FOR IMMEDIATE RELEASE Contact: Glenn Bozarth February 7, 1995 (310) 252-3521 MATTEL EARNINGS UP SHARPLY IN 1994 QUARTER AND YEAR, COMPANY REPORTS SIXTH CONSECUTIVE YEAR OF RECORD RESULTS -------------------------------------------------------- LOS ANGELES, February 7 -- Mattel, Inc. today reported 1994 net sales of $3.2 billion, a 19 percent increase from $2.7 billion in 1993. Net income was $256 million in 1994, up from $117 million in 1993. Pre-tax income, before charges for restructuring and changes in accounting principles, was $466 million, a 32 percent increase from $352 million in 1993. After tax income was $1.32 per share before a $.21 per share charge related to a previously announced restructuring. Per share amounts are adjusted for the January 1995 five-for-four stock split. "These outstanding results further reinforce Mattel's position as a top performer among consumer product companies," John W. Amerman, chairman and chief executive officer, said. "Consistent profitable growth has been our top priority. We've achieved that objective and exceeded our goals in each of the past six years. -more- 2-2-2-2-2 "The integration of Fisher-Price, Kransco and J.W. Spear with Mattel during 1994 provided benefits that surpassed our expectations," Amerman said. "Additionally, sales and profitability of the Fisher-Price, Kransco and Spear businesses exceeded our targets." For the fourth quarter ended December 31, 1994, pre-tax earnings before the restructuring charge were $135 million, up 38 percent from comparable 1993 earnings. Net sales for the quarter were $1.03 billion, an increase of 37 percent from $754 million in the year-ago quarter. "Our strong sales momentum in the fourth quarter, combined with the excellent new toy line we will introduce next week at the American International Toy Fair, give us confidence that 1995 will be another great year for Mattel," Amerman said. Mattel, Inc. is a worldwide leader in the design, manufacture and marketing of children's toys. With headquarters in El Segundo, California, Mattel has offices and facilities in 36 countries and sells its products in more than 140 nations throughout the world. -###- MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED RESULTS OF OPERATIONS FOR THE FOR THE THREE MONTHS ENDED YEAR ENDED ------------------------ ------------------------ Dec. 31, Dec. 31, Dec. 31, Dec. 31, (In thousands, except per share amounts) 1994 1993 1994 1993 - ---------------------------------------- ----------- ----------- ----------- ----------- Net Sales $ 1,030,409 $ 753,914 $ 3,205,025 $ 2,704,448 Cost of sales 510,475 379,365 1,603,522 1,378,181 ----------- ----------- ----------- ----------- Gross Profit 519,934 374,549 1,601,503 1,326,267 Advertising and promotion expenses 189,547 135,427 516,485 426,698 Other selling and administrative expenses 160,437 121,363 536,443 473,394 Mattel restructuring costs (a) 72,000 - 72,000 - Integration/restructuring costs (b) - 115,000 - 115,000 Other expense, net 16,927 2,158 27,494 11,915 ----------- ----------- ----------- ----------- Operating Profit 81,023 601 449,081 299,260 Interest expense 17,562 17,563 55,449 62,614 ----------- ----------- ----------- ----------- Income (Loss) Before Income Taxes 63,461 (16,962) 393,632 236,646 Provision for income taxes 20,600 11,033 137,800 100,735 ----------- ----------- ----------- ----------- Income (Loss) Before Extraordinary Item and Cumulative Effect of Changes in Accounting Principles 42,861 (27,995) 255,832 135,911 Extraordinary item - debt retirement - (14,681) - (14,681) ----------- ----------- ----------- ----------- Income (Loss) Before Cumulative Effect of Changes in Accounting Principles 42,861 (42,676) 255,832 121,230 Cumulative effect of changes in accounting principles - - - (4,022) ----------- ----------- ----------- ----------- Net Income (Loss) $ 42,861 $ (42,676) $ 255,832 $ 117,208 =========== =========== =========== =========== Income (Loss) Per Share - Primary (c) Income (loss) before extraordinary item and cumulative effect of changes in accounting principles $ 0.19 $ (0.14) $ 1.12 $ 0.62 Extraordinary item - debt retirement - (0.07) - (0.07) Cumulative effect of changes in accounting principles - - - (0.02) ----------- ----------- ----------- ----------- Net Income (Loss) Per Share - Primary $ 0.19 $ (0.21) $ 1.12 $ 0.53 =========== =========== =========== =========== Average Number of Common and Common Equivalent Shares Outstanding - Primary 224,493 213,308 223,939 213,978 =========== =========== =========== =========== Income (Loss) Per Share - Fully Diluted (c) Income (loss) before extraordinary item and cumulative effect of changes in accounting principles $ 0.19 $ (0.14) $ 1.11 $ 0.60 Extraordinary item - debt retirement - (0.07) - (0.06) Cumulative effect of changes in accounting principles - - - (0.02) ----------- ----------- ----------- ----------- Net Income (Loss) Per Share - $ 0.19 $ (0.21) $ 1.11 $ 0.52 Fully Diluted (d) =========== =========== =========== =========== Average Number of Common and Common Equivalent Shares Outstanding - 225,281 212,050 227,006 226,062 Fully Diluted =========== =========== =========== =========== MATTEL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS Dec. 31, Dec. 31, (In thousands) 1994 1993 - -------------- ----------- ----------- ASSETS Cash, cash equivalents and marketable securities $ 259,681 $ 523,581 Accounts receivable, net 762,024 580,313 Inventories 339,143 219,993 Prepaid expenses 182,675 146,863 ----------- ----------- Total current assets 1,543,523 1,470,750 Property, plant and equipment, net 415,921 326,877 Other assets 499,582 202,450 ----------- --------- Total Assets $ 2,459,026 $ 2,000,077 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term liabilities $ 3,095 $ 104,862 Accounts payable and accrued liabilities 748,392 573,224 Income taxes payable 164,394 105,243 ----------- ----------- Total current liabilities 915,881 783,329 Long-term debt 264,483 254,159 Medium-Term notes 110,500 - Other long-term liabilities 82,472 70,827 Convertible debt - 73,953 Shareholders' equity 1,085,690 817,809 ----------- ----------- Total Liabilities and Shareholders' Equity $ 2,459,026 $ 2,000,077 =========== =========== <FN> (a) Represents a nonrecurring charge in connection with the consolidation of manufacturing operations and the reduction of headquarters expense and support functions worldwide. The related tax benefit of $25.2 million is included in the provision for income taxes. (b) Represents a nonrecurring charge for transaction and restructuring costs of the Fisher-Price merger. The related tax benefit of $24.6 million is included in the provision for income taxes. (c) Share and per share data for all periods presented reflect the retroactive effect of a 5/4 stock split declared in December 1994. (d) Fully diluted income per share for the year, before the $0.21 per share effect of the 1994 nonrecurring charge of $46.8 million after-taxes, was $1.32 per share.