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Derivative Instruments
 6 Months Ended
Jun. 30, 2017
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 June 30, 2017, June 30, 2016, and December 31, 2016, Mattel held foreign currency forward exchange contracts with notional amounts of $1.38 billion, $1.21 billion, and $1.20 billion, respectively. As of June 30, 2016, Mattel also held cross currency swap contracts with notional amounts of $17.1 million.
The following tables present Mattel’s derivative assets and liabilities:
 
Derivative Assets
 
Balance Sheet Classification
 
Fair Value
 
 
 
June 30,
2017
 
June 30,
2016
 
December 31,
2016
 
 
 
(In thousands) 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Prepaid expenses and other
current assets
 
$
3,026

 
$
7,202

 
$
18,747

Foreign currency forward exchange contracts
Other noncurrent assets
 
626

 
1,534

 
5,782

Total derivatives designated as hedging instruments
 
 
$
3,652

 
$
8,736

 
$
24,529

Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Prepaid expenses and other
current assets
 
$
5,054

 
$
1,760

 
$
2,678

Total
 
 
$
8,706

 
$
10,496

 
$
27,207

 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
Balance Sheet Classification
 
Fair Value
 
 
 
June 30,
2017
 
June 30,
2016
 
December 31,
2016
 
 
 
(In thousands) 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Accrued liabilities
 
$
19,719

 
$
4,709

 
$
1,917

Foreign currency forward exchange contracts
Other noncurrent liabilities
 
6,127

 
698

 
223

Total derivatives designated as hedging instruments
 
 
$
25,846

 
$
5,407

 
$
2,140

Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Accrued liabilities
 
$
772

 
$
11,618

 
$
7,072

Cross currency swap contract
Accrued liabilities
 
—

 
1,258

 
—

Total derivatives not designated as hedging instruments
 
 
$
772

 
$
12,876

 
$
7,072

Total
 
 
$
26,618

 
$
18,283

 
$
9,212


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
 
 
 
June 30, 2017
 
June 30, 2016
 
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
$
(27,406
)
 
$
364

 
$
15,561

 
$
3,305

 
Cost of sales
 
 
 
 
 
 
 
 
 
 
 
For the Six Months Ended
 
 
 
June 30, 2017
 
June 30, 2016
 
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
$
(39,990
)
 
$
2,593

 
$
(332
)
 
$
10,315

 
Cost of sales

The net gains of $0.4 million and $2.6 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three and six months ended June 30, 2017, respectively, and the net gains of $3.3 million and $10.3 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three and six months ended June 30, 2016, 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
 
 
June 30,
2017
 
June 30,
2016
 
 
(In thousands)
 
 
Derivatives not designated as hedging instruments
 
Foreign currency forward exchange contracts
$
25,389

 
$
(17,989
)
 
Other non-operating income/expense
Cross currency swap contract
—

 
(1,258
)
 
Other non-operating income/expense
Foreign currency forward exchange contracts
116

 
473

 
Cost of sales
Total
$
25,505

 
$
(18,774
)
 
 
 
 
 
 
 
 
 
Amount of Gain
(Loss) Recognized in the
Statements of Operations
 
Statements of Operations
Classification
 
For the Six Months Ended
 
 
June 30,
2017
 
June 30,
2016
 
 
(In thousands)
 
 
Derivatives not designated as hedging instruments
 
Foreign currency forward exchange contracts
$
50,958

 
$
5,603

 
Other non-operating income/expense
Cross currency swap contract
—

 
(1,258
)
 
Other non-operating income/expense
Foreign currency forward exchange contracts
502

 
1,598

 
Cost of sales
Total
$
51,460

 
$
5,943

 
 

The net gains of $25.5 million and $51.5 million recognized in the consolidated statements of operations for the three and six months ended June 30, 2017, respectively, and the net (loss) gain of $(18.8) million and $5.9 million recognized in the consolidated statements of operations for the three and six months ended June 30, 2016, respectively, are offset by foreign currency transaction gains and losses on the related hedged balances.