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Derivative Instruments
 3 Months Ended
Mar. 31, 2018
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 March 31, 2018, March 31, 2017, and December 31, 2017, Mattel held foreign currency forward exchange contracts with notional amounts of $1.10 billion, $1.48 billion, and $987.7 million, respectively.
The following tables present Mattel’s derivative assets and liabilities:
 
Derivative Assets
 
Balance Sheet Classification
 
Fair Value
 
 
 
March 31,
2018
 
March 31,
2017
 
December 31,
2017
 
 
 
(In thousands) 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Prepaid expenses and other
current assets
 
$
1,787

 
$
12,198

 
$
2,175

Foreign currency forward exchange contracts
Other noncurrent assets
 
390

 
2,683

 
115

Total derivatives designated as hedging instruments
 
 
$
2,177

 
$
14,881

 
$
2,290

Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Prepaid expenses and other
current assets
 
$
1,424

 
$
2,303

 
$
5,514

Total
 
 
$
3,601

 
$
17,184

 
$
7,804

 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
Balance Sheet Classification
 
Fair Value
 
 
 
March 31,
2018
 
March 31,
2017
 
December 31,
2017
 
 
 
(In thousands) 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Accrued liabilities
 
$
17,456

 
$
7,808

 
$
15,970

Foreign currency forward exchange contracts
Other noncurrent liabilities
 
1,419

 
706

 
3,159

Total derivatives designated as hedging instruments
 
 
$
18,875

 
$
8,514

 
$
19,129

Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
Accrued liabilities
 
$
4,663

 
$
6,671

 
$
191

Total
 
 
$
23,538

 
$
15,185

 
$
19,320


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, 2018
 
March 31, 2017
 
Statements of
Operations
Classification
 
Amount of
(Loss) Recognized
in OCI
 
Amount of
(Loss) Reclassified from
Accumulated OCI
to Statements of
Operations
 
Amount of
(Loss) Recognized
in OCI
 
Amount of
Gain
Reclassified from
Accumulated OCI
to Statements of
Operations
 
 
(In thousands)
 
 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
 
Foreign currency forward exchange contracts
$
(5,319
)
 
$
(4,431
)
 
$
(12,584
)
 
$
2,229

 
Cost of sales

The net loss of $4.4 million and net gain of $2.2 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three months ended March 31, 2018 and 2017, respectively, are offset by the changes in cash flows associated with the underlying hedged transactions.
 
Amount of Gain
Recognized in the
Statements of Operations
 
Statements of Operations
Classification
 
For the Three Months Ended
 
 
March 31,
2018
 
March 31,
2017
 
 
(In thousands)
 
 
Derivatives not designated as hedging instruments
 
Foreign currency forward exchange contracts
$
14,688

 
$
25,569

 
Other non-operating income/expense
Foreign currency forward exchange contracts
—

 
386

 
Cost of sales
Total
$
14,688

 
$
25,955

 
 
 
 
 
 
 
 

The net gains of $14.7 million and $26.0 million recognized in the consolidated statements of operations for the three months ended March 31, 2018 and 2017, respectively, are offset by foreign currency transaction gains and losses on the related hedged balances.