Derivative Instruments

12 Months Ended

Dec. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

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 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. Mattel utilizes derivative contracts to hedge certain purchases of commodities, which were not material. As of December 31, 2020 and December 31, 2019, Mattel held foreign currency forward exchange contracts and other commodity derivative instruments, with notional amounts of $855.0 million and $742.0 million, respectively.

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


	Derivative Assets
	Balance Sheet Classification	Fair Value
		December 31, 2020		December 31, 2019
		(In thousands)
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts and other	Prepaid expenses and other current assets	$	3,641	$	10,227
Foreign currency forward exchange contracts and other	Other noncurrent assets	50		715
Total derivatives designated as hedging instruments		$	3,691	$	10,942
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts and other	Prepaid expenses and other current assets	$	1,982	$	4,060
Foreign currency forward exchange contracts and other	Other noncurrent assets	38		—
Total derivatives not designated as hedging instruments		$	2,020	$	4,060
		$	5,711	$	15,002

	Derivative Liabilities
	Balance Sheet Classification	Fair Value
		December 31, 2020		December 31, 2019
		(In thousands)
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts and other	Accrued liabilities	$	20,330	$	2,500
Foreign currency forward exchange contracts and other	Other noncurrent liabilities	4,361		213
Total derivatives designated as hedging instruments		$	24,691	$	2,713
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts and other	Accrued liabilities	$	803	$	263


		$	25,494	$	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:


	Derivatives Designated As Hedging Instruments						Consolidated Statements of Operations Classification
	For the Year Ended
	December 31, 2020		December 31, 2019		December 31, 2018
	(In thousands)
Foreign currency forward exchange contracts:
Amount of (losses) gains recognized in OCI	$	(14,037)	$	17,024	$	24,082
Amount of gains (losses) reclassified from accumulated OCI to the consolidated statements of operations	12,373		17,394		(8,427)		Cost of sales

The net gains (losses) of $12.4 million, $17.4 million, and $(8.4) million reclassified from accumulated other comprehensive loss to the consolidated statements of operations during 2020, 2019, and 2018, respectively, were offset by the changes in cash flows associated with the underlying hedged transactions.


	Derivatives Not Designated As Hedging Instruments						Consolidated Statements of Operations Classification
	For the Year Ended
	December 31, 2020		December 31, 2019		December 31, 2018
	(In thousands)
Amount of (loss) gain recognized in the consolidated statements of operations:
Foreign currency forward exchange contracts	$	(26,553)	$	2,530	$	(23,109)	Other non-operating expense, net

Foreign currency forward exchange contracts	495		—		(244)		Cost of sales
	$	(26,058)	$	2,530	$	(23,353)

The net (losses) gains of $(26.1) million, $2.5 million, and $(23.4) million recognized in the consolidated statements of operations during 2020, 2019, and 2018, respectively, were offset by foreign currency transaction gains and losses on the related hedged balances.