Mattel 2015 Annual Report Download - page 91

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a new motion for clarification with the Appeals Court on January 21, 2015, due to the incorrect statement made by the reporting
judge of the Appeals Court, that the court-appointed expert analyzed the “accounting documents” of Yellowstone. On April 26,
2015, a decision on the motion for clarification was rendered. The Appeals Court ruled that the motion for clarification was
denied and imposed a fine on Mattel do Brasil equal to 1% of the value of the claims made for the delay caused by the motion.
On July 3, 2015, Mattel do Brasil filed a special appeal to the Superior Court of Justice based upon both procedural and
substantive grounds. This special appeal seeks to reverse the Appeals Court's decision of July 26, 2013, and to reverse the fine
as inappropriate under the law. This special appeal was submitted to the Appeals Court which must rule on its admissibility
before it is transferred to the Superior Court.
Yellowstone also filed a special appeal in February 2015, which was made available to Mattel do Brasil on October 7,
2015. Yellowstone's special appeal seeks to reverse the Appeals Court decision with respect to: (a) the limitation on
Yellowstone's loss of profits claim to the amount requested in the complaint, instead of the amount contained in the first court-
appointed experts report, and (b) the award of damages to Mattel do Brasil on the counterclaim, since the specific amount was
not requested in Mattel do Brasil's counterclaim brief.
On October 19, 2015, Mattel do Brasil filed its answer to the special appeal filed by Yellowstone and Yellowstone filed
its answer to the special appeal filed by Mattel do Brasil. The parties are awaiting the Appeals Court ruling on the admissibility
of the special appeals before they are transferred to the Superior Court.
Mattel believes that it is reasonably possible that a loss in this matter could range from $0 to approximately $12.3
million. The high end of this range, approximately $12.3 million, is based on the calculation of the current amount of the
damages (reported in the first court-appointed examination report submitted in the lawsuit), and loss of profits (indicated in the
complaint by Yellowstone), including interest, inflation, currency adjustments, plus attorney's fees. Mattel do Brasil will be
entitled to offset its counterclaim award of approximately $5.5 million, the current amount including inflation, and currency
adjustment, against such loss. The existence of procedural matters that will be addressed to the Superior Court of Justice adds
some uncertainty to the final outcome of the matter. Mattel do Brasil believes, however, that it has valid legal grounds for an
appeal of the Appeals Court decision and currently does not believe that a loss is probable for this matter. Accordingly, a
liability has not been accrued to date. Mattel do Brasil may be required by the Trial Court to place a bond or the full amount of
the damage award in escrow pending an appeal decision by the Superior Court.
Note 12—Segment Information
Description of Segments
Mattel, through its subsidiaries, sells a broad variety of toy products which are grouped into four major brand categories,
including the Construction and Arts & Crafts brand category, which was introduced in the second quarter of 2014:
Mattel Girls & Boys Brands—including Barbie® fashion dolls and accessories (“Barbie”), Monster High®, Disney
Classics®, Ever After High®, Little Mommy®, and Polly Pocket (collectively “Other Girls”), Hot Wheels® and
Matchbox® vehicles and play sets (collectively “Wheels”), and CARS®, Disney Planes™, BOOMco®, Radica®,
Toy Story®, Max Steel®, WWE® Wrestling, DC Comics™, and games and puzzles (collectively “Entertainment”).
Fisher-Price Brands—including Fisher-Price®, Little People®, BabyGear™, Laugh & Learn®, and Imaginext®
(collectively “Core Fisher-Price”), Thomas & Friends®, Dora the Explorer®, Mickey Mouse® Clubhouse, and
Disney Jake and the Never Land Pirates® (collectively “Fisher-Price Friends”), and Power Wheels®.
American Girl Brands—including Truly Me®, BeForever®, and Bitty Baby®. American Girl® Brands products are
sold directly to consumers via its catalog, website, and proprietary retail stores. Its children’s publications are also
sold to certain retailers.
Construction and Arts & Crafts Brands—including MEGA BLOKS®, RoseArt®, and Board Dudes®.
Mattel’s operating segments are: (i) North America, which consists of the US and Canada, (ii) International, and
(iii) American Girl. Factors considered in determining the operating segments include the nature of business activities, the
management structure directly accountable to the Chief Operating Decision Maker (“CODM”) for operating and administrative
activities, availability of discrete financial information, and strategic priorities within the organizational structure. These factors
correspond to the manner in which the CODM reviews and evaluates operating performance to make decisions about resources
to be allocated to these operating segments.
The North America and International segments sell products in the Mattel Girls & Boys Brands, Fisher-Price Brands, and
Construction and Arts & Crafts Brands categories, although some are developed and adapted for particular international
markets.