EXHIBIT 99
For Immediate Release CONTACT:
--------
October 21, 2002 Karen A. Warren (Investor Relations) 401-727-5401
Wayne S. Charness (News Media) 401-727-5983
HASBRO REPORTS THIRD QUARTER 2002 RESULTS
Pawtucket, RI (October 21, 2002) - Hasbro, Inc. (NYSE: HAS) today
reported results for its third quarter ending September 29, 2002. Worldwide
net revenues were $820.5 million compared to $893.4 million a year ago. Net
earnings for the quarter were $55.8 million, compared to earnings of $50.6
million a year ago and diluted earnings per share were $0.32, compared to
$0.29 per share in 2001. The Company also reported third quarter Earnings
before Interest, Taxes, Depreciation and Amortization (EBITDA) of $146.1
million, compared to $161.3 million in the third quarter of 2001.
For the nine months, worldwide net revenues were $1.8 billion, compared
to $1.9 billion a year ago. Before the cumulative effect of an accounting
change related to the adoption of FAS 142 "Goodwill and Other Intangibles,"
the Company's earnings for the nine months were $12.9 million, compared to
earnings, before accounting change, of $8.3 million in the prior year.
Including the impact of accounting changes in both years, the Company
recorded a net loss of $232.8 million, compared to net earnings of $7.2
million for the year-ago nine-month period. The company reported a diluted
loss per share in the first nine months of 2002 of $1.34, compared to
earnings of $0.04 for the comparable period last year.
Alan G. Hassenfeld, Chairman and Chief Executive Officer, said, "We are
encouraged by our accomplishments this quarter. We remained focused on
improving profitability for shareholders, managing our bottom line
effectively despite a revenue decline. In examining our revenue results more
closely, non-core products such as licensed trading card games and robotic
pets were the primary reason for the top line decrease this quarter."
"In looking at our core brands, G.I. Joe sales were up 82% and
Transformers were up 65%. In addition, Playskool was up 49% year-over-year,
with Mr. Potato Head experiencing 39% revenue growth for the quarter. In
Games, the initial response to The Special 20th Anniversary Edition of
Trivial Pursuit and the Scrabble Folio has been very strong. I believe our
success with these core brand extensions underlines the depth and strength of
Hasbro's product portfolio," Hassenfeld continued.
In the U.S. Toys segment, revenues were down for the quarter, primarily
due to robotic toy products related to the Tiger and WowWee lines. Partly
offsetting this impact, the Company experienced strength in a number of core
product lines including G.I. Joe, Transformers, Playskool and Easy Bake.
Revenues for the Games segment were down for the quarter, primarily due to
licensed trading card games and electronic games. International segment
revenues were down, primarily due to Pokemon and Harry Potter trading card
games, offset in part by strong revenues from many core brands including
Transformers,
Play-Doh, Micro-Machines and Magic the Gathering trading card games. All
three of the Company's business segments were profitable for the quarter on a
pre-tax basis, with both the U. S. Toys and Games segments delivering an
increase in year-over-year profitability.
"Our strategy of focusing on cost reductions, managing the balance sheet
and growing our core brands is continuing to generate results," said Alfred
J. Verrecchia, President and Chief Operating Officer. "We continue to make
significant progress on both our financial and non-financial goals."
"In terms of our financial performance, our third quarter year-over-year
increase in earnings per share is significant because we accomplished this
with revenue down and higher royalty expenses associated with Star Wars.
These factors were more than offset by our cost reduction initiatives, lower
interest expense related to our debt reduction, and lower amortization
expense associated with the adoption of accounting requirements related to
goodwill," Verrecchia concluded.
In the second quarter the Company announced that it had recorded a
$245.7 million, net of tax or $1.42 per diluted share non-cash charge as a
cumulative effect of a change in accounting principle related to the adoption
of FAS 142 "Goodwill and Other Intangibles." FAS 142 requires that goodwill
and intangible assets with indefinite lives be tested for impairment annually
rather than amortized over time. The impaired goodwill was entirely related
to the U.S. Toys segment. This charge was made retroactively to the
beginning of the year and impacts year to date results. Amortization of
goodwill and intangible assets with indefinite lives in the third quarter of
2001 amounted to $13.4 million. The elimination of this amortization and its
related tax effect would have resulted in earnings of $63.5 million in the
third quarter of 2001.
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 "Corporate Info" from the home page, click
on "Investor Information," and then click on the webcast microphone). A
replay of the call also will be available, for a period of time, at this
website address.
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 the retail market,
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; work stoppages, slowdowns or
strikes, which may impact the Company's ability to manufacture or deliver
product, the bankruptcy or other lack of success of one of the Company's
significant retailers which could negatively impact the Company's revenues or
bad debt exposure; 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; the risk that
anticipated benefits of acquisitions may not occur or be delayed or reduced
in their realization; and other risks and uncertainties as may be detailed
from time to time in the Company's public announcements and SEC filings. 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 (loss) excluding, restructuring, 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 filings with the Securities and
Exchange Commission.
# # #
(Tables Attached)
HASBRO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars)
Sept. 29, Sept. 30,
2002 2001
--------- ---------
Assets
Cash and Cash Equivalents $ 43,850 $ 37,080
Accounts Receivable, Net 799,122 785,807
Inventories 282,146 345,690
Other Current Assets 290,600 388,092
--------- ---------
Total Current Assets 1,415,718 1,556,669
Property, Plant and Equipment, Net 213,628 256,982
Other Assets 1,494,852 1,776,935
--------- ---------
Total Assets $3,124,198 $3,590,586
========= =========
Liabilities and Shareholders' Equity
Short-term Borrowings $ 63,392 $ 298,698
Current Installments of Long-term Debt 255,248 3,344
Payables and Accrued Liabilities 715,658 746,757
--------- ---------
Total Current Liabilities 1,034,298 1,048,799
Long-term Debt 856,257 1,166,360
Deferred Liabilities 94,561 90,293
--------- ---------
Total Liabilities 1,985,116 2,305,452
Total Shareholders' Equity 1,139,082 1,285,134
--------- ---------
Total Liabilities and Shareholders' Equity $3,124,198 $3,590,586
========= =========
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars and Shares Except Per Share Data)
Quarter Ended Nine Months Ended
------------------ ---------------------
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
2002 2001 2002 2001
-------- --------- ---------- ---------
Net Revenues $ 820,532 893,353 $1,818,789 1,867,610
Cost of Sales 342,918 402,155 705,497 795,968
-------- --------- ---------- ---------
Gross Profit 477,614 491,198 1,113,292 1,071,642
Amortization 22,268 29,761 66,483 88,044
Royalties 85,210 65,105 202,378 131,504
Research and Product Development 36,687 32,077 106,670 92,281
Advertising 82,911 90,655 188,307 189,333
Selling, Distribution and
Administration 153,821 169,826 445,081 480,854
-------- --------- ---------- ---------
Operating Profit 96,717 103,774 104,373 89,626
Interest Expense 17,897 26,116 55,756 77,327
Other (Income) Expense, Net 3,350 3,244 31,182 74
-------- --------- ---------- ---------
Earnings Before Income
Taxes and Cumulative Effect of
Accounting Change 75,470 74,414 17,435 12,225
Income Taxes 19,622 23,812 4,533 3,912
-------- --------- ---------- ---------
Earnings before
Cumulative Effect of
Accounting Change 55,848 50,602 12,902 8,313
Cumulative Effect of Accounting
Change, Net of Tax - - (245,732) (1,066)
-------- --------- ---------- ---------
Net Earnings (Loss) $ 55,848 $ 50,602 $ (232,830) $ 7,247
======== ========= ========== =========
Per Common Share
Earnings before Cumulative
Effect of Accounting Change
Basic and Diluted $ 0.32 $ 0.29 $ 0.07 $ 0.05
======== ========= ========== =========
Cumulative Effect of
Accounting Change, Net of Tax
Basic and Diluted $ - $ - $ (1.42) $ (0.01)
======== ========= ========== =========
Net Earnings (Loss)
Basic $ 0.32 $ 0.29 $ (1.35) $ 0.04
======== ========= ========== =========
Diluted $ 0.32 $ 0.29 $ (1.34) $ 0.04
======== ========= ========== =========
Cash Dividends Declared $ 0.03 $ 0.03 $ 0.09 $ 0.09
======== ========= ========== =========
Weighted Average Number of shares
Basic 172,758 172,140 172,692 172,032
======== ========= ========== =========
Diluted 173,285 173,232 173,571 172,650
======== ========= ========== =========