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Hasbro Inc (HAS) SEC Filing 8-K Material Event for the period ending Monday, April 23, 2018

Hasbro Inc

CIK: 46080 Ticker: HAS

 

Exhibit 99.1 

 

 

For Immediate Release

 

Hasbro Reports First Quarter 2018 Financial Results

·         First quarter 2018 revenues decreased to $716.3 million due to the liquidation of Toys“R”Us and retail inventory overhang, primarily in Europe;

·         Reported net loss of $112.5 million or $0.90 per diluted share, includes after-tax expenses of $61.4 million associated with Toys“R”Us; $15.7 million of severance costs associated with an acceleration of the Company’s ongoing commercial organization transformation; and a net charge of $47.8 million related to U.S. tax reform (the “Non-GAAP Adjustments”);

·         Adjusted net earnings of $12.4 million or $0.10 per diluted share;

·         Ended the quarter with $1.6 billion in cash and returned $109.6 million to shareholders; $70.8 million in dividends and $38.8 million in share repurchases.

 

Pawtucket, R.I., April 23, 2018 -- Hasbro, Inc. (NASDAQ: HAS) today reported financial results for the first quarter 2018. Net revenues for the first quarter 2018 decreased 16% to $716.3 million versus $849.7 million in 2017. The decrease in revenues is the result of the liquidation of Toys“R”Us in the U.S. and U.K., along with uncertainty in its other operations, as well as retail inventory overhang, primarily in Europe.

 

Net loss for the first quarter 2018 was $112.5 million, or $0.90 per diluted share, compared to net earnings of $68.6 million, or $0.54 per diluted share, in 2017. Excluding the Non-GAAP Adjustments noted above, adjusted net earnings for the quarter were $12.4 million or $0.10 per diluted share. The first quarter 2018 was a 13-week period versus the first quarter 2017 which was a 14-week period.

 

“The Hasbro teams executed extremely well during a challenging first quarter,” said Brian Goldner, Hasbro’s chairman and chief executive officer. “Hasbro brands are resonating with consumers and consumer takeaway is positive. However, as we discussed earlier in the year, our first quarter was expected to be difficult. We are working to put the near-term disruption from Toys“R”Us behind us. Our global retailers view this as an opportunity in a key consumer category and are partnering with Hasbro to develop growth plans for our brands. New Hasbro initiatives shipping in this quarter and beyond won’t be caught up in the Toys“R”Us liquidation process. With the rapid shift to a converged retail environment, we accelerated plans we originally had spread throughout the year to transform our commercial organization on a more immediate basis.

 


 

“Our underlying financial strength is sound, and despite the near-term challenges associated with a major customer liquidation, Hasbro is positioned to manage a challenging 2018 and drive growth in 2019 and beyond,” said Deborah Thomas, Hasbro’s chief financial officer.  “The quarter’s revenue and profits were negatively impacted by lower revenues and higher expenses associated with events that do not reflect the health of our underlying business. We remain on track to meet our goal of generating $600 to $700 million in operating cash flow this year while investing to build our brands, transform our organization and return cash to shareholders.”

 

First Quarter 2018 Major Segment Performance

 

 

 

Net Revenues

($ Millions)

Operating Profit (Loss)  ($ Millions)

Adjusted Operating Profit (Loss)  ($M)

Q1 2018

Q1 2017

% Change

Q1 2018

Q1 2017

Q1 2018

U.S. and Canada

$364.3

$451.6

-19%

$(23.4)

$64.8

$28.9

International

$287.9

$345.3

-17%

$(56.1)

$0.5

$(44.9)

Entertainment and Licensing

$64.0

$52.7

+21%

$13.9

$11.3

$13.9

 

First quarter 2018 U.S. and Canada segment net revenues decreased 19% to $364.3 million compared to $451.6 million in 2017. The segment reported an operating loss of $23.4 million compared to an operating profit of $64.8 million in 2017. The segment’s first quarter performance reflected the Toys“R”Us liquidation both in lower revenues and $52.3 million of pre-tax expenses, primarily bad debt.  

  

First quarter 2018 International segment net revenues were $287.9 million compared to $345.3 million in 2017. Revenues in the segment were negatively impacted by efforts to clear excess inventory in Europe, as well as the Toys“R”Us U.K. liquidation and uncertainty in its other international operations. International segment revenues include a favorable $19.5 million impact of foreign exchange. On a regional basis, Europe net revenues decreased 28%, Latin America increased 2% and Asia Pacific increased 3%. Emerging markets net revenues decreased 5% in the quarter. The International segment reported an operating loss of $56.1 million compared to an operating profit of $0.5 million in 2017. The decline in operating profit reflects lower revenues and includes $11.2 million of pre-tax expense associated with Toys“R”Us.  

 

Entertainment and Licensing segment net revenues increased 21% to $64.0 million compared to $52.7 million in 2017. Operating profit increased 23% to $13.9 million, or 21.7% of net revenues, compared to $11.3 million, or 21.5% of net revenues, in 2017. Revenue growth was driven by consumer products and digital gaming. During the quarter, the Company adopted ASC 606 Revenue from Contracts with Customers which favorably impacted the timing of revenue recognition in the quarter.

 

Additional pre-tax expense of $7.0 million associated with Toys“R”Us and $17.3 million from accelerating the commercial organization transformation are included in the Corporate and Eliminations segment.

 

 


 

First Quarter 2018 Brand Portfolio Performance

 

 

Net Revenues ($ Millions)

Q1 2018

Q1 2017

% Change

Franchise Brands

$361.7

$449.2

-19%

Partner Brands

$200.6

$213.0

-6%

Hasbro Gaming*

$105.2

$135.8

-22%

Emerging Brands

$48.8

$51.8

-6%

 

*Hasbro’s total gaming category, including all gaming revenue, most notably MAGIC: THE GATHERING and MONOPOLY, which are included in Franchise Brands in the table above, totaled $203.5 million for the first quarter 2018, down 20%, versus $253.3 million for the first quarter 2017. Hasbro believes its gaming portfolio is a competitive differentiator and views it in its entirety.

 

First quarter 2018 revenues were negatively impacted across all Brand Portfolio categories by the liquidation of Toys“R”Us in the U.S. and U.K., along with uncertainty in its other operations, as well as retail inventory overhang, primarily in Europe.

 

First quarter 2018 Franchise Brand revenues decreased 19% to $361.7 million. Growth in MONOPOLY was offset by declines in all other Franchise Brands in the quarter. Franchise Brand revenues grew in the Entertainment and Licensing segment and declined in the U.S. and Canada and International segments. 

 

Partner Brand revenues declined 6% to $200.6 million. Revenue growth in MARVEL and BEYBLADE was more than offset by declines in other Partner Brands. Partner Brand revenues increased slightly in the U.S. and Canada segment, but declined in the International segment.

 

Hasbro Gaming revenue decreased 22% to $105.2 million. Revenue gains in DUNGEONS AND DRAGONS, JENGA and several new game launches were offset by declines in other properties. Hasbro’s total gaming category was down 20% to $203.5 million. Hasbro Gaming revenues declined in all three major operating segments.

 

Emerging Brands revenue declined 6% to $48.8 million. Revenue increases from STRETCH ARMSTRONG and LITTLEST PET SHOP products were offset by declines in other Emerging Brands. Emerging Brands revenues grew in the Entertainment and Licensing segment and declined in the U.S. and Canada and International segments.

 

Dividend and Share Repurchase

 

The Company paid $70.8 million in cash dividends to shareholders during the first quarter 2018.  The next quarterly cash dividend payment of $0.63 per common share is scheduled for May 15, 2018 to shareholders of record at the close of business on May 1, 2018. 

 

During the first quarter, Hasbro repurchased 427.1 thousand shares of common stock at a total cost of $38.8 million and an average price of $90.81 per share.  At quarter-end, $139.2 million remained available in the current share repurchase authorization. 

 


 

Non-GAAP Adjustments

 

During the first quarter, the Company recorded lower revenues in part due to the loss of revenues from Toys“R”Us in the U.S. and Europe, as a result of the related liquidations as well as uncertainty in the other Toys“R”Us operations. In association with this, the Company recorded after-tax expenses of $61.4 million, primarily bad debt. 

 

Hasbro also recorded $15.7 million of after tax expense associated with accelerating its commercial organization transformation. Over the past several years, the Company has invested in developing an omni-channel retail presence, and in 2018 is bringing onboard new skill sets and talent to lead in today’s converged retail environment. These actions were initially planned to occur over time, commencing later this year. Given the current retail environment the Company chose to accelerate its actions.

 

In 2017, the Company recognized a provisional net charge of $296.5 million from the U.S. Tax Cuts and Jobs Act. Additional changes and guidance issued since year end resulted in a first quarter 2018 charge of $47.8 million, or $0.38 per diluted share. This charge is related to an increase in the Company’s repatriation tax liability and a reversal of tax benefits no longer permitted under the new guidance. The Company expects its full-year underlying tax rate to be at the high end of its previously projected range of 15% to 17%.

 

Conference Call Webcast

 

Hasbro will webcast its first quarter 2018 earnings conference call at 8:30 a.m. Eastern Time today.  To listen to the live webcast and access the accompanying presentation slides, please go to http://investor.hasbro.com.   The replay of the call will be available on Hasbro’s web site approximately 2 hours following completion of the call. 

 

About Hasbro: Hasbro (NASDAQ: HAS) is a global play and entertainment company committed to Creating the World's Best Play Experiences. From toys and games to television, movies, digital gaming and consumer products, Hasbro offers a variety of ways for audiences to experience its iconic brands, including NERF, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, MONOPOLY, BABY ALIVE and MAGIC: THE GATHERING, as well as premier partner brands. Through its entertainment labels, Allspark Pictures and Allspark Animation, the Company is building its brands globally through great storytelling and content on all screens. Hasbro is committed to making the world a better place for children and their families through corporate social responsibility and philanthropy. Hasbro ranked No. 1 on the 2017 100 Best Corporate Citizens list by CR Magazine, and has been named one of the World’s Most Ethical Companies® by Ethisphere Institute for the past seven years. Learn more at www.hasbro.com, and follow us on Twitter (@Hasbro & @HasbroNews) and Instagram (@Hasbro).

 

© 2018 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

 


 

Company’s potential performance in the future and the Company’s ability to achieve its 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, develop, produce, manufacture, source and ship 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 recover the Company’s costs and earn a profit; (ii) downturns in economic conditions impacting one or more of the markets in which the Company sells products, such as the economic downturns which impacted the United Kingdom and Brazil in 2017, which can negatively impact the Company’s retail customers and consumers, and which can result in lower employment levels, lower consumer disposable income, lower retailer inventories and lower spending, including lower spending on purchases of the Company’s 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) consumer interest in entertainment properties, such as motion pictures, for which the Company is developing and marketing products, and the ability to drive sales of products associated with such entertainment properties, (v) potential difficulties or delays the Company may experience in implementing cost savings and efficiency enhancing initiatives; (vi) other economic and public health conditions or regulatory changes in the markets in which the Company and its customers and suppliers operate which could create delays or increase the Company’s costs, such as higher commodity prices, labor costs or transportation costs, or outbreaks of disease; (vii) currency fluctuations, including movements in foreign exchange rates, which can lower the Company’s net revenues and earnings, and significantly impact the Company’s costs; (viii) the concentration of the Company's customers, potentially increasing the negative impact to the Company of difficulties experienced by any of the Company’s customers or changes in their purchasing or selling patterns; (ix) consumer interest in and acceptance of the Discovery Family Channel, and programming created by Hasbro Studios, and other factors impacting the financial performance of the network and Hasbro Studios; (x) the inventory policies of the Company’s retail customers, including retailers’ potential decisions to lower their inventories, 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 compressed shipping schedules; (xi) delays, increased costs or difficulties associated with any of our or our partners’ planned digital applications or media initiatives; (xii) work disruptions, which may impact the Company's ability to manufacture or deliver product in a timely and cost-effective manner; (xiii) the bankruptcy or other lack of success of one of the Company's significant retailers, such as the bankruptcy of Toys“R”Us in the United States and Canada in the fourth quarter of 2017 and the beginning of liquidation of those businesses, as well as economic difficulty of Toys“R”Us in other markets, which could negatively impact the Company's revenues or bad debt exposure; (xiv) the impact of competition on revenues, margins and other aspects of the Company's business, including the ability to offer Company products which consumers choose to buy instead of competitive products, the ability to secure, maintain and renew popular licenses and the ability to attract and retain talented employees; (xv) concentration of manufacturing for many of the Company’s products in the People’s Republic of China and the associated impact to the Company of social, economic or public health conditions and other factors affecting China, the movement of products into and out of China, the cost of producing products in China and exporting them to other countries, including without limitation, the potential application of tariffs to products the Company purchases from vendors in China, which would significantly increase the price of the Company’s products and harm sales; (xvi) the risk of product recalls or product liability suits and costs associated with product safety

 


 

regulations; (xvii) the impact of other market conditions, third party actions or approvals and competition which could reduce demand for the Company’s products or delay or increase the cost of implementation of the Company's programs or alter the Company's actions and reduce actual results; (xviii) changes in tax laws or regulations, or the interpretation and application of such laws and regulations, such as what may occur as the U.S. Tax Cuts and Jobs Act is interpreted and applied, which may cause the Company to alter tax reserves or make other changes which significantly impact its reported financial results; (xix) the impact of litigation or arbitration decisions or settlement actions; and (xx) 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 non-GAAP financial measures as defined under SEC rules, specifically Adjusted net earnings and adjusted earnings per diluted share, excluding the impact of charges associated with the Toys“R”Us liquidation; severance costs and U.S. tax reform in the first quarter of 2018, as well as adjusted operating profit absent the impact of the charges associated with the Toys“R”Us liquidation and severance costs. Also included in the financial tables attached to this release are the non-GAAP financial measures of EBITDA and Adjusted EBITDA. EBITDA represents net earnings attributable to Hasbro, Inc. excluding interest expense, income taxes, depreciation and amortization. Adjusted EBITDA also excludes the impact of charges associated with the Toys“R”Us liquidation and severance costs in the first quarter of 2018. As required by SEC rules, we have provided reconciliation on the attached schedule of these measures to the most directly comparable GAAP measure. Management believes that Adjusted net earnings, Adjusted earnings per diluted share and adjusted operating profit absent the impact of charges associated with the Toys“R”Us liquidation and severance costs in the first quarter of 2018 provides investors with an understanding of the underlying performance of the Company’s business absent these unusual events.  Management believes that EBITDA and Adjusted EBITDA are appropriate measures for evaluating the operating performance of the Company because they reflect the resources available for strategic opportunities including, among others, to invest in the business, strengthen the balance sheet and make strategic acquisitions. These non-GAAP measures 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. 

 

HAS-E

Investor Contact:  Debbie Hancock | Hasbro, Inc. | (401) 727-5401 | debbie.hancock@hasbro.com

Press Contact: Julie Duffy | Hasbro, Inc. | (401) 727-5931 | julie.duffy@hasbro.com

 

# # #

 

(Tables Attached)

  

 


 

HASBRO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Thousands of Dollars)

 

 

 

 

 

April 1, 2018

 

April 2, 2017

  

ASSETS

 

 

 

 

 

 

  

Cash and Cash Equivalents

 

$

1,598,944

 

$

1,463,081

 

Accounts Receivable, Net

 

 

612,698

 

 

676,945

  

Inventories

 

 

517,439

 

 

416,232

  

Other Current Assets

 

 

292,756

 

 

243,475

  

     Total Current Assets

 

 

3,021,837

 

 

2,799,733

  

Property, Plant and Equipment, Net

 

 

262,418

 

 

270,023

 

Other Assets

 

 

1,444,817

 

 

1,576,114

 

     Total Assets

 

$

4,729,072

 

$

4,645,870

  

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

  

Short-term Borrowings

 

$

21,611

 

$

65,294

 

Current Portion of Long-term Debt

 

 

                      - 

 

 

349,814

  

Payables and Accrued Liabilities

 

 

830,915

 

 

786,706

  

     Total Current Liabilities

 

 

852,526

 

 

1,201,814

  

Long-term Debt

 

 

1,693,977

 

 

1,198,896

  

Other Liabilities

 

 

611,210

 

 

393,516

  

     Total Liabilities

 

 

3,157,713

 

 

2,794,226

  

Total Shareholders' Equity

 

 

1,571,359

 

 

1,851,644

 

  

 

 

 

 

 

 

 

     Total Liabilities and Shareholders' Equity

 

$

4,729,072

 

$

4,645,870

 


 

HASBRO, INC.

 

 

 

 

 

 

 

 

 

  

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

(Thousands of Dollars and Shares Except Per Share Data)

 

Quarter Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 1, 2018

 

% Net Revenues

 

 

April 2, 2017

 

% Net Revenues

Net Revenues

 

$

716,341

 

100.0%

 

$

849,663

 

100.0%

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

     Cost of Sales

 

 

255,187

 

35.6%

 

 

306,082

 

36.0%

     Royalties

 

 

69,652

 

9.7%

 

 

64,380

 

7.6%

     Product Development

 

 

57,384

 

8.0%

 

 

62,586

 

7.4%

     Advertising

 

 

68,016

 

9.5%

 

 

80,936

 

9.5%

     Amortization of Intangibles

 

 

6,478

 

0.9%

 

 

7,881

 

0.9%

     Program Production Cost Amortization

 

 

12,034

 

1.7%

 

 

5,570

 

0.7%

     Selling, Distribution and Administration

 

 

328,009

 

45.8%

 

 

243,885

 

28.7%

          Operating Profit (Loss)

 

 

(80,419)

 

-11.2%

 

 

78,343

 

9.2%

Interest Expense

 

 

22,809

 

3.2%

 

 

24,456

 

2.9%

Other (Income) Expense, Net

 

 

(14,840)

 

-2.1%

 

 

(16,950)

 

-2.0%

           Earnings (Loss) before Income Taxes

 

 

(88,388)

 

-12.3%

 

 

70,837

 

8.3%

Income Taxes

 

 

24,104

 

3.4%

 

 

2,238

 

0.3%

          Net Earnings (Loss)

 

 

(112,492)

 

-15.7%

 

 

68,599

 

8.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share

 

 

 

 

 

 

 

 

 

 

          Net Earnings (Loss)

 

 

 

 

 

 

 

 

 

 

  

 

  

Basic

 

 

$

(0.90)

 

 

 

$

0.55

 

 

  

 

  

Diluted

 

 

$

(0.90)

 

 

 

$

0.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Cash Dividends Declared

 

$

0.63

 

 

 

$

0.57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Shares

 

 

 

 

 

 

 

 

 

 

 

  

 

Basic

 

 

 

125,073

 

 

 

 

125,182

 

 

 

  

 

Diluted

 

 

 

125,073

 

 

 

 

127,229

 

 

 


 

HASBRO, INC.

 

 

 

 

  

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

(Unaudited)

 

 

 

 

 

(Thousands of Dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

April 1, 2018

 

 

April 2, 2017

Cash Flows from Operating Activities:

 

 

 

 

 

  Net Earnings

$

(112,492)

 

$

68,599

  Non-cash Adjustments

 

33,615

 

 

59,927

  Changes in Operating Assets and Liabilities

 

396,616

 

 

283,402

    Net Cash Provided by Operating Activities

 

317,739

 

 

411,928

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

  Additions to Property, Plant and Equipment

 

(28,235)

 

 

(30,243)

  Other

 

2,007

 

 

(781)

   Net Cash Utilized by Investing Activities

 

(26,228)

 

 

(31,024)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

  Net Repayments of Short-term Borrowings

 

(133,698)

 

 

(107,336)

  Purchases of Common Stock

 

(38,126)

 

 

(19,312)

  Stock-based Compensation Transactions

 

19,518

 

 

9,743

  Dividends Paid

 

(70,781)

 

 

(63,404)

  Employee Taxes Paid for Shares Withheld

 

(52,637)

 

 

(31,391)

   Net Cash Utilized by Financing Activities

 

(275,724)

 

 

(211,700)

 

 

 

 

 

 

Effect of Exchange Rate Changes on Cash

 

1,923

 

 

11,592

 

 

 

 

 

 

Cash and Cash Equivalents at Beginning of Period

 

1,581,234

 

 

1,282,285

 

 

 

 

 

 

Cash and Cash Equivalents at End of Period

$

1,598,944

 

$

1,463,081

 

 

 

 

 

 

 


 

HASBRO, INC.

 

 

 

 

 

  

  

SUPPLEMENTAL FINANCIAL DATA

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

(Thousands of Dollars)

 

Quarter Ended

 

 

 

 

 

 

 

April 1, 2018

 

 

April 2, 2017

 

% Change

Major Segment Results

 

 

 

 

 

 

 

 U.S. and Canada Segment:

 

 

 

 

 

 

 

   External Net Revenues

$

364,297

 

$

451,577

 

-19%

   Operating Profit (Loss)

 

(23,383)

 

 

64,754

 

-136%

   Operating Margin

 

-6.4%

 

 

14.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 International Segment:

 

 

 

 

 

 

 

   External Net Revenues

 

287,945

 

 

345,281

 

-17%

   Operating Profit (Loss)

 

(56,088)

 

 

544

 

-10410%

   Operating Margin

 

-19.5%

 

 

0.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 Entertainment and Licensing Segment:

 

 

 

 

 

 

 

   External Net Revenues

 

64,021

 

 

52,729

 

21%

   Operating Profit

 

13,906

 

 

11,346

 

23%

   Operating Margin

 

21.7%

 

 

21.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

International Segment Net Revenues by Major Geographic Region

 

 

 

 

 

  Europe

$

155,562

 

$

216,120

 

-28%

  Latin America

 

65,961

 

 

64,756

 

2%

  Asia Pacific

 

66,422

 

 

64,405

 

3%

 

Total

 

 

$

287,945

 

$

345,281

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenues by Brand Portfolio

 

 

 

 

 

 

 

  Franchise Brands

$

361,706

 

$

449,160

 

-19%

  Partner Brands

 

200,592

 

 

212,962

 

-6%

  Hasbro Gaming

 

105,227

 

 

135,766

 

-22%

  Emerging Brands

 

48,816

 

 

51,775

 

-6%

 

Total Net Revenues

$

716,341

 

$

849,663

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise and Emerging Brands net revenues for the first quarter of 2017 have been restated to reflect the

 

 

elevation of BABY ALIVE from Emerging Brands to Franchise Brands and the move of LITTLEST

 

 

PET SHOP from Franchise Brands to Emerging Brands.

 

 

 

 

 

 

 

 

 

 

 

 

 

Hasbro's total gaming category, including all gaming revenue, most notably MAGIC: THE GATHERING

 

 

and MONOPOLY, totaled $203,542 for the first quarter of 2018, down 20%, from revenues of $253,289

 

 

for the first quarter of 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 


 

HASBRO, INC.

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL DATA

 

 

 

 

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES      

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

(Thousands of Dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Earnings and Earnings per Share Excluding the Impact of Toys"R"Us, Severance and

 

 

 

Tax Reform

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

Quarter Ended

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

April 1, 

 

Per Share

 

 

April 2, 

 

Per Share

(all adjustments reported after-tax)

 

 

 

2018

 

Amount (1)

 

 

2017

 

Amount

Net Earnings (Loss), as Reported

$

(112,492)

 

$

(0.90)

 

$

68,599

 

$

0.54

Incremental costs impact of Toys"R"Us (2)

 

61,372

 

 

0.49

 

 

-

 

 

-

Severance (3)

 

15,699

 

 

0.12

 

 

-

 

 

-

Impact of Tax Reform (4)

 

47,790

 

 

0.38

 

 

-

 

 

-

Net Earnings, as Adjusted

$

12,369

 

$

0.10

 

$

68,599

 

$

0.54

(1) Diluted Per Share Amount for the impact of Toys"R"Us, severance and Tax Reform and net earnings,

as adjusted, for Q1 2018 are calculated using dilutive shares of 126,095 for the quarter.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) In the first quarter of 2018, Toys"R"Us announced a liquidation of its U.S. operations, as well as other retail

impacts around the globe. As a result, the Company recognized incremental bad debt expense on outstanding

Toys R Us receivables, royalty expense, inventory obsolescence as well as other related costs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) In the first quarter of 2018, the Company incurred severance charges, primarily outside the U.S., related to

accelerating actions associated with a new go-to-market strategy designed to be more omni-channel and

e-commerce focused. These charges were included in Corporate and Eliminations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4) Represents the adjustment of certain provisional amounts recorded in the fourth quarter of 2017 based on

additional guidance issued by the U.S. Treasury Department and the Internal Revenue Service in the

first quarter of 2018.

 

 


 

The impact of the above items on Operating Profit (Loss), and impacted segments, and Income Taxes for quarter

ended April 1, 2018 is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less Impact

 

Excluding

 

 

 

 

 

 

 

 

 

 

% Net

 

of Above

 

Impact of

 

% Net

2018

As Reported

 

Revenues

 

Items (5)

 

Above Items

 

Revenues

Operating Profit (Loss)

$

(80,419)

 

-11.2%

 

$

87,777

 

$

7,358

 

 

1.0%

U.S. and Canada Segment

 

(23,383)

 

-6.4%

 

 

52,277

 

 

28,894

 

 

7.9%

International Segment

 

(56,088)

 

-19.5%

 

 

11,151

 

 

(44,937)

 

 

-15.6%

Income tax expense (benefit)

 

 

24,104

 

3.4%

 

 

(37,084)

 

 

(12,980)

 

 

-1.8%

 

(5) Additional pretax expense of $24.3 million is included in Corporate and Eliminations.

 

 

 

 

 

 

 

Quarter Ended

 

 

 

 

 

 

 

 

 

 

 

 

April 1, 

 

April 2, 

 

 

 

 

 

 

Reconciliation of EBITDA

2018

 

2017

 

 

 

 

 

 

  Net Earnings (Loss)

$

(112,492)

 

$

68,599

 

 

 

 

 

 

  Interest Expense

 

22,809

 

 

24,456

 

 

 

 

 

 

  Income Taxes (including Tax Reform)

 

24,104

 

 

2,238

 

 

 

 

 

 

  Depreciation

 

26,221

 

 

27,702

 

 

 

 

 

 

  Amortization of Intangibles

 

6,478

 

 

7,881

 

 

 

 

 

 

     EBITDA

 

 

 

$

(32,880)

 

$

130,876

 

 

 

 

 

 

  Impact of Toys"R"Us and Severance

 

(87,777)

 

 

-

 

 

 

 

 

 

     Adjusted EBITDA

 

 

 

$

54,897

 

$

130,876

 

 

 

 

 

 

 

 


 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 23, 2018

 

Hasbro, Inc.

(Exact name of registrant as specified in its charter)

Rhode Island

 

1-6682

 

05-0155090

(State or other jurisdiction

 

(Commission File Number)

 

(IRS Employer

of incorporation)

     

Identification No.)

         

1027 Newport Ave., Pawtucket, Rhode Island

     

02861

(Address of principal executive offices)

     

(Zip Code)

 

Registrant’s telephone number, including area code:   (401) 431-8697

______________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 


 

 

 

Item 2.02          Results of Operations and Financial Condition.

 

On April 23, 2018, Hasbro, Inc. ("Hasbro" or "we") announced our financial results for the fiscal quarter ended April 1, 2018, and certain other financial information. The press release, attached as Exhibit 99.1, includes non-GAAP financial measures as defined under SEC rules, specifically Adjusted net earnings and adjusted earnings per diluted share, excluding the impact of charges associated with the Toys“R”Us liquidation; severance costs and U.S. tax reform in the first quarter of 2018, as well as adjusted operating profit absent the impact of the charges associated with the Toys“R”Us liquidation and severance costs. Also included in the financial tables attached to this release are the non-GAAP financial measures of EBITDA and Adjusted EBITDA. EBITDA represents net earnings attributable to Hasbro, Inc. excluding interest expense, income taxes, depreciation and amortization. Adjusted EBITDA also excludes the impact of charges associated with the Toys“R”Us liquidation and severance costs in the first quarter of 2018. As required by SEC rules, we have provided reconciliation on the attached schedule of these measures to the most directly comparable GAAP measure. Management believes that Adjusted net earnings, Adjusted earnings per diluted share and adjusted operating profit absent the impact of charges associated with the Toys“R”Us liquidation and severance costs in the first quarter of 2018 provides investors with an understanding of the underlying performance of the Company’s business absent these unusual events.  Management believes that EBITDA and Adjusted EBITDA are appropriate measures for evaluating the operating performance of the Company because they reflect the resources available for strategic opportunities including, among others, to invest in the business, strengthen the balance sheet and make strategic acquisitions.

 

These non-GAAP measures 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.

 

The information furnished in Item 2.02, including the Exhibit attached hereto, shall not be deemed "filed" for any purpose, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such filing.

 

Item 9.01                          Financial Statements and Exhibits.

 

(d)  Exhibits

 

99.1      Hasbro, Inc. Press Release, dated April 23, 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

HASBRO, INC.

 

 

 

 

 

 

By:

/s/ Deborah Thomas

 

Name:

Deborah Thomas

 

Title:

Executive Vice President and Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)

Date: April 23, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT INDEX

Exhibit No.

 

Description

 

 

99.1

 

Hasbro, Inc. Press Release, dated April 23, 2018.

 

 

 


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Hasbro Inc provided additional information to their SEC Filing as exhibits

Ticker: HAS
CIK: 46080
Form Type: 8-K Corporate News
Accession Number: 0000046080-18-000075
Submitted to the SEC: Mon Apr 23 2018 7:34:17 AM EST
Accepted by the SEC: Mon Apr 23 2018
Period: Monday, April 23, 2018
Industry: Games Toys And Childrens Vehicles No Dolls And Bicycles
Events:
  1. Earnings Release
  2. Financial Exhibit

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