Mattel 2011 Annual Report Download - page 88

Note 7—Seasonal Financing and Debt
Seasonal Financing
In November 2011, Mattel issued $300.0 million of unsecured 2.50% senior notes (“2.50% Senior Notes”)
due November 1, 2016 and $300.0 million of unsecured 5.45% senior notes (“5.45% Senior Notes”) due
November 1, 2041 (collectively, “2011 Senior Notes”). Interest on the 2011 Senior Notes is payable semi-
annually on May 1 and November 1 of each year, beginning May 1, 2012. Mattel may redeem all or part of the
2.50% Senior Notes at any time or from time to time at its option, at a redemption price equal to the greater of
(i) 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest to but excluding
the redemption date, and (ii) a “make-whole” amount based on the yield of a comparable US Treasury security
plus 25 basis points. Mattel may redeem all or part of the 5.45% Senior Notes at any time or from time to time at
its option prior to May 1, 2041 (six months prior to the maturity date of the 5.45% Senior Notes), at a redemption
price equal to the greater of (i) 100% of the principal amount of the notes being redeemed plus accrued and
unpaid interest to but excluding the redemption date, and (ii) a “make-whole” amount based on the yield of a
comparable US Treasury security plus 35 basis points. Mattel may redeem all or part of the 5.45% Senior Notes
at any time or from time to time at its option on or after May 1, 2041 (six months prior to the maturity date for
the 5.45% Senior Notes), at a redemption price equal to 100% of the principal amount of the notes to be
redeemed, plus accrued and unpaid interest to but excluding the redemption date.
In September 2010, Mattel issued $250.0 million of unsecured 4.35% senior notes (“4.35% Senior Notes”)
due October 1, 2020 and $250.0 million of unsecured 6.20% senior notes (“6.20% Senior Notes”) due
October 1, 2040 (collectively, “2010 Senior Notes”). Interest on the 2010 Senior Notes is payable semi-annually
on October 1 and April 1 of each year. Mattel may redeem all or part of the 2010 Senior Notes at any time or
from time to time at its option at a redemption price equal to the greater of (i) 100% of the principal amount of
the notes being redeemed plus accrued and unpaid interest to the redemption date, and (ii) a “make-whole”
amount based on the yield of a comparable US Treasury security plus 25 basis points in respect of the 4.35%
Senior Notes and 40 basis points in respect of the 6.20% Senior Notes.
Mattel maintains and periodically amends or replaces its domestic unsecured committed revolving credit
facility (“Credit Facility”) with a commercial bank group that is used as a back-up facility to Mattel’s
commercial paper program, which is used as the primary source of financing for the seasonal working capital
requirements of its domestic subsidiaries. The Credit Facility was amended and restated on March 8, 2011 to,
among other things, (i) extend the maturity date of the Credit Facility to March 8, 2015, (ii) increase aggregate
commitments under the Credit Facility to $1.40 billion, with an “accordion feature,” which allows Mattel to
increase the aggregate availability under the Credit Facility to $1.60 billion under certain circumstances,
(iii) decrease the applicable interest rate margins to a range of 0.25% to 1.50% above the applicable base rate for
base rate loans, and 1.25% to 2.50% above the applicable London Interbank Borrowing Rate for Eurodollar rate
loans, in each case depending on Mattel’s senior unsecured long-term debt rating, and (iv) decrease commitment
fees to a range of 0.15% to 0.40% of the unused commitments under the Credit Facility.
The borrowing capacity of the amended Credit Facility is $1.40 billion for four years, which exceeded the
$1.10 billion for one year remaining on the Credit Facility prior to the March 2011 amendment. The proportion
of unamortized debt issuance costs from the prior Credit Facility renewal related to creditors involved in both the
prior Credit Facility and amended Credit Facility, and borrowing costs incurred as a result of the amendment
were deferred and will be amortized over the term of the amended Credit Facility.
In connection with the execution of the amendment of the Credit Facility, Mattel terminated its $300.0
million domestic receivables sales facility, which was a sub-facility of Credit Facility.
Mattel is required to meet financial covenants at the end of each quarter and fiscal year, using the formulae
specified in the Credit Facility agreement to calculate the ratios. Mattel was in compliance with such covenants at
the end of each fiscal quarter and fiscal year in 2011. As of December 31, 2011, Mattel’s consolidated
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