Hasbro 2009 Annual Report Download - page 74

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
liabilities at December 27, 2009 and December 28, 2008 are:
2009 2008
Deferred tax assets:
Accounts receivable.......................................... $ 17,314 16,764
Inventories ................................................ 15,937 20,226
Losses and tax credit carryforwards .............................. 29,623 34,438
Operating expenses .......................................... 40,419 42,947
Pension ................................................... 26,566 34,065
Other compensation .......................................... 45,383 31,331
Postretirement benefits........................................ 14,463 12,647
Tax sharing agreement ........................................ 26,352 —
Other .................................................... 31,683 39,147
Gross deferred tax assets .................................... 247,740 231,565
Valuation allowance.......................................... (11,641) (11,755)
Net deferred tax assets ...................................... 236,099 219,810
Deferred tax liabilities:
Convertible debentures ....................................... 56,787 47,608
International earnings not indefinitely reinvested .................... 25,903 24,641
Depreciation and amortization of long-lived assets ................... 40,144 40,509
Equity method investment ..................................... 26,941 —
Other .................................................... 7,227 11,035
Deferred tax liabilities ...................................... 157,002 123,793
Net deferred income taxes ....................................... $ 79,097 96,017
Hasbro has a valuation allowance for certain deferred tax assets at December 27, 2009 of $11,641, which
is a decrease of $114 from $11,755 at December 28, 2008. The valuation allowance pertains to certain United
States and International loss carryforwards, some of which have no expiration and others that would expire
beginning in 2010.
Based on Hasbro’s history of taxable income and the anticipation of sufficient taxable income in years
when the temporary differences are expected to become tax deductions, the Company believes that it will
realize the benefit of the deferred tax assets, net of the existing valuation allowance.
Deferred income taxes of $54,321 and $53,285 at the end of 2009 and 2008, respectively, are included as
a component of prepaid expenses and other current assets, and $31,537 and $53,031, respectively, are included
as a component of other assets. At the same dates, deferred income taxes of $1,456 and $4,245, respectively,
are included as a component of accrued liabilities, and $5,305 and $6,054, respectively, are included as a
component of other liabilities.
On January 1, 2007, the Company adopted the revised accounting standard related to uncertain tax
positions. The revised standard prescribes a two step process for the measurement of uncertain tax positions
that have been taken or are expected to be taken in a tax return. The first step is a determination of whether
the tax position should be recognized in the financial statements. The second step determines the measurement
of the tax position. The revised standard also provides guidance on derecognition of such tax positions,
64
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)