Mattel Reports Third Quarter 2008 Financial Results

by Jay Cochran
October 20, 2008

Third Quarter Highlights

- Worldwide net sales up 6 percent;

- Domestic gross sales grew 4 percent and international gross sales increased 7 percent;

- Worldwide gross sales for core brands: Barbie� down 1 percent; Hot Wheels� down 1 percent; Core Fisher-Price� up 7 percent and American Girl� brands up 11 percent;

- Gross margin decreased 80 basis points of net sales; SG&A decreased by 10 basis points of net sales;

- Operating income was $315.3 million compared to operating income of $310.5 million in the third quarter of 2007; and

- Earnings per share of $0.66 vs. prior year of $0.61

Mattel, Inc. (NYSE: MAT) today reported 2008 third quarter financial results. For the quarter, the company reported net income of $238.1 million, or $0.66 per share, compared to last year�s third quarter net income of $236.8 million, or $0.61 per share.

�In light of the recent global economic environment, our business performed well in the quarter,� said Robert A. Eckert, chairman and chief executive officer of Mattel, Inc. �The all-important holiday season, however, is ahead of us, and fortunately, we�ve got some of the industry�s hottest toys that deliver terrific play value for both parent and child.�

Financial Overview

For the quarter, net sales were $1.95 billion, up 6 percent compared to $1.84 billion last year, including favorable changes in currency exchange rates of 2 percentage points. On a regional basis, third quarter gross sales increased 4 percent in the U.S. and increased 7 percent in international markets, including favorable changes in currency exchange rates of 6 percentage points. Operating income for the quarter was $315.3 million, compared to prior year�s operating income for the quarter of $310.5 million.

The company�s debt-to-total-capital ratio was 37 percent. Consistent with the seasonality of the business, during the first nine months, the company�s cash and equivalents declined by approximately $454 million. This compares to a decline of $929 million in the first nine months of 2007.

Sales by Business Unit

Mattel Girls and Boys Brands

For the third quarter, worldwide gross sales for the Mattel Girls & Boys Brands business unit were $1.21 billion, up 6 percent versus a year ago. Worldwide gross sales for the Barbie� brand declined 1 percent compared to last year, with modest domestic growth offset by international declines. Worldwide gross sales for Other Girls Brands were up 26 percent, driven primarily by Disney�s High School Musical dolls. Worldwide gross sales for the Wheels category, which includes the Hot Wheels�, Matchbox� and Tyco� R/C brands, were up 7 percent. Worldwide gross sales for the Entertainment business, which includes Radica� and Games and Puzzles, grew 3 percent for the quarter, mostly attributable to shipments of products tied to the movie properties Batman�: The Dark Knight�, Speed Racer�, and Kung Fu Panda�.

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 $833.1 million, or up 4 percent versus the prior year, primarily due to growth in Fisher-Price� Core, partially offset by declines in Fisher-Price� Friends and Power Wheels�.

American Girl Brands

Third quarter gross sales for the American Girl Brands business unit, which offers American Girl� branded products directly to consumers, were $78.8 million, up 11 percent versus last year, driven by strong sales of products tied to the Kit Kittredge� movie, and additional sales in the Atlanta and Dallas boutiques, which opened in the second half of 2007.

Live Webcast

Mattel will webcast its 2008 third quarter earnings conference call at 8 a.m. Eastern time (5 a.m. Pacific time) today. The conference call will be webcast on the "Investors & Media" section of the company's corporate Web site, www.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 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 the morning of the call, until midnight Eastern time on Oct. 24th and may be accessed by dialing + (719) 457-0820. The passcode is 3333641.

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 www.mattel.com, under the sub-headings �Financial Information� � �Earnings Releases.�

Comments...

Last 10 comments - ( Read All Posts )

nonameshmo30 - 2008-10-21 @ 6:38 am

grrrrr that whole thing just gets my blood boiling wish u hadnt posted it lol

nonameshmo30 - 2008-10-21 @ 6:37 am

Just because Mattel as a company is doing well, in other words, doesn't automatically mean that the DCUC line is going to do well/better.
Further evidence of that is ToyGuru/Matty's mentions of having to keep costs down (like reusing parts) to try to ensure the line's vitality. I think there's a pretty small margin for error with DCUC, JLU, and especially MOTUC.

OK i read it im with queen i dont understand all the facts and figures. BUt that being said one thing that hurts the hot wheels or there car line in general is there still pushing the cars movie ok kids move on just like we do. also speed racer movie was crap so the toy line didnt move like they had hoped but the speed toys were cheap looking no real collector even wanted to try to collect them. and we all know bratz is kickin barbies butt.Ok so on to the comment. "Just because Mattel as a company is doing well, in other words, doesn't automatically mean that the DCUC line is going to do well" Thats total horse poop cause how many forumz and threads have we all seen with people screaming where the dcuc figs. and how there seeling on e bay and other places.so please go some where else with that bunch of bull.And then i see this in the info...In light of the recent global economic environment, our business performed well in the quarter, said Robert A. Eckert, chairman and chief executive officer of Mattel, Inc. so looks to me there doing just fine so again i side with queen where is the damn DCUC figs and why are we paying more and more and why do the big wigs keep sayin there not makeing profit. When its clear they are would would make more profit if they would stop this store exclusive crap.its hard enough on us to try to find them period. much less have to hunt down this and that from store to store with this only here or there. it makes me so mad i ust want to punch some one in the face.Cause i see gi joes everywhere and hulk figs and spiderman which im sic to death of spiderman figs i mean come on how many times can u repackage the same damn figs.i saw a spiderman fig the other day i got when i was 12 im 31 now and it was just repackaged in a different box. god why do i have to like figs so much lol.But anyway theres all that but no DCUC figs to be seen and if you do find one or two the paint is missing or dripping or the white part looks dingy and brown. i have the best example today i saw a green lanturn his white gloves have brown marks on them and the green didnt even cover his crotchl area and his hair had paint missing . u all know what im talking about.

Eric - 2008-10-21 @ 3:39 am

MattyCollector is having a "relaunch" of sorts in November with new information and brand-specific pages. They will also have figure stands for sale (I know, I know, exciting stuff). December I think will be the next time figures are actually offered for sale on the site (He-Man and Beast Man from MOTUC, and then at the end of the year the DCUC Adam Strange-Starfire two-pack).

ScubatheDiver - 2008-10-21 @ 3:22 am

Speaking of Matty, what's the deal with the Matty Collector website? I keep checking every now and then to see if they might have added something to sell but nada, nothing, zilch. Why create a website to sell stuff and not add any product to sell. It's not for lack of Mattell products.

Eric - 2008-10-20 @ 7:27 pm

Just because Mattel as a company is doing well, in other words, doesn't automatically mean that the DCUC line is going to do well/better.

Further evidence of that is ToyGuru/Matty's mentions of having to keep costs down (like reusing parts) to try to ensure the line's vitality. I think there's a pretty small margin for error with DCUC, JLU, and especially MOTUC.

Jmacq1 - 2008-10-20 @ 5:47 pm

You also have to figure: Profits from within a brand tend to (to some extent) get re-invested into that same brand. I don't see DCUC listed among Mattel's "top performers" (and really, it couldn't be when you try to compare it to the amount of shelf-space that brands like Hot Wheels and Barbie play with).

Just because Mattel as a company is doing well, in other words, doesn't automatically mean that the DCUC line is going to do well/better.

Eric - 2008-10-20 @ 4:34 pm

Even with things seemingly positive financially, I'm sure the top execs at the company believe costs could be cut to maximize profits even more. I think that's usually how it works with big corporations. Look at the oil companies. No amount of money is ever enough, so they keep trying to get more even when quarterly profits are in the billions. Those CEOs need all that money, and us dumb common folk just don't understand.

But anyway, I'm glad Mattel's doing well. Maybe if they ever make available the figures people like me want to buy (DCUC, Masters of the Universe Classics) they'll do even better.

SUPREMEQUEEN - 2008-10-20 @ 3:54 pm

Well that's a lot of info to process, & I'm not even gonna pretend that I understand all of it cause I don't. But surfice to say it looks like Mattel had a profitable year. So excuse me for saying again but...............WHERE THE BLEEP ARE ALL THE DCUC & MMs!!!!

I mean if all is going so flippin well then where's all the hot money makeing figs??? I guess Mattel was just to busy inflating that 11% Fisher Price increase by cranking out baby dolls that proclaim their religion is superior to everyone else! "Goo goo gah gah, renounce Christ & see the light" my fat aunt Harriet!

All I know is this news confirms that Mattel is more than financhely fit to crank out more MM & DCUC figs than they have been. I'm tired of their lame "production cost" excuses. I want results NOW!

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