Mattel 2015 Annual Report Download - page 12

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8
Mattel also licenses a number of its trademarks and other property rights to others for use in connection with the sale of
their products. Mattel distributes some third-party finished products that are independently designed and manufactured.
Trademarks, Copyrights, and Patents
Most of Mattel’s products are sold under trademarks, trade names, and copyrights, and a number of these products
incorporate patented devices or designs. Trademarks, copyrights, and patents are significant assets of Mattel in that they
provide product recognition and acceptance worldwide.
Mattel customarily seeks trademark, copyright, and patent protection covering its products, and it owns or has
applications pending for US and foreign trademarks, copyrights, and patents covering many of its products. A number of these
trademarks, copyrights, and patents relate to product lines that are significant to Mattel’s business and operations. Mattel
believes its rights to these properties are adequately protected, but there can be no assurance that its rights can be successfully
asserted in the future or will not be invalidated, circumvented, or challenged.
Commitments
In the normal course of business, Mattel enters into contractual arrangements for future purchases of goods and services
to ensure availability and timely delivery and to obtain and protect Mattel’s right to create and market certain products. Certain
of these commitments routinely contain provisions for guarantees or minimum expenditures during the term of the contracts.
Current and future commitments for guaranteed payments reflect Mattel’s focus on expanding its product lines through
alliances with businesses in other industries. Additionally, Mattel routinely enters into noncancelable lease agreements for
premises and equipment used in the normal course of business.
Agreements to purchase inventory, services, and other items with terms extending through 2020 contain future minimum
payments totaling approximately $438 million. Licensing and similar agreements with terms extending through 2020 and
beyond contain provisions for future guaranteed minimum payments totaling approximately $411 million. Operating lease
commitments with terms extending through 2020 and beyond contain future minimum obligations totaling approximately $442
million. See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Commitments” and Part II, Item 8 “Financial Statements and Supplementary Data—Note 11 to the Consolidated Financial
Statements—Commitments and Contingencies.”
Backlog
Mattel ships products in accordance with delivery schedules specified by its customers, which usually request delivery
within three months. In the toy industry, orders are subject to cancellation or change at any time prior to shipment. In recent
years, a trend toward just-in-time inventory practices in the toy industry has resulted in fewer advance orders and therefore less
backlog of orders. Mattel believes that the amount of backlog orders at any given time may not accurately indicate future sales.
Financial Instruments
Currency exchange rate fluctuations may impact Mattel’s results of operations and cash flows. Mattel seeks to mitigate
its exposure to foreign exchange risk by monitoring its foreign currency transaction exposure for the year and partially hedging
such exposure using foreign currency forward exchange contracts primarily to hedge its purchase and sale of inventory and
other intercompany transactions denominated in foreign currencies. These contracts generally have maturity dates of up to 18
months. In addition, Mattel manages its exposure to currency exchange rate fluctuations through the selection of currencies
used for international borrowings. Mattel does not trade in financial instruments for speculative purposes.
For additional information regarding foreign currency contracts, see “International Segment” above, Part II, Item 7A
“Quantitative and Qualitative Disclosures About Market Risk,” and Part II, Item 8 “Financial Statements and Supplementary
Data—Note 9 to the Consolidated Financial Statements—Derivative Instruments.”
Seasonal Financing
See Part II, Item 8 “Financial Statements and Supplementary Data—Note 5 to the Consolidated Financial Statements—
Seasonal Financing and Debt.”
Government Regulations and Environmental Quality
Mattel’s products sold in the US are subject to the provisions of the Consumer Product Safety Act, as amended by the
Consumer Product Safety Improvement Act of 2008, the Federal Hazardous Substances Act, and the Consumer Product Safety
Improvement Act of 2008, and may also be subject to the requirements of the Flammable Fabrics Act or the Food, Drug, and