Hasbro 2010 Annual Report Download - page 72

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The components of earnings before income taxes, determined by tax jurisdiction, are as follows:
2010 2009 2008
United States ........................................ $168,436 248,654 208,125
International ........................................ 339,284 281,043 232,930
$507,720 529,697 441,055
The components of deferred income tax expense (benefit) arise from various temporary differences and
relate to items included in the statements of operations as well as items recognized in other comprehensive
earnings. The tax effects of temporary differences that give rise to significant portions of the deferred tax
assets and liabilities at December 26, 2010 and December 27, 2009 are:
2010 2009
Deferred tax assets:
Accounts receivable.......................................... $ 21,095 17,314
Inventories ................................................ 18,723 15,937
Losses and tax credit carryforwards .............................. 22,395 29,623
Operating expenses .......................................... 40,835 40,419
Pension ................................................... 29,823 26,566
Other compensation .......................................... 45,175 45,383
Postretirement benefits........................................ 15,435 14,463
Tax sharing agreement ........................................ 26,276 26,352
Other .................................................... 25,477 31,683
Gross deferred tax assets .................................... 245,234 247,740
Valuation allowance.......................................... (10,776) (11,641)
Net deferred tax assets ...................................... 234,458 236,099
Deferred tax liabilities:
Convertible debentures ....................................... — 56,787
International earnings not indefinitely reinvested .................... 25,903 25,903
Depreciation and amortization of long-lived assets ................... 61,274 40,144
Equity method investment ..................................... 23,617 26,941
Other .................................................... 4,715 7,227
Deferred tax liabilities ...................................... 115,509 157,002
Net deferred income taxes ....................................... $118,949 79,097
Hasbro has a valuation allowance for certain deferred tax assets at December 26, 2010 of $10,776, which
is a decrease of $865 from $11,641 at December 27, 2009. The valuation allowance pertains to certain
International loss carryforwards, some of which have no expiration and others that would expire beginning in
2013.
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.
62
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)