Hasbro 2007 Annual Report Download - page 61

Cranium’s net assets on the closing date. The acquisition closed on January 25, 2008. Based on the amount of
Cranium’s net assets as of the closing date, the adjusted purchase price, which may be subject to further
adjustment, totaled approximately $69,000.
(5) Financing Arrangements
Short-Term Borrowings
At December 30, 2007, Hasbro had available an unsecured committed line and unsecured uncommitted
lines of credit from various banks approximating $300,000 and $194,100, respectively. All of the short-term
borrowings outstanding at the end of 2007, and a significant portion of the short-term borrowings outstanding
at the end of 2006, represent borrowings made under, or supported by, these lines of credit. The weighted
average interest rates of the outstanding borrowings as of December 30, 2007 and December 31, 2006 were
5.5% and 4.7%, respectively. The Company had no borrowings outstanding under its committed line of credit
at December 30, 2007. During 2007, Hasbro’s working capital needs were fulfilled by cash generated from
operations, the Company’s accounts receivable securitization program, and borrowings under lines of credit.
Borrowings under the lines of credit were on terms and at interest rates generally extended to companies of
comparable creditworthiness.
The unsecured committed line (the “Agreement”) provides the Company with a $300,000 committed
borrowing facility through June 2011. 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 year ended
December 30, 2007.
The Company pays a commitment fee (0.10% as of December 30, 2007) based on the unused portion of
the facility and interest equal to LIBOR or Prime plus a spread on borrowings under the facility. The
commitment fee and the amount of the spread to LIBOR or Prime both vary based on the Company’s long-
term debt ratings and the Company’s leverage. At December 30, 2007, the interest rate under the facility was
equal to LIBOR plus 0.50% or Prime.
Securitization
The Company is party to a 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 subsidiary,
Hasbro Receivables Funding, LLC (HRF), which is wholly-owned and consolidated by the Company. HRF
will, subject to certain conditions, sell, from time to time on a revolving basis, an undivided fractional
ownership interest in up to $250,000 of eligible domestic receivables to various multi-party commercial paper
conduits supported by a committed liquidity facility. During the period from the first day of October fiscal
month through the last day of the following January fiscal month, this limit is increased to $300,000. Under
the terms of the agreement, new receivables are added to the pool as collections reduce previously held
receivables. The Company expects to service, administer, and collect the receivables on behalf of HRF and the
conduits. The net proceeds of sale will be less than the face amount of accounts receivable sold by an amount
that approximates the purchaser’s financing costs.
The receivables facility contains certain restrictions on the Company and HRF that are customary for
facilities of this type. The commitments under the facility are subject to termination prior to their term upon
the occurrence of certain events, including payment defaults, breach of covenants, breach of representations or
warranties, bankruptcy, and failure of the receivables to satisfy certain performance criteria.
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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)