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 AprilJuly 2, 1995 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 April 28, 1994August 11, 1995 was 87,717,715.87,782,900.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands of Dollars Except Share Data) (Unaudited)
Apr.Jul. 2, Mar. 27,Jun. 26, Dec. 25,
Assets 1995 1994 1994
-------- -------- --------
Current assets
Cash and cash equivalents $ 189,777 250,26286,213 46,427 137,028
Accounts receivable, less allowance
for doubtful accounts of $49,700,$45,800,
$53,500 and $51,000 475,813 449,981654,216 635,893 717,890
Inventories:
Finished products 198,587 203,757272,182 271,620 181,202
Work in process 22,334 23,27429,987 22,549 19,342
Raw materials 56,017 44,28861,873 44,275 43,863
--------- --------- ---------
Total inventories 276,938 271,319364,042 338,444 244,407
Deferred income taxes 83,474 86,93381,173 89,356 83,730
Prepaid expenses 86,849 63,57179,920 63,719 69,408
--------- --------- ---------
Total current assets 1,112,851 1,122,0661,265,564 1,173,839 1,252,463
Property, plant and equipment, net 308,469 282,978309,571 292,794 308,879
--------- --------- ---------
Other assets
Cost in excess of acquired net assets,
less accumulated amortization of
$87,335, $71,768$91,499, $75,461 and $82,949 489,918 472,367486,034 469,384 479,960
Other intangibles, less accumulated
amortization of $62,761, $89,609$68,363, $94,803 and
$58,178 357,373 180,839351,852 175,793 295,333
Other 61,152 55,10046,747 55,332 41,740
--------- --------- ---------
Total other assets 908,443 708,306884,633 700,509 817,033
--------- --------- ---------
Total assets $2,329,763 2,113,350$2,459,768 2,167,142 2,378,375
========= ========= =========
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
(Thousands of Dollars Except Share Data) (Unaudited)
Apr.Jul. 2, Mar. 27,Jun. 26, Dec. 25,
Liabilities and Shareholders' Equity 1995 1994 1994
-------- -------- --------
Current liabilities
Short-term borrowings $ 162,736 53,091353,051 129,488 81,805
Current installments of long-term debt - 3,214 10
Trade payables 115,259 105,280 165,378115,321 105,249 165,368
Accrued liabilities 309,950 293,557314,563 297,094 417,763
Income taxes 106,007 92,90657,905 67,425 98,786
--------- --------- ---------
Total current liabilities 693,952 544,834840,840 602,470 763,732
Long-term debt, excluding current
installments 150,000 200,479149,993 200,458 150,000
Deferred liabilities 65,809 73,17166,292 70,946 69,226
--------- --------- ---------
Total liabilities 909,761 818,4841,057,125 873,874 982,958
--------- --------- ---------
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, 87,981,17688,086,040, 88,081,902 and 88,085,802 44,043 43,99144,041 44,043
Additional paid-in capital 280,896 299,064279,933 292,455 282,151
Retained earnings 1,086,070 937,2271,064,150 932,690 1,071,416
Cumulative translation adjustments 22,473 14,58424,464 27,933 14,526
Treasury stock, at cost, 450,559,
none335,435,
134,400 and 557,455 shares (13,480) -(9,947) (3,851) (16,719)
--------- --------- ---------
Total shareholders' equity 1,420,002 1,294,8661,402,643 1,293,268 1,395,417
--------- --------- ---------
Total liabilities and
shareholders' equity $2,329,763 2,113,350$2,459,768 2,167,142 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)
Quarter Ended Six Months Ended
------------------- --------------------
Apr.Jul. 2, Mar. 27,Jun. 26, Jul. 2, Jun. 26,
1995 1994 1995 1994
-------- -------- --------- ---------
Net revenues $526,503 489,133$481,854 444,324 1,008,357 933,457
Cost of sales 232,572 208,200214,085 203,178 446,657 411,378
------- ------- --------- ---------
Gross profit 293,931 280,933267,769 241,146 561,700 522,079
------- ------- --------- ---------
Expenses
Amortization 9,243 8,7939,725 8,805 18,968 17,598
Royalties, research and
development 55,084 50,32062,085 55,102 117,169 105,422
Discontinued development
project 31,100 - 31,100 -
Advertising 70,233 64,55968,164 60,428 138,397 124,987
Selling, distribution and
administration 120,803 110,290119,005 109,980 239,808 220,270
------- ------- --------- ---------
Total expenses 255,363 233,962290,079 234,315 545,442 468,277
------- ------- --------- ---------
Operating profit 38,568 46,971(loss) (22,310) 6,831 16,258 53,802
------- ------- --------- ---------
Nonoperating (income) expense
Interest expense 5,823 5,4367,384 4,609 13,207 10,045
Other (income), net (2,512) (1,908)(5,477) (435) (7,989) (2,343)
------- ------- --------- ---------
Total nonoperating expense 3,311 3,5281,907 4,174 5,218 7,702
------- ------- --------- ---------
Earnings (loss) before income
taxes and cumulative effect of
change in accounting principles 35,257 43,443(24,217) 2,657 11,040 46,100
Income taxes 13,574 16,726(9,324) 1,023 4,250 17,749
------- ------- Earnings--------- ---------
Net earnings (loss) before
cumulative effect of change in
accounting principles 21,683 26,717(14,893) 1,634 6,790 28,351
Cumulative effect of change in
accounting principles - - - (4,282)
------- ------- --------- ---------
Net earnings $ 21,683 22,435(loss) $(14,893) 1,634 6,790 24,069
======= ======= ========= =========
Per common share
EarningsNet earnings (loss) before
cumulative effect of change
in accounting principles $ .25 .30(.17) .02 .08 .32
======= ======= ========= =========
Net earnings (loss) $ .25 .25(.17) .02 .08 .27
======= ======= ========= =========
Cash dividends declared $ .08 .07 .16 .14
======= ======= ========= =========
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
QuartersSix Months Ended AprilJuly 2, 1995 and March 27,June 26, 1994
(Thousands of Dollars) (Unaudited)
1995 1994
---- ----
Cash flows from operating activities
Net earnings $ 21,683 22,4356,790 24,069
Adjustments to reconcile net earnings to net cash
providedutilized by operating activities:
Depreciation and amortization of plant and equipment 19,224 16,42440,415 35,529
Other amortization 9,243 8,79318,968 17,598
Deferred income taxes (5,112) (11,023)(3,521) (13,241)
Change in operating assets and liabilities (other
than cash and cash equivalents):
Decrease in accounts receivable 257,841 268,68779,057 90,098
(Increase) in inventories (22,261) (21,178)(108,054) (82,645)
(Increase) decrease in prepaid expenses (15,843) 2,075(8,323) 3,193
(Decrease) in trade payables and accrued
liabilities (162,280) (193,199)(208,513) (219,678)
Other (6,958) 4,12912,016 1,475
------- -------
Net cash providedutilized by operating activities 95,537 97,143(171,165) (143,602)
------- -------
Cash flows from investing activities
Additions to property, plant and equipment (16,044) (19,590)
Investments and acquisitions,(38,752) (45,825)
Acquisitions, net of cash acquired (102,413) -
Other 168 1982,215 1,114
------- -------
Net cash utilized by investing activities (118,289) (19,392)(138,950) (44,711)
------- -------
Cash flows from financing activities
Net proceeds (payments)from short-term borrowings of 90 days
or less 76,332 63,944
Proceeds from short-term borrowing 72,338 (10,551)borrowings in excess of
90 days 185,000 -
Repayment of long-term debt (10) (37)(74)
Stock option and warrant transactions 4,866 (4,225)
Purchase of common stock (312) -
Stock option and warrant transactions 2,296 2,334(3,851)
Dividends paid (6,130) (5,271)(13,147) (11,434)
------- -------
Net cash provided (utilized) by financing activities 68,182 (13,525)252,729 44,360
------- -------
Effect of exchange rate changes on cash 7,319 (218)6,571 4,126
------- -------
Increase (decrease)Decrease in cash and cash equivalents 52,749 64,008(50,815) (139,827)
Cash and cash equivalents at beginning of year 137,028 186,254
------- -------
Cash and cash equivalents at end of period $189,777 250,262$ 86,213 46,427
======= =======
Supplemental information
Cash paid during the period for:
Interest $ 2,951 2,85910,279 10,958
Income taxes $ 10,827 20,89345,982 43,361
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 AprilJuly 2, 1995 and March 27,June 26, 1994,
and the results of operations and cash flows for the periods then ended.
The quartersix months ended AprilJuly 2, 1995 consisted of fourteen27 weeks while the quartersix
months ended March 27,June 26, 1994 consisted of thirteen26 weeks.
The results of operations for the quartersix months ended AprilJuly 2, 1995, are not
necessarily indicative of results to be expected for the full year.
(2) During the second quarter, the Company discontinued its efforts, begun
in
1992, related to the development of a mass-market virtual reality game
system. These efforts produced such a game system, but at a price judged to
be too expensive for the mass-market. The Company adoptedimpact of this decision on the
provisionsquarter was a charge of Statement$31,100. (See further discussion in Management's
Discussion and Analysis of Financial Accounting Standards No. 112, Employers' Accounting for Postemployment
Benefits (SFAS 112) asCondition and Results 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.Operations.)
(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 the difference between primary and fully
diluted earnings per share was not significant.
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 firstsecond quarter and six months of 1995 were $526,503, or$481,854
and $1,008,357, respectively, up approximately 8% greater thanin each period from the
$489,133$444,324 and $933,457 reported for the same periodperiods of 1994. IncreasedReflecting
local currency revenues from mostgrowth in their major markets, the U.K., France, Italy and
Spain, as well as the impact of acquisitions made in the Company's international
marketingsecond half of
1994, the European units coupled with the favorableachieved revenue growth of almost 14% in constant
dollars. The effect of the weakened U.S. dollar wasadded approximately
$15,000, resulting in a total European growth of 26% for the major factor in this growth. In the domestic market,quarter.
Domestically, the Company's revenues were essentially flat with increases inalso favorably impacted by the
second-half 1994 and early 1995 acquisitions. The Hasbro Games Group,
offset by decreasesshowing growth in the Hasbro Toy Group. The first quartermany of 1995 included 14 weeks whiletheir classic products, a positive acceptance
from new products as well as benefiting from one of these 1994
included 13.
Gross Profitacquisitions, reported significant revenue growth, up more than 21%.
COST OF SALES
- -------------------------
The gross profit margin, expressed as a percentage of net revenues, decreasedfor the
quarter increased to 55.8%55.6% from the 1994 level of 57.4%. A major cause of this
deterioration was54.3%, while marginally
decreasing for the change insix months to 55.7% from 55.9% a year ago. The
improvement for the quarter reflects the more favorable mix of products
sold primarily withinin 1995, which more than offset cost increases from a year ago. The
difference for the Hasbro Toy Group. Duringsix months can largely be attributed to the impact of
increased product costs and the higher volume of preschool products sold
during the first quarter of 1995, preschool products
accounted for a larger portion of total revenues and generally this
category returns lower gross margins than do promotional products.
Additionally, the increased cost of plastic resins and paper, major
components of many of the Company's products, was a contributing factor.quarter.
EXPENSES
- --------
Royalties, research and development expenses for the quarter increased in
both amount and as a percentage of revenues from 1994 levels. The royalty
component increased marginally
in amount reflecting the increased
revenues, while as a percentage of revenues it decreased, reflecting the
change in mix of products sold. Research and development was $32,564 for
the quarter compared to $28,503 in 1994. This increase cannot be attributed
to any one unit or geographic area, but rather reflects the Company's
expanded efforts, both in new products and technologies and the refreshing
of its existing items.
The current quarter advertising increased approximately $5,700 from the
comparable 1994 level, and as a percentage of net revenues from prior year levels. The
royalty component increased marginallyin amount and when expressed as a percentage of
net revenues. In addition to 13.3% from 13.2% a year ago. Bothreflecting the 8% growth in volume during the
quarter, the increases can largelyalso be attributed to the mix of products sold
with more revenue being derived from items carrying higher portionthan traditional
royalty rates. Research and development was $34,864 and $67,428 for the
quarter and six months of 1995 while $32,959 and $61,462 for the same
periods of 1994. Included in the 1995 amounts are $2,300 for the second
quarter and $5,300 for the six months relating to efforts to develop a
mass-market virtual reality game system as discussed below. Amounts for the
comparable periods of 1994 were $3,800 and $6,800.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
During the second quarter, the Company discontinued its efforts, begun in
1992, related to the development of a mass-market virtual reality game
system. These efforts produced such a game system, but at a price judged to
be too expensive for the mass-market. The impact of this decision on the
quarter was a charge of $31,100, the estimated costs associated with such
action. Approximately half of the charge resulted from the expensing of
software development costs related to both the operating system and games
for the system. These costs were previously capitalized under the
provisions of Statement of Financial Accounting Standards No. 86. The
remaining amount represents provisions for costs associated with
discontinuing this project, including the termination of contractual
agreements relating to the development of the system and games, the write-
off of certain fixed assets and various other cancellation/termination
costs.
Advertising expense in the current quarter increased both in amount and as
a percentage of net revenues. For the second quarter and six months of
1995, the amounts were $68,164 and $138,397, respectively, compared with
$60,428 and $124,987 in the same periods of 1994. Expressed as a percentage
of net revenues, 1995 was 14.1% and 13.7% while 1994 was 13.6% and 13.4%.
The increases during the current year reflect the higher proportion of the
Company's revenues coming from the international marketing units which
generally have higher advertising to sales ratios than do the domestic
groups.
The Company'sFor the quarter, selling distribution and administration expensesexpense increased
both in amount and asfrom the level of the comparable period of 1994. This increase was the
result of a percentagecombination of net revenues, from their respective
1994 amounts. Contributing to the increases werefactors including the impact of the weakened
U.S. dollar, new organizations, principally Larami, Waddington Games,
Scandinavia and the amounts from the Company's new operations, including
Larami, the K'nexK'NEX joint venture, Scandinavia,higher distribution costs
attributable to the higher sales volume and Waddington Games,a general increase in expense
levels. The six month increase is primarily attributable to the same
factors, augmented by the impact of the additional week included in the
1995 first quarter of 1995.
NONOPERATING (INCOME) EXPENSE
- -----------------------------
Interest expense for the second quarter, reflecting the impact of higher
interest rates and the higher proportionutilization of volume contributedapproximately $400,000 of working
capital for acquisitions and investments, warrant and share repurchases and
the reduction of long-term debt during the most recent twelve months,
increased by $2,800 from the international units. Because of1994 level. The six month increase can also be
attributed to the need to
operate stand-alone units in most of the international markets, their
selling, distribution and administration expenses, expressed as a
percentage of revenues, are generally greater than those of the domestic
units.same factors.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
NONOPERATING (INCOME) EXPENSE
- -----------------------------
Interest expense, while remaining constant asOther income, net, increased significantly for the quarter reflecting both
the impact of foreign currency transaction gains and increased earnings
from available funds, principally in the international units, invested on a
percentage of net revenues,
increased approximately 7% from the 1994 first quarter amount. 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 $400,000short-term basis locally. (See Liquidity and Capital Resources later in
this document 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 1995.further discussion related to short-term investments.)
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
whichnow being used 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 $400,000$950,000 at April 28,July 30,
1995, compared to $350,000$850,000 at April 22,July 24, 1994. During the past several yearsThe revenue pattern of the
Company has experienced acontinues to shift in
its revenue pattern whereinwith the second half of the year has growngrowing in
significance to its overall business and within that half the fourth
quarter has becomebecoming much more prominent. The Company expects that this trend
will continue.
During both 1994 andthe fourth quarter of 1993, the Company incurred certainrecorded a restructuring
costs. The 1994 actions, completed incharge of $15,500, primarily relating to the first quarter of 1995, resulted
in the termination of approximately 600 employees, of which approximately
100 were management positions. Theplanned closure of the
Company's Netherlands
manufacturing facility which was the major portion of the 1993 charge,
originallyin The Netherlands. The Company had
initially planned forto cease production at this facility during the second
quarter of 1994 but was delayedunable to do so. The actions necessary to comply
with local regulations relating to such a closure took longer than
anticipated and the Company did not cease production at this facility until
the first quarter of 1995 due to1995. A majority of 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,liability established for this
closure has now been satisfied and the Company has just begun to experience the
financial
benefitspositive results from these actions but does not believe that they will be materialthis action including both the elimination of costs
associated with the previously existing excess production capacity and the
transfer of production to a lower-cost manufacturing facility. The
remaining amount provided in any future period. A majority1993 related to several items, none of which
were significant, either in cost or anticipated benefits. All of the
liabilities established for these
restructurings has not yetsuch items have been satisfied.satisfied and the expected
benefits are being obtained.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
During the third quarter of 1994, the Company recorded a restructuring
charge of $12,500, primarily to cover costs associated with the
restructuring of certain of its domestic operations. Included in such
amount 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 a majority of
the liability has been satisfied. Also part of this charge was a provision
of approximately $3,400 for costs associated with the termination of
approximately 485 domestic manufacturing employees. Substantially all of
these employees have also been terminated and a majority of the liability
has been satisfied. The Company believes that the reorganized units are
operating more efficiently and thus the anticipated savings, although
impractical to quantify, are being experienced.
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 areis 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. As a result, cash flow from operations
during the second and third quarters of each year is usually negative while
lateLate in theits 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.
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.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
Cash and cash equivalents at July 2, 1995, were approximately 25% belowalmost double their 1994
level. TheWhile the Company attempts to keep its cash and cash equivalents at
the lowest level possible whenever it has short-term borrowings. Atborrowings, 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. Receivables were approximately $25,000$20,000 greater than at the
same time in 1994. More1994, with more than halftwo-thirds of the increase results from the impact ofattributable
to changed foreign currency translation rates while the remainder reflects the increased revenue volume
in the first quarter of 1995.rates. Inventories, marginally increased from their
1994 level but absent the effect of changed translation rates would have
been belowat $364,042
were approximately $25,000 higher than those of a year ago. Prepaid expenses increased from their 1994
amountsago reflecting the
impact of the Company's increased volume and business activities.new operations as well as that of the weakened U.S.
dollar. Other assets, as a group, increased by approximately $200,000$185,000 from
their level a year ago. This increase reflects the Company's investments
and acquisitions during the most recent twelve months, partially offset by
the disposition of certain investments, as described in Management's
Discussion and Analysis of Financial Condition and Results of Operations in
the Company's Annual Report on Form 10-K (Management's Review) for the year ended December 25,
1994, 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 $162,736$353,051 were approximately $110,000$225,000 greater than
last year. This increase is the net effect of the cash required for the
Company's recent investments and acquisitions, the early redemption of
$50,000 of its long-
termlong-term debt, the election to pay cash rather than issuing
additional shares to exercising holders of its warrants, which expired on
July 12, 1994, and the repurchase of shares of the Company's common stock, the net cash
requirements of the change in other assets noted above,
all partially offset by funds generated from operations within the most
recent twelve months. Other current liabilities increased approximately 8% as a result of3%
reflecting both the Company's increased activities and the impact of
changed foreign currency translation rates.
At AprilJuly 2, 1995, the Company had committed unsecured lines of credit
totaling approximately $450,000$600,000 available to it. It also had available
uncommitted lines approximating $950,000.$1,050,000. The Company believes that these
amounts are adequate for its needs. Of these available lines, approximately
$175,000$375,000 was in use at AprilJuly 2, 1995.
RECENT INFORMATION
- ------------------
As discussed in Management's Review for the year ended December 25, 1994,
the Company and CBS Inc. (CBS) had negotiated a resolution to the
implementation of the judgment in favor of the Company arising from a legal
action relating to the environmental remediation of the Company's former
manufacturing facility in Lancaster, Pennsylvania. During the quarter, 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 agreed payment.
PART II. Other Information
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.None
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
NoneAt the Company's Annual Meeting of Shareholders held on May
10, 1995, the Company's Shareholders, by a vote of 69,811,908
for, 6,116,974 against, 681,468 abstentions and no broker
nonvotes, approved the Hasbro, Inc. Stock Incentive Performance
Plan.
In addition, they reelected the following persons to the Board
of Directors of the Company: Barry J. Alperin (76,462,143 votes
for, 148,207 votes withheld); Alan R. Batkin (76,447,327 votes
for, 163,023 votes withheld); Claudine B. Malone (76,462,359
votes for, 147,991 votes withheld); Carl Spielvogel (74,190,912
votes for, 2,419,438 votes withheld); and Henry Taub (74,177,318
votes for, 2,433,032 votes withheld). They also elected the
following two new Directors; Morris W. Offit (76,455,655 votes
for, 154,695 votes withheld); and Paul Wolfowitz (76,457,571
votes for, 152,779 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 1995 fiscal year by a vote of 76,501,156 for,
40,194 against, 69,000 abstentions and no broker nonvotes.
Item 5. Other Information.Information
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
4 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.
1111.1 Computation of Earnings Per Common Share - QuartersSix Months
Ended AprilJuly 2, 1995 and March 27,June 26, 1994.
11.2 Computation of Earnings Per Common Share - Quarter
Ended July 2, 1995 and June 26, 1994.
12 Computation of Ratio of Earnings to Fixed Charges -
Six Months and Quarter Ended AprilJuly 2, 1995.
27 Article 5 Financial Data Schedule.Schedule - Second Quarter 1995
(b) Reports on Form 8-K
A Current Report on Form 8-K, dated April 20,July 19, 1995, was filed by
the Company and included the Press Release dated April
20,July 19, 1995,
announcing that the Company was discontinuing its efforts to
develop a mass-market virtual reality game system and
discussing the Company's revenue and earnings expectations for
the current quarter.
A Current Report on Form 8-K, dated July 24, 1995, was filed by
the Company and included the Press Release dated July 24, 1995,
announcing the Company's results for the current quarter.
Consolidated Statements of Earnings (without notes) for the
quarters and six months ended AprilJuly 2, 1995 and March 27,June 26, 1994
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: May 12,August 16, 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 AprilJuly 2, 1995
Exhibit Index
Exhibit
No. Exhibits
- ------- --------
4 Amendment No.11.1 Computation of Earnings Per Common Share -
Six Months Ended July 2, 1995 and June 26, 1994
11.2 Computation of Earnings Per Common Share -
Quarter Ended July 2, 1995 and June 26, 1994
12 Computation of Ratio of Earnings to Revolving Credit Agreement
11 Statement re computation of per share earningsFixed
Charges - quarter
12 Statement re computation of ratiosSix Months and Quarter Ended July 2, 1995
27 Article 5 Financial Data Schedule - Second Quarter 199