First Quarter Highlights
* Worldwide net sales up 1 percent;
* Domestic gross sales up 3 percent and international gross sales flat with
prior year;
* Worldwide gross sales for core brands: Barbie(R) down 8 percent; Hot
Wheels(R) down 3 percent; Core Fisher-Price(R) up 12 percent and American
Girl(R) brands down 9 percent;
* Gross margin decreased 210 basis points of net sales; SG&A increased 270
basis points of net sales;
* Operating loss was $32.0 million compared to operating income of $5.5
million in the first quarter of 2005; and
* Earnings per share of $0.08 (includes tax benefit from settlements of
$0.15) vs. prior year of $0.02.
EL SEGUNDO, Calif., April 18 /PRNewswire-FirstCall/ -- Mattel, Inc.
(NYSE: MAT) today reported 2006 first quarter financial results. For the
quarter, the company reported net income of $30.2 million, or $0.08 per
share, compared to last year's first quarter net income of $6.5 million, or
$0.02 per share. Net income for the quarter was positively impacted by tax
benefits of approximately $57 million, or $0.15 per share, relating to
audit settlements with foreign tax authorities.
"Although the first quarter is relatively less important in the highly
seasonal toy business, we were encouraged by some of the sales trends,"
said Robert A. Eckert, chairman and chief executive officer of Mattel.
"Positive developments in the quarter included strong worldwide
Fisher-Price(R) growth and a slight increase in U.S. Barbie(R) sales. Our
profitability, however, was negatively impacted by continued gross margin
pressure, as well as severance charges in the quarter. We expect the year
to continue to be challenging and have implemented price increases
effective in the second quarter for the U.S. We look forward in the
near-term to the opening of American Girl(R) Place -- Los Angeles this
weekend and the rollout of the toy lines based on the CARS and Superman(TM)
movies slated for release this summer."
Financial Overview
For the quarter, net sales were $793.3 million, up 1 percent compared
to $783.1 million last year, in spite of unfavorable changes in currency
exchange rates of 2 percentage points. On a regional basis, first quarter
gross sales increased 3 percent in the U.S., and were flat with prior year
in international markets, including unfavorable changes in currency
exchange rates of 4 percentage points. Operating loss for the quarter of
$32.0 million included $13 million of severance charges related to the
January 2006 reduction in workforce, primarily within the Mattel Brands
division. Unfavorable product mix and external cost pressures also
contributed to the operating loss.
The company's debt-to-total-capital ratio of 23.7 percent is in line
with the company's capital and investment framework. Consistent with the
seasonality of the business, during the quarter the company's cash and
equivalents declined by approximately $394 million, compared with a decline
of approximately $378 million in last year's first quarter.
Sales by Business Unit
Mattel Girls and Boys Brands
For the first quarter, worldwide gross sales for the Mattel Girls and
Boys Brands business unit were $493.2 million, down 4 percent versus a year
ago. Worldwide gross sales for the Barbie(R) brand were down 8 percent.
Worldwide gross sales for Other Girls Brands were up 23 percent, driven by
strong sales of the Pixel Chix(TM) and Winx(TM) toy lines. Worldwide gross
sales for the Wheels category, which includes the Hot Wheels(R),
Matchbox(R) and Tyco(R) R/C brands, were down 4 percent. Worldwide gross
sales for the Entertainment business, which includes Games and Puzzles,
were down 14 percent for the quarter primarily due to declines in
Yu-Gi-Oh!(TM).
Fisher-Price Brands
First quarter worldwide gross sales for the Fisher-Price Brands
business unit, which includes the Fisher-Price(R), Little People(R), Rescue
Heroes(R) and Power Wheels(R) brands, were $307.2 million, or up 16 percent
versus the prior year. This reflects strong growth in Fisher-Price(R)
Friends and Core Fisher-Price(R) worldwide, as well as strong growth in the
Power Wheels(R) brand.
American Girl Brands
First quarter gross sales for the American Girl Brands business unit,
which offers American Girl(R) branded products direct to consumers, were
$61.9 million, down 9 percent versus last year primarily due to the timing
of the Easter holiday and strong performance in 2005 from the debut of the
Marisol(TM) Girl of the Year doll.
Live Webcast
Mattel will webcast its 2006 first quarter 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 Wednesday, April 19th, 2006 at
midnight Eastern time (9 p.m. Pacific time) and may be accessed by dialing
+(719) 457-0820. The passcode is: 7651954.
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 outlook for the year, price increases,
a retail store opening, rollout of new toy lines, and alignment of the
company's debt-to-total-capital ratio with the company's capital and
investment framework. 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 March 31,
(In millions, except per share and 2006 2005 Yr/Yr
percentage information) % Net % Net %
$Amt Sales $Amt Sales Change
Net Sales $793.3 $783.1 1%
Cost of sales 461.3 58.2% 439.1 56.1% 5%
Gross Profit 332.0 41.8% 344.0 43.9% -4%
Advertising and promotion
expenses 88.9 11.2% 87.7 11.2% 1%
Other selling and administrative
expenses 275.1 34.7% 250.8 32.0% 10%
Operating (Loss) Income (32.0) -4.0% 5.5 0.7%
Interest expense 15.2 1.9% 17.6 2.2% -13%
Interest (income) (8.8) -1.1% (12.1) -1.5% -27%
Other non-operating
(income), net (1.9) (8.9)
(Loss) Income Before Income Taxes (36.5) -4.6% 8.9 1.1%
(Benefit) provision for income
taxes (66.7) 2.4
Net Income $30.2 3.8% $6.5 0.8%
EPS - Basic $0.08 $0.02
Average Number of Common Shares
Outstanding - Basic 388.8 416.1
EPS - Diluted $0.08 $0.02
Average Number of Common and Common
Equivalent Shares Outstanding -
Diluted 391.3 421.1
MATTEL, INC. AND SUBSIDIARIES EXHIBIT II
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended March 31,
(In millions, except percentage
information) 2006 2005
Worldwide Gross Sales:
Mattel Girls & Boys Brands $493.2 $514.4
% Change -4% -3%
Pos./(Neg.) Impact of Currency
(in % pts) (2) 2
Fisher-Price Brands 307.2 264.4
% Change 16% 0%
Pos./(Neg.) Impact of Currency
(in % pts) (2) 1
American Girl Brands 61.9 67.6
% Change -9% 25%
Other 3.2 3.9
Gross Sales $865.5 $850.3
% Change 2% 0%
Pos./(Neg.) Impact of Currency
(in % pts) (2) 2
Reconciliation of GAAP to Non-GAAP
Financial Measure:
Gross Sales $865.5 $850.3
Sales Adjustments (72.2) (67.2)
Net Sales $793.3 $783.1
% Change 1% 0%
Pos./(Neg.) Impact of Currency
(in % pts) (2) 2
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
CONDENSED CONSOLIDATED BALANCE SHEETS
At March 31,
2006 2005 At Dec. 31
(In millions) (Unaudited) 2005
Assets
Cash and equivalents $603.3 $778.7 $997.7
Accounts receivable, net 585.0 571.3 760.6
Inventories 410.8 472.6 376.9
Prepaid expenses and other current
assets 284.3 246.9 277.3
Total current assets 1,883.4 2,069.5 2,412.5
Property, plant and equipment, net 535.2 562.5 547.1
Other noncurrent assets 1,446.2 1,522.2 1,412.7
Total Assets $3,864.8 $4,154.2 $4,372.3
Liabilities and Stockholders' Equity
Short-term borrowings $43.5 $19.9 $118.0
Current portion of long-term debt 100.0 188.9 100.0
Accounts payable and accrued
liabilities 648.1 669.1 1,062.4
Income taxes payable 108.5 236.0 182.8
Total current liabilities 900.1 1,113.9 1,463.2
Long-term debt 525.0 400.0 525.0
Other noncurrent liabilities 282.8 239.4 282.4
Stockholders' equity 2,156.9 2,400.9 2,101.7
Total Liabilities and
Stockholders' Equity $3,864.8 $4,154.2 $4,372.3
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)
At March 31,
(In millions, except days and
percentage information) 2006 2005
Key Balance Sheet Data:
Accounts Receivable, Net
Days of Sales Outstanding (DSO) 66 66
Inventories
Days of Supply (DOS) 72 89
Total Debt Outstanding $668.5 $608.8
Total Debt-to-Total Capital
Ratio 23.7% 20.2%
Three Months Ended
March 31,
(In millions) 2006 (a) 2005
Condensed Cash Flow Data:
Cash Flows (Used For) Operating
Activities $(290) $(375)
Cash Flows (Used For) Investing
Activities (28) (7)
Cash Flows (Used For) From Financing
Activities and Other (76) 4
Decrease in Cash and Equivalents $(394) $(378)
(a) Amounts shown are preliminary estimates. Actual amounts will be
reported in Mattel's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2006.
SOURCE Mattel, Inc.
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Related links:
http://www.fisher-price.com
http://www.mattel.com
http://www.prnewswire.com/comp/540363.html /
CONTACT:
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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