First Quarter Highlights
- Worldwide net sales down 2 percent;
- Domestic gross sales down 11 percent and international gross sales up 8
percent;
- Worldwide gross sales for core brands: Barbie(R) flat; Hot Wheels(R) up 2
percent; Core Fisher-Price(R) down 1 percent and American Girl(R) brands up
10 percent;
- Gross margin decreased 130 basis points of net sales; SG&A increased 480
basis points of net sales;
- Operating loss of $36.5 million compared to operating income of $20.6
million in the first quarter of 2007; and
- Loss per share of $0.13 vs. prior year earnings per share of $0.03.
EL SEGUNDO, Calif., April 21 /PRNewswire-FirstCall/ -- Mattel, Inc.
(NYSE: MAT) today reported 2008 first quarter financial results. For the
quarter, the company reported a net loss of $46.6 million, or $0.13 per
share, compared to last year's first quarter net income of $12.0 million,
or $0.03 per share.
"Results were not completely surprising compared to last year's strong
first quarter, which benefited from depleted retail inventories and hot
properties such as T.M.X.(TM) Elmo and CARS," said Robert A. Eckert,
chairman and chief executive officer of Mattel. "Our consumer takeaway,
though, outperformed shipments, which is a positive sign for the remainder
of the year. We are also excited about the introduction of toy lines based
on this summer's most anticipated theatrical releases, including Speed
Racer, Kung Fu Panda(TM), Batman(R): The Dark Knight(TM), and the American
Girl(R) movie: Kit Kittredge(R), An American Girl(R). Although the first
quarter was impacted by higher product costs and legal fees, we expect
price increases effective in June to aid profitability in the latter half
of the year."
Financial Overview
For the quarter, net sales were $919.3 million, down 2 percent compared
to $940.3 million last year, including favorable changes in currency
exchange rates of 5 percentage points. On a regional basis, first quarter
gross sales decreased 11 percent in the U.S. and increased 8 percent in
international markets, including favorable changes in currency exchange
rates of 11 percentage points. Operating loss for the quarter was $36.5
million, compared to prior year's operating income for the quarter of $20.6
million.
The company's debt-to-total-capital ratio was 28 percent. Consistent
with the seasonality of the business, during the quarter the company's cash
and equivalents declined by approximately $276 million, compared with a
decline of approximately $221 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 &
Boys Brands business unit were $592.8 million, up 5 percent versus a year
ago. Worldwide gross sales for the Barbie(R) brand were flat, with
increases in international markets offsetting declines in the U.S.
Worldwide gross sales for Other Girls Brands were up 16 percent, driven by
High School Musical dolls. 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, led by sales of the new Speed Racer toy line. Worldwide
gross sales for the Entertainment business, which includes Radica(R) and
Games and Puzzles, were down 5 percent for the quarter.
Fisher-Price Brands
First quarter worldwide gross sales for the Fisher-Price Brands
business unit, which includes the Fisher-Price(R) Core, Fisher-Price(R)
Friends and Power Wheels(R) brands, were $341.3 million, or down 13 percent
versus the prior year, primarily due to declines in Fisher-Price(R)
Friends.
American Girl Brands
First quarter gross sales for the American Girl Brands business unit,
which offers American Girl(R) branded products directly to consumers, were
$69.1 million, up 10 percent versus last year, driven by sales in the
Atlanta and Dallas boutiques which opened in the second half of 2007.
Live Webcast
Mattel will webcast its 2008 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 23
at 11:30 p.m. Eastern time (8:30 p.m. Pacific time) and may be accessed by
dialing + (719) 457-0820. The passcode is 3246404.
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 as one
of 2008's "100 Best Companies to Work For" by FORTUNE Magazine and among
the 100 Most Trustworthy U.S. Companies by Forbes Magazine. Committed to
ethical manufacturing and sustainable business practices, Mattel marked a
10-year milestone in 2007 for its Global Manufacturing Principles. With
worldwide 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 consumer takeaway relative to shipments, introduction of
new toy lines, summer theatrical releases, price increases in June and
profitability in the latter half of the year. 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 2008 2007 Yr/Yr
percentage information) % Net % Net
$ Amt Sales $ Amt Sales % Change
Net Sales $919.3 $940.3 -2%
Cost of sales 522.5 56.8% 521.6 55.5% 0%
Gross Profit 396.8 43.2% 418.7 44.5% -5%
Advertising and promotion
expenses 103.0 11.2% 105.3 11.2% -2%
Other selling and
administrative expenses 330.3 35.9% 292.8 31.1% 13%
Operating (Loss) Income (36.5) -4.0% 20.6 2.2%
Interest expense 16.0 1.7% 14.5 1.5% 10%
Interest (income) (8.5) -0.9% (12.0) -1.3% -29%
Other non-operating expense, net 15.8 2.4
(Loss) Income Before Income Taxes (59.8) -6.5% 15.7 1.7%
(Benefit) provision for
income taxes (13.2) 3.7
Net (Loss) Income $(46.6) -5.1% $12.0 1.3%
EPS - Basic $(0.13) $0.03
Average Number of Common Shares 361.8 389.9
EPS - Diluted $(0.13) $0.03
Average Number of Common and
Potential Common Shares 361.8 396.8
MATTEL, INC. AND SUBSIDIARIES EXHIBIT II
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended March 31,
(In millions, except percentage information) 2008 2007
Worldwide Gross Sales:
Mattel Girls & Boys Brands $592.8 $567.0
% Change 5% 15%
Pos./(Neg.) Impact of Currency (in % pts) 7 4
Fisher-Price Brands 341.3 391.3
% Change -13% 27%
Pos./(Neg.) Impact of Currency (in % pts) 4 2
American Girl Brands 69.1 62.9
% Change 10% 2%
Other 3.5 3.6
Gross Sales $1,006.7 $1,024.8
% Change -2% 18%
Pos./(Neg.) Impact of Currency (in % pts) 5 3
Reconciliation of GAAP to Non-GAAP
Financial Measure:
Gross Sales $1,006.7 $1,024.8
Sales Adjustments (87.4) (84.5)
Net Sales $919.3 $940.3
% Change -2% 19%
Pos./(Neg.) Impact of Currency (in % pts) 5 3
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
CONDENSED CONSOLIDATED BALANCE SHEETS
At March 31,
2008 2007 At Dec. 31,
(In millions) (Unaudited) 2007
Assets
Cash and equivalents $624.9 $984.2 $901.1
Accounts receivable, net 728.2 730.6 991.2
Inventories 534.2 448.6 428.7
Prepaid expenses and other current
assets 314.5 202.0 271.9
Total current assets 2,201.8 2,365.4 2,592.9
Property, plant and equipment, net 514.7 518.8 518.6
Other noncurrent assets 1,725.0 1,583.4 1,694.0
Total Assets $4,441.5 $4,467.6 $4,805.5
Liabilities and Stockholders' Equity
Short-term borrowings $ - $ - $349.0
Current portion of long-term debt 10.0 90.0 50.0
Accounts payable and accrued
liabilities 813.3 733.0 1,154.3
Income taxes payable 3.2 23.7 17.1
Total current liabilities 826.5 846.7 1,570.4
Long-term debt 900.0 560.0 550.0
Other noncurrent liabilities 375.7 428.2 378.4
Stockholders' equity 2,339.3 2,632.7 2,306.7
Total Liabilities and
Stockholders' Equity $4,441.5 $4,467.6 $4,805.5
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)
At March 31,
(In millions, except days and
percentage information) 2008 2007
Key Balance Sheet Data:
Accounts Receivable, Net
Days of Sales Outstanding (DSO) 71 70
Inventories
Days of Supply (DOS) 79 76
Total Debt Outstanding $910.0 $650.0
Total Debt-to-Total Capital Ratio 28.0% 19.8%
Three Months Ended March 31,
(In millions) 2008 (a) 2007
Condensed Cash Flow Data:
Cash Flows (Used For) Operating Activities $(264) $(327)
Cash Flows From (Used For) Investing Activities 3 (24)
Cash Flows (Used For) From Financing Activities
and Other (15) 130
Decrease in Cash and Equivalents $(276) $(221)
(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, 2008.
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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