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| Mattel, Inc.: Investor Relations |
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Mattel Reports Second Quarter 2003 Financial Results
Second Quarter Highlights
Worldwide net sales down 4 percent;
Domestic gross sales down by 15 percent and international gross sales up 11 percent; or up less than 1 percent in local currency;
Worldwide gross sales for core brands: Barbie? down 8 percent; Hot Wheels? down 16 percent; core Fisher-Price? down 3 percent and American Girl? brands down 3 percent;
Gross margin improvement of 210 basis points of net sales; SG&A increased by 210 basis points of net sales;
Operating income down 6 percent;
Earnings per share, excluding charges, of $0.07 flat vs. prior year; and
GAAP earnings per share of $0.05 vs. prior year of $0.04.
EL SEGUNDO, Calif., July 18, 2003 - Mattel, Inc. (NYSE:MAT) today reported 2003 second quarter financial results. For the quarter, excluding charges related to the financial realignment plan, income was $30.9 million, or $0.07 per share, versus last year's second quarter income of $29.6 million, or $0.07 per share. The company reported GAAP (Generally Accepted Accounting Principles) net income of $20.9 million for the quarter, or $0.05 per share, compared to last year's second quarter income of $19.6 million, or $0.04 per share.
For the quarter, net sales were $769.0 million, down 4 percent compared to last year's second quarter net sales of $804.4 million. Operating income, excluding charges, was down 6 percent at $54.8 million. On a regional basis, domestic second quarter gross sales decreased by 15 percent while international second quarter gross sales increased by 11 percent, or up less than 1 percent in local currency.
"As expected, second quarter sales were weak driven by the combination of declining retail inventories and market share losses. With that said, I am pleased with our progress on the income statement and balance sheet, specifically improvements in gross margin and working capital," said Robert A. Eckert, chairman and chief executive officer of Mattel. "To reinvigorate sales in the all-important second half, we are bolstering our marketing and promotional programs surrounding our core brands, as well as introducing exciting new brands."
Mattel Brands Business Unit
Worldwide gross sales for the Mattel Brands business unit were $494.7 million, a 9 percent decrease. Worldwide gross sales for the Barbie? brand were down 8 percent with double-digit international gains offset by declines in domestic sales. Worldwide gross sales for Other Girls Brands, which includes the Polly Pocket!? and elloTM brands, were down 12 percent for the quarter with strong sales of Polly Pocket!? and elloTM offset by sales declines in the What's Her Face!? and Diva Starz? brands.
For the quarter, worldwide gross sales for the Wheels category, which includes the Hot Wheels?, Matchbox? and Tyco? R/C brands, were down 20 percent. Gains in international sales for Hot Wheels? were offset by declines in domestic Hot Wheels? sales and worldwide sales declines in Tyco? R/C and Matchbox?.
Worldwide gross sales for the Entertainment category, which includes the Games and Puzzles segment, were up 9 percent for the quarter led by strong growth in the Yu-Gi-Oh!? brand and the Games and Puzzles segment, partially offset by sales declines in Harry Potter? products.
Fisher-Price? Brands Business Unit
Second quarter worldwide gross sales for the Fisher-Price? Brands business unit, which includes the Fisher-Price?, Little People?, Rescue HeroesTM, and Power Wheels? brands, were $295.6 million, flat with the prior year's second quarter. Strong sales of core Fisher-Price? internationally and worldwide sales of Fisher-Price Friends, previously referred to as licensed character brands, were offset by declines in core Fisher-Price in the U.S.
American Girl? Brands Business Unit
Second quarter gross sales for the American Girl? Brands business unit, which offers American Girl? branded products direct to consumers, were $41.6 million, down 3 percent, as increases in the Bitty Baby? line were more than offset by declines in the historically-based American Girls Collection? and American Girl Today? lines.
Financial Realignment
Mattel recorded pre-tax charges of $14.0 million in the quarter as part of its $250 million financial realignment plan. The second quarter charges were largely related to termination of a licensing arrangement; restructuring of Corolle, the company's French doll business; streamlining back office functions; and consolidation of two manufacturing facilities in Mexico. These charges are included in Cost of Sales ($2.4 million), Other Selling and Administrative Expenses ($7.4 million), Restructuring and Other Charges ($3.3 million) and Other Non-Operating (Income), Net ($0.9 million) in the consolidated statement of operations. Since the announcement of the plan in September 2000, Mattel has recorded $249.3 million in pre-tax charges. The company is on track to deliver at least the targeted initial cumulative pre-tax cost savings of approximately $200 million over the three-year duration of the plan.
Live Webcast
Mattel will webcast its 2003 second quarter earnings conference call at 5:30 a.m. Pacific time (8:30 a.m. Eastern time) today. The conference call will be simulcast on the "Investors & Media" section of www.mattel.com. To listen to the call live, log on to the Web site at least 15 minutes early to register, download and install any necessary audio software. An archive of the call may be accessed beginning two hours after the completion of the live call. To listen to a replay of the call via telephone, domestic and international callers should dial + (719) 457-0820. The passcode is 346895. The telephonic playback will be available beginning at 8:30 a.m. Pacific time the morning of the call, until Saturday, July 19 at 9 p.m. Pacific time.
Information required by Securities and Exchange Commission Regulation G, regarding non-GAAP financial measures, will be available at the time of the webcast on the "Investors & Media" section of www.mattel.com, under the headings "Financial Information" - "Earnings Releases."
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 created. Leading the toy and game market, the Mattel family is comprised of such best-selling brands as Hot Wheels?, Matchbox?, American Girl?, and Tyco? R/C, as well as Fisher-Price brands (www.fisher-price.com), including Little People?, Rescue HeroesTM, Power Wheels? and a wide array of entertainment-inspired toy lines. With worldwide headquarters in El Segundo, Calif., Mattel employs more than 25,000 people in 36 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, which may include, but are not limited to sales levels, restructuring, special charges, other non-recurring charges, cost savings, operating efficiencies, cash flow, investments, capital expenditures, strategic acquisitions, plans to employ capital and make investments and profitability 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; significant changes in buying and payment patterns of major customers, including as a result of bankruptcy; adverse changes in general economic conditions in the U.S. and internationally, including adverse changes in the retail environment; the impact of competition on revenues and margins; the supply and cost of raw materials and components; the effect of currency fluctuations on reportable income; risks associated with acquisitions and mergers including the possibility that attractive opportunities will not be identified or consummated and that such transactions may not result in the intended objective; risks associated with foreign operations; negative results of litigation, governmental proceedings or environmental matters; possible work stoppages, slowdowns or strikes; increasing advertising costs and other risks and uncertainties as may be detailed from time to time in the company's public announcements and SEC filings. This release includes forward-looking statements about sales in the second half of the year, marketing and promotional plans and cost savings under the company's financial realignment plan. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so.
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