Mattel Reports Second Quarter 2007 Financial Results

Mattel Reports Second Quarter 2007 Financial Results

Mattel, Inc. (NYSE: MAT) today reported 2007 second quarter financial results. For the quarter, the company reported net income of $43.1 million, or $0.11 per share, compared to last year’s second quarter net income of $37.4 million, or $0.10 per share. Last year’s quarterly net income was positively impacted by tax benefits of approximately $6.2 million, or $0.02 per share, primarily relating to an audit settlement with a state tax authority.

“Overall we had a good quarter, especially given the comparisons with strong sales from movie-related toys in last year’s second quarter,” said Robert A. Eckert, chairman and chief executive officer of Mattel. “While the first half is not particularly significant to the highly seasonal toy industry, our positive results continue to reflect the benefits of our diversified portfolio of global brands.”

Financial Overview

For the quarter, net sales were $1.02 billion, up 7 percent compared to $957.7 million last year, including favorable changes in currency exchange rates of 3 percentage points. On a regional basis, second quarter gross sales decreased 3 percent in the U.S. and increased 18 percent in international markets, including favorable changes in currency exchange rates of 7 percentage points. Operating income for the quarter was $63.5 million, compared to prior year’s operating income for the quarter of $49.9 million.

The company’s debt-to-total-capital ratio of 18.8 percent is in line with the company’s capital and investment framework. Consistent with the seasonality of the business, during the first half the company’s cash and equivalents declined by approximately $463 million, compared with a decline of approximately $373 million in the first half of 2006.
Sales by Business Unit

Mattel Girls and Boys Brands

For the quarter, worldwide gross sales for the Mattel Girls & Boys Brands business unit were $638.4 million, up 5 percent versus a year ago. Worldwide gross sales for the Barbie(R) brand were up 6 percent, with increases in international markets more than offsetting declines in the U.S. Worldwide gross sales for Other Girls Brands were down 1 percent. Worldwide gross sales for Wheels, which includes the Hot Wheels(R), Matchbox(R) and Tyco(R) R/C brands, were up 20 percent, led by double-digit growth in the Hot Wheels(R) and Matchbox(R) lines. Worldwide gross sales for the Entertainment business, which includes Radica(R) and Games and Puzzles, declined 2 percent.

Fisher-Price Brands

Second quarter worldwide gross sales for the Fisher-Price Brands business unit, which includes the Fisher-Price(R) Core, Fisher-Price(R) Friends and the Power Wheels(R) brand, were $410.4 million, up 12 percent versus the prior year. This reflects continued strong growth in Core Fisher-Price(R) worldwide.

American Girl Brands

Second quarter gross sales for the American Girl Brands business unit, which offers American Girl(R) branded products directly to consumers, were $55.8 million, down 10 percent versus last year.

Live Webcast

Mattel will webcast its 2007 second quarter earnings conference call today at 8:30 a.m. (Eastern), 5:30 a.m. (Pacific). The conference call will be webcast on the “Investors & Media” section of the company’s corporate Web site, http://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 (8:30 a.m. Pacific time) the morning of the call, until Tuesday, July 17 at midnight Eastern time (9 p.m. Pacific time) and may be accessed by dialing + (719) 457-0820. The passcode is 4856439.

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://www.mattel.com/, under the sub-headings “Financial Information” – “Earnings Releases.”