Mattel 2014 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2014 Mattel annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 134

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134

Mattel’s foreign currency forward exchange contracts that were used to hedge firm foreign currency
commitments as of December 31, 2014 are shown below. All contracts in the following table are against the US
dollar and are maintained by reporting units with a US dollar functional currency, with the exception of the
Indonesian rupiah contracts, which are maintained by entities with a rupiah functional currency.
Buy Sell
Contract
Amount
Weighted
Average
Contract
Rate
Fair
Value
Contract
Amount
Weighted
Average
Contract
Rate
Fair
Value
(In thousands of US dollars, except for rates)
Australian dollar* ................... $ 42,682 0.82 $ (82) $ 4,934 0.91 $ 557
British pound sterling* ............... 44,743 1.57 (485) — — —
Canadian dollar* ................... 12,886 0.86 19 14,574 0.89 517
Czech koruna ...................... 809 21.96 (29) — — —
Danish krone ...................... 51 5.95 (2) — — —
Euro* ............................ 265,501 1.25 (8,565) 377,501 1.33 32,349
Hungarian forint .................... 2,104 249.64 (93) — — —
Indonesian rupiah ................... 72,418 12,590.81 (431) — — —
Japanese yen ....................... — — — 13,154 117.20 285
Mexican peso ...................... 117,913 14.73 — 75,489 14.73 252
New Turkish lira ................... 1,257 2.37 16———
New Zealand dollar* ................ 17,149 0.78 38———
Polish zloty ........................ 11,915 3.36 (594) — — —
Russian ruble ...................... 5,560 62.95 1,028———
Singapore dollar .................... 6,483 1.31 (90) — — —
Swiss franc ........................ 29,014 0.96 (1,016) — — —
Taiwan dollar ...................... — — — 13,657 31.50 83
$630,485 $ (10,286) $499,309 $ 34,043
*The weighted average contract rate for these contracts is quoted in US dollar per local currency.
For the purchase of foreign currencies, fair value reflects the amount, based on dealer quotes, that Mattel
would pay at maturity for contracts involving the same notional amounts, currencies, and maturity dates, if they
had been entered into as of December 31, 2014. For the sale of foreign currencies, fair value reflects the amount,
based on dealer quotes, that Mattel would receive at maturity for contracts involving the same notional amounts,
currencies, and maturity dates, if they had been entered into as of December 31, 2014. The differences between
the market forward amounts and the contract amounts are expected to be fully offset by currency transaction
gains and losses on the underlying hedged transactions.
In addition to the contracts involving the US dollar detailed in the above table, Mattel also had contracts to
sell British pound sterling for the purchase of Euro. As of December 31, 2014, these contracts had a contract
amount of $57.7 million and a fair value of $(2.0) million.
Had Mattel not entered into hedges to limit the effect of currency exchange rate fluctuations on its results of
operations and cash flows, its income before income taxes would have increased by approximately $32 million in
2014, decreased by approximately $9 million in 2013, and decreased by approximately $35 million in 2012.
Venezuelan Operations
Since January 1, 2010, Mattel has accounted for Venezuela as a highly inflationary economy as the three-
year cumulative inflation rate for Venezuela exceeded 100%. Accordingly, Mattel’s Venezuelan subsidiary uses
the US dollar as its functional currency, and monetary assets and liabilities denominated in Venezuelan bolivar
fuerte (“BsF”) generate income or expense for changes in value associated with foreign currency exchange rate
55