Hasbro 2012 Annual Report Download - page 78

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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
During 2011, as the result of the completion of an examination related to the 2006 and 2007 U.S. federal
income tax returns by the U.S. Internal Revenue Service, the Company recognized $22,101 of previously accrued
unrecognized tax benefits, including the reversal of related accrued interest, primarily related to the deductibility
of certain expenses, as well as the tax treatment of certain subsidiary and other transactions. Of this amount,
$1,482 was recorded as a reduction of deferred tax assets and the remainder as a reduction of income tax
expense. The total income tax benefit resulting from the completion of the examination, including other
adjustments, totaled $20,477 during 2011.
During 2010, as a result of the completion of an examination related to the 2004 and 2005 U.S. federal
income tax returns by the U.S. Internal Revenue Service, the Company recognized approximately $24,200 of
previously accrued unrecognized tax benefits, including the reversal of related accrued interest, primarily related
to the deductibility of certain expenses, as well as the tax treatment of certain subsidiary and other transactions.
Of this amount, $7,032 was recorded as a reduction of deferred tax assets and the remainder as a reduction of
income tax expense. The total income tax benefit resulting from the completion of the examination, including
other adjustments, totaled approximately $21,000 during 2010.
In connection with tax examinations in Mexico for the years 2000 to 2005 and 2007, the Company has
received tax assessments totaling approximately $205,720, which includes interest, penalties and inflation
updates, related to transfer pricing which the Company is vigorously defending. In order to continue the process
of defending its position, the Company was required to guarantee the amount of the assessments for the years
2000 to 2004, as is usual and customary in Mexico with respect to these matters. Accordingly, as of
December 30, 2012, bonds totaling approximately $174,870 (at year-end 2012 exchange rates) have been
provided to the Mexican government related to the 2000 through 2004 assessments, allowing the Company to
defend its positions. The Company is not currently required to guarantee the amount of the 2005 and 2007
assessment. The Company expects to be successful in sustaining its position with respect to these assessments as
well as similar positions that may be taken by the Mexican tax authorities for 2006 and periods subsequent to
2007.
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 $7,000, substantially all of which would be recorded
as a tax benefit in the statement of operations. In addition, approximately $1,200 of potential interest and
penalties related to these amounts would also be recorded as a tax benefit in the consolidated statement of
operations.
The cumulative amount of undistributed earnings of Hasbro’s international subsidiaries held for indefinite
reinvestment is approximately $1,583,000 at December 30, 2012. In the event that all international undistributed
earnings were remitted to the United States, the amount of incremental taxes would be approximately $393,000.
(11) Capital Stock
In May 2011 the Company’s Board of Directors authorized the repurchase of up to $500,000 in common
stock after five previous authorizations dated May 2005, July 2006, August 2007, February 2008 and April 2010
with a cumulative authorized repurchase amount of $2,325,000 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 time, 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 2012, the Company repurchased
2,694 shares at an average price of $37.11. The total cost of these repurchases, including transaction costs, was
$100,041. At December 30, 2012, $127,282 remained under the current authorization.
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