10-K annual report · filed Feb 22, 2019

Mattel Inc (MAT) FY2018 10-K Annual Report

Short answer

Mattel Inc (MAT) filed its fiscal 2018 10-K annual report with the SEC on Feb 22, 2019. It reported revenue of $4.5B (−7.6% year over year) and net income of −$531M.

  • Top risk flagged: EU General Data Protection Regulation: May 2018 effective date increased compliance costs and breach penalties for Mattel’s digital products

FY2018 key financial metrics · XBRL

Revenue
$4.5B
−7.6% YoY
Net income
−$531M
+49.6% YoY
Operating margin
-5.2%
+1.8 pp YoY
Gross margin
39.8%
+2.5 pp YoY
EPS (diluted)
−$1.54
+49.8% YoY
ROE
-79.3%
+4.5 pp YoY
Operating cash flow
−$27M
+1.1% YoY

Source: XBRL data from the Mattel Inc (MAT) FY2018 10-K on SEC EDGAR. USD.

Mattel Inc FY2018 10-K analysis

AI summary of each section, grounded in the filing text

Business Overview

  • Global children’s entertainment company monetizing owned and licensed IP through toys, content, gaming, consumer products, and direct retail
  • Strategic transformation toward IP-driven growth, franchise management, and expanded online retail and e-commerce capabilities
  • 2019 pipeline emphasized Barbie 60th anniversary, Hot Wheels Monster Trucks, Nintendo Mario Kart, BTS, Toy Story 4, and Detective Pikachu
  • Advertising and promotion expenses fell to $526.4 million from $642.3 million, while declining from 13.2% to 11.7% of net sales
  • Walmart and Target represented approximately 34% of 2018 worldwide net sales, replacing Toys “R” Us as the disclosed major-customer concentration

Management Discussion & Analysis

  • Net sales $4.51B, down 8% YoY from $4.88B, including 6% impact from Toys “R” Us liquidation
  • Gross margin 39.8% vs 37.3%; operating margin -5.2% vs -7.0%
  • Best segment North America: income $221.3M vs $98.5M; worst American Girl: sales $341.2M, down 28%, loss $17.5M
  • Operating cash flow use $27.3M; investing cash flow use $160.8M, with lower capital spending
  • No 2018 buybacks or dividends; emerging risks included Toys “R” Us exposure, credit downgrades, and International goodwill at 1.24x carrying value

Risk Factors

  • EU General Data Protection Regulation: May 2018 effective date increased compliance costs and breach penalties for Mattel’s digital products
  • U.S.-China tariff escalation: increased tariffs threatened Mattel’s Asia-based manufacturing and U.S. toy imports
  • China manufacturing concentration: political instability, disease, port delays, and supplier disruptions could impair seasonal production
  • Walmart and Target concentration: approximately 34% of 2018 net sales exposed to reduced purchases or private-label competition
  • Debt burden: $2.85 billion indebtedness, with variable-rate revolver exposure and higher refinancing costs after credit-rating declines

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