Hasbro 2007 Annual Report Download - page 58

(2) Other Comprehensive Earnings
The Company’s other comprehensive earnings (loss) for the years 2007, 2006 and 2005 consist of the
following:
2007 2006 2005
Foreign currency translation adjustments . . . .................. $35,888 26,429 (68,530)
Changes in value of available-for-sale securities, net of tax ....... 221 (2,497) 838
Gains (losses) on cash flow hedging activities, net of tax ......... (15,851) (7,412) 6,460
Change in unrecognized pension and postretirement amounts,
netoftax .......................................... 27,393 — —
Minimum pension liability adjustment, net of tax ............... — 1,991 (7,813)
Reclassifications to earnings, net of tax ...................... 8,322 4,077 2,005
Other comprehensive earnings (loss) ........................ $55,973 22,588 (67,040)
Reclassification adjustments from other comprehensive earnings to earnings in 2007, 2006 and 2005 were
net of related income taxes of $1,412, $85, and $89, respectively. The reclassification adjustment for 2007
includes a realized gain of $(664) on the sale of available-for-sale securities and amortization, net of tax, of
unrecognized pension and postretirement amounts of $2,099. The reclassification adjustment for 2006 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 amount of
$2,629 in 2006. The remainder of the reclassification adjustments in 2007 and 2006, 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 $16,064, $273, and $3,960
for the years 2007, 2006, and 2005, respectively.
In the first quarter of 2007, in accordance with SFAS No. 158, the Company changed its measurement
date for certain of its defined benefit pension plans and its postretirement plan from September 30 to the
Company’s fiscal year-end date. As a result of this change, the assets and liabilities of these plans were
remeasured as of December 31, 2006, the 2006 fiscal year end date of the Company. This remeasurement
resulted in an adjustment to accumulated other comprehensive earnings of $7,779 net of taxes of $4,765,
during the first quarter of 2007.
At December 31, 2006, the Company adopted the recognition provisions of SFAS 158, which required the
Company to recognize the funded 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.
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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)