Second Quarter Highlights
- Worldwide net sales up 7 percent;
- Domestic gross sales down 3 percent and international gross sales up 18
percent;
- Worldwide gross sales for core brands: Barbie(R) up 6 percent; Hot
Wheels(R) up 20 percent; Core Fisher-Price(R) up 22 percent and American
Girl(R) brands down 10 percent;
- Gross margin increased 260 basis points of net sales; SG&A increased by
170 basis points of net sales;
- Operating income was $63.5 million compared to operating income of $49.9
million in the second quarter of 2006; and
- Earnings per share of $0.11 vs. prior year of $0.10, which included a tax
benefit of $0.02.
EL SEGUNDO, Calif., July 16 /PRNewswire-FirstCall/ -- Mattel, Inc.
(NYSE: MAT) today reported 2007 second quarter financial results. For the
quarter, the company reported net income of $43.1 million, or $0.11 per
share, compared to last year's second quarter net income of $37.4 million,
or $0.10 per share. Last year's quarterly net income was positively
impacted by tax benefits of approximately $6.2 million, or $0.02 per share,
primarily relating to an audit settlement with a state tax authority.
"Overall we had a good quarter, especially given the comparisons with
strong sales from movie-related toys in last year's second quarter," said
Robert A. Eckert, chairman and chief executive officer of Mattel. "While
the first half is not particularly significant to the highly seasonal toy
industry, our positive results continue to reflect the benefits of our
diversified portfolio of global brands."
Financial Overview
For the quarter, net sales were $1.02 billion, up 7 percent compared to
$957.7 million last year, including favorable changes in currency exchange
rates of 3 percentage points. On a regional basis, second quarter gross
sales decreased 3 percent in the U.S. and increased 18 percent in
international markets, including favorable changes in currency exchange
rates of 7 percentage points. Operating income for the quarter was $63.5
million, compared to prior year's operating income for the quarter of $49.9
million.
The company's debt-to-total-capital ratio of 18.8 percent is in line
with the company's capital and investment framework. Consistent with the
seasonality of the business, during the first half the company's cash and
equivalents declined by approximately $463 million, compared with a decline
of approximately $373 million in the first half of 2006.
Sales by Business Unit
Mattel Girls and Boys Brands
For the quarter, worldwide gross sales for the Mattel Girls & Boys
Brands business unit were $638.4 million, up 5 percent versus a year ago.
Worldwide gross sales for the Barbie(R) brand were up 6 percent, with
increases in international markets more than offsetting declines in the
U.S. Worldwide gross sales for Other Girls Brands were down 1 percent.
Worldwide gross sales for Wheels, which includes the Hot Wheels(R),
Matchbox(R) and Tyco(R) R/C brands, were up 20 percent, led by double-digit
growth in the Hot Wheels(R) and Matchbox(R) lines. Worldwide gross sales
for the Entertainment business, which includes Radica(R) and Games and
Puzzles, declined 2 percent.
Fisher-Price Brands
Second quarter worldwide gross sales for the Fisher-Price Brands
business unit, which includes the Fisher-Price(R) Core, Fisher-Price(R)
Friends and the Power Wheels(R) brand, were $410.4 million, up 12 percent
versus the prior year. This reflects continued strong growth in Core
Fisher-Price(R) worldwide.
American Girl Brands
Second quarter gross sales for the American Girl Brands business unit,
which offers American Girl(R) branded products directly to consumers, were
$55.8 million, down 10 percent versus last year.
Live Webcast
Mattel will webcast its 2007 second quarter earnings conference call
today at 8:30 a.m. (Eastern), 5:30 a.m. (Pacific). 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 Tuesday, July 17 at midnight Eastern time (9
p.m. Pacific time) and may be accessed by dialing + (719) 457-0820. The
passcode is 4856439.
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 the 100 Most Trustworthy U.S. Companies by Forbes Magazine and is ranked
among the 100 Best Corporate Citizens by CRO Magazine. Committed to ethical
manufacturing sustainable business practices, Mattel marks 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; 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 effects
of our diversified portfolio on our results, and the company's
debt-to-total capital ratio 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.
MATTEL, INC. AND SUBSIDIARIES EXHIBIT I
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended June 30,
(In millions, except
per share and
percentage 2007 2006 Yr/Yr
information) $ Amt % Net Sales $ Amt % Net Sales % Change
Net Sales $1,020.1 $957.7 7%
Cost of sales 549.4 53.9% 541.6 56.5% 1%
Gross Profit 470.7 46.1% 416.1 43.5% 13%
Advertising and
promotion expenses 107.1 10.5% 100.6 10.5% 7%
Other selling and
administrative
expenses 300.1 29.4% 265.6 27.7% 13%
Operating Income 63.5 6.2% 49.9 5.2% 27%
Interest expense 14.1 1.4% 16.1 1.7%
Interest (income) (10.5) -1.0% (6.4) -0.7%
Other non-operating
(income), net (3.2) (2.2)
Income Before Income Taxes 63.1 6.2% 42.4 4.4%
Provision (benefit)
for income taxes 20.0 5.0
Net Income $43.1 4.2% $37.4 3.9% 15%
EPS - Basic $0.11 $0.10
Average Number of
Common Shares
Outstanding - Basic 396.2 386.2
EPS - Diluted $0.11 $0.10
Average Number of Common
and Common Equivalent
Shares Outstanding -
Diluted 402.8 388.8
For the Six Months Ended June 30,
(In millions, except
per share and
percentage 2007 2006 Yr/Yr
information) $ Amt % Net Sales $ Amt % Net Sales %Change
Net Sales $1,960.3 $1,751.0 12%
Cost of sales 1,070.9 54.6% 1,002.9 57.3% 7%
Gross Profit 889.4 45.4% 748.1 42.7% 19%
Advertising and
promotion expenses 212.4 10.8% 189.4 10.8% 12%
Other selling and
administrative
expenses 592.9 30.2% 540.8 30.9% 10%
Operating Income 84.1 4.3% 17.9 1.0% 369%
Interest expense 28.6 1.5% 31.3 1.8%
Interest (income) (22.4) -1.1% (15.3) -0.9%
Other non-operating
(income), net (0.8) (4.0)
Income Before Income Taxes 78.7 4.0% 5.9 0.3%
Provision (benefit)
for income taxes 23.6 (61.7)
Net Income $55.1 2.8% $67.6 3.9% -18%
EPS - Basic $0.14 $0.17
Average Number of
Common Shares
Outstanding - Basic 393.1 387.5
EPS - Diluted $0.14 $0.17
Average Number of Common
and Common Equivalent
Shares Outstanding
- Diluted 399.7 390.0
MATTEL, INC. AND SUBSIDIARIES EXHIBIT II
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(In millions, except
percentage
information) 2007 2006 2007 2006
Worldwide Gross
Sales:
Mattel Girls &
Boys Brands $638.4 $609.6 $1,205.4 $1,102.8
% Change 5% 8% 9% 2%
Pos./(Neg.)
Impact of
Currency
(in % pts) 4 0 4 -1
Fisher-Price
Brands 410.4 365.7 801.6 673.0
% Change 12% 8% 19% 12%
Pos./(Neg.)
Impact of
Currency
(in % pts) 2 0 2 0
American Girl Brands 55.8 61.6 118.7 123.5
% Change -10% 5% -4% -2%
Other 4.1 4.4 7.8 7.5
Gross Sales $1,108.7 $1,041.3 $2,133.5 $1,906.8
% Change 6% 8% 12% 5%
Pos./(Neg.)
Impact of
Currency
(in % pts) 3 0 3 -1
Reconciliation
of GAAP to
Non-GAAP
Financial
Measure:
Gross Sales $1,108.7 $1,041.3 $2,133.5 $1,906.8
Sales
Adjustments (88.6) (83.6) (173.2) (155.8)
Net Sales $1,020.1 $957.7 $1,960.3 $1,751.0
% Change 7% 8% 12% 5%
Pos./(Neg.)
Impact of
Currency
(in % pts) 3 0 3 0
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
CONDENSED CONSOLIDATED BALANCE SHEETS
At June 30,
2007 2006 At Dec. 31,
(In millions) (Unaudited) 2006
Assets
Cash and equivalents $742.6 $625.1 $1,205.6
Accounts receivable, net 881.6 743.7 943.8
Inventories 605.1 538.5 383.1
Prepaid expenses and
other current assets 225.0 266.7 317.6
Total current assets 2,454.3 2,174.0 2,850.1
Property, plant and
equipment, net 512.7 535.9 536.7
Other noncurrent assets 1,694.1 1,473.9 1,569.1
Total Assets $4,661.1 $4,183.8 $4,955.9
Liabilities and
Stockholders' Equity
Short-term borrowings $15.1 $33.4 $ --
Current portion of
long-term debt 60.0 100.0 64.3
Accounts payable and
accrued liabilities 817.5 799.9 1,356.3
Income taxes payable 20.6 109.9 161.9
Total current
liabilities 913.2 1,043.2 1,582.5
Long-term debt 560.0 795.0 635.7
Other noncurrent
liabilities 442.1 291.8 304.7
Stockholders' equity 2,745.8 2,053.8 2,433.0
Total Liabilities
and Stockholders'
Equity $4,661.1 $4,183.8 $4,955.9
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)
At June 30,
(In millions, except days and percentage 2007 2006
information)
Key Balance Sheet Data:
Accounts Receivable, Net
Days of Sales
Outstanding (DSO) 78 70
Inventories
Days of Supply (DOS) 57 53
Total Debt Outstanding $635.1 $928.4
Total Debt-to-Total
Capital Ratio 18.8% 31.1%
Six Months Ended June 30,
(In millions) 2007 (a) 2006
Condensed Cash Flow Data:
Cash Flows (Used For)
Operating Activities $(492) $(358)
Cash Flows (Used For)
Investing Activities (137) (66)
Cash Flows From Financing
Activities and Other 166 51
(Decrease) in Cash
and Equivalents $(463) $(373)
(a) Amounts shown are preliminary estimates. Actual amounts will be
reported in Mattel's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2007.
SOURCE Mattel, Inc.
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Related links:
http://www.mattel.com
http://www.prnewswire.com/comp/540363.html /
CONTACT:
Media, Jules Andres, +1-310-252-3529,
Jules.Andres@mattel.com, or Securities Analysts, Joleen Jackson,
+1-310-252-2702, Joleen.Jackson@mattel.com, both of Mattel, Inc.
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