Hasbro 2010 Annual Report Download - page 29

building in East Providence, Rhode Island consisting of approximately 120,000 square feet that is used in the
corporate function as well as by 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 by the U.S. and Canada segment. The Company also leases
properties that total approximately 41,500 square feet in Dedham, Massachusetts and Burbank, California that
are used by the Entertainment and Licensing 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 by the U.S. and
Canada and Global Operations segments. The Waterford plant consists of approximately 244,000 square feet
and is used by 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 by 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 through 2005. These tax assessments, which total approximately $179 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 assessment in June
2008; and the 2003 assessment in March 2009. The Company is challenging the 2004 assessment through
administrative appeals and anticipates that it will challenge the 2005 assessment in a similar manner. The
Company expects to be successful in sustaining its positions for all of these years. However, in order to
challenge the outstanding tax assessments related to 2000 through 2003, as is usual and customary in Mexico
in these matters, the Company was required to either make a deposit or post a bond in the full amount of the
assessments. The Company elected to post bonds and accordingly, as of December 26, 2010, bonds totaling
approximately $115 million (at year-end 2010 exchange rates) have been posted related to the 2000, 2001,
2002 and 2003 assessments. These bonds guarantee the full amounts of the related outstanding tax assessments
in the event the Company is not successful in its challenge to them. The Company does not currently expect
that it will be required to make a deposit or post a bond related to the 2004 or 2005 assessments.
We are currently party to certain other legal proceedings, none of which we believe to be material to our
business or financial condition.
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