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: February 3, 1999
MATTEL, INC.
------------
(Exact name of registrant as specified in its charter)
Delaware 001-05647 95-1567322
- ------------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
333 Continental Boulevard, El Segundo, California 90245-5012
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 252-2000
----------------------------
N/A
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
- ------- ------------
On February 2, 1999, the Company announced that results for the
full-year 1998 were in line with reduced expectations cited
in a December 14, 1998 press release.
Income for the year ended December 31 totaled $363.8 million
or $1.20 per share, before a previously announced, after-tax
charge of $27 million or $0.09 per share related to a
voluntary recall of certain Power Wheels ride-on vehicles
and an additional one-time, after-tax charge of $4 million
or $0.01 per share. This second charge, incurred in the
fourth quarter, is related to an expected settlement of
litigation stemming from a Federal Trade Commission
action involving Toys "R" Us. Earnings for the full year
1997 were $499.5 million or $1.65 per share before charges.
Net sales for 1998 were $4.782 billion, down 1 percent
from $4.835 billion in 1997.
Net income for the 1998 fourth quarter totaled $63.8 million
or $0.21 per share, before the $0.01 charge, down from
$195.1 million or $0.64 per share in the 1997 quarter. Net
sales for the 1998 fourth quarter were $1.543 billion,
down from $1.613 billion in 1997.
U.S. revenues were down 2 percent for the year, and
international volume was down 1 percent in U.S. dollars and
up 1 percent in local currency.
Note:
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, the Mattel and Tyco restructuring charge, special
charges, other non-recurring charges, cost savings 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.
<PAGE>
<TABLE>
MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED YEAR ENDED
------------------------- -------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(In thousands, except per share amounts) 1998 1997 1998 1997 (a)
- ---------------------------------------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 1,543,082 $ 1,613,093 $4,781,892 $4,834,616
Cost of sales 760,992 795,018 2,418,899 2,434,616
----------- ---------- ---------- ----------
Gross Profit 782,090 818,075 2,362,993 2,400,000
Advertising and promotion expenses 351,844 300,569 813,293 779,139
Other selling and administrative expenses 289,104 220,192 882,127 796,952
Amortization of intangibles 13,761 7,932 41,929 32,179
Special charge (b) 6,000 - 44,000 -
Integration/restructuring costs (c) - - - 275,000
Other (income) expense, net (2,981) (4,968) 5,748 1,518
----------- ---------- ---------- ----------
Operating Profit 124,362 294,350 575,896 515,212
Interest expense 41,158 27,348 110,833 90,130
----------- ---------- ---------- ----------
Income Before Income Taxes 83,204 267,002 465,063 425,082
Provision for income taxes 23,658 71,873 132,799 135,288
----------- ---------- ---------- ----------
Income Before Extraordinary Item 59,546 195,129 332,264 289,794
Extraordinary item, net of tax - - - (4,610)
----------- ---------- ---------- ----------
Net Income 59,546 195,129 332,264 285,184
Less: dividends on convertible preferred stock 1,990 1,990 7,960 10,505
----------- ---------- ---------- ----------
Net Income Applicable to Common Shares $ 57,556 $ 193,139 $ 324,304 $ 274,679
=========== ========== ========== ==========
Income Per Share - Basic
Income Before Extraordinary Item, Net of Tax $ 0.20 $ 0.66 $ 1.11 $ 0.96
Extraordinary Item - Debt Retirement - - - (0.01)
----------- ---------- ---------- ----------
Net Income Per Share - Basic $ 0.20 $ 0.66 $ 1.11 $ 0.95
=========== ========== ========== ==========
Average Number of Common Shares
Outstanding - Basic 287,630 290,962 291,481 290,450
=========== ========== ========== ==========
Income Per Share - Diluted (d)(e)
Income Before Extraordinary Item, Net of Tax $ 0.20 $ 0.64 $ 1.10 $ 0.94
Extraordinary Item - Debt Retirement - - - (0.01)
----------- ---------- ---------- ----------
Net Income Per Share - Diluted $ 0.20 $ 0.64 $ 1.10 $ 0.93
=========== ========== ========== ==========
Average Number of Common and Common
Equivalent Shares Outstanding - Diluted 290,399 306,053 303,243 295,653
=========== ========== ========== ==========
</TABLE>
<TABLE>
MATTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
Dec. 31, Dec. 31,
(In thousands) 1998 1997
- -------------- ----------- -----------
ASSETS
<S> <C> <C>
Cash $ 212,454 $ 694,947
Accounts receivable, net 983,050 1,091,416
Inventories 584,358 428,844
Prepaid expenses and other current assets 277,948 246,529
----------- -----------
Total current assets 2,057,810 2,461,736
Property, plant and equipment, net 736,457 601,597
Other assets 1,467,898 740,458
----------- -----------
Total Assets $ 4,262,165 $ 3,803,791
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Short-term borrowings $ 134,006 $ 17,468
Current portion of long-term liabilities 33,518 13,659
Accounts payable and accrued liabilities 944,434 939,562
Income taxes payable 205,253 202,735
----------- -----------
Total current liabilities 1,317,211 1,173,424
Senior notes 400,000 100,000
Medium-term notes 540,500 520,500
Long-term debt 43,007 55,036
Other long-term liabilities 141,249 132,761
Shareholders' equity 1,820,198 1,822,070
----------- -----------
Total Liabilities and Shareholders' Equity $ 4,262,165 $ 3,803,791
=========== ===========
<FN>
(a) Consolidated results are restated for the March 1997 merger with Tyco Toys, Inc.
(b) For the year ended December 1998, represents a one-time charge related to a voluntary
recall of Power Wheels brand ride-on vehicles. The related tax benefit of
$11 million is included in the provision for income taxes. For the quarter and
year ended December 1998, represents a one-time charge in connection with the
Toys R Us-related antitrust litigation settlement. The related tax benefit of
$2 million is included in the provision for income taxes.
(c) Represents a nonrecurring charge for transaction, integration and restructuring
costs related to the Tyco merger. The related tax benefit of $65 million is included
in the provision for income taxes.
(d) Diluted income per share for the year ended December 1998 was $1.20 per share,
after absorbing $0.11 per share related to the amortization of intangibles,
before the $0.09 per share effect of a one-time charge of $27 million after taxes
related to a voluntary recall of Power Wheels brand ride-on vehicles, and
the $0.01 per share effect of a nonrecurring charge of $4 million after-tax
settlement in connection with the Toys R Us-related antitrust litigation.
(e) Diluted income per share for the year ended December 1997 was $1.65 per share,
after absorbing $0.09 per share related to the amortization of intangibles,
before the $0.71 per share effect of the merger-related nonrecurring charge of
$210 million after taxes.
<PAGE>
SIGNATURES
----------
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/ Lee B. Essner
-------------------------
Lee B. Essner
Assistant General Counsel
and Assistant Secretary
Date: February 3, 1999
----------------------
<PAGE>
</TABLE>
