Hasbro 2006 Annual Report Download - page 61

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(2) Other Comprehensive Earnings
The Company’s other comprehensive earnings (loss) for the years 2006, 2005 and 2004 consist of the
following:
2006 2005 2004
Foreign currency translation adjustments ...................... $26,429 (68,530) 50,391
Changes in value of available-for-sale securities, net of tax ........ (2,497) 838 (9,862)
Gains (losses) on cash flow hedging activities, net of tax. . ........ (7,412) 6,460 (3,954)
Minimum pension liability adjustment, net of tax ............... 1,991 (7,813) (1,661)
Reclassifications to earnings, net of tax....................... 4,077 2,005 16,990
Other comprehensive earnings (loss) ......................... $22,588 (67,040) 51,904
Reclassification adjustments from other comprehensive earnings to earnings in 2006, 2005 and 2004 were
net of related income taxes of $85, $89, and $1,724, respectively. The reclassification adjustments for 2006
and 2004 includes an impairment charge relating to other than temporary decreases in the value of the
Company’s available-for-sale securities. In accordance with Hasbro’s marketable securities accounting policy,
as the result of the decline in the fair value of the Company’s investment in Infogrames Entertainment SA
common stock, the Company adjusted the basis of this investment and recorded a pretax charge to earnings in
the amounts of $2,629 and $8,988 in 2006 and 2004, respectively. The remainder of the reclassification
adjustments in 2006 and 2004, as well as the 2005 reclassification adjustment, include net losses on cash flow
hedging derivatives for which the related transaction has impacted earnings and was reflected in cost of sales.
The related tax benefit (expense) of other comprehensive earnings items was $273, $3,960, and $(283) for
the years 2006, 2005, and 2004, respectively.
At December 31, 2006, the Company adopted SFAS 158, which required the Company to recognize the
over or underfunded status of defined benefit pension and postretirement plans as an asset or liability in its
statement of financial position and to recognize changes in that funded status in the year in which the changes
occur through comprehensive income. The adoption of this statement resulted in an adjustment of $(26,750) to
accumulated other comprehensive income at December 31, 2006.
Components of accumulated other comprehensive earnings at December 31, 2006 and December 25, 2005
are as follows:
2006 2005
Foreign currency translation adjustments ............................. $68,984 42,555
Changes in value of available-for-sale securities, net of tax ............... 1,932 1,800
Gains (losses) on cash flow hedging activities, net of tax ................. (2,116) 3,848
Minimum pension liability adjustment, net of tax ...................... — (32,855)
Unrecognized pension and postretirement amounts, net of tax ............. (57,614) —
$ 11,186 15,348
50
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)