Mattel 2005 Annual Report Download - page 47

at December 31, 2005 decreased $284.1 million from December 31, 2004, primarily as a result of the treasury
stock repurchases and payment of the annual dividend on common stock in the fourth quarter of 2005, partially
offset by net income in 2005.
Mattel’s debt-to-capital ratio, including short-term borrowings and the current portion of long-term debt,
increased from 20.6% at December 31, 2004 to 26.1% at December 31, 2005 due to the borrowings under the
MAPS facility of $325.0 million, treasury stock repurchases and the payment of the annual dividend on common
stock, partially offset by the repayment of the senior note and mortgage note during 2005 and lower net income
in 2005 than in 2004. 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
ensure availability and timely delivery. These arrangements include commitments for future inventory purchases
and royalty payments pursuant to licensing agreements. Certain of these commitments routinely contain
provisions for guaranteed or minimum expenditures during the term of the contracts.
Mattel’s commitments for debt and other contractual obligations expected to be settled in cash are
summarized as follows (in millions):
Payments Due by Period
Total 2006 2007 2008 2009 2010 Thereafter
Long-term debt ...................... $ 625.0 $100.0 $100.0 $175.0 $ 50.0 $ 50.0 $150.0
Interest on long-term debt .............. 143.4 38.7 32.4 25.6 16.1 12.5 18.1
Capital leases* ....................... 9.1 0.3 0.3 0.3 0.3 0.3 7.6
Operating leases ...................... 369.0 62.0 58.0 48.0 35.0 29.0 137.0
Purchases of inventory, other assets and
services .......................... 217.4 196.6 20.8——— —
Licensing minimum guarantees .......... 203.0 60.0 50.0 30.0 30.0 20.0 13.0
Defined benefit and postretirement benefit
plans ............................. 247.4 22.8 22.6 23.7 23.3 22.7 132.3
Total ............................... $1,814.3 $480.4 $284.1 $302.6 $154.7 $134.5 $458.0
*Represents total obligation, including imputed interest of $6.8 million.
Litigation
Litigation Related to Learning Company
Following Mattel’s announcement in October 1999 of the expected results of its Learning Company division
for the third quarter of 1999, various Mattel stockholders filed purported class action complaints naming Mattel
and certain of its present and former officers and directors as defendants.
These shareholder complaints were consolidated into two lead cases, one under §10(b) of the Securities
Exchange Act of 1934 (the “Exchange Act”), and the other under §14(a) of the Exchange Act. In November 2002,
the United States District Court for the Central District of California permitted the actions to proceed as class actions.
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