SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: July 29, 1994
MATTEL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 001-05647 95-1567322
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
333 Continental Boulevard, El Segundo, California 90245-5012
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 252-2000
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N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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Response to comments regarding additional disclosures
as requested by the Securities and Exchange Commission
in its comment letter dated July 15, 1994.
Commitments and Contingencies - Foreign Currency Contracts
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The following tables detail the Company's foreign currency
positions by type of contract and by major currency as of
December 31, 1993. Forward contracts to sell and purchase
currencies were entered into in order to hedge the settlement of
intercompany receivables and payables arising in connection with
transfers of finished goods inventories between affiliates. Swap
contracts to purchase and sell U.S. dollars and foreign
currencies were entered into to hedge intercompany payables
arising from short-term loans and advances among affiliates. The
contracts thus relate to specific exposures and were not entered
into in an attempt to generate profits. The Company held no cash
instruments which were subject to its hedging program.
The following forward contracts, by which the Company
sold/purchased currencies, were outstanding as of December 31,
1993:
<TABLE>
<CAPTION>
Contract
Currency Amounts
Currency Sold Purchased (U.S. $000's)
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<S> <C> <C>
British pounds sterling U.S. dollars $ 34,913
Italian lira U.S. dollars 30,582
Canadian dollars U.S. dollars 44,924
Dutch guilders U.S. dollars 8,950
Spanish pesetas U.S. dollars 10,736
French francs U.S. dollars 32,145
German deutschemarks U.S. dollars 43,798
Other under $5,000 U.S. dollars 9,585
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Total forward contracts
to purchase U.S. dollars $ 215,633
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U.S. dollars Hong Kong dollars $ 13,566
U.S. dollars Malaysian ringgits 61,311
British pounds sterling Italian lira 6,751
French francs Italian lira 16,576
German deutschemarks Italian lira 21,017
Other under $5,000 Italian lira 8,361
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Total forward contracts
to purchase foreign currencies $ 127,582
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</TABLE>
The following swap contracts, by which the Company purchased
foreign currencies, were outstanding as of December 31, 1993:
<TABLE>
<CAPTION>
Contract
Currency Amounts
Currency Sold Purchased (U.S. $000's)
- - ------------------------- -------------------- -------------
<S> <C> <C>
U.S. dollars German deutschemarks $ 77,330
U.S. dollars Swiss francs 5,212
U.S. dollars Canadian dollars 6,721
U.S. dollars Other under $5,000 2,527
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Total swaps into
foreign currencies $ 91,790
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</TABLE>
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The following swap contracts, by which the Company sold
foreign currencies, were outstanding as of December 31, 1993:
<TABLE>
<CAPTION>
Contract
Currency Amounts
Currency Sold Purchased (U.S. $000's)
- - ------------------------- -------------------- -------------
<S> <C> <C>
French francs U.S. dollars $ 17,794
British pounds sterling U.S. dollars 16,346
Other under $5,000 U.S. dollars 6,194
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Total swaps into U.S. dollars $ 40,334
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</TABLE>
The amount of $219.4 million disclosed in Note 7, page 47, of
Exhibit 13.0 to the Company's Annual Report on Form 10-K is
comprised of the sum of contract values for the above forward
contracts and swaps to acquire foreign currencies. The amount of
$256.0 million disclosed in Note 7 is comprised of the sum of
contract values for the above forward contracts and swaps to
acquire U.S. dollars.
The Company's Corporate Treasury function is responsible for
coordinating the management of Mattel's foreign currency exposure
on a worldwide basis, with a primary objective of minimizing the
Company's risk of loss from fluctuations in exchange rates.
Treasury maintains reports that are continuously updated which
track the Company's foreign currency positions and amounts of
related hedge coverages. Unhedged positions are measured monthly
at both current and forecasted rates of exchange to determine
whether the Company's hedge coverage is sufficient, and in the
event of periods of volatile exchange rate activity, foreign
currency positions are monitored more frequently than monthly.
The Company's practice is to hedge a minimum of 50% of its
foreign currency transactions for any given year. Contracts may
be executed during a year for the purpose of hedging foreign
currency commitments for the following year, or they may be
executed during a year for exposures arising within the year. As
such, the Company's hedge contracts generally have maturities
ranging from one month to twelve months in duration, which are
designed to coincide with settlement dates of the related
intercompany transactions. For the year ended December 31, 1993,
net realized foreign currency gains were $3.6 million. Had the
Company not entered into hedges covering a percentage of its
foreign currency positions, the unfavorable effect on pre-tax
income would have approximated $17 million.
As a matter of policy, in order to minimize counterparty risk,
all hedge contracts are executed with financial institutions
believed to be credit-worthy, generally those who provide the
Company with its working capital lines of credit. The Company's
contracts are not acquired from brokers, nor are they traded on
any exchange or over-the-counter market.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MATTEL, INC.
Registrant
By: /s/ Gary P. Rolfes
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Gary P. Rolfes
Senior Vice President &
Date: July 29, 1994 Controller
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