Derivative Instruments

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Mattel seeks to mitigate its exposure to foreign currency transaction risk by monitoring its foreign currency transaction exposure for the year and partially hedging such exposure using foreign currency forward exchange contracts. Mattel uses foreign currency forward exchange contracts as cash flow hedges primarily to hedge its purchases and sales of inventory denominated in foreign currencies. These contracts generally have maturity dates of up to 18 months. These derivative instruments have been designated as effective cash flow hedges, whereby the unsettled hedges are reported in Mattel’s consolidated balance sheets at fair value, with changes in the fair value of the hedges reflected in other comprehensive income ("OCI"). Realized gains and losses for these contracts are recorded in the consolidated statements of operations in the period in which the inventory is sold to customers. Additionally, Mattel uses foreign currency forward exchange contracts to hedge intercompany loans and advances denominated in foreign currencies. Due to the short-term nature of the contracts involved, Mattel does not use hedge accounting for these contracts, and as such, changes in fair value are recorded in the period of change in the consolidated statements of operations. As of December 31, 2019 and 2018, Mattel held foreign currency forward exchange contracts with notional amounts of $742.0 million and $962.1 million, respectively.

The following table presents Mattel’s derivative assets and liabilities:

	Derivative Assets
	Balance Sheet Classification	Fair Value
		December 31, 2019		December 31, 2018
		(In thousands)
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Prepaid expenses and other current assets	$	10,227	$	12,122
Foreign currency forward exchange contracts	Other noncurrent assets	715		1,613
		$	10,942	$	13,735
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	Prepaid expenses and other current assets	$	4,060	$	2,357
		$	15,002	$	16,092
	Derivative Liabilities
	Balance Sheet Classification	Fair Value
		December 31, 2019		December 31, 2018
		(In thousands)
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Accrued liabilities	$	2,500	$	954
Foreign currency forward exchange contracts	Other noncurrent liabilities	213		185
		$	2,713	$	1,139
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	Accrued liabilities	$	263	$	1,771
		$	2,976	$	2,910

The following tables present the classification and amount of gains and losses, net of tax, from derivatives reported in the consolidated statements of operations:

	Derivatives Designated As Hedging Instruments								Consolidated Statements of Operations Classification
	For the Year Ended
	December 31, 2019		December 31, 2018			December 31, 2017
	(In thousands)
Foreign currency forward exchange contracts:
Amount of gains (losses) recognized in OCI	$	17,024	$	24,082		$	(55,377	)
Amount of gains (losses) reclassified from accumulated OCI to the consolidated statements of operations	17,394		(8,427		)	(16,810		)	Cost of sales

The net gains (losses) of $17.4 million, $(8.4) million, and $(16.8) million reclassified from accumulated other comprehensive loss to the consolidated statements of operations during 2019, 2018, and 2017, respectively, are offset by the changes in cash flows associated with the underlying hedged transactions.

	Derivatives Not Designated As Hedging Instruments							Consolidated Statements of Operations Classification
	For the Year Ended
	December 31, 2019		December 31, 2018			December 31, 2017
	(In thousands)
Amount of gain (loss) recognized in the consolidated statements of operations:
Foreign currency forward exchange contracts	$	2,530	$	(23,109	)	$	70,200	Other non-operating expense, net
Foreign currency forward exchange contracts	—		(244		)	511		Cost of sales
	$	2,530	$	(23,353	)	$	70,711

The net gains (losses) of $2.5 million, $(23.4) million, and $70.7 million recognized in the consolidated statements of operations during 2019, 2018, and 2017, respectively, are offset by foreign currency transaction gains and losses on the related hedged balances.