Mattel 2007 Annual Report Download - page 20

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$100.0 million, with a maturity date of December 9, 2008. Interest was 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 a result of such pre-payments, the
MAPS term loan facility terminated in accordance with its terms, but the MAPS revolving loan facility remained
in effect. On March 26, 2007, Mattel terminated the MAPS revolving loan facility. Mattel did not incur any early
termination penalties in connection with the termination of the MAPS revolving loan facility.
To finance seasonal working capital requirements of certain foreign subsidiaries, Mattel obtains individual
short-term credit lines with a number of banks. As of December 31, 2007, 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 2008.
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
interest to the redemption date, or (ii) a “make whole” amount based on the yield of a comparable US Treasury
security plus 20 basis points.
In June 2006, Mattel entered into two interest rate swap agreements on the $100.0 million Floating Rate
Senior Notes, each with a notional amount of $50.0 million, for the purpose of hedging the variability of cash
flows in the interest payments due to fluctuations of the LIBOR benchmark interest rate. These cash flow hedges
are accounted for under Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for
Derivative Instruments and Hedging Activities, whereby the hedges are reported in Mattel’s consolidated balance
sheets at fair value, with changes in the fair value of the hedges reflected in accumulated other comprehensive
loss. Under the terms of the agreements, Mattel receives quarterly interest payments from the swap
counterparties based on the three-month LIBOR plus 40 basis points and makes semi-annual interest payments to
the swap counterparties based on a fixed rate of 5.87125%. The three-month LIBOR used to determine interest
payments under the interest rate swap agreements resets every three months, matching the variable interest on the
Floating Rate Senior Notes. The agreements expire in June 2009, which corresponds with the maturity of the
Floating Rate Senior Notes.
In September 2007, a major credit rating agency reaffirmed Mattel’s long-term credit rating at BBB-, but
changed the outlook from positive to stable. In August 2007, another major credit rating agency maintained its
long-term credit rating at BBB, but changed its outlook to positive. In May 2007, an additional credit rating
agency maintained its long-term rating for Mattel at Baa2, but changed its long-term outlook from negative to
stable. Management does not expect these actions to have a significant impact on Mattel’s ability to obtain
financing or to have a significant negative impact on Mattel’s liquidity or results of operations.
Mattel believes its cash on hand at the beginning of 2008 and amounts available under its domestic
unsecured committed revolving credit facility and its foreign credit lines will be adequate to meet its seasonal
financing requirements in 2008. As of December 31, 2007, Mattel had available incremental borrowing resources
totaling approximately $850 million 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
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