Hasbro 2007 Annual Report Download - page 37

The Company is party to an accounts receivable securitization program whereby the Company sells, on
an ongoing basis, substantially all of its U.S. trade accounts receivable to a bankruptcy remote special purpose
entity, Hasbro Receivables Funding, LLC (“HRF”). HRF is consolidated with the Company for financial
reporting purposes. The securitization program then allows HRF to sell, on a revolving basis, an undivided
fractional ownership interest of up to $250,000 in the eligible receivables it holds to certain bank conduits.
During the period from the first day of the October fiscal month through the last day of the following January
fiscal month, this limit is increased to $300,000. The program provides the Company with a cost-effective
source of working capital. Based on the amount of eligible accounts receivable as of December 30, 2007, the
Company had $266,550 available to sell under this program of which $250,000 was utilized.
The Company has a revolving credit agreement (the “Agreement”) which provides it with a $300,000
committed borrowing facility. The Company has the ability to request increases in the committed facility in
additional increments of at least $50,000, up to a total committed facility of $500,000. The Agreement
contains certain financial covenants setting forth leverage and coverage requirements, and certain other
limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of
indebtedness. The Company was in compliance with all covenants as of and for the fiscal year ended
December 30, 2007. The Company had no borrowings outstanding under its committed revolving credit
facility at December 30, 2007. The Company also has other uncommitted lines from various banks, of which
approximately $37,833 was utilized at December 30, 2007. Amounts available and unused under the
committed line at December 30, 2007 were approximately $298,200.
Net cash utilized by financing activities was $433,917 in 2007. Of this amount, $584,349, which includes
transaction costs, was used to repurchase shares of the Company’s common stock. In August 2007, the
Company’s Board of Directors authorized the repurchase of an additional $500,000 in common stock after two
previous authorizations dated May 2005 and July 2006 of $350,000 each were fully utilized. During 2007, the
Company repurchased 20,795 shares at an average price of $28.20. In addition, the Company purchased
certain warrants in May 2007 for $200,000 in accordance with the terms of the call provision of the amended
Lucas warrant agreement. Dividends paid were $94,097 in 2007 reflecting the increase in the Company’s
quarterly dividend rate to $0.16 per share in 2007 compared to $0.12 per share in 2006. These uses of cash
were partially offset by net proceeds of $346,009 from the issuance of $350,000 of Notes that are due in 2017.
The proceeds from the Notes were primarily used to repay short-term borrowings. The uses of cash were also
partially offset by cash receipts of $82,661 from the exercise of employee stock options.
Net cash utilized by financing activities was $467,279 in 2006. Of this amount, $456,744, which includes
transaction costs, was used to repurchase shares of the Company’s common stock. In July 2006, the
Company’s Board of Directors authorized the repurchase of $350,000 in common stock subsequent to the full
utilization of the Board of Director’s May 2005 authorization of $350,000. During 2006, the Company
repurchased 22,767 shares at an average price of $20.03. In addition, $32,743 was used to repay long-term
debt. Dividends paid were $75,282 in 2006 reflecting the increase in the Company’s quarterly dividend rate to
$0.12 per share in 2006 compared to $0.09 per share in 2005. These uses of cash were partially offset by cash
receipts of $86,257 from the exercise of employee stock options.
Net cash utilized by financing activities was $158,641 in 2005. This amount included repayments in
principal amount of long-term debt totaling $93,303. These amounts primarily related to $71,970 of bonds that
matured in November of 2005. The remaining amount related to repayment of long-term debt associated with
the Company’s former manufacturing facility in Spain. Dividends paid increased to $58,901 as a result of the
increase of the quarterly dividend rate to $0.09 in 2005 from $0.06. In 2005, the Company repurchased 2,386
of its common shares on the open market at an average price of $20.10 under the Board of Director’s
May 2005 authorization. The total cost of these repurchases, including transaction costs, was $48,030. The
Company received $45,278 in 2005 in proceeds from the exercise of employee stock options.
At December 30, 2007, the Company has outstanding $249,828 in principal amount of senior convertible
debentures due 2021. The senior convertible debentures bear interest at 2.75%, which could be subject to an
upward adjustment in the rate, not to exceed 11%, should the price of the Company’s stock trade at or below
$9.72 per share for 20 of the 30 trading days preceding the fifth day prior to an interest payment date. This
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