Hasbro 2011 Annual Report Download - page 70

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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
(8) Accrued Liabilities
Components of accrued liabilities are as follows:
2011 2010
Royalties ....................................................... $156,955 121,037
Advertising ..................................................... 83,080 86,257
Payroll and management incentives .................................. 59,070 70,064
Non-income based taxes ........................................... 52,590 42,644
Other .......................................................... 275,355 251,714
Total accrued liabilities ............................................ $627,050 571,716
(9) Long-Term Debt
Components of long-term debt are as follows:
2011 2010
Carrying
Cost
Fair
Value
Carrying
Cost
Fair
Value
6.35% Notes Due 2040 ................... $ 500,000 540,850 500,000 499,900
6.125% Notes Due 2014 .................. 440,977 462,868 437,786 462,698
6.30% Notes Due 2017 ................... 350,000 400,400 350,000 382,830
6.60% Debentures Due 2028 ............... 109,895 120,148 109,895 110,038
Total long-term debt ..................... $1,400,872 1,524,266 1,397,681 1,455,466
The carrying cost of the 6.125% Notes Due 2014 include principal amounts of $425,000 as well as fair
value adjustments of $15,977 and $12,786 at December 25, 2011 and December 26, 2010, respectively, related to
interest rate swaps. All other carrying costs represent principal amounts. Total principal amounts of long-term
debt at December 25, 2011 and December 26, 2010 were $1,384,895.
The fair values of the Company’s 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.
Interest rates for the 6.125% Notes Due 2014 and the 6.30% Notes Due 2017 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 25, 2011, 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 these notes
at its option at the greater of the principal amount of these 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.
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