Mattel reported Friday that third-quarter revenue rose 5% but net income fell nearly 50% because of a sharply higher tax rate.
Net income for the year should be "significantly lower" than in 1985 despite continued strong international business, Arthur S. Spear, chairman of the Hawthorne toy company, and Thomas J. Kalinske, president, said in a joint statement. They attributed the decline to the higher-than-normal tax rate, "generally weak domestic toy industry conditions" and lower demand in the United States for the company's Masters of the Universe products.
Mattel's revenue for the three months rose to $344.4 million from $328.1 million in the year-ago period.
But net income plunged to $16.3 million from $31.3 million a year ago, which was inflated by $5.6 million in tax loss carryforwards. The income decline was less severe before income taxes: $44.5 million in the quarter, compared to $48.6 million in the same quarter last year. Net income per share fell to 34 cents from 60 cents in the year-ago quarter, adjusted for payment of preferred stock dividends.
Mattel's tax rate was 63% in the third quarter, compared to 47% during the same period last year. The 1986 rate is so high because losses sustained by domestic operations cannot be used to offset higher foreign earnings, a Mattel spokesman said.