Mattel 2002 Annual Report Download - page 39

SFAS No. 142. Other assets increased $36.1 million to $767.9 million, principally due to increased noncurrent
deferred tax assets resulting from the transition adjustment made in connection with implementation of SFAS
No. 142, partially offset by tax asset reductions associated with income from continuing and discontinued
operations.
Short-term borrowings decreased $12.9 million to $25.2 million at year end 2002 compared to $38.1 million
at year end 2001, due to the repayment of debt. Current portion of long-term debt decreased by $27.8 million to
$182.3 million at year end 2002, largely due to the repayment of the 200 million Euro Notes, partially offset by
the reclassification of $150.0 million of 6% senior notes from long-term debt to current portion of long-term debt
since they mature in July 2003.
A summary of Mattel’s capitalization is as follows (in millions):
As of Year End
2002 2001
Medium-term notes ............................................ $ 450.0 16% $ 480.0 17%
Seniornotes .................................................. 150.0 5 500.0 17
Other long-term debt obligations ................................. 40.1 2 40.9 1
Total long-term debt ........................................... 640.1 23 1,020.9 35
Other long-term liabilities ....................................... 192.1 7 184.2 6
Stockholders’ equity ........................................... 1,978.7 70 1,738.5 59
$2,810.9 100% $2,943.6 100%
Total long-term debt decreased by $380.8 million at year end 2002 compared to year end 2001 due to the
aforementioned reclassification of the $150.0 million of 6% senior notes and $30.0 million of medium-term notes
maturing in the next twelve months to current portion of long-term debt. Additionally, Mattel repaid its
$200.0 million term loan in the fourth quarter of 2002. Mattel expects to satisfy its future long-term capital needs
through the retention of corporate earnings and the issuance of long-term debt instruments. Stockholders’ equity
of $1.979 billion at year end 2002 increased $240.2 million from year end 2001, primarily as a result of income
from continuing and discontinued operations and cash received from exercise of employee stock options,
partially offset by the cumulative effect of change in accounting principles related to the one-time transition
adjustment recorded upon implementation of SFAS No. 142 and payment of a dividend on common stock in the
fourth quarter of 2002.
Mattel’s debt-to-capital ratio, including short-term borrowings and current portion of long-term debt,
improved from 42% at year end 2001 to 30% at year end 2002 due to the repayment of short-term and long-term
debt combined with improvement in operating results. As previously discussed, Mattel plans to target a goal of
reducing the year end debt-to-capital ratio to about 25%.
Off-Balance Sheet Arrangements
Mattel has no off-balance sheet arrangements in which the failure by Mattel and/or an unconsolidated entity
to meet performance obligations would have a material impact on its financial position, results of operations or
cash flows.
Commitments
In the normal course of business, Mattel enters into debt arrangements and 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. These arrangements include commitments for future
inventory purchases and licensing payments. Certain of these commitments routinely contain provisions for
guaranteed or minimum expenditures during the term of the contracts.
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