Fourth Quarter Highlights- Worldwide net sales up 14 percent from the prior year;
- Domestic gross sales up 15 percent and international gross sales up 15 percent;
- Worldwide gross sales for core brands: Barbie® up 3 percent; Hot Wheels® up 9 percent; Core Fisher-Price® up 15 percent and American Girl® brands up 2 percent;
- Gross margin increased 20 basis points of net sales; SG&A increased 110 basis points of net sales;
- Operating income as a percentage of net sales was 18.4 percent, up 90 basis points; and
- Earnings per share of $0.75 vs. prior year of $0.69 (prior year includes tax benefit of $0.11).
Full-Year Highlights- Worldwide net sales up 9 percent from the prior year;
- Domestic gross sales up 8 percent and international gross sales up 11 percent;
- Worldwide gross sales for core brands: Barbie® flat; Hot Wheels® up 2 percent; Core Fisher-Price® up 11 percent and American Girl® brands up 1 percent;
- Gross margin increased 40 basis points of net sales; SG&A increased 100 basis points of net sales;
- Operating income as a percentage of net sales was 12.9 percent, up 10 basis points; and
- Earnings per share of $1.53 (includes tax benefit of $0.16 per share) vs. prior year of $1.01 (includes American Jobs Creation Act-related tax expense of $0.26 per share and tax benefit of $0.09 per share).
EL SEGUNDO, Calif., Jan. 29, 2007 -- Mattel, Inc. today reported 2006 fourth quarter and full-year financial results. For the quarter, the company reported net income of $286.4 million, or $0.75 per share, compared to last year's fourth quarter net income of $279.2 million, or $0.69 per share. For the year, the company reported net income of $592.9 million, or $1.53 per share, compared to last year's net income of $417.0 million, or $1.01 per share.
"I am pleased with our 2006 results as we made good progress in addressing the two key challenges facing the company: U.S. sales declines in the Barbie® brand and pressure on our gross margins," said Robert A. Eckert, chairman and chief executive officer of Mattel. "Barbie®'s domestic gross sales grew for the year with four consecutive quarters of U.S. growth and our gross margins also grew in 2006, the first increase since 2003. Although positive trends, we have more to achieve on both fronts."
On October 3rd, 2006, the company completed the acquisition of Radica Games Limited, the maker of electronic entertainment toys. The acquisition is included in Mattel's fourth quarter and full-year results within the Mattel Girls & Boys Brands Entertainment business which also includes Games and Puzzles.
Financial Overview
For the quarter, net sales were $2.11 billion, a 14 percent increase from $1.84 billion last year, and included a favorable impact from changes in currency exchange rates of 2 percentage points. On a regional basis, fourth quarter gross sales increased 15 percent in the U.S. and were up 15 percent in international markets, which included a favorable impact from changes in currency exchange rates of 5 percentage points. Operating income for the quarter was up 21 percent at $388.7 million.
For the year, net sales were $5.65 billion, a 9 percent increase from $5.18 billion last year, and included a benefit from changes in currency exchange rates of 1 percentage point. On a regional basis, full-year gross sales were up 8 percent in the U.S. and were up 11 percent in international markets, which included a benefit from changes in currency exchange rates of 2 percentage points. Operating income for the year was $728.8 million, an increase of 10 percent compared to the prior year.
The company's debt-to-total capital ratio of 22.3 percent is in line with the company's capital and investment framework, and its year-end cash balance was $1.21 billion. During 2006, the company repurchased 11.8 million shares of its common stock at a cost of approximately $193 million.
Mattel Girls & Boys Brands
Fourth quarter worldwide gross sales for the Mattel Girls & Boys Brands business unit were $1.24 billion, up 17 percent versus a year ago, and included $62.5 million of gross sales for Radica®. Worldwide gross sales for the Barbie® brand were up 3 percent and worldwide gross sales for Other Girls Brands were up 8 percent. Worldwide gross sales for the Wheels category, which includes the Hot Wheels®, Matchbox® and Tyco® R/C brands, were up 5 percent. Worldwide gross sales for the Entertainment business, which includes Radica® and Games and Puzzles, were up 62 percent for the quarter.
For the year, worldwide gross sales for the Mattel Girls & Boys Brands business unit, including fourth quarter sales of Radica®, were $3.42 billion, or up 9 percent. Worldwide gross sales for the Barbie® brand were flat. Worldwide gross sales for Other Girls Brands were up 11 percent for the year.
Worldwide gross sales for the Wheels category were down 1 percent. Worldwide gross sales for the Entertainment business, including Radica® and Games and Puzzles, were up 34 percent.
Fisher-Price® Brands
Fourth quarter worldwide gross sales for the Fisher-Price® Brands business unit, which includes the Fisher-Price®, Little People®, and Power Wheels® brands, were $805.9 million, up 16 percent due to strong worldwide sales of Core Fisher-Price® and Fisher-Price® Friends.
For the year, worldwide gross sales for the Fisher-Price® Brands business unit were $2.27 billion, up 12 percent driven by double-digit sales growth of Core Fisher-Price® and Fisher-Price® Friends.
American Girl® Brands
Fourth quarter gross sales for the American Girl® Brands business unit, which offers American Girl® branded products direct to consumers, were $245.2 million, up 2 percent.
For the year, gross sales for the American Girl® Brands business unit were $440 million, up 1 percent, primarily due to the opening in Los Angeles of the third American Girl Place® retail store.
About Mattel
Mattel, Inc., (NYSE: MAT) (www.mattel.com) is the worldwide leader in the design, manufacture and marketing of toys and family products, including Barbie®, the most popular fashion doll ever introduced. The Mattel family is comprised of such best-selling brands as Hot Wheels®, Matchbox®, American Girl®, Radica® and Tyco® R/C, as well as Fisher-Price® brands (www.fisher-price.com), including Little People®, Rescue Heroes®, Power Wheels® and a wide array of entertainment-inspired toy lines. 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 throughout the world. The Mattel vision is to be the world's premier toy brands -- today and tomorrow.
