Financial Instruments

3 Months Ended

Mar. 31, 2013

Financial Instruments (Thousands of Dollars) [Abstract]

(4) Financial Instruments

Hasbro's financial instruments include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and certain accrued liabilities. At March 31, 2013, April 1, 2012 and December 30, 2012, the carrying cost of these instruments approximated their fair value. The Company's financial instruments at March 31, 2013, April 1, 2012 and December 30, 2012 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 March 31, 2013, April 1, 2012 and December 30, 2012 are as follows:

	March 31, 2013				April 1, 2012				December 30, 2012
	Carrying Cost		Fair Value		Carrying Cost		Fair Value		Carrying Cost		Fair Value
6.35% Notes Due 2040	$	500,000		584,750		500,000		535,950		500,000		615,650
6.125% Notes Due 2014		434,492		449,395		441,047		461,678		436,526		455,175
6.30% Notes Due 2017		350,000		407,085		350,000		400,260		350,000		399,700
6.60% Debentures Due 2028		109,895		126,588		109,895		118,148		109,895		129,687
Total long-term debt	$	1,394,387		1,567,818		1,400,942		1,516,036		1,396,421		1,600,212

The carrying cost of the 6.125% Notes Due 2014 includes principal amounts of $425,000 as well as fair value adjustments of $9,492, $16,047, and $11,526 at March 31, 2013, April 1, 2012 and December 30, 2012, respectively, related to interest rate swaps. The interest rate swaps were terminated in November 2012 and the fair value adjustment at March 31, 2013 and December 30, 2012 represent the unamortized portions of the fair value of the interest rate swaps at the date of termination. All other carrying costs represent principal amounts. Total principal amount of long-term debt at March 31, 2013, April 1, 2012 and December 30, 2012 was $1,384,895.

The fair values of the Company's long-term debt are considered Level 3 fair values (see Note 6 for further discussion of the fair value hierarchy) and are measured using the discounted future cash flows method. In addition to the debt terms, the valuation methodology includes an assumption of a discount rate that approximates the current yield on a similar debt security. This assumption is considered an unobservable input in that it reflects the Company's own assumptions about the inputs that market participants would use in pricing the asset or liability. The Company believes that this is the best information available for use in the fair value measurement.

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. The interest rate swaps were 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 had a total notional amount of $400,000 with maturities in 2014 which matched the maturity date of the related notes. 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 changes in the fair value of the associated debt. 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 March 31, 2013 and December 30, 2012, this adjustment to long-term debt was $9,492 and $11,526, respectively. At April 1, 2012, the fair value of these contracts was an asset of $16,047 which was recorded in other assets with a corresponding fair value adjustment to increase long-term debt. The Company recorded a gain of $70 for the quarter ended April 1, 2012 on these instruments in other (income) expense, net relating to the change in fair value of such derivatives, wholly offsetting (gains) losses from the change in fair value of the associated long-term debt, also included in other (income) expense.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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