Hasbro (NASDAQ:HAS) Q3 2011 Earnings Call October 17, 2011 8:30 AM ET

Executives

Brian D. Goldner - Chief Executive Officer, President, Director and Member of Executive Committee

Deborah Thomas - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Debbie Hancock - VP, IR

David D. R. Hargreaves - Chief Operating Officer

Analysts

James Hardiman - Longbow Research LLC

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Gregory R. Badishkanian - Citigroup Inc, Research Division

Gerrick L. Johnson - BMO Capital Markets U.S.

Per E. Ostlund - Jefferies & Company, Inc., Research Division

Chris Cerrone - Goldman Sachs Group Inc., Research Division

Felicia R. Hendrix - Barclays Capital, Research Division

Sean P. McGowan - Needham & Company, LLC, Research Division

Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division

John Taylor - Arcadia

Eric O. Handler - MKM Partners LLC, Research Division

Robert W. Carroll - UBS Investment Bank, Research Division

Operator

Good morning, and welcome to the Hasbro Third Quarter 2011 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the call over to Miss Debbie Hancock, Vice President of Investor Relations. Please go ahead.

Debbie Hancock

Thank you, and good morning, everyone. Joining me today are Brian Goldner, President and Chief Executive Officer; David Hargreaves, Chief Operating Officer; and Deb Thomas, Chief Financial Officer. Our third quarter 2011 earnings release was issued earlier this morning and is available on our website. The press release includes information regarding non-GAAP financial measures included in today's call. Additionally, whenever we discuss earnings per share or EPS, we are referring to earnings per diluted share. This morning, Brian will discuss key factors impacting our results, and Deb will review the financials. We will then open the call to your questions.

Before we begin, let me note that during this call and the question-and-answer session that follows, members of Hasbro management may make forward-looking statements concerning management's expectations, goals, objectives and similar matters. These forward-looking statements may include comments concerning our product and entertainment plans, anticipated product performance, business opportunities and strategies, costs, financial goals and expectations for our future financial performance and achieving our objective.

There are many factors that could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. Some of those factors are set forth in our annual report on Form 10-K, in today's press release and in our other public disclosures. We undertake no obligation to update any forward-looking statements made today to reflect events or circumstances occurring after the date of this call.

Now I would like to introduce Brian Goldner. Brian?

Brian D. Goldner

Thank you, Debbie. Good morning, everyone, and thank you for joining us today. The third quarter highlights the global execution of our branded play strategy and keeps us on the path to deliver meaningful growth in revenues and earnings per share in 2011. Not only was this a record third quarter in respect to revenues, operating profit and net earnings, there are a number of important positive trends which give us the confidence to maintain our outlook for the full year.

Three weeks into the fourth quarter, our shipments in the U.S. and Canada segment are off to a strong start, tracking ahead of last year and reaffirming our belief that the decline in the third quarter was substantially related to the timing of orders. We are all well aware that the retail landscape today requires more just-in-time inventory than before, as well as our new initiatives are only recently hitting retail shelves. As you know, last year's holiday performance was affected by softer U.S. consumer demand, in particular, in games.

In the U.S., we believe we are in a stronger position than last year, as we entered the fourth quarter with less inventory at retail. As well, it is positive trends in point of sale during the third quarter. Point of sale in our top 4 U.S. accounts was up 8% year-over-year in the quarter versus being up slightly in the second quarter and down in the first quarter. This quarter's growth was driven by mid-teen percentage gains in our toy point of sale as well as improvement in our games point of sale. Most importantly, for our consumers globally, we have a great innovative product line that delivers the value and brands consumers are seeking, given the challenging economic environment this holiday season.

