Fourth Quarter Highlights
- Worldwide net sales up 4 percent from the prior year;
- Domestic gross sales down 3 percent and international gross sales up 18
percent;
- Worldwide gross sales for core brands: Barbie(R) up 4 percent; Hot
Wheels(R) up 21 percent; Core Fisher-Price(R) up 15 percent and American
Girl(R) brands down 2 percent;
- Gross margin was flat with last year as a percentage of net sales; SG&A
increased 90 basis points of net sales;
- Operating income was $362.1 million, down $26.6 million, and included
charges of approximately $42 million related to the company's 2007 product
recalls; and
- Earnings per share of $0.89 (includes tax benefit of $0.13 per share) vs.
prior year of $0.75.
Full-Year Highlights
- Worldwide net sales up 6 percent from the prior year;
- Domestic gross sales down 1 percent and international gross sales up 17
percent;
- Worldwide gross sales for core brands: Barbie(R) up 1 percent; Hot
Wheels(R) up 16 percent; Core Fisher-Price(R) up 19 percent and American
Girl(R) brands down 2 percent;
- Gross margin increased 30 basis points of net sales; SG&A increased 60
basis points of net sales;
- Operating income was $730.1 million, up $1.3 million, and included
charges of approximately $110 million related to the company's 2007 product
recalls; and
- Earnings per share of $1.54 (includes tax benefit of $0.11 per share) vs.
prior year of $1.53 (includes tax benefit of $0.16 per share).
Additional $500 million share repurchase authorization approved.
EL SEGUNDO, Calif., Jan. 31 /PRNewswire-FirstCall/ -- Mattel, Inc.
(NYSE: MAT) today reported 2007 fourth quarter and full-year financial
results. For the quarter, the company reported net income of $328.5
million, or $0.89 per share, compared to last year's fourth quarter net
income of $286.4 million, or $0.75 per share. For the year, the company
reported net income of $600.0 million, or $1.54 per share, compared to last
year's net income of $592.9 million, or $1.53 per share.
For the fourth quarter, operating income of $362.1 million included
charges and incremental costs of approximately $42 million related to the
company's product recalls during 2007. For the year, operating income of
$730.1 million included charges and incremental costs of approximately $110
million related to the company's product recalls during 2007. Of this
annual cost, $68.4 million related to the reserves recorded for reversal of
sales associated with recalled products, impairment of the affected
inventory and other recall-related costs, and approximately $42 million
related to incremental recall related legal, advertising, testing,
logistics and administration costs.
Net income for the fourth quarter of 2007 was positively impacted by
tax benefits related to prior years of $47.3 million as a result of
reassessments of tax exposures based on the status of current audits in
various jurisdictions around the world, including settlements.
"Considering the challenges we faced in 2007, the business performed
fairly well, including strong performances from our international business
as well as Core Fisher-Price(R)," said Robert A. Eckert, chairman and chief
executive officer of Mattel. "The new year not only offers its own set of
challenges, including higher costs for commodities, labor and quality
testing, but it also offers a new set of opportunities, as we build on the
momentum of our international success and introduce a strong line-up of
toys based on entertainment properties."
Financial Overview
For the quarter, net sales were $2.19 billion, a 4 percent increase
from $2.11 billion last year, and included a favorable impact from changes
in currency exchange rates of 4 percentage points. On a regional basis,
fourth quarter gross sales were down 3 percent in the U.S. and were up 18
percent in international markets, which included a favorable impact from
changes in currency exchange rates of 9 percentage points. Operating income
for the quarter was down 7 percent to $362.1 million.
For the year, net sales were $5.97 billion, a 6 percent increase from
$5.65 billion last year, and included a benefit from changes in currency
exchange rates of 3 percentage points. On a regional basis, full-year gross
sales were down 1 percent in the U.S. and were up 17 percent in
international markets, which included a benefit from changes in currency
exchange rates of 7 percentage points. Operating income for the year was
$730.1 million, flat compared to the prior year.
The company's debt-to-total capital ratio of 29.1 percent is in line
with the company's capital and investment framework, and its year-end cash
balance was $901.1 million. During 2007, the company repurchased 35.9
million shares of its common stock at a cost of approximately $806 million.
Additionally, the Mattel Board of Directors has authorized the company
to increase its previously announced share repurchase program by an
additional $500 million. Repurchases will take place from time to time,
depending on market conditions. The share repurchase program is one
component of the company's capital and investment framework, which was
announced in February 2003. Under this program, Mattel has repurchased 104
million shares of common stock for an aggregate of $2 billion.
Mattel Girls & Boys Brands
Fourth quarter worldwide gross sales for the Mattel Girls & Boys Brands
business unit were $1.35 billion, up 9 percent versus a year ago. Worldwide
gross sales for the Barbie(R) brand were up 4 percent and worldwide gross
sales for Other Girls Brands were up 19 percent. Worldwide gross sales for
the Wheels category, which includes the Hot Wheels(R), Matchbox(R) and
Tyco(R) R/C brands, were up 15 percent. Worldwide gross sales for the
Entertainment business, which includes Radica(R) and Games and Puzzles,
were up 6 percent for the quarter.
For the year, worldwide gross sales for the Mattel Girls & Boys Brands
business unit were $3.70 billion, or up 8 percent. Worldwide gross sales
for the Barbie(R) brand were up 1 percent. Worldwide gross sales for Other
Girls Brands were up 2 percent for the year. Worldwide gross sales for the
Wheels category were up 14 percent. Worldwide gross sales for the
Entertainment business, including Radica(R) and Games and Puzzles, were up
16 percent.
Fisher-Price(R) Brands
Fourth quarter worldwide gross sales for the Fisher-Price(R) Brands
business unit, which includes the Fisher-Price(R), Little People(R), and
Power Wheels(R) brands, were $840.3 million, up 4 percent due to strong
international sales of Core Fisher-Price(R).
For the year, worldwide gross sales for the Fisher-Price(R) Brands
business unit were $2.44 billion, up 8 percent driven by double-digit
global sales growth of Core Fisher-Price(R).
American Girl(R) Brands
Fourth quarter gross sales for the American Girl(R) Brands business
unit, which offers American Girl(R) branded products direct to consumers,
were $241.6 million, down 2 percent. For the year, gross sales for the
American Girl(R) Brands business unit were $431.3 million, down 2 percent.
Live Webcast
Mattel will webcast its 2007 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 11:30 a.m.
Eastern time (8:30 a.m. Pacific time) the morning of the call, until
Friday, February 1st at midnight Eastern time (9 p.m. Pacific time) and may
be accessed by dialing + (719) 457-0820. The passcode is 2548464.
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. The Mattel family is comprised of such best-selling brands as
Barbie(R), the most popular fashion doll ever introduced, Hot Wheels(R),
Matchbox(R), American Girl(R), Radica(R) and Tyco(R) R/C, as well as
Fisher-Price(R) brands, including Little People(R), Power Wheels(R) and a
wide array of entertainment-inspired toy lines. Mattel is recognized among
the 100 Most Trustworthy U.S. Companies by Forbes Magazine and is ranked
among the 100 Best Corporate Citizens by CRO Magazine and as one of 2008's
100 Best Companies to Work For by Fortune Magazine. Committed to ethical
manufacturing sustainable business practices, Mattel marked a 10-year
milestone in 2007 for its Global Manufacturing Principles. With global
headquarters in El Segundo, Calif., Mattel employs more than 30,000 people
in 43 countries and territories and sells products in more than 150
nations. Mattel's 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 sellers of a broad range of play products including video
games and consoles, consumer electronics, and retailers' private label
products) 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; risks associated
with product recalls, product liability claims and product safety concerns,
such as possible reputational harm, reduced sales or increased 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 opportunities and challenges for the new year; building on
the momentum of international success; strong line-up of toys based on
entertainment properties; higher costs for commodities, labor and quality
testing; the debt-to-total capital ratio in relation to the company's
capital and investment framework; and anticipated share repurchases and the
timing of such repurchases. 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 information) 2007 2006 Yr/Yr
% Net % Net %
$ Amt Sales $ Amt Sales Change
Net Sales $2,188.6 $2,108.8 4%
Cost of sales 1,137.9 52.0% 1,096.5 52.0% 4%
Gross Profit 1,050.7 48.0% 1,012.3 48.0% 4%
Advertising and promotion
expenses 284.9 13.0% 255.6 12.1% 11%
Other selling and
administrative expenses 403.7 18.4% 368.0 17.5% 10%
Operating Income 362.1 16.5% 388.7 18.4% -7%
Interest expense 26.0 1.2% 26.0 1.2% 0%
Interest (income) (4.7) -0.2% (8.5) -0.4% -45%
Other non-operating
(income), net (2.8) (2.1)
Income Before Income Taxes 343.6 15.7% 373.3 17.7% -8%
Provision for income taxes 15.1 86.9
Net Income $328.5 15.0% $286.4 13.6% 15%
EPS -- Basic $0.90 $0.76
Average Number of Common
Shares Outstanding -- Basic 364.8 378.3
EPS -- Diluted $0.89 $0.75
Average Number of Common and
Common Equivalent Shares
Outstanding -- Diluted 368.7 384.0
For the Year Ended December 31,
2007 2006 Yr/Yr
% Net % Net %
$ Amt Sales $ Amt Sales Change
Net Sales $5,970.1 $5,650.2 6%
Cost of sales 3,192.8 53.5% 3,038.4 53.8% 5%
Gross Profit 2,777.3 46.5% 2,611.8 46.2% 6%
Advertising and promotion
expenses 708.8 11.9% 651.0 11.5% 9%
Other selling and
administrative expenses 1,338.4 22.4% 1,232.0 21.8% 9%
Operating Income 730.1 12.2% 728.8 12.9% 0%
Interest expense 71.0 1.2% 79.9 1.4% -11%
Interest (income) (33.3) -0.6% (30.5) -0.5% 9%
Other non-operating
(income), net (11.0) (4.4)
Income Before Income Taxes 703.4 11.8% 683.8 12.1% 3%
Provision for income taxes 103.4 90.9
Net Income $600.0 10.1% $592.9 10.5% 1%
EPS - Basic $1.56 $1.55
Average Number of Common
Shares Outstanding -Basic 384.5 382.9
EPS -Diluted $1.54 $1.53
Average Number of Common and
Common Equivalent Shares
Outstanding - Diluted 390.6 386.4
MATTEL, INC. AND SUBSIDIARIES EXHIBIT II
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended December 31,
(In millions, except percentage
information) 2007 2006
Worldwide Gross Sales:
Mattel Girls & Boys Brands $1,351.5 $1,238.8
% Change 9% 17%
Pos./(Neg.) Impact of Currency
(in % pts) 6 3
Fisher-Price Brands 840.3 805.9
% Change 4% 16%
Pos./(Neg.) Impact of Currency
(in % pts) 3 2
American Girl Brands 241.6 245.2
% Change -2% 2%
Other 7.2 11.6
Gross Sales $2,440.6 $2,301.5
% Change 6% 15%
Pos./(Neg.) Impact of Currency
(in % pts) 4 2
Reconciliation of GAAP to Non-GAAP
Financial Measure:
Gross Sales $2,440.6 $2,301.5
Sales Adjustments (252.0) (192.7)
Net Sales $2,188.6 $2,108.8
% Change 4% 14%
Pos./(Neg.) Impact of Currency
(in % pts) 4 2
Year Ended December 31,
2007 2006
Worldwide Gross Sales:
Mattel Girls & Boys Brands $3,700.0 $3,423.7
% Change 8% 9%
Pos./(Neg.) Impact of Currency
(in % pts) 5 1
Fisher-Price Brands 2,441.8 2,269.4
% Change 8% 12%
Pos./(Neg.) Impact of Currency
(in % pts) 2 1
American Girl Brands 431.3 440.0
% Change -2% 1%
Other 19.8 24.9
Gross Sales $6,592.9 $6,158.0
% Change 7% 10%
Pos./(Neg.) Impact of Currency
(in % pts) 3 1
Reconciliation of GAAP to Non-GAAP
Financial Measure:
Gross Sales $6,592.9 $6,158.0
Sales Adjustments (622.8) (507.8)
Net Sales $5,970.1 $5,650.2
% Change 6% 9%
Pos./(Neg.) Impact of Currency
(in % pts) 3 1
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
CONDENSED CONSOLIDATED BALANCE SHEETS
At December 31,
2007 2006
(In millions) (Unaudited)
Assets
Cash and equivalents $901.1 $1,205.6
Accounts receivable, net 991.2 943.8
Inventories 428.7 383.1
Prepaid expenses and other current assets 271.9 317.6
Total current assets 2,592.9 2,850.1
Property, plant and equipment, net 518.6 536.7
Other noncurrent assets 1,694.0 1,569.1
Total Assets $4,805.5 $4,955.9
Liabilities and Stockholders' Equity
Short-term borrowings $349.0 $ -
Current portion of long-term debt 50.0 64.3
Accounts payable and accrued liabilities 1,154.3 1,356.3
Income taxes payable 17.1 161.9
Total current liabilities 1,570.4 1,582.5
Long-term debt 550.0 635.7
Other noncurrent liabilities 378.4 304.7
Stockholders' equity 2,306.7 2,433.0
Total Liabilities and
Stockholders' Equity $4,805.5 $4,955.9
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)
(In millions, except days and At December 31,
percentage information) 2007 2006
Key Balance Sheet Data:
Accounts Receivable, Net
Days of Sales Outstanding (DSO) 41 40
Inventories
Days of Supply (DOS) 74 73
Total Debt Outstanding $949.0 $700.0
Total Debt-to-Total Capital Ratio 29.1% 22.3%
Year Ended December 31,
(In millions) 2007 (a) 2006
Condensed Cash Flow Data:
Cash Flows From Operating Activities $561 $876
Cash Flows (Used For) Investing Activities (285) (315)
Cash Flows (Used For) Financing Activities
and Other (580) (353)
(Decrease) Increase in Cash and Equivalents $(304) $208
(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, 2007.
SOURCE Mattel, Inc.
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Related links:
http://www.mattel.com
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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