UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 7, 2018

 

Hasbro, Inc.

(Exact name of registrant as specified in its charter)

Rhode Island

 

1-6682

 

05-0155090

(State or other jurisdiction

 

(Commission File Number)

 

(IRS Employer

of incorporation)

     

Identification No.)

         

1027 Newport Ave., Pawtucket, Rhode Island

     

02861

(Address of principal executive offices)

     

(Zip Code)

 

Registrant’s telephone number, including area code:   (401) 431-8697

______________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 


 

 

 

Item 2.02          Results of Operations and Financial Condition.

 

On February 7, 2018, Hasbro, Inc. ("Hasbro" or "we") announced our financial results for the fiscal quarter and fiscal year ended December 31, 2017, and certain other financial information. The press release, attached as Exhibit 99.1, includes non-GAAP financial measures as defined under SEC rules, specifically Adjusted net earnings and earnings per share, excluding the impact of U.S. tax reform in 2017 and the impact of a goodwill impairment charge associated with Backflip Studios in 2016, as well as adjusted operating profit absent the impact of the goodwill impairment charge. Also included in the financial tables attached to this release are the non-GAAP financial measures of EBITDA and Adjusted EBITDA. EBITDA represents net earnings attributable to Hasbro, Inc. excluding net loss attributable to noncontrolling interests, interest expense, income taxes, depreciation and amortization. Adjusted EBITDA also excludes the impact of U.S. tax reform in 2017 and the impact of a goodwill impairment charge in 2016. As required by SEC rules, we have provided reconciliation on the attached schedule of these measures to the most directly comparable GAAP measure. Management believes that Adjusted net earnings, Adjusted earnings per share and adjusted operating profit absent the impact of U.S. tax reform and the goodwill impairment charge provides investors with an understanding of the underlying performance of the Company’s business absent these unusual events.  Management believes that EBITDA and Adjusted EBITDA are appropriate measures for evaluating the operating performance of the Company because they reflect the resources available for strategic opportunities including, among others, to invest in the business, strengthen the balance sheet and make strategic acquisitions.

 

These non-GAAP measures 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. 

 

The information furnished in Item 2.02, including the Exhibit attached hereto, shall not be deemed "filed" for any purpose, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such filing.

 

Item 9.01                          Financial Statements and Exhibits.

 

(d)  Exhibits

 

99.1      Hasbro, Inc. Press Release, dated February 7, 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

HASBRO, INC.

 

 

 

 

 

 

By:

/s/ Deborah Thomas

 

Name:

Deborah Thomas

 

Title:

Executive Vice President and Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)

Date: February 7, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT INDEX

Exhibit No.

 

Description

 

99.1

 

Hasbro, Inc. Press Release, dated February 7, 2018.

 

 

 


 

 

Exhibit 99.1 

 

 

For Immediate Release

 

 

Hasbro Reports Full-Year and Fourth Quarter 2017 Financial Results

 

Board of Directors Increases Quarterly Dividend 11%,

 or $0.06 per share, to $0.63 per share

 

Full-Year 2017

·         2017 full-year net revenues of $5.21 billion increased 4%, including a favorable $79.2 million impact of foreign exchange; Operating profit margin of 15.6%;

·         2017 revenues grew in all major operating segments: 5% in the U.S. and Canada segment; 2% in the International segment; and 8% in the Entertainment and Licensing segment;  

·         Franchise Brand revenues increased 10%; Hasbro Gaming revenues up 10%; Emerging Brands grew 2%; Partner Brands declined 10%;

·         U.S. tax reform, passed in December 2017, resulted in a $296.5 million net charge, or $2.33 per diluted share;

·         Adjusted net earnings, excluding the impact of U.S. tax reform, were $693.1 million or $5.46 per diluted share; Reported net earnings of $396.6 million or $3.12 per diluted share;

·         $724.4 million in operating cash flow generated during the year; Year-end cash and cash equivalents of $1.58 billion;

·         Company returned $427.0 million to shareholders in 2017; $277.0 million in dividends and $150.0 million in share repurchases.

 

Fourth Quarter 2017

·         Fourth Quarter net revenues decreased 2% to $1.60 billion, including a favorable $44.3 million impact of foreign exchange; Operating profit margin of 17.0%;

·         U.S. tax reform resulted in a $296.5 million net charge, or $2.35 per diluted share;

·         Adjusted net earnings, excluding the impact of U.S. tax reform, were $291.2 million or $2.30 per diluted share; Reported net loss of $5.3 million, or $0.04 per diluted share;

 

 


 

Pawtucket, R.I., February 7, 2018 -- Hasbro, Inc. (NASDAQ: HAS) today reported financial results for the full-year and fourth quarter 2017. Net revenues for the full-year 2017 increased 4% to $5.21 billion versus $5.02 billion in 2016. 2017 net revenues include a favorable $79.2 million impact from foreign exchange.

 

As reported net earnings for the full-year 2017 of $396.6 million, or $3.12 per diluted share, compared to $551.4 million, or $4.34 per diluted share in 2016. Adjusted 2017 net earnings were $693.1 million, or $5.46 per diluted share, excluding a $296.5 million, or $2.33 per diluted share, impact from U.S. tax reform. Adjusted net earnings for the full-year 2016 were $566.1 million, or $4.46 per diluted share, excluding a post-tax $14.7 million, or $0.12 per diluted share, non-cash fourth quarter 2016 goodwill impairment charge related to Backflip Studios. 

 

In December 2017, the U.S. enacted the Tax Cuts and Jobs Act that provided significant changes to the U.S. tax code, including a one-time repatriation tax payable over eight years.  As a result of the Act, the Company recognized a net charge of $296.5 million. Given the significant complexities associated with the changes in the U.S. tax code, the estimated financial impact for the fourth-quarter and full year 2017 are provisional and subject to further analysis which could result in changes to this estimate during 2018 as further guidance is issued.

 

2017 net earnings also include a $0.25 per diluted share benefit versus full-year 2016 from the adoption of FASB ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. 

 

“Hasbro’s global team’s execution of our Brand Blueprint drove revenue gains in Franchise Brands, Hasbro Gaming and Emerging Brands, including immersive brand experiences across consumer products and digital gaming,” said Brian Goldner, Hasbro’s Chairman and Chief Executive Officer. “Our strong performance ranked Hasbro #1 across the G11 markets for the full-year 20171. In the fourth quarter, Hasbro Franchise Brand revenues increased 11%. However, overall consumer demand slowed in November and December both for the industry and for Hasbro. A decline in Partner Brands and Europe revenues resulted in us not meeting our fourth quarter revenue expectations. Looking ahead, our innovative lines are supported by robust storytelling and digital initiatives that position us well for 2018 and beyond.”

 

“Over the past five years, we added over $1 billion in revenues to our top line, growing revenues four consecutive years, while meaningfully increasing operating profit, net earnings and generating significant cash flow,” said Deborah Thomas, Hasbro’s Chief Financial Officer.  “Hasbro is in a strong financial position with the cash and profitability to invest in growing our business for the long term. Our team’s excellent job of understanding and assessing the global tax environment and managing associated risks contributed to strong underlying net earnings growth. In addition, our 2017 year-end results include an estimate for the expense associated with U.S. tax reform. We expect an on-going benefit to our tax rate in future periods and will discuss this further at our Toy Fair Investor Event.”

 


 

 

Fourth Quarter 2017 Financial Results

 

Fourth quarter 2017 net revenues of $1.60 billion compared to $1.63 billion in 2016. 2017 net revenues include a favorable $44.3 million from foreign exchange.

 

As reported net loss for the fourth quarter 2017 totaled $5.3 million, or $0.04 per diluted share, compared to net earnings of $192.7 million, or $1.52 per diluted share in 2016. Fourth quarter 2017 net earnings include a $0.09 per diluted share benefit versus fourth quarter 2016 from the adoption of FASB ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. Adjusted net earnings for the fourth quarter 2017 were $291.2 million, or $2.30 per diluted share, excluding $296.5 million or $2.35 per diluted share, from U.S. tax reform. Adjusted net earnings for the fourth quarter 2016 were $207.4 million, or $1.64 per diluted share, excluding a post-tax $14.7 million, or $0.12 per diluted share, non-cash fourth quarter 2016 goodwill impairment charge related to Backflip Studios.

 

Full-Year 2017 Major Segment Performance

 

 

 

Net Revenues ($ Millions)

Operating Profit ($ Millions)

FY 2017

FY 2016

% Change

FY 2017

FY 2016

% Change

U.S. and Canada

$2,690.5

$2,559.9

+5%

$509.9

$522.3

-2%

International

$2,233.6

$2,194.7

+2%

$228.7

$294.5

-22%

Entertainment and Licensing

$285.6

$265.2

+8%

$96.4

$49.9

+93%

 

Note: Full-year 2016 Entertainment and Licensing segment operating profit includes a pre-tax $32.9 million fourth quarter 2016 non-cash goodwill impairment charge. The impact of that charge is outlined in the attached schedule “Net Earnings and Earnings per Share Excluding the Impact of Tax Reform and Goodwill Impairment.”

 

Full-year 2017 U.S. and Canada segment net revenues increased 5% to $2.69 billion compared to $2.56 billion in 2016.  The U.S. and Canada segment operating profit declined 2% to $509.9 million, or 19.0% of net revenues, compared to $522.3 million, or 20.4% of net revenues in 2016, primarily driven by increased advertising as well as higher bad debt expense related to the Toys“R”Us bankruptcy filing in the third quarter of 2017.

 

Full-year International segment net revenues increased 2% to $2.23 billion compared to $2.19 billion in 2016. Full-year 2017 International segment revenues include a favorable $75.3 million impact of foreign exchange. On a regional basis, Europe net revenues decreased 2%, Latin America increased 5% and Asia Pacific increased 12%. Emerging markets net revenues increased 5% in the year. International segment operating profit decreased 22% to $228.7 million, or 10.2% of net revenues, compared to $294.5 million, or 13.4% of net revenues in 2016. The decline in operating profit was driven by higher sales allowances and unfavorable product mix, as well as higher advertising costs. 

 

 


 

Entertainment and Licensing segment net revenues increased 8% to $285.6 million compared to $265.2 million in 2016. Full-year gains were driven by growth in consumer products and digital gaming, as well as the addition of Boulder Media. Operating profit was $96.4 million, or 33.8% of net revenues, compared to $49.9 million, or 18.8% of net revenues, in 2016. 2016 adjusted operating profit was $82.7 million, or 31.2% of net revenues, excluding a pre-tax $32.9 million non-cash fourth quarter 2016 goodwill impairment charge related to Backflip Studios.

 

Fourth Quarter and Full-Year 2017 Brand Portfolio Performance 

 

 

Net Revenues ($ Millions)

Q4 2017

Q4 2016

% Change

FY 2017

FY 2016

% Change

Franchise Brands

$764.2

$685.6

+11%

$2,568.0

$2,327.7

+10%

Partner Brands

$342.9

$433.7

-21%

$1,271.6

$1,412.8

-10%

Hasbro Gaming*

$343.3

$356.9

-4%

$893.0

$813.4

+10%

Emerging Brands

$145.7

$153.7

-5%

$477.2

$466.0

+2%

 

*Hasbro’s total gaming category, including all gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, which are included in Franchise Brands in the table above, totaled $546.4 million for the fourth quarter 2017, up 5%, versus $518.7 million in the fourth quarter 2016 and up 8% to $1,497.8 million for full-year 2017 versus $1,387.1 million for full-year 2016.  Hasbro believes its gaming portfolio is a competitive differentiator and views it in its entirety.

 

Full-year 2017 Franchise Brand net revenues increased 10% to $2.57 billion driven by revenue growth in TRANSFORMERS, NERF, MONOPOLY and MY LITTLE PONY. Franchise Brand revenue grew in all three major operating segments.

   

Partner Brand net revenues decreased 10% to $1.27 billion. An increase in BEYBLADE, MARVEL and SESAME STREET revenues was more than offset by a revenue decline in STAR WARS and to a lesser extent declines in YO-KAI WATCH and DISNEY FROZEN. Partner Brand revenues decreased in the U.S. and Canada and International segments.

 

Hasbro Gaming net revenues grew 10% to $893.0 million. Hasbro’s diverse gaming portfolio includes a broad spectrum of gaming experiences from face-to-face gaming, social gaming and digital gaming. New social games, such as SPEAK OUT, TOILET TROUBLE and FANTASTIC GYMNASTICS, were among many which contributed to growth. In addition, several other gaming brands grew, including DUNGEONS & DRAGONS, the launch of DROPMIX and growth in digital gaming. Hasbro Gaming net revenues grew in the U.S. and Canada and International segments. Hasbro’s total gaming category grew 8% to $1.50 billion, including revenue growth from MONOPOLY. 

 

Emerging Brands net revenues increased 2% to $477.2 million, behind strong growth in BABY ALIVE and FURREAL FRIENDS. Emerging Brand net revenues grew in the U.S. and Canada segment. 

 

Dividend and Share Repurchase

 

 


 

The Company paid $277.0 million in cash dividends to shareholders during 2017. Hasbro’s Board of Directors has declared a quarterly cash dividend of $0.63 per common share.  This represents an increase of $0.06 per share, or 11%, from the previous quarterly dividend of $0.57 per common share. The dividend will be payable on May 15, 2018 to shareholders of record at the close of business on May 1, 2018. 

 

For the full-year 2017, Hasbro repurchased 1.58 million shares of common stock at a total cost of $150.0 million and an average price of $94.74 per share. At year end, $178.0 million remained available in the current share repurchase authorization.  

 

Conference Call Webcast

 

Hasbro will webcast its fourth quarter and full-year 2017 earnings conference call at 8:30 a.m. Eastern Time today.  To listen to the live webcast and access the accompanying presentation slides, please go to http://investor.hasbro.com.  The replay of the call will be available on Hasbro’s web site approximately 2 hours following completion of the call. 

About Hasbro  

Hasbro (NASDAQ: HAS) is a global play and entertainment company committed to Creating the World's Best Play Experiences. From toys and games to television, movies, digital gaming and consumer products, Hasbro offers a variety of ways for audiences to experience its iconic brands, including NERF, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, MONOPOLY, LITTLEST PET SHOP and MAGIC: THE GATHERING, as well as premier partner brands. Through Hasbro Studios and its film labels, Allspark Pictures and Allspark Animation, the Company is building its brands globally through great storytelling and content on all screens. Hasbro is committed to making the world a better place for children and their families through corporate social responsibility and philanthropy. Hasbro ranked No. 1 on the 2017 100 Best Corporate Citizens list by CR Magazine, and has been named one of the World’s Most Ethical Companies® by Ethisphere Institute for the past six years. Learn more at www.hasbro.com, and follow us on Twitter (@Hasbro & @HasbroNews) and Instagram (@Hasbro).

© 2018 Hasbro, Inc. All Rights Reserved.

 

Certain statements 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 potential performance in the future and the Company’s ability to achieve its financial and business goals and may be identified by the use of forward-looking words or phrases. The Company's actual actions or results may differ materially from those expected or anticipated in the forward-looking statements due to both known and unknown risks and uncertainties. Specific factors that might cause such a difference include, but are not limited to: (i) the Company's ability to design, develop, produce, manufacture, source and ship products on a timely and cost-effective basis, as well as interest in and purchase of those products by retail customers and consumers in quantities and at prices that will be sufficient to recover the Company’s costs and earn a profit; (ii) downturns in economic conditions

 


 

impacting one or more of the markets in which the Company sells products, such as the economic downturns which impacted the United Kingdom and Brazil in 2017, which can negatively impact the Company’s retail customers and consumers, and which can result in lower employment levels, lower consumer disposable income, lower retailer inventories and lower spending, including lower spending on purchases of the Company’s products; (iii) other factors which can lower discretionary consumer spending, such as higher costs for fuel and food, drops in the value of homes or other consumer assets, and high levels of consumer debt; (iv) consumer interest in entertainment properties, such as motion pictures, for which the Company is developing and marketing products, and the ability to drive sales of products associated with such entertainment properties, (v) potential difficulties or delays the Company may experience in implementing cost savings and efficiency enhancing initiatives; (vi) other economic and public health conditions or regulatory changes in the markets in which the Company and its customers and suppliers operate which could create delays or increase the Company’s costs, such as higher commodity prices, labor costs or transportation costs, or outbreaks of disease; (vii) currency fluctuations, including movements in foreign exchange rates, which can lower the Company’s net revenues and earnings, and significantly impact the Company’s costs; (viii) the concentration of the Company's customers, potentially increasing the negative impact to the Company of difficulties experienced by any of the Company’s customers or changes in their purchasing or selling patterns; (ix) consumer interest in and acceptance of the Discovery Family Channel, and programming created by Hasbro Studios, and other factors impacting the financial performance of the network and Hasbro Studios; (x) the inventory policies of the Company’s retail customers, including retailers’ potential decisions to lower their inventories, even if it results in lost sales, as well as the concentration of the Company's revenues in the second half and fourth quarter of the year, which coupled with reliance by retailers on quick response inventory management techniques increases the risk of underproduction of popular items, overproduction of less popular items and failure to achieve compressed shipping schedules; (xi) delays, increased costs or difficulties associated with any of our or our partners’ planned digital applications or media initiatives; (xii) work disruptions, which may impact the Company's ability to manufacture or deliver product in a timely and cost-effective manner; (xiii) the bankruptcy or other lack of success of one of the Company's significant retailers, such as the bankruptcy of Toys “R” Us in the United States and Canada in the fourth quarter of 2017, which could negatively impact the Company's revenues or bad debt exposure; (xiv) the impact of competition on revenues, margins and other aspects of the Company's business, including the ability to offer Company products which consumers choose to buy instead of competitive products, the ability to secure, maintain and renew popular licenses and the ability to attract and retain talented employees; (xv) concentration of manufacturing for many of the Company’s products in the People’s Republic of China and the associated impact to the Company of social, economic or public health conditions and other factors affecting China, the movement of products into and out of China, the cost of producing products in China and exporting them to other countries; (xvi) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xvii) the impact of other market conditions, third party actions or approvals and 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; (xviii) changes in tax laws or regulations, or the interpretation and application of such laws and regulations, such as what may occur as the U.S. Tax Cuts and Jobs Act is interpreted and applied, which may cause the Company to alter tax reserves or make other changes which significantly impact its reported financial results; (xix) the impact of litigation or arbitration decisions or settlement actions; and (xx) other risks and uncertainties as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission (“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 press release includes non-GAAP financial measures as defined under SEC rules, specifically Adjusted net earnings and earnings per share, excluding the impact of U.S. tax reform in 2017 and the impact of a goodwill impairment charge associated with Backflip Studios in 2016, as well as adjusted operating profit absent the impact of the goodwill impairment charge. Also included in the financial tables attached to this release are the non-GAAP financial measures of EBITDA and Adjusted EBITDA. EBITDA represents net earnings attributable to Hasbro, Inc. excluding net loss attributable to noncontrolling interests, interest expense, income taxes, depreciation and amortization. Adjusted EBITDA also excludes the impact of re-measuring a liability as a result of U.S. tax reform in 2017 and the impact of a goodwill impairment charge in 2016. As required by SEC rules, we have provided reconciliation on the attached schedule of these measures to the most directly comparable GAAP measure. Management believes that Adjusted net earnings, Adjusted earnings per share and adjusted operating profit absent the impact of U.S. tax reform and the goodwill impairment charge provides investors with an understanding of the underlying performance of the Company’s business absent these unusual events.  Management believes that EBITDA and Adjusted EBITDA are appropriate measures for evaluating the operating performance of the Company because they reflect the resources available for strategic opportunities including, among others, to invest in the business, strengthen the balance sheet and make strategic acquisitions. These non-GAAP measures 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. 

  

HAS-E

1 According to NPD and SIM

Investor Contact:  Debbie Hancock | Hasbro, Inc. | (401) 727-5401 | debbie.hancock@hasbro.com

Press Contact: Julie Duffy | Hasbro, Inc. | (401) 727-5931 | julie.duffy@hasbro.com

 

# # #

 

(Tables Attached)

 

 

  


HASBRO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Thousands of Dollars)

 

 

 

 

 

Dec. 31, 2017

 

Dec. 25, 2016

  

ASSETS

 

 

 

 

 

 

  

Cash and Cash Equivalents

 

$

1,581,234

 

$

1,282,285

 

Accounts Receivable, Net

 

 

1,405,399

 

 

1,319,963

  

Inventories

 

 

433,293

 

 

387,675

  

Other Current Assets

 

 

214,000

 

 

237,684

  

     Total Current Assets

 

 

3,633,926

 

 

3,227,607

  

Property, Plant and Equipment, Net

 

 

259,710

 

 

267,398

 

Other Assets

 

 

1,396,347

 

 

1,596,361

 

     Total Assets

 

$

5,289,983

 

$

5,091,366

  

 

 

 

 

 

 

  

  

 

 

 

 

 

 

  

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS

 

 

 

 

 

 

 

AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

  

Short-term Borrowings

 

$

154,957

 

$

172,582

 

Current Portion of Long-term Debt

 

 

-

 

 

349,713

  

Payables and Accrued Liabilities

 

 

1,096,740

 

 

1,095,564

  

     Total Current Liabilities

 

 

1,251,697

 

 

1,617,859

  

Long-term Debt

 

 

1,693,609

 

 

1,198,679

  

Other Liabilities

 

 

514,720

 

 

389,388

  

     Total Liabilities

 

 

3,460,026

 

 

3,205,926

 

Redeemable Noncontrolling Interests

 

 

-

 

 

22,704

  

Total Shareholders' Equity

 

 

1,829,957

 

 

1,862,736

 

  

 

 

 

 

 

 

 

     Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity

 

$

5,289,983

 

$

5,091,366


HASBRO, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Thousands of Dollars and Shares Except Per Share Data)

Quarter Ended

 

Year Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dec. 31,   2017

 

% Net Revenues

 

 

Dec. 25,   2016

 

% Net Revenues

 

 

Dec. 31,   2017

 

% Net Revenues

 

 

Dec. 25,   2016

 

% Net Revenues

Net Revenues

$

1,596,111

 

100.0%

 

$

1,629,940

 

100.0%

 

$

5,209,782

 

100.0%

 

$

5,019,822

 

100.0%

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Cost of Sales

 

628,722

 

39.4%

 

 

634,572

 

38.9%

 

 

2,033,693

 

39.0%

 

 

1,905,474

 

38.0%

     Royalties

 

122,734

 

7.7%

 

 

135,851

 

8.3%

 

 

405,488

 

7.8%

 

 

409,522

 

8.2%

     Product Development

 

76,255

 

4.8%

 

 

75,457

 

4.6%

 

 

269,020

 

5.2%

 

 

266,375

 

5.3%

     Advertising

 

159,577

 

10.0%

 

 

147,992

 

9.1%

 

 

501,813

 

9.6%

 

 

468,940

 

9.3%

     Amortization of Intangibles

 

6,564

 

0.4%

 

 

8,690

 

0.5%

 

 

28,818

 

0.6%

 

 

34,763

 

0.7%

     Program Production Cost Amortization

 

19,646

 

1.2%

 

 

18,430

 

1.1%

 

 

35,798

 

0.7%

 

 

35,931

 

0.7%

     Selling, Distribution and Administration

 

311,525

 

19.5%

 

 

353,791

 

21.7%

 

 

1,124,793

 

21.6%

 

 

1,110,769

 

22.1%

          Operating Profit

 

271,088

 

17.0%

 

 

255,157

 

15.7%

 

 

810,359

 

15.6%

 

 

788,048

 

15.7%

Interest Expense

 

24,516

 

1.5%

 

 

25,142

 

1.5%

 

 

98,268

 

1.9%

 

 

97,405

 

1.9%

Other (Income) Expense, Net

 

(32,014)

 

-2.0%

 

 

10,083

 

0.6%

 

 

(74,059)

 

-1.4%

 

 

(1,846)

 

0.0%

           Earnings before Income Taxes

 

278,586

 

17.5%

 

 

219,932

 

13.5%

 

 

786,150

 

15.1%

 

 

692,489

 

13.8%

Income Taxes

 

283,884

 

17.8%

 

 

39,333

 

2.4%

 

 

389,543

 

7.5%

 

 

159,338

 

3.2%

          Net Earnings (Loss)

 

(5,298)

 

-0.3%

 

 

180,599

 

11.1%

 

 

396,607

 

7.6%

 

 

533,151

 

10.6%

Net Loss Attributable to Noncontrolling Interests

 

-

 

0.0%

 

 

(12,126)

 

-0.7%

 

 

-

 

0.0%

 

 

(18,229)

 

-0.4%

          Net Earnings (Loss) Attributable to Hasbro, Inc.

$

(5,298)

 

-0.3%

 

$

192,725

 

11.8%

 

$

396,607

 

7.6%

 

$

551,380

 

11.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Net Earnings (Loss) Attributable to Hasbro, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

  

Basic

 

$

(0.04)

 

 

 

$

1.54

 

 

 

$

3.17

 

 

 

$

4.40

 

 

  

 

  

Diluted

 

$

(0.04)

 

 

 

$

1.52

 

 

 

$

3.12

 

 

 

$

4.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Cash Dividends Declared

$

0.57

 

 

 

$

0.51

 

 

 

$

2.28

 

 

 

$

2.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

Basic

 

 

124,528

 

 

 

 

124,927

 

 

 

 

125,039

 

 

 

 

125,292

 

 

 

  

 

Diluted

 

 

124,528

 

 

 

 

126,699

 

 

 

 

127,031

 

 

 

 

126,966

 

 


HASBRO, INC.

 

 

 

 

  

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

(Unaudited)

 

 

 

 

 

(Thousands of Dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

Dec. 31, 2017

 

 

Dec. 25, 2016

Cash Flows from Operating Activities:

 

 

 

 

 

  Net Earnings

$

396,607

 

$

533,151

  Non-cash Adjustments

 

331,770

 

 

268,210

  Changes in Operating Assets and Liabilities

 

(3,999)

 

 

15,952

    Net Cash Provided by Operating Activities

 

724,378

 

 

817,313

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

  Additions to Property, Plant and Equipment

 

(134,877)

 

 

(154,900)

  Acquisitions

 

-

 

 

(12,436)

  Other

 

3,396

 

 

28,945

   Net Cash Utilized by Investing Activities

 

(131,481)

 

 

(138,391)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

  Proceeds from Borrowings with Maturity Greater Than 3 Months

 

493,878

 

 

-

  Repayments of Borrowings with Maturity Greater Than 3 Months

 

(350,000)

 

 

-

  Net Proceeds (Repayments of) from Short-term Borrowings

 

(18,419)

 

 

8,978

  Purchases of Common Stock

 

(151,311)

 

 

(150,075)

  Stock-based Compensation Transactions

 

29,431

 

 

42,207

  Dividends Paid

 

(276,973)

 

 

(248,881)

  Employee Taxes Paid for Shares Withheld

 

(31,994)

 

 

(21,969)

  Other

 

(6,785)

 

 

(5,758)

   Net Cash Utilized by Financing Activities

 

(312,173)

 

 

(375,498)

 

 

 

 

 

 

Effect of Exchange Rate Changes on Cash

 

18,225

 

 

2,111

 

 

 

 

 

 

Cash and Cash Equivalents at Beginning of Year

 

1,282,285

 

 

976,750

 

 

 

 

 

 

Cash and Cash Equivalents at End of Year

$

1,581,234

 

$

1,282,285

 

 

 

 

 

 

Certain reclassifications have been made to the prior year cash flow statement to conform to the

 

 

current year presentation.

 

 


HASBRO, INC.

 

 

 

 

 

 

 

 

  

  

SUPPLEMENTAL FINANCIAL DATA

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

(Thousands of Dollars)

 

Quarter Ended

 

 

 

Year Ended

 

 

 

 

 

 

 

Dec. 31, 2017

 

 

Dec. 25, 2016

 

% Change

 

 

Dec. 31, 2017

 

 

Dec. 25, 2016

 

% Change

Major Segment Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 U.S. and Canada Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   External Net Revenues

$

750,690

 

$

757,516

 

-1%

 

$

2,690,527

 

$

2,559,907

 

5%

   Operating Profit

 

146,353

 

 

157,965

 

-7%

 

 

509,942

 

 

522,287

 

-2%

   Operating Margin

 

19.5%

 

 

20.9%

 

 

 

 

19.0%

 

 

20.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 International Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   External Net Revenues

 

722,505

 

 

757,740

 

-5%

 

 

2,233,579

 

 

2,194,651

 

2%

   Operating Profit

 

79,234

 

 

128,915

 

-39%

 

 

228,669

 

 

294,497

 

-22%

   Operating Margin

 

11.0%

 

 

17.0%

 

 

 

 

10.2%

 

 

13.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Entertainment and Licensing Segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   External Net Revenues

 

122,916

 

 

114,684

 

7%

 

 

285,579

 

 

265,205

 

8%

   Operating Profit

 

56,820

 

 

16,509

 

244%

 

 

96,400

 

 

49,876

 

93%

   Operating Margin

 

46.2%

 

 

14.4%

 

 

 

 

33.8%

 

 

18.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International Segment Net Revenues by Major Geographic Region

 

 

 

 

 

 

 

 

  Europe

$

460,482

 

$

499,397

 

-8%

 

$

1,381,949

 

$

1,404,478

 

-2%

  Latin America

 

146,017

 

 

155,689

 

-6%

 

 

485,088

 

 

463,638

 

5%

  Asia Pacific

 

116,006

 

 

102,654

 

13%

 

 

366,542

 

 

326,535

 

12%

 

Total

 

 

$

722,505

 

$

757,740

 

 

 

$

2,233,579

 

$

2,194,651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brand Portfolio Performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Franchise Brands

$

764,218

 

$

685,611

 

11%

 

$

2,567,962

 

$

2,327,668

 

10%

  Partner Brands

 

342,873

 

 

433,719

 

-21%

 

 

1,271,597

 

 

1,412,770

 

-10%

  Hasbro Gaming

 

343,283

 

 

356,918

 

-4%

 

 

893,019

 

 

813,433

 

10%

  Emerging Brands

 

145,737

 

 

153,692

 

-5%

 

 

477,204

 

 

465,951

 

2%

 

Total Net Revenues

$

1,596,111

 

$

1,629,940

 

 

 

$

5,209,782

 

$

5,019,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hasbro's total gaming category, including all gaming revenue, most notably MAGIC: THE GATHERING

 

 

and MONOPOLY, totaled $546,397 for the fourth quarter 2017, up 5%, from revenues of $518,704 for the

 

 

fourth quarter 2016. For the full year 2017, the total gaming business totaled $1,497,794, up 8%, from revenues

 

 

of $1,387,077 for the full year 2016.

 

 



 

HASBRO, INC.

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL DATA

 

 

 

 

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES      

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

(Thousands of Dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Earnings and Earnings per Share Excluding the Impact of Tax Reform and

 

 

 

Goodwill Impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

Quarter Ended

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

Dec. 31, 

 

Per Share

 

 

Dec. 25, 

 

Per Share

 

 

 

 

 

 

 

2017

 

Amount (1)

 

 

2016

 

Amount

Net Earnings (Loss) Attributable to Hasbro, Inc., as Reported

$

(5,298)

 

$

(0.04)

 

$

192,725

 

$

1.52

Impact of Tax Reform

 

 

 

296,512

 

 

2.35

 

 

-

 

 

-

Goodwill Impairment Charge

 

 

 

-

 

 

-

 

 

14,674

 

 

0.12

Net Earnings Attributable to Hasbro, Inc., as Adjusted

$

291,214

 

$

2.30

 

$

207,399

 

$

1.64

(1) Diluted Per Share Amount for the impact of tax reform and net earnings, as adjusted, for Q4 2017 are

calculated using dilutive shares of 126,369 for the quarter.

 

  

Year Ended

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

Dec. 31, 

 

Per Share

 

 

Dec. 25, 

 

Per Share

 

 

 

 

 

 

 

2017

 

Amount

 

 

2016

 

Amount

Net Earnings Attributable to Hasbro, Inc., as Reported

$

396,607

 

$

3.12

 

$

551,380

 

$

4.34

Impact of Tax Reform

 

 

 

296,512

 

 

2.33

 

 

-

 

 

-

Goodwill Impairment Charge

 

 

-

 

 

-

 

 

14,674

 

 

0.12

Net Earnings Attributable to Hasbro, Inc., as Adjusted

$

693,119

 

$

5.46

 

$

566,054

 

$

4.46

 

The line items impacted by tax reform and the goodwill impairment charge as well as these line items excluding these

     amounts as a percentage  of revenues is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding

 

 

 

 

 

 

 

 

 

 

% Net

 

Less Impact of

 

Impact of

 

% Net

 

 

 

 

As Reported

 

Revenues

 

Tax Reform

 

Tax Reform

 

Revenues

Quarter ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

Other (Income) Expense, Net

$

(32,014)

 

-2.0%

 

$

19,911

(1a)

$

(12,103)

 

 

-0.8%

Income Taxes

 

283,884

 

17.8%

 

 

(316,423)

(1b)

 

(32,539)

 

 

-2.0%

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

Year ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (Income) Expense, Net

$

(74,059)

 

-1.4%

 

$

19,911

(1a)

$

(54,148)

 

 

-1.0%

Income Taxes

 

389,543

 

7.5%

 

 

(316,423)

(1b)

 

73,120

 

 

1.4%


 

(1) As a result of the U.S. Tax Reform that was passed in December 2017, the Company made the following non-operating adjustments to its financials:

 

(1a) A estimated gain of 19.9 million related to a change in the value of a long-term liability due to the change in corporate tax rate that takes effect in 2018.

 

(1b) Recognition of a one-time raptriation tax liability and adjustments to the Company's deferred tax assets and liabilites to reflect the lower corporate tax rate that takes effect in 2018.

These amounts are provisional based on the information reviewed by the Company, and may change as new information is reviewed and analyzed.

 

 

 

 

 

 

 

 

 

 

  

 

Excluding

 

 

 

 

 

 

 

 

 

 

 

 

Less Goodwill

 

Goodwill

 

 

 

 

 

 

 

 

 

 

% Net

 

Impairment

 

Impairment

 

% Net

 

 

 

 

As Reported

 

Revenues

 

Charge

 

Charge

 

Revenues

Quarter ended December 25, 2016

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Distribution and Administration

$

353,791

 

21.7%

 

$

(32,858)

(1)

$

320,933

 

 

19.7%

Tax expense

 

39,333

 

2.4%

 

 

8,327

 

 

47,660

 

 

2.9%

Net Loss Attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling Interests

 

(12,126)

 

-0.7%

 

  

9,857

 

 

(2,269)

 

 

-0.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 25, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, Distribution and Administration

$

1,110,769

 

22.1%

 

$

(32,858)

(1)

$

1,077,911

 

 

21.5%

Tax expense

 

159,338

 

3.2%

 

 

8,327

 

 

167,665

 

 

3.3%

Net Loss Attributable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling Interests

 

(18,229)

 

-0.4%

 

 

9,857

 

 

(8,372)

 

 

-0.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) This charge was recorded in the Entertainment and Licensing segment. Excluding this charge, operating profit

 

and margin for the segment for the quarter ended December 25, 2016 would have been $49,367 and 43.0%,

 

respectively, and $82,734 and 31.2%, respectively, for the year ended December 25, 2016.

 

 

 

 

 

 

 

Quarter Ended

 

Year Ended

 

 

 

 

 

 

Dec. 31, 

 

Dec. 25, 

 

Dec. 31, 

 

Dec. 25, 

Reconciliation of EBITDA

2017

 

2016

 

2017

 

2016

  Net Earnings (Loss) Attributable to Hasbro, Inc.

$

(5,298)

 

$

192,725

 

$

396,607

 

$

551,380

  Net Loss Attributable to Noncontrolling Interests

 

-

 

 

(12,126)

 

 

-

 

 

(18,229)

  Interest Expense

 

24,516

 

 

25,142

 

 

98,268

 

 

97,405

  Income Taxes (including tax reform)

 

283,884

 

 

39,333

 

 

389,543

 

 

159,338

  Depreciation

 

35,165

 

 

30,380

 

 

143,018

 

 

119,707

  Amortization of Intangibles

 

6,564

 

 

8,690

 

 

28,818

 

 

34,763

     EBITDA

 

 

 

$

344,831

 

$

284,144

 

$

1,056,254

 

$

944,364

  Impact of Tax Reform/Goodwill Impairment

 

19,911

 

 

(32,858)

 

 

19,911

 

 

(32,858)

     Adjusted EBITDA

 

 

 

$

324,920

 

$

317,002

 

$

1,036,343

 

$

977,222