Hasbro 2009 Annual Report Download - page 28

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.
We have a material amount of goodwill which, if it becomes impaired, would result in a reduction in our
net earnings.
Goodwill is the amount by which the cost of an acquisition exceeds the fair value of the net assets we
acquire. Goodwill is not amortized and is required to be periodically evaluated for impairment. At
December 27, 2009, $475,931, or 12.2%, of our total assets represented goodwill. Declines in our profitability
may impact the fair value of our reporting units, which could result in a write-down of our goodwill.
Reductions in our net earnings caused by the write-down of goodwill or our investment in the joint venture
could harm our results of operations.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Hasbro owns its corporate headquarters in Pawtucket, Rhode Island consisting of approximately
343,000 square feet, which is used in the U.S. and Canada, Global Operations and Entertainment and
Licensing segments as well as for corporate functions. The Company also owns an adjacent building consisting
of approximately 23,000 square feet that is used in the corporate function. In addition, the Company leases a
building in East Providence, Rhode Island consisting of approximately 120,000 square feet that is used in the
corporate function as well as in the Global Operations and Entertainment and Licensing segments. In addition
to the above facilities, the Company also leases office space consisting of approximately 95,400 square feet in
Renton, Washington as well as warehouse space aggregating approximately 1,939,000 square feet in Georgia,
California, Texas and Quebec that are also used in the U.S. and Canada segment.
The Company owns manufacturing plants in East Longmeadow, Massachusetts and Waterford, Ireland.
The East Longmeadow plant consists of approximately 1,148,000 square feet and is used in the U.S. and
Canada and Global Operations segments. The Waterford plant consists of approximately 244,000 square feet
and is used in our Global Operations segment. The Global Operations segment also leases an aggregate of
87,900 square feet of office and warehouse space in Hong Kong used in this segment as well as approximately
52,300 square feet of office space leased in China.
In the International segment, the Company leases or owns property in over 25 countries. The primary
locations in the International segment are in the United Kingdom, Mexico, Germany, France, Spain, Australia
and Brazil, all of which are comprised of both office and warehouse space.
The above properties consist, in general, of brick, cinder block or concrete block buildings which the
Company believes are in good condition and well maintained.
The Company believes that its facilities are adequate for its needs. The Company believes that, should it
not be able to renew any of the leases related to its leased facilities, it could secure similar substitute
properties without a material adverse impact on its operations.
Item 3. Legal Proceedings
The Company has outstanding tax assessments from the Mexican tax authorities relating to the years
2000, 2001, 2002, 2003 and 2004. These tax assessments, which total approximately $130 million in aggregate
(including interest, penalties, and inflation updates), are based on transfer pricing issues between the
Company’s subsidiaries with respect to the Company’s operations in Mexico. The Company has filed suit in
the Federal Tribunal of Fiscal and Administrative Justice in Mexico challenging the 2000 through 2003
assessments. The Company filed the suit related to the 2000 and 2001 assessments in May 2009; the 2002
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