Segment Information

12 Months Ended

Dec. 31, 2019

Mattel designs, manufactures, and markets a broad variety of toy products worldwide, which are sold to its customers and directly to consumers.

Gross Sales

Although there were no changes to Mattel's commercial operations that impacted its operating segments, in the first quarter of 2019, Mattel modified its reporting structure for revenues, as outlined below, and reorganized its regional sales reporting structure within the International segment. Prior period amounts have been reclassified to conform to the current period presentation. Gross sales by categories are presented as follows:

Dolls—including brands such as Barbie, American Girl, Enchantimals, and Polly Pocket.

Infant, Toddler, and Preschool—including brands such as Fisher-Price and Thomas & Friends, Power Wheels, Fireman Sam, and Shimmer and Shine (Nickelodeon).

Vehicles—including brands such as Hot Wheels, Matchbox, and CARS (Disney Pixar).

Action Figures, Building Sets, and Games—including brands such as MEGA, UNO, Toy Story (Disney Pixar), Jurassic World (NBCUniversal), and WWE.

Segment Data

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 across categories, although some products are developed and adapted for particular international markets.

The following tables present information about revenues, income (loss), 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 the tables below). 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 and net sales by segment as metrics to measure segment performance. Such sales adjustments are included in the determination of segment income (loss) from operations based on the adjustments recorded in the financial accounting systems. Segment income (loss) represents each segment's operating income (loss), while consolidated operating income (loss) represents income (loss) from operations before net interest, other non-operating expense, 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, certain severance and other restructuring costs, share-based compensation, 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, 2019			December 31, 2018			December 31, 2017 (b)
	(In thousands)
Revenues by Segment
North America	$	2,432,299		$	2,422,108		$	2,536,654
International	2,363,786			2,312,230			2,503,527
American Girl	268,489			341,191			473,944
Gross sales	5,064,574			5,075,529			5,514,125
Sales adjustments	(560,003		)	(560,719		)	(632,632		)
Net sales	$	4,504,571		$	4,514,810		$	4,881,493

Segment Income (Loss)
North America	$	357,039		$	220,769		$	102,710
International	166,873			13,915			(6,322		)
American Girl	(58,813		)	(17,726		)	(72,968		)
	465,099			216,958			23,420
Corporate and other expense (a)	(425,859		)	(451,307		)	(359,118		)
Operating income (loss)	39,240			(234,349		)	(335,698		)
Interest expense	201,044			181,886			105,214
Interest (income)	(6,166		)	(6,463		)	(7,777		)
Other non-operating expense, net	2,650			7,331			68,110
Loss before income taxes	$	(158,288	)	$	(417,103	)	$	(501,245	)

(a)

Corporate and other expense includes (i) incentive compensation expense of $119.5 million, $84.1 million, and $19.4 million for 2019, 2018, and 2017, respectively; (ii) $40.5 million, $104.1 million, and $65.1 million of charges related to severance and other restructuring costs for 2019, 2018, and 2017, respectively; and (iii) share-based compensation expense of $56.0 million, $48.9 million, and $67.1 million for 2019, 2018, and 2017, respectively.


(b)	In accordance with ASU 2017-07, prior period amounts have been retrospectively adjusted, which resulted in a reclassification of $3.4 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.



	For the Year Ended
	December 31, 2019		December 31, 2018		December 31, 2017
	(In thousands)
Depreciation/Amortization by Segment
North America	$	112,988	$	130,087	$	118,898
International	85,496		95,480		96,623
American Girl	12,416		14,391		22,615
	210,900		239,958		238,136
Corporate and other	33,618		31,974		36,631
Depreciation and amortization	$	244,518	$	271,932	$	274,767

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



	December 31, 2019		December 31, 2018		December 31, 2017
	(In thousands)
Assets by Segment
North America	$	569,819	$	615,654	$	692,232
International	721,251		728,870		825,227
American Girl	35,004		43,748		100,184
	1,326,074		1,388,272		1,617,643
Corporate and other	105,789		124,700		107,713
Accounts receivable and inventories, net	$	1,431,863	$	1,512,972	$	1,725,356

The table below presents worldwide revenues by categories:



	For the Year Ended
	December 31, 2019			December 31, 2018			December 31, 2017
	(In thousands)
Revenues by Categories (a)
Dolls	$	1,724,008		$	1,730,907		$	1,725,865
Infant, Toddler, and Preschool	1,257,646			1,417,820			1,677,223
Vehicles	1,101,338			1,065,452			1,242,790
Action Figures, Building Sets, and Games	981,582			861,350			868,247
Gross sales	5,064,574			5,075,529			5,514,125
Sales adjustments	(560,003		)	(560,719		)	(632,632		)
Net sales	$	4,504,571		$	4,514,810		$	4,881,493


(a)	Mattel modified its reporting structure for revenues in the first quarter of 2019 to disclose revenues by categories.

The table below presents worldwide revenues by brand category:



	For the Year Ended
	December 31, 2019			December 31, 2018			December 31, 2017
	(In thousands)
Revenues by Top 3 Power Brands
Barbie	$	1,159,768		$	1,088,953		$	954,892
Hot Wheels	925,854			834,058			777,341
Fisher-Price and Thomas & Friends	1,131,750			1,185,669			1,370,543
Other	1,847,202			1,966,849			2,411,349
Gross sales	5,064,574			5,075,529			5,514,125
Sales adjustments	(560,003		)	(560,719		)	(632,632		)
Net sales	$	4,504,571		$	4,514,810		$	4,881,493

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, 2019			December 31, 2018			December 31, 2017
	(In thousands)
Revenues
North American Region (a)	$	2,700,788		$	2,763,299		$	3,010,598
International Region (b):
EMEA	1,292,948			1,252,424			1,281,671
Latin America	666,102			653,992			675,286
Asia Pacific	404,736			405,814			546,570
Total International Region	2,363,786			2,312,230			2,503,527
Gross sales	5,064,574			5,075,529			5,514,125
Sales adjustments	(560,003		)	(560,719		)	(632,632		)
Net sales	$	4,504,571		$	4,514,810		$	4,881,493



	December 31, 2019		December 31, 2018		December 31, 2017
	(In thousands)
Long-Lived Assets
North American Region (c)	$	1,429,549	$	1,466,413	$	1,543,662
International Region	1,276,616		1,374,676		1,506,503
Consolidated total	$	2,706,165	$	2,841,089	$	3,050,165


(a)	Revenues for the North American Region include revenues attributable to the U.S. of $2.54 billion, $2.60 billion, and $2.82 billion for 2019, 2018, and 2017, respectively.

(b)

Mattel reorganized its regional reporting structure in the first quarter of 2019. As a result, the new regions are Europe, the Middle East, and Africa ("EMEA"), Latin America, and Asia Pacific. The Middle East, Africa, Russia, and Turkey were previously included in the Asia Pacific regions (previously Global Emerging Markets) and are now included in EMEA (previously 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 $1.39 billion, $1.42 billion, and $1.49 billion for 2019, 2018, and 2017, respectively.

Major Customers

Sales to Mattel’s two largest customers accounted for 32%, 34%, and 29% of worldwide consolidated net sales for 2019, 2018, and 2017, respectively, as follows:



	For the Year Ended
	December 31, 2019		December 31, 2018		December 31, 2017
	(In billions)
Walmart	$	1.01	$	1.07	$	1.02
Target	$	0.44	$	0.45	$	0.37

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.