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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 22, 2002
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HASBRO, INC.
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(Name of Registrant)
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)
Item 5. Other Events and Regulation FD Disclosure
The July 22, 2002 Press Release of the Registrant attached
hereto as EXHIBIT 99 is incorporated herein by reference.
Item 7(c) Exhibits
99 Press Release, dated July 22, 2002, of Hasbro, Inc.
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.
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(Registrant)
Date: July 22, 2002 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 22, 2002
Exhibit Index
Exhibit
No. Exhibits
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99 Press Release, dated July 22, 2002, of Hasbro, Inc.
EXHIBIT 99
For Immediate Release Contact:Karen A. Warren (Investor Relations)
July 22, 2002 401-727-5401
Wayne S. Charness (News Media)
401-727-5983
HASBRO REPORTS SECOND QUARTER RESULTS
Pawtucket, RI (July 22, 2002) - Hasbro, Inc. (NYSE: HAS) today
reported results for its second quarter ended June 30, 2002.
Worldwide net revenues were $546.0 million, up 7% from $511.0 million
a year ago. Operating profits were $14.0 million, compared to a loss
of $41 thousand last year. The net loss for the quarter was $25.9
million, compared to a loss of $18.3 million last year, and the loss
per diluted share was $0.15, compared to a loss of $0.11 per diluted
share in 2001. The results include a non-cash, after- tax charge of
$28.6 million or $0.17 per diluted share related to a decline in the
value of the Company's investment in Infogrames Entertainment SA. The
Company also recorded a non-cash charge as a cumulative effect of a
change in accounting principle related to the adoption of FAS 142
"Goodwill and Other Intangibles," as detailed later in the release.
The Company reported second quarter Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) of $60.1 million, compared to
$51.3 million in 2001.
For the first half, worldwide net revenues were $998.3 million,
compared to $974.3 million a year ago. Net loss and loss per diluted
share, before a change in accounting principle, in the first half was
$42.9 million and $0.25, respectively, compared to a loss, before a
change in accounting principle, of $42.3 million and $0.25 last year.
First half EBITDA was $92.1 million, compared to $85.8 million last
year.
"We are particularly gratified to see the strong increase in
revenue and the improvement in operating profit this quarter. Hasbro
enters the second half of the year well positioned and on track to
achieve our financial goals for the year," said Alan G. Hassenfeld,
Chairman and Chief Executive Officer.
"Quarterly revenue growth was driven in part by an 18% year-over-
year increase in the Company's U.S. Toys segment, led by strong
product lines including TRANSFORMERS, G.I. JOE, STAR WARS, PLAYSKOOL,
NERF and ZOIDS," continued Hassenfeld.
"We are enthusiastic about the second half of the year because we
have some great new products, augmenting what we believe to be an
already strong product line. We will be supporting the line with
promotional programs throughout the fall and holiday season. Going
forward, we continue to be focused on growing and leveraging our core
brands, which are our most important asset in terms of building
shareholder value, as well as our continued focus on expense
reductions and our balance sheet," concluded Hassenfeld.
In the U.S. Toys segment, revenues increased in the quarter and
the segment was profitable compared to a loss in the prior year.
International segment revenue for the quarter also increased and the
segment pre-tax loss improved year over year. The Games segment
revenue declined for the quarter, primarily due to a reduction in
licensed trading card games, offsetting an increase in board game
shipments. Retail sales data from our top five accounts indicate that
the traditional board games business is continuing to perform well.
In addition, the Games segment was profitable for the quarter,
although not quite as profitable as in the comparable period last
year.
"We are pleased with the progress we have made this year in
implementing key strategic initiatives as we further align our
businesses and run them more efficiently," said Alfred J. Verrecchia,
President and Chief Operating Officer. "Our strategy of focusing on
cost reductions, cash management and growing our core brands is
generating results, laying the foundation for our continued success."
As mentioned previously in the release, the Company had a non-
cash charge in the second quarter related to an investment in
Infogrames Entertainment SA, which was acquired as a result of the
sale of Hasbro Interactive and Games.com. The net proceeds from the
sale included approximately 2.9 million shares of Infogrames
Entertainment SA common stock. Based on the decline in Infogrames
Entertainment SA stock, the Company has written down the investment by
$28.6 million after-tax.
"When we sold Hasbro Interactive and Games.com we eliminated a
business that incurred significant operating losses for Hasbro.
Although we are disappointed in the stock price performance of
Infogrames Entertainment SA, we believe they are a good strategic long-
term partner that will bring value to our brands in the digital world.
In addition, they are providing a guaranteed royalty income stream to
Hasbro over the next 14 years," concluded Verrecchia.
The Company recorded a $245.7 million, net of tax or $1.42 per
diluted share non-cash charge as a cumulative effect of a change in
accounting principle related to the adoption of FAS 142 "Goodwill and
Other Intangibles." FAS 142 requires that goodwill and intangible
assets with indefinite lives be tested for impairment annually rather
than amortized over time. The impaired goodwill is entirely related
to the U.S. Toys Segment. This charge is being made retroactively to
the beginning of the year and will impact year to date results.
Amortization of goodwill and intangible assets with indefinite lives
in the second quarter of 2001 amounted to $12.7 million. The
elimination of this amortization and its related tax effect would have
resulted in a net loss of $10.4 million in the second quarter of 2001.
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 conditions,
including higher fuel prices, currency fluctuations and government
regulation and other actions 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; 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.
EBITDA (earnings before interest, taxes, depreciation and
amortization) represents operating profit (loss) excluding,
restructuring, depreciation and all amortization. EBITDA is not
adjusted for all noncash expenses or for working capital, capital
expenditures or other investment requirements and, accordingly, is not
necessarily indicative of amounts that may be available for
discretionary uses. Thus, EBITDA should not be considered in isolation
or as a substitute for net earnings or cash provided by operating
activities, each prepared in accordance with generally accepted
accounting principles, when measuring Hasbro's profitability or
liquidity as more fully discussed in the Company's financial
statements and filings with the Securities and Exchange Commission.
# # #
(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 30, July 1, June 30, July 1,
2002 2001 2002 2001
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Net Revenues $ 545,990 510,971 $ 998,257 974,257
Cost of Sales 196,165 204,008 362,579 393,813
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Gross Profit 349,825 306,963 635,678 580,444
Amortization 22,766 28,862 44,215 58,283
Royalties 65,712 39,961 117,168 66,399
Research and Product Development 36,770 29,907 69,983 60,204
Advertising 58,507 51,065 105,396 98,678
Selling, Distribution and
Administration 152,069 157,209 291,260 311,028
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Operating Profit (Loss) 14,001 (41) 7,656 (14,148)
Interest Expense 18,317 25,321 37,859 51,211
Other (Income) Expense, Net 30,667 1,595 27,832 (3,170)
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Earnings (Loss) Before Income
Taxes and Cumulative Effect of
Accounting Change, Net of Tax (34,983) (26,957) (58,035) (62,189)
Income Taxes (9,095) (8,626) (15,089) (19,900)
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Earnings (Loss) before
Cumulative Effect of
Accounting Change (25,888) (18,331) (42,946) (42,289)
Cumulative Effect of Accounting
Change - - (245,732) (1,066)
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Net Earnings (Loss) $(25,888) $(18,331) $(288,678) $ (43,355)
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Per Common Share
Earnings (Loss) before Cumulative
Effect of Accounting Change
Basic and Diluted $ (.15) $ (.11) $ (.25) $ (.25)
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Cumulative Effect of Accounting
Change, Net of Tax
Basic and Diluted $ - $ - $ (1.42) $ (.01)
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Net Earnings (Loss)
Basic and Diluted $ (.15) $ (.11) $ (1.67) $ (.25)
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Cash Dividends Declared $ .03 $ .03 $ .06 $ .06
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Weighted Average Number of Shares
Basic and Diluted 172,723 172,023 172,659 171,978
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HASBRO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars)
June 30, July 1,
2002 2001
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Assets
Cash and Cash Equivalents $ 57,057 $ 56,819
Accounts Receivable, Net 479,443 399,402
Inventories 279,873 336,638
Other Current Assets 290,919 385,422
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Total Current Assets 1,107,292 1,178,281
Property, Plant and Equipment, Net 228,588 268,054
Other Assets 1,548,897 1,887,454
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Total Assets $2,884,777 $3,333,789
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Liabilities and Shareholders' Equity
Short-term Borrowings $ 17,066 $ 173,253
Current Installments of Long-Term Debt 277,928 1,729
Payables and Accrued Liabilities 553,208 616,841
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Total Current Liabilities 848,202 791,823
Long-term Debt 846,361 1,167,035
Deferred Liabilities 98,185 117,000
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Total Liabilities 1,792,748 2,075,858
Total Shareholders' Equity 1,092,029 1,257,931
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Total Liabilities and Shareholders' Equity $2,884,777 $3,333,789
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