UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 2013
Hasbro, Inc.
(Exact name of registrant as specified in its charter)
|
Rhode Island
|
|
1-6682
|
|
05-0155090
|
|
(State or other jurisdiction
of incorporation) |
|
(Commission File Number)
|
|
(IRS Employer
Identification No.) |
|
1027 Newport Ave., Pawtucket, Rhode Island
|
|
02862
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Registrant's telephone number, including area code: (401) 431-8697
____________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On November 5, 2013, Hasbro, Inc. (the "Company") filed its Quarterly Report on Form 10-Q for the quarter ended September 29, 2013 (the "10-Q"). As disclosed in the 10-Q, the Company reported certain adjustments made since its third quarter earnings announcement on October 21, 2013 relating to an arbitration award received by the Company on October 29, 2013, which affect its third quarter financial statements. The Company recognized a total charge during the third quarter related to this arbitration award of $75.5 million, of which $57.2 million was included in royalty expense and $18.3 million in interest expense. These adjustments decreased reported GAAP diluted earnings per share by $0.50 for the third quarter to $0.96 per share.
A copy of the financial information attached to the Company's October 21, 2013 earnings press release, updated to reflect the arbitration award charges, is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The Company has also revised certain slides in the slide presentation that accompanied its earnings call to reflect the arbitration award, which are attached hereto as Exhibit 99.2 and incorporated herein by reference.
The accompanying financial schedules include a financial measure, Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA"), that is considered a non-GAAP financial measure as defined under Securities and Exchange Commission ("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 GAAP. Management believes that EBITDA is one of the appropriate measures for 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 earnings or other measures of financial performance prepared in accordance with GAAP as more fully discussed in our financial statements and filings with the SEC. The EBITDA measures included in the financial schedules have been reconciled to the most directly comparable GAAP measures as is required under SEC rules regarding the use of non-GAAP financial measures.
The accompanying financial schedules and revised presentation slides also include the Company's 2013 and 2012 costs and expenses and operating profit excluding the impact of restructuring, pension settlement and the arbitration award charges, and 2013 and 2012 net earnings and diluted earnings per share excluding the above charges as well as a benefit from a tax settlement. Management believes that presenting this data excluding these charges and tax benefit assists investors understanding of the underlying performance of the results of operations.
As used herein, "GAAP" refers to accounting principles generally accepted in the United States of America.
The information furnished in this Item 2.02, including the Exhibits attached hereto, shall not be deemed "filed" for any purpose, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| 99.1 | Hasbro, Inc. Revised Earnings Release Financial Schedules for the Quarter Ended September 29, 2013. |
| 99.2 | Hasbro, Inc. Revised Conference Call Presentation Slides for the Quarter Ended September 29, 2013. |
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.
|
|
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HASBRO, INC.
|
|
|
|
|
|
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By:
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/s/ Deborah Thomas
|
|
|
Name:
|
Deborah Thomas
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
|
|
Date: November 5, 2013
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
99.1
99.2
|
|
Hasbro, Inc. Revised Earnings Release Financial Schedules for the Quarter Ended September 29, 2013.
Hasbro, Inc. Revised Conference Call Presentation Slides for the Quarter Ended September 29, 2013.
|
|
Exhibit 99.1
|
HASBRO, INC.
|
||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(Unaudited)
|
||||||||
|
(Thousands of Dollars)
|
Sept. 29, 2013
|
Sept. 30, 2012
|
||||||
|
ASSETS
|
||||||||
|
Cash and Cash Equivalents
|
$
|
588,668
|
$
|
696,733
|
||||
|
Accounts Receivable, Net
|
1,215,289
|
1,195,517
|
||||||
|
Inventories
|
447,113
|
463,433
|
||||||
|
Other Current Assets
|
346,215
|
263,297
|
||||||
|
Total Current Assets
|
2,597,285
|
2,618,980
|
||||||
|
Property, Plant and Equipment, Net
|
231,199
|
217,636
|
||||||
|
Other Assets
|
1,761,661
|
1,609,671
|
||||||
|
Total Assets
|
$
|
4,590,145
|
$
|
4,446,287
|
||||
|
|
||||||||
|
|
||||||||
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITY
|
||||||||
|
Short-term Borrowings
|
$
|
212,926
|
$
|
264,745
|
||||
|
Current Portion of Long-term Debt
|
430,424
|
-
|
||||||
|
Payables and Accrued Liabilities
|
1,005,529
|
861,874
|
||||||
|
Total Current Liabilities
|
1,648,879
|
1,126,619
|
||||||
|
Long-term Debt
|
959,895
|
1,398,906
|
||||||
|
Other Liabilities
|
410,672
|
393,873
|
||||||
|
Total Liabilities
|
3,019,446
|
2,919,398
|
||||||
|
Redeemable Noncontrolling Interests
|
47,269
|
-
|
||||||
|
Total Shareholders' Equity
|
1,523,430
|
1,526,889
|
||||||
|
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity
|
$
|
4,590,145
|
$
|
4,446,287
|
||||
|
HASBRO, INC.
|
||||||||||||||||||||||||||||||||
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CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||||||||||
|
|
Quarter Ended
|
Nine Months Ended
|
||||||||||||||||||||||||||||||
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(Thousands of Dollars and Shares Except Per Share Data)
|
Sept. 29, 2013
|
% Net Revenues
|
Sept. 30, 2012
|
% Net Revenues
|
Sept. 29, 2013
|
% Net Revenues
|
Sept. 30, 2012
|
% Net Revenues
|
||||||||||||||||||||||||
|
Net Revenues
|
$
|
1,370,348
|
100.0
|
%
|
$
|
1,345,137
|
100.0
|
%
|
$
|
2,800,384
|
100.0
|
%
|
$
|
2,805,454
|
100.0
|
%
|
||||||||||||||||
|
Costs and Expenses:
|
||||||||||||||||||||||||||||||||
|
Cost of Sales
|
568,582
|
41.5
|
%
|
586,516
|
43.6
|
%
|
1,136,724
|
40.6
|
%
|
1,155,536
|
41.2
|
%
|
||||||||||||||||||||
|
Royalties
|
143,947
|
10.5
|
%
|
89,224
|
6.6
|
%
|
243,568
|
8.8
|
%
|
212,551
|
7.6
|
%
|
||||||||||||||||||||
|
Product Development
|
59,366
|
4.3
|
%
|
48,472
|
3.6
|
%
|
154,455
|
5.5
|
%
|
143,511
|
5.1
|
%
|
||||||||||||||||||||
|
Advertising
|
136,487
|
10.0
|
%
|
134,997
|
10.0
|
%
|
277,278
|
9.9
|
%
|
279,339
|
10.0
|
%
|
||||||||||||||||||||
|
Amortization of Intangibles
|
14,224
|
1.0
|
%
|
12,636
|
0.9
|
%
|
37,677
|
1.3
|
%
|
34,792
|
1.2
|
%
|
||||||||||||||||||||
|
Program Product Cost Amortization
|
17,991
|
1.3
|
%
|
12,794
|
1.0
|
%
|
34,023
|
1.2
|
%
|
25,950
|
0.9
|
%
|
||||||||||||||||||||
|
Selling, Distribution and Administration
|
231,045
|
16.9
|
%
|
210,876
|
15.7
|
%
|
633,238
|
22.6
|
%
|
602,145
|
21.5
|
%
|
||||||||||||||||||||
|
Operating Profit
|
198,706
|
14.5
|
%
|
249,622
|
18.6
|
%
|
283,421
|
10.1
|
%
|
351,630
|
12.5
|
%
|
||||||||||||||||||||
|
Interest Expense
|
41,194
|
3.0
|
%
|
23,043
|
1.7
|
%
|
86,398
|
3.0
|
%
|
68,568
|
2.4
|
%
|
||||||||||||||||||||
|
Other (Income) Expense, Net
|
1,599
|
0.1
|
%
|
1,630
|
0.1
|
%
|
6,527
|
0.3
|
%
|
3,320
|
0.1
|
%
|
||||||||||||||||||||
|
Earnings before Income Taxes
|
155,913
|
11.4
|
%
|
224,949
|
16.8
|
%
|
190,496
|
6.8
|
%
|
279,742
|
10.0
|
%
|
||||||||||||||||||||
|
Income Taxes
|
30,070
|
2.2
|
%
|
60,097
|
4.5
|
%
|
34,844
|
1.2
|
%
|
74,042
|
2.7
|
%
|
||||||||||||||||||||
|
Net Earnings
|
125,843
|
9.2
|
%
|
164,852
|
12.3
|
%
|
155,652
|
5.6
|
%
|
205,700
|
7.3
|
%
|
||||||||||||||||||||
|
Net Loss Attributable to Noncontrolling Interests
|
(731
|
)
|
0.0
|
%
|
-
|
0.0
|
%
|
(731
|
)
|
0.0
|
%
|
-
|
0.0
|
%
|
||||||||||||||||||
|
Net Earnings Attributable to Hasbro, Inc.
|
$
|
126,574
|
9.2
|
%
|
$
|
164,852
|
12.3
|
%
|
$
|
156,383
|
5.6
|
%
|
$
|
205,700
|
7.3
|
%
|
||||||||||||||||
|
Per Common Share
|
||||||||||||||||||||||||||||||||
|
Net Earnings Attributable to Hasbro, Inc.
|
||||||||||||||||||||||||||||||||
|
Basic
|
$
|
0.97
|
$
|
1.26
|
$
|
1.20
|
$
|
1.58
|
||||||||||||||||||||||||
|
Diluted
|
$
|
0.96
|
$
|
1.24
|
$
|
1.19
|
$
|
1.56
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Cash Dividends Declared
|
$
|
0.40
|
$
|
0.36
|
$
|
1.20
|
$
|
1.08
|
||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Weighted Average Number of Shares
|
||||||||||||||||||||||||||||||||
|
Basic
|
130,253
|
130,619
|
129,972
|
130,146
|
||||||||||||||||||||||||||||
|
Diluted
|
131,845
|
132,483
|
131,573
|
132,039
|
||||||||||||||||||||||||||||
|
HASBRO, INC.
|
||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
|
(Unaudited)
|
||||||||
|
|
Nine Months Ended
|
|||||||
|
(Thousands of Dollars)
|
Sept. 29, 2013
|
Sept. 30, 2012
|
||||||
|
Cash Flows from Operating Activities:
|
||||||||
|
Net Earnings
|
$
|
155,652
|
$
|
205,700
|
||||
|
Non-cash Adjustments
|
168,429
|
152,201
|
||||||
|
Changes in Operating Assets and Liabilities
|
(276,764
|
)
|
(214,285
|
)
|
||||
|
Net Cash Provided by Operating Activities
|
47,317
|
143,616
|
||||||
|
|
||||||||
|
Cash Flows from Investing Activities:
|
||||||||
|
Additions to Property, Plant and Equipment
|
(78,246
|
)
|
(74,896
|
)
|
||||
|
Investments and Acquisitions, Net of Cash Acquired
|
(109,955
|
)
|
-
|
|||||
|
Other
|
3,121
|
2,558
|
||||||
|
Net Cash Utilized by Investing Activities
|
(185,080
|
)
|
(72,338
|
)
|
||||
|
|
||||||||
|
Cash Flows from Financing Activities:
|
||||||||
|
Net (Repayments of) Proceeds from Short-term Borrowings
|
(11,235
|
)
|
83,380
|
|||||
|
Purchases of Common Stock
|
(86,972
|
)
|
(15,079
|
)
|
||||
|
Stock-based Compensation Transactions
|
87,172
|
49,182
|
||||||
|
Dividends Paid
|
(104,164
|
)
|
(132,231
|
)
|
||||
|
Net Cash Utilized by Financing Activities
|
(115,199
|
)
|
(14,748
|
)
|
||||
|
|
||||||||
|
Effect of Exchange Rate Changes on Cash
|
(8,071
|
)
|
(1,485
|
)
|
||||
|
|
||||||||
|
Cash and Cash Equivalents at Beginning of Year
|
849,701
|
641,688
|
||||||
|
Cash and Cash Equivalents at End of Period
|
$
|
588,668
|
$
|
696,733
|
||||
|
HASBRO, INC.
|
||||||||||||||||||||||||
|
SUPPLEMENTAL FINANCIAL DATA
|
||||||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||
|
(Thousands of Dollars)
|
||||||||||||||||||||||||
|
|
Quarter Ended
|
Nine Months Ended
|
||||||||||||||||||||||
|
|
Sept. 29, 2013
|
Sept. 30, 2012
|
% Change
|
Sept. 29, 2013
|
Sept. 30, 2012
|
% Change
|
||||||||||||||||||
|
Major Segment Results
|
||||||||||||||||||||||||
|
U.S. and Canada Segment:
|
||||||||||||||||||||||||
|
External Net Revenues
|
$
|
735,619
|
$
|
774,539
|
-5
|
%
|
$
|
1,466,921
|
$
|
1,510,112
|
-3
|
%
|
||||||||||||
|
Operating Profit
|
146,991
|
154,239
|
-5
|
%
|
243,738
|
229,578
|
6
|
%
|
||||||||||||||||
|
Operating Margin
|
20.0
|
%
|
19.9
|
%
|
16.6
|
%
|
15.2
|
%
|
||||||||||||||||
|
|
||||||||||||||||||||||||
|
International Segment:
|
||||||||||||||||||||||||
|
External Net Revenues
|
582,676
|
524,144
|
11
|
%
|
1,212,665
|
1,174,366
|
3
|
%
|
||||||||||||||||
|
Operating Profit
|
105,663
|
85,498
|
24
|
%
|
115,951
|
110,265
|
5
|
%
|
||||||||||||||||
|
Operating Margin
|
18.1
|
%
|
16.3
|
%
|
9.6
|
%
|
9.4
|
%
|
||||||||||||||||
|
|
||||||||||||||||||||||||
|
Entertainment and Licensing Segment:
|
||||||||||||||||||||||||
|
External Net Revenues
|
48,637
|
43,066
|
13
|
%
|
114,747
|
115,618
|
-1
|
%
|
||||||||||||||||
|
Operating Profit
|
7,625
|
10,722
|
-29
|
%
|
16,622
|
26,652
|
-38
|
%
|
||||||||||||||||
|
Operating Margin
|
15.7
|
%
|
24.9
|
%
|
14.5
|
%
|
23.1
|
%
|
||||||||||||||||
|
|
||||||||||||||||||||||||
|
Net Revenues by Product Category
|
||||||||||||||||||||||||
|
Boys
|
$
|
392,014
|
$
|
471,125
|
-17
|
%
|
$
|
888,494
|
$
|
1,162,958
|
-24
|
%
|
||||||||||||
|
Games
|
387,450
|
365,714
|
6
|
%
|
873,774
|
763,460
|
14
|
%
|
||||||||||||||||
|
Girls
|
388,696
|
302,304
|
29
|
%
|
652,889
|
499,731
|
31
|
%
|
||||||||||||||||
|
Preschool
|
202,188
|
205,994
|
-2
|
%
|
385,227
|
379,305
|
2
|
%
|
||||||||||||||||
|
Total Net Revenues
|
$
|
1,370,348
|
$
|
1,345,137
|
$
|
2,800,384
|
$
|
2,805,454
|
||||||||||||||||
|
|
||||||||||||||||||||||||
|
International Segment Net Revenues by Major Geographic Region
|
||||||||||||||||||||||||
|
Europe
|
$
|
376,648
|
$
|
345,281
|
9
|
%
|
$
|
755,097
|
$
|
751,547
|
<1
|
% | ||||||||||||
|
Latin America
|
131,914
|
115,342
|
14
|
%
|
260,443
|
237,090
|
10
|
%
|
||||||||||||||||
|
Asia Pacific
|
74,114
|
63,521
|
17
|
%
|
197,125
|
185,729
|
6
|
%
|
||||||||||||||||
|
Total
|
$
|
582,676
|
$
|
524,144
|
$
|
1,212,665
|
$
|
1,174,366
|
||||||||||||||||
|
|
||||||||||||||||||||||||
|
Reconciliation of EBITDA
|
||||||||||||||||||||||||
|
Net Earnings Attributable to Hasbro, Inc.
|
$
|
126,574
|
$
|
164,852
|
$
|
156,383
|
$
|
205,700
|
||||||||||||||||
|
Net Loss Attributable to Noncontrolling Interests
|
(731
|
)
|
-
|
(731
|
)
|
-
|
||||||||||||||||||
|
Interest Expense
|
41,194
|
23,043
|
86,398
|
68,568
|
||||||||||||||||||||
|
Income Taxes
|
30,070
|
60,097
|
34,844
|
74,042
|
||||||||||||||||||||
|
Depreciation
|
32,345
|
31,374
|
75,526
|
75,113
|
||||||||||||||||||||
|
Amortization of Intangibles
|
14,224
|
12,636
|
37,677
|
34,792
|
||||||||||||||||||||
|
EBITDA
|
$
|
243,676
|
$
|
292,002
|
$
|
390,097
|
$
|
458,215
|
||||||||||||||||
|
HASBRO, INC.
|
||||||||||||||||
|
SUPPLEMENTAL FINANCIAL DATA
|
||||||||||||||||
|
RESTRUCTURING AND PENSION SETTLEMENT CHARGES
|
||||||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
(Thousands of Dollars)
|
||||||||||||||||
|
Operating Profit, Excluding Restructuring, Pension Settlement and Arbitration Award Charges
|
||||||||||||||||
|
Quarter Ended September 29, 2013
|
As Reported
|
Less
Restructuring, Pension Settlement and Arbitration Award Charges
|
Excluding Restructuring, Pension Settlement and Arbitration Award Charges
|
% Net Revenues
|
||||||||||||
|
Net Revenues
|
$
|
1,370,348
|
$
|
-
|
$
|
1,370,348
|
100.0
|
%
|
||||||||
|
Costs and Expenses:
|
||||||||||||||||
|
Cost of Sales
|
568,582
|
-
|
568,582
|
41.5
|
%
|
|||||||||||
|
Royalties
|
143,947
|
(57,164
|
)
|
86,783
|
6.3
|
%
|
||||||||||
|
Product Development
|
59,366
|
-
|
59,366
|
4.3
|
%
|
|||||||||||
|
Advertising
|
136,487
|
-
|
136,487
|
10.0
|
%
|
|||||||||||
|
Amortization of Intangibles
|
14,224
|
-
|
14,224
|
1.0
|
%
|
|||||||||||
|
Program Production Cost Amortization
|
17,991
|
-
|
17,991
|
1.3
|
%
|
|||||||||||
|
Selling, Distribution and Administration
|
231,045
|
(4,093
|
)
|
226,952
|
16.6
|
%
|
||||||||||
|
Operating Profit
|
$
|
198,706
|
$
|
(61,257
|
)
|
$
|
259,963
|
19.0
|
%
|
|||||||
|
|
||||||||||||||||
|
Nine Months Ended September 29, 2013
|
As Reported
|
Less
Restructuring, Pension Settlement and Arbitration Award Charges
|
Excluding Restructuring, Pension Settlement and Arbitration Award Charges
|
% Net Revenues
|
||||||||||||
|
Net Revenues
|
$
|
2,800,384
|
$
|
-
|
$
|
2,800,384
|
100.0
|
%
|
||||||||
|
Costs and Expenses:
|
||||||||||||||||
|
Cost of Sales
|
1,136,724
|
(8,493
|
)
|
1,128,231
|
40.3
|
%
|
||||||||||
|
Royalties
|
243,568
|
(57,164
|
)
|
186,404
|
6.7
|
%
|
||||||||||
|
Product Development
|
154,455
|
(3,515
|
)
|
150,940
|
5.4
|
%
|
||||||||||
|
Advertising
|
277,278
|
-
|
277,278
|
9.9
|
%
|
|||||||||||
|
Amortization of Intangibles
|
37,677
|
-
|
37,677
|
1.3
|
%
|
|||||||||||
|
Program Production Cost Amortization
|
34,023
|
-
|
34,023
|
1.2
|
%
|
|||||||||||
|
Selling, Distribution and Administration
|
633,238
|
(23,473
|
)
|
609,765
|
21.8
|
%
|
||||||||||
|
Operating Profit
|
$
|
283,421
|
$
|
(92,645
|
)
|
$
|
376,066
|
13.4
|
%
|
|||||||
|
|
||||||||||||||||
|
Nine Months Ended September 30, 2012
|
As Reported
|
Less
Restructuring Charges
|
Excluding Restructuring Charges
|
% Net Revenues
|
||||||||||||
|
Net Revenues
|
$
|
2,805,454
|
$
|
-
|
$
|
2,805,454
|
100.0
|
%
|
||||||||
|
Costs and Expenses:
|
||||||||||||||||
|
Cost of Sales
|
1,155,536
|
(2,764
|
)
|
1,152,772
|
41.1
|
%
|
||||||||||
|
Royalties
|
212,551
|
-
|
212,551
|
7.6
|
%
|
|||||||||||
|
Product Development
|
143,511
|
(2,479
|
)
|
141,032
|
5.0
|
%
|
||||||||||
|
Advertising
|
279,339
|
-
|
279,339
|
10.0
|
%
|
|||||||||||
|
Amortization of Intangibles
|
34,792
|
-
|
34,792
|
1.2
|
%
|
|||||||||||
|
Program Production Cost Amortization
|
25,950
|
-
|
25,950
|
0.9
|
%
|
|||||||||||
|
Selling, Distribution and Administration
|
602,145
|
(5,887
|
)
|
596,258
|
21.3
|
%
|
||||||||||
|
Operating Profit
|
$
|
351,630
|
$
|
(11,130
|
)
|
$
|
362,760
|
12.9
|
%
|
|||||||
|
|
||||||||||||||||
|
NOTE: There were no restructuring charges included in the reported amounts for the quarter ended September 30, 2012.
|
||||||||||||||||
|
Net Earnings and Earnings per Share Excluding Restructuring Charges, Pension Settlement Charges, Arbitration Award Charges and Benefit from Settlement of Tax Exams
|
||||||||||||||||
|
|
||||||||||||||||
|
|
Quarter Ended
|
|||||||||||||||
|
|
Sept. 29, 2013
|
Diluted Per Share Amount
|
Sept. 30, 2012
|
Diluted Per Share Amount
|
||||||||||||
|
Net Earnings Attributable to Hasbro, Inc., as Reported
|
$
|
126,574
|
$
|
0.96
|
$
|
164,852
|
$
|
1.24
|
||||||||
|
Restructuring Charges, Net of Tax
|
2,447
|
0.02
|
-
|
-
|
||||||||||||
|
Pension Settlement Charges, Net of Tax
|
679
|
0.01
|
-
|
-
|
||||||||||||
|
Arbitration Award Charges, Net of Tax
|
66,447
|
0.50
|
-
|
-
|
||||||||||||
|
2013 Benefit from Tax Exam Settlement
|
(23,637
|
)
|
(0.18
|
)
|
-
|
-
|
||||||||||
|
Net Earnings Attributable to Hasbro, Inc. as Adjusted
|
$
|
172,510
|
$
|
1.31
|
$
|
164,852
|
$
|
1.24
|
||||||||
|
|
||||||||||||||||
|
|
Nine Months Ended
|
|||||||||||||||
|
|
Sept. 29, 2013
|
Diluted Per Share Amount
|
Sept. 30, 2012
|
Diluted Per Share Amount
|
||||||||||||
|
Net Earnings Attributable to Hasbro, Inc., as Reported
|
$
|
156,383
|
$
|
1.19
|
$
|
205,700
|
$
|
1.56
|
||||||||
|
Restructuring Charges, Net of Tax
|
21,224
|
0.16
|
7,675
|
0.06
|
||||||||||||
|
Pension Settlement Charges, Net of Tax
|
2,469
|
0.02
|
-
|
-
|
||||||||||||
|
Arbitration Award Charges, Net of Tax
|
66,447
|
0.50
|
-
|
-
|
||||||||||||
|
2013 Benefit from Tax Exam Settlement
|
(23,637
|
)
|
(0.18
|
)
|
-
|
-
|
||||||||||
|
Net Earnings Attributable to Hasbro, Inc. as Adjusted
|
$
|
222,886
|
$
|
1.69
|
$
|
213,375
|
$
|
1.62
|
||||||||
|
Restructuring, Pension Settlement and Arbitration Award Charges – by Segment
|
||||||||||||||||
|
|
||||||||||||||||
|
|
Quarter Ended
|
Nine Months Ended
|
||||||||||||||
|
|
Sept. 29, 2013
|
Sept. 30, 2012
|
Sept. 29, 2013
|
Sept. 30, 2012
|
||||||||||||
|
U.S. and Canada Segment
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
2,444
|
||||||||
|
International Segment
|
-
|
-
|
-
|
1,628
|
||||||||||||
|
Entertainment and Licensing Segment
|
-
|
-
|
1,729
|
555
|
||||||||||||
|
Global Operations Segment
|
-
|
-
|
-
|
4,307
|
||||||||||||
|
Corporate and Eliminations
|
61,257
|
-
|
90,916
|
2,196
|
||||||||||||
|
Total Restructuring and Pension Settlement Charges
|
$
|
61,257
|
$
|
-
|
$
|
92,645
|
$
|
11,130
|
||||||||
Exhibit 99.2
Third Quarter 2013 Snapshot Revenues, Operating Profit and Earnings Per Share Increasein the Third Quarter 2013 Q3 Net revenues $1.37 billion, up 2% year-over-year International Segment up 11% Emerging markets continue to post strong growth: Up 22% year-over-year Entertainment and Licensing up 13% Games and Girls categories increased revenues year-over-year Difficult comparisons remain in Boys category; Preschool down 2% Franchise Brand revenues up 19% Q3 Operating profit up 4% (absent charges)*Operating profit year-to-date, ex. charges, up 4% year-over-year despite flat revenues in same period Q3 2013 adjusted EPS of $1.31 per diluted share** As reported EPS $0.96 per diluted share *Q3 2013 reported operating profit includes $61.3 million pre-tax restructuring, partial pension settlement charges and arbitration award charges or $0.53 per diluted share**Q3 2013 reported EPS includes above charges and a favorable tax adjustment of $23.6 million, or $0.18 per diluted shareRefer to slides 23-27 for a reconciliation of “As Reported” to “As Adjusted” financials 4
Third Quarter 2013 Major Expense Items (as adjusted*) ($ millions, unaudited) 2013 2012 %Change YOY % of Q3 2013 Revenue Notes Cost of Sales $569 $586 -3.1% 41.5% Product mix; lower manufacturing costs Royalties $87 $89 -2.7% 6.3% Lower revenues from licensed properties Product Development $59 $48 22.5% 4.3% Film Development Write-Off; Addition of Backflip; Magic: The Gathering investments Advertising $136 $135 1.1% 10.0% Amortization of Intangibles $14 $13 12.6% 1.0% Addition of Backflip Program Production Cost Amortization $18 $13 40.6% 1.3% Mix of programming delivered in Q3 Selling, Distribution & Administration* $227 $211 7.6% 16.6% Compensation; Depreciation; Magic: The Gathering investments * Q3 2013 as adjusted financials excludes $61.3 million pre-tax restructuring, partial pension settlement charge and arbitration award charges. Refer to slide 23 for a reconciliation of “As Reported” to “As Adjusted” financials. 9
Third Quarter 2013 Operating Profit -20% +4% Operating profit adversely impacted by arbitration award.Underlying operating profitability improved. Adjusted operating profit margin increased to 19.0% in Q3 2013 compared to 18.6% in Q3 2012 * Q3 2013 excludes $61.3 million pre-tax restructuring, partial pension settlement charge and arbitration award charges. Refer to slide 23 for a reconciliation of “As Reported” to “As Adjusted” financials. 10 ($ Millions, Unaudited)
Adjusted 2013 net earnings of $173M or $1.31 per diluted share Excludes pre-tax arbitration award charges of $75.5M, or $0.50 per diluted share Excludes pre-tax restructuring and partial pension settlement charges of $4.1M, or $0.03 per diluted share Excludes favorable tax adjustment of $23.6 million, or $0.18 per diluted share Non-operating expense essentially flat year-over-year Underlying tax rate of 26.5% Average diluted shares 131.8M 2013 vs. 132.5M 2012 Third Quarter 2013 Net Earnings Attributable to Hasbro, Inc. $0.96per diluted share $1.24per diluted share $1.31per diluted share $1.24 per diluted share 12 ($ millions, except per share, unaudited)
Third Quarter Income Statement ($ millions, unaudited) Sept. 29, 2013 Sept. 30, 2012 Net Revenues $ 1,370 $1,345 Cost of Sales 569 586 Royalties 144 89 Product Development 59 48 Advertising 136 135 Amortization of Intangibles 14 13 Program Production Cost Amortization 18 13 Selling, Distribution & Administration 231 211 Operating Profit $ 199 $250 Interest Expense 41 23 Other (Income) Expense, Net 2 2 Earnings Before Income Taxes $156 $225 Income Taxes 30 60 Net Earnings $126 $165 Net Loss Attributable to Noncontrolling Interests (1) --- Net Earnings Attributable to Hasbro, Inc. $ 127 $165 Diluted EPS $0.96 $1.24 20
September Balance Sheets ($ millions, unaudited) Sept. 29, 2013 Sept. 30, 2012 Cash and Cash Equivalents $ 589 $ 697 Accounts Receivable 1,215 1,196 Inventories 447 463 Other Current Assets 346 263 Total Current Assets $ 2,597 $ 2,619 Property, Plant & Equipment, Net 231 217 Other Assets 1,762 1,610 Total Assets $ 4,590 $ 4,446 Short-term Borrowings 213 264 Current Portion of Long-term Debt 430 --- Payables & Accrued Liabilities 1,006 862 Total Current Liabilities $ 1,649 $ 1,126 Long-term Debt 960 1,399 Other Liabilities 411 394 Total Liabilities $ 3,020 $ 2,919 Redeemable Noncontrolling Interests 47 --- Total Shareholders’ Equity 1,523 1,527 Total Liabilities, Redeemable Noncontrolling Interests & Shareholders’ Equity $ 4,590 $ 4,446 21
Supplemental Financial Data Third Quarter Operating Profit, Excluding Restructuring, Pension Settlement and Arbitration Award Charges ($ thousands, unaudited)Quarter Ended September 29, 2013 As Reported Less Restructuring, Pension Settlement and Arbitration Award Charges Excluding Restructuring, Pension Settlement and Arbitration Award Charges % Net Revenues Net Revenues $ 1,370,348 $ - $ 1,370,348 100.0% Costs and Expenses: Cost of Sales 568,582 - 568,582 41.5% Royalties 143,947 (57,164) 86,783 6.3% Product Development 59,366 - 59,366 4.3% Advertising 136,487 - 136,487 10.0% Amortization of Intangibles 14,224 - 14,224 1.0% Program Production Cost Amortization 17,991 - 17,991 1.3% Selling, Distribution and Administration 231,045 (4,093) 226,952 16.6% Operating Profit $ 198,706 $ (61,257) $ 259,963 19.0% Note: There were no restructuring, pension settlement or arbitration award charges included in the reported amounts for the quarter ended September 30, 2012. 23
Supplemental Financial Data ($ thousands, unaudited)Nine Months Ended September 29, 2013 As Reported Less Restructuring, Pension Settlement and Arbitration Award Charges Excluding Restructuring, Pension Settlement and Arbitration Award Charges % Net Revenues Net Revenues $ 2,800,384 $ - $ 2,800,384 100.0% Costs and Expenses: Cost of Sales 1,136,724 (8,493) 1,128,231 40.3% Royalties 243,568 (57,164) 186,404 6.7% Product Development 154,455 (3,515) 150,940 5.4% Advertising 277,278 - 277,278 9.9% Amortization of Intangibles 37,677 - 37,677 1.3% Program Production Cost Amortization 34,023 - 34,023 1.2% Selling, Distribution and Administration 633,238 (23,473) 609,765 21.8% Operating Profit $ 283,421 $ (92,645) $ 376,066 13.4% Nine Months Ended September 30, 2012 As Reported Less RestructuringCharges Excluding Restructuring Charges % Net Revenues Net Revenues $ 2,805,454 $ - $ 2,805,454 100.0% Costs and Expenses: Cost of Sales 1,155,536 (2,764) 1,152,772 41.1% Royalties 212,551 - 212,551 7.6% Product Development 143,511 (2,479) 141,032 5.0% Advertising 279,339 - 279,339 10.0% Amortization of Intangibles 34,792 - 34,792 1.2% Program Production Cost Amortization 25,950 - 25,950 0.9% Selling, Distribution and Administration 602,145 (5,887) 596,258 21.3% Operating Profit $ 351,630 $ (11,130) $ 362,760 12.9% 24 Nine Month Operating Profit, Excluding Restructuring, Pension Settlement and Arbitration Award Charges
Supplemental Financial Data Quarter Ended Quarter Ended Nine Months Ended Nine Months Ended ($ thousands, unaudited) Sept. 29, 2013 Sept. 30, 2012 Sept. 29, 2013 Sept. 30, 2012 U.S. and Canada Segment $ - $ - $ - $ 2,444 International Segment - - - 1,628 Entertainment and Licensing Segment - - 1,729 555 Global Operations Segment - - - 4,307 Corporate and Eliminations 61,257 - 90,916 2,196 Total Restructuring, Pension Settlement and Arbitration Award Charges $ 61,257 $ - $ 92,645 $ 11,130 Restructuring, Pension Settlement and Arbitration Award Charges by Segment 25
Supplemental Financial Data Net Earnings and EPS Excluding Restructuring Charges, Pension Settlement Charges, Arbitration Award Charges and Benefit from Settlement of Tax Exams Quarter Ended Quarter Ended Quarter Ended Quarter Ended ($ thousands, except per share amounts, unaudited) Sept. 29, 2013 Diluted Per Share Amount Sept. 30, 2012 Diluted Per Share Amount Net Earnings Attributable to Hasbro, Inc., as Reported $ 126,574 $ 0.96 $ 164,852 $ 1.24 Restructuring Charges, Net of Tax 2,447 0.02 - - Pension Settlement Charges, Net of Tax 679 0.01 - - Arbitration Award Charges, Net of Tax 66,447 0.50 - - 2013 Benefit from Tax Exam Settlement (23,637) (0.18) - - Net Earnings Attributable to Hasbro, Inc., as Adjusted $ 172,510 $ 1.31 $ 164,852 $ 1.24 27 Nine Months Ended Nine Months Ended Nine Months Ended Nine Months Ended ($ thousands, except per share amounts, unaudited) Sept. 29, 2013 Diluted Per Share Amount Sept. 30, 2012 Diluted Per Share Amount Net Earnings Attributable to Hasbro, Inc., as Reported $ 156,383 $ 1.19 $ 205,700 $ 1.56 Restructuring Charges, Net of Tax 21,224 0.16 7,675 0.06 Pension Settlement Charges, Net of Tax 2,469 0.02 - - Arbitration Award Charges, Net of Tax 66,447 0.50 - - 2013 Benefit from Tax Exam Settlement (23,637) (0.18) - - Net Earnings Attributable to Hasbro, Inc., as Adjusted $ 222,886 $ 1.69 $ 213,375 $ 1.62