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Mattel takes $345M charge
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July 22, 1999: 11:59 a.m. ET
Excluding one-time items, toymaker's profit meets expectations in 2Q
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NEW YORK (CNNfn) - Mattel Inc., the nation's largest toymaker, posted a second-quarter profit in line with expectations Thursday and said it would take a $345 million pre-tax charge to cover merger and restructuring costs as it struggles with job cuts and flat sales of Barbie dolls and other products.
Mattel's sales rose only 1 percent, to $1.04 billion, in the second quarter, held down largely by markets abroad. U.S. sales rose 5 percent on the strength of brands including Fisher-Price and American Girl, but the entertainment unit, Barbie and Wheels products posted declines.
"Our volume growth was less than originally projected, due in large part to a very difficult European environment," CEO Jill Barad said in a statement. But, she said, the company remains on target to meet earnings expectations of $1.50 per share for the full year, excluding the restructuring and merger expenses.
Mattel (MAT) earned $62.5 million, or 15 cents per diluted share, excluding the charges, in the April-June quarter. The results matched expectations of analysts polled by the First Call Corp.
By comparison, Mattel earned $34.6 million, or 8 cents per diluted share, in the year-ago period, also excluding one-time charges. Better gross margins helped lead to the increase in 1999 results, the company said.
Including the $345 million charge -- which was at the top end of projections -- the company posted a net loss of $204.3 million, or 50 cents per diluted share. The charge includes $200 million in restructuring costs; $115 million in merger and integration costs associated with the acquisition of the Learning Co., a software publisher, and $30 million in recall and other one-time expenses.
Mattel stock traded down 1/8 at 23-3/4 at midday Thursday.
Mattel said in April that it would take a second-quarter charge, estimating then it would cost from $300 million to $350 million. The charges are expected to result in cost savings of about $50 million this year and at least $400 million over the following three years.
The company also said it has resumed its stock repurchase program and plans to buy back 4 million shares this year.
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Mattel
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