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Derivative Financial Instruments
 12 Months Ended
Dec. 29, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments
Hasbro uses foreign currency forward contracts and zero-cost collar options 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
Hasbro uses foreign currency forward contracts and zero-cost collar options 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 and other cross-border transactions in years 2020 through 2022.
At December 29, 2019 and December 30, 2018, the notional amounts and fair values of assets (liabilities) for the Company’s foreign currency forward contracts designated as cash flow hedging instruments were as follows:
 
2019
 
2018
 
Notional
Amount
 
Fair
Value
 
Notional
Amount
 
Fair
Value
Hedged transaction
 
 
 
 
 
 
 
Inventory purchases
$
398,800

 
8,727

 
468,305

 
15,089

Sales
124,920

 
4,037

 
298,194

 
11,232

Royalties and Other
19,499

 
140

 
26,341

 
(304
)
Total
$
543,219

 
12,904

 
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 sheet at December 29, 2019 and December 30, 2018 as follows:
 
2019
 
2018
Prepaid expenses and other current assets
 
 
 
Unrealized gains
$
12,133

 
21,718

Unrealized losses
(3,955
)
 
(972
)
Net unrealized gain
$
8,178

 
20,746

Other assets
 
 
 
Unrealized gains
$
6,652

 
6,173

Unrealized losses
—

 
(843
)
Net unrealized gain
$
6,652

 
5,330

Accrued liabilities
 
 
 
Unrealized gains
$
293

 
77

Unrealized losses
(2,219
)
 
(136
)
Net unrealized loss
$
(1,926
)
 
(59
)

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings to net earnings for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 as follows:
 
2019
 
2018
 
2017
Consolidated Statements of Operations Classification
 
 
 
 
 
Cost of sales
$
16,689

 
3,909

 
(1,905
)
Sales
5,644

 
3,479

 
5,315

Royalties and other
193

 
(527
)
 
(6,000
)
Net realized gains (losses)
$
22,526

 
6,861

 
(2,590
)

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 December 29, 2019 and December 30, 2018, the total notional amounts of the Company’s undesignated derivative instruments were $307,351 and $452,773, respectively.
At December 29, 2019 and December 30, 2018, the fair value of the Company’s undesignated derivative financial instruments are recorded in the consolidated balance sheets as follows:
 
2019
 
2018
Accrued liabilities
 
 
 
Unrealized gains
$
13

 
1,269

Unrealized losses
(3,820
)
 
(2,820
)
Net unrealized loss
$
(3,807
)
 
(1,551
)
Total unrealized losses
$
(3,807
)
 
(1,551
)

The Company recorded net gains (losses) of $13,443, $11,698 and $(4,267) on these instruments to other (income) expense, net for 2019, 2018 and 2017, 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 instruments relate.
eOne Purchase Hedges
As described in note 22, during the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling and other transactions in relation to the eOne acquisition using a series of both foreign exchange forward and option contracts. These contracts do not qualify for hedge accounting and as such, were marked to market through the Company's Consolidated Statement of Operations. For tax purposes these contracts qualify as nontaxable integrated tax hedges. As of December 29, 2019, the outstanding derivative instruments had a total notional value of $4,468,822 and a net fair value of $34,143 which is recorded to prepaid expenses and other assets within the Company's consolidated financial statements. In addition, the Company recorded realized gains of $79,990 on matured contracts to other (income) expense, net for the year ended December 29, 2019.
For additional information related to the Company’s derivative financial instruments see notes 3 and 13.