Hasbro 2015 Annual Report Download - page 25

media, and the heightened connection between digital media and consumer interest, has further increased the
ability for new participants to enter our markets, and has broadened the array of companies we compete with.
New participants with a popular product idea or entertainment property can gain access to consumers and
become a significant source of competition for our products in a very short period of time. These existing and
new competitors may be able to respond more rapidly than us to changes in consumer preferences. Our
competitors’ products may achieve greater market acceptance than our products and potentially reduce demand
for our products, lower our revenues and lower our profitability.
In recent years, retailers have also developed their own private-label products that directly compete with the
products of traditional manufacturers and brand owners. Some retail chains that are our customers sell private-
label children’s and family entertainment products designed, manufactured and branded by the retailers
themselves. These products may be sold at prices lower than our prices for comparable products, which may
result in lower purchases of our products by these retailers and may reduce our market share.
An inability to develop and introduce planned products, product lines and new brands in a timely and cost-
effective manner may damage our business.
In developing products, product lines and new brands we have anticipated dates for the associated product
and brand introductions. When we state that we will introduce, or anticipate introducing, a particular product,
product line or brand at a certain time in the future those expectations are based on completing the associated
development, implementation, and marketing work in accordance with our currently anticipated development
schedule. There is no guarantee that we will be able to manufacture, source and ship new or continuing products
in a timely manner and on a cost-effective basis to meet constantly changing consumer demands. This risk is
heightened by our customers’ compressed shipping schedules and the seasonality of our business. The risk is also
exacerbated by the increasing sophistication of many of the products we are designing, and brands we are
developing in terms of combining digital and analog technologies, utilizing digital media to a greater degree, and
providing greater innovation and product differentiation. Unforeseen delays or difficulties in the development
process, significant increases in the planned cost of development, or changes in anticipated consumer demand for
our products and new brands may cause the introduction date for products to be later than anticipated or, in some
situations, may cause a product or new brand introduction to be discontinued.
Changes in foreign currency exchange rates can significantly impact our reported financial performance.
Our global operations mean we produce and buy products, and sell products, in many different jurisdictions
with many different currencies. As a result, if the exchange rate between the United States dollar and a local
currency for an international market in which we have significant sales or operations changes, our financial
results as reported in U.S. dollars, may be meaningfully impacted even if our business in the local currency is not
significantly affected. As an example, if the dollar appreciates 10% relative to a local currency for an
international market in which we had $200 million of net revenues, the dollar value of those sales, as they are
translated into U.S. dollars, would decrease by $20 million in our consolidated financial results. As such, we
would recognize a $20 million decrease in our net revenues, even if the actual level of sales in the foreign market
had not changed. Similarly, our expenses can be significantly impacted, in U.S. dollar terms, by exchange rates,
meaning the profitability of our business in U.S. dollar terms can be negatively impacted by exchange rate
movements which we do not control. Late in 2014 and throughout 2015, certain key currencies, such as the Euro,
Russian Ruble, and Brazilian Real depreciated significantly compared to the U.S. dollar. This depreciation had a
significant negative impact on our 2014 and 2015 revenues and earnings. Similar depreciation in key currencies
during 2016 may have a significant negative impact on our revenues and earnings as they are reported in U.S.
dollars.
Global and regional economic downturns that negatively impact the retail and credit markets, or that
otherwise damage the financial health of our retail customers and consumers, can harm our business and
financial performance.
We design, manufacture and market a wide variety of entertainment and consumer products worldwide
through sales to our retail customers and directly to consumers. Our financial performance is impacted by the
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