Mattel 2013 Annual Report Download

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2013 Annual Report

Table of contents

  • Page 1
    2013 Annual Report

  • Page 2
    ...Girl Fisher-Price Other Fisher-Price Friends Other Barbie Latin America Asia-Pacific North American (US, Canada & American Girl) $7.1B Fisher-Price Core Entertainment Other Girls $7.1B Europe Wheels 2013 Gross Sales by Brand Source: Mattel 2013 10-K 2013 Gross Sales by Region 2013 Financials...

  • Page 3
    ...from Barbie® and Hot Wheels®, to American Girl®, Fisher-Price® and Thomas & Friends®. Parents trust Mattel to deliver hours of fun for their children, and our shareholders trust us to bring long-term value to their investment. Mattel led the toy industry with $7.1 billion in gross sales in 2013...

  • Page 4
    ... grew in 2013, driven by great products and an effective omnichannel marketing and sales strategy. American Girl bucked retail trends, expanding its brick-and-mortar footprint while still achieving incredibly high online sales numbers-the highest in the brand's history. New store economics are...

  • Page 5
    ...our objective in 2014 is to further leverage our more than one billion digital consumer touch points across all channels to further drive sales. In the toy business, we also know that when you innovate, you grow; therefore, a core component of our growth strategy is to ensure our products, marketing...

  • Page 6
    ... we come to work each day-to create great play experiences that develop creativity, fuel imaginations and ultimately foster the innovative spirit in millions of children around the world. In closing, I want to thank all of you, our shareholders, for your ongoing support and belief in Mattel. We are...

  • Page 7
    Mattel, Inc. Form 10-K 2013

  • Page 8

  • Page 9
    ... year ended December 31, 2013 ' or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-05647 (Exact name of registrant as specified in its charter) MATTEL, INC. 333 Continental Blvd. El Segundo, CA...

  • Page 10
    ... Statements and Supplementary Data ...Changes in and Disagreements with Accountants on 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...

  • Page 11
    ... and Tyco R/C® vehicles and play sets (collectively "Wheels"), and CARS®, Disney Planes™, 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...

  • Page 12
    ... includes Monster High, Disney Classics, Ever After High, Little Mommy, and Polly Pocket. Wheels includes Hot Wheels, Matchbox, and Tyco R/C vehicles and play sets. Entertainment includes CARS, Disney Planes, Radica, Toy Story, WWE Wrestling, and Batman, as well as games and puzzles. In 2014, Barbie...

  • Page 13
    ... and the award-winning American Girl magazine. In January 2014, American Girl introduced Isabelle™, the 2014 Girl of the Year® doll. American Girl products are sold in the US and Canada. Manufacturing and Materials Mattel manufactures toy products for all segments in both company-owned facilities...

  • Page 14
    ...at younger ages, Mattel competes with companies that sell products outside the toy aisle, such as electronic consumer products and video games. Competition continues to be heavily influenced by the fact that a small number of retailers account for a large portion of all toy sales, allocate the shelf...

  • Page 15
    ...of net sales), respectively, for advertising and promotion. Sales 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, to...

  • Page 16
    ... and Charlotte, North Carolina in 2014 and Nashville, Tennessee in 2015. Additionally, Mattel sells certain of its products online through its website. During 2013, Mattel's three largest customers (Wal-Mart at $1.2 billion, Toys "R" Us at $0.7 billion, and Target at $0.5 billion) accounted for...

  • Page 17
    ...Financial Statements and Supplementary Data-Note 11 to the Consolidated Financial Statements-Commitments and Contingencies." Backlog Mattel ships products in accordance with delivery schedules specified by its customers, which usually request delivery within three months. In the toy industry, orders...

  • Page 18
    ...advertising to children. In addition, Mattel's online and other digital communications activity are or may be subject to US and foreign privacy-related regulations, including the US Children's Online Privacy Protection Act of 1998 and the EU Data Protection Directive (Directive 95/46/EC) and related...

  • Page 19
    ... President, Chief Legal Officer and Secretary Executive Vice President, North America Senior Vice President and Corporate Treasurer Senior Vice President and Corporate Controller Executive Vice President, Global Brands Team - Fisher-Price 2000 1996 2013 2000 2011 2007 2013 1999 2012 2010 2004 2013...

  • Page 20
    ... firm and for 12 years with IBM in various human resources positions. Mr. Kilpin has been Executive Vice President, Global Brands Team - Boys & Girls since February 2011. From February 2010 to February 2011, he served as General Manager and Senior Vice President, Mattel Brands El Segundo. Mr. Kilpin...

  • Page 21
    ... Senior Vice President Marketing and Senior Vice President Global Core Brands Marketing Strategy. Starting with Mattel in July 1995, Mr. Walker has held a variety of brand management positions within the Wheels, Entertainment and Games divisions. Available Information Mattel files its Annual Report...

  • Page 22
    ...culture, movies, media, fashion, or technology, its products may not be accepted by children, parents, or families and Mattel's revenues, profitability, and results of operations may be adversely affected. Mattel's business is highly seasonal and its operating results depend, in large part, on sales...

  • Page 23
    ... 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 2013, Mattel's three largest customers, Wal-Mart, Toys "R" Us, and Target, in the...

  • Page 24
    ..., create new brands, and offer new innovative products, enhance product safety, develop people, improve productivity, simplify processes, maintain customer service levels, as well as initiatives designed to drive sales growth, capitalize on Mattel's scale advantage, and improve its supply chain...

  • Page 25
    ... 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 26
    ... 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 not affected by similar issues with products, any of which could have a significant adverse effect...

  • Page 27
    ...recent years, consumer goods companies, including those in the toy business, generally have experienced the phenomenon of retail customers developing their own private-label products that directly compete with the products of traditional manufacturers. Some retail chains that are customers of Mattel...

  • Page 28
    ...products, reporting its results of operations, collection and storage of personal data of customers, employees and other stakeholders, and various other processes and transactions. Many of these systems are managed by third-party service providers. Mattel's ability to effectively manage its business...

  • Page 29
    ...-looking statements, whether as a result of new developments or otherwise. Item 1B. Unresolved Staff Comments. None. Item 2. Properties. Mattel owns its corporate headquarters in El Segundo, California, consisting of approximately 335,000 square feet, and an adjacent office building consisting...

  • Page 30
    ..., which is used by the American Girl segment, and Pomona, California, which is used by the North America segment. Internationally, Mattel has offices and/or warehouse space in Argentina, Australia, Austria, Belgium, Bermuda, Brazil, Canada, Chile, China, Colombia, Czech Republic, Denmark, France...

  • Page 31
    ... 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 32
    ... table provides certain information with respect to Mattel's purchases of its common stock during the fourth quarter of 2013: 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 Be...

  • Page 33
    ...on December 31, 2008 and reinvestment of dividends. Comparison of Five Year Cumulative Total Return Mattel, Inc., S&P 500, and S&P 500 Consumer Discretionary Index 400 350 300 250 Dollars 200 150 100 50 0 2008 2009 2010 2011 2012 2013 December 31 Mattel, Inc. S&P 500 S&P 500 Consumer Discretionary...

  • Page 34
    Item 6. Selected Financial Data. For the Year Ended December 31, 2013 2012 2011 2010 2009 (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 35
    .... Mattel paid total annual dividends of $1.44 per share, an increase of 16% from the prior year, and repurchased 11.0 million shares of its common stock. • • • 2014 and Beyond In 2014, Mattel will focus on expanding on its product and brand innovation, improving its advertising and promotion...

  • Page 36
    ... its brands, countries, and customers, which include growing its girls portfolio, continuing to invest in emerging and developing markets, and improving execution in both its ecommerce and brick and mortar channels. Results of Operations 2013 Compared to 2012 Consolidated Results Net sales for 2013...

  • Page 37
    ... gross sales by brand for 2013 and 2012: For the Year 2013 2012 % Change (In millions, except percentage information) Mattel Girls & Boys Brands: Barbie ...Other Girls ...Wheels ...Entertainment ...Fisher-Price Brands: Core Fisher-Price ...Fisher-Price Friends ...Other Fisher-Price ...American Girl...

  • Page 38
    ... of Mattel's gross sales by brand for the North America segment for 2013 and 2012: For the Year 2013 2012 % Change (In millions, except percentage information) Mattel Girls & Boys Brands: Barbie ...Other Girls ...Wheels ...Entertainment ...Fisher-Price Brands: Core Fisher-Price ...Fisher-Price...

  • Page 39
    ... ...Asia Pacific ... 5 7 - 6 -1 1 -4 -5 The following table provides a summary of Mattel's gross sales by brand for the International segment for 2013 and 2012: For the Year 2013 2012 % Change (In millions, except percentage information) Mattel Girls & Boys Brands: Barbie ...Other Girls ...Wheels...

  • Page 40
    ...advertising and promotion expenses. American Girl Segment The following table provides a summary of Mattel's gross sales by brand for the American Girl segment for 2013 and 2012: For the Year 2013 2012 % Change (In millions, except percentage information) American Girl Segment: American Girl Brands...

  • Page 41
    ... gross sales by brand for 2012 and 2011: For the Year 2012 2011 % Change (In millions, except percentage information) Mattel Girls & Boys Brands: Barbie ...Other Girls ...Wheels ...Entertainment ...Fisher-Price Brands: Core Fisher-Price ...Fisher-Price Friends ...Other Fisher-Price ...American Girl...

  • Page 42
    ... 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 higher customer benefits. Advertising and...

  • Page 43
    ... 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 44
    ...Asia Pacific ... 4 4 2 13 -6 -6 -7 -2 The following table provides a summary of Mattel's gross sales by brand for the International segment for 2012 and 2011: For the Year 2012 2011 % Change (In millions, except percentage information) Mattel Girls & Boys Brands: Barbie ...Other Girls ...Wheels...

  • Page 45
    ...by price increases. American Girl segment income increased 9% to $121.6 million in 2012, as compared to $111.1 million in 2011, driven by higher net sales, partially offset by higher other selling and administrative expenses. Cost Savings Programs During 2011, Mattel initiated Operational Excellence...

  • Page 46
    ...advertising and promotion expenses. Income Taxes Mattel's effective tax rate on income before income taxes in both 2013 and 2012 was 17.8%. The 2013 income tax provision included net tax benefits of $32.2 million, primarily related to reassessments of prior years' tax liabilities based on the status...

  • Page 47
    ..., 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, 2013, Mattel had available incremental borrowing resources totaling $1.60...

  • Page 48
    ... acquisition of HIT Entertainment in 2012 and higher purchases of other property, plant, and equipment. Financing Activities Cash flows used for financing activities were $740.0 million during 2013, as compared to $410.9 million during 2012 and $397.3 million during 2011. The increase in cash flows...

  • Page 49
    ... and December 31, 2012. Mattel's objective is to maintain a year-end debtto-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, revenues or...

  • Page 50
    ... impact on its results of operations or financial position during 2013, 2012, or 2011. 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. 42

  • Page 51
    ...and future economic factors 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...

  • Page 52
    ... factors beyond the control of Mattel. This could increase Mattel's exposure to losses from bad debts. A small number of customers account for a large share of Mattel's net sales and accounts receivable. In 2013, Mattel's three largest customers, Wal-Mart, Toys "R" Us, and Target, in the aggregate...

  • Page 53
    ... would require management to record a valuation allowance on such inventory. Mattel bases its production schedules for toy products on customer orders and forecasts, taking into account historical trends, results of market research, and current market information. Mattel ships products in accordance...

  • Page 54
    ...method requires Mattel to make projections of revenue, operating costs, and working capital investment for the reporting unit over a multi-year period. Additionally, management must make an estimate of a weighted average cost of capital that a market participant would use as a discount rate. Changes...

  • Page 55
    ... for customer programs at December 31, 2013 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 Item 8 "Financial Statements and Supplementary Data...

  • Page 56
    ...benefit pension plans was 8.0% in 2013, 2012, and 2011. 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 2014 of approximately $3 million. The health care cost...

  • Page 57
    ...Expected life (in years) ...Risk-free interest rate ...Volatility factor ...Dividend yield ... (1) year (1)% (1)% (1)% (6.5) (7.2) (3.8) 12.3 Mattel recognized compensation expense of $12.1 million, $13.8 million, and $14.5 million for stock options during 2013, 2012, and 2011, respectively, which...

  • Page 58
    ... be realized. Mattel's effective tax rate on income before income taxes in both 2013 and 2012 was 17.8%. The income tax provision included net tax benefits of $32.2 million, $16.0 million, and $6.8 million in 2013, 2012, and 2011, respectively, primarily related to reassessments of prior years' tax...

  • Page 59
    ... products, making net sales less meaningful. A reconciliation of gross sales to the most directly comparable GAAP financial measure, net sales, is as follows: 2013 For the Year 2012 (In thousands) 2011 Revenues by Segment North America ...International ...American Girl ...Gross sales ...Sales...

  • 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
    ... by approximately $9 million in 2013, decreased by approximately $35 million in 2012, and increased by approximately $5 million in 2011. Venezuelan Operations Since January 1, 2010, Mattel has accounted for Venezuela as a highly inflationary economy as the three-year cumulative inflation rate...

  • Page 62
    ... utilize the SICAD to regularly access US dollars for its operations in future periods, the SICAD rate may be used as its remeasurement rate. Mattel's Venezuelan subsidiary represented less than 0.1% of Mattel's consolidated net sales in 2013 and had approximately $22 million of net monetary assets...

  • Page 63
    ...Financial Statements and Supplementary Data. MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Mattel's management...

  • Page 64
    ... statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Mattel, Inc. and its subsidiaries at December 31, 2013 and December 31, 2012, and the results of their operations and their cash flows for each of the three years...

  • Page 65
    MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, December 31, 2013 2012 (In thousands, except share data) ASSETS Current Assets Cash and equivalents ...Accounts receivable, net of allowances of $20.4 million and $33.5 million in 2013 and 2012, respectively ...Inventories ......

  • Page 66
    MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Year 2013 2012 2011 (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
    MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2013 For the Year 2012 (In thousands) 2011 Net Income ...Other Comprehensive Income (Loss), Net of Tax: Currency translation adjustments ...Defined benefit pension plans net prior service credit (cost) and net actuarial ...

  • Page 68
    MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year 2013 2012 (In thousands) 2011 Cash Flows From Operating Activities: Net income ...$ 903,944 $ 776,464 $ 768,508 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation ...179,333 ...

  • Page 69
    ...Share-based compensation ...Tax benefits from share-based payment arrangements ...Dividend equivalents for restricted stock units ...Dividends ...Balance, December 31, 2012 ...Net income ...Other comprehensive income, net of tax ...Purchase of treasury stock ...Issuance of treasury stock for stock...

  • Page 70
    ... 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 71
    ... 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 72
    ...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 consists primarily of catalog production and mailing...

  • Page 73
    ... certain retirement and other postretirement benefit plans (see "Note 4 to the Consolidated Financial Statements-Employee Benefit Plans"). Share-Based Payments Mattel recognizes the cost of employee share-based payment awards on a straight-line attribution basis over the requisite employee service...

  • Page 74
    ... 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 75
    ...million of amortizable identifiable intangible assets, primarily related to intellectual property rights. During the second quarter of 2013, Mattel changed its brand strategy for Polly Pocket, which includes a more focused allocation of resources to support the Polly Pocket brand in specific markets...

  • Page 76
    ... conjunction with the Polly Pocket trade name impairment test, Mattel reassessed the intangible asset's nonamortizable classification and determined that the nonamortizable classification could no longer be supported. During the second quarter of 2013, the Polly Pocket trade name was reclassified as...

  • Page 77
    ...-in-capital will be increased by $4.6 million when the deferred tax assets are realized. Mattel uses tax law ordering when determining when excess tax benefits have been realized. Net deferred income tax assets are reported in the consolidated balance sheets as follows: December 31, 2013 2012 (In...

  • Page 78
    ...consolidated statements of operations are as follows: 2013 For the Year 2012 (In thousands) 2011 Provision at US federal statutory rate ...(Decrease) increase resulting from: Foreign earnings taxed at different rates, including withholding taxes ...Foreign losses without income tax benefit ...State...

  • Page 79
    ... to a capital loss for which Mattel recognized no financial statement benefit. In the normal course of business, Mattel is regularly audited by federal, state, local and foreign tax authorities. The IRS is currently auditing Mattel's 2010 and 2011 federal income tax returns. The IRS audit plan calls...

  • Page 80
    ... and vesting of other stock compensation awards resulted in an increase to additional paid-in capital for related windfall income tax benefits totaling $50.4 million, $35.8 million, and $24.2 million in 2013, 2012, and 2011, respectively. Note 4-Employee Benefit Plans Mattel and certain of its...

  • Page 81
    ...: 2013 For the Year 2012 2011 Defined benefit pension plans: Discount rate ...4.0% 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 82
    ...150) - $ 194,998 $ 289,685 $ 7,119 $ 3,649 - $ 3,649 (a) The 2012 actual return on plan assets from defined 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. 74

  • Page 83
    ... pension and postretirement benefit plans are as follows: December 31, 2013 2012 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 84
    ... intended to closely match the duration of the liabilities and include US government treasuries and agencies, corporate bonds from various industries, and mortgage-backed and assetbacked securities. Mattel's defined benefit pension plan assets are measured and reported in the financial statements at...

  • Page 85
    ... 2012. The Fisher-Price Pension Plan was renamed the Mattel Cash Balance Plan in connection with the conversion. The plan conversion resulted in a reduction in the benefit obligation of approximately $12 million, which was recognized in 2012. Defined Contribution Retirement Plans Domestic employees...

  • Page 86
    ..., during 2013, 2012, and 2011, Mattel recognized share-based compensation expense of $1.4 million, $1.8 million, and $1.2 million, respectively, for the market-related component. The fair values of the performance-related components were based on the closing stock prices of Mattel's common stock on...

  • Page 87
    ... working capital requirements. The outstanding amounts of accounts receivable that have been sold under international factoring arrangements were $25.6 million and $25.3 million at December 31, 2013 and 2012, respectively. These amounts have been excluded from Mattel's consolidated balance sheets...

  • Page 88
    ...and 2012, Mattel repaid $50.0 million of its Medium-term notes in connection with their scheduled maturities. The aggregate amount of long-term debt maturing in the next five years and thereafter is as follows: 2010 Senior Notes 2011 2013 Senior Senior Notes Notes (In thousands) Total 2014 ...2015...

  • Page 89
    ... million. During 2012, Mattel repurchased 2.3 million shares of its common stock at a cost of $77.9 million. During 2011, Mattel repurchased 20.4 million shares of its common stock at a cost of $536.3 million. During both 2013 and 2011, the Board of Directors authorized Mattel to increase its share...

  • Page 90
    ... income to the consolidated statement of operations: 2013 For the Year 2012 (In thousands) 2011 Statements of Operations Classification Derivative Instruments (Loss) gain on foreign currency forward exchange contracts ... $ (5,735) $ 29,978 $ (8,502) Cost of sales 838 (45) (1,341) Provision...

  • Page 91
    ... similar to the 2005 Plan. Under the 2010 Plan, Mattel has the ability to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, RSUs, dividend equivalent rights, performance awards, and shares of common stock to officers, employees, and other persons...

  • Page 92
    ...Mattel recognized compensation expense of $12.1 million, $13.8 million, and $14.5 million for stock options during 2013, 2012, and 2011, respectively, which is included within other selling and administrative expenses in the consolidated statements of operations. Income tax benefits related to stock...

  • Page 93
    ... Financial Statements-Employee Benefit Plans." Income tax benefits related to Performance RSU compensation expense recognized in the consolidated statements of operations during 2013, 2012, and 2011 totaled $4.2 million, $5.2 million, and $3.1 million, respectively. Note 8-Earnings Per Share...

  • Page 94
    ...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 95
    ...Mattel's derivative assets and liabilities: Asset Derivatives Balance Sheet Classification Fair Value December 31, December 31, 2013 2012... from derivatives reported in the consolidated statements of operations: For the Year Ended For the Year Ended December 31, 2013 December 31, 2012 Amount of Amount...

  • Page 96
    ... income/expense Cost of sales $ 13,520 $ 5,407 The net gains of $13.5 million and $5.4 million recognized in the consolidated statements of operations during 2013 and 2012, respectively, are offset by foreign currency transaction gains and losses on the related hedged balances. Note 10-Fair...

  • Page 97
    ... quarter of 2013, Mattel changed its brand strategy for Polly Pocket, which includes a more focused allocation of resources to support the Polly Pocket brand in specific markets, resulting in a reduction of the forecasted future cash flows of the brand. As a result, Mattel recognized an impairment...

  • Page 98
    ... income of $0.9 million, $0.9 million, and $0.9 million in 2013, 2012, and 2011, respectively. Commitments In the normal course of business, Mattel enters into contractual arrangements to obtain and protect Mattel's right to create and market certain products and for future purchases of goods and...

  • Page 99
    ... liabilities in the consolidated balance sheets. Loss reserves are accrued based on Mattel's estimate of the aggregate liability for claims incurred. Litigation Litigation Related to Carter Bryant and MGA Entertainment, Inc. In April 2004, Mattel filed a lawsuit in Los Angeles County Superior Court...

  • Page 100
    ..., 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 101
    ... Bratz works found by the jury to 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...

  • Page 102
    ... of approximately $138 million during the fourth quarter of 2012 to cover these fees and costs. Because multiple claimants asserted rights to the attorney's fees portion of the judgment, on February 13, 2013, Mattel filed a motion in the district court for orders permitting Mattel to interplead the...

  • Page 103
    ... parties relating to the supply and sale of toys in Brazil. Yellowstone's complaint sought alleged loss of profits of approximately $0.5 million, plus an unspecified amount of damages consisting of: (i) compensation for all investments made by Yellowstone to develop Mattel do Brasil's business; (ii...

  • Page 104
    ...After High, Little Mommy, and Polly Pocket (collectively "Other Girls"), Hot Wheels, Matchbox, and Tyco R/C vehicles and play sets (collectively "Wheels"), and CARS, Disney Planes, Radica, Toy Story, Max Steel, WWE Wrestling, Batman, and games and puzzles (collectively "Entertainment"). Fisher-Price...

  • Page 105
    ...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 accountable to...

  • Page 106
    ..., and corporate headquarters functions managed on a worldwide basis, and the impact of changes in foreign currency rates on intercompany transactions. 2013 For the Year 2012 (In thousands) 2011 Revenues by Segment North America ...International ...American Girl ...Gross sales ...Sales adjustments...

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    ..., Fisher-Price Brands, and American Girl Brands. The table below presents worldwide revenues by brand category: 2013 For the Year 2012 (In thousands) 2011 Worldwide Revenues by Brand Category Mattel Girls & Boys Brands ...Fisher-Price Brands ...American Girl Brands ...Other ...Gross sales ...Sales...

  • Page 108
    ..., property, plant, and equipment, net, and identifiable intangibles, net. 2013 For the Year 2012 (In thousands) 2011 Revenues North American Region (a) ...International Region: Europe ...Latin America ...Asia Pacific ...Total International Region ...Gross sales ...Sales adjustments ...Net sales...

  • Page 109
    ... million at December 31, 2013 and 2012, respectively) ...Other ...Accrued liabilities include the following: Royalties ...Advertising and promotion ...Taxes other than income taxes ...Incentive compensation ...Litigation accrual ...Other ...Other noncurrent liabilities include the following: Benefit...

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    ... average number of common and potential common shares ...Dividends declared per common share ...Common stock market price: High ...Low ...Year Ended December 31, 2012: Net sales ...Gross profit ...Advertising and promotion expenses ...Other selling and administrative expenses (b) ...Operating income...

  • Page 111
    ... 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, 2013. Management's Report on Internal Control over Financial Reporting The report called for by...

  • Page 112
    ... by applicable laws, regulations and stock exchange listing standards on its corporate website or in a Current Report on Form 8K. Mattel has posted the Board of Directors' corporate governance guidelines and the charters of its Audit, Compensation and Governance and Social Responsibility Committees...

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    ... 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, 2013 and 2012 ...Consolidated Statements of Operations for the years ended December 31, 2013, 2012, and 2011...

  • Page 114
    ..., regarding Mr. Massingberd's relocation to Mattel's headquarters 10.4+ Letter Agreement between Mattel and Peter D. Gibbons, dated March 28, 2013, regarding an offer of employment for the position of EVP Global Operations. 10-K 001-05647 10.18 February 23, 2012 10-Q 001-05647 10.2 April 22...

  • Page 115
    ... 10.18+ The Mattel Cash Balance Excess Benefit Plan, as amended and restated effective July 1, 2012 10.19+ Amendment No. 1 to the Mattel Cash Balance Excess Benefit Plan (as amended and restated effective July 1, 2012) 10.20+ Mattel, Inc. Personal Investment Plan, January 1, 2013 Restatement ('PIP...

  • Page 116
    ...to the 2005 Plan 10.37+ Amendment No. 3 to the 2005 Plan 10.38+ Mattel, Inc. 2010 Equity and Long-Term Compensation Plan (the "2010 Plan") 10.39+ Amendment No. 1 to the 2010 Plan 10.40+ Form of Grant Agreement as of August 1, 2005 for grants to employees of NonQualified Stock Options ("NQSOs") under...

  • Page 117
    ...to Employees under the 2010 Plan 10.46+ Form of Grant Agreement for Long-Term Incentive Program Performance-Based 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 118
    ... for May 18, 2007 Annual Grants to Outside Directors of NQSOs under the 2005 Plan Form of Grant Agreement for May 13, 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 Computation of Earnings to...

  • Page 119
    ... 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 120
    ...this report to be signed on its behalf by the undersigned, thereunto duly authorized. MATTEL, INC. Registrant By: /s/ KEVIN M. FARR Kevin M. Farr Chief Financial Officer Date: February 26, 2014 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that we, the undersigned directors and officers of...

  • Page 121
    Signature Title Date /s/ VASANT M. PRABHU Vasant M. Prabhu ANDREA L. RICH Andrea L. Rich Director February 26, 2014 /s/ Director February 26, 2014 /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 122
    ... Operations and Other (In thousands) Balance at End of Year Allowance for Doubtful Accounts: Year ended December 31, 2013 ...Year ended December 31, 2012 ...Year ended December 31, 2011 ...Allowance for Inventory Obsolescence: Year ended December 31, 2013 ...Year ended December 31, 2012 ...Year...

  • Page 123
    EXHIBIT 12.0 MATTEL, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Unaudited; in thousands, except ratios) 2013 2012 For the Year 2011 2010 2009 Earnings Available for Fixed Charges: Income from continuing operations before income taxes ...Add: Non-controlling interest ...

  • Page 124
    ...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(s) and I are responsible for establishing and maintaining disclosure controls and...

  • Page 125
    ... 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 26, 2014 By: /S/ KEVIN M. FARR Kevin M. Farr Chief Financial Officer...

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    ... Vice President, Global Brands Team - Fisher-Price (1) (2) (3) (4) Member, Executive Committee Christopher A. Sinclair, Chair Member, Audit Committee Christopher A. Sinclair, Chair Member, Compensation Committee Michael J. Dolan, Chair Member, Governance and Social Responsibility Committee...

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    ... 'n Play™, Team Hot Wheels®, Terrain Twister®, Total Control™, Trio®, TwirlinWhirlin'™, UNO®, View-Master® and Wheelies™ trademarks and trade dress are owned by Mattel, Inc. ©2011 Mattel, Inc. All Rights Reserved. American Girl®, Bitty Baby®, Felicity®, Girl of the Year®, Kanani...

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