Mattel 2008 Annual Report Download - page 72

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In 2008, Mattel performed the impairment tests required by SFAS No. 142, Goodwill and Other Intangible
Assets, and determined that its goodwill and nonamortizable intangible assets were not impaired. Additionally,
goodwill and nonamortizable intangibles were determined to not be impaired in 2007 and 2006.
In October 2008, Mattel acquired Sekkoia SAS, which owns the Blokus®trademark and trade name rights,
for $35.1 million in cash, including acquisition costs. In connection with the acquisition, Mattel recorded
goodwill and amortizable identifiable intangible assets totaling $18.1 million and $22.9 million, respectively.
In August 2008, Mattel acquired the intellectual property rights related to Whac-a-Mole®for $23.5 million,
including acquisition costs, which is included within amortizable identifiable intangibles.
In August 2007, Mattel acquired the rights to manufacture, distribute and market several game properties,
including Apples to Apples®, Snorta®, and Blink®for $25.3 million, including acquisition costs, which is
included within amortizable identifiable intangibles.
In May 2007, Mattel acquired Origin Products Limited (“Origin”), which owns the Polly Pocket®trademark
and trade name rights, for $79.1 million in cash, including acquisition costs. Prior to the acquisition, Mattel had
exclusive rights to manufacture, design and distribute Polly Pocket®products. In connection with the acquisition
of Origin, Mattel recorded nonamortizable intangible assets totaling $113.0 million, including the $79.1 million
for the purchase price and acquisition costs, along with related deferred tax liabilities.
Note 3—Fair Value Measurements
Mattel adopted SFAS No. 157 on January 1, 2008, which clarifies that 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. Under SFAS No. 157, fair value should be
based on the assumptions market participants would use when pricing the asset or liability and establishes a fair
value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. Observable inputs are inputs that market participants would use
in pricing the asset or liability developed based on market data obtained from sources independent of Mattel.
Unobservable inputs are those that reflect Mattel’s assumptions about what market participants would use in
pricing the asset or liability developed based on the best information available in the circumstances. The three
levels of the fair value hierarchy defined by SFAS No. 157 are as follows:
• Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the
entity has the ability to access.
• Level 2—Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that
are not active, or other inputs that are observable or can be corroborated by observable data for
substantially the full term of the assets or liabilities.
• Level 3—Valuations based on inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.
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