Mattel 2012 Annual Report Download

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Table of contents

  • Page 1

  • Page 2

  • Page 3
    Nurture Innovate 2012 Annual Report Plan Struct Structure 1 corporate.mattel.com

  • Page 4
    ... season, and Mattel was once again a big hit, as our brands were well represented in their toy, video and consumer product purchases. This, in turn, pleased our retail partners and allowed us to deliver solid results. In 2012, we had record sales, eclipsing $7 billion in total gross sales for the...

  • Page 5
    "My motto is to o be happy, but never satisfied." 2012 Annual Report 3 corporate.mattel.com

  • Page 6
    ... 1 doll property, in three short years Monster High has become the No. 2 doll property worldwide4. In fact, Monster High has now grown to be a $1 billion brand at retail5. Our other core girl's brand, American Girl®, continued to excel and grew double digits in 2012. Also in 2012, Hot Wheels® grew...

  • Page 7
    ... North America Division now focuses on planning more closely with our retail customer cus base. I believe this new s structure was a critical ritical piece of our strong s financial performance: global globa revenues were up, gross margin mar was up and d inventories were lower lo for both Mattel...

  • Page 8
    ... FORTUNE Magazine's "100 Best Companies to Work For." Also, in 2012, we launched our fourth Global Citizenship Report, "We Believe Play Matters," which highlights Mattel's commitment to operating as a responsible member of the global business community. Underscoring our efforts, Mattel was recently...

  • Page 9
    "We remain in bullish on the toy industry and continue to see growth o opportunities." 2012 Annual Report 7 corporate.mattel.com

  • Page 10

  • Page 11
    Mattel, Inc. Form 10-K 2012

  • Page 12

  • Page 13
    ...in its charter) MATTEL, INC. 333 Continental Blvd. El Segundo, CA 90245-5012 (Address of principal executive offices) Delaware (State or other jurisdiction of incorporation or organization) 95-1567322 (I.R.S. Employer Identification No.) (310) 252-2000 (Registrant's telephone number) Securities...

  • Page 14
    ...Accounting and Financial Disclosure ... Item 9A. Controls and Procedures ...Item 9B. Other Information ...PART III Item 10. Directors, Executive Officers and Corporate Governance ...Item 11. Executive Compensation ...Item 12. Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 15
    ... 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...

  • Page 16
    ... Barbie fashion dolls and accessories, and Polly Pocket, Little Mommy, Disney Classics, and Monster High are included within Other Girls Brands. Wheels includes Hot Wheels, Matchbox, and Tyco R/C vehicles and play sets. Entertainment includes CARS, Radica, Toy Story, Max Steel, WWE Wrestling, Batman...

  • Page 17
    ..., and Disney's film Planes. New product extensions of Disney/Pixar's Toy Story® include Toy Story Zing 'Ems™ and four-inch figures. WWE Wrestling will extend its product line with Power Slammers™ Figures. In 2013, new products will be featured to support an all new animated Max Steel TV series...

  • Page 18
    ... 8 "Financial Statements and Supplementary Data-Note 12 to the Consolidated Financial Statements-Segment Information." American Girl Segment The American Girl segment is a direct marketer, children's publisher, and retailer best known for its flagship line of historical dolls, books, and accessories...

  • Page 19
    ... electronic consumer products and video games. Competition is increased further by the fact that a small number of retailers account for a large portion of all toy sales, allocate the shelf space from which toys are viewed, and have direct contact with parents and children through in-store purchases...

  • Page 20
    ... the North America segment are sold directly to retailers, including discount and free-standing toy stores, chain stores, department stores, other retail outlets, and, to a limited extent, wholesalers. Mattel also operates several small retail outlets, generally near or at its corporate headquarters...

  • Page 21
    ...or has applications pending for US and foreign trademarks, copyrights, and patents covering many of its products. A number of these trademarks, copyrights, and patents relate to product lines that are significant to Mattel's business and operations. Mattel believes its rights to these properties are...

  • Page 22
    ... applicable to its business. Mattel believes that it is in substantial compliance with these laws and regulations. Employees The total number of persons employed by Mattel and its subsidiaries at any one time varies because of the seasonal nature of its manufacturing operations. At December 31, 2012...

  • Page 23
    ... Chief Executive Officer of Basic Vegetable Products, the largest manufacturer of vegetable ingredients in the world. For more than 20 years prior to that, he was employed by Kraft Foods, Inc., the largest packaged food company in North America, and was President of Kraft North American Food Service...

  • Page 24
    ... been Executive Vice President, North America since February 2012. He served as Senior Vice President and General Manager of Asia Pacific from December 2007 to January 2012, and Vice President and General Manager UK from August 2004 to December 2007. He began working at Mattel as Sales Director in...

  • Page 25
    ... publishing company. Prior to that, he spent eight years with Total Petroleum (North America) Ltd., most recently as Vice President of Human Resources. Available Information Mattel files its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8K, Proxy Statements and...

  • Page 26
    ...toys, media-driven products, and fashion-related toys. Mattel competes domestically and internationally with a wide range of large and small manufacturers, marketers and sellers of toys, video games, consumer electronics and other play products, as well as retailers, which means that Mattel's market...

  • Page 27
    ...or changes in the purchasing policies or patterns of its key customers could have a significant impact on Mattel's business and operating results. A small number of customers account for a large share of Mattel's net sales. In 2012, Mattel's three largest customers, Wal-Mart, Toys "R" Us, and Target...

  • Page 28
    ...adverse effect on Mattel's business and results of operations. If global economic conditions deteriorate, Mattel's business and financial results could be adversely affected. Mattel designs, manufactures, and markets a wide variety of toy products worldwide through sales to customers and directly to...

  • Page 29
    ... adverse effect on Mattel's business, financial condition, and results of operations. Mattel has acquired certain intellectual properties from third parties. Declines in the profitability of these acquired brands may impact Mattel's ability to recover the carrying value of the related assets...

  • Page 30
    ... insurance, or additional safety and testing requirements. Such results could divert development and management resources, adversely affect Mattel's business operations, decrease sales, increase legal fees and other costs, and put Mattel at a competitive disadvantage compared to other manufacturers...

  • Page 31
    .... Political developments, including trade relations, and the threat or occurrence of war or terrorist activities could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions. Mattel's business is worldwide...

  • Page 32
    ...dependent in part upon the success of these programs. If Mattel does not successfully market its products or if media or other advertising or promotional costs increase, these factors could have an adverse effect on Mattel's business, financial condition, and results of operations. Mattel depends on...

  • Page 33
    ... in El Segundo consisting of approximately 327,000 square feet. All segments use these facilities. Mattel also owns facilities in East Aurora, New York, consisting of approximately 535,000 square feet, which is used by the North America segment and for corporate support functions. American Girl owns...

  • Page 34
    ... and distribution facilities in California, New Jersey, and Texas, all of which are used by the North America segment. Mattel has leased retail and related office space in Chicago, Illinois, New York, New York, and Los Angeles, California for its American Girl Place stores, Alpharetta, Georgia...

  • Page 35
    ... regarding the markets in which Mattel's common stock, par value $1.00 per share, is traded, see the cover page hereof. For information regarding the high and low closing prices of Mattel's common stock for the last two calendar years, see Item 8 "Financial Statements and Supplementary Data-Note 14...

  • Page 36
    This table provides certain information with respect to Mattel's purchases of its common stock during the fourth quarter of 2012: Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet...

  • Page 37
    ... 500, and S&P 500 Consumer Discretionary Index 250 200 Dollars 150 100 50 0 2007 2008 2009 2010 2011 2012 December 31 Mattel, Inc. S&P 500 Cumulative Total Return S&P 500 Consumer Discretionary 2008 2009 2010 2011 2012 Mattel, Inc...$87.97 S&P 500 ...63.45 S&P 500 Consumer Discretionary...

  • Page 38
    Item 6. Selected Financial Data. For the Year Ended December 31, 2012 2011 2010 2009 2008 (In thousands, except per share and percentage information) Operating Results: Net sales ...Gross profit ...% of net sales ...Operating income (a) ...% of net sales ...Income before income taxes ...Provision ...

  • Page 39
    ... increase in gross profit as a percentage of net sales was driven primarily by favorable product mix, savings from manufacturing efficiency and Operational Excellence 2.0 programs, the benefit of HIT Entertainment's licensing business, and price increases partially offset by higher input costs and...

  • Page 40
    ...: (i) capitalizing on Fisher-Price's global growth opportunities, (ii) continuing to accelerate growth in its key brands, including Barbie, Monster High, American Girl, and Hot Wheels, (iii) launching new franchises, including Max Steel, (iv) optimizing its entertainment partnerships with theatrical...

  • Page 41
    ... product mix, savings from manufacturing efficiency and Operational Excellence 2.0 programs, the benefit of HIT Entertainment's licensing business, and price increases partially offset by higher input costs and higher customer benefits. Advertising and Promotion Expenses Advertising and promotion...

  • Page 42
    ... properties, savings from manufacturing efficiency and Operational Excellence 2.0 programs, and price increases partially offset by higher input costs and higher customer benefits. Additionally, gross margins were positively impacted by the acquisition of HIT Entertainment. North America...

  • Page 43
    ... product mix, savings from manufacturing efficiency and Operational Excellence 2.0 programs, favorable changes in currency exchange rates, and price increases partially offset by higher input costs and higher customer benefits. Additionally, gross margins were positively impacted by the acquisition...

  • Page 44
    ... sales of Barbie, Monster High, and CARS 2 products. The gross sales within the North American Region accounted for 56% of consolidated gross sales in 2011, as compared to 58% of consolidated gross sales in 2010. Gross sales in the International Region increased 12% in 2011, as compared to 2010...

  • Page 45
    ... the North America segment were $3.30 billion in 2011, an increase of $106.7 million or 3%, as compared to $3.19 billion in 2010, with no impact from changes in currency exchange rates, driven primarily by higher sales of Barbie, Monster High, and CARS 2 products. Gross sales of Mattel Girls & Boys...

  • Page 46
    ....0 million in 2010, driven primarily by sales from the American Girl virtual world and Kanani®, the 2011 Girl of the Year doll, and the benefit of two new American Girl stores in McLean, Virginia and Lynwood, Washington, which opened in June 2011 and July 2011, respectively. Cost of sales increased...

  • Page 47
    ... the Operational Excellence 2.0 program included A reorganization which resulted in the North America division, Additional procurement initiatives designed to fully leverage Mattel's global scale, SKU efficiency, and Packaging optimization. During 2011, Mattel realized gross cost savings before...

  • Page 48
    ... $27 million within gross profit, and approximately $11 million within advertising and promotion expenses. Mattel exceeded its Operational Excellence 2.0 goal by realizing approximately $187 million of cumulative gross cost savings throughout the program. During 2013, Mattel will initiate...

  • Page 49
    ...its business needs, including beginning of year cash and equivalents, cash flows from operations, and access to the commercial paper markets and its Credit Facility, which it uses for seasonal working capital requirements. As of December 31, 2012, Mattel had available incremental borrowing resources...

  • Page 50
    ... 2012, as compared to $174.5 million during 2011 and $146.7 million during 2010. The increase in cash flows used for investing activities in 2012 from 2011 was primarily due to the acquisition of HIT Entertainment and higher purchases of other property, plant, and equipment. The increase in cash...

  • Page 51
    ...the increase to stockholders' equity. Mattel's objective is to maintain a year-end debt-to-capital ratio of about 35%. Off-Balance Sheet Arrangements Mattel has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition...

  • Page 52
    ... and limited information related to current audits, Mattel is not able to make reasonably reliable estimates of the periods in which cash settlements will occur with taxing authorities for the noncurrent liabilities. Subsequent Event On February 1, 2013, Mattel announced that the Board of Directors...

  • Page 53
    ... in relation to its customers' ability to pay amounts owed to Mattel. Mattel's products are sold throughout the world. Products within the North America segment are sold directly to retailers, including discount and free-standing toy stores, chain stores, department stores, other retail outlets and...

  • Page 54
    ... largest customers accounted for approximately 56% of net accounts receivable. The concentration of Mattel's business with a relatively small number of customers may expose Mattel to a material adverse effect if one or more of Mattel's large customers were to experience financial difficulty. Mattel...

  • Page 55
    ..., North America, International, and American Girl, performs a detailed review of its inventory on an item-by-item basis and identifies products that are believed to be impaired. Management assesses the need for, and the amount of, an obsolescence reserve based on the following factors Customer and...

  • Page 56
    ... Financial Statements-Segment Information," on January 1, 2012, Mattel changed its operating segments to align with its new organizational structure, which resulted in changes to its reporting units. The new reporting units are: (i) North America, (ii) International, and (iii) American Girl. Mattel...

  • Page 57
    ... average discount rate to be used to measure future plan obligations and interest cost component of plan income or expense; Rate of future compensation increases (for defined benefit pension plans); Expected long-term rate of return on plan assets (for funded plans); and Health care cost trend...

  • Page 58
    ... in the expected return on plan assets would result in an increase in benefit plan expense during 2013 of approximately $3 million. The health care cost trend rates used by Mattel for its other postretirement benefit plans reflect management's best estimate of expected claim costs over the next...

  • Page 59
    ... the cost of employee share-based payment awards on a straight-line attribution basis over the requisite employee service period, net of estimated forfeitures. In determining when additional tax benefits associated with share-based payment exercises are recognized, Mattel follows the ordering of...

  • Page 60
    ... experience, the status of current audits, conclusions of tax audits, lapsing of applicable statutes of limitations, identification of new issues, and any administrative guidance or developments. Mattel recognizes unrecognized tax benefits in the first financial reporting period in which information...

  • Page 61
    ... products, making net sales less meaningful. A reconciliation of gross sales to the most directly comparable GAAP financial measure, net sales, is as follows: 2012 For the Year 2011 (In thousands) 2010 Revenues by Segment North America ...International ...American Girl ...Gross sales ...Sales...

  • Page 62
    ... consolidated statement of operations in the period in which the inventory is sold to customers. In addition, Mattel manages its exposure to currency exchange rate fluctuations through the selection of currencies used for international borrowings. Mattel does not trade in financial instruments for...

  • Page 63
    ...sterling for the purchase of Euro. As of December 31, 2012, these contracts had a contract amount of $27.4 million and a fair value of $(0.2) million. Had Mattel not entered into hedges to limit the effect of currency exchange rate fluctuations on its results of operations and cash flows, its income...

  • Page 64
    Venezuelan Operations Since January 1, 2010, Mattel has accounted for Venezuela as a highly inflationary economy as the threeyear cumulative inflation rate for Venezuela exceeded 100%. Accordingly, Mattel's Venezuelan subsidiary uses the US dollar as its functional currency, and monetary assets and ...

  • Page 65
    ... than 3% of Mattel's total net sales for the year ended December 31, 2012. Based on this evaluation, management concluded that Mattel's internal control over financial reporting was effective as of December 31, 2012. The effectiveness of the Company's internal control over financial reporting as of...

  • Page 66
    ... assets, excluding amounts resulting from purchase price adjustments, and total revenues each represent less than 3% of the related consolidated financial statement amounts as of and for the year ended December 31, 2012. /s/ PricewaterhouseCoopers LLP Los Angeles, California February 26, 2013 54

  • Page 67
    ..., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, December 31, 2012 2011 (In thousands, except share data) ASSETS Current Assets Cash and equivalents ...Accounts receivable, net of allowances of $33.5 million and $26.3 million in 2012 and 2011, respectively ...Inventories ...Prepaid...

  • Page 68
    MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Year 2012 2011 2010 (In thousands, except per share amounts) Net Sales ...Cost of sales ...Gross Profit ...Advertising and promotion expenses ...Other selling and administrative expenses ...Operating Income ...Interest ...

  • Page 69
    MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2012 For the Year 2011 (In thousands) 2010 Net Income ...Other Comprehensive (Loss) Income, Net of Tax: Currency translation adjustments ...Defined benefit pension plans net prior service cost... part of these statements. 57

  • Page 70
    ... current assets ...Accounts payable, accrued liabilities, and income taxes payable ...Other, net ...Net cash flows from operating activities ...Cash Flows From Investing Activities: Purchases of tools, dies, and molds ...Purchases of other property, plant, and equipment ...Payments for acquisition...

  • Page 71
    ... stock units ...Deferred compensation ...Share-based compensation ...Tax benefits from share-based payment arrangements ...Dividend equivalents for restricted stock units ...Dividends ...Balance, December 31, 2011 ...Net income ...Other comprehensive loss, net of tax ...Purchase of treasury stock...

  • Page 72
    ... of credit, purchasing various forms of credit insurance with unrelated third parties, factoring, or requiring cash in advance of shipment. Mattel records an allowance for doubtful accounts based on management's assessment of the business environment, customers' financial condition, historical...

  • Page 73
    ... Financial Statements-Segment Information," on January 1, 2012, Mattel changed its operating segments to align with its new organizational structure, which resulted in changes to its reporting units. The new reporting units are: (i) North America, (ii) International, and (iii) American Girl...

  • Page 74
    ... gross revenue in the period the related revenue is recognized. Advertising and Promotion Costs Costs of media advertising are expensed the first time the advertising takes place, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefits...

  • Page 75
    ...business, Mattel is regularly audited by federal, state, local, and foreign tax authorities. The ultimate settlement of any particular issue with the applicable taxing authority could have a material impact on Mattel's consolidated financial statements. New Accounting Pronouncements In December 2011...

  • Page 76
    ... Financial Statements-Segment Information," on January 1, 2012, Mattel changed its operating segments to align with its new organizational structure, which resulted in changes to its reporting units. The new reporting units are: (i) North America, (ii) International, and (iii) American Girl...

  • Page 77
    ...In connection with the acquisition of HIT Entertainment, Mattel recognized $495.0 million of nonamortizable identifiable intangible assets and $15.7 million of amortizable identifiable intangible assets, primarily related to intellectual property rights. Mattel tests nonamortizable intangible assets...

  • Page 78
    ... principally for tax credit carryforwards, research and development expenses, net operating loss carryforwards, employee compensation-related expenses and certain other reserves that are recognized in different years for financial statement and income tax reporting purposes. Mattel's deferred income...

  • Page 79
    ...for recognition in the financial statements. Utilization of these loss and tax credit carryforwards is subject to annual limitations. Mattel's loss and tax credit carryforwards expire in the following periods: Loss Carryforwards Tax Credit Carryforwards (In millions) 2013 - 2017 ...Thereafter ...No...

  • Page 80
    ... statements of operations. As of December 31, 2012, Mattel had accrued $10.3 million in interest and penalties related to unrecognized tax benefits. Of this balance, $9.8 million would impact the effective tax rate if recognized. In the normal course of business, Mattel is regularly audited...

  • Page 81
    ... with the applicable taxing authority could have a material impact on Mattel's consolidated financial statements. In 2012, income was positively impacted by net tax benefits of $16.0 million, primarily related to reassessments of prior years' tax liabilities based on the status of current audits and...

  • Page 82
    ... 31 is as follows: Defined Benefit Pension Plans Postretirement Benefit Plans 2012 2011 2010 2012 2011 2010 (In thousands) Net periodic benefit cost: Service cost ...Interest cost ...Expected return on plan assets ...Amortization of prior service (credit) cost ...Recognized actuarial loss (gain...

  • Page 83
    ... the Year 2011 2010 Defined benefit pension plans: Discount rate ...4.5% Weighted average rate of future compensation increases ...3.8% Long-term rate of return on plan assets ...8.0% Postretirement benefit plans: Discount rate ...Annual increase in Medicare Part B premium ...Health care cost trend...

  • Page 84
    ... benefit pension plan includes an increase of approximately $12 million related to assets transferred to the Fisher-Price Pension Plan resulting from its conversion to a cash balance plan. (b) Amounts exclude related tax benefits of $102.7 million and $100.4 million for December 31, 2012 and 2011...

  • Page 85
    ... pension and postretirement benefit plans are as follows: December 31, 2012 2011 Defined benefit pension plans: Discount rate ...Weighted average rate of future compensation increases ...Postretirement benefit plans: Discount rate ...Annual increase in Medicare Part B premium ...Health care cost...

  • Page 86
    ... corporate debt instruments are determined based on quoted market prices or are estimated using pricing models with observable inputs, quoted prices of securities with similar characteristics, or discounted cash flows. Mattel's defined benefit pension plan assets are not directly invested in Mattel...

  • Page 87
    ... employees to an excess benefit plan, earns various rates of return. The liability for these plans as of December 31, 2012 and 2011 was $55.9 million and $51.6 million, respectively, and is included in other noncurrent liabilities in the consolidated balance sheets. Changes in the market...

  • Page 88
    ... Mattel recognized share-based compensation expense of $1.9 million for the marketrelated component. For the January 1, 2011-December 31, 2013 LTIP, Mattel granted Performance RSUs under the Mattel, Inc. 2010 Equity and Long-Term Compensation Plan to officers and certain employees providing services...

  • Page 89
    ... of the Credit Facility, Mattel terminated its $300.0 million domestic receivables sales facility, which was a sub-facility of the Credit Facility. Mattel did not sell receivables pursuant to the domestic receivables facility in 2011 or 2010. The outstanding amounts of accounts receivable that...

  • Page 90
    ... increase the cost of obtaining financing. Short-Term Borrowings As of December 31, 2012 and 2011, Mattel had foreign short-term bank loans outstanding of $9.8 million and $8.0 million, respectively. As of December 31, 2012 and 2011, Mattel had no borrowings outstanding under the Credit Facility...

  • Page 91
    ... 18.6 million shares of its common stock at a cost of $446.7 million. During 2011 and 2010, the Board of Directors authorized Mattel to increase its share repurchase program by $500.0 million. At December 31, 2012, share repurchase authorizations of $349.4 million had not been executed. Repurchases...

  • Page 92
    ...and shares of common stock to officers, employees, and other persons providing services to Mattel. Generally, options vest and become exercisable contingent upon the grantees' continued employment or service with Mattel. Nonqualified stock options are granted at not less than 100% of the fair market...

  • Page 93
    ... selling and administrative expenses. Income tax benefits related to stock option compensation expense recognized in the consolidated statements of operations during 2012, 2011, and 2010 totaled $4.5 million, $4.8 million, and $4.3 million, respectively. The fair value of options granted has been...

  • Page 94
    ... Financial Statements-Employee Benefit Plans." Income tax benefits related to Performance RSU compensation expense recognized in the consolidated statements of operations during 2012, 2011, and 2010 totaled $5.2 million, $3.1 million, and $7.4 million, respectively. Note 8-Earnings Per Share...

  • Page 95
    ...its purchases and sales of inventory denominated in foreign currencies. These contracts generally have maturity dates of up to 18 months. These derivative instruments have been designated as effective cash flow hedges, whereby the unsettled hedges are reported in Mattel's consolidated balance sheets...

  • Page 96
    ... hedging instruments ... Prepaid expenses and other current assets Other noncurrent assets $ 3,064 4 3,068 $ 29,043 2,853 31,896 $ $ Liability Derivatives Balance Sheet Classification Fair Value December 31, December 31, 2012 2011 (In thousands) Derivatives designated as hedging instruments...

  • Page 97
    ... operations during 2012 and 2011, respectively, are offset by foreign currency transaction gains and losses on the related hedged balances. Note 10-Fair Value Measurements The following table presents information about Mattel's assets and liabilities measured and reported in the financial statements...

  • Page 98
    ... credit derivatives, that were previously reported at amortized cost. The unrealized gains/losses recognized relating to these auction rate securities are reflected within other non-operating income in the consolidated statements of operations. Non-Recurring Fair Value Measurements Mattel tests...

  • Page 99
    ...estate taxes, maintenance, utilities, and insurance. Rental expense is recorded on a straight-line basis, including escalating minimum payments. The American Girl Place leases in Chicago, Illinois, Los Angeles, California, and New York, New York, and American Girl store leases in Alpharetta, Georgia...

  • Page 100
    ...for product liability risks, and $0.5 million per occurrence for foreign property risks. Various insurance companies, that have an "A" or better AM Best rating at the time the policies are purchased, reinsure Mattel's risk in excess of the amounts insured by Far West. Mattel's liability for reported...

  • Page 101
    ..., and converted Mattel property for their own use. The same jury determined that defendants MGA, Larian, and MGA Entertainment (HK) Limited infringed Mattel's copyrights in the Bratz design drawings and other Bratz works, and awarded Mattel total damages of approximately $100 million against the...

  • Page 102
    ...have been created by Bryant during his Mattel employment were Mattel's property and that hundreds of Bratz female fashion dolls infringe Mattel's copyrights. The Court also upheld the jury's award of damages in the amount of $100 million and ordered an accounting of post-trial Bratz sales. The Court...

  • Page 103
    ...-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, and...

  • Page 104
    ... sell products in the Mattel Girls & Boys Brands and Fisher-Price Brands categories, although some are developed and adapted for particular international markets. Factors considered in determining the new operating segments include the nature of business activities, the management structure directly...

  • Page 105
    ..., share-based payments, and corporate headquarters functions managed on a worldwide basis, and the impact of changes in foreign currency rates on intercompany transactions. 2012 For the Year 2011 (In thousands) 2010 Revenues by Segment North America ...International ...American Girl ...Gross sales...

  • Page 106
    ...,808 Segment assets are comprised of accounts receivable and inventories, net of applicable reserves and allowances. December 31, 2012 2011 (In thousands) Assets by Segment North America ...International ...American Girl ...Corporate and other ...Accounts receivable and inventories, net ... $ 694...

  • Page 107
    ...2010 (In billions) Wal-Mart ...Toys "R" Us ...Target ... $1.2 0.7 0.5 $1.2 0.7 0.5 $1.1 0.8 0.5 The North America segment sells products to each of Mattel's three largest customers. The International segment sells products to Wal-Mart and Toys "R" Us. The American Girl segment sells its children...

  • Page 108
    ... income taxes ...Identifiable intangibles (net of amortization of $64.9 million and $55.5 million at December 31, 2012 and 2011, respectively) ...Other ...Accrued liabilities include the following: Litigation accrual ...Incentive compensation ...Royalties ...Advertising and promotion ...Taxes other...

  • Page 109
    ... average number of common and potential common shares ...Dividends declared per common share ...Common stock market price: High ...Low ...Year Ended December 31, 2011: Net sales ...Gross profit ...Advertising and promotion expenses ...Other selling and administrative expenses ...Operating income...

  • Page 110
    ...the year of acquisition. Based on this evaluation, Bryan G. Stockton, Mattel's principal executive officer, and Kevin M. Farr, Mattel's principal financial officer, concluded that these disclosure controls and procedures were effective as of December 31, 2012. Management's Report on Internal Control...

  • Page 111
    ... NASDAQ Stock Market ("NASDAQ") regarding "code of business conduct and ethics" and satisfies the SEC rules regarding disclosure of a "code of ethics" for the Chief Executive Officer, Chief Financial Officer and Controller. The Code of Conduct is publicly available on Mattel's corporate website at...

  • Page 112
    ... Data." Page Management's Report on Internal Control over Financial Reporting ...Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets as of December 31, 2012 and 2011 ...Consolidated Statements of Operations for the years ended December 31, 2012, 2011, and 2010...

  • Page 113
    ...Canada, as Co-Documentation Agents, and the other financial institutions party thereto Form of Indemnity Agreement between Mattel and certain of its directors Letter Agreement between Mattel and Bryan G. Stockton, dated November 21, 2011, regarding Mr. Stockton's promotion to Chief Executive Officer...

  • Page 114
    ...July 2, 2009 10.10*+ The Mattel Cash Balance Excess Benefit Plan, as amended and restated effective July 1, 2012 10.11*+ Mattel, Inc. Personal Investment Plan, January 1, 2013 Restatement 10.12+ Amended and Restated Mattel, Inc. 1996 Stock Option Plan (the "1996 Plan") 10.13+ Amendment to the 1996...

  • Page 115
    ... to Employees under the 2010 Plan 10.34+ Form of Grant Agreement for LongTerm Incentive Program PerformanceBased Restricted Stock Units for Senior Executives under the 2010 Plan for Certain Executive Officers with Employment Agreements and Certain Executive Officers Participating in the Mattel, Inc...

  • Page 116
    ... for August 1, 2006 and August 1, 2007 grants to Robert A. Eckert of NQSOs under the 2005 Plan 10.42+ Form of Notice of Grant and Grant Agreement for NQSOs to Robert A. Eckert under the 2010 Plan 10.43+ Form of Grant Agreement for August 1, 2006 grant to Thomas A. Debrowski of NQSOs under the 2005...

  • Page 117
    ...Key Executive Life Insurance Plan (for Robert A. Eckert) Mattel, Inc. Summary of Compensation of the Non-Employee Members of the Board of Directors Computation of Earnings to Fixed Charges Subsidiaries of the Registrant as of December 31, 2012 Consent of Independent Registered Public Accounting Firm...

  • Page 118
    ... of this Annual Report on Form 10-K (including Exhibit 24.0) and Exhibits 12.0, 21.0, 23.0, 31.0, 31.1, and 32.0 are available to stockholders of Mattel without charge. Written requests should be sent to: Secretary, Mail Stop M1-1516, Mattel, Inc., 333 Continental Blvd., El Segundo, California 90245...

  • Page 119
    ... Executive Officer (principal executive officer) Chief Financial Officer (principal financial officer) Senior Vice President and Corporate Controller (principal accounting officer) Director February 26, 2013 February 26, 2013 /s/ February 26, 2013 /s/ February 26, 2013 /s/ Director February...

  • Page 120
    Signature Title Date /s/ VASANT M. PRABHU Vasant M. Prabhu ANDREA L. RICH Andrea L. Rich Director February 26, 2013 /s/ Director February 26, 2013 /s/ DEAN A. SCARBOROUGH Dean A. Scarborough CHRISTOPHER A. SINCLAIR Christopher A. Sinclair /s/ DIRK VAN DE PUT Dirk Van De Put KATHY WHITE ...

  • Page 121
    ... periods in 2011; and projected utilization of foreign tax credits and utilization and write-offs of loss carryforwards for 2010. (d) Includes an allowance for doubtful accounts of $12.8 million related to a transaction that was not recognized in the statement of operations as the transaction...

  • Page 122
    EXHIBIT 12.0 MATTEL, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Unaudited; in thousands, except ratios) 2012 2011 For the Year 2010 2009 2008 Earnings Available for Fixed Charges: Income from continuing operations before income taxes ...Add: Non-controlling interest ...

  • Page 123
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer...

  • Page 124
    ... financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer...

  • Page 125
    ...President, Chief Executive Officer and Artistic Director, Los Angeles County Museum of Art Dean A. Scarborough (1) (3) (5) Chairman, President and Chief Executive Officer, Avery Dennison Corporation BUSINESS UNIT EXECUTIVES David Allmark Executive Vice President, Global Brands Team - Fisher-Price...

  • Page 126
    ... Fashion On-The-Go Bow-tique, Fijit Friends®, Fisher-Price®, Flexforce Lightning®, Ghouls Rule™, Girl Tech®, Hot Wheels®, Imaginext®, Kid-Tough®, Laugh & Learn®, Little Mommy®, Little People®, Matchbox®, Max Steel®, Monster High®, Nitro Speeders®, Phase 10®, Polly Pocket®, Power...

  • Page 127

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