SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] Annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended
December 31, 1996.
[_] Transition report pursuant to section 15(d) of the Securities
Exchange Act of 1934 for the transition period
from _________ to _________.
Commission File Number 001-04777
- ---------------------------------
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
MATTEL, INC. PERSONAL INVESTMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
MATTEL, INC.
333 CONTINENTAL BOULEVARD
EL SEGUNDO, CALIFORNIA 90245-5012
<PAGE>
[Price Waterhouse LLP letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
June 19, 1997
To the Participants and Administrators of the
Mattel, Inc. Personal Investment Plan and the Mattel, Inc.
Hourly Personal Investment Plan
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits for each of the plans, the Mattel, Inc. Personal Investment Plan
and the Mattel, Inc. Hourly Personal Investment Plan, held in the Mattel,
Inc. Personal Investment Plan Master Trust present fairly, in all material
respects, the net assets available for benefits of the Plans at December 31,
1996 and 1995, and the changes in net assets available for benefits for
the years then ended, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
plans' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
- ------------------------
<PAGE>
<TABLE>
<CAPTION>
MATTEL, INC. PERSONAL INVESTMENT PLAN MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
----------------------------------------------
December 31, 1996
------------------------------------------
Total
Hourly Master
PIP PIP Trust
------------ ------------ ------------
ASSETS
- ------
<S> <C> <C> <C>
Investment in Master Trust (Note 6) $206,793,000 $ 63,000 $206,856,000
Interest and dividends receivable 43,000 43,000
------------ ------------ ------------
Total assets 206,836,000 63,000 206,899,000
------------ ------------ ------------
LIABILITIES
- ----------
Excess contributions refunds
payable 6,000 6,000
------------ ------------ ------------
Net assets available for
benefits $206,830,000 $ 63,000 $206,893,000
============ ============ ============
<CAPTION>
December 31, 1995
------------------------------------------
Total
Hourly Master
PIP PIP Trust
------------ ------------ ------------
ASSETS
- ------
<S> <C> <C> <C>
Investment in Master Trust $180,793,000 $ 15,000 $180,808,000
Contributions receivable 12,000 12,000
Interest and dividends receivable 32,000 32,000
------------ ------------ ------------
Net assets available for
benefits $180,837,000 $ 15,000 $180,852,000
============ ============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
MATTEL, INC. PERSONAL INVESTMENT PLAN MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
---------------------------------------------------------
December 31, 1996
------------------------------------------
Total
Hourly Master
PIP PIP Trust
------------ ------------ ------------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Interest $ 7,466,000 $ 16,000 $ 7,482,000
Dividends 289,000 289,000
Net appreciation in fair value
of investments 13,476,000 1,000 13,477,000
------------ ------------ ------------
21,231,000 17,000 21,248,000
------------ ------------ ------------
Contributions:
Employee 9,163,000 11,000 9,174,000
Employer 11,046,000 28,000 11,074,000
------------ ------------ ------------
20,209,000 39,000 20,248,000
------------ ------------ ------------
Total additions 41,440,000 56,000 41,496,000
------------ ------------ ------------
Deductions from net assets
attributed to:
Benefits paid to participants (15,447,000) (8,000) (15,455,000)
------------ ------------ ------------
Net increase 25,993,000 48,000 26,041,000
Net assets available for benefits:
Beginning of year 180,837,000 15,000 180,852,000
------------ ------------ ------------
End of year $206,830,000 $ 63,000 $206,893,000
============ ============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
MATTEL, INC. PERSONAL INVESTMENT PLAN MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
---------------------------------------------------------
December 31, 1995
------------------------------------------
Total
Hourly Master
PIP PIP Trust
------------ ------------ ------------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Interest $ 8,136,000 $ 8,136,000
Dividends 116,000 116,000
Net appreciation in fair value
of investments 13,663,000 13,663,000
------------ ------------ ------------
21,915,000 21,915,000
------------ ------------ ------------
Contributions:
Employee 12,913,000 $ 11,000 12,924,000
Employer 8,377,000 4,000 8,381,000
------------ ------------ ------------
21,290,000 15,000 21,305,000
------------ ------------ ------------
Total additions 43,205,000 15,000 43,220,000
------------ ------------ ------------
Deductions from net assets
attributed to:
Benefits paid to participants (20,447,000) (20,447,000)
------------ ------------ ------------
Net increase 22,758,000 15,000 22,773,000
Net assets available for benefits:
Beginning of year 158,079,000 158,079,000
------------ ------------ ------------
End of year $180,837,000 $ 15,000 $180,852,000
============ ============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
-4-
<PAGE>
MATTEL, INC. PERSONAL INVESTMENT PLAN MASTER TRUST
--------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 - GENERAL DESCRIPTION OF THE PLAN:
- ----------------------------------------
Mattel, Inc. (the "Company") maintains two separate savings plans which are
held in the Mattel, Inc. Personal Investment Plan Master Trust (the "Master
Trust"). The following description of the Mattel, Inc. Personal Investment
Plan (the "PIP") and the Mattel, Inc. Hourly Personal Investment Plan (the
"Hourly PIP", collectively the "Plans") is provided for general information
only. Participants should refer to the respective plan agreements for a
more complete description of specific plan provisions.
General
- -------
The PIP, which was established November 1, 1983, is a contributory thrift
savings form of a defined contribution plan covering nonunion employees of
the Company and certain of its subsidiaries. The Hourly PIP, which was
established July 1, 1996, is a similar type savings plan covering certain
nonunion hourly employees of the Company. The Master Trust was established
on July 1, 1996 to coincide with the creation of the Hourly PIP.
The Plans are administrated by the Company under the direction of the
Pension Committee of the Board of Directors of the Company. The Plans'
assets at December 31, 1996 and 1995 were held by The Northern Trust
Company (the "Trustee") under the direction of the Pension Committee.
There were approximately 3,823 participants in the Plans as of December 31,
1996.
Contributions
- -------------
For the PIP the Company makes automatic contributions ranging from 2
percent to 7 percent of compensation based upon covered participants' ages,
regardless of whether the employees elect to personally contribute to the
Plan. The Company will match 100 percent of the first 2 percent of
compensation contributed by an employee and 50 percent of the next 4
percent. In addition, each employee may contribute up to an additional 9
percent of compensation, with no matching contribution by the Company.
For the Hourly PIP the Company makes automatic contributions of 1 percent
of compensation for all employees, regardless of whether the employees
elect to personally contribute to the Plan. The Company will match 25
percent of the first 6 percent of compensation contributed by an employee
during their first five years of service. The match percentage increases
to 30 percent and 40 percent if the employee has between six to ten years
of service and more than ten years of service,
-5-
Note 1: (Continued)
- -------
respectively. In addition, each employee may contribute up to an
additional 9 percent of compensation, with no matching contribution by the
Company.
For both Plans participants are permitted to direct all contributions made
to the Plans into one or more of four separate investment funds: a fixed
income fund, a managed equity fund, an equity index fund and the Mattel
stock fund. Participants may change their investment options twice each
quarter. Participants can invest a maximum of 50 percent of their current
contributions in the Mattel stock fund. In addition, participants cannot
transfer more than 50 percent of their account balance to the Mattel stock
fund.
Vesting
- -------
Each participant hired prior to July 1, 1989 has a 100 percent vested
interest in all contributions and earnings in his or her account, including
the Company's matching contributions. Each participant hired after July 1,
1989 is immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company's matching and discretionary contribution
portion of the participant's account plus actual earnings thereon is based
on years of continuous service. Participants become 25 percent vested
after two years of credited service and vest an additional 25 percent for
each additional year of service through the fifth year at which time 100
percent vesting occurs.
Participant Loans Receivable
- ----------------------------
Participants may borrow from their accounts from a minimum of $2,000 to a
maximum equal to the lesser of $50,000 or 50 percent of their vested
account balance. Loan terms range from 1-5 years or up to 15 years for the
purchase of a primary residence. The loans are secured by the balance in
the participant's account and bear interest at the prime rate plus one
percent set at the beginning of the month in which the loan is granted.
The interest rate is set for the duration of the loan. As of December 31,
1996, interest rates on loans outstanding ranged from 6 percent to 8.5
percent. Principal and interest are paid ratably through payroll
deductions. In addition, funds may be withdrawn by participants prior to
retirement under limited circumstances, subject to restrictions as defined
by the Plans.
Participant Accounts
- --------------------
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's contribution and (b) plan earnings.
Allocations are made based on the fund allocation percentages used for the
employees' contributions. Forfeited balances of terminated participants'
nonvested accounts are used to reduce future Company contributions. The
benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
-6-
Note 1: (Continued)
- -------
Payment of Benefits
- -------------------
Upon termination of service due to death, disability, retirement or other
reasons, a participant or beneficiary may receive a lump-sum amount equal
to the value of the participant's vested interest in his or her account.
Participants automatically become 100 percent vested in their account
balance if their termination is due to total disability or retirement.
Expenses of the Plan
- --------------------
Expenses incurred in the administration of the Plans are paid by the
Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- ----------------------------------------------------
Basis of Accounting
- -------------------
The financial statements of the Plans are prepared using the accrual basis
of accounting.
Valuation of Investments
- ------------------------
Investments held within the Master Trust are based on their fair values.
Investments held in the managed equity fund, equity index fund and Mattel
stock fund are valued using quoted market prices. Investments in the fixed
income fund, made primarily pursuant to guaranteed investment contracts,
are valued at contract value as determined by the insurance companies.
Contract value represents contributions made under a guaranteed investment
contract, plus interest at the contract rate, less administrative expenses
charged by the insurance company. Participant loans receivable are valued
at cost which approximates fair value.
Contributions
- -------------
Contributions from plan participants are recorded in the period in which
the Company makes payroll deductions from the employee's compensation. The
Company's matching contributions are recorded in the period corresponding
with the employee contributions. Employee rollover contributions are
included as Employee Contributions in the financial statements.
Income Recognition
- ------------------
In accordance with the policy of presenting investments at current fair
value, the net appreciation or depreciation in the fair value of
investments during the period is reflected in the statement of changes in
net assets available for benefits. Such net appreciation or depreciation
in current fair value includes realized gains and losses on dispositions of
securities during the period. Securities transactions are recorded on a
trade date basis. Interest income is recorded as earned on an accrual
basis. Dividend income is recorded on the ex-dividend date.
-7-
Note 2: (Continued)
- -------
Payment of Benefits
- -------------------
Benefits payable to former employees are recorded in the period in which
payment occurs.
Use of Estimates
- ----------------
Preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
NOTE 3 - RECONCILIATION OF THE FINANCIAL STATEMENTS TO FORM 5500:
- ----------------------------------------------------------------
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500 for the PIP:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Net assets available for benefits
per the financial statements $206,830,000 $180,837,000
Amounts allocated to
withdrawing participants (29,000)
------------ ------------
Net assets available for benefits
per the Form 5500 $206,830,000 $180,808,000
============ ============
</TABLE>
There were no reconciling items in the net assets available for benefits
for the Hourly PIP between the financial statements and the Form 5500 for
the years ended December 31, 1996 and 1995.
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the PIP:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Benefits paid to participants
per the financial statements $ 15,447,000 $ 20,447,000
Amounts allocated to
withdrawing participants
at current year end - 29,000
Amounts allocated to
withdrawing participants
at prior year end (29,000) (159,000)
------------ ------------
Benefits paid to participants
per the Form 5500 $ 15,418,000 $ 20,317,000
============ ============
</TABLE>
-8-
Note 3: (Continued)
- -------
Amounts allocated to withdrawing participants are recorded in the Form 5500
for benefit claims that have been processed and approved for payment prior
to December 31 but not yet paid as of that date. There were no reconciling
items for benefits paid to participants for the Hourly PIP between the
financial statements and the Form 5500 for the years ended December 31,
1996 and 1995.
NOTE 4 - TAX STATUS OF THE PLANS:
- ---------------------------------
The administrator for the Plans has received determination letters from the
Internal Revenue Service which confirmed the qualified and tax-exempt
status of the Plans. Therefore, no provision for federal or state income
tax has been made for the Plans.
NOTE 5 - PLAN TERMINATION:
- --------------------------
The Company anticipates that the Plans will continue without interruption,
but reserves the right to discontinue the Plan. In the event such
discontinuance results in the termination of the Plan, participants shall
be entitled to receive their account balance.
NOTE 6 - INVESTMENTS IN MASTER TRUST:
- ------------------------------------
The following summarizes the Plans' investments at December 31, 1996:
<TABLE>
<CAPTION>
Hourly
PIP % PIP % Total
------------ ------- ------------ --- ------------
<S> <C> <C> <C> <C> <C>
Fixed Income Account $115,479,000 99.95 $ 54,000 .05 $115,533,000
Managed Equity Account 35,344,000 99.99 3,000 .01 35,347,000
Equity Index Account 35,228,000 99.99 3,000 .01 35,231,000
Mattel Stock Account 13,434,000 99.98 3,000 .02 13,437,000
Participant Loan Account 7,361,000 100.00 7,361,000
Money Market Account (53,000) (100.00) (53,000)
------------ ------------ ------------
Total investments $206,793,000 99.97 $ 63,000 .03 $206,856,000
============ ============ ============
</TABLE>
The Plans administrator has directed the Trustee to invest any excess cash
balances in The Northern Trust COLTV Short Term Investment Fund and the
Northern Trust Co. STEP Fund, which are diversified portfolios of short-
term investment securities.
-9-
NOTE 6: (Continued)
- -------
The following summarizes the changes in net assets available by fund
for the years ended December 31, 1996 and 1995.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------
Participant Directed
---------------------------------------------------------------------
Fixed Managed Equity Mattel
Income Equity Index Stock Participant
Fund Fund Fund Fund Loans
------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $ 6,930,000 - - $ 8,000 $ 533,000
Dividends - $ 183,000 - 106,000 -
Net appreciation
in fair value of
investments - 5,974,000 $ 6,203,000 1,300,000 -
Contributions:
Employer 4,825,000 1,853,000 1,723,000 792,000 -
Employee 4,777,000 2,634,000 2,498,000 1,176,000 -
Fund transfers (8,079,000) 3,229,000 2,291,000 2,125,000 435,000
Benefit payments (10,842,000) (2,047,000) (1,809,000) (417,000) (278,000)
------------ ----------- ----------- ----------- ------------
(Decrease)/increase in
net assets available
for benefits (2,389,000) 11,826,000 10,906,000 5,090,000 690,000
------------ ----------- ----------- ----------- ------------
Net assets available for
benefits:
Beginning of year 117,932,000 23,520,000 24,324,000 8,376,000 6,671,000
------------ ----------- ----------- ----------- ------------
End of year $115,543,000 $35,346,000 $35,230,000 $13,466,000 $ 7,361,000
============ =========== =========== =========== ============
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------
Non-
Participant
Directed
------------
Total
Clearing Master
Account Trust
------------ -------------
<S> <C> <C>
Investment income:
Interest $ 11,000 $ 7,482,000 (a)
Dividends - 289,000
Net appreciation
in fair value of
investments - 13,477,000
Contributions:
Employer (19,000) 9,174,000
Employee 4,000 11,089,000 (a)
Fund transfers (1,000) -
Benefit payments (77,000) (15,470,000)
------------ ------------
(Decrease)/increase in
net assets available
for benefits (82,000) 26,041,000
------------ ------------
Net assets available for
benefits:
Beginning of year 29,000 180,852,000
------------ ------------
End of year $ (53,000) $206,893,000
============ ============
<FN>
(a) Interest income related to participant loans of $533,000 was reclassified from employee
contributions to interest income.
</TABLE>
-10-
<PAGE>
NOTE 6: (Continued)
- -------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
------------------------------------
Participant Directed
---------------------------------------------------------------------
Fixed Managed Equity Mattel
Income Equity Index Stock Participant
Fund Fund Fund Fund Loans
------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $ 7,844,000 - - $ 7,000 $ 450,000
Dividends - $ 64,000 - 52,000 -
Net appreciation
in fair value of
investments - 5,696,000 $ 5,618,000 2,167,000 -
Contributions:
Employer 5,351,000 1,324,000 1,187,000 495,000 -
Employee 7,509,000 2,296,000 2,153,000 1,003,000 -
Fund transfers (8,797,000) 2,296,000 3,896,000 1,985,000 665,000
Benefit payments (16,566,000) (1,449,000) (1,919,000) (216,000) (208,000)
------------ ----------- ----------- ----------- ------------
(Decrease)/increase in
net assets available
for benefits (4,659,000) 10,227,000 10,935,000 5,493,000 907,000
------------ ----------- ----------- ----------- ------------
Net assets available for
benefits:
Beginning of year 122,591,000 13,293,000 13,389,000 2,883,000 5,764,000
------------ ----------- ----------- ----------- ------------
End of year $117,932,000 $23,520,000 $24,324,000 $ 8,376,000 $ 6,671,000
============ =========== =========== =========== ============
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
------------------------------------
Non-
Participant
Directed
------------
Total
Clearing Master
Account Trust
------------ -------------
<S> <C> <C>
Investment income:
Interest $ 11,000 $ 8,312,000 (a)
Dividends - 116,000
Net appreciation
in fair value of
investments 6,000 13,487,000
Contributions:
Employer 24,000 8,381,000
Employee (37,000) 12,924,000 (a)
Fund transfers (45,000) -
Benefit payments (89,000) (20,447,000)
------------ ------------
(Decrease)/increase in
net assets available
for benefits (130,000) 22,773,000
------------ ------------
Net assets available for
benefits:
Beginning of year 159,000 158,079,000
------------ ------------
End of year $ 29,000 $180,852,000
============ ============
<FN>
(a) Interest income related to participant loans of $450,000 was reclassified from employee
contributions to interest income.
</TABLE>
-11-
<PAGE>
POWER OF ATTORNEY
-----------------
We, the undersigned members of the Committee designated to
administer the Mattel, Inc. Personal Investment Plan, do hereby severally
constitute and appoint Jill E. Barad, Ned Mansour, Robert Normile,
Barnett Rosenberg, Leland P. Smith and John L. Vogelstein, and each of them,
our true and lawful attorneys and agents, to do any and all acts and things
in our name and behalf in our capacities as members of said Committee and to
execute any and all instruments for us and in our names in the capacities
indicated below, which said attorneys and agents, or any of them, may deem
necessary or advisable to enable said Plan to comply with the Securities
Exchange Act of 1934, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection
with this Annual Report on Form 11-K, including specifically, but without
limitation, power and authority to sign for us or any of us, in our names
in the capacities indicated below, any and all amendments hereto; and we
do each hereby ratify and confirm all that said attorneys and agents or any
one of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, the members of the Committee designated to administer the Mattel,
Inc. Personal Investment Plan have duly caused this Annual Report on Form
11-K to be signed on behalf of the Plan by the undersigned, thereunto duly
authorized in the City of El Segundo, State of California, on June 30,
1997.
MATTEL, INC. PERSONAL
INVESTMENT PLAN
---------------------
(Name of Plan)
By: /s/ Harold Brown
----------------
Harold Brown
By: /s/ Edward H. Malone
--------------------
Edward H. Malone
By: /s/ Edward N. Ney
-----------------
Edward N. Ney
<PAGE>
EXHIBIT - 23.0
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (No. 33-51454) of Mattel,
Inc. of our report dated June 19, 1997, appearing on page 1
of this Form 11-K.
/s/ Price Waterhouse LLP
- ------------------------
Los Angeles, California
June 30, 1997
