Fair Value Measurements

12 Months Ended

Dec. 31, 2020

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, 2020 and 2019 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, 2020
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange contracts and other (a)	$	—	$	5,711	$	—	$	5,711
Available-for-sale (b)	4,268		—		—		4,268

Total assets	$	4,268	$	5,711	$	—	$	9,979

Liabilities:
Foreign currency forward exchange contracts and other (a)	$	—	$	25,494	$	—	$	25,494


	December 31, 2019
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange contracts (a)	$	—	$	15,002	$	—	$	15,002
Available-for-sale (b)	3,530		—		—		3,530

Total assets	$	3,530	$	15,002	$	—	$	18,532

Liabilities:
Foreign currency forward exchange contracts (a)	$	—	$	2,976	$	—	$	2,976

(a)The fair value of the foreign currency forward exchange contracts and other 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 the year ended December 31, 2019, Mattel impaired certain property, plant, and equipment totaling $38.7 million, of which $25.9 million related to the impairment of certain American Girl retail store assets. The fair value of the American Girl retail stores was determined based on the income approach, with Level 3 inputs utilizing certain market participant assumptions. These inputs included revenue forecasts, profit forecasts, and the discount rate. The other impairment charges of $12.8 million were primarily related to the full impairment of certain tools, dies, and molds and machinery equipment due to discontinued use. The remaining book value attributed to these assets was subsequently impaired in 2020 due to discontinued use.

During the year ended December 31, 2020, Mattel fully impaired certain right-of-use assets, tooling, and property, plant, and equipment totaling $13.0 million due to discontinued use. Subsequent to these impairment charges, there was no remaining value attributed to these assets as of December 31, 2020.

Other Financial Instruments

Mattel’s financial instruments include cash and equivalents, accounts receivable and payable, accrued liabilities, short-term borrowings, and long-term debt. The fair values of these instruments, excluding long-term debt, approximate their carrying values because of their short-term nature. Cash and equivalents are 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 was $3.11 billion (compared to a carrying value of $2.90 billion) as of December 31, 2020 and $3.00 billion (compared to a carrying value of $2.90 billion) as of December 31, 2019. 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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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