Mattel 2014 Annual Report Download - page 108

In September 2010, Yellowstone filed a further appeal with the Appeals Court. Under Brazilian law, the
appeal was de novo and Yellowstone restated all of the arguments it made at the Trial Court level. Yellowstone
did not provide any additional information supporting its unspecified alleged damages. The Appeals Court held
hearings on the appeal in March and April 2013. On July 26, 2013, the Appeals Court awarded Yellowstone
approximately $17 million in damages, as adjusted for inflation and interest. The Appeals Court also awarded
Mattel approximately $7.5 million on its counterclaim, as adjusted for inflation. On August 2, 2013, Mattel filed
a motion with the Appeals Court for clarification since the written decision contained clear errors in terms of
amounts awarded and interest and inflation adjustments. Mattel’s motion also asked the Appeals Court to decide
whether Yellowstone’s award could be offset by the counterclaim award, despite Yellowstone’s status as a
bankrupt entity. Yellowstone also filed a motion for clarification on August 5, 2013. A decision on the
clarification motions was rendered on November 11, 2014, and the Appeals Court accepted partially the
arguments raised by Mattel. As a result, the Appeals Court awarded Yellowstone approximately $14.5 million in
damages, as adjusted for inflation and interest. The Appeals Court also awarded Mattel approximately $7.5
million on its counterclaim, as adjusted for inflation. The decision also recognized the existence of legal rules
that support Mattel’s right to offset its counterclaim award of approximately $7.5 million. Mattel filed a new
motion for clarification with the Appeals Court on January 21, 2015, due to the incorrect statement made by the
reporting judge of the Appeals Court, that the court-appointed expert analyzed the “accounting documents” of
Yellowstone. As soon as a new decision on this motion for clarification is rendered, Mattel will appeal the
Appeals Court decision to both the Superior Court of Justice and the Federal Supreme Court (collectively, the
“Superior Courts”), based on both procedural and substantive grounds.
Mattel believes that it is reasonably possible that a loss in this matter could range from $0 to approximately
$15 million. The high end of this range, approximately $15 million, is based on the calculation of the current
amount of the damages and loss of profits, including interest and inflation adjustments, reported in the first court-
appointed examination report submitted in the lawsuit, plus attorney’s fees. Mattel do Brasil will also be entitled to
offset its counterclaim award of approximately $7.5 million, the current amount including inflation adjustment,
against such loss. The existence of procedural matters that will be addressed to the Superior Courts adds some
uncertainty to the final outcome of the matter. Mattel believes, however, that it has valid legal grounds for appeal of
the Appeals Court decision and currently does not have grounds to affirm that a loss is probable for this matter.
Accordingly, a liability has not been accrued to date. Mattel may be required by the Trial Court to place a bond or
the full amount of the damage award in escrow pending an appeal decision by the Superior Courts.
Note 12—Segment Information
Description of Segments
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
TM
, 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 My American Girl®, 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®.
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