Mattel 2010 Annual Report Download - page 44

expiration date and repurchases will take place from time to time, depending on market conditions. The ability to
successfully implement the capital deployment plan is directly dependent on Mattel’s ability to generate strong
cash flows from operating activities. There is no assurance that Mattel will continue to generate strong cash flows
from operating activities or achieve its targeted goals for investing activities.
Operating Activities
Cash flows generated from operating activities were $528.0 million during 2010, as compared to $945.0
million during 2009 and $436.3 million in 2008. The decrease in cash flows from operating activities in 2010
from 2009 was primarily due to the decision not to factor $300 million of domestic receivables in 2010, as well
as growth in accounts receivable due to increased sales volume, and the rebuild of inventory to support point of
sale momentum and customer service levels, partially offset by higher net income. The increase in cash flows
from operating activities in 2009 from 2008 was primarily the result of higher profitability and lower working
capital requirements, mainly due to lower levels of accounts receivable and inventories.
Investing Activities
Cash flows used for investing activities were $146.7 million during 2010, as compared to $33.5 million
during 2009 and $311.7 million during 2008. The increase in cash flows used for investing activities in 2010
from 2009 was primarily due to lower proceeds received from the redemption of a money market investment
fund, lower net proceeds received relating to settled foreign currency forward exchange contracts, and higher
purchases of tools, dies, and molds and other property, plant, and equipment. The decrease in cash flows used for
investing activities in 2009 from 2008 was primarily due to lower purchases of other property, plant, and
equipment, an increase in other investments in 2008, of which the proceeds of the investments were received in
2009, and lower payments for businesses acquired.
Financing Activities
Cash flows used for financing activities were $224.8 million during 2010, as compared to $376.1 million
during 2009 and $395.7 million during 2008. The decrease in cash flows used for financing activities in 2010
from 2009 primarily reflects net proceeds received from the $500.0 million issuance of senior notes in September
2010 and higher proceeds from the exercise of stock options, partially offset by higher share repurchases. The
decrease in cash flows used for financing activities in 2009 from 2008 was primarily due to lower share
repurchases, lower tax benefits from share-based payment arrangements, and higher proceeds from the exercise
of stock options, partially offset by higher net payments of borrowings.
During both 2010 and 2008, the Board of Directors authorized Mattel to increase its share repurchase
program by $500.0 million. During 2010, Mattel repurchased 18.6 million shares of its common stock at a cost of
$446.7 million. During 2009, Mattel did not repurchase any shares of its common stock. During 2008, Mattel
repurchased 4.9 million shares of its common stock at a cost of $90.6 million. At December 31, 2010, share
repurchase authorizations of $463.6 million had not been executed. Repurchases will take place from time to
time, depending on market conditions. Mattel’s share repurchase program has no expiration date.
In 2010, 2009, and 2008, Mattel paid a dividend per share of $0.83, $0.75, and $0.75 to holders of its
common stock, respectively. The Board of Directors declared the dividends in November and Mattel paid the
dividends in December of each year. The dividend payments were $291.3 million, $271.4 million, and $268.9
million in 2010, 2009, and 2008, respectively.
Seasonal Financing
See Item 8 “Financial Statements and Supplementary Data—Note 7 to the Consolidated Financial
Statements—Seasonal Financing and Debt.”
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