Mattel 2010 Annual Report Download - page 57

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Mattel’s foreign currency forward exchange contracts that were used to hedge firm foreign currency
commitments as of December 31, 2010 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)
Australian dollar* ....................... $ 48,574 0.99 $ 1,581 $ 3,408 0.87 $ (573)
British pound sterling* ................... — — — 5,394 1.55 (52)
Canadian dollar* ........................ — — — 36,337 0.96 (1,374)
Czech koruna .......................... 7,447 19.27 252 — — —
Danish krone ........................... — — — 10,550 5.68 (196)
Euro* ................................. 313,548 1.31 6,030 331,581 1.32 (3,299)
Hungarian forint ........................ 3,197 211.48 75 — — —
Indonesian rupiah ....................... 88,070 9,385.07 2,261 — — —
Japanese yen ........................... 12,574 83.39 363 18,334 83.45 (515)
Mexican peso .......................... — — — 51,280 12.44 (256)
New Turkish lira ........................ — — — 6,129 1.56 (36)
New Zealand dollar* ..................... 10,357 0.74 578 512 0.69 (67)
Norwegian krone ........................ 8,157 5.99 260 — — —
Polish zloty ............................ 4,930 3.05 165 — — —
Swedish krona .......................... 5,979 6.86 136 — — —
Swiss franc ............................ 21,689 0.96 696 — — —
Taiwan dollar .......................... — — — 10,667 30.12 (306)
$524,522 $12,397 $474,192 $(6,674)
*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, 2010. 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, 2010. 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, 2010, these contracts had a contract
amount of $52.3 million and a fair value of $0.7 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 increased by approximately $4 million in
2010, decreased by approximately $13 million in 2009, and increased by approximately $16 million in 2008.
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
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