PAWTUCKET – Hasbro Inc. today reported global net revenues for the quarter just ended of $1.039 billion, up 5 percent from the $988.1 million it earned in the third quarter of 2005. It said the results included a $9.6 million favorable impact from foreign exchange.
The company posted net income of $99.6 million, or $0.58 per diluted share. That included stock-based compensation expense of $3.9 million or $0.02 per diluted share, net of tax, from the required implementation of SFAS 123R at the beginning of the year. (The company’s net earnings previously did not include stock-based compensation expense.) Net earnings posted for the third quarter of 2005, not including the stock-based compensation expense, were $92.1 million or $0.47 per diluted share.
The results in both years include the impact of the mark to market adjustment for the Lucas warrants; in the third quarter of 2006, there was a non-cash expense of $19.8 million or $0.09 per diluted share related to the Lucas warrants, compared to non-cash income of $570 thousand in 2005.
“We are pleased with our third-quarter results,” said Alfred J. Verrecchia, Hasbro’s president and chief executive officer.
“Net revenues were up 5 percent, with revenues excluding STAR WARS up 13 percent for the quarter and year-to-date, driven in part by the success of LITTLEST PET SHOP, PLAYSKOOL, NERF, PLAY-DOH, MONOPOLY, TRANSFORMERS and CLUE,” he said. “STAR WARS has performed well and continues to be the No. 1 action-figure property, with $69 million in revenue for the quarter and $182 million year-to-date, demonstrating the strength of the brand even in a non-movie year.
“With the overall breadth and depth of our product portfolio, we have been able to grow our business for the quarter and year-to-date, in spite of the revenue decline of $58 million for the quarter and $193 million year-to-date in STAR WARS,” Verrecchia concluded.
“Earnings per diluted share were up a strong 23% in the quarter, said David Hargreaves, Chief Financial Officer. “Absent the Lucas warrants mark to market expense of $0.09 per diluted share, the underlying business performed even better with earnings per diluted share increasing 43% to $0.67 per diluted share for the quarter,” he added.
Among the report’s highlights:
* Hasbro’s global games business has risen 7 percent, driven by the success of MONOPOLY HERE AND NOW.
* Net earnings per share increased 23 percent, to $0.58 per diluted share, from the year-ago period’s net earnings of $0.47 per diluted share.
* Operating profits rose 29 percent, to $165.2 million, or 15.9 percent of revenues.
* The company repurchased about 6.6 million shares of common stock during the third quarter, at a total cost of about $131.0 million. (Since June 2005, the company has repurchased 23.5 million shares at a total cost of $465.3 million.)
North American segment revenues, including all toys and games in the United States, Canada and Mexico, were $745.5 million for the quarter, up from $712.3 million a year ago; the company cited strong sales of Littlest Pet Shop, Playskoool, Nerf, Play-Doh and Monopoly. The segment posted an operating profit for the quarter of $111.6 million, up from the year-ago period’s $85.3 million, as adjusted to include the impact of stock-based compensation. Besides higher revenues, Hasbro said, the profit growth reflected declines in amortization and royalty expenses, partially offset by higher product development and advertising expenses.
International revenues for the quarter were $280.4 million, up from the year-ago’s $264.6 million. The company credited $9.3 million from foreign exchange, plus high volume in Littlest Pet Shop, Playskool, Transformers and Monopoly. The segment posted an operating profit of $43.2 million, up from the year-ago period’s $32.9 million, as adjusted to include the impact of stock-based compensation expense. Most of the improvement was credited to decreases in royalty and amortization expense.
The company reported overall third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) of $192.6 million, compared to $187.9 million in the third quarter of 2005.
Hasbro’s third-quarter earnings conference call, today at 9 a.m., was broadcast at www.hasbro.com, where a replay is available by selecting “Corporate Info,” clicking on “Investor Information,” and then clicking on the Web-cast microphone.
Pawtucket-based Hasbro Inc. (NYSE: HAS) is a world leader in entertainment products and services for all ages, including the design, manufacture and marketing of games and toys from traditional to high-tech. Its brands include Playskool, Tonka, Milton Bradley, Parker Brothers, Tiger and Wizards of the Coast. Additional information is available at www.hasbro.com.
