Hasbro 2012 Annual Report Download - page 29

Difficulties associated with the implementation of our plan to reinvent our gaming business may harm our
revenues and profitability.
Recognizing the critical need for increased innovation and a change in the way we go to market with
gaming products in order to remain successful in the gaming business in the future, we began implementing a
strategy in 2011 to reinvent our gaming business. The objective of this plan was to stabilize our gaming business
in 2012, and to position it to grow in 2013 and beyond. Our strategy to drive our gaming business in the future
involves substantial changes in how we market our gaming products to consumers and how we position them at
retail, a focus on delivering industry leading innovation in gaming, a change in our allocation of focus across
gaming brands, greater penetration of our brands into digital gaming and the successful combination of analog
and digital gaming. We also are designing our gaming products to recognize the need to provide immersive game
play in shorter periods of time, and to offer innovative face to face and off the board gaming opportunities. Our
failure to successfully implement our strategy to reinvent our gaming business and to otherwise stabilize and
grow our gaming business in the future could substantially harm our business, resulting in lost revenues and lost
profits. There can be no assurance that we will successfully implement our global gaming strategy.
Our success is critically dependent on the efforts and dedication of our officers and other employees.
Our officers and employees are at the heart of all of our branded play efforts. It is their skill, innovation and
hard work that drive our success. We compete with many other potential employers in recruiting, hiring and
retaining our senior management team and our many other skilled officers and other employees. There is no
guarantee that we will be able to recruit, hire or retain the senior management, officers and other employees we
need to succeed. Our loss of key management or other employees, or our inability to hire talented people we need
in the future, could significantly harm our business.
To remain competitive we must continuously work to increase efficiency and reduce costs, but there is no
guarantee we will be successful in this regard.
Our business is extremely competitive, the pace of change in our industry is getting faster and our
competitors are always working to be more efficient and profitable. To compete we must continuously improve
our processes, increase efficiency and work to reduce our expenses. To improve our profitability and
competitiveness, in the fourth quarter of 2012 we implemented a global cost savings initiative. The objective of
this initiative is to reduce our operating costs by an annual amount of $100 million by 2015. We intend to
achieve this by focusing on fewer, more global brand initiatives, workforce reductions, facility consolidation and
other process improvements. However, this is no guarantee we will achieve our cost savings goals.
We rely on external financing, including our credit facility, to help fund our operations. If we were unable
to obtain or service such financing, or if the restrictions imposed by such financing were too burdensome,
our business would be harmed.
Due to the seasonal nature of our business, in order to meet our working capital needs, particularly those in
the third and fourth quarters, we rely on our revolving credit facility and our other credit facilities for working
capital. We currently have a revolving credit agreement that expires in 2017, which provides for a $700,000
committed revolving credit facility. The credit agreement contains certain restrictive covenants setting forth
leverage and coverage requirements, and certain other limitations typical of an investment grade facility. These
restrictive covenants may limit our future actions as well as our financial, operating and strategic flexibility. In
addition, our financial covenants were set at the time we entered into our credit facility. Our performance and
financial condition may not meet our original expectations, causing us to fail to meet such financial covenants.
Non-compliance with our debt covenants could result in us being unable to utilize borrowings under our
revolving credit facility and other bank lines, a circumstance which potentially could occur when operating
shortfalls would most require supplementary borrowings to enable us to continue to fund our operations.
We also have a commercial paper program which, subject to market conditions, allows us to issue up to
$700,000 in aggregate amount of commercial paper outstanding from time to time as a further source of working
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