MATTEL INC /DE/ 10-K

Item 8. Financial Statements and Supplementary Data. MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING 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 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. 47 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Mattel, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Mattel, Inc. and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and schedule of valuation and qualifying accounts and allowances for each of the three years in the period ended December 31, 2025 appearing after Item 16 and the signature and power of attorney pages (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 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 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 the accompanying Management's Report on Internal Control Over Financial Reporting. 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. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. 48 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Sales Adjustments Accrual – Discretionary Component As described in Note 1 to the consolidated financial statements, the Company routinely enters into arrangements with its customers to provide sales incentives, support customer promotions, and allowances for returns or defective merchandise. Accruals for these programs are recorded in net sales as sales adjustments that reduce gross billings in the period the related sale is recognized. The accrual for such programs, which can either be contractual or discretionary in nature, is based on an assessment of customer purchases, customer performance of specified promotional activities, and other specified factors such as customer sales volume. As disclosed by management, sales adjustments for such programs totaled $731.4 million for the year ended December 31, 2025, a portion of which is discretionary in nature. While certain sales adjustment amounts are readily determinable at year end and do not require estimates, other sales adjustments, such as discretionary sales adjustments, require significant judgment by management to make these estimates. In making these estimates, management considers all available information, including the overall business environment, historical trends, and information from customers. The principal considerations for our determination that performing procedures relating to the discretionary component of the sales adjustments accrual is a critical audit matter are (i) the significant judgment by management when developing the estimate of the discretionary component of the sales adjustments accrual and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to management's estimate. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the estimate of the discretionary component of the sales adjustments accrual. These procedures also included, among others (i) testing management's process for developing the estimate of the discretionary component of the sales adjustments accrual, (ii) evaluating the reasonableness of available information considered by management in developing the estimate, (iii) testing the completeness and accuracy of underlying data used in the estimate, (iv) evaluating, on a sample basis, the results of a retrospective comparison of sales adjustments accrued in the prior year to settlements in the current year, and (v) testing, on a sample basis, settlements subsequent to year-end. /s/ PricewaterhouseCoopers LLP Los Angeles, California February 23, 2026 We have served as the Company's auditor since 1974. 49 MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2025 December 31, 2024 (In thousands, except share data) ASSETS Current Assets Cash and equivalents $ 1,242,927 $ 1,387,908 Accounts receivable, net of allowances for credit losses of $ 17.4 million and $ 8.2 million in 2025 and 2024, respectively 1,097,604 1,003,178 Inventories 563,142 501,732 Prepaid expenses and other current assets 227,116 234,099 Total current assets 3,130,789 3,126,917 Noncurrent Assets Property, plant, and equipment, net 590,015 516,049 Right-of-use assets, net 319,548 326,394 Goodwill 1,390,169 1,381,721 Deferred income tax assets 312,913 296,862 Identifiable intangible assets, net 337,105 360,563 Other noncurrent assets 559,843 535,578 Total Assets $ 6,640,382 $ 6,544,084 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 555,403 $ 398,983 Accrued liabilities 872,928 878,710 Income taxes payable 29,851 38,030 Total current liabilities 1,458,182 1,315,723 Noncurrent Liabilities Long-term debt 2,331,675 2,334,351 Noncurrent lease liabilities 268,351 278,174 Other noncurrent liabilities 349,126 351,711 Total noncurrent liabilities 2,949,152 2,964,236 Commitments and Contingencies (See Note 13) Stockholders' Equity Common stock $ 1.00 par value, 1.00 billion shares authorized; 441.4 million shares issued 441,369 441,369 Additional paid-in capital 1,787,790 1,780,259 Treasury stock at cost: 140.0 million shares and 111.4 million shares in 2025 and 2024, respectively ( 3,107,007 ) ( 2,566,929 ) Retained earnings 4,001,462 3,603,878 Accumulated other comprehensive loss ( 890,566 ) ( 994,452 ) Total stockholders' equity 2,233,048 2,264,125 Total Liabilities and Stockholders' Equity $ 6,640,382 $ 6,544,084 The accompanying notes are an integral part of these consolidated financial statements. 50 MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands, except per share amounts) Net Sales $ 5,347,623 $ 5,379,546 $ 5,441,219 Cost of sales 2,741,966 2,645,478 2,857,503 Gross Profit 2,605,657 2,734,068 2,583,716 Advertising and promotion expenses 522,000 507,321 524,786 Other selling and administrative expenses 1,537,233 1,532,465 1,497,271 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 (income), net 13,275 4,481 ( 2,293 ) Income Before Income Taxes 459,489 622,505 465,404 Provision for income taxes 89,774 105,626 269,475 (Income) from equity method investments ( 27,869 ) ( 24,938 ) ( 18,423 ) Net Income $ 397,584 $ 541,817 $ 214,352 Net Income Per Common Share - Basic $ 1.25 $ 1.59 $ 0.61 Weighted-average number of common shares 318,159 340,435 353,588 Net Income Per Common Share - Diluted $ 1.24 $ 1.58 $ 0.60 Weighted-average number of common and potential common shares 321,792 343,336 357,112 The accompanying notes are an integral part of these consolidated financial statements. 51 MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Net Income $ 397,584 $ 541,817 $ 214,352 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 ) 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 Income (Loss), Net of Tax 103,886 ( 89,484 ) 6,510 Comprehensive Income $ 501,470 $ 452,333 $ 220,862 The accompanying notes are an integral part of these consolidated financial statements. 52 MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Cash Flows From Operating Activities: Net Income $ 397,584 $ 541,817 $ 214,352 Adjustments to reconcile net income to net cash flows provided by operating activities: Depreciation 136,473 136,649 139,451 Amortization of intangibles 31,512 31,314 37,893 Share-based compensation 79,719 79,429 83,334 Inventory obsolescence 38,367 45,909 63,748 Deferred income taxes ( 19,408 ) ( 20,986 ) 176,385 Income from equity method investments ( 27,869 ) ( 24,938 ) ( 18,423 ) Content asset amortization 50,246 77,986 51,837 Changes in assets and liabilities: Accounts receivable, net ( 60,493 ) 21,369 ( 198,322 ) Inventories ( 56,633 ) ( 24,519 ) 261,309 Prepaid expenses and other current assets ( 5,554 ) ( 11,168 ) 8,182 Accounts payable, accrued liabilities, and income taxes payable 65,431 49,592 135,767 Content asset spend ( 19,711 ) ( 25,562 ) ( 58,062 ) Other, net ( 16,409 ) ( 76,326 ) ( 27,660 ) Net cash flows provided by operating activities 593,255 800,566 869,791 Cash Flows From Investing Activities: Purchases of tools, dies, and molds ( 71,374 ) ( 67,415 ) ( 74,480 ) Purchases of other property, plant, and equipment ( 110,618 ) ( 135,205 ) ( 85,820 ) Proceeds from foreign currency forward exchange contracts, net 8,629 7,344 14,948 Other, net 18,431 6,233 2,934 Net cash flows used for investing activities ( 154,932 ) ( 189,043 ) ( 142,418 ) Cash Flows From Financing Activities: Proceeds from long-term borrowings, net 592,382 — — Payments of long-term borrowings ( 600,000 ) — — Share repurchases ( 600,000 ) ( 400,000 ) ( 203,016 ) Tax withholdings for share-based compensation ( 16,858 ) ( 19,663 ) ( 35,108 ) Proceeds from stock option exercises 9,803 6,345 26,742 Other, net ( 5,893 ) ( 36,034 ) ( 15,185 ) Net cash flows used for financing activities ( 620,566 ) ( 449,352 ) ( 226,567 ) Effect of Currency Exchange Rate Changes on Cash and Equivalents 37,262 ( 35,626 ) ( 678 ) Change in Cash and Equivalents ( 144,981 ) 126,545 500,128 Cash and Equivalents at Beginning of Period 1,387,908 1,261,363 761,235 Cash and Equivalents at End of Period $ 1,242,927 $ 1,387,908 $ 1,261,363 Supplemental Cash Flow Information: 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. 53 MATTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Stock Additional Paid-In Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity (In thousands) Balance, December 31, 2022 $ 441,369 $ 1,808,308 $ ( 2,129,639 ) $ 2,847,709 $ ( 911,478 ) $ 2,056,269 Net income — — — 214,352 — 214,352 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 Issuance of treasury stock for restricted stock units vesting — ( 100,636 ) 65,528 — — ( 35,108 ) Deferred compensation — ( 36 ) 166 — — 130 Share-based compensation — 83,334 — — — 83,334 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 (loss), net of tax — — — — ( 89,484 ) ( 89,484 ) Share repurchases — — ( 403,527 ) — — ( 403,527 ) Issuance of treasury stock for stock option exercises — ( 4,475 ) 10,820 — — 6,345 Issuance of treasury stock for restricted stock units vesting — ( 69,458 ) 49,790 — — ( 19,668 ) Deferred compensation — ( 148 ) 148 — — — Share-based compensation — 79,429 — — — 79,429 Balance, December 31, 2024 441,369 1,780,259 ( 2,566,929 ) 3,603,878 ( 994,452 ) 2,264,125 Net income — — — 397,584 — 397,584 Other comprehensive income, net of tax — — — — 103,886 103,886 Share repurchases — — ( 605,488 ) — — ( 605,488 ) Issuance of treasury stock for stock option exercises — ( 6,684 ) 16,487 — — 9,803 Issuance of treasury stock for restricted stock units vesting — ( 65,280 ) 48,402 — — ( 16,878 ) Deferred compensation — ( 224 ) 521 — — 297 Share-based compensation — 79,719 — — — 79,719 Balance, December 31, 2025 $ 441,369 $ 1,787,790 $ ( 3,107,007 ) $ 4,001,462 $ ( 890,566 ) $ 2,233,048 The accompanying notes are an integral part of these consolidated financial statements. 54 MATTEL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1— Summary of Significant Accounting Policies Principles of Consolidation and Basis of Preparation The consolidated financial statements include the accounts of Mattel, Inc. ("Mattel") and its subsidiaries. All wholly and majority-owned subsidiaries are consolidated and included in Mattel's consolidated financial statements. Mattel does not have any minority stock ownership interests in which it has a controlling financial interest that would require consolidation. Intercompany accounts and transactions have been eliminated upon consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation. Use of Estimates Preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could ultimately differ from those estimates. Cash and Equivalents Cash and equivalents include short-term investments, which are highly liquid investments with maturities of three months or less when purchased. Such investments are stated at cost, which approximates market value. Accounts Receivable and Allowance for Credit Losses Credit is granted to customers on an unsecured basis. 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. Mattel records an allowance for credit losses based on collection history and management's assessment of the current economic trends, business environment, customers' financial condition, accounts receivable aging, and customer disputes that may impact the level of future credit losses. Inventories Inventories are stated at the lower of cost or net realizable value. Expense associated with inventory obsolescence is recognized in cost of sales and establishes a lower cost basis for the inventory. Cost is determined by the first-in, first-out method. Property, Plant, and Equipment Property, plant, and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over estimated useful lives of 10 to 30 years for buildings and building improvements, 3 to 15 years for machinery and equipment, 3 to 10 years for software, and 10 to 20 years, not to exceed the lease term, for leasehold improvements. Tools, dies, and molds are depreciated using the straight-line method over 3 years. Estimated useful lives are periodically reviewed and, where appropriate, changes are made prospectively. The carrying amount of property, plant, and equipment is reviewed when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Any potential impairment identified is initially assessed by evaluating the operating performance and future undiscounted cash flows of the underlying asset groups. 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. 55 Leases 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. Mattel determines if an arrangement is a lease at inception by assessing whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Mattel's leases may include one or more options to renew for additional terms of up to 10 years. Renewal and termination options are included in the lease term when it is reasonably certain that Mattel will exercise the option. Certain of these leases include escalation clauses that adjust rental expense to reflect changes in price indices, as well as renewal and termination options. A portion of Mattel's lease agreements include contingent rental payments based on a percentage of sales. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As substantially all of Mattel's leases do not provide an implicit rate, Mattel uses its incremental borrowing rate, based on the information available at the lease commencement date, to determine the present value of lease payments. Operating lease costs are recognized on a straight-line basis over the lease term. Goodwill and Intangible Assets Goodwill is allocated to reporting units for the purpose of evaluating whether goodwill is impaired. Mattel's reporting units are: (i) North America, which consists of the United States and Canada, (ii) International, and (iii) American Girl. Goodwill related to the American Girl reporting unit is included in the North America operating segment. Mattel's reportable segments are: (i) North America and (ii) International. Components of the operating segments have been aggregated into a single reporting unit as the components have similar economic characteristics. The similar economic characteristics include the nature of the products, the nature of the production processes, the customers, and the manner in which the products are distributed. Mattel tests its goodwill for impairment annually in the third quarter and whenever events or changes in circumstances indicate that the carrying amount of a reporting unit may exceed its fair value. 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 using the straight-line method over the estimated useful lives of the amortizable intangible assets. Content Assets Mattel incurs and capitalizes direct costs associated with the production of episodic series, feature films, and other similar forms of content. Content assets are recorded within other noncurrent assets in the consolidated balance sheets. Mattel's content assets are predominately monetized individually and amortized based upon the ratio of the current period's revenues to the estimated remaining total revenues ("Ultimate Revenues"). Ultimate Revenues include revenues forecasted to be earned within ten years from the date of initial release of the content asset. Ultimate Revenues are reassessed each reporting period. If Mattel's estimate of Ultimate Revenues decreases, amortization of costs may be accelerated or result in an impairment. To the extent Mattel's estimate of Ultimate Revenues increases, cost amortization may be slowed. Content asset amortization is recorded within cost of sales in the consolidated statements of operations. 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 Mattel's reporting currency is the U.S. dollar. The translation of its net investments in subsidiaries with non-U.S. dollar functional currencies subjects Mattel to the impact of currency exchange rate fluctuations in its results of operations and financial position. Assets and liabilities of subsidiaries with non-U.S. dollar functional currencies are translated into U.S. dollars at period-end exchange rates. Net income and cash flow items are translated at weighted-average exchange rates prevailing during the period. The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive loss within stockholders' equity. 56 Foreign Currency Transaction Exposure Currency exchange rate fluctuations may impact Mattel's results of operations and cash flows. Mattel's currency transaction exposures include gains and losses realized on unhedged inventory purchases and unhedged receivables and payables balances that are denominated in a currency other than the applicable functional currency. Gains and losses on unhedged inventory purchases and other transactions associated with operating activities are recorded in the components of operating income in the consolidated statements of operations. Transaction gains or losses on hedged intercompany inventory transactions are recorded in the consolidated statements of operations in the period in which the inventory is sold to customers. Gains and losses on unhedged intercompany loans and advances are recorded as a component of other non-operating expense (income), net in the consolidated statements of operations in the period in which the currency exchange rate changes. Derivative Instruments Mattel uses foreign currency forward exchange contracts as cash flow hedges primarily to hedge its purchases and sales of inventory denominated in foreign currencies. At the inception of the contracts, Mattel designates these derivatives as cash flow hedges and documents the relationship of the hedge to the underlying transaction. Hedge effectiveness is assessed at inception and throughout the life of the hedge to ensure the hedge qualifies for hedge accounting. Changes in fair value associated with hedge ineffectiveness, if any, are recorded in the consolidated statements of operations. Changes in fair value of cash flow hedge derivatives are deferred and recorded as part of accumulated other comprehensive loss in stockholders' equity until the underlying transaction affects earnings. 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. Mattel uses foreign currency forward exchange contracts to hedge intercompany loans and advances denominated in foreign currencies. Due to the short-term nature of the contracts involved, Mattel does not use hedge accounting for these contracts, and as such, changes in fair value are recorded in the period of change in the consolidated statements of operations. Mattel 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 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. Accruals for these programs are recorded in net sales as sales adjustments that reduce gross billings in the period the related sale is recognized. The accrual for such programs, which can either be contractual or discretionary in nature, is based on an assessment of customer purchases, customer performance of specified promotional activities, and other specified factors such as customer sales volume. In making these estimates, management considers all available information, including the overall business environment, historical trends, and information from customers. Mattel also enters into symbolic and functional licensing arrangements, whereby the licensee pays Mattel royalties based on sales of licensed product, and in certain cases are subject to minimum guaranteed amounts. The timing of revenue recognition for certain of these licensing arrangements with minimum guarantees is based on the determination of whether the license of intellectual property ("IP") is symbolic, which includes the license of Mattel's brands, or functional, which includes the license of Mattel's completed television or streaming content. Revenues from symbolic licenses of IP are recognized based on actual sales when Mattel expects royalties to exceed the minimum guarantee. For symbolic licensing arrangements in which Mattel does not expect royalties to exceed the minimum guarantee, an estimate of the royalties expected to be recouped is recognized on a straight-line basis over the license term. Revenues from functional licenses of IP are recognized once the license period has commenced and the licensee has the ability to use the delivered content. Mattel does not evaluate contracts of one year or less for the existence of a significant financing component. Multi-year contracts were not material. Advertising and Promotion Costs Advertising production costs are expensed in the period the underlying advertisement is first aired. The costs of other advertising and promotional programs are expensed in the period incurred. 57 Product Recalls and Withdrawals Mattel establishes a reserve for product recalls and withdrawals on a product-specific basis when circumstances giving rise to the recall or withdrawal become known. 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 exceed the estimated product recall or withdrawal expenses. Design and Development Costs Product design and development costs primarily include employee compensation and outside services and are expensed in the period incurred. Employee Benefit Plans Mattel and certain of its subsidiaries have retirement and other postretirement benefit plans covering substantially all employees of these entities. Actuarial valuations are used in determining amounts recognized in the financial statements for certain retirement and other postretirement benefit plans (see "Note 4 to the Consolidated Financial Statements—Employee Benefit Plans"). Share-Based Payments 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. 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. Expected stock price volatility is based on the historical volatility of Mattel's stock for a period approximating the expected life. Expected dividend yield is based on the annual rate of dividends expected to be paid over the expected life. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues approximating the expected life 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 vesting 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. 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. Income Taxes Certain income and expense items are accounted for differently for financial reporting and income tax purposes. Deferred income tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, applying enacted statutory income tax rates in effect for the year in which the differences are expected to reverse. Mattel evaluates the realization of its deferred tax assets based on all available evidence and establishes a valuation allowance to reduce deferred tax assets when it is more likely than not that they will not be realized. 58 Mattel recognizes the financial statement effects of a tax position when it is more likely than not that, based on technical merits, the position will be sustained upon examination. The tax benefits of the position recognized in the financial statements are then measured based on the largest amount of benefit that is greater than 50% likely to be realized upon settlement with a taxing authority. In addition, Mattel recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. In the normal course of business, Mattel is regularly audited by U.S. federal, state, local, and foreign tax authorities. The ultimate settlement of any particular issue with the applicable taxing authority could have a material impact on Mattel's consolidated financial statements. Equity Method Investments Mattel utilizes the equity method when accounting for investments in which Mattel is able to exercise significant influence, but does not hold a controlling interest. Significant influence is generally presumed to exist when Mattel owns between 20% to 50% of the investee. Under the equity method of accounting, the initial equity investment is recorded at cost. The carrying amount of the investment is subsequently adjusted for Mattel's share of net income (loss) and distributions from the investee. 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. The joint venture was not significant for the periods presented. New Accounting Pronouncements Recently Adopted Accounting Pronouncements 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 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): Disaggregation of Income Statement Expenses for public business entities. ASU 2024-03 requires enhanced disclosures of each expense caption in the income statement to improve transparency and provide financial statement users with more detailed information about the nature, amount and timing of expenses impacting financial performance. 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. 59 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 Property, plant, and equipment, net included the following: December 31, 2025 December 31, 2024 (In thousands) Land $ 48,729 $ 42,584 Buildings 372,966 350,920 Machinery and equipment 615,125 605,311 Software 229,408 234,699 Tools, dies, and molds 471,651 476,551 Leasehold improvements 109,261 107,139 Construction in progress 93,337 62,130 1,940,477 1,879,334 Less: accumulated depreciation ( 1,350,462 ) ( 1,363,285 ) $ 590,015 $ 516,049 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. 60 Note 3— Goodwill and Identifiable Intangible Assets, Net Goodwill 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. Mattel's reportable segments are: (i) North America and (ii) International. The change in the carrying amount of goodwill by reporting unit for 2025 and 2024 is shown below. Brand-specific goodwill held by foreign subsidiaries is allocated to the North America reporting unit selling those brands, thereby causing a foreign currency translation impact. December 31, 2023 Currency Exchange Rate Impact December 31, 2024 Currency Exchange Rate Impact December 31, 2025 (In thousands) North America $ 733,487 $ ( 492 ) $ 732,995 $ 2,212 $ 735,207 International 443,454 ( 2,299 ) 441,155 6,236 447,391 American Girl 207,571 — 207,571 — 207,571 $ 1,384,512 $ ( 2,791 ) $ 1,381,721 $ 8,448 $ 1,390,169 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, 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. Identifiable Intangible Assets, Net Mattel's identifiable intangible assets, net consisted of the following: December 31, 2025 December 31, 2024 (In thousands) Identifiable intangible assets $ 808,830 $ 798,655 Less: accumulated amortization ( 471,725 ) ( 438,092 ) $ 337,105 $ 360,563 The estimated future amortization expense for the next five years is as follows: Amortization Expense (In thousands) 2026 $ 31,717 2027 31,139 2028 29,430 2029 27,690 2030 27,690 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. 61 Note 4— Employee Benefit Plans Mattel and certain of its subsidiaries have qualified and nonqualified retirement plans covering substantially all employees of these companies. These plans include defined benefit pension plans, defined contribution retirement plans, postretirement benefit plans, and deferred compensation and excess benefit plans. In addition, Mattel makes contributions to government-mandated retirement plans in countries outside the United States where its employees work. A summary of retirement plan expense, net is as follows: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Defined contribution retirement plans $ 42,953 $ 40,227 $ 37,784 Defined benefit pension plans 15,042 12,806 9,949 Deferred compensation and excess benefit plans 5,463 ( 1,537 ) 8,227 Postretirement benefit plans ( 2,144 ) ( 2,046 ) ( 2,084 ) $ 61,314 $ 49,450 $ 53,876 Defined Benefit Pension and Postretirement Benefit Plans Mattel provides defined benefit pension plans for eligible domestic employees, which are intended to comply with the requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"). Some of Mattel's foreign subsidiaries have defined benefit pension plans covering substantially all of their eligible employees. Mattel funds these plans in accordance with the terms of the plans and local statutory requirements, which differ for each of the countries in which the subsidiaries are located. Mattel also has unfunded postretirement health insurance plans covering certain eligible domestic employees. A summary of the components of Mattel's net periodic benefit cost/credit and other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the years ended December 31 is as follows: Defined Benefit Pension Plans Postretirement Benefit Plans 2025 2024 2023 2025 2024 2023 (In thousands) Net Periodic Benefit Cost (Credit): Service cost $ 3,400 $ 3,388 $ 3,371 $ 1 $ 2 $ 1 Interest cost 20,523 20,181 20,966 144 180 179 Expected return on plan assets ( 17,575 ) ( 18,738 ) ( 20,372 ) — — — Amortization of prior service cost (credit) 200 194 150 ( 1,997 ) ( 2,038 ) ( 2,038 ) Recognized actuarial loss (gain) 8,683 7,781 5,893 ( 292 ) ( 190 ) ( 226 ) 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 Income (Loss): Net actuarial (gain) loss $ ( 19,309 ) $ ( 5,086 ) $ 904 $ 32 $ ( 433 ) $ 311 Prior service cost — 131 1,169 — — — Amortization of prior service (cost) credit ( 200 ) ( 194 ) ( 150 ) 1,997 2,038 2,038 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 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). 62 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: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 Defined benefit pension plans: Discount rate 5.3 % 4.7 % 4.9 % Weighted-average rate of future compensation increases N/A N/A N/A Long-term rate of return on plan assets 6.2 % 6.2 % 5.0 % Postretirement benefit plans: Discount rate 5.3 % 4.7 % 4.9 % Annual increase in Medicare Part B premium 6.0 % 6.0 % 6.0 % Health care cost trend rate: Pre-65 7.6 % 7.9 % 7.0 % Post-65 7.8 % 8.1 % 7.0 % Ultimate cost trend rate: Pre-65 4.5 % 4.5 % 4.5 % Post-65 4.5 % 4.5 % 4.5 % Year that the rate reaches the ultimate cost trend rate: Pre-65 2031 2031 2029 Post-65 2031 2031 2029 Discount rates, weighted-average rates of future compensation increases, and long-term rates of return on plan assets for Mattel's foreign defined benefit pension plans differ from the assumptions used for Mattel's domestic defined benefit pension plans due to differences in local economic conditions in the locations where the non-U.S. plans are based. The rates shown in the preceding table are indicative of the weighted-average rates of all of Mattel's defined benefit pension plans given the relative insignificance of the foreign plans to the consolidated total. 63 Mattel used a measurement date of December 31, 2025 for its defined benefit pension and postretirement benefit plans. A summary of the changes in benefit obligation and plan assets is as follows: Defined Benefit Pension Plans Postretirement Benefit Plans December 31, 2025 December 31, 2024 December 31, 2025 December 31, 2024 (In thousands) Change in Benefit Obligation: Benefit obligation, beginning of year $ 423,877 $ 460,676 $ 3,082 $ 4,085 Service cost 3,400 3,388 1 2 Interest cost 20,523 20,181 144 180 Impact of currency exchange rate changes 8,259 ( 5,085 ) — — Actuarial loss (gain) 2,857 ( 20,525 ) ( 260 ) ( 623 ) Benefits paid ( 34,644 ) ( 34,294 ) ( 475 ) ( 562 ) Plan amendments — 61 — — Curtailments ( 177 ) ( 372 ) — — Settlements ( 305 ) — — — Other — ( 153 ) — — Benefit obligation, end of year $ 423,790 $ 423,877 $ 2,492 $ 3,082 Change in Plan Assets: Plan assets at fair value, beginning of year $ 306,279 $ 327,336 $ — $ — Actual return (loss) on plan assets 31,552 ( 3,336 ) — — Employer contributions 21,565 17,786 475 562 Impact of currency exchange rate changes 4,812 ( 1,102 ) — — Benefits paid ( 34,644 ) ( 34,294 ) ( 475 ) ( 562 ) Settlements ( 305 ) — — — Other — ( 111 ) — — Plan assets at fair value, end of year $ 329,259 $ 306,279 $ — $ — Net Amount Recognized in Consolidated Balance Sheets: Funded status, end of year $ ( 94,531 ) $ ( 117,598 ) $ ( 2,492 ) $ ( 3,082 ) 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 ) Amounts Recognized in Accumulated Other Comprehensive Loss (a): Net actuarial loss (gain) $ 181,917 $ 208,985 $ ( 1,967 ) $ ( 1,999 ) Prior service cost (credit) 2,167 2,012 — ( 1,997 ) $ 184,084 $ 210,997 $ ( 1,967 ) $ ( 3,996 ) (a) Amounts exclude related tax benefits of approximately $ 56 million and $ 68 million for December 31, 2025 and 2024, respectively, which are also included in accumulated other comprehensive loss. The accumulated benefit obligation differs from the projected benefit obligation in that it assumes future compensation levels will remain unchanged. 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 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. 64 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: December 31, 2025 December 31, 2024 (In thousands) Projected benefit obligation $ 363,669 $ 366,692 Accumulated benefit obligation 348,663 352,415 Fair value of plan assets 261,871 240,863 The assumptions used in determining the projected and accumulated benefit obligations of Mattel's domestic defined benefit pension and postretirement benefit plans are as follows: December 31, 2025 December 31, 2024 Defined benefit pension plans: Discount rate 5.0 % 5.3 % Cash balance interest crediting rate 4.0 % 4.0 % Weighted-average rate of future compensation increases N/A N/A Postretirement benefit plans: Discount rate 5.1 % 5.3 % Annual increase in Medicare Part B premium 6.0 % 6.0 % Health care cost trend rate: Pre-65 7.1 % 7.6 % Post-65 7.3 % 7.8 % Ultimate cost trend rate: Pre-65 4.5 % 4.5 % Post-65 4.5 % 4.5 % Year that the rate reaches the ultimate cost trend rate: Pre-65 2031 2031 Post-65 2031 2031 Discount rates, weighted-average rates of future compensation increases, and long-term rates of return on plan assets for Mattel's foreign defined benefit pension plans differ from the assumptions used for Mattel's domestic defined benefit pension plans due to differences in local economic conditions in the locations where the non-U.S. plans are based. The rates shown in the preceding table are indicative of the weighted-average rates of all of Mattel's defined benefit pension plans given the relative insignificance of the foreign plans to the consolidated total. At the end of each fiscal year, Mattel determines the weighted-average discount rate used to calculate the projected benefit obligation. The discount rate is an estimate of the current interest rate at which the benefit plan liabilities could be effectively settled at the end of the year. The discount rate also impacts the interest cost component of plan income or expense. As of December 31, 2025, Mattel determined the discount rate for its domestic defined benefit pension and postretirement benefit plans used in determining the projected and accumulated benefit obligations to be 5.0 %, as compared to 5.3 % as of December 31, 2024. In estimating this rate, Mattel reviews rates of return on high-quality corporate bond indices, which approximate the timing and amount of benefit payments. 65 The estimated future benefit payments for Mattel's defined benefit pension and postretirement benefit plans are as follows: Defined Benefit Pension Plans Postretirement Benefit Plans (In thousands) 2026 $ 37,786 $ 430 2027 34,026 440 2028 34,784 320 2029 34,117 320 2030 35,709 220 2031 - 2035 168,248 880 Mattel expects to make cash contributions totaling approximately $ 14 million to its defined benefit pension and postretirement benefit plans in 2026, substantially all of which will be for benefit payments for its underfunded plans. Mattel periodically commissions a study of the plans' assets and liabilities to determine an asset allocation that would best match expected cash flows from the plans' assets to expected benefit payments. 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 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. The U.S. equities are benchmarked against the S&P 500, and the non-U.S. equities are benchmarked against a combination of developed and emerging markets indices. Fixed income securities are long-duration bonds intended to closely match the duration of the liabilities and include U.S. government treasuries and agencies, corporate bonds from various industries, and mortgage-backed and asset-backed securities. 66 Mattel's defined benefit pension plan assets are measured and reported in the consolidated financial statements at fair value using inputs, which are more fully described in "Note 11 to the Consolidated Financial Statements—Fair Value Measurements," as follows: December 31, 2025 Level 1 Level 2 Level 3 Total (In thousands) U.S. government and U.S. government agency securities $ — $ 42,459 $ — $ 42,459 U.S. corporate debt instruments — 67,035 — 67,035 International corporate debt instruments — 9,897 — 9,897 Mutual funds (a) 135,853 Money market funds 6,563 — — 6,563 Other investments — 6,770 — 6,770 Insurance "buy-in" policy — — 55,489 55,489 Collective trust funds (a): U.S. equity securities 592 International equity securities 2,822 Global fixed income — Real Estate 1,779 Total $ 6,563 $ 126,161 $ 55,489 $ 329,259 December 31, 2024 Level 1 Level 2 Level 3 Total (In thousands) U.S. government and U.S. government agency securities $ — $ 62 $ — $ 62 U.S. corporate debt instruments — 60,751 — 60,751 International corporate debt instruments — 4,388 — 4,388 Mutual funds (a) 126,518 Money market funds 12,365 — — 12,365 Other investments — 7,303 — 7,303 Insurance "buy-in" policy — — 52,785 52,785 Collective trust funds (a): U.S. equity securities 577 International equity securities 2,588 Global fixed income 25,738 Real Estate 13,204 Total $ 12,365 $ 72,504 $ 52,785 $ 306,279 (a) These investments primarily consist of privately placed funds that are valued based on net asset value per share. 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. The fair value of U.S. government securities, U.S. 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. 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. the full benefits have been insured). The initial value of the asset associated with this policy was equal to the premium paid to secure the policy and is adjusted each reporting period for changes in interest rates, discount rates, and benefits paid. As the valuation of this asset is judgmental, and there are no observable inputs associated with the valuation, the buy-in contract is classified as Level 3 on the fair value hierarchy. 67 The following table provides a reconciliation of the beginning and ending balances of insurance buy-in policy contract assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3): Level 3 (in thousands) Balance at December 31, 2023 $ 60,727 Purchases, sales, and settlements ( 3,119 ) Changes in fair value ( 4,823 ) Balance at December 31, 2024 52,785 Purchases, sales, and settlements ( 3,039 ) Changes in fair value 5,743 Balance at December 31, 2025 $ 55,489 Mattel's domestic defined benefit pension plan assets are not directly invested in Mattel common stock. Mattel believes that the long-term rate of return on plan assets of 6.2 % as of December 31, 2025 is reasonable based on historical returns. Defined Contribution Retirement Plans Domestic employees are eligible to participate in a 401(k) savings plan, the Mattel, Inc. Personal Investment Plan (the "Plan"), sponsored by Mattel, which is a funded defined contribution plan intended to comply with ERISA's requirements. Contributions to the Plan include voluntary contributions by eligible employees and employer automatic and matching contributions by Mattel. The Plan allows employees to allocate both their voluntary contributions and their employer automatic and matching contributions to a variety of investment funds, including a fund that is invested in Mattel common stock (the "Mattel Stock Fund"). Employees are not required to allocate any of their Plan account balance to the Mattel Stock Fund, allowing employees to limit or eliminate their exposure to market changes in Mattel's stock price. Furthermore, the Plan limits the percentage of the employee's total account balance that may be allocated to the Mattel Stock Fund to 25 %. Employees may generally reallocate their account balances on a daily basis. However, pursuant to Mattel's insider trading policy, employees classified as insiders under Mattel's insider trading policy are limited to certain periods in which they may make allocations into or out of the Mattel Stock Fund. Certain non-U.S. employees participate in other defined contribution retirement plans with varying vesting and contribution provisions. Deferred Compensation and Excess Benefit Plans Mattel maintains a deferred compensation and 401(k) excess plan (the "DCP") that permits certain officers and key employees to elect to defer portions of their compensation. The participant DCP deferrals, together with certain contributions made by Mattel, earn various rates of return. The liability for these plans as of December 31, 2025 and 2024 was $ 60.9 million and $ 56.9 million, respectively, and is primarily included in other noncurrent liabilities in the consolidated balance sheets. Changes in the market value of the participant-selected investment options are recorded as retirement plan expense within other selling and administrative expenses in the consolidated statements of operations. Separately, Mattel has purchased group trust-owned life insurance contracts designed to assist in funding these benefits under the DCP. The cash surrender value of these policies, valued at $ 109.7 million and $ 97.1 million as of December 31, 2025 and 2024, respectively, are held in an irrevocable guarantor trust, the assets of which are subject to the claims of Mattel's creditors and are included in other noncurrent assets in the consolidated balance sheets. Annual Incentive Compensation Mattel has an annual incentive compensation plan under which officers and key employees may earn cash incentive compensation based on Mattel's and individual performance, subject to certain approvals of the Compensation Committee of the Board of Directors. Incentive compensation for 2025, 2024 and 2023 was $ 83.4 million, $ 150.9 million, and $ 137.8 million, respectively, for awards under the plan. 68 Note 5— Supplier Finance Program Mattel has an agreement with a third-party financial institution that allows certain participating suppliers the opportunity to voluntarily finance payment obligations of Mattel under a supplier finance program. Under this program, participating suppliers may accelerate the timing of collection of their receivables due from Mattel, prior to their scheduled due dates, by selling one or more of their receivables at a discounted price to the third-party financial institution. The range of payment terms Mattel negotiates with suppliers are consistent, regardless of whether the suppliers participate in the supplier finance program, and Mattel does not have any economic interest in any suppliers' decision to participate in the supplier finance program. Suppliers participating in the program are able to select which individual Mattel invoices they sell to the third-party financial institution. All Mattel payments of the full amounts due to participating suppliers are paid on the invoice due date based on the terms originally negotiated with the supplier, regardless of whether the individual invoice due to the supplier is sold to the third-party financial institution. Outstanding payment obligations due to suppliers under the supplier finance program were included in Mattel's accounts payable in the consolidated balance sheets. All payment activities related to the supplier finance program were presented within operating activities in the consolidated statements of cash flows. The following is a roll-forward of outstanding payment obligations due under the supplier finance program: December 31, 2025 December 31, 2024 (In thousands) Obligations outstanding at beginning of the year $ 69,203 $ 54,316 Invoices issued during the year 452,572 351,761 Invoices paid during the year ( 435,103 ) ( 336,874 ) Obligations outstanding at end of the year $ 86,672 $ 69,203 Note 6— Seasonal Financing and Debt Seasonal Financing On July 15, 2024, Mattel entered into a revolving credit agreement (the "Credit Agreement"), among Mattel, as the borrower, Bank of America, N.A., as administrative agent, and the other lenders and financial institutions party thereto, providing for $ 1.40 billion in aggregate principal amount of senior unsecured revolving credit facilities (the "Credit Facility"). The Credit Facility matures on July 15, 2029. In connection with the Credit Facility, Mattel terminated the commitments and satisfied all outstanding obligations under Mattel's prior revolving credit agreement, dated as of September 15, 2022 (as amended), among Mattel, as the borrower, Bank of America, N.A., as administrative agent, and the other lenders and financial institutions party thereto, which provided for a senior secured revolving credit facility in an aggregate principal amount of $ 1.40 billion. Borrowings under the Credit Facility bear interest at a floating rate, which for U.S. dollar-denominated loans can be, at Mattel's option, either (a) Term SOFR (as defined in the Credit Agreement), plus an applicable margin ranging from 0.875 % to 1.375 % per annum, or (b) Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.000 % to 0.375 % per annum, in each case, such applicable margins to be determined based on Mattel's debt rating. In addition to paying interest on the outstanding principal 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. As of December 31, 2025, no subsidiaries of Mattel were required to guarantee the Credit Facility. 69 The Credit Agreement requires the maintenance of (a) an interest coverage ratio of not less than 2.75 to 1.00 as of the end of each fiscal quarter and (b) a total leverage ratio as of the end of each fiscal quarter, not to exceed (x) 3.75 to 1.00 with respect to fiscal quarters ending on March 31, June 30, and December 31 of each year, and (y) 4.00 to 1.00 with respect to fiscal quarters ending on September 30 of each year. The total leverage ratio financial covenant is subject to a step-up to 4.25 to 1.00, with respect to fiscal quarters in which certain material acquisitions are consummated, and for a period of four fiscal quarters thereafter, and subject to certain customary exceptions. As of December 31, 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. As of December 31, 2025, foreign credit lines totaled approximately $ 18 million. Mattel expects to extend the majority of these credit lines throughout 2026. As of December 31, 2025, Mattel was in compliance with all covenants contained in the Credit Agreement. The Credit Agreement is a material agreement, and failure to comply with its covenants may result in an event of default under the terms of the Credit Facility. If Mattel were to default under the terms of the Credit Facility, its ability to meet its seasonal financing requirements could be adversely affected. Short-Term Borrowings As of December 31, 2025 and 2024, Mattel had no short-term borrowings outstanding. 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. 70 Mattel's long-term debt consists of the following: Interest Rate December 31, 2025 December 31, 2024 (In thousands) 2010 Senior Notes due October 2040 6.20 % $ 250,000 $ 250,000 2011 Senior Notes due November 2041 5.45 % 300,000 300,000 2019 Senior Notes due December 2027 5.875 % 600,000 600,000 2021 Senior Notes due April 2026 3.375 % — 600,000 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 ) 2,331,675 2,334,351 Less: current portion — — Total long-term debt $ 2,331,675 $ 2,334,351 Mattel's 2019 Senior Notes due 2027 were issued pursuant to an indenture dated November 20, 2019, and its 2021 Senior Notes due 2026 and 2021 Senior Notes due 2029 were issued pursuant to an indenture dated March 19, 2021. These indentures contain covenants that limit Mattel's (and some of its subsidiaries') ability to, among other things: (i) incur additional debt or issue certain preferred shares; (ii) pay dividends on or make other distributions in respect of their capital stock or make other restricted payments; (iii) make investments in unrestricted subsidiaries; (iv) create liens; (v) enter into certain sale/leaseback transactions; (vi) merge or consolidate, or sell, transfer or otherwise dispose of substantially all of their assets; and (vii) designate future guarantors. The indentures also provided that certain of these covenants would be suspended if Mattel achieved a debt rating of BBB-, Baa3, and/or BBB- (or higher) from any two of S&P, Moody's, and Fitch, respectively, and no event of default has occurred. In 2024, Fitch changed Mattel's credit rating from BB+ to BBB- with a stable outlook, S&P changed Mattel's credit rating from BBB- to BBB with a stable outlook, and Moody's maintained Mattel's credit rating of Baa3 with a stable outlook. 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. The aggregate principal amount of long-term debt maturing in the next five years and thereafter is as follows: 2010 Senior Notes 2011 Senior Notes 2019 Senior Notes 2021 Senior Notes 2025 Senior Notes Total (In thousands) 2026 $ — $ — $ — $ — $ — $ — 2027 — — 600,000 — — 600,000 2028 — — — — — — 2029 — — — 600,000 — 600,000 2030 — — — 600,000 600,000 Thereafter 250,000 300,000 — — — 550,000 $ 250,000 $ 300,000 $ 600,000 $ 600,000 $ 600,000 $ 2,350,000 71 Note 7— Stockholders' Equity Preference Stock Mattel is authorized to issue up to 20.0 million shares of $ 0.01 par value preference stock, of which none is currently outstanding. Preferred Stock Mattel is authorized to issue up to 3.0 million shares of $ 1.00 par value preferred stock, of which none is currently outstanding. Common Stock Repurchase Program 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. 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 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. Dividends During 2025, 2024, and 2023, Mattel did no t pay any dividends to holders of its common stock. The payment of dividends on common stock is at the discretion of the Board of Directors and is subject to customary limitations. 72 Accumulated Other Comprehensive Income (Loss) The following tables present changes in the accumulated balances for each component of other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications from accumulated other comprehensive income (loss): For the Year Ended December 31, 2025 Derivative Instruments Employee Benefit Plans Currency Translation Adjustments Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2024 $ 14,307 $ ( 139,663 ) $ ( 869,096 ) $ ( 994,452 ) Other comprehensive income (loss) before reclassifications ( 49,196 ) 8,575 121,458 80,837 Amounts reclassified from accumulated other comprehensive income (loss) 18,173 4,876 — 23,049 Net change in other comprehensive income (loss) ( 31,023 ) 13,451 121,458 103,886 Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2025 $ ( 16,716 ) $ ( 126,212 ) $ ( 747,638 ) $ ( 890,566 ) For the Year Ended December 31, 2024 Derivative Instruments Employee Benefit Plans Currency Translation Adjustments Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2023 $ ( 3,463 ) $ ( 142,916 ) $ ( 758,589 ) $ ( 904,968 ) Other comprehensive income (loss) before reclassifications 39,409 ( 819 ) ( 110,507 ) ( 71,917 ) Amounts reclassified from accumulated other comprehensive income (loss) ( 21,639 ) 4,072 — ( 17,567 ) Net change in other comprehensive income (loss) 17,770 3,253 ( 110,507 ) ( 89,484 ) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2024 $ 14,307 $ ( 139,663 ) $ ( 869,096 ) $ ( 994,452 ) For the Year Ended December 31, 2023 Derivative Instruments Employee Benefit Plans Currency Translation Adjustments Total (In thousands) Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2022 $ 22,732 $ ( 138,498 ) $ ( 795,712 ) $ ( 911,478 ) Other comprehensive income (loss) before reclassifications ( 15,903 ) ( 6,558 ) 37,123 14,662 Amounts reclassified from accumulated other comprehensive income (loss) ( 10,292 ) 2,140 — ( 8,152 ) Net change in other comprehensive income (loss) ( 26,195 ) ( 4,418 ) 37,123 6,510 Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2023 $ ( 3,463 ) $ ( 142,916 ) $ ( 758,589 ) $ ( 904,968 ) 73 The following table presents the classification and amount of the reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of operations: For the Year Ended Consolidated Statements of Operations Classification December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Derivative Instruments (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 $ ( 18,173 ) $ 21,639 $ 10,292 Net Income Employee Benefit Plans Amortization of prior service credit (a) $ 1,797 $ 1,844 $ 1,888 Other non-operating income/expense, net Recognized actuarial (loss) (a) ( 8,391 ) ( 7,591 ) ( 5,667 ) 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 ) Tax effect 1,529 1,675 1,580 Provision/benefit for income taxes $ ( 4,876 ) $ ( 4,072 ) $ ( 2,140 ) Net Income (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. 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. dollar. 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. dollar. During 2023, currency translation adjustments resulted in a net other comprehensive gain of $ 37.1 million, primarily due to the strengthening of the Mexican peso and British pound sterling against the U.S. dollar, partially offset by the weakening of the Russian ruble against the U.S. dollar. 74 Note 8— Leases The following table summarizes Mattel's right-of-use assets and liabilities and other information about its leases: December 31, 2025 December 31, 2024 (In thousands, except years and percentage information) Right-of-use assets, net $ 319,548 $ 326,394 Accrued liabilities 83,242 74,755 Noncurrent lease liabilities 268,351 278,174 Total lease liabilities $ 351,593 $ 352,929 Weighted-average remaining lease term 6.0 years 6.4 years Weighted-average discount rate 8.7 % 6.6 % Lease costs were as follows: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Lease costs (a) (b) $ 137,440 $ 132,899 $ 127,850 (a) Includes short-term and variable lease costs of approximately $ 30 million, $ 34 million, and $ 36 million for 2025, 2024, and 2023, respectively. Variable lease costs primarily relate to variable components of third-party logistics rental charges, common area maintenance charges, management fees, and taxes. (b) Contingent rental expense is recorded in the period in which the contingent event becomes probable. During 2025, 2024, and 2023, contingent rental expense was not material. Supplemental information related to leases were as follows: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Cash payments for leases $ 103,571 $ 95,827 $ 98,453 Right-of-use assets obtained in exchange for new and modified lease liabilities 67,852 97,809 71,375 The following table shows the future maturities of lease liabilities for leases in effect as of December 31, 2025: Years Ending December 31, Lease Liabilities (In thousands) 2026 $ 105,610 2027 76,830 2028 57,231 2029 44,951 2030 42,774 Thereafter 115,057 442,453 Less: imputed interest ( 90,860 ) $ 351,593 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. 75 Note 9— Share-Based Payments Mattel Stock Plans The 2010 Equity and Long-Term Compensation Plan was initially approved by Mattel's stockholders in May 2010, and most recently amended in May 2024 by Mattel's stockholders (the "Amended 2010 Plan"). Under the Amended 2010 Plan, Mattel has the ability to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, RSUs, performance RSUs ("performance awards"), dividend equivalent rights, and shares of common stock to officers, employees, non-employee directors, and consultants providing services to Mattel. The Amended 2010 Plan also contains provisions regarding grants of equity compensation to the non-employee members of the Board of Directors. The Amended 2010 Plan expires on March 21, 2034, except as to any grants then outstanding. Nonqualified stock options are granted with an exercise price not less than 100 % of the fair market value of Mattel's common stock on the date of grant, expire no later than 10 years from the date of grant, and 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. 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 (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. In the event of the involuntary termination of an employee that meets retirement provisions under the Amended 2010 Plan, or the death or disability of an employee, that occurs at least six months after the grant date, RSUs become fully vested. Performance awards granted under the Amended 2010 Plan vest upon achievement of performance conditions at a settlement date determined by the Compensation Committee of the Board of Directors, which occurs in the first quarter subsequent the performance cycle. In the event of a retirement 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 start date of the performance period, performance awards vest at the settlement date. 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. 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 $ 79.7 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. As of December 31, 2025, total unrecognized compensation cost related to unvested share-based payments totaled $ 114.0 million and is expected to be recognized over a weighted-average period of 2.1 years. Stock Options 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. 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. Expected stock price volatility is based on the historical volatility of Mattel's stock for a period approximating the expected life. Expected dividend yield is based on the annual rate of dividends expected to be paid over the expected life. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues approximating the expected life. 76 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: 2023 Expected life (in years) 6.6 Risk-free interest rate 3.5 % Volatility factor 44.4 % Dividend yield — % The following is a summary of stock option information and weighted-average exercise prices for Mattel's stock options: 2025 2024 2023 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price (In thousands, except weighted-average exercise prices) Outstanding at January 1 10,566 $ 19.69 11,742 $ 20.30 17,563 $ 21.73 Granted — — — — 579 18.00 Exercised ( 723 ) 13.55 ( 456 ) 13.92 ( 1,751 ) 15.27 Forfeited ( 18 ) 18.00 ( 48 ) 21.99 ( 146 ) 18.59 Canceled ( 1,803 ) 23.85 ( 672 ) 34.12 ( 4,503 ) 27.57 Outstanding at December 31 8,022 $ 19.31 10,566 $ 19.69 11,742 $ 20.30 Exercisable at December 31 7,875 $ 19.34 10,045 $ 19.68 10,544 $ 20.25 The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value of options exercised was approximately $ 5 million, $ 2 million, and $ 9 million, during 2025, 2024, and 2023, respectively. At December 31, 2025, options outstanding had an intrinsic value of approximately $ 24 million, with a weighted-average remaining life of 3.0 years. At December 31, 2025, options exercisable had an intrinsic value of approximately $ 23 million, with a weighted-average remaining life of 2.9 years. Mattel uses treasury shares purchased under its share repurchase program to satisfy stock option exercises. Cash received from stock options exercised, net of taxes during 2025 was approximately $ 10 million. 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 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 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. The expense for RSUs is evenly attributed to the periods in which the restrictions lapse, which is generally three years from the date of grant. 77 The following is a summary of RSU information and weighted-average grant-date fair values for Mattel's RSUs: 2025 2024 2023 Shares Weighted Average Grant-Date Fair Value Shares Weighted Average Grant-Date Fair Value Shares Weighted Average Grant-Date Fair Value (In thousands, except weighted-average grant-date fair values) Unvested at January 1 5,893 $ 18.94 5,174 $ 20.04 4,503 $ 21.00 Granted 3,863 17.57 3,859 18.50 3,479 18.24 Vested ( 2,868 ) 19.46 ( 2,388 ) 20.52 ( 2,186 ) 19.18 Forfeited ( 517 ) 18.17 ( 752 ) 19.22 ( 622 ) 19.91 Unvested at December 31 6,371 $ 17.94 5,893 $ 18.94 5,174 $ 20.04 At December 31, 2025, RSUs expected to vest totaled approximately 6 million shares, with a weighted-average grant-date fair value of $ 17.95 . The total grant-date fair value of RSUs vested during 2025, 2024, and 2023 was approximately $ 56 million, $ 49 million, and $ 42 million, respectively. Performance Awards 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, 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, 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. The grant also allows for a maximum potential earnout of 200 % of the targeted number of performance-based restricted stock units. 78 Mattel determines the fair value of the performance-related components of its performance awards based on the closing market price of Mattel's common stock on the date of grant and determines the fair value of the market-related components of its performance awards based on the Monte Carlo valuation methodology. 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. 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. The weighted-average grant-date fair value of performance awards granted during 2025, 2024, and 2023 was $ 26.43 , $ 21.97 , and $ 19.44 , respectively. The following weighted-average valuation assumptions were used in determining the fair value of the market-related components of performance awards granted: 2025 2024 2023 Risk-free interest rate 4.0 % 4.3 % 3.8 % Volatility factor 35.1 % 36.0 % 35.6 % Dividend yield — % — % — % The following is a summary of performance award information and weighted-average grant-date fair values for Mattel's performance awards: 2025 2024 2023 Shares Weighted- Average Grant-Date Fair Value Shares Weighted- Average Grant-Date Fair Value Shares Weighted- Average Grant-Date Fair Value (In thousands, except weighted-average grant-date fair values) Unvested at January 1 3,252 $ 22.55 2,440 $ 23.01 2,894 $ 18.77 Granted (a)(b) 473 25.11 1,776 21.98 1,954 16.42 Vested ( 271 ) 28.39 ( 765 ) 22.91 ( 2,189 ) 11.93 Forfeited ( 275 ) 21.65 ( 199 ) 21.73 ( 219 ) 18.96 Unvested at December 31 3,179 $ 22.51 3,252 $ 22.55 2,440 $ 23.01 (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. The aggregate number of shares subject to performance awards that would be issued if performance goals are achieved at the maximum number of shares are approximately 2 million, 4 million, and 2 million for 2025, 2024, and 2023, respectively. At December 31, 2025, performance awards expected to vest totaled approximately 2 million shares, with a weighted-average grant-date fair value of $ 21.41 . The total grant-date fair value of performance awards vested during 2025, 2024, and 2023 was approximately $ 8 million, $ 18 million, and $ 26 million, respectively. 79 Note 10— Earnings Per Share The following table reconciles basic and diluted earnings per common share: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands, except per share amounts) Basic: Net income $ 397,584 $ 541,817 $ 214,352 Weighted-average number of common shares 318,159 340,435 353,588 Basic net income per common share $ 1.25 $ 1.59 $ 0.61 Diluted: Net income $ 397,584 $ 541,817 $ 214,352 Weighted-average number of common shares 318,159 340,435 353,588 Dilutive share-based awards (a) 3,633 2,901 3,524 Weighted-average number of common and potential common shares 321,792 343,336 357,112 Diluted net income per common share $ 1.24 $ 1.58 $ 0.60 (a) Share-based awards totaling 5.9 million, 7.5 million, and 10.4 million were excluded from the calculation of diluted net income per common share for the years ended December 31, 2025, 2024, and 2023, respectively, because their effect would be antidilutive. Note 11— Fair Value Measurements 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: • Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. • 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 significant to the fair value of the assets or liabilities. 80 December 31, 2025 Level 1 Level 2 Level 3 Total (In thousands) Assets: Foreign currency forward exchange and other contracts (a) $ — $ 1,338 $ — $ 1,338 Liabilities: Foreign currency forward exchange and other contracts (a) $ — $ 16,333 $ — $ 16,333 December 31, 2024 Level 1 Level 2 Level 3 Total (In thousands) Assets: Foreign currency forward exchange and other contracts (a) $ — $ 22,031 $ — $ 22,031 Liabilities: Foreign currency forward exchange and other contracts (a) $ — $ 2,337 $ — $ 2,337 (a) The fair value of the foreign currency forward exchange and other contracts was based on dealer quotes of market forward rates and reflects the amount that Mattel would receive or pay at their maturity dates for contracts involving the same notional amounts, currencies, and maturity dates. Other Financial Instruments Mattel's financial instruments included cash and equivalents, accounts receivable and payable, accrued liabilities, short-term borrowings, and long-term debt. The fair values of these instruments, excluding long-term debt, approximate their carrying amounts because of their short-term nature. Cash and equivalents were classified as Level 1 and all other financial instruments were classified as Level 2 within the fair value hierarchy. The estimated fair value of Mattel's long-term debt was $ 2.32 billion (compared to a carrying amount of $ 2.35 billion) as of December 31, 2025 and $ 2.27 billion (compared to a carrying amount of $ 2.35 billion) as of December 31, 2024. The estimated fair values have been calculated based on broker quotes or rates for the same or similar instruments and were classified as Level 2 within the fair value hierarchy. Note 12— Derivative Instruments Mattel seeks to mitigate its exposure to foreign currency transaction risk by monitoring its foreign currency transaction exposure for the year and partially hedging such exposure using foreign currency forward exchange contracts. Mattel uses foreign currency forward exchange contracts as cash flow hedges primarily to hedge its purchases and sales of inventory denominated in foreign currencies. These contracts have maturity dates of up to 24 months. These derivative instruments have been designated as effective cash flow hedges, whereby the unsettled hedges are reported in Mattel's consolidated balance sheets at fair value, with changes in the fair value of the hedges reflected in other comprehensive income ("OCI"). Realized gains and losses for these contracts are recorded in the consolidated statements of operations in the period in which the inventory is sold to customers. Mattel uses foreign currency forward exchange contracts to hedge intercompany loans and advances denominated in foreign currencies. Due to the short-term nature of the contracts involved, Mattel does not use hedge accounting for these contracts, and as such, changes in fair value are recorded in the period of change in the consolidated statements of operations. Mattel utilizes derivative contracts to hedge certain purchases of commodities, which were not material. As of December 31, 2025 and 2024, Mattel held foreign currency forward exchange contracts and other commodity derivative instruments, with notional amounts of approximately $ 677 million and $ 628 million, respectively. 81 The following tables present Mattel's derivative assets and liabilities: Derivative Assets Balance Sheet Classification Fair Value December 31, 2025 December 31, 2024 (In thousands) Derivatives Designated as Hedging Instruments: Foreign currency forward exchange and other contracts Prepaid expenses and other current assets $ 854 $ 17,290 Foreign currency forward exchange and other contracts Other noncurrent assets 15 2,775 Total Derivatives Designated as Hedging Instruments $ 869 $ 20,065 Derivatives Not Designated as Hedging Instruments: Foreign currency forward exchange and other contracts Prepaid expenses and other current assets $ 469 $ 1,966 Total Derivatives Not Designated as Hedging Instruments $ 469 $ 1,966 $ 1,338 $ 22,031 Derivative Liabilities Balance Sheet Classification Fair Value December 31, 2025 December 31, 2024 (In thousands) Derivatives Designated as Hedging Instruments: Foreign currency forward exchange and other contracts Accrued liabilities $ 14,781 $ 1,370 Foreign currency forward exchange and other contracts Other noncurrent liabilities 1,257 65 Total Derivatives Designated as Hedging Instruments $ 16,038 $ 1,435 Derivatives Not Designated as Hedging Instruments: Foreign currency forward exchange and other contracts Accrued liabilities $ 295 $ 902 Total Derivatives Not Designated as Hedging Instruments $ 295 $ 902 $ 16,333 $ 2,337 The following tables present the classification and amount of gains and losses, net of tax, from derivatives reported in the consolidated statements of operations: Derivatives Designated As Hedging Instruments For the Year Ended Statements of Operations Classification December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Foreign Currency Forward Exchange Contracts: 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. 82 Derivatives Not Designated As Hedging Instruments For the Year Ended Statements of Operations Classification December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) 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 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 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. Current and future commitments for guaranteed payments reflect Mattel's focus on expanding its product lines through alliances with businesses in other industries. Licensing and similar agreements in effect at December 31, 2025 contain provisions for future minimum payments as shown in the following table: Licensing and Similar Agreements (In thousands) 2026 $ 100,011 2027 94,319 2028 70,751 2029 59,179 2030 12,520 Thereafter — $ 336,780 Royalty expense for 2025, 2024, and 2023 was $ 264.6 million, $ 244.1 million, and $ 249.8 million, respectively. 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 . Insurance Mattel has a wholly-owned subsidiary, Far West Insurance Company, Ltd. ("Far West"), that was established to insure Mattel's workers' compensation, general, automobile, product liability, and property risks. For the year ended December 31, 2025, Far West insured the first $ 1.0 million per occurrence for workers' compensation risks, the first $ 0.5 million per occurrence for general and automobile liability risks, the first $ 2.0 million per occurrence for product liability losses occurring prior to February 1, 2020, and the first $ 5.0 million per occurrence for product liability risks thereafter, and up to $ 1.0 million per occurrence for property risks. Various insurance companies that have an "A" or better AM Best rating at the time the policies are purchased reinsured Mattel's risk in excess of the amounts insured by Far West. Mattel's liability for workers' compensation, general, automobile, product liability, and property claims at December 31, 2025 and 2024 totaled $ 12.1 million and $ 12.0 million, respectively, and is primarily included in other noncurrent liabilities in the consolidated balance sheets. Loss reserves are accrued based on Mattel's estimate of the aggregate liability for claims incurred. 83 Litigation Litigation Related to Yellowstone do Brasil Ltda. In April 1999, Yellowstone do Brasil Ltda. (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. Mattel do Brasil filed its defenses to these claims and simultaneously presented a counterclaim for unpaid accounts receivable for goods supplied to Yellowstone. In April 2018, Mattel do Brasil entered into a settlement agreement to resolve this matter, but the settlement remains the subject of ongoing appeals. In October 2018, the Superior Court of Justice issued a final ruling in favor of Yellowstone on the merits of Yellowstone's claims. 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 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. In January 2020, Mattel obtained an injunction, staying Yellowstone's enforcement action pending resolution of Mattel's appeal to enforce the parties' April 2018 settlement. As of December 31, 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 Rock 'n Play Sleeper One products liability lawsuit filed in April 2023 remains pending against Fisher-Price, Inc. and Mattel, Inc. 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 A number of putative class action lawsuits were filed against Fisher-Price, Inc. and Mattel, Inc. 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 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, 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. 84 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. Segment Data Mattel's reportable segments are: (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 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, 2025 December 31, 2024 December 31, 2023 (In thousands) North America Segment: Net sales $ 3,001,070 $ 3,168,069 $ 3,210,436 Less: Cost of sales (a) 1,571,026 1,602,047 1,723,162 Advertising and promotion expenses 244,976 245,037 251,738 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 Less: Cost of sales (a) 1,180,177 1,137,859 1,233,055 Advertising and promotion expenses 277,024 262,284 273,048 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 Less: 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. 85 The following table is a reconciliation of segment income to income before income taxes for the periods indicated: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (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 (income), net 13,275 4,481 ( 2,293 ) Income before income taxes $ 459,489 $ 622,505 $ 465,404 (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. For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Depreciation and Amortization by Segment North America $ 91,641 $ 94,282 $ 97,456 International 56,417 54,611 59,876 148,058 148,893 157,332 Corporate and other 19,927 19,070 20,012 Depreciation and amortization $ 167,985 $ 167,963 $ 177,344 Segment assets were comprised of accounts receivable and inventories, net of applicable reserves and allowances. December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Assets by Segment North America $ 810,153 $ 757,552 $ 845,113 International 760,346 651,738 735,236 1,570,499 1,409,290 1,580,349 Corporate and other 90,247 95,620 73,087 Accounts receivable and inventories, net $ 1,660,746 $ 1,504,910 $ 1,653,436 86 Geographic Information 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. For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Net Sales by Geographic Area North America Region (a) $ 3,001,070 $ 3,168,069 $ 3,210,436 International Region EMEA 1,342,122 1,240,444 1,241,483 Latin America 602,544 608,218 658,018 Asia Pacific 401,887 362,815 331,282 Total International Region 2,346,553 2,211,477 2,230,783 Net sales $ 5,347,623 $ 5,379,546 $ 5,441,219 December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Long-Lived Assets North America Region (b) $ 423,383 $ 415,213 $ 337,527 International Region 486,180 427,230 441,187 Consolidated total $ 909,563 $ 842,443 $ 778,714 (a) Net sales for the North America Region included net sales attributable to the United States of $ 2.85 billion, $ 3.02 billion, and $ 3.05 billion for 2025, 2024, and 2023, respectively. (b) Long-lived assets for the North America Region included long-lived assets attributable to the United States of $ 406.7 million, $ 399.4 million, and $ 319.3 million for 2025, 2024, and 2023, respectively. Major Customers In 2025, net sales to Mattel's three largest customers accounted for 42 % of worldwide consolidated net sales. In 2025, net sales to Walmart, Target, and Amazon were $ 1.08 billion, $ 0.63 billion, and $ 0.52 billion, respectively. In 2024, net sales to Mattel's three largest customers accounted for 44 % of worldwide consolidated net sales. In 2024, net sales to Walmart, Target, and Amazon were $ 1.17 billion, $ 0.68 billion, and $ 0.51 billion, respectively. In 2023, net sales to Mattel's three largest customers accounted for 44 % of worldwide consolidated net sales. In 2023, net sales to Walmart, Target, and Amazon were $ 1.13 billion, $ 0.67 billion, and $ 0.60 billion, respectively. The North America segment sells products to each of Mattel's three largest customers. The International segment sells products to Walmart and Amazon. Note 15— Restructuring Charges Optimizing for Profitable Growth On February 7, 2024, Mattel announced the Optimizing for Profitable Growth program (the "OPG program"), a multi-year cost savings program that follows the Optimizing for Growth program (the "OFG program"), which concluded in the fourth quarter of 2023. The OPG program is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel's global supply chain, including its manufacturing footprint. The OPG program includes cost savings actions in connection with discontinuing production at a plant in China as previously announced in the third quarter of 2023, as well as savings from other previous actions taken in 2023 that were not recognized in the OFG program. 87 In connection with the OPG program, Mattel recorded severance and other restructuring costs in the following cost and expense categories within operating income in the consolidated statements of operations: For the Year Ended December 31, 2025 December 31, 2024 (In thousands) Cost of sales (a) $ 7,795 $ 4,275 Other selling and administrative expenses (b) 33,454 44,884 $ 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 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: Liability at December 31, 2024 Charges (a) Payments/Utilization Liability at December 31, 2025 (In thousands) Severance $ 32,661 $ 31,093 $ ( 47,164 ) $ 16,590 Other restructuring charges (a) 10 10,156 ( 10,099 ) 67 $ 32,671 $ 41,249 $ ( 57,263 ) $ 16,657 Liability at December 31, 2023 Charges (a) Payments/Utilization Liability at December 31, 2024 (In thousands) Severance $ 25,096 $ 45,875 $ ( 38,310 ) $ 32,661 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 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, 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. 88 Note 16— Income Taxes Consolidated pre-tax income consisted of the following: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) U.S. operations $ 179,094 $ 250,455 $ 150,361 Foreign operations 280,395 372,050 315,043 Consolidated pre-tax income excluding equity method investments $ 459,489 $ 622,505 $ 465,404 The provision for current and deferred income taxes consisted of the following: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Current Federal $ 8,559 $ 40,647 $ 8,256 State 18,205 5,888 4,669 Foreign 85,927 76,562 79,843 112,691 123,097 92,768 Deferred Federal 6,662 ( 15,645 ) ( 24,711 ) State ( 6,096 ) ( 2,463 ) 1,986 Foreign ( 23,483 ) 637 199,432 ( 22,917 ) ( 17,471 ) 176,707 Provision for income taxes $ 89,774 $ 105,626 $ 269,475 Mattel's deferred income tax assets (liabilities) were composed of the following: December 31, 2025 December 31, 2024 (In thousands) Tax credit carryforwards $ 17,853 $ 20,007 Research and development expenses 164,980 129,836 Net operating loss carryforwards 89,101 87,398 Interest expense 28,093 50,214 Allowances and reserves 108,594 96,264 Intangible assets 33,360 31,209 Deferred compensation 65,833 71,880 Postretirement benefits 15,944 19,138 Lease liabilities 85,704 83,301 Other 39,021 45,819 Gross deferred income tax assets 648,483 635,066 Intangible assets ( 172,409 ) ( 167,607 ) Right-of-use assets ( 77,563 ) ( 75,266 ) Other ( 25,111 ) ( 42,026 ) Gross deferred income tax liabilities ( 275,083 ) ( 284,899 ) Deferred income tax asset valuation allowances ( 100,454 ) ( 97,661 ) Net deferred income tax assets $ 272,946 $ 252,506 89 Net deferred income tax assets and other noncurrent liabilities were reported in the consolidated balance sheets as follows: December 31, 2025 December 31, 2024 (In thousands) Deferred income tax assets $ 312,913 $ 296,862 Other noncurrent liabilities ( 39,967 ) ( 44,356 ) $ 272,946 $ 252,506 As of December 31, 2025, Mattel had U.S. federal and foreign loss carryforwards totaling $ 359.6 million and U.S. 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. Mattel's loss and tax credit carryforwards expire in the following periods: Loss Carryforward Tax Credit Carryforward (In thousands) 2026–2030 $ 5,067 $ — Thereafter 42,376 1,494 No expiration date 312,169 16,163 $ 359,612 $ 17,657 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. 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. 90 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: Hong Kong 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 Tax credits: 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. 91 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 December 31, 2024 December 31, 2023 (In thousands) Provision at U.S. federal statutory rate $ 130,726 $ 97,735 Differences resulting from: Changes in valuation allowances 13,362 2,343 Foreign earnings taxed at different rates, including foreign losses without benefit ( 9,111 ) ( 12,480 ) Foreign-derived intangible income ( 8,006 ) ( 364 ) Tax related to pass-through income 5,125 3,869 Non deductible executive compensation 5,941 7,248 State and local taxes, net of U.S. federal benefit 7,711 8,480 Adjustments to previously accrued taxes 5,553 9,943 Tax on undistributed earnings of foreign subsidiaries 1,100 ( 1,000 ) Research and development tax credit ( 6,163 ) ( 7,248 ) Discrete tax impact related to intra-group IP transfer ( 34,762 ) 161,388 Other ( 5,850 ) ( 439 ) Provision for income taxes $ 105,626 $ 269,475 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. 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. A reconciliation of the reserve for unrecognized tax benefits is as follows: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Unrecognized tax benefits at January 1 $ 134,853 $ 129,970 $ 114,057 Increases for positions taken in current year 7,135 9,123 5,855 Increases for positions taken in a prior year 17,373 12,715 18,831 Decreases for positions taken in a prior year ( 2,074 ) ( 7,983 ) ( 4,841 ) Decreases for settlements with taxing authorities ( 498 ) ( 2,940 ) ( 273 ) Decreases for lapses in the applicable statute of limitations ( 3,320 ) ( 6,032 ) ( 3,659 ) Unrecognized tax benefits at December 31 $ 153,469 $ 134,853 $ 129,970 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. 92 In the normal course of business, Mattel is regularly audited by U.S. federal, state, local and foreign tax authorities. 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 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. The ultimate settlement of certain issues with the applicable taxing authority could have a material impact on Mattel's consolidated financial statements. 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 Foreign Hong Kong 17,870 Netherlands 15,840 Brazil 5,577 China 5,476 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. 93 Note 17— Supplemental Financial Information December 31, 2025 December 31, 2024 (In thousands) Inventories included the following: Finished goods $ 466,779 $ 406,977 Raw materials and work in process 96,363 94,755 $ 563,142 $ 501,732 Accrued liabilities included the following: Royalties $ 90,828 $ 80,754 Incentive compensation 90,685 157,669 Advertising and promotion 90,369 120,290 Lease liabilities 83,242 74,755 For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (In thousands) Currency transaction (losses) gains included in: Operating income $ ( 4,476 ) $ ( 15,691 ) $ ( 14,921 ) Other non-operating income/expense, net ( 7,929 ) 5,073 1,545 Currency transaction losses, net $ ( 12,405 ) $ ( 10,618 ) $ ( 13,376 ) Other selling and administrative expenses included the following: 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. 94 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. U.S. 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. 95 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.