Hasbro 2011 Annual Report Download - page 30

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 develop popular and profitable products or services in the future.
Failure to operate our information systems and implement new technology effectively could disrupt our
business or reduce our sales or profitability.
We rely extensively on various information technology systems and software applications, to manage many
aspects of our business, including management of our supply chain, sale and delivery of our products and various
other process transactions. We are dependent on the integrity, security and consistent operations of these systems
and related back-up systems. These systems are subject to damage or interruption from power outages, computer
and telecommunications failures, computer viruses, security breaches, catastrophic events such as hurricanes,
fires, floods, earthquakes, tornadoes, acts of war or terrorism and usage errors by our employees. The efficient
operation and successful growth of our business depends on these information systems, including our ability to
operate them effectively and to select and implement appropriate upgrades or new technologies and systems and
adequate disaster recovery systems successfully. The failure of our information systems to perform as designed
or our failure to implement and operate them effectively could disrupt our business, require significant capital
investments to remediate a problem or subject us to liability.
If our electronic data is compromised our business could be significantly harmed.
We maintain significant amounts of data electronically in locations around the world. This data relates to all
aspects of our business and also contains certain customer and consumer data. We maintain systems and
processes designed to protect this data, but notwithstanding such protective measures, there is a risk of intrusion
or tampering that could compromise the integrity and privacy of this data. In addition, we provide confidential
and proprietary information to our third party business partners in certain cases where doing so is necessary to
conduct our business. While we obtain assurances from those parties that they have systems and processes in
place to protect such data, and where applicable, that they will take steps to assure the protections of such data by
third parties, nonetheless those partners may also be subject to data intrusion or otherwise compromise the
protection of such data. Any compromise of the confidential data of our customers, our consumers, or ourselves
could have a negative effect on our business.
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, including potential liability from personal injury or property
damage claims by the users of products that have been or may be developed by us. 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. Any
successful claim could significantly harm our business, financial condition and results of operations.
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 25,
2011, $474,792, or 11.5%, 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 could harm our results of operations.
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