Mattel 2004 Annual Report Download - page 85

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During 2002, the board of directors of Softkey Software Products Inc. accelerated the automatic redemption
date of its outstanding exchangeable shares that were not owned by Mattel, its subsidiaries or any entity
controlled by Mattel. Concurrently, Mattel exercised its right to acquire these exchangeable shares on the
automatic redemption date. In 2003, Mattel acquired all exchangeable shares not previously exchanged by
issuing 312.8 thousand shares of Mattel common stock. No exchangeable shares were outstanding as of year end
2004 or 2003.
During 2003 and 2002, 260.7 thousand and 674.3 thousand exchangeable shares, respectively, were
exchanged by the holders into common stock at the rate of 1.2 Mattel common shares per exchangeable share.
Stock Warrants
In 2000, Mattel issued Warner Bros. Consumer Products a stock warrant to purchase 3.0 million shares of
Mattel’s common stock at an exercise price of $10.875 per share. In 2002, Mattel issued 1.4 million common
shares to Warner Bros. Consumer Products as a result of a cashless exercise. Mattel has no further obligation to
issue shares under this warrant.
The fair value of this warrant was amortized as a component of royalty expense when the related properties
were introduced over the period the related revenues were recognized. During 2003 and 2002, $0.3 million and
$3.3 million, respectively, was recognized in the results of operations related to this warrant.
Common Stock Repurchase Plan
In July 2003, Mattel’s board of directors approved a share repurchase program of up to $250.0 million.
During 2003, Mattel repurchased 12.7 million shares at a cost of $244.4 million pursuant to this program. In
November 2003, the board of directors approved an increase to the share repurchase program of an additional
$250.0 million, bringing the total authorized repurchases to $500.0 million. During 2004, Mattel repurchased
14.7 million shares at a cost of $255.1 million pursuant to this program. Mattel’s share repurchase program has
no expiration date. Repurchases under the share repurchase program will take place from time to time, depending
on market conditions.
Dividends
In 2004, 2003 and 2002, Mattel paid a dividend per share of $0.45, $0.40 and $0.05, respectively, to holders
of its common stock. The board of directors declared the dividend in November, and Mattel paid the dividend in
December of each year. The payment of dividends on common stock is at the discretion of Mattel’s board of
directors and is subject to customary limitations.
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