Mattel 2007 Annual Report Download - page 55

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.
Total 2008 2009 2010 2011 2012 Thereafter
(In millions)
Long-term debt ...................... $ 600.0 $ 50.0 $150.0 $ 50.0 $250.0 $ 50.0 $ 50.0
Interest on long-term debt .............. 117.8 37.5 31.3 24.8 15.3 5.6 3.3
Capital leases* ....................... 3.6 0.3 0.3 0.3 0.3 0.3 2.1
Operating leases ...................... 529.0 86.0 74.0 69.0 57.0 46.0 197.0
Purchases of inventory, other assets, and
services .......................... 321.8 321.8———— —
Licensing minimum guarantees .......... 123.0 55.0 31.0 30.0 7.0 — —
Defined benefit and postretirement benefit
plans ............................. 288.3 27.4 26.7 26.1 26.7 28.1 153.3
Total ............................... $1,983.5 $578.0 $313.3 $200.2 $356.3 $130.0 $405.7
*Represents total obligation, including imputed interest of $1.3 million.
In connection with the January 1, 2007 adoption of FIN 48, liabilities for uncertain tax positions at
December 31, 2007 totaling approximately $80 million for which a cash tax payment is not expected to be made
in the next twelve months were reclassified from income taxes payable (within current liabilities) to other
noncurrent liabilities. Due to the uncertainty about the periods in which examinations will be completed and
limited information related to current audits, Mattel is not able to make reasonably reliable estimates of the
periods in which cash settlements will occur with taxing authorities for the noncurrent liabilities.
Litigation
The content of Note 10 (“Commitments and Contingencies—Litigation”) to the Consolidated Financial
Statements of Mattel in this Annual Report on Form 10-K is hereby incorporated by reference in its entirety in
this Item 7.
Derivative Litigation
Seven stockholder derivative actions have been filed, three in Los Angeles County Superior Court in
California (Advantage Investors, G.P. v. Dolan et al., filed September 13, 2007; SEB Investment Management AB
v. Eckert et al., filed September 14, 2007; and Catholic Medical Mission Board v. Eckert et al., filed
September 19, 2007,), one in the Court of Chancery of Delaware (Sterling Heights Police & Fire Ret. Sys. v.
Eckert et al., filed October 10, 2007) and three in U.S. District Court, Central District of California (City of
Philadelphia Bd. of Pensions v. Eckert et al., filed October 11, 2007, Retirement Board of Allegheny County etc.
v. Beard, et al., filed October 26, 2007, and Asbestos Workers, Local 14 Pension Fund v. Eckert et al., filed
October 30, 2007 (previously filed in state court)), each asserting claims ostensibly on behalf and for the benefit
of Mattel. The derivative actions allege that past and present members of Mattel’s Board of Directors breached
their fiduciary duties in connection with product safety and reporting practices allegedly related to Mattel’s
product recalls during August and September 2007. In SEB Investment, plaintiff also sues certain executive
officers of Mattel, and also alleges waste of corporate assets and unjust enrichment against all defendants. In
Sterling Heights, plaintiff also alleges that certain current and former directors who sold stock during the first
half of 2007 breached their fiduciary duties by selling while allegedly in possession of non-public information
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