Mattel 2007 Annual Report Download - page 53

In November 2006, the commitment termination date for the European trade receivables facility was
extended until February 28, 2007. However, effective on February 9, 2007, the Depositor, Mattel France and
Mattel Germany terminated the European trade receivable facility with SGBN because the Company determined
the facility was no longer necessary based on projected international cash flows and seasonal financing needs.
The outstanding amounts of accounts receivable that were 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:
December 31,
2007 2006
(In thousands)
Receivables sold pursuant to the:
Domestic receivables facility ........................................ $ 251,657 $ 255,871
European receivables facility ........................................ — 103,886
Other factoring arrangements ............................................ 74,682 52,505
$ 326,339 $ 412,262
Financial Position
Mattel’s cash and equivalents were $901.1 million at December 31, 2007, a decrease of $304.4 million from
2006. The decrease was primarily driven by share repurchases of $806.3 million, dividend payments of
$272.3 million, the $50.0 million repayment of the MAPS revolving loan facility, $50.0 million repayment of
Medium-term notes, the acquisition of Origin for $79.1 million, the purchase of rights to manufacture, distribute,
and market several game properties for $25.3 million, and the purchase of a $35.0 million long-term investment
security, partially offset by cash flows generated from operating activities of $560.5 million, short-term
borrowings of $349.0 million and proceeds from the exercise of stock options of $222.6 million. Accounts
receivable increased by $47.4 million to $991.2 million at December 31, 2007, reflecting higher fourth quarter
sales and lower factored receivables. Management expects to collect the majority of these receivables in the first
quarter of 2008. Inventory levels increased by $45.6 million from 2006, primarily due to international growth
along with longer lead times in importing goods into certain countries, and higher production costs. Based on its
analysis of point of sale information for its top US customers, management believes that inventory levels of
Mattel products at retail were somewhat higher at December 31, 2007 than the low levels of inventory that
existed at December 31, 2006 and at the end of 2007 were more reflective of normalized levels.
Short-term borrowings includes borrowings under the domestic unsecured committed credit facilities of
$349.0 million. The current portion of long-term debt decreased $14.3 million to $50.0 million at December 31,
2007, as compared to December 31, 2006 due to the $50.0 million repayment of the MAPS term loan facility in
January 2007, of which $14.3 million was classified as current at December 31, 2006. Accounts payable and
accrued liabilities decreased $202.0 million from December 31, 2006 to $1.2 billion at December 31, 2007,
mainly due to a decrease in amounts due bank related to the termination of the European receivables facility in
2007 and the timing and amount of payments of various accrued liability balances, including incentive
compensation, royalties, and advertising obligations. The current portion of income taxes payable decreased from
$161.9 million at year-end 2006 to $17.1 million at December 31, 2007, primarily due to the reclassification of
tax reserves for which a cash tax payment is not expected to be made in the next twelve months to other
noncurrent liabilities in accordance with Financial Accounting Standards Board Interpretation No. (“FIN”) 48.
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