Mattel Toy Company Was Born in 1945 Term Paper

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Mattel Toy Company was "born" in 1945. Owners, Ruth and Elliot Handler and Harold (Matt) Matson began the company out of a garage workshop in Southern California. The name,"Mattel" was a joining of "Matt" for Matson and "Ell" for Handler, thus the name "Mattel." The first products made by this new company were picture frames, but Elliot, always the one on the lookout for new ideas, soon began manufacturing dollhouse furniture from the picture frame scraps. Mattson sold his share of the company later that year, thus leaving the Handlers sole proprietors of Mattel. The dollhouse furniture sold exceedingly well and convinced the Handlers that their new company should be one based on the needs and desires of children - a toy company (Mattel corporate website, 2001).

In 1955, Mattel Toys literally became a household word when they began to advertise on the new Mickey Mouse Club television program. Advertising in this way was a completely new concept for toy companies at that time, so again the Handlers made history just because they decided that targeting the viewers of the children's show might be better than targeting their parents in prime time (Mattel corporate website, 2001).

One of the most important innovations made by any toy manufacturer in the 20th century was done by Ruth Handler just because she was mindful of her daughter, Barbie's, fascination with changing the clothes of paper dolls. Ruth designed a female doll with a three dimensional figure of a well-developed teenager. History was made and Barbie dolls were born in 1959 (The World of Toys website, 2003).

The Mattel company was begun as a family business and remained one for many years (Mattel Corporate website, 2001). In 1960, Mattel sold its first shares of publicly-offered stock. After becoming publicly owned in 1960, Mattel had its common stock listed on the New York and Pacific Coast Stock Exchanges in 1963. By 1965, sales topped $100,000,000 and the company joined the elite ranks of the "Fortune 500" companies (Lukas, 2003). The Handlers began to be called the "founding mother and father of the promotional toy business as it exists today" (Stern & Schoenhaus, 1990). This certainly was too bad for a couple of young people who literally stumbled onto the toy business over a pile of wood shavings.

Mattel was a family run company for the first 30 years of its existence. In the middle 1970's, the Handlers were getting older and realized that after the success of their company going public, the best way to continue its success was to look for the brightest and hardest working business professionals who also shared a dream that toys could change the world. Needless to say, many were interviewed, but few were chosen.

After Barbie and all of her extended relatives and friends were introduced, Hot Wheels came along for the boys. Of course these small, matchbox size cars were an immediate hit in 1968 and the giant toy maker continued to roll along in profits. In fact, the largest privately owned Hot Wheels car collection is valued at more that one million dollars today (Mattel Corporate website, 2001).

After the Handlers gave up the day-to-day running of the business, they made sure that the close "family-like" atmosphere was maintained. Today, the CEO of Mattel is Bob Eckert, former head of Draft Foods. Eckert states Mattel's business philosophy this say, "We credit our success to our employees who never forget that they were once kids. Their integrity and their ownership of everything they work on make them responsible for the results of the business and the development of their fellow employees. As a result, Mattel is the largest toy company in the world and we strive to share this success with customers, vendors, shareholders, and communities.

Today, Mattel continues its leadership role in the toy industry by innovation, anticipation, and solid business practices. And along the way, we too are inspired...by the imagination of children.

The documents below show more exact details of the Mattel Company that were explained in the previous paragraphs. All of this material is taken from the Mattel Corporation Website: http://www.mattel.com

First Quarter Highlights

Worldwide net sales flat;

Domestic gross sales down by 5% and international gross sales up 13%; flat in local currency;

Worldwide gross sales for core brands: Barbie® down 1%; Hot Wheels® flat; core Fisher-Price® up 8% and American Girl® brands down 8%;

Gross margin improvement of 430 basis points of net sales; SG&A increased by 110 basis points of net sales;

Operating income up 56%;

Earnings per share, excluding charges, of $0.09 vs. prior year of $0.02; and GAAP earnings per share of $0.07 vs. prior year loss of $0.59.

MATTEL, INC. AND SUBSIDIARIES

EXHIBIT I

FINANCIAL HIGHLIGHTS PRO FORMA BEFORE CHARGES FOR THE QUARTER ENDED MARCH 31, 2003

Three Months Ended

In millions, except per share amounts) 3/31/2003 3/31/2002% Change Key P&L Data: Net Sales $

742.0-0% Gross Profit $ of Net Sales 49.6% 45.3% Advertising $ of Net Sales 11.3% 11.1% SG&A $ of Net Sales 29.7% 28.6% Operating Income (a) $ of Net Sales 8.6% 5.6% Income Before Charges $ of Net Sales 5.5% 1.4% EPS Before Charges - Diluted $

0.02 Average Number of Common Shares - Diluted 443.9 432.6 Key Balance Sheet Data: Accounts Receivable, Net $

Days of Sales Outstanding (DSO) 64-80 Inventories $

Days of Supply (DOS) 82-95 Total Debt Outstanding $

Total Debt-to-Total Capitalization 29.3% 45.1% Worldwide Gross Sales by Category: Mattel Brands $

Change as Reported 1% 10%

Change in Local Currency -4% 11% Fisher-Price Brands

Change as Reported 3% -7%

Change in Local Currency 0% -6% American Girl Brands

Change as Reported -8% 2% Other

3.9 Total Company

Change as Reported 1% 4%

Change in Local Currency -3% 5% Sales Adjustments

63.3) Net Sales $

Change as Reported 0% 4%

Change in Local Currency -4% 5% a) Certain financial information for prior years has been reclassified to conform to the current year's presentation.

Mattel's consolidated statement of operations for the quarter ended March 31, 2002 has been restated to classify interest income and other non-operating expense, net below operating income to conform to the year end 2002 presentation.

MATTEL STOCK

Mattel Inc. - NYSE

Last Trade

4:06 PM EST

Price

Volume

Change

Day Hi/Lo

52 Wk Hi

52 Wk Lo

Q. What is the ticker symbol for Mattel common stock?

A. The ticker is "MAT."

Q. What exchanges does Mattel common stock trade on?

A. The common stock of Mattel is listed on the New York Stock Exchange and Pacific Exchange, Inc. Exchangeable Non-Voting Shares of Softkey Software Products Inc. are listed on the Toronto Stock Exchange.

Q.Q. Who is the transfer agent for Mattel common stock?

A. EquiServe is the transfer agent for Mattel common stock. Inquiries relating to stockholder accounting records, stock transfer, dividends (including dividend reinvestment) and direct stock purchase for Mattel, Inc. Common Stock should be directed to:

EquiServe

Providence, Rhode Island 02940-3010

Telephone number:

Q. How can I get information about Softkey Exchangeable Shares?

A. Inquiries relating to stockholder accounting records, stock transfer and dividends for Softkey Exchangeable Shares should be directed to:

CIBC Mellon Trust Company

Adelaide Street Postal Station

Toronto, Ontario M5C 2W9

Canada

(toll-free throughout North America)

Website:

www.cibcmellon.com

E-mail:

Q. Does Mattel pay a dividend on its common stock?

A. Mattel adjusted its dividend in 2000 in an effort to provide more capital flexibility going forward. The company's cash dividend was reduced, effective beginning the fourth quarter of 2000, from a quarterly $.09 per share to an annual $.05 per share when and as declared by the Board of Directors. On November 12, 2002, the Board of Directors declared a dividend for Mattel common stock in the amount of $.05 per share, payable on December 12, 2002 to stockholders of record at the close of business on November 26, 2002. For additional information see Stock Split/Dividend History.

Q. Does Mattel have a Dividend Reinvestment Program (DRIP) or Direct Stock Purchase Plan?

A. Mattel has a Dividend Reinvestment Plan (DRIP) and Direct Stock Purchase Plan. For further information, please contact:

EquiServe

Providence, Rhode Island 02940-3010

Phone:

Fax: TBD

Website:

www.equiserve.com

Q. What was the conversion rate for The Learning Company when it was acquired in 1999?

A. On May 13, 1999 Mattel acquired The Learning Company, and shares of The Learning Company became exchangeable for 1.2 shares of Mattel common stock.

Q. What was the conversion rate for Tyco Toys, Inc. when it was acquired in 1997?

A. On March 27, 1997 Mattel acquired Tyco Toys, Inc., and shares of Tyco Toys, Inc. became exchangeable for 0.48876 shares of Mattel common stock.

Q. What was the conversion rate for Fisher-Price, Inc. when it was acquired in 1993?

A. On November 30, 1993 Mattel acquired Fisher-Price, Inc. And shares of Fisher-Price, Inc. became exchangeable for 1.275 shares of Mattel common stock. Adjusting for subsequent stock splits (see Stock Split/Dividend History for detail) the conversion ratio would be 2.49 shares.

Q. When…[continue]

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