Mattel 2005 Annual Report Download - page 12

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PART I
Item 1. Business.
Mattel, Inc. (“Mattel”) designs, manufactures, and markets a broad variety of toy products worldwide
through sales to retailers and wholesalers (i.e., “customers”) and directly to consumers. Mattel’s vision is to
provide “the world’s premier toy brands—today and tomorrow.” Management has set six key company
strategies: (i) improve execution of the existing toy business; (ii) globalize the brands; (iii) extend the brands into
new areas; (iv) catch new trends, create new brands and enter new categories; (v) develop people; and
(vi) improve productivity, simplify processes and maintain customer service levels.
Mattel believes its products are among the most widely recognized toy products in the world. Mattel’s
portfolio of brands and products are grouped in the following categories:
Mattel Girls & Boys Brands—including Barbie®fashion dolls and accessories (“Barbie®”), Polly Pocket!™
and Disney Classics (collectively “Other Girls Brands”), Hot Wheels®, Matchbox®and Tyco®R/C vehicles
and playsets (collectively “Wheels”) and Harry Potter™, Yu-Gi-Oh!™, Batman™, Justice League™,
MegaMan™and games and puzzles (collectively “Entertainment”).
Fisher-Price Brands—including Fisher-Price®, Little People®, Rescue Heroes®, BabyGear™and
View-Master®(collectively “Core Fisher-Price®”), Sesame Street®, Barney™, Dora the Explorer™,
Winnie the Pooh, InteracTV™and See ‘N Say®(collectively “Fisher-Price®Friends”) and Power Wheels®.
American Girl Brands—including Just Like You™(formerly “American Girl Today®”), the historical
collection (formerly “The American Girls Collection®”) and Bitty Baby®. American Girl Brands products
are sold directly to consumers and its children’s publications are also sold to certain retailers.
Mattel was incorporated in California in 1948 and reincorporated in Delaware in 1968. Its executive offices
are located at 333 Continental Blvd., El Segundo, California 90245-5012, telephone number (310) 252-2000.
Business Segments
“Mattel” refers to Mattel, Inc. and its subsidiaries as a whole, unless the context requires otherwise. This
narrative discussion applies to all segments except where otherwise stated. Mattel’s reportable segments are
separately managed business units and are divided on a geographic basis between domestic and international.
The Domestic segment is further divided into Mattel Girls & Boys Brands (formerly “Mattel Brands”) US,
Fisher-Price Brands US and American Girl Brands.
On October 10, 2005, Mattel announced the consolidation of its domestic Mattel Girls & Boys Brands and
Fisher-Price Brands divisions into one division. The creation of the new “Mattel Brands” division, which will
result in the consolidation of some management and support functions, is expected to more effectively and
efficiently leverage Mattel’s scale, and will preserve the natural marketing and design groups that are empowered
to create and market toys based on gender and age groups. These changes are consistent with Mattel’s ongoing
strategy to build brands, cut costs and develop people in a streamlined organization that is focused on scale,
innovation and execution. In connection with this consolidation, Mattel began executing an initiative in 2006 to
streamline its workforce, primarily in El Segundo, California. It is expected that this initiative will result in a net
reduction of over 200 positions, expenses of approximately $10 to $13 million and will be substantially
completed during the first quarter of 2006. The consolidation of these divisions does not change Mattel’s
operating segments.
For additional information on Mattel’s operating segment reporting, including revenues, segment income
and assets, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Results of Operations—Operating Segment Results” and Item 8 “Financial Statements and
Supplementary Data—Note 11 to the Consolidated Financial Statements.” For additional information regarding
geographic areas, see Item 8 “Financial Statements and Supplementary Data—Note 11 to the Consolidated
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