Hasbro 2008 Annual Report Download - page 64

The Company will continue to incur amortization expense related to the use of acquired and licensed
rights to produce various products. The amortization of these product rights will fluctuate depending on related
projected revenues during an annual period, as well as rights reaching the end of their useful lives. The
Company currently estimates continuing amortization expense related to the above intangible assets for the
next five years to be approximately:
2009 ................................................................ $77,000
2010 ................................................................ 52,300
2011 ................................................................ 51,900
2012 ................................................................ 52,700
2013 ................................................................ 48,300
(5) Financing Arrangements
Short-Term Borrowings
At December 28, 2008, Hasbro had available an unsecured committed line and unsecured uncommitted
lines of credit from various banks approximating $300,000 and $174,200, respectively. A significant portion of
the short-term borrowings outstanding at the end of 2008, and all of the short-term borrowings outstanding at
the end of 2007, represent borrowings made under, or supported by, these lines of credit. The weighted
average interest rates of the outstanding borrowings as of December 28, 2008 and December 30, 2007 were
10.7% and 5.5%, respectively. The Company had no borrowings outstanding under its committed line of credit
at December 28, 2008. During 2008, Hasbro’s working capital needs were fulfilled by cash generated from
operations, borrowings under lines of credit, and the Company’s accounts receivable securitization program.
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, subject to lender agreement, 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 28, 2008.
The Company pays a commitment fee (0.10% as of December 28, 2008) 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 28, 2008, 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 the 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
54
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)