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Pension, Postretirement and Postemployment Benefits | 12 Months Ended
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Dec. 27, 2015
Pension, Postretirement and Postemployment Benefits [Abstract] |
Pension, Postretirement and Postemployment Benefits | (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 2015, 2014 and 2013 were approximately $36,000, $34,300 and $35,900, respectively. Of these amounts, $26,600, $28,100 and $23,000, 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. 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. Following the August 2015 sale of its manufacturing facility in East Longmeadow, MA, the Company elected to freeze benefits related to its major plan covering union employees. At December 27, 2015, 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 $66,980 while the unfunded plans of the Company had an aggregate accumulated and projected benefit obligation of $34,751. At December 28, 2014 the projected benefit obligations of the funded plans were in excess of the fair value of the plans' assets in the amount of $73,398 while the unfunded plans of the Company had an aggregate accumulated and projected benefit obligation of $37,660. 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 27, 2015 and December 28, 2014.
| Pension |  | Postretirement
| 2015 |  | 2014 |  | 2015 |  | 2014
Change in Projected Benefit Obligation |  |  |  |  |  |  |  |
Projected benefit obligation – beginning | $ | 383,068 |  | 332,774 |  | 28,017 |  | 27,174
Service cost |  | 1,918 |  | 1,824 |  | 567 |  | 543
Interest cost |  | 15,683 |  | 16,209 |  | 1,154 |  | 1,337
Actuarial (gain) loss |  | (17,968) |  | 59,640 |  | (741) |  | 796
Curtailment |  | 660 |  | - |  | (746) |  | -
Benefits paid |  | (20,202) |  | (25,690) |  | (2,004) |  | (1,833)
Expenses paid |  | (2,099) |  | (1,689) |  | - |  | -
Projected benefit obligation – ending | $ | 361,060 |  | 383,068 |  | 26,247 |  | 28,017
Accumulated benefit obligation – ending | $ | 361,060 |  | 383,068 |  | 26,247 |  | 28,017
Change in Plan Assets |  |  |  |  |  |  |  |
Fair value of plan assets – beginning | $ | 272,010 |  | 273,337 |  | - |  | -
Actual return on plan assets |  | (3,414) |  | 20,385 |  | - |  | -
Employer contribution |  | 13,034 |  | 5,667 |  | - |  | -
Benefits paid |  | (20,202) |  | (25,690) |  | - |  | -
Expenses paid |  | (2,099) |  | (1,689) |  | - |  | -
Fair value of plan assets – ending | $ | 259,329 |  | 272,010 |  | - |  | -
Reconciliation of Funded Status |  |  |  |  |  |  |  |
Projected benefit obligation | $ | (361,060) |  | (383,068) |  | (26,247) |  | (28,017)
Fair value of plan assets |  | 259,329 |  | 272,010 |  | - |  | -
Funded status |  | (101,731) |  | (111,058) |  | (26,247) |  | (28,017)
Unrecognized net loss |  | 120,482 |  | 123,968 |  | 41 |  | 782
Unrecognized prior service cost (credit) |  | - |  | 187 |  | - |  | (3,401)
Net amount recognized | $ | 18,751 |  | 13,097 |  | (26,206) |  | (30,636)
Accrued liabilities | $ | (2,663) |  | (2,990) |  | (1,800) |  | (2,100)
Other liabilities |  | (99,068) |  | (108,068) |  | (24,447) |  | (25,917)
Accumulated other comprehensive earnings (loss) |  | 120,482 |  | 124,155 |  | 41 |  | (2,619)
Net amount recognized | $ | 18,751 |  | 13,097 |  | (26,206) |  | (30,636)
In fiscal 2016, the Company expects amortization of unrecognized net losses related to its defined benefit pension plans of $7,361 to be included as a component of net periodic benefit cost. The Company does not expect amortization in 2016 related to its postretirement plan. Assumptions used to determine the year-end pension and postretirement benefit obligations are as follows:
| 2015 |  | 2014
Pension |  |  |
Weighted average discount rate | 4.58% |  | 4.19%
Mortality table | RP-2014/Scale BB |  | RP-2014/Scale BB
Postretirement |  |  |
Discount rate | 4.64% |  | 4.23%
Health care cost trend rate assumed for next year | 7.00% |  | 6.50%
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 | 2021 |  | 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 27, 2015 and December 28, 2014 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)
2015: |  |  |  |  |  |  |  |
Equity: |  |  |  |  |  |  |  |
Large Cap | $ | 27,600 |  | 27,600 |  | - |  | -
Small Cap |  | 24,300 |  | 24,300 |  | - |  | -
International |  | 37,500 |  | - |  | 37,500 |  | -
Other |  | 2,500 |  | - |  | - |  | 2,500
Fixed Income |  | 122,600 |  | - |  | 122,600 |  | -
Total Return Fund |  | 27,700 |  | - |  | 27,700 |  | -
Cash Equivalents |  | 17,100 |  | - |  | 17,100 |  | -
| $ | 259,300 |  | 51,900 |  | 204,900 |  | 2,500
2014: |  |  |  |  |  |  |  |
Equity: |  |  |  |  |  |  |  |
Large Cap | $ | 14,100 |  | 14,100 |  | - |  | -
Small Cap |  | 18,000 |  | 18,000 |  | - |  | -
International |  | 34,300 |  | - |  | 34,300 |  | -
Other |  | 36,400 |  | - |  | - |  | 36,400
Fixed Income |  | 132,100 |  | - |  | 110,100 |  | 22,000
Total Return Fund |  | 28,600 |  | - |  | 28,600 |  | -
Cash Equivalents |  | 8,500 |  | - |  | 8,500 |  | -
| $ | 272,000 |  | 32,100 |  | 181,500 |  | 58,400
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 2015, $200 relates to purchases of investments, $58,700 relates to sales and capital distributions, $4,700 relates to realized gains on assets sold during the period and $740 relates to the unrealized gains on plan assets still held at December 27, 2015. 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 27, 2015 and December 28, 2014. 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. The following is a detail of the components of the net periodic benefit cost for the three years ended December 27, 2015.
| 2015 |  | 2014 |  | 2013
Components of Net Periodic Cost |  |  |  |  |  |
Pension |  |  |  |  |  |
Service cost | $ | 1,918 |  | 1,824 |  | 2,579
Interest cost |  | 15,683 |  | 16,209 |  | 15,597
Expected return on assets |  | (18,538) |  | (18,631) |  | (17,761)
Amortization of prior service cost |  | 65 |  | 98 |  | 98
Amortization of actuarial loss |  | 7,468 |  | 3,351 |  | 7,070
Curtailment/settlement losses |  | 781 |  | - |  | 6,993
Net periodic benefit cost | $ | 7,377 |  | 2,851 |  | 14,576
Postretirement |  |  |  |  |  |
Service cost | $ | 567 |  | 543 |  | 750
Interest cost |  | 1,154 |  | 1,337 |  | 1,380
Amortization of actuarial (gain) loss |  | (304) |  | (457) |  | (264)
Curtailment |  | (3,842) |  | - |  | -
Net periodic benefit cost (income) | $ | (2,425) |  | 1,423 |  | 1,866
See note 17 for additional information on 2015 curtailment. Assumptions used to determine net periodic benefit cost of the pension plan and postretirement plan for each fiscal year follow:
| 2015 |  | 2014 |  | 2013
Pension |  |  |  |  |
Weighted average discount rate | 4.22% |  | 5.02% |  | 4.49%
Long-term rate of return on plan assets | 7.00% |  | 7.00% |  | 7.00%
Postretirement |  |  |  |  |
Discount rate | 4.49% |  | 5.11% |  | 4.34%
Health care cost trend rate assumed for next year | 6.50% |  | 7.00% |  | 7.00%
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 27, 2015 and the aggregate of the benefits earned during the period and the interest cost would have both increased by approximately 1.5%. 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 2015 and in the aggregate for the following five years are as follows:
| Pension |  | Postretirement
2016 | $ | 19,501 |  | 1,850
2017 |  | 20,036 |  | 1,657
2018 |  | 20,576 |  | 1,615
2019 |  | 20,955 |  | 1,553
2020 |  | 21,249 |  | 1,504
2021-2025 |  | 115,117 |  | 6,934
I 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 27, 2015 and December 28, 2014, the defined benefit plans had total projected benefit obligations of $112,799 and $147,528, respectively, and fair values of plan assets of $85,752 and $102,375, respectively. Substantially all of the plan assets are invested in equity and fixed income securities. The pension expense related to these plans was $2,769, $3,363 and $4,085 in 2015, 2014 and 2013, respectively. In fiscal 2016, the Company expects amortization of $(39) of prior service costs, $1,077 of unrecognized net losses and $2 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 2015 and in the aggregate for the five years thereafter are as follows: 2016: $1,647; 2017: $1,792; 2018: $1,974; 2019: $2,122; 2020: $2,251; and 2021 through 2025: $14,493. 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.

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