Revision for Immaterial Misstatements

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

As disclosed in "Note 1 to the Consolidated Financial Statements—Basis of Presentation," during the quarter ended June 30, 2021, Mattel identified misstatements for inventory tooling expenses that should have first been capitalized into inventory and a misstatement related to the timing of disbursements for certain capital expenditures that resulted in a cash flow misclassification between operating activities and investing activities. Although Mattel concluded that these misstatements were not material, either individually or in aggregate, to its current or previously issued consolidated financial statements, Mattel elected to revise its previously issued consolidated financial statements to correct for these misstatements. In connection with such revision, Mattel is also correcting for other previously identified immaterial misstatements that were previously corrected for as out of period adjustments in the period of identification.

Due to certain misstatements originating prior to 2018, the opening retained earnings balance as of January 1, 2018 was understated by $25.1 million, primarily due to the net impact of the tooling misstatement of $37.2 million, partially offset by other previously identified misstatements of $12.1 million. Such previously identified misstatements were previously corrected for as out of period adjustments and included the improper revenue recognition for certain licensing contracts executed prior to 2018 and the understatement of depreciation expense for certain fixed assets. Similarly, the opening retained earnings balance as of January 1, 2020 was understated by $16.9 million, which principally included the net impact of the tooling misstatement and an over-accrual of advertising costs.

The revision also reflects the correction of previously identified balance sheet misclassifications, including a misclassification between property, plant and equipment and other assets associated with capitalized implementation costs for cloud computing software.

The accompanying consolidated statements of cash flows have been revised to reflect the above items, inclusive of the cash flow misstatement between operating and investing activities related to capitalized implementation costs for cloud computing software and the timing of disbursements for capital expenditures.

The revision to the accompanying unaudited consolidated balance sheets, consolidated statements of operations and comprehensive loss, and consolidated statements of cash flows are as follows. There were no changes to the consolidated statements of stockholders’ equity that have not otherwise been reflected in the consolidated balance sheets and consolidated statements of operations and comprehensive income (loss) as detailed in the tables below:


	As of September 30, 2020
	As Previously Reported		Adjustments		As Revised
	(In thousands)
Consolidated Balance Sheet
Inventories	$	663,639	$	15,843	$	679,482
Total current assets	$	2,599,863	$	15,843	$	2,615,706
Property, plant, and equipment, net	$	497,437	$	(34,916)	$	462,521
Other noncurrent assets	$	828,438	$	28,469	$	856,907
Total Assets	$	5,604,095	$	9,396	$	5,613,491
Accrued liabilities	$	739,790	$	(9,000)	$	730,790
Total current liabilities	$	1,658,421	$	(9,000)	$	1,649,421
Other noncurrent liabilities	$	436,459	$	3,100	$	439,559
Total noncurrent liabilities	$	3,541,167	$	3,100	$	3,544,267
Retained earnings	$	1,409,262	$	15,296	$	1,424,558
Total stockholders' equity	$	404,507	$	15,296	$	419,803


	Three Months Ended September 30, 2020
	As Previously Reported		Adjustments		As Revised
	(In thousands, except per share amounts)
Consolidated Statement of Operations and Comprehensive Income
Net Sales	$	1,631,691	$	4,773	$	1,636,464
Cost of sales	$	799,307	$	9,429	$	808,736
Gross profit	$	832,384	$	(4,656)	$	827,728
Operating Income	$	384,157	$	(4,656)	$	379,501
Income Before Income Taxes	$	332,870	$	(4,656)	$	328,214
Net Income	$	315,994	$	(4,656)	$	311,338
Comprehensive Income	$	307,717	$	(4,656)	$	303,061
Net Income Per Common Share - Basic	$	0.91	$	(0.01)	$	0.90
Net Income Per Common Share - Diluted	$	0.91	$	(0.02)	$	0.89


	Nine Months Ended September 30, 2020
	As Previously Reported		Adjustments		As Revised
	(In thousands, except per share amounts)
Consolidated Statement of Operations and Comprehensive Loss
Net Sales	$	2,957,897	$	4,773	$	2,962,670
Cost of sales	$	1,549,482	$	6,327	$	1,555,809
Gross Profit	$	1,408,415	$	(1,554)	$	1,406,861
Operating Income	$	188,205	$	(1,554)	$	186,651
Income Before Income Taxes	$	35,747	$	(1,554)	$	34,193
Net Loss	$	(3,919)	$	(1,554)	$	(5,473)
Comprehensive Loss	$	(120,309)	$	(1,554)	$	(121,863)
Net Loss Per Common Share - Basic	$	(0.01)	$	(0.01)	$	(0.02)
Net Loss Per Common Share - Diluted	$	(0.01)	$	(0.01)	$	(0.02)


	Nine Months Ended September 30, 2020
	As Previously Reported		Adjustments		As Revised
	(In thousands)
Consolidated Statement of Cash Flows
Net loss	$	(3,919)	$	(1,554)	$	(5,473)
Changes in assets and liabilities:
Inventories	$	(211,149)	$	6,327	$	(204,822)
Prepaid expenses and other current assets	$	18,979	$	(25,700)	$	(6,721)
Accounts payable, accrued liabilities, and income taxes payable	$	(40,082)	$	(413)	$	(40,495)
Other, net	$	(1,232)	$	13,307	$	12,075
Net cash flows used for operating activities	$	(433,977)	$	(8,033)	$	(442,010)
Purchases of tools, dies, and molds	$	(41,447)	$	(924)	$	(42,371)
Purchases of other property, plant, and equipment	$	(49,016)	$	8,957	$	(40,059)
Net cash flows used for investing activities	$	(115,162)	$	8,033	$	(107,129)


	As of December 31, 2020
	As Previously Reported		Adjustments		As Revised
	(In thousands)
Consolidated Balance Sheet
Inventories	$	514,673	$	13,801	$	528,474
Total current assets	$	2,482,890	$	13,801	$	2,496,691
Total Assets	$	5,521,089	$	13,801	$	5,534,890
Retained earnings	$	1,539,809	$	13,801	$	1,553,610
Total stockholders' equity	$	596,343	$	13,801	$	610,144