Mattel 2014 Annual Report Download - page 16

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purchase and sale of inventory and other intercompany transactions denominated in foreign currencies. These
contracts generally have maturity dates of up to 18 months. 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 speculative purposes.
For additional information regarding foreign currency contracts, see “International Segment” above, Part II,
Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” and Part II, Item 8 “Financial
Statements and Supplementary Data—Note 9 to the Consolidated Financial Statements—Derivative
Instruments.”
Seasonal Financing
See Part II, Item 8 “Financial Statements and Supplementary Data—Note 5 to the Consolidated Financial
Statements—Seasonal Financing and Debt.”
Government Regulations and Environmental Quality
Mattel’s products sold in the US are subject to the provisions of the Consumer Product Safety Act, as
amended by the Consumer Product Safety Improvement Act of 2008, the Federal Hazardous Substances Act, and
the Consumer Product Safety Improvement Act of 2008, and may also be subject to the requirements of the
Flammable Fabrics Act or the Food, Drug, and Cosmetics Act and the regulations promulgated pursuant to such
statutes. These statutes and the related regulations ban from the market consumer products that fail to comply
with applicable product safety laws, regulations, and standards. The Consumer Product Safety Commission may
require the recall, repurchase, replacement, or repair of any such banned products or products that otherwise
create a substantial risk of injury and may seek penalties for regulatory noncompliance under certain
circumstances. Similar laws exist in some US states. Mattel believes that it is in substantial compliance with
these federal and state laws and regulations.
Mattel’s products sold worldwide are subject to the provisions of similar laws and regulations in many
jurisdictions, including the European Union and Canada. Mattel believes that it is in substantial compliance with
these laws and regulations.
Mattel maintains a quality control program to help ensure compliance with applicable product safety
requirements. Nonetheless, Mattel has experienced, and may in the future experience, issues in products that
result in recalls, withdrawals, or replacements of products. A product recall could have a material adverse effect
on Mattel’s results of operations and financial condition, depending on the product affected by the recall and the
extent of the recall efforts required. A product recall could also negatively affect Mattel’s reputation and the sales
of other Mattel products. See Item 1A “Risk Factors.”
Mattel’s advertising is subject to the Federal Trade Commission Act, The Children’s Television Act of
1990, the rules and regulations promulgated by the Federal Trade Commission, and the Federal Communications
Commission, as well as laws of certain countries that regulate advertising and 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 national regulations. Mattel believes that it is in substantial
compliance with these laws and regulations.
Mattel’s worldwide operations are subject to the requirements of various environmental laws and
regulations in the jurisdictions where those operations are located. Mattel believes that it is in substantial
compliance with those laws and regulations. Mattel’s operations are from time to time the subject of
investigations, conferences, discussions, and negotiations with various federal, state and local environmental
agencies within and outside the US with respect to the discharge or cleanup of hazardous waste. Mattel is not
aware of any material cleanup liabilities.
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