Hasbro 2012 Annual Report Download - page 63

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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 interests in other
companies are accounted for using the equity method. All 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. The fiscal year ended December 30, 2012 was a
fifty-three week period while each of the fiscal years in the two-year period ended December 25, 2011 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 private investment funds. For these investments, which are
included in prepaid and other current assets in the accompanying consolidated balance sheets, 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 collectability
of certain of its accounts, including letters of credit, credit insurance, and requiring cash in advance of shipping.
The Company records an allowance for doubtful accounts based on management’s assessment of the
business environment, customers’ financial condition, historical collection experience, accounts receivable aging
and customer disputes. When a significant event occurs, such as a bankruptcy filing by a specific customer, and
on a quarterly basis, the allowance is reviewed for adequacy and the balance is adjusted to reflect current risk
assessments.
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