UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
October 16, 2013
MATTEL, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-05647 | 95-1567322 | ||
(State or other jurisdiction of incorporation) |
(Commission File No.) | (I.R.S. Employer Identification No.) |
333 Continental Boulevard, El Segundo, California | 90245-5012 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code
(310) 252-2000
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition.
On October 16, 2013, Mattel, Inc. (Mattel or the Company) issued a press release regarding its third quarter 2013 financial results, a copy of which is furnished as Exhibit 99.1 hereto. This exhibit is incorporated herein by reference.
In its third quarter 2013 press release, Mattel includes a non-GAAP financial measure, gross sales, which it uses to analyze its operations and to monitor, assess and identify meaningful trends in its operating and financial performance. Net sales, as reported in the consolidated statements of operations, include the impact of sales adjustments, such as trade discounts and other allowances. Gross sales represent sales to customers, excluding the impact of sales adjustments. Consistent with its segment reporting, Mattel presents changes in gross sales as a metric for comparing its aggregate, business unit, brand and geographic results to highlight significant trends in Mattels business. Changes in gross sales are discussed because, while Mattel records the detail of such sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally not associated with individual products, making net sales less meaningful. A reconciliation of gross sales to the most directly comparable GAAP financial measure, net sales, is provided in Exhibit II to the press release furnished as Exhibit 99.1 to this Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Section 8 Other Events
Item 8.01 Other Events.
In the same press release described in Item 2.02 above, Mattel also announced that the Companys Board of Directors has declared a quarterly dividend of $0.36 per share on the Companys common stock, to be paid on December 13, 2013 to stockholders of record on November 27, 2013.
Section 9 Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(a) | Financial statements of businesses acquired: None |
(b) | Pro forma financial information: None |
(c) | Shell company transactions: None |
(d) | Exhibits: Press release dated October 16, 2013, issued by Mattel, Inc. |
Exhibit No. |
Exhibit Description | |||
99.1 | ** | Press release dated October 16, 2013. |
** | Furnished herewith. |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MATTEL, INC. Registrant | ||
By: | /s/ Robert Normile | |
Robert Normile | ||
Executive Vice President, Chief Legal Officer and Secretary |
Dated: October 16, 2013
3
Exhibit 99.1
FOR RELEASE AT 3 AM PDT ON OCTOBER 16, 2013
Contacts: News Media Dallas Lawrence Mattel, Inc. +1-310-252-6397 press@mattel.com |
Securities Analysts Drew Vollero Mattel, Inc. +1-310-252-2703 drew.vollero@mattel.com |
Mattel Reports Third Quarter 2013 Financial Results
and Declares Fourth Quarter Dividend
Third Quarter Highlights
| Worldwide net sales up 6%; |
| North American1 gross sales up 3% and International gross sales up 9%; |
| Worldwide gross sales by core brands: Barbie® up 3%; Hot Wheels® down 2%; Fisher-Price® flat; and American Girl® up 20%; |
| Gross margin increased 10 basis points of net sales; SG&A decreased 30 basis points of net sales; |
| Operating income of $528.2 million compared to operating income of $487.4 million in the third quarter of 2012; and |
| Earnings per share of $1.21 (includes tax benefit of $0.05 per share) vs. prior year earnings per share of $1.04. |
Capital Deployment
| Board declared 2013 fourth quarter cash dividend of $0.36 per share, reflecting an annualized dividend of $1.44 per share; and |
| The Company repurchased 6.1 million shares of its common stock during the third quarter at a cost of approximately $259 million. |
EL SEGUNDO, Calif., October 16, 2013 Mattel, Inc. (NASDAQ: MAT) today reported 2013 third quarter financial results. For the quarter, the Company reported net income of $422.8 million, or $1.21 per share, compared to last years third quarter net income of $365.9 million, or $1.04 per share.
We are pleased with our third quarter performance as Mattel delivered growth in every region of the world, expanded our operating margins, further strengthened our balance sheet and returned more capital to our shareholders, said Bryan G. Stockton, Mattel Chairman and Chief Executive Officer. As we enter the all-important holiday season, we have a strong lineup of innovative products, promotions and content, and we will continue to focus on execution to deliver growth and long-term shareholder value.
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1 | Consists of the North America Division (U.S. & Canada) and American Girl |
Mattel Reports Third Quarter 2013 Financial Results, Page 2
Financial Overview
For the quarter, net sales were $2.21 billion, up 6%, including an unfavorable change in currency exchange rates of 1 percentage point. On a regional basis, third quarter gross sales increased 3% in the North American Region, which consists of the U.S., Canada and American Girl, with no impact from changes in currency exchange rates. For the International Region, gross sales increased 9%, including an unfavorable impact of currency exchange rates of 2 percentage points. Operating income for the quarter was $528.2 million, compared to prior years operating income of $487.4 million.
The Companys debt-to-total-capital ratio was 36.5%. For the first nine months of the year, the Companys cash and equivalents decreased by approximately $929 million, compared with a decline of approximately $1.09 billion during the same period last year.
For the first nine months of the year, cash flows used for operating activities were approximately $321 million, an increase of $220 million compared to approximately $101 million of cash flows used for operating activities in the same period of 2012. The increase is primarily due to higher working capital usage, partially offset by higher net income. Cash flows used for investing activities were approximately $176 million, a decrease of $657 million, compared to approximately $833 million in 2012, driven primarily by the prior year acquisition of HIT Entertainment. Cash flows used for financing and other activities were approximately $432 million, an increase of $279 million, compared to approximately $153 million in 2012, primarily due to higher share repurchases and repayments of long-term debt, partially offset by net proceeds received from the issuance of long-term debt.
Capital Deployment
The Company announced today that its Board of Directors declared a fourth quarter cash dividend of $0.36 per share on the Companys common stock. The dividend will be payable on December 13, 2013, to stockholders of record on November 27, 2013. The dividend is the final of four quarterly dividends the Company will have paid this year, reflecting an annualized dividend of $1.44 per share, which represents a 16% increase to last years total dividends. During the third quarter of 2013, the Company repurchased 6.1 million shares of its common stock at a cost of approximately $259 million.
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Mattel Reports Third Quarter 2013 Financial Results, Page 3
Sales by Brand
Mattel Girls and Boys Brands
For the third quarter, worldwide gross sales for Mattel Girls & Boys Brands were $1.48 billion, up 8% versus the prior year. Worldwide gross sales for the Barbie brand were up 3%. Worldwide gross sales for Other Girls Brands were up 28%, primarily driven by Monster High®. Worldwide gross sales for the Wheels category, which includes the Hot Wheels, Matchbox® and Tyco R/C® brands, were down 9%, primarily driven by Tyco R/C and Matchbox. Worldwide gross sales for the Entertainment business, which also includes Radica® and Games, were up 7%, primarily driven by the Disney Planes movie property.
Fisher-Price Brands
Third quarter worldwide gross sales for Fisher-Price Brands, which includes the Fisher-Price Core, Fisher-Price Friends and Power Wheels® brands, were $789.3 million, or flat versus the prior year.
American Girl Brands
Third quarter gross sales for American Girl Brands, which offers American Girl-branded products directly to consumers, were $122.3 million, up 20% versus the prior year, driven by Saige, the 2013 Girl of the Year, My American Girl, Bitty Baby and Historical dolls.
Live Webcast
Mattel will webcast its 2013 third quarter financial results conference call at 8:30 a.m. Eastern time today. The conference call will be webcast on the Investors section of the Companys corporate website: http://corporate.mattel.com. To listen to the live call, log on to the website at least 15 minutes early to register, download and install any necessary audio software. An archive of the webcast will be available on the companys website for 90 days and may be accessed beginning two hours after the completion of the live call. A telephonic replay of the call will be available beginning at 11:30 a.m. Eastern time the morning of the call until Wednesday, October 23, at midnight Eastern time and may be accessed by dialing + (404) 537-3406. The passcode is 58903743.
Information required by Securities and Exchange Commission Regulation G, regarding non-GAAP financial measures, as well as other financial and statistical information, will be available at the time of the webcast on the Investors section of http://corporate.mattel.com, under the sub-headings Financial Information Earnings Releases.
(more)
Mattel Reports Third Quarter 2013 Financial Results, Page 4
About Mattel Inc.
Mattel, Inc. (Nasdaq: MAT) is the worldwide leader in the design, manufacture and marketing of toys and family products. The Mattel family is comprised of such best-selling brands as Barbie®, the most popular fashion doll ever produced, Hot Wheels®, Monster High®, American Girl®, Thomas & Friends® and Fisher-Price® brands, including Little People® and Power Wheels®, as well as a wide array of entertainment-inspired toy lines. In 2013, Mattel was named as one of FORTUNE Magazines 100 Best Companies to Work For for the sixth year in a row and as one of the Worlds Most Ethical Companies by Ethisphere Magazine. Mattel also is ranked No. 2 on Corporate Responsibility Magazines 100 Best Corporate Citizens list. With worldwide headquarters in El Segundo, Calif., Mattel employs nearly 30,000 people in 40 countries and territories and sells products in more than 150 nations. At Mattel, we are Creating the Future of Play. Visit us at www.mattel.com, www.facebook.com/mattel or www.twitter.com/mattel.
###
Note: This press release contains forward-looking statements relating to the Companys expected financial performance and expected quarterly cash dividend payments in 2013. These forward-looking statements are based on currently available operating, financial, economic and other information and are subject to a number of significant risks and uncertainties. A variety of factors, many of which are beyond our control, could cause actual future results to differ materially from those projected in the forward-looking statements. Some of these factors are described in the Companys periodic filings with the Securities and Exchange Commission, including the Risk Factors section of Mattels Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and Mattels Quarterly Reports on Form 10-Q for fiscal year 2013, as well as in Mattels other public statements. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so.
MATTEL, INC. AND SUBSIDIARIES | EXHIBIT I |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
(In millions, except per share and percentage information) |
2013 | 2012 | Yr /
Yr % Change |
2013 | 2012 | Yr /
Yr % Change |
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$ Amt | % Net Sales | $ Amt | % Net Sales | $ Amt | % Net Sales | $ Amt | % Net Sales | |||||||||||||||||||||||||||||||||
Net Sales |
$ | 2,207.0 | $ | 2,077.8 | 6 | % | $ | 4,371.7 | $ | 4,165.0 | 5 | % | ||||||||||||||||||||||||||||
Cost of sales |
1,019.0 | 46.2 | % | 962.4 | 46.3 | % | 6 | % | 2,043.7 | 46.7 | % | 1,981.7 | 47.6 | % | 3 | % | ||||||||||||||||||||||||
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Gross Profit |
1,188.0 | 53.8 | % | 1,115.4 | 53.7 | % | 7 | % | 2,328.0 | 53.3 | % | 2,183.3 | 52.4 | % | 7 | % | ||||||||||||||||||||||||
Advertising and promotion expenses |
249.4 | 11.3 | % | 234.8 | 11.3 | % | 6 | % | 467.3 | 10.7 | % | 445.0 | 10.7 | % | 5 | % | ||||||||||||||||||||||||
Other selling and administrative expenses |
410.4 | 18.6 | % | 393.2 | 18.9 | % | 4 | % | 1,171.9 | 26.8 | % | 1,090.8 | 26.2 | % | 7 | % | ||||||||||||||||||||||||
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Operating Income |
528.2 | 23.9 | % | 487.4 | 23.5 | % | 8 | % | 688.8 | 15.8 | % | 647.5 | 15.5 | % | 6 | % | ||||||||||||||||||||||||
Interest expense |
19.6 | 0.9 | % | 22.7 | 1.1 | % | -14 | % | 58.2 | 1.3 | % | 65.4 | 1.6 | % | -11 | % | ||||||||||||||||||||||||
Interest (income) |
(1.4 | ) | -0.1 | % | (1.5 | ) | -0.1 | % | -5 | % | (4.1 | ) | -0.1 | % | (5.2 | ) | -0.1 | % | -21 | % | ||||||||||||||||||||
Other non-operating (income), net |
(4.3 | ) | (0.6 | ) | (2.5 | ) | (1.1 | ) | ||||||||||||||||||||||||||||||||
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Income Before Income Taxes |
514.3 | 23.3 | % | 466.8 | 22.5 | % | 10 | % | 637.2 | 14.6 | % | 588.4 | 14.1 | % | 8 | % | ||||||||||||||||||||||||
Provision for income taxes |
91.5 | 100.9 | 102.5 | 118.4 | ||||||||||||||||||||||||||||||||||||
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Net Income |
$ | 422.8 | 19.2 | % | $ | 365.9 | 17.6 | % | 16 | % | $ | 534.7 | 12.2 | % | $ | 470.0 | 11.3 | % | 14 | % | ||||||||||||||||||||
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Net Income Per Common Share - Basic |
$ | 1.22 | $ | 1.06 | $ | 1.54 | $ | 1.36 | ||||||||||||||||||||||||||||||||
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Weighted average number of common shares |
343.3 | 342.6 | 344.7 | 341.0 | ||||||||||||||||||||||||||||||||||||
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Net Income Per Common Share - Diluted |
$ | 1.21 | $ | 1.04 | $ | 1.52 | $ | 1.35 | ||||||||||||||||||||||||||||||||
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Weighted average number of common and potential common shares |
346.7 | 347.1 | 348.6 | 345.4 | ||||||||||||||||||||||||||||||||||||
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MATTEL, INC. AND SUBSIDIARIES | EXHIBIT II |
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
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(In millions, except percentage information) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||||||
Worldwide Gross Sales: |
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Mattel Girls & Boys Brands |
$ | 1,480.7 | $ | 1,371.1 | $ | 2,965.3 | $ | 2,775.0 | ||||||||||||||||||||||||
% Change |
8 | % | 3 | % | 7 | % | 0 | % | ||||||||||||||||||||||||
Pos./(Neg.) Impact of Currency (in % pts) |
-1 | -5 | -1 | -4 | ||||||||||||||||||||||||||||
Fisher-Price Brands |
789.3 | 790.4 | 1,473.3 | 1,507.9 | ||||||||||||||||||||||||||||
% Change |
0 | % | 6 | % | -2 | % | 3 | % | ||||||||||||||||||||||||
Pos./(Neg.) Impact of Currency (in % pts) |
-1 | -2 | 0 | -3 | ||||||||||||||||||||||||||||
American Girl Brands |
122.3 | 102.0 | 300.9 | 246.7 | ||||||||||||||||||||||||||||
% Change |
20 | % | 16 | % | 22 | % | 9 | % | ||||||||||||||||||||||||
Other |
10.0 | 10.2 | 29.4 | 28.0 | ||||||||||||||||||||||||||||
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Gross Sales |
$ | 2,402.3 | $ | 2,273.7 | $ | 4,768.9 | $ | 4,557.6 | ||||||||||||||||||||||||
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% Change |
6 | % | 4 | % | 5 | % | 2 | % | ||||||||||||||||||||||||
Pos./(Neg.) Impact of Currency (in % pts) |
0 | -4 | 0 | -3 | ||||||||||||||||||||||||||||
Reconciliation of Non-GAAP to GAAP Financial Measure: |
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Gross Sales |
$ | 2,402.3 | $ | 2,273.7 | $ | 4,768.9 | $ | 4,557.6 | ||||||||||||||||||||||||
Sales Adjustments |
(195.3 | ) | (195.9 | ) | (397.2 | ) | (392.6 | ) | ||||||||||||||||||||||||
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Net Sales |
$ | 2,207.0 | $ | 2,077.8 | $ | 4,371.7 | $ | 4,165.0 | ||||||||||||||||||||||||
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% Change |
6 | % | 4 | % | 5 | % | 1 | % | ||||||||||||||||||||||||
Pos./(Neg.) Impact of Currency (in % pts) |
-1 | -3 | -1 | -3 |
MATTEL, INC. AND SUBSIDIARIES | EXHIBIT III |
CONDENSED CONSOLIDATED BALANCE SHEETS
At September 30, | At December 31, | |||||||||||
2013 | 2012 (a) | 2012 | ||||||||||
(In millions) |
(Unaudited) | |||||||||||
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Assets |
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Cash and equivalents |
$ | 406.5 | $ | 282.1 | $ | 1,335.7 | ||||||
Accounts receivable, net |
1,885.2 | 1,828.2 | 1,226.8 | |||||||||
Inventories |
807.2 | 796.4 | 465.1 | |||||||||
Prepaid expenses and other current assets |
538.6 | 366.6 | 529.2 | |||||||||
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Total current assets |
3,637.5 | 3,273.3 | 3,556.8 | |||||||||
Property, plant, and equipment, net |
634.8 | 575.3 | 593.2 | |||||||||
Other noncurrent assets |
2,424.0 | 2,470.1 | 2,376.8 | |||||||||
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Total Assets |
$ | 6,696.3 | $ | 6,318.7 | $ | 6,526.8 | ||||||
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Liabilities and Stockholders Equity |
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Short-term borrowings |
$ | 77.8 | $ | 154.5 | $ | 9.8 | ||||||
Current portion of long-term debt |
50.0 | 350.0 | 400.0 | |||||||||
Accounts payable and accrued liabilities |
1,278.0 | 1,111.6 | 1,273.2 | |||||||||
Income taxes payable |
65.8 | 47.3 | 33.0 | |||||||||
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Total current liabilities |
1,471.6 | 1,663.4 | 1,716.0 | |||||||||
Long-term debt |
1,600.0 | 1,150.0 | 1,100.0 | |||||||||
Other noncurrent liabilities |
616.5 | 601.4 | 643.8 | |||||||||
Stockholders equity |
3,008.2 | 2,903.9 | 3,067.0 | |||||||||
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Total Liabilities and Stockholders Equity |
$ | 6,696.3 | $ | 6,318.7 | $ | 6,526.8 | ||||||
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SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)
At September 30, | ||||||||
(In millions, except days and percentage information) | 2013 | 2012 | ||||||
Key Balance Sheet Data: |
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Accounts receivable, net days of sales outstanding (DSO) |
77 | 79 | ||||||
Total debt outstanding |
$ | 1,727.8 | $ | 1,654.5 | ||||
Total debt-to-total capital ratio |
36.5 | % | 36.3 | % | ||||
Nine Months Ended September 30, | ||||||||
(In millions) |
2013(b) | 2012(a) | ||||||
Condensed Cash Flow Data: |
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Cash flows (used for) operating activities |
$ | (321 | ) | $ | (101 | ) | ||
Cash flows (used for) investing activities |
(176 | ) | (833 | ) | ||||
Cash flows (used for) financing activities and other |
(432 | ) | (153 | ) | ||||
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Decrease in cash and equivalents |
$ | (929 | ) | $ | (1,087 | ) | ||
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(a) | Certain balances related to the acquisition of HIT Entertainment have been retrospectively adjusted to reflect their final acquisition-date fair values. |
(b) | Amounts shown are preliminary estimates. Actual amounts will be reported in Mattels Quarterly Report on Form 10-Q for the quarter ended September 30, 2013. |