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Derivative Instruments
 9 Months Ended
Sep. 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 (loss) 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, 2017, September 30, 2016, and December 31, 2016, Mattel held foreign currency forward exchange contracts with notional amounts of $2.46 billion, $1.15 billion, and $1.20 billion, respectively. The notional amounts of the foreign currency forward exchange contracts outstanding as of September 30, 2017 include foreign currency forward contracts executed on September 29, 2017 to settle contracts used to hedge intercompany loans and advances that matured on October 2, 2017.  The notional amounts also include additional foreign currency forward contracts executed on September 29, 2017 to replace the contracts used to hedge the intercompany loans and advances that matured and settled on October 2, 2017.  The increase to the notional amounts outstanding as of September 30, 2017 was primarily due to the timing of the scheduled settlements of Mattel’s intercompany loans and advances denominated in foreign currencies. As of September 30, 2016, Mattel also held cross currency swap contracts with notional amounts of $16.9 million.
The following tables present Mattel’s derivative assets and liabilities:
 
Derivative Assets
 
Balance Sheet Classification
 
Fair Value
 
 
 
September 30,
2017
 
September 30,
2016
 
December 31,
2016
 
 
 
(In thousands) 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Prepaid expenses and other
current assets
 
$
1,951

 
$
7,127

 
$
18,747

Foreign currency forward exchange contracts
Other noncurrent assets
 
764

 
1,122

 
5,782

Total derivatives designated as hedging instruments
 
 
$
2,715

 
$
8,249

 
$
24,529

Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Prepaid expenses and other
current assets
 
$
1,369

 
$
826

 
$
2,678

Total
 
 
$
4,084

 
$
9,075

 
$
27,207

 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
Balance Sheet Classification
 
Fair Value
 
 
 
September 30,
2017
 
September 30,
2016
 
December 31,
2016
 
 
 
(In thousands) 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Accrued liabilities
 
$
21,624

 
$
5,131

 
$
1,917

Foreign currency forward exchange contracts
Other noncurrent liabilities
 
7,206

 
1,382

 
223

Total derivatives designated as hedging instruments
 
 
$
28,830

 
$
6,513

 
$
2,140

Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Accrued liabilities
 
$
1,047

 
$
—

 
$
7,072

Cross currency swap contract
Accrued liabilities
 
—

 
1,532

 
—

Total derivatives not designated as hedging instruments
 
 
$
1,047

 
$
1,532

 
$
7,072

Total
 
 
$
29,877

 
$
8,045

 
$
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
 
 
 
September 30, 2017
 
September 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
$
(24,009
)
 
$
(9,241
)
 
$
974

 
$
2,157

 
Cost of sales
 
 
 
 
 
 
 
 
 
 
 
For the Nine Months Ended
 
 
 
September 30, 2017
 
September 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
$
(63,999
)
 
$
(6,648
)
 
$
642

 
$
12,472

 
Cost of sales

The net losses of $9.2 million and $6.6 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three and nine months ended September 30, 2017, respectively, and 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, 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,
2017
 
September 30,
2016
 
 
(In thousands)
 
 
Derivatives not designated as hedging instruments
 
Foreign currency forward exchange contracts
$
13,624

 
$
306

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

 
(274
)
 
Other non-operating income/expense
Foreign currency forward exchange contracts
9

 
619

 
Cost of sales
Total
$
13,633

 
$
651

 
 
 
 
 
 
 
 
 
Amount of Gain
(Loss) Recognized in the
Statements of Operations
 
Statements of Operations
Classification
 
For the Nine Months Ended
 
 
September 30,
2017
 
September 30,
2016
 
 
(In thousands)
 
 
Derivatives not designated as hedging instruments
 
Foreign currency forward exchange contracts
$
64,582

 
$
5,909

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

 
(1,532
)
 
Other non-operating income/expense
Foreign currency forward exchange contracts
511

 
2,217

 
Cost of sales
Total
$
65,093

 
$
6,594

 
 

The net gains of $13.6 million and $65.1 million recognized in the consolidated statements of operations for the three and nine months ended September 30, 2017, respectively, and 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, are offset by foreign currency transaction gains and losses on the related hedged balances.