The Company expects full year 2000 earnings per share to be at best, break even, with the potential for a loss of between $0.10 to $0.20 per share, prior to the approximately $140 to $170 million of pre-tax restructuring and other charges announced in October and a potential write down of approximately $35 million associated with the sale of Hasbro Interactive and Games.com. EBITDA for full-year 2000 is now expected to be approximately $320 to $370 million, or $1.81 to $2.09 per share, also before the charges.

"While we announced some very exciting news today with the pending licensing agreement and sale of Hasbro Interactive and Games.com to Infogrames Entertainment SA, we also announced that our earnings will be below expectations," said Alan G. Hassenfeld, Chairman and CEO. "The reduced expectations can be attributed in large part to the decline in worldwide revenue of trading card games. Frankly, while Pokemon Trading Card Game cards are still selling well, we were too aggressive in our forecast following incredible demand in 1999 and 2000. Given the high level of inventory at Wizards of the Coast, we are going to take an additional provision of $75 million for inventory obsolescence. This coupled with some additional weakness in the U.S. toy group account for the change in our expectations."

"To address the inventory issue we are changing inventory practices in order to keep this from happening in the future and we are very confident about the continued success of this business. We expect good results from this month's U.S. launch of Pokemon Gold and Silver trading card games as Game Boy Gold and Silver cartridge sales have broken all records at retail," Mr. Hassenfeld added.

"We are very focused on enhancing shareholder value by generating sustainable revenue and earnings growth by growing our own brands and new product development," said Alfred J. Verrecchia, President and Chief Operating Officer. "In October we announced several actions to improve profitability and we are on track to accomplish our goals. We will be significantly reducing overhead throughout the company. We currently expect headcount reductions of approximately 750 across all divisions of Hasbro excluding Hasbro Interactive and Games.com. This is higher than the 500 to 550 that we originally outlined, as we have been more aggressive in our efforts. We don't expect the charges associated with the restructuring to change from the previous guidance in the range of $140 - $170 million but they are likely to be on the high end of the range. Our goal continues to be lowering our break even by reducing costs in product development, sales and marketing, and administrative functions. We are making Hasbro more efficient so we can better leverage our revenue and earnings stream going forward. This leaves us well positioned for 2001," Mr. Verrecchia concluded.

Mr. Hassenfeld added, "We are confident that we are making the right moves to make Hasbro leaner and more consistently profitable for shareholders. While 2000 has been a very painful year, we are looking forward to returning Hasbro to profitability in 2001 and beyond."

As a result of the earnings decline, the Company also announced that its cash dividend has been reduced from $0.06 per share quarterly to $0.03 per share, effective with the dividend payable on February 15, 2001 to shareholders of record on February 1, 2001. This will result in an annual cash savings of $21 million beginning in 2001.

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, HASBRO INTERACTIVE, MICROPROSE and WIZARDS OF THE COAST brands and products provide the highest quality and most recognizable play experiences in the world.

Source: Hasbro

[Posted 12/07/2000]