Hasbro 2007 Annual Report Download - page 57

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A reconciliation of net earnings and average number of shares for the three fiscal years ended
December 30, 2007 is as follows:
Basic Diluted Basic Diluted Basic Diluted
2007 2006 2005
Net earnings .............. $333,003 333,003 230,055 230,055 212,075 212,075
Change in fair value of
liabilities potentially
settleable in common
stock ................ — — — — — (2,080)
Interest expense on
contingent convertible
debentures due 2021, net
oftax................ — 4,248 — 4,262 — 4,263
$333,003 337,251 230,055 234,317 212,075 214,258
Average shares outstanding.... 156,054 156,054 167,100 167,100 178,303 178,303
Effect of dilutive securities:
Liabilities potentially
settleable in common
stock ................ — — — — — 5,339
Contingent convertible
debentures due 2021 ..... — 11,568 — 11,574 — 11,574
Options and warrants ...... — 3,583 — 2,369 — 2,220
Equivalent shares ........... 156,054 171,205 167,100 181,043 178,303 197,436
Net earnings per share ....... $ 2.13 1.97 1.38 1.29 1.19 1.09
In accordance with Emerging Issues Task Force (“EITF”) Issue 04-8, “The Effect of Contingently
Convertible Instruments on Diluted Earnings per Share”, the net earnings per share calculations for the three
years ended December 30, 2007 include adjustments to add back to earnings the interest expense, net of tax,
incurred on the Company’s Senior Convertible Debentures due 2021, as well as to add back to outstanding
shares the amount of shares potentially issuable as if the contingent conversion features were met. See note 7
for further information on the contingent conversion feature.
Certain warrants containing a put feature that may be settled in cash or common stock were required to
be accounted for as a liability at fair value. These warrants were repurchased by the Company in May of
2007. Prior to their repurchase, the Company was required to assess if these warrants, classified as a liability,
had a more dilutive impact on earnings per share when treated as an equity contract. For the years ended
December 30, 2007 and December 31, 2006, the warrants had a more dilutive impact on earnings per share
assuming they were treated as a liability and no adjustments to net earnings or equivalent shares was required.
For the year ended December 25, 2005, the warrants had a more dilutive impact on earnings per share
assuming they were treated as an equity contract. Accordingly for 2005, the numerator includes an adjustment
to net earnings for the income included therein related to the fair market value adjustment and the denominator
includes an adjustment for the shares issuable as of that date.
49
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)