(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 consolidated balance sheets in AOCE. Reclassifications to earnings from AOCE related to pension and postretirement plans are recorded to selling, distribution and administration expense.

Expenses related to the Company's defined benefit pension and defined contribution plans for 2013, 2012 and 2011 were approximately $35,900, $40,300 and $35,500, respectively. Of these amounts, $23,000, $29,500 and $28,500, 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.

Reclassifications to earnings related to pension and postretirement plans is recorded to selling, distribution and administration expense.

United States Plans

Prior to 2008, substantially all United States employees were covered under at least one of several non-contributory defined benefit pension plans maintained by the Company. Benefits under the two major plans which principally cover non-union employees, were based primarily on salary and years of service. One of these major plans is funded. Benefits under the remaining plans are based primarily on fixed amounts for specified years of service. Of these remaining plans, the plan covering union employees is also funded. In 2007, for the two major plans covering its non-union employees, the Company froze benefits being accrued effective at the end of December 2007.

At December 29, 2013, the measurement date, the projected benefit obligations of the funded plans were in excess of the fair value of the plans' assets in the amount of $24,551 while the unfunded plans of the Company had an aggregate accumulated and projected benefit obligation of $34,886. At December 30, 2012 the projected benefit obligations of the funded plans were in excess of the fair value of the plans' assets in the amount of $77,205 while the unfunded plans of the Company had an aggregate accumulated and projected benefit obligation of $40,901.

Hasbro also provides certain postretirement health care and life insurance benefits to eligible employees who retire and have either attained age 65 with 5 years of service or age 55 with 10 years of service. The cost of providing these benefits on behalf of employees who retired prior to 1993 is and will continue to be substantially borne by the Company. The cost of providing benefits on behalf of substantially all employees who retire after 1992 is borne by the employee. The plan is not funded.

Reconciliations of the beginning and ending balances for the projected benefit obligation, the fair value of plan assets and the funded status are included below for the years ended December 29, 2013 and December 30, 2012.

	Pension						Postretirement

	2013			2012			2013			2012
Change in Projected Benefit Obligation
Projected benefit obligation – beginning	$	391,681			346,155			36,969			35,196
Service cost		2,579			1,784			750			735
Interest cost		15,597			16,669			1,380			1,758
Actuarial (gain) loss		(45,170	)		54,428			(5,617	)		1,403
Curtailment		2,958			486			-			-
Plan amendment		-			-			(4,408	)		-
Benefits paid		(17,213	)		(25,795	)		(1,900	)		(2,123	)
Settlements		(16,213	)		-			-			-
Expenses paid		(1,445	)		(2,046	)		-			-
Projected benefit obligation – ending	$	332,774			391,681			27,174			36,969
Accumulated benefit obligation – ending	$	332,774			391,681			27,174			36,969

Change in Plan Assets
Fair value of plan assets - beginning	$	273,575			265,075			-			-
Actual return on plan assets		30,619			32,613			-			-
Employer contribution		4,014			3,728			-			-
Benefits paid		(17,213	)		(25,795	)		-			-
Settlements		(16,213	)		-			-			-
Expenses paid		(1,445	)		(2,046	)		-			-
Fair value of plan assets - ending	$	273,337			273,575			-			-

Reconciliation of Funded Status
Projected benefit obligation	$	(332,774	)		(391,681	)		(27,174	)		(36,969	)
Fair value of plan assets		273,337			273,575			-			-
Funded status		(59,437	)		(118,106	)		(27,174	)		(36,969	)
Unrecognized net loss (gain)		69,716			138,946			(15	)		5,673
Unrecognized prior service cost (credit)		-			-			(3,857	)		215
Net amount recognized	$	10,279			20,840			(31,046	)		(31,081	)

Accrued liabilities	$	(2,978	)		(2,982	)		(2,100	)		(2,200	)
Other liabilities		(56,459	)		(115,124	)		(25,074	)		(34,769	)
Accumulated other comprehensive earnings (loss)		69,716			138,946			(3,872	)		5,888
Net amount recognized	$	10,279			20,840			(31,046	)		(31,081	)

In fiscal 2014, the Company expects amortization of unrecognized net losses and unrecognized prior service cost related to its defined benefit pension plans of $3,351 and $98, respectively, to be included as a component of net periodic benefit cost. The Company expects amortization of unrecognized prior service credits in 2014 related to its postretirement plan of $(457).

Assumptions used to determine the year-end pension and postretirement benefit obligations are as follows:

	2013			2012
Pension
Weighted average discount rate		5.02	%		4.09	%

Mortality table	RP-2000/IRS Static Basis			RP-2000/IRS Static Basis

Postretirement
Discount rate		5.11	%		4.17	%
Health care cost trend rate assumed for next year		7.00	%		7.00	%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)		5.00	%		5.00	%
Year that the rate reaches the ultimate trend		2020			2020

The assets of the funded plans are managed by investment advisors. The fair values of the plan assets by asset class and fair value hierarchy level (as described in note 12) as of December 29, 2013 and December 30, 2012 are as follows:

			Fair value measurements using:
	Fair Value		Quoted prices in Active markets For identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
2013:
Equity:
Large Cap	$	14,700		14,700		-		-
Small Cap		18,400		18,400		-		-
International		40,100		-		40,100		-
Other		59,500		-		-		59,500
Fixed Income		103,700		-		100,700		3,000
Total Return Fund		27,900		-		27,900		-
Cash Equivalents		9,000		-		9,000		-
	$	273,300		33,100		177,700		62,500

2012:
Equity:
Large Cap	$	8,000		8,000		-		-
Small Cap		11,400		11,400		-		-
International		33,600		-		33,600		-
Other		56,600		-		-		56,600
Fixed Income		110,600		-		108,200		2,400
Total Return Fund		31,800		-		31,800		-
Cash Equivalents		21,600		-		21,600		-
	$	273,600		19,400		195,200		59,000

Level 1 assets consist of investments traded on active markets that are valued using published closing prices. The Plans' Level 2 assets primarily consist of investments in common and collective trusts as well as other private investment funds that are valued using the net asset values provided by the trust or fund. Although these trusts and funds are not traded in an active market with quoted prices, the investments underlying the net asset value are based on quoted prices. The Company believes that these investments could be sold at amounts approximating the net asset values provided by the trust or fund. The Plans' Level 3 assets consist of an investment in a hedge fund which is valued using the net asset value provided by the investment manager as well as an investment in a public-private investment fund which is also valued using the net asset value provided by the investment manager. The hedge fund contains investments in financial instruments that are valued using certain estimates which are considered unobservable in that they reflect the investment manager's own assumptions about the inputs that market participants would use in pricing the asset or liability. The public-private investment fund, which is included in fixed income investments above, invests in commercial mortgage-backed securities and non-agency residential mortgage-backed securities. These securities are valued using certain estimates which are considered unobservable in that they reflect the investment manager's own assumptions about the inputs that market participants would use in pricing the asset. The Company believes that the net asset value is the best information available for use in the fair value measurement of this fund. Of the activity in Level 3 assets for 2013, $1,100 relates to purchases of investments, $16,700 relates to capital distributions, $1,600 relates to realized gains on assets sold during the period and $17,500 relates to the unrealized gains on plan assets still held at December 29, 2013.

Hasbro's two major funded plans (the "Plans") are defined benefit pension plans intended to provide retirement benefits to participants in accordance with the benefit structure established by Hasbro, Inc. The Plans' investment managers, who exercise full investment discretion within guidelines outlined in the Plans' Investment Policy, are charged with managing the assets with the care, skill, prudence and diligence that a prudent investment professional in similar circumstance would exercise. Investment practices, at a minimum, must comply with the Employee Retirement Income Security Act (ERISA) and any other applicable laws and regulations.

The Plans' asset allocations are structured to meet a long-term targeted total return consistent with the ongoing nature of the Plans' liabilities. The shared long-term total return goal, presently 7.00%, includes income plus realized and unrealized gains and/or losses on the Plans' assets. Utilizing generally accepted diversification techniques, the Plans' assets, in aggregate and at the individual portfolio level, are invested so that the total portfolio risk exposure and risk-adjusted returns best meet the Plans' long-term obligations to employees. The Company's asset allocation includes alternative investment strategies designed to achieve a modest absolute return in addition to the return on an underlying asset class such as bond or equity indices. These alternative investment strategies may use derivatives to gain market returns in an efficient and timely manner; however, derivatives are not used to leverage the portfolio beyond the market value of the underlying assets. These alternative investment strategies are included in other equity, total return fund and fixed income asset categories at December 29, 2013 and December 30, 2012. Plan asset allocations are reviewed at least quarterly and rebalanced to achieve target allocation among the asset categories when necessary.

The Plans' investment managers are provided specific guidelines under which they are to invest the assets assigned to them. In general, investment managers are expected to remain fully invested in their asset class with further limitations of risk as related to investments in a single security, portfolio turnover and credit quality.

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 comprises 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.

For 2013, 2012 and 2011, the Company measured the assets and obligations of the Plans as of the fiscal year-end. The following is a detail of the components of the net periodic benefit cost for the three years ended December 29, 2013.

	2013			2012			2011
Components of Net Periodic Cost

Pension
Service cost	$	2,579			1,784			1,729
Interest cost		15,597			16,669			16,852
Expected return on assets		(17,761	)		(18,097	)		(19,012	)
Amortization of prior service cost		98			157			198
Amortization of actuarial loss		7,070			6,221			4,624
Curtailment/settlement losses		6,993			672			-
Net periodic benefit cost	$	14,576			7,406			4,391

Postretirement
Service cost	$	750			735			685
Interest cost		1,380			1,758			1,764
Amortization of actuarial (gain) loss		(264	)		80			67
Net periodic benefit cost	$	1,866			2,573			2,516

Assumptions used to determine net periodic benefit cost of the pension plan and postretirement plan for each fiscal year follow:

	2013			2012			2011
Pension
Weighted average discount rate		4.49	%		4.96	%		5.20	%
Long-term rate of return on plan assets		7.00	%		7.00	%		7.25	%

Postretirement
Discount rate		4.34	%		5.17	%		5.27	%
Health care cost trend rate assumed for next year		7.00	%		7.00	%		7.50	%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)		5.00	%		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate		2020			2020			2020

If the health care cost trend rate were increased one percentage point in each year, the accumulated postretirement benefit obligation at December 29, 2013 and the aggregate of the benefits earned during the period and the interest cost would have both increased by approximately 3%.

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.

Expected benefit payments under the defined benefit pension plans and the postretirement benefit plan for the next five years subsequent to 2013 and in the aggregate for the following five years are as follows:

	Pension		Postretirement
2014	$	19,865		2,031
2015		19,972		1,704
2016		19,996		1,669
2017		20,643		1,624
2018		21,379		1,589
2019-2023		111,457		7,449

International Plans

Pension coverage for employees of Hasbro's international subsidiaries is provided, to the extent deemed appropriate, through separate defined benefit and defined contribution plans. At December 29, 2013 and December 30, 2012, the defined benefit plans had total projected benefit obligations of $112,460 and $107,366, respectively, and fair values of plan assets of $85,335 and $76,930, respectively. Substantially all of the plan assets are invested in equity and fixed income securities. The pension expense related to these plans was $4,085, $3,458 and $2,758 in 2013, 2012 and 2011, respectively. In fiscal 2014, the Company expects amortization of $(27) of prior service costs, $1,589 of unrecognized net losses and $3 of unrecognized transition obligation to be included as a component of net periodic benefit cost.

Expected benefit payments under the international defined benefit pension plans for the five years subsequent to 2013 and in the aggregate for the five years thereafter are as follows: 2014: $1,898; 2015: $1,973; 2016: $2,195; 2017: $2,434; 2018: $2,655; and 2019 through 2023: $17,635.

Postemployment Benefits

Hasbro has several plans covering certain groups of employees, which may provide benefits to such employees following their period of active employment but prior to their retirement. These plans include certain severance plans which provide benefits to employees involuntarily terminated and certain plans which continue the Company's health and life insurance contributions for employees who have left Hasbro's employ under terms of its long-term disability plan.