Mattel 2009 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2009 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 134

  • 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
  • 131
  • 132
  • 133
  • 134

Mattel’s foreign currency forward exchange contracts that were used to hedge firm foreign currency
commitments as of December 31, 2009 are shown in the following table. All contracts are against the US dollar
and are maintained by reporting units with a US dollar functional currency, with the exception of the Indonesian
rupiah contracts, which are maintained by entities with a rupiah functional currency.
Buy Sell
Contract
Amount
Weighted
Average
Contract
Rate
Fair
Value
Contract
Amount
Weighted
Average
Contract
Rate
Fair
Value
(In thousands of US dollars)
Euro* ................................. $296,827 1.43 $ 845 $320,163 1.38 $(10,233)
Canadian dollar* ........................ 4,161 0.87 569 37,246 0.87 662
British pound sterling* ................... — — — 16,779 1.61 (108)
Japanese yen ........................... 9,896 89.74 (344) 19,868 89.88 680
Australian dollar* ....................... 32,575 0.88 607 24,364 1.30 (3,480)
Swiss franc ............................. 18,900 1.04 164 — — —
Mexican peso ........................... 51,277 12.87 (797) 1,500 14.44 (132)
Indonesian rupiah ....................... 39,040 9,883 1,850 3,020 11,882 (629)
New Zealand dollar* ..................... 9,178 0.71 224 1,769 1.73 (416)
Czech koruna ........................... 5,597 18.35 (17) — — —
Taiwan dollar ........................... — — — 10,233 0.03 (197)
Singapore dollar ......................... — — — 1,019 0.72 8
Hungarian forint ........................ 2,879 192.86 73 — — —
Polish zloty ............................ 9,997 2.93 344 — — —
New Turkish lira ........................ — — — 5,798 0.65 (79)
$480,327 $3,518 $441,759 $(13,924)
*The weighted average contract rate for these contracts is quoted in US dollar per local currency.
For the purchase of foreign currencies, fair value reflects the amount, based on dealer quotes, that Mattel
would pay at maturity for contracts involving the same currencies and maturity dates, if they had been entered
into as of December 31, 2009. For the sale of foreign currencies, fair value reflects the amount, based on dealer
quotes, that Mattel would receive at maturity for contracts involving the same currencies and maturity dates, if
they had been entered into as of December 31, 2009. The differences between the market forward amounts and
the contract amounts are expected to be fully offset by currency transaction gains and losses on the underlying
hedged transactions.
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, 2009, these contracts had a contract
amount of $40.8 million and a fair value of $0.5 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 $13 million
in 2009, decreased by approximately $16 million in 2008, and increased by approximately $7 million in 2007.
Venezuelan Operations
Mattel’s pricing decisions in Venezuela are intended to mitigate the risks of government imposed currency
controls and significant inflation by aligning Mattel’s prices with its expectations of the local currency cost of
acquiring inventory and distributing earnings in US dollars. Mattel applies to the Venezuelan government’s
Foreign Exchange Administrative Commission, CADIVI, for the conversion of local currency to US dollars at
the official exchange rate. The official exchange rate had been fixed at 2.15 Venezuelan bolivar fuertes to the US
51