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 June 26,September 25, 1994 Commission file number 1-6682
HASBRO, INC.
--------------------
(Name of Registrant)
Rhode Island O5-0155090
- - ------------------------ ------------------------------------
(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 July 29,October 28, 1994 was 87,745,672.87,619,877.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands of Dollars Except Share Data)
(Unaudited)
Jun.Sep. 25, Sep. 26, Jun. 27, Dec. 26,
Assets 1994 1993 1993
-------- -------- --------
Current assets
Cash and cash equivalents $ 46,427 16,61143,234 48,466 186,254
Marketable securities available
for sale 16,810 - -
Accounts receivable, less allowance
for doubtful accounts of $53,500,
$55,900$52,500,
$58,300 and $54,200 635,893 647,8991,118,622 1,087,653 720,442
Inventories:
Finished products 271,620 227,028260,407 244,289 183,899
Work in process 22,549 37,90420,163 29,359 22,486
Raw materials 44,275 50,09352,519 59,883 43,682
--------- --------- ---------
Total inventories 338,444 315,025333,089 333,531 250,067
Deferred income taxes 89,356 78,10489,165 81,429 78,413
Prepaid expenses 63,719 63,15858,002 64,463 65,959
--------- --------- ---------
Total current assets 1,173,839 1,120,7971,658,922 1,615,542 1,301,135
Property, plant and equipment, net 292,794 253,899296,986 258,919 279,803
--------- --------- ---------
Other assets
Cost in excess of acquired net assets,
less accumulated amortization of
$75,461, $60,301$79,926, $63,736 and $68,122 469,384 484,487553,745 481,507 475,607
Other intangibles, less accumulated
amortization of $94,803, $75,189$99,499, $80,520 and
$85,290 175,793 196,121170,695 190,818 185,953
Other 55,332 22,21335,966 48,256 50,520
--------- --------- ---------
Total other assets 700,509 702,821760,406 720,581 712,080
--------- --------- ---------
Total assets $2,167,142 2,077,517$2,716,314 2,595,042 2,293,018
========= ========= =========
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
(Thousands of Dollars Except Share Data)
(Unaudited)
Jun.Sep. 25, Sep. 26, Jun. 27, Dec. 26,
Liabilities and Shareholders' Equity 1994 1993 1993
-------- -------- --------
Current liabilities
Short-term borrowings $ 129,488 207,068486,252 469,355 62,242
Current installments of long-term debt 3,214 6573,204 141 3,236
Trade payables 105,249 100,472133,060 134,307 170,309
Accrued liabilities 297,094 288,854413,741 412,964 420,476
Income taxes 67,425 67,205108,515 93,635 92,051
--------- --------- ---------
Total current liabilities 602,470 664,2561,144,772 1,110,402 748,314
Long-term debt, excluding current
installments 200,458 205,736150,437 203,642 200,510
Deferred liabilities 70,946 69,87873,057 69,170 67,511
--------- --------- ---------
Total liabilities 873,874 939,8701,368,266 1,383,214 1,016,335
--------- --------- ---------
Shareholders' equity
Preference stock of $2.50 par
value. Authorized 5,000,000
shares; none issued - - -
Common stock of $.50 par value.
Authorized 300,000,000 shares; issued
88,081,902, 87,464,26588,085,802, 87,635,774 and 87,795,251 44,041 43,73244,043 43,818 43,898
Additional paid-in capital 292,455 292,542283,872 294,670 296,823
Retained earnings 932,690 785,2301,001,730 855,511 920,956
Cumulative translation adjustments 27,933 16,14332,049 17,829 15,006
Treasury stock, at cost, 134,400451,900
shares in 1994 (3,851)(13,646) - -
--------- --------- ---------
Total shareholders' equity 1,293,268 1,137,6471,348,048 1,211,828 1,276,683
--------- --------- ---------
Total liabilities and
shareholders' equity $2,167,142 2,077,517$2,716,314 2,595,042 2,293,018
========= ========= =========
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(Thousands of Dollars Except Share Data)
(Unaudited)
Thirteen Weeks Ended Twenty-SixThirty-Nine Weeks Ended
-------------------- ----------------------
Jun.-----------------------
Sep. 25, Sep. 26, Jun. 27, Jun.Sep. 25, Sep. 26, Jun. 27,
1994 1993 1994 1993
-------- -------- -------- --------
Net revenues $444,324 515,551 933,457 1,002,587$796,222 812,393 1,729,679 1,814,980
Cost of sales 203,178 221,520 411,378 429,541352,129 351,064 763,507 780,605
------- ------- --------- ---------
Gross profit 241,146 294,031 522,079 573,046444,093 461,329 966,172 1,034,375
------- ------- --------- ---------
Expenses
Amortization 8,805 8,717 17,598 17,3769,598 8,797 27,196 26,173
Royalties, research and
development 55,102 55,880 105,422 103,28375,359 81,991 180,781 185,274
Advertising 60,428 67,775 124,987 135,612116,307 111,868 241,294 247,480
Selling, distribution and
administrative 109,980 113,807 220,270 223,366123,067 126,364 343,337 349,730
Restructuring charges 12,500 - 12,500 -
------- ------- --------- ---------
Total expenses 234,315 246,179 468,277 479,637336,831 329,020 805,108 808,657
------- ------- --------- ---------
Operating profit 6,831 47,852 53,802 93,409107,262 132,309 161,064 225,718
------- ------- --------- ---------
Nonoperating (income) expense
Interest expense 4,609 6,133 10,045 10,5488,776 9,111 18,821 19,659
Other (income), net (435) (2,072) (2,343) (3,801)(23,710) 333 (26,053) (3,468)
------- ------- --------- ---------
Total nonoperating expense 4,174 4,061 7,702 6,747(14,934) 9,444 (7,232) 16,191
------- ------- --------- ---------
Earnings before income taxes and
cumulative effect of change in
accounting principles 2,657 43,791 46,100 86,662122,196 122,865 168,296 209,527
Income taxes 1,023 16,641 17,749 32,93247,045 47,317 64,794 80,249
------- ------- --------- ---------
Net earnings before cumulative
effect of change in accounting
principles 1,634 27,150 28,351 53,73075,151 75,548 103,502 129,278
Cumulative effect of change in
accounting principles - - (4,282) -
------- ------- --------- ---------
Net earnings $ 1,634 27,150 24,069 53,73075,151 75,548 99,220 129,278
======= ======= ========= =========
Per common share
Net earnings before cumulative
effect of change in
accounting principles $ .02 .30 .32 .60.85 .84 1.16 1.44
======= ======= ========= =========
Net earnings $ .02 .30 .27 .60.85 .84 1.11 1.44
======= ======= ========= =========
Cash dividends declared $ .07 .06 .14 .12.21 .18
======= ======= ========= =========
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Twenty-SixThirty-Nine Weeks Ended June 26,September 25, 1994 and June 27,September 26, 1993
(Thousands of Dollars)
(Unaudited)
1994 1993
---- ----
Cash flows from operating activities
Net earnings $ 24,069 53,73099,220 129,278
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of plant and equipment 35,529 32,42159,710 48,953
Other amortization 17,598 17,37627,196 26,173
Deferred income taxes (13,241) (1,660)(11,102) (6,006)
Gain on investments (23,291) -
Change in currentoperating assets and liabilities (other
than cash and cash equivalents):
(Increase) decrease in accounts receivable 90,098 (12,760)(368,304) (450,621)
(Increase) in inventories (82,645) (96,808)(73,557) (114,140)
(Increase) decrease in prepaid expenses 3,193 (5,419)9,318 (6,540)
(Decrease) increase in trade payables and
accrued liabilities (219,678) (170,165)(41,936) 11,201
Other 1,475 (1,118)(786) (3,158)
------- -------
Net cash utilized by operating activities (143,602) (184,403)(323,532) (364,860)
------- -------
Cash flows from investing activities
Additions to property, plant and equipment (45,825) (39,529)(73,019) (60,955)
Purchase of marketable securities - (141,411)
Proceeds from sale of marketable securities -investments 24,449 141,839
Acquisitions, net of cash acquired - (6,023)(98,411) (30,644)
Other 1,114 3,526444 2,520
------- -------
Net cash utilized by investing activities (44,711) (41,598)(146,537) (88,651)
------- -------
Cash flows from financing activities
Net proceeds of short-term borrowings 63,944 133,870418,409 394,313
Repayment of long-term debt (74) (11,617)(50,105) (11,668)
Stock option and warrant transactions (4,225) 5,208(8,498) 7,422
Purchase of common stock (3,851)(17,954) -
Dividends paid (11,434) (9,607)(17,577) (14,865)
------- -------
Net cash provided by financing activities 44,360 117,854324,275 375,202
------- -------
Effect of exchange rate changes on cash 4,126 (1,195)2,774 822
------- -------
Decrease in cash and cash equivalents (139,827) (109,342)(143,020) (77,487)
Cash and cash equivalents at beginning of year 186,254 125,953
------- -------
Cash and cash equivalents at end of period $ 46,427 16,61143,234 48,466
======= =======
Supplemental information
Cash paid during the period for:
Interest $ 10,958 12,52516,636 18,053
Income taxes $ 43,361 48,08545,931 69,105
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars)
(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 June 26,September 25, 1994 and June 27,September 26,
1993, and the results of operations and cash flows for the periods then ended.
The results of operations for the twenty-sixthirty-nine week period ended June 26,September 25,
1994, are not necessarily indicative of results to be expected for the full
year.
(2) Earnings per common share are based on the weighted average number of
shares of common stock and dilutive common stock equivalents outstanding
during each period. Common stock equivalents include stock options and
warrants for the period prior to their exercise. Under the treasury stock
method, the unexercised options and warrants were assumed to be exercised at
the beginning of the period or at issuance, if later. The assumed proceeds
were then used to purchase common stock at the average market price during the
period.
For each of the reported periods except the thirteen weeks ended September 25,
1994 and September 26, 1993, the difference between primary and fully diluted
earnings per share was not significant. For the thirteen weeks ended September
25, 1994, the primary and fully diluted earnings per share were $.85 and $.82,
respectively. For the thirteen weeks ended September 26, 1993, the primary and
fully diluted earnings per share were $.84 and $.81, respectively.
(3) During October 1994, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 119, Disclosure About
Derivative Financial Instruments and Fair Value of Financial Instruments (SFAS
119). SFAS 119 requires disclosures about derivative financial instruments
including futures, forward, swap and option contracts and other financial
instruments with similar characteristics and is effective for fiscal years
ending after December 15, 1994.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(Thousands of dollars)
NET REVENUES
- - ------------
Net revenues for the secondthird quarter and sixnine months of 1994 were $444,324$796,222 and
$933,457,$1,729,679, compared to the $515,551$812,393 and $1,002,587$1,814,980 reported for the same
periods of 1993. DuringFor the quarter, the Company's international revenues were
essentially flat while its domestic revenues decreased approximately 20%.
Domestically, data received from several larger customers indicates that
consumer purchasesreturned to a level
comparable with those of a year ago. This occurred in spite of the Company's products through the endloss of
June have
increased overapproximately $80,000 of worldwide volume from two successful 1993 levels. With many retailers moving toward more
sophisticated inventory management techniques, however, this increase has not
yet resulted in a higher level of replacement orders. Additionally, a
comparison with 1993 is adversely impacted by the fact that revenues during the
second quarter of 1993 were at record levels, in part due to the introduction
of certainproduct
ranges, Barney(R) and Jurassic Park(TM) and Barney(R) products in mid-quarter, while 1994
introductions are on a more traditional time-line of late second quarter or
early third quarter.. Internationally, manymost of the Company's
units were able to
exceed last year's amounts inshowed modest growth from their local currencies although this growth was
largely offset1993 levels and also benefited from a
$9,000 favorable effect of the weakened U.S. dollar. Domestically, the record
volume of the third quarter of 1993, buoyed by the adverse effect of changed foreign currency translation
rates. Although the dollar has recently weakened against certain currencies,
for the quarter as a whole it was stronger than in the comparable period of
1993. For the three months, the adverse effect of changed foreign currency
translation rates approximated $8,000.two product ranges noted
above, could not be sustained.
COST OF SALES
- - -------------
The gross profit margin, expressed as a percentage of net revenues, for the
quarter decreased to 54.3%55.8% from the 1993 level of 57.0%56.8% and for the sixnine months
to 55.9% from 57.2%57.0%. This deterioration is largely attributable to the effect
of the decreased domestic sales volumes as well asvolume, principally in the promotional product area.
Generally, promotional items, which carry higher royalty rates, provide a
less favorable mix of
products sold.higher gross margin than do games and other items.
EXPENSES
- - --------
Royalties, research and development expenses for the secondthird quarter and sixnine
months increaseddecreased in amount and, for the third quarter, as a percentage of
revenues and, for the six months, in amount from 1993 levels. The royalty component decreased in both categories,
reflecting both the effect of reduced revenues and rates on certain 1993
products which carried higher than traditional royalty rates. Research and
development was $32,959$35,193 and $61,462$96,655 for the secondthird quarter and sixnine months of
1994 compared to $27,113$33,423 and $54,101$87,524 in the same periods of 1993. These
increases were largely attributable to the Company's domestic units whose
development efforts have been expanded.
The current quarter advertising increased approximately $4,400 from the
comparable 1993 level while for the nine months it decreased approximately
$6,200. As a percentage of net revenues, for the quarter and nine months it
increased to 14.6% from 13.8% and to 14.0% from 13.6%, respectively. The
increased percentages are largely the result of higher spending to establish
selected core brands in certain international markets coupled with the lower
than normal advertising requirements of Jurassic Park and Barney in 1993,
reflecting the amount of exposure given these two brands by other parties.
Both in dollars and as a percentage of net revenues, third quarter selling,
distribution and administrative expenses showed a minor decrease from the
respective 1993 amounts, which is partially the result of lower distribution
costs resulting from the lower revenues, coupled with a reduced requirement for
doubtful accounts. The nine month decrease in amount can be attributed to the
same causes while the increase in percentage is reflective of the fact that
most other expenses in this category are relatively fixed.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
The current quarter advertising decreased approximately $7,300 fromCompany recently completed a restructuring of its Domestic Toy group,
merging its Hasbro Toy, Playskool, Playskool Baby, Kenner and Kid Dimension
units into one organization, the comparable 1993 level whileHasbro Toy Group, and also announced a
consolidation of its domestic manufacturing facilities. To provide for these
and other immaterial restructuring costs, the six months it decreased approximately
$10,600. AsCompany recorded a percentage of net revenues, for the quarter it increased to 13.6%
from 13.1% in the same period last year and for the six months it decreased to
13.4% from 13.5% a year ago. The reduction in amounts reflect the reduced
revenues while the increased percentage$12,500 pretax
charge during the quarter is largely the
result of higher spending to establish selected core brands in certain
international markets.
Both the second quarter and six months selling, distribution and administrative
expenses show decreases from the respective 1993 amounts, while increasing as a
percentage of net revenues. The decreases in amount are partially the result of
lower distribution costs resulting from the lower revenues, while the increases
in percentage are reflective of the fact that most other expenses in this
category are relatively fixed.quarter.
NONOPERATING (INCOME) EXPENSE
- - -----------------------------
Interest expense decreased approximately 4% from 1993 levels in both the secondthird
quarter and the sixnine months. This decrease reflects the Company's lower
borrowing requirements, partially offset by slightly higher interest rates. During the
quarter, the Company liquidated its investment in J.W. Spear & Sons PLC (Spear)
and sold its investment in Virgin Interactive Entertainment plc (Virgin) to
Blockbuster Entertainment (Blockbuster). The major componentCompany realized an aggregate
pretax gain of approximately $23,000 from these transactions, which is
responsible for the large change in other income, continues to be income from temporary investments.net. Also included are
various other items, none of which are material, of both income and expense.
INCOME TAXES
- - ------------
Income tax expense, as a percentage of pretax earnings, was 38.5% for both the
secondthird quarter and sixnine months of 1994, compared with 38.0%38.5% and 38.3% in both periodsthe
third quarter and nine months of 1993. This increase in the nine month rate
primarily results from the third quarter 1993 increase in the U. S. federal
income tax rate from 34% to 35%.
OTHER INFORMATION
- - -----------------
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 and
inventory levels of retailers and differences in overall economic conditions.
Also, more retailers are using quick response inventory management practices
which results in fewer orders being placed in advance of shipment and more
orders, when placed, for immediate delivery. As a result, comparisons of
unshipped orders on any date in a given year with those at the same date in a
prior year are not necessarily indicative of sales for the entire year. In
addition, it is a general industry practice that orders are subject to
amendment or cancellation by customers prior to shipment. The Company's
unshipped orders were approximately $850,000$490,000 at July 24,October 23, 1994 compared to
$950,000$520,000 at July 25,October 24, 1993. During the past several years the Company has
experienced a shift in its revenue pattern wherein the second half of the year
has grown in significance to its overall business and within that half the
fourth quarter has become more prominent. The Company expects that this trend
will continue.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
During the fourth quarter of 1993, the Company recorded a restructuring charge
of $15,500, primarily relating to the planned closure of the Company's
manufacturing facility in The Netherlands, as announced on January 13, 1994.
The Company had initially planned to cease production at this facility during
the second quarter of 1994 but has not yet been able to do so. The actions
necessary to comply with local regulations relating to such a closure have
taken longer than anticipated and the Company now believes that the shut down
of production at this facility will take place late in the fourth quarter of
1994. As a result, no anticipated benefits have yet been obtained and only
minimal amounts of the liability accrued for this closure have been satisfied.
The remaining amount provided in 1993 related to several items, none of which
were significant, either in cost or anticipated benefits. A majority of the
liabilities established for such items has been satisfied and the expected
benefits are being obtained.
Included in the restructuring charges recorded during the current quarter,
noted above, for the Domestic Toy restructuring, was a provision of
approximately $4,400 for the costs associated with the termination of
approximately 100 management employees. Substantially all of these employees
have been terminated and approximately $921 of the liability has been
satisfied. It is anticipated that no material benefits from this restructuring
will be experienced until 1995. Also included, and related to the consolidation
of domestic manufacturing operations as announced on November 8, 1994, and
further discussed below, was a provision of approximately $3,400 for costs
associated with the termination of approximately 485 manufacturing employees.
These terminations will occur during the fourth quarter of 1994 and the first
quarter of 1995. As a result, none of the liability has been satisfied and the
Company expects that no material benefits from this consolidation will be
experienced until 1995.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
SeveralBecause of the major balance sheet categories, including cash and cash
equivalents, accounts receivable, inventories and short-term borrowings,
fluctuate significantly from quarter to quarter. This reflects the seasonality of the Company's business coupled with certain
customer incentives, mainly in the form of extended payment terms. Generally,terms, the interim
cash flow statements are not representative of that which may be expected for
the full year. As a result of these extended payment terms, the majority of the
Company's cash collections occur late in the fourth quarter and early in the
first quarter of the subsequent year. While a large portion of these
receivables are of a quality which would allow their sale, alleviating the need
for much of its interim financing, the Company believes it to be more cost
effective to use its available funds and short-term borrowings to finance them.
Late in its fourth quarter and through 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 the short-term borrowings.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
As a result, management believes that on an interim basis, rather than
discussing its cash flows, a better understanding of its liquidity and capital
resources can be obtained through a discussion of the various balance sheet
categories. Also, as several of the major categories, including cash and cash
equivalents, accounts receivable, inventories and short-term debt are lower atborrowings,
fluctuate significantly from quarter to quarter, again due to the endseasonality
of Decemberits business and March than at the end
of the other quarters while cash and related amounts are higher. As a result,extended payment terms offered, 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 and cash equivalents were aboveapproximately 10% below their 1993 level which is the result of
the timing of cash receipts and their currency.level. The
Company attempts to keep its cash at the lowest level possible whenever it has
short-term borrowings. At times, however, the cash available and the borrowing
requirement may be in different countries and currencies which may make it
impractical to substitute one for the other. Marketable securities at
September 25, 1994 represent shares of Blockbuster, received from the sale of
the Company's investment in Virgin, which had not been liquidated. Subsequent
to the balance sheet date, such shares were sold, with a resulting immaterial
gain. Receivables were lessapproximately $31,000 greater than at the same time in
1993
reflecting1993. More than half of the Company's reduced revenues, partially offset byincrease relates to a non-trade amount due from the
Blockbuster shares sold prior to balance sheet date but having a settlement
date of September 30. The remaining increase reflects the change in the
Company's sales mix with a larger percentage being made to customers with
extended payment terms. Inventories were modestly above the levelapproximated those of a year agoago. Other
assets, as a group, increased approximately $40,000 from their level a year
ago. This increase reflects the Company continuesCompany's acquisition of the game and puzzle
business of Western Publishing and its investment made in Connector Set Limited
Partnership in conjunction with the joint venture to commitmarket the K'NEX(R) line
of construction toys internationally, both partially offset by the disposition,
or transfer to production at levels sufficient to support its
anticipated second half revenues.current assets, of the Company's investments in Spear and Virgin
and twelve months of amortization expense.
Short-term borrowings, at $129,488$486,252 were approximately $77,600 less$16,900 greater than last
year, reflecting bothyear. This reflects the net of several significant items including the election
by the Company to pay exercising holders of its warrants, which expired on July
12, 1994, approximately $17,000 in cash rather than shares, the repurchase of
shares of the Company's decreased activitycommon stock in the amount of approximately $18,000,
the early redemption by the Company of its $50,000 of Subordinated Variable
Notes Due 1995, the net cash requirements of the change in other assets noted
above and the funds generated from operations within the most recent twelve
months. Other current liabilities increased marginally, primarily due to timing
differences on payments. As part
of the traditional marketing strategies of the toy industry, many sales made
early in the year are not due for payment until the fourth quarter, thus making
it necessary for the Company to borrow significant amounts pending collection
of these receivables. At June 26,September 25, 1994, the Company had committed
unsecured lines of credit totaling approximately $450,000 available to it. It
also had available uncommitted lines exceeding $900,000.$950,000. The Company believes
that these amounts are adequate for its needs. Of these available lines,
approximately $150,000$500,000 was in use at June 26,September 25, 1994.
RECENT DEVELOPMENTS
- - -------------------
On June 22, 1994, the Company announced that the Executive Committee of its
Board of Directors authorized the repurchase of up to five million shares of
common stock from time to time in the open market or otherwise. This
authorization is in addition to the 2,445,300 shares of common stock that the
Company is authorized to repurchase pursuant to prior authorization by the
Board. Shares repurchased will be used for general corporate purposes including
funding of the Company's existing stock option plans.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
RECENT DEVELOPMENTS
- - -------------------
As discussed in Management's Discussion and Analysis of Financial Condition and
Results of Operations in the Company's Form 10-K filing for the year ended
December 26, 1993, the Company was engaged in legal action against CBS Inc.
(CBS) to recover all costs associated with the environmental clean-up of the
Company's former manufacturing facility in Lancaster, Pennsylvania. On July 12,August
10, 1994, the Company's outstanding warrants, which were issuedU.S. District Court for the Eastern Division of Pennsylvania
entered judgment in connection with the purchase of assets from Coleco Industries, Inc. in 1989,
expired and prior to this date most had been exercised. Under termsfavor of the warrants, upon exerciseCompany, awarding the Company had the option of either issuing shares of
its stock or paying the exercising warrantholder an equivalent amount in cash.
For all but a small number of warrants exercised prior to mid-1993, the Company
elected to pay the equivalent cash amounts, approximating $16,000, rather than
diluting its equity.
On July 18, 1994, in response to a public offer to acquire shares in J.W. Spear
& Sons PLC at a price of 11.50 pounds sterling per share, the Company tendered all of its approximately 1,400,000 shares. These shares were purchased bypast
and future costs associated with such environmental remediation. The Company
and CBS are currently negotiating the manner in which this judgment will be
satisfied.
On November 8, the Company announced that it would close its Wayne, New Jersey
manufacturing plant, effective March 5, 1995, and was reducing the number of
manufacturing jobs at its facilities in 1990 at a costRhode Island. The New Jersey facility
employs approximately 85 employees while approximately 400 people will be
affected in Rhode Island, of which approximately $9,000.
On July 29, 1994, the Company exchanged its investment in approximately
1,500,000 shares of Virgin Interactive Entertainment Plc (VIE) for
approximately 1,300,000 shares of Blockbuster Entertainment Corporation
(Blockbuster). The Company acquired the VIE shares in September 1993 at a cost
of approximately $25,000 while the value of the Blockbuster shares280 are currently on
July 29,
1994 was approximately $34,000.traditional seasonal layoffs.
PART II. Other Information
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.On September 22, 1994, pursuant to notice given on
September 7, 1994, the Company redeemed all $50,000,000 of
its outstanding Subordinated Variable Rate Notes Due 1995
(the Notes) at a redemption price of 100% of their principal
amount plus accrued interest through that date. Shawmut Bank
Connecticut, N.A. is the Trustee and Paying Agent for the
Notes.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's Annual Meeting of Shareholders held on May
11, 1994, the Company's Shareholders, by a vote of 75,077,738
for, 2,419,162 against, 431,516 abstentions and no broker
nonvotes, approved the Stock Option Plan for Non-employee
Directors of the Company.
They also, by a vote of 68,186,493 for, 9,252,726 against,
489,197 abstentions and no broker nonvotes, approved the
Senior Management Annual Performance Plan for the Company.
In addition, the Company's Shareholders reelected the
following persons to the Board of Directors of the Company:
Alan G. Hassenfeld (77,265,949 votes for, 662,367 votes
withheld); George R. Ditomassi, Jr. (77,422,923 votes for,
505,393 votes withheld); Harold P. Gordon (76,401,225 votes
for, 1,527,091 votes withheld); Alex Grass (77,414,385 votes
for, 513,931 votes withheld); and Preston Robert Tisch
(74,237,060 votes for, 3,691,256 votes withheld). There were
no votes against any nominee and no broker nonvotes.
Finally, the Company's Shareholders ratified the selection of
KPMG Peat Marwick as the independent public accountants for
the Company for the 1994 fiscal year by a vote of 77,558,979
for, 28,733 against, 340,704 abstentions and no broker
nonvotes.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 - Twenty-SixThirty-Nine
Weeks Ended June 26,September 25, 1994 and June 27,1993.September 26, 1993.
11.2 Computation of Earnings Per Common Share - Thirteen
Weeks Ended June 26,September 25, 1994 and June 27,1993.September 26, 1993.
12 Computation of Ratio of Earnings to Fixed Charges -
Twenty-SixThirty-Nine and Thirteeen Weeks Ended June 26,September
25, 1994.
27 Article 5 Financial Data Schedule - Third Quarter 1994
(b) Reports on Form 8-K
A current Report on Form 8-K dated June 16,October 13, 1994, as
amended by Form 8-K/A of the same date, was filed by the
Company and included the Press Release dated June
16, 1994 announcing the Company's revenue and earnings
expectations for the second quarter and full year 1994.
A current Report on Form 8-K dated July 14, 1994 was filed
by the Company and included the Press Release dated July
14,October 13, 1994
announcing the Company's results for the current quarter.
Consolidated Statements of Earnings (without notes) for the
quarters and nine months ended June 26,September 25, 1994 and
June 27,September 26, 1993 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: August 4,November 9, 1994 By: /s/ John T. O'Neill
---------------------
John T. O'Neill
Executive Vice President 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 June 26,September 25, 1994
Exhibit Index
Exhibit
No. Exhibits
- - ------- --------
11.1 Statement re computationComputation of per share earningsEarnings Per Common Share -
twenty-six weeks ended June 26,Thirty-Nine Weeks Ended September 25, 1994
and June 27,September 26, 1993
11.2 Statement re computationComputation of per share earningsEarnings Per Common Share -
thirteen weeks ended June 26,Thirteen Weeks Ended September 25, 1994 and
June 27,September 26, 1993
12 Statement re computationComputation of ratios
Ratio of Earnings to Fixed
Charges - Thirty-Nine and Thirteen Weeks
Ended September 25, 1994
27 Article 5 Financial Data Schedule - Third
Quarter 1994.