Mattel 2009 Annual Report Download

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Table of contents

  • Page 1

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  • Page 4
    ... year, FORTUNE Magazine named Mattel to its "100 Best Companies to Work For" list. We published our third Global Citizenship Report, which focused on our efforts to create safe, high-quality products and to manufacture them in a responsible and ethical manner while managing our environmental...

  • Page 5
    ... a new generation of girls to explore this important high-tech career. â„¢ Creating the future of play is evolution. Our goal is to build on the progress we've made and to push ourselves to achieve more. That's consistent with our 2010 goals: we will capitalize on opportunities to increase revenues...

  • Page 6

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    bout ore a m n r a To le n for a l.com e t t a m rate. orpo c / / : p htt visit nds, a r b of mily ur fa o d l an Matte ctive intera t. cker ob E B m fro age mess

  • Page 9
    MATTEL, INC. FORM 10-K 2009

  • Page 10

  • Page 11
    ... using the market price as of the close of business June 30, 2009 was $5,766,693,594. Number of shares outstanding of registrant's common stock, $1.00 par value, as of February 22, 2010: 363,657,823 shares DOCUMENTS INCORPORATED BY REFERENCE Portions of the Mattel, Inc. 2009 Notice of Annual Meeting...

  • Page 12
    ..., Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accountant Fees and Services ...PART IV...

  • Page 13
    ... Business. Mattel, Inc. ("Mattel") designs, manufactures, and markets a broad variety of toy products worldwide through sales to its 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...

  • Page 14
    ...of American Girl Brands, although some are developed or adapted for particular international markets. Mattel's products are sold directly to retailers and wholesalers in most European, Latin American, and Asian countries, and in Australia, Canada, and New Zealand, and through agents and distributors...

  • Page 15
    ... of worldwide consolidated gross sales in 2009. Within the International segment, Mattel operates in four regional groups that generated the following gross sales during 2009: Percentage of International Amount Gross Sales (In millions, except percentage information) Europe ...Latin America ...Asia...

  • Page 16
    ... of video games and consumer electronics. American Girl Brands competes with companies that manufacture girls' toys and with children's book publishers and retailers. Mattel's International segment competes with global toy companies including Bandai, Hasbro, Lego, Tomy, and MGA Entertainment, and...

  • Page 17
    ... world. Products within the Domestic 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 by Mattel Girls & Boys Brands US and Fisher-Price Brands US. Mattel also operates...

  • Page 18
    ... to Mattel's business and operations. Mattel has entered into agreements to license entertainment properties from, among others, Disney Enterprises, Inc. (including Disney® characters such as Disney Princess™, CARS™ and Toy Story® from Pixar, High School Musical®, Winnie the Pooh®, and...

  • Page 19
    ... foreign product safety requirements. Nonetheless, Mattel has experienced, and may in the future experience, issues in products that result in recalls, withdrawals, or replacements of products. A product recall could have a material adverse effect on Mattel's results of operations and financial...

  • Page 20
    ... of Mattel and President, American Girl Executive Vice President, Worldwide Operations Chief Financial Officer President, Mattel Brands Senior Vice President, Human Resources Senior Vice President, Corporate Responsibility Senior Vice President, General Counsel and Secretary President, International...

  • Page 21
    ... in various human resources positions. Mr. Massingberd has been Senior Vice President, Corporate Responsibility since September 2007. From February 1998 to August 2007, he served as Senior Vice President and General Manager of Mattel's International divisions in Canada, Australia, New Zealand, Asia...

  • Page 22
    ... continue to be adversely affected. The global economic conditions adversely impacted Mattel's business and financial results in 2009. Mattel designs, manufactures, and markets a wide variety of toy products worldwide through sales to customers and directly to consumers. Our performance is impacted...

  • Page 23
    ...puzzles, educational 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...

  • Page 24
    ... changes in the purchasing policies or patterns of its major 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 2009, Mattel's three largest customers, Wal-Mart, Toys "R" Us and Target...

  • Page 25
    ... effectively operate its business. As a part of our efforts to cut costs, achieve better efficiencies and increase productivity and service quality, Mattel relies significantly on vendor and outsourcing relationships with third parties for services and systems including manufacturing, transportation...

  • Page 26
    ... may lead to increased costs, changes in Mattel's effective tax rate, or the interruption of normal business operations that would negatively impact Mattel's financial condition and results of operations. Mattel operates in a highly regulated environment in the US and international markets. US...

  • Page 27
    ...business operations, decrease sales and increase costs. Recalls may also increase competitive pressures from other toy manufacturers. Product recalls, withdrawals, or replacements have resulted in coverage critical of Mattel in the press and media. While Mattel believes that it has acted responsibly...

  • Page 28
    .... 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 in...

  • Page 29
    ... 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 key...

  • Page 30
    ... and distribution facilities in California, New Jersey, and Texas, all of which are used by the Domestic 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, Dallas, Texas, Atlanta...

  • Page 31
    Item 3. Legal Proceedings. See Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations- Litigation" and Item 8 "Financial Statements and Supplementary Data-Note 14...vote of security holders during the fourth quarter of the fiscal year covered by this report. 21

  • Page 32
    ... 2009, Mattel did not repurchase any shares of its common stock. During 2008, Mattel repurchased 4.9 million shares at a cost of $90.6 million. During 2007, Mattel repurchased 35.9 million shares at a cost of $806.3 million. During 2008 and 2007, the Board of Directors authorized Mattel to increase...

  • Page 33
    ... Mattel's purchases of its common stock during the fourth quarter of 2009: Maximum Number (or Total Number of Shares Approximate Dollar Value) (or Units) Purchased as of Shares (or Units) that Total Number of Part of Publicly May Yet Be Purchased Shares (or Units) Average Price Paid Announced Plans...

  • Page 34
    ... Total Return Mattel, Inc., S&P 500, and S&P 500 Consumer Staples Index 200 150 Dollars 100 50 0 2004 2005 2006 2007 2008 2009 December 31 Mattel, Inc. S&P 500 Cumulative Total Return S&P 500 Consumer Staples Index 2005 2006 2007 2008 2009 Mattel, Inc...S&P 500 ...S&P 500 Consumer...

  • Page 35
    ... Financial Data. For the Year Ended December 31, 2009 2008 2007 2006 2005 (In thousands, except per share and percentage information) Operating Results: Net sales ...Gross profit ...% of net sales ...Operating income ...% of net sales ...Income before income taxes ...Provision for income taxes...

  • Page 36
    .... Operating income increased from $541.8 million in 2008 to $731.2 million in 2009, primarily due to higher gross profit, lower advertising and promotion expenses, and lower other selling and administrative expenses, partially offset by lower sales. The Global Cost Leadership program generated gross...

  • Page 37
    ... its Global Cost Leadership program; Continuing its other cost and manufacturing efficiency programs; and Pricing products consistent with its long-term operating margin goals given likely cost pressures, such as commodities and labor rates in China. Results of Operations 2009 Compared to 2008...

  • Page 38
    ... from 2008, and accounted for 54% and 51% of consolidated gross sales in 2009 and 2008, respectively. Gross sales in international markets decreased 13% as compared to 2008, including unfavorable changes in currency exchange rates of 4 percentage points. Worldwide gross sales of Mattel Girls & Boys...

  • Page 39
    ...Operating Segment Results Mattel's operating 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 US, Fisher-Price Brands US and American Girl Brands. Operating...

  • Page 40
    ...entertainment-related sales in 2008. American Girl Brands segment operating income increased 19% to $103.4 million in 2009 from $86.6 million in 2008, primarily driven by higher gross profit, lower other selling and administrative expenses, and lower advertising and promotion expenses. International...

  • Page 41
    ... decreased 2% from 2007, and accounted for 51% of consolidated gross sales in both 2008 and 2007. Gross sales in international markets decreased 1% as compared to 2007, including a 1 percentage point benefit from changes in currency exchange rates. Worldwide gross sales of Mattel Girls & Boys Brands...

  • Page 42
    ... offset by growth in sales of Disney® products. Worldwide gross sales of Core Fisher-Price® increased 1% as compared to 2007, including a 1 percentage point benefit from changes in currency exchange rates. Gross sales of American Girl Brands increased 7% to $463.1 million in 2008 as compared to...

  • Page 43
    ...Mattel Girls & Boys Brands US segment income decreased 25% to $158.2 million in 2008, primarily due to lower gross profit driven by higher input costs, higher costs of distribution, and mix, partially offset by the benefit of price increases and lower product recall costs as compared to 2007. Fisher...

  • Page 44
    ... and increased sales in the retail channel. American Girl Brands segment operating income decreased 12% to $86.6 million in 2008, primarily due to higher other selling and administrative expenses related to retail pre-opening costs, partially offset by higher sales volume. International Segment The...

  • Page 45
    ... by increased costs associated with manufacturing and distribution of products or shortages in raw materials or component parts. Additionally, Mattel's ability to issue long-term debt and obtain seasonal financing could be adversely affected by factors such as the current global economic crisis and...

  • Page 46
    ... and to return funds to stockholders through cash dividends and share repurchases. Mattel's share repurchase program has no expiration date and repurchases will take place from time to time, depending on market conditions. The ability to successfully implement the capital deployment plan is directly...

  • Page 47
    ... 2009, Mattel did not repurchase any shares of its common stock. During 2008, Mattel repurchased 4.9 million shares at a cost of $90.6 million. During 2007, Mattel repurchased 35.9 million shares at a cost of $806.3 million. During 2008 and 2007, the Board of Directors authorized Mattel to increase...

  • Page 48
    ... of accounts payable and various accrued liability balances, including receivable collections due bank related to the domestic receivable facility, freight, and royalty obligations, partially offset by an increase in accrued incentive compensation. At December 31, 2009 and 2008, Mattel's total...

  • Page 49
    ... and present members of Mattel's Board of Directors breached their fiduciary duties in connection with product safety and reporting practices allegedly related to Mattel's product recalls during August and September 2007. Plaintiffs also sued certain executive officers of Mattel, and alleged that...

  • Page 50
    ... of operations or financial position during 2009, 2008, or 2007. Mattel receives some protection from the impact of inflation from high turnover of inventories and its ability, under certain circumstances and at certain times, to pass on higher prices to its customers. Employee Savings Plan Mattel...

  • Page 51
    ... the world. Products within the Domestic 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, and directly to consumers. Products within the International segment are...

  • Page 52
    ... the sales of Mattel's products and its corresponding inventory levels, which could potentially impact the valuation of its inventory. At the end of each quarter, management within each business segment, Mattel Girls & Boys Brands US, Fisher-Price Brands US, American Girl Brands, and International...

  • Page 53
    ... are either at the operating segment level or one reporting level below the operating segment. Mattel's reporting units are: Mattel Girls Brands US, Mattel Boys Brands US, Fisher-Price Brands US, American Girl Brands, and International. Goodwill is allocated to Mattel's reporting units based on an...

  • Page 54
    ...additional products were recalled, withdrawn from retail stores, or replaced at the request of consumers as a result of safety or quality issues (collectively, the "2007 Product Recalls"). In the second quarter of 2008, Mattel determined that certain products had been shipped into foreign markets in...

  • Page 55
    ...that its reserves for the 2007 Product Recalls and 2008 Product Withdrawal at December 31, 2009 are adequate and proper. Benefit Plan Assumptions Mattel and certain of its subsidiaries have retirement and other postretirement benefit plans covering substantially all employees of these companies. See...

  • Page 56
    ... pension plans was 8.0% in 2009, 2008 and 2007. Assuming all other benefit plan assumptions remain constant, a one percentage point decrease in the expected return on plan assets would result in an increase in benefit plan expense during 2010 of approximately $2.5 million. The health care cost...

  • Page 57
    ... to develop the estimates could materially affect key financial measures, including net income. The following weighted average assumptions were used in determining the fair value of options granted: 2009 2008 2007 Expected life (in years) ...Risk-free interest rate ...Volatility factor ...Dividend...

  • Page 58
    ... expense recognized related to RSUs was $37.0 million, $26.2 million, and $14.8 million in 2009, 2008, and 2007, respectively, and is also included within other selling and administrative expenses. As of December 31, 2009, total unrecognized compensation cost related to unvested share-based payments...

  • Page 59
    ... of operations, include the impact of sales adjustments such as trade discounts and other allowances. Gross sales represent sales to customers, excluding the impact of sales adjustments, the 2007 Product Recalls, and the 2008 Product Withdrawal. Consistent with its segment reporting, Mattel presents...

  • Page 60
    ... 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 61
    ... decreased by approximately $13 million in 2009, decreased by approximately $16 million in 2008, and increased by approximately $7 million in 2007. Venezuelan Operations Mattel's pricing decisions in Venezuela are intended to mitigate the risks of government imposed currency controls and significant...

  • Page 62
    ... exchange rate would have further decreased/(increased) Mattel's 2009 net sales and net income by approximately $500 thousand and $100 thousand, respectively. Effective January 1, 2010, and as required by US GAAP, Mattel will account for Venezuela as a highly inflationary economy as the three-year...

  • Page 63
    ... that Mattel's internal control over financial reporting was effective as of December 31, 2009. The effectiveness of the Company's internal control over financial reporting as of December 31, 2009 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm...

  • Page 64
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was...

  • Page 65
    ... (See Note 14) Stockholders' Equity Common stock $1.00 par value, 1.0 billion shares authorized; 441.4 million shares issued ...Additional paid-in capital ...Treasury stock at cost; 79.5 million shares and 82.9 million shares in 2009 and 2008, respectively ...Retained earnings ...Accumulated other...

  • Page 66
    MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Year 2009 2008 2007 (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 67
    ... from operating activities: Net loss on sale of other property, plant, and equipment ...1,491 6,831 2,790 Depreciation ...152,065 160,048 160,790 Amortization ...17,765 12,047 11,290 Asset impairments ...11,146 4,000 - Deferred income taxes ...(21,971) (13,535) 23,034 Tax benefits from share-based...

  • Page 68
    ... for restricted stock units ...(2,665) Dividends ...(268,854) Balance, December 31, 2008 ...441,369 1,642,092 (1,621,264) 2,085,573 Comprehensive income: Net income ...528,704 Change in net unrealized (loss) on derivative instruments ...Defined benefit pension plans, net prior service cost, and net...

  • Page 69
    ... letters of credit, factoring or purchasing various forms of credit insurance with unrelated third parties, 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...

  • Page 70
    ... at the operating segment level or one reporting level below the operating segment, for purposes of evaluating whether goodwill is impaired. Mattel's reporting units are: Mattel Girls Brands US, Mattel Boys Brands US, Fisher-Price Brands US, American Girl Brands, and International. Mattel tests...

  • Page 71
    ... (for imported products and dividends), delays in previously obtained approvals being honored by CADIVI, and Mattel's 2009 repatriation of dividends generated by its Venezuelan subsidiary at the parallel exchange rate. Effective January 1, 2010, and as required by US GAAP, Mattel will account for...

  • Page 72
    ... 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. Direct-response advertising...

  • Page 73
    ... RSUs granted under Mattel's January 1, 2008-December 31, 2010 Long-Term Incentive Program, as more fully described in "Note 7 to the Consolidated Financial Statements-Employee Benefit Plans." As of December 31, 2009, total unrecognized compensation expense related to unvested share-based payments...

  • Page 74
    ... reporting units. Mattel Girls Brands US Division Mattel Boys Brands US Division FisherPrice American Girl Brands US Brands International (In thousands) Total Balance at December 31, 2007 ...Additions/Adjustments ...Impact of currency exchange rate changes ...Balance at December 31, 2008 ...Impact...

  • Page 75
    ... intellectual property rights related to Whac-a-Mole® for $23.5 million, including acquisition costs, which is included within amortizable identifiable intangibles. Note 3-Income Taxes Consolidated pre-tax income consists of the following: 2009 For the Year 2008 (In thousands) 2007 US operations...

  • Page 76
    ... 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 tax assets (liabilities) are composed of the following: December 31, 2009 2008...

  • Page 77
    ... of tax audits, lapsing of applicable statutes of limitations, and any administrative guidance or developments. A reconciliation of unrecognized tax benefits is as follows: 2009 2008 2007 (In millions) Unrecognized tax benefits at January 1 ...Increases for positions taken in current year...

  • Page 78
    ... taxes payable. The exercise of nonqualified stock options and vesting of other stock compensation awards resulted in increases/(decreases) to additional paid-in-capital for related income tax benefits totaling $36.7 million, ($2.3) million, and $5.7 million, in 2009, 2008, and 2007, respectively...

  • Page 79
    ...additional products were recalled, withdrawn from retail stores, or replaced at the request of consumers as a result of safety or quality issues (collectively, the "2007 Product Recalls"). In the second quarter of 2008, Mattel determined that certain products had been shipped into foreign markets in...

  • Page 80
    ... plan that includes structural changes designed to lower costs and improve efficiencies; for example, offshoring and outsourcing certain back office functions, and more clustering of management in international markets. Additional procurement initiatives designed to fully leverage Mattel's global...

  • Page 81
    ... share for 2009, 2008, and 2007, respectively, because they were antidilutive. Note 7-Employee Benefit Plans Mattel and certain of its subsidiaries have qualified and nonqualified retirement plans covering substantially all employees of these companies. These plans include defined benefit pension...

  • Page 82
    ...as follows: Defined Benefit Pension Plans Postretirement Benefit Plans 2009 2008 2007 2009 2008 2007 (In thousands) Net periodic benefit cost: Service cost ...$ 11,153 $ 11,989 $ 12,305 $ 82 $ 100 $ 99 Interest cost ...26,606 26,299 25,327 2,263 2,797 2,832 Expected return on plan assets ...(24,330...

  • Page 83
    ...: 2009 For the Year 2008 2007 Defined benefit pension plans: Discount rate ...5.4% 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...

  • Page 84
    ... and plans assets is as follows: Defined Benefit Postretirement Pension Plans Benefit Plans 2009 2008 2009 2008 (In thousands) Change in Benefit Obligation: Benefit obligation, beginning of year ...$ 478,703 $ 441,985 $ 50,985 $ 48,167 Service cost ...11,153 11,989 82 100 Interest cost ...26...

  • Page 85
    ... pension and postretirement benefit plans are as follows: December 31, 2009 2008 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
    ... Government agency securities, and corporate debt instruments are determined based on quoted market prices. Mattel's defined benefit pension plan assets are not directly invested in Mattel common stock. Mattel believes that the long-term rate of return on plan assets of 8.0% as of December 31, 2009...

  • Page 87
    ... 31, 2010 LTIP performance cycle, during 2009 and 2008, Mattel granted performance RSUs under the Mattel, Inc. 2005 Equity Compensation Plan to officers and certain employees providing services to Mattel. Performance RSUs are units that may become payable in shares of Mattel's common stock at the...

  • Page 88
    ...performance-related and market-related components of the performance RSUs were $10.36 and $3.99 per share, respectively, for 2009, and $18.14 and $3.99 per share, respectively, for 2008. The fair value of the performance-related component was based on the closing stock price of Mattel's common stock...

  • Page 89
    ..., Bank of America, N.A., as administrative agent, Citicorp USA, Inc. and Barclays Bank PLC, as co-syndication agents, and Societe Generale and BNP Paribas, as co-documentation agents. Pursuant to the domestic receivables facility, Mattel Sales Corp., Fisher-Price, Inc., and Mattel Direct Import, Inc...

  • Page 90
    ...-Price, Inc., and Mattel Direct Import, Inc. to Mattel Factoring, who then sells such receivables to the bank group at a slight discount, and Mattel acts as a servicer for such receivables. Mattel has designated Mattel Sales Corp. and Fisher-Price, Inc. as sub-servicers, as permitted by the facility...

  • Page 91
    ... 2009, Mattel did not repurchase any shares of its common stock. During 2008, Mattel repurchased 4.9 million shares at a cost of $90.6 million. During 2007, Mattel repurchased 35.9 million shares at a cost of $806.3 million. During 2008 and 2007, the Board of Directors authorized Mattel to increase...

  • Page 92
    ... was dependent upon Mattel's common stock achieving a specified fair market value during a specified time period. Options were granted to non-employee members of Mattel's Board of Directors under the 1996 Plan with exercise prices equal to the fair market value of Mattel's common stock on the date...

  • Page 93
    ... and administrative expenses. Income tax benefits related to stock option compensation expense recognized in the consolidated statements of operations during 2009, 2008, and 2007 totaled $4.4 million, $3.2 million, and $2.5 million, respectively. The fair value of options granted has been estimated...

  • Page 94
    ... price of $18.45, and weighted average remaining life of 5.6 years. During 2009, 3.2 million stock options vested. The total grant date fair value of stock options vested during 2009, 2008, and 2007 totaled $12.7 million, $7.5 million, and $5.3 million, respectively. Mattel uses treasury shares...

  • Page 95
    ... granted in connection with its January 1, 2008-December 31, 2010 Long-Term Incentive Program, as more fully described in "Note 7 to the Consolidated Financial Statements-Employee Benefit Plans." Note 11-Derivative Instruments Effective January 1, 2009, Mattel adopted ASC 815-10 (formerly SFAS No...

  • Page 96
    ... Notes. The following table presents Mattel's derivative assets and liabilities at December 31, 2009 (in thousands): Asset Derivatives Balance Sheet Location Fair Value Liability Derivatives Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Foreign currency forward...

  • Page 97
    ... in the consolidated statements of operations during 2009 are offset by foreign currency transaction losses on the related hedged balances. Note 12-Fair Value Measurements The following table presents information about Mattel's assets and liabilities measured and reported in the financial statements...

  • Page 98
    ..., New York, and Los Angeles, California and American Girl Boutique and Bistro® leases in Dallas, Texas, Atlanta, Georgia, Natick, Massachusetts, Bloomington, Minnesota, and Denver, Colorado also contain provisions for additional rental payments based on a percentage of the sales of each store after...

  • Page 99
    ... Related to Carter Bryant and MGA Entertainment, Inc. In April 2004, Mattel filed a lawsuit in Los Angeles County Superior Court against Carter Bryant ("Bryant"), a former Mattel design employee. The suit alleges that Bryant aided and assisted a Mattel competitor, MGA Entertainment, Inc. ("MGA...

  • Page 100
    ...'s property for their own use. Post-trial, Mattel moved the Court to enjoin MGA from producing infringing products in the future. Mattel also asked the Court to award to Mattel certain rights in the term "Bratz", which the jury found Bryant had conceived and created while a Mattel employee. Mattel...

  • Page 101
    ... 14, September 4, and/or October 25, 2007 voluntary product recalls by Mattel and Fisher-Price, as well as the withdrawal of red and green toy blood pressure cuffs from retail stores or their replacement at the request of consumers. Eighteen of those cases were commenced in the following United...

  • Page 102
    ... recalled on November 21, 2006 and August 14, 2007, related to magnets; and the red and green toy blood pressure cuffs voluntarily withdrawn from retail stores or replaced at the request of consumers. Defendants named in the Consolidated Complaint are Mattel, Fisher-Price, Target Corporation, Toys...

  • Page 103
    ... and Fisher-Price in August and September 2007 and children, either directly or through their parents as "next friends," who have had contact with those toys. The actions in Canada generally allege that defendants were negligent in allowing their products to be manufactured and sold with lead paint...

  • Page 104
    ... Mattel do Brasil was ordered to provide product-exchange outlets in certain locations for replacement of the recalled products, to publish in newspapers the provisions of the court decision, and to make available on its website the addresses of the outlets for replacement of recalled products and...

  • Page 105
    ...-Price branded drop-side cribs manufactured and sold by Stork Craft pursuant to a License Agreement with Fisher-Price, Inc. These claims follow product recalls of Stork Craftmanufactured drop-side cribs in the United States and Canada. Stork Craft and the corporate entities of a number of retailers...

  • Page 106
    ... "Fisher-Price® Friends"), and Power Wheels® . American Girl Brands-including Just Like You®, the historical collection, and Bitty Baby®. American Girl Brands products are sold directly to consumers via its catalogue, website, and proprietary retail stores. Its children's publications are...

  • Page 107
    ... 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. 2009 For the Year 2008 (In thousands) 2007 Revenues Domestic: Mattel Girls & Boys...

  • Page 108
    ... toy products, which are grouped into three major categories: Mattel Girls & Boys Brands, Fisher-Price Brands, and American Girl Brands. The table below presents worldwide revenues by category: 2009 For the Year 2008 (In thousands) 2007 Worldwide Revenues Mattel Girls & Boys Brands ...Fisher-Price...

  • Page 109
    ... For the Year 2009 2008 2007 (In billions) Wal-Mart ...Toys "R" Us ...Target ... $1.0 0.7 0.5 $1.1 0.7 0.5 $1.1 0.7 0.6 The Mattel Girls & Boys Brands US and Fisher-Price Brands US segments sell products to each of Mattel's three largest customers. The International segment sells products to Wal...

  • Page 110
    ... of $69.5 million and $61.8 million in 2009 and 2008, respectively) ...Nonamortizable identifiable intangibles ...Other ...Accrued liabilities include the following: Incentive compensation ...Royalties ...Taxes other than income taxes ...Advertising and promotion ...Receivable collections due...

  • Page 111
    ...) income per common share-diluted ...Weighted average number of common and potential common shares ...Dividends declared per common share ...Common stock market price: High ...Low ...Year Ended December 31, 2008: Net sales ...Gross profit ...Advertising and promotion expenses ...Other selling and...

  • Page 112
    ... Registered Public Accounting Firm, included in Part II, "Item 8. Financial Statements and Supplementary Data" of this report. Changes in Internal Control Over Financial Reporting Mattel continues to implement a conversion to new and upgraded financial and human resources information technology...

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    ...its Audit, Compensation and Governance and Social Responsibility Committees of the Board of Directors on its corporate website at http://www.mattel.com. Copies of the corporate governance guidelines and committee charters may be obtained free of charge by mailing a request to the address noted above...

  • Page 114
    ... Management's Report on Internal Control over Financial Reporting ...Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets as of December 31, 2009 and 2008 ...Consolidated Statements of Operations for the years ended December 31, 2009, 2008, and 2007 ...Consolidated...

  • Page 115
    ... Trust Company, N.A. Form of 5.625% Notes due March 15, 2013 Fourth Amended and Restated Credit Agreement dated as of March 23, 2009, by and among Mattel, Inc., as Borrower, Bank of America, N.A., as Administrative Agent, Banc of America Securities LLC, as Sole Lead Arranger and Sole Book Manager...

  • Page 116
    ... Letter Agreement between Mattel and Robert A. Eckert entered into on April 4, 2005 regarding the Mattel, Inc. 2005 Supplemental Executive Retirement Plan Amendment to Executive Employment Agreement between Mattel and Robert A. Eckert, effective as of December 31, 2008 Executive Employment Agreement...

  • Page 117
    ... Supplemental Executive Retirement Plan Amendment to Amended and Restated Executive Employment Agreement between Mattel and Kevin M. Farr, effective as of December 31, 2008 Notice to Kevin M. Farr dated June 30, 2009 regarding non-renewal of employment agreement Letter agreement between Mattel and...

  • Page 118
    ... Compensation Plan for Non-Employee Directors (as amended and restated effective January 1, 2009) Mattel, Inc. 2005 Supplemental Executive Retirement Plan (as amended and restated effective January 1, 2009) Mattel, Inc. Executive Severance Plan The Fisher-Price Section 415 Excess Benefit Plan...

  • Page 119
    ... of Option Grant Agreement for Outside Directors (Annual Grant) under the 1996 Plan, as amended Form of Option Grant Agreement (Three Year Vesting) under the 1996 Plan, as amended Mattel, Inc. 1997 Premium Price Stock Option Plan (the "1997 Plan") First Amendment to the 1997 Plan Second Amendment to...

  • Page 120
    ... under the 2005 Plan Form of Grant Agreement as of May 17, 2007 for grants to employees of RSUs under the 2005 Plan Form of Grant Agreement for Long-Term Incentive Program Performance-Based Restricted Stock Units for Senior Executives under the Mattel, Inc. 2005 Equity Compensation Plan - for Messrs...

  • Page 121
    ..., 2009 Annual Grants to Outside Directors of RSUs under the 2005 Plan Form of Grant Agreement for Special Retention Award of RSUs under the 2005 Plan Mattel, Inc. Key Executive Life Insurance Plan (for Robert A. Eckert) Mattel, Inc. Summary of Compensation of the Non-Employee Members of the Board of...

  • Page 122
    ... Officer dated February 24, 2010, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the SarbanesOxley Act of 2002 (1) The following materials from Mattel, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2009, formatted in XBRL (Extensible Business Reporting...

  • Page 123
    ... ROBERT A. ECKERT Robert A. Eckert KEVIN M. FARR Kevin M. Farr H. SCOTT TOPHAM H. Scott Topham MICHAEL J. DOLAN Michael J. Dolan Chairman of the Board and Chief Executive Officer (principal executive officer) Chief Financial Officer (principal financial officer) Senior Vice President and Corporate...

  • Page 124
    ...RONALD L. SARGENT Ronald L. Sargent DEAN A. SCARBOROUGH Dean A. Scarborough Director February 24, 2010 /s/ Director February 24, 2010 /s/ Director February 24, 2010 /s/ Director February 24, 2010 /s/ CHRISTOPHER A. SINCLAIR Christopher A. Sinclair /s/ G. CRAIG SULLIVAN G. Craig Sullivan...

  • Page 125
    ... at Beginning of Year Additions Charged to Net Operations Deductions (In thousands) Balance at End of Year Allowance for Doubtful Accounts: Year ended December 31, 2009 ...Year ended December 31, 2008 ...Year ended December 31, 2007 ...Allowance for Inventory Obsolescence: Year ended December 31...

  • Page 126
    EXHIBIT 11.0 MATTEL, INC. AND SUBSIDIARIES COMPUTATION OF INCOME PER COMMON AND POTENTIAL COMMON SHARE BASIC: 2009 For the Year 2008 2007 2006 (In thousands, except per share amounts) 2005 Net income ...Less net income allocable to participating RSUs ...Net income available for basic common shares ...

  • Page 127
    ... MATTEL, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Unaudited; in thousands, except ratios) 2009 2008 For the Year 2007 2006 2005 Earnings Available for Fixed Charges: Income from continuing operations before income taxes and cumulative effect of changes in accounting...

  • Page 128
    ... and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 24, 2010 By: Robert A. Eckert Chairman and Chief Executive Officer...

  • Page 129
    ... and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 24, 2010 By: Kevin M. Farr Chief Financial Officer (Principal...

  • Page 130
    ... Worldwide Operations Kevin M. Farr Chief Financial Officer Alan Kaye Senior Vice President, Human Resources Geoff Massingberd Senior Vice President, Corporate Responsibility Robert Normile Senior Vice President, General Counsel and Secretary Dianne Douglas Senior Vice President, Investor Relations...

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    ... 2013 Mattel, Inc. Medium-Term Notes The Bank of New York Mellon Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, CA 90017 MEDIA RELATIONS Financial media should contact: Lisa Marie Bongiovanni, Vice President, Corporate Affairs at 310-252-3524 INVESTOR RELATIONS Institutional...

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