Mattel 2001 Annual Report Download - page 70

District of California, and are all in a preliminary stage. The plaintiffs have asked for unspecified monetary
damages. Plaintiffs filed an amended consolidated complaint in February 2002 in the California state court
actions and defendants have filed a demurrer seeking dismissal of that action.
Mattel believes that the actions are without merit and intends to defend them vigorously.
Environmental
Fisher-Price
Fisher-Price has executed a consent order with the State of New York to implement a groundwater
remediation system at one of its former manufacturing plants. The execution of the consent order was in
response to the New York State Department of Environmental Conservation Record of Decision issued in
March 2000. The Department approved a conceptual work plan in March 2001, with work scheduled to begin
in 2001. However, in response to concerns expressed by a number of nearby residents, the Department has
requested that Mattel postpone implementation of the groundwater remediation plan until 2002 after the
installation of a public water line to those residents is completed. The ultimate liability associated with this
cleanup presently is estimated to be approximately $1.76 million, approximately $1.26 million of which has
been incurred through December 31, 2001.
Beaverton, Oregon
Mattel previously operated a manufacturing facility on a leased property in Beaverton, Oregon that was
acquired as part of the March 1997 merger with Tyco. In March 1998, samples of groundwater used by the
facility for process water and drinking water disclosed elevated levels of certain chemicals, including
trichloroethylene. Mattel immediately closed the water supply and self-reported the sample results to the
Oregon Department of Environmental Quality and the Oregon Health Division. Mattel also implemented a
community outreach program to employees, former employees and surrounding landowners.
In November 1998, Mattel and another potentially responsible party entered into a consent order with the
Oregon Department of Environmental Quality to conduct a remedial investigation/feasibility study at the
property, to propose an interim remedial action measure, and to continue the community outreach program.
Mattel has recorded pre-tax charges totaling $19.0 million for environmental remediation costs related to this
property, based on the completion and approval of the remediation plan and feasibility study. Approximately $3
million has been incurred through December 31, 2001, largely related to attorney fees, consulting work and an
employee medical screening program.
General
Mattel is also involved in various other litigation and legal matters, including claims related to intellectual
property, product liability and labor, which Mattel is addressing or defending in the ordinary course of business.
Management believes that resolving such matters is not likely to have a material adverse effect on Mattel’s
business, financial condition or results of operations.
Note 8—Financial Instruments
Marketable Securities
Marketable securities totaling $16.3 million were stated at fair value based on quoted market prices and
were classified as securities available-for-sale as of December 31, 2000. These securities, which had a cost
basis of $28.3 million as of December 31, 2000, were received by Mattel as part of the sale of CyberPatrol.
Upon the adoption of SFAS No. 133 on January 1, 2001, Mattel recorded a one-time transition adjustment of
$12.0 million, net of tax, (or $0.03 per share) as the cumulative effect of change in accounting principles
related to unrealized losses on these securities that had been previously deferred in accumulated other
comprehensive income (loss).
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