Mattel 2010 Annual Report Download - page 27

profitable products or services. In addition, Mattel has certain anti-takeover provisions in its bylaws that may
make it more difficult for a third party to acquire Mattel without its consent, which may adversely affect Mattel’s
stock price.
Mattel relies extensively on information technology in its operations, and any material failure, inadequacy,
interruption or security failure of that technology could harm its ability to effectively operate its business.
Mattel relies extensively on information technology systems, many of which are managed by third-party
service providers, across its operations, including for management of its supply chain, sale and delivery of its
products, and various other processes and transactions. Mattel’s ability to effectively manage its business and
coordinate the production, distribution, and sale of its products depends significantly on the reliability and
capacity of these systems and third-party service providers. The failure of these systems to operate effectively,
problems with transitioning to upgraded or replacement systems, or a breach in security of these systems could
cause delays in product sales and reduced efficiency of its operations, and significant capital investments could
be required to remediate the problem.
The level of returns on pension plan assets and the actuarial assumptions used for valuation purposes
could affect Mattel’s earnings in future periods. Changes in standards and government regulations could
also affect its pension plan expense and funding requirements.
Assumptions used in determining projected benefit obligations and the fair value of plan assets for Mattel’s
pension plan are evaluated by Mattel in consultation with outside actuaries. In the event that Mattel determines
that changes are warranted in the assumptions used, such as the discount rate, expected long term rate of return,
or health care costs, its future pension benefit expenses could increase or decrease. Due to changing market
conditions or changes in the participant population, the actuarial assumptions that Mattel uses may differ from
actual results, which could have a significant impact on its pension and postretirement liability and related costs.
Funding obligations are determined based on the value of assets and liabilities on a specific date as required
under relevant government regulations for each plan. Future pension funding requirements, and the timing of
funding payments, could be affected by legislation enacted by the relevant governmental authorities.
If Mattel’s goodwill becomes impaired, Mattel’s results of operations could be adversely affected.
Mattel tests goodwill for impairment annually, or more often if an event or circumstance indicates that an
impairment may have occurred. For purposes of evaluating whether goodwill is impaired, goodwill is allocated
to various reporting units, which are either at the operating segment level or one reporting level below the
operating segment. Declines in profitability of Mattel’s reporting units may impact the fair value of its reporting
units, which could result in a write-down of its goodwill, negatively impacting its results of operations.
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If any of the risks and uncertainties described in the cautionary factors listed above actually occurs, Mattel’s
business, financial condition and results of operations could be significantly and adversely affected. The factors
listed above are not exhaustive. Other sections of this Annual Report on Form 10-K include additional factors
that could materially and adversely impact Mattel’s business, financial condition and results of operations.
Moreover, Mattel operates in a very competitive and rapidly changing environment. New factors emerge from
time to time, and it is not possible for management to predict the impact of all of these factors on Mattel’s
business, financial condition or results of operations, or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements. Given these
risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results.
Any or all of the forward-looking statements contained in this Annual Report on Form 10-K and any other public
statement made by Mattel or its representatives may turn out to be wrong. Mattel expressly disclaims any
obligation to update or revise any forward-looking statements, whether as a result of new developments or
otherwise.
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