Mattel 2001 Annual Report Download - page 30

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Operating profit in the US Girls segment decreased by 2%, primarily due to lower sales volume. Operating
profit in the US Boys-Entertainment segment increased 39%, primarily due to increased sales volume and
improved margins. Operating profit in the US Infant & Preschool segment increased 2%, primarily due to
improved margins, partially offset by higher selling and administrative expenses to support certain new product
lines. All the US segments benefited from lower costs per rating point for media purchases. The International
segment operating profit increased 26%, largely due to increased sales volume and improved margins, partially
offset by lower operating profit in certain Latin American countries and unfavorable foreign exchange. In Latin
America, Mattel has appointed a new management team with the goal of converting sales growth into increased
cash flow and profitability in this region.
2000 Compared to 1999
Consolidated Results
Net income from continuing operations for 2000 was $170.2 million or $0.40 per diluted share as
compared to net income from continuing operations of $108.4 million or $0.25 per diluted share in 1999.
Profitability in 2000 was negatively impacted by a $125.2 million pre-tax charge related to the initial phase of
the financial realignment plan, a $53.1 million pre-tax charge for the departure of certain senior executives in
the first quarter, and an $8.4 million pre-tax charge 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 $7.0 million
reversal of the 1999 reserve related to restructuring and other charges. The combined effect of theses items,
resulted in a pre-tax net charge of $179.7 million, approximately $123 million after-tax or $0.29 per diluted
share. Profitability in 1999 was negatively impacted by a $281.1 million charge, approximately $218 million
after-tax or $0.51 per diluted share, related to restructuring and other charges.
The following table provides a comparison of the reported results and the results excluding charges (in
millions):
For the Year
2000 1999
Reported
Results Charges
Results
Ex. Chgs
Reported
Results Charges
Results
Ex. Chgs
Net sales ............................ $4,669.9 $ — $4,669.9 $4,595.5 $ — $4,595.5
Gross profit .......................... $2,100.8 $ (78.6) $2,179.4 $2,182.0 $ — $2,182.0
Advertising and promotion expenses ........ 685.9 4.8 681.1 684.5 — 684.5
Other selling and administrative expenses .... 967.0 59.0 908.0 867.9 867.9
Amortization of intangibles ............... 52.0 0.5 51.5 52.0 — 52.0
Restructuring and other charges ........... 15.9 15.9 — 281.1 281.1 —
Other expense (income), net .............. 1.6 20.9 (19.3) (5.3) — (5.3)
Operating income ...................... 378.4 (179.7) 558.1 301.8 (281.1) 582.9
Interest expense ....................... 153.0 — 153.0 131.6 — 131.6
Income from continuing operations
before income taxes .................. $ 225.4 $(179.7) $ 405.1 $ 170.2 $(281.1) $ 451.3
Net sales from continuing operations for 2000 increased 2% to $4.7 billion, from $4.6 billion in 1999. In
local currency, net sales were up 4% in 2000 compared to 1999. Net sales within the US increased 4% and
accounted for 71% of consolidated net sales in 2000 compared to 70% in 1999. Net sales outside the US
decreased 3% from 1999. Excluding the unfavorable exchange impact, international net sales increased 6%
compared to 1999.
Worldwide gross sales in the Girls category, which includes American Girl, increased 5%, or 8% in local
currency, to $2.1 billion. Domestic sales increased by 10%, while international sales decreased by 4%. The
worldwide growth in the Girls category was due to increased sales of Barbieand American Girlproducts,
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