PAWTUCKET – Hasbro Inc. (NYSE: HAS) today posted annual net income of $306.77 million, a 7.88-percent decline from 2007’s record $333 million, on revenue that grew 4.56 percent year over year to $4.02 billion.
Earnings per diluted common share, however, edged up to $2 in 2008 from $1.97 the year before. Hasbro’s 2007 results (READ MORE) included “a favorable tax adjustment of $29.6 million, or 17 cents per diluted share, that was taken in the third quarter,” as well as a full-year expense of $44.4 million, or 23 cents per diluted share, reflecting the market value of the Lucasfilm Ltd. and Lucas Licensing Ltd. warrants that the toymaker retired in the 2007 second quarter.
“In a challenging environment, we delivered both revenue and earnings-per-share growth in 2008, while also continuing to make investments in our future,” said Brian Goldner, Hasbro’s president and chief executive officer.
Among operating segments – which were restructured at the beginning of fiscal 2008 – sales in the United States and Canada segment rose 4.93 percent to $2.41 billion, led by increases in the Star Wars, Playskool, Nerf, Easy Bake, G.I. Joe, and trading-card and board-game lines, including Guess Who, Pictureka and Scrabble. “Additionally, Transformers, Marvel and Littlest Pet Shop continued to contribute significantly,” Hasbro said. The segment reported an operating profit of $283.15 million, a 1.61-percent decline from 2007’s $287.80 million.
International segment sales grew 3.77 percent to $1.50 billion, led by the Littlest Pet Shop, Star Wars, Playskool, Nerf, Twister and Guess Who lines. “Additionaly, Transformers and Marvel continued to contribute significantly to the segment,” Hasbro said. But the segment’s operating profit shrank to $165.19 million, a 12.96-percent decline from 2007’s $189.78 million, as that sales growth was more than offset by a $7.4 million expense from negative foreign-exchange rates.
During 2008, the company repurchased 11.7 million shares of common stock at a total cost of $357.6 million, leaving $252.4 million remaining in its current buyback authorization. None of the shares were repurchased in the fourth quarter. “Since the inception of its buyback program in June 2005, the company has repurchased 57.7 million shares at a total cost of $1.4 billion,” or about $25.10 per share, Hasbro said.
Total cash dividends declared rose to 80 cents last year from 64 cents in 2007.
“After a very strong performance in the first nine months of the year, the fourth quarter clearly had significant headwinds: the negative impact of foreign exchange and the broad-based global economic downturn,” noted David Hargreaves, the company’s chief operating officer and chief financial officer.
For the three months ended Dec. 30, the company posted net earnings of $93.58 million, a 30.02-percent decline from the year-ago period’s $133.73 million, on fourth-quarter revenue that fell 5.15 percent year over year to $1.23 billion. Fourth-quarter earnings per diluted common share shrank to 62 cents from the year-ago 84 cents. That lagged the 76-cent-per-share average estimate of 12 analysts surveyed by Bloomberg News.
But excluding the $80.1 million negative impact of adverse foreign exchange rates, Hasbro’s revenue rose 1 percent. By comparison, El Segundo, Calif.-based Mattel Inc. last week posted an 11-percent drop in fourth-quarter revenue, with foreign exchange rates accounting for about half of that decline, according to Bloomberg News.
On Feb. 5, Hasbro announced that its board of directors had declared a quarterly cash dividend of 20 cents per common share. The dividend will be payable May 15 to shareholders of record at the close of business on May 1.
“To keep our core brands strong and to drive consumer traffic in the critical selling weeks prior to the holidays, we worked with our global retail partners and put additional promotional programs in place,” Hargreaves said. “This resulted in our finishing 2008 in a much better inventory position than we would have otherwise, although it did negatively impact operating profit in the fourth quarter.”
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Like many companies this season, Hasbro declined to provide specific full-year earnings guidance in its annual report.
“As we look to the year ahead,” Goldner said, “given the severity of the downturn in global economies, we are focused on keeping costs down, managing our operating cash flow and continuing to invest in our business for the long term. That said, we believe the underlying strength of our brands and commitment to our strategy should enable Hasbro to grow revenue and earnings per share in 2009, absent a material deterioration in economic conditions or the value of foreign currencies.”
Customers are “still spending on Hasbro’s products, just to a lesser extent than before,” Chris White, an analyst at Wedbush Morgan Securities in Los Angeles, told Bloomberg News. “Clearly Hasbro is doing something right.”
Hasbro Inc. (NYSE: HAS) is a world leader in the design, manufacture and marketing of traditional and high-tech games and toys under brands including Cranium, Milton Bradley, Parker Brothers, Playskool, Tiger, Tonka, Transformers and Wizards of the Coast. Additional information is available at www.hasbro.com.
