Mattel Reports Q4 2010 EPS $0.89 Vs. $0.86 Est.; Revenues $2.12B Vs. $2.09B (MAT)

Mattel, Inc.

today reported 2010 fourth quarter and full-year financial results. For the fourth quarter, the company reported net income of $325.2 million, or $0.89 per share, compared to last year's fourth quarter net income of $328.4 million, or $0.89 per share. For the year, the company reported net income of $684.9 million, or $1.86 per share, compared to last year's net income of $528.7 million, or $1.45 per share. “I am pleased with our strong results for the quarter and the year, with revenue growth across brands and markets, and improved profitability,” said Robert A. Eckert, chairman and chief executive officer of Mattel. “Our priority for 2011 is to accelerate our performance by inculcating our new vision and implementing a new organizational structure; uncovering the next layer of cost cutting opportunities; generating significant cash flow; and deploying capital in a disciplined and opportunistic manner.” Financial Overview For the fourth quarter, net sales were $2.12 billion, a 9 percent increase from $1.96 billion last year, and included an unfavorable impact from changes in currency exchange rates of 2 percentage points. On a regional basis, fourth quarter gross sales were up 11 percent in the U.S. and were up 6 percent in international markets, which included an unfavorable impact from changes in currency exchange rates of 5 percentage points. Operating income for the quarter was $428.6 million, or 20.2 percent of net sales. For the year, net sales were $5.86 billion, an 8 percent increase from $5.43 billion last year, and included an unfavorable impact from changes in currency exchange rates of 2 percentage points. On a regional basis, full-year gross sales were up 9 percent in the U.S. and were up 6 percent in international markets, which included an unfavorable impact from changes in currency exchange rates of 4 percentage points. Operating income for the year was $901.9 million, or 15.4 percent of net sales, compared to the prior year of 13.5 percent of net sales. The company's debt-to-total-capital ratio of 31.3 percent is in line with the company's capital and investment framework, and its year-end cash balance was $1.28 billion. Net cash flows from operating activities were approximately $528 million, a decrease of $417 million compared with approximately $945 million in 2009. The decrease is primarily due to the decision not to factor $300 million of domestic receivables in 2010, as well as growth in accounts receivable due to increased sales volumes, and the rebuild of inventory, partially offset by higher net income. Inventory levels increased to support point of sale momentum and improve customer service levels as compared to a significant liquidation of inventories in 2009 due to economic uncertainty. Cash flows used for financing and other activities were $217 million, a decrease of $195 million, compared with $412 million in 2009, primarily reflecting proceeds from third quarter debt issuance of $500 million and lower debt maturities in 2010 of $100 million, partially offset by share repurchases of $447 million.