EXHIBIT 99
For Immediate Release Contact:
Karen A. Warren (Investor Relations) 401-727-5401
Wayne S. Charness (News Media) 401-727-5983
HASBRO EXPECTS FOURTH QUARTER AND FULL YEAR RESULTS TO BE BELOW
EXPECTATIONS
DIVIDEND IS REDUCED
Pawtucket, RI (December 6, 2000) - Hasbro, Inc. (NYSE:HAS)
today announced that results for the fourth quarter and full year
2000 will be below expectations.
The Company expects full year 2000 earnings per share to be at
best, break even, with the potential for a loss of between $0.10 to
$0.20 per share, prior to the approximately $140 to $170 million of
pre-tax restructuring and other charges announced in October and a
potential write down of approximately $35 million associated with
the sale of Hasbro Interactive and Games.com. EBITDA for full-year
2000 is now expected to be approximately $320 to $370 million, or
$1.81 to $2.09 per share, also before the charges.
"While we announced some very exciting news today with the
pending licensing agreement and sale of Hasbro Interactive and
Games.com to Infogrames Entertainment SA, we also announced that
our earnings will be below expectations," said Alan G. Hassenfeld,
Chairman and CEO. "The reduced expectations can be attributed in
large part to the decline in worldwide revenue of trading card
games. Frankly, while Pokemon Trading Card Game cards are still
selling well, we were too aggressive in our forecast following
incredible demand in 1999 and 2000. Given the high level of
inventory at Wizards of the Coast, we are going to take an
additional provision of $75 million for inventory obsolescence.
This coupled with some additional weakness in the U.S. toy group
account for the change in our expectations."
"To address the inventory issue we are changing inventory
practices in order to keep this from happening in the future and we
are very confident about the continued success of this business.
We expect good results from this month's U.S. launch of Pokemon
Gold and Silver trading card games as Game Boy Gold and Silver
cartridge sales have broken all records at retail," Mr. Hassenfeld
added.
-continued-
Page Two
"We are very focused on enhancing shareholder value by
generating sustainable revenue and earnings growth by growing our
own brands and new product development," said Alfred J. Verrecchia,
President and Chief Operating Officer. "In October we announced
several actions to improve profitability and we are on track to
accomplish our goals. We will be significantly reducing overhead
throughout the company. We currently expect headcount reductions of
approximately 750 across all divisions of Hasbro excluding Hasbro
Interactive and Games.com. This is higher than the 500 to 550 that
we originally outlined, as we have been more aggressive in our
efforts. We don't expect the charges associated with the
restructuring to change from the previous guidance in the range of
$140 - $170 million but they are likely to be on the high end of
the range. Our goal continues to be lowering our break even by
reducing costs in product development, sales and marketing, and
administrative functions. We are making Hasbro more efficient so
we can better leverage our revenue and earnings stream going
forward. This leaves us well positioned for 2001," Mr. Verrecchia
concluded.
Mr. Hassenfeld added, "We are confident that we are making the
right moves to make Hasbro leaner and more consistently profitable
for shareholders. While 2000 has been a very painful year, we are
looking forward to returning Hasbro to profitability in 2001 and
beyond."
As a result of the earnings decline, the Company also
announced that its cash dividend has been reduced from $0.06 per
share quarterly to $0.03 per share, effective with the dividend
payable on February 15, 2001 to shareholders of record on February
1, 2001. This will result in an annual cash savings of $21 million
beginning in 2001.
The Company has made available a pre-recorded webcast of a
conference call that can be accessed beginning at 5:00 P.M. Eastern
Time today that reviews the sale of Hasbro Interactive and
Games.com, expectations for the fourth quarter and full year 2000.
Investors and the media are invited to listen at
http://www.hasbro.com (select "Investors & Media" from the home
page, then click on the webcast icon). In addition, the conference
call will also be available for replay via telephone, at 402-998-
1728. The press release announcing the sale of Hasbro Interactive
and Games.com to Infogrames Entertainment SA (Euronext 5257) is
also available on the website.
Hasbro is a worldwide leader in children's and family leisure
time and entertainment products and services, including the design,
manufacture and marketing of games and toys ranging from
traditional to high-tech. Both internationally and in the U.S., its
PLAYSKOOL, TONKA, SUPER SOAKER, MILTON BRADLEY, PARKER BROTHERS,
TIGER, HASBRO INTERACTIVE, MICROPROSE and WIZARDS OF THE COAST
brands and products provide the highest quality and most
recognizable play experiences in the world.
-continued-
Page Three
Certain statements contained in this release contain "forward-
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements may be identified
by the use of forward-looking words or phrases such as
"anticipate", "believe", "could", "expect", "intend", "may",
"planned", "potential", "should", "will" and "would". Such forward-
looking statements are inherently subject to known and unknown
risks and uncertainties. The Company's actual actions or results
may differ materially from those expected or anticipated in the
forward-looking statements. Specific factors that might cause such
a difference include, but are not limited to, the Company's ability
to manufacture, source and ship new and continuing products on a
timely basis and the acceptance of those products by customers and
consumers at prices that will be sufficient to profitably recover
development, manufacturing, marketing, royalty and other costs of
products; economic conditions, including higher fuel prices and
availability of electronic components, currency fluctuations and
government regulation and other actions in the various markets in
which the Company operates throughout the world; the inventory
policies of retailers, including the concentration of the Company's
revenues in the second half and fourth quarter of the year,
together with increased reliance by retailers on quick response
inventory management techniques, which increases the risk of
underproduction of popular items, overproduction of less popular
items and failure to achieve tight and compressed shipping
schedules; the impact of competition on revenues, margins and other
aspects of the Company's business, including the ability to secure,
maintain and renew popular licenses and the ability to attract and
retain talented employees in a competitive environment; the
assessment by the Company of its 2001 product line and of the
impact of discontinued product lines and product lines with reduced
expectations has not been completed and actual charges, primarily
non-cash, could be more or less than the current estimated range
for such charges; market conditions, third party actions or
approvals and the impact of competition that could delay or
increase the cost of implementation of the Company's profit
improvement programs or alter the Company's actions and reduce
actual results; the risk that anticipated benefits of acquisitions
may not occur or be delayed or reduced in their realization; and
with respect to the Company's online game site initiative,
technical difficulties in adapting games to online format and
establishing the online game site that could delay or increase the
cost of the site becoming operational; the acceptance by consumers
of the games and other products and services to be offered at the
site; competition from other online game sites and other game
playing formats; and the fact online game revenues may not be
sufficient to cover the significant advertising and other
expenditures required or the support, service and product
enhancement demands of online users. The Company undertakes no
obligation to make any revisions to the forward-looking statements
contained in this release or to update them to reflect events or
circumstances occurring after the date of this release.
EBITDA (earnings before interest, taxes, depreciation and
amortization) represents operating profit plus acquired in-process
research and development, restructuring charges, depreciation and
all amortization. EBITDA is not adjusted for all noncash expenses
or for working capital, capital expenditures or other investment
requirements and, accordingly, is not necessarily indicative of
amounts that may be available for discretionary uses. Thus, EBITDA
should not be considered in isolation or as a substitute for net
earnings or cash provided by operating activities, each prepared in
accordance with generally accepted accounting principles, when
measuring Hasbro's profitability or liquidity as more fully
discussed in the Company's financial statements and securities
filings.
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