Hasbro, Inc.
Oct 17, 2011
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Hasbro Reports Revenue and Earnings Growth for the Third Quarter 2011

- Net revenues for the third quarter 2011 grew 5% to $1.38 billion compared to $1.31 billion for the third quarter 2010; foreign exchange had a positive $37.1 million impact on third quarter 2011 revenues;

- Net earnings for the third quarter 2011 increased 10% to $171.0 million, or $1.27 per diluted share, compared to $155.2 million, or $1.09 per diluted share, in 2010;

- International segment net revenues grew 23% to $563.3 million versus $458.9 million in 2010; Foreign exchange had a positive $35.2 million impact on third quarter 2011 revenues;

- Boys and Preschool category net revenues grew 15% and 12%, respectively;

- Repurchased 5.6 million shares of common stock at a total cost of $211.0 million.

PAWTUCKET, R.I.--(BUSINESS WIRE)-- Hasbro, Inc. (NASDAQ: HAS) today reported revenue and earnings growth for the third quarter 2011. The Company reported 5% net revenues growth to $1.38 billion compared to $1.31 billion in the third quarter 2010. Third quarter 2011 net revenues include a positive $37.1 million impact of foreign exchange. The Company reported a 10% increase in net earnings for the third quarter 2011 to $171.0 million or $1.27 per diluted share compared to $155.2 million or $1.09 per diluted share in 2010.

"We continue to expect to deliver meaningful growth in both revenues and earnings per share for the full-year 2011 versus our 2010 reported full-year results," said Brian Goldner, President and Chief Executive Officer. "Our performance this year demonstrates we are successfully executing our strategy globally. We begin the fourth quarter with a number of encouraging factors supporting our full-year outlook. We have a great line up of innovative, sought-after toys and games for the holiday, many of which are only recently hitting retail shelves; our point-of-sale both in the U.S. and internationally is positive and showing good momentum; our U.S. retail inventories are down versus a year ago; and we continue to experience very strong trends in our international business."

"Our third quarter results highlight the continued strength of our international business as well as the leverage we are achieving from our investments," said Deborah Thomas, Chief Financial Officer. "This resulted in a higher mix of revenue and profits from the International segment in the third quarter. Given our liquidity and confidence in our long-term strategy, we continued to be active buyers of Hasbro shares during the quarter, purchasing 5.6 million shares at an average price of $37.74."

In the third quarter, worldwide net revenues in the Boys product category increased 15% to $534.6 million; the Games and Puzzles category decreased 6% to $364.7 million; the Girls category declined 4% to $259.1 million; and the Preschool category was up 12% to $217.4 million.

U.S. and Canada segment net revenues declined 7% to $764.6 million compared to $825.5 million in 2010; however, our products experienced an 8% increase year-over-year in point-of-sale at our top 4 U.S. accounts. The reported results reflect growth in the Preschool category, which was offset by declines in the Boys, Girls and Games and Puzzles categories. The U.S. and Canada segment reported an operating profit of $128.8 million, compared to $158.8 million in 2010.

International segment net revenues grew 23% to $563.3 million, an increase of $104.4 million compared to $458.9 million in 2010. Net revenues in the International segment grew 15% absent the positive $35.2 million impact of foreign exchange. Revenue in the International segment reflects growth in the Boys category, which offset slight declines in the other product categories. The International segment reported a 42% increase in operating profit to $100.7 million, compared to an operating profit of $70.8 million in 2010.

Entertainment and Licensing segment net revenues increased 69% to $46.3 million, compared to $27.5 million in 2010. Revenue in the Entertainment and Licensing segment reflected growth in licensing revenue associated with the sale of television programming globally, movie and merchandise-related revenue from Transformers: Dark of the Moon as well as a onetime payment from Universal Studios. The Entertainment and Licensing segment reported an operating profit of $15.3 million compared to $5.9 million in 2010.

The Company repurchased a total of 5.6 million shares of common stock during the third quarter 2011 at a total cost of $211.0 million and an average price of $37.74 per share. For the first three quarters in 2011, the Company repurchased a total of 9.4 million shares at a total cost of $386.7 million and an average price of $40.97. At quarter-end, $263.5 million remained available under the current share repurchase authorization.

The Company will webcast its third quarter 2011 earnings conference call at 8:30 a.m. Eastern Time today. To listen to the live webcast, go to http://investor.hasbro.com. The replay will be on Hasbro's web site approximately 2 hours following completion of the call.

About Hasbro

Hasbro, Inc. (NASDAQ: HAS) is a branded play company providing children and families around the world with a wide-range of immersive entertainment offerings based on the Company's world class brand portfolio. From toys and games, to television programming, motion pictures, video games and a comprehensive licensing program, Hasbro strives to delight its customers through the strategic leveraging of well-known and beloved brands such as TRANSFORMERS, LITTLEST PET SHOP, NERF, PLAYSKOOL, MY LITTLE PONY, G.I. JOE, MAGIC: THE GATHERING and MONOPOLY. The HUB, Hasbro's multi-platform joint venture with Discovery Communications (NASDAQ: DISCA, DISCB, DISCK) launched on October 10, 2010. The online home of The HUB is www.hubworld.com. The HUB logo and name are trademarks of Hub Television Networks, LLC. All rights reserved. © 2011 Hasbro, Inc. All Rights Reserved.

HAS-E

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 2011 and beyond, including with respect to its revenues and earnings per share, 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) global economic conditions, including recessions, credit crises or other economic shocks or downturns which can negatively impact the retail and/or credit markets, the financial health of the Company's retail customers and consumers, and consumer and business confidence, and which can result in lower employment levels, less consumer disposable income, and lower consumer 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) 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 disease 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; (v) 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; (vi) 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 by the Company's customers in their purchasing or selling patterns; (vii) 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; (viii) consumer interest in and acceptance of the joint venture network, and programming created by Hasbro Studios, and other factors impacting the financial performance of the joint venture and Hasbro Studios; (ix) greater than expected costs or unexpected delays associated with the creation of the Center of Excellence for Hasbro Games; (x) the inventory policies of the Company's retail customers, including retailers' potential decisions to lower the inventories they are willing to carry, 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 tight and compressed shipping schedules; (xi) work stoppages, slowdowns or strikes, which may impact the Company's ability to manufacture or deliver product in a timely and cost-effective manner; (xii) 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; (xiii) 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; (xiv) 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; (xv) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xvi) 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; (xvii) the risk that anticipated benefits of acquisitions may not occur or be delayed or reduced in their realization; and (xviii) 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.

(Tables Attached)

                     
HASBRO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
(Thousands of Dollars) Sept. 25, 2011 Sept. 26, 2010
ASSETS
Cash and Cash Equivalents $ 186,962 $ 497,903
Accounts Receivable, Net 1,260,521 1,210,460
Inventories 518,866 467,953
Other Current Assets   243,956   170,394
Total Current Assets 2,210,305 2,346,710
Property, Plant and Equipment, Net 220,412 221,165
Other Assets   1,654,009   1,647,742
Total Assets $ 4,084,726 $ 4,215,617
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term Borrowings $ 13,168 $ 103,625
Payables and Accrued Liabilities   929,275   874,861
Total Current Liabilities 942,443 978,486
Long-term Debt 1,405,071 1,404,556
Other Liabilities   355,970   345,264
Total Liabilities 2,703,484 2,728,306
Total Shareholders' Equity   1,381,242   1,487,311
Total Liabilities and Shareholders' Equity $ 4,084,726 $ 4,215,617
 
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Thousands of Dollars and Shares Except Per Share Data)       Quarter Ended         Nine Months Ended
                     
Sept. 25, 2011 Sept. 26, 2010 Sept. 25, 2011   Sept. 26, 2010
Net Revenues $ 1,375,811 $ 1,313,302 $ 2,956,251 $ 2,723,464
Costs and Expenses:
Cost of Sales 599,524 591,600 1,244,780 1,154,601
Royalties 109,257 75,620 234,680 169,454
Product Development 49,504 51,618 150,287 139,408
Advertising 130,396 133,742 278,703 276,914
Amortization of Intangibles 11,084 15,611 32,378 38,310
Program Production Cost Amortization 7,844 5,034 18,082 5,034
Selling, Distribution and Administration   220,130   202,320     619,939   552,933  
Operating Profit 248,072 237,757 377,402 386,810
Interest Expense 22,479 21,657 66,702 60,371
Other (Income) Expense, Net   4,136   (2,973 )   13,451   (7,901 )
Earnings before Income Taxes 221,457 219,073 297,249 334,340
Income Taxes   50,467   63,909     51,012   76,602  
Net Earnings $ 170,990 $ 155,164   $ 246,237 $ 257,738  
 
Per Common Share
Net Earnings
Basic $ 1.29 $ 1.12   $ 1.82 $ 1.84  
Diluted $ 1.27 $ 1.09   $ 1.78 $ 1.76  
 
Cash Dividends Declared $ 0.30 $ 0.25   $ 0.90 $ 0.75  
 
Weighted Average Number of Shares
Basic   132,448   138,199     135,388   139,773  
Diluted   134,924   141,715     138,373   147,157  
                           
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
MAJOR SEGMENT RESULTS, NET REVENUES BY PRODUCT CLASS AND EBITDA
(Unaudited)
(Thousands of Dollars) Quarter Ended Nine Months Ended
    Sept. 25, 2011 Sept. 26, 2010 % Change   Sept. 25, 2011 Sept. 26, 2010 % Change  

Major Segment Results

U.S. and Canada Segment:

External Net Revenues $ 764,562 $ 825,483 -7 % $ 1,660,664 $ 1,694,713 -2 %
Operating Profit 128,789 158,763 -19 % 227,526 278,635 -18 %
Operating Margin 16.8 % 19.2 % 13.7 % 16.4 %
 

International Segment:

External Net Revenues 563,310 458,917 23 % 1,192,113 942,047 27 %
Operating Profit 100,739 70,818 42 % 132,756 79,984 66 %
Operating Margin 17.9 % 15.4 % 11.1 % 8.5 %
 

Entertainment and Licensing Segment:

External Net Revenues 46,316 27,478 69 % 98,144 83,038 18 %
Operating Profit 15,251 5,918 158 % 21,294 28,280 -25 %
Operating Margin 32.9 % 21.5 % 21.7 % 34.1 %
 

Net Revenues by Product Class

Boys $ 534,595 $ 463,697 15 % $ 1,285,273 $ 930,277 38 %
Games and Puzzles 364,740 387,041 -6 % 796,364 876,312 -9 %
Girls 259,113 269,069 -4 % 491,412 531,668 -8 %
Preschool 217,363 193,262 12 % 383,173 384,778 0 %
Other   -     233   -   29     429   -93 %
Total Net Revenues $ 1,375,811   $ 1,313,302   $ 2,956,251   $ 2,723,464  
 

Reconciliation of EBITDA

Net Earnings $ 170,990 $ 155,164 $ 246,237 $ 257,738
Interest Expense 22,479 21,657 66,702 60,371
Income Taxes 50,467 63,909 51,012 76,602
Depreciation 36,390 27,503 85,039 72,994
Amortization   11,084     15,611     32,378     38,310  
EBITDA $ 291,410   $ 283,844   $ 481,368   $ 506,015  

Hasbro, Inc.
(Investor Relations)
Debbie Hancock, 401-727-5401
or
(News Media)
Wayne S. Charness, 401-727-5983

Source: Hasbro, Inc.

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