Mattel 2002 Annual Report Download - page 72

ratios. Specifically, Mattel is required to meet these financial covenant ratios at the end of each fiscal quarter and
fiscal year, using the formulae specified in the credit agreement to calculate the ratios. Mattel was in compliance
with such covenants at the end of each fiscal quarter and fiscal year in 2002. As of December 31, 2002, Mattel’s
consolidated debt-to-capital ratio, as calculated per the terms of the credit agreement, was 0.37 to 1 (compared to
a maximum allowed of 0.50 to 1) and Mattel’s interest coverage ratio was 8.14 to 1 (compared to a minimum
allowed of 3.50 to 1).
To finance seasonal working capital requirements of certain foreign subsidiaries, Mattel avails itself of
individual short-term foreign credit lines with a number of banks. Foreign credit lines total approximately
$266 million, a portion of which is used to support letters of credit. Mattel expects to extend these credit lines
throughout 2003. Mattel believes the cash on hand at the beginning of 2003, amounts available under its
domestic unsecured committed revolving credit facility, its uncommitted money market facility, and its foreign
credit lines will be adequate to meet its seasonal financing requirements.
Information relating to Mattel’s unsecured committed credit facilities, foreign credit lines and other short-
term borrowings is summarized as follows (in thousands):
For the Year
2002 2001 2000
Balance at end of year
Domestic ............................................. $ — $ — $ 178,017
Foreign ............................................... 25,190 38,108 48,386
Maximum amount outstanding
Domestic ............................................. $820,477 $1,028,090 $1,320,000
Foreign ............................................... 38,062 64,158 85,905
Average borrowing
Domestic ............................................. $481,600 $ 694,900 $ 835,200
Foreign ............................................... 35,330 43,168 79,561
Weighted average interest rate on average borrowing
Domestic (computed daily) ............................... 2.1% 4.6% 6.7%
Foreign (computed weekly) ............................... 17.9% 17.5% 15.7%
Mattel has a $300.0 million domestic receivables sales facility which is a sub-facility of Mattel’s
$1.060 billion, 3-year domestic unsecured committed revolving credit facility. The outstanding amount of
receivables sold under the domestic receivables facility may not exceed $300.0 million at any given time, and the
$1.060 billion available to be borrowed under the credit facility is reduced to the extent of any such outstanding
receivables sold. Under the domestic receivables facility, certain trade receivables are sold to a group of banks,
which currently include, among others, Bank of America, N.A. as administrative agent, Citicorp USA, Inc. and
Fleet National Bank as syndication agents, and Societe Generale and BNP Paribas as documentation agents.
Pursuant to the domestic receivables facility, Mattel Sales Corp. and Fisher-Price, Inc. (which are wholly-owned
subsidiaries of Mattel) can sell trade receivables from Wal-Mart and Target to Mattel Factoring, a Delaware
corporation and wholly-owned subsidiary of Mattel. Mattel Factoring is a special purpose entity whose activities
are limited to purchasing and selling receivables under this facility. Mattel Factoring is a consolidated subsidiary
of Mattel. Pursuant to the terms of the domestic receivables facility and simultaneous with each receivables
purchase, Mattel Factoring sells those receivables to the bank group. Mattel records the transaction, reflecting
cash proceeds and sale of accounts receivable on its consolidated balance sheet, at the time of the sale of the
receivables to the bank group.
Mattel’s subsidiaries Mattel International Holdings B.V., a Netherlands company, Mattel France S.A.S., a
French company, and Mattel GmbH, a German company, have entered into a Euro 150 million European trade
receivables facility, pursuant to which Mattel France S.A.S. and Mattel GmbH may sell trade receivables to a
bank, Societe Generale Nederland N.V. The receivables sales are accounted for as a sale. As with the domestic
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