Hasbro 2006 Annual Report Download - page 12

PART I
Item 1. Business
General Development and Description of Business and Business Segments
Except as expressly indicated or unless the context otherwise requires, as used herein, “Hasbro”, the
“Company”, “we”, or “us”, means Hasbro, Inc., a Rhode Island corporation organized on January 8, 1926, and
its subsidiaries. Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in
thousands of dollars or shares, except for per share amounts.
Overview
We are a worldwide leader in children’s and family leisure time and entertainment products and services,
including the design, manufacture and marketing of games and toys. Both internationally and in the U.S., our
widely recognized core brands such as PLAYSKOOL, TONKA, SUPER SOAKER, MILTON BRADLEY,
PARKER BROTHERS, TIGER, and WIZARDS OF THE COAST provide what we believe are the highest
quality play experiences in the world. Our offerings encompass a broad variety of games, including traditional
board, card, hand-held electronic, trading card, roleplaying, plug and play and DVD games, as well as
electronic learning aids and puzzles. Toy offerings include boys’ action figures, vehicles and playsets, girls’
toys, electronic toys, plush products, preschool toys and infant products, children’s consumer electronics,
electronic interactive products, creative play and toy related specialty products. In addition, we license certain
of our trademarks, characters and other property rights to third parties for use in connection with consumer
promotions and for the sale of noncompeting toys and games and non-toy products.
Organizationally, our principal segments are North America and International. Both of these segments
engage in the development, marketing and selling of various toy and game products as listed above. Our
North American segment covers the United States, Canada and Mexico while the International segment
primarily includes Europe, the Asia Pacific region and Latin and South America. Financial information with
respect to our segments and geographic areas is included in note 15 to our financial statements, which are
included in Item 8 of this Form 10-K.
In addition, the Hasbro Products Group outlicenses our intellectual property to third parties on a
worldwide basis and the Global Operations segment is responsible for arranging product manufacturing and
sourcing for the North American and International segments.
North America
The North American segment’s strategy in 2006 continued to be based on growing core brands through
innovation and reinvention, introducing new initiatives driven by consumer and marketplace insights and
leveraging opportunistic toy and game lines and licenses. In recent years, a major source of innovation has
been the incorporation of greater technology into our products. The use of technology has increased our ability
to develop products that appeal to older children who have been shifting from traditional toys and games to
consumer electronic products, such as MP3 players, cell phones and other entertainment and lifestyle products.
In addition, we seek to grow our business and maintain our brands by refreshing and reintroducing products
from our vast portfolio which have been out of the market for extended periods of time. Recent successful
reintroductions of products include BABY ALIVE in 2006, LITTLEST PET SHOP in 2005 and MY LITTLE
PONY in 2003. Major 2006 brands and products included STAR WARS, PLAYSKOOL, LITTLEST PET
SHOP, NERF, MAGIC: THE GATHERING, PLAY-DOH, TRANSFORMERS and MONOPOLY. In the
North American segment, our products are organized into the following categories: (i) games and puzzles;
(ii) boys’ toys; (iii) girls’ toys; (iv) preschool toys; (v) tween toys; and (vi) other.
Our games and puzzles category includes several well known brands, including MILTON BRADLEY,
PARKER BROTHERS, TIGER GAMES, AVALON HILL, and WIZARDS OF THE COAST. The MILTON
BRADLEY, PARKER BROTHERS, TIGER GAMES and AVALON HILL brand portfolios consist of a broad
assortment of games for children, tweens, families and adults. Core game brands include MONOPOLY,
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