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, 2005.
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:
Report of Independent Registered Public Accounting Firm
Statement of Net Assets Available for Plan Benefits as of
December 31, 2005 and 2004
Statements of Changes in Net Assets Available for Plan Benefits for
the years ended December 31, 2005 and 2004
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 Registered Public Accounting Firm
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 23, 2006 /s/ David D.R. Hargreaves
------------- --------------------------
David D. R. Hargreaves
Senior Vice President and
Chief Financial Officer of
Hasbro, Inc.
Report of Independent Registered Public Accounting Firm
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, 2005 and 2004, 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2005 and 2004, and the changes in net assets available for
plan benefits for the years ended December 31, 2005 and 2004, in conformity
with U.S. generally accepted accounting principles.
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, 2005 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
June 16, 2006
HASBRO, INC. RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2005 and 2004
2005 2004
---- ----
Assets:
Cash $ 112,433 82,192
Investments 270,369,601 257,689,845
----------- -----------
Total investments and cash (note 3) 270,482,034 257,772,037
----------- -----------
Receivables:
Loans to participants 4,732,045 4,177,734
Investment income 352 102
----------- -----------
Total receivables 4,732,397 4,177,836
----------- -----------
Net assets available for plan benefits $275,214,431 261,949,873
=========== ===========
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, 2005 and 2004
2005 2004
----- -----
Additions to net assets attributed to:
Investment income:
Net appreciation in fair
value of investments $ 11,581,666 14,854,182
Dividends and interest 7,071,726 5,903,489
----------- -----------
Total investment income (note 3) 18,653,392 20,757,671
----------- -----------
Contributions:
Rollovers 736,349 620,704
Employee contributions 12,458,209 13,042,853
Employer matching contributions 7,806,244 8,056,359
----------- -----------
Total contributions 21,000,802 21,719,916
----------- -----------
Total additions 39,654,194 42,477,587
Deductions from net assets attributed to:
Termination, withdrawal and retirement
payments directly to participants 26,279,705 18,693,132
Administrative expenses 109,931 100,774
----------- -----------
Total deductions 26,389,636 18,793,906
Net increase 13,264,558 23,683,681
Net assets available for plan benefits:
Beginning of year 261,949,873 238,266,192
------------ -----------
End of year $ 275,214,431 261,949,873
============ ===========
See accompanying notes to financial statements.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2005 and 2004
(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 (collectively 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 eligible pay,
limited to an annual maximum of $14,000 and $13,000,respectively, in
2005 and 2004. Contributions may be limited to less than the maximum
percentage of eligible 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' eligible pay that they contribute per pay period,
plus a 50% match of the next 4% of participants' eligible pay period
that they contribute per pay period up to a maximum matching
contribution of 6% of a participant's eligible pay per pay period. For
Milton Bradley union employees, for 2004 and up to February 6, 2005,
the Company made a 25% matching contribution of the participants'
contributions up to a maximum matching of 6% of a participant's
eligible pay per pay period. Effective February 7, 2005, this matching
contribution is 30%.
All eligible employees at least age 50 by the end of the calendar year
are permitted to make additional pre-tax deferrals over and above the
otherwise applicable limits. These additional deferrals are called
"catch-up contributions." The Company does not make a matching
contribution. Catch-up contributions may be made up to an additional
$4,000 for 2005, and $3,000 for 2004.
(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 the completion of one year of service.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2005 and 2004
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 in 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.
(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 on the 1st day of the month (for each month) at prime as
published in the Wall Street Journal on the prior day. 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.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2005 and 2004
(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 in the fair value of investments includes both
realized and unrealized gains and losses.
(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
investment consulting, audit, 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.
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2005 and 2004
(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
Equity Income Fund, the Fidelity Growth Company Fund, the Fidelity Freedom
2000 Fund, Fidelity Freedom 2010 Fund, the Fidelity Freedom 2020 Fund, the
Fidelity Freedom 2030 Fund, the Fidelity Freedom 2040 Fund, the Fidelity
Freedom Income Fund, the PIMCO Total Return Fund, the Spartan US Equity
Index Fund, the Fidelity Diversified International Fund. As of July 1, 2005
the Plan added the Vanguard Small-Cap Index Fund, Vanguard Mid-Cap Index
Fund, and Standish Mellon High Yield Bond Fund as investment options, which
replaced the Fidelity Magellan Fund and Dreyfus Emerging Leaders Fund,
which were eliminated effective October 31, 2005.
Participants can elect to invest up to 25% of their contributions in the
Hasbro Stock Fund which is a unitized 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. The fair value of the Hasbro
Stock Fund was $1,995,338 as of December 31, 2005 and $1,645,267 as of
December 31, 2004.
Participants may also elect to invest their funds in the Fleet Stable Asset
Fund. This fund is managed by Columbia Management Advisors, Inc. and
invests in fixed income contracts. This fund yielded approximately 4.20%
and 3.95% for 2005 and 2004, respectively.
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, 2005:
Fidelity Diversified International Fund $ 23,410,157
Fidelity Equity Income Fund 38,014,056
Fidelity Growth Company Fund 44,857,667
Fleet Stable Asset Fund 51,296,359
Spartan US Equity Index Fund 47,063,227
During 2005 and 2004, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value by $11,581,666 and $14,854,182, respectively, as follows:
HASBRO, INC. RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2005 and 2004
Year Ended December 31,
2005 2004
------ ------
Shares in Registered Investment Companies $ 11,473,994 15,013,530
Hasbro, Inc. Common Stock Fund 107,672 (159,348)
----------- ----------
$ 11,581,666 14,854,182
=========== ==========
(4) Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Fidelity
Management and Research Company, an affiliate of the Trustee.
Additionally, the Plan holds investments in shares of Hasbro, Inc. common
stock. The Plan had 93,308 and 80,654 shares of common stock valued at
$1,882,955 and $1,563,075, respectively, as of December 31, 2005 and 2004.
These transactions qualify as exempt 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 - Schedule of Assets (Held at End of Year)
Year ended December 31, 2005
Issuer Investment Description Current Value
------ ----------------------- -------------
Fleet Stable Asset Fund Common/collective trusts $ 51,296,359 **
Spartan US Equity Index Fund Shares in registered 47,063,227 **
investment company
Fidelity Growth Company Fund* Shares in registered 44,857,667 **
investment company
Fidelity Equity Income Fund* Shares in registered 38,014,056 **
investment company
Fidelity Diversified Shares in registered 23,410,157 **
International Fund* investment company
Fidelity Freedom 2010 Fund* Shares in registered 12,372,704
investment company
PIMCO Total Return Fund Shares in registered 11,490,631
investment company
Vanguard Small-Cap Index Shares in registered 10,531,640
Fund investment company
Vanguard Mid-Cap Index Fund Shares in registered 9,087,939
investment company
Fidelity Freedom 2020 Fund* Shares in registered 8,439,402
investment company
Fidelity Freedom 2030 Fund* Shares in registered 5,776,759
investment company
Hasbro Stock Fund* Common Stock of Hasbro, Inc. 1,995,388
and cash
Fidelity Freedom 2040 Fund* Shares in registered 1,949,833
investment company
Standish Mellon High Yield Bond Shares in registered 1,847,122
investment company
Fidelity Freedom 2000 Fund* Shares in registered 1,443,742
investment company
Fidelity Freedom Income Fund* Shares in registered 905,408
investment company
-----------
Investments and Cash $270,482,034
===========
Loans to Participants* Interest rate 4.0% to 9.5% $ 4,732,045
*Party-in-interest
**Represents greater than 5% of Plan assets at December 31, 2005.
See accompanying report of independent registered public accounting firm.