FOR IMMEDIATE RELEASE Contact: Glenn Bozarth February 5, 1997 Mattel, Inc. (310) 252-3521 MATTEL REPORTS EARNINGS AND SALES INCREASES FOR 1996 FOURTH QUARTER AND FULL-YEAR ------------------------------------------- LOS ANGELES, Feb. 5 -- Mattel, Inc. today reported that income per share for the full-year 1996, before an accrual and special charge, increased 14 percent on a 4 percent increase in sales. Net income was $378 million or $1.36 per share, after a $.03 impact from a Snacktime Kids refund accrual and a $.05 special accounting charge. In 1995, net income was $358 million or $1.26 per share. Net sales for 1996 totaled $3.79 billion, versus $3.64 billion in 1995. Before the impact of the accrual and charge, income for the 1996 fourth quarter was up 22 percent on a 4 percent increase in sales. After these items, net income for the quarter was $113 million, versus $112 million in 1995, and net sales were $1.19 billion, compared with $1.16 billion in the prior year. "Despite a difficult retail environment, worldwide sales of our four core brands of Barbie, Fisher-Price, Disney and Hot Wheels increased 10 percent in 1996, even with a 4 percent decrease in sales for Fisher-Price," Jill E. Barad, Mattel's president and chief executive officer, said. "Our 38-year-strong Barbie brand led the way with a 20 percent increase in worldwide sales. "The increased focus on our core brands helped us maximize profitability in 1996, with gross margin increasing from 49.2 percent in 1995 to 50.8 percent last year," Barad said. In response to concerns related to its Snacktime Kids dolls, Mattel in January announced that it would provide cash refunds to consumers who had purchased the dolls, and would voluntarily withdraw all product from retail shelves. A 1996 fourth quarter accrual related to this action resulted in a negative impact of $10 million to sales and $8 million to after-tax earnings. The company also took a special after-tax charge of $15.1 million after discussions with the SEC staff concerning Mattel's method of accounting for certain royalties and participation fees related to prior periods. Mattel and its auditors continue to believe that the company's accounting treatment was appropriate. Nevertheless, Mattel has accepted the SEC staff's accounting treatment in order to proceed with its pending merger with Tyco. The company also announced that the Mattel board of directors has declared a quarterly dividend of $.06 per share on its common stock. The dividend is payable April 3, 1997 to shareholders of record on March 14, 1997. In addition, the Mattel board authorized the repurchase of up to 6.5 million shares of the company's common stock during 1997. Mattel, Inc. is the 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 STATEMENTS OF INCOME FOR THE FOR THE THREE MONTHS ENDED YEAR ENDED ------------------------ ------------------------ Dec. 31, Dec. 31, Dec. 31, Dec. 31, (In thousands, except per share amounts) 1996 1995 1996 1995 - ---------------------------------------- ----------- ----------- ----------- ----------- Net Sales $ 1,190,545 $ 1,155,284 $ 3,785,958 $ 3,638,812 Cost of sales 571,323 574,785 1,863,135 1,849,650 ----------- ----------- ----------- ----------- Gross Profit 619,222 580,499 1,922,823 1,789,162 Advertising and promotion expenses 236,876 216,824 606,823 584,497 Other selling and administrative expenses 176,027 170,286 647,112 603,061 Other expense (income), net 7,115 8,282 25,808 (4,887) Special charge (a) 21,810 - 21,810 - ----------- ----------- ----------- ----------- Operating Profit 177,394 185,107 621,270 606,491 Interest expense 23,038 21,785 75,529 73,589 ----------- ----------- ----------- ----------- Income Before Income Taxes 154,356 163,322 545,741 532,902 Provision for income taxes 40,900 51,300 168,100 175,100 ----------- ----------- ----------- ----------- Net Income $ 113,456 $ 112,022 $ 377,641 $ 357,802 =========== ============ =========== =========== Net Income Per Share (b) $ 0.41 $ 0.40 $ 1.36 $ 1.26 =========== =========== =========== =========== Average Number of Common and Common Equivalent Shares Outstanding 275,184 280,916 278,385 281,015 =========== =========== =========== =========== MATTEL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS Dec. 31, Dec. 31, (In thousands) 1996 1995 - -------------- ----------- ----------- ASSETS Cash and marketable securities $ 500,625 $ 483,457 Accounts receivable, net 732,307 679,283 Inventories 372,686 350,841 Prepaid expenses and other current assets 165,223 177,238 ----------- ----------- Total current assets 1,770,841 1,690,819 Property, plant and equipment, net 579,613 499,314 Other assets 543,068 505,376 ----------- ----------- Total Assets $ 2,893,522 $ 2,695,509 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings $ 20,485 $ 15,520 Current portion of long-term liabilities 106,069 33,215 Accounts payable and accrued liabilities 666,065 660,763 Income taxes payable 167,749 138,183 ----------- ----------- Total current liabilities 960,368 847,681 Long-term debt 153,758 260,868 Medium-Term notes 220,000 220,000 Other long-term liabilities 111,609 91,791 Shareholders' equity 1,447,787 1,275,169 ----------- ----------- Total Liabilities and Shareholders' Equity $ 2,893,522 $ 2,695,509 =========== =========== <FN> (a) Represents a nonrecurring charge related to the accounting for certain royalties and participation fees in prior periods. (b) Net income per share was $1.44 for the year ended December 31, 1996, before the $0.03 effect of a Snacktime Kids refund accrual and the $0.05 effect of the Special charge.