Hasbro, Inc. reported its 2006 full year and fourth quarter results. For the year, the Company reported record net earnings of $230.1 million, or $1.29 per diluted share, compared to $212.1 million or $1.09 per diluted share in 2005. Excluding the $0.14 impact of the Lucas warrants mark to market expense, 2006 earnings would have been $1.43 per diluted share, a 25% increase over the prior year's results, as adjusted to exclude the impact of the repatriation of foreign earnings and include the impact of stock-based compensation. Earnings per diluted share in 2005, excluding the $0.13 impact from the repatriation of foreign earnings and including the $0.08 impact from stock-based compensation, were $1.14.

For the fourth quarter, the Company reported net earnings of $108.3 million, or $0.62 per diluted share, compared to $94.3 million or $0.48 per diluted share last year. Excluding the impact of the Lucas warrants mark to market expense of $0.12 per diluted share, fourth quarter earnings per diluted share would have been $0.74, a 25% increase over prior year results, as adjusted to exclude the impact of the repatriation of foreign earnings and include the impact of stock-based compensation. Earnings per diluted share in the fourth quarter of 2005, excluding the $0.13 impact from the repatriation of foreign earnings and including the $0.02 impact of stock-based compensation, were $0.59.

For the year, worldwide net revenues were $3.2 billion, an increase of 2.1% or $63.9 million, compared to $3.1 billion a year ago. The 2006 results included $284.9 million in STAR WARS revenue, compared to $494.1 million in the prior year. For the fourth quarter, the Company reported worldwide net revenues of $1.1 billion, an increase of 4.1% or $44.2 million.

"2006 was another good year for Hasbro, we achieved the highest net earnings in the history of the Company," said Alfred J. Verrecchia, President and Chief Executive Officer. "Our performance for both the quarter and year is a solid indication of the success we have had in growing our core brands. Given the exceptional performance of STAR WARS in 2005, it is particularly meaningful to have grown revenue 2.1% for the year and 4.1% for the quarter."

"As we look ahead, we have momentum in our core brands and commitment to continued innovation. With the richest and most diversified toy and game product line in the industry, including product tied to upcoming releases of the TRANSFORMERS and SPIDER-MAN movies, we're very excited about the opportunities for 2007," Verrecchia concluded.

North American segment revenues, which include all of the Company's toys and games business in the United States, Canada and Mexico, were $2.1 billion for the year compared to $2.0 billion a year ago, reflecting strong performances from LITTLEST PET SHOP, CLUE, PLAYSKOOL, MONOPOLY, TRANSFORMERS, NERF, PLAY-DOH and MAGIC: THE GATHERING. The segment reported an operating profit of $276.0 million for the year compared to $165.7 million last year, as adjusted to include the impact of stock-based compensation. In addition to the higher revenues, the improvement in operating profit reflected lower amortization and royalty expenses, as well as a decline in inventory obsolescence expenses.

International segment revenues for the year were $959.3 million compared to $988.6 million a year ago and included a $24.3 million favorable impact from foreign exchange. The results reflect declines in FURBY, STAR WARS and DUEL MASTERS, partially offset by strong performance from a number of core brands including LITTLEST PET SHOP, PLAYSKOOL, TRANSFORMERS and MONOPOLY. The International segment reported an operating profit of $90.9 million for the year compared to an operating profit of $106.4 million in 2005, as adjusted to include the impact of stock-based compensation expense. The decline in operating profit was primarily due to lower revenues.

During the fourth quarter, the Company repurchased approximately 1.6 million shares of common stock at a total cost of $39.5 million. For the year the Company purchased 22.8 million shares at a total cost of $456.7 million. Since June of 2005, Hasbro has repurchased approximately 25.2 million shares, at a total cost of $504.8 million.

"I am pleased we delivered our sixth consecutive year of earnings growth," said David Hargreaves, Chief Financial Officer. "Our balance sheet remains strong and our operating margin at 11.9% is very close to the near-term target of 12% that we have been articulating for a number of years," concluded Hargreaves.

As mentioned above, the quarter and full year results for 2006 were impacted by the Lucas mark to market adjustment. For the quarter and full year periods in 2006, the impact of the mark to market adjustment for the Lucas warrants was a non-cash expense of $24.0 million and $31.8 million, respectively. This compares to non-cash income of $1.0 million and $2.1 million, respectively, for the comparable periods in 2005. 2006 net earnings also include stock-based compensation 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. As previously disclosed in Hasbro's financial statement footnotes, the impact of stock-based compensation expense for the quarter and full year of 2005 under SFAS 123 was $0.02 and $0.08 per diluted share, respectively. A supplemental table for the 2005 quarter and full year results adjusted to include the impact of stock-based compensation is attached. Additionally, the 2005 results include a tax impact of $25.8 million for the repatriation of foreign earnings under the American Jobs Creation Act.

The Company reported full year Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $515.7 million compared to $521.6 million in 2005. The attached schedules provide a reconciliation of diluted earnings per share and EBITDA to net earnings for the fourth quarter and full year of 2006 and 2005.