Mattel 2006 Annual Report Download - page 90

seasonal financing requirements in 2007. As of December 31, 2006, Mattel had available incremental borrowing
resources totaling approximately $1.3 billion under its domestic unsecured committed revolving credit facility,
the MAPS 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, Inc. (“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 in its consolidated balance sheet, at the time of the sale of the receivables to the bank group.
Sales of receivables pursuant to the domestic receivables sale facility occur periodically, generally quarterly.
The receivables are sold by Mattel Sales Corp. and Fisher-Price, Inc. to Mattel Factoring for a purchase price
equal to the nominal amount of the receivables sold. Mattel Factoring then sells such receivables to the bank
group at a slight discount, and Mattel acts as a servicer for such receivables. Mattel has designated Mattel Sales
Corp. and Fisher-Price, Inc. as sub-servicers, as permitted by the facility. Mattel’s appointment as a servicer is
subject to termination events that are customary for such transactions. The domestic receivables sales facility is
also subject to conditions to funding, representations and warranties, undertakings and early termination events
that are customary for transactions of this nature. Mattel retains a servicing interest in the receivables sold under
this facility. The fair value of the net servicing asset is based on an estimate of interest Mattel earns on cash
collections prior to remitting the funds to the bank group, partially offset by an estimate of the cost of servicing
the trade receivables sold. The fair value of the net servicing asset totaled $2.3 million at December 31, 2006.
Until the Master Agreement was terminated on February 9, 2007, Mattel International Holdings B.V., a
company incorporated in the Netherlands (the “Depositor”), Mattel France, a company incorporated in France
(“Mattel France”), and Mattel GmbH, a company incorporated in Germany (“Mattel Germany”), each of which is
a subsidiary of Mattel, and Societe Generale Bank Nederland N.V. (“SGBN”), were parties to a Master
Agreement for the Transfer of Receivables that established a Euro 150 million European trade receivables
facility (the “European trade receivables facility”), pursuant to which Mattel France and Mattel Germany sold
trade receivables to SGBN. The European trade receivables facility was subject to conditions to funding,
representations and warranties, undertakings and early termination events that were customary for transactions of
this nature.
Sales of receivables pursuant to the European trade receivables facility occurred monthly, with the last such
sale occurring on January 10, 2007. The receivables were sold by Mattel France and Mattel Germany directly to
SGBN for a purchase price equal to the nominal amount of the receivables sold. As a result, no Mattel subsidiary
was used as a special purpose entity in connection with these transactions. A portion of the purchase price was
funded by SGBN and a portion by a deposit provided by the Depositor. The amount of the deposit was reset on
each date on which new receivables were sold. During the 12-month period ending December 31, 2006, the
deposit was, on average, equal to about 51% of the aggregate notional amount of sold receivables outstanding
during such period. The deposit totaled $120.1 million and $97.8 million as of December 31, 2006 and
December 31, 2005, respectively.
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