Mattel 2003 Annual Report Download - page 32

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The following table provides a summary of Mattel’s consolidated results for 2002 and 2001 (in millions,
except percentage and basis point information):
For the Year
2002 2001 Year/Year Change
Results
%ofNet
Sales Results
%ofNet
Sales %
Basis Points
of Net Sales
Net sales ............................... $4,885.3 100.0% $4,687.9 100.0% 4%
Gross profit ............................. $2,361.0 48.3% $2,148.9 45.8% 10% 250
Advertising and promotion expenses ......... 552.5 11.3 543.6 11.6 2% (30)
Other selling and administrative expenses ..... 1,050.3 21.5 964.2 20.6 9% 90
Amortization of goodwill .................. — — 46.1 0.9
Restructuring and other charges ............. 24.6 0.5 15.7 0.3 57% 20
Operating income ........................ 733.6 15.0 579.3 12.4 27% 260
Interest expense .......................... 113.9 2.3 155.1 3.3
Interest (income) ......................... (17.7) (0.3) (15.5) (0.3)
Other non-operating expense, net ............ 15.9 0.3 9.7 0.2
Income from continuing operations before
income taxes .......................... $ 621.5 12.7% $ 430.0 9.2% 45% 350
Net sales for 2002 were $4.89 billion, a 4% increase compared to $4.69 billion in 2001. Worldwide gross
sales for 2002 increased 5% compared to 2001, which included a benefit from changes in currency exchange
rates of 1 percentage point. Gross sales within the US increased 1% from 2001 and accounted for 64% of
consolidated gross sales in 2002 compared to 67% in 2001. In 2002, gross sales in international markets
increased 13% compared to 2001. The growth in international gross sales included a benefit from changes in
currency exchange rates of 2 percentage points.
As previously discussed, during the fourth quarter of 2003, Mattel changed the way certain close out sales
are classified in its consolidated statement of operations. Close out sales are sales of certain products that are no
longer included in current product lines. Effective October 1, 2003, close out sales previously classified as a
reduction of cost of sales are now classified as net sales in Mattel’s consolidated statements of operations. This
change in classification has no impact on gross profit, net income, income per common share, balance sheets or
cash flows for any period. For 2002 and 2001, close out sales classified as a reduction of cost of sales were
$112.7 million and $163.4 million, respectively. See Item 6 “Selected Financial Data” and Item 8 “Financial
Statements and Supplementary Data—Notes 1, 11 and 12 to the Consolidated Financial Statements.”
Worldwide gross sales of Mattel Brands increased 5% to $3.2 billion in 2002 compared to 2001, including a
1percentage point benefit from changes in currency exchange rates. Domestic gross sales decreased 2% and
international gross sales grew 14%, including a 1 percentage point benefit from changes in currency exchange
rates. Worldwide gross sales of Barbie®increased 6%, including a 1 percentage point benefit from changes in
currency exchange rates. A 16% increase in international Barbie®gross sales was partially offset by a 2% decline
in domestic Barbie®gross sales. The international Barbie®gross sales growth included a 2 percentage point
benefit from changes in currency exchange rates. In the US, the decline in Barbie®was driven by the strategic
initiative to reduce shipments of adult-targeted collector and holiday dolls. Barbie®holiday doll shipments in
2002 were approximately one-half the amount shipped in 2001. Excluding these adult-targeted lines, domestic
Barbie®sales increased 2% in 2002. Worldwide gross sales of Other Girls Brands increased 8%, including a
1percentage point benefit from changes in currency exchange rates. The increase in gross sales of Other Girls
Brands was due to growth in Polly Pocket!™and What’s Her Face!™,partially offset by declines in Diva Starz™
and large dolls. The discontinuation of Cabbage Patch Kids®in 2002 contributed to the decrease in total large
doll sales. Worldwide gross sales in the Wheels category increased 3% in 2002 compared to 2001, due to growth
in Matchbox®and increased international sales of Hot Wheels®and Tyco®R/C brands. International gross sales
of Wheels grew by 12% and domestic sales declined by 2% in 2002 compared to 2001. Worldwide gross sales in
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