Mattel 2006 Annual Report Download - page 45

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requirements, mainly due to payments made in 2005 related to year-end 2004 accruals to vendors and foreign tax
authorities.
Investing Activities
On October 3, 2006, Mattel completed its acquisition of Radica for net cash paid of $196.4 million, which
includes the purchase price and acquisition costs of $235.1 million, net of cash acquired of $38.7 million.
Mattel’s acquisition of Radica is intended to maximize and combine the core competencies of each company, as
well as provide growth opportunities internationally and for existing brands like Barbie®, Hot Wheels®, and
Fisher-Price®. See Item 8 “Financial Statements and Supplementary Data—Note 12 to the Consolidated
Financial Statements.”
Cash flows used for investing activities were $314.8 million during 2006, primarily due to the acquisition of
Radica, investments in tooling to support existing and new products and Mattel’s long-term information
technology strategy, partially offset by proceeds from the sale of property, plant and equipment. Cash flows used
for investing activities were higher in 2006 as compared to 2005 due to the Radica acquisition and lower
proceeds from the sale of investments. Cash flows used for investing activities were lower in 2005 as compared
to 2004 due to higher proceeds from the sale of investments and lower payments for business acquired in 2005,
partially offset by higher investments in other property, plant and equipment in 2005 as a result of investment in
Mattel’s long-term information technology strategy and spending associated with the construction of the new
American Girl Place®in Los Angeles. In 2004, Mattel used cash flows for investing activities of $108.1 million.
Capital expenditures were partially offset by proceeds from the sale of investments and property, plant and
equipment, primarily related to the disposal of property in Mexico that was no longer needed when
manufacturing operations in Mexico were combined as part of the financial realignment plan.
Financing Activities
Cash flows used for financing activities decreased to $374.1 million in 2006 from $537.3 million in 2005 as
a result of lower share repurchases, higher proceeds from the exercise of stock options, and the issuance of
$300.0 million of Senior Notes in June 2006, which were partially offset by higher payments on short-term
borrowings, the repayment of $175.0 million of the MAPS term loan facility in December 2006 and
$50.0 million of Medium-term notes in May and September 2006 and increased dividend payments. Cash flows
used for financing activities increased $71.0 million to $537.3 million in 2005 compared to 2004, primarily due
to the repayment of $150.0 million of 6 1/8% senior notes in July 2005 and the 10.15% mortgage note for
$39.1 million in November 2005 upon maturity, higher dividends paid and an increase in share repurchases in
2005, partially offset by $225.0 million of proceeds from the MAPS term loan facility and $100.0 million under
the MAPS revolving loan facility.
The Board of Directors approved an increase to the share repurchase program of an additional
$250.0 million in November 2003 and, at that time, there were share repurchase authorizations that had not been
executed totaling $5.6 million. During 2004, Mattel repurchased 14.7 million shares at a cost of $255.1 million.
In 2005, the Board of Directors approved the repurchase of an additional $500.0 million of Mattel’s common
stock. During 2005, Mattel repurchased 28.9 million shares at a cost of $500.4 million, of which $487.1 million
was paid during 2005. In January 2006, the Board of Directors authorized Mattel to increase its share repurchase
program by an additional $250.0 million. During 2006, Mattel repurchased 11.8 million shares at a cost of
$192.7 million. The total amount paid for share repurchases in 2006 was $205.9 million. At December 31, 2006,
share repurchase authorizations of $57.3 million had not been executed. Repurchases take place from time to
time, depending on market conditions. Mattel’s share repurchase program has no expiration date.
In 2006, 2005 and 2004, Mattel paid a $0.65 per share, $0.50 per share, and $0.45 per share dividend to
holders of its common stock, respectively. The Board of Directors declared the dividend in November, and
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