The Energon Pub

Consumer demand for our brands has remained very strong throughout 2015 with many emerging and developed markets including the US, UK and Germany posting double-digit point-of-sale gains this quarter. This demand was evident across categories. In the US and UK, point-of-sale increased double digits in the boys, games, girls and preschool categories. In several countries, point-of-sale also grew in all four categories. Retail inventories are well-positioned to support demand for the holiday season with increases in inventory focused on new initiatives and growing brands. We continued to see strong demand for Hasbro brands. Absent foreign exchange, Hasbro franchise brands increased 4% in the third quarter with Nerf, Play-Doh and Monopoly posting the largest revenue increases. Over the first nine months of the year, franchise brands were up 8% absent FX. Transformers was down given the difficult comparison and Littlest Pet Shop was flat despite growth in the US. The other five franchise brands each reported growth in constant currency in the nine-month period.

Nerf is having another outstanding year with strong innovation driving the core as well as new initiatives including Nerf Modulus and Rival, both off to a strong start. Play-Doh's creative play continues to appeal to global consumers. We celebrated the first-ever world Play-Doh Day on September 16 and we are supporting new fall initiatives including Crazy Cuts and Cupcake Celebration. The growth in these brands helped offset the decline in Transformers. Last year the brand benefited from the Transformers Age of Extinction film. We continue to plan the future of Transformers franchise in all forms of entertainment including movies, television and digital expressions. Transformers Robots in Disguise is airing on Cartoon Network in the US and many international markets and Transformers Rescue Bots is also airing on networks around the world.

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Finally, revenues in the entertainment and licensing segment were down 2% versus 2014. The decline in revenue was primarily driven by lower Transformers revenues in the segment the year after the movie. Operating profit increased to $16.2 million . Intangible amortization was lower as certain digital gaming rights were fully amortized in the second quarter of 2015. In addition, last year operating profit was negatively impacted by the acceleration of certain programming amortization costs. Turning to overall expenses for Hasbro , as anticipated, cost of sales in the third quarter was favorably impacted by product mix. In particular, higher-margin royalty bearing product revenues.

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So first, let's talk about Transformers. Year to date Transformers is actually bucking the trend of a typical boys action property the year following the movie. In fact it is down by just over one-third which as you know is far better than one would expect in a non-movie year and that is because of the amount of entertainment. We are also seeing in our preschool Transformers growth year to date in preschool Transformers, our Transformers Rescue Bots product line and being supported again by content. Our licensing year to date for Transformers is up. So I think maybe we would need to take a broader perspective on the performance of Transformers and look more globally because it is performing quite well in a non-movie year, certainly was down in the quarter and down more typical in the more typical range in the quarter. But again I think the team has done a great job, great innovation, an expanded product line and again down below those trends one would expect.