EXHIBIT 99
For Immediate Release CONTACT:
October 12, 2000 David Hargreaves (Investor Relations)
401-727-5300
Wayne S. Charness (News Media)
401-727-5983
HASBRO ANNOUNCES PLANS TO IMPROVE PROFITABILITY
EXPECTS SECOND HALF RESULTS TO BE BELOW EXPECTATIONS
Pawtucket, RI (October 12, 2000) - Hasbro, Inc. (NYSE:HAS)
today announced initiatives to increase its focus on core businesses
and improve profitability. These initiatives to enhance future
earnings will result in charges against earnings primarily in the
fourth quarter of 2000. The Company also announced that second half
results, prior to these charges, will be below expectations
reflecting soft demand for POKEMON toys in the U.S. and STAR WARS
worldwide, continuing weakness in the interactive entertainment
business, an ongoing shortage of electronic components, the strong
U.S. dollar, and other external factors.
"Improving Hasbro's profitability is our highest priority,"
said Alan G. Hassenfeld, Chairman and Chief Executive Officer. "Our
intellectual property portfolio of toy and game assets represents
our crown jewels. With our new management team in place, led by Al
Verrecchia, we are focusing more of our efforts on growing our own
brands and new product development to enhance shareholder value by
generating sustainable revenue and earnings growth."
"We have generated significant operating efficiencies and
savings by consolidating our global manufacturing operations in
recent years," said Alfred J. Verrecchia, President and Chief
Operating Officer. "Now we must focus on the product development,
sales and marketing, and administrative functions. Our first step is
to close our toy facilities in Cincinnati, Ohio and in Napa and San
Francisco, California, and to consolidate the U.S. toy group into
Rhode Island. This will reduce fixed overhead, enhance our speed to
market, and improve the product development process, helping us grow
our core brands. We value our relationships with our key
entertainment partners and recognize they will always be important.
However, to generate sustainable revenue and earnings growth, we
must reduce our reliance on licensed properties and improve our core
profitability," Verrecchia explained.
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In addition to consolidating the U.S. toy group, the Company
plans significant overhead reductions in other areas to further
reduce costs. Together, these moves are expected to eliminate
approximately 500 to 550 positions worldwide, or approximately 5% of
the Company's global workforce. Charges under these programs relate
primarily to severance and lease terminations and are expected to be
approximately $70 million pre-tax, primarily in the fourth quarter.
In addition, the Company is assessing its 2001 product line and has
yet to determine the impact of discontinued product lines and
product lines with reduced expectations. This assessment is planned
to be completed in the fourth quarter and may likely result in
additional charges, primarily non-cash. Based upon management's
experience, this additional amount could be in the range of $70 to
$100 million pre-tax. These actions are expected to begin generating
savings in the year 2001 and to payback in less than 3 years.
Prior to these profit improvement charges, the Company's second
half results have been impacted by several challenges previously
cited in July. POKEMON trading card games continue selling briskly
worldwide, while POKEMON toy demand remains strong internationally
but soft in the U.S. STAR WARS revenues are now expected to be
minimal this year. While POO-CHI is still the best-selling
interactive electronic puppy, some of the anticipated second-half
new product introductions from Tiger Electronics have been delayed.
External factors contributing to the anticipated shortfall in
revenue and earnings include continued high oil prices that impact
resin and transportation costs, the continued relative strength of
the U.S. dollar, availability of electronic components, and the
overall lackluster retailing environment. In addition, the
interactive games business is not performing to already reduced
expectations. However, the Company is exploring strategic
alternatives for this business.
As a result, prior to the charges announced today, the Company
expects to report third quarter earnings per share in the range of
approximately $0.06 to $0.10. Under current market conditions, the
Company's revised outlook for full-year 2000 earnings per share is
in the range of $0.40 to $0.50 prior to restructuring and other
charges. Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) for full-year 2000 are expected to be
approximately $540 to $575 million, or $3.05 to $3.25 per share.
"I am confident we are making the right moves to help make
Hasbro leaner and more consistently profitable for our
shareholders," Hassenfeld concluded.
The Company will webcast a conference call at 9:00 A.M. Eastern
Time today to discuss the profit enhancement initiatives and
earnings outlook. Investors and the media are invited to listen at
http://www.hasbro.com (select "Investors & Media" from the home
page, then click on the webcast icon).
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Hasbro is a worldwide leader in children's and family leisure
time and entertainment products and services, including the design,
manufacture and marketing of games and toys ranging from traditional
to high-tech. Both internationally and in the U.S., its PLAYSKOOL,
TONKA, SUPER SOAKER, MILTON BRADLEY, PARKER BROTHERS, TIGER, HASBRO
INTERACTIVE, MICROPROSE and WIZARDS OF THE COAST brands and products
provide the highest quality and most recognizable play experiences
in the world.
Certain statements contained in this release contain "forward-
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements may be identified
by the use of forward-looking words or phrases such as "anticipate",
"believe", "could", "expect", "intend", "may", "planned",
"potential", "should", "will" and "would". Such forward-looking
statements are inherently subject to known and unknown risks and
uncertainties. The Company's actual actions or results may differ
materially from those expected or anticipated in the forward-looking
statements. Specific factors that might cause such a difference
include, but are not limited to, the Company's ability to
manufacture, source and ship new and continuing products on a timely
basis and the acceptance of those products by customers and
consumers at prices that will be sufficient to profitably recover
development, manufacturing, marketing, royalty and other costs of
products; economic conditions, including higher fuel prices and
availability of electronic components, currency fluctuations and
government regulation and other actions in the various markets in
which the Company operates throughout the world; the inventory
policies of retailers, including the concentration of the Company's
revenues in the second half and fourth quarter of the year, together
with increased reliance by retailers on quick response inventory
management techniques, which increases the risk of underproduction
of popular items, overproduction of less popular items and failure
to achieve tight and compressed shipping schedules; the impact of
competition on revenues, margins and other aspects of the Company's
business, including the ability to secure, maintain and renew
popular licenses and the ability to attract and retain talented
employees in a competitive environment; market conditions, third
party actions or approvals and the impact of competition that could
delay or increase the cost of implementation of the Company's Profit
Improvement Program or alter the Company's actions and reduce actual
results; the risk that anticipated benefits of acquisitions may not
occur or be delayed or reduced in their realization; and with
respect to the Company's online game site initiative, technical
difficulties in adapting games to online format and establishing the
online game site that could delay or increase the cost of the site
becoming operational; the acceptance by consumers of the games and
other products and services to be offered at the site; competition
from other online game sites and other game playing formats; and the
fact online game revenues may not be sufficient to cover the
significant advertising and other expenditures required or the
support, service and product enhancement demands of online users.
The Company undertakes no obligation to make any revisions to the
forward-looking statements contained in this release or to update
them to reflect events or circumstances occurring after the date of
this release.
EBITDA (earnings before interest, taxes, depreciation and
amortization) represents operating profit plus acquired in-process
research and development, restructuring charges, depreciation and
all amortization. EBITDA is not adjusted for all noncash expenses or
for working capital, capital expenditures or other investment
requirements and, accordingly, is not necessarily indicative of
amounts that may be available for discretionary uses. Thus, EBITDA
should not be considered in isolation or as a substitute for net
earnings or cash provided by operating activities, each prepared in
accordance with generally accepted accounting principles, when
measuring Hasbro's profitability or liquidity as more fully
discussed in the Company's financial statements and securities
filings.
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