Mattel Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

mat-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________________

FORM 10-Q

___________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			For the quarterly period ended			June 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission File Number 001-05647

___________________________________________________________

MATTEL, INC.

(Exact name of registrant as specified in its charter)

___________________________________________________________


Delaware						95-1567322
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

333 Continental Blvd.

90245-5012

El Segundo,

(Address of principal executive offices)

(Zip Code)

(310) 252-2000

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report):

NONE

__________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $1.00 per share

MAT

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares outstanding of registrant's common stock, $1.00 par value, as of July 15, 2020: 346,897,357 shares

MATTEL, INC. AND SUBSIDIARIES

(Cautionary Statement Under the Private Securities Litigation Reform Act of 1995)

Mattel is including this Cautionary Statement to caution investors and qualify for the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the "Act") for forward-looking statements. This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Act. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. 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 assumptions, 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, and are currently, or in the future could be, amplified by the COVID-19 pandemic. Specific factors that might cause such a difference include, but are not limited to: (i) potential impacts of the COVID-19 pandemic on our business operations, financial results and financial position and on the global economy, including its impact on our sales; (ii) 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; (iii) 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; (iv) 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; (v) potential difficulties or delays Mattel may experience in implementing cost savings and efficiency enhancing initiatives; (vi) 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; (vii) currency fluctuations, including movements in foreign exchange rates, which can lower Mattel’s net revenues and earnings, and significantly impact Mattel’s costs; (viii) the concentration of Mattel’s customers, potentially increasing the negative impact to Mattel of difficulties experienced by any of Mattel’s customers, or changes in their purchasing or selling patterns; (ix) 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; (x) 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; (xi) legal, reputational, and financial risks related to security breaches or cyberattacks; (xii) the increased costs of developing more sophisticated digital and smart technology products, and the corresponding supply chain and design challenges associated with such products; (xiii) work disruptions, which may impact Mattel’s ability to manufacture or deliver product in a timely and cost-effective manner; (xiv) the bankruptcy and liquidation 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; (xv) 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 competitive products, the ability to secure, maintain and renew popular licenses and the ability to attract and retain talented employees; (xvi) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xvii) 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; (xviii) failure to realize the planned benefits from any investments or acquisitions made by Mattel; (xix) 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; (xx) changes in financing markets or the inability of Mattel to obtain financing on attractive terms; (xxi) the impact of litigation, arbitration, or regulatory decisions or settlement actions; (xxii) uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; and (xxiii) other risks and uncertainties detailed in Part 1, Item 1A "Risk Factors" in Mattel's 2019 Annual Report on Form 10-K, as amended (the "2019 Annual Report on Form 10-K") and in Part II, Item 1A "Risk Factors" of this Quarterly Report on Form 10-Q. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so, except as required by law.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	June 30, 2020		June 30, 2019		December 31, 2019
	(Unaudited; in thousands, except share data)
ASSETS
Current Assets
Cash and equivalents	$	461,557	$	194,125	$	630,028
Accounts receivable, net of allowances for credit losses of $18.7 million, $21.3 million, and $18.5 million, respectively	650,502		755,698		936,359
Inventories	702,592		722,394		495,504
Prepaid expenses and other current assets	211,418		243,305		186,083
Total current assets	2,026,069		1,915,522		2,247,974
Noncurrent Assets
Property, plant, and equipment, net	506,555		595,838		550,139
Right-of-use assets, net	282,474		317,085		303,187
Goodwill	1,382,858		1,386,057		1,390,714
Other noncurrent assets	794,724		832,127		833,212
Total Assets	$	4,992,680	$	5,046,629	$	5,325,226
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings	$	400,000	$	45,000	$	—
Accounts payable	402,220		416,430		459,357
Accrued liabilities	563,633		585,674		769,513
Income taxes payable	15,732		22,618		48,037
Total current liabilities	1,381,585		1,069,722		1,276,907
Noncurrent Liabilities
Long-term debt	2,850,841		2,855,194		2,846,751
Noncurrent lease liabilities	246,414		284,947		270,853
Other noncurrent liabilities	427,692		410,571		439,001
Total noncurrent liabilities	3,524,947		3,550,712		3,556,605
Stockholders' Equity
Common stock $1.00 par value, 1.0 billion shares authorized; 441.4 million shares issued	441,369		441,369		441,369
Additional paid-in capital	1,844,075		1,831,952		1,825,569
Treasury stock at cost: 94.4 million shares, 95.9 million shares, and 94.6 million shares, respectively	(2,314,967)		(2,349,874)		(2,318,921)
Retained earnings	1,093,268		1,342,410		1,413,181
Accumulated other comprehensive loss	(977,597)		(839,662)		(869,484)
Total stockholders' equity	86,148		426,195		491,714
Total Liabilities and Stockholders' Equity	$	4,992,680	$	5,046,629	$	5,325,226

The accompanying notes are an integral part of these consolidated financial statements.

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


	For the Three Months Ended									For the Six Months Ended
			June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
	(Unaudited; in thousands, except per share amounts)
Net Sales	$	732,136		$	860,063		$	1,326,206		$	1,549,309
Cost of sales	411,288			518,679			750,175			968,135
Gross Profit	320,848			341,384			576,031			581,174
Advertising and promotion expenses	60,172			84,489			136,454			153,954
Other selling and administrative expenses	306,817			308,311			635,529			605,647
Operating Loss	(46,141)			(51,416)			(195,952)			(178,427)
Interest expense	49,615			46,234			98,595			93,192
Interest (income)	(1,025)			(1,532)			(3,108)			(3,804)
Other non-operating expense (income), net	1,602			(294)			3,743			1,610
Loss Before Income Taxes	(96,333)			(95,824)			(295,182)			(269,425)
Provision for income taxes	12,839			12,163			24,732			14,858
Net Loss	$	(109,172)		$	(107,987)		$	(319,914)		$	(284,283)
Net Loss Per Common Share - Basic	$	(0.31)		$	(0.31)		$	(0.92)		$	(0.82)
Weighted-average number of common shares	346,875			345,941			346,778			345,946
Net Loss Per Common Share - Diluted	$	(0.31)		$	(0.31)		$	(0.92)		$	(0.82)
Weighted-average number of common and potential common shares	346,875			345,941			346,778			345,946

The accompanying notes are an integral part of these consolidated financial statements.

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


	For the Three Months Ended						For the Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Unaudited; in thousands)
Net Loss	$	(109,172)	$	(107,987)	$	(319,914)	$	(284,283)
Other Comprehensive Income (Loss), Net of Tax
Currency translation adjustments	26,843		(1,170)		(118,791)		12,963
Employee benefit plan adjustments	518		624		3,578		847
Net unrealized (losses) gains on available-for-sale security	(80)		(1,944)		115		(67)
Net unrealized gains on derivative instruments:
Unrealized holding gains	4,704		3,254		13,894		9,072
Amounts reclassified from accumulated other comprehensive loss	(3,699)		(2,492)		(6,909)		(3,251)
	1,005		762		6,985		5,821
Other Comprehensive Income (Loss), Net of Tax	28,286		(1,728)		(108,113)		19,564
Comprehensive Loss	$	(80,886)	$	(109,715)	$	(428,027)	$	(264,719)

The accompanying notes are an integral part of these consolidated financial statements.

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Six Months Ended
			June 30, 2020			June 30, 2019
	(Unaudited; in thousands)
Cash Flows From Operating Activities
Net loss	$	(319,914)		$	(284,283)
Adjustments to reconcile net loss to net cash flows used for operating activities:
Depreciation	81,984			103,580
Amortization	19,652			20,338
Asset impairments	4,716			6,845



Share-based compensation	23,414			24,310
Bad debt expense	6,460			2,487
Inventory obsolescence	20,929			35,351

Deferred income taxes	5,784			36
Changes in assets and liabilities:
Accounts receivable	248,008			217,754
Inventories	(241,833)			(207,984)
Prepaid expenses and other current assets	(30,923)			(8,154)
Accounts payable, accrued liabilities, and income taxes payable	(305,316)			(301,942)
Other, net	24,007			(8,857)
Net cash flows used for operating activities	(463,032)			(400,519)
Cash Flows From Investing Activities
Purchases of tools, dies, and molds	(25,824)			(20,933)
Purchases of other property, plant, and equipment	(34,367)			(27,248)

(Payments for) proceeds from foreign currency forward exchange contracts, net	(21,746)			3,992

Other, net	1,005			484
Net cash flows used for investing activities	(80,932)			(43,705)
Cash Flows From Financing Activities

Proceeds from short-term borrowings, net	400,000			40,824






Other, net	(693)			(158)
Net cash flows provided by financing activities	399,307			40,666
Effect of Currency Exchange Rate Changes on Cash	(23,814)			3,202
Decrease in Cash and Equivalents	(168,471)			(400,356)
Cash and Equivalents at Beginning of Period	630,028			594,481
Cash and Equivalents at End of Period	$	461,557		$	194,125

The accompanying notes are an integral part of these consolidated financial statements.

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


	Common Stock		Additional Paid-In Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	(Unaudited; in thousands)
Balance, December 31, 2019	$	441,369	$	1,825,569	$	(2,318,921)	$	1,413,181	$	(869,484)	$	491,714

Net loss	—		—		—		(210,741)		—		(210,741)
Other comprehensive loss, net of tax	—		—		—		—		(136,399)		(136,399)

Issuance of treasury stock for restricted stock units vesting	—		(3,777)		2,811		—		—		(966)

Share-based compensation	—		14,275		—		—		—		14,275


Balance, March 31, 2020	$	441,369	$	1,836,067	$	(2,316,110)	$	1,202,440	$	(1,005,883)	$	157,883

Net loss	—		—		—		(109,172)		—		(109,172)
Other comprehensive income, net of tax	—		—		—		—		28,286		28,286

Issuance of treasury stock for restricted stock units vesting	—		(944)		833		—		—		(111)
Deferred compensation	—		(186)		310		—		—		124
Share-based compensation	—		9,138		—		—		—		9,138
Balance, June 30, 2020	$	441,369	$	1,844,075	$	(2,314,967)	$	1,093,268	$	(977,597)	$	86,148


















	Common Stock		Additional Paid-In Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	(Unaudited; in thousands)
Balance, December 31, 2018	$	441,369	$	1,812,682	$	(2,354,617)	$	1,626,693	$	(859,226)	$	666,901
Net loss	—		—		—		(176,296)		—		(176,296)
Other comprehensive income, net of tax	—		—		—		—		21,292		21,292
Issuance of treasury stock for restricted stock units vesting	—		(1,829)		1,442		—		—		(387)
Share-based compensation	—		11,865		—		—		—		11,865
Balance, March 31, 2019	$	441,369	$	1,822,718	$	(2,353,175)	$	1,450,397	$	(837,934)	$	523,375

Net loss	—		—		—		(107,987)		—		(107,987)
Other comprehensive loss, net of tax	—		—		—		—		(1,728)		(1,728)

Issuance of treasury stock for restricted stock units vesting	—		(3,060)		3,025		—		—		(35)
Deferred compensation	—		(151)		276		—		—		125
Share-based compensation	—		12,445		—		—		—		12,445


Balance, June 30, 2019	$	441,369	$	1,831,952	$	(2,349,874)	$	1,342,410	$	(839,662)	$	426,195

Price	11.26	EPS	-1
Shares	348	P/E	-19
MCap	3,924	P/FCF	-8
Net Debt	2,682	EBIT	-16
TEV	6,606	TEV/EBIT	-423
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-10
10-Q	2020-03-31	Filed 2020-05-06
10-K	2019-12-31	Filed 2020-02-25
10-Q	2019-09-30	Filed 2019-11-12
10-Q	2019-06-30	Filed 2019-07-26
10-Q	2019-03-31	Filed 2019-04-26
10-K	2018-12-31	Filed 2019-02-22
10-Q	2018-09-30	Filed 2018-10-25
10-Q	2018-06-30	Filed 2018-07-25
10-Q	2018-03-31	Filed 2018-04-26
10-K	2017-12-31	Filed 2018-02-27
10-Q	2017-09-30	Filed 2017-10-26
10-Q	2017-06-30	Filed 2017-08-02
10-Q	2017-03-31	Filed 2017-04-27
10-K	2016-12-31	Filed 2017-02-23
10-Q	2016-09-30	Filed 2016-10-27
10-Q	2016-06-30	Filed 2016-07-28
10-Q	2016-03-31	Filed 2016-04-28
10-K	2015-12-31	Filed 2016-02-25
10-Q	2015-09-30	Filed 2015-10-27
10-Q	2015-06-30	Filed 2015-07-28
10-Q	2015-03-31	Filed 2015-04-28
10-K	2014-12-31	Filed 2015-02-25
10-Q	2014-09-30	Filed 2014-10-28
10-Q	2014-06-30	Filed 2014-07-29
10-Q	2014-03-31	Filed 2014-04-29
10-K	2013-12-31	Filed 2014-02-26
10-Q	2013-09-30	Filed 2013-10-24
10-Q	2013-06-30	Filed 2013-07-25
10-Q	2013-03-31	Filed 2013-04-22
10-K	2012-12-31	Filed 2013-02-26
10-Q	2012-09-30	Filed 2012-10-24
10-Q	2012-06-30	Filed 2012-07-25
10-Q	2012-03-31	Filed 2012-04-25
10-K	2011-12-31	Filed 2012-02-23
10-Q	2011-09-30	Filed 2011-10-26
10-Q	2011-06-30	Filed 2011-07-20
10-Q	2011-03-31	Filed 2011-04-27
10-K	2010-12-31	Filed 2011-02-24
10-Q	2010-09-30	Filed 2010-10-27
10-Q	2010-06-30	Filed 2010-07-28
10-Q	2010-03-31	Filed 2010-04-28
10-K	2009-12-31	Filed 2010-02-24

8-K	2020-07-23	Earnings, Exhibits
8-K	2020-07-21	Officers, Regulation FD, Exhibits
8-K	2020-06-19
8-K	2020-06-10
8-K	2020-05-04
8-K	2020-04-15
8-K	2020-02-13
8-K	2019-11-20
8-K	2019-11-18
8-K	2019-11-18
8-K	2019-10-23
8-K	2019-10-01
8-K	2019-08-06
8-K	2019-08-01
8-K	2019-08-01
8-K	2019-07-25
8-K	2019-05-16
8-K	2019-04-25
8-K	2019-04-15
8-K	2019-02-27
8-K	2019-02-07
8-K	2018-12-14
8-K	2018-10-25
8-K	2018-10-10
8-K	2018-09-13
8-K	2018-08-22
8-K	2018-08-13
8-K	2018-08-07
8-K	2018-07-25
8-K	2018-06-11
8-K	2018-05-31
8-K	2018-05-23
8-K	2018-05-21
8-K	2018-05-17
8-K	2018-05-03
8-K	2018-04-26
8-K	2018-04-17
8-K	2018-04-03
8-K	2018-03-28
8-K	2018-03-20
8-K	2018-02-26
8-K	2018-02-08
8-K	2018-02-01
8-K	2018-01-30
8-K	2018-01-02

EX-10.5	mat63020ex105.htm
EX-31.0	mat63020ex310.htm
EX-31.1	mat63020ex311.htm
EX-32.0	mat63020ex320.htm
EX-99.1	mat6302020ex991.htm
EX-99.2	mat63020ex992.htm


		Page

	PART I

Item 1.	Financial Statements	4

	Consolidated Balance Sheets	4

	Consolidated Statements of Operations	5

	Consolidated Statements of Comprehensive Loss	6

	Consolidated Statements of Cash Flows	7

	Consolidated Statements of Stockholders' Equity	8

	Notes to Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	52

	PART II

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

Item 3.	Defaults Upon Senior Securities	55

Item 4.	Mine Safety Disclosures	55

Item 5.	Other Information	55

Item 6.	Exhibits	56

	Signature	57

MAT 10Q Quarterly Report

Mattel Earnings 2020-06-30