Hasbro with anticipated decline in STAR WARS
Hasbro, Inc. reported that worldwide net revenues for the quarter were $527.8 million, compared to $572.4 million a year ago. The Company reported net income of $27.1 million or $0.07 per diluted share, which includes stock-based compensation expense of $2.5 million or ($0.01) per diluted share, net of tax, due to the required implementation of SFAS 123R at the beginning of the year. Net earnings prior to fiscal 2006 did not include stock-based compensation expense. Including the stock-based compensation expense previously disclosed in Hasbro's financial statement footnotes, the net earnings for the second quarter of fiscal 2005 would have been $26.0 million or $0.11 per diluted share. In the second quarter of 2005 net earnings on a reported basis, which did not include the effect of stock-based compensation expense, were $29.5 million or $0.13 per diluted share. Please refer to the tables attached to this press release for 2005 results that have been adjusted to include the effect of stock-based compensation expense.
"Given the anticipated decline in STAR WARS of $84.8 million, our top line results are better than we expected and the remaining business is performing well, up $40.2 million or 9.4% for the quarter and $102.8 million or 13.2% for the year, which bodes well for our full year results," said Alfred J. Verrecchia, President and Chief Executive Officer.
North American segment revenues, which include all of the Company's toys and games business in the United States, Canada, and Mexico, were $362.0 million for the quarter, compared to $388.0 million in 2005. This $26.0 million decline reflects a $47.7 million decline in STAR WARS, which was partially offset by growth in PLAYSKOOL, MAGIC: THE GATHERING, LITTLEST PET SHOP, NERF, G.I. JOE, TRANSFORMERS and board games. The North American segment reported an operating profit of $30.4 million, compared to $25.4 million last year, which has been adjusted to include the impact of stock-based compensation.
International segment revenues for the quarter were $153.2 million, compared to $172.5 million in 2005, a decline of $19.3 million. The results reflect strong performance from MONOPOLY, PLAY-DOH, LITTLEST PET SHOP, MAGIC: THE GATHERING and PLAYSKOOL which was offset by a $37.1 million decline in STAR WARS. The International segment reported an operating loss of ($8.1) million for the quarter, compared with an operating profit of $1.2 million in 2005, as adjusted to include the impact of stock-based compensation.
"As part of our commitment to return cash to shareholders, during the quarter we repurchased approximately 10 million shares of common stock at a total cost of $192.6 million," said David Hargreaves, Chief Financial Officer. "Given our performance in the second quarter, I believe we remain on track to achieve our financial goals for the full year."
Mattels’ worldwide net sales up 8 percent
For the quarter Mattel, Inc. reported net income of $37.4 million, or $0.10 per share, compared to last year's second quarter net loss of $94.0 million, or $0.23 per share. Net income for the quarter was positively impacted by tax benefits of approximately $6.2 million, or $0.02 per share, primarily relating to an audit settlement with a state tax authority. Last year's net loss was significantly impacted by incremental tax expense of $112.9 million, or $0.28 per share, resulting from the company's decision to repatriate $2.4 billion in unremitted foreign earnings under AJCA.
"We are pleased with our second quarter results. As expected, we benefited from our summer entertainment toy lines based on the CARS and Superman™ movies, as well as the newest American Girl Place in Los Angeles," said Robert A. Eckert, chairman and chief executive officer of Mattel. "We also experienced the second consecutive quarter of growth in the U.S. for the Barbie brand. While I am pleased with Barbie's progress thus far, we are still in the process of implementing a variety of enhancements for the brand over the next year."
For the quarter, net sales were $957.7 million, up 8 percent compared to $886.8 million last year, with no impact from changes in currency exchange rates. On a regional basis, second quarter gross sales increased 5 percent in the U.S., and were up 12 percent in international markets, including favorable changes in currency exchange rates of 1 percentage point. Operating income for the quarter of $49.9 million increased from $28.5 million in 2005 primarily due to the growth in net sales.
The company's debt-to-total-capital ratio was 31.1 percent. In the quarter, the company issued $300 million of senior notes. Due to the normal seasonality of the business, the company's cash and equivalents declined by approximately $373 million during the six months ended June 30, 2006, compared with a decline of approximately $795 million in the prior year period. During the second quarter, the company repurchased 9.4 million shares of its common stock at a cost of $153.3 million.
Sales by Business Unit
Mattel Girls and Boys Brands
For the second quarter, worldwide gross sales for the Mattel Girls and Boys Brands business unit were $609.6 million, up 8 percent versus a year ago. Worldwide gross sales for the Barbie® brand were down 1 percent. Worldwide gross sales for Other Girls Brands were down 1 percent, despite continued growth from the Pixel Chix™ and Polly Pocket!™ toy lines. Worldwide gross sales for the Wheels category, which includes the Hot Wheels®, Matchbox® and Tyco® R/C brands, were down 6 percent. Worldwide gross sales for the Entertainment business, which includes Games and Puzzles, were up 38 percent for the quarter primarily due to the launch of the CARS and Superman™ toy lines.
Second quarter worldwide gross sales for the Fisher-Price Brands business unit, which includes the Fisher-Price®, Little People®, Rescue Heroes® and Power Wheels® brands, were $365.7 million, or up 8 percent versus the prior year. This reflects strong growth in Core Fisher-Price® and the Power Wheels® brand worldwide, as well as strong growth in Fisher-Price® Friends in international markets.
American Girl Brands
Second quarter gross sales for the American Girl Brands business unit, which offers American Girl® branded products direct to consumers, were $61.6 million, up 5 percent versus last year primarily due to sales from the third American Girl Place store, which opened in Los Angeles in April 2006.