<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-82077
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 14, 2000)
[HASBRO LOGO]
$750,000,000
HASBRO, INC.
$550,000,000 7.95% NOTES DUE 2003
$200,000,000 8.50% NOTES DUE 2006
------------------
We will pay interest on the 7.95% Notes twice a year on March 15 and
September 15, beginning September 15, 2000 and on the 8.50% Notes twice a year
on March 15 and September 15, beginning September 15, 2000. We may not redeem
the Notes prior to maturity.
If we default, your right to payment under the Notes will be junior to our
secured debt, equal to our unsecured and unsubordinated debt, and senior to our
subordinated debt, in each case whether current or future.
INVESTING IN THE NOTES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE S-4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these Notes or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------
<TABLE>
<CAPTION>
PER 7.95% NOTE TOTAL
-------------- ------------
<S> <C> <C>
Public Offering Price....................................... 99.772% $548,746,000
Underwriting Discount....................................... 0.450% $ 2,475,000
Proceeds to Hasbro, Inc. (before expenses).................. 99.322% $546,271,000
</TABLE>
<TABLE>
<CAPTION>
PER 8.50% NOTE TOTAL
-------------- ------------
<S> <C> <C>
Public Offering Price....................................... 99.861% $199,722,000
Underwriting Discount....................................... 0.625% $ 1,250,000
Proceeds to Hasbro, Inc. (before expenses).................. 99.236% $198,472,000
</TABLE>
The public offering price set forth above does not include accrued
interest, if any, from March 15, 2000.
------------------
The underwriters will offer the Notes on a firm commitment basis, subject
to various conditions. The underwriters expect to deliver the Notes in
book-entry form only through the facilities of the Depository Trust Company
against payment in New York, New York on March 15, 2000.
------------------
Joint Book-Running Managers
SALOMON SMITH BARNEY BEAR, STEARNS & CO. INC.
------------------
FLEETBOSTON ROBERTSON STEPHENS
BANC OF AMERICA SECURITIES LLC
BANCA D'INTERMEDIAZIONE MOBILIARE IMI
COMMERZBANK CAPITAL MARKETS CORP.
MELLON FINANCIAL MARKETS, LLC
MERRILL LYNCH & CO.
SCOTIA CAPITAL
March 10, 2000
<PAGE> 2
IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS
THIS DOCUMENT IS IN TWO PARTS. THE FIRST PART IS THE PROSPECTUS SUPPLEMENT,
WHICH DESCRIBES THE SPECIFIC TERMS OF THE NOTES WE ARE OFFERING. THE SECOND
PART, THE BASE PROSPECTUS, GIVES MORE GENERAL INFORMATION, SOME OF WHICH MAY NOT
APPLY TO THE NOTES WE ARE OFFERING. GENERALLY WHEN WE REFER ONLY TO THE
"PROSPECTUS," WE ARE REFERRING TO BOTH PARTS COMBINED.
IF THE DESCRIPTION OF THE NOTES VARIES BETWEEN THE PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THE NOTES IN ANY STATE
WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION
CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS ACCURATE AS OF
ANY DATE LATER THAN MARCH 10, 2000.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Note Regarding Forward-Looking Statements................... S-3
Risk Factors................................................ S-4
Hasbro...................................................... S-7
Ratio of Earnings to Fixed Charges.......................... S-9
Use of Proceeds............................................. S-9
Selected Consolidated Financial Data........................ S-10
Capitalization.............................................. S-11
Description of Notes........................................ S-12
Underwriting................................................ S-15
Legal Matters............................................... S-17
Experts..................................................... S-17
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
PROSPECTUS
Risk Factors................................................ 3
Where You Can Find More Information......................... 5
Incorporation of Information We File with the SEC........... 5
About This Prospectus....................................... 6
Note Regarding Forward-looking Statements................... 7
Hasbro...................................................... 7
Ratio of Earnings to Fixed Charges.......................... 8
The Selling Shareholders.................................... 8
Use of Proceeds............................................. 8
Description of Securities................................... 8
Description of Debt Securities.............................. 8
Description of Common Stock................................. 18
Certain Anti-takeover Provisions............................ 19
Plan of Distribution........................................ 24
Legal Matters............................................... 26
Experts..................................................... 26
</TABLE>
S-2
<PAGE> 3
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in the prospectus by
reference may contain "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended. 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." These forward-looking statements reflect our
current expectations and are based upon currently available data. The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor" for such
forward-looking statements. In order to comply with the terms of the safe
harbor, we note that a variety of factors could cause actual results and
experience to differ materially from the anticipated results or other
expectations expressed in the forward-looking statements. These factors include,
but are not limited to:
- our ability to manufacture, source and ship new and continuing products
in a timely manner and customers' and consumers' acceptance of those
products in a competitive product environment;
- economic conditions, currency fluctuations and government regulation and
other actions in the various markets in which we operate throughout the
world;
- the inventory policies of retailers, including the continuing trend of
concentration of our revenues in the second half and fourth quarter of
the year, together with retailers' increased reliance on quick response
inventory management techniques, which increases the risks of our
underproducing popular items, overproducing less popular items and
failing to achieve tight and compressed shipping schedules;
- the impact of competition on revenues, margins and other aspects of our
business, including our ability to secure, maintain and renew popular
licenses and our ability to attract and retain 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
our Consolidation Program or alter our 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 our 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 customers of the games and other products
and services to be offered at our on-line game site; competition from
other on-line game sites and other game playing formats; and the fact
that the current business model for on-line games is experimental, and
on-line game revenues may not be sufficient to cover the significant
advertising expenditures required or the support, service and product
enhancement demands of on-line users.
These or other events or circumstances could cause our actual performance
or financial results in future periods to differ materially from those expressed
in the forward-looking statements. We undertake no obligation to make any
revisions to the forward-looking statements contained in this prospectus
supplement, the accompanying prospectus or the documents incorporated by
reference in the prospectus supplement or prospectus, or to update the
forward-looking statements to reflect events or circumstances occurring after
the date of the prospectus supplement.
S-3
<PAGE> 4
RISK FACTORS
As a holder of our Notes, you will be subject to risks affecting our
business and risks relating to the ownership of our Notes. You should carefully
consider the following factors as well as other information contained in this
prospectus before deciding to invest in our Notes.
Consumer preferences are difficult to predict and the introduction of new
products is critical to the family entertainment industry.
Our business and operating results depend largely upon the appeal of our
family entertainment products, principally games and toys. A decline in the
popularity of our existing products and product lines or the failure of new
products and product lines to achieve and sustain market acceptance could result
in reduced overall revenues and margins, which could have a material adverse
effect on our business, financial condition and results of operations. Our
continued success will depend on our ability to redesign, restyle and extend our
existing family entertainment product lines and to develop, introduce and gain
customer acceptance of new family entertainment product lines. However, consumer
preferences with respect to family entertainment are continuously changing and
are difficult to predict. Individual family entertainment products typically
have short life cycles. There can be no assurances that:
- any of our current products or product lines will continue to be popular
for any significant period of time;
- any new products and product lines introduced by us will achieve an
adequate degree of market acceptance; or
- any new product's life cycle will be sufficient to permit us to recover
development, manufacturing, marketing and other costs of the product.
Our business is seasonal and therefore our annual operating results will
depend, in large part, on our sales during the relatively brief holiday season.
Further, this seasonality is increasing as large retailers become more efficient
in their control of inventory levels through quick response management
techniques.
Sales of our family entertainment products at retail are seasonal, with a
majority of retail sales occurring during the period from September through
December in anticipation of the holiday season. This seasonality is increasing
as large retailers become more efficient in their control of inventory levels
through quick response management techniques. These customers are timing
reorders so that they are being filled by suppliers closer to the time of
purchase by consumers, which to a large extent occur during September through
December, rather than maintaining large on-hand inventories throughout the year
to meet consumer demand. While these techniques reduce a retailer's investment
in inventory, they increase pressure on suppliers like us to fill orders
promptly and shift a significant portion of inventory risk and carrying costs to
the supplier. The limited inventory carried by retailers may also reduce or
delay retail sales. Additionally, the logistics of supplying more and more
product within shorter time periods will increase the risk that we fail to
achieve tight and compressed shipping schedules. This seasonal pattern requires
significant use of working capital mainly to manufacture inventory during the
year, prior to the holiday season, and requires accurate forecasting of demand
for products during the holiday season. Our failure to accurately predict and
respond to consumer demand could result in our underproducing popular items and
overproducing less popular items.
The continuing consolidation of our retail customer base means that changes
in the purchasing policies of our major customers could have a significant
impact on us.
If some of our major customers were to cease doing business with us, or to
significantly reduce the amount of their purchases from us, it could have a
material adverse effect on our business, financial condition and results of
operations. For the fiscal year ended December 26, 1999, Wal-Mart Stores, Inc.
and Toys R Us, Inc. each accounted for approximately 16% of our consolidated net
revenues and our ten largest customers, including Wal-Mart and Toys R Us, in the
aggregate accounted for approximately 56% of our consolidated net revenues.
S-4
<PAGE> 5
We may not realize anticipated benefits of acquisitions or these benefits
may be delayed or reduced in their realization.
Acquisitions have been a significant part of our growth over the years and
have enabled us to further broaden and diversify our product offerings. While we
target companies having what we believe to be attractive family entertainment
product offerings, there can be no assurance that the products of companies we
acquire will continue to be popular.
In addition, in some cases, we expect that the integration of the product
lines of the companies that we acquire into our operations will create
production, marketing and other operating synergies. We believe that creating
these synergies can create greater revenue growth and profitability and, where
applicable, cost savings, operating efficiencies and other synergies. However,
we can provide no assurances that these synergies, efficiencies and cost savings
will be realized. Even if achieved, these benefits may be delayed or reduced in
their realization.
In other cases we acquire companies with what we believe to have strong and
creative management, in which case we plan to create synergies by operating them
autonomously rather than integrating them into our operations. There can be no
assurance, however, that the key talented individuals at these companies will
continue to work for us after the acquisition or that they will continue to
develop popular and profitable products or services.
Our sales and manufacturing operations outside the United States subject us
to risks normally associated with international operations.
Various international risks could negatively impact our international
sales, manufacturing and sourcing operations, which could have a material
adverse effect on our business, financial condition and results of operations.
For the year ended December 26, 1999, our international net revenues comprised
approximately 33% of our total consolidated net revenues. We expect our
international sales to continue to account for a significant and growing portion
of our revenues. Additionally, we have manufacturing facilities in Ireland and
Spain and utilize third-party manufacturers principally in the Far East. These
sales and manufacturing operations are subject to the risks normally associated
with international operations, including:
- currency conversion risks and currency fluctuations;
- limitations, including taxes, on the repatriation of earnings;
- political instability, civil unrest and economic instability;
- greater difficulty enforcing intellectual property rights and weaker laws
protecting such rights;
- complications in complying with laws in varying jurisdictions and changes
in governmental policies;
- natural disasters and the greater difficulty and expense in recovering
therefrom;
- transportation delays and interruptions; and
- the imposition of tariffs.
Our reliance on external sources of manufacturing can be shifted, over a
period of time, to alternative sources of supply, should such changes be
necessary. However, if we were prevented from obtaining products or components
for a material portion of our product line due to political, labor or other
factors beyond our control, Hasbro's operations would be disrupted while
alternative sources of products were secured. The imposition of trade sanctions
by the United States or the European Union against a class of products imported
by us from, or the loss of "most favored nation" trading status by, the Peoples
Republic of China could significantly increase our cost of products imported
into the United States or Europe from China.
S-5
<PAGE> 6
Changes in our credit rating or the credit markets could adversely affect
the price of the debt securities.
The interest rate, selling price, initial offering discount or any premium
offered for Hasbro's debt securities will be based on a number of factors,
including:
- Hasbro's rating with major credit rating agencies;
- the prevailing interest rates being paid by other companies similar to
Hasbro; and
- the overall condition of the financial markets at the time of the initial
distribution of the debt securities.
The condition of the credit markets and prevailing interets rates have
fluctuated in the past and are likely to fluctuate in the future. Fluctuations
in these factors could have an adverse effect on the price of the debt
securities.
In addition, credit rating agencies continually revise their ratings for
the companies that they follow, including Hasbro. The credit rating agencies
also evaluate the family entertainment industry as a whole and may change their
credit rating for Hasbro based on their overall view of our industry. We cannot
be sure that credit rating agencies will maintain Hasbro's rating at any time
after the issuance of any series of the debt securities. A negative change in
Hasbro's rating could have an adverse effect on the price of the debt
securities.
S-6
<PAGE> 7
HASBRO
The following summary is qualified in its entirety by and should be read
together with the more detailed information and the audited and unaudited
financial statements, including the related notes, included or incorporated by
reference in this prospectus supplement and the accompanying prospectus. Except
as expressly indicated or unless the context otherwise requires, "Hasbro", "we",
"our" and "us" means Hasbro, Inc., a Rhode Island corporation organized on
January 8, 1926, and its consolidated subsidiaries.
GENERAL
We are 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. Our offerings
include board, trading card, hand-held electronic and interactive CD-ROM games,
puzzles, preschool, boys' action and girls' toys, dolls, plush, creative play
and infant products. We also license various trademarks, characters and other
property rights for use in connection with the sale by others of noncompeting
toys and non-toy products. Both internationally and in the U.S., our PLAYSKOOL,
KENNER, TONKA, ODDZON, SUPER SOAKER, MILTON BRADLEY, PARKER BROTHERS, TIGER,
HASBRO INTERACTIVE, MICROPROSE, GALOOB and WIZARDS OF THE COAST brands and
products provide children and families with what we believe to be the highest
quality and most recognizable play experiences in the world.
RECENT DEVELOPMENTS
Tender Offer for Common Stock
On February 25, 2000, we announced plans to repurchase up to 17.25 million
shares of our Common Stock through a "Modified Dutch Auction" tender offer at a
purchase price not in excess of $17.50 nor less than $15.25 per share net to the
seller in cash, without interest, on the terms and subject to the conditions set
forth in the Offer to Purchase and the related Letter of Transmittal mailed to
our shareholders on February 29, 2000, the commencement date of the tender
offer. The tender offer is scheduled to expire at 12:00 Midnight on March 27,
2000, unless we extend it. The tender offer is not subject to our receipt of
financing.
This tender offer is part of, and effectively accelerates, the additional
$500 million share repurchase program approved by our board of directors on
December 6, 1999, which supplemented the $500 million share repurchase program
begun by us in December 1997 and which was substantially complete in December
1999. Assuming the maximum number of shares are tendered and not properly
withdrawn at the maximum range of the purchase price, we will spend
approximately $300 million to repurchase 17.25 million shares, or approximately
9.1% of our approximately 190.4 million outstanding shares. Our board of
directors has also approved the repurchase of shares from time to time under the
December 6, 1999 share repurchase program on the open market beginning no
earlier than 10 business days following the expiration date of the tender offer.
Announcement of Fourth Quarter and Full-Year Financial Results
On February 8, 2000, we reported record fourth quarter and full-year 1999
revenues, earnings and earnings per share, prior to charges related to our
Consolidation Program. See "-- Consolidation Program." Net revenues for the year
increased 28% to $4.2 billion compared to $3.3 billion in 1998. 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, our Internet games initiative, and exclude $141.6 million of
pre-tax charges ($97.7 million after tax) related to our 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 related to our
purchase of MicroProse, Inc. Reported net earnings and diluted earnings per
share in 1999 were $189.0 million and $0.93, respectively, compared to $206.4
million and $1.00, respectively, in 1998.
S-7
<PAGE> 8
Consolidation Program
On December 7, 1999, we announced a Consolidation Program to continue to
enhance shareholder value. The Consolidation Program includes further
consolidation of our manufacturing and sourcing activities and product lines,
plus streamlining and continued regionalization of marketing, sales and research
and development activities worldwide. As a result, in the fourth quarter of
1999, we recognized pre-tax charges of $141.6 million on its financial
statements. Implementation of the Consolidation Program began in 1999 and will
be completed in 2000.
Wizards of the Coast Acquisition
On September 30, 1999, we completed our previously announced acquisition of
Wizards of the Coast, Inc., a privately held publisher of hobby games and
fantasy and science fiction literature, for approximately $325 million, subject
to post closing adjustment and certain contingent payment rights. In February
2000, we made a post closing adjustment payment of approximately $83 million.
S-8
<PAGE> 9
RATIO OF EARNINGS TO FIXED CHARGES
The table below sets forth the ratio of earnings to fixed charges of Hasbro
and its consolidated subsidiaries for each of the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED IN
SEPTEMBER(1) FISCAL YEAR(2)
------------ ----------------------------
1999 1998 1998 1997 1996 1995 1994
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
4.28 4.47 6.70 5.66 7.51 5.82 7.58
</TABLE>
- ---------------
(1) Nine months ended September 26, 1999 and September 27, 1998.
(2) Fiscal years 1998, 1997, 1996, 1995 and 1994 ended on December 27, 1998,
December 28, 1997, December 29, 1996, December 31, 1995 and December 25,
1994, respectively.
For purposes of computing the ratios of earnings to fixed charges:
- fixed charges include interest, amortization of debt expense and
one-third of rentals; and
- earnings available for fixed charges represent earnings before fixed
charges and income taxes.
USE OF PROCEEDS
We intend to use the net proceeds that we receive from the sale of the
Notes to pay down short term commercial paper primarily incurred in connection
with our acquisition of Wizards of the Coast, Inc. and our repurchases of shares
of our Common Stock. A portion of the net proceeds from the sale of the Notes
may also be used to repurchase shares of our Common Stock, including repurchases
of our shares of Common Stock under our "Modified Dutch Auction" tender offer,
which commenced on February 29, 2000. See "Hasbro -- Recent Developments" and
"Capitalization."
S-9
<PAGE> 10
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth our selected historical financial data for
each of the last five fiscal years ended in December and for the nine-month
periods ended in September 1999 and 1998, respectively. Such data have been
derived from, and should be read in conjunction with, the audited consolidated
financial statements and other financial information contained in our Annual
Reports on Form 10-K for the last five fiscal years ended in December and the
unaudited consolidated interim financial statements contained in our Quarterly
Reports on Form 10-Q for the nine-month periods ended in September 1999 and
1998, respectively, including the related notes, incorporated by reference
herein. See "Where You Can Find More Information" and "Incorporation of
Information We File With the SEC" in the accompanying prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED IN DECEMBER ENDED IN SEPTEMBER
---------------------------------------------------------- ---------------------
1998 1997 1996 1995 1994 1999 1998
---------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net revenues................... $3,304,454 3,188,559 3,002,370 2,858,210 2,670,262 2,641,151 2,000,375
Operating profit(1)............ 324,882 235,108 332,267 273,572 295,677 228,969 117,625
Earnings before income taxes... 303,478 204,525 306,893 252,550 291,569 190,223 109,671
Net earnings................... 206,365 134,986 199,912 155,571 175,033 131,254 74,576
========== ========= ========= ========= ========= ========= =========
Per common share:
Net earnings:
Basic...................... $ 1.04 .70 1.02 .79 .89 .67 .38
Diluted.................... 1.00 .68 .98 .77 .85 .64 .36
Cash dividends declared...... .21 .21 .18 .14 .12 .18 .15
Weighted average number of
common shares outstanding:
Basic...................... 197,927 193,089 195,061 197,272 197,554 195,280 198,519
Diluted.................... 205,420 206,353 209,283 210,075 212,501 204,006 206,406
BALANCE SHEET DATA:
Total assets................... $3,793,845 2,899,717 2,701,509 2,616,388 2,378,375 4,193,269 3,676,304
Long-term debt................. 407,180 -- 149,382 149,991 150,000 407,584 300,000
Shareholders' equity........... 1,944,795 1,838,117 1,652,046 1,525,612 1,395,417 1,864,125 1,758,792
</TABLE>
- ---------------
(1) The 1997 fiscal year includes $140,000 of pre-tax charges relating to our
Global Integration and Profit Enhancement program, $125,000 of which was
reported as a non-recurring restructuring charge and $15,000 of which was
reflected in cost of sales.
S-10
<PAGE> 11
CAPITALIZATION
The following table sets forth our capitalization and short-term
indebtedness at September 26, 1999. The Actual amounts are those reported; the
Pro Forma amounts give effect to our incurrence of the incremental short-term
borrowing of $325 million to cover the initial purchase price payable in
connection with our acquisition of Wizards of the Coast, and the As Adjusted
amounts give further effect to the offering and the application of the estimated
net proceeds from the offering. See "Use of Proceeds" and "Hasbro -- Recent
Developments." This table should be read in conjunction with, and is qualified
in its entirety by reference to, our financial statements and related notes
contained in documents incorporated by reference in this prospectus supplement
and the accompanying prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 26, 1999 (UNAUDITED)
---------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
SHORT-TERM DEBT:
Short-term borrowings............................. $ 889,405 $1,214,405 $ 470,512
Current maturities of long-term debt.............. -- -- --
---------- ---------- ----------
Total short-term debt........................ $ 889,405 $1,214,405 $ 470,512
========== ========== ==========
LONG-TERM DEBT:
7.95% Notes Due 2003.............................. $ -- $ -- $ 550,000
8.50% Notes Due 2006.............................. -- -- 200,000
5.60% Notes Due 2005.............................. 100,000 100,000 100,000
6.15% Notes Due 2008.............................. 150,000 150,000 150,000
6.60% Debentures Due 2028......................... 150,000 150,000 150,000
Other long-term debt.............................. 7,584 7,584 7,584
---------- ---------- ----------
Total long-term debt......................... $ 407,584 $ 407,584 $1,157,584
========== ========== ==========
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 209,694,630.......... 104,847 104,847 104,847
Additional paid-in capital........................ 467,064 467,064 467,064
Retained earnings................................. 1,717,972 1,717,972 1,717,972
Accumulated other comprehensive earnings.......... (27,470) (27,470) (27,470)
Treasury stock, at cost, 15,299,432 shares........ (398,288) (398,288) (398,288)
---------- ---------- ----------
Total shareholders' equity................... $1,864,125 $1,864,125 $1,864,125
---------- ---------- ----------
Total long-term debt and shareholders'
equity..................................... $2,271,709 $2,271,709 $3,021,709
========== ========== ==========
</TABLE>
S-11
<PAGE> 12
DESCRIPTION OF NOTES
We provide information to you about the Notes in two separate documents
that progressively provide more detail: this prospectus supplement and the
prospectus. The Notes are to be issued as a series of Debt Securities under the
Senior Indenture, which is more fully described in the prospectus. Since the
terms of the Notes may differ from the general information we have provided in
the prospectus and since not all of the features of Debt Securities described in
the prospectus apply to the Notes, you should rely on information in the
prospectus supplement over information in the Prospectus that is inconsistent
with information in the prospectus supplement. Capitalized terms not defined in
this prospectus supplement have the meanings assigned to them in the prospectus.
GENERAL
The 7.95% Notes will be limited to $550,000,000 aggregate principal amount
and the 8.50% Notes will be limited to $200,000,000 aggregate principal amount
(collectively the "Notes"). The 7.95% Notes will mature on March 15, 2003, and
the 8.50% Notes will mature on March 15, 2006. The Notes are not redeemable
prior to maturity and will not be entitled to any sinking fund. Interest at the
applicable annual rate set forth on the cover page of this prospectus supplement
will be payable semiannually on March 15 and September 15, commencing September
15, 2000 for the 7.95% Notes and on March 15 and September 15, commencing
September 15, 2000 for the 8.50% Notes. This interest will be paid to the
persons in whose names the Notes are registered at the close of business on
March 1 or September 1, as the case may be, preceding such interest payment
date. Interest on the 7.95% Notes will accrue from March 15, 2000 or from the
most recent interest payment date to which interest has been paid or provided
for to, but excluding, the next interest payment date. Interest on the 8.50%
Notes will accrue from March 15, 2000 or from the most recent interest payment
date to which interest has been paid or provided for to, but excluding, the next
interest payment date. The Notes constitute a separate series of Debt Securities
under the Senior Indenture (as defined in the prospectus). The Notes are a new
issue of securities with no established trading market. We have not applied for
and do not intend to apply for listing of the Notes on any securities exchange.
The Notes will be our senior unsecured obligations and will rank equally
with all of our other unsecured and unsubordinated indebtedness from time to
time outstanding.
The Notes are not Convertible Debt Securities, as defined in the
prospectus. See "Description of Debt Securities -- Conversion" in the
prospectus.
For a description of the conditions under which we may consolidate or merge
with or into another corporation, or sell, convey or lease all or substantially
all of our property to another corporation, see "Description of Debt
Securities -- Consolidation, Merger, Sale or Conveyance" in the prospectus.
We may elect under certain conditions either:
- to defease and be discharged from any and all obligations with respect to
the Notes, except as otherwise provided in the Senior Indenture; or
- to be released from our obligations with respect to the Notes as
described in the prospectus under the headings "Description of Debt
Securities -- Restrictions on Secured Debt," and "Description of Debt
Securities -- Restrictions on Sale and Leaseback Transactions."
For a description of the conditions under which we may make this election,
see "Description of Debt Securities -- Defeasance and Covenant Defeasance" in
the prospectus.
For a description of the Events of Default and certain covenants that apply
to us under the Senior Indenture, see "Description of Debt Securities -- Events
of Default" and "Description of Debt Securities -- Provisions Applicable Solely
to Senior Debt Securities" in the prospectus.
BOOK-ENTRY PROCEDURES
The Notes will be issued in book-entry only form (a "Book-Entry Note"), and
will be represented by one or more registered Global Securities (each, a "Global
Security") that will be deposited with, or on behalf of, the Depository Trust
Company, New York, New York ("DTC") or such other Depository which may replace
DTC as Depository for the Book-Entry Notes ("the Depository"). The Global
Securities will be registered in the name of a nominee of the Depository.
S-12
<PAGE> 13
Upon issuance, all Book-Entry Notes of the same series will be represented
by one Global Security. Except under the circumstances described below,
Book-Entry Notes will not be exchangeable for Senior Notes in certificated form
and will not otherwise be issuable in certificated form.
If the Depository notifies Hasbro that it is at any time unwilling or
unable to continue as Depository and a successor Depository is not appointed
within 90 days after the receipt of such notice, Hasbro will cause to be issued
Notes in certificated form ("Certificated Notes") in exchange for the Global
Security or Global Securities representing the corresponding Book-Entry Notes.
In addition, Hasbro, in its sole discretion, may determine not to have any
Book-Entry Notes represented by one or more Global Securities. In such event,
Hasbro will cause to be issued individual Certificated Senior Notes in exchange
for the Global Security or Global Securities representing the corresponding
Book-Entry Notes. Lastly, within seven days of the occurrence of an event of
default under the Senior Note Indenture, Hasbro will cause to be issued
Certificated Notes in exchange for the Global Security or Securities
representing the corresponding Book-Entry Notes.
In any such instance, a beneficial owner of a Book-Entry Note represented
by a Global Security will be entitled to physical delivery of Certificated Notes
equal in principal amount to such Book-Entry Note and to have such Certified
Notes registered in its name.
DTC is a limited-purposes trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934 (the "Exchange Act"). DTC holds securities that its participants
("Direct Participants") deposit with DTC. DTC also facilitates the settlement
among Direct Participants of securities transactions, such as transfers and
pledges, in deposited securities, through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants" and,
together with Direct Participants, the "Participants"). The rules applicable to
DTC and its Participants are on file with the Securities and Exchange
Commission.
Purchases of Book-Entry Notes represented by Global Securities under the
DTC system must be made by or through Direct Participants, which will receive a
credit for such purchases of Book-Entry Notes on DTC's records. The ownership
interest of each actual purchaser of each Book-Entry Note represented by a
Global Security ("Beneficial Owner") is in turn recorded in the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase. However Beneficial Owners are expected
to receive written confirmations providing details of the transaction, as well
as periodic statements of their holdings, from the Direct or Indirect
Participant though which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Book-Entry Notes represented by Global
Securities are accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Book-Entry Notes represented by Global
Securities, except in the event that use of the book-entry system for such Book-
Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities deposited with,
or on behalf of, DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Global Securities with DTC and their registration in
the name of Cede & Co. do not change beneficial ownership. DTC has no knowledge
of the actual Beneficial Owners of the Book-Entry Notes represented by Global
Securities. DTC's records reflect only the identify of the Direct Participants
to whose accounts such Book-Entry Notes are credited which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be
S-13
<PAGE> 14
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Book-Entry Notes represented by Global Securities. Under its usual procedures,
DTC mails an Omnibus Proxy to Hasbro as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Book-Entry Notes represented by Global
Securities are credited on the applicable record date. These accounts are
identified in a listing attached to the Omnibus Proxy.
Principal and any premium and/or interest payments on the Book-Entry Notes
represented by Global Securities will be made to DTC in immediately available
funds. DTC's practice is to credit Direct Participants' accounts on the date on
which interest is payable in accordance with respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
such date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name". Payments will be the responsibility of such Participant and not of DTC,
the underwriters, dealers or agents or Hasbro, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and any premium and/or interest to DTC is the responsibility of Hasbro
and the Trustee. Disbursement of such payments to Direct Participants shall be
the responsibility of DTC, and disbursement of such payments to be the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities Depository with
respect to the Book-Entry Notes at any time by giving reasonable notice to
Hasbro and the Trustee. Under such circumstances, in the event that a successor
securities Depository is not obtained, Notes in certificated form are required
to be printed and delivered in exchange for Book-Entry Notes held by DTC.
Hasbro may decide to discontinue use of the system and book-entry transfers
through DTC (or a successor securities Depository). In that event, Notes in
certificated form will be printed and delivered in exchange for Book-Entry Notes
held by DTC.
So long as Cede & Co. is the registered owner of any series of Book-Entry
Notes, as nominee of DTC, reference herein to holders of such series of
Book-Entry Notes shall mean Cede & Co. or DTC and shall not mean the Beneficial
Owners of the Book-Entry Notes.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that Hasbro believes to be
reliable, but Hasbro takes no responsibility for the accuracy thereof.
The underwriters, dealers or agents of any Notes may be Direct Participants
of DTC.
Neither Hasbro, the Trustee, any underwriters, agents or dealers nor any
agent of payment on or registration of transfer or exchange of any Global
Security will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interest in such Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial interests.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the underwriters in immediately
available funds. All payments of principal and interest on the Global Securities
will be made by us in immediately available funds.
GOVERNING LAW
The Senior Indenture and Notes will be governed by, and construed in
accordance with, the laws of the State of New York.
TRUSTEE
The trustee under the Senior Indenture will be The Bank of Nova Scotia
Trust Company of New York (the "Trustee"). The Trustee and its affiliates have
performed, and from time to time may perform, other services for us in the
normal course of business, including, without limitation, acting as depositories
for our funds and making loans and providing other financial accommodations to
us. An affiliate of the Trustee is one of the underwriters of this offering.
S-14
<PAGE> 15
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
dated the date hereof, each underwriter named below has severally agreed to
purchase, and we have agreed to sell to such underwriter, the principal amount
of Notes set forth opposite the name of such underwriter.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
NAME OF 7.95% NOTES OF 8.50% NOTES
---- ---------------- ----------------
<S> <C> <C>
Salomon Smith Barney Inc............................. $247,500,000 $ 90,000,000
Bear, Stearns & Co. Inc.............................. 220,000,000 80,000,000
FleetBoston Robertson Stephens Inc................... 16,500,000 6,000,000
Banc of America Securities LLC....................... 11,000,000 4,000,000
Banca d'Intermediazione Mobiliare IMI. .............. 11,000,000 4,000,000
Commerzbank Capital Markets Corp. ................... 11,000,000 4,000,000
Mellon Financial Markets, LLC ....................... 11,000,000 4,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated... 11,000,000 4,000,000
Scotia Capital (USA) Inc. ........................... 11,000,000 4,000,000
------------ ------------
Total...................................... $550,000,000 $200,000,000
============ ============
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the Notes included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the Notes if they purchase any of
the Notes.
The underwriters, for whom Salomon Smith Barney Inc. and Bear, Stearns &
Co. Inc. are acting as representatives, propose to offer some of the 7.95% Notes
directly to the public at the public offering price set forth on the cover page
of this prospectus supplement and some of the 7.95% Notes to certain dealers at
the public offering price less a concession not in excess of 0.25% of the
principal amount of the 7.95% Notes. The underwriters may allow, and such
dealers may reallow, a concession not in excess of 0.20% of the principal amount
of the 7.95% Notes on sales to certain other dealers. After the initial offering
of the 7.95% Notes to the public, the public offering price and such concessions
may be changed by the representatives.
The underwriters, for whom Salomon Smith Barney Inc. and Bear, Stearns &
Co. Inc. are acting as representatives, propose to offer some of the 8.50% Notes
directly to the public at the public offering price set forth on the cover page
of this prospectus supplement and some of the 8.50% Notes to certain dealers at
the public offering price less a concession not in excess of 0.375% of the
principal amount of the 8.50% Notes. The underwriters may allow, and such
dealers may reallow a concession not in excess of 0.25% of the principal amount
of the Notes on sales to certain other dealers. After the initial offering of
the 8.50% Notes to the public, the public offering price and such concessions
may be changed by the representatives.
The following table shows the underwriting discounts and commissions to be
paid to the underwriters by us in connection with this offering (expressed as a
percentage of the principal amount of the Notes).
<TABLE>
<CAPTION>
PAID BY US
----------
<S> <C>
Per 7.95% Note.............................................. 0.450%
Per 8.50% Note.............................................. 0.625%
</TABLE>
In connection with the offering, Salomon Smith Barney Inc., on behalf of
the underwriters, may purchase and sell Notes in the open market. These
transactions may include over-allotment, syndicate covering transactions and
stabilizing transactions. Over-allotment involves syndicate sales of Notes in
excess of the principal amount of Notes to be purchased by the underwriters in
the offering, which creates a syndicate short position. Syndicate covering
transactions involve purchases of the Notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of Notes made for
the purpose of preventing or retarding a decline in the market price of the
Notes while the offering is in progress.
The underwriters may also impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases Notes originally sold by that syndicate
member.
S-15
<PAGE> 16
Any of these activities may cause the price of the Notes to be higher than
the price that otherwise would exist in the open market in the absence of such
transactions. These transactions may be effected in the over-the-counter market
or otherwise and, if commenced, may be discontinued at any time.
We estimate that our total expenses of this offering will be $850,000.
The representatives have performed certain investment banking and advisory
services for us from time to time for which they have received customary fees
and expenses. The representatives may, from time to time, engage in transactions
with and perform services for us in the ordinary course of their business.
Salomon Smith Barney Inc. is an affiliate of Citibank, N.A., which, together
with Bear, Stearns & Co. Inc., provided a credit facility to us in connection
with our acquisition of Wizards of the Coast. Salomon Smith Barney Inc. also is
the dealer-manager in our "Modified Dutch Auction" tender offer and Citibank has
committed to provide a $300 million, 90-day credit facility to us in connection
with the tender offer. See "Hasbro -- Recent Developments -- Tender Offer for
Common Stock." Affiliates of several of the underwriters have performed, and
from time to time may perform, other services for us in the normal course of
business, including, without limitation, acting as depositories for our funds
and making loans and providing other financial accommodations to us. See
"Hasbro -- Recent Developments."
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make in respect of any of those
liabilities.
S-16
<PAGE> 17
LEGAL MATTERS
The validity of the securities offered by this prospectus will be passed
upon for Hasbro by Phillip H. Waldoks, Senior Vice President -- Corporate Legal
Affairs and Secretary of Hasbro. Mr. Waldoks will rely as to matters of Rhode
Island law on the opinion of David Dubosky, Vice President/Managing Attorney of
Hasbro. Mr. Waldoks owns 7,100 shares of Common Stock, 3,500 of which are shares
of restricted stock, and has options to purchase 167,405 shares of Common Stock
granted under Hasbro's employee stock option plans. Mr. Dubosky owns 1,200
shares of restricted Common Stock and has options to purchase 25,950 shares of
Common Stock granted under Hasbro's employee stock option plans. Certain legal
matters with respect to the debt securities offered by this prospectus will be
passed upon for any underwriters, dealers or agents by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York.
EXPERTS
The consolidated financial statements incorporated by reference and
schedules included in our Annual Report on Form 10-K for the fiscal year ended
December 27, 1998 incorporated by reference herein and elsewhere in the
Registration Statement, have been incorporated by reference herein and in the
Registration Statement in reliance upon the reports of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
S-17
<PAGE> 18
PROSPECTUS
HASBRO, INC.
COMMON STOCK AND DEBT SECURITIES
With this prospectus, Hasbro may:
- sell senior or subordinated debt securities to the public; and
- issue and sell up to 15,750,000 shares of its common stock upon the
exercise of warrants held by selling shareholders, which shares may be
resold by selling shareholders using this prospectus. Hasbro will not
receive any proceeds from the sale of the common stock by the selling
shareholders.
Hasbro's common stock is listed on the New York Stock Exchange under the
symbol HAS.
INVESTING IN OUR SECURITIES INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
---------------------------------
We urge you to carefully read this prospectus and, with respect to
offerings of debt securities, the accompanying prospectus supplement, which will
describe the specific terms of our senior or subordinated debt securities,
before you make your investment decision.
---------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus or any accompanying prospectus supplement is truthful or complete.
Any representation to the contrary is a criminal offense.
---------------------------------
The date of this prospectus is January 14, 2000.
<PAGE> 19
TABLE OF CONTENTS
<TABLE>
<S> <C>
Risk Factors................................................ 3
Where You Can Find More Information......................... 5
Incorporation of Information We File with the SEC........... 5
About This Prospectus....................................... 6
Note Regarding Forward-looking Statements................... 7
Hasbro...................................................... 7
Ratio of Earnings to Fixed Charges.......................... 8
The Selling Shareholders.................................... 8
Use of Proceeds............................................. 8
Description of Securities................................... 8
Description of Debt Securities.............................. 8
Description of Common Stock................................. 18
Certain Anti-takeover Provisions............................ 19
Plan of Distribution........................................ 24
Legal Matters............................................... 26
Experts..................................................... 26
</TABLE>
------------------------
This prospectus and any accompanying prospectus supplement contain
information you should consider when making your investment decision. You should
rely only on the information contained or incorporated by reference in this
prospectus and any accompanying prospectus supplement. We have not authorized
any other person to provide you with different information. If anyone provides
you with different or inconsistent information you should not rely on it. We are
not, and neither the selling shareholders nor any underwriter are, making an
offer to sell these securities in any jurisdiction where the offer or sale is
not permitted. You should assume that the information appearing in this
prospectus and the information we filed with the Securities and Exchange
Commission and incorporated by reference, is accurate as of the date on the
front cover of this prospectus only. Our business, financial condition, results
of operations and prospects may have changed since that date.
2
<PAGE> 20
RISK FACTORS
As a holder of our securities, you will be subject to risks affecting our
business and risks relating to the ownership of our securities. You should
carefully consider the following factors as well as other information contained
in this prospectus before deciding to invest in our debt securities or common
stock.
Consumer preferences are difficult to predict and the introduction of new
products is critical to the family entertainment industry.
Our business and operating results depend largely upon the appeal of our
family entertainment products, principally games and toys. A decline in the
popularity of our existing products and product lines or the failure of new
products and product lines to achieve and sustain market acceptance could result
in reduced overall revenues and margins, which could have a material adverse
effect on our business, financial condition and results of operations. Our
continued success will depend on our ability to redesign, restyle and extend our
existing family entertainment product lines and to develop, introduce and gain
customer acceptance of new family entertainment product lines. However consumer
preferences with respect to family entertainment are continuously changing and
are difficult to predict. Individual family entertainment products typically
have short life cycles. There can be no assurances that:
- any of our current products or product lines will continue to be popular
for any significant period of time;
- any new products and product lines introduced by us will achieve an
adequate degree of market acceptance; or
- any new product's life cycle will be sufficient to permit us to recover
development, manufacturing, marketing and other costs of the product.
Our business is seasonal and therefore our annual operating results will
depend, in large part, on our sales during the relatively brief holiday season.
Further, this seasonality is increasing as large retailers become more efficient
in their control of inventory levels through quick response management
techniques.
Sales of our family entertainment products at retail are seasonal, with a
majority of retail sales occurring during the period from September through
December in anticipation of the holiday season. This seasonality is increasing
as large retailers become more efficient in their control of inventory levels
through quick response management techniques. These customers are timing
reorders so that they are being filled by suppliers closer to the time of
purchase by consumers, which to a large extent occur during September through
December, rather than maintaining large on-hand inventories throughout the year
to meet consumer demand. While these techniques reduce a retailer's investment
in inventory, they increase pressure on suppliers like us to fill orders
promptly and shift a significant portion of inventory risk and carrying costs to
the supplier. The limited inventory carried by retailers may also reduce or
delay retail sales. Additionally, the logistics of supplying more and more
product within shorter time periods will increase the risk that we fail to
achieve tight and compressed shipping schedules. This seasonal pattern requires
significant use of working capital mainly to manufacture inventory during the
year, prior to the holiday season, and requires accurate forecasting of demand
for products during the holiday season. Our failure to accurately predict and
respond to consumer demand could result in our underproducing popular items and
overproducing less popular items.
The continuing consolidation of our retail customer base means that changes
in the purchasing policies of our major customers could have a significant
impact on us.
If some of our major customers were to cease doing business with us, or to
significantly reduce the amount of their purchases from us, it could have a
material adverse effect on our business, financial condition and results of
operations. For the fiscal year ended December 27, 1998, Wal-Mart Stores, Inc.
accounted for approximately 18% of our consolidated net revenues, Toys R Us,
Inc. accounted for approximately 17% of our consolidated net revenues, and our
ten largest customers, including Wal-Mart and Toys R Us, in the aggregate
accounted for approximately 58% of our consolidated net revenues.
3
<PAGE> 21
We may not realize anticipated benefits of acquisitions or these benefits
may be delayed or reduced in their realization.
Acquisitions have been a significant part of our growth over the years and
have enabled us to further broaden and diversify our product offerings. While we
target companies having what we believe to be attractive family entertainment
product offerings, there can be no assurance that the products of companies we
acquire will continue to be popular.
In addition, in some cases, we expect that the integration of the product
lines of the companies that we acquire into our operations will create
production, marketing and other operating synergies. We believe that creating
these synergies can create greater revenue growth and profitability and, where
applicable, cost savings, operating efficiencies and other synergies. However,
we can provide no assurances that these synergies, efficiencies and cost savings
will be realized. Even if achieved, these benefits may be delayed or reduced in
their realization.
In other cases we acquire companies with what we believe to have strong and
creative management, in which case we plan to create synergies by operating them
autonomously rather than integrating them into our operations. There can be no
assurance, however, that the key talented individuals at these companies will
continue to work for us after the acquisition or that they will continue to
develop popular and profitable products or services.
Our sales and manufacturing operations outside the United States subject us
to risks normally associated with international operations.
Various international risks could negatively impact our international sales
and manufacturing operations, which could have a material adverse effect on our
business, financial condition and results of operations. For the year ended
December 27, 1998, our international net revenues comprised approximately 36% of
our total consolidated net revenues. We expect our international sales to
continue to account for a significant and growing portion of our revenues.
Additionally, we have manufacturing facilities in Ireland and Spain and utilize
third-party manufacturers principally in the Far East. These sales and
manufacturing operations are subject to the risks normally associated with
international operations, including:
- currency conversion risks and currency fluctuations;
- limitations, including taxes, on the repatriation of earnings;
- political instability, civil unrest and economic instability;
- greater difficulty enforcing intellectual property rights and weaker laws
protecting such rights;
- complications in complying with laws in varying jurisdictions and changes
in governmental policies;
- natural disasters and the greater difficulty and expense in recovering
therefrom;
- transportation delays and interruptions; and
- the imposition of tariffs.
Our reliance on external sources of manufacturing can be shifted, over a
period of time, to alternative sources of supply, should such changes be
necessary. However, if we were prevented from obtaining products or components
for a material portion of our product line due to political, labor or other
factors beyond our control, Hasbro's operations would be disrupted while
alternative sources of products were secured. The imposition of trade sanctions
by the United States or the European Union against a class of products imported
by us from, or the loss of "most favored nation" trading status by, the Peoples
Republic of China could significantly increase our cost of products imported
into the United States or Europe from China.
4
<PAGE> 22
Changes in our credit rating or the credit markets could adversely affect
the price of the debt securities.
The interest rate, selling price, initial offering discount or any premium
offered for Hasbro's debt securities will be based on a number of factors,
including:
- Hasbro's rating with major credit rating agencies;
- the prevailing interest rates being paid by other companies similar to
Hasbro; and
- the overall condition of the financial markets at the time of the initial
distribution of the debt securities.
The condition of the credit markets and prevailing interets rates have
fluctuated in the past and are likely to fluctuate in the future. Fluctuations
in these factors could have an adverse effect on the price of the debt
securities.
In addition, credit rating agencies continually revise their ratings for
the companies that they follow, including Hasbro. The credit rating agencies
also evaluate the family entertainment industry as a whole and may change their
credit rating for Hasbro based on their overall view of our industry. We cannot
be sure that credit rating agencies will maintain Hasbro's rating at any time
after the issuance of any series of the debt securities. A negative change in
Hasbro's rating could have an adverse effect on the price of the debt
securities.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. These
reports, proxy statements and other information can be read and copied at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549,
as well as the following regional offices: Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New York,
New York 10048. Please call the SEC at 1-800-SEC-0330 for further information on
the Public Reference Room. The SEC maintains an Internet site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding companies that file electronically with the SEC,
including Hasbro. In addition, our common stock is listed on the New York Stock
Exchange. These reports, proxy statements and other information can also be read
at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
This prospectus is part of a registration statement filed with the SEC by
Hasbro. The full registration statement can be obtained from the SEC as
indicated above, or from Hasbro.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file
with the SEC. This permits us to disclose important information to you by
referencing these filed documents. Any information referenced this way is
considered part of this prospectus, and any information filed with the SEC
subsequent to this prospectus will automatically be deemed to update and
supersede this information. We incorporate by reference the following documents
which we have filed with the SEC:
- our Annual Report on Form 10-K for the fiscal year ended December 27,
1998;
- our Quarterly Reports on Form 10-Q for the quarters ended March 28, 1999,
June 27, 1999 and September 26, 1999; and
- our Current Reports on Form 8-K dated April 15, 1999, June 16, 1999, July
15, 1999, October 14, 1999 and December 7, 1999.
We also incorporate by reference the documents listed above and any future
filings made with the SEC in accordance with Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") until we
file a post-effective amendment which indicates the termination of the offering
of the securities made by this prospectus.
Hasbro will provide without charge upon written or oral request, a copy of
any or all of the documents which are incorporated by reference in this
prospectus, other than exhibits which are specifically incorporated by reference
into those documents. Requests for these copies should be directed to: Hasbro,
Inc., 1027 Newport Avenue, Pawtucket, Rhode Island, 02861, Attention: Investor
Relations, or by telephone to Investor Relations at (401)431-8697.
5
<PAGE> 23
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration process. This prospectus provides you with a
general description of the securities we may offer. Each time we sell debt
securities, we will provide a prospectus supplement that will contain specific
information about the terms of the offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with additional
information described above under the heading "Where You Can Find More
Information."
6
<PAGE> 24
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in this prospectus by
reference may contain "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Exchange Act. These statements may be identified by the use
of forward-looking words or phrases such as "anticipate," "believe," "expect,"
"intend," "may," "planned," "potential," and "should." These forward-looking
statements reflect our current expectations and are based upon currently
available data. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for these forward-looking statements. In order to comply with the
terms of the safe harbor, we note that a variety of factors could cause actual
results and experience to differ materially from the anticipated results or
other expectations expressed in the forward-looking statements. These factors
include, but are not limited to:
- our ability to manufacture, source and ship new and continuing products
in a timely manner and customers' and consumers' acceptance of those
products in a competitive product environment;
- economic conditions, currency fluctuations and government regulation and
other actions in the various markets in which we operate throughout the
world;
- the inventory policies of retailers, including the continuing trend of
concentration of our revenues in the second half and fourth quarter of
the year, together with retailers' increased reliance on quick response
inventory management techniques, which increases the risk of us
underproducing popular items, overproducing less popular items and
failing to achieve tight and compressed shipping schedules;
- the impact of competition on revenues, margins and other aspects of our
business;
- our incurring higher than expected costs to achieve, or not achieving,
"year 2000" readiness with respect to our information systems, or our
vendors and service suppliers failing to achieve this readiness; and
- the risk that anticipated benefits of acquisitions or our Consolidation
Program may not occur or be delayed or reduced in their realization.
These or other events or circumstances could cause our actual performance
or financial results in future periods to differ materially from those expressed
in the forward-looking statements. We undertake no obligation to make any
revisions to the forward-looking statements contained in this prospectus or the
documents incorporated by reference in this prospectus, or to update the
forward-looking statements to reflect events or circumstances occurring after
the date of this prospectus.
HASBRO
We are 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, from traditional to high-tech. Our offerings
include board, trading card, hand-held electronic and interactive CD-ROM games,
puzzles, preschool, boys' action and girls' toys, dolls, plush, creative play
and infant products. We also license various trademarks, characters and other
property rights for use in connection with the sale by others of noncompeting
toys and non-toy products. Both internationally and in the U.S., our PLAYSKOOL,
KENNER, TONKA, ODDZON, SUPER SOAKER, MILTON BRADLEY, PARKER BROTHERS, TIGER,
HASBRO INTERACTIVE, MICROPROSE, GALOOB and WIZARDS OF THE COAST brands and
products provide children and families with what we believe to be the highest
quality and most recognizable play patterns in the world. References in this
prospectus to "Hasbro," "we," "us," or "our" mean Hasbro, Inc., a Rhode Island
corporation organized on January 8, 1926, and, unless the context otherwise
requires, its subsidiaries.
On December 6, 1999, the reported last sale price of Hasbro's common stock
on the New York Stock Exchange was $21.4375 per share.
Hasbro's principal office is at 1027 Newport Avenue, Pawtucket, Rhode
Island 02861, and its telephone number is (401) 431-8697.
7
<PAGE> 25
RATIO OF EARNINGS TO FIXED CHARGES
The table below sets forth the ratio of earnings to fixed charges of Hasbro
and its consolidated subsidiaries for each of the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED IN
SEPTEMBER(1) FISCAL YEAR(2)
- ------------ --------------------------------
1999 1998 1998 1997 1996 1995 1994
- ----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
4.28 4.47 6.70 5.66 7.51 5.82 7.58
</TABLE>
- ---------------
(1) Nine months ended September 26, 1999 and September 27, 1998.
(2) Fiscal years 1998, 1997, 1996, 1995 and 1994 ended on December 27, 1998,
December 28, 1997, December 29, 1996, December 31, 1995 and December 25,
1994, respectively.
For purposes of computing the ratios of earnings to fixed charges:
- fixed charges include interest, amortization of debt expense and
one-third of rentals; and
- earnings available for fixed charges represent earnings before fixed
charges and income taxes.
THE SELLING SHAREHOLDERS
All of the shares of common stock are being issued to and sold by the
selling shareholders of Hasbro identified in the following table. The table and
the following paragraph also set forth information regarding the beneficial
ownership of our outstanding common stock as of December 6, 1999 for each of the
selling shareholders. The address for each of Lucasfilm Ltd., Lucas Licensing
Ltd. and George W. Lucas, Jr. is 5858 Lucas Valley Road, Nicasio, California
94946.
<TABLE>
<CAPTION>
NUMBER OF SHARES
SELLING SHAREHOLDER COVERED BY THIS PROSPECTUS
- ------------------- --------------------------
<S> <C>
Lucas Licensing Ltd......................................... 9,450,000
Lucasfilm Ltd............................................... 6,300,000
</TABLE>
As of the close of business on December 6, 1999, Lucas Licensing Ltd. did
not hold any shares directly but owned warrants to purchase an aggregate of
9,450,000 shares. As of the close of business on December 6, 1999, Lucasfilm
Ltd. did not hold any shares directly but owned warrants to purchase an
aggregate of 6,300,000 shares. All of the warrants held by Lucasfilm Ltd. and
Lucas Licensing Ltd. became exercisable upon the release of the film, "Star
Wars: Episode 1: The Phantom Menace" on May 19, 1999. Lucasfilm Ltd. is the sole
shareholder of Lucas Licensing Ltd. and as such may be deemed to beneficially
own the shares held by Lucas Licensing Ltd. As the sole director of both
Lucasfilm Ltd. and Lucas Licensing Ltd. and as the controlling person of
Lucasfilm Ltd., George W. Lucas, Jr. may be deemed to beneficially own the
shares held by both Lucasfilm Ltd. and Lucas Licensing Ltd.
USE OF PROCEEDS
We will receive none of the proceeds of securities sold by selling
shareholders. We intend to use the net proceeds of any debt securities sold by
us for working capital, to repurchase outstanding shares of our common stock and
for acquisitions. Any specific allocation of the net proceeds of an offering of
debt securities to a specific purpose will be described in the applicable
prospectus supplement.
DESCRIPTION OF SECURITIES
This prospectus contains a summary of the debt securities and common stock
that Hasbro or selling shareholders may sell. These summaries are not meant to
be a complete description of each security. However, this prospectus and any
accompanying prospectus supplement contain the material terms of the securities
being offered.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be our direct general unsecured obligations. The
debt securities will be either senior debt securities or subordinated debt
securities. Both senior debt securities and subordinated debt
8
<PAGE> 26
securities may be issued as convertible debt securities which, unless previously
redeemed or otherwise purchased, will be convertible into shares of Hasbro's
common stock. The debt securities will be issued under one or more separate
indentures between us and a banking institution as trustee. Senior debt
securities will be issued under a senior indenture and subordinated debt
securities will be issued under a subordinated indenture. Together the senior
indenture and the subordinated indenture are called indentures.
We have summarized all material provisions of the indentures below. The
forms of the indentures have been filed as exhibits to the registration
statement and you should read the indentures for provisions that may be
important to you. In parts of the summary below, we have included references to
section numbers of the indentures so that you can easily locate these
provisions. The Indentures are substantially identical, except for covenants of
Hasbro applicable to the senior indenture and provisions relating to
subordination. See "Provisions Applicable Solely to Senior Debt Securities" and
"Provisions Applicable Solely to Subordinated Debt Securities."
GENERAL
Significant operations of Hasbro are currently conducted through
subsidiaries and, as a result, the cash flows of Hasbro depend in part upon the
cash flows of these subsidiaries and the availability of those cash flows to
Hasbro. In addition, the payment of dividends, distributions and certain loans
and advances to Hasbro by its subsidiaries may be subject to statutory or
contractual restrictions, depend upon the earnings of the subsidiaries and are
subject to various business considerations. Any right of Hasbro to receive the
assets of any of its subsidiaries upon their liquidation, reorganization or
recapitalization will be subordinated to the claims of the creditors and any
preferred shareholders of the respective subsidiaries. These creditors would
include trade creditors and in the future may include lenders of additional debt
for borrowed money. As a result of this subordination, the rights of the holders
of the debt securities to participate in any distribution of assets in the
situations referred to above will be similarly subordinated. Even if Hasbro is
itself recognized as a creditor of the subsidiary, the claims of Hasbro would
still be subordinated to any security interests in the assets of the subsidiary
and any indebtedness of the subsidiary senior to that held by Hasbro.
A prospectus supplement relating to any series of debt securities being
offered will include specific terms relating to the offering. The terms will be
established in an officer's certificate or a supplemental indenture. The
officer's certificate or supplemental indenture will be signed at the time of
issuance and will contain important information. The officers' certificate or
supplemental indenture will be filed as an exhibit to a Current Report on Form
8-K of Hasbro. The Current Report on Form 8-K will be publicly available. Under
Section 3.01 of the indentures, the officers' certificate or supplemental
indenture will include some or all of the following for a particular series of
debt securities:
- the title of the securities;
- any limit on the amount(s) that may be issued;
- the maturity date(s) or the method by which this date or these dates will
be determined;
- the interest rate or the method of computing the interest rate;
- the date or dates from which interest will accrue, or how this date or
these dates will be determined, and the interest payment date or dates
and any related record dates;
- any mandatory or optional sinking fund or similar provisions;
- the terms and conditions on which we may redeem the debt securities;
- the date(s), if any, on which, and the price(s) at which Hasbro is
obligated to redeem the series of debt securities and other related terms
and provisions;
- the place(s) where payments, if any, will be made on the debt securities
and the place(s) where debt securities may be presented for transfer and,
if applicable, conversion;
- whether the debt securities are issuable as registered securities, bearer
securities or both, and the terms upon which bearer securities may be
exchanged for registered securities;
- special provisions relating to the issuance of any bearer securities of
any series;
9
<PAGE> 27
- the currency or currency units in which payments may be payable;
- any changes to or additional events of default or covenants;
- the form of debt securities and coupons, if any; and
- any other terms of the debt securities.
Unless otherwise indicated in a prospectus supplement relating to any debt
securities, the covenants contained in the indentures or the debt securities
would not protect holders of the debt securities in the event of a highly
leveraged or other transaction involving Hasbro or its subsidiaries that may
adversely affect the holders of the debt securities.
Debt securities may be issued under the indentures as original issue
discount securities. An original issue discount security is a security,
including any zero-coupon security, which:
- is issued at a price lower than the amount payable upon its stated
maturity and
- provides, under Section 1.01 of the indentures, that upon redemption or
acceleration of the maturity, an amount less than the amount payable upon
the stated maturity, shall become due and payable.
If a series of debt securities is issued as original issue discount
securities, the special Federal income tax, accounting and other considerations
applicable to original issue discount securities will be discussed in the
prospectus supplement relating to that series of debt securities.
FORM, EXCHANGE AND TRANSFER
The debt securities will be issuable as registered securities, as bearer
securities or both. Ownership and transfer of debt securities which are issued
as bearer securities will be based upon possession or delivery of the actual
certificate; that is, the owner of a debt security issued as a bearer security
will presumptively be the "bearer" of the security. By contrast, the ownership
or transfer of debt securities issued as registered securities will be listed in
the security register described in the indenture. The indentures will provide
that debt securities may be issuable in global form which will be deposited
with, or on behalf of, a depositary, identified in an applicable prospectus
supplement. If debt securities are issued in global form, one certificate will
represent a large number of outstanding debt securities which may be held by
separate persons, rather than each debt security being represented by a separate
certificate. Under Section 3.02 of the indentures, registered securities
denominated in U.S. dollars will be issued only in denominations of $1,000 and
whole multiples of $1,000 and bearer securities denominated in U.S. dollars will
be issued only in denominations of $5,000 and whole multiples of $5,000, unless
the prospectus supplement relating to a series of debt securities specifies
otherwise.
Debt securities may be presented for exchange, and registered securities
other than book-entry securities, may be presented for registration of transfer
with the applicable form of transfer duly executed, at the office of any
transfer agent or at the office of the Security Registrar, as defined in the
indentures, without service charge and upon payments of any taxes and other
governmental charges as described in the indentures. Under Section 3.05 of the
indentures, this registration of transfer or exchange will be effected upon the
transfer agent or the Security Registrar, as the case may be, being satisfied
with the documents of title and identity of the person making the request.
Bearer securities will be transferable by delivery.
Under Section 3.05 of the indentures, a debt security in global form may
not be transferred except as a whole by or between the depositary for the debt
security and any of its nominees or successors. If any debt security of a series
is issuable in global form, the applicable prospectus supplement will describe:
- any circumstances under which beneficial owners of interests in that
global debt security may exchange their interests for definitive debt
securities of that series of like tenor and principal amount in any
authorized form and denomination,
- the manner of payment of principal and interest, if any, on that global
debt security and
- the specific terms of the depositary arrangement with respect to that
global debt security.
10
<PAGE> 28
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable prospectus supplement, we will
pay principal, any premium and interest on registered securities at the office
of the paying agents we have designated, except that we may pay interest by
check mailed to, or wire transfer to the account of, the holder. Unless
otherwise indicated in an applicable prospectus supplement, payment of any
installment of interest on registered securities will be made to the person in
whose name the registered security is registered at the close of business on the
record date for this interest payment. See Sections 3.07 and 10.02 of the
indentures for a more detailed description of payments and payment agents.
We will pay principal, any premium and interest on bearer securities in the
currency or composite of currency in the manner designated in the prospectus
supplement, subject to any applicable laws and regulations, at the paying
agencies outside the United States we have designated. The paying agents outside
the United States initially appointed by Hasbro for a series of debt securities
will be named in the prospectus supplement. In addition, under Section 10.02 of
the indentures:
- if debt securities of a series are issuable as registered securities,
Hasbro will be required to maintain at least one paying agent in each
place of payment for the series;
- if debt securities of a series are issuable as bearer securities, Hasbro
will be required to maintain a paying agent in a place of payment outside
the United States where debt securities of the series and any coupons
appertaining thereto may be presented and surrendered for payment; and
- if the debt securities of a series are listed on any stock exchange
located outside the United States and the stock exchange(s) require
Hasbro to maintain a paying agent in a city located outside the United
States, Hasbro will comply with these requirements.
WAIVER, MODIFICATIONS AND AMENDMENT
Described below are provisions which apply to the waiver of defaults under,
or compliance with, the indentures.
Under Section 6.12 of the indentures, the holders of a majority of the
principal amount of the outstanding debt securities of any particular series may
waive past defaults with respect to that particular series, except for:
- defaults on any required payments; or
- defaults relating to any covenants of the indentures which cannot be
changed without the consent of each holder of a debt security affected by
the change.
Under Section 10.07 of the senior indenture, the holders, voting as a
single class and not by individual series, of a majority in aggregate principal
amount of the outstanding senior debt securities of each series affected under
the senior indenture may waive Hasbro's compliance with some of the restrictive
provisions of the senior indenture.
Hasbro and the applicable trustee may change an indenture with the consent
of the holders of a majority in aggregate principal amount of the debt
securities outstanding under that indenture. In addition, the rights of holders
of a series of debt securities may be changed by Hasbro and the trustee with the
written consent of the holders of a majority of the principal amount of the
outstanding debt securities of each series that is affected. However, under
Section 9.02 of the indentures, the following changes may only be made with the
consent of each affected holder:
- changing the stated maturity of principal or of any installment of
principal or interest;
- reducing the principal amount or any premium;
- reducing the rate of interest;
- reducing any premium payable upon redemption;
11
<PAGE> 29
- reducing the principal amount of an original issue discount security due
and payable upon an acceleration of maturity;
- changing the currency of payment of, or deleting any country from places
of payment on, the debt securities or changing the obligation to maintain
paying agencies;
- impairing the right to sue for any payment on a debt security;
- making any change which adversely affects the right to convert a debt
security or, unless provided for in the applicable indenture, decreasing
the conversion rate or increasing the conversion price;
- modifying the subordination provisions of the subordinated indenture to
adversely affect the holders of subordinated debt securities;
- reducing the percentage of debt securities referred to above, the holders
of which are required to consent to any waiver or amendment; or
- modifying any of the above requirements.
Section 1.01 of the indentures requires that for purposes of computing the
required consents referred to above, and for all other purposes under the
indentures, the aggregate principal amount of any outstanding debt securities
not payable in U.S. dollars is the amount of U.S. dollars that could be obtained
for this principal amount based on the spot rate of exchange for the applicable
foreign currency or currency unit as determined by Hasbro or by an authorized
exchange rate agent.
EVENTS OF DEFAULT
Pursuant to Section 6.01 of the indentures, the following are events of
default with respect to any series of debt securities issued:
- we fail to pay the principal or any premium when due;
- we fail to deposit any sinking fund payment when due;
- we fail to pay interest when due and our failure continues for 30 days;
- we fail to observe or perform any other covenant, other than a covenant
specifically relating to another series of debt securities and our
failure continues for 90 days after receipt of written notice as provided
in the indentures;
- events of bankruptcy, insolvency or reorganization involving Hasbro or a
Significant Subsidiary;
- acceleration of indebtedness of Hasbro or a Significant Subsidiary
aggregating more than $50 million;
- final and nonappealable judgments or orders to pay against Hasbro or a
Significant Subsidiary, in the aggregate at any one time, of more than
$50 million, rendered by a court of competent jurisdiction, continued for
90 days during which execution shall not be effectively stayed or bonded,
without discharge or reduction to $50 million or less; and
- any other events of default provided with respect to debt securities of
that series.
As used above, the term "Significant Subsidiary" has the meaning ascribed
to it in Regulation S-X under the Securities Act. Generally, a Significant
Subsidiary is a subsidiary, together with its subsidiaries, that satisfies any
of the following conditions:
- Hasbro and its other subsidiaries' investments in and advances to the
subsidiary exceed 10% of the total consolidated assets of Hasbro and its
subsidiaries;
- Hasbro and its other subsidiaries' proportionate share of the total
assets of the subsidiary exceeds 10% of the total consolidated assets of
Hasbro and its subsidiaries; or
12
<PAGE> 30
- Hasbro and its other subsidiaries' equity in the income from continuing
operations before income taxes, extraordinary items and cumulative effect
of a change in accounting principle of the subsidiary exceeds 10% of
consolidated income of Hasbro and its subsidiaries.
If an event of default occurs and is continuing, the trustee or the holders
of at least 25% in aggregate principal amount of the outstanding debt securities
of that series may declare each debt security of that series due and payable
immediately by a notice in writing to Hasbro, and to the applicable trustee if
given by holders. No notice is required in the event of a bankruptcy, insolvency
or reorganization involving Hasbro or a Significant Subsidiary. See Section 6.02
of the indentures for a more detailed description of default events and notice
requirements.
Pursuant to Section 6.07 of the indentures, a holder of the debt securities
of any series will only have the right to institute a proceeding under the
indentures or to seek other remedies if:
- the holder has given written notice to the trustee of a continuing event
of default;
- the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series have made written request;
- these holders have offered reasonable indemnity to the trustee to
institute proceedings as trustee;
- the trustee has not received written directions inconsistent with the
request from the holders of a majority of the principal amount of the
outstanding debt securities of that series; and
- the trustee does not institute a proceeding within 60 days.
Hasbro will annually file statements with the applicable trustees regarding
our compliance with the covenants in the indentures. The applicable trustee will
generally give the holders of debt securities notice within 90 days of the
occurrence of an event of default known to the trustee.
DEFEASANCE AND COVENANT DEFEASANCE
The indentures provide, if such a provision is made applicable to the debt
securities of any series pursuant to Section 3.01 of the applicable indenture,
that, subject to certain conditions, we may elect either:
- defeasance, whereby we are discharged from any and all obligations with
respect to the debt securities, except as may be otherwise provided in
the applicable indenture; or
- covenant defeasance, whereby we are released from our obligations with
respect to any of these senior debt securities described below under
"Restrictions on Secured Debt," and "Restrictions on Sale and Leaseback
Transactions."
We may do so by depositing with the applicable trustee money, and/or
certain government securities which through the payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient to pay the principal and any premium and interest on the debt
securities, and any mandatory sinking fund or analogous payments on their
scheduled due dates. This type of a trust may only be established if, among
other things, Hasbro has delivered to the applicable trustee an opinion of
counsel meeting the requirements set forth in Article Five of the indentures.
The prospectus supplement may further describe the provisions, if any,
permitting this type of defeasance or covenant defeasance with respect to debt
securities of a particular series.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Under Section 8.01 of the indentures and Section 8.03 of the senior
indenture, Hasbro has the ability to merge or consolidate with, or sell, convey,
or lease all or substantially all of our property, to another corporation,
provided that:
- it is a corporation incorporated in the United States;
- the corporation assumes all of Hasbro's obligations under the indentures
and the debt securities;
13
<PAGE> 31
- the corporation delivers to the applicable trustee a supplemental
indenture providing for preservation of any conversion rights;
- no event of default would occur; and
- in the case of senior debt securities, prior to any transaction or any
acquisition by Hasbro of the properties of any other person, which would
result in any Principal Property, as defined in the senior indenture, or
any shares of capital stock or indebtedness of any subsidiary owned by
Hasbro or any subsidiary becoming subject to any lien or other security
interest not permitted by the covenant described under "Provisions
Applicable Solely to Senior Debt Securities -- Restrictions on Secured
Debt," Hasbro, by supplemental indenture, secures the payment of the
principal and any premium and interest, on the senior debt securities
then outstanding, equally and ratably with any other indebtedness also
entitled to security immediately following the transaction.
CONVERSION
The terms, if any, on which a series of debt securities may be convertible
into or exchangeable for our common stock or cash will be described in the
prospectus supplement relating to that series of debt securities. The terms will
include provisions as to whether conversion or exchange is mandatory or at the
option of the holder or at our option. Under Section 4.04 of the indentures, the
terms will also include provisions pursuant to which the number of shares of
common stock or cash to be received by the holders of the series of debt
securities would be subject to adjustment upon the occurrence of certain events,
including:
- the issuance of shares of our common stock as a dividend or distribution
on our common stock;
- subdivisions, combinations and reclassifications of our common stock;
- the issuance generally to holders of our common stock of rights, options
or warrants entitling them, for a period not exceeding 45 days, to
purchase shares of our common stock for less than the then current market
price; and
- apart from the above, the distribution generally to holders of our common
stock of evidences of indebtedness, equity securities, or other assets,
excluding cash dividends paid from earned surplus or current net earnings
but including Extraordinary Cash Dividends, as defined in the indentures,
or subscription rights or options or warrants entitling holders to
subscribe for securities.
With respect to the Rights distributed under Hasbro's Rights Plan described
below under "Certain Anti-Takeover Provisions," and/or in the event that Hasbro
distributes any other rights or warrants other than those referred to in the
preceding paragraph ("Additional Rights") pro rata to holders of our common
stock, so long as any such Rights or Additional Rights have not expired or been
redeemed, the holder of any convertible debt security surrendered for conversion
will be entitled to receive a number of Rights or Additional Rights as
determined under the indentures. The conversion price of the convertible debt
securities will not be subject to adjustment on account of any declaration,
distribution or exercise of Rights or Additional Rights. See Section 4.04 of the
indentures for a more detailed description of the distribution of Rights or
Additional Rights to holders of our convertible debt securities.
Pursuant to Section 4.03 of the indentures, we will not issue fractional
shares of our common stock upon conversion, but, in place of fractional shares,
we will pay a cash adjustment based on the then current market price for the
common stock. Upon conversion, no payments or adjustments will be made for
accrued interest on convertible debt securities or dividends. A convertible debt
security surrendered for conversion between the record date for an interest
payment and the interest payment date, except a convertible debt security to be
redeemed on a redemption date during this period, must be accompanied by payment
of an amount equal to the interest which the registered holder is to receive
with respect to this security. The interest payable on this interest payment
date shall, notwithstanding this conversion, be payable on this interest payment
date to the registered holder on the record date. See Sections 3.07 and 4.02 of
the indentures for a more detailed discussion of interest payments and
convertible debt securities.
14
<PAGE> 32
Under Section 4.05 of the indentures, if Hasbro merges or consolidates with
or into any other person, with some exceptions, or sells or transfers all or
substantially all of its assets, the holder of convertible debt securities,
after that transaction, will have the right to convert convertible debt
securities only into the kind and amount of securities, cash and other property
which the holder would have been entitled to receive if the holder had held the
common stock issuable upon conversion of these convertible debt securities
immediately prior to that transaction.
PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES
General. Senior debt securities will be issued under the senior indenture
and will rank equally with all other unsecured and unsubordinated debt of
Hasbro.
Certain Definitions. For purposes of the following discussion, the
following definitions, as contained in Article One of the senior indenture, are
applicable.
"Attributable Debt" in respect of a Sale and Leaseback Transaction means,
as of any particular time, the present value of the obligation of the lessee for
rental payments during the remaining term of the lease. The present value will
be discounted at the rate of interest implicit in the terms of the lease
involved in this Sale and Leaseback Transaction, as determined in good faith by
Hasbro.
"Consolidated Net Tangible Assets" means, as determined at any time, the
aggregate amount of assets included on a consolidated balance sheet of Hasbro
and its Subsidiaries, less applicable reserves, after deducting therefrom:
- all current liabilities of Hasbro and its Subsidiaries, which includes
current maturities of long-term indebtedness and
- the total of the net book values of all assets of Hasbro and its
Subsidiaries properly classified as intangible assets under U.S.
generally accepted accounting principles,
in each case as of the end of the last fiscal quarter for which financial
information is available at the time of this calculation.
"Funded Debt" means all indebtedness which by its terms matures more than
12 months after the time of the computation of this amount or which is
extendible or renewable at the option of the obligor on this indebtedness to a
time more than 12 months after the time of the computation of this amount or
which is classified, in accordance with generally accepted accounting
principles, on a corporation's balance sheet as long-term debt.
"Principal Property" means any real property, manufacturing plant,
warehouse, office building or other physical facility or other like depreciable
physical assets of Hasbro or of any Subsidiary, whether owned at or acquired
after the date of the senior indenture, having a net book value at the time of
the determination in excess of the greater of 5% of Consolidated Net Tangible
Assets or $50 million. This definition excludes, in each case, any of the above
which in the good faith opinion of the Board of Directors of Hasbro is not of
material importance to the total business conducted by Hasbro and its
Subsidiaries as a whole. As of the date of this Prospectus none of Hasbro's
assets constitute Principal Property as defined above.
"Sale and Leaseback Transaction" means any arrangement with any Person
providing for the leasing or use by Hasbro or any Subsidiary of any Principal
Property, whether owned at the date of the Indenture or thereafter acquired,
excluding temporary leases of a term, including any renewal period, of not more
than three years, which Principal Property has been or is to be sold or
transferred by Hasbro or a Subsidiary to a Person with an intention of taking
back a lease of this property.
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<PAGE> 33
"Secured Debt" means indebtedness, other than indebtedness among Hasbro and
its Subsidiaries, for money borrowed by Hasbro or a Subsidiary which is secured
by:
- a mortgage or other lien on any Principal Property, or
- a pledge, lien or other security interest on any shares of stock or
evidences of indebtedness of a Subsidiary.
If any amount of indebtedness among Hasbro and its Subsidiaries is
transferred in any manner to any Person other than Hasbro or a Subsidiary, this
amount shall be deemed to be Secured Debt issued on the date of transfer.
"Subsidiary" means any corporation of which Hasbro, or Hasbro and one or
more Subsidiaries, or any one or more Subsidiaries, directly or indirectly own a
majority of the outstanding voting securities having voting power, under
ordinary circumstances, to elect the directors of the corporation.
Restrictions on Secured Debt. Under Section 10.09 of the senior indenture,
if Hasbro and its Subsidiaries incur, assume or guarantee any Secured Debt,
Hasbro must secure the senior debt securities equally and ratably with or, at
the option of Hasbro, prior to that Secured Debt. The foregoing restrictions are
not applicable to:
- any security interest on any property acquired by Hasbro or a Subsidiary
and created within 180 days after the acquisition to secure or provide
for the payment of all or any part of the purchase price of the property;
- any security interest on any property improved or constructed by Hasbro
or a Subsidiary and created within 180 days after the completion and
commencement of commercial operation of the property to secure or provide
for the payment of all or any part of the construction price of the
property;
- any security interest existing on property at the time of acquisition by
Hasbro or a Subsidiary;
- any security interest existing on the property or on the outstanding
shares or indebtedness of a corporation at the time it becomes a
Subsidiary, but not created in anticipation of the transaction in which
the corporation becomes a Subsidiary;
- any security interest on the property, shares or indebtedness of a
corporation existing at the time the corporation is merged or
consolidated with Hasbro or a Subsidiary or at the time of a sale, lease
or other disposition of all or substantially all of the properties of a
corporation or firm to Hasbro or a Subsidiary, but not created in
anticipation of any the transaction;
- any security interest in favor of governmental bodies to secure payments
of any amounts owed under contract or statute; or
- any extensions, renewals or replacements of any of the security interests
referred to above.
Notwithstanding the above restriction, Section 10.09 of the senior
indenture permits Hasbro and any one or more Subsidiaries to create, incur,
assume or guarantee Secured Debt, including, for purposes of this paragraph,
pursuant to a transaction to which the covenant described in the last item under
"Consolidation, Merger, Sale or Conveyance" applies, without equally and ratably
securing the senior debt securities to the extent that the sum of:
- the amount of all Secured Debt then outstanding, other than Secured Debt
referred to in the bullet points in the immediately preceding paragraph
and Secured Debt deemed outstanding under the last item of
"Consolidation, Merger, Sale or Conveyance" in connection with which
Hasbro secures obligations on the senior debt securities then outstanding
in accordance with the provisions of that item, plus
- the amount of Attributable Debt in respect of Sale and Leaseback
Transactions, other than Sale and Leaseback Transactions described in the
bullet points in the immediately succeeding paragraph, does not at the
time exceed the greater of 10% of Consolidated Net Tangible Assets or
$100 million.
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Restrictions on Sale and Leaseback Transactions. Under Section 10.10 of
the senior indenture, Sale and Leaseback Transactions by Hasbro or any
Subsidiary of any Principal Property are prohibited unless at the effective time
of the Sale and Leaseback Transaction:
- Hasbro or the Subsidiary would be entitled, without equally and ratably
securing the senior debt securities, to incur Secured Debt secured by a
mortgage or security interest on the Principal Property to be leased
pursuant to "Restrictions on Secured Debt" above, or
- Hasbro or the Subsidiary would be entitled, without equally and ratably
securing the senior debt securities, to incur Secured Debt in an amount
at least equal to the Attributable Debt, or
- Hasbro shall apply an amount equal to the Attributable Debt, within 180
days after the effective date of the Sale and Leaseback Transaction, to
the prepayment or retirement of senior debt securities or other
indebtedness for borrowed money which was recorded as Funded Debt of
Hasbro and its Subsidiaries, including the prepayment or retirement of
any mortgage, lien or other security interest in the Principal Property
existing prior to the Sale and Leaseback Transaction. The aggregate
principal amount of the senior debt securities or other indebtedness
required to be so retired will be reduced by the aggregate principal
amount of
- any senior debt securities delivered within 180 days after the
effective date of any the Sale and Leaseback Transaction to the
Trustee for retirement and
- this other indebtedness retired by Hasbro or a Subsidiary within 180
days after the effective date of the Sale and Leaseback Transaction.
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
Subordination. The subordinated debt securities will be subordinate in
right of payment to the extent set forth in the subordinated indenture to all
existing and future Senior Indebtedness, as defined below, of Hasbro. In the
event of any distribution of our assets in any dissolution, winding down,
liquidation or reorganization of Hasbro, payment in full must be made on the
Senior Indebtedness before any payment is made on the subordinated debt
securities. Upon the happening and during the continuance of a default in
payment of any principal, sinking fund installments or interest due on any
Senior Indebtedness, Hasbro may not make payments of any kind on the
subordinated debt securities until the default shall have been remedied. Hasbro
will also not be able to make any payments on the subordinated debt securities
if a default described in the preceding sentence would result. These
subordination provisions will not prevent the occurrence of any event of
default. See Sections 13.02 and 13.03 of the subordinated indenture for a more
detailed description of the subordination of the subordinated debt securities to
any Senior Indebtedness.
"Senior Indebtedness" means the principal of and premium, if any, and
interest, whether accruing before or after filing of any petition in bankruptcy
or any similar proceeding by or against Hasbro, on any Indebtedness of Hasbro,
whether outstanding on the date of issuance of the applicable series of
subordinated debt securities or thereafter incurred, assumed or guaranteed;
excluding, however:
- the subordinated debt securities, and
- any Indebtedness of Hasbro which, by its terms or the terms of the
instrument creating or evidencing it, is subordinate or equal in right of
payment to the subordinated debt securities.
"Indebtedness", as used in the preceding paragraph means
(1) any liability of any Person
- for borrowed money,
- evidenced by a note, debenture or similar instrument, including an
obligation with or without recourse, issued in connection with the
acquisition of any business, real property or other assets, other
than inventory or similar property acquired in the ordinary course
of business, or
- for the payment of money relating to a Capital Lease Obligation, as
defined in the Subordinated Indenture;
(2) any liability of others described in clause (1) which the Person has
guaranteed or which is otherwise its legal liability; or
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(3) any amendment, renewal, extension or refunding of any of this type of
liability.
The Indentures do not limit the amount of additional Indebtedness,
including Senior Indebtedness or Indebtedness ranking equally with the
subordinated debt securities, which Hasbro or any Subsidiary can create, incur,
assume or guarantee. As a result of these subordination provisions and the
requirement, as stated in Section 13.02 of the subordinated indenture, that
certain payments be paid over to holders of Senior Indebtedness, in the event of
insolvency, holders of the subordinated debt securities may recover less ratably
than general creditors of Hasbro.
DESCRIPTION OF COMMON STOCK
GENERAL
Hasbro's authorized capital stock consists of 300,000,000 shares of common
stock, and 5,000,000 shares of preference stock. No shares of preference stock
were issued or outstanding as of December 6, 1999. However, 60,000 shares of
preference stock (the "Junior Participating Preference Stock") have been
authorized and reserved for issuance in connection with the preference stock
purchase rights (the "Rights") described in "Certain Anti-Takeover
Provisions -- Shareholders Rights Plan" and "-- Junior Participating Preference
Stock."
VOTING RIGHTS
Each holder of common stock is entitled to one vote for each share held on
all matters to be voted upon by shareholders.
DIVIDEND RIGHTS
The holders of common stock, subject to the rights of holders of any
outstanding preference stock, are entitled to receive dividends as determined by
the board of directors.
LIQUIDATION RIGHTS AND OTHER PROVISIONS
Subject to the prior rights of creditors and the holders of any outstanding
preference stock, the holders of the common stock are entitled to share ratably
in our remaining assets in the event of a liquidation, dissolution or winding up
of Hasbro.
The common stock is fully paid and is not liable to any calls or
assessments and is not convertible into any other securities. There are no
redemption or sinking fund provisions applicable to the common stock, and, in
accordance with the Rhode Island Business Corporation Act and the Articles of
Incorporation, there are no preemptive rights.
BankBoston, N.A., acting directly and through EquiServe L.P., acts as
transfer agent and registrar for the common stock.
DIRECTORS' LIABILITY
Our Articles of Incorporation provide that, to the fullest extent permitted
by the Rhode Island Business Corporation Act, a member of the board of directors
will not be personally liable to Hasbro or its shareholders for monetary damages
for breaches of his or her legal duties to Hasbro or our shareholders as a
director, except for liability:
- for any breach of the director's duty of loyalty to Hasbro or our
shareholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- for unlawfully declaring dividend payments or purchasing stock; or
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- for any transaction from which the director derived an improper personal
benefit, other than as permitted under Section 7-1.1-37 of the Rhode
Island Business Corporation Act.
In addition, we have entered into an indemnification agreement with each of
our directors, whereby we have agreed to indemnify each director for amounts
that the director is legally obligated to pay, including judgments, settlements
of fines, including certain related expenses to be advanced by us, due to any
actual or alleged breach of duty, neglect, error, misstatement, misleading
statement or other act or omission by a director in his or her capacity as a
director. This indemnification agreement excludes claims:
- covered by our directors and officers liability insurance policy;
- for which the director is otherwise indemnified or reimbursed;
- relating to certain judgments or adjudications under which the director
is liable for breaches of duty of loyalty, acts or omissions not in good
faith or involving intentional misconduct or involving knowing violations
of law, actions or certain transactions from which the director derives
an improper personal benefit;
- relating to the director's liability for accounting for profits under
Section 16 of the Exchange Act;
- in respect of remuneration, if found unlawful; and
- as to which a final and non-appealable judgment has determined that
payment to the director thereunder is unlawful.
In addition, our By-Laws include certain provisions which provide that our
directors and officers generally shall be indemnified against specific
liabilities to the fullest extent permitted or required by the Rhode Island
Business Corporation Act.
CERTAIN ANTI-TAKEOVER PROVISIONS
The provisions of the Articles of Incorporation summarized in the
succeeding paragraphs could have an anti-takeover effect. These provisions are
intended to enhance the likelihood of continuity and stability in the
composition of our Board of Directors and in their policies. They may, however,
delay, defer or prevent a tender offer or takeover attempt that a shareholder
might consider to be in his or her best interest, including those attempts that
might result in a premium over the market price for the shares held by
shareholders.
Our Board of Directors is divided into three classes that are elected for
staggered three-year terms. Directors can be removed from office only for cause
and, with certain exceptions, only with the approval of a majority vote of the
entire Board of Directors or by the affirmative vote of holders of a majority of
the then outstanding shares of capital stock of Hasbro entitled to vote for
these directors. Vacancies on the Board of Directors may be filled only by the
remaining directors and not by the shareholders.
Under the Articles of Incorporation, the Board of Directors by resolution
may establish one or more series of preference stock having the number of
shares, designation, relative voting rights, dividend rates, liquidation and
other rights, preferences and limitations as may be fixed by the Board of
Directors without any further shareholder approval. These rights, preferences,
privileges and limitations as may be established could have the effect of
impeding or discouraging the acquisition of control of Hasbro.
The Articles of Incorporation also provide that any action required or
permitted to be taken by our shareholders may be effected only at an annual or
special meeting of shareholders, or by the unanimous written consent of
shareholders.
In order to approve a number of extraordinary corporate transactions, such
as a merger, consolidation or sale of all or substantially all assets, with an
Interested Person, as defined below, our Articles of Incorporation require:
- an 80% vote of all outstanding Company shares entitled to vote, including
a majority vote of all disinterested shareholders;
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- the approval of a majority of the entire Board of Directors, including
the affirmative vote of a majority of the "Continuing Directors", as
defined in the Articles of Incorporation; and
- the satisfaction of procedural requirements which are intended to assure
that shareholders are treated fairly under the circumstances.
"Interested Person", as used in the preceding paragraph means:
- any person together with its "Affiliates" and "Associates", as defined in
the Exchange Act, and any person acting in concert therewith who is the
beneficial owner, directly or indirectly, of ten percent or more of the
votes held by the holders of the securities generally entitled to vote
for directors (the "Voting Stock"),
- any Affiliate or Associate of an Interested Person, including without
limitation, a Person acting in concert therewith,
- any person that at any time within the two year period immediately prior
to the date in question was the beneficial owner, directly or indirectly,
of ten percent or more of the votes held by the holders of shares of
Voting Stock, or
- an assignee of, or successor to, any shares of Voting Stock which were at
any time within the two year period prior to the date in question
beneficially owned by any Interested Person, if such assignment or
succession occurred in a transaction or series of transactions not
involving a public offering as defined by the Securities Act.
This definition of an Interested Person is subject to certain exceptions as
contained within our Articles of Incorporation.
The 80% vote will not be required and, in accordance with the Rhode Island
Business Corporation Act, only a majority vote of shareholders will generally be
required if this type of a transaction is approved by a majority of the entire
Board of Directors, including the affirmative vote of at least two-thirds of the
Continuing Directors.
SHAREHOLDERS RIGHTS PLAN
On June 16, 1999, we entered into a rights agreement with BankBoston, N.A.,
as Rights Agent. This agreement replaced a previous rights agreement, dated June
4, 1989, which expired on June 30, 1999. As with most shareholder rights
agreements, the terms of our rights agreement are complex and not easily
summarized, particularly as they relate to the acquisition of our common stock
and to exercisability of the Rights. This summary may not contain all of the
information that is important to you. Accordingly, you should carefully read our
rights agreement, which is incorporated by reference into this prospectus in its
entirety. Capitalized terms used in this summary and not otherwise defined shall
have the meanings given to them in the rights agreement.
The Rights attach to all certificates representing shares of common stock
outstanding at the close of business on June 30, 1999 and will attach to any
shares of common stock issued by Hasbro, including upon the exercise of any
warrants and options or upon conversion of any convertible debt securities,
after this date and prior to the Distribution Date, as defined below. The Rights
will become exercisable and will separate from the common stock and be
represented by separate certificates on the Distribution Date; the date which is
approximately 10 days after anyone acquires or commences a tender offer to
acquire 15% of more of our outstanding common stock (an "Acquiring Person"). The
Rights will not be exercisable until such date, if any, and will expire on June
30, 2009, unless this date is extended or unless the Rights are earlier
exchanged or redeemed by Hasbro. Upon the Distribution Date, the Rights will
initially be exercisable, at a price of $140, for one ten-thousandth of a share
of Hasbro's Junior Participating Preference Stock, although the terms of the
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exercise are subject to adjustment under the rights agreement. Under the rights
agreement, the following are not Acquiring Persons:
- Hasbro;
- any of our subsidiaries;
- employee benefit plans of Hasbro or any of our subsidiaries;
- individuals and entities connected with the Hassenfeld family, as
described in the rights agreement;
- any person who becomes the owner of 15% or more of the common stock by
virtue of a repurchase of common stock by Hasbro, unless after becoming
aware of this fact, such person acquires an additional 1%; and
- any person who reports the ownership of 15% or more of the common stock
in a filing under the Exchange Act, who does not state any intention to
control the management of Hasbro and who, upon request, certifies to
Hasbro that the 15% threshold was crossed inadvertently and with no
knowledge of the terms of the Rights.
Upon any person becoming an Acquiring Person, subject to the exception
noted below in this paragraph, each Right will entitle the holder to purchase a
number of shares of common stock of Hasbro having a then current market value of
twice the exercise price of the Right. For example, at the initial exercise
price of $140, upon exercise, each Right would entitle its holder to receive
$280 worth of common stock or other consideration, as described below. A holder
of a Right will not be entitled to purchase shares if any person becomes an
Acquiring Person in a tender offer or exchange offer for all outstanding shares
that has been determined by the Board of Directors, after receiving advice from
one or more investment banking firms, to be at a price which is fair to and
otherwise in the best interests of the shareholders.
In addition, each Right will entitle the holder to purchase a number of
shares of common stock of the acquiring company having a current market value of
twice the exercise price of the Right, if, after the date upon which someone has
become an Acquiring Person:
- Hasbro is party to a merger or another business combination transaction
in which Hasbro is not the surviving corporation;
- Hasbro is the surviving corporation in a merger or other business
combination, but all or part of its common stock is changed into or
exchanged for stock or other securities of another person, cash or any
other property; or
- Hasbro sells 50% or more of its consolidated assets, cash flow or earning
power.
If any of the above events occurs, the acquiring company shall assume all of our
obligations under the rights agreement.
From and after the occurrence of the event which triggers the exercise of
the Rights, any Rights that are or were acquired or beneficially owned by any
Acquiring Person, any Associate or any Affiliate shall be void and any holder of
these Rights shall thereafter have no right to exercise these Rights.
At any time prior to the earlier of ten business days following the date
upon which someone has become an Acquiring Person and the expiration date of the
Rights, our Board of Directors may redeem all, but not less than all, of the
outstanding Rights at a price of $.01 per Right, subject to adjustment, payable
in cash, shares of common stock or other consideration. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate, and
the only right of the holders of Rights will be to receive the redemption price.
The exercisability of the Rights triggered by someone becoming an Acquiring
Person, as described above, will not occur until after the expiration of this
redemption right. If, however, a majority of our Board of Directors was elected
by shareholder action by written consent or is not comprised of members who were
nominated by the predecessor Board of Directors, the Rights shall not be
redeemed if this type of a redemption is likely to have the effect of allowing
anyone to become an Acquiring Person or to otherwise trigger the exercisability
of the Rights, as described above, for a period of 180 days following the
election.
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At any time after a person becomes an Acquiring Person and prior to the
acquisition by a person or group of 50% or more of our outstanding common stock,
our Board of Directors may exchange the Rights, other than those Rights owned by
the person or group which have become void. This exchange may be in whole or in
part, at a ratio of one share of common stock per Right, subject to adjustment.
In the event that, after the Rights become exercisable for shares of our
common stock, there is an insufficient number of shares of our common stock
available to permit the full exercise of Rights, our Board of Directors has the
ability to substitute an equivalent value in:
- cash;
- a reduction in the exercise price of the Right;
- shares of preference stock with an equivalent value to our common stock;
- debt securities;
- other assets; or
- any combination of the foregoing.
Prior to the Distribution Date, the rights agreement may be amended by our
Board of Directors without the consent of the holders of the Rights. After the
Distribution Date, the rights agreement may only be amended by our Board of
Directors, without the consent of the holders of the Rights, as follows:
- to cure any ambiguity;
- to correct any provisions which are defective or inconsistent;
- to shorten or lengthen any time period, though any lengthening must be
for the purpose of protecting the interests of the holders of the Rights;
or
- to make changes which do not adversely affect the interests of the
holders of the Rights.
The rights agreement may not be amended, however, at any time when the Rights
are not redeemable.
Until a holder of a Right exercises the Right, the holder will have no
rights as a shareholder of Hasbro, including, without limitation, the right to
vote or to receive dividends.
While the distribution of the Rights will not be taxable to shareholders or
to Hasbro, shareholders may, depending on the circumstances, recognize taxable
income in the event that the Rights become exercisable for our common stock, or
other consideration, or in the event the Rights are redeemed by Hasbro.
The Rights may have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire Hasbro in a
manner which causes the Rights to become exercisable. We do not believe,
however, that the Rights would affect any prospective offeror willing to make an
offer at a price that is fair and otherwise in the best interests of the
shareholders, since the Board of Directors would be required by its fiduciary
duties under applicable law to consider the offer. If the offer were fair and
otherwise in the best interests of the shareholders, the Board could, at its
option, exercise its right to redeem the Rights as described above. In
considering the merits of a proposed offer and pursuant to Rhode Island law and
our Articles of Incorporation, however, our directors are authorized to take
into account the interests of Hasbro in addition to the interests of the
shareholders. In considering the interests of Hasbro, our directors may evaluate
the effect of the proposed offer on Hasbro's employees, suppliers, creditors and
customers. Our directors may also consider the effect of the proposed offer on
the communities in which Hasbro operates as well as the long and short term
interests of Hasbro, including the possibility that these interests may be best
served by the continued independence of Hasbro. If in considering any of these
factors, the Board of Directors determines the proposed offer is not in the best
interests of Hasbro, the Board may reject the offer and has no obligation to
facilitate or refrain from impeding the proposed offer. Because of the
redemption right, the Rights should also not interfere with any merger or
business combination approved by our Board of Directors.
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JUNIOR PARTICIPATING PREFERENCE STOCK
In connection with the rights agreement, 60,000 shares of Junior
Participating Preference Stock have been reserved and authorized for issuance by
the Board of Directors. No shares of Junior Participating Preference Stock were
outstanding as of December 6, 1999. The following statements with respect to the
Junior Participating Preference Stock are subject to, and are qualified in their
entirety by reference to, the detailed provisions of the Articles of
Incorporation, including the Certificate of Designation relating to the Junior
Participating Preference Stock (the "Certificate of Designation"), which is
incorporated herein by reference.
Shares of Junior Participating Preference Stock purchasable upon exercise
of the Rights will not be redeemable. Each share of Junior Participating
Preference Stock will be entitled to a minimum preferential quarterly dividend
payment of $10 per share but will be entitled to an aggregate dividend of 10,000
times the dividend declared per share of common stock. In the event of
liquidation, the holders of the Junior Participating Preference Stock will be
entitled to a minimum preferential liquidation payment of $10,000 per share,
plus accrued and unpaid dividends, and will also be entitled to preferential
treatment on the distribution of any remaining assets. Each share of Junior
Participating Preference Stock will have 10,000 votes, voting together with the
common stock. In the event of any merger, consolidation or other transaction in
which shares of common stock are exchanged, each share of Junior Participating
Preference Stock will be entitled to receive 10,000 times the amount received
per share of common stock. These rights are subject to proportionate adjustment
in the event of certain stock splits, recombinations and other events.
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PLAN OF DISTRIBUTION
DEBT SECURITIES
We may sell debt securities directly or to or through one or more
underwriters, agents or dealers who will be named in the prospectus supplement
or an underwriting syndicate, represented by one or more managing underwriters,
that would be named in the prospectus supplement relating to an issue of offered
debt securities.
The distribution of the debt securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to the
prevailing market prices or at negotiated prices.
In connection with underwritten offerings of the debt securities and in
accordance with applicable law and industry practice, underwriters may
over-allot or effect transactions that stabilize, maintain or otherwise affect
the market price of the debt securities at levels above those which might
otherwise prevail in the open market. Such transactions include the entering of
stabilizing bids, effecting syndicate covering transactions or imposing penalty
bids.
- A stabilizing bid means the placing of any bid, or the effecting of any
purchase, for the purpose of pegging, fixing or maintaining the price of
a security.
- A syndicate covering transaction means the placing of any bid on behalf
of the underwriting syndicate or the effecting of any purchase to reduce
a short position created in connection with the offering.
- A penalty bid means an arrangement that permits the managing underwriter
to reclaim a selling concession from a syndicate member in connection
with the offering when debt securities originally sold by the syndicate
member are purchased in syndicate covering transactions.
These transactions may be effected in the over-the-counter market or
otherwise. Underwriters are not required to engage in any of these activities.
Any of these activities, if commenced, may be discontinued at any time.
In connection with the sale of debt securities to underwriters,
underwriters may receive compensation in the form of discounts, concessions or
commissions from Hasbro or from purchasers of debt securities for whom they may
act as agents. Underwriters and dealers that participate in the distribution of
debt securities may be deemed to be underwriters, and any discounts or
commissions received by them and any profit on the resale of debt securities by
them may be deemed to be underwriting discounts and commissions under the
Securities Act. Any such underwriter will be identified, and any such
compensation will be described, in the prospectus supplement.
Debt securities may be sold directly by Hasbro or through agents designated
by Hasbro from time to time. Any agent involved in the offer or sale of the debt
securities in respect of which this prospectus is delivered will be named, and
any commissions payable by Hasbro to such agent will be set forth, in the
prospectus supplement. Unless otherwise indicated in the prospectus supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment.
Under agreements which may be entered into by Hasbro, underwriters, agents
and dealers who participate in the distribution of debt securities may be
entitled to indemnification by Hasbro against certain liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which these underwriters, dealers, or agents may be required to make in
respect thereof. These underwriters, dealers or agents may engage in
transactions with, or perform services for, Hasbro in the ordinary course of
business.
The debt securities are a new issue of securities with no established
trading market. In the event that debt securities of a series offered hereunder
are not listed on a national securities exchange, certain broker-dealers may
make a market in the debt securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given that any broker-dealer will make a market in the debt securities of any
series or as to the liquidity of the trading market for the debt securities. Any
of this type of market making activity may be discontinued at any time.
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STOCK SALES BY SELLING SHAREHOLDERS
The selling shareholders or their respective successors, including
permitted assignees, pledgees, donees, transferees or other successors in
interest, may sell all of their shares from time to time in transactions on the
securities markets and exchanges, including the NYSE, in the over the counter
market, in privately negotiated transactions, or through writing options or
warrants on their shares or otherwise. They may sell shares at fixed prices that
may change, at market prices prevailing at the time of sale, at prices relating
to prevailing market prices or at negotiated prices. Under certain
circumstances, the selling shareholders may sell their shares pursuant to Rule
144 or another exemption from registration under the Securities Act in lieu of
selling their shares pursuant to this prospectus. The selling shareholders may
sell shares in any manner permitted by law, including through underwriters,
licensed brokers, dealers or agents, and directly to one or more purchasers.
Sales of shares of common stock may involve:
- sales to underwriters, who will acquire shares of common stock for their
own account and resell them in one or more transactions at fixed prices
or at varying prices determined at that time of sale;
- block transactions in which the broker or dealer so engaged may sell
shares as agent or principal;
- purchases by a broker or dealer as principal who resells the shares for
its account;
- an exchange distribution in accordance with the rules of any such
exchange;
- ordinary brokerage transactions and transactions in which a broker
solicits purchasers; and
- privately negotiated sales, which may include sales directly to
institutions.
The selling shareholders have advised us that, as of the date of this
prospectus, they have not entered into any agreements, understandings or
arrangements for the sale of the shares with any underwriters or broker-dealers
and that no underwriter or coordinating broker-dealer is now acting in
connection with the proposed sale of shares. At the time a particular offering
of shares is made and to the extent required, the aggregate number of shares
being offered, the name or names of the selling shareholders and the terms of
the offering, including the names of the underwriters, broker-dealers or agents,
any discounts, concessions or commissions and other terms constituting
compensation from the selling shareholders, and any discounts, concessions or
commissions allowed or re-allowed or paid to broker-dealers, will be set forth
in an accompanying prospectus supplement.
Broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the selling shareholders and/or the purchasers.
The selling shareholders and any broker-dealers, agents or underwriters that
participate with the selling shareholders in the distribution of shares offered
by this prospectus may be deemed to be "underwriters" within the meaning of the
Securities Act. Accordingly, the selling shareholders will be subject to the
prospectus delivery requirements of the Securities Act. Any commissions paid or
any discounts or concessions allowed to these persons, and any profits received
on the resale of the shares offered by this prospectus and purchased by these
persons, may be deemed to be underwriting commissions or discounts under the
Securities Act.
Under the rules and regulations under the Exchange Act, any person engaged
in a distribution of the shares offered pursuant to this prospectus may be
limited in its ability to engage in market activities with respect to those
shares. Each selling shareholder will be subject to the provisions of the
Exchange Act and the rules and regulations under the Exchange Act, including
Regulation M. Those rules and regulations may limit the timing of purchases and
sales of any shares offered by the selling shareholders pursuant to this
prospectus, which may affect the marketability of the shares offered by this
prospectus.
We will pay all expenses, other than selling commissions, selling fees and
stock transfer taxes, of the registration and sale of shares. We also have
agreed to indemnify the selling shareholders against certain liabilities,
including liabilities under the Securities Act.
We may suspend the use of this prospectus by the selling shareholders under
certain circumstances.
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We will not receive any proceeds from sales of shares by selling
shareholders. We cannot guarantee that the selling shareholders will sell any or
all of their shares.
LEGAL MATTERS
The validity of the securities offered by this prospectus will be passed
upon for Hasbro by Phillip H. Waldoks, Senior Vice President -- Corporate Legal
Affairs and Secretary of Hasbro. Mr. Waldoks will rely as to matters of Rhode
Island law on the opinion of David Dubosky, Vice President/Managing Attorney, of
Hasbro. Mr. Waldoks owns 3,600 shares of Common Stock and has options to
purchase 139,905 shares of Common Stock granted under Hasbro's employee stock
option plans. Mr. Dubosky has options to purchase 14,950 shares of Common Stock
granted under Hasbro's employee stock option plans. Certain legal matters with
respect to the debt securities offered by this prospectus will be passed upon
for any underwriters, dealers or agents by Skadden, Arps, Slate, Meagher & Flom
LLP, New York, New York.
EXPERTS
The consolidated financial statements incorporated by reference and
schedule included in the Annual Report on Form 10-K of Hasbro for the fiscal
year ended December 27, 1998 incorporated by reference herein and elsewhere in
the Registration Statement, have been incorporated by reference herein and in
the registration statement in reliance upon the reports of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
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$750,000,000
HASBRO, INC.
$550,000,000 7.95% NOTES DUE 2003
$200,000,000 8.50% NOTES DUE 2006
[HASBRO LOGO]
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PROSPECTUS SUPPLEMENT
MARCH 10, 2000
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Joint Book-Running Managers
SALOMON SMITH BARNEY BEAR, STEARNS & CO. INC.
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FLEETBOSTON ROBERTSON STEPHENS
BANC OF AMERICA SECURITIES LLC
BANCA D'INTERMEDIAZIONE MOBILIARE IMI
COMMERZBANK CAPITAL MARKETS CORP.
MELLON FINANCIAL MARKETS, LLC
MERRILL LYNCH & CO.
SCOTIA CAPITAL
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