Hasbro, Inc.

Company Profile
Reference Code: 1B81864B-E7C8-465C-AC5C-3B4FEDFFCB88 Publication Date: Sep 2006

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Table of Contents

TABLE OF CONTENTS Facts & Overview... 4 Business Description.. 5 History... 7 Major Products & Services... 10 Revenue Analysis... 11 Key Employees.. 12 Key Employee Biographies.. 13 Locations & Subsidiaries.. 16 Company View... 17 SWOT Analysis.. 21 Top Competitors... 25

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Company Overview

COMPANY OVERVIEW
Hasbro is one of the leading toy makers in the US. The company also publishes interactive games, puzzles and other related entrainment products for children and teens. The company primarily operates in the US and Europe. It is headquartered in Pawtucket, Rhode Island and employs about 5,900 people. The company recorded revenues of $3,087.6 million during the fiscal year ended December 2005, an increase of 3% over 2004. The operating profit of the company was $310.5 million during fiscal year 2005, an increase of 6% over 2004. The net profit was $212.1 million in fiscal year 2005, an increase of 8.2% over 2004.

KEY FACTS

Head Office 1027 Newport Avenue Pawtucket RI 02862 USA Phone Fax Web Address Ticker # Employees Turnover (US$ Mn) Financial Year End http://www.hasbro.com New York: HAS 5,900 3,087.6 December
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Business Description

BUSINESS DESCRIPTION
Hasbro is a leading provider of childrens and family leisure time and entertainment products and services. It designs, manufactures and markets games and toys ranging from traditional toys to electronic toys. Its core brands include Playskool, Tonka, Super Soaker, Milton Bradley, Parker Brothers, Tiger and Wizards of the Coast. The company operates in more than 25 countries, selling a range of toys and games marketed in the US, together with some items that are sold only internationally. The company divides its operations in four segments, US toys, games, international and other operating segment. The US toys segment is engaged in the design, marketing and selling of boys action figures, vehicles and play sets, girls toys, electronic toys, plush products, preschool toys, infant products, childrens consumer electronics, electronic interactive products, creative play and toy related specialty products. In the US toys segment, the companys products are categorized as boys toys, girls toys, preschool, childrens consumer electronics, creative play and other products. The boys toys product line includes GI Joe and Transformers action figures, the Tonka line of trucks and interactive toys. Other products include entertainment-based licensed products, based on popular movie and television characters, such as Star Wars toys and accessories, and other licensed products, such as Beyblade tops. In 2005, the companys Star Wars based line of toys and accessories was promoted by the theater and DVD release of Star Wars Episode III: Revenge of The Sith. In the girls toy category, Hasbro provides traditional toys, which include the My Little Pony and Littlest Pet Shop lines as well as the Easy Bake oven. In 2005, My Little Pony brand was supported by the DVD release of My Little Pony: A Very Minty Christmas. These product lines are supported by an animated on-pack video, such as Secret Central, a collectible line of dolls. Hasbro has a broad-based licensing relationship with Disney in the children toys category. The companys preschool products are marketed under the Playskool trademark. The children consumer electronics products include Hitclips micro-music systems and the Videonow portable video players. Other products in the US Toys segment include the Super Soaker line of water products and the NERF line of soft foam sports action toys. The Playskool line includes products such as Mr. Potato Head, Weebles, Sit n Spin and Gloworm, along with Step Start Walk nRide, 2-in-1 Tummy Time Gym and Busy Ball Popper. In teen toy category Hesbro markets its products under the Tiger Electronics brand targeting those children who have outgrown traditional toys. The age group targeted

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by this category is 8 to 12 years old. The companys major teen toys product lines in 2005 included Videonow, I-Dog and Chatnow. The games segment includes the development, manufacturing, marketing and selling of traditional board and card games, handheld electronic games, trading card and role-playing games, learning aids and puzzles. The companys game items include jigsaw puzzles for children and adults, including Big Ben and Croxley. Magic; The Gathering Online, is an online site where players can purchase, trade and play digital cards with other players, build and customize decks and organize their card collections right on their computers. The Milton Bradley, Parker Brothers, Tiger Games and Avalon Hill brand portfolios consist of a broad assortment of games for children, teens, families and adults. In the international segment, the company develops, manufactures, markets and sells both toy and game products in non-US markets. The key international brands include Action Man, Furreal Friends, Play-Doh, Playskool, Monopoly, Beyblade, Magic; The Gathering, Duel Masters and Videonow. The company also acts as distributor for Bratz Dolls in certain European markets. In the other segment, the Hasbro Properties Group provides global licenses for some of the companys intellectual properties to third parties for promotional and merchandising purposes. Operations segment is also responsible for sourcing production of toy products and certain game products from unrelated manufacturers in various Far East countries, principally China.
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History

HISTORY
Two brothers, Henry and Helal Hassenfeld founded Hasbro in 1923. Known as Hassenfeld Brothers, the company began by selling textile remnants and later began manufacturing pencil boxes and school supplies. In 1943, Henrys son, Merrill, was named President of Hassenfeld Brothers, and the company expanded its product line to include toys such as paint sets, wax crayons, and doctor and nurse kits. During the next two decades, the company introduced many new toys to the American marketplace, including Mr. Potato Head, the first toy ever to be advertised on television. Major growth occurred during the 1960s with the introduction of G.I. Joe, one of the most successful toys ever marketed, in 1964. On the back of this, in 1968, Hasbro became a public company and changed its name to Hasbro Industries. The company was involved in a string of acquisitions in the 1980s, using profits and earnings from successful product lines like Transformers, G.I. Joe and My Little Pony. In 1983, Hasbro acquired a number of companies, including Glenco Infant Items and Knickerbocker Toy Company, which brought the company plush toys including the classic Raggedy Ann and Raggedy Andy. In 1984, the company acquired the worlds largest and oldest game and puzzle maker, the Milton Bradley Company, as well as its Playskool subsidiary. By mid-1985, Hasbro united its four subsidiaries - Hasbro Toys, Milton Bradley, Playskool and Playskool Baby - under a billion-dollar corporate parent renamed Hasbro. In 1986, Hasbro went on to acquire Ideal games and Child Guidance products from CBS. By 1990, Hasbro international segment was formed, combining several international markets under one unified management group. Hasbro acquired Tonka Corporation in 1991, which included its Kenner Products and Parker Brothers divisions. The Tonka acquisition brought a new library of classics to its already deep and balanced collection with brands such as Tonka Trucks, Monopoly, Nerf, Easy-Bake Oven, Clue and Play-Doh modeling compound. It entered the growing Asian marketplace in 1992 by purchasing the Nomura Toy Co. of Japan, and Palmyra, a toy distributor in Southeast Asia. Strengthening Hasbros position as leader in the game business, the company purchased the rights to some of the games from Waddingtons in 1994, bringing more premier games, such as Pictionary and Cluedo, into the Hasbro family. The following year, Hasbro expanded

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acquired Wrebbit, a creator and manufacturer of innovative puzzles, including three dimensional (3D) puzzles marketed under the Puzz-3D brand. In January 2006, Brian Goldner, a toy industry veteran who has held a number of senior posts within the company, was appointed as Chief Operating Officer. In the following month, Phil Jackson, who has more than 20 years toy and game industry experience was appointed as Senior Vice President, Marketing and Product Development for games. In July, the company announced a $350 million share repurchase program.
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Major Products & Services
MAJOR PRODUCTS & SERVICES
Hasbro specializes in the design, manufacture and marketing of toys, games, interactive software, puzzles and infant products. The companys key products and services include the following: US toy segment: Boys action figures Toy vehicles Play-sets Girls toys Preschool toys Infant products Creative play products Games segment: Traditional board and card games and puzzles Handheld electronic games Electronic interactive products Childrens consumer electronics Electronic learning aids Trading cards Role-playing games International segment: Boys action figures Toy vehicles Play-sets Girls toys Preschool toys Infant products Creative play products
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Revenue Analysis

REVENUE ANALYSIS
The company recorded revenues of $3,087.6 million during the fiscal year ended December 2005, an increase of 3% over 2004. For the fiscal year 2005, the US, the companys largest geographic market, accounted for 59.8% of the total revenues. Hasbro generates revenues through its four business divisions: international (39.9% of total revenue during fiscal year 2005), US toys (34.8%), games (23.7%) and other segments (1.6%). Revenues by Division During the fiscal year 2005, the international division recorded revenues of $1231.8 million, an increase of 3.1% over 2004. The US toys division recorded revenues of $1,074.5 million in fiscal year 2005, an increase of 12.8% over 2004. The games division recorded revenues of $730.6 million in fiscal year 2005, a decrease of 8.2% from 2004. The other segments division recorded revenues of $49.9 million in fiscal year 2005, a decrease of 2.6% from 2004. The operations division recorded revenues of $0.8 million in fiscal year 2005, a decrease of 69.6% from 2004.

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Key Employees

KEY EMPLOYEES
Name Basil L Anderson Alan R. Batkin Frank J. Biondi, Jr Jack Connors Michael Garrett E Gordon Gee Jack Greenberg Claudine B. Malone Edward M Philip Paula Stern Brian Goldner David Hargreaves Frank P. Bifulco Simon Gardner Barry Nagler Deborah Slater Martin Trueb Alfred J Verrecchia Alan G Hassenfeld Job Title Director (Since: 2002) Director (Since: 1992) Director (Since: 2002) Director (Since: 2004) Director Director (Since: 1999) Director Director (Since: 2001) Director (Since: 2002) Director (Since: 2002) President, US Toys (Since: 2000) Chief Financial Officer (Since: 1999) President, North American Sales President, Europe Senior Vice President, General Counsel, Secretary Senior Vice President and Controller Senior Vice President and Treasurer President, Chief Executive Officer (Since: 2003) Chairman of the Board (Since: 2003) Non Executive Board Senior Management Senior Management Executive Board Senior Management Senior Management Senior Management Senior Management Senior Management Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Board Non Executive Board Total Annual Comp. -
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Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES

Basil L Anderson

Board: Non Executive Board Job Title: Director Since: 2002 Mr. Anderson has been a Director of the company since 2002. He has been Vice Chairman of Staples, an office supply company, since 2001. Prior thereto, he served as Executive Vice President, Finance and Chief Financial Officer of Campbell Soup Company since 1996. He serves as a Director of Becton, Dickinson and Company, Charles River Associates, Moodys Corporation and Staples.

Alan R. Batkin

Board: Non Executive Board Job Title: Director Since: 1992 Mr. Batkin has been a Director of the company since 1992. He has been Vice Chairman of Kissinger Associates, geopolitical strategic consulting firm, since 1990. He serves as Director of Diamond Offshore Drilling, Overseas Shipholding Group and Cantel Medical Corporation.

Frank J. Biondi, Jr

Board: Non Executive Board Job Title: Director Since: 2002 Mr. Biondi has been a Director of the company since 2002. He has been Senior Managing Director, WaterView Advisors, private equity fund specializing in media, since 1999. Prior thereto, he was Chairman and Chief Executive Officer of Universal Studios from 1996 to 1998. He is a Director of Amgen, Harrahs Entertainment, The Bank of New York and Vail Resorts.

Jack Connors

Board: Non Executive Board Job Title: Director Since: 2004
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Mr. Connors has been a Director of the company since 2004. He has been Chairman of Hill, Holliday, Connors, Cosmopulos, marketing communications company, since 1995. He serves as a Director of John Hancock Financial Services.

E Gordon Gee

Board: Non Executive Board Job Title: Director Since: 1999 Mr. Gee has been a Director of the company since 1999. He has been Chancellor of Vanderbilt University since 2000. Prior thereto, he served as President of Brown University from 1997 to 2000 and President, The Ohio State University. He is a Director of Dollar General Corporation, Gaylord Entertainment Company, The Limited and Massey Energy Company.

Jack Greenberg

Board: Non Executive Board Job Title: Director Mr. Greenberg has been a Director of the company since 2003. He has been Chief Executive Officer of McDonalds Corporation from 1998 to 2002. He served as Chairman of McDonalds Corporation from 1999 to 2002. He served as President of McDonalds Corporation from 1998 to 1999. He serves as Director of Abbott Laboratories, The Allstate Corporation, First Data Corporation and Manpower.

Claudine B. Malone

Board: Non Executive Board Job Title: Director Since: 2001 Ms. Malone has been a Director of the company since 2001. She has been President and Chief Executive Officer of Financial and Management Consulting since 1984. She serves as a Director of LaFarge North America, Lowes Companies, Novell and Science Applications International Corporation. Ms. Malone previously served as a Director of Hasbro from 1992 to 1999.

Edward M Philip

Board: Non Executive Board Job Title: Director Since: 2002
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Mr. Philip has been a Director of the company since 2002. He has been general partner of Lake Partners, private investment firm, since 2004. Prior to that, he served as Senior Vice President of Terra Networks, global internet company, from 2000 to 2004. He has served as Chief Financial Officer and Secretary of Lycos from 19952000 and Chief Operating Officer of Lycos from 1996 to 2000.

Paula Stern

Board: Non Executive Board Job Title: Director Since: 2002 Ms Stern has been a director of the company since 2002. She has been chairwoman of The Stern Group (international advisory firm in the areas of business and government strategy) since 1988. She serves as director of Avaya, Avon Products, and The Neiman Marcus Group.

Alfred J Verrecchia

Board: Executive Board Job Title: President, Chief Executive Officer Since: 2003 Mr. Verrecchia has been President and Chief Executive Officer of the company since 2003. Prior to that, he has served as President and Chief Operating Officer from 2001 to 2003 and from 2000 to 2001; Executive Vice President. He was also Global Operations and Chief Financial Officer from 1999 to 2000; Executive Vice President, Global Operations and Development during 1999; and Executive Vice President and President, Global Operations from 1996 to 1999. He has been a Director of the company since 1992.

Alan G Hassenfeld

Board: Non Executive Board Job Title: Chairman of the Board Since: 2003 Mr. Hassenfeld has been Chairman since 2003. Prior to that, he served as Chairman and Chief Executive Officer since 1999. Prior thereto, he served as Chairman, President and Chief Executive Officer. He has been a Director of the company since 1978. He also serves as a Director of salesforce.com.
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Locations & Subsidiaries
LOCATIONS & SUBSIDIARIES
Parker Brothers & Co. 50 Dunham Road Beverly MA 01915-1894 USA T: Oddzon Products Inc. 50 Technology CT Napa CA 94558-7519 USA T: Milton Bradely Co. 443 Shaker Road East Longmeadow MA 01028-3149 USA T: Larami Ltd. 303 Fellowship Rd. # 110 Mt. Laurel NJ 08054-1212 USA T: Tiger Electronics Inc. 980 Woodlands Parkway Vernon Hills IL 60061-3103 USA T: 913 8100
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Company View

COMPANY VIEW
A joint statement by Alfred J. Verrecchia, President and Chief Executive Officer, Alan G. Hassenfeld, Chairman of Hasbro is given below. The statement has been taken from the companys 2005 annual report. 2005 was a very good year for Hasbro and represented a continuation of our improving financial performance during the past five years. In 2005, we increased revenues, delivered strong earnings, and further strengthened our balance sheet. We accomplished all of this in what continued to be a challenging environment. In recognition of this strong performance, our Board of Director s announced a 33% increase in our quarterly dividend to $0.12 per share, the highest quarterly dividend in Hasbros history. As we build on this success in 2006, we have implemented a new organizational approach that we believe will improve our go to market capabilities and provide more opportunities for growth. Earlier in 2006, we announced the promotion of Brian Goldner to Chief Operating Officer. One of his responsibilities is leading our recently formed North American business segment, which combines our US Toys and Games, Canada and Mexico operations. In addition, he is directing our worldwide product development efforts and our global supply chain. Brian is clearly one of the most creative and talented executives in the business and is a leader in bringing innovation and growth to our industry. We drove our business in four primary ways in 2005. These continue to be our key areas of strategic focus as we strive to deliver another successful year in 2006. They include: - Maximizing strategic licensing opportunities- Driving core brand growthEnhancing play patterns with technology and innovation- Remaining a leader in the growing and significant tween segment By concentrating on these key areas, we continued to make strides in building on the strong financial foundation we have established during the past five years. In 2005, revenues increased 3% to $3.1 billion and diluted earnings per share increased 14% to $1.09. Excluding the $25.8 million, or $0.13 per share, impact from taxes on the repatriation of foreign earnings, diluted earnings per share increased 27% to $1.22. In addition, operating cash flow increased significantly to $496.6 million. Lets look at how our strategy is driving our business. Maximizing Strategic Licensing Opportunities Our revenue growth for 2005 was driven principally by the excellent performance of our Star Wars line of products. For the year, Star Wars generated $494.1 million in

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revenue, including co-branded products like the Star Wars edition of the Monopoly game and our very own Darth Tater. Star Wars is an example of Hasbro at its very best, as measured by everything from product development, marketing and retail distribution, to our collaboration with Lucasfilm. Star Wars remains a valued and longterm strategic license for Hasbro and we expect it to contribute meaningfully to our business in 2006 and beyond. Clearly STAR WARS has proven we can maximize an opportunity with the right license at the right time. We believe our newly announced agreement with Marvel is another example of a strategic licensing opportunity. Through this agreement, we have acquired rights to develop toys and games based on Marvels renowned Super Hero franchises, such as Spider-Man, Fantastic Four, X-Men and Captain America. In 2006 we will be expanding our Nickelodeon range of games with a broader line based on the strength of their portfolio of the hottest and best loved preschool characters, including the introduction of the Spongebob Squarepants edition of MONOPOLY, an innovative game with breakthrough packaging. Driving Core Brand Growth In 2005 we continued to invest in our core brands by reinventing them to make them relevant to todays consumers. Our girls business was up significantly on a global basis, with strong performances from core brands, including Littlest Pet Shop and My Little Pony. Another core brand, NERF, had an excellent year, with revenues up 70%. We have a great deal of innovation going on within our Playskool brand as well with products that help infants and preschoolers learn, grow and develop, while providing parents with ideas for playing and connecting with their children. These are all good examples of how our strategy of introducing innovative products under existing brands is being successfully executed. Although our boys action figure business, other than Star Wars, was down for the year, there was good news in this category as we closed 2005. We had a successful fourth quarter launch of our new G.I. Joe Sigma Six line, which we expect to be one of our growth brands for 2006. Transformers had a solid year and is a major priority for us in 2006, as we build up to the much-anticipated 2007 scheduled release of the live action Transformers film from DreamWorks Pictures and Paramount Pictures. Action Mans A.T.O.M. brand, our new European action figure, was launched in the fourth quarter with good television ratings, and we expect it to do well in 2006. In 2005 the results were mixed in our global games business. The international board game business delivered strong revenue growth of 5% for the year, helped by the success of Monopoly Here And Now throughout Europe. However, revenues in our US games business were down year over year. While the traditional board game business both domestically and internationally continued to deliver operating margins

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in the high teens, these margins were offset by poor performance in the plug and play electronic game category and overall softness in trading card game sales. We are very focused on improving the performance of the US games business in 2006. Enhancing Play Patterns with Technology and Innovation In 2005, we continued to enhance traditional play patterns with technology and innovation, and in 2006 we will do more of the same by bringing to market two new learning platforms. The Playskool Ion Educational Gaming System uses active play to engage and provide an early learning foundation, and T. J. Bearytales provides a unique inter active learning experience with an animated friend who entertains and teaches through a collection of animated tales. Our expertise in animatronics technology is resulting in exciting new innovations, including Butterscotch My Furreal Friends Pony, which will amaze kids and adults alike with her level of realism. The application of technology to enhance game play is another way we intend to drive our games business in 2006, with introductions like Clue DVD and Designers World, a plug and play game where girls can design and market their own fashion products. Remaining a Leader in the Tween Segment Entering New Categories We also know that in order to grow we need to enter new categories. One of our first new entries will be in the or al care aisle with our new Tooth Tunes musical tooth brush, which uses patented denta-mandibular sound transmission technology to give kids a fun new way to brush to an effective clean, and will be hitting stores later in 2006. During the last several years, Hasbro has led the way in under standing the value and potential of the tween consumer. We were among the first to recognize the significance of this target group, and our speed to market and unique innovations have established Hasbro as a clear market leader in the growing and important category of tween consumer electronics. The depth and strength of our line resulted in numerous awards in 2005, including I-Dog, Furby and Vcamnow being named to the Toy Wishes Hot Dozen. I-Dog also appeared in Time magazines special issue, "Most Amazing Inventions of 2005." We had a number of other strong performers as well, including Chatnow and Zoombox. In 2006, we intend to optimize opportunities in the newly-created tween electronics section of many retailers by introducing innovative new products. Coming up for 2006 are Twister Dance DVD, I-Cat, Mini I-Dog, and the national launch of Zoombox, a portable and easy to use entertainment projector that plays DVDs, CDs and connects to most gaming systems. Entering New Categories We also know that in order to grow we need to enter new categories. One of our first new entries will be in the oral care aisle with our new Tooth Tunes musical toothbrush,

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which uses patented denta-mandibular sound transmission technology to give kids a fun new way to brush to an effective clean, and will be hitting stores later in 2006. Governance In terms of board governance, we continued to add expertise to our Board of Director s with the addition of our newest independent director, Michael Garrett, formerly an Executive Vice President of Nestle S.A. Michael has extensive international consumer product experience, and we are looking forward to his guidance as we seek to continue to grow on a global basis. On a sadder note, we lost our good friend, long-time board member, and our Presiding Director, Eli Segal, to cancer in early 2006. He was a remarkable individual who made a tremendous difference through his immense contributions to the community, the government sector, the business world, and to Hasbro. He left behind a tremendous legacy that wont be forgotten as other s help to further the causes he so generously contributed to. He will be greatly missed by all of us at Hasbro. At Hasbro, corporate social responsibility continues to be very y important. We are active with the Inter national Council of Toy Industries (ICTI) Care Process in driving ethical manufacturing. We continue to be involved with the communities in which we live and work. Through our charitable grants and in-kind product donations, we have helped to improve the lives of millions of children who were impacted by tragedies like the Asian Tsunami and Hurricane Katrina. We will continue to do our par t in 2006 in helping to make the world a better place. While our industry is undoubtedly changing, it is still a wonderful business with many opportunities. Toys and games hold a special place in consumers hearts and are as relevant as ever. We are committed to making the necessary investments to ensure that we successfully evolve and remain an industry leader. Our focus continues to be on generating strong cash flow, improving profitability, and creating greater value for our shareholders.
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SWOT Analysis

SWOT ANALYSIS
Hasbro is a leader in childrens and family leisure time and entertainment products and services. It designs, manufactures and markets games and toys ranging from traditional toys to electronic toys. The company has an array of successful brands such as PlayDoh, G I Joe, Playskool, Tonka, Milton Bradley, Parker Brothers, Tiger and Wizards of the Coast. A strong brand portfolio gives the company an edge over its competitors. However, intense competition could affect the companys revenues and margins.
Strengths Strong core brands Relationship with Disney Low cost manufacturing Opportunities Booming US computer and video game market Launch of new products Maximizing licensing opportunities Threats Intense competition Piracy Short lifecycle of products Children getting older younger Weaknesses Inconsistent revenues Low profitability and returns

Strengths

Strong core brands Hasbro dominates the board game business with Parker Brothers and Milton Bradley. The company has an array of brands from PlayDoh to G I Joe. Some of its successful brands are Playskool, Tonka, Milton Bradley, Parker Brothers, Tiger and Wizards of the Coast. Its preschool line is marketed under the PlaySkool line and its girls lines include My Little Pony, whose re-introduction has been well received. Hasbro has focused upon the tweens market with lines including VideoNow and FurReal Friends. The company has significant focus on building its core brands. A strong brand portfolio gives the company an edge over its competitors. Relationship with Disney In addition to designing and developing products based on its brands, Hasbro produces products based on popular entertainment properties developed by other parties through a license. The entertainment properties released theatrically for which the company has a license include Star Wars or Disney related productions. Hasbro is the master toy licensee for all of Disneys event films, in addition to some classic properties. The company is the official toy and game company for Walt DisneyWorld,
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Disneyland and Euro Disney. The company has been leveraging the popularity of Disneys products to gain attract customers. Low cost manufacturing The companys products are manufactured in third party facilities in the Far East and the company-owned facilities located in East Longmeadow, Massachusetts and Waterford, Ireland. However, majority of its toy products are manufactured in China. The company takes advantage of cost efficiencies through sourcing of the products from the low cost production destinations.

Weaknesses

Inconsistent revenues The company has been experiencing inconsistency in its revenue growth in the recent years. In the fiscal 2003, revenues increased by 11.4%, followed by a decline of 4.5% in fiscal 2004. In the fiscal 2005, the companys revenue grew marginally by 3%. Any continued inconsistencies in revenue growth could adversely affect investor confidence. Low profitability and returns Hasbros profit margins and returns have been low compared to the industry average in the recent past. Its operating and net margins in the five year period 2001-2005, were 9.3% and 4.8%, respectively, much lower compared to the industry average of 15.5% and 9.7%. During the same period its return on assets, investments and equity was 4.4%, 6.2% and 10.1%, respectively, lower compared to the industry average of 11.8%, 16.8% and 21%. Low profit margins reflect inefficient cost structure of the company, while low returns suggest ineffective utilization of resources.

Opportunities

Booming US computer and video game market Demand for computer and video games is expected to grow rapidly. The US video and computer games sales reached approximately $7 billion in 2005 and are expected to reach $11 billion in 2006. Every household in the US has on an average two video games. About 42% of the Americans are expected to purchase video games in 2006. Increasing demand for computer and video games in the US would mean higher business for Hasbro since it generates almost 60% of its revenues from the US. Launch of new products
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The company plans to launch new products to address this market. Hasbro had a successful fourth quarter launch of new G.I. Joe Sigma Six line, which is expected to be one of the companys growth brands in the short term. Action Mans A.T.O.M. brand, Hasbros new European action figure, was launched in the fourth quarter with good television ratings, and is expected to further gain popularity in 2006. Moreover, Hasbro plans to focus on its Transformers line as it can face a surge in popularity as a result of release of the live action Transformers film from DreamWorks Pictures and Paramount Pictures in 2007. Hasbro expects to leverage its popularity among the US tweens market and is planning to enter into other related businesses. One of the companys new product in the oral care aisle market is Tooth Tunes musical tooth brush, which uses patented denta-mandibular sound transmission technology. The new product is scheduled to be launched in the market in late 2006. Further, in 2006, Hasbro intends to introduce many new products in the newly-created tweens electronics business. The products in the pipeline are Twister Dance DVD, ICat, Mini I-Dog, and the national launch of Zoombox, a portable and easy to use entertainment projector that plays DVDs, CDs and connects to most gaming systems. The companys focus on launching new products for tweens could increase its revenues and market share in US tweens market. Maximizing licensing opportunities Hasbros licensing agreements provide it with significant co-branding avenues. For instance during 2005, its product line of Star Wars generated $494.1 million in revenue, including co-branded products like the Star Wars edition of the Monopoly game. Star Wars product line depicts the success of Hasbros collaboration with Lucasfilm, the licensor of Star Wars. Having acquired the license, Hasbro indulged in product development, marketing and retail distribution. The company has recently announced an agreement with Marvel, one of the worlds most prominent character-based entertainment companies. Through this agreement, Hasbro has acquired rights to develop toys and games based on Marvels Super Hero franchises, such as Spider-Man, Fantastic Four, X-Men and Captain America. These films which are as popular as Star Wars would provide the company significant growth opportunities.

Toy Company Playskool Fisher Price Fisher Price Fisher Price Chicco Fisher Price Fisher Price Fisher Price Toy Mobile Toy Mobile Brio Network Toy Mobile Playmates RC2 RC2 Chicco Spin Master Fisher Price Fisher Price Think Geek Playmates RC2 MGA MGA MGA Spin Master Jakks Pacific Jakks Pacific Jakks Pacific Jakks Pacific Jakks Pacific Jakks Pacific Jakks Pacific Brio Network Toy Mobile Fisher Price Fisher Price Fisher Price Fisher Price Hasbro Hasbro Hasbro Play-Doh Play-Doh Hasbro Mattel Mattel Mattel Mattel Fisher Price Fisher Price
Toy Peek N Play Discovery Dome Amazing Animals Laugh & Learn Baby Grand Piano Baby Gymnastic Bounce & Spin Zebra Talking Video Phone Turbo Tigger Tail Sesame Street Sing & Giggle Toolbench The Backyardigans Sing & Spin Pablo Sherpa Doll, 100% Organic Cotton Wooden Zoo Book Squiddo Wooden Fruit Basket Disney My Baby Princess Bob the Builder Remote Ctr Scoop Thomas Can We Built It Toolbench First Radio Control Ducati Sing Along with Aquadoodle My First Dollhouse Diego's Talking Rescue Center Carnivourous Creatures Ninja Turtles Fast Forward Steel Wheel Thomas Working Hard Set Spiderman Assault Bratz Diamondz Rolling Runway Storytime Little Mermaid Master the Moves Power Range Video Game Controller Tu Ta Bella Dora the Explorer TeleStory Console, Thomas Tank Care Bears Tele-Friend Cabbage Patch Kids Newborns Snugglers The Battle between the Giants Red Wooden Dragon Kid Tough FP3 Player Pink Kid Tough FP3 Player Blue Kid Tough Digital Camera Pink Kid Tough Digital Camera Blue Baby Alive My Little Pony Crystal Rainbow Castle My Little Pony Sweet Steps Pony Play-Doh Creativity Center Play-Doh Activity Mats Air Powered Action Stadium Barbie Let's Dance Little Mommy Play All Day Toddler Doll Little Mommy Play All Day Activity Ctr Superman Returns Inflato-Suit Fairy Wishes Dora Dora Magic Castle
Age 3mo + 6mo 9mo+ 12mo+ 18mo+ 18mo+ 18mo+ 18mo+ 1 1+ 1.5+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+
List Price $49.99 $11.99 $49.99 $39.99 $34.99 $24.99 $42.99 $29.99 $9.95 $10.50 $55.00 $19.99 $29.99 $17.99 $29.99 $34.99 $33.00 $39.99 $22.99 $39.99 $39.99 $49.99 $79.99 $12.99 $29.99 $14.99 $29.99 $19.99 $19.99 $19.99
$70.00 $70.00 $79.99 $79.99 $49.99 $59.99 $29.99 $29.99 $9.99 $49.99 $54.99 $34.99 $49.99 $21.99 $40.00 $49.99
Fisher Price RC2 Jakks Pacific Jakks Pacific Hasbro Games Hasbro Games Toy Mobile Playmates Playmates Hasbro Games MGA MGA MGA MGA MGA MGA MGA MGA Jakks Pacific Jakks Pacific Jakks Pacific Jakks Pacific Fisher Price Hasbro Mattel Mattel Hot Wheels Mattel Fisher Price Fisher Price Jakks Pacific Jasman MGA MGA Jakks Pacific Hasbro Hasbro Mattel Mattel Milton Bradley Playmates Playmates Playmates Jasman Jasman MGA MGA MGA MGA MGA MGA MGA MGA
Spark Creativity Center Art Easel Thomas Roundhouse Playset Dora Mosaic Sticker By Numbers Telestory Console, Dora, Thomas Tank Dora The Explorer ABC Game Go Diego Go Charades Game in Travel Tin Strawberry Shortcake Friends Strawberry Shortcake Play Date Pals Littlest Pet Shop Game Bratz Super Secret Lipgloss LaundryMatt Trend Setter Studder Bratz Kidz Makeup Vanity Bratz Kidz Motor Scooter Bratz Kidz Yasmin Bratz Kidz Sasha Bratz Kidz Jade Bratz Kidz Cloe Doodle a Master Hide n' Seek Doodle Monster Speed Snacks Imaginext Mega Trex Furreal Friends Cuddle Chimp PollyWorld Rockin Theme Park Matchbox Mega Rig Monster Mission Fast Talkin Lightning McQueen I Can Play Piano Air Launching Avatar Aang & Appa TuTa Bella Fashion Accessory Wild West Gunslinger Bratz Cyber Style Laptop Insane Darts Pac-Man Transformers Cybertron Primus G.I. Joe Sigma Dragon Hawk Barbie Fashion Fever Styling Head Holly Hobbie Clubhouse Snow Cone Mkr Big Trouble Game The Hedge DVD game Santa's Trivia Game DVD Discovery Ch American Road Trip DVD Command Force Chopper AH-6Little Bird Command Force Chopper AH-64 Apache Bratz Diamondz Funky Fashion Makeover Bratz 6ft Puzzle Bratz Design Your Own Handbag Bratz Runway Board Game Shark Shooter Bratz Miuchiz Miuchiz Monster Creeper Miuchiz Pawz Dash
3+ 3+ 3+ 3+ 3+ 3+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 4+ 5+ 5+ 5+ 5+ 5+ 5+ 5+ 5+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+
$79.99 $29.99 $29.99 $9.99 $9.99 $8.99 $26.99 $12.99 $29.99 $24.99 $34.99 $12.99 $12.99 $12.99 $12.99 $24.99 $34.99 $24.99 $39.99 $29.99 $29.99 $39.99 $44.99 $34.99 $74.99 $29.99 $9.99 $29.99 $48.99 $19.99 $19.99 $49.99 $34.99 $34.99 $29.99 $22.99 $24.99 $14.99 $14.99 $29.99 $29.99 $29.99 $8.99 $12.99 $19.99 $17.99 $29.99 $29.99 $29.99

MGA MGA MGA MGA MGA MGA Jakks Pacific Uncle Milton Fisher Price Mattel Mattel Hasbro Games Mattel Hot Wheels Mattel Playmates Radica Think Geek Think Geek Hasbro Games Hasbro Games Hasbro Games MGA MGA MGA Jakks Pacific Jakks Pacific Uncle Milton Radica Radica Radica Radica Radica Wow Wee Robotics Hasbro/Tiger Games Hasbro/Tiger Electronics Hasbro Tyco Radio Control Tyco Radio Control Mattel Jakks Pacific Hasbro Games Hasbro Games Hasbro Games Uncle Milton Hasbro Games MGA Think Geek Jakks Pacific Think Geek
Bratz Forever Diamondz Yasmin Bratz Forever Diamondz Sasha Bratz Forever Diamondz Chloe Bratz Ice Champions Vanessa Bratz MP3 Player Bratz Ice Champions Dana Trolls RC Tarantula Sing and Go Choo Choo My Scene Fab Faces Dolls Pixel Chix Cosmic Catch Radar Gun Assortment UNO Spin Jump Start 3rd Grade DVD Music 20 Q Antworks Space Age Ants Acrobots Monopoly Spongbob Squarepants DVD That's So Raven Girl Talk Game Twister Dance DVD Lazer Battle Sew Styling Sewing Machine State Fair Ferris Wheel Knockout XPV Xtreme Performance Vehicle Fly Wheels Star Theater Cube World Jibbi Friend that Lives in Your TV Digi Makeover Golden Tee Play TV Skate Boarding RoboReptile Designers World Massively Mini Media Easy Bake Oven R/C N.S.E.C.T. Assortment R/C Air Blade Deco Scene It? Nickelodean Game Fly Wheels Battery Pack & Charger Trivial Pursuit DVD Game of Life Pirates of the Caribbean DVD Pop-0-Matic Big Trouble Game Lightcast Interactive Music Light Show Clue DVD Game The 10,000 Pyramid Game Star Wars Force Fx TVG Pixar Wavy Wand
6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 6+ 7+ 7+ 7+ 7+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 8+ 9+ 9+ 9+ 10+ 10+ 12+ No age
$29.99 $29.99 $29.99 $19.99 $49.99 $19.99 $9.99 $25.99 $56.99 $19.99 $34.99 $24.99 $29.99 $15.99 $14.99 $14.99 $29.99 $6.99 $29.99 $22.99 $29.99 $24.99 $39.99 $19.99 $59.99 $69.99 $29.99 $29.99 $34.99 $59.99 $39.99 $39.99 $99.99 $35.99 $79.99 $24.99 $99.99 $79.99 $34.99 $29.99 $19.99 $19.99 $19.99 $59.99 $29.99 $19.99 $99.99 $29.99