EX-99 2 exhibit99.htm PRESS RELEASE DATED JULY 18, 2005 HASBRO, INC

EXHIBIT 99


For Immediate Release

Contact: Karen A. Warren (Investor Relations)                   

July 18, 2005

401-727-5401

 

Wayne S. Charness (News Media)

 

401-727-5983




Hasbro Reports Second Quarter 2005 Results


Highlights:


·

Net revenues up 11% to $572.4 million, compared to $516.4 million a year ago, driven by strong performance from STAR WARS products;


·

Diluted earnings per share more than doubled to $0.13 per diluted share, versus $0.06 per diluted share in 2004;


·

Toy segment net revenues up 25%, reflecting strong performance from STAR WARS products and a number of other brands including NERF, TRANSFORMERS, MY LITTLE PONY and LITTLEST PET SHOP;


·

Games segment net revenues declined 12%, primarily due to a decline in trading card games and the increased seasonality of board game shipments.


Pawtucket, RI (July 18, 2005) -- Hasbro, Inc. (NYSE: HAS) today reported strong second quarter results.  Worldwide net revenues for the quarter were $572.4 million compared to $516.4 million a year ago and included a $9.1 million favorable impact from foreign exchange.  Net earnings for the quarter were $29.5 million or $0.13 per diluted share, compared to net earnings of $18.8 million or $0.06 per diluted share in 2004.  

Alfred J. Verrecchia, President and Chief Executive Officer, said, "We are pleased with our results this past quarter – revenues were up 11%, driven by significant STAR WARS volume, as well as strong performance from a number of other Hasbro brands, including NERF, TRANSFORMERS, MY LITTLE PONY and LITTLEST PET SHOP.”

“Our second quarter performance reinforces the confidence we have in our ability to achieve our full-year financial goals, however, it’s important to keep in mind that there is still a lot of business to be done in the back half of the year,” Verrecchia concluded.

Revenues in the U.S. Toys segment were $209.3 million for the quarter compared to $167.2 million a year ago, reflecting a strong performance from STAR WARS and a number of other brands including NERF, MY LITTLE PONY, TRANSFORMERS and LITTLEST PET SHOP.  The segment reported an operating profit of $14.6 million for the quarter compared to an operating loss of ($7.0) million last year due to the increase in volume and lower fixed expenses in 2005.

Revenues in the Games segment were $142.9 million for the quarter compared to $161.6 million a year ago.  The decrease in revenue is primarily related to trading card games, with both DUEL MASTERS and MAGIC: THE GATHERING trading card games down year over year.  In addition, board game revenues declined due to the increasing seasonality of the business which reflects retailers continuing focus on keeping inventory levels down.  The Games segment reported operating profit of $13.4 million compared to an operating profit of $28.7 million last year, primarily due to a decline in volume, particularly trading card games which have a higher margin than the board game business.

International segment revenues were $210.2 million for the quarter compared to $179.2 million a year ago, reflecting strong performance from STAR WARS, as well as a number of other toy and game brands, including PLAYSKOOL, MY LITTLE PONY, PARKER BROTHERS and MILTON BRADLEY.  The International segment reported an operating profit of $4.5 million compared to an operating profit of $2.8 million a year ago.

“Hasbro’s top and bottom line growth, combined with the strong cash generating ability of our business, enabled us to further strengthen our balance sheet year over year.  The Company also repurchased 360,000 shares during the second quarter, as part of the common stock buyback plan approved by the Board of Directors in May,” said David Hargreaves, Chief Financial Officer.

The Company reported second quarter Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $85.9 million compared to $63.7 million in 2004. The attached schedules provide a reconciliation of diluted earnings per share and EBITDA to net earnings for the second quarters and six-month periods of 2005 and 2004.

The Company will webcast its second 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 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 include statements concerning our financial goals and 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 and potential transportation delays, currency fluctuations and government regulation and other conditions in the various markets in which the Company operates throughout the world; the concentration of the Company's customers; 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 rules of the Securities and Exchange Commission (“SEC”), 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 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.



# # #

(Tables Attached)







HASBRO, INC.

       

CONSOLIDATED CONDENSED BALANCE SHEETS

   
           
           
           
           
           

(Thousands of Dollars)

    

June 26, 2005

 

June 27, 2004

 

ASSETS

     

-----------

 

-----------

Cash and Cash Equivalents

   

 $   642,831

 

 $   480,144

Accounts Receivable, Net

    

348,200

 

307,013

Inventories

     

262,471

 

237,129

Other Current Assets

    

      208,921

 

      264,460

     

----------------

 

---------------

Total Current Assets

    

   1,462,423

 

   1,288,746

Property, Plant and Equipment, Net

   

171,762

 

203,586

Other Assets

     

   1,363,529

 

   1,384,819

     

----------------

 

---------------

Total Assets

     

 $2,997,714

 

 $2,877,151

        

=========

 

=========

           
           
 

LIABILITIES AND SHAREHOLDERS' EQUITY

    

Short-term Borrowings

    

 $    13,177

 

 $    43,014

Current Portion of Long-term Debt

  

355,005

 

1,331

Payables and Accrued Liabilities

   

      624,674

 

      619,030

     

----------------

 

---------------

Total Current Liabilities

    

992,856

 

663,375

Long-term Debt

    

247,554

 

651,281

Deferred Liabilities

    

150,810

 

145,370

     

----------------

 

---------------

Total Liabilities

    

1,391,220

 

1,460,026

Total Shareholders' Equity

    

1,606,494

 

1,417,125

     

----------------

 

---------------

Total Liabilities and Shareholders' Equity

  

 $2,997,714

 

 $2,877,151

   

=========

 

=========









HASBRO, INC.

         

CONSOLIDATED STATEMENTS OF OPERATIONS

     
             
      

Quarter Ended

 

Six Months Ended

             

(Thousands of Dollars and Shares Except Per Share Data)

June 26, 2005

 

June 27, 2004

 

June 26, 2005

 

June 27, 2004

    

-----------

 

-----------

 

-----------

 

-----------

Net Revenues

  

$   572,388

 

$   516,433

 

$1,027,332

 

$  990,680

Cost of Sales

  

224,766

 

207,350

 

390,741

 

394,073

    

--------------

 

---------------

 

--------------

 

--------------

Gross Profit

   

347,622

 

309,083

 

636,591

 

596,607

Amortization

   

26,930

 

15,752

 

51,685

 

30,993

Royalties

   

50,795

 

34,021

 

91,667

 

66,660

Research and Product Development

36,514

 

37,696

 

67,555

 

69,379

Advertising

   

64,974

 

59,018

 

119,164

 

114,348

Selling, Distribution and Administration

141,289

 

139,867

 

277,860

 

277,826

    

--------------

 

---------------

 

--------------

 

--------------

Operating Profit

  

27,120

 

22,729

 

28,660

 

37,401

Interest Expense

  

7,649

 

7,924

 

15,380

 

16,231

Other (Income) Expense, Net

 

(13,219

)

(8,047

)

(16,185

)

(10,093

)

    

--------------

 

---------------

 

--------------

 

--------------

Earnings Before Income Taxes

32,690

 

22,852

 

29,465

 

31,263

Income Taxes

  

3,236

 

4,013

 

3,724

 

5,892

    

--------------

 

---------------

 

--------------

 

--------------

Net Earnings

  

$     29,454

 

$     18,839

 

$     25,741

 

$     25,371

      

========

 

========

 

========

 

========

             

Per Common Share

         
 

Net Earnings

        
  

Basic

   

$         0.17

 

$         0.11

 

$         0.14

 

$         0.14

      

========

 

========

 

========

 

========

  

Diluted

   

$         0.13

 

$         0.06

 

$         0.13

 

$         0.08

      

========

 

========

 

========

 

========

             
 

Cash Dividends Declared

 

$         0.09

 

$         0.06

 

$         0.18

 

$         0.12

      

========

 

========

 

========

 

========

             

Weighted Average Number of Shares

       
 

Basic

   

178,463

 

176,417

 

178,113

 

176,079

     

========

 

========

 

========

 

========

 

Diluted

   

197,630

 

184,667

 

185,710

 

184,310

      

========

 

========

 

========

 

========






HASBRO, INC.

           

Supplemental Financial Data

          


(Thousands of Dollars)

           
            

Major Segment Results

Quarter Ended

 

Six Months Ended

               
 

June 26, 2005

 

June 27, 2004

 

% Change

 

June 26, 2005

 

June 27, 2004

 

% Change

  

-----------

 

-----------

 

-----------

 

-----------

 

-----------

 

----------

U.S. Toys

            

  External Revenues

$ 209,340

 

$ 167,161 

 

25 %

 

$ 375,813 

 

$ 319,551 

 

18 %

  Operating Profit (Loss)

14,645

 

(6,991)

 

309 %

 

22,560 

 

(5,956)

 

479 %

               

Games

             

  External Revenues

142,899

 

161,602 

 

(12)%

 

241,936 

 

289,200 

 

(16)%

  Operating Profit

13,443

 

28,711 

 

(53)%

 

14,648 

 

48,295 

 

(70)%

               

International

            

  External Revenues

210,240

 

179,185 

 

17 %

 

388,127 

 

359,926 

 

8 %

  Operating Profit (Loss)

4,532

 

2,756 

 

64 %

 

(4,169)

 

(7,276)

 

43 %

            


Reconciliation of EBITDA

           
            

Net Earnings

$  29,454

 

$  18,839

   

$   25,741

 

$   25,371

  

Interest Expense

7,649

 

7,924

   

15,380

 

16,231

  

Income Taxes

3,236

 

4,013

   

3,724

 

5,892

  

Depreciation

18,587

 

17,200

   

31,948

 

30,939

  

Amortization

26,930

 

15,752

   

51,685

 

30,993

  
 

------------

 

------------

   

------------

 

------------

  

     EBITDA

$  85,856

 

$  63,728

   

$ 128,478

 

$ 109,426

  
 

=======

 

=======

   

=======

 

=======

  





HASBRO, INC.

         

Supplemental Financial Data

     

(Thousands of Dollars and Shares, except Per Share Data)

       
         

Net Earnings Per Share

  

2005

 

2004

             

Quarter

Basic

 

Diluted

 

Basic

 

Diluted

----------

-----------

 

-----------

 

-----------

 

-----------

        

Net earnings

$    29,454

 

$    29,454

 

$    18,839

 

$    18,839

Effect of dilutive securities:

        

  Change in fair value of liabilities

        

   potentially settleable in common stock

-

 

(5,730

)

-

 

(8,520

)

  Interest expense on contingent convertible

      

   debentures due 2021

 

-

 

1,066

 

-

 

-

 

--------------

 

--------------

 

--------------

 

--------------

  

$    29,454

 

$    24,790

 

$    18,839

 

$    10,319

  

========

 

========

 

========

 

========

         

Average shares outstanding

 

178,463

 

178,463

 

176,417

 

176,417

Effect of dilutive securities:

        

  Liabilities potentially settleable in

       

   common stock

-

 

5,412

 

-

 

5,721

  Contingent convertible debentures due 2021

-

 

11,574

 

-

 

-

  Options and warrants

 

-

 

2,181

 

-

 

2,529

  

--------------

 

--------------

 

--------------

 

--------------

Equivalent shares

 

178,463

 

197,630

 

176,417

 

184,667

 

========

 

========

 

========

 

========

           

Net earnings per share

 

$        0.17

 

$        0.13

 

$        0.11

 

$        0.06

   

========

 

========

 

========

 

========

Six Months

       

---------------

       

Net earnings

$    25,741

 

$    25,741

 

$    25,371

 

$    25,371

Effect of dilutive securities:

        

  Change in fair value of liabilities

        

   potentially settleable in common stock

-

 

(760

)

-

 

(10,220

)

 

--------------

 

--------------

 

--------------

 

--------------

  

$    25,741

 

$    24,981

 

$    25,371

 

$    15,151

  

========

 

========

 

========

 

========

         

Average shares outstanding

 

178,113

 

178,113

 

176,079

 

176,079

Effect of dilutive securities:

        

  Liabilities potentially settleable in

       

   common stock

-

 

5,358

 

-

 

5,363

  Options and warrants

 

-

 

2,239

 

-

 

2,868

  

--------------

 

--------------

 

--------------

 

--------------

Equivalent shares

 

178,113

 

185,710

 

176,079

 

184,310

 

========

 

========

 

========

 

========

           

Net earnings per share

 

$        0.14

 

$        0.13

 

$        0.14

 

$        0.08

   

========

 

========

 

========

 

========