Mattel Inc. (MAT) filed Quarterly Report for the period ended 2012-06-30.

Mattel, Inc. has a market cap of $11.71 billion; its shares were traded at around $34.51 with a P/E ratio of 15.2 and P/S ratio of 1.9. The dividend yield of Mattel, Inc. stocks is 3.6%. Mattel, Inc. had an annual average earning growth of 5.3% over the past 10 years. GuruFocus rated Mattel, Inc. the business predictability rank of 3.5-star.

Highlight of Business Operations:

Cost of sales as a percentage of net sales was 48.7% in the second quarter of 2012, as compared to 52.1% in 2011. Cost of sales decreased by $41.2 million, or 7%, from $605.4 million in the second quarter of 2011 to $564.2 million in 2012, as compared to flat net sales. Within cost of sales, product and other costs decreased by $24.5 million, or 5%, from $476.8 million in the second quarter of 2011 to $452.3 million in 2012; royalty expenses decreased by $16.8 million, or 26%, from $65.6 million in the second quarter of 2011 to $48.8 million in 2012; and freight and logistics expenses increased by $0.1 million, from $63.0 million in the second quarter of 2011 to $63.1 million in 2012.

Gross sales for the North America segment were $586.4 million in the second quarter of 2012, an increase of $5.6 million or 1%, as compared to $580.8 million in 2011, with no impact from changes in currency exchange rates, primarily due to higher sales of our key brands including Barbie®, Monster High®, and Hot Wheels®, partially offset by lower sales of CARS 2® products. Gross sales of Mattel Girls & Boys Brands increased 1%, with no impact from changes in currency exchange rates. Gross sales of Barbie® increased 11%, with no impact from changes in currency exchange rates. Gross sales of Other Girls Brands increased 110%, with no impact from changes in currency exchange rates, driven primarily by higher sales of Monster High® and Disney Princess® products. Gross sales of Wheels products increased 24%, with an unfavorable change in currency exchange rates of 1 percentage point, driven primarily by higher sales of Hot Wheels® products. Gross sales of Entertainment products decreased 39%, with no impact from changes in currency exchange rates, driven primarily by lower sales of CARS 2® products resulting from the timing of the movie release during 2011. Gross sales of Fisher-Price Brands were flat, with an unfavorable change in currency exchange rates of 1 percentage point. Gross sales of Core Fisher-Price® products decreased 13%, with no impact from changes in currency

Gross sales for the International segment were $606.2 million in the second quarter of 2012, down $5.1 million or 1%, as compared to $611.3 million in 2011, with unfavorable changes in currency exchange rates of 10 percentage points. Gross sales of Mattel Girls & Boys Brands decreased 3%, with unfavorable changes in currency exchange rates of 10 percentage points. Gross sales of Barbie® increased 2%, with unfavorable changes in currency exchange rates of 10 percentage points. Gross sales of Other Girls Brands increased 85%, with unfavorable changes in currency exchange rates of 20 percentage points, driven primarily by higher sales of Monster High® products. Gross sales of Wheels products decreased 1%, with unfavorable changes in currency exchange rates of 11 percentage points. Gross sales of Entertainment products decreased 34%, with unfavorable changes in currency exchange rates of 7 percentage points, due to lower sales of CARS 2® products resulting from the timing of the movie release during 2011. Gross sales of Fisher-Price Brands increased 4%, with unfavorable changes in currency exchange rates of 9 percentage points. Gross sales of Core Fisher-Price® products decreased 5%, with unfavorable changes in currency exchange rates of 8 percentage points. Gross sales of Fisher-Price® Friends products increased 39%, with unfavorable changes in currency exchange rates of 11 percentage points, driven primarily by the benefit of licensing revenues from the acquisition of HIT Entertainment. Cost of sales decreased 6% in the second quarter of 2012, as compared to a 1% decrease in net sales, driven primarily by lower product and other costs and lower royalty expenses. Gross margins increased primarily due to favorable product mix, including lower sales of royalty-related entertainment properties, and price increases and savings from Operational Excellence 2.0 initiatives, partially offset by higher input costs.

Other selling and administrative expenses were $697.4 million in the first half of 2012, as compared to $665.4 million in 2011, or 33.4% of net sales in 2012, as compared to 31.5% of net sales in 2011. The increase in other selling and administrative expenses was driven primarily by transaction and integration costs associated with HIT Entertainment of approximately $17 million in the first half of 2012, HIT Entertainment’s ongoing other selling and administrative expenses, higher employee-related expenses, and investments in strategic growth initiatives, including initiatives related to American Girl retail store expansion and information technology initiatives. The increase was partially offset by lower MGA legal fees of approximately $34 million as Mattel was in trial during the first half of 2011, the absence of legal settlement costs, and structural cost savings from Operational Excellence 2.0 initiatives. Mattel expects to incur a total of approximately $25 million to $30 million of transaction and integration costs associated with HIT Entertainment during 2012.

Gross sales for the North America segment were $1.04 billion in the first half of 2012, down $51.5 million or 5%, as compared to $1.09 billion in 2011, with no impact from changes in currency exchange rates, driven primarily by lower sales of CARS 2® products, partially offset by higher Monster High® sales. Gross sales of Mattel Girls & Boys Brands decreased 7%, with an unfavorable change in currency exchange rates of 1 percentage point. Gross sales of Barbie® increased 1%, with no impact from changes in currency exchange rates. Gross sales of Other Girls products increased 45%, with no impact from changes in currency exchange rates, driven primarily by higher sales of Monster High® and Disney Princess® products. Gross sales of Wheels products increased 6%, with no impact from changes in currency exchange rates, driven primarily by higher sales of Hot Wheels® products. Gross sales of Entertainment products decreased 36%, with no impact from changes in currency exchange rates, driven primarily by lower sales of CARS 2® products resulting from the timing of the movie release during 2011. Gross sales of Fisher-Price Brands decreased 2%, with no impact from changes in currency exchange rates. Gross sales of Core Fisher-Price® products decreased 11%, with no impact from changes in currency exchange rates. Gross sales of Fisher-Price® Friends products increased 45%, with no impact from changes in currency exchange rates, driven primarily by the benefit of licensing revenues from the acquisition of HIT Entertainment. Cost of sales decreased 9% in the first half of 2012, as compared to a 5% decrease in net sales, driven primarily by lower product and other costs and lower royalty expenses. Gross margins increased primarily due to favorable product mix, including lower sales of royalty-related entertainment properties, and price increases and savings from Operational Excellence 2.0 initiatives, partially offset by higher input costs.

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