But Mattel's losses from continuing operations, excluding the charges and Learning Co. losses, improved from a year earlier and were lower than Wall Street had been expecting although sales edged ahead just 1 percent.

On an operating basis, the El Segundo, Calif., maker of Barbie dolls, Hot Wheels and Matchbox cars and Fisher-Price infant and preschool toys, reported a loss of $6.2 million, or 1 cent per share, in the quarter ended March 31. In the same period a year ago it reported a loss from continuing operations of $12.6 million, or 3 cents per share.

Analysts had been expecting a loss of 3 cents per share, according to research firm First Call/Thomson Financial.

Including $38.4 million in severance costs and the Learning Co. results, Mattel reported a net loss of $171.2 million, or 40 cents per share, compared with a profit of $3.1 million, or 1 cents per share, a year earlier.

Earlier this month Mattel said it would sell The Learning Co. A buyer has not yet emerged, but it is expected the ailing unit will fetch far less than its $3.5 billion purchase price.

The unit produced massive fourth quarter losses that offset gains in Mattel's entertainment division and in Barbie doll sales, and led to the resignation of Mattel's Chief Executive Jill Barad and several other top executives. In the first quarter, the unit generated an after-tax loss of $126.6 million, or 30 cents per share on sales of $64.4 million.

Mattel's first-quarter net sales rose 1 percent to $693.3 million from $688.3 million. Regionally, sales were up 4 percent in the United States, but they fell 7 percent overseas, largely as a result of foreign exchange rates.

Worldwide Barbie sales rose 7 percent as a 14 percent gain in U.S. sales was partially offset by a 5 percent slide internationally. Barbie sales rose 1 percent overseas before currency translation effects.

U.S. Fisher-Price sales rose 29 percent but were largely offset by declines in other areas of the U.S. infant and preschool segment, resulting in an overall U.S. infant and preschool sales rise of 5 percent. International sales in the category fell 5 percent, trimming the segment's worldwide gain for the quarter to just 2 percent.

In the Wheels business, which includes Hot Wheels, Matchbox and Tyco, overall sales fell 4 percent as a decline in U.S. sales offset a rise overseas.

Worldwide entertainment category sales were up 14 percent, with rises of 22 percent domestically and 5 percent internationally.

In late-morning trading on the New York Stock Exchange, Mattel shares were down 1/4 at 11 1/2.

Source: Reuters

[Updated 4/19/2000]