What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-23 compared with 2025-02-26 · 142 added, 141 removed, 373 unchanged (43% of the section changed)

13 unchanged sentences

Changes in gross billings are discussed because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and not associated with categories, brands, or individual products.

Mattel is a leading global toy and family entertainment company and owner of one of the most iconic brand portfolios in the world.

Mattel creates innovative products and experiences that inspire fans, entertain audiences, and develop children through play.

Mattel is focused on the following strategy to grow its IP-driven toy business and expand its entertainment offering:

• Grow toy business profitably through scaling Mattel's portfolio, optimizing operations, evolving demand creation, and growing franchise brands;

• Expand entertainment offering to capture the full value of Mattel's IP outside the toy aisle in highly accretive business verticals, by growing franchise brands and accelerating content, consumer products, and digital and live experiences.

Mattel is a leading global play and family entertainment company and owner of one of the most iconic brand portfolios in the world.

Mattel's mission is to create innovative products and experiences that inspire fans, entertain audiences, and develop children through play, and its purpose is to empower generations to explore the wonder of childhood and reach their full potential.

Mattel is focused on the following new brand-centric strategy to grow its IP driven play and family entertainment business:

• Grow its toy brands with more breakthrough innovation and adult fans and collectors, as well as evolved demand creation;

• Expand its direct-to-consumer and commercial reach through first party data, retail development, and new channels;

• Broaden content offering in film, television, and short-form content, accelerate licensing in consumer products, location-based entertainment, and publishing, and expand with new business models;

• Scale digital play through mobile games self-publishing, Mattel163 mobile games studio, licensing, and creator platforms;

• Optimize operations and leverage AI across its systems and supply chain.

Recent Developments

During 2024, Mattel continued to execute its multi-year strategy to grow its IP-driven toy business and expand its entertainment offering, growing profitability, expanding gross margin, and generating strong cash flow.

Mattel's full year net sales declined 1%, which reflects a comparison with the benefits of the Barbie movie in the prior year.

Gross margin expanded to 50.8% in 2024 compared to 47.5% in 2023, with benefits from favorable supply chain and other efficiencies, the Optimizing for Profitable Growth program ("OPG program"), lower inventory management costs, cost deflation, and favorable foreign currency exchange and other factors, which more than offset the prior year benefit associated with the Barbie movie.

Operating income grew to $694.3 million, an improvement of $132.6 million, and earnings per share in 2024 increased to $1.58, compared to $0.60 in 2023.

Mattel ended the year with a cash balance of $1.39 billion, compared to $1.26 billion in the prior year.

Cash increased primarily due to Mattel's cash flows from operations, which were $800.6 million during the year.

Cash flows from operations were partially offset by $400.0 million of cash used for share repurchases and capital expenditures, including $58.8 million for the acquisition of a property that will serve as Mattel's new global design center, which will replace a facility that is currently leased.

During 2024, Mattel executed $400.0 million of share repurchases and has a remaining authorization of $600.0 million as of December 31, 2024.

Additionally, in February 2024, Mattel announced the OPG program, a multi-year cost savings program that follows the Optimizing for Growth program ("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 has targeted annual gross cost savings of $200.0 million between 2024 and 2026.

During 2024, Mattel generated approximately $83 million of cost savings under the OPG program.

2025 was marked by uncertainty in U.S.

trade dynamics that affected retailer ordering patterns for much of the year.

Although U.S.

retailers had delayed orders during the second and third quarters of 2025, there was a significant acceleration in orders in the fourth quarter.

Despite overall growth in the fourth quarter, growth was less than anticipated in the United States and Mattel's full year results were below expectations.

Full year net sales decreased 1%, as compared to the prior year.

Gross margin was 48.7% in 2025, as compared to 50.8% in 2024, and net income per diluted common share was $1.24 in 2025, as compared to $1.58 in 2024.

Global trade policy continues to evolve and the ultimate impact of recent developments with respect to U.S.

tariffs is unclear.

On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA").

The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments.

Following the Supreme Court’s decision, the U.S.

presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs.

There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on Mattel's business.

Mattel continues to monitor and evaluate these developments and assess their potential impact on Mattel’s business, financial condition, and results of operations.

Mattel is tracking ahead of its multi-year savings target related to the Optimizing for Profitable Growth program ("OPG program"), and in the fourth quarter of 2025 Mattel increased its targeted annual gross cost savings from $200 million to $225 million.

Mattel ended the year with cash and equivalents of $1.24 billion, as compared to $1.39 billion at the end of 2024, after $600.0 million of share repurchases during the year, which exhausted the remaining share repurchase authorization under the program announced on February 5, 2024.

On February 9, 2026, the Board of Directors authorized a new $1.50 billion share repurchase program.

Additionally, in November 2025, Mattel issued $600.0 million of senior notes and used the proceeds of the offering plus cash on hand to repay $600.0 million of senior notes that were scheduled to mature in April 2026.

On February 10, 2026, Mattel announced it had entered into a definitive agreement to acquire the remaining 50% ownership interest in Mattel163 Limited ("Mattel163"), a mobile games studio, for approximately $159 million, subject to customary closing adjustments.

The completion of the transaction is subject to the satisfaction of customary closing conditions.

Upon closing, Mattel will own 100% of Mattel163 and will begin consolidating its future financial results in Mattel's consolidated financial statements.

Mattel is operating in a macro-economic environment that may impact consumer demand.

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Interest (income) (45.0) -0.8 % (51.5) -1.0 % -13 % 20

Other non-operating expense (income), net 4.5 (2.3)

Other non-operating expense, net 13.3 4.5

Income before income taxes 459.5 8.6 % 622.5 11.6 % -26 % (300)

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Net sales in 2025 were $5.35 billion, a decrease of $31.9 million, or 1%, as compared to $5.38 billion in 2024.

The decrease in net sales was primarily due to a decrease in gross billings of $68.6 million.

The decrease in net sales was primarily due to an increase in sales adjustments of $77.7 million, partially offset by an increase in gross billings of $45.8 million.

Gross billings represent amounts invoiced to a customer and do not include the impact of sales adjustments, such as trade discounts and other allowances.

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Hot Wheels 1,749.7 1,575.0 11 % 1 %

Fisher-Price (a) 700.8 681.5 3 % -1 %

Fisher-Price 622.3 700.8 -11 % 1 %

Other 2,503.0 2,407.4 4 % 1 %

Gross Billings $ 6,079.1 $ 6,033.3 1 % 1 %

(a) Beginning in the first quarter of 2024, the Fisher-Price power brand was revised to exclude Baby Gear and Imaginext products.

Prior period amounts have been reclassified to conform to the current presentation.

Gross billings were $6.03 billion in 2024, a decrease of $68.6 million, or 1%, as compared to $6.10 billion in 2023, with an unfavorable impact from changes in currency exchange rates of one percentage point.

The decrease in gross billings was due to lower billings of Dolls and Infant, Toddler, and Preschool products, partially offset by higher billings of Vehicles and Action Figures, Building Sets, Games, and Other products.

Dolls gross billings decreased 8%, due to lower billings of Barbie, which benefited from the Barbie movie in the prior year.

Infant, Toddler, and Preschool gross billings decreased 5%, primarily due to lower billings of Baby Gear and Power Wheels products of 5%, due to the continued strategic exit from certain product lines in Power Wheels and Baby Gear.

Vehicles gross billings increased 9%, due to higher billings of Hot Wheels products.

Action Figures, Building Sets, Games, and Other gross billings increased 2%, of which 6% was due to higher billings of Games products and 1% was due to higher billings of Action Figures products, partially offset by lower billings of Building Sets products of 2% and lower billings of Other products of 3%.

Gross billings were $6.08 billion in 2025, an increase of $45.8 million, or 1%, as compared to $6.03 billion in 2024, with a favorable impact from changes in currency exchange rates of one percentage point.

The increase in gross billings was due to higher billings of Vehicles and Action Figures, Building Sets, Games, and Other products, partially offset by lower billings of Infant, Toddler, and Preschool and Dolls products.

Dolls gross billings decreased 7%, primarily due to lower billings of Barbie products.

Infant, Toddler, and Preschool gross billings decreased 17%, of which 8% was due to lower billings of Fisher-Price products, 5% was due to lower billings of Baby Gear and Power Wheels products, due to the continued strategic exit from certain product lines in Baby Gear and Power Wheels , and 4% was due to lower billings of Preschool Entertainment products.

Vehicles gross billings increased 11%, primarily due to higher billings of Hot Wheels products.

Action Figures, Building Sets, Games, and Other gross billings increased 14%, of which 18% was due to higher billings of Action Figures products, primarily due to higher billings of Jurassic World and Minecraft products in connection with their theatrical releases in 2025, partially offset by lower billings of Building Sets products of 4%.

Sales adjustments generally represent arrangements with Mattel's customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise.

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Additionally, sales adjustments may include foreign currency transaction gains and losses from the remeasurement of accounts receivable denominated in currencies that are different from the relevant entity's functional currency.

Sales adjustments decreased to $653.7 million in 2024, as compared to $660.6 million in 2023.

Sales adjustments as a percentage of net sales were relatively consistent at 12.2% in 2024, as compared to 12.1% in 2023.

Sales adjustments increased to $731.4 million in 2025, as compared to $653.7 million in 2024.

Sales adjustments as a percentage of net sales increased to 13.7% in 2025 from 12.2% in 2024, primarily due to increased promotional activities and a shift in sales channel mix resulting in a higher proportion of sales with higher average sales adjustment rates.

Cost of Sales

Cost of sales decreased by $212.0 million, or 7%, to $2.65 billion in 2024 from $2.86 billion in 2023.

Within cost of sales, product and other costs decreased by $203.4 million, or 9%, to $2.08 billion in 2024 from $2.28 billion in 2023.

Royalty expense decreased by $5.7 million, or 2%, to $244.1 million in 2024 from $249.8 million in 2023.

Freight and logistics expenses decreased by $2.9 million, or 1%, to $324.1 million in 2024 from $327.0 million in 2023.

Gross margin increased to 50.8% in 2024 from 47.5% in 2023.

The increase in gross margin was primarily due to favorable supply chain and other efficiencies of 130 basis points, incremental realized savings from the OPG program of 90 basis points, lower inventory management costs of 60 basis points, including lower close-out sales and inventory obsolescence, cost deflation of 50 basis points, and favorable foreign currency exchange and other factors of 90 basis points, partially offset by unfavorable mix of 90 basis points primarily related to the prior year benefit from the Barbie movie.

Cost of sales increased by $96.5 million, or 4%, to $2.74 billion in 2025 from $2.65 billion in 2024.

Within cost of sales, product and other costs increased by $63.7 million, or 3%, to $2.14 billion in 2025 from $2.08 billion in 2024.

Royalty expense increased by $20.5 million, or 8%, to $264.6 million in 2025 from $244.1 million in 2024.

Freight and logistics expenses increased by $12.3 million, or 4%, to $336.4 million in 2025 from $324.1 million in 2024.

Gross margin decreased to 48.7% in 2025 from 50.8% in 2024.

The decrease in gross margin was primarily due to the impact of cost inflation of 100 basis points, unfavorable foreign currency exchange of 60 basis points, and higher discounts and other factors of 160 basis points, partially offset by incremental realized savings from the OPG program of 90 basis points and the net impact of tariff costs, which were more than offset by the timing of mitigating actions of 30 basis points.

Advertising and Promotion Expenses

Advertising and promotion expenses primarily consist of:

(i) media costs, which include the media, planning, and buying fees for television, print, and online advertisements, (ii) non-media costs, which include commercial and website production, merchandising, and promotional costs, (iii) retail advertising costs, which include consumer direct catalogs;

and (iv) general advertising costs, which include trade show costs.

Advertising and promotion expenses as a percentage of net sales were relatively flat at 9.4% in 2024, compared to 9.6% in 2023.

(i) media costs, which include the media, planning, and buying fees for television, print, and digital advertisements, (ii) non-media costs, which include commercial and website production, merchandising, and promotional costs, (iii) retail advertising costs, which include consumer direct catalogs, and (iv) general advertising costs, which include trade show costs.

Advertising and promotion expenses as a percentage of net sales were relatively flat at 9.8% in 2025, as compared to 9.4% in 2024.

Other Selling and Administrative Expenses

Other selling and administrative expenses were $1.54 billion, or 28.7% of net sales, in 2025, an increase of $4.8 million, as compared to $1.53 billion, or 28.5% of net sales, in 2024.

The increase in other selling and administrative expenses was primarily due to employee compensation increases and higher incentive compensation of $65.6 million, partially offset by realized savings from cost savings programs of $30.8 million.

The increase in other selling and administrative expenses was primarily due to higher expenses related to inclined sleeper product recalls and related litigation of $30.8 million and higher outside services and other expenses of $69.5 million, partially offset by lower employee compensation related expenses, including lower incentive compensation, of $50.2 million, and realized savings from the OPG program of $40.6 million.

Interest Expense

Interest expense was $118.8 million in 2024, a decrease of $5.0 million as compared to $123.8 million in 2023.

Interest expense was $118.7 million in 2025, relatively flat as compared to $118.8 million in 2024.

Interest Income

Interest income increased by $26.2 million to $51.5 million in 2024 from $25.2 million in 2023, primarily due to higher average invested cash balances in 2024.

Interest income decreased by $6.5 million to $45.0 million in 2025 from $51.5 million in 2024.

Provision for Income Taxes

Mattel's provision for income taxes was $105.6 million in 2024, as compared to a provision for income taxes of $269.5 million in 2023.

The decrease in provision for income taxes was the result of the intra-group transfer of certain IP rights in the prior year, 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.

Mattel's provision for income taxes was $89.8 million in 2025, as compared to $105.6 million in 2024.

The decrease in provision for income taxes was due to lower income before income taxes in 2025, partially offset by a decrease in non-recurring discrete income tax benefits.

In 2025, Mattel recognized a net income tax benefit of $26.8 million, primarily related to a change of its indefinite reinvestment assertion with respect to certain foreign subsidiary earnings and release of previously unrecognized tax benefits.

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.

Additionally, 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, which was offset by higher income tax expense as a result of an increase in income before income taxes.

Evaluating the need for and the amount of a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence to determine whether it is more likely than not that these assets will be realizable.

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.

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.

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.

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.

The Organization for Economic Co-operation and Development ("OECD") reached an agreement among various countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two.

Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two rules.

Mattel is continuing to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available.

Some of the legislative changes could impact Mattel's effective tax rate and tax liabilities.

When and how these laws and regulations are adopted or enacted by various countries in which Mattel operates could increase tax complexity and uncertainty and may adversely affect Mattel's worldwide effective tax rate, income tax expense and cash flows.

Mattel does not expect the provisions that went into effect in 2024 to have a materially adverse impact on its results of operations, financial position, or cash flows.

As of December 31, 2025 and 2024, the valuation allowance was primarily related to foreign net operating loss carryforwards and foreign tax credits that Mattel does not expect to realize, and there were no material changes.

On July 4, 2025, H.R.1- the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States.

The OBBBA contains significant provisions, including the permanent extension or restoration of certain expiring corporate income tax provisions, originally introduced by the Tax Cuts and Jobs Act of 2017, and incremental modifications to the international tax framework.

The legislation has multiple effective dates, with certain provisions effective for the tax year beginning after December 31, 2024, and others effective for tax years beginning after December 31, 2025.

Mattel has evaluated the OBBBA provisions that have been enacted and has included the related impact in the provision for income taxes for the year ended

December 31, 2025, which was not material.

Mattel will continue to assess the potential future tax implications of this legislation and monitor future developments, including regulatory guidance and interpretations as they become available.

Segment Results

North America Segment

Beginning in the first quarter of 2024, Mattel's American Girl business was integrated into its North America commercial organization and is reported within the North America operating segment.

Prior to the first quarter of 2024, Mattel's American Girl business was a separate reportable operating segment.

Prior period amounts have been reclassified to conform to the current period presentation.

The following tables provide a summary of Mattel's net sales, segment operating income, and gross billings by categories, along with supplemental information by brand, for the North America segment for 2024 and 2023:

The following tables provide a summary of Mattel's net sales, segment income, and gross billings by categories, along with supplemental information by brand, for the North America segment for 2025 and 2024:

For the Year Ended % Change as

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Net Sales $ 3,001.1 $ 3,168.1 -5 % — %

Segment Operating Income 840.0 787.7 7 %

Segment Income 704.7 840.0 -16 %

Net sales for the North America segment in 2025 were $3.00 billion, a decrease of $167.0 million, or 5%, as compared to $3.17 billion in 2024.

The decrease in net sales was primarily due to a decrease in gross billings of $37.9 million.

The decrease in net sales was primarily due to a decrease in gross billings of $132.4 million and an increase in sales adjustments of $34.6 million.

For the Year Ended % Change as

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Hot Wheels 760.6 741.3 3 % — %

Fisher-Price (a) 421.3 404.9 4 % — %

Fisher-Price 369.8 421.3 -12 % — %

Other 1,481.0 1,497.0 -1 % — %

Gross Billings $ 3,262.2 $ 3,394.6 -4 % — %

(a) Beginning in the first quarter of 2024, the Fisher-Price power brand was revised to exclude Baby Gear and Imaginext products.

Prior period amounts have been reclassified to conform to the current presentation.

Gross billings for the North America segment were $3.26 billion in 2025, a decrease of $132.4 million, or 4%, as compared to $3.39 billion in 2024.

The decrease in the North America segment gross billings was primarily due to lower billings of Dolls and Infant, Toddler, and Preschool products, partially offset by higher billings of Vehicles and Action Figures, Building Sets, Games, and Other products.

Dolls gross billings decreased 6%, due to lower billings of Barbie, which benefited from the Barbie movie in the prior year.

Infant, Toddler, and Preschool gross billings decreased 6%, due to lower billings of Baby Gear and Power Wheels products.

Vehicles gross billings increased 6%, due to higher billings of Hot Wheels products.

Action Figures, Building Sets, Games, and Other gross billings increased 6%, of which 6% was due to higher billings of Action Figures products and 5% was due to higher billings of Games products, partially offset by lower billings of Building Sets products of 2% and lower billings of Other products of 2%.

The decrease in the North America segment gross billings was primarily due to lower billings of Infant, Toddler, and Preschool and Dolls products, partially offset by higher billings of Vehicles and Action Figures, Building Sets, Games, and Other products.

Dolls gross billings decreased 6%, primarily due to lower billings of Barbie products.

Infant, Toddler, and Preschool gross billings decreased 21%, of which 9% was due to lower billings of Fisher-Price products, 7% was due to lower billings of Baby Gear and Power Wheels products, due to the continued strategic exit from certain product lines in Baby Gear and Power Wheels , and 5% was due to lower billings of Preschool Entertainment products.

Vehicles gross billings increased 4%, of which 2% was due to higher billings of Hot Wheels products and 1% was due to higher billings of Cars products.

Action Figures, Building Sets, Games, and Other gross billings increased 5%, of which 15% was due to higher billings of Action Figures products, primarily due to higher billings of Jurassic World and Minecraft products in connection with their theatrical releases in 2025, partially offset by lower billings of Building Sets products of 5% and lower billings of Games products of 3%.

Sales adjustments increased to $261.2 million in 2025, as compared to $226.5 million in 2024.

Sales adjustments as a percentage of net sales were relatively consistent at 7.1% in 2024 as compared to 6.9% in 2023.

Sales adjustments as a percentage of net sales increased to 8.7% in 2025 as compared to 7.1% in 2024, primarily due to a shift in sales channel mix resulting in a higher proportion of sales with higher average sales adjustment rates and increased promotional activities.

Cost of sales decreased by $31.0 million, or 2%, to $1.57 billion in 2025 from $1.60 billion in 2024, primarily due to a decrease in product and other costs of $34.8 million.

Gross margin increased to 49.4% in 2024 from 46.3% in 2023, primarily due to supply chain and other efficiencies of 210 basis points, incremental realized savings from the OPG program of 90 basis points, lower inventory management costs of 60 basis points, including lower inventory obsolescence and close-out sales, and favorable other factors of 40 basis points, partially offset by unfavorable mix of 90 basis points primarily related to the prior year benefit from the Barbie movie.

North America segment operating income was $840.0 million in 2024, as compared to $787.7 million in 2023, due to higher gross profit of $78.7 million, partially offset by higher other selling and administrative expenses of $33.2 million.

North America segment income decreased by $135.3 million to $704.7 million in 2025, as compared to $840.0 million in 2024.

The decrease was primarily due to lower net sales of $167.0 million, partially offset by lower cost of sales of $31.0 million.

International Segment

The following tables provide a summary of Mattel's net sales, segment income, and gross billings by categories, along with supplemental information by brand, for the International segment for 2025 and 2024:

For the Year Ended % Change as

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Net Sales $ 2,346.6 $ 2,211.5 6 % 2 %

Segment Operating Income 389.0 299.1 30 %

Net sales for the International segment in 2024 were $2.21 billion, a decrease of $19.3 million, or 1%, as compared to $2.23 billion in 2023.

The decrease in net sales was due to a decrease in gross billings of $30.6 million, partially offset by a decrease in sales adjustments of $11.3 million.

Segment Income 445.0 389.0 14 %

Net sales for the International segment in 2025 were $2.35 billion, an increase of $135.1 million, or 6%, as compared to $2.21 billion in 2024.

The increase in net sales was due to an increase in gross billings of $178.1 million, partially offset by an increase in sales adjustments of $43.0 million.

For the Year Ended % Change as

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Hot Wheels 989.0 833.7 19 % 2 %

Fisher-Price (a) 279.5 276.5 1 % -2 %

Fisher-Price 252.5 279.5 -10 % 1 %

Other 1,022.0 910.3 12 % 3 %

Gross Billings $ 2,816.8 $ 2,638.7 7 % 2 %

(a) Beginning in the first quarter of 2024, the Fisher-Price power brand was revised to exclude Baby Gear and Imaginext products.

Prior period amounts have been reclassified to conform to the current presentation.

Gross billings for the International segment were $2.64 billion in 2024, a decrease of $30.6 million, or 1%, as compared to $2.67 billion in 2023, with an unfavorable impact from changes in currency exchange rates of one percentage point.

The decrease in the International segment gross billings was due to lower billings of Dolls, Infant, Toddler, and Preschool, and Action Figures, Building Sets, Games, and Other products, partially offset by higher billings of Vehicles products.

Dolls gross billings decreased 10%, of which 8% was due to lower billings of Barbie primarily due to the benefit of the Barbie movie in the prior year.

Infant, Toddler, and Preschool gross billings decreased 4%, of which 3% was due to lower billings of Baby Gear and Power Wheels products.

Vehicles gross billings increased 12%, of which 11% was due to higher billings of Hot Wheels products.

Action Figures, Building Sets, Games, and Other gross billings decreased 3%, of which 5% was due to lower billings of Action Figures products and 3% was due to lower billings of Other products, partially offset by higher billings of Games products of 6%.

Sales adjustments decreased to $427.2 million in 2024, as compared to $438.6 million in 2023.

Sales adjustments as a percentage of net sales were relatively consistent at 19.3% in 2024 as compared to 19.7% in 2023.

Cost of sales decreased by $95.2 million, or 8%, to $1.14 billion in 2024 from $1.23 billion in 2023, primarily due to a decrease of product and other costs of $92.4 million.

Gross margin in 2024 increased to 48.5% from 44.7% in 2023, primarily due to incremental realized savings from the OPG program of 100 basis points, cost deflation of 100 basis points, lower inventory management costs of 70 basis points, including lower close-out sales and inventory obsolescence, favorable supply chain and other efficiencies of 60 basis points, and favorable foreign currency exchange and other factors of 160 basis points, partially offset by unfavorable mix of 110 basis points, primarily related to the prior year benefit from the Barbie movie.

International segment operating income was $389.0 million in 2024, as compared to $299.1 million in 2023, primarily due to higher gross profit of $75.9 million and lower advertising and promotion expenses of $10.8 million.

Gross billings for the International segment were $2.82 billion in 2025, an increase of $178.1 million, or 7%, as compared to $2.64 billion in 2024, with a favorable impact from changes in currency exchange rates of two percentage points.

The increase in the International segment gross billings was due to higher billings of Vehicles and Action Figures, Building Sets, Games, and Other products, partially offset by lower billings of Dolls and Infant, Toddler, and Preschool products.

Dolls gross billings decreased 7%, primarily due to lower billings of Barbie products.

Infant, Toddler, and Preschool gross billings decreased 12%, of which 7% was due to lower billings of Fisher-Price products, 3% was due to lower billings of Preschool Entertainment products, and 2% was due to lower billings of Baby Gear and Power Wheels products, due to the continued strategic exit from certain product lines in Baby Gear and Power Wheels.

Vehicles gross billings increased 18%, primarily due to higher billings of Hot Wheels products.

Action Figures, Building Sets, Games, and Other gross billings increased 28%, of which 24% was due to higher billings of Action Figures products, primarily due to higher billings of Jurassic World and Minecraft products in connection with their theatrical releases in 2025, and 7% was due to higher billings of Games products.

Sales adjustments increased to $470.3 million in 2025, as compared to $427.2 million in 2024.

Sales adjustments as a percentage of net sales increased to 20.0% in 2025 from 19.3% in 2024, primarily due to increased promotional activities.

Cost of sales increased by $42.3 million, or 4%, to $1.18 billion in 2025 from $1.14 billion in 2024, primarily due to an increase in royalty expense of $17.1 million and an increase in product and other costs of $13.3 million.

International segment income increased by $56.0 million to $445.0 million in 2025, as compared to $389.0 million in 2024, primarily due to higher net sales of $135.1 million, partially offset by higher cost of sales of $42.3 million, higher other selling and administrative expenses of $22.0 million, and higher advertising and promotion expenses of $14.7 million.

Cost Savings Programs

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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.

Targeted annual gross cost savings from actions associated with the OPG program, which are expected to be completed by 2026, are $200 million.

Targeted annual gross cost savings from actions associated with the OPG program, which are expected to be completed by the end of 2026, were increased from $200 million to $225 million in the fourth quarter of 2025.

Of the $225 million in targeted annual gross costs savings, approximately 55% is expected to benefit cost of sales and 45% is expected to benefit other selling and administrative expenses.

Total expected cash expenditures under the OPG program are expected to be between $130 and $165 million and total non-cash charges are expected to be up to $5 million.

Total cash expenditures under the OPG program are expected to be between $115 and $140 million and total non-cash charges are expected to be up to $5 million.

The costs associated with the OPG program are expected to include the following:

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$ 41.3 $ 49.2

(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."

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

Mattel realized cumulative cost savings (before severance, restructuring costs, and cost inflation) of approximately $83 million, which represents approximately 60% benefit to cost of sales, and 40% benefit to other selling and administrative expenses, as of December 31, 2024, in connection with the OPG Program.

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

As of December 31, 2025, in connection with the OPG program, Mattel recorded cumulative severance and other restructuring charges of approximately $116 million, which included approximately $5 million of non-cash charges.

Mattel realized cumulative cost savings (before severance, restructuring costs, and cost inflation) of approximately $172 million, which represents approximately 60% benefit to cost of sales, and approximately 40% benefit to other selling and administrative expenses as of December 31, 2025.

Other Cost Savings Actions

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.

Mattel periodically executes additional actions to simplify and streamline its organizational structure that are not included in its cost savings programs.

In connection with these actions, Mattel recorded severance charges of $5.6 million within other selling and administrative expenses during 2025.

Mattel did not record any such charges in 2024.

See Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Provision for Income Taxes."

Liquidity and Capital Resources

Mattel's primary sources of liquidity are its domestic and foreign cash and equivalents balances, short-term borrowing facilities, including its $1.40 billion in aggregate principal amount of senior unsecured revolving credit facilities (the "Credit Facility"), which on July 15, 2024 replaced the $1.40 billion prior credit facility, and access to capital markets to fund its operations and obligations.

Mattel's primary sources of liquidity are its domestic and foreign cash and equivalents balances, driven by cash flows from operating activities, short-term borrowing facilities, including its $1.40 billion in aggregate principal amount of senior unsecured revolving credit facilities (the "Credit Facility"), and access to capital markets to fund its operations and obligations.

Such obligations may include capital expenditures, debt service, future royalty payments pursuant to licensing agreements, future inventory and service purchases, and required cash contributions and payments related to benefit plans.

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In early 2022, Mattel paused all shipments into Russia.

Cash flows from operating activities could be negatively impacted by decreased demand for Mattel's products, which could result from factors such as, but not limited to, adverse economic conditions and changes in public and consumer preferences, or by increased costs associated with manufacturing and distribution of products or shortages in raw materials or component parts.

Additionally, Mattel's ability to issue long-term debt and obtain seasonal financing could be adversely affected by factors such as, but not limited to, global economic crises and tight credit environments, an inability to comply with its debt covenants and its Credit Facility covenants, or deterioration of Mattel's credit ratings.

However, based on Mattel's current business plan and factors known to date, it is expected that existing cash and equivalents, cash flows from operations, availability under the Credit Facility, and access to capital markets, will be sufficient to meet working capital and operating expenditure requirements for the next twelve months and in the long-term.

The Tax Cuts and Jobs Act, enacted on December 22, 2017 (the "U.S.

Tax Act"), provides Mattel with a reduced cost to access the earnings of its foreign subsidiaries.

With the passage of the U.S.

Tax Act, repatriations of foreign earnings generally will not be taxable for U.S.

Additionally, Mattel's ability to issue long-term debt and obtain seasonal financing could be adversely affected by factors such as, but not limited to, global economic crises and tight credit environments, inability to comply with its debt covenants and its Credit Facility covenants, or deterioration of Mattel's credit ratings.

However, based on Mattel's current business plan and factors known to date, it is expected that existing cash and equivalents, cash flows from operations, availability under the Credit Facility, and access to capital markets, will be sufficient to meet working capital, operating expenditure, and other contractual requirements for the next twelve months and in the long-term.

Mattel has the ability to repatriate foreign earnings, which generally will not be taxable for U.S.

federal income tax purposes but may be subject to state income tax and/or foreign withholding tax, in addition to any local country distribution requirements.

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Actual returns below the expected rate of return, along with changes in interest rates that affect the measurement of the liability, would impact the amount and timing of Mattel's future contributions to these 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 under-funded plans.

Mattel expects to make cash contributions totaling approximately $14 million to its defined benefit pension and postretirement benefit plans in 2026, substantially all of which will be for benefit payments for its underfunded plans.

Cash Flow Activities

Cash flows provided by operating activities were $593.3 million in 2025, as compared to $800.6 million in 2024.

The decrease in cash flows provided by operating activities was primarily due to an increase in cash used for working capital of $191.1 million, which included $285.8 million of unfavorable changes in inventories, reflecting the prior year impact of reduced inventory levels, and $86.1 million of unfavorable changes in accounts payable and accrued liabilities, partially offset by $219.7 million of favorable changes in accounts receivable.

The unfavorable changes to working capital were partially offset by an increase in net income, excluding the impact of non-cash items.

The decrease in cash flows provided by operating activities was primarily due to a decrease in net income, excluding the impact of non-cash items, and an increase in cash used for working capital of $26.8 million.

Cash flows used for investing activities were $154.9 million in 2025, as compared to $189.0 million in 2024.

The increase was primarily due to a $42.3 million increase in capital expenditures, including the July 2024 purchase of a property that will serve as Mattel's new global design center for $58.8 million.

The decrease in cash flows used for investing activities was primarily due to a decrease in purchases of other property, plant, and equipment of $24.6 million, which included the purchase of an office building for $58.8 million in July 2024.

Cash flows used for financing activities were $620.6 million in 2025, as compared to $449.4 million in 2024.

The increase in cash flows used for financing activities was primarily due to $197.0 million of higher share repurchases in 2024 compared to 2023.

The increase in cash flows used for financing activities was primarily due to $200.0 million of increased share repurchases in 2025 compared to 2024.

During 2025, Mattel repurchased 31.4 million shares of its common stock at a cost of $600.0 million.

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

On July 17, 2013, the Board of Directors approved a $500.0 million increase to Mattel's share repurchase authorization, which as of December 31, 2023 was exhausted.

On February 5, 2024, the Board of Directors authorized a $1.00 billion share repurchase program, which as of December 31, 2025 was exhausted.

On February 9, 2026, the Board of Directors authorized a new $1.50 billion share repurchase program.

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

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

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Credit Ratings

In 2024, Fitch changed Mattel's credit rating from BB+ to BBB- with a stable outlook, Standard & Poor's 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.

In 2025, Fitch maintained Mattel's credit rating of BBB- with a stable outlook, Standard & Poor's maintained Mattel's credit rating of BBB with a stable outlook, and Moody's maintained Mattel's credit rating of Baa3 with a stable outlook.

Financial Position

Mattel's cash and equivalents increased $126.5 million to $1.39 billion at December 31, 2024, as compared to $1.26 billion at December 31, 2023, primarily due to cash flow provided by operating activities of $800.6 million, partially offset by share repurchases of $400.0 million and capital expenditures of $202.6 million.

Accounts receivable decreased $78.6 million to $1.00 billion at December 31, 2024, as compared to $1.08 billion at December 31, 2023, primarily due to the impact of foreign currency translation and the timing of sales and collections.

Inventories decreased $69.9 million to $501.7 million at December 31, 2024, as compared to $571.6 million at December 31, 2023, primarily due to continued inventory management efforts during 2024 and the impact of foreign currency translation.

Prepaid expenses and other current assets increased $26.6 million to $234.1 million at December 31, 2024, as compared to $207.5 million at December 31, 2023, primarily due to an increase in derivative receivables of $16.5 million.

Accounts payable and accrued liabilities decreased $30.9 million to $1.28 billion at December 31, 2024, as compared to $1.31 billion at December 31, 2023, primarily due to a decrease of $43.2 million in accounts payable, partially offset by an increase in accrued advertising expense of $18.1 million.

Mattel's cash and equivalents decreased $145.0 million to $1.24 billion at December 31, 2025, as compared to $1.39 billion at December 31, 2024, primarily due to share repurchases of $600.0 million and capital expenditures of $182.0 million, partially offset by cash flow provided by operating activities of $593.3 million.

Accounts receivable increased $94.4 million to $1.10 billion at December 31, 2025, as compared to $1.00 billion at December 31, 2024, primarily due to higher net sales in the fourth quarter of 2025 of $120.1 million, partially offset by the timing of collections.

Inventories increased $61.4 million to $563.1 million at December 31, 2025, as compared to $501.7 million at December 31, 2024, primarily due to tariff related impacts in the United States and the impact of foreign currency translation.

Prepaid expenses and other current assets decreased $7.0 million to $227.1 million at December 31, 2025, as compared to $234.1 million at December 31, 2024.

The changes included a decrease in derivatives receivable of $17.9 million, partially offset by an increase in prepaid royalties of $17.8 million.

Accounts payable and accrued liabilities increased $150.6 million to $1.43 billion at December 31, 2025, as compared to $1.28 billion at December 31, 2024, primarily due to an increase of $156.4 million in accounts payable, an increase in derivative liabilities of $12.8 million, and an increase in accrued royalties of $10.1 million, partially offset by a decrease in accrued incentive compensation expense of $67.0 million and a decrease in accrued advertising of $29.9 million.

A summary of Mattel's capitalization is as follows:

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2021 Senior Notes due April 2029 600.0 600.0

2025 Senior Notes due November 2030 600.0 —

Debt issuance costs and debt discount (18.3) (15.6)

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Total debt was $2.33 billion at December 31, 2025, flat as compared to $2.33 billion at December 31, 2024.

Stockholders' equity increased $114.9 million to $2.26 billion at December 31, 2024, as compared to $2.15 billion at December 31, 2023, primarily due to net income in 2024 of $541.8 million and the impact of share-based compensation on additional paid-in capital of $79.4 million, partially offset by share repurchases of $400.0 million and other comprehensive loss of $89.5 million.

During 2025, Mattel issued $600.0 million of 2025 Senior Notes due November 2030 and used the proceeds plus cash on hand to repay $600.0 million of 2021 Senior Notes due April 2026.

Stockholders' equity decreased $31.1 million to $2.23 billion at December 31, 2025, as compared to $2.26 billion at December 31, 2024, primarily due to share repurchases of $600.0 million, partially offset by net income in 2025 of $397.6 million, other comprehensive income of $103.9 million, and the impact of share-based compensation on additional paid-in capital of $79.7 million.

Off-Balance Sheet Arrangements

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Mattel also has defined benefit and postretirement benefit plans, which require future cash contributions and benefit payments.

Additionally, Mattel routinely enters into noncancelable lease agreements for premises and equipment used, which contain minimum rental payments.

Additionally, Mattel routinely enters into lease agreements for premises and equipment used, which contain minimum rental payments.

These obligations represent those for which Mattel is contractually obligated and do not represent all future expected purchases.

For obligations subject to variable price and/or quantity provisions, a best estimate of such variables is made.

Actual cash payments may vary due to the variable pricing components of certain purchase obligations.

The following table summarizes Mattel's contractual commitments and obligations:

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Due to the uncertainty regarding the periods in which examinations will be completed and limited information related to current audits, Mattel is not able to make reasonably reliable estimates of the periods in which cash settlements will occur with taxing authorities for the noncurrent liabilities.

Subsequent Events

See Part II, Item 8 "Financial Statements and Supplementary Data—Note 18 to the Consolidated Financial Statements—Subsequent Events."

The content of Item 8 "Financial Statements and Supplementary Data—Note 13 to the Consolidated Financial Statements—Commitments and Contingencies—Litigation" is hereby incorporated by reference in this Item 7.

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Mattel's products are sold throughout the world.

Products within the North America segment are sold directly to retailers, including discount and freestanding toy stores, chain stores, department stores, other retail outlets and, to a limited extent, wholesalers, and directly to consumers through Mattel's e-commerce platforms.

Products within the International segment are sold directly to retailers and wholesalers in most European, Latin American, and Asian countries, and in Australia and New Zealand, and through agents and distributors in those countries where Mattel has no direct presence.

In recent years, the mass-market retail channel has experienced significant shifts in market share among competitors, causing some large retailers to experience liquidity problems.

Products within the North America segment are sold directly to retailers, including omnichannel retailers, discount and freestanding toy stores, chain stores, department stores, other retail outlets and, to a limited extent, wholesalers, and directly to consumers through Mattel's e-commerce platforms.

Products within the International segment are sold directly to retailers and wholesalers in most European, Latin American, and Asian countries, in Australia and New Zealand, and through agents and distributors in those countries where Mattel has no direct presence.

The mass-market retail channel periodically experiences shifts in market share among competitors, causing some large retailers to experience liquidity problems.

Mattel's sales to customers are typically made on credit without collateral and are highly concentrated in the third and fourth quarters due to the seasonal nature of toy sales, which results in a substantial portion of trade receivables being collected during the latter half of the year and the first quarter of the following year.

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A small number of customers account for a large share of Mattel's net sales and accounts receivable.

In 2024, Mattel's three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 44% of net sales, and its ten largest customers, in the aggregate, accounted for approximately 51% of net sales.

In 2025, Mattel's three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 42% of worldwide consolidated net sales, and its ten largest customers, in the aggregate, accounted for approximately 49% of net sales.

As of December 31, 2025, Mattel's three largest customers accounted for approximately 31% of net accounts receivable, and its ten largest customers accounted for approximately 43% of net accounts receivable.

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The allowance for credit losses is also affected by the time at which uncollectable accounts receivable balances are actually written off.

For the year ended December 31, 2024, Mattel recorded a charge related to its allowance for credit losses of approximately $3 million, which was recognized as other selling and administrative expense.

For the year ended December 31, 2023, Mattel recorded a benefit related to its allowance for credit losses of approximately $2 million, which was recognized as other selling and administrative income.

For the year ended December 31, 2025, Mattel recorded a net expense related to its allowance for credit losses of approximately $3 million, which was recognized within other selling and administrative expenses.

For the year ended December 31, 2024, Mattel recorded a net expense related to its allowance for credit losses of approximately $3 million, which was recognized within other selling and administrative expenses.

In general, Mattel's allowance for credit loss estimates has historically been within its expectations and in line with the reserves established, and although possible, significant variation is not expected in the future.

If significant changes in the assumptions used to develop the estimates occur, they could materially affect key financial statement line items, including other selling and administrative expenses and accounts receivable.

A hypothetical 1% increase or decrease to the allowance for credit losses as a percentage of accounts receivable would have impacted 2024 and 2023 other selling and administrative expenses by approximately $10 million and $11 million, respectively.

A hypothetical 1% increase or decrease of the allowance for credit losses as a percentage of accounts receivable would have impacted 2025 and 2024 other selling and administrative expenses by approximately $11 million and $10 million, respectively.

Inventories—Obsolescence Reserve

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Inventory obsolescence reserves are recorded for damaged, obsolete, excess, and slow-moving inventory.

Inventory obsolescence expense is charged to cost of sales and establishes a lower cost basis for the inventory.

Inventory obsolescence expense is recognized in cost of sales and establishes a lower cost basis for the inventory.

Management believes that the accounting estimate related to the obsolescence reserve is a "critical accounting estimate" because significant judgment is required to evaluate the level of future demand for inventories held by Mattel as well as the prices at which customers are willing to pay for Mattel's inventories.

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Such economic changes may affect the sales of Mattel's products and its corresponding inventory levels, which could potentially impact the valuation of its inventory.

At the end of each quarter, management within each business segment, North America and International, performs a detailed review of its inventory on an item-by-item basis.

At the end of each quarter, management within each commercial business segment, North America and International, as well as Mattel's owned and operated manufacturing plants, performs a detailed review of its inventory on an item-by-item basis.

Management assesses the need for, and the amount of, an obsolescence reserve based on the following factors:

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As a percentage of gross inventory 5.4 % 6.2 %

For the years ended December 31, 2024 and 2023, Mattel recorded a charge related to its inventory obsolescence reserve of approximately $46 million and $64 million, respectively, which was recognized as cost of sales.

For the years ended December 31, 2025 and 2024, Mattel recorded an expense related to its inventory obsolescence reserve of approximately $38 million and $46 million, respectively, which was recognized within cost of sales.

In general, Mattel's inventory obsolescence estimates have historically been within expectations and in line with the reserves established, and although possible, significant variation is not expected in the future.

If significant changes in the assumptions used to develop the estimate occur, they could materially affect key financial statement line items, including cost of sales and inventories.

A hypothetical 1% increase or decrease to inventory reserves as a percentage of gross inventory at December 31, 2024 and 2023 would have impacted 2024 and 2023 cost of sales by approximately $5 million and $6 million, respectively.

A hypothetical 1% increase or decrease to obsolescence reserves as a percentage of gross inventory at December 31, 2025 and 2024 would have impacted 2025 and 2024 cost of sales by approximately $6 million and $5 million, respectively.

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

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

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

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

Sales adjustments for such programs totaled $731.4 million or 13.7% as a percentage of net sales in 2025 and $653.7 million or 12.2% as a percentage of net sales in 2024.

If significant changes in the assumptions used to develop the estimates occur, they could impact Mattel's results of operations or financial condition.

A hypothetical 1% increase or decrease in Mattel's sales adjustments as a percentage of net sales during the years ended December 31, 2024 and 2023 would have impacted 2024 and 2023 net sales and accounts receivable by approximately $54 million.

A hypothetical 1% increase or decrease in Mattel's sales adjustments as a percentage of net sales during the years ended December 31, 2025 and 2024 would have impacted 2025 and 2024 net sales and accounts receivable by approximately $53 million and $54 million, respectively.

Mattel's income tax provision and related income tax assets and liabilities are based on actual and expected future income, U.S.

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Management evaluates the level of Mattel's valuation allowances at least annually, and more frequently if actual operating results differ significantly from forecasted results.

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.

Changes in the valuation allowances in 2025 primarily related to changes in assessment of the future realizability of certain deferred tax assets and utilization and expiration of tax attributes.

As of December 31, 2025, Mattel's valuation allowances on its U.S.

federal and state deferred tax assets and foreign deferred tax assets were approximately $13 million and $87 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.

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

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

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Mattel uses this measure to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance.

Mattel believes that the disclosure of this non-GAAP financial measure provides useful supplemental information to investors to be able to better evaluate ongoing business performance and certain components of Mattel's results.

Mattel believes that the disclosure of this non-GAAP financial measure provides useful supplemental information to investors to allow them to better evaluate ongoing business performance and certain components of Mattel's results.

This measure is not, and should not be viewed as, a substitute for GAAP financial measures and may not be comparable to similarly-titled measures used by other companies.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis