Mattel 2008 Annual Report Download - page 44

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 guarantees or minimum expenditures during the term of the contracts.
Total 2009 2010 2011 2012 2013 Thereafter
(In millions)
Long-term debt ...................... $ 900.0 $150.0 $ 50.0 $250.0 $ 50.0 $400.0 $ —
Interest on long-term debt .............. 168.9 51.0 44.5 35.0 25.3 13.1 —
Capital leases* ....................... 3.3 0.3 0.3 0.3 0.3 0.3 1.8
Operating leases ...................... 510.0 88.0 82.0 69.0 54.0 37.0 180.0
Purchases of inventory, other assets, and
services .......................... 295.9 295.9———— —
Licensing minimum guarantees .......... 244.0 58.0 52.0 48.0 22.0 23.0 41.0
Defined benefit and postretirement benefit
plans ............................. 277.1 25.3 24.4 25.3 26.3 26.8 149.0
Total ............................... $2,399.2 $668.5 $253.2 $427.6 $177.9 $500.2 $371.8
* Represents total obligation, including imputed interest of $1.1 million.
In connection with the 2007 adoption of FASB Interpretation No. (“FIN”) 48, Accounting for Uncertainty in
Income Taxes, an interpretation of SFAS No. 109, liabilities for uncertain tax positions 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 12 (“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
A consolidated stockholder derivative action is pending in Los Angeles County Superior Court in
California, captioned In re Mattel, Inc. Derivative Litigation, consolidating three derivative actions filed in
September 2007 (the “Superior Court Action”), asserting claims ostensibly on behalf and for the benefit of
Mattel. A second consolidated derivative action in US District Court, Central District of California, captioned In
re Mattel, Inc. Derivative Litigation, consolidating three federal derivative actions filed in October 2007,
asserting claims ostensibly on behalf and for the benefit of Mattel, was dismissed with prejudice by the federal
court in August 2008. Another derivative action, filed in the Court of Chancery of Delaware in October 2007, has
been voluntarily dismissed.
The Superior Court Action alleges 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. Plaintiffs also sue certain executive officers of Mattel, and
allege that certain officers and current and former directors who sold stock during the first half of 2007 breached
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