Hasbro 2007 Annual Report Download - page 22

be no assurance that a claim will not be brought against us in the future. Any successful claim could
significantly harm our business, financial condition and results of operations.
As a large, multinational corporation, we are subject to a host of governmental regulations throughout the
world, including antitrust, customs and tax requirements, anti-boycott regulations and the Foreign Corrupt
Practices Act. Our failure to successfully comply with any such legal requirements could subject us to
monetary liabilities and other sanctions that could harm our business and financial condition.
Our business is dependent on intellectual property rights and we may not be able to protect such rights
successfully. In addition, we have a material amount of acquired product rights which, if impaired, would
result in a reduction of our income.
Our intellectual property, including our license agreements and other agreements that establish our
ownership rights and maintain the confidentiality of our intellectual property, are of great value. We rely on a
combination of trade secret, copyright, trademark, patent and other proprietary rights laws to protect our rights
to valuable intellectual property related to our brands. From time to time, third parties have challenged, and
may in the future try to challenge, our ownership of our intellectual property. In addition, our business is
subject to the risk of third parties counterfeiting our products or infringing on our intellectual property rights.
We may need to resort to litigation to protect our intellectual property rights, which could result in substantial
costs and diversion of resources. Our failure to protect our intellectual property rights could harm our business
and competitive position. Much of our intellectual property has been internally developed and has no carrying
value on our balance sheet. As of December 30, 2007, we had approximately $486,232 of acquired product
and licensing rights included in other assets on our balance sheet. Declines in the profitability of the acquired
brands or licensed products may impact our ability to recover the carrying value of the related assets and
could result in an impairment charge. Reduction in our net income caused by impairment charges could harm
our financial results.
We may not realize the anticipated benefits of future acquisitions or those benefits may be delayed or
reduced in their realization.
Although we have not made any major acquisitions in the last few years, acquisitions have been a
significant part of our historical growth and have enabled us to further broaden and diversify our product
offerings. In making acquisitions, we target companies that we believe offer attractive family entertainment
products. However, we cannot be certain that the products of companies we may acquire in the future will
achieve or maintain popularity with consumers. In some cases, we expect that the integration of the product
lines of the companies that we acquire into our operations will create production, marketing and other
operating synergies which will produce greater revenue growth and profitability and, where applicable, cost
savings, operating efficiencies and other advantages. However, we cannot be certain that these synergies,
efficiencies and cost savings will be realized. Even if achieved, these benefits may be delayed or reduced in
their realization. In other cases, we acquire companies that we believe have strong and creative management,
in which case we plan to operate them more autonomously rather than fully integrating them into our
operations. We cannot be certain that the key talented individuals at these companies will continue to work for
us after the acquisition or that they will continue to develop popular and profitable products or services.
From time to time, we are involved in litigation, arbitration or regulatory matters where the outcome is
uncertain and which could entail significant expense.
As is the case with many large multinational corporations, we are subject from time to time to regulatory
investigations, litigation and arbitration disputes. Because the outcome of litigation, arbitration and regulatory
investigations is inherently difficult to predict, it is possible that the outcome of any of these matters could
entail significant expense for us and harm our business. The fact that we operate in significant numbers of
international markets also increases the risk that we may face legal and regulatory exposures as we attempt to
comply with a large number of varying legal and regulatory requirements.
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