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|Subject: HAS: Hasbro Q4 CC Transcripts||Date: 2/11/2008 5:13 PM|
|Author: FreethinkerKW||Number: 8 of 25|
I am sure it comes as so surprise to many of you that Transformers, first introduced in 1984, has established itself as a property that can deliver both entertainment and products that resonate with kids and adults alike. Total box office revenues exceeded $700 million and it was the number one DVD in the U.S. in 2007. Transformers was also nominated for three academy awards -- best sound editing, best sound mixing, and best visual effects.
Transformers was not only a theatrical success; it was our leading brand with toys, games, and a very successful licensing program. Together they generated approximately $480 million in Transformer revenues during 2007. That momentum has continued into 2008. We finished the year with very clean inventories and we have a great product lineup for 2008 with many new items, as well as entertainment support from the Transformers animated series that began airing in early January on Cartoon Network.
All in all, we have all the pieces in place to deliver another strong year for Transformers.
Star Wars continues to be a phenomena in the industry. It is a perennial in the category and continues to deliver significant volume, even in non-movie years. Given the anticipated release of Star Wars animation later this year, we expect our Star Wars revenues to grow in 2008.
In addition, we had a very good year with the Marvel properties. We are looking forward to another strong year for Spider-man, with television animation expected to begin in March. When you combine this with the scheduled theatrical releases of The Incredible Hulk and Iron Man later this year, our Marvel products are expected to do very well again in 2008.
Given the continued strength of Transformers, the Marvel properties, and Star Wars, as well as the excitement surrounding the upcoming release of Indiana Jones, we expect a strong year in our boys business in 2008.
Our girls category, a very important part of our business which we have grown significant over the past six years, was up 29%, driven by the continued success of Littlest Pet Shop, up 53%; My Little Pony, up 25%; Furreal Friends, up 44%; and a very strong performance in Baby Alive, which was up 85%.
As we said in November, Hasbro has redefined the girls category over the last six years by consistently delivering innovative and exciting new products.
The preschool category was up 7%, benefiting from the Playskool brand being up a solid 10% in part due to the success of In The Night Garden in the U.K. I am pleased with the progress we are making with the Playskool business, although I was disappointed that TJ Bearytales did not carry forward. Absent the impact of TJ, the Playskool brand was up 27%.
In the tween category, Nerf continued to perform well, up 23% for the year. iDog also had another great year, although the success of these two brands was not enough to offset declines in the Now brand ZoomBox and the disappointment of the Power Tour Electric Guitar, which resulted in the category being down 6% for the year.
Traditional board games were up 6% based on the strength of Monopoly Electronic Banking, Operation, Are You Smarter Than a Fifth-Grader?, Sorry!, and The Game of Life Twists and Turns. Offsetting this were declines in trading card and plug-and-play games, which resulted in the games and puzzle category being up 2% for the year.
The acquisition of Cranium closed last month. This is a great addition to the Hasbro board game portfolio. As we look ahead, we believe there is an opportunity for growth for the Cranium brand, particularly in the international markets, and we’ll talk more about the Cranium brand at our Toy Fair meeting on Friday.
We will also talk more about our partnership with EA on Friday. Today they announced the first Hasbro titles in development -- Littlest Pet Shop, Nerf, Monopoly, and Yahtzee. This initial slate of Hasbro brands will be developed for game consoles, PCs, and mobile devices. We couldn’t e more pleased with the opportunity this relationship represents for Hasbro.
In closing, 2007 was a very good year for Hasbro. It was the third year in a row of record net earnings and the seventh consecutive year of net earnings growth. We generated significant cash flow and grew the top line 22%, with the strength of our business broad-based, both in terms of geography and product categories. We finished the year strong, with U.S. retail takeaway up double-digits and similar results in most geographies around the world, leading to good inventory positions at retail at year-end.
Going into 2008, we’re excited about the opportunities. We have momentum and we’re looking forward to another good year. We hope you will join us on Friday morning’s webcast from Toy Fair to hear more about our new product plans for this year. With that, thank you for joining us and now I will turn the call over to David to talk more about our results. David.
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