Hasbro 2011 Annual Report Download - page 80

HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
With respect to the 11,004 outstanding options and 7,494 options exercisable at December 25, 2011, the
weighted average remaining contractual life of these options was 3.53 years and 2.72 years, respectively. The
aggregate intrinsic value of the options outstanding and exercisable at December 25, 2011 was $70,422 and
$61,585, respectively.
The Company uses the Black-Scholes valuation model in determining the fair value of stock options. The
weighted average fair value of options granted in fiscal 2011, 2010 and 2009 was $9.84, $7.24 and $5.16,
respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions used for grants in the fiscal years 2011, 2010
and 2009:
2011 2010 2009
Risk-free interest rate ....................................... 1.64% 2.17% 1.87%
Expected dividend yield ..................................... 2.63% 2.97% 3.52%
Expected volatility ......................................... 30% 30% 36%
Expected option life ........................................ 5years 5 years 4 years
The intrinsic values, which represent the difference between the fair market value on the date of exercise
and the exercise price of the option, of the options exercised in fiscal 2011, 2010 and 2009 were $26,308,
$80,783 and $4,044, respectively.
At December 25, 2011, the amount of total unrecognized compensation cost related to stock options was
$17,076 and the weighted average period over which this will be expensed is 24 months.
In 2011 and 2010, the Company granted awards to certain employees consisting of cash settled restricted
stock units. Under these awards, the recipients are granted restricted stock units that vest over three years. At the
end of the vesting period, the fair value of those units based on Hasbro’s stock price will be paid in cash to the
recipient. The Company accounts for these awards as a liability and marks the vested portion of the award to
market through the statement of operations. In 2011 and 2010, the Company recognized expense of $804 and
$1,004, respectively related to these awards.
In 2011, 2010 and 2009, the Company granted 33, 36 and 60 shares of common stock, respectively, to its
non-employee members of its Board of Directors. Of these shares, the receipt of 27 shares from the 2011 grant,
30 shares from the 2010 grant and 51 shares from the 2009 grant has been deferred to the date upon which the
respective director ceases to be a member of the Company’s Board of Directors. These awards were valued at the
market value of the underlying common stock at the date of grant and vested upon grant. In connection with
these grants, compensation cost of $1,560, $1,440 and $1,365 was recorded in selling, distribution and
administration expense in 2011, 2010 and 2009, respectively.
(14) 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.
Expenses related to the Company’s defined benefit pension and defined contribution plans for 2011, 2010
and 2009 were approximately $35,500, $34,900 and $41,100, respectively. Of these amounts, $28,500, $29,000
and $27,600, respectively, related to defined contribution plans in the United States and certain international
subsidiaries. The remainder of the expense relates to defined benefit pension plans discussed below.
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