Hasbro 2007 Annual Report Download - page 20

• Political instability, civil unrest and economic instability;
• Greater difficulty enforcing intellectual property rights and weaker laws protecting such rights;
• Complications in complying with different laws in varying jurisdictions, which laws may dictate that
certain practices which are acceptable in some jurisdictions are not acceptable in others, and changes in
governmental policies;
• Natural disasters and the greater difficulty and expense in recovering therefrom;
• Difficulties in moving materials and products from one country to another, including port congestion,
strikes and other transportation delays and interruptions;
• Changes in international labor costs and other costs of doing business internationally; and
• The imposition of tariffs.
Because of the importance of our international sales and international sourcing of manufacturing to our
business, our financial condition and results of operations could be significantly harmed if any of the risks
described above were to occur.
Market conditions, including commodity and fuel prices, public health conditions and other third party
conduct could negatively impact our revenues, margins and our other business initiatives.
Economic and public health conditions, including factors that impact the strength of the retail market and
retail demand, or our ability to manufacture and deliver products in a timely and cost-effective manner, can
have a significant impact on our business. The success of our family entertainment products is dependent on
consumer purchasing of those products. Consumers may not purchase our products because the products do
not capture consumer interest and imagination or because competitor family entertainment offerings are
deemed more attractive. But consumer spending on our products can also be harmed by factors that negatively
impact consumers’ budgets generally, and which are not due to our product offerings.
Significant increases in the costs of other products which are required by consumers, such as gasoline and
home heating fuels, may reduce household spending on discretionary entertainment products we offer. In
addition, weakened economic conditions, lowered employment levels or recessions in any of our major
markets may significantly reduce purchases of our products. Economic conditions may also be negatively
impacted by terrorist attacks, wars and other conflicts, increases in critical commodity prices, or the prospect
of such events. Such a weakened economic and business climate, as well as consumer uncertainty created by
such a climate, could harm our sales and profitability.
Our success and profitability not only depend on consumer demand for our products, but also on our
ability to produce and sell those products at costs which allow for profitable sales. Rising fuel and raw
material prices, for components such as resin used in plastics, increased transportation costs, and increased
labor costs in the markets in which our products are manufactured all may increase our costs for producing
and transporting our products, which in turn may reduce our margins, reduce our profitability and harm our
business.
Other conditions, such as the unavailability of electrical components, may impede our ability to
manufacture, source and ship new and continuing products on a timely basis. Additional factors outside of our
control could delay or increase the cost of implementing our business initiatives and product plans or alter our
actions and reduce actual results. For example, work stoppages, slowdowns or strikes, a severe public health
pandemic or the occurrence or threat of wars or other conflicts, could impact our ability to manufacture or
deliver product, resulting in increased costs and/or lost sales for our products.
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