SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: April 17, 1997
MATTEL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 001-05647 95-1567322
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
333 Continental Boulevard, El Segundo, California 90245-5012
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 252-2000
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N/A
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(Former name or former address, if changed since last report)
Item 7. Financial Statements and Exhibits
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(a) Financial statements of businesses acquired: None
(b) Pro forma financial information:
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
HISTORICAL PRO FORMA
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MATTEL TYCO ADJUSTMENTS COMBINED
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(IN MILLIONS, EXCEPT PER SHARE DATA)
Net Sales............................................... $3,785.9 $721.0 $28.4 (g) $4,535.3
Cost of sales................................... 1,877.3 404.1 34.1 (g) 2,315.5
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Gross Profit............................................ 1,908.6 316.9 (5.7) 2,219.8
Advertising and promotion expenses.............. 614.5 174.2 (9.7) (g) 779.0
Other selling and administrative expenses....... 647.1 121.3 4.0 (g) 772.4
Interest expense................................ 75.5 23.8 99.3
Restructuring and integration charges........... - - -
Other expense, net.............................. 25.8 6.6 32.4
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Income (Loss) from Continuing Operations Before
Income Taxes........................................ 545.7 (9.0) - 536.7
Provision (benefit) for income taxes........... 168.1 (0.2) (3.4) (h) 164.5
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Income (Loss) from Continuing Operations................ 377.6 (8.8) 3.4 372.2
Preferred stock dividend requirements.......... - 7.4 7.4
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Income (Loss) from Continuing Operations Applicable to
Common Shares........................................ $ 377.6 $(16.2) $ 3.4 $ 364.8
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Income (Loss) Per Share from Continuing
Operations (i)....................................... $ 1.36 $(0.46) $ 1.24
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Average number of common and common equivalent
shares outstanding (i)............................... 278.4 34.8 295.4
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See accompanying notes to pro forma condensed combined financial statements.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1996
HISTORICAL PRO FORMA
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MATTEL TYCO ADJUSTMENTS COMBINED
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(IN MILLIONS)
ASSETS
Current Assets:
Cash, cash equivalents and marketable securities............. $ 500.6 $ 49.6 $ 69.7 (a) $ 619.9
Accounts receivable, net..................................... 732.3 189.0 27.6 (b) 948.9
Inventories.................................................. 372.7 71.5 - 444.2
Prepaid expenses and other current assets.................... 165.2 30.5 (1.9) (c) 193.8
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Total current assets.................................. 1,770.8 340.6 95.4 2,206.8
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Property, plant and equipment, net.................................. 579.6 36.6 - 616.2
Other noncurrent assets............................................. 543.1 268.2 27.2 (d) 838.5
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TOTAL ASSETS......................................... $2,893.5 $645.4 $ 122.6 $3,661.5
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings and current portion of long-
term liabilities.......................................... $ 126.6 $ 9.4 $ - $ 136.0
Accounts payable, accrued liabilities and income taxes
payable................................................... 833.8 144.4 234.2 (e) 1,212.4
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Total current liabilities............................. 960.4 153.8 234.2 1,348.4
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Medium-Term notes................................................... 220.0 - - 220.0
Senior subordinated notes........................................... - 126.5 - 126.5
6-3/4% senior notes due 2000........................................ 100.0 - - 100.0
Other long-term debt................................................ 54.9 20.1 - 75.0
Other long-term liabilities......................................... 110.4 1.4 - 111.8
Shareholders' equity................................................ 1,447.8 343.6 (111.6) (f) 1,679.8
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,893.5 $645.4 $ 122.6 $3,661.5
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See accompanying notes to pro forma condensed combined financial statements.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma condensed combined financial statements are
presented for illustrative purposes only, giving effect to the Merger of
Mattel and Tyco as accounted for by the "pooling of interests" method. In
accordance with Commission reporting rules, the pro forma condensed
combined statement of income, and the historical statements from which it
is derived, presents only income from continuing operations and, therefore,
does not include discontinued operations, extraordinary items, and the
cumulative effects of accounting changes.
The pro forma condensed combined statement of income for the twelve
months ended December 31, 1996 excludes: (i) the positive effects of
potential cost savings which may be achieved upon combining the resources
of the companies; and (ii) transaction and restructuring costs of
approximately $275 million.
The pro forma condensed combined balance sheet as of December 31, 1996
includes, in accordance with Commission reporting rules, the impact of all
transactions, whether of a recurring or nonrecurring nature, that can be
reasonably estimated and should be reflected as of that date.
2. PRO FORMA ADJUSTMENTS
Intercompany Transactions - There were no intercompany transactions
which required elimination from the pro forma combined operating results or
balance sheet.
(a) Cash - Cash has been adjusted to reflect the issuance of 3.0 million
shares of Mattel Common Stock to an independent third party prior to the
merger consummation date, and the payment of a termination fee on certain
Tyco short-term borrowings.
(b) Accounts Receivable, Net - A reclassification was made to conform
Tyco's reporting of the allowance for defective returns to that of Mattel.
(c) Prepaid Expenses and Other Current Assets - Current assets have been
adjusted to reflect the write-off of the current portion of Tyco's
capitalized debt issuance costs related to certain short-term borrowing
arrangements that will be terminated.
(d) Other Noncurrent Assets - The combined pro forma financial information
has been adjusted to reflect the write-off of the noncurrent portion of
Tyco's capitalized debt issuance costs related to certain short-term
borrowing arrangements that will be terminated, and recognition of tax
benefits relating to certain foreign net operating losses of Tyco.
(e) Accounts Payable, Accrued Liabilities, and Income Taxes Payable - The
pro forma adjustment reflects approximately $200 million, net of related
taxes, for transaction and restructuring costs related to the Merger, and
the reclassification of the allowance for defective returns to conform
Tyco's reporting to that of Mattel.
(f) Shareholders' Equity - Shareholders' equity has been adjusted to
reflect the following:
-Common stock accounts are adjusted for the assumed issuance of 17.0
million shares of Mattel Common Stock in exchange for 34.8 million shares
of Tyco Common Stock outstanding as of December 31, 1996, utilizing the
Exchange Ratio of 0.48876. Additionally, adjustments reflect conversion of
Tyco stock options and Restricted Stock Units into Mattel Common Stock.
The number of shares of Mattel Common Stock to be issued at consummation of
the Merger will be based upon the actual number of shares of Tyco Common
Stock outstanding at that time.
-Additional paid-in capital is adjusted for the effects of: (i)
issuance of shares of Mattel Common Stock having a par value of $1 per
share in exchange for Tyco Common Stock having a par value of $0.01 per
share; (ii) cancellation of 0.2 million shares of Tyco Common Stock held in
treasury as of December 31, 1996; (iii) the issuance of 0.6 million shares
of Mattel Common Stock for Tyco stock options and Restricted Stock Units;
(iv) the issuance of 3.0 million shares of Mattel Common Stock from its
treasury to an independent third party prior to the merger consummation
date; and (v) conversion of Tyco Series B and Series C Preferred Stock into
equivalent shares of Mattel Series B and C Preferred Stock.
-Retained earnings is adjusted for the effects of: (i) accrual for
transaction and restructuring costs related to the Merger; (ii)
compensation expense related to the Tyco Restricted Stock Units; (iii)
write-off of Tyco's capitalized debt issuance costs and a termination fee
related to certain short-term borrowings; and (iv) recognition of tax
benefits relating to certain foreign net operating losses of Tyco.
(g) Pro Forma Combined Statement of Income - Certain reclassifications have
been made to conform Tyco's reporting of net sales, cost of sales,
advertising and promotion, and selling and administrative expenses to that
of Mattel.
(h) Provision (Benefit) for Income Taxes - The pro forma financial
adjustment reflects the reduction of valuation allowances established in
the historical financial statements of Tyco, resulting in the recognition
of benefits of losses incurred by certain foreign affiliates in the pro
forma combined financial statements.
(i) Income per Common Share - Pro forma weighted-average common shares
outstanding for all periods presented are based upon Mattel's and Tyco's
combined historical weighted-average shares, after adjustment of Tyco's
historical number of shares by the Exchange Ratio of 0.48876.
(c) Exhibits:
99.0 First Amended and Restated Credit Agreement
dated as of March 13, 1997 among the Company,
the Banks named therein and Bank of America
National Trust and Savings Association, as Agent
99.1 Transfer and Administration Agreement dated as
of March 11, 1997 among the Company, Mattel
Factoring, Inc., the Banks named therein and
NationsBank of Texas, N.A., as Agent
99.2 Receivables Purchase Agreement dated as of March
11, 1997 by and among Mattel Sales Corp., Fisher-
Price, Inc., the Company and Mattel Factoring,
Inc.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MATTEL, INC.
Registrant
By: /s/ Leland P. Smith
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Leland P. Smith
Date: April 17, 1997 Assistant Secretary and
-------------- Assistant General Counsel