Hasbro 2012 Annual Report Download - page 4

We begin 2013 in a strong position with good quality
inventory at Hasbro and our retail partners, as well as
compelling brand innovation.
This is despite not achieving
our objective of growing 2012 revenues absent the impact of
foreign exchange versus $4.29 billion in revenues in 2011.
Generating, Investing and Returning Cash
Over the past five years, Hasbro has generated $2.2
billion in operating cash flow. We have used that cash to
strategically invest more than $400 million in expanding
our global footprint and capabilities across several long-
term growth opportunities, including the emerging markets,
entertainment - including Hasbro Studios - and licensing.
In 2009, we also invested $300 million in our joint
venture with Discovery Communications to establish THE
HUB kids’ television network in the U.S. In 2012, THE HUB
had a record year in terms of ratings and was the fastest
growing children’s cable network in both distribution and
ratings growth. This strategic investment was the catalyst
for launching Hasbro Studios and our global television
strategy. Today, we have Hasbro television programs airing
in more than 170 countries around the world.
During that five-year period, we have remained
committed to returning cash to you, our shareholders. We
have paid $731 million through our dividend program and
spent $1.6 billion in share repurchases.
In 2012, we generated $535 million in operating
cash flow, ahead of our $500 million annual target. Our
consistent cash generation continues to provide us with
capital to both strategically deploy back into our business
and return to you, our shareholders.
As a result, last year we were able to return $323.5
million dollars to shareholders. This included $225.5 million
through our quarterly dividend program, including $46.6
million dollars associated with the accelerated payment
of our historical February dividend, which we paid in
December 2012.
Importantly, in February 2013, we announced the ninth
increase of our dividend over the last ten years. The new
quarterly dividend rate is $0.40 per share, up 11%, or $0.04,
from the previous rate of $0.36 per share. Our ability to
increase the dividend continues to speak to the confidence
our Board of Directors has in the long-term opportunities
for our company.
During 2012, we also spent $100 million on share
repurchases, buying back 2.7 million shares at an average
price of $37.11.
Increasing Focus, Streamlining the Company
As we continue to accelerate the transformation of our
company while operating in markets with new consumer
and retail dynamics, we have outlined a company wide cost
savings initiative designed to deliver $100 million in annual
savings by 2015.
We are reviewing the organization from top to bottom
to identify cost-saving opportunities. To date, these include
an approximate 10% reduction in work force, including
an early retirement oering, facility consolidation, the
continuation of our item and SKU count reduction programs
and the implementation of process improvements. These
actions are global in nature and reach across multiple
disciplines and functions.
Our 2012 results include a pre-tax charge of $36 million
related to the initial implementation of this program and we
anticipate $20-$30 million in additional charges in 2013. We
expect to realize 2013 net savings of $15-$25 million with the
remainder of the savings being fully recognized by 2015 as
all aspects of the plan are implemented.
Over the past several years, we’ve invested in strategic
growth opportunities for Hasbro. We’ve added new brand-
building capabilities, while eliminating many historical
complex and costly SKU-making behaviors. We will continue
investing strategically for the long-term where we anticipate
strong returns on that investment, but we are accelerating
our cost-saving eorts to reflect the market environment
and our strategic decision to focus on fewer, more
significant initiatives. Our objective remains to help ensure
that, in any environment, we continue to enhance our total
shareholder returns, while delivering great innovation and
play experiences to our global customers and consumers.
Building Global Brands
Innovation, entertainment, digital engagement, engaging
storytelling and global consumer insights are at the
center of our brand initiatives year in and year out.
In 2012, the combination of these elements of our
blueprint enabled several brands to stand out.
As one of our franchise brands, MY LITTLE PONY
continued on its growth trajectory last year. With the
support of global television, product innovation, inventive
licensing, a new digital app game, online experiences and
a strong retail execution, MY LITTLE PONY posted very
robust, double-digit growth year-over-year. In 2013, the
magical storytelling behind our global animation will focus
on an all-new theme and we will unveil an entirely new
intellectual property based on the brand.