-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, N4tfROZcXXCFojh7qNQuDwcJoNFl4/gMEQQ8slfJ+tEOOAp+ImPsCVWvlQ4MxcYf zFR4io8ntxHex9uMWbmcGw== 0000063276-95-000017.txt : 19950512 0000063276-95-000017.hdr.sgml : 19950512 ACCESSION NUMBER: 0000063276-95-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MATTEL INC /DE/ CENTRAL INDEX KEY: 0000063276 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 951567322 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05647 FILM NUMBER: 95536829 BUSINESS ADDRESS: STREET 1: 333 CONTINENTAL BLVD CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3105244600 10-Q 1 1ST QUARTER 1995 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 -------------- OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-05647 ---------------------------------- MATTEL, INC. ------------ (Exact name of registrant as specified in its charter) DELAWARE 95-1567322 - ------------------------------------------------------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 333 Continental Boulevard, El Segundo, California 90245-5012 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (310) 252-2000 -------------- (Former name, former address and former fiscal year, None if changed since last report) -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Number of shares outstanding of registrant's common stock as of May 5, 1995: Common Stock - $1 par value -- 221,088,732 shares PART I -- FINANCIAL INFORMATION ------------------------------- MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, March 31, Dec. 31, (In thousands) 1995 1994 1994 - -------------- ----------- ----------- ----------- ASSETS Current Assets Cash $ 73,963 $ 183,541 $ 239,100 Marketable securities 15,386 18,452 20,581 Accounts receivable, net 701,190 607,448 762,024 Inventories 414,184 244,864 339,143 Prepaid expenses and other current assets 202,915 145,223 182,675 ----------- ----------- ----------- Total current assets 1,407,638 1,199,528 1,543,523 ----------- ----------- ----------- Property, Plant and Equipment Land 22,630 15,636 22,577 Buildings 180,913 149,761 172,310 Machinery and equipment 303,213 252,206 289,796 Capitalized leases 24,271 38,290 38,468 Leasehold improvements 50,852 41,733 46,512 ----------- ----------- ----------- 581,879 497,626 569,663 Less: accumulated depreciation 251,397 242,839 248,666 ----------- ----------- ----------- 330,482 254,787 320,997 Tools, dies and molds, net 99,501 78,798 94,924 ----------- ----------- ----------- Property, plant and equipment, net 429,983 333,585 415,921 ----------- ----------- ----------- Other Noncurrent Assets Intangible assets, net 429,180 135,401 432,232 Sundry assets 71,665 62,780 67,350 ----------- ----------- ----------- $ 2,338,466 $ 1,731,294 $ 2,459,026 =========== =========== =========== See accompanying notes to consolidated financial information.
2 MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued)
March 31, March 31, Dec. 31, (In thousands, except share data) 1995 1994 1994 - --------------------------------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Notes payable $ 167,820 $ - $ - Current portion of long-term liabilities 2,547 4,041 3,095 Accounts payable 150,344 122,008 295,246 Accrued liabilities 294,102 264,694 453,146 Income taxes payable 162,048 93,158 164,394 ----------- ----------- ----------- Total current liabilities 776,861 483,901 915,881 ----------- ----------- ----------- Long-Term Liabilities 6-7/8% Senior notes due 1997 99,640 99,503 99,604 6-3/4% Senior notes due 2000 100,000 100,000 100,000 Medium-Term notes 110,500 - 110,500 Mortgage note 44,900 45,000 45,000 Other 104,328 82,440 102,351 ----------- ----------- ----------- Total long-term liabilities 459,368 326,943 457,455 ----------- ----------- ----------- Shareholders' Equity Preference stock 9 9 9 Common stock $1.00 par value, 300.0 million shares authorized; 223.3 million shares, 223.0 million shares and 223.3 million shares issued, respectively (a) 223,254 178,367 223,264 Additional paid-in capital 235,661 289,917 234,913 Treasury stock at cost; 2.3 million shares, 1.7 million shares and 2.4 million shares, respectively (a) (50,579) (29,108) (53,812) Retained earnings (b) 749,927 544,212 737,528 ESOP note receivable - (2,270) - Deferred compensation - (13,675) - Currency translation adjustments (b) (56,035) (47,002) (56,212) ----------- ----------- ----------- Total shareholders' equity 1,102,237 920,450 1,085,690 ----------- ----------- ----------- $ 2,338,466 $ 1,731,294 $ 2,459,026 =========== =========== =========== (a) Share data for March 1994 have been restated for the effect of the five-for-four stock split declared in December 1994. (b) Since December 26, 1987. See accompanying notes to consolidated financial information.
3 MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended ---------------------- March 31, March 31, (In thousands, except per share amounts) 1995 1994 - ---------------------------------------- ---------- ---------- Net Sales $ 543,570 $ 487,271 Cost of sales 284,545 249,167 ---------- ---------- Gross Profit 259,025 238,104 Advertising and promotion expenses 78,600 71,630 Other selling and administrative expenses 131,918 116,797 Interest expense 11,077 8,123 Other (income) expense, net (3,414) 3,285 ---------- ---------- Income Before Income Taxes 40,844 38,269 Provision for income taxes 13,886 14,200 ---------- ---------- Net Income 26,958 24,069 Preference stock dividend requirements 1,099 1,223 ---------- ---------- Net Income Applicable to Common Shares $ 25,859 $ 22,846 ========== ========== Primary Income Per Common And Common Equivalent Share - ------------------------------------ Net income $ 0.12 $ 0.10 ========== ========== Average number of common and common equivalent shares 223,883 218,796 ========== ========== Dividends Declared Per Common Share $ 0.06 $ 0.05 ========== ========== See accompanying notes to consolidated financial information.
4 MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended ----------------------- March 31, March 31, (In thousands) 1995 1994 - -------------- ---------- ---------- Cash Flows From Operating Activities: - ------------------------------------- Net income $ 26,958 $ 24,069 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 31,031 23,538 Provision for deferred compensation 3,300 1,243 Decrease (increase) in marketable securities 5,195 (984) Decrease (increase) in accounts receivable 58,144 (22,841) (Increase) in inventories (74,961) (23,075) (Increase) decrease in prepaid expenses and other current assets (21,300) 1,727 (Decrease) in accounts payable, accrued liabilities and income taxes payable (294,925) (181,788) Other, net (2,394) 1,408 ---------- ---------- Net cash flows used for operating activities (268,952) (176,703) ---------- ---------- Cash Flows From Investing Activities: - ------------------------------------- Purchases of tools, dies and molds (21,134) (16,803) Purchases of other property, plant and equipment (26,878) (11,308) Sales of other property, plant and equipment 2,709 903 Contingent consideration - Kransco acquisition (8,625) - Other, net 430 347 ---------- ---------- Net cash flows used for investing activities (53,498) (26,861) ---------- ---------- Cash Flows From Financing Activities: - ------------------------------------- Notes payable 166,092 (136) Redemption of Fisher-Price term loan - (120,629) Long-term foreign borrowing 348 (2,590) Collection of ESOP note receivable - 1,230 Payment of ESOP notes payable - (1,230) Tax benefit of employee stock options exercised 1,520 12,283 Exercise of stock options 4,104 21,555 Purchase of treasury stock (4,953) (21,671) Dividends paid on common stock (10,791) (8,134) Dividends paid on preference stock (1,099) (1,223) Other, net 653 (59) ---------- ---------- Net cash flows from (used for) financing activities 155,874 (120,604) Effect of Exchange Rate Changes on Cash 1,439 1,596 ---------- ---------- (Decrease) in Cash (165,137) (322,572) Cash at Beginning of Period 239,100 506,113 ---------- ---------- Cash at End of Period $ 73,963 $ 183,541 ========== ========== See accompanying notes to consolidated financial information.
5 MATTEL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION ------------------------------------------- 1. The accompanying unaudited consolidated financial statements and related disclosures have been prepared in accordance with generally accepted accounting principles applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company's financial position and interim results as of and for the periods presented have been included. Because the Company's business is seasonal, results for interim periods are not necessarily indicative of those which may be expected for a full year. The financial information included herein should be read in conjunction with the Company's consolidated financial statements and related notes in its 1994 Annual Report to Shareholders. 2. Accounts receivable are shown net of allowances for doubtful accounts of $13.9 million (March 31, 1995), $22.2 million (March 31, 1994) and $16.1 million (December 31, 1994). 3. Inventories are comprised of the following:
March 31, March 31, Dec. 31, (In thousands) 1995 1994 1994 - -------------- --------- --------- --------- Raw materials and work in progress $ 80,280 $ 51,914 $ 50,334 Finished goods 333,904 192,950 288,809 --------- --------- --------- $ 414,184 $ 244,864 $ 339,143 ========= ========= =========
4. Net cash flows from operating activities include cash payments for the following:
For the Three Months Ended -------------------------- March 31, March 31, (In thousands) 1995 1994 - -------------- ----------- ----------- Interest $ 11,319 $ 8,381 Income taxes 22,745 19,480 --------------------------
5. In April and May 1995, the Company issued an aggregate of $90.0 million principal amount of fixed rate notes under its Medium-Term Note program. The notes mature on various dates from April 2002 to May 2006 and bear interest at rates ranging from 7.17% to 7.65%. The proceeds of these issuances will be used for general corporate purposes. 6 6. In the current quarter, the Board of Directors declared cash dividends of $0.06 per common share, compared to $0.05 per common share in the first quarter of 1994. Additionally, cash dividends of $1.2717 per Series F convertible preference share were declared, which includes participating common dividends of $0.06 per share. 7. Share and per share data presented in these financial statements reflect the retroactive effects of the five-for-four stock split distributed in January 1995. Income per common share is computed by dividing earnings available to common shareholders by the average number of common and common equivalent shares outstanding during each period. Weighted average share computations assume the exercise of dilutive stock options and warrants, reduced by the number of shares which could be repurchased at average market prices with proceeds from exercise. 7 MATTEL, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Mattel, Inc. (the "Company") designs, manufactures, markets and distributes a broad variety of toy products on a worldwide basis. The Company's business is dependent in great part on its ability each year to redesign, restyle and extend existing core products and product lines and to design and develop innovative new toys and product lines. New products have limited lives, ranging from one to three years, and generally must be updated and refreshed each year. Core brands, which historically have provided the Company with relatively stable growth, include BARBIE doll products; FISHER-PRICE toys and juvenile products including the POWER WHEELS line of battery-powered, ride-on vehicles; Disney-licensed toys; HOT WHEELS vehicles and playsets; large dolls; preschool toys including SEE 'N SAY toys; the UNO and SKIP-BO card games; and the SCRABBLE game, which the Company owns in markets outside of the United States and Canada. RESULTS OF OPERATIONS --------------------- The Company's business is seasonal, and, therefore, results of operations are comparable only with corresponding periods. Following is a percentage analysis of operating results:
For the Three Months Ended ------------------------ March 31, March 31, 1995 1994 ----------- ----------- Net sales 100% 100% =========== =========== Gross profit 48% 49% Advertising and promotion expenses 14 15 Other selling and administrative expenses 24 24 ----------- ----------- Operating profit 10 10 Interest expense 2 2 ----------- ----------- Income before income taxes 8% 8% =========== ===========
Net sales in the first quarter of 1995 increased $56.3 million or 12% over the 1994 first quarter, reflecting increased demand for the Company's core products such as Disney-licensed toys and FISHER-PRICE products, as well as strong demand for non-core products such as STREET SHARK action figures and POLLY POCKET toys. Additional volume was also generated by the acquisitions of Kransco and Spear, which contributed approximately $29 million in the aggregate to net sales in 1995. 8 Worldwide sales of core products represented 85% of gross revenues for the current quarter compared to 83% in the first quarter of 1994. Sales of Disney-licensed products, led by toys connected with "The Lion King" motion picture, increased by 44% to $69.7 million. Fisher-Price contributed $156.9 million to gross sales in 1995 compared to $137.1 million in 1994. Sales to customers within the United States accounted for 62% of consolidated sales compared to 60% in the year-ago quarter. In total, domestic sales increased 13%, partially attributable to incremental volume generated from the acquisition of Kransco, which represented 6% of the Company's domestic sales for 1995. Total international sales increased 6% compared to 1994, including a $15.3 million favorable effect of the weakening of the U.S. dollar relative to the year-ago quarter. Gross profit as a percentage of net sales decreased one percentage point to 48% over the year-ago quarter, principally as a result of higher sales of lower-margin products. Advertising and promotion expenses decreased slightly as a percentage of net sales; however, spending increased $7.0 million in support of growth in sales volume. As a percentage of net sales, other selling and administrative expenses remained virtually constant at 24%, reflecting the Company's ongoing effort to manage expense growth relative to revenue growth. Other income, net, increased $6.7 million, principally as a result of foreign currency transaction gains, and a gain associated with a Mexican insurance claim. These increases were partially offset by an increase in goodwill amortization arising from the Kransco and Spear acquisitions in 1994. Interest expense increased $3.0 million compared to the first quarter of 1994 as a result of the issuance of Medium-Term Notes in the fourth quarter of 1994 as well as an increase in short-term borrowings in the first quarter of 1995. FINANCIAL CONDITION ------------------- The Company's financial condition remained strong during the first quarter of 1995 as a result of its profitable operating results. The Company's cash position as of March 31, 1995, including marketable securities, was $89.3 million, compared to $202.0 million as of the first quarter 1994. The decrease was primarily due to the acquisitions of Kransco and Spear for cash in 1994, partially offset by the issuance of $110.5 million of Medium- Term Notes in the 1994 fourth quarter and cash generated by increased revenue. Cash decreased by $170.3 million since December 31, 1994 primarily as a result of reductions of year-end accounts payable and accrued liabilities. 9 Accounts receivable increased $93.7 million over the year-ago quarter reflecting higher sales volume, as well as the addition of Kransco and Spear receivables totaling approximately $15 million. Since year end, accounts receivable decreased $60.8 million mainly due to the collection of prior year receivables and the sale of certain trade receivables. Inventory balances increased $75.0 million since year end and $169.3 million over the 1994 quarter end, primarily as a result of the Company's production in support of future sales volume. Other noncurrent assets increased $302.7 million over the year-ago quarter, primarily as a result of goodwill of $212.1 million and $97.5 million generated from the acquisitions of Kransco and Spear, respectively, net of amortization. Short-term bank borrowing increased $167.8 million compared to the 1994 year end and first quarter end, in order to fund the Company's seasonal working capital requirements. Seasonal financing needs for the next twelve months are expected to be satisfied through internally generated cash, issuance of commercial paper, use of the Company's various short-term bank lines of credit, and issuance of the Company's Medium-Term Notes. The Company's capitalization is as follows:
(In millions) March 31, 1995 March 31, 1994 Dec. 31, 1994 - ------------- ---------------------------------------------- 6-7/8% Senior notes $ 99.6 6% $ 99.5 8% $ 99.6 7% 6-3/4% Senior notes 100.0 6 100.0 8 100.0 7 Medium-Term notes 110.5 7 - - 110.5 7 Other long-term debt obligations 65.2 4 51.8 4 64.9 4 ---------------------------------------------- Total long-term debt 375.3 23 251.3 20 375.0 25 Other long-term liabilities 84.1 6 75.6 6 82.5 5 Shareholders' equity 1,102.2 71 920.5 74 1,085.7 70 ---------------------------------------------- $ 1,561.6 100% $1,247.4 100% $1,543.2 100% ==============================================
Total long-term debt increased as a percentage of total capitalization compared to the year-ago quarter, primarily due to issuance of the Medium- Term Notes. Shareholders' equity increased $16.5 million since December 31, 1994, and $181.7 million over the 1994 first quarter primarily as a result of the Company's profitable operating results and exercises of employee stock options, partially offset by treasury stock purchases and dividends declared to common and preference shareholders. 10 PART II -- OTHER INFORMATION ---------------------------- Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits -------- 11.0 Computation of Income per Common and Common Equivalent Share 27.0 Financial Data Schedule (EDGAR filing only) (b) Reports on Form 8-K ------------------- Mattel, Inc. filed the following Current Reports on Form 8-K during the quarterly period ended March 31, 1995: Financial Date of Report Items Reported Statements Filed ---------------- -------------- ---------------- January 4, 1995 5, 7 None February 7, 1995 5, 7 None March 21, 1995 7 None 11 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934 as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MATTEL, INC. ------------ Registrant Date: As of May 11, 1995 By: /s/ GARY P. ROLFES ------------------ ------------------------- Gary P. Rolfes Senior Vice President and Controller 12 EX-11.0 2 STATEMENT RE COMPUTATION OF EARNINGS PER SHARE MATTEL, INC. AND SUBSIDIARIES EXHIBIT 11.0 (Page 1 of 2) COMPUTATION OF INCOME PER COMMON AND COMMON EQUIVALENT SHARE ------------------------------------------------------------ (In thousands, except per share amounts)
For The Three Months Ended ---------------------- March 31, March 31, PRIMARY 1995 1994 - ------- --------- --------- Net income $ 26,958 $ 24,069 Less: Dividends on convertible preference stock (1,099) (1,223) --------- --------- Net income applicable to common shares $ 25,859 $ 22,846 ========= ========= Applicable Shares for Computation of Income per Share: - ------------------------------------------------------ Weighted average common shares outstanding 220,961 215,311 Weighted average common equivalent shares arising from: Dilutive stock options 1,944 2,513 Fisher-Price warrants 702 926 Restricted stock 276 46 --------- --------- Weighted average number of common and common equivalent shares 223,883 218,796 ========= ========= Income Per Common Share: - ------------------------ Net income per common share $ 0.12 $ 0.10 ========= =========
MATTEL, INC. AND SUBSIDIARIES EXHIBIT 11.0 (Page 2 of 2) COMPUTATION OF INCOME PER COMMON AND COMMON EQUIVALENT SHARE ------------------------------------------------------------ (In thousands, except per share amounts)
For The Three Months Ended ---------------------- March 31, March 31, FULLY DILUTED 1995 (a) 1994 (b) - ------------- --------- --------- Net income $ 26,958 $ 24,069 Add: Interest savings, net of tax, applicable to: Assumed conversion of 8% convertible debentures - 628 Less: Impact of required ESOP dividends or contributions upon conversion - (1,223) --------- --------- Net income applicable to common shares $ 26,958 $ 23,474 ========= ========= Applicable Shares for Computation of Income per Share: - ------------------------------------------------------ Weighted average common shares outstanding 220,961 215,311 Weighted average common equivalent shares arising from: Assumed conversion of 8% convertible debentures - 5,255 Dilutive stock options 2,617 3,600 Assumed conversion of convertible preference stock 738 2,026 Fisher-Price warrants 728 947 Restricted stock 309 61 --------- --------- Weighted average number of common and common equivalent shares 225,353 227,200 ========= ========= Income Per Common Share: - ------------------------ Net income per common share $ 0.12 $ 0.10 ========= ========= (a) This calculation is submitted in accordance with Regulation S-K, Item 601 (b)(11), although it is contrary to paragraph 40 of APB Opinion No. 15 because it produces an anti-dilutive result. (b) This calculation is submitted in accordance with Regulation S-K, Item 601 (b)(11), although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
EX-27.0 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MATTEL INC.'S BALANCE SHEETS AND INCOME STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1995 MAR-31-1995 73,963 15,386 715,104 13,914 414,184 1,407,638 681,380 251,397 2,338,466 776,861 369,180 223,254 0 9 862,417 2,338,466 543,570 543,570 284,545 284,545 207,104 0 11,077 40,844 13,886 26,958 0 0 0 26,958 0.12 0.12
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