Mattel 2008 Annual Report Download - page 70

Download and view the complete annual report

Please find page 70 of the 2008 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 130

  • 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

nonfinancial assets and liabilities that are measured at fair value on a non-recurring basis, such as goodwill and
identifiable intangible assets. Mattel does not expect the adoption of SFAS No. 157 on the nonfinancial assets
and liabilities that have been delayed to have a material impact on the amounts reported in its financial
statements. Mattel’s adoption of SFAS No. 157 did not require a cumulative effect adjustment to the opening
balance of its retained earnings.
SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at
fair value. Under SFAS No. 157, fair value refers to the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants in the market in which the reporting
entity transacts. SFAS No. 157 establishes a fair value hierarchy, which prioritizes the information used to
develop assumptions, gives the highest priority to quoted prices in active markets, and lowest priority to
unobservable data such as the reporting entity’s own data. See “Note 3 to the Consolidated Financial
Statements—Fair Value Measurements”.
In October 2008, the FASB issued FSP No. FAS 157-3, Determining the Fair Value of a Financial Asset
When the Market for That Asset is Not Active. FSP No. FAS 157-3 clarifies the application of SFAS No. 157,
which Mattel adopted as of January 1, 2008, in cases where a market is not active. Mattel has considered FSP
No. FAS 157-3 in its determination of estimated fair values as of December 31, 2008, and the impact was not
material.
New Accounting Pronouncements
SFAS No. 141(R)
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, which replaces
SFAS No. 141, Business Combinations. SFAS No. 141(R) (i) requires the acquiring entity in a business
combination to record all assets acquired and liabilities assumed at their acquisition-date fair values, (ii) changes
the recognition of assets acquired and liabilities assumed arising from contingencies, (iii) requires contingent
consideration to be recognized at its fair value on the acquisition date and, for certain arrangements, requires
changes in fair value to be recognized in earnings until settled, (iv) requires companies to revise any previously
issued post-acquisition financial information to reflect any adjustments as if they had been recorded on the
acquisition date for acquisitions completed on or after January 1, 2009, (v) requires the reversals of valuation
allowances related to acquired deferred tax assets and changes to acquired income tax uncertainties to be
recognized in earnings, and (vi) requires the expensing of acquisition-related costs as incurred. SFAS No. 141(R)
also requires additional disclosure of information surrounding a business combination to enhance financial
statement users’ understanding of the nature and financial impact of the business combination. SFAS No. 141(R)
applies prospectively to business combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008, with the exception of accounting for
changes in a valuation allowance for acquired deferred tax assets and the resolution of uncertain tax positions
accounted for under FIN 48, which is effective on January 1, 2009 for all acquisitions regardless of the date on
which they were completed. Mattel does not expect the adoption of SFAS No. 141(R) to have a material effect on
its operating results or financial position.
SFAS No. 161
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133. SFAS No. 161 amends and expands the disclosure
requirements of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to provide users
of financial statements with an enhanced understanding of (i) how and why an entity uses derivative instruments;
(ii) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related
interpretations, and (iii) how derivative instruments and related hedged items affect an entity’s financial position,
results of operations, and cash flows. SFAS No. 161 requires (i) qualitative disclosures about objectives for using
derivatives by primary underlying risk exposure, (ii) information about the volume of derivative activity,
66