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Seasonal Financing and Debt | 12 Months Ended
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Dec. 31, 2020
Debt Disclosure [Abstract] |
Seasonal Financing and Debt | Seasonal Financing and Debt Seasonal Financing On December 20, 2017, Mattel entered into a syndicated facility agreement (the "Credit Agreement"), as a borrower thereunder (in such capacity, the "Borrower"), along with certain of Mattel’s domestic subsidiaries, as additional borrowers thereunder (together with the Borrower, the "U.S. Borrowers"), Mattel Canada Inc. as a borrower thereunder (the "Canadian Borrower"), certain additional domestic and foreign subsidiaries of Mattel, as guarantors thereunder, Bank of America, N.A., as global administrative agent, collateral agent, Australian security trustee, and lender, and the other lenders and financial institutions party thereto, providing for $1.60 billion in aggregate principal amount of senior secured revolving credit facilities (the "senior secured revolving credit facilities"). The senior secured revolving credit facilities consist of an asset based lending facility with aggregate commitments of $1.31 billion, subject to borrowing base capacity, and a revolving credit facility with $294.0 million in aggregate commitments secured by certain fixed assets and intellectual property of the U.S. Borrowers and certain equity interests in various subsidiaries of Mattel, subject to borrowing base capacity (the "Fixed Asset & IP Facility"). The senior secured revolving credit facilities will mature on November 18, 2022. On March 28, 2018 and March 29, 2018, Mattel, Inc. and certain of its subsidiaries entered into various foreign joinder agreements to the Credit Agreement. The foreign joinder agreements join the relevant foreign borrowers and foreign lenders to the Credit Agreement, as contemplated therein, making portions of the senior secured revolving credit facilities available to other subsidiaries of Mattel, Inc. such that, together with the initial entry into the Credit Agreement, the senior secured revolving credit facilities are available to certain subsidiaries of Mattel, Inc., in their capacity as borrowers, located in the following jurisdictions: (i) the United States (the "U.S. Borrowers"), (ii) Canada (the "Canadian Borrower"), (iii) Germany, the Netherlands and the United Kingdom (the "European (GNU) Borrowers"), (iv) Spain (the "Spanish Borrower"), (v) France (the "French Borrower"), and (vi) Australia (the "Australian Borrower"), in each case through subfacilities in each such jurisdiction (each, a "Subfacility"). Through the initial Credit Agreement and the foreign joinder agreements, certain additional domestic and foreign subsidiaries of Mattel Inc., are also parties to the Credit Agreement as guarantors of various obligations of the borrowers under the Credit Agreement as further described below. On December 14, 2018, Mattel, Inc. entered into an amendment to the Credit Agreement, which included the expansion of eligibility criteria for accounts receivable and inventory included in the borrowing base. In support of the foregoing, two additional Mattel subsidiaries, Mattel Import Services, LLC ("MISL") and Mattel Finco Europe B.V. ("Mattel Finco") were added as borrowers to the Credit Agreement. The Credit Agreement allows for certain inventory located in the Czech Republic and the Netherlands to be included in the borrowing base. Additionally, certain accounts receivable with account debtors located in Italy and Poland, as well as other countries agreed upon with the Administrative Agent, may be purchased by Mattel Finco and added to the borrowing base in the future. On November 20, 2019, Mattel, Inc. entered into an amendment to the Credit Agreement, which included, but not limited to, amendments to certain definitions related to the borrowing base, a reduction in certain interest rates thereunder and an extension of the maturity date thereof. Each of the facilities under the Credit Agreement will mature, and lending commitments thereunder will terminate, on November 18, 2022. Borrowings under the senior secured revolving credit facilities will (i) be limited by jurisdiction-specific borrowing base calculations based on the sum of specified percentages of eligible accounts receivable, eligible inventory and certain fixed assets and intellectual property, as applicable, minus the amount of any applicable reserves, and (ii) bear interest at a floating rate, which can be either, at the Borrower’s option, (a) an adjusted LIBOR rate plus an applicable margin ranging from 1.25% to 2.75% per annum or (b) an alternate base rate plus an applicable margin ranging from 0.25% to 1.75% per annum, in each case, such applicable margins to be determined based on the Borrower’s average borrowing availability remaining under the senior secured revolving credit facilities. In addition to paying interest on the outstanding principal under the senior secured revolving credit facilities, the Borrower is required to pay (i) an unused line fee per annum of the average daily unused portion of the senior secured revolving credit facilities, (ii) a letter of credit fronting fee based on a percentage of the aggregate face amount of outstanding letters of credit, and (iii) certain other customary fees and expenses of the lenders and agents. Outstanding letters of credit under the senior secured revolving credit facilities totaled approximately $11 million as of December 31, 2020. The U.S. Borrowers, as well as certain U.S. subsidiaries of the Borrower (the "U.S. Guarantors"), guarantee the obligations of all Borrowers under the senior secured revolving credit facilities. Additionally, the obligations of the Canadian Borrower, the French Borrower, the Spanish Borrower, the European (GNU) Borrowers, and the Australian Borrower (collectively, the "Foreign Borrowers"), are guaranteed by the obligations of the other Foreign Borrowers, as well as certain additional foreign subsidiaries ("Foreign Guarantors"). The U.S. Subfacility is secured by liens on substantially all of the U.S. Borrowers’ and the U.S. Guarantors’ accounts receivable and inventory (the "U.S. Current Assets Collateral"). The Canadian Subfacility, the French Subfacility, the Spanish Subfacility, the European (GNU) Subfacility, and the Australian Subfacility are each secured by a first priority lien on (i) the accounts receivable and inventory of the applicable Foreign Borrower(s) and Foreign Guarantors under such facility, and (ii) the U.S. Current Assets Collateral. The Fixed Asset & IP Facility is secured by a first priority lien on certain owned real property in the U.S., certain U.S. trademarks and patents, and 100% of the equity interests in the U.S. Borrowers (aside from Mattel) and U.S. Guarantors, as well as 65% of the voting equity interests and 100% of the non-voting equity interests in Mattel Holdings Limited. Upon the additional Foreign Borrowers and Foreign Guarantors joining the Credit Agreement, the Fixed Asset & IP Facility will also be secured by 65% of the voting equity interests of such additional Foreign Borrowers and Foreign Guarantors that are directly owned by a U.S. Borrower or U.S. Guarantor. The net book value of the accounts receivable, inventory, and certain owned real property in the U.S. currently pledged as collateral under the senior secured revolving credit facilities was approximately $935 million as of December 31, 2020. The Credit Agreement contains customary covenants, including, but not limited to, restrictions on the Borrower’s and its subsidiaries’ ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances, or investments, pay dividends, sell or otherwise transfer assets outside of the ordinary course, optionally prepay or modify terms of any junior indebtedness, enter into transactions with affiliates, or change their line of business. The Credit Agreement requires the maintenance of a fixed charge coverage ratio of 1.00 to 1.00 at the end of each fiscal quarter when excess availability under the senior secured revolving credit facilities is less than the greater of (x) $100 million and (y) 10% of the aggregate amount available thereunder (the "Availability Threshold") and on the last day of each subsequent fiscal quarter ending thereafter, until no event of default exists and excess availability is greater than the Availability Threshold for at least 30 consecutive days. Mattel had no borrowings under the senior secured revolving credit facilities as of December 31, 2020 and 2019. Since the execution of the Credit Agreement, the fixed charge coverage ratio covenant has not been in effect as no event of default has occurred and as Mattel's excess availability has been greater than $100 million and the Availability Threshold. As of December 31, 2020 and 2019, Mattel was in compliance with all covenants contained in the Credit Agreement. The Credit Agreement is a material agreement, and failure to comply with its covenants may result in an event of default under the terms of the senior secured revolving credit facilities. If Mattel were to default under the terms of the senior secured revolving credit facilities, its ability to meet its seasonal financing requirements could be adversely affected. To finance seasonal working capital requirements of certain foreign subsidiaries, Mattel avails itself of individual short-term credit lines. As of December 31, 2020, foreign credit lines totaled approximately $13 million. Mattel expects to extend the majority of these credit lines throughout 2021. Additionally, sales of foreign receivables occur periodically to finance seasonal working capital requirements. As of December 31, 2020 and 2019, there were no outstanding amounts of accounts receivable that were sold under international factoring arrangements. Short-Term Borrowings As of December 31, 2020, Mattel had no borrowings outstanding under the senior secured revolving credit facilities and approximately $1 million of foreign short-term borrowings outstanding. As of December 31, 2019, Mattel had no borrowings outstanding under the senior secured revolving credit facilities and no foreign short-term borrowings outstanding. During 2020 and 2019, Mattel had average borrowings under the senior secured revolving credit facilities and other short-term borrowings of $201.7 million and $89.0 million, respectively, to help finance its seasonal working capital requirements. Average borrowings were higher during 2020 than in 2019 due to the accelerated timing of borrowings under the senior secured revolving credit facilities in 2020 in anticipation of its projected seasonal working capital requirements and in light of the uncertainties surrounding COVID-19. The weighted-average interest rate on borrowings under the senior secured revolving credit facilities and other short-term borrowings during 2020 and 2019 was 2.2% and 3.6%, respectively. Mattel's average borrowings on its foreign short-term bank loans were not material during 2020 and 2019. Long-Term Debt In November 2019, Mattel issued $600 million aggregate principal amount of 5.875% senior unsecured notes due December 15, 2027 ("2019 Senior Notes"). The 2019 Senior Notes were issued pursuant to an indenture, dated November 20, 2019, among Mattel, the guarantors named therein, and MUFG Union Bank, N.A., as Trustee (the "Indenture"). Interest on the 2019 Senior Notes is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2020. Mattel may redeem all or part of the 2019 Senior Notes at any time or from time to time prior to December 15, 2022 at its option, at a redemption price equal to 100% of the principal amount, plus a "make whole" premium, plus accrued and unpaid interest on the 2019 Senior Notes being redeemed to, but excluding, the redemption date. Mattel may also redeem up to 40% of the principal amount of the 2019 Senior Notes at any time or from time to time prior to December 15, 2022 at its option, at a redemption price equal to 105.875% of the principal amount, plus accrued and unpaid interest on the 2019 Senior Notes being redeemed to, but excluding, the redemption date, with the net cash proceeds of sales of one or more equity offerings by Mattel or any direct or indirect parent of Mattel. Mattel may redeem all or part of the 2019 Senior Notes at any time or from time to time on or after December 15, 2022, at its option, at a redemption price including a call premium that varies (from 0% to 4.406%) depending on the year of redemption, plus accrued and unpaid interest on the 2019 Senior Notes being redeemed to, but excluding, the redemption date. The 2019 Senior Notes are Mattel’s and the guarantors’ senior unsecured obligations. The 2019 Senior Notes are guaranteed by Mattel's existing, and subject to certain exceptions, future wholly-owned domestic restricted subsidiaries that guarantee Mattel’s 2017/2018 Senior Notes due 2025 and senior secured revolving credit facilities or certain other indebtedness. Under the terms of the Indenture, the 2019 Senior Notes rank equally in right of payment with all of Mattel’s existing and future senior debt, including Mattel’s Existing Notes (as defined in the Indenture) and borrowings under the senior secured revolving credit facilities, and rank senior in right of payment to Mattel's existing and future debt and other obligations that expressly provide for their subordination to the 2019 Senior Notes. The 2019 Senior Notes are structurally subordinated to all of the existing and future liabilities, including trade payables, of Mattel’s subsidiaries that do not guarantee the 2019 Senior Notes (including the Canadian Subfacility, the French Subfacility, the Spanish Subfacility, the European (GNU) Subfacility, and the Australian Subfacility of the senior secured revolving credit facilities) and are effectively subordinated to Mattel’s and the guarantors’ existing and future senior secured debt to the extent of the value of the collateral securing such debt (including borrowings under the senior secured revolving credit facilities). The guarantees are, with respect to the assets of the guarantors of the 2019 Senior Notes, structurally senior to all of Mattel’s existing indebtedness, future indebtedness or other liabilities that are not guaranteed by such guarantors, including Mattel’s obligations under the Existing Notes (other than the 2017/2018 Senior Notes due 2025). The Indenture contains covenants that limit Mattel’s (and some of its subsidiaries’) ability to, among other things: (i) incur additional debt or issue certain preferred shares; (ii) pay dividends on or make other distributions in respect of their capital stock or make other restricted payments; (iii) make investments in unrestricted subsidiaries; (iv) create liens; (v) enter into certain sale/leaseback transactions; (vi) merge or consolidate, or sell, transfer or otherwise dispose of substantially all of their assets; and (vii) designate subsidiaries as unrestricted. In December 2019, Mattel used the net proceeds from the issuance of the 2019 Senior Notes, plus cash on hand, to redeem and retire all of the 2010 Senior Notes due October 1, 2020 and all of the 2016 Senior Notes due August 15, 2021, at a redemption price equal to the principal amount, plus a "make-whole" premium, and accrued and unpaid interest. Upon redemption, Mattel recognized total debt extinguishment costs, including write off of debt issuance costs, of $9.2 million which were recorded within interest expense in the consolidated statements of operations. Mattel’s long-term debt consists of the following:
| Interest Rate |  | December 31, 2020 |  | December 31, 2019
|  |  | (In thousands)
2010 Senior Notes due October 2040 | 6.20 | % |  | $ | 250,000 |  |  | $ | 250,000 |
2011 Senior Notes due November 2041 | 5.45 | % |  | 300,000 |  |  | 300,000 |
2013 Senior Notes due March 2023 | 3.15 | % |  | 250,000 |  |  | 250,000 |
2017/2018 Senior Notes due December 2025 | 6.75 | % |  | 1,500,000 |  |  | 1,500,000 |
2019 Senior Notes due December 2027 | 5.875 | % |  | 600,000 |  |  | 600,000 |
Debt issuance costs and debt discount |  |  | (45,336) |  |  | (53,249) |
|  |  | 2,854,664 |  |  | 2,846,751 |
Less: current portion |  |  | — |  |  | — |
Total long-term debt |  |  | $ | 2,854,664 |  |  | $ | 2,846,751 |
The aggregate principal amount of long-term debt maturing in the next five years and thereafter is as follows:
| 2010 Senior Notes |  | 2011 Senior Notes |  | 2013 Senior Notes |  | 2017/2018 Senior Notes |  | 2019 Senior Notes |  | Total
| (In thousands)
2021 | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
2022 | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
2023 | — |  |  | — |  |  | 250,000 |  |  | — |  |  | — |  |  | 250,000 |
2024 | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
2025 | — |  |  | — |  |  | — |  |  | 1,500,000 |  |  | — |  |  | 1,500,000 |
Thereafter | 250,000 |  |  | 300,000 |  |  | — |  |  | — |  |  | 600,000 |  |  | 1,150,000 |
| $ | 250,000 |  |  | $ | 300,000 |  |  | $ | 250,000 |  |  | $ | 1,500,000 |  |  | $ | 600,000 |  |  | $ | 2,900,000 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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