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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): July 21, 2003
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HASBRO, INC.
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(Exact name of registrant as specified in its charter)
RHODE ISLAND 1-6682 05-0155090
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(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
1027 NEWPORT AVE., PAWTUCKET, RHODE ISLAND 02862
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(Address of Principal Executive Offices) (Zip Code)
(401) 431-8697
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(Registrant's telephone number, including area code)
Item 5. Other Events and Regulation FD Disclosure.
The July 21, 2003 Press Release of the Company attached
hereto as EXHIBIT 99 is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99 Press Release, dated July 21, 2003, of Hasbro, Inc.
Item 12. Results of Operations and Financial Condition.
On July 21, 2003, we announced our financial results for the
fiscal quarter ended June 29, 2003, and certain other
information. The press release, which has been attached as
Exhibit 99, discloses a financial measure, Earnings before
Interest, Taxes, Depreciation and Amortization ("EBITDA"), that
is considered a non-GAAP financial measure as defined under SEC
rules. Generally, a non-GAAP financial measure is a numerical
measure of a company's performance, financial position, or cash
flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with generally
accepted accounting principles. In order to fully assess our
financial operating results, management believes that EBITDA is
an appropriate measure of evaluating our operating performance,
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, and not as a substitute for, or superior to,
net income or other measures of financial performance
prepared in accordance with generally accepted accounting
principles as more fully discussed in our financial statements
and filings with the SEC. The EBITDA measures included in our
press release have been reconciled to the nearest GAAP measures
as is now required under new SEC rules regarding the use of non-
GAAP financial measures.
As used herein, "GAAP" refers to accounting principles generally
accepted in the United States
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.
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(Registrant)
Date: July 21, 2003 By: /s/ David D. R. Hargreaves
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David D. R. Hargreaves
Senior Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
HASBRO, INC.
Current Report on Form 8-K
Dated July 21, 2003
Exhibit Index
Exhibit
No. Exhibits
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99 Press Release, dated July 21, 2003, of Hasbro, Inc.
EXHIBIT 99
For Immediate Release Contact: Karen A. Warren (Investor Relations)
July 21, 2003 401-727-5401
Wayne S. Charness (News Media)
401-727-5983
HASBRO REPORTS STRONG SECOND QUARTER RESULTS
Highlights:
- - Net revenues up 7%, to $581.5 million compared to $546.0 million a year
ago
- - Net earnings of $11.4 million or $0.06 per diluted share, versus a net
loss of $25.9 million, or ($.15) per diluted share in 2002
- - International segment net revenues up 3% in local currency and 17% in
U.S. dollars
- - U. S. Toys segment net revenues up 4%, despite tough Star Wars
comparisons
- - Continued strong performances by core brands such as TRANSFORMERS and
TRIVIAL PURSUIT and new, innovative products such as BEYBLADE and FURREAL
FRIENDS
Pawtucket, RI (July 21, 2003) - Hasbro, Inc. (NYSE: HAS) today reported
strong second quarter results. Worldwide net revenues were $581.5 million, up
7% from $546.0 million a year ago. The net income for the quarter was $11.4
million, compared to a loss of $25.9 million last year, and the net income per
diluted share was $0.06, compared to a loss of ($0.15) per diluted share in
2002. The 2002 results include a net, after-tax charge of $21.0 million, or
$0.12 per diluted share, related to a decline in the value of the Company's
investment in Infogrames Entertainment SA, as partially offset by interest
income on a tax settlement from the Internal Revenue Service. The Company
reported second quarter Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) of $66.8 million for the quarter, compared to $29.4
million in 2002. The attached schedules provide a reconciliation of EBITDA to
net income for the second quarter and year to date.
For the first half, worldwide net revenues were $1.043 billion, compared
to $998.3 million a year ago. Net income for the first half was $12.6 million
or $0.07 per diluted share, compared to a loss of $42.9 million or ($0.25) per
diluted share a year ago before the effect of an accounting change. First
half EBITDA was $114.2 million, compared to $64.3 million last year.
"I am pleased with our second quarter performance and our progress for
the first half of the year," said Alfred J. Verrecchia, Hasbro's President and
Chief Executive Officer. "We had good growth in many of our core brands, as
well as in new products such as BEYBLADE and FURREAL FRIENDS. All of this
increases my confidence in our ability to deliver on our plan for the year."
"Our innovation is paying off as we create and enter new categories and
segments in both toys and games, and reinvent existing brands. With new
products running the gamut from BEYBLADE to the latest in TRANSFORMERS and
VIDEO NOW -- a personal, disc based video player, we are successfully gaining
shelf space and growing the top line," Verrecchia concluded.
Revenues in the U.S. Toys segment increased in the quarter to $208.4
million, compared to $199.6 million a year ago. The segment reported
operating profit of $12.9 million compared to $14.6 million last year. The
expected revenue decline due to STAR WARS was offset by strength in BEYBLADE
and sales of certain core product lines including TRANSFORMERS and PLAYSKOOL,
as well as continuing strong sales of FURREAL FRIENDS.
Revenues in the Games segment were $148.6 million for the quarter,
compared to $152.0 million a year ago. Board game revenues remained strong,
led by TRIVIAL PURSUIT 20TH ANNIVERSARY EDITION. Non-licensed trading card
games were up, but licensed trading card games including POKEMON were down.
The Games segment reported improved operating profit of $25.4 million compared
to $22.4 million last year.
International segment revenues were $203.8 million for the quarter,
compared to $174.3 million a year ago. This increase of 17% includes the
positive impact of foreign exchange of $23.6 million. Absent this impact,
revenues increased 3% to $180.3 million. The segment experienced strength in
BEYBLADE and sales of certain core product lines including MAGIC: THE
GATHERING trading card games, TRANSFORMERS and PLAYSKOOL. The International
segment operating loss declined to $4.8 million compared to a loss of $17.3
million a year ago.
"We are pleased with the financial progress we have made this year and we
remain on target with our cost cutting and debt reduction initiatives," said
David Hargreaves, Hasbro's Chief Financial Officer.
"Our second quarter revenue growth of 7% was a significant achievement
given the difficult year-over-year comparison associated with the decline in
revenues from major entertainment properties. In fact, the growth in our core
brands and new products more than offset the anticipated -- and realized --
reduction in Star Wars revenue."
"Looking forward, because of the challenging economic and retail
environments and with approximately two-thirds of our business yet to ship, we
have not significantly changed our expectations for the year," Hargreaves
concluded.
The Company will webcast its second quarter earnings conference call at
9:00 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 webcast microphone).
Hasbro is a worldwide leader in children's and family leisure time and
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, SUPER SOAKER, 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 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 manufacture, source and ship new
and continuing products on a timely basis and the acceptance of those products
by customers and consumers at prices that will be sufficient to profitably
recover development, manufacturing, marketing, royalty and other costs of
products; economic and public health conditions, including factors which
impact the retail market or the Company's ability to manufacture and deliver
products, higher fuel and commodity prices, higher transportation costs,
currency fluctuations and government regulation and other conditions in the
various markets in which the Company operates throughout the world; the
inventory policies of retailers, 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; the bankruptcy
or other lack of success of one of the Company's significant retailers which
could negatively impact the Company's revenues or bad debt exposure; the
impact of competition on revenues, margins and other aspects of the Company's
business, including the ability to secure, maintain and renew popular licenses
and the ability to attract and retain talented employees in a competitive
environment; market conditions, third party actions or approvals and the
impact of competition that could delay or increase the cost of implementation
of the Company's consolidation 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 SEC
rules, specifically EBITDA. As required by SEC rules, we have provided a
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 income (loss) before cumulative effect of
accounting change, excluding, interest expense, income taxes, depreciation and
amortization. In order to fully assess the Company's financial operating
results, management believes that EBITDA is an appropriate measure of
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 income or other measures of financial
performance prepared in accordance with generally accepted accounting
principles as more fully discussed in the Company's financial statements and
filings with the Securities and Exchange Commission. As used herein, "GAAP"
refers to accounting principles generally accepted in the United States. 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.
# # #
(Tables Attached)
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars and Shares Except Per Share Data)
Quarter Ended Six Months Ended
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June 29, June 30, June 29, June 30,
2003 2002 2003 2002
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Net Revenues $ 581,469 545,990 $1,043,237 998,257
Cost of Sales 230,807 196,165 403,044 362,579
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Gross Profit 350,662 349,825 640,193 635,678
Amortization 18,410 22,766 34,588 44,215
Royalties 52,650 65,712 86,740 117,168
Research and Product Development 33,105 36,770 63,605 69,983
Advertising 67,686 58,507 120,864 105,396
Selling, Distribution and
Administration 150,420 152,069 290,319 291,260
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Operating Profit 28,391 14,001 44,347 7,656
Interest Expense 11,974 18,317 26,996 37,859
Other (Income) Expense, Net 777 30,667 82 27,832
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Earnings (Loss) Before Income
Taxes and Cumulative Effect of
Accounting Change, Net of Tax 15,640 (34,983) 17,269 (58,035)
Income Taxes 4,223 (9,095) 4,663 (15,089)
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Earnings (Loss) before
Cumulative Effect of
Accounting Change 11,417 (25,888) 12,606 (42,946)
Cumulative Effect of Accounting
Change, Net of Tax - - - (245,732)
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Net Earnings (Loss) $ 11,417 $(25,888) $ 12,606 $ (288,678)
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Per Common Share
Earnings (Loss) before Cumulative
Effect of Accounting Change
Basic $ 0.07 $ (0.15) $ 0.07 $ (0.25)
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Diluted $ 0.06 $ (0.15) $ 0.07 $ (0.25)
======== ======= ========= =========
Cumulative Effect of Accounting
Change, Net of Tax
Basic and Diluted $ - $ - $ - $ (1.42)
======== ======= ========= =========
Net Earnings (Loss)
Basic $ 0.07 $ (0.15) $ 0.07 $ (1.67)
======= ======= ========= =========
Diluted $ 0.06 $ (0.15) $ 0.07 $ (1.67)
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Cash Dividends Declared $ 0.03 $ 0.03 $ 0.06 $ 0.06
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Weighted Average Number of Shares
Basic 173,327 172,723 173,122 172,659
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Diluted 180,895 172,723 179,792 172,659
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HASBRO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars)
June 29, June 30,
2003 2002
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Assets
Cash and Cash Equivalents $ 172,577 $ 57,057
Accounts Receivable, Net 485,108 479,443
Inventories 273,803 279,873
Other Current Assets 234,917 290,919
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Total Current Assets 1,166,405 1,107,292
Property, Plant and Equipment, Net 211,960 228,588
Other Assets 1,525,862 1,548,897
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Total Assets $2,904,227 $2,884,777
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Liabilities and Shareholders' Equity
Short-term Borrowings $ 16,815 $ 17,066
Current Installments of Long-Term Debt 1,201 277,928
Payables and Accrued Liabilities 577,775 553,208
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Total Current Liabilities 595,791 848,202
Long-term Debt 861,280 846,361
Deferred Liabilities 137,294 98,185
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Total Liabilities 1,594,365 1,792,748
Total Shareholders' Equity 1,309,862 1,092,029
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Total Liabilities and Shareholders' Equity $2,904,227 $2,884,777
========= =========
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
Quarter Ended Six Months Ended
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June 29, June 30, % June 29, June 30, %
2003 2002 Change 2003 2002 Change
(Thousands of Dollars) -------- -------- ------ ------- ------- -----
U.S. Toys
- ---------
External Revenues $ 208,419 199,635 4% $ 361,863 400,495 (10)%
Operating Profit 12,946 14,556 (11)% 18,272 40,796 (55)%
Games
- -----
External Revenues 148,613 152,039 (2)% 260,823 244,888 7%
Operating Profit 25,363 22,444 13% 43,372 19,943 117%
International
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External Revenues 203,849 174,260 17% 379,232 310,405 22%
Operating Profit (4,793) (17,298) 72% (10,768) (46,388) 77%
RECONCILIATION OF EBITDA
Net Earnings(Loss) $ 11,417 $(25,888) $ 12,606 (288,678)
Cumulative Effect of
Accounting Change, Net
of Tax - - - (245,732)
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Earnings (Loss) before
Cumulative Effect of
Accounting Change 11,417 (25,888) 12,606 (42,946)
Interest Expense 11,974 18,317 26,996 37,859
Income Taxes 4,223 (9,095) 4,663 (15,089)
Depreciation 20,797 23,308 35,366 40,258
Amortization 18,410 22,766 34,588 44,215
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EBITDA $ 66,821 $29,408 $ 114,219 $64,297
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