Mattel 2008 Annual Report Download - page 86

Sales of receivables pursuant to the domestic receivables sales 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 $0.2 million and
$1.9 million as of December 31, 2008 and 2007, respectively.
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.
Mattel’s aggregate losses on receivables sold under the domestic and other trade receivables facilities were
$5.4 million, $9.3 million, and $11.8 million during 2008, 2007, and 2006, respectively.
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:
December 31,
2008 2007
(In thousands)
Receivables sold pursuant to the:
Domestic receivables facility ............................................ $217,755 $251,657
Other factoring arrangements ............................................ 35,581 74,682
$253,336 $326,339
Short-Term Borrowings
As of December 31, 2008 and 2007, Mattel had no foreign short-term bank loans outstanding. As of
December 31, 2008, Mattel had no borrowings outstanding under the domestic unsecured committed credit
facilities. As of December 31, 2007, Mattel had borrowings under the domestic unsecured committed credit
facilities outstanding of $349.0 million, at a weighted average interest rate of 5.5%.
During 2008 and 2007, Mattel had average borrowings of $9.1 million and $13.8 million, respectively,
under its foreign short-term bank loans, and $559.7 million and $143.2 million, respectively, under its domestic
unsecured committed credit facilities, to help finance its seasonal working capital requirements. The weighted
average interest rate during 2008 and 2007 was 15.3% and 10.5%, respectively, on foreign short-term bank loans
and 3.6% and 5.6%, respectively, on domestic unsecured committed credit facilities.
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