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Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
Hasbro uses foreign currency forward contracts to mitigate the impact of currency rate fluctuations on firmly committed and projected future foreign currency transactions. These over-the-counter contracts, which hedge future currency requirements related to purchases of inventory, product sales and other cross-border transactions not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars, and Euros. All contracts are entered into with a number of counterparties, all of which are major financial institutions. The Company believes that a default by a single counterparty would not have a material adverse effect on the financial condition of the Company. Hasbro does not enter into derivative financial instruments for speculative purposes.
Cash Flow Hedges
The Company uses foreign currency forward contracts to reduce the impact of currency rate fluctuations on firmly committed and projected future foreign currency transactions. All of the Company's designated foreign currency forward contracts are considered to be cash flow hedges. These instruments hedge a portion of the Company's currency requirements associated with anticipated inventory purchases, product sales and other cross-border transactions in 2019 through 2022.

At June 30, 2019, July 1, 2018 and December 30, 2018, the notional amounts and fair values of the Company's foreign currency forward contracts designated as cash flow hedging instruments were as follows:
 
June 30, 2019
 
July 1, 2018
 
December 30, 2018
Hedged transaction
Notional
Amount
 
Fair
Value
 
Notional
Amount
 
Fair
Value
 
Notional
Amount
 
Fair
Value
Inventory purchases
$
480,244

 
16,062

 
647,255

 
10,248

 
468,305

 
15,089

Sales
235,874

 
8,452

 
342,123

 
11,291

 
298,194

 
11,232

Royalties and Other
12,228

 
15

 
151,689

 
(4,575
)
 
26,341

 
(304
)
Total
$
728,346

 
24,529

 
1,141,067

 
16,964

 
792,840

 
26,017



The Company has a master agreement with each of its counterparties that allows for the netting of outstanding forward contracts. The fair values of the Company's foreign currency forward contracts designated as cash flow hedges are recorded in the consolidated balance sheets at June 30, 2019, July 1, 2018 and December 30, 2018 as follows:
 
June 30,
2019
 
July 1,
2018
 
December 30,
2018
Prepaid expenses and other current assets
 
 
 
 
 
Unrealized gains
$
18,554

 
17,388

 
21,718

Unrealized losses
(1,911
)
 
(5,307
)
 
(972
)
Net unrealized gains
$
16,643

 
12,081

 
20,746

 
 
 
 
 
 
Other assets
 
 
 
 
 
Unrealized gains
$
8,250

 
12,774

 
6,173

Unrealized losses
(271
)
 
(2,700
)
 
(843
)
Net unrealized gains
$
7,979

 
10,074

 
5,330

 
 
 
 
 
 
Accrued liabilities
 
 
 
 
 
Unrealized gains
$
—

 
911

 
77

Unrealized losses
(78
)
 
(3,118
)
 
(136
)
Net unrealized losses
$
(78
)
 
(2,207
)
 
(59
)
 
 
 
 
 
 
Other liabilities
 
 
 
 
 
Unrealized gains
$
—

 
807

 
—

Unrealized losses
(15
)
 
(3,791
)
 
—

Net unrealized losses
$
(15
)
 
(2,984
)
 
—



Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters and six months ended June 30, 2019 and July 1, 2018 as follows:
 
Quarter Ended
 
Six Months Ended
 
June 30,
2019
 
July 1,
2018
 
June 30,
2019
 
July 1,
2018
Statements of Operations Classification
 
 
 
 
 
 
 
Cost of sales
$
1,986

 
(950
)
 
4,600

 
(4,841
)
Net revenues
599

 
430

 
1,477

 
762

Other
34

 
1,339

 
152

 
(84
)
Net realized gains (losses)
$
2,619

 
819

 
6,229

 
(4,163
)

Undesignated Hedges
The Company also enters into foreign currency forward contracts to minimize the impact of changes in the fair value of intercompany loans due to foreign currency changes. The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are substantially offset by changes in the fair value of the intercompany loans.  As of June 30, 2019, July 1, 2018 and December 30, 2018 the total notional amounts of the Company's undesignated derivative instruments were $247,295, $140,151 and $452,773, respectively.
At June 30, 2019, July 1, 2018 and December 30, 2018, the fair values of the Company's undesignated derivative financial instruments were recorded in the consolidated balance sheets as follows:
 
June 30,
2019
 
July 1,
2018
 
December 30,
2018
Prepaid expenses and other current assets
 
 
 
 
 
Unrealized gains
$
—

 
1,120

 
—

Unrealized losses
—

 
(724
)
 
—

Net unrealized gains
$
—

 
396

 
—

 
 
 
 
 
 
Accrued liabilities
 
 
 
 
 
Unrealized gains
$
164

 
—

 
1,269

Unrealized losses
(1,965
)
 
—

 
(2,820
)
Net unrealized losses
$
(1,801
)
 
—

 
(1,551
)
 
 
 
 
 
 
Total unrealized (losses) gains, net
$
(1,801
)
 
396

 
(1,551
)

The Company recorded net gains of $1,776 and $6,584 on these instruments to other (income) expense, net for the quarter and six month periods ended June 30, 2019, respectively, and net gains of $10,451 and $3,751 on these instruments to other (income) expense, net for the quarter and six month periods ended July 1, 2018, respectively, relating to the change in fair value of such derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to which the contracts relate.
For additional information related to the Company's derivative financial instruments see Notes 4 and 7.