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Press release from Business Wire

Mattel Reports Third Quarter 2011 Financial Results

<p class='bwalignc'> <b>-- Declares Quarterly Dividend and Increases Share Repurchase Program by $500 Million --</b> </p> <p> <b>Third Quarter Highlights</b> </p> <ul> <li class='bwlistitemmargb'> <b>Worldwide net sales up 9 percent;</b> </li> <li class='bwlistitemmargb'> <b>Domestic gross sales up 6 percent and international gross sales up 13 percent;</b> </li> <li class='bwlistitemmargb'> <b>Worldwide gross sales for core brands: Barbie</b><sup>®</sup><b> up 17 percent; Hot Wheels</b><sup>®</sup><b> up 6 percent; Core Fisher-Price</b><sup><b>®</b></sup><b> up 5 percent and American Girl</b><sup><b>®</b></sup><b> brands up 4 percent;</b> </li> <li class='bwlistitemmargb'> <b>Gross margin decreased 330 basis points of net sales; SG&A decreased 370 basis points of net sales;</b> </li> <li class='bwlistitemmargb'> <b>Operating income of $397.6 million compared to operating income of $358.6 million in the third quarter of 2010; and</b> </li> <li class='bwlistitemmargb'> <b>Earnings per share of $0.86 vs. prior year earnings per share of $0.77 (which included a tax benefit of $0.05).</b> </li> </ul> <p> <b>Capital Deployment</b> </p> <ul> <li class='bwlistitemmargb'> <b>Board declares fourth quarter cash dividend of $0.23 per share, reflecting an annualized dividend of $0.92 per share, which represents an 11 percent increase to last year's annual dividend;</b> </li> <li class='bwlistitemmargb'> <b>The company repurchased 6.6 million shares of its common stock at a cost of approximately $173 million; and</b> </li> <li class='bwlistitemmargb'> <b>Board authorizes the company to increase its previously announced share repurchase program by $500 million.</b> </li> </ul>

Friday, October 14, 2011

Mattel Reports Third Quarter 2011 Financial Results06:00 EDT Friday, October 14, 2011 EL SEGUNDO, Calif. (Business Wire) -- Mattel, Inc. (NASDAQ: MAT) today reported 2011 third quarter financial results. For the quarter, the company reported net income of $300.8 million, or $0.86 per share, compared to last year's third quarter net income of $283.3 million, or $0.77 per share. “We continue to be pleased with our performance across our portfolio of brands in all of the regions of the world. Not only have we continued to benefit from the strength of our core brands, but this year's big entertainment property, CARS 2®, is also fueling momentum,” said Robert A. Eckert, chairman and chief executive officer of Mattel. “As we enter into the all-important holiday season, we remain keenly focused on execution and delivering growth in our core brands, working to expand and leverage our international footprint, optimizing our entertainment portfolio, and building our newest franchise, Monster High.” Financial Overview For the quarter, net sales were $2.0 billion, up 9 percent compared to $1.83 billion last year, including favorable changes in currency exchange rates of 2percentage points. On a regional basis, third quarter gross sales increased 6 percent in the U.S. and increased 13 percent in international markets, including favorable changes in currency exchange rates of 5percentage points. Operating income for the quarter was $397.6 million, compared to prior year's operating income for the quarter of $358.6 million. The company's debt-to-total-capital ratio was 33.0 percent. Consistent with the seasonality of the business, net cash flows used for operating activities were approximately $322 million in the first nine months of 2011, a decrease of $106 million, compared with a use of approximately $428 million in the same period in 2010. Cash flows used for financing and other activities were $586 million in the first nine months of 2011, compared to cash flows from financing and other activities of approximately $361 million in the same period in 2010, primarily reflecting increased debt repayments consistent with scheduled maturities, dividend payments and increased share repurchases in 2011, as well as the issuance of $500 million of senior unsecured notes in the third quarter of 2010. During the third quarter of 2011, the company repurchased approximately 6.6 million shares of its common stock at a cost of approximately $173 million. Sales by Business UnitMattel Girls and Boys Brands For the third quarter, worldwide gross sales for the Mattel Girls & Boys Brands business unit were $1.34 billion, up 15 percent versus a year ago. Worldwide gross sales for the Barbie® brand were up 17 percent. Worldwide gross sales for Other Girls Brands were up 32 percent, driven by the Monster High® and Disney Princess™ doll lines. Worldwide gross sales for the Wheels business, which includes the Hot Wheels®, Matchbox® and Tyco R/C® brands, were up 2 percent. Worldwide gross sales for the Entertainment business, which includes Radica® and Games and Puzzles, were up 14 percent for the quarter, primarily driven by growth in the CARS 2® property. Fisher-Price Brands Third quarter worldwide gross sales for the Fisher-Price® Brands business unit, which includes the Fisher-Price® Core, Fisher-Price® Friends and Power Wheels® brands, were $748.9 million, up 1 percent versus the prior year, primarily driven by sales of Infant products. American Girl Brands Third quarter gross sales for the American Girl® Brands business unit, which offers American Girl® branded products directly to consumers, were $87.6 million, up 4 percent versus last year, primarily reflecting sales of products related to Kanani™, the 2011 Girl of the Year®. Quarterly Dividend Additionally, the company announced today that its Board of Directors declared a fourth quarter cash dividend of $0.23 per share on the Company's common stock. The dividend will be payable on December 16, 2011 to stockholders of record on November 30, 2011. The dividend is the fourth of four quarterly dividends the Company will pay this year, reflecting an annualized dividend of $0.92 per share, which represents an increase of $0.09 per share, or 11 percent, versus last year's annual dividend of $0.83 per share. Increase in Share Repurchase Program The Mattel Board of Directors authorized the company to increase its previously announced share repurchase program by $500 million. Repurchases will take place from time to time, depending on market conditions. The share repurchase program is one component of the company's capital and investment framework which was announced in February 2003. Under the program, Mattel has repurchased approximately 144.7 million shares of its common stock for an aggregate of approximately $3.0 billion. Live Webcast Mattel will webcast its 2011 third quarter financial results conference call at 8:30 a.m. Eastern time today. The conference call will be webcast on the “Investors & Media” section of the company's corporate Web site: http://corporate.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 the next 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 11:30 a.m. Eastern time on October 14 until Tuesday, October 18, at midnight Eastern time and may be accessed by dialing +1-404-537-3406. The passcode is 99034862. 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://corporate.mattel.com/, under the sub-headings “Financial Information” – “Earnings Releases.” About Mattel Mattel, Inc. (NASDAQ:MAT) (www.mattel.com) is the worldwide leader in the design, manufacture and marketing of toys and family products. The Mattel family comprises such best-selling brands as Barbie®, the most popular fashion doll ever introduced, Hot Wheels®, Matchbox®, American Girl®, Radica® and Tyco R/C®, as well as Fisher-Price® brands, including Little People®, Power Wheels® and a wide array of entertainment-inspired toy lines. In 2011, Mattel was named as one of FORTUNE Magazine's “100 Best Companies to Work For” for the fourth year in a row, and was also ranked among Corporate Responsibility Magazine's “100 Best Corporate Citizens.” With worldwide headquarters in El Segundo, Calif., Mattel employs approximately 31,000 people in 43 countries and territories and sells products in more than 150 nations. At Mattel, we are “Creating the Future of Play.” Follow Mattel on Facebook: www.facebook.com/mattel Note: This press release contains forward-looking statements relating to the Company's expected 2011 financial performance. These forward-looking statements are based on currently available operating, financial, economic and other information and are subject to a number of significant risks and uncertainties. A variety of factors, many of which are beyond our control, could cause actual future results to differ materially from those projected in the forward-looking statements. Some of these factors are described in the Company's periodic filings with the Securities and Exchange Commission, including the “Risk Factors” section of Mattel's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and Mattel's Quarterly Reports on Form 10-Q for fiscal year 2011, as well as in Mattel's other public statements. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so.   MATTEL, INC. AND SUBSIDIARIESEXHIBIT I   CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)     For the Three Months Ended September 30,   For the Nine Months Ended September 30,(In millions, except per share andpercentage information)2011   2010   Yr / Yr% Change2011   2010   Yr / Yr% Change$ Amt   % Net Sales$ Amt   % Net Sales$ Amt% Net Sales$ Amt   % Net Sales   Net Sales $ 1,998.8 $ 1,833.1 9 % $ 4,112.3 $ 3,731.6 10 % Cost of sales 1,042.7   52.2 % 895.6   48.9 % 16 % 2,126.8   51.7 % 1,872.6   50.2 % 14 %   Gross Profit 956.1 47.8 % 937.5 51.1 % 2 % 1,985.5 48.3 % 1,859.0 49.8 % 7 % Advertising and promotion expenses 219.9 11.0 % 201.6 11.0 % 9 % 437.9 10.6 % 397.7 10.7 % 10 % Other selling and administrative expenses 338.6 16.9 % 377.3 20.6 % -10 % 1,004.0 24.4 % 988.0 26.5 % 2 %         Operating Income 397.6 19.9 % 358.6 19.6 % 11 % 543.6 13.2 % 473.3 12.7 % 15 % Interest expense 15.4 0.8 % 13.8 0.8 % 11 % 51.8 1.3 % 40.9 1.1 % 27 % Interest (income) (1.1 ) -0.1 % (1.8 ) -0.1 % -42 % (6.7 ) -0.2 % (7.1 ) -0.2 % -6 % Other non-operating (income), net (2.4 ) -   (3.3 ) (2.5 )   Income Before Income Taxes 385.7 19.3 % 346.6 18.9 % 11 % 501.8 12.2 % 442.0 11.8 % 14 % Provision for income taxes 84.9   63.3   103.9   82.3     Net Income $ 300.8   15.0 % $ 283.3   15.5 % 6 % $ 397.9   9.7 % $ 359.7   9.6 % 11 %   EPS - Basic $ 0.87   $ 0.78   $ 1.14   $ 0.98       Average Number of Common Shares 343.2   360.6   346.4   362.2       EPS - Diluted $ 0.86   $ 0.77   $ 1.12   $ 0.97     Average Number of Common andPotential Common Shares 346.8   363.5   350.0   365.4       MATTEL, INC. AND SUBSIDIARIESEXHIBIT II   WORLDWIDE GROSS SALES INFORMATION (Unaudited)       Three Months Ended September 30,   Nine Months Ended September 30,             (In millions, except percentage information)2011201020112010   Worldwide Gross Sales: Mattel Girls & Boys Brands $ 1,343.1 $ 1,169.1 $ 2,795.1 $ 2,395.4 % Change 15 % 8 % 17 % 13 % Pos./(Neg.) Impact of Currency (in % pts) 4 -4 4 -2   Fisher-Price Brands 748.9 743.4 1,458.8 1,444.7 % Change 1 % -5 % 1 % 0 % Pos./(Neg.) Impact of Currency (in % pts) 1 -2 2 -2   American Girl Brands 87.6 84.4 227.0 213.5 % Change 4 % 2 % 6 % 2 %   Other   3.6     -     7.6     5.6     Gross Sales $ 2,183.2   $ 1,996.9   $ 4,488.5   $ 4,059.2   % Change 9 % 2 % 11 % 7 % Pos./(Neg.) Impact of Currency (in % pts) 2 -3 3 -2   Reconciliation of Non-GAAP to GAAP Financial Measure: Gross Sales $ 2,183.2 $ 1,996.9 $ 4,488.5 $ 4,059.2 Sales Adjustments   (184.4 )   (163.8 )   (376.2 )   (327.6 )   Net Sales $ 1,998.8   $ 1,833.1   $ 4,112.3   $ 3,731.6   % Change 9 % 2 % 10 % 7 % Pos./(Neg.) Impact of Currency (in % pts) 2 -3 3 -1   MATTEL, INC. AND SUBSIDIARIESEXHIBIT III   CONDENSED CONSOLIDATED BALANCE SHEETS     At September 30,   At Dec. 31,2011   20102010(In millions)(Unaudited)       Assets Cash and equivalents $ 254.5 $ 960.5 $ 1,281.1 Accounts receivable, net 1,650.6 1,550.0 1,146.1 Inventories 764.0 741.4 463.8 Prepaid expenses and other current assets 303.7   313.8     335.6   Total current assets 2,972.8 3,565.7 3,226.6   Property, plant and equipment, net 515.3 478.1 484.7 Other noncurrent assets 1,713.4   1,715.0     1,706.4   Total Assets $ 5,201.5 $   5,758.8   $   5,417.7     Liabilities and Stockholders' Equity Short-term borrowings $ 236.8 $ 5.5 $ - Current portion of long-term debt 60.0 250.0 250.0 Accounts payable and accrued liabilities 1,055.9 1,138.1 1,048.5 Income taxes payable 45.7   52.2     51.8   Total current liabilities 1,398.4 1,445.8 1,350.3   Long-term debt 900.0 960.0 950.0 Other noncurrent liabilities 472.6 495.9 488.8 Stockholders' equity 2,430.5   2,857.1     2,628.6   Total Liabilities and Stockholders' Equity $ 5,201.5 $   5,758.8   $   5,417.7                         SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)   At September 30,(In millions, except days and percentage information)20112010   Key Balance Sheet Data: Accounts Receivable, Net Days of Sales Outstanding (DSO) 74 76   Total Debt Outstanding $ 1,196.8 $ 1,215.5 Total Debt-to-Total-Capital Ratio 33.0 % 29.8 %   Nine Months Ended September 30,(In millions)2011 (a)2010   Condensed Cash Flow Data: Cash Flows (Used For) Operating Activities $ (322 ) $ (428 )   Cash Flows (Used For) Investing Activities (119 ) (89 )   Cash Flows (Used For) Provided By Financing Activities and Other   (586 )   361     Decrease in Cash and Equivalents $ (1,027 ) $ (156 )   (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, 2011.   Mattel, Inc.News Media:Lisa Marie Bongiovanni, 310-252-3524LisaMarie.Bongiovanni@mattel.comSecurities Analysts:Drew Vollero, 310-252-2703Drew.Vollero@mattel.com