Highlights:- Net revenues up 5% to $1.039 billion, compared to $988.1 million a year ago, with strong performance from a number of brands including LITTLEST PET SHOP, PLAYSKOOL, NERF, TRANSFORMERS, STAR WARS and PLAY-DOH;
- Global games business up a solid 7% driven by the success of MONOPOLY HERE AND NOW;
- Net earnings per share increased 23% to $0.58 per diluted share, this compared to prior year net earnings of $0.47 per diluted share;
- Operating profit improved 29% to $165.2 million or 15.9% of revenues;
- During the quarter, the company repurchased approximately 6.6 million shares of common stock at a total cost of $131.0 million.
PAWTUCKET, R.I. -- October 23, 2006 -- Hasbro, Inc. today reported strong third quarter results. Worldwide net revenues for the quarter were $1.039 billion, up 5% compared to $988.1 million a year ago and included a $9.6 million favorable impact from foreign exchange. The Company reported net income of $99.6 million or $0.58 per diluted share, which includes stock-based compensation expense of $3.9 million or ($0.02) per diluted share, net of tax, due to the required implementation of SFAS 123R at the beginning of the year. Net earnings prior to fiscal 2006 did not include stock-based compensation expense. Refer to the attached supplemental table for the 2005 quarterly and year-to-date results adjusted to include the impact of stock-based compensation expense. In the third quarter of 2005 net earnings on a reported basis, which did not include the effect of stock-based compensation expense, were $92.1 million or $0.47 per diluted share. The results in both years include the impact of the mark to market adjustment for the Lucas warrants; in the third quarter of 2006 there was a non-cash expense of $19.8 million or $0.09 per diluted share related to the Lucas warrants, compared to non-cash income of $570 thousand in 2005.
Alfred J. Verrecchia, President and Chief Executive Officer, said, "We are pleased with our third quarter results. Net revenues were up 5%, with revenues excluding STAR WARS up 13% for the quarter and year-to-date, driven in part by the success of LITTLEST PET SHOP, PLAYSKOOL, NERF, PLAY-DOH, MONOPOLY, TRANSFORMERS and CLUE. STAR WARS has performed well and continues to be the #1 action figure property with $69 million in revenue for the quarter and $182 million year-to-date, demonstrating the strength of the brand even in a non-movie year.
"With the overall breadth and depth of our product portfolio we have been able to grow our business for the quarter and year-to-date, in spite of the revenue decline of $58 million for the quarter and $193 million year-to-date in STAR WARS," Verrecchia concluded.
"Earnings per diluted share were up a strong 23% in the quarter," said David Hargreaves, Chief Financial Officer. "Absent the Lucas warrants mark to market expense of $0.09 per diluted share, the underlying business performed even better with earnings per diluted share increasing 43% to $0.67 per diluted share for the quarter," he added.
North American segment revenues, which include all of the Company's toys and games business in the United States, Canada and Mexico, were $745.5 million for the quarter compared to $712.3 million a year ago, reflecting strong performances from LITTLEST PET SHOP, PLAYSKOOL, NERF, PLAY-DOH and MONOPOLY. The segment reported an operating profit of $111.6 million for the quarter compared to $85.3 million last year, as adjusted to include the impact of stock-based compensation. In addition to the higher revenues, the improvement in operating profit reflected declines in amortization and royalty expenses, partially off-set by increases in product development and advertising expenses.
International segment revenues for the quarter were $280.4 million compared to $264.6 million a year ago and included a $9.3 million favorable impact from foreign exchange. Volume increases reflected strong performance from LITTLEST PET SHOP, PLAYSKOOL, TRANSFORMERS and MONOPOLY. The International segment reported an operating profit of $43.2 million compared to an operating profit of $32.9 million in 2005, as adjusted to include the impact of stock-based compensation expense. The improvement in operating profit is primarily due to decreases in royalty and amortization expense.
The Company reported third quarter Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $192.6 million compared to $187.9 million in 2005. The attached schedules provide a reconciliation of diluted earnings per share and EBITDA to net earnings for the third quarters and nine-month periods of 2006 and 2005.
During the quarter, the company repurchased approximately 6.6 million shares of common stock at a total cost of $131.0 million. Since June of 2005, the company has repurchased 23.5 million shares at a total cost of $465.3 million.
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.
