XML 31 R18.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 30, 2018
Income Taxes [Abstract] |
Income Taxes | (11) Income Taxes The Tax Cuts and Jobs Act (the “Tax Act”) enacted on December 22, 2017 introduced significant changes to U.S. income tax law. Effective 2018, the Tax Act reduced the U.S. statutory tax rate from 35% to 21% and created new taxes on certain foreign-sourced earnings and certain related-party payments. In accordance with the Tax Act, the Company recorded a provisional tax expense of $316,423 in the fourth quarter of 2017, the period in which the legislation was enacted. Th e total expense included $2 71,605 for the deemed repatriation tax and $44,818 of expense primarily due to the remeasurement of deferred taxes associated with the corporate rate reduction. The Company expected to utilize $90,300 of existing ta x credits to reduce the $271,605 U.S. fe deral tax liability due to the deemed repatriation tax, which resulted in $181,305 to be paid over eight years. This liability was included as a component of other liabilities as of December 31, 2017. Additionally, Staff Accounting Bulletin (SAB) 118 was issued to address the application of U.S. GAAP in situations when the registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effect s of the Tax Act. December 22, 2018 marked the end of the measurement period for purposes of SAB 118. As such, the Company has completed its analysis based on legislative updates relating to the Tax Act currently available which resulted in an additional SAB 118 tax expense of $40,650, primarily related to adjustments to the transition tax in the year ended December 30, 2018. The components of earnings before income taxes, determined by tax jurisdiction, are as follows:
| 2018 |  | 2017 |  | 2016
United States | $ | 6,293 |  |  | 168,370 |  |  | 146,013
International |  | 264,109 |  |  | 617,780 |  |  | 546,476
Total earnings before income taxes | $ | 270,402 |  |  | 786,150 |  |  | 692,489
Income taxes attributable to earnings before income taxes are:
| 2018 |  | 2017 |  | 2016
Current |  |  |  |  |  |  |  |
United States | $ | 12,805 |  |  | 202,374 |  |  | 78,958
State and local |  | 5,644 |  |  | 2,926 |  |  | 3,208
International |  | 42,613 |  |  | 72,138 |  |  | 77,834
|  | 61,062 |  |  | 277,438 |  |  | 160,000
Deferred |  |  |  |  |  |  |  |
United States |  | (4,937) |  |  | 105,174 |  |  | 11,989
State and local |  | (471) |  |  | 1,658 |  |  | 411
International |  | (5,686) |  |  | 5,273 |  |  | (13,062)
|  | (11,094) |  |  | 112,105 |  |  | (662)
Total income taxes | $ | 49,968 |  |  | 389,543 |  |  | 159,338
A reconciliation of the statutory United States federal income tax rate to Hasbro's effective income tax rate is as follows:
| 2018 |  | 2017 |  | 2016
Statutory income tax rate |  | 21.0% |  |  | 35.0% |  |  | 35.0%
State and local income taxes, net |  | 1.5 |  |  | 0.3 |  |  | 0.3
Tax on international earnings |  | (11.4) |  |  | (23.0) |  |  | (15.8)
Change in unrecognized tax benefits |  | (7.9) |  |  | 1.0 |  |  | 1.7
Share-based compensation |  | (4.0) |  |  | (4.1) |  |  | —
Tax Cuts and Jobs Act of 2017 |  | 15.0 |  |  | 39.4 |  |  | —
Research and development tax credits |  | (1.9) |  |  | (0.5) |  |  | (0.4)
Non-deductible goodwill impairment |  | 2.0 |  |  | — |  |  | —
Other, net |  | 4.2 |  |  | 1.5 |  |  | 2.2
|  | 18.5% |  |  | 49.6% |  |  | 23.0%
Certain reclassifications have been made to prior year amounts to conform to current year presentation.
The components of deferred income tax expense (benefit) arise from various temporary differences and relate to items included in the consolidated 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 30, 2018 and December 31, 2017 are:
| 2018 |  | 2017
Deferred tax assets: |  |  |  |  |
Accounts receivable | $ | 29,094 |  |  | 31,424
Inventories |  | 11,958 |  |  | 11,198
Loss and credit carryforwards |  | 105,915 |  |  | 36,821
Operating expenses |  | 21,213 |  |  | 20,424
Pension |  | 11,543 |  |  | 8,372
Other compensation |  | 35,418 |  |  | 37,718
Postretirement benefits |  | 7,894 |  |  | 8,497
Interest rate hedge |  | 5,607 |  |  | 6,012
Tax sharing agreement |  | 4,015 |  |  | 5,514
Other |  | 9,077 |  |  | 11,721
Gross deferred tax assets |  | 241,734 |  |  | 177,701
Valuation allowance |  | (36,311) |  |  | (32,851)
Net deferred tax assets |  | 205,423 |  |  | 144,850
Deferred tax liabilities: |  |  |  |  |
Depreciation and amortization of long-lived assets |  | 12,258 |  |  | 29,226
Equity method investment |  | 15,113 |  |  | 12,829
Other |  | 9,885 |  |  | 11,018
Deferred tax liabilities |  | 37,256 |  |  | 53,073
Net deferred income taxes | $ | 168,167 |  |  | 91,777
Certain reclassifications have been made to prior year amounts to conform to current year presentation.
The most significant amount of the carryforward relates to tax attributes that will be used to offset the 2017 transition tax.
At December 30, 2018 and December 31, 2017, the Company’s net deferred income taxes are recorded in the consolidated balance sheets as follows:
| 2018 |  | 2017
Other assets |  | 174,077 |  |  | 97,870
Other liabilities |  | (5,910) |  |  | (6,093)
Net deferred income taxes | $ | 168,167 |  |  | 91,777
The Company has a valuation allowance for certain deferred tax assets at December 30, 2018 of $36,311, which is a n in crease of $3,460 from $32,851 at December 31, 2017. The valuation allowance pertains to certain U.S. state and international loss and credit carryforwards, some of which have no expiration and others that would expire beginning in 2019. We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred incom e taxes. The Tax Act eliminates the deferral of U.S. income tax on these foreign earnings by imposing a transition tax which is a one-time mandatory deemed repatriation tax. As a result we now intend to repatriate substantially all of our accumulated forei gn earnings. The Company still has significant cash needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements. However, tax reform gives more companies flexibility to manage cash glob ally. We have recorded $494 of US state income taxes as part of the provisional repatriation tax amount, which will be incurred due to certain future cash distributions. The Company has not finalized the timing of any actual cash distributions or the speci fic amounts and therefore we could still be subject to some additional foreign withholding taxes and U.S. state taxes. We will record these additional tax effects, if any, in the period that we complete our analysis and are able to make a reasonable estima te. A reconciliation of unrecognized tax benefits, excluding potential interest and penalties, for the fiscal years ended December 30, 2018, December 31, 2017, and December 25, 20 16 is as follows:
| 2018 |  | 2017 |  | 2016
Balance at beginning of year | $ | 84,244 |  |  | 80,388 |  |  | 63,549
Gross increases in prior period tax positions |  | 4,449 |  |  | 2,518 |  |  | 2,727
Gross decreases in prior period tax positions |  | (55,752) |  |  | (28,653) |  |  | (3,103)
Gross increases in current period tax positions |  | 16,987 |  |  | 34,056 |  |  | 34,155
Decreases related to settlements with tax authorities |  | (1,102) |  |  | (1,375) |  |  | (11,662)
Decreases from the expiration of statute of limitations |  | (2,752) |  |  | (2,690) |  |  | (5,278)
Balance at end of year | $ | 46,074 |  |  | 84,244 |  |  | 80,388
Unrecognized tax benefits as of December 30, 2018, December 31, 2017 and December 25, 2016, were $46,074, $84,244, and $80,388, respectively. If recognized, these tax benefits would have affected our income tax provision for fiscal years 2018, 2017, and 2016, by approximately $45,000, $7 7,000, and $70,000, respectively. During 2018, 2017, and 2016, the Company recognized $3,101, $2,431, and $2,135, respectively, of potential interest and penalties, which are included as a component of inc ome taxes in the accompanying consolidated statements of operations. At December 30, 2018, December 31, 2017, and December 25, 2016, the Company had accrued potential interest and penalties of $4,200, $5,157, and $3,966, respectively. The Company an d its subsidiaries file income tax returns in the United States and various state and international jurisdictions. In the normal course of business, the Company is regularly audited by U.S. federal, state and local and international tax authorities in vari ous tax jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years before 2013. With few exceptions, the Company is no longer subject to U.S. state or local and non-U.S. income tax examinations by tax authorities in i ts major jurisdictions for years before 2012. The Company believes it is reasonably possible that a decrease of approximately $15,700 in gross unrecognized tax benefits may be necessary within the coming year as a result of expected tax return settl ements and lapse of statute of limitations.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration