Mattel 2008 Annual Report Download - page 93

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The loss on derivative financial instruments, net of tax, reclassified from accumulated other comprehensive
loss to Mattel’s results of operations was $7.8 million, $24.1 million, and $2.3 million during 2008, 2007, and
2006, respectively. As of December 31, 2008, $4.2 million of pre-tax unrealized gains ($4.9 million net of tax
benefit) and December 31, 2007, $22.0 million of pre-tax unrealized losses ($20.5 million net of tax benefit),
related to derivative instruments have been recorded in accumulated other comprehensive loss. Mattel expects to
reclassify the unrealized gains as of December 31, 2008 from accumulated other comprehensive loss to its results
of operations over the life of the contracts, generally within 18 months or less.
Fair Value of Financial Instruments
Mattel’s financial instruments include cash, cash equivalents, investments, accounts receivable and payable,
short-term borrowings, and accrued liabilities. The carrying amount of these instruments approximates fair value
because of their short-term nature.
The estimated fair value of Mattel’s long-term debt, including the current portion, is $853.5 million
(compared to a carrying amount of $900.0 million) as of December 31, 2008 and $613.1 million (compared to a
carrying amount of $600.0 million) as of December 31, 2007. The estimated fair value has been calculated based
on broker quotes or rates for the same or similar instruments.
The estimated fair value of derivative financial instruments recognized in Mattel’s consolidated balance
sheets is as follows:
December 31,
2008 2007
(In thousands)
Accounts receivable ........................................................ $ 772 $ 1,033
Prepaid expenses and other current assets ....................................... 23,914 2,202
Other noncurrent assets ..................................................... 28 152
Accrued liabilities .......................................................... (11,757) (22,700)
Other noncurrent liabilities ................................................... (2,503) (855)
The estimated fair value of derivative financial instruments is based on dealer quotes and reflects the
amount that Mattel would receive or pay at maturity for contracts involving the same currencies and maturity
dates, if they had been entered into as of December 31, 2008 or 2007.
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