Mattel 2006 Annual Report Download - page 4

The opportunity for growth outside the U.S. is indeed impressive. Our International business, under Bryan
Stockton’s exemplary leadership, grew 11 percent in 2006, with total gross sales of $2.7 billion. In fact,
Mattel’s International business, were it a stand-alone company, would be the industry’s third largest player
(and, Mattel’s U.S. business – again on a stand-alone basis – would still be #1). International now
contributes 44 percent of Mattel’s global gross sales, and its operating margins are approaching those
of our U.S. business.*
There are great growth opportunities across International. While Western Europe and Canada are more
mature business environments, we continue to see remarkable opportunities; for example, in the sale of toys
to infants and preschoolers. Across Latin America and Eastern Europe, as well as India and China, though
the bases are smaller, we are beginning to identify areas of growth as we see rising economies, an emerging
middle class and modernization of the retail environment. The opportunity to generate more than half of
our business outside the U.S. is now clearly in sight.
American Girl® posted a good year, aided by the opening in Los Angeles of the third American Girl Place.®
Ellen Brothers, president of American Girl,
® and her team are capturing opportunities to accelerate growth.
For example, this year we plan to open an American Girl Boutique and Bistro,™
a new experiential retail concept that takes the best of the brand’s fl agship retail
stores, in both Dallas and Atlanta. We will also be launching two new character dolls:
Nicki,™ the 2007 Girl of the Year who loves animals and promotes volunteerism
for girls of all ages and, later this fall, the newest member of the American Girl®
historical doll collection.
Finally, we see wonderful global opportunities to build the recently acquired
Radica Games Limited business, makers of electronic games and toys including
20Q ,
™ Digi Makeover™ and Cube World.™ Radica® products appeal to older kids and adults, compete
in some of the industry’s fastest growing areas, complement Mattel’s core business and do not yet have
suffi cient international presence.
Customers, large and small, domestically and internationally, are helping to fuel our growth. In 2006,
we grew with all of our major customers, including Wal-Mart, the world’s largest toy seller, Target and
Toys R Us. Internationally, we have worked closely with key customers to help them capture toy
growth opportunities.
Together, we enjoyed a good 2006, and we are committed to further capitalize on the opportunities
in 2007 and beyond.
WE SEE
WONDERFUL
OPPORTUNITIES
TO BUILD
GLOBALLY
OPPORTUNITY FOR GROWTH
* Information required by SEC Regulation G regarding gross sales, a non-GAAP fi nancial measure, appears on page 53 of the enclosed Mattel, Inc. Annual Report on Form 10-K.
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