Mattel 2011 Annual Report Download - page 62

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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* ....................... $ 51,737 1.01 $ 793 $ 6,765 1.03 $ 98
British pound sterling* ................... 19,447 1.57 (149) — — —
Canadian dollar* ........................ 10,687 0.97 91 28,351 1.01 1,010
Czech koruna .......................... 3,101 19.51 (29) — — —
Danish krone ........................... 2,507 5.68 (24) — — —
Euro* ................................. 374,915 1.31 (3,415) 400,556 1.40 29,689
Hungarian forint ........................ 394 230.21 (20) — — —
Indonesian rupiah ....................... 75,851 9,371.69 1,049 — — —
Japanese yen ........................... 16,017 77.70 178 19,132 77.72 (188)
Mexican peso .......................... — — — 18,958 13.81 135
New Turkish lira ........................ — — — 5,026 1.89 (18)
New Zealand dollar* ..................... 11,924 0.77 115 — — —
Norwegian krone ........................ 9,146 5.90 (100) — — —
Polish zloty ............................ — — — 3,039 3.41 25
Russian ruble ........................... — — — 574 31.47 12
Singapore dollar ........................ 382 1,305.00 3 — — —
Swedish krona .......................... 7,081 6.85 (31) — — —
Swiss franc ............................ 25,200 0.93 (188) — — —
Taiwan dollar .......................... — — — 11,349 30.54 (114)
$608,389 $(1,727) $493,750 $30,649
*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 notional amounts, currencies and maturity dates, if they
had been entered into as of December 31, 2011. 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 notional amounts,
currencies and maturity dates, if they had been entered into as of December 31, 2011. 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, 2011, these contracts had a contract
amount of $37.6 million and a fair value of $(1.3) 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 $5 million in
2011, increased by approximately $4 million in 2010, and decreased by approximately $13 million in 2009.
Venezuelan Operations
Since January 1, 2010, Mattel has accounted for Venezuela as a highly inflationary economy as the three-
year cumulative inflation rate for Venezuela exceeded 100%. Accordingly, Mattel’s Venezuelan subsidiary uses
the US dollar as its functional currency, and monetary assets and liabilities denominated in Venezuelan bolivar
fuertes generate income or expense for changes in value associated with foreign currency exchange rate
fluctuations against the US dollar. Mattel’s Venezuelan subsidiary uses the Sistema de Transacciones con Titulos
en Moneda Extranjera (“SITME”) rate, which is controlled by the Central Bank of Venezuela, to remeasure
50