Mattel 2004 Annual Report Download - page 42

$30.0 million to $418.6 million at year end 2004, mainly due to lower than expected sales volume during the
holiday season and changes in currency exchange rates. Based on Mattel’s analysis of point of sale information,
management believes that inventory levels of Mattel products at retail are lower at year end 2004 compared to
2003.
Current portion of long-term debt increased $136.9 million to $189.1 million at year end 2004 compared to
year end 2003 due to the reclassification of $150.0 million of 6
1
⁄ 8 % senior notes maturing in the third quarter of
2005 and the $39.1 million mortgage note maturing in the fourth quarter of 2005 from long-term debt to current
portion of long-term debt, partially offset by repayment of $50.0 million of medium-term notes in 2004.
Accounts payable and accrued liabilities increased $86.5 million since year end 2003 to $1.2 billion, mainly due
to changes in currency exchange rates, increased amounts due to third-party manufacturers, and higher
advertising and royalty accruals, partially offset by lower receivable collections due to bank related to the
European receivables facility and reduced reserves for defective returns.
A summary of Mattel’s capitalization is as follows (in millions, except percentage information):
As of Year End
2004 2003
Medium-term notes ....................................... $ 400.0 13% $ 400.0 13%
Senior notes ............................................. — — 150.0 5
Other long-term debt obligations ............................ — — 39.1 1
Total long-term debt ...................................... 400.0 13 589.1 19
Other long-term liabilities .................................. 243.5 8 237.9 8
Stockholders’ equity ...................................... 2,385.8 79 2,216.2 73
$3,029.3 100% $3,043.2 100%
Total long-term debt decreased $189.1 million at year end 2004 compared to year end 2003 due to the
aforementioned reclassification of $150.0 million of 6
1
⁄ 8 % senior notes and the $39.1 million mortgage note
maturing in 2005 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
$2.39 billion at year end 2004 increased $169.6 million from year end 2003, primarily as a result of income from
continuing operations, partially offset by the purchase of treasury stock and payment of the annual dividend on
common stock in the fourth quarter of 2004.
Mattel’s debt-to-capital ratio, including short-term borrowings and current portion of long-term debt,
improved from 23.0% at year end 2003 to 20.6% at year end 2004 due to cash flows generated from operating
activities of continuing operations combined with the repayment of medium-term notes, partially offset by the
purchase of treasury stock and the payment of the annual dividend on common stock. Mattel’s objective is to
continue to maintain a year-end debt-to-capital ratio of approximately 25%.
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 agreements, contractual arrangements to obtain and
protect Mattel’s right to create and market certain products, and for future purchases of goods and services to
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