FOR IMMEDIATE RELEASE CONTACT:
October 21, 1997 Mattel, Inc.
News Media Investor Relations
Glenn Bozarth Mike Salop
310-252-3521 310-252-2703
MATTEL REPORTS THIRD QUARTER EARNINGS OF $.75,
UP 23 PERCENT FROM YEAR-AGO QUARTER
-----------------------------------
LOS ANGELES, October 21 -- Mattel, Inc. [NYSE:MAT] today reported that
income for the 1997 third quarter increased 23 percent to $223.7 million or
$.75 per share, before an extraordinary charge of $4.6 million related to
the redemption of Senior Subordinated Notes. Net income for the 1996 third
quarter was $181.4 million or $.61 per share.
Net sales for the 1997 quarter were up 7 percent in local currency
before the $50 million negative impact of foreign exchange. In U.S.
dollars, sales totaled $1.555 billion, up 4 percent from $1.498 billion
last year. More significantly, worldwide core brand sales for the quarter
increased a strong 10 percent in local currency.
"Our strong profitability in the quarter demonstrates the fundamental
health of Mattel's business," Jill Barad, Mattel's chairman and chief
executive officer, said. "Our gross margin increased to 51.5 percent, up
from 50.1 percent last year, and our operating margin increased from 19.8
percent to 22 percent, two of the highest levels in our company's history.
"Availability issues greatly affected our ability to meet retail
demand, shifting what was planned as third quarter volume into the fourth
quarter," Barad said. "In fact, unshippable demand totaled approximately
$200 million for the quarter. Despite our inability to meet retailer
-more-
2-2-2-2-2
demand, our consumer sales were very strong across all of our core brands,
especially for Barbie, which is up 24 percent in over-the-counter sales in
the U.S. year-to-date."
For the first nine months of 1997, income increased 15 percent to $304
million or $1.01 per share, before the note redemption and a first quarter
pre-tax charge of $275 million related to the Tyco integration and Mattel
restructuring. Net income for the 1996 nine months was $265 million or
$.88 per share.
Net sales for the 1997 nine months were up 7 percent in local
currency. In U.S. dollars, sales totaled $3.222 billion, up 4 percent from
$3.103 billion in 1996.
"Our key new Barbie dolls are now shipping, including walking and
talking dolls, and CD-Rom sales are projected to quadruple," Barad said.
"This, along with the strength of Hot Wheels, Sesame Street and Winnie the
Pooh, puts us solidly on track to achieve our full-year targets."
Mattel redeemed the former Tyco 10-1/8 percent Senior Subordinated
Notes due 2002, effective August 15, 1997. The redemption will result in
annual pre-tax interest savings of $3.8 million.
Mattel, Inc. is the worldwide leader in the design, manufacturing 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
155 countries throughout the world.
Note:
Forward-looking statements included in this release with respect to the
financial condition, results of operations and business of the company,
which include, but are not limited to, the restructuring charge, cost
savings and profitability, are subject to certain risks and uncertainties
that could cause actual results to differ materially from those set forth
in such statements. These include without limitation: the company's
dependence on the timely development, introduction and customer acceptance
of new products; possible weaknesses of international markets; the impact
of competition on revenues and margins; the effect of currency fluctuations
on reportable income; and other risks and uncertainties as may be detailed
from time to time in the company's public announcements and SEC filings.
-###-
MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------- -------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
(In thousands, except per share amounts) 1997 1996 (a) 1997 (a) 1996 (a)
- ---------------------------------------- ----------- ----------- ---------- ---------
Net Sales $ 1,555,347 $ 1,497,916 $3,221,523 $3,103,498
Cost of sales 755,070 747,143 1,639,598 1,593,827
----------- ---------- ---------- ----------
Gross Profit 800,277 750,773 1,581,925 1,509,671
Advertising and promotion expenses 244,231 240,303 478,570 469,931
Other selling and administrative expenses 198,767 204,584 576,760 557,381
Integration/restructuring costs (b) 0 0 275,000 0
Other expense, net 14,892 9,459 30,733 22,662
----------- ---------- ---------- ----------
Operating Profit 342,387 296,427 220,862 459,697
Interest expense 24,632 28,251 62,782 70,134
----------- ---------- ---------- ----------
Income Before Income Taxes 317,755 268,176 158,080 389,563
Provision for income taxes 94,100 86,801 63,415 124,284
----------- ---------- ---------- ----------
Income Before Extraordinary Item 223,655 181,375 94,665 265,279
Extraordinary item, net of tax (4,610) 0 (4,610) 0
----------- ---------- ---------- ----------
Net Income 219,045 181,375 90,055 265,279
Less: dividends on convertible preferred stock 2,838 2,838 8,515 4,554
----------- ---------- ---------- ----------
Net Income Applicable to Common Shares $ 216,207 $ 178,537 $ 81,540 $ 260,725
=========== ========== ========== ==========
Income Per Share
Income Before Extraordinary Item, Net of Tax $ 0.75 $ 0.61 $ 0.30 $ 0.88
Extraordinary Item - Debt Retirement (0.02) - (0.02) -
---------- ---------- --------- ---------
Net Income Per Share (c) (d) $ 0.73 $ 0.61 $ 0.28 $ 0.88
========== ========== ========= =========
Average Number of Common and Common
Equivalent Shares Outstanding (d) 295,688 293,961 294,437 296,417
========== ========== ========= =========
MATTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept. 30, Sept. 30, Dec. 31,
(In thousands) 1997 1996 (a) 1996 (a)
- -------------- ----------- ----------- -----------
ASSETS
Cash $ 68,171 $ 126,924 $ 550,271
Accounts receivable, net 1,846,994 1,572,481 948,940
Inventories 552,661 566,625 444,178
Prepaid expenses and other current assets 183,522 240,621 195,673
----------- ----------- -----------
Total current assets 2,651,348 2,506,651 2,139,062
Property, plant and equipment, net 609,648 594,278 616,281
Other assets 813,622 798,371 825,799
----------- ----------- -----------
Total Assets $ 4,074,618 $ 3,899,300 $ 3,581,142
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings $ 352,833 $ 423,525 $ 28,924
Current portion of long-term liabilities 13,522 105,989 106,596
Accounts payable and accrued liabilities 1,041,409 813,677 823,069
Income taxes payable 162,142 209,338 183,288
----------- ----------- -----------
Total current liabilities 1,569,906 1,552,529 1,141,877
Long-term debt 155,787 301,377 299,806
Medium-Term notes 460,500 220,000 220,000
Other long-term liabilities 124,166 108,482 113,536
Shareholders' equity 1,764,259 1,716,912 1,805,923
----------- ----------- -----------
Total Liabilities and Shareholders' Equity $ 4,074,618 $ 3,899,300 $ 3,581,142
=========== =========== ===========
<FN>
(a) Consolidated results for all periods are restated for the merger with Tyco Toys, Inc.
(b) Represents a nonrecurring charge for transaction, integration and restructuring
costs related to the Tyco merger. The related tax benefit of $65 million is included
in the provision for income taxes.
(c) Primary income per share for the nine months was $1.01 per share, before the $0.71 per share
effect of the merger-related nonrecurring charge of $210 million after taxes, and the $0.02
per share effect of the extraordinary item of $4.6 million, after taxes.
(d) Share and per share data for all periods presented reflect the retroactive effect of
shares issued pursuant to the Tyco merger.