11-K 1 form11k04.txt FORM 11-K FOR THE YEAR ENDED DECEMBER 31, 2004 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, 2004. 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, 2004 and 2003 Statements of Changes in Net Assets Available for Plan Benefits for the years ended December 31, 2004 and 2003 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 28, 2005 /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, 2004 and 2003, and the related statements of changes in net assets available for plan benefits for the years then 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, 2004 and 2003, and the changes in net assets available for plan benefits for the years ended December 31, 2004 and 2003, 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, 2004 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 17, 2005 HASBRO, INC. RETIREMENT SAVINGS PLAN Statements of Net Assets Available for Plan Benefits December 31, 2004 and 2003 2004 2003 ---- ---- Assets: Cash $ 82,192 109,864 Investments 257,689,845 234,241,703 ----------- ----------- Total investments and cash (note 3) 257,772,037 234,351,567 ----------- ----------- Receivables: Loans to participants 4,177,734 3,914,525 Investment income 102 100 ----------- ----------- Total receivables 4,177,836 3,914,625 ----------- ----------- Net assets available for plan benefits $261,949,873 238,266,192 =========== =========== 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, 2004 and 2003 2004 2003 ----- ----- Additions to net assets attributed to: Investment income: Net appreciation in fair value of investments $ 14,854,182 37,387,978 Dividends and interest 5,903,489 5,043,481 ----------- ----------- Total investment income (note 3) 20,757,671 42,431,459 ----------- ----------- Contributions: Rollovers 620,704 366,868 Employee contributions 13,042,853 11,364,123 Employer matching contributions 8,056,359 7,542,880 ----------- ----------- Total contributions 21,719,916 19,273,871 ----------- ----------- Total additions 42,477,587 61,705,330 Deductions from net assets attributed to: Termination, withdrawal and retirement payments directly to participants 18,693,132 13,858,155 Administrative expenses 100,774 114,443 ----------- ----------- Total deductions 18,793,906 13,972,598 Net increase 23,683,681 47,732,732 Net assets available for plan benefits: Beginning of year 238,266,192 190,533,460 ------------ ----------- End of year $ 261,949,873 238,266,192 ============ =========== See accompanying notes to financial statements. HASBRO, INC. RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 2004 and 2003 (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 gross pay, limited to an annual maximum of $13,000 and $12,000,respectively, in 2004 and 2003. 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 a maximum matching contribution of 6% of a participant's gross pay. For Milton Bradley union employees the Company makes a 25% matching contribution of the participants' contributions up to a maximum matching contribution of 6% of a participant's gross pay. 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 $2,000 for 2003 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. 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. HASBRO, INC. RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 2004 and 2003 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 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. HASBRO, INC. RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 2004 and 2003 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. (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 Fund, the Fidelity Freedom 2010 Fund, the Fidelity Freedom 2020 Fund, the Fidelity Freedom 2030 Fund, the Fidelity Freedom 2040 Fund, 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 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 $1,645,267 as of December 31, 2004 and $2,222,990 as of December 31, 2003. HASBRO, INC. RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 2004 and 2003 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 3.95% and 4.35% for 2004 and 2003, 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, 2004: Fidelity Magellan Fund $ 56,931,753 Fidelity Equity Income Fund 40,069,804 Fidelity Growth Company Fund 44,372,456 Fleet Stable Asset Fund 52,880,808 During 2004 and 2003, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated /(depreciated) in value by $14,854,182 and $37,387,978, respectively, as follows: Year Ended December 31, 2004 2003 ------ ------ Shares in Registered Investment Companies $ 15,013,526 36,500,640 Hasbro, Inc. Common Stock Fund (159,348) 887,338 ----------- ---------- $ 14,854,182 37,387,978 =========== ========== (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, 2004 Issuer Investment Description Current Value ------ ----------------------- ------------- Fidelity Magellan Fund* Shares in registered $ 56,931,753 ** investment company Fidelity Equity Income Fund* Shares in registered 40,069,804 ** investment company Fidelity Growth Company Fund* Shares in registered 44,372,456 ** investment company Fleet Stable Asset Fund Common/collective trusts 52,880,808 ** Fidelity Freedom Income Fund* Shares in registered 892,346 investment company Fidelity Freedom 2000 Fund* Shares in registered 492,181 investment company Fidelity Freedom 2010 Fund* Shares in registered 11,040,451 investment company Fidelity Freedom 2020 Fund* Shares in registered 4,292,107 investment company Fidelity Freedom 2030 Fund* Shares in registered 3,581,529 investment company Fidelity Freedom 2040 Fund* Shares in registered 854,179 investment company Dreyfus Emerging Leaders Fund Shares in registered 10,505,900 investment company PIMCO Total Return Fund Shares in registered 9,303,063 investment company Spartan US Equity Index Fund Shares in registered 7,879,377 investment company Fidelity Diversified Shares in registered 13,030,816 International Fund* investment company Hasbro Stock Fund Common Stock of Hasbro, Inc. 1,645,267 and other short-term investments ----------- Investments $257,772,037 =========== Loans to Participants* Interest rate 4.0% to 9.5% $ 4,177,734 *Party-in-interest **Represents greater than 5% of Plan assets at December 31, 2004. See accompanying report of independent registered public accounting firm.