SEC Filing | Hasbro, Inc.

View:




                     SECURITIES AND EXCHANGE COMMISSION

                         Washington, D. C.   20549

                                 FORM 10-Q

              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

                   OF THE SECURITIES EXCHANGE ACT OF 1934



For the period ended October 1, 2000       Commission file number 1-6682


                                HASBRO, INC.
                            --------------------
                            (Name of Registrant)

       Rhode Island                                05-0155090
- ------------------------             ------------------------------------
(State of Incorporation)             (I.R.S. Employer Identification No.)



            1027 Newport Avenue, Pawtucket, Rhode Island  02861
            ---------------------------------------------------
                       (Principal Executive Offices)



                               (401) 431-8697



    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.

                             Yes  X  or No
                                 ---       ---

    The number of shares of Common Stock, par value $.50 per share,
outstanding as of October 29, 2000 was 172,322,501.


                         HASBRO, INC. AND SUBSIDIARIES
                          Consolidated Balance Sheets

                   (Thousands of Dollars Except Share Data)
                                  (Unaudited)


                                            Oct. 1,   Sep. 26,   Dec. 26,
   Assets                                    2000       1999       1999
                                          ---------  ---------  ---------
Current assets
  Cash and cash equivalents              $  164,307    108,627    280,159
  Accounts receivable, less allowance
   for doubtful accounts of $64,100,
   $64,900 and $65,000                      889,090  1,167,660  1,084,118
  Inventories:
    Finished products                       456,005    366,811    348,058
    Work in process                          40,681     17,839     13,470
    Raw materials                            43,621     54,012     47,043
                                          ---------  ---------  ---------
      Total inventories                     540,307    438,662    408,571

  Deferred income taxes                     138,197    108,930    115,646
  Prepaid expenses                          304,454    443,344    243,158
                                          ---------  ---------  ---------
        Total current assets              2,036,355  2,267,223  2,131,652

Property, plant and equipment, net          313,301    303,667    318,825
                                          ---------  ---------  ---------

Other assets
  Cost in excess of acquired net assets,
   less accumulated amortization of
   $224,076, $179,094 and $193,947          835,941    687,848    806,092
  Other intangibles, less accumulated
   amortization of $330,571, $232,597
   and $300,632                             948,023    800,514    949,789
  Other                                     236,966    134,017    256,990
                                          ---------  ---------  ---------
        Total other assets                2,020,930  1,622,379  2,012,871
                                          ---------  ---------  ---------

        Total assets                     $4,370,586  4,193,269  4,463,348
                                          =========  =========  =========



                         HASBRO, INC. AND SUBSIDIARIES
                    Consolidated Balance Sheets (continued)

                   (Thousands of Dollars Except Share Data)
                                  (Unaudited)


                                            Oct. 1,   Sep. 26,   Dec. 26,
   Liabilities and Shareholders' Equity      2000       1999       1999
                                          ---------  ---------  ---------
Current liabilities
  Short-term borrowings                  $  539,434    889,405    714,669
  Trade payables                            200,961    140,845    284,772
  Accrued liabilities                       828,726    733,114    983,280
  Income taxes                               50,489     75,745     88,606
                                          ---------  ---------  ---------
        Total current liabilities         1,619,610  1,839,109  2,071,327

Long-term debt, excluding current
 installments                             1,168,764    407,584    420,654
Deferred liabilities                         90,887     82,451     92,392
                                          ---------  ---------  ---------
        Total liabilities                 2,879,261  2,329,144  2,584,373
                                          ---------  ---------  ---------
Shareholders' equity
  Preference stock of $2.50 par
   value. Authorized 5,000,000
   shares; none issued                            -          -          -
  Common stock of $.50 par value.
   Authorized 600,000,000 shares;
   issued 209,694,630, 209,694,630
   and 209,694,630                          104,847    104,847    104,847
  Additional paid-in capital                470,754    467,064    468,329
  Deferred compensation                     (11,242)         -          -
  Retained earnings                       1,768,659  1,717,972  1,764,110
  Accumulated other comprehensive income    (65,323)   (27,470)   (32,982)
  Treasury stock, at cost; 37,375,704,
   15,299,432 and 16,710,620 shares        (776,370)  (398,288)  (425,329)
                                          ---------  ---------  ---------
        Total shareholders' equity        1,491,325  1,864,125  1,878,975
                                          ---------  ---------  ---------

        Total liabilities and
         shareholders' equity            $4,370,586  4,193,269  4,463,348
                                          =========  =========  =========


See accompanying condensed notes to consolidated financial statements.


                         HASBRO, INC. AND SUBSIDIARIES
                      Consolidated Statements of Earnings
                    (Thousands of Dollars Except Share Data)
                                  (Unaudited)

                                  Quarter Ended        Nine Months Ended
                                ------------------    --------------------
                                Oct. 1,   Sep. 26,     Oct. 1,    Sep. 26,
                                  2000      1999         2000       1999
                                --------  --------    ---------  ---------
Net Revenues                 $ 1,072,617 1,098,179    2,624,471  2,641,151
Cost of Sales                    459,535   444,013    1,057,879  1,045,556
                                --------  --------    ---------  ---------
Gross Profit                     613,082   654,166    1,566,592  1,595,595
                                --------  --------    ---------  ---------
Expenses
  Amortization                    33,861    31,130       98,645     88,974
  Royalties, Research and
   Development                   164,912   170,778      426,101    462,496
  Advertising                    134,631   117,567      281,722    299,925
  Selling, Distribution and
   Administration                222,743   193,582      626,453    515,231
                                --------  --------    ---------  ---------
    Total Expenses               556,147   513,057    1,432,921  1,366,626
                                --------  --------    ---------  ---------
Operating Profit                  56,935   141,109      133,671    228,969
                                --------  --------    ---------  ---------
Nonoperating (Income) Expense
  Interest Expense                30,565    19,190       80,206     44,788
  Other (Income) Expense, Net      6,324    (1,515)       2,075     (6,042)
                                --------  --------    ---------  ---------
    Total Nonoperating (Income)
     Expense                      36,889    17,675       82,281     38,746
                                --------  --------    ---------  ---------
Earnings Before Income Taxes      20,046   123,434       51,390    190,223
Income Taxes                       6,214    38,264       15,931     58,969
                                --------  --------    ---------  ---------
Net Earnings                   $  13,832    85,170       35,459    131,254
                                ========  ========    =========  =========
Per Common Share
  Net Earnings
    Basic                      $     .08       .44          .20        .67
                                ========  ========    =========  =========
    Diluted                    $     .08       .43          .20        .64
                                ========  ========    =========  =========
  Cash Dividends Declared      $     .06       .06          .18        .18
                                ========  ========    =========  =========
See accompanying condensed notes to consolidated financial statements.

                         HASBRO, INC. AND SUBSIDIARIES
                     Consolidated Statements of Cash Flows
          Nine Months Ended October 1, 2000 and September 26, 1999
                            (Thousands of Dollars)
                                  (Unaudited)
                                                          2000      1999
                                                         -------   -------
Cash flows from operating activities
  Net earnings                                         $  35,459   131,254
  Adjustments to reconcile net earnings to net cash
   utilized by operating activities:
    Depreciation and amortization of plant and equipment  78,723    76,511
    Other amortization                                    98,645    88,974
    Deferred income taxes                                (10,812)   (5,974)
    Compensation earned under restricted stock programs    2,538         -
  Change in operating assets and liabilities (other
   than cash and cash equivalents):
    Decrease (increase) in accounts receivable           177,366  (218,729)
    Increase in inventories                             (142,276) (109,874)
    Increase in prepaid expenses                         (69,991) (227,326)
    Decrease in trade payables
     and accrued liabilities                            (237,705)  (39,419)
  Other                                                   (2,417)   (1,081)
                                                         -------   -------
      Net cash utilized by operating activities          (70,470) (305,664)
                                                         -------   -------
Cash flows from investing activities
  Additions to property, plant and equipment             (87,685)  (66,897)
  Investments and acquisitions, net of cash acquired    (136,475)  (36,591)
  Other                                                   (2,373)    2,527
                                                         -------   -------
      Net cash utilized by investing activities         (226,533) (100,961)
                                                         -------   -------
Cash flows from financing activities
  Proceeds from borrowings with original maturities
   of more than three months                             912,001   445,861
  Repayments of borrowings with original maturities
   of more than three months                            (158,324)  (90,760)
  Net (repayments) proceeds of other
   short-term borrowings                                (164,550)  178,062
  Purchase of common stock                              (367,548) (207,170)
  Stock option transactions                                1,987    48,172
  Dividends paid                                         (32,153)  (33,879)
                                                         -------   -------
      Net cash provided by financing activities          191,413   340,286
                                                         -------   -------
Effect of exchange rate changes on cash                  (10,262)   (2,782)
                                                         -------   -------
      Decrease in cash and cash equivalents             (115,852)  (69,121)
Cash and cash equivalents at beginning of year           280,159   177,748
                                                         -------   -------
      Cash and cash equivalents at end of period        $164,307   108,627
                                                         =======   =======

                         HASBRO, INC. AND SUBSIDIARIES
               Consolidated Statements of Cash Flows (continued)
          Nine Months Ended October 1, 2000 and September 26, 1999

                            (Thousands of Dollars)
                                  (Unaudited)


                                                          2000      1999
                                                         -------   -------
Supplemental information
  Cash paid during the period for:
    Interest                                            $ 72,750    40,952
    Income taxes                                        $ 76,450    37,639

See accompanying condensed notes to consolidated financial statements.











                         HASBRO, INC. AND SUBSIDIARIES
               Consolidated Statements of Comprehensive Earnings

                             (Thousands of Dollars)
                                  (Unaudited)


                                  Quarter Ended        Nine Months Ended
                                ------------------     ------------------
                                 Oct. 1,  Sep. 26,      Oct. 1,  Sep. 26,
                                  2000      1999         2000      1999
                                --------  --------     --------  --------
Net earnings                   $  13,832    85,170       35,459   131,254
Other comprehensive
  loss                           (15,183)   (1,461)     (32,341)  (17,845)
                                --------  --------     --------  --------
Total comprehensive
  earnings (loss)              $  (1,351)   83,709        3,118   113,409
                                ========  ========     ========  ========

See accompanying condensed notes to consolidated financial statements.



                         HASBRO, INC. AND SUBSIDIARIES
             Condensed Notes to Consolidated Financial Statements

            (Thousands of Dollars and Shares Except Per share Data)
                                  (Unaudited)


(1)  In the opinion of management and subject to year-end audit, the
accompanying unaudited interim financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly the
financial position of the Company as of October 1, 2000 and September 26,
1999, and the results of operations and cash flows for the periods then ended.
Certain 1999 balances have been reclassified to conform to current year
presentation.

The year to date period ended October 1, 2000 is a 40-week period while the
year to date period ended September 26, 1999 is a 39-week period.

The results of operations for the nine months ended October 1, 2000 are not
necessarily indicative of results to be expected for the full year.

(2)  The Company's other comprehensive earnings (loss) primarily results from
foreign currency translation adjustments.

(3)  During 2000, the Company issued restricted stock and granted deferred
restricted stock units to certain key employees. At October 1, 2000, these
awards, net of forfeitures, aggregated the equivalent of 665,000 shares. These
shares or units are nontransferable and subject to forfeiture for periods
prescribed by the Company. Upon granting of these awards, unearned
compensation equivalent to the market value at the date of grant is charged to
shareholders' equity and subsequently amortized over the periods during which
the restrictions lapse, generally 3 years. During 2000, the Company also
conditionally awarded, net of forfeitures, 320,000 deferred restricted shares
under the Long Term Incentive Program (LTIP) under the Company's omnibus
employee stock plans. This award is conditional upon the Company reaching
certain volume, earnings per share and stock price benchmarks within a three
year performance cycle, with payout over the two years following that cycle.
Unearned compensation equivalent to the market value of shares awarded was
recorded at the date of award and is being amortized over a five-year period.
Adjustments are made to compensation expense for changes in market value and
achievement of financial goals.  Amortization of deferred, unearned
compensation relating to the restricted stock and deferred restricted stock
units, and shares awarded under the LTIP of $2,049 and $480, respectively, was
recorded in the nine months of 2000.

(4) Hasbro is a worldwide marketer and distributor of children's and family
entertainment products and services, principally engaged in the design,
manufacture and marketing of games and toys ranging from traditional to high-
tech.  The Company is focused on managing its business in two major areas,
Toys and Games. Within these two major areas, the Company's reportable
segments are U.S. Toys, Games, International and Global Operations.

In the United States, the U.S. Toy segment includes the design, marketing and
selling of boys action figures, vehicles and playsets, girls toys, preschool

                         HASBRO, INC. AND SUBSIDIARIES
       Condensed Notes to Consolidated Financial Statements (continued)

                            (Thousands of Dollars)
                                  (Unaudited)


toys, infant products and creative play products. The Games segment includes
the development, marketing and selling of traditional board games and puzzles,
handheld electronic games, electronic interactive plush, children's consumer
electronics, electronic learning aids, trading card and role-playing games and
interactive software games based on the Company's owned and licensed brands.
Within the International segment, the Company develops, markets and sells both
toy and game products in non-U.S. markets. Global Operations manufactures and
sources product for the majority of the Company's segments. The Company also
has other segments which license certain toy and game properties and which
develop and market non-traditional toy and game based product realizing more
than half of their revenues and the majority of their operating profit in the
first half of the year, which is contra-seasonal to the rest of the Company's
business. These other segments do not meet the quantitative thresholds for
reportable segments and have been combined for reporting purposes.

Segment performance is measured at the operating profit level. Included in
Corporate and eliminations are general corporate expenses, the elimination of
intersegment transactions and assets not identified with a specific segment.
Intersegment sales and transfers are reflected in management reports at
amounts approximating cost.

As a result of the complexity of the Company's organizational changes, it is
unable to segregate 1999 assets between the U.S. Toys and Games segments, and
thus they are reported as one. Assets are segregated in 2000 and are
separately reported for that period. The total of U.S. Toys and Games assets
in 2000 is presented for comparative purposes only, and is not used by
management in assessing segment performance in 2000. Certain asset related
expense items, including depreciation and amortization of intangibles, have
been allocated to segments in 1999 based upon estimates in order to arrive at
segment operating profit. In the fourth quarter of 1999, the Company's Games
segment acquired Wizards of the Coast, Inc. Management of the Company's
interactive software games international units, currently part of the Games
segment, has been assumed by International segment management. The Company
will reclassify the related revenues, operating profit and total assets of
this portion of the business in segment disclosure when it is completed for
management reporting purposes. These changes are not expected to be material.

The accounting policies of the segments are the same as those described in
Note 1 to the Company's Consolidated Financial Statements for the fiscal year
ended December 26, 1999.

Results shown for the quarter and nine months are not necessarily
representative of those which may be expected for the full year 2000 nor were
those of the comparable 1999 periods representative of those actually

                         HASBRO, INC. AND SUBSIDIARIES
       Condensed Notes to Consolidated Financial Statements (continued)

                            (Thousands of Dollars)
                                  (Unaudited)


experienced for the full year 1999. Similarly, such results are not
necessarily those which would be achieved were each segment an unaffiliated
business enterprise.

Information by segment and a reconciliation to reported amounts for the three
and nine months ended October 1, 2000 and September 26, 1999 are as follows:

                                              Three Months
                                              ------------

                                           2000                 1999
                                           ----                 ----
                                     External  Affiliate  External  Affiliate
      Net revenues                   --------  ---------  --------  ---------
        U.S. Toys                  $  184,253      1,114   309,670         -
        Games                         541,398     28,488   394,887    50,410
        International                 300,526        666   359,740       655
        Global Operations (a)           6,060    260,403     8,591   293,612
        Other segments                 40,380      2,284    25,291     5,314
        Corporate and eliminations          -   (292,955)        -  (349,991)
                                    ---------  --------- --------- ---------
                                   $1,072,617          - 1,098,179         -
                                    =========  ========= ========= =========

                                                  Nine Months
                                                  -----------
                                           2000                 1999
                                           ----                 ----
                                    External  Affiliate  External  Affiliate
      Net revenues                  --------  ---------  --------  ---------
        U.S. Toys                  $  412,817      3,970   839,194         -
        Games                       1,384,267     55,215   906,615    51,766
        International                 665,590       (308)  709,715     3,625
        Global Operations (a)          11,262    635,935    17,216   752,206
        Other segments                150,535     10,651   168,411    13,661
        Corporate and eliminations          -   (705,463)        -  (821,258)
                                    ---------  --------- --------- ---------
                                   $2,624,471          - 2,641,151         -
                                    =========  ========= ========= =========


                         HASBRO, INC. AND SUBSIDIARIES
       Condensed Notes to Consolidated Financial Statements (continued)

                            (Thousands of Dollars)
                                  (Unaudited)


                                        Quarter Ended       Nine Months Ended
                                      Oct. 1,   Sep. 26,   Oct. 1,    Sep. 26,
                                        2000       1999      2000       1999
                                        ----       ----      ----       ----
      Operating profit (loss)
        U.S. Toys                   $ (21,922)    35,278   (74,349)   84,313
        Games                          57,013     56,592   204,168    95,224
        International                  28,077     58,817    18,016    33,854
        Global Operations (a)             762     (2,090)   (2,320)   (5,714)
        Other segments                 (7,101)    (8,572)   (7,122)   22,455
        Corporate and eliminations        106      1,084    (4,722)   (1,163)
                                      -------    -------   -------   -------
                                    $  56,935    141,109   133,671   228,969
                                      =======    =======   =======   =======

                                          Oct. 1, 2000         Sep. 26, 1999
                                          ------------         -------------
      Total assets
          U.S. Toys   (b)                 $   412,166                      -
          Games       (b)                   2,219,383                      -
                                            ---------              ---------
            U.S. Toys and Games (b)       $ 2,631,549              2,702,800
        International                       1,170,302              1,181,310
        Global Operations                     532,168                543,274
        Other segments                        302,959                289,524
        Corporate and eliminations           (266,392)              (523,639)
                                            ---------              ---------
                                          $ 4,370,586              4,193,269
                                            =========              =========


(a)  The Global Operations segment derives substantially all of its revenues
and operating results from intersegment activities.

(b)  As a result of the complexity of the Company's organizational changes, it
is unable to segregate 1999 assets between the U.S. Toys and Games segments,
and thus they are reported as one for 1999. Certain asset related expense
items including depreciation and amortization of intangibles have been
allocated to 1999 segment results based upon estimates in order to arrive at
segment operating profit.



                         HASBRO, INC. AND SUBSIDIARIES
       Condensed Notes to Consolidated Financial Statements (continued)

                            (Thousands of Dollars)
                                  (Unaudited)


The following table presents consolidated net revenues by classes of principal
products for the quarter and nine months ended October 1, 2000 and September
26, 1999:

                                      Quarter Ended        Nine Months Ended
                                     Oct. 1,   Sep. 26,    Oct. 1,   Sep. 26,
                                      2000       1999       2000       1999
                                      ----       ----       ----       ----

Boys toys                          $  207,400    364,200   508,000   937,200
Games and puzzles                     600,200    494,400 1,519,800 1,033,500
Interactive software games             59,300     34,000   100,100   111,700
Preschool toys                         65,600     76,200   140,100   161,700
Other                                 140,117    129,379   356,471   397,051
                                      -------    ------- --------- ---------
Net revenues                       $1,072,617  1,098,179 2,624,471 2,641,151
                                    =========  ========= ========= =========


                         HASBRO, INC. AND SUBSIDIARIES
       Condensed Notes to Consolidated Financial Statements (continued)

                            (Thousands of Dollars)
                                  (Unaudited)


 (5) Earnings per share data for the fiscal quarters and nine months ended
October 1, 2000 and September 26, 1999 were computed as follows:

                                           2000                 1999
                                    -----------------    -----------------
                                     Basic    Diluted     Basic    Diluted
                                    -------   -------    -------   -------
Quarter
- -------
  Net earnings                     $ 13,832    13,832     85,170    85,170
                                    =======   =======    =======   =======

  Average shares outstanding (in
   thousands)                       171,732   171,732    194,612   194,612
  Effect of dilutive securities;
    Options and warrants                  -       209          -     5,732
                                    -------   -------    -------   -------
  Equivalent shares                 171,732   171,941    194,612   200,344
                                    =======   =======    =======   =======

  Earnings per share               $    .08       .08        .44       .43
                                    =======   =======    =======   =======
Nine Months
- -----------
  Net earnings                     $ 35,459    35,459    131,254   131,254
                                    =======   =======    =======   =======

  Average shares outstanding (in
   thousands)                       177,937   177,937    195,280   195,280
  Effect of dilutive securities;
    Options and warrants                  -       701          -     8,726
                                    -------   -------    -------   -------
  Equivalent shares                 177,937   178,638    195,280   204,006
                                    =======   =======    =======   =======

  Earnings per share               $    .20       .20        .67       .64
                                    =======   =======    =======   =======


                        HASBRO, INC. AND SUBSIDIARIES
       Condensed Notes to Consolidated Financial Statements (continued)

                            (Thousands of Dollars)
                                  (Unaudited)


(6) On December 7, 1999, the Company announced a program to further
consolidate manufacturing and sourcing activities and product lines, as well
as streamline and further regionalize marketing, sales and research and
development activities worldwide. Costs associated with this consolidation
program, recorded in the fourth quarter of 1999, amounted to $141,575, of
which $64,232 was recorded as a restructuring charge and $77,343 in various
other operating expense categories.

The significant components of the plan included the closing of two factories,
one in Mexico and one in the United Kingdom, reducing capacity at the
remaining three factories, shifting production to third party manufacturers in
the Far East and further consolidation and regionalization of the
International marketing and sales structure. Actions under the plan commenced
in December 1999 and are expected to be completed by the end of fiscal 2000.
There have been no material changes to the plan to date. The restructuring
charge of $64,232 represented approximately $38,700 of cash charges for
severance benefits for termination of approximately 2,200 employees, which
will be disbursed over the employee's entitlement period, $14,300 of cash
charges for lease and facility closing costs to be expended over the
contractual lease terms and closing process and non-cash charges of $11,200
for fixed asset write-offs, arising primarily in the manufacturing area. Of
the cash amount, approximately $4,700 was paid prior to December 26, 1999 for
severance benefits relating to approximately 200 employees terminated prior to
year-end. Non-cash charges relating to fixed asset write-offs were credited to
the respective line items on the balance sheet. Details of activity in the
restructuring plan for the nine month period follow:

                                         Balance at              Balance at
                                           Dec. 26,                Oct. 1,
                                             1999    Activity       2000
                                           -------   --------     -------
Severance                                $  34,000    (21,000)     13,000
Lease and facility closing costs            14,300     (6,300)      8,000
                                           -------    -------     -------
                                         $  48,300    (27,300)     21,000
                                           =======    =======     =======
Employee redundancies by area:
  Manufacturing and sourcing activities      1,700     (1,600)        100
  Research, product development, marketing
   sales and administration                    300       (260)         40
                                           -------    -------     -------
                                             2,000     (1,860)        140
                                           =======    =======     =======

The remaining severance liability represents cash charges for severance
benefits for employees not yet terminated and amounts for employees made
redundant which will be disbursed over the employee's entitlement period. The

                         HASBRO, INC. AND SUBSIDIARIES
       Condensed Notes to Consolidated Financial Statements (continued)

                            (Thousands of Dollars)
                                  (Unaudited)


balance in lease and facility closing costs will be expended over the
contractual lease term and closing process.


(7)  On October 12, 2000, the Company announced a plan, approved by its Board
of Directors, to consolidate its US Toy group into Rhode Island. The major
components of the plan include the closing of offices in Cincinnati, Ohio and
San Francisco, California, office and warehouse space in Napa, California, and
the shifting of certain design and engineering functions to the Far East.
These locations are expected to be closed by the end of the year. In
addition,,  the Company plans significant overhead reductions in other areas
to reduce costs in the product development, sales and marketing, and
administrative functions across the Company and to further improve the product
development process.

Together, these plans will result in expected charges, primarily in the fourth
quarter of 2000, of approximately $70,000, which is expected to consist of
$50,000 in severance benefits and $20,000 in lease and facility closing costs.
Included in the $70,000 are non-cash charges of $6,000 relating to fixed asset
write-offs. The plans anticipate the redundancy of approximately 500 to 550
employees worldwide in the product development, sales and marketing and
administrative functions.

In addition, results from the important fourth quarter holiday selling season
impact the Company's assessment of its ongoing and future product lines. As
the Company has not completed this assessment, the impact of discontinued
product lines and product lines with reduced expectations has not yet been
determined. This assessment is expected to be completed in the fourth quarter
of 2000 and may result in additional charges, primarily non-cash.


                         HASBRO, INC. AND SUBSIDIARIES
               Management's Discussion and Analysis of Financial
                      Condition and Results of Operations

                            (Thousands of dollars)

NET EARNINGS AND SEGMENT RESULTS
- --------------------------------
In the third quarter and nine months ended October 1, 2000, net earnings were
$13,832 and $35,459, respectively, compared to 1999 levels of $85,170 and
$131,254. Diluted earnings per share for the third quarter was $.08 in 2000
and $.43 in 1999. For the nine months of 2000, diluted earnings per share was
$.20, compared to $.64 for the same period in 1999. Net revenues and operating
profits of the Games segment increased in both the third quarter and nine
months of 2000 over comparable 1999 levels. The revenue increase in the
quarter and nine months was due primarily to trading card and role playing
games associated with the Company's September 30, 1999 acquisition of Wizards
of the Coast, Inc. (Wizards). With the contribution of revenues from Wizards,
Games segment operating profit for the nine months of 2000 was $204,168,
compared to $95,224 for the comparable period in 1999. In the quarter, the
increase was modest, with operating profit of $57,013 compared to $56,592 for
the year ago period. Games segment quarter and nine month operating profits
were negatively impacted by a loss from interactive software games of $22,431
and $79,303, respectively, as well as a decline in FURBY revenues from a year
ago. Games segment operating profit also reflects expenses of approximately
$6,000 in the third quarter and $13,000 for the nine months on Games.com, the
Company's internet games initiative. US Toy segment revenues declined by 41%
and 51% in the quarter and nine months from a year ago, and reflected 2000
operating losses for the quarter and nine months of $21,922 and $74,349,
respectively. Revenues and operating profit in the International segment
increased in local currencies over the quarter and nine months of 1999. A more
detailed discussion of items impacting consolidated net earnings and segment
results follows.

NET REVENUES
- ------------
Net revenues for the third quarter of 2000 decreased approximately 2% to
$1,072,617 from $1,098,179 in the third quarter of 1999. This decrease is due
to reduced revenues, primarily in the US Toy segment, from STAR WARS product
relating to the May, 1999 theatrical release of STAR WARS: EPISODE I: THE
PHANTOM MENACE. More than offsetting this reduction was the addition of
revenues across all segments resulting from increased shipments of POKEMON
related product over 1999. In the Games segment, this includes trading card
games of Wizards, acquired in the fourth quarter of 1999, and electronic
games. In addition to POKEMON games, revenue from other trading card and role
playing games and the addition of new interactive plush products more than
offset the decline in FURBY revenues over the comparable quarter in 1999.
Third quarter revenues from interactive software games increased 74% to
$59,300 from $34,000 in 1999. The strong US dollar negatively impacted
worldwide net revenues by $33,300 in the third quarter of 2000 compared to the
third quarter of 1999. In addition to the third quarter factors above, the
2000 nine month amounts reflect a negative impact of approximately $66,500
from the stronger U.S. dollar.  Continued strength of the U.S. dollar will
have a continued negative impact on reported worldwide revenues of the
Company.

                         HASBRO, INC. AND SUBSIDIARIES
               Management's Discussion and Analysis of Financial
                Condition and Results of Operations (continued)

                            (Thousands of dollars)


GROSS PROFIT
- ------------
The Company's gross profit margins for the quarter and nine months of 2000
were 57.2% and 59.7%, respectively, compared to 1999 amounts of 59.6% and
60.4%. The decrease in margins primarily reflects product mix, such as lower
revenues generated from entertainment based properties, such as STAR WARS
related products, and FURBY which carry higher gross margins. Also impacting
gross margins were higher oil prices, which impact resin prices and
transportation costs.  Partially offsetting these decreases are the higher
gross margins associated with trading card games from Wizards. Continued high
oil prices will continue to have a negative impact on the Company's gross
profit margins in 2000.

EXPENSES
- --------
Amortization expense for both periods of 2000 was greater than in the
comparable periods of 1999, reflecting the Games segment fourth quarter 1999
acquisition of Wizards.

Royalties, research and development expenses for the quarter and year to date
decreased in both amount and as a percentage of net revenues from comparable
1999 levels. The royalty component decreased in dollars and was a comparable
percentage of net revenues in the quarter.  For the nine months, royalties
decreased in both amount and as a percentage of net revenues, principally
reflecting decreased volumes of STAR WARS products, primarily in the US Toy
segment, and FURBY in the Games segment.  This decrease was somewhat offset by
royalties incurred across all segments relating to POKEMON products. Revenues
derived from entertainment based properties, such as STAR WARS and POKEMON,
and their corresponding royalties, while continuous over the life of a
contract, are generally higher in amount in the year a theatrical release
takes place. It is anticipated that operating profit will also generally be
higher in these years. The degree to which revenues, royalties and operating
profits fluctuate is influenced not only by theatrical release dates, but by
video release dates as well.  Research and development, at $58,414 for the
2000 third quarter decreased in both dollars and as a percentage of net
revenues from the 1999 amount of $62,022. For the nine months ended October
2000, research and development expenses increased modestly in dollars to
$156,991 from the 1999 amount of $156,110.

Advertising expense in the third quarter of 2000 increased in dollars and as a
percentage of net revenues to $134,631 from the 1999 amount of $117,567. The
increase in the quarter is largely due to the mix of more highly advertised
products on a base of lower net revenues primarily in the US Toy segment,
compared to the comparable quarter of 1999.  For the nine months ended October
2000, advertising expense decreased in dollars and as a percentage of net
revenues to $281,722 from $299,925 in the comparable period of 1999.


                         HASBRO, INC. AND SUBSIDIARIES
               Management's Discussion and Analysis of Financial
                Condition and Results of Operations (continued)

                            (Thousands of dollars)


Selling, distribution and administration expenses, which are largely fixed,
increased in amount and as a percentage of net revenues in both the third
quarter and nine months of 2000 from comparable 1999 levels.  The increase in
amount is due primarily to the Games segment's fourth quarter 1999 acquisition
of Wizards, which has higher selling, distribution and administrative costs
associated with its retail stores and worldwide trading card and role-playing
game tournament sponsorship.

NONOPERATING (INCOME) EXPENSE
- -----------------------------
Interest expense during the third quarter and nine months of 1999 was $30,565
and $80,206, respectively, compared with $19,190 and $44,788 in 1999.  This
increase reflects costs associated with borrowing requirements to fund the
Company's 1998 acquisitions, the fourth quarter 1999 acquisition of Wizards,
and the Company's share repurchase program, all partially offset by the
availability of funds generated from operations.  The decrease in other income
was due primarily to foreign currency.

INCOME TAXES
- ------------
Income tax expense as a percentage of pretax earnings for the third quarter
and nine months of 2000 was 31.0%, unchanged from the full year 1999 rate.

OTHER INFORMATION
- -----------------
During the fourth quarter of 1999, the Games segment acquired Wizards. The
trading card and role playing games associated with that acquisition are a
year round business, less dependent on the fourth quarter holiday retail
selling season than traditional toys and other forms of games. Also in 1999,
the second quarter and first half were positively impacted by the May 19, 1999
theatrical release of STAR WARS: EPISODE 1: THE PHANTOM MENACE. Despite these
factors, the Company continues to expect the second half of the year and
within that half, the fourth quarter, to be more significant to its overall
ongoing full year business. This concentration increases the risk of (a)
underproduction of popular items, (b) overproduction of less popular items and
(c) failure to achieve tight and compressed shipping schedules. The business
of the Company is characterized by customer order patterns which vary from
year to year largely because of differences in the degree of consumer
acceptance of a product line, product availability, marketing strategies,
inventory levels, policies of retailers and differences in overall economic
conditions. The trend of retailers over the past few years has been to
purchase product within or close to the fourth quarter holiday consumer
selling season, which includes Christmas. Quick response inventory management
practices now being used result in fewer orders being placed in advance of
shipment and more orders, when placed, for immediate delivery. Consequently,
unshipped orders on any date in a given year are not necessarily indicative of
sales for the entire year. In addition, it is a general industry practice that

                         HASBRO, INC. AND SUBSIDIARIES
               Management's Discussion and Analysis of Financial
                Condition and Results of Operations (continued)

                            (Thousands of dollars)


orders are subject to amendment or cancellation by customers prior to
shipment.  At October 1, 2000 and September 26, 1999 the Company's unshipped
orders were approximately $723,000 and $818,000, respectively. In addition to
the above factors, many of the Company's new product introductions are planned
for the latter part of the year. For those planned new products containing
electronic components, a continued worldwide shortage of electronic components
may impact the Company's ability to meet customer demands for those products.

On December 7, 1999, the Company announced a program to further consolidate
manufacturing and sourcing activities and product lines, as well as streamline
and further regionalize marketing, sales and research and development
activities worldwide. The plan resulted in pre-tax cost savings of
approximately $4,200 and $10,300, respectively, in the third quarter and nine
months of 2000. The components of activity in the plan and the balance
remaining at the end of the quarter are as follows:

                                         Balance at              Balance at
                                          Dec. 26,                 Oct. 1
                                             1999    Activity       2000
                                           -------   --------     -------
Severance                                   34,000    (21,000)     13,000
Lease and facility closing costs            14,300     (6,300)      8,000
                                           -------    -------     -------
                                         $  48,300    (27,300)     21,000
                                           =======    =======     =======
Employee redundancies by area:
  Manufacturing and sourcing activities      1,700     (1,600)        100
  Research, product development, marketing
   sales and administration                    300       (260)         40
                                           -------    -------     -------
                                             2,000     (1,860)        140
                                           =======    =======     =======

The significant components of the plan included the closing of two factories,
in Mexico and the United Kingdom, the reduction of capacity at the remaining
three factories, the shift of production to third party manufacturers in the
Far East and further consolidation and regionalization of the International
marketing and sales structure. Actions under the plan commenced in December
1999 and are expected to be completed by the end of fiscal 2000. The remaining
severance liability represents cash charges for severance benefits for
employees not yet terminated and amounts for employees made redundant which
will be disbursed over the employee's entitlement period. The balance in lease
and facility closing costs will be expended over the contractual lease terms
and closing process. The Company expects to generate pre-tax savings of
approximately $16,000 in 2000 and $23,000 per year thereafter from these
actions.

                         HASBRO, INC. AND SUBSIDIARIES
               Management's Discussion and Analysis of Financial
                Condition and Results of Operations (continued)

                            (Thousands of dollars)


On October 12, 2000, the Company announced a plan, approved by its Board of
Directors, to consolidate its US Toy group into Rhode Island. The major
components of the plan include the closing of offices in Cincinnati, Ohio and
San Francisco, California, office and warehouse space in Napa, California, and
the shifting of certain design and engineering functions to the Far East.
These locations are expected to be closed by the end of the year. In addition,
the Company plans significant overhead reductions in other areas to reduce
costs in the product development, sales and marketing, and administrative
functions across the Company and to further improve the product development
process.

Together, these plans will result in expected charges, primarily in the fourth
quarter of 2000, of approximately $70,000, which is expected to consist of
$50,000 in severance benefits and $20,000 in lease and facility closing costs.
Included in the $70,000 are non-cash charges of $6,000 relating to fixed asset
write-offs. The plans anticipate the redundancy of approximately 500 to 550
employees worldwide in the product development, sales and marketing and
administrative functions.

In addition, results from the important fourth quarter holiday selling season
impact the Company's assessment of its ongoing and future product lines. As
the Company has not completed this assessment, the impact of discontinued
product lines and product lines with reduced expectations has not yet been
determined. This assessment is expected to be completed in the fourth quarter
of 2000 and may result in additional charges, primarily non-cash.

LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The seasonality of the Company's business coupled with certain customer
incentives, mainly in the form of extended payment terms, result in the
interim cash flow statements not being representative of that which may be
expected for the full year. Historically, the majority of the Company's cash
collections occur late in the fourth quarter and early in the first quarter of
the subsequent year. As receivables are collected, cash flow from operations
becomes positive and is used to repay a significant portion of outstanding
short-term debt.


                         HASBRO, INC. AND SUBSIDIARIES
               Management's Discussion and Analysis of Financial
                Condition and Results of Operations (continued)

                            (Thousands of dollars)


Because of this seasonality in cash flow, management believes that on an
interim basis, rather than discussing only its cash flows, a better
understanding of its liquidity and capital resources can be obtained through a
discussion of the various balance sheet categories as well. Also, as several
of the major categories, including cash and cash equivalents, accounts
receivable, inventories and short-term borrowings, fluctuate significantly
from quarter to quarter, again due to the seasonality of its business,
management believes that a comparison to the comparable period in the prior
year is generally more meaningful than a comparison to the prior year-end.

Cash flows utilized by operating activities were $70,470 and $305,664 for the
nine months ended October 1, 2000 and September 26, 1999, respectively.
Receivables were $889,090 at October 1, 2000 compared to $1,167,660 at
September 26, 1999, while days sales outstanding improved to 75 days from 96
days last year.  The decrease reflects the shorter payment terms associated
with trading card games and higher levels of cash collections in the quarter
than in the comparable period of the prior year. Inventories increased 23%
from 1999 levels, primarily reflecting the Company's fourth quarter 1999
acquisition of Wizards. In addition to finished product, Wizards maintains a
higher level of raw materials and work in process than the Company's pre-
existing toys and games, due to the special paper and printing requirements of
trading card games.  Prepaid expenses decreased to $304,454 from $443,344,
reflecting a reduction in prepaid royalties existing at September 26, 1999,
offset in part by the acquisition of Wizards. Trade payables and accrued
liabilities increased to $1,029,687 from $873,959 in 1999. The increase
primarily relates to the acquisition of Wizards.

Property, plant and equipment and other assets, as a group, increased from
their 1999 levels, primarily reflecting the Company's fourth quarter 1999
acquisition of Wizards, partially offset by assets of approximately $76,200
written off or written down to fair market value in connection with the
Company's 1999 consolidation program, and twelve additional months of
depreciation and amortization expense.

Net borrowings (short and long-term borrowings less cash and cash equivalents)
increased to $1,543,891 at October 1, 2000 from $1,188,362 at September 26,
1999.  This reflects the use of approximately $850,000 of cash in the prior
twelve months for investments and acquisitions and the Company's continued
repurchase of its common stock both of which are traditionally funded through
a combination of cash provided by operating activities and short and long-term
borrowings. On March 15, 2000, the Company issued $750 million of debt
securities in the form of $550 million of 7.95% notes due March 15, 2003 and

                         HASBRO, INC. AND SUBSIDIARIES
               Management's Discussion and Analysis of Financial
                Condition and Results of Operations (continued)

                            (Thousands of dollars)


$200 million of 8.50% notes due March 15, 2006. The Company used the proceeds
of these notes to pay down short term debt primarily incurred in connection
with the acquisition of Wizards and the repurchase of shares of its common
stock, including a portion of the proceeds for the repurchase of shares under
a Modified Dutch Auction Tender Offer, which was initiated and completed in
the first six months of 2000. Included in short-term borrowings is $781 of
current installments of long-term debt.  At October 1, 2000, the Company had
committed unsecured lines of credit totaling approximately $715,000 available
to it. It also had available uncommitted lines approximating $601,000. The
Company believes that these amounts are adequate for its needs. Of these
available lines, approximately $590,000 was in use at October 1, 2000.

EURO CONVERSION
- ---------------
Certain member countries of the European Union established fixed conversion
rates between their existing currencies and the European Economic Monetary
Union common currency, or Euro. While the Euro was introduced on January 1,
1999, member countries will continue to use their existing currencies through
January 1, 2002, with the transition period for full conversion to the Euro
ending June 30, 2002. Transition to the Euro creates certain issues for the
Company with respect to upgrading information technology systems for 2002 full
use requirements, reassessing currency risk, product pricing, amending
business and financial contracts as well as processing tax and accounting
records. The Company has and will continue to address these transition issues
and does not expect the Euro conversion to have a material effect on the
results of operations or financial condition of the Company.

FORWARD-LOOKING STATEMENTS
- --------------------------
This discussion contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements
include, without limitation, any statement that may predict, forecast,
indicate or imply future results, performance or achievements, and may contain
the use of forward-looking words or phrases such as "anticipate," "believe,"
"could," "expect," "intend," "may," "planned," "potential," "should," "will,"
and "would" or any variations of such words with similar meanings. These
forward-looking statements are inherently subject to known and unknown risks
and uncertainties. A variety of factors could cause actual results and
experience to differ materially from the anticipated results or other
expectations expressed in the forward-looking statements. These factors
include, but are not limited to, the Company's ability to manufacture, source
and ship new and continuing product in a timely manner and customers' and
consumers' acceptance of those products at prices that will be sufficient to
profitably recover development, manufacturing, marketing, royalty and other
costs of the products; economic conditions including higher fuel prices and
availability of electronic components, currency fluctuations and government
regulation and other actions in the various markets in which the Company

                         HASBRO, INC. AND SUBSIDIARIES
              Management's Discussion and Analysis of Financial
               Condition and Results of Operations, Continued

                            (Thousands of dollars)


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 the 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; 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;
the assessment by the Company of its 2001 product line and of the impact of
discontinued product lines and product lines with reduced expectations has not
been completed and charges, primarily non-cash, are likely to be incurred when
the assessment is completed; the impact of market conditions, third party
actions or approvals and the impact of competition that could delay or
increase the cost of implementation of the consolidation program or alter
planned actions and reduce actual results; the risk that anticipated benefits
of acquisitions may not occur or be delayed or reduced in their realization;
with respect to the Company's online game site initiative, in addition to the
factors set forth above, technical difficulties in adapting games to online
format and establishing the online game site that could delay or increase the
cost of the site becoming operational; the acceptance by customers of the
games and other products and services to be offered at the online game site;
competition from other online game sites and other game playing formats; and
the fact that online game revenues may not be sufficient to cover the
significant advertising and other expenditures required or the support,
service and product enhancement demands of online users; and other risks and
uncertainties as are or may be detailed from time to time in the Company's
public announcements and filings with the SEC such as Forms 8-K, 10-Q and 10-
K. The Company undertakes no obligation to revise the forward-looking
statements contained in this discussion or to update the forward-looking
statements to reflect events or circumstances occurring after the date of this
discussion.

RECENT INFORMATION
- ------------------
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities (SFAS 133). SFAS 133 was amended by SFAS
138 in June 2000. The Company will adopt this statement on January 1, 2001.
SFAS 133 will require that the Company record all derivatives, such as foreign
exchange contracts, in the balance sheet at fair value.  Changes in derivative
fair values will either be recognized in earnings as an offset to the changes
in the fair value of the related hedged assets, liabilities and firm
commitments or, for forecasted transactions, deferred and recorded as a
component of other shareholders' equity until the hedged transactions occur
and are recognized in earnings.  The ineffective portion of a hedging

                         HASBRO, INC. AND SUBSIDIARIES
              Management's Discussion and Analysis of Financial
               Condition and Results of Operations, Continued

                            (Thousands of dollars)


derivative's change in fair value will be immediately recognized in earnings.
The impact of SFAS 133 on the Company's financial statements will depend on
several factors, including interpretive guidance issued from the FASB, the
extent of the Company's hedging activities and use of equity and other
financial derivatives, the Company's ability to forecast foreign currency
transactions compared to actual results and the effectiveness of the hedging
instruments used. However, the Company does not believe adoption of SFAS 133
will have a material impact on either the Company's financial condition or its
results of operations.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB
101) which addresses certain criteria for revenue recognition. SAB 101, as
amended by SAB 101A and SAB 101B, outlines the criteria that must be met to
recognize revenue and provides guidance for disclosures related to revenue
recognition policies. The Company must implement any applicable provisions of
SAB 101 no later than the fourth quarter of the fiscal year ending December
31, 2000. Management is currently evaluating the effects of SAB 101 on the
Company's financial statements and current disclosures.

In September 2000, the Emerging Issues Task Force reached a consensus on Issue
00-10, Accounting for Shipping and Handling Fees and Costs (Issue 00-10).
Issue 00-10, requires that all amounts billed to customers related to shipping
and handling should be classified as revenues. In addition, Issue 00-10,
specifies that the classification of shipping and handling cost is an
accounting policy decision that should be disclosed pursuant to APB 22,
Disclosure of Accounting Policies. A company may adopt a policy of including
shipping and handling costs in cost of sales. If shipping and handling costs
are not included in cost of sales, a company should disclose both the amount
of such cost and the line item on the income statement which includes those
costs. Issue 00-10 will be effective for the Company no later than the fourth
quarter of the fiscal year ending December 31, 2000. The Company currently
estimates the impact of adopting Issue 00-10 on Net Revenues and on Selling,
Distribution and Administration Expense to be immaterial for 2000 and 1999.


PART II.  Other Information

Item 1.   Legal Proceedings.

           In October 2000, Galoob Toys, Inc. (Galoob), which was acquired by
           the Company in the fourth quarter of 1998, entered into a
           settlement agreement order with the U.S. Consumer Product Safety
           Commission (CPSC) relating to Galoob SKY DANCERS product, which was
           subject to a voluntary recall by Galoob in 2000.  The CPSC alleged
           that Galoob failed to timely report incident data in connection
           with SKY DANCERS.  Following the acquisition, Galoob promptly
           reported the data to the CPSC. Without admitting any liability or
           wrongdoing or that the recalled product was defective or dangerous,
           Galoob, to avoid incurring additional legal costs and expenses,
           agreed to pay a $400,000 civil penalty in connection with the
           matter.

Item 2.   Changes in Securities.

           On September 20, 2000, the Company issued two warrants to
           purchase 1,000,000 and 700,000 shares of common stock, par value
           $.50 per share, of the Company, at exercise prices of $15.70 and
           $18.84 per share, respectively, to a subsidiary of The Walt Disney
           Company, in connection with, and as partial consideration for, a
           broad multi-year corporate alliance encompassing the licensing of
           Disney film and television properties.  Under terms of the
           agreement, the Company will have the right to develop and market
           toys and games associated with upcoming Disney-branded film
           properties, beginning with "MONSTERS, INC.," a Disney/Pixar
           animated feature film scheduled for release in fall 2001. One half
           of each warrant is exercisable 30 days after the U.S. theatrical
           release of the second film and the remaining half 30 days after the
           release of the fourth film.  The warrants expire in December 2006,
           subject to extension under certain circumstances.

Item 3.   Defaults Upon Senior Securities.

           None.

Item 4.   Submission of Matters to a Vote of Security Holders.

           None.

Item 5.   Other Information

           None.

Item 6.   Exhibits and Reports on Form 8-K.

           (a)  Exhibits.

            11.1  Computation of Earnings Per Common Share - Nine Months
                  Ended October 1, 2000 and September 26, 1999.

            11.2  Computation of Earnings Per Common Share - Quarter
                  Ended October 1, 2000 and September 26, 1999.

            12    Computation of Ratio of Earnings to Fixed Charges -
                  Nine Months and Quarter Ended October 1, 2000.

            27    Article 5 Financial Data Schedule - Third Quarter 2000.

           (b)  Reports on Form 8-K

            A Current Report on Form 8-K, dated October 12, 2000, was filed
            by the Company and included the Press Release, dated October 12,
            2000, announcing the Company's expectation of second half results
            and plans to improve profitability.

            A Current Report on Form 8-K, dated October 19, 2000, was filed
            by the Company and included the Press Release, dated October 19,
            2000, announcing the Company's results for the current quarter.
            Consolidated Statements of Earnings (without notes) for the
            quarters and nine months ended October 1, 2000 and September 26,
            1999 and Consolidated Condensed Balance Sheets (without notes)
            as of said dates were also filed.



                                  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 thereunto duly authorized.

                                                      HASBRO, INC.
                                                      ------------
                                                      (Registrant)


Date: October 30, 2000                       By:  /s/ Alfred J. Verrecchia
                                                 -------------------------
                                             President and
                                             Chief Operating Officer and
                                             Chief Financial Officer
                                             (Duly Authorized Officer and
                                             Principal Financial Officer)




                       HASBRO, INC. AND SUBSIDIARIES
                       Quarterly Report on Form 10-Q
                   For the Period Ended October 1, 2000


                               Exhibit Index


Exhibit
  No.                            Exhibits
- -------                          --------

  11.1        Computation of Earnings Per Common Share -
               Nine Months Ended October 1, 2000 and September 26, 1999

  11.2        Computation of Earnings Per Common Share -
               Quarter Ended October 1, 2000 and September 26, 1999

  12          Computation of Ratio of Earnings to Fixed Charges -
               Nine Months and Quarter Ended October 1, 2000

  27          Article 5 Financial Data Schedule - Third Quarter 2000

                                                                 EXHIBIT 11.1

                        HASBRO, INC. AND SUBSIDIARIES
                  Computation of Earnings Per Common Share
              Nine Months Ended October 1, 2000 and September 26, 1999

           (Thousands of Dollars and Shares Except Per Share Data)





                                            2000                 1999
                                      -----------------    -----------------
                                       Basic    Diluted     Basic    Diluted
                                      -------   -------    -------   -------

Net earnings                         $ 35,459    35,459    131,254   131,254
                                      =======   =======    =======   =======

Weighted average number of shares
 Outstanding:
  Outstanding at beginning of
   period                             192,984   192,984    196,175   196,175
  Exercise of stock options
   and warrants:
    Actual                                 79        79      2,641     2,641
    Assumed                                 -       701          -     8,726
  Purchase of common stock            (15,126)  (15,126)    (3,536)   (3,536)
                                      -------   -------    -------   -------
    Total                             177,937   178,638    195,280   204,006
                                      =======   =======    =======   =======

Per common share:
  Net earnings                       $    .20       .20        .67       .64
                                      =======   =======    =======   =======

                                                                 EXHIBIT 11.2

                        HASBRO, INC. AND SUBSIDIARIES
                  Computation of Earnings Per Common Share
              Quarter Ended October 1, 2000 and September 26, 1999

           (Thousands of Dollars and Shares Except Per Share Data)





                                            2000                 1999
                                      -----------------    -----------------
                                       Basic    Diluted     Basic    Diluted
                                      -------   -------    -------   -------

Net earnings                         $ 13,832    13,832     85,170    85,170
                                      =======   =======    =======   =======

Weighted average number of shares
 Outstanding:
  Outstanding at beginning of
   period                             171,709   171,709    194,834   194,834
  Exercise of stock options
   and warrants:
    Actual                                 23        23        131       131
    Assumed                                 -       209          -     5,732
  Purchase of common stock                  -         -       (353)     (353)
                                      -------   -------    -------   -------
    Total                             171,732   171,941    194,612   200,344
                                      =======   =======    =======   =======

Per common share:
  Net earnings                       $    .08       .08        .44       .43
                                      =======   =======    =======   =======


                                                                 EXHIBIT 12

                         HASBRO, INC. AND SUBSIDIARIES
               Computation of Ratio of Earnings to Fixed Charges
                   Nine Months and Quarter Ended October 1, 2000

(Thousands of Dollars)



                                                      Nine
                                                     Months        Quarter
                                                    -------        -------

Earnings available for fixed charges:
  Net earnings                                     $ 35,459         13,832
  Add:
    Fixed charges                                    94,870         36,047
    Income taxes                                     15,931          6,214
                                                    -------        -------
      Total                                        $146,260         56,093
                                                    =======        =======


Fixed Charges:
  Interest on long-term debt                       $ 53,115         21,241
  Other interest charges                             27,091          9,324
  Amortization of debt expense				    1,213			 510
  Rental expense representative
   of interest factor                                13,451          4,972
                                                    -------        -------
      Total                                        $ 94,870         36,047
                                                    =======        =======

Ratio of earnings to fixed charges                     1.54           1.56
                                                    =======        =======

  

 5
 1000

                             
                   9-MOS
                          DEC-31-2000
                                OCT-1-2000
                                         164,307
                                         0
                                  953,190
                                    64,100
                                    540,307
                             2,036,355
                                         626,784
                                 313,483
                               4,370,586
                        1,619,610
                                      1,168,764
                                0
                                          0
                                       104,847
                                   1,386,478
                 4,370,586
                                      2,624,471
                             2,624,471
                                        1,057,879
                                1,057,879
                               806,468
                                 3,754
                              80,206
                                 51,390
                                    15,931
                             35,459
                                       0
                                      0
                                            0
                                    35,459
                                        .20
                                      .20