EXHIBIT 99
For Immediate Contact:
Release
October 22, 2001 Karen A. Warren (Investor Relations) 401-727-5401
Wayne S. Charness (News Media) 401-727-5983
HASBRO RETURNS TO PROFITABILITY IN THE THIRD QUARTER
CONTINUES TO BE ON TRACK FOR FULL YEAR PROFITABILITY
Pawtucket, RI (October 22, 2001) - Hasbro, Inc. (NYSE:HAS) today
reported that it had returned to profitability in the third quarter.
Worldwide net revenues were $893.4 million compared to $1.1 billion a year
ago. Net earnings were $50.6 million, compared to earnings of $13.8 million
in 2000 and diluted earnings per share were $0.29, compared to $0.08 per
share in 2000. The Company also reported third quarter Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA) of $161.3 million,
compared to $120.4 million in the third quarter of 2000.
For the nine months, worldwide net revenues were $1.9 billion compared
to $2.6 billion a year ago. Net earnings and diluted earnings per share in
the first nine months were $7.2 million and $0.04, respectively, compared to
earnings of $35.5 million and $0.20 last year. EBITDA for the nine months
was $247.0 million compared to $311.0 million last year.
"We are very pleased that we achieved our goal of cumulative
profitability for 2001 by the end of the third quarter and we continue to
believe we are on track to be profitable this year. Our strategy of focusing
on expense reductions and growing our core brands is continuing to pay
dividends," said Alan G. Hassenfeld, Chairman and Chief Executive Officer.
"In the third quarter, many of our new products for the year began
shipping and we saw our revenue grow by approximately $92 million or 12%,
excluding POKEMON, Hasbro Interactive and FURBY. Revenue reductions from
these three product lines totaled $272 million for the quarter in 2001,"
Hassenfeld continued.
"We've had strong sales from TRANSFORMERS and G.I. JOE - including our
new kid directed line DOUBLE DUTY. In the games area, several new products
have done well including WHEELS ON THE BUS and DISNEY MONOPOLY, one of the
most successful introductions of a licensed Monopoly game in the 66 year
history of the brand. Also, we've had great initial response to DUSTY MY
TALKING TOOL BENCH from TONKA. We are also pleased with our partnerships -
BOB THE BUILDER has continued to have strong sales, and we've had good
initial response to HARRY POTTER trading card games, E-KARA, a hand-held
karaoke system and MONSTERS, INC., the first movie with a full product line
as part of our new Disney alliance," Hassenfeld concluded.
For the third quarter, the U.S. Toy segment increased revenue 21% and
was profitable, compared to a substantial loss last year. Excluding POKEMON,
revenue increased 30% for the U.S. Toy segment. The Games segment continued
to be profitable, although revenue declined due to POKEMON, FURBY and the
sale of Hasbro Interactive. Excluding these three product lines, revenue
increased 2% for the segment, primarily attributable to growth in our board
game and trading card game businesses, which was partially offset by a
decline in Tiger Electronics. International segment revenue declined year
over year, primarily due to POKEMON and FURBY. This decline in International
segment revenue also resulted in a slightly lower operating profit versus the
comparable period last year. Excluding POKEMON, FURBY and Hasbro Interactive,
International revenue increased 10%.
"We continue to demonstrate that our focus on reducing expenses is
working, with substantial reductions in all operating expense categories in
each of the past three quarters. In fact, we expect cost savings for the
year, excluding Hasbro Interactive, will exceed the $50 to $70 million
objective we set at the beginning of the year, and with further opportunities
for cost reductions in 2002," said Alfred J. Verrecchia, President and Chief
Operating Officer.
"As has been the case all year, these cost savings are primarily
attributable to our ongoing cost reduction program and the sale of Hasbro
Interactive and Games.com. In addition, we maintained our focus on managing
the balance sheet as we continue to reduce inventory levels and short-term
debt. In fact, short-term debt declined $240.0 million and total debt, net
of cash, declined $112.6 million as compared to the third quarter last year.
We are on track and management is focused on our most important objective of
returning to the profitability levels we have had historically," Verrecchia
concluded.
The company will webcast its third quarter earnings conference call at
9:00 a.m. Eastern time today. Investors and the media are invited to listen
at http://www.hasbro.com (select "Investors" from the home page, then click
on the webcast icon).
Hasbro is a worldwide leader in children's and family leisure time
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, MILTON BRADLEY, PARKER
BROTHERS, TIGER, 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", "look forward", "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,
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 consolidation programs
or alter the Company's actions and reduce actual results, and the risk that
anticipated benefits of acquisitions may not occur or be delayed or reduced
in their realization. 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 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.
# # #
(Tables Attached)
HASBRO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars)
Sept. 30, Oct. 1,
2001 2000
--------- ---------
Assets
Cash and Cash Equivalents $ 37,080 $ 164,307
Accounts Receivable, Net 785,807 889,090
Inventories 345,690 540,307
Other Current Assets 388,092 442,651
--------- ---------
Total Current Assets 1,556,669 2,036,355
Property, Plant and Equipment, Net 256,982 313,301
Other Assets 1,776,935 2,020,930
--------- ---------
Total Assets $3,590,586 $4,370,586
========= =========
Liabilities and Shareholders' Equity
Short-term Borrowings $ 298,698 $ 538,653
Current Installments of Long-term Debt 3,344 781
Payables and Accrued Liabilities 746,757 1,080,176
--------- ---------
Total Current Liabilities 1,048,799 1,619,610
Long-term Debt 1,166,360 1,168,764
Deferred Liabilities 90,293 90,887
--------- ---------
Total Liabilities 2,305,452 2,879,261
Total Shareholders' Equity 1,285,134 1,491,325
--------- ---------
Total Liabilities and Shareholders' Equity $3,590,586 $4,370,586
========= =========
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars and Shares Except Per Share Data)
Quarter Ended Nine Months Ended
------------------ ---------------------
Sept. 30, Oct. 1, Sept 30, Oct. 1,
2001 2000 2001 2000
-------- --------- ---------- ---------
Net Revenues $ 893,353 1,072,617 $1,867,610 2,624,471
Cost of Sales 402,155 459,535 795,968 1,057,879
-------- --------- ---------- ---------
Gross Profit 491,198 613,082 1,071,642 1,566,592
Amortization 29,761 33,861 88,044 98,645
Royalties, Research and
Development 97,182 164,912 223,785 426,101
Advertising 90,655 134,631 189,333 281,722
Selling, Distribution and
Administration 169,826 222,743 480,854 626,453
-------- --------- ---------- ---------
Operating Profit 103,774 56,935 89,626 133,671
Interest Expense 26,116 30,565 77,327 80,206
Other (Income) Expense, Net 3,244 6,324 74 2,075
-------- --------- ---------- ---------
Earnings Before Income
Taxes and Cumulative Effect of
Accounting Change 74,414 20,046 12,225 51,390
Income Taxes 23,812 6,214 3,912 15,931
-------- --------- ---------- ---------
Earnings before
Cumulative Effect of
Accounting Change 50,602 13,832 8,313 35,459
Cumulative Effect of Accounting
Change - - (1,066) -
-------- --------- ---------- ---------
Net Earnings $ 50,602 $ 13,832 $ 7,247 $ 35,459
======== ========= ========== =========
Per Common Share
Earnings before Cumulative
Effect of Accounting Change
Basic and Diluted $ 0.29 $ 0.08 $ 0.05 $ 0.20
======== ========= ========== =========
Net Earnings
Basic and Diluted $ 0.29 $ 0.08 $ 0.04 $ 0.20
======== ========= ========== =========
Cash Dividends Declared $ 0.03 $ 0.06 $ 0.09 $ 0.18
======== ========= ========== =========
Weighted Average Number of shares
Basic 172,140 171,732 172,032 177,937
======== ========= ========== =========
Diluted 173,232 171,941 172,650 178,638
======== ========= ========== =========