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HAS » Topics » Our use of third-party manufacturers to produce the majority of our toy products, as well as certain other products, presents risks to our business.This excerpt taken from the HAS 10-K filed Feb 24, 2010. Our
use of third-party manufacturers to produce the majority of our
toy products, as well as certain other products, presents risks
to our business.
We own and operate two game and puzzle manufacturing facilities,
one in East Longmeadow, Massachusetts and the other in
Waterford, Ireland. However, most of our toy products, in
addition to certain other products, are manufactured by
third-party manufacturers, most of whom are located in the
People’s Republic of China. Although our external sources
of manufacturing can be shifted, over a period of time, to
alternative sources of supply, should such changes be necessary,
if we were prevented or delayed in obtaining products or
components for a material portion of our product line due to
political, labor or other factors beyond our control, including
natural disasters or pandemics, our operations would be
disrupted, potentially for a significant period of time, while
alternative sources of supply were secured. This delay could
significantly reduce our revenues and profitability, and harm
our business.
Given that the majority of our manufacturing is conducted by
third-party manufacturers located in the People’s Republic
of China, health conditions and other factors affecting social
and economic activity in China and affecting the movement of
people and products into and from China to our major markets,
including North America and Europe, as well as increases in the
costs of labor and other costs of doing business in China, could
have a significant negative impact on our operations, revenues
and earnings. Factors that could negatively affect our business
include a potential significant revaluation of the Chinese yuan,
which may result in an increase in the cost of producing
products in China, increases in labor costs and difficulties in
moving products manufactured in China out of Asia and through
the ports on the western coast of North America, whether due to
port congestion, labor disputes, product regulations
and/or
inspections or other factors, and natural disasters or health
pandemics impacting China. Also, the imposition of trade
sanctions or other regulations by the United States or the
European Union against products imported by us from, or the loss
of “normal trade relations” status with, the
People’s Republic of China, could significantly increase
our cost of products imported into the United States or Europe
and harm our business. Additionally, the suspension of the
operations of a third party manufacturer by government
inspectors in China could result in delays to us in obtaining
product and may harm sales.
We require our third-party manufacturers to comply with our
Global Business Ethics Principles, which are designed to prevent
products manufactured by or for us from being produced under
inhumane or exploitive conditions. The Global Business Ethics
Principles address a number of issues, including working hours
and compensation, health and safety, and abuse and
discrimination. In addition, Hasbro requires that our products
supplied by third-party manufacturers be produced in compliance
with all applicable laws and regulations, including consumer and
product safety laws in the markets where those products are
sold. Hasbro has the right, both directly and through the use of
outside monitors, to monitor compliance by our third-party
manufacturers with our Global Business Ethics Principles and
other manufacturing requirements. In addition, we do quality
assurance testing on our products, including products
manufactured for us by third parties. Notwithstanding these
requirements and our monitoring and testing of compliance with
them, there is always a risk that one or more of our third-party
manufacturers will not comply with our requirements and that we
will not immediately discover such non-compliance. Any failure
of our third-party manufacturers to comply with labor, consumer,
product safety or other applicable requirements in manufacturing
products for us could result in damage to our reputation, harm
sales of our products and potentially create liability for us.
Part
of our strategy for remaining relevant to children is to offer
innovative children’s toy and game electronic products. The
margins on many of these products are lower than more
traditional toys and games and such products may have a shorter
lifespan than more traditional toys and games. As a result,
sales of children’s toy and game electronic products may
lower our overall operating margins and produce more volatility
in our business.
As children have grown “older younger” and have
otherwise become interested in more and more sophisticated and
adult products, such as videogames and consumer electronics, at
younger and younger ages, we have sought to keep our products
relevant for these consumers. One initiative we have pursued to
capture the interest of children is to offer innovative
children’s electronic toys and games. Examples of such
products in the last few years include our I-branded products
such as I-DOG and I-CAT, and our FURREAL FRIENDS
Table of Contents
line of products, including BUTTERSCOTCH PONY, BISCUIT MY
LOVIN’ PUP and KOTA. These products, if successful, can be
an effective way for us to connect with consumers and increase
sales. However, children’s electronics, in addition to the
risks associated with our other family entertainment products,
also face certain additional risks.
Our costs for designing, developing and producing electronic
products tend to be higher than for many of our other more
traditional products, such as board games and action figures.
The ability to recoup these higher costs through sufficient
sales quantities and to reflect higher costs in higher prices is
constrained by heavy competition in consumer electronics and
entertainment products, and can be further constrained by
difficult economic conditions. As a consequence, our margins on
the sales of electronic products tend to be lower than for more
traditional products and we can face increased risk of not
achieving sales sufficient to recover our costs. In addition,
the pace of change in product offerings and consumer tastes in
the electronics area is potentially even greater than for our
other products. This pace of change means that the window in
which a product can achieve and maintain consumer interest may
be even shorter than traditional toys and games.
This excerpt taken from the HAS 10-K filed Feb 25, 2009. Our
use of third-party manufacturers to produce the majority of our
toy products, as well as certain other products, presents risks
to our business.
We own and operate two game and puzzle manufacturing facilities,
one in East Longmeadow, Massachusetts and the other in
Waterford, Ireland. However, most of our toy products, in
addition to certain other products, are manufactured by
third-party manufacturers, most of whom are located in the
People’s Republic of China. Although our external sources
of manufacturing can be shifted, over a period of time, to
alternative sources of supply, should such changes be necessary,
if we were prevented or delayed in obtaining products or
components for a material portion of our product line due to
political, labor or other factors beyond our control, our
operations would be disrupted, potentially for a significant
period of time, while alternative sources of supply were
secured. This delay could significantly reduce our revenues and
profitability, and harm our business.
Given that the majority of our manufacturing is conducted by
third-party manufacturers located in the People’s Republic
of China, health conditions and other factors affecting social
and economic activity in China and affecting the movement of
people and products into and from China to our major markets,
including North America and Europe, as well as increases in the
costs of labor and other costs of doing business in China, could
have a significant negative impact on our operations, revenues
and earnings. Factors that could negatively affect our business
include a potential significant revaluation of the Chinese yuan,
which may result in an increase in the cost of producing
products in China, increases in labor costs and difficulties in
moving products manufactured in China out of Asia and through
the ports on the western coast of North America, whether due to
port congestion, labor disputes, product regulations
and/or
inspections or other factors. Also, the imposition of trade
sanctions or other regulations by the United States or the
European Union against products imported by us from, or the loss
of “normal trade relations” status with, the
People’s Republic of China, could significantly increase
our cost of products imported into the United States or Europe
and harm our business. Additionally, the suspension of the
operations of a third party manufacturer by government
inspectors in China could result in delays to us in obtaining
product and may harm sales.
We require our third-party manufacturers to comply with our
Global Business Ethics Principles, which are designed to prevent
products manufactured by or for us from being produced under
inhumane or exploitive conditions. The Global Business Ethics
Principles address a number of issues, including working hours
and compensation, health and safety, and abuse and
discrimination. In addition, Hasbro requires that our products
supplied by third-party manufacturers be produced in compliance
with all applicable laws and regulations, including consumer and
product safety laws in the markets where those products are
sold. Hasbro has the right, both directly and through the use of
outside monitors, to monitor compliance by our third-party
manufacturers with our Global Business Ethics Principles and
other manufacturing requirements. In addition, we do quality
assurance testing on our products, including products
manufactured for us by third parties. Notwithstanding these
requirements and our monitoring and testing of compliance with
them, there is always a risk that one or more of our third-party
manufacturers will not comply with our requirements and that we
will not immediately discover such non-compliance. Any failure
of our third-party manufacturers to comply with labor, consumer,
product safety or other applicable requirements in manufacturing
products for us could result in damage to our reputation, harm
sales of our products and potentially create liability for us.
Table of Contents
Part
of our strategy for remaining relevant to older children is to
offer innovative children’s toy and game electronic
products. The margins on many of these products are lower than
more traditional toys and games and such products may have a
shorter lifespan than more traditional toys and games. As a
result, sales of children’s toy and game electronic
products may lower our overall operating margins and produce
more volatility in our business.
As children have grown “older younger” and have become
interested in more and more sophisticated and adult products,
such as videogames and consumer electronics, at younger and
younger ages, we have needed to work even harder to keep our
products relevant for these consumers. One initiative we have
pursued to capture the interest of older children is to offer
innovative children’s electronic toys and games. Examples
of such products in the last few years include VIDEONOW,
CHATNOW, ZOOMBOX, our I-branded products such as I-DOG and
I-CAT, and our FURREAL FRIENDS line of products, including
BUTTERSCOTCH, BISCUIT and KOTA. These products, if successful,
can be an effective way for us to connect with consumers and
increase sales. However, children’s electronics, in
addition to the risks associated with our other family
entertainment products, also face certain additional risks.
Our costs for designing, developing and producing electronic
products tend to be higher than for many of our other more
traditional products, such as board games and action figures.
The ability to recoup these higher costs through sufficient
sales quantities and to reflect higher costs in higher prices is
constrained by heavy competition in consumer electronics and
entertainment products, and can be further constrained by
difficult economic conditions. As a consequence, our margins on
the sales of electronic products tend to be lower than for more
traditional products and we can face increased risk of not
achieving sales sufficient to recover our costs. In addition,
the pace of change in product offerings and consumer tastes in
the electronics area is potentially even greater than for our
other products. This pace of change means that the window in
which a product can achieve and maintain consumer interest may
be even shorter.
These excerpts taken from the HAS 10-K filed Feb 27, 2008. Our
use of third-party manufacturers to produce the majority of our
toy products, as well as certain other products, presents risks
to our business.
We own and operate two game and puzzle manufacturing facilities,
one in East Longmeadow, Massachusetts and the other in
Waterford, Ireland. However, most of our toy products, in
addition to certain other products, are manufactured by
third-party manufacturers, most of whom are located in the
People’s Republic of China. Although our external sources
of manufacturing can be shifted, over a period of time, to
alternative sources of supply, should such changes be necessary,
if we were prevented or delayed in obtaining products or
components for a material portion of our product line due to
political, labor or other factors beyond our control, our
operations would be disrupted, potentially for a significant
period of time, while alternative sources of supply were
secured. This delay could significantly reduce our sales and
profitability, and harm our business.
Given that the majority of our manufacturing is conducted by
third-party manufacturers located in the People’s Republic
of China, health conditions and other factors affecting social
and economic activity in China and affecting the movement of
people and products into and from China to our major markets,
including North America and Europe, as well as increases in the
costs of labor and other costs of doing business in China, could
have a significant negative impact on our operations, revenues
and earnings. Factors that could negatively affect our business
include a potential significant revaluation of the Chinese yuan,
which may result in an increase in the cost of producing
products in China, increases in labor costs and difficulties in
moving products manufactured in the Far East out of the Far East
and through the ports on the western coast of
North America, whether due to port congestion, labor
disputes, product regulations and/or inspections or other
factors. Also, the imposition of trade sanctions or other
regulations by the United States or the European Union against
products imported by us from, or the loss of “normal trade
relations” status with, the People’s Republic of
China, could significantly increase our cost of products
imported into the United States or Europe and harm our business.
Additionally, the suspension of the operations of a third party
manufacturer by government inspectors in China could result in
delays to us in obtaining product and may harm sales.
We require our third-party manufacturers to comply with our
Global Business Ethics Principles, which are designed to prevent
products manufactured by or for us from being produced under
inhumane or exploitive conditions. The Global Business Ethics
Principles address a number of issues, including working hours
and compensation, health and safety, and abuse and
discrimination. In addition, Hasbro requires that our products
supplied by third-party manufacturers be produced in compliance
with all applicable laws and regulations, including consumer and
product safety laws in the markets where those products are
sold. Hasbro has the right, both directly and through the use of
outside monitors, to monitor compliance by our third-party
manufacturers with our Global Business Ethics Principles and
other manufacturing requirements. In addition, we do quality
assurance testing on our products, including products
manufactured for us by third parties. Notwithstanding these
requirements and our monitoring and testing of compliance with
them, there is always a risk that one or more of our third-party
manufacturers will not comply with our requirements and that we
will not immediately discover such non-compliance. Any failure
of our third-party manufacturers to comply with labor, consumer,
product safety or other applicable requirements in manufacturing
products for us could result in damage to our reputation, harm
sales of our products and potentially create liability for us.
Our use of third-party manufacturers to produce the majority of our toy products, as well as certain other products, presents risks to our business. We own and operate two game and puzzle manufacturing facilities, one in East Longmeadow, Massachusetts and the other in Waterford, Ireland. However, most of our toy products, in addition to certain other products, are manufactured by third-party manufacturers, most of whom are located in the People’s Republic of China. Although our external sources of manufacturing can be shifted, over a period of time, to alternative sources of supply, should such changes be necessary, if we were prevented or delayed in obtaining products or components for a material portion of our product line due to political, labor or other factors beyond our control, our operations would be disrupted, potentially for a significant period of time, while alternative sources of supply were secured. This delay could significantly reduce our sales and profitability, and harm our business. Given that the majority of our manufacturing is conducted by third-party manufacturers located in the People’s Republic of China, health conditions and other factors affecting social and economic activity in China and affecting the movement of people and products into and from China to our major markets, including North America and Europe, as well as increases in the costs of labor and other costs of doing business in China, could have a significant negative impact on our operations, revenues and earnings. Factors that could negatively affect our business include a potential significant revaluation of the Chinese yuan, which may result in an increase in the cost of producing products in China, increases in labor costs and difficulties in moving products manufactured in the Far East out of the Far East and through the ports on the western coast of North America, whether due to port congestion, labor disputes, product regulations and/or inspections or other factors. Also, the imposition of trade sanctions or other regulations by the United States or the European Union against products imported by us from, or the loss of “normal trade relations” status with, the People’s Republic of China, could significantly increase our cost of products imported into the United States or Europe and harm our business. Additionally, the suspension of the operations of a third party manufacturer by government inspectors in China could result in delays to us in obtaining product and may harm sales. We require our third-party manufacturers to comply with our Global Business Ethics Principles, which are designed to prevent products manufactured by or for us from being produced under inhumane or exploitive conditions. The Global Business Ethics Principles address a number of issues, including working hours and compensation, health and safety, and abuse and discrimination. In addition, Hasbro requires that our products supplied by third-party manufacturers be produced in compliance with all applicable laws and regulations, including consumer and product safety laws in the markets where those products are sold. Hasbro has the right, both directly and through the use of outside monitors, to monitor compliance by our third-party manufacturers with our Global Business Ethics Principles and other manufacturing requirements. In addition, we do quality assurance testing on our products, including products manufactured for us by third parties. Notwithstanding these requirements and our monitoring and testing of compliance with them, there is always a risk that one or more of our third-party manufacturers will not comply with our requirements and that we will not immediately discover such non-compliance. Any failure of our third-party manufacturers to comply with labor, consumer, product safety or other applicable requirements in manufacturing products for us could result in damage to our reputation, harm sales of our products and potentially create liability for us. | EXCERPTS ON THIS PAGE:
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