Hasbro 2008 Annual Report Download - page 20

income, and lower consumer confidence. Any of these factors can reduce the amount which consumers spend
on the purchase of our products. This in turn can reduce our revenues and harm our financial performance.
In addition to experiencing potentially lower revenues from our products during times of economic
difficulty, in an effort to maintain sales during such times we may need to reduce the price of our products,
increase our promotional spending, or take other steps to encourage retailer and consumer purchase of our
products. Those steps may lower our net revenues, decrease our operating margins, increase our costs and/or
lower our profitability.
Other economic and public health conditions in the markets in which we operate, including rising
commodity and fuel prices, higher labor costs, increased transportation costs, outbreaks of SARs or other
diseases, or third party conduct could negatively impact our ability to produce and ship our products, and
lower our revenues, margins and profitability.
Various economic and public health conditions can impact our ability to manufacture and deliver products
in a timely and cost-effective manner, or can otherwise have a significant negative impact on our business.
Significant increases in the costs of other products which are required by consumers, such as gasoline,
home heating fuels, or groceries, may reduce household spending on the discretionary entertainment products
we offer. As we discussed above, weakened economic conditions, lowered employment levels or recessions in
any of our major markets may significantly reduce consumer 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 revenues 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 revenues. 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 the costs we incur to
produce and transport 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 further delay our products or increase the cost we pay to produce such products. For example,
work stoppages, slowdowns or strikes, an outbreak of SARs or another severe public health pandemic, or the
occurrence or threat of wars or other conflicts, all could impact our ability to manufacture or deliver product.
Any of these factors could result in product delays, increased costs and/or lost sales for our products.
We may not realize the full benefit of our licenses if the licensed material has less market appeal than
expected or if revenue from the licensed products is not sufficient to earn out the minimum guaranteed
royalties.
In addition to designing and developing products based on our own brands, we seek to fulfill consumer
preferences and interests by producing products based on popular entertainment properties developed by other
parties and licensed to us. The success of entertainment properties released theatrically for which we have a
license, such as MARVEL or STAR WARS related products, can significantly affect our revenues and
profitability. If we produce a line of products based on a movie or television series, the success of the movie
or series has a critical impact on the level of consumer interest in the associated products we are offering. In
addition, competition in our industry for access to entertainment properties can lessen our ability to secure,
maintain, and renew popular licenses to entertainment products on beneficial terms, if at all, and to attract and
retain the talented employees necessary to design, develop and market successful products based on these
properties. The loss of rights granted pursuant to any of our licensing agreements could harm our business and
competitive position.
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