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Segment Information
 6 Months Ended
Jun. 30, 2014
Segment Information
21. Segment Information

Mattel, through its subsidiaries, sells a broad variety of toy products which are grouped into four major brand categories, including the introduction of the Construction and Arts & Crafts brand category in the second quarter of 2014:

Mattel Girls & Boys Brands—including Barbie® fashion dolls and accessories (“Barbie”), Monster High®, Disney Classics®, Ever After High®, Little Mommy®, and Polly Pocket (collectively “Other Girls”), Hot Wheels® and Matchbox® vehicles and play sets (collectively “Wheels”), and CARS®, Disney Planes™, Radica®, Toy Story®, Max Steel®, WWE® Wrestling, Batman®, and games and puzzles (collectively “Entertainment”).

Fisher-Price Brands—including Fisher-Price®, Little People®, BabyGear™, Laugh & Learn®, and Imaginext® (collectively “Core Fisher-Price”), Thomas & Friends®, Dora the Explorer®, Mickey Mouse® Clubhouse, and Disney Jake and the Never Land Pirates® (collectively “Fisher-Price Friends”), and Power Wheels®.

American Girl Brands—including My American Girl®, the historical collection, and Bitty Baby®. American Girl Brands products are sold directly to consumers via its catalog, website, and proprietary retail stores. Its children’s publications are also sold to certain retailers.

Construction and Arts & Crafts Brands—including MEGA BLOKS®, RoseArt®, and Board Dudes®.

 

Mattel’s operating segments are: (i) North America, which consists of the US and Canada, (ii) International, and (iii) American Girl. The North America and International segments sell products in the Mattel Girls & Boys Brands, Fisher-Price Brands, and Construction and Arts & Crafts Brands categories, although some are developed and adapted for particular international markets.

Segment Data

The following tables present information about revenues, income, and assets by segment. Mattel does not include sales adjustments such as trade discounts and other allowances in the calculation of segment revenues (referred to as “gross sales” and reconciled to net sales in Part I, Item 2 “Non-GAAP Financial Measure” of this Quarterly Report on Form 10-Q). Mattel records these adjustments in its financial accounting systems at the time of sale to each customer, but the adjustments are not allocated to individual products. For this reason, Mattel’s chief operating decision maker uses gross sales by segment as one of the metrics to measure segment performance. Such sales adjustments are included in the determination of segment income from operations based on the adjustments recorded in the financial accounting systems. Segment income represents each segment’s operating income, while consolidated operating income represents income from operations before net interest, other non-operating (income) expense, and income taxes as reported in the consolidated statements of operations. The corporate and other expense category includes costs not allocated to individual segments, including charges related to incentive compensation, share-based payments, and corporate headquarters functions managed on a worldwide basis, and the impact of changes in foreign currency rates on intercompany transactions.

 

     For the Three Months Ended     For the Six Months Ended  
     June 30, 2014     June 30, 2013     June 30, 2014     June 30, 2013  
     (In thousands)  

Revenues by Segment

         

North America

    $ 513,463      $ 566,471      $ 954,894      $ 1,022,940   

International

      569,936        627,896        1,059,175        1,154,907   

American Girl

      87,731        83,757        198,289        188,707   
  

 

 

    

 

 

    

 

 

    

 

 

  

Gross sales

      1,171,130        1,278,124        2,212,358        2,366,554   

Sales adjustments

      (108,878 )      (109,015 )      (203,929 )      (201,839 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net sales

    $ 1,062,252      $ 1,169,109      $ 2,008,429      $ 2,164,715   
  

 

 

    

 

 

    

 

 

    

 

 

  

Segment Income (Loss)

         

North America

    $ 39,497      $ 83,966      $ 88,220      $ 152,093   

International

      30,854        77,100        62,334        139,095   

American Girl

      (1,263 )      (4,792 )      7,981        7,163   
  

 

 

    

 

 

    

 

 

    

 

 

  
     69,088        156,274        158,535        298,351   

Corporate and other expense (a)

      (68,080 )      (61,484 )      (151,309 )      (137,730 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      1,008        94,790        7,226        160,621   

Interest expense

      18,965        18,259        36,211        38,596   

Interest (income)

      (2,186 )      (1,289 )      (3,465 )      (2,689 ) 

Other non-operating (income) expense, net

      (1,400 )      (909 )      (1,728 )      1,820   
  

 

 

    

 

 

    

 

 

    

 

 

  

(Loss) Income before income taxes

    $ (14,371 )    $ 78,729      $ (23,792 )    $ 122,894   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

(a) Corporate and other expense includes severance and other termination-related costs of $12.6 million and $34.1 million for the three and six months ended June 30, 2014, respectively, and $8.0 million and $13.5 million for the three and six months ended June 30, 2013, respectively, and share-based compensation expense of $11.8 million and $24.5 million for the three and six months ended June 30, 2014, respectively, and $13.7 million and $27.6 million for the three and six months ended June 30, 2013, respectively.

Segment assets are comprised of accounts receivable and inventories, net of applicable reserves and allowances.

 

     June 30,
2014		      June 30,
2013		      December 31,
2013		  
     (In thousands)  

Assets by Segment

         

North America

    $ 700,968       $ 645,334       $ 723,886   

International

      835,707         850,907         920,770   

American Girl

      135,395         117,011         100,438   
  

 

 

     

 

 

     

 

 

  
     1,672,070         1,613,252         1,745,094   

Corporate and other

      92,147         126,086         83,854   
  

 

 

     

 

 

     

 

 

  

Accounts receivable and inventories, net

    $ 1,764,217       $ 1,739,338       $ 1,828,948   
  

 

 

     

 

 

     

 

 

  

 

The table below presents worldwide revenues by brand category:

 

     For the Three Months Ended     For the Six Months Ended  
     June 30,
2014		     June 30,
2013		     June 30,
2014		     June 30,
2013		  
     (In thousands)  

Worldwide Revenues by Brand Category

         

Mattel Girls & Boys Brands

    $ 688,977      $ 792,428      $ 1,345,838      $ 1,484,598   

Fisher-Price Brands

      328,766        396,730        600,209        683,995   

American Girl Brands

      83,146        78,174        189,084        178,629   

Construction and Arts & Crafts Brands

      61,600        —          61,600        —     

Other

      8,641        10,792        15,627        19,332   
  

 

 

    

 

 

    

 

 

    

 

 

  

Gross sales

      1,171,130        1,278,124        2,212,358        2,366,554   

Sales adjustments

      (108,878 )      (109,015 )      (203,929 )      (201,839 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net sales

    $ 1,062,252      $ 1,169,109      $ 2,008,429      $ 2,164,715