Hasbro 2009 Annual Report Download - page 58

HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Hasbro, Inc. and all majority-owned
subsidiaries (“Hasbro” or the “Company”). Investments representing 20% to 50% ownership interest in other
companies are accounted for using the equity method. Prior to 2009 the Company had no equity method
investments that were material to the consolidated financial statements. During the year ended December 27,
2009 the Company purchased a 50% interest in a joint venture with Discovery Communications, Inc. that is
accounted for under the equity method. See note 5 for additional information. All significant intercompany
balances and transactions have been eliminated.
Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and notes thereto. Actual results could differ from those estimates.
Fiscal Year
Hasbro’s fiscal year ends on the last Sunday in December. Each of the fiscal years in the three-year
period ended December 27, 2009 were fifty-two week periods.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances and highly liquid investments purchased with a
maturity to the Company of three months or less.
Marketable Securities
Marketable securities consist of investments in publicly-traded securities as well as investments in private
investment funds. These investments are classified as available-for-sale and recorded at fair value. For publicly
traded securities, which are included in other assets on the accompanying consolidated balance sheet,
unrealized gains or losses, net of tax, are reported as a component of accumulated other comprehensive
earnings (“AOCE”) within shareholders’ equity until realized. Unrealized losses are evaluated to determine the
nature of the losses. If the losses are determined to be other than temporary, the basis of the security is
adjusted and the loss is recognized in earnings at that time. For investments in private funds, which are
included in prepaid and other current assets on the accompanying consolidated balance sheet, the Company
has selected the fair value option which requires the Company to record the unrealized gains and losses on
these investments in the consolidated statements of operations at the time they occur.
Accounts Receivable and Allowance for Doubtful Accounts
Credit is granted to customers predominantly on an unsecured basis. Credit limits and payment terms are
established based on extensive evaluations made on an ongoing basis throughout the fiscal year with regard to
the financial performance, cash generation, financing availability and liquidity status of each customer. The
majority of customers are formally reviewed at least annually; more frequent reviews are performed based on
the customer’s financial condition and the level of credit being extended. For customers on credit who are
experiencing financial difficulties, management performs additional financial analyses before shipping orders.
The Company uses a variety of financial transactions based on availability and cost, to increase the
collectibility of certain of its accounts, including letters of credit, credit insurance, factoring with unrelated
third parties, and requiring cash in advance of shipping.
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