Mattel announced preliminary fourth quarter and full year 2014 financial results. For Q4 the company reported net income of $149.9 million, or $0.44 per share.
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This includes a negative impact of $0.05 per share from MEGA Brands integration costs and a negative tax impact of $0.03 per share, compared to net income of $369.2 million, or $1.07 per share, in the fourth quarter of 2013. Worldwide net sales in the fourth quarter were $1.99 billion, down 6%, including an unfavorable impact from changes in currency exchange rates of 3 percentage points, compared to $2.11 billion last year.
Gross margin decreased by 410 basis points of net sales to 50.4%, which was partially due to the acquisition of MEGA Brands. SG&A expenses increased by 390 basis points of net sales, including the impact of the acquisition of MEGA Brands. Operating income for the quarter was $237.0 million compared to $479.3 million in the fourth quarter of 2013.
For the year, the company reported net income of $498.9 million, or $1.45 per share, which includes a negative impact of $0.16 per share from MEGA Brands acquisition and integration costs and a tax benefit of $0.13 per share, compared to net income of $903.9 million, or $2.58 per share, in 2013, which included a tax benefit of $0.09.
Worldwide net sales were $6.02 billion, down 7%, including an unfavorable impact from changes in currency exchange rates of 2 percentage points, compared to $6.48 billion last year. Gross margin decreased by 380 basis points of net sales to 49.8%, which was partially due to the acquisition of MEGA Brands. SG&A expenses increased by 270 basis points of net sales, including the impact of the acquisition of MEGA Brands. Operating income for the year was $653.7 million compared to $1.17 billion in 2013.
For the year, net cash flows from operating activities were approximately $889 million, an increase of $191 million over approximately $698 million in 2013. The increase was primarily driven by reductions in working capital, partially offset by lower net income.
The company ended the year with cash of $971.7 million, which is consistent with our capital and investment framework target of $800 million to $1 billion of year-end cash. The company's debt-to-total capital ratio as of December 31, 2014 was 41.6%. ■