Mattel 2013 Annual Report Download - page 16

countries where Mattel has no direct presence. Mattel also has retail outlets in Latin America and Europe that
serve as outlets for its products. American Girl products are sold directly to consumers, and its children’s
publications are also sold to certain retailers. Mattel has sixteen American Girl retail stores: American Girl Place
in Chicago, Illinois, Los Angeles, California, and New York, New York, and American Girl stores in Alpharetta,
Georgia, Bloomington, Minnesota, Chesterfield, Missouri, Columbus, Ohio, Dallas, Texas, Houston, Texas,
Lone Tree, Colorado, Lynnwood, Washington, McLean, Virginia, Miami, Florida, Natick, Massachusetts,
Overland Park, Kansas, and Palo Alto, California, each of which features children’s products from the American
Girl segment. American Girl also has a retail outlet in Oshkosh, Wisconsin that serves as an outlet for its
products. Mattel also plans to open retail stores in Orlando, Florida 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 approximately 36% of worldwide consolidated net sales. Within countries in
the International segment, there is also a concentration of sales to certain large customers that do not operate in
the US, none of which exceed 10% of net sales. The customers and the degree of concentration vary depending
upon the region or nation. See Item 1A “Risk Factors” and Part II, Item 8 “Financial Statements and
Supplementary Data—Note 12 to the Consolidated Financial Statements—Segment Information.”
Licenses and Distribution Agreements
Mattel has license agreements with third parties that permit Mattel to utilize the trademark, characters, or
inventions of the licensor in products that Mattel sells. A number of these licenses relate to product lines that are
significant 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 Mickey Mouse, Disney Princess, Jake and the Never
Land Pirates, Planes, CARS and Toy Story from Pixar, Winnie the Pooh®, and certain Disney films and
television properties), Viacom International, Inc. relating to its Nickelodeon®properties (including Dora the
Explorer and Bubble Guppies®), Warner Bros. Consumer Products (including Batman, Superman®, Justice
League®, and Green Lantern®), and WWE Wrestling.
Royalty expense for 2013, 2012, and 2011 was $246.9 million, $240.2 million, and $262.4 million,
respectively. See “Commitments” and Part II, Item 8 “Financial Statements and Supplementary Data—Note 11
to the Consolidated Financial Statements—Commitments and Contingencies.”
Mattel also licenses a number of its trademarks and other property rights to others for use in connection with
the sale of their products. Mattel distributes some third-party finished products that are independently designed
and manufactured.
Trademarks, Copyrights and Patents
Most of Mattel’s products are sold under trademarks, trade names, and copyrights, and a number of these
products incorporate patented devices or designs. Trademarks, copyrights, and patents are significant assets of
Mattel in that they provide product recognition and acceptance worldwide.
Mattel customarily seeks trademark, copyright, and patent protection covering its products, and it owns or
has applications pending for US and foreign trademarks, copyrights, and patents covering many of its products. A
number of these trademarks, copyrights, and patents relate to product lines that are significant to Mattel’s
business and operations. Mattel believes its rights to these properties are adequately protected, but there can be
no assurance that its rights can be successfully asserted in the future or will not be invalidated, circumvented, or
challenged.
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