Mattel 2012 Annual Report Download - page 89

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.
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 the Credit Facility. Mattel did not sell
receivables pursuant to the domestic receivables facility in 2011 or 2010.
The outstanding amounts of accounts receivable that have been sold under other international factoring
arrangements were $25.3 million and $25.9 million at December 31, 2012 and 2011, respectively. These amounts
have been excluded from Mattel’s consolidated balance sheets.
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 2012. As of December 31, 2012, Mattel’s consolidated debt-to-EBITDA
ratio, as calculated per the terms of the Credit Facility agreement, was 1.3 to 1 (compared to a maximum allowed of 3.0
to 1), and Mattel’s interest coverage ratio was 13.6 to 1 (compared to a minimum required of 3.50 to 1).
The Credit Facility is a material agreement and failure to comply with the financial covenant ratios may
result in an event of default under the terms of the facility. If Mattel defaulted under the terms of the Credit
Facility, its ability to meet its seasonal financing requirements could be adversely affected.
Mattel believes its cash on hand, amounts available under its Credit Facility, and its foreign credit lines will
be adequate to meet its seasonal financing requirements in 2013.
To finance seasonal working capital requirements of certain foreign subsidiaries, Mattel avails itself of
individual short-term credit lines with a number of banks. As of December 31, 2012, foreign credit lines totaled
approximately $275 million. Mattel expects to extend the majority of these credit lines throughout 2013.
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