EXHIBIT 99
For Immediate Release Contact: Karen A. Warren (Investor Relations)
October 20, 2003 401-727-5401
Wayne S. Charness (News Media)
401-727-5983
HASBRO DELIVERS STRONG THIRD QUARTER RESULTS
Highlights:
- Net revenues up 18%, to $971.1 million compared to $820.5 million a year
ago
- Earnings before a cumulative effect of accounting change of $85.8 million
or $0.48 per diluted share compared to net earnings of $55.8 million, or
$0.32 per diluted share in 2002
- International segment net revenues up 13% in local currency and 22% in
U.S. dollars
- U. S. Toys segment net revenues up 23%
- Continued strong performances from core brands such as TRANSFORMERS,
PLAYSKOOL and TRIVIAL PURSUIT, plus innovative products such as BEYBLADE,
FURREAL FRIENDS and VIDEONOW
Pawtucket, RI (October 20, 2003) - Hasbro, Inc. (NYSE: HAS) today
reported strong third quarter results. Worldwide net revenues were $971.1
million, up 18% from $820.5 million a year ago. Earnings for the quarter,
before cumulative effect of accounting change, were $85.8 million, compared to
net earnings of $55.8 million last year. Third quarter earnings, before
cumulative effect of accounting change, were $0.48 per diluted share, an
increase of 50%, compared to net earnings of $0.32 per diluted share in 2002.
Including the effect of accounting change the Company recorded net earnings of
$68.5 million or $0.38 per diluted share. The Company reported third quarter
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of
$170.3 million for the quarter, compared to $142.7 million in 2002. The
attached schedules provide a reconciliation of EBITDA to net earnings for the
third quarter and year to date.
"I am very pleased that our strategy of focusing on Hasbro's core brands
and product innovation continues to deliver strong results," said Alfred J.
Verrecchia, President and Chief Executive Officer. "Our third quarter
performance and progress year to date reflects growth in many of our core
brands, such as TRANSFORMERS, PLAYSKOOL and TRIVIAL PURSUIT, as well as
innovative products such as BEYBLADE, FURREAL FRIENDS and VIDEONOW, leading to
substantial gains in shelf space."
For the nine months, worldwide net revenues were $2.0 billion, compared
to $1.8 billion a year ago. Earnings before the cumulative effect of
accounting change for the nine months, were $98.4 million or $0.55 per diluted
share, compared to earnings of $12.9 million or $0.07 per diluted share a year
ago before the effect of the accounting change related to the adoption of FASB
Statement No. 142 "Goodwill and Other Intangibles". Including the impact of
accounting changes in both years, the Company recorded net earnings of $81.1
million, compared to a net loss of $232.8 million for the year-ago nine-month
period. For the nine months EBITDA was $284.5 million, compared to $207.0
million last year.
Effective as of the beginning of the third quarter 2003, Hasbro adopted
FASB Statement No. 150, "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity." As a result of adopting this
statement, Hasbro recorded a one-time non-cash charge from the cumulative
effect of this accounting change totaling $17.4 million, or $0.10 per diluted
share, in the consolidated statement of operations for the quarter related to
certain instruments that were previously classified as equity that are now
required to be recorded as a liability at fair value.
Revenues in the U.S. Toys segment increased in the quarter to $377.3
million, up 23% compared to $307.2 million a year ago. The segment reported
improved operating profit of $45.8 million compared to $25.5 million last
year. The segment experienced strength in many brands, including BEYBLADE,
TRANSFORMERS, PLAYSKOOL and VIDEONOW, as well as continuing strong sales of
FURREAL FRIENDS, including GO GO MY WALKIN' PUP.
Revenues in the Games segment were $250.2 million for the quarter, up 11%
compared to $225.9 million a year ago. The segment experienced strength in
many brands and products, including MONOPOLY, TRIVIAL PURSUIT 20TH ANNIVERSARY
EDITION, BULLS-EYE BALL and MAGIC: THE GATHERING trading card games. The
Games segment reported improved operating profit of $58.3 million compared to
$48.4 million last year.
International segment revenues were $328.1 million for the quarter, up
22% compared to $268.5 million a year ago. This increase includes the
positive impact of foreign exchange of approximately $26 million. Absent this
impact, revenues increased 13% to $302.3 million. The segment experienced
strength in BEYBLADE, MAGIC: THE GATHERING trading card games, TRANSFORMERS
and PLAYSKOOL. The International segment reported significant improvement in
operating profit, increasing to $38.5 million compared to $9.9 million a year
ago.
"We are pleased that all major segments are performing well, with
International delivering the anticipated improvement associated with revenue
growth and cost reductions," said David Hargreaves, Chief Financial Officer.
"However, with much of our business yet to ship, absent the impact of exchange
rates, we have not significantly changed our expectations for our full year
2003 performance."
"Our cash and balance sheet position continue to improve, with days
sales outstanding down six days and inventories also down, excluding the
impact of foreign exchange - - this, along with many other indicators of
strength in our business are now being recognized by the credit markets,"
Hargreaves concluded.
The Company will webcast its third quarter earnings conference call at
9:00 a.m. Eastern Standard 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).
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 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 and public health conditions, including factors which
impact the retail market or the Company's ability to manufacture and deliver
products, higher fuel and commodity prices, higher transportation costs,
currency fluctuations and government regulation and other conditions 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.
This presentation includes a non-GAAP financial measure as defined under SEC
rules, specifically EBITDA. As required by SEC rules, we have provided
reconciliation on the attached schedule of this measure to the most directly
comparable GAAP measure. EBITDA (earnings before interest, taxes, depreciation
and amortization) represents net earnings (loss) before cumulative effect of
accounting change, excluding, interest expense, income taxes, depreciation and
amortization. Management believes that EBITDA is one of the appropriate
measures for evaluating the operating performance of the Company because it
reflects the resources available for strategic opportunities including, among
others, to invest in the business, strengthen the balance sheet, and make
strategic acquisitions. However, this measure should be considered in addition
to, not as a substitute for, or superior to, net earnings or other measures of
financial performance prepared in accordance with generally accepted
accounting principles as more fully discussed in the Company's financial
statements and filings with the Securities and Exchange Commission. As used
herein, "GAAP" refers to accounting principles generally accepted in the
United States. This presentation also includes the Company's International
segment net revenues excluding the impact of changes in exchange rates.
Management believes that the presentation of International segment net
revenues minus the impact of exchange rate changes provides information that
is helpful to an investor's understanding of the segment's underlying business
performance absent exchange rate fluctuations which are beyond the Company's
control.
# # #
(Tables Attached)
HASBRO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars)
Sept. 28, Sept. 29,
2003 2002
--------- ---------
Assets
Cash and Cash Equivalents $ 155,357 $ 43,850
Accounts Receivable, Net 879,669 799,122
Inventories 289,411 282,146
Other Current Assets 222,704 290,600
--------- ---------
Total Current Assets 1,547,141 1,415,718
Property, Plant and Equipment, Net 206,756 213,628
Other Assets 1,494,597 1,494,852
--------- ---------
Total Assets $3,248,494 $3,124,198
========= =========
Liabilities and Shareholders' Equity
Short-term Borrowings $ 104,576 $ 63,392
Current Installments of Long-Term Debt 1,219 255,248
Payables and Accrued Liabilities 867,911 715,658
--------- ---------
Total Current Liabilities 973,706 1,034,298
Long-term Debt 856,934 856,257
Deferred Liabilities 146,463 94,561
--------- ---------
Total Liabilities 1,977,103 1,985,116
Total Shareholders' Equity 1,271,391 1,139,082
--------- ---------
Total Liabilities and Shareholders' Equity $3,248,494 $3,124,198
========= =========
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars and Shares Except Per Share Data)
Quarter Ended Nine Months Ended
------------------ --------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
2003 2002 2003 2002
-------- -------- --------- ---------
Net Revenues $ 971,071 $ 820,532 $2,014,308 $1,818,789
Cost of Sales 419,869 342,918 822,913 705,497
-------- ------- --------- ---------
Gross Profit 551,202 477,614 1,191,395 1,113,292
Amortization 19,319 22,268 53,907 66,483
Royalties 82,535 85,210 169,005 202,378
Research and Product Development 38,811 36,687 102,416 106,670
Advertising 105,039 82,911 225,903 188,307
Selling, Distribution and
Administration 168,505 153,821 458,824 445,081
-------- ------- --------- ---------
Operating Profit 136,993 96,717 181,340 104,373
Interest Expense 12,570 17,897 39,566 55,756
Other (Income) Expense, Net 6,299 3,350 6,381 31,182
-------- ------- --------- ---------
Earnings Before Income Taxes
and Cumulative Effect of
Accounting Change, Net of Tax 118,124 75,470 135,393 17,435
Income Taxes 32,309 19,622 36,972 4,533
-------- ------- --------- ---------
Earnings before Cumulative
Effect of Accounting
Change 85,815 55,848 98,421 12,902
Cumulative Effect of Accounting
Change, Net of Tax (17,351) - (17,351) (245,732)
-------- ------- --------- ---------
Net Earnings (Loss) $ 68,464 $ 55,848 $ 81,070 $ (232,830)
======== ======= ========= =========
Per Common Share
Earnings before Cumulative
Effect of Accounting Change
Basic $ 0.49 $ 0.32 $ 0.57 $ 0.07
======== ======= ========= =========
Diluted $ 0.48 $ 0.32 $ 0.55 $ 0.07
======== ======= ========= =========
Cumulative Effect of Accounting
Change, Net of Tax
Basic and Diluted $ (0.10) $ - $ (0.10)$ (1.42)
======== ======= ========= =========
Net Earnings (Loss)
Basic $ 0.39 $ 0.32 $ 0.47 $ (1.35)
======= ======= ========= =========
Diluted $ 0.38 $ 0.32 $ 0.45 $ (1.34)
======= ======= ========= =========
Cash Dividends Declared $ 0.03 $ 0.03 $ 0.09 $ 0.09
======= ======= ========= =========
Weighted Average Number of Shares
Basic 173,833 172,758 173,359 172,692
======= ======= ========= =========
Diluted 181,995 173,285 178,569 173,571
======= ======= ========= =========
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
Quarter Ended Nine Months Ended
------------------------- -------------------------
Sept 28, Sept. 29, % Sept. 28, Sept. 29, %
2003 2002 Change 2003 2002 Change
(Thousands of Dollars) -------- -------- ------ ------- ------- -----
U.S. Toys
- ---------
External Revenues $ 377,251 $ 307,164 23% $ 739,114 $ 707,659 4 %
Operating Profit 45,835 25,489 80% 64,107 66,285 (3)%
Games
- -----
External Revenues 250,201 225,871 11% 511,024 470,759 9 %
Operating Profit 58,310 48,378 21% 101,682 68,321 49 %
International
- -------------
External Revenues 328,110 268,454 22% 707,342 578,859 22%
Operating Profit 38,537 9,937 288% 27,769 (36,451) 176%
RECONCILIATION OF EBITDA
Net Earnings(Loss) $ 68,464 $ 55,848 $ 81,070 $(232,830)
Cumulative Effect of
Accounting Change, Net
of Tax (17,351) - (17,351) (245,732)
------- ------- -------- --------
Earnings before
Cumulative Effect of
Accounting Change 85,815 55,848 98,421 12,902
Interest Expense 12,570 17,897 39,566 55,756
Income Taxes 32,309 19,622 36,972 4,533
Depreciation 20,261 27,106 55,627 67,364
Amortization 19,319 22,268 53,907 66,483
------ ------- -------- --------
EBITDA $170,274 $142,741 $ 284,493 $ 207,038
======= ======= ======== ========