Mattel 2002 Annual Report Download - page 30

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local currency). The International segment continued to benefit from Mattel’s strategic focus on globalization of
brands, including improved product availability, better alignment of worldwide marketing and sales plans and
strong product launches.
The US Girls segment income increased by 5% to $389.8 million, largely due to improved margin, which
was partially offset by lower volume. The US Boys-Entertainment segment income grew by 34% to
$110.0 million, primarily due to improved margin and lower selling and administrative expenses. The US Infant
& Preschool segment income increased by 19% to $187.0 million, largely due to increased volume and improved
margin. All the US segments benefited from lower costs for media purchases due to lower costs per rating point.
The International segment income increased by 54% to $305.0 million, mainly due to increased volume and
improved margin.
2001 Compared to 2000
Consolidated Results
Net income from continuing operations for 2001 was $310.9 million or $0.71 per diluted share as compared
to net income from continuing operations of $170.2 million or $0.40 per diluted share in 2000. Profitability in
2001 was impacted by a pre-tax charge of $50.2 million ($35.2 million after-tax) related to the financial
realignment plan and a $5.5 million after-tax charge related to a loss on derivative instruments. Included in the
reported results for 2001 was a pre-tax goodwill amortization charge of $46.1 million ($34.7 million after-tax).
The combined effect of these items resulted in an after-tax charge totaling $75.4 million. Profitability in 2000
was impacted by a pre-tax charge of $125.2 million ($84.4 million after-tax) related to the initial phase of the
financial realignment plan, a $53.1 million pre-tax charge ($38.4 million after-tax) for the departure of certain
senior executives and an $8.4 million pre-tax charge ($5.6 million after-tax) related to losses realized on the
disposition of a portion of the stock received as part of the sale of CyberPatrol. These charges were partially
offset by a pre-tax $7.0 million reserve reversal ($5.3 million after-tax) related to the 1999 restructuring and
other charges. Included in the reported results for 2000 was a pre-tax goodwill amortization charge of
$46.6 million ($35.2 million after-tax). The combined effect of these items resulted in an after-tax charge totaling
$158.3 million.
The year 2001 presented substantial obstacles for Mattel. Global economies softened; the September 11th
terrorist attacks eroded US consumer confidence; and as a result, several important US retailers cancelled holiday
reorders as they intensified their focus on inventory management in light of uncertain consumer spending
prospects. The difficult retail environment, combined with increased competitive pressures, resulted in a
weakening in the financial strength of some major US retail industry participants. Kmart, the second largest
US retailer, filed for bankruptcy in January 2002.
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