Hasbro 2012 Annual Report Download - page 75

HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
The Company was party to a series of interest rate swap agreements to adjust the amount of debt that is
subject to fixed interest rates. In November 2012, these interest rate swap agreements were terminated. The fair
value was recorded as an adjustment to long-term debt and is being amortized through the statement of
operations over the life of the related debt using a straight-line method. At December 30, 2012, this adjustment to
long-term debt is $11,526. The interest rate swaps were matched with the 6.125% Notes Due 2014 and accounted
for as fair value hedges of those notes. The interest rate swaps had a total notional amount of $400,000 with
maturities in 2014. In each of the contracts, the Company received payments based upon a fixed interest rate of
6.125%, which matched the interest rate of the notes being hedged, and made payments based upon a floating
rate based on Libor. These contracts were designated and effective as hedges of the change in the fair value of the
associated debt. At December 25, 2011, the fair value of these contracts was an asset of $15,977 which was
recorded in other assets with a corresponding fair value adjustment to increase long-term debt. The Company
recorded a (gain) loss of $3,095, $(3,191) and $(15,511) on these instruments in other (income) expense, net for
the years ended December 30, 2012, December 25, 2011 and December 26, 2010, 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 30, 2012, as detailed above, the Company’s 6.125% Notes mature in 2014 and 6.30% Notes
mature in 2017. All of the Company’s other long-term borrowings have contractual maturities that occur
subsequent to 2017. The aggregate principal amount of long-term debt maturing in the next five years is
$775,000.
(10) Income Taxes
Income taxes attributable to earnings before income taxes are:
2012 2011 2010
Current
United States ....................................... $ 64,076 49,233 35,232
State and local ...................................... 1,587 2,538 1,931
International ........................................ 67,826 52,176 47,633
133,489 103,947 84,796
Deferred
United States ....................................... (8,832) (1,973) 26,269
State and local ...................................... (303) (68) 901
International ........................................ (6,951) (880) (1,998)
(16,086) (2,921) 25,172
Total income taxes ..................................... $117,403 101,026 109,968
Certain income tax benefits, not reflected in income taxes in the consolidated statements of operations
totaled $31,682 in 2012, $18,266 in 2011 and $87,367 in 2010. In 2012 and 2011 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 2012, 2011 and 2010, the deferred
tax portion of the total benefit was $17,213, $8,579 and $64,700, respectively.
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