Hasbro Reports Financial Results for the First Quarter 2012
PAWTUCKET, R.I. -- April 23, 2012 -- Hasbro, Inc. today reported financial results for first quarter 2012. Net revenues for the quarter were $648.9 million, a decrease of 3%, compared to $672.0 million in 2011. First quarter 2012 net revenues include a negative $8.5 million impact of foreign exchange. Net loss for the first quarter 2012 was $2.6 million, or ($0.02) per diluted share, versus net earnings of $17.2 million, or $0.12 per diluted share, in 2011. First quarter 2012 net earnings were $5.1 million, or $0.04 per diluted share, excluding $11.1 million, or $0.06 per diluted share, of severance costs. The first quarter 2012 was a 14-week period versus the first quarter 2011 which was a 13-week period.
"Our first quarter 2012 results are consistent with the plan we previously communicated for the year," said Brian Goldner, President and Chief Executive Officer. "We continue to experience good momentum in our international business and positive point-of-sale trends in the U.S. and international markets. We have launched several new initiatives for 2012 which are generating good early results. We are looking forward to the four major motion pictures coming to global audiences in the next few months as well as the launch of our all important fall and holiday initiatives in the second half of the year."
"In partnership with our retailers and supported by a strong line of new fall initiatives, our expectation remains that a higher percentage of full year revenues will be in the second half of the year versus past years. This shift in the timing of our business has a similar impact on profitability," continued Goldner. "For the full year 2012, we continue to believe, absent the impact of foreign exchange, we will again grow revenues and earnings per share."
"As we previously outlined for you, we planned 2012 with the belief that our business would develop later in the year, more closely aligned with the timing of consumer demand and our international business," said Deborah Thomas, Chief Financial Officer. "Importantly, in the U.S. and Canada segment, we are executing our plan to return the segment to historical operating profit levels. This includes steps we have taken to right-size the organization, for which we have incurred the costs, and a planned higher level of spending in consumer-facing marketing and advertising. In the first quarter 2012, operating profit was impacted by the lower revenue base in addition to $11.1 million in severance costs across the global organization and approximately $6 million associated with an extra week of expenses."
Major Segment Performance
U.S. and Canada segment net revenues were $329.0 million, a decrease of $62.2 million or 16%, compared to $391.2 million in 2011. The results reflect growth in the Preschool category offset by declines in the other product categories. The U.S. and Canada segment reported an operating profit of $14.4 million, compared to $41.0 million in 2011.
International segment net revenues grew $35.4 million or 14% to $289.7 million, compared to $254.3 million in 2011. Net revenues in the International segment grew 17% absent the negative $8.2 million impact of foreign exchange. Revenue in the International segment reflects growth in the Boys and Games categories which more than offset flat revenues in the Preschool category and a decline in the Girls category. The International segment reported an operating loss of $5.1 million, compared to an operating loss of $1.7 million in 2011.
Entertainment and Licensing segment net revenues increased 19% to $29.3 million, compared to $24.6 million in 2011. The segment benefited from the sale of television programming in the U.S. and internationally, as well as continued box office and licensed revenues related to TRANSFORMERS. The Entertainment and Licensing segment reported an operating profit of $7.7 million compared to $5.4 million in 2011.
Product Category Performance
For the first quarter 2012, net revenues in the Boys category increased 4% to $302.8 million led by growth in entertainment-backed brands MARVEL and STAR WARS. Additionally, KRE-O, Hasbro's new construction line, contributed to the year-over-year gains. Following a strong 2011, BEYBLADE was essentially flat in the quarter. Overall, TRANSFORMERS brand revenue was also flat in the quarter, but down in the Boys category. The Preschool category grew 2% to $69.9 million supported by SESAME STREET and PLAYSKOOL RESCUE HEROES, including TRANSFORMERS RESCUE BOTS.
The increases in net revenues in the Boys and Preschool categories were offset by a 9% decline in the Games category to $181.9 million and an 18% decline in the Girls category to $93.2 million. Despite declines in these categories several brands posted year-over-year growth. In the Games category, MAGIC: THE GATHERING, DUEL MASTERS and BATTLESHIP posted revenue gains in the quarter. Also contributing to the quarter were new games initiatives for 2012, including STAR WARS FIGHTER PODS and TRANSFORMERS BOT SHOTS, which launched during the quarter and are performing well. In the Girls category, MY LITTLE PONY, which is now backed by television entertainment globally, posted growth in the quarter.
Share Repurchase and Dividend
The Company repurchased a total of 139,656 shares of common stock during the first quarter 2012 at a total cost of $5.0 million and an average price of $35.80 per share. At quarter end, $222.3 million remained available in the current share repurchase authorization. The Company paid $38.6 million in cash dividends to shareholders during the quarter and on February 2, 2012 declared a quarterly cash dividend of $0.36 per common share, an increase of $0.06 per share, or 20%, from the previous quarterly dividend of $0.30 per common share. The dividend will be payable on May 15, 2012 to shareholders of record at the close of business on May 1, 2012.
Hasbro, Inc. (NASDAQ: HAS) is a branded play company providing children and families around the world with a wide-range of immersive entertainment offerings based on the Company's world class brand portfolio. From toys and games, to television programming, motion pictures, digital gaming and a comprehensive licensing program, Hasbro strives to delight its global customers with well-known and beloved brands such as TRANSFORMERS, LITTLEST PET SHOP, NERF, PLAYSKOOL, MY LITTLE PONY, G.I. JOE, MAGIC: THE GATHERING and MONOPOLY. The Company's Hasbro Studios develops and produces television programming for markets around the world. Programming in the U.S. is distributed on The Hub TV Network, a multi-platform joint venture between Hasbro and Discovery Communications (NASDAQ: DISCA, DISCB, DISCK). 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" and is ranked as one of Corporate Responsibility Magazine's "100 Best Corporate Citizens." Learn more at http://www.hasbro.com.