Hasbro 2014 Annual Report Download - page 104

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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
hedge future currency requirements related to purchases of inventory, product sales and other cross-border
transactions not denominated in the functional currency of the business unit, are primarily denominated in United
States and Hong Kong dollars, and Euros. Further, during the fourth quarter of 2013 and first half of 2014 Hasbro
used forward-starting interest rate swap agreements to hedge anticipated interest payments. All contracts are
entered into with a number of counterparties, all of which are major financial institutions. The Company believes
that a default by a single counterparty would not have a material adverse effect on the financial condition of the
Company. Hasbro does not enter into derivative financial instruments for speculative purposes.
The Company was also party to several interest rate swap agreements to adjust the amount of long-term debt
subject to fixed interest rates which were terminated during 2012. For additional information related to these
interest rate swaps see note 9.
Cash Flow Hedges
Hasbro uses foreign currency forward contracts to reduce the impact of currency rate fluctuations on firmly
committed and projected future foreign currency transactions. All of the Company’s designated foreign currency
forward contracts are considered to be cash flow hedges. These instruments hedge a portion of the Company’s
currency requirements associated with anticipated inventory purchases and other cross-border transactions in
2015 and 2016.
At December 28, 2014 and December 29, 2013, the notional amounts and fair values of assets (liabilities)
for the Company’s foreign currency forward contracts designated as cash flow hedging instruments were as
follows:
2014 2013
Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
Hedged transaction
Inventory purchases ........................... $ 863,232 69,049 577,138 (7,493)
Intercompany royalty transaction ................. — — 4,948 (2,774)
Sales ....................................... 139,946 829 171,393 (1,965)
Other ....................................... 51,213 (1,008) 46,563 302
Total ....................................... $1,054,391 68,870 800,042 (11,930)
90