Mattel: Protecting Dividend Is Priority; Sees '09 Capex Down

Mattel Corp. (MAT) expects to cut 2009 capital expenditures to below $150 million after spending $199 million last year as the toy maker focuses on reducing debt and boosting cash, Chief Executive Robert A. Eckert said.

"Our priority is to protect the dividend, so you won't see a lot of activity from us in either repurchasing shares" or mergers and acquisitions, Eckert said during a conference call following disappointing fourth-quarter results. "This is a year really to hunker down and run the cash machine for cash."

The annual dividend, which was 75 cents in 2008, is ultimately up to the board, Eckert noted.

Mattel in 2008 generated about $436 million in cash flow from operations, officials said. The toy maker spent $58 million on acquisitions and $91 million on share repurchases. With 358 million basic shares outstanding as of Dec. 31, the dividend would cost $268.5 million.

Earlier Monday, Mattel posted a worse-than-expected 46% drop in net income on an 11% revenue decline and falling margins as consumers pulled back on toy spending. Foreign currency exchange also had a negative impact.

Shares of Mattel fell sharply and pulled down other toy makers. Mattel recently traded down 15% at $12.03, and Hasbro Inc. (HAS) declined 8.5% to $22.09. Leapfrog Enterprises (LF) fell 5.5% to $1.90, Rc2 Corp. (RCRC) was off 5% to $5.52, and Jakks Pacific Inc. (JAKK) was down 3.8% to $17.65.

-By Mary Ellen Lloyd, Dow Jones Newswires; 704-948-9145; [e-mail]

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