Mattel 2006 Annual Report Download - page 46

Mattel paid the dividend in December of each year. The dividend payments were $249.5 million, $200.5 million,
and $186.9 million in 2006, 2005 and 2004, respectively.
Seasonal Financing
Mattel maintains and periodically amends or replaces a $1.3 billion domestic unsecured committed revolving
credit facility with a commercial bank group that is used as the primary source of financing for the seasonal working
capital requirements of its domestic subsidiaries. The agreement in effect was amended and restated in March 2005
and the expiration date of the facility was extended to March 23, 2010. The other terms and conditions of the
amended and restated facility are substantially similar to those contained in the previous facility. Interest is charged
at various rates selected by Mattel, ranging from market commercial paper rates to the bank reference rate. The
domestic unsecured committed revolving credit facility contains a variety of covenants, including financial
covenants that require Mattel to maintain certain consolidated debt-to-capital and interest coverage 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 2006. As of December 31, 2006, Mattel’s
consolidated debt-to-capital ratio, as calculated per the terms of the credit agreement, was 0.29 to 1 (compared to a
maximum allowed of 0.50 to 1) and Mattel’s interest coverage ratio was 11.72 to 1 (compared to a minimum
allowed of 3.50 to 1).
On December 9, 2005, Mattel, MAPS, a wholly-owned subsidiary of Mattel, Bank of America, N.A., as a
lender and administrative agent, and other financial institutions executed a credit agreement (“the MAPS
facility”) which provides for (i) a term loan facility of $225.0 million consisting of a term loan advanced to
MAPS in the original principal amount of $225.0 million, with $50.0 million of such amount to be repaid on each
of December 15, 2006 and December 15, 2007, and the remaining aggregate principal amount of $125.0 million
to be repaid on December 9, 2008, and (ii) a revolving loan facility consisting of revolving loans advanced to
MAPS in the maximum aggregate principal amount at any time outstanding of $100.0 million, with a maturity
date of December 9, 2008. Interest is charged at various rates selected by Mattel based on Eurodollar rates or
bank reference rates. On December 15, 2006, in addition to the required payment of $50.0 million, MAPS
prepaid an incremental $125.0 million of the MAPS term loan facility. The remaining $50.0 million principal
amount, consisting of $14.3 million due on December 15, 2007 and $35.7 million due on December 9, 2008, was
prepaid on January 16, 2007. As of December 31, 2006, there was no balance outstanding on the MAPS
revolving loan facility. In connection with the MAPS facility, Mattel executed a Continuing Guaranty Agreement
pursuant to which Mattel unconditionally guaranteed the obligations of MAPS arising pursuant to the MAPS
facility. The MAPS facility contains a variety of covenants, including financial covenants that require Mattel to
maintain certain consolidated debt-to-capital and interest coverage ratios at the end of each fiscal quarter and
fiscal year, using the formulae specified and ratios allowed in the MAPS facility to calculate the ratios. The
formulae specified in the MAPS facility are the same as those required by the domestic unsecured committed
revolving credit facility. Mattel was in compliance with such covenants at December 31, 2006.
To finance seasonal working capital requirements of certain foreign subsidiaries, Mattel avails itself of
individual short-term credit lines with a number of banks. As of December 31, 2006, foreign credit lines totaled
approximately $200 million, a portion of which are used to support letters of credit. Mattel expects to extend the
majority of these credit lines throughout 2007.
In June 2006, Mattel issued $100.0 million of unsecured floating rate senior notes (“Floating Rate Senior
Notes”) due June 15, 2009 and $200.0 million of unsecured 6.125% senior notes (“6.125% Senior Notes”) due
June 15, 2011 (collectively “Senior Notes”). Interest on the Floating Rate Senior Notes is based on the
three-month US Dollar London Interbank Offered Rate (“LIBOR”) plus 40 basis points with interest payable
quarterly beginning September 15, 2006. Interest on the 6.125% Senior Notes is payable semi-annually
beginning December 15, 2006. The 6.125% Senior Notes may be redeemed at any time at the option of Mattel at
a redemption price equal to the greater of (i) the principal amount of the notes being redeemed plus accrued
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