Mattel 2003 Annual Report Download - page 35

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American Girl Brands gross sales increased 3% due to sales increases in The American Girls Collection®,
driven by the launch of the historical Kaya®doll, and higher sales of Bitty Baby®,boosted by the introduction of
Bitty Twins®.This increase in gross sales was partially offset by a decline in the American Girl Today®brand,
which benefited from the launch of the Lindsey®doll in 2001, and lower sales of AG Mini*s™.American Girl
Brands segment income increased 16% to $58.1 million in 2002, primarily due to increased volume and gross
profit improvement.
International Segment
The following table provides a summary of percentage changes in gross sales within the International
segment for 2002 versus 2001:
Non-US Regions:
%Change in
Gross Sales
Impact of Change in
Currency Rates
(in % pts)
Europe .......................................................... 20 7
Latin America .................................................... (1) (9)
Canada .......................................................... 4 —
Asia Pacific ...................................................... 14 3
Total International ................................................. 13 2
International gross sales increased 13% in 2002 compared to 2001, including a benefit from changes in
currency exchange rates of 2 percentage points. The increase in gross sales was due to growth across all product
lines, including Barbie®,Hot Wheels®and core Fisher-Price®.International segment income increased 54% to
$305.0 million in 2002, mainly due to increased volume and gross profit improvement.
Financial Realignment Plan
In 2003, Mattel completed its financial realignment plan, originally announced during the third quarter of
2000, designed to improve gross profit; selling and administrative expenses; operating income; and cash flows.
Since its inception, Mattel recorded a total pre-tax charge of $250.0 million, or approximately $171 million after-
tax, of which approximately $123 million represented cash expenditures and $48 million represented non-cash
writedowns.
Mattel exceeded the targeted initial cumulative pre-tax cost savings of approximately $200 million. Over the
last three years, Mattel recognized cumulative pre-tax cost savings of approximately $221 million, of which
approximately $55 million, $87 million and $79 million were realized in 2001, 2002 and 2003, respectively. The
$87 million of savings achieved in 2002 exceeded the previously expected amount by approximately $22 million,
largely due to the accelerated execution of the North American Strategy.
Asummary of the components of the financial realignment plan for 2000 through 2003 is as follows (in
millions):
For the Year Ended
2000 2001 2002 2003 Total
Gross profit ............................................... $ 78.6 $28.2 $10.4 $ 4.1 $121.3
Advertising and promotion expenses ........................... 4.8 0.3 — — 5.1
Other selling and administrative expenses ....................... 13.4 6.0 13.3 8.6 41.3
Restructuring and other charges ............................... 22.9 15.7 24.6 12.7 75.9
Other non-operating expense, net .............................. 5.5 — — 0.9 6.4
Pre-tax charges ............................................ $125.2 $50.2 $48.3 $26.3 $250.0
Approximate after-tax charges ................................ $ 84 $ 35 $ 32 $ 20 $ 171
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