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 September 25, 1994April 2, 1995 Commission file number 1-6682
HASBRO, INC.
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(Name of Registrant)
Rhode Island O5-0155090
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- ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1027 Newport Avenue, Pawtucket, Rhode Island 02861
- -
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(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 OctoberApril 28, 1994 was 87,619,877.
87,717,715.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands of Dollars Except Share Data)
(Unaudited)
Sep.Apr. 2, Mar. 27, Dec. 25,
Sep. 26, Dec. 26,
Assets 1995 1994 1993 19931994
-------- -------- --------
Current assets
Cash and cash equivalents $ 43,234 48,466 186,254
Marketable securities available
for sale 16,810 - -189,777 250,262 137,028
Accounts receivable, less allowance
for doubtful accounts of $52,500,
$58,300$49,700,
$53,500 and $54,200 1,118,622 1,087,653 720,442$51,000 475,813 449,981 717,890
Inventories:
Finished products 260,407 244,289 183,899198,587 203,757 181,202
Work in process 20,163 29,359 22,48622,334 23,274 19,342
Raw materials 52,519 59,883 43,68256,017 44,288 43,863
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Total inventories 333,089 333,531 250,067276,938 271,319 244,407
Deferred income taxes 89,165 81,429 78,41383,474 86,933 83,730
Prepaid expenses 58,002 64,463 65,95986,849 63,571 69,408
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Total current assets 1,658,922 1,615,542 1,301,1351,112,851 1,122,066 1,252,463
Property, plant and equipment, net 296,986 258,919 279,803308,469 282,978 308,879
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Other assets
Cost in excess of acquired net assets,
less accumulated amortization of
$79,926, $63,736$87,335, $71,768 and $68,122 553,745 481,507 475,607$82,949 489,918 472,367 479,960
Other intangibles, less accumulated
amortization of $99,499, $80,520$62,761, $89,609 and
$85,290 170,695 190,818 185,953$58,178 357,373 180,839 295,333
Other 35,966 48,256 50,52061,152 55,100 41,740
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Total other assets 760,406 720,581 712,080908,443 708,306 817,033
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Total assets $2,716,314 2,595,042 2,293,018$2,329,763 2,113,350 2,378,375
========= ========= =========
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
(Thousands of Dollars Except Share Data)
(Unaudited)
Sep.Apr. 2, Mar. 27, Dec. 25, Sep. 26, Dec. 26,
Liabilities and Shareholders' Equity 1995 1994 1993 19931994
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Current liabilities
Short-term borrowings $ 486,252 469,355 62,242
Current installments of long-term debt 3,204 141 3,236162,736 53,091 81,805
Trade payables 133,060 134,307 170,309115,259 105,280 165,378
Accrued liabilities 413,741 412,964 420,476309,950 293,557 417,763
Income taxes 108,515 93,635 92,051106,007 92,906 98,786
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Total current liabilities 1,144,772 1,110,402 748,314693,952 544,834 763,732
Long-term debt, excluding current
installments 150,437 203,642 200,510150,000 200,479 150,000
Deferred liabilities 73,057 69,170 67,51165,809 73,171 69,226
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Total liabilities 1,368,266 1,383,214 1,016,335909,761 818,484 982,958
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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
88,085,802, 87,635,77487,981,176 and 87,795,25188,085,802 44,043 43,818 43,89843,991 44,043
Additional paid-in capital 283,872 294,670 296,823280,896 299,064 282,151
Retained earnings 1,001,730 855,511 920,9561,086,070 937,227 1,071,416
Cumulative translation adjustments 32,049 17,829 15,00622,473 14,584 14,526
Treasury stock, at cost, 451,900450,559,
none and 557,455 shares in 1994 (13,646)(13,480) - -(16,719)
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Total shareholders' equity 1,348,048 1,211,828 1,276,6831,420,002 1,294,866 1,395,417
--------- --------- ---------
Total liabilities and
shareholders' equity $2,716,314 2,595,042 2,293,018$2,329,763 2,113,350 2,378,375
========= ========= =========
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 Thirty-Nine WeeksQuarter Ended
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-----------------------
Sep. 25, Sep. 26, Sep. 25, Sep. 26,Apr. 2, Mar. 27,
1995 1994 1993 1994 1993
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-------- --------
Net revenues $796,222 812,393 1,729,679 1,814,980$526,503 489,133
Cost of sales 352,129 351,064 763,507 780,605232,572 208,200
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Gross profit 444,093 461,329 966,172 1,034,375293,931 280,933
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Expenses
Amortization 9,598 8,797 27,196 26,1739,243 8,793
Royalties, research and
development 75,359 81,991 180,781 185,27455,084 50,320
Advertising 116,307 111,868 241,294 247,48070,233 64,559
Selling, distribution and
administrative 123,067 126,364 343,337 349,730
Restructuring charges 12,500 - 12,500 -administration 120,803 110,290
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Total expenses 336,831 329,020 805,108 808,657255,363 233,962
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Operating profit 107,262 132,309 161,064 225,71838,568 46,971
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Nonoperating (income) expense
Interest expense 8,776 9,111 18,821 19,6595,823 5,436
Other (income), net (23,710) 333 (26,053) (3,468)(2,512) (1,908)
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Total nonoperating expense (14,934) 9,444 (7,232) 16,1913,311 3,528
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Earnings before income taxes and
cumulative effect of change in
accounting principles 122,196 122,865 168,296 209,52735,257 43,443
Income taxes 47,045 47,317 64,794 80,24913,574 16,726
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Net earningsEarnings before cumulative
effect of change in accounting
principles 75,151 75,548 103,502 129,27821,683 26,717
Cumulative effect of change in
accounting principles - - (4,282) -
------- ------- --------- ---------
Net earnings $ 75,151 75,548 99,220 129,27821,683 22,435
======= ======= ========= =========
Per common share
Net earningsEarnings before cumulative
effect of change in accounting
principles $ .85 .84 1.16 1.44.25 .30
======= ======= ========= =========
Net earnings $ .85 .84 1.11 1.44.25 .25
======= ======= ========= =========
Cash dividends declared $ .08 .07 .06 .21 .18
======= ======= ========= =========
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Thirty-Nine WeeksQuarters Ended September 25,April 2, 1995 and March 27, 1994 and September 26, 1993
(Thousands of Dollars)
(Unaudited)
1995 1994 1993
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Cash flows from operating activities
Net earnings $ 99,220 129,27821,683 22,435
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of plant and equipment 59,710 48,95319,224 16,424
Other amortization 27,196 26,1739,243 8,793
Deferred income taxes (11,102) (6,006)
Gain on investments (23,291) -(5,112) (11,023)
Change in operating assets and liabilities (other than
cash and cash equivalents):
(Increase)Decrease in accounts receivable (368,304) (450,621)257,841 268,687
(Increase) in inventories (73,557) (114,140)(22,261) (21,178)
(Increase) decrease in prepaid expenses 9,318 (6,540)(15,843) 2,075
(Decrease) increase in trade payables and accrued
liabilities (41,936) 11,201(162,280) (193,199)
Other (786) (3,158)(6,958) 4,129
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Net cash utilizedprovided by operating activities (323,532) (364,860)95,537 97,143
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Cash flows from investing activities
Additions to property, plant and equipment (73,019) (60,955)
Purchase of marketable securities - (141,411)
Proceeds from sale of investments 24,449 141,839
Acquisitions,(16,044) (19,590)
Investments and acquisitions, net of cash acquired (98,411) (30,644)(102,413) -
Other 444 2,520168 198
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Net cash utilized by investing activities (146,537) (88,651)(118,289) (19,392)
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Cash flows from financing activities
Net proceeds (payments) of short-term borrowings 418,409 394,313borrowing 72,338 (10,551)
Repayment of long-term debt (50,105) (11,668)(10) (37)
Purchase of common stock (312) -
Stock option and warrant transactions (8,498) 7,422
Purchase of common stock (17,954) -2,296 2,334
Dividends paid (17,577) (14,865)(6,130) (5,271)
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Net cash provided (utilized) by financing
activities 324,275 375,20268,182 (13,525)
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Effect of exchange rate changes on cash 2,774 8227,319 (218)
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DecreaseIncrease (decrease) in cash and cash equivalents (143,020) (77,487)52,749 64,008
Cash and cash equivalents at beginning of year 137,028 186,254 125,953
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Cash and cash equivalents at end of period $ 43,234 48,466$189,777 250,262
======= =======
Supplemental information
Cash paid during the period for:
Interest $ 16,636 18,0532,951 2,859
Income taxes $ 45,931 69,10510,827 20,893
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 September 25,April 2, 1995 and March 27,
1994, and September 26,
1993, and the results of operations and cash flows for the periods then
ended.
The quarter ended April 2, 1995 consisted of fourteen weeks while
the quarter ended March 27, 1994 consisted of thirteen weeks.
The results of operations for the thirty-nine week periodquarter ended September 25,
1994,April 2, 1995, are
not necessarily indicative of results to be expected for the full year.
(2) The Company adopted the provisions of Statement of Financial
Accounting Standards No. 112, Employers' Accounting for Postemployment
Benefits (SFAS 112) as of the beginning of the prior fiscal year. SFAS 112
requires that the cost of certain postemployment benefits be accrued over
the employee service period, which was a change from the Company's prior
practice of recording such benefits when incurred. The effect of initially
applying SFAS 112, net of a deferred tax benefit of $2,513, was reported as
the cumulative effect of a change in accounting principles, negatively
impacting the Company's first quarter 1994 earnings by $4,282.
(3) As of February 1, 1995, the Company purchased certain products and
other assets from the Larami group of companies. The consideration for this
purchase is currently estimated by the Company to be $88,652. Accounting
for this acquisition using the purchase method, the Company has allocated
the purchase price based on preliminary estimates of fair market value
which included $9,622 of net tangible assets, $67,175 of product rights and
licenses and $11,855 of cost in excess of net assets acquired.
(4) 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 thirdfirst quarter and nine months of 19941995 were $796,222 and
$1,729,679, compared to$526,503, or approximately
8% greater than the $812,393 and $1,814,980$489,133 reported for the same periodsperiod of 1993. For the quarter, the Company's1994.
Increased local currency revenues returned to a level
comparable with those of a year ago. This occurred in spite of the loss of
approximately $80,000 of worldwide volume from two successful 1993 product
ranges, Barney(R) and Jurassic Park(TM). Internationally, most of the Company's international
marketing units, showed modest growth from their 1993 levels and also benefited from a
$9,000coupled with the favorable effect of the weakened U.S.
dollar. Domestically,dollar was the record
volume ofmajor factor in this growth. In the thirddomestic market, the
Company's revenues were essentially flat with increases in the Hasbro Games
Group offset by decreases in the Hasbro Toy Group. The first quarter of
1993, buoyed by the two product ranges noted
above, could not be sustained.
COST OF SALES1995 included 14 weeks while 1994 included 13.
Gross Profit
- - -------------------------
The gross profit margin, expressed as a percentage of net revenues,
for the
quarter decreased to 55.8% from the 19931994 level of 56.8%57.4%. A major cause of this
deterioration was the change in mix of products sold, primarily within the
Hasbro Toy Group. During the first quarter of 1995, preschool products
accounted for a larger portion of total revenues and forgenerally this
category returns lower gross margins than do promotional products.
Additionally, the nine months
to 55.9% from 57.0%. This deterioration is largely attributable to the effectincreased cost of plastic resins and paper, major
components of many of the decreased domestic volume, principally in the promotional product area.
Generally, promotional items, which carry higher royalty rates, provideCompany's products, was a higher gross margin than do games and other items.contributing factor.
EXPENSES
-
- --------
Royalties, research and development expenses for the third quarter and nine
months decreasedincreased in
both amount and for the third quarter, as a percentage of revenues from 19931994 levels. The royalty
component increased marginally in amount, reflecting the increased
revenues, while as a percentage of revenues it decreased, reflecting the
change in both categories,
reflecting both the effectmix of reduced revenues and rates on certain 1993
products which carried higher than traditional royalty rates.sold. Research and development was $35,193 and $96,655$32,564 for
the third quarter and nine months of
1994 compared to $33,423 and $87,524$28,503 in the same periods of 1993. These
increases were largely attributable1994. This increase cannot be attributed
to any one unit or geographic area, but rather reflects the Company's
domestic units whose
developmentexpanded efforts, have been expanded.both in new products and technologies and the refreshing
of its existing items.
The current quarter advertising increased approximately $4,400$5,700 from the
comparable 19931994 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 showedincreased
marginally to 13.3% from 13.2% 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 amountyear ago. Both increases can largely be
attributed to the same causes while the increase in percentage is reflectivehigher portion of the fact thatCompany's revenues coming from the
international marketing units which generally have higher advertising to
sales ratios than do the domestic groups.
The Company's selling, distribution and administration expenses increased,
both in amount and as a percentage of net revenues, from their respective
1994 amounts. Contributing to the increases were the impact of the weakened
U.S. dollar, the amounts from the Company's new operations, including
Larami, the K'nex joint venture, Scandinavia, and Waddington Games, the
additional week in the 1995 first quarter and the higher proportion of
volume contributed by the international units. Because of the need to
operate stand-alone units in most otherof the international markets, their
selling, distribution and administration expenses, in this categoryexpressed as a
percentage of revenues, are relatively fixed.
generally greater than those of the domestic
units.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
The Company 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 Hasbro Toy Group, and also announced a
consolidation of its domestic manufacturing facilities. To provide for these
and other immaterial restructuring costs, the Company recorded a $12,500 pretax
charge during the quarter.
NONOPERATING (INCOME) EXPENSE
- - -----------------------------
Interest expense, decreased approximately 4% from 1993 levels in both the third
quarter and the nine months. This decrease reflects the Company's lower
borrowing requirements, partially offset by 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 Company realized an aggregate
pretax gain of approximately $23,000 from these transactions, which is
responsible for the large change in other income, net. Also included are
various other items, none of which are material, of both income and expense.
INCOME TAXES
- - ------------
Income tax expense,while remaining constant as a percentage of pretax earnings, was 38.5% for both the
third quarter and nine months of 1994, compared with 38.5% and 38.3% in the
third quarter and nine months of 1993. This increase in the nine month rate
primarily resultsnet revenues,
increased approximately 7% from the third1994 first quarter 1993 increaseamount. While the
Company's operations generated more than $280,000 of cash during the most
recent twelve months, it also has increased borrowing requirements,
resulting from the utilization of approximately $400,000 for acquisitions
and investments, warrant and share repurchases and the reduction of long-
term debt during the same period. In addition, higher interest rates are
being experienced in the U. S. federal
income tax rate from 34% to 35%.1995.
OTHER INFORMATION
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- -----------------
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 $490,000$400,000 at October 23, 1994April 28, 1995 compared to $520,000$350,000 at October 24, 1993.April 22,
1994. 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.
During both 1994 and 1993, the Company incurred certain restructuring
costs. The 1994 actions, completed in the first quarter of 1995, resulted
in the termination of approximately 600 employees, of which approximately
100 were management positions. The closure of the Company's Netherlands
manufacturing facility, which was the major portion of the 1993 charge,
originally planned for the second quarter of 1994, was delayed until the
first quarter of 1995 due to the time necessary to comply with local
requirements. This resulted in the severance of approximately 200
additional employees. As both of these actions were not completed until the
current quarter, the Company has just begun to experience the financial
benefits from these actions but does not believe that they will be material
in any future period. A majority of the liabilities established for these
restructurings has not yet been satisfied.
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
-
- -------------------------------
Because of the seasonality of the Company's business coupled with certain
customer incentives, mainly in the form of extended payment 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-termshort-
term borrowings to finance them. LateAs a result, cash flow from operations
during the second and third quarters of each year is usually negative while
late in itsthe 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 borrowings, fluctuate significantly from quarter to quarter,
again due to the seasonality of its business and the 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 approximately 10%25% below their 19931994 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
approximately $31,000$25,000 greater than at the same time in 1993.1994. More than half
of the increase relates to a non-trade amount dueresults from the Blockbuster shares sold prior to balance sheet date but having a settlement
dateimpact of September 30. The remaining increasechanged foreign currency
translation rates while the remainder reflects the changeincreased revenue volume
in the Company's sales mix with a larger percentage being made to customers with
extended payment terms.first quarter of 1995. Inventories approximatedmarginally increased from their
1994 level but absent the effect of changed translation rates would have
been below those of a year ago. Prepaid expenses increased from their 1994
amounts reflecting the Company's increased volume and business activities.
Other assets, as a group, increased approximately $40,000$200,000 from their level
a year ago. This increase reflects the Company's acquisition ofinvestments and
acquisitions during the game and puzzle
business of Western Publishing and its investment made in Connector Set Limited
Partnership in conjunction with the joint venture to market the K'NEX(R) line
of construction toys internationally, bothmost recent twelve months, partially offset by the
disposition or transfer to current assets, of certain investments, as described in Management's Discussion
and Analysis of Financial Condition and Results of Operations in the
Company's investments in SpearAnnual Report on Form 10-K (Management's Review) for the year
ended December 25, 1994, and Virgin
and twelve additional months of amortization
expense.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
Short-term borrowings, at $486,252$162,736 were approximately $16,900$110,000 greater than
last year. This reflectsincrease is the net effect of several significant items includingthe cash required for the
Company's recent acquisitions, the early redemption of $50,000 of its long-
term debt, the election by the Company to pay cash rather than issuing additional shares
to 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 common 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 theall partially
offset by funds generated from operations within the most recent twelve
months. Other current liabilities increased marginally, primarily due to timing
differences on payments.approximately 8% as a result of
the Company's increased activities and the impact of changed foreign
currency translation rates. At September 25, 1994,April 2, 1995, the Company had committed
unsecured lines of credit totaling approximately $450,000 available to it.
It also had available uncommitted lines exceedingapproximating $950,000. The Company
believes that these amounts are adequate for its needs. Of these available
lines, approximately $500,000$175,000 was in use at September 25, 1994.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)April 2, 1995.
RECENT DEVELOPMENTSINFORMATION
- - -------------------------------------
As discussed in Management's Discussion and Analysis of Financial Condition and
Results of Operations in the Company's Form 10-K filingReview for the year ended December 26, 1993,25, 1994,
the Company was engaged in legal action againstand CBS Inc. (CBS) had negotiated a resolution to recover all costs associated withthe
implementation of the judgment in favor of the Company arising from a legal
action relating to the environmental clean-upremediation of the Company's former
manufacturing facility in Lancaster, Pennsylvania. On August
10, 1994,During the U.S. District Courtquarter, the
Company received the agreed payment from CBS for remediation and other
costs incurred, the termination of the consent order from the Pennsylvania
Department of Environmental Resources and on April 17, 1995 sold the site
to CBS for the Eastern Division of Pennsylvania
entered judgment in favor of the Company, awarding the Company all of its past
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 Rhode Island. The New Jersey facility
employs approximately 85 employees while approximately 400 people will be
affected in Rhode Island, of which approximately 280 are currently on
traditional seasonal layoffs.
agreed payment.
PART II. Other Information
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
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.None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.None
Item 5. Other InformationInformation.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
11.14 Amendment No. 2 to Revolving Credit Agreement, dated
as of May 1, 1995, among the Company, certain banks
(the "Banks") and The First National Bank of Boston,
as agent for the Banks.
11 Computation of Earnings Per Common Share - Thirty-Nine
WeeksQuarters
Ended September 25, 1994April 2, 1995 and September 26, 1993.
11.2 Computation of Earnings Per Common Share - Thirteen
Weeks Ended September 25, 1994 and September 26, 1993.March 27, 1994.
12 Computation of Ratio of Earnings to Fixed Charges -
Thirty-Nine and Thirteeen WeeksQuarter Ended September
25, 1994.April 2, 1995.
27 Article 5 Financial Data Schedule - Third Quarter 1994Schedule.
(b) Reports on Form 8-K
A currentCurrent Report on Form 8-K dated October 13, 1994, as
amended by Form 8-K/A of the same date,April 20, 1995 was filed
by the Company and included the Press Release dated October 13, 1994April
20, 1995 announcing the Company's results for the current
quarter. Consolidated Statements of Earnings (without notes)
for the quarters ended April 2, 1995 and nine months ended September 25,March 27, 1994 and
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: November 9, 1994May 12, 1995 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 September 25, 1994April 2, 1995
Exhibit Index
Exhibit
No. Exhibits
- - ------- --------
11.1 Computation4 Amendment No. 2 to Revolving Credit Agreement
11 Statement re computation of Earnings Per Common Shareper share earnings - Thirty-Nine Weeks Ended September 25, 1994
and September 26, 1993
11.2 Computationquarter
12 Statement re computation of Earnings Per Common Share -
Thirteen Weeks Ended September 25, 1994 and
September 26, 1993
12 Computation of Ratio of Earnings to Fixed
Charges - Thirty-Nine and Thirteen Weeks
Ended September 25, 1994ratios
27 Article 5 Financial Data Schedule
- Third
Quarter 1994.