Hasbro 2010 Annual Report Download - page 27

refinance such debt or face default. There is no guarantee that we would be able to refinance debt on favorable
terms, or at all.
As a manufacturer of consumer products and a large multinational corporation, we are subject to various
government regulations and may be subject to additional regulations in the future, violation of which
could subject us to sanctions or otherwise harm our business. In addition, we could be the subject of
future product liability suits or product recalls, which could harm our business.
As a manufacturer of consumer products, we are subject to significant government regulations, including,
in the United States, under The Consumer Products Safety Act, The Federal Hazardous Substances Act, and
The Flammable Fabrics Act, as well as under product safety and consumer protection statutes in our
international markets. In addition, certain of our products are subject to regulation by the Food and Drug
Administration or similar international authorities. While we take all the steps we believe are necessary to
comply with these acts, there can be no assurance that we will be in compliance in the future. Failure to
comply could result in sanctions which could have a negative impact on our business, financial condition and
results of operations. We may also be subject to involuntary product recalls or may voluntarily conduct a
product recall. While costs associated with product recalls have generally not been material to our business,
the costs associated with future product recalls individually and in the aggregate in any given fiscal year, could
be significant. In addition, any product recall, regardless of direct costs of the recall, may harm consumer
perceptions of our products and have a negative impact on our future revenues and results of operations.
Governments and regulatory agencies in the markets where we manufacture and sell products may enact
additional regulations relating to product safety and consumer protection in the future, and may also increase
the penalties for failure to comply with product safety and consumer protection regulations. In addition, one or
more of our customers might require changes in our products, such as the non-use of certain materials, in the
future. Complying with any such additional regulations or requirements could impose increased costs on our
business. Similarly, increased penalties for non-compliance could subject us to greater expense in the event
any of our products were found to not comply with such regulations. Such increased costs or penalties could
harm our business.
In addition to government regulation, products that have been or may be developed by us may expose us
to potential liability from personal injury or property damage claims by the users of such products. There can
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, environmental regulations
and the Foreign Corrupt Practices Act. Complying with these regulations imposes costs on us which can
reduce our profitability and our failure to successfully comply with any such legal requirements could subject
us to monetary liabilities and other sanctions that could further 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 net earnings.
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. However, as of December 26, 2010, we had $500,597 of acquired product and
17