Hasbro 2008 Annual Report Download - page 79

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With the exception of the alternative investment strategies mentioned above, the Plans’ Investment Policy
restricts the use of derivatives associated with leverage or speculation. In addition, the Investment Policy also
restricts investments in securities issued by Hasbro, Inc. except through index-related strategies (e.g. an S&P
500 Index Fund) and/or commingled funds. In addition, unless specifically approved by the Investment
Committee (which is comprised of members of management, established by the Board to manage and control
pension plan assets), certain securities, strategies, and investments are ineligible for inclusion within the Plans.
As noted above, in 2007, the Company adopted the measurement date provision of SFAS 158 and,
accordingly, for 2008 and 2007, the Plans’ assets and liabilities were measured at December 28, 2008 and
December 30, 2007, respectively. For the fiscal year 2006, the Company measured its liabilities and related
assets at September 30. The discount rates used in the pension calculation were also used for the postretire-
ment calculation.
2008 2007 2006
Components of Net Periodic Cost
Pension
Service cost.......................................... $ 1,597 9,437 10,188
Interest cost.......................................... 17,714 17,435 16,809
Expected return on assets ................................ (23,961) (23,064) (19,112)
Amortization of prior service cost ......................... 282 634 596
Amortization of actuarial loss ............................ 993 1,768 3,399
Curtailment loss ...................................... 1,213 908 —
Net periodic benefit cost (benefit) ......................... $ (2,162) 7,118 11,880
Postretirement
Service cost.......................................... $ 570 597 684
Interest cost.......................................... 2,065 2,105 2,047
Amortization of actuarial loss ............................ 115 364 459
Net periodic benefit cost ................................ $ 2,750 3,066 3,190
Assumptions used to determine net periodic benefit cost of the pension plan for each fiscal year follow:
2008 2007 2006
Weighted average discount rate ................................... 6.34% 5.83% 5.50%
Rate of future compensation increases .............................. 4.00% 4.00% 4.00%
Long-term rate of return on plan assets .............................. 8.75% 8.75% 8.75%
Hasbro works with external benefit investment specialists to assist in the development of the long-term
rate of return assumptions used to model and determine the overall asset allocation. Forecast returns are based
on the combination of historical returns, current market conditions and a forecast for the capital markets for
the next 5-7 years. All asset class assumptions are within certain bands around the long-term historical
averages. Correlations are based primarily on historical return patterns.
69
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)