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Mattel, Inc. today reported 2007 third quarter financial results. For the quarter, the company reported net income of $236.8 million compared to last year's third quarter net income of $239.0 million. Third quarter operating income of $310.5 million included charges and incremental costs of approximately $40 million related to the company's product recalls during 2007. Of this total, $13.3 million related to an increase in the reserves recorded in the second quarter for the August recalls, due primarily to higher than anticipated product return rates; $9.1 million related to additional reserves for subsequent product recalls; and approximately $17 million related to incremental recall related legal, advertising and administration costs incurred in the third quarter. "Despite the challenges the company faced during the third quarter, the business has performed fairly well, even with some supply chain disruptions that impacted our sales during the quarter. International has continued to drive growth in every major region, and while the U.S. was down slightly in the quarter, we did continue to see strong performance from several lines, especially Core Fisher-Price® and our Disney/Pixar CARS™ entertainment property," said Robert A. Eckert, chairman and chief executive officer of Mattel. "U.S. Barbie® performance was soft and remains an area of focus, although a good portion of the decline in the quarter was directly related to the supply chain disruptions." Financial Overview For the quarter, net sales were $1.84 billion, up 3 percent compared to $1.79 billion last year. On a regional basis, third quarter gross sales decreased 2 percent in the U.S. and increased 10 percent in international markets. Operating income for the quarter was $310.5 million, compared to prior year's operating income for the quarter of $322.2 million. Mattel Girls and Boys Brands For the quarter, worldwide gross sales for the Mattel Girls & Boys Brands business unit were $1.14 billion, up 6 percent versus a year ago. Worldwide gross sales for the Barbie® brand were down 4 percent, with increases in international markets partially offsetting declines in the U.S. Worldwide gross sales for Other Girls Brands were down 10 percent, due primarily to U.S. declines in the Polly Pocket!™ brand. Worldwide gross sales for Wheels, which includes the Hot Wheels®, Matchbox® and Tyco® R/C brands, were up 9 percent, led by double-digit growth in the Hot Wheels® and Matchbox® lines. Worldwide gross sales for the Entertainment business, which includes Radica® and Games and Puzzles, increased 29 percent, driven by strong performance of Disney/Pixar CARS™ and the addition of the Radica® product lines. 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 $799.8 million, up 1 percent versus the prior year, reflecting continued strong growth in Core Fisher-Price® worldwide, which was partially offset by declines in Fisher-Price® Friends. American Girl Brands Third quarter gross sales for the American Girl Brands business unit, which offers American Girl® branded products directly to consumers, were $71.0 million, or flat with last year. |
