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Hasbro (NASDAQ:HAS)

Q3 2011 Earnings Call

October 17, 2011 8:30 am ET

Executives

Brian D. Goldner - Chief Executive Officer, President, Director and Member of Executive Committee

Deborah Thomas - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Debbie Hancock - VP, IR

David D. R. Hargreaves - Chief Operating Officer

Analysts

James Hardiman - Longbow Research LLC

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Gregory R. Badishkanian - Citigroup Inc, Research Division

Gerrick L. Johnson - BMO Capital Markets U.S.

Per E. Ostlund - Jefferies & Company, Inc., Research Division

Chris Cerrone - Goldman Sachs Group Inc., Research Division

Felicia R. Hendrix - Barclays Capital, Research Division

Sean P. McGowan - Needham & Company, LLC, Research Division

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

John Taylor - Arcadia

Eric O. Handler - MKM Partners LLC, Research Division

Robert W. Carroll - UBS Investment Bank, Research Division

Operator

Good morning, and welcome to the Hasbro Third Quarter 2011 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the call over to Miss Debbie Hancock, Vice President of Investor Relations. Please go ahead.

Debbie Hancock

Thank you, and good morning, everyone. Joining me today are Brian Goldner, President and Chief Executive Officer; David Hargreaves, Chief Operating Officer; and Deb Thomas, Chief Financial Officer. Our third quarter 2011 earnings release was issued earlier this morning and is available on our website. The press release includes information regarding non-GAAP financial measures included in today's call. Additionally, whenever we discuss earnings per share or EPS, we are referring to earnings per diluted share. This morning, Brian will discuss key factors impacting our results, and Deb will review the financials. We will then open the call to your questions.

Before we begin, let me note that during this call and the question-and-answer session that follows, members of Hasbro management may make forward-looking statements concerning management's expectations, goals, objectives and similar matters. These forward-looking statements may include comments concerning our product and entertainment plans, anticipated product performance, business opportunities and strategies, costs, financial goals and expectations for our future financial performance and achieving our objective.

There are many factors that could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. Some of those factors are set forth in our annual report on Form 10-K, in today's press release and in our other public disclosures. We undertake no obligation to update any forward-looking statements made today to reflect events or circumstances occurring after the date of this call.

Now I would like to introduce Brian Goldner. Brian?

Brian D. Goldner

Thank you, Debbie. Good morning, everyone, and thank you for joining us today. The third quarter highlights the global execution of our branded play strategy and keeps us on the path to deliver meaningful growth in revenues and earnings per share in 2011. Not only was this a record third quarter in respect to revenues, operating profit and net earnings, there are a number of important positive trends which give us the confidence to maintain our outlook for the full year.

Three weeks into the fourth quarter, our shipments in the U.S. and Canada segment are off to a strong start, tracking ahead of last year and reaffirming our belief that the decline in the third quarter was substantially related to the timing of orders. We are all well aware that the retail landscape today requires more just-in-time inventory than before, as well as our new initiatives are only recently hitting retail shelves. As you know, last year's holiday performance was affected by softer U.S. consumer demand, in particular, in games.

In the U.S., we believe we are in a stronger position than last year, as we entered the fourth quarter with less inventory at retail. As well, it is positive trends in point of sale during the third quarter. Point of sale in our top 4 U.S. accounts was up 8% year-over-year in the quarter versus being up slightly in the second quarter and down in the first quarter. This quarter's growth was driven by mid-teen percentage gains in our toy point of sale as well as improvement in our games point of sale. Most importantly, for our consumers globally, we have a great innovative product line that delivers the value and brands consumers are seeking, given the challenging economic environment this holiday season.

Across all categories, we have new highly innovative exciting products: LET'S ROCK ELMO, the Elefun Busy Ball Popper and the NERF VORTEX are each on a number of hot-toy lists for the holiday season, along with other great Hasbro toys and games including TRANSFORMERS, FURREAL FRIENDS, COOKIE MY PLAYFUL PUP, SIMON Flash, BEYBLADE and Star Wars. Many of these initiatives have just begun hitting store shelves in recent weeks. In total, more than 20 Hasbro toys and games are on the hot-toy lists and third-party expert award lists in the U.S. and international markets this holiday season.

Internationally, our business continues to post strong results, delivering 23% revenue growth in the third quarter; 15% growth, absent foreign exchange, including growth in all major geographic regions. Year-to-date, the International segment revenues have grown 27% or 19%, absent foreign exchange. While the economies in Europe are facing challenges of their own, our Toy and Game business and the overall market have held up well.

Additionally, as you're aware, we have been investing in establishing and growing our brands globally, including a focus on the emerging markets. We are gaining market share in both mature international markets as well as emerging markets. Based on our momentum in these markets, the strength of our line and our current expectations, we remain optimistic about our International business for the full year.

Taking a closer look at our overall third quarter results. We had several Hasbro brands perform well and contribute to our overall growth. BABY ALIVE, MY LITTLE PONY, MAGIC: THE GATHERING and TRANSFORMERS, including the new KRE-O-branded products, all continued their growth trends in the quarter. Additionally, shipments of the new Easy-Bake Oven grew the brand year-over-year. SIMON and YAHTZEE brands grew with the new flash games on shelf now and the launch of our GAME OF LIFE Adventures helped extend the brand globally, particularly in Europe, and contributed to growth in the quarter.

From our licensed partners, BEYBLADE has continued to be a significant contributor to our growth globally. The third quarter also includes more significant shipments of Sesame Street products, including early shipments of one of the holiday's hot items, LET’S ROCK ELMO.

With respect to TRANSFORMERS, we currently believe full year revenue for the brand will be between the levels reported during the past 2 movie years, specifically between the $482 million we reported in 2007 and $592 million reported in 2009. This is in line with our original 2011 plans. And despite beginning the year with carryforward inventory, TRANSFORMERS has been a major contributor to our revenue growth during the year, posting strong shipments and point-of-sale gains versus last year, with year-over-year point-of-sale trends improving since the movie launch.

Given this was the third movie that focused on the same core cast of characters, we did not have the same collector pounce at product launch that we had in past years. However, the broad global consumer base has responded to the movie, and trends have improved. In several markets, including several mature markets, TRANSFORMERS shipments year-to-date are up in the triple digits year-over-year, and point-of-sale in many countries during the third quarter was also up greater than 100%. On September 30, the Blu-Ray DVD was released, which helps to continue the momentum in the brand and serves as another opportunity to engage with our TRANSFORMERS consumers.

A number of our branded television shows have started to air in certain international markets, including Transformers: Prime, which has already become one of the top-rated shows for boys on Cartoon Network in the U.K. and Spain. MY LITTLE PONY is consistently ranked in the top 5 shows airing on a number of networks around the world, including Cartoon Networks' Boomerang channel in the U.K. and on Treehouse in Canada. Hasbro and its broadcast partners are equally pleased with the strong ratings performance of Hasbro Studios' other shows, including G.I. Joe: Renegades, The Adventures of Chuck and Friends and Pound Puppies.

Importantly, early results indicate that our shows are having a positive impact on point-of-sale trends. MY LITTLE PONY has returned to growth in 2011, with point-of-sale up in the U.S. and Canada, as well as recently in the U.K., following the first airing of programming. In the U.K., Transformers' point of sale has also increased in the weeks following the recent launch of programming. These are very encouraging signs, which speak to the importance of television to drive our brands in the international markets.

I'm pleased to report that currently we have closed deals which will enable Hasbro Studios shows to air in substantially all of our markets and every major sales territory, including across Europe, Latin America and Asia-Pacific. This represents the airing of our TV shows in 142 countries globally. These include a majority of the primary and secondary international markets, including Canada, U.K., Germany, Italy, France, Spain, Scandinavia, Singapore, Hong Kong, Korea, China, Mexico and Brazil. 3/4 of the major markets have signed up for 3 or more of our first-season shows, including MY LITTLE PONY, Transformers: Prime, Pound Puppies and The Adventures of Chuck and Friends.

Hasbro Studios anticipates closing further deals in the coming months. The studio also completed production on its first international game show format based on our hit series Family Game Night, which was produced for the Boing TV network in Spain. This show began airing in early October.

In this third quarter, The Hub delivered its best-ever quarterly performance in kid's total day among all key target demographics. The Hub's third quarter 24% ratings growth from the prior quarter among kids 2 to 11 was the largest of any kid cable network.

In fact, the momentum has continued. On Saturday, October 8, the network posted its best-ever Saturday night, out-delivering several competitive networks against several demos in key time slots. Hasbro Studios' branded programming continues to play a key role in garnering ratings growth for the network, with Pound Puppies, Family Game Night, MY LITTLE PONY: FRIENDSHIP IS MAGIC and Transformers: Prime, among the top 5 shows on The Hub.

In motion pictures, 2011 boasts a record year for TRANSFORMERS: Dark of the Moon, with over $1.1 billion at the box office, making it the fourth-highest grossing film of all time, and 2 great films from Marvel, Thor and Captain America: The First Avenger.

2012 is another strong year for movies, backed by Hasbro's toys, games and licensed merchandise. BATTLESHIP will be a major initiative for Universal in 2012, premiering internationally in April and in the U.S. on May 18.

Additionally, the second film in the G.I. Joe franchise from Paramount will be in theaters on June 29. Our partners also have a tremendous slate of films for 2012, including in February, STAR WARS: EPISODE I in 3D from Lucasfilm; in May, The Avengers from Marvel and Disney; and in July, The Amazing Spider-Man from Marvel and Sony. As we build our core brands and new brand franchises beyond 2012, we continue to actively develop a number of additional Hasbro films with great writers and partners, including MICRONAUTS, OUIJA, CANDY LAND, Risk, STRETCH ARMSTRONG, CLUE and MONOPOLY.

In the second quarter, we announced the creation of our Center of Excellence for Hasbro Games in Rhode Island to help accelerate our growth in this important category. We had a small amount of expense related to establishing this center during the third quarter, which Deb will speak to. But more importantly, we are well underway in reimagining and reigniting our Games business.

You may recall several areas of focus we discussed with you last quarter. First, we are driving integrated, innovative gaming experiences for traditional face-to-face gaming for both on- and off-the-board formats. We're also driving new experiences in video, digital and online gaming. We've had success with a number of brands over the last few years, but we are seeking to accelerate these efforts in future years.

Second, throughout 2011, we have worked closely with our retail partners on the merchandising and promotion of games following the softer holiday season in 2010. We believe retailer plans for 2011 will have a better impact than last year and are encouraged by the efforts and early results behind our gaming brands and the category.

In addition, we told you our promotional and advertising execution in 2010 fell short. This year, we made a number of media-focused changes designed to makes games fun and relevant for kids again. Hopefully by now, you've seen some of our television ads for brands like MONOPOLY Electronic Banking. These ads are more focused on our consumer target, as well as more insightful and culturally relevant for this audience. Early indications are they are having a positive impact at retail. The fourth quarter is extremely important in the games category in the U.S., as more than 50% of the consumer purchases for Hasbro games traditionally occur in the final 6 weeks of the year.

Where we stand today heading into the holiday season is as follows: Our Games and Puzzles category shipments have improved from the first 2 quarters; at the end of the third quarter, U.S. retailers have reduced games inventories in the mid-teens as a percent; and we have a great line of new and reimagined games on shelf, which are reacting positively to new advertising and promotional activities. We have grown our overall Hasbro net revenues this year, despite lower shipments in the Games and Puzzle category to date; and we feel better about our execution and retailer merchandising planned for games this holiday season versus 2010.

We plan to provide more details about our gaming effort, as well as an update on our business and strategy at our annual Investor Day we are hosting on November 9 here in Rhode Island.

In summary, we feel that we have the right elements in place to deliver meaningful growth in revenues and EPS this year, including great brand initiatives, encouraging point-of-sales trends, appropriate levels of inventory, strength internationally, an improving trend in the U.S. and the team to execute our plan globally. These investments we've undertaken, which are focused around the globalization of our business, are driving growth and unlocking leverage in our business for the long term, setting the stage for a strong 2011 and growth in future years.

Now I would like to turn the call over to Deb. Deb?

Deborah Thomas

Thank you, Brian, and good morning. In the third quarter, Hasbro delivered growth in revenues and earnings, driven by strong international performance, incremental leverage from our investments and solid execution. As evidenced by our third quarter stock repurchases, we remain confident in our business over the long term and are committed to returning cash to shareholders.

Net revenues in the quarter were $1.38 billion, up 5% from last year. Foreign exchange had a positive $37.1 million impact on net revenues for the quarter. Excluding the impact of foreign exchange, net revenues grew 2%. Operating profit grew 4% for the quarter to $248.1 million or 18% of revenues versus $237.8 million or 18.1% in 2010.

As outlined in our second quarter earnings call, we incurred additional expense in the third quarter related to establishing our Center of Excellence for Hasbro Games here in Rhode Island. In total, during the third quarter, there was an incremental $1.8 million of pretax expense, which equates to $0.01 per diluted share. Excluding this cost, EPS in the quarter was $1.28 per share. Year-to-date, we recorded $15 million of pretax expense or $0.07 per share related to severance, relocation and related costs.

Looking at our segment results for the third quarter 2011. The U.S. and Canada segment net revenues were $764.6 million, down 7% versus $825.5 million last year. Growth in the Preschool category was offset by declines in Boys, Girls and Games and Puzzles.

The U.S. and Canada segment reported an operating profit of $128.8 million or 16.8% of revenues. This compares to $158.8 million or 19.2% of revenues in 2010. The decline in operating profit is primarily the result of lower revenues in the quarter.

As we look at the International segment, we've made important investments in people, facilities, marketing and systems over the past several years. We're beginning to see the benefits of these investments in our results through strong revenue growth and operating margin improvement. Net revenues in the International segment increased 23% to $563.3 million versus $458.9 million in 2010. Absent a positive foreign exchange impact of $35.2 million, net revenues in the International segment grew 15%. The results in this segment reflect growth in all major geographic regions, including the emerging markets, as well as growth in the Boys category, which more than offset slight declines in the Games and Puzzles, Girls and Preschool categories.

Operating profit in the International segment grew 42% to $100.7 million or 17.9% of revenues compared to $70.8 million or 15.4% of revenues in 2010. Again this quarter, we reported strong operating profit improvement in the International segment, which was driven by higher volume in the quarter and greater leverage of the ongoing investments I spoke to earlier.

The Entertainment and Licensing segment net revenues increased 69% to $46.3 million compared to $27.5 million in 2010. Revenue in the Entertainment and Licensing segment increased based on sales of licensed products associated with Transformers: Dark of the Moon. Additionally, entertainment-based revenues increased from both television distribution and movies, including a onetime payment of $5 million from Universal Studios.

For the third quarter, the Entertainment and Licensing segment reported an operating profit of $15.3 million compared to $5.9 million in 2010. Higher revenue in the quarter more than offset the incremental year-over-year investments in global licensing talent and our online initiative. As we mentioned during our second quarter earnings call, our quarterly run rate of fixed expenses in this segment is approximately $16 million. Despite the improvement in operating profit in the quarter, we are still in the early stages of reaching the full earnings potential of this segment.

Now let's look at earnings. For the third quarter 2011, we reported net earnings of $171 million or $1.27 per diluted share compared to $155.2 million or $1.09 per diluted share a year ago. Excluding the costs outlined earlier associated with our Center of Excellence for Hasbro Games, earnings per share were $1.28. For the quarter, average diluted shares were 134.9 million compared to 141.7 million last year.

Cost of sales in the quarter was $599.5 million or 43.6% of revenues versus $591.6 million or 45% of revenues in 2010. This improvement resulted primarily from favorable product mix, including higher sales of royalty-bearing products and Entertainment and Licensing segment revenues. Year-to-date, cost of sales is 42.1% versus 42.4% in 2010. We continue to target cost of sales in the 42% range for the full year 2011, which positions us to achieve our traditional gross margin in the 58% range. Operating profit margin in the quarter was 18% of revenue compared to 18.1% of revenues in the third quarter 2010.

2011 includes a higher level of spending related to our investments in key growth areas, including international expansion, entertainment and licensing, as well as product innovation. These investments are driving growth in our business and afford us the opportunity to further grow revenues and improve returns in our business over the long term. With the typical pattern of higher revenue late in the year, we're beginning to see the leverage from these investments, which we did not see in the lower revenue first and second quarters.

In the quarter, advertising of 9.5% of revenues declined from 10.2% in 2010, consistent with our expectation that given the strong entertainment slate in 2011, full year advertising would be at the lower end of the 10% to 11% of revenue range.

Royalties grew in the quarter and represented 7.9% of revenues, as brands such as BEYBLADE and TRANSFORMERS continued posting strong growth.

Program production cost amortization in the quarter was $7.8 million versus $5 million last year. Year-to-date, it is $18.1 million, and we continue to expect full year program amortization to be in the range of $35 million to $45 million.

SD&A in the quarter included $1.2 million of costs associated with our games action. For the full year, we expect SD&A to be at or below 20% of revenues, including the costs associated with our Games group. Absent the incremental expense associated with establishing Hasbro's Center of Excellence for Games, we continue to expect SD&A to be below 20% for the full year.

Moving below operating profit. Other expense net to the quarter totaled $4.1 million compared to other income net of $3 million a year ago. The year-over-year change was primarily the result of a gain of $4.9 million recognized in 2010 from the sale of intellectual property.

Additionally, our 50% share of The Hub is included in this line on the P&L. For the third quarter, our share of the earnings in The Hub was a loss of $1.5 million compared to a loss of $874,000 in the third quarter 2010.

Our underlying tax rate in 2011 was 25.1% compared to an underlying tax rate of 28.8% through the third quarter of 2010. This lower rate reflects a greater percentage of earnings coming from our International business and is consistent with our current expectation for our full year tax rate.

Now let's turn to the balance sheet. At quarter end, cash totaled $187 million compared to $497.9 million a year ago. Operating cash flow for the past 12 months was $366.9 million and includes $81.6 million in television programming costs over the period.

During the third quarter 2011, we repurchased a total of 5.6 million shares of common stock at a total cost of $211 million and at an average price of $37.74 per share. In the first 3 quarters of 2011, the company repurchased 9.4 million shares at a total cost of $386.7 million and at an average price of $40.97. At quarter end, $263.5 million remained available under our current share repurchase authorization.

The quality of our receivables portfolio remains good, and receivables at quarter end were $1.26 billion, up 4% compared to $1.21 billion last year. This reflects the 5% growth in revenues and an impact from foreign exchange. DSOs were 82 days, down 1 day versus last year.

Inventories at $518.9 million compared to $468 million a year ago and $426.9 million at the end of the second quarter. This reflects the growth in our business globally and our incremental initiatives this holiday season. Nearly 70% of the year-over-year increase is related to inventory supporting our International segment revenues. Depreciation and capital expenditures in the quarter were $36.4 million and $20.6 million, respectively.

We continue to be confident in our ability to deliver a meaningful growth in revenues and earnings per share in 2011. The investments we have made are driving growth in our business, not only this year but in future years as well, when we anticipate generating greater returns on these investments. Today, Hasbro's financial position is healthy, and we are delivering against our long-term strategy.

As Brian mentioned, we look forward to speaking with you in more detail about our business and our plans on November 9 when we host our annual Investor Day.

Brian, David and I are now happy to take your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question this morning is coming from the line of Eric Handler of MKM Partners.

Eric O. Handler - MKM Partners LLC, Research Division

Just doing some math. In terms of your shipments, you said -- looks like you're shipping a little bit later with some of your product. And when you look at consensus revenues to where you came in, looks like you were about $74 million below expectations. Can you quantify how much the value of the shipments was that got pushed into the fourth quarter versus the third quarter?

Brian D. Goldner

Yes. If you look at the revenues year-to-date as a company, we're up 9% year-to-date in revenues. The U.S. was down 2% year-to-date in revenues; International, up 27%. Thus far, in the fourth quarter, we have made up those revenues in shipments for the first 3 weeks in the first -- our fourth quarter, and so again, we would be even in the U.S. to year-ago in shipments.

Eric O. Handler - MKM Partners LLC, Research Division

Okay. And then quickly, just an FX question. We saw FX had a big impact. Mattel, when they reported earnings on Friday that there was actually a headwind. For you guys, it was a bit of a tailwind. Just hoping you could reconcile that a little bit.

Deborah Thomas

Certainly. The -- from a foreign exchange standpoint, we could see a drop in the euro and pound and the Australian dollar and Mexican peso late at the end of the third quarter. However, it did -- it was still positive over where we sat in 2010. We did not have a significant impact at all on our gross margins from foreign exchange. As a matter of fact, we had a slightly positive impact because of favorable hedges that we had put in place last year. So for us, foreign exchange, while it did have a positive impact, which we highlighted on the top line, it did not have a significant or meaningful impact overall to the P&L for the quarter.

Operator

Our next question is coming from the line of Sean McGowan of Needham & Company.

Sean P. McGowan - Needham & Company, LLC, Research Division

Question about the tax rate. Was there anything in the quarter that you would characterize as unusual or not repeatable?

Deborah Thomas

Sean, we did have a small amount of discrete charges, kind of like we have every quarter, less than a few million dollars. But really, what we're seeing is, and we talked about, was the greater leverage we're getting from our International business. And as a matter of fact, the leverage coming through being better than we had originally expected. Based on the unit -- the segment's performance, we actually are finding that the underlying tax rate is coming in lower, because we are earning more internationally than we had originally expected. So really, that's what's driving the change in the rate in the quarter, the strength of the International business.

Sean P. McGowan - Needham & Company, LLC, Research Division

Okay. And the second question, what's your overall outlook on the impact of all the TV activities relative to your commentary earlier in the year? It's little bit -- I think it's going to be around neutral.

Brian D. Goldner

Yes, exactly. A year ago, we had the $0.30 dilution, and this year, we'll have nothing like that. And so again, on track. The shows are being placed around the world, 142 markets around the world, and most networks are buying 3 or more shows, more than 75%. So the TV is on track, and we're seeing some great ratings growth more recently on The Hub. So again, those long-term plans are in place.

Operator

Our next question is from the line of Felicia Hendrix of Barclays Capital.

Felicia R. Hendrix - Barclays Capital, Research Division

So Brian, you sounded upbeat on games. Sounds like it's improving. It also, obviously, faces easy comps. I was just wondering, is it fair to say that you might see growth in the Games business in the fourth quarter?

Brian D. Goldner

We won't typically provide guidance like that, but suffice it to say, we do have a lot of new initiatives as well as new marketing energy behind the Games business, as well as great new merchandising plans that are a major improvement to 2010. So we feel good about where we are going in the fourth quarter for the Games business and then into 2012.

Felicia R. Hendrix - Barclays Capital, Research Division

Okay. Great. And then just moving on to the Boys. And I'm not really looking for guidance per se, just more directional. You talked about the timing differences, just wondering, is that -- should we expect growth in the domestic Boys business as well. Was it more timing than anything else?

Brian D. Goldner

Yes, I think that for the most part, if you look at the quarter, and then for the full year -- I don't have the specific forecast of the Boys business. But overall, the Boys business has performed well year-to-date. The TRANSFORMERS business has continued to perform very well. So again, I think that as we've said, our indication, given the strong POS that we're seeing in the U.S. and the momentum that we're seeing in POS into the fourth quarter, we feel good about that business for the full year.

Felicia R. Hendrix - Barclays Capital, Research Division

And how is the T3 been tracking versus 2 and 1.

Brian D. Goldner

So we've mentioned on the call, in the formal notes that the TRANSFORMERS business right now is tracking very strongly. In fact, the POS that we're seeing now is very strong. It's very strong in mature markets around the world, in some markets up over 100%, as are shipments in several mature markets around the world and emerging markets. We said that we believe now we will come in between the $482 million we reported in 2007 and $594 million that we reported in 2009. And a lot of new initiatives there. Things that are performing very well include KRE-O, as well as our Rescue Bots, Preschool segments of that business. And so we're seeing great broad consumer takeaway.

Felicia R. Hendrix - Barclays Capital, Research Division

Sorry, must have missed that. And then just on the Preschool business. If you'd -- I just was trying to get a feel for how Sesame Street was driving that. So can you just give us a view of Sesame Street, wow the underlying business was looking?

Brian D. Goldner

We've got a lot of areas in our underlying business that are performing quite well, in the new Elefun Busy Ball Popper, particularly, in the Preschool heroes line -- PLAYSKOOL Heroes line, particularly focused on the TRANSFORMERS Rescue Bots on the Marvel Preschool as well as Star Wars. So again, overall, clearly, we intend for Sesame Street to be one of the major contributors to our Preschool business. So it's kind of collectively showing some good momentum both in the U.S. and around the world.

Felicia R. Hendrix - Barclays Capital, Research Division

Great. And then just final housekeeping. Deb, on The hub, do you still expect program production cost amortization of $35 million to $45 million in the year?

Deborah Thomas

We do. On TV, we expect Hasbro's program production amortization for the year to be between $35 million and $45 million.

Felicia R. Hendrix - Barclays Capital, Research Division

Okay. And so, is there -- like, as we forecast going forward, so it seems like it's very seasonal for this year in terms of how it -- is it a seasonal thing? Or is it a ramping thing?

Deborah Thomas

It was really a ramping thing and how the revenue is coming through. And on The Hub itself, I know we said in the second quarter, we had expected this quarter to be more like the first quarter. For The Hub in our non-op expense, we'd expect the fourth quarter to be similar to this quarter, not to go back to the profit that we saw last quarter, but along the similar lines of this quarter.

Operator

Our next question is from the line of Michael Kelter of Goldman Sachs.

Chris Cerrone - Goldman Sachs Group Inc., Research Division

This is actually Christopher Cerrone for Michael. Quick one. On the Boys division, could you give a little bit of detail on how some of the core underlying toy properties are doing excluding TRANSFORMERS and BEYBLADE?

Brian D. Goldner

Sure. This year, a number of new initiatives in the KRE-O business, which to this year, of course, is focused on our TRANSFORMERS brand, is off to a great start in 8 countries around the world. And we'll roll that out to the rest of the territories in 2012. Our Super Soaker business was up significantly year-on-year and the teams really rethought that business. Our NERF business continues to perform exceedingly well in the international markets, and we're seeing great growth across geographies. The VORTEX line is just hitting retail now and already seeing some great takeaway there. Our Marvel business and Star Wars business this year are down versus a year ago.

Chris Cerrone - Goldman Sachs Group Inc., Research Division

Great. That's really helpful. And then just shifting quickly to board games for the holiday season approaching here. How does retail support look like versus what you were looking at this time last year?

Brian D. Goldner

Well, I think what had, had happened a year ago was a different -- a change in plans that really was never executed a year ago. This year, the plans are very significant. We feel very good about the plans and the execution of those plans happening earlier in the holiday season albeit still late, because our Board Game business sell-through is particularly late with 50% of our sales happening in the last 6 weeks. But we feel very good about marketing around games, the focus again on the kids, the takeaway we're seeing on products like MONOPOLY Electronic Banking, as we're focusing on kids advertising, CONNECT 4 and the new launchers product, BOP IT! XT, SIMON FLASH as well as YAHTZEE Flash and SCRABBLE Flash. So across the board, we're seeing some great initiatives from us. The marketing, and then the merchandising plans, I think, have significantly improved this holiday season versus a year ago.

Operator

Our next question is from the line of Tim Conder of Wells Fargo.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Just a couple. You touched on it in your preamble, but on the balance sheet inventories, if you look at the inventories back in the second quarter, they were -- as a percent of sales, they were within a range that we've seen over the last 5 or 6 years. And then here in the third quarter again, we've moved above that range. And I know, again, you were kind of stacked on inventories last year on the balance sheet, as well as was the industry. Can you kind of talk to -- touch on that again in a little bit more detail?

Brian D. Goldner

Sure. First thing to note -- I think it's important to note that, particularly in -- if you look at the U.S., inventories at the end of the third quarter were down 9.4%. So retail inventory was down. We're doing business in more markets around the world than ever before. Over the last few years, we've opened 11 new major marketing and sales offices around the world and converted those businesses from distributor markets to our own marketing and selling operations. And so, therefore, we're taking in the inventories. Business year-to-date internationally is up 27%. So again, I think there's every reason to have some additional inventories going into the holiday selling season. I don't know, David, do you want to add anything to that?

David D. R. Hargreaves

No, I'd agree. I mean, a lot of the inventory increase versus a year ago is to support our International business. We're in more markets, and we're growing rapidly, so that's fine.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Okay, okay. And thanks for the additional color, Brian, on the U.S. channel inventories. Would you say that the U.S. channel inventories are now where you want them, you feel comfortable?

Brian D. Goldner

Yes. I think that if you look at the combination of the U.S. business year-to-date being down 2% in shipments, the inventories being down 9.4%, third quarter POS being up 8%, Play POS being up double digits, Games POS improving, the number of new initiatives we have for the holidays and a refocus on our Games business and merchandising and advertising, I think the empirical evidence indicates and certainly supports our belief that we can deliver meaningful growth in revenues and EPS this year.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Okay. And so again, you feel comfortable with the U.S. channel inventories and U.S. inventories -- excuse me, international channel inventories, collectively?

Brian D. Goldner

Yes. If you look at the growth in inventories, year-on-year, that we have, nearly 70% of those inventories are focused on international markets. The remaining roughly 1/3 is focused on the U.S. business, which is consistent with the growth rates we've seen both domestically and internationally and again would point us in the direction of meaningful revenues and EPS growth for the year.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Okay. And then on the business with Universal, clearly, a lot of concern in that area with Universal sort of backing off or not wanting to do a couple of the movies. But just recap for us when you initially signed the agreement, I think they had their choice to pick between multiple properties to do the agreed-upon number of movies. And then, as they said, "Okay, we want this. We don't want this," then those were released from with under that umbrella. Recap how many movies they are now firmly committed to doing, and what's left in that bucket. And then, I guess, thirdly, for the movies that they're not involved with, and you're looking for other partners, would you ever consider producing movies on your own?

Brian D. Goldner

Appreciate the question. Actually, we read with great interest and sort of seeing the similarities. If you look most recently at the Walt Disney Company, having recently worked with filmmakers to bring down the budget of the Lone Ranger movie, and yet then greenlit movie at a lower budget level for 2013, have just slated it for 2013. That's the same process we've been going through on the OUIJA movie and brand, albeit not at that type of budget level. And we -- we're reworking that budget, but the script is in good shape. We're polishing the script right now and have a producer on board. We would expect that, that movie would be back with a studio very shortly. It's part of the process. In addition, the deal with Universal does continue to include STRETCH ARMSTRONG and does continue to include CANDY LAND as some of the properties that they are going to look at for production. Obviously, as you know, BATTLESHIP for 2012 goes into theaters April of 2012 around the world, and in May domestically. And that's one of the major initiatives between Hasbro and Universal. And we'll have a full product line around that, which I look forward to showing you, when everyone comes in to Rhode Island in early November. In addition to that, we have a MICRONAUTS movie in development now, and script's being written with our producing partner J.J. Abrams, and that deal has been done over at Paramount. We are developing and writing a script right now for MONOPOLY, for RISK, for CLUE. And we have a couple of other projects that are yet to be named that we haven't yet talked about. So again, our business continues in earnest. The process of honing a budget for a script is part of the process, as the economics of the movie business change, and we're actively developing all these movies right now.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Okay. But would you, at any point, as you see the world right now, consider doing the production from Hasbro's only perspective [ph] without a production partner.

Brian D. Goldner

No. We would not employ, I'll call it, a Marvel strategy.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Okay. And one last piece, a clarification from an earlier question. How is Preschool doing x Sesame Street, I guess, on a year-over-year basis?

Brian D. Goldner

Preschool x Sesame Street, year-to-date, is -- looking at some numbers -- is down. I don't have it overall broken out quite like that, but overall, the rest of the business is down a bit.

Operator

Our next question is coming from the line of Margaret Whitfield with Sterne Agee.

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

First question is you mentioned a high level of investment spending in the current year. I wondered if you could quantify that and discuss the trends in that investment spending in 2012 and beyond.

Brian D. Goldner

Sure, Margaret. I'll start off, and then maybe Deb will pick up as well. Over the last couple of years, we talked about becoming globally capable, the ability to take our brands out, reimagine and reinvent those brands around the world. And over the last couple of years, we've opened offices, Hasbro sales and marketing offices or subsidiaries in 11 new territories. In order to do that this year, we needed a step up both in marketing and sales personnel globally as well as licensed personnel, and that's the significant investment we made in SD&A. It's really a step-up that this was a onetime step-up when we would see some nominal increases in SD&A go forward, consistent with running the business, providing raises and salaries and increases and leases or cost of space, but nothing like this year. So as Deb mentioned, we begin to get significant leverage out of those increases as we go forward.

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

Can you quantify it, Deb?

Deborah Thomas

Well, I think as we've looked at the prior quarters, we've seen about a $25 million impact per quarter. So as we sit and look through and -- to the full year, if we just roll that step change amount through to the full year while keeping SD&A at 20% or below of revenue, that's really how we would quantify it.

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

So SD&A next year could fall below 20%?

Deborah Thomas

We will be talking more about that in November, but it could.

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

Okay. And TRANSFORMER 4, any news on when that might occur, given the strong box office for the third movie? And any other comments on what might be out in '13, apart from, I guess, the Marvel announcements?

Brian D. Goldner

Yes. We do have a couple of movies from Marvel that have already been announced in Iron Man 3 and Thor 2. As you imagine, with the success of a franchise like TRANSFORMERS, we are in active discussions with our great partners at Paramount, with Michael Bay, with Steven Spielberg and our writer to talk about what's next on TRANSFORMERS. And hopefully, I'll have some more news to share with you in the next quarter.

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

And on The Hub, do you think it could be breakeven or slightly accretive next year after the small amount of losses likely this year?

Brian D. Goldner

Well, we're not going to comment at this point. But again, we're making great progress overall. As you know, the ratings on The Hub, as well as our domestic -- our international placement of TV shows now being in a 142 countries, which was ahead of the news we'd given you earlier in the year. So again, the teams were making great progress internationally, as well as the early signs, as we put those shows on air with both the ratings that we're garnering, as well as the POS increases we're seeing on brands. It's all pointing in a positive direction and is consistent with our long-range plan in the TV arena.

Operator

Our next question is coming from the line of James Hardiman with Longbow Research.

James Hardiman - Longbow Research LLC

Couple of questions on The Hub. Some of the general metrics that you guys talked about when you took that over, in terms of subscribers, sub-fees and sort of the sub-to-ad revenue mix, given the ratings improvement that you've seen so far this year, how much have those metrics, if at all, improved? And based on the conversations you've had with some of the cable networks, is there any reason to believe that they're going to be improving here during the foreseeable future?

Brian D. Goldner

Yes. Our distribution has increased organically to about 61 million homes over the period. Our conversations with MSOs around additional rolldowns or additional distribution gains are going quite well, although we're not going to report any news at this point, but are going quite well. The ratings momentum that we're seeing more recently certainly has a good bearing on the number of new advertisers we're garnering. We're now over 120 new advertisers to the channel versus where we were with Discovery Kids. Our advertising year-on-year, as you would imagine, is up significantly. Our affiliate fees increase more organically in line with the long-term contracts we have with MSOs. So again, long-term plan for The Hub is consistent with what our strategic plan was over the long term. Internationally, we're ahead of plan, with 142 countries taking our programming. Now at this point, several major kids networks are already reporting some great ratings, having just begun airing our shows. And 3/4 of those deals are for 3 or more series, recognizing that we'll have a second wave of new series that will go out to the international markets over the next year or so.

James Hardiman - Longbow Research LLC

Perfect. And then, I realize that it's -- I'm sure it's way too early to give any sort of guidance for 2012 on TRANSFORMERS, but just given the success, it sounds like you guys have had with The Hub and Hasbro Studios in terms of Transformers: Prime, is there any evidence that as we look forward to 2012 that we can expect maybe less of a dropoff than we saw last year and in sort of an off-year from a movie perspective?

Brian D. Goldner

It's a great point, and clearly, when we do have television following a movie year, the brand does perform considerably better. If we look at '10 versus 2008, for example, there's a -- was a significant difference in the dropoff. We would expect a dropoff from a -- to a non-movie year to be more consistent with a year where we had television. We had foregone that a year ago, in order to line up our television launch with the launch of The Hub.

James Hardiman - Longbow Research LLC

Great. And just one last quickie. In terms of your share repurchases in the quarter, your cash balance coming out of the quarter is a lot lower than it typically is coming out of the third quarter. How should I think about where we're going to finish the year in terms of cash? Are you looking to stay aggressive in terms of buybacks in the fourth quarter? And given where the stock is trading, would you ever consider even borrowing money to continue those buybacks?

Deborah Thomas

I think, we're -- certainly, where we saw our stock price get to in the quarter, we thought it was a very opportunistic time to buy back the shares in line with our plan. We do have remaining amount under our authorization at the end of the third quarter of $263.5 million. And we -- we'll certainly look to the market and be opportunistic in our repurchases there.

Operator

The next question is coming from the line of Greg Badishkanian with Citigroup.

Gregory R. Badishkanian - Citigroup Inc, Research Division

Two questions. First, just maybe a little bit of color kind of POS retail inventory levels internationally, kind of similar to when you talked about domestically.

Brian D. Goldner

Sure. If you look at POS overall we have tried to look at some of the measures where we have them. In a lot of the major markets around the world, our POS is up strong double digits, so we have good data from Mexico, France, U.K., Germany and Spain. And all those markets are -- POS is indicated as significantly stronger.

Gregory R. Badishkanian - Citigroup Inc, Research Division

In retail inventory as well?

David D. R. Hargreaves

Yes. We clearly don't get as good retail inventory information overseas as we do in the U.S. But I think overall, our retail inventories are in good shape and aren't excessive, but should support the growth of our business, which we're anticipating, which has been fairly significant all year. And we're not seeing that necessarily changing.

Gregory R. Badishkanian - Citigroup Inc, Research Division

Great. And just -- and then finally, just -- you mentioned some new initiatives haven't hit store shelves yet, so that could help growth during the holiday. Is the level of kind of those initiatives that you're going to roll out different than last year this time? Or did you hold some back this year that you didn't last year? Or is it about the same?

Brian D. Goldner

Well, we've planned more significant initiatives this year, if you think about the number of brands and products that are on those top-toy lists. Having about 20 this year was certainly more than a year ago. As well, the merchandising plans and promotional plans of our retail partners is indicative of having some greater success with those initiatives. So whether it's in the NERF business, whether it's in the LITTLEST PETSHOP business, the MY LITTLE PONY business, our KRE-O brand, which is brand new, and FURREAL FRIENDS, across the board, we have some major new initiatives and innovation, a number of different price points which offer both great value and our brands that consumers want.

Operator

Our next question is from the line of Per Ostlund of Jefferies & Company.

Per E. Ostlund - Jefferies & Company, Inc., Research Division

Really just a couple of follow-ups here, if I could. We talked about some of the elevated SD&A spending, mostly related to the international buildup. I think in past quarters, we've had conversations about spending behind SAP and bolstering the team at Hasbro Studios. How are those investments tracking? And are we kind of toward the end of that upcycle on those costs?

Brian D. Goldner

It's Brian. Good morning. If you look overall, what Deb was talking about, if you take the roughly $25 million a quarter in additional SD&A step-up this year, it's inclusive of our personnel at Hasbro Studios, which led -- which had to lead the actual initiatives in revenues in Hasbro Studios. It was in licensing personnel, which we needed prior to getting the additional revenues in licensing. It was in marketing and sales personnel, as we opened new subsidiaries. So that step-up is now going to be concluded at the end of the fourth quarter of 2011. Go forward, any additional increases in SD&A are more, I'll call them, organic, consistent with a payroll increase or a lease cost or something along those lines to run the business, but nothing like the 2011 period. We're really hitting a peak of incremental spending with our intention to be -- to deliver additional leverage and earnings power, as we become a more globally capable competitor. Recognize, our brands have been in markets for decades, but were handled by distributors. So many of our brands have been in the markets for 20, 30 years, but were handled at a much lower level, a much more modest level, because they were handled by distributors in Latin America and Asia-Pacific and in Europe. So in taking those brands on and having our own marketing and sales personnel, we have this great opportunity for significant revenues growth and earnings growth, as you're beginning to see in this quarter and as we go forward, with not a significant step-up in expenditure from 2011 to 2012.

Per E. Ostlund - Jefferies & Company, Inc., Research Division

Excellent. That's very, very helpful. Talking about the international programming rollout behind the Hasbro Studios programming. Can you just give us an update as far as how extensively the toy product itself is out there in these markets? My suspicion is it's probably very, very early in most cases, but maybe just a little clarity.

Brian D. Goldner

Sure. For the most part, with the exception of MY LITTLE PONY and some Chuck and Friends, the toy product is not out in markets yet. It's just really beginning to roll out into markets. Transformers: Prime in particular and the rest of MY LITTLE PONY as we roll out the television, will begin in earnest in 2012, consistent with our plans. And so that's -- for us, that's really where you'll start to see the integration of extensive programming placement along with the availability of toys and licensed products associated with these brands. And it's heartening to see, while we've made investments in our license personnel, that year-to-date, our licensing revenue in each category is up versus a year ago, so in Boys, Girls, Games, as well as across the -- each category. So that's been helpful as we create these placements and toys -- or excuse me, in TV to be able to see that the license revenues are increasing.

Per E. Ostlund - Jefferies & Company, Inc., Research Division

Great. Maybe one last quick one, if I could. Just harkening to an earlier question on the inventory levels, and it sounds like most of that inventory increase is pretty explainable with the inventory build internationally, which makes a lot of sense. But just curious as to whether or not FX and/or higher inputs attached to inventory, how much of an impact those might have been having as well.

David D. R. Hargreaves

If you look at our month-end rate for quarter end rate this year compared to the quarter-end at last year, it's not having a material impact on the inventory.

Operator

Our next question is from the line of Gerrick Johnson of BMO Capital Markets.

Gerrick L. Johnson - BMO Capital Markets U.S.

I was hoping we could get some comments on how your retail partners are feeling going into the holiday season?

David D. R. Hargreaves

Yes. I mean, I think our retail partners are sort of -- have planning sort of fairly robust season. Certainly, as we talk to them at the moment, they all plan that their business with us will be up this year and are starting with low inventory, which is good. I think there is a degree of caution around that. As we all know, the economy is not in great shape. We've still got high unemployment. So I think they are certain level of cautious, but they're certainly planning the business to be up.

Gerrick L. Johnson - BMO Capital Markets U.S.

Okay. And you just mentioned more just-in-time delivery. I'm wondering if there's any sort of change in the way these retailers and what could be fulfilled. More domestic fulfillment versus FOB, perhaps?

David D. R. Hargreaves

I think, thus far, we're virtually seeing a bit of a shift in -- to FOB later in the year. But I think as traditionally, when you get into the very last part of the year, it is predominantly domestic. And I think that will clearly continue or be more so.

Gerrick L. Johnson - BMO Capital Markets U.S.

Okay, so no real change in historical trends. And last one on your retail partners. You've had a lot of chance to meet with them over the last couple of weeks, I guess, to show 2012 lines, and you do have a lot of movie initiatives in '12. How are the retailers' appetite for movie-related toys in 2012?

Brian D. Goldner

The performance of our TRANSFORMERS business outside the U.S. has been phenomenal. And TRANSFORMERS box office, if you think about international box office, take 2007's movie for a moment, the box office of the 2007 TRANSFORMERS movie is not as big as the international box office performance of the 2011 movie. So as they're building more multiplexes in Russia, in China and Brazil, as the movie box office increases dramatically there, as people move into the middle class, as there's more disposable income in those emerging territories, motion picture business from both Hasbro, as well as our great partners in Lucasfilm and Marvel, play a key role in building our overall business. And so again, feel very good about the ability to be part of that part of the business. Having said that, brands like NERF, FURREAL FRIENDS, PLAY-DOH are brands that are showing exceptional growth globally. And so again, it's not just about our movie business or the TV business, but it is that branded play, that balance between all those different categories where we can drive growth.

Operator

Our next question is from the line of Rob Carroll with UBS.

Robert W. Carroll - UBS Investment Bank, Research Division

Just 2 quick ones that are mostly follow-ups. Just in terms of where inventory is year-over-year and reconciling that with the comments for a kind of a fairly robust season expected by retailers, I mean, does that -- I mean, if the season does come in as robust as, I guess, the retailer sentiment seems to be, I mean, are you guys well positioned in terms of where inventory levels are, in terms of meeting that? And then just a second one around 2012 lineup.

David D. R. Hargreaves

So I think everyone recognizes that we came into the year with too much inventory at the retailers. And I think the fact that it is down to more appropriate levels is okay. There is still enough there to support our fourth quarter growth objectives.

Robert W. Carroll - UBS Investment Bank, Research Division

Okay. And in terms of those overall growth objectives for meaningful revenue and EPS, has the definition of meaningful in-house changed at all since it was originally issued, I guess, given the macro changes in the industry?

David D. R. Hargreaves

Not at all.

Robert W. Carroll - UBS Investment Bank, Research Division

Okay. And then, secondly, just around 2012, as you guys -- as someone asked about earlier, the movie slate is pretty heavy. I mean, while you guys are flushing out the SKU counts and the product lines for 2012, do you know what percentage of the 2012 SKUs are royalty-bearing items? And I guess, how that compares historically?

Brian D. Goldner

No, I don't think we would -- I don't think we have that in here. We'd have to follow up on that note. I think it's important to note, and maybe to provide some additional color to the idea of motion pictures -- and now I understand a bit of what maybe the question was. We're not just launching the same types of product lines for each of the major motion picture initiatives for 2012, so there are some great and significant differences between what we can do with Star Wars that kicks off the year and lots of role play and other great new initiatives there. And the Avengers, BATTLESHIP is a totally different kind of complementary product line, not just -- not action figures per se, but in the gaming arena as well as some other new categories for us. G.I. Joe, different still, so -- and of course, Spider-Man is both a great role play of action figures. So there's some great complementary new product initiatives within those brands, and so it's not just all in the same category but across the departments in the store.

Operator

[Operator Instructions] And that question is coming from the line of John Taylor of Arcadia Investment Management.

John Taylor - Arcadia

I've got a couple of questions too, if I can. Brian, for you, I guess, I think I heard you say that in the U.S., Preschool was up, offsetting Boys, Girls and Puzzles. In International, Boys was up, offsetting Preschool, Girls, Puzzles, so -- there's a lot of variation between what's going on here and elsewhere. So is -- would you attribute most of those differences to timing? Or are there some differing brand dynamics that are going on that might account for those changes?

Brian D. Goldner

Yes. If you look at the International business, the other categories are down just by a tad year-to-date as well as in the quarter. So our feeling is with the fourth quarter initiatives in International and the fact that the International businesses tends to be more significantly later, we feel good about the categories across the board. In the U.S., I think it just has to do a lot with some of the timing, particularly as we look at Games and Girls. We've had some great growth in several of our Girls brands, both domestically and internationally, including FURREAL FRIENDS, MY LITTLE PONY, picked up first domestically behind the television and the new toys here. We're just beginning that process internationally. So that's where you might see some differences. On NERF, we're growing that brand very significantly, globally and through new geographies, whereas the U.S., we are staging the VORTEX launch just now. So again, a bit of a timing difference between international territories and domestic.

John Taylor - Arcadia

Okay. So there's no real -- I mean, there used to be a time where there was international lag to a domestic launch. That's pretty much behind us now.

Brian D. Goldner

Yes, I think the difference is where we don't have full capacity like a brand like KRE-O, where we can't roll out every market at once. We're seeing great success in the 7, 8 territories where we've launched, but we need to get into 2012 to get to the rest of the geographies for the TRANSFORMERS line. That's the case where you would see more particularly a lag.

John Taylor - Arcadia

Okay. And then other question on Games, I guess. So last year Q4, the year-to-year decline started to show up a little bit. And I'm wondering if, with your new merchandising and promotional plans and whatnot, what your expectations are related to price at retail. Do you think that the Games category is going to be subject to the same kind of discounting and whatnot this year, as you've seen in the last year or 2?

David D. R. Hargreaves

Well, I think at the end of the day, the price will be dependent on what our retailers choose to say to that. I do think that games are a tremendous traffic builder. They're a very good Christmas item, so I'm sure we will see games discounted in order to bring people into the store. Whether that's -- I would expect on average, probably the level of discounting is lower than last year, given that the level of inventories of games are down.

Operator

I would now like to turn the floor back over to management for closing comments.

Debbie Hancock

We'd like to thank everyone for joining the call today. The replay will be available on our website in approximately 2 hours. Additionally, management's prepared remarks will be posted on our website following this call. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation.

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