Raving Toy Maniac

Hasbro Reports Financial Results for the Second Quarter 2013

• Net revenues of $766.3 million for the second quarter 2013 versus $811.5 million for the second quarter 2012;
• Operating profit of $76.6 million in the second quarter 2013, or 10.0% of revenues, excluding $2.5 million of pre-tax partial pension settlement charges associated with restructuring actions, versus $86.3 million, or 10.6% of revenues, in the second quarter 2012;
• Net earnings of $38.3 million or $0.29 per diluted share, excluding the pension charges of $0.01 per diluted share, compared to $43.4 million, or $0.33 per diluted share in 2012;
• Revenues for Games up 19%; Girls up 43%; and Preschool up 4% in the quarter;
• Growth across vast majority of Franchise Brands including MY LITTLE PONY, MAGIC: THE GATHERING, PLAY-DOH, NERF and MONOPOLY.

PAWTUCKET, R.I. -- July 22, 2013 -- Hasbro, Inc. today reported financial results for the second quarter 2013. Net revenues for the quarter were $766.3 million, a 6% decline compared to $811.5 million in 2012. Second quarter 2013 net revenues include a favorable $1.0 million impact of foreign exchange.

As adjusted, net earnings for the second quarter 2013 were $38.3 million, or $0.29 per diluted share, compared to $43.4 million, or $0.33 per diluted share in 2012. This excludes pre-tax partial pension settlement charges of $2.5 million, or $0.01 per diluted share, associated with previously disclosed restructuring actions. Second quarter 2013 net earnings were $36.5 million, or $0.28 per diluted share, as reported.

"Through our global brand building efforts, we are taking steps to drive long-term profitable growth across our brand portfolio," said Brian Goldner, Hasbro's President and Chief Executive Officer. "In the second quarter, this resulted in growth in our Girls, Games, and Preschool categories. This growth, however, did not offset the decline in our Boys revenues, which faced difficult comparisons due to major motion pictures in 2012. As we enter the second half of the year, we have innovative brand initiatives across categories and geographies, including NERF REBELLE, FURBY BOOM, MY LITTLE PONY EQUESTRIA GIRLS, TELEPODS for ANGRY BIRDS STAR WARS II and TRANSFORMERS CONSTRUCT-BOTS."

"Across our business, we are increasing our focus on our most important initiatives while right sizing our cost base," continued Goldner. "We have expanded our digital gaming capabilities with the acquisition of 70% of Backflip Studios, a profitable mobile game studio. Importantly, we are developing comprehensive and innovative lines for both film and television entertainment in the coming years, including TRANSFORMERS 4 in 2014 as well as MARVEL and STAR WARS entertainment from Disney in 2014, 2015 and beyond."

U.S. and Canada segment net revenues were $389.2 million compared to $406.6 million in 2012. The results reflect growth in the Games, Girls and Preschool categories. The U.S. and Canada segment reported operating profit of $59.0 million compared to $60.9 million in 2012.

International segment net revenues were $340.2 million compared to $360.5 million in 2012. Net revenues in the International segment include a favorable $1.2 million impact of foreign exchange. Revenues in the International segment reflect growth in emerging markets as well as the Games, Girls and Preschool categories. The International segment reported operating profit of $14.8 million compared to $29.9 million in 2012.

Entertainment and Licensing segment net revenues were $35.3 million compared to $43.2 million in 2012. Second quarter 2012 revenues reflected a higher mix of revenues from television programming sales for digital distribution. The Entertainment and Licensing segment reported an operating profit of $3.7 million compared to $8.2 million in 2012.

Second Quarter 2013 Product Category Performance
Net Revenues ($ Millions)
Q2 2013 Q2 2012 % Change
Boys $253.7 $389.1 -35%
Games $255.4 $214.8 +19%
Girls $149.4 $104.2 +43%
Preschool $107.8 $103.4 +4%

For the second quarter 2013, net revenues in the Boys category decreased 35% to $253.7 million. NERF was up in the quarter; however, several brands, including MARVEL and BEYBLADE, faced difficult comparisons with the second quarter 2012.

The Games category posted its third consecutive quarter of growth, increasing revenues 19% in the second quarter 2013 versus last year. Both of our Games Franchise Brands, MAGIC: THE GATHERING and MONOPOLY, were up in the quarter. Additionally, many other Games brands grew including TWISTER, JENGA and the ELEFUN & FRIENDS collection.

The Girls category posted its fourth straight quarter of growth, increasing 43% in the quarter. FURBY and MY LITTLE PONY were the primary contributors to the strong year-over-year growth.

The Preschool category also grew in the second quarter, increasing 4% to $107.8 million. PLAY-DOH, PLAYSKOOL HEROES, led by TRANSFORMERS RESCUE BOTS, and SESAME STREET products all grew in the quarter.

Cost Savings Initiative

As previously announced, the Company is undertaking a cost savings initiative designed to better align resources and costs while targeting $100 million in annual savings by 2015.

During the second quarter 2013, the Company incurred $2.5 million in pre-tax partial pension settlement charges, or $0.01 per diluted share, associated with this initiative. Potential additional pension settlement charges could be as much as $8 million dependent on the amount and type of benefit payments pension participants request during the remainder of 2013. The Company did not record any additional restructuring charges during the second quarter, but continues to expect full-year charges of $30 to $35 million, prior to pension charges. In the first quarter 2013, the Company recorded $28.9 million in restructuring charges.

The expectation for gross savings for 2013 continues to be $45 to $48 million, resulting in expected net savings of $13 to $15 million for the full-year, prior to pension charges.

Dividend and Share Repurchase

On May 23, 2013, Hasbro declared a quarterly cash dividend of $0.40 per common share. The dividend will be payable on August 15, 2013 to shareholders of record at the close of business on August 1, 2013. Year-to-date, the Company has paid $52.1 million in cash dividends to shareholders.

During the second quarter 2013, the Company repurchased a total of 771,211 shares of common stock at a total cost of $35.4 million and an average price of $45.82 per share. At quarter end, the Company had repurchased a total of 1.29 million shares of common stock year-to-date and $71.8 million remained available in the current share repurchase authorization.

About Hasbro, Inc.

Hasbro, Inc. (NASDAQ: HAS) is a branded play company dedicated to fulfilling the fundamental need for play for children and families through the creative expression of the Company's world class brand portfolio, including TRANSFORMERS, MONOPOLY, PLAY-DOH, MY LITTLE PONY, MAGIC: THE GATHERING, NERF and LITTLEST PET SHOP. From toys and games, to television programming, motion pictures, digital gaming and a comprehensive licensing program, Hasbro strives to delight its global customers with innovative play and entertainment experiences, in a variety of forms and formats, anytime and anywhere. The Company's Hasbro Studios develops and produces television programming for more than 170 markets around the world, and for the U.S. on Hub Network, part of 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.

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