Hasbro 2008 Annual Report Download - page 67

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debentures may also put the notes back to Hasbro in December 2011 and December 2016. At these times, the
purchase price may be paid in cash, shares of common stock or a combination of the two, at the discretion of
the Company.
(8) Income Taxes
Income taxes attributable to earnings before income taxes are:
2008 2007 2006
Current
United States ...................................... $ 68,514 42,613 40,875
State and local ..................................... 251 5,497 3,203
International....................................... 40,530 43,691 42,374
109,295 91,801 86,452
Deferred
United States ...................................... 22,917 33,707 24,912
State and local ..................................... 1,964 2,889 2,135
International....................................... 113 982 (2,080)
24,994 37,578 24,967
$134,289 129,379 111,419
Certain income tax (benefits) expenses, not reflected in income taxes in the statements of operations
totaled $(29,287) in 2008, $2,542 in 2007, and $(27,876) in 2006. These income tax (benefits) expenses relate
primarily to pension amounts recorded in AOCE and stock options. In 2008, 2007, and 2006, the deferred tax
portion of the total (benefit) expense was $(26,555), $20,163, and $(12,917), respectively.
A reconciliation of the statutory United States federal income tax rate to Hasbro’s effective income tax
rate is as follows:
2008 2007 2006
Statutory income tax rate ....................................... 35.0% 35.0% 35.0%
State and local income taxes, net .................................. 1.0 1.1 1.2
Investment of foreign earnings in U.S. . . ............................ 3.5 4.4 —
Tax on international earnings .................................... (7.9) (10.9) (9.7)
Fair value adjustment of liabilities potentially settleable in common stock . . . — 3.4 3.3
Change in valuation allowance ................................... — — 0.8
Exam settlements and statute expirations ............................ (0.8) (6.5) 1.5
Other, net ................................................... (0.4) 1.5 0.5
30.4% 28.0% 32.6%
During 2008 and 2007, the Company designated $60,000 and $90,000 of the respective current year
international net earnings that will not be indefinitely reinvested outside of the U.S. The incremental income
tax on this amount, representing the difference between the U.S. federal income tax rate and the income tax
rates in the applicable international jurisdictions, is a component of deferred income tax expense.
57
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)