Financial Instruments

9 Months Ended

Sep. 25, 2011

Financial Instruments (Thousands of Dollars) [Abstract]

(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 September 25, 2011, the carrying cost of these instruments approximated their fair value. The Company’s financial instruments at September 25, 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 September 25, 2011, September 26, 2010 and December 26, 2010 are as follows:

	Sept. 25, 2011		Sept. 26, 2010		Dec. 26, 2010
	--------------------		--------------------		----------------------------
	Carrying Cost	Fair Value	Carrying Cost	Fair Value	Carrying Cost	Fair Value
	-------	------	-------	------	-------	------
6.125% Notes Due 2014	$ 445,176	467,245	444,661	466,225	437,786	462,698
6.30% Notes Due 2017	350,000	402,780	350,000	388,290	350,000	382,830
6.60% Debentures Due 2028	109,895	120,775	109,895	114,148	109,895	110,038
6.35% Notes Due 2040	500,000	547,200	500,000	511,000	500,000	499,900
	-------------	-----------	-------------	-----------	------------	-----------
Total long-term debt	$1,405,071	1,538,000	1,404,556	1,479,663	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 $20,176, $19,661 and $12,786 at September 25, 2011, September 26, 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 September 25, 2011, September 26, 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 September 25, 2011, September 26, 2010 and December 26, 2010, the fair value of these contracts was $20,176, $19,661 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 $2,040 and $7,390 for the quarter and nine months ended September 25, 2011, respectively, and $7,576 and $22,386 for the quarter and nine months ended September 26, 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.