Hasbro 2009 Annual Report Download - page 81

In 2007 certain warrants previously issued by the Company allowing for the purchase of 1,700 shares of
the Company’s common stock, with a weighted average exercise price of approximately $16.99, were
exercised. The holder of the warrants elected to settle the warrants through a non-cash net share settlement,
resulting in the issuance of 779 shares. If the holder had not elected net share settlement, the Company would
have received cash proceeds from the exercise totaling $28,888 and would have been required to issue
1,700 shares.
In addition, during 2007 the Company exercised its call option to repurchase warrants which allowed for
the purchase of an aggregate of 15,750 shares of the Company’s common stock. The Company had a warrant
amendment agreement with Lucasfilm Ltd. and Lucas Licensing Ltd. (together “Lucas”) that provided the
Company with a call option through October 13, 2016 to purchase the warrants from Lucas for a price to be
paid at the Company’s election of either $200,000 in cash or the equivalent of $220,000 in shares of the
Company’s common stock, such stock being valued at the time of the exercise of the option. Also, the warrant
amendment agreement provided Lucas with a put option through January 2008 to sell all of these warrants to
the Company for a price to be paid at the Company’s election of either $100,000 in cash or the equivalent of
$110,000 in shares of the Company’s common stock, such stock being valued at the time of the exercise of the
option. In May 2007 the Company exercised its call option to repurchase all of the outstanding warrants for
the Company’s common stock held by Lucas and paid $200,000 in cash and repurchased the warrants.
Prior to exercising the call option, the Company adjusted these warrants to their fair value through
earnings at the end of each reporting period. During 2007, the Company recorded other expense of $44,370 to
adjust the warrants to their fair value. This amount is included in other (income) expense, net in the
consolidated statements of operations. There was no tax benefit or expense associated with these fair value
adjustments.
(13) Pension, Postretirement and Postemployment Benefits
Pension and Postretirement Benefits
The Company recognizes an asset or liability for each of its defined benefit pension plans equal to the
difference between the projected benefit obligation of the plan and the fair value of the plan’s assets. Actuarial
gains and losses and prior service costs that have not yet been included in income are recognized in the
balance sheet in AOCE.
In 2007 the Company changed the measurement date of certain of its defined benefit pension plans and
the Company’s other postretirement plan from September 30 to the Company’s fiscal year-end date. As a result
of this election, the assets and liabilities of these plans were remeasured as of December 31, 2006. The
remeasurement of the assets and liabilities resulted in an increase in the projected benefit obligation of $536
and an increase in the fair value of plan assets of $10,872. The impact of this accounting change was a
reduction of retained earnings of $2,143, an increase to accumulated other comprehensive earnings of $7,779,
a decrease in long-term accrued pension expense of $3,619, an increase in prepaid pension expense of $5,482,
and a decrease in long-term deferred tax assets of $3,465.
Expenses related to the Company’s defined benefit and defined contribution plans for 2009, 2008 and
2007 were approximately $41,100, $33,400 and $25,900, respectively. Of these amounts, $27,600, $32,400 and
$13,400 related to defined contribution plans in the United States and certain international affiliates. The
remainder of the expense relates to defined benefit plans discussed below.
United States Plans
Prior to 2008, substantially all United States employees were covered under at least one of several non-
contributory defined benefit pension plans maintained by the Company. Benefits under the two major plans
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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)