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Segment Information
 6 Months Ended
Jun. 30, 2015
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 Construction and Arts & Crafts brand category, which was introduced 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™, BOOMco™, 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 Truly Me™, BeForever™, 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Non-GAAP Financial Measures” 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 exchange rates on intercompany transactions.

 

     For the Three Months Ended      For the Six Months Ended  
     June 30,
2015		      June 30,
2014		      June 30,
2015		      June 30,
2014		  
     (In thousands)  

Revenues by Segment

            

North America

    $ 495,738       $ 513,463       $ 983,937       $ 954,894   

International

      511,460         569,936         933,541         1,059,175   

American Girl

      87,943         87,731         197,853         198,289   
  

 

 

     

 

 

     

 

 

     

 

 

  

Gross sales

      1,095,141         1,171,130         2,115,331         2,212,358   

Sales adjustments

      (106,989 )       (108,878 )       (204,430 )       (203,929 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Net sales

    $ 988,152       $ 1,062,252       $ 1,910,901       $ 2,008,429   
  

 

 

     

 

 

     

 

 

     

 

 

  

Segment Income (Loss)

            

North America

    $ 28,091       $ 39,497       $ 53,140       $ 88,220   

International

      22,110         30,854         17,674         62,334   

American Girl

      (7,053 )       (1,263 )       (1,525 )       7,981   
  

 

 

     

 

 

     

 

 

     

 

 

  
     43,148         69,088         69,289         158,535   

Corporate and other expense (a)

      (42,585 )       (68,080 )       (123,193 )       (151,309 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Operating income (loss)

      563         1,008         (53,904 )       7,226   

Interest expense

      20,706         18,965         41,107         36,211   

Interest (income)

      (2,099 )       (2,186 )       (3,767 )       (3,465 ) 

Other non-operating expense (income), net

      1,854         (1,400 )       1,801         (1,728 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Loss before income taxes

    $ (19,898 )     $ (14,371 )     $ (93,045 )     $ (23,792 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(a) Corporate and other expense includes severance and other termination-related costs of $15.6 million and $43.6 million for the three and six months ended June 30, 2015, respectively, and $12.6 million and $34.1 million for the three and six months ended June 30, 2014, respectively, and share-based compensation expense of $15.7 million and $27.3 million for the three and six months ended June 30, 2015, respectively, and $11.8 million and $24.5 million for the three and six months ended June 30, 2014, respectively.

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

 

     June 30,
2015		      June 30,
2014		      December 31,
2014		  
     (In thousands)  

Assets by Segment

         

North America

    $ 663,328       $ 703,610       $ 698,357   

International

      719,810         835,707         778,849   

American Girl

      121,086         135,395         108,667   
  

 

 

     

 

 

     

 

 

  
     1,504,224         1,674,712         1,585,873   

Corporate and other

      152,682         92,147         70,334   
  

 

 

     

 

 

     

 

 

  

Accounts receivable and inventories, net

    $ 1,656,906       $ 1,766,859       $ 1,656,207   
  

 

 

     

 

 

     

 

 

  

 

The table below presents worldwide revenues by brand category:

 

     For the Three Months Ended      For the Six Months Ended  
     June 30,
2015		      June 30,
2014		      June 30,
2015		      June 30,
2014		  
     (In thousands)  

Worldwide Revenues by Brand Category

            

Mattel Girls & Boys Brands

    $ 601,759       $ 688,977       $ 1,206,942       $ 1,345,838   

Fisher-Price Brands

      336,778         328,766         600,746         600,209   

American Girl Brands

      84,166         83,146         190,249         189,084   

Construction and Arts & Crafts Brands

      64,797         61,600         103,080         61,600   

Other

      7,641         8,641         14,314         15,627   
  

 

 

     

 

 

     

 

 

     

 

 

  

Gross sales

   1,095,141      1,171,130      2,115,331      2,212,358   

Sales adjustments

   (106,989 )    (108,878 )    (204,430 )    (203,929 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Net sales

 $ 988,152    $ 1,062,252    $ 1,910,901    $ 2,008,429