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Fair Value Measurements
 12 Months Ended
Dec. 31, 2015
Fair Value Disclosures [Abstract]  
Fair Value Measurements
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, 2015 and 2014 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’s financial assets and liabilities include the following:
 
 
December 31, 2015
  
Level 1
 
Level 2
 
Level 3
 
Total
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts (a)
$
—

 
$
18,106

 
$
—

 
$
18,106

Liabilities:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts (a)
$
—

 
$
3,720

 
$
—

 
$
3,720


 
December 31, 2014
  
Level 1
 
Level 2
 
Level 3
 
Total
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts (a)
$
—

 
$
33,743

 
$
—

 
$
33,743

Auction rate security (b)
—

 
—

 
30,960

 
30,960

Total assets
$
—

 
$
33,743

 
$
30,960

 
$
64,703

Liabilities:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts (a)
$
—

 
$
13,398

 
$
—

 
$
13,398

 
(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 was 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.
During 2015, Mattel sold its auction rate security and received proceeds of $32.3 million, resulting in a gain of $1.3 million for the year ended December 31, 2015. The following table presents information about Mattel's investments measured and reported at fair value on a recurring basis using significant Level 3 inputs:
 
 
Level 3
 
(In thousands)
Balance at December 31, 2012
$
19,256

Unrealized gain
9,639

Balance at December 31, 2013
$
28,895

Unrealized gain
2,065

Balance at December 31, 2014
$
30,960

Proceeds from sale
(32,250
)
Gain on sale
1,290

Balance at December 31, 2015
$
—


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 2015, 2014, and 2013, 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 approximate their fair value because of their short-term nature and are classified as Level 2 within the fair value hierarchy.
The estimated fair value of Mattel’s long-term debt, including the current portion, was $2.15 billion (compared to a carrying value of $2.10 billion) as of December 31, 2015 and $2.18 billion (compared to a carrying value of $2.10 billion) as of December 31, 2014. The estimated fair values have been calculated based on broker quotes or rates for the same or similar instruments and are classified as Level 2 within the fair value hierarchy.