SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(MARK ONE)
\X\ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006.
OR
\ \ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER 1-6682
A. FULL TITLE OF THE PLAN AND ADDRESS OF THE PLAN, IF DIFFERENT
FROM THAT OF ISSUER NAMED BELOW:
HASBRO, INC. RETIREMENT SAVINGS PLAN
B. NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND
THE ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE:
HASBRO, INC.
1027 NEWPORT AVENUE
PAWTUCKET, RI 02862-1059
REQUIRED INFORMATION
I. FINANCIAL STATEMENTS
The following Plan financial statements and schedule prepared in accordance
with the financial reporting requirements of the Employee Retirement Income
Security Act of 1974 are filed herewith, as permitted by Item 4 of Form 11-K:
Report of Independent Registered Public Accounting Firm
Statements of Net Assets Available for Plan Benefits as of
December 31, 2006 and 2005
Statements of Changes in Net Assets Available for Plan Benefits for
the years ended December 31, 2006 and 2005
Notes to Financial Statements
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
Other schedules are omitted as the required information is not applicable.
II. EXHIBITS
23 Consent of Independent Registered Public Accounting Firm
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee appointed by the Board of Directors of Hasbro, Inc. to administer the
Plan has duly caused this Annual Report on Form 11-K to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: June 15, 2007 /s/ David D.R. Hargreaves
------------- --------------------------
David D. R. Hargreaves
Executive Vice President,
Finance and Global Operations
and Chief Financial Officer of
Hasbro, Inc.
Report of Independent Registered Public Accounting Firm
The Plan Administrator
Hasbro, Inc. Retirement Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Hasbro, Inc. Retirement Savings Plan (the Plan) as of
December 31, 2006 and 2005, and the related statements of changes in net assets
available for plan benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan
as of December 31, 2006 and 2005, and the changes in net assets available for
plan benefits for the years ended December 31, 2006 and 2005, in conformity
with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule H, Line 4i -
Schedule of Assets (Held at End of Year) as of December 31, 2006 is presented
for the purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedule
is the responsibility of the Plan's management. The supplemental schedule has
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
As further described in Note 2, during 2006 the Plan adopted Financial
Accounting Standards Board Staff Position AAG INV-1 and Statement of Position
94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by
Certain Investment Companies Subject to the AICPA Investment Company Guide and
Defined-Contribution Health and Welfare and Pension Plans.
/s/ KPMG LLP
Providence, Rhode Island
June 12, 2007
HASBRO, INC. RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2006 and 2005
2006 2005
---- ----
Assets:
Cash $ 176,492 112,433
Investments, at fair value 296,264,214 269,927,132
----------- -----------
Total investments and cash (note 3) 296,440,706 270,039,565
----------- -----------
Receivables:
Loans to participants 4,982,777 4,732,045
Investment income 700 352
----------- -----------
Total receivables 4,983,477 4,732,397
----------- -----------
Net assets, reflecting investments at
fair value 301,424,183 274,711,962
------------ -----------
Adjustment from fair value to contract
value for fully benefit-responsive
investment contracts 484,389 442,469
----------- -----------
Net assets available for plan benefits $301,908,572 275,214,431
=========== ===========
See accompanying notes to financial statements.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 2006 and 2005
2006 2005
----- -----
Additions to net assets attributed to:
Investment income:
Net appreciation in fair
value of investments $ 22,490,999 11,581,666
Dividends and interest 11,585,443 7,071,726
----------- -----------
Total investment income (note 3) 34,076,442 18,653,392
----------- -----------
Contributions:
Rollovers 1,171,478 736,349
Employee contributions 13,715,951 12,458,209
Employer matching contributions 8,560,970 7,806,244
----------- -----------
Total contributions 23,448,399 21,000,802
----------- -----------
Total additions 57,524,841 39,654,194
----------- -----------
Deductions from net assets attributed to:
Termination, withdrawal and retirement
payments directly to participants 30,747,710 26,279,705
Administrative expenses 82,990 109,931
---------- -----------
Total deductions 30,830,700 26,389,636
---------- -----------
Net increase 26,694,141 13,264,558
Net assets available for plan benefits:
Beginning of year 275,214,431 261,949,873
------------ -----------
End of year $ 301,908,572 275,214,431
============ ===========
See accompanying notes to financial statements.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2006 and 2005
(1) Description of Plan
The following brief description of the Hasbro, Inc. Retirement Savings Plan
(the Plan) is provided for general information purposes only. Participants
should refer to the Plan agreement for more complete information.
(a) General
The Plan is a defined contribution plan subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA) and is
available to substantially all domestic employees of Hasbro, Inc. and
certain subsidiaries (collectively the Company or Plan Administrator).
Participation in the Plan is voluntary and eligibility provisions
apply.
(b) Contributions
Eligible employees could contribute up to 50% of their eligible pay,
limited to an annual maximum of $15,000 and $14,000,respectively, in
2006 and 2005. Contributions may be limited to less than the
maximum percentage of eligible pay to enable the Company to meet IRS
discrimination regulations. The Company makes a matching
contribution, except for Milton Bradley union employees, of 200% of
the first 2% of the participants' eligible pay that they contribute per
pay period, plus a 50% match of the next 4% of participants' eligible
pay that they contribute per pay period up to a maximum matching
contribution of 6% of a participant's eligible pay per pay period. For
Milton Bradley union employees, from January 1, 2005 to February 6,
2005, the Company made a 25% matching contribution, up to a matching of
6% of a participant's eligible pay per pay period. For the remainder
of 2005 and during 2006, the Company's matching contribution was 30%,
up to a maximum matching of 6% of a participant's eligible pay per pay
period.
All eligible employees at least age 50 by the end of the calendar year
are permitted to make additional pre-tax deferrals over and above the
otherwise applicable limits. These additional deferrals are called
"catch-up contributions." The Company does not make a matching
contribution. Catch-up contributions may be made up to an additional
$5,000 for 2006 and $4,000 for 2005.
(c) Benefits
All participants currently employed by the Company own, or are vested
in, 100% of the total value of their plan account, including the
Company's 401(k) matching contribution to the Plan, except for Milton
Bradley union employees who become 100% vested in Company
contributions on January 1 following the completion of one year of
service. Subsequent to December 31, 2006, the vesting provisions
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2006 and 2005
related to Milton Bradley union employees were modified resulting in
immediate vesting of Company contributions effective February 5, 2007.
A participant's entire vested account will be paid upon
retirement, disability, or termination of employment. The account
balance will be paid to a beneficiary upon death of the participant.
Participants in the Plan have the option of receiving their account
either in a lump sum or in periodic installments. Participants,
except for terminated participants, may also make in-service
withdrawals from their Pre-Tax Savings Contribution Account in the
event of a demonstrated severe financial hardship as defined by the
IRS Safe Harbor rules. Participants who have reached age 59 1/2
may make in-service withdrawals from their vested accounts in the Plan
for any reason.
(d) Participant Loans
The maximum loan available to each participant is the lesser of (1)
$50,000 reduced by the highest outstanding loan balance due from
the participant during the preceding twelve months, or (2) 50% of the
participant's vested account balance, reduced by the current
outstanding loan balance due from the participant. The minimum loan
amount available to participants is $500. Each loan shall bear a fixed
interest rate on the 1st day of the month (for each month) at prime as
published in the Wall Street Journal on the prior day. Repayment of the
loan must be made over a period not to exceed five years, unless it is
for the purchase of a primary residence, then the loan period cannot
exceed ten years.
(2) Summary of Accounting Policies
(a) Basis of Accounting
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
the Plan Administrator to make estimates and assumptions that affect
the reported amounts in the financial statements and accompanying
notes. Actual results could differ from those estimates. The
accompanying financial statements are presented on the accrual
basis of accounting. Benefits payable at year end are not accrued for
as they are considered to be a component of the net assets available
for plan benefits.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2006 and 2005
(b) Investments
On December 29, 2005, the Financial Accounting Standards Board (FASB)
issued Financial Accounting Standards Board Staff Position (FSP) AAG
INV-1 and Statement of Position 94-4-1, Reporting of Fully Benefit-
Responsive Investment Contracts Held by Certain Investment Companies
Subject to the AICPA Investment Company Audit Guide and Defined-
Contribution Health and Welfare and Pension Plans (the "FSP"). The FSP
provides a definition of fully benefit-responsive investment contracts
and guidance on financial statement presentation and disclosure of
fully benefit-responsive investment contracts.
The Plan has adopted the FSP for the year ended December 31, 2006 and
has retroactively restated the December 31, 2005 presentation of
investments in the accompanying statements of Net Assets Available for
Plan Benefits as required by the transition provisions of the FSP. One
of the investment options offered by the Plan, the Stable Asset Fund
for Employee Benefit Plans, is a common collective trust that is fully
invested in contracts deemed to be fully benefit-responsive within the
meaning of the FSP. The FSP requires that this investment be reported
at fair value. However, contract value is the relevant measure to the
Plan because it is the amount that is available for Plan benefits.
Accordingly, investments as reflected in the Statements of Net Assets
Available for Plan Benefits state the Stable Asset Fund for Employee
Benefit Plans at its fair value, with a corresponding adjustment to
reflect the investment at contract value. The adoption of the FSP had
no impact on net assets available for plan benefit or changes in net
assets available for plan benefit.
Investments are stated at fair value. Company stock held in the Hasbro
Stock Fund is valued at the composite closing price on the New York
Stock Exchange. The fair value of other investments is determined daily
by Fidelity Management Trust Company (the Trustee) on a per share basis
using security prices quoted on national exchanges.
Participant notes receivable are valued at cost, which approximates
fair value.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2006 and 2005
Security transactions received prior to 4:00 pm Eastern time by the
Trustee are recognized on that business day. Transactions received
after 4:00 pm Eastern time are valued as of the next business day.
Interest income is recorded on the accrual basis and dividend income
is recorded on the ex-dividend date.
Net appreciation in the fair value of investments includes both
realized and unrealized gains and losses.
(c) Contributions
Contributions from employees are accounted for when deducted from
employees' wages. The Company's matching contributions are accrued at
the time the employee's contributions are deducted. For years ended
December 31, 2006 and 2005, employer and employee contributions for the
last pay period of the year were paid to the Plan prior to the Plan's
year end.
(d) Payments of Benefits
Benefits are recorded when paid.
(e) Administrative Expenses
The Plan bears all costs and general expenses incurred with regard to
investment consulting, audit, legal and communication fees, other
professional fees, independent fund managers and the purchase and sale
of investments. Other costs of administration are paid for by the Plan
Administrator.
3) Investment Information
Participants may elect to have their accounts invested in one or more
of the investment funds offered by the Plan. Investment funds offered
by the Plan include the following nationally traded mutual funds: the
Fidelity Equity Income Fund, the Fidelity Growth Company Fund, the
Fidelity Freedom 2000 Fund, Fidelity Freedom 2010 Fund, the Fidelity
Freedom 2020 Fund, the Fidelity Freedom 2030 Fund, the Fidelity Freedom
2040 Fund, the Fidelity Freedom Income Fund, the PIMCO Total Return
Fund, the Spartan US Equity Index Fund, and the Fidelity Diversified
International Fund. The following investment options were added as of
July 1, 2005: Vanguard Small-Cap Index Fund, Vanguard Mid-Cap Index
Fund, and Standish Mellon High Yield Bond Fund. The Fidelity Magellan
Fund and Dreyfus Emerging Leaders Fund investment options were
eliminated effective October 31, 2005.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2006 and 2005
Participants can elect to invest up to 25% of their contributions in the
Hasbro Stock Fund which is a unitized stock fund that invests in the stock
of Hasbro, Inc. and other short term investments designed to allow
participants to buy and sell without the usual trade settlement period for
individual stock transactions. Ownership is measured in units of the fund
instead of shares of stock. In addition, participants cannot elect to
reallocate their investment funds that would result in 25% or more of their
account invested in the Hasbro Stock Fund. The fair value of the cash and
investments of the Hasbro Stock Fund was $2,957,782 as of December 31, 2006
and $1,995,740 as of December 31, 2005.
Participants may also elect to invest their funds in the Stable Asset Fund
for Employee Benefit Plans. This fund is managed by Columbia Management
Advisors, LLC. and invests in fixed income contracts. In the Statements of
Net Assets Available for Plan Benefits, the Plan is required to reflect
this investment at fair value, with a corresponding adjustment to contract
value (see Note 2(b)). The fair value of this fund as of December 31, 2006
and 2005 was $47,616,514 and $50,853,890, respectively. The contract value
of the fund as of December 31, 2006 and 2005, which is a component of net
assets available for plan benefits, totaled $48,100,903 and $51,296,359,
respectively. This fund yielded approximately 4.59% and 4.20% for 2006 and
2005, respectively.
The following table represents the carrying value of investments, which
were 5% or more of the Plan's net assets as of December 31, 2006:
Spartan US Equity Index Fund $50,777,082
Stable Asset Fund for Employee Benefit Plans 48,100,903
Fidelity Growth Company Fund 45,876,056
Fidelity Equity Income Fund 41,877,454
Fidelity Diversified International Fund 32,639,330
During 2006 and 2005, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value by $22,490,999 and $11,581,666, respectively, as follows:
Year Ended December 31,
2006 2005
------ ------
Shares in Registered Investment Companies $ 21,719,327 11,473,994
Hasbro, Inc. Common Stock Fund 771,672 107,672
----------- ----------
$ 22,490,999 11,581,666
=========== ==========
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2006 and 2005
(4) Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Fidelity
Management and Research Company, an affiliate of the Trustee, and,
therefore, qualify as party-in-interest transactions. Additionally, the
Plan holds investments in shares of Hasbro, Inc. common stock. The Plan had
102,040 and 93,308 shares of common stock valued at $2,780,590 and
$1,882,955, respectively, as of December 31, 2006 and 2005. These
transactions qualify as exempt party-in-interest transactions.
(5) Plan Termination
Upon termination of the Plan and trust, each Participant shall be entitled
to receive the vested amount standing to the credit of their account as of
the final valuation date. The Trustee shall make payments of such amounts
as directed by the Plan Administrator.
Although the Company has not expressed any intent to do so, it reserves the
right to terminate the Plan at any time subject to ERISA provisions.
(6) Risks and Uncertainties
The Plan provides for investments in various funds, which invest in equity
and debt securities and other investments. Such investments are exposed to
risks and uncertainties, such as interest rate risk, credit risk, economic
and political risks, regulatory changes, and foreign currency risk. In
addition, participants may elect to invest up to 25% of their contributions
in the Hasbro Stock Fund. The underlying performance of this fund is
dependent upon the performance of the Company and the market's evaluation
of such performance. The Plan's exposure to a concentration of credit risk
is subject to the Plan's investment funds selected by participants. These
risks and uncertainties could impact participants' account balances and the
amounts reported in the financial statements.
(7) Federal Income Taxes
The Internal Revenue Service issued a determination letter on January 21,
2003, which stated that the Plan and its underlying trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC), and
therefore, are exempt from federal income taxes.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
Year ended December 31, 2006
Issuer Investment Description Current Value
------ ----------------------- -------------
Stable Asset Fund for
Employee Benefit Plans*** 4,810,090 shares in $ 48,100,903 **
common/collective trusts
Spartan US Equity Index Fund 1,011,899 shares in registered 50,777,082 **
investment company
Fidelity Growth Company Fund* 658,099 shares in registered 45,876,056 **
investment company
Fidelity Equity Income Fund* 715,243 shares in registered 41,877,454 **
investment company
Fidelity Diversified 833,338 shares in registered 32,639,330 **
International Fund* investment company
Fidelity Freedom 2010 Fund* 918,322 shares in registered 13,425,864
investment company
PIMCO Total Return Fund 1,023,082 shares in registered 10,619,590
investment company
Vanguard Small-Cap Index 412,126 shares in registered 13,455,900
Fund investment company
Vanguard Mid-Cap Index Fund 122,407 shares in registered 10,983,601
investment company
Fidelity Freedom 2020 Fund* 692,299 shares in registered 10,751,409
Investment company
Fidelity Freedom 2030 Fund* 482,035 shares in registered 7,727,027
investment company
Hasbro Stock Fund * 102,040 shares of Hasbro, Inc. 2,780,590
common stock
Cash 176,492
Fidelity Freedom 2040 Fund* 305,746 shares in registered 2,898,470
investment company
Standish Mellon High Yield Bond 184,412 shares in registered 2,961,664
investment company
Fidelity Freedom 2000 Fund* 66,983 shares in registered 834,611
investment company
Fidelity Freedom Income Fund* 90,039 shares in registered 1,039,052
investment company
-----------
Investments and Cash $ 296,925,095
===========
Loans to Participants* Interest rate 4.0% to 8.5% $ 4,982,777
*Party-in-interest
**Represents greater than 5% of Plan assets at December 31, 2006.
*** Represents the contract value. The fair value of this investment as of
December 31, 2006 was $47,616,514.
See accompanying report of independent registered public accounting firm.