SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended April 2, 1995 Commission file number 1-6682
HASBRO, INC.
--------------------
(Name of Registrant)
Rhode Island O5-0155090
- ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1027 Newport Avenue, Pawtucket, Rhode Island 02861
---------------------------------------------------
(Principal Executive Offices)
(401) 431-8697
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes X or No
--- ---
The number of shares of Common Stock, par value $.50 per share,
outstanding as of April 28, 1994 was 87,717,715.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands of Dollars Except Share Data)
(Unaudited)
Apr. 2, Mar. 27, Dec. 25,
Assets 1995 1994 1994
-------- -------- --------
Current assets
Cash and cash equivalents $ 189,777 250,262 137,028
Accounts receivable, less allowance
for doubtful accounts of $49,700,
$53,500 and $51,000 475,813 449,981 717,890
Inventories:
Finished products 198,587 203,757 181,202
Work in process 22,334 23,274 19,342
Raw materials 56,017 44,288 43,863
--------- --------- ---------
Total inventories 276,938 271,319 244,407
Deferred income taxes 83,474 86,933 83,730
Prepaid expenses 86,849 63,571 69,408
--------- --------- ---------
Total current assets 1,112,851 1,122,066 1,252,463
Property, plant and equipment, net 308,469 282,978 308,879
--------- --------- ---------
Other assets
Cost in excess of acquired net assets,
less accumulated amortization of
$87,335, $71,768 and $82,949 489,918 472,367 479,960
Other intangibles, less accumulated
amortization of $62,761, $89,609 and
$58,178 357,373 180,839 295,333
Other 61,152 55,100 41,740
--------- --------- ---------
Total other assets 908,443 708,306 817,033
--------- --------- ---------
Total assets $2,329,763 2,113,350 2,378,375
========= ========= =========
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
(Thousands of Dollars Except Share Data)
(Unaudited)
Apr. 2, Mar. 27, Dec. 25,
Liabilities and Shareholders' Equity 1995 1994 1994
-------- -------- --------
Current liabilities
Short-term borrowings $ 162,736 53,091 81,805
Trade payables 115,259 105,280 165,378
Accrued liabilities 309,950 293,557 417,763
Income taxes 106,007 92,906 98,786
--------- --------- ---------
Total current liabilities 693,952 544,834 763,732
Long-term debt, excluding current
installments 150,000 200,479 150,000
Deferred liabilities 65,809 73,171 69,226
--------- --------- ---------
Total liabilities 909,761 818,484 982,958
--------- --------- ---------
Shareholders' equity
Preference stock of $2.50 par
value. Authorized 5,000,000
shares; none issued - - -
Common stock of $.50 par value.
Authorized 300,000,000 shares; issued
88,085,802, 87,981,176 and 88,085,802 44,043 43,991 44,043
Additional paid-in capital 280,896 299,064 282,151
Retained earnings 1,086,070 937,227 1,071,416
Cumulative translation adjustments 22,473 14,584 14,526
Treasury stock, at cost, 450,559,
none and 557,455 shares (13,480) - (16,719)
--------- --------- ---------
Total shareholders' equity 1,420,002 1,294,866 1,395,417
--------- --------- ---------
Total liabilities and
shareholders' equity $2,329,763 2,113,350 2,378,375
========= ========= =========
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(Thousands of Dollars Except Share Data)
(Unaudited)
Quarter Ended
--------------------
Apr. 2, Mar. 27,
1995 1994
-------- --------
Net revenues $526,503 489,133
Cost of sales 232,572 208,200
------- -------
Gross profit 293,931 280,933
------- -------
Expenses
Amortization 9,243 8,793
Royalties, research and
development 55,084 50,320
Advertising 70,233 64,559
Selling, distribution and
administration 120,803 110,290
------- -------
Total expenses 255,363 233,962
------- -------
Operating profit 38,568 46,971
------- -------
Nonoperating (income) expense
Interest expense 5,823 5,436
Other (income), net (2,512) (1,908)
------- -------
Total nonoperating expense 3,311 3,528
------- -------
Earnings before income taxes and
cumulative effect of change in
accounting principles 35,257 43,443
Income taxes 13,574 16,726
------- -------
Earnings before cumulative
effect of change in accounting
principles 21,683 26,717
Cumulative effect of change in
accounting principles - (4,282)
------- -------
Net earnings $ 21,683 22,435
======= =======
Per common share
Earnings before cumulative
effect of change in accounting
principles $ .25 .30
======= =======
Net earnings $ .25 .25
======= =======
Cash dividends declared $ .08 .07
======= =======
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Quarters Ended April 2, 1995 and March 27, 1994
(Thousands of Dollars)
(Unaudited)
1995 1994
---- ----
Cash flows from operating activities
Net earnings $ 21,683 22,435
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of plant and equipment 19,224 16,424
Other amortization 9,243 8,793
Deferred income taxes (5,112) (11,023)
Change in operating assets and liabilities (other than
cash and cash equivalents):
Decrease in accounts receivable 257,841 268,687
(Increase) in inventories (22,261) (21,178)
(Increase) decrease in prepaid expenses (15,843) 2,075
(Decrease) in trade payables and accrued
liabilities (162,280) (193,199)
Other (6,958) 4,129
------- -------
Net cash provided by operating activities 95,537 97,143
------- -------
Cash flows from investing activities
Additions to property, plant and equipment (16,044) (19,590)
Investments and acquisitions, net of cash acquired (102,413) -
Other 168 198
------- -------
Net cash utilized by investing activities (118,289) (19,392)
------- -------
Cash flows from financing activities
Net proceeds (payments) of short-term borrowing 72,338 (10,551)
Repayment of long-term debt (10) (37)
Purchase of common stock (312) -
Stock option and warrant transactions 2,296 2,334
Dividends paid (6,130) (5,271)
------- -------
Net cash provided (utilized) by financing
activities 68,182 (13,525)
------- -------
Effect of exchange rate changes on cash 7,319 (218)
------- -------
Increase (decrease) in cash and cash equivalents 52,749 64,008
Cash and cash equivalents at beginning of year 137,028 186,254
------- -------
Cash and cash equivalents at end of period $189,777 250,262
======= =======
Supplemental information
Cash paid during the period for:
Interest $ 2,951 2,859
Income taxes $ 10,827 20,893
See accompanying condensed notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars)
(Unaudited)
(1) In the opinion of management and subject to year-end audit, the
accompanying unaudited interim financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the financial position of the Company as of April 2, 1995 and March 27,
1994, and the results of operations and cash flows for the periods then
ended.
The quarter ended April 2, 1995 consisted of fourteen weeks while
the quarter ended March 27, 1994 consisted of thirteen weeks.
The results of operations for the quarter ended April 2, 1995, are
not necessarily indicative of results to be expected for the full year.
(2) The Company adopted the provisions of Statement of Financial
Accounting Standards No. 112, Employers' Accounting for Postemployment
Benefits (SFAS 112) as of the beginning of the prior fiscal year. SFAS 112
requires that the cost of certain postemployment benefits be accrued over
the employee service period, which was a change from the Company's prior
practice of recording such benefits when incurred. The effect of initially
applying SFAS 112, net of a deferred tax benefit of $2,513, was reported as
the cumulative effect of a change in accounting principles, negatively
impacting the Company's first quarter 1994 earnings by $4,282.
(3) As of February 1, 1995, the Company purchased certain products and
other assets from the Larami group of companies. The consideration for this
purchase is currently estimated by the Company to be $88,652. Accounting
for this acquisition using the purchase method, the Company has allocated
the purchase price based on preliminary estimates of fair market value
which included $9,622 of net tangible assets, $67,175 of product rights and
licenses and $11,855 of cost in excess of net assets acquired.
(4) Earnings per common share are based on the weighted average number
of shares of common stock and dilutive common stock equivalents outstanding
during each period. Common stock equivalents include stock options and
warrants for the period prior to their exercise. Under the treasury stock
method, the unexercised options and warrants were assumed to be exercised
at the beginning of the period or at issuance, if later. The assumed
proceeds were then used to purchase common stock at the average market
price during the period.
For each of the reported periods the difference between primary and
fully diluted earnings per share was not significant.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
(Thousands of dollars)
NET REVENUES
- ------------
Net revenues for the first quarter of 1995 were $526,503, or approximately
8% greater than the $489,133 reported for the same period of 1994.
Increased local currency revenues from most of the Company's international
marketing units, coupled with the favorable effect of the weakened U.S.
dollar was the major factor in this growth. In the domestic market, the
Company's revenues were essentially flat with increases in the Hasbro Games
Group offset by decreases in the Hasbro Toy Group. The first quarter of
1995 included 14 weeks while 1994 included 13.
Gross Profit
- ------------
The gross profit margin, expressed as a percentage of net revenues,
decreased to 55.8% from the 1994 level of 57.4%. A major cause of this
deterioration was the change in mix of products sold, primarily within the
Hasbro Toy Group. During the first quarter of 1995, preschool products
accounted for a larger portion of total revenues and generally this
category returns lower gross margins than do promotional products.
Additionally, the increased cost of plastic resins and paper, major
components of many of the Company's products, was a contributing factor.
EXPENSES
- --------
Royalties, research and development expenses for the quarter increased in
both amount and as a percentage of revenues from 1994 levels. The royalty
component increased marginally in amount, reflecting the increased
revenues, while as a percentage of revenues it decreased, reflecting the
change in mix of products sold. Research and development was $32,564 for
the quarter compared to $28,503 in 1994. This increase cannot be attributed
to any one unit or geographic area, but rather reflects the Company's
expanded efforts, both in new products and technologies and the refreshing
of its existing items.
The current quarter advertising increased approximately $5,700 from the
comparable 1994 level, and, as a percentage of net revenues, increased
marginally to 13.3% from 13.2% a year ago. Both increases can largely be
attributed to the higher portion of the Company's revenues coming from the
international marketing units which generally have higher advertising to
sales ratios than do the domestic groups.
The Company's selling, distribution and administration expenses increased,
both in amount and as a percentage of net revenues, from their respective
1994 amounts. Contributing to the increases were the impact of the weakened
U.S. dollar, the amounts from the Company's new operations, including
Larami, the K'nex joint venture, Scandinavia, and Waddington Games, the
additional week in the 1995 first quarter and the higher proportion of
volume contributed by the international units. Because of the need to
operate stand-alone units in most of the international markets, their
selling, distribution and administration expenses, expressed as a
percentage of revenues, are generally greater than those of the domestic
units.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
NONOPERATING (INCOME) EXPENSE
- -----------------------------
Interest expense, while remaining constant as a percentage of net revenues,
increased approximately 7% from the 1994 first quarter amount. While the
Company's operations generated more than $280,000 of cash during the most
recent twelve months, it also has increased borrowing requirements,
resulting from the utilization of approximately $400,000 for acquisitions
and investments, warrant and share repurchases and the reduction of long-
term debt during the same period. In addition, higher interest rates are
being experienced in 1995.
OTHER INFORMATION
- -----------------
The business of the Company is characterized by customer order patterns
which vary from year to year largely because of differences in the degree
of consumer acceptance of a product line, product availability, marketing
strategies and inventory levels of retailers and differences in overall
economic conditions. Also, more retailers are using quick response
inventory management practices which results in fewer orders being placed
in advance of shipment and more orders, when placed, for immediate
delivery. As a result, comparisons of unshipped orders on any date in a
given year with those at the same date in a prior year are not necessarily
indicative of sales for the entire year. In addition, it is a general
industry practice that orders are subject to amendment or cancellation by
customers prior to shipment. The Company's unshipped orders were
approximately $400,000 at April 28, 1995 compared to $350,000 at April 22,
1994. During the past several years the Company has experienced a shift in
its revenue pattern wherein the second half of the year has grown in
significance to its overall business and within that half the fourth
quarter has become more prominent. The Company expects that this trend will
continue.
During both 1994 and 1993, the Company incurred certain restructuring
costs. The 1994 actions, completed in the first quarter of 1995, resulted
in the termination of approximately 600 employees, of which approximately
100 were management positions. The closure of the Company's Netherlands
manufacturing facility, which was the major portion of the 1993 charge,
originally planned for the second quarter of 1994, was delayed until the
first quarter of 1995 due to the time necessary to comply with local
requirements. This resulted in the severance of approximately 200
additional employees. As both of these actions were not completed until the
current quarter, the Company has just begun to experience the financial
benefits from these actions but does not believe that they will be material
in any future period. A majority of the liabilities established for these
restructurings has not yet been satisfied.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Because of the seasonality of the Company's business coupled with certain
customer incentives, mainly in the form of extended payment terms, the
interim cash flow statements are not representative of that which may be
expected for the full year. As a result of these extended payment terms,
the majority of the Company's cash collections occur late in the fourth
quarter and early in the first quarter of the subsequent year. While a
large portion of these receivables are of a quality which would allow their
sale, alleviating the need for much of its interim financing, the Company
believes it to be more cost effective to use its available funds and short-
term borrowings to finance them. As a result, cash flow from operations
during the second and third quarters of each year is usually negative while
late in the fourth quarter and through the first quarter of the subsequent
year, as receivables are collected, cash flow from operations becomes
positive and is used to repay a significant portion of the short-term
borrowings.
As a result, management believes that on an interim basis, rather than
discussing its cash flows, a better understanding of its liquidity and
capital resources can be obtained through a discussion of the various
balance sheet categories. Also, as several of the major categories,
including cash and cash equivalents, accounts receivable, inventories and
short-term borrowings, fluctuate significantly from quarter to quarter,
again due to the seasonality of its business and the extended payment terms
offered, management believes that a comparison to the comparable period in
the prior year is generally more meaningful than a comparison to the prior
year-end.
Cash and cash equivalents were approximately 25% below their 1994 level.
The Company attempts to keep its cash at the lowest level possible whenever
it has short-term borrowings. At times, however, the cash available and the
borrowing requirement may be in different countries and currencies which
may make it impractical to substitute one for the other. Receivables were
approximately $25,000 greater than at the same time in 1994. More than half
of the increase results from the impact of changed foreign currency
translation rates while the remainder reflects the increased revenue volume
in the first quarter of 1995. Inventories marginally increased from their
1994 level but absent the effect of changed translation rates would have
been below those of a year ago. Prepaid expenses increased from their 1994
amounts reflecting the Company's increased volume and business activities.
Other assets, as a group, increased approximately $200,000 from their level
a year ago. This increase reflects the Company's investments and
acquisitions during the most recent twelve months, partially offset by the
disposition of certain investments, as described in Management's Discussion
and Analysis of Financial Condition and Results of Operations in the
Company's Annual Report on Form 10-K (Management's Review) for the year
ended December 25, 1994, and twelve additional months of amortization
expense.
HASBRO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations, Continued
(Thousands of dollars)
Short-term borrowings, at $162,736 were approximately $110,000 greater than
last year. This increase is the net effect of the cash required for the
Company's recent acquisitions, the early redemption of $50,000 of its long-
term debt, the election to pay cash rather than issuing additional shares
to exercising holders of its warrants, which expired on July 12, 1994, the
repurchase of shares of the Company's common stock, the net cash
requirements of the change in other assets noted above, all partially
offset by funds generated from operations within the most recent twelve
months. Other current liabilities increased approximately 8% as a result of
the Company's increased activities and the impact of changed foreign
currency translation rates. At April 2, 1995, the Company had committed
unsecured lines of credit totaling approximately $450,000 available to it.
It also had available uncommitted lines approximating $950,000. The Company
believes that these amounts are adequate for its needs. Of these available
lines, approximately $175,000 was in use at April 2, 1995.
RECENT INFORMATION
- ------------------
As discussed in Management's Review for the year ended December 25, 1994,
the Company and CBS Inc. (CBS) had negotiated a resolution to the
implementation of the judgment in favor of the Company arising from a legal
action relating to the environmental remediation of the Company's former
manufacturing facility in Lancaster, Pennsylvania. During the quarter, the
Company received the agreed payment from CBS for remediation and other
costs incurred, the termination of the consent order from the Pennsylvania
Department of Environmental Resources and on April 17, 1995 sold the site
to CBS for the agreed payment.
PART II. Other Information
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
4 Amendment No. 2 to Revolving Credit Agreement, dated
as of May 1, 1995, among the Company, certain banks
(the "Banks") and The First National Bank of Boston,
as agent for the Banks.
11 Computation of Earnings Per Common Share - Quarters
Ended April 2, 1995 and March 27, 1994.
12 Computation of Ratio of Earnings to Fixed Charges -
Quarter Ended April 2, 1995.
27 Financial Data Schedule.
(b) Reports on Form 8-K
A Current Report on Form 8-K dated April 20, 1995 was filed
by the Company and included the Press Release dated April
20, 1995 announcing the Company's results for the current
quarter. Consolidated Statements of Earnings (without notes)
for the quarters ended April 2, 1995 and March 27, 1994 and
Consolidated Condensed Balance Sheets (without notes) as of
said dates were also filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HASBRO, INC.
------------
(Registrant)
Date: May 12, 1995 By: /s/ John T. O'Neill
---------------------
John T. O'Neill
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
HASBRO, INC. AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the Period Ended April 2, 1995
Exhibit Index
Exhibit
No. Exhibits
- ------- --------
4 Amendment No. 2 to Revolving Credit Agreement
11 Statement re computation of per share earnings - quarter
12 Statement re computation of ratios
27 Financial Data Schedule
EXHIBIT 4
AMENDMENT NO. 2
TO
REVOLVING CREDIT AGREEMENT
This Amendment No. 2 (this "Amendment"), dated as of May 1,
1995, among Hasbro, Inc., a Rhode Island corporation (the "Borrower")
and The First National Bank of Boston, The Bank of Nova Scotia,
Citibank, N.A., Fleet National Bank, Bank of America Illinois (as
successor to Continental Bank, N.A.), Mellon Bank, N.A. and Union Bank
of Switzerland (collectively, the "Banks") and The First National Bank
of Boston, as agent for the Banks (the "Agent"), further amends the
Revolving Credit Agreement, dated as of June 22, 1992, as amended by an
Amendment No. 1, dated as of April 1, 1994 (as so amended and as may be
further amended and in effect from time to time, the "Credit
Agreement"). Capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Credit Agreement.
WHEREAS, the Borrower has requested that the Banks and the
Agent make certain amendments to the Credit Agreement and the Banks and
the Agent are agreeable thereto upon the terms and conditions described
herein:
NOW, THEREFORE, in consideration of the foregoing premises,
the parties hereby agree as follows:
1. Definitions.
-----------
Section 1 of the Credit Agreement is hereby amended as
follows:
1.1 Commitment Fee Rate.
-------------------
Clause (a) of the definition of "Commitment Fee Rate" shall be
amended to read as follows:
"(a) With respect to the Revolving Credit Commitment
Fee, effective May 1, 1995, the applicable annual percentage rate
set forth in the table below opposite the Debt Ratings with
respect to Long Term Senior Debt of the Company then in effect,
subject to the provisions set forth in clauses (i) through (iv) of
the definition of "Margin":
Debt Rating
----------- Applicable Commitment
---------------------
Standard & Poors Moody's Fee Rate
---------------- ------- --------
AA- or better Aa3 or better 0.085%
A or A+ A2 or A1 0.10%
A- A3 0.105%
BBB+ Baa1 0.12%
BBB Baa2 0.15%
BBB- or below Baa3 or below 0.20%
1.2 Final Maturity Date.
-------------------
The definition of Final Maturity Date is hereby amended by
substituting the date "May 31, 1998" for the date "May 31, 1997"
appearing therein.
1.3 Hasbro Companies.
----------------
The definition of Hasbro Companies is hereby amended by
deleting therefrom the words "Playskool, Inc. (a Delaware corporation)";
as a result of the merger of Playskool, Inc. into the Borrower,
effective December 25, 1994.
1.4 Margin.
------
The definition of Margin is hereby amended by substituting the
following table for the table appearing therein:
Debt Rating Applicable Margin
----------- -----------------
Euro-
Base currency CD
Standard Rate Rate Rate
& Poors Moody's Amounts Amounts Amounts
-------- ------- ------- -------- -------
AA- or better Aa3 or better 0% .2300% .355%
A or A+ A2 or A1 0% .2750% .400%
A- A3 0% .3000% .425%
BBB+ Baa1 0% .3250% .450%
BBB Baa2 0% .4250% .550%
BBB- Baa3 0% .5000% .625%
Below BBB- Below Baa3 The applicable Margins for Debt
Ratings of BBB-/Baa3 subject to
Clause (vii) below
2. Conditions to Effectiveness.
---------------------------
The effectiveness of this Amendment shall be conditioned upon
the satisfaction of the following conditions precedent:
2.1 Delivery of Documents.
---------------------
(a) The Borrower shall have delivered to the Agent,
contemporaneously with the execution hereof, the following, in form and
substance satisfactory to the Banks:
(i) this Amendment signed by the Borrower;
(ii) certified copies of the resolutions of the Borrower
approving this Amendment and the other documents referred to herein
together with Officer's Certificates as to the incumbency and true
signatures of officers; and
(iii) Officer's Certificates of the Borrower certifying as
to the legal existence, good standing, and qualification to do business
of the Borrower.
(b) Each Bank shall have delivered to the Agent this
Amendment, signed by such Bank.
2.2 Legality of Transaction.
-----------------------
No change in applicable law shall have occurred as a
consequence of which it shall have become and continue to be unlawful on
the date this Amendment is to become effective (a) for the Agent or any
Bank to perform any of its obligations under any of the Loan Documents
or (b) for the Borrower to perform any of its agreements or obligations
under any of the Loan Documents.
2.3 Performance.
-----------
The Borrower shall have duly and properly performed, complied
with and observed in all material respects its covenants, agreements and
obligations contained in the Loan Documents required to be performed,
complied with or observed by it on or prior to the date this Amendment
is to become effective. No event shall have occurred on or prior to the
date this Amendment is to become effective and be continuing, and no
condition shall exist on the date this Amendment is to become effective
which constitutes a Default or Event of Default under any of the Loan
Documents.
2.4 Proceedings and Documents.
-------------------------
All corporate, governmental and other proceedings in
connection with the transactions contemplated by this Amendment and all
instruments and documents incidental thereto shall be in the form and
substance reasonably satisfactory to the Agent and the Agent shall have
received all such counterpart originals or certified or other copies of
all such instruments and documents as the Agent shall have reasonably
requested.
3. Representations and Warranties.
------------------------------
The Borrower hereby represents and warrants to the Banks as
follows:
(a) The representations and warranties of the Borrower
contained in the Credit Agreement, as amended hereby, were true and
correct in all material respects when made and continue to be true and
correct in all material respects on the date hereof, except that the
financial statements referred to therein shall be the financial
statements of the Borrower most recently delivered to the Agent, and
except as such representations and warranties are affected by the
transactions contemplated hereby;
(b) The execution, delivery and performance by the Borrower
of this Amendment and the consummation of the transactions contemplated
hereby: (i) are within the corporate powers of the Borrower and have
been duly authorized by all necessary corporate action on the part of
the Borrower, (ii) do not require any approval, consent of, or filing
with, any governmental agency or authority, or any other person,
association or entity, which bears on the validity of this Amendment and
which is required by law or the regulation or rule of any agency or
authority, or other person, association or entity, (iii) do not violate
any provisions of any order, writ, judgment, injunction, decree,
determination or award presently in effect in which the Borrower is
named, or any provision of the charter documents or by-laws of the
Borrower, (iv) do not result in any breach of or constitute a default
under any agreement or instrument to which the Borrower is a party or to
which it or any of its properties are bound, including without
limitation any indenture, loan or credit agreement, lease, debt
instrument or mortgage, except for such breaches and defaults which
would not have a material adverse effect on the Borrower and its
subsidiaries taken as a whole, and (v) do not result in or require the
creation or imposition of any mortgage, deed of trust, pledge or
encumbrance of any nature upon any of the assets or properties of the
Borrower; and
(c) This Amendment, the Credit Agreement as amended hereby,
and the other Loan Documents constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, provided that (i) enforcement
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application affecting the rights
and remedies of creditors, and (ii) enforcement may be subject to
general principles of equity, and the availability of the remedies of
specific performance and injunctive relief may be subject to the
discretion of the court before which any proceeding for such remedies
may be brought.
4. No Other Amendments.
-------------------
Except as expressly provided in this Amendment, all of the
terms and conditions of the Credit Agreement, the Notes and the other
Loan Documents shall remain in full force and effect.
5. Execution in Counterparts.
-------------------------
This Amendment may be executed in any number of counterparts
and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, but all of which together
shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
6. Effective Date.
--------------
Subject to the satisfaction of the conditions precedent set
forth in Section 2 hereof, this Amendment shall be deemed to be
effective as of the date hereof.
IN WITNESS WHEREOF, the Borrower, the Banks and the Agent have
duly executed this Amendment as of the date first above written.
HASBRO, INC.
By: \s\ John T. O'Neill
-------------------
Title: Executive Vice
President and Chief
Financial Officer
THE FIRST NATIONAL BANK OF BOSTON
individually and as Agent
By: \s\ Carol A. Lovell
-------------------
Title: Director
THE BANK OF NOVA SCOTIA
By: \s\ Michael R. Bradley
----------------------
Title: Authorized Signatory
CITIBANK, N.A.
By: \s\ W. Dwight Raiford
---------------------
Title: Vice President
FLEET NATIONAL BANK
By: \s\ Virginia C. Roberts
-----------------------
Title: Senior Vice President
By: \s\ Kathleen A. Fitzgerald
--------------------------
Title: Senior Vice President
BANK OF AMERICA ILLINOIS
By: \s\ Brock T. Harris
-------------------
Title: Vice President
MELLON BANK, N.A.
By: \s\ John Paul Maretta
---------------------
Title: Assistant Vice President
UNION BANK OF SWITZERLAND
By: \s\Paul R. Morrison
-------------------
Title: Assistant Vice President
By: \s\Robert A. High
-----------------
Title: Assistant Treasurer
EXHIBIT 11
HASBRO, INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
Quarter Ended April 2, 1995 and March 27, 1994
(Thousands of Dollars and Shares Except Per Share Data)
1995 1994
----------------- -----------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Net earnings before cumulative
effect of change in accounting
principles $21,683 21,683 26,717 26,717
Interest and amortization on 6%
convertible notes, net of taxes - 1,441 - 1,441
------ ------ ------ ------
Net earnings before cumulative
effect of change in accounting
principles applicable to common
shares 21,683 23,124 26,717 28,158
Cumulative effect of change in
accounting principles - - (4,282) (4,282)
------ ------ ------ ------
Net earnings applicable to
common shares $21,683 23,124 22,435 23,876
====== ====== ====== ======
Weighted average number of shares
outstanding:(a)
Outstanding at beginning of
period 87,528 87,528 87,795 87,795
Actual exercise of stock
options and warrants 48 48 86 86
Assumed exercise of stock
options and warrants 580 682 2,219 2,276
Assumed conversion of 6%
convertible notes - 5,114 - 5,114
Purchase of common stock (3) (3) - -
------ ------ ------ ------
Total 88,153 93,369 90,100 95,271
====== ====== ====== ======
Per common share:
Earnings before cumulative
effect of change in
accounting principles $ .25 .25 .30 .30
Cumulative effect of change
in accounting principles - - (.05) (.05)
------ ------ ------ ------
Net earnings $ .25 .25 .25 .25
====== ====== ====== ======
(a) Computation to arrive at the average number is a weighted average
computation.
EXHIBIT 12
HASBRO, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
Quarter Ended April 2, 1995
(Thousands of Dollars)
Earnings available for fixed charges:
Net earnings $21,683
Add:
Fixed charges 9,171
Income taxes 13,574
------
Total $44,428
======
Fixed Charges:
Interest on long-term debt $ 2,490
Other interest charges 3,333
Amortization of debt expense 85
Rental expense representative
of interest factor 3,263
------
Total $ 9,171
======
Ratio of earnings to fixed charges 4.84
======
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> APR-02-1995
<CASH> 189777
<SECURITIES> 0
<RECEIVABLES> 525513
<ALLOWANCES> 49700
<INVENTORY> 276938
<CURRENT-ASSETS> 1112851
<PP&E> 487947
<DEPRECIATION> 179478
<TOTAL-ASSETS> 2329763
<CURRENT-LIABILITIES> 693952
<BONDS> 150000
<COMMON> 44043
0
0
<OTHER-SE> 1375959
<TOTAL-LIABILITY-AND-EQUITY> 2329763
<SALES> 526503
<TOTAL-REVENUES> 526503
<CGS> 232572
<TOTAL-COSTS> 254071
<OTHER-EXPENSES> (2512)
<LOSS-PROVISION> 1292
<INTEREST-EXPENSE> 5823
<INCOME-PRETAX> 35257
<INCOME-TAX> 13574
<INCOME-CONTINUING> 21683
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21683
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
