Mattel 2009 Annual Report Download - page 97

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The net gains of $20.8 million recognized in the consolidated statements of operations during 2009 are
offset by foreign currency transaction losses on the related hedged balances.
Note 12—Fair Value Measurements
The following table presents information about Mattel’s assets and liabilities measured and reported in the
financial statements at fair value on a recurring basis as of December 31, 2009 and indicates the fair value
hierarchy of the valuation techniques utilized to determine such fair value. The three levels of the fair value
hierarchy are as follows:
• Level 1 – Valuations based on unadjusted 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 unobservable, supported by little or no market activity
and that are significant to the fair value of the assets or liabilities.
Mattel does not have any significant financial assets or liabilities measured at fair value using Level 1 or
Level 3 inputs as of December 31, 2009 or December 31, 2008. Mattel’s financial assets and liabilities measured
using Level 2 inputs include the following:
December 31, 2009 December 31, 2008
(In thousands)
Assets:
Foreign currency forward exchange contracts (a) .................. $10,192 $24,714
Liabilities:
Foreign currency forward exchange contracts (a) .................. $21,051 $12,326
Interest rate swaps (b) ....................................... — 1,934
Total liabilities ............................................. $21,051 $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 13—Financial Instruments
Mattel’s financial instruments include cash and 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 $794.7 million
(compared to a carrying amount of $750.0 million) as of December 31, 2009 and $853.5 million (compared to a
carrying amount of $900.0 million) as of December 31, 2008. The estimated fair value has been calculated based
on broker quotes or rates for the same or similar instruments.
The fair value related disclosures for Mattel’s derivative financial instruments are included in “Note 11 to
the Consolidated Financial Statements—Derivative Instruments” and “Note 12 to the Consolidated Financial
Statements—Fair Value Measurements.”
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