Mattel 2013 Annual Report Download - page 97

Download and view the complete annual report

Please find page 97 of the 2013 Mattel annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

December 31, 2012
Level 1 Level 2 Level 3 Total
(In thousands)
Assets:
Foreign currency forward exchange contracts (a) .............. $ — $3,068 $ — $ 3,068
Auction rate security (b) .................................. — — 19,256 19,256
Total assets ............................................ $ — $3,068 $19,256 $22,324
Liabilities:
Foreign currency forward exchange contracts (a) .............. $ — $8,757 $ — $ 8,757
(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 notional amounts, currencies, and maturity dates.
(b) The fair value of the auction rate security is estimated using a discounted cash flow model based on
(i) estimated interest rates, timing, and amount of cash flows, (ii) credit spreads, recovery rates, and credit
quality of the underlying securities, (iii) illiquidity considerations, and (iv) market correlation.
The following table presents information about Mattel’s auction rate security measured and reported at fair
value on a recurring basis using significant Level 3 inputs:
Level 3
(In thousands)
Balance at December 31, 2010 ..................................................... $ 21,000
Unrealized loss .................................................................. (5,370)
Balance at December 31, 2011 ..................................................... 15,630
Unrealized gain ................................................................. 3,626
Balance at December 31, 2012 ..................................................... 19,256
Unrealized gain ................................................................. 9,639
Balance at December 31, 2013 ..................................................... $ 28,895
The unrealized gains/losses recognized relating to the auction rate security are reflected within other non-
operating income in the consolidated statements of operations.
Non-Recurring Fair Value Measurements
Mattel tests its long-lived assets for impairment whenever events or changes in circumstances indicate that
the carrying value may not be recoverable or that the carrying value may exceed its fair value. During the second
quarter of 2013, Mattel changed its brand strategy for Polly Pocket, which includes a more focused allocation of
resources to support the Polly Pocket brand in specific markets, resulting in a reduction of the forecasted future
cash flows of the brand. As a result, Mattel recognized an impairment charge of approximately $14 million,
which reduced the value of the intangible asset to approximately $99 million, as more fully described in “Note 2
to the Consolidated Financial Statements—Goodwill and Other Intangibles.”
During 2013, 2012, and 2011, Mattel did not have any other assets or liabilities measured and reported at
fair value on a non-recurring basis in periods subsequent to initial recognition.
Other Financial Instruments
Mattel’s financial instruments include cash and equivalents, accounts receivable and payable, short-term
borrowings, and accrued liabilities. The carrying value of these instruments approximates fair value because of
their short-term nature.
89