Segment Information

6 Months Ended

Jun. 30, 2013

Segment Information

21. Segment Information

Mattel sells a broad variety of toy products which are grouped into three major brand categories:

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

Fisher-Price Brands—including Fisher-Price^®, Little People^®, BabyGear™, and Imaginext^® (collectively “Core Fisher-Price”), Dora the Explorer^®, Go Diego Go!^®, Thomas & Friends, Mickey Mouse^® Clubhouse, Disney Jake and the Never Land Pirates^®, and See ‘N Say^® (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.

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 and Fisher-Price 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 II, 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, 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, 2013			June 30, 2012			June 30, 2013			June 30, 2012
	(In thousands)
Revenues by Segment
North America	$	566,471		$	586,430		$	1,022,940		$	1,038,033
International		627,896			606,212			1,154,907			1,090,186
American Girl		83,757			74,050			188,707			155,673
Gross sales		1,278,124			1,266,692			2,366,554			2,283,892
Sales adjustments		(109,015	)		(107,981	)		(201,839	)		(196,732	)
Net sales	$	1,169,109		$	1,158,711		$	2,164,715		$	2,087,160
Segment Income (Loss)
North America	$	83,966		$	104,740		$	152,093		$	168,745
International		77,100			84,163			139,095			123,434
American Girl		(4,792	)		(6,778	)		7,163			(5,350	)
		156,274			182,125			298,351			286,829
Corporate and other expense (a)		(61,484	)		(50,692	)		(137,730	)		(126,660	)
Operating income		94,790			131,433			160,621			160,169
Interest expense		18,259			21,524			38,596			42,629
Interest (income)		(1,289	)		(1,941	)		(2,689	)		(3,686	)
Other non-operating (income) expense, net		(909	)		489			1,820			(303	)
Income before income taxes	$	78,729		$	111,361		$	122,894		$	121,529

(a) Corporate and other expense includes share-based compensation expense of $13.7 million and $27.6 million for the three and six months ended June 30, 2013, respectively, and $13.3 million and $25.2 million for the three and six months ended June 30, 2012, respectively, and severance expense of $8.0 million and $13.5 million for the three and six months ended June 30, 2013, respectively, and $3.0 million and $8.1 million for the three and six months ended June 30, 2012, respectively.

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

	June 30, 2013		June 30, 2012		December 31, 2012
	(In thousands)
Assets by Segment
North America	$	645,334	$	640,205	$	694,479
International		850,907		863,418		807,911
American Girl		117,011		107,877		90,335
		1,613,252		1,611,500		1,592,725
Corporate and other		126,086		115,585		99,165
Accounts receivable and inventories, net	$	1,739,338	$	1,727,085	$	1,691,890

The table below presents worldwide revenues by brand category:

	For the Three Months Ended						For the Six Months Ended
	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
	(In thousands)
Worldwide Revenues by Brand Category
Mattel Girls & Boys Brands	$	792,428		$	781,644		$	1,484,598		$	1,403,886
Fisher-Price Brands		396,730			407,269			683,995			717,438
American Girl Brands		78,174			68,682			178,629			144,709
Other		10,792			9,097			19,332			17,859
Gross sales		1,278,124			1,266,692			2,366,554			2,283,892
Sales adjustments		(109,015	)		(107,981	)		(201,839	)		(196,732	)
Net sales	$	1,169,109		$	1,158,711		$	2,164,715		$	2,087,160