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Mattel Reports Q2 2011 Results

Mattel Reports Second Quarter 2011 Financial Results and Declares Quarterly Dividend

Second Quarter Highlights

  • Worldwide net sales up 14 percent;
  • Domestic gross sales up 7 percent and international gross sales up 23 percent;
  • Worldwide gross sales for core brands: Barbie® up 12 percent; Hot Wheels® down 2 percent; Core Fisher-Price® up 9 percent and American Girl® brands up 13 percent;
  • Gross margin decreased 20 basis points of net sales; SG&A decreased 280 basis points of net sales;
  • Operating income of $109.3 million compared to operating income of $69.4 million in the second quarter of 2010; and
  • Earnings per share of $0.23 vs. prior year earnings per share of $0.14.

Capital Deployment
  • Board declares third quarter cash dividend of $0.23 per share, reflecting an annualized dividend of $0.92 per share, which represents an 11 percent increase to last year's annual dividend.
  • The company repurchased 5.8 million shares of its common stock at a cost of approximately $152 million.

EL SEGUNDO, Calif. -- July 15, 2011 -- Mattel, Inc. today reported 2011 second quarter financial results. For the quarter, the company reported net income of $80.5 million, or $0.23 per share, compared to last year's second quarter net income of $51.6 million, or $0.14 per share.

"For the second quarter, I am very pleased with the continued global momentum across our portfolio, including core brand strength as well as the outstanding performance of the CARS 2® entertainment property," said Robert A. Eckert, chairman and chief executive officer of Mattel. "Despite the mixed economic news, I am encouraged by our strong operating results and continue to believe we are well-positioned for the all-important second half of the year."

Financial Overview

For the quarter, net sales were $1.16 billion, up 14 percent compared to $1.02 billion last year, including favorable changes in currency exchange rates of 5 percentage points. On a regional basis, second quarter gross sales increased 7 percent in the U.S. and increased 23 percent in international markets, including favorable changes in currency exchange rates of 11 percentage points. Operating income for the quarter was $109.3 million, compared to prior year's operating income for the quarter of $69.4 million.

The company's debt-to-total-capital ratio was 28.0 percent. Consistent with the seasonality of the business, net cash flow used for operating activities was approximately $227 million in the first half of 2011, a decrease of $145 million, compared with a use of approximately $372 million in 2010.

Cash flows used for financing and other activities were $592 million in the first half of 2011, an increased usage of $489 million, compared to approximately $103 million used for financing and other activities in 2010, primarily reflecting increased debt repayments consistent with scheduled maturities, dividend payments and increased share repurchases.

During the second quarter of 2011, the company repurchased approximately 5.8 million shares of its common stock at a cost of approximately $152 million.

Sales by Business Unit

Mattel Girls and Boys Brands

For the second quarter, worldwide gross sales for the Mattel Girls & Boys Brands business unit were $795.6 million, up 22 percent versus a year ago. Worldwide gross sales for the Barbie® brand were up 12 percent. Worldwide gross sales for Other Girls Brands were up 29 percent, driven by the Monster High® and Disney Princess™ doll lines. Worldwide gross sales for the Wheels business, which includes the Hot Wheels®, Matchbox® and Tyco R/C® brands, were down 2 percent. Worldwide gross sales for the Entertainment business, which includes Radica® and Games and Puzzles, were up 41 percent for the quarter, primarily driven by growth in the CARS 2® and Green Lantern® properties.

Fisher-Price Brands

Second 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 $400 million, or up 4 percent versus the prior year, primarily driven by sales of Baby Gear and Infant and Preschool products, as well as solid performance in the Thomas and Friends® line.

American Girl Brands

Second quarter gross sales for the American Girl® Brands business unit, which offers American Girl® branded products directly to consumers, were $66.4 million, up 13 percent versus last year, primarily reflecting sales of products related to Kanani™, the 2011 Girl of the Year®.

Quarterly Dividend

Additionally, the Company announced today that its Board of Directors declared a third quarter cash dividend of $0.23 per share on the Company's common stock. The dividend will be payable on September 23rd, 2011 to stockholders of record on August 31st, 2011. The dividend is the third of four quarterly dividends the Company expects to pay this year, reflecting an annualized dividend of $0.92 per share, which represents an increase of $0.09, or 11 percent, versus last year's annual dividend of $0.83 per share.

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 2011, Mattel was named as one of FORTUNE Magazine's "100 Best Companies to Work For" for the fourth year in a row, and was also ranked among Corporate Responsibility Magazine's "100 Best Corporate Citizens. With worldwide headquarters in El Segundo, Calif., Mattel employs approximately 31,000 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: www.facebook.com/mattel

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