Segment Information

Mattel designs, manufactures, and markets a broad variety of toy products worldwide, which are sold to its customers and directly to consumers. Mattel reorganized its brands reporting structure in the first quarter of 2018 as outlined below. Prior period amounts have been reclassified to conform to the current period presentation.

Mattel’s portfolio of brands and products are classified as Power Brands, which includes Barbie, Hot Wheels, Fisher-Price and Thomas & Friends, and American Girl brands, and Toy Box, which includes Owned Brands and Partner Brands.

Mattel’s operating segments are: (i) North America, which consists of the U.S. and Canada, (ii) International, and (iii) American Girl. The North America and International segments sell products in both the Power Brands, excluding American Girl, and Toy Box categories, although some are developed and adapted for particular international markets.

Segment Data

The following tables present information about revenues, loss/income, depreciation and amortization, 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"). 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 ("CODM") uses gross and net sales by segment as metrics to measure segment performance. Such sales adjustments are included in the determination of segment loss/income from operations based on the adjustments recorded in the financial accounting systems. Segment loss/income represents each segment’s operating loss/income, while consolidated operating loss/income represents loss/income from operations before net interest, other non-operating expense/income, net, 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, severance and other restructuring costs, 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 Year Ended
	December 31, 2018			December 31, 2017 (b)			December 31, 2016 (b)
	(In thousands)
Revenues by Segment
North America	$	2,422,108		$	2,536,654		$	3,036,181
International	2,312,230			2,503,527			2,447,615
American Girl	341,191			473,944			589,918
Gross sales	5,075,529			5,514,125			6,073,714
Sales adjustments	(564,677		)	(632,174		)	(617,064		)
Net sales	$	4,510,852		$	4,881,951		$	5,456,650

Segment Income (Loss)
North America	$	221,293		$	98,510		$	564,378
International	9,130			(5,864		)	291,230
American Girl	(17,531		)	(72,968		)	106,423
	212,892			19,678			962,031
Corporate and other expense (a)	(449,399		)	(359,118		)	(434,356		)
Operating (loss) income	(236,507		)	(339,440		)	527,675
Interest expense	181,886			105,214			95,118
Interest (income)	(6,463		)	(7,777		)	(9,144		)
Other non-operating expense, net	7,331			68,110			31,959
(Loss) income before income taxes	$	(419,261	)	$	(504,987	)	$	409,742

(a)

Corporate and other expense includes (i) incentive compensation expense of $84.1 million, $19.4 million, and $16.5 million for 2018, 2017, and 2016, respectively, (ii) $104.1 million, $65.1 million, and $39.9 million of charges related to severance and other restructuring costs for 2018, 2017, and 2016, respectively, and (iii) share-based compensation expense of $48.9 million, $67.1 million, and$53.9 million for 2018, 2017, and 2016, respectively.


(b)	In accordance with ASU 2017-07, prior period amounts have been retrospectively adjusted, which resulted in a reclassification of $3.4 million and $8.4 million of expense, net from other selling and administrative expenses, which is included in corporate and other expense, to other non-operating expense, net for the year ended December 31, 2017 and 2016, respectively.



	For the Year Ended
	December 31, 2018		December 31, 2017		December 31, 2016
	(In thousands)
Depreciation/Amortization by Segment
North America	$	130,087	$	118,898	$	118,047
International	95,480		96,623		88,414
American Girl	14,391		22,615		23,023
	239,958		238,136		229,484
Corporate and other	31,974		36,631		32,856
Depreciation and amortization	$	271,932	$	274,767	$	262,340

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



	December 31, 2018		December 31, 2017		December 31, 2016
	(In thousands)
Assets by Segment
North America	$	615,654	$	692,232	$	677,203
International	728,870		829,185		766,584
American Girl	43,748		100,184		154,924
	1,388,272		1,621,601		1,598,711
Corporate and other	124,700		107,713		130,304
Accounts receivable and inventories, net	$	1,512,972	$	1,729,314	$	1,729,015

The table below presents worldwide revenues by brand category:



	For the Year Ended
	December 31, 2018			December 31, 2017			December 31, 2016
	(In thousands)
Worldwide Revenues by Brand Category (a)
Barbie	$	1,088,953		$	954,892		$	971,795
Hot Wheels	834,058			777,341			796,969
Fisher-Price and Thomas & Friends	1,185,669			1,370,543			1,546,111
American Girl	342,442			473,302			592,118
Toy Box	1,624,408			1,938,047			2,166,722
Gross sales	5,075,529			5,514,125			6,073,714
Sales adjustments	(564,677		)	(632,174		)	(617,064		)
Net sales	$	4,510,852		$	4,881,951		$	5,456,650


(a)	Mattel reorganized its brands reporting structure in the first quarter of 2018. Prior period amounts have been reclassified to conform to the current period presentation.

Geographic Information

The tables below present information by geographic area. Revenues are attributed to countries based on location of customer. Long-lived assets principally include goodwill, property, plant, and equipment, net, and identifiable intangibles, net.



	For the Year Ended
	December 31, 2018			December 31, 2017			December 31, 2016
	(In thousands)
Revenues
North American Region (a)	$	2,763,299		$	3,010,598		$	3,626,099
International Region (b):
Europe	1,013,983			1,054,789			1,066,263
Latin America	653,992			675,286			636,535
Global Emerging Markets	644,255			773,453			744,817
Total International Region	2,312,230			2,503,527			2,447,615
Gross sales	5,075,529			5,514,125			6,073,714
Sales adjustments	(564,677		)	(632,174		)	(617,064		)
Net sales	$	4,510,852		$	4,881,951		$	5,456,650



	December 31, 2018		December 31, 2017		December 31, 2016
	(In thousands)
Long-Lived Assets
North American Region (c)	$	1,466,413	$	1,543,662	$	1,566,621
International Region	1,374,676		1,506,503		1,478,747
Consolidated total	$	2,841,089	$	3,050,165	$	3,045,368


(a)	Revenues for the North American Region include revenues attributable to the U.S. of $2.60 billion, $2.82 billion, and $3.39 billion for 2018, 2017, and 2016, respectively.


(b)	Mattel reorganized its regional reporting structure in the first quarter of 2018. As a result, Global Emerging Markets, which was previously disclosed as Asia Pacific, includes Russia, Turkey, the Middle East, and Africa, which were previously included within Europe. Prior period amounts have been reclassified to conform to the current period presentation.


(c)	Long-lived assets for the North American Region include long-lived assets attributable to the U.S. of $1.42 billion, $1.49 billion, and $1.57 billion for 2018, 2017, and 2016, respectively.

Major Customers

Sales to Mattel’s two largest customers accounted for 34%, 29%, and 27% of worldwide consolidated net sales for 2018, 2017, and 2016, respectively, as follows:



	For the Year Ended
	December 31, 2018		December 31, 2017		December 31, 2016
	(In billions)
Walmart	$	1.07	$	1.02	$	1.05
Target	0.45		0.37		0.41

During 2017 and 2016, Toys "R" Us accounted for $0.40 billion and $0.64 billion, respectively, of worldwide consolidated net sales.

The North America segment sells products to each of Mattel’s two largest customers. The International segment sells products to Walmart. The American Girl segment sells its children’s publications to each of Mattel's two largest customers.