Item 7.01
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Regulation FD Disclosure
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On December 9, 2017, Mattel, Inc. (Mattel or
the Company) issued a press release announcing that it intends to offer senior unsecured notes in a private offering (the Offering), subject to market conditions and other factors, a copy of which is furnished as Exhibit 99.1
hereto. This exhibit is incorporated herein by reference. The notes are being sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and to
non-U.S.
persons outside the United States under Regulation S under the Securities Act.
Additionally,
Mattel intends to replace its revolving credit facility with a new $1.6 billion senior secured revolving credit facility that will be secured by certain of its accounts receivable, inventory and other assets.
Exhibit 99.2 hereto contains information that has not been previously reported or modifies previously reported information and is excerpted
from the preliminary offering memorandum that is being disseminated in connection with the Offering. This exhibit is incorporated herein by reference.
This Current Report on Form
8-K,
including the information contained in Exhibits 99.1 and 99.2, does
not constitute an offer to sell, or the solicitation of an offer to buy, any securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.
This Current Report on Form
8-K,
including Exhibits 99.1 and 99.2, contains a number of
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as anticipates, expects, could, may, intends, plans,
confident that and believes, among others, generally identify forward-looking statements. 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 Mattels control, could cause actual future results to differ materially from those projected in the forward-looking statements. Specific factors
that might cause such a difference include, but are not limited to: (i) Mattels ability to design, develop, produce, manufacture, source and ship products on a timely and cost-effective basis, as well as interest in and purchase of those
products by retail customers and consumers in quantities and at prices that will be sufficient to profitably recover Mattels costs; (ii) downturns in economic conditions affecting Mattels markets which can negatively impact retail
customers and consumers, and which can result in lower employment levels, lower consumer disposable income and spending, including lower spending on purchases of Mattels products; (iii) other factors which can lower discretionary consumer
spending, such as higher costs for fuel and food, drops in the value of homes or other consumer assets, and high levels of consumer debt; (iv) potential difficulties or delays Mattel may experience in implementing cost savings and efficiency
enhancing initiatives; (v) other economic and public health conditions or regulatory changes in the markets in which Mattel and its customers and suppliers operate, which could create delays or increase Mattels costs, such as higher
commodity prices, labor costs or transportation costs, or outbreaks of disease; (vi) currency fluctuations, including movements in foreign exchange rates, which can lower Mattels net revenues and earnings, and significantly impact
Mattels costs; (vii) the concentration of the Mattels customers, potentially increasing the negative impact to Mattel of difficulties experienced by any of Mattels customers, including the bankruptcy of Toys R Us,
Inc., or changes in their purchasing or selling patterns; (viii) the future willingness of licensors of entertainment properties for which Mattel currently has licenses or would seek to have licenses in the future to license those products to
Mattel; (ix) the inventory policies of Mattels retail customers, including retailers potential decisions to lower their inventories, even if it results in lost sales, as well as the concentration of Mattels revenues in the
second half of the year, which coupled with reliance by retailers on quick response inventory management techniques increases the risk of underproduction of popular items, overproduction of less popular items and failure to achieve compressed
shipping schedules; (x) the increased costs of developing more sophisticated digital and smart technology products, and the corresponding supply chain and design challenges associated with such products; (xi) work disruptions, which may
impact Mattels ability to manufacture or deliver product in a timely and cost-effective manner; (xii) the bankruptcy of Toys R Us, Inc. or other of Mattels significant retailers, or the general lack of success of one of
Mattels significant retailers which could negatively impact Mattels revenues or bad debt exposure; (xiii) the impact of competition on revenues, margins and other aspects of Mattels business, including the ability to offer
products which consumers choose to buy instead of competitive products, the ability to secure, maintain and renew popular licenses and the ability to attract and retain talented employees; (xiv) the risk of product recalls or product liability
suits and costs associated with product safety regulations; (xv) changes in laws or regulations in the United States and/or in other major markets in which Mattel operates, including, without limitation, with respect to taxes, tariffs or
product safety, which may increase Mattels product costs and other costs of doing business, and reduce Mattels earnings; (xvi) failure to realize the planned benefits from any investments or acquisitions made by Mattel; (xvii)
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the impact of other market conditions, third party actions or approvals and competition which could reduce demand for Mattels products or delay or increase the cost of implementation of
Mattels programs or alter Mattels actions and reduce actual results; (xviii) changes in financing markets or the inability of Mattel to obtain financing on attractive terms (xix) the impact of litigation or arbitration
decisions or settlement actions; (xx) the closing of this private offering of notes and / or Mattels new senior secured credit facilities; and (xxi) other risks and uncertainties as may be described in Mattels 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, 2016, and Mattels
Quarterly Reports on Form
10-Q
for fiscal year 2017, as well as in Mattels other public statements. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so.
Exhibit 99.2 includes certain
non-GAAP
financial measures within the meaning of Regulation G
promulgated by the Securities and Exchange Commission. The
non-GAAP
financial measures that Mattel uses in Exhibit 99.2 include EBITDA and Adjusted EBITDA. Mattel uses these metrics to analyze its continuing
operations and to monitor, assess and identify meaningful trends in its operating and financial performance, and each is discussed in detail therein. Mattel believes that the disclosure of
non-GAAP
financial
measures provides useful supplemental information to investors to be able to better evaluate ongoing business performance and certain components of the Companys results. These measures are not, and should not be viewed as, substitutes for GAAP
financial measures. Reconciliations of the
non-GAAP
financial measures to the most directly comparable GAAP financial measures are included in Exhibit 99.2.
In accordance with General Instruction B.2 of Form
8-K,
the information in this Item 7.01, including
Exhibits 99.1 and 99.2, shall not be deemed to be filed for purposes of Section 18 of the Securities and 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, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.