Third Quarter Highlights
* Worldwide net sales flat with the prior year;
* Domestic gross sales down 4 percent and international gross sales up 5
percent;
* Worldwide gross sales for core brands: Barbie(R) down 18 percent; Hot
Wheels(R) up 8 percent; Core Fisher-Price(R) flat and American Girl(R)
brands up 12 percent;
* Gross margin decreased 210 basis points of net sales; SG&A increased
100 basis points of net sales;
* Operating income as a percentage of net sales was 18.5 percent, down
310 basis points; and
* Earnings per share of $0.55 vs. prior year of $0.61.
EL SEGUNDO, Calif., Oct. 17 /PRNewswire-FirstCall/ -- Mattel, Inc.
(NYSE: MAT) today reported 2005 third quarter financial results. For the
quarter, the company reported net income of $225.3 million, or $0.55 per
share, compared to last year's third quarter net income of $255.8 million, or
$0.61 per share.
"Third quarter results are disappointing as sales increases in much of our
portfolio were offset by declines in the Barbie(R) brand. Overall, we
continue to experience the effect of a difficult retail environment as well as
cost increases," said Robert A. Eckert, chairman and chief executive officer
of Mattel. "I am confident, however, that our recent organizational changes
have laid a positive foundation as we continue to reinvigorate the Barbie(R)
brand and improve our processes across the organization."
Financial Overview
For the quarter, net sales were $1.67 billion, flat compared to last year,
and included a benefit from changes in currency exchange rates of 1 percentage
point. On a regional basis, third quarter gross sales decreased 4 percent in
the U.S., and were up 5 percent in international markets, which included a
benefit from changes in currency exchange rates of 3 percentage points.
Operating income for the quarter was down 14 percent at $308.8 million,
primarily due to lower gross margins.
The company's debt-to-total-capital ratio was 18.8 percent. Consistent
with the seasonality of the company's business and its use of working capital,
the company's cash and equivalents declined by approximately $983 million
during the nine months ended September 30, 2005, compared to a decline of
approximately $822 million in the prior year period. The primary reason for
the higher cash usage was the repayment of $150 million of 6 1/8th percent
senior notes that matured in July 2005. Additionally, during the third
quarter of 2005, the company repurchased 0.7 million shares of its common
stock at a cost of $13.4 million. During the third quarter of 2004, the
company did not repurchase shares of its common stock.
Sales by Business Unit
Mattel Brands
For the third quarter, worldwide gross sales for the Mattel Brands
business unit were $1.0 billion, a 5 percent decrease versus the prior year's
third quarter. Worldwide gross sales for the Barbie(R) brand were down
18 percent. Worldwide gross sales of Other Girls Brands, which includes Polly
Pocket!(TM), Little Mommy(TM), and several new brand introductions, such as
Disney Cinderella and Teen Trends(TM), were up double-digits.
Worldwide gross sales for the Wheels category, which includes the Hot
Wheels(R), Matchbox(R) and Tyco(R) R/C brands, were up 4 percent, primarily
driven by higher sales of Hot Wheels(R). Worldwide gross sales for the
Entertainment business, which includes Games and Puzzles, were down 7 percent
for the quarter, primarily driven by sales declines in the Yu-Gi-Oh!(TM)
property and JuiceBox(TM), while sales of the Batman(TM) property were higher.
Fisher-Price(R) Brands
Third quarter worldwide gross sales for the Fisher-Price(R) Brands
business unit, which includes the Fisher-Price(R), Little People(R), Rescue
Heroes(R) and Power Wheels(R) brands, were $727.4 million, a 6 percent
increase versus the prior year's third quarter. The increase reflects the
strong growth in Fisher-Price(R) Friends worldwide and Core Fisher-Price(R) in
international markets.
American Girl(R) Brands
Third quarter gross sales for the American Girl(R) Brands business unit,
which offers American Girl(R) branded products direct to consumers, were
$69.1 million, up 12 percent from the prior year, primarily driven by the
continued success of the new American Girl Today(R) doll and strong
performance of the American Girl(R) retail stores.
Live Webcast
Mattel will webcast its 2005 third quarter earnings conference call at
8 a.m. Eastern time (5 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 a.m. Eastern time (8 a.m. Pacific time) the morning of the
call, until Tuesday, October 18th, 2005 at midnight Eastern time
(9 p.m. Pacific time) and may be accessed by dialing + (719) 457-0820. The
passcode is 9578764.
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 impact of recent organizational changes, reinvigoration
of the Barbie(R) brand and improvement of processes across the organization.
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 September 30,
(In millions, except 2005 2004
per share and percentage % Net % Net Yr/Yr
information) $ Amt Sales $ Amt Sales % Change
Net Sales $1,666.1 $1,667.5 0%
Cost of sales 904.8 54.3% 870.8 52.2% 4%
Gross Profit 761.3 45.7% 796.7 47.8% -4%
Advertising and
promotion expenses 191.6 11.5% 192.1 11.5% 0%
Other selling and
administrative expenses 260.9 15.7% 243.7 14.7% 7%
Operating Income 308.8 18.5% 360.9 21.6% -14%
Interest expense 16.8 1.0% 20.8 1.3% -19%
Interest (income) (4.3) -0.3% (5.2) -0.3% -18%
Other non-operating
(income), net (15.0) (5.8)
Income Before
Income Taxes 311.3 18.7% 351.1 21.1% -11%
Provision for
income taxes 86.0 95.3
Net Income $225.3 13.5% $255.8 15.3% -12%
EPS - Basic $0.56 $0.62
Average Number of Common
Shares Outstanding -
Basic 403.7 414.6
EPS - Diluted $0.55 $0.61
Average Number of Common
and Common Equivalent
Shares Outstanding -
Diluted 407.2 418.0
For the Nine Months Ended September 30,
(In millions, except 2005 2004
per share and percentage % Net % Net Yr/Yr
information) $ Amt Sales $ Amt Sales % Change
Net Sales $3,336.1 $3,252.4 3%
Cost of sales 1,844.0 55.3% 1,737.7 53.4% 6%
Gross Profit 1,492.1 44.7% 1,514.7 46.6% -1%
Advertising and
promotion expenses 372.4 11.2% 363.9 11.2% 2%
Other selling and
administrative expenses 776.8 23.2% 734.0 22.6% 6%
Operating Income 342.9 10.3% 416.8 12.8% -18%
Interest expense 54.0 1.6% 52.5 1.6% 3%
Interest (income) (28.7) -0.9% (14.3) -0.4% 102%
Other non-operating
(income), net (28.7) (17.4)
Income Before
Income Taxes 346.3 10.4% 396.0 12.2% -13%
Provision for
income taxes 208.4 107.6
Net Income $137.9 4.1% $288.4 8.9% -52%
EPS - Basic $0.34 $0.69
Average Number of Common
Shares Outstanding -
Basic 409.8 420.6
EPS - Diluted $0.33 $0.68
Average Number of Common
and Common Equivalent
Shares Outstanding -
Diluted 413.9 424.4
MATTEL, INC. AND SUBSIDIARIES EXHIBIT II
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended September 30,
(In millions, except percentage 2005 2004
information)
Worldwide Gross Sales:
Mattel Brands $1,005.0 $1,060.9
% Change -5% -9%
Pos./(Neg.) Impact of
Currency (in % pts) 2 2
Fisher-Price Brands 727.4 683.1
% Change 6% 7%
Pos./(Neg.) Impact of
Currency (in % pts) 0 2
American Girl Brands 69.1 61.4
% Change 12% 9%
Other 3.5 0.2
Gross Sales $1,805.0 $1,805.6
% Change 0% -3%
Pos./(Neg.) Impact of
Currency (in % pts) 1 2
Reconciliation of GAAP to
Non-GAAP Financial Measure:
Gross Sales $1,805.0 $1,805.6
Sales Adjustments (138.9) (138.1)
Net Sales $1,666.1 $1,667.5
% Change 0% -2%
Pos./(Neg.) Impact of
Currency (in % pts) 1 2
Nine Months Ended September 30,
(In millions, except percentage 2005 2004
information)
Worldwide Gross Sales:
Mattel Brands $2,083.2 $2,106.3
% Change -1% -4%
Pos./(Neg.) Impact of
Currency (in % pts) 2 3
Fisher-Price Brands 1,329.1 1,261.7
% Change 5% 8%
Pos./(Neg.) Impact of
Currency (in % pts) 1 2
American Girl Brands 195.5 164.7
% Change 19% 14%
Other 12.1 5.8
Gross Sales $3,619.9 $3,538.5
% Change 2% 1%
Pos./(Neg.) Impact of
Currency (in % pts) 1 3
Reconciliation of GAAP to
Non-GAAP Financial Measure:
Gross Sales $3,619.9 $3,538.5
Sales Adjustments (283.8) (286.1)
Net Sales $3,336.1 $3,252.4
% Change 3% 1%
Pos./(Neg.) Impact of
Currency (in % pts) 2 2
MATTEL, INC. AND SUBSIDIARIES EXHIBIT III
CONDENSED CONSOLIDATED BALANCE SHEETS
At September 30,
2005 2004 At Dec. 31,
(In millions) (Unaudited) (Unaudited) 2004
Assets
Cash and equivalents $173.8 $331.1 $1,156.8
Accounts receivable, net 1,262.4 1,220.5 759.0
Inventories 725.9 666.5 418.6
Prepaid expenses and other
current assets 264.7 287.5 302.8
Total current assets 2,426.8 2,505.6 2,637.2
Property, plant and equipment,
net 538.2 596.9 586.5
Other noncurrent assets 1,436.5 1,410.3 1,532.8
Total Assets $4,401.5 $4,512.8 $4,756.5
Liabilities and Stockholders' Equity
Short-term borrowings $89.3 $89.2 $29.0
Current portion of long-term debt 88.4 191.0 189.1
Accounts payable and accrued
liabilities 1,069.2 1,060.8 1,229.2
Income taxes payable 262.4 240.9 279.9
Total current liabilities 1,509.3 1,581.9 1,727.2
Long-term debt 350.0 438.4 400.0
Other noncurrent liabilities 259.4 244.5 243.5
Stockholders' equity 2,282.8 2,248.0 2,385.8
Total Liabilities and
Stockholders' Equity $4,401.5 $4,512.8 $4,756.5
SUPPLEMENTAL BALANCE SHEET AND CASH
FLOW DATA (Unaudited)
At September 30,
(In millions, except days and 2005 2004
percentage information)
Key Balance Sheet Data:
Accounts Receivable, Net
Days of Sales Outstanding
(DSO) 68 66
Inventories
Days of Supply (DOS) 67 64
Total Debt Outstanding $527.7 $718.6
Total Debt-to-Total Capital
Ratio 18.8% 24.2%
Nine Months Ended
September 30,
(In millions) 2005 (a) 2004
Condensed Cash Flow Data:
Cash Flows (Used For) Operating
Activities $(629) $(549)
Cash Flows (Used For) Investing
Activities (38) (85)
Cash Flows (Used For) Financing
Activities and Other (316) (188)
(Decrease) in Cash and Equivalents $(983) $(822)
(a) Amounts shown are preliminary estimates. Actual amounts will be
reported in Mattel's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2005.
SOURCE Mattel, Inc.
 back to top
Related links:
http://www.mattel.com
Company News On-Call:
http://www.prnewswire.com/comp/540363.html
CONTACT:
News Media, Lisa Marie Bongiovanni,
+1-310-252-3524, LisaMarie.Bongiovanni@mattel.com, or Securities
Analysts, Joleen Jackson, +1-310-252-2702,
Joleen.Jackson@mattel.com, both of Mattel, Inc.
|
