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AKC Chairman's Report

New York, NY - Throughout our 120 year history, The American Kennel Club has not only established its reputation as the world's leading purebred dog registry, but has developed a strong brand identity that represents the pinnacle of knowledge and care of purebred dogs. In a new branding initiative, AKC has begun to cultivate the value of our brand through a licensing program that will result in a variety of products bearing AKC trademarks.

Look around you. Licensed products are everywhere. You may even be wearing one right now! When you walk into a Home Depot and see Ralph Lauren paint, you've seen a licensed product. Of course Ralph Lauren hasn't made that paint. He has licensed his name to a paint manufacturer who knows that there is a value and quality associated with the name Ralph Lauren. All licensors, including AKC, have final approval over the products that bear their name and trademarks.

The success of a licensing program lies in the brand equity of the licensor. A licensing program carries the benefits of a revenue stream through guaranteed advances and royalties on net sales. These funds will assist AKC in continuing its efforts on behalf of the sport and the general dog-owning public. As licensor, AKC has chosen 4Kids Entertainment to act as our licensing agent in managing our property and identifying merchandisers as potential licensees.

Best known for its introduction of Pokemon products in the U.S. marketplace, 4Kids Entertainment also manages a number of popular brands, including Cabbage Patch, Nintendo and Yu-Gi-Oh! Our goal is to build a line of luxurious, classic, and stylish products for dogs and dog lovers, which will reflect the AKC's history, expertise and extensive art collection. Not only will this program help to build the AKC brand, but it will familarize people with AKC, our goals and purpose.

4Kids is currently researching and developing a unique line of AKC licensed products consisting of items for dogs and people. Among the products they are pursuing are:

Toys, treats, collars, leads, beds, dishes, and apparel for dogs
Paper products (e.g. calendars, notecards, journals)
Children's toys (e.g. games and plush) Men's and women's accessories (e.g. scarves, ties, jewelry, watches, bags)
Home collection products (e.g. pillows, blankets, book ends, lamps, tableware, collectible ornaments, bronzes, candles, throw rugs, pictures frames.)
A full line of travel gear for dogs including shoulder bags, roller bags, backpacks, and car accessories to make the ride more comfortable for owner and dog.

The first licensed products currently in development are a board game from International Playthings called "Best in Show," large and small-sized ornaments to be sold during the Christmas holiday season, a line of Steiff plush purebred dogs and puppies to be sold exclusively at FAO Schwarz, as well as a line of designer dog apparel also exclusive to FAO Schwarz which will include tartan jackets, coats and more.

Throughout the years AKC has turned down many requests to endorse all kinds of products already on the market from people seeking a canine version of the "Good Housekeeping Seal of Approval." There is a distinction between a licensed product and an endorsed product. All AKC licensed products will be exclusive AKC branded products; the functionality and attributes will create an original product. For example, a dog collar uniquely designed to represent AKC's sensibility, branded with the AKC logo. In addition to styling - colors, overall look - the product may also have a special function unique to AKC, such as a little leather bi-fold on the dog collar for the owner's keys and money. An endorsement would be an existing product with AKC stamped on the hang-tag. The styling and design of an endorsed product would not be exclusive to AKC.

We look forward to introducing the tradition and legacy of the AKC to dog lovers everywhere, with our new licensing program. We will create increased brand awareness for the AKC as well as an alternative revenue stream to complement earnings from current programs. Look for the launch of many AKC licensed products this fall in stores near you.