Mattel 2006 Annual Report Download - page 24

Item 1A. Risk Factors.
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 SEC, 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 and inventory
levels; brand and customer management programs; increased competition; initiatives to promote revenue growth;
globalization initiatives; restructuring and financial realignment plans; special charges and other non-recurring
charges; initiatives aimed at anticipated cost savings; initiatives to invigorate the Barbie®brand, enhance
innovation, improve the execution of the core business, leverage scale, extend brands, catch new trends, create
new brands and enter new categories, develop people, improve productivity, simplify processes, maintain
customer service levels and improve supply chain; integration of Radica Games Limited; operating efficiencies;
capital and investment framework (including statements about free cash flow, seasonal working capital,
debt-to-total capital ratios, capital expenditures, strategic acquisitions, dividends and share repurchases); cost
pressures and increases; advertising and promotion spending; profitability; price increases, retail store openings
and the impact of recent organizational changes. 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. Except
for historical matters, the matters discussed in this Annual Report on Form 10-K and other statements or filings
made by Mattel from time-to-time may be forward-looking statements. 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 SEC, 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.
If Mattel does not successfully satisfy consumer preferences, enhance existing products, develop and
introduce new products and achieve consumer acceptance of those products, Mattel’s results of operations
may be adversely affected.
Mattel’s business and operating results depend largely upon the appeal of its toy products. Consumer
preferences, particularly among end users of Mattel’s products–children–are continuously changing. Significant,
sudden shifts in demand are caused by “hit” toys and trends, which are often unpredictable. Mattel offers a
diverse range of products for children of all ages and families that includes, among others, toys for infants and
preschoolers, girls’ toys, boys’ toys, youth electronics, hand-held and other games, puzzles, educational toys,
media-driven products and fashion-related toys. Mattel competes domestically and internationally with a wide
range of large and small manufacturers, marketers and sellers of toys, video games, consumer electronics and
other play products, as well as retailers, which means that Mattel’s market position is always at risk. Mattel’s
ability to maintain its current product sales, and increase its product sales or establish product sales with new,
innovative toys, will depend on Mattel’s ability to satisfy play preferences, enhance existing products, develop
and introduce new products, and achieve market acceptance of these products. Competition is intensifying due to
recent trends towards shorter life cycles for individual toy products, the phenomenon of children outgrowing toys
at younger ages and an increasing use of more sophisticated technology in toys. If Mattel does not successfully
meet the challenges outlined above in a timely and cost-effective manner, demand for its products could decrease
and Mattel’s revenues, profitability and results of operations may be adversely affected.
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