Commitments and Contingencies

12 Months Ended

Dec. 25, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

(17)                      Commitments and Contingencies

Hasbro had unused open letters of credit and related instruments of approximately $174,082 and $179,592 at December 25, 2011 and December 26, 2010, respectively. Included in the amounts for 2011 and 2010 were $150,840 and $114,890, respectively, of bonds related to tax assessments in Mexico. See note 10 for additional discussion.

The Company enters into license agreements with inventors, designers and others for the use of intellectual properties in its products. Certain of these agreements contain provisions for the payment of guaranteed or minimum royalty amounts.  Under terms of existing agreements as of December 25, 2011, Hasbro may, provided the other party meets their contractual commitment, be required to pay amounts as follows: 2012: $40,314; 2013: $93,173; 2014: $14,775; 2015: $14,775; 2016: $14,375; and thereafter: $57,500. At December 25, 2011, the Company had $134,730 of prepaid royalties, $16,788 of which are included in prepaid expenses and other current assets and $117,942 of which are included in other assets.

In addition to the above commitments, certain of the above contracts impose minimum marketing commitments on the Company. The Company may be subject to additional royalty guarantees totaling $140,000 that are not included in the amounts above that may be payable during the next  seven years contingent upon the quantity and types of theatrical movie releases by the licensor.

In connection with the Company’s agreement to form a joint venture with Discovery, the Company is obligated to make future payments to Discovery under a tax sharing agreement. The Company estimates these payments may total approximately $129,800 and may range from approximately $6,400 to $7,700 per year during the period 2012 to 2016, and approximately $94,400 in aggregate for all years occurring thereafter. These payments are contingent upon the Company having sufficient taxable income to realize the expected tax deductions of certain amounts related to the joint venture.

At December 25, 2011, the Company had approximately $344,370 in outstanding inventory and tooling purchase commitments.

Hasbro is party to certain legal proceedings, as well as certain asserted and unasserted claims.  Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements.