Hasbro Reports Second Quarter 2012 Financial Results

Hasbro Reports Financial Results for the Second Quarter 2012

Second Quarter Results Consistent with Company Strategy to Shift U.S. Shipments Later in the Year

  • Net revenues of $811.5 million for the second quarter 2012 versus $908.5 million for the second quarter 2011; Second quarter net revenues declined 7% excluding a negative $34.4 million impact of foreign exchange;
  • Net earnings of $43.4 million, or $0.33 per diluted share, compared to net earnings of $46.0 million or $0.33 per diluted share in 2011 (excluding a favorable tax adjustment and costs associated with establishing Hasbro's Gaming Center of Excellence); Second quarter 2011 net earnings were $58.1 million, or $0.42 per diluted share as reported;
  • Operating profit at 10.6% of revenues versus 10.3% in 2011 (excluding the Gaming Center of Excellence costs) or 8.9% as reported a year ago;
  • Second quarter 2012 operating profit increased in the U.S. and Canada and Entertainment and Licensing segments.

PAWTUCKET, R.I. -- July 23, 2012 -- Hasbro, Inc. today reported financial results for the second quarter 2012. Net revenues for the quarter were $811.5 million, a decrease of 11%, compared to $908.5 million in 2011. Second quarter 2012 net revenues declined 7% excluding a negative $34.4 million impact of foreign exchange. Net earnings for the second quarter 2012 were $43.4 million, or $0.33 per diluted share, versus $58.1 million, or $0.42 per diluted share, in 2011. Second quarter 2011 net earnings include a favorable tax adjustment of $20.5 million, or $0.15 per diluted share, and pre-tax expense of $13.1 million, or $0.06 per diluted share, related to costs associated with establishing Hasbro's Gaming Center of Excellence. Absent these items, second quarter 2011 net earnings were $46.0 million or $0.33 per share.

"2012 continues to develop in line with our expectations as we shift more of our shipments later in the year while improving profitability in the near term," said Brian Goldner, President and Chief Executive Officer. "In the U.S. and Canada, we have gained share and the teams are focused on returning to historical levels of operating profit as well as partnering with U.S. retailers to shift shipments closer to the peak consumer demand periods in the third and fourth quarters. Internationally, we continue our global expansion, leveraging investments in emerging markets, product innovation and entertainment to drive Hasbro brands globally. Finally, our television strategy is delivering growth within our Entertainment and Licensing segment and creating demand for our toys and games in global markets."

"As we enter the second half of the year, we have innovative brand initiatives across product categories and geographies," 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 have previously stated, we expect 2-4% more of our full-year revenues to occur in the second half of the year. Within this revenue shift, we also expect the fourth quarter to be greater than the third quarter in both revenues and earnings per share, similar to our historical international results."

"An important element of our full-year plan is returning the U.S. and Canada segment to historical levels of operating profit margin. In the second quarter, this segment's profitability, and Hasbro's overall profitability, improved through favorable product mix and higher quality inventory in the U.S. and Canada segment versus last year," said Deborah Thomas, Chief Financial Officer. "As we enter the second half of 2012, Hasbro is in a strong financial position with healthy cash flow and great initiatives for the holidays. A year ago, we made an investment in Games, establishing Hasbro's Gaming Center of Excellence. One year later we believe we are well positioned with innovative gaming products and strong marketing programs for the holiday season."

Major Segment Performance

U.S. and Canada segment net revenues were $406.6 million, a decrease of 19%, compared to $505.0 million in 2011. The results reflect growth in the Preschool category offset by declines in the Boys, Girls and Games categories. The U.S. and Canada segment reported an operating profit of $60.9 million, up 6%, compared to $57.7 million in 2011.

Net revenues in the International segment grew 5% absent the negative $33.4 million impact of foreign exchange. Including the impact of foreign exchange, International segment net revenues were $360.5 million, down 4%, compared to $374.5 million in 2011. Revenue in the International segment reflects growth in Latin America offset by a decline in Europe and Asia Pacific. Additionally, the Preschool category contributed to growth, offset by declines in the Boys, Girls and Games categories. The International segment reported an operating profit of $29.9 million, compared to $33.8 million in 2011.

Entertainment and Licensing segment net revenues increased 59% to $43.2 million, compared to $27.2 million in 2011. The segment benefited from the sale of television content in all formats in the U.S. and internationally. The Entertainment and Licensing segment reported an operating profit of $8.2 million compared to $0.6 million in 2011.

Product Category Performance

For the second quarter 2012, net revenues in the Boys category decreased 16% to $389.1 million despite strong growth in MARVEL products which partially offset expected declines in TRANSFORMERS and BEYBLADE products.

Net revenues in the Games category declined 8% to $213.8 million with MAGIC: THE GATHERING, DUEL MASTERS and BATTLESHIP brands continuing to grow. Boys Action Gaming, including the STAR WARS FIGHTER PODS, TRANSFORMERS BOT SHOTS and the introduction of the MARVEL BONKAZONKS line, continued to perform well.

In the Girls Category, net revenues declined 13%. MY LITTLE PONY products continued to grow backed by television programming globally. In the second half 2012, new Girls initiatives include the launch of FURBY, 1D, the boy band product line, as well as feature holiday items including BABY BUTTERSCOTCH from FURREAL FRIENDS; BABY WANNA WALK from BABY ALIVE and television animation for LITTLEST PET SHOP products.

Net revenues in the Preschool category increased 6% to $103.4 million backed by continued growth in the PLAYSKOOL HEROES line, including MARVEL and TRANSFORMERS RESCUE BOTS products, as well as SESAME STREET products and initial shipments of the new KOOSH line.

Share Repurchase and Dividend

The Company repurchased a total of 139,734 shares of common stock during the second quarter 2012 at a total cost of $4.9 million and an average price of $35.21 per share. At quarter-end, $217.3 million remained available in the current share repurchase authorization. The Company paid $46.7 million in cash dividends to shareholders during the quarter.

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. The Hub TV Network is part of a multi-platform joint venture between Hasbro and Discovery Communications (NASDAQ: DISCA, DISCB, DISCK), in the U.S. 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 http://www.hasbro.com.