Mattel 2014 Annual Report Download - page 109

Mattel’s operating segments are: (i) North America, which consists of the US and Canada, (ii) International,
and (iii) American Girl. Factors considered in determining the operating segments include the nature of business
activities, the management structure directly accountable to the Chief Operating Decision Maker (“CODM”) for
operating and administrative activities, availability of discrete financial information, and strategic priorities
within the organizational structure. These factors correspond to the manner in which the CODM reviews and
evaluates operating performance to make decisions about resources to be allocated to these operating segments.
The North America and International segments sell products in the Mattel Girls & Boys Brands, Fisher-
Price Brands, and Construction and Arts & Crafts Brands categories, although some are developed and adapted
for particular international markets.
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
2014 2013 2012
(In thousands)
Revenues by Segment
North America .............................................. $3,011,633 $3,181,205 $3,330,217
International ............................................... 3,061,506 3,277,840 3,126,088
American Girl .............................................. 645,309 658,768 596,298
Gross sales ................................................. 6,718,448 7,117,813 7,052,603
Sales adjustments ........................................... (694,629) (632,921) (631,722)
Net sales .................................................. $6,023,819 $6,484,892 $6,420,881
Segment Income
North America .............................................. $ 459,833 $ 723,834 $ 810,271
International ............................................... 359,904 622,910 571,413
American Girl .............................................. 113,571 138,029 121,642
933,308 1,484,773 1,503,326
Corporate and other expense (a) ................................ (279,594) (316,670) (482,311)
Operating income ........................................... 653,714 1,168,103 1,021,015
Interest expense ............................................. 79,271 78,505 88,835
Interest (income) ............................................ (7,382) (5,555) (6,841)
Other non-operating (income), net .............................. (5,085) (3,975) (6,024)
Income before income taxes ................................... $ 586,910 $1,099,128 $ 945,045
(a) Corporate and other expense includes (i) incentive compensation expense of $25.2 million, $65.0 million,
and $108.1 million for 2014, 2013, and 2012, respectively, (ii) $51.8 million, $17.6 million, and $13.4
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