Hasbro 2010 Annual Report Download - page 85

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In addition, Hasbro leases certain facilities which, as a result of restructurings, are no longer in use.
Future costs relating to such facilities were accrued as a component of the original restructuring charge and
are not included in minimum rental amounts above.
(16) Derivative Financial Instruments
Hasbro uses foreign currency forward contracts to mitigate the impact of currency rate fluctuations on
firmly committed and projected future foreign currency transactions. These over-the-counter contracts, which
hedge future currency requirements related to purchases of inventory 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, Euros and British pound sterling and 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 also has warrants to purchase common stock that qualify as derivatives. For additional
information related to these warrants see note 12. In addition, the Company is also party to several interest
rate swap agreements to adjust the amount of long-term debt subject to fixed interest rates. 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 2011 and 2012.
At December 26, 2010 and December 27, 2009, the notional amounts and fair values of the Company’s
foreign currency forward contracts designated as cash flow hedging instruments were as follows:
Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
2010 2009
Hedged transaction
Inventory purchases ............................ $593,953 11,074 380,661 16,715
Intercompany royalty transactions .................. 179,308 5,344 135,921 7,007
Other ....................................... 17,047 533 30,268 230
Total ....................................... $790,308 16,951 546,850 23,952
75
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)