Mattel 2009 Annual Report Download - page 95

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The following table summarizes the number and weighted average grant date fair value of Mattel’s unvested
RSUs during the year (amounts in thousands, except weighted average grant date fair value):
2009 2008 2007
Shares
Weighted
Average
Grant Date
Fair Value Shares
Weighted
Average
Grant Date
Fair Value Shares
Weighted
Average
Grant Date
Fair Value
Unvested at January 1 ....................... 3,927 $21.03 3,452 $20.38 1,811 $17.28
Granted ............................... 2,113 17.41 1,873 20.09 1,744 23.60
Vested ............................... (1,408) 20.96 (990) 16.91 (15) 28.10
Forfeited .............................. (183) 20.53 (408) 21.16 (88) 19.27
Unvested at December 31 .................... 4,449 $19.36 3,927 $21.03 3,452 $20.38
At December 31, 2009, total RSUs expected to vest totaled 4.1 million shares, with a weighted average
grant date fair value of $19.42. The total grant date fair value of RSUs vested during 2009, 2008, and 2007
totaled $29.5 million, $16.7 million, and $0.4 million, respectively.
In addition to the expense and share amounts described above, Mattel recognized compensation expense of
$5.3 million and $1.5 million, during 2009 and 2008, respectively, for performance RSUs granted in connection
with its January 1, 2008–December 31, 2010 Long-Term Incentive Program, as more fully described in “Note 7
to the Consolidated Financial Statements—Employee Benefit Plans.”
Note 11—Derivative Instruments
Effective January 1, 2009, Mattel adopted ASC 815-10 (formerly SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133). ASC 815-10 amends
and expands the current disclosure requirements 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, and (iii) how derivative instruments and related hedged items affect an
entity’s financial position, results of operations, and cash flows. The adoption of this standard had no impact on
Mattel’s financial statements.
Mattel seeks to mitigate its exposure to foreign currency transaction risk by monitoring its foreign currency
transaction exposure for the year and partially hedging such exposure using foreign currency forward exchange
contracts. Mattel uses foreign currency forward exchange contracts as cash flow hedges primarily to hedge its
purchases and sales of inventory denominated in foreign currencies. These contracts generally have maturity
dates up to 18 months. These derivative instruments have been designated as effective cash flow hedges,
whereby the unsettled hedges are reported in Mattel’s consolidated balance sheets at fair value, with changes in
the fair value of the hedges reflected in other comprehensive income (“OCI”). Realized gains and losses for these
contracts are recorded in the consolidated statements of operations in the period in which the inventory is sold to
customers. Additionally, Mattel uses foreign currency forward exchange contracts to hedge intercompany loans
and advances denominated in foreign currencies. Due to the short-term nature of the contracts involved, Mattel
does not use hedge accounting for these contracts, and as such, changes in fair value are recorded in the period of
change in the consolidated statements of operations. As of December 31, 2009 and 2008, Mattel held foreign
currency forward exchange contracts with notional amounts of $962.9 million and $888.1 million, respectively,
which was equal to the exposure hedged.
In connection with the issuance of its $100.0 million of Floating Rate Senior Notes, Mattel entered into two
interest rate swap agreements, each in a notional amount of $50.0 million, for the purpose of hedging the
variability of cash flows in the interest payments due to fluctuations of the LIBOR benchmark interest rate. The
two interest rate swap agreements expired in June 2009, which corresponded with the maturity of the Floating
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