Mattel - 2006 fourth quarter and full-year financial results

  Mattel, Inc., the worldwide leader in the design, manufacture and marketing of toys and family products, today reported 2006 fourth quarter and full-year financial results. For the quarter, the company reported net income of $286.4 million, or $0.75 per share, compared to last year's fourth quarter net income of $279.2 million, or $0.69 per share. For the year, the company reported net income of $592.9 million, or $1.53 per share, compared to last year's net income of $417.0 million, or $1.01 per share.

  Fourth Quarter Highlights

• Worldwide net sales up 14 percent from the prior year;
• Domestic gross sales up 15 percent and international gross sales up 15 percent;
• Worldwide gross sales for core brands: Barbie® up 3 percent; Hot Wheels® up 9 percent; Core Fisher-Price® up 15 percent and American Girl brands up 2 percent;
• Gross margin increased 20 basis points of net sales; SG&A increased 110 basis points of net sales;
• Operating income as a percentage of net sales was 18.4 percent, up 90 basis points; and
• Earnings per share of $0.75 vs. prior year of $0.69 (prior year includes tax benefit of $0.11).

Full-Year Highlights

• Worldwide net sales up 9 percent from the prior year;
• Domestic gross sales up 8 percent and international gross sales up 11 percent;
• Worldwide gross sales for core brands: Barbie flat; Hot Wheels up 2 percent; Core Fisher-Price up 11 percent and American Girl brands up 1 percent;
• Gross margin increased 40 basis points of net sales; SG&A increased 100 basis points of net sales;
• Operating income as a percentage of net sales was 12.9 percent, up 10 basis points; and
• Earnings per share of $1.53 (includes tax benefit of $0.16 per share) vs. prior year of $1.01 (includes American Jobs Creation Act-related tax expense of $0.26 per share and tax benefit of $0.09 per share).

  "I am pleased with our 2006 results as we made good progress in addressing the two key challenges facing the company: U.S. sales declines in the Barbie brand and pressure on our gross margins," said Robert A. Eckert, chairman and chief executive officer of Mattel. "Barbie's domestic gross sales grew for the year with four consecutive quarters of U.S. growth and our gross margins also grew in 2006, the first increase since 2003. Although positive trends, we have more to achieve on both fronts."

  For the quarter, net sales were $2.11 billion, a 14 percent increase from $1.84 billion last year, and included a favorable impact from changes in currency exchange rates of 2 percentage points. On a regional basis, fourth quarter gross sales increased 15 percent in the U.S. and were up 15 percent in international markets, which included a favorable impact from changes in currency exchange rates of 5 percentage points. Operating income for the quarter was up 21 percent at $388.7 million.

  For the year, net sales were $5.65 billion, a 9 percent increase from $5.18 billion last year, and included a benefit from changes in currency exchange rates of 1 percentage point. On a regional basis, full-year gross sales were up 8 percent in the U.S. and were up 11 percent in international markets, which included a benefit from changes in currency exchange rates of 2 percentage points.

  Operating income for the year was $728.8 million, an increase of 10 percent compared to the prior year.

  The company's debt-to-total capital ratio of 22.3 percent is in line with the company's capital and investment framework, and its year-end cash balance was $1.21 billion. During 2006, the company repurchased 11.8 million shares of its common stock at a cost of approximately $193 million.