Following a successful earnings beat Tuesday for the third quarter, toymaker Mattel announced that Chief Financial Officer Joseph J. Euteneuer will leave the company after "a transition period of up to six months."
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While CEO Ynon Kreiz made the traditional plaudits following moves such as these -- "Joe has been a valued member of our leadership team since joining Mattel two years ago" -- looming in the background are the results of an independent investigation into allegations from an anonymous whistleblower last August who charged that there "were accounting errors in historical periods and whether Mattel’s outside auditor was independent," according to Mattel's announcement.
The maker of Barbie and Hot Wheels said in a press release that the "investigation determined that income tax expense was understated by $109 million in the third quarter of 2017, and overstated by $109 million in the fourth quarter of 2017, with no impact for the full year. . . and had no impact on Mattel’s full-year financial results for 2017 or subsequent periods."
The company also said that its Audit Committee came to the conclusion that "the objectivity and impartiality of Mattel’s outside auditor has not been impaired, and that Mattel’s outside auditor can continue as its independent auditor."
The accounting errors came during the tenure of former CEO Margaret Georgiadis. She was replaced by Kreiz in April 2018.
With the holidays approaching, Mattel is gearing up for battle against its arch-rival Hasbro to dominate the toy market at Christmas and beyond. Last year, Mattel announced the creation of Mattel Films, a new division charged with developing and producing feature films based on the company's line of toys. Hasbro has been very active and successful in Hollywood with films based on Transformers and GI Joe action figures. Mattel's biggest project may be the production of Barbie, the iconic doll, which is being produced with Warner Bros. and stars Margot Robbie and Greta Gerwig.
Mattel shares were up more than 20 percent in aftermarket trading Tuesday.