Mattel 2004 Annual Report Download - page 33

The following table provides a summary of Mattel’s consolidated results for 2003 and 2002 (in millions,
except percentage and basis point information):
For the Year
2003 2002 Year/Year Change
Amount
% of Net
Sales Amount
% of Net
Sales %
Basis Points
of Net Sales
Net sales .............................. $4,960.1 100.0% $4,885.3 100.0% 2%
Gross profit ........................... $2,429.5 49.0% $2,361.0 48.3% 3% 70
Advertising and promotion expenses ........ 636.1 12.8 552.5 11.3 15% 150
Other selling and administrative expenses .... 1,002.9 20.3 1,050.3 21.5 –5% (120)
Restructuring and other charges ........... 4.8 0.1 24.6 0.5 –80% (40)
Operating income ....................... 785.7 15.8 733.6 15.0 7% 80
Interest expense ........................ 80.6 1.6 113.9 2.3 –29%
Interest (income) ....................... (18.9) –0.4 (17.7) –0.3 7%
Other non-operating (income) expense, net . . . (16.8) –0.3 15.9 0.3 –206%
Income from continuing operations before
income taxes ......................... $ 740.8 14.9% $ 621.5 12.7% 19% 220
Sales
Net sales for 2003 were $4.96 billion, a 2% increase compared to $4.89 billion in 2002. Worldwide gross
sales for 2003 increased 1%, which included a benefit from changes in currency exchange rates of 3 percentage
points. Gross sales within the US decreased 6% from 2002 and accounted for 60% of consolidated gross sales in
2003 compared to 64% in 2002. The decline in gross sales within the US reflects the challenging retail
environment and competition in key categories. In 2003, gross sales in international markets increased 15%
compared to 2002, which included a benefit from changes in currency exchange rates of 10 percentage points.
During the fourth quarter of 2003, Mattel changed the way certain close out sales are classified in its
consolidated statement of income. Close out sales are sales of certain products that are no longer included in
current product lines. These sales were previously classified as a reduction of cost of sales. Effective
October 1, 2003, close out sales are reported as net sales in Mattel’s consolidated statements of income. This
change in classification had no impact on gross profit, net income, net income per common share, balance sheets
or cash flows for any date or period presented. For the fourth quarter of 2003, close out sales, which were
included in reported net sales, were $19.2 million representing 1 percentage point of sales growth for the quarter
and 40 basis points of sales growth for the year. For the first three quarters of 2003 and for 2002, close out sales
classified as a reduction of cost of sales were $38.1 million and $112.7 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 1% to $3.3 billion in 2003 compared to 2002, including a
5 percentage point benefit from changes in currency exchange rates. Domestic gross sales decreased 10% and
international gross sales grew 14%, including a 10 percentage point benefit from changes in currency exchange
rates. Worldwide gross sales of Barbie®remained flat with 2002, including a 6 percentage point benefit from
changes in currency exchange rates. A 17% increase in international Barbie®gross sales was offset by a 15%
decline in domestic Barbie®gross sales. The international Barbie®gross sales growth included an 11 percentage
point benefit from changes in currency exchange rates. An increase in international sales of dolls was more than
offset by declines in worldwide sales of Barbie®accessories and lower domestic sales of dolls. Worldwide gross
sales of Other Girls Brands increased 5%, including a 5 percentage point benefit from changes in currency
exchange rates. The increase in gross sales of Other Girls Brands was driven by solid performances by
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