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Mattel Reports Q3 2010 Results

Mattel Reports Third Quarter 2010 Financial Results

Third Quarter Highlights

  • Worldwide net sales increased 2 percent;
  • Domestic gross sales increased 3 percent and international gross sales increased 2 percent;
  • Worldwide gross sales for core brands: Barbie® up 6 percent; Hot Wheels® down 3 percent; Core Fisher-Price® down 10 percent and American Girl® brands up 2 percent;
  • Gross margin decreased by 20 basis points of net sales; SG&A decreased by 90 basis points of net sales;
  • Operating income was $358.6 million compared to operating income of $336.5 million in the third quarter of 2009; and
  • Earnings per share of $0.77 (includes a tax benefit of $0.05) vs. prior year of $0.63.

EL SEGUNDO, Calif. -- (October 15, 2010) -- Mattel, Inc. today reported 2010 third quarter financial results. For the quarter, the company reported net income of $283.3 million, or $0.77 per share, compared to last year's third quarter net income of $229.8 million, or $0.63 per share.

"We continue to be pleased with the performance of the business," said Robert A. Eckert, chairman and chief executive officer of Mattel, Inc. "While the all-important holiday season is still in front of us, we remain on track to deliver solid revenue and profit growth driven by our portfolio of brands and countries."

Financial Overview

For the quarter, net sales were $1.83 billion, up 2 percent compared to $1.79 billion last year, including unfavorable changes in currency exchange rates of 3 percentage points. On a regional basis, third quarter gross sales increased 3 percent in the U.S. and increased 2 percent in international markets, including unfavorable changes in currency exchange rates of 7 percentage points. Operating income for the quarter was $358.6 million, compared to prior year's operating income for the quarter of $336.5 million.

The company's debt-to-total-capital ratio was 29.8 percent. On September 28, 2010, the company issued $500 million of senior unsecured notes with the proceeds to be used for general corporate purposes, including paying off $260 million of long-term debt maturities over the next year.

Consistent with the seasonality of the business, year-to-date, net cash flow used for operating activities was approximately $428 million, an increase of $109 million, compared with a use of approximately $319 million in the first nine months of 2009, primarily due to lower factoring of receivables in 2010.

Sales by Business Unit

Mattel Girls and Boys Brands

For the third quarter, worldwide gross sales for the Mattel Girls & Boys Brands business unit were $1.17 billion, up 8 percent versus a year ago. Worldwide gross sales for the Barbie® brand grew 6 percent compared to last year. Worldwide gross sales for Other Girls Brands were up 7 percent, driven primarily by strong performance of the Disney Princess™ doll line and the introduction of the Monster High doll line. Worldwide gross sales for the Wheels category, which includes the Hot Wheels®, Matchbox® and Tyco R/C® brands, were down 5 percent. Worldwide gross sales for the Entertainment business, which includes Radica® and Games and Puzzles, increased by 23 percent for the quarter, mostly attributable to growth in the Toy Story® 3 and World Wrestling Entertainment properties.

Fisher-Price Brands

Third quarter worldwide gross sales for the Fisher-Price Brands business unit, which includes the Fisher-Price® Core, Fisher-Price® Friends and Power Wheels® brands, were $743.4 million, or down 5 percent versus the prior year, primarily due to declines in Fisher-Price® Core and Power Wheels®, which offset gains in Fisher-Price® Friends, primarily driven by products supporting evergreen entertainment properties such as Thomas and Friends® and the new product introduction of Sing-A-Ma-Jigs!™.

American Girl Brands

Third quarter gross sales for the American Girl Brands business unit, which offers American Girl® branded products directly to consumers, were $84.4 million, up 2 percent versus last year, reflecting the benefit of the opening of two new boutique stores in Denver and Kansas City and the retiring of historical character, Felicity, to the American Girl Archives, as well as the launch of the My American Girl line, a re-positioning of the contemporary line featuring a doll configurator and virtual world.

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 Little People®, Power Wheels® and a wide array of entertainment-inspired toy lines. In 2010, Mattel was named as one of FORTUNE Magazine's "100 Best Companies to Work For" for the third year in a row, and was ranked among Corporate Responsibility Magazine's "100 Best Corporate Citizens." Mattel also is recognized among the "World's Most Ethical Companies." With worldwide headquarters in El Segundo, Calif., Mattel employs approximately 27,000 people in 43 countries and territories and sells products in more than 150 nations. At Mattel, we are "Creating the Future of Play."

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