Mattel, Inc. (NASDAQ:MAT) today reported 2012 fourth quarter and
full-year financial results. For the fourth quarter, the Company
reported net income of $306.5 million, or $0.87 per share, and
adjusted net income of $393.6 million, or $1.12 per share,
excluding the litigation charge discussed below, compared to last
year’s fourth quarter net income of $370.6 million, or $1.07 per
share. For the year, the Company reported net income of $776.5
million, or $2.22 per share, and adjusted net income of $863.6
million, or $2.47 per share, excluding the litigation charge,
compared to last year’s net income of $768.5 million, or $2.18 per
share.
"We had another great year at Mattel with record sales for both
total company and our International division, stronger gross
margins and our second year of more than $1 billion in operating
profit,” said Bryan G. Stockton, chairman and chief executive
officer of Mattel. “These results are particularly gratifying given
the challenging global economic and cost environment."
Financial Overview
For the fourth quarter, net sales were $2.26 billion, a 5%
increase from $2.15 billion last year, including an unfavorable
impact of changes in currency exchange rates of 1 percentage point.
On a regional basis, fourth quarter gross sales were up 5% in the
North American Region, which consists of the U.S., Canada and
American Girl, including a favorable impact of currency exchange
rates of 1 percentage point. For the International Region, gross
sales increased 8%, including an unfavorable impact of currency
exchange rates of 2 percentage points. Operating income for the
quarter was $373.5 million. Adjusted operating income was $511.3
million, or 22.7% of net sales, excluding the litigation charge,
compared to the prior year’s operating income for the quarter of
$497.5 million.
For the year, net sales were $6.42 billion, a 2% increase from
$6.27 billion last year, including an unfavorable impact of changes
in currency exchange rates of 2 percentage points. On a regional
basis, full-year gross sales were up 2% in the North American
Region, with no impact from changes in currency exchange rates. For
the International Region, gross sales were up 4%, including an
unfavorable impact of currency exchange rates of 6 percentage
points. Operating income for the year was $1.02 billion. Adjusted
operating income was $1.16 billion, or 18.0% of net sales,
excluding the litigation charge, compared to the prior year’s
operating income of $1.04 billion.
The Company’s debt-to-total-capital ratio of 33.0% is in line
with the Company’s capital and investment framework, and its
year-end cash balance was $1.34 billion.
For the year, net cash flows from operating activities were
approximately $1.28 billion, an increase of $611 million compared
with approximately $665 million in 2011. The increase is primarily
driven by reductions in working capital. Cash flows used for
investing activities were approximately $900 million, an increase
of $725 million, compared to approximately $175 million in 2011,
driven primarily by the acquisition of HIT Entertainment™. Cash
flows used for financing and other activities were approximately
$409 million, an increase of $7 million, compared with
approximately $402 million in 2011, primarily due to lower net
proceeds from the issuance of long-term debt and higher dividends,
partially offset by lower share repurchases and lower repayments of
long-term debt.
Capital Deployment
The Company announced today that its Board of Directors declared
a first quarter cash dividend of $0.36 per share on the Company's
common stock, which represents an increase of 16% versus last
year’s dividend of $0.31 per share. The dividend will be payable on
March 8, 2013 to stockholders of record on February 22, 2013. For
the fourth quarter 2012, the Company repurchased 1.4 million shares
of its common stock at a cost of approximately $51 million, and for
the year, the Company repurchased 2.3 million shares of its common
stock at a cost of approximately $78 million.
Litigation Charge
On January 24, 2013, the U.S. Ninth Circuit Court of Appeals
issued a decision on the litigation related to Carter Bryant and
MGA Entertainment, Inc. The Ninth Circuit agreed with Mattel that
the verdict and damages on MGA’s toy fair claims must be reversed,
and directed the District Court to dismiss the claims without
prejudice. The Ninth Circuit’s decision vacates the District
Court’s judgment awarding MGA approximately $172 million,
consisting primarily of compensatory and punitive damages, for the
claims MGA made arising out of conduct at toy fairs. Consistent
with the District Court’s affirmance of the award of fees and costs
against Mattel arising out of the separate copyright claims, Mattel
has taken a charge of $137.8 million ($87.1 million net of taxes)
with respect to the fourth quarter of 2012 to cover these fees and
costs.
Mattel Girls & Boys Brands
Fourth quarter worldwide gross sales for the Mattel Girls &
Boys Brands business unit were $1.41 billion, up 5% versus a year
ago. Worldwide gross sales for the Barbie brand were down 4% and
worldwide gross sales for Other Girls Brands were up 55%, primarily
driven by Monster High®. Worldwide gross sales for the Wheels
business, which includes the Hot Wheels, Matchbox® and Tyco R/C®
brands, were down 1%, primarily driven by Matchbox. Worldwide gross
sales for the Entertainment business, which includes Radica® and
Games, were down 13% for the quarter, primarily driven by decreases
in the CARS 2® movie property.
For the year, worldwide gross sales for the Mattel Girls &
Boys Brands business unit were $4.19 billion, or up 2%. Worldwide
gross sales for the Barbie brand were down 3%. Worldwide gross
sales for Other Girls Brands were up 57% for the year, primarily
driven by Monster High. Worldwide gross sales for the Wheels
business, which includes the Hot Wheels, Matchbox and Tyco R/C
brands, were flat, with growth in Hot Wheels offset by decreases in
Matchbox. Worldwide gross sales for the Entertainment business,
including Radica and Games, were down 21%, primarily driven by
decreases in the CARS 2 movie property.
Fisher-Price Brands
Fourth quarter worldwide gross sales for the Fisher-Price Brands
business unit, which includes the Fisher-Price Core, Fisher-Price
Friends and Power Wheels brands, were $744.5 million, up 6%. For
the year, worldwide gross sales for the Fisher-Price Brands
business unit were $2.25 billion, up 4%, driven by strength in
Fisher-Price Friends with the addition of the HIT Entertainment
portfolio and Disney’s Jake and the Never Land Pirates™
property.
American Girl Brands
Fourth quarter gross sales for the American Girl Brands business
unit, which offers American Girl branded products direct to
consumers, were $320.8 million, up 13%. For the year, gross sales
for the American Girl Brands business unit were $567.5 million, up
11%, primarily driven by strong sales of McKenna™, the 2012 Girl of
the Year, and the expansion of retail locations.
Live Webcast
Mattel will webcast its 2012 fourth quarter and full-year
financial results conference call at 8:30 a.m. Eastern time today.
The conference call will be webcast on the "Investors & Media"
section of the Company's 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 Company's 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 Friday, Feb.
8 at midnight Eastern time and may be accessed by dialing + 1 (404)
537-3406. The passcode is 84924461.
Presentation slides relating to the conference call, as well as
other financial and statistical information, will be available at
the time of the webcast on the “Investors & Media” section of
http://corporate.mattel.com/, under the sub-headings “Financial
Information” – “Earnings Releases.” Information required by
Securities and Exchange Commission Regulation G regarding non-GAAP
financial measures is set forth in the Exhibits to this press
release.
About Mattel
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 introduced, Hot Wheels®, Monster
High®, American Girl®, Thomas & Friends®, Fisher-Price® brands,
including, Little People®, Power Wheels®, as well as a wide array
of entertainment-inspired toy lines. In 2013, Mattel was named as
one of FORTUNE Magazine's "100 Best Companies to Work For" for the
sixth year in a row. Mattel also is ranked among Corporate
Responsibility Magazine's "100 Best Corporate Citizens." With
worldwide headquarters in El Segundo, Calif., Mattel employs
approximately 28,000 people in 43 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 on
a variety of matters, including without limitation, the Company’s
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 Company's periodic filings with the Securities
and Exchange Commission, including the "Risk Factors" section of
Mattel's Annual Report on Form 10-K for the fiscal year ended
December 31, 2011 and Mattel's Quarterly Reports on Form 10-Q for
fiscal year 2012, as well as in Mattel's other public statements.
Mattel does not update forward-looking statements and expressly
disclaims any obligation to do so.
1 Consists of the North America Division (U.S. & Canada) and
American Girl
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT
I CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES
For the Three Months Ended December 31,
2012 As Reported vs.
2012 Adjusted vs.
2012 2011
2011 As Reported
2011 As Reported
As Reported
Impact
ofLitigationCharge
Adjusted As Reported
$ Amt
% Net Sales
$ Amt $ Amt
% Net Sales
$ Amt
% Net Sales
Yr/Yr$ Change
Yr/Yr% Change
Yr/Yr$ Change
Yr/Yr% Change
(In millions, except per share and
percentage information)
(In millions, except percentage
information)
Net Sales
$
2,255.9
$
–
$
2,255.9
$
2,153.8
$
102.1
5
%
$
102.1
5
%
Cost of sales
1,030.0 45.7 %
–
1,030.0 45.7 % 993.4 46.1 % 36.6 4 %
36.6 4 %
Gross Profit 1,225.9 54.3 %
–
1,225.9 54.3 % 1,160.4 53.9 % 65.5 6 % 65.5 6 % Advertising and
promotion expenses 272.8 12.1 %
–
272.8 12.1 % 261.4 12.1 % 11.4 4 % 11.4 4 % Other selling and
administrative expenses 579.6 25.7 % 137.8 441.8
19.6 % 401.5 18.6 % 178.1 44 % 40.3 10
%
Operating Income 373.5 16.6 % (137.8 ) 511.3 22.7 % 497.5
23.1 % (124.0 ) -25 % 13.8 3 % Interest expense 23.5 1.0 %
–
23.5 1.0 % 23.5 1.1 % - 0 % - 0 % Interest (income) (1.7 ) -0.1 %
–
(1.7 ) -0.1 % (1.4 ) -0.1 % (0.3 ) 19 % (0.3 ) 19 % Other
non-operating (income) expense, net (5.0 )
–
(5.0 ) 6.5 (11.5 ) (11.5 )
Income Before Income
Taxes 356.7 15.8 % (137.8 ) 494.5 21.9 % 468.9 21.8 % (112.2 )
-24 % 25.6 5 % Provision for income taxes 50.2 (50.7 ) 100.9
98.3 (48.1 ) -49 % 2.6 3 %
Net
Income $ 306.5 13.6 % $ (87.1 ) $ 393.6 17.4 % $
370.6 17.2 % $ (64.1 ) -17 % $ 23.0 6 %
Net
Income Per Common Share - Basic $ 0.88 $ (0.25 ) $ 1.13
$ 1.08 Weighted average number of common
shares 343.6
–
343.6 339.4
Net Income Per
Common Share - Diluted $ 0.87 $ (0.25 ) $ 1.12 $
1.07
Weighted average number of common and potential common shares 348.4
–
348.4 343.5
MATTEL, INC.
AND SUBSIDIARIES
EXHIBIT II
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES
For the Year Ended December 31, 2012 As Reported
vs. 2012 Adjusted vs. 2012 2011
2011 As Reported 2011 As Reported As
Reported
Impact
ofLitigationCharge
Adjusted As Reported
$ Amt
% NetSales
$ Amt $ Amt
% Net Sales
$ Amt
% Net Sales
Yr/Yr$ Change
Yr/Yr% Change
Yr/Yr$ Change
Yr/Yr% Change
(In millions, except per share and
percentage information)
(In millions, except percentage
information)
Net Sales
$
6,420.9
$
–
$
6,420.9
$
6,266.0
$
154.9
2
%
$
154.9
2
%
Cost of sales 3,011.7 46.9 %
–
3,011.7 46.9 % 3,120.2 49.8 % (108.5 ) -3 %
(108.5 ) -3 %
Gross Profit 3,409.2 53.1 %
–
3,409.2 53.1 % 3,145.8 50.2 % 263.4 8 % 263.4 8 % Advertising and
promotion expenses 717.8 11.2 %
–
717.8 11.2 % 699.2 11.2 % 18.6 3 % 18.6 3 % Other selling and
administrative expenses 1,670.4 26.0 % 137.8 1,532.6
23.9 % 1,405.5 22.4 % 264.9 19 % 127.1
9 %
Operating Income 1,021.0 15.9 % (137.8 ) 1,158.8 18.0 %
1,041.1 16.6 % (20.1 ) -2 % 117.7 11 % Interest expense 88.8 1.4 %
–
88.8 1.4 % 75.3 1.2 % 13.5 18 % 13.5 18 % Interest (income) (6.8 )
-0.1 %
–
(6.8 ) -0.1 % (8.1 ) -0.1 % 1.3 -15 % 1.3 -15 % Other non-operating
(income) expense, net (6.0 )
–
(6.0 ) 3.2 (9.2 ) (9.2 )
Income Before Income
Taxes 945.0 14.7 % (137.8 ) 1,082.8 16.9 % 970.7 15.5 % (25.7 )
-3 % 112.1 12 % Provision for income taxes 168.5 (50.7 )
219.2 202.2 (33.7 ) -17 % 17.0 8 %
Net Income $ 776.5 12.1 % $ (87.1 ) $ 863.6
13.4 % $ 768.5 12.3 % $ 8.0 1 % $ 95.1 12 %
Net Income Per Common Share - Basic $ 2.25 $
(0.25 ) $ 2.50 $ 2.20 Weighted average number
of common shares 341.7
–
341.7 344.7
Net Income Per
Common Share - Diluted $ 2.22 $ (0.25 ) $ 2.47 $
2.18
Weighted average number of common and potential common shares 346.2
–
346.2 348.4
MATTEL, INC. AND
SUBSIDIARIES EXHIBIT III
WORLDWIDE GROSS SALES INFORMATION (Unaudited)
Three Months Ended December 31, Year Ended December
31,
(In millions,
except percentage information)
2012 2011
2012 2011
Worldwide Gross
Sales:
Mattel Girls & Boys Brands $ 1,411.5 $ 1,346.1 $ 4,186.6 $
4,120.6 % Change 5 % 7 % 2 % 14 % Pos./(Neg.) Impact of Currency
(in % pts) -1 -2 -3 2 Fisher-Price Brands 744.5 700.4
2,252.3 2,159.2 % Change 6 % -10 % 4 % -3 % Pos./(Neg.) Impact of
Currency (in % pts) -1 -1 -2 1 American Girl Brands 320.8
283.9 567.5 510.9 % Change 13 % 4 % 11 % 5 % Other
18.2 22.2 46.2 50.4
Gross Sales $ 2,495.0 $ 2,352.6 $ 7,052.6
$ 6,841.1 % Change 6 % 1 % 3 % 7 % Pos./(Neg.) Impact
of Currency (in % pts) -1 -1 -3 1
Reconciliation of
Non-GAAP to GAAP Financial Measure:
Gross Sales $ 2,495.0 $ 2,352.6 $ 7,052.6 $ 6,841.1 Sales
Adjustments (239.1 ) (198.8 ) (631.7 )
(575.1 ) Net Sales $ 2,255.9 $ 2,153.8 $ 6,420.9
$ 6,266.0 % Change 5 % 1 % 2 % 7 % Pos./(Neg.) Impact
of Currency (in % pts) -1 -1 -2 1
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT IV CONDENSED CONSOLIDATED BALANCE SHEETS
At December 31, 2012 2011
(In
millions)
(Unaudited)
Assets Cash and equivalents $ 1,335.7 $ 1,369.1
Accounts receivable, net 1,226.8 1,246.7 Inventories 465.1 487.0
Prepaid expenses and other current assets 529.2
340.9 Total current assets 3,556.8 3,443.7
Property, plant, and equipment, net 593.2 523.9 Other noncurrent
assets 2,376.8 1,704.0
Total
Assets $ 6,526.8 $ 5,671.6
Liabilities and Stockholders' Equity Short-term borrowings $
9.8 $ 8.0 Current portion of long-term debt 400.0 50.0 Accounts
payable and accrued liabilities 1,273.2 953.8 Income taxes payable
33.0 27.1 Total current liabilities
1,716.0 1,038.9 Long-term debt 1,100.0 1,500.0 Other
noncurrent liabilities 643.8 522.1 Stockholders' equity
3,067.0 2,610.6
Total Liabilities and
Stockholders' Equity $ 6,526.8 $ 5,671.6
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA (Unaudited)
At December 31,
(In millions,
except days and percentage information)
2012 2011
Key Balance Sheet
Data:
Accounts receivable, net days of sales outstanding (DSO) 49 52
Total debt outstanding $ 1,509.8 $ 1,558.0 Total debt-to-total
capital ratio 33.0 % 37.4 %
Year Ended December 31,
(In
millions)
2012 (a)
2011
Condensed Cash
Flow Data:
Cash flows from operating activities $ 1,276 $ 665 Cash
flows (used for) investing activities (900 ) (175 ) Cash
flows (used for) financing activities and other (409 )
(402 ) (Decrease) Increase in cash and equivalents $
(33 ) $ 88 (a) Amounts shown are preliminary
estimates. Actual amounts will be reported in Mattel's Annual
Report on Form 10-K for the year ended December 31, 2012.
MATTEL, INC.
AND SUBSIDIARIES EXHIBIT V COMPUTATION
OF INCOME PER COMMON AND POTENTIAL COMMON SHARE (Unaudited)
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES
For the Three Months Ended For the Year Ended
December 31, 2012 December 31, 2012 Impact of
Impact of Litigation Litigation As
Reported Charge Adjusted As Reported
Charge Adjusted (In millions, except per share
amounts) (In millions, except per share amounts)
BASIC
Net income $ 306.5 $ (87.1 ) $ 393.6 $ 776.5 $ (87.1 ) $
863.6 Less net income allocable to participating RSUs (3.2 )
0.9 (4.1 ) (7.8 ) 0.9
(8.7 ) Net income available for basic common shares $ 303.3
$ (86.2 ) $ 389.5 $ 768.7 $ (86.2 ) $ 854.9
Weighted average common shares outstanding 343.6
- 343.6 341.7
- 341.7
Basic Net Income Per Common
Share
$ 0.88 $ (0.25 ) $
1.13 $ 2.25 $
(0.25 ) $ 2.50
DILUTED
Net income $ 306.5 $ (87.1 ) $ 393.6 $ 776.5 $ (87.1 ) $
863.6 Less net income allocable to participating RSUs (3.2 )
0.9 (4.0 ) (7.7 ) 0.9
(8.6 ) Net income available for diluted common shares $
303.3 $ (86.2 ) $ 389.6 $ 768.8 $ (86.2 ) $
855.0 Weighted average common shares outstanding 343.6 -
343.6 341.7 - 341.7 Weighted average common equivalent shares
arising from: Dilutive stock options and non-participating RSUs
4.8 - 4.8 4.5
- 4.5 Weighted average number of
common and potential common shares 348.4 -
348.4 346.2 -
346.2
Diluted Net Income Per Common
Share
$ 0.87 $ (0.25 ) $
1.12 $ 2.22 $
(0.25 ) $ 2.47
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