Mattel 2004 Annual Report Download - page 32

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International Segment
The following table provides a summary of percentage changes in gross sales within the International
segment in 2004 versus 2003:
Non-US Regions:
% Change in
Gross Sales
Impact of Change in
Currency Rates
(in % pts)
Europe ........................................................ 4 8
Latin America .................................................. 13 –2
Canada ........................................................ 6 5
Asia Pacific .................................................... 19 6
Total International ............................................... 7 5
International gross sales increased 7% in 2004 compared to 2003, including a benefit from changes in
currency exchange rates of 5 percentage points. Gross sales of Barbie®decreased 3%, including a benefit from
changes in currency exchange rates of 5 percentage points. Gross sales in the Wheels category grew by double-
digits in 2004 compared to 2003, mainly due to growth in Hot Wheels®products, partially offset by declines in
sales of Matchbox®. Gross sales in the Entertainment category also increased by double-digits in 2004 compared
to 2003, primarily due to strong sales of games and puzzles, including Scene It?™, and the Warner Bros.
properties, including Batman™and Harry Potter™. Fisher-Price Brands gross sales increased 18%, including a
benefit from changes in currency exchange rates of 6 percentage points, due to strong growth in Core Fisher-
Price®products, primarily infant and preschool and BabyGear™lines and Fisher-Price®Friends, mainly due to
new product introductions featuring Dora the Explorer™and Winnie the Pooh. International segment income
decreased 18% to $299.2 million in 2004, as a result of a sales mix shift to lower margin products, the higher cost
of value enhancement initiatives and pricing adjustments made in 2004 on certain products in Europe to remain
competitive given the strength of the Euro versus the US dollar, and external cost pressures.
2003 Compared to 2002
Consolidated Results
Net sales for 2003 were $4.96 billion, a 2% increase compared to $4.89 billion in 2002, including a benefit
from changes in currency exchange rates of 4 percentage points. Net income for 2003 was $537.6 million, or
$1.22 per diluted share, as compared to net income of $230.1 million, or $0.52 per diluted share, for 2002. Net
income for 2003 included a pre-tax charge of $26.3 million ($20.0 million after-tax) related to the financial
realignment plan. In 2003, Mattel also recognized pre-tax income of $7.9 million ($5.0 million after-tax)
representing an adjustment to a reserve accrued in 1999 associated with the closure of a manufacturing facility in
Beaverton, Oregon. The combined effect of these items was a net after-tax charge of $15.0 million for 2003. In
the first quarter of 2002, Mattel implemented SFAS No. 142 and recorded a transition adjustment of
$252.2 million, net of tax, as the cumulative effect of a change in accounting principle resulting from the
transitional impairment test of the American Girl Brands goodwill. In the third quarter of 2002, Mattel recorded a
$27.3 million after-tax gain from discontinued operations related to the sale of Learning Company. In 2002,
Mattel also incurred a pre-tax charge of $48.3 million ($31.9 million after-tax) related to the financial
realignment plan. The combined effect of these items was a net after-tax charge of $256.8 million for 2002.
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