Mattel 2003 Annual Report Download - page 41

improvements in 2003 as in 2002 considering the relatively low level of accounts receivables and inventories at
year end 2002. Management believes that the quality of its inventory at year end 2003 is better than at year end
2002. Additionally, based on Mattel’s analysis of point of sale information, management believes that its
inventory at retail is lower at year end 2003 compared to year end 2002. Property, plant and equipment, net
increased $26.3 million to $625.9 million at year end 2003, largely due to capital spending, partially offset by
depreciation.
Current portion of long-term debt decreased $130.0 million to $52.3 million at year end 2003 compared to
$182.3 million at year end 2002, due to repayment of the $150.0 million 6% senior notes and $30.0 million of
medium-term notes upon maturity, partially offset by reclassification of $50.0 million of medium-term notes
from long-term debt to current portion of long-term debt. Accrued liabilities decreased $88.9 million since year
end 2002 to $853.0 million, mainly due to payments made in 2003 related to year end 2002 accruals for incentive
compensation and the shareholder lawsuit settlement that were partially offset by an increase of $53.7 million
due to changes in currency exchange rates.
Asummary of Mattel’s capitalization is as follows (in millions, except percentage information):
As of Year End
2003 2002
Medium-term notes ............................................. $ 400.0 13% $ 450.0 16%
Senior notes ................................................... 150.0 5 150.0 5
Other long-term debt obligations .................................. 39.1 1 40.1 2
Total long-term debt ............................................ 589.1 19 640.1 23
Other long-term liabilities ........................................ 237.9 8 192.1 7
Stockholders’ equity ............................................ 2,216.2 73 1,978.7 70
$3,043.2 100% $2,810.9 100%
Total long-term debt decreased by $51.0 million at year end 2003 compared to year end 2002 due to the
aforementioned reclassification of $50.0 million of medium-term notes maturing in the next twelve months to
current portion of long-term debt. Mattel expects to satisfy its future long-term capital needs through the
generation of corporate earnings and issuance of long-term debt instruments. Stockholders’ equity of
$2.22 billion at year end 2003 increased $237.5 million from year end 2002, primarily as a result of income from
continuing operations and cash received from exercise of employee stock options, partially offset by repurchase
of common stock and payment of a dividend on common stock in the fourth quarter of 2003.
Mattel’s debt-to-capital ratio, including short-term borrowings and current portion of long-term debt,
improved from 30% at year end 2002 to 23% at year end 2003 due to strong cash flows generated by operations
combined with the repayment of long-term debt. Mattel’s objective is to continue to maintain a year end debt-to-
capital ratio of approximately 25% with the target of achieving a long-term debt rating of single-A.
Off-Balance Sheet Arrangements
Mattel has no off-balance sheet arrangements that have or are reasonably likely to have a current or future
effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that is material to shareholders.
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
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