Hasbro Reports Fourth Quarter and Full-Year 2012 Financial Results and Declares 11% Increase in Quarterly Dividend
- 2012 net revenues declined 2% to $4.19 billion excluding foreign exchange; net revenues as reported for the full-year 2012 were $4.09 billion compared to $4.29 billion in 2011;
- 2012 net earnings were $370.8 million, or $2.81 per diluted share, excluding pre-tax charges of $47.2 million, or $0.26 per diluted share, associated with restructuring actions; as reported, 2012 net earnings were $336.0 million, or $2.55 per share, compared to $385.4 million, or $2.82 per diluted share in 2011;
- During the fourth quarter 2012, the Company commenced a cost savings initiative targeting $100 million in annual savings by 2015;
- Full-year 2012 operating profit margin increased to 14.7% from 14.2% (excluding restructuring charges in both years) led by gains in the U.S. and Canada segment profitability;
- Generated $534.8 million in operating cash flow during 2012;
- Company Board of Directors raises quarterly dividend 11% to $0.40 per share.
PAWTUCKET, R.I.--(BUSINESS WIRE)-- Hasbro, Inc. (NASDAQ: HAS) today reported financial results for the full-year and fourth quarter 2012. Net revenues for the full-year 2012 were $4.09 billion compared to $4.29 billion in 2011. Excluding a negative $98.5 million impact of foreign exchange, net revenues declined 2% to $4.19 billion.
Net earnings for the full-year 2012 were $336.0 million, or $2.55 per diluted share, versus $385.4 million, or $2.82 per diluted share, in 2011. 2012 net earnings include $47.2 million pre-tax, or $0.26 per diluted share, of restructuring charges. Excluding these charges, net earnings were $370.8 million, or $2.81 per diluted share. Additionally, full-year 2012 earnings per share include $0.10 per diluted share from the negative impact of foreign exchange.
The Companys reported 2011 earnings per diluted share included the impact of a $20.5 million favorable tax adjustment, or $0.15 per diluted share, and pre-tax expense of $14.4 million, or $0.07 per diluted share, related to costs associated with establishing Hasbros Gaming Center of Excellence in Rhode Island. Earnings per diluted share for 2011 excluding these two items were $2.74.
For the fourth quarter 2012, the Company reported net revenues of $1.28 billion compared to $1.33 billion in 2011. Foreign exchange had an $8.2 million negative impact on revenues in the quarter. The Company reported net earnings for the quarter of $130.3 million or $0.99 per diluted share, including $36.0 million pre-tax, or $0.21 per share, in restructuring charges, versus $139.1 million or $1.06 per diluted share in 2011. Excluding these charges, fourth quarter net earnings were $157.4 million, or $1.20 per diluted share.
In 2012, we achieved many important objectives for the year, including improving the U.S. and Canada segment operating profit margin to 15.1%, growing our Games and Girls categories and driving 16% revenue growth in the emerging markets while improving profitability, said Brian Goldner, Hasbros President and Chief Executive Officer. We did, however, face difficult year-over-year comparisons and a challenging holiday season in certain geographies.
We also began an important next step in realizing our full potential as brand builders, with the implementation of a cost savings initiative designed to better align resources and costs while delivering $100 million in annual savings by 2015, continued Goldner. Our strategy during the past several years has focused on delivering compelling brand innovation while investing in and establishing the capabilities required for developing content-rich brand initiatives that consumers and retailers around the world want. With the investments in these capabilities in place, we are now taking the next step to increase our organizations focus around fewer multi-platform global brand opportunities that are integrating play through digital and analog experiences.
Hasbro remains in a strong financial position, said Deborah Thomas, Hasbros Chief Financial Officer. In 2012, we generated $535 million in operating cash flow, reduced inventory at Hasbro (HAS) and at our retailers and we improved our operating profit margin, absent restructuring charges, versus 2011. We are taking the steps we believe necessary to lower our cost base and better align our resources behind our greatest long-term opportunities. We remain committed to investing in the long-term growth of Hasbro and delivering strong shareholder returns including our dividend and share repurchase program. Our ability to raise the dividend for the ninth time in ten years is based on the confidence we have in the long-term prospects for Hasbro.
Dividend and Share Repurchase
Hasbros Board of Directors has declared a quarterly cash dividend of $0.40 per common share. This represents an increase of $0.04 per share, or 11%, from the previous quarterly dividend of $0.36 per common share. The dividend will be payable on May 15, 2013 to shareholders of record at the close of business on May 1, 2013.
The Company paid $225.5 million in cash dividends to shareholders during 2012, including the $46.6 million accelerated payment of its fourth quarter dividend historically paid in February.
Additionally, Hasbro repurchased a total of 2.7 million shares of common stock during 2012 at a total cost of $100.0 million and an average price of $37.11 per share. At year-end, $127.3 million remained available in the current share repurchase authorization.
Full-Year 2012 Major Segment Performance
|Net Revenues ($ Millions)||Operating Profit ($ Millions)|
|FY 2012||FY 2011||% Change||FY 2012||FY 2011||% Change|
|U.S. and Canada||$2,116.3||$2,253.5||-6%||$319.1||$278.4||+15%|
|Entertainment and Licensing||$181.4||$162.2||+12%||$53.2||$42.8||+24%|
U.S. and Canada segment net revenues were $2.12 billion compared to $2.25 billion in 2011. The segments results reflect growth in the Girls and Games categories, which was more than offset by declines in Boys and Preschool. The U.S. and Canada segment reported 15% operating profit growth to $319.1 million, or 15.1% of revenues, compared to $278.4 million, or 12.4% of revenues, in 2011.
Net revenues in the International segment grew 1% absent the negative $97.9 million impact of foreign exchange. Including the impact of foreign exchange, International segment net revenues were $1.78 billion, down 4%, compared to $1.86 billion in 2011. Revenue in the International segment reflects 8% growth in Latin America offset by a decline in Europe and Asia Pacific. Additionally, the Games and Preschool category were flat in 2012, while Boys and Girls declined. The International segment reported an operating profit of $215.5 million compared to $270.6 million in 2011.
Entertainment and Licensing segment net revenues increased 12% to $181.4 million compared to $162.2 million in 2011. The segment continued to benefit from the sale of television programming in all formats in the U.S. and internationally offset by lower movie-related revenues. The Entertainment and Licensing segment reported 24% operating profit growth to $53.2 million compared to $42.8 million in 2011.
Full-Year 2012 Product Category Performance
|Net Revenues ($ Millions)|
|FY 2012||FY 2011||% Change|
In the Boys category, net revenues decreased 13% to $1.58 billion. MARVEL branded products, driven primarily by MARVELS THE AVENGERS and THE AMAZING SPIDER-MAN, posted strong year-over-year gains globally. This growth was more than offset by expected declines in TRANSFORMERS and BEYBLADE products following a strong 2011 for both lines.
Net revenues in the Games category increased 2% to $1.19 billion. MAGIC: THE GATHERING, TWISTER, BATTLESHIP and Boys Action Gaming, including TRANSFORMERS BOT SHOTS and ANGRY BIRDS STAR WARS, all helped the category grow in 2012.
The Girls category net revenues increased 7% to $792.3 million. FURBY was very successful in 2012 and will launch globally in 2013. MY LITTLE PONY posted strong growth for the year and the addition of ONE DIRECTION to the Girls category was favorable.
Net revenues in the Preschool category declined 5% to $527.6 million. The PLAYSKOOL HEROES line had a strong 2012 and PLAY-DOH product revenues grew in the year. The category faced difficult comparisons against the initial launch of SESAME STREET products in 2011.
Hasbro will webcast its fourth quarter and full-year 2012 earnings conference call at 5:00 p.m. Eastern Time today. To listen to the live webcast, go to http://investor.hasbro.com. The replay of the call will be available on Hasbros web site approximately 2 hours following completion of the call. Additionally, presentation slides associated with todays conference call are available on Hasbros website at http://investor.hasbro.com.
Hasbro, Inc. (NASDAQ: HAS) is a branded play company dedicated to fulfilling the fundamental need for play for children and families through creative expression of the Companys world class brand portfolio, including TRANSFORMERS, MONOPOLY, PLAY-DOH, MY LITTLE PONY, MAGIC: THE GATHERING, NERF, LITTLEST PET SHOP and G.I. JOE. From toys and games, to television programming, motion pictures, digital gaming and a comprehensive licensing program, Hasbro strives to delight its global customers with innovative play and entertainment experiences, in a variety of forms and formats, anytime and anywhere. The Company's Hasbro Studios develops and produces television programming for more than 170 markets around the world, and for the U.S. on The Hub TV Network, part of a multi-platform joint venture between Hasbro and Discovery Communications. Through the Company's deep commitment to corporate social responsibility, including philanthropy, Hasbro is helping to build a safe and sustainable world for future generations and to positively impact the lives of millions of children and families every year. It has been recognized for its efforts by being named one of the "World's Most Ethical Companies," is ranked as one of Corporate Responsibility Magazine's "100 Best Corporate Citizens" and was named in the top 10 of the Civic 50 for its efforts to improve the quality of life in the communities where it does business. Learn more at www.hasbro.com.
© 2013 Hasbro, Inc. All Rights Reserved.
Certain statements in this release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include expectations concerning the Companys potential performance in the future, including with respect to its planned cost savings initiative and profitability, and the Companys ability to achieve its other financial and business goals and may be identified by the use of forward-looking words or phrases. The Company's actual actions or results may differ materially from those expected or anticipated in the forward-looking statements due to both known and unknown risks and uncertainties. Specific factors that might cause such a difference include, but are not limited to: (i) the Company's ability to design, manufacture, source and ship new and continuing products on a timely and cost-effective basis, as well as interest in and purchase of those products by retail customers and consumers in quantities and at prices that will be sufficient to profitably recover the Companys development, manufacturing, marketing, royalty and other costs; (ii) global economic conditions, including recessions, credit crises or other economic shocks or downturns affecting the United States, Europe or any of the Companys other markets which can negatively impact the retail and/or credit markets, the financial health of the Companys retail customers and consumers, and consumer and business confidence, and which can result in lower employment levels, less consumer disposable income, and lower consumer spending, including lower spending on purchases of the Companys products; (iii) other factors which can lower discretionary consumer spending, such as higher costs for fuel and food, drops in the value of homes or other consumer assets, and high levels of consumer debt; (iv) potential difficulties or delays the Company may experience in implementing cost savings and efficiency enhancing initiatives in an effective manner; (v) other economic and public health conditions in the markets in which the Company and its customers and suppliers operate which impact the Company's ability and cost to manufacture and deliver products, such as higher fuel and other commodity prices, higher labor costs, higher transportation costs, outbreaks of disease which affect public health and the movement of people and goods, and other factors, including government regulations, which can create potential manufacturing and transportation delays or impact costs; (vi) currency fluctuations, including movements in foreign exchange rates, which can lower the Companys net revenues and earnings, and significantly impact the Companys costs; (vii) the concentration of the Company's customers, potentially increasing the negative impact to the Company of difficulties experienced by any of the Companys customers or changes by the Companys customers in their purchasing or selling patterns; (viii) greater than expected costs, or unexpected delays or difficulties, associated with The Hub TV Network, the Companys joint venture television network with Discovery Communications, LLC, Hasbro Studios, or the creation of new content to appear on The Hub TV Network and elsewhere; (ix) consumer interest in and acceptance of The Hub TV Network, and programming created by Hasbro Studios, and other factors impacting the financial performance of the network and Hasbro Studios; (x) greater than expected costs or unexpected delays or difficulties associated with the creation of Hasbros Gaming Center of Excellence and the execution of the Companys strategy for driving innovation and immersive play experiences in its gaming business; (xi) unexpected delays or difficulties in the Companys execution of its plans to drive growth and increased profitability in its U.S. and Canada business; (xii) the inventory policies of the Companys retail customers, including retailers potential decisions to lower the inventories they are willing to carry, even if it results in lost sales, as well as the concentration of the Company's revenues in the second half and fourth quarter of the year, which coupled with reliance by retailers on quick response inventory management techniques increases the risk of underproduction of popular items, overproduction of less popular items and failure to achieve tight and compressed shipping schedules; (xiii) delays, increased costs or difficulties associated with any of our planned entertainment initiatives; (xiv) work stoppages, slowdowns or strikes, which may impact the Company's ability to manufacture or deliver product in a timely and cost-effective manner; (xv) the bankruptcy or other lack of success of one of the Company's significant retailers which could negatively impact the Company's revenues or bad debt exposure; (xvi) 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; (xvii) concentration of manufacturing for many of the Companys products in the Peoples Republic of China and the associated impact to the Company of public health conditions and other factors affecting social and economic activity in China, affecting the movement of products into and out of China, and impacting the cost of producing products in China and exporting them to other countries; (xviii) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xix) other market conditions, third party actions or approvals and the impact of competition which could reduce demand for the Companys products or delay or increase the cost of implementation of the Company's programs or alter the Company's actions and reduce actual results; (xx) the risk that anticipated benefits of acquisitions may not occur or be delayed or reduced in their realization; and (xxi) other risks and uncertainties as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission (SEC) filings. 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.
This press release includes a non-GAAP financial measure as defined under SEC rules, specifically EBITDA. EBITDA represents net earnings excluding interest expense, income taxes, depreciation and amortization. As required by SEC rules, we have provided reconciliation on the attached schedule of this measure to the most directly comparable GAAP measure. Management believes that EBITDA is one of the appropriate measures for evaluating the operating performance of the Company because it reflects the resources available for strategic opportunities including, among others, to invest in the business, strengthen the balance sheet, and make strategic acquisitions. However, this measure should be considered in addition to, not as a substitute for, or superior to, net earnings or other measures of financial performance prepared in accordance with GAAP as more fully discussed in the Company's financial statements and filings with the SEC. As used herein, "GAAP" refers to accounting principles generally accepted in the United States of America. This press release also includes the Companys Consolidated and International segment net revenues, net earnings and earnings per share excluding the impact of changes in exchange rates. Management believes that the presentation of Consolidated and International segment net revenues, net earnings and earnings per share excluding the impact of exchange rate changes provides information that is helpful to an investors understanding of the underlying business performance absent exchange rate fluctuations which are beyond the Companys control. Further, the Company provided the 2012 and 2011 diluted earnings per share absent restructuring charges and favorable tax adjustment as well as 2012 and 2011 operating profit and operating proft margin absent restructing charges to assist investors in understanding the comparability of the Companys results.
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(Thousands of Dollars)|
|Cash and Cash Equivalents||$||849,701||$||641,688|
|Accounts Receivable, Net||1,029,959||1,034,580|
|Other Current Assets||312,493||243,431|
|Total Current Assets||2,508,202||2,253,692|
|Property, Plant and Equipment, Net||230,414||218,021|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Payables and Accrued Liabilities||736,070||761,914|
|Total Current Liabilities||960,435||942,344|
|Total Shareholders' Equity||1,507,379||1,417,515|
|Total Liabilities and Shareholders' Equity||$||4,325,387||$||4,130,774|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|(Thousands of Dollars and Shares Except Per Share Data)||Quarter Ended||Year Ended|
|Costs and Expenses:|
|Cost of Sales||516,444||40.2||%||591,483||44.5||%||1,671,980||40.9||%||1,836,263||42.8||%|
|Amortization of Intangibles||15,777||1.2||%||14,269||1.1||%||50,569||1.3||%||46,647||1.1||%|
|Program Production Cost Amortization||15,850||1.3||%||17,716||1.3||%||41,800||1.0||%||35,798||0.8||%|
|Selling, Distribution and Administration||245,202||19.1||%||202,155||15.2||%||847,347||20.7||%||822,094||19.2||%|
|Other (Income) Expense, Net||3,922||0.3||%||5,115||0.4||%||7,242||0.2||%||18,566||0.4||%|
|Earnings before Income Taxes||173,660||13.5||%||189,144||14.2||%||453,402||11.1||%||486,393||11.4||%|
|Per Common Share|
|Cash Dividends Declared||$||0.36||$||0.30||$||1.44||$||1.20|
|Weighted Average Number of Shares|
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS|
|(Thousands of Dollars)|
|Dec. 30, 2012||Dec. 25, 2011|
|Cash Flows from Operating Activities:|
|Changes in Operating Assets and Liabilities||
|Net Cash Provided by Operating Activities||534,796||396,069|
|Cash Flows from Investing Activities:|
|Additions to Property, Plant and Equipment||(112,091||)||(99,402||)|
|Net Cash Utilized by Investing Activities||(106,172||)||(107,615||)|
|Cash Flows from Financing Activities:|
|Net Proceeds from Short-term Borrowings||43,106||167,339|
|Purchases of Common Stock||(98,005||)||(423,008||)|
|Stock-based Compensation Transactions||69,440||39,455|
|Net Cash Utilized by Financing Activities||(219,379||)||(375,685||)|
|Effect of Exchange Rate Changes on Cash||(1,232||)||1,123|
|Cash and Cash Equivalents at Beginning of Year||641,688||727,796|
|Cash and Cash Equivalents at End of Year||$||849,701||$||641,688|
|SUPPLEMENTAL FINANCIAL DATA|
|(Thousands of Dollars)||Quarter Ended||Year Ended|
Dec. 30, 2012
|Dec. 25, 2011||
|Dec. 30, 2012||Dec. 25, 2011||% Change|
Major Segment Results
U.S. and Canada Segment:
|External Net Revenues||$||606,185||$||592,794||2||%||$||2,116,297||$||2,253,458||-6||%|
|External Net Revenues||607,753||669,788||-9||%||1,782,119||1,861,901||-4||%|
Entertainment and Licensing Segment:
|External Net Revenues||65,812||64,089||3||%||181,430||162,233||12||%|
International Segment Net Revenues by Major Geographic Region
Net Revenues by Product Class
|Total Net Revenues||$||1,283,529||$||1,329,338||$||4,088,983||$||4,285,589|
Reconciliation of EBITDA
|Amortization of Intangibles||15,777||14,269||50,569||46,647|
Operating Profit, as Adjusted
|Dec. 30, 2012||
% Net Revenues
|Dec. 25, 2011||% Net Revenues|
|Operating Profit, as Reported||$||551,785||13.5||%||$||593,981||13.9||%|
|Operating Profit, as Adjusted||$||598,961||14.7||%||$||608,366||14.2||%|
Net Earnings and Earnings per Share Excluding
Restructuring Charges and Tax Benefit
Dec. 30, 2012
Dec. 25, 2011
|Net Earnings, as Reported||$||335,999||$||2.55||$||385,367||$||2.82|
|Restructuring Charges, Net of Tax||34,762||0.26||9,178||0.07|
|2011 Tax Benefit||-||-||(20,477||)||(0.15||)|
|Net Earnings, as Adjusted||$||370,761||$||2.81||$||374,068||$||2.74|
Debbie Hancock, 401-727-5401
Wayne Charness, 401-727-5983
Source: Hasbro, Inc.Copyright Business Wire 2013