Mattel

Mattel Inc.

Type	Public (NASDAQ: MAT)
Industry	Toys and games
Founded	1945
Headquarters	El Segundo, California, U.S.
Key people	Robert A. Eckert, Chairman and CEO. Kevin M. Farr, CFO.
Revenue	US$5.92 Billion (FY 2008)[1]
Operating income	US$567 Million (FY 2008)[1]
Net income	US$380 Million (FY 2008)[1]
Total assets	US$4.68 Billion (FY 2008)[2]
Total equity	US$2.12 Billion (FY 2008)[2]
Employees	31,000 (2008)[3]
Website	www.mattel.com

Mattel headquarters in El Segundo

Mattel Inc. (pronounced /məˈtɛl/; NASDAQ: MAT) is the world's largest toy company based on revenue.^[4] The products it produces include Barbie dolls, Hot Wheels and Matchbox cars, Masters of the Universe, American Girl dolls, board games, and, in the early 1980s, video game consoles. The company's name is derived from Harold "Matt" Matson and Elliot Handler, who founded the company in 1945. Handler's wife, Ruth Handler, later became president, and is credited with establishing the Barbie product line for the company in 1959. Mattel closed its last American factory, originally part of the Fisher-Price division, in 2002. By 2007, Mattel's toys were primarily manufactured by subcontractors in Asia. On Friday, September 3, 2010 a mini "Flash Crash" appears to have occurred in Mattel shares which plunged 22% in pre-market trade for no apparent reason, only to recover shortly thereafter.^[5]

Corporate governance

Board of directors

Current members of the board of directors of Mattel Inc. are:

• Robert A. Eckert, chairman
• Tully Friedman
• Michael Dolan
• Vasant Prabhu
• Dominic Ng
• Andrea Rich
• Ronald Sargent
• Christopher A. Sinclair
• G. Craig Sullivan
• John Vogelstein
• Kathy Whit

Corporate responsibility

Mattel announced its Global Manufacturing Principles (GMP)^[6] in 1997, designed to set safe and fair treatment of employees.

In 2003, Mattel issued its first Global Reporting Initiative report^[7] to publicly assess the success of the GMP and commit to improvements. Simultaneous to this report, Mattel issued their 2004 Corporate Responsibility^[8] report, the first to be issued by a toy company. From both the 2004 and 2007 reports, a majority percentages of Mattel-owned facilities are regularly audited, it can be seen that Mattel has room to expand its supply chain auditing.^[9]

Following the high-profile recalls of 2007, Mattel appointed Geoff Massingberd as Vice President of Corporate Responsibility,^[10] to lead development and implementation of programs business integrity.

The Learning Company acquisition

In May 1999, at the height of the dot-com bubble, Mattel acquired The Learning Company for $3.5 billion in stock^[11] or 4.5 times annual sales.^[12] The Learning Company was considered at the time one of the leading entertainment and educational software companies, owner of such titles as Reader Rabbit, Carmen Sandiego, Myst, Riven, and National Geographic,^[13] but had in 1997 accumulated losses of $475 million.^[14] Mattel thought that this acquisition would help business diversification by giving the company a leading position in the market of consumer software^[15]. Mattel CEO Jill Barad expected to have direct internet sales for all Mattel's toys and predicted that Mattel sales over the Internet would reach $1 billion in a few years.^[14]

In the third quarter of 1999, Mattel expected The Learning Company to post $50 million in profits but in reality it posted losses of $105 million.^[12] Despite this loss, CEO Jill Barad continued to be optimistic. Things worsened in the fourth quarter, as The Learning Company's pre-tax losses reached $183 million. For the year The Learning Company's pre-taxes losses were $206 million^[16], on revenues of $750 million.^[15] The Learning Company's losses depressed Mattel's 1999 profits and as a result, Mattel posted a $82 million net loss compared to a $206 million net income in 1998.^[16] Mattel also warned that it would take a revamping charge of $75 million to $100 million in the first quarter of 2000 because of The Learning Company.^[17]

By 2000, Mattel was losing $1.5 million a day with The Learning Company^[18], and Mattel's stock price (which reached a high of $45 in March 1998) traded at $11 in February 2000.^[17] Under pressure, on February 3, Mattel's CEO Jill Barad resigned but received a $50 million severance package.^[19] In April Mattel announced that it was selling The Learning Company; analysts predicted that The Learning Company could be sold for $400 million, then for $200 million.^[11] In the end, in October, The Learning Company was sold to Gores Technology for nothing other than a percentage of The Learning Company's future profits.^[19] In addition Mattel fired 10% of its workforce to further cut costs.^[19] As a result of this restructuring Mattel posted a net loss of $430 million for the year 2000.^[20]

Toxic toys scandal

On August 2, 2007, Mattel's Fisher-Price subsidiary recalled almost one million Chinese-made toys, including Dora the Explorer and Sesame Street toys, because of potential hazards from parts of the toys which were colored using lead-based paint that may have exceeded the US Federal limit of 600 part per million^[21][22]

In worst cases, Mattel toys' lead in paint was found to be 180 times the limit.^[23] The paint on the toys was up to 11% lead, or 110,000 parts per million. U.S. Federal law allows just 0.06% lead, or 600 parts per million. Children who suck on or ingest toys or jewelry with high lead content may be poisoned, which can lead to learning and behavior problems, even death in some cases.^[23]

On August 14, 2007, Mattel recalled over 18 million products because it was possible that they could pose a danger to children due to the use of strong magnets that may detach. Strong small magnets could be dangerous to the children if two or more were ingested, attracting each other in the intestines and causing damage. Some instances were reported. A child swallowed a Polly Pocket toy magnet and had to undergo a surgery. At the time of the recall, none of the American or European safety legislation and standards addressed the specific hazard of strong magnets. Some of the products had been available in U.S. stores since 2003, during which time Mattel did not consider them harmful enough to warrant a recall. After incidents with similar magnetic toy parts being swallowed, causing perforation of the intestines, Mattel re-wrote its policy on magnets, finally issuing this recall in August 2007.^[24]

Recalled items included die-cast Cars character, Sarge, made between May and July 2007, found to have been manufactured using paint containing higher than acceptable levels of lead (436,000 recalled globally), 7.1 million Polly Pocket toys produced before November 2006; 600,000 Barbie and Tanner Playsets; 1 million Doggie Daycare; Shonen Jump's One Piece; and thousands of Batman Manga toys due to exposed magnets.^[24] 18.2 million items were recalled in total.

Zhang Shuhong, co-owner of the Lee Der Toy Company, which had made a number of toys for Mattel, committed suicide by hanging himself at one of his company's factories in Foshan on August 11, 2007, according to authorities.^[25] In the factory's loading bay, the BBC's Quentin Somerville found boxes of toys made for Mattel and Fisher-Price going nowhere. The Lee Der business was closing for good.^[26]

On September 4, 2007, Mattel recalled a further 530,000 affected toys in the United States — and 318,000 outside the United States — after its intensive testing found that the Chinese-made products contained levels of lead in painted parts that were above the acceptable limit set by the company. This third recall in a month included accessories for Barbie dolls and Fisher-Price toys.^[27]

June 5, 2009 the Consumer Product Safety Commission fined Mattel and its Fisher-Price division $2.3 million dollars for violation of Code 16 of Federal Regulations CFR 1303, the Federal lead paint ban. While Mattel agreed to the fine, no wrong doing was admitted on the companies part.^[28]

Effect on Mattel

Among others, Fortune magazine rated the recall of Mattel's products as one of the 'Dumbest Moments' in business for 2007^[29]

Mattel’s response

Mattel has increased audits and testing of all products. In August 2007, CEO Robert Eckert said, “We were let down, and so we let you down,” referring to the three massive product recalls for lead contamination of paint.

On September 21, 2007, Mattel’s Executive Vice-President for worldwide operations, Thomas Debrowski, traveled to Beijing. In a meeting with China’s product safety chief, Li Chanjiang, Debrowski took full responsibility for the magnet recalls and said that, “vast majority of those products that were recalled were the result of a design flaw in Mattel’s design, not through a manufacturing flaw in China’s manufacturers.”^[30][31][32] Reading a prepared text, he continued, “Mattel takes full responsibility for these recalls and apologises personally to you, the Chinese people, and all of your customers who received the toys.”^[33]

Partnerships

In March 2005 Mattel partnered with Oasys Mobile to extend their market into the mobile field. The partnership was announced on March 16, 2005 and gave Oasys Mobile the right to produce games on such licenses as UNO, Ker Plunk!, Toss Across, and Rock'em Sock'em Robots.^[34] Since then the two have worked together to add such licenses as the Barbie, Magic 8 Ball and Max Steel IPs to Oasys' portfolio. These subsequent partnerships also extended the territories in which they could market their products. The new markets included Japan and Taiwan for the Barbie license and Japan, China, Korea, India, and the Philippines for the UNO license.^[35]

Lawsuits

Some of the lawsuits involving Mattel are as follows:

• Keller Rohrback L.L.P. Files Suit Against Mattel, Inc. for Selling Toys Covered in Lead Paint^[36]
• Mattel Lawsuit Seeks Lead Tests for Children.^[37]Class action wants toymaker to pay for medical testing.
• Family files suit against maker of Polly Pocket after son undergoes surgery^[38]
• Mattel against Winx Club.
• Shareholders File Lawsuit Against Mattel Over Toy Recalls
• Mattel sued the band Aqua, saying they violated the Barbie trademark and turned Barbie into a sex object, referring to her as a "Blonde Bimbo." The lawsuit was finally rejected in 2002.^[39]
• Mattel is currently involved in legal proceedings with Super Duper Publications in an attempt to suppress Super Duper's use of the words "and say" in their therapy products. Super Duper Publications specializes in materials for use in special education classrooms but Mattel accuses Super Duper of trying the dilute their "See N' Say" product line.^[40]
• Mattel won the legal battle against Super Duper Publications and was awarded $400,000 in penalties. They are now seeking millions of dollars to pay for their legal expenses and costs.^[41]

• Mattel Inc. defeated MGA Entertainment Inc. in a conflict over the creation of the Bratz doll line. The U.S. District Court in Riverside ruled that Bratz designer CEO, Carter Bryant, violated the terms of his exclusivity contract with Mattel. It was decided that he created the Bratz doll concept while he was working for Mattel. This decision will lead to the possibility for Mattel to claim right to the Bratz doll line as well as the right to receive damages.^[42]
• Mattel Inc VS Playing Mantis. In the mid 1990's Playing Mantis released a line of rechargeable cars which were a direct copy of the 1970s Mattel Hotwheels Sizzlers with the same name. The merchandise was quickly removed from store shelves. Mattel won the case, however the payout from Playing Mantis remains unknown. Since Mattel has re-released its own line of Sizzlers through an exclusive deal with Target Stores.

Products

Toys

Games

Video game consoles, home computers and handheld electronic games

• Intellivision
• Intellivision II
• Intellivision III (unreleased)
• Intellivision IV (unreleased)
• Aquarius
• HyperScan

In addition, Mattel distributed Nintendo's products in Canada from 1986 to 1990, the UK until 1990 when Nintendo Computer Entertainment UK was established, and Australia from 1987 to early 1994 when Hiroshi Yamauchi opened Nintendo Australia Pty Ltd, Nintendo's only privately owned subsidiary and had Susumu Tanaka from Nintendo UK Ltd and Graham Kerry from Mattel Australia Pty Ltd as the first Managing Directors of the subsidiary.

Mattel's international revenue accounts for 49% of its gross sale in 2007, coming from regions like Europe, Latin America and Asia.

Mattel's International Sales Revenue by Geographical Regions in 2007^[43]

In 2008 Mattel was honored at the 59th Annual Technology & Engineering Emmy Awards for pioneering the development of handheld video games with its Mattel Electronics sports titles Football and Auto Race, both published in the late 1970s.

See also

• 2007 Chinese export recalls
• Toy
• Toy safety
• SCS
• Hasbro
• Panini Group

References

External links

• Mattel
• Mattel Toys Pictures of many toys at Figure-archive.net