Hasbro 2008 Annual Report Download - page 65

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receivables. The Company expects to service, administer, and collect the receivables on behalf of HRF and the
conduits. The net proceeds of sale will be less than the face amount of accounts receivable sold by an amount
that approximates a financing cost.
The receivables facility contains certain restrictions on the Company and HRF that are customary for
facilities of this type. The commitments under the facility are subject to termination prior to their term upon
the occurrence of certain events, including payment defaults, breach of covenants, breach of representations or
warranties, bankruptcy, and failure of the receivables to satisfy certain performance criteria.
As of December 28, 2008 and December 30, 2007 the utilization of the receivables facility was $250,000.
As of December 28, 2008 and December 30, 2007 the Company had an additional $1,106 and $16,550,
respectively, available to sell under the facility. The transactions are accounted for as sales under SFAS 140.
During 2008, 2007 and 2006, the loss on the sale of the receivables totaled $5,302, $7,982 and $2,241,
respectively, which is recorded in selling, distribution and administration expenses in the accompanying
consolidated statements of operations. The discount on interests sold is approximately equal to the interest rate
paid by the conduits to the holders of the commercial paper plus other fees. The discount rate as of
December 28, 2008 was approximately 3.00%.
Upon sale to the conduits, HRF continues to hold a subordinated retained interest in the receivables. The
subordinated interest in receivables is recorded at fair value, which is determined based on the present value of
future expected cash flows estimated using management’s best estimates of credit losses and discount rates
commensurate with the risks involved. Due to the short-term nature of trade receivables, the carrying amount,
less allowances, approximates fair value. Variations in the credit and discount assumptions would not
significantly impact fair value.
(6) Accrued Liabilities
Components of accrued liabilities are as follows:
2008 2007
Royalties ................................................... $144,566 98,767
Advertising .................................................. 92,852 100,883
Payroll and management incentives ................................ 65,171 78,809
Other ...................................................... 305,264 277,461
$607,853 555,920
55
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)