Market Overview

Hasbro Reports Second Quarter 2018 Financial Results

Share:
  • Second quarter 2018 revenues of $904.5 million;
  • U.S. and Canada segment revenues down 7%; International segment
    revenues down 11%; Entertainment and Licensing revenues up 26%;
  • Operating profit margin of 9.7%;
  • Reported net earnings of $60.3 million, or $0.48 per diluted share;
  • Strengthened brand portfolio with acquisition of POWER RANGERS;
  • Ended the quarter with $1.2 billion in cash and returned $152.8
    million to shareholders; $78.7 million in dividends and $74.1 million
    in share repurchases.

Hasbro,
Inc.
(NASDAQ:HAS) today reported financial results for the
second quarter 2018. Net revenues for the second quarter 2018 decreased
7% to $904.5 million versus $972.5 million in 2017. The lower revenues
reflect the liquidation of Toys"R"Us in the U.S. and many other global
markets. In addition, revenues declined internationally, most notably in
Europe, as a result of managing retail inventory amid a rapidly evolving
retail landscape.

Net earnings for the second quarter 2018 were $60.3 million, or $0.48
per diluted share, compared to $67.7 million, or $0.53 per diluted
share, for the second quarter of 2017.

"2018 is unfolding as expected as our teams manage the liquidation of
Toys"R"Us in many markets and address the rapidly evolving European
retail landscape," said Brian Goldner, Hasbro's chairman and chief
executive officer. "We are investing in our business - in innovation,
entertainment and a modern global commercial organization, to drive
profitable growth in 2019 and beyond. Consumer takeaway is up for our
brands, and we further strengthened our brand portfolio through the
acquisition of POWER RANGERS. We are focused on moving beyond the
near-term disruption of losing a major customer, with a clear path
forward including new retailer activations to meet the consumer demand
made available by the Toys"R"Us departure."

"Our global teams executed well despite the disruption in the market,"
said Deborah Thomas, Hasbro's chief financial officer. "With $1.2
billion in cash, and a healthy balance sheet, our financial position is
strong. Our diverse portfolio enabled us to partially offset the
negative margin impact from lower revenues, but not entirely. We are
working with our retailers to successfully execute their plans for
Hasbro's innovative portfolio this holiday season."

Second Quarter 2018 Major Segment Performance

         
    Net Revenues ($ Millions)   Operating Profit ($ Millions)
  Q2 2018   Q2 2017   % Change   Q2 2018   Q2 2017   % Change
U.S. and Canada   $459.3   $494.4   -7%   $76.2   $81.6   -7%
International   $380.4   $426.6   -11%   $0.2   $16.9   -99%
Entertainment and Licensing   $64.7   $51.5   +26%   $18.6   $11.3   +64%
         

Second quarter 2018 U.S. and Canada segment net revenues decreased 7% to
$459.3 million compared to $494.4 million in 2017. The segment reported
an operating profit of $76.2 million, or 16.6% of net revenues, compared
to an operating profit of $81.6 million, or 16.5% of net revenues, in
2017. The segment's quarterly performance was negatively impacted by the
loss of Toys"R"Us revenues and the near-term disruption of its stores'
liquidation in the marketplace. Favorable product mix helped offset the
negative impact of lower revenues on operating profit margin.

Second quarter 2018 International segment net revenues were $380.4
million, down 11%, compared to $426.6 million in 2017. Revenues in the
segment were negatively impacted by efforts to clear excess retail
inventory in Europe, as well as the loss of Toys"R"Us revenues in many
Europe and Asia Pacific markets. International segment revenues include
a favorable $2.6 million impact of foreign exchange. On a regional
basis, Europe net revenues decreased 16%, Latin America decreased 3% and
Asia Pacific decreased 5%. Emerging markets net revenues decreased 9% in
the quarter. The International segment reported an operating profit of
$0.2 million compared to an operating profit of $16.9 million in 2017.
The decline in operating profit reflects lower revenues combined with
fixed cost deleveraging.

Entertainment and Licensing segment net revenues increased 26% to $64.7
million compared to $51.5 million in 2017. Operating profit increased
64% to $18.6 million, or 28.8% of net revenues, compared to $11.3
million, or 22.0% of net revenues, in 2017. The adoption of ASC 606 Revenue
from Contracts with Customers
favorably impacted the timing of
revenue recognition in the quarter, in addition to the continued
underlying success in our licensing and entertainment businesses.

Second Quarter 2018 Brand Portfolio Performance

     
 

 

Net Revenues ($ Millions)
  Q2 2018   Q2 2017   % Change  

Six Months
2018

 

Six Months
2017

  % Change
Franchise Brands   $506.5   $552.4   -8%   $868.2   $1,001.6   -13%
Partner Brands   $208.0   $230.0   -10%   $408.6   $443.0   -8%
Hasbro Gaming*   $134.3   $133.9   --   $239.5   $269.6   -11%
Emerging Brands   $55.6   $56.2   -1%   $104.5   $108.0   -3%

*Hasbro's total gaming category, including all gaming revenue, most
notably MAGIC: THE GATHERING and MONOPOLY, which are included in
Franchise Brands in the table above, totaled $312.8 million for the
second quarter 2018, up 14%, versus $273.3 million in the second quarter
2017.
This category was down 2% to $516.3 million for the six
months 2018 versus $526.6 million for the six months 2017.
Hasbro
believes its gaming portfolio is a competitive differentiator and views
it in its entirety.

Second quarter 2018 revenues were negatively impacted by the liquidation
of Toys"R"Us in the U.S. and many other global markets, including lower
Toys"R"Us revenues and the near-term disruption of its stores'
liquidation in the marketplace, as well as managing retail inventory,
primarily in Europe.

Second quarter 2018 Franchise Brand revenues decreased 8% to $506.5
million. Growth in MAGIC: THE GATHERING, MONOPOLY and BABY ALIVE were
offset by declines in the other Franchise Brands in the quarter,
including TRANSFORMERS which declined versus the movie launch in the
second quarter 2017. Franchise Brand revenues grew in the Entertainment
and Licensing segment and declined in the U.S. and Canada and
International segments.

Partner Brand revenues declined 10% to $208.0 million. Revenue growth in
BEYBLADE and MARVEL was more than offset by declines in other Partner
Brands. Partner Brand revenues decreased in the U.S. and Canada and
International segments.

Hasbro Gaming revenue increased slightly to $134.3 million. Revenue
gains in DUNGEONS and DRAGONS, DUEL MASTER, JENGA and DON'T STEP IN IT
were partially offset by declines in other properties. Hasbro Gaming
revenues increased in the International segment and the Entertainment
and Licensing segment; but declined in the U.S. and Canada segment.
Hasbro's total gaming category was up 14% to $312.8 million, including
growth in MAGIC: THE GATHERING and MONOPOLY.

Emerging Brand revenue declined 1% to $55.6 million. The category
benefited from several new initiatives, including LOST KITTIES and LOCK
STARS. This was offset by declines in other Emerging Brands. Emerging
Brands revenues grew in the International segment and declined in the
U.S. and Canada segment and the Entertainment and Licensing segment.

Dividend and Share Repurchase

The Company paid $78.7 million in cash dividends to shareholders during
the second quarter 2018. The next quarterly cash dividend payment of
$0.63 per common share is scheduled for August 15, 2018 to shareholders
of record at the close of business on August 1, 2018.

During the second quarter, Hasbro repurchased 820,343 shares of common
stock at a total cost of $74.1 million and an average price of $90.33
per share. Through the first six months of 2018, the Company repurchased
1.2 million shares of common stock at a total cost of $112.9 million and
an average price of $90.50. At quarter-end, $565.1 million remained
available in the current share repurchase authorizations, including the
additional $500 million authorized by the Board of Directors during the
second quarter.

Conference Call Webcast

Hasbro will webcast its second quarter 2018 earnings conference call at
8:30 a.m. Eastern Time today. To listen to the live webcast and access
the accompanying presentation slides, please go to http://investor.hasbro.com.
The replay of the call will be available on Hasbro's web site
approximately 2 hours following completion of the call.

About Hasbro: Hasbro (NASDAQ:HAS) is a global play and
entertainment company committed to Creating the World's Best Play
Experiences
. From toys and games to television, movies, digital
gaming and consumer products, Hasbro offers a variety of ways for
audiences to experience its iconic brands, including NERF, MY LITTLE
PONY, TRANSFORMERS, PLAY-DOH, MONOPOLY, BABY ALIVE and MAGIC: THE
GATHERING, as well as premier partner brands. Through its entertainment
labels, Allspark Pictures and Allspark Animation, the Company is
building its brands globally through great storytelling and content on
all screens. Hasbro is committed to making the world a better place for
children and their families through corporate social responsibility and
philanthropy. Hasbro ranked No. 1 on the 2017 100 Best Corporate
Citizens list by CR Magazine and has been named one of the
World's Most Ethical Companies® by Ethisphere Institute for the past
seven years. Learn more at www.hasbro.com
and follow us on Twitter (@Hasbro & @HasbroNews) and Instagram (@Hasbro).

© 2018 Hasbro, Inc. All Rights Reserved.

Certain statements in this release contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements include expectations concerning the Company's
potential performance in the future and the Company's ability to achieve
its financial and business goals and may be identified by the use of
forward-looking words or phrases. The Company's actual actions or
results may differ materially from those expected or anticipated in the
forward-looking statements due to both known and unknown risks and
uncertainties. Specific factors that might cause such a difference
include, but are not limited to: (i) the Company's ability to design,
develop, produce, manufacture, source and ship products on a timely and
cost-effective basis, as well as interest in and purchase of those
products by retail customers and consumers in quantities and at prices
that will be sufficient to recover the Company's costs and earn a
profit; (ii) downturns in economic conditions impacting one or more of
the markets in which the Company sells products, such as the economic
downturns which impacted the United Kingdom and Brazil in 2017, which
can negatively impact the Company's retail customers and consumers, and
which can result in lower employment levels, lower consumer disposable
income, lower retailer inventories and lower spending, including lower
spending on purchases of the Company's products; (iii) other factors
which can lower discretionary consumer spending, such as higher costs
for fuel and food, drops in the value of homes or other consumer assets,
and high levels of consumer debt; (iv) consumer interest in
entertainment properties, such as motion pictures, for which the Company
is developing and marketing products, and the ability to drive sales of
products associated with such entertainment properties; (v) potential
difficulties or delays the Company may experience in implementing cost
savings and efficiency enhancing initiatives; (vi) other economic and
public health conditions or regulatory changes in the markets in which
the Company and its customers and suppliers operate which could create
delays or increase the Company's costs, such as higher commodity prices,
labor costs or transportation costs, or outbreaks of disease; (vii)
currency fluctuations, including movements in foreign exchange rates,
which can lower the Company's net revenues and earnings, and
significantly impact the Company's costs; (viii) the concentration of
the Company's customers, potentially increasing the negative impact to
the Company of difficulties experienced by any of the Company's
customers or changes in their purchasing or selling patterns; (ix)
consumer interest in and acceptance of the Discovery Family Channel, and
programming created by Hasbro Studios, and other factors impacting the
financial performance of the network and Hasbro Studios; (x) the
inventory policies of the Company's retail customers, including
retailers' potential decisions to lower their inventories, even if it
results in lost sales, as well as the concentration of the Company's
revenues in the second half and fourth quarter of the year, which
coupled with reliance by retailers on quick response inventory
management techniques increases the risk of underproduction of popular
items, overproduction of less popular items and failure to achieve
compressed shipping schedules; (xi) delays, increased costs or
difficulties associated with any of our or our partners' planned digital
applications or media initiatives; (xii) work disruptions, which may
impact the Company's ability to manufacture or deliver product in a
timely and cost-effective manner; (xiii) the bankruptcy or other lack of
success of one of the Company's significant retailers, such as the
bankruptcy of Toys"R"Us in the United States and Canada in the fourth
quarter of 2017 and the beginning of liquidation of those businesses, as
well as economic difficulty of Toys"R"Us in other markets, which could
negatively impact the Company's revenues or bad debt exposure; (xiv) the
impact of competition on revenues, margins and other aspects of the
Company's business, including the ability to offer Company products
which consumers choose to buy instead of competitive products, the
ability to secure, maintain and renew popular licenses and the ability
to attract and retain talented employees; (xv) concentration of
manufacturing for many of the Company's products in the People's
Republic of China and the associated impact to the Company of social,
economic or public health conditions and other factors affecting China,
the movement of products into and out of China, the cost of producing
products in China and exporting them to other countries, including
without limitation, the potential application of tariffs to products the
Company purchases from vendors in China, which would significantly
increase the price of the Company's products and harm sales; (xvi) the
risk of product recalls or product liability suits and costs associated
with product safety regulations; (xvii) the impact of other market
conditions, third party actions or approvals and competition which could
reduce demand for the Company's products or delay or increase the cost
of implementation of the Company's programs or alter the Company's
actions and reduce actual results; (xviii) changes in tax laws or
regulations, or the interpretation and application of such laws and
regulations, such as what may occur as the U.S. Tax Cuts and Jobs Act is
interpreted and applied, which may cause the Company to alter tax
reserves or make other changes which significantly impact its reported
financial results; (xix) the impact of litigation or arbitration
decisions or settlement actions; and (xx) other risks and uncertainties
as may be detailed from time to time in the Company's public
announcements and Securities and Exchange Commission ("SEC") filings.
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.

The financial tables accompanying this press release include non-GAAP
financial measures as defined under SEC rules, specifically Adjusted net
earnings and Adjusted earnings per diluted share, excluding the impact
of charges associated with the Toys"R"Us liquidation; severance costs
and U.S. tax reform in the first quarter of 2018, as well as Adjusted
operating profit absent the impact of the charges associated with the
Toys"R"Us liquidation and severance costs. Also included in the
financial tables are the non-GAAP financial measures of EBITDA and
Adjusted EBITDA. EBITDA represents net earnings attributable to Hasbro,
Inc. excluding interest expense, income taxes, depreciation and
amortization. Adjusted EBITDA also excludes the impact of charges
associated with the Toys"R"Us liquidation and severance costs in the
first quarter of 2018. As required by SEC rules, we have provided
reconciliations on the attached schedules of these measures to the most
directly comparable GAAP measure. Management believes that Adjusted net
earnings, Adjusted earnings per diluted share and Adjusted operating
profit absent the impact of charges associated with the Toys"R"Us
liquidation and severance costs in the first quarter of 2018 provides
investors with an understanding of the underlying performance of the
Company's business absent these unusual events. Management believes that
EBITDA and Adjusted EBITDA are appropriate measures for evaluating the
operating performance of the Company because they reflect the resources
available for strategic opportunities including, among others, to invest
in the business, strengthen the balance sheet and make strategic
acquisitions. These non-GAAP measures should be considered in addition
to, not as a substitute for, or superior to, net earnings or other
measures of financial performance prepared in accordance with GAAP as
more fully discussed in the Company's financial statements and filings
with the SEC. As used herein, "GAAP" refers to accounting principles
generally accepted in the United States of America.

HAS-E

   
HASBRO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(Thousands of Dollars)
July 1, 2018 July 2, 2017
ASSETS
Cash and Cash Equivalents $ 1,159,072 $ 1,433,500
Accounts Receivable, Net 739,268 846,547
Inventories 610,248 557,507
Other Current Assets   319,045   257,251
Total Current Assets 2,827,633 3,094,805
Property, Plant and Equipment, Net 265,904 268,973
Other Assets   2,020,319   1,548,965
Total Assets $ 5,113,856 $ 4,912,743
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term Borrowings $ 20,121 $ 186,863
Current Portion of Long-term Debt - 349,916

Payables and Accrued Liabilities

  1,032,323   935,468
Total Current Liabilities 1,052,444 1,472,247
Long-term Debt 1,694,350 1,199,114
Other Liabilities   600,312   408,888
Total Liabilities 3,347,106 3,080,249
Total Shareholders' Equity   1,766,750   1,832,494
Total Liabilities and Shareholders' Equity $ 5,113,856 $ 4,912,743
 
                 
HASBRO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 

Quarter Ended

Six Months Ended
 

(Thousands of Dollars and Shares Except Per Share Data)

July 1,
2018

% Net
Revenues

July 2,
2017

% Net
Revenues

July 1,
2018

% Net
Revenues

July 2,
2017

% Net
Revenues

Net Revenues $ 904,458 100.0 % $ 972,506 100.0 % $ 1,620,799 100.0 % $ 1,822,169 100.0 %
Costs and Expenses:
Cost of Sales 338,306 37.4 % 368,233 37.9 % 593,493 36.6 % 674,315 37.0 %
Royalties 66,045 7.3 % 79,152 8.1 % 135,697 8.4 % 143,532 7.9 %
Product Development 59,859 6.6 % 62,793 6.5 % 117,243 7.2 % 125,379 6.9 %
Advertising 87,601 9.7 % 92,374 9.5 % 155,617 9.6 % 173,310 9.5 %
Amortization of Intangibles 4,554 0.5 % 7,881 0.8 % 11,032 0.7 % 15,762 0.9 %
Program Production Cost Amortization 7,297 0.8 % 5,188 0.5 % 19,331 1.2 % 10,758 0.6 %
Selling, Distribution and Administration   253,208   28.0 %   256,901   26.4 %   581,217   35.9 %   500,786   27.5 %
Operating Profit 87,588 9.7 % 99,984 10.3 % 7,169 0.4 % 178,327 9.8 %
Interest Expense 22,803 2.5 % 24,224 2.5 % 45,612 2.8 % 48,680 2.7 %
Other Income, Net   (3,339 ) -0.4 %   (11,126 ) -1.1 %   (18,179 ) -1.1 %   (28,076 ) -1.5 %
Earnings (Loss) before Income Taxes 68,124 7.5 % 86,886 8.9 % (20,264 ) -1.3 % 157,723 8.7 %
Income Tax Expense   7,825   0.9 %   19,163   2.0 %   31,929   2.0 %   21,401   1.2 %
Net Earnings (Loss) $ 60,299   6.7 % $ 67,723   7.0 % $ (52,193 ) -3.2 % $ 136,322   7.5 %
 
Per Common Share
Net Earnings (Loss)
Basic $ 0.48   $ 0.54   $ (0.42 ) $ 1.09  
Diluted $ 0.48   $ 0.53   $ (0.42 ) $ 1.07  
 
Cash Dividends Declared $ 0.63   $ 0.57   $ 1.26   $ 1.14  
 
Weighted Average Number of Shares
Basic   125,711     125,263     125,392     125,221  
Diluted   126,335     127,367     125,392     127,296  
 
     
HASBRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands of Dollars)
 
Six Months Ended
July 1, 2018 July 2, 2017
Cash Flows from Operating Activities:
Net (Loss) Earnings $ (52,193 ) $ 136,322
Non-Cash Adjustments 89,919 118,139
Changes in Operating Assets and Liabilities   203,075     111,645  
Net Cash Provided by Operating Activities   240,801     366,106  
 
Cash Flows from Investing Activities:
Additions to Property, Plant and Equipment (71,755 ) (66,321 )
Investments and Acquisitions, Net of Cash Acquired (155,451 ) -
Other   3,384     (1,465 )
Net Cash Utilized by Investing Activities   (223,822 )   (67,786 )
 
Cash Flows from Financing Activities:
Net (Repayments of) Proceeds from Short-term Borrowings (133,582 ) 14,258
Purchases of Common Stock (103,493 ) (18,561 )
Stock-Based Compensation Transactions 20,108 9,902
Dividends Paid (149,528 ) (134,655 )
Employee Taxes Paid for Shares Withheld   (54,730 )   (31,400 )
Net Cash Utilized by Financing Activities   (421,225 )   (160,456 )
 
Effect of Exchange Rate Changes on Cash (17,916 ) 13,351
 
Cash and Cash Equivalents at Beginning of Year   1,581,234     1,282,285  
 
Cash and Cash Equivalents at End of Period $ 1,159,072   $ 1,433,500  
 
           
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
(Unaudited)
(Thousands of Dollars)

Quarter Ended

Six Months Ended
   

July 1,
2018

July 2,
2017

%
Change

 

July 1,
2018

July 2,
2017

%
Change

 

Major Segment Results

U.S. and Canada Segment:

External Net Revenues $ 459,332 $ 494,427 -7 % $ 823,629 $ 946,004 -13 %
Operating Profit 76,231 81,557 -7 % 52,848 146,311 -64 %
Operating Margin 16.6 % 16.5 % 6.4 % 15.5 %
 

International Segment:

External Net Revenues 380,444 426,564 -11 % 668,389 771,845 -13 %
Operating Profit (Loss) 173 16,884 -99 % (55,915 ) 17,428 > -100%
Operating Margin 0.0 % 4.0 % -8.4 % 2.3 %
 

Entertainment and Licensing Segment:

External Net Revenues 64,651 51,494 26 % 128,672 104,223 23 %
Operating Profit 18,627 11,324 64 % 32,533 22,670 44 %
Operating Margin 28.8 % 22.0 % 25.3 % 21.8 %
 

International Segment Net Revenues by
Major Geographic Region

Europe $ 199,575 $ 237,607 -16 % $ 355,137 $ 453,727 -22 %
Latin America 96,401 99,869 -3 % 162,362 164,625 -1 %
Asia Pacific   84,468     89,088   -5 %   150,890     153,493   -2 %
Total $ 380,444   $ 426,564   $ 668,389   $ 771,845  
 

Net Revenues by Brand Portfolio (1)

Franchise Brands $ 506,535 $ 552,435 -8 % $ 868,241 $ 1,001,594 -13 %
Partner Brands 208,005 230,015 -10 % 408,597 442,977 -8 %
Hasbro Gaming 134,275 133,872 0 % 239,502 269,639 -11 %
Emerging Brands   55,643     56,184   -1 %   104,459     107,959   -3 %
Total Net Revenues $ 904,458   $ 972,506   $ 1,620,799   $ 1,822,169  
 

Hasbro's total gaming category, including all gaming revenue, most
notably MAGIC: THE GATHERING and MONOPOLY, totaled $312,773 and $516,315
for the three and six months ended July 1, 2018, respectively, up 14%
and down 2%, respectively, from revenues of $273,261 and $526,550 for
the three and six months ended July 2, 2017, respectively.

(1) For the quarter and six months ended July 2, 2017, revenues of
$6,717 and $25,132, respectively, were reclassified from Emerging Brands
to Franchise Brands to conform to the presentation for the quarter and
six months ended July 1, 2018.

 
HASBRO, INC.
SUPPLEMENTAL FINANCIAL DATA
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Thousands of Dollars)
         

Net Earnings (Loss) and Earnings (Loss)
per Share Excluding the Impact of Toys"R" Us, Severance and Tax
Reform

 
Six Months Ended

(all adjustments reported after-tax)

July 1, 2018

Diluted Per Share
Amount (1)

July 2, 2017

Diluted Per
Share Amount

Net Earnings (Loss), as Reported $ (52,193 ) $ (0.42 ) $ 136,322 $ 1.07
Incremental costs impact of Toys"R"Us (2) 61,372 0.49 - -
Severance (3) 15,699 0.12 - -
Impact of Tax Reform (4)   47,790     0.38     -     -  
Net Earnings, as Adjusted $ 72,668   $ 0.58   $ 136,322   $ 1.07  
 
(1) Diluted Per Share Amount for the impact of Toys"R"Us,
severance and Tax Reform and net earnings, as adjusted, for the six
months ended July 1, 2018 are calculated using dilutive shares of
126,215.

(2) In the first quarter of 2018, Toys"R"Us announced a
liquidation of its U.S. operations, as well as other retail
impacts around the globe. As a result, the Company recognized
incremental bad debt expense on outstanding Toys"R"Us receivables,
royalty expense, inventory obsolescence as well as other related
costs.

(3) In the first quarter of 2018, the Company incurred
severance charges, primarily outside the U.S., related to
accelerating actions associated with a new go-to-market strategy
designed to be more omni-channel and e-commerce focused. These
charges were included in Corporate and Eliminations.
(4) Represents the adjustment of certain provisional
amounts recorded in the fourth quarter of 2017 based on additional
guidance issued by the U.S. Treasury Department and the Internal
Revenue Service in the first quarter of 2018.
 
The impact of the above items on Operating Profit (Loss), and
impacted segments, and Income Taxes for the six months ended July 1,
2018 is as follows:
YTD June 2018   As Reported % Net Revenues

Impact of
Above Items

Excluding
Impact of
Above Items

% Net Revenues
Operating Profit (Loss) $ 7,169 0.4 % $ 87,777 $ 94,946 5.9 %
U.S. and Canada Segment 52,848 6.4 % 52,277 105,125 12.8 %
International Segment (55,915 ) -8.4 % 11,151 (44,764 ) -6.7 %
Income tax expense (benefit) 31,929 2.0 % (37,084 ) (5,155 ) -0.3 %
 
 

Reconciliation of EBITDA

Quarter Ended Six Months Ended
July 1, 2018 July 2, 2017 July 1, 2018 July 2, 2017
Net Earnings (Loss) $ 60,299 $ 67,723 $ (52,193 ) $ 136,322
Interest Expense 22,803 24,224 45,612 48,680
Income Taxes (including tax reform) 7,825 19,163 31,929 21,401
Depreciation 36,071 38,089 62,292 65,791
Amortization of Intangibles   4,554     7,881     11,032     15,762  
EBITDA $ 131,552   $ 157,080   $ 98,672   $ 287,956  
Impact of Toys"R"Us and Severance   -     -     (87,777 )   -  
Adjusted EBITDA $ 131,552   $ 157,080   $ 186,449   $ 287,956  

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