Tuesday February 8, 8:02 am Eastern Time

Company Press Release

Hasbro Reports 33% Increase in Full-Year 1999 Earnings Per Share and Record Results Before Consolidation Program Charges

Expects Focus On Content, Technology and Game Play to be Catalysts in 2000

PAWTUCKET, R.I.--(BUSINESS WIRE)--Feb. 8, 2000-- Hasbro, Inc. (NYSE:HAS - news) today reported record fourth quarter and full-year 1999 revenues, earnings and earnings per share, prior to charges related to the previously announced Consolidation Program. Net earnings for the year increased 30% to $286.6 million compared to $220.0 million in 1998, and diluted earnings per share increased 33% to $1.42 compared to $1.07 in 1998. These results include a loss of $0.01 per share attributable to initial spending for Games.com, the Company's Internet games initiative, and exclude $141.6 million of pre-tax charges ($97.7 million after-tax) related to the Consolidation Program in 1999 and a $20.0 million one-time pre-tax charge ($13.6 million after-tax) in 1998 to write-off acquired in-process research and development of MicroProse.

``Hasbro had its best year ever in 1999,'' said Alan G. Hassenfeld, Chairman and Chief Executive Officer. ``We delivered on our promises including building for future growth by acquiring Wizards of the Coast, enabling us to expand in the fast-growing games arena. Games have long been a cornerstone of Hasbro, and we will continue to leverage this strength. This segment grew significantly in 1999, driven not only by the success of recent acquisitions but also the enduring popularity of our core brands like MONOPOLY, YAHTZEE, TRIVIAL PURSUIT and many others. We also unveiled plans for Games.com, which we expect to launch in summer 2000 and to become the best online games portal. Hasbro's unmatched games content is truly what will set us apart,'' Hassenfeld noted.

For the year, net revenues increased 28% to a record $4.2 billion compared to $3.3 billion in 1998, reflecting balanced growth in core brands and key licenses. Revenues from U.S. customers increased 33% while revenues from international customers increased 24% in local currencies and 19% in U.S. dollars. This growth was driven by significantly higher shipments of STAR WARS and FURBY, plus new POKEMON toys and games. Interactive software revenues, which nearly doubled during the first nine months of 1999 compared to 1998, were below expectations later in the fourth quarter and below fourth quarter 1998, resulting in full-year 1999 revenues of approximately $229 million compared to $192 million in 1998. In addition to the late introduction of new product, which impacted fourth quarter shipments in both the U.S. and Europe, this shortfall is partly attributable to significant industry-wide softening of the video and PC CD-ROM business in the fourth quarter and significant price erosion. This fourth-quarter shortfall was more than offset by significant growth in FURBY, hand-held electronic games, plus a wide range of POKEMON toys and games including POKEMON MONOPOLY, the POKEDEX organizer, and trading card games from Wizards of the Coast - which was acquired in September and contributed approximately $237 million of revenue. As a result, total fourth quarter net revenues increased 22% to a record $1.6 billion compared to $1.3 billion a year ago.

Fourth quarter net earnings increased 18% to $155.4 million compared to $131.8 million a year ago, and diluted earnings per share increased 22% to $0.79 compared to $0.65 in 1998. These results exclude $141.6 million of pre-tax charges ($97.7 million after-tax) related to the 1999 Consolidation Program. The attached schedule ``Impact of Consolidation Program'' sets forth earnings before and after these charges.

After the Consolidation Program charges, reported net earnings and diluted earnings per share for the year were $189.0 million and $0.93, respectively, compared to $206.4 million and $1.00 per share, respectively, in 1998. For the fourth quarter, reported net earnings and diluted earnings per share were $57.7 million and $0.29 per share, respectively, compared to $131.8 million and $0.65, respectively, in 1998.

Revenues and operating profits increased in the three major business segments: U.S. Toys, Games and International toys and games. Within the Games segment, the unfavorable impacts of the increased costs incurred to expand the Company's offering of interactive software games, partly resulting from escalating research and development costs across the industry, coupled with the unanticipated shortfall in fourth quarter revenues attributable to the late introduction of new product as well as general softness at retail and significant price erosion, resulted in a full-year loss from interactive software games of approximately $53 million after-tax excluding Consolidation Program charges. This was more than offset by increased profitability in the rest of the Games segment, including the Wizards of the Coast acquisition. ``Our performance underscores the importance of having a diversified portfolio. I am especially pleased with the strength of our International segment,'' Hassenfeld commented.

The Company also reported record fourth quarter and full-year Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $274.7 million and $669.1 million, respectively, compared to EBITDA of $257.7 million and $514.1 million, respectively, in 1998.

``In addition to delivering record results,'' Hassenfeld noted, ``we realigned our business to support our commitment to technology and game play. Together with our content, they are the keys to Hasbro's successful transition from a toy and game manufacturer to a leader in children's and family leisure time and entertainment. We also sharpened our focus on profitability, with the Consolidation Program and other initiatives to become a low-cost operator, to help better leverage the revenue growth opportunities of our portfolio of popular global brands and products and secure a bright future for our shareowners. While we are disappointed that our efforts have not been reflected in our stock price performance, we firmly believe in our future. We invested approximately $238 million to repurchase almost 9 million shares of our common stock in 1999, bringing our total investment under the $500 million repurchase program, approved in December 1997, to approximately $428 million for almost 17 million shares. In December 1999, our Board of Directors authorized an additional $500 million repurchase program.''

``We feel good about our business in 2000. Coming off an exceptionally strong 1999, with 28% revenue growth and 33% earnings per share growth, as we head into Toy Fair we forecast revenues to increase approximately 5% this year. Earnings per share growth could approach 10%, excluding the impact of Games.com in 2000 and the Consolidation Program charges in 1999,'' Hassenfeld continued. ``We ended 1999 with strong momentum in many areas. FURBY continues to be a smash hit worldwide, and POKEMANIA continues. With highly popular titles like ROLLER COASTER TYCOON - the number one PC game in 1999 based on units sold in the U.S., MECHWARRIOR 3, FROGGER and Q*BERT, plus a more streamlined organization, Hasbro Interactive is positioned for continued growth and renewed profitability in 2000. We also look forward to the spring video releases of the STAR WARS and POKEMON movies, plus the second POKEMON movie this summer. We will continue to further leverage our content and offer wonderful new product like ACTION MAN, NASCAR RACERS, BEAST MACHINES, TITAN AE, DRAGON TALES and TWEENIES, plus technology-oriented toys and games like TALKIN' ACHA, MY REAL BABY, POO-CHI, new FURBY products, LIGHTNING MAIL and more,'' Hassenfeld concluded.

Hasbro will webcast its fourth quarter earnings conference call at 9:00 a.m. Eastern time today. Investors and the media are invited to listen to the call through the company's website at http://www.hasbro.com (select ``Corporate Information'' from the home page, then click on the webcast icon).

Hasbro is a worldwide leader in children's and family leisure time and entertainment products and services, including the design, manufacture and marketing of games and toys ranging from traditional to high-tech. Both internationally and in the U.S., its PLAYSKOOL, KENNER, TONKA, ODDZON, SUPER SOAKER, MILTON BRADLEY, PARKER BROTHERS, TIGER, HASBRO INTERACTIVE, MICROPROSE, GALOOB and WIZARDS OF THE COAST brands and products provide the highest quality and most recognizable play experiences in the world.

Certain statements contained in this release contain ``forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as ``anticipate'', ``believe'', ``expect'', ``intend'', ``may'', ``planned'', ``potential'', ``should'', ``will'' and ``would''. Such forward-looking statements are inherently subject to known and unknown risks and uncertainties. The Company's actual actions or results may differ materially from those expected or anticipated in the forward-looking statements. Specific factors that might cause such a difference include, but are not limited to, the Company's ability to manufacture, source and ship new and continuing products on a timely basis and the acceptance of those products by customers and consumers in a competitive product environment; economic conditions, currency fluctuations and government regulation and other actions in the various markets in which the Company operates throughout the world; the inventory policies of retailers, including the continuing trend of concentration of the Company's revenues in the second half and fourth quarter of the year, together with increased reliance by retailers on quick response inventory management techniques, which increases the risk of underproduction of popular items, overproduction of less popular items and failure to achieve tight and compressed shipping schedules; the impact of competition on revenues, margins and other aspects of the Company's business, including the ability to secure, maintain and renew popular licenses and the ability to attract and retain talented employees in a competitive environment; market conditions, third party actions or approvals and the impact of competition that could delay or increase the cost of implementation of the Company's Consolidation Program or alter the Company's actions and reduce actual results; the risk that anticipated benefits of acquisitions may not occur or be delayed or reduced in their realization; and with respect to the Company's on-line game site initiative, technical difficulties in adapting games to on-line format and establishing the on-line game site that could delay or increase the cost of the site becoming operational; the acceptance by consumers of the games and other products and services to be offered at the site; competition from other on-line game sites and other game playing formats; the fact that the current business model for on-line games is experimental, and on-line revenues may not be sufficient to cover the significant advertising expenditures required or the support, service and product enhancement demands of on-line users. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this release or to update them to reflect events or circumstances occurring after the date of this release.

EBITDA (earnings before interest, taxes, depreciation and amortization) represents operating profit plus acquired in-process research and development, restructuring charges, depreciation and all amortization. EBITDA is not adjusted for all noncash expenses or for working capital, capital expenditures or other investment requirements and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. Thus, EBITDA should not be considered in isolation or as a substitute for net earnings or cash provided by operating activities, each prepared in accordance with generally accepted accounting principles, when measuring Hasbro's profitability or liquidity as more fully discussed in the Company's financial statements and securities filings.



(Thousands of Dollars and Shares Except Per Share Data)

                    Quarter Ended                Year Ended

             December 26,  December 27,  December 26,   December 27,

                   1999         1998           1999           1998

Net Revenues   $1,591,112   $1,304,079     $4,232,263    $ 3,304,454

Cost of Sales     652,686      512,285      1,698,242      1,366,061

Gross Profit      938,426      791,794      2,534,021      1,938,393

Amortization       84,559       22,910        173,533         72,208


 Research and

 Development      249,294      161,453        711,790        424,673

Advertising       157,053      183,669        456,978        440,692


 Distribution and

 Administration   284,688      216,505        799,919        655,938


 Charges           64,232         --           64,232         20,000

Operating Profit   98,600      207,257        327,569        324,882

Interest Expense   24,552       16,075         69,340         36,111

Other (Income)

 Expense, Net      (9,574)      (2,625)       (15,616)       (14,707)

Earnings Before

 Income Taxes      83,622      193,807        273,845        303,478

Income Taxes       25,923       62,018         84,892         97,113

Net Earnings     $ 57,699    $ 131,789      $ 188,953    $   206,365

Per Common Share

  Net Earnings

      Basic      $    .30    $     .67      $     .97    $      1.04

      Diluted    $    .29    $     .65      $     .93    $      1.00

  Cash Dividends

   Declared      $    .06    $     .05      $     .24    $       .21

Weighted Average

 Number of Shares

     Basic        193,828      196,151        194,917        197,927

     Diluted      196,395      202,462        202,103        205,420



                                           December 26,  December 27,

(Thousands of Dollars)                           1999         1998


Cash and Temporary Investments               $  280,159   $  177,748

Accounts Receivable, Net                      1,084,118      958,826

Inventories                                     408,571      334,801

Other                                           358,804      318,611

Total Current Assets                          2,131,652    1,789,986

Property, Plant and Equipment, Net              318,825      330,355

Other Assets                                  2,012,871    1,673,504

Total Assets                                 $4,463,348   $3,793,845


Short-term Borrowings                        $  714,669   $  372,509

Payables and Accrued Liabilities              1,356,658      993,791

Total Current Liabilities                     2,071,327    1,366,300

Long-term Debt                                  420,654      407,180

Deferred Liabilities                             92,392       75,570

Total Liabilities                             2,584,373    1,849,050

Total Shareholders' Equity                    1,878,975    1,944,795

Total Liabilities and Shareholders' Equity   $4,463,348   $3,793,845



(Thousands of Dollars and Shares Except Per Share Data)

                                    Quarter Ended December 26, 1999

                                           Impact of      Excluding

                                  As     Consolidation  Consolidation

                               Reported     Program        Program

Net Revenues                 $ 1,591,112  $     --      $ 1,591,112

Cost of Sales                    652,686     (8,740)        643,946

Gross Profit                     938,426      8,740         947,166

Amortization                      84,559    (38,449)         46,110

Royalties, Research and

 Development                     249,294    (26,292)        223,002

Advertising                      157,053     (3,862)        153,191

Selling, Distribution and

 Administration                  284,688       --           284,688

Nonrecurring Charges              64,232    (64,232)           --

Operating Profit                  98,600    141,575         240,175

Interest Expense                  24,552       --            24,552

Other (Income) Expense, Net       (9,574)      --            (9,574)

Earnings Before Income Taxes      83,622    141,575         225,197

Income Taxes                      25,923     43,888          69,811

Net Earnings                 $    57,699  $  97,687     $   155,386

Per Common Share

     Net Earnings

         Basic               $       .30  $     .50     $       .80

         Diluted             $       .29  $     .50     $       .79

Weighted Average Number of


         Basic                   193,828

         Diluted                 196,395

                                   Year Ended December 26, 1999

                                           Impact of      Excluding

                                  As     Consolidation  Consolidation

                               Reported     Program        Program

Net Revenues                 $ 4,232,263  $    --       $ 4,232,263

Cost of Sales                  1,698,242     (8,740)      1,689,502

Gross Profit                   2,534,021      8,740       2,542,761

Amortization                     173,533    (38,449)        135,084

Royalties, Research and

 Development                     711,790    (26,292)        685,498

Advertising                      456,978     (3,862)        453,116

Selling, Distribution and

 Administration                  799,919       --           799,919

Nonrecurring Charges              64,232    (64,232)           --

Operating Profit                 327,569    141,575         469,144

Interest Expense                  69,340       --            69,340

Other (Income) Expense, Net      (15,616)      --           (15,616)

Earnings Before Income Taxes     273,845    141,575         415,420

Income Taxes                      84,892     43,888         128,780

Net Earnings                 $   188,953   $ 97,687     $   286,640

Per Common Share

     Net Earnings

         Basic               $       .97   $    .50     $      1.47

         Diluted             $       .93   $    .49     $      1.42

Weighted Average Number of


         Basic                   194,917

         Diluted                 202,103

NOTE TO EDITORS: In the product name Q*BERT, noted in this release, an asterisk symbol appears between the Q and BERT. This symbol may not appear properly in some systems.

     Hasbro, Inc.

     Alfred J. Verrecchia, 401-727-5100


     Renita E. O'Connell


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