Mattel 2010 Annual Report Download - page 41

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International Segment
The following table provides a summary of percentage changes in gross sales within the International
segment in 2009 versus 2008:
Non-US Regions:
% Change in
Gross Sales
Impact of Change in
Currency Rates
(in % pts)
Total International ................................................. –13 –4
Europe ...................................................... –15 –4
Latin America ................................................ –12 –6
Asia Pacific .................................................. –7 –2
Other ....................................................... –11 –1
International gross sales decreased 13% in 2009 as compared to 2008, including unfavorable changes in
currency exchange rates of 4 percentage points. Gross sales of Mattel Girls & Boys Brands decreased 15%,
including unfavorable change in currency exchange rates of 4 percentage points. Gross sales of Barbie®
decreased 6%, including unfavorable changes in currency exchange rates of 4 percentage points. Gross sales of
Other Girls Brands decreased 26%, including unfavorable changes in currency exchange rates of 3 percentage
points, driven primarily by decreased sales of High School Musical®products. Gross sales of Wheels products
decreased 13%, including unfavorable changes in currency exchange rates of 5 percentage points driven
primarily by decreased sales of Speed Racer®and Tyco R/C®products. Gross sales of Entertainment products
decreased by 19%, including unfavorable changes in currency exchange rates of 4 percentage points, driven
primarily by decreased sales of products tied to last year’s three key summer movie properties: Batman®, Speed
Racer®, and Kung Fu Panda®, along with CARS™ products, and Radica®products, partially offset by sales of
products tied to Toy Story®and Toy Story®2. Fisher-Price Brands gross sales decreased 9%, including
unfavorable changes in currency exchange rates of 4 percentage points. Gross sales of Core Fisher-Price®
products decreased 9%, including unfavorable change in currency exchange rates of 4 percentage points and
gross sales of Fisher-Price®Friends products decreased 5%, with no impact from changes in currency exchange
rates. International segment income increased 18% to $422.5 million in 2009 from $357.6 million in 2008, driven
primarily by higher gross margin, lower advertising and promotion expenses, and lower other selling and
administrative expenses, partially offset by lower sales volume.
Global Cost Leadership Program
During the middle of 2008, Mattel initiated its Global Cost Leadership program, which was 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 included:
• A global reduction in Mattel’s professional workforce of approximately 1,000 employees that was
initiated in November 2008, which resulted in severance and other termination-related charges of
approximately $34 million, and an additional reduction in Mattel’s professional workforce initiated in
the third quarter of 2009, which resulted in severance and other termination-related charges of
approximately $32 million.
• 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
additional clustering of management in international markets.
• 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.
Mattel’s Global Cost Leadership program was intended to generate approximately $90 million to $100
million of net cost savings in 2009, and approximately $180 million to $200 million of cumulative net cost
33