Revision for Immaterial Misstatements

12 Months Ended

Dec. 31, 2021

Accounting Changes and Error Corrections [Abstract]

As disclosed in "Note 1 to the Consolidated Financial Statements—Basis of Presentation," during the second quarter of 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 the 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 conjunction 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 consolidated balance sheets, consolidated statement of operations and comprehensive loss, and consolidated statement 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 sheet and consolidated statement of operations and comprehensive income or loss as detailed in the tables below:


	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
Total liabilities and stockholders' equity	5,521,089		13,801		5,534,890


	Year Ended December 31, 2020
	As Previously Reported		Adjustments		As Revised
	(In thousands, except per share amounts)
Consolidated Statement of Operations and Comprehensive Income
Net sales	$	4,583,660	$	4,773	$	4,588,433
Cost of sales	2,340,066		5,264		2,345,330
Gross profit	2,243,594		(491)		2,243,103
Advertising and promotion expenses	516,803		9,000		525,803
Other selling and administrative expenses	1,345,906		(3,342)		1,342,564
Operating income	380,885		(6,149)		374,736
Income before income taxes	183,806		(6,149)		177,657
Provision for income taxes	68,649		(3,100)		65,549
Net income	126,628		(3,049)		123,579
Comprehensive income	51,536		(3,049)		48,487
Net loss per common share - basic	$	0.36	$	(0.01)	$	0.36
Net income per common share - diluted	$	0.36	$	(0.01)	$	0.35


	Year Ended December 31, 2019
	As Previously Reported		Adjustments		As Revised
	(In thousands, except per share amounts)
Consolidated Statement of Operations and Comprehensive Loss
Cost of sales	$	2,523,792	$	3,438	$	2,527,230
Gross profit	1,980,779		(3,438)		1,977,341
Advertising and promotion expenses	551,517		(1,300)		550,217
Operating income	39,240		(2,138)		37,102
Loss before income taxes	(157,517)		(2,138)		(159,655)
Provision for income taxes	55,224		3,100		58,324
Net loss	(213,512)		(5,238)		(218,750)
Comprehensive loss	(223,770)		(5,238)		(229,008)
Net loss per common share - basic	$	(0.62)	$	(0.01)	$	(0.63)
Net income per common share - diluted	$	(0.62)	$	(0.01)	$	(0.63)


	Year Ended December 31, 2020
	As Previously Reported		Adjustments		As Revised
	(In thousands)
Consolidated Statement of Cash Flows
Net income	$	126,628	$	(3,049)	$	123,579
Depreciation	160,973		(6,447)		154,526
Deferred income taxes	(2,200)		(3,100)		(5,300)
Changes in assets and liabilities:
Inventories	(50,562)		8,369		(42,193)
Prepaid expenses and other current assets	5,661		(25,700)		(20,039)
Accounts payable, accrued liabilities, and income taxes payable	11,209		6,194		17,403
Other, net	(26,457)		20,927		(5,530)
Net cash flows provided by operating activities	288,502		(2,806)		285,696
Purchases of other property, plant, and equipment	(62,195)		2,806		(59,389)
Net cash flows used for investing activities	(134,910)		2,806		(132,104)


	Year Ended December 31, 2019
	As Previously Reported		Adjustments		As Revised
	(In thousands)
Consolidated Statement of Cash Flows
Net loss	$	(213,512)	$	(5,238)	$	(218,750)
Asset impairments	38,729		2,485		41,214
Deferred income taxes	(9,136)		3,100		(6,036)
Changes in assets and liabilities:
Inventories	(26,920)		4,234		(22,686)
Prepaid expenses and other current assets	47,971		1,100		49,071
Accounts payable, accrued liabilities, and income taxes payable	(58,679)		4,027		(54,652)
Other, net	(10,094)		(22,249)		(32,343)
Net cash flows provided by operating activities	180,977		(12,541)		168,436
Purchases of tools, dies, and molds	(50,509)		(2,485)		(52,994)
Purchases of other property, plant, and equipment	(65,843)		15,026		(50,817)
Net cash flows used for investing activities	(114,176)		12,541		(101,635)