Hasbro, Inc.Pawtucket, RI, United States (NYSE: HAS)

Congress Considers Banning Chemicals in Children's Toys - Toy makers' attentions turn to DC as federal legislation amending the Consumer Product Safety Act is considered. The consumer safety legislation would, among many other things, ban the use of certain phthalates - chemicals believed to cause birth defects, promote early puberty, and increase risk for certain cancers - in children's toys. Two states have recently passed laws restricting phthalate in children's products, and several major US toy makers, including Mattel and Hasbro, already exclude certain phthalates from their toys. Prudent toy manufacturers, say legal experts, should be evaluating steps to comply with these impending, stringent national rules.

Toy Makers Impacted by Rapidly Rising Commodity Prices - The cost of oil, a primary raw material in toy making, is escalating almost daily; Goldman Sachs predicts prices will hit $200 a barrel within two years. Consequently, the cost of oil-based products, such as plastics and resin, is also rising: the producer price for plastics and resins rose 12 percent in May 2008 compared to a year ago. Because these materials are essential to toy making (about one-quarter of Mattel's raw material budget goes to buy resins), toy manufacturers are feeling the strain.

Imports from China Still Strong - Despite the 2007 recalls of millions of toys made in China with excessive lead levels, the country remains the forerunner in toy importers to the US. China's import numbers declined only 2.6 percent year-to-date April 2008; it still makes nearly 90 percent of the toys imported into the US. Benefiting slightly from China's stumble are European toy makers, perceived by many US consumers as more safety-conscious. German toy manufacturer Haba, for example, claims that its US sales have risen about 25 percent in the past year, making it and other European toy manufacturers a growing threat to US toy makers.