Hasbro 2012 Annual Report Download - page 36

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the audited consolidated financial statements of
the Company included in Part II Item 8 of this document.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains
forward-looking statements concerning the Company’s expectations and beliefs. See Item 1A “Forward-Looking
Information and Risk Factors That May Affect Future Results” for a discussion of other uncertainties, risks and
assumptions associated with these statements.
Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in thousands of
dollars or shares, except for per share amounts.
EXECUTIVE SUMMARY
Hasbro, Inc. (“Hasbro” or the “Company”) is a branded play company dedicated to fulfilling the
fundamental need for play for children and families through creative expression of the Company’s world class
brand portfolio. From toys and games, to television programming, motion pictures, digital gaming and a
comprehensive licensing program, Hasbro applies its brand blueprint to its broad portfolio of properties. The
brand blueprint revolves around the objectives of continuously re-imagining, re-inventing and re-igniting the
Company’s existing brands, imagining, inventing and igniting new brands, and offering consumers the ability to
experience the Company’s brands in all areas of their lives.
To accomplish these objectives, the Company offers consumers the ability to experience its branded play
through innovative toys and games, digital media, lifestyle licensing and publishing and entertainment, including
television programming and motion pictures. The Company’s focus remains on growing owned and controlled
brands, developing new and innovative products and brands which respond to market insights, offering
entertainment experiences which allow consumers to experience the Company’s brands across multiple forms
and formats, and optimizing efficiencies within the Company to increase operating margins and maintain a strong
balance sheet.
The Company earns revenue and generates cash primarily through the sale of a broad variety of toy and
game products and distribution of television programming based on the Company’s properties, as well as through
the out-licensing of rights for use of its properties in connection with complementary products, including digital
media and games and lifestyle products, offered by third parties. The Company’s brand architecture includes
franchise brands, challenger brands, gaming mega brands, key licensed brands and new brands. The Company’s
franchise and challenger brands represent Company-owned brands or brands which if not entirely owned, are
broadly controlled by the Company, and which have been successful over the long term. Franchise brands are the
Company’s most significant owned or controlled brands which have the ability to deliver significant revenue
over the long-term. Challenger brands are brands which have not achieved franchise brand status yet, but have
the potential to do so with investment and time. These franchise and challenger brands include
TRANSFORMERS, NERF, LITTLEST PET SHOP, MY LITTLE PONY, FURREAL FRIENDS, BABY
ALIVE, G.I. JOE, MONOPOLY, MAGIC: THE GATHERING, PLAY-DOH and PLAYSKOOL. The Company
has a large portfolio of owned and controlled brands, which can be introduced in new forms and formats over
time. These brands may also be further extended by pairing a licensed concept with an owned or controlled
brand. By focusing on these brands, the Company is working to build a more consistent revenue stream and basis
for future growth, and to leverage profitability. During 2012 the Company had strong revenues from owned or
controlled brands such as NERF, MAGIC: THE GATHERING, TRANSFORMERS, PLAY-DOH, FURREAL
FRIENDS, LITTLEST PET SHOP, PLAYSKOOL, MONOPOLY and MY LITTLE PONY.
The Company’s innovative product offerings encompass a broad variety of toys including boys’ action
figures, vehicles and playsets, girls’ toys, electronic toys, plush products, preschool toys and infant products,
electronic interactive products, creative play and toy-related specialty products. Games offerings include boys’
action, board, off-the-board, digital, card, electronic, trading card and role-playing games.
While the Company believes it has built a more sustainable revenue base by developing and maintaining its
owned or controlled brands and avoiding reliance on licensed entertainment properties, it continues to
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