Fourth Quarter Highlights
- Worldwide net sales down 6%
(including an unfavorable impact from changes in currency exchange
rates of 3%);
- North American Region1
gross sales down 2% and International Region gross sales down 5%
(including an unfavorable impact from changes in currency exchange
rates of 8%);
- Worldwide gross sales by core
brands: Barbie® down 12%; Hot Wheels® up 5%;
Fisher-Price® down 11% and American Girl® down
4%;
- Gross margin decreased 410 basis
points of net sales, partially due to the acquisition of MEGA®
Brands;
- SG&A increased 390 basis points
of net sales, including the impact of the acquisition of MEGA
Brands;
- Operating income of $237.0 million
compared to operating income of $479.3 million in the fourth
quarter of 2013; and
- Earnings per share of $0.44
(includes a negative impact of $0.05 per share from MEGA Brands
integration costs2 and a negative tax impact of $0.03
per share) vs. prior year earnings per share of $1.07.
Full Year Highlights
- Worldwide net sales down 7%
(including an unfavorable impact from changes in currency exchange
rates of 2%);
- North American Region1
gross sales down 5% and International Region gross sales down 7%
(including an unfavorable impact from changes in currency exchange
rates of 4%);
- Worldwide gross sales by core
brands: Barbie down 16%; Hot Wheels up 3%; Fisher-Price down 13%
and American Girl down 2%;
- Gross margin decreased 380 basis
points of net sales, partially due to the acquisition of MEGA
Brands;
- SG&A increased 270 basis points
of net sales, including the impact of the acquisition of MEGA
Brands;
- Operating income of $653.7 million
compared to operating income of $1.17 billion in 2013; and
- Earnings per share of $1.45
(includes a negative impact of $0.16 per share from MEGA Brands
acquisition and integration costs3 and a tax benefit
of $0.13 per share) vs. prior year earnings per share of $2.58
(included a tax benefit of $0.09).
Capital Deployment
- Board declared 2015 first quarter
cash dividend of $0.38 per share, which is flat compared to the
first quarter of 2014; and
- For the 2014 fourth quarter, the
Company repurchased 1.6 million shares of its common stock at a
cost of approximately $49 million, and for the year the Company
repurchased 4.9 million shares of its common stock at a cost of
approximately $177 million.
Mattel, Inc. (NASDAQ: MAT) today reported 2014 fourth quarter
and full year financial results. For the quarter, the Company
reported net income of $149.9 million, or $0.44 per share, which
includes a negative impact of $0.05 per share from MEGA Brands
integration costs2 and a negative tax impact of $0.03 per share,
compared to last year’s fourth quarter net income of $369.2
million, or $1.07 per share. For the year, the Company reported net
income of $498.9 million, or $1.45 per share, which includes a
negative impact of $0.16 per share from MEGA Brands acquisition and
integration costs3 and a tax benefit of $0.13 per share, compared
to last year’s net income of $903.9 million, or $2.58 per share,
which included a tax benefit of $0.09.
"We are disappointed with our results but moving forward with a
heightened sense of urgency to make the necessary changes to
enhance our brand relevance and improve our execution,” said
Christopher Sinclair, Mattel Chairman and Interim CEO. "Over the
next few months, I will be focused on working with the management
team to thoroughly evaluate the business in order to identify how
we can improve our top-line performance and drive profitability. I
am confident in our ability to revitalize our brands and our
business and fully committed to delivering greater value for
shareholders.”
Financial Overview
For the quarter, net sales were $1.99 billion, down 6% compared
to $2.11 billion last year, with an unfavorable impact from changes
in currency exchange rates of 3 percentage points. On a regional
basis, fourth quarter gross sales decreased 2% in the North
American Region, which consists of the United States, Canada and
American Girl, with no impact from changes in currency exchange
rates. For the International Region, gross sales decreased 5%,
including an unfavorable impact from changes in currency exchange
rates of 8 percentage points. Operating income for the quarter was
$237.0 million, compared to prior year’s operating income for the
quarter of $479.3 million.
For the year, net sales were $6.02 billion, down 7% compared to
$6.48 billion last year, with an unfavorable impact from changes in
currency exchange rates of 2 percentage points. On a regional
basis, full year gross sales decreased 5% in the North American
Region, with no impact from changes in currency exchange rates. For
the International Region, gross sales decreased 7%, including an
unfavorable impact from changes in currency exchange rates of 4
percentage points. Operating income for the year was $653.7
million, compared to prior year’s operating income of $1.17
billion.
The Company’s debt-to-total capital ratio as of December 31,
2014 was 41.6%.
For the year, net cash flows from operating activities were
approximately $889 million, an increase of $191 million compared
with approximately $698 million in 2013. The increase was primarily
driven by reductions in working capital, partially offset by lower
net income. Cash flows used for investing activities were
approximately $709 million, an increase of $467 million, compared
to approximately $242 million in 2013, driven primarily by the
acquisition of MEGA Brands. Cash flows used for financing
activities and other were approximately $248 million, a decrease of
$504 million, compared with approximately $752 million in 2013. The
change was primarily due to lower repayments of long-term debt and
lower share repurchases, partially offset by lower proceeds from
stock option exercises.
Capital Deployment
The Board of Directors declared a first quarter cash dividend of
$0.38 per share, which is flat compared to the first quarter of
2014. The dividend will be payable on March 6, 2015 to stockholders
of record on February 19, 2015.
For 2014, a portion of Mattel’s dividend will be classified as a
non-dividend distribution for U.S. federal income tax purposes.
Although Mattel has significant retained earnings, these earnings
do not constitute “earnings and profits” as defined in U.S. Federal
tax rules. Non-dividend distributions are considered a return of
capital and are generally not taxable; however, the recipient must
adjust their cost basis to reflect the distribution. For 2014,
approximately 80% of the distribution is a non-dividend
distribution. Please visit http://investor.shareholder.com/mattel
for more information.
In the fourth quarter 2014, the Company repurchased 1.6 million
shares of its common stock at a cost of approximately $49 million,
and, for the year, the Company repurchased 4.9 million shares of
its common stock at a cost of approximately $177 million.
Sales by Brand
Mattel Girls and Boys Brands
For the fourth quarter, worldwide gross sales for Mattel Girls
& Boys Brands were $1.23 billion, down 9% versus the prior
year. Worldwide gross sales for the Barbie brand were down 12%.
Worldwide gross sales for Other Girls brands were down 3%.
Worldwide gross sales for the Wheels category, which includes the
Hot Wheels and Matchbox® brands, were up 2%. Worldwide gross sales
for the Entertainment business, which includes Radica® and Games,
were down 21%.
For the year, worldwide gross sales for Mattel Girls & Boys
Brands were $3.90 billion, down 10% versus the prior year.
Worldwide gross sales for the Barbie brand were down 16%. Worldwide
gross sales for Other Girls brands were down 2%. Worldwide gross
sales for the Wheels category, which includes the Hot Wheels and
Matchbox® brands, were up 1%. Worldwide gross sales for the
Entertainment business, which includes Radica® and Games, were down
20%.
Fisher-Price Brands
Fourth quarter worldwide gross sales for Fisher-Price Brands,
which includes the Fisher-Price Core, Fisher-Price Friends and
Power Wheels® brands, were $578.9 million, down 11% versus the
prior year. For the year, worldwide gross sales for Fisher-Price
Brands were $1.84 billion, down 13% versus the prior year.
American Girl Brands
Fourth quarter gross sales for American Girl Brands, which
offers American Girl-branded products directly to consumers, were
$318.3 million, down 4% versus the prior year. For the year, gross
sales for American Girl Brands were $620.7 million, down 2% versus
the prior year.
Construction and Arts & Crafts Brands
Fourth quarter gross sales for Construction and Arts &
Crafts Brands, which includes the MEGA BLOKS® and RoseArt® brands,
were $130.0 million. For the year, gross sales for Construction and
Arts & Crafts Brands were $315.0 million. Mattel acquired MEGA
Brands Inc. on April 30, 2014.
Live Webcast
Mattel will webcast its 2014 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” section of
the Company's corporate website: http://corporate.mattel.com. To
listen to the live call, log in 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, February 6, 2015, and may be
accessed by dialing +1-404-537-3406. The passcode is 61570566.
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-heading “Financial
Information.”
About Mattel
The Mattel family of companies (NASDAQ: MAT) is the worldwide
leader in the design, manufacture and marketing of toys and family
products. Mattel’s portfolio of best-selling brands includes
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®,
MEGA® Brands, including MEGA BLOKS® and RoseArt®, as well as a wide
array of entertainment-inspired toy lines. In 2013, Mattel was
named one of the "World's Most Ethical Companies" by Ethisphere
Magazine and in 2014 ranked No. 5 on Corporate Responsibility
Magazine's "100 Best Corporate Citizens" list. With worldwide
headquarters in El Segundo, Calif., Mattel’s companies employ
31,000 people in 40 countries and territories and sell 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.
Forward-looking Statements
This press release contains forward-looking statements on a
variety of matters. 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, 2013 and Mattel’s Quarterly Reports
on Form 10-Q for fiscal year 2014, 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 United States, Canada and American Girl.2
Consists of integration costs, including amortization of acquired
intangible assets.3 Consists of acquisition and integration costs,
including amortization of acquired intangible assets and inventory
fair value markup above cost.
MAT-FIN
MATTEL, INC.
AND SUBSIDIARIES EXHIBIT I CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) For the Three
Months Ended December 31, For the Year Ended December
31,
(In millions,
except per share and
2014 2013 Yr / Yr 2014 2013
Yr / Yr
percentage
information)
$ Amt % Net Sales $ Amt % Net Sales
% Change $ Amt % Net Sales $ Amt %
Net Sales % Change Net Sales $ 1,994.0 $
2,113.2 -6 % $ 6,023.8 $ 6,484.9 -7 % Cost of sales 988.2
49.6 % 962.4 45.5 % 3 % 3,022.8 50.2 % 3,006.0
46.4 % 1 %
Gross Profit 1,005.8 50.4 % 1,150.8 54.5 %
-13 % 3,001.0 49.8 % 3,478.9 53.6 % -14 % Advertising and promotion
expenses 323.8 16.2 % 282.9 13.4 % 14 % 733.2 12.2 % 750.2 11.6 %
-2 % Other selling and administrative expenses 445.0 22.3 %
388.6 18.4 % 14 % 1,614.1 26.8 % 1,560.6 24.1
% 3 %
Operating Income 237.0 11.9 % 479.3 22.7 % -51
% 653.7 10.9 % 1,168.1 18.0 % -44 % Interest expense 22.1 1.1 %
20.3 1.0 % 8 % 79.3 1.3 % 78.5 1.2 % 1 % Interest (income) (2.1 )
-0.1 % (1.5 ) -0.1 % 46 % (7.4 ) -0.1 % (5.6 ) -0.1 % 33 % Other
non-operating expense (income), net 0.5 (1.4 ) (5.1 ) (3.9 )
Income Before Income Taxes 216.5 10.9 % 461.9 21.9 %
-53 % 586.9 9.7 % 1,099.1 16.9 % -47 % Provision for income taxes
66.6 92.7 88.0 195.2
Net
Income $ 149.9 7.5 % $ 369.2 17.5 % -59 % $ 498.9
8.3 % $ 903.9 13.9 % -45 %
Net Income Per
Common Share - Basic $ 0.44 $ 1.08 $ 1.46
$ 2.61 Weighted average number of common
shares 338.4 339.4 339.0 343.4
Net Income Per Common Share - Diluted $ 0.44 $
1.07 $ 1.45 $ 2.58
Weighted average number of common and
potential common shares
339.5 343.2 340.8 347.5
MATTEL, INC.
AND SUBSIDIARIES EXHIBIT II WORLDWIDE GROSS
SALES INFORMATION (Unaudited) Three Months Ended
December 31, Year Ended December 31,
(In millions,
except percentage information)
2014 2013 2014 2013
Worldwide Gross
Sales:
Mattel Girls & Boys Brands $ 1,228.1 $ 1,350.6 $ 3,897.2 $
4,315.9
% Change
-9 % -4 % -10 % 3 % Pos./(Neg.) Impact of Currency (in % pts) -5 0
-2 -1 Fisher-Price Brands 578.9 647.4 1,842.6 2,120.7
% Change
-11 % -13 % -13 % -6 % Pos./(Neg.) Impact of Currency (in % pts) -4
0 -1 -1 American Girl Brands 318.3 331.6 620.7 632.5
% Change
-4 % 3 % -2 % 11 % Construction and Arts & Crafts Brands
130.0 - 315.0 - Other 18.1 19.3
42.9 48.7 Gross Sales $ 2,273.4
$ 2,348.9 $ 6,718.4 $ 7,117.8
% Change
-3 % -6 % -6 % 1 % Pos./(Neg.) Impact of Currency (in % pts) -4 -1
-2 0
Reconciliation of
Non-GAAP to GAAP Financial Measure:
Gross Sales $ 2,273.4 $ 2,348.9 $ 6,718.4 $ 7,117.8 Sales
Adjustments (279.4 ) (235.7 ) (694.6 )
(632.9 ) Net Sales $ 1,994.0 $ 2,113.2 $
6,023.8 $ 6,484.9
% Change
-6 % -6 % -7 % 1 % Pos./(Neg.) Impact of Currency (in % pts) -3 0
-2 -1
MATTEL, INC. AND SUBSIDIARIES
EXHIBIT III
CONDENSED CONSOLIDATED BALANCE SHEETS At
December 31, 2014 2013
(In
millions)
(Unaudited) Assets Cash and equivalents
$ 971.7 $ 1,039.2 Accounts receivable, net 1,093.2 1,260.1
Inventories 562.0 568.8 Prepaid expenses and other current assets
559.1 509.9 Total current assets
3,186.0 3,378.0 Property, plant, and equipment, net 737.9
659.3 Other noncurrent assets 2,798.1 2,402.3
Total Assets $ 6,722.0 $ 6,439.6
Liabilities and Stockholders' Equity
Short-term borrowings $ - $ 4.3 Accounts payable and accrued
liabilities 1,070.1 1,015.4 Income taxes payable 18.8
27.7 Total current liabilities 1,088.9 1,047.4
Long-term debt 2,100.0 1,600.0 Other noncurrent liabilities 584.0
540.6 Stockholders' equity 2,949.1 3,251.6
Total Liabilities and Stockholders' Equity $
6,722.0 $ 6,439.6
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA
(Unaudited) At December 31,
(In millions,
except days and percentage information)
2014 2013
Key Balance Sheet
Data:
Accounts receivable, net days of sales outstanding (DSO) 49 54
Total debt outstanding $ 2,100.0 $ 1,604.3 Total debt-to-total
capital ratio 41.6 % 33.0 %
Year Ended December 31,
(In
millions)
2014(a)
2013
Condensed Cash
Flow Data:
Cash flows from operating activities $ 889 $ 698 Cash flows
(used for) investing activities (709 ) (242 ) Cash flows
(used for) financing activities and other (248 ) (752
) Decrease in cash and equivalents $ (68 ) $ (296 )
(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, 2014.
Mattel, Inc.News MediaAlex Clark,
310-252-6397alex.clark@mattel.comorSecurities AnalystsDrew
Vollero, 310-252-2703drew.vollero@mattel.com
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