Mattel, Inc. : Mattel Reports Second Quarter 2012 Financial Results and Declares Third Quarter Dividend
07/17/2012| 06:05am US/Eastern
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Second Quarter Highlights
Worldwide net sales flat;
North American1 gross sales up 1% and
International gross sales down 1%;
Worldwide gross sales by core brands: Barbie® up
5%; Hot Wheels® up 11%; Fisher-Price®
up 2% and American Girl® up 3%;
Gross margin increased 340 basis points of net sales; SG&A
increased 180 basis points of net sales;
Operating income of $131.4 million compared to operating income of
$109.3 million in the second quarter of 2011; and
Earnings per share of $0.2
Mattel, Inc. (NASDAQ: MAT) today reported 2012 second quarter financial
results. For the quarter, the Company reported net income of $96.2
million, or $0.28 per share, compared to last year's second quarter net
income of $80.5 million, or $0.23 per share.
"In the second quarter, we delivered solid performance as we continued
to build momentum with key brands, such as Barbie, Monster High,
American Girl and Hot Wheels, as well as the Batman - The Dark Night
Rises property, despite a continued cautious global retail environment
and a strengthening U.S. dollar," said Bryan G. Stockton, Mattel Chief
Executive Officer. "As we look forward, we remain focused on executing
our portfolio of strong brands, countries and customers to deliver in
the all-important holiday season."
Financial Overview
For the quarter, net sales were $1.16 billion, flat compared to last
year, including an unfavorable change in currency exchange rates of 4
percentage points. On a regional basis, second quarter gross sales
increased 1% in the North American region, which consists of the U.S.,
Canada and American Girl, with no impact from changes in currency
exchange rates. For the International region, gross sales decreased 1%,
including an unfavorable impact of currency exchange rates of 10
percentage points. Operating income for the quarter was $131.4 million,
compared to prior year's operating income for the quarter of $109.3
million.
The Company's debt-to-total-capital ratio was 38.1%. For the first half
of the year, the Company's cash and equivalents declined by
approximately $997 million, compared with a decline of approximately
$863 million in last year's first half.
For the first half of the year, cash flows used for operating activities
were approximately $61 million, a decrease of $166 million compared to
approximately $227 million of cash flows used for operating activities
in the first half of 2011. The decrease is primarily due to lower
working capital usage. Cash flows used for investing activities were
approximately $816 million, an increase of $772 million, driven
primarily by the acquisition of HIT Entertainment. Cash flows used for
financing and other activities were approximately $120 million, a
decrease of $472 million, compared to approximately $592 million in
2011, primarily due to the 2011 repayments of long-term debt and lower
share repurchases.
Capital Deployment
The Company announced today that its Board of Directors declared a third
quarter cash dividend of $0.31 per share on the Company's common stock.
The dividend will be payable on Sept. 21, 2012, to stockholders of
record on Aug. 29, 2012. The dividend is the third of four quarterly
dividends the Company expects to pay this year, reflecting an annualized
dividend of $1.24 per share, which represents a 35% increase to last
year's total dividends. During the second quarter of 2012, the Company
repurchased 70,000 shares of its common stock at a cost of approximately
$2 million.
Sales by Brand
Mattel Girls and Boys Brands
For the second quarter, worldwide gross sales for Mattel Girls & Boys
Brands were $781.6 million, down 1% versus the prior year. Worldwide
gross sales for the Barbiebrand were up 5%. Worldwide gross
sales for Other Girls Brands were up 96%, primarily driven by Monster
High®. Worldwide gross sales for the Wheels category, which
includes the Hot Wheels, Matchbox® and Tyco R/C®
brands, were up 9%, primarily driven by Hot Wheels. Worldwide gross
sales for the Entertainment business, which also includes Radica®
and Games, were down 36%, primarily driven by decreases in the CARS 2®
movie property.
Fisher-Price Brands
Second quarter worldwide gross sales for Fisher-Price Brands, which
includes the Fisher-Price Core, Fisher-Price Friends and Power Wheels®
brands, were $407.3 million, or up 2% versus the prior year, driven by
strength in Fisher-Price Friends with the addition of the HIT
Entertainment portfolio and Disney's Jake and the Never Land Pirates
property.
American Girl Brands
Second quarter gross sales for American Girl Brands, which offers
American Girl branded products directly to consumers, were $68.7
million, up 3% versus the prior year, primarily driven by strong sales
of McKenna?, the 2012 Girl of the Year.
Live Webcast
Mattel will webcast its 2012 second quarter financial results conference
call at 8:30 a.m. Eastern time today. The conference call will be
webcast on the "Investors & Media" section of the Company's corporate
website: http://corporate.mattel.com.
To listen to the live call, log on to the website 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 website 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 Friday, July 20
at midnight Eastern time and may be accessed by dialing + (404)
537-3406. The passcode is 91283277.
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://corporate.mattel.com,
under the sub-headings "Financial Information" - "Earnings Releases."
About Mattel:
Mattel, Inc. (NASDAQ: MAT) (www.mattel.com)
is the worldwide leader in the design, manufacture and marketing of toys
and family products. The Mattel family is comprised of such best-selling
brands as Barbie®, the most popular fashion doll ever introduced, Hot
Wheels®, Matchbox®, American Girl®, Radica® and Tyco® R/C, as well as
Fisher-Price® brands, including Thomas & Friends®, Little People®, Power
Wheels® and a wide array of entertainment-inspired toy lines. In 2012,
Mattel was named as one of FORTUNE Magazine's "100 Best Companies to
Work For" for the fifth year in a row. Mattel also is ranked among
Corporate Responsibility Magazine's "100 Best Corporate Citizens." With
worldwide headquarters in El Segundo, Calif., Mattel employs
approximately 28,000 people in 43 countries and territories and sells
products in more than 150 nations. At Mattel, we are "Creating the
Future of Play." Follow Mattel on Facebook: http://www.facebook.com/mattel.
Note: This press release contains forward-looking statements relating to
the Company's expected financial performance and expected quarterly cash
dividend payments in 2012. These forward-looking statements are based on
currently available operating, financial, economic and other information
and are subject to a number of significant risks and uncertainties. A
variety of factors, many of which are beyond our control, could cause
actual future results to differ materially from those projected in the
forward-looking statements. Some of these factors are described in the
Company's periodic filings with the Securities and Exchange Commission,
including the "Risk Factors" section of Mattel's Annual Report on Form
10-K for the fiscal year ended December 31, 2011 and Mattel's Quarterly
Reports on Form 10-Q for fiscal year 2012, as well as in Mattel's other
public statements. Mattel does not update forward-looking statements and
expressly disclaims any obligation to do so.
1 Consists of the North America Division (U.S. & Canada) and
American Girl
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT I
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2012
2011
Yr / Yr
2012
2011
Yr / Yr
(In millions, except per share and
percentage information)
$ Amt
% Net Sales
$ Amt
% Net Sales
% Change
$ Amt
% Net Sales
$ Amt
% Net Sales
% Change
Net Sales
$
1,158.7
$
1,161.7
0%
$
2,087.2
$
2,113.5
-1%
Cost of sales
564.2
48.7%
605.5
52.1%
-7%
1,019.3
48.8%
1,084.1
51.3%
-6%
Gross Profit
594.5
51.3%
556.2
47.9%
7%
1,067.9
51.2%
1,029.4
48.7%
4%
Advertising and promotion expenses
112.4
9.7%
116.2
10.0%
-3%
210.3
10.1%
218.0
10.3%
-4%
Other selling and administrative expenses
350.7
30.3%
330.7
28.5%
6%
697.4
33.4%
665.4
31.5%
5%
Operating Income
131.4
11.3%
109.3
9.4%
20%
160.2
7.7%
146.0
6.9%
10%
Interest expense
21.5
1.9%
17.6
1.5%
22%
42.6
2.0%
36.5
1.7%
17%
Interest (income)
(1.9
)
-0.2%
(2.5
)
-0.2%
-21%
(3.7
)
-0.2%
(5.6
)
-0.3%
-34%
Other non-operating expense (income), net
0.4
(0.7
)
(0.2
)
(1.0
)
Income Before Income Taxes
111.4
9.6%
94.9
8.2%
17%
121.5
5.8%
116.1
5.5%
5%
Provision for income taxes
15.2
14.4
17.5
19.0
Net Income
$
96.2
8.3%
$
80.5
6.9%
19%
$
104.0
5.0%
$
97.1
4.6%
7%
Net Income Per Common Share - Basic
$
0.28
$
0.23
$
0.30
$
0.27
Average Number of Common Shares
341.3
347.1
340.2
348.1
Net Income Per Common Share - Diluted
$
0.28
$
0.23
$
0.30
$
0.27
Average Number of Common and Potential Common Shares
345.6
350.9
344.6
351.7
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT II
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
(In millions, except percentage
information)
2012
2011
2012
2011
Worldwide Gross Sales:
Mattel Girls & Boys Brands
$
781.6
$
790.0
$
1,403.9
$
1,440.9
% Change
-1%
22%
-3%
19%
Pos./(Neg.) Impact of Currency (in % pts)
-6
6
-4
4
Fisher-Price Brands
407.3
400.0
717.4
709.8
% Change
2%
4%
1%
1%
Pos./(Neg.) Impact of Currency (in % pts)
-3
3
-3
2
American Girl Brands
68.7
66.4
144.7
139.4
% Change
3%
13%
4%
8%
Other
9.1
7.8
17.9
15.2
Gross Sales
$
1,266.7
$
1,264.2
$
2,283.9
$
2,305.3
% Change
0%
15%
-1%
12%
Pos./(Neg.) Impact of Currency (in % pts)
-5
5
-3
3
Reconciliation of GAAP to Non-GAAP
Financial Measure:
Gross Sales
$
1,266.7
$
1,264.2
$
2,283.9
$
2,305.3
Sales Adjustments
(108.0
)
(102.5
)
(196.7
)
(191.8
)
Net Sales
$
1,158.7
$
1,161.7
$
2,087.2
$
2,113.5
% Change
0%
14%
-1%
11%
Pos./(Neg.) Impact of Currency (in % pts)
-4
5
-3
3
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT III
CONDENSED CONSOLIDATED BALANCE SHEETS
At June 30,
At December 31,
2012
2011
2011
(In millions)
(Unaudited)
Assets
Cash and equivalents
$
372.3
$
418.5
$
1,369.1
Accounts receivable, net
981.7
1,012.0
1,246.7
Inventories
746.7
783.5
487.0
Prepaid expenses and other current assets
418.3
317.1
340.9
Total current assets
2,519.0
2,531.1
3,443.7
Property, plant, and equipment, net
562.3
513.8
523.9
Other noncurrent assets
2,498.3
1,752.8
1,704.0
Total Assets
$
5,579.6
$
4,797.7
$
5,671.6
Liabilities and Stockholders' Equity
Short-term borrowings
$
42.3
$
-
$
8.0
Current portion of long-term debt
400.0
10.0
50.0
Accounts payable and accrued liabilities
777.8
871.1
953.8
Income taxes payable
16.1
17.5
27.1
Total current liabilities
1,236.2
898.6
1,038.9
Long-term debt
1,150.0
950.0
1,500.0
Other noncurrent liabilities
602.6
482.2
522.1
Stockholders' equity
2,590.8
2,466.9
2,610.6
Total Liabilities and Stockholders' Equity
$
5,579.6
$
4,797.7
$
5,671.6
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)
At June 30,
(In millions, except days and percentage
information)
2012
2011
Key Balance Sheet Data:
Accounts receivable, net days of sales outstanding (DSO)
76
78
Total debt outstanding
$
1,592.3
$
960.0
Total debt-to-total capital ratio
38.1
%
28.0
%
Six Months Ended June 30,
(In millions)
2012 (a)
2011
Condensed Cash Flow Data:
Cash flows (used for) operating activities
$
(61
)
$
(227
)
Cash flows (used for) investing activities
(816
)
(44
)
Cash flows (used for) financing activities and other
(120
)
(592
)
Decrease in cash and equivalents
$
(997
)
$
(863
)
(a) Amounts shown are preliminary estimates. Actual amounts will
be reported in Mattel's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2012.
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