STRICTLY PRIVATE AND CONFIDENTIAL

© Nomura

Connecting Markets East & West

STRICTLY PRIVATE AND CONFIDENTIAL

© Nomura

Hasbro, Inc. (HAS)

May 2014

LBO Presentation

M&A Group

Sean Penso

Table of Contents

1. Introduction to Hasbro

2. Investment Highlights

3. Growth Opportunities

4. Valuation and Financing Considerations

Introduction to Hasbro

Sources:

1. Market Cap, Net Debt and TEV as of 5/14/14 at stock price of $54.95.

2. Company filings and investor presentations.

Overview: Founded in 1923 and headquartered in Pawtucket, Rhode Island,

Hasbro, Inc. (“Hasbro” or the “Company) is a global provider of children’s toys

and family leisure products

– Employs >5,000 workers in the Americas, Europe, Asia/Pacific region and

South Africa

Products/Services: Marketed under four segments: (1) boys; (2) games; (3)

girls; and (4) preschool toys

– Toys: sells boy’s action figures, vehicles, and playsets, girl’s toys, plush

products, preschool toys and infant products, electronic interactive products,

creative play, and toy-related specialty products

– Games: sells action battling, board, card, digital, electronic, mobile, and

RPG’s

– Television programming: produces and distributes broadcasting based on

the Company’s brands

– Distribution platforms include cable network, ITunes, and Netflix

– Licensing/ Movie Entertainment: license trademarks, characters and other

property rights to third parties

Clients: Wholesalers, distributors, chain stores, discount stores, mail order

houses, catalog stores, department stores, and Internet retailers

Financials Highlight (FY’13): Revenue: $4.08b; Net Income: $2.01b; FY14E

EBITDA: $839m; EPS: $2.83; FY14E PE: 16.8

– 52-week range: 43.46 – 56.91; Market Cap: $7.13b(1) ~$570m Net Debt;

TEV: ~$7.7b

– Awards: Fortune Rankings 100 Best Companies to Work For: 2011-13; Forbes

Global 2000: 2010-11; Forbes 400 Best Big Companies in America: 2009

1

Company Overview 2013 Revenue by Segment

US & Canada vs. International Sales

Company Overview

Entertainment &

Licensing

5%

International

46% US & Canada

49%

Global Operations

<1%

2,448 2,300 2,253

2,116 2,006

1,459 1,560

1,862 1,782

1,873

2009 2010 2011 2012 2013

US & Canada International

2009 2010 2011 2012 2013

Sources/Annotations:

1. Company filings. 2

Franchise Brands Challenger Brands Gaming Mega Brands

Hasbro’s Brands

Partner Brands

®

2013 Revenue by Segment

Franchise

44%

Partnerships

20%

Games

20%

Challenger

16%

1,998 2,009 2,031 2,011 1,997 4,068 4,002 4,286 4,089 4,082

Sources/Notes:

1. All results are from Fiscal Year ending in the referenced period.

2. Company filings and investor presentations. 3

Revenue ($m) Net Income ($m) EBITDA ($m)

Operating Performance Snapshot

CAGR: 0.1% CAGR: 0.0%

792 774 800 813 785

2009 2010 2011 2012 2013

($mm) 2009 2010 2011 2012 2013

Sales 4,068 4,002 4,286 4,089 4,082

COGS 2,070 1,993 2,255 2,078 2,085

Gross Profit 1,998 2,009 2,031 2,011 1,997

% margin 49.1% 50.2% 47.4% 49.2% 48.9%

SG&A 1,387 1,403 1,427 1,390 1,441

EBIT 611 606 604 621 556

% margin 15.0% 15.1% 14.1% 15.2% 13.6%

Total EBITDA 792 774 800 813 785

% margin 19.5% 19.4% 18.7% 19.9% 19.2%

2009 2010 2011 2012 2013

2009 2010 2011 2012 2013

Sales: 2009-2010: part of larger trend of financial

crisis among large toy providers

– 2011-2012: > $200m decrease in boys’ toys sales

– 2012-2013: > $300m decrease in boy’s toys sales

Gross Profit: 2010-2011: increase in COGS due to

unfavorable manufacturing variances as a result of

reduced games production

– 2012-2013: increase in COGS due to a change in

product mix

EBIT: 2010-2011: SG&A expenses remained similar;

lower EBIT margin from trend above

– 2012-2013: (same as 2010-2011)

EBITDA: 2010-2011: explained by trend in EBIT

– 2012-2013: explained by trend in EBIT

Commentary Key Income Statement Items

Sources:

1. Company filings and investor presentations. 4

Investment Highlights

Attractive Financial Profile

Strong Target Industry Drivers

Opportunities to Increase

Profitability

Company historically has strong, stable cash flows

– Free cash flow has been positive for all of the past 5 fiscal years despite downward compression

in the sector

– CAGR between 2009-2013 is 12.4%, with growth from $161.5m to $289.1m in free cash flow

Hasbro holds a relatively standard debt profile compared to peers

– Total Debt/ TEV = 17.9% versus industry average of 20.8%

Girls’ toys sales expected to drive growth with strong brands like My Little Pony products

– Girls’ toys sales were up 26% in 2013 vs. 2012

– Segment projected to increase from 21% of total revenue in 2010 to >26% of total revenue in

2019

There are increasing opportunities for digital, mobile, and online engagement

– Combination of macroeconomic and company-specific factors enable these opportunities

Emerging markets represent a huge potential for revenue growth and margin expansion

– Sustained double-digit growth within EM’s where Hasbro products are offered

Currently a global cost savings initiative in place to improve operating and other below-the-

line margins

– Aimed to reduce operating costs by an annual gross amount of $100m by the end of 2015

– Achieved through focusing on fewer, more global brand initiatives, workforce reductions, facility

consolidation and other process improvements

Emerging markets show sustained operating margin expansion

– Can further improve margins via isolation

Key Growth Opportunities

Sources/Annotations:

1. Other revenue streams account for <1% of total revenue for each period.

2. Company filings and investor presentations.

5

Hasbro’s Revenue Mix by Market(1)

Key Figures

Reputable Girl Brands

Girls’ Toys Expansion

2014E 2019E

Games and

Puzzles

32%

Boys’ Toys

34%

Girls’ Toys

21%

Preschool Toys

13%

Games and

Puzzles

31%

Boys’ Toys

32%

Girls’ Toys

25%

Preschool Toys

12%

Games and

Puzzles

31%

Boys’ Toys

31%

Girls’ Toys

26%

Preschool Toys

12%

2010A

Revenue:

$4.0b

Revenue:

$4.4b

Revenue:

$5.5b

Girls’ Toys Sales are up 26% in 2013 vs. 2012

6 consecutive quarters of growth in this segment

Currently accounts for > $1b in revenue

Select Analyst & Press Comments on Hasbro’s Q1 2014 Results

“Despite the EPS beat, we think the quarter was something of a mixed bag, with enough to keep both

bears and bulls in their respective positions. On the positive side, sales were positive in a tough overall

market, with strong continued growth in Girls and an improvement in Boys.”

BMO Capital Markets (Market Perform – PT: $55)

“We believe Hasbro is well positioned for growth in 2014 and beyond. Although the current lineup of

entertainment properties in 2014 and 2015, which should benefit Boys, is on the forefront of investor’s

minds, we are most excited about the strength of the Girl’s division, which continues to showcase

Hasbro’s creativity…Q1 Revenue growth in Girls (+20.8%) offset worse-than-expected results across

the other product categories.”

Barclays (Equal Weight – PT: $58 – increased from $55)

“The growth in Hasbro's sales of toys for girls contrasts with the fading sales of Barbie dolls, which

dragged rival Mattel Inc to its first quarterly loss in nearly five years…Hasbro has tasted success with

its My Little Pony franchise, including a TV series based on the equine characters with colorful bodies

and manes.”

Thomson Reuters

Sources:

1. Investor presentations and company filings.

The My Little Pony Brand has experienced tremendous success globally

My Little Pony Brand

+199%

+194%

+203%

+47%

6

2010-2013 Regional Growth Rates

Sources/Annotations:

1. 5-Year CAGR of 96%.

2. Company filings and investor presentations.

Division Overview:

$575m in revenue in 2013; comprised 14% of total revenue in 2013

> 40% operating profit growth and significant margin expansion

– Operating margin of 10.1% of revenue in 2013 vs. 8.9% in 2012

– 3-year CAGR of 113%; 5-Year CAGR of 96%

– Expected continuous double digit growth

Number of Hasbro employees in EM’s increased 2x between 2008 and

2013

– 50% of employees were outside the US in 2013

Emerging markets represent a huge potential for revenue and operating profit growth, as well as

margin expansion

Emerging Markets Momentum

8

EM Revenues ($m)

2008 2009 2010 2011 2012 2013

153 192

233

399

461

575

3-Year CAGR: 35%

2 (4)

6

25

40

58

2008 2009 2010 2011 2012 2013

3-Year CAGR: 113%

EM Operating Profit ($m)(1)

25% Revenue Growth

YoY

45% Operating Profit

Growth YoY

Valuation and Financing Considerations

Valuation Multiples

Trading Comparables Analysis

9

Company Name

Price at

5/14/14

(USD)

% of

52 Week

High

Equity

Value

Enterprise

Value CY2014E CY2015E CY2014E CY2015E CY2014E CY2015E

Total Debt/

EBITDA

Net Debt/

EBITDA

Hasbro $54.95 96.6% $7,133 $7,700 1.8x 1.7x 9.2x 8.6x 17.1x 15.5x 1.8x 0.7x

Mattel $39.27 81.0% $13,322 $14,025 2.1x 2.0x 10.4x 9.5x 15.7x 14.0x 1.2x 0.5x

LeapFrog Enterprises $6.65 55.6% $463 $295 0.5x 0.5x 6.0x 4.3x 33.4x 18.2x 0.0x NM

BuildABear Workshop $13.64 95.8% $238 $194 0.5x 0.5x 6.7x 6.0x 27.3x 24.4x 0.0x NM

Namco Bandai $22.02 88.2% $4,889 $3,877 0.8x 0.8x 5.3x 5.1x 14.9x 14.2x 0.2x NM

VTech $13.51 85.3% $3,393 $3,298 1.7x 1.6x 12.3x 11.4x 15.9x 14.7x 0.0x NM

Tomy $4.58 83.7% $441 $812 0.5x 0.5x 5.9x 6.2x 21.1x 18.9x 6.2x 3.3x

Sanrio $32.51 51.0% $2,896 $2,690 3.5x 3.3x 11.3x 10.2x 21.1x 18.3x 1.1x NM

Playmates Toys $0.38 65.1% $450 $383 1.3x 1.5x 4.1x 4.6x 7.1x 7.9x 0.0x NM

Mean 1.38x 1.35x 7.75x 7.16x 19.55x 16.33x 1.07x 1.90x

Median 1.35x 1.54x 6.70x 6.22x 17.14x 15.55x 0.17x 0.70x

Revenue EBITDA Price / EPS

Sources:

1. CapIQ, FactSet, Equity Research, Company 8ks.

Sources:

1. Equity Research Reports and company filings.

Discounted Cash Flow Analysis

10

STUB-6mo

($mm) Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Terminal

**Discount Rate of 9%

EBITDA $489.4 $891.0 $940.0 $997.8 $1,059.6 $1,059.6

Less: D&A (156.3) (272.0) (283.0) (300.4) (319.0) (157.8)

EBIT 333.1 619.0 657.0 697.4 740.6 901.8

Less: Taxes (35.0%) (116.6) (216.7) (230.0) (244.1) (259.2) (315.6)

NOPAT 216.5 402.4 427.1 453.3 481.4 586.2

Plus: D&A 156.3 272.0 283.0 300.4 319.0 157.8

Plus / Less: ∆ Working Capital 0.0 (21.9) (2.4) (26.3) (28.1) (28.1)

Less: CapEx (72.3) (131.0) (140.0) (142.0) (157.8) (157.8)

Unlevered Free Cash Flows 300.5 521.4 567.6 585.5 614.5 558.1

Perpetual Multiple

Method Method

PV of Operation CFs 2,123.4 27.9% 2,123.4 24.4%

PV of Terminal CF 5,478.6 72.1% 6,567.6 75.6%

Total Enterprise Value 7,602.0 100.0% 8,691.0 100.0%

Illustrative Pro Forma Capitalization

Assumes purchase

price of $8,074 million

or 10x Jun-14E LTM

EBITDA of $807

million

Fully prepayable

capital structure

After-tax weighted

average cost of debt

of 4.23%

Key considerations Sources and uses

Indicative pro forma capitalization

11

($mm)

Sources Uses

Revolver (size TBD) - Purchase Price 8,074

Term Loan A - Financing Fees 190

Cov-Lite Term Loan B 4,000 Other Fees & Expenses -

Second Lien Term Loan 2,000 OID Related Fees 80

Equity 2,344

Total Sources 8,344 Total Uses 8,344

($mm) x Jun-14 % of Total

PF Jun-14 LTM EBITDA Cap Maturity Pricing

Revolver (size TBD) - - - 5.0 years L+375bps / 1.00% / 0

Cov-Lite Term Loan B 4,000 5.0x 48% 7.0 years L+375bps / 1.00% / 99

Second Lien Term Loan 2,000 2.5x 24% 8.0 years L+800bps / 1.00% / 98

Total Debt 6,000 7.4x 72%

Equity 2,344 28%

Total Capitalization 8,344 10.3x 100%

LTM Jun-14 EBITDA 807

Sources:

1. Investor presentations and company filings.

Illustrative Summary Credit Stats

Projections

based on

equity research

consensuses

through 2019

Cumulative

free cash flow

of $1,896

million through

2019E

Delevers from

7.4x Jun-14E

LTM EBITDA

to 3.6x by

2019E

12

($mm) Actual Est. LTM Projected CAGR / Margin

Dec-11 Dec-12 Dec-13 Jun-14 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 2011-'13 2013-'18

Revenue $4,286 $4,089 $4,082 $4,195 $4,354 $4,511 $4,620 $4,904 $5,208 $5,533 (2.4%) 6.3%growth (4.6%) (0.2%) 6.7% 3.6% 2.4% 6.2% 6.2% 6.2%

EBITDA 800 813 785 807 839 891 940 998 1,060 1,126margin 18.7% 19.9% 19.2% 19.2% 19.3% 19.8% 20.3% 20.3% 20.3% 20.3% 19.3% 19.9%

Jun - Dec 14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19

EBITDA 800 813 785 807 489 891 940 998 1,060 1,126

Less: Maintenance Capex (99) (112) (112) (117) (72) (131) (140) (142) (158) (168)Less: Growth Capex (1) (1) (1) (1) (1) (1) (1) (1) (1) (3)

Less: Total Capex (100) (113) (113) (118) (73) (132) (141) (143) (159) (171)

as a % of revenue 2.3% 2.8% 2.8% 2.8% 3.1% 2.9% 3.1% 2.9% 3.0% 3.1% 2.6% 2.7%

Less: Interest expense (395) (213) (355) (382) (407) (414) (405)

Less: Taxes (63) (34) (79) (83) (88) (101) (120)

Plus (Less): Change in working capital - (22) (2) (26) (28) (30)

Free cash flow for debt repayment 169 303 332 334 358 400

Cumulative 169 472 804 1,138 1,496 1,896

Less: Mandatory Amortization (23) (40) (40) (40) (40) (40)

Plus (Less): Revolver draw (paydown) - - - - - -

Less: Optional debt repayment (146) (263) (292) (294) (318) (360)

Free cash flow - - - - - -

Cash balance - - - - - - 0

Revolver - - - - - - -

Bank debt 6,000 5,831 5,528 5,196 4,862 4,504 4,104

Total debt 6,000 5,831 5,528 5,196 4,862 4,504 4,104

Net debt 6,000 5,831 5,528 5,196 4,862 4,504 4,104

Credit Statistics

Bank debt / EBITDA 7.4x 6.9x 6.2x 5.5x 4.9x 4.3x 3.6x

Total debt / EBITDA 7.4x 6.9x 6.2x 5.5x 4.9x 4.3x 3.6x

Net debt / EBITDA 7.4x 6.9x 6.2x 5.5x 4.9x 4.3x 3.6x

EBITDA / Interest expense 2.0x 2.3x 2.5x 2.5x 2.5x 2.6x 2.8x

(EBITDA - CapEx) / Interest expense 1.7x 2.0x 2.1x 2.1x 2.1x 2.2x 2.4x

Fixed charge coverage 1.7x 1.8x 1.9x 1.9x 1.9x 2.0x 2.1x

FCF for Debt Repayment / Debt % 5.2% 5.2% 6.0% 6.4% 7.4% 8.9%

Sources:

1. Equity research reports, investor presentations and company filings.

Illustrative Returns Sensitivity

Three Year Returns

Five Year Returns

13

3-Year IRRs 3-Year MOIC

Entry Multiple Entry Multiple

9.5x 9.8x 10.0x 10.3x 10.5x 9.5x 9.8x 10.0x 10.3x 10.5x

9.5x 28.3% 24.2% 20.5% 17.2% 14.3% 9.5x 2.1x 1.9x 1.8x 1.6x 1.5x

9.8x 30.8% 26.6% 22.8% 19.5% 16.5% 9.8x 2.2x 2.0x 1.9x 1.7x 1.6x

10.0x 33.2% 28.9% 25.1% 21.7% 18.6% 10.0x 2.4x 2.1x 2.0x 1.8x 1.7x

10.3x 35.5% 31.1% 27.2% 23.8% 20.6% 10.3x 2.5x 2.3x 2.1x 1.9x 1.8x

10.5x 37.7% 33.2% 29.3% 25.8% 22.6% 10.5x 2.6x 2.4x 2.2x 2.0x 1.8x

7,670 7,872 8,074 8,276 8,478 7,670 7,872 8,074 8,276 8,478

Exit

Multiple

Implied Entry EV

Exit

Multiple

Implied Entry EV

5-Year IRRs 5-Year MOIC

Entry Multiple Entry Multiple

9.5x 9.8x 10.0x 10.3x 10.5x 9.5x 9.8x 10.0x 10.3x 10.5x

9.5x 25.3% 22.8% 20.6% 18.7% 16.9% 9.5x 3.1x 2.8x 2.6x 2.4x 2.2x

9.8x 26.4% 23.9% 21.7% 19.7% 17.9% 9.8x 3.2x 2.9x 2.7x 2.5x 2.3x

10.0x 27.5% 25.0% 22.8% 20.7% 18.9% 10.0x 3.4x 3.1x 2.8x 2.6x 2.4x

10.3x 28.5% 26.0% 23.8% 21.7% 19.9% 10.3x 3.5x 3.2x 2.9x 2.7x 2.5x

10.5x 29.5% 27.0% 24.7% 22.7% 20.8% 10.5x 3.6x 3.3x 3.0x 2.8x 2.6x

7,670 7,872 8,074 8,276 8,478 7,670 7,872 8,074 8,276 8,478Implied Entry EV Implied Entry EV

Exit

Multiple

Exit

Multiple

Sources:

1. Equity research reports, investor presentations and company filings.