EL SEGUNDO, Calif.,
April 25, 2019 /PRNewswire/ --
Mattel, Inc. (NASDAQ: MAT) today reported first quarter 2019
financial results.
Ynon Kreiz, Chairman and CEO, Mattel said: "This was another
strong quarter, demonstrating meaningful progress in the execution
of our strategy, a significant improvement in profitability and a
solid performance in our topline. The positive momentum exiting
2018 has continued and is reflected in our operating results. While
we are in a multi-year turnaround, we remain on-track to achieve
our goals to restore profitability and regain topline growth in the
short-to-mid-term and capture the full value from our IP in the
mid-to-long term. I continue to be inspired by the commitment and
capabilities of our organization as we build shareholder value and
transform Mattel into an IP-driven, high-performing toy
company."
Joseph Euteneuer, CFO, Mattel
said: "This represents the third consecutive quarter of improvement
in our key profitability metrics, including Gross Margin, Operating
Income, EBITDA and EPS. We have achieved $610 million of run-rate savings from our
Structural Simplification program and expect to exceed our goal of
$650 million exiting 2019. We have
begun implementing our Capital Light model and look forward to
starting to realize additional savings in 2020."
For the first quarter, Net Sales were down 3% as reported, and
up 1% in constant currency, versus the prior year's first quarter.
Gross Sales were down 2% as reported, and up 2% in constant
currency. Reported Operating Loss was $131.0
million, an improvement of $145.6
million, and Adjusted Operating Loss was $100.4 million, an improvement of $146.9 million. Reported Loss Per Share was
$0.53, an improvement of $0.37, and Adjusted Loss Per Share was
$0.44, an improvement of $0.41.
Financial Overview
Net Sales in the North America
segment increased by 5% as reported, and in constant currency,
versus the prior year's first quarter.
Gross Sales in the North
America segment increased 6% as reported, and in constant
currency, primarily driven by growth in Action Figures/Building
Sets/Games (including Toy Story® 4 and Jurassic
World®), Dolls (including Barbie and Polly
Pocket®), and Vehicles (including Hot Wheels and
Matchbox®). This was partially offset by a decline in
Infant/Toddler/Preschool (including Fisher-Price and Thomas &
Friends).
Net Sales in the International segment decreased by 4% as
reported, and increased 4% in constant currency, versus the prior
year's first quarter.
Gross Sales in the International segment decreased by 5% as
reported, primarily driven by a decline in Infant/Toddler/Preschool
(including Fisher-Price and Thomas & Friends), and Vehicles
(including lower sales for CARS® partially offset by
increased sales for Hot Wheels). These declines were partially
offset by growth in Dolls (including Polly Pocket and Barbie), and
Action Figures/Building Sets/Games (including Jurassic World and
Toy Story 4).
Gross Sales in the International segment increased 4% in
constant currency, primarily driven by growth in Dolls (including
Barbie and Polly Pocket), Action Figures/Building Sets/Games
(including Jurassic World and Toy Story 4), and Vehicles (including
increased sales for Hot Wheels partially offset by lower sales for
CARS). This growth was partially offset by a decline in
Infant/Toddler/Preschool (including Fisher-Price and Thomas &
Friends).
Net Sales in the American Girl® segment decreased by
32% as reported, and 31% in constant currency, versus the prior
year's first quarter.
Gross Sales in the American Girl segment decreased by 32% as
reported, and in constant currency, primarily driven by lower sales
in proprietary retail and direct channels.
Reported Gross Margin increased to 34.8% versus 30.9% in the
prior year's first quarter and Adjusted Gross Margin increased to
38.0% versus 31.3%.
The increase in Reported Gross Margin was primarily driven by
savings from our Structural Simplification program and the benefit
of the absence of the first quarter 2018 Toys "R" Us Net Sales
reversal, partially offset by the expense related to the voluntary
Fisher-Price Rock 'n Play™ Sleeper recall and
product cost inflation.
The increase in Adjusted Gross Margin was primarily driven by
savings from our Structural Simplification program and the benefit
of the absence of the first quarter 2018 Toys "R" Us Net Sales
reversal, partially offset by product cost inflation and a portion
of the expense related to the voluntary product recall.
Reported Other Selling and Administrative Expenses decreased by
$123.3 million, or 29%, to
$301.3 million, versus the prior
year's first quarter. Adjusted Other Selling and Administrative
Expenses decreased by $105.7 million,
or 27%, to $292.6 million. The
improvements in Reported and Adjusted Other Selling and
Administrative Expenses were primarily driven by the benefit of the
absence of the first quarter 2018 Toys "R" Us bad debt expense and
savings from our Structural Simplification program.
Cash Flows Used for Operating Activities decreased by
$80.9 million to $192.8 million, versus the prior year's first
quarter, primarily driven by a lower net loss, excluding non-cash
charges and lower working capital usage. Cash Flows Used for
Investing Activities decreased by $11.7
million to $19.2 million,
versus the prior year's first quarter, primarily driven by lower
capital spending. Cash Flows Used for Financing Activities and
Other decreased by $245.5 million to
$2.4 million, versus the prior year's
first quarter, primarily driven by the 2018 repayment of
$250 million of senior notes.
Sales by Categories
Worldwide Gross Sales for Dolls were $252.9 million, down 2% as reported, and up 3% in
constant currency, versus the prior year's first quarter, primarily
driven by a decline in American Girl, partially offset by growth in
Barbie and Polly Pocket.
Worldwide Gross Sales for Infant/Toddler/Preschool were
$193.6 million, down 15% as reported,
and down 11% in constant currency, versus the prior year's first
quarter, primarily driven by declines in Fisher-Price and Thomas
& Friends.
Worldwide Gross Sales for Vehicles were $183.4 million, down 3% as reported, and up 2% in
constant currency, versus the prior year's first quarter, primarily
driven by a decline in CARS, partially offset by growth in Hot
Wheels.
Worldwide Gross Sales for Action Figures/Building Sets/Games
were $150.3 million, up 18% as
reported, and up 22% in constant currency, versus the prior year's
first quarter, primarily driven by the initial sales of Toy Story 4
products in advance of its theatrical release as well as Jurassic
World.
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 2019 first quarter financial results. The
conference call will be webcast on Mattel's Investor
Relations website, https://mattel.gcs-web.com/. 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 Mattel's Investor
Relations 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 2, 2019
and may be accessed by dialing +1-404-537-3406. The passcode is
8098234.
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, such as China, in which Mattel operates, including,
without limitation, with respect to taxes, tariffs, trade policies
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 initiatives 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, 2018,
as well as in Mattel's other public statements. 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 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, https://mattel.gcs-web.com/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, categorical, 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 category and 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 Profit and Adjusted Gross Margin
Adjusted Gross Profit and Adjusted Gross Margin represent
reported Gross Profit and Reported Gross Margin, respectively,
adjusted to exclude asset impairments and the impact of the Rock 'n
Play product recall. Adjusted Gross Margin represents Mattel's
Adjusted Gross Profit, as a percentage of 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 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 asset
impairments, non-recurring executive compensation, severance and
restructuring expenses, sale of assets, and the impact of the Rock
'n Play product recall, 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 asset impairments, severance and restructuring expenses,
and the impact of the Rock 'n Play product recall, 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, adjusting for certain discrete tax
items, and dividing by the reported weighted average number of
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 asset impairments, share-based compensation,
severance and restructuring expenses, sale of assets, and the
impact of the Rock 'n Play product recall, 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 constant currency
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 leading global children's entertainment company that
specializes in design and production of quality toys and consumer
products. We create innovative products and experiences that
inspire, entertain and develop children through play. We engage
consumers through our portfolio of iconic franchises, including
Barbie®, Hot Wheels®, American Girl®, Fisher-Price®, Thomas &
Friends® and MEGA®, as well as other popular brands that we own or
license in partnership with global entertainment companies. Our
offerings include film and television content, gaming, music and
live events. We operate in 40 locations and sell products in more
than 150 countries in collaboration with the world's leading retail
and technology companies. Since its founding in 1945, Mattel is
proud to be a trusted partner in exploring the wonder of childhood
and empowering kids to reach their full potential. Visit us online
at www.mattel.com.
Contacts:
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News
Media
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Securities
Analysts
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Dena Cook
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David
Zbojniewicz
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dena.cook@mattel.com
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david.zbojniewicz@mattel.com
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310-252-4247
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310-252-2703
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MAT-FIN MAT-CORP
MATTEL, INC. AND
SUBSIDIARIES
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EXHIBIT
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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
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Yr /
Yr
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%
Change
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%
Change
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(In millions,
except per share and
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2019
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2018
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as
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in
Constant
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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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Reported
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Currency
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Net
Sales
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$
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689.2
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$
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708.4
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-3%
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1%
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Cost of
sales
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449.5
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65.2%
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489.5
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69.1%
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-8%
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Gross
Profit
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239.8
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34.8%
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218.9
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30.9%
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10%
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21%
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Advertising and promotion expenses
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69.5
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10.1%
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70.8
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10.0%
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-2%
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Other
selling and administrative expenses
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301.3
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43.7%
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424.6
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59.9%
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-29%
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Operating
Loss
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(131.0)
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-19.0%
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(276.6)
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-39.0%
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-53%
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-56%
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Interest
expense
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47.0
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6.8%
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41.1
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5.8%
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14%
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Interest
(income)
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(2.3)
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-0.3%
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(3.1)
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-0.4%
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-28%
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Other non-operating
expense (income), net
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1.9
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(0.6)
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Loss Before Income
Taxes
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(177.5)
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-25.8%
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(313.9)
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-44.3%
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-43%
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-47%
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Provision for
(benefit from) income taxes
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6.2
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(2.7)
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Net
Loss
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$
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(183.7)
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-26.7%
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$
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(311.3)
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-43.9%
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-41%
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Net Loss Per
Common Share - Basic
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$
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(0.53)
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$
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(0.90)
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Weighted
average number of common shares
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345.9
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344.4
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Net Loss Per
Common Share - Diluted
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$
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(0.53)
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$
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(0.90)
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Weighted
average number of common and
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potential
common shares
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345.9
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344.4
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1 Amounts
may not foot due to rounding.
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MATTEL, INC. AND
SUBSIDIARIES
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|
|
|
EXHIBIT
II
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2018
|
(In
millions)
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Cash and
equivalents
|
|
|
|
$
|
380.1
|
$
|
526.7
|
$
|
594.5
|
Accounts
receivable, net
|
|
|
|
|
624.5
|
|
676.1
|
|
970.1
|
Inventories
|
|
|
|
|
|
615.8
|
|
677.7
|
|
542.9
|
Prepaid
expenses and other current assets
|
|
|
|
274.7
|
|
341.1
|
|
245.0
|
Total current
assets
|
|
|
|
|
1,895.1
|
|
2,221.7
|
|
2,352.4
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net
|
|
|
|
622.3
|
|
756.7
|
|
657.6
|
Right-of-use assets,
net2
|
|
|
|
|
327.4
|
|
-
|
|
-
|
Other
noncurrent assets
|
|
|
|
|
2,237.6
|
|
2,325.7
|
|
2,233.4
|
Total
Assets
|
|
|
|
|
$
|
5,082.4
|
$
|
5,304.1
|
$
|
5,243.5
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
|
$
|
-
|
$
|
-
|
$
|
4.2
|
Accounts
payable and accrued liabilities2
|
|
|
|
986.9
|
|
977.3
|
|
1,238.4
|
Income
taxes payable
|
|
|
|
|
19.4
|
|
9.9
|
|
10.0
|
Total current
liabilities
|
|
|
|
|
1,006.3
|
|
987.2
|
|
1,252.6
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
2,853.5
|
|
2,871.8
|
|
2,851.7
|
Noncurrent lease
liabilities2
|
|
|
|
|
294.8
|
|
-
|
|
-
|
Other
noncurrent liabilities
|
|
|
|
|
409.3
|
|
462.7
|
|
469.7
|
Stockholders' equity
|
|
|
|
|
518.5
|
|
982.5
|
|
669.5
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
5,082.4
|
$
|
5,304.1
|
$
|
5,243.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
BALANCE SHEET AND CASH FLOW DATA
(Unaudited)1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
|
Key Balance Sheet
Data:
|
|
|
|
|
|
|
|
|
|
Accounts receivable,
net days of sales outstanding (DSO)
|
|
82
|
|
86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
(In
millions)
|
|
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Cash
Flow Data:
|
|
|
|
|
|
|
|
|
|
Cash flows used for
operating activities
|
|
|
|
$
(193)
|
|
$
(274)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used for
investing activities
|
|
|
|
(19)
|
|
(31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used for
financing activities and other
|
|
|
(2)
|
|
(248)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and
equivalents
|
|
|
|
|
$
(214)
|
|
$
(552)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Amounts
may not foot due to rounding.
|
|
|
|
|
|
|
|
|
2 Mattel
adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019 using
the modified retrospective transition method. Upon adoption,
Mattel
|
recorded a
right-of-use asset and lease liability on its balance sheet. Prior
periods were not retrospectively adjusted.
|
|
|
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)
|
|
2019
|
|
2018
|
|
% Change
as Reported
|
|
% Change in
Constant Currency
|
|
|
Worldwide Gross
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
$
689.2
|
|
$
708.4
|
|
-3
|
%
|
1
|
%
|
|
Sales
Adjustments2
|
|
|
|
90.9
|
|
91.6
|
|
|
|
|
|
|
Gross
Sales
|
|
|
|
$
780.1
|
|
$
800.0
|
|
-2
|
%
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Gross
Sales by Categories:3
|
|
|
|
|
|
|
|
|
|
|
Dolls
|
|
|
|
|
$
252.9
|
|
$
257.4
|
|
-2
|
%
|
3
|
%
|
|
Infant/Toddler/Preschool
|
|
|
|
193.6
|
|
226.6
|
|
-15
|
|
-11
|
|
|
Vehicles
|
|
|
|
|
183.4
|
|
188.9
|
|
-3
|
|
2
|
|
|
Action
Figures/Building Sets/Games
|
|
|
150.3
|
|
127.1
|
|
18
|
|
22
|
|
|
Gross
Sales
|
|
|
|
$
780.1
|
|
$
800.0
|
|
-2
|
%
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Gross
Sales Disclosures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Gross
Sales by Top 3 Power Brands:
|
|
|
|
|
|
|
|
|
Barbie
|
|
|
|
|
$
163.5
|
|
$
152.7
|
|
7
|
%
|
13
|
%
|
|
Hot Wheels
|
|
|
|
|
150.5
|
|
144.9
|
|
4
|
|
9
|
|
|
Fisher-Price and
Thomas & Friends
|
|
|
172.4
|
|
187.8
|
|
-8
|
|
-5
|
|
|
Other
|
|
|
|
|
293.7
|
|
314.6
|
|
-7
|
|
-3
|
|
|
Gross
Sales
|
|
|
|
$
780.1
|
|
$
800.0
|
|
-2
|
%
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 categories or brand
level.
|
3 Mattel
modified its reporting structure for revenues in the first quarter
of 2019 to disclose revenues by categories. Refer to Note
23,
|
Segment
Information, in the Form 10-Q for additional
information.
|
|
|
|
|
|
|
|
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)
|
|
2019
|
|
2018
|
|
% Change
as Reported
|
|
% Change in
Constant
Currency
|
|
|
North America
Segment Gross Sales:
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
$
341.4
|
|
$
326.2
|
|
5
|
%
|
5
|
%
|
|
Sales
Adjustments2
|
|
|
|
28.0
|
|
22.2
|
|
|
|
|
|
|
Gross
Sales
|
|
|
|
$
369.4
|
|
$
348.4
|
|
6
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
Gross Sales by Categories:3
|
|
|
|
|
|
|
|
|
|
Dolls
|
|
|
|
|
$
80.3
|
|
$
69.3
|
|
16
|
%
|
16
|
%
|
|
Infant/Toddler/Preschool
|
|
|
|
108.0
|
|
118.8
|
|
-9
|
|
-9
|
|
|
Vehicles
|
|
|
|
|
85.0
|
|
83.2
|
|
2
|
|
2
|
|
|
Action
Figures/Building Sets/Games
|
|
|
96.2
|
|
77.2
|
|
25
|
|
25
|
|
|
Gross
Sales
|
|
|
|
$
369.4
|
|
$
348.4
|
|
6
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Gross
Sales Disclosures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
Gross Sales by Top 3 Power Brands:
|
|
|
|
|
|
|
|
|
Barbie
|
|
|
|
|
$
69.3
|
|
$
60.5
|
|
15
|
%
|
15
|
%
|
|
Hot Wheels
|
|
|
|
|
67.1
|
|
63.5
|
|
6
|
|
6
|
|
|
Fisher-Price and
Thomas & Friends
|
|
|
96.6
|
|
99.8
|
|
-3
|
|
-3
|
|
|
Other
|
|
|
|
|
136.5
|
|
124.6
|
|
10
|
|
10
|
|
|
Gross
Sales
|
|
|
|
$
369.4
|
|
$
348.4
|
|
6
|
%
|
6
|
%
|
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 categories or brand
level.
|
3 Mattel
modified its reporting structure for revenues in the first quarter
of 2019 to disclose revenues by categories. Refer to Note 23,
Segment Information, in the Form 10-Q for additional
information.
|
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)
|
|
2019
|
|
2018
|
|
% Change
as Reported
|
|
% Change in
Constant
Currency
|
|
|
Total
International Segment Gross Sales:
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
$
303.4
|
|
$
317.2
|
|
-4
|
%
|
4
|
%
|
|
Sales
Adjustments2
|
|
|
|
61.8
|
|
66.9
|
|
|
|
|
|
|
Gross
Sales
|
|
|
|
$
365.2
|
|
$
384.1
|
|
-5
|
%
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Segment Gross Sales:
|
|
|
|
|
|
|
|
|
|
|
|
EMEA3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
|
|
$
174.5
|
|
$
185.9
|
|
-6
|
%
|
4
|
%
|
|
Sales
Adjustments2
|
|
|
|
|
41.9
|
|
43.7
|
|
|
|
|
|
|
Gross
Sales
|
|
|
|
$
216.3
|
|
$
229.5
|
|
-6
|
%
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
|
|
$
64.5
|
|
$
63.4
|
|
2
|
%
|
9
|
%
|
|
Sales
Adjustments2
|
|
|
|
|
10.8
|
|
11.1
|
|
|
|
|
|
|
Gross
Sales
|
|
|
|
$
75.3
|
|
$
74.5
|
|
1
|
%
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia
Pacific3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
|
|
$
64.4
|
|
$
68.0
|
|
-5
|
%
|
0
|
%
|
|
Sales
Adjustments2
|
|
|
|
|
9.1
|
|
12.1
|
|
|
|
|
|
|
Gross
Sales
|
|
|
|
$
73.6
|
|
$
80.1
|
|
-8
|
%
|
-3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Gross Sales by Categories:4
|
|
|
|
|
|
|
|
|
|
|
Dolls
|
|
|
|
|
$
127.1
|
|
$
120.7
|
|
5
|
%
|
16
|
%
|
|
Infant/Toddler/Preschool
|
|
|
|
85.6
|
|
107.9
|
|
-21
|
|
-14
|
|
|
Vehicles
|
|
|
|
|
98.4
|
|
105.8
|
|
-7
|
|
2
|
|
|
Action
Figures/Building Sets/Games
|
|
|
54.1
|
|
49.8
|
|
9
|
|
17
|
|
|
Gross
Sales
|
|
|
|
$
365.2
|
|
$
384.1
|
|
-5
|
%
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Gross
Sales Disclosures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Gross Sales by Top 3 Power Brands:
|
|
|
|
|
|
|
|
|
Barbie
|
|
|
|
|
$
94.2
|
|
$
92.2
|
|
2
|
%
|
12
|
%
|
|
Hot Wheels
|
|
|
|
|
83.5
|
|
81.5
|
|
2
|
|
12
|
|
|
Fisher-Price and
Thomas & Friends
|
|
|
75.8
|
|
88.0
|
|
-14
|
|
-7
|
|
|
Other
|
|
|
|
|
111.7
|
|
122.5
|
|
-9
|
|
-1
|
|
|
Gross
Sales
|
|
|
|
$
365.2
|
|
$
384.1
|
|
-5
|
%
|
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 categories or brand
level.
|
3 Mattel
reorganized its regional sales reporting structure in the first
quarter of 2019. As a result, the new regions are Europe, the
Middle East, and Africa ("EMEA"), Latin America, and Asia Pacific.
The Middle East, Africa, Russia, and Turkey were previously
included in the Asia Pacific region (previously Global
Emerging Markets) and are now included in EMEA (previously Europe).
Prior period amounts have been reclassified to conform to the
current period presentation.
|
4 Mattel
modified its reporting structure for revenues in the first quarter
of 2019 to disclose revenues by categories. 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)
|
|
2019
|
|
2018
|
|
% Change
as Reported
|
|
% Change in
Constant
Currency
|
|
|
American Girl
Segment Gross Sales:
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
$
44.4
|
|
$
65.0
|
|
-32
|
%
|
-31
|
%
|
|
Sales
Adjustments
|
|
|
|
1.1
|
|
2.5
|
|
|
|
|
|
|
Gross
Sales
|
|
|
|
$
45.6
|
|
$
67.5
|
|
-32
|
%
|
-32
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Amounts
may not foot due to rounding.
|
|
|
|
|
|
|
|
|
|
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)
|
|
20192
|
|
20182
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
|
Gross Profit, As
Reported
|
|
|
|
|
$
|
239.8
|
$
|
218.9
|
|
Gross
Margin
|
|
|
|
|
34.8%
|
|
30.9%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Asset
Impairments
|
|
|
|
-
|
|
3.0
|
|
Rock 'n Play Product
Recall3
|
|
|
|
21.9
|
|
-
|
|
Gross Profit, As
Adjusted
|
|
|
|
|
$
|
261.7
|
$
|
221.9
|
|
Adjusted Gross
Margin
|
|
|
|
|
38.0%
|
|
31.3%
|
|
|
|
|
|
|
|
|
|
|
|
Other Selling and
Administrative Expenses
|
|
|
|
|
|
Other Selling and
Administrative Expenses, As Reported
|
$
|
301.3
|
$
|
424.6
|
|
% of Net
Sales
|
|
|
|
|
43.7%
|
|
59.9%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Asset
Impairments
|
|
|
|
-
|
|
(1.8)
|
|
Non-recurring
Executive Compensation
|
|
|
-
|
|
(1.0)
|
|
Severance and
Restructuring Expenses
|
|
|
(8.7)
|
|
(24.9)
|
|
Sale of
Assets
|
|
|
|
|
-
|
|
1.4
|
|
Other Selling and
Administrative Expenses, As Adjusted
|
$
|
292.6
|
$
|
398.3
|
|
% of Net
Sales
|
|
|
|
|
42.5%
|
|
56.2%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Loss
|
|
|
|
|
|
|
|
|
Operating Loss, As
Reported
|
|
|
$
|
(131.0)
|
$
|
(276.6)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Asset
Impairments
|
|
|
|
-
|
|
4.8
|
|
Non-recurring
Executive Compensation
|
|
|
-
|
|
1.0
|
|
Severance and
Restructuring Expenses
|
|
|
8.7
|
|
24.9
|
|
Rock 'n Play Product
Recall3
|
|
|
|
21.9
|
|
-
|
|
Sale of
Assets
|
|
|
|
|
-
|
|
(1.4)
|
|
Operating Loss, As
Adjusted
|
|
|
$
|
(100.4)
|
$
|
(247.3)
|
|
|
|
|
|
|
|
|
|
|
|
Other
Information
|
|
|
|
|
|
|
|
|
Toys "R" Us Net Sales
Reversal4
|
|
$
|
-
|
$
|
29.5
|
|
Toys "R" Us Bad Debt
Expense, Net4
|
|
$
|
-
|
$
|
57.3
|
|
Rock 'n Play Product
Recall3
|
|
|
$
|
27.3
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Amounts
may not foot due to rounding.
|
2 Toys "R"
Us Net Sales Reversal and Toys "R" Us Bad Debt Expense, Net are no
longer presented as non-GAAP adjustments for the
three
|
months ended
March 31, 2019 and 2018.
|
|
|
|
|
|
|
3 Mattel
recorded an estimated impact of $27.3 million related to the Rock
'n Play product recall for the three months ended March 31,
2019.
|
Of the $27.3
million, Mattel recorded $21.9 million within Cost of Sales for
customer reimbursement obligations and inventory
obsolescence
|
expense and
$5.4 million as a reduction to Net Sales for estimated retailer
returns.
|
|
|
|
|
4 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, during 2018,
Mattel recorded Bad Debt Expense, Net for the
estimated
|
|
uncollectible
portion of its outstanding receivables, net of recoveries and other
reductions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share
|
|
|
|
|
|
|
|
|
Net Loss Per Common
Share, As Reported
|
|
$
|
(0.53)
|
$
|
(0.90)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Asset
Impairments
|
|
|
|
-
|
|
0.01
|
|
Severance and
Restructuring Expenses
|
|
|
0.03
|
|
0.07
|
|
Rock 'n Play Product
Recall3
|
|
|
|
0.06
|
|
-
|
|
Tax Effect of
Adjustments5
|
|
|
|
-
|
|
(0.03)
|
|
Net Loss Per Common
Share, As Adjusted
|
|
$
|
(0.44)
|
$
|
(0.85)
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA and
Adjusted EBITDA
|
|
|
|
|
|
|
Net Loss, As
Reported
|
|
|
$
|
(183.7)
|
$
|
(311.3)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
47.0
|
|
41.1
|
|
Provision for
(Benefit from) Income Taxes
|
|
6.2
|
|
(2.7)
|
|
Depreciation
|
|
|
|
|
52.1
|
|
58.5
|
|
Amortization
|
|
|
|
|
10.4
|
|
10.2
|
|
EBITDA
|
|
|
|
|
|
(68.1)
|
|
(204.1)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Asset
Impairments
|
|
|
|
-
|
|
4.8
|
|
Shared-based
Compensation
|
|
|
|
11.9
|
|
14.4
|
|
Severance and
Restructuring Expenses
|
|
|
8.7
|
|
24.9
|
|
Rock 'n Play Product
Recall3
|
|
|
|
21.9
|
|
-
|
|
Sale of
Assets
|
|
|
|
|
-
|
|
(1.4)
|
|
Adjusted
EBITDA
|
|
|
|
$
|
(25.6)
|
$
|
(161.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Amounts
may not foot due to rounding.
|
2 Toys "R"
Us Net Sales Reversal and Toys "R" Us Bad Debt Expense, Net are no
longer presented as non-GAAP adjustments for the
three
|
months
ended March 31, 2019 and 2018.
|
|
|
|
|
|
|
3 Mattel
recorded an estimated impact of $27.3 million related to the Rock
'n Play product recall for the three months ended March 31,
2019.
|
Of the $27.3
million, Mattel recorded $21.9 million within Cost of Sales for
customer reimbursement obligations and inventory
obsolescence
|
expense and
$5.4 million as a reduction to Net Sales for estimated retailer
returns.
|
|
|
|
|
5 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.
Adjustments for the U.S. and certain International
affiliates
|
were not
tax effected because of the valuation allowance on deferred tax
assets.
|
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/mattel-reports-first-quarter-2019-financial-results-300838704.html
SOURCE Mattel