Hasbro 2010 Annual Report Download - page 69

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(8) Accrued Liabilities
Components of accrued liabilities are as follows:
2010 2009
Royalties ................................................... $121,037 141,143
Advertising .................................................. 86,257 92,614
Payroll and management incentives ................................ 70,064 91,298
Non-income based taxes ........................................ 42,644 33,069
Other ...................................................... 251,714 270,263
$571,716 628,387
(9) Long-Term Debt
Components of long-term debt are as follows:
Carrying
Cost
Fair
Value
Carrying
Cost
Fair
Value
2010 2009
6.35% Notes Due 2040 .................. $ 500,000 499,900 — —
6.125% Notes Due 2014 ................. 437,786 462,698 422,275 465,545
6.30% Notes Due 2017 .................. 350,000 382,830 350,000 375,585
2.75% Convertible Debentures Due 2021 ..... — — 249,828 373,515
6.60% Debentures Due 2028 . . ............ 109,895 110,038 109,895 110,697
Total long-term debt .................... $1,397,681 1,455,466 1,131,998 1,325,342
The carrying cost of the 6.125% Notes Due 2014 includes principal amounts of $425,000 as well as fair
value adjustments of $12,786 and $(2,725) at December 26, 2010 and December 27, 2009, respectively, related
to interest rate swaps. All other carrying costs represent principal amounts. Total principal amounts of long-
term debt at December 26, 2010 and December 27, 2009 were $1,384,895 and $1,134,723, respectively.
The fair value of the convertible debt is based on an average of the prices of trades occurring around the
balance sheet date. The fair values of the Company’s other long-term borrowings are measured using a
combination of broker quotations when available and discounted future cash flows. The fair value of the
interest rate swaps are measured based on the present value of future cash flows using the swap curve as of
the date of valuation.
In March 2010 the Company issued $500,000 of Notes that are due in 2040 (the “Notes”). The Notes
bear interest at a rate of 6.35%. The Company may redeem the Notes at its option at the greater of the
principal amount of the Notes or the present value of the remaining scheduled payments discounted using the
effective interest rate on applicable U.S. Treasury bills at the time of repurchase.
In May 2009 the Company issued $425,000 of Notes that are due in 2014 (the “Notes”). The Notes bear
interest at a rate of 6.125%, which may be adjusted upward in the event that the Company’s credit rating from
Moody’s Investor Services, Inc., Standard & Poor’s Ratings Services or Fitch Ratings is reduced to Ba1, BB+,
or BB+, respectively, or below. At December 26, 2010, the Company’s ratings from Moody’s Investor
Services, Inc., Standard & Poor’s Rating Services and Fitch ratings were Baa2, BBB, and BBB+, respectively.
The interest rate adjustment is dependent on the degree of decrease of the Company’s ratings and could range
from 0.25% to a maximum of 2.00%. The Company may redeem the Notes at its option at the greater of the
59
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)