<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: October 22, 1999
MATTEL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 001-05647 95-1567322
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
333 Continental Boulevard, El Segundo, California 90245-5012
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 252-2000
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N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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Mattel, Inc. hereby incorporates by reference herein its press
release dated October 21, 1999 regarding its 1999 third
quarter results of operations, a copy of which is included
as Exhibit 99.0 attached hereto.
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial statements of businesses acquired: None
(b) Pro forma financial information: None
(c) Exhibits:
99.0 Press release dated October 21, 1999
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MATTEL, INC.
Registrant
By: /s/ Robert Normile
-------------------------
Robert Normile
Senior Vice President,
General Counsel and
Secretary
Date: October 22, 1999
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Page 2
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EXHIBIT 99.0
FOR IMMEDIATE RELEASE CONTACT:
October 21, 1999 News Media Investor Relations
Glenn Bozarth Jessica Fisher
310-252-3521 310-252-2703
MATTEL REPORTS 1999 THIRD QUARTER RESULTS
-----------------------------------------
LOS ANGELES, October 21 - Mattel, Inc. (NYSE:MAT) today reported that earnings
for the third quarter ended September 30, 1999 totaled $135.3 million or $.32
per share, versus $233.8 million or $.54 before after-tax charges of $65.1
million in the 1998 third quarter. Sales for the 1999 quarter were $1.83
billion, compared with $1.88 billion in 1998. As Mattel advised in its October
4 press release, these results were adversely affected by issues at its Learning
Company division.
"While we are most disappointed in developments at The Learning Company,
and by continuing difficulties in international markets, we are encouraged by
U.S. sales increases in the quarter for our core Barbie(R), Fisher-Price(R),
Wheels and American Girl(R) brands," Jill E. Barad, Mattel's chairman and chief
executive officer, said.
Mattel said that The Learning Company division incurred an after-tax loss
of approximately $105 million in the quarter, versus the $50 million profit that
had been expected earlier. The significant contributors to this earnings
shortfall were distributor and retailer returns and allowances of $58 million,
stemming in large part from the merger of Mattel and The Learning Company;
increased bad debt reserves of $56 million, primarily involving one major
distributor, and Mattel's decision not to complete a significant Learning
Company licensing agreement that had been budgeted since June to produce $60
million in earnings.
-more-
<PAGE>
For the first nine months of 1999, earnings totaled $205.8 million or $.49
per share before $269.7 million in after-tax charges related to integration,
restructuring and other non-recurring costs. This compares with $263.9 million
or $.62 per share in the 1998 nine months, before one-time, after-tax charges of
$146.5 million. Net sales for the period were $3.74 billion, versus $3.80
billion for the 1998 nine months.
"Although we believe the major problems at The Learning Company are behind
us, we are not yet projecting that it will return to substantial profitability
in the fourth quarter," Barad said. "As a result, it is our present estimate
that Mattel's earnings for 1999 will be in the range of $.70 to $.80 per share."
Mattel is a worldwide leader in the design, manufacture and marketing of
family products. With headquarters in El Segundo, California, Mattel has
offices and facilities in 36 countries and sells its products in more than 150
nations throughout the world.
Note:
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Forward-looking statements included in this release with respect to the
financial condition, results of operations and business of the company, which
include, but are not limited to sales levels, restructuring and integration
charges, special charges, other non-recurring charges, cost savings, operating
efficiencies and profitability, are subject to certain risks and uncertainties
that could cause actual results to differ materially from those set forth in
such statements. These include without limitation: the company's dependence on
the timely development, introduction and customer acceptance of new products;
significant changes in buying patterns of major customers; possible weaknesses
of international markets; the impact of competition on revenues and margins; the
company's ability to successfully integrate the operations of The Learning
Company following its merger into the company; the effect of currency
fluctuations on reportable income; unanticipated negative results of litigation,
governmental proceedings or environmental matters; and other risks and
uncertainties as may be detailed from time to time in the company's public
announcements and SEC filings.
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<TABLE>
<CAPTION>
MATTEL, INC. AND SUBSIDIARIES
=========================================================================================================================
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------- ------------------------------
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
(In thousands, except per share amounts) 1999 1998(a) 1999(a) 1998(a)
---------------------------------------- ------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Net Sales $1,825,247 $1,884,843 $3,744,360 $3,802,852
Cost of sales 957,961 888,753 1,926,076 1,857,634
---------- ---------- ---------- ----------
Gross Profit 867,286 996,090 1,818,284 1,945,218
Advertising and promotion expenses 296,436 281,726 549,670 535,931
Other selling and administrative expenses 331,934 278,059 836,562 783,553
Charge for incomplete technology (b) 0 0 0 56,826
Restructuring and other charges (b) 0 97,088 348,889 133,205
Other (income) expense, net (846) 8,870 (8,845) (1,199)
---------- ---------- ---------- ----------
Operating Profit Before Amortization 239,762 330,347 92,008 436,902
Amortization of intangibles 22,765 20,674 65,193 103,365
---------- ---------- ---------- ----------
Operating Profit 216,997 309,673 26,815 333,537
Interest expense 41,019 42,346 102,463 83,609
---------- ---------- ---------- ----------
Income (Loss) Before Income Taxes 175,978 267,327 (75,648) 249,928
Provision (benefit) for income taxes 40,645 98,593 (11,696) 132,573
---------- ---------- ---------- ----------
Net Income (Loss) 135,333 168,734 (63,952) 117,355
Less: dividends on convertible
preferred stock 0 1,990 3,980 5,970
---------- ---------- ---------- ----------
Net Income (Loss) Applicable to
Common Shares $ 135,333 $ 166,744 $ (67,932) $ 111,385
========== ========= ========== ==========
Net Income (Loss) Per Share
- Basic (c) (d) $ 0.32 $ 0.42 $ (0.17) $ 0.29
========== ========= ========= ==========
Average Number of Common Shares
Outstanding - Basic (d) 425,148 399,218 410,316 387,020
========== ========= == ======= ==========
Net Income (Loss) Per Share
- Diluted (c) (d) $ 0.32 $ 0.39 $ (0.17) $ 0.27
========== ========= ========== ==========
Average Number of Common and Common
Equivalent Shares Outstanding
- Diluted (d) 429,455 435,123 410,316 419,870
========== ========= ========== ==========
<CAPTION>
MATTEL, INC. AND SUBSIDIARIES
=========================================================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPT. 30, SEPT. 30, DEC. 31,
(In thousands) 1999 1998(a) 1998(a)
- -------------- --------------- ----------- --------------
<S> <C> <C> <C>
Assets
Cash $ 92,714 $ 377,385 $ 469,213
Accounts receivable, net 2,000,868 1,898,943 1,150,051
Inventories 742,704 808,555 644,270
Prepaid expenses and other current assets 471,147 377,053 371,772
---------- ---------- ----------
Total current assets 3,307,433 3,461,936 2,635,306
Property, plant and equipment, net 727,941 742,691 763,121
Other assets 1,700,483 1,774,757 1,748,958
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Total Assets $5,735,857 $5,979,384 $5,147,385
========== ========== ==========
Liabilities and Stockholders' Equity
Short-term borrowings $ 945,447 $ 917,228 $ 199,006
Current portion of long-term liabilities 133,285 13,769 33,666
Accounts payable and accrued liabilities 1,213,872 1,246,344 1,111,304
Income taxes payable 194,162 280,257 299,058
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Total current liabilities 2,486,766 2,457,598 1,643,034
Senior notes 500,955 590,955 600,955
Medium-term notes 540,500 520,500 540,500
Long-term debt 42,893 43,154 43,007
Other long-term liabilities 159,581 143,362 149,086
Stockholders' equity 2,005,162 2,223,815 2,170,803
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Total Liabilities and Stockholders' Equity $5,735,857 $5,979,384 $5,147,385
========== ========== ==========
</TABLE>
(a) Consolidated results are restated for the May 1999 merger with The Learning
Company.
(b) Represents nonrecurring charges of $270 million and $147 million, net of
taxes, for integration, restructuring and other charges recorded in the
first nine months of 1999 and 1998, respectively. Charges for the third
quarter of 1998 represent restructuring and other nonrecurring charges of
$65 million, net of taxes.
(c) Income per share for the 1998 quarter, before the $0.15 per share effect of
the nonrecurring charges, was $0.54 per share. Income per share for the
nine months ended September 1999, before the $0.66 per share effect of the
nonrecurring charges, was $0.49 per share. Income per share for the nine
months ended September 1998, before the $0.35 per share effect of the
nonrecurring charges, was $0.62 per share.
(d) Share and per share data for all periods presented reflect the retroactive
effect of shares issued pursuant to the merger with The Learning Company.
3
