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Fair Value Measurements
 12 Months Ended
Dec. 31, 2018
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, 2018 and 2017 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, 2018
  
Level 1
 
Level 2
 
Level 3
 
Total
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts (a)
$
—

 
$
16,092

 
$
—

 
$
16,092

Available-for-sale (b)
5,243

 
—

 
—

 
5,243

Total assets
$
5,243

 
$
16,092

 
$
—

 
$
21,335

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

 
$
2,910

 
$
—

 
$
2,910

 
December 31, 2017
  
Level 1
 
Level 2
 
Level 3
 
Total
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts (a)
$
—

 
$
7,804

 
$
—

 
$
7,804

Available-for-sale (b)
8,991

 
—

 
—

 
8,991

Total assets
$
8,991

 
$
7,804

 
$
—

 
$
16,795

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

 
$
19,320

 
$
—

 
$
19,320

(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 available-for-sale security is based on the quoted price on an active public exchange.
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 2017, Mattel recorded impairment charges associated with its intangible assets and property, plant, and equipment.
As described in "Note 3 to the Consolidated Financial Statements—Goodwill and Other Intangibles," during the third quarter of 2017, Mattel discontinued the use of a trademark which resulted in an impairment charge of $9.2 million.
As described in "Note 2 to the Consolidated Financial Statements—Property, Plant, and Equipment," during the third and fourth quarter of 2017, Mattel recorded impairment charges of $21.2 million related to leasehold improvements within certain American Girl retail stores. The fair value of the asset group was determined based on the income approach, with inputs which are categorized as Level 3 on the fair value hierarchy, utilizing certain market participant assumptions. These inputs include revenue and profit forecasts and the discount rate. Further, Mattel recorded an impairment charge in the fourth quarter of 2017 of $20.6 million for capitalized costs related to tools, dies, and molds for discontinued products which were no longer considered to be recoverable. There was no remaining value attributed to the identified tools, dies, and molds subsequent to the impairment charge.
During the year ended December 31, 2018, Mattel fully impaired certain intangible assets and property, plant, and equipment of $18.2 million due to discontinued use. There was no remaining value attributed to these identified intangible assets and property, plant, and equipment as of December 31, 2018.
Other Financial Instruments
Mattel’s financial instruments include cash and equivalents, accounts receivable and payable, accrued liabilities, and short-term and long-term borrowings. The fair values of these instruments approximate their carrying values because of their short-term nature. Cash is classified as Level 1 and all other financial instruments 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 $2.49 billion (compared to a carrying value of $2.90 billion) as of December 31, 2018 and $3.01 billion (compared to a carrying value of $3.15 billion) as of December 31, 2017. 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.