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Mattel profits in 2007

By Staff -- Gifts and Dec, 1/31/2008 2:59:00 PM

EL SEGUNDO, Calif.—Mattel today reported a profitable fourth quarter and full year 2007, period in which foreign currency exchange and tax benefits helped offset declining domestic sales.

For the quarter, net income reached $328.5 million, or $0.89 per share, compared to last year's fourth quarter total of $286.4 million, or $0.75 per share. The 2007 Q4 gain would have been a $5.4 million loss had it not been for $47.3 million in tax benefits. For the year, Mattel recorded net income of $600.0 million, or $1.54 per share, compared to $592.9 million, or $1.53 per share, in 2006, helped again by tax benefits.

The toymaker’s Q4 operating income, worth $362.1 million, included charges and incremental costs of approximately $42 million related to its product recalls in 2007. For the year, operating income of $730.1 million included charges and incremental costs of approximately $110 million related to the company's product recalls during 2007. Of the $110 million, $68.4 million was related to reserves recorded for reversal of sales associated with recalled products, impairment of the affected inventory and other recall-related costs, and approximately $42 million related to incremental recall related legal, advertising, testing, logistics and administration costs.

For the quarter, net sales were $2.19 billion, a 4 percent increase helped along by changes in currency exchange rates of 4 percentage points. In the U.S., fourth quarter gross sales were down 3 percent, but rose 18 percent in international markets, helped by changes in currency exchange rates of 9 percentage points. Operating income for the quarter was down 7 percent to $362.1 million.

For the year, Mattel’s net sales were $5.97 billion, a 6 percent increase that benefited from changes in currency exchange rates of 3 percentage points. On a regional basis, full-year gross sales were down 1 percent in the U.S. but were up 17 percent in international markets, which included a benefit from changes in currency exchange rates of 7 percentage points.

"Considering the challenges we faced in 2007, the business performed fairly well, including strong performances from our international business as well as Core Fisher-Price," said Robert A. Eckert, Mattel’s chairman and CEO. "The new year not only offers its own set of challenges, including higher costs for commodities, labor and quality testing, but it also offers a new set of opportunities, as we build on the momentum of our international success and introduce a strong line-up of toys based on entertainment properties."

Behind the numbers
Fourth quarter worldwide gross sales for the Mattel Girls & Boys Brands business unit were $1.35 billion, up 9 percent versus a year ago. Worldwide gross sales for the unit’s Barbie brand rose 4 percent and worldwide gross sales for its Other Girls Brands gained 19 percent. Worldwide gross sales for the Wheels category, which includes the Hot Wheels, Matchbox and Tyco R/C brands, climbed 15 percent. Worldwide gross sales for the Entertainment business, which includes Radica and Games and Puzzles, grew 6 percent for the quarter.

For the year, worldwide gross sales for the Mattel Girls & Boys Brands business unit rose 8 percent to $3.70 billion. Worldwide gross sales for the Barbie brand increased 1 percent. Worldwide gross sales for Other Girls Brands were up 2 percent for the year. Worldwide gross sales for the Wheels category climbed 14 percent. Worldwide gross sales for the Entertainment increased 16 percent.

At its Fisher-Price Brands business unit, which includes the Fisher-Price, Little People, and Power Wheels brands, fourth quarter worldwide gross sales were $840.3 million, up 4 percent due to “strong” international sales of Core Fisher-Price.

For the year, worldwide gross sales for the Fisher-Price Brands business unit were $2.44 billion, up 8 percent, driven by double-digit global sales growth of Core Fisher-Price.

Fourth quarter gross sales for the American Girl Brands business unit, which offers American Girl branded products direct to consumers, fell 2 percent to $241.6 million. For the year, the unit’s gross sales slipped 2 percent to $431.3 million.

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