Mattel 2006 Annual Report Download - page 39

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BabyGear™and infant and newborn products. Sales increases in Fisher-Price®Friends were driven by several
Nickelodeon properties including Go-Diego-Go!™, Dora the Explorer™, and The Backyardigans™and
Sesame Street®. Fisher-Price Brands US segment income increased 25% to $216.1 million in 2006, primarily due
to higher sales volume and improved gross profit resulting from price increases and favorable product mix,
partially offset by higher external cost pressures.
American Girl Brands gross sales increased 1% from the prior year. American Girl Brands segment income
decreased from $106.2 million to $97.0 million in 2006, primarily driven by higher other selling and
administrative expenses associated with the American Girl Place®retail store in Los Angeles which opened in
2006.
International Segment
The following table provides a summary of percentage changes in gross sales within the International
segment in 2006 versus 2005:
Non-US Regions:
% Change in
Gross Sales
Impact of Change in
Currency Rates
(in % pts)
Europe ....................................................... 9 2
Latin America ................................................. 15 1
Asia Pacific ................................................... 10 —
Other ........................................................ 12 4
Total International .............................................. 11 2
International gross sales increased 11% in 2006 compared to 2005, including a 2 percentage point benefit
from changes in currency exchange rates. Gross sales of Barbie®decreased 2%, including a 2 percentage point
benefit from changes in currency exchange rates. Gross sales of Other Girls Brands increased 26%, including a
3 percentage point benefit from changes in currency exchange rates, primarily driven by increased sales of
Polly Pocket!™, Pixel Chix™and Winx Club™. Gross sales in the Wheels category grew by 7%, including a
2 percentage point benefit from changes in currency exchange rates, mainly driven by the success of
Hot Wheels®and Matchbox®products, partially offset by Tyco®R/C sales declines. Gross sales in the
Entertainment category increased by 15%, mainly due to strong sales in CARS™and Superman™products, which
more than offset decline in sales of Batman™and Yu-Gi-Oh!™products. Fisher-Price Brands gross sales
increased 20%, including a 2 percentage point benefit from changes in currency exchange rates, due to increased
sales of Core Fisher-Price®products, primarily infant and newborn and BabyGear™products and growth in
Fisher-Price®Friends, mainly Dora the Explorer™and Go-Diego-Go!™properties, and T.M.X.™Elmo from
Sesame Street®. International segment income increased 33% to $419.1 million in 2006, as a result of an increase
in sales volume, improved gross profit and benefits from changes in currency exchange rates. Improved gross
profit resulted from price increases, partially offset by external cost pressures, unfavorable product mix, and
higher royalty costs.
2005 Compared to 2004
Consolidated Results
Net sales for 2005 were $5.18 billion, a 1% increase compared to $5.10 billion in 2004, including a
1 percentage point benefit from changes in currency exchange rates. Net income for 2005 was $417.0 million, or
$1.01 per diluted share, as compared to net income of $572.7 million, or $1.35 per diluted share, for 2004.
Gross profit, as a percentage of net sales, declined from 47.2% in 2004 to 45.8% in 2005. Higher external
cost pressures, higher sales of lower margin products, including the impact of sales mix, and higher royalty costs
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