Good morning, and welcome to the Hasbro Second Quarter 2013 Earnings Conference Call. [Operator Instructions] 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. Our second quarter 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 included in today's call. Please note that whenever we discuss earnings per share, or EPS, we are referring to earnings per diluted share. This morning, Brian Goldner, Hasbro's President and Chief Executive Officer; and Deb Thomas, Hasbro's Chief Financial Officer, will review our financial results and discuss important factors impacting our performance. Following their prepared remarks, Brian and Deb will be happy to field your questions. Before we begin, please note 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. These forward-looking statements may include comments concerning our product and entertainment plans; anticipated product performance; business opportunities, plans and strategies; costs and cost savings initiatives; financial goals and expectations for our future financial performance. 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. You should review such factors together with any forward-looking statements made on today's call. We undertake no obligation to update any forward-looking statements made today to reflect events or circumstances occurring after the date of this call. Now I would like to introduce Brian Goldner. Brian?

Thank you, Debbie. Good morning, everyone, and thank you for joining us today. We are driving our global brand building efforts across our Brand Blueprint through toy and game innovation, digital media, licensing and entertainment to deliver long-term profitable growth for Hasbro and our shareholders. While we're up against challenging comparisons in the Boys arena this year, we have seen growth in our other categories and believe that these efforts position Hasbro to successfully execute our strategy and leverage our brands and our strategic investments in both the near term and in the years to come. Our second quarter performance reflected the difficult comparisons in the Boys category while at the same time, highlighted areas of growth and opportunity for Hasbro. Second quarter revenues of $766 million declined 6%, while year-to-date revenues declined 2%. Second quarter operating profit excluding charges declined 11%, reflecting the lower level of revenues in the quarter. However, year-to-date operating profit was up 3% absent charges. We are focusing on our most important initiatives while rightsizing our cost base and organization. This focus is having positive results. 5 of our 7 franchise brands grew, and 3 of our 4 product categories were up, both in the second quarter and year to date. We have extraordinary people doing outstanding brand building globally around these high-priority initiatives. Geographically, our emerging market investments continue to pay off. In the second quarter, these markets grew 24% behind Games in many countries, including Russia, China and Brazil. Supported by our investment in innovation and a focus on our top initiatives, revenues in our Girls and Games categories grew 43% and 19%, respectively, this quarter. Preschool revenues gained 4% in the quarter. Content is clearly driving our brands. Our investment in Hasbro Studios is powering our franchise brands, including My Little Pony,…

Good morning, everyone. While our investments and innovation are reflected in the second quarter growth of our Girls, Games and Preschool categories, this growth was not sufficient to offset the difficult comparison in the Boys category that Brian spoke to. We are, however, in a strong financial position and have innovative brand initiatives across categories and geographies as we enter the important second half of the year. We remain focused on profitably growing our business over the longer time through the successful execution of our Brand Blueprint. This focus is evident in our performance so far this year. Specifically, operating profit is up 3% year to date, excluding restructuring charges, despite a 2% decline in revenues over the same period. Our cost savings initiative and savings targets remain on track. Our cash flow and balance sheet are strong. We generated $632 million of operating cash flow over the past 12 months, and we ended the quarter with more cash and lower inventories than a year ago. And we continue to strategically invest in our business. Early in the third quarter, we acquired a majority interest in the successful, innovative and profitable Backflip Studios, thereby expanding our capabilities and participation in digital gaming, one of the key elements of our global Brand Blueprint. In both the U.S. and Canada and International segments, the Games, Girls and Preschool categories grew in the quarter. Globally, this growth was 43%, 19% and 4%, respectively. This growth, however, did not offset the decline in Boys revenues, globally or in either segment. Additionally, in the second quarter of last year, we entered into a multi-year streaming distribution deal for Hasbro Studios television programming. As we said at that time, this revenue and related operating profit will continue to be part of our programming sales mix, but…

Thank you, Deb. Before we open the call up to questions, I want to take a minute and highlight another announcement we made this morning. After years of successful partnership with Disney, Marvel and Lucasfilm, we are pleased to have expanded our relationship with Disney for these great brand franchises. Now through 2020, we have the rights to develop toys and games for both the Marvel and Star Wars franchises, including all television and film content during that period. We are very excited about entering the next stage of our relationship with Disney as we collaborate on amazing play experiences for kids and fans around the world. Now Deb and I are happy to take your questions.

[Operator Instructions] Our first question today is coming from Sean McGowan from Needham & Company. Sean P. McGowan - Needham & Company, LLC, Research Division: A couple of quick questions -- a couple of questions. One of them is very quick. Why is Backflip being accounted for in its payment and licensing and not like all the other games would be?

Well, it's part of our digital gaming business, and so it will align there. Sean P. McGowan - Needham & Company, LLC, Research Division: Okay. Just to match it up with the others?

That's right. Sean P. McGowan - Needham & Company, LLC, Research Division: Okay. Can you comment -- I know you're not going to give us the rates, but can you comment on the extensions for Star Wars and Marvel, whether the royalty rates underlying these extensions are comparable to what's already in place?

Yes, the royalty rates are comparable to what's already in place. And the deal, as an amendment, was structured very similarly the way we had done our deal more recently on the Marvel business. This expands our right and begins to align our advances and guarantees with additional entertainment that's now contemplated by the Walt Disney Company for both the Star Wars and Marvel brands. Sean P. McGowan - Needham & Company, LLC, Research Division: Any comment, Brian, on point-of-sale movement for the Hasbro brands?

Year to date, we feel good about where we are, particularly growth in our Games and Girls business. Preschool is just below flat. The Boys business is really where the decline is in POS. That's true both domestically and internationally. And again, as we indicated, we're really cycling through some very big numbers in comparatives versus a year ago. And so as we go forward with the raft of entertainment that we have and our partners have the in the Boys arena plus the growth in the other 3 product categories, as well as 5 of our 7 franchise brands, we feel very comfortable with the current position we have. Sean P. McGowan - Needham & Company, LLC, Research Division: With regard to Boys, can you comment on the point-of-sale movement versus the sell-in year to date?

Well, we look at Boys -- they're pretty similar. In terms of sell-in versus POS, very similar. Sean P. McGowan - Needham & Company, LLC, Research Division: And then final question, you've given us some help in recent quarters on the magnitude of the increase in Magic. Any help there at this time?

Well, the great news about our Games business is certainly that Magic has continued to grow at double digits. But the rest of our Games business, excluding Magic, has also grown at double digits. In fact, if you recall, those charts that we talked about back at our February Analyst Meeting, we're seeing growth across a lot of those components. In fact, mostly all through the quarter and year to date, all those different components are growing. And so again, I think the team is doing a great job of bringing innovation back to our business in the Games business, and that's true in the U.S., where we have a more technologically savvy consumer, as well as internationally.

Our next question is coming from Steph Wissink from Piper Jaffray.

Two really quick ones for us. The first, Deb, if you could just talk about the International business in particular, any signs of improvement or inspection [ph] in either Asia or Europe as you look into the back half. And then secondly, just looking at the Boys business, I think a follow-up to Sean's question, how should we think about the comparisons over the next 2 quarters? And is there any of the 2014 product that will actually fall into this 2013 year as you prepare for some of those movie events?

Well, for the second half, we have a number of new Boys initiatives that hit across a number of our brands, whether it's in Nerf with the Mega Elite, across the Marvel business with a number of new additions, in Transformers, a brand-new major segment called Construct-Bots. And we're seeing in Preschool -- in Preschool Boys with Transformers Rescue Bots. So we see both entertainment support in television in the fall, as well as a number of our innovative platforms launching. So we feel, again, like obviously second quarter was our most considerable comparison versus 2012. But it will remain a more challenging year as we go forward in 2014. Obviously, we line up strength on strength both Hasbro's Boys brands, as well as our partner brands, in '14, '15 and beyond. Again, if you look at the regions, you see that really that POS is comparable to the POS I just cited, with Boys really being the strongest negative comparison to a year ago. And we feel, again, good longer term about our Boys business given the best of entertainment, both television, as well as film, coming in the both near and long term. And we also feel good about the growth of our business in Girls and Games and Preschool. We're also seeing great growth in the emerging markets, up double digits, 24% in the emerging markets. And we are gaining share in markets like Brazil. If you look at our POS internationally, where we do get POS, we're up in about half the countries where we get POS in the second quarter. So we get POS data outside the U.S. in 6 countries. We're up in half of those.

Our next question comes from Michael Kelter from Goldman Sachs.

I wanted to ask about SD&A for the quarter, which came in at $195 million. It's essentially in line with each of the last 2 years second quarters. Why are we not seeing lower SD&A at this point given all the layoffs this past spring?

Good morning, Michael. Well, I think as you look at, and we try to point out in the release, SD&A was impacted this quarter by the pension charge. So when you back that out in the second quarter, we -- is the time that we tend to incur any stock-based compensation expense because that's when it's granted by our board. So what you're really seeing, with your comparisons for the second quarter, is an increase in compensation expenses, as well as depreciation from our capital assets. Now they're not big numbers in their total, but they just happen to impact the second quarter. If you actually look at SD&A on a year-to-date basis and back out the restructuring charges year-on-year, you'll see that SD&A is down as a percent of revenue.

And then maybe more broadly, when all of the changes are implemented in restructuring the organization, when you talk about $100 million of savings, how much of that is actually going to flow through to the bottom line versus being offset by investments? Meaning, what might SD&A look like in absolute dollars, let's say, 2 years from now when you've implemented everything and this all goes to plan?

So Michael, for the full year 2013, we've already identified nearly half of that $100 million run rate. And we've identified going into 2014 to '15 the additional savings that we would anticipate and are targeting by '15, $100 million in reduction. Deb, you want to talk about the underlying?

Yes. And we've always said that there will be some element of inflation in the costs. But to say we will take out $100 million in savings, not all of it will be in SD&A. And we highlighted in February the line items that we expected it will come out from. But we remain on target for $100 million of cost savings by 2015.

And then could you just, and a follow-up on the question earlier, make sure that we understand the renegotiated Marvel deal, what -- just maybe if you oversimplify it for us. Why did you have to give them another $225 million?

Well, that would be the maximum we would provide over the contract. And that has to do with the fact that Disney is, of course, lining up far more entertainment than what was originally contemplated as part of our relationship. And so as you've seen the Walt Disney Company gear up around Star Wars, begin to talk about the major entertainment initiatives and movies, as well as television, the Marvel extensions, which goes for another 2 years, and the additional entertainment that Marvel is now planning, all of those things line up well for us. And again, the way it gets paid is as those entertainment initiatives are launched -- and as those entertainment initiatives are launched, then we would have advances paid around each of those new movies. And again, the $225 million is a minimum payment based on the amount of entertainment that is anticipated.

And then one last quick one. Any progress on unlocking any of your overseas cash?

Well, we continue to look at the best ways for investing in the business. And as we pointed out, our investments in emerging markets have been paying off. We saw that with the growth this quarter again. So we believe that we're providing the most effective use of our cash, and we continue to look at the most cost-effective ways to use that cash to grow the business.

Our next question is from Michael Swartz from SunTrust Robinson Humphrey.

Just a quick question on the Boys business. I mean, is there anything fundamentally that you're seeing, hearing from retailers, just on maybe their appetite for this whole entertainment-driven phenomenon and then maybe getting away from that?

No. In fact, the Boys business and the Boys industry or category historically has been one of the most demand-elastic categories that exists in the toy industry. And so in fact, when you have entertainment and major initiatives in entertainment, be it television, online, all screens or theatrical, across all screens, in fact, you can drive significant business. It just so happens that in second quarter 2013 up against '12, we have 3 major Boys areas that are down versus a year ago, which makes for a challenging comparison. But again, if you think about the ability of entertainment to build brand affinity, to build retail purchases across the shopping basket and the fact that many of these entertainment initiatives come during the second and third quarters, so prior to holiday season, that's all very important to retailers globally. Then if you add to that the fact that one of the biggest areas of growth for the motion picture business are the emerging markets and the number of multiplexes that are being built there and the amount of consumers and audiences going to movies there, in fact, it portends good things for the Boys entertainment business globally, and it's certainly something that we look forward to both as we place our television and our partners place television, as well as movies around the world.

And am I right in saying that for last year, The Avengers franchise, was most of that shipping, in the second quarter?

Well, most of our Boys brands, and I don't -- I won't speak specifically about Avengers, but in general, there's a significant proportion of shipping. And then as sell-through occurs, we continue to ship products through the third and fourth quarters of the year, and that -- because we also add new items and initiatives for the holiday season and new price points. So I would say proportionally, there's a proportion -- certainly a significant proportion that happens in the second quarter. But then you continue to ship products throughout the remainder of the year.

Our next question is coming from Gerrick Johnson from BMO Capital.

Emerging markets, can you tell us what that revenue base is?

Well, at the end of 2012, we said it was $461 million.

Okay, great. And were there any gross savings in the quarter from restructuring and in the 6 months of the year?

Well, we said that we remain on track for the full year for the gross savings of $45 million to $48 million. I don't think we've gone through and disclosed how much we have by quarter.

Okay. And on the minimum guarantees, what are the unamortized amounts you still have on the books for each of those properties, Marvel and Lucas?

0.

0, okay. Does that include or exclude the $50 million that will be paid this month?

That's correct.

Yes, okay. And then on Games, can you give us a breakdown between trading card games, traditional board games and Boys Action Gaming?

Well, what I'll do -- because again, if you look across the business, Games, excluding the Wizards of the Coast, was up. Wizards of the Coast was up. And across the major segments of our business, we talked about Monopoly growing. Our gaming mega brands grew. Our core 20 grew. And so I'd say most of the major segments -- in fact, almost all of the major segments grew in the second quarter. And year to date, every major segment of our Games business has grown.

Okay. Well, maybe I have one easy one here. What are the expected release dates of some of the Hasbro-related movie events, Candy Land, Ouija, I haven't heard much on those, Stretch Armstrong and anything else that may be coming in the next couple of years?

They continue to be in development. We have scripts in the works, as well as directors in some cases attached. And we feel that over the next couple of years, we will have the opportunity to launch new Boys brands. Some of those will be launched in movies. Some of those will be launched via television. Some of those will be launched in new and innovative -- additional new and innovation ways and platforms -- across platforms. So our intention is to selectively and strategically launch new Boys properties over time. We're also equally happy about and looking forward to launching some of the new initiatives from some of our partners. We've seen the beginnings of Guardians of The Galaxy and very excited about what that portends for Marvel as a new brand for them.

So other than Transformers 4, which is next June, I guess, Stretch Armstrong, is that the only one we have a hard date for?

Yes, we do. And the others are in development, and we continue to work with Bad Robot and Paramount on Micronauts, and we're working on a script right now. And the other projects are in sort of similar state. So that's just the nature of making movies. If you remember, we started -- well, you may not know this, but it took us almost 5 years to get the first Transformers into theaters from the time we began working on it, and that's just the nature of making sure you have great characters and great storytelling first and foremost.

Our next question is coming from Felicia Hendrix from Barclays.

Brian, on Beyblade, when do you see the declines anniversary-ing?

Well, the biggest -- recall, and this has to do with some of our results in the quarter relative to Europe versus the rest of the world, Beyblade was more developed in Europe as it was back the first time it was launched, and it was this time as well. We launched a brand-new initiative around Beyblade called BEYWARRIORs this fall, as all-new television. So we are exploiting some new television entertainment support and new innovation in the toy line that we didn't have the first time around. And we would believe that, that should mitigate some of the comparisons as we go forward into the third and fourth quarter. But Beyblade throughout this year will continue to be a comparative -- a negative comparative throughout the rest of the year.

Okay. You got to my second point. Just if you're seeing any traction from other spinoff? And how's BEYWHEELZ doing?

BEYWHEELZ has done well. And again, as it's launching, most of the new initiatives now for Beyblade do come in the third and fourth quarter. And the major initiative this year is this BEYWARRIOR's product lineup. We're very excited about that. It has all-new entertainment attached. And we're getting placement around the world for that programming with our partners, and the products look great.

And Deb, on the gross margin side, they were lower than expected, but I'm assuming that was driven by probably the decline in Boys. But I would have thought that it would have been somewhat offset by the increase in Games & Puzzles. So I was just wondering if you could talk to us a little bit about what drove the gross margins lower year-over-year and relative to expectations?

I think you actually hit it, Felicia. And what we're seeing is if we look at from a percentage of revenue standpoint, you typically get a higher -- lower cost of sales as a percent of revenue when you have a lot of entertainment, Boys entertainment property. So when you have the Marvel and Beyblade, it was a lower cost of sales percent of revenue but a higher royalty percent. So if you look at the 2 of those together, the decline in our royalties as a percent of revenue is actually greater than the increase in cost of sales as a percent of revenue.

Okay, great. And then did I hear you say that SD&A was going to be up in the next 2 years?

No.

No, okay. And then just, Brian, maybe you could discuss just a view of mobile gaming and the magnitude that could have on your P&L going forward as you're seeming to kind of get involved with more initiatives?

Well, clearly, as we've done extensive consumer insight work, and anybody who has a young person in their house can tell you, particularly in developed economies, kids are increasingly and rapidly gravitating toward mobile gaming. And so we really feel that we're lining up for -- to go after the engine of this train, and the engine is in mobile gaming and out-of-home gaming. So the combination of the 70% acquisition of Backflip Studios, our partnership with Backflip in executing games, and I'll tell you that Backflip has millions of monthly active users already playing their games, and so therefore, we see this is a great avenue not only for their current raft of games but the development of new games. Then the connection between mobile gaming and integrated play opportunities between our brands, we're doing this on Magic: The Gathering. We're doing this today on MONOPOLY. We're doing this today on Furby and other brands. You'll see as we go forward. Then the addition of new platforms like TELEPODS, which is an all-new mobile gaming platform, which has both an analog play element, as well as a mobile gaming play element. It's really break frame, and we're very pleased to hear the early responses from media, as well as from consumer research that we've done. And that will launch in August and roll out in line with some of the new apps that are coming out from our partners at Rovio and Lucasfilm. And then lastly but equally importantly, we have some great partnerships with mobile gaming companies, which we'll continue with EA. We are partnered on our 8 core brands around their initiatives. Then we have DeNA on certain brands and Gameloft on our My Little Pony and Littlest Pet Shop brands. So we really feel that the sweet spot for gaming, particularly for young people, is mobile gaming, and we see a great opportunity continue to build revenues and earnings around this, and of course, gross margins that are accretive to our underlying toy and game gross margins.

Our next question today is coming from Greg Badishkanian from Citigroup.

Just 2 questions related to Boys. You mentioned that this quarter, you have tough compares. I think last year, sales for Boys in the second quarter was down about 15.5%. I think you had some pretty decent movies, so I do understand tough comparisons. But can you just kind of walk us through the components? And then as kind of a second question to that, and you may have mentioned it already, I may have missed it, but if you exclude movie-related toy sales from the second quarter of 2013 and in the second quarter of 2012, what would overall company sales have been versus the reported negative 6%? Would that difference have turned -- pushed you into the positive category or not?

Well, let me try to answer the second part of your question in a different way from the numbers that we have reported because again, that breakdown is something that we've not reported and probably not the right way to think about things. But clearly, if you look in the quarter, you see the growth in 3 of the other -- of our 4 product segments. And you see significant growth in Girls and double-digit growth in Games and then growth in our Preschool business. You also see growth of 5 of our 7 franchise brands. In fact, franchise brand growth was up double digits in the quarter and double-digit year to date. So what we've said as our objective is, in fact, happening. And the 2 brands that didn't grow in the quarter, Transformers was just down a bit and then Littlest Pet Shop, as you know, is in the process of a reinvention around entertainment that's rolling out throughout the year, particularly in the third and fourth quarter, an all-new innovation in the product line. So long term, our focus on franchise brands and growth there is particularly heartening. We're on track for our objectives in that area. If you look at Games, we go from strength to strength, and our teams have done a great job in bringing innovation back to the Games business across a number of different segments. In fact, as we said, year to date, all of the Gaming segments, as we've broken it out for you in our recent Analyst Meetings, are up. And we would continue to thrive in Gaming across those segments. And add to that our efforts in mobile gaming. I think you're seeing us really activate our Brand Blueprint around our franchise brands, around Gaming and Girls. And then there's Preschool. We've got a number of sweet spots there where we've really developed a unique positioning and added product innovation with Play-Doh this year with a whole new compound in Play-Doh Plus. Transformers Rescue Bots bringing character play to that younger consumer in a way that moms can really buy in has been quite fantastic for us, and we're seeing that roll out around the world. So again, it really comes down to comparisons versus year ago. There were 3 major initiatives a year ago that were driving our Boys business, Beyblade and then movie-related entertainment initiatives. And as we go forward, I think we've highlighted for you a superior level of entertainment that will come both from Hasbro brands, as well as partner brands, in 2013 fall and certainly into '14, '15 and beyond.

Right. I mean, I understand the movie-related properties are going to drive strength in 2014, '15. I think everyone knows that, and I'm just trying to understand your core business, if you excluded movie-related events, which can be very volatile year-to-year. In the quarter, would you have seen growth if you just -- if you excluded that or not? And I know you walked through some other things, but I didn't...

Yes, I would reassure you that if you look at our core business, excluding Boys or the movie-related Boys brands, we would have been up.

Our next question is coming from Eric Handler from MKM Partners.

A quick question on the mobile side. I thought it was interesting that the same week you made your investment in Backflip, you also renewed your contract with EA. And I'm just curious, what's going into your decision in terms of making with Backflip versus licensing out with EA. And I would imagine the cost benefit analysis of sort of taking in the license that you have from EA and why not just make those games on your own?

Well, if you think about it, it's much more of a long-term strategy that we have around gaming, particularly around mobile gaming. As we said to you a number of years ago, we wanted to build the expertise in-house, and we've now done that. Mark Blecher and his team have done a fantastic job in mobile gaming in embedding our teams with the best in the business across a number of partnerships, be it at EA and in mobile or Activision, DeNA, Gameloft and other companies, and really understanding the trends that are out there in the industry the way that the industry players understand the trends. As we began our conversation with Backflip, they have a tremendous management team and have built new brands within this industry and have millions of monthly active users. We really saw a joint opportunity to not only work on known Hasbro brands but introduce new brands together, using this mobile gaming to integrated play model. And so we had an original deal with EA that went out. It was a 6 plus 4-year deal. So this is the renewal for the 4 additional years. And we felt very good that EA would continue to handle those 8 core brands. That's really where their focus is, and that enables us to work on all the other brands of the company.

Our next question is coming from Jaime Katz from MorningStar.

Can you guys talk a little bit about developed markets overseas? You made it sound like they were pretty weak. Have you thought about marketing any differently to them? Or how are you positioning the brands, I guess, for the holiday season this year?

If you look at the markets, there's differences by market. I think within Europe, you have Eastern Europe, including Russia and Poland and other countries that are particularly strong. Clearly, if you look at France and U.K., a little bit weaker. And we would expect that as the economic environment changes, as well as we add our third and fourth quarter initiatives, we would see changes there. As I said, where we have POS data in the 6 international markets, we're up in 3 of those. That includes 2 European countries, where we're up in Germany and Spain. And so we're beginning to see the turnaround in Spain that we'd hope for and also plan for. We're seeing good strength in a number of markets in Latin America, with Brazil's growth and growth in market share, POS growth in Mexico. So again, I think that you have a couple of the Continental European markets there that are more challenging. Australia within Asia has been more challenging. The economic environment there has been more challenging. And again, as we get beyond some of these comparisons in Boys, the categories like Girls, Games and Preschool are up there, consistent with our overall results. So as we add new Boys initiatives in the third and fourth quarter this year and then longer term, new Boys entertainment in the form of TV and film, as well as online content, we expect that, along with the economic turnarounds in those economies, we should see better things.

Okay. And then do you -- are you guys perceiving the commitment from retailers for the holiday season as better, worse, equal than last year? Or is it still kind of like the visibility is difficult to interpret because they're ordering closer to the holiday season?

Well, we have executed our plan to bring in inventory closer to consumer demand. And you see that with our inventory being down and enables us to get new initiatives out and new inventories in the market in a timely fashion in time for the holidays. We're actually seeing great games in our Girls business with retailer support, with Furby, Nerf Rebelle, My Little Pony Equestria Girls, Play-Doh, FurReal Friends, Baby Alive. And in Preschool, we're seeing Games and also strong response from retailers. And Sesame Street as well, coming back, and it's been up -- it was up for the quarter and is coming back. In Games, we're seeing some increases there in terms of retailer commitments. So we have a pretty good sense of retailers and their commitments for the holidays. They've been very happy with a lot of the new innovation and initiatives we're bringing to the market. And we're bringing some new platforms to the market that are quite literally, forgive the pun, game changers, like TELEPODS with a whole new gaming platform that's around mobile gaming. And again, very excited retailers and partnerships that we're building globally.

Our next question is coming from Drew Crum from Stifel. Andrew E. Crum - Stifel, Nicolaus & Co., Inc., Research Division: So Deb, you guys have $432 million of debt coming due within the next 12 months. Can you comment on your plans with that outstanding balance?

Sure. Well, we're currently evaluating our alternatives for settling that debt. But I would say, given the current interest rate environment, we currently would anticipate that we'd refinance a portion, if not all of that. But as we move closer to the due date, our plans will firm up, and we will certainly let you know at that time. Andrew E. Crum - Stifel, Nicolaus & Co., Inc., Research Division: And Brian, I didn't hear you talk about Littlest Pet Shop for the quarter. The ratings on the Hub has been quite strong. What is the timing on -- or do you have products in the market today that support that? Or can you talk about the timing of new initiatives for Littlest Pet Shop?

Yes, in fact, I mentioned it in our prepared remarks and talked about it briefly. But let me sort of summarize. Littlest Pet Shop has performed very well on the Hub. It's among the most highly rated program in the Hub. It's also among the most highly rated program that we're having, and we are in about 4, 5 countries, beginning in English-speaking territories and rolling our way through the rest of the markets in third and fourth quarter. Brand-new innovative product line for this year as well, all new innovation for 2014. And the team is really getting some traction here, and I think we'll have an opportunity to show you in September some of the new product for holiday season. And then by next February, I think you'll really see what we've done and modeled on My Little Pony is what we would intend to do on Littlest Pet Shop, and that effort is beginning to roll out around the world.

Our final question today is coming from Tim Conder from Wells Fargo Securities.

Just a couple of clarifications. Deb, on the royalties, were there any payments or advances or true-ups done in the second quarter related to the new Disney agreement?

No, there was nothing done in the second quarter.

Because it was -- okay. And then just to clarify on the cost savings, the $100 million. You're saying you're going to be at that run rate entering '15 or that will occur -- or during the early part of '15?

We said in '15. So hopefully, earlier in the year, but by the end of '15, we'll have identified for you $100 million of cost reductions.

Okay, okay. And then, Brian, just a follow-up on an earlier...

Tim, let me just clarify. So what we said is if you look at 2015, we're saying at that point. But just as this year, we've identified for you $48 million -- $45 million to $48 million worth of cost savings in 2013 and then a run rate towards $100 million. So by 2015, we're targeting $100 million.

Okay, okay. On -- as it relates to Hasbro-related additional properties and movies and that, are you maybe -- does it have to be on the big screen or could you run it through Hasbro Studios coupled with online vignettes and other types of things for some of the properties instead of maybe just shift tacked a little bit? Has there been any discussion internally about doing that?

Well, actually, I appreciate the question because in fact, our brands, if you go online, our brands are everywhere online in terms of digital shorts. Once you're producing television episodes that are 20 minutes long, you're able to have -- any number of shorts and music videos and all kinds of online line entertainment, we're seeing kids enjoying that entertainment online. We've produced now -- on our way to producing 800 half hours of programming, so that gives us an inordinate amount of online content. In addition, it gives us the opportunity to stream our content in partnerships around the world. So no, we are not wedded to having to be in the movie business with additional properties. We look at movies as great, if we can get the right story, highlighting the right characters. You saw us with a new innovative approach, launching Equestria Girls this year, with a limited run of an animated film in about 300 theaters followed by Home Entertainment, followed by broadcast on the Hub and other broadcasters around the world, which will be followed by streaming. So that's a whole new innovative way to platform the launch of a property. So we really do adhere to the concept of an all-screen strategy and to the fact that brands can be invented in any form and format and then driven across all of the different elements, all the different touch points that are important to consumers and audiences to build brand affinity. And so we are agnostic about where we begin and where we end. We just have built the capabilities to create those experiences, including digital gaming, as an opportunity to create experiences around these brands and then to take that concept of integrated play and playing with our brands into entertainment and content. So I do appreciate the question, and certainly, we are not wedded to only being in the movie business.

I'd like to now turn the floor back over to management for any further or closing comments.

I'd like to thank 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 the call. I'd also like to mention that as Brian referenced in his call, we'll be hosting our Investor Day on September 10 in Providence. Registration details will be sent out this week, so we hope you can join us. Thank you, everyone, and have a great day.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.