Mattel 2004 Annual Report Download - page 27

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the consolidated financial statements and the
related notes. See Item 8 “Financial Statements and Supplementary Data.” Mattel’s consolidated financial
statements for all periods present the Consumer Software segment as a discontinued operation. See
“Discontinued Operations.” Unless otherwise indicated, the following discussion relates only to Mattel’s
continuing operations.
Overview
Mattel designs, manufactures and markets a broad variety of toy products worldwide through sales to its
customers and directly to consumers. Mattel’s business is dependent in great part on its ability each year to
redesign, restyle and extend existing core products and product lines, to design and develop innovative new
products and product lines, and to successfully market those products and product lines. Mattel plans to continue
to focus on its portfolio of traditional brands that have historically had worldwide appeal, to create new brands
utilizing its knowledge of children’s play patterns and to target customer and consumer preferences around the
world.
Mattel’s portfolio of brands and products are grouped in the following categories:
Mattel Brands—including Barbie®fashion dolls and accessories (“Barbie®”), Polly Pocket!™and Disney
Classics (collectively “Other Girls Brands”), Hot Wheels®, Matchbox®and Tyco®R/C vehicles and
playsets (collectively “Wheels”) and Harry Potter™, Yu-Gi-Oh!™, Batman™, Justice League™, Megaman™
and games and puzzles (collectively “Entertainment”).
Fisher-Price Brands—including Fisher-Price®, Little People®, Rescue Heroes®, BabyGear™and
View-Master®(collectively “Core Fisher-Price®”), Sesame Street®, Barney™, Dora the Explorer™,
Winnie the Pooh, InteracTV™and See ’N Say®(collectively “Fisher-Price®Friends”) and Power Wheels®.
American Girl Brands—including American Girl Today®, The American Girls Collection®and
Bitty Baby®. American Girl Brands products are sold directly to consumers and its children’s publications
are also sold to certain retailers.
Management believes that the business environment for Mattel in 2005 will be similar to that of 2004.
Mattel expects to continue facing challenges both domestically and internationally as retailers continue to
rationalize stores and prioritize inventory management. Management also expects to encounter continued cost
pressures in the areas of product costs, including oil-based resin, transportation costs, and employee-related costs.
Management has established two overarching goals for 2005. The first goal is to drive growth by continuing
the invigoration of the Barbie®brand, while maintaining growth in all of its core brands by continuing to develop
innovative toys. Mattel also plans on generating growth by focusing on more effectively aligning with growing
retail customers and continuing to develop new channels. The second goal is to gain further efficiencies in the
supply chain by implementing new spend management and e-procurement policies, procedures and information
systems; and rationalizing manufacturing and vendor sourcing.
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