Second Quarter Highlights
* Worldwide net sales up 8 percent;
* Domestic gross sales up 5 percent and international gross sales up 12
percent;
* Worldwide gross sales for core brands: Barbie(R) down 1 percent; Hot
Wheels(R) down 7 percent; Core Fisher-Price(R) up 10 percent and American
Girl(R) brands up 5 percent;
* Gross margin decreased 10 basis points of net sales; SG&A decreased 220
basis points of net sales;
* Operating income was $49.9 million compared to operating income of $28.5
million in the second quarter of 2005;
* Net income was $37.4 million (includes a tax benefit of $6.2 million)
compared to a net loss of $94.0 million in the second quarter of 2005
(which included incremental tax expense of $112.9 million associated with
the repatriation of foreign earnings in 2005 under the American Jobs
Creation Act (AJCA)); and
* Earnings per share of $0.10 (includes a tax benefit of $0.02) vs. prior
year's loss per share of $0.23 (included AJCA-related tax expense of $0.28
per share).
EL SEGUNDO, Calif., July 17 /PRNewswire-FirstCall/ -- Mattel, Inc.
(NYSE: MAT) today reported 2006 second quarter financial results. For the
quarter, the company reported net income of $37.4 million, or $0.10 per
share, compared to last year's second quarter net loss of $94.0 million, or
$0.23 per share. Net income for the quarter 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. Last year's net
loss was significantly impacted by incremental tax expense of $112.9
million, or $0.28 per share, resulting from the company's decision to
repatriate $2.4 billion in unremitted foreign earnings under AJCA.
"We are pleased with our second quarter results. As expected, we
benefited from our summer entertainment toy lines based on the CARS and
Superman(TM) movies, as well as the newest American Girl Place in Los
Angeles," said Robert A. Eckert, chairman and chief executive officer of
Mattel. "We also experienced the second consecutive quarter of growth in
the U.S. for the Barbie brand. While I am pleased with Barbie's progress
thus far, we are still in the process of implementing a variety of
enhancements for the brand over the next year."
Financial Overview
For the quarter, net sales were $957.7 million, up 8 percent compared
to $886.8 million last year, with no impact from changes in currency
exchange rates. On a regional basis, second quarter gross sales increased 5
percent in the U.S., and were up 12 percent in international markets,
including favorable changes in currency exchange rates of 1 percentage
point. Operating income for the quarter of $49.9 million increased from
$28.5 million in 2005 primarily due to the growth in net sales.
The company's debt-to-total-capital ratio was 31.1 percent. In the
quarter, the company issued $300 million of senior notes. Due to the normal
seasonality of the business, the company's cash and equivalents declined by
approximately $373 million during the six months ended June 30, 2006,
compared with a decline of approximately $795 million in the prior year
period. During the second quarter, the company repurchased 9.4 million
shares of its common stock at a cost of $153.3 million.
Sales by Business Unit
Mattel Girls and Boys Brands
For the second quarter, worldwide gross sales for the Mattel Girls and
Boys Brands business unit were $609.6 million, up 8 percent versus a year
ago. Worldwide gross sales for the Barbie(R) brand were down 1 percent.
Worldwide gross sales for Other Girls Brands were down 1 percent, despite
continued growth from the Pixel Chix(TM) and Polly Pocket!(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 6 percent.
Worldwide gross sales for the Entertainment business, which includes Games
and Puzzles, were up 38 percent for the quarter primarily due to the launch
of the CARS and Superman(TM) toy lines.
Fisher-Price Brands
Second 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 $365.7 million, or up 8 percent
versus the prior year. This reflects strong growth in Core Fisher-Price(R)
and the Power Wheels(R) brand worldwide, as well as strong growth in
Fisher-Price(R) Friends in international markets.
American Girl Brands
Second quarter gross sales for the American Girl Brands business unit,
which offers American Girl(R) branded products direct to consumers, were
$61.6 million, up 5 percent versus last year primarily due to sales from
the third American Girl Place store, which opened in Los Angeles in April
2006.
Live Webcast
Mattel will webcast its 2006 second 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 Tuesday, July 18th at midnight
Eastern time (9 p.m. Pacific time) and may be accessed by dialing + (719)
457-0820. The passcode is 6244535.
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
approximately 26,000 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 a
forward-looking statement about enhancements for the Barbie brand over the
next 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 June 30,
(In millions, except
per share and
percentage 2006 2005 Yr / Yr
information) $ Amt % Net Sales $ Amt % Net Sales % Change
Net Sales $957.7 $886.8 8%
Cost of sales 541.6 56.5% 500.0 56.4% 8%
Gross Profit 416.1 43.5% 386.8 43.6% 8%
Advertising and
promotion
expenses 100.6 10.5% 93.1 10.5% 8%
Other selling and
administrative
expenses 265.6 27.7% 265.2 29.9% 0%
Operating Income 49.9 5.2% 28.5 3.2% 75%
Interest expense 16.1 1.7% 19.6 2.2% -18%
Interest (income) (6.4) -0.7% (12.4) -1.4% -48%
Other
non-operating
(income), net (2.2) (4.7)
Income Before Income
Taxes 42.4 4.4% 26.0 2.9% 63%
Provision (benefit)
for income taxes 5.0 120.0
Net Income (Loss) $37.4 3.9% $(94.0) -10.6% -140%
EPS - Basic $0.10 $(0.23)
Average Number of
Common Shares
Outstanding - Basic 386.2 409.8
EPS - Diluted $0.10 $(0.23)
Average Number of
Common and Common
Equivalent Shares
Outstanding - Diluted 388.8 409.8
For the Six Months Ended June 30,
(In millions, except
per share and
percentage 2006 2005 Yr / Yr
information) $ Amt % Net Sales $ Amt % Net Sales % Change
Net Sales $1,751.0 $1,669.9 5%
Cost of sales 1,002.9 57.3% 939.1 56.2% 7%
Gross Profit 748.1 42.7% 730.8 43.8% 2%
Advertising and
promotion
expenses 189.4 10.8% 180.8 10.8% 5%
Other selling and
administrative
expenses 540.8 30.9% 516.0 30.9% 5%
Operating Income 17.9 1.0% 34.0 2.0% -47%
Interest expense 31.3 1.8% 37.2 2.2% -16%
Interest (income) (15.3) -0.9% (24.5) -1.5% -38%
Other
non-operating
(income), net (4.0) (13.6)
Income Before Income
Taxes 5.9 0.3% 34.9 2.1% -83%
Provision (benefit)
for income taxes (61.7) 122.4
Net Income (Loss) $67.6 3.9% $(87.5) -5.2% -177%
EPS - Basic $0.17 $(0.21)
Average Number of
Common Shares
Outstanding - Basic 387.5 412.9
EPS - Diluted $0.17 $(0.21)
Average Number of
Common and Common
Equivalent Shares
Outstanding - Diluted 390.0 412.9
MATTEL, INC. AND SUBSIDIARIES EXHIBIT II
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
(In millions,
except percentage
information) 2006 2005 2006 2005
Worldwide Gross
Sales:
Mattel Girls & Boys
Brands $609.6 $563.8 $1,102.8 $1,078.2
% Change 8% 10% 2% 3%
Pos./(Neg.)
Impact of
Currency
(in % pts) 0 3 -1 2
Fisher-Price Brands 365.7 337.3 673.0 601.7
% Change 8% 7% 12% 4%
Pos./(Neg.)
Impact of
Currency
(in % pts) 0 1 0 2
American Girl Brands 61.6 58.8 123.5 126.4
% Change 5% 20% -2% 22%
Other 4.4 4.8 7.5 8.6
Gross Sales $1,041.3 $964.7 $1,906.8 $1,814.9
% Change 8% 10% 5% 5%
Pos./(Neg.)
Impact of
Currency
(in % pts) 0 2 -1 2
Reconciliation
of GAAP to
Non-GAAP Financial
Measure:
Gross Sales $1,041.3 $964.7 $1,906.8 $1,814.9
Sales Adjustments (83.6) (77.9) (155.8) (145.0)
Net Sales $957.7 $886.8 $1,751.0 $1,669.9
% Change 8% 10% 5% 5%
Pos./(Neg.)
Impact of
Currency
(in % pts) 0 2 0 2
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
CONDENSED CONSOLIDATED BALANCE SHEETS
At June 30,
2006 2005 At Dec. 31,
(In millions) (Unaudited) 2005
Assets
Cash and equivalents $625.1 $361.9 $997.7
Accounts receivable, net 743.7 692.4 760.6
Inventories 538.5 579.9 376.9
Prepaid expenses and other current
assets 266.7 246.5 277.3
Total current assets 2,174.0 1,880.7 2,412.5
Property, plant and equipment, net 535.9 550.5 547.1
Other noncurrent assets 1,473.9 1,480.4 1,412.7
Total Assets $4,183.8 $3,911.6 $4,372.3
Liabilities and Stockholders' Equity
Short-term borrowings $33.4 $31.3 $118.0
Current portion of long-term debt 100.0 218.6 100.0
Accounts payable and accrued
liabilities 799.9 709.3 1,062.4
Income taxes payable 109.9 269.3 182.8
Total current liabilities 1,043.2 1,228.5 1,463.2
Long-term debt 795.0 370.0 525.0
Other noncurrent liabilities 291.8 242.1 282.4
Stockholders' equity 2,053.8 2,071.0 2,101.7
Total Liabilities and Stockholders'
Equity $4,183.8 $3,911.6 $4,372.3
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)
At June 30,
(In millions, except days and percentage information) 2006 2005
Key Balance Sheet Data:
Accounts Receivable, Net
Days of Sales Outstanding (DSO) 70 70
Inventories
Days of Supply (DOS) 53 56
Total Debt Outstanding $928.4 $619.9
Total Debt-to-Total Capital Ratio 31.1% 23.0%
Six Months Ended
June 30,
(In millions) 2006(a) 2005
Condensed Cash Flow Data:
Cash Flows (Used For) Operating Activities $(358) $(551)
Cash Flows (Used For) Investing Activities (66) (32)
Cash Flows From (Used For) Financing Activities and Other 51 (212)
(Decrease) in Cash and Equivalents $(373) $(795)
(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, 2006.
SOURCE Mattel, Inc.
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Related links:
http://www.mattel.com
http://www.prnewswire.com/comp/540363.html /
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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