Hasbro 2006 Annual Report Download - page 71

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weighted average grant-date fair value of each Stock Performance Awards was $19.00. Forfeitures of these
awards during 2006 were 24. At December 31, 2006, the amount of total unrecognized compensation cost
related to these awards is approximately $11,317 and the weighted average period over which this will be
expensed is 24 months.
Prior to fiscal 2006, Hasbro used the intrinsic-value method of accounting for stock options granted to
employees and non-employee members of the Board of Directors. Effective December 26, 2005, the first day
of fiscal 2006, the Company adopted SFAS 123R under the modified prospective transition method as defined
in the statement. Under this adoption method, the Company recorded stock option expense in 2006 based on
all unvested stock options as of the adoption date and any stock option awards made subsequent to the
adoption date. Stock-based compensation is recognized on a straight-line basis over the requisite service period
of the award. In accordance with the modified prospective transition method, the Company’s consolidated
financial statements for prior years have not been restated to reflect, and do not include, the impact of
SFAS 123R.
Total compensation expense related to stock options and the stock performance awards recognized under
SFAS 123R for the year ended December 31, 2006 was $21,684 and was recorded as follows:
Cost of sales .......................................................... $ 306
Research and product development .......................................... 1,436
Selling, distribution and administration ....................................... 19,942
21,684
Income taxes .......................................................... 7,399
$14,285
Information with respect to stock options for the three years ended December 31, 2006 is as follows:
2006 2005 2004
Outstanding at beginning of year ............................ 20,443 21,041 19,261
Granted ............................................. 3,126 2,953 4,956
Exercised ........................................... (5,490) (3,020) (1,865)
Expired or canceled .................................... (770) (531) (1,311)
Outstanding at end of year ............................... 17,309 20,443 21,041
Exercisable at end of year ............................... 11,016 14,015 12,570
Weighted average exercise price:
Granted ............................................. $ 18.83 20.55 19.35
Exercised ........................................... $ 16.00 15.00 14.28
Expired or canceled .................................... $ 24.38 25.07 20.59
Outstanding at end of year ............................... $ 19.73 19.04 18.40
Exercisable at end of year ............................... $ 19.94 19.29 19.24
With respect to the 17,309 outstanding options and 11,016 options exercisable at December 31, 2006, the
weighted average remaining contractual life of these options was 5.29 years and 4.66 years, respectively. The
aggregate intrinsic value of the options outstanding and exercisable at December 31, 2006 was $140,257 and
$90,630, respectively.
60
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)