Mattel 2011 Annual Report Download - page 25

This Annual Report on Form 10-K includes forward-looking statements within the meaning of the Act. Forward-
looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They
often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or
words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “may,” “aims,”
“intends,” or “projects.” A forward-looking statement is neither a prediction nor a guarantee of future events or
circumstances, and those future events or circumstances may not occur. Investors should not place undue reliance
on the forward-looking statements, which speak only as of the date of this Form 10-K. These forward-looking
statements are all based on currently available operating, financial, economic and competitive information and
are subject to various risks and uncertainties. The Company’s actual future results and trends may differ
materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed
below.
Factors That May Affect Future Results
If Mattel does not successfully identify or satisfy consumer preferences, its 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, digital media, 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. These
challenges are intensifying due to recent trends towards shorter life cycles for individual toy products, the
phenomenon of children outgrowing traditional 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.
High levels of competition make it difficult to achieve, maintain, or build upon the success of Mattel’s
brands, products, and product lines.
Mattel faces competitors who are also constantly monitoring and attempting to anticipate consumer tastes,
seeking ideas which will appeal to consumers and introducing new products that compete with Mattel’s products.
In addition, competition for access to entertainment properties could lessen Mattel’s ability to secure, maintain,
and renew popular licenses to entertainment products developed by other parties and licensed to Mattel or require
Mattel to pay licensors higher royalties and higher minimum guaranteed payments in order to obtain or retain
these licenses. If demand for Mattel’s brands, products and product lines is reduced as a result of these factors,
Mattel’s results of operations may be adversely affected.
Inaccurately anticipating changes and trends in popular culture, media and movies, fashion, or technology
can negatively affect Mattel’s sales.
Successful movies and characters in children’s literature affect play preferences, and many toys depend on
media-based intellectual property licenses. Media-based licenses can cause a line of toys to gain immediate
success among children, parents, or families. Trends in media, movies, and children’s characters change swiftly
and contribute to the transience and uncertainty of play preferences. In addition, certain developments in the
entertainment industry, including labor strikes, could cause delay or interruption in the release of new movies and
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