XML 29 R18.htm IDEA: XBRL DOCUMENT v3.5.0.2
Derivative Instruments
 9 Months Ended
Sep. 30, 2016
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 has not designated these contracts as hedging instruments, and as such, changes in fair value are recorded in the period of change in the consolidated statements of operations. As of September 30, 2016, September 30, 2015, and December 31, 2015, Mattel held foreign currency forward exchange contracts with notional amounts of approximately $1.15 billion, $972 million, and $931 million, respectively. As of September 30, 2016 and September 30, 2015, Mattel also held cross currency swap contracts with notional amounts of $16.9 million and $30.0 million, respectively.
The following tables present Mattel’s derivative assets and liabilities:
 
Derivative Assets
 
Balance Sheet Classification
 
Fair Value
 
 
 
September 30,
2016
 
September 30,
2015
 
December 31,
2015
 
 
 
(In thousands) 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Prepaid expenses and other
current assets
 
$
7,127

 
$
21,138

 
$
15,279

Foreign currency forward exchange contracts
Other noncurrent assets
 
1,122

 
1,027

 
1,611

Total derivatives designated as hedging instruments
 
 
$
8,249

 
$
22,165

 
$
16,890

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Prepaid expenses and other
current assets
 
$
826

 
$
827

 
$
1,216

Cross currency swap contract
Prepaid expenses and other
current assets
 
—

 
5,288

 
—

Total derivatives not designated as hedging instruments
 
 
$
826

 
$
6,115

 
$
1,216

Total
 
 
$
9,075

 
$
28,280

 
$
18,106

 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
Balance Sheet Classification
 
Fair Value
 
 
 
September 30,
2016
 
September 30,
2015
 
December 31,
2015
 
 
 
(In thousands) 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Accrued liabilities
 
$
5,131

 
$
6,773

 
$
1,214

Foreign currency forward exchange contracts
Other noncurrent liabilities
 
1,382

 
672

 
219

Total derivatives designated as hedging instruments
 
 
$
6,513

 
$
7,445

 
$
1,433

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Accrued liabilities
 
$
—

 
$
816

 
$
2,287

Cross currency swap contract
Accrued liabilities
 
1,532

 
—

 
—

Total derivatives not designated as hedging instruments
 
 
$
1,532

 
$
816

 
$
2,287

Total
 
 
$
8,045

 
$
8,261

 
$
3,720


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
 
 
 
September 30, 2016
 
September 30, 2015
 
Statements of
Operations
Classification
 
Amount of Gain
(Loss) Recognized
in OCI
 
Amount of
Gain (Loss)
Reclassified from
Accumulated OCI
to Statements of
Operations
 
Amount of Gain
(Loss) Recognized
in OCI
 
Amount of
Gain (Loss)
Reclassified from
Accumulated OCI
to Statements of
Operations
 
 
(In thousands)
 
 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
$
974

 
$
2,157

 
$
8,866

 
$
19,152

 
Cost of sales
 
 
 
 
 
 
 
 
 
 
 
For the Nine Months Ended
 
 
 
September 30, 2016
 
September 30, 2015
 
Statements of
Operations
Classification
 
Amount of Gain
(Loss) Recognized
in OCI
 
Amount of
Gain (Loss)
Reclassified from
Accumulated OCI
to Statements of
Operations
 
Amount of Gain
(Loss) Recognized
in OCI
 
Amount of
Gain (Loss)
Reclassified from
Accumulated OCI
to Statements  of
Operations
 
 
(In thousands)
 
 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
$
642

 
$
12,472

 
$
32,367

 
$
41,708

 
Cost of sales

The net gains of $2.2 million and $12.5 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three and nine months ended September 30, 2016, respectively, and the net gains of $19.2 million and $41.7 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three and nine months ended September 30, 2015, respectively, are offset by the changes in cash flows associated with the underlying hedged transactions.
 
 
Amount of Gain
(Loss) Recognized in the
Statements of Operations
 
Statements of Operations
Classification
 
For the Three Months Ended
 
 
September 30,
2016
 
September 30,
2015
 
 
(In thousands)
 
 
Derivatives not designated as hedging instruments
 
Foreign currency forward exchange contracts
$
306

 
$
(14,711
)
 
Non-operating income/expense
Cross currency swap contract
(274
)
 
6,085

 
Non-operating income/expense
Foreign currency forward exchange contracts
619

 
896

 
Cost of sales
Total
$
651

 
$
(7,730
)
 
 
 
Amount of Gain
(Loss) Recognized in the
Statements of Operations
 
Statements of Operations
Classification
 
For the Nine Months Ended
 
 
September 30,
2016
 
September 30,
2015
 
 
(In thousands)
 
 
Derivatives not designated as hedging instruments
 
Foreign currency forward exchange contracts
$
5,909

 
$
(55,033
)
 
Non-operating income/expense
Cross currency swap contract
(1,532
)
 
5,288

 
Non-operating income/expense
Foreign currency forward exchange contracts
2,217

 
(3
)
 
Cost of sales
Total
$
6,594

 
$
(49,748
)
 
 

The net gains of $0.7 million and $6.6 million recognized in the consolidated statements of operations for the three and nine months ended September 30, 2016, respectively, and the net losses of $7.7 million and $49.7 million recognized in the consolidated statements of operations for the three and nine months ended September 30, 2015, respectively, are offset by foreign currency transaction gains and losses on the related hedged balances.