SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): February 8, 2000
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HASBRO, INC.
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(Name of Registrant)
RHODE ISLAND 1-6682 05-0155090
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(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
1027 NEWPORT AVE., PAWTUCKET, RHODE ISLAND 02861
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(Address of Principal Executive Offices) (Zip Code)
(401) 431-8697
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(Registrant's Telephone Number)
Item 5. Other Events
The February 8, 2000 Press Release of the Registrant attached
hereto as EXHIBIT 99 is incorporated herein by reference.
Item 7(c) Exhibits
99 Press Release, dated February 8, 2000, of Hasbro, Inc.
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: February 8, 2000 By: /s/ Alfred J. Verrecchia
--------------------------
Alfred J. Verrecchia
Executive Vice President,
Global Operations and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
HASBRO, INC.
Current Report on Form 8-K
Dated February 8, 2000
Exhibit Index
Exhibit
No. Exhibits
- - ------- --------
99 Press Release dated February 8, 2000
EXHIBIT 99
For Immediate Release Contact: Alfred J. Verrecchia
February 8, 2000 401-727-5100
Renita E. O'Connell
401-727-5401
HASBRO REPORTS 33% INCREASE IN FULL-YEAR 1999 EARNINGS PER SHARE AND
RECORD RESULTS BEFORE CONSOLIDATION PROGRAM CHARGES
EXPECTS FOCUS ON CONTENT, TECHNOLOGY AND GAME PLAY TO BE CATALYSTS IN 2000
Pawtucket, RI (February 8, 2000) -- Hasbro, Inc. (NYSE:HAS) today reported
record fourth quarter and full-year 1999 revenues, earnings and earnings per
share, prior to charges related to the previously announced Consolidation
Program. Net earnings for the year increased 30% to $286.6 million compared to
$220.0 million in 1998, and diluted earnings per share increased 33% to $1.42
compared to $1.07 in 1998. These results include a loss of $0.01 per share
attributable to initial spending for Games.com, the Company's Internet games
initiative, and exclude $141.6 million of pre-tax charges ($97.7 million
after-tax) related to the Consolidation Program in 1999 and a $20.0 million
one-time pre-tax charge ($13.6 million after-tax) in 1998 to write-off
acquired in-process research and development of MicroProse.
"Hasbro had its best year ever in 1999," said Alan G. Hassenfeld, Chairman
and Chief Executive Officer. "We delivered on our promises including building
for future growth by acquiring Wizards of the Coast, enabling us to expand in
the fast-growing games arena. Games have long been a cornerstone of Hasbro,
and we will continue to leverage this strength. This segment grew
significantly in 1999, driven not only by the success of recent acquisitions
but also the enduring popularity of our core brands like MONOPOLY, YAHTZEE,
TRIVIAL PURSUIT and many others. We also unveiled plans for Games.com, which
we expect to launch in summer 2000 and to become the best online games portal.
Hasbro's unmatched games content is truly what will set us apart," Hassenfeld
noted.
For the year, net revenues increased 28% to a record $4.2 billion compared
to $3.3 billion in 1998, reflecting balanced growth in core brands and key
licenses. Revenues from U.S. customers increased 33% while revenues from
international customers increased 24% in local currencies and 19% in U.S.
dollars. This growth was driven by significantly higher shipments of STAR WARS
and FURBY, plus new POKEMON toys and games. Interactive software revenues,
which nearly doubled during the first nine months of 1999 compared to 1998,
were below expectations later in the fourth quarter and below fourth quarter
1998, resulting in full-year 1999 revenues of approximately $229 million
compared to $192 million in 1998. In addition to the late introduction of new
product, which impacted fourth quarter shipments in both the U.S. and Europe,
this shortfall is partly attributable to significant industry-wide softening
of the video and PC CD-ROM business in the fourth quarter and significant
price erosion. This fourth-quarter shortfall was more than offset by
significant
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growth in FURBY, hand-held Electronic games, plus a wide range of POKEMON toys
and games including POKEMON MONOPOLY, the POKEDEX organizer, and trading card
games from Wizards of the Coast - which was acquired in September and
contributed approximately $237 million of revenue. As a result, total fourth
quarter net revenues increased 22% to a record $1.6 billion compared to $1.3
billion a year ago.
Fourth quarter net earnings increased 18% to $155.4 million compared to
$131.8 million a year ago, and diluted earnings per share increased 22% to
$0.79 compared to $0.65 in 1998. These results exclude $141.6 million of pre-
tax charges ($97.7 million after-tax) related to the 1999 Consolidation
Program. The attached schedule "Impact of Consolidation Program" sets forth
earnings before and after these charges.
After the Consolidation Program charges, reported net earnings and diluted
earnings per share for the year were $189.0 million and $0.93, respectively,
compared to $206.4 million and $1.00 per share, respectively, in 1998. For
the fourth quarter, reported net earnings and diluted earnings per share were
$57.7 million and $0.29 per share, respectively, compared to $131.8 million
and $0.65, respectively, in 1998.
Revenues and operating profits increased in the three major business
segments: U.S. Toys, Games and International toys and games. Within the Games
segment, the unfavorable impacts of the increased costs incurred to expand the
Company's offering of interactive software games, partly resulting from
escalating research and development costs across the industry, coupled with
the unanticipated shortfall in fourth quarter revenues attributable to the
late introduction of new product as well as general softness at retail and
significant price erosion, resulted in a full-year loss from interactive
software games of approximately $53 million after-tax excluding Consolidation
Program charges. This was more than offset by increased profitability in the
rest of the Games segment, including the Wizards of the Coast acquisition.
"Our performance underscores the importance of having a diversified portfolio.
I am especially pleased with the strength of our International segment,"
Hassenfeld commented.
The Company also reported record fourth quarter and full-year Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $274.7
million and $669.1 million, respectively, compared to EBITDA of $257.7 million
and $514.1 million, respectively, in 1998.
"In addition to delivering record results," Hassenfeld noted, "we
realigned our business to support our commitment to technology and game play.
Together with our content, they are the keys to Hasbro's successful transition
from a toy and game manufacturer to a leader in children's and family leisure
time and entertainment. We also sharpened our focus on profitability, with
the Consolidation Program and other initiatives to become a low-cost operator,
to help better leverage the revenue growth opportunities of our portfolio of
popular global brands and products and secure a bright future for our
shareowners. While we are
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disappointed that our efforts have not been reflected in our stock price
performance, we firmly believe in our future. We invested approximately $238
million to repurchase almost 9 million shares of our common stock in 1999,
bringing our total investment under the $500 million repurchase program,
approved in December 1997, to approximately $428 million for almost 17 million
shares. In December 1999, our Board of Directors authorized an additional $500
million repurchase program."
"We feel good about our business in 2000. Coming off an exceptionally
strong 1999, with 28% revenue growth and 33% earnings per share growth, as we
head into Toy Fair we forecast revenues to increase approximately 5% this
year. Earnings per share growth could approach 10%, excluding the impact of
Games.com in 2000 and the Consolidation Program charges in 1999," Hassenfeld
continued. "We ended 1999 with strong momentum in many areas. FURBY continues
to be a smash hit worldwide, and POKEMANIA continues. With highly popular
titles like ROLLER COASTER TYCOON - the number one PC game in 1999 based on
units sold in the U.S., MECHWARRIOR 3, FROGGER and Q*BERT, plus a more
streamlined organization, Hasbro Interactive is positioned for continued
growth and renewed profitability in 2000. We also look forward to the spring
video releases of the STAR WARS and POKEMON movies, plus the second POKEMON
movie this summer. We will continue to further leverage our content and offer
wonderful new product like ACTION MAN, NASCAR RACERS, BEAST MACHINES, TITAN
AE, DRAGON TALES and TWEENIES, plus technology-oriented toys and games like
TALKIN' ACHA, MY REAL BABY, POO-CHI, new FURBY products, LIGHTNING MAIL and
more," Hassenfeld concluded.
Hasbro will webcast its fourth quarter earnings conference call at 9:00
a.m. Eastern time today. Investors and the media are invited to listen to the
call through the company's website at http://www.hasbro.com (select "Corporate
Information" from the home page, then click on the webcast icon).
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, KENNER, TONKA, ODDZON, SUPER
SOAKER, MILTON BRADLEY, PARKER BROTHERS, TIGER, HASBRO INTERACTIVE,
MICROPROSE, GALOOB and WIZARDS OF THE COAST brands and products provide the
highest quality and most recognizable play experiences in the world.
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Certain statements contained in this release contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements may be identified by the use of forward-looking
words or phrases such as "anticipate", "believe", "expect", "intend", "may",
"planned", "potential", "should", "will" and "would". Such forward-looking
statements are inherently subject to known and unknown risks and
uncertainties. The Company's actual actions or results may differ materially
from those expected or anticipated in the forward-looking statements. Specific
factors that might cause such a difference include, but are not limited to,
the Company's ability to manufacture, source and ship new and continuing
products on a timely basis and the acceptance of those products by customers
and consumers in a competitive product environment; economic conditions,
currency fluctuations and government regulation and other actions in the
various markets in which the Company operates throughout the world; the
inventory policies of retailers, including the continuing trend of
concentration of the Company's revenues in the second half and fourth quarter
of the year, together with increased reliance by retailers on quick response
inventory management techniques, which increases the risk of underproduction
of popular items, overproduction of less popular items and failure to achieve
tight and compressed shipping schedules; the impact of competition on
revenues, margins and other aspects of the Company's business, including the
ability to secure, maintain and renew popular licenses and the ability to
attract and retain talented employees in a competitive environment; market
conditions, third party actions or approvals and the impact of competition
that could delay or increase the cost of implementation of the Company's
Consolidation Program or alter the Company's actions and reduce actual
results; the risk that anticipated benefits of acquisitions may not occur or
be delayed or reduced in their realization; and with respect to the Company's
on-line game site initiative, technical difficulties in adapting games to on-
line format and establishing the on-line game site that could delay or
increase the cost of the site becoming operational; the acceptance by
consumers of the games and other products and services to be offered at the
site; competition from other on-line game sites and other game playing
formats; the fact that the current business model for on-line games is
experimental, and on-line revenues may not be sufficient to cover the
significant advertising expenditures required or the support, service and
product enhancement demands of on-line users. The Company undertakes no
obligation to make any revisions to the forward-looking statements contained
in this release or to update them to reflect events or circumstances occurring
after the date of this release.
EBITDA (earnings before interest, taxes, depreciation and amortization)
represents operating profit plus acquired in-process research and development,
restructuring charges, depreciation and all amortization. EBITDA is not
adjusted for all noncash expenses or for working capital, capital expenditures
or other investment requirements and, accordingly, is not necessarily
indicative of amounts that may be available for discretionary uses. Thus,
EBITDA should not be considered in isolation or as a substitute for net
earnings or cash provided by operating activities, each prepared in accordance
with generally accepted accounting principles, when measuring Hasbro's
profitability or liquidity as more fully discussed in the Company's financial
statements and securities filings.
# # #
(Tables Attached)
HASBRO, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands of Dollars and Shares Except Per Share Data)
Quarter Ended Year Ended
-------------------- --------------------
Dec. 26, Dec. 27, Dec. 26, Dec. 27,
1999 1998 1999 1998
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Net Revenues $1,591,112 1,304,079 $4,232,263 3,304,454
Cost of Sales 652,686 512,285 1,698,242 1,366,061
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Gross Profit 938,426 791,794 2,534,021 1,938,393
Amortization 84,559 22,910 173,533 72,208
Royalties, Research and
Development 249,294 161,453 711,790 424,673
Advertising 157,053 183,669 456,978 440,692
Selling, Distribution and
Administration 284,688 216,505 799,919 655,938
Nonrecurring Charges 64,232 - 64,232 20,000
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Operating Profit 98,600 207,257 327,569 324,882
Interest Expense 24,552 16,075 69,340 36,111
Other (Income) Expense, Net (9,574) (2,625) (15,616) (14,707)
--------- --------- --------- ---------
Earnings Before Income Taxes 83,622 193,807 273,845 303,478
Income Taxes 25,923 62,018 84,892 97,113
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Net Earnings $ 57,699 131,789 $ 188,953 206,365
========= ========= ========= =========
Per Common Share
Net Earnings
Basic $ .30 $ .67 $ .97 $ 1.04
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Diluted $ .29 $ .65 $ .93 $ 1.00
========= ========= ========= =========
Cash Dividends Declared $ .06 $ .05 $ .24 $ .21
========= ========= ========= =========
Weighted Average Number
of Shares
Basic 193,828 196,151 194,917 197,927
========= ========= ========= =========
Diluted 196,395 202,462 202,103 205,420
========= ========= ========= =========
HASBRO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars)
Dec. 26, Dec. 27,
1999 1998
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Assets
Cash and Temporary Investments $ 280,159 $ 177,748
Accounts Receivable, Net 1,084,118 958,826
Inventories 408,571 334,801
Other 358,804 318,611
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Total Current Assets 2,131,652 1,789,986
Property, Plant and Equipment, Net 318,825 330,355
Other Assets 2,012,871 1,673,504
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Total Assets $4,463,348 $3,793,845
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Liabilities and Shareholders' Equity
Short-term Borrowings $ 714,669 $ 372,509
Payables and Accrued Liabilities 1,356,658 993,791
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Total Current Liabilities 2,071,327 1,366,300
Long-term Debt 420,654 407,180
Deferred Liabilities 92,392 75,570
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Total Liabilities 2,584,373 1,849,050
Total Shareholders' Equity 1,878,975 1,944,795
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Total Liabilities and Shareholders' Equity $4,463,348 $3,793,845
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HASBRO, INC.
IMPACT OF CONSOLIDATION PROGRAM
(Thousands of Dollars and Shares Except Per Share Data)
Quarter Ended December 26, 1999
---------------------------------------
Impact of Excluding
As Consolidation Consolidation
Reported Program Program
--------- --------- ---------
Net Revenues $1,591,112 - $1,591,112
Cost of Sales 652,686 (8,740) 643,946
--------- --------- ---------
Gross Profit 938,426 8,740 947,166
Amortization 84,559 (38,449) 46,110
Royalties, Research and
Development 249,294 (26,292) 223,002
Advertising 157,053 (3,862) 153,191
Selling, Distribution and
Administration 284,688 - 284,688
Nonrecurring Charges 64,232 (64,232) -
--------- --------- ---------
Operating Profit 98,600 141,575 240,175
Interest Expense 24,552 - 24,552
Other (Income) Expense, Net (9,574) - (9,574)
--------- --------- ---------
Earnings Before Income Taxes 83,622 141,575 225,197
Income Taxes 25,923 43,888 69,811
--------- --------- ---------
Net Earnings $ 57,699 97,687 $ 155,386
========= ========= =========
Per Common Share
Net Earnings
Basic $ .30 .50 $ .80
========= ========= =========
Diluted $ .29 .50 $ .79
========= ========= =========
Weighted Average Number
of Shares
Basic 193,828
=========
Diluted 196,395
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HASBRO, INC.
IMPACT OF CONSOLIDATION PROGRAM
(Thousands of Dollars and Shares Except Per Share Data)
Year Ended December 26, 1999
---------------------------------------
Impact of Excluding
As Consolidation Consolidation
Reported Program Program
--------- --------- ---------
Net Revenues $4,232,263 - $4,232,263
Cost of Sales 1,698,242 (8,740) 1,689,502
--------- --------- ---------
Gross Profit 2,534,021 8,740 2,542,761
Amortization 173,533 (38,449) 135,084
Royalties, Research and
Development 711,790 (26,292) 685,498
Advertising 456,978 (3,862) 453,116
Selling, Distribution and
Administration 799,919 - 799,919
Nonrecurring Charges 64,232 (64,232) -
--------- --------- ---------
Operating Profit 327,569 141,575 469,144
Interest Expense 69,340 - 69,340
Other (Income) Expense, Net (15,616) - (15,616)
--------- --------- ---------
Earnings Before Income Taxes 273,845 141,575 415,420
Income Taxes 84,892 43,888 128,780
--------- --------- ---------
Net Earnings $ 188,953 97,687 $ 286,640
========= ========= =========
Per Common Share
Net Earnings
Basic $ .97 .50 $ 1.47
========= ========= =========
Diluted $ .93 .49 $ 1.42
========= ========= =========
Weighted Average Number
of Shares
Basic 194,917
=========
Diluted 202,103
=========
