Mattel 2013 Annual Report Download - page 87

maturity. The proportion of unamortized debt issuance costs from the prior facility renewal related to creditors
involved in both the prior facility and amended facility and borrowing costs incurred as a result of the
amendment were deferred and will be amortized over the term of the amended facility.
Mattel is required to meet financial ratio covenants at the end of each quarter and fiscal year, using the
formulae specified in the credit agreement to calculate the ratios. Mattel was in compliance with such covenants
at the end of each fiscal quarter and fiscal year in 2013. As of December 31, 2013, Mattel’s consolidated debt-to-
EBITDA ratio, as calculated per the terms of the credit agreement, was 1.16 to 1 (compared to a maximum
allowed of 3.00 to 1), and Mattel’s interest coverage ratio was 17.69 to 1 (compared to a minimum required of
3.50 to 1).
The credit agreement is a material agreement, and failure to comply with the financial ratio covenants may
result in an event of default under the terms of the credit facility. If Mattel were to default 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 2014.
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, 2013, foreign credit lines totaled
approximately $349 million. Mattel expects to extend the majority of these credit lines throughout 2014.
Additionally, sales of foreign receivables occur periodically to finance seasonal working capital
requirements. The outstanding amounts of accounts receivable that have been sold under international factoring
arrangements were $25.6 million and $25.3 million at December 31, 2013 and 2012, respectively. These amounts
have been excluded from Mattel’s consolidated balance sheets.
Short-Term Borrowings
As of December 31, 2013 and 2012, Mattel had foreign short-term bank loans outstanding of $4.3 million
and $9.8 million, respectively. As of December 31, 2013 and 2012, Mattel had no borrowings outstanding under
the credit facility.
During 2013 and 2012, Mattel had average borrowings of $38.0 million and $44.3 million, respectively,
under its foreign short-term bank loans, and $262.3 million and $661.9 million, respectively, under the credit
facility and other short-term borrowings, to help finance its seasonal working capital requirements. The weighted
average interest rate on foreign short-term bank loans during 2013 and 2012 was 9.4% and 7.8%, respectively.
The weighted average interest rate on the credit facility and other short-term borrowings during 2013 and 2012
was 0.2% and 0.4%, respectively.
Long-Term Debt
In March 2013, Mattel issued $250.0 million aggregate principal amount of 1.70% senior unsecured notes
(“1.70% Senior Notes”) due March 15, 2018 and $250.0 million aggregate principal amount of 3.15% senior
unsecured notes (“3.15% Senior Notes”) due March 15, 2023 (collectively, “2013 Senior Notes”). Interest on the
2013 Senior Notes is payable semi-annually on March 15 and September 15 of each year, beginning
September 15, 2013. Mattel may redeem all or part of the 1.70% 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 15 basis points. Mattel may redeem all or part of
the 3.15% Senior Notes at any time or from time to time prior to December 15, 2022 (three months prior to the
maturity date of the 3.15% Senior Notes) at its option, at a redemption price equal to the greater of (i) 100% of
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