Financial Instruments

6 Months Ended

Jun. 26, 2011

Financial Instruments (Thousands of Dollars) [Abstract]

Financial Instruments

(4) Financial Instruments

Hasbro’s financial instruments include cash and cash equivalents, accounts receivable, marketable securities, short-term borrowings, accounts payable and certain accrued liabilities. At June 26, 2011, the carrying cost of these instruments approximated their fair value. The Company’s financial instruments at June 26, 2011 also include certain assets and liabilities measured at fair value (see Notes 6 and 8) as well as long-term borrowings. The carrying costs and fair values of the Company’s long-term borrowings as of June 26, 2011, June 27, 2010 and December 26, 2010 are as follows:

	June 26, 2011		June 27, 2010		Dec. 26, 2010
	--------------------		--------------------		---------------------------
	Carrying Cost	Fair Value	Carrying Cost	Fair Value	Carrying Cost	Fair Value
	-------	------	-------	------	-------	------
6.125% Notes Due 2014	$   443,136	469,625	437,085	451,606	437,786	462,698
6.30% Notes Due 2017	350,000	399,420	350,000	365,773	350,000	382,830
6.60% Debentures    Due 2028	109,895	115,675	109,895	109,002	109,895	110,038
6.35% Notes Due 2040	500,000	523,650	500,000	507,887	500,000	499,900
	-------------	-----------	-------------	-----------	-------------	-----------
Total long-term debt	$1,403,031	1,508,370	1,396,980	1,434,268	1,397,681	1,455,466
	=======	=======	=======	=======	=======	=======

The carrying cost of the 6.125% Notes Due 2014 includes principal amounts of $425,000 as well as fair value adjustments of $18,136, $12,085 and $12,786 at June 26, 2011, June 27, 2010 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 June 26, 2011, June 27, 2010 and December 26, 2010 were each $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 Company is party to a series of interest rate swap agreements which effectively adjust the interest rates on a portion of the Company’s long-term debt from fixed to variable. The interest rate swaps are matched with a portion of 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 which match the maturity date of the related notes. 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 June 26, 2011, June 27, 2010 and December 26, 2010, the fair value of these contracts was $18,136, $12,085 and $12,786, respectively, which is recorded in other assets with a corresponding fair value adjustment to increase long-term debt. The Company recorded gains of $6,336 and $5,350 for the quarter and six months ended June 26, 2011, respectively, and $6,496 and $14,810 for the quarter and six months ended June 27, 2010, respectively on these instruments in other (income) expense, net relating to the change in fair value of such derivatives, wholly offsetting losses from the change in fair value of the associated long-term debt, also included in other (income) expense.