Mattel 2004 Annual Report Download - page 41

Mattel believes its cash on hand at the beginning of 2005, 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 in 2005. As of year end 2004, Mattel has available
borrowing resources totaling approximately $1.2 billion under its domestic unsecured committed revolving credit
facility and foreign credit lines.
Mattel has a $300.0 million domestic receivables sales facility that is a sub-facility of Mattel’s 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 amount 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 Barclays Bank PLC, as co-syndication
agents, and Societe Generale and BNP Paribas, as co-documentation agents. Pursuant to the domestic receivables
facility, Mattel Sales Corp. and Fisher-Price, Inc. (which are wholly-owned subsidiaries of Mattel) can sell
eligible trade receivables from Wal-Mart and Target to Mattel Factoring, a Delaware corporation and wholly-
owned, consolidated subsidiary of Mattel. Mattel Factoring is a special purpose entity whose activities are
limited to purchasing and selling receivables under this facility. 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 Bank Nederland N.V. As with the domestic receivables facility, each sale of accounts
receivable is recorded on Mattel’s consolidated balance sheet at the time of such sale. No Mattel subsidiary is
used as a special purpose entity in connection with these transactions. Under the European trade receivables
facility, the outstanding amount of receivables sold may not exceed Euro 60 million from February 1 through
July 31 of each year and may not exceed Euro 150 million at all other times. Pursuant to a letter agreement
between Societe Generale Bank Nederland N.V. and Mattel International Holdings B.V., Mattel France S.A.S.
and Mattel GmbH dated July 12, 2004, and effective June 25, 2004, the commitment termination date for the
European receivables facility was extended to June 24, 2005.
The outstanding amounts of accounts receivable that have been sold under these facilities and other
factoring arrangements, net of collections from customers, have been excluded from Mattel’s consolidated
balance sheets and are summarized as follows (in millions):
As of Year End
2004 2003
Receivables sold pursuant to the:
Domestic receivables facility ........................................ $ 253.4 $ 279.5
European receivables facility ........................................ 93.8 94.5
Other factoring arrangements ............................................ 99.1 82.0
$ 446.3 $ 456.0
Financial Position
Mattel’s cash and cash equivalents was $1.16 billion at year end 2004, which was slightly higher than year
end 2003. Accounts receivable increased by $215.1 million to $759.0 million at year end 2004, reflecting a shift
in timing of sales to late in the fourth quarter of 2004 compared to 2003 and changes in currency exchange rates.
Management expects to collect the majority of these receivables in the first quarter of 2005. Inventories increased
30