EL SEGUNDO, Calif.,
April 26, 2018 /PRNewswire/
-- Mattel, Inc. (NASDAQ: MAT) today reported first quarter
2018 financial results.
"Mattel delivered positive sales growth in the first quarter,
excluding the impact of the Toys "R" Us liquidation," said Ynon
Kreiz, incoming CEO of Mattel. "And we continue to see strong
momentum in our key Power Brands, with Barbie and Hot Wheels each
up double-digits. While Toys "R" Us will present a near term
challenge, our transformation plan remains our focus, as we work to
deliver improved profitability and return Mattel to its leadership
position as a high-performing toy company."
"Our first quarter results reflect continued progress on
executing our transformation plan," said Joseph Euteneuer, CFO of Mattel. "In addition,
we are tightly managing our working capital, and making disciplined
investments in our business."
For the first quarter of 2018, net sales, which included a
$30 million net sales reversal, were
down 4% as reported, and down 7% in constant currency, versus the
prior year's first quarter. Gross sales were down 2% as reported,
and down 5% in constant currency. Adjusted gross sales were up 2%,
excluding the $30 million gross sales
reversal. Reported operating loss was $276.6
million, and adjusted operating loss was $160.5 million. Reported loss per share was
$0.90 and adjusted loss per share was
$0.60.
POS Summary1
For the quarter,
consumer takeaway for Barbie and Hot Wheels was up double digits;
Fisher-Price® and Thomas & Friends® were down mid-single
digits.
Financial Overview
For the first quarter, net sales
in the North America segment,
which included a $27 million net
sales reversal, decreased by 5% as reported and in constant
currency, versus the prior year's first quarter. Gross sales in the
North America segment decreased by
4% as reported and in constant currency, primarily driven by sales
reversals resulting from the Toys "R" Us ("TRU") liquidation,
partially offset by higher sales of Barbie and Hot Wheels. Adjusted
gross sales in the North America
segment were up 4%, excluding a $27
million gross sales reversal.
In the International segment, net sales increased by 2% as
reported, and decreased by 5% in constant currency; gross sales in
the International segment increased 5% as reported, and decreased
by 3% in constant currency, primarily driven by higher sales of
Barbie and Hot Wheels.
Net sales for the American Girl® segment decreased by 21% as
reported and in constant currency; gross sales for the American
Girl segment decreased by 22% as reported and in constant currency,
primarily driven by lower sales across channels.
Reported gross margin decreased by 700 basis points, primarily
driven by higher product costs as a result of higher materials
costs, the impact of the TRU liquidation, higher freight and
distribution costs, and higher obsolescence, partially offset by
favorable mix. Adjusted gross margin declined by 380 basis points,
primarily driven by higher product costs as a result of higher
materials costs, higher freight and distribution costs, and higher
obsolescence, partially offset by favorable mix. Reported other
selling and administrative expenses increased by $93.8 million, primarily driven by bad debt
expense related to the TRU liquidation and severance and
restructuring charges. Adjusted other selling and administrative
expenses for the quarter increased $15.1
million, primarily driven by foreign exchange, higher
employee-related expenses, and higher intangible amortization
expense, partially offset by Structural Simplification savings.
Reported operating loss for the quarter was $276.6 million, compared to reported operating
loss of $125.6 million in the prior
year's first quarter. Adjusted operating loss for the quarter was
$160.5 million, compared to adjusted
operating loss of $120.7 million in
the prior year's first quarter.
For the quarter, net cash flows used for operating activities
were approximately $274 million, a
decrease of $36 million compared to
the prior year's first quarter, primarily driven by lower working
capital usage, partially offset by a higher net loss, excluding the
impact of non-cash charges. Cash flows used for investing
activities were approximately $31
million in the quarter, a decrease of approximately
$14 million versus the prior year's
first quarter, primarily driven by lower capital spending. Cash
flows used for financing activities and other were approximately
$248 million in the quarter, an
increase of $115 million versus the
prior year's first quarter, primarily driven by the $250 million repayment of senior notes which
matured in the first quarter of 2018, partially offset by
$130 million of dividend payments
during the first quarter of 2017.
As of March 31, 2018, the
Company's debt-to-total capital ratio was 74.5%.
Sales by Brand
Power Brands
For the first quarter, worldwide gross sales for Mattel Power Brands were $552.9 million, up 2% as reported, and down 1% in
constant currency, versus the prior year's first quarter. Worldwide
gross sales for the Barbie brand were up 24% as reported, and up
18% in constant currency, versus the prior year's first quarter,
primarily driven by positive POS momentum and the successful
introduction of new product lines. Worldwide gross sales for the
Hot Wheels brand were up 15% as reported, and up 11% in constant
currency, versus the prior year's first quarter, primarily driven
by higher sales of die cast and tracks and playsets. Worldwide
gross sales for the Fisher-Price and Thomas & Friends brands
were down 8% as reported, and down 12% in constant currency,
primarily driven by lower sales of Fisher-Price Baby and Thomas
& Friends products. Worldwide gross sales for the American Girl
brand were down 21% as reported, and down 22% in constant currency,
due to lower sales across channels.
Toy Box
For the first quarter, worldwide gross sales for Mattel Toy Box
brands, which includes Owned Brands and Partner Brands, were
$247.2 million, down 10% as reported,
and down 14% in constant currency, versus the prior year's first
quarter. Worldwide gross sales for Owned Brands were down 6% as
reported, and down 10% versus the prior year's first quarter,
primarily driven by lower sales of Monster High® and MEGA™,
partially offset by sales of Enchantimals™. Worldwide gross sales
for Partner Brands were down 14% as reported, and down 17% in
constant currency, primarily driven by lower sales of vehicles and
DC Super Hero Girls™, partially offset by initial sales of Jurassic
World™.
CEO Announcement
As previously announced, the
Board of Directors has named Ynon Kreiz,
a Mattel director since June 2017, as Chief
Executive Officer effective today, April 26, 2018. Margo Georgiadis, who
became Mattel's CEO in February 2017, informed the
Board of her decision to step down from her executive and Board
roles to pursue a new opportunity. Ms. Georgiadis will serve
in an advisory role at Mattel until May 10,
2018 to ensure a smooth transition.
As previously announced, Mr. Kreiz also will become Chairman of
the Board, effective upon his election at the 2018 Annual Meeting
of Stockholders, scheduled for May 17, 2018. Mr. Kreiz
succeeds Christopher A. Sinclair, the Executive Chairman and
former CEO of Mattel who, on June 13, 2017,
announced his intention to retire at the 2018 Annual Meeting.
Conference Call and Live Webcast
At 5:00 p.m. (Eastern Time) today, Mattel will host
a conference call with investors and financial analysts to discuss
its 2018 first quarter financial results. The conference call will
be webcast on Mattel's Investor Relations
website, http://investor.shareholder.com/mattel. To listen to
the live call, log on to the website at least 10 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 approximately two hours
after the completion of the live call. A telephonic replay of the
call will be available beginning at 8:30
p.m. Eastern time the evening of the call until Thursday, May 3, 2018, and may be accessed by
dialing +1-404-537-3406. The passcode is 1389911.
Forward-Looking Statements
This press release
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," "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
our 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) Mattel's 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 Mattel's
costs; (ii) downturns in economic conditions affecting Mattel's
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 Mattel's 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 Mattel's 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 Mattel's net revenues and earnings, and
significantly impact Mattel's costs; (vii) the concentration of
Mattel's customers, potentially increasing the negative impact to
Mattel of difficulties experienced by any of Mattel's 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
Mattel's retail customers, including retailers' potential decisions
to lower their inventories, even if it results in lost sales, as
well as the concentration of Mattel's 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 Mattel's ability to manufacture or deliver product
in a timely and cost-effective manner; (xii) the bankruptcy of Toys
"R" Us, Inc. or other of Mattel's significant retailers, or the
general lack of success of one of Mattel's significant retailers
which could negatively impact Mattel's revenues or bad debt
exposure; (xiii) the impact of competition on revenues, margins and
other aspects of Mattel's business, including the ability to offer
products which consumers choose to buy instead of competitor's
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 Mattel's product costs and other costs of doing business,
and reduce Mattel's earnings, (xvi) failure to realize the planned
benefits from any investments or acquisitions made by Mattel,
(xvii) the impact of other market conditions, third party actions
or approvals and competition which could reduce demand for Mattel's
products or delay or increase the cost of implementation of
Mattel's programs or alter Mattel's 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; and (xx)
other risks and uncertainties as may be described in Mattel'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, 2017. Mattel does not update forward-looking statements
and expressly disclaims any obligation to do so.
Non-GAAP Financial Measures
To supplement our
financial results presented in accordance with generally accepted
accounting principles in the United
States ("GAAP"), Mattel presents 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 this earnings release include gross sales,
adjusted net sales, adjusted gross profit, adjusted gross margin,
adjusted other selling and administrative expenses, adjusted
operating income (loss), adjusted earnings (loss) per share,
earnings before interest expense, taxes, depreciation and
amortization ("EBITDA"), adjusted EBITDA, and constant currency.
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 below.
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 Company's 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 attached to this earnings release as
exhibits and to our earnings slide presentation as an appendix.
This earnings release and our earnings slide presentation are
available on Mattel's Investor Relations
website, http://investor.shareholder.com/mattel, under the
subheading "Financial Information – Earnings Releases."
Gross sales
Gross sales represent sales to customers,
excluding the impact of sales adjustments. Net sales, as reported,
include the impact of sales adjustments, such as trade discounts
and other allowances. Mattel presents changes in gross sales as a
metric for comparing its aggregate, brand and geographic results to
highlight significant trends in Mattel's business. Changes in gross
sales are discussed because, while Mattel records the details of
such sales adjustments in its financial accounting systems at the
time of sale, such sales adjustments are generally not associated
with brands and individual products, making net sales less
meaningful. Since sales adjustments are determined by customer
rather than at the brand level, Mattel believes that the disclosure
of gross sales by brand is useful supplemental information for
investors to be able to assess the performance of its underlying
brands (e.g., Barbie) and also enhances their ability to compare
sales trends over time.
Adjusted gross sales
Adjusted gross sales represents
Mattel's reported gross sales, adjusted to exclude the gross sales
reversal related to the Toys "R" Us bankruptcy and liquidation.
Adjusted gross sales is presented to provide additional perspective
on underlying trends in Mattel's core gross sales, which Mattel
believes is useful supplemental information for investors to be
able to gauge and compare Mattel's current business performance
from one period to another.
Adjusted net sales
Adjusted net sales represents
Mattel's reported net sales, adjusted to exclude the net sales
reversal related to the Toys "R" Us bankruptcy and liquidation.
Adjusted net sales is presented to provide additional perspective
on underlying trends in Mattel's core net sales, which Mattel
believes is useful supplemental information for investors to be
able to gauge and compare Mattel's current business performance
from one period to another.
Adjusted gross profit and adjusted gross margin
Adjusted gross profit and adjusted gross margin represent reported
gross profit and reported gross margin, respectively, adjusted to
exclude the net sales reversal related to the Toys "R" Us
bankruptcy and liquidation and asset impairments. Adjusted gross
margin represents Mattel's adjusted gross profit, as a percentage
of adjusted net sales. Adjusted gross profit and adjusted gross
margin are presented to provide additional perspective on
underlying trends in Mattel's core gross profit and gross margin,
which Mattel believes is useful supplemental information for
investors to be able to gauge and compare Mattel's current business
performance from one period to another.
Adjusted other selling and administrative expenses
Adjusted other selling and administrative expenses represents
Mattel's reported other selling and administrative expenses,
adjusted to exclude the impact of bad debt expense resulting from
the Toys "R" Us liquidation, asset impairments, non-recurring
executive compensation, severance and restructuring expenses, and
sale of assets, which are not part of Mattel's core business.
Adjusted other selling and administrative expenses is presented to
provide additional perspective on underlying trends in Mattel's
core other selling and administrative expenses, which Mattel
believes is useful supplemental information for investors to be
able to gauge and compare Mattel's current business performance
from one period to another.
Adjusted operating income (loss)
Adjusted operating
income (loss) represents Mattel's reported operating loss, adjusted
to exclude the impact of the net sales reversal and bad debt
expense resulting from the Toys "R" Us bankruptcy and liquidation,
asset impairments, non-recurring executive compensation, severance
and restructuring expenses, and sale of assets, which are not part
of Mattel's core business. Adjusted operating income (loss) is
presented to provide additional perspective on underlying trends in
Mattel's core operating results, which Mattel believes is useful
supplemental information for investors to be able to gauge and
compare Mattel's current business performance from one period to
another.
Adjusted earnings (loss) per share
Adjusted earnings
(loss) per share represents Mattel's reported diluted earnings
(loss) per common share, adjusted to exclude the impact of the net
sales reversal and bad debt expense resulting from the Toys "R" Us
bankruptcy and liquidation, asset impairments, non-recurring
executive compensation, severance and restructuring expenses, and
sale of assets, which are not part of Mattel's core business. The
aggregate tax effect of the adjustments is calculated by tax
effecting the adjustments by the current effective tax rate, and
dividing by the reported weighted average number of common and
potential common shares. Adjusted earnings (loss) per share is
presented to provide additional perspective on underlying trends in
Mattel's core business. Mattel believes it is useful supplemental
information for investors to gauge and compare Mattel's current
earnings results from one period to another. Adjusted earnings
(loss) per share is a performance measure and should not be used as
a measure of liquidity.
EBITDA and Adjusted EBITDA
EBITDA represents Mattel's
net income (loss), adjusted to exclude the impact of interest
expense, taxes, depreciation and amortization. Adjusted EBITDA
represents EBITDA adjusted to exclude the impact of the net sales
reversal and bad debt expense resulting from the Toys "R" Us
bankruptcy and liquidation, asset impairments, non-recurring
executive compensation, severance and restructuring expenses, and
sale of assets, which are not part of Mattel's core business.
Mattel believes EBITDA and Adjusted EBITDA are useful supplemental
information for investors to gauge and compare Mattel's business
performance to other companies in our industry with similar capital
structures. The presentation of Adjusted EBITDA differs from how we
will calculate EBITDA for purposes of covenant compliance under the
indenture governing our 6.75% senior notes due 2025 and the
syndicated facility agreement governing our senior secured
revolving credit facilities. Because of these limitations, EBITDA
and Adjusted EBITDA should not be considered as measures of
discretionary cash available to us to invest in the growth of our
business. As a result, we rely primarily on our GAAP results and
use EBITDA and Adjusted EBITDA only supplementally.
Constant currency
Percentage changes in results
expressed in constant currency are presented excluding the impact
from changes in currency exchange rates. To present this
information, Mattel calculates constant currency information by
translating current period and prior period results for entities
reporting in currencies other than the US dollar using consistent
exchange rates. The consistent exchange rates are determined by
Mattel at the beginning of each year and are applied consistently
during the year. They are generally different from the actual
exchange rates in effect during the current or prior period due to
volatility in actual foreign exchange rates. Mattel considers
whether any changes to the constant currency rates are appropriate
at the beginning of each year. The exchange rates used for
these constant currency calculations are generally based on prior
year actual exchange rates. The difference between the current
period and prior period results using the consistent exchange rates
reflects the changes in the underlying performance results,
excluding the impact from changes in currency exchange rates.
Mattel analyzes constant currency results to provide additional
perspective on changes in underlying trends in Mattel's operating
performance. Mattel believes that the disclosure of the percentage
change in constant currency is useful supplemental information for
investors to be able to gauge Mattel's current business performance
and the longer term strength of its overall business since foreign
currency changes could potentially mask underlying sales trends.
The disclosure of the percentage change in constant currency
enhances investor's ability to compare financial results from one
period to another.
About Mattel
Mattel is a global learning, development
and play company that inspires the next generation of kids to shape
a brighter tomorrow. Through our portfolio of iconic consumer
brands, including American Girl®, Barbie®, Fisher-Price®, Hot
Wheels® and Thomas & Friends®, we create systems of play,
content and experiences that help kids unlock their full potential.
Mattel also creates inspiring and innovative products in
collaboration with leading entertainment and technology companies
as well as other partners. With a global workforce of approximately
28,000 people, Mattel operates in 40 countries and territories and
sells products in more than 150 nations. Visit us online at
www.mattel.com.
Contacts:
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News
Media
Alex Clark
310-252-6397
alex.clark@mattel.com
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Securities
Analysts
Whitney
Steininger
310-252-2703
whitney.steininger@mattel.com
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MAT-FIN MAT-CORP
1 Mattel internal analysis, at wholesale.
MATTEL, INC. AND
SUBSIDIARIES
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EXHIBIT
I
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CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)1
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For the Three
Months Ended March 31,
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Yr /
Yr
%
Change
as
Reported
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Yr /
Yr
%
Change
in
Constant
Currency
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2018
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20172
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(In millions,
except per share and percentage
information)
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$
Amt
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% Net
Sales
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$
Amt
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% Net
Sales
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Net
Sales
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$
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708.4
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$
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735.6
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-4%
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-7%
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Cost of
sales
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489.5
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69.1%
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456.8
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62.1%
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7%
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Gross
Profit
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218.9
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30.9%
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278.8
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37.9%
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-21%
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-26%
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Advertising and promotion expenses
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70.8
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10.0%
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73.6
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10.0%
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-4%
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Other
selling and administrative expenses
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424.6
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59.9%
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330.8
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45.0%
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28%
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Operating
Loss
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(276.6)
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-39.0%
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(125.6)
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-17.1%
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120%
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121%
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Interest
expense
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41.1
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5.8%
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22.0
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3.0%
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86%
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Interest
(income)
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(3.1)
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-0.4%
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(2.5)
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-0.3%
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28%
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Other
non-operating (income) expense, net
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(0.6)
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0.6
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Loss Before Income
Taxes
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(313.9)
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-44.3%
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(145.7)
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-19.8%
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115%
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117%
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Benefit
for income taxes
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(2.7)
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(32.5)
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Net
Loss
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$
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(311.3)
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-43.9%
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$
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(113.2)
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-15.4%
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175%
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Net Loss Per
Common Share - Basic
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$
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(0.90)
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$
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(0.33)
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Weighted
average number of common shares
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344.4
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342.9
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Net Loss Per
Common Share - Diluted
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$
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(0.90)
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$
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(0.33)
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Weighted
average number of common and potential common
shares
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344.4
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342.9
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1 Amounts
may not foot due to rounding.
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2Other
selling and administrative expenses, operating loss, and other
non-operating (income), net have been retrospectively restated to
reflect the adoption of Accounting Standards Update 2017-07,
Improving the Presentation of Net Periodic Pension Cost and Net
Periodic Postretirement Benefit Cost.
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MATTEL, INC. AND
SUBSIDIARIES
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EXHIBIT
II
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CONDENSED
CONSOLIDATED BALANCE SHEETS1
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March
31,
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December
31,
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2018
|
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2017
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2017
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(In
millions)
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(Unaudited)
|
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|
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Assets
|
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Cash and
equivalents
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$
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526.7
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$
|
381.9
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$
|
1,079.2
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Accounts
receivable, net
|
|
676.1
|
|
806.8
|
|
1,128.6
|
Inventories
|
|
677.7
|
|
769.8
|
|
600.7
|
Prepaid
expenses and other current assets
|
|
341.1
|
|
362.9
|
|
303.1
|
Total current
assets
|
|
2,221.7
|
|
2,321.4
|
|
3,111.6
|
|
|
|
|
|
|
|
Property, plant, and equipment, net
|
|
756.7
|
|
783.5
|
|
785.3
|
Other
noncurrent assets
|
|
2,325.7
|
|
2,816.0
|
|
2,341.6
|
Total
Assets
|
$
|
5,304.1
|
$
|
5,920.9
|
$
|
6,238.5
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
Short-term borrowings
|
$
|
-
|
$
|
180.0
|
$
|
-
|
Current
portion of long-term debt
|
|
-
|
|
250.0
|
|
250.0
|
Accounts
payable and accrued liabilities
|
|
977.3
|
|
931.7
|
|
1,364.3
|
Income
taxes payable
|
|
9.9
|
|
9.3
|
|
9.5
|
Total current
liabilities
|
|
987.2
|
|
1,371.0
|
|
1,623.8
|
|
|
|
|
|
|
|
Long-term debt
|
|
2,871.8
|
|
1,885.0
|
|
2,873.1
|
Other
noncurrent liabilities
|
|
462.7
|
|
449.0
|
|
484.1
|
Stockholders' equity
|
|
982.5
|
|
2,215.9
|
|
1,257.5
|
Total Liabilities
and Stockholders' Equity
|
$
|
5,304.1
|
$
|
5,920.9
|
$
|
6,238.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
BALANCE SHEET AND CASH FLOW DATA
(Unaudited)1
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
(In millions,
except days and percentage information)
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Key Balance Sheet
Data:
|
|
|
|
|
|
|
Accounts receivable,
net days of sales outstanding (DSO)
|
|
86
|
|
93
|
|
|
Total debt
outstanding
|
$
|
2,871.8
|
$
|
2,315.0
|
|
|
Total debt-to-total
capital ratio
|
|
74.5%
|
|
51.1%
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
(In
millions)
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Condensed Cash
Flow Data:
|
|
|
|
|
|
|
Cash flows (used for)
operating activities
|
$
|
(274)
|
$
|
(310)
|
|
|
|
|
|
|
|
|
|
Cash flows (used for)
investing activities
|
|
(31)
|
|
(45)
|
|
|
|
|
|
|
|
|
|
Cash flows (used for)
financing activities and other
|
|
(248)
|
|
(133)
|
|
|
|
|
|
|
|
|
|
Decrease in cash and
equivalents
|
$
|
(552)
|
$
|
(488)
|
|
|
1Amounts
may not foot due to rounding.
|
MATTEL, INC. AND
SUBSIDIARIES
|
|
EXHIBIT
III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WORLDWIDE GROSS
SALES INFORMATION (Unaudited)1
|
RECONCILIATION OF
GAAP AND NON-GAAP FINANCIAL MEASURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions,
except percentage information)
|
|
2018
|
|
2017
|
|
% Change
as Reported
|
|
% Change in
Constant
Currency
|
|
|
Worldwide Gross
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
$
708.4
|
|
$
735.6
|
|
-4
|
%
|
-7
|
%
|
|
Sales
Adjustments2
|
|
|
|
91.6
|
|
79.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Sales
|
|
|
|
$
800.0
|
|
$
814.6
|
|
-2
|
%
|
-5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Gross
Sales by Brand:
|
|
|
|
|
|
|
|
|
|
|
|
Power
Brands
|
|
|
|
|
|
|
|
|
|
|
|
|
Barbie
|
|
|
|
|
$
152.7
|
|
$
123.4
|
|
24
|
%
|
18
|
%
|
|
Hot Wheels
|
|
|
|
144.9
|
|
125.7
|
|
15
|
|
11
|
|
|
Fisher-Price and
Thomas & Friends
|
|
|
187.8
|
|
205.0
|
|
-8
|
|
-12
|
|
|
American
Girl
|
|
|
|
67.4
|
|
85.8
|
|
-21
|
|
-22
|
|
|
Total Power
Brands
|
|
|
$
552.9
|
|
$
539.9
|
|
2
|
|
-1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Toy
Box
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned
Brands
|
|
|
|
$
130.7
|
|
$
139.4
|
|
-6
|
|
-10
|
|
|
Partner
Brands
|
|
|
|
116.5
|
|
135.3
|
|
-14
|
|
-17
|
|
|
Total Toy
Box
|
|
|
|
247.2
|
|
274.7
|
|
-10
|
|
-14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross
Sales
|
|
|
|
$
800.0
|
|
$
814.6
|
|
-2
|
%
|
-5
|
%
|
|
1 Amounts
may not foot due to rounding.
|
|
2 Sales
adjustments are not allocated to individual products. As
such, net sales are not presented on a brand level.
|
MATTEL, INC. AND
SUBSIDIARIES
|
|
EXHIBIT
IV
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS SALES BY
SEGMENT (Unaudited)1
|
RECONCILIATION OF
GAAP AND NON-GAAP FINANCIAL MEASURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions,
except percentage information)
|
|
2018
|
|
2017
|
|
% Change
as Reported
|
|
% Change in
Constant
Currency
|
|
|
North America
Segment Gross Sales:
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
$
326.2
|
|
$
342.2
|
|
-5
|
%
|
-5
|
%
|
|
Sales
Adjustments2
|
|
22.2
|
|
20.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Sales
|
|
$
348.4
|
|
$
362.3
|
|
-4
|
%
|
-4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
Segment Gross Sales by Brand:
|
|
|
|
|
|
|
|
|
|
Power
Brands
|
|
|
|
|
|
|
|
|
|
|
Barbie
|
|
|
$
60.5
|
|
$
46.9
|
|
29
|
%
|
29
|
%
|
|
Hot Wheels
|
|
63.5
|
|
53.6
|
|
19
|
|
18
|
|
|
Fisher-Price and
Thomas & Friends
|
|
99.8
|
|
108.9
|
|
-8
|
|
-9
|
|
|
Total Power
Brands
|
|
$
223.9
|
|
$
209.4
|
|
7
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Toy
Box
|
|
|
|
|
|
|
|
|
|
|
|
Owned
Brands
|
|
$
57.1
|
|
$
71.2
|
|
-20
|
|
-20
|
|
|
Partner
Brands
|
|
67.4
|
|
81.7
|
|
-18
|
|
-18
|
|
|
Total Toy
Box
|
|
124.5
|
|
153.0
|
|
-19
|
|
-19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross
Sales
|
|
$
348.4
|
|
$
362.3
|
|
-4
|
%
|
-4
|
%
|
|
1 Amounts
may not foot due to rounding.
|
|
2 Sales
adjustments are not allocated to individual products. As
such, net sales are not presented on a brand level.
|
MATTEL, INC. AND
SUBSIDIARIES
|
|
|
|
|
|
EXHIBIT
V
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS SALES BY
SEGMENT (Unaudited)1
|
|
|
|
RECONCILIATION OF
GAAP AND NON-GAAP FINANCIAL MEASURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions,
except percentage information)
|
2018
|
|
2017
|
|
% Change
as Reported
|
|
% Change in
Constant
Currency
|
|
|
Total
International Segment Gross Sales:
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
$
317.2
|
|
$
311.5
|
|
2
|
%
|
-5
|
%
|
|
Sales
Adjustments
|
|
66.9
|
|
54.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Sales
|
|
$
384.1
|
|
$
366.3
|
|
5
|
%
|
-3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Segment Gross Sales:
|
|
|
|
|
|
|
|
|
|
Europe3
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
$
136.7
|
|
$
131.8
|
|
4
|
%
|
-9
|
%
|
|
Sales
Adjustments2
|
|
|
31.7
|
|
24.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Sales
|
|
$
168.3
|
|
$
156.5
|
|
8
|
%
|
-6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
$
63.4
|
|
$
59.6
|
|
6
|
%
|
5
|
%
|
|
Sales
Adjustments2
|
|
|
11.1
|
|
10.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Sales
|
|
$
74.5
|
|
$
69.8
|
|
7
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Emerging
Markets3
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
$
117.2
|
|
$
120.2
|
|
-2
|
%
|
-6
|
%
|
|
Sales
Adjustments2
|
|
|
24.1
|
|
19.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Sales
|
|
$
141.3
|
|
$
140.0
|
|
1
|
%
|
-3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Segment Gross Sales by Brand:
|
|
|
|
|
|
|
|
|
Power
Brands
|
|
|
|
|
|
|
|
|
|
|
Barbie
|
|
|
$
92.2
|
|
$
76.5
|
|
21
|
%
|
12
|
%
|
|
Hot Wheels
|
|
81.5
|
|
72.1
|
|
13
|
|
6
|
|
|
Fisher-Price and
Thomas & Friends
|
88.0
|
|
96.1
|
|
-9
|
|
-15
|
|
|
Total Power
Brands
|
|
$
261.6
|
|
$
244.7
|
|
7
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Toy
Box
|
|
|
|
|
|
|
|
|
|
|
|
Owned
Brands
|
|
$
73.5
|
|
$
68.0
|
|
8
|
|
-1
|
|
|
Partner
Brands
|
|
49.1
|
|
53.6
|
|
-8
|
|
-16
|
|
|
Total Toy
Box
|
|
122.5
|
|
121.6
|
|
1
|
|
-7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross
Sales
|
|
$
384.1
|
|
$
366.3
|
|
5
|
%
|
-3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Amounts
may not foot due to rounding.
|
|
2 Sales
adjustments are not allocated to individual products. As
such, net sales are not presented on a brand level.
|
|
3 Prior
period balances have been reclassified to conform with current year
presentation. Refer to Note 23, Segment Information, in the
Form 10-Q for additional information.
|
MATTEL, INC. AND
SUBSIDIARIES
|
|
|
EXHIBIT
VI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS SALES BY
SEGMENT (Unaudited)1
|
RECONCILIATION OF
GAAP AND NON-GAAP FINANCIAL MEASURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions,
except percentage information)
|
|
2018
|
|
2017
|
|
% Change
as Reported
|
|
% Change in
Constant
Currency
|
|
|
American Girl
Segment Gross Sales:
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
$
65.0
|
|
$
81.9
|
|
-21
|
%
|
-21
|
%
|
|
Sales
Adjustments2
|
|
2.5
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Sales
|
|
$
67.5
|
|
$
86.0
|
|
-22
|
%
|
-22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Amounts
may not foot due to rounding.
|
|
2 Sales
adjustments are not allocated to individual products. As
such, net sales are not presented on a brand level.
|
MATTEL, INC. AND
SUBSIDIARIES
|
|
|
|
|
EXHIBIT
VII
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
FINANCIAL INFORMATION (Unaudited)1
|
RECONCILIATION OF
GAAP AND NON-GAAP FINANCIAL MEASURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31,
|
|
(In millions,
except per share and percentage information)
|
|
2018
|
|
20172
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
Net Sales, As
Reported
|
|
|
|
$
|
708.4
|
$
|
735.6
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Toys "R" Us Net Sales
Reversal3
|
|
|
|
|
|
29.5
|
|
-
|
|
Net Sales, As
Adjusted
|
|
|
|
$
|
737.9
|
$
|
735.6
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
|
Gross Profit, As
Reported
|
|
|
|
|
$
|
218.9
|
$
|
278.8
|
|
Gross
Margin
|
|
|
|
|
30.9%
|
|
37.9%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Toys "R" Us Net Sales
Reversal3
|
|
|
29.5
|
|
-
|
|
Asset
Impairments
|
|
|
|
3.0
|
|
-
|
|
Gross Profit, As
Adjusted
|
|
|
|
|
$
|
251.4
|
$
|
278.8
|
|
Adjusted Gross
Margin
|
|
|
|
|
34.1%
|
|
37.9%
|
|
|
|
|
|
|
|
|
|
|
|
Other Selling and
Administrative Expenses
|
|
|
|
|
|
Other Selling and
Administrative Expenses, As Reported
|
$
|
424.6
|
$
|
330.8
|
|
% of Net
Sales
|
|
|
|
|
59.9%
|
|
45.0%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Toys "R" Us Bad Debt
Expense3
|
|
|
(57.3)
|
|
-
|
|
Asset
Impairments
|
|
|
|
(1.8)
|
|
-
|
|
Non-recurring
Executive Compensation
|
|
|
(1.0)
|
|
(1.9)
|
|
Severance and
Restructuring Expenses
|
|
|
(24.9)
|
|
(3.0)
|
|
Sale of
Assets
|
|
|
|
|
1.4
|
|
-
|
|
Other Selling and
Administrative Expenses, As Adjusted
|
$
|
341.0
|
$
|
325.9
|
|
% of Net
Sales
|
|
|
|
|
46.2%
|
|
44.3%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Loss
|
|
|
|
|
|
|
|
|
Operating Loss, As
Reported
|
|
|
$
|
(276.6)
|
$
|
(125.6)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Toys "R" Us Net Sales
Reversal & Bad Debt Expense3
|
|
86.8
|
|
-
|
|
Asset
Impairments
|
|
|
|
4.8
|
|
-
|
|
Non-recurring
Executive Compensation
|
|
|
1.0
|
|
1.9
|
|
Severance and
Restructuring Expenses
|
|
|
24.9
|
|
3.0
|
|
Sale of
Assets
|
|
|
|
|
(1.4)
|
|
-
|
|
Operating Loss, As
Adjusted
|
|
|
$
|
(160.5)
|
$
|
(120.7)
|
|
|
|
|
|
|
|
|
|
|
|
1 Amounts
may not foot due to rounding.
|
2Other
selling and administrative expenses, operating loss, and other
non-operating (income), net have been retrospectively restated to
reflect the adoption of Accounting Standards Update 2017-07,
Improving the Presentation of Net Periodic Pension Cost and Net
Periodic Postretirement Benefit Cost.
|
3 As a
result of the Toys "R" Us liquidation, Mattel reversed Net Sales
for the estimated uncollectible portion of its outstanding
receivables originating from first quarter 2018 sales. As
such, Gross Profit, As Reported includes the Cost of Sales for the
inventory sold to Toys "R" Us but excludes the corresponding
Net Sales. Additionally, Mattel recorded Bad Debt Expense for the
estimated uncollectible portion of its outstanding receivables
as of December 31, 2017.
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
|
Net Loss Per Common
Share, As Reported
|
|
$
|
(0.90)
|
$
|
(0.33)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Toys "R" Us Net Sales
Reversal & Bad Debt Expense3
|
|
0.25
|
|
-
|
|
Asset
Impairments
|
|
|
|
0.01
|
|
-
|
|
Non-recurring
Executive Compensation
|
|
|
-
|
|
0.01
|
|
Severance and
Restructuring Expenses
|
|
|
0.07
|
|
0.01
|
|
Tax Effect of
Adjustments4
|
|
|
|
(0.03)
|
|
(0.01)
|
|
Net Loss Per Common
Share, As Adjusted
|
|
$
|
(0.60)
|
$
|
(0.32)
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA and
Adjusted EBITDA
|
|
|
|
|
|
|
Net Loss, As
Reported
|
|
|
$
|
(311.3)
|
$
|
(113.2)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
41.1
|
|
22.0
|
|
Benefit for Income
Taxes
|
|
|
|
(2.7)
|
|
(32.5)
|
|
Depreciation
|
|
|
|
|
58.5
|
|
59.3
|
|
Amortization
|
|
|
|
|
10.2
|
|
5.2
|
|
EBITDA
|
|
|
|
|
|
(204.1)
|
|
(59.1)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Toys "R" Us Net Sales
Reversal & Bad Debt Expense3
|
|
86.8
|
|
-
|
|
Asset
Impairments
|
|
|
|
4.8
|
|
-
|
|
Shared-based
compensation
|
|
|
|
14.4
|
|
12.7
|
|
Severance and
Restructuring Expenses
|
|
|
24.9
|
|
3.0
|
|
Sale of
Assets
|
|
|
|
|
(1.4)
|
|
-
|
|
Adjusted
EBITDA
|
|
|
|
$
|
(74.6)
|
$
|
(43.4)
|
|
1 Amounts
may not foot due to rounding.
|
2Other
selling and administrative expenses, operating loss, and other
non-operating (income), net have been retrospectively restated to
reflect the adoption of Accounting Standards Update 2017-07,
Improving the Presentation of Net Periodic Pension Cost and Net
Periodic Postretirement Benefit Cost.
|
3 As a
result of the Toys "R" Us liquidation, Mattel reversed Net Sales
for the estimated uncollectible portion of its outstanding
receivables originating from first quarter 2018 sales. As
such, Gross Profit, As Reported includes the Cost of Sales for the
inventory sold to Toys "R" Us but excludes the corresponding
Net Sales. Additionally, Mattel recorded Bad Debt Expense for the
estimated uncollectible portion of its outstanding receivables
as of December 31, 2017.
|
4 The
aggregate tax effect of the adjustments is calculated by tax
effecting the adjustments by the current effective tax rate, and
dividing by the reported weighted average number of common and
potential common shares. For the three months ended March 31, 2018
U.S. adjustments were not tax effected because of the
valuation allowance on U.S. deferred tax assets.
|
MATTEL, INC. AND
SUBSIDIARIES
|
|
|
|
|
|
EXHIBIT
VIII
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
FINANCIAL INFORMATION (Unaudited)1
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31,
|
|
(In millions,
except percentage information)
|
|
|
2018
|
|
2017
|
|
% Change
|
|
Worldwide Gross
Sales3
|
|
|
|
|
|
|
|
|
Gross
Sales
|
|
$
|
800.0
|
$
|
814.6
|
|
-2
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
Toys "R" Us Gross
Sales Reversal2
|
|
|
29.5
|
|
-
|
|
|
|
Gross Sales, As
Adjusted
|
|
$
|
829.5
|
$
|
814.6
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
North America
Segment Gross Sales4
|
|
|
|
|
|
|
|
|
Gross
Sales
|
|
$
|
348.4
|
$
|
362.3
|
|
-4
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
Toys "R" Us Gross
Sales Reversal2
|
|
|
27.3
|
|
-
|
|
|
|
Gross Sales, As
Adjusted
|
|
$
|
375.7
|
$
|
362.3
|
|
4
|
%
|
1 Amounts
may not foot due to rounding.
|
2 As a
result of the Toys "R" Us liquidation, Mattel reversed Gross Sales
for the estimated uncollectible portion of its outstanding
receivables originating from first quarter 2018
sales.
|
3 Refer to
Exhibit III for a reconciliation of Worldwide Net Sales to Gross
Sales.
|
4 Refer to
Exhibit IV for a reconciliation of North America Segment Net Sales
to Gross Sales.
|
View original content with
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SOURCE Mattel, Inc.