Mattel 2012 Annual Report Download - page 105

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Segment Data
The following tables present information about revenues, income, and assets by segment. Mattel does not
include sales adjustments such as trade discounts and other allowances in the calculation of segment revenues
(referred to as “gross sales”). Mattel records these adjustments in its financial accounting systems at the time of
sale to each customer, but the adjustments are not allocated to individual products. For this reason, Mattel’s
CODM uses gross sales by segment as one of the metrics to measure segment performance. Such sales
adjustments are included in the determination of segment income from operations based on the adjustments
recorded in the financial accounting systems. Segment income represents each segment’s operating income,
while consolidated operating income represents income from operations before net interest, other non-operating
income, and income taxes as reported in the consolidated statements of operations. The corporate and other
expense category includes costs not allocated to individual segments, including charges related to incentive
compensation, share-based payments, and corporate headquarters functions managed on a worldwide basis, and
the impact of changes in foreign currency rates on intercompany transactions.
For the Year
2012 2011 2010
(In thousands)
Revenues by Segment
North America .............................................. $3,330,217 $3,296,995 $3,190,305
International ............................................... 3,126,088 3,001,705 2,679,273
American Girl .............................................. 596,298 542,387 517,032
Gross sales ................................................. 7,052,603 6,841,087 6,386,610
Sales adjustments ........................................... (631,722) (575,050) (530,415)
Net sales .................................................. $6,420,881 $6,266,037 $5,856,195
Segment Income
North America .............................................. $ 810,271 $ 770,276 $ 671,242
International ............................................... 571,413 513,414 490,733
American Girl .............................................. 121,642 111,104 113,442
1,503,326 1,394,794 1,275,417
Corporate and other expense (a) ................................ (482,311) (353,693) (373,515)
Operating income ........................................... 1,021,015 1,041,101 901,902
Interest expense ............................................. 88,835 75,332 64,839
Interest (income) ............................................ (6,841) (8,093) (8,434)
Other non-operating (income) expense, net ....................... (6,024) 3,189 (1,328)
Income before income taxes ................................... $ 945,045 $ 970,673 $ 846,825
(a) Corporate and other expense includes (i) the Litigation Charge of $137.8 million for 2012, (ii) incentive
compensation expense of $108.1 million, $75.3 million, and $106.7 million for 2012, 2011, and 2010,
respectively, (iii) $13.4 million, $14.9 million, and $21.0 million of charges related to severance and other
termination-related costs for 2012, 2011, and 2010, respectively, (iv) share-based compensation expense of
$63.3 million, $53.5 million, and $67.1 million for 2012, 2011, and 2010, respectively, (v) a reduction to the
legal settlement reserve of $8.7 million for 2010 and benefits from insurance recoveries of costs incurred in
connection with product liability-related litigation of $4.8 million for 2010, (vi) $7.5 million Gunther-Wahl
Productions legal settlement for 2011, and (vii) legal fees associated with MGA litigation matters.
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