Fourth Quarter Highlights
* Worldwide net sales flat with the prior year;
* Domestic gross sales down 3 percent and international gross sales up
3 percent;
* Worldwide gross sales for core brands: Barbie(R) down 11 percent;
Hot Wheels(R) down 11 percent; Core Fisher-Price(R) up 1 percent and
American Girl(R) brands up 12 percent;
* Gross margin decreased 60 basis points of net sales; SG&A
flat with prior year;
* Operating income as a percentage of net sales was 17.5 percent, up
50 basis points; and
* Earnings per share of $0.69 (includes tax benefit of $0.11) vs. prior
year of $0.68 (includes tax benefit of $0.16).
Full-Year Highlights
* Worldwide net sales up 1 percent from the prior year;
* Domestic gross sales down 2 percent and international gross sales up
5 percent;
* Worldwide gross sales for core brands: Barbie(R) down 13 percent;
Hot Wheels(R) down 1 percent; Core Fisher-Price(R) up 1 percent and
American Girl(R) brands up 15 percent;
* Gross margin decreased 140 basis points of net sales; SG&A increased
50 basis points of net sales;
* Operating income as a percentage of net sales was 12.8 percent, down
150 basis points; and
* Earnings per share of $1.01 (includes AJCA-related tax expense of
$0.26 per share and tax benefit of $0.09 per share) vs. prior year of
$1.35 (includes tax benefit of $0.15 per share).
EL SEGUNDO, Calif., Jan. 30 /PRNewswire-FirstCall/ -- Mattel, Inc.
(NYSE: MAT) today reported 2005 fourth quarter and full-year financial
results. For the quarter, the company reported net income of $279.2 million,
or $0.69 per share, compared to last year's fourth quarter net income of
$284.3 million, or $0.68 per share. For the year, the company reported net
income of $417.0 million, or $1.01 per share, compared to last year's net
income of $572.7 million, or $1.35 per share.
Net income for the year was negatively impacted by incremental tax expense
of $107.0 million, or $0.26 per share, resulting from the company's decision
to repatriate $2.4 billion in previously unremitted foreign earnings under the
American Jobs Creation Act (AJCA). The company recognized expense of
$112.9 million in the second quarter in anticipation of the repatriation, and
reduced the expense by $5.8 million in the fourth quarter. Net income for the
year was positively impacted by $38.6 million of tax benefit, or $0.09 per
share, primarily relating to audit settlements with certain tax authorities in
both the U.S. and abroad. Net income in 2004 was positively impacted by a
$65.1 million tax benefit, or $0.15 per share, related to an audit settlement
with the Internal Revenue Service.
"As I said throughout the year, 2005 proved to be a challenging year for
Mattel as we continued to experience extensive cost pressures and sales
declines in the Barbie(R) brand, which offset much of the growth we
experienced throughout our portfolio," said Robert A. Eckert, chairman and
chief executive officer of Mattel. "That said, we generated strong cash flow
and the balance sheet remained healthy with approximately $1 billion of cash
at year-end."
Financial Overview
For the quarter, net sales were $1.84 billion, or flat with $1.85 billion
in sales last year, which included a negative impact from changes in currency
exchange rates of 1 percentage point. On a regional basis, fourth quarter
gross sales decreased 3 percent in the U.S., and were up 3 percent in
international markets, which included a negative impact from changes in
currency exchange rates of 2 percentage points. Operating income for the
quarter was up 2 percent at $321.7 million.
For the year, net sales were $5.18 billion, a 1 percent increase from
$5.10 billion last year, which included a benefit from changes in currency
exchange rates of 1 percentage point. On a regional basis, full-year gross
sales were down 2 percent in the U.S., and were up 5 percent in international
markets, which included a benefit from changes in currency exchange rates of
1 percentage point. Operating income for the year was $664.5 million, a
decrease of 9 percent compared to the prior year, driven primarily by lower
gross margins and higher selling, general and administrative expenses.
The company's debt-to-total capital ratio of 26.1 percent and year-end
cash balance of $997.7 million are in line with the company's capital and
investment framework. During 2005, the company repurchased 28.9 million
shares of its common stock at a cost of approximately $500 million.
Mattel Brands Girls and Boys: Fourth Quarter
For the fourth quarter, worldwide gross sales for the Mattel Brands Girls
and Boys business unit were $1.06 billion, down 6 percent versus a year ago.
Worldwide gross sales for the Barbie(R) brand were down 11 percent. Worldwide
gross sales for Other Girls Brands were up 23 percent. Worldwide gross sales
for the Wheels category, which includes the Hot Wheels(R), Matchbox(R) and
Tyco(R) R/C brands, were down 7 percent. Worldwide gross sales for the
Entertainment business, which includes Games and Puzzles, were down 13 percent
for the quarter.
Mattel Brands Girls and Boys: Full Year
For the year, worldwide gross sales for the Mattel Brands Girls and Boys
business unit were $3.14 billion, or down 3 percent. Worldwide gross sales
for the Barbie(R) brand were down 13 percent. Worldwide gross sales for Other
Girls Brands were up 25 percent for the year. Worldwide gross sales for the
Wheels category were down 1 percent. Worldwide gross sales for the
Entertainment business were flat.
Fisher-Price(R) Brands: Fourth Quarter
Fourth quarter worldwide gross sales for the Fisher-Price(R) Brands
business unit, which includes the Fisher-Price(R), Little People(R), Rescue
Heroes(R) and Power Wheels(R) brands, were $694.8 million, up 6 percent due to
strong international sales of Core Fisher-Price(R) and worldwide sales of
Fisher-Price(R) Friends.
Fisher-Price(R) Brands: Full Year
For the year, worldwide gross sales for the Fisher-Price(R) Brands
business unit were $2.02 billion, up 5 percent driven by double-digit sales
growth of Fisher-Price(R) Friends and solid sales growth of Core
Fisher-Price(R) internationally.
American Girl(R) Brands: Fourth Quarter
Fourth quarter gross sales for the American Girl(R) Brands business unit,
which offers American Girl(R) branded products direct to consumers, were
$240.6 million, up 12 percent.
American Girl(R) Brands: Full Year
For the full year, gross sales for the American Girl(R) Brands business
unit were $436.1 million, up 15 percent, primarily due to strong performance
in both the Direct and Retail channels. Increased sales were fueled by the
Marisol(TM) doll and book from the Just Like You(TM) contemporary line, and
doll and book products related to the American Girl(R) live-action,
made-for-TV movies.
Live Webcast
Mattel will webcast its 2005 fourth quarter and year-end earnings
conference call at 8:30 a.m. Eastern time (5:30 a.m. Pacific time) today. The
conference call will be webcast on the "Investors & Media" section of the
company's corporate Web site, http://www.mattel.com. To listen to the live call, log
on to the Web site at least 15 minutes early to register, download and install
any necessary audio software. An archive of the webcast will be available on
the company's Web site for 90 days and may be accessed beginning two hours
after the completion of the live call. A telephonic replay of the call will
be available beginning at 11 a.m. Eastern time (8 a.m. Pacific time) the
morning of the call, until Tuesday, January 31st, 2006 at midnight Eastern
time (9 p.m. Pacific time) and may be accessed by dialing + (719) 457-0820.
The passcode is 5741618.
Information required by Securities and Exchange Commission Regulation G,
regarding non-GAAP financial measures, as well as other financial and
statistical information, will be available at the time of the webcast on the
"Investors & Media" section of http://www.mattel.com, under the sub-headings
"Financial Information" - "Earnings Releases."
About Mattel
Mattel, Inc., (NYSE: MAT) (http://www.mattel.com) is the worldwide leader in the
design, manufacture and marketing of toys and family products, including
Barbie(R), the most popular fashion doll ever introduced. The Mattel family
is comprised of such best-selling brands as Hot Wheels(R), Matchbox(R),
American Girl(R) and Tyco(R) R/C, as well as Fisher-Price(R) brands
(http://www.fisher-price.com), including Little People(R), Rescue Heroes(R), Power
Wheels(R) and a wide array of entertainment-inspired toy lines. With
worldwide headquarters in El Segundo, Calif., Mattel employs more than
25,000 people in 42 countries and sells products in more than 150 nations
throughout the world. The Mattel vision is to be the world's premier toy
brands -- today and tomorrow.
Note: Forward-looking statements with respect to the financial condition,
results of operations and business of the company are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those set forth in such statements. These include without limitation: the
company's dependence on the timely development, manufacture, introduction and
customer acceptance of new products; the seasonality of the toy business;
customer concentration and pricing; significant changes in buying and payment
patterns of major customers, including as a result of bankruptcy and store
closures; adverse changes in general economic conditions in the U.S. and
internationally, including adverse changes in the retail environment,
employment and the stock market; order predictability and supply chain
management; the impact of competition, including from private label toys, on
revenues and margins; the supply and cost of raw materials (including oil and
resin prices), components, employee benefits and various services; the effect
of currency exchange rate fluctuations on reportable income; risks associated
with acquisitions and mergers; the possibility of product recalls and related
costs; risks associated with foreign operations; negative results of
litigation, governmental proceedings or environmental matters; changes in laws
and regulations; possible work stoppages, slowdowns or strikes; possible
outbreaks of SARS, bird flu, or other diseases; political developments and the
threat or occurrence of war or terrorist acts; the possibility of catastrophic
events; the inherent risk of new initiatives; and other risks and
uncertainties as may be detailed from time to time in the company's public
announcements and SEC filings. This release contains forward-looking
statements about the company's debt-to-total ratio and year-end cash balance
in relation to the company's capital and investment framework. Mattel does
not update forward-looking statements and expressly disclaims any obligation
to do so.
EXHIBIT I
MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended December 31,
(In millions, except per share
and percentage information) 2005 2004 Yr/Yr
% Net % Net %
$ Amt Sales $ Amt Sales Change
Net Sales $1,842.9 $1,850.4 0%
Cost of sales 962.2 52.2% 954.4 51.6% 1%
Gross Profit 880.7 47.8% 896.0 48.4% -2%
Advertising and promotion
expenses 256.7 13.9% 279.0 15.1% -8%
Other selling and
administrative expenses 302.3 16.4% 303.0 16.4% 0%
Operating Income 321.7 17.5% 314.0 17.0% 2%
Interest expense 22.4 1.2% 25.3 1.4% -11%
Interest (income) (5.4) -0.3% (5.4) -0.3% 0%
Other non-operating
(income), net (1.1) (6.1)
Income Before Income Taxes 305.8 16.6% 300.2 16.2% 2%
Provision for income
taxes 26.6 15.9
Net Income $279.2 15.1% $284.3 15.4% -2%
EPS - Basic $0.70 $0.69
Average Number of Common
Shares Outstanding - Basic 400.2 415.1
EPS - Diluted $0.69 $0.68
Average Number of Common and
Common Equivalent Shares
Outstanding - Diluted 402.5 419.2
EXHIBIT I
MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Year Ended December 31,
(In millions, except per share
and percentage information) 2005 2004 Yr/Yr
% Net % Net %
$ Amt Sales $ Amt Sales Change
Net Sales $5,179.0 $5,102.8 1%
Cost of sales 2,806.1 54.2% 2,692.1 52.8% 4%
Gross Profit 2,372.9 45.8% 2,410.7 47.2% -2%
Advertising and
promotion expenses 629.1 12.1% 643.0 12.6% -2%
Other selling and
administrative
expenses 1,079.3 20.8% 1,036.9 20.3% 4%
Operating Income 664.5 12.8% 730.8 14.3% -9%
Interest expense 76.5 1.5% 77.8 1.5% -2%
Interest (income) (34.2) -0.7% (19.7) -0.4% 74%
Other non-operating
(income), net (29.8) (23.5)
Income Before Income Taxes 652.0 12.6% 696.2 13.6% -6%
Provision for income
taxes 235.0 123.5
Net Income $417.0 8.1% $572.7 11.2% -27%
EPS - Basic $1.02 $1.37
Average Number of Common
Shares Outstanding - Basic 407.4 419.2
EPS - Diluted $1.01 $1.35
Average Number of Common
and Common Equivalent
Shares Outstanding -
Diluted 411.0 423.1
EXHIBIT II
MATTEL, INC. AND SUBSIDIARIES
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended December 31,
(In millions, except percentage
information) 2005 2004
Worldwide Gross Sales:
Mattel Brands Girls & Boys $1,055.6 $1,127.1
% Change -6% 5%
Pos./(Neg.) Impact of Currency
(in % pts) 0 2
Fisher-Price Brands 694.8 658.5
% Change 6% 10%
Pos./(Neg.) Impact of Currency
(in % pts) 0 2
American Girl Brands 240.6 214.4
% Change 12% 7%
Other 12.6 7.6
Gross Sales $2,003.6 $2,007.6
% Change 0% 7%
Pos./(Neg.) Impact of Currency
(in % pts) 0 2
Reconciliation of GAAP to Non-GAAP
Financial Measure:
Gross Sales $2,003.6 $2,007.6
Sales Adjustments (160.7) (157.2)
Net Sales $1,842.9 $1,850.4
% Change 0% 6%
Pos./(Neg.) Impact of Currency
(in % pts) (1) 2
EXHIBIT II
MATTEL, INC. AND SUBSIDIARIES
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Year Ended December 31,
(In millions, except percentage
information) 2005 2004
Worldwide Gross Sales:
Mattel Brands Girls & Boys $3,138.7 $3,233.4
% Change -3% -1%
Pos./(Neg.) Impact of Currency
(in % pts) 1 3
Fisher-Price Brands 2,023.9 1,920.2
% Change 5% 8%
Pos./(Neg.) Impact of Currency
(in % pts) 0 1
American Girl Brands 436.1 379.1
% Change 15% 10%
Other 24.8 13.4
Gross Sales $5,623.5 $5,546.1
% Change 1% 3%
Pos./(Neg.) Impact of Currency
(in % pts) 0 2
Reconciliation of GAAP to Non-GAAP
Financial Measure:
Gross Sales $5,623.5 $5,546.1
Sales Adjustments (444.5) (443.3)
Net Sales $5,179.0 $5,102.8
% Change 1% 3%
Pos./(Neg.) Impact of Currency
(in % pts) 1 2
EXHIBIT III
MATTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
At December 31,
2005 2004
(In millions) (Unaudited)
Assets
Cash and equivalents $997.7 $1,156.8
Accounts receivable, net 760.6 759.0
Inventories 376.9 418.6
Prepaid expenses and other
current assets 277.3 302.8
Total current assets 2,412.5 2,637.2
Property, plant and equipment, net 547.1 586.5
Other noncurrent assets 1,412.7 1,532.8
Total Assets $4,372.3 $4,756.5
Liabilities and Stockholders' Equity
Short-term borrowings $118.0 $29.0
Current portion of long-term debt 100.0 189.1
Accounts payable and accrued
liabilities 1,062.4 1,229.2
Income taxes payable 182.8 279.9
Total current liabilities 1,463.2 1,727.2
Long-term debt 525.0 400.0
Other noncurrent liabilities 282.4 243.5
Stockholders' equity 2,101.7 2,385.8
Total Liabilities and
Stockholders' Equity $4,372.3 $4,756.5
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)
(In millions, except days and At December 31,
percentage information) 2005 2004
Key Balance Sheet Data:
Accounts Receivable, Net
Days of Sales Outstanding (DSO) 37 37
Inventories
Days of Supply (DOS) 77 89
Total Debt Outstanding $743.0 $618.1
Total Debt-to-Total Capital Ratio 26.1% 20.6%
Year Ended
December 31,
(In millions) 2005 (a) 2004
Condensed Cash Flow Data:
Cash Flows From Operating Activities $462 $570
Cash Flows (Used For) Investing
Activities (82) (108)
Cash Flows (Used For) Financing
Activities and Other (539) (458)
(Decrease) Increase in Cash and
Equivalents $(159) $4
(a) Amounts shown are preliminary estimates. Actual amounts will be
reported in Mattel's Annual Report on Form 10-K for the year ended
December 31, 2005.
SOURCE Mattel, Inc.
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Related links:
http://www.mattel.com
Company News On-Call:
http://www.prnewswire.com/comp/540363.html
CONTACT:
News Media, Lisa Marie Bongiovanni,
+1-310-252-3524, LisaMarie.Bongiovanni@mattel.com, or Securities
Analysts, Mike Salop, +1-310-252-2703, Mike.Salop@mattel.com,
both of Mattel, Inc.
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