July 20, 2011

Laser Pegs

New Lead Limit Effective August 14

Last Wednesday, the U.S. Consumer Product Safety Commission (CPSC) voted 3-2 to find that it is “technologically feasible” to reduce substrate lead limits in toys from 300 to 100 parts per million (ppm). As such, new requirements, as part of the Consumer Product Safety Improvement Act (CPSIA) of 2008, will go into effect on August 14, and will also apply to products already produced and currently in the marketplace. The new lead content limit does not apply to inaccessible (internal) parts of children’s products or to certain component parts of children’s electronic devices.
Over a three-year period, outlined under the CPSIA, substrate lead content limits have been introduced and reduced from 600 ppm to the new total lead content limit of 100 ppm. The Toy Industry Association (TIA) had joined numerous other organizations in active outreach to the commission expressing concerns about the technical feasibility of meeting the lower limits, asking that the commission exclude some materials, specifically metal and glass, from the scope of the 100 ppm limit. The CPSC said that manufacturers may petition for exceptions to the 100 ppm limit, and that such petitions will be considered on a case-by-case basis. 
Due to an action taken by the CPSC earlier this year to extend a stay of enforcement on testing and certification rules for total lead content requirements, independent third-party test results confirming adherence to the new 100 ppm total lead limits are not required until December 31. Compliance with the new limit, however, is required effective August 14.

European Toy Safety Directive Now In Effect

The European Union’s Toy Safety Directive (TSD), which strengthens the EU’s safety criteria for all toys produced domestically and imported from abroad, is now in effect. The directive was approved on June 30, 2009.
Directive 2009/48/EC applies to toys, defined as “products that are designed or intended, whether or not exclusively, for use in play by children under 14 years of age.” The directive requires manufacturers to carry out a safety assessment of all toys before placing them on the market, including an analysis of the chemical and non-chemical (physical, mechanical, electrical, flammability, hygiene, and radioactivity) hazards that the toy may present, as well as an assessment of the potential exposure to such hazards.
TSD requirements regarding chemical contents in toys will come into force on July 20, 2013. During the two-year transitional period, regulations contained in the old Directive 88/378/EEC will continue to apply. The new TSD requires manufacturers to carry out chemical safety assessments (to existing requirements) until the new chemical requirements are in effect.

Sideshow Collectibles to Produce Signature Line for DC Comics

The Dark Knight RisesWarner Bros. Consumer Products (WBCP), along with DC Entertainment, has enlisted specialty manufacturer Sideshow Collectibles to create a signature line of statues, busts, and other collectibles inspired by DC Comics’ iconic superheroes and villains, as well as the upcoming theatrical releases The Dark Knight Rises and Man of Steel. Sideshow Collectibles will also produce limited-edition art prints and 1/6 scale articulated figures. Sideshow Collectibles’ figures feature more than 30 points of articulation, detailed accessories, real fabric costumes, and an array of switch-out parts for customization. The art print products will capture DC Comics characters and adventures in flat art form. The company will also collaborate with Mondo Tees to create limited-edition prints, each featuring original artwork that is screen printed on archival paper. These new collectible lines will complement the offerings available from DC Direct.

Proposed Class Action Lawsuit to Ban Happy Meal Advertising in California

Happy MealAccording to Reuters, a proposed class action lawsuit, Parham v. McDonald’s Corporation et al, 11-511, will seek to stop McDonald’s from advertising toys in connection with Happy Meals in California. The fast food restaurant chain has been accused of using toys to attract children to eat at its restaurants. At a hearing on Friday, McDonald’s attorney Scott Elder argued an advertising ban on Happy Meal toys in California would make the chain unable to purchase ads on a national basis, which can be cheaper. McDonald’s is asking that the case be litigated in the federal courts, but first has to prove the lawsuit involves potential costs of more than $5 million.


U.S. Consumers Spent $2 Billion in Q1 on Video and PC Game Software

According to a new report by The NPD Group, Q1 2011 Games Industry: Total Consumer Spend, consumers in the U.S. spent $2.03 billion on new physical video and PC game software in the first quarter of 2011. The report also showed that consumers spent an estimated $1.85 billion content via other monetization methods, including used games, game rentals, subscriptions, digital full game downloads, social network games, downloadable content, and mobile games. The total amount spent by consumers on hardware, content, and accessories was reported to be $5.9 billion, an increase of 1.5 percent compared to Q1 2010.

Street Surfing Acquires Blur Skateboards

Street Surfing, LLC, has acquired Blur Skateboards, which was founded last year by Scott Rickett, Bruce Lee, Sergio Sandoval, Marco Saiz, and Steve Saiz. Blur aims to produce high-quality skateboards with a West Coast aesthetic to beginner and younger skaters. As part of the Street Surfing brand, Blur skateboards will provide an outlet for riders looking to branch out from Street Surfing’s current offering of scooters and casterboards. Street Surfing will promote all of its products as part of a California Skate Park Tour, launching this month.

EA to Acquire PopCap Games

PopCapsElectronic Arts, Inc. (EA) has confirmed an agreement to acquire PopCap Games, a provider of games for mobile phones, tablets, PCs, and social network sites. PopCap Games’ titles include Plants vs. Zombies, Bejeweled, and Zuma, and the company has more than 150 million games installed and played worldwide on platforms such as Facebook, RenRen, Google, iPhone, iPad, and Android. In 2010, approximately 80 percent of PopCap’s revenue was on high-growth digital platforms.
EA will pay approximately $650 million in cash and $100 million in shares of EA common stock to be issued to certain stockholders of PopCap. In addition, the PopCap sellers are entitled to additional variable cash consideration, contingent upon the achievement of certain non-GAAP earnings before income and tax performance milestones through December 2013, EA’s third fiscal quarter end.

M!ke Licensing Signs StinkyKids Musical Deal

StinkyKidsStinkyKids is getting musical. M!ke Licensing has announced that Vital Theatre Company, Inc., a family musical producer, has been appointed as the exclusive licensee for StinkyKids to create StinkyKids The Musical! The stars of the brand, the little StinKers, will come alive in this production for the whole family, slated to launch early next year. 
M!ke Licensing is currently seeking licensees to add to the StinkyKids roster of products in categories such as toys/games, coloring books, jewelry, stickers, key chains, puzzles, gift and novelty, party paper products, and apparel and accessories.

Brainy Brands Partners with Just Baby Baby Company

Brainy BabyThe Brainy Brands Company, which produces and markets the Brainy Baby line of children’s educational videos and products for preschoolers, has signed a distribution deal with Just Baby Baby Company, of Zimbabwe, Africa, to exclusively distribute the Brainy Baby in Zimbabwe. According to the agreement, Just Baby Baby Company will immediately begin selling the Brainy Baby products in their retail stores, and will target preschools, kindergarten, nursery schools, and churches with brand exposure. The Brainy Brands Company recently revamped its entire product line. The redesign takes a more comprehensive approach to early childhood education and incorporates modern technology with old-fashioned products.

Giochi Preziosi Group Appoints VTech for Puppy in My Pocket Laptop

Puppy in My PocketThe Giochi Preziosi Group has signed a deal with VTech to produce a Puppy in My Pocket: Adventures in Pocketville laptop. The laptops will become available next year in France, Germany, and Spain, where the TV series launched this month. The laptop will feature character voices from the TV series and an ABC keyboard.





Strawberry Shortcake Available in McDonald’s Happy Meals

Strawberry Shortcake McDonald’s Happy Meals and Mighty Kids Meals are now available in North America. Through July 28, kids can enjoy one of six “berry fun” Strawberry Shortcake characters with the purchase of a Happy Meal or Mighty Kids meal, at participating McDonald’s locations while supplies last. Each of the six characters in the “Strawberry Shortcake: Berry Bitty City Scent-Station” Happy Meal comes with its own unique motion and an online code that unlocks a virtual accessory in McWorld, McDonald’s virtual world at www.happymeal.com. CPLG, the global licensing agent for Strawberry Shortcake, and American Greetings Properties (AGP), announced the deal.




WowWee Sponsors 2011 Minor League Baseball Season

WowWee, the company behind products such as Paper Jamz and Light Strike, is teaming up with Minor League Baseball (MiLB) in a new sponsorship deal. Under the agreement, the WowWee campaign will be present in 22 MiLB ballparks this season. The WowWee brand and select toy products will be promoted through a series of video board commercials, public address announcements, and product giveaways via radio broadcasts. As a popular destination for families, the MiLB games allow for WowWee to reach parents and kids at the same time through the media outlets as well as with on-field product demonstrations. A highlight of the sponsorship involves kids going head-to-head in competitions with the Paper Jamz and Light Strike products on the field. There will also be interactive toy displays located on the concourse of each ballpark during Friday and Saturday games through August 15.
WowWee also recently announced that Lexi St. George, the teen singer discovered by Good Morning America’s “One Week to Hit It Big: Pop Star” series, has landed her first commercial deal with the company, promoting the Paper Jamz Pro Series Microphone. The commercial will feature Lexi’s debut single and video, “Dancing to the Rhythm.”

TIF Needs Your Toy Donations

The Toy Industry Foundation (TIF) is in critical need of new toys for its Play Comforts partnership with the Boys and Girls Clubs of America Military Services and is asking the industry for donations. TIF’s Toy Bank needs toys, plush, games, books, and arts and crafts for kids of all ages. The organization stresses that no donation is too small. Shipping to Atlanta is required.
There are only two live Toy Bank distribution events left for this year and toys must be shipped no later than Friday, July 29 for the events serving 5,000 kids stationed in Norfolk, Va. and 8,000 children abroad in Germany. However, toy donations will be accepted at anytime; later this year, thousands of additional toys will be distributed to additional U.S. bases across the country. For more information, contact thetoybank@toyindustryfoundation.org or (646) 454-5581.

Tomy Expands Parent Company Board After Acquiring RC2 Corporation

Curtis W. Stoelting, former CEO and director of RC2 Corporation, has joined the Tomy parent company board of directors. Tomy recently acquired RC2 Corporation, which will now be known as Tomy International with sales and marketing units in North America, Europe, and Australia, and developing and sourcing units in Asia. Stoelting is also serving as CEO of Tomy International.
The new company will benefit from access to complementary global distribution and sourcing networks, brand portfolio development, enhanced operational efficiency, and access to top global talent as part of one of the largest toy and infant product companies in the world.

GreenLight Promotes Executive to President

GreenLight, LLC, a manufacturer and marketer of officially licensed authentic die-cast replica vehicles, model kits, and aftermarket automotive accessories, has promoted Russell J. Hughes to president of the company. Previously, Hughes served as vice president of sales and marketing. He succeeds Kevin A. Davey, who founded GreenLight and will now dedicate his attention to developing the company’s promotional product business and strategic licensing relationships. Hughes joined GreenLight in 2003 after graduating from the Butler University College of Business. The company stated it welcomes inquiries from potential licensors, suppliers, or employees interested in working together.

InnovativeKids Hires Toy Veteran as VP of Sales

InnovativeKids has hired Peter Reynolds as the company’s vice president of sales. Reynolds has many years of experience in the specialty toy industry, most notably building the Brio brand through the 1980s and 1990s and, most recently, launching the Early Learning Centre U.S. subsidiary.
“We believe Peter’s commitment to the value of play in the lives of children coupled with his familiarity with and reputation in various channels of distribution for children’s goods will make him a sound addition to our management team,” said Shari Kaufman, president and publisher of innovativeKids, in a press release.

Private Equity Firm Teams Up with Bill Guarisco

Access Value Investors (AVI), a Chicago-based private equity firm focused on companies undergoing transition, has announced a joint venture with William Guarisco, targeting companies in the toy and gift industries. Guarisco will work closely with AVI senior partners to identify investment opportunities, assist in transaction execution, and provide operational and management support to portfolio companies.
Guarisco has an extensive background in both the toy and gift industries. He spent more than 20 years working at Mattel in a variety of international and domestic management roles, where he focused on driving operating improvements, integrating acquisitions, and expanding the firm’s geographical presence.

New Board Members at LIMA

The International Licensing Industry Merchandisers’ Association (LIMA) announced the addition of six new members to the board of directors. The new directors were elected by a vote of the LIMA membership, and their terms will run from July 1 through June 30, 2014. Joining the LIMA board are Susie Lecker, senior vice president, Fisher-Price Friends, FP Brands; Marty Malysz, president, Dependable Solutions, Inc.; Carla Peyton, senior vice president, licensed consumer products, the Americas, BBC Worldwide America; Jennifer Richmond, managing director, Richmond Management Group; James Slifer, vice president, business development, The Joester Loria Group; and Cheryl Stoebenau, president, CAS Marketing.

Mattel Reports Q2 Financial Results

Mattel, Inc. has reported its second quarter financial results for 2011. For the quarter, the company reported net income of $80.5 million, or $0.23 per share, compared to last year’s second quarter net income of $51.6 million, or $0.14 per share. For the quarter, net sales were $1.16 billion, up 14 percent compared to $1.02 billion last year, including favorable changes in currency exchange rates of 5 percentage points. On a regional basis, second quarter gross sales increased 7 percent in the U.S. and increased 23 percent in international markets, including favorable changes in currency exchange rates of 11 percentage points. Operating income for the quarter was $109.3 million, compared to 2010’s operating income for the quarter of $69.4 million.

Hasbro Reports Q2 Earnings

Hasbro, Inc. today reported revenue and earnings growth for the second quarter of 2011. The company reported a 23 percent net revenue growth totaling $908.5 million, compared to $737.8 million for the second quarter last year. Second quarter 2011 net revenues include a positive $35.8 million impact of foreign exchange. The company reported net earnings for the second quarter of 2011 of $58.1 million, or $0.42 per diluted share, compared to $43.6 million, or $0.29 per diluted share, in 2010. Second quarter 2011 net earnings were $0.33 per diluted share, excluding a favorable tax adjustment of $20.5 million, or $0.15 per diluted share, as well as $13.1 million pre-tax expense, or $0.06 per diluted share, for severance, relocation, and related costs associated with establishing the Center of Excellence for Hasbro Games in Rhode Island.

Jakks Pacific Reports Second Quarter Results for 2011

Jakks Pacific, Inc. reported results for the company’s second quarter and first six months that ended June 30, 2011. Net sales for the second quarter of 2011 were $131.9 million, compared to $123.3 million reported in the comparable period last year, and net sales for the six months were $204.3 million, compared to $200.6 million in 2010. Net income for the second quarter was $4.2 million, or $0.16 per diluted share, compared to $3.0 million, or $0.11 per diluted share, reported in the second quarter of 2010. The net loss reported for the six-month period was $6.3 million, or $0.23 per diluted share, compared to a loss for the first six months of 2010 of $2.2 million, or $0.08 per diluted share, which included a tax benefit adjustment of $4.9 million, or $0.18 per diluted share. Excluding the tax benefit the 2010 six month loss would have been $7.1 million or $0.26 per diluted share.
Operations used cash of $14.6 million for the first six months of this year with inventory and accounts receivable at seasonal highs. As of June 30, the company’s working capital was $372.8 million, including cash and equivalents and marketable securities of $247.1 million.

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