Mattel 2010 Annual Report Download - page 39

driven primarily by decreased sales of High School Musical®products. Worldwide gross sales of Wheels
products decreased 7%, including unfavorable changes in currency exchange rates of 3 percentage points, driven
primarily by decreased sales of Speed Racer®and Tyco R/C®products, partially offset by increased sales of Core
Hot Wheels®and Matchbox®products. Worldwide gross sales of Entertainment products decreased by 14%,
including unfavorable changes in currency exchange rates of 2 percentage points, driven primarily by decreased
sales of Radica®products and products tied to last year’s three key summer movie properties: Batman®, Speed
Racer®, and Kung Fu Panda®, partially offset by sales of products tied to Toy Story®and Toy Story®2 and
increased sales of CARS™ products domestically.
Worldwide gross sales of Fisher-Price Brands decreased 8% to $2.17 billion in 2009 as compared to 2008,
including unfavorable changes in currency exchange rates of 1 percentage point. Domestic gross sales of Fisher-
Price Brands decreased 8% and international gross sales decreased 9%, including unfavorable changes in
currency exchange rates of 4 percentage points. Worldwide gross sales of Core Fisher-Price®decreased 6%,
including unfavorable changes in currency exchange rates of 1 percentage point. Domestic gross sales of Core
Fisher-Price®decreased 4% and international gross sales decreased 9%, including unfavorable changes in
currency exchange rates of 4 percentage points. Worldwide gross sales of Fisher-Price®Friends decreased 13%,
with no impact from changes in currency exchange rates. Domestic gross sales of Fisher-Price®Friends
decreased 18% and international gross sales decreased 5%, with no impact from changes in currency exchange
rates.
American Girl Brands gross sales were flat during 2009 as compared to 2008, driven primarily by the
November 2008 openings of the American Girl®stores in Natick, Massachusetts and Bloomington, Minnesota,
offset by softness resulting primarily from a difficult comparison to strong entertainment-related sales in 2008.
Cost of Sales
Cost of sales decreased by $517.4 million, or 16%, from $3.23 billion in 2008 to $2.72 billion in 2009 as
compared to an 8% decrease in net sales. On an overall basis, cost of sales decreased from 2008 primarily due to
lower sales volume, cost savings from Mattel’s Global Cost Leadership program, and lower input costs. Within
cost of sales, freight and logistics expenses decreased by $98.2 million, or 25%, which included net cost savings
from the Global Cost Leadership program, from $394.1 million in 2008 to $295.9 million in 2009; royalty
expense decreased $52.7 million, or 22%, from $241.2 million in 2008 to $188.5 million in 2009; and other
product costs decreased by $366.5 million, or 14%, from $2.60 billion in 2008 to $2.23 billion in 2009.
Gross Profit
Gross profit as a percentage of net sales increased from 45.4% in 2008 to 50.0% in 2009. The increase in
gross profit as a percentage of net sales was primarily driven by price increases and net cost savings related to the
Global Cost Leadership program, partially offset by unfavorable changes in currency exchange rates.
Advertising and Promotion Expenses
Advertising and promotion expenses decreased to 11.2% of net sales in 2009, from 12.2% of net sales in
2008, due primarily to lower than expected sales volume in 2008 and savings of approximately $14 million
related to Mattel’s Global Cost Leadership program.
Other Selling and Administrative Expenses
Other selling and administrative expenses were $1.37 billion in 2009, or 25.3% of net sales in 2009 as
compared to $1.42 billion in 2008, or 24.1% of net sales. The dollar decrease in other selling and administrative
expenses was primarily due to incremental year-over-year savings related to the Global Cost Leadership program
(approximately $88 million in gross savings along with approximately $3 million of lower severance in 2009),
31