Derivative Instruments

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative InstrumentsMattel 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 (loss) ("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 September 30, 2021, September 30, 2020, and December 31, 2020, Mattel held foreign currency forward exchange contracts and other commodity derivative instruments, with notional amounts of $861.2 million, $903.1 million, and $855.0 million, respectively.

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


	Derivative Assets
	Balance Sheet Classification	Fair Value
		September 30, 2021		September 30, 2020		December 31, 2020
		(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward exchange and other contracts	Prepaid expenses and other current assets	$	11,624	$	5,340	$	3,641
Foreign currency forward exchange and other contracts	Other noncurrent assets	2,775		896		50
Total derivatives designated as hedging instruments		$	14,399	$	6,236	$	3,691
Derivatives not designated as hedging instruments
Foreign currency forward exchange and other contracts	Prepaid expenses and other current assets	$	1,165	$	2,337	$	1,982
Foreign currency forward exchange and other contracts	Other noncurrent assets	—		—		38
Total derivatives not designated as hedging instruments		$	1,165	$	2,337	$	2,020
		$	15,564	$	8,573	$	5,711

	Derivative Liabilities
	Balance Sheet Classification	Fair Value
		September 30, 2021		September 30, 2020		December 31, 2020
		(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward exchange and other contracts	Accrued liabilities	$	4,046	$	9,256	$	20,330
Foreign currency forward exchange and other contracts	Other noncurrent liabilities	7		3,602		4,361
Total derivatives designated as hedging instruments		$	4,053	$	12,858	$	24,691
Derivatives not designated as hedging instruments
Foreign currency forward exchange and other contracts	Accrued liabilities	$	2,247	$	984	$	803
Foreign currency forward exchange and other contracts	Other noncurrent liabilities	—		99		—
Total derivatives not designated as hedging instruments		$	2,247	$	1,083	$	803
		$	6,300	$	13,941	$	25,494

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

For the Three Months Ended

September 30,
2021

September 30,
2020

Statements of
Operations
Classification

(In thousands)

Foreign currency forward exchange contracts:

Amount of gains (losses) recognized in OCI

13,900

(20,578)

Amount of gains reclassified from accumulated OCI to consolidated statements of operations

2,223

2,200

Cost of sales

Derivatives Designated As Hedging Instruments

For the Nine Months Ended

September 30,
2021

September 30,
2020

Statements of
Operations
Classification

(In thousands)

Foreign currency forward exchange contracts:

Amount of gains (losses) recognized in OCI

23,230

(4,556)

Amount of gains reclassified from accumulated OCI to consolidated statements of operations

2,893

11,237

Cost of sales

The net gains (losses) reclassified from accumulated other comprehensive loss to the consolidated statements of operations during the three and nine months ended September 30, 2021 and 2020, respectively, were offset by the changes in cash flows associated with the underlying hedged transactions.


	Derivatives Not Designated As Hedging Instruments
	For the Three Months Ended
	September 30, 2021		September 30, 2020		Statements of Operations Classification
	(In thousands)
Amount of net (losses) gains recognized in the Statements of Operations
Foreign currency forward exchange and other contract (losses) gains	$	(2,900)	$	232	Other non-operating expense, net

	$	(2,900)	$	232


	Derivatives Not Designated As Hedging Instruments
	For the Nine Months Ended
	September 30, 2021		September 30, 2020		Statements of Operations Classification
	(In thousands)
Amount of net losses recognized in the Statements of Operations
Foreign currency forward exchange and other contract (losses)	$	(3,863)	$	(30,015)	Other non-operating expense, net
Foreign currency forward exchange and other contract gains	639		—		Cost of sales
	$	(3,224)	$	(30,015)

The net (losses) gains recognized in the consolidated statements of operations during the three and nine months ended September 30, 2021 and September 30, 2020, respectively, were offset by foreign currency transaction gains and losses on the related hedged balances.