EXHIBIT 99
For Immediate Release CONTACT:
July 20, 2000 Alfred J. Verrecchia (Investor Relations) 401-727-5100
Renita E. O'Connell (Investor Relations) 401-727-5401
Wayne S. Charness (News Media) 401-727-5983
HASBRO REPORTS SECOND QUARTER RESULTS
CAUTIOUS OUTLOOK FOR SECOND HALF
Pawtucket, RI (July 20, 2000) - Hasbro, Inc. (NYSE:HAS) today reported
second quarter results which were consistent with expectations.
Worldwide net revenues were $778.4 million compared to $874.6 million a
year ago. This approximately 11% decrease primarily reflects the anticipated
decline from last year's exceptionally strong STAR WARS and FURBY shipments
plus foreign currency translation. The stronger U.S. dollar reduced reported
revenues by approximately $17 million, or 2%. Net earnings and diluted
earnings per share were $6.5 million and $0.04, respectively, compared to
$32.3 million and $0.16, respectively, a year ago. Reported earnings include
spending of approximately $5 million pre-tax ($3 million after-tax), or a
loss of approximately $0.02 per share in this quarter, attributable to
GAMES.COM, the Company's Internet games initiative. The Company also reported
second quarter Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) of $95.2 million compared to $118.3 million in the second quarter of
1999.
For the first half, worldwide net revenues were $1.552 billion compared
to $1.543 billion a year ago. Net earnings and diluted earnings per share in
the first half were $21.6 million and $0.12, respectively, compared to $46.1
million and $0.22 last year. First-half EBITDA was $190.6 million compared
to $194.1 million last year.
"We feel good about our performance this quarter," said Alan G.
Hassenfeld, Chairman and Chief Executive Officer. "Our international business
is strong, with revenues from international customers up 57% in local
currencies and 50% in U.S. dollars. Core brands that performed especially
well worldwide this quarter were PLAY-DOH, MONOPOLY and family board games.
We benefited from significantly higher worldwide shipments of POKEMON toys
and games, plus other trading card games. POO-CHI, our interactive electronic
puppy, is the number one selling item in the "What's Hot" survey of TV-
promoted toys and games. However, as expected, these positives were not
sufficient to offset the anticipated fall-off in STAR WARS and FURBY,"
Hassenfeld noted.
The Company invested approximately $4 million during the second quarter
to repurchase approximately 250,000 Hasbro shares, which brings the total
investment this year to approximately $367 million for approximately 21.4
million shares.
Revenues and pre-tax operating results increased in two of the Company's
three major business segments. The Games increase is primarily due to
POKEMON and other trading card and role-playing games from Wizards of the
Coast, acquired in September 1999, plus traditional board games.
International segment revenues were unchanged in U.S. dollars but increased
in local currencies, driven primarily by POKEMON toys and games, as well as
other board games and TWEENIES preschool toys. In the U.S. Toys segment,
higher POKEMON revenues did not fully offset lower STAR WARS revenues.
Significant progress was made during the second quarter with GAMES.COM.
"We made several key hires and are leveraging our development efforts with a
combination of internal resources and best-in-class partners. We are on track
for a soft launch of GAMES.COM in September," Hassenfeld explained.
"Although our first-half performance met expectations, we face several
challenges which could negatively impact our second half," Hassenfeld noted.
"POKEMON is softening in the U.S. However, the release of the second movie
this week - with six new GOLD and SILVER characters, plus 40 new television
episodes beginning in September, Nintendo's launch of GOLD and SILVER in
October, and new products may help rekindle excitement consistent with the
product life cycle in Japan. While we do not expect to begin shipping GOLD
and SILVER product until late this year, we do plan to ship several other
exciting new POKEMON items including ACTION COMBAT FIGURES, the THINK CHIP
BATTLE STADIUM and THINK CHIP figures."
"There are also several external factors which could impact us,"
Hassenfeld continued, "including a worldwide shortage of electronic
components. Since our new product introductions are concentrated in the
second half, this shortage could impact our ability to meet customer demand.
Other external challenges include continued high oil prices that impact resin
and transportation costs, continuing softness in the interactive
entertainment business, the relative strength of the U.S. dollar and the
overall lackluster retailing environment."
"We still look forward to introducing many new products, especially in
the all-important fourth quarter," Hassenfeld added. "We are excited about
the U.S. debut of ACTION MAN, MY REAL BABY, HARRY POTTER'S BERTIE BOTT'S
EVERY FLAVORED BEANS, several interactive games, plus new interactive pets
and lifestyle products from Tiger Electronics including SUPER POO-CHI,
SHELBY, HIT CLIPS and LIGHTNING MAIL," Hassenfeld concluded.
The Company will webcast its second quarter earnings conference call at
9:00 a.m. Eastern time today. Investors and the media are invited to listen
at http://www.hasbro.com (select "Investors & Media" 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.
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", "could", "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 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
online game site initiative, technical difficulties in adapting games to
online format and establishing the online 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 online game sites and other game playing
formats; and the fact online game revenues may not be sufficient to cover the
significant advertising and other expenditures required or the support,
service and product enhancement demands of online 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 Six Months Ended
------------------ --------------------
Jul. 2, Jun. 27, Jul. 2, Jun. 27,
2000 1999 2000 1999
-------- -------- --------- ---------
Net Revenues $ 778,373 874,574 $1,551,854 1,542,972
Cost of Sales 298,043 345,026 598,344 601,543
------- ------- --------- ---------
Gross Profit 480,330 529,548 953,510 941,429
Amortization 31,928 31,918 64,784 57,844
Royalties, Research and
Development 135,150 179,776 261,189 291,718
Advertising 77,732 101,274 147,091 182,358
Selling, Distribution and
Administration 198,974 158,368 403,710 321,649
------- ------- --------- ---------
Operating Profit 36,546 58,212 76,736 87,860
Interest Expense 28,198 13,625 49,641 25,598
Other (Income) Expense, Net (1,073) (2,209) (4,249) (4,527)
------- ------- --------- ---------
Earnings Before Income Taxes 9,421 46,796 31,344 66,789
Income Taxes 2,921 14,507 9,717 20,705
------- ------- --------- ---------
Net Earnings $ 6,500 $32,289 $ 21,627 46,084
======= ======= ========= =========
Per Common Share
Net Earnings
Basic $ .04 .17 $ .12 .24
======= ======= ========= =========
Diluted $ .04 .16 $ .12 .22
======= ======= ========= =========
Cash Dividends Declared $ .06 .06 $ .12 .12
======= ======= ========= =========
Weighted Average Number of shares
Basic 171,621 195,330 180,925 195,614
======= ======= ========= =========
Diluted 172,739 207,052 181,872 205,836
======= ======= ========= ========
HASBRO, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of Dollars)
Jul. 2, Jun. 27,
2000 1999
--------- ---------
Assets
Cash and Temporary Investments $ 188,545 $ 97,765
Accounts Receivable, Net 573,869 843,580
Inventories 508,160 433,460
Other 456,279 586,115
--------- ---------
Total Current Assets 1,726,853 1,960,920
Property, Plant and Equipment, Net 320,176 308,420
Other Assets 1,968,187 1,631,797
--------- ---------
Total Assets $4,015,216 $3,901,137
========= =========
Liabilities and Shareholders' Equity
Short-term Borrowings $ 363,375 $ 823,202
Payables and Accrued Liabilities 881,204 786,176
--------- ---------
Total Current Liabilities 1,244,579 1,609,378
Long-term Debt 1,168,959 409,937
Deferred Liabilities 99,857 77,700
--------- ---------
Total Liabilities 2,513,395 2,097,015
Total Shareholders' Equity 1,501,821 1,804,122
--------- ---------
Total Liabilities and Shareholders' Equity $4,015,216 $3,901,137
========= =========
