SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(MARK ONE)
\X\ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002.
OR
\ \ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER 1-6682
A. FULL TITLE OF THE PLAN AND ADDRESS OF THE PLAN, IF DIFFERENT
FROM THAT OF ISSUER NAMED BELOW:
HASBRO, INC. RETIREMENT SAVINGS PLAN
B. NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND
THE ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE:
HASBRO, INC.
1027 NEWPORT AVENUE
PAWTUCKET, RI 02862-1059
REQUIRED INFORMATION
I. FINANCIAL STATEMENTS
The following Plan financial statements and schedule prepared in accordance
with the financial reporting requirements of the Employee Retirement Income
Security Act of 1974 are filed herewith, as permitted by Item 4 of Form 11-K:
Independent Auditors' Report
Statement of Net Assets Available for Plan Benefits as of
December 31, 2002 and 2001
Statements of Changes in Net Assets Available for Plan Benefits for
the years ended December 31, 2002 and 2001
Notes to Financial Statements
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
Other schedules are omitted as the required information is not applicable.
II. EXHIBITS
23 Consent of Independent Auditors
99.1 Certification of the Chief Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
99.2 Certification of the Chief Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee appointed by the Board of Directors of Hasbro, Inc. to administer
the Plan has duly caused this Annual Report on Form 11-K to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: June 27, 2003 /s/ David D.R. Hargreaves
------------- --------------------------
David D. R. Hargreaves
Senior Vice President and
Chief Financial Officer of
Hasbro, Inc.
Independent Auditors' Report
The Plan Trustees
Hasbro, Inc. Retirement Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Hasbro, Inc. Retirement Savings Plan (the Plan) as of
December 31, 2002 and 2001, and the related statements of changes in net
assets available for plan benefits for the years ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with accounting principles generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan
as of December 31, 2002 and 2001, and the changes in net assets available for
plan benefits for the years ended December 31, 2002 and 2001, in conformity
with accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule H, Line 4i -
schedule of assets (held at end of year) as of December 31, 2002 is presented
for the purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedule
is the responsibility of the Plan's management. The supplemental schedule has
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ KPMG LLP
Providence, Rhode Island
May 30, 2003
HASBRO, INC. RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2002 and 2001
2002 2001
---- ----
Assets:
Cash $ 52,620 24,908
Investments 186,647,403 223,240,406
----------- -----------
Total investments and cash (note 3) 186,700,023 223,265,314
----------- -----------
Receivables:
Loans to participants 3,833,383 3,917,205
Investment income 54 58
----------- -----------
Total receivables 3,833,437 3,917,263
----------- -----------
Net assets available for plan benefits $190,533,460 227,182,577
=========== ===========
See accompanying notes to financial statements.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 2002 and 2001
2002 2001
----- -----
Additions to net assets attributed to:
Investment (loss) income:
Net depreciation in fair
value of investments $ (41,312,493) (33,385,005)
Dividends and interest 4,633,577 6,669,908
----------- -----------
Total investment loss (note 3) (36,678,916) (26,715,097)
----------- -----------
Contributions:
Rollovers 417,641 997,033
Employee contributions 11,331,391 11,635,107
Employer matching contributions 7,620,565 7,792,965
----------- -----------
Total contributions 19,369,597 20,425,105
----------- -----------
Total additions (17,309,319) (6,289,992)
Termination, withdrawal and retirement
payments directly to participants 19,147,653 45,439,299
Administrative expenses 192,145 137,012
----------- -----------
Net decrease (36,649,117) (51,866,303)
Net assets available for plan benefits:
Beginning of year 227,182,577 279,048,880
------------ -----------
End of year $ 190,533,460 227,182,577
============ ===========
See accompanying notes to financial statements.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(1) Description of Plan
The following brief description of the Hasbro, Inc. Retirement Savings Plan
(the Plan) is provided for general information purposes only. Participants
should refer to the Plan agreement for more complete information.
(a) General
The Plan is a defined contribution plan subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA) and is
available to substantially all domestic employees of Hasbro, Inc. and
certain subsidiaries (the Company or Plan Administrator).
Participation in the Plan is voluntary and eligibility provisions
apply.
(b) Contributions
Eligible employees could contribute up to 50% of their gross pay,
limited to an annual maximum of $11,000, in 2002 and up to 18% of
their gross pay, limited to an annual maximum of $10,500, in 2001.
Contributions may be limited to less than the maximum percentage of
gross pay to enable the Company to meet IRS discrimination
regulations. The Company makes a matching contribution, except for
Milton Bradley union employees, of 200% of the first 2% of the
participants' gross pay that they contribute, plus a 50% match of the
next 4% of participants' gross pay that they contribute up to 6% of
their gross pay. For Milton Bradley union employees the Company makes
a 25% matching contribution of the participants' contributions up to
6% of their gross pay.
(c) Benefits
All participants currently employed by the Company own, or are vested
in, 100% of the total value of their plan account, including the
Company's 401(k) matching contribution to the Plan except for Milton
Bradley union employees who become 100% vested in Company
contributions on January 1 following one year of service. A
participant's entire vested account will be paid upon retirement,
disability, or termination of employment. The account balance will be
paid to a beneficiary upon death of the participant.
Participants of the Plan have the option of receiving their account
either in a lump sum or in periodic installments. Participants, except
for terminated participants, may also make in-service withdrawals from
their Pre-Tax Savings Contribution Account in the event of a
demonstrated severe financial hardship as defined by the IRS Safe
Harbor rules. Participants who have reached age 59 1/2 may make in-
service withdrawals from their vested accounts in the Plan for any
reason.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(d) Participant Loans
The maximum loan available to each participant is the lesser of (1)
$50,000 reduced by the highest outstanding loan balance due from
the participant during the preceding twelve months, or (2) 50% of the
participant's vested account balance, reduced by the current
outstanding loan balance due from the participant. The minimum loan
amount available to participants is $500. Each loan shall bear a fixed
interest rate based on the prime rate published in the Wall Street
Journal. Repayment of the loan must be made over a period not to
exceed five years, unless it is for the purchase of a primary
residence then the loan period cannot exceed ten years.
(2) Summary of Accounting Policies
(a) Basis of Accounting
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
the Plan Administrator to make estimates and assumptions that affect
the reported amounts in the financial statements and accompanying
notes. Actual results could differ from those estimates.
The accompanying financial statements are presented on the accrual
basis of accounting. Benefits payable at year end are not accrued for
as they are considered to be a component of the net assets available
for plan benefits.
(b) Investments
Investments are stated at fair value. Company stock held in the Hasbro
Stock Fund is valued at the composite closing price on the New York
Stock Exchange. The fair value for all other investments is determined
daily by Fidelity Management Trust Company (the Trustee) on a per
share basis using security prices quoted on national exchanges, and
amortized cost in the case of any short-term and money market
securities held. Participant notes receivable are valued at cost,
which approximates fair value.
Security transactions received prior to 4:00 pm Eastern time by the
Trustee are recognized on that business day. Transactions received
after 4:00 pm Eastern time are valued as of the next business day.
Interest income is recorded on the accrual basis and dividend income
is recorded on the ex-dividend date.
Net appreciation (depreciation) in the fair value of investments
includes both realized and unrealized gains and losses.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(c) Contributions
Contributions from employees are accounted for when such contributions
are deducted from wages. The Company's matching contributions are
accrued at the time the employee's contributions are deducted.
(d) Payments of Benefits
Benefits are recorded when paid.
(e) Administrative Expenses
The Plan bears all costs and general expenses incurred with regard to
legal and communication fees, other professional fees, independent
fund managers and the purchase and sale of investments. Other costs of
administration are paid for by the Plan Administrator.
(3) Investment Information
Participants may elect to have their accounts invested in one or more of
the investment funds offered by the Plan. Investment funds offered by the
Plan include the following nationally traded mutual funds: the Fidelity
Magellan Fund, Fidelity Freedom Income Fund, the Fidelity Equity Income
Fund, the Fidelity Growth Company Fund, the Fidelity Freedom 2000, the
Fidelity Freedom 2010, the Fidelity Freedom 2020, the Fidelity Freedom
2030, the Fidelity Freedom 2040, the Dreyfus Emerging Leaders Fund, the
PIMCO Total Return Fund, the Spartan US Equity Index Fund, and the
Fidelity Diversified International Fund.
Participants can elect to invest up to 25% of their contributions in the
Hasbro Stock Fund which is a unitized company stock fund that invests in
the stock of Hasbro, Inc. and other short term investments designed to
allow participants to buy and sell without the usual trade settlement
period for individual stock transactions. Ownership is measured in units
of the fund instead of shares of stock. In addition, participants cannot
elect to reallocate their investment funds that would result in 25% or
more of their account invested in the Hasbro Stock Fund.
Participants may also elect to invest their funds in the Fleet Stable
Asset Fund. This fund is managed by Fleet Investment Advisors, Inc. and
invests in fixed income contracts. This fund yielded approximately 5.32%
and 6.10% for 2002 and 2001, respectively.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
The following table represents the fair values of investments which were 5
percent or more of the Plan's net assets as of December 31, 2002:
Fidelity Magellan Fund $ 45,736,227
Fidelity Equity Income Fund 26,313,881
Fidelity Growth Company Fund 26,682,495
Fleet Stable Asset Fund 54,758,191
During 2002 and 2001, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
depreciated in value by $(41,312,493) and $(33,385,005), respectively as
follows:
Year Ended December 31,
2002 2001
------ ------
Shares in Registered Investment Companies $(40,952,353) (33,620,275)
Hasbro, Inc. Common Stock Fund (360,140) 235,270
----------- ----------
$(41,312,493) (33,385,005)
=========== ==========
(4) Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Fidelity
Management and Research Company, an affiliate of the Trustee, and,
therefore, qualify as party-in-interest transactions.
(5) Plan Termination
Upon termination of the Plan and trust, each Participant shall be entitled
to receive the vested amount standing to the credit of their account as of
the final valuation date. The Trustee shall make payments of such amounts
as directed by the Plan Administrator.
Although the Company has not expressed any intent to do so, it reserves
the right to terminate the Plan at any time subject to ERISA provisions.
(6) Federal Income Taxes
The Internal Revenue Service issued a determination letter on January 21,
2003, which stated that the Plan and its underlying trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC),
and therefore, are exempt from federal income taxes.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Schedule H, Line 4i - Statements of Assets Held for Investment
Purposes at End of Year
Year ended December 31, 2002
Issuer Investment Description Current Value
------ ----------------------- -------------
Fidelity Magellan Fund* Shares in registered $ 45,736,227 **
investment company
Fidelity Equity Income Fund* Shares in registered 26,313,881 **
investment company
Fidelity Growth Company Fund* Shares in registered 26,682,495 **
investment company
Fleet Stable Asset Fund Common/collective trusts 54,758,191 **
Fidelity Freedom Income Fund* Shares in registered 684,139
investment company
Fidelity Freedom 2000* Shares in registered 274,770
investment company
Fidelity Freedom 2010* Shares in registered 8,950,674
investment company
Fidelity Freedom 2020* Shares in registered 1,621,722
investment company
Fidelity Freedom 2030* Shares in registered 1,649,087
investment company
Fidelity Freedom 2040* Shares in registered 144,709
investment company
Dreyfus Emerging Leaders Fund Shares in registered 4,204,136
investment company
PIMCO Total Return Fund Shares in registered 6,827,083
investment company
Spartan US Equity Index Fund Shares in registered 3,302,327
investment company
Fidelity Diversified Shares in registered 4,489,635
International Fund* investment company
Hasbro Stock Fund Common Stock of Hasbro, Inc. 1,008,327
and other short-term
investments
-----------
Investments $186,647,403
===========
Loans to Participants* Interest rate 8.5% to 9.5% $ 3,833,383
*Party-in-interest
**Represents greater than 5% of Plan assets at December 31, 2002.
See accompanying independent auditors' report.