Hasbro 2010 Annual Report Download - page 86

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The Company has a master agreement with each of its counterparties that allows for the netting of
outstanding forward contracts. The fair values of the Company’s foreign currency forward contracts designated
as cash flow hedges are recorded in the consolidated balance sheet at December 26, 2010 and December 27,
2009 as follows:
2010 2009
Prepaid expenses and other current assets
Unrealized gains ................................................ $24,710 12,142
Unrealized losses ............................................... (9,229) (1,899)
Net unrealized gain.............................................. 15,481 10,243
Other assets
Unrealized gains ................................................ 4,403 13,709
Unrealized losses ............................................... (2,933) —
Net unrealized gain.............................................. 1,470 13,709
Total net unrealized gain .......................................... $16,951 23,952
During the years ended December 26, 2010 and December 27, 2009, the Company reclassified net gains
from other comprehensive earnings to net earnings of $17,912 and $21,240, respectively. Of the amount
reclassified in 2010 and 2009, $13,249 and $17,173 were reclassified to cost of sales and $4,663 and $4,785
were reclassified to royalty expense, respectively. In addition, net losses of $(132) and $(718) were reclassified
to earnings as a result of hedge ineffectiveness in 2010 and 2009, respectively.
Undesignated Hedges
The Company also enters into foreign currency forward contracts to minimize the impact of changes in
the fair value of intercompany loans due to foreign currency changes. Due to the short-term nature of the
derivative contracts involved, the Company does not use hedge accounting for these contracts. As of
December 26, 2010, the total notional amount of the Company’s undesignated derivative instruments was
$89,191.
At December 26, 2010 and December 27, 2009, the fair values of the Company’s undesignated derivative
financial instruments are recorded in prepaid expenses and other current assets in the consolidated balance
sheet as follows:
2010 2009
Unrealized gains .................................................. $ 27 747
Unrealized losses ................................................. (827) (2,151)
Net unrealized loss ................................................ $(800) (1,404)
The Company recorded net gains (losses) of $4,827, $6,580, and $(42,382) on these instruments to other
(income) expense, net for 2010, 2009 and 2008, respectively, relating to the change in fair value of such
derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to
which the contracts relate.
For additional information related to the Company’s derivative financial instruments see notes 2, 9 and 12.
76
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)