Hasbro Reports Strong Third Quarter Results
Highlights
* Net revenues of $1.2 billion for the quarter, up 18% from a year ago;
* Operating profit improved 27% to $209.7 million or 17.1% of revenue;
- Net earnings of $161.6 million, or $0.95 per diluted share;
- North American segment net revenues were up 10% and International segment net revenues were up 33% in the third quarter;
- Growth driven by TRANSFORMERS and MARVEL movie-related products, as well as strong performances from LITTLEST PET SHOP, BABY ALIVE, FURREAL FRIENDS, MY LITTLE PONY, NERF and board games;
- During the quarter, the Company repurchased approximately 12.9 million shares of common stock at a total cost of $362.1 million.
PAWTUCKET, R.I.--(BUSINESS WIRE)--Oct. 22, 2007--Hasbro, Inc. (NYSE: HAS) today reported third quarter net revenues of $1,223.0 million, an increase of $183.9 million or 18% compared to $1,039.1 million a year ago. The Company reported net earnings for the quarter of $161.6 million or $0.95 per diluted share, compared to $99.6 million or $0.58 per diluted share in 2006. The 2007 results for the quarter include a favorable tax adjustment of $29.6 million or $0.17 per diluted share. Excluding the impact of the favorable tax adjustment, 2007 net earnings for the quarter would have been $132.0 million or $0.78 per diluted share. In addition, the 2006 quarter included an expense of $19.8 million or $0.09 per diluted share related to the Lucas warrants.
"We are very pleased with our third quarter and year-to-date performance and we are well positioned for the all important holiday season," said Alfred J. Verrecchia, President and Chief Executive Officer. "Revenues were up 18% for the quarter and 25% year-to-date as the business continues to be strong both in terms of category and geographic performance."
"Operating profit was up significantly for the third quarter to $209.7 million, an historical record for the Company and further validation that our strategy of focusing on our core brands is working," Verrecchia concluded.
North American segment net revenues for the quarter were $822.7 million, an increase of $77.2 million or 10% compared to $745.5 million in 2006. The growth in revenue is attributable to shipments of the TRANSFORMERS and MARVEL product lines, as well as growth in other Hasbro brands including FURREAL FRIENDS, LITTLEST PET SHOP, BABY ALIVE, MY LITTLE PONY, NERF, MONOPOLY, OPERATION and SCRABBLE. The North American segment reported an operating profit of $134.0 million compared to $111.6 million in 2006.
International segment net revenues for the quarter were $374.0 million, an increase of $93.6 million or 33% compared to $280.4 million in 2006. The revenues include a positive foreign exchange impact of approximately $21.7 million or 8%. The results reflect shipments of the TRANSFORMERS and MARVEL product lines, as well as growth in other Hasbro brands including LITTLEST PET SHOP, MY LITTLE PONY, PLAYSKOOL, MONOPOLY, OPERATION and THE GAME OF LIFE. The International segment reported an operating profit of $57.6 million compared to $43.2 million in 2006.
"In light of our strong global cash flow generation and our expectations for the future, we continued to aggressively repurchase shares during the quarter," said David Hargreaves, Executive Vice President and Chief Financial Officer. "During the quarter, we repurchased a total of 12.9 million shares of common stock at a total cost of $362.1 million, leaving $240.6 million in the current authorization as of quarter end," Hargreaves concluded.
The Company will web cast its third quarter 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, 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; 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.
HASBRO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars) Sept. 30, 2007 Oct. 1, 2006
---------------------------
ASSETS
Cash and Cash Equivalents $ 410,941 $ 309,100
Accounts Receivable, Net 892,708 679,363
Inventories 395,466 312,041
Other Current Assets 208,303 259,735
-------------- ------------
Total Current Assets 1,907,418 1,560,239
Property, Plant and Equipment, Net 181,369 163,767
Other Assets 1,197,386 1,238,771
-------------- ------------
Total Assets $ 3,286,173 $ 2,962,777
============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term Borrowings $ 10,588 $ 11,596
Current Portion of Long-term Debt 135,200 -
Payables and Accrued Liabilities 825,170 889,215
-------------- ------------
Total Current Liabilities 970,958 900,811
Long-term Debt 709,723 494,989
Other Liabilities 252,571 148,552
-------------- ------------
Total Liabilities 1,933,252 1,544,352
Total Shareholders' Equity 1,352,921 1,418,425
-------------- ------------
Total Liabilities and Shareholders' Equity $ 3,286,173 $ 2,962,777
============== ============
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended Nine Months Ended
---------------------- ----------------------
(Thousands of Dollars Sept. 30, Oct. 1, Sept. 30, Oct. 1,
and Shares Except Per 2007 2006 2007 2006
Share Data)
---------------------- ----------------------
Net Revenues $1,223,038 $1,039,138 $2,539,713 $2,035,083
Cost of Sales 521,022 461,511 1,037,686 857,972
----------- ---------- ---------- -----------
Gross Profit 702,016 577,627 1,502,027 1,177,111
Amortization 17,990 20,504 53,522 57,896
Royalties 93,035 51,350 205,819 107,540
Research and Product
Development 43,466 44,445 117,563 122,215
Advertising 138,653 126,829 285,283 242,149
Selling, Distribution
and Administration 199,135 169,302 520,599 463,641
----------- ---------- ---------- -----------
Operating Profit 209,737 165,197 319,241 183,670
Interest Expense 9,272 6,158 22,117 20,096
Other (Income) Expense,
Net (3,456) 15,163 21,642 (7,351)
----------- ---------- ---------- -----------
Earnings before Income
Taxes 203,921 143,876 275,482 170,925
Income Taxes 42,341 44,292 76,211 49,152
----------- ---------- ---------- -----------
Net Earnings $ 161,580 $ 99,584 $ 199,271 $ 121,773
=========== ========== ========== ===========
Per Common Share
Net Earnings
Basic $ 1.04 $ 0.62 $ 1.25 $ 0.72
=========== ========== ========== ===========
Diluted $ 0.95 $ 0.58 $ 1.16 $ 0.68
=========== ========== ========== ===========
Cash Dividends
Declared $ 0.16 $ 0.12 $ 0.48 $ 0.36
=========== ========== ========== ===========
Weighted Average Number
of Shares
Basic 156,027 161,303 159,116 169,519
=========== ========== ========== ===========
Diluted 170,807 174,707 174,560 182,979
=========== ========== ========== ===========
HASBRO, INC.
Supplemental Financial Data
Major Segment Results and EBITDA
(Thousands of Dollars)
Quarter Ended
---------------------
Sept. 30, Oct. 1,
2007 2006 % Change
---------- ---------- ---------
Major Segment Results
North American Segment
--------------------------------------
External Net Revenues $ 822,703 $ 745,476 10%
Operating Profit 134,041 111,581 20%
International Segment
--------------------------------------
External Net Revenues 374,027 280,421 33%
Operating Profit 57,634 43,202 33%
Reconciliation of EBITDA
Net Earnings $ 161,580 $ 99,584
Interest Expense 9,272 6,158
Income Taxes 42,341 44,292
Depreciation 28,150 22,035
Amortization 17,990 20,504
---------- ----------
EBITDA $ 259,333 $ 192,573
========== ==========
Nine Months Ended
---------------------
Sept. 30, Oct. 1,
2007 2006 % Change
---------- ---------- ---------
Major Segment Results
North American Segment
--------------------------------------
External Net Revenues $1,693,190 $1,417,736 19%
Operating Profit 217,698 146,753 48%
International Segment
--------------------------------------
External Net Revenues 789,347 579,156 36%
Operating Profit 68,819 26,786 157%
Reconciliation of EBITDA
Net Earnings $ 199,271 $ 121,773
Interest Expense 22,117 20,096
Income Taxes 76,211 49,152
Depreciation 66,774 53,971
Amortization 53,522 57,896
---------- ----------
EBITDA $ 417,895 $ 302,888
========== ==========
HASBRO, INC.
Supplemental Financial Data
(Thousands of Dollars and Shares, except Per Share Data)
Net Earnings Per Share
Sept. 30, 2007 Oct. 1, 2006
----------------- -----------------
Basic Diluted Basic Diluted
-------- -------- -------- --------
Quarter
--------------------------------
Net earnings $161,580 $161,580 $ 99,584 $ 99,584
Effect of dilutive securities:
Interest expense on contingent
convertible debentures due
2021 - 1,055 - 1,066
-------- -------- -------- --------
Adjusted net earnings $161,580 $162,635 $ 99,584 $100,650
======== ======== ======== ========
Average shares outstanding 156,027 156,027 161,303 161,303
Effect of dilutive securities:
Contingent convertible
debentures due 2021 - 11,566 - 11,574
Options and warrants - 3,214 - 1,830
-------- -------- -------- --------
Equivalent shares 156,027 170,807 161,303 174,707
======== ======== ======== ========
Net earnings per share $ 1.04 $ 0.95 $ 0.62 $ 0.58
======== ======== ======== ========
Nine Months
--------------------------------
Net earnings $199,271 $199,271 $121,773 $121,773
Effect of dilutive securities:
Interest expense on contingent
convertible debentures due
2021 - 3,185 - 3,197
-------- -------- -------- --------
Adjusted net earnings $199,271 $202,456 $121,773 $124,970
======== ======== ======== ========
Average shares outstanding 159,116 159,116 169,519 169,519
Effect of dilutive securities:
Contingent convertible
debentures due 2021 - 11,569 - 11,574
Options and warrants - 3,875 - 1,886
-------- -------- -------- --------
Equivalent shares 159,116 174,560 169,519 182,979
======== ======== ======== ========
Net earnings per share $ 1.25 $ 1.16 $ 0.72 $ 0.68
======== ======== ======== ========
CONTACT: Hasbro, Inc.
Investor Relations
Karen A. Warren, 401-727-5401
or
News Media
Wayne S. Charness, 401-727-5983
SOURCE: Hasbro, Inc.