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Item 1A. Risk Factors

2025-02-26 compared with 2024-03-15 · 104 added, 101 removed, 296 unchanged (41% of the section changed)

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Moreover, Mattel operates in a very competitive and rapidly changing environment.

New factors emerge from time to time, and it is not possible for management to predict the impact of all of these factors on Mattel's business, financial condition, or results of operations, or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

New factors emerge from time to time, and it is not possible for management to predict the impact of all of these factors on Mattel's business, financial condition, or results of operations, or the extent to which any factor, or combination of factors, may cause actual results or outcomes, or the timing of those results or outcomes, to differ materially from those contained in any forward-looking statements.

These factors are also currently, and in the future may be, amplified by the global economic or geopolitical climate and additional or unforeseen circumstances, developments, or risks.

Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results.

Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results or outcomes.

Any or all of the forward-looking statements contained in this Annual Report on Form 10-K and any other public statement made by Mattel or its representatives may turn out to be wrong.

The risk factors below describe factors, events, or contingencies that could have an adverse effect on Mattel and are not intended as an exhaustive discussion of whether any such factors, events, or contingencies have or have not occurred.

Mattel expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

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Mattel's business and operating results depend largely upon the appeal of its products, driven by both innovation and marketing.

Consumer preferences, particularly with children as the end users of Mattel's products, are continuously changing and can vary by geographical markets.

Consumer preferences are continuously changing and can vary by geographical markets.

Product life cycles and consumer preferences continue to be affected by the rapidly increasing use and proliferation of social and digital media by consumers, and the speed with which information is shared.

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Significant, sudden shifts in demand are caused by "hit" toys and trends, which are often unpredictable and can result in short consumer life cycles.

Mattel offers a diverse range of products for children, fans of all ages, and families that includes, among others, toys for infants, toddlers, and preschoolers, toys for school-aged children, youth electronics, digital media, hand-held and other games, puzzles, educational toys, and fashion-related items.

Mattel competes domestically and internationally with a wide range of large and small manufacturers, marketers, and sellers of toys, video games, consumer electronics such as tablets and mobile devices, and other play products, as well as retailers, which means that Mattel's market position is always at risk.

Mattel's ability to maintain its current product sales and increase its product sales or establish product sales with new, innovative toys, depends on Mattel's ability to satisfy play preferences, enhance existing products, develop and introduce new products, and achieve market acceptance of these products.

These challenges are intensifying due to trends towards shorter life cycles for individual toy products, the phenomenon of children outgrowing traditional toys at younger ages, an increasing use of more sophisticated technology in toys, including machine learning and artificial intelligence ("AI"), and an evolving path to purchase.

Mattel offers a wide range of products for children, fans of all ages, and families that includes, among others, toys for infants, toddlers, and preschoolers, toys for school-aged children, dolls, vehicles, action figures, building sets, games, including digital, puzzles, plush, educational toys, technology-related products, media-driven products, and fashion-related items.

Mattel competes domestically and internationally with a wide range of large and small manufacturers, marketers, and sellers of such products, consumer electronics, such as tablets and mobile devices, and other play products, as well as retailers, which means that Mattel's market position is always at risk.

Mattel's ability to maintain or increase its current product sales, or establish product sales with new, innovative toys, depends on Mattel's ability to satisfy play preferences, enhance existing products, develop and introduce new products, and achieve market acceptance of these products.

In addition, entertainment media has become increasingly important for consumers to experience Mattel's brands and its license partners' brands.

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As a licensee of entertainment properties, Mattel has no guarantee that a particular property or brand will translate into a successful toy, game, or other product.

In addition, the barriers to entry for new participants in the toy products industry and

entertainment industry are low.

In a very short period of time, new market participants with a popular product idea or entertainment property can become a significant source of competition for Mattel and its products.

In addition, the barriers to entry for new participants in the toy industry and entertainment industry are low and the increasing prevalence of digital media has further increased the ability for new participants to enter Mattel's markets, and broadened the array of companies Mattel competes with.

New market participants with a popular product idea or entertainment property can become a significant source of competition for Mattel and its products in a very short period of time.

Reduced demand for Mattel's brands, products, and product lines as a result of these factors may adversely affect Mattel's business, financial condition, and results of operations.

Inaccurately anticipating changes and trends in popular culture, media, fashion, or technology can adversely affect Mattel's sales, financial condition, and results of operations.

Successful movies, television programs, video games, and characters in children's literature affect play preferences, and many products depend on media-based intellectual property licenses including trademarks, trade names, copyrights, patents, trade secrets, and rights under intellectual property license agreements and other agreements with third parties.

Successful movies, television programs, digital games, and characters in children's literature affect play preferences, and many products depend on media-based IP licenses including trademarks, trade names, copyrights, patents, trade secrets, and rights under IP license agreements and other agreements with third parties.

Media-based licenses can cause a line of toys or other products to gain immediate success among children, parents, or families.

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Other developments, such as labor strikes or theater closures, have at times caused, and could in the future cause, delays in the release of new movies and television programs, and any such delay or cancellation may adversely impact Mattel’s sales of the associated toys and other products.

Mattel expects that children will continue to be interested in product offerings incorporating sophisticated technology, such as video games, consumer electronics, and social and digital media, at increasingly younger ages.

To the extent Mattel seeks to introduce sophisticated technology products, such products tend to have higher design, development, and production costs, follow longer timelines, and require different competencies compared to Mattel's more traditional toys and games.

Mattel expects that children will continue to be interested in product offerings incorporating sophisticated technology, such as digital games, consumer electronics, and social and digital media, at increasingly younger ages.

As Mattel introduces more sophisticated technology products, such products tend to have higher design, development, and production costs, follow longer timelines, and require different competencies compared to Mattel's more traditional toys and games.

The pace of change in product offerings and consumer tastes for sophisticated technology products is potentially even greater than for Mattel's more traditional products, and consequently the window for consumer interest in such products may be shorter than for traditional toys and games.

The entertainment industry continues to experience frequent change driven by technological development and audience viewing preferences, including developments with respect to the formats through which films, television programming, and other episodic content are delivered to consumers, and the scale and scope of these changes have accelerated in recent years, with consumers continuing to increase their access to television, film, and other episodic content on streaming and digital content networks.

These changes, as well as other trends in the industry, have caused significant disruption to the retail distribution of entertainment offerings and have caused, and could in the future cause, a negative impact on sales of Mattel's products and other forms of monetization of content, especially those that are reliant on box office success.

Mattel may lose opportunities to capitalize on changing market dynamics, technological innovations or consumer tastes if it does not adapt to such changes in a timely manner.

The overall effect that technological development and new digital distribution platforms have on the revenue and profits Mattel derives from its entertainment content, including from product sales associated with such content, and the additional costs associated with changing markets, media platforms, and technologies, is unpredictable.

If Mattel fails to accurately assess and effectively respond to changes in technology and consumer behavior in the entertainment industry, Mattel's business, financial condition, and results of operations could be adversely affected.

Any inability by Mattel to accurately anticipate trends in popular culture, media, fashion, or technology may cause its products not to be accepted by children, parents, fans, or families and may adversely affect its sales, financial condition, and results of operations.

Mattel's failure to successfully market or advertise its products could have an adverse effect on Mattel's business, financial condition, and results of operations.

Mattel's products are marketed worldwide through a diverse spectrum of advertising, marketing, and promotional programs, including the use of digital and social media to reach consumers.

Mattel's products are marketed worldwide through a wide spectrum of advertising, marketing, and promotional programs, including the use of digital and social media to reach consumers.

Mattel's ability to sell products is dependent in part upon the success of these programs.

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Management believes that the increase in "last minute" shopping during the holiday season and the popularity of gift cards (which often shift purchases to after the holiday season) may negatively impact customer re-orders during the holiday season.

pandemics or other public health crises, terrorist attacks, economic shocks, severe weather due to climate change or otherwise, earthquakes or other catastrophic events, that harm the retail environment or consumer buying patterns during its key selling season, or by events, such as strikes, disruptions in transportation, or port delays, that interfere with the manufacture or shipment of goods during the critical months leading up to the holiday purchasing season.

In addition, as a result of the seasonal nature of Mattel's business, Mattel may be adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events, such as pandemics or other public health crises, terrorist attacks, economic shocks, severe weather due to climate change or otherwise, earthquakes or other catastrophic events, that harm the retail environment or consumer buying patterns during its key selling season, or by other events, such as strikes, disruptions in transportation, port delays, regional conflict, tariffs, trade restrictions, or trade barriers, and geopolitical and macro-economic factors, including high inflation and high interest rates, that interfere with the manufacture or shipment of goods during the critical months leading up to the holiday purchasing season.

If Mattel does not correctly anticipate demand for its products, Mattel may not be able to secure sufficient quantities or cost-effective production of its products or it could have costly excess production or inventories.

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In 2024, Mattel's three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 44% of worldwide consolidated net sales (Walmart at $1.17 billion, Target at $0.68 billion, and Amazon at $0.51 billion ) and its ten largest customers, in the aggregate, accounted for approximately 51% of net sales.

This concentration exposes Mattel to risk of a material adverse effect if one or more of Mattel's large customers were to significantly reduce purchases for any reason, favor competitors or new entrants, redeploy their retail floor space to other product categories, or increase their direct competition with Mattel by expanding their private-label business.

This concentration exposes Mattel to risk of a material adverse effect if one or more of Mattel's large customers were to significantly reduce purchases for any reason, favor competitors or new entrants, redeploy their retail floor space to other product categories, alter the manner in which they promote Mattel's products or the resources they devote to promoting and selling Mattel's products, or increase their direct competition with Mattel by expanding their private-label business.

Customers make no binding long-term commitments to Mattel regarding purchase volumes and make all purchases by delivering one-time purchase orders.

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There is no guarantee that Mattel will be able to manufacture, source, ship, and distribute new or continuing products in a timely manner and on a cost-effective basis.

Unforeseen delays or difficulties in the development process or significant increases in the planned cost of development for new Mattel products may cause the introduction date for products to be later than anticipated or, in some situations, may cause a product or new product introduction to be discontinued.

Failure to successfully implement any of these initiatives or launches, or the failure of any of these initiatives or launches to produce the

results anticipated by management, could have an adverse effect on Mattel's business, financial condition, and results of operations.

Unforeseen delays or difficulties in the development process or significant

increases in the planned cost of development for new Mattel products may cause the introduction date for products to be later than anticipated or, in some situations, may cause a product or new product introduction to be discontinued.

Failure to successfully implement any of these initiatives or launches, or the failure of any of these initiatives or launches to produce the results anticipated by management, could have an adverse effect on Mattel's business, financial condition, and results of operations.

Mattel's business depends in large part on the success of its vendors and outsourcers, and Mattel's brands and reputation are subject to harm from actions taken by third parties that are outside Mattel's control.

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Market Conditions

The deterioration of global economic conditions could adversely affect Mattel's business, financial condition, and results of operations.

Mattel designs, manufactures, and markets a wide variety of toy products worldwide through sales to retailer customers and directly to consumers.

The deterioration of global or regional economic conditions could adversely affect Mattel's business, financial condition, and results of operations.

Mattel designs, manufactures, and markets a wide variety of products worldwide through sales to retailer customers and directly to consumers.

Mattel's performance is impacted by the level of discretionary consumer spending, which remains relatively weak in many countries around the world in which Mattel does business.

Consumers' discretionary purchases of toy products are often impacted by a number of factors beyond Mattel's control, including, inflation, job losses, foreclosures, bankruptcies, reduced access to credit, interest rates, tax rates, investment losses, lower consumer confidence, and other macro-economic factors that affect consumer spending behavior.

Consumers' discretionary purchases of toy and entertainment products are often impacted by a number of factors beyond Mattel's control, including, inflation, job losses, foreclosures, bankruptcies, reduced access to credit, interest rates, tax rates, investment losses, lower consumer confidence, and other macro-economic factors that affect consumer spending behavior.

These or other factors can reduce the amount that consumers spend on the purchase of Mattel's products.

Deterioration of global economic conditions have at times adversely affected Mattel's business and financial results.

Deterioration of global or regional economic conditions have at times adversely affected Mattel's business, financial condition, and results of operations.

Unfavorable economic conditions can also impair the ability of those with whom Mattel does business to satisfy their obligations to us.

Future deterioration of global economic conditions or disruptions in credit markets in the markets in which Mattel operates could potentially have a material adverse effect on Mattel's liquidity and capital resources, including increasing Mattel's cost of capital or its ability to raise additional capital if needed, or otherwise adversely affect Mattel's business, financial condition, and results of operations.

In addition to experiencing potentially lower revenues during times of economic difficulty, in an effort to maintain sales during such times, Mattel may need to increase promotional spending or take other steps to encourage retailer and consumer

purchase of its products.

Future deterioration of global or regional economic conditions or disruptions in credit markets in the markets in which Mattel operates could potentially have a material adverse effect on Mattel's liquidity and capital resources, including increasing Mattel's cost of capital or its ability to raise additional capital if needed, or otherwise adversely affect Mattel's business, financial condition, and results of operations.

Those steps may increase costs and/or decrease profit margins and are not always successful.

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Significant increases in the price of commodities, transportation, or labor, if not offset by declines in other input costs, or a reduction or interruption in the delivery of raw materials, components, and finished products from Mattel's vendors, could adversely affect Mattel's business, financial condition, and results of operations.

Cost increases, whether resulting from rising costs of materials, transportation, services, labor, or compliance with existing or future regulatory requirements, impact the profit margins realized by Mattel on the sale of its products.

Cost increases, whether resulting from rising costs of materials, transportation, services, labor, or compliance with existing or future regulatory requirements, including tariffs, trade restrictions, or trade barriers, impact the profit margins realized by Mattel on the sale of its products.

Because of market conditions, timing of pricing decisions, and other factors, there can be no assurance that Mattel will be able to offset any of these increased costs by adjusting the prices of its products.

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If Mattel is required to use alternative sources, it may be required to redesign some aspects of the affected products, which may involve delays and additional expense.

Reductions or interruptions in supplies or in the delivery of finished products, whether resulting from more stringent regulatory requirements, disruptions in transportation, port delays, labor strikes or disputes, lockouts, loss or impairment of key manufacturing facilities, discontinuity or disruptions in information technology systems, changes in trade policy, an outbreak of a severe public health crisis, natural disasters, including severe weather due to climate change or otherwise, the occurrence or threat of wars or other conflicts, or a significant increase in the price of one or more supplies (or an inability to procure sufficient supplies), such as fuel or resin (which is an oil-based product used in plastics), or otherwise, have at times adversely affected and could in the future adversely affect Mattel's business, financial condition, and results of operations.

Reductions or interruptions in supplies or in the delivery of finished products, whether resulting from more stringent regulatory requirements, disruptions in transportation, port delays, labor strikes or disputes, lockouts, loss or impairment of key manufacturing facilities, discontinuity or disruptions in information technology systems, changes in trade policy, including the imposition of tariffs, trade restrictions, or trade barriers, an outbreak of disease or a severe public health crisis, natural disasters, including severe weather due to climate change or otherwise, the occurrence or threat of wars or other conflicts, or a significant increase in the price of one or more supplies (or an inability to procure sufficient supplies), such as fuel or resin (which is an oil-based product used in plastics), or otherwise, have at times adversely affected and could in the future adversely affect Mattel's business, financial condition, and results of operations.

Significant changes in currency exchange rates or the ability to transfer capital across borders could have an adverse effect on Mattel's business, financial condition, and results of operations.

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Furthermore, Mattel's net investment in its foreign subsidiaries and its results of operations and cash flows are subject to changes in currency exchange rates and regulations.

Highly inflationary economies of certain foreign countries can result in foreign currency devaluation, which negatively impacts Mattel's profitability.

Significant inflation in economies of certain foreign countries can result in foreign currency devaluation, which negatively impacts Mattel's profitability.

Mattel's efforts to mitigate the exposure of its results of operations to fluctuations in currency exchange rates by aligning its prices with the local currency cost of acquiring inventory, distributing earnings in U.S.

dollars, and partially hedging this exposure using foreign currency forward exchange contracts may ultimately be unsuccessful.

Government action may restrict Mattel's ability to transfer capital across borders, such as recently enacted currency control regulations in China, and may also impact the fluctuation of currencies in the countries where Mattel conducts business or has invested capital.

Government action may restrict Mattel's ability to transfer capital across borders, such as currency control regulations in China, and may also impact the fluctuation of currencies in the countries where Mattel conducts business or has invested capital.

Significant changes in currency exchange rates, reductions in Mattel's ability to transfer its capital across borders, and changes in government-fixed currency exchange rates, including the Chinese yuan, could have an adverse effect on Mattel's business, financial condition, and results of operations.

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difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets, which are often quite different from those in the United States;

difficulties in moving materials and products from one country to another, including port congestion, strikes and other transportation delays and interruptions;

difficulties in moving

materials and products from one country to another, including port congestion, strikes and other transportation delays and interruptions;

potential challenges to Mattel's transfer pricing determinations and other aspects of its cross border transactions;

and the impact of tariffs, quotas, or other protectionist measures.

and the impact of tariffs, trade restrictions, trade barriers, quotas, or other protectionist measures.

Failure to properly manage these risks could adversely affect Mattel's business, financial condition, and results of operations.

Disruptions due to political instability, civil unrest, future pandemics or other public health crises, or earthquakes or other natural disasters out of Mattel's control and actions taken by governments, businesses, and individuals in response to such events could adversely affect Mattel's business, financial position, sales, and results of operations.

Mattel's business and operations could be materially and adversely affected by political instability, civil unrest, future pandemics or other public health crises, earthquakes, natural disasters, and other natural or man-made economic, political, or environmental disruptions.

Disruptions, and government responses to any disruption, could adversely affect Mattel's business, financial position, sales, and results of operations and may vary based on the length and severity of the disruption.

Disruptions due to political instability, civil unrest, the threat or occurrence of war or terrorist activities, pandemics or other public health crises, or earthquakes or other natural disasters out of Mattel's control and actions taken by governments, businesses, and individuals in response to such events could adversely affect Mattel's business, financial condition, and results of operations.

Mattel's business and operations could be materially and adversely affected by political instability, civil unrest, the threat or occurrence of war or terrorist activities, pandemics or other public health crises, earthquakes, natural disasters, and other natural or man-made economic, political, or environmental disruptions.

Disruptions, and government responses to any disruption, could adversely affect Mattel's business, financial condition, and results of operations and may vary based on the length and severity of the disruption.

For example, the COVID-19 pandemic and the actions taken by governments, businesses, and individuals in response thereto affected how Mattel and its suppliers and partners operated their businesses, caused supply chain disruption and retail store closures, and adversely affected Mattel's operating results.

The impact of any new outbreaks of COVID-19, other variants, or other public health crises on Mattel's business and financial results will depend on future developments, which are highly uncertain and cannot be predicted.

Mattel owns, operates, and manages manufacturing facilities and utilizes third-party manufacturers and suppliers throughout Asia, primarily in China, Indonesia, Malaysia, Vietnam and Thailand, and in Mexico.

Risks from political instability, civil unrest, and other geopolitical or macro-economic conditions exist in certain of these countries, which could temporarily or permanently damage the manufacturing operations of Mattel or its third-party manufacturers located there.

Risks from political instability, civil unrest, the threat or occurrence of war or terrorist activities, and other geopolitical or macro-economic conditions exist in certain of these countries, which could temporarily or permanently damage the manufacturing operations of Mattel or its third-party manufacturers located there.

In addition, Mattel has significant operations near major earthquake faults, including its corporate headquarters in El Segundo, California.

A catastrophic event where Mattel has important operations, such as an earthquake, tsunami, flood, typhoon, fire, power outage, or other natural or manmade disaster, including as a result of climate change, could disrupt Mattel's operations or those of its business partners and impair production or distribution of its products, damage inventory, interrupt critical functions, or otherwise affect its business negatively.

A catastrophic event where Mattel has important operations, such as an earthquake, tsunami, flood, typhoon, fire or wildfire, power outage, or other natural or manmade disaster, including as a result of climate change, could disrupt Mattel's operations or those of its business partners and impair production or distribution of its products, damage inventory, interrupt critical functions, or otherwise affect its business negatively.

Any one of these factors, or a combination thereof, could impact Mattel's ability to meet demand for its products or could increase the costs of its products.

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In addition, the contingency plans Mattel has developed to help mitigate the impact of disruptions in its manufacturing operations and supply chain may not prevent its business, financial position, sales, and results of operations from being adversely affected by a significant disruption to its manufacturing operations or suppliers.

Political developments, including trade relations, and the threat or occurrence of war or terrorist activities, and/or trade actions could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions.

The occurrence of war or hostilities between countries or threat of terrorist activities, and the responses to and results of these activities, could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions.

For example, the global economy has been negatively impacted as a result of the Russia-Ukraine war as well as the conflict in the Middle East, and Mattel's operations in Russia have experienced significant disruption.

Mattel has paused all shipments into Russia and expects, for the foreseeable future, decreased revenues compared with those prior to the war from Russia and Ukraine.

Political developments, including trade relations, and/or trade actions could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions.

Mattel's business is worldwide in scope, and political instability, civil unrest, the deterioration of the political, economic, or social situation in a country in which Mattel has significant sales or operations, or the breakdown of trade relations between the United States and a foreign country in which Mattel has significant manufacturing facilities or other operations, could adversely affect Mattel's business, financial condition, and results of operations.

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China has also implemented various trade actions directed at the United States.

Further trade actions by the United States or China could result in diverting more production to, or sourcing from, countries other than China, and could cause customers in some countries or regions, such as China, to seek domestic or non-U.S.

sources for products that Mattel sells, or to be pressured or incentivized by foreign governments not to purchase goods of U.S.

companies, all of which could harm Mattel's future sales in these markets.

In addition, the United States, United Kingdom, and European Union, among other jurisdictions, have each imposed export controls, as well as financial and economic sanctions, currency controls, and other trade actions, on certain products, technologies, industry sectors, and parties in Russia as a result of the Russia-Ukraine war, which have resulted and could further result in retaliatory measures and actions by Russia.

Any increased trade barriers or restrictions on global trade imposed by the United States, or further retaliatory trade measures or currency controls taken by China, Russia, or other countries in response, could further adversely affect Mattel's business, financial condition, and results of operations.

The outcomes of, and disruptions

associated with, upcoming elections in the United States and other jurisdictions in which Mattel operates could alter the political, economic, and regulatory landscape in ways that are unfavorable to Mattel's interests.

For example, the global economy has been negatively impacted as a result of the Russia-Ukraine war, and Mattel's operations in Russia have experienced significant disruption.

Mattel has paused all shipments into Russia and expects, for the foreseeable future, decreased revenues from Russia and Ukraine.

Global climate change, evolving stakeholder expectations for sustainability matters, and Mattel's related goals present challenges to its business and reputation that could adversely affect Mattel.

The effects of global climate change create financial, operational, and reputational risks to Mattel's business, both directly and indirectly.

There is a general consensus that greenhouse gas ("GHG") emissions are linked to global climate change, and that these emissions must be reduced dramatically to avert the worst effects of climate change.

Mattel's operations may be vulnerable to the adverse effects of climate change, which are predicted to increase the frequency and severity of weather events and other natural cycles such as wildfires, heatwaves, floods, and droughts.

The effects of climate change may cause disruptions in Mattel's operations, including its supply chain and the productivity of its third-party manufacturers, increase Mattel's production costs, impose capacity restraints, and impact the types of products that consumers purchase, all of which may cause Mattel to suffer losses and additional costs to maintain or resume operations.

Mattel may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for Mattel's products.

In addition, Mattel may incur capital expenditures, compliance costs, and other costs to comply with increasingly stringent environmental laws, compliance reporting, and enforcement policies.

Governments around the world are increasingly focused on enacting laws and regulations regarding climate change and regulation of GHG emissions.

Lawmakers and regulators in the United States and certain jurisdictions where Mattel operates have proposed or enacted regulations requiring reporting of GHG emissions and the restriction thereof, including increased fuel efficiency standards, carbon taxes or cap and trade systems, restrictive permitting, and incentives for renewable energy.

For example, in October 2023, California enacted legislation addressing the disclosure of GHG emissions, climate-related risks, environmental claims, and the use or sale of voluntary carbon offsets.

The Securities and Exchange Commission recently adopted a mandatory climate change reporting framework that is likely to materially increase the amount of time, monitoring, diligence and reporting costs related to these matters.

Global efforts have been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global climate change issues.

In January 2023, the EU enacted the Corporate Sustainability Reporting Directive, which will require sustainability reporting across a broad range of sustainability topics for both EU and non-EU companies.

A variety of other stakeholders, including regulators, investors, advisory firms, rating agencies, and customers, are establishing laws, regulations, expectations, and/or assessments reflecting their expectations for corporate practices related to climate change and other corporate responsibility matters.

In August 2021, Mattel announced its goal to reduce absolute Scope 1 and Scope 2 GHG emissions 50% by 2030 (versus a 2019 baseline).

Mattel has subsequently established additional goals related to sustainability matters.

Such goals are based on Mattel management's current assumptions related to scientific or technological developments, carbon markets, the workforce and hiring market, and other matters that are subject to change in the future and which are outside of Mattel's control, as well as standards for measuring progress that are still in development, and subject to a number of significant risks and uncertainties.

Mattel's efforts to be responsive to climate change, to reduce its carbon footprint, and regarding other sustainability matters cannot provide assurance that Mattel will successfully achieve its sustainability goals, that related costs may not be higher than expected, that proposed regulation or deregulation related to climate change and other sustainability matters will not be more aggressive than Mattel's measures and result in higher costs (or require additional resources), or that any investments Mattel makes in furtherance of achieving such goals will meet expectations for all stakeholders or any applicable binding or non-binding legal standards, any one of which could have an adverse effect on Mattel's financial condition, results of operations, or reputation.

Climate-related litigation has increased in recent years, including claims involving the failure of organizations to mitigate their impacts on climate change, the failure of organizations to adapt to climate change, and the insufficiency of disclosure around material financial risks or inaccuracy of climate-related disclosure.

Additionally, as consumers and customers continue to put an increased priority on purchasing products that are sustainably manufactured and packaged, Mattel may need to incur increased costs in order to effectively source materials that are more sustainable, as well as increased costs for additional transparency, due diligence, and reporting.

If Mattel's sustainability practices do not meet, or are not viewed as meeting, investor or other stakeholder expectations and standards (which are continually evolving and may emphasize different priorities than the ones Mattel chooses to focus on), or if Mattel does not or appears not to achieve its sustainability goals, then investors, consumers, and other stakeholders could lose confidence in Mattel and its brands, damaging Mattel's reputation and negatively impacting operations.

Further trade actions by the United States or China, or trade actions by or directed toward other countries, such as Mexico or Canada, could result in diverting more production to, or sourcing from, countries other than China or Mexico, could raise the cost of Mattel products in those markets, and could cause customers in those markets to seek domestic or non-U.S.

sources for products that Mattel sells,

or to be pressured or incentivized by foreign governments not to purchase goods of U.S.

companies, all of which could harm Mattel's future sales in these those markets, adversely affecting Mattel's business, financial condition, and results of operations.

In addition, the United States, United Kingdom, and European Union, among other jurisdictions, have each imposed export controls, as well as financial and economic sanctions, currency controls, and other trade actions, on certain products, technologies, industry sectors, and parties in Russia and Belarus as a result of the Russia-Ukraine war, which have resulted and could further result in retaliatory measures and actions by Russia.

Any increased trade barriers or restrictions on global trade imposed by the United States, whether toward China, Russia, or other countries, or further retaliatory trade measures or currency controls taken by China, Russia, or other countries in response, could further adversely affect Mattel's business, financial condition, and results of operations.

Evolving stakeholder expectations, regulatory requirements, and increasing scrutiny relating to sustainability matters including with respect to climate change, could expose Mattel to potential liabilities, increase costs, cause reputational harm, and cause other adverse impacts to Mattel's business.

Mattel's business is susceptible to financial, operational, and reputational risks associated with the effects of global climate change.

The effects of climate change may cause disruptions to Mattel's operations, including by disrupting its supply chain and the productivity of its third-party manufacturers, increasing Mattel's production costs, imposing capacity restraints, and impacting the types of products that consumers purchase, all of which may cause Mattel to suffer losses and additional costs to maintain or resume operations.

Mattel may also be subject to decreased availability or less favorable pricing for certain commodities that are necessary for Mattel's products.

In addition, Mattel expects to incur capital expenditures, compliance costs, and other costs to comply with increasingly stringent sustainability laws, compliance reporting, and enforcement policies, including those related to the environment.

Foreign, federal, state, and local governments have and may in the future focus on enacting laws and regulations regarding the management of, or disclosure regarding, sustainability matters, such as, among other topics, climate change and the regulation of greenhouse gas (“GHG”) emissions, energy use, sustainability claims and labeling requirements, responsible sourcing, and the recyclability or recoverability of packaging and products.

For example, in October 2023, California enacted legislation addressing the disclosure of GHG emissions, climate-related risks, certain environmental claims, and the use or sale of voluntary carbon offsets.

Federal agencies, such as the Securities and Exchange Commission and other U.S.

agencies, have at times in the past increased their focus on climate, human capital, or other sustainability-related disclosures, claims, and practices.

Global efforts have been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global sustainability issues.

Further, the EU has passed a variety of sustainability-related directives and regulations in recent years as part of its Green Deal, such as the Corporate Sustainability Reporting Directive, which will require sustainability reporting across a broad range of sustainability topics for both EU and non-EU companies, and the Corporation Sustainability Due Diligence Directive, which will require both EU and non-EU companies to take certain steps to address human rights- and climate-related risks and impacts.

Compliance with this evolving legislative and regulatory landscape will require management’s time and resources, impose increased costs, and could result in operational disruptions.

Further, Mattel’s failure to comply with sustainability-related laws and regulations could lead to government enforcement actions, penalties, litigation, and/or reputational harm.

A variety of Mattel's stakeholders, including regulators, investors, advisory firms, rating agencies, and customers, are establishing laws, regulations, expectations, and/or assessments reflecting their varied and evolving expectations on corporate practices, including transparency, due diligence, and reporting related to sustainability matters, such as climate change, plastic use, human rights and/or labor standards, responsible sourcing, the recyclability or recoverability of packaging and products, human capital management, product safety and quality, and other sustainability matters.

In particular, customers and consumers may continue to put a premium on purchasing products that are sustainably manufactured and packaged, and Mattel may need to incur additional costs in order to effectively source materials that are more sustainable.

As Mattel's sustainability practices, stakeholder expectations, and voluntary and regulatory sustainability disclosure standards and policies continue to evolve, Mattel has developed, and may further develop, sustainability-related goals and disclosures in these areas.

Current sustainability goals are based on Mattel management's current assumptions related to scientific or technological developments, carbon markets, and other matters that are subject to change in the future and which may be outside of Mattel's control, as well as standards for measuring progress that are still developing and subject to a number of significant risks and uncertainties.

Mattel's efforts to be responsive to climate change, including to reduce its carbon footprint, and other sustainability matters, cannot provide assurance that Mattel will successfully achieve its sustainability goals, that related costs may not be higher than expected, that proposed regulation or deregulation related to climate change and other sustainability matters will not be more aggressive than Mattel's measures and result in higher costs (or require additional resources), or that any investments Mattel makes in furtherance of achieving such goals will meet expectations for all stakeholders or any applicable binding or non-

binding standards, any one of which could have an adverse effect on Mattel's financial condition, results of operations, reputation, or stock price.

In addition, Mattel's efforts on these topics may harm its reputation or competitive position and negatively impact its ability to retain existing or attract new employees, customers, and business relationships.

Further, being associated with activities by business partners or other affiliates that have or are perceived to have individual or cumulative adverse impacts on the climate, human rights, or other sustainability matters could negatively affect Mattel's reputation and impose additional costs.

Climate and other sustainability-related litigation has increased in recent years, such as claims involving the failure of organizations to mitigate their negative impacts on climate change, the failure of organizations to adapt to climate change, the insufficiency or inaccuracy of disclosure around climate or other sustainability-related risks, the failure to meet stated sustainability-related goals, or the failure to adequately meet standards regarding human rights and/or labor conditions.

If Mattel's sustainability practices do not or are perceived to not meet or align with investor or other stakeholder expectations and standards (which are continually evolving and may disagree with or emphasize different priorities than the ones Mattel chooses to focus on), or if Mattel fails to achieve, is perceived to have failed to achieve or been delayed in achieving, its sustainability goals, it could negatively affect consumer or customer preference for Mattel's products, as well as expose Mattel to reputational harm or litigation.

Financial and Accounting

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Mattel tests its goodwill for impairment annually or more often if an event or circumstance indicates that an impairment may have occurred.

For purposes of evaluating whether goodwill is impaired, goodwill is allocated to various reporting units, which are at the operating segment level.

For purposes of evaluating whether goodwill is impaired, goodwill is allocated to various reporting units.

Declines in profitability of Mattel's reporting units may impact the fair value of its reporting units, which could result in an impairment of its goodwill, adversely affecting its results of operations.

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A significant drop in the price of Mattel's stock would expose Mattel to the risk of securities class action lawsuits, which could result in substantial costs and divert management's attention and resources, with the potential to adversely affect Mattel's business.

For example, Mattel and certain other defendants have recently been party to certain class actions and certain derivative actions.

For example, Mattel and certain other defendants have been party to certain class actions and certain derivative actions.

For more information, see Part II, Item 8 "Financial Statements and Supplementary Data—Note 13 to the Consolidated Financial Statements—Commitments and Contingencies—Litigation."

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As disclosed in Part II, Item 9A "Controls and Procedures," Mattel determined that there is a material weakness in its internal control over financial reporting and as a result, its disclosure controls and procedures and internal control over financial reporting are not effective as of December 31, 2024.

While Mattel is actively engaged in the planning for, and implementation of, remediation efforts to address the material weakness, there can be no assurance that the efforts will fully remediate the material weakness in a timely manner.

While Mattel is in the process of implementing its remediation plan to address the material weakness, there can be no assurance that the efforts will fully remediate the material weakness in a timely manner.

If Mattel is unable to remediate the material weakness, or is otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, Mattel's ability to record, process, and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected.

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Mattel relies extensively on information technology systems across its operations, including for management of its supply chain, sale and delivery of its products and services, reporting its results of operations, collection and storage of consumer data, personal data of customers, employees and other stakeholders, and various other processes and transactions.

If Mattel does not allocate and effectively manage the resources necessary to build, sustain, and protect an appropriate technology infrastructure, it could be subject to transaction errors, processing inefficiencies, loss of customers, business disruptions, shutdowns, or loss of or damage to intellectual property through security breach.

Many of these systems are managed by third-party service providers.

Mattel relies on such third parties to provide services on a timely and effective basis, but Mattel ultimately does not control their performance.

Mattel uses third-party technology and systems for a variety of reasons, including, without limitation,

encryption and authentication technology, employee email, content delivery to customers, regulatory compliance, back-office support, and other functions.

Mattel uses third-party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, regulatory compliance, back-office support, and other functions.

A small and growing volume of Mattel's consumer products and services are web-based, and some are offered in conjunction with business partners or such third-party service providers.

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While Mattel carries cyber and business continuity insurance commensurate with its size and the nature of its operations, there can be no guarantee that costs incurred as a result of cyber events will be covered completely.

The recent global shift to remote work environments (including for Mattel's employees, customers, sellers, suppliers, vendors, and other third parties) may amplify these security risks or introduce additional security vulnerabilities.

Additionally, AI may increase the frequency or efficacy of cyberattacks against Mattel.

Remote or hybrid work environments (including for Mattel's employees, customers, sellers, suppliers, vendors, and other third parties) may amplify these security risks or introduce additional security vulnerabilities.

Additionally, the prevalence and increasing sophistication of AI may increase the frequency or efficacy of cyberattacks against Mattel.

Mattel's information systems require an ongoing commitment of significant resources to maintain, upgrade and enhance existing systems and develop or contract for new systems in order to keep pace with continuing changes in information processing technology, emerging cybersecurity risks and threats, evolving industry, legal and regulatory standards and requirements, and other changes in Mattel's business, among other things.

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These laws and regulations are continuously evolving and developing, creating significant uncertainty as privacy and data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements.

For example, the GDPR, which greatly increases

the jurisdictional reach of EU law and became effective in May 2018, added a broad array of requirements for handling personal data, including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance.

The EU AI Act, which is expected to become effective in the coming years, imposes certain requirements and limitations on developers and deployers of AI systems designated as "high risk," including in some cases AI systems designed for interaction with children.

For example, the GDPR, which greatly increases the jurisdictional reach of EU law and became effective in May 2018, added a broad array of requirements for handling personal data, including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance.

The EU AI Act, which was adopted in 2024 and will be implemented in phases beginning 2025 through 2030, imposes certain requirements and limitations on developers and deployers of AI systems designated as "high risk," including in some cases AI systems designed for interaction with children.

The requirements will apply to companies based outside the EU but operating on the EU market, and will carry the potential for substantial penalties for non-compliance.

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The California Privacy Rights Act ("CPRA"), which became operative on January 1, 2023, established the California Privacy Protection Agency to enforce Californians' privacy rights under the CCPA.

Since the CCPA was enacted, several other states have enacted and are in the process of enacting similar comprehensive privacy schemes, certain of which also impose obligations on companies developing and using AI or automated decision-making technologies.

Mattel's ongoing compliance with the GDPR and other privacy and data protection laws, such as the PIPL, CCPA, CPRA, and COPPA, as well as initiatives to comply with new legal regimes relating to privacy, data protection, and AI, imposes significant costs and challenges that are likely to increase over time, including as Mattel introduces sophisticated digital and smart technology products, including products that incorporate AI.

Since the CCPA was enacted, several other states have enacted or are in the process of enacting privacy, data protection, and AI-related laws, which may also impose obligations on companies developing and using AI or automated decision-making technologies.

Mattel's ongoing efforts to comply with the GDPR and other privacy and data protection laws, such as the PIPL, CCPA, CPRA, and COPPA, as well as initiatives to comply with new legal regimes relating to privacy, data protection, and AI, impose significant costs and challenges that are likely to increase over time, including as Mattel introduces sophisticated digital and smart technology products, including products that incorporate AI.

Given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be in conflict across jurisdictions, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or Mattel's practices.

Any failure, or perceived failure, by Mattel or third-party service providers to comply with Mattel's privacy or security policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personal data, may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on Mattel's operating results and financial condition.

Mattel faces risks related to protecting its proprietary intellectual property and information and is subject to third-party claims that Mattel is infringing on their intellectual property rights, either of which could adversely affect Mattel's business, financial condition, and results of operations.

The value of Mattel's business depends on its ability to protect its intellectual property and information, including its trademarks, trade names, copyrights, patents, trade secrets, and rights under intellectual property license agreements and other agreements with third parties, in the United States and around the world, as well as its customer, employee, and consumer data.

From time to time, third parties have challenged, and may in the future try to challenge, Mattel's ownership of its intellectual property in the United States and around the world.

Mattel faces risks related to protecting its proprietary IP and information and is subject to third-party claims that Mattel is infringing on their IP rights, either of which could adversely affect Mattel's business, financial condition, and results of operations.

The value of Mattel's business depends on its ability to protect its IP and information, including its trademarks, trade names, copyrights, patents, trade secrets, and rights under IP license agreements and other agreements with third parties, in the United States and around the world, as well as its customer, employee, and consumer data.

From time to time, third parties have challenged, and may in the future try to challenge, Mattel's ownership of its IP in the United States and around the world.

Responding to any infringement claim, regardless of its validity, may be costly and time-consuming and may divert management and key personnel from business operations.

Findings of infringement on the intellectual property rights of any third party by Mattel, its distributors, its licensors, or its manufacturers may require obtaining a license to use those rights, which may not be obtainable on reasonable terms, if at all.

In addition, Mattel's business is subject to the risk of third parties counterfeiting its products or infringing on its intellectual property rights.

Findings of infringement on the IP rights of any third party by Mattel, its distributors, its licensors, or its manufacturers may require obtaining a license to use those rights, which may not be obtainable on reasonable terms, if at all.

In addition, Mattel's business is subject to the risk of third parties counterfeiting its products or infringing on its IP rights, and the availability of certain AI tools has facilitated the creation of infringing works based on the unauthorized use of Mattel's IP.

The legal landscape for some new technologies, including AI (particularly generative AI), remains uncertain, and development of the law in this area could impact Mattel's ability to protect against potentially infringing uses associated with both the development and use of AI.

In addition, the availability of copyright protection and other legal protections for IP generated by certain new technologies, such as generative AI, is uncertain.

The steps Mattel has taken may not prevent unauthorized use of its intellectual property, particularly in foreign countries where the laws may not protect its intellectual property as fully as in the United States.

Mattel at times resorts to litigation to protect its intellectual property rights, which could result in substantial costs and diversion of resources.

Mattel's failure to protect its proprietary intellectual property and information, including with respect to any successful challenge to Mattel's ownership of its intellectual property or significant infringements of its intellectual property, could have an adverse effect on Mattel's business, financial condition, and results of operations.

Mattel has acquired, and may in the future acquire, certain intellectual property from third parties.

The steps Mattel has taken may not prevent unauthorized use of its IP, particularly in foreign countries where the laws may not protect its IP as fully as in the United States.

Mattel at times resorts to litigation to protect its IP rights, which could result in substantial costs and diversion of resources.

Mattel's failure to protect its proprietary IP and information, including with respect to any successful challenge to Mattel's

ownership of its IP or significant infringements of its IP, could have an adverse effect on Mattel's business, financial condition, and results of operations.

Mattel has acquired, and may in the future acquire, certain IP from third parties.

Declines in the profitability of these acquired brands may impact Mattel's ability to recover the carrying value of the related assets and could result in an impairment charge.

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An unfavorable resolution of these matters could have an adverse effect on Mattel's business, financial condition, and results of operations.

Regardless of their outcome, these matters may result in substantial costs and expenses, significantly divert the

attention of management, or interrupt Mattel's normal business operations.

Regardless of their outcome, these matters may result in substantial costs and expenses, significantly divert the attention of management, or interrupt Mattel's normal business operations.

There can be no assurance that Mattel will be able to prevail in, or achieve a favorable settlement of, any of these matters.

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federal, state, and local governmental entities, and foreign governments regulate many aspects of Mattel's business, including its products and the importation and exportation of its products, and these laws and regulations can change frequently.

These policies or regulations include accounting standards, taxation requirements (including changes in applicable income tax rates, new tax laws, and revised tax law interpretations), product safety and other safety standards, trade restrictions, duties and tariffs (including international trade laws and regulations, export controls, and economic sanctions), regulations regarding currency and financial matters, anticorruption standards (such as the U.S.

Foreign Corrupt Practices Act), environmental matters, advertising directed toward children, product content, and privacy and data protection, as well as other administrative and regulatory restrictions.

These policies or regulations include accounting standards, taxation requirements (including changes in applicable income tax rates, new tax laws, and revised tax law interpretations), product safety and other safety standards, duties and tariffs (including international trade laws and regulations, export controls, and economic sanctions), trade restrictions, trade barriers, regulations regarding currency and financial matters, anticorruption standards (such as the U.S.

Foreign Corrupt Practices Act), labor and employment, environmental matters, advertising directed toward children, product content, AI, and privacy and data protection, as well as other administrative and regulatory restrictions.

In addition, as Mattel enters into new areas of investment, product development, or other business activities, it will have to learn to navigate the regulatory framework surrounding those areas, which may be continuing to develop.

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The steps Mattel takes to comply with these laws, regulations, and policies do not ensure that Mattel will be in compliance in the future.

Compliance with these various laws, regulations, and policies imposes significant costs on Mattel's business, and failure to comply could result in monetary liabilities and other penalties and could lead to negative media attention and consumer dissatisfaction, which could have an adverse effect on Mattel's business, financial condition, and results of operations.

Compliance with these various laws, regulations, and policies imposes significant costs on Mattel's business, and failure to comply could result in monetary liabilities and other penalties and could also lead to negative media attention, reputational damage, and consumer dissatisfaction, which could have an adverse effect on Mattel's business, financial condition, and results of operations.

New tax laws and interpretations of tax law are taken into account for financial statement purposes in the quarter or year that they become applicable.

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Mattel's substantial indebtedness could adversely affect its ability to raise additional capital to fund its operations, limit its ability to react to changes in the economy or its industry, and expose it to interest rate risk to the extent of its variable rate debt.

At December 31, 2023, Mattel had $2.33 billion of indebtedness on a consolidated basis, consisting primarily of 3.375% Senior Notes due 2026, 5.875% Senior Notes due 2027, and 3.750% Senior Notes due 2029, as well as Senior Notes issued in prior years.

At December 31, 2024, Mattel had $2.33 billion of indebtedness on a consolidated basis.

In addition, Mattel has $1.40 billion of commitments under its revolving credit facility.

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• Limit Mattel's ability to obtain additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions, and general corporate or other purposes.

Mattel's credit ratings have fluctuated in recent years.

Mattel's credit ratings have fluctuated over time.

If Mattel's credit ratings decline, its cost of issuing new debt could increase.

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Mattel's stock repurchase program could affect the price of its common stock and may be suspended at any time, and there is no guarantee that repurchases under the program, if any, will enhance stockholder value.

Mattel has a stock repurchase program, under which it is currently authorized to repurchase up to $1.00 billion of its common stock.

Mattel has a $1.00 billion stock repurchase program, under which it is currently authorized to repurchase up to $600 million of its common stock.

The stock repurchase program does not obligate Mattel to repurchase any dollar amount or number of shares and may be suspended at any time without prior notice, which could cause the market price of Mattel's common stock to decline.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors