UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________________

FORM 10-Q

___________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2023~~2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission File Number 001-05647

___________________________________________________________

MATTEL, INC.

(Exact name of registrant as specified in its charter)

___________________________________________________________


Delaware						95-1567322
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

333 Continental Blvd.		90245-5012
El Segundo,	CA
(Address of principal executive offices)		(Zip Code)

(310) 252-2000

(Registrant's telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

__________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $1.00 per share

MAT

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares outstanding of registrant's common stock, $1.00 par value, as of ~~October~~April 2515, ~~2023~~2024: ~~353,232,620~~344.1 million shares

MATTEL, INC. AND SUBSIDIARIES

		Page
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations	5
	Consolidated Statements of Comprehensive Income (Loss)	6
	Consolidated Statements of Cash Flows	7
	Consolidated Statements of Stockholders' Equity	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2726
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4537
Item 4.	Controls and Procedures	4638
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	4739
Item 1A.	Risk Factors	4739
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4739
Item 3.	Defaults Upon Senior Securities	4739
Item 4.	Mine Safety Disclosures	4739
Item 5.	Other Information	4739
Item 6.	Exhibits	4840
	Signature	4941

(Cautionary Note Regarding Forward-Looking Statements)

Mattel cautions investors that this Quarterly Report on Form 10-Q includes forward-looking statements, which are statements that relate to the future and are, by their nature, uncertain. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. The use of words such as "anticipates," "expects," "intends," "plans," "projects," "looks forward," "confident that," "believes," and "targeted," among others, generally identify forward-looking statements. These forward-looking statements are based on currently available operating, financial, economic, and other information and assumptions, and are subject to a number of significant risks and uncertainties. A variety of factors, many of which are beyond Mattel's control, could cause actual future results to differ materially from those projected in the forward-looking statements. Specific factors that might cause such a difference include, but are not limited to: (i) Mattel's ability to design, develop, produce, manufacture, source, ship, and distribute products on a timely and cost-effective basis; (ii) sufficient interest in and demand for the products and entertainment Mattel offers by retail customers and consumers to profitably recover Mattel's costs; (iii) downturns in economic conditions affecting Mattel's markets which can negatively impact retail customers and consumers, and which can result in lower employment levels and lower consumer disposable income and spending, including lower spending on purchases of Mattel's products; (iv) other factors which can lower discretionary consumer spending, such as higher costs for fuel and food, drops in the value of homes or other consumer assets, and high levels of consumer debt; (v) potential difficulties or delays Mattel may experience in implementing cost savings and efficiency enhancing initiatives; (vi) other economic and public health conditions or regulatory changes in the markets in which Mattel and its customers and suppliers operate, which could create delays or increase Mattel's costs, such as higher commodity prices, labor costs or transportation costs, or outbreaks of disease; (vii) the effect of inflation on Mattel's business, including cost inflation in supply chain inputs and increased labor costs, as well as pricing actions taken in an effort to mitigate the effects of inflation; (viii) currency fluctuations, including movements in foreign exchange rates, which can lower Mattel's net revenues and earnings, and significantly impact Mattel's costs; (ix) the concentration of Mattel's customers, potentially increasing the negative impact to Mattel of difficulties experienced by any of Mattel's customers, such as bankruptcies or liquidations or a general lack of success, or changes in their purchasing or selling patterns; (x) the inventory policies of Mattel's retail customers, as well as the concentration of Mattel's revenues in the second half of the year, which coupled with reliance by retailers on quick response inventory management techniques, increases the risk of underproduction, overproduction, and shipping delays; (xi) legal, reputational, and financial risks related to security breaches or cyberattacks; (xii) work disruptions, including as a result of supply chain disruption such as plant or port closures, which may impact Mattel's ability to manufacture or deliver product in a timely and cost-effective manner; (xiii) the impact of competition on revenues, margins, and other aspects of Mattel's business, including the ability to offer products that consumers choose to buy instead of competitive products, the ability to secure, maintain, and renew popular licenses from licensors of entertainment properties, and the ability to attract and retain talented employees and adapt to evolving workplace models; (xiv) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xv) changes in laws or regulations in the United States and/or in other major markets, such as China, in which Mattel operates, including, without limitation, with respect to taxes, tariffs, trade policies, or product safety, or sustainability, which may increase Mattel's product costs and other costs of doing business, and reduce Mattel's earnings and liquidity; (xvi) business disruptions or other unforeseen impacts due to economic instability, political instability, civil unrest, armed hostilities (including the impact of the war in Ukraine and geopolitical developments in the Middle East), natural and man-made disasters, pandemics or other public health crises, ~~such as the COVID-19 pandemic,~~ or other catastrophic events; (xvii) failure to realize the planned benefits from any investments or acquisitions made by Mattel; (xviii) the impact of other market conditions or third -party actions or approvals, including those that result in any significant failure, inadequacy, or interruption from vendors or outsourcers, which could reduce demand for Mattel's products, delay or increase the cost of implementation of Mattel's programs, or alter Mattel's actions and reduce actual results; (xix) changes in financing markets or the inability of Mattel to obtain financing on attractive terms; (xx) the impact of litigation, arbitration, or regulatory decisions or settlement actions; (xxi) Mattel's ability to navigate regulatory frameworks in connection with new areas of investment, product development, or other business activities, such as artificial intelligence, non-fungible tokens, and cryptocurrency; (xxii) an inability to remediate the material weakness in Mattel's internal control over financial reporting, or additional material weaknesses or other deficiencies in the future or the failure to maintain an effective system of internal control; and (~~xxii~~xxiii) other risks and uncertainties detailed in Part I, Item 1A "Risk Factors" in Mattel's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023 (the "~~2022~~2023 Annual Report on Form 10-K"), and subsequent periodic filings. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so, except as required by law.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30,2023

September 30,2022

December 31,2022

March 31,2024

March 31,2023

December 31,2023

(Unaudited; in thousands, except share data)

ASSETS

Current Assets

Cash and equivalents

~~455~~1,~~735~~130,223

~~348~~461,~~970~~717

~~761~~1,~~235~~261,363

Accounts receivable, net of allowances for credit losses of $12.5 million, $12.5 million, and $27.6 million, respectively

1,571,047

1,381,534

860,221

Accounts receivable, net of allowances for credit losses of $8.7 million, $12.9 million, and $8.8 million, respectively

673,270

673,844

1,081,827

Inventories

~~790~~669,~~521~~335

1961,~~083,769~~048

~~894~~571,~~064~~609

Prepaid expenses and other current assets

~~224~~262,~~796~~668

~~268~~269,~~886~~723

~~213~~207,~~515~~548

Total current assets

32,~~042~~735,~~099~~496

32,~~083~~366,~~159~~332

23,~~729~~122,~~035~~347

Noncurrent Assets

Property, plant, and equipment, net

~~457~~452,~~202~~220

~~444~~471,~~442~~216

~~469~~465,~~132~~523

Right-of-use assets, net

~~286~~308,~~019~~456

~~323~~304,~~490~~496

~~318~~313,~~680~~191

Goodwill

1,~~380~~383,~~042~~757

1,~~370~~380,~~986~~992

1,~~378~~384,~~551~~512

Deferred income tax assets

~~230~~304,~~415~~240

~~439~~483,~~965~~562

~~471~~299,~~672~~157

Intangible assets, net

~~397~~384,~~821~~306

~~426~~417,~~283~~919

~~425~~393,~~100~~039

Other noncurrent assets

~~450~~496,~~956~~897

~~379~~407,~~850~~221

~~385~~458,~~491~~053

Total Assets

6,~~244~~065,~~554~~372

65,~~468~~831,~~175~~738

6,~~177~~435,~~661~~822

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Current portion of long-term debt

—

250,000

—

Accounts payable

315,346

314,140

442,286

Accounts payable

450,109

495,221

471,475

Accrued liabilities

768,840

641,326

866,283

Accrued liabilities

803,081

780,522

678,689

Income taxes payable

14,925

13,496

33,911

Income taxes payable

51,366

50,366

37,584

Total current liabilities

1,099,111

968,962

1,342,480

Total current liabilities

1,304,556

1,576,109

1,187,748

Noncurrent Liabilities

Long-term debt

2,~~328~~331,~~897~~078

2,~~324~~326,~~459~~731

2,~~325~~329,~~644~~986

Noncurrent lease liabilities

~~234~~256,~~699~~200

~~279~~257,~~525~~415

~~271~~259,~~418~~548

Other noncurrent liabilities

~~340~~353,~~936~~671

~~320~~340,~~618~~969

~~336~~354,~~582~~595

Total noncurrent liabilities

2,~~904~~940,~~532~~949

2,~~924~~925,~~602~~115

2,~~933~~944,~~644~~129

Stockholders' Equity

Common stock $1.00 par value, 1.0 billion shares authorized; 441.4 million shares issued

441,369

Common stock $1.00 par value, 1.00 billion shares authorized; 441.4 million shares issued

441,369

Additional paid-in capital

1,~~745~~772,~~170~~154

1,~~795~~772,~~720~~796

1,~~808~~774,~~308~~911

Treasury stock at cost: 88.1 million shares, 87.0 million shares, and 87.0 million shares, respectively

(2,131,676)

(2,130,163)

(2,129,639)

Treasury stock at cost: 97.3 million shares, 87.4 million shares, and 92.9 million shares, respectively

(2,306,258)

(2,129,424)

(2,224,160)

Retained earnings

23,~~914~~033,~~744~~780

2,~~831~~741,~~572~~238

23,~~847~~062,~~709~~061

Accumulated other comprehensive loss

(~~934~~915,~~141~~733)

(~~971~~888,~~034~~318)

(~~911~~904,~~478~~968)

Total stockholders' equity

2,~~035~~025,~~466~~312

1,~~967~~937,~~464~~661

2,~~056~~149,~~269~~213

Total Liabilities and Stockholders' Equity

6,~~244~~065,~~554~~372

65,~~468~~831,~~175~~738

6,~~177~~435,~~661~~822

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	~~For the Three Months Ended~~		For the Three Months Ended		~~For the Nine Months Ended~~
	September 30,2023		September 30,2022		September 30,2023		September 30,2022
					March 31,2024		March 31,2023
	~~(Unaudited; in thousands, except per share amounts)~~				(Unaudited; in thousands, except per share amounts)
Net Sales	$	~~1,918,788~~	$	~~1,755,780~~	$	3809,~~820,531~~508	$	4814,~~032,767~~579
Cost of sales	~~940,854~~		~~908,902~~		2420,~~027,004~~638		2488,~~154,076~~792
Gross Profit	~~977,934~~		~~846,878~~		1388,~~793,527~~870		1325,~~878,691~~787
Advertising and promotion expenses	~~124,265~~		~~127,600~~		~~290~~71,~~337~~441		~~291~~76,~~545~~047
Other selling and administrative expenses	~~379,811~~		~~327,906~~		1352,~~081,594~~947		~~990~~364,~~627~~777
Operating income	473,858		391,372		421,596		596,519
Operating Loss					(35,518)		(115,037)
Interest expense	~~30,716~~		~~33,870~~		9230,~~486~~059		9931,~~730~~128
Interest (income)	~~(4,569)~~		~~(1,903)~~		(1517,~~409~~282)		(56,~~064~~519)
Other non-operating (income) expense, net	(2,391)		(4,293)		(5,976)		11,966
Other non-operating expense (income), net					5,613		(1,439)
Income before income taxes	450,102		363,698		350,495		489,887
Loss Before Income Taxes					(53,908)		(138,207)
Provision for income taxes	309,342		80,035		296,767		130,530
Benefit from income taxes					(20,790)		(26,999)
(Income) from equity method investments	~~(5,559)~~		~~(6,219)~~		(134,~~306~~837)		(184,~~419~~737)
Net Income	$	146,319	$	289,882	$	67,034	$	377,776
Net Loss					$	(28,281)	$	(106,471)
Net Income Per Common Share - Basic	$	0.41	$	0.82	$	0.19	$	1.07
Net Loss Per Common Share - Basic					$	(0.08)	$	(0.30)
Weighted-average number of common shares	~~354,139~~		~~354,471~~		~~354~~346,~~559~~888		~~353~~354,~~394~~942
Net Income Per Common Share - Diluted	$	0.41	$	0.80	$	0.19	$	1.05
Net Loss Per Common Share - Diluted					$	(0.08)	$	(0.30)
Weighted-average number of common and potential common shares	~~357,474~~		~~360,229~~		~~357~~346,~~977~~888		~~359~~354,~~731~~942

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	For the Three Months Ended				~~For the Nine Months Ended~~
	September 30,2023		September 30,2022		September 30,2023		September 30,2022
	March 31,2024		March 31,2023
	(Unaudited; in thousands)
Net Income	$	146,319	$	289,882	$	67,034	$	377,776
Net Loss	$	(28,281)	$	(106,471)
Other Comprehensive Loss, Net of Tax
Other Comprehensive (Loss) Income, Net of Tax
Currency translation adjustments	(3917,~~273~~946)		~~(72~~28,~~643)~~100		~~(8,992)~~		~~(78,212)~~
Employee benefit plan adjustments	~~664~~2,198		~~1,354~~727		~~2,120~~		~~4,065~~
Available-for-sale security adjustments	—		—		—		3,646
Net unrealized gains (losses) on derivative instruments:
Net unrealized gains (losses) on derivative instruments:
Unrealized holding gains (losses)	13,224		(1,772)
Unrealized holding gains (losses)	7,521		24,715		(1,729)		58,604
Reclassification adjustments included in net loss	(8,241)		(3,895)
Reclassification adjustments included in net income	(5,801)		(11,312)		(14,062)		(20,667)
	4,983		(5,667)
	1,720		13,403		(15,791)		37,937
Other Comprehensive (Loss) Income, Net of Tax	(10,765)		23,160
Other Comprehensive Loss, Net of Tax	(36,889)		(57,886)		(22,663)		(32,564)
Comprehensive Loss	$	(39,046)	$	(83,311)
Comprehensive Income	$	109,430	$	231,996	$	44,371	$	345,212

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Nine Months Ended
	For the Three Months Ended
	September 30,2023		September 30,2022
	March 31,2024		March 31,2023
	(Unaudited; in thousands)
Cash Flows From Operating Activities:
Net income	$	67,034	$	377,776
Net loss	$	(28,281)	$	(106,471)
Adjustments to reconcile net income to net cash flows used for operating activities:
Adjustments to reconcile net loss to net cash flows provided by (used for) operating activities:
Depreciation	~~104~~34,~~042~~513		~~108~~33,~~450~~734
Amortization	28,570		28,304
Amortization of intangible assets	7,823		9,461
Share-based compensation	5217,~~425~~929		5516,~~941~~943
Bad debt expense	178		7,029
Inventory obsolescence	16,069		24,926
Inventory obsolescence	42,245		35,410
Deferred income taxes	(5,157)		(9,854)
Deferred income taxes	26,283		82,673
Income from equity method investments	(4,837)		(4,737)
Income from equity method investments	(13,306)		(18,419)
Content assets amortization	14,239		12,408
Loss (gain) on sale of assets, net	1,408		(15,960)
Valuation allowance on foreign deferred tax assets	212,379		—
Changes in assets and liabilities:
Accounts receivable, net	~~(714~~398,~~198)~~921		~~(348~~192,~~229)~~853
Inventories	42(123,~~701~~718)		(~~401~~83,~~845~~162)
Prepaid expenses and other current assets	(447,~~768~~835)		(3857,~~985~~844)
Accounts payable, accrued liabilities, and income taxes payable	~~125~~(226,~~775~~543)		(~~126~~207,~~552~~475)
Other, net	(50,409)		(20,360)
Content assets spend	(7,161)		(12,423)
Net cash flows used for operating activities	(79,641)		(274,767)
Other, net	(10,467)		(14,739)
Net cash flows provided by (used for) operating activities	35,495		(206,380)
Cash Flows From Investing Activities:
Purchases of tools, dies, and molds	(5615,~~741~~759)		(5719,~~955~~924)
Purchases of other property, plant, and equipment	(6014,~~797~~713)		(6923,~~373~~068)
Proceeds from foreign currency forward exchange contracts, net	201,~~021~~829		31,~~247~~443
Proceeds from sale of assets	6,336		25,839
Other, net	209		(962)
Other, net	(2,731)		749
Net cash flows used for investing activities	(28,434)		(42,511)
Net cash flows used for investing activities	(93,912)		(97,493)
Cash Flows From Financing Activities:
Share repurchases	(~~109~~99,~~860~~999)		—(33,986)
Tax withholdings for share-based compensation	(326,~~822~~165)		(3020,~~327~~299)
Proceeds from stock option exercises	264,~~014~~299		272,~~658~~045
Other, net	(229,~~783~~463)		(~~6,795~~969)
Net cash flows used for financing activities	(~~119~~131,~~451~~328)		(953,~~464~~209)
Effect of Currency Exchange Rate Changes on Cash and Equivalents	(126,~~496~~873)		~~(668)~~2,582
Decrease in Cash and Equivalents	(~~305~~131,~~500~~140)		(~~382~~299,~~392~~518)
Cash and Equivalents at Beginning of Period	~~761~~1,~~235~~261,363		~~731~~761,~~362~~235
Cash and Equivalents at End of Period	$	~~455~~1,~~735~~130,223	$	~~348~~461,~~970~~717

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

	CommonStock		AdditionalPaid-InCapital		TreasuryStock		RetainedEarnings		AccumulatedOtherComprehensiveLoss		TotalStockholders'Equity
	(Unaudited; in thousands)
Balance, December 31, 2023	$	441,369	$	1,774,911	$	(2,224,160)	$	3,062,061	$	(904,968)	$	2,149,213
Net loss	—		—		—		(28,281)		—		(28,281)
Other comprehensive loss, net of tax	—		—		—		—		(10,765)		(10,765)
Share repurchases	—		—		(100,758)		—		—		(100,758)
Issuance of treasury stock for stock option exercises	—		(2,754)		7,053		—		—		4,299
Issuance of treasury stock for restricted stock units vesting	—		(17,932)		11,607		—		—		(6,325)
Share-based compensation	—		17,929		—		—		—		17,929
Balance, March 31, 2024	$	441,369	$	1,772,154	$	(2,306,258)	$	3,033,780	$	(915,733)	$	2,025,312
	CommonStock		AdditionalPaid-InCapital		TreasuryStock		RetainedEarnings		AccumulatedOtherComprehensiveLoss		TotalStockholders'Equity
	(Unaudited; in thousands)
Balance, December 31, 2022	$	441,369	$	1,808,308	$	(2,129,639)	$	2,847,709	$	(911,478)	$	2,056,269
Net loss	—		—		—		(106,471)		—		(106,471)
Other comprehensive income, net of tax	—		—		—		—		23,160		23,160
Share repurchases	—		—		(33,986)		—		—		(33,986)
Issuance of treasury stock for stock option exercises	—		(1,144)		3,189		—		—		2,045
Issuance of treasury stock for restricted stock units vesting	—		(51,311)		31,012		—		—		(20,299)
Share-based compensation	—		16,943		—		—		—		16,943
Balance, March 31, 2023	$	441,369	$	1,772,796	$	(2,129,424)	$	2,741,238	$	(888,318)	$	1,937,661
Net income	—		—		—		27,187		—		27,187
Other comprehensive loss, net of tax	—		—		—		—		(8,934)		(8,934)
Share repurchases	—		—		(15,875)		—		—		(15,875)
Issuance of treasury stock for stock option exercises	—		(4,075)		10,670		—		—		6,595
Issuance of treasury stock for restricted stock units vesting	—		(18,079)		13,698		—		—		(4,381)
Deferred compensation	—		(36)		166		—		—		130
Share-based compensation	—		19,991		—		—		—		19,991
Balance, June 30, 2023	$	441,369	$	1,770,597	$	(2,120,765)	$	2,768,425	$	(897,252)	$	1,962,374
Net income	—		—		—		146,319		—		146,319
Other comprehensive loss, net of tax	—		—		—		—		(36,889)		(36,889)
Share repurchases	—		—		(60,000)		—		—		(60,000)
Issuance of treasury stock for stock option exercises	—		(10,095)		27,469		—		—		17,374
Issuance of treasury stock for restricted stock units vesting	—		(30,824)		21,620		—		—		(9,204)
Share-based compensation	—		15,492		—		—		—		15,492
Balance, September 30, 2023	$	441,369	$	1,745,170	$	(2,131,676)	$	2,914,744	$	(934,141)	$	2,035,466
	CommonStock		AdditionalPaid-InCapital		TreasuryStock		RetainedEarnings		AccumulatedOtherComprehensiveLoss		TotalStockholders'Equity
	(Unaudited; in thousands)
Balance, December 31, 2021	$	441,369	$	1,832,144	$	(2,219,990)	$	2,456,597	$	(941,271)	$	1,568,849
Net income	—		—		—		21,454		—		21,454
Other comprehensive income, net of tax	—		—		—		—		12,061		12,061
Issuance of treasury stock for stock option exercises	—		(3,183)		17,118		—		—		13,935
Issuance of treasury stock for restricted stock units vesting	—		(43,523)		25,968		—		—		(17,555)
Share-based compensation	—		19,323		—		—		—		19,323
Adjustment of accumulated other comprehensive loss to retained earnings for available-for-sale securities	—		—		—		(2,801)		2,801		—
Balance, March 31, 2022	$	441,369	$	1,804,761	$	(2,176,904)	$	2,475,250	$	(926,409)	$	1,618,067
Net income	—		—		—		66,440		—		66,440
Other comprehensive income, net of tax	—		—		—		—		13,261		13,261
Issuance of treasury stock for stock option exercises	—		(2,792)		15,139		—		—		12,347
Issuance of treasury stock for restricted stock units vesting	—		(3,997)		3,234		—		—		(763)
Deferred compensation	—		(12)		143		—		—		131
Share-based compensation	—		18,566		—		—		—		18,566
Balance, June 30, 2022	$	441,369	$	1,816,526	$	(2,158,388)	$	2,541,690	$	(913,148)	$	1,728,049
Net income	—		—		—		289,882		—		289,882
Other comprehensive loss, net of tax	—		—		—		—		(57,886)		(57,886)
Issuance of treasury stock for stock option exercises	—		(998)		2,374		—		—		1,376
Issuance of treasury stock for restricted stock units vesting	—		(37,861)		25,851		—		—		(12,010)
Share-based compensation	—		18,053		—		—		—		18,053
Balance, September 30, 2022	$	441,369	$	1,795,720	$	(2,130,163)	$	2,831,572	$	(971,034)	$	1,967,464

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

MATTEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments, consisting of only those of a normal recurring nature, considered necessary for a fair statement of the financial position and interim results of Mattel, Inc. and its subsidiaries ("Mattel") as of and for the periods presented have been included.

The December 31, ~~2022~~2023 balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the consolidated financial statements do not include all of the annual disclosures required by GAAP. As Mattel's business is seasonal, results for interim periods are not necessarily indicative of those that may be expected for a full year. The financial information included herein should be read in conjunction with Mattel's consolidated financial statements and related notes in the ~~2022~~2023 Annual Report on Form 10-K.

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

2. Accounts Receivable, Net

Mattel estimates current expected credit losses based on collection history and management's assessment of the current economic trends, business environment, customers' financial condition, and accounts receivable aging that may impact the level of future credit losses. Accounts receivable were net of allowances for credit losses of $128.57 million, $12.59 million, and $278.68 million as of ~~September~~March 3031, ~~2023~~2024, ~~September~~March 3031, ~~2022~~2023, and December 31, ~~2022~~2023, respectively.

3. Inventories

Inventories included the following:

September 30,2023

September 30,2022

December 31,2022

March 31,2024

March 31,2023

December 31,2023

(In thousands)

Raw materials and work in process

~~102~~97,~~582~~116

~~163~~127,~~962~~712

~~139~~92,~~212~~902

Finished goods

~~687~~572,~~939~~219

~~919~~833,~~807~~336

~~754~~478,~~852~~707

~~790~~669,~~521~~335

1961,~~083,769~~048

~~894~~571,~~064~~609

4. Property, Plant, and Equipment, Net

Property, plant, and equipment, net included the following:

September 30,2023

September 30,2022

December 31,2022

March 31,2024

March 31,2023

December 31,2023

(In thousands)

Land

19,~~566~~590

1918,~~198~~078

1819,~~045~~838

Buildings

~~311~~312,~~030~~034

~~303~~305,~~862~~649

~~303~~313,~~827~~750

Machinery and equipment

623,~~687~~141

~~711~~668,~~000~~965

~~654~~628,~~437~~089

Software

~~232~~233,~~995~~655

~~343~~337,~~172~~162

~~336~~233,~~716~~224

Tools, dies, and molds

~~494~~495,~~070~~158

~~526~~506,~~639~~325

~~510~~488,~~398~~170

Leasehold improvements

~~123~~119,~~240~~777

~~105~~112,~~223~~128

~~104~~121,~~135~~571

Construction in progress

39,~~533~~266

6180,~~938~~376

7948,~~742~~483

1,844,121

2,071,032

2,007,300

1,842,621

2,028,683

1,853,125

Less: accumulated depreciation

(1,~~386~~390,~~919~~401)

(1,~~626~~557,~~590~~467)

(1,~~538~~387,~~168~~602)

~~457~~452,~~202~~220

~~444~~471,~~442~~216

~~469~~465,~~132~~523

During the second quarter of 2022, Mattel sold the American Girl corporate office and distribution center located in Middleton, Wisconsin, which included land and buildings. Mattel received net proceeds from the sale of $23.8 million, which resulted in a pre-tax gain of $15.2 million, recorded in other selling and administrative expenses in the consolidated statement of operations.

5. Goodwill and Intangible Assets, Net

Goodwill

Goodwill is allocated to various reporting units, ~~which are at the operating segment level,~~ for the purpose of evaluating whether goodwill is impaired. Mattel's reporting units are: (i) North America; (ii) ~~International~~ American Girl; and (iii) ~~American Girl~~ International. Components of the ~~operating~~reporting ~~segments~~units have been aggregated into a single reporting ~~unit~~units aswhere 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.

In ~~the third quarter of 2023, Mattel performed its annual impairment test and determined that goodwill was not impaired.~~ The change in the carrying amount of goodwill by reporting unit for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 is shown below. Brand-specific goodwill held by foreign subsidiaries is allocated to the North America reporting unit selling those brands, ~~thereby~~resulting ~~causing~~in a foreign currency translation impact.

	December 31,2022		CurrencyExchange RateImpact		September 30,2023
	December 31,2023		CurrencyExchange RateImpact		March 31,2024
	(In thousands)
North America	$	~~731~~733,~~993~~487	$	~~265~~(250)	$	~~732~~733,~~258~~237
International	438,987		1,226		440,213
American Girl	207,571		—		207,571
	$	1,378,551	$	1,491	$	1,380,042
International	443,454		(505)		442,949
	$	1,384,512	$	(755)	$	1,383,757

Intangible Assets, Net

~~Amortizable~~Identifiable ~~intangible~~intangibles ~~assets~~ were $~~397~~384.83 million, net of accumulated amortization of $~~396~~415.8 million, $~~426~~417.39 million, net of accumulated amortization of $~~355~~378.3 million, and $~~425~~393.10 million, net of accumulated amortization of $~~364~~408.95 million as of ~~September~~March 3031, ~~2023~~2024, ~~September~~March 3031, ~~2022~~2023, and December 31, ~~2022~~2023, respectively.

Mattel's amortizable intangible assets primarily consist of trademarks and trade names. Mattel tests its amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Mattel's amortizable intangible assets were not impaired during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023.

6. Accrued Liabilities

Accrued liabilities included the following:

	September 30,2023		September 30,2022		December 31,2022
	March 31,2024		March 31,2023		December 31,2023
	(In thousands)
Advertising and promotion	$	105,218	$	100,091	$	115,707
Incentive compensation	$	155,228	$	30,580	$	143,091
Incentive compensation	89,142		66,830		2,889
Lease liabilities	76,976		74,425		77,254
Current lease liabilities	76,021		72,591		75,297
Advertising and promotion	57,082		76,851		102,217
Royalties	74,801		78,186		65,330
Deferred income	54,591		50,218		56,900
Royalties	34,942		37,093		86,475

7. 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. ~~However,~~All ~~all~~ Mattel payments of the full amounts due to participating suppliers are paid on the invoice due date based on the terms originally negotiated with the supplier, regardless of whether the individual invoice due to the supplier is sold to the third-party financial institution. Included in Mattel's accounts payable in the consolidated balance sheets as of ~~September~~March 3031, ~~2023~~2024, ~~September~~March 3031, ~~2022~~2023, and December 31, ~~2022~~2023 were $9053.54 million, $~~156~~54.68 million, and $8654.03 million of outstanding payment obligations due to suppliers, respectively, under the supplier finance program. All payment activities related to the supplier finance program were presented within operating activities in the consolidated statements of cash flows.

8. Seasonal Financing

On September 15, 2022, Mattel entered into a revolving credit agreement (the "Credit Agreement") as the borrower with Bank of America, N.A., as administrative agent, and the other lenders and financial institutions party thereto, providing for a senior secured revolving credit facility in an aggregate principal amount of $1.40 billion (the "Revolving Credit Facility"). The Revolving Credit Facility will mature on September 15, 2025. In connection with the entry into the Credit Agreement, Mattel terminated the commitments and satisfied all outstanding obligations under the previous credit agreement, dated December 20, 2017 (as amended).

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

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

In November 2022, Moody's upgraded Mattel's ~~debt~~credit rating from Ba1 to Baa3, and in April 2023, S&P upgraded Mattel's ~~debt~~credit rating from BB+ to BBB- and maintained a positive outlook. On April 27, 2023 (the "Fall-Away Date"), Mattel provided a certification of the foregoing to the administrative agent under the Credit Agreement, which resulted in certain subsidiary guarantees, liens, covenants, and other restrictions falling away under the Credit Agreement.

The obligations of Mattel under the Revolving Credit Facility were previously guaranteed by each domestic subsidiary of Mattel that guaranteed any of Mattel's senior unsecured notes (collectively, the "Guarantors"). On the Fall-Away Date, the foregoing guarantees were released and the obligations of Mattel under the Revolving Credit Facility are instead required to be guaranteed by each existing and future direct and indirect domestic subsidiary of Mattel only to the extent such subsidiary guarantees other indebtedness of Mattel in an aggregate principal or committed amount in excess of $50 million.

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

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

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

Mattel had no borrowings outstanding under the Revolving Credit Facility and no other short-term borrowings outstanding as of ~~September~~March 3031, ~~2023~~2024, ~~September~~March 3031, ~~2022~~2023, and December 31, ~~2022~~2023. Outstanding letters of credit under the Revolving Credit Facility totaled approximately $9 million, $98 million, and $89 million as of ~~September~~March 3031, ~~2023~~2024, ~~September~~March 3031, ~~2022~~2023, and December 31, ~~2022~~2023, respectively.

As of ~~September~~March 3031, ~~2023~~2024, Mattel was in compliance with all covenants contained in the Credit Agreement. The Credit Agreement is a material agreement, and failure to comply with its covenants may result in an event of default under the terms of the Revolving Credit Facility. If Mattel were to default under the terms of the Revolving Credit Facility, its ability to meet its seasonal financing requirements could be adversely affected.

9. Long-Term Debt

Long-term debt included the following:

	September 30,2023		September 30,2022		December 31,2022
	March 31,2024		March 31,2023		December 31,2023
	(In thousands)
2010 Senior Notes due October 2040	$	250,000	$	250,000	$	250,000
2011 Senior Notes due November 2041	300,000		300,000		300,000
2013 Senior Notes due March 2023	—		250,000		—
2019 Senior Notes due December 2027	600,000		600,000		600,000
2021 Senior Notes due April 2026	600,000		600,000		600,000
2021 Senior Notes due April 2029	600,000		600,000		600,000
Debt issuance costs and debt discount	(2118,~~103~~922)		(2523,~~541~~269)		(2420,~~356~~014)
	$	2,~~328~~331,~~897~~078	$	2,~~574~~326,~~459~~731	$	2,~~325~~329,~~644~~986
Less: current portion	—		~~(250,000)~~—		—
Total long-term debt	$	2,~~328~~331,~~897~~078	$	2,~~324~~326,~~459~~731	$	2,~~325~~329,~~644~~986

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

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 subsidiaries as unrestricted. 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 April 2023, S&P upgraded Mattel’'s ~~debt~~credit rating from BB+ to BBB- and maintained a positive outlook, and in November 2022, Moody’'s ~~previously~~ upgraded Mattel’'s ~~debt~~credit rating from Ba1 to Baa3. As a result of the upgraded ~~debt~~credit ratings and no events of default, the covenants limiting Mattel’'s ability to incur additional debt or issue certain preferred shares, pay dividends on or make other distributions in respect of their capital stock or make other restricted payments, and make investments in unrestricted subsidiaries, and certain provisions of the covenant limiting Mattel’'s ability to merge or consolidate, or sell, transfer or otherwise dispose of substantially all of their assets, are suspended. If Mattel ceases to have ~~debt~~credit ratings of BBB-, Baa3, and/or BBB- (or higher) from any two of S&P, Moody's, and Fitch, respectively, Mattel will thereafter be subject to the suspended covenants with respect to future events. Following the Fall-Away Date under the Revolving Credit Facility, all guarantee obligations of the Guarantors under the 2019 Senior Notes due 2027, 2021 Senior Notes due 2026, and 2021 Senior Notes due 2029 were released, and the obligations of Mattel under the 2019 Senior Notes due 2027, 2021 Senior Notes due 2026, and 2021 Senior Notes due 2029 will be required to be guaranteed by each existing and future direct and indirect domestic subsidiary of Mattel only to the extent such subsidiary guarantees other indebtedness of Mattel in an aggregate principal or committed amount in excess of $50 million.

10. 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 Three Months Ended September 30, 2023
	For the Three Months Ended March 31, 2024
	DerivativeInstruments		~~Available-for-Sale~~Employee ~~Security~~Benefit Plans		~~Employee Benefit Plans~~CurrencyTranslationAdjustments		~~CurrencyTranslationAdjustments~~Total		~~Total~~
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of June 30, 2023	$	5,221	$	—	$	(137,042)	$	(765,431)	$	(897,252)
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	713,~~521~~224		—1,493		5(17,946)		(393,~~273~~229)		~~(31,747)~~
Amounts reclassified from accumulated other comprehensive income (loss)	(58,~~801~~241)		—705		~~659~~—		—(7,536)		~~(5,142)~~
Net increase (decrease) in other comprehensive income	1,720		—		664		(39,273)		(36,889)
Net change in other comprehensive income (loss)	4,983		2,198		(17,946)		(10,765)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2023	$	6,941	$	—	$	(136,378)	$	(804,704)	$	(934,141)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of March 31, 2024	$	1,520	$	(140,718)	$	(776,535)	$	(915,733)

	For the Nine Months Ended September 30, 2023
	For the Three Months Ended March 31, 2023
	DerivativeInstruments		~~Available-for-Sale~~Employee ~~Security~~Benefit Plans		~~Employee Benefit Plans~~CurrencyTranslationAdjustments		~~CurrencyTranslationAdjustments~~Total		~~Total~~
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2022	$	22,732	$	—(138,498)	$	(~~138~~795,~~498~~712)	$	(~~795~~911,~~712~~478)	$	~~(911,478)~~
Other comprehensive (loss) income before reclassifications	(1,729)		—		20		(8,992)		(10,701)
Other comprehensive income (loss) before reclassifications	(1,772)		7		28,100		26,335
Amounts reclassified from accumulated other comprehensive income (loss)	(143,~~062~~895)		—720		~~2,100~~—		—(3,175)		~~(11,962)~~
Net (decrease) increase in other comprehensive income	(15,791)		—		2,120		(8,992)		(22,663)
Net change in other comprehensive income (loss)	(5,667)		727		28,100		23,160
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2023	$	6,941	$	—	$	(136,378)	$	(804,704)	$	(934,141)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of March 31, 2023	$	17,065	$	(137,771)	$	(767,612)	$	(888,318)

	For the Three Months Ended September 30, 2022
	DerivativeInstruments		Available-for-Sale Security		Employee Benefit Plans		CurrencyTranslationAdjustments		Total
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of June 30, 2022	$	33,330	$	—	$	(151,388)	$	(795,090)	$	(913,148)
Other comprehensive income (loss) before reclassifications	24,715		—		63		(72,643)		(47,865)
Amounts reclassified from accumulated other comprehensive income (loss)	(11,312)		—		1,291		—		(10,021)
Net increase (decrease) in other comprehensive income	13,403		—		1,354		(72,643)		(57,886)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2022	$	46,733	$	—	$	(150,034)	$	(867,733)	$	(971,034)

	For the Nine Months Ended September 30, 2022
	DerivativeInstruments		Available-for-Sale Security		Employee Benefit Plans		CurrencyTranslationAdjustments		Total
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2021	$	8,796	$	(6,447)	$	(154,099)	$	(789,521)	$	(941,271)
Other comprehensive income (loss) before reclassifications	58,604		—		(35)		(78,212)		(19,643)
Amounts reclassified from accumulated other comprehensive income (loss)	(20,667)		3,646		4,100		—		(12,921)
Net increase (decrease) in other comprehensive income	37,937		3,646		4,065		(78,212)		(32,564)
Adjustment of accumulated other comprehensive loss to retained earnings	—		2,801		—		—		2,801
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2022	$	46,733	$	—	$	(150,034)	$	(867,733)	$	(971,034)

The following table presents the classification and amount of the reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of operations:

The following tables present the classification and amount of the reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of operations:


	For the Three Months Ended
	March 31, 2024		March 31, 2023		Statements of Operations Classification
	(In thousands)
Derivative Instruments:
Gain on foreign currency forward exchange and other contracts	$	8,225	$	3,603	Cost of sales
Tax effect	16		292		Benefit from income taxes
	$	8,241	$	3,895	Net loss
Employee Benefit Plans:
Amortization of prior service credit (a)	$	461	$	472	Other non-operating income/expense, net
Recognized actuarial (loss) (a)	(1,895)		(1,408)		Other non-operating income/expense, net

	(1,434)		(936)
Tax effect	729		216		Benefit from income taxes
	$	(705)	$	(720)	Net loss

	For the Three Months Ended
	September 30, 2023		September 30, 2022		Statements of OperationsClassification
	(In thousands)
Derivative Instruments:
Gain on foreign currency forward exchange and other contracts	$	5,784	$	11,292	Cost of sales
Tax effect	17		20		Provision for income taxes
	$	5,801	$	11,312	Net income
Employee Benefit Plans:
Amortization of prior service credit (a)	$	472	$	504	Other non-operating (income) expense, net
Recognized actuarial loss (a)	(1,410)		(2,108)		Other non-operating (income) expense, net
	(938)		(1,604)
Tax effect	279		313		Provision for income taxes
	$	(659)	$	(1,291)	Net income

(a)The amortization of prior service credit and recognized actuarial loss are included in the computation of net periodic benefit cost. Refer to "Note 15 to the Consolidated Financial Statements—Employee Benefit Plans" for additional information regarding Mattel's net periodic benefit cost.

	For the Nine Months Ended
	September 30, 2023		September 30, 2022		Statements of OperationsClassification
	(In thousands)
Derivative Instruments:
Gain on foreign currency forward exchange and other contracts	$	13,709	$	20,764	Cost of sales
Tax effect	353		(97)		Provision for income taxes
	$	14,062	$	20,667	Net income
Employee Benefit Plans:
Amortization of prior service credit (a)	$	1,416	$	1,409	Other non-operating (income) expense, net
Recognized actuarial loss (a)	(4,229)		(6,649)		Other non-operating (income) expense, net
	(2,813)		(5,240)
Tax effect	713		1,140		Provision for income taxes
	$	(2,100)	$	(4,100)	Net income

During the three months ended March 31, 2022, Mattel adjusted accumulated other comprehensive loss by $6.4 million in relation to previously recorded available-for-sale equity securities. This amount was adjusted in order to account for such securities in a manner consistent with Accounting Standards Codification 321, Investments—Equity Securities. The adjustment included $3.6 million of accumulated other comprehensive loss reclassified to other non-operating expense (income), net in the consolidated statement of operations and $2.8 million reclassified to retained earnings in the consolidated statement of stockholders' equity. The adjustment, including tax effect, was immaterial to the financial statements.

Currency Translation Adjustments

During the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, currency translation adjustments resulted in a net loss of $917.09 million, ~~primarily~~ due to the ~~weakening~~general strengthening of the ~~Russian~~U.S. ~~ruble~~dollar ~~and~~against ~~Malaysian~~most ~~ringgit~~currencies, ~~against~~including the UChilean peso and Russian ruble.S. ~~dollar,~~The losses were partially offset by ~~the~~ strengthening of the Mexican peso, ~~British pound sterling, and Brazilian real~~ against the U.S. dollar.

During the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, currency translation adjustments resulted in a net ~~loss~~gain of $7828.2 1 million, primarily due to the ~~weakening~~strengthening of the Mexican peso, British pound sterling, Chilean peso, and ~~the~~Brazilian ~~Euro~~real against the U.S. dollar, offset by the ~~strengthening~~weakening of the Russian ruble against the U.S. dollar.

11. Foreign Currency Transaction Exposure

Currency transaction gains (losses) included in the consolidated statements of operations were as follows:

	For the Three Months Ended
	September 30,2023		September 30,2022		Statements of Operations Classification
	March 31,2024		March 31,2023		Statements of Operations Classification
	(In thousands)
Currency transaction (losses)	$	(2,276)	$	(6,689)	Operating income/expense
Currency transaction gains, net	$	118	$	50	Operating income/expense
Currency transaction gains (losses)	3,301		(41)		Other non-operating income/expense, net
Currency transaction gains, net	714		1,550		Other non-operating income/expense, net
Currency transaction gains (losses), net	$	1,025	$	(6,730)
Currency transaction gains, net	$	832	$	1,600
	For the Nine Months Ended
	September 30,2023		September 30,2022		Statements of Operations Classification
	(In thousands)
Currency transaction (losses)	$	(11,987)	$	(14,948)	Operating income/expense
Currency transaction gains (losses)	5,390		(18,832)		Other non-operating income/expense, net
Currency transaction (losses), net	$	(6,597)	$	(33,780)

~~The Chinese yuan, Euro, Russian ruble, and Turkish lira were the primary currencies that caused foreign currency transaction exposure for Mattel during the nine months ended September 30, 2023.~~ 14

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 ~~September~~March 3031, ~~2023~~2024, ~~September~~March 3031, ~~2022~~2023, and December 31, ~~2022~~2023, Mattel held foreign currency forward exchange contracts and other commodity derivative instruments, with notional amounts of approximately $~~636~~683 million, $~~771~~792 million, and $~~674~~609 million, respectively.

1615

The following tables present Mattel's derivative assets and liabilities:

Derivative Assets

Balance Sheet Classification

Fair Value

September 30,2023

September 30,2022

December 31,2022

March 31,2024

March 31,2023

December 31,2023

(In thousands)

Derivatives Designated as Hedging Instruments:

Foreign currency forward exchange and other contracts

Prepaid expenses and other current assets

134,~~308~~631

4111,~~832~~051

142,~~899~~198

Foreign currency forward exchange and other contracts

Other noncurrent assets

~~747~~423

~~8,320~~413

~~1,501~~52

Total Derivatives Designated as Hedging Instruments

145,~~055~~054

5011,~~152~~464

162,~~400~~250

Derivatives Not Designated as Hedging Instruments:

Foreign currency forward exchange and other contracts

Prepaid expenses and other current assets

~~519~~3,511

34,~~424~~898

~~1,163~~578

Total Derivatives Not Designated as Hedging Instruments

~~519~~3,511

34,~~424~~898

~~1,163~~578

148,~~574~~565

5316,~~576~~362

172,~~563~~828

Derivative Liabilities

Balance Sheet Classification

Fair Value

September 30,2023

September 30,2022

December 31,2022

March 31,2024

March 31,2023

December 31,2023

(In thousands)

Derivatives Designated as Hedging Instruments:

Foreign currency forward exchange and other contracts

Accrued liabilities

14,~~997~~389

13,~~981~~903

37,~~647~~520

Foreign currency forward exchange and other contracts

Other noncurrent liabilities

1447

~~194~~351

~~807~~1,575

Total Derivatives Designated as Hedging Instruments

24,~~011~~436

24,~~175~~254

49,~~454~~095

Derivatives Not Designated as Hedging Instruments:

Foreign currency forward exchange and other contracts

Accrued liabilities

~~323~~173

~~3,609~~961

~~6,261~~449

Foreign currency forward exchange and other contracts

Other noncurrent liabilities

—

44—

3920

Total Derivatives Not Designated as Hedging Instruments

~~323~~173

~~3,653~~961

~~6,300~~469

24,~~334~~609

5,~~828~~215

109,~~754~~564

1716

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 Three Months Ended

September 30,2023

September 30,2022

Statements ofOperationsClassification

March 31,2024

March 31,2023

Statements ofOperationsClassification

(In thousands)

Foreign Currency Forward Exchange and Other Contracts:

Amount of gains recognized in OCI

7,521

24,715

Amount of gains (losses) recognized in OCI

13,224

(1,772)

Amount of gains reclassified from accumulated OCI to the consolidated statements of operations

58,~~801~~241

113,~~312~~895

Cost of sales

Derivatives Designated as Hedging Instruments

For the Nine Months Ended

September 30,2023

September 30,2022

Statements ofOperationsClassification

(In thousands)

Foreign Currency Forward Exchange and Other Contracts:

Amount of (losses) gains recognized in OCI

(1,729)

58,604

Amount of gains reclassified from accumulated OCI to consolidated statements of operations

14,062

20,667

Cost of sales

The net gains reclassified from accumulated other comprehensive loss to the consolidated statements of operations during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023, respectively, were offset by changes in cash flows associated with the underlying hedged transactions.

Derivatives Not Designated as Hedging Instruments

For the Three Months Ended

September 30,2023

September 30,2022

Statements ofOperationsClassification

March 31,2024

March 31,2023

Statements ofOperationsClassification

(In thousands)

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

Foreign currency forward exchange and other contracts

65,~~805~~063

(210,~~279)~~304

Other non-operating (income) /expense, net

Derivatives Not Designated as Hedging Instruments

For the Nine Months Ended

September 30,2023

September 30,2022

Statements ofOperationsClassification

(In thousands)

Amount of Net Gains Recognized in the Statements of Operations:

Foreign currency forward exchange and other contracts

25,083

843

Other non-operating (income) expense, net

The net gains and losses recognized in the consolidated statements of operations during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~September~~March 3031, ~~2022~~2023, respectively, were offset by foreign currency transaction gains and losses on the related derivative balances.

13. 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 ~~September~~March 3031, ~~2023~~2024, ~~September~~March 3031, ~~2022~~2023, and December 31, ~~2022~~2023 and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value. The three levels of the fair value hierarchy are as follows:

•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 that are significant to the fair value of the assets or liabilities.

	September 30, 2023
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange and other contracts (a)	$	—	$	14,574	$	—	$	14,574
Liabilities:
Foreign currency forward exchange and other contracts (a)	$	—	$	2,334	$	—	$	2,334
	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange and other contracts (a)	$	—	$	53,576	$	—	$	53,576
Available-for-sale (b)	3,360		—		—		3,360
Total assets	$	3,360	$	53,576	$	—	$	56,936
Liabilities:
Foreign currency forward exchange and other contracts (a)	$	—	$	5,828	$	—	$	5,828
	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange and other contracts (a)	$	—	$	17,563	$	—	$	17,563
Liabilities:
Foreign currency forward exchange and other contracts (a)	$	—	$	10,754	$	—	$	10,754


	March 31, 2024
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange and other contracts (a)	$	—	$	8,565	$	—	$	8,565
Liabilities:
Foreign currency forward exchange and other contracts (a)	$	—	$	4,609	$	—	$	4,609

	March 31, 2023
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange and other contracts (a)	$	—	$	16,362	$	—	$	16,362

Liabilities:
Foreign currency forward exchange and other contracts (a)	$	—	$	5,215	$	—	$	5,215

	December 31, 2023
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange and other contracts (a)	$	—	$	2,828	$	—	$	2,828
Liabilities:
Foreign currency forward exchange and other contracts (a)	$	—	$	9,564	$	—	$	9,564

(a)The fair value of the foreign currency forward exchange and other contracts 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.

(b)The fair value of the available-for-sale security was based on the quoted price on an active public exchange.

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 $2.1326 billion (compared to a carrying amount of $2.35 billion) as of ~~September~~March 3031, ~~2023~~2024, $2.3519 billion (compared to a carrying amount of $2.6035 billion) as of ~~September~~March 3031, ~~2022~~2023, and $2.1323 billion (compared to a carrying amount of $2.35 billion) as of December 31, ~~2022~~2023. 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.

14. Earnings Per Share

The following table reconciles basic and diluted earnings per common share for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023:

	~~For the Three Months Ended~~		For the Three Months Ended			~~For the Nine Months Ended~~
	September 30,2023		September 30,2022			September 30,2023		September 30,2022
						March 31,2024		March 31,2023
	~~(In thousands, except per share amounts)~~				(In thousands, except per share amounts)
Basic:
Net income	$	146,319	$	289,882		$	67,034	$	377,776
Net loss						$	(28,281)	$	(106,471)
Weighted-average number of common shares	~~354,139~~		~~354,471~~			~~354~~346,~~559~~888		~~353~~354,~~394~~942
Basic net income per common share	$	0.41	$	0.82		$	0.19	$	1.07
Basic net loss per common share						$	(0.08)	$	(0.30)
Diluted:
Net income	$	146,319	$	289,882		$	67,034	$	377,776
Net loss						$	(28,281)	$	(106,471)
Weighted-average number of common shares	~~354,139~~		~~354,471~~			~~354~~346,~~559~~888		~~353~~354,~~394~~942
Dilutive share-based awards (a)	~~3,335~~		~~5,758~~			~~3,418~~—		~~6,337~~—
Weighted-average number of common and potential common shares	~~357,474~~		~~360,229~~			~~357~~346,~~977~~888		~~359~~354,~~731~~942
Diluted net income per common share	$	0.41	$	0.80		$	0.19	$	1.05
Diluted net loss per common share						$	(0.08)	$	(0.30)

(a)For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~share-based awards totaling 6.5 million~~ and ~~11.5~~March ~~million~~31, ~~respectively~~2023, ~~were excluded from the calculation of diluted net income per common~~ share ~~because their effect would be antidilutive. For the three and nine months ended September 30, 2022, share~~-based awards totaling 10.4 million and 1014.82 million, respectively, were excluded from the calculation of diluted net ~~income~~loss per common share because their effect would be antidilutive.

15. Employee Benefit Plans

Mattel and certain of its subsidiaries have qualified and nonqualified retirement plans covering substantially all employees of these companies, which are more fully described in Part II, Item 8 "Financial Statements and Supplementary Data—Note 4 to the Consolidated Financial Statements–Employee Benefit Plans" in the ~~2022~~2023 Annual Report on Form 10-K.

20The components of Mattel's net periodic benefit cost for defined benefit pension plans were as follows:

The components of net periodic benefit cost for Mattel's defined benefit pension plans were as follows:


	For the Three Months Ended
	March 31, 2024		March 31, 2023
	(In thousands)
Service cost	$	859	$	843
Interest cost	5,053		5,198
Expected return on plan assets	(4,681)		(5,080)
Amortization of prior service cost	48		37
Recognized actuarial loss	1,943		1,465
Net periodic benefit cost	$	3,222	$	2,463

	For the Three Months Ended				For the Nine Months Ended
	September 30,2023		September 30,2022		September 30,2023		September 30,2022
	(In thousands)
Service cost	$	848	$	980	$	2,548	$	3,046
Interest cost	5,234		2,996		15,670		9,112
Expected return on plan assets	(5,103)		(4,776)		(15,280)		(14,480)
Amortization of prior service cost	37		5		112		118
Recognized actuarial loss	1,467		2,133		4,399		6,724
	$	2,483	$	1,338	$	7,449	$	4,520

The components of Mattel's net periodic benefit cost (credit) for ~~Mattel's~~ postretirement benefit plans were as follows:

	For the Three Months Ended				~~For the Nine Months Ended~~
	September 30,2023		September 30,2022		September 30,2023		September 30,2022
	March 31,2024		March 31,2023
	(In thousands)
Interest cost	$	45	$	2245	$	~~134~~	$	66
Amortization of prior service credit	(509)		(509)		~~(1,528)~~		~~(1,527)~~
Recognized actuarial gain	(5748)		(2557)		~~(170)~~		~~(75)~~
	$	(521)	$	(512)	$	(1,564)	$	(1,536)
Net periodic benefit credit	$	(512)	$	(521)

Mattel's service cost component is recorded within operating ~~income~~loss while other components of net periodic pension cost and postretirement benefit cost are recorded within other non-operating expense (income) ~~expense~~, net.

During the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, Mattel made cash contributions totaling approximately $111 million related to its defined benefit pension and postretirement benefit plans. During the remainder of ~~2023~~2024, Mattel expects to make additional cash contributions of approximately $313 million.

16. Share-Based Payments

Mattel has various stock compensation plans, which are described in Part II, Item 8 "Financial Statements and Supplementary Data—Note 89 to the Consolidated Financial Statements—Share-Based Payments" in the ~~2022~~2023 Annual Report on Form 10-K. Under the Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan, Mattel has the ability to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units ("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. Stock options are granted with exercise prices at the fair market value of Mattel's common stock on the applicable grant date and expire no later than ten years from the date of grant. Stock options, RSUs, and performance awards generally provide for vesting over, or at the end of, a period of three years from the date of grant.

Compensation expense, included within other selling and administrative expenses in the consolidated statements of operations, related to stock options, RSUs, and performance awards was as follows:

For the Three Months Ended

~~For the Nine Months Ended~~

September 30,2023

September 30,2022

September 30,2023

September 30,2022

March 31,2024

March 31,2023

(In thousands)

Stock option compensation expense

1,~~077~~046

52,~~170~~818

~~5,673~~

~~10,064~~

RSU compensation expense

12,~~020~~248

910,~~643~~117

~~36,724~~

~~27,810~~

Performance award compensation expense

24,~~395~~635

34,~~240~~008

~~10,028~~

~~18,067~~

1517,~~492~~929

1816,~~053~~943

~~52,425~~

~~55,941~~

21As of March 31, 2024, total unrecognized compensation expense related to unvested share-based payments totaled $88.1 million and is expected to be recognized over a weighted-average period of 1.7 years.

AsMattel ofuses ~~September 30,~~treasury ~~2023,~~shares ~~total~~purchased ~~unrecognized~~under ~~compensation~~its ~~expense~~share ~~related~~repurchase program to ~~unvested~~satisfy ~~share-based~~stock ~~payments~~option ~~totaled~~exercises ~~$110.7 million~~and the vesting of RSUs and isperformance ~~expected~~awards. toCash bereceived ~~recognized~~for ~~over~~stock aoption ~~weighted-average~~exercises, ~~period~~net of 2taxes, was $4.13 million ~~years~~and $2.0 million for the three months ended March 31, 2024 and 2023, respectively.

Mattel uses treasury shares purchased under its share repurchase program to satisfy stock option exercises and the vesting of RSUs and performance awards. Cash received for stock option exercises, net of taxes, was $26.0 million and $27.7 million for the nine months ended September 30, 2023 and 2022, respectively.

17. Other Selling and Administrative Expenses

Other selling and administrative expenses included the following:

~~For the Three Months Ended~~

For the ~~Nine~~Three Months Ended

September 30,2023

September 30,2022

September 30,2023

September 30,2022

March 31,2024

March 31,2023

~~(In thousands)~~

(In thousands)

Design and development

~~49,781~~

~~52,204~~

~~148~~47,~~319~~610

~~144~~48,~~145~~756

Intangible asset amortization

9,584

9,308

28,570

28,304

Amortization of intangible assets

7,823

9,461

18. Restructuring Charges

Optimizing for ~~Growth~~Profitable ~~(formerly Capital Light)~~Growth

On February 7, 2024, Mattel's announced the Optimizing for Profitable Growth program is(the "OPG program"), a multi-year cost savings program that ~~integrates~~follows ~~and expands upon~~ the ~~previously~~Optimizing ~~announced~~for ~~Capital~~Growth ~~Light~~ program (the "~~Program~~OFG program")., Inwhich ~~February~~concluded ~~2023,~~in the ~~Program~~fourth ~~was~~quarter ~~expanded~~of to2023. ~~include~~The ~~additional~~OPG ~~initiatives,~~program ~~including~~is ~~actions~~designed to achieve further ~~streamline~~efficiency and cost savings opportunities, primarily within Mattel's ~~organizational~~global ~~structure~~supply chain, including its manufacturing footprint.

In connection with the ~~Program~~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 Three Months Ended

~~For the Nine Months Ended~~

September 30,2023

September 30,2022

September 30,2023

September 30,2022

March 31,2024

(In thousands)

Cost of sales (a)

~~(76)~~2,213

~~1,366~~

~~(1,276)~~

~~9,795~~

Other selling and administrative expenses (b)

37,~~082~~518

~~4,441~~

~~31,550~~

~~16,602~~

39,~~006~~731

~~5,807~~

~~30,274~~

~~26,397~~

(a)Severance and other restructuring charges recorded within cost of sales in the consolidated statements of operations are included in segment operating income in "Note 21 to the Consolidated Financial Statements—Segment Information."

(b)Severance and other restructuring charges recorded within other selling and administrative expenses in the consolidated statements of operations are included in corporate and other expense in "Note 21 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 ~~Program~~OPG program:

Liability at December 31, 2022

Charges

Payments/Utilization

Liability at September 30, 2023

Liability at December 31, 2023

Charges

Payments/Utilization

Liability at March 31, 2024

(In thousands)

Severance

925,~~355~~096

219,~~607~~229

(201,~~104~~536)

1032,~~858~~789

Other restructuring charges (a)

~~3,540~~—

~~8,667~~502

(~~10,650~~502)

~~1,557~~—

1225,~~895~~096

309,~~274~~731

(302,~~754~~038)

1232,~~415~~789

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

	Liability at December 31, 2021		Charges		Payments/Utilization		Liability at September 30, 2022
	(In thousands)
Severance	$	12,411	$	14,021	$	(12,290)	$	14,142
Other restructuring charges (a)	2,834		12,376		(14,278)		932
	$	15,245	$	26,397	$	(26,568)	$	15,074

As of March 31, 2024, in connection with the OPG program, Mattel had recorded cumulative severance and other restructuring charges of approximately $35 million, which included approximately $0.4 million of non-cash charges. Total expected cash expenditures are approximately $130 to $165 million and total non-cash charges are expected to be up to $5 million.

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

As of September 30, 2023, Mattel had recorded cumulative severance and other restructuring charges related to the Program of approximately $196 million, which included approximately $73 million of non-cash charges, including $45.4 million recognized within other non-operating expense, net, during the fourth quarter of 2022 related to the liquidation of Mattel's subsidiary in Argentina. Furthermore, cumulatively, in conjunction with previous actions taken under the Capital Light program, total expected cash expenditures are approximately $195 to $225 million and total expected non-cash charges are approximately $75 million.

Other Cost Savings Actions

InAs ~~the~~of ~~third~~December ~~quarter~~31, of 2023, Mattel ~~committed~~concluded tothe ~~actions~~OFG ~~not~~program, ~~included~~which inwas ~~the~~a ~~Program~~multi-year tocost ~~discontinue~~savings ~~production~~program atthat ahad ~~plant~~integrated ~~located~~and inexpanded ~~China~~upon the previous Capital Light program. In ~~connection~~the ~~with~~first ~~these~~three ~~actions~~months of 2023, Mattel recorded severance expense of $2520.37 million within other selling and administrative expenses in the consolidated ~~statements~~statement of operations inrelated ~~the three months ended September 30, 2023, which are recorded in corporate and other expense in "Note 21~~ to the ~~Consolidated~~OFG ~~Financial Statements—Segment Information~~program." The $25.3 million of severance expense accrued during the quarter remained outstanding as of September 30, 2023. Total expected cash charges in connection with these actions are approximately $30 to $35 million and total expected non-cash charges are approximately $6 million.

Additionally, induring the first ~~nine~~three months of 2023, Mattel executed ~~other cost savings~~ actions ~~not included in the Program~~ to further streamline its organizational structure. Inthat ~~connection~~were ~~with~~not ~~these~~included ~~actions~~in the OFG program, ~~Mattel~~and recorded severance ~~expense~~costs of $63.12 million in connection with these actions within other selling and administrative expenses in the consolidated statement of operations.

19. Income Taxes

Mattel's ~~provision~~benefit ~~for~~from income taxes was $~~309~~20.~~3 million and $296.~~8 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024, ~~respectively,~~compared ~~and~~to ~~$80.0 million~~a ~~and~~benefit of $~~130~~27.50 million for the three ~~and~~months ~~nine~~ended March 31, 2023. During the three months ended ~~September~~March 3031, ~~2022~~2024, ~~respectively.~~ Mattel recognized a net discrete income tax ~~expense~~benefit of $~~200~~8.74 million ~~and $201.0 million during the three and nine months ended September 30~~, ~~2023,~~primarily ~~respectively,~~related ~~which~~to ~~included~~tax ~~the~~elections ~~establishment~~filed ofto aamortize ~~valuation allowance of $212.4 million on~~ certain ~~foreign~~intangible ~~deferred tax~~ assets ~~resulting~~transferred ~~from~~as ~~the~~part ~~planned~~of Mattel's intra-group ~~transfer of certain~~ intellectual property ~~("IP")~~ rights transfer, partially offset by ~~undistributed earnings of certain foreign subsidiaries and~~ reassessments of prior years' tax liabilities. During the three months ended March 31, 2023, Mattel recognized a net discrete income tax ~~benefit~~expense of $190.41 million, ~~and~~primarily related to $41.8 million ~~during~~of ~~the~~reassessments ~~three~~of ~~and~~prior ~~nine~~years' ~~months~~tax ~~ended September 30~~liabilities, ~~2022,~~partially ~~respectively,~~offset ~~primarily~~by ~~related~~undistributed toearnings ~~income taxes recorded on a discrete basis in various jurisdictions and reassessments~~ of ~~prior~~certain ~~years'~~foreign ~~tax liabilities~~subsidiaries.

~~judgment~~In the normal course of business, Mattel is regularly audited by federal, state, and ~~extensive~~foreign ~~analysis~~tax authorities. Based on the current status of ~~all~~federal, ~~available~~state, ~~evidence~~and toforeign ~~determine~~audits, ~~whether~~Mattel believes it is ~~more-likely-than-not~~reasonably possible that ~~these~~in ~~assets~~the ~~will~~next 12 months, the total unrecognized tax benefits could decrease by $16.9 million related to the settlement of tax audits and/or the expiration of statutes of limitations. The ultimate settlement of any particular issue with the applicable taxing authority could

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. During the third quarter of 2023, Mattel finalized a plan to complete an intra-group transfer of certain IP rights, resulting in the establishment of a valuation allowance on certain foreign deferred tax assets of $212.4 million, that will not be realized upon execution of the plan.

In the normal course of business, Mattel is regularly audited by federal, state, and foreign tax authorities. Based on the current status of federal, state, and foreign audits, Mattel believes it is reasonably possible that in the next 12 months, the total unrecognized tax benefits could decrease by approximately $17 million related to the settlement of tax audits and/or the expiration of statutes of limitations. The ultimate settlement of any particular issue with the applicable taxing authority could

have a material impact on Mattel's consolidated financial statements.

20. Contingencies

Litigation Related to Yellowstone do Brasil Ltda.

In April 1999, Yellowstone do Brasil Ltda. (formerly known as Trebbor Informática Ltda.) filed a lawsuit against Mattel do Brasil before the 15th Civil Court of Curitiba, State of Parana, requesting the annulment of its security bonds and promissory notes given to Mattel do Brasil as well as damages due to an alleged breach of an oral exclusive distribution agreement between the parties relating to the supply and sale of toys in Brazil. 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 was later rejected by the courts, subject to a pending appeal by Mattel.

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 attorney's 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 ~~September 30~~March 31, ~~2023~~2024, Mattel assessed its probable loss related to this matter and has accrued a reserve, which is not material.

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

A number of putative class action lawsuits filed between April 2019 and October 2019 are pending against Fisher-Price, Inc. and/or Mattel, Inc. asserting claims for false advertising, negligent product design, breach of warranty, fraud, and other claims in connection with the marketing and sale of the Fisher-Price Rock 'n Play Sleeper (the "Sleeper"). In general, the lawsuits allege that the Sleeper should not have been marketed and sold as safe and fit for prolonged and overnight sleep for infants. The putative class action lawsuits propose nationwide and over 10 statewide consumer classes comprised of those who purchased the Sleeper as marketed as safe for prolonged and overnight sleep. The class actions have been consolidated before a single judge in the United States District Court for the Western District of New York for pre-trial purposes pursuant to the U.S. federal courts' Multi-District Litigation program. In June 2022, the court denied the plaintiffs' motion to certify damages and injunctive relief classes under New York law, but granted plaintiffs' request to certify a New York issue class to resolve two issues on a class-wide basis. In October 2022, the United States Court of Appeals for the Second Circuit denied plaintiffs' petition to appeal the denial of certification of the damages and injunctive relief classes. On February 13, 2024, the parties filed a notice of settlement informing the court that they have reached a settlement in principle of this litigation. The settlement in principle is subject to preliminary and final approval by the court. As of March 31, 2024, Mattel assessed its probable loss related to this matter and has accrued a reserve, which is not material.

Thirty~~-one~~ additional lawsuits filed between April 2019 and ~~September~~January ~~2023~~2024 are pending against Fisher-Price, Inc. and Mattel, Inc. alleging that a product defect in the Sleeper caused the fatalities of or injuries to thirty-~~four~~three children. Several lawsuits have been settled and/or dismissed. Additionally, Fisher-Price, Inc. and/or Mattel, Inc. have also received letters from lawyers purporting to represent additional plaintiffs who have threatened to assert similar claims.

In addition, a stockholder has filed a derivative action in the Court of Chancery for the State of Delaware (Kumar v. Bradley, et al., filed July 7, 2020) alleging breach of fiduciary duty and unjust enrichment related to the development, marketing, and sale of the Sleeper. The defendants in the derivative action are certain of Mattel's current and former officers and directors. In August ~~2020, the derivative action was stayed pending further developments in the class action lawsuits. In August~~ 2021, a second similar derivative action was filed in the Court of Chancery for the State of Delaware (Armon v. Bradley, et al., filed August 30, 2021)~~, which is also stayed~~.

The lawsuits seek compensatory damages, punitive damages, statutory damages, restitution, disgorgement, attorneys' fees, costs, interest, declaratory relief, and/or injunctive relief. Mattel believes that the allegations in the lawsuits are without merit and intends to vigorously defend against them. A reasonable estimate of the amount of any possible loss or range of loss ~~for the lawsuits~~ cannot be made at this time.

Mattel has also had discussions with the US Consumer Product Safety Commission ("CPSC") regarding a request from the CPSC that Mattel increase the proportional cash refund available to consumers who participate in the recall of the Sleeper first announced in 2019. As of September 30, 2023, Mattel assessed its probable loss related to this matter and has accrued a reserve, which is not material.

21. 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

In the first quarter of 2024, Mattel announced an organizational change that resulted in the American Girl business being integrated into Mattel's North America commercial organization. Such integration resulted in a change to Mattel's operating and reportable segments. Mattel's new reportable segments are: (i) North America,; ~~which~~and ~~consists~~(ii) International. ofThe ~~the~~prior ~~United~~period ~~States~~amounts ~~and~~have ~~Canada;~~been ~~(ii) International;~~reclassified ~~and~~to ~~(iii) American~~conform ~~Girl~~to the current period presentation. The North America and International segments sell products across Mattel's categories, although some products are developed and adapted for particular international markets, and American Girl products are only sold in North America.

The following tables present information regarding Mattel's net sales, operating income, and assets by reportable segment. The corporate and other expense category includes operating costs not allocated to individual segments, including charges related to incentive and share-based compensation, corporate headquarters functions managed on a worldwide basis, the impact of changes in foreign currency exchange rates on intercompany transactions, and certain severance and other restructuring costs. It is generally 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 Three Months Ended				For the Nine Months Ended
	September 30,2023		September 30,2022		September 30,2023		September 30,2022
	(In thousands)
Net Sales by Segment
North America	$	1,104,377	$	1,002,126	$	2,138,210	$	2,330,747
International	771,827		704,640		1,578,632		1,584,878
American Girl	42,584		49,014		103,689		117,142
Net sales	$	1,918,788	$	1,755,780	$	3,820,531	$	4,032,767

	For the Three Months Ended				~~For the Nine Months Ended~~
	September 30,2023		September 30,2022		September 30,2023		September 30,2022
	March 31,2024		March 31,2023
	(In thousands)
Operating Income by Segment (a)
Net Sales by Segment
North America	$	~~405~~477,~~667~~786	$	~~337~~470,~~305~~486	$	~~589,664~~	$	~~707,605~~
International	~~202~~331,~~550~~722		~~162~~344,~~828~~093		~~245,773~~		~~268,012~~
American Girl	(4,572)		(8,964)		(24,073)		(20,426)
Net sales	$	809,508	$	814,579
	603,645		491,169		811,364		955,191
Corporate and other expense (b)	(129,787)		(99,797)		(389,768)		(358,672)
Operating income	473,858		391,372		421,596		596,519
Interest expense	30,716		33,870		92,486		99,730
Interest (income)	(4,569)		(1,903)		(15,409)		(5,064)
Other non-operating (income) expense, net	(2,391)		(4,293)		(5,976)		11,966
Income before income taxes	$	450,102	$	363,698	$	350,495	$	489,887

(a)Segment operating income included (i) severance and other restructuring charges of $(0.1) million and $(1.3) million for the three and nine months ended September 30, 2023, respectively, and $1.4 million and $9.8 million for the three and nine months ended September 30, 2022, respectively, which were allocated to the North America and International segments; and (ii) a loss on sale of assets of $1.8 million from the sale of a production facility for the three and nine months ended September 30, 2023, which was recorded in the International segment; and a gain on sale of assets of $15.2 million from the sale of the American Girl corporate office and distribution center for the nine months ended September 30, 2022, which was recorded in the American Girl segment.


	For the Three Months Ended
	March 31, 2024		March 31, 2023
	(In thousands)
Operating Income by Segment (a)
North America	$	72,991	$	32,143
International	9,270		313
	82,261		32,456
Corporate and other expense (b)	(117,779)		(147,493)
Operating loss	(35,518)		(115,037)
Interest expense	30,059		31,128
Interest (income)	(17,282)		(6,519)
Other non-operating expense (income), net	5,613		(1,439)
Loss before income taxes	$	(53,908)	$	(138,207)

25(a)Segment operating income included severance and other restructuring charges of $2.2 million for the three months ended March 31, 2024, and no severance and other restructuring charges were allocated to the segments for the three months ended March 31, 2023.

(b)Corporate and other expense included ~~(i)~~ severance and other restructuring charges of $296.3 million and $6323.09 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~$4.5 million and $17.1 million for the three and nine months ended September 30~~2023, ~~2022~~respectively, ~~respectively;~~ and ~~(ii)~~ inclined sleeper product recall litigation expense of $1.3.7 million and $94.03 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 ~~respectively;~~ and ~~$0.7 million and $1.2 million for the three months and nine months ended September 30~~2023, ~~2022,~~ respectively.

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

	September 30,2023		September 30,2022		December 31,2022
	March 31,2024		March 31,2023		December 31,2023
	(In thousands)
Assets by Segment
North America	$	1686,~~194,978~~694	$	1793,~~233,835~~021	$	~~778~~845,~~897~~113
International	1566,~~024,549~~572		~~961~~694,~~097~~469		~~756~~735,~~830~~236
American Girl	75,272		85,705		58,833
	1,253,266		1,487,490		1,580,349
	2,294,799		2,280,637		1,594,560
Corporate and other	89,339		147,402		73,087
Corporate and other	66,769		184,666		159,725
Accounts receivable, net and inventories	$	1,342,605	$	1,634,892	$	1,653,436
Accounts receivable, net and inventories	$	2,361,568	$	2,465,303	$	1,754,285

Geographic Information

The following table presents information regarding Mattel's net sales by geographic area. Net sales are attributed to countries based on the location of the customer:

For the Three Months Ended

~~For the Nine Months Ended~~

September 30,2023

September 30,2022

September 30,2023

September 30,2022

March 31,2024

March 31,2023

(In thousands)

Net Sales by Geographic Area

North America

1477,~~146,961~~786

1470,~~051,140~~486

~~2,241,899~~

~~2,447,889~~

International

EMEA

~~423~~185,~~923~~239

~~410~~209,~~187~~356

~~874,972~~

~~958,839~~

Latin America

~~262~~79,~~071~~651

~~221~~75,~~805~~531

~~475,648~~

~~418,531~~

Asia Pacific

8566,~~833~~832

7259,~~648~~206

~~228,012~~

~~207,508~~

Total International

~~771~~331,~~827~~722

~~704~~344,~~640~~093

~~1,578,632~~

~~1,584,878~~

Net sales

1809,~~918,788~~508

1814,~~755,780~~579

~~3,820,531~~

~~4,032,767~~

22. New Accounting Pronouncements

Accounting Pronouncements ~~Recently~~Not ~~Adopted~~Yet Adopted

In ~~September~~November ~~2022~~2023, the ~~Financial~~FASB ~~Accounting Standards Board~~ issued ~~Accounting Standards Update ("~~ASU") ~~2022~~2023-0407, ~~Liabilities—Supplier~~Segment ~~Finance~~Reporting ~~Programs~~ (~~Subtopic~~Topic ~~405-50~~280): ~~Disclosure~~Improvements ofto ~~Supplier~~Reportable ~~Finance~~Segment ~~Program Obligations~~Disclosures. ASU ~~2022~~2023-0407 requires ~~that~~incremental ~~buyers~~disclosure inof asignificant ~~supplier~~segment ~~finance~~expenses ~~program~~on ~~disclose~~an ~~sufficient~~annual ~~information~~and ~~about~~interim ~~the~~basis ~~program~~ to ~~allow~~enable ainvestors ~~user of the financial statements~~ to ~~understand~~develop ~~the~~more ~~program's~~decision-useful ~~nature,~~financial ~~activity during the period, changes since prior periods, and potential magnitude~~analyses. The guidance in ASU ~~2022~~2023-0407 ~~was~~is effective for ~~interim and~~ fiscal years beginning after December 15, ~~2022.~~2023, ~~Refer~~and tointerim ~~"Note~~periods 7within tofiscal ~~the~~years ~~Consolidated~~beginning ~~Financial~~after ~~Statements—Supplier~~December ~~Finance~~15, ~~Program"~~2024. ~~for~~Mattel ~~additional~~is ~~information~~currently ~~regarding~~evaluating ~~Mattel's~~the ~~supplier~~impact ~~finance~~of ~~program.~~the ~~The~~ adoption of ~~this~~ASU ~~new~~2023-07 ~~accounting standard did not have a material impact~~ on ~~Mattel's~~its consolidated financial statements.

26In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires enhanced income tax disclosures on an annual basis for specific categories in the rate reconciliation and disclosure of income taxes paid by jurisdiction. The guidance in ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Mattel is currently evaluating the impact of the adoption of ASU 2023-09 on its consolidated financial statements.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

In the discussion that follows, "Mattel" refers to Mattel, Inc. and/or one or more of its subsidiaries.

The following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear in Part I, Item 1 "Financial Statements" of this Quarterly Report on Form 10-Q. Mattel's business is seasonal with consumers making a large percentage of all toy purchases during the traditional holiday season; therefore, results of operations are most comparable to corresponding periods.

The following discussion includes currency exchange rate impact, a non-GAAP financial measure within the meaning of Regulation G promulgated by the SEC ("Regulation G"), to supplement the financial results as reported in accordance with GAAP. The currency exchange rate impact reflects the portion (expressed as a percentage) of changes in Mattel's reported results that are attributable to fluctuations in currency exchange rates. Mattel uses this non-GAAP financial measure to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. Management believes that the disclosure of this non-GAAP financial measure provides useful supplemental information to investors to allow them to better evaluate ongoing business performance and certain components of Mattel's results. This measure is not, and should not be viewed as, a substitute for GAAP financial measures.

The following discussion also includes the use of gross billings, a key performance indicator. Gross billings represent amounts invoiced to customers. It does not include the impact of sales adjustments, such as trade discounts and other allowances. Mattel presents changes in gross billings as a metric for comparing its aggregate, categorical, brand, and geographic results to highlight significant trends in Mattel's business. Changes in gross billings are discussed because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and ~~are~~ not associated with categories, brands, or individual products.

~~Note~~Amounts ~~that amounts~~ shown in millions or billions within this Item 2 may not sum due to rounding.

Overview

Mattel is a leading global toy and family entertainment company and owner of one of the ~~strongest~~most ~~catalogs~~iconic ofbrand ~~children's~~portfolios ~~and family entertainment franchises~~ in the world. Mattel creates innovative products and experiences that inspire fans, entertain audiences, and develop children through play. Mattel is focused on the following ~~evolved~~ strategy to grow its intellectual property ("IP") driven toy business and expand its entertainment offering:

•~~Accelerate~~Grow ~~topline~~toy ~~growth~~business profitably through scaling Mattel's portfolio, ~~growing~~optimizing ~~franchise brands~~operations, ~~and~~evolving ~~advancing~~demand ~~e-commerce and direct-to-consumer business~~creation, and ~~increasing~~growing ~~profitability~~franchise ~~by continuing to optimize operations~~brands; and

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

Mattel is the owner of a portfolio of iconic brands and partners with global entertainment companies to license other IP. Mattel's portfolio of owned and licensed brands and products are organized into the following categories:

Dolls—including brands such as Barbie, American Girl, Disney Princess and Disney Frozen, Monster High, and Polly Pocket. Mattel's Dolls portfolio is driven by the flagship Barbie brand and a collection of complementary brands offered globally. Empowering girls since 1959, Barbie has inspired the limitless potential of every girl by showing them that they can be anything. American Girl, with an extensive portfolio of dolls and accessories, content, gaming, and lifestyle products, is best known for imparting valuable life lessons that instill confidence through its inspiring dolls and books, featuring diverse characters from past and present. ~~American Girl products are sold directly to consumers through its website, proprietary retail stores in the United States, and at select retailers in the United States and Canada.~~

Infant, Toddler, and Preschool—including brands such as Fisher-Price, ~~Thomas~~(including &Little ~~Friends,~~People) and ~~Power~~Thomas ~~Wheels~~& Friends. As a leader in play and child development, Fisher-Price's mission is to help families by making the most fun, enriching products for infants, toddlers, and preschoolers. Thomas & Friends is an award-winning preschool train brand franchise that brings meaningful life lessons of friendship and teamwork to kids through toys, content, live events, and other consumer products.

~~Vehicles—including~~In ~~brands~~the ~~such~~first asquarter ~~Hot~~of ~~Wheels~~2024, ~~(including~~Mattel ~~Hot~~further ~~Wheels~~divided ~~Monster~~its ~~Trucks~~Infant, Toddler, and ~~Hot~~Preschool ~~Wheels~~category ~~Mario~~into ~~Kart~~three ~~(Nintendo)),~~subcategories. ~~Matchbox~~The first subcategory is Fisher-Price, ~~and~~the ~~Cars~~power ~~(Disney~~brand, ~~Pixar).~~which Inincludes ~~production~~the ~~for~~core ~~over~~Infant, 50Little ~~years~~People, ~~Hot~~and ~~Wheels~~Newborn ~~continues~~product tolines, ~~push~~as well as the ~~limits~~recently oflaunched ~~performance~~Fisher-Price ~~and~~Wood ~~design~~product ~~and~~line. ~~ignites~~The ~~the~~second ~~challenger~~subcategory ~~spirit~~is ofPreschool ~~kids~~Entertainment, ~~adults~~which includes owned IP such as Thomas & Friends and Barney, Mattel's character based Imaginext line, and ~~collectors~~partner entertainment brands. ~~From~~The ~~die-cast~~third ~~vehicles~~subcategory tois ~~tracks,~~Baby ~~playsets,~~Gear and ~~accessories~~Power Wheels, ~~the~~in which Mattel ~~Vehicles portfolio~~ has ~~broad~~decided ~~appeal~~to ~~that~~strategically ~~engages~~out-license ~~and~~or ~~excites~~exit ~~kids~~certain ofproduct ~~all ages~~lines.

2726

~~Action Figures, Building Sets, Games, and Other~~Vehicles—including brands such as ~~Masters~~Hot ofWheels ~~the~~(including ~~Universe,~~Hot ~~MEGA,~~Wheels ~~UNO,~~Monster ~~Lightyear~~Trucks ~~(Disney~~and ~~Pixar),~~Hot ~~Jurassic~~Wheels ~~World~~Mario Kart (~~NBCUniversal~~Nintendo)), ~~WWE~~Matchbox, and ~~Star~~Cars ~~Wars~~ (Disney's ~~Lucasfilm~~Pixar). ~~Mattel's~~In ~~Action~~production ~~Figures~~for ~~portfolio~~over is50 ~~comprised~~years, ofHot ~~product~~Wheels ~~lines~~continues ~~associated~~to ~~with~~push ~~licensed~~the ~~entertainment~~limits ~~franchises~~of ~~that~~performance ~~are~~and ~~driven by major tentpole releases~~design, ~~such~~and asignites ~~Lightyear~~ and ~~Jurassic~~nurtures ~~World,~~the aschallenger ~~well~~spirit asof ~~product~~kids, ~~lines from Mattel's owned IP~~adults, ~~such~~and ~~as Masters of the Universe~~collectors. AsFrom ~~the~~die-cast ~~challenger~~vehicles ~~brand~~to intracks, ~~Building Sets~~playsets, ~~MEGA sparks creativity through the power of connection with builders of all ages~~ and ~~fans of global franchises. Within Games~~accessories, ~~UNO~~the isMattel ~~the~~Vehicles ~~classic~~portfolio ~~matching~~has ~~card~~broad ~~game~~appeal that isengages ~~easy to learn~~ and ~~fast~~excites ~~fun~~fans ~~for~~of ~~everyone.~~all ~~Other includes Plush, which contains products associated with movie releases from licensed entertainment franchises, as well as Mattel-owned IP~~ages.

Action Figures, Building Sets, Games, and Other—including brands such as Masters of the Universe, MEGA, UNO, Jurassic World (NBCUniversal), Minecraft (Microsoft), WWE, and Star Wars (Disney's Lucasfilm). Mattel's Action Figures portfolio is comprised of product lines associated with licensed entertainment franchises, such as Jurassic World and WWE, as well as product lines from Mattel-owned IP, such as Masters of the Universe. As the challenger brand in Building Sets, MEGA inspires creativity through authentic building experiences for builders of all ages and fans of global franchises. Within Games, UNO is the classic matching card game that is easy to learn and fast fun for everyone. Other includes Plush, which contains products associated with movie releases from licensed entertainment franchises, as well as Mattel-owned IP.

Recent Developments

~~Mattel's~~During ~~third~~the first quarter ~~2023~~of ~~financial results showed meaningful sales growth~~2024, ~~gross~~Mattel ~~margin~~made ~~expansion,~~additional ~~and~~progress ~~improvement~~ to ~~operating~~execute ~~cash~~its ~~flows,~~multi-year ~~with~~strategy ~~significant~~to ~~contributions~~grow ~~from~~its ~~the~~IP-driven ~~theatrical~~toy ~~release~~business ofand ~~the~~expand ~~Barbie~~its ~~movie~~entertainment ~~during~~offering, ~~the~~as ~~quarter.~~it ~~Third~~expanded ~~quarter~~gross ~~2023~~margin, ~~net~~generated ~~sales~~positive ~~increased~~cash ~~$163.0~~flow ~~million~~from tooperations, ~~$1.92 billion~~ and ~~gross~~further ~~margin~~ improved toits ~~51.0%,~~financial ~~from 48~~position.2% ~~in the third quarter of 2022.~~

Mattel's ~~cash~~first ~~flows~~quarter ~~used~~net ~~for~~sales ~~operations~~ were ~~$79.6~~comparable ~~million~~with ~~for~~ the ~~first~~prior ~~nine months of 2023~~year, andeclining ~~improvement of $195.~~1 ~~million~~% as compared to the first ~~nine~~quarter ~~months~~ of ~~2022~~2023. Mattel's ~~executed~~first ~~$60.0~~quarter ~~million~~results ofincluded ~~share~~an ~~repurchases~~improvement into ~~the~~operating ~~third~~cash ~~quarter~~flows ~~of 2023,~~ and ~~has~~gross ~~executed~~margin ~~$109.9~~expansion, ~~million~~with ofsignificant ~~repurchases~~contributions ~~during~~from ~~the~~lower ~~first~~inventory ~~nine~~management ~~months~~costs, ofcost ~~2023.~~deflation, Asand ofcost ~~September~~savings. ~~30,~~First ~~2023~~quarter ~~Mattel~~gross ~~has~~margin aimproved ~~remaining~~to ~~authorization~~48.0%, offrom ~~$93~~40.20% ~~million~~in ~~under~~the ~~its~~first ~~existing~~quarter ~~share~~of ~~repurchase program~~2023.

~~Retailer~~Mattel ~~inventory~~ended ~~levels~~the ~~were~~first ~~elevated~~quarter ~~entering~~with ~~2023.~~a ~~During~~cash ~~the~~balance ~~first nine months~~ of ~~2023~~$1.13 billion, ~~retailer~~compared ~~inventory~~to ~~levels~~$461.7 ~~improved~~million ~~and~~in at the ~~end~~first quarter of ~~the~~2023. ~~third~~Cash ~~quarter~~increased ~~had~~primarily ~~decreased~~due ~~compared~~ to ~~prior~~Mattel's ~~year~~cash ~~levels.~~flows ~~Additionally~~from operations, aswhich ofwere ~~September~~$1.11 ~~30,~~billion ~~2023~~in the trailing twelve months, ~~Mattel's~~driven ~~owned~~by ~~inventory~~improved ~~had~~working ~~also~~capital, ~~decreased~~partially offset by ~~$293.2~~cash ~~million~~used ~~compared~~for tocapital ~~prior~~expenditures ~~year~~and ~~levels.~~share repurchases.

~~Mattel~~On isFebruary ~~operating~~5, in2024, athe ~~challenging~~Board ~~macro-economic~~of ~~environment~~Directors ~~with~~authorized ~~higher~~a ~~volatility~~new ~~that~~$1.00 ~~may~~billion ~~impact~~share ~~consumer~~repurchase ~~demand~~program. ToDuring the ~~extent~~first ~~the macro-economic environment remains challenging~~quarter, ~~or worsens, it may have a material effect on~~ Mattel's ~~results~~executed ~~of operations and financial condition~~$100.0 ~~Refer~~million toof ~~Part~~share I,repurchases ~~Item~~under ~~1A "Risk Factors" in~~ the ~~2022~~new ~~Annual Report on Form 10-K for further discussion regarding potential impacts on Mattel's business~~program.

~~Russia~~Additionally, in February 2024, Mattel announced the Optimizing for Profitable Growth program (the "OPG program"), a multi-year ~~Ukraine~~cost ~~War~~savings program that follows the Optimizing for Growth program (the "OFG program"). The OPG program is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel's global supply chain, with targeted annual gross cost savings of $200.0 million between 2024 and 2026.

~~The~~In ~~ongoing~~the ~~war~~first ~~between~~quarter ~~Russia~~of ~~and~~2024, ~~Ukraine~~Mattel ~~has~~announced ~~led~~an toorganizational ~~volatility~~change ~~and~~that ~~disruption~~resulted in ~~these countries. The length and impact of~~ the ~~ongoing~~American ~~war~~Girl isbusiness ~~highly~~being ~~unpredictable.~~integrated ~~While~~into Mattel's ~~has~~North noAmerica ~~direct~~commercial ~~operations~~organization. inSuch ~~Ukraine,~~integration ~~its~~resulted ~~operations~~ in ~~Russia~~a ~~have~~change ~~experienced~~to ~~significant~~Mattel's ~~disruption~~operating and ~~Mattel~~reportable ~~paused all shipments into Russia in early 2022~~segments. Mattel's ~~net~~new ~~sales~~reportable insegments ~~these~~are: ~~two~~(i) North ~~countries~~America; ~~represented~~and ~~less than 2% of total net sales during the nine months ended September~~(ii) ~~30, 2022~~International.

28Mattel is operating in a macro-economic environment that may impact consumer demand. To the extent the macro-economic environment worsens, it may have a material effect on Mattel's results of operations and financial condition. Refer to Part I, Item 1A "Risk Factors" in the 2023 Annual Report on Form 10-K for further discussion regarding potential impacts on Mattel's business.

~~Results of Operations—Third Quarter~~27

Results of Operations—First Quarter

Consolidated Results

The following table presents Mattel's consolidated results for the ~~third~~first quarter of ~~2023~~2024 and ~~2022~~2023:

	For the Three Months Ended								Year/Year Change
	September 30, 2023				September 30, 2022
	March 31, 2024				March 31, 2023
	Amount		% of NetSales		Amount		% of NetSales		%		Basis Pointsof Net Sales
	(In millions, except percentage and basis point information)
Net sales	$	~~1,918~~809.85			$	~~1,755~~814.86			9-1	%
Cost of sales	~~940~~420.96		4952.0	%	~~908~~488.98		5160.80	%	4-14	%	(~~280~~800)
Gross profit	~~977~~388.9		5148.0	%	~~846~~325.98		4840.20	%	1519	%	~~280~~800
Advertising and promotion expenses	~~124~~71.34		68.58	%	~~127~~76.60		79.3	%	-36	%	(8050)
Other selling and administrative expenses	~~379~~352.89		1943.86	%	~~327~~364.98		1844.78	%	16-3	%	~~110~~(120)
Operating income	473.9		24.7	%	391.4		22.3	%	21	%	240
Operating loss	(35.5)		-4.4	%	(115.0)		-14.1	%	-69	%	970
Interest expense	30.71		13.67	%	3331.91		13.98	%	-93	%	(3010)
Interest (income)	(417.63)		-0.2.1	%	(16.95)		-0.18	%	~~140~~165	%	(10130)
Other non-operating (income), net	(2.4)				(4.3)
Other non-operating expense (income), net	5.6				(1.4)
Income before income taxes	450.1		23.5	%	363.7		20.7	%	24	%	280
Loss before income taxes	(53.9)		-6.7	%	(138.2)		-17.0	%	-61	%	1,030
Provision for income taxes	309.3				80.0
Benefit from income taxes	(20.8)				(27.0)
(Income) from equity method investments	(54.68)				(64.27)
Net income	$	146.3	7.6	%	$	289.9	16.5	%	-50	%	(890)
Net loss	$	(28.3)	-3.5	%	$	(106.5)	-13.1	%	-73	%	960

Sales

Net sales in the ~~third~~first quarter of ~~2023~~2024 were $1809.~~92 billion~~5 million, ana ~~increase~~decrease of $~~163~~5.01 million, or 91%, as compared to $1814.766 ~~billion~~million in the ~~third~~first quarter of ~~2022~~2023. The ~~increase~~decrease in net sales was the result of ana ~~increase~~decrease in gross billings of $~~173~~12.74 million, partially offset by ana ~~increase~~decrease in sales adjustments of $~~10.~~7.4 million.

Gross billings represent amounts invoiced to a customer and do not include the impact of sales adjustments, such as trade discounts and other allowances. Changes in gross billings are discussed below because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and are not associated with categories, brands, or individual products. The following tables provide a summary of Mattel's consolidated gross billings by categories, along with supplemental information by brand, for the ~~third~~first quarter of ~~2023~~2024 and ~~2022~~2023:

	For the Three Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30,2023		September 30,2022
	March 31,2024		March 31,2023
	(In millions, except percentage information)
Gross Billings by Categories
Dolls	$	~~884~~294.5	$	~~697~~306.21	27-4	%	31	%
Infant, Toddler, and Preschool	~~361~~135.10		~~370~~150.12		-210	%	31	%
Vehicles	~~518~~297.57		~~437~~283.96		185	%	31	%
Action Figures, Building Sets, Games, and Other	~~357~~171.7		~~442~~171.95		~~-19~~—	%	2—	%
Gross Billings	$	~~2,121~~898.89	$	~~1,948~~911.03	9-1	%	31	%
Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie	$	~~605~~177.15	$	~~519~~176.69	16—	%	21	%
Hot Wheels	~~454~~258.81		~~371~~244.69		225	%	31	%
Fisher-Price	317.0		319.0		-1	%	2	%
Fisher-Price (a)	93.4		93.1		—	%	1	%
Other	~~744~~370.90		~~737~~396.95		1-7	%	31	%
Gross Billings	$	~~2,121~~898.89	$	~~1,948~~911.03	9-1	%	31	%

2928

~~Gross~~(a) ~~billings~~Beginning ~~were $2.12 billion~~ in the ~~third~~first quarter of ~~2023~~2024, ~~an increase of $173.7 million, or 9%, as compared to $1.95 billion in~~ the ~~third~~Fisher-Price ~~quarter~~power ofbrand ~~2022, with a favorable impact from changes in currency exchange rates of three percentage points. The increase in gross billings~~ was ~~primarily~~revised ~~due~~ to ~~higher~~exclude ~~billings~~Baby ofGear ~~Dolls~~ and ~~Vehicles,~~Imaginext ~~partially~~products. ~~offset~~Prior byperiod ~~lower~~amounts ~~billings~~have ofbeen ~~Action~~reclassified ~~Figures,~~to ~~Building~~conform ~~Sets,~~to ~~Games,~~the ~~and~~current ~~Other, and Infant, Toddler, and Preschool~~presentation.

~~Dolls~~Gross ~~gross~~ billings ~~increased~~were ~~27%,~~$898.9 million in the first quarter of ~~which~~2024, a decrease of $12.4 million, or 1%, ~~was~~as ~~due~~compared to ~~higher~~$911.3 million ~~billings~~in the first quarter of ~~Barbie~~2023, ~~driven~~with ~~primarily~~a byfavorable ~~licensing~~impact ~~revenues~~from ~~associated~~changes ~~with~~in ~~the~~currency ~~release~~exchange rates of ~~the~~one ~~Barbie~~percentage ~~movie,~~point. ~~12%~~The decrease in gross billings was primarily due to ~~higher~~lower billings of ~~Disney~~Infant, ~~Princess~~Toddler, and ~~Disney~~Preschool ~~Frozen~~and ~~products~~Dolls, ~~and~~partially 4%offset ~~was~~by ~~due to~~ higher billings of ~~Monster High products~~Vehicles.

~~Infant,~~Dolls ~~Toddler~~gross billings decreased 4%, ~~and~~of ~~Preschool~~which ~~gross~~5% was due to lower billings ~~decreased~~of Disney Princess and Disney Frozen products and 2%, ~~primarily~~was due to lower billings of ~~Thomas~~Polly &Pocket ~~Friends~~products, partially offset by higher billings of Trolls products of 2%.

~~Vehicles~~Infant, Toddler, and Preschool gross billings ~~increased~~decreased 1810%, ~~primarily~~of which 7% was due to ~~higher~~lower billings of ~~Hot~~Baby Gear and Power Wheels products, and 3% was due to lower billings of Preschool Entertainment products.

~~Action~~Vehicles ~~Figures, Building Sets, Games, and Other~~ gross billings ~~decreased~~increased 195%, ~~of which 12% was~~ due to ~~lower billings of Jurassic World products and 8% was due to lower billings of Lightyear products, following their theatrical releases during the second quarter of 2022, partially offset by~~ higher billings of ~~Buildings~~Hot ~~Sets~~Wheels products ~~of 4%~~.

~~Sales~~Action ~~adjustments generally represent arrangements with Mattel's customers to provide sales incentives~~Figures, ~~support~~Building ~~customer promotions~~Sets, ~~and provide allowances for returns and defective merchandise. Such programs are based primarily on customer purchases~~Games, ~~customer performance of specified promotional activities,~~ and ~~other~~Other specified factors such as sales to consumers. Additionally, sales adjustments may include foreign currency transaction gains and losses from the remeasurement of accounts receivable denominated in currencies that are different from the relevant entity’s functional currency. Sales adjustments increased to $203.0 million in the third quarter of 2023, from $192.3 million in the third quarter of 2022, due to higher gross billings. ~~Sales~~were ~~adjustments~~flat ~~as a percentage of net sales was relatively consistent at 10~~year-over-year.~~6% in the third quarter of 2023, as compared to 11.0% in the third quarter of 2022.~~

Sales adjustments generally represent arrangements with Mattel's customers to provide sales incentives, support customer promotions, and provide allowances for returns and 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. Additionally, sales adjustments may include foreign currency transaction gains and losses from the remeasurement of accounts receivable denominated in currencies that are different from the relevant entity’s functional currency. Sales adjustments decreased to $89.4 million in the first quarter of 2024, from $96.8 million in the first quarter of 2023. Sales adjustments as a percentage of net sales decreased to 11.0% in the first quarter of 2024, as compared to 11.9% in the first quarter of 2023. The decreased rate was due to a shift in sales channel mix resulting in a higher proportion of sales with lower average sales adjustment rates.

Cost of Sales

Cost of sales ~~increased~~decreased by $3268.02 million, or 414%, to $~~940~~420.9 6 million in the ~~third~~first quarter of ~~2023~~2024 from $~~908~~488.9 8 million in the ~~third~~first quarter of ~~2022~~2023. Within cost of sales, ~~royalty~~product ~~expense~~and ~~increased~~other costs decreased by $1467.57 million, or 2018%, to $87319.61 million in the ~~third~~first quarter of ~~2023~~2024 from $73386.28 million in the ~~third~~first quarter of ~~2022,~~2023. ~~freight~~Royalty ~~and~~expense ~~logistics~~was ~~expenses~~relatively ~~increased~~consistent byat $836.~~8 million, or 11%, to $92.0~~1 million in the ~~third~~first quarter of ~~2023~~2024, ~~from~~as compared to $8336.27 million in the ~~third~~first quarter of ~~2022,~~2023. ~~and~~Freight ~~product~~ and ~~other~~logistics ~~costs~~expenses ~~increased~~were byrelatively ~~$8.7 million,~~consistent orat ~~1%, to~~ $~~761~~65.3 5 million in the ~~third~~first quarter of ~~2023~~2024, ~~from~~as compared to $~~752~~65.5 3 million in the ~~third~~first quarter of ~~2022~~2023.

Gross Margin

Gross margin increased to 5148.0% in the ~~third~~first quarter of ~~2023~~2024 from 4840.20% in the ~~third~~first quarter of ~~2022~~2023. The increase in gross margin ~~was~~included ~~primarily~~lower ~~due~~inventory tomanagement ~~favorable~~costs ~~mix~~ of ~~170~~230 basis points, ~~which~~including ~~primarily~~lower ~~related~~inventory toobsolescence ~~the~~and ~~release~~close-out ~~of the Barbie movie~~sales, ~~favorable~~cost ~~pricing~~deflation of ~~140~~220 basis points, ~~incremental~~ realized savings from the Optimizing for Profitable Growth program of ~~130~~120 basis points, ~~and~~favorable ~~cost~~mix ~~deflation~~ of 7080 basis points., ~~These~~and favorable ~~factors~~foreign ~~were~~currency ~~partially~~exchange ~~offset by unfavorable fixed cost absorption~~ and other supply chain costs of ~~230~~150 basis points.

Advertising and Promotion Expenses

Advertising and promotion expenses primarily consist of: (i) media costs, which include the media, planning, and buying fees for television, print, and online advertisements;, (ii) non-media costs, which include commercial and website production, merchandising, and promotional costs;, (iii) retail advertising costs, which include consumer direct catalogs; and (iv) generic advertising costs, which include trade show costs. Advertising and promotion expenses as a percentage of net sales ~~decreased~~were torelatively ~~6.5%~~flat inat ~~the third quarter of 2023 from 7~~8.38% in the ~~third~~first quarter of ~~2022~~2024, ~~primarily~~compared ~~due~~ to ~~the~~ 9.3% ~~increase~~ in ~~net sales as compared to~~ the ~~third~~first quarter of ~~2022~~2023.

Other Selling and Administrative Expenses

Other selling and administrative expenses were $~~379~~352.89 million, or 1943.86% of net sales, in the ~~third~~first quarter of ~~2023~~2024, ana ~~increase~~decrease of $5111.98 million, as compared to $~~327~~364.98 million, or 1844.78% of net sales, in the ~~third~~first quarter of ~~2022~~2023. The ~~increase~~decrease in other selling and administrative expenses was primarily due to ~~higher~~lower severance and restructuring charges of $2417.7 6 million, ~~higher~~and ~~incentive~~realized ~~compensation~~savings ~~expense~~from cost savings programs of $188.0 1 million, ~~and~~partially ~~salary~~offset ~~and~~by market-related pay increases of $79.5 1 million, ~~partially~~and ~~offset~~information bytechnology ~~incremental~~and ~~realized~~administrative ~~savings~~costs ~~from the Optimizing for Growth program~~ of $124.5 7 million.

Interest Expense

Interest expense was $30.7 1 million in the ~~third~~first quarter of ~~2023~~2024, relatively flat as compared to $3331.~~9 million~~1 ~~in the third quarter of 2022. The decrease in interest expense was due to the $250.0~~ million ~~repayment of the 2013 Senior Notes due March 2023~~ in the ~~fourth~~first quarter of ~~2022~~2023.

3029

~~Provision~~Interest ~~for~~ Income ~~Taxes~~

~~Mattel's~~Interest ~~provision for~~ income ~~taxes~~increased ~~was~~by $~~309~~10.3 8 million ~~in the third quarter of 2023, as compared~~ to $8017.0 3 million in the ~~third~~first quarter of ~~2022.~~2024 ~~The~~from ~~provision for income taxes during the three months ended 2023 included a net discrete income tax expense of~~ $~~200~~6.~~7 million,~~5 ~~which included the establishment of a valuation allowance of $212.4~~ million onin ~~certain foreign deferred tax assets during~~ the ~~third~~first quarter of 2023 ~~resulting from the planned intra-group transfer of certain IP rights~~, ~~partially offset by other discrete income tax benefits of $11.7 million. During the three months ended September 30, 2022, Mattel recognized a net discrete income tax benefit of $19.4 million,~~ primarily ~~related~~due to ~~income~~higher ~~taxes~~average ~~recorded~~invested oncash ~~a discrete basis~~ in ~~various~~the ~~jurisdictions~~first ~~and~~quarter ~~reassessments~~ of ~~prior years' tax liabilities~~2024.

~~Evaluating~~Benefit ~~the~~from ~~need~~Income 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. During the third quarter of 2023, Mattel finalized a plan to complete an intra-group transfer of certain IP rights, resulting in the establishment of a valuation allowance on certain foreign deferred tax assets of $212.4 million that will not be realized upon execution of the plan. While the transfer will not result in a taxable gain, Mattel expects to recognize a one-time tax benefit of approximately $53 million in the fourth quarter of 2023, when the transaction is completed, in connection with the establishment of deferred tax assets related to the transferred IP.Taxes

Mattel's benefit from income taxes was $20.8 million in the first quarter of 2024, compared to a benefit of $27.0 million in the first quarter of 2023. During the three months ended March 31, 2024, Mattel recognized a net discrete tax benefit of $8.4 million primarily related to tax elections filed to amortize certain intangible assets transferred as part of Mattel's intra-group IP rights transfer, partially offset by reassessments of prior years' tax liabilities. During the three months ended March 31, 2023, Mattel recognized a net discrete income tax expense of $0.1 million, primarily related to $1.8 million of reassessments of prior years' tax liabilities, partially offset by undistributed earnings of certain foreign subsidiaries.

The Organization for Economic Co-operation and Development (OECD) reached an agreement among various countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two. Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two rules. Mattel is continuing to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available. Some of the legislative changes could impact Mattel's effective tax rate and tax liabilities. When and how these laws and regulations are adopted or enacted by various countries in which Mattel operates could increase tax complexity and uncertainty and may adversely affect Mattel's worldwide effective tax rate, income tax expense and cash flows. Mattel does not expect the provisions effective in 2024 to have a materially adverse impact on its results of operations, financial position, or cash flows.

Segment Results

North America Segment

~~The~~Beginning ~~following~~in ~~tables~~the ~~provide~~first aquarter ~~summary~~ of 2024, Mattel's ~~net~~American ~~sales,~~Girl ~~segment~~business ~~operating~~was ~~income,~~integrated ~~and~~into ~~gross~~its ~~billings~~North byAmerica ~~categories,~~commercial ~~along~~organization ~~with~~and ~~supplemental~~is ~~information~~reported bywithin ~~brand, for~~ the North America operating segment. ~~for~~Prior to the ~~third~~first quarter of ~~2023~~2024, ~~and~~Mattel's ~~2022:~~American Girl business was a separate reportable operating segment. Prior period amounts have been reclassified to conform to the current period presentation.

	For the Three Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30,2023		September 30,2022
	(In millions, except percentage information)
Net Sales	$	1,104.4	$	1,002.1	10	%	—	%
Segment Operating Income	405.7		337.3		20	%

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

Net sales for the North America segment in the third quarter of 2023 were $1.10 billion, an increase of $102.2 million, or 10%, as compared to $1.00 billion in the third quarter of 2022. The increase in net sales was the result of an increase in gross billings of $108.9 million, partially offset by an increase in sales adjustments of $6.6 million.


	For the Three Months Ended				% Change as Reported		Currency Exchange Rate Impact
	March 31, 2024		March 31, 2023
	(In millions, except percentage information)
Net Sales	$	477.8	$	470.5	2	%	—	%
Segment Operating Income	73.0		32.1		127	%

Net sales for the North America segment in the first quarter of 2024 were $477.8 million, an increase of $7.3 million, or 2%, as compared to $470.5 million in the first quarter of 2023. The increase in net sales was the result of a decrease in sales adjustments of $3.7 million and an increase in gross billings of $3.6 million.


	For the Three Months Ended				% Change as Reported		Currency Exchange Rate Impact
	March 31, 2024		March 31, 2023
	(In millions, except percentage information)
Gross Billings by Categories
Dolls	$	164.7	$	167.2	-1	%	—	%
Infant, Toddler, and Preschool	80.5		87.2		-8	%	—	%
Vehicles	150.2		142.2		6	%	—	%
Action Figures, Building Sets, Games, and Other	111.0		106.3		4	%	—	%
Gross Billings	$	506.4	$	502.8	1	%	—	%

Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie	$	92.4	$	89.5	3	%	—	%
Hot Wheels	126.8		119.7		6	%	—	%
Fisher-Price (a)	53.7		49.1		9	%	—	%
Other	233.5		244.4		-4	%	—	%
Gross Billings	$	506.4	$	502.8	1	%	—	%

(a) Beginning in the first quarter of 2024, the Fisher-Price power brand was revised to exclude Baby Gear and Imaginext products. Prior period amounts have been reclassified to conform to the current presentation.

Gross billings for the North America segment were $506.4 million in the first quarter of 2024, an increase of $3.6 million, or 1%, as compared to $502.8 million in the first quarter of 2023. The increase in the North America segment gross billings was due to higher billings of Vehicles and Action Figures, Building Sets, Games, and Other, partially offset by lower billings of Infant, Toddler, and Preschool and Dolls.

Dolls gross billings decreased 1%, of which 2% was due to lower billings of Disney Princess and Disney Frozen products, partially offset by higher billings of Trolls products of 1%.

Infant, Toddler, and Preschool gross billings decreased 8%, of which 11% was due to lower billings of Baby Gear and Power Wheels products, partially offset by higher billings of Fisher-Price products of 5%.

Vehicles gross billings increased 6%, of which 5% was due to higher billings of Hot Wheels products.

Action Figures, Building Sets, Games, and Other gross billings increased 4%, of which 6% was due to higher billings of Action Figures products, partially offset by lower billings of Other products of 2%.

Sales adjustments decreased to $28.6 million in the first quarter of 2024 from $32.3 million in the first quarter of 2023. Sales adjustments as a percentage of net sales decreased to 6.0% in the first quarter of 2024, as compared to 6.9% in the first quarter of 2023, due to a shift in sales channel mix resulting in a higher proportion of sales with lower average sales adjustment rates.

Cost of sales decreased by $35.5 million, or 12%, to $257.1 million in the first quarter of 2024 from $292.6 million in the first quarter of 2023, due to a decrease in product and other costs of $37.8 million.

Gross margin increased to 46.2% in the first quarter of 2024 from 37.8% in the first quarter of 2023. The increase in gross margin included lower inventory management costs of 370 basis points, including lower inventory obsolescence and close-out sales, cost deflation of 230 basis points, realized savings from the Optimizing for Profitable Growth program of 100 basis points, and favorable mix and other of 140 basis points.

North America segment operating income was $73.0 million in the first quarter of 2024, as compared to segment operating income of $32.1 million in the first quarter of 2023, primarily due to higher gross profit of $42.8 million.

	For the Three Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30,2023		September 30,2022
	(In millions, except percentage information)
Gross Billings by Categories
Dolls	$	468.5	$	342.9	37	%	—	%
Infant, Toddler, and Preschool	230.6		239.8		-4	%	—	%
Vehicles	263.4		226.3		16	%	-1	%
Action Figures, Building Sets, Games, and Other	214.1		258.7		-17	%	—	%
Gross Billings	$	1,176.6	$	1,067.8	10	%	—	%
Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie	$	349.9	$	278.5	26	%	—	%
Hot Wheels	225.7		184.1		23	%	—	%
Fisher-Price	204.8		206.4		-1	%	—	%
Other	396.2		398.8		-1	%	—	%
Gross Billings	$	1,176.6	$	1,067.8	10	%	—	%

Gross billings for the North America segment were $1.18 billion in the third quarter of 2023, an increase of $108.9 million, or 10%, as compared to $1.07 billion in the third quarter of 2022. The increase in the North America segment gross billings was primarily due to higher billings of Dolls and Vehicles, partially offset by lower billings of Action Figures, Building Sets, Games, and Other, and Infant, Toddler, and Preschool.

Dolls gross billings increased 37%, of which 21% was due to higher billings of Barbie, driven primarily by licensing revenues associated with the release of the Barbie movie, and 15% was due to higher billing of Disney Princess and Disney Frozen products.

Infant, Toddler, and Preschool gross billings decreased 4%, primarily due to lower billings of Thomas & Friends products.

Vehicles gross billings increased 16%, due to higher billings of Hot Wheels products.

Action Figures, Building Sets, Games, and Other gross billings decreased 17%, of which 11% was due to lower billings of Jurassic World products and 7% was due to lower billings of Lightyear products, following their theatrical releases during the second quarter of 2022, and 4% was due to lower billings of other Action Figures products, partially offset by higher billings of Buildings Sets products of 4%.

Sales adjustments increased to $72.2 million in the third quarter of 2023 from $65.6 million in the third quarter of 2022, primarily due to higher gross billings. Sales adjustments as a percentage of net sales were flat at 6.5% in the third quarter of 2023 and 2022.

Cost of sales increased by $31.2 million, or 6%, to $553.3 million in the third quarter of 2023 from $522.2 million in the third quarter of 2022, due to an increase in product and other costs of $13.3 million, an increase in freight and logistics expenses of $9.1 million, and an increase in royalty expenses of $8.8 million.

Gross margin in the third quarter of 2023 increased to 49.9% from 47.9% in the third quarter of 2022, primarily due to favorable mix of 140 basis points, which primarily related to the release of the Barbie movie, incremental realized savings from the Optimizing for Growth program of 130 basis points, favorable pricing of 80 basis points, and cost deflation of 70 basis points, partially offset by unfavorable fixed cost absorption and other supply chain costs of 220 basis points.

North America segment operating income was $405.7 million in the third quarter of 2023, as compared to segment operating income of $337.3 million in the third quarter of 2022, primarily due to higher gross profit.

International Segment

The following tables provide a summary of Mattel's net sales, segment operating income, and gross billings by categories, along with supplemental information by brand, for the International segment for the ~~third~~first quarter of ~~2023~~2024 and ~~2022~~2023:

For the Three Months Ended

% Change asReported

CurrencyExchange RateImpact

September 30,2023

September 30,2022

March 31,2024

March 31,2023

(In millions, except percentage information)

Net Sales

~~771~~331.87

~~704~~344.61

10-4

Segment Operating Income

~~202~~9.53

~~162~~0.83

24N/M

~~Net~~N/M ~~sales~~- ~~for~~Not the International segment in the third quarter of 2023 were $771.8 million, an increase of $67.2 million, or 10%, as compared to $704.6 million in the third quarter of 2022. The increase in net sales was the result of an increase in gross billings of $71.4 million, partially offset by an increase in sales adjustments of $4.2 million.meaningful

	For the Three Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30,2023		September 30,2022
	(In millions, except percentage information)
Gross Billings by Categories
Dolls	$	371.7	$	303.5	22	%	7	%
Infant, Toddler, and Preschool	130.5		130.3		—	%	8	%
Vehicles	255.0		211.6		21	%	8	%
Action Figures, Building Sets, Games, and Other	143.6		184.2		-22	%	5	%
Gross Billings	$	900.9	$	829.5	9	%	7	%
Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie	$	255.2	$	241.1	6	%	6	%
Hot Wheels	229.1		187.5		22	%	7	%
Fisher-Price	112.2		112.6		—	%	8	%
Other	304.4		288.3		6	%	7	%
Gross Billings	$	900.9	$	829.5	9	%	7	%

Net sales for the International segment in the first quarter of 2024 were $331.7 million, a decrease of $12.4 million, or 4%, as compared to $344.1 million in the first quarter of 2023. The decrease in net sales was the result of a decrease in gross billings of $16.1 million, partially offset by a decrease in sales adjustments of $3.7 million.

Gross billings for the International segment were $900.9 million in the third quarter of 2023, an increase of $71.4 million, or 9%, as compared to $829.5 million in the third quarter of 2022, with a favorable impact from changes in currency exchange rates of seven percentage points. The increase in the International segment gross billings was due to higher billings of Dolls and Vehicles, partially offset by lower billings of Action Figures, Building Sets, Games, and Other.


	For the Three Months Ended				% Change as Reported		Currency Exchange Rate Impact
	March 31, 2024		March 31, 2023
	(In millions, except percentage information)
Gross Billings by Categories
Dolls	$	129.8	$	138.9	-7	%	2	%
Infant, Toddler, and Preschool	54.5		63.0		-13	%	2	%
Vehicles	147.5		141.5		4	%	2	%
Action Figures, Building Sets, Games, and Other	60.7		65.2		-7	%	1	%
Gross Billings	$	392.5	$	408.6	-4	%	2	%

Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie	$	85.1	$	87.3	-3	%	2	%
Hot Wheels	131.3		125.2		5	%	2	%
Fisher-Price (a)	39.6		43.9		-10	%	3	%
Other	136.4		152.0		-10	%	2	%
Gross Billings	$	392.5	$	408.6	-4	%	2	%

~~Dolls~~(a) ~~gross~~Beginning ~~billings~~in ~~increased~~the ~~22%,~~first ofquarter ~~which 11% was due to higher billings~~ of ~~Disney~~2024, ~~Princess~~the ~~and~~Fisher-Price ~~Disney~~power ~~Frozen~~brand ~~products, 9%~~ was ~~due~~revised to ~~higher~~exclude ~~billings~~Baby ofGear ~~Monster~~and ~~High~~Imaginext products,. ~~and~~Prior 5%period ~~was~~amounts ~~due~~have tobeen ~~higher~~reclassified ~~billings~~to ofconform ~~Barbie,~~to ~~driven primarily by licensing revenues associated with~~ the ~~release~~current ~~of the Barbie movie~~presentation.

Gross billings for the International segment were $392.5 million in the first quarter of 2024, a decrease of $16.1 million, or 4%, as compared to $408.6 million in the first quarter of 2023, with a favorable impact from changes in currency exchange rates of two percentage points. The decrease in the International segment gross billings was due to lower billings of Dolls, Infant, Toddler, and Preschool, ~~gross~~and ~~billings~~Action ~~were~~Figures, ~~flat~~Building ~~year-over-year~~Sets, Games, and Other, partially offset by higher billings of Vehicles.

~~Vehicles~~Dolls gross billings ~~increased~~decreased 217%, primarily due to lower billings of Disney Princess and Disney Frozen products of 7%, lower billings of Enchantimals products of 2%, and lower billings of Polly Pocket products of 2%, partially offset by higher billings of ~~Hot~~Monster ~~Wheels~~High products of 5%.

~~Action Figures~~Infant, ~~Building Sets~~Toddler, ~~Games,~~ and ~~Other~~Preschool gross billings decreased 2213%, ~~primarily due to lower billings~~ of ~~Jurassic~~which ~~World~~7% ~~products~~was ofdue ~~13%~~to ~~and~~ lower billings of ~~Lightyear~~Fisher-Price products ofand 104%, ~~following~~was ~~their~~due ~~theatrical~~to ~~releases~~lower ~~during the second quarter of 2022, partially offset by higher~~ billings of ~~Buildings~~Preschool ~~Sets~~Entertainment products ~~of 3%~~.

~~Sales~~Vehicles ~~adjustments~~gross billings increased ~~to $129.1 million in the third quarter of 2023 from $124.9 million in the third quarter of 2022. Sales adjustments as a percentage of net sales decreased to 16.7~~4%, ~~in the third quarter of 2023 from 17.7% in the third quarter of 2022. The decrease in sales adjustments as a percentage of net sales was primarily~~ due to higher ~~gross~~ billings, ~~which includes licensing revenues associated with the release~~ of ~~the~~Hot ~~Barbie~~Wheels ~~movie~~products.

~~Cost~~Action ofFigures, ~~sales~~Building ~~increased by $28.5 million~~Sets, ~~or 8%~~Games, toand ~~$399.4 million~~Other ingross ~~the~~billings ~~third~~decreased ~~quarter~~7%, of ~~2023~~which ~~from $370.~~9 ~~million~~% inwas ~~the~~due ~~third~~to ~~quarter~~lower billings of ~~2022,~~Action ~~primarily~~Figures ~~due~~products, topartially anoffset ~~increase~~by inhigher ~~product~~billings ~~and~~of ~~other~~Games ~~costs~~products of ~~$22~~4%.~~6 million.~~

3332

~~Gross~~Sales ~~margin~~adjustments ~~increased~~decreased to 48$60.3%8 million in the ~~third~~first quarter of ~~2023~~2024 from 47$64.4%5 million in the ~~third~~first quarter of ~~2022~~2023, primarily due to ~~favorable~~lower ~~pricing~~gross ~~actions~~billings. ofSales ~~250~~adjustments ~~basis~~as ~~points,~~a ~~favorable~~percentage ~~mix~~ of ~~230~~net ~~basis~~sales ~~points,~~were ~~which~~relatively ~~primarily~~flat ~~related~~at to18.3% ~~the~~in ~~release of~~ the ~~Barbie~~first ~~movie,~~quarter ~~incremental realized savings from the Optimizing for Growth program~~ of ~~140 basis points~~2024, ~~and~~as ~~cost~~compared ~~deflation~~to ~~of 80 basis points~~18.7% ~~These~~in ~~favorable~~the ~~factors~~first ~~were~~quarter ~~partially offset by unfavorable foreign currency exchange~~ of ~~330 basis points and unfavorable fixed cost absorption from lower production volumes and other supply chain costs of 280 basis points~~2023.

~~International~~Cost ~~segment~~of ~~operating~~sales ~~income~~decreased ~~was~~by $~~202~~17.56 million, inor ~~the third quarter of 2023~~9%, asto ~~compared~~$184.1 million toin ~~segment~~the ~~operating~~first ~~income~~quarter of 2024 from $~~162~~201.87 million in the ~~third~~first quarter of ~~2022~~2023, primarily due to ~~higher~~a ~~gross~~decrease ~~profit~~in product and other costs of $15.7 million.

~~American~~Gross ~~Girl~~margin ~~Segment~~increased to 44.5% in the first quarter of 2024 from 41.4% in the first quarter of 2023. The increase in gross margin included favorable mix of 200 basis points, cost deflation of 190 basis points, realized savings from the Optimizing for Profitable Growth program of 140 basis points, lower inventory management costs of 80 basis points, including lower inventory obsolescence, partially offset by unfavorable foreign currency exchange and other supply chain costs of 300 basis points.

~~The~~International ~~following~~segment ~~table~~operating ~~provides~~income awas ~~summary~~$9.3 million in the first quarter of ~~Mattel's~~2024, ~~net~~as ~~sales~~compared ~~and~~to segment operating ~~loss~~income ~~for~~of $0.3 million in the ~~American~~first ~~Girl~~quarter ~~segment~~of ~~for~~2023, ~~the~~primarily ~~third~~due ~~quarter~~to higher gross profit of ~~2023~~$5.2 million and ~~2022:~~lower advertising and promotion expenses of $2.7 million.

	For the Three Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30,2023		September 30,2022
	(In millions, except percentage information)
Net Sales	$	42.6	$	49.0	-13	%	—	%
Segment Operating Loss	(4.6)		(9.0)		-49	%

Net sales for the American Girl segment in the third quarter of 2023 were $42.6 million, a decrease of $6.4 million, or 13%, as compared to $49.0 million in the third quarter of 2022. The decrease in net sales was the result of a decrease in gross billings of $6.5 million, or 13%. Gross billings decreased to $44.3 million in the third quarter of 2023 from $50.7 million in the third quarter of 2022, primarily due to lower billings of Truly Me products.

Sales adjustments were flat at $1.7 million in the third quarter of 2023 and 2022.

Cost of sales decreased by $3.0 million, or 13%, to $20.0 million in the third quarter of 2023, as compared to a 13% decrease in net sales, primarily due to a decrease in product and other costs of $2.4 million.

Gross margin was relatively consistent at 52.9% in the third quarter of 2023, as compared to 53.0% in the third quarter of 2022.

American Girl segment operating loss was $4.6 million in the third quarter of 2023, as compared to segment operating loss of $9.0 million in the third quarter of 2022, primarily due to lower advertising and promotion expenses.

Results of Operations—First Nine Months

Consolidated Results

The following table presents Mattel's consolidated results for the first nine months of 2023 and 2022:

	For the Nine Months Ended								Year/Year Change
	September 30, 2023				September 30, 2022
	Amount		% of NetSales		Amount		% of NetSales		%		Basis Pointsof Net Sales
	(In millions, except percentage and basis point information)
Net sales	$	3,820.5			$	4,032.8			-5	%
Cost of sales	2,027.0		53.1	%	2,154.1		53.4	%	-6	%	(30)
Gross profit	1,793.5		46.9	%	1,878.7		46.6	%	-5	%	30
Advertising and promotion expenses	290.3		7.6	%	291.5		7.2	%	—	%	40
Other selling and administrative expenses	1,081.6		28.3	%	990.6		24.6	%	9	%	370
Operating income	421.6		11.0	%	596.5		14.8	%	-29	%	(380)
Interest expense	92.5		2.4	%	99.7		2.5	%	-7	%	(10)
Interest (income)	(15.4)		-0.4	%	(5.1)		-0.1	%	204	%	(30)
Other non-operating (income) expense, net	(6.0)				12.0
Income before income taxes	350.5		9.2	%	489.9		12.1	%	-28	%	(290)
Provision for income taxes	296.8				130.5
(Income) from equity method investments	(13.3)				(18.4)
Net income	$	67.0	1.8	%	$	377.8	9.4	%	-82	%	(760)

Sales

Net sales in the first nine months of 2023 were $3.82 billion, a decrease of $212.2 million, or 5%, as compared to $4.03 billion in the first nine months of 2022. The decrease in net sales was the result of a decrease in gross billings of $228.1 million, partially offset by a decrease in sales adjustments of $15.9 million.

	For the Nine Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30,2023		September 30,2022
	(In millions, except percentage information)
Gross Billings by Categories
Dolls	$	1,631.1	$	1,494.6	9	%	1	%
Infant, Toddler, and Preschool	708.6		850.3		-17	%	1	%
Vehicles	1,165.9		1,048.3		11	%	1	%
Action Figures, Building Sets, Games, and Other	755.0		1,095.5		-31	%	1	%
Gross Billings	$	4,260.6	$	4,488.7	-5	%	1	%
Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie	$	1,064.7	$	1,118.4	-5	%	1	%
Hot Wheels	1,014.9		899.5		13	%	2	%
Fisher-Price	607.3		719.1		-16	%	1	%
Other	1,573.7		1,751.6		-10	%	1	%
Gross Billings	$	4,260.6	$	4,488.7	-5	%	1	%

Gross billings were $4.26 billion in the first nine months of 2023, a decrease of $228.1 million, or 5%, as compared to $4.49 billion in the first nine months of 2022. The decrease in gross billings for the first nine months of 2023 was primarily due to lower billings of Action Figures, Building Sets, Games, and Other, and Infant, Toddler, and Preschool, partially offset by higher billings of Dolls and Vehicles.

Dolls gross billings increased 9%, of which 11% was due to higher billings of Disney Princess and Disney Frozen products, and 6% was due to higher billings of Monster High products, partially offset by lower billings of Barbie products of 4%, and lower billings of Enchantimals products of 2%.

Infant, Toddler, and Preschool gross billings decreased 17%, of which 13% was due to lower billings of Fisher-Price products and 2% was due to lower billings of Fisher-Price Friends products.

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

Action Figures, Building Sets, Games, and Other gross billings decreased 31%, of which 16% was due to lower billings of Jurassic World products and 10% was due to lower billings of Lightyear products, following their theatrical releases during the second quarter of 2022, and 4% was due to lower billings of other Action Figures products.

Sales adjustments generally represent arrangements with Mattel's customers to provide sales incentives, support customer promotions, and provide allowances for returns and 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. Additionally, sales adjustments may include foreign currency transaction gains and losses from the remeasurement of accounts receivable denominated in currencies that are different from the relevant entity’s functional currency. Sales adjustments decreased to $440.1 million in the first nine months of 2023 from $456.0 million in the first nine months of 2022, primarily due to lower gross billings. Sales adjustments as a percentage of net sales was relatively consistent at 11.5% in the first nine months of 2023, as compared to 11.3% in the first nine months of 2022.

Cost of Sales

Cost of sales decreased by $127.1 million, or 6%, to $2.03 billion in the first nine months of 2023 from $2.15 billion in the first nine months of 2022. Within cost of sales, product and other costs decreased by $132.1 million, or 8%, to $1.62 billion in the first nine months of 2023 from $1.75 billion in the first nine months of 2022, freight and logistics expenses increased by $7.9 million, or 4%, to $230.2 million in the first nine months of 2023, as compared to $222.3 million in the first nine months of 2022, and royalty expense was relatively consistent at $175.0 million in the first nine months of 2023, as compared to $177.9 million in the first nine months of 2022.

Gross Margin

Gross margin increased to 46.9% in the first nine months of 2023 from 46.6% in the first nine months of 2022. The increase in gross margin was primarily due to favorable pricing of 150 basis points, incremental realized savings from the Optimizing for Growth program of 140 basis points, and favorable mix of 90 basis points, which primarily related to the release of the Barbie movie, partially offset by inventory management efforts of 100 basis points, including higher close-out sales and inventory obsolescence, cost inflation of 50 basis points, and unfavorable fixed cost absorption and other supply chain costs of 200 basis points.

Advertising and Promotion Expenses

Advertising and promotion expenses primarily consist of: (i) media costs, which include the media, planning, and buying fees for television, print, and online advertisements; (ii) non-media costs, which include commercial and website production, merchandising, and promotional costs; (iii) retail advertising costs, which include consumer direct catalogs; and (iv) generic advertising costs, which include trade show costs. Advertising and promotion expenses as a percentage of net sales was relatively consistent at 7.6% in the first nine months of 2023, as compared to 7.2% in the first nine months of 2022.

Other Selling and Administrative Expenses

Other selling and administrative expenses were $1.08 billion, or 28.3% of net sales, in the first nine months of 2023, as compared to $990.6 million, or 24.6% of net sales, in the first nine months of 2022. The increase in other selling and administrative expenses was primarily due to higher severance and restructuring charges of $45.9 million, market-related pay increases of $35.4 million, higher incentive compensation of $21.1 million, and a prior year gain on the sale of the American Girl corporate office and distribution center in the second quarter of 2022 of $15.2 million, partially offset by incremental realized savings from the Optimizing for Growth program of $32.2 million.

Interest Expense

Interest expense was $92.5 million in the first nine months of 2023, as compared to $99.7 million in the first nine months of 2022. The decrease in interest expense was primarily due to the $250.0 million repayment of the 2013 Senior Notes due March 2023 in the fourth quarter of 2022.

Provision for Income Taxes

Mattel's provision for income taxes was $296.8 million in the first nine months of 2023, as compared to $130.5 million in the first nine months of 2022. The provision for income taxes during the nine months ended 2023 included a net discrete income tax expense of $201.0 million, which included the establishment of a valuation allowance of $212.4 million on certain foreign deferred tax assets during the third quarter of 2023 resulting from the planned intra-group transfer of certain IP rights, partially offset by other discrete income tax benefits of $11.4 million. During the nine months ended September 30, 2022, Mattel recognized a net discrete income tax benefit of $4.8 million, primarily related to income taxes recorded on a discrete basis in various jurisdictions and reassessments of prior years' tax liabilities.

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. During the third quarter of 2023, Mattel finalized a plan to complete an intra-group transfer of certain IP rights, resulting in the establishment of a valuation allowance on certain foreign deferred tax assets of $212.4 million that will not be realized upon execution of the plan. While the IP transfer will not result in a taxable gain, Mattel expects to recognize a one-time tax benefit of approximately $53 million in the fourth quarter of 2023, when the transaction is completed, in connection with the establishment of deferred tax assets related to the transferred IP.

Segment Results

North America Segment

	For the Nine Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30, 2023		September 30, 2022
	(In millions, except percentage information)
Net Sales	$	2,138.2	$	2,330.8	-8	%	—	%
Segment Operating Income	589.7		707.6		-17	%

Net sales for the North America segment in the first nine months of 2023 were $2.14 billion, a decrease of $192.5 million, or 8%, as compared to $2.33 billion in the first nine months of 2022. The decrease in net sales was the result of a decrease in gross billings of $201.9 million, partially offset by a decrease in sales adjustments of $9.3 million.

	For the Nine Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30, 2023		September 30, 2022
	(In millions, except percentage information)
Gross Billings by Categories
Dolls	$	812.3	$	715.8	13	%	-1	%
Infant, Toddler, and Preschool	437.7		549.6		-20	%	—	%
Vehicles	579.1		550.7		5	%	—	%
Action Figures, Building Sets, Games, and Other	453.4		668.3		-32	%	—	%
Gross Billings	$	2,282.5	$	2,484.4	-8	%	—	%
Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie	$	587.6	$	599.2	-2	%	—	%
Hot Wheels	492.3		458.4		7	%	-1	%
Fisher-Price	380.9		469.2		-19	%	—	%
Other	821.8		957.6		-14	%	—	%
Gross Billings	$	2,282.5	$	2,484.4	-8	%	—	%

Gross billings for the North America segment were $2.28 billion in the first nine months of 2023, a decrease of $201.9 million, or 8%, as compared to $2.48 billion in the first nine months of 2022. The decrease in the North America segment gross billings for the first nine months of 2023 was primarily due to lower billings of Action Figures, Building Sets, Games, and Other, and Infant, Toddler, and Preschool, partially offset by higher billings of Dolls and Vehicles.

Dolls gross billings increased 13%, of which 12% was due to higher billings of Disney Princess and Disney Frozen products and 5% was due to higher billings of Monster High products, partially offset by lower billings of Polly Pocket products of 2%.

Infant, Toddler, and Preschool gross billings decreased 20%, of which 16% was due to lower billings of Fisher-Price products and 2% was due to lower billings of Thomas & Friends products.

Vehicles gross billings increased 5%, primarily due to higher billings of Hot Wheels products.

Action Figures, Building Sets, Games, and Other gross billings decreased 32%, of which 16% was due to lower billings of Jurassic World products and 9% was due to lower billings of Lightyear products, following their theatrical releases during the second quarter of 2022, and 4% was due to lower billings of other Action Figures products.

Sales adjustments decreased to $144.3 million in the first nine months of 2023 from $153.6 million in the first nine months of 2022, primarily due to lower gross billings. Sales adjustments as a percentage of net sales were relatively consistent at 6.7% for the first nine months of 2023, as compared to 6.6% for the first nine months of 2022.

Cost of sales decreased by $84.6 million, or 7%, to $1.16 billion in the first nine months of 2023 from $1.25 billion in the first nine months of 2022, primarily due to a decrease in product and other costs of $86.8 million.

Gross margin in the first nine months of 2023 decreased to 45.5% from 46.4% in the first nine months of 2022, primarily due to inventory management efforts of 90 basis points, including higher close-out sales and inventory obsolescence, cost inflation of 50 basis points, and unfavorable fixed cost absorption and other supply chain costs of 240 basis points. These negative factors were partially offset by incremental realized savings from the Optimizing for Growth program of 120 basis points, favorable pricing of 90 basis points, and favorable mix of 80 basis points, which primarily related to the release of the Barbie movie.

North America segment operating income was $589.7 million in the first nine months of 2023, as compared to segment operating income of $707.6 million in the first nine months of 2022. The decrease was primarily due to lower gross profit.

International Segment

The following tables provide a summary of Mattel's net sales, segment operating income, and gross billings by categories, along with supplemental information by brand, for the International segment for the first nine months of 2023 and 2022:

	For the Nine Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30,2023		September 30,2022
	(In millions, except percentage information)
Net Sales	$	1,578.6	$	1,584.9	—	%	3	%
Segment Operating Income	245.8		268.0		-8	%

Net sales for the International segment were relatively consistent at $1.58 billion, in the first nine months of 2023 and 2022.

	For the Nine Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30,2023		September 30,2022
	(In millions, except percentage information)
Gross Billings by Categories
Dolls	$	712.0	$	658.3	8	%	3	%
Infant, Toddler, and Preschool	270.9		300.6		-10	%	3	%
Vehicles	586.8		497.6		18	%	3	%
Action Figures, Building Sets, Games, and Other	301.7		427.3		-29	%	3	%
Gross Billings	$	1,871.3	$	1,883.9	-1	%	3	%
Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie	$	477.1	$	519.3	-8	%	2	%
Hot Wheels	522.6		441.1		18	%	3	%
Fisher-Price	226.4		249.9		-9	%	4	%
Other	645.1		673.6		-4	%	3	%
Gross Billings	$	1,871.3	$	1,883.9	-1	%	3	%

Gross billings for the International segment were $1.87 billion in the first nine months of 2023, a decrease of $12.6 million, or 1%, as compared to $1.88 billion in the first nine months of 2022. The decrease in the International segment gross billings was due to lower billings of Action Figures, Building Sets, Games, and Other, and Infant, Toddler, and Preschool, partially offset by higher billings of Vehicles and Dolls.

Dolls gross billings increased 8%, of which 12% was due to higher billings of Disney Princess and Disney Frozen products and 8% was due to higher billings of Monster High products, partially offset by lower billings of Barbie products of 6%, and lower billings of Enchantimals products of 4%.

Infant, Toddler, and Preschool gross billings decreased 10%, primarily due to lower billings of Fisher-Price products.

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

Action Figures, Building Sets, Games, and Other gross billings decreased 29%, of which 15% was due to lower billings of Jurassic World products and 10% was due to lower billings of Lightyear products, following their theatrical releases during the second quarter of 2022, and 2% was due to lower billings of other Action Figures products.

Sales adjustments decreased to $292.7 million in the first nine months of 2023 from $299.0 million in the first nine months of 2022, primarily due to lower gross billings. Sales adjustments as a percentage of net sales were relatively consistent at 18.5% for the first nine months of 2023, as compared to 18.9% for the first nine months of 2022.

Cost of sales increased by $13.4 million, or 2%, to $866.1 million in the first nine months of 2023 from $852.8 million in the first nine months of 2022, primarily due to an increase in product and other costs of $10.0 million.

Gross margin decreased to 45.1% in the first nine months of 2023 from 46.2% in the first nine months of 2022, primarily due to unfavorable foreign currency exchange of 220 basis points, inventory management efforts of 120 basis points, including higher close-out sales and inventory obsolescence, cost inflation of 40 basis points, and unfavorable fixed cost absorption from lower production volumes and other supply chain costs of 250 basis points. These negative factors were partially offset by favorable pricing actions of 250 basis points, incremental realized savings from the Optimizing for Growth program of 160 basis points, and favorable mix of 110 basis points, which primarily related to the release of the Barbie movie.

International segment operating income was $245.8 million in the first nine months of 2023, as compared to segment operating income of $268.0 million in the first nine months of 2022, primarily due to lower gross profit.

American Girl Segment

The following table provides a summary of Mattel's net sales and segment operating loss for the American Girl segment for the first nine months of 2023 and 2022:

	For the Nine Months Ended				% Change asReported		CurrencyExchange RateImpact
	September 30,2023		September 30,2022
	(In millions, except percentage information)
Net Sales	$	103.7	$	117.1	-11	%	—	%
Segment Operating Loss	(24.1)		(20.4)		18	%

Net sales for the American Girl segment in the first nine months of 2023 were $103.7 million, a decrease of $13.4 million, or 11%, as compared to $117.1 million in the first nine months of 2022. The decrease in net sales was the result of a decrease in gross billings of $13.7 million, or 11%, to $106.8 million in the first nine months of 2023 from $120.5 million in the first nine months of 2022. The decrease in net sales was primarily due to lower billings of Girl of the Year dolls.

Sales adjustments were $3.1 million in the first nine months of 2023, as compared to $3.3 million in the first nine months of 2022.

Cost of sales decreased by $6.0 million, or 11%, to $50.6 million in the first nine months of 2023, as compared to an 11% decrease in net sales in the first nine months of 2023, primarily due to a decrease in product and other costs of $5.2 million.

Gross margin decreased to 51.2% in the first nine months of 2023 from 51.7% in the first nine months of 2022, primarily due to cost inflation of 190 basis points, and unfavorable fixed cost absorption of 90 basis points, partially offset by incremental realized savings from the Optimizing for Growth program of 120 basis points and favorable product mix and other of 110 basis points.

American Girl segment operating loss was $24.1 million in the first nine months of 2023, as compared to segment operating loss of $20.4 million in the first nine months of 2022, primarily due to lower gross profit of $7.5 million. In addition, other selling and administrative expenses were flat compared to prior year, as a $15.2 million gain on sale of the American Girl corporate office and distribution center that was recognized in the first nine months of 2022 was offset by lower rent expense of $7.1 million and lower miscellaneous other selling and administrative expenses in the first nine months of 2023.

Cost Savings Program

Optimizing for ~~Growth~~Profitable ~~(formerly Capital Light)~~Growth

InOn February ~~2021~~7, 2024, Mattel announced the ~~Optimizing~~OPG ~~for Growth~~ program, a multi-year cost savings program that ~~integrates~~follows ~~and~~the ~~expands~~OFG ~~upon~~program, which concluded in the ~~previously~~fourth ~~announced~~quarter ~~Capital~~of ~~Light~~2023. The OPG program ~~(the~~is ~~"Program"),~~designed ~~which~~to ~~had~~achieve ~~targeted~~further ~~annual~~efficiency ~~gross~~and cost savings ofopportunities, ~~$250 million~~primarily ~~from~~within Mattel’s global supply chain, including its manufacturing footprint. The OPG program includes cost savings actions ~~expected~~in toconnection bewith ~~completed~~discontinuing ~~beginning~~production ~~2021~~at ~~through~~a ~~2023.~~plant Inin ~~February~~China as previously announced in the third quarter of 2023, ~~Mattel~~as ~~expanded~~well ~~the~~as ~~Program~~savings ~~and~~from ~~increased~~other previous actions that were not recognized in the ~~targeted~~OFG program. Targeted annual gross cost savings from ~~$250~~actions ~~million~~associated towith ~~$300~~the ~~million~~OPG program, ~~reflecting~~which ~~additional~~are ~~initiatives,~~expected ~~including~~to ~~actions~~be tocompleted ~~further~~by ~~streamline~~2026, ~~Mattel's~~are ~~organizational~~$200 ~~structure~~million. AsOf ofthe ~~September~~$200 ~~30,~~million ~~2023,~~in ~~Mattel~~targeted ~~had realized~~ annual gross ~~cost~~costs savings, of approximately ~~$297~~70% ~~million~~is expected to benefit cost of sales and ~~expects~~30% is expected to ~~exceed~~benefit other selling and administrative expenses. Total expected cash expenditures under the ~~targeted~~OPG ~~annual~~program ~~gross~~are ~~costs~~expected ~~savings~~to ofbe between $~~300~~130 and $165 million ~~during~~and ~~the~~total ~~fourth~~non-cash ~~quarter~~charges ofare ~~2023~~expected to be up to $5 million.

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

Of the $300 million in targeted gross cost savings, approximately 60% is expected to benefit cost of sales, 30% is expected to benefit other selling and administrative expenses, and 10% is expected to benefit advertising and promotion expenses. Estimated total cash expenditures associated with the Program, excluding previous actions taken under the Capital Light program, are expected to be approximately $155 to $185 million.


Optimizing for Profitable Growth – Actions			Estimate of Cost
Employee severance			$90 to $105 million
Other restructuring costs			$10 to $20 million
Non-cash charges			up to $5 million
Total estimated severance and restructuring costs (a)			$100 to $130 million
Investments			$30 to $40 million
Total estimated actions			$130 to $170 million

~~Mattel~~In ~~estimates~~connection with the ~~cost~~OPG ofprogram, ~~actions~~Mattel ~~for~~recorded severance and other restructuring costs in the ~~Program,~~following ~~excluding~~cost ~~previous~~and ~~actions~~expense ~~taken~~categories ~~under~~within ~~the~~operating ~~Capital~~income ~~Light~~in ~~program,~~the toconsolidated bestatements asof ~~follows~~operations:

Optimizing for Growth - Actions	Estimate of Cost
	For the Three Months Ended
Employee severance	$50 to $60 million
	March 31,2024
Real estate/supply chain optimization and other restructuring costs	$30 to $40 million
	(In millions)
Non-cash charges (a)	$55 to $60 million
Cost of sales (a)	$	2.2
Total estimated severance and restructuring costs	$135 to $160 million
Other selling and administrative expenses (b)	7.5
Information technology enhancements and other investments	$75 to $85 million
	$	9.7
Total estimated actions	$210 to $245 million

(a)Non-cash charges include $45.4 million of currency translation losses that were recognized within other non-operating expense, net, in the consolidated statement of operations during the fourth quarter of 2022 as a result of Mattel's liquidation of its subsidiary in Argentina, which was substantially completed in 2022.

Cumulatively, in conjunction with previous actions taken under the Capital Light program prior to 2021, targeted annual gross cost savings for the Program are $375 million by 2023, with total expected cash expenditures of approximately $195 to $225 million, and total expected non-cash charges of approximately $75 million. Of the $375 million in targeted annual gross cost savings, approximately 65% was expected to benefit cost of sales, 25% was expected to benefit other selling and administrative expenses, and 10% was expected to benefit advertising and promotion expenses.

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

	For the Three Months Ended				For the Nine Months Ended
	September 30,2023		September 30,2022		September 30,2023		September 30,2022
	(In millions)
Cost of sales (a)	$	(0.1)	$	1.4	$	(1.3)	$	9.8
Other selling and administrative expenses (b)	3.1		4.4		31.6		16.6
	$	3.0	$	5.8	$	30.3	$	26.4

(a)Severance and other restructuring costs recorded within cost of sales in the consolidated statements of operations are included in segment operating income in "Note 21 to the Consolidated Financial Statements—Segment Information."

(b)Severance and other restructuring costs recorded within other selling and administrative expenses in the consolidated statements of operations are included in corporate and other expense in "Note 21 to the Consolidated Financial Statements—Segment Information."

As of ~~September~~March 3031, ~~2023~~2024, Mattel has recorded cumulative severance and other restructuring charges related to the ~~Program~~OPG program of approximately $~~196~~35 million, which ~~include~~includes approximately $730.4 million of non-cash charges. ~~Non-cash charges include $45.4 million recorded in non-operating expense, net, during 2022 related to the liquidation of~~ Mattel's ~~subsidiary in Argentina. Mattel~~ realized cumulative cost savings (before severance, restructuring costs, and cost inflation) of approximately $~~372~~17 million, which represents approximately 7055% benefit to cost of sales, 25and 45% benefit to other selling and administrative expenses, ~~and 5% benefit to advertising and promotion expenses,~~ as of ~~September 30, 2023, in connection with the Program.~~

4133

March 31, 2024, in connection with the OPG Program.

Other Cost Savings Actions

OnAs ~~September~~of 14December 31, 2023, Mattel ~~committed~~concluded tothe ~~cost~~OFG ~~savings~~program, ~~actions~~which ~~not~~was ~~included~~a inmulti-year ~~the~~cost ~~Program~~savings toprogram ~~optimize~~that ~~its~~had ~~manufacturing~~integrated ~~footprint~~and byexpanded ~~discontinuing~~upon ~~production~~the atprevious aCapital ~~plant~~Light ~~located~~program. inThe ~~China~~OFG program, ~~which~~excluding previous actions ~~were~~taken ~~announced~~under tothe ~~plant~~Capital ~~employees~~Light ~~on November 8~~program, ~~2023.~~had ~~The~~realized ~~targeted~~gross annual ~~gross~~ cost savings ~~from these actions, which are expected to be completed at the end~~ of ~~2024, are~~ approximately $21 343 million ~~and~~upon ~~are~~conclusion ~~expected to benefit cost~~ of ~~sales of~~ the ~~North America and International segments~~program. ~~During~~In the first three months ~~ended~~of ~~September 30,~~ 2023, Mattel recorded severance expense ~~in connection with these actions~~ of $2520.3 7 million within other selling and administrative expenses in the consolidated ~~statements~~statement of operations. ~~Total~~related ~~expected cash charges in connection with these actions are approximately $30~~ to ~~$35 million,~~the ~~which~~OFG ~~consist of severance and other restructuring costs~~program. Total expected non-cash charges are approximately $6 million, which consist of accelerated depreciation expense. Additionally, Mattel expects to invest approximately $6 million in capital expenditures to support incremental production capabilities at Mattel's other manufacturing plants.

Additionally, induring the first ~~nine~~three months of 2023, Mattel executed ~~other cost savings~~ actions ~~not included in the Program~~ to further streamline its organizational structure. Inthat ~~connection~~were ~~with~~not ~~these~~included ~~actions~~in the OFG program, ~~Mattel~~and recorded severance ~~expense~~costs of $63.1 2 million in connection with these actions within other selling and administrative expenses in the consolidated statement of operations.

Liquidity and Capital Resources

Mattel's primary sources of liquidity are its domestic and foreign cash and equivalents balances, short-term borrowing facilities, including its $1.40 billion senior secured revolving credit facility (the "Revolving Credit Facility"), and access to capital markets to fund its operations and obligations. Such obligations may include capital expenditures, debt service, future royalty payments pursuant to licensing agreements, future inventory and service purchases, and required cash contributions and payments related to benefit plans. Of Mattel's $~~455~~1.713 ~~million~~billion in cash and equivalents at ~~September~~March 3031, ~~2023~~2024, $~~195~~701.54 million was held by foreign subsidiaries, including $5156.58 million held in Russia. Mattel's cash held in Russia can be used within the country; however, its movement out of Russia is currently limited. In early 2022, Mattel paused all shipments into Russia.

Cash flows from operating activities could be negatively impacted by decreased demand for Mattel's products, which could result from factors such as, but not limited to, adverse economic conditions and changes in public and consumer preferences, or by increased costs associated with manufacturing and distribution of products or shortages in raw materials or component parts. Additionally, Mattel's ability to issue long-term debt and obtain seasonal financing could be adversely affected by factors such as, but not limited to, global economic crises and tight credit environments, an inability to comply with its debt covenants and its Revolving Credit Facility covenants, or deterioration of Mattel's credit ratings. However, based on Mattel's current business plan and factors known to date, it is expected that existing cash and equivalents, cash flows from operations, availability under the Revolving Credit Facility, and access to capital markets will be sufficient to meet working capital and operating expenditure requirements for the next twelve months and in the long-term.

Current Market Conditions

Mattel is exposed to financial market risk resulting from changes in interest and foreign currency exchange rates.

~~Consistent with prior periods,~~ Mattel intends to utilize its existing cash and cash equivalents, cash flow from operations, and ~~borrowing~~borrowings under the Revolving Credit Facility to meet its short-term liquidity needs. At ~~September~~March 3031, ~~2023~~2024, Mattel had no outstanding borrowings under the Revolving Credit Facility and approximately $9 million in outstanding letters of credit under the Revolving Credit Facility.

Market conditions could affect certain terms of other debt instruments that Mattel enters into from time to time.

Mattel monitors the third-party depository institutions that hold Mattel's cash and equivalents. Mattel's emphasis is primarily on safety and liquidity of principal, and secondarily on maximizing the yield on those funds. Mattel diversifies its cash and equivalents among counterparties and securities to minimize risks.

Mattel is subject to credit risks relating to the ability of its counterparties in hedging transactions to meet their contractual payment obligations. The risks related to creditworthiness and nonperformance have been considered in the fair value measurements of Mattel's foreign currency forward exchange contracts. Mattel closely monitors its counterparties and takes action, as necessary, to manage its counterparty credit risk.

Mattel expects that some of its customers and vendors may experience difficulty in obtaining the liquidity required to buy inventory or raw materials. Mattel monitors its customers' financial condition and their liquidity in order to mitigate accounts receivable collectability risks, and customer terms and credit limits are adjusted, if necessary. Additionally, Mattel uses a variety of financial arrangements to support the collectability of accounts receivable of customers deemed to be a credit risk, including requiring letters of credit, purchasing various forms of credit insurance with unrelated third parties, or requiring cash in advance of shipment.

Mattel sponsors defined benefit pension plans and postretirement benefit plans for its employees. Actual returns below the expected rate of return, along with changes in interest rates that affect the measurement of the liability, would impact the amount and timing of Mattel's future contributions to these plans.

Cash Flow Activities

Cash flows ~~used~~provided ~~for~~by operating activities were $7935.65 million in the first ~~nine~~three months of ~~2023~~2024, as compared to cash flows used for operating activities of $~~274~~206.84 million in the first ~~nine~~three months of ~~2022~~2023. The ~~decrease~~change was due to $~~335~~165.13 million of ~~lower~~improvements to working capital ~~usage,~~and ~~partially~~favorable ~~offset by~~ changes in net income, excluding the impact of ~~the~~non-cash ~~establishment~~items. The improvements to working capital included $206.0 million of afavorability ~~valuation~~from ~~allowance~~changes onto ~~foreign~~accounts ~~deferred~~receivable, ~~tax~~partially ~~assets~~offset by the impact of $~~212~~40.46 million of unfavorable changes to inventories, and ~~other~~unfavorable ~~non-cash~~changes ~~items~~in accounts payable, accrued liabilities, and income taxes payable of $19.1 million.

Cash flows used for investing activities were $9328.94 million in the first ~~nine~~three months of ~~2023~~2024, as compared to $9742.5 million in the first ~~nine~~three months of ~~2022~~2023. The change was primarily due to ~~higher net proceeds from foreign currency forward exchange contracts of $16.8 million and~~ lower capital expenditures of $812.~~8 million, partially offset by lower proceeds from the sale of assets of $19.~~5 million in the first ~~nine~~three months of 2023.

Cash flows used for financing activities were $~~119~~131.53 million in the first ~~nine~~three months of ~~2023~~2024, as compared to $953.52 million in the first ~~nine~~three months of ~~2022~~2023. The ~~increase~~change was primarily due to $66.0 million of increased share repurchases in the first three months of ~~$109.9 million~~2024 inas compared to the first ~~nine~~three months of 2023.

Seasonal Financing

See Part I, Item 1 "Financial Statements—Note 8 to the Consolidated Financial Statements—Seasonal Financing" of this Quarterly Report on Form 10-Q.

Financial Position

Mattel's cash and equivalents decreased $~~305~~131.51 million to $~~455~~1.713 ~~million~~billion at ~~September~~March 3031, ~~2023~~2024 from $~~761~~1.226 ~~million~~billion at December 31, ~~2022~~2023, primarily due to ~~capital expenditures of~~ $~~117~~100.50 million, of share repurchases ~~of $109.9 million~~ and ~~cash~~capital ~~flows~~expenditures ~~used for operating activities~~ of $7930.65 million during the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. Mattel's cash and equivalents increased $~~106~~668.85 million to $~~455~~1.713 ~~million~~billion at ~~September~~March 3031, ~~2023~~2024 from $~~349~~461.07 million at ~~September~~March 3031, ~~2022~~2023, primarily due to ~~trailing twelve month~~ cash flows generated from operating activities of $~~638~~1.011 ~~million,~~billion ~~partially~~in ~~offset~~the bytrailing ~~the~~twelve ~~repayment~~months, ofpartially ~~the~~offset by $~~250~~269.0 million ~~aggregate principal amount~~ of ~~the~~share ~~2013~~repurchases ~~Senior~~and ~~Notes~~$147.8 million ~~due March 2023 in the fourth quarter~~ of ~~2022,~~ capital expenditures ~~of $176.7 million~~ in the trailing twelve months~~, and share repurchases of $109~~.~~9 million in the first nine months of 2023.~~

Accounts receivable ~~increased~~decreased $~~710~~408.86 million to $1673.573 ~~billion~~million at ~~September~~March 3031, ~~2023~~2024 from $~~860~~1.208 ~~million~~billion at December 31, ~~2022~~2023, primarily due to ~~the~~seasonal ~~seasonality~~declines ofas ~~Mattel's~~year-end ~~business~~receivables are collected. Accounts receivable ~~increased~~were $~~189~~673.53 million ~~to $1.57 billion~~ at ~~September~~March 3031, ~~2023~~2024, ~~from~~relatively flat as compared to $1673.388 ~~billion~~million at ~~September~~March 3031, ~~2022, primarily due to the increase in net sales in the third quarter of~~ 2023 ~~compared to the prior year~~.

Inventories ~~decreased~~increased $~~103~~97.57 million to $~~790~~669.53 million at ~~September~~March 3031, ~~2023~~2024 from $~~894~~571.16 million at December 31, ~~2022~~2023, primarily due to ~~higher~~seasonal inventory ~~production and cost inflation in 2022~~build. Inventories decreased $~~293~~291.27 million to $~~790~~669.53 million at ~~September~~March 3031, ~~2023~~2024 from $1961.080 ~~billion~~million at ~~September~~March 3031, ~~2022~~2023, primarily due to ~~higher~~lower ~~net sales in the third quarter of 2023, and higher inventory~~ production and product cost ~~inflation in 2022~~deflation.

Prepaid expenses and other current assets increased $1155.31 million to $~~224~~262.87 million at ~~September~~March 3031, ~~2023~~2024 from $~~213~~207.5 million at December 31, ~~2022~~2023, ~~primarily~~which ~~due~~included to increases in prepaid ~~royalties.~~income ~~Prepaid~~taxes ~~expenses~~of ~~and~~$16.2 million, ~~other~~prepaid ~~current~~value ~~assets~~added ~~decreased~~taxes byof $4413.1 9 million, toand prepaid insurance of $~~224~~12.8 3 million. atPrepaid ~~September 30,~~expenses ~~2023~~and ~~from~~other current assets were $~~268~~262.97 million at ~~September~~March 3031, ~~2022~~2024, ~~primarily~~relatively ~~due~~flat toas acompared ~~decrease~~to in$269.7 ~~derivative~~million ~~receivables~~at ~~of $31.4~~March ~~million.~~31, 2023.

43Accounts payable and accrued liabilities decreased $224.4 million to $1.08 billion at March 31, 2024 from $1.31 billion at December 31, 2023, due to seasonal declines in expenditure levels. Accounts payable and accrued liabilities increased $128.7 million to $1.08 billion at March 31, 2024 from $955.5 million at March 31, 2023, primarily due to increases in accrued incentive compensation of $124.6 million.

Accounts payable and accrued liabilities increased $103.0 million to $1.25 billion at September 30, 2023 from $1.15 billion at December 31, 2022, primarily due to increases in accrued incentive compensation of $86.3 million and accrued interest of $26.6 million. Accounts payable and accrued liabilities decreased $22.6 million to $1.25 billion at September 30, 2023 from $1.28 billion at September 30, 2022, primarily due to lower payables associated with inventory production, partially offset by an increase in accrued incentive compensation of $22.3 million.35

A summary of Mattel's capitalization is as follows:

	September 30, 2023				September 30, 2022				December 31, 2022
	March 31, 2024				March 31, 2023				December 31, 2023
	(In millions, except percentage information)
Cash and equivalents	$	~~455~~1,130.72			$	~~349~~461.07			$	~~761~~1,261.24
Short-term borrowings	—				—				—
2010 Senior Notes due October 2040	250.0				250.0				250.0
2011 Senior Notes due November 2041	300.0				300.0				300.0
2013 Senior Notes due March 2023	—				250.0				—
2019 Senior Notes due December 2027	600.0				600.0				600.0
2021 Senior Notes due April 2026	600.0				600.0				600.0
2021 Senior Notes due April 2029	600.0				600.0				600.0
Debt issuance costs and debt discount	(2118.19)				(2523.53)				(2420.40)
Total debt	2,~~328~~331.91		5354	%	2,~~574~~326.57		5755	%	2,~~325~~330.60		5352	%
Stockholders' equity	2,~~035~~025.53		4746		1,~~967~~937.57		4345		2,~~056~~149.32		4748
Total capitalization (debt plus equity)	$	4,~~364~~356.4	100	%	$	4,~~541~~264.94	100	%	$	4,~~381~~479.92	100	%

Total debt, ~~including short-term borrowings,~~ was $2.33 billion at ~~September~~March 3031, ~~2023~~2024, ~~flat as compared to $2.33 billion at~~ December 31, ~~2022.~~2023 ~~Total~~and ~~debt, including short-term borrowings, was $2.33 billion at September~~March 3031, 2023, ~~as compared to $2~~respectively.57 ~~billion at September 30, 2022. The decrease was due to the repayment of the $250.0 million aggregate principal amount of the 2013 Senior Notes due March 2023 in the fourth quarter of 2022.~~

Stockholders' equity decreased $20123.89 million to $2.0403 billion at ~~September~~March 3031, ~~2023~~2024 from $2.0615 billion at December 31, ~~2022~~2023, primarily due to share repurchases of $~~109~~100.90 million, ~~partially~~and ~~offset~~a by net ~~income~~loss of $6728.03 million for the first ~~nine~~three months of ~~2023 and the net effect of share based compensation and related issuance of treasury stock of $44~~2024.6 ~~million.~~ Stockholders' equity increased $6887.07 million to $2.0403 billion at ~~September~~March 3031, ~~2023~~2024 from $1.9794 billion at ~~September~~March 3031, ~~2022~~2023, primarily due to net income ~~in the trailing twelve months~~ of $83292.25 million and the ~~net~~impact ~~effect~~ of share -based compensation ~~and~~on ~~related~~additional ~~issuance~~paid-in ofcapital ~~treasury stock~~ of $5784.7 3 million during the trailing twelve months, partially offset by $269.0 million of share repurchases ofduring ~~$109~~the trailing twelve months.~~9 million.~~

Litigation

See Part I, Item 1 "Financial Statements—Note 20 to the Consolidated Financial Statements—Contingencies" of this Quarterly Report on Form 10-Q.

Application of Critical Accounting Policies and Estimates

Mattel's critical accounting policies and estimates are included in the ~~2022~~2023 Annual Report on Form 10-K and did not materially change during the first ~~nine~~three months of ~~2023~~2024.

New Accounting Pronouncements

See Part I, Item 1 "Financial Statements—Note 22 to the Consolidated Financial Statements—New Accounting Pronouncements" of this Quarterly Report on Form 10-Q.

Non-GAAP Financial Measure

To supplement the financial results presented in accordance with GAAP, Mattel presents a non-GAAP financial measure within the meaning of Regulation G promulgated by the SEC. The non-GAAP financial measure that Mattel presents is currency exchange rate impact. Mattel uses this measure to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. Mattel believes that the disclosure of this non-GAAP financial measure provides useful supplemental information to investors to be able to better evaluate ongoing business performance and certain components of Mattel's results. This measure is not, and should not be viewed as, a substitute for GAAP financial measures and may not be comparable to similarly-titled measures used by other companies.

Currency Exchange Rate Impact

The currency exchange rate impact reflects the portion (expressed as a percentage) of changes in Mattel's reported results that are attributable to fluctuations in currency exchange rates.

For entities reporting in currencies other than the U.S. dollar, Mattel calculates the percentage change of period-over-period results at constant currency exchange rates (established as described below) by translating current period and prior period results using these rates and then determines the currency exchange rate impact percentage by calculating the difference between the percentage change at such constant currency exchange rates and the percentage change at actual exchange rates.

The constant currency exchange rates are determined by Mattel at the beginning of each year and are applied consistently during the year. They are generally different from the actual exchange rates in effect during the current or prior period due to volatility in actual foreign currency exchange rates. Mattel considers whether any changes to the constant currency rates are appropriate at the beginning of each year. The exchange rates used for these constant currency calculations are generally based on prior year actual exchange rates.36

~~Mattel~~period ~~believes~~results ~~that~~using ~~the~~these ~~disclosure~~rates ofand ~~the~~then ~~percentage~~determines ~~impact~~the ~~of foreign~~ currency ~~changes~~exchange israte ~~useful~~impact ~~supplemental~~percentage ~~information~~by ~~for~~calculating ~~investors~~the todifference bebetween ~~able to gauge Mattel's current business performance and~~ the ~~longer-term~~percentage ~~strength~~change ofat ~~its~~such ~~overall~~constant ~~business since foreign~~ currency ~~changes~~exchange ~~could~~rates ~~potentially~~and ~~mask underlying sales trends. The disclosure of~~ the percentage ~~impact~~change ofat ~~foreign~~actual ~~currency~~ exchange ~~allows investors to calculate the impact on a constant currency basis and also enhances their ability to compare financial results from one period to another~~rates.

The constant currency exchange rates are determined by Mattel at the beginning of each year and are applied consistently during the year. They are generally different from the actual exchange rates in effect during the current or prior period due to volatility in actual currency exchange rates. Mattel considers whether any changes to the constant currency rates are appropriate at the beginning of each year. The exchange rates used for these constant currency calculations are generally based on prior year actual exchange rates.

Mattel believes that the disclosure of the percentage impact of currency changes is useful supplemental information for investors to be able to gauge Mattel's current business performance and the longer-term strength of its overall business since currency changes could potentially mask underlying sales trends. The disclosure of the percentage impact of currency exchange allows investors to calculate the impact on a constant currency basis and also enhances their ability to compare financial results from one period to another.

Key Performance Indicator

Gross billings represent amounts invoiced to customers. It does not include the impact of sales adjustments, such as trade discounts and other allowances. Mattel presents changes in gross billings as a metric for comparing its aggregate, categorical, brand, and geographic results to highlight significant trends in Mattel's business. Changes in gross billings are discussed because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and ~~are~~ not associated with categories, brands, or individual products.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Foreign Currency Exchange Rate Risk

Currency exchange rate fluctuations may impact Mattel's results of operations and cash flows. The ~~Chinese yuan,~~ Euro, ~~Russian~~Chinese ~~ruble~~yuan, and ~~Turkish~~Mexican ~~lira~~peso were the primary currencies that caused foreign currency transaction exposure for Mattel during the first ~~nine~~three months of ~~2023~~2024. Mattel seeks to mitigate its exposure to foreign currency exchange risk by monitoring its foreign currency transaction exposure for the year and partially hedging such exposure using foreign currency forward exchange contracts primarily to hedge its purchase and sale of inventory and other intercompany transactions denominated in foreign currencies. These contracts generally have maturity dates of up to 24 months. For those intercompany receivables and payables that are not hedged, the transaction gains or losses are recorded in the consolidated statements of operations in the period in which the exchange rate changes as part of operating income or other non-operating expense (income) ~~expense~~, net based on the nature of the underlying transaction. 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. In addition, Mattel manages its exposure to currency exchange rate fluctuations through the selection of currencies used for international borrowings. Mattel does not trade in financial instruments for speculative purposes.

45Mattel's financial position is also impacted by currency exchange rate fluctuations on translation of its net investments in subsidiaries with non-U.S. dollar functional currencies. Assets and liabilities of subsidiaries with non-U.S. dollar functional currencies are translated into U.S. dollars at fiscal period-end exchange rates. Income, expense, and cash flow items are translated at weighted-average exchange rates prevailing during the fiscal period. The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive loss within stockholders' equity. Mattel's primary currency translation adjustments for the three months ended March 31, 2024 were related to its net investments in entities having functional currencies denominated in the Mexican peso, Chilean peso, and Russian ruble.

~~Mattel's~~There ~~financial~~are ~~position~~numerous isfactors ~~also~~impacting ~~impacted~~the amount by ~~currency~~which ~~exchange~~Mattel's ~~rate~~financial ~~fluctuations~~results onare ~~translation~~affected ofby ~~its~~foreign ~~net~~currency ~~investments~~translation inand ~~subsidiaries~~transaction ~~with~~gains ~~non-U.S.~~and ~~dollar~~losses ~~functional~~resulting ~~currencies.~~from ~~Assets~~changes ~~and~~in ~~liabilities~~currency ofexchange ~~subsidiaries~~rates, ~~with~~including, ~~non-U.S.~~but ~~dollar~~not ~~functional~~limited ~~currencies~~to, ~~are~~the ~~translated~~level ~~into~~of ~~U.S.~~foreign ~~dollars~~currency atforward ~~fiscal period-end~~ exchange ~~rates.~~contracts ~~Income,~~in ~~expense,~~place ~~and cash flow items are translated~~ at ~~weighted-average~~a ~~exchange~~given ~~rates~~time ~~prevailing~~and ~~during~~ the ~~fiscal~~volume ~~period.~~of ~~The~~foreign ~~resulting~~ currency-denominated ~~translation~~transactions ~~adjustments~~in ~~are~~a ~~recorded~~given asperiod. aHowever, ~~component~~assuming ofthat ~~accumulated~~such ~~other~~factors ~~comprehensive~~were ~~loss~~held ~~within~~constant, ~~stockholders'~~Mattel ~~equity.~~estimates ~~Mattel's~~that ~~primary~~a ~~currency~~one ~~translation~~percent ~~adjustments~~change ~~for~~in the ~~nine~~U.S. ~~months~~dollar ~~ended~~would ~~September 30,~~have ~~2023~~impacted ~~were~~Mattel's ~~related~~first toquarter ~~its~~ net ~~investments~~sales inby ~~entities~~approximately ~~having~~0.3% ~~functional~~and ~~currencies~~would ~~denominated~~have inless ~~the~~than ~~Russian~~a ~~ruble,~~$0.01 ~~Mexican~~impact ~~peso,~~to ~~British~~Mattel's ~~pound~~net ~~sterling,~~income ~~Brazilian~~per ~~real, and Malaysian ringgit~~share.

There are numerous factors impacting the amount by which Mattel's financial results are affected by foreign currency translation and transaction gains and losses resulting from changes in currency exchange rates, including, but not limited to, the level of foreign currency forward exchange contracts in place at a given time and the volume of foreign currency-denominated transactions in a given period. However, assuming that such factors were held constant, Mattel estimates that a one percent change in the U.S. dollar would have impacted Mattel's third quarter net sales by approximately 0.3% and would have less than a $0.01 impact to Mattel's net income per share. 37

Turkey Operations

Effective April 1, 2022, Mattel has accounted for Turkey as a highly inflationary economy, as the projected three-year cumulative inflation rate exceeded 100%. As such, beginning April 1, 2022, Mattel's Turkey subsidiary has designated the U.S. dollar as its functional currency.

Argentina Operations

During the third quarter of 2021, Mattel began a process to liquidate its subsidiary in Argentina. The liquidation was substantially completed during the fourth quarter of 2022. Prior to the substantial completion of the liquidation, Mattel had recorded $45.4 million of currency translation adjustments in accumulated other comprehensive loss, net within its consolidated balance sheet. As a result of the substantially complete liquidation, the cumulative currency translation adjustments were removed from accumulated other comprehensive loss and recognized as a loss in other non-operating expense within the consolidated statement of operations in the fourth quarter of 2022.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of ~~September~~March 3031, ~~2023~~2024, Mattel's disclosure controls and procedures were evaluated, with the participation of Mattel's principal executive officer and principal financial officer, to assess whether they are effective in providing reasonable assurance that information required to be disclosed by Mattel in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Based on this evaluation, Ynon Kreiz, Mattel's principal executive officer, and Anthony DiSilvestro, Mattel's principal financial officer, concluded that these disclosure controls and procedures ~~were~~are not effective as of March 31, 2024 due to ~~provide~~a ~~reasonable~~material ~~assurance~~weakness asin ofMattel's ~~September 30~~internal control over financial reporting, which is more fully described in Management's Report on Internal Control Over Financial Reporting, in Part II, Item 8 "Financial Statements and Supplementary Data" in the 2023 Annual Report on Form 10-K.

~~Changes~~Remediation ~~in Internal Control over Financial Reporting~~Plan

~~There~~Management ~~were~~is noin ~~changes~~the inprocess ~~internal~~of ~~control~~implementing ~~over~~its ~~financial~~remediation ~~reporting~~plan ~~that~~to ~~occurred~~address ~~during~~the material weakness, which includes the ~~quarter~~adoption ~~ended~~of ~~September 30~~new program change management controls, ~~2023~~and ~~that~~the ~~have~~design ~~materially~~of ~~affected~~new user access provisioning and review controls. Additional time is required to test the operating effectiveness of the program change management controls and to complete the design, orimplementation, ~~are~~and ~~reasonably~~testing ~~likely~~of the user access provisioning and review controls, to ~~materially~~demonstrate ~~affect~~the effectiveness of the remediation efforts. The material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, ~~Mattel's~~through ~~internal~~testing, ~~control~~that ~~over~~these ~~financial~~controls ~~reporting~~are operating effectively.

46Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting that occurred during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, Mattel's internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The content of Part I, Item 1 "Financial Statements—Note 20 to the Consolidated Financial Statements—Contingencies" of this Quarterly Report on Form 10-Q is hereby incorporated by reference in its entirety in this Item 1.

Item 1A. Risk Factors.

There have been no material changes to the risk factors disclosed under Part I, Item 1A "Risk Factors" in the ~~2022~~2023 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Equity Securities

During the ~~third~~first quarter of ~~2023~~2024, Mattel did not sell any unregistered equity securities.

Issuer Purchases of Equity Securities

The following table provides certain information with respect to Mattel's purchases of its common stock during the ~~third~~first quarter of ~~2023~~2024:

Period	Total Number ofSharesPurchased (a)	Average Price Paidper Share		Total Number of SharesPurchased asPart of PubliclyAnnounced Plans orPrograms	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (b)
July 1-31	573,509	$	21.34	353,583	$	145,600,081
January 1-31	9,400	$	18.44	—	$	1,000,000,000
August 1-31	2,655,743	21.21		2,472,883	93,155,887
February 1-29	5,508,995	19.24		5,184,149	900,000,735
September 1-30	48,178	22.03		—	93,155,887
March 1-31	8,080	19.81		—	900,000,735
Total	35,~~277~~526,~~430~~475	$	2119.2524	25,~~826~~184,~~466~~149	$	93900,~~155~~000,~~887~~735

____________________________________

(a)The total number of shares purchased includes ~~450~~342,~~964~~326 shares withheld from employees to satisfy minimum tax withholding obligations that occur upon settlement of equity awards, which were not purchased as part of a publicly announced repurchase plan or program.

(b)~~Mattel's~~On ~~share~~February ~~repurchase program was first announced on July 21~~5, ~~2003. On July 17~~2024, ~~2013,~~ the Board of Directors authorized ~~Mattel~~a to$1.00 ~~increase~~billion ~~its~~ share repurchase program ~~by $500~~.0 ~~million.~~As Atof ~~September~~March 3031, ~~2023~~2024, ~~share~~Mattel ~~repurchase~~had ~~authorizations~~a remaining authorization of $93900.20 million ~~had~~under ~~not~~the ~~been executed~~program. Repurchases under the share repurchase program will take place from time to time, depending on market conditions. Mattel's share repurchase program has no expiration date.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

(a)~~Item 2~~None.~~05 Costs Associated with Exit or Disposal Activities~~

The information set forth in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations— Cost Savings Program— Other Cost Savings Actions" above is incorporated herein by reference.

(b)Not applicable.

(c)None.

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Item 6. Exhibits.

Incorporated by Reference

Exhibit No.

Exhibit Description

Form

File No.

Exhibit(s)

Filing Date

3.0

Restated Certificate of Incorporation of Mattel, Inc.

8-K

001-05647

99.0

May 21, 2007

3.1

Amended and Restated Bylaws of Mattel, Inc.

8-K

001-05647

3.1

September 15, 2023

4.0

Specimen Stock Certificate with respect to Mattel, Inc.

10-Q

001-05647

4.0

August 3, 2007

31.0*

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.1*

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.0**

Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

Inline XBRL Instance Document

101.SCH*

Inline XBRL Taxonomy Extension Schema Document

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*

The cover page from ~~Mattel's~~this Quarterly Report on Form 10-Q ~~for the three months ended September 30~~, ~~2023,~~ formatted in Inline XBRL.

______________________________________________



*			Filed herewith.
**			Furnished herewith. This exhibit should not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934.

4840

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			MATTEL, INC. Registrant

			By:						/s/ Yoon Hugh
									Yoon Hugh Senior Vice President and Corporate Controller (Duly Authorized Officer and Chief Accounting Officer)

Date: ~~November~~April 930, ~~2023~~2024

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