Derivative Financial Instruments

12 Months Ended

Dec. 30, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

(16)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 and 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.

The Company also has warrants to purchase common stock of an unrelated company that constitute and are accounted for as derivatives. For additional information related to these warrants see note 12. In addition, the Company was also party to several interest rate swap agreements to adjust the amount of long-term debt subject to fixed interest rates. For additional information related to these interest rate swaps see note 9.

Cash Flow Hedges

Hasbro 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 and other cross-border transactions in 2013 and 2014.

At December 30, 2012 and December 25, 2011, 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:

	2012					2011
Hedged transaction	Notional Amount		Fair Value			Notional Amount		Fair Value
Inventory purchases	$	397,770		(2,638	)		379,688		7,974
Intercompany royalty transactions		131,693		(1,168	)		117,192		2,126
Sales		92,761		2,458			-		-
Other		2,420		(45	)		29,517		(360	)
Total	$	624,644		(1,393	)		526,397		9,740

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 30, 2012 and December 25, 2011 as follows:

	2012			2011
Prepaid expenses and other current assets
Unrealized gains	$	2,802			11,965
Unrealized losses		(1,073	)		(4,187	)
Net unrealized gain		1,729			7,778
Other assets
Unrealized gains		12			2,113
Unrealized losses		-			(92	)
Net unrealized gain		12			2,021
Total asset derivatives	$	1,741			9,799
Accrued liabilities
Unrealized gains	$	1,466			12
Unrealized losses		(4,245	)		(50	)
Net unrealized loss		(2,779	)		(38	)
Other liabilities
Unrealized gains		20			-
Unrealized losses		(375	)		(21	)
Net unrealized loss		(355	)		(21	)
Total liability derivatives	$	(3,134	)		(59	)

During the years ended December 30, 2012, December 25, 2011 and December 26, 2010, the Company reclassified net (losses) gains from AOCE to net earnings of $8,762, $(2,936) and $17,780, respectively. Of the amount reclassified in 2012, 2011 and 2010, $9,644, $(6,158) and $13,249 were reclassified to cost of sales and $1,845, $2,895 and $4,663 were reclassified to royalty expense, respectively. In addition, $(2,633) and $436 was reclassified to net revenues in 2012 and 2011. Net losses of $(94), $(109) and $(132) were reclassified to earnings as a result of hedge ineffectiveness in 2012, 2011 and 2010, respectively.  Other (income) expense for the year ended December 25, 2011 includes a loss of approximately $3,700 related to certain derivatives which no longer qualified for hedge accounting.

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 30, 2012 and December 25, 2011, the total notional amount of the Company's undesignated derivative instruments was $189,217 and $218,122, respectively.

At December 30, 2012 and December 25, 2011, the fair value of the Company's undesignated derivative financial instruments are recorded in the consolidated balance sheet as follows:

	2012			2011
Accrued liabilities
Unrealized gains	$	469			41
Unrealized losses		(796	)		(786	)
Net unrealized loss		(327	)		(745	)
Other liabilities
Unrealized gains		-			-
Unrealized losses		-			(1,104	)
Net unrealized loss		-			(1,104	)
Total unrealized loss, net	$	(327	)		(1,849	)

The Company recorded net losses (gains) of $2,067, $(9,098) and $(4,827) on these instruments to other (income) expense, net for 2012, 2011 and 2010, 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.

For additional information related to the Company's derivative financial instruments see notes 2, 9 and 12.