Hasbro, Inc. (NASDAQ: HAS) today reported financial
results for first quarter 2012. Net revenues for the quarter were
$648.9 million, a decrease of 3%, compared to $672.0 million in
2011. First quarter 2012 net revenues include a negative $8.5
million impact of foreign exchange. Net loss for the first quarter
2012 was $2.6 million, or ($0.02) per diluted share, versus net
earnings of $17.2 million, or $0.12 per diluted share, in 2011.
First quarter 2012 net earnings were $5.1 million, or $0.04 per
diluted share, excluding $11.1 million, or $0.06 per diluted share,
of severance costs. The first quarter 2012 was a 14-week period
versus the first quarter 2011 which was a 13-week period.
“Our first quarter 2012 results are consistent with the plan we
previously communicated for the year,” said Brian Goldner,
President and Chief Executive Officer. “We continue to experience
good momentum in our international business and positive
point-of-sale trends in the U.S. and international markets. We have
launched several new initiatives for 2012 which are generating good
early results. We are looking forward to the four major motion
pictures coming to global audiences in the next few months as well
as the launch of our all important fall and holiday initiatives in
the second half of the year.”
“In partnership with our retailers and supported by a strong
line of new fall initiatives, our expectation remains that a higher
percentage of full year revenues will be in the second half of the
year versus past years. This shift in the timing of our business
has a similar impact on profitability,” continued Goldner. “For the
full year 2012, we continue to believe, absent the impact of
foreign exchange, we will again grow revenues and earnings per
share.”
“As we previously outlined for you, we planned 2012 with the
belief that our business would develop later in the year, more
closely aligned with the timing of consumer demand and our
international business,” said Deborah Thomas, Chief Financial
Officer. “Importantly, in the U.S. and Canada segment, we are
executing our plan to return the segment to historical operating
profit levels. This includes steps we have taken to right-size the
organization, for which we have incurred the costs, and a planned
higher level of spending in consumer-facing marketing and
advertising. In the first quarter 2012, operating profit was
impacted by the lower revenue base in addition to $11.1 million in
severance costs across the global organization and approximately $6
million associated with an extra week of expenses.”
Major Segment
Performance
Net Revenues ($ Millions)
Operating Profit (Loss) ($ Millions)
Q1 2012 Q1 2011
% Change Q1
2012 Q1 2011
% Change U.S. & Canada
$329.0 $391.2 -16%
$14.4 $41.0
-65%
International $289.7
$254.3 +14% $(5.1)
$(1.7) -193%
Entertainment & Licensing $29.3
$24.6 +19%
$7.7 $5.4 +42%
U.S. and Canada segment net revenues were $329.0 million, a
decrease of $62.2 million or 16%, compared to $391.2 million in
2011. The results reflect growth in the Preschool category offset
by declines in the other product categories. The U.S. and Canada
segment reported an operating profit of $14.4 million, compared to
$41.0 million in 2011.
International segment net revenues grew $35.4 million or 14% to
$289.7 million, compared to $254.3 million in 2011. Net revenues in
the International segment grew 17% absent the negative $8.2 million
impact of foreign exchange. Revenue in the International segment
reflects growth in the Boys and Games categories which more than
offset flat revenues in the Preschool category and a decline in the
Girls category. The International segment reported an operating
loss of $5.1 million, compared to an operating loss of $1.7 million
in 2011.
Entertainment and Licensing segment net revenues increased 19%
to $29.3 million, compared to $24.6 million in 2011. The segment
benefited from the sale of television programming in the U.S. and
internationally, as well as continued box office and licensed
revenues related to TRANSFORMERS. The Entertainment and Licensing
segment reported an operating profit of $7.7 million compared to
$5.4 million in 2011.
Product Category
Performance
Net revenues ($ Millions)
Q1 2012 Q1 2011
% Change Boys
$302.8 $290.2 +4%
Games $181.9
$200.4 -9%
Girls
$93.2 $113.2 -18%
Preschool $69.9
$68.2 +2%
For the first quarter 2012, net revenues in the Boys category
increased 4% to $302.8 million led by growth in
entertainment-backed brands MARVEL and STAR WARS. Additionally,
KRE-O, Hasbro’s new construction line, contributed to the
year-over-year gains. Following a strong 2011, BEYBLADE was
essentially flat in the quarter. Overall, TRANSFORMERS brand
revenue was also flat in the quarter, but down in the Boys
category. The Preschool category grew 2% to $69.9 million supported
by SESAME STREET and PLAYSKOOL RESCUE HEROES, including
TRANSFORMERS RESCUE BOTS.
The increases in net revenues in the Boys and Preschool
categories were offset by a 9% decline in the Games category to
$181.9 million and an 18% decline in the Girls category to $93.2
million. Despite declines in these categories several brands posted
year-over-year growth. In the Games category, MAGIC: THE GATHERING,
DUEL MASTERS and BATTLESHIP posted revenue gains in the quarter.
Also contributing to the quarter were new games initiatives for
2012, including STAR WARS FIGHTER PODS and TRANSFORMERS BOT SHOTS,
which launched during the quarter and are performing well. In the
Girls category, MY LITTLE PONY, which is now backed by television
entertainment globally, posted growth in the quarter.
Share Repurchase and
Dividend
The Company repurchased a total of 139,656 shares of common
stock during the first quarter 2012 at a total cost of $5.0 million
and an average price of $35.80 per share. At quarter end, $222.3
million remained available in the current share repurchase
authorization. The Company paid $38.6 million in cash dividends to
shareholders during the quarter and on February 2, 2012 declared a
quarterly cash dividend of $0.36 per common share, an increase of
$0.06 per share, or 20%, from the previous quarterly dividend of
$0.30 per common share. The dividend will be payable on May 15,
2012 to shareholders of record at the close of business on May 1,
2012.
The Company will webcast its first quarter 2012 earnings
conference call at 8:30 a.m. Eastern Time today. To listen to the
live webcast, go to http://investor.hasbro.com. The replay of the
call will be available on Hasbro’s web site approximately 2 hours
following completion of the call. Additionally, presentation slides
associated with today’s conference call are available on Hasbro’s
website at http://investor.hasbro.com.
About Hasbro
Hasbro, Inc. (NASDAQ: HAS) is a branded play company providing
children and families around the world with a wide-range of
immersive entertainment offerings based on the Company's world
class brand portfolio. From toys and games, to television
programming, motion pictures, digital gaming and a comprehensive
licensing program, Hasbro strives to delight its global customers
with well-known and beloved brands such as TRANSFORMERS, LITTLEST
PET SHOP, NERF, PLAYSKOOL, MY LITTLE PONY, G.I. JOE, MAGIC: THE
GATHERING and MONOPOLY. The Company’s Hasbro Studios develops and
produces television programming for markets around the world.
Programming in the U.S. is distributed on The Hub TV Network, a
multi-platform joint venture between Hasbro and Discovery
Communications (NASDAQ: DISCA, DISCB, DISCK). Through the Company's
deep commitment to corporate social responsibility, including
philanthropy, Hasbro is helping to build a safe and sustainable
world for future generations and to positively impact the lives of
millions of children and families every year. It has been
recognized for its efforts by being named one of the “World’s Most
Ethical Companies” and is ranked as one of Corporate Responsibility
Magazine’s “100 Best Corporate Citizens.” Learn more at
www.hasbro.com.
© 2012 Hasbro, Inc. All Rights Reserved.
*Source: The NPD Group, through March 2012
HAS-E
Certain statements in this release contain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements include expectations
concerning the Company’s potential performance in 2012 and beyond,
including with respect to its revenues and earnings per share, and
the Company’s ability to achieve its other financial and business
goals and may be identified by the use of forward-looking words or
phrases. The Company's actual actions or results may differ
materially from those expected or anticipated in the
forward-looking statements due to both known and unknown risks and
uncertainties. Specific factors that might cause such a difference
include, but are not limited to: (i) the Company's ability to
design, manufacture, source and ship new and continuing products on
a timely and cost-effective basis, as well as interest in and
purchase of those products by retail customers and consumers in
quantities and at prices that will be sufficient to profitably
recover the Company’s development, manufacturing, marketing,
royalty and other costs; (ii) global economic conditions, including
recessions, credit crises or other economic shocks or downturns
which can negatively impact the retail and/or credit markets, the
financial health of the Company’s retail customers and consumers,
and consumer and business confidence, and which can result in lower
employment levels, less consumer disposable income, and lower
consumer spending, including lower spending on purchases of the
Company’s products; (iii) other factors which can lower
discretionary consumer spending, such as higher costs for fuel and
food, drops in the value of homes or other consumer assets, and
high levels of consumer debt; (iv) other economic and public health
conditions in the markets in which the Company and its customers
and suppliers operate which impact the Company's ability and cost
to manufacture and deliver products, such as higher fuel and other
commodity prices, higher labor costs, higher transportation costs,
outbreaks of disease which affect public health and the movement of
people and goods, and other factors, including government
regulations, which can create potential manufacturing and
transportation delays or impact costs; (v) currency fluctuations,
including movements in foreign exchange rates, which can lower the
Company’s net revenues and earnings, and significantly impact the
Company’s costs; (vi) the concentration of the Company's customers,
potentially increasing the negative impact to the Company of
difficulties experienced by any of the Company’s customers or
changes by the Company’s customers in their purchasing or selling
patterns; (vii) greater than expected costs, or unexpected delays
or difficulties, associated with the Company’s investment in its
joint venture with Discovery Communications, LLC, the rebranding of
the joint venture network, development of Hasbro Studios, and the
creation of new content to appear on the network and elsewhere;
(viii) consumer interest in and acceptance of the joint venture
network, and programming created by Hasbro Studios, and other
factors impacting the financial performance of the joint venture
and Hasbro Studios; (ix) greater than expected costs or unexpected
delays or difficulties associated with the creation of Hasbro’s
Gaming Center of Excellence and the execution of the Company’s
strategy for driving innovation and immersive play experiences in
its gaming business; (x) unexpected delays or difficulties in the
Company’s execution of its plans to drive growth and increased
profitability in its U.S. and Canada business; (xi) the inventory
policies of the Company’s retail customers, including retailers’
potential decisions to lower the inventories they are willing to
carry, even if it results in lost sales, as well as the
concentration of the Company's revenues in the second half and
fourth quarter of the year, which coupled with reliance by
retailers on quick response inventory management techniques
increases the risk of underproduction of popular items,
overproduction of less popular items and failure to achieve tight
and compressed shipping schedules; (xii) work stoppages, slowdowns
or strikes, which may impact the Company's ability to manufacture
or deliver product in a timely and cost-effective manner; (xiii)
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; (xiv) 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; (xv) concentration of manufacturing
for many of the Company’s products in the People’s Republic of
China and the associated impact to the Company of public health
conditions and other factors affecting social and economic activity
in China, affecting the movement of products into and out of China,
and impacting the cost of producing products in China and exporting
them to other countries; (xvi) the risk of product recalls or
product liability suits and costs associated with product safety
regulations; (xvii) other market conditions, third party actions or
approvals and the impact of competition which could reduce demand
for the Company’s products or delay or increase the cost of
implementation of the Company's programs or alter the Company's
actions and reduce actual results; (xviii) the risk that
anticipated benefits of acquisitions may not occur or be delayed or
reduced in their realization; and (xix) other risks and
uncertainties as may be detailed from time to time in the Company's
public announcements and Securities and Exchange Commission (“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 press release includes a non-GAAP financial measure as
defined under SEC rules, specifically EBITDA. EBITDA represents net
earnings excluding interest expense, income taxes, depreciation and
amortization. As required by SEC rules, we have provided
reconciliation on the attached schedule of this measure to the most
directly comparable GAAP measure. 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 GAAP as more fully discussed in the Company's
financial statements and filings with the SEC. As used herein,
"GAAP" refers to accounting principles generally accepted in the
United States of America. This press release also includes the
Company’s Consolidated and International segment net revenues
excluding the impact of changes in exchange rates. Management
believes that the presentation of Consolidated and International
segment net revenues minus the impact of exchange rate changes
provides information that is helpful to an investor’s understanding
of the underlying business performance absent exchange rate
fluctuations which are beyond the Company’s control. Similarly,
this press release includes the Company’s first quarter 2012 net
earnings excluding certain expenses related to severance costs. We
provided the first quarter 2012 net earnings absent these amounts
to assist investors in understanding the comparability of the
Company’s results.
HASBRO, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Thousands of Dollars) April 1,
2012 March 27, 2011
ASSETS Cash and Cash Equivalents $
883,824 $ 927,422 Accounts Receivable, Net 456,580 558,980
Inventories 396,981 401,309 Other Current Assets 281,517
173,070 Total Current Assets 2,018,902 2,060,781 Property,
Plant and Equipment, Net 222,821 238,403 Other Assets
1,655,414 1,641,157 Total Assets $ 3,897,137 $ 3,940,341
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term Borrowings $ 171,177 $ 37,923 Payables and Accrued
Liabilities 554,700 588,609 Total Current Liabilities
725,877 626,532 Long-term Debt 1,400,942 1,396,695 Other
Liabilities 372,925 386,126 Total Liabilities
2,499,744 2,409,353 Total Shareholders' Equity 1,397,393
1,530,988 Total Liabilities and Shareholders' Equity $
3,897,137 $ 3,940,341
HASBRO, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)
(Thousands of Dollars and Shares Except Per Share Data) Quarter
Ended April 1, 2012 March 27, 2011 Net Revenues $ 648,850 $ 671,986
Costs and Expenses: Cost of Sales 257,036 267,246 Royalties 52,434
43,226 Product Development 44,926 45,818 Advertising 65,045 66,537
Amortization of Intangibles 10,655 10,696 Program Production Cost
Amortization 3,138 3,117 Selling, Distribution and Administration
199,890 186,423 Operating Profit 15,726 48,923
Interest Expense 23,112 21,375 Other (Income) Expense, Net
(2,520 ) 4,710 Earnings (Loss) Before Income Taxes (4,866 )
22,838 Income Taxes (2,287 ) 5,642 Net Earnings
(Loss) $ (2,579 ) $ 17,196 Per Common Share Net Earnings
(Loss) Basic $ (0.02 ) $ 0.12 Diluted $ (0.02 ) $ 0.12 Cash
Dividends Declared $ 0.36 $ 0.30 Weighted Average
Number of Shares Basic 129,569 137,645 Diluted
129,569 140,953
HASBRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Thousands of Dollars) Quarter
Ended April 1, 2012 March 27, 2011 Cash Flows from Operating
Activities: Net Earnings (Loss) $ (2,579 ) $ 17,196 Non-cash
Adjustments 39,601 40,935 Changes in Operating Assets and
Liabilities 247,716 218,363 Net Cash
Provided by Operating Activities 284,738
276,494 Cash Flows from Investing Activities:
Additions to Property, Plant and Equipment (23,034 ) (22,396 )
Other 6,673 (2,037 ) Net Cash Utilized by
Investing Activities (16,361 ) (24,433 ) Cash
Flows from Financing Activities: Net Proceeds (Repayments) from
Short-term Borrowings (10,137 ) 23,622 Purchases of Common Stock
(4,644 ) (58,320 ) Stock-based Compensation Transactions 22,929
11,600 Dividends Paid (38,593 ) (34,297 ) Net Cash
Utilized by Financing Activities (30,445 ) (57,395 )
Effect of Exchange Rate Changes on Cash 4,204 4,960
Cash and Cash Equivalents at Beginning of Year 641,688
727,796 Cash and Cash Equivalents at
End of Period $ 883,824 $ 927,422
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA (Unaudited) (Thousands of
Dollars) Quarter Ended April 1, 2012
March 27, 2011 % Change
Major Segment
Results
U.S. and Canada
Segment:
External Net Revenues $ 328,985 $ 391,152 -16 % Operating Profit
14,411 41,012 -65 % Operating Margin 4.4 % 10.5 %
International
Segment:
External Net Revenues 289,729 254,332 14 % Operating Loss (5,084 )
(1,733 ) -193 % Operating Margin -1.8 % -0.7 %
Entertainment and
Licensing Segment:
External Net Revenues 29,336 24,641 19 % Operating Profit 7,738
5,431 42 % Operating Margin 26.4 % 22.0 %
Net Revenues by
Product Class
Boys $ 302,759 $ 290,232 4 % Games 181,916 200,352 -9 % Girls
93,236 113,156 -18 % Preschool 69,939 68,236 2 % Other 1,000
10 NM Total Net Revenues $ 648,850 $
671,986
International
Segment Net Revenues by Major Geographic Region
Europe $ 208,113 $ 184,898 13 % Latin America 38,969 31,698 23 %
Asia Pacific 42,647 37,736 13 % Total $
289,729 $ 254,332
Reconciliation of
EBITDA
Net Earnings (Loss) $ (2,579 ) $ 17,196 Interest Expense 23,112
21,375 Income Taxes (2,287 ) 5,642 Depreciation 19,308 20,322
Amortization of Intangibles 10,655 10,696
EBITDA $ 48,209 $ 75,231
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA 2011, 2010 and 2009
INTERNATIONAL SEGMENT NET REVENUES BY MAJOR GEOGRAPHIC REGION
(Unaudited) (Thousands of
Dollars)
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Full Year
2011
Europe $ 184,898 $ 221,654 $ 383,734 $ 464,141 $ 1,254,427
Latin America 31,698 72,226 105,696 125,267 334,887 Asia Pacific
37,736 80,591 73,880 80,380
272,587 Total International $ 254,332 $ 374,471 $ 563,310 $ 669,788
$ 1,861,901
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Full Year
2010
Europe $ 165,416 $ 146,229 $ 319,537 $ 426,755 $ 1,057,937
Latin America 24,403 56,340 80,771 120,321 281,835 Asia Pacific
31,900 58,842 58,609 70,804
220,155 Total International $ 221,719 $ 261,411 $ 458,917 $ 617,880
$ 1,559,927
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Full Year
2009
Europe $ 144,076 $ 169,710 $ 323,435 $ 394,875 $ 1,032,096
Latin America 19,784 49,309 67,654 89,785 226,532 Asia Pacific
25,332 57,212
53,016 65,288
200,848 Total International $ 189,192 $ 276,231 $
444,105 $ 549,948 $ 1,459,476
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