Mattel 2003 Annual Report Download - page 30

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At year end 2003, the pre-tax unrealized holding gains on marketable equity securities held by Mattel were
$52.1 million ($32.8 million after-tax). Prospectively, management expects to periodically sell additional
marketable securities.
Business Segment Results
Mattel’s reportable segments are separately managed business units and are divided on a geographic basis
between domestic and international. The Domestic segment historically was further divided into US Girls, US
Boys-Entertainment, and US Infant & Preschool. In February 2003, Mattel announced the consolidation of its US
Girls and US Boys-Entertainment segments into one segment, renamed Mattel Brands US. Additionally, Pleasant
Company, which was previously part of the US Girls segment, is now a separate segment for management
reporting purposes. The results of Pleasant Company are now reported as American Girl Brands and US Infant &
Preschool are now reported as Fisher-Price Brands US for segment reporting purposes. Business Segment Results
should be read in conjunction with Item 8 “Financial Statements and Supplementary Data—Note 11 to the
Consolidated Financial Statements.”
Domestic Segment
Mattel Brands US gross sales decreased 11% in 2003 compared to 2002. Within this segment, lower sales of
Barbie®,Diva Starz™,What’s Her Face!™,Wheels and Harry Potter™products were partially offset by growth
in Polly Pocket!™and ello™,and the introduction of Flavas™and the Warner Bros. properties Batman™and
Justice League™.Barbie®gross sales decreased by 15% due to declines in the accessories and doll categories and
increased competition. Mattel Brands US segment income decreased 13% to $388.7 million in 2003, primarily
due to lower volume and increased advertising spending to support the launch of several new product lines and
its attempt to rebuild volume momentum in core brands, partially offset by higher gross profit.
Fisher-Price Brands US gross sales decreased 1%, due to declines in sales of core Fisher-Price®and Power
Wheels®products, partially offset by increased sales of licensed character brands and new product launches in
the interactive learning category. Fisher-Price Brands US segment income decreased 4% to $180.1 million in
2003, primarily due to lower volume and increased overhead costs to support development of new product lines,
partially offset by higher gross profit.
American Girl Brands gross sales decreased 2% as declines in the Angelina Ballerina™,Bitty Baby®and
last year’s launch of the historical Kaya®doll were partially offset by strong performances in this year’s
American Girl Today®brand, driven by the launch of the Kailey®doll, as well as introduction of the Hopscotch
Hill School™brand. American Girl Brands segment income increased 7% to $62.0 million in 2003, primarily due
to higher gross profit, partially offset by increased selling and administrative expenses to support the opening of
its retail store, American Girl Place®,inNew York City during the fourth quarter of 2003.
Management believes the overall decrease in Domestic segment gross sales resulted from the
aforementioned impact of the challenging retail environment, competition in key categories and the shift in
consumer purchases to later in the holiday season.
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