Hasbro 2011 Annual Report Download - page 17

in China, such as higher Chinese labor costs or an appreciation in the Chinese Yuan, could significantly disrupt
our operations and/or significantly increase the cost of the products which are manufactured in China and
imported into other markets.
Competition
We are a worldwide leader in the design, manufacture and marketing of toys and games and other
entertainment offerings, but our business is highly competitive. We compete with several large toy and game
companies in our product categories, as well as many smaller United States and international toy and game
designers, manufacturers and marketers. We also compete with companies that offer branded entertainment
focused on children and their families. Competition is based primarily on meeting consumer entertainment
preferences and on the quality and play value of our products. To a lesser extent, competition is also based on
product pricing. In entertainment, Hasbro Studios and THE HUB compete with other children’s television
networks and entertainment producers, such as NICKELODEON and CARTOON NETWORK, for viewers,
advertising revenue and distribution.
In addition to contending with competition from other toy and game and branded play entertainment
companies, in our business we must deal with the phenomenon that children are increasingly sophisticated and
many children have been moving away from traditional toys and games at a younger age and the array of
products and entertainment offerings competing for the attention of children has greatly expanded. We refer to
this as “children getting older younger.” As a result, our products not only compete with the offerings of other
toy and game manufacturers, but we must compete, particularly in meeting the demands of older children, with
the entertainment offerings of many other companies, such as makers of video games and consumer electronic
products.
The volatility in consumer preferences with respect to family entertainment and low barriers to entry
continually creates new opportunities for existing competitors and start-ups to develop products that compete
with our toy and game offerings.
Employees
At December 25, 2011, we employed approximately 5,900 persons worldwide, approximately 3,200 of
whom were located in the United States.
Trademarks, Copyrights and Patents
We seek to protect our products, for the most part, and in as many countries as practical, through registered
trademarks, copyrights and patents to the extent that such protection is available, cost effective, and meaningful.
The loss of such rights concerning any particular product is unlikely to result in significant harm to our business,
although the loss of such protection for a number of significant items might have such an effect.
Government Regulation
Our toy and game products sold in the United States are subject to the provisions of The Consumer Product
Safety Act, as amended by the Consumer Product Safety Improvement Act of 2008, (as amended, the “CPSA”),
The Federal Hazardous Substances Act (the “FHSA”), The Flammable Fabrics Act (the “FFA”), and the
regulations promulgated thereunder. In addition, certain of our products, such as the mixes for our EASY-BAKE
ovens, are also subject to regulation by the Food and Drug Administration.
The CPSA empowers the Consumer Product Safety Commission (the “CPSC”) to take action against
hazards presented by consumer products, including the formulation and implementation of regulations and
uniform safety standards. The CPSC has the authority to seek to declare a product “a banned hazardous
substance” under the CPSA and to ban it from commerce. The CPSC can file an action to seize and condemn an
“imminently hazardous consumer product” under the CPSA and may also order equitable remedies such as
recall, replacement, repair or refund for the product. The FHSA provides for the repurchase by the manufacturer
of articles that are banned.
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