Debbie Hancock - Hasbro, Inc. Brian D. Goldner - Hasbro, Inc. Deborah M. Thomas - Hasbro, Inc..

Drew Crum - Stifel, Nicolaus & Co., Inc. Felicia Hendrix - Barclays Capital, Inc. Eric O. Handler - MKM Partners LLC Stephanie Schiller Wissink - Piper Jaffray & Co. Gregory Robert Badishkanian - Citigroup Global Markets, Inc. Arpiné H.

Kocharyan - UBS Securities LLC Timothy Andrew Conder - Wells Fargo Securities LLC Gerrick Luke Johnson - BMO Capital Markets (United States).

Good morning, and welcome to the Hasbro Fourth Quarter and Full Year 2016 Earnings Conference Call. At this time, all parties will be in a listen-only mode. A brief question-and-answer session will follow the formal presentation. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

At this time, I'd like to turn the call over to Ms. Debbie Hancock, Vice President of Investor Relations. Please go ahead..

Thank you, and good morning, everyone. Joining me this morning are Brian Goldner, Hasbro's Chairman, President and Chief Executive Officer; and Deb Thomas, Hasbro's Chief Financial Officer. Today, we will begin with Brian and Deb providing commentary on the company's performance, and then we will take your questions.

Our fourth quarter and full-year earnings release was issued this morning, and is available on our website. Additionally, presentation slides containing information covered in today's earnings release and call are also available on our site. The press release and presentation include information regarding non-GAAP financial measures.

Please note that whenever we discuss earnings per share, or EPS, we are referring to earnings per diluted share.

Before we begin, I would like to remind you that during this call and the question-and-answer session that follows, members of Hasbro management may make forward-looking statements concerning management's expectations, goals, objectives and similar matters.

There are many factors that could cause actual results or events to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. Some of those factors are set forth in our annual report on Form 10-K, our most recent 10-Q, in today's press release and in our other public disclosures.

We undertake no obligation to update any forward-looking statements made today to reflect events or circumstances occurring after the date of this call. I would now like to introduce Brian Goldner.

Brian?.

The Movie comes to theaters in October. Powered by our all-screen year-round storytelling, TRANSFORMERS had a strong finish to 2016, posting double-digit growth in the second half of the year and is well positioned for the next chapter of the TRANSFORMERS franchise. MY LITTLE PONY revenues declined last year, but grew in the International segment.

Brand engagement continues to build through multi-screen storytelling, and we have an innovative and robust line with new characters and worlds. Retailers and consumer products licensees are significantly supporting both Hasbro films. 2016 showcased the extensive innovation and progress Hasbro is making every day.

Our Brand Blueprint is delivering bigger opportunities and new thinking from our teams. Beginning with the first quarter, we will no longer report revenue along the Boys, Games, Girls and Preschool categories. Instead, we'll provide a revenue breakdown of Franchise Brands, Partner Brands, Hasbro Gaming and Emerging Brands.

We believe this is a more relevant and appropriate view of our business. We hope to see many of you next week in New York for Toy Fair. We have amazing new initiatives to share, far too many to review today. As we begin 2017, we have already introduced an all-new segment for NERF, NERF NITRO, which combines NERF blasting and innovative foam vehicles.

We've also introduced an all-new story-driven lifestyle brand, Hanazuki. We launched this brand on YouTube with animated stream content produced by Hasbro Studios. In the first three weeks alone, it has over 49 million views. We look forward to telling you more about these initiatives and many others at Toy Fair. I will now turn the call over to Deb.

Deb?.

THE GATHERING and our consumer product teams, higher depreciation from our investment in IT systems and higher compensation expense associated with our stronger performance. Turning to our results below operating profit, other income was $1.8 million versus $9.1 million last year.

Improved earnings from our share of the Discovery Family Channel, along with higher interest income and investment gains, were more than offset by higher expense related to foreign currency translation. Most of this impact arose in the fourth quarter, driven primarily by a steep decline in the British pound and the steady strengthening of the U.S.

dollar against the Euro. On a reported basis, 2015 included a $6.6 million gain from the sale of manufacturing operations. Excluding the gains, 2015 other income was $2.5 million. The underlying 2016 tax rate was 24.5%, down from 26.4% for the full year 2015.

The decline in the tax rate reflected higher U.S.-based expenses and a higher mix of international sales. For 2017, our tax rate will be favorably impacted by the new accounting standard governing stock-based compensation. We will outline the impact of this standard on our quarterly tax rates in more detail at Toy Fair next week.

Our diluted earnings per share for 2016 were $4.34. On a non-GAAP basis, excluding the $0.12 per share goodwill impairment charge, adjusted 2016 EPS was $4.46 per share. We finished 2016 in a very good financial position, including a strong balance sheet with robust cash generation.

The $775 million in operating cash flow we generated during 2016 allowed us to continue executing against our capital priorities of investing in Hasbro and returning cash to shareholders. In addition to the 12% quarterly dividend increase, we're currently targeting 2017 share repurchases in line with 2016 levels.

These repurchases are subject to market conditions and availability of U.S. cash. Receivables at year-end increased 8%, and days sales outstanding decreased 2 days to 73 days. Our accounts receivable are in good condition, and collections continue to be strong. Inventories at year-end were essentially flat with last year, increasing $3.2 million.

As we communicated, we built inventory during the year to meet our anticipated demand and strong revenue growth outlook throughout 2016. To begin 2017, we have good quality inventory in the right brands and geographies.

Running a global business you'll always find some challenges with certain brands, retailers or regions, but overall, we feel good about the level and quality of our retail inventories and the strong December consumer takeaway has us well positioned to begin 2017.

In closing, 2016's strong performance was driven by a focus on our strategy and tremendous execution across the Hasbro team in building great brands, telling amazing stories, listening to our consumers and executing with excellence, while always investing to position us for future successful years. Brian and I are now happy to take your questions..

Thank you. Thank you. Our first question comes from the line of Drew Crum with Stifel. Please proceed with your question..

Okay. Thanks. Good morning, everyone. Deb, I wonder if you could talk about expectations for the EBIT margin in 2017. I think, 2016 was originally discussed as a year that would limit or the investment spending would limit the margin expansion, but you were able to pick up 90 bps of EBIT margin in 2016.

So, where are you in terms of cycling through some of those investments on MAGIC, on the DISNEY PRINCESS license, on the IT system and what does that allow for margin expansion for 2017? And then, for Brian, could you talk about some of the tailwinds and headwinds as we think about brands for top line growth in 2017? Thanks..

Sure, yeah..

THE GATHERING to get Magic Digital Next up and running and some other investments that we'll continue to make in the business.

And some of those other non-cash type charges that we've expended in the past, like depreciation on our IT systems, we'll put a chart up at Toy Fair again on that, but we'd show they do peak up to 2018 and then start to come down after that. So, we'll provide quite a bit more color at Toy Fair as well..

Yeah. So, Drew, I think important to note that I'd encourage you to model off of our GAAP operating profit margin. And remember that we've improved the operating profit margin over the last three years consecutively.

So, I think the higher operating margin certainly portends good things as we continue to look at ways to expand operating profit faster than revenues growth. And it's a shape of things to come in the future and then model off of the GAAP operating margin.

As it comes to, as you look at brands, I think that our new designations in categories are great way to now look at our business, it's much more indicative of the way we look at our business. So, you see great growth for the year, in Gaming, was up 23%, the Games category overall which is about $1.4 billion business for us, was up 9%.

Our Emerging Brands were up 17%. Our Franchise Brands were up a couple percent, 2%, and then of course our Partner Brands were up 28%. So, the company had great strength and if you took out Partner Brand growth, the company still grew in a very strong way.

So, I think going into 2017, what you see is good retail inventory on several brands that really performed throughout the year and we're setting up for early-year initiatives, including PRINCESS, NERF, STAR WARS, FROZEN, TROLLS. We also saw great growth of these brands online.

And as we go into the initiatives for the year, you see, or quarter-by-quarter great initiatives coming from us for our brands and also our partners' brands.

I think one of the first initiatives out of the gate is the new live-action Beauty and the Beast movie coming for PRINCESS in March and then we go into three Marvel properties for the year, including something I'm very excited about, the new Spider-Man movie which is incredibly toyetic, and then a Guardians film and Avengers.

But brand to brand, strength to strength for 2017. I think the other fun part of the STAR WARS lineup for 2017 is its 40th anniversary, so in addition to focusing on the two movies coming out of last year and then into the new movie, The Last Jedi for December, obviously, it's a wonderful year to celebrate the 40th anniversary of the New Hope.

So, again, whether it's NERF or PLAY-DOH or some of our Partner Brands, what we're going to do for TRANSFORMERS and MY LITTLE PONY around our two feature films, you'll see a real strong lineup as you come into Toy Fair next week..

Thanks, guys..

Our next question comes from the line of Felicia Hendrix with Barclays. Please proceed with your questions..

Hi, good morning..

Morning..

So, Brian, heading into this call, I think expectations were for you to have a different tone in general, maybe not specific to the company, but regarding the industry as a whole.

So, clearly, you benefited from strong performance in the quarter, but can you just give us some color as to what you saw in the quarter from an industry perspective? You didn't really talk a lot, in your prepared remarks, about the industry.

And I thought the comment, Deb, that you made at the end of your prepared remarks that sales allowances were flat year-over-year was interesting. So, just wondering if you could discuss how you maintain those given the industry challenges. Thanks..

Yeah. So, clearly, the industry overall global was up 4.5% for the year and we saw growth through the end of the year. Hasbro was the number one player in December, according to NPD. We saw share growth in most every market in which we participate in and where we have data.

We saw great growth in emerging markets, including double-digit growth in China, significant growth in Russia and growth in Brazil, which one of the markets that was down a bit for the year, yet we grew revenues and share in that market. So, overall, I would say the industry saw strong growth.

We saw strong share growth in several categories, three major categories of the industry, the way the NPD data looks at it. And we were the number one company across five major categories of product, including dolls, arts and crafts, outdoor sports, games, plush, action figures.

So, we see a market that is ripe for story-led brands backed by strong innovation and insights that embrace digital and are executed globally with incredible team work. And that's what we did. And that's what we'll continue to do..

Okay. Okay. And then just....

So, I guess the answer is, we see growth in the industry. So, I'm not sure exactly what your question....

No, that hit it. And then your sales allowances were indeed flat year-over-year, so there was no kind of pressure for you to promote more than normal..

Yeah. So, our DSOs are down by 2 days. Our inventory levels year-on-year are up $3 million, or basically flat year-on-year. We didn't experience any kind of extraordinary sales allowances.

And we entered the year, I looked at retail inventories knowing that would be an area of discussion, and if you look at the brands that where we have retail inventory that would be an increase versus year ago, you have PRINCESS and FROZEN where we didn't have the brands a year ago.

You had STAR WARS where a year ago, we really were out of stock coming out of the movie and now we're set up well for the spring initiatives around Rogue One, around the 40th anniversary and then, of course, head into the new movie in December. We have inventory around NERF. We've had great success across a number of initiatives.

And, of course, we have a new initiative coming there in NITRO. And, of course, TROLLS, which performed incredibly well. We had really worked hand-in-glove with DREAMWORKS and now Universal. The brand really resonates in the toy space, as you would imagine it would, and we're very excited about our initiatives coming into 2017..

That's good. And then just on STAR WARS, you mentioned, Brian, that STAR WARS declined slightly year-over-year, but that was commentary related to the overall portfolio. Just wondering if you could give us a little color about Rogue One.

And what I'm trying to also understand is, how Boys would have done if you adjusted for Force Friday, which was in the quarter this year and not last year? And then also along those lines, what the POS for the quarter would have been on a calendar basis, since the fiscal quarter ended on 12/25/2016. I'm just trying to get apples to apples..

Yeah. So, look, overall, I think it's important to note for STAR WARS, our POS in 2016 was up versus 2015, for the brand. And clearly, we tried to indicate quarter-on-quarter, we saw different template in 2016 than 2015 but overall, we believed the brand would perform similar to 2015 and it, in fact, did.

Obviously in the fourth quarter, it was below the prior year. If you look at the differences in timing, clearly that plays a bit of a role about STAR WARS in the fourth quarter, but I would tell you if you look at our online business, particularly in the U.S. where we have great data, overall online sales were up three times that of our overall POS.

So, our overall POS in the quarter, in the U.S., was up 10%. So, it was better than three times. And online and one of the key areas that was really growing for us online were STAR WARS. And so, we had some great initiatives there, and clearly helped to drive our overall online POS, so STAR WARS was up.

So, I think that as we go the forward on Rogue One, I'm sure that there'll be even more engagement in that story as more and more kids catch on to the story. The movie didn't really come until mid-December.

And then of course, we have wonderful 40th anniversary product I know our fans and collectors are very excited from all of our social scraping and listening. We really see their excitement around the 40th anniversary. And then we'll segue again into a fall event, and head into The Last Jedi.

And so, again, I think we're set up well for STAR WARS this year..

Okay. Thanks for the help. Appreciate it..

Thank you. Our next question is from the line of Eric Handler with MKM Partners. Please proceed with your questions..

Yes. Thanks for the question. Two things for you. First, as you look at your quarterly revenue cadence for 2017, I'm sure you'll probably give more data in Toy Fair, but the way Beauty and the Beast is tracking theatrically, is very, very high and the movie is being very well regarded.

How do you think that may impact your revenue cadence for the year? And then secondly, as a follow-up to comments you just made about online revenue being up three times versus overall POS, is there any difference between your online margins and sort of your bricks and mortar margins?.

Yeah. So, let me take the PRINCESS question first. So, remember, a year ago, we were just launching our PRINCESS business. And what we saw throughout the year was great results in PRINCESS and FROZEN. And in fact, we performed at a very high level and our retailers felt very strongly about our product offering, the innovation.

We got a lot of really positive consumer takeaway and consumer feedback as well. But one of the other things we saw throughout the year particularly early in the year and then it continued throughout the year was this baseline of POS related to the prior product, the product from the predecessor licensee.

And in fact, if you took the full year, it was probably on average between PRINCESS and FROZEN about 25% of overall POS related to product that had been shipped in, in 2015 and in 2016, given their window to ship. So, we clearly see PRINCESS as just the early days.

And we've said before that we believe long-term that we can grow the PRINCESS business to be far bigger on average in a given year than it had been in the past and we don't really change our thoughts about that. The team has done a great job in innovative product.

I think one of the keys to that as you look at the holiday sales, you get to online and a good segue, one of the key items that sold online was the 11-pack of our PRINCESSES, meaning all 11 PRINCESSES offered as an online pack and it was one of our key items for the holidays. People loved that shimmering doll and that was one of our top sellers.

If you look at online overall, we clearly have gone through a learning curve. We continue to go through a learning curve and how you do packaging different, how you create digital assets. And so there have been some initial costs related to that as we build our capabilities as a company in design and development.

But I would also tell you overall, there is no long-term difference, or cost of business difference long-term between brick and mortar and online. In the short-term, we've clearly built in those investments into our P&L that's been expressed over the last couple years.

But, long-term next, call it, two to four years, we should be in a position where there is, again, the costs are very similar in cost of business. But you've got to work through all the initial startups, frustration-free packaging, digital assets and how you develop a solid pat product.

But again, we've been able to accomplish an awful lot and come up the learning curve relatively quickly..

Thanks, Brian..

Our next question comes from the line of Stephanie Wissink with Piper Jaffray. Please proceed with your questions..

Thanks. Good morning, everyone. Just a couple of clarification question. Brian, I think you mentioned to use GAAP operating margins as a starting point for 2017. That's a little bit different than I think how most of us model.

So I'm just curious if we should be kind of adjusting out some of the add-backs that you had this year, if you'd like us to use that fully impacted number as a starting point. And then, Deb, just one for you, as we think about the 53rd week, it does fall at a pretty sizable revenue period for you as we end this year.

So, can you talk a little bit about the benefit of what you're expecting in 2017 from that additional selling week? Thank you..

Yeah. So, overall, if you take the GAAP number we reported, it was 15.7% operating margin, clearly the full year on adjusted is, 16.4%. The point I make is that over the last three years, we've had improving operating profit margin consecutively. And we would expect to continue to improve operating profit margin over time.

And I believe that the 16.4% portends the long-term, longer term future of Hasbro, but we need to continue to build a relentlessly repeatable model. We need to be able to execute at that level that would enable us to get there on a sustaining basis.

So, therefore, I would encourage you to model based on 15.7%, recognizing that over the last three years we've been able to expand operating margin modestly in each and every year.

So, just again, I think everyone at the company is very focused on long-term achieving that kind of 16.4% level on a regular basis, but we also know that that took tremendous performance, and, I think, every factor that could go for us went for us. And again, I think that I'm just trying to give you some help as you think about your modeling..

And as far as the 53rd week, I mean, what we find is the 53rd week actually comes early for us because our year ended 12/25 in 2016 and it ends 12/31 in 2017, so it really kind of comes at the beginning of the year versus the end of the year for us.

So, we'll find while we've got some more expenses, it just generally blends out over the course of the year..

Thank you..

Our next question is from the line of Greg Badishkanian from Citigroup. Please proceed with your question..

Great. Thanks. You have a very big entertainment movie slate for this year.

How do you feel how it's spaced and the different cannibalization within different categories? How additive do you think that could actually be to sales this year?.

I think in addition to a great calendar that stretched all 12 months, we've talked about how the old days of summer movies has now become year-round movies that are all can be toyetic and contribute to our business. So, you start in the first quarter with great initiatives like Beauty and the Beast.

We have a new Spider-Man that, as I said, I'm particularly excited about. You've got Guardians too (44:49). And wait till you see our dancing GROOT, it's quite a fun product. And then you get into, in the fall in Marvel, Thor, which again, part of the Avengers. And then, of course, we have our own TRANSFORMERS.

We have a MY LITTLE PONY movie coming in October. We get into the holidays with STAR WARS, so I think it's really stretched out. The other thing that's interesting is the difference in globality between, let's just take three properties. So, there's a great opportunity.

Marvel is one of the more developed Boys action properties with about 55% of revenues or better coming in international markets. Our TRANSFORMERS business is sort of roughly split, but has been growing more internationally over time.

And then STAR WARS is a little less internationally oriented, but I think over time, again, as we partner with Disney, we'll grow it to be more global. So, don't just focus on the U.S. marketplace, but rather the global marketplace as we think about how we run these initiatives and brands.

And so, I think we partner really well with our studios partners, and again, are working to continue to grow those businesses. And the play patterns, innovation and focus for each of our teams, we have dedicated teams on each of those brands and businesses, enable them to really focus on bringing the best ideas to each of those properties.

And we treat all those properties like our properties, because we're a great IP owner and a great partner..

Great. And, it sounds like the, wherever you had elevated inventory, those were in your stronger brands. So it didn't really impact your sales allowances, but, obviously, your competitors have talked about that impacting their businesses.

So, would you expect an uptick in promotion from some of your competitors in Q1? Would that have any impact on your sales or your need to promote products as well?.

We really have looked at where we are with retail inventories. Remember, our inventories at Hasbro are roughly flat to year ago.

And if you look at retail inventories and you add up the increments, it's in the brands I outlined earlier, which are all strong brands where we had lesser inventory a year ago for good reason, meaning PRINCESS was just starting, as was FROZEN.

STAR WARS, we were really out of stock the year prior, and now we have some in stock to take advantage of the first half of the year. TROLLS is brand new for us. And NERF, of course, has had great success and we have new initiatives.

We'd seen discounted product running throughout the year on a brand like PRINCESS in 2016, and yet with our innovation and marketing we continue to perform. We don't see any retail inventories impacting our full-year 2017. So, I would take a longer view, a four-quarter view, to our business.

I can't really comment on what others might do promotionally, but we have our plans in place and obviously provide the same level of discounts and allowances to our retailers in this past season than we've provided in past years. There's really been no difference..

Thank you..

Our next question is from the line of Arpiné Kocharyan with UBS. Please proceed with your questions..

Hi. Thank you. Good morning. Very good shipment and retail growth for the quarter, obviously. Would it be possible to share global point of sale number ex-DISNEY PRINCESS and FROZEN versus shipment, ex-DISNEY PRINCESS? And then I have a quick follow-up..

Yeah. Our business, we would be ahead of the industry growth around the world ex-DISNEY PRINCESS and FROZEN. So, our overall POS would be better than the industry growth still. And as I mentioned, of course, our business would be up considerably ex-DISNEY PRINCESS and FROZEN as well..

Great, great. And then I have a quick follow-up, Brian.

As you look at the industry today, and your relative outperformance both fundamentally and sort of strength of your stock price, could you perhaps update us on your capital allocation plans and your appetite for a transformational deal? And perhaps if you could remind us for your criteria for M&A. Thanks..

Sure. I'll take part and then, Deb, maybe you'll talk about a piece. Look, we've said that our Brand Blueprint has been our guiding principle and we enacted the Blueprint back in 2008 after having developed global brands focus for the company, and that's been our focus.

If you notice, everywhere we've added capability, it's been around the Blueprint, it's been a way for us to execute our brands and storytelling. We're very happy to have Boulder Media on board, our animation studio in Ireland that's going to give us some bandwidth for additional animation. We're very happy to have Backflip Studios.

It gives us owned and control mobile gaming creation, in addition to third-party. We always follow a similar path as we look at M&A. First thing we do is, we partner with the best in the business and we learn from them. Second, we develop teams and we embed teams with those partners so that we learn the business and bring that experience in-house.

And then we begin to look outside of ourselves for what capabilities we need and size and scale those opportunities relative to the long-term opportunity for the company. So, we remain open to look at new ideas, and we are also very careful to say it has to fit within our model.

And our model, of course, is storytelling and digital engagement and brands. And that's our focus..

Right. And I agree. And we say that all the time. I mean, first and foremost, we invest in our business. And if we see something that fits with our strategy, and we haven't deviated off our strategy in many years, that's what we want to look at opportunistically because that's in the best interest of our shareholders for the long-term.

So, absent that, we'll return our excess cash to our shareholders, and we do that through dividend. We're really pleased our board announced another dividend increase this year, 12% on per share per quarter, which is just fantastic, and shows that our continued belief in our business is there.

And then, subject to available cash, we return cash to our shareholders through share repurchase as well. And for 2017, subject to market conditions, we're still looking at about the same level as 2016 on that..

Thank you..

Our next question comes from the line of Tim Conder with Wells Fargo. Please go ahead with your questions..

Thank you. And congrats to everyone on the great execution..

Thanks, Tim..

Thank you, Tim..

Just a couple. Brian, you talked about, in context of modeling for 2017 in response to an earlier question off of the GAAP, as you want to continue to reinvest for sustainability being the key word there.

And then you've talked before about how STAR WARS, even in a more major movie year and then in the spinoff year, you'd seen that around $500 million. And then I think there's probably a similar type of context for Marvel.

Can you kind of refresh us your thoughts on that for STAR WARS and Marvel? And then along that line, Deb, operating cash flow this year, $775 million. Historically, you said you want that to be over $500 million and then you raised that last year.

Can you kind of reset where we should be thinking about that going forward?.

Yeah. So, let me take cash flow first, and then – so I think, we had a really just an exceptional year this year. And we did target, I think, we had $550 million to $600 million was our target in 2016.

While we're not at Toy Fair yet, and we'll be talking more about it next week, I would expect that we would take our thoughts around operating cash flow up this year in 2017..

Okay. Yeah..

THE GATHERING. For example, we have Magic Digital Next, which has been an investment for a number of years and will continue to be a bit of investment this year because, of course, late this year, you'll start to see some of the evidence of what the team has been working on as they begin to put that platform out into the market.

So, my broad guidance to you is that last year GAAP we achieved 15.7% operating profit margin. Obviously, overall, we achieved 16.4%. And I think the 16.4% is a beacon for our company. It demonstrates that when we execute with excellence we can achieve much stronger returns, and we can gain leverage off of our efforts.

But again, over the last three years, we've improved our operating profit margin and I would encourage us to all look at something like 16.4% as a longer term objective given that we also have, in our mind's eye, the ability to deliver visibility and sustainability to our revenues and earnings.

And so, again, we've expanded operating profit margin and the 15.7% is a very good number and it's improved each year over the last three years. And I would expect it to improve in the near term and medium term, and that's was just a way of helping you guys as you think about your model..

And then, Brian, on the sort of the how we should think about year in, year out, a little bit of sort of an average line, so to speak on STAR WARS and Marvel?.

Infinity War, Ant Man Versus Wasp, and then, of course a spider-man-animated film toward the end of the year. So, I think we go from strength to strength. I said a couple of years ago, we had entered an unprecedented era of new entertainment, both from Hasbro and our partners. And I believe that we are in the early innings of enjoying that..

Great. Thank you..

Our next question is from the line of Gerrick Johnson with BMO. Please proceed with your questions..

Good morning. At this point, I've got two quick ones here. Sales allowances, I know you said they're unchanged, but maybe you could tell us what they run as a percent of gross sales in the fourth quarter, and then in 2017, just simply do you expect to grow sales and earnings in 2017? Thank you..

So, let me take sales allowances. As you know, we record our net revenues, which is in accordance with GAAP, because that's what we actually collect at the end of the day, but our allowances, they tend to be fairly stable across the quarters and the revenues that they represent.

So, if you want to know specifically about quarters, you could kind of think of it that way.

And, Brian, you want to talk about revenues?.

Yeah, look, we obviously don't provide specific guidance, but I think if what we've laid out is any indication, we feel very good about our year. And we look forward to seeing you at Toy Fair, and describing to you the new initiatives for our business..

Okay. And, Deb, would that be about 8.5%, 9%, 10%? Kind of looking for a ballpark number..

We don't disclose that..

Yeah, but we report net revenues..

Right..

Okay. Thanks..

Right. Thanks..

Thank you. I'll now turn the call back to Debbie Hancock for closing remarks..

Thank you, Rob, and thank you everyone for joining the call today. The replay will be available on our website in approximately 2 hours. Additionally, management's prepared remarks will be posted on our website following this call.

And as Brian said, we look forward to seeing many of you in New York on Friday, February 17, for our annual investor update at Toy Fair. Thank you..

This concludes today's teleconference. Thank you for your participation. You may now disconnect your lines at this time..