Hasbro, Inc.
Feb 8, 2010
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Hasbro Reports Fourth Quarter and Full-Year 2009 Results;Posts Ninth Consecutive Year of E.P.S. Growth and Fifth Consecutive Year of Revenue Growth

Fourth Quarter Highlights Full-Year Highlights

PAWTUCKET, R.I., Feb 08, 2010 (BUSINESS WIRE) -- Hasbro, Inc. (NYSE: HAS) today reported 2009 fourth quarter and full-year results. For the fourth quarter 2009, the Company reported net revenues of $1.38 billion, an increase of $144.1 million or 12%, compared to $1.23 billion a year ago. 2009 fourth quarter revenues grew 7% excluding a $55.4 million positive impact of foreign exchange. The Company reported net earnings for the quarter of $165.6 million or $1.09 per diluted share, an increase of $72.0 million or 77%, compared to $93.6 million or $0.62 per diluted share in 2008.

For the full year 2009, the Company reported revenues of $4.07 billion, an increase of $46.4 million or 1%, compared to $4.02 billion a year ago. 2009 revenues grew 3% excluding a $65.2 million negative impact of foreign exchange. Net earnings for the full year were $374.9 million, or $2.48 per diluted share, an increase of $68.1 million or 22% from $306.8 million or $2.00 per diluted share in 2008.

"We are extremely pleased with our fourth quarter and full-year results that demonstrate Hasbro's strategy is working," said Brian Goldner, President and Chief Executive Officer. "The Hasbro teams around the globe performed at a high level in 2009, delivering innovation and strong marketing programs to our consumers and retailers. The result is our fifth consecutive year of revenue growth and ninth consecutive year of E.P.S. growth, achieved in a challenging global economy. Continued investments in our business, including the joint venture with Discovery Communications to form The Hub television network, the creation of Hasbro Studios, establishing a local presence in emerging geographies and securing long-term key licenses, position us not only for the success we had in 2009 but over the long term as we execute our branded play strategy globally."

"As we continue to execute our strategy to re-imagine, re-invent and re-ignite our global core brands, we believe we should be able to grow revenues and earnings per share for the full year 2010, including the dilution from our television investments and absent a deterioration in consumer spending, global economic conditions or the value of foreign currencies," concluded Goldner.

"Our strong financial results demonstrate our ability to grow our brands globally and invest in our business for future years," said Deborah Thomas, Chief Financial Officer. "In 2009, we grew revenues, improved profitability, grew earnings per share, including the dilution from our television investments, and invested in our business while returning cash to our shareholders. We ended the year with $636 million in cash and as a result did not utilize our accounts receivable securitization facility."

For the full year 2009, the Boys product category grew 9% to $1.47 billion; the Games and Puzzles category increased slightly to $1.34 billion; the Girls category declined 5% to $790.8 million; and the Preschool category was down 1% to $451.4 million.

U.S. and Canada segment net revenues were $2.45 billion, an increase of $41.2 million or 2%, compared to $2.41 billion in 2008. The results reflect a strong performance in the Boys and Preschool categories partially offset by declines in Girls and the Games and Puzzles categories. The U.S. and Canada segment reported an operating profit of $380.6 million compared to $283.2 million in 2008.

International segment net revenues were $1.46 billion, a decrease of $39.9 million or 3%, compared to $1.50 billion in 2008. Absent the negative $64.5 million impact of foreign exchange, International segment net revenues increased 2% from 2008. Revenue in the International segment reflects growth in the Boys category offset by declines in Preschool, Girls, as well as the Games and Puzzles categories. The International segment reported an operating profit of $162.2 million compared to $165.2 million in 2008.

Entertainment and Licensing segment net revenues were $155.0 million, an increase of $47.1 million or 44%, compared to $107.9 million in 2008. Revenue in the Entertainment and Licensing segment reflects growth in lifestyle licensing and digital gaming. The Entertainment and Licensing segment reported an operating profit of $65.6 million compared to $51.0 million in 2008.

The Company repurchased a total of 3.2 million shares of common stock during 2009 at a total cost of $91.0 million and an average price of $28.67 per share. At year end, $161.4 million remained available in the current share repurchase authorization. Since the inception of its buyback program in June 2005, the Company has repurchased 60.9 million shares at a total cost of $1.5 billion and an average price of $25.28 per share. In the fourth quarter 2009, the Company repurchased 2.1 million shares of common stock at a total cost of $60.8 million and an average price of $29.09 per share.

The Company will webcast its fourth quarter and full-year 2009 earnings conference call at 8:30 a.m. Eastern Time today. To listen to the live webcast, go to http://investor.hasbro.com, and click on the webcast microphone. The replay will be available on Hasbro's web site approximately 2 hours following completion of the call.

Hasbro, Inc. is a worldwide leader in children's and family leisure time products and services with a rich portfolio of brands and entertainment properties that provides some of the highest quality and most recognizable play and recreational experiences in the world. As a brand-driven, consumer-focused global company, Hasbro brings to market a range of toys, games and licensed products, from traditional to high-tech and digital, under such powerful brand names as TRANSFORMERS, PLAYSKOOL, TONKA, MILTON BRADLEY, PARKER BROTHERS, CRANIUM and WIZARDS OF THE COAST. Come see how we inspire play through our brands at http://www.hasbro.com. © 2010 Hasbro, Inc. All Rights Reserved.

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 potential performance in 2010, including with respect to its revenues and earnings per share, potential future dilution associated with the joint venture with Discovery Communications, future opportunities and the Company's ability to achieve its other 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, manufacture, source and ship new and continuing 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 profitably recover the Company's development, manufacturing, marketing, royalty and other costs; (ii) recessions or other economic downturns which negatively impact the retail and credit markets, and the financial health of the Company's retail customers and consumers, and which can result in lower employment levels, less consumer disposable income, lower consumer confidence and, as a consequence, lower consumer spending, including lower spending on purchases of the Company's products, (iii) other economic and public health conditions in the markets in which the Company and its customers and suppliers operate which impact the Company's ability and cost to manufacture and deliver products, such as higher fuel and other commodity prices, higher labor costs, higher transportation costs, outbreaks of SARs, bird flu or other diseases which affect public health and the movement of people and goods, and other factors, including government regulations, which can create potential manufacturing and transportation delays or impact costs, (iv) 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; (v) 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; (vi) greater than expected costs, or unexpected delays or difficulties, associated with the Company's investment in its joint venture with Discovery Communications, LLC, the rebranding of the joint venture network, development of Hasbro Studios, and the creation of new content to appear on the network and elsewhere, (vii) consumer interest in and acceptance of the joint venture network, and other factors impacting the financial performance of the joint venture and Hasbro Studios, (viii) 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; (ix) work stoppages, slowdowns or strikes, which may impact the Company's ability to manufacture or deliver product in a timely and cost-effective manner; (x) 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; (xi) 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; (xii) 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 public health conditions and other factors affecting social and economic activity in China, affecting the movement of products into and out of China, and impacting the cost of producing products in China and exporting them to other countries; (xiii) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xiv) other 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; (xv) the risk that anticipated benefits of acquisitions may not occur or be delayed or reduced in their realization; and (xvi) 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 Consolidated and International segment net revenues excluding the impact of changes in exchange rates. Management believes that the presentation of Consolidated and International segment net revenues minus the impact of exchange rate changes provides information that is helpful to an investor's understanding of the underlying business performance absent exchange rate fluctuations which are beyond the Company's control.

 
 
HASBRO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Thousands of Dollars)
 
     

December 27,
2009

       

December 28,
2008

ASSETS                
Cash and Cash Equivalents     $ 636,045         $ 630,390
Accounts Receivable, Net       1,038,802           611,766
Inventories       207,895           300,463
Other Current Assets       162,290           171,387
Total Current Assets       2,045,032           1,714,006
Property, Plant and Equipment, Net       220,706           211,707
Other Assets       1,631,154           1,243,084
Total Assets     $ 3,896,892         $ 3,168,797
                 
                 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Short-term Borrowings     $ 14,113         $ 7,586
Payables and Accrued Liabilities       801,775           792,306
Total Current Liabilities       815,888           799,892
Long-term Debt       1,131,998           709,723
Other Liabilities       354,234           268,396
Total Liabilities       2,302,120           1,778,011
Total Shareholders' Equity       1,594,772           1,390,786
Total Liabilities and Shareholders' Equity     $ 3,896,892         $ 3,168,797
 
 
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Thousands of Dollars and Shares Except Per Share Data)
 
    Quarter Ended       Year Ended
   

December 27,
2009

   

December 28,
2008

     

December 27,
2009

   

December 28,
2008

Net Revenues   $ 1,375,184     $ 1,231,053       $ 4,067,947       $ 4,021,520
Cost of Sales     562,105       539,510         1,676,336         1,692,728

Gross Profit

    813,079       691,543         2,391,611         2,328,792
Amortization     25,395       19,443         85,029         78,265
Royalties     102,647       102,650         330,651         312,986
Research and Product Development     56,665       54,229         181,195         191,424
Advertising     133,644       140,169         412,580         454,612
Selling, Distribution and Administration     251,129       223,443         793,558         797,209
Operating Profit     243,599       151,609         588,598         494,296
Interest Expense     16,776       11,036         61,603         47,143
Other (Income) Expense, Net     426       11,993         (2,702 )       6,098
Earnings before Income Taxes     226,397       128,580         529,697         441,055
Income Taxes     60,834       34,999         154,767         134,289
Net Earnings   $ 165,563     $ 93,581       $ 374,930       $ 306,766
                         
Per Common Share                        
Net Earnings                        
Basic   $ 1.20     $ 0.67       $ 2.69       $ 2.18
Diluted   $ 1.09     $ 0.62       $ 2.48       $ 2.00
                         
Cash Dividends Declared   $ 0.20     $ 0.20       $ 0.80       $ 0.80
                         
Weighted Average Number of Shares                        
Basic     138,118       139,318         139,487         140,877
Diluted     152,263       153,351         152,780         155,230
 
 
HASBRO, INC.
Supplemental Financial Data
Net Earnings Per Share
(Unaudited)
(Thousands of Dollars and Shares Except Per Share Data)
                         
    December 27, 2009       December 28, 2008
    Basic     Diluted       Basic     Diluted

Quarter

                       
Net Earnings   $ 165,563     $ 165,563       $ 93,581     $ 93,581
Effect of Dilutive Securities:                        
Interest Expense on Contingent Convertible Debentures Due 2021     -       1,078         -       1,061
Adjusted Net Earnings   $ 165,563     $ 166,641       $ 93,581     $ 94,642
                         
Average Shares Outstanding     138,118       138,118         139,318       139,318
Effect of Dilutive Securities:                        
Contingent Convertible Debentures Due 2021     -       11,566         -       11,566
Options and Other Share-Based Awards     -       2,579         -       2,467
Equivalent Shares     138,118       152,263         139,318       153,351
                         
Net Earnings Per Share   $ 1.20     $ 1.09       $ 0.67     $ 0.62
                         

Full Year

                       
Net Earnings   $ 374,930     $ 374,930       $ 306,766     $ 306,766
Effect of Dilutive Securities:                        
Interest Expense on Contingent Convertible Debentures Due 2021     -       4,328         -       4,238
Adjusted Net Earnings   $ 374,930     $ 379,258       $ 306,766     $ 311,004
                         
Average Shares Outstanding     139,487       139,487         140,877       140,877
Effect of Dilutive Securities:                        
Contingent Convertible Debentures Due 2021     -       11,566         -       11,566
Options and Other Share-Based Awards     -       1,727         -       2,787
Equivalent Shares     139,487       152,780         140,877       155,230
                         
Net Earnings Per Share   $ 2.69     $ 2.48       $ 2.18     $ 2.00
 
 
HASBRO, INC.
Supplemental Financial Data
Major Segment Results, Net Revenues by Product Class and EBITDA
(Unaudited)
(Thousands of Dollars)     Quarter Ended             Year Ended      
     

December 27,
2009

   

December 28,
2008

    % Change        

December 27,
2009

   

December 28,
2008

    % Change  

Major Segment Results

                                     

U.S. and Canada Segment:

                                     
External Net Revenues     $ 760,668     $ 689,532     10 %       $ 2,447,943     $ 2,406,745     2 %
Operating Profit       153,620       70,219     119 %         380,580       283,152     34 %
                                       

International Segment:

                                     
External Net Revenues       549,948       496,832     11 %         1,459,476       1,499,334     -3 %
Operating Profit       96,033       72,366     33 %         162,159       165,186     -2 %
                                       

Entertainment and Licensing Segment:

                                     
External Net Revenues       62,073       41,998     48 %         155,013       107,929     44 %
Operating Profit       29,186       24,359     20 %         65,572       51,035     28 %
                                       

Net Revenues by Product Class

                                     
Boys     $ 424,412     $ 365,002     16 %       $ 1,470,975     $ 1,344,672     9 %
Games and Puzzles       534,841       452,371     18 %         1,340,886       1,339,909     0 %
Girls       272,691       261,604     4 %         790,817       829,785     -5 %
Preschool       137,060       137,721     0 %         451,401       456,791     -1 %
Other       6,180       14,355     -57 %         13,868       50,363     -72 %
      $ 1,375,184     $ 1,231,053             $ 4,067,947     $ 4,021,520      
                                       

Reconciliation of EBITDA

                                     
Net Earnings     $ 165,563     $ 93,581             $ 374,930     $ 306,766      
Interest Expense       16,776       11,036               61,603       47,143      
Income Taxes       60,834       34,999               154,767       134,289      
Depreciation       24,930       23,313               95,934       87,873      
Amortization       25,395       19,443               85,029       78,265      
EBITDA     $ 293,498     $ 182,372             $ 772,263     $ 654,336      

SOURCE: Hasbro, Inc.

Hasbro, Inc.
Investor Relations
Karen A. Warren or Debbie Hancock, 401-727-5401
or
News Media
Wayne S. Charness, 401-727-5983