Derivative Instruments

3 Months Ended

Mar. 31, 2020

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. Mattel also 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. Additionally, Mattel utilizes derivative contracts to hedge commodities including certain raw materials. As of March 31, 2020, March 31, 2019, and December 31, 2019, Mattel held foreign currency forward exchange contracts and other commodity derivative instruments, with notional amounts of $1.37 billion, $1.10 billion, and $742.0 million, respectively.

The following tables present Mattel's derivative assets and liabilities:

	Derivative Assets
	Fair Value						Balance Sheet Classification
	March 31, 2020		March 31, 2019		December 31, 2019
	(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward exchange contracts and other	$	21,121	$	16,703	$	10,227	Prepaid expenses and  other current assets
Foreign currency forward exchange contracts and other	2,525		3,041		715		Other noncurrent assets
Total derivatives designated as hedging instruments	$	23,646	$	19,744	$	10,942
Derivatives not designated as hedging instruments
Foreign currency forward exchange contracts and other	$	13,811	$	377	$	4,060	Prepaid expenses and other current assets
	$	37,457	$	20,121	$	15,002
	Derivative Liabilities
	Fair Value						Balance Sheet Classification
	March 31, 2020		March 31, 2019		December 31, 2019
	(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward exchange contracts and other	$	6,841	$	1,045	$	2,500	Accrued liabilities
Foreign currency forward exchange contracts and other	2,507		146		213		Other noncurrent liabilities
Total derivatives designated as hedging instruments	$	9,348	$	1,191	$	2,713
Derivatives not designated as hedging instruments
Foreign currency forward exchange contracts and other	$	1,594	$	4,992	$	263	Accrued liabilities
Foreign currency forward exchange contracts and other	224		—		—		Other noncurrent liabilities
Total derivatives not designated as hedging instruments	$	1,818	$	4,992	$	263
	$	11,166	$	6,183	$	2,976

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

	For the Three Months Ended
	March 31, 2020				March 31, 2019				Statements of Operations Classification
	Amount of Gain Recognized in OCI		Amount of Gain Reclassified from Accumulated OCI to Statement of Operations		Amount of Gain Recognized in OCI		Amount of Gain Reclassified from Accumulated OCI to Statement of Operations
	(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward exchange contracts and other	$	9,190	$	3,210	$	5,818	$	759	Cost of sales

The net gains of $3.2 million and $0.8 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three months ended March 31, 2020 and 2019, respectively, are offset by the changes in cash flows associated with the underlying hedged transactions.

	Amount of (Loss) Gain Recognized in the Statements of Operations						Statements of Operations Classification
	For the Three Months Ended
	March 31, 2020			March 31, 2019
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward exchange contracts and other	$	(38,369	)	$	(498	)	Other non-operating expense, net

The net losses of $38.4 million and $0.5 million recognized in the consolidated statements of operations for the three months ended March 31, 2020 and 2019, respectively, are offset by foreign currency transaction gains and losses on the related hedged balances.