PAWTUCKET – Hasbro Inc. (NYSE: HAS) today posted 2007 net income of $330.00 million, an increase of 44.7 percent from 2006’s record profit of $230.06 million, on net revenue that increased 22 percent to $3.84 billion worldwide. Earnings per diluted share surged 53 percent to $1.97 from the previous year’s $1.29 per share.
The 2007 results included a one-time credit of $29.6 million or 17 cents per diluted share from a favorable tax adjustment in the third quarter. The 2007 full-year results also included a one-time expense of $44.4 million or 23 cents per diluted share related to the Lucasfilm Ltd. and Lucas Licensing Ltd. warrants to purchase 15.76 million shares that Hasbro retired in May at a cost of $200 million, compared with a similar 2006 expense of $31.8 million or 14 cents per diluted share, Hasbro said.
The company’s results far exceeded expectations, based on a Bloomberg News survey of 10 analysts, whose median forecasts called for a profit of 81 cents per share.
“2007 was another strong year for Hasbro,” said Alfred J. Verrecchia, the company’s president and CEO, who in a separate announcement today said he plans to step down as the company’s president and CEO effective May 22. In 2007, “we achieved … the third consecutive year of record net earnings and our seventh consecutive year of earnings-per-share growth,” Verrecchia said.
“Revenues were up 22 percent for the year and 16 percent for the quarter, as the business continued to be strong both in terms of category and geographic performance, providing us with momentum going into 2008,” he added.
Sales in the company’s North American segment increased 15 percent to $2.46 billion, led by increases in the Transformers and Marvel product lines, as well as gains in brands including Furreal Friends, Littlest Pet Shop, Baby Alive, My Little Pony, Toothtunes, Operation and Sorry. “Star Wars also remained very strong,” Hasbro said. The segment reported an operating profit of $318.74 million, a 15.5-percent increase from 2006.
International segment sales grew 33 percent to $1.28 billion, reflecting about $88.5 million in gains from foreign exchange rates, as well as increased shipments of product lines led by Transformers, Marvel, Littlest Pet Shop, My Little Pony, Playskool, Furreal Friends, Monopoly, Operation, The Game of Life and Star Wars. The international segment’s operating profit grew to $158.85 million, an increase of 74.7 percent from the previous year.
“I’m especially pleased that, when you combine the robust revenue growth we achieved in 2007 with the cost-structure improvements and share-count reductions we have achieved in recent years, the result is a 53 percent increase in reported earnings per share,” said David Hargreaves, Hasbro’s executive vice president and chief financial officer. “In addition, we generated $601.8 million in operating cash flow during 2007.”
For the fourth quarter, the company posted a $133.73 million profit, an increase of 24 percent from the 2006 fourth quarter, on net revenue that increased 16 percent to $1.30 billion. Earnings per diluted share increased to 84 cents from the year-ago 62 cents per share.
Fourth-quarter revenue in the North American segment increased 8 percent to $766.83 million, but the segment’s operating profit fell 22 percent year-over-year to $101.04 million. International revenue increased 29 percent to $489.24 million, as favorable exchange rates helped boost the segment’s operating profit to $90.03 million, an increase of 40 percent from the 2006 fourth quarter.
During 2007, Hasbro repurchased a total of 20.8 million shares of common stock at a total cost of $587.0 million, leaving $109.6 million in the share-repurchase authorization as of year’s end. Since the inception of its buyback program in June 2005, the company has spent more than $1.15 billion to buy back nearly 48.40 million shares – not including the $200 million it spent last May to retire Lucasfilm Ltd. and Lucas Licensing Ltd. warrants to purchase 15.76 million shares – at an average price of $23.73 per share.
On Feb. 7, the board of directors authorized another half-billion-dollar share repurchase program. It also increased Hasbro’s regular quarterly dividend by 25 percent to 20 cents per common share, in the fifth consecutive year of dividend increases. The cash dividend is payable May 15 to shareholders of record at the close of business May 1. (READ MORE.)
“I have achieved all of the goals I set when I became CEO and I thought now was a great time to step aside,” Verrecchia said this morning in announcing plans to leave the company he has served for 43 years. On his departure as president and CEO – effective May 22, the date of the company’s annual meeting – he will become board chairman, replacing Alan Hassenfeld, who will remain a member of the board of directors and continue to chair its executive committee. Succeeding Verrecchia as CEO will be Chief Operating Officer Brian Goldner, 44.
“During Al’s long and dedicated career at Hasbro, he has been one of the key architects – especially during his five years as CEO – of making Hasbro the successful global company it is today,” said Hassenfeld, who also preceded Verrecchia as president and CEO.
Goldner, who joined Hasbro in 2000, from Bandai America Inc., was president of the U.S. toy segment before being named COO in 2000. He is a graduate of Dartmouth College.
“I am honored to succeed Al as CEO,” he said today. “This is a very exciting time for the Company; we have a tremendous team at Hasbro who all share a common goal of continuing to grow our world class portfolio of brands through creativity and innovation.”
“Hasbro is a company on the rise,” Verrecchia added. “We’re financially strong, with great momentum and I am really excited to turn the leadership of this company over to Brian. I have worked closely with him during the last seven years and I know his entrepreneurial spirit, creative stewardship and strong leadership will serve Brian well as he takes Hasbro to the next level.”
Hasbro Inc. (NYSE: HAS) – the world’s second-largest toymaker – designs, manufactures and markets games and toys under brands including Playskool, Tonka, Milton Bradley, Parker Brothers, Tiger and Wizards of the Coast. Additional information is available at www.hasbro.com.
