Mattel 2007 Annual Report Download - page 41

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Sales
Net sales for 2007 were $5.97 billion, a 6% increase as compared to $5.65 billion in 2006, including a
3 percentage point benefit from changes in currency exchange rates. The 2007 Product Recalls reduced net sales
by approximately $48.9 million for sales returns and reserves recorded in 2007. Gross sales in international
markets increased 17% as compared to 2006, including a 7 percentage point benefit from changes in currency
exchange rates. Gross sales within the US decreased 1% from 2006, and accounted for 51% and 56% of
consolidated gross sales in 2007 and 2006, respectively.
Worldwide gross sales of Mattel Girls & Boys Brands increased 8% to $3.70 billion in 2007 as compared to
2006, including a 5 percentage point benefit from changes in currency exchange rates. Domestic gross sales of
Mattel Girls & Boys Brands decreased 4% and international gross sales of Mattel Girls & Boys Brands increased
18%, including an 8 percentage point benefit from changes in currency exchange rates. Worldwide gross sales of
Barbie®increased by 1%, including a 4 percentage point benefit from changes in currency exchange rates. Domestic
gross sales of Barbie®decreased by 15%, primarily driven by sales declines in Barbie®Fantasy and My Scene®
products, partially offset by sales increases in Barbie®Collector products. International gross sales of Barbie®
increased by 12%, including an 8 percentage point benefit from changes in currency exchange rates, primarily due
to higher sales of Barbie®Reality and Barbie®Collector products. Softness in Barbie®Fantasy products worldwide
was driven by the underperformance of toys associated with the 2007 Barbie®entertainment properties,
Barbie®Magic of the Rainbow™and Barbie as the Island Princess™as compared to the 2006 entertainment
properties, Barbie®in Fairytopia™II: Mermaidia®and Barbie in the 12 Dancing Princesses®. Worldwide gross
sales of Other Girls Brands increased 2% from 2006, including a 5 percentage point benefit from changes in
currency exchange rates, primarily driven by strong sales of Little Mommy®and High School Musical, partially
offset by sales declines of Winx Club™and Pixel Chix®worldwide, and Polly Pocket®in the US.
Worldwide gross sales of Wheels products increased 14% as compared to 2006, including a 4 percentage
point benefit from changes in currency exchange rates, primarily as a result of strong worldwide sales growth in
Hot Wheels®and Matchbox®products. Worldwide gross sales of Entertainment products, which includes games
and puzzles and Radica®, increased by 16% as compared to 2006, including a 5 percentage point benefit from
changes in currency exchange rates, primarily driven by continued strong worldwide sales in CARS™products
and inclusion of Radica®sales, partially offset by sales declines in Superman™products.
Worldwide gross sales of Fisher-Price Brands increased 8% to $2.44 billion in 2007 as compared to 2006,
including a 2 percentage point benefit from changes in currency exchange rates. Worldwide gross sales of Core
Fisher-Price®increased 19% as compared to 2006, including a 3 percentage point benefit from changes in currency
exchange rates, primarily driven by the continued strength of infant, preschool, learning, and BabyGear™sales.
Worldwide gross sales of Fisher-Price®Friends decreased 15% as compared to 2006, including a 2 percentage point
benefit from changes in currency exchange rates, primarily due to some properties declining from strong 2006
levels, partially offset by higher Sesame Street®sales during 2007.
Gross sales of American Girl Brands decreased 2% to $431.3 million in 2007 as compared to 2006,
primarily driven by the continued softness in the direct channel and lower sales of established historical
characters, partially offset by strong sales of the Girl of the Year®, Nicki™, the launch of the newest historical
character, Julie™, and sales from the American Girl Boutique and Bistro™retail stores, which opened in Atlanta,
Georgia in August 2007 and Dallas, Texas in November 2007.
Cost of Sales
Cost of sales increased by $154.4 million, or 5%, from $3.04 billion in 2006 to $3.19 billion in 2007, as
compared to a 6% increase in net sales. On an overall basis, cost of sales increased primarily due to increased
sales volume and the impact of the 2007 Product Recalls, which increased cost of sales by approximately
$22 million. Within cost of sales, product costs increased by $150.6 million, or 6%, from $2.42 billion in 2006 to
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