Hasbro 2011 Annual Report Download - page 71

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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
The Company is party to a series of interest rate swap agreements to adjust the amount of debt that is subject
to fixed interest rates. The interest rate swaps are matched with the 6.125% Notes Due 2014 and accounted for as
fair value hedges of those notes. The interest rate swaps have a total notional amount of $400,000 with maturities
in 2014. In each of the contracts, the Company receives payments based upon a fixed interest rate of 6.125%,
which matches the interest rate of the notes being hedged, and makes payments based upon a floating rate based
on Libor. These contracts are designated and effective as hedges of the change in the fair value of the associated
debt. At December 25, 2011 and December 26, 2010, the fair value of these contracts was an asset of $15,977
and $12,786, respectively, which is recorded in other assets with a corresponding fair value adjustment to
increase long-term debt. The Company recorded a (gain) loss of $(3,191), $(15,511) and $2,725 on these
instruments in other (income) expense, net for the years ended December 25, 2011, December 26, 2010 and
December 27, 2009, respectively, relating to the change in fair value of the interest rate swaps, wholly offsetting
gains and losses from the change in fair value of the associated long-term debt.
At December 25, 2011, as detailed above, the Company’s 6.125% Notes mature in 2014. All of the
Company’s other long-term borrowings have contractual maturities that occur subsequent to 2016.
(10) Income Taxes
Income taxes attributable to earnings before income taxes are:
2011 2010 2009
Current
United States ....................................... $ 49,233 35,232 87,053
State and local ...................................... 2,538 1,931 4,142
International ........................................ 52,176 47,633 44,436
103,947 84,796 135,631
Deferred
United States ....................................... (1,973) 26,269 17,387
State and local ...................................... (68) 901 993
International ........................................ (880) (1,998) 756
(2,921) 25,172 19,136
Total incomes taxes .................................... $101,026 109,968 154,767
Certain income tax benefits, not reflected in income taxes in the consolidated statements of operations
totaled $18,266 in 2011, $87,367 in 2010 and $2,905 in 2009. In 2011 and 2009 these income tax benefits relate
primarily to pension amounts recorded in AOCE and stock options. In 2010 these income tax benefits relate
primarily to the reversal through additional paid in capital of deferred tax liabilities relating to the Company’s
contingent convertible debentures upon the conversion of these debentures. In 2011, 2010 and 2009, the deferred
tax portion of the total benefit was $8,579, $64,700 and $1,041, respectively.
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