Hasbro 2011 Annual Report Download - page 28

We rely on external financing, including our credit facility, to help fund our operations. If we were unable
to obtain or service such financing, or if the restrictions imposed by such financing were too burdensome,
our business would be harmed.
Due to the seasonal nature of our business, in order to meet our working capital needs, particularly those in
the third and fourth quarters, we rely on our revolving credit facility and our other credit facilities for working
capital. We currently have a revolving credit agreement that expires in 2014, which provides for a $500,000
committed revolving credit facility. The credit agreement contains certain restrictive covenants setting forth
leverage and coverage requirements, and certain other limitations typical of an investment grade facility. These
restrictive covenants may limit our future actions, and financial, operating and strategic flexibility. In addition,
our financial covenants were set at the time we entered into our credit facility. Our performance and financial
condition may not meet our original expectations, causing us to fail to meet such financial covenants.
Non-compliance with our debt covenants could result in us being unable to utilize borrowings under our
revolving credit facility and other bank lines, a circumstance which potentially could occur when operating
shortfalls would most require supplementary borrowings to enable us to continue to fund our operations.
In early 2011 we established a commercial paper program which, subject to market conditions, will allow us
to issue up to $500,000 in aggregate amount of commercial paper outstanding from time to time as a further
source of working capital funding and liquidity. There is no guarantee that we will be able to issue commercial
paper on favorable terms, or at all, at any given point in time.
Not only may our individual financial performance impact our ability to access sources of external
financing, but significant disruptions to credit markets in general may also harm our ability to obtain financing.
In times of severe economic downturn and/or distress in the credit markets, it is possible that one or more sources
of external financing may be unable or unwilling to provide funding to us. In such a situation, it may be that we
would be unable to access funding under our existing credit facilities, and it might not be possible to find
alternative sources of funding.
We also may choose to finance our capital needs, from time to time, through the issuance of debt securities.
Our ability to issue such securities on satisfactory terms, if at all, will depend on the state of our business and
financial condition, any ratings issued by major credit rating agencies, market interest rates, and the overall
condition of the financial and credit markets at the time of the offering. The condition of the credit markets and
prevailing interest rates have fluctuated significantly in the past and are likely to fluctuate in the future.
Variations in these factors could make it difficult for us to sell debt securities or require us to offer higher interest
rates in order to sell new debt securities. The failure to receive financing on desirable terms, or at all, could
damage our ability to support our future operations or capital needs or engage in other business activities.
As of December 25, 2011, we had $1,384,895 of total principal amount of indebtedness outstanding. If we are
unable to generate sufficient available cash flow to service our outstanding debt we would need to 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. In addition, advertising to children is subject to regulation by the Federal Trade
Commission, the Federal Communications Commission and a host of other agencies globally. 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, and failure to comply with these acts 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
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