Mattel 2001 Annual Report Download - page 22

March 31, 2000, and the consolidated financial statements were reclassified to segregate the net
investment in, and the liabilities and operating results of the Consumer Software segment.
(b) Consolidated financial information for 1997 has been restated retroactively for the effects of the March
1997 merger with Tyco Toys, Inc. (‘‘Tyco’’), accounted for as a pooling of interests.
(c) Represents income from continuing operations before interest expense and provision for income taxes.
(d) Per share data reflect the retroactive effect of the mergers with Learning Company and Tyco in 1999 and
1997, respectively.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Factors That May Affect Future Results
(Cautionary Statement Under the Private Securities Litigation Reform Act of 1995)
Certain written and oral statements made or incorporated by reference from time to time by Mattel or its
representatives in this Annual Report on Form 10-K, other filings or reports filed with the Securities and
Exchange Commission, press releases, conferences, or otherwise, are ‘‘forward-looking statements’’ within the
meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to,
statements about sales levels, restructuring, special charges, other non-recurring charges, cost savings, operating
efficiencies and profitability. Mattel is including this Cautionary Statement to make applicable and take
advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any such
forward-looking statements. Forward-looking statements include any statement that may predict, forecast,
indicate, or imply future results, performance, or achievements. Forward-looking statements can be identified
by the use of terminology such as ‘‘believe,’’ ‘‘anticipate,’’ ‘‘expect,’’ ‘‘estimate,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’
‘‘project,’’ ‘‘continue,’’ ‘‘plans,’’ ‘‘aims,’’ ‘‘intends,’’ ‘‘likely,’’ or other similar words or phrases. Management
cautions you that forward-looking statements involve risks and uncertainties that may cause actual results to
differ materially from the forward-looking statements. In addition to the important factors detailed herein and
from time to time in other reports filed by Mattel with the Securities and Exchange Commission, including
Forms 8-K, 10-Q and 10-K, the following important factors could cause actual results to differ materially from
past results or those suggested by any forward-looking statements.
Competition and New Product Introductions
Mattel’s business and operating results depend largely upon the appeal of its toy products. Consumer
preferences are continuously changing. In recent years there have been trends towards shorter life cycles for
individual products, the phenomenon of children outgrowing toys at younger ages—particularly in favor of
interactive and high technology products—and an increasing use of high technology in toys. In addition, Mattel
competes with many other companies, both large and small, which means that Mattel’s market position is
always at risk. Mattel’s ability to maintain its current market share, and increase its market share or establish
market share in new product categories, will depend on Mattel’s ability to satisfy consumer preferences,
enhance existing products, develop and introduce new products, and achieve market acceptance of such
products. If Mattel does not successfully meet these challenges in a timely and cost-effective manner, demand
for its products will decrease and Mattel’s results of operations will suffer.
Seasonality, Managing Production and Predictability of Orders
Mattel’s business is subject to risks associated with the underproduction of popular toys and the
overproduction of toys that do not match consumer demand. Sales of toy products at retail are seasonal, with a
majority of retail sales occurring during the period from September through December. As a result, Mattel’s
annual operating results will depend, in large part, on sales during the relatively brief holiday season. Retailers
are attempting to manage their inventories better, requiring Mattel to ship products closer to the time the
retailers expect to sell the products to consumers. This in turn results in shorter lead times for production.
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