What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-23 compared with 2025-02-26 · 310 added, 325 removed, 1184 unchanged (35% of the section changed)

2 unchanged sentences

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)).

Mattel's management, including Ynon Kreiz, its principal executive officer, and Anthony DiSilvestro, its principal financial officer, evaluated the effectiveness of Mattel's internal control over financial reporting using the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this evaluation, management concluded that Mattel's internal control over financial reporting is not effective as of December 31, 2024, due to a material weakness in Mattel's internal control over financial reporting, as further described below.

Mattel's management, including Ynon Kreiz, its principal executive officer, and Paul Ruh, its principal financial officer, evaluated the effectiveness of Mattel's internal control over financial reporting using the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this evaluation, management concluded that Mattel's internal control over financial reporting was effective as of December 31, 2025.

The effectiveness of Mattel's internal control over financial reporting as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report that appears herein.

Material Weakness

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 company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Mattel identified a material weakness in its internal control over financial reporting related to certain of its information technology general controls within certain of the Company's information technology systems.

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.

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.

Therefore, management concluded that the deficiencies represent a material weakness.

Report of Independent Registered Public Accounting Firm

5 unchanged sentences

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.

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.

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.

The material weakness referred to above is described in the accompanying Management’s Report on Internal Control Over Financial Reporting.

We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above.

Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

109 unchanged sentences

Net Income $ 397,584 $ 541,817 $ 214,352

Other Comprehensive (Loss) Income, Net of Tax

Other Comprehensive Income (Loss), Net of Tax

Currency translation adjustments 121,458 ( 110,507 ) 37,123

Employee benefit plan adjustments 13,451 3,253 ( 4,418 )

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

Net unrealized gains (losses) on derivative instruments:

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

Net unrealized (losses) gains on derivative instruments:

Unrealized holding (losses) gains ( 49,196 ) 39,409 ( 15,903 )

Reclassification adjustments included in net income 18,173 ( 21,639 ) ( 10,292 )

( 31,023 ) 17,770 ( 26,195 )

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

Other Comprehensive Income (Loss), Net of Tax 103,886 ( 89,484 ) 6,510

Comprehensive Income $ 501,470 $ 452,333 $ 220,862

12 unchanged sentences

Share-based compensation 79,719 79,429 83,334

Bad debt expense 2,940 ( 1,502 ) 18,279

Inventory obsolescence 38,367 45,909 63,748

1 unchanged sentence

Income from equity method investments ( 27,869 ) ( 24,938 ) ( 18,423 )

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

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

Content asset amortization 50,246 77,986 51,837

Loss on liquidation of subsidiary — — 45,366

Changes in assets and liabilities:

9 unchanged sentences

Purchases of other property, plant, and equipment ( 110,618 ) ( 135,205 ) ( 85,820 )

Proceeds from (payments for) foreign currency forward exchange contracts, net 7,344 14,948 ( 520 )

Proceeds from sale of assets 2,072 6,847 38,148

Proceeds from foreign currency forward exchange contracts, net 8,629 7,344 14,948

Other, net 18,431 6,233 2,934

1 unchanged sentence

Cash Flows From Financing Activities:

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

Proceeds from long-term borrowings, net 592,382 — —

Payments of long-term borrowings ( 600,000 ) — —

Share repurchases ( 600,000 ) ( 400,000 ) ( 203,016 )

8 unchanged sentences

Supplemental Cash Flow Information:

Cash paid during the year for:

Income taxes, gross $ 100,327 $ 93,641 $ 89,617

Interest 114,280 117,701 129,217

Cash paid during the year for interest $ 115,804 $ 114,280 $ 117,701

The accompanying notes are an integral part of these consolidated financial statements.

11 unchanged sentences

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

Net income — — — 541,817 — 541,817

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

Other comprehensive (loss), net of tax — — — — ( 89,484 ) ( 89,484 )

Share repurchases — — ( 403,527 ) — — ( 403,527 )

21 unchanged sentences

Mattel does not have any minority stock ownership interests in which it has a controlling financial interest that would require consolidation.

All significant intercompany accounts and transactions have been eliminated upon consolidation.

Intercompany accounts and transactions have been eliminated upon consolidation.

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

8 unchanged sentences

Credit is granted to customers on an unsecured basis.

Credit limits and payment terms are established based on extensive evaluations made on an ongoing basis throughout the fiscal year of the financial performance, cash generation, financing availability, and liquidity status of each customer.

Credit limits and payment terms are established based on extensive evaluations performed on an ongoing basis throughout the fiscal year of the financial performance, cash generation, financing availability, and liquidity status of each customer.

Customers are reviewed at least annually, with more frequent reviews performed as necessary, based on the customers' financial condition and the level of credit being extended.

For customers who are experiencing financial difficulties, management performs additional financial analyses before shipping to those customers on credit.

Customers' terms and credit limits are adjusted or revoked, if necessary, to reflect the results of the review.

Mattel uses a variety of financial arrangements to ensure collectability of accounts receivable of customers, including requiring letters of credit, purchasing various forms of credit insurance with unrelated third parties, or requiring cash in advance of shipment.

11 unchanged sentences

When property, plant, and equipment are sold or retired, the cost of the property and the related accumulated depreciation are removed from the consolidated balance sheets, and any resulting gain or loss is included in the consolidated statements of operations.

Mattel routinely enters into noncancelable lease agreements primarily for premises and equipment used in the normal course of business.

Mattel routinely enters into lease agreements primarily for premises and equipment used in the normal course of business.

Mattel excludes right-of-use assets and lease liabilities for leases with an initial term of 12 months or less from the balance sheet, and combines lease and non-lease components for property leases, which primarily relate to ancillary expenses such as common area maintenance charges and management fees.

11 unchanged sentences

(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.

(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.

2 unchanged sentences

Mattel also tests its amortizable intangible assets, which are primarily comprised of trademarks and trade names, for impairment whenever events or changes in circumstances indicate that the asset's carrying amount may not be recoverable.

Amortization is computed primarily using the straight-line method over the estimated useful lives of the amortizable intangible assets.

Amortization is computed using the straight-line method over the estimated useful lives of the amortizable intangible assets.

Content Assets

7 unchanged sentences

Content asset amortization is recorded within cost of sales in the consolidated statements of operations.

Unamortized content assets shall be tested for impairment at the individual content asset level when events or changes in circumstances indicate that the fair value of an asset may be less than its unamortized costs.

Unamortized content assets are tested for impairment at the individual content asset level when events or changes in circumstances indicate that the fair value of an asset may be less than its unamortized costs.

Foreign Currency Translation Exposure

6 unchanged sentences

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.

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

Foreign Currency Transaction Exposure

9 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 income (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 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.

1 unchanged sentence

Due to the short-term nature of the contracts involved, Mattel does not use hedge accounting for these contracts, and as such, changes in fair value are recorded in the period of change in the consolidated statements of operations.

Mattel utilizes derivative contracts to hedge certain purchases of commodities, which were not material.

Mattel periodically utilizes derivative contracts to hedge certain purchases of commodities, which are not material.

Revenue Recognition and Sales Adjustments

Revenue is recognized when control of the goods is transferred to the customer, which is either upon shipment or upon receipt of finished goods by the customer, depending on the contract terms, with payment due typically within 60 days from the invoice date.

Mattel routinely enters into arrangements with its customers to provide sales incentives, support customer promotions, and allowances for returns or defective merchandise.

Mattel routinely enters into arrangements with its customers to provide sales incentives, support for customer promotions, and allowances for returns or defective merchandise.

Such programs are based primarily on customer purchases, customer performance of specified promotional activities, and other specified factors such as sales to consumers.

15 unchanged sentences

Facts and circumstances related to the recall or withdrawal, including where the product affected by the recall or withdrawal is located (e.g., with consumers, in customers' inventory, or in Mattel's inventory), cost estimates for shipping and handling for returns, cost estimates for communicating the recall or withdrawal to consumers and customers, and cost estimates for parts and labor if the recalled or withdrawn product is deemed to be repairable, are considered when establishing a product recall or withdrawal reserve.

These factors are updated and reevaluated each period, and the related reserves are adjusted when these factors indicate that the recall or withdrawal reserve is either not sufficient to cover or exceeds the estimated product recall or withdrawal expenses.

These factors are updated and reevaluated each period, and the related reserves are adjusted when these factors indicate that the recall or withdrawal reserve is either not sufficient to cover or exceed the estimated product recall or withdrawal expenses.

Design and Development Costs

5 unchanged sentences

Mattel recognizes the cost of service-based employee share-based payment awards on a straight-line attribution basis over the requisite employee service period, net of estimated forfeitures.

Determining the fair value of share-based awards at the measurement date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise, the associated volatility, and the expected dividends.

Mattel estimates the fair value of options granted using the Black-Scholes valuation model.

Mattel estimates and adjusts forfeiture rates based on a periodic review of recent forfeiture activity and expected future employee turnover.

Mattel determines the fair value of stock options using the Black-Scholes valuation model which requires judgment in estimating the expected term that stock options will be outstanding prior to exercise.

The expected volatility of Mattel’s stock price and the expected dividends to be paid over the period that the option is expected to be outstanding are also required to be estimated.

The expected life of stock options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience.

3 unchanged sentences

Treasury zero-coupon issues approximating the expected life

Mattel estimates and adjusts forfeiture rates based on a periodic review of recent forfeiture activity and expected future employee turnover.

Mattel determines the fair value of restricted stock units ("RSUs"), excluding performance RSUs, based on the closing market price of Mattel's common stock on the date of grant, adjusted by the present value of the expected dividends for RSUs that are not entitled to a dividend during the vest period.

Mattel determines the fair value of the performance-related components of its performance RSUs based on the closing market price of Mattel's common stock on the date of grant.

It determines the fair value of the market-related components of its performance RSUs based on the Monte Carlo valuation methodology.

The fair value of the market-related components of its performance RSUs is determined based on the Monte Carlo valuation methodology which requires judgment in estimating the expected volatility of Mattel's stock price and its correlation to an index of other public companies upon which the market-related components are measured.

Expected stock price volatility is based on the historical volatility of Mattel's stock for a period approximating the expected term of the award.

Correlation is based on historical share prices of other public companies which comprise the index for a period approximating the expected term.

The risk-free interest rate is based on the implied yield available on U.S.

Treasury zero-coupon issues approximating the expected term.

Certain income and expense items are accounted for differently for financial reporting and income tax purposes.

12 unchanged sentences

The carrying amount of the investment is subsequently adjusted for Mattel's share of net income (loss) and distributions from the investee.

Mattel owns a 50 % equity interest in Mattel163 Limited, a joint venture with a third party that develops and operates online games.

Distributions from equity method investees are accounted for using the cumulative earnings approach whereby distributions received are considered to be returns on investment and recognized within cash flows from operating activities in Mattel's consolidated statement of cash flows, unless cumulative distributions exceed Mattel's equity share in the earnings of the investee.

Mattel owns a 50 % equity interest in Mattel163 Limited, a joint venture with a third party that develops and operates digital games.

Mattel's portion of the joint venture's earnings and losses is recognized on a three-month lag as the joint venture's financial information is not available in a sufficiently timely manner.

2 unchanged sentences

Recently Adopted Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

ASU 2022-04 requires that buyers in a supplier finance program disclose sufficient information about the program to allow a user of the financial statements to understand the program's nature, potential magnitude, obligations outstanding at the end of each period, and an annual rollforward of such obligations.

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

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.

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

Improvements to Reportable Segment Disclosures.

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 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):

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 requires enhanced income tax disclosures on an annual basis for specific categories in the rate reconciliation and disclosure of income taxes paid by jurisdiction.

The guidance in ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

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

The guidance in ASU 2023-09 was effective for fiscal years beginning after December 15, 2024.

Mattel adopted the guidance in ASU 2023-09 effective January 1, 2025 and applied the new disclosure requirements prospectively as of the adoption date.

Refer to "Note 16 to the Consolidated Financial Statements— Income Taxes" for additional information regarding Mattel's income taxes.

Accounting Pronouncements Not Yet Adopted

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

1 unchanged sentence

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.

Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03.

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.

Early adoption is permitted.

The ASU may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements.

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

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

ASU 2025-05 provides the option to use a practical expedient to address implementation challenges related to the estimation of expected credit losses for current accounts receivable and current assets arising from transactions accounted for under revenue recognition (Topic 606) and assets acquired through business combinations.

The practical expedient allows entities to assume current conditions as of the balance sheet date remain unchanged over the life of these assets when developing forecasts.

The guidance allows entities to bypass the requirement to incorporate macro-economic data into their forecast when such data is not expected to materially affect the estimate.

The guidance in ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years.

Early adoption is permitted.

Mattel is currently evaluating the impact of the adoption of ASU 2025-05 on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

ASU 2025-06 modernizes certain aspects of the accounting for software costs to develop or obtain software for internal use under Accounting Standards Codification 350-40.

The ASU requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose.

The guidance in ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years.

Early adoption is permitted.

The amendments in ASU 2025-06 permit entities to apply the new guidance using a prospective, retrospective, or modified transition approach.

Mattel is currently evaluating the impact of the adoption of ASU 2025-06 on its consolidated financial statements.

Note 2— Property, Plant, and Equipment, Net

12 unchanged sentences

$ 590,015 $ 516,049

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 (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.

Purchases of property, plant, and equipment within Mattel's consolidated statement of cash flows were adjusted for unpaid balances of $ 50.2 million, $ 18.7 million, and $ 20.5 million as of December 31, 2025, 2024, and 2023, respectively.

Note 3— Goodwill and Identifiable Intangible Assets, Net

Mattel's reporting units are:

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

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

12 unchanged sentences

$ 1,384,512 $ ( 2,791 ) $ 1,381,721 $ 8,448 $ 1,390,169

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

In the third quarter of 2025, Mattel performed its annual goodwill impairment assessment 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.

To the extent assumptions, estimates, 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, 2025.

Intangible Assets, Net

Identifiable Intangible Assets, Net

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

1 unchanged sentence

(In thousands)

Identifiable intangibles $ 798,655 $ 801,506

Identifiable intangible assets $ 808,830 $ 798,655

accumulated amortization ( 471,725 ) ( 438,092 )

4 unchanged sentences

2026 $ 31,717

Mattel tests its amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Mattel's amortizable intangible assets primarily consist of trademarks and trade names.

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

Mattel tests its amortizable identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable.

Mattel's amortizable identifiable intangible assets primarily consist of trademarks and trade names.

During 2025, 2024, and 2023, Mattel's amortizable identifiable intangible assets were not impaired.

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 (loss) 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 income (loss) for the years ended December 31 is as follows:

Defined Benefit Pension Plans Postretirement Benefit Plans

7 unchanged sentences

Recognized actuarial loss (gain) 8,683 7,781 5,893 ( 292 ) ( 190 ) ( 226 )

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

Settlement (gain) ( 68 ) — ( 59 ) — — —

Curtailment (gain) ( 121 ) — — — — —

Net periodic benefit cost (credit) $ 15,042 $ 12,806 $ 9,949 $ ( 2,144 ) $ ( 2,046 ) $ ( 2,084 )

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

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

Net actuarial (gain) loss $ ( 19,309 ) $ ( 5,086 ) $ 904 $ 32 $ ( 433 ) $ 311

2 unchanged sentences

Total recognized in other comprehensive (income) loss (a) $ ( 19,509 ) $ ( 5,149 ) $ 1,923 $ 2,029 $ 1,605 $ 2,349

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.

Total recognized in net periodic benefit cost (credit) and other comprehensive income (loss) $ ( 4,467 ) $ 7,657 $ 11,872 $ ( 115 ) $ ( 441 ) $ 265

(a) Amounts exclude related tax expense (benefit) of approximately $ 5 million, $ 1 million, and $( 2 ) million, during 2025, 2024, and 2023, respectively, which are also included in other comprehensive income (loss).

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 8,259 ( 5,085 ) — —

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

Actuarial loss (gain) 2,857 ( 20,525 ) ( 260 ) ( 623 )

Benefits paid ( 34,644 ) ( 34,294 ) ( 475 ) ( 562 )

15 unchanged sentences

Funded status, end of year $ ( 94,531 ) $ ( 117,598 ) $ ( 2,492 ) $ ( 3,082 )

Current accrued benefit liability $ ( 6,383 ) $ ( 5,960 ) $ ( 530 ) $ ( 530 )

Noncurrent accrued benefit liability, net ( 111,215 ) ( 127,380 ) ( 2,552 ) ( 3,555 )

Current accrued benefit liabilities $ ( 7,030 ) $ ( 6,383 ) $ ( 430 ) $ ( 530 )

Noncurrent accrued benefit liabilities, net ( 87,501 ) ( 111,215 ) ( 2,062 ) ( 2,552 )

Net amount recognized $ ( 94,531 ) $ ( 117,598 ) $ ( 2,492 ) $ ( 3,082 )

6 unchanged sentences

Mattel's accumulated benefit obligation for its defined benefit pension plans as of 2025 and 2024 totaled $ 408.8 million and $ 409.6 million, respectively.

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.

The actuarial loss recognized in 2025 for the defined benefit pension plan was primarily due to the increase in the discount rate from the prior year that was used to determine the projected benefit obligation at December 31, 2025.

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

As of December 31, 2025 and 2024, information for defined benefit pension plans that had aggregate accumulated benefit obligations and projected benefit obligations in excess of plan assets is as follows:

44 unchanged sentences

Mattel monitors the returns earned by the plans' assets and reallocates investments as needed.

Mattel's overall investment strategy is to achieve an adequately diversified asset allocation mix of investments that provides for both near-term benefit payments as well as long-term growth.

The assets are invested in a combination of indexed and actively managed funds.

The target allocations for Mattel's domestic plan assets, which comprise 79 % of Mattel's total plan assets, are 42 % in U.S.

equities, 28 % in non-U.S.

equities, 20 % in fixed income securities, and 10 % in real estate securities.

Mattel's overall investment strategy is to achieve an adequately diversified asset allocation mix of investments that provides for both near-term benefit payments and expected long-term pension liabilities.

The assets are invested in a combination of indexed and actively managed funds, as well as government and corporate debt instruments.

equities are benchmarked against the S&P 500, and the non-U.S.

38 unchanged sentences

(a) These investments primarily consist of privately placed funds that are valued based on net asset value per share.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets and its related disclosures.

The fair value of these investments are included in the table above to permit reconciliation of the total defined benefit pension plan assets classified by level within the fair value hierarchy.

The fair value of collective trust funds is determined based on the net asset value per share held at year-end.

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government agency securities, corporate debt instruments, mutual funds, and money market funds are determined based on quoted market prices or are estimated using pricing models with observable inputs or quoted prices of securities with similar characteristics.

In December 2017, Mattel entered into an insurance buy-in policy contract with a private limited life insurance company to insure a portion of the U.K.

pension plan, which initially covered approximately 40 % of the total membership in the plan.

In 2022, Mattel entered into an additional insurance buy-in policy contract to insure the remainder of the membership in the plan.

Mattel entered into an insurance buy-in policy contract with a private limited life insurance company to insure the U.K.

pension plan.

The assets and liabilities with respect to insured pensioners are assumed to match for the purposes of Accounting Standards Codification 715, Pension — Retirement Benefits (i.e.

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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 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.

Incentive compensation for 2025, 2024 and 2023 was $ 83.4 million, $ 150.9 million, and $ 137.8 million, respectively, for awards under the plan.

Note 5— Supplier Finance Program

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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:

The following is a roll-forward of outstanding payment obligations due under the supplier finance program:

2025 December 31,

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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.

In addition to paying interest on the outstanding principal amount 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.

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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.

As of December 31, 2025 and 2024, Mattel had no borrowings outstanding under the Credit Facility.

Outstanding letters of credit under the Credit Facility totaled approximately $ 9 million as of December 31, 2025 and 2024.

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

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As of December 31, 2025 and 2024, Mattel had no short-term borrowings outstanding.

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

During 2025 and 2024, Mattel had no borrowings under the Credit Facility, and no other short-term borrowings.

Long-Term Debt

On November 17, 2025, Mattel issued $ 600.0 million aggregate principal amount of 5.000 % 2025 Senior Notes due November 2030 (the "2025 Notes").

The 2025 Notes were issued pursuant to a base indenture, dated November 17, 2025 (the "Base Indenture") between Mattel and U.S.

Bank Trust Company, National Association, as trustee (the "Trustee"), as supplemented by the first supplemental indenture with respect to the 2025 Notes, dated November 17, 2025 (the "Supplemental Indenture" and, together with the Base Indenture, the "Indenture"), between Mattel and the Trustee.

The Notes pay interest semi-annually in arrears on May 17 and November 17 of each year, beginning on May 17, 2026, to the holders of record on the immediately preceding May 1 and November 1, respectively.

The 2025 Notes will mature on November 17, 2030.

Prior to October 17, 2030 (one month prior to the maturity date), Mattel may redeem the 2025 Notes at its option, in whole or in part, at any time and from time to time, at a redemption price equal to 100 % of the principal amount of the 2025 Notes being redeemed, plus a corresponding "make-whole premium" as set forth in the Base Indenture, plus, in either case, accrued and unpaid interest thereon to (but not including) the redemption date.

Additionally, on or after October 17, 2030, Mattel may redeem the 2025 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100 % of the principal amount of the 2025 Notes being redeemed, plus accrued and unpaid interest, if any, to (but not including) the redemption date.

The holders of the 2025 Notes have the right to require Mattel to repurchase the 2025 Notes of any series at 101 % of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of repurchase upon the occurrence of a Change of Control Triggering Event (as defined in the Base Indenture), except to the extent that Mattel has exercised its right to redeem all of the 2025 Notes as described above.

The 2025 Notes are Mattel's senior unsecured obligations.

Under the terms of the Indenture, the 2025 Notes, without giving effect to collateral arrangements, rank pari passu in right of payment with all existing and future senior indebtedness of Mattel, including indebtedness of Mattel under the Existing Notes and the Credit Agreement (each as defined in the Base Indenture).

The 2025 Notes are senior in right of payment to any future subordinated indebtedness of Mattel, if any.

The 2025 Notes are structurally subordinated to all existing and future indebtedness and other liabilities of all subsidiaries of Mattel including indebtedness of the subsidiaries that borrow under or guarantee any obligations under the Credit Agreement, if any, and guarantees of the Existing Notes, if any.

The 2025 Notes are effectively subordinated to any existing and future secured indebtedness of Mattel, including indebtedness of Mattel under capital leases, if any, to the extent of the value of the collateral securing such indebtedness.

The Indenture governing the 2025 Notes contains covenants that limit Mattel's ability to, among other things, create liens, enter into certain sale and leaseback transactions, or to engage in certain consolidation, merger, and sale of asset transactions.

These restrictions are subject to a number of exceptions.

The net proceeds from the 2025 Notes, together with cash on hand, were used to redeem all outstanding 3.375 % 2021 Senior Notes due April 2026 and pay related fees and expenses.

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

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2021 Senior Notes due April 2029 3.75 % 600,000 600,000

2025 Senior Notes due November 2030 5.000 % 600,000 —

Debt issuance costs and debt discount ( 18,325 ) ( 15,649 )

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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.

There were no changes to Mattel's credit rating in 2025.

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.

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.

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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Common Stock Repurchase Program

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

During 2025, Mattel repurchased 31.4 million shares of its common stock at a cost of $ 605.5 million, inclusive of accrued excise taxes of $ 5.5 million.

During 2024, Mattel repurchased 21.0 million shares of its common stock at a cost of $ 403.5 million, inclusive of accrued excise taxes of $ 3.5 million.

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.

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

On February 5, 2024, the Board of Directors authorized a $ 1.00 billion share repurchase program and as of December 31, 2025, such authorization 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 will take place from time to time, depending on market conditions.

As of February 20, 2026, Mattel has repurchased 5.9 million shares of its common stock at a cost of $ 101.0 million under the new $ 1.50 billion share repurchase program.

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

Mattel's share repurchase program has no expiration date.

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For the Year Ended December 31, 2025

Instruments Available-for-Sale Security Employee Benefit Plans Currency

Instruments Employee Benefit Plans Currency

Adjustments Total

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For the Year Ended December 31, 2024

Instruments Available-for-Sale Security Employee Benefit Plans Currency

Instruments Employee Benefit Plans Currency

Adjustments Total

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For the Year Ended December 31, 2023

Instruments Available-for-Sale Security Employee Benefit Plans Currency

Instruments Employee Benefit Plans Currency

Adjustments Total

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

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, 2023 $ ( 3,463 ) $ ( 142,916 ) $ ( 758,589 ) $ ( 904,968 )

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Derivative Instruments

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

(Loss) gain on foreign currency forward exchange and other contracts $ ( 18,181 ) $ 21,590 $ 9,880 Cost of sales

Tax effect 8 49 412 Provision/benefit for income taxes

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Recognized actuarial (loss) (a) ( 8,391 ) ( 7,591 ) ( 5,667 ) Other non-operating income/expense, net

Curtailment gain (loss) (a) — — 326 Other non-operating income/expense, net

Settlement gain (loss) (a) — 59 ( 19 ) Other non-operating income/expense, net

Curtailment gain (a) 121 — — Other non-operating income/expense, net

Settlement gain (a) 68 — 59 Other non-operating income/expense, net

( 6,405 ) ( 5,747 ) ( 3,720 )

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$ ( 4,876 ) $ ( 4,072 ) $ ( 2,140 ) Net Income

Currency Translation Adjustments

(Loss) on liquidation of subsidiary $ — $ — $ ( 45,366 ) Other non-operating income/expense, net

Tax effect (b) — — — Provision/benefit for income taxes

$ — $ — $ ( 45,366 )

(a) The amortization of prior service credit, recognized actuarial (loss), curtailment gain (loss) and settlement gain (loss) are included in the computation of net periodic benefit cost.

(a) The amortization of prior service credit, recognized actuarial loss, curtailment gain, and settlement gain are included in the computation of net periodic benefit cost.

Refer to "Note 4 to the Consolidated Financial Statements—Employee Benefit Plans" for additional information regarding Mattel's net periodic benefit cost.

(b) There is no tax effect associated with the loss on the liquidation of Mattel's subsidiary in Argentina.

During 2022, Mattel adjusted accumulated other comprehensive loss by $ 6.4 million in relation to previously recorded available-for-sale equity securities.

This amount was adjusted in order to account for such securities in a manner consistent with Accounting Standards Codification 321, Investments—Equity Securities.

The adjustment included $ 3.6 million of accumulated other comprehensive loss reclassified to other non-operating expense (income), net in the consolidated statement of operations and $ 2.8 million reclassified to retained earnings in the consolidated statement of stockholders' equity.

The adjustment, including tax effect, was immaterial to the financial statements.

Currency Translation Adjustments

During 2025, currency translation adjustments resulted in a net other comprehensive gain of $ 121.5 million, primarily due to the strengthening of the Russian ruble, Mexican peso, and British pound sterling against the U.S.

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.

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dollar, partially offset by the weakening of the Russian ruble against the U.S.

During 2022, currency translation adjustments resulted in a net other comprehensive loss of $ 51.6 million, primarily due to the weakening of the British pound sterling, Euro, and Hong Kong dollar against the U.S.

dollar, partially offset by the strengthening of the Mexican peso and Brazilian real against the U.S.

Upon sale or upon complete or substantially complete liquidation of an investment in a foreign entity, the accumulated currency translation adjustment related to the foreign entity is reclassified from accumulated other comprehensive loss to earnings.

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.

Note 8— Leases

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Weighted-average discount rate 8.7 % 6.6 %

Lease costs for the years ended December 31, 2024, 2023, and 2022 were as follows:

Lease costs were as follows:

For the Year Ended

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imputed interest ( 90,860 )

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 $ 2.3 million.

Mattel has entered into a lease agreement for a premise to be used in the normal course of business which had not yet commenced as of December 31, 2025.

The future minimum obligation related to this lease agreement is $ 33.4 million.

Note 9— Share-Based Payments

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Nonqualified stock options generally vest and become exercisable contingent upon the grantees' continued employment or service with Mattel.

In the event of a retirement, or an involuntary termination, of an employee that meets retirement provisions under the Amended 2010 Plan, or the death or disability of an employee, that occurs in each case at least six months after the grant-date, nonqualified stock options become fully vested.

In the event of an involuntary termination, an employee has 90 days to exercise vested options.

In the event of a retirement, or an involuntary termination (without cause), of an employee that meets retirement provisions under the Amended 2010 Plan, or the death or disability of an employee, that occurs in each case at least six months after the grant date, nonqualified stock options become fully vested, with up to five years to exercise.

In the event of other terminations (without cause), an employee has up to 90 days to exercise vested options.

RSUs granted under the Amended 2010 Plan vest on a schedule determined by the Compensation Committee of the Board of Directors, generally over a period of three years from the date of grant.

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In each case, vested performance awards are determined upon the achievement of performance conditions over the performance period, which is then prorated for the period of employment as a percentage of the performance period.

An employee qualifies for retirement provisions under the Amended 2010 Plan if;

aged 55 years or older with 5 or more years of service for grants prior to April 28, 2023, or aged 55 years or older with 10 or more years of service for grants on or after April 28, 2023, which includes Mattel's 2023 annual employee grant.

An employee qualifies for retirement provisions under the Amended 2010 Plan if aged 55 years or older with 5 or more years of service for grants prior to April 28, 2023, or aged 55 years or older with 10 or more years of service for grants on or after April 28, 2023, which includes Mattel's 2023 annual employee grant.

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, 2025, there were approximately 23 million shares available for grant under the Amended 2010 Plan if target performance goals are achieved, and approximately 19 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.

Mattel recognized total share-based compensation expense related to stock options, RSUs, and performance awards of $ 79.7 million, $ 79.4 million, and $ 83.3 million during 2025, 2024, and 2023, respectively.

The income tax benefit related to stock options, RSUs, and performance awards during 2025, 2024, and 2023 was approximately $ 9 million, $ 9 million and $ 10 million, respectively.

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Stock Options

Mattel recognized compensation expense of $ 3.1 million, $ 6.7 million, and $ 13.2 million for stock options during 2024, 2023, and 2022, respectively, which is included within other selling and administrative expenses in the consolidated statements of operations.

Mattel recognized compensation expense of $ 1.7 million, $ 3.1 million, and $ 6.7 million for stock options during 2025, 2024, and 2023, respectively.

The fair values of options granted have been estimated using the Black-Scholes valuation model.

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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.

No options were granted during 2025 and 2024.

The weighted-average grant-date fair value of options granted during 2023 was $ 8.91 .

The following weighted-average valuation assumptions were used in determining the fair value of options granted:

2024 2023 2022

Expected life (in years) 6.6

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At December 31, 2025, stock options vested, and expected to vest, totaled approximately 8 million shares, with an intrinsic value of approximately $ 24 million, weighted-average exercise price of $ 19.32 , and weighted-average remaining life of 3.0 years.

During 2024, approximately 1 million stock options vested.

During 2025, less than 1 million stock options vested.

The total grant-date fair value of stock options vested during 2025, 2024, and 2023 was approximately $ 3 million, $ 6 million, and $ 9 million, respectively.

Restricted Stock Units

Compensation expense recognized related to grants of RSUs was $ 55.2 million, $ 48.5 million, and $ 37.7 million in 2024, 2023, and 2022, respectively, and was included within other selling and administrative expenses in the consolidated statements of operations.

Mattel recognized compensation expense of $ 56.7 million, $ 55.2 million, and $ 48.5 million for RSUs during 2025, 2024, and 2023, respectively.

RSUs are valued at the market value on the date of grant, adjusted by the present value of the expected dividends for RSUs that are not entitled to a dividend during the vesting period.

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Performance Awards

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 recognized compensation expense of $ 21.3 million, $ 21.2 million, and $ 28.1 million for performance awards during 2025, 2024, and 2023, respectively.

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

Mattel had four LTIP performance cycles in place during 2025, which were established by the Compensation Committee of the Board of Directors:

(i) a January 1, 2021—December 31, 2023 ("2021 LTIP"), which was completed in the first quarter of 2024 (ii) a January 1, 2022—December 31, 2024 performance cycle ("2022 LTIP"), (ii) a January 1, 2023—December 31, 2025 performance cycle ("2023 LTIP"), and (iii) a January 1, 2024—December 31, 2026 performance cycle ("2024 LTIP").

Under the LTIP performance cycles in place in 2024, officers and key employees may earn shares of Mattel's common stock based on attaining certain cumulative three-year performance targets, which are subject to approvals of the Compensation Committee of the Board of Directors.

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.

(i) a January 1, 2022—December 31, 2024 performance cycle ("2022 LTIP"), which was completed in the first quarter of 2025, (ii) a January 1, 2023—December 31, 2025 performance cycle ("2023 LTIP"), (iii) a January 1, 2024—December 31, 2026 performance cycle ("2024 LTIP"), and (iv) a January 1, 2025—December 31, 2027 performance cycle ("2025 LTIP").

On May 21, 2025, performance awards under the 2025 LTIP were granted to officers and key employees of Mattel.

Under the 2025 LTIP, shares of Mattel's common stock may be earned based on Mattel’s relative Total Shareholder Return ("TSR") over the three-year performance measurement period.

Performance awards previously granted under Mattel’s LTIP may earn shares of Mattel's common stock based on Mattel's performance against three-year cumulative Adjusted Free Cash Flow targets, with the final payout subject to modification based on Mattel's relative TSR over the same periods.

Upon completion of each performance cycle, company performance measures and relative TSR are subject to approvals of the Compensation Committee of the Board of Directors.

The actual number of shares earned under both the 2025 LTIP and prior LTIP awards may range from 0 % to 200 % of the target award, depending on performance against the applicable metrics.

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.

The Retention Performance Grant has targeted approximately 0.8 million performance-based restricted stock units, 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 TSR over the five-year performance measurement period.

No portion of the Retention Performance Grant will be earned unless Mattel achieves 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.

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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.

Mattel recognizes compensation expense for its LTIP awards on a straight-line basis over the requisite service period.

Additionally, compensation expense for the performance component of LTIP awards where vesting is subject to three-year cumulative Adjusted Free Cash Flow targets, is adjusted based on the probability that such targets will be 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.

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Unvested at December 31 3,179 $ 22.51 3,252 $ 22.55 2,440 $ 23.01

(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 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.

(a) During 2025, Mattel granted 0.8 million shares as part of the 2025 LTIP.

This amount was offset by a reduction of 0.3 million shares related to the 2022 LTIP based on the final earnout of the 2022 performance cycle, which are included in the weighted-average grant-date fair value.

During 2024, Mattel granted 0.8 million shares as part of the Retention Performance Grant and 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 the 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.

(b) The number of shares granted for the Retention Performance Grant, the 2025 LTIP, the 2024 LTIP, and the 2023 LTIP, represents the aggregate target numbers of shares that may be issued pursuant to the award over its full term.

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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, 2024 and 2023 and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value.

The following tables present information about Mattel's financial assets and liabilities measured and reported in the financial statements at fair value on a recurring basis as of December 31, 2025 and 2024 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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• Level 2 – Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

• Level 3 – Valuations based on inputs that are unobservable, supported by little or no market activity, and that are significant to the fair value of the assets or liabilities.

• Level 3 – Valuations based on inputs that are unobservable, supported by little or no market activity, and significant to the fair value of the assets or liabilities.

December 31, 2025

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Foreign currency forward exchange and other contracts Accrued liabilities $ 295 $ 902

Foreign currency forward exchange and other contracts Other noncurrent liabilities — 20

Total Derivatives Not Designated as Hedging Instruments $ 295 $ 902

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Foreign Currency Forward Exchange Contracts:

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.

Amount of (losses) gains recognized in OCI $ ( 49,196 ) $ 39,409 $ ( 15,903 )

Amount of (losses) gains reclassified from accumulated OCI to the consolidated statements of operations ( 18,173 ) 21,639 10,292 Cost of sales

The gains and losses reclassified from accumulated other comprehensive loss to the consolidated statements of operations during 2025, 2024, and 2023, respectively, were offset by the recognition of the underlying hedged transactions.

As of December 31, 2025, approximately $ 18 million of net losses reported within other accumulated comprehensive loss are expected to be reclassified into the consolidated statements of operations within the next twelve months.

Derivatives Not Designated As Hedging Instruments

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(In thousands)

Amount of Net Gains (Losses) Recognized in the Statements of Operations:

Amount of Net Gains Recognized in the Statements of Operations:

Foreign currency forward exchange and other contracts $ 7,739 $ 8,404 $ 19,939 Other non-operating income/expense, net

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.

The net gains recognized in the consolidated statements of operations during 2025, 2024, and 2023, respectively, were offset by foreign currency transaction gains and losses on the related derivative balances.

Note 13— Commitments and Contingencies

Licensing and Similar Agreements and Other Purchasing Obligations

Licensing and Similar Agreements

In the normal course of business, Mattel enters into contractual arrangements to obtain and protect Mattel's right to create and market certain products.

These arrangements include royalty payments pursuant to licensing agreements that routinely contain provisions for guarantees or minimum expenditures during the term of the contract.

Mattel also enters into contractual arrangements for commitments of future purchases of goods and services to ensure availability and timely delivery.

Current and future commitments for guaranteed payments reflect Mattel's focus on expanding its product lines through alliances with businesses in other industries.

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Royalty expense for 2025, 2024, and 2023 was $ 264.6 million, $ 244.1 million, and $ 249.8 million, respectively.

The following table shows the future minimum obligations for purchases of inventory, services, and other items as of December 31, 2024:

(In thousands)

2025 $ 298,690

Thereafter 29,573

Other Purchase Obligations

Mattel also enters into contractual arrangements for commitments of future purchases of goods and services to ensure availability and timely delivery.

Mattel determined that no such agreements in effect as of December 31, 2025 met the criteria for disclosure in accordance with Accounting Standards Codification 440, Commitments .

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

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In April 1999, Yellowstone do Brasil Ltda.

(formerly known as Trebbor Informática Ltda.) filed a lawsuit against Mattel do Brasil before the 15th Civil Court of Curitiba, State of Parana, requesting the annulment of its security bonds and promissory notes given to Mattel do Brasil as well as damages due to an alleged breach of an oral exclusive distribution agreement between the parties relating to the supply and sale of toys in Brazil.

(formerly known as Trebbor Informática Ltda.) ("Yellowstone") filed a lawsuit against Mattel do Brasil before the 15th Civil Court of Curitiba, State of Parana, requesting the annulment of its security bonds and promissory notes given to Mattel do Brasil as well as damages due to an alleged breach of an oral exclusive distribution agreement between the parties relating to the supply and sale of toys in Brazil.

Yellowstone's complaints sought alleged loss of profits plus an unspecified amount of damages.

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Previously, the courts had ruled in Mattel's favor on its counterclaim.

In October 2019, Mattel reached an agreement with Yellowstone's former counsel regarding payment of the attorney's fees portion of the judgment.

In October 2019, Mattel reached an agreement with Yellowstone's former counsel regarding payment of the attorneys' fees portion of the judgment.

In November 2019, Yellowstone initiated an action to enforce its judgment against Mattel but did not account for an offset for Mattel's counterclaim.

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

A number of putative class action lawsuits filed between April 2019 and October 2019 are pending against Fisher-Price, Inc.

and/or Mattel, Inc.

asserting claims for false advertising, negligent product design, breach of warranty, fraud, and other claims in connection with the marketing and sale of the Fisher-Price Rock 'n Play Sleeper (the "Sleeper").

In general, the lawsuits allege that the Sleeper should not have been marketed and sold as safe and fit for prolonged and overnight sleep for infants.

The putative class action lawsuits propose nationwide and over 10 statewide consumer classes comprised of those who purchased the Sleeper as marketed as safe for prolonged and overnight sleep.

The class actions have been consolidated before a single judge in the United States District Court for the Western District of New York for pre-trial purposes pursuant to the U.S.

federal courts' Multi-District Litigation program.

In June 2022, the court denied the plaintiffs' motion to certify damages and injunctive relief classes under New York law, but granted plaintiffs' request to certify a New York issue class to resolve two issues on a class-wide basis.

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 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.

One products liability lawsuit filed in April 2023 remains pending against Fisher-Price, Inc.

and Mattel, Inc.

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.

and/or Mattel, Inc.

have also received letters from lawyers purporting to represent additional plaintiffs who have threatened to assert similar claims.

In addition, a stockholder has filed a derivative action in the Court of Chancery for the State of Delaware (Kumar v.

Bradley, et al., filed July 7, 2020) alleging breach of fiduciary duty and unjust enrichment related to the development, marketing, and sale of the Sleeper.

The defendants in the derivative action are certain of Mattel's current and former officers and directors.

In August 2021, a second similar derivative action was filed in the Court of Chancery for the State of Delaware (Armon v.

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

alleging that a product defect in the Fisher-Price Rock 'n Play Sleeper (the "Sleeper") caused the fatality of a child.

More than sixty other lawsuits have been settled and/or dismissed.

The remaining lawsuit seeks compensatory damages, punitive damages, attorneys' fees, costs, and interest.

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

As of December 31, 2025, Mattel assessed its probable loss related to the matters outstanding at that time and has accrued estimated liabilities where appropriate, which are not material.

Insurance Litigation

On January 6, 2023, Mattel, Inc.

and Fisher-Price, Inc.

filed a lawsuit against their products liability insurers in the Superior Court of the State of Delaware seeking a declaratory judgment regarding the obligations of the insurers to defend and indemnify Mattel for the Sleeper products liability lawsuits.

On March 28, 2025 and June 2, 2025, the court issued summary judgment rulings which determined, among other things, that the Sleeper products liability claims constitute a single occurrence under Mattel’s insurance policies, and that each claim is allocated to the policy year in which the incident occurred.

As of December 31, 2025, 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 Snuga Swings

Purported class action lawsuits against Fisher-Price, Inc.

A number of putative class action lawsuits were filed 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").

between October 2024 and February 2025 asserting 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 propose nationwide and several state consumer classes comprised of those who purchased the Swings.

The lawsuits have been consolidated before a single judge in the United States District Court for the Western District of New York.

In May 2025, the parties reached a contingent settlement of the litigation, which is subject to court approval.

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 believes that it has substantial defenses to the allegations in the lawsuits and, to the extent the settlement is not finalized or approved, intends to vigorously defend against them.

As of December 31, 2025, Mattel assessed its probable loss related to this matter and has accrued an estimated liability, 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;

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.

(i) North America and (ii) International.

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

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.

Mattel's CODM evaluates segment performance based on each segment’s income.

The CODM also uses this metric 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 segment income and significant expense information for Mattel's reportable segments.

Unallocated corporate and other operating expenses include 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 December 31, 2024

North America International Total Reportable Segments Corporate

and other Consolidated

For the Year Ended

2025 December 31,

2024 December 31,

(In thousands)

North America Segment:

Net sales $ 3,001,070 $ 3,168,069 $ 3,210,436

Cost of sales (a) 1,571,026 1,602,047 1,723,162

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

Advertising and promotion expenses 244,976 245,037 251,738

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 expense, net 4,481 4,481

Income before income taxes $ 622,505

(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)

Other selling and administrative expenses 480,331 480,997 447,793

North America segment expenses 2,296,333 2,328,081 2,422,693

North America segment income $ 704,737 $ 839,988 $ 787,743

International Segment:

Net sales $ 2,346,553 $ 2,211,477 $ 2,230,783

Cost of sales (a) 1,180,177 1,137,859 1,233,055

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

Advertising and promotion expenses 277,024 262,284 273,048

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)

Other selling and administrative expenses 444,338 422,357 425,596

International segment expenses 1,901,539 1,822,500 1,931,699

International segment income $ 445,014 $ 388,977 $ 299,084

Total Reportable Segments:

Net sales $ 5,347,623 $ 5,379,546 $ 5,441,219

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

Total segment expenses 4,197,872 4,150,581 4,354,392

Total segment income $ 1,149,751 $ 1,228,965 $ 1,086,827

(a) Cost of sales included severance and other restructuring charges of approximately $ 8 million, $ 4 million, and $( 1 ) million for 2025, 2024, and 2023, respectively, which was allocated to the North America and International segments.

The following table is a reconciliation of segment income to income before income taxes for the periods indicated:

For the Year Ended

2025 December 31,

2024 December 31,

(In thousands)

Total segment income $ 1,149,751 $ 1,228,965 $ 1,086,827

Unallocated corporate and other operating expenses (a) 603,327 534,683 525,168

Total operating income 546,424 694,282 561,659

Interest expense 118,681 118,774 123,786

Interest (income) ( 45,021 ) ( 51,478 ) ( 25,238 )

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

Other non-operating expense (income), net 13,275 4,481 ( 2,293 )

Income before income taxes $ 459,489 $ 622,505 $ 465,404

(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.

(a) Unallocated corporate and other operating expenses included 1) incentive compensation expense of approximately $ 83 million, $ 151 million, and $ 138 million for 2025, 2024, and 2023, respectively, 2) equity compensation expense of approximately $ 80 million, $ 79 million, and $ 83 million for 2025, 2024, and 2023, respectively, and 3) severance and other restructuring charges of approximately $ 39 million, $ 44 million, and $ 61 million for 2025, 2024, and 2023, respectively.

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

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Geographic Information

The tables below present information by geographic area.

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

The tables below present information regarding Mattel's net sales and long-lived assets by geographic area.

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

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

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$ 41,249 $ 49,159

(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."

(a) Severance and other restructuring charges 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 charges 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."

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

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

Other restructuring charges — — — —

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

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

(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.

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

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 $ 25 million of severance charges recorded within other selling and administrative expenses during 2023.

Cumulative other restructuring charges include approximately $ 5 million of non-cash charges.

Total expected cash expenditures are approximately $ 115 to $ 140 million, and total non-cash charges are expected to be $ 5 million.

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.

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

Mattel periodically executes additional actions to simplify and streamline its organizational structure, which are separate from its multi-year cost savings programs.

In connection with these actions, Mattel recorded severance charges of $ 5.6 million and $ 3.4 million during 2025 and 2023, respectively, within other selling and administrative expenses.

Mattel did not record any such charges in 2024.

Note 16— Income Taxes

Consolidated pre-tax income consists of the following:

Consolidated pre-tax income consisted of the following:

For the Year Ended

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Consolidated pre-tax income excluding equity method investments $ 459,489 $ 622,505 $ 465,404

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

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

For the Year Ended

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Provision for income taxes $ 89,774 $ 105,626 $ 269,475

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) are composed of the following:

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

2025 December 31,

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Allowances and reserves 108,594 96,264

Intangible assets 33,360 31,209

Deferred compensation 65,833 71,880

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Net deferred income tax assets $ 272,946 $ 252,506

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

Net deferred income tax assets and other noncurrent liabilities were reported in the consolidated balance sheets as follows:

2025 December 31,

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federal and foreign loss carryforwards totaling $ 359.6 million and U.S.

federal, state, and foreign tax credit carryforwards of $ 20.1 million, which excludes carryforwards that do not meet the threshold for recognition in the financial statements.

federal, state, and foreign tax credit carryforwards of $ 17.7 million, which exclude carryforwards that do not meet the threshold for recognition in the financial statements.

Utilization of these loss and tax credit carryforwards is subject to annual limitations.

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$ 359,612 $ 17,657

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.

deferred tax assets, resulting in a reduction in intangible deferred tax assets and deferred tax liabilities and an increase in research and development deferred tax assets.

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 2022 primarily related to utilization and expiration of tax attributes and currency fluctuations.

As of December 31, 2022, Mattel's valuation allowances on its U.S.

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 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.

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

federal statutory income tax rate and the provision in the consolidated statements of operations are as follows:

As of December 31, 2025, the valuation allowance of $ 100.5 million was primarily due to foreign net operating loss carryforwards and foreign tax credits that Mattel does not expect to utilize.

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S.

federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:

For the Year Ended

December 31, 2025

Amount Percent

(In thousands)

Provision at U.S.

federal statutory rate $ 96,493 21.0 %

State and local income tax, net of federal income tax effect (a) 1,533 0.3

Foreign tax effects:

Income not subject to tax ( 10,482 ) ( 2.3 )

Minimum top-up tax 5,816 1.3

Other adjustments ( 3,364 ) ( 0.7 )

Netherlands 7,431 1.6

Other foreign jurisdictions 8,469 1.8

Effect of cross-border tax laws:

Foreign-derived intangible income ( 7,918 ) ( 1.7 )

Subpart F income inclusion ( 18,895 ) ( 4.1 )

Other 3,441 0.7

Research and development tax credits ( 7,920 ) ( 1.7 )

Nontaxable or nondeductible items

Non-deductible executive compensation 6,104 1.3

Other ( 2,723 ) ( 0.6 )

Changes in unrecognized tax benefits 11,789 2.6

Provision for income taxes $ 89,774 19.5 %

(a) The states and local jurisdictions that contribute to the majority (greater than 50%) of the effect in this category include Pennsylvania and California.

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S.

federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:

For the Year Ended

2024 December 31,

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

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.

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.

Mattel records a reserve for unrecognized tax benefits for U.S.

federal, state, local, and foreign tax positions related primarily to transfer pricing, tax credits claimed, tax nexus, and apportionment.

For each reporting period, management applies a consistent methodology to measure unrecognized tax benefits, and all unrecognized tax benefits are reviewed periodically and adjusted as circumstances warrant.

Mattel's measurement of its reserve for unrecognized tax benefits is based on management's assessment of all relevant information, including prior audit experience, the status of audits, conclusions of tax audits, lapsing of applicable statutes of limitations, identification of new issues, and any administrative guidance or developments.

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

deferred tax assets.

A reconciliation of the reserve for unrecognized tax benefits is as follows:

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Unrecognized tax benefits at December 31 $ 153,469 $ 134,853 $ 129,970

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 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.

Gross unrecognized tax benefits related to uncertain tax positions as of December 31, 2025, 2024, and 2023, were $ 153.5 million, $ 134.9 million, and $ 130.0 million, respectively.

The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as other noncurrent liabilities and a reduction of deferred tax assets in the consolidated balance sheets.

If recognized, the resulting tax benefit would affect Mattel's effective tax rates during the years ended December 31, 2025, 2024, and 2023 by $ 125.4 million, $ 107.7 million, and $ 110.7 million, respectively.

Mattel includes interest and penalties related to unrecognized tax benefits within the provision for income taxes in the consolidated statements of operations and in other noncurrent liabilities in the consolidated balance sheets.

During the years ended December 31, 2025, 2024, and 2023, Mattel recorded $ 1.1 million, $ 1.7 million, and $ 1.5 million, respectively, of net interest and penalties in the provision for income taxes in the consolidated statements of operations.

The amount of interest and penalties accrued as of December 31, 2025, 2024, and 2023 were $ 20.1 million, $ 19.0 million, and $ 17.3 million, respectively, all of which would impact the effective tax rate if recognized.

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

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Mattel remains subject to IRS examination for the 2022 through 2025 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 state and local income tax returns and remains subject to examination in various jurisdictions, including California for the 2014 through 2025 tax years.

Mattel files multiple foreign income tax returns and remains subject to examination in various foreign jurisdictions including Hong Kong for the 2019 through 2025 tax years, Mexico for the 2020 through 2025 tax years, Netherlands for the 2021 through 2025 tax years, and China for the 2021 through 2025 tax years.

Based on the current status of U.S.

federal, state, local, and foreign audits, Mattel believes it is reasonably possible that in the next 12 months, the total unrecognized tax benefits could decrease by $ 15.2 million related to the settlement of tax audits and/or the expiration of statutes of limitations.

The ultimate settlement of certain issues with the applicable taxing authority could have a material impact on Mattel's consolidated financial statements.

Mattel has recorded a deferred tax liability of $ 22.1 million related to undistributed earnings of certain foreign subsidiaries of $ 0.56 billion as of December 31, 2024.

During 2024, Mattel reported a distribution of foreign earnings to the United States for which taxes had been previously provided.

Taxes have not been provided on approximately $ 1.16 billion of undistributed foreign U.S.

GAAP retained earnings.

The determination of any incremental tax liability associated with these earnings is not practicable due to the complexity of local country withholding rules and interactions with tax treaties, foreign exchange considerations, and the diversity of state income tax treatment on actual distribution.

Mattel will remit reinvested earnings of its foreign subsidiaries for which a deferred tax liability has been recorded when Mattel determines that it is advantageous for business operations or cash management purposes.

As of December 31, 2025, Mattel has recorded a $ 13.8 million deferred tax liability related to $ 701.2 million of foreign undistributed earnings that it expects to repatriate based on business or cash needs.

Mattel intends to indefinitely reinvest all other foreign earnings.

The incremental tax liability related to those earnings is not practicable to determine due to the complexity of local country withholding rules and interactions with tax treaties, foreign exchange considerations, and the diversity of state income tax treatment on actual distribution.

The amount of income taxes paid (net of refunds received) by Mattel were as follows:

For the Year Ended

December 31, 2025

(In thousands)

Federal $ 10,825

State and local 9,287

Hong Kong 17,870

Netherlands 15,840

All other foreign 42,973

Total income taxes paid (net of refunds received) $ 107,848

For the years ended December 31, 2024 and 2023, gross income taxes paid were $ 100.3 million and $ 93.6 million, respectively.

Note 17— Supplemental Financial Information

6 unchanged sentences

Accrued liabilities included the following:

Royalties $ 90,828 $ 80,754

Incentive compensation 90,685 157,669

Advertising and promotion 90,369 120,290

Royalties 80,754 86,475

Lease liabilities 83,242 74,755

3 unchanged sentences

(In thousands)

Currency transaction gains (losses) included in:

Currency transaction (losses) gains included in:

Operating income $ ( 4,476 ) $ ( 15,691 ) $ ( 14,921 )

2 unchanged sentences

Other selling and administrative expenses included the following:

Design and development $ 194,069 $ 198,603 $ 195,451

Design and development (a) $ 227,418 $ 194,069 $ 198,603

Identifiable intangible asset amortization 31,512 31,314 37,893

Bad debt expense, net 2,732 2,940 ( 1,502 )

(a) Design and development included incentive and equity compensation expenses totaling approximately $ 19 million during 2025.

During 2024 and 2023, incentive and equity compensation expenses were not included in design and development and were not material.

Note 18— Subsequent Events

Mattel163 Limited

On January 30, 2026, Mattel entered into a definitive agreement to acquire the remaining 50 % ownership interest in Mattel163 Limited ("Mattel163"), a mobile games studio.

Upon completion of the transaction, which is subject to the satisfaction of customary closing conditions, Mattel will own 100 % of Mattel163.

The purchase price for the remaining 50 % interest is $ 159.0 million, subject to customary closing adjustments.

Mattel plans to fund the purchase price using cash on hand, including dividends expected to be received from Mattel163.

Upon closing, Mattel will account for the transaction under the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations .

The previously held 50 % equity interest in Mattel163 will be remeasured to its acquisition-date fair value.

The resulting remeasurement is expected to result in a gain, which will be recognized in other non-operating income, net within the consolidated statement of operations during the period in which the transaction closes.

Additionally, future financial results of Mattel163 will be consolidated and included in Mattel's consolidated financial statements subsequent to closing.

Tariff Update

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.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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