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Derivative Financial Instruments
 3 Months Ended
Mar. 29, 2020
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, television and film production cost and production financing loans (see Note 6) as well as 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 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 and zero-cost collar options 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, certain production financing loans and other cross-border transactions in 2020 through 2022.

At March 29, 2020, March 31, 2019 and December 29, 2019, the notional amounts and fair values of the Company's foreign currency forward contracts designated as cash flow hedging instruments were as follows:
 
March 29, 2020
 
March 31, 2019
 
December 29, 2019
Hedged transaction
Notional
Amount
 
Fair
Value
 
Notional
Amount
 
Fair
Value
 
Notional
Amount
 
Fair
Value
Inventory purchases
$
343,227

 
32,186

 
486,999

 
21,649

 
398,800

 
8,727

Sales
101,120

 
4,761

 
263,221

 
8,358

 
124,920

 
4,037

Production financing and other
161,303

 
6,687

 
26,422

 
190

 
19,499

 
140

Total
$
605,650

 
43,634

 
776,642

 
30,197

 
543,219

 
12,904



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 March 29, 2020, March 31, 2019 and December 29, 2019 as follows:
 
March 29,
2020
 
March 31,
2019
 
December 29,
2019
Prepaid expenses and other current assets
 
 
 
 
 
Unrealized gains
$
40,376

 
22,737

 
12,133

Unrealized losses
(1,893
)
 
(2,008
)
 
(3,955
)
Net unrealized gains
$
38,483

 
20,729

 
8,178

 
 
 
 
 
 
Other assets
 
 
 
 
 
Unrealized gains
$
7,128

 
9,752

 
6,652

Unrealized losses
—

 
(239
)
 
—

Net unrealized gains
$
7,128

 
9,513

 
6,652

 
 
 
 
 
 
Accrued liabilities
 
 
 
 
 
Unrealized gains
$
—

 
—

 
293

Unrealized losses
(1,974
)
 
(45
)
 
(2,219
)
Net unrealized losses
$
(1,974
)
 
(45
)
 
(1,926
)
 
 
 
 
 
 
Other liabilities
 
 
 
 
 
Unrealized gains
$
—

 
—

 
—

Unrealized losses
(3
)
 
—

 
—

Net unrealized losses
$
(3
)
 
—

 
—



Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters ended March 29, 2020 and March 31, 2019 as follows:
 
Quarter Ended
 
March 29,
2020
 
March 31,
2019
Statements of Operations Classification
 
 
 
Cost of sales
$
3,957

 
2,614

Net revenues
343

 
878

Other
81

 
118

Net realized gains
$
4,381

 
3,610


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.  Additionally, with the acquisition of eOne during the first quarter of 2020, the Company continued eOne's balance sheet hedging program designed to manage transactional exposure to fair value movements on certain of eOne's foreign currency denominated monetary assets and liabilities. The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are offset by changes in the fair value of the balance sheet item. As of March 29, 2020, March 31, 2019 and December 29, 2019 the total notional amounts of the Company's undesignated derivative instruments were $238,187, $293,326 and $307,351, respectively.
At March 29, 2020, March 31, 2019 and December 29, 2019, the fair values of the Company's undesignated derivative financial instruments were recorded in the consolidated balance sheets as follows:
 
March 29,
2020
 
March 31,
2019
 
December 29,
2019
Prepaid expenses and other current assets
 
 
 
 
 
Unrealized gains
$
1,170

 
2,391

 
—

Unrealized losses
—

 
(337
)
 
—

Net unrealized gains
$
1,170

 
2,054

 
—

 
 
 
 
 
 
Accrued liabilities
 
 
 
 
 
Unrealized gains
$
1,252

 
—

 
13

Unrealized losses
(12,406
)
 
—

 
(3,820
)
Net unrealized losses
$
(11,154
)
 
—

 
(3,807
)
 
 
 
 
 
 
Total unrealized (losses) gains, net
$
(9,984
)
 
2,054

 
(3,807
)

The Company recorded net gains of $2,499 and $4,809 on these instruments to other (income) expense, net for the quarters ended March 29, 2020 and March 31, 2019, 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.
eOne Purchase Price Hedge

During the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the eOne Acquisition purchase using a series of both foreign exchange forward and option contracts. These contracts did 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 qualified as nontaxable integrated tax hedges. These contracts matured on December 30, 2019 (the closing date of the transaction) and net gains or losses recognized on these contracts in the first quarter of 2020 were immaterial.
For additional information related to the Company's derivative financial instruments see Note 5.