Good morning, and welcome to the Hasbro Fourth Quarter and Full Year 2014 Earnings Conference Call. [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 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 full year 2014 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. 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. These forward-looking statements may include comments concerning our product and entertainment plans, anticipated product performance, business opportunities, plans and strategies, foreign exchange translations, costs and cost savings initiatives, financial goals and expectations for our future financial performance. 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, in today's press release and in our other public disclosures. You should review such factors together with any forward-looking statements made on today's call. 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?

Thank you, Debbie. Good morning, everyone, and thank you for joining us today. Hasbro's 2014 results highlight the power of understanding our consumers and audiences by garnering great consumer insights to drive innovation and build brands globally. Superior retail execution, compelling storytelling and global consumer engagement across mediums further strengthens these brands. At Hasbro, consumer insights and storytelling surround our brands and sits at the center of our brand blueprint. This brand blueprint is the strategy our global teams are employing around the world, and through which we are differentiating Hasbro in a competitive marketplace. Through innovation and storytelling, we are creating the world's best play experiences. In 2014, the execution of our strategy resulted in revenue growth of 5%. Improved profitability across segments delivered an adjusted operating profit growth rate of 7%, and an expanded operating profit margin of 14.9%. For the year, Hasbro Franchise Brands grew 31%. This growth was driven by story-led brands, including MY LITTLE PONY and TRANSFORMERS, but also from innovation based firmly in our global consumer insights for brands, including NERF and PLAY-DOH. In total, 6 of our 7 Franchise Brands grew in 2014: MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS. Within our partner brand portfolio, great story telling and content supported by innovation propelled MARVEL properties to higher levels, behind The Avengers, Spider-Man, and the Guardians of The Galaxy franchises. Geographically, the global execution of our strategy drove International segment revenue growth of 8% in 2014 or 13% on a constant currency basis. 6 of 7 Hasbro Franchise Brands grew in the segment. Emerging market revenues increased 20%. Our playbook to continue growing in these significant markets includes driving consumer engagement with innovative product lines for Hasbro and partner brands, combined with television and film content distributed across mediums.…

Thank you, Brian, and good morning, everyone. As Brian said, 2014 was a good year for Hasbro, as revenues and profit grew. We returned significant capital to shareholders, and our underlying financial performance was strong despite several challenges in the marketplace, including a large negative foreign exchange impact at the end of the year. Our business grew across segments, geographies and franchise and partner brands. Our investments in new markets, in global teams and in new capabilities and systems enabled this performance, and our ongoing focus toward lowering cost and maximizing profitability is delivering results. We ended 2014 in a strong financial position. We generated $454 million in operating cash flow, and ended the year with $893 million of cash on the balance sheet. Before we discuss the year's results, please note there were a number of charges and benefits in both 2014 and 2013. We've included a reconciliation of both years to reported amounts in today's release and the presentation accompanying this call. During my discussion of our business, I will exclude these items as they do not speak to the underlying performance of Hasbro. Looking at our segments for the full year 2014, revenues in the U.S. and Canada segment increased 1%. Growth in the Boys category offset declines in the Girls Games and Preschool categories. All 7 of Hasbro's Franchise Brands grew revenues in 2014, as did MARVEL properties. This growth more than offset the expected declines in Furby and BEYBLADE. Our U.S. business is posting positive gains after several challenging years. Franchise Brand POS was up 31% in 2014 and we're well positioned from an inventory and brand initiative standpoint for 2015. In Canada, revenue declined in the year, but point-of-sale at our retailers increased. Looking ahead to 2015, given Target's decision to exit the Canadian…

[Operator Instructions] Our first question is coming from the line of Sean McGowan with Needham & Company. Sean P. McGowan - Needham & Company, LLC, Research Division: I have a couple of questions, if I can. First, can you give us an update on what's happening with Backflip Studios, and should we expect in 2015 to see some Hasbro properties coming out of that studio?

Yes, good morning, Sean. We will start to see Hasbro Studios and Hasbro brands properties coming out from Backflip Studios this third and fourth quarter. We've had a few that were more about network building than revenue generation early on, but you'll see a significant increase in Hasbro Studios brand, Hasbro brands properties. The other element is they are working on some new exciting brands within the Backflip portfolio, including something very exciting with DragonVale. Sean P. McGowan - Needham & Company, LLC, Research Division: Did anything else go on with their other properties during 2014?

No. They continue to have NinJump and Paper Toss and several other brands that they launched, PLUNDERNAUTS and Seabeard, but DragonVale, obviously, is the largest brand, their Franchise Brand, if you will, and they're working on an exciting new initiative around DragonVale for the second half of this year. Sean P. McGowan - Needham & Company, LLC, Research Division: Okay. You may have said this in the remarks or maybe I didn't catch it clearly. What was the performance of MAGIC in the fourth quarter? Was that up?

Yes, it was. Yes. Sean P. McGowan - Needham & Company, LLC, Research Division: Okay. Can you just remind us why the change from 2 sets to -- I mean, from 4 to 2 sets?

Well, we actually -- for 2015, there are a couple of things going on. So there are more than 2 initiatives that are going on that we'll launch in 2015. We'll have 2 sets, but then we also have an additional, the core set. So in fact, it's a transition, and the teams got some pretty robust storytelling plans around that brand. And again, we're very excited about what we're seeing in MAGIC, the momentum in MAGIC continues. The number of Friday gaming sessions has increased. We're up to nearly 7,000 every Friday, where fans are getting together to play. We have additional tournaments this year around several of the releases. By summer, we'll have a tournament that will actually take place in 3 different countries around the world. So in fact, I think MAGIC and the opportunity for MAGIC players to play face-to-face in a number of different ways increases throughout the year. Sean P. McGowan - Needham & Company, LLC, Research Division: Great. And then last question, can you help us understand what the impact was, if any, to Hasbro from these West Coast port disruptions? I mean, was -- did you recognize some sales earlier than the fourth quarter, and what do you think the impact will be in the first half of 2015?

Yes. I think you have to -- you divide up our business between our domestic inventory that we carry into the U.S. into our warehouses. Our team did a tremendous job of thinking through what might happen with West Coast ports and brought more into the East Coast throughout 2014. We didn't advance shipments. We just took those shipments, and took the extra time that we knew it would take to get to the East Coast. It resulted in slightly higher cost, although we expanded the U.S. business' operating margin at the same time. The impact really comes when you look at the way retailers take their FOB or direct import shipments because they, in certain instances, continued to bring those into the West Coast more prevalently, and that's why we commented that early in the year, you might see some shipments continue to come in to the first quarter, but we think for the full year, we don't see any impact to our 2015 numbers. Sean P. McGowan - Needham & Company, LLC, Research Division: So with the impact to a company like Hasbro be that open to buys might be lower in the first half because retailers are still taking a product that they had thought would come in early, is that what you mean?

I think it's not prevalent among retailers. I think there's probably 1 or 2 retailers that their direct import business will carry over into 2015 a bit. And so I think in the first quarter, certainly, we're going to see a little bit of that come in, not impacting Hasbro per se, as much as maybe their total direct import shipments, but we don't think that, that has an impact beyond the first half of the year.

Our next question comes from the line of Mike Schwartz with SunTrust Robinson.

I wanted to touch on, Brian, you made a bunch of commentary just around POS, and maybe I missed some of it. So can you maybe go over that again just in terms of how POS looked to the fourth quarter into '15 maybe by regions, if possible?

Sure. In the U.S., what I was saying is that our POS in the fourth quarter and for the full year was down slightly single digits. However, it was really impacted by high dollar sales items like Furby, and obviously, the dollar sales associated BEYBLADE. So my point was, if you took out either of those initiatives, our POS for the year in the quarter would have been up. So again, it's not related to the underlying strength of several of our segments, it was related to the absolute dollars, and please keep in mind that POS doesn't count all of the sales that we have in the U.S. because, obviously, MAGIC -- 4/5 of MAGIC is outside of the purview of major retailers and POS inside NPD is about 90% of our sales, so they're sales outside. Then if you look at our international business, POS both for the quarter and for the full year was up significantly in a number of markets, was up overall, with the exception of really 2 where we have data. So it was up in Canada, up in Mexico, Australia, up in the U.K., up in Spain, and POS was down single digits in France and Germany.

And that's for the full year?

That was for the full year and the fourth quarter.

That's great. And then just -- you had mentioned specifically just the closing of a part of Canada's -- can you give us any sense how large that business is for you and maybe how you kind of deal with that in the year ahead? I'm assuming inventory will be adjusting around and some other things.

Yes, I think that in the short term, it impacts our business. Longer term, we've already heard from several customers who plan to expand their businesses in Canada, who had great success in Canada, and so we think this is more of a short-term issue as stores and store locations close, change hands, and perhaps reopen under new ownership. And it's just a matter of working through that process. Overall, the Canadian business in terms of POS was quite good for the year, and our brands continue to resonate quite well up there. So I think this is a matter of working through some shorter-term issues, 2015 related issues as we change out for kind of dominant retailers in that territory.

Our next question is coming from the line of Stephanie Wissink with Piper Jaffray.

Just a couple of questions if I can. Deb, one for you. With respect to your comment that the revenue is now commanding a higher margin, can you just talk about the next couple of years, are there any major investments we should be aware of or can we assume that this incremental margin continues to expand here over the next, I would say, 1 to 2 years? And then Brian, a question for you. I'm just curious, as you think about the STAR WARS opportunity, your international business and your global distribution platform has evolved substantially since 2008. Does that change either how you think about the potential volume or the profitability of that business as we face that opportunity in the back half of this year?

Sure. Why don't I -- I'll start with the brand, and then Deb can -- will come back and talk about expanding operating margins. I think STAR WARS, there are several elements to the brand that are both new and different as we go forward this year. Obviously, the new initiative, we saw great success around the television that was on in the fourth quarter of 2014, and how it helped to drive the STAR WARS brand. We all know how content really drives that brand, as well as many others. We're very excited about the movie, but the movie does come later in the year, December 18, 2015, and so therefore, I would expect that our revenues for the first movie would be split across calendar years, and I would hope that people would recognize that you'd see a couple of quarters of impact to STAR WARS this year, and then into '16 for several quarters, and really into what becomes several years of STAR WARS positive impact between the trilogy movies, and then the new stories that will be told. The second piece, as you asked about globality, clearly, what we've seen in MARVEL is the impact of Disney, our partnership with Disney, our increasing global scope and scale, their increased global scope and scale. We're seeing a more internationally-oriented MARVEL business. We also saw a more internationally-oriented TRANSFORMERS business this past year because we are having impact in so many territories, and we would expect that to carry forward for STAR WARS. As we are starting to see increases in operating margin in those regions, we would expect over time to see increases in operating margin, but recognize that, today, our international territories in Emerging Markets operating margin are below the company average operating margin. So I think that, that does have a mitigating impact in the short term and an expanded operating margin opportunity in the longer term. The last piece I'll note is that the excitement around STAR WARS is significant, and I think that there are a number of licensees that have the opportunity to share in that brand, and therefore, we are going to do all that we can. We have an amazing innovations in action figures and role play and games and several other categories. We can't wait to show the line. There are others that also will have the opportunity to sell in market, STAR WARS product coming this fall, and then throughout the trilogy series.

So the other things that are impacting our margin, we did see an improvement in our gross margin this year, and that was due to the success of our brands, particularly our Franchise Brands. But one of the headwinds that we talked about for next year is foreign exchange. Many of our product costs are denominated in U.S. or Hong Kong dollars, which had stayed pretty stable, as the U.S. dollar has strengthened against foreign exchange. So while over the longer term we do have the opportunity, as Brian was saying, to really adjust for the currency impact because of the rate and pace of the change, it had a more significant impact for us in the fourth quarter, but will continue to have an impact to us in 2015. So as far as hedging, as you know, we hedged a substantial amount of our product purchases, but not all of it. And I think on a blended basis, we've hedged about just under 70% for 2015. So we'll continue to be impacted by currency from that, and we will continue to invest in MAGIC: THE GATHERING online and in projects that create the longer-term cost efficiency. So we've talked about in the past our $100 million cost-savings initiative, which we've established about $90 million through the end of 2014, and we've identified that final $10 million, we'll talk a little bit more about that on Friday. But for us, it's really about investing in our business and putting things in place that create those longer-term efficiencies, still allowing us to invest in creative storytelling and innovative product line. So the one other thing that we have impacting our margins on the shorter-term basis is the development expense for Disney Princess and Frozen line because I'll just remind you, we don't have revenue that coincides with that until 2016.

And while we're continuing to drive, develop and create new storytelling, our cash expense in storytelling have declined '14 versus '13. And as we build efficiencies and experience in how to create content, we're able to sort of take that into account as we go forward.

That's really helpful. Deb, just one more follow-up on resin. Can you just give us a level of exposure in your cost of sales that's related to resin and any benefit from oil costing coming down?

If you look at the -- if you take our total cost of goods, it's 39.7% this past year. If you take the percentage that's resin, it's 5.7 percentage points of that 39.7%. So actually, labor and paperboard are higher as a percent of cost as a component of our total cost of goods. So what we've seen in the past, what we tend to see, is that resin falls in arrears to oil prices because, obviously, it's a produced product beyond just crude oil. So over time, we would expect to get some benefit, but again, try to size the impact overall.

Our next question comes from the line of Tim Conder with Wells Fargo.

A couple of questions here. I wanted to revisit your POS in Europe. You called out a few countries to where it was strong in Western Europe and a couple were just down a little bit. But as a whole, maybe if you want to include Eastern Europe or not, your shipment seemed quite a bit above that POS, and just maybe kind of help us with the difference between those 2, and then...

No, actually. Yes, okay, sorry -- go ahead.

No, go ahead, Brian, that may change my second question.

Okay. Yes, so if we look at Europe, we said that the revenues were up 6% for the year in Europe, obviously, up stronger in Emerging Markets, so Eastern Europe and Russia were up better than that. Our inventories are very much in line with our sales. If you look at inventories at year-end, you'll see that they are really aligned to where the sales have occurred. So across Europe, what we saw is that POS increases were absolutely in that range. U.K., for example, was 8% POS increase for the year, and I would say that inventories today are very much in line with those kinds of sales increases. We don't see significant issues and pockets of inventory. I think we've managed that very well. The inventory is really following the rate of sale globally. Inventories also, obviously, going into Latin America. We don't have specific POS data the way that it's reported through NPD. We have our own data, and we've seen great performance throughout Latin America. Obviously, the region was up by 14%, and we saw great growth in -- not only Brazil, but Columbia, Peru and into Mexico, and I would say, again, we're very comfortable with the inventories we have, and the inventories are following our sales growth globally.

Okay, okay. That's very helpful. Then the second question is, whoever wants to take this, as you look to '15, and I know, in general, you don't give a lot of specific guidance. But as you look at '15 on a reported sales basis, if currency rates hold at yesterday or Friday's level or whatever near benchmark you're using here, and given the headwinds in Canada, do you expect reported sales growth at this point for '15?

Well, let me say it this way because we've look at, and really thought about where our business is in '15, and you're right, we don't provide specific guidance. But I would tell you that we feel very comfortable in saying that our underlying growth in our brands and our underlying growth in our operating profit in '15 should be positive. We feel we have the initiatives, certainly, across all of our major segments. As we look at FX, there's really 3 elements to the impact of 4x. It was the size of change, the rate of change and then the range of currencies impacted. In the case of the fourth quarter, all 3 came in at high levels, if you will, the size of the change, the speed of the change and the rate of currency. Obviously, with a bit more time, we start to address that. Deb noted that in her comments that we begin to address that as we look at our longer-term cost of goods and in the short-term pricing for products to recover those revenues and earnings power in the country. So I would be -- it would be too early for us to say one way or the other, because again, we don't know exactly where FX will be. But I will tell you, the underlying strength of our company and the strength of our people running countries around the world, I feel very confident in the underlying strength of our brands and our trajectory for 2015.

So again, Brian, by saying underlying, you're saying excluding FX, you feel highly confident in both of those being up?

That's right, yes. The underlying strength means absent FX. I don't know if you want to comment further.

We have, and we do, as Brian said, we feel pretty good about the initiatives we have for '15 and the underlying top and bottom line strength of our business. But I'll remind you, in case you missed it in our prepared remarks, currency does have a big impact on a translation standpoint, and we don't hedge for translation, and at current rates, it would had about a $250 million impact on our reported earnings for 2015 -- '14.

Reported revenue.

Reported revenue, sorry.

Last question, Furby, BEYBLADE, really not a comparable factor for '15 at this point?

Well, actually, although we'd all like to move beyond the comparisons, I think BEYBLADE becomes de minimis in 2015. Furby has performed very well, was down to a significant degree, but please remember that in non-English-speaking markets, Furby Boom just launched in fall of 2014. So Furby still represents a sizable brand and business in our international market, and therefore, we'll probably continue to talk about Furby comparisons for a bit of time.

Our next question comes from the line of Taposh Bari with Goldman Sachs.

I had a question on capital allocation. It's nice to see that you're raising your dividend, as well as your buyback authorization this morning. But I was hoping, Brian, you can speak your philosophy around M&A, and specifically, acquisition criteria, and where acquisitions fall in your list of cash priorities.

Yes. Well, thank you for the question. If you look over the last 5 years, this management team has returned 143% of net earnings to its shareholders via both the dividend and the share buyback. Last year, nearly $680 million returned, $217 million of which was in a dividend, $461 million of which was in buybacks. Deb will talk more about capital structure, but you have a management team that's very committed to returning excess capital to shareholders. We still also believe strongly in investing in our business, and we're also building our brands and innovation insight and storytelling capabilities organically as we speak, and certainly we think given the global growth potential of something like MAGIC: THE GATHERING, and its strong profitability that enjoys investing in that brand for longer-term growth is certainly warranted, and I think something our shareholders would support. And in terms of specific M&A, there's not anything that we look at today that where we say that there's something out there that we're thinking about at all, and that we continue to be skeptical about M&A activity. I think that we focus on our brand blueprint, and the acquisition we made in Backflip were really working to get Backflip to grow and to invest there so that we can be more a player in that mobile gaming space where we see both kids and casual players going.

And then just another kind of philosophical question around your portfolio, you have several owned brands and many licensed brands with good momentum today. As we think about the company, let's say, 5 years out, I know it's a long time from now, but how do you envision the owned segment of your portfolio? You've got properties like TRANSFORMERS, MY LITTLE PONY, NERF, extremely good momentum. If we look out 5 years from now, are we looking at a whole new set of brands, whether organically created or acquired, that could be needle movers within the portfolio or are TRANSFORMERS and MY LITTLE PONY and the likes going to be even bigger contributors to the portfolio?

Yes. I think there are really 3 elements to our brand building and the way we look at brand building. The first in the early 2000s was building our core brands, which are now Franchise Brands, and continuing to foster growth there; secondly, major brand adjacencies. You've seen the success of things like NERF REBELLE, DOHVINCI, EQUESTRIA GIRLS. You'll continue to see those adjacencies. And as we move forward here over the next bit, including 2015, you're going to see some new brands, and we'll begin to add new brands. Some of them will be vault brands that Hasbro owns and controls, and some will be new brands that we invent, and some may be some from our partners over the next period of time, and we'll talk more about that. John Frascotti will lead the discussion of that on Friday as we start to talk about 2015, and you'll certainly see entrance in all 3 of those areas. We do believe that our Franchise Brands can be much larger. We're starting to see our brands get to highest ever revenues. We talked about how NERF is performing, and certainly, PLAY-DOH and MY LITTLE PONY, and that we've moved those brands significantly versus when we first started, but there's still a lot of headroom and growth for our Franchise Brands globally over the next several years.

Our next question comes from the line of Felicia Hendrix with Barclays.

Brian, in your prepared remarks and throughout this call, when you talked about the performance of Girls, you mentioned a number of things that were headwinds there. But we do not hear you talk about the competitive environment, particularly given Frozen and how popular that was, so just wondering was that an impact at all in your Girls business? And if so, how should we expect that to continue to be a headwind, if at all, in early '15?

Yes. We saw very strong growth with our Franchise Brands in our Girls business. The one headwind I talked about in Girls was Furby, and I would say that unfortunately, to talk about Furby as a headwind, it's one of our brands, but it was a headwind. It was a headwind in the fourth quarter, had a large impact in the fourth quarter, and frankly, throughout the year, but clearly, the fourth quarter had significant impact. If we look at the growth of our Franchise Brands, MY LITTLE PONY had a very strong year, up double digits, both in the fourth quarter and for the full year, EQUESTRIA GIRLS contributed significantly to that brand. In addition, NERF REBELLE has really performed well. PLAY-DOH DOHVINCI is off to a very strong start. So I would not view the Frozen success in any way as impeding our progress as a company. We think that Frozen and the Princes business is very complementary to what we are currently working on, and EQUESTRIA GIRLS is very different than the Frozen brand and recipients of those 2 brands, very complementary. So what we would say is a great opportunity for growth, we're very excited about the developments we are undertaking in 2015 around Frozen and Disney Princess, and we're very excited about 2016 as we bring product out to the market, and we may show you a few things later this week that are equally exciting for 2015 in our Girls arena, but I'll leave that to the team to share that with you on Friday.

I guess that's a little teaser to get us all out, huh?

[indiscernible]

And then, Brian, folks have asked this question in a number of ways. I'm going to go forward here. You say -- especially in the first half of 2015, you say there's different puts and takes because you have the headwinds that you've talked about. You faced tough comps in Boys. We have the Target, the issue of Canada, Target in Canada. You have FX. You have the -- the stuff you talked about in the port issues, although you said that might not affect you as much, Furby, but you also have tailwinds in the first half, which you've alluded to, which I'm sure we'll see some of that on Friday. Are you -- when you think about the headwinds, the tailwinds, are you optimistic that the tailwinds can offset the headwinds in the first half because that's really what investors are most focused on right now?

Yes. If you talk about the Boys business, I know that we're talking about tough comparisons, but we have a line up, as I indicated a year ago. We said we were entering the first year of an unprecedented era of new Boys entertainment coming to the market, and 2015, in our mind, is even better than 2014. You have Avengers that comes in early May. You have Jurassic World. We have Ant Man, the Fantastic Four, and then, obviously, in December, you have STAR WARS. So I would say that as we look at the year, we feel very good about the underlying strength of our brands, and we feel good about each of our categories of product that we're bringing to the marketplace. What we obviously are contending with was a very fast-changing foreign exchange environment. Over the longer term, companies like Hasbro have always been able to adapt to marketplace factors, and can address those issues, and we are already underway in addressing those issues, but, clearly, given the size and rate of change of ForEx, I would say that, that's probably, in the short term, the biggest headwind. And everything that management and our teams can control, we are controlling toward growth, with good momentum coming into '15. I also mentioned that our POS is quite good, is up in the U.S. and is quite strong throughout Europe, 2015 POS. So we're off to a very good start.

Great, that's helpful. And Deb, should I just -- I know you gave us a lot of data on FX and translation and transaction and all that, and we can do -- crunch numbers all afternoon and figure that out, but should I just give up hope that you'll ever give us just a nice, easy sensitivity to work from?

Felicia, if I had my crystal ball and I could do foreign exchange, I'd be happy to share that with you, but I do think it's important. If we just look at current rates, as Brian said, it really is the rate and pace of change. So rates declined so significantly at the end of the fourth quarter, and continued to go down into January. And of late, they've been a little bit more stable, but still went down from there. At current rates would have had a $250 million impact to our reported revenues. That being said, over the long term, we believe it will still have about a 10 -- any impact you model in from foreign exchange would have about a 10% to 15% impact to earnings over the longer term.

Our next question comes from line of Greg Badishkanian with Citigroup.

Just going back to the U.S. POS that was positive in 2015, which brands really stood out? Did anything change in terms of momentum you saw in the fourth quarter?

Well, what I had said, Greg, was just to be clear, absent either BEYBLADE or a Furby, you would see positive POS in the fourth quarter for our brands. So what that speaks to is the underlying strength of our brands, particularly, our Franchise Brands. Our Franchise Brand POS in the full year was up 30%, and revenues were up 30% as well. So we've seen strong growth in Franchise Brands, obviously, up some comparisons in -- comparing Furby and BEYBLADE, obviously, have some impact to overall POS. And then of course, MAGIC: THE GATHERING in the U.S. is outside of 80% of that business outside of the NPD data or the POS data, and we have said that MAGIC was up. Both in full year, it was up quite strongly in the fourth quarter with the new Khans of Tarkir launch and release, which has been very popular among players. So as we look at this underlying strength of our brands, Franchise Brands, and then our adjacencies, new brand adjacencies, as well as new brands, we feel that we are well positioned and have good momentum going into 2015.

Very helpful. And retail inventory being in a good position, if we go back to last time, this time last year, I was trying to read the transcript, and I didn't really see a comparable type of comment. So how would you characterize it last year? Was it in a good position, worse off, and now you're in a better position inventory level wise?

Yes. I think that we certainly have inventories where we have sales growth. I think they're really well lined-up. I think a year ago, we were still clearing through a little bit of NERF inventory, maybe a little bit of LITTLEST PET SHOP inventory as we were changing over the brand for 2014. So overall, we would say we began the year 2015 with inventories in a good place, our retail inventories in a very good place, and our own inventories are strong as well and in the right spot. U.S. inventory is down. International inventory is up, and it tracks quite well up against the sales increases we've seen country-by-country.

Very helpful. And then I'll just bring -- because you had mentioned Toy Fair, is there one segment where if we're looking out at your new products that could really see an acceleration in growth from the level -- sort of innovation that you're going to be introducing? Should we look out for one category in particular?

Actually, I would say that you're going to see innovation across all the categories of our brands, and you'll see that on Friday. You're going to see new brand initiatives, core franchise initiatives and adjacencies, new in several instances, and we're going to take advantage of the momentum we have in our brands and add to that. And we've spent a significant amount of time looking at proprietary consumer research. Our team over the last year has interacted with nearly 80,000 consumers, kids and parents, in several countries around the world. So our investments in consumer insight are really leading us to these innovations and marketing initiatives because we want to understand our consumers and our audiences better than anybody else.

The next question comes from the line of Jaime Katz with Morningstar.

Can you guys just talk to any trends that you may have seen emerging in the Preschool space that's made it more difficult for everybody to compete? And then any color commentary you might have on the cadence of promotions at the retail channels since the end of the holiday season, would be great?

In Preschool, we've really seen that as kids have gotten a bit more media-savvy at a younger age that, clearly, characters and story-led brands are winning today. We've seen that in our own portfolio, where our TRANSFORMERS RESCUE BOTS performed quite well. We also have early creativity brands like PLAY-DOH, which have performed incredibly well and are doing so globally. It's one of our most global brands. I think that our focus has been in core PLAYSKOOL to bring some level of value to the company back in getting our profit margins more in line with our expectations, ensuring that we have innovative products that are valuable to the consumer and our customers, and also provide a good operating return to Hasbro. So looking at the innovations, and you'll see some things at the end of the week that bring great innovation back to that core PLAYSKOOL business, and do so in a way that enables our customers and Hasbro to make money, and I think that's one of the watchwords. The other area that we're very excited about is in SESAME STREET. Again, I don't want to steal the team's thunder, but there's some new product in that area for the fourth -- third and fourth quarter that is very exciting and very intuitive, so we're looking forward to launching that as well.

Our next question comes from the line of Eric Handler with MKM Partners.

Wondered if you could talk about the impact of Discovery Family Channel now that you are below a 50% owner. How is that going to impact your P&L, and how should we be thinking about your TV development strategy?

Sure. Well, certainly, from our television development strategy, as Brian mentioned earlier, we remain committed to our storytelling capabilities because we really see the benefit that has in our brand. And while we develop programming for Discovery Family Channel, which we will continue to do, we then take that programming and leverage it by selling it internationally and through other channels. So it really is more of an effort in that spend for us than just the U.S. brand, but what we've seen now is Discovery Family is that the network continues to perform well. As we said, we had some charges that we kind of called out in the third and fourth quarter just because they're not ongoing, but overall, the network has moved to a profit, and we continue to expect it to do well. We'll still program a good part of the day part, and so our programming still is doing very well on Discovery Family Channel.

So your overall programming hours, you don't expect is going to be changing?

Yes. In fact, we noted that since the relaunch in October, we had aired over 1,000 hours of programming on the channel, and it's, on average, about 68 hours a week. So we're primarily programming the daytime kids day parts. We have a range of library shows that are running, plus new shows that we're producing. As Deb said, we're then able to take those shows out around the world. One of the changes that we made as a result of the new relationship, the amended relationship, is the ability to take some of our shows out beyond the channel for a first run. So Transformers: Robots in Disguise, which is the new series, will air globally on Cartoon Network beginning next month, so that's a change. So both domestically and internationally, we'll air on Cartoon Network. What we're really seeing for the network is that it's performing quite well, particularly, for girls and younger boys, but we have this opportunity for a show like TRANSFORMERS that skews a bit, older boy, to go out to a network that's more suited for that programming.

Our final question is from the line of Gerrick Johnson with BMO Capital Markets.

I was hoping you could discuss the timing of shipments for movie-related products, so when will you begin shipping product for STAR WARS, Avengers, Jurassic World and anything else that might be material?

Yes, typically, the range for shipping product is somewhere between 4 and 8 weeks before the launch of the movie. So Avengers is May 1. So in that range, you'll see the different retailers, depending on how quickly they're setting. And Jurassic mid-June. Minions is July 10. Ant Man's the 17 of July. Fantastic 4 is August 7, and then STAR WARS is December 18. STAR WARS, you'll probably see an effort that begins more in the fall with classic product, and then rolls into the movie product about on the timetable I just outlined. And then obviously, STAR WARS will continue into 2016. And each of those, as you'll recall, Gerrick, will have the kind of prior to movie, and then of course, they have windows as the movie hits, all different home entertainment windows marketing around that, new products around that. So it's not just the one and done window. It will carry forward for the year.

Okay. Maybe to be a little bit more specific, when do you anticipate shipping the incremental STAR WARS movie related product? Will that be a back-to-school, July, August type shipment or will be October resets? When will that movie product hit shelf?

I'm not going to get specific on the call here, but I would say that you will see STAR WARS-related product on shelves in September overall, and then movie product will feather in as we get closer to the movie.

Okay. And then can you quantify the incremental cost for the build-out of Disney Princess infrastructure? How much did it, I guess, hit the fourth quarter? And I know you gave us a range for R&D, but can you give us a sort of a dollar amount, all-in you're expecting to spend on this?

Well, we did say that, as we mentioned in the third quarter, we expected to be at/or above the high-end of our normal 4.5% to 5% range, and did have an impact. So our development expense was 5.2% of revenue for the full year of '14. We do expect that given development in our innovation, but also the impact, particularly of developing for the Disney Princess and Frozen line, without the related revenue, that we will be in the 5% to 5.5% range for 2015.

Okay. And since I'm last here, I want to ask a few more. What was the sale of the license rights? What does that refer to?

We had a few non-core brands, where we didn't control the brand, where we had some underlying license rights that we sold to a third-party.

Okay. Do you care to tell us what they were?

No, I'll leave it to them to talk about that.

Okay, okay. And then one last one, please? Your gross margin performance is quite nice in the quarter. Are you now -- are you fully reserved for any additional markdowns that may pop up in the first quarter? How do you feel about those reserve level?

Yes, we feel very good about our reserves. Obviously, related to inventory and to promotions, and we enter the year with good momentum. We talked about early POS, and feel like we have the inventory in the right place, both in the U.S. and globally.

Thank you. At this time, I'd like to turn the floor back to management for closing comments.

Thank you for joining the call today. The replay will be available on our website in approximately 2 hours. Additionally, management's prepared remarks will be posted to our website following this call. We hope to see many of you on Friday of this week, February 13, at our Annual Toy Fair Investor Event, and our first quarter earnings call is tentatively scheduled for Monday, April 20. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.