Fitch Affirms Hasbro's Issuer Default Rating at 'BBB

BOSTON, Jul 08, 2008 (ASCRIBE NEWS via COMTEX) -- HAS | Quote | Chart | News | PowerRating -- Fitch Ratings has affirmed the following ratings on Hasbro: --Issuer Default Rating (IDR) at 'BBB'; --Unsecured bank facility at 'BBB', --Senior notes at 'BBB'.

Fitch Ratings said approximately $1.145 million of debt and debt facilities are affected by the affirmation. The Rating Outlook has been revised to Positive from Stable.

Hasbro said its rating reflects its position in the traditional toy industry with revenues of $3.8 billion, improving operating performance as shown by an EBITDA margin which has increased from 14.7 percent at the fiscal year ended December 2004 (FY04) to 17.6 percent at FY07. Hasbro's top line has some volatility related to theatrical releases although Fitch notes that core revenues are also growing. The company stated it has a broad and diverse portfolio of brands, strong free cash flow which averaged $300 million over the past four years, and leverage of 1.3 times (x).

The rating also incorporates the volatility inherent in the toy industry. These include: fashion risk; energy related commodity cost increases; customer concentration in the U.S. to Wal-Mart, Toys 'R' Us and Target; age compression; declining to flat domestic revenues -- down 2 percent to $22.1 billion in 2007 per NPD Group; and increased seasonality particularly regarding profitability. Given this, the larger players in the industry maintain clean balance sheets and a broad product portfolio.

Hasbro is focused in children and family entertainment products including a broad variety of games -- both board and electronic games, puzzles, boys' action figures and an increasing focus on girls and tween toys. Key toy brands include G.I. Joe, Transformers, Playskool, My Little Pony, Littlest Pet Shop, Play-Doh and Tonka. The Games segment makes products under its Milton Bradley, Parker Brothers, Tiger and Wizards of the Coast brands. Hasbro also holds the license for Star Wars and Marvel products.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, fitchratings.com.

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