Mattel 2005 Annual Report Download - page 59

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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, 2005, these contracts had a contract
amount of $15.6 million and a fair value of $15.8 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 decreased by approximately $3 million in
2005 and increased by approximately $38 million and $57 million in 2004 and 2003, respectively.
Interest Rate Sensitivity
An assumed 50 basis point movement in interest rates on Mattel’s short-term borrowings would have had an
immaterial impact on its results of operations for the year ended December 31, 2005.
Item 8. Financial Statements and Supplementary Data.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Mattel’s management, including
Robert A. Eckert, its principal executive officer, and Kevin M. Farr, its principal financial officer, evaluated the
effectiveness of Mattel’s internal control over financial reporting using the framework in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, management concluded that Mattel’s internal control over financial reporting was
effective as of December 31, 2005. PricewaterhouseCoopers LLP, an independent registered public accounting
firm, has audited management’s assessment of the effectiveness of Mattel’s internal control over financial
reporting as of December 31, 2005 as stated in their report which is included in this Annual Report on
Form 10-K.
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