Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 16, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | MAT | |
Entity Registrant Name | MATTEL INC /DE/ | |
Entity Central Index Key | 63,276 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 339,354,128 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Current Assets | |||
Cash and equivalents | $ 289,697 | $ 971,650 | $ 262,172 |
Accounts receivable, net | 1,451,250 | 1,094,452 | 1,695,358 |
Inventories | 870,785 | 561,755 | 824,270 |
Prepaid expenses and other current assets | 571,487 | 559,074 | 543,673 |
Total current assets | 3,183,219 | 3,186,931 | 3,325,473 |
Noncurrent Assets | |||
Property, plant, and equipment, net | 721,299 | 737,869 | 710,612 |
Goodwill | 1,387,959 | 1,392,925 | 1,398,984 |
Other noncurrent assets | 1,357,053 | 1,404,258 | 1,458,478 |
Total Assets | 6,649,530 | 6,721,983 | 6,893,547 |
Current Liabilities | |||
Short-term borrowings | 161,008 | 52,500 | |
Accounts payable | 560,668 | 430,259 | 456,594 |
Accrued liabilities | 688,004 | 639,844 | 653,798 |
Income taxes payable | 31,918 | 18,783 | 47,388 |
Total current liabilities | 1,441,598 | 1,088,886 | 1,210,280 |
Noncurrent Liabilities | |||
Long-term debt | 2,100,000 | 2,100,000 | 2,100,000 |
Other noncurrent liabilities | 535,269 | 584,026 | 515,433 |
Total noncurrent liabilities | 2,635,269 | 2,684,026 | 2,615,433 |
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 | 1,779,176 | 1,767,096 | 1,751,566 |
Treasury stock at cost: 102.1 million shares, 103.3 million shares, and 102.6 million shares, respectively | (2,503,757) | (2,533,566) | (2,508,837) |
Retained earnings | 3,660,796 | 3,896,261 | 3,876,423 |
Accumulated other comprehensive loss | (804,921) | (622,089) | (492,687) |
Total stockholders' equity | 2,572,663 | 2,949,071 | 3,067,834 |
Total Liabilities and Stockholders' Equity | $ 6,649,530 | $ 6,721,983 | $ 6,893,547 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Common stock, par value | $ 1 | $ 1 | $ 1 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 441,400,000 | 441,400,000 | 441,400,000 |
Treasury stock, shares | 102,100,000 | 103,300,000 | 102,600,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net Sales | $ 1,791,968 | $ 2,021,424 | $ 3,702,869 | $ 4,029,853 |
Cost of sales | 912,371 | 1,000,286 | 1,899,966 | 2,034,614 |
Gross Profit | 879,597 | 1,021,138 | 1,802,903 | 1,995,239 |
Advertising and promotion expenses | 213,245 | 218,746 | 420,417 | 409,433 |
Other selling and administrative expenses | 365,579 | 392,913 | 1,135,617 | 1,169,101 |
Operating Income | 300,773 | 409,479 | 246,869 | 416,705 |
Interest expense | 21,409 | 21,009 | 62,516 | 57,220 |
Interest (income) | (1,990) | (1,773) | (5,757) | (5,238) |
Other non-operating (income), net | (4,785) | (3,937) | (2,984) | (5,665) |
Income Before Income Taxes | 286,139 | 394,180 | 193,094 | 370,388 |
Provision for income taxes | 62,355 | 62,344 | 38,838 | 21,445 |
Net Income | $ 223,784 | $ 331,836 | $ 154,256 | $ 348,943 |
Net Income Per Common Share-Basic | $ 0.66 | $ 0.97 | $ 0.45 | $ 1.02 |
Weighted average number of common shares | 339,420 | 338,728 | 338,954 | 339,216 |
Net Income Per Common Share-Diluted | $ 0.66 | $ 0.97 | $ 0.45 | $ 1.02 |
Weighted average number of common and potential common shares | 339,790 | 340,329 | 339,544 | 341,167 |
Dividends Declared Per Common Share | $ 0.38 | $ 0.38 | $ 1.14 | $ 1.14 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net income | $ 223,784 | $ 331,836 | $ 154,256 | $ 348,943 |
Other Comprehensive (Loss) Income, Net of Tax: | ||||
Currency translation adjustments | (90,486) | (117,713) | (179,802) | (80,335) |
Defined benefit pension plan adjustments | 6,724 | 2,217 | 6,311 | 6,962 |
Net unrealized (losses) gains on derivative instruments: | ||||
Unrealized holding gains | 8,866 | 19,745 | 32,367 | 15,437 |
Reclassification adjustment for realized (gains) losses included in net income | (19,152) | 3,328 | (41,708) | 8,925 |
Net unrealized (losses) gains on derivative instruments | (10,286) | 23,073 | (9,341) | 24,362 |
Other Comprehensive (Loss) Income, Net of Tax | (94,048) | (92,423) | (182,832) | (49,011) |
Comprehensive Income (Loss) | $ 129,736 | $ 239,413 | $ (28,576) | $ 299,932 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows From Operating Activities: | ||
Net income | $ 154,256 | $ 348,943 |
Adjustments to reconcile net income to net cash flows used for operating activities: | ||
Depreciation | 173,026 | 151,959 |
Amortization | 24,396 | 25,213 |
Deferred income taxes | (14,551) | (23,677) |
Tax deficiency (benefit) from share-based payment arrangements | 3,114 | (19,746) |
Share-based compensation | 41,130 | 36,510 |
(Decrease) increase from changes in assets and liabilities, net of acquired assets and liabilities: | ||
Accounts receivable | (411,829) | (442,843) |
Inventories | (349,476) | (215,316) |
Prepaid expenses and other current assets | (24,369) | (5,737) |
Accounts payable, accrued liabilities, and income taxes payable | 180,969 | (288) |
Other, net | 996 | 672 |
Net cash flows used for operating activities | (222,338) | (144,310) |
Cash Flows From Investing Activities: | ||
Purchases of tools, dies, and molds | (95,751) | (102,803) |
Purchases of other property, plant, and equipment | (74,856) | (69,323) |
Payments for acquisition, net of cash acquired | (423,309) | |
Payments for foreign currency forward exchange contracts | (68,443) | (9,362) |
Other, net | 33,091 | 439 |
Net cash flows used for investing activities | (205,959) | (604,358) |
Cash Flows From Financing Activities: | ||
Payments of short-term borrowings, net | (4,278) | |
Proceeds from short-term borrowings, net | 161,008 | 52,500 |
Payments of long-term borrowings | (44,587) | |
Proceeds from long-term borrowings, net | 495,459 | |
Share repurchases | (128,165) | |
Payments of dividends on common stock | (386,102) | (386,360) |
Proceeds from exercise of stock options | 10,458 | 20,866 |
Tax (deficiency) benefit from share-based payment arrangements | (3,114) | 19,746 |
Other, net | (12,216) | (45,237) |
Net cash flows used for financing activities | (229,966) | (20,056) |
Effect of Currency Exchange Rate Changes on Cash | (23,690) | (8,320) |
Decrease in Cash and Equivalents | (681,953) | (777,044) |
Cash and Equivalents at Beginning of Period | 971,650 | 1,039,216 |
Cash and Equivalents at End of Period | $ 289,697 | $ 262,172 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments, consisting of only those of a normal recurring nature, considered necessary for a fair presentation of the financial position and interim results of Mattel, Inc. and its subsidiaries (“Mattel”) as of and for the periods presented have been included. As Mattel’s business is seasonal, results for interim periods are not necessarily indicative of those that may be expected for a full year. The year-end balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the consolidated financial statements do not include all disclosures required by GAAP. The financial information included herein should be read in conjunction with Mattel’s consolidated financial statements and related notes in its 2014 Annual Report on Form 10-K. |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2015 | |
Accounts Receivable | 2. Accounts Receivable Accounts receivable are net of allowances for doubtful accounts of $26.0 million, $22.0 million, and $26.3 million as of September 30, 2015, September 30, 2014, and December 31, 2014, respectively. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2015 | |
Inventories | 3. Inventories Inventories include the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Raw materials and work in process $ 126,261 $ 125,536 $ 88,395 Finished goods 744,524 698,734 473,360 $ 870,785 $ 824,270 $ 561,755 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant, and Equipment | 4. Property, Plant, and Equipment Property, plant, and equipment, net includes the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Land $ 27,055 $ 27,609 $ 27,465 Buildings 273,139 273,261 274,452 Machinery and equipment 748,247 701,476 728,299 Software 327,190 331,324 316,374 Tools, dies, and molds 820,772 773,059 782,507 Capital leases 23,970 23,970 23,970 Leasehold improvements 242,060 239,407 242,177 2,462,433 2,370,106 2,395,244 Less: accumulated depreciation (1,741,134 ) (1,659,494 ) (1,657,375 ) $ 721,299 $ 710,612 $ 737,869 |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill | 5. Goodwill Goodwill is allocated to various reporting units, which are at the operating segment level, for purposes of evaluating whether goodwill is impaired. Mattel’s reporting units are: (i) North America, (ii) International, and (iii) American Girl. Mattel tests its goodwill for impairment annually in the third quarter and whenever events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value. In the third quarter of 2015, Mattel performed its annual impairment tests and determined that goodwill was not impaired since each reporting unit’s fair value exceeded its carrying value. The change in the carrying amount of goodwill by operating segment for the nine months ended September 30, 2015 is shown below. Brand-specific goodwill held by foreign subsidiaries is allocated to the North America and American Girl operating segments selling those brands, thereby causing a foreign currency translation impact for these operating segments. December 31, 2014 Currency Exchange Rate Impact September 30, 2015 (In thousands) North America $ 720,939 $ (1,035 ) $ 719,904 International 458,766 (3,501 ) 455,265 American Girl 213,220 (430 ) 212,790 Total goodwill $ 1,392,925 $ (4,966 ) $ 1,387,959 Acquisition of MEGA Brands Inc. On April 30, 2014, Mattel acquired MEGA Brands Inc., a corporation incorporated under the laws of Canada (“MEGA Brands”), pursuant to the Arrangement Agreement dated as of February 27, 2014, between MEGA Brands, Mattel Overseas Operations Ltd., a corporation incorporated under the laws of Bermuda, Mattel-MEGA Holdings Inc., a corporation incorporated under the laws of Canada (the “Purchasing Subsidiary”), and, with respect to certain provisions thereof, Mattel (the “Arrangement Agreement”). Pursuant to the terms set forth in the Arrangement Agreement, Mattel indirectly acquired, through the Purchasing Subsidiary, 100% of the issued and outstanding common shares and warrants of MEGA Brands for total cash consideration of $454.9 million, including payment for cash acquired of $31.6 million. The acquisition of MEGA Brands builds upon Mattel’s portfolio of brands by expanding into the construction building sets and arts and crafts categories. The total purchase consideration was allocated to the assets acquired and liabilities assumed based on their estimated fair values. As a result of the acquisition, Mattel recognized $95.0 million of identifiable intangible assets (primarily related to trade names and existing product lines), $40.6 million of net assets acquired (which included $31.6 million of cash, $36.6 million of accounts receivable, $83.0 million of inventory, $32.5 million of property, plant, and equipment, $66.6 million of accounts payable and accrued liabilities, $44.6 million of long-term debt, and $31.9 million of other net liabilities), and $319.3 million of goodwill, which is not deductible for tax purposes. The fair values of the identifiable intangible assets related to trade names were based on the relief from royalty method, using Level 3 inputs within the fair value hierarchy, which included forecasted future cash flows, long-term revenue growth rates, royalty rates, and discount rates. The fair values of the identifiable intangible assets related to existing product lines were estimated based on the multi-period excess earnings method, using Level 3 inputs within the fair value hierarchy, which included forecasted future cash flows, long-term revenue growth rates, and discount rates. Goodwill relates to a number of factors built into the purchase price, including the future earnings and cash flow potential of the business, as well as the complementary strategic fit and the resulting synergies it brings to Mattel’s existing operations. Mattel finalized the valuation of the assets acquired and liabilities assumed in the first quarter of 2015, which resulted in adjustments to the purchase price allocation during the measurement period. As such, Mattel has retrospectively adjusted the provisional amounts recorded in its consolidated balance sheets as of September 30, 2014 and December 31, 2014 as if the valuation of the assets acquired and liabilities assumed was finalized on the acquisition date. For the consolidated balance sheet as of September 30, 2014, the retrospective adjustments resulted in a decrease to net assets acquired of approximately $9 million and an increase to goodwill of approximately $9 million. For the consolidated balance sheet as of December 31, 2014, the retrospective adjustments resulted in an increase to net assets acquired of approximately $1 million and a decrease to goodwill of approximately $1 million. During the three and nine months ended September 30, 2015, Mattel recognized approximately $3 million and $13 million of integration costs, respectively. During the three and nine months ended September 30, 2014, Mattel recognized approximately $5 million and $9 million of integration costs, respectively. There were no transaction costs during the three months ended September 30, 2014. During the nine months ended September 30, 2014, Mattel recognized approximately $7 million of transaction costs. Integration and transaction costs are recorded within other selling and administrative expenses in the consolidated statements of operations. The pro forma and actual results of operations for this acquisition have not been presented because they are not material. |
Other Noncurrent Assets
Other Noncurrent Assets | 9 Months Ended |
Sep. 30, 2015 | |
Other Noncurrent Assets | 6. Other Noncurrent Assets Other noncurrent assets include the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Nonamortizable identifiable intangibles $ 492,979 $ 506,363 $ 498,517 Deferred income taxes 390,109 419,197 385,434 Identifiable intangibles (net of amortization of $124.6 million, $89.0 million, and $103.6 million, respectively) 219,311 249,520 240,227 Other 254,654 283,398 280,080 $ 1,357,053 $ 1,458,478 $ 1,404,258 In connection with the acquisition of MEGA Brands, as more fully described in “Note 5 to the Consolidated Financial Statements—Goodwill” of this Quarterly Report on Form 10-Q, Mattel recognized $95.0 million of amortizable identifiable intangible assets, primarily related to trade names and existing product lines. Mattel tests nonamortizable intangible assets, including trademarks and trade names, for impairment annually in the third quarter and whenever events or changes in circumstances indicate that the carrying values may exceed the fair values. During the third quarter of 2015, Mattel performed its annual impairment assessments and determined that its nonamortizable intangible assets were not impaired. Mattel also tests its amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Amortizable intangible assets were determined to not be impaired during the three and nine months ended September 30, 2015. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Accrued Liabilities | 7. Accrued Liabilities Accrued liabilities include the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Advertising and promotion $ 116,529 $ 87,306 $ 88,132 Royalties 111,082 102,504 112,823 Taxes other than income taxes 70,815 71,190 53,182 Other 389,578 392,798 385,707 $ 688,004 $ 653,798 $ 639,844 |
Seasonal Financing
Seasonal Financing | 9 Months Ended |
Sep. 30, 2015 | |
Seasonal Financing | 8. Seasonal Financing Mattel maintains and periodically amends or replaces its domestic unsecured committed revolving credit facility with a commercial bank group. The credit facility is used as a back-up to Mattel’s commercial paper program, which is used as the primary source of financing for the seasonal working capital requirements of its domestic subsidiaries. The agreement governing the credit facility was amended and restated on June 8, 2015 to, among other things, (i) extend the maturity date of the credit facility to June 9, 2020, (ii) amend the definition of consolidated earnings before interest, taxes, depreciation, and amortization (“Consolidated EBITDA”) used in calculating Mattel’s financial ratio covenants, and (iii) increase the maximum allowed consolidated debt-to-Consolidated EBITDA ratio to 3.50 to 1. The aggregate commitments under the credit facility remain at $1.60 billion, with an “accordion feature,” which allows Mattel to increase the aggregate availability under the credit facility to $1.85 billion under certain circumstances. In addition, applicable interest rate margins remain within a range of 0.00% to 0.75% above the applicable base rate for base rate loans and 0.88% to 1.75% above the applicable LIBOR for Eurodollar rate loans, and the commitment fees range from 0.08% to 0.25% of the unused commitments under the credit facility, in each case depending on Mattel’s senior unsecured long-term debt rating. The proportion of unamortized debt issuance costs from the prior credit facility renewal related to creditors involved in both the prior credit facility and amended credit facility and borrowing costs incurred as a result of the amendment were deferred, and such costs will be amortized over the term of the amended credit facility. Mattel is required to meet financial ratio covenants at the end of each quarter and fiscal year, using the formulae specified in the credit agreement to calculate the ratios. Mattel was in compliance with such covenants at September 30, 2015. The agreement governing the credit facility is a material agreement, and failure to comply with the financial ratio covenants may result in an event of default under the terms of the credit facility. If Mattel were to default under the terms of the credit facility, its ability to meet its seasonal financing requirements could be adversely affected. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2015 | |
Long-Term Debt | 9. Long-Term Debt Long-term debt includes the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) 2010 Senior Notes due October 2020 and October 2040 $ 500,000 $ 500,000 $ 500,000 2011 Senior Notes due November 2016 and November 2041 600,000 600,000 600,000 2013 Senior Notes due March 2018 and March 2023 500,000 500,000 500,000 2014 Senior Notes due May 2019 500,000 500,000 500,000 2,100,000 2,100,000 2,100,000 Less: current portion — — — Total long-term debt $ 2,100,000 $ 2,100,000 $ 2,100,000 |
Other Noncurrent Liabilities
Other Noncurrent Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Other Noncurrent Liabilities | 10. Other Noncurrent Liabilities Other noncurrent liabilities include the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Benefit plan liabilities $ 203,251 $ 183,933 $ 229,963 Noncurrent tax liabilities 168,704 166,244 171,181 Other 163,314 165,256 182,882 $ 535,269 $ 515,433 $ 584,026 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss) | 11. Accumulated Other Comprehensive Income (Loss) The following tables present changes in the accumulated balances for each component of other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications out of accumulated other comprehensive income (loss): For the Three Months Ended September 30, 2015 Derivative Instruments Defined Benefit Currency Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of June 30, 2015 $ 30,970 $ (161,920 ) $ (579,923 ) $ (710,873 ) Other comprehensive income (loss) before reclassifications 8,866 (103 ) (90,486 ) (81,723 ) Amounts reclassified from accumulated other comprehensive income (loss) (19,152 ) 6,827 — (12,325 ) Net (decrease) increase in other comprehensive income (loss) (10,286 ) 6,724 (90,486 ) (94,048 ) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2015 $ 20,684 $ (155,196 ) $ (670,409 ) $ (804,921 ) For the Nine Months Ended September 30, 2015 Derivative Instruments Defined Benefit Currency Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2014 $ 30,025 $ (161,507 ) $ (490,607 ) $ (622,089 ) Other comprehensive income (loss) before reclassifications 32,367 (1,053 ) (179,802 ) (148,488 ) Amounts reclassified from accumulated other comprehensive income (loss) (41,708 ) 7,364 — (34,344 ) Net (decrease) increase in other comprehensive income (loss) (9,341 ) 6,311 (179,802 ) (182,832 ) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2015 $ 20,684 $ (155,196 ) $ (670,409 ) $ (804,921 ) For the Three Months Ended September 30, 2014 Derivative Instruments Defined Benefit Currency Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of June 30, 2014 $ (9,500 ) $ (127,201 ) $ (263,563 ) $ (400,264 ) Other comprehensive income (loss) before reclassifications 19,745 139 (117,713 ) (97,829 ) Amounts reclassified from accumulated other comprehensive income (loss) 3,328 2,078 — 5,406 Net increase (decrease) in other comprehensive income (loss) 23,073 2,217 (117,713 ) (92,423 ) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2014 $ 13,573 $ (124,984 ) $ (381,276 ) $ (492,687 ) For the Nine Months Ended September 30, 2014 Derivative Instruments Defined Benefit Currency Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2013 $ (10,789 ) $ (131,946 ) $ (300,941 ) $ (443,676 ) Other comprehensive income (loss) before reclassifications 15,437 511 (80,335 ) (64,387 ) Amounts reclassified from accumulated other comprehensive income (loss) 8,925 6,451 — 15,376 Net increase (decrease) in other comprehensive income (loss) 24,362 6,962 (80,335 ) (49,011 ) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2014 $ 13,573 $ (124,984 ) $ (381,276 ) $ (492,687 ) The following table presents the classification and amount of the reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of operations: For the Three Months Ended September 30, For the Three Months Ended September 30, Statements of Operations (In thousands) Derivative Instruments Gain (loss) on foreign currency forward exchange contracts $ 18,909 $ (3,671 ) Cost of sales 243 343 Provision for income taxes $ 19,152 $ (3,328 ) Net income Defined Benefit Pension Plans Amortization of prior service (cost) credit $ (6 ) $ 264 (a) Recognized actuarial loss (3,172 ) (3,462 ) (a) Settlement loss (5,233 ) — Other selling and (8,411 ) (3,198 ) 1,584 1,120 Provision for income taxes $ (6,827 ) $ (2,078 ) Net income For the Nine Months Ended September 30, For the Nine Months Ended September 30, Statements of Operations (In thousands) Derivative Instruments Gain (loss) on foreign currency forward exchange contracts $ 41,290 $ (9,248 ) Cost of sales 418 323 Provision for income taxes $ 41,708 $ (8,925 ) Net income Defined Benefit Pension Plans Amortization of prior service credit $ 522 $ 792 (a) Recognized actuarial loss (13,030 ) (10,788 ) (a) Curtailment gain 8,639 — Other selling and Settlement loss (5,233 ) — Other selling and (9,102 ) (9,996 ) 1,738 3,545 Provision for income taxes $ (7,364 ) $ (6,451 ) Net income (a) The amortization of prior service (cost) credit and recognized actuarial loss are included in the computation of net periodic benefit cost. Refer to “Note 15 to the Consolidated Financial Statements—Employee Benefit Plans” of this Quarterly Report on Form 10-Q for additional information regarding Mattel’s net periodic benefit cost. Currency Translation Adjustments Mattel’s reporting currency is the US dollar. The translation of its net investments in subsidiaries with non-US dollar functional currencies subjects Mattel to the impact of currency exchange rate fluctuations in its results of operations and financial position. Assets and liabilities of subsidiaries with non-US dollar functional currencies are translated into US dollars at fiscal period-end exchange rates. Income, expense, and cash flow items are translated at weighted average exchange rates prevailing during the fiscal period. The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Currency translation adjustments resulted in a net loss of $179.8 million for the nine months ended September 30, 2015, primarily due to the weakening of the Euro, Mexican peso, and Brazilian real against the US dollar. Currency translation adjustments resulted in a net loss of $80.3 million for the nine months ended September 30, 2014, primarily due to the weakening of the Euro, Mexican peso, and Brazilian real against the US dollar. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments | 12. Derivative Instruments Mattel seeks to mitigate its exposure to foreign currency transaction risk by monitoring its foreign currency transaction exposure for the year and partially hedging such exposure using foreign currency forward exchange contracts. Mattel uses foreign currency forward exchange contracts as cash flow hedges primarily to hedge its purchases and sales of inventory denominated in foreign currencies. These contracts generally have maturity dates of up to 18 months. These derivative instruments have been designated as effective cash flow hedges, whereby the unsettled hedges are reported in Mattel’s consolidated balance sheets at fair value, with changes in the fair value of the hedges reflected in other comprehensive income (“OCI”). Realized gains and losses for these contracts are recorded in the consolidated statements of operations in the period in which the inventory is sold to customers. Additionally, Mattel uses foreign currency forward exchange contracts and a cross currency swap contract to hedge intercompany loans and advances denominated in foreign currencies. Due to the short-term nature of the contracts involved, Mattel has not designated these contracts as hedging instruments, and as such, changes in fair value are recorded in the period of change in the consolidated statements of operations. As of September 30, 2015, September 30, 2014, and December 31, 2014, Mattel held foreign currency forward exchange contracts with notional amounts of approximately $972 million, $1.11 billion, and $1.19 billion, respectively. As of September 30, 2015, Mattel also held a cross currency swap contract with a notional amount of approximately $30 million. The following table presents Mattel’s derivative assets and liabilities: Derivative Assets Balance Sheet Classification Fair Value September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Derivatives designated as hedging instruments: Foreign currency forward exchange contracts Prepaid expenses and other current assets $ 21,138 $ 31,908 $ 31,982 Foreign currency forward exchange contracts Other noncurrent assets 1,027 1,829 1,443 Total derivatives designated as hedging instruments $ 22,165 $ 33,737 $ 33,425 Derivatives not designated as hedging instruments: Foreign currency forward exchange contracts Prepaid expenses and other current assets $ 827 $ 165 $ 318 Cross currency swap contract Prepaid expenses and other current assets 5,288 — — Total derivatives not designated as hedging instruments $ 6,115 $ 165 $ 318 Total $ 28,280 $ 33,902 $ 33,743 Derivative Liabilities Balance Sheet Classification Fair Value September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Derivatives designated as hedging instruments: Foreign currency forward exchange contracts Accrued liabilities $ 6,773 $ 5,697 $ 2,408 Foreign currency forward exchange contracts Other noncurrent liabilities 672 395 36 Total derivatives designated as hedging instruments $ 7,445 $ 6,092 $ 2,444 Derivatives not designated as hedging instruments: Foreign currency forward exchange contracts Accrued liabilities $ 816 $ 6,504 $ 10,954 Total $ 8,261 $ 12,596 $ 13,398 The following tables present the classification and amount of gains and losses, net of tax, from derivatives reported in the consolidated statements of operations: For the Three Months Ended September 30, 2015 For the Three Months Ended September 30, 2014 Statements of Operations Classification Amount of Gain (Loss) Recognized in OCI Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations Amount of Gain (Loss) Recognized in OCI Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations (In thousands) Derivatives designated as hedging instruments Foreign currency forward exchange contracts $ 8,866 $ 19,152 $ 19,745 $ (3,328 ) Cost of sales For the Nine Months Ended September 30, 2015 For the Nine Months Ended September 30, 2014 Statements of Operations Classification Amount of Gain (Loss) Recognized in OCI Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations Amount of Gain (Loss) Recognized in OCI Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations (In thousands) Derivatives designated as hedging instruments Foreign currency forward exchange contracts $ 32,367 $ 41,708 $ 15,437 $ (8,925 ) Cost of sales The net gains of $19.2 million and $41.7 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three and nine months ended September 30, 2015, respectively, and the net losses of $3.3 million and $8.9 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three and nine months ended September 30, 2014, respectively, are offset by the changes in cash flows associated with the underlying hedged transactions. Amount of Gain (Loss) Recognized in the Statements of Operations Statements of Operations Classification For the Three Months Ended September 30, 2015 For the Three Months Ended September 30, 2014 (In thousands) Derivatives not designated as hedging instruments Foreign currency forward exchange contracts $ (14,711 ) $ (26,632 ) Non-operating income/expense Cross currency swap contract 6,085 — Non-operating income/expense Foreign currency forward exchange contracts 896 292 Cost of sales Total $ (7,730 ) $ (26,340 ) Amount of Gain (Loss) Recognized in the Statements of Operations Statements of Operations Classification For the Nine Months Ended September 30, 2015 For the Nine Months Ended September 30, 2014 (In thousands) Derivatives not designated as hedging instruments Foreign currency forward exchange contracts $ (55,033 ) $ (16,863 ) Non-operating income/expense Cross currency swap contract 5,288 — Non-operating income/expense Foreign currency forward exchange contracts (3 ) 978 Cost of sales Total $ (49,748 ) $ (15,885 ) The net losses of $7.7 million and $49.7 million recognized in the consolidated statements of operations for the three and nine months ended September 30, 2015, respectively, and the net losses of $26.3 million and $15.9 million recognized in the consolidated statements of operations for the three and nine months ended September 30, 2014, respectively, are offset by foreign currency transaction gains and losses on the related hedged balances. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements | 13. Fair Value Measurements The following table presents information about Mattel’s assets and liabilities measured and reported in the financial statements at fair value and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value. The three levels of the fair value hierarchy are as follows: • Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. • Level 2 – Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. • Level 3 – Valuations based on inputs that are unobservable, supported by little or no market activity, and that are significant to the fair value of the assets or liabilities. Mattel’s financial assets and liabilities measured and reported at fair value on a recurring basis include the following: September 30, 2015 Level 1 Level 2 Level 3 Total (In thousands) Assets: Foreign currency forward exchange contracts (a) $ — $ 22,992 $ — $ 22,992 Cross currency swap contract (a) — 5,288 — 5,288 Total assets $ — $ 28,280 $ — $ 28,280 Liabilities: Foreign currency forward exchange contracts (a) $ — $ 8,261 $ — $ 8,261 September 30, 2014 Level 1 Level 2 Level 3 Total (In thousands) Assets: Foreign currency forward exchange contracts (a) $ — $ 33,902 $ — $ 33,902 Auction rate security (b) — — 31,142 31,142 Total assets $ — $ 33,902 $ 31,142 $ 65,044 Liabilities: Foreign currency forward exchange contracts (a) $ — $ 12,596 $ — $ 12,596 December 31, 2014 Level 1 Level 2 Level 3 Total (In thousands) Assets: Foreign currency forward exchange contracts (a) $ — $ 33,743 $ — $ 33,743 Auction rate security (b) — — 30,960 30,960 Total assets $ — $ 33,743 $ 30,960 $ 64,703 Liabilities: Foreign currency forward exchange contracts (a) $ — $ 13,398 $ — $ 13,398 (a) The fair values of the foreign currency forward exchange contracts and the cross currency swap contract are based on dealer quotes of market forward rates and reflect the amount that Mattel would receive or pay at their maturity dates for contracts involving the same notional amounts, currencies, and maturity dates. (b) The fair value of the auction rate security was estimated using a discounted cash flow model based on (i) estimated interest rates, timing, and amount of cash flows, (ii) credit spreads, recovery rates, and credit quality of the underlying securities, (iii) illiquidity considerations, and (iv) market correlation. During the quarter, Mattel sold its auction rate security and received proceeds of $32.3 million, resulting in a gain of $1.3 million for the nine months ended September 30, 2015. The following table presents information about Mattel’s investments measured and reported at fair value on a recurring basis using significant Level 3 inputs: Level 3 (In thousands) Balance at December 31, 2014 $ 30,960 Proceeds from sale (32,250 ) Gain on sale 1,290 Balance at September 30, 2015 $ — Other Financial Instruments Mattel’s financial instruments include cash and equivalents, accounts receivable and payable, short-term borrowings, and accrued liabilities. The fair values of these instruments approximate their carrying values because of their short-term nature and are classified as Level 2 within the fair value hierarchy. The estimated fair value of Mattel’s long-term debt, including the current portion, was $2.15 billion (compared to a carrying value of $2.10 billion) as of September 30, 2015, $2.19 billion (compared to a carrying value of $2.10 billion) as of September 30, 2014, and $2.18 billion (compared to a carrying value of $2.10 billion) as of December 31, 2014. The estimated fair values have been calculated based on broker quotes or rates for the same or similar instruments and are classified as Level 2 within the fair value hierarchy. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share | 14. Earnings Per Share Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. Certain of Mattel’s restricted stock units (“RSUs”) are considered participating securities because they contain nonforfeitable rights to dividend equivalents. Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of common stock and participating securities. The remaining undistributed earnings are then allocated to common stock and participating securities as if all of the net income for the period had been distributed. Basic earnings per common share excludes dilution and is calculated by dividing net income allocable to common shares by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net income allocable to common shares by the weighted average number of common shares for the period, as adjusted for the potential dilutive effect of non-participating share-based awards. The following table reconciles earnings per common share for the three and nine months ended September 30, 2015 and 2014: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands, except per share amounts) Basic: Net income $ 223,784 $ 331,836 $ 154,256 $ 348,943 Less: net income allocable to participating RSUs (a) (1,036 ) (2,338 ) (2,393 ) (2,521 ) Net income available for basic common shares $ 222,748 $ 329,498 $ 151,863 $ 346,422 Weighted average common shares outstanding 339,420 338,728 338,954 339,216 Basic net income per common share $ 0.66 $ 0.97 $ 0.45 $ 1.02 Diluted: Net income $ 223,784 $ 331,836 $ 154,256 $ 348,943 Less: net income allocable to participating RSUs (a) (1,035 ) (2,330 ) (2,393 ) (2,523 ) Net income available for diluted common shares $ 222,749 $ 329,506 $ 151,863 $ 346,420 Weighted average common shares outstanding 339,420 338,728 338,954 339,216 Weighted average common equivalent shares arising from: Dilutive stock options and non-participating RSUs 370 1,601 590 1,951 Weighted average number of common and potential common shares 339,790 340,329 339,544 341,167 Diluted net income per common share $ 0.66 $ 0.97 $ 0.45 $ 1.02 (a) During the three and nine months ended September 30, 2015 and 2014, Mattel allocated a proportionate share of both dividends and undistributed earnings to participating RSUs. The calculation of potential common shares assumes the exercise of dilutive stock options and vesting of non-participating RSUs, net of assumed treasury share repurchases at average market prices. Nonqualified stock options and non-participating RSUs totaling 14.9 million and 8.6 million shares were excluded from the calculation of diluted net income per common share for the three and nine months ended September 30, 2015, respectively, because they were antidilutive. Nonqualified stock options and non-participating RSUs totaling 3.6 million and 2.2 million shares were excluded from the calculation of diluted net income per common share for the three and nine months ended September 30, 2014, respectively, because they were antidilutive. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2015 | |
Employee Benefit Plans | 15. Employee Benefit Plans Mattel and certain of its subsidiaries have qualified and nonqualified retirement plans covering substantially all employees of these companies, which are more fully described in Part II, Item 8 “Financial Statements and Supplementary Data—Note 4 to the Consolidated Financial Statements–Employee Benefit Plans” in its 2014 Annual Report on Form 10-K. A summary of the components of net periodic benefit cost for Mattel’s defined benefit pension plans is as follows: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Service cost $ 624 $ 2,120 $ 4,988 $ 7,432 Interest cost 7,036 6,747 19,568 20,666 Expected return on plan assets (7,356 ) (7,826 ) (22,629 ) (23,849 ) Amortization of prior service cost (credit) 6 (264 ) (522 ) (792 ) Recognized actuarial loss 3,138 3,600 12,919 10,776 Curtailment gain — — (8,639 ) — Settlement loss 5,233 — 5,233 — $ 8,681 $ 4,377 $ 10,918 $ 14,233 A summary of the components of net periodic benefit cost for Mattel’s postretirement benefit plans is as follows: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Service (credit) cost $ (1 ) $ 11 $ 41 $ 51 Interest cost 270 129 896 1,033 Recognized actuarial loss (gain) 34 (138 ) 111 12 $ 303 $ 2 $ 1,048 $ 1,096 During the nine months ended September 30, 2015, Mattel made cash contributions totaling approximately $31 million and $2 million related to its defined benefit pension and postretirement benefit plans, respectively. During the remainder of 2015, Mattel expects to make additional cash contributions of approximately $5 million. |
Share-Based Payments
Share-Based Payments | 9 Months Ended |
Sep. 30, 2015 | |
Share-Based Payments | 16. Share-Based Payments Mattel has various stock compensation plans, which are more fully described in Part II, Item 8 “Financial Statements and Supplementary Data—Note 7 to the Consolidated Financial Statements–Share-Based Payments” in its 2014 Annual Report on Form 10-K. Under the Mattel, Inc. 2010 Equity and Long-Term Compensation Plan, Mattel has the ability to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, RSUs, performance awards, dividend equivalent rights, and shares of common stock to officers, employees, and other persons providing services to Mattel. Stock options are granted with exercise prices at the fair market value of Mattel’s common stock on the applicable grant date and expire no later than ten years from the date of grant. Both stock options and time-vesting RSUs generally provide for vesting over a period of three years from the date of grant. Compensation expense, included within other selling and administrative expenses in the consolidated statements of operations, related to stock options and RSUs is as follows: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Stock option compensation expense $ 4,644 $ 3,448 $ 11,833 $ 7,682 RSU compensation expense 9,196 8,590 29,297 28,828 $ 13,840 $ 12,038 $ 41,130 $ 36,510 As of September 30, 2015, total unrecognized compensation cost related to unvested share-based payments totaled $97.1 million and is expected to be recognized over a weighted-average period of 2.1 years. Mattel uses treasury shares purchased under its share repurchase program to satisfy stock option exercises and the vesting of RSUs. Cash received for stock option exercises for the nine months ended September 30, 2015 and 2014 was $10.5 million and $20.9 million, respectively. |
Other Selling and Administrativ
Other Selling and Administrative Expenses | 9 Months Ended |
Sep. 30, 2015 | |
Other Selling and Administrative Expenses | 17. Other Selling and Administrative Expenses Other selling and administrative expenses include the following: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Design and development $ 54,278 $ 53,215 $ 164,824 $ 154,274 Identifiable intangible asset amortization 7,035 11,818 20,963 22,071 |
Foreign Currency Transaction Ga
Foreign Currency Transaction Gains and Losses | 9 Months Ended |
Sep. 30, 2015 | |
Foreign Currency Transaction Gains and Losses | 18. Foreign Currency Transaction Gains and Losses Currency exchange rate fluctuations impact Mattel’s results of operations and cash flows. Mattel’s currency transaction exposures include gains and losses realized on unhedged inventory purchases and unhedged receivables and payables balances that are denominated in a currency other than the applicable functional currency. Gains and losses on unhedged inventory purchases and other transactions associated with operating activities are recorded in the components of operating income to which they relate in the consolidated statements of operations. For hedges of intercompany loans and advances, which do not qualify for hedge accounting treatment, the gains or losses on the hedges resulting from changes in fair value as well as the offsetting transaction gains or losses on the related hedged items, along with unhedged items, are recognized in other non-operating income (expense), net in the consolidated statements of operations. Inventory purchase and sale transactions denominated in the Euro, British pound sterling, Mexican peso, Brazilian real, and Indonesian rupiah are the primary transactions that cause foreign currency transaction exposure for Mattel. Currency transaction (losses) gains included in the consolidated statements of operations are as follows: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Operating income $ (16,463 ) $ 13,881 $ 7,976 $ 29,672 Other non-operating income (expense), net (2,926 ) 3,729 (6,324 ) 2,805 Net transaction (losses) gains $ (19,389 ) $ 17,610 $ 1,652 $ 32,477 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes | 19. Income Taxes Mattel’s provision for income taxes was $38.8 million and $21.4 million for the nine months ended September 30, 2015 and 2014, respectively. During the three and nine months ended September 30, 2015, Mattel recognized net discrete tax expense of $0.8 million and net discrete benefits of $2.8 million, respectively, primarily related to reassessments of prior years’ tax liabilities based on the status of audits and tax filings in various jurisdictions around the world, settlements, and enacted tax law changes. During the three and nine months ended September 30, 2014, Mattel recognized net discrete tax benefits of $15.1 million and $51.4 million, respectively, primarily related to reassessments of prior years’ tax liabilities based on the status of audits and tax filings in various jurisdictions around the world, settlements, and enacted tax law changes. Mattel may incur a capital loss, for tax purposes only, in the next twelve months due to the sale of assets that are not significant to its business. This capital loss is due to the disposition of assets with significant tax basis in excess of book basis. Mattel does not expect to utilize this capital loss of approximately $300 million in the applicable five-year carryforward period for tax purposes, and thus is fully offset with a corresponding valuation allowance. In the normal course of business, Mattel is regularly audited by federal, state, and foreign tax authorities. Based on the current status of federal, state and foreign audits, Mattel believes it is reasonably possible that in the next twelve months, the total unrecognized tax benefits could decrease by approximately $3 million related to the settlement of tax audits and/or the expiration of statutes of limitations. The ultimate settlement of any particular issue with the applicable taxing authority could have a material impact on Mattel’s consolidated financial statements. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Contingencies | 20. Contingencies Litigation Related to Carter Bryant and MGA Entertainment, Inc. In April 2004, Mattel filed a lawsuit in Los Angeles County Superior Court against Carter Bryant (“Bryant”), a former Mattel design employee. The suit alleges that Bryant aided and assisted a Mattel competitor, MGA Entertainment, Inc. (“MGA”), during the time he was employed by Mattel, in violation of his contractual and other duties to Mattel. In September 2004, Bryant asserted counterclaims against Mattel, including counterclaims in which Bryant sought, as a putative class action representative, to invalidate Mattel’s Confidential Information and Proprietary Inventions Agreements with its employees. Bryant also removed Mattel’s suit to the United States District Court for the Central District of California. In December 2004, MGA intervened as a party-defendant in Mattel’s action against Bryant, asserting that its rights to Bratz properties are at stake in the litigation. Separately, in November 2004, Bryant filed an action against Mattel in the United States District Court for the Central District of California. The action sought a judicial declaration that Bryant’s purported conveyance of rights in Bratz was proper and that he did not misappropriate Mattel property in creating Bratz. In April 2005, MGA filed suit against Mattel in the United States District Court for the Central District of California. MGA’s action alleges claims of trade dress infringement, trade dress dilution, false designation of origin, unfair competition, and unjust enrichment. The suit alleges, among other things, that certain products, themes, packaging, and/or television commercials in various Mattel product lines have infringed upon products, themes, packaging, and/or television commercials for various MGA product lines, including Bratz. The complaint also asserts that various alleged Mattel acts with respect to unidentified retailers, distributors, and licensees have damaged MGA and that various alleged acts by industry organizations, purportedly induced by Mattel, have damaged MGA. MGA’s suit alleges that MGA has been damaged in an amount “believed to reach or exceed tens of millions of dollars” and further seeks punitive damages, disgorgement of Mattel’s profits and injunctive relief. In June 2006, the three cases were consolidated in the United States District Court for the Central District of California. On July 17, 2006, the Court issued an order dismissing all claims that Bryant had asserted against Mattel, including Bryant’s purported counterclaims to invalidate Mattel’s Confidential Information and Proprietary Inventions Agreements with its employees, and Bryant’s claims for declaratory relief. On January 12, 2007, Mattel filed an Amended Complaint setting forth counterclaims that included additional claims against Bryant as well as claims for copyright infringement, Racketeer Influenced and Corrupt Organizations (“RICO”) violations, misappropriation of trade secrets, intentional interference with contract, aiding and abetting breach of fiduciary duty and breach of duty of loyalty, and unfair competition, among others, against MGA, its Chief Executive Officer Isaac Larian, certain MGA affiliates and an MGA employee. The RICO claim alleged that MGA stole Bratz and then, by recruiting and hiring key Mattel employees and directing them to bring with them Mattel confidential and proprietary information, unfairly competed against Mattel using Mattel’s trade secrets, confidential information, and key employees to build their business. Mattel sought to try all of its claims in a single trial, but in February 2007, the Court decided that the consolidated cases would be tried in two phases, with the first trial to determine claims and defenses related to Mattel’s ownership of Bratz works and whether MGA infringed those works. On May 19, 2008, Bryant reached a settlement agreement with Mattel and is no longer a defendant in the litigation. In the public stipulation entered by Mattel and Bryant in connection with the resolution, Bryant agreed that he was and would continue to be bound by all prior and future Court Orders relating to Bratz ownership and infringement, including the Court’s summary judgment rulings. The first phase of the first trial resulted in a unanimous jury verdict on July 17, 2008 in favor of Mattel. The jury found that almost all of the Bratz design drawings and other works in question were created by Bryant while he was employed at Mattel; that MGA and Isaac Larian intentionally interfered with the contractual duties owed by Bryant to Mattel, aided and abetted Bryant’s breaches of his duty of loyalty to Mattel, aided and abetted Bryant’s breaches of the fiduciary duties he owed to Mattel, and converted Mattel property for their own use. The same jury determined that defendants MGA, Larian, and MGA Entertainment (HK) Limited infringed Mattel’s copyrights in the Bratz design drawings and other Bratz works, and awarded Mattel total damages of approximately $100 million against the defendants. On December 3, 2008, the Court issued a series of orders rejecting MGA’s equitable defenses and granting Mattel’s motions for equitable relief, including an order enjoining the MGA party defendants from manufacturing, marketing, or selling certain Bratz fashion dolls or from using the “Bratz” name. The Court stayed its December 3, 2008 injunctive orders until further order of the Court. The parties filed and argued additional motions for post-trial relief, including a request by MGA to enter judgment as a matter of law on Mattel’s claims in MGA’s favor and to reduce the jury’s damages award to Mattel. Mattel additionally moved for the appointment of a receiver. On April 27, 2009, the Court entered an order confirming that Bratz works found by the jury to have been created by Bryant during his Mattel employment were Mattel’s property and that hundreds of Bratz female fashion dolls infringe Mattel’s copyrights. The Court also upheld the jury’s award of damages in the amount of $100 million and ordered an accounting of post-trial Bratz sales. The Court further vacated the stay of the December 3, 2008 orders. MGA appealed the Court’s equitable orders to the Court of Appeals for the Ninth Circuit. On December 9, 2009, the Ninth Circuit heard oral argument on MGA’s appeal and issued an order staying the District Court’s equitable orders pending a further order to be issued by the Ninth Circuit. On July 22, 2010, the Ninth Circuit vacated the District Court’s equitable orders. The Ninth Circuit stated that, because of several jury instruction errors it identified, a significant portion—if not all—of the jury verdict and damage award should be vacated. In its opinion, the Ninth Circuit found that the District Court erred in concluding that Mattel’s Invention Agreement unambiguously applied to “ideas;” that it should have considered extrinsic evidence in determining the application of the agreement; and if the conclusion turns on conflicting evidence, it should have been up to the jury to decide. The Ninth Circuit also concluded that the District Judge erred in transferring the entire brand to Mattel based on misappropriated names and that the Court should have submitted to the jury, rather than deciding itself, whether Bryant’s agreement assigned works created outside the scope of his employment and whether Bryant’s creation of the Bratz designs and sculpt was outside of his employment. The Court then went on to address copyright issues which would be raised after a retrial, since Mattel “might well convince a properly instructed jury” that it owns Bryant’s designs and sculpt. The Ninth Circuit stated that the sculpt itself was entitled only to “thin” copyright protection against virtually identical works, while the Bratz sketches were entitled to “broad” protection against substantially similar works; in applying the broad protection, however, the Ninth Circuit found that the lower court had erred in failing to filter out all of the unprotectable elements of Bryant’s sketches. This mistake, the Court said, caused the lower court to conclude that all Bratz dolls were substantially similar to Bryant’s original sketches. Judge Stephen Larson, who presided over the first trial, retired from the bench during the course of the appeal, and the case was transferred to Judge David O. Carter. After the transfer, Judge Carter granted Mattel leave to file a Fourth Amended Answer and Counterclaims, which focused on RICO, trade secret and other claims, and added additional parties, and subsequently granted in part and denied in part a defense motion to dismiss those counterclaims. Later, on August 16, 2010, MGA asserted several new claims against Mattel in response to Mattel’s Fourth Amended Answer and Counterclaims, including claims for alleged trade secret misappropriation, an alleged violation of RICO, and wrongful injunction. MGA alleged, in summary, that, for more than a decade dating back to 1992, Mattel employees engaged in a pattern of stealing alleged trade secret information from competitors’ “toy fair” showrooms, and then sought to conceal that alleged misconduct. Mattel moved to strike and/or dismiss these claims, as well as certain MGA allegations regarding Mattel’s motives for filing suit. The Court granted that motion as to the wrongful injunction claim, which it dismissed with prejudice, and as to the allegations about Mattel’s motives, which it struck. The Court denied the motion as to MGA’s trade secret misappropriation claim and its claim for violations of RICO. The Court resolved summary judgment motions in late 2010. Among other rulings, the Court dismissed both parties’ RICO claims; dismissed Mattel’s claim for breach of fiduciary duty and portions of other claims as “preempted” by the trade secrets act; dismissed MGA’s trade dress infringement claims; dismissed MGA’s unjust enrichment claim; dismissed MGA’s common law unfair competition claim; and dismissed portions of Mattel’s copyright infringement claim as to “later generation” Bratz dolls. Trial of all remaining claims began in early January 2011. During the trial, and before the case was submitted to the jury, the Court granted MGA’s motions for judgment as to Mattel’s claims for aiding and abetting breach of duty of loyalty and conversion. The Court also granted a defense motion for judgment on portions of Mattel’s claim for misappropriation of trade secrets relating to thefts by former Mattel employees located in Mexico. The jury reached verdicts on the remaining claims in April 2011. In those verdicts, the jury ruled against Mattel on its claims for ownership of Bratz-related works, for copyright infringement, and for misappropriation of trade secrets. The jury ruled for MGA on its claim of trade secret misappropriation as to 26 of its claimed trade secrets and awarded $88.5 million in damages. The jury ruled against MGA as to 88 of its claimed trade secrets. The jury found that Mattel’s misappropriation was willful and malicious. In early August 2011, the Court ruled on post-trial motions. The Court rejected MGA’s unfair competition claims and also rejected Mattel’s equitable defenses to MGA’s misappropriation of trade secrets claim. The Court reduced the jury’s damages award of $88.5 million to $85.0 million. The Court awarded MGA an additional $85.0 million in punitive damages and approximately $140 million in attorney’s fees and costs. The Court entered a judgment which totaled approximately $310 million in favor of MGA. On August 11, 2011, Mattel appealed the judgment, challenging on appeal the entirety of the District Court’s monetary award in favor of MGA, including both the award of $170 million in damages for alleged trade secret misappropriation and approximately $140 million in attorney’s fees and costs. On January 24, 2013, the Ninth Circuit Court of Appeals issued a ruling on Mattel’s appeal. In that ruling, the Court found that MGA’s claim for trade secrets misappropriation was not compulsory to any Mattel claim and could not be filed as a counterclaim-in-reply. Accordingly, the Court of Appeals vacated the portion of the judgment awarding damages and attorney’s fees and costs to MGA for prevailing on its trade secrets misappropriation claim, totaling approximately $172.5 million. It ruled that, on remand, the District Court must dismiss MGA’s trade secret claim without prejudice. In its ruling, the Court of Appeals also affirmed the District Court’s award of attorney’s fees and costs under the Copyright Act. Accordingly, Mattel recorded a litigation accrual of approximately $138 million during the fourth quarter of 2012 to cover these fees and costs. Because multiple claimants asserted rights to the attorney’s fees portion of the judgment, on February 13, 2013, Mattel filed a motion in the District Court for orders permitting Mattel to interplead the proceeds of the judgment and releasing Mattel from liability to any claimant based on Mattel’s payment of the judgment. On February 27, 2013, MGA filed a motion for leave to amend its prior complaint in the existing federal court lawsuit so that it could reassert its trade secrets claim. Mattel opposed that motion. On December 17, 2013, the District Court denied MGA’s motion for leave to amend and entered an order dismissing MGA’s trade secrets claim without prejudice. Also on December 17, 2013, following a settlement between MGA and certain insurance carriers, the District Court denied Mattel’s motion for leave to interplead the proceeds of the judgment. On December 21, 2013, a stipulation regarding settlement with insurers and payment of judgment was filed in the District Court, which provided that (i) Mattel would pay approximately $138 million, including accrued interest, in full satisfaction of the copyright fees judgment, (ii) all parties would consent to entry of an order exonerating and discharging the appeal bond posted by Mattel, and (iii) MGA’s insurers would dismiss all pending actions related to the proceeds of the copyright fees judgment, including an appeal by Evanston Insurance Company in an action against Mattel that was pending in the Ninth Circuit. On December 23, 2013, Mattel paid the copyright fees judgment in the total sum, including interest, of approximately $138 million. On December 26, 2013, the District Court entered an order exonerating and discharging the appeal bond posted by Mattel, and on December 27, 2013, MGA filed an acknowledgment of satisfaction of judgment. On December 30, 2013, Evanston Insurance Company’s appeal in its action against Mattel was dismissed. On January 13, 2014, MGA filed a new, but virtually identical, trade secrets claim against Mattel in Los Angeles County Superior Court. In its complaint, MGA purports to seek damages in excess of $1 billion. Mattel believes that MGA’s claim should be barred as a matter of law, and intends to vigorously defend against it. On December 3, 2014, the Court overruled Mattel’s request to dismiss MGA’s case as barred as a result of prior litigation between the parties. In light of that ruling, Mattel believes that it is reasonably possible that damages in this matter could range from $0 to approximately $12.5 million. In addition, Mattel believes that if such damages are awarded, it is reasonably possible that pre-judgment interest, ranging from $0 to approximately $10 million, could be awarded. Mattel may be entitled to an offset against any damages awarded to MGA. Mattel has not quantified the amount of any such offset as it is not currently estimable. As Mattel believes a loss in this matter is reasonably possible but not probable, no liability has been accrued to date. Litigation Related to Yellowstone do Brasil Ltda. Yellowstone do Brasil Ltda. (formerly known as Trebbor Informática Ltda.) was a customer of Mattel’s subsidiary Mattel do Brasil Ltda. when a commercial dispute arose between Yellowstone and Mattel do Brasil regarding the supply of product and related payment terms. As a consequence of the dispute, in April 1999, Yellowstone filed a declarative action against Mattel do Brasil before the 15 th Mattel do Brasil filed its defenses to these claims and simultaneously presented a counterclaim for unpaid accounts receivable for goods supplied to Yellowstone in the approximate amount of $4 million. During the evidentiary phase a first accounting report was submitted by a court-appointed expert. Such report stated that Yellowstone had invested approximately $3 million in its business. Additionally, the court-appointed expert calculated a loss of profits compensation of approximately $1 million. Mattel do Brasil challenged the report since it was not made based on the official accounting documents of Yellowstone and since the report calculated damages based only on documents unilaterally submitted by Yellowstone. The Trial Court accepted the challenge and ruled that a second accounting examination should take place in the lawsuit. Yellowstone appealed the decision to the Court of Appeals of the State of Parana (the “Appeals Court”), but it was upheld by the Appeals Court. The second court-appointed expert’s report submitted at trial did not assign a value to any of Yellowstone’s claims and found no evidence of causation between Mattel do Brasil’s actions and such claims. In January 2010, the Trial Court ruled in favor of Mattel do Brasil and denied all of Yellowstone’s claims based primarily on the lack of any causal connection between the acts of Mattel do Brasil and Yellowstone’s alleged damages. Additionally, the Trial Court upheld Mattel do Brasil’s counterclaim and ordered Yellowstone to pay Mattel do Brasil approximately $4 million. The likelihood of Mattel do Brasil recovering this amount was uncertain due to the fact that Yellowstone was declared insolvent and filed for bankruptcy protection. In February 2010, Yellowstone filed a motion seeking clarification of the decision which was denied. In September 2010, Yellowstone filed a further appeal with the Appeals Court. Under Brazilian law, the appeal was de novo and Yellowstone restated all of the arguments it made at the Trial Court level. Yellowstone did not provide any additional information supporting its unspecified alleged damages. The Appeals Court held hearings on the appeal in March and April 2013. On July 26, 2013, the Appeals Court awarded Yellowstone approximately $17 million in damages, plus attorney’s fees, as adjusted for inflation and interest. The Appeals Court also awarded Mattel do Brasil approximately $7.5 million on its counterclaim, as adjusted for inflation. On August 2, 2013, Mattel do Brasil filed a motion with the Appeals Court for clarification since the written decision contained clear errors in terms of amounts awarded and interest and inflation adjustments. Mattel do Brasil’s motion also asked the Appeals Court to decide whether Yellowstone’s award could be offset by the counterclaim award, despite Yellowstone’s status as a bankrupt entity. Yellowstone also filed a motion for clarification on August 5, 2013. A decision on the clarification motions was rendered on November 11, 2014, and the Appeals Court accepted partially the arguments raised by Mattel do Brasil. As a result, the Appeals Court awarded Yellowstone approximately $14.5 million in damages, as adjusted for inflation and interest, plus attorney’s fees. The Appeals Court also awarded Mattel do Brasil approximately $7.5 million on its counterclaim, as adjusted for inflation. The decision also recognized the existence of legal rules that support Mattel do Brasil’s right to offset its counterclaim award of approximately $7.5 million. Mattel do Brasil filed a new motion for clarification with the Appeals Court on January 21, 2015, due to the incorrect statement made by the reporting judge of the Appeals Court, that the court-appointed expert analyzed the “accounting documents” of Yellowstone. On April 26, 2015, a decision on the motion for clarification was rendered. The Appeals Court ruled that the motion for clarification was denied and imposed a fine on Mattel do Brasil equal to 1% of the value of the claims made for the delay caused by the motion. On July 3, 2015, Mattel do Brasil filed a special appeal to the Superior Court of Justice based upon both procedural and substantive grounds. This special appeal seeks to reverse the Appeals Court’s decision of July 26, 2013, and to reverse the fine as inappropriate under the law. This special appeal was submitted to the Appeals Court which must rule on its admissibility before it is transferred to the Superior Court. Yellowstone also filed a special appeal in February 2015, which was made available to Mattel do Brasil on October 7, 2015. Yellowstone’s special appeal seeks to reverse the Appeals Court decision with respect to: (a) the limitation on Yellowstone’s loss of profits claim to the amount requested in the complaint, instead of the amount contained in the first court-appointed experts report, and (b) the award of damages to Mattel do Brasil on the counterclaim, since the specific amount was not requested in Mattel do Brasil’s counterclaim brief. Mattel believes that it is reasonably possible that a loss in this matter could range from $0 to approximately $11.2 million. The high end of this range, approximately $11.2 million, is based on the calculation of the current amount of the damages (reported in the first court-appointed examination report submitted in the lawsuit), and loss of profits (indicated in the complaint by Yellowstone), including interest, inflation, currency adjustments, plus attorney’s fees. Mattel do Brasil will be entitled to offset its counterclaim award of approximately $5 million, the current amount including inflation, and currency adjustment, against such loss. The existence of procedural matters that will be addressed to the Superior Court of Justice adds some uncertainty to the final outcome of the matter. Mattel do Brasil believes, however, that it has valid legal grounds for an appeal of the Appeals Court decision and currently does not believe that a loss is probable for this matter. Accordingly, a liability has not been accrued to date. Mattel do Brasil may be required by the Trial Court to place a bond or the full amount of the damage award in escrow pending an appeal decision by the Superior Courts. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Information | 21. Segment Information Mattel, through its subsidiaries, sells a broad variety of toy products which are grouped into four major brand categories, including the Construction and Arts & Crafts brand category, which was introduced in the second quarter of 2014: Mattel Girls & Boys Brands ® ® ® ® ® ® ® ® ® ® ® ® ® ® Fisher-Price Brands ® ® ® ® ® ® ® ® American Girl Brands ® Construction and Arts & Crafts Brands ® ® ® Mattel’s operating segments are: (i) North America, which consists of the US and Canada, (ii) International, and (iii) American Girl. The North America and International segments sell products in the Mattel Girls & Boys Brands, Fisher-Price Brands, and Construction and Arts & Crafts Brands categories, although some are developed and adapted for particular international markets. Segment Data The following tables present information about revenues, income, and assets by segment. Mattel does not include sales adjustments such as trade discounts and other allowances in the calculation of segment revenues (referred to as “gross sales” and reconciled to net sales in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Non-GAAP Financial Measures” of this Quarterly Report on Form 10-Q). Mattel records these adjustments in its financial accounting systems at the time of sale to each customer, but the adjustments are not allocated to individual products. For this reason, Mattel’s chief operating decision maker uses gross sales by segment as one of the metrics to measure segment performance. Such sales adjustments are included in the determination of segment income from operations based on the adjustments recorded in the financial accounting systems. Segment income represents each segment’s operating income, while consolidated operating income represents income from operations before net interest, other non-operating income (expense), and income taxes as reported in the consolidated statements of operations. The corporate and other expense category includes costs not allocated to individual segments, including charges related to incentive compensation, share-based payments, and corporate headquarters functions managed on a worldwide basis, and the impact of changes in foreign currency exchange rates on intercompany transactions. For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Revenues by Segment North America $ 1,069,116 $ 1,124,463 $ 2,053,053 $ 2,079,357 International 798,584 989,228 1,732,125 2,048,403 American Girl 115,651 119,025 313,504 317,314 Gross sales 1,983,351 2,232,716 4,098,682 4,445,074 Sales adjustments (191,383 ) (211,292 ) (395,813 ) (415,221 ) Net sales $ 1,791,968 $ 2,021,424 $ 3,702,869 $ 4,029,853 Segment Income North America $ 230,216 $ 257,496 $ 283,356 $ 345,716 International 142,576 183,142 160,250 245,476 American Girl 7,142 7,618 5,617 15,599 379,934 448,256 449,223 606,791 Corporate and other expense (a) (79,161 ) (38,777 ) (202,354 ) (190,086 ) Operating income 300,773 409,479 246,869 416,705 Interest expense 21,409 21,009 62,516 57,220 Interest (income) (1,990 ) (1,773 ) (5,757 ) (5,238 ) Other non-operating (income), net (4,785 ) (3,937 ) (2,984 ) (5,665 ) Income before income taxes $ 286,139 $ 394,180 $ 193,094 $ 370,388 (a) Corporate and other expense includes severance and other termination-related costs of $13.3 million and $61.1 million for the three and nine months ended September 30, 2015, respectively, and $5.0 million and $39.1 million for the three and nine months ended September 30, 2014, respectively, and share-based compensation expense of $13.8 million and $41.1 million for the three and nine months ended September 30, 2015, respectively, and $12.0 million and $36.5 million for the three and nine months ended September 30, 2014, respectively. Segment assets are comprised of accounts receivable and inventories, net of applicable reserves and allowances. September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Assets by Segment North America $ 1,011,546 $ 1,078,388 $ 698,357 International 1,063,727 1,244,067 778,849 American Girl 147,517 160,754 108,667 2,222,790 2,483,209 1,585,873 Corporate and other 99,245 36,419 70,334 Accounts receivable and inventories, net $ 2,322,035 $ 2,519,628 $ 1,656,207 The table below presents worldwide revenues by brand category: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Worldwide Revenues by Brand Category Mattel Girls & Boys Brands $ 1,120,612 $ 1,323,273 $ 2,327,555 $ 2,669,111 Fisher-Price Brands 625,277 663,446 1,226,023 1,263,655 American Girl Brands 109,879 113,291 300,128 302,375 Construction and Arts & Crafts Brands 118,480 123,415 221,560 185,015 Other 9,103 9,291 23,416 24,918 Gross sales 1,983,351 2,232,716 4,098,682 4,445,074 Sales adjustments (191,383 ) (211,292 ) (395,813 ) (415,221 ) Net sales $ 1,791,968 $ 2,021,424 $ 3,702,869 $ 4,029,853 |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2015 | |
New Accounting Pronouncements | 22. New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), Revenue Recognition, Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date, In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, In May 2015, the FASB issued ASU 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Event | 23. Subsequent Event On October 15, 2015, Mattel announced that its Board of Directors declared a fourth quarter dividend of $0.38 per common share. The dividend is payable on December 11, 2015 to stockholders of record on November 25, 2015. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill Policy | Mattel tests its goodwill for impairment annually in the third quarter and whenever events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value. |
Intangible Assets, Indefinite-Lived, Policy | Mattel tests nonamortizable intangible assets, including trademarks and trade names, for impairment annually in the third quarter and whenever events or changes in circumstances indicate that the carrying values may exceed the fair values. |
Intangible Assets, Finite-Lived, Policy | Mattel also tests its amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. |
Debt Policy | The proportion of unamortized debt issuance costs from the prior credit facility renewal related to creditors involved in both the prior credit facility and amended credit facility and borrowing costs incurred as a result of the amendment were deferred, and such costs will be amortized over the term of the amended credit facility. |
Foreign Currency Translations Policy | Mattel’s reporting currency is the US dollar. The translation of its net investments in subsidiaries with non-US dollar functional currencies subjects Mattel to the impact of currency exchange rate fluctuations in its results of operations and financial position. Assets and liabilities of subsidiaries with non-US dollar functional currencies are translated into US dollars at fiscal period-end exchange rates. Income, expense, and cash flow items are translated at weighted average exchange rates prevailing during the fiscal period. The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity. |
Derivatives Policy | Mattel uses foreign currency forward exchange contracts as cash flow hedges primarily to hedge its purchases and sales of inventory denominated in foreign currencies. These contracts generally have maturity dates of up to 18 months. These derivative instruments have been designated as effective cash flow hedges, whereby the unsettled hedges are reported in Mattel’s consolidated balance sheets at fair value, with changes in the fair value of the hedges reflected in other comprehensive income (“OCI”). Realized gains and losses for these contracts are recorded in the consolidated statements of operations in the period in which the inventory is sold to customers. Additionally, Mattel uses foreign currency forward exchange contracts and a cross currency swap contract to hedge intercompany loans and advances denominated in foreign currencies. Due to the short-term nature of the contracts involved, Mattel has not designated these contracts as hedging instruments, and as such, changes in fair value are recorded in the period of change in the consolidated statements of operations. |
Earnings Per Share Policy | Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. Certain of Mattel’s restricted stock units (“RSUs”) are considered participating securities because they contain nonforfeitable rights to dividend equivalents. Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of common stock and participating securities. The remaining undistributed earnings are then allocated to common stock and participating securities as if all of the net income for the period had been distributed. Basic earnings per common share excludes dilution and is calculated by dividing net income allocable to common shares by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net income allocable to common shares by the weighted average number of common shares for the period, as adjusted for the potential dilutive effect of non-participating share-based awards. |
Foreign Currency Transaction Gains and Losses Policy | Currency exchange rate fluctuations impact Mattel’s results of operations and cash flows. Mattel’s currency transaction exposures include gains and losses realized on unhedged inventory purchases and unhedged receivables and payables balances that are denominated in a currency other than the applicable functional currency. Gains and losses on unhedged inventory purchases and other transactions associated with operating activities are recorded in the components of operating income to which they relate in the consolidated statements of operations. For hedges of intercompany loans and advances, which do not qualify for hedge accounting treatment, the gains or losses on the hedges resulting from changes in fair value as well as the offsetting transaction gains or losses on the related hedged items, along with unhedged items, are recognized in other non-operating income (expense), net in the consolidated statements of operations. |
Segment Information | Mattel does not include sales adjustments such as trade discounts and other allowances in the calculation of segment revenues (referred to as “gross sales” and reconciled to net sales in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Non-GAAP Financial Measures” of this Quarterly Report on Form 10-Q). Mattel records these adjustments in its financial accounting systems at the time of sale to each customer, but the adjustments are not allocated to individual products. For this reason, Mattel’s chief operating decision maker uses gross sales by segment as one of the metrics to measure segment performance. Such sales adjustments are included in the determination of segment income from operations based on the adjustments recorded in the financial accounting systems. Segment income represents each segment’s operating income, while consolidated operating income represents income from operations before net interest, other non-operating income (expense), and income taxes as reported in the consolidated statements of operations. The corporate and other expense category includes costs not allocated to individual segments, including charges related to incentive compensation, share-based payments, and corporate headquarters functions managed on a worldwide basis, and the impact of changes in foreign currency exchange rates on intercompany transactions. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventories | Inventories include the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Raw materials and work in process $ 126,261 $ 125,536 $ 88,395 Finished goods 744,524 698,734 473,360 $ 870,785 $ 824,270 $ 561,755 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant, and Equipment | Property, plant, and equipment, net includes the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Land $ 27,055 $ 27,609 $ 27,465 Buildings 273,139 273,261 274,452 Machinery and equipment 748,247 701,476 728,299 Software 327,190 331,324 316,374 Tools, dies, and molds 820,772 773,059 782,507 Capital leases 23,970 23,970 23,970 Leasehold improvements 242,060 239,407 242,177 2,462,433 2,370,106 2,395,244 Less: accumulated depreciation (1,741,134 ) (1,659,494 ) (1,657,375 ) $ 721,299 $ 710,612 $ 737,869 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill | The change in the carrying amount of goodwill by operating segment for the nine months ended September 30, 2015 is shown below. Brand-specific goodwill held by foreign subsidiaries is allocated to the North America and American Girl operating segments selling those brands, thereby causing a foreign currency translation impact for these operating segments. December 31, 2014 Currency Exchange Rate Impact September 30, 2015 (In thousands) North America $ 720,939 $ (1,035 ) $ 719,904 International 458,766 (3,501 ) 455,265 American Girl 213,220 (430 ) 212,790 Total goodwill $ 1,392,925 $ (4,966 ) $ 1,387,959 |
Other Noncurrent Assets (Tables
Other Noncurrent Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Noncurrent Assets | Other noncurrent assets include the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Nonamortizable identifiable intangibles $ 492,979 $ 506,363 $ 498,517 Deferred income taxes 390,109 419,197 385,434 Identifiable intangibles (net of amortization of $124.6 million, $89.0 million, and $103.6 million, respectively) 219,311 249,520 240,227 Other 254,654 283,398 280,080 $ 1,357,053 $ 1,458,478 $ 1,404,258 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accrued Liabilities | Accrued liabilities include the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Advertising and promotion $ 116,529 $ 87,306 $ 88,132 Royalties 111,082 102,504 112,823 Taxes other than income taxes 70,815 71,190 53,182 Other 389,578 392,798 385,707 $ 688,004 $ 653,798 $ 639,844 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Long-Term Debt | Long-term debt includes the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) 2010 Senior Notes due October 2020 and October 2040 $ 500,000 $ 500,000 $ 500,000 2011 Senior Notes due November 2016 and November 2041 600,000 600,000 600,000 2013 Senior Notes due March 2018 and March 2023 500,000 500,000 500,000 2014 Senior Notes due May 2019 500,000 500,000 500,000 2,100,000 2,100,000 2,100,000 Less: current portion — — — Total long-term debt $ 2,100,000 $ 2,100,000 $ 2,100,000 |
Other Noncurrent Liabilities (T
Other Noncurrent Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Noncurrent Liabilities | Other noncurrent liabilities include the following: September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Benefit plan liabilities $ 203,251 $ 183,933 $ 229,963 Noncurrent tax liabilities 168,704 166,244 171,181 Other 163,314 165,256 182,882 $ 535,269 $ 515,433 $ 584,026 |
Accumulated Other Comprehensi38
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Changes in Accumulated Other Comprehensive Income (Loss) | The following tables present changes in the accumulated balances for each component of other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications out of accumulated other comprehensive income (loss): For the Three Months Ended September 30, 2015 Derivative Instruments Defined Benefit Currency Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of June 30, 2015 $ 30,970 $ (161,920 ) $ (579,923 ) $ (710,873 ) Other comprehensive income (loss) before reclassifications 8,866 (103 ) (90,486 ) (81,723 ) Amounts reclassified from accumulated other comprehensive income (loss) (19,152 ) 6,827 — (12,325 ) Net (decrease) increase in other comprehensive income (loss) (10,286 ) 6,724 (90,486 ) (94,048 ) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2015 $ 20,684 $ (155,196 ) $ (670,409 ) $ (804,921 ) For the Nine Months Ended September 30, 2015 Derivative Instruments Defined Benefit Currency Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2014 $ 30,025 $ (161,507 ) $ (490,607 ) $ (622,089 ) Other comprehensive income (loss) before reclassifications 32,367 (1,053 ) (179,802 ) (148,488 ) Amounts reclassified from accumulated other comprehensive income (loss) (41,708 ) 7,364 — (34,344 ) Net (decrease) increase in other comprehensive income (loss) (9,341 ) 6,311 (179,802 ) (182,832 ) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2015 $ 20,684 $ (155,196 ) $ (670,409 ) $ (804,921 ) For the Three Months Ended September 30, 2014 Derivative Instruments Defined Benefit Currency Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of June 30, 2014 $ (9,500 ) $ (127,201 ) $ (263,563 ) $ (400,264 ) Other comprehensive income (loss) before reclassifications 19,745 139 (117,713 ) (97,829 ) Amounts reclassified from accumulated other comprehensive income (loss) 3,328 2,078 — 5,406 Net increase (decrease) in other comprehensive income (loss) 23,073 2,217 (117,713 ) (92,423 ) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2014 $ 13,573 $ (124,984 ) $ (381,276 ) $ (492,687 ) For the Nine Months Ended September 30, 2014 Derivative Instruments Defined Benefit Currency Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2013 $ (10,789 ) $ (131,946 ) $ (300,941 ) $ (443,676 ) Other comprehensive income (loss) before reclassifications 15,437 511 (80,335 ) (64,387 ) Amounts reclassified from accumulated other comprehensive income (loss) 8,925 6,451 — 15,376 Net increase (decrease) in other comprehensive income (loss) 24,362 6,962 (80,335 ) (49,011 ) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2014 $ 13,573 $ (124,984 ) $ (381,276 ) $ (492,687 ) |
Summary of Consolidated Statement of Operations Line Items Affected by Reclassifications from Accumulated Other Comprehensive Income (Loss) | The following table presents the classification and amount of the reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of operations: For the Three Months Ended September 30, For the Three Months Ended September 30, Statements of Operations (In thousands) Derivative Instruments Gain (loss) on foreign currency forward exchange contracts $ 18,909 $ (3,671 ) Cost of sales 243 343 Provision for income taxes $ 19,152 $ (3,328 ) Net income Defined Benefit Pension Plans Amortization of prior service (cost) credit $ (6 ) $ 264 (a) Recognized actuarial loss (3,172 ) (3,462 ) (a) Settlement loss (5,233 ) — Other selling and (8,411 ) (3,198 ) 1,584 1,120 Provision for income taxes $ (6,827 ) $ (2,078 ) Net income For the Nine Months Ended September 30, For the Nine Months Ended September 30, Statements of Operations (In thousands) Derivative Instruments Gain (loss) on foreign currency forward exchange contracts $ 41,290 $ (9,248 ) Cost of sales 418 323 Provision for income taxes $ 41,708 $ (8,925 ) Net income Defined Benefit Pension Plans Amortization of prior service credit $ 522 $ 792 (a) Recognized actuarial loss (13,030 ) (10,788 ) (a) Curtailment gain 8,639 — Other selling and Settlement loss (5,233 ) — Other selling and (9,102 ) (9,996 ) 1,738 3,545 Provision for income taxes $ (7,364 ) $ (6,451 ) Net income (a) The amortization of prior service (cost) credit and recognized actuarial loss are included in the computation of net periodic benefit cost. Refer to “Note 15 to the Consolidated Financial Statements—Employee Benefit Plans” of this Quarterly Report on Form 10-Q for additional information regarding Mattel’s net periodic benefit cost. |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Assets and Liabilities | The following table presents Mattel’s derivative assets and liabilities: Derivative Assets Balance Sheet Classification Fair Value September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Derivatives designated as hedging instruments: Foreign currency forward exchange contracts Prepaid expenses and other current assets $ 21,138 $ 31,908 $ 31,982 Foreign currency forward exchange contracts Other noncurrent assets 1,027 1,829 1,443 Total derivatives designated as hedging instruments $ 22,165 $ 33,737 $ 33,425 Derivatives not designated as hedging instruments: Foreign currency forward exchange contracts Prepaid expenses and other current assets $ 827 $ 165 $ 318 Cross currency swap contract Prepaid expenses and other current assets 5,288 — — Total derivatives not designated as hedging instruments $ 6,115 $ 165 $ 318 Total $ 28,280 $ 33,902 $ 33,743 Derivative Liabilities Balance Sheet Classification Fair Value September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Derivatives designated as hedging instruments: Foreign currency forward exchange contracts Accrued liabilities $ 6,773 $ 5,697 $ 2,408 Foreign currency forward exchange contracts Other noncurrent liabilities 672 395 36 Total derivatives designated as hedging instruments $ 7,445 $ 6,092 $ 2,444 Derivatives not designated as hedging instruments: Foreign currency forward exchange contracts Accrued liabilities $ 816 $ 6,504 $ 10,954 Total $ 8,261 $ 12,596 $ 13,398 |
Derivatives Designated as Hedging Instruments by Classification and Amount of Gains and Losses | The following tables present the classification and amount of gains and losses, net of tax, from derivatives reported in the consolidated statements of operations: For the Three Months Ended September 30, 2015 For the Three Months Ended September 30, 2014 Statements of Operations Classification Amount of Gain (Loss) Recognized in OCI Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations Amount of Gain (Loss) Recognized in OCI Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations (In thousands) Derivatives designated as hedging instruments Foreign currency forward exchange contracts $ 8,866 $ 19,152 $ 19,745 $ (3,328 ) Cost of sales For the Nine Months Ended September 30, 2015 For the Nine Months Ended September 30, 2014 Statements of Operations Classification Amount of Gain (Loss) Recognized in OCI Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations Amount of Gain (Loss) Recognized in OCI Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations (In thousands) Derivatives designated as hedging instruments Foreign currency forward exchange contracts $ 32,367 $ 41,708 $ 15,437 $ (8,925 ) Cost of sales |
Derivatives Not Designated as Hedging Instruments by Classification and Amount of Gains and Losses | Amount of Gain (Loss) Recognized in the Statements of Operations Statements of Operations Classification For the Three Months Ended September 30, 2015 For the Three Months Ended September 30, 2014 (In thousands) Derivatives not designated as hedging instruments Foreign currency forward exchange contracts $ (14,711 ) $ (26,632 ) Non-operating income/expense Cross currency swap contract 6,085 — Non-operating income/expense Foreign currency forward exchange contracts 896 292 Cost of sales Total $ (7,730 ) $ (26,340 ) Amount of Gain (Loss) Recognized in the Statements of Operations Statements of Operations Classification For the Nine Months Ended September 30, 2015 For the Nine Months Ended September 30, 2014 (In thousands) Derivatives not designated as hedging instruments Foreign currency forward exchange contracts $ (55,033 ) $ (16,863 ) Non-operating income/expense Cross currency swap contract 5,288 — Non-operating income/expense Foreign currency forward exchange contracts (3 ) 978 Cost of sales Total $ (49,748 ) $ (15,885 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | Mattel’s financial assets and liabilities measured and reported at fair value on a recurring basis include the following: September 30, 2015 Level 1 Level 2 Level 3 Total (In thousands) Assets: Foreign currency forward exchange contracts (a) $ — $ 22,992 $ — $ 22,992 Cross currency swap contract (a) — 5,288 — 5,288 Total assets $ — $ 28,280 $ — $ 28,280 Liabilities: Foreign currency forward exchange contracts (a) $ — $ 8,261 $ — $ 8,261 September 30, 2014 Level 1 Level 2 Level 3 Total (In thousands) Assets: Foreign currency forward exchange contracts (a) $ — $ 33,902 $ — $ 33,902 Auction rate security (b) — — 31,142 31,142 Total assets $ — $ 33,902 $ 31,142 $ 65,044 Liabilities: Foreign currency forward exchange contracts (a) $ — $ 12,596 $ — $ 12,596 December 31, 2014 Level 1 Level 2 Level 3 Total (In thousands) Assets: Foreign currency forward exchange contracts (a) $ — $ 33,743 $ — $ 33,743 Auction rate security (b) — — 30,960 30,960 Total assets $ — $ 33,743 $ 30,960 $ 64,703 Liabilities: Foreign currency forward exchange contracts (a) $ — $ 13,398 $ — $ 13,398 (a) The fair values of the foreign currency forward exchange contracts and the cross currency swap contract are based on dealer quotes of market forward rates and reflect the amount that Mattel would receive or pay at their maturity dates for contracts involving the same notional amounts, currencies, and maturity dates. (b) The fair value of the auction rate security was estimated using a discounted cash flow model based on (i) estimated interest rates, timing, and amount of cash flows, (ii) credit spreads, recovery rates, and credit quality of the underlying securities, (iii) illiquidity considerations, and (iv) market correlation. |
Reconciliation of Fair Value of Asset Measured Using Level 3 Inputs | The following table presents information about Mattel’s investments measured and reported at fair value on a recurring basis using significant Level 3 inputs: Level 3 (In thousands) Balance at December 31, 2014 $ 30,960 Proceeds from sale (32,250 ) Gain on sale 1,290 Balance at September 30, 2015 $ — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings per Share | The following table reconciles earnings per common share for the three and nine months ended September 30, 2015 and 2014: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands, except per share amounts) Basic: Net income $ 223,784 $ 331,836 $ 154,256 $ 348,943 Less: net income allocable to participating RSUs (a) (1,036 ) (2,338 ) (2,393 ) (2,521 ) Net income available for basic common shares $ 222,748 $ 329,498 $ 151,863 $ 346,422 Weighted average common shares outstanding 339,420 338,728 338,954 339,216 Basic net income per common share $ 0.66 $ 0.97 $ 0.45 $ 1.02 Diluted: Net income $ 223,784 $ 331,836 $ 154,256 $ 348,943 Less: net income allocable to participating RSUs (a) (1,035 ) (2,330 ) (2,393 ) (2,523 ) Net income available for diluted common shares $ 222,749 $ 329,506 $ 151,863 $ 346,420 Weighted average common shares outstanding 339,420 338,728 338,954 339,216 Weighted average common equivalent shares arising from: Dilutive stock options and non-participating RSUs 370 1,601 590 1,951 Weighted average number of common and potential common shares 339,790 340,329 339,544 341,167 Diluted net income per common share $ 0.66 $ 0.97 $ 0.45 $ 1.02 (a) During the three and nine months ended September 30, 2015 and 2014, Mattel allocated a proportionate share of both dividends and undistributed earnings to participating RSUs. |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Defined benefit pension plans | |
Components of Net Periodic Benefit Cost | A summary of the components of net periodic benefit cost for Mattel’s defined benefit pension plans is as follows: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Service cost $ 624 $ 2,120 $ 4,988 $ 7,432 Interest cost 7,036 6,747 19,568 20,666 Expected return on plan assets (7,356 ) (7,826 ) (22,629 ) (23,849 ) Amortization of prior service cost (credit) 6 (264 ) (522 ) (792 ) Recognized actuarial loss 3,138 3,600 12,919 10,776 Curtailment gain — — (8,639 ) — Settlement loss 5,233 — 5,233 — $ 8,681 $ 4,377 $ 10,918 $ 14,233 |
Postretirement benefit plans | |
Components of Net Periodic Benefit Cost | A summary of the components of net periodic benefit cost for Mattel’s postretirement benefit plans is as follows: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Service (credit) cost $ (1 ) $ 11 $ 41 $ 51 Interest cost 270 129 896 1,033 Recognized actuarial loss (gain) 34 (138 ) 111 12 $ 303 $ 2 $ 1,048 $ 1,096 |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stock Option and Restricted Stock Unit Compensation Expense | Compensation expense, included within other selling and administrative expenses in the consolidated statements of operations, related to stock options and RSUs is as follows: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Stock option compensation expense $ 4,644 $ 3,448 $ 11,833 $ 7,682 RSU compensation expense 9,196 8,590 29,297 28,828 $ 13,840 $ 12,038 $ 41,130 $ 36,510 |
Other Selling and Administrat44
Other Selling and Administrative Expenses (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Selling and Administrative Expenses | Other selling and administrative expenses include the following: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Design and development $ 54,278 $ 53,215 $ 164,824 $ 154,274 Identifiable intangible asset amortization 7,035 11,818 20,963 22,071 |
Foreign Currency Transaction 45
Foreign Currency Transaction Gains and Losses (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Currency Transaction (Losses) Gains | Currency transaction (losses) gains included in the consolidated statements of operations are as follows: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Operating income $ (16,463 ) $ 13,881 $ 7,976 $ 29,672 Other non-operating income (expense), net (2,926 ) 3,729 (6,324 ) 2,805 Net transaction (losses) gains $ (19,389 ) $ 17,610 $ 1,652 $ 32,477 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Revenues and Segment Income | For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Revenues by Segment North America $ 1,069,116 $ 1,124,463 $ 2,053,053 $ 2,079,357 International 798,584 989,228 1,732,125 2,048,403 American Girl 115,651 119,025 313,504 317,314 Gross sales 1,983,351 2,232,716 4,098,682 4,445,074 Sales adjustments (191,383 ) (211,292 ) (395,813 ) (415,221 ) Net sales $ 1,791,968 $ 2,021,424 $ 3,702,869 $ 4,029,853 Segment Income North America $ 230,216 $ 257,496 $ 283,356 $ 345,716 International 142,576 183,142 160,250 245,476 American Girl 7,142 7,618 5,617 15,599 379,934 448,256 449,223 606,791 Corporate and other expense (a) (79,161 ) (38,777 ) (202,354 ) (190,086 ) Operating income 300,773 409,479 246,869 416,705 Interest expense 21,409 21,009 62,516 57,220 Interest (income) (1,990 ) (1,773 ) (5,757 ) (5,238 ) Other non-operating (income), net (4,785 ) (3,937 ) (2,984 ) (5,665 ) Income before income taxes $ 286,139 $ 394,180 $ 193,094 $ 370,388 (a) Corporate and other expense includes severance and other termination-related costs of $13.3 million and $61.1 million for the three and nine months ended September 30, 2015, respectively, and $5.0 million and $39.1 million for the three and nine months ended September 30, 2014, respectively, and share-based compensation expense of $13.8 million and $41.1 million for the three and nine months ended September 30, 2015, respectively, and $12.0 million and $36.5 million for the three and nine months ended September 30, 2014, respectively. |
Segment Revenues and Segment Income | For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Revenues by Segment North America $ 1,069,116 $ 1,124,463 $ 2,053,053 $ 2,079,357 International 798,584 989,228 1,732,125 2,048,403 American Girl 115,651 119,025 313,504 317,314 Gross sales 1,983,351 2,232,716 4,098,682 4,445,074 Sales adjustments (191,383 ) (211,292 ) (395,813 ) (415,221 ) Net sales $ 1,791,968 $ 2,021,424 $ 3,702,869 $ 4,029,853 Segment Income North America $ 230,216 $ 257,496 $ 283,356 $ 345,716 International 142,576 183,142 160,250 245,476 American Girl 7,142 7,618 5,617 15,599 379,934 448,256 449,223 606,791 Corporate and other expense (a) (79,161 ) (38,777 ) (202,354 ) (190,086 ) Operating income 300,773 409,479 246,869 416,705 Interest expense 21,409 21,009 62,516 57,220 Interest (income) (1,990 ) (1,773 ) (5,757 ) (5,238 ) Other non-operating (income), net (4,785 ) (3,937 ) (2,984 ) (5,665 ) Income before income taxes $ 286,139 $ 394,180 $ 193,094 $ 370,388 (a) Corporate and other expense includes severance and other termination-related costs of $13.3 million and $61.1 million for the three and nine months ended September 30, 2015, respectively, and $5.0 million and $39.1 million for the three and nine months ended September 30, 2014, respectively, and share-based compensation expense of $13.8 million and $41.1 million for the three and nine months ended September 30, 2015, respectively, and $12.0 million and $36.5 million for the three and nine months ended September 30, 2014, respectively. |
Segment Assets | Segment assets are comprised of accounts receivable and inventories, net of applicable reserves and allowances. September 30, 2015 September 30, 2014 December 31, 2014 (In thousands) Assets by Segment North America $ 1,011,546 $ 1,078,388 $ 698,357 International 1,063,727 1,244,067 778,849 American Girl 147,517 160,754 108,667 2,222,790 2,483,209 1,585,873 Corporate and other 99,245 36,419 70,334 Accounts receivable and inventories, net $ 2,322,035 $ 2,519,628 $ 1,656,207 |
Worldwide Revenues by Brand Category | The table below presents worldwide revenues by brand category: For the Three Months Ended For the Nine Months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 (In thousands) Worldwide Revenues by Brand Category Mattel Girls & Boys Brands $ 1,120,612 $ 1,323,273 $ 2,327,555 $ 2,669,111 Fisher-Price Brands 625,277 663,446 1,226,023 1,263,655 American Girl Brands 109,879 113,291 300,128 302,375 Construction and Arts & Crafts Brands 118,480 123,415 221,560 185,015 Other 9,103 9,291 23,416 24,918 Gross sales 1,983,351 2,232,716 4,098,682 4,445,074 Sales adjustments (191,383 ) (211,292 ) (395,813 ) (415,221 ) Net sales $ 1,791,968 $ 2,021,424 $ 3,702,869 $ 4,029,853 |
Accounts Receivable - Additiona
Accounts Receivable - Additional Information (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable, allowances for doubtful accounts | $ 26 | $ 26.3 | $ 22 |
Inventories (Detail)
Inventories (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Inventory [Line Items] | |||
Raw materials and work in process | $ 126,261 | $ 88,395 | $ 125,536 |
Finished goods | 744,524 | 473,360 | 698,734 |
Inventories | $ 870,785 | $ 561,755 | $ 824,270 |
Property, Plant, and Equipmen49
Property, Plant, and Equipment (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Property, Plant and Equipment [Line Items] | |||
Property, plant, and equipment, gross | $ 2,462,433 | $ 2,395,244 | $ 2,370,106 |
Less: accumulated depreciation | (1,741,134) | (1,657,375) | (1,659,494) |
Property, plant, and equipment, net | 721,299 | 737,869 | 710,612 |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant, and equipment, gross | 27,055 | 27,465 | 27,609 |
Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant, and equipment, gross | 273,139 | 274,452 | 273,261 |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant, and equipment, gross | 748,247 | 728,299 | 701,476 |
Software | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant, and equipment, gross | 327,190 | 316,374 | 331,324 |
Tools, dies, and molds | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant, and equipment, gross | 820,772 | 782,507 | 773,059 |
Capital leases | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant, and equipment, gross | 23,970 | 23,970 | 23,970 |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant, and equipment, gross | $ 242,060 | $ 242,177 | $ 239,407 |
Goodwill (Detail)
Goodwill (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Goodwill [Line Items] | |
Goodwill, beginning balance | $ 1,392,925 |
Currency Exchange Rate Impact | (4,966) |
Goodwill, ending balance | 1,387,959 |
North America | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 720,939 |
Currency Exchange Rate Impact | (1,035) |
Goodwill, ending balance | 719,904 |
International | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 458,766 |
Currency Exchange Rate Impact | (3,501) |
Goodwill, ending balance | 455,265 |
American Girl | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 213,220 |
Currency Exchange Rate Impact | (430) |
Goodwill, ending balance | $ 212,790 |
Goodwill - Additional Informati
Goodwill - Additional Information (Detail) - MEGA Brands - USD ($) | Dec. 31, 2014 | Sep. 30, 2014 | Apr. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Business Acquisition [Line Items] | |||||||
Percentage of ownership acquired | 100.00% | ||||||
Total cash consideration paid | $ 454,900,000 | ||||||
Identifiable intangible assets | 95,000,000 | ||||||
Net assets acquired | 40,600,000 | ||||||
Cash | 31,600,000 | ||||||
Accounts receivable | 36,600,000 | ||||||
Inventory | 83,000,000 | ||||||
Property, plant, and equipment | 32,500,000 | ||||||
Accounts payable and accrued liabilities | 66,600,000 | ||||||
Long-term debt | 44,600,000 | ||||||
Other net liabilities | 31,900,000 | ||||||
Goodwill relating to acquisition | $ 319,300,000 | ||||||
Retrospective adjustment to net assets | $ 1,000,000 | $ (9,000,000) | |||||
Retrospective adjustment to goodwill | $ (1,000,000) | $ 9,000,000 | |||||
Integration costs recognized | $ 3,000,000 | $ 5,000,000 | $ 13,000,000 | $ 9,000,000 | |||
Transaction costs recognized | $ 0 | $ 7,000,000 |
Other Noncurrent Assets (Detail
Other Noncurrent Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Other Noncurrent Assets Disclosure [Line Items] | |||
Nonamortizable identifiable intangibles | $ 492,979 | $ 498,517 | $ 506,363 |
Deferred income taxes | 390,109 | 385,434 | 419,197 |
Identifiable intangibles (net of amortization of $124.6 million, $103.6 million, and $89.0 million, respectively) | 219,311 | 240,227 | 249,520 |
Other | 254,654 | 280,080 | 283,398 |
Total other noncurrent assets | $ 1,357,053 | $ 1,404,258 | $ 1,458,478 |
Other Noncurrent Assets (Parent
Other Noncurrent Assets (Parenthetical) (Detail) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Other Noncurrent Assets Disclosure [Line Items] | |||
Accumulated amortization of identifiable intangibles | $ 124.6 | $ 103.6 | $ 89 |
Other Noncurrent Assets - Addit
Other Noncurrent Assets - Additional Information (Detail) $ in Millions | 1 Months Ended |
Apr. 30, 2014USD ($) | |
MEGA Brands | |
Other Noncurrent Assets Disclosure [Line Items] | |
Amortizable identifiable intangible assets acquired | $ 95 |
Accrued Liabilities (Detail)
Accrued Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Schedule of Accrued Liabilities [Line Items] | |||
Advertising and promotion | $ 116,529 | $ 88,132 | $ 87,306 |
Royalties | 111,082 | 112,823 | 102,504 |
Taxes other than income taxes | 70,815 | 53,182 | 71,190 |
Other | 389,578 | 385,707 | 392,798 |
Total accrued liabilities | $ 688,004 | $ 639,844 | $ 653,798 |
Seasonal Financing - Additional
Seasonal Financing - Additional Information (Detail) - 2015 Credit Facility | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Debt Instrument [Line Items] | |
Terms of credit facility | The agreement governing the credit facility was amended and restated on June 8, 2015 to, among other things, (i) extend the maturity date of the credit facility to June 9, 2020, (ii) amend the definition of consolidated earnings before interest, taxes, depreciation, and amortization ("Consolidated EBITDA") used in calculating Mattel's financial ratio covenants, and (iii) increase the maximum allowed consolidated debt-to-Consolidated EBITDA ratio to 3.50 to 1. |
Debt-to-earnings before interest taxes depreciation amortization ratio maximum for covenant compliance | 350.00% |
Maturity date | Jun. 9, 2020 |
Aggregate commitment under the credit facility | $ 1,600,000,000 |
Aggregate commitment under the credit facility, including the accordion feature | $ 1,850,000,000 |
Minimum | |
Debt Instrument [Line Items] | |
Commitment fee rate for unused commitments | 0.08% |
Maximum | |
Debt Instrument [Line Items] | |
Commitment fee rate for unused commitments | 0.25% |
Base Rate | Minimum | |
Debt Instrument [Line Items] | |
Interest rate margin for loans | 0.00% |
Base Rate | Maximum | |
Debt Instrument [Line Items] | |
Interest rate margin for loans | 0.75% |
LIBOR | Minimum | |
Debt Instrument [Line Items] | |
Interest rate margin for loans | 0.88% |
LIBOR | Maximum | |
Debt Instrument [Line Items] | |
Interest rate margin for loans | 1.75% |
Long-Term Debt (Detail)
Long-Term Debt (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Debt Instrument [Line Items] | |||
Long-term debt | $ 2,100,000 | $ 2,100,000 | $ 2,100,000 |
Less: current portion | 0 | 0 | 0 |
Total long-term debt | 2,100,000 | 2,100,000 | 2,100,000 |
2010 Senior Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | 500,000 | 500,000 | 500,000 |
2011 Senior Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | 600,000 | 600,000 | 600,000 |
2013 Senior Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | 500,000 | 500,000 | 500,000 |
2014 Senior Notes | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 500,000 | $ 500,000 | $ 500,000 |
Long-Term Debt (Parenthetical)
Long-Term Debt (Parenthetical) (Detail) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
2010 Senior Notes due October 2020 | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date, month and year | 2020-10 | 2020-10 | 2020-10 |
2010 Senior Notes due October 2040 | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date, month and year | 2040-10 | 2040-10 | 2040-10 |
2011 Senior Notes due November 2016 | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date, month and year | 2016-11 | 2016-11 | 2016-11 |
2011 Senior Notes due November 2041 | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date, month and year | 2041-11 | 2041-11 | 2041-11 |
2013 Senior Notes due March 2018 | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date, month and year | 2018-03 | 2018-03 | 2018-03 |
2013 Senior Notes due March 2023 | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date, month and year | 2023-03 | 2023-03 | 2023-03 |
2014 Senior Notes due May 2019 | |||
Debt Instrument [Line Items] | |||
Debt instrument maturity date, month and year | 2019-05 | 2019-05 | 2019-05 |
Other Noncurrent Liabilities (D
Other Noncurrent Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Other Liabilities [Line Items] | |||
Benefit plan liabilities | $ 203,251 | $ 229,963 | $ 183,933 |
Noncurrent tax liabilities | 168,704 | 171,181 | 166,244 |
Other | 163,314 | 182,882 | 165,256 |
Total other noncurrent liabilities | $ 535,269 | $ 584,026 | $ 515,433 |
Changes in Accumulated Balances
Changes in Accumulated Balances for Each Component of Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of Beginning Period | $ (710,873) | $ (400,264) | $ (622,089) | $ (443,676) |
Other comprehensive income (loss) before reclassifications | (81,723) | (97,829) | (148,488) | (64,387) |
Amounts reclassified from accumulated other comprehensive income (loss) | (12,325) | 5,406 | (34,344) | 15,376 |
Other Comprehensive (Loss) Income, Net of Tax | (94,048) | (92,423) | (182,832) | (49,011) |
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of End Period | (804,921) | (492,687) | (804,921) | (492,687) |
Derivative Instruments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of Beginning Period | 30,970 | (9,500) | 30,025 | (10,789) |
Other comprehensive income (loss) before reclassifications | 8,866 | 19,745 | 32,367 | 15,437 |
Amounts reclassified from accumulated other comprehensive income (loss) | (19,152) | 3,328 | (41,708) | 8,925 |
Other Comprehensive (Loss) Income, Net of Tax | (10,286) | 23,073 | (9,341) | 24,362 |
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of End Period | 20,684 | 13,573 | 20,684 | 13,573 |
Defined Benefit Pension Plans | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of Beginning Period | (161,920) | (127,201) | (161,507) | (131,946) |
Other comprehensive income (loss) before reclassifications | (103) | 139 | (1,053) | 511 |
Amounts reclassified from accumulated other comprehensive income (loss) | 6,827 | 2,078 | 7,364 | 6,451 |
Other Comprehensive (Loss) Income, Net of Tax | 6,724 | 2,217 | 6,311 | 6,962 |
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of End Period | (155,196) | (124,984) | (155,196) | (124,984) |
Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of Beginning Period | (579,923) | (263,563) | (490,607) | (300,941) |
Other comprehensive income (loss) before reclassifications | (90,486) | (117,713) | (179,802) | (80,335) |
Other Comprehensive (Loss) Income, Net of Tax | (90,486) | (117,713) | (179,802) | (80,335) |
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of End Period | $ (670,409) | $ (381,276) | $ (670,409) | $ (381,276) |
Classification and Amount of Re
Classification and Amount of Reclassifications from Accumulated Other Comprehensive Income to Consolidated Statement of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Cost of sales | $ 912,371 | $ 1,000,286 | $ 1,899,966 | $ 2,034,614 | |
Income Before Income Taxes | 286,139 | 394,180 | 193,094 | 370,388 | |
Provision for income taxes | (62,355) | (62,344) | (38,838) | (21,445) | |
Net Income | 223,784 | 331,836 | 154,256 | 348,943 | |
Reclassification Out of Accumulated Other Comprehensive Income (Loss) | Derivative Instruments | Foreign Currency Forward Exchange Contracts | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Cost of sales | 18,909 | (3,671) | 41,290 | (9,248) | |
Provision for income taxes | 243 | 343 | 418 | 323 | |
Net Income | 19,152 | (3,328) | 41,708 | (8,925) | |
Reclassification Out of Accumulated Other Comprehensive Income (Loss) | Defined Benefit Pension Plans | |||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Amortization of prior service (cost) credit | [1] | (6) | 264 | 522 | 792 |
Recognized actuarial loss | [1] | (3,172) | (3,462) | (13,030) | (10,788) |
Curtailment gain | 8,639 | ||||
Settlement loss | (5,233) | (5,233) | |||
Income Before Income Taxes | (8,411) | (3,198) | (9,102) | (9,996) | |
Provision for income taxes | 1,584 | 1,120 | 1,738 | 3,545 | |
Net Income | $ (6,827) | $ (2,078) | $ (7,364) | $ (6,451) | |
[1] | The amortization of prior service (cost) credit and recognized actuarial loss are included in the computation of net periodic benefit cost. Refer to "Note 15 to the Consolidated Financial Statements-Employee Benefit Plans" of this Quarterly Report on Form 10-Q for additional information regarding Mattel's net periodic benefit cost. |
Accumulated Other Comprehensi62
Accumulated Other Comprehensive Income (Loss) - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Comprehensive Income (Loss) [Line Items] | ||||
Currency translation adjustments | $ (90,486) | $ (117,713) | $ (179,802) | $ (80,335) |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Not designated as hedging instruments | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Net gain (loss) recognized in the consolidated statements of operations for derivatives not designated as hedging instruments | $ (7,730) | $ (26,340) | $ (49,748) | $ (15,885) | |
Foreign Exchange Forward | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount | 972,000 | 1,110,000 | 972,000 | 1,110,000 | $ 1,190,000 |
Foreign Exchange Forward | Designated as hedging instruments | Cost of Sales | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Net gain (loss) reclassified from accumulated other comprehensive loss to the consolidated statements of operations for derivatives designated as hedging instruments | 19,152 | (3,328) | 41,708 | (8,925) | |
Foreign Exchange Forward | Not designated as hedging instruments | Cost of Sales | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Net gain (loss) recognized in the consolidated statements of operations for derivatives not designated as hedging instruments | 896 | $ 292 | (3) | $ 978 | |
Cross currency swap contract | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Notional amount | $ 30,000 | $ 30,000 | |||
Maximum | Foreign Exchange Forward | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Maximum term for foreign currency forward exchange contracts | 18 months |
Derivative Assets and Liabiliti
Derivative Assets and Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Derivatives, Fair Value [Line Items] | |||
Derivative asset, fair value | $ 28,280 | $ 33,743 | $ 33,902 |
Derivative liability, fair value | 8,261 | 13,398 | 12,596 |
Designated as hedging instruments | |||
Derivatives, Fair Value [Line Items] | |||
Derivative asset, fair value | 22,165 | 33,425 | 33,737 |
Derivative liability, fair value | 7,445 | 2,444 | 6,092 |
Designated as hedging instruments | Foreign Exchange Forward | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative asset, fair value | 21,138 | 31,982 | 31,908 |
Designated as hedging instruments | Foreign Exchange Forward | Other noncurrent assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative asset, fair value | 1,027 | 1,443 | 1,829 |
Designated as hedging instruments | Foreign Exchange Forward | Accrued liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative liability, fair value | 6,773 | 2,408 | 5,697 |
Designated as hedging instruments | Foreign Exchange Forward | Other noncurrent liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative liability, fair value | 672 | 36 | 395 |
Not designated as hedging instruments | |||
Derivatives, Fair Value [Line Items] | |||
Derivative asset, fair value | 6,115 | 318 | 165 |
Not designated as hedging instruments | Foreign Exchange Forward | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative asset, fair value | 827 | 318 | 165 |
Not designated as hedging instruments | Foreign Exchange Forward | Accrued liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative liability, fair value | 816 | $ 10,954 | $ 6,504 |
Not designated as hedging instruments | Cross currency swap contract | Prepaid expenses and other current assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative asset, fair value | $ 5,288 |
Derivatives Designated as Hedgi
Derivatives Designated as Hedging Instruments by Classification and Amount of Gains and Losses (Detail) - Designated as hedging instruments - Foreign Exchange Forward - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in OCI | $ 8,866 | $ 19,745 | $ 32,367 | $ 15,437 |
Cost of Sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) reclassified from accumulated OCI to statements of operations | $ 19,152 | $ (3,328) | $ 41,708 | $ (8,925) |
Derivatives Not Designated as H
Derivatives Not Designated as Hedging Instruments by Classification and Amount of Gains and Losses (Detail) - Not designated as hedging instruments - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain (loss) recognized in the statements of operations for derivatives not designated as hedging instruments | $ (7,730) | $ (26,340) | $ (49,748) | $ (15,885) |
Foreign Exchange Forward | Non-operating income/expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain (loss) recognized in the statements of operations for derivatives not designated as hedging instruments | (14,711) | (26,632) | (55,033) | (16,863) |
Foreign Exchange Forward | Cost of Sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain (loss) recognized in the statements of operations for derivatives not designated as hedging instruments | 896 | $ 292 | (3) | $ 978 |
Cross currency swap contract | Non-operating income/expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain (loss) recognized in the statements of operations for derivatives not designated as hedging instruments | $ 6,085 | $ 5,288 |
Financial Assets and Liabilitie
Financial Assets and Liabilities Measured and Reported at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |
Assets: | ||||
Foreign currency forward exchange contracts | [1] | $ 22,992 | $ 33,743 | $ 33,902 |
Cross currency swap contract | [1] | 5,288 | ||
Auction rate security | [2] | 30,960 | 31,142 | |
Total assets | 28,280 | 64,703 | 65,044 | |
Liabilities: | ||||
Foreign currency forward exchange contracts | [1] | 8,261 | 13,398 | 12,596 |
Level 2 | ||||
Assets: | ||||
Foreign currency forward exchange contracts | [1] | 22,992 | 33,743 | 33,902 |
Cross currency swap contract | [1] | 5,288 | ||
Total assets | 28,280 | 33,743 | 33,902 | |
Liabilities: | ||||
Foreign currency forward exchange contracts | [1] | $ 8,261 | 13,398 | 12,596 |
Level 3 | ||||
Assets: | ||||
Auction rate security | [2] | 30,960 | 31,142 | |
Total assets | $ 30,960 | $ 31,142 | ||
[1] | The fair values of the foreign currency forward exchange contracts and the cross currency swap contract are based on dealer quotes of market forward rates and reflect the amount that Mattel would receive or pay at their maturity dates for contracts involving the same notional amounts, currencies, and maturity dates. | |||
[2] | The fair value of the auction rate security was estimated using a discounted cash flow model based on (i) estimated interest rates, timing, and amount of cash flows, (ii) credit spreads, recovery rates, and credit quality of the underlying securities, (iii) illiquidity considerations, and (iv) market correlation. |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |
Financial Instruments [Line Items] | ||||
Estimated fair value of long-term debt | $ 2,150,000 | $ 2,150,000 | $ 2,180,000 | $ 2,190,000 |
Long-term debt | 2,100,000 | 2,100,000 | $ 2,100,000 | $ 2,100,000 |
Auction Rate Securities | ||||
Financial Instruments [Line Items] | ||||
Proceeds from sale of debt security | $ 32,300 | 32,250 | ||
Gain (loss) on sale of debt security | $ 1,290 |
Assets Measured and Reported at
Assets Measured and Reported at Fair Value on Recurring Basis Using Significant Level 3 Inputs (Detail) - Auction Rate Securities - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Fair Value, Asset Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Balance at beginning of period | $ 30,960 | |
Proceeds from sale | $ (32,300) | (32,250) |
Gain on sale | $ 1,290 |
Earnings per Share (Detail)
Earnings per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Basic: | |||||
Net income | $ 223,784 | $ 331,836 | $ 154,256 | $ 348,943 | |
Less: net income allocable to participating RSUs | [1] | (1,036) | (2,338) | (2,393) | (2,521) |
Net income available for basic common shares | $ 222,748 | $ 329,498 | $ 151,863 | $ 346,422 | |
Weighted average common shares outstanding | 339,420 | 338,728 | 338,954 | 339,216 | |
Basic net income per common share | $ 0.66 | $ 0.97 | $ 0.45 | $ 1.02 | |
Diluted: | |||||
Net income | $ 223,784 | $ 331,836 | $ 154,256 | $ 348,943 | |
Less: net income allocable to participating RSUs | [1] | (1,035) | (2,330) | (2,393) | (2,523) |
Net income available for diluted common shares | $ 222,749 | $ 329,506 | $ 151,863 | $ 346,420 | |
Weighted average common shares outstanding | 339,420 | 338,728 | 338,954 | 339,216 | |
Weighted average common equivalent shares arising from: | |||||
Dilutive stock options and non-participating RSUs | 370 | 1,601 | 590 | 1,951 | |
Weighted average number of common and potential common shares | 339,790 | 340,329 | 339,544 | 341,167 | |
Diluted net income per common share | $ 0.66 | $ 0.97 | $ 0.45 | $ 1.02 | |
[1] | During the three and nine months ended September 30, 2015 and 2014, Mattel allocated a proportionate share of both dividends and undistributed earnings to participating RSUs. |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Nonqualified RSUs excluded from the calculation of diluted net income per common share | 14.9 | 3.6 | 8.6 | 2.2 |
Components of Net Periodic Bene
Components of Net Periodic Benefit Cost (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Defined benefit pension plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 624 | $ 2,120 | $ 4,988 | $ 7,432 |
Interest cost | 7,036 | 6,747 | 19,568 | 20,666 |
Expected return on plan assets | (7,356) | (7,826) | (22,629) | (23,849) |
Amortization of prior service cost (credit) | 6 | (264) | (522) | (792) |
Recognized actuarial loss (gain) | 3,138 | 3,600 | 12,919 | 10,776 |
Curtailment gain | (8,639) | |||
Settlement loss | 5,233 | 5,233 | ||
Net periodic benefit cost | 8,681 | 4,377 | 10,918 | 14,233 |
Postretirement benefit plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service (credit) cost | (1) | 11 | 41 | 51 |
Interest cost | 270 | 129 | 896 | 1,033 |
Recognized actuarial loss (gain) | 34 | (138) | 111 | 12 |
Net periodic benefit cost | $ 303 | $ 2 | $ 1,048 | $ 1,096 |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Employee Benefits Disclosure [Line Items] | |
Cash contributions made for defined benefit pension benefit plans | $ 31 |
Cash contributions made for postretirement benefit plans | 2 |
Expected additional cash contributions | $ 5 |
Share-Based Payments - Addition
Share-Based Payments - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
General vesting period | 3 years | |
Total unrecognized compensation cost related to unvested share-based payments | $ 97,100 | |
Weighted average period for unrecognized compensation cost expected to be recognized (in years) | 2 years 1 month 18 days | |
Proceeds from exercise of stock options | $ 10,458 | $ 20,866 |
Stock Options | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock option expire from date of grant, period | 10 years |
Stock Option and Restricted Sto
Stock Option and Restricted Stock Unit Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 13,840 | $ 12,038 | $ 41,130 | $ 36,510 |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 4,644 | 3,448 | 11,833 | 7,682 |
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 9,196 | $ 8,590 | $ 29,297 | $ 28,828 |
Other Selling and Administrat76
Other Selling and Administrative Expenses (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Component of Operating Other Cost and Expense [Line Items] | ||||
Design and development | $ 54,278 | $ 53,215 | $ 164,824 | $ 154,274 |
Identifiable intangible asset amortization | $ 7,035 | $ 11,818 | $ 20,963 | $ 22,071 |
Currency Transaction (Losses) G
Currency Transaction (Losses) Gains (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Currency Transaction Gains (Losses) [Line Items] | ||||
Net transaction (losses) gains | $ (19,389) | $ 17,610 | $ 1,652 | $ 32,477 |
Operating income | ||||
Currency Transaction Gains (Losses) [Line Items] | ||||
Net transaction (losses) gains | (16,463) | 13,881 | 7,976 | 29,672 |
Non-operating income/expense | ||||
Currency Transaction Gains (Losses) [Line Items] | ||||
Net transaction (losses) gains | $ (2,926) | $ 3,729 | $ (6,324) | $ 2,805 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Taxes [Line Items] | ||||
Provision for income taxes | $ 62,355 | $ 62,344 | $ 38,838 | $ 21,445 |
Net discrete tax (expense) benefit | (800) | $ 15,100 | 2,800 | $ 51,400 |
Capital loss carryforward | 300,000 | $ 300,000 | ||
Capital loss carryforward expiration period | 5 years | |||
Reasonably possible changes to unrecognized tax benefits related to settlement of tax audits and/or expiration of statutes of limitations within the next twelve months | $ 3,000 | $ 3,000 |
Contingencies - Additional Info
Contingencies - Additional Information (Detail) | Apr. 26, 2015 | Jan. 13, 2014USD ($) | Dec. 23, 2013USD ($) | Dec. 21, 2013USD ($) | Jan. 24, 2013USD ($) | Aug. 11, 2011USD ($) | Aug. 31, 2011USD ($) | Apr. 30, 2011USD ($)LegalMatter | Jan. 31, 2010USD ($) | Apr. 30, 1999USD ($) | Sep. 30, 2015USD ($) | Nov. 11, 2014USD ($) | Jul. 26, 2013USD ($) | Apr. 27, 2009USD ($) | Jul. 17, 2008USD ($) |
MGA | |||||||||||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||||||||||
Historical jury verdict | $ 100,000,000 | $ 100,000,000 | |||||||||||||
Claimed trade secrets | LegalMatter | 26 | ||||||||||||||
Other claimed trade secrets | LegalMatter | 88 | ||||||||||||||
Compensatory damages awarded by jury | $ 88,500,000 | ||||||||||||||
Reduced compensatory damages awarded by court | $ 85,000,000 | ||||||||||||||
Punitive damages awarded | 85,000,000 | ||||||||||||||
Attorney fees and costs awarded | 140,000,000 | ||||||||||||||
Compensatory damages, punitive damages, and attorney fees and costs awarded by court | $ 310,000,000 | ||||||||||||||
Damages for alleged trade secret misappropriation appealed | $ 170,000,000 | ||||||||||||||
Attorney fees and costs appealed | $ 140,000,000 | ||||||||||||||
Amount of damages and attorney's fees and costs vacated by the appeals court | $ 172,500,000 | ||||||||||||||
Litigation accrual | $ 138,000,000 | ||||||||||||||
Payment of Judgment | $ 138,000,000 | ||||||||||||||
Approximate amount of judgment finalized in the District Court, including interest | $ 138,000,000 | ||||||||||||||
Reasonably possible range of loss, minimum | $ 0 | ||||||||||||||
Reasonably possible range of loss, maximum | 12,500,000 | ||||||||||||||
Reasonably possible range of pre-judgment interest, minimum | 0 | ||||||||||||||
Reasonably possible range of pre-judgment interest, maximum | 10,000,000 | ||||||||||||||
Accrued litigation liability | 0 | ||||||||||||||
MGA | Minimum | |||||||||||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||||||||||
Alleged trade secrets damages claimed | $ 1,000,000,000 | ||||||||||||||
Yellowstone | |||||||||||||||
Commitments and Contingencies Disclosure [Line Items] | |||||||||||||||
Reasonably possible range of loss, minimum | 0 | ||||||||||||||
Reasonably possible range of loss, maximum | 11,200,000 | ||||||||||||||
Alleged loss of profits | $ 1,000,000 | ||||||||||||||
Unpaid accounts receivable | 4,000,000 | ||||||||||||||
Alleged business investments | 3,000,000 | ||||||||||||||
Initial court appointed expert estimated loss of profits | 1,000,000 | ||||||||||||||
Court awarded damages from counterclaim | $ 4,000,000 | ||||||||||||||
Damages including attorney fees awarded by Appeals Court including inflation and interest | $ 14,500,000 | $ 17,000,000 | |||||||||||||
Counterclaim Awarded By Appeals Court | $ 5,000,000 | $ 7,500,000 | $ 7,500,000 | ||||||||||||
Percentage of fine imposed on value of the claims made | 1.00% |
Segment Revenues and Segment In
Segment Revenues and Segment Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Segment Reporting Information [Line Items] | |||||
Gross sales | $ 1,983,351 | $ 2,232,716 | $ 4,098,682 | $ 4,445,074 | |
Sales adjustments | (191,383) | (211,292) | (395,813) | (415,221) | |
Net Sales | 1,791,968 | 2,021,424 | 3,702,869 | 4,029,853 | |
Operating income (loss) | 300,773 | 409,479 | 246,869 | 416,705 | |
Interest expense | 21,409 | 21,009 | 62,516 | 57,220 | |
Interest (income) | (1,990) | (1,773) | (5,757) | (5,238) | |
Other non-operating (income), net | (4,785) | (3,937) | (2,984) | (5,665) | |
Income before income taxes | 286,139 | 394,180 | 193,094 | 370,388 | |
Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Gross sales | 1,983,351 | 2,232,716 | 4,098,682 | 4,445,074 | |
Operating income (loss) | 379,934 | 448,256 | 449,223 | 606,791 | |
Operating Segments | North America | |||||
Segment Reporting Information [Line Items] | |||||
Gross sales | 1,069,116 | 1,124,463 | 2,053,053 | 2,079,357 | |
Operating income (loss) | 230,216 | 257,496 | 283,356 | 345,716 | |
Operating Segments | International | |||||
Segment Reporting Information [Line Items] | |||||
Gross sales | 798,584 | 989,228 | 1,732,125 | 2,048,403 | |
Operating income (loss) | 142,576 | 183,142 | 160,250 | 245,476 | |
Operating Segments | American Girl | |||||
Segment Reporting Information [Line Items] | |||||
Gross sales | 115,651 | 119,025 | 313,504 | 317,314 | |
Operating income (loss) | 7,142 | 7,618 | 5,617 | 15,599 | |
Corporate and Other | |||||
Segment Reporting Information [Line Items] | |||||
Operating income (loss) | [1] | $ (79,161) | $ (38,777) | $ (202,354) | $ (190,086) |
[1] | Corporate and other expense includes severance and other termination-related costs of $13.3 million and $61.1 million for the three and nine months ended September 30, 2015, respectively, and $5.0 million and $39.1 million for the three and nine months ended September 30, 2014, respectively, and share-based compensation expense of $13.8 million and $41.1 million for the three and nine months ended September 30, 2015, respectively, and $12.0 million and $36.5 million for the three and nine months ended September 30, 2014, respectively. |
Segment Revenues and Segment 81
Segment Revenues and Segment Income (Parenthetical) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Share-based compensation expense | $ 13,840 | $ 12,038 | $ 41,130 | $ 36,510 |
Corporate and Other | ||||
Segment Reporting Information [Line Items] | ||||
Severance and other termination-related costs | 13,300 | 5,000 | 61,100 | 39,100 |
Share-based compensation expense | $ 13,800 | $ 12,000 | $ 41,100 | $ 36,500 |
Segment Assets (Detail)
Segment Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Accounts receivable and inventories, net | $ 2,322,035 | $ 1,656,207 | $ 2,519,628 |
Operating Segments | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Accounts receivable and inventories, net | 2,222,790 | 1,585,873 | 2,483,209 |
Operating Segments | North America | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Accounts receivable and inventories, net | 1,011,546 | 698,357 | 1,078,388 |
Operating Segments | International | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Accounts receivable and inventories, net | 1,063,727 | 778,849 | 1,244,067 |
Operating Segments | American Girl | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Accounts receivable and inventories, net | 147,517 | 108,667 | 160,754 |
Corporate and Other | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Accounts receivable and inventories, net | $ 99,245 | $ 70,334 | $ 36,419 |
Worldwide Revenues by Brand Cat
Worldwide Revenues by Brand Category (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Gross sales | $ 1,983,351 | $ 2,232,716 | $ 4,098,682 | $ 4,445,074 |
Sales adjustments | (191,383) | (211,292) | (395,813) | (415,221) |
Net Sales | 1,791,968 | 2,021,424 | 3,702,869 | 4,029,853 |
Mattel Girls & Boys Brands | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Gross sales | 1,120,612 | 1,323,273 | 2,327,555 | 2,669,111 |
Fisher-Price Brands | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Gross sales | 625,277 | 663,446 | 1,226,023 | 1,263,655 |
American Girl Brands | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Gross sales | 109,879 | 113,291 | 300,128 | 302,375 |
Construction and Arts & Crafts Brands | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Gross sales | 118,480 | 123,415 | 221,560 | 185,015 |
Other | ||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||
Gross sales | $ 9,103 | $ 9,291 | $ 23,416 | $ 24,918 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Detail) - $ / shares | Oct. 15, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Subsequent Event [Line Items] | |||||
Dividends Declared Per Common Share | $ 0.38 | $ 0.38 | $ 1.14 | $ 1.14 | |
Subsequent Event | Dividend Declared | |||||
Subsequent Event [Line Items] | |||||
Dividends Declared Per Common Share | $ 0.38 | ||||
Dividend payable date | Dec. 11, 2015 | ||||
Dividend payable, stockholders of record date | Nov. 25, 2015 | ||||
Dividend announcement date | Oct. 15, 2015 |