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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 | March 31, 2024

or

☐ | 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 April 15, 2024: 344.1 million shares
1

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 | 26
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 37
Item 4. | Controls and Procedures | 38
| PART II — OTHER INFORMATION |
Item 1. | Legal Proceedings | 39
Item 1A. | Risk Factors | 39
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 39
Item 3. | Defaults Upon Senior Securities | 39
Item 4. | Mine Safety Disclosures | 39
Item 5. | Other Information | 39
Item 6. | Exhibits | 40
| Signature | 41

2

(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, 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, 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 (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, 2023 (the "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.
3

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

| March 31, 2024 |  | March 31, 2023 |  | December 31, 2023
| (Unaudited; in thousands, except share data)
ASSETS |  |  |  |  |
Current Assets |  |  |  |  |
Cash and equivalents | $ | 1,130,223 |  |  | $ | 461,717 |  |  | $ | 1,261,363 |
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 | 669,335 |  |  | 961,048 |  |  | 571,609 |
Prepaid expenses and other current assets | 262,668 |  |  | 269,723 |  |  | 207,548 |
Total current assets | 2,735,496 |  |  | 2,366,332 |  |  | 3,122,347 |
Noncurrent Assets |  |  |  |  |
Property, plant, and equipment, net | 452,220 |  |  | 471,216 |  |  | 465,523 |
Right-of-use assets, net | 308,456 |  |  | 304,496 |  |  | 313,191 |
Goodwill | 1,383,757 |  |  | 1,380,992 |  |  | 1,384,512 |
Deferred income tax assets | 304,240 |  |  | 483,562 |  |  | 299,157 |
Intangible assets, net | 384,306 |  |  | 417,919 |  |  | 393,039 |
Other noncurrent assets | 496,897 |  |  | 407,221 |  |  | 458,053 |
Total Assets | $ | 6,065,372 |  |  | $ | 5,831,738 |  |  | $ | 6,435,822 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |
Current Liabilities |  |  |  |  |
Accounts payable | $ | 315,346 |  |  | $ | 314,140 |  |  | $ | 442,286 |
Accrued liabilities | 768,840 |  |  | 641,326 |  |  | 866,283 |
Income taxes payable | 14,925 |  |  | 13,496 |  |  | 33,911 |
Total current liabilities | 1,099,111 |  |  | 968,962 |  |  | 1,342,480 |
Noncurrent Liabilities |  |  |  |  |
Long-term debt | 2,331,078 |  |  | 2,326,731 |  |  | 2,329,986 |
Noncurrent lease liabilities | 256,200 |  |  | 257,415 |  |  | 259,548 |
Other noncurrent liabilities | 353,671 |  |  | 340,969 |  |  | 354,595 |
Total noncurrent liabilities | 2,940,949 |  |  | 2,925,115 |  |  | 2,944,129 |
Stockholders' Equity |  |  |  |  |
Common stock $1.00 par value, 1.00 billion shares authorized; 441.4 million shares issued | 441,369 |  |  | 441,369 |  |  | 441,369 |
Additional paid-in capital | 1,772,154 |  |  | 1,772,796 |  |  | 1,774,911 |
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 | 3,033,780 |  |  | 2,741,238 |  |  | 3,062,061 |
Accumulated other comprehensive loss | (915,733) |  |  | (888,318) |  |  | (904,968) |
Total stockholders' equity | 2,025,312 |  |  | 1,937,661 |  |  | 2,149,213 |
Total Liabilities and Stockholders' Equity | $ | 6,065,372 |  |  | $ | 5,831,738 |  |  | $ | 6,435,822 |

The accompanying notes are an integral part of these consolidated financial statements.
4

MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

|  |  | For the Three Months Ended
|  |  |  | March 31, 2024 |  | March 31, 2023
|  |  |  |  | (Unaudited; in thousands, except per share amounts)
Net Sales |  |  |  |  | $ | 809,508 |  |  | $ | 814,579 |
Cost of sales |  |  |  |  | 420,638 |  |  | 488,792 |
Gross Profit |  |  |  |  | 388,870 |  |  | 325,787 |
Advertising and promotion expenses |  |  |  |  | 71,441 |  |  | 76,047 |
Other selling and administrative expenses |  |  |  |  | 352,947 |  |  | 364,777 |
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) |
Benefit from income taxes |  |  |  |  | (20,790) |  |  | (26,999) |
(Income) from equity method investments |  |  |  |  | (4,837) |  |  | (4,737) |
Net Loss |  |  |  |  | $ | (28,281) |  |  | $ | (106,471) |
Net Loss Per Common Share - Basic |  |  |  |  | $ | (0.08) |  |  | $ | (0.30) |
Weighted-average number of common shares |  |  |  |  | 346,888 |  |  | 354,942 |
Net Loss Per Common Share - Diluted |  |  |  |  | $ | (0.08) |  |  | $ | (0.30) |
Weighted-average number of common and potential common shares |  |  |  |  | 346,888 |  |  | 354,942 |

The accompanying notes are an integral part of these consolidated financial statements.
5

MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

| For the Three Months Ended
| March 31, 2024 |  | March 31, 2023
| (Unaudited; in thousands)
Net Loss | $ | (28,281) |  |  | $ | (106,471) |
Other Comprehensive (Loss) Income, Net of Tax |  |  |
Currency translation adjustments | (17,946) |  |  | 28,100 |
Employee benefit plan adjustments | 2,198 |  |  | 727 |
Net unrealized gains (losses) on derivative instruments: |  |  |
Unrealized holding gains (losses) | 13,224 |  |  | (1,772) |
Reclassification adjustments included in net loss | (8,241) |  |  | (3,895) |
| 4,983 |  |  | (5,667) |
Other Comprehensive (Loss) Income, Net of Tax | (10,765) |  |  | 23,160 |
Comprehensive Loss | $ | (39,046) |  |  | $ | (83,311) |

The accompanying notes are an integral part of these consolidated financial statements.
6

MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

| For the Three Months Ended
March 31, 2024 |  | March 31, 2023
| (Unaudited; in thousands)
Cash Flows From Operating Activities: |  |  |
Net loss | $ | (28,281) |  |  | $ | (106,471) |
Adjustments to reconcile net loss to net cash flows provided by (used for) operating activities: |  |  |
Depreciation | 34,513 |  |  | 33,734 |
Amortization of intangible assets | 7,823 |  |  | 9,461 |
Share-based compensation | 17,929 |  |  | 16,943 |
Inventory obsolescence | 16,069 |  |  | 24,926 |
Deferred income taxes | (5,157) |  |  | (9,854) |
Income from equity method investments | (4,837) |  |  | (4,737) |
Content assets amortization | 14,239 |  |  | 12,408 |
Changes in assets and liabilities: |  |  |
Accounts receivable, net | 398,921 |  |  | 192,853 |
Inventories | (123,718) |  |  | (83,162) |
Prepaid expenses and other current assets | (47,835) |  |  | (57,844) |
Accounts payable, accrued liabilities, and income taxes payable | (226,543) |  |  | (207,475) |
Content assets spend | (7,161) |  |  | (12,423) |
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 | (15,759) |  |  | (19,924) |
Purchases of other property, plant, and equipment | (14,713) |  |  | (23,068) |
Proceeds from foreign currency forward exchange contracts, net | 1,829 |  |  | 1,443 |
Other, net | 209 |  |  | (962) |
Net cash flows used for investing activities | (28,434) |  |  | (42,511) |
Cash Flows From Financing Activities: |  |  |
Share repurchases | (99,999) |  |  | (33,986) |
Tax withholdings for share-based compensation | (6,165) |  |  | (20,299) |
Proceeds from stock option exercises | 4,299 |  |  | 2,045 |
Other, net | (29,463) |  |  | (969) |
Net cash flows used for financing activities | (131,328) |  |  | (53,209) |
Effect of Currency Exchange Rate Changes on Cash and Equivalents | (6,873) |  |  | 2,582 |
Decrease in Cash and Equivalents | (131,140) |  |  | (299,518) |
Cash and Equivalents at Beginning of Period | 1,261,363 |  |  | 761,235 |
Cash and Equivalents at End of Period | $ | 1,130,223 |  |  | $ | 461,717 |

The accompanying notes are an integral part of these consolidated financial statements.
7

MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

| Common Stock |  | Additional Paid-In Capital |  | Treasury Stock |  | Retained Earnings |  | Accumulated Other Comprehensive Loss |  | Total Stockholders' Equity
| (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 |
| Common Stock |  | Additional Paid-In Capital |  | Treasury Stock |  | Retained Earnings |  | Accumulated Other Comprehensive Loss |  | Total Stockholders' 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 |

The accompanying notes are an integral part of these consolidated financial statements.
8

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, 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 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 $8.7 million, $12.9 million, and $8.8 million as of March 31, 2024, March 31, 2023, and December 31, 2023, respectively.
3. Inventories
Inventories included the following:

| March 31, 2024 |  | March 31, 2023 |  | December 31, 2023
| (In thousands)
Raw materials and work in process | $ | 97,116 |  |  | $ | 127,712 |  |  | $ | 92,902 |
Finished goods | 572,219 |  |  | 833,336 |  |  | 478,707 |
| $ | 669,335 |  |  | $ | 961,048 |  |  | $ | 571,609 |

4. Property, Plant, and Equipment, Net
Property, plant, and equipment, net included the following:

| March 31, 2024 |  | March 31, 2023 |  | December 31, 2023
| (In thousands)
Land | $ | 19,590 |  |  | $ | 18,078 |  |  | $ | 19,838 |
Buildings | 312,034 |  |  | 305,649 |  |  | 313,750 |
Machinery and equipment | 623,141 |  |  | 668,965 |  |  | 628,089 |
Software | 233,655 |  |  | 337,162 |  |  | 233,224 |
Tools, dies, and molds | 495,158 |  |  | 506,325 |  |  | 488,170 |
Leasehold improvements | 119,777 |  |  | 112,128 |  |  | 121,571 |
Construction in progress | 39,266 |  |  | 80,376 |  |  | 48,483 |
| 1,842,621 |  |  | 2,028,683 |  |  | 1,853,125 |
Less: accumulated depreciation | (1,390,401) |  |  | (1,557,467) |  |  | (1,387,602) |
| $ | 452,220 |  |  | $ | 471,216 |  |  | $ | 465,523 |

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5. Goodwill and Intangible Assets, Net
Goodwill
Goodwill is allocated to various reporting units for the purpose of evaluating whether goodwill is impaired. Mattel's reporting units are: (i) North America; (ii) American Girl; and (iii) International. Components of the reporting units have been aggregated into single reporting units where 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.
The change in the carrying amount of goodwill by reporting unit for the three months ended March 31, 2024 is shown below. Brand-specific goodwill held by foreign subsidiaries is allocated to the North America reporting unit selling those brands, resulting in a foreign currency translation impact.

| December 31, 2023 |  |  |  | Currency Exchange Rate Impact |  | March 31, 2024
| (In thousands)
North America | $ | 733,487 |  |  |  |  | $ | (250) |  |  | $ | 733,237 |
American Girl | 207,571 |  |  |  |  | — |  |  | 207,571 |
International | 443,454 |  |  |  |  | (505) |  |  | 442,949 |
| $ | 1,384,512 |  |  |  |  | $ | (755) |  |  | $ | 1,383,757 |

Intangible Assets, Net
Identifiable intangibles were $384.3 million, net of accumulated amortization of $415.8 million, $417.9 million, net of accumulated amortization of $378.3 million, and $393.0 million, net of accumulated amortization of $408.5 million as of March 31, 2024, March 31, 2023, and December 31, 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 months ended March 31, 2024 and 2023.
6. Accrued Liabilities
Accrued liabilities included the following:

| March 31, 2024 |  | March 31, 2023 |  | December 31, 2023
| (In thousands)
Incentive compensation | $ | 155,228 |  |  | $ | 30,580 |  |  | $ | 143,091 |
Lease liabilities | 76,976 |  |  | 74,425 |  |  | 77,254 |
Advertising and promotion | 57,082 |  |  | 76,851 |  |  | 102,217 |
Deferred income | 54,591 |  |  | 50,218 |  |  | 56,900 |
Royalties | 34,942 |  |  | 37,093 |  |  | 86,475 |

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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. 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 March 31, 2024, March 31, 2023, and December 31, 2023 were $53.4 million, $54.8 million, and $54.3 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 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 credit rating from Ba1 to Baa3, and in April 2023, S&P upgraded Mattel's 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 March 31, 2024, March 31, 2023, and December 31, 2023. Outstanding letters of credit under the Revolving Credit Facility totaled approximately $9 million, $8 million, and $9 million as of March 31, 2024, March 31, 2023, and December 31, 2023, respectively.
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As of March 31, 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:

| 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 |
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 | (18,922) |  |  | (23,269) |  |  | (20,014) |
| $ | 2,331,078 |  |  | $ | 2,326,731 |  |  | $ | 2,329,986 |
Less: current portion | — |  |  | — |  |  | — |
Total long-term debt | $ | 2,331,078 |  |  | $ | 2,326,731 |  |  | $ | 2,329,986 |

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 credit rating from BB+ to BBB- and maintained a positive outlook, and in November 2022, Moody's upgraded Mattel's credit rating from Ba1 to Baa3. As a result of the upgraded 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 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.
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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 March 31, 2024
| Derivative Instruments |  | Employee Benefit Plans |  | Currency Translation Adjustments |  | Total
| (In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2023 | $ | (3,463) |  |  | $ | (142,916) |  |  | $ | (758,589) |  |  | $ | (904,968) |
Other comprehensive income (loss) before reclassifications | 13,224 |  |  | 1,493 |  |  | (17,946) |  |  | (3,229) |
Amounts reclassified from accumulated other comprehensive income (loss) | (8,241) |  |  | 705 |  |  | — |  |  | (7,536) |
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 March 31, 2024 | $ | 1,520 |  |  | $ | (140,718) |  |  | $ | (776,535) |  |  | $ | (915,733) |

| For the Three Months Ended March 31, 2023
| Derivative Instruments |  | Employee Benefit Plans |  | Currency Translation Adjustments |  | Total
| (In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2022 | $ | 22,732 |  |  | $ | (138,498) |  |  | $ | (795,712) |  |  | $ | (911,478) |
Other comprehensive income (loss) before reclassifications | (1,772) |  |  | 7 |  |  | 28,100 |  |  | 26,335 |
Amounts reclassified from accumulated other comprehensive income (loss) | (3,895) |  |  | 720 |  |  | — |  |  | (3,175) |
Net change in other comprehensive income (loss) | (5,667) |  |  | 727 |  |  | 28,100 |  |  | 23,160 |
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of March 31, 2023 | $ | 17,065 |  |  | $ | (137,771) |  |  | $ | (767,612) |  |  | $ | (888,318) |

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

| For the 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

(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.
Currency Translation Adjustments
During the three months ended March 31, 2024, currency translation adjustments resulted in a net loss of $17.9 million, due to the general strengthening of the U.S. dollar against most currencies, including the Chilean peso and Russian ruble. The losses were partially offset by strengthening of the Mexican peso against the U.S. dollar.
During the three months ended March 31, 2023, currency translation adjustments resulted in a net gain of $28.1 million, primarily due to the strengthening of the Mexican peso, British pound sterling, Chilean peso, and Brazilian real against the U.S. dollar, offset by the 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 |  |
| March 31, 2024 |  | March 31, 2023 |  | Statements of Operations Classification
| (In thousands) |  |
Currency transaction gains, net | $ | 118 |  |  | $ | 50 |  |  | Operating income/expense
Currency transaction gains, net | 714 |  |  | 1,550 |  |  | Other non-operating income/expense, net
Currency transaction gains, net | $ | 832 |  |  | $ | 1,600 |  |  |

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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 March 31, 2024, March 31, 2023, and December 31, 2023, Mattel held foreign currency forward exchange contracts and other commodity derivative instruments, with notional amounts of approximately $683 million, $792 million, and $609 million, respectively.
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The following tables present Mattel's derivative assets and liabilities:

| Derivative Assets
| Balance Sheet Classification |  | Fair Value
|  | 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 |  | $ | 4,631 |  |  | $ | 11,051 |  |  | $ | 2,198 |
Foreign currency forward exchange and other contracts | Other noncurrent assets |  | 423 |  |  | 413 |  |  | 52 |
Total Derivatives Designated as Hedging Instruments |  |  | $ | 5,054 |  |  | $ | 11,464 |  |  | $ | 2,250 |
Derivatives Not Designated as Hedging Instruments: |  |  |  |  |  |  |
Foreign currency forward exchange and other contracts | Prepaid expenses and other current assets |  | $ | 3,511 |  |  | $ | 4,898 |  |  | $ | 578 |
Total Derivatives Not Designated as Hedging Instruments |  |  | $ | 3,511 |  |  | $ | 4,898 |  |  | $ | 578 |
|  |  | $ | 8,565 |  |  | $ | 16,362 |  |  | $ | 2,828 |
| Derivative Liabilities
| Balance Sheet Classification |  | Fair Value
|  | 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 |  | $ | 4,389 |  |  | $ | 3,903 |  |  | $ | 7,520 |
Foreign currency forward exchange and other contracts | Other noncurrent liabilities |  | 47 |  |  | 351 |  |  | 1,575 |
Total Derivatives Designated as Hedging Instruments |  |  | $ | 4,436 |  |  | $ | 4,254 |  |  | $ | 9,095 |
Derivatives Not Designated as Hedging Instruments: |  |  |  |  |  |  |
Foreign currency forward exchange and other contracts | Accrued liabilities |  | $ | 173 |  |  | $ | 961 |  |  | $ | 449 |
Foreign currency forward exchange and other contracts | Other noncurrent liabilities |  | — |  |  | — |  |  | 20 |
Total Derivatives Not Designated as Hedging Instruments |  |  | $ | 173 |  |  | $ | 961 |  |  | $ | 469 |
|  |  | $ | 4,609 |  |  | $ | 5,215 |  |  | $ | 9,564 |

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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 |  |
| March 31, 2024 |  | March 31, 2023 |  | Statements of Operations Classification
| (In thousands) |  |
Foreign Currency Forward Exchange and Other Contracts: |  |  |  |  |
Amount of gains (losses) recognized in OCI | $ | 13,224 |  |  | $ | (1,772) |  |  |
Amount of gains reclassified from accumulated OCI to the consolidated statements of operations | 8,241 |  |  | 3,895 |  |  | Cost of sales

The net gains reclassified from accumulated other comprehensive loss to the consolidated statements of operations during the three months ended March 31, 2024 and 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 |  |
| March 31, 2024 |  | March 31, 2023 |  | Statements of Operations Classification
| (In thousands) |  |
Amount of Net Gains (Losses) Recognized in the Statements of Operations: |  |  |  |  |
Foreign currency forward exchange and other contracts | $ | 5,063 |  |  | $ | 10,304 |  |  | Other non-operating income/expense, net

The net gains and losses recognized in the consolidated statements of operations during the three months ended March 31, 2024 and March 31, 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 March 31, 2024, March 31, 2023, and December 31, 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.
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| 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.
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 $2.26 billion (compared to a carrying amount of $2.35 billion) as of March 31, 2024, $2.19 billion (compared to a carrying amount of $2.35 billion) as of March 31, 2023, and $2.23 billion (compared to a carrying amount of $2.35 billion) as of December 31, 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.
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14. Earnings Per Share
The following table reconciles basic and diluted earnings per common share for the three months ended March 31, 2024 and 2023:

|  |  | For the Three Months Ended
|  |  |  |  | March 31, 2024 |  | March 31, 2023
|  |  |  | (In thousands, except per share amounts)
Basic: |  |  |  |  |  |  |
Net loss |  |  |  |  | $ | (28,281) |  |  | $ | (106,471) |
Weighted-average number of common shares |  |  |  |  | 346,888 |  |  | 354,942 |
Basic net loss per common share |  |  |  |  | $ | (0.08) |  |  | $ | (0.30) |
Diluted: |  |  |  |  |  |  |
Net loss |  |  |  |  | $ | (28,281) |  |  | $ | (106,471) |
Weighted-average number of common shares |  |  |  |  | 346,888 |  |  | 354,942 |
Dilutive share-based awards (a) |  |  |  |  | — |  |  | — |
Weighted-average number of common and potential common shares |  |  |  |  | 346,888 |  |  | 354,942 |
Diluted net loss per common share |  |  |  |  | $ | (0.08) |  |  | $ | (0.30) |

(a)For the three months ended March 31, 2024 and March 31, 2023, share-based awards totaling 10.4 million and 14.2 million, respectively, were excluded from the calculation of diluted net 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 2023 Annual Report on Form 10-K.
The components of Mattel's net periodic benefit cost for 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 |

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

| For the Three Months Ended
| March 31, 2024 |  | March 31, 2023
| (In thousands)
Interest cost | $ | 45 |  |  | $ | 45 |
Amortization of prior service credit | (509) |  |  | (509) |
Recognized actuarial gain | (48) |  |  | (57) |
Net periodic benefit credit | $ | (512) |  |  | $ | (521) |

Mattel's service cost component is recorded within operating loss while other components of net periodic pension cost and postretirement benefit cost are recorded within other non-operating expense (income), net.
During the three months ended March 31, 2024, Mattel made cash contributions totaling approximately $1 million related to its defined benefit pension and postretirement benefit plans. During the remainder of 2024, Mattel expects to make additional cash contributions of approximately $13 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 9 to the Consolidated Financial Statements—Share-Based Payments" in the 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 |  |
| March 31, 2024 |  | March 31, 2023 |  |  |  |
| (In thousands)
Stock option compensation expense | $ | 1,046 |  |  | $ | 2,818 |  |  |  |  |
RSU compensation expense | 12,248 |  |  | 10,117 |  |  |  |  |
Performance award compensation expense | 4,635 |  |  | 4,008 |  |  |  |  |
| $ | 17,929 |  |  | $ | 16,943 |  |  |  |  |

As 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.
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 $4.3 million and $2.0 million for the three months ended March 31, 2024 and 2023, respectively.
17. Other Selling and Administrative Expenses
Other selling and administrative expenses included the following:

|  |  | For the Three Months Ended
|  |  |  |  | March 31, 2024 |  | March 31, 2023
|  |  |  |  | (In thousands)
Design and development |  |  |  |  | $ | 47,610 |  |  | $ | 48,756 |
Amortization of intangible assets |  |  |  |  | 7,823 |  |  | 9,461 |

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18. Restructuring Charges
Optimizing for Profitable Growth
On February 7, 2024, Mattel announced the Optimizing for Profitable Growth program (the "OPG program"), a multi-year cost savings program that follows the Optimizing for Growth program (the "OFG program"), which concluded in the fourth quarter of 2023. The OPG program is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel's global supply chain, including its manufacturing footprint.
In connection with the OPG program, Mattel recorded severance and other restructuring costs in the following cost and expense categories within operating income in the consolidated statements of operations:

| For the Three Months Ended
| March 31, 2024
| (In thousands)
Cost of sales (a) | $ | 2,213 |
Other selling and administrative expenses (b) | 7,518 |
| $ | 9,731 |

(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 OPG program:

| Liability at December 31, 2023 |  | Charges |  | Payments/Utilization |  | Liability at March 31, 2024
| (In thousands)
Severance | $ | 25,096 |  |  | $ | 9,229 |  |  | $ | (1,536) |  |  | $ | 32,789 |
Other restructuring charges (a) | — |  |  | 502 |  |  | (502) |  |  | — |
| $ | 25,096 |  |  | $ | 9,731 |  |  | $ | (2,038) |  |  | $ | 32,789 |

(a)Other restructuring charges consist primarily of expenses associated with the consolidation of manufacturing facilities.
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.
Other Cost Savings Actions
As of December 31, 2023, Mattel concluded the OFG program, which was a multi-year cost savings program that had integrated and expanded upon the previous Capital Light program. In the first three months of 2023, Mattel recorded severance expense of $20.7 million within other selling and administrative expenses in the consolidated statement of operations related to the OFG program.
Additionally, during the first three months of 2023, Mattel executed actions to further streamline its organizational structure that were not included in the OFG program, and recorded severance costs of $3.2 million in connection with these actions within other selling and administrative expenses in the consolidated statement of operations.
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19. Income Taxes
Mattel's benefit from income taxes was $20.8 million for the three months ended March 31, 2024, compared to a benefit of $27.0 million for the three months ended March 31, 2023. During the three months ended March 31, 2024, Mattel recognized a net discrete income 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 intellectual property 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.
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 three months ended March 31, 2024 and 2023, there were no changes to Mattel's valuation allowance.
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 $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
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 March 31, 2024, Mattel assessed its probable loss related to this matter and has accrued a reserve, which is not material.
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Litigation Related to the Fisher-Price Rock 'n Play Sleeper
A number of putative class action lawsuits filed between April 2019 and October 2019 are pending against Fisher-Price, Inc. and/or Mattel, Inc. asserting claims for false advertising, negligent product design, breach of warranty, fraud, and other claims in connection with the marketing and sale of the Fisher-Price Rock 'n Play Sleeper (the "Sleeper"). In general, the lawsuits allege that the Sleeper should not have been marketed and sold as safe and fit for prolonged and overnight sleep for infants. The putative class action lawsuits propose nationwide and over 10 statewide consumer classes comprised of those who purchased the Sleeper as marketed as safe for prolonged and overnight sleep. The class actions have been consolidated before a single judge in the United States District Court for the Western District of New York for pre-trial purposes pursuant to the U.S. federal courts' Multi-District Litigation program. In June 2022, the court denied the plaintiffs' motion to certify damages and injunctive relief classes under New York law, but granted plaintiffs' request to certify a New York issue class to resolve two issues on a class-wide basis. In October 2022, the United States Court of Appeals for the Second Circuit denied plaintiffs' petition to appeal the denial of certification of the damages and injunctive relief classes. On 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 additional lawsuits filed between April 2019 and January 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-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 2021, a second similar derivative action was filed in the Court of Chancery for the State of Delaware (Armon v. Bradley, et al., filed August 30, 2021).
The 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 cannot be made at this time.
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; and (ii) International. The prior period amounts have been reclassified to conform to the current period presentation. The North America and International segments sell products across Mattel's categories, although some products are developed and adapted for particular international markets, and American Girl products are 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.
23

| For the Three Months Ended
| March 31, 2024 |  | March 31, 2023
| (In thousands)
Net Sales by Segment |  |  |
North America | $ | 477,786 |  |  | $ | 470,486 |
International | 331,722 |  |  | 344,093 |
Net sales | $ | 809,508 |  |  | $ | 814,579 |

| 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) |

(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 severance and other restructuring charges of $6.3 million and $23.9 million for the three months ended March 31, 2024 and 2023, respectively, and inclined sleeper product recall litigation expense of $3.7 million and $4.3 million for the three months ended March 31, 2024 and 2023, respectively.
Segment assets are comprised of accounts receivable, net and inventories.

| March 31, 2024 |  | March 31, 2023 |  | December 31, 2023
| (In thousands)
Assets by Segment |  |  |  |  |
North America | $ | 686,694 |  |  | $ | 793,021 |  |  | $ | 845,113 |
International | 566,572 |  |  | 694,469 |  |  | 735,236 |
| 1,253,266 |  |  | 1,487,490 |  |  | 1,580,349 |
Corporate and other | 89,339 |  |  | 147,402 |  |  | 73,087 |
Accounts receivable, net and inventories | $ | 1,342,605 |  |  | $ | 1,634,892 |  |  | $ | 1,653,436 |

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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
| March 31, 2024 |  | March 31, 2023
| (In thousands)
Net Sales by Geographic Area |  |  |
North America | $ | 477,786 |  |  | $ | 470,486 |
International |  |  |
EMEA | 185,239 |  |  | 209,356 |
Latin America | 79,651 |  |  | 75,531 |
Asia Pacific | 66,832 |  |  | 59,206 |
Total International | 331,722 |  |  | 344,093 |
Net sales | $ | 809,508 |  |  | $ | 814,579 |

22. New Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires incremental disclosure of significant segment expenses on an annual and interim basis to enable investors to develop more decision-useful financial analyses. The guidance in ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Mattel is currently evaluating the impact of the adoption of ASU 2023-07 on its consolidated financial statements.
In 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.
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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 not associated with categories, brands, or individual products.
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 most iconic brand portfolios 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 strategy to grow its intellectual property ("IP") driven toy business and expand its entertainment offering:
•Grow toy business profitably through scaling Mattel's portfolio, optimizing operations, evolving demand creation, and growing franchise brands; and
•Expand entertainment offering to capture the full value of Mattel's IP outside the toy aisle in highly accretive business verticals, 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.
Infant, Toddler, and Preschool—including brands such as Fisher-Price (including Little People) and Thomas & 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.
In the first quarter of 2024, Mattel further divided its Infant, Toddler, and Preschool category into three subcategories. The first subcategory is Fisher-Price, the power brand, which includes the core Infant, Little People, and Newborn product lines, as well as the recently launched Fisher-Price Wood product line. The second subcategory is Preschool Entertainment, which includes owned IP such as Thomas & Friends and Barney, Mattel's character based Imaginext line, and partner entertainment brands. The third subcategory is Baby Gear and Power Wheels, in which Mattel has decided to strategically out-license or exit certain product lines.
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Vehicles—including brands such as Hot Wheels (including Hot Wheels Monster Trucks and Hot Wheels Mario Kart (Nintendo)), Matchbox, and Cars (Disney Pixar). In production for over 50 years, Hot Wheels continues to push the limits of performance and design, and ignites and nurtures the challenger spirit of kids, adults, and collectors. From die-cast vehicles to tracks, playsets, and accessories, the Mattel Vehicles portfolio has broad appeal that engages and excites fans of all 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
During the first quarter of 2024, Mattel made additional progress to execute its multi-year strategy to grow its IP-driven toy business and expand its entertainment offering, as it expanded gross margin, generated positive cash flow from operations, and further improved its financial position.
Mattel's first quarter net sales were comparable with the prior year, declining 1% compared to the first quarter of 2023. Mattel's first quarter results included an improvement to operating cash flows and gross margin expansion, with significant contributions from lower inventory management costs, cost deflation, and cost savings. First quarter gross margin improved to 48.0%, from 40.0% in the first quarter of 2023.
Mattel ended the first quarter with a cash balance of $1.13 billion, compared to $461.7 million in the first quarter of 2023. Cash increased primarily due to Mattel's cash flows from operations, which were $1.11 billion in the trailing twelve months, driven by improved working capital, partially offset by cash used for capital expenditures and share repurchases.
On February 5, 2024, the Board of Directors authorized a new $1.00 billion share repurchase program. During the first quarter, Mattel executed $100.0 million of share repurchases under the new program.
Additionally, in February 2024, Mattel announced the Optimizing for Profitable Growth program (the "OPG program"), a multi-year cost savings program that follows the Optimizing for Growth program (the "OFG program"). 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.
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; and (ii) International.
Mattel 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.
27

Results of Operations—First Quarter
Consolidated Results
The following table presents Mattel's consolidated results for the first quarter of 2024 and 2023:

| For the Three Months Ended |  | Year/Year Change
March 31, 2024 |  | March 31, 2023 |
Amount |  | % of Net Sales |  | Amount |  | % of Net Sales |  | % |  | Basis Points of Net Sales
| (In millions, except percentage and basis point information)
Net sales | $ | 809.5 |  |  |  |  | $ | 814.6 |  |  |  |  | -1 | % |  |
Cost of sales | 420.6 |  |  | 52.0 | % |  | 488.8 |  |  | 60.0 | % |  | -14 | % |  | (800) |
Gross profit | 388.9 |  |  | 48.0 | % |  | 325.8 |  |  | 40.0 | % |  | 19 | % |  | 800 |
Advertising and promotion expenses | 71.4 |  |  | 8.8 | % |  | 76.0 |  |  | 9.3 | % |  | -6 | % |  | (50) |
Other selling and administrative expenses | 352.9 |  |  | 43.6 | % |  | 364.8 |  |  | 44.8 | % |  | -3 | % |  | (120) |
Operating loss | (35.5) |  |  | -4.4 | % |  | (115.0) |  |  | -14.1 | % |  | -69 | % |  | 970 |
Interest expense | 30.1 |  |  | 3.7 | % |  | 31.1 |  |  | 3.8 | % |  | -3 | % |  | (10) |
Interest (income) | (17.3) |  |  | -2.1 | % |  | (6.5) |  |  | -0.8 | % |  | 165 | % |  | (130) |
Other non-operating expense (income), net | 5.6 |  |  |  |  | (1.4) |  |  |  |  |  |  |
Loss before income taxes | (53.9) |  |  | -6.7 | % |  | (138.2) |  |  | -17.0 | % |  | -61 | % |  | 1,030 |
Benefit from income taxes | (20.8) |  |  |  |  | (27.0) |  |  |  |  |  |  |
(Income) from equity method investments | (4.8) |  |  |  |  | (4.7) |  |  |  |  |  |  |
Net loss | $ | (28.3) |  |  | -3.5 | % |  | $ | (106.5) |  |  | -13.1 | % |  | -73 | % |  | 960 |

Sales
Net sales in the first quarter of 2024 were $809.5 million, a decrease of $5.1 million, or 1%, as compared to $814.6 million in the first quarter of 2023. The decrease in net sales was the result of a decrease in gross billings of $12.4 million, partially offset by a decrease in sales adjustments of $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 first quarter of 2024 and 2023:

| 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 | $ | 294.5 |  |  | $ | 306.1 |  |  | -4 | % |  | 1 | %
Infant, Toddler, and Preschool | 135.0 |  |  | 150.2 |  |  | -10 | % |  | 1 | %
Vehicles | 297.7 |  |  | 283.6 |  |  | 5 | % |  | 1 | %
Action Figures, Building Sets, Games, and Other | 171.7 |  |  | 171.5 |  |  | — | % |  | — | %
Gross Billings | $ | 898.9 |  |  | $ | 911.3 |  |  | -1 | % |  | 1 | %
Supplemental Gross Billings Disclosure |  |  |  |  |  |  |
Gross Billings by Top 3 Power Brands |  |  |  |  |  |  |
Barbie | $ | 177.5 |  |  | $ | 176.9 |  |  | — | % |  | 1 | %
Hot Wheels | 258.1 |  |  | 244.9 |  |  | 5 | % |  | 1 | %
Fisher-Price (a) | 93.4 |  |  | 93.1 |  |  | — | % |  | 1 | %
Other | 370.0 |  |  | 396.5 |  |  | -7 | % |  | 1 | %
Gross Billings | $ | 898.9 |  |  | $ | 911.3 |  |  | -1 | % |  | 1 | %

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(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 were $898.9 million in the first quarter of 2024, a decrease of $12.4 million, or 1%, as compared to $911.3 million in the first quarter of 2023, with a favorable impact from changes in currency exchange rates of one percentage point. The decrease in gross billings was primarily due to lower billings of Infant, Toddler, and Preschool and Dolls, partially offset by higher billings of Vehicles.
Dolls gross billings decreased 4%, of which 5% was due to lower billings of Disney Princess and Disney Frozen products and 2% was due to lower billings of Polly Pocket products, partially offset by higher billings of Trolls products of 2%.
Infant, Toddler, and Preschool gross billings decreased 10%, of which 7% was due to lower billings of Baby Gear and Power Wheels products, and 3% was due to lower billings of Preschool Entertainment products.
Vehicles gross billings increased 5%, due to higher billings of Hot Wheels products.
Action Figures, Building Sets, Games, and Other gross billings were flat year-over-year.
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 decreased by $68.2 million, or 14%, to $420.6 million in the first quarter of 2024 from $488.8 million in the first quarter of 2023. Within cost of sales, product and other costs decreased by $67.7 million, or 18%, to $319.1 million in the first quarter of 2024 from $386.8 million in the first quarter of 2023. Royalty expense was relatively consistent at $36.1 million in the first quarter of 2024, as compared to $36.7 million in the first quarter of 2023. Freight and logistics expenses were relatively consistent at $65.5 million in the first quarter of 2024, as compared to $65.3 million in the first quarter of 2023.
Gross Margin
Gross margin increased to 48.0% in the first quarter of 2024 from 40.0% in the first quarter of 2023. The increase in gross margin included lower inventory management costs of 230 basis points, including lower inventory obsolescence and close-out sales, cost deflation of 220 basis points, realized savings from the Optimizing for Profitable Growth program of 120 basis points, favorable mix of 80 basis points, and favorable foreign currency exchange and other supply chain costs of 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 were relatively flat at 8.8% in the first quarter of 2024, compared to 9.3% in the first quarter of 2023.
Other Selling and Administrative Expenses
Other selling and administrative expenses were $352.9 million, or 43.6% of net sales, in the first quarter of 2024, a decrease of $11.8 million, as compared to $364.8 million, or 44.8% of net sales, in the first quarter of 2023. The decrease in other selling and administrative expenses was primarily due to lower severance and restructuring charges of $17.6 million and realized savings from cost savings programs of $8.1 million, partially offset by market-related pay increases of $9.1 million and information technology and administrative costs of $4.7 million.
Interest Expense
Interest expense was $30.1 million in the first quarter of 2024, relatively flat as compared to $31.1 million in the first quarter of 2023.
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Interest Income
Interest income increased by $10.8 million to $17.3 million in the first quarter of 2024 from $6.5 million in the first quarter of 2023, primarily due to higher average invested cash in the first quarter of 2024.
Benefit from Income 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.
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 three months ended March 31, 2024 and 2023, there were no changes to Mattel's valuation allowance.
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
Beginning in the first quarter of 2024, Mattel's American Girl business was integrated into its North America commercial organization and is reported within the North America operating segment. Prior to the first quarter of 2024, Mattel's American Girl business was a separate reportable operating segment. Prior period amounts have been reclassified to conform to the current period presentation.
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:

| 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.
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| 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.
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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 quarter of 2024 and 2023:

| 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 | $ | 331.7 |  |  | $ | 344.1 |  |  | -4 | % |  | 2 | %
Segment Operating Income | 9.3 |  |  | 0.3 |  |  | N/M |  |

N/M - Not meaningful
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.

| 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 | %

(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 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, and Action Figures, Building Sets, Games, and Other, partially offset by higher billings of Vehicles.
Dolls gross billings decreased 7%, 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 Monster High products of 5%.
Infant, Toddler, and Preschool gross billings decreased 13%, of which 7% was due to lower billings of Fisher-Price products and 4% was due to lower billings of Preschool Entertainment products.
Vehicles gross billings increased 4%, due to higher billings of Hot Wheels products.
Action Figures, Building Sets, Games, and Other gross billings decreased 7%, of which 9% was due to lower billings of Action Figures products, partially offset by higher billings of Games products of 4%.
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Sales adjustments decreased to $60.8 million in the first quarter of 2024 from $64.5 million in the first quarter of 2023, primarily due to lower gross billings. Sales adjustments as a percentage of net sales were relatively flat at 18.3% in the first quarter of 2024, as compared to 18.7% in the first quarter of 2023.
Cost of sales decreased by $17.6 million, or 9%, to $184.1 million in the first quarter of 2024 from $201.7 million in the first quarter of 2023, primarily due to a decrease in product and other costs of $15.7 million.
Gross margin 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.
International segment operating income was $9.3 million in the first quarter of 2024, as compared to segment operating income of $0.3 million in the first quarter of 2023, primarily due to higher gross profit of $5.2 million and lower advertising and promotion expenses of $2.7 million.
Cost Savings Program
Optimizing for Profitable Growth
On February 7, 2024, Mattel announced the OPG program, a multi-year cost savings program that follows the OFG program, which concluded in the fourth quarter of 2023. The OPG program is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel’s global supply chain, including its manufacturing footprint. The OPG program includes cost savings actions in connection with discontinuing production at a plant in China as previously announced in the third quarter of 2023, as well as savings from other previous actions that were not recognized in the OFG program. Targeted annual gross cost savings from actions associated with the OPG program, which are expected to be completed by 2026, are $200 million. Of the $200 million in targeted annual gross costs savings, approximately 70% is expected to benefit cost of sales and 30% is expected to benefit other selling and administrative expenses. Total expected cash expenditures under the OPG program are expected to be between $130 and $165 million and total non-cash charges are expected to be up to $5 million.
The costs associated with the OPG program are expected to include the following:

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

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

| For the Three Months Ended
| March 31, 2024
| (In millions)
Cost of sales (a) | $ | 2.2 |
Other selling and administrative expenses (b) | 7.5 |
| $ | 9.7 |

(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 March 31, 2024, Mattel has recorded cumulative severance and other restructuring charges related to the OPG program of approximately $35 million, which includes approximately $0.4 million of non-cash charges. Mattel realized cumulative cost savings (before severance, restructuring costs, and cost inflation) of approximately $17 million, which represents approximately 55% benefit to cost of sales, and 45% benefit to other selling and administrative expenses, as of
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March 31, 2024, in connection with the OPG Program.
Other Cost Savings Actions
As of December 31, 2023, Mattel concluded the OFG program, which was a multi-year cost savings program that had integrated and expanded upon the previous Capital Light program. The OFG program, excluding previous actions taken under the Capital Light program, had realized gross annual cost savings of approximately $343 million upon conclusion of the program. In the first three months of 2023, Mattel recorded severance expense of $20.7 million within other selling and administrative expenses in the consolidated statement of operations related to the OFG program.
Additionally, during the first three months of 2023, Mattel executed actions to further streamline its organizational structure that were not included in the OFG program, and recorded severance costs of $3.2 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 licensin g agreements, future inventory and service pu rchases, and required cash contributions and payments related to benefit plans. Of Mattel's $1.13 billion in cash and equivalents at March 31, 2024, $701.4 million was held by foreign subsidiaries, including $56.8 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.
Mattel intends to utilize its existing cash and cash equivalents, cash flow from operations, and borrowings under the Revolving Credit Facility to meet its short-term liquidity needs. At March 31, 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.
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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 provided by operating activities were $35.5 million in the first three months of 2024, as compared to cash flows used for operating activities of $206.4 million in the first three months of 2023. The change was due to $165.3 million of improvements to working capital and favorable changes in net income, excluding the impact of non-cash items. The improvements to working capital included $206.0 million of favorability from changes to accounts receivable, partially offset by the impact of $40.6 million of unfavorable changes to inventories, and unfavorable changes in accounts payable, accrued liabilities, and income taxes payable of $19.1 million.
Cash flows used for investing activities were $28.4 million in the first three months of 2024, as compared to $42.5 million in the first three months of 2023. The change was primarily due to lower capital expenditures of $12.5 million in the first three months of 2023.
Cash flows used for financing activities were $131.3 million in the first three months of 2024, as compared to $53.2 million in the first three months of 2023. The change was primarily due to $66.0 million of increased share repurchases in the first three months of 2024 as compared to the first 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 $131.1 million to $1.13 billion at March 31, 2024 from $1.26 billion at December 31, 2023, primarily due to $100.0 million of share repurchases and capital expenditures of $30.5 million during the three months ended March 31, 2024. Mattel's cash and equivalents increased $668.5 million to $1.13 billion at March 31, 2024 from $461.7 million at March 31, 2023, primarily due to cash flows generated from operating activities of $1.11 billion in the trailing twelve months, partially offset by $269.0 million of share repurchases and $147.8 million of capital expenditures in the trailing twelve months.
Accounts receivable decreased $408.6 million to $673.3 million at March 31, 2024 from $1.08 billion at December 31, 2023, primarily due to seasonal declines as year-end receivables are collected. Accounts receivable were $673.3 million at March 31, 2024, relatively flat as compared to $673.8 million at March 31, 2023.
Inventories increased $97.7 million to $669.3 million at March 31, 2024 from $571.6 million at December 31, 2023, primarily due to seasonal inventory build. Inventories decreased $291.7 million to $669.3 million at March 31, 2024 from $961.0 million at March 31, 2023, primarily due to lower production and product cost deflation.
Prepaid expenses and other current assets increased $55.1 million to $262.7 million at March 31, 2024 from $207.5 million at December 31, 2023, which included increases in prepaid income taxes of $16.2 million, prepaid value added taxes of $13.9 million, and prepaid insurance of $12.3 million. Prepaid expenses and other current assets were $262.7 million at March 31, 2024, relatively flat as compared to $269.7 million at March 31, 2023.
Accounts 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.
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A summary of Mattel's capitalizat ion is as follows:

| March 31, 2024 |  | March 31, 2023 |  | December 31, 2023
| (In millions, except percentage information)
Cash and equivalents | $ | 1,130.2 |  |  |  |  | $ | 461.7 |  |  |  |  | $ | 1,261.4 |  |  |
2010 Senior Notes due October 2040 | 250.0 |  |  |  |  | 250.0 |  |  |  |  | 250.0 |  |  |
2011 Senior Notes due November 2041 | 300.0 |  |  |  |  | 300.0 |  |  |  |  | 300.0 |  |  |
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 | (18.9) |  |  |  |  | (23.3) |  |  |  |  | (20.0) |  |  |
Total debt | 2,331.1 |  |  | 54 | % |  | 2,326.7 |  |  | 55 | % |  | 2,330.0 |  |  | 52 | %
Stockholders' equity | 2,025.3 |  |  | 46 |  |  | 1,937.7 |  |  | 45 |  |  | 2,149.2 |  |  | 48 |
Total capitalization (debt plus equity) | $ | 4,356.4 |  |  | 100 | % |  | $ | 4,264.4 |  |  | 100 | % |  | $ | 4,479.2 |  |  | 100 | %

Total debt was $2.33 billion at March 31, 2024, December 31, 2023 and March 31, 2023, respectively.
Stockholders' equity decreased $123.9 million to $2.03 billion at March 31, 2024 from $2.15 billion at December 31, 2023, primarily due to share repurchases of $100.0 million and a net loss of $28.3 million for the first three months of 2024. Stockholders' equity increased $87.7 million to $2.03 billion at March 31, 2024 from $1.94 billion at March 31, 2023, primarily due to net income of $292.5 million and the impact of share-based compensation on additional paid-in capital of $84.3 million during the trailing twelve months, partially offset by $269.0 million of share repurchases during the trailing twelve months.
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 2023 Annual Report on Form 10-K and did not materially change during the first three months of 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
36

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 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 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 Euro, Chinese yuan, and Mexican peso were the primary currencies that caused foreign currency transaction exposure for Mattel during the first three months of 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), 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.
Mattel'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.
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 first quarter net sales by approximately 0.3% and would have less than a $0.01 impact to Mattel's net income per share.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of March 31, 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 are not effective as of March 31, 2024 due to a material weakness in Mattel's 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.
Remediation Plan
Management is in the process of implementing its remediation plan to address the material weakness, which includes the adoption of new program change management controls, and the design of 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, implementation, and testing of the user access provisioning and review controls, to demonstrate 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, through testing, that these controls are operating effectively.
Changes 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.
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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 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 first quarter of 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 first quarter of 2024:

Period | Total Number of Shares Purchased (a) |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (b)
January 1-31 | 9,400 |  |  | $ | 18.44 |  |  | — |  |  | $ | 1,000,000,000 |
February 1-29 | 5,508,995 |  |  | 19.24 |  |  | 5,184,149 |  |  | 900,000,735 |
March 1-31 | 8,080 |  |  | 19.81 |  |  | — |  |  | 900,000,735 |
Total | 5,526,475 |  |  | $ | 19.24 |  |  | 5,184,149 |  |  | $ | 900,000,735 |

____________________________________
(a)The total number of shares purchased includes 342,326 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)On February 5, 2024, the Board of Directors authorized a $1.00 billion share repurchase program. As of March 31, 2024, Mattel had a remaining authorization of $900.0 million under the 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)None.
(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 this Quarterly Report on Form 10-Q, 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.

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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: April 30, 2024
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