What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-03-15 · 276 added, 221 removed, 1233 unchanged (29% of the section changed)

9 unchanged sentences

Specifically, Mattel did not design and maintain effective user access and provisioning review controls to prevent or detect inappropriate user and privileged access to, or ensure the appropriate segregation of duties within, those systems.

Additionally, Mattel's software program change monitoring controls are not effectively designed to detect inappropriate changes to those systems.

The control deficiencies described did not result in a material misstatement to Mattel’s consolidated financial statements;

The control deficiencies described above did not result in a material misstatement to Mattel’s consolidated financial statements;

however, those deficiencies raise a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.

8 unchanged sentences

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to certain of its information technology general controls within certain of the Company's information technology systems, as the Company did not design and maintain effective user access and provisioning review controls to prevent or detect inappropriate user and privileged access to, or ensure the appropriate segregation of duties within, those systems.

Additionally, the Company’s software program change monitoring controls are not effectively designed to detect inappropriate changes to those systems.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

27 unchanged sentences

Accruals for these programs are recorded in net sales as sales adjustments that reduce gross billings in the period the related sale is recognized.

As disclosed by management, sales adjustments for such programs totaled $660.6 million for the year ended December 31, 2023.

The accrual for such programs, which can either be contractual or discretionary in nature, is based on an assessment of customer purchases, customer performance of specified promotional activities, and other specified factors such as customer sales volume.

As disclosed by management, sales adjustments for such programs totaled $653.7 million for the year ended December 31, 2024, a portion of which is discretionary in nature.

While certain sales adjustment amounts are readily determinable at year end and do not require estimates, other sales adjustments, such as discretionary sales adjustments, require significant judgment by management to make these estimates.

In making these estimates, management considers all available information, including the overall business environment, historical trends, and information from customers.

The principal considerations for our determination that performing procedures relating to the discretionary component of the sales adjustments accrual is a critical audit matter are the significant judgment by management in estimating the discretionary component of the sales adjustments accrual, which in turn led to a high degree of auditor judgment, subjectivity, and audit effort in performing procedures and evaluating audit evidence relating to management's estimate.

The principal considerations for our determination that performing procedures relating to the discretionary component of the sales adjustments accrual is a critical audit matter are (i) the significant judgment by management when developing the estimate of the discretionary component of the sales adjustments accrual and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to management's estimate.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

3 unchanged sentences

Los Angeles, California

March 15, 2024

February 25, 2025

We have served as the Company's auditor since 1974.

57 unchanged sentences

Interest (income) ( 51,478 ) ( 25,238 ) ( 9,398 )

Other non-operating (income) expense, net ( 2,293 ) 47,760 8,364

Other non-operating expense (income), net 4,481 ( 2,293 ) 47,760

Income Before Income Taxes 622,505 465,404 504,335

Provision (benefit) for income taxes 269,475 135,851 ( 420,381 )

Provision for income taxes 105,626 269,475 135,851

(Income) from equity method investments ( 24,938 ) ( 18,423 ) ( 25,429 )

12 unchanged sentences

Net Income $ 541,817 $ 214,352 $ 393,913

Other Comprehensive Income, Net of Tax

Other Comprehensive (Loss) Income, Net of Tax

Currency translation adjustments ( 110,507 ) 37,123 ( 6,191 )

1 unchanged sentence

Available-for-sale security adjustments — — 3,646

Net unrealized (losses) gains on derivative instruments:

Unrealized holding (losses) gains ( 15,903 ) 40,449 23,253

Net unrealized gains (losses) on derivative instruments:

Unrealized holding gains (losses) 39,409 ( 15,903 ) 40,449

Reclassification adjustments included in net income ( 21,639 ) ( 10,292 ) ( 26,513 )

17,770 ( 26,195 ) 13,936

Other Comprehensive Income, Net of Tax 6,510 26,992 3,305

Other Comprehensive (Loss) Income, Net of Tax ( 89,484 ) 6,510 26,992

Comprehensive Income $ 452,333 $ 220,862 $ 420,905

16 unchanged sentences

Income from equity method investments ( 24,938 ) ( 18,423 ) ( 25,429 )

Loss on extinguishment of long-term borrowings — — 101,695

Loss (gain) on sale of assets, net 1,016 ( 26,905 ) ( 23,823 )

Release of valuation allowance on deferred tax assets — — ( 540,803 )

(Gain) loss on sale of assets, net ( 138 ) 1,016 ( 26,905 )

Valuation allowance on foreign deferred tax assets 3,200 — —

Content asset amortization 77,986 51,837 56,037

16 unchanged sentences

Cash Flows From Financing Activities:

Payments of short-term borrowings, net — — ( 969 )

Payments of long-term borrowings, net — — ( 250,000 )

Proceeds from long-term borrowings, net — — 1,184,913

Share repurchases ( 400,000 ) ( 203,016 ) —

28 unchanged sentences

Share-based compensation — 69,072 — — — 69,072

Adjustment of accumulated other comprehensive loss to retained earnings for available-for-sale securities — — — ( 2,801 ) 2,801 —

Balance, December 31, 2022 441,369 1,808,308 ( 2,129,639 ) 2,847,709 ( 911,478 ) 2,056,269

1 unchanged sentence

Other comprehensive income, net of tax — — — — 6,510 6,510

Share repurchases — — ( 203,016 ) — — ( 203,016 )

Issuance of treasury stock for stock option exercises — ( 16,059 ) 42,801 — — 26,742

2 unchanged sentences

Share-based compensation — 83,334 — — — 83,334

Adjustment of accumulated other comprehensive loss to retained earnings for available-for-sale securities — — — ( 2,801 ) 2,801 —

Balance, December 31, 2023 441,369 1,774,911 ( 2,224,160 ) 3,062,061 ( 904,968 ) 2,149,213

54 unchanged sentences

Goodwill and Intangible Assets

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

Goodwill is allocated to reporting units for the purpose of evaluating whether goodwill is impaired.

Mattel's reporting units are:

(i) North America, which consists of the United States and Canada, (ii) International, and (iii) American Girl.

In the first quarter of 2024, Mattel announced an organizational change that resulted in the American Girl business being integrated into Mattel's North America commercial organization.

Such integration resulted in a change to Mattel's operating and reportable segments.

Goodwill related to the American Girl reporting unit is included in the North America operating segment.

Mattel's reportable segments are:

(i) North America;

and (ii) International.

Components of the operating segments have been aggregated into a single reporting unit as the components have similar economic characteristics.

19 unchanged sentences

dollar functional currencies are translated into U.S.

dollars at year-end exchange rates.

Net income and cash flow items are translated at weighted-average exchange rates prevailing during the year.

The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive loss within stockholders' equity.

dollars at period-end exchange rates.

Net income and cash flow items are translated at weighted-average exchange rates prevailing during the period.

The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders' equity.

Foreign Currency Transaction Exposure

3 unchanged sentences

Transaction gains or losses on hedged intercompany inventory transactions are recorded in the consolidated statements of operations in the period in which the inventory is sold to customers.

Gains and losses on unhedged intercompany loans and advances are recorded as a component of other non-operating (income) expense, net in the consolidated statements of operations in the period in which the currency exchange rate changes.

Gains and losses on unhedged intercompany loans and advances are recorded as a component of other non-operating expense (income), net in the consolidated statements of operations in the period in which the currency exchange rate changes.

Derivative Instruments

3 unchanged sentences

Changes in fair value associated with hedge ineffectiveness, if any, are recorded in the consolidated statements of operations.

Changes in fair value of cash flow hedge derivatives are deferred and recorded as part of accumulated other comprehensive loss in stockholders' equity until the underlying transaction affects earnings.

Changes in fair value of cash flow hedge derivatives are deferred and recorded as part of accumulated other comprehensive income (loss) in stockholders' equity until the underlying transaction affects earnings.

In the event that an anticipated transaction is no longer likely to occur, Mattel recognizes the change in fair value of the derivative in its consolidated statements of operations in the period the determination is made.

64 unchanged sentences

The guidance in ASU 2022-04 was effective for interim and fiscal years beginning after December 15, 2022.

The annual rollforward disclosure is not required to be made until the fiscal year beginning after December 15, 2023, and is to be applied prospectively.

Refer to "Note 5 to the Consolidated Financial Statements—Supplier Finance Program" for additional information regarding Mattel's supplier finance program.

The annual rollforward was effective for fiscal years beginning after December 15, 2023.

Refer to "Note 5 to the Consolidated Financial Statements—Supplier Finance Program" for additional information regarding Mattel's supplier finance program, including the annual rollforward.

The adoption of this new accounting standard did not have a material impact on Mattel's consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

1 unchanged sentence

ASU 2023-07 requires incremental disclosure of significant segment expenses on an annual and interim basis to enable investors to develop more decision-useful financial analyses.

The guidance in ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Mattel is currently evaluating the impact of the adoption of ASU 2023-07 on its consolidated financial statements.

The guidance in ASU 2023-07 was effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Mattel adopted the guidance in ASU 2023-07 effective January 1, 2024 and applied the amendments retrospectively to all prior periods presented in the consolidated financial statements.

Refer to "Note 14 to the Consolidated Financial Statements—Segment Information" for additional information regarding Mattel's Segments.

The adoption of this new accounting standard did not have a material impact on Mattel's consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

3 unchanged sentences

Mattel is currently evaluating the impact of the adoption of ASU 2023-09 on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses for public business entities.

ASU 2024-03 requires enhanced disclosures of each expense caption in the income statement to improve transparency and provide financial statement users with more detailed information about the nature, amount and timing of expenses impacting financial performance.

The guidance in ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Mattel is currently evaluating the impact of the adoption of ASU 2024-03 on its consolidated financial statements.

Note 2— Property, Plant, and Equipment, Net

12 unchanged sentences

$ 516,049 $ 465,523

During the second quarter of 2022, Mattel completed the sale of the American Girl corporate office and a distribution center located in Middleton, Wisconsin, which included land and buildings.

Mattel received net proceeds from the sale of $ 23.8 million, which resulted in a pre-tax gain of $ 15.2 million, recorded in other selling and administrative expenses in the consolidated statement of operations.

In July 2024, Mattel completed the purchase of an office building located in El Segundo, California for cash consideration of $ 58.8 million.

The building totals approximately 168,000 square feet and, upon completion of an interior build-out, will replace a currently leased facility that supports Mattel's global design and development and other activities.

The building will support the North America and International segments.

Note 3— Goodwill and Intangible Assets, Net

Mattel's reporting units are at the same level as its operating segments.

Mattel's reporting units are (i) North America, which consists of the United States and Canada, (ii) International, and (iii) American Girl.

In the first quarter of 2024, Mattel implemented an organizational change integrating the American Girl business into Mattel's North America commercial organization.

Such integration resulted in a change to Mattel's operating and reportable segments.

Goodwill related to the American Girl reporting unit is included in the North America operating segment.

Mattel's reportable segments are:

(i) North America and (ii) International.

The change in the carrying amount of goodwill by reporting unit for 2024 and 2023 is shown below.

1 unchanged sentence

2022 Currency Exchange Rate Impact December 31,

2023 Currency

Exchange Rate

Impact December 31,

(In thousands)

3 unchanged sentences

$ 1,378,551 $ 5,961 $ 1,384,512 $ ( 2,791 ) $ 1,381,721

In the third quarter of 2023, Mattel performed its annual impairment test and determined each reporting unit's fair value exceeded its carrying amount and that goodwill was not impaired.

In the third quarter of 2024, Mattel performed its annual goodwill impairment test and determined that goodwill was not impaired.

The quantitative goodwill impairment assessment includes the use of certain assumptions and estimates to calculate the estimated fair value of Mattel's reporting units.

To the extent assumptions, estimations, or market factors, including seasonality, differ from Mattel's current estimates, the estimated fair value of Mattel's reporting units may be susceptible to significant changes.

The reporting unit that is most susceptible to changes in assumptions and estimates, given its smaller size, is American Girl, as excess fair value over carrying value is a lesser dollar and percentage value than the other reporting units.

There were no events or changes in circumstances subsequent to the third quarter assessment that indicate that the carrying amount of a reporting unit may exceed its fair value as of December 31, 2024.

Intangible Assets, Net

Identifiable intangibles were $ 393.0 million, net of accumulated amortization of $ 408.5 million, and $ 425.1 million, net of accumulated amortization of $ 364.9 million, as of December 31, 2023 and 2022, respectively.

Mattel's identifiable intangible assets, net consisted of the following:

2024 December 31,

(In thousands)

Identifiable intangibles $ 798,655 $ 801,506

accumulated amortization ( 438,092 ) ( 408,467 )

$ 360,563 $ 393,039

The estimated future amortization expense for the next five years is as follows:

5 unchanged sentences

During 2024, 2023, and 2022, Mattel's amortizable intangible assets were not impaired.

During 2021, Mattel discontinued the use of an intangible asset, which resulted in an asset impairment charge of $ 2.0 million.

Note 4— Employee Benefit Plans

17 unchanged sentences

Mattel also has unfunded postretirement health insurance plans covering certain eligible domestic employees.

A summary of the components of Mattel's net periodic benefit cost (credit) and other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31 is as follows:

A summary of the components of Mattel's net periodic benefit cost/credit and other changes in plan assets and benefit obligations recognized in other comprehensive (loss) income for the years ended December 31 is as follows:

Defined Benefit Pension Plans Postretirement Benefit Plans

8 unchanged sentences

Settlement (gain) loss — ( 59 ) 19 — — —

Curtailment (gain) loss — ( 326 ) 48 — — —

Curtailment gain — — ( 326 ) — — —

Net periodic benefit cost (credit) $ 12,806 $ 9,949 $ 5,693 $ ( 2,046 ) $ ( 2,084 ) $ ( 2,047 )

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:

Net actuarial loss (gain) $ 904 $ ( 23,501 ) $ ( 42,671 ) $ 311 $ ( 922 ) $ ( 605 )

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Loss) Income:

Net actuarial (gain) loss $ ( 5,086 ) $ 904 $ ( 23,501 ) $ ( 433 ) $ 311 $ ( 922 )

Prior service cost 131 1,169 1,022 — — —

Amortization of prior service (cost) credit ( 194 ) ( 150 ) ( 155 ) 2,038 2,038 2,038

Total recognized in other comprehensive loss (income) (a) $ 1,923 $ ( 22,634 ) $ ( 42,630 ) $ 2,349 $ 1,116 $ 1,433

Total recognized in net periodic benefit cost (credit) and other comprehensive income $ 11,872 $ ( 16,941 ) $ ( 27,772 ) $ 265 $ ( 931 ) $ ( 535 )

(a) Amounts exclude related tax (benefit) expense of approximately $( 2 ) million, $ 6 million, and $ 9 million, during 2023, 2022, and 2021, respectively, which are also included in other comprehensive income.

Total recognized in other comprehensive (income) loss (a) $ ( 5,149 ) $ 1,923 $ ( 22,634 ) $ 1,605 $ 2,349 $ 1,116

Total recognized in net periodic benefit cost (credit) and other comprehensive (loss) income $ 7,657 $ 11,872 $ ( 16,941 ) $ ( 441 ) $ 265 $ ( 931 )

(a) Amounts exclude related tax expense (benefit) of approximately $ 1 million, $( 2 ) million, and $ 6 million, during 2024, 2023, and 2022, respectively, which are also included in other comprehensive (loss) income.

Net periodic benefit cost/credit for Mattel's domestic defined benefit pension and postretirement benefit plans was calculated on January 1 of each year using the following assumptions:

35 unchanged sentences

Impact of currency exchange rate changes ( 5,085 ) 4,921 — —

Actuarial loss (gain) 13,879 ( 124,229 ) 85 ( 1,022 )

Actuarial (gain) loss ( 20,525 ) 13,879 ( 623 ) 85

Benefits paid ( 34,294 ) ( 35,634 ) ( 562 ) ( 174 )

25 unchanged sentences

Mattel's accumulated benefit obligation for its defined benefit pension plans as of 2024 and 2023 totaled $ 409.6 million and $ 445.2 million, respectively.

The actuarial loss recognized in 2023 for the defined benefit pension plan was driven primarily by the decrease in the discount rate from the prior year that was used to determine the projected benefit obligation at December 31, 2023.

The actuarial gain recognized in 2022 for the defined benefit pension plan was driven primarily by the increase in the discount rate from the prior year that was used to determine the projected benefit obligation at December 31, 2022.

The actuarial gain recognized in 2024 for the defined benefit pension plan was driven primarily by the decrease in the discount rate from the prior year that was used to determine the projected benefit obligation at December 31, 2024.

The actuarial loss recognized in 2023 for the defined benefit pension plan was driven primarily by the increase in the discount rate from the prior year that was used to determine the projected benefit obligation at December 31, 2023.

As of December 31, 2024 and 2023, information for defined benefit pension plans that had aggregate accumulated benefit obligations and projected benefit obligations in excess of plan assets is as follows:

41 unchanged sentences

2030 - 2034 169,647 980

Mattel expects to make cash contributions totaling approximately $ 14 million to its defined benefit pension and postretirement benefit plans in 2024, substantially all of which will be for benefit payments for its under funded plans.

Mattel expects to make cash contributions totaling approximately $ 21 million to its defined benefit pension and postretirement benefit plans in 2025, substantially all of which will be for benefit payments for its underfunded plans.

Mattel periodically commissions a study of the plans' assets and liabilities to determine an asset allocation that would best match expected cash flows from the plans' assets to expected benefit payments.

42 unchanged sentences

Global fixed income 25,048

Diversified funds —

Real Estate 17,582

13 unchanged sentences

As the valuation of this asset is judgmental, and there are no observable inputs associated with the valuation, the buy-in contract is classified as Level 3 on the fair value hierarchy.

The following table provides a reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

The following table provides a reconciliation of the beginning and ending balances of insurance buy-in policy contract assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

(in thousands)

6 unchanged sentences

Balance at December 31, 2024 $ 52,785

Mattel's defined benefit pension plan assets are not directly invested in Mattel common stock.

Mattel's domestic defined benefit pension plan assets are not directly invested in Mattel common stock.

Mattel believes that the long-term rate of return on plan assets of 6.2 % as of December 31, 2024 is reasonable based on historical returns.

16 unchanged sentences

Separately, Mattel has purchased group trust-owned life insurance contracts designed to assist in funding these benefits under the DCP.

The cash surrender value of these policies, valued at $ 87.1 million and $ 79.6 million as of December 31, 2023 and 2022, respectively, are held in an irrevocable grantor trust, the assets of which are subject to the claims of Mattel's creditors and are included in other noncurrent assets in the consolidated balance sheets.

The cash surrender value of these policies, valued at $ 97.1 million and $ 87.1 million as of December 31, 2024 and 2023, respectively, are held in an irrevocable guarantor trust, the assets of which are subject to the claims of Mattel's creditors and are included in other noncurrent assets in the consolidated balance sheets.

Annual Incentive Compensation

Mattel has an annual incentive compensation plan under which officers and key employees may earn cash incentive compensation based on Mattel's and individual performance, subject to certain approvals of the Compensation Committee of the Board of Directors.

Incentive compensation for 2023, 2022, and 2021 were $ 137.8 million, $ 0 million , and $ 137.1 million, respectively, for awards under the plan and were included in other selling and administrative expenses.

Incentive compensation for 2024 and 2023 were $ 150.9 million and $ 137.8 million, respectively, for awards under the plan and were included in other selling and administrative expenses.

During 2022, Mattel did not achieve threshold performance under the plan, and therefore, no cash payout was earned.

4 unchanged sentences

Suppliers participating in the program are able to select which individual Mattel invoices they sell to the third-party financial institution.

However, all Mattel payments of the full amounts due to participating suppliers are paid on the invoice due date based on the terms originally negotiated with the supplier, regardless of whether the individual invoice due to the supplier is sold to the third-party financial institution.

Included in Mattel's accounts payable in the consolidated balance sheets as of December 31, 2023 and 2022 were $ 54.3 million and $ 86.0 million of outstanding payment obligations due to suppliers, respectively, under the supplier finance program.

All Mattel payments of the full amounts due to participating suppliers are paid on the invoice due date based on the terms originally negotiated with the supplier, regardless of whether the individual invoice due to the supplier is sold to the third-party financial institution.

Outstanding payment obligations due to suppliers under the supplier finance program were included in Mattel's accounts payable in the consolidated balance sheets.

All payment activities related to the supplier finance program were presented within operating activities in the consolidated statements of cash flows.

The following is a rollforward of outstanding payment obligations due under the supplier finance program:

2024 December 31,

(In thousands)

Obligations outstanding at beginning of the year $ 54,316 $ 85,988

Invoices issued during the year 351,761 290,143

Invoices paid during the year ( 336,874 ) ( 321,815 )

Obligations outstanding at end of the year $ 69,203 $ 54,316

Note 6— Seasonal Financing and Debt

Seasonal Financing

On September 15, 2022, Mattel entered into a revolving credit agreement (the "Credit Agreement") as the borrower with Bank of America, N.A., as administrative agent, and the other lenders and financial institutions party thereto, providing for a senior secured revolving credit facility in an aggregate principal amount of $ 1.40 billion (the "Revolving Credit Facility").

The Revolving Credit Facility will mature on September 15, 2025.

In connection with the entry into the Credit Agreement, Mattel terminated the commitments and satisfied all outstanding obligations under the previous credit agreement, dated December 20, 2017 (as amended).

Borrowings under the Revolving Credit Facility bear interest at a floating rate, which can be either, at Mattel's option, (i) adjusted Term Secured Overnight Financing Rate ("SOFR") plus an applicable margin ranging from 1.125 % to 2.000 % per annum or (ii) an alternate base rate plus an applicable margin ranging from 0.125 % to 1.000 % per annum, in each case, such applicable margins to be determined based on Mattel's credit ratings.

In addition to paying interest on the outstanding principal under the Revolving Credit Facility, Mattel is required to pay (i) an unused line fee per annum of the average daily unused portion of the Revolving Credit Facility;

(ii) a letter of credit fronting fee based on a percentage of the aggregate face amount of outstanding letters of credit;

and (iii) certain other customary fees and expenses of the lenders and agents.

In November 2022, Moody's upgraded Mattel's credit rating from Ba1 to Baa3, and in April 2023, S&P upgraded Mattel's credit rating from BB+ to BBB- and maintained a positive outlook.

On April 27, 2023 (the "Fall-Away Date"), Mattel provided a certification of the foregoing to the administrative agent under the Credit Agreement, which resulted in certain subsidiary guarantees, liens, covenants, and other restrictions falling away under the Credit Agreement.

The obligations of Mattel under the Revolving Credit Facility were previously guaranteed by each domestic subsidiary of Mattel that guaranteed any of Mattel's senior unsecured notes (collectively, the "Guarantors").

On the Fall-Away Date, the foregoing guarantees were released and the obligations of Mattel under the Revolving Credit Facility are instead required to be guaranteed by each existing and future direct and indirect domestic subsidiary of Mattel only to the extent such subsidiary guarantees other indebtedness of Mattel in an aggregate principal or committed amount in excess of $ 50 million.

The Revolving Credit Facility was previously secured by liens on substantially all of Mattel's and the Guarantors' present and after-acquired assets (subject to certain exceptions), including domestic accounts receivable, inventory, certain trademarks and patents, and certain equity interests in direct material subsidiaries of Mattel and the Guarantors, but all such liens were permanently released on the Fall-Away Date.

The Credit Agreement contains customary covenants (subject to customary exceptions), including, but not limited to, restrictions on Mattel's and its subsidiaries' ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, sell or otherwise dispose of assets, or amend organizational documents.

The Credit Agreement requires the maintenance of (a) an interest coverage ratio of not less than 2.75 to 1.00 as of the end of each fiscal quarter and (b) a total leverage ratio not to exceed 3.75 to 1.00 as of the end of each fiscal quarter.

As of December 31, 2023 and 2022, Mattel had no borrowings outstanding under the Revolving Credit Facility.

Outstanding letters of credit under the Revolving Credit Facility totaled approximately $ 9 million and $ 8 million as of December 31, 2023 and 2022, respectively.

On July 15, 2024, Mattel entered into a revolving credit agreement (the "Credit Agreement"), among Mattel, as the borrower, Bank of America, N.A., as administrative agent, and the other lenders and financial institutions party thereto, providing for $ 1.40 billion in aggregate principal amount of senior unsecured revolving credit facilities (the "Credit Facility").

The Credit Facility matures on July 15, 2029.

In connection with the Credit Facility, Mattel terminated the commitments and satisfied all outstanding obligations under Mattel's prior revolving credit agreement, dated as of September 15, 2022 (as amended), among Mattel, as the borrower, Bank of America, N.A., as administrative agent, and the other lenders and financial institutions party thereto, which provided for a senior secured revolving credit facility in an aggregate principal amount of $ 1.40 billion.

Borrowings under the Credit Facility bear interest at a floating rate, which for U.S.

Dollar-denominated loans can be, at Mattel's option, either (a) Term SOFR (as defined in the Credit Agreement), plus an applicable margin ranging from 0.875 % to 1.375 % per annum, or (b) Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.000 % to 0.375 % per annum, in each case, such applicable margins to be determined based on Mattel's debt rating.

In addition to paying interest on the outstanding principal under the Credit Facility, Mattel is required to pay (i) an unused line fee per annum of the average daily unused portion of the Credit Facility, (ii) a letter of credit fronting fee based on a percentage of the aggregate face amount of outstanding letters of credit, and (iii) certain other customary fees and expenses of the lenders and agents.

The Credit Agreement contains customary covenants, including, but not limited to, (a) restrictions on Mattel's and its subsidiaries' ability to merge and consolidate with other companies, dispose of all or substantially all assets, incur indebtedness, or grant liens or other security interests on assets, in each case, subject to certain customary exceptions and (b) the requirement that the obligations of Mattel under the Credit Facility be guaranteed by any existing or future direct or indirect domestic subsidiary of Mattel that guarantees other indebtedness of Mattel in an aggregate principal or committed amount in excess of $ 50 million, subject to certain customary exceptions.

As of December 31, 2024, no subsidiaries of Mattel were required to guarantee the Credit Facility.

The Credit Agreement requires the maintenance of (a) an interest coverage ratio of not less than 2.75 to 1.00 as of the end of each fiscal quarter and (b) a total leverage ratio as of the end of each fiscal quarter, not to exceed (x) 3.75 to 1.00 with respect to fiscal quarters ending on March 31, June 30 and December 31 of each year, and (y) 4.00 to 1.00 with respect to fiscal quarters ending on September 30 of each year.

The total leverage ratio financial covenant is subject to a step-up to 4.25 to 1.00, with respect to fiscal quarters in which certain material acquisitions are consummated, and for a period of four fiscal quarters thereafter, and subject to certain customary exceptions.

As of December 31, 2024 and 2023, Mattel had no borrowings outstanding under the Credit Facility and the prior credit facility, respectively.

Outstanding letters of credit under the Credit Facility and the prior credit facility totaled approximately $ 9 million as of December 31, 2024 and 2023.

To finance seasonal working capital requirements of certain foreign subsidiaries, Mattel avails itself of individual short-term credit lines.

2 unchanged sentences

As of December 31, 2024, Mattel was in compliance with all covenants contained in the Credit Agreement.

The Credit Agreement is a material agreement, and failure to comply with its covenants may result in an event of default under the terms of the Revolving Credit Facility.

If Mattel were to default under the terms of the Revolving Credit Facility, its ability to meet its seasonal financing requirements could be adversely affected.

The Credit Agreement is a material agreement, and failure to comply with its covenants may result in an event of default under the terms of the Credit Facility.

If Mattel were to default under the terms of the Credit Facility, its ability to meet its seasonal financing requirements could be adversely affected.

Short-Term Borrowings

As of December 31, 2024 and 2023, Mattel had no short-term borrowings outstanding.

During 2023, Mattel had no borrowings under the Revolving Credit Facility and no other short-term borrowings.

During 2022, Mattel had average borrowings under the new and previous senior secured revolving credit facilities and other short-term borrowings of $ 2.9 million, to help finance its seasonal working capital requirements, and the weighted-average interest rate on borrowings under the senior secured revolving credit facilities and other short-term borrowings during 2022 was 3.6 %.

Mattel's average foreign short-term borrowings were not material during 2023 and 2022.

During 2024 and 2023, Mattel had no borrowings under the Credit Facility and prior credit facility, and no other short-term borrowings.

Long-Term Debt

On March 19, 2021, Mattel issued (i) $ 600 million aggregate principal amount of 3.375 % Senior Notes due 2026 (the "2026 Notes") and (ii) $ 600 million aggregate principal amount of 3.750 % Senior Notes due 2029 (the "2029 Notes" and, together with the 2026 Notes, the "Notes" and each a "series" of the Notes).

The 2026 Notes were issued pursuant to an indenture dated March 19, 2021 (the "2026 Notes Indenture"), among Mattel, the guarantors named therein and U.S.

Bank National Association, as trustee (the "Trustee").

The 2029 Notes were issued pursuant to an indenture dated March 19, 2021 (the "2029 Notes Indenture" and, together with the 2026 Notes Indenture, the "Indentures" and each, an "Indenture"), among Mattel, the guarantors named therein and the Trustee.

The Notes of each series pay interest semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2021.

Mattel may redeem all or part of the 2026 Notes any time or from time to time at its option, at a redemption price including a call premium that varies (from 0 % to 1.688 %) depending on the year of redemption, plus accrued and unpaid interest to, but excluding, the redemption date.

Mattel may redeem all or part of the 2029 Notes at any time or from time to time prior to April 1, 2024, at its option, at a redemption price equal to 100 % of the principal amount, plus a "make whole" premium, plus accrued and unpaid interest on applicable 2029 Notes being redeemed to, but excluding, the redemption date.

Any time or from time to time following April 1, 2024, Mattel may redeem all or part of the 2029 Notes, at its option, at a redemption price including a call premium that varies (from 0 % to 1.875 %) depending on the year of redemption, plus accrued and unpaid interest to, but excluding, the redemption date.

Mattel may also redeem up to 40 % of the principal amount of the 2029 Notes at any time or from time to time prior to April 1, 2024, at its option, at a redemption price equal to 103.750 %, of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the redemption date, with the net cash proceeds of sales of one or more equity offerings by Mattel or any direct or indirect parent of Mattel.

The Notes of each series are Mattel's and the guarantors' senior unsecured obligations.

The Notes of each series are guaranteed by Mattel's existing, and subject to certain exceptions, future wholly-owned domestic restricted subsidiaries that guarantee Mattel's senior secured revolving credit facilities or certain other indebtedness.

Under the terms of the applicable Indenture, the Notes of each series rank equally in right of payment with all of Mattel's existing and future senior debt, including Mattel's Existing Notes (as defined in the Indenture) and borrowings under the senior secured revolving credit facilities, and rank senior in right of payment to Mattel's existing and future debt and other obligations that expressly provide for their subordination to the Notes.

The Notes of each series are structurally subordinated to all of the existing and future liabilities, including trade payables, of Mattel's subsidiaries that do not guarantee the Notes of each series and are effectively subordinated to Mattel's and the guarantors' existing and future senior secured debt to the extent of the value of the collateral securing such debt (including borrowings under the senior secured revolving credit facilities).

The guarantees are, with respect to the assets of the guarantors of the Notes of each series, structurally senior to all of Mattel's existing indebtedness, future indebtedness or other liabilities that are not guaranteed by such guarantors, including Mattel's obligations under the Existing Non-Guaranteed Notes (as defined in the Indentures).

The Indentures contain covenants that limit Mattel's (and some of its subsidiaries') ability to, among other things:

(i) incur additional debt or issue certain preferred shares;

(ii) pay dividends on or make other distributions in respect of their capital stock or make other restricted payments;

(iii) make investments in unrestricted subsidiaries;

(iv) create liens;

(v) enter into certain sale/leaseback transactions;

(vi) merge or consolidate, or sell, transfer or otherwise dispose of substantially all of their assets;

and (vii) designate subsidiaries as unrestricted.

In 2021, Mattel used the net proceeds from the issuance of the $ 600 million of 2026 Notes and $ 600 million of 2029 Notes, plus cash on hand, to redeem and retire $ 1.50 billion in aggregate principal amount of the 2017/2018 Senior Notes due 2025 and pay related prepayment premiums and transaction fees and expenses.

As a result of the redemptions, Mattel incurred losses on extinguishment of debt of $ 101.7 million, comprised of $ 76.0 million of prepayment premiums and a $ 25.7 million write-off of the unamortized debt issuance costs, which was recorded within interest expense in the consolidated statements of operations.

On December 30, 2022, Mattel used cash on hand to redeem and retire the $ 250 million aggregate principal amount of the 2013 Senior Notes due 2023.

In April 2023, S&P upgraded Mattel’s credit rating from BB+ to BBB- and maintained a positive outlook, and in November 2022, Moody’s upgraded Mattel’s credit rating from Ba1 to Baa3.

As a result of the upgraded credit ratings and no events of default, the covenants limiting Mattel’s ability to incur additional debt or issue certain preferred shares, pay dividends on or make other distributions in respect of their capital stock or make other restricted payments, and make investments in unrestricted subsidiaries, and certain provisions of the covenant limiting Mattel’s ability to merge or consolidate, or sell, transfer or otherwise dispose of substantially all of their assets, are suspended.

If Mattel ceases to have credit ratings of BBB-, Baa3, and/or BBB- (or higher) from any two of S&P, Moody's, and Fitch, respectively, Mattel will thereafter be subject to the suspended covenants with respect to future events.

Following the Fall-Away Date under the Revolving Credit Facility, all guarantee obligations of the Guarantors under the 2019 Senior Notes due 2027, 2021 Senior Notes due 2026, and 2021 Senior Notes due 2029 were released, and the obligations of Mattel under the 2019 Senior Notes due 2027, 2021 Senior Notes due 2026, and 2021 Senior Notes due 2029 will be required to be guaranteed by each existing and future direct and indirect domestic subsidiary of Mattel only to the extent such subsidiary guarantees other indebtedness of Mattel in an aggregate principal or committed amount in excess of $ 50 million.

Mattel's long-term debt consists of the following:

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Total long-term debt $ 2,334,351 $ 2,329,986

Mattel's 2019 Senior Notes due 2027 were issued pursuant to an indenture dated November 20, 2019, and its 2021 Senior Notes due 2026 and 2021 Senior Notes due 2029 were issued pursuant to an indenture dated March 19, 2021.

These indentures contain covenants that limit Mattel's (and some of its subsidiaries') ability to, among other things:

(i) incur additional debt or issue certain preferred shares;

(ii) pay dividends on or make other distributions in respect of their capital stock or make other restricted payments;

(iii) make investments in unrestricted subsidiaries;

(iv) create liens;

(v) enter into certain sale/leaseback transactions;

(vi) merge or consolidate, or sell, transfer or otherwise dispose of substantially all of their assets;

and (vii) designate future guarantors.

The indentures also provided that certain of these covenants would be suspended if Mattel achieved a debt rating of BBB-, Baa3, and/or BBB- (or higher) from any two of S&P, Moody's, and Fitch, respectively, and no event of default has occurred.

In 2024, Fitch changed Mattel's credit rating from BB+ to BBB- with a stable outlook, S&P changed Mattel's credit rating from BBB- to BBB with a stable outlook, and Moody's maintained Mattel's credit rating of Baa3 with a stable outlook.

As a result of the current credit ratings and no events of default, the covenants limiting Mattel's ability to incur additional debt or issue certain preferred shares, pay dividends on or make other distributions in respect of its capital stock or make other restricted payments, and make investments in unrestricted subsidiaries, and certain provisions of the covenant limiting Mattel's ability to merge or consolidate, or sell, transfer or otherwise dispose of substantially all of its assets and designate future guarantors, are suspended.

On December 30, 2022, Mattel used cash on hand to redeem and retire the $ 250 million aggregate principal amount of the 2013 Senior Notes due 2023.

The aggregate principal amount of long-term debt maturing in the next five years and thereafter is as follows:

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During 2024, Mattel repurchased 21.0 million shares of its common stock at a cost of $ 400.0 million.

During 2022 and 2021, Mattel did no t repurchase any shares of its common stock.

During 2023, Mattel repurchased 10.4 million shares of its common stock at a cost of $ 203.0 million.

During 2022, Mattel did no t repurchase any shares of its common stock.

Mattel's share repurchase program was first announced on July 21, 2003.

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On February 5, 2024, the Board of Directors authorized a new $ 1.00 billion share repurchase program.

During February 2024, Mattel executed $ 100.0 million of share repurchases under the new program.

As of December 31, 2024, Mattel had a remaining authorization of $ 600.0 million under the program.

Repurchases will take place from time to time, depending on market conditions.

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Accumulated Other Comprehensive Income (Loss)

The following tables present changes in the accumulated balances for each component of other comprehensive income (loss), including current period other comprehensive income and reclassifications out of accumulated other comprehensive income (loss):

The following tables present changes in the accumulated balances for each component of other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications from accumulated other comprehensive income (loss):

For the Year Ended December 31, 2024

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Amounts reclassified from accumulated other comprehensive income (loss) ( 21,639 ) — 4,072 — ( 17,567 )

Net (decrease) increase in other comprehensive income ( 26,195 ) — ( 4,418 ) 37,123 6,510

Accumulated Other Comprehensive Loss, Net of Tax, as of December 31, 2023 $ ( 3,463 ) $ — $ ( 142,916 ) $ ( 758,589 ) $ ( 904,968 )

Net change in other comprehensive income (loss) 17,770 — 3,253 ( 110,507 ) ( 89,484 )

Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2024 $ 14,307 $ — $ ( 139,663 ) $ ( 869,096 ) $ ( 994,452 )

For the Year Ended December 31, 2023

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Amounts reclassified from accumulated other comprehensive income (loss) ( 10,292 ) — 2,140 — ( 8,152 )

Net increase (decrease) in other comprehensive income 13,936 3,646 15,601 ( 6,191 ) 26,992

Adjustment of accumulated other comprehensive loss to retained earnings — 2,801 — — 2,801

Net change in other comprehensive income (loss) ( 26,195 ) — ( 4,418 ) 37,123 6,510

Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2023 $ ( 3,463 ) $ — $ ( 142,916 ) $ ( 758,589 ) $ ( 904,968 )

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(In thousands)

Accumulated Other Comprehensive Loss, Net of Tax, as of December 31, 2020 $ ( 15,369 ) $ ( 7,522 ) $ ( 186,854 ) $ ( 734,831 ) $ ( 944,576 )

Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2021 $ 8,796 $ ( 6,447 ) $ ( 154,099 ) $ ( 789,521 ) $ ( 941,271 )

Other comprehensive income (loss) before reclassifications 40,449 — 14,988 ( 51,557 ) 3,880

Amounts reclassified from accumulated other comprehensive loss 912 — 12,794 — 13,706

Net increase (decrease) in other comprehensive income 24,165 1,075 32,755 ( 54,690 ) 3,305

Amounts reclassified from accumulated other comprehensive income (loss) ( 26,513 ) 3,646 613 45,366 23,112

Net change in other comprehensive income (loss) 13,936 3,646 15,601 ( 6,191 ) 26,992

Adjustment of accumulated other comprehensive income (loss) to retained earnings — 2,801 — — 2,801

Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2022 $ 22,732 $ — $ ( 138,498 ) $ ( 795,712 ) $ ( 911,478 )

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Derivative Instruments

Gain (loss) on foreign currency forward exchange and other contracts $ 9,880 $ 26,500 $ ( 512 ) Cost of sales

Gain on foreign currency forward exchange and other contracts $ 21,590 $ 9,880 $ 26,500 Cost of sales

Tax effect 49 412 13 Provision/benefit for income taxes

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Currency Translation Adjustments

During 2024, currency translation adjustments resulted in a net other comprehensive loss of $ 110.5 million, primarily due to the weakening of the Mexican peso, Russian ruble, and Brazilian real against the U.S.

During 2023, currency translation adjustments resulted in a net other comprehensive gain of $ 37.1 million, primarily due to the strengthening of the Mexican peso and British pound sterling against the U.S.

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During the fourth quarter of 2022, the liquidation of Mattel's subsidiary in Argentina was substantially complete and as a result, $ 45.4 million of accumulated currency translation losses were recognized in other non-operating expense, net within the consolidated statement of operations.

During 2021, currency translation adjustments resulted in a net other comprehensive loss of $ 54.7 million, primarily due to the weakening of the Turkish lira, Chilean peso, Mexican peso, Euro, and Brazilian real against the U.S.

Note 8— Leases

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Mattel has entered into noncancelable lease agreements for premises and equipment to be used in the normal course of business which had not yet commenced as of December 31, 2024.

The future minimum obligations related to these agreements is approximately $ 34.7 million.

The future minimum obligations related to these agreements is $ 2.3 million.

Note 9— Share-Based Payments

Mattel Stock Plans

The 2010 Equity and Long-Term Compensation Plan was approved by Mattel's stockholders in May 2010.

In May 2015, Mattel's stockholders approved the Amended and Restated 2010 Equity and Long-Term Compensation Plan (the "Amended 2010 Plan").

The 2010 Equity and Long-Term Compensation Plan was initially approved by Mattel's stockholders in May 2010, and most recently amended in May 2024 by Mattel's stockholders (the "Amended 2010 Plan").

Under the Amended 2010 Plan, Mattel has the ability to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, RSUs, performance RSUs ("performance awards"), dividend equivalent rights, and shares of common stock to officers, employees, non-employee directors, and consultants providing services to Mattel.

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The number of shares of common stock available for grant under the Amended 2010 Plan is subject to an aggregate limit as defined therein.

At December 31, 2023, there were approximately 32 million shares available for grant under the Amended 2010 Plan if target performance goals are achieved under Mattel's long-term incentive programs ("LTIPs"), and approximately 30 million shares available if maximum performance goals are achieved under the LTIPs.

At December 31, 2024, there were approximately 27 million shares available for grant under the Amended 2010 Plan if target performance goals are achieved, and approximately 23 million shares available if maximum performance goals are achieved.

Mattel recognized total share-based compensation expense related to stock options, RSUs, and performance awards of $ 79.4 million, $ 83.3 million, and $ 69.1 million during 2024, 2023, and 2022, respectively, which is included in other selling and administrative expenses in the consolidated statements of operations.

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Treasury zero-coupon issues approximating the expected life.

No options were granted during 2024.

The weighted-average grant-date fair value of options granted during 2023 and 2022 was $ 8.91 , and $ 11.18 , respectively.

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Compensation expense recognized related to grants of performance awards was $ 21.2 million, $ 28.1 million, and $ 18.2 million during 2024, 2023, and 2022, respectively.

Performance awards were comprised of Mattel's long-term incentive program ("LTIP") and a one-time retention award of performance-based restricted stock units (the "Retention Performance Grant").

Mattel had four LTIP performance cycles in place during 2024, which were established by the Compensation Committee of the Board of Directors:

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The ultimate amount of shares earned for these LTIP awards may vary from 0 % to 200 % of the target number of shares, depending on the cumulative results achieved.

On September 30, 2024, the Retention Performance Grant was granted to Ynon Kreiz, Mattel's Chief Executive Officer, in order to incentivize retention and drive significant stock price performance and market outperformance.

The Retention Performance Grant has targeted approximately 0.8 million performance-based restricted stock units granted under the Plan, which was determined based on a target value of $ 15.0 million divided by the closing price of Mattel's common stock on the grant date.

The Retention Performance Grant is 100 % performance-based, with 50 % of the Retention Performance Grant subject to vesting based on the achievement of the stock price hurdles during the final three years of the five-year performance measurement period, and the remaining 50 % of the Retention Performance Grant subject to vesting based on Mattel's relative Total Shareholder Return ("TSR") over the five-year performance measurement period.

No portion of the Retention Performance Grant will be earned unless Mattel achieves rigorous performance goals and Mr.

Kreiz remains employed through the settlement date following the completion of a five-year vesting period from September 30, 2024 to September 30, 2029, subject to potential acceleration upon certain qualifying terminations of employment.

The grant also allows for a maximum potential earnout of 200 % of the targeted number of performance-based restricted stock units.

Mattel determines the fair value of the performance-related components of its performance awards based on the closing market price of Mattel's common stock on the date of grant and determines the fair value of the market-related components of its performance awards based on the Monte Carlo valuation methodology.

Performance awards cliff-vest at the end of the requisite service period, which typically occurs in the first quarter subsequent to the end of the performance period.

Mattel recognizes compensation expense on a straight-line basis over the requisite service period, provided that certain cumulative three-year performance targets and other vesting criteria are met.

The LTIP awards cliff-vest at the end of the requisite service period, which typically occurs in the first quarter subsequent to the end of the performance period.

Mattel recognizes compensation expense for its LTIP awards on a straight-line basis over the requisite service period, provided that certain cumulative three-year performance targets and other vesting criteria are met.

The Retention Performance Grant has a five-year vesting period from September 30, 2024 to September 30, 2029, which will be recognized straight-line over the service period.

The weighted-average grant-date fair value of performance awards granted during 2024, 2023, and 2022 was $ 21.97 , $ 19.44 , and $ 28.39 respectively.

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Unvested at December 31 3,252 $ 22.55 2,440 $ 23.01 2,894 $ 18.77

(a) During 2023, Mattel granted 1.2 million shares as part of its 2023 LTIP and issued 0.8 million incremental shares under the 2020 LTIP based on the final earnout of the 2020 performance cycle, which are included in the weighted average grant-date fair value.

(a) During 2024, Mattel granted 0.8 million shares as part of the Retention Performance Grant, 1.0 million shares as part of the 2024 LTIP, and issued less than 0.1 million incremental shares under the 2021 LTIP based on the final earnout of the 2021 performance cycle, which are included in the weighted average grant-date fair value.

During 2023, Mattel granted 1.2 million shares as part of its 2023 LTIP and issued 0.8 million incremental shares under the 2020 LTIP based on the final earnout of the 2020 performance cycle, which are included in the weighted average grant-date fair value.

During 2021, Mattel granted 0.8 million shares under the 2021 LTIP and issued 0.1 million incremental shares under the 2018 LTIP based on the final earnout of the 2018 performance cycle, which are included in the weighted average grant-date fair value.

(b) The number of shares granted for the 2023 LTIP, the 2022 LTIP, and the 2021 LTIP, represents the aggregate target numbers of shares that may be issued pursuant to the award over its full term.

During 2022, Mattel granted 0.7 million shares as part of its 2022 LTIP and issued 0.8 million incremental shares under the 2019 LTIP based on the final earnout of the 2019 performance cycle, which are included in the weighted average grant-date fair value.

(b) The number of shares granted for the Retention Performance Grant, the 2024 LTIP, the 2023 LTIP, and the 2022 LTIP, represents the aggregate target numbers of shares that may be issued pursuant to the award over its full term.

The aggregate number of shares subject to performance awards that would be issued if performance goals are achieved at the maximum number of shares are approximately 4 million, 2 million, and 1 million for 2024, 2023, and 2022, respectively.

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Note 11— Fair Value Measurements

The following tables present information about Mattel's assets and liabilities measured and reported in the financial statements at fair value on a recurring basis as of December 31, 2023 and 2022 and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

The following tables present information about Mattel's assets and liabilities measured and reported in the financial statements at fair value on a recurring basis as of December 31, 2024 and 2023 and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value.

The three levels of the fair value hierarchy are as follows:

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Foreign currency forward exchange and other contracts (a) $ — $ 9,564 $ — $ 9,564

(a) The fair value of the foreign currency forward exchange and other contracts is based on dealer quotes of market forward rates and reflects the amount that Mattel would receive or pay at their maturity dates for contracts involving the same notional amounts, currencies, and maturity dates.

(a) The fair value of the foreign currency forward exchange and other contracts was based on dealer quotes of market forward rates and reflects the amount that Mattel would receive or pay at their maturity dates for contracts involving the same notional amounts, currencies, and maturity dates.

Other Financial Instruments

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The estimated fair value of Mattel's long-term debt was $ 2.27 billion (compared to a carrying amount of $ 2.35 billion) as of December 31, 2024 and $ 2.23 billion (compared to a carrying amount of $ 2.35 billion) as of December 31, 2023.

The estimated fair values have been calculated based on broker quotes or rates for the same or similar instruments and are classified as Level 2 within the fair value hierarchy.

The estimated fair values have been calculated based on broker quotes or rates for the same or similar instruments and were classified as Level 2 within the fair value hierarchy.

Note 12— Derivative Instruments

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Foreign Currency Forward Exchange Contracts:

Amount of (losses) gains recognized in OCI $ ( 15,903 ) $ 40,449 $ 23,253

Amount of gains (losses) reclassified from accumulated OCI to the consolidated statements of operations 10,292 26,513 ( 912 ) Cost of sales

The net gains (losses) reclassified from accumulated other comprehensive loss to the consolidated statements of operations during 2023, 2022, and 2021, respectively, were offset by changes in cash flows associated with the underlying hedged transactions.

Amount of gains (losses) recognized in OCI $ 39,409 $ ( 15,903 ) $ 40,449

Amount of gains reclassified from accumulated OCI to the consolidated statements of operations 21,639 10,292 26,513 Cost of sales

The net gains reclassified from accumulated other comprehensive loss to the consolidated statements of operations during 2024, 2023, and 2022, respectively, were offset by changes in cash flows associated with the underlying hedged transactions.

Derivatives Not Designated As Hedging Instruments

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Foreign currency forward exchange and other contracts $ 8,404 $ 19,939 $ ( 7,833 ) Other non-operating income/expense, net

Foreign currency forward exchange and other contracts — — 639 Cost of sales

$ 19,939 $ ( 7,833 ) $ 3,511

The net Gains (Losses) recognized in the consolidated statements of operations during 2024, 2023, and 2022, respectively, were offset by foreign currency transaction gains and losses on the related derivative balances.

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2025 $ 298,690

Thereafter 29,573

Mattel has a wholly-owned subsidiary, Far West Insurance Company, Ltd.

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Mattel do Brasil filed its defenses to these claims and simultaneously presented a counterclaim for unpaid accounts receivable for goods supplied to Yellowstone.

In April 2018, Mattel do Brasil entered into a settlement agreement to resolve this matter, but the settlement was later rejected by the courts, subject to a pending appeal by Mattel.

In April 2018, Mattel do Brasil entered into a settlement agreement to resolve this matter, but the settlement remains the subject of ongoing appeals.

In October 2018, the Superior Court of Justice issued a final ruling in favor of Yellowstone on the merits of Yellowstone's claims.

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In January 2020, Mattel obtained an injunction, staying Yellowstone's enforcement action pending resolution of Mattel's appeal to enforce the parties' April 2018 settlement.

As of December 31, 2023, Mattel assessed its probable loss related to this matter and has accrued a reserve, which is not material.

As of December 31, 2024, Mattel assessed its probable loss related to this matter and has accrued an estimated liability, which is not material.

Litigation Related to the Fisher-Price Rock 'n Play Sleeper

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In October 2022, the United States Court of Appeals for the Second Circuit denied plaintiffs' petition to appeal the denial of certification of the damages and injunctive relief classes.

On February 13, 2024, the parties filed a notice of settlement informing the court that they have reached a settlement in principle of this litigation.

The settlement in principle is subject to preliminary and final approval by the court.

As of December 31, 2023, Mattel assessed its probable loss related to this matter and has accrued a reserve, which is not material.

Thirty-one additional lawsuits filed between April 2019 and January 2024 are pending against Fisher-Price, Inc.

On July 24, 2024, the parties filed a settlement agreement with the court to resolve this litigation.

On August 9, 2024, the settlement was preliminarily approved by the court.

A final approval hearing is scheduled for February 28, 2025.

As of December 31, 2024, Mattel assessed its probable loss related to this matter and has accrued an estimated liability, which is not material.

Twenty-seven additional lawsuits filed between April 2019 and September 2024 are pending against Fisher-Price, Inc.

and Mattel, Inc.

alleging that a product defect in the Sleeper caused the fatalities of or injuries to thirty-four children.

Several lawsuits have been settled and/or dismissed.

alleging that a product defect in the Sleeper caused the fatalities of or injuries to twenty-seven children.

More than thirty lawsuits have been settled and/or dismissed.

As of December 31,2024, Mattel assessed its probable loss related to these matters and estimated a liability where appropriate, which is not material.

Additionally, Fisher-Price, Inc.

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Bradley, et al., filed August 30, 2021).

The parties have reached a settlement in principle of this litigation, which is subject to approval by the court.

As of December 31, 2024, Mattel has determined that a recovery of prior losses in this matter is probable and has accrued for the estimated amount, which is not material.

The lawsuits seek compensatory damages, punitive damages, statutory damages, restitution, disgorgement, attorneys' fees, costs, interest, declaratory relief, and/or injunctive relief.

Mattel believes that the allegations in the lawsuits are without merit and intends to vigorously defend against them.

Mattel believes that it has substantial defenses to the allegations in the lawsuits and intends to vigorously defend against them.

Litigation Related to the Fisher-Price Snuga Swings

Purported class action lawsuits against Fisher-Price, Inc.

and Mattel, Inc.

were filed in United States District Courts for the Western District of New York (Bigelow v.

Mattel, Inc., et al., filed October 17, 2024, Wall v.

Mattel, Inc., et al., filed October 25, 2024, and Spencer v.

Fisher-Price, Inc., et al., filed February 14, 2025), and the Central District of California (Shahbaz v.

Fisher-Price, Inc., et al., filed October 24, 2024, and Gates, et al.

Fisher-Price, Inc., et al.

filed November 18, 2024).

The two lawsuits filed in the Central District of California have since been transferred to the Western District of New York.

The lawsuits assert claims for false advertising, breach of contract, breach of warranty, fraud, negligence, and other claims in connection with the marketing and sale of Fisher-Price Snuga Swings (the "Swings").

In general, the lawsuits allege that the Swings were falsely marketed and sold as safe for infant use, particularly infant sleep, and failed to disclose a risk of suffocation.

The lawsuits propose nationwide and several state consumer classes comprised of those who purchased Swings.

The lawsuits seek unspecified compensatory damages, punitive and treble damages, statutory damages, restitution, rescission, disgorgement, attorneys' fees, costs, interest, and injunctive relief.

Mattel believes that it has substantial defenses to the allegations in the lawsuits and intends to vigorously defend against them.

A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.

Mattel has also had discussions with the U.S.

Consumer Product Safety Commission ("CPSC") regarding a request from the CPSC that Mattel increase the proportional cash refund available to consumers who participate in the recall of the Sleeper first announced in 2019.

As of December 31, 2023, Mattel assessed its probable loss related to this matter and has accrued a reserve, which is not material.

Note 14— Segment Information

Mattel designs, manufactures, and markets a broad variety of toy products worldwide, which are sold to its customers and directly to consumers.

In the first quarter of 2024, Mattel implemented an organizational change that resulted in the American Girl business being integrated into Mattel's North America commercial organization.

Such integration resulted in a change to Mattel's operating and reportable segments.

Mattel's reportable segments are:

(i) North America, which consists of the United States and Canada;

(ii) International;

and (iii) American Girl.

The North America and International segments sell products across categories, although some products are developed and adapted for particular international markets.

In February 2024, Mattel announced an organizational change that American Girl will become part of Mattel's North America commercial organization and, as a result, American Girl will no longer be an operating segment.

Beginning in the first quarter of 2024, Mattel is expected to have two reportable segments, North America and International.

The following tables present information regarding net sales, operating income, depreciation and amortization, and assets by segment.

The corporate and other expense category includes operating costs not allocated to individual segments, including charges related to incentive and share-based compensation, corporate headquarters functions managed on a worldwide basis, the impact of changes in foreign currency exchange rates on intercompany transactions, and certain severance and other restructuring costs.

(i) North America;

and (ii) International.

The prior period amounts have been reclassified to conform to the current period presentation.

The North America and International segments sell products across Mattel's categories, although some products are developed and adapted for particular international markets, and American Girl products are sold only in North America.

Mattel's reportable segments are aligned to the structure used by its Chief Executive Officer, who is also the Chief Operating Decision Maker ("CODM"), to allocate resources and assess performance.

Mattel's CODM evaluates segment performance based on each segment’s gross profit and operating income.

The CODM also uses these metrics in the annual budgeting and quarterly forecasting process to inform decisions about allocating capital and other resources to each segment.

The following tables present information regarding Mattel's statement of operations information by segment.

The corporate and other category includes operating costs not allocated to individual segments, including charges related to incentive and share-based compensation, corporate headquarters functions managed on a worldwide basis, the impact of changes in foreign currency exchange rates on intercompany transactions, and certain severance and other restructuring costs.

It is impracticable for Mattel to present net sales by categories, brands, or products, as trade discounts and other allowances are generally recorded in the financial accounting systems by customer.

For the Year Ended

2023 December 31,

2022 December 31,

For the Year Ended December 31, 2024

North America International Total Reportable Segments Corporate

and other Consolidated

(In thousands)

Net Sales by Segment

North America $ 3,003,218 $ 2,987,831 $ 2,968,278

International 2,230,783 2,220,001 2,219,189

American Girl 207,218 226,855 270,274

Net Sales $ 3,168,069 $ 2,211,477 $ 5,379,546 $ — $ 5,379,546

Operating Income (Loss) by Segment (a)

North America $ 793,444 $ 765,867 $ 872,536

International 299,084 295,840 349,952

American Girl ( 5,701 ) 199 5,409

1,086,827 1,061,906 1,227,897

Corporate and other expense (b) ( 525,168 ) ( 386,391 ) ( 498,335 )

Operating income 561,659 675,515 729,562

Cost of Sales (a) 1,602,047 1,137,859 2,739,906 ( 94,428 ) 2,645,478

Gross Profit 1,566,022 1,073,618 2,639,640 94,428 2,734,068

Advertising and promotion expenses 245,037 262,284 507,321 — 507,321

Other selling and administrative expenses (b) 480,997 422,357 903,354 629,111 1,532,465

Operating Income (Loss) 839,988 388,977 1,228,965 ( 534,683 ) 694,282

Interest expense 118,774 118,774

Interest (income) ( 51,478 ) ( 51,478 )

Other non-operating (income) expense, net (c) ( 2,293 ) 47,760 8,364

Other non-operating expense, net 4,481 4,481

Income before income taxes $ 622,505

(a) Segment operating income included (i) severance and other restructuring charges of approximately $( 1 ) million, $ 11 million, and $ 3 million for 2023, 2022, and 2021, respectively, which were allocated to the North America, International, and American Girl segments.

(b) Corporate and other expense included (i) severance and other restructuring charges of approximately $ 61 million, $ 26 million, and $ 32 million for 2023, 2022, and 2021, respectively and (ii) inclined sleeper product recall litigation charges of approximately $ 18 million, $( 1 ) million, and $ 15 million for 2023, 2022, and 2021, respectively.

(c) Other non-operating (income) expense, net includes $ 45.4 million of currency translation losses recognized as a result of Mattel's liquidation of its subsidiary in Argentina, which was substantially completed in 2022.

(a) Cost of sales included severance and other restructuring charges of approximately $ 4 million recorded to corporate and other.

(b) Other selling and administrative expenses included severance and other restructuring charges, the impact of inclined sleeper product recall litigation, incentive compensation, and share-based compensation of approximately $ 44 million, $( 4 ) million, $ 151 million, and $ 79 million, respectively, which were recorded in corporate and other.

For the Year Ended December 31, 2023

North America International Total Reportable Segments Corporate

and other Consolidated

(In thousands)

Net Sales $ 3,210,436 $ 2,230,783 $ 5,441,219 $ — $ 5,441,219

Cost of Sales (a) 1,723,162 1,233,055 2,956,217 ( 98,714 ) 2,857,503

Gross Profit 1,487,274 997,728 2,485,002 98,714 2,583,716

Advertising and promotion expenses 251,738 273,048 524,786 — 524,786

Other selling and administrative expenses (b) 447,793 425,596 873,389 623,882 1,497,271

Operating Income (Loss) 787,743 299,084 1,086,827 ( 525,168 ) 561,659

Interest expense 123,786 123,786

Interest (income) ( 25,238 ) ( 25,238 )

Other non-operating (income), net ( 2,293 ) ( 2,293 )

Income before income taxes $ 465,404

(a) Cost of sales included impact of severance and other restructuring activities of approximately $( 1 ) million recorded to corporate and other.

(b) Other selling and administrative expenses included severance and other restructuring charges, inclined sleeper product recall litigation charges, incentive compensation, and share-based compensation of approximately $ 61 million, $ 18 million, $ 138 million, and $ 83 million respectively, which were recorded in corporate and other.

For the Year Ended December 31, 2022

North America International Total Reportable Segments Corporate

and other Consolidated

(In thousands)

Net Sales $ 3,214,686 $ 2,220,001 $ 5,434,687 $ — $ 5,434,687

Cost of Sales (a) 1,758,890 1,212,288 2,971,178 ( 17,843 ) 2,953,335

Gross Profit 1,455,796 1,007,713 2,463,509 17,843 2,481,352

Advertising and promotion expenses 255,540 278,715 534,255 — 534,255

Other selling and administrative expenses (b) 434,190 433,158 867,348 404,234 1,271,582

Operating Income (Loss) 766,066 295,840 1,061,906 ( 386,391 ) 675,515

Interest expense 132,818 132,818

Interest (income) ( 9,398 ) ( 9,398 )

Other non-operating expense, net (c) 47,760 47,760

Income before income taxes $ 504,335

(a) Cost of sales included severance and other restructuring charges of approximately $ 2 million, $ 1 million, and $ 8 million allocated to North America, International, and corporate and other, respectively.

(b) Other selling and administrative expenses included severance and other restructuring charges, the impact of inclined sleeper product recall litigation, and share-based compensation of approximately $ 26 million, $( 1 ) million, and $ 69 million respectively, which were recorded in corporate and other.

(c) Other non-operating expense, net included $ 45.4 million of currency translation losses recognized as a result of Mattel's liquidation of its subsidiary in Argentina, which was substantially completed in 2022.

The following tables present information regarding depreciation and amortization by segment, as well as assets by segment.

For the Year Ended

5 unchanged sentences

International 54,611 59,876 58,683

American Girl 6,893 10,631 12,508

148,893 157,332 156,768

1 unchanged sentence

Depreciation and amortization $ 167,963 $ 177,344 $ 182,179

Segment assets are comprised of accounts receivable and inventories, net of applicable reserves and allowances.

Segment assets were comprised of accounts receivable and inventories, net of applicable reserves and allowances.

2024 December 31,

4 unchanged sentences

International 651,738 735,236 756,830

American Girl 52,500 58,833 52,168

1,409,290 1,580,349 1,594,560

3 unchanged sentences

The tables below present information by geographic area.

Net sales are attributed to countries based on location of customer.

Long-lived assets include property, plant, and equipment, net, and right-of-use assets, net.

Net sales were attributed to countries based on location of customer.

Long-lived assets included property, plant, and equipment, net, and right-of-use assets, net.

For the Year Ended

17 unchanged sentences

Consolidated total $ 842,443 $ 778,714 $ 787,812

(a) Net sales for the North America Region include net sales attributable to the United States of $ 3.05 billion, $ 3.04 billion, and $ 3.07 billion for 2023, 2022, and 2021, respectively.

(b) Long-lived assets for the North America Region include long-lived assets attributable to the United States of $ 319.3 million, $ 309.0 million, and $ 343.7 million for 2023, 2022, and 2021, respectively.

(a) Net sales for the North America Region included net sales attributable to the United States of $ 3.02 billion, $ 3.05 billion, and $ 3.04 billion for 2024, 2023, and 2022, respectively.

(b) Long-lived assets for the North America Region included long-lived assets attributable to the United States of $ 399.4 million, $ 319.3 million, and $ 309.0 million for 2024, 2023, and 2022, respectively.

Major Customers

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The International segment sells products to Walmart and Amazon.

The American Girl segment's net sales to Mattel's three largest customers were not material.

Note 15— Restructuring Charges

Optimizing for Growth (formerly Capital Light)

Mattel's Optimizing for Growth program (the "OFG program") was a multi-year cost savings program that integrated and expanded upon the previously announced Capital Light program.

In February 2023, the OFG program was expanded to include additional initiatives, including actions to further streamline Mattel's organizational structure.

Mattel has concluded the OFG program as of December 31, 2023.

In connection with the OFG program, Mattel recorded severance and other restructuring costs in the following cost and expense categories within operating income in the consolidated statements of operations:

Optimizing for Profitable Growth

On February 7, 2024, Mattel announced the Optimizing for Profitable Growth program (the "OPG program"), a multi-year cost savings program that follows the Optimizing for Growth program (the "OFG program"), which concluded in the fourth quarter of 2023.

The OPG program is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel's global supply chain, including its manufacturing footprint.

The OPG program includes cost savings actions in connection with discontinuing production at a plant in China as previously announced in the third quarter of 2023, as well as savings from other previous actions taken in 2023 that were not recognized in the OFG program.

In connection with the OPG program, Mattel recorded severance and other restructuring costs in the following cost and expense categories within operating income in the consolidated statements of operations:

For the Year Ended

2024 December 31,

2022 December 31,

(In thousands)

2 unchanged sentences

$ 49,159 $ 25,296

(a) Severance and other restructuring costs recorded within cost of sales in the consolidated statements of operations are included in segment operating income in "Note 14 to the Consolidated Financial Statements—Segment Information."

(b) Severance and other restructuring costs recorded within other selling and administrative expenses in the consolidated statements of operations are included in corporate and other expense in "Note 14 to the Consolidated Financial Statements—Segment Information."

The following tables summarize Mattel's severance and other restructuring charges activity within operating income related to the OFG program:

(a) Severance and other restructuring charges recorded within cost of sales in the consolidated statements of operations are included in segment operating income in "Note 14 to the Consolidated Financial Statements—Segment Information."

(b) Severance and other restructuring charges recorded within other selling and administrative expenses in the consolidated statements of operations are included in corporate and other expense in "Note 14 to the Consolidated Financial Statements—Segment Information."

The following tables summarize Mattel's severance and other restructuring charges activity within operating income related to the OPG program:

Liability at December 31, 2023 Charges (a) Payments/Utilization Liability at December 31, 2024

1 unchanged sentence

Severance $ 25,096 $ 45,875 $ ( 38,310 ) $ 32,661

Other restructuring charges 3,540 8,996 ( 12,077 ) 459

Other restructuring charges (a) — 3,284 ( 3,274 ) 10

$ 25,096 $ 49,159 $ ( 41,584 ) $ 32,671

4 unchanged sentences

$ — $ 25,296 $ ( 200 ) $ 25,096

(a) Other restructuring charges consist primarily of expenses associated with the restructuring of commercial and corporate functions and consolidation of manufacturing facilities.

As of December 31, 2023, Mattel had recorded cumulative severance and other restructuring charges related to the OFG program, including previous actions taken under the Capital Light program, of approximately $ 196 million, which included approximately $ 73.0 million of non-cash charges, including $ 45.4 million recorded in non-operating expense, net, during 2022, related to the liquidation of Mattel's subsidiary in Argentina.

During 2021, in conjunction with the OFG program, Mattel completed the sale of a manufacturing plant based in Mexico, which included land and buildings, resulting in a pre-tax gain of $ 15.8 million.

Optimizing for Profitable Growth

On February 7, 2024, Mattel announced the Optimizing for Profitable Growth program, a multi-year cost savings program that follows the OFG program and is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel's global supply chain, including its manufacturing footprint (the "OPG program").

The OPG program includes cost savings actions in connection with discontinuing production at a plant in China as previously announced in the third quarter of 2023, that were not included in the OFG program.

In connection with the OPG program, as of Decemeber 31, 2023, Mattel recorded $ 25.3 million of severance costs within other selling and administrative expense in the consolidated statements of operations and is included in corporate and other expense in " Note 14 to the Consolidated Financial Statements—Segment Information."

The following table summarizes Mattel's severance charges activity related to the OPG program for the year ended December 31, 2023:

Liability at December 31, 2022 Charges Payments/Utilization Liability at December 31, 2023

(In thousands)

Severance $ — $ 25,296 $ ( 200 ) $ 25,096

As of December 31, 2023, Mattel expects to incur total cash expenditures under the OPG program of approximately $ 130 to $ 165 million and non-cash charges of up to $ 5 million.

(a) Other restructuring charges consist primarily of expenses associated with the consolidation of manufacturing facilities.

As of December 31, 2024, in connection with the OPG program, Mattel recorded cumulative severance and other restructuring charges of approximately $ 74 million, which included approximately $ 2 million of non-cash charges.

Total expected cash expenditures are approximately $ 130 to $ 165 million and total non-cash charges are expected to be up to $ 5 million.

Other Cost Savings Actions

In 2023, Mattel executed other cost savings actions not included in the OFG program or the OPG program to streamline its organizational structure.

In connection with these actions, Mattel recorded severance expense of $ 3.4 million within other selling and administrative expenses in the consolidated statement of operations.

As of December 31, 2023, Mattel concluded the OFG program, a multi-year cost savings program that had integrated and expanded upon the previous Capital Light program.

During 2023 and 2022, Mattel recorded severance and other restructuring charges of $ 32.3 million and $ 23.6 million, respectively, within other selling and administrative expenses and $( 1.3 ) million and $ 10.7 million, respectively, within cost of sales in the consolidated statement of operations in connection with the OFG program.

During 2023, Mattel executed actions to further streamline its organizational structure that were not included in the OFG program.

In connection with these actions, Mattel recorded severance charges of $ 3.4 million within other selling and administrative expenses in the consolidated statement of operations.

Note 16— Income Taxes

7 unchanged sentences

Consolidated pre-tax income excluding equity method investments $ 622,505 $ 465,404 $ 504,335

The provision (benefit) for current and deferred income taxes consists of the following:

The provision for current and deferred income taxes consists of the following:

For the Year Ended

10 unchanged sentences

( 17,471 ) 176,707 71,214

Provision (benefit) for income taxes $ 269,475 $ 135,851 $ ( 420,381 )

Provision for income taxes $ 105,626 $ 269,475 $ 135,851

Deferred income taxes are provided principally for tax credit carryforwards, net operating loss carryforwards, interest expense, research and development expenses, employee compensation-related expenses, right-of-use assets, lease liabilities, and certain other reserves that are recognized in different years for financial statement and income tax reporting purposes.

Mattel's deferred income tax assets (liabilities) consist of the following:

Mattel's deferred income tax assets (liabilities) are composed of the following:

2024 December 31,

7 unchanged sentences

Postretirement benefits 19,138 22,741

Intangible assets 115 212,497

Lease liabilities 83,301 81,604

7 unchanged sentences

Net deferred income tax assets $ 252,506 $ 243,050

Net deferred income tax assets are presented in the consolidated balance sheets as follows:

Net deferred income tax assets are reported in the consolidated balance sheets as follows:

2024 December 31,

14 unchanged sentences

$ 363,130 $ 20,080

In 2024, Mattel recognized a net income tax benefit of $ 34.8 million related to tax elections filed to amortize certain intangible assets transferred as part of Mattel's intra-group IP rights transfer and establishment of certain U.S.

deferred tax assets.

In 2023, Mattel completed an intra-group transfer of certain IP rights, resulting in a net tax expense of $ 161.4 million related to the write-down of certain foreign deferred tax assets and establishment of certain U.S.

2 unchanged sentences

Mattel routinely assesses the positive and negative evidence for this realizability, including the evaluation of sustained profitability and three years of cumulative pretax income for each tax jurisdiction.

During the twelve months ended December 31, 2021, Mattel continued to see improved and sustained profitability, which presented objective positive evidence for the realizability of certain deferred tax assets.

As such, based on the overall analysis of the positive and negative evidence in each tax jurisdiction, during 2021, Mattel released the valuation allowances related to certain U.S.

federal, state, and foreign deferred tax assets, except for certain tax assets that are primarily expected to expire before utilization.

Valuation allowance releases for the year ended December 31, 2021, resulted in recognition of a portion of these deferred tax assets and a benefit to Mattel's provision for income taxes of $ 540.8 million.

Changes in the valuation allowances in 2022 primarily related to utilization and expiration of tax attributes and currency fluctuations.

1 unchanged sentence

federal and state deferred tax assets and foreign deferred tax assets were approximately $ 16 million and $ 74 million, respectively.

Changes in the valuation allowances in 2023 primarily related to changes in the assessment of the future realizability of certain deferred tax assets, utilization and expiration of tax attributes, and currency fluctuations.

Changes in the valuation allowances in 2023 primarily related to changes in assessment of the future realizability of certain deferred tax assets, utilization and expiration of tax attributes, and currency fluctuations.

As of December 31, 2023, Mattel's valuation allowances on its U.S.

federal and state deferred tax assets and foreign deferred tax assets were approximately $ 14 million and $ 71 million, respectively.

As of December 31, 2023 and 2022, Mattel had recorded net deferred tax assets of $ 243.1 million and $ 416.5 million, respectively.

Changes in the valuation allowances in 2024 primarily related to changes in assessment of the future realizability of certain deferred tax assets, utilization and expiration of tax attributes.

As of December 31, 2024, Mattel's valuation allowances on its U.S.

federal and state deferred tax assets and foreign deferred tax assets were approximately $ 12 million and $ 85 million, respectively.

As of December 31, 2024 and 2023, Mattel has recorded net deferred tax assets of $ 252.5 million and $ 243.1 million, respectively.

Differences between the provision for income taxes at the U.S.

9 unchanged sentences

Foreign earnings taxed at different rates, including foreign losses without benefit ( 9,111 ) ( 12,480 ) 18,138

Foreign-derived intangible income ( 8,006 ) ( 364 ) ( 1,261 )

Tax related to pass-through income 5,125 3,869 5,340

1 unchanged sentence

State and local taxes, net of U.S.

federal benefit (expense) 8,480 5,027 ( 983 )

federal benefit 7,711 8,480 5,027

Adjustments to previously accrued taxes 5,553 9,943 ( 9,471 )

1 unchanged sentence

Research and development tax credit ( 6,163 ) ( 7,248 ) ( 5,487 )

Discrete tax impact due to intra-group IP transfer 161,388 — —

Discrete tax impact related to intra-group IP transfer ( 34,762 ) 161,388 —

Other ( 5,850 ) ( 439 ) 1,914

Provision (benefit) for income taxes $ 269,475 $ 135,851 $ ( 420,381 )

Provision for income taxes $ 105,626 $ 269,475 $ 135,851

In assessing whether uncertain tax positions should be recognized in its financial statements, Mattel first determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position.

In evaluating whether a tax position has met the more likely than not recognition threshold, Mattel presumes that the position will be examined by the appropriate taxing authority that would have full knowledge of all relevant information.

For tax positions that meet the more likely than not recognition threshold, Mattel measures the amount of benefit recognized in the financial statements at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority.

Mattel recognizes unrecognized tax benefits in the first financial reporting period in which information becomes available indicating that such benefits will more likely than not be realized.

16 unchanged sentences

Of the $ 134.9 million of unrecognized tax benefits as of December 31, 2024, $ 107.7 million would impact the effective tax rate if recognized, $ 10.0 million would result in an increase in the valuation allowance, and $ 17.2 million would result in an offset with a non-current asset account.

Mattel recognized an increase of interest and penalties of $ 1.5 million in 2023, a decrease of $ 5.3 million in 2022, and a decrease of $ 1.5 million in 2021, related to unrecognized tax benefits, which are reflected in the provision (benefit) for income taxes in the consolidated statements of operations.

Mattel recognized a net increase of interest and penalties of $ 1.7 million in 2024, a net increase of $ 1.5 million in 2023, and a net decrease of $ 5.3 million in 2022, related to unrecognized tax benefits, which are reflected in the provision for income taxes in the consolidated statements of operations.

As of December 31, 2024, Mattel accrued $ 19.0 million in interest and penalties related to unrecognized tax benefits, all of which would impact the effective tax rate if recognized.

As of December 31, 2023, Mattel accrued $ 17.3 million in interest and penalties related to unrecognized tax benefits, all of which would impact the effective tax rate if recognized.

As of December 31, 2022, Mattel accrued $ 15.9 million in interest and penalties related to unrecognized tax benefits, all of which would impact the effective tax rate if recognized.

In the normal course of business, Mattel is regularly audited by U.S.

1 unchanged sentence

Mattel remains subject to IRS examination for the 2021 through 2024 tax years.

Mattel files multiple state and local income tax returns and remains subject to examination in various jurisdictions, including California for the 2018 through 2023 tax years, New York for the 2020 through 2023 tax years, and Wisconsin for the 2015 through 2023 tax years.

Mattel files multiple foreign income tax returns and remains subject to examination in various foreign jurisdictions including Hong Kong for the 2017 through 2023 tax years, Mexico for the 2018 through 2023 tax years, Netherlands for the 2019 through 2023 tax years, Cyprus for the 2020 through 2023 tax years, China for the 2010 through 2023 tax years, and United Kingdom for the 2017 through 2023 tax years.

Mattel files multiple state and local income tax returns and remains subject to examination in various jurisdictions, including California for the 2019 through 2024 tax years and New York for the 2021 through 2024 tax years.

Mattel files multiple foreign income tax returns and remains subject to examination in various foreign jurisdictions including Hong Kong for the 2018 through 2024 tax years, Mexico for the 2019 through 2024 tax years, Netherlands for the 2020 through 2024 tax years, and China for the 2020 through 2024 tax years.

Based on the current status of U.S.

33 unchanged sentences

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 8. Financial Statements and Supplementary Data