Hasbro 2006 Annual Report Download - page 57

Advertising
Production costs of commercials and programming are charged to operations in the fiscal year during
which the production is first aired. The costs of other advertising, promotion and marketing programs are
charged to operations in the fiscal year incurred.
Shipping and Handling
Hasbro expenses costs related to the shipment and handling of goods to customers as incurred. For 2006,
2005, and 2004, these costs were $145,729, $144,953 and $144,620, respectively, and are included in selling,
distribution and administration expenses.
Operating Leases
Hasbro records lease expense in such a manner as to recognize this expense on a straight-line basis
inclusive of rent concessions and rent increases. Reimbursements from lessors for leasehold improvements are
deferred and recognized as a reduction to lease expense over the lease term.
Income Taxes
Hasbro uses the asset and liability approach for financial accounting and reporting of income taxes.
Deferred income taxes have not been provided on undistributed earnings of international subsidiaries as
substantially all of such earnings are indefinitely reinvested by the Company.
Foreign Currency Translation
Foreign currency assets and liabilities are translated into U.S. dollars at period-end rates, and revenues,
costs and expenses are translated at weighted average rates during each reporting period. Earnings include
gains or losses resulting from foreign currency transactions and, when required, translation gains and losses
resulting from the use of the U.S. dollar as the functional currency in highly inflationary economies. Other
gains and losses resulting from translation of financial statements are a component of other comprehensive
earnings.
Pension Plans, Postretirement and Postemployment Benefits
Hasbro, except for certain international subsidiaries, has pension plans covering substantially all of its
full-time employees. Pension expense is based on actuarial computations of current and future benefits. In
December 2006, the Company adopted Statement of Financial Accounting Standards No. 158, “Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans” (“SFAS 158”), which amends
SFAS 87, 88, 106 and 132(R). See footnotes 2 and 11 for the impact of adoption of this statement.
The Company’s policy is to fund amounts which are required by applicable regulations and which are tax
deductible. In 2007, the Company expects to contribute approximately $7,100 to its pension plans. The
estimated amounts of future payments to be made under other retirement programs are being accrued currently
over the period of active employment and are also included in pension expense.
Hasbro has a contributory postretirement health and life insurance plan covering substantially all
employees who retire under any of its United States defined benefit pension plans and meet certain age and
length of service requirements. It also has several plans covering certain groups of employees, which may
provide benefits to such employees following their period of employment but prior to their retirement. The
Company measures the costs of these obligations based on actuarial computations.
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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)