Mattel 2008 Annual Report Download - page 73

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As required by SFAS No. 157, financial assets and liabilities are classified in their entirety based on the
lowest level of input that is significant to the fair value measurement. Mattel’s assessment of the significance of a
particular input to the fair value measurement requires judgment, and may affect the valuation of assets and
liabilities and their placement within the fair value hierarchy levels. The impact of Mattel’s creditworthiness has
been considered in the fair value measurements noted below. In addition, under SFAS No. 157, the fair value
measurement of a liability must reflect the nonperformance risk of an entity. Mattel does not have any significant
assets or liabilities measured at fair value using Level 1 or Level 3 inputs as of December 31, 2008. Mattel’s
financial assets and liabilities measured and reported in the financial statements at fair value on a recurring basis
using Level 2 inputs as of December 31, 2008 include the following (in thousands):
Assets:
Foreign currency forward exchange contracts (a) ....................................... $24,714
Liabilities:
Foreign currency forward exchange contracts (a) ....................................... 12,326
Interest rate swaps (b) ............................................................ 1,934
Total liabilities .................................................................. $14,260
(a) The fair value of the foreign currency forward exchange contracts is based on dealer quotes of market
forward rates and reflects the amount that Mattel would receive or pay at their maturity dates for contracts
involving the same currencies and maturity dates.
(b) The fair value of the interest rate swaps is based on dealer quotes using cash flows discounted at relevant
market interest rates.
Note 4—Income Taxes
Consolidated pre-tax income consists of the following:
For the Year
2008 2007 2006
(In thousands)
US operations ................................................... $(37,808) $ 14,745 $ 33,985
Foreign operations ............................................... 525,772 688,653 649,771
$487,964 $703,398 $683,756
The provision (benefit) for current and deferred income taxes consists of the following:
For the Year
2008 2007 2006
(In thousands)
Current
Federal .................................................... $ 2,230 $ (36,626) $ 25,483
State ...................................................... (1,790) (1,143) (5,294)
Foreign .................................................... 121,423 118,140 80,769
121,863 80,371 100,958
Deferred
Federal .................................................... (15,043) 3,055 4,635
State ...................................................... 151 11,039 (2,185)
Foreign .................................................... 1,357 8,940 (12,579)
(13,535) 23,034 (10,129)
Provision for income taxes ......................................... $108,328 $103,405 $ 90,829
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