Mattel Reports First Quarter 2007 Financial Results
First Quarter Highlights
- Worldwide net sales up 19 percent;
- Domestic gross sales up 10 percent and international gross sales up 29 percent;
- Worldwide gross sales for core brands: Barbie® up 2 percent; Hot Wheels® up 14 percent; Core Fisher-Price® up 27 percent and American Girl® brands up 2 percent;
- Gross margin increased 270 basis points of net sales; SG&A decreased 360 basis points of net sales;
- Operating income was $20.6 million compared to operating loss of $32.0 million in the first quarter of 2006; and
- Earnings per share of $0.03 vs. prior year of $0.08, which included a tax benefit from settlements of $0.15.
EL SEGUNDO, Calif., April 16, 2007 -- Mattel, Inc. today reported 2007 first quarter financial results. For the quarter, the company reported net income of $12 million, or $0.03 per share, compared to last year's first quarter net income of $30.2 million, or $0.08 per share. Last year's quarterly net income was positively impacted by tax benefits of approximately $57 million, or $0.15 per share, relating to audit settlements with foreign tax authorities.
"While not a particularly significant quarter within the seasonal toy industry, our positive first quarter results are a good start to the year," said Robert A. Eckert, chairman and chief executive officer of Mattel. "I am pleased with the performance of our strong portfolio of brands, including nice increases in the Fisher-Price® and Wheels businesses and continued strength of the Disney/Pixar CARS™ entertainment property. Our international business continued to generate strong growth around the world, and we benefited from improved gross margins."
Financial Overview
For the quarter, net sales were $940.3 million, up 19 percent compared to $793.3 million last year, including favorable changes in currency exchange rates of 3 percentage points. On a regional basis, first quarter gross sales increased 10 percent in the U.S. and increased 29 percent in international markets, including favorable changes in currency exchange rates of 7 percentage points. Operating income for the quarter was $20.6 million, compared to prior year's operating loss for the quarter of $32.0 million, which included $13 million of severance charges.
The company's debt-to-total-capital ratio of 19.8 percent is in line with the company's capital and investment framework. Consistent with the seasonality of the business, during the quarter the company's cash and equivalents declined by approximately $221 million, compared with a decline of approximately $394 million in last year's first quarter.
Sales by Business Unit
Mattel Girls and Boys Brands
For the first quarter, worldwide gross sales for the Mattel Girls & Boys Brands business unit were $567 million, up 15 percent versus a year ago. Worldwide gross sales for the Barbie® brand were up 2 percent, with increases in international markets offsetting declines in the U.S. Worldwide gross sales for Other Girls Brands were down 8 percent, with gains in the Disney Princesses and Polly Pocket!™ toy lines offset by declines in the Winx™ and Pixel Chix™ toy lines. Worldwide gross sales for the Wheels category, which includes the Hot Wheels®, Matchbox® and Tyco® R/C brands, were up 15 percent, led by double-digit growth in the Hot Wheels® and Matchbox® lines. Worldwide gross sales for the Entertainment business, which includes Radica® and Games and Puzzles, were up 59 percent for the quarter, reflecting strong performance in the CARS™ entertainment property and the addition of Radica®.
Fisher-Price Brands
First quarter worldwide gross sales for the Fisher-Price Brands business unit, which includes the Fisher-Price® Core, Fisher-Price® Friends and the Power Wheels® brand, were $391.3 million, or up 27 percent versus the prior year. This reflects strong growth in Fisher-Price® Friends and Core Fisher- Price® worldwide.
American Girl Brands
First quarter gross sales for the American Girl Brands business unit, which offers American Girl® branded products directly to consumers, were $62.9 million, up 2 percent versus last year.
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® and 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.
