Fourth Quarter Highlights
* Worldwide net sales up 6 percent;
* Domestic gross sales up 10 percent and international gross sales up 3
percent;
* Worldwide gross sales for core brands: Barbie(R) down 1 percent; Hot
Wheels(R) up 8 percent; core Fisher-Price(R) up 7 percent and American
Girl(R) brands up 7 percent;
* Gross margin decreased 130 basis points of net sales; SG&A decreased
10 basis points of net sales;
* Operating income as a percentage of net sales was 17.0 percent, down
50 basis points;
* Earnings per share of $0.68 vs. prior year of $0.49; and
* Included in net income is a $65 million non-recurring benefit to
income tax expense.
Full-Year Highlights
* Worldwide net sales up 3 percent;
* Domestic gross sales flat and international gross sales up 7 percent;
* Worldwide gross sales for core brands: Barbie(R) down 8 percent; Hot
Wheels(R) up 7 percent; core Fisher-Price(R) up 9 percent and American
Girl(R) brands up 10 percent;
* Gross margin decreased 180 basis points of net sales; SG&A as a
percentage of net sales flat with the prior year;
* Operating income as a percentage of net sales was 14.3 percent, down
150 basis points;
* Earnings per share of $1.35 vs. prior year of $1.22; and
* Included in net income is a $65 million non-recurring benefit to
income tax expense.
EL SEGUNDO, Calif., Jan. 31 /PRNewswire-FirstCall/ -- Mattel, Inc.
(NYSE: MAT) today reported 2004 fourth quarter and full-year financial
results. For the quarter, the company reported net income of $284.3 million,
or $0.68 per share, compared to last year's fourth quarter net income of
$213.9 million, or $0.49 per share. For the year, the company reported net
income of $572.7 million, or $1.35 per share, compared to last year's net
income of $537.6 million, or $1.22 per share.
In the fourth quarter of 2004, a settlement was reached with the Internal
Revenue Service ("IRS") regarding the examination of the company's U.S.
federal income tax returns for the years 1998 through 2001. The settlement
resulted in a non-recurring benefit to net income of approximately $65 million
for the fourth quarter and the full year. As previously disclosed in the
company's 2003 Annual Report on Form 10-K, the examinations of prior years'
U.S. federal income tax returns by the IRS are performed regularly in the
normal course of business.
"Despite a challenging retail environment, we finished the year with
improved momentum," said Robert A. Eckert, chairman and chief executive
officer of Mattel. "We made good progress on two of our key goals for 2004 by
invigorating the Barbie(R) brand and building on our success in the learning
category, as reflected by our increased category share."
Financial Overview
For the quarter, net sales were $1.85 billion, a 6 percent increase from
$1.74 billion last year, which included a benefit from changes in currency
exchange rates of 2 percentage points. On a regional basis, fourth quarter
gross sales increased 10 percent in the U.S., and were up 3 percent in
international markets, which included a benefit from changes in currency
exchange rates of 5 percentage points. Operating income for the quarter was
up 3 percent at $314.0 million, primarily due to higher sales volume,
partially offset by lower gross margins.
For the year, net sales were $5.10 billion, a 3 percent increase from
$4.96 billion last year, which included a benefit from changes in currency
exchange rates of 2 percentage points. Additionally, beginning in October
2003, the company changed the way it classifies certain close out sales,
resulting in a 0.8 percentage point benefit to net sales for full year 2004,
when compared to 2003.
On a regional basis, full-year gross sales were flat in the U.S., and were
up 7 percent in international markets, which included a benefit from changes
in currency exchange rates of 5 percentage points. Operating income for the
year was $730.8 million, a decrease of 7 percent compared to the prior year,
driven primarily by lower gross margins.
The company's debt-to-total capital ratio of 20.6 percent is in line with
the company's long-term goal and the company ended the year with more than
$1.1 billion of cash, which is consistent with the level on hand at the end of
2003.
Sales by Business Unit
Mattel Brands Business Unit: Fourth Quarter
For the fourth quarter, worldwide gross sales for the Mattel Brands
business unit were $1.13 billion, a 5 percent increase versus a year ago.
Worldwide gross sales for the Barbie(R) brand were down 1 percent. Worldwide
gross sales for Other Girls Brands were up 1 percent. Worldwide gross sales
for the Wheels category, which includes the Hot Wheels(R), Matchbox(R) and
Tyco(R) R/C brands, were up 1 percent. Worldwide gross sales for the
Entertainment business, which includes Games and Puzzles, were up 30 percent
for the quarter.
Mattel Brands Business Unit: Full Year
For the year, worldwide gross sales for the Mattel Brands business unit
were $3.23 billion, or down 1 percent. Worldwide gross sales for the
Barbie(R) brand were down 8 percent. Worldwide gross sales for Other Girls
Brands were down 10 percent for the year.
Full year, worldwide gross sales for the Wheels category were up 3
percent. Gains in international sales of Hot Wheels(R) were partially offset
by declines in Matchbox(R) worldwide.
Full year, worldwide gross sales for the Entertainment business were up
22 percent with strong sales growth in Games, related to the success of Scene
It(TM) and the launch of Juicebox(TM), and continued strength in our male
action entertainment properties, including Batman(TM), Megaman(TM) and
Yu-Gi-Oh!(TM).
Fisher-Price(R) Brands Business Unit: 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 $658.5 million, up 10 percent due
to strong worldwide sales of core Fisher-Price(R) and Fisher-Price Friends.
Fisher-Price(R) Brands Business Unit: Full Year
For the year, worldwide gross sales for the Fisher-Price(R) Brands
business unit were $1.92 billion, up 8 percent driven by double-digit sales
growth of Fisher-Price Friends and solid sales growth of core Fisher-Price(R)
worldwide.
American Girl(R) Brands Business Unit: 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
$214.4 million, up 7 percent.
American Girl(R) Brands Business Unit: Full Year
For the full year, gross sales for the American Girl(R) Brands business
unit were $379.1 million, up 10 percent, primarily due to the continued
success of the American Girl Place(R) retail store in New York City and
increased sales of The American Girls Collection(R) dolls and accessories
related to the first American Girl(R) live-action, made-for-TV movie, which
aired in November.
Live Webcast
Mattel will webcast its 2004 fourth quarter and year-end earnings
conference call at 5:30 a.m. Pacific time (8:30 a.m. Eastern time) today. The
conference call will be simulcast on the "Investors & Media" section of
http://www.mattel.com. To listen to the live call, logon to the Website at least
15 minutes early to register, download and install any necessary audio
software. An archive of the call may be accessed beginning two hours after
the completion of the live call. To listen to a replay of the call via
telephone, dial + (719) 457-0820. The passcode is 989174. The telephonic
playback will be available beginning at 8:30 a.m. Pacific time the morning of
the call, until Wednesday, Feb. 2 at 9 p.m. Pacific time.
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 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 created. 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 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; possible work
stoppages, slowdowns or strikes; possible outbreaks of SARS 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 sales momentum, increased category share
performance and the company's debt-to-total capital ratio goal. Mattel does
not update forward-looking statements and expressly disclaims any obligation
to do so.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT I
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended December 31,
(In millions,
except per share
and percentage 2004 2003 Yr / Yr
information) $ Amt % Net Sales $ Amt % Net Sales % Change
Net Sales $1,850.4 $1,741.1 6%
Cost of sales 954.4 51.6% 876.0 50.3% 9%
Gross Profit 896.0 48.4% 865.1 49.7% 4%
Advertising and
promotion
expenses 279.1 15.1% 274.9 15.8% 2%
Other selling
and
administrative
expenses 302.9 16.3% 286.2 16.4% 6%
Restructuring and
other charges -- 0.0% 0.4 0.0% -100%
Operating Income 314.0 17.0% 303.6 17.5% 3%
Interest expense 25.4 1.4% 23.8 1.4% 7%
Interest (income) (5.5) -0.3% (4.2) -0.2% 28%
Other non-
operating
(income), net (6.1) -0.3% (10.0) -0.6% -38%
Income Before
Income Taxes 300.2 16.2% 294.0 16.9% 2%
Provision for
income taxes 15.9 80.1
Net Income $ 284.3 15.4% $213.9 12.3% 33%
EPS - Basic $0.69 $0.50
Average Number
of Common Shares
Outstanding -
Basic 415.1 430.8
EPS - Diluted $0.68 $0.49
Average Number
of Common and
Common Equivalent
Shares Outstanding
- Diluted 419.2 435.3
For the Year Ended December 31,
(In millions,
except per share
and percentage 2004 2003 (a) Yr / Yr
information) $ Amt % Net Sales $ Amt % Net Sales % Change
Net Sales $5,102.8 $4,960.1 3%
Cost of sales 2,692.1 52.8% 2,530.6 51.0% 6%
Gross Profit 2,410.7 47.2% 2,429.5 49.0% -1%
Advertising and
promotion
expenses 643.0 12.6% 636.1 12.8% 1%
Other selling
and
administrative
expenses 1,036.9 20.3% 1,002.9 20.3% 3%
Restructuring and
other charges -- 0.0% 4.8 0.1% -100%
Operating Income 730.8 14.3% 785.7 15.8% -7%
Interest expense 77.8 1.5% 80.6 1.6% -3%
Interest (income) (19.7) -0.4% (18.9) -0.4% 4%
Other non-
operating
(income), net (23.5) -0.4% (16.8) -0.3% 40%
Income Before
Income Taxes 696.2 13.6% 740.8 14.9% -6%
Provision for
income taxes 123.5 203.2
Net Income $572.7 11.2% $537.6 10.8% 7%
EPS - Basic $1.37 $1.23
Average Number
of Common Shares
Outstanding -
Basic 419.2 437.0
EPS - Diluted $1.35 $1.22
Average Number
of Common and
Common Equivalent
Shares Outstanding
- Diluted 423.1 442.2
(a) Close out sales for the first three quarters of 2003 totaling
$38.1 million are classified as a reduction of cost of sales.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT II
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended December 31,
(In millions, except
percentage information) 2004 2003
Worldwide Gross Sales:
Mattel Brands $1,127.1 $1,068.4
% Change 5% 2%
Pos./(Neg.) Impact of Currency
(in % pts) 2 5
Fisher-Price Brands 658.5 601.2
% Change 10% 10%
Pos./(Neg.) Impact of Currency
(in % pts) 2 4
American Girl Brands 214.4 200.1
% Change 7% 0%
Other 7.6 2.7
Gross Sales $2,007.6 $1,872.4
% Change 7% 4%
Pos./(Neg.) Impact of Currency
(in % pts) 2 4
Reconciliation of GAAP to
Non-GAAP Financial Measure:
Gross Sales $2,007.6 $1,872.4
Sales Adjustments (157.2) (131.3)
Net Sales $1,850.4 $1,741.1
% Change 6% 4%
Pos./(Neg.) Impact of Currency
(in % pts) 2 4
Year Ended December 31,
(In millions, except
percentage information) 2004 2003 (a)
Worldwide Gross Sales:
Mattel Brands $3,233.4 $3,255.6
% Change -1% 1%
Pos./(Neg.) Impact of Currency
(in % pts) 3 5
Fisher-Price Brands 1,920.2 1,771.2
% Change 8% 4%
Pos./(Neg.) Impact of Currency
(in % pts) 1 2
American Girl Brands 379.1 344.4
% Change 10% -2%
Other 13.4 8.2
Gross Sales $5,546.1 $5,379.4
% Change 3% 1%
Pos./(Neg.) Impact of Currency
(in % pts) 2 3
Reconciliation of GAAP to
Non-GAAP Financial Measure:
Gross Sales $5,546.1 $5,379.4
Sales Adjustments (443.3) (419.3)
Net Sales $5,102.8 $4,960.1
% Change 3% 2%
Pos./(Neg.) Impact of Currency
(in % pts) 2 4
(a) Close out sales for the first three quarters of 2003 totaling
$38.1 million are classified as a reduction of cost of sales.
Please refer to Mattel's Current Report on Form 8-K dated
February 3, 2004, for discussion of annual and quarterly close out
sales amounts impacting worldwide gross sales.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
At December 31,
(In millions) 2004 2003
Assets
Cash and short-term investments $1,156.8 $1,152.7
Accounts receivable, net 759.0 543.9
Inventories 418.6 388.7
Prepaid expenses and other current assets 302.8 309.6
Total current assets 2,637.2 2,394.9
Property, plant and equipment, net 586.5 625.9
Other assets 1,532.8 1,490.2
Total Assets $4,756.5 $4,511.0
Liabilities and Stockholders' Equity
Short-term borrowings $29.0 $19.6
Current portion of long-term debt 189.1 52.3
Accounts payable and accrued liabilities 1,229.2 1,142.7
Income taxes payable 279.9 253.2
Total current liabilities 1,727.2 1,467.8
Long-term debt 400.0 589.1
Other long-term liabilities 243.5 237.9
Stockholders' equity 2,385.8 2,216.2
Total Liabilities and Stockholders' Equity $4,756.5 $4,511.0
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)
At December 31,
(In millions, except days and percentage
information) 2004 2003
Key Balance Sheet Data:
Accounts Receivable, Net
Days of Sales Outstanding (DSO) 37 28
Inventories
Days of Supply (DOS) 89 90
Total Debt Outstanding $618.1 $661.0
Debt-to-Total Capital Ratio 20.6% 23.0%
Year Ended
December 31,
(In millions) 2004 2003
Preliminary Condensed Cash Flow Data (a):
Cash Flows From Operating Activities $570 $605
Cash Flows (Used For) Investing Activities (108) (181)
Cash Flows (Used For) Financing
Activities and Other (458) (538)
Increase (Decrease) in Cash and Short-term
Investments $4 $(114)
(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, 2004.
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, Jules Andres, +1-310-252-3529,
Jules.Andres@mattel.com, or Securities Analysts, Dianne Douglas,
+1-310-252-2703, Dianne.Douglas@mattel.com
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