Mattel 2010 Annual Report Download - page 11

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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 its customers and directly to consumers. Mattel’s vision is “creating the future of play.”
Management has set three key company strategies: (i) deliver consistent growth by continuing the momentum in
its core brands, optimizing entertainment partnerships, building new franchises, and working to expand and
leverage its international footprint; (ii) build on the progress it has made on improving operating margins through
at least sustaining the gross margins and delivering another round of cost savings; and (iii) generate significant
cash flow and continue its disciplined, opportunistic, and value-enhancing deployment.
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®,
Little Mommy®, Disney Classics®, and Monster High®(collectively “Other Girls Brands”), Hot Wheels®,
Matchbox®, Battle Force 5®, and Tyco R/C®vehicles and play sets (collectively “Wheels”), and CARS™,
Radica®, Toy Story®, Max Steel®, WWE®Wrestling, and Batman®products, and games and puzzles
(collectively “Entertainment”).
Fisher-Price Brands—including Fisher-Price®, Little People®, BabyGear™, and View-Master®
(collectively “Core Fisher-Price®”), Dora the Explorer®, Go Diego Go!®, Thomas and Friends®,
Sing-a-ma-jigs, and See ‘N Say®(collectively “Fisher-Price®Friends”), and Power Wheels®.
American Girl Brands—including My American Girl®, 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 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 US, Fisher-Price Brands US, and
American Girl Brands.
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 15 to the Consolidated Financial Statements—Segment Information.” For additional
information regarding geographic areas, see Item 8 “Financial Statements and Supplementary Data—Note 15 to
the Consolidated Financial Statements—Segment Information.” For a discussion of the risks inherent in the
foreign operations of Mattel, which affect each segment, see Item 1A “Risk Factors—Factors That May Affect
Future Results.”
Domestic Segment
The Domestic segment develops toys that it markets and sells through the Mattel Girls & Boys Brands US,
Fisher-Price Brands US, and American Girl Brands segments.
In the Mattel Girls & Boys Brands US segment, Barbie®includes brands such as Barbie®fashion dolls and
accessories, and Polly Pocket®, Little Mommy®, Disney Classics®, and Monster High®are included within
3