Mattel 2004 Annual Report Download - page 21

used as a special purpose entity in connection with these transactions. Under the European trade receivables
facility, the outstanding amount of receivables sold may not exceed Euro 60 million from February 1 through
July 31 of each year and may not exceed Euro 150 million at all other times. Pursuant to a letter agreement
between Societe Generale Bank Nederland N.V. and Mattel International Holdings B.V., Mattel France S.A.S.
and Mattel GmbH dated July 12, 2004, and effective June 25, 2004, the commitment termination date for the
European receivables facility was extended to June 24, 2005.
Government Regulations and Environmental Quality
Mattel’s toy products sold in the US are subject to the provisions of the Consumer Product Safety Act and
the Federal Hazardous Substances Act, 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. The
Consumer Product Safety Act and the Federal Hazardous Substances Act enable the Consumer Product Safety
Commission (“CPSC”) to exclude from the market consumer products that fail to comply with applicable
product safety regulations or otherwise create a substantial risk of injury, as well as articles that contain excessive
amounts of a banned hazardous substance. The CPSC may also require the recall and repurchase or repair of
articles that are banned. Similar laws exist in some states and cities and in many international markets.
Mattel maintains a quality control program to ensure compliance with various US federal, state and
applicable foreign product safety requirements. Notwithstanding the foregoing, there can be no assurance that all
of Mattel’s products are or will be free from defects or hazard-free. 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 7 “Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Factors That May Affect Future Results.”
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 websites that are directed toward children are subject to The Children’s Online Privacy Protection Act
of 1998. Mattel is subject to various other federal, state and local laws and regulations applicable to its business.
Mattel believes that it is in substantial compliance with these 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 with respect to the discharge or cleanup
of hazardous waste and compliance by those operations with environmental laws and regulations. See Item 8
“Financial Statements and Supplementary Data—Note 9 to the Consolidated Financial Statements—
Environmental.”
Employees
The total number of persons employed by Mattel and its subsidiaries at any one time varies because of the
seasonal nature of its manufacturing operations. At year end 2004, Mattel’s total number of employees was
approximately 25,000.
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