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Segment Information
 9 Months Ended
Sep. 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 Nine Months Ended  
     September 30,
2015		      September 30,
2014		      September 30,
2015		      September 30,
2014		  
     (In thousands)  

Revenues by Segment

            

North America

    $ 1,069,116       $ 1,124,463       $ 2,053,053       $ 2,079,357   

International

      798,584         989,228         1,732,125         2,048,403   

American Girl

      115,651         119,025         313,504         317,314   
  

 

 

     

 

 

     

 

 

     

 

 

  

Gross sales

      1,983,351         2,232,716         4,098,682         4,445,074   

Sales adjustments

      (191,383 )       (211,292 )       (395,813 )       (415,221 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Net sales

    $ 1,791,968       $ 2,021,424       $ 3,702,869       $ 4,029,853   
  

 

 

     

 

 

     

 

 

     

 

 

  

Segment Income

            

North America

    $ 230,216       $ 257,496       $ 283,356       $ 345,716   

International

      142,576         183,142         160,250         245,476   

American Girl

      7,142         7,618         5,617         15,599   
  

 

 

     

 

 

     

 

 

     

 

 

  
     379,934         448,256         449,223         606,791   

Corporate and other expense (a)

      (79,161 )       (38,777 )       (202,354 )       (190,086 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Operating income

      300,773         409,479         246,869         416,705   

Interest expense

      21,409         21,009         62,516         57,220   

Interest (income)

      (1,990 )       (1,773 )       (5,757 )       (5,238 ) 

Other non-operating (income), net

      (4,785 )       (3,937 )       (2,984 )       (5,665 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Income before income taxes

    $ 286,139       $ 394,180       $ 193,094       $ 370,388   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(a) Corporate and other expense includes severance and other termination-related costs of $13.3 million and $61.1 million for the three and nine months ended September 30, 2015, respectively, and $5.0 million and $39.1 million for the three and nine months ended September 30, 2014, respectively, and share-based compensation expense of $13.8 million and $41.1 million for the three and nine months ended September 30, 2015, respectively, and $12.0 million and $36.5 million for the three and nine months ended September 30, 2014, respectively.

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

 

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

Assets by Segment

         

North America

    $ 1,011,546       $ 1,078,388       $ 698,357   

International

      1,063,727         1,244,067         778,849   

American Girl

      147,517         160,754         108,667   
  

 

 

     

 

 

     

 

 

  
     2,222,790         2,483,209         1,585,873   

Corporate and other

      99,245         36,419         70,334   
  

 

 

     

 

 

     

 

 

  

Accounts receivable and inventories, net

    $ 2,322,035       $ 2,519,628       $ 1,656,207   
  

 

 

     

 

 

     

 

 

  

The table below presents worldwide revenues by brand category:

 

     For the Three Months Ended      For the Nine Months Ended  
     September 30,
2015		      September 30,
2014		      September 30,
2015		      September 30,
2014		  
     (In thousands)  

Worldwide Revenues by Brand Category

            

Mattel Girls & Boys Brands

    $ 1,120,612       $ 1,323,273       $ 2,327,555       $ 2,669,111   

Fisher-Price Brands

      625,277         663,446         1,226,023         1,263,655   

American Girl Brands

      109,879         113,291         300,128         302,375   

Construction and Arts & Crafts Brands

      118,480         123,415         221,560         185,015   

Other

      9,103         9,291         23,416         24,918   
  

 

 

     

 

 

     

 

 

     

 

 

  

Gross sales

      1,983,351         2,232,716         4,098,682         4,445,074   

Sales adjustments

      (191,383 )       (211,292 )       (395,813 )       (415,221 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Net sales

    $ 1,791,968       $ 2,021,424       $ 3,702,869       $ 4,029,853