Hasbro 2009 Annual Report Download - page 76

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The Company believes it is reasonably possible that certain tax examinations and statutes of limitations
may be concluded and will expire within the next 12 months, and that unrecognized tax benefits, excluding
potential interest and penalties, may decrease by up to approximately $24,000, of which approximately
$14,000 would be recorded as a tax benefit in the statement of operations. In addition, approximately $4,000
of potential interest and penalties related to these amounts would also be recorded as a tax benefit in the
statement of operations. These unrecognized tax benefits primarily relate to both the timing and the nature of
the deductibility of certain expenses, as well as the tax treatment of certain subsidiary and other transactions.
The cumulative amount of undistributed earnings of Hasbro’s international subsidiaries held for indefinite
reinvestment is approximately $914,000 at December 27, 2009. In the event that all international undistributed
earnings were remitted to the United States, the amount of incremental taxes would be approximately
$216,000.
(10) Capital Stock
In February 2008 the Company’s Board of Directors authorized the repurchase of up to $500,000 in
common stock after three previous authorizations dated May 2005, July 2006 and August 2007 with a
cumulative authorized repurchase amount of $1,200,000 were fully utilized. Purchases of the Company’s
common stock may be made from time to time, subject to market conditions, and may be made in the open
market or through privately negotiated transactions. The Company has no obligation to repurchase shares
under the authorization and the timing, actual number, and the value of the shares which are repurchased will
depend on a number of factors, including the price of the Company’s common stock. In 2009, the Company
repurchased 3,172 shares at an average price of $28.67. The total cost of these repurchases, including
transaction costs, was $90,994. At December 27, 2009, $161,434 remained under this authorization.
(11) Fair Value of Financial Instruments
The Company measures certain assets at fair value in accordance with current accounting standards. The
fair value hierarchy consists of three levels: Level 1 fair values are valuations based on quoted market prices
in active markets for identical assets or liabilities that the entity has the ability to access; Level 2 fair values
are those valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are
not active, or other inputs that are observable or can be corroborated by observable data for substantially the
full term of the assets or liabilities; and Level 3 fair values are valuations based on inputs that are supported
by little or no market activity and that are significant to the fair value of the assets or liabilities. Certain
aspects of fair value accounting standards were not required to be adopted for certain non-financial assets and
liabilities until the first day of fiscal 2009 and, as such, were adopted by the Company in the first quarter of
2009. The adoption of these provisions did not have an impact on the Company’s consolidated statements of
operations or balance sheets.
Current accounting standards permit entities to choose to measure many financial instruments and certain
other items at fair value and establishes presentation and disclosure requirements designed to facilitate
comparisons between entities that choose different measurement attributes for similar assets and liabilities.
During 2009 the Company elected the fair value option for certain investments purchased during the year. At
December 27, 2009, these investments totaled $21,108 and are included in prepaid expenses and other current
assets in the consolidated balance sheet. The Company recorded net gains of $1,019 on these investments in
other (income) expense, net for the year ended December 27, 2009, relating to the change in fair value of such
investments.
66
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)