Hasbro, Inc.
Feb 11, 2008
PDF
Add to Briefcase

Hasbro Reports Record Net Earnings and Seventh Consecutive Year of E.P.S. Growth

Fourth Quarter Highlights Full-Year Highlights

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


Privacy Policy ESRB Privacy Certified Logo