Derivative Financial Instruments

12 Months Ended

Dec. 27, 2015

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. 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 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 2016 through 2020.

At December 27, 2015 and December 28, 2014, 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:

	2015			2014
Hedged transaction	Notional Amount		Fair Value	Notional Amount	Fair Value
Inventory purchases	$	1,380,488	108,521	863,232	69,049
Sales		97,350	803	139,946	829
Royalties and Other		54,360	(1,886)	51,213	(1,008)
Total	$	1,532,198	107,438	1,054,391	68,870

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 27, 2015 and December 28, 2014 as follows:

	2015		2014
Prepaid expenses and other current assets
Unrealized gains	$	78,910	46,594
Unrealized losses		(5,932)	(11,508)
Net unrealized gain	$	72,978	35,086
Other assets
Unrealized gains	$	35,366	34,234
Unrealized losses		(710)	(172)
Net unrealized gain	$	34,656	34,062
Accrued liabilities
Unrealized gains	$	-	447
Unrealized losses		-	(725)
Net unrealized loss	$	-	(278)
Other liabilities
Unrealized gains	$	241	-
Unrealized losses		(437)	-
Net unrealized loss	$	(196)	-

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings to net earnings for the years ended December 27, 2015, December 28, 2014 and December 29, 2013 as follows:

	2015		2014		2013
Consolidated Statements of Operations Classification
Cost of sales	$	66,378		973	1,523
Sales		(9,219)		(3,741)	3,585
Royalties and other		(566)		(2,028)	(1,096)
Net realized (losses) gains	$	56,593		(4,796)	4,012

In addition, net gains of $1,169, $62 and $164 were reclassified to earnings as a result of hedge ineffectiveness in 2015, 2014 and 2013, respectively.

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 27, 2015 and December 28, 2014, the total notional amount of the Company's undesignated derivative instruments was $341,389 and $294,571, respectively.

At December 27, 2015 and December 28, 2014, the fair value of the Company's undesignated derivative financial instruments are recorded to accrued liabilities in the consolidated balance sheets as follows:

	2015		2014
Accrued liabilities
Unrealized gains	$	416	1,733
Unrealized losses		(1,460)	(4,046)
Net unrealized loss	$	(1,044)	(2,313)

The Company recorded net gains (losses) of $48,489, $(32,106) and $(8,791) on these instruments to other (income) expense, net for 2015, 2014 and 2013, 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.