Mattel 2009 Annual Report Download - page 44

American Girl Brands gross sales increased 7% from the prior year, primarily driven by strong sales of
products tied to the Kit Kittredge®movie and increased sales in the retail channel. American Girl Brands
segment operating income decreased 12% to $86.6 million in 2008, primarily due to higher other selling and
administrative expenses related to retail pre-opening costs, partially offset by higher sales volume.
International Segment
The following table provides a summary of percentage changes in gross sales within the International
segment in 2008 versus 2007:
Non-US Regions:
% Change in
Gross Sales
Impact of Change in
Currency Rates
(in % pts)
Total International ................................................. –1 1
Europe ...................................................... –6 2
Latin America ................................................ 7 2
Asia Pacific .................................................. 4 0
Other ....................................................... –4 –3
International gross sales decreased 1% in 2008 as compared to 2007, including a 1 percentage point benefit
from changes in currency exchange rates. Gross sales of Barbie®decreased 9%, including a 2 percentage point
benefit from changes in currency exchange rates, primarily driven by sales declines in Barbie®Fantasy, Barbie
Girls®MP3 Player, and My Scene®products. Lower sales in Barbie®Fantasy products was driven by the
underperformance of toys associated with the 2008 Barbie®entertainment property, Barbie & the Diamond
Castle®, as compared to the 2007 entertainment property, Barbie as the Island Princess®. Gross sales of Other
Girls Brands increased 10%, including a 1 percentage point benefit from changes in currency exchange rates,
primarily due to sales of High School Musical®and Hanna Montana®products and higher sales of Little
Mommy®, partially offset by sales declines for Pixel Chix®and Polly Pocket®. Gross sales of Wheels products
decreased 2%, including a 2 percentage point benefit from changes in currency exchange rates. Gross sales of
Entertainment products increased by 1%, including a 1 percentage point benefit from changes in currency
exchange rates, primarily driven by sales of products tied to the Batman®:The Dark Knight®,Speed Racer®, and
Kung Fu Panda®movie properties. Fisher-Price Brands gross sales increased 1%, with no impact from changes
in currency exchange rates, primarily driven by strong sales of Core Fisher-Price®products, partially offset by
sales declines of Fisher-Price®Friends products. International segment income decreased 15% to $357.6 million
in 2008, primarily due to lower gross profit driven by higher input costs, higher costs of distribution, and mix,
partially offset by the benefit of price increases, favorable changes in currency exchange rates, and lower product
recall costs as compared to 2007, and higher other selling and administrative expenses.
Global Cost Leadership Program
During the middle of 2008, Mattel initiated its Global Cost Leadership program, which is designed to
improve operating efficiencies and leverage Mattel’s global scale to improve profitability and operating cash
flows. The major initiatives within Mattel’s Global Cost Leadership program include:
• A global reduction in Mattel’s professional workforce of approximately 1,000 employees that was
initiated in November 2008, and an additional reduction in Mattel’s professional workforce initiated in
the third quarter of 2009.
• A coordinated efficiency strategic plan that includes structural changes designed to lower costs and
improve efficiencies; for example, offshoring and outsourcing certain back office functions, and more
clustering of management in international markets.
• Additional procurement initiatives designed to fully leverage Mattel’s global scale in areas such as
creative agency partnerships, legal services, and distribution, including ocean carriers and over-the-road
freight vendors.
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