Hasbro Reports Record Net Earnings and Seventh Consecutive Year of E.P.S. Growth
Fourth Quarter Highlights
- Net earnings of $133.7 million, an increase of 24%;
- Earnings per diluted share of $0.84, up 35%;
- Net revenues of $1.3 billion, up 16% from a year ago.
Full-Year Highlights
- Net earnings of $333.0 million, an increase of over $100
million compared to last year's record net earnings of $230.1
million;
- Operating profit improved 38% to $519.4 million or 13.5% of
net revenues;
- Earnings per diluted share of $1.97, a 53% increase from the
prior year;
- Net revenues of $3.8 billion, up 22% from a year ago;
- North American segment net revenues were up 15% and
International segment net revenues were up 33%;
- Strength in the business was broad based both in terms of
geography and product categories;
- During the year, the Company repurchased 20.8 million shares
of common stock at a total cost of $587.0 million.
PAWTUCKET, R.I.--(BUSINESS WIRE)--Feb. 11, 2008--Hasbro, Inc. (NYSE: HAS)Hasbro, Inc. (NYSE: HAS) today reported 2007 fourth quarter and full-year results. For the fourth quarter the Company reported net revenues of $1.3 billion, an increase of $181.4 million or 16%, compared to $1.1 billion a year ago. The Company reported net earnings for the quarter of $133.7 million or $0.84 per diluted share, compared to $108.3 million or $0.62 per diluted share in 2006.
For the year, the Company reported record net earnings of $333.0 million, or $1.97 per diluted share, compared to $230.1 million or $1.29 per diluted share in 2006. The 2007 results include a favorable tax adjustment of $29.6 million or $0.17 per diluted share that was taken in the third quarter. In addition, the 2007 and 2006 full-year results included expenses of $0.23 per diluted share or $44.4 million, and $0.14 per diluted share or $31.8 million, respectively, related to the Lucas warrants mark to market. The Company exercised the right to purchase the warrants in the second quarter of 2007. For the year, worldwide net revenues were $3.8 billion, an increase of $686.1 million or 22%, compared to $3.2 billion a year ago.
"2007 was another strong year for Hasbro. We achieved net earnings of $333.0 million, an increase of over $100 million compared to last year's record net earnings of $230.1 million. In addition, it was the third consecutive year of record net earnings and our seventh consecutive year of earnings per share growth," said Alfred J. Verrecchia, President and Chief Executive Officer.
"Revenues were up 22% for the year and 16% for the quarter, as the business continued to be strong both in terms of category and geographic performance, providing us with momentum going into 2008," Verrecchia concluded.
North American segment net revenues were $2.5 billion, an increase of $329.7 million or 15%, compared to $2.1 billion in 2006. The growth in revenue is attributable, in part, to the success of TRANSFORMERS, MARVEL product lines, FURREAL FRIENDS, LITTLEST PET SHOP, BABY ALIVE, MY LITTLE PONY, TOOTHTUNES, NERF, OPERATION and SORRY. STAR WARS also remained very strong. The North American segment reported an operating profit of $318.7 million compared to $276.0 million in 2006.
International segment net revenues were $1.3 billion, an increase of $319.3 million or 33%, compared to $959.3 million in 2006, or an increase of 24%, net of the favorable foreign exchange impact of $88.5 million. The growth in revenue is attributable, in part, to the success of TRANSFORMERS, MARVEL product lines, LITTLEST PET SHOP, MY LITTLE PONY, PLAYSKOOL, FURREAL FRIENDS, MONOPOLY, OPERATION and THE GAME OF LIFE. STAR WARS also remained very strong. The International segment reported an operating profit of $158.8 million compared to $90.9 million in 2006.
"I'm especially pleased that when you combine the robust revenue growth we achieved in 2007, with the cost structure improvements and share count reductions we have achieved in recent years, the result is a 53% increase in reported earnings per share," said David Hargreaves, Executive Vice President and Chief Financial Officer. "In addition, we generated $601.8 million in operating cash flow during 2007," Hargreaves concluded.
The Company repurchased a total of 20.8 million shares of common stock during 2007, at a total cost of $587.0 million, leaving $109.6 million in the share repurchase authorization as of year end. Since the inception of its buyback program in June 2005, the Company has repurchased 45.9 million shares at a total cost of $1.1 billion, at an average price of $23.73 per share. Additionally, last week the Board of Directors increased the share buy-back program by a further $500 million and increased the quarterly dividend by $0.04 per share to $0.20 per share; this is the fifth consecutive year the dividend was increased.
The Company will web cast its earnings conference call at 8:30 a.m. Eastern Standard Time today. Investors and the media are invited to listen at http://www.hasbro.com (select "Corporate Info" from the home page, click on "Investor Information," and then click on the web cast microphone).
Hasbro is a worldwide leader in children's and family leisure time entertainment products and services, including the design, manufacture and marketing of games and toys ranging from traditional to high-tech. Both internationally and in the U.S., its PLAYSKOOL, TONKA, MILTON BRADLEY, PARKER BROTHERS, TIGER, and WIZARDS OF THE COAST brands and products provide the highest quality and most recognizable play experiences in the world.
Certain statements contained in this release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include expectations concerning the Company's future opportunities and ability to achieve its financial goals and may be identified by the use of forward-looking words or phrases such as "anticipate," "believe," "could," "expect," "intend," "look forward," "may," "planned," "potential," "should," "will" and "would." Such forward-looking statements are inherently subject to known and unknown risks and uncertainties. The Company's actual actions or results may differ materially from those expected or anticipated in the forward-looking statements. Specific factors that might cause such a difference include, but are not limited to: the Company's ability to design, manufacture, source and ship new and continuing products on a timely and cost-effective basis, as well as interest in and acceptance and purchase of those products by retail customers and consumers in quantities and at prices that will be sufficient to profitably recover development, manufacturing, marketing, royalty and other costs of products; economic and public health conditions in the various markets in which the Company and its customers and suppliers operate throughout the world, including factors which impact the retail market, disposable income or consumer demand for the Company's products, the Company's ability to manufacture and deliver products, higher fuel and other commodity prices, higher transportation costs and potential transportation delays, currency fluctuations and government regulation; the concentration of the Company's customers; the inventory policies of the Company's retail customers, including the concentration of the Company's revenues in the second half and fourth quarter of the year, together with increased reliance by retailers on quick response inventory management techniques, which increases the risk of underproduction of popular items, overproduction of less popular items and failure to achieve tight and compressed shipping schedules; work stoppages, slowdowns or strikes, which may impact the Company's ability to manufacture or deliver product in a timely and cost-effective manner; the bankruptcy or other lack of success of one of the Company's significant retailers which could negatively impact the Company's revenues or bad debt exposure; the impact of competition on revenues, margins and other aspects of the Company's business, including the ability to secure, maintain and renew popular licenses and the ability to attract and retain talented employees in a competitive environment; concentration of manufacturing for many of the Company's products in the People's Republic of China; the risk of product recalls or product liability suits; market conditions, third party actions or approvals and the impact of competition which could reduce demand for the Company's products or delay or increase the cost of implementation of the Company's programs or alter the Company's actions and reduce actual results; the risk that anticipated benefits of acquisitions may not occur or be delayed or reduced in their realization; and other risks and uncertainties as may be detailed from time to time in the Company's public announcements and SEC filings. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this release or to update them to reflect events or circumstances occurring after the date of this release.
This presentation includes a non-GAAP financial measure as defined under rules of the Securities and Exchange Commission ("SEC"), specifically EBITDA. As required by SEC rules, we have provided reconciliation on the attached schedule of this measure to the most directly comparable GAAP measure. EBITDA (earnings before interest, taxes, depreciation and amortization) represents net earnings excluding, interest expense, income taxes, depreciation and amortization. Management believes that EBITDA is one of the appropriate measures for evaluating the operating performance of the Company because it reflects the resources available for strategic opportunities including, among others, to invest in the business, strengthen the balance sheet, and make strategic acquisitions. However, this measure should be considered in addition to, not as a substitute for, or superior to, net earnings or other measures of financial performance prepared in accordance with GAAP as more fully discussed in the Company's financial statements and filings with the SEC. As used herein, "GAAP" refers to accounting principles generally accepted in the United States of America. This presentation also includes the Company's International segment net revenues excluding the impact of changes in exchange rates. Management believes that the presentation of International segment net revenues minus the impact of exchange rate changes provides information that is helpful to an investor's understanding of the segment's underlying business performance absent exchange rate fluctuations which are beyond the Company's control.
HASBRO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars) December December
30, 2007 31, 2006
---------- ----------
ASSETS
Cash and Cash Equivalents $ 774,458 $ 715,400
Accounts Receivable, Net 654,789 556,287
Inventories 259,081 203,337
Other Current Assets 199,912 243,291
---------- ----------
Total Current Assets 1,888,240 1,718,315
Property, Plant and Equipment, Net 187,960 181,726
Other Assets 1,160,863 1,196,864
---------- ----------
Total Assets $3,237,063 $3,096,905
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term Borrowings $ 10,201 $ 10,582
Current Portion of Long-term Debt 135,348 -
Payables and Accrued Liabilities 742,122 895,311
---------- ----------
Total Current Liabilities 887,671 905,893
Long-term Debt 709,723 494,917
Other Liabilities 254,577 158,205
---------- ----------
Total Liabilities 1,851,971 1,559,015
Total Shareholders' Equity 1,385,092 1,537,890
---------- ----------
Total Liabilities and Shareholders' Equity $3,237,063 $3,096,905
========== ==========
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended Year Ended
--------------------- ---------------------
(Thousands of Dollars and December December December December
Shares Except Per Share 30, 2007 31, 2006 30, 2007 31, 2006
Data)
---------- ---------- ---------- ----------
Net Revenues $1,297,844 $1,116,398 $3,837,557 $3,151,481
Cost of Sales 538,935 445,913 1,576,621 1,303,885
---------- ---------- ---------- ----------
Gross Profit 758,909 670,485 2,260,936 1,847,596
Amortization 14,194 21,038 67,716 78,934
Royalties 110,988 62,191 316,807 169,731
Research and Product
Development 49,631 49,143 167,194 171,358
Advertising 149,459 126,847 434,742 368,996
Selling, Distribution and
Administration 234,528 218,573 755,127 682,214
---------- ---------- ---------- ----------
Operating Profit 200,109 192,693 519,350 376,363
Interest Expense 12,501 7,425 34,618 27,521
Other (Income) Expense,
Net 708 14,719 22,350 7,368
---------- ---------- ---------- ----------
Earnings before Income
Taxes 186,900 170,549 462,382 341,474
Income Taxes 53,168 62,267 129,379 111,419
---------- ---------- ---------- ----------
Net Earnings $ 133,732 $ 108,282 $ 333,003 $ 230,055
========== ========== ========== ==========
Per Common Share
Net Earnings
Basic $ 0.91 $ 0.68 $ 2.13 $ 1.38
========== ========== ========== ==========
Diluted $ 0.84 $ 0.62 $ 1.97 $ 1.29
========== ========== ========== ==========
Cash Dividends Declared $ 0.16 $ 0.12 $ 0.64 $ 0.48
========== ========== ========== ==========
Weighted Average Number
of Shares
Basic 146,866 159,655 156,054 167,100
========== ========== ========== ==========
Diluted 161,140 175,049 171,205 181,043
========== ========== ========== ==========
HASBRO, INC.
Supplemental Financial Data
Major Segment Results and EBITDA
(Thousands of Dollars)
Quarter Ended Year Ended
----------------- ---------------------
December December December December
30, 31, 30, 2007 31, 2006
2007 2006 % Change % Change
-------- -------- --------- ---------- ---------- ---------
Major
Segment
Results
North
American
Segment
----------
External
Net
Revenues $766,826 $712,554 8% $2,460,016 $2,130,290 15%
Operating
Profit 101,039 129,206 -22% 318,737 275,959 16%
Inter-
national
Segment
----------
External
Net
Revenues 489,242 380,163 29% 1,278,589 959,319 33%
Operating
Profit 90,027 64,107 40% 158,846 90,893 75%
Recon-
ciliation
of EBITDA
Net
Earnings $133,732 $108,282 $ 333,003 $ 230,055
Interest
Expense 12,501 7,425 34,618 27,521
Income
Taxes 53,168 62,267 129,379 111,419
Deprec-
iation 22,030 13,802 88,804 67,773
Amort-
ization 14,194 21,038 67,716 78,934
-------- -------- ---------- ----------
EBITDA $235,625 $212,814 $ 653,520 $ 515,702
======== ======== ========== ==========
HASBRO, INC.
Supplemental Financial Data
(Thousands of Dollars and Shares, Except Per Share Data)
Earnings Per Share
2007 2006
----------------- -----------------
Basic Diluted Basic Diluted
-------- -------- -------- --------
Quarter
---------------------------------
Net earnings $133,732 $133,732 $108,282 $108,282
Effect of dilutive securities:
Interest expense on contingent
convertible debentures due
2021 - 1,063 - 1,066
-------- -------- -------- --------
$133,732 $134,795 $108,282 $109,348
======== ======== ======== ========
Average shares outstanding 146,866 146,866 159,655 159,655
Effect of dilutive securities:
Contingent convertible
debentures due 2021 - 11,566 - 11,574
Options and warrants - 2,708 - 3,820
-------- -------- -------- --------
Equivalent shares 146,866 161,140 159,655 175,049
======== ======== ======== ========
Net earnings per share $ 0.91 $ 0.84 $ 0.68 $ 0.62
======== ======== ======== ========
Full Year
---------------------------------
Net earnings $333,003 $333,003 $230,055 $230,055
Effect of dilutive securities:
Interest expense on contingent
convertible debentures due
2021 - 4,248 - 4,262
-------- -------- -------- --------
$333,003 $337,251 $230,055 $234,317
======== ======== ======== ========
Average shares outstanding 156,054 156,054 167,100 167,100
Effect of dilutive securities:
Contingent convertible
debentures due 2021 - 11,568 - 11,574
Options and warrants - 3,583 - 2,369
-------- -------- -------- --------
Equivalent shares 156,054 171,205 167,100 181,043
======== ======== ======== ========
Net earnings per share $ 2.13 $ 1.97 $ 1.38 $ 1.29
======== ======== ======== ========
CONTACT: (Investor Relations)
Hasbro, Inc.
Karen A. Warren, 401-727-5401
or
(News Media)
Wayne S. Charness, 401-727-5983
SOURCE: Hasbro