Hasbro 2010 Annual Report Download - page 70

principal amount of the Notes or the present value of the remaining scheduled payments discounted using the
effective interest rate on applicable U.S. Treasury bills at the time of repurchase.
The Company is party to a series of interest rate swap agreements to adjust the amount of debt that is
subject to fixed interest rates. The interest rate swaps are matched with the 6.125% Notes Due 2014 and
accounted for as fair value hedges of those notes. The interest rate swaps have a total notional amount of
$400,000 with maturities in 2014. In each of the contracts, the Company receives payments based upon a fixed
interest rate of 6.125%, which matches the interest rate of the notes being hedged, and makes payments based
upon a floating rate based on Libor. These contracts are designated and effective as hedges of the change in
the fair value of the associated debt. At December 26, 2010 and December 27, 2009, the fair value of these
contracts was an asset (liability) of $12,786 and $(2,725), respectively, which is recorded in other assets and
other liabilities with a corresponding fair value adjustment to increase (decrease) long-term debt. The
Company recorded a gain (loss) of $15,511 and $(2,725) on these instruments in other (income) expense, net
for the years ended December 26, 2010 and December 27, 2009, respectively, relating to the change in fair
value of such derivatives, wholly offsetting gains and losses from the change in fair value of the associated
long-term debt.
In 2008 the Company repaid $135,092 of 6.15% notes due in July 2008.
At December 27, 2009, the Company had $249,828 outstanding in principal amount of contingent
convertible debentures due 2021. If the closing price of the Company’s common stock exceeded $23.76 for at
least 20 trading days, within the 30 consecutive trading day period ending on the last trading day of the
calendar quarter, the holders had the right to convert the notes to shares of the Company’s common stock at
the initial conversion price of $21.60 in the next calendar quarter. During the first quarter of 2010, holders of
these debentures converted $111,177 of these debentures which resulted in the issuance of 5,147 shares of
common stock. In addition, if the closing price of the Company’s common stock exceeded $27.00 for at least
20 trading days in any thirty day period, the Company had the right to call the debentures by giving notice to
the holders of the debentures. During a prescribed notice period following a call by the Company, the holders
of the debentures had the right to convert their debentures in accordance with the conversion terms described
above. On March 29, 2010, the Company gave notice of its election to redeem all of the outstanding
debentures on April 29, 2010 at a redemption price to be paid in cash of $1,011.31 per $1,000 principal
amount, which was equal to the par value thereof plus accrued and unpaid cash interest through April 29,
2010. During the notice period, $138,467 of the debentures were converted by the holders, resulting in the
issuance of 6,410 shares of common stock. The remaining debentures were redeemed at a total cost of $186,
which included accrued interest through the redemption date.
At December 26, 2010, as detailed above, the Company’s 6.125% Notes mature in 2014. All of the
Company’s other long-term borrowings have contractual maturities that occur subsequent to 2015.
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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)