Hasbro 2008 Annual Report Download - page 41

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 source of working
capital. Based on the amount of eligible accounts receivable as of December 28, 2008, the Company had
availability under this program to sell $251,100, 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, subject to lender agreement, up to a total committed facility of
$500,000. The Agreement contains certain financial covenants setting forth leverage and coverage require-
ments, 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 28, 2008. The Company had no borrowings outstanding under its committed
revolving credit facility at December 28, 2008. However, letters of credit outstanding under this facility as of
December 28, 2008 were approximately $1,700. Amounts available and unused under the committed line at
December 28, 2008 were approximately $298,300. The Company also has other uncommitted lines from
various banks, of which approximately $38,700 was utilized at December 28, 2008. Of the amount utilized
under the uncommitted lines, approximately $7,500 and $31,200 represent outstanding borrowings and letters
of credit, respectively.
Net cash utilized by financing activities was $457,391 in 2008. Of this amount, $360,244, which includes
transaction costs, was used to repurchase shares of the Company’s common stock. In February 2008 the
Company’s Board of Directors authorized the repurchase of an additional $500,000 in common stock after
three previous authorizations dated May 2005, July 2006 and August 2007 with a cumulative authorized
repurchase amount of $1,200,000 were fully utilized. During 2008, the Company repurchased 11,736 shares at
an average price per share of $30.44. At December 28, 2008, $252,364 remained under the February 2008
authorization. Dividends paid were $107,065 in 2008 compared to $94,097 in 2007, reflecting the increase in
the Company’s quarterly dividend rate to $0.20 per share in 2008 from $0.16 per share in 2007, and net of the
effect of decreased shares outstanding in 2008 as a result of the share repurchases. In addition, $135,092 was
used to repay long-term debt. These uses of cash were partially offset by cash receipts of $120,895 from the
exercise of employee stock options.
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. During 2007, the Company
repurchased 20,795 shares at an average price per share 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, compared to $75,282 in 2006, 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. During 2006, the Company
repurchased 22,767 shares at an average price per share of $20.03. In addition, $32,743 was used to repay
long-term debt. Dividends paid were $75,282 in 2006. These uses of cash were partially offset by cash receipts
of $86,257 from the exercise of employee stock options.
At December 28, 2008, 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 common 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 contingent interest feature represents a derivative instrument that is recorded on the balance sheet at
31