Mattel 2012 Annual Report Download - page 86

securities are long-duration bonds intended to closely match the duration of the liabilities and include US
government treasuries and agencies, corporate bonds from various industries, and mortgage-backed and asset-
backed securities.
Mattel’s defined benefit pension plan assets are measured and reported in the financial statements at fair
value using inputs, which are more fully described in “Note 10 to the Consolidated Financial Statements—Fair
Value Measurements,” as follows:
December 31, 2012
Level 1 Level 2 Level 3 Total
(In thousands)
Collective trust funds:
US equity securities ..................................... $ — $148,435 $ — $148,435
International equity securities ............................. — 147,756 — 147,756
International fixed income securities ........................ — 36,580 — 36,580
US government and US government agency securities .............. — 35,944 — 35,944
US corporate debt instruments ................................. — 20,514 — 20,514
International corporate debt instruments ......................... — 5,455 — 5,455
Mutual funds ............................................... 1,422 3,661 — 5,083
Other ..................................................... — 6,396 — 6,396
Total ............................................. $1,422 $404,741 $ — $406,163
December 31, 2011
Level 1 Level 2 Level 3 Total
(In thousands)
Collective trust funds:
US equity securities ..................................... $ — $101,747 $ — $101,747
International equity securities ............................. — 101,956 — 101,956
International fixed income securities ........................ — 36,128 — 36,128
US government and US government agency securities .............. — 51,897 — 51,897
US corporate debt instruments ................................. — 19,346 — 19,346
International corporate debt instruments ......................... — 5,887 — 5,887
Mutual funds ............................................... 4,883 — — 4,883
Other ..................................................... — 16,237 — 16,237
Total ............................................. $4,883 $333,198 $ — $338,081
The fair value of collective trust funds and mutual funds shares are determined based on the net asset value
of shares held at year-end. The fair value of US government securities, US government agency securities, and
corporate debt instruments are determined based on quoted market prices or are estimated using pricing models
with observable inputs, quoted prices of securities with similar characteristics, or discounted cash flows.
Mattel’s defined benefit pension plan assets are not directly invested in Mattel common stock. Mattel
believes that the long-term rate of return on plan assets of 8.0% as of December 31, 2012 is reasonable based on
historical returns.
During 1999, Mattel amended the Fisher-Price Pension Plan to convert it from a career-average plan to a
cash balance plan and applied for a determination letter from the IRS. In 2003 and 2011, Mattel further amended
the Fisher-Price Pension Plan to reflect changes in regulations and court cases associated with cash balance plans
and submitted applications for a determination letter to the IRS. Mattel received a favorable determination letter
in February 2012 and converted the Fisher-Price Pension Plan to a cash balance plan in July 2012. The Fisher-
Price Pension Plan was renamed the Mattel Cash Balance Plan in connection with the conversion. The plan
conversion resulted in a reduction in the benefit obligation of approximately $12 million.
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