Debbie Hancock - VP, IR Brian Goldner - Chairman, President and CEO Deb Thomas - CFO.

Stephanie Wissink - Piper Jaffray Drew Crum - Stifel Nicolaus Jaime Katz - Morningstar Taposh Bari - Goldman Sachs Felicia Hendrix - Barclays Capital Eric Handler - MKM Partners Tim Conder - Wells Fargo Gerrick Johnson - BMO Capital Markets Jim Chartier - Monness Crespi Hardt Lee Giardano - Sterne Agee CRT.

Good morning. And welcome to the Hasbro's Fourth Quarter and Full Year 2015 Earnings Conference Call. At this time, all parties will be in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time.

At this time, I’d like to turn the call over to Ms. Debbie Hancock, Vice President of Investor Relations. Please go ahead..

Thank you, and good morning, everyone. Joining me this morning are Brian Goldner, Hasbro's Chairman, President and Chief Executive Officer; and Deb Thomas, Hasbro's Chief Financial Officer. Today, we will begin with Brian and Deb providing commentary on the company's performance and then we will take your questions.

Our fourth quarter and year-end earnings release was issued this morning and is available on our website. Additionally, presentation slides containing information covered in today's earnings release and call are also available on our site. The press release and presentation include information regarding non-GAAP financial measures.

Please note that whenever we discuss earnings per share or EPS, we are referring to earnings per diluted share. Today's discussion will exclude items from both our 2015 and 2014 results but do not speak to the underlying financial performance of Hasbro.

Details on those items and reconciliation to our reported financial results are included in the earnings release and presentation slides accompanying this call.

Before we begin, I would like to remind you that during this call and the question-and-answer session that follows, members of Hasbro management may make forward-looking statements concerning management's expectations, goals, objectives and similar matters.

There are many factors that could cause actual results or events to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. Some of those factors are set forth in our annual report on Form 10-K, our most recent 10-Q, and today's press release, and in our other public disclosures.

We undertake no obligation to update any forward-looking statements made today to reflect events or circumstances occurring after the date of this call. I would now like to introduce Brian Goldner.

Brian?.

THE GATHERING, contributed to the 8% increase in the games category absent FX. MAGIC had a very good fourth quarter with the release of Battle for Zendikar which had the strongest start to a set in the brand’s history.

In addition to higher revenues, in our franchise brands and several other Hasbro gaming brands, Pie Face was a clear winner this holiday season and continues to be in high demand at retail. It was recently named toy of the year in the UK. You’ll learn more about the next innovation for Pie Face later this week at Toy Fair.

As expected TRANSFORMERS revenue declined, given the difficult comparison with the 2014 theatrical release. The decrease was at the low end of the traditional range following a movie and benefited from the success of Transformers Robots in Disguise television programing airing in markets around the world.

In 2016, the second season of programing will begin airing including on Cartoon Network in the US. Littlest Pet Shop posted a small revenue decrease, despite growth in the US and Canada segment, as well as in the entertainment and licensing segment.

Outside the US, the markets are actively re-launching the brand, and we plan to extend the success we’ve seen in the US globally. We believe that there is an opportunity to engage girls around a more immersive franchise story, including a new approach to multi-platform entertainment, which we will be unveiling in the future.

MY LITTLE PONY remains a vibrant and growing property. The core MY LITTLE PONY brand did extremely well in 2015 with positive revenue growth in several countries backed by strong point-of-sale and the launch of the new Friendship is Magic collectable segment.

MY LITTLE PONY has established itself as a major lifestyle brand, and for 2015 was our top licensed property. We experience a slowdown in EQUESTRIA GIRLS that offset much of the growth we saw in other areas of the brand. In January 2016, we launched a new Mini Dolls! EQUESTRIA GIRLS line which is off to a very good start.

Overall MY LITTLE PONY brand engagement is very high across all lines of the business. To maintain this momentum we are continuing to invest in multichannel storytelling, while evolving our entertainment strategy to more effectively deliver content.

The success of our franchise brands contributed to the 11% revenue growth in our entertainment and licensing segment. Despite a difficult comparison with 2014 Transformers movie, consumer product licensing revenues increased. Over the past several years, we’ve built a world class consumer products organization.

We are driving momentum across several brands including MY LITTLE PONY, TRANSFORMERS and MONOPOLY, delivering cross category statements at retail, while making inroads in emerging markets including China and Thailand.

The entertainment and licensing segment is benefiting from our ongoing investment and storytelling through episodic television programing including a multi-year digital streaming deal. With the continued growth, the entertainment and licensing segment increased to 6% of total revenues and 11% of operating profit.

At a 31% operating profit margin, our ongoing investments are positively contributing to the overall operating margin for Hasbro. Shifting to our partner brands, several brands delivered strong growth last year. Star Wars fans around the world have embraced The Force Awakens both in theater and in merchandise.

Hasbro’s 2015 Star Wars revenue was on par with past movie years. Nearly half of this revenue was recorded in the fourth quarter, given the December 18 movie release.

The next wave of Hasbro Star Wars product is on-shelf today and new product will continue to be available in 2016, supporting both the Spring Home Entertainment window for The Force Awakens as well as the December ’16 release of Rogue One.

Given the level of entertainment and the strong global demand we’re seeing, 2016 STAR WARS revenue could be on par with 2015. Earlier in 2015, JURASSIC WORLD and MARVEL’s The Avengers Age of Ultron both established themselves as top grossing films at the global box office. Each property made strong revenue contributions for Hasbro.

In total, our partner brand revenues were slightly higher than our previous expectation and totaled 28% of revenues. Strong STAR WARS results in the fourth quarter were a major contributor to the over performance of these brands. We continue to expect partner brand revenues to be 20% to 25% of total Hasbro revenues.

In the near term, this number is expected to be at the higher end of this range. In 2016, Hasbro’s line of DISNEY PRINCES and DISNEY FROZEN fashion dolls and small dolls became available. These products are already on shelves in the US and rolling our internationally.

We shipped a very small amount of product in the fourth quarter, given the timing of retailer plans. Shipments are now ramping up and early consumer indications are positive. Great partnership with Disney and our global retailers is resulting in a smooth transition with product on-shelf beginning in January.

We are closely monitoring inventory at retail to ensure this continues in 2016 as revenues grow and we build greater efficiency and profitability in to this new business. This growth in our franchise and partner brands portfolio drove growth in every region on a constant dollar basis.

The US and Canada segment delivered double digit revenue and operating profit growth. In 2012, we reorganized our US teams and put in place a plan to drive both top and bottom line growth. Over the past several years this has substantially improved profit leverage and segment operating profit margin.

The team has done a tremendous job working with our retail partners to build a robust growing and profitable business. The international segment revenues grew 16% absent FX and emerging markets increased 15%. We continue to expect modest double-digit growth in the emerging markets going forward.

Our regional teams are navigating challenging economic environments, but are successfully driving our brands and positioning Hasbro for profitable growth over the long term. In closing, 2015 was a very good year for Hasbro.

Positive momentum in Hasbro franchise brands and our partner brands positions us to capitalize on the innovation and entertainment our teams are delivering in 2016 and beyond. As Deb will discuss, Hasbro is in a very strong financial position.

We continue to strategically invest in brands and initiatives where we see additional revenue and earnings potential, while returning excess cash to shareholders. This Friday, February 12, is our Annual Toy Fair Investor event. We look forward to seeing you in New York and sharing with you our future brand and business initiatives.

I’d like to now turn the call over to Deb.

Deb?.

THE GATHERING. This is a multiyear investment program which we believe will expand the potential market for MAGIC over the long term. In addition, our IT expense and depreciation is higher, reflecting our increased investments and improving the efficiency of Hasbro growing forward.

As we outlined in November, these expenses increased in 2015 and will again increase in 2016 and 2017. In 2018, we anticipate they will begin to decline. Compensation expense was also higher reflecting the strength of our results.

We are able to expand operating profit while making incremental investments, given the ongoing focus of our teams on managing expenses and the inherent financial advantages of executing our brand blueprint strategy.

Turning to our results for [lower] operating profits for the quarter; on an as adjusted basis other income was $2.5 million compared to an expense of 8.5 million last year.

The improvement resulted from increased profits associated with our 40% share of the operating income in the Discovery Family channel as well as a lower losses from foreign exchange transactions. The 2015 underlying tax rate was essentially flat with last year, at 26.4% versus 26.5%.

Our 2016 tax rate is anticipated to remain in the range of 26.5% to 27%. This will fluctuate to reflect the geographic mix of profits. On an adjusted basis, diluted earnings per share for the year were $3.51 versus $3.15 in 2014. Our balance sheet remained strong. Of our nearly $1 billion in cash at year end almost all of it is located outside the US.

We returned $310.7 million to shareholders in 2015, $225.8 million in dividends and $84.9 million in share repurchase. We announced today that the Board has approved an 11% of $0.05 per share increase in the quarterly dividend. The new quarterly dividend rate of $0.51 per share will be payable May 16 to shareholders of record on May 2nd.

We will continue returning excess cash to shareholders through our dividend share repurchase program. Receivable at year-end were up 11% and DSOs declined one day to 75 days. Excluding the impact of foreign exchange, receivables increased approximately 23% equal to the fourth quarter revenue growth absent FX. Inventories increased 13% versus last year.

Adjusting for a negative foreign exchange impact, inventory increased 24% in line with our growing business and entertainment schedule. Our inventory both at retail and at Hasbro is of high quality, and we are well positioned to meet demand in 2016. In closing 2015 was an extremely strong year for Hasbro.

We continue to make important advances in the execution of our strategy and we invested in strategic initiatives to drive long term shareholder value creation. We have positive momentum in our business and we are well positioned for 2016 and beyond. We look forward to sharing more with you on Friday at Toy Fair.

Brian and I are now happy to take your questions. .

[Operator Instructions] our first question is from the line of Stephanie Wissink with Piper Jaffray. Please go ahead with your questions..

Congratulations on a nice finish to the year. Brian, I’m wondering if you can just talk a little bit more about the sales-to-cost balance. You’ve seen some nice favorable increases in your gross and operating margin, should we continue to expect that trend line throughout the course of the next couple of years.

And then as you’re looking at some of the investment spend I think Deb you mentioned a few things that you still have on the docket.

How many of those will flow through the P&L versus what would be capitalized on the balance sheet?.

If you look at our gross and operating margins, we believe that they are sustainable at approximately the 2015 levels, and over time we would hope to continue to expand those. We’ve talked about the points of leverage that we have in our business in order to expand them over time.

Obviously the growth of our franchise brands that enjoy a higher than average operating profit margin, the growth of our entertainment and licensing business which as you saw has a very strong operating margin as well, and then of course as we continue to grow international markets, particularly emerging markets and we get greater economy of scale, those begin to approach the company’s average operating profit margin.

So those three levers broadly will enable us over time to continue to expand operating margins, but we do believe that our operating profit margins and gross margins are at a new place and can remain at this higher level beyond 2015. .

THE GATHERING online, investment in our development process which we expect will lead to future savings in the cost of sales line a couple of years out, and we’ve got the higher level of depreciation coming through. We expect to see those coming through the P&L for the next ’16 and ’17 and starting to decline in ’18.

And we’ll begin to see revenue from some of these activities like MAGIC Online beginning in 2017. So it’s a little bit of a balance, but we expect to see some of those expenses begin to decline by 2018 and we’ll have some charts on depreciation and amortization and some of the details behind that at Toy Fair on Friday. .

Great. Just one follow-up on the DISNEY PRINCESS business, I think that you had historically quantified that as about 30 to 50 basis points drag.

As what you’re seeing in the channel now, are you expecting to arrive at leverage a little bit sooner than you would have initially forecasted or how should we think about that drag rolling offshore over the next 12 months or so. .

Yeah Steph, if you think about revenues this year through the first quarter, we’re working through the transition, and for the full year we have some strong expectations, but obviously it’s a transition year. We believe we get more leverage in our business over time in 2017 and ’18.

So over time we’ll build more leverage in to that business as we again grow economy of scale and create new innovations in years out. But we’ve not said that we would get all that leverage this year. .

Our next question comes from the line of Drew Crum with Stifel. Please proceed with your question..

Can you guys talk a little more about your expectations for royalties, 8.5% in 2015? I think you suggested that in terms of mix partner brands would be at the high end of the historical range at least over the near term. Yet you expect royalties as a percentage of sales to be at about 8% in 2016. So just want to get some additional clarity on that. .

Hi Drew it’s Deb. I think it’s really just a mix. I mean we have such a strong entertainment driven mix of revenue this year. As our franchise brands continue to grow, we do expect that royalty number to come in closer to our five year average which was around that 8%.

So that’s why as we look forward we believe we’ve got sustainability and our gross margin as our consumers are paying for innovation in our product and we’ve built some cost savings measures in there that we’re realizing now and our royalties will be closer to 8% than 8.5%.

We think this year was just -- given the strength of STAR WARS as well as JURASSIC WORLD and MARVEL they were just higher than we expected they would be. .

And then Brian can you comment on the performance of MAGIC during the quarter, any quantification in terms of sales growth and any noteworthy changes or variances in terms of the content strategy in ’16 relative to this past year. .

Yeah, MAGIC category grew for the full year. It grew very strongly in the fourth quarter; we talked about Battle for Zendikar being the most successful set launch.

Just to remind everyone that MAGIC is really story-led, it’s much less responsive to the quarters or holiday seasonality, it’s really about the stories that we’re telling and we think the transition the teams’ taken the brand through this year and how we tell stories is very helpful to the brand as we go forward.

So we continue to invest, improve and drive our online business. As Deb said, we would expect to see some revenues from the new MAGIC Next platform in 2017.

But MAGIC is a long term growth driver for us and we’re very happy to have a brand like that also, and we’ll talk more about this on Friday that talks to and appeals to different demographic and psychographic that helps the company to expand our portfolio and deliver value and brands across a number of different demographic. .

Just one last question from me, are you willing to share with the profitability or margin was for your emerging markets business in 2015. .

Emerging markets absent FX grew 15% and operating margin was a little bit lower mostly because of China as we’re investing in that business and then of course impacted by FX..

The two of our biggest growth market this year absent FX continue to be Brazil and Russia, both growing over 20% absent FX. But the pressure of FX on those markets when you think the precipitous drop in their currencies that kept going on year along really put a lot of pressure on our emerging market operating profit. .

Our next question is from the line of Jaime Katz with Morningstar. Please proceed with your questions..

I have a quick clarification actually, I think you guys had said that FX would be 15% to 20% of 2015 levels if those levels were at current rate.

So is that right to think about as 15% to 20% of the 100 million incremental change?.

Yeah, I think what we are trying to highlight Jaime is that we don’t see the precipitous currency drops that we saw at the end of 2014 and into ’15. So our expectation of what our current rates are, we think they’ll continue to have an impact.

Again particularly in countries like Brazil, which continue to have pressure on their currency of about a 100 million to revenue and about 15% to 20% of that would drop through the operating profit. .

And then are you willing to comment on advertising, the advertising spend outlook in the year ahead with royalties ticking up a little bit higher, what the offset might be?.

2016 and ’17 are both great entertainment years. In fact we’re sitting here today with more visibility, it’s a great entertainment and storytelling both from our own brands and our partners’ brands than ever before. And so we think advertising will remain below the 10% range that we’ve talked about historically.

But it would be probably be in a range between where we ended last year and 10%. .

Our next question is from the line of Taposh Bari with Goldman Sachs. Please go ahead with your questions..

Brian I guess just a color on STAR WARS appreciate the color in terms of contextualizing this year versus past movie years.

Last we heard you were expecting a 50-50 mix from episodes between 2015 and 2016, is that still the case? And can you remind us or can you give us an update on how the US mix versus international mix of that property is trending versus the prior movie?.

Sure. So what we talked about was that in 2015 STAR WARS performed like a movie year, like other movie year, so it was very strong for us. And we also believed that STAR WARS can be equal in 2016 obviously rolling through the Force Awakens home entertainment window and then in to Rogue One. So we believe similar revenues.

And I was looking at some of the detail of STAR WARS, and I think it’s rather interesting that prior to the movie release or if you take the full year numbers for STAR WARS, the US and Canada segment if you will, 56% revenues and international was 44%.

However, if you look at the fourth quarter or more of the movie related revenues, the international segment revenues as a percent go to 54% and the US is 46%.

So what we’ve said all along is that, as the brand benefits from more entertainment and benefits from more global movie releases that we would see a growth in that footprint, the global footprint of the brand, and we are in fact seeing that. .

Great, that’s helpful. And then just the other question I had was on capital allocations and M&A in particular.

Can you just remind us what your criteria are for M&A as you think about acquisitions, and what your appetite in terms of making a transformational deal?.

We are focused on executing our brand blueprint strategy. We obviously have looked from time to time at opportunities to help us round that out to build our capabilities and we’ve spent the last 10 years doing that.

So acquisitions like 70% of Backflip, our joint venture with the television network that’s continuing to improve its financial position, and we continue to remain open to ideas that enhance our strategic brand blueprint and the strategy that we’re executing.

But we are very focused on executing our own strategy and really focusing in on how we build our business overtime. We have great brands in our portfolio and believe there’s lots of headroom for growth in our franchise brands and you’ll also see us introducing some new brands out of the box and new original brands over the next couple of years.

So we think we are well positioned from a brand standpoint, but we do remain open to add on acquisitions that would help to enhance the strategic platform that we are running our brand blueprint strategy. .

From a capital standpoint, we also remain committed to returning our excess cash to our shareholders, and indeed we’re very pleased that our Board voted and we are able to report today an 11% increase in our dividends, because we do remain very committed to getting excess cash back to our shareholders. .

Our next question is coming from the line of Felicia Hendrix, Barclays. Please proceed with your questions. .

Brian if you could just go back to STAR WARS for a second because I just want to make sure I’m understanding what you’re saying correctly. You said STAR WARS was on par with prior years, so according to our notes that’s depending on how far back you look, somewhere between 500 million and 600 million and then you said half of that was in 2015.

So I’m just wondering when you think about the kind of blend in 2015 and 2016 together is that what’s equating to the 500 million to 600 million or should be looking at the total and spreading it up. Just a little confusing to me thanks. .

What I was saying is that, just to give you a sense on an annual basis that STAR WARS for us in 2015 for the full year was comparable to prior movie years, and I might point to years like 2005 for example. And I was talking about the fact that if you took the full year number, you would see that the US was more represented in terms of the sale.

So said differently, sales before the launch of the film were more oriented towards the US segment and less in international and as the movie entered the market in the fourth quarter, we talked about how the fourth quarter was about half of the total years revenues and that was more internationally oriented at about 54% versus the 46% for the US.

We’re also seeing in 2015 Hasbro’s market share of STAR WARS growth fairly dramatically, because people are really responding to the innovation that we’ve brought to the product lines, to our role play which we’re selling incredibly well all lightsabers of different kinds including Kylo Ren’s lighsaber and then of course 3 and 3.25 inch scale action figure and of course our black series.

Those are some of our top sellers and we’re rolling out new product and already have for 2016. We’ll continue to roll out new product throughout 2016 and we’ll make a transition more towards Rogue One for the back half of 2016, given the December movie release for Rogue One. And we do believe that 2016 can be comparable size to 2015. .

Deb just quickly, can you help us; I know it’s such a moving target, but you’ve given us some FX guidance in the past. Can you help us to think this through for 2016? You might have said that I might have missed it. .

Sure. We’re thinking that based on our current expected rates, we would have about $100 million negative impact to 2015 revenue, if you just apply those same rates with about 15% to 20% of that flowing through your operating profit. So that’s significant impact than 2015 versus 2014. .

And then you guys beat EPS nicely, but if you look at the reconciliation in your release your EBITDA seems to have come in lighter than consensus EBITDA.

So I was just wondering how to reconcile that?.

EBITDA was in line with consensus, $856 million..

For the quarter?.

I know we were actually pleased with our results for the quarter and for the year. So given our expectations they were in line. .

I think as we think about building our business, we really do think more annual and over three year basis than in any given --.

Okay, but there wouldn’t be like a strain like a line item or something that would make that difference right because you beat on earnings, I mean in fact it’s EBIT. .

Fair enough. Not that we aware. .

Final question just on SG&A, looks like it grew 18% year-over-year in the quarter. So just wondering how we should think about SG&A in 2016..

On a full year basis we said we’ve got a couple of these investments which I indicated earlier we’ll outline a bit more on Friday at our meeting at Toy Fair.

But a quite a few more of these investments that are continuing for the next few years before we start to see the revenue from it and that includes depreciation which is going to ramp down coming in ’18 from the new systems that we’ve put in.

So we’ll highlight more of that and any other items that impact us of significance in SG&A line with compensation because of the performance of the year. But we’ll outline more about that on Friday..

Would you say that compensation accounted for most of the year-over-year increase in this quarter?.

I would have to go back and look at the quarter, however again on a full year basis; we are in line from a percent of revenue standpoint of where we thought we would be at the beginning of the year. .

Our next question is from the line of Eric Handler with MKM Partners. Please proceed with your question..

Deb, what if you could walk through, sort of the puts and takes we might see in the entertainment and licensing business in 2016 and how it differs in ’15. In the first quarter I’m assuming you’re not going to have the Netflix bump, but sort of like-for-like how we might at the two years. .

That’s very good that you picked up on that Eric, because you know it’s like my favorite term and I get teased about it a bit, but it is a bit lumpy in that business because of that. And I believe having the Netflix in the first quarter would have an impact.

However, we continue to invest in that business and we saw good growth not just in the studio and Netflix business but in our consumer product licensing business. And the strength of our brands and the licensing is much more stable than that entertainment driven revenue, or those large deals that you can see from time to time.

So overall, one of the reasons why we’ve expanded our operating profit is because of the expansion in our entertainment and licensing business, and we continue to invest in that business for the long term because we see not just the revenue growth but the operating profit expansion opportunities for the company as a whole. .

And on Friday we’ll outline for you as well our efforts particularly in digital gaming. We’re going to talk about some of the new titles that are around Hasbro brands coming from Blackfoot Studios as well as some of the other gaming efforts and that’s all resident in that segment as well. .

Our next question comes from the line of Tim Conder with Wells Fargo. Please go ahead with your questions..

A couple here, any quantification Brian that you can give us on NERF, again that was your largest revenue producer, just any type of quantification there? And then as it relates to DISNEY PRINCESS, was a little bit of this faster than anticipated.

Again you just touched on it a little bit earlier here, the international shipment that you did in Q4 it seemed like at the analyst meeting in November that you said, hey we are going to let the channel clear and the material shipments would start in Q2; so any additional color there? And then finally the capital allocation question here.

You guys have executed well on the strategy over the last several years, cash flow is good and you gave a very good outline here with the partner businesses staying sustainable and then what you’re doing on the licensing and your own brands.

Can that operating cash flow number of approximating 500 million, should that expand in the not too distant future, given the visibility and sustainability?.

As we look at our cash flow number, we will talk about more about that on Friday. So we look forward to seeing you then and talking more about that then. With respect to the DISNEY PRINCESS and FROZEN business, we began very small shipments in the fourth quarter.

I think we did talk about DISNEY’s DESCENDANTS being a good contributor to 2015, however we have been working very closely with Disney and our retail partners to ensure the channel’s in good shape for everyone and our expectation is, we’ll begin to ship that in a more meaningful way in 2016. But we only had very small shipments in 2015. .

In the first quarter we’ll work through the transition on PRINCESS.

So we will be shipping PRINCESS product and you’re starting to see displays up and rolling the product out around the world and we’re very happy with the transition in working with Disney and our retailers, they’ve been incredibly supportive and we’re seeing some good early indications of how a product is selling, its selling quite well.

And then if we talk about NERF, the brand was up both in the quarter as well as full year double digits, and the sell-through was very strong and it’s really around Modulus around N-Strike and around Zombie Striker, as kind of the top performers for the years and then of course NERF Rival which is launched in a couple of countries in the world that are out in a few more as we move forward that more.

This is a little bit more of the paintball like paint play pattern that we’re rolling out in markets around the world.

So again the brand is our top brand at the company, and we just wanted to give that perspective because as we had created the franchise brand strategy many years ago, we believe that those brands were capable of growing to first hundreds of millions of dollars and then overtime even larger and NERF and PLAY-DOH are great examples of brands that have grown significantly over the last few years and they are among the top brands of the company..

Still clearly over double digit percent of revenues this -..

Yeah, double digit percent of revenues. .

Our next question comes from the line of Gerrick Johnson with BMO Capital. Please go ahead with your questions. .

In the past you weren’t shy about giving us the actual Star Wars revenue numbers, so maybe you can give us that as oppose to close to what it used to be. NERF just clarification, is that your largest owned brand or is it the largest brand in the portfolio if you include partner brands.

And then lastly on entertainment and licensing, I think you commented that MY LITTLE PONY is your biggest licensed brand.

So is that the largest contributor to entertainment and licensing revenue and what’s the percentage of the total there?.

On Star Wars I think I gave some pretty good guidance that Star Wars was very similar to 2005 last movie year. We used to give out specific percentages of revenues for a whole host of reasons; we’d no longer feel that that’s specifically required. So I’d rather just give you some guidance up against the prior movie or NERF.

It is the largest brand that has brought if you include all brands including franchise and partner brands, every brand. It’s the largest brand in our portfolio. .

And MY LITTLE PONY entertainment?.

On MY LITTLE PONY we’re talking about the licensing income.

So this is within the entertainment and licensing segment our new rebranded team consumer product personnel generated the largest amount of revenues from MY LITTLE PONY business up significantly versus a year ago and that’s what we were referring to and no I’m not going to give you a percent as it relates to E&L..

Our next question comes from the line of Jim Chartier with Monness Crespi Hardt. Please go ahead with your question..

I just want to talk about the segment operating margins, yes indeed a really good progress in North America over the last couple of years and recognized that international’s been impacting by FX. A couple of years ago at International’s pretty similar to North America.

Can you bridge the gap between international and North America at current exchange rates? Is the North America margin sustainable and what would the drivers be with getting international closer to North America?.

We made changes in our North American operation back in 2012 and reorganized that business in working with our retail partners. We believe that North American profitability is now at a new level and it’s relatively sustainable. Obviously there’ll be ups and downs overtime by bits, but overtime it can also grow as we continue to leverage our brands.

International is just impacted by FX and may be Deb you want to talk absent FX where arte those margins because they are very healthy margins absent FX..

Yeah, absolutely. Every one of our components of our International segment were up absent FX, and operating profit was also negatively impacted because of the FX impact.

But again, so much of this year in the segments as well, product mix had a big impact on operating profit for the segment as well as the cost savings and we continue to get cost savings through ongoing initiatives.

As you know, we had a $100 million cost saving initiative a few years back which we completed in 2015, but ongoing cost savings has always been a part of our business, and many of the things you’ve seen us invest and then are running through some of the lines like product development and then SG&A are ongoing investments to further decrease cost throughout our business including in our international segment..

In the past, international’s been about 300 basis points lower than North America, now it’s over 600 basis points lower. Again if FX break-stay where they are do you believe you can get that margin close to 300 basis points differential in the future. .

Well we continue to make investments in the business to really reflect things in the currencies and to take cost out of the business of where we are actually incurring our revenues. So overtime, our expectation is that you’ll see more of our margins in the different operating segments come closer to each other.

Now if you think about international, you’re in a lot of different markets though. So just by their own nature they’re going to have slightly administrative expenses. So will they ever be 100% the same? I don’t know. But they’ll move closer overtime based on all the initiatives are undertaken in the company. .

We’ve seen some great growth in several of the emerging markets we talked about, north of 20% growth in Russia and Brazil. In China this past year, our largest brand in China continues to be TRANSFORMERS, so you’re up against the movie here.

I think that has more of a temporal impact in the year and overtime I would expect the trends that we’ve seen in our emerging market business and profitability to continue continued improvement for the company average operating profit margin.

And as Deb said, there’s some puts and takes overtime as we continue to expand our capabilities, but we’re [trending][ph], right. .

Our next question comes from the line of Lee Giardano with CRT. Please go ahead with your question..

Can you talk a little more about your expectations for Transformers and how the content cycle for that brand looks in the coming years?.

The brand performed very well for us in a non-movie year coming off of 2014’s movie, it was down much less than one expects. We’ve talked a lot about what brands do in the years following movies and TRANSFORMERS really bucked that trend for the full year being down about one-third versus typical more closer to 50%.

So the television and other entertainment has really helped to support the brand and help drive our brand globally, and I’ll give you some more color on our entertainment plans, what’s coming out of the writers room and plans for Transformers, theatrically by Friday. .

[Operator Instructions] If there are no other additional questions at this time, I will turn it back to Ms. Debbie Hancock for closing remarks. .

Thank you Rob and thank you everyone for joining the call today. The replay will be available on our website in approximately two hours. Additionally, management’s prepared remarks will be posted on our website following this call.

Our investor event at Toy Fair is been held this Friday February 12, and our first quarter 2016 earnings release is tentatively scheduled for Monday, April 18. Thank you..

This concludes today’s conference, you may disconnect your lines at this time, and we thank you for your participation..