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What changed in MATTEL INC /DE/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MATTEL INC /DE/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+331 added−350 removedSource: 10-K (2025-02-26) vs 10-K (2024-03-15)

Top changes in MATTEL INC /DE/'s 2024 10-K

331 paragraphs added · 350 removed · 279 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMattel was ranked among Forbes 2023 World's Best Employers and 2023 America's Best Midsize Employers; named to Fast Company's list of the Best Workplaces for Innovators in 2023; recognized by U.S.
Biggest changeMattel was ranked among Forbes 2024 World's Best Employers; named to Fast Company's Most Innovative Companies of 2024 and Best Workplaces for Innovators in 2024; recognized by Newsweek as one of the World's Most Trustworthy Companies of 2024; honored by TIME as one of America's Best Mid-Size Companies of 2024; named to Computerworld's 2024 Best Places to Work in IT; and certified as a Great Place to Work in multiple countries.
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 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 , Disney Frozen , Monster High, and Polly Pocket .
Mattel seeks to mitigate its exposure to foreign 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 have maturity dates of up to 24 months.
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 have maturity dates of up to 24 months.
Mattel makes available on its internet website, free of charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC. 10
Mattel makes available on its internet website, free of charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC.
Mattel is focused on the following evolved 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 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.
Seasonality Mattel's business is highly seasonal, with consumers making a large percentage of all toy purchases during the traditional holiday season. A significant portion of retailer purchasing typically occurs in the third and fourth quarters of Mattel's fiscal year in anticipation of holiday buying.
Seasonality Mattel's business is highly seasonal, with consumers making a large percentage of all toy purchases during the traditional holiday season. A significant portion of retailer purchasing typically occurs in the third and fourth quarters of the year in anticipation of holiday buying.
The majority of Mattel's raw materials are available from numerous suppliers but may be subject to fluctuations in price. See Part I, Item 1A "Risk Factors." Advertising and Marketing Mattel supports its product lines with extensive advertising and consumer promotions. Advertising takes place at varying levels throughout the year and peaks during the traditional holiday season.
The majority of Mattel's raw materials are available from numerous suppliers but may be subject to fluctuations in price. See Part I, Item 1A "Risk Factors." Advertising and Promotion Mattel supports its product lines with extensive advertising and consumer promotions. Advertising takes place at varying levels throughout the year and peaks during the traditional holiday season.
The International segment competes with global toy companies including Hasbro, Jazwares, LEGO, the Pokémon Company, Spin Master, other national and regional toy companies, and manufacturers of video games and consumer electronics. Foreign regions may include competitors that are strong in a particular toy line or geographical area but do not compete with Mattel or other international toy companies worldwide.
The International segment competes with global toy companies including Hasbro, Jazwares, LEGO, the Pokémon Company, Spin Master, other national and regional toy companies, and manufacturers of digital games and consumer electronics. Foreign regions may include competitors that are strong in a particular toy line or geographical area but do not compete with Mattel or other international toy companies worldwide.
Mattel offers a diverse range of products for children, fans of all ages, and families that include, among others, toys for infants, toddlers, and preschoolers, toys for school-aged children, dolls, vehicles, action figures, building sets, games, including digital, puzzles, plush, educational toys, technology-related products, media-driven products, and fashion-related items.
Mattel offers a wide range of products for children, fans of all ages, and families that include, among others, toys for infants, toddlers, and preschoolers, toys for school-aged children, dolls, vehicles, action figures, building sets, games, including digital, puzzles, plush, educational toys, technology-related products, media-driven products, and fashion-related items.
See Part I, Item 1A "Risk Factors." Mattel's advertising and marketing activities are subject to the Federal Trade Commission Act and the Children's Television Act of 1990 and may also be subject to other rules and regulations promulgated by the Federal Trade Commission, and the Federal Communications Commission, as well as laws of certain countries that regulate advertising, advertising to children, and related activities.
See Part I, Item 1A "Risk Factors." Mattel's advertising and promotion activities are subject to the Federal Trade Commission Act and the Children's Television Act of 1990 and may also be subject to other rules and regulations promulgated by the Federal Trade Commission, and the Federal Communications Commission, as well as laws of certain countries that regulate advertising, advertising to children, and related activities.
Privacy-related laws also exist in some U.S. states, such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act, and other state laws that took effect in 2023, or are yet to take effect. Mattel believes that it is in substantial compliance with these laws and regulations.
Privacy-related laws also exist in some U.S. states, such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act, and other state laws that are in effect, or are yet to take effect. Mattel believes that it is in substantial compliance with these laws and regulations.
Parents of preschoolers can continue to discover how the MEGA Bloks preschool building system enhances playtime and early childhood development beyond the Big Building Bag. Mattel Games consists of some of the most beloved Games IP in the world including UNO , Pictionary , Skip-Bo , Blokus , and many others.
Parents of preschoolers can continue to discover how the MEGA Bloks preschool building system enhances playtime and early childhood development beyond the Big Building Bag. 5 Mattel Games consists of some of the most beloved Games IP in the world including UNO , Pictionary , Skip-Bo , Phase-10, Blokus , and many others.
Mattel's products are sold directly to retailers and wholesalers in most European, Latin American, and Asian countries, in Australia and New Zealand, and through agents and distributors in those countries where Mattel has no direct presence. No individual country within the International segment exceeded 8% of worldwide consolidated net sales during 2023.
Mattel's products are sold directly to retailers and wholesalers in most European, Latin American, and Asian countries, in Australia and New Zealand, and through agents and distributors in those countries where Mattel has no direct presence. No individual country within the International segment exceeded 7% of worldwide consolidated net sales during 2024.
In addition, Mattel competes with companies that sell non-toy products, such as electronic consumer products, video games, as well as content and other entertainment companies.
In addition, Mattel competes with companies that sell non-toy products, such as electronic consumer products, digital games, as well as content and other entertainment companies.
To help avoid disruption of its product supply due to political instability, civil unrest, future pandemics or other health crises, economic instability, changes in government policies or regulations, natural and manmade disasters, and other risks, Mattel produces its products in various facilities across multiple countries.
To help avoid disruption of its product supply due to political instability, civil unrest, future pandemics or other health crises, economic instability, changes in government policies or regulations, including tariffs, trade restrictions, or trade barriers, natural and manmade disasters, and other risks, Mattel produces its products in various facilities across multiple countries.
Approximately 28,400 employees (86% of the total workforce) are located outside the United States, with a significant global manufacturing labor workforce of approximately 23,600 employees. The remaining workforce focuses on the design, marketing, sales, finance, and other aspects of Mattel's business. Mattel believes recruiting, developing, and motivating a talented global workforce are important to its long-term growth and success.
Approximately 29,600 employees (86% of the total workforce) are located outside the United States, with a significant global manufacturing labor workforce of approximately 25,100 employees. The remaining workforce focuses on design, marketing, sales, finance, and other aspects of Mattel's business. Mattel believes recruiting, developing, and motivating a talented global workforce are important to its long-term growth and success.
Mattel has entered into agreements to license entertainment properties, including among others, Disney Consumer Products (including Disney Princess and Disney Frozen, Star Wars, Disney Pixar (including Cars and Toy Story ) and certain other Disney films and television properties), NBCUniversal (including Jurassic World, Trolls, and Fast and Furious ), Paramount (relating to its Nickelodeon properties), Warner Bros.
Mattel has entered into agreements to license entertainment properties, including among others, Disney Consumer Products (including Disney Princess and Disney Frozen, Star Wars, Disney Pixar (including Cars and Toy Story ) and certain other Disney films and television properties), NBCUniversal (including Jurassic World, Wicked, and Fast and Furious ), Warner Bros.
Advertising includes television commercials, social media, catalogs, and internet advertisements. Promotions include in-store displays, merchandising materials, major events focusing on products, and tie-ins with various consumer products companies. During 2023, 2022, and 2021, Mattel incurred advertising and promotion expenses of $524.8 million (9.6% of net sales), $534.3 million (9.8% of net sales), and $545.7 million (10.0% of net sales), respectively.
Advertising includes television commercials, social media, catalogs, and internet advertisements. Promotions include in-store displays, merchandising materials, major events focusing on products, and tie-ins with various consumer products companies. During 2024, 2023, and 2022, Mattel incurred advertising and promotion expenses of $507.3 million (9.4% of net sales), $524.8 million (9.6% of net sales), and $534.3 million (9.8% of net sales), respectively.
Human Capital As of December 31, 2023, Mattel had approximately 33,000 employees (including temporary and seasonal employees) working in over 35 countries worldwide to create innovative products and experiences that inspire fans, entertain audiences, and develop children through play.
Human Capital As of December 31, 2024, Mattel had approximately 34,000 employees (including temporary and seasonal employees) working in over 37 countries worldwide to create innovative products and experiences that inspire fans, entertain audiences, and develop children through play.
Mattel will continue to partner with Disney Pixar for Cars to drive innovation, including fresh new product offerings to support key marketing events in 2024.
Mattel will continue to partner with Disney Pixar for Cars to drive innovation, including fresh new product offerings to support key promotional events in 2025.
Additionally, Mattel sells certain of its products directly to consumers through its e-commerce platform and various third-party e-commerce channels. During 2023, Mattel's three largest customers (Walmart at $1.13 billion, Target at $0.67 billion, and Amazon at $0.60 billion) accounted for approximately 44% of worldwide consolidated net sales.
Additionally, Mattel sells certain of its products directly to consumers through its e-commerce platform and various third-party e-commerce channels. During 2024, Mattel's three largest customers (Walmart at $1.17 billion, Target at $0.68 billion, and Amazon at $0.51 billion) accounted for approximately 44% of worldwide consolidated net sales.
Through Mattel's focus on employee engagement, diversity, equity, and inclusion, training and development, health and safety, and employee well-being, Mattel endeavors to create a supportive and rewarding environment where employees are encouraged to collaborate, innovate, and grow.
Through Mattel's focus on employee engagement, equal employment opportunity, training and development, health and safety, and employee well-being, Mattel endeavors to create a supportive and rewarding environment where employees are encouraged to collaborate, innovate, and grow.
Additionally, offering the opportunity for employees to continuously learn and grow their careers at Mattel is a key driver of its employee engagement strategy. In 2023, employees at all levels around the globe participated in several hundred thousand hours of online classes and instructor-led training regarding professional development, management development, and technical training.
Additionally, offering the opportunity for employees to continuously learn and grow their careers at Mattel is a key driver of its employee engagement strategy. Around the globe, employees at all levels participate in a variety of online classes and instructor-led training, including professional development, management development, and technical training.
For additional information on Mattel's worldwide gross billings by brand category, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations." 4 North America Segment The North America segment markets and sells toys and consumer products in the United States and Canada across all of Mattel's categories.
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 sold only in North America. 4 For additional information on Mattel's worldwide gross billings by brand category, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations." North America Segment The North America segment markets and sells toys and consumer products in the United States and Canada across all of Mattel's categories.
Partnerships with some of the world's top franchises, including Pokémon and Hot Wheels , invite consumers to try MEGA building sets, while innovative building play, authentic details, compatible quality, and accessible value encourages consumers to stay in the MEGA building set collection.
In Building Sets, MEGA inspires creativity through authentic building experiences for builders of all ages and fans of global franchises. Partnerships with some of the world's top franchises, including Pokémon , invite consumers to try MEGA building sets, while innovative building play, authentic details, compatible quality, and accessible value encourages consumers to stay in the MEGA building set collection.
In conjunction with Mattel's cost savings programs, in 2021, Mattel discontinued production at its plant located in Canada. In addition, Mattel intends to discontinue production at a plant located in China in 2024.
In conjunction with Mattel's cost savings programs, Mattel discontinued production at a plant located in China in 2024 and intends to discontinue production at another plant located in China in 2025.
Mattel has retail space in Chicago, Illinois; Los Angeles, California; and New York, New York for its flagship American Girl stores, and in five other cities across the United States for its American Girl boutique stores, each of which features children's products from the American Girl segment.
Mattel has retail space in Chicago, Illinois; Los Angeles, California; and New York, New York for its flagship American Girl stores, and in four other cities across the United States for its American Girl boutique stores.
In anticipation of retail sales during the traditional holiday season, Mattel significantly increases its production in advance of the peak selling period, resulting in a corresponding build-up of inventory levels in the first three quarters of its fiscal year.
In anticipation of retail sales during the traditional holiday season, Mattel significantly increases its production in advance of the peak selling period, resulting in a corresponding build-up of inventory levels in the first three quarters of the year. Additionally, seasonal shipping patterns generally result in significant increases in accounts receivable during the third and fourth quarters of the year.
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 Imaginext ) and Thomas & Friends .
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 characters from past and present.
(including DC Universe and Harry Potter ), Microsoft (including Minecraft and Halo ), WWE, and Pokémon . Royalty expense for 2023, 2022, and 2021 was $249.8 million, $230.8 million, and $184.3 million, respectively.
(including DC Universe and Harry Potter ), Microsoft (including Minecraft and Halo ), WWE, Pokémon, and Paramount (relating to its Nickelodeon properties). Royalty expense for 2024, 2023, and 2022 was $244.1 million, $249.8 million, and $230.8 million, respectively.
Mattel offers several benefits to promote employee well-being, including flexible work hours and/or paid time off, health and welfare insurance options, retirement plans, and basic and supplemental employee life insurance for eligible individuals, as well as programs targeted at matters such as maintaining work/life balance and improving health and happiness.
Mattel offers several benefits to promote employee well-being, including paid time off, health and welfare insurance options, retirement plans, and basic and supplemental employee life insurance for eligible individuals.
During 2022, Mattel's three largest customers (Walmart at $0.95 billion, Target at $0.76 billion, and Amazon at $0.64 billion) accounted for approximately 43% of worldwide consolidated net sales.
During 2023, Mattel's three largest customers (Walmart at $1.13 billion, Target at $0.67 billion, and Amazon at $0.60 billion) accounted for approximately 44% of worldwide consolidated net sales.
Additionally, Mattel expects to introduce new game extensions and partnerships that celebrate pop culture. 5 International Segment Products marketed and sold by the International segment are generally the same as those marketed and sold by the North America segment, although some are developed or adapted for particular international markets.
International Segment Products marketed and sold by the International segment are generally the same as those marketed and sold by the North America segment, although some are developed or adapted for particular international markets.
The North America segment competes with several large toy companies, including Hasbro, Jazwares, LEGO, the Pokémon Company, Spin Master, many smaller toy companies, and manufacturers of video games and consumer electronics.
The North America segment competes with several large toy companies, including Hasbro, Jazwares, LEGO, the Pokémon Company, Spin Master, many smaller toy companies, and manufacturers of digital games and consumer electronics. The North America segment also includes American Girl products which compete with companies that manufacture dolls and accessories, and with children's book publishers and retailers.
Mattel will focus on its expansion of Games into its direct-to-consumer business, collectability, and innovation.
Mattel will focus on its expansion of Games into its direct-to-consumer business, collectability, and innovation. Additionally, Mattel expects to introduce new game extensions and partnerships that celebrate pop culture.
Mattel's 2024 Action Figures product lines will include toys tied to Netflix content for NBCUniversal’s Jurassic World ( Jurassic World: Chaos Theory ) and Masters of the Universe ( Masters of the Universe: Revolution ) as well as new innovation within Minecraft and WWE .
Mattel's 2025 Action Figures product lines will include toys tied to theatrical releases for NBCUniversal ' s Jurassic World: Rebirth and Microsoft ' s Minecraft ( Minecraft the Movie ), as well as new releases within Masters of the Universe and WWE .
Products within the North America segment are sold directly to retailers, including omnichannel retailers, discount and free-standing toy stores, chain stores, department stores, other retail outlets, and, to a limited extent, wholesalers. Mattel also operates small retail outlets at certain corporate offices as a service to its employees and as an outlet for its products.
Mattel also operates small retail outlets at certain corporate offices as a service to its employees and as an outlet for its products. The North America segment also includes American Girl products and its children's publications, which are sold directly to consumers and select retailers in the United States.
From die-cast vehicles to tracks, playsets, and accessories, the Mattel Vehicles portfolio has broad appeal that engages and excites fans of all ages.
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.
The American Girl segment sells products directly to consumers through its website, proprietary retail stores in the United States, and at select retailers in the United States. Competition and Industry Background Mattel is a worldwide leader in the manufacture, marketing, and sale of toys, games, and other products related to play, learning, and development.
Competition and Industry Background Mattel is a worldwide leader in the manufacture, marketing, and sale of toys, games, and other products related to play, entertainment, learning, and development. Competition in the toy industry is based primarily on quality, play value, brands, and price.
The American Girl segment competes with companies that manufacture dolls and accessories, and with children's book publishers and retailers. There is increasing competition among the above companies due to trends towards shorter life cycles for individual toy products and an increasing use of more sophisticated technology among consumers.
There is increasing competition among the above companies due to trends towards shorter life cycles for individual toy products, the phenomenon of children outgrowing toys at younger ages, an increasing use of more sophisticated technology in toys, including machine learning and artificial intelligence ("AI"), and an evolving path to purchase for consumers.
Mattel is also excited to build upon its strong partnerships with Disney for the Disney Princess and Disney Frozen product lines. Monster High will look to build upon the success of its global re-launch, including planned new content and product offerings.
Monster High will look to build upon the success of its global re-launch, including planned new content and product offerings. American Girl is a direct marketer, retailer, and children's publisher dedicated to its mission to help girls grow up with courage, confidence, and strength of character.
Infant, Toddler, and Preschool In 2024, Fisher-Price will continue its focus on engaging consumers as a trusted partner for families with infants, toddlers and preschoolers, by continuing to create brand love through innovative products and enriching the first five years of childhood for every family.
Infant, Toddler, and Preschool In 2025, Fisher-Price will continue its focus on engaging consumers as a trusted partner for families with infants, toddlers and preschoolers, and remain dedicated to giving families the best possible start to life. Consumer-centric innovation will continue to drive new product offerings across the portfolio.
The ERGs organize learning opportunities, cultural celebrations, and community outreach, elevate important issues, encourage open and honest conversations, and collect critical feedback. Employee Development and Well-Being Mattel believes continuously developing skills and capabilities for the future is essential to operating as an IP-driven, high-performing toy and family entertainment company.
Mattel values a wide range of ideas and voices that help evolve and broaden its perspectives, with a reach that extends to consumers, customers, business partners, and suppliers. 9 Employee Development and Well-Being Mattel believes continuously developing skills and capabilities for the future is essential to operating as an IP-driven, high-performing toy and family entertainment company.
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.
Infant, Toddler, and Preschool —including brands such as Fisher-Price (including Little People and Fisher-Price Wood ), Imaginext , and Thomas & Friends . As a leader in play and child development, Fisher-Price is dedicated to giving families the best possible start to life by making the most fun, enriching products for infants, toddlers, and preschoolers.
Vehicles In 2024, industry leader Hot Wheels will look to continue its strong momentum as a multigenerational franchise with consumer interest that remains at historic highs. Hot Wheels product offerings are expected to excite consumers with innovation in both die-cast vehicles and tracks and playsets.
Thomas & Friends will be celebrating its 80 th anniversary with numerous activations throughout the year and also launch exciting new products with classic characters and train play. Vehicles In 2025, industry leader Hot Wheels expects to continue its strong momentum as a multigenerational franchise with consumer interest that remains at historic highs.
These offerings will be supported by an all-new animated children's series on Netflix, Hot Wheels Let’s Race , and the expansion of the Hot Wheels Racerverse line. Hot Wheels also seeks to further expand die-cast vehicle distribution, targeting fans of all ages.
Hot Wheels product offerings are expected to excite consumers with innovation in both die-cast vehicles and tracks and playsets. These offerings will be supported by the animated children's series on Netflix, Hot Wheels Let ' s Race , and the new exciting partnership with Formula 1 , bringing fans of the sport a full range of Hot Wheels products.
Seasonal shipping patterns generally result in significant peaks in the third and fourth quarters in the respective levels of inventories and accounts receivable, which may result in seasonal working capital financing requirements. 6 Sales Mattel's products are sold throughout the world.
The elevated accounts receivable and inventory levels may result in seasonal working capital financing requirements. 6 Sales Mattel's products are sold throughout the world. Products within the North America segment include products sold directly to retailers, including omnichannel retailers, discount and free-standing toy stores, chain stores, department stores, other retail outlets, and, to a limited extent, wholesalers.
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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.
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Monster High , a character-driven franchise, engages fans of all ages, encouraging them to be their authentic selves and celebrate what makes them unique.
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Business Segments Mattel's operating segments are: (i) North America, which consists of the United States and Canada; (ii) International; and (iii) American Girl. The North America and International segments sell products across Mattel's categories, although some products are developed and adapted for particular international markets.
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Thomas & Friends is an award-winning preschool train brand franchise that lays the tracks to inspire, entertain, and develop young train fans 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.
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In 2024, Barbie will look to continue to capitalize on the successful live action theatrical movie to help drive the full Barbie franchise, including toys, consumer products, and gaming. Barbie will be celebrating its 65 th anniversary with numerous activations, and also launch exciting new product lines and play patterns.
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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.
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Consumer-centric innovation will continue to drive new product offerings, including the expansion of Linked Play within Infant and new innovative toys from Imaginext , including new licensed entertainment offerings. Fisher-Price will add Fisher-Price Wood and continue its strong momentum in the Little People product line with the expansion of the Little People Barbie line and Little People Collector line.
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The third subcategory is Baby Gear and Power Wheels , in which Mattel is strategically out-licensing or exiting certain product lines. Vehicles —including brands such as Hot Wheels (including Hot Wheels Monster Trucks and Hot Wheels RC ), Matchbox , and Cars ( Disney Pixar ).
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Die-cast pioneer Matchbox expects to continue to bring exciting new products to market following its successful 70 th anniversary, including new sustainable die-cast products, and new episodes of the globally popular YouTube series, Matchbox Adventures .
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Business Segments In the first quarter of 2024, Mattel implemented an organizational change integrating the American Girl business into Mattel's North America commercial organization, which 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.
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In Building Sets, MEGA inspires creativity through authentic building experiences for builders of all ages and fans of global franchises.
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In 2025, Barbie will continue to inspire multi-generational fans by delivering new products and captivating experiences through the year-long Limitless Possibilities marketing campaign, which Mattel expects will further amplify the franchise's impact globally. Mattel is also excited to build upon its strong partnerships with Disney for the Disney Princess and Disney Frozen product lines.
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American Girl Segment The American Girl segment is a direct marketer, retailer, and children's publisher dedicated to its mission to help girls grow up with confidence and character. American Girl is best known for its line of historical and contemporary characters that feature 18" dolls, books, and accessories that inspire girls to face the world with courage, resilience, and kindness.
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In 2025, American Girl looks to build on its momentum from 2024 with quality product drops, multiplatform content launches, immersive omnichannel experiences, and new promotional campaigns geared towards kids, shoppers, and adult fans.
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The contemporary Truly Me and Create Your Own lines encourage girls to express their imaginations and creativity by choosing a doll that looks like them or custom-creating one that's completely unique from more than one million options.
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Fisher-Price Wood will continue to expand globally, leveraging popular themes and trend-based aesthetics, while Little People will look to build on its strong momentum with the expansion of the Little People Core line and Little People Collector line.
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Bitty Baby introduces younger girls to nurturing play until they are ready for WellieWishers , a sweet group of girls who focus on empathy and being a good friend. American Girl also publishes best-selling fiction and non-fiction books, as well as an array of popular digital content.
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Hot Wheels also seeks to further expand die-cast vehicle distribution, targeting fans of all ages. Die-cast pioneer Matchbox expects to continue to bring exciting new products to market, including new sustainable die-cast products and toys tied to the theatrical release of NBCUniversal ' s Jurassic World: Rebirth .
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Competition in the toy industry is based primarily on quality, play value, brands, and price.
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American Girl products and its children's publications are sold directly to consumers and select retailers in the United States.
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News as one of the Best Companies to Work For 2023-2024; named to Newsweek America’s Greatest Workplaces for Women 2023 and America's Greatest Workplaces for Diversity 2024; and honored by Computerworld as one of the Best Places to Work in IT in 2023 and 2024.
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Mattel has once again been recognized for its diversity, equity, and inclusion efforts, including by the Human Rights Campaign Foundation as a 2023-2024 "Equality 100 Award" recipient. For the fourth consecutive year, Mattel received a perfect score on the Human Rights Campaign Foundation's Corporate Equality Index.
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Mattel values a wide range of ideas and voices that help evolve and broaden its perspectives, with a reach that extends to consumers, customers, business partners, and suppliers. 9 In September 2023, Mattel published its 2022 Citizenship Report, which described goals and initiatives related to its diversity, equity, and inclusion efforts.
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The report highlighted Mattel's progress on its goals as of December 31, 2022, including the following: • Maintained 100% base pay equity in 2022 for similar work performed in similar markets by gender globally and by ethnicity in the United States. * • Continued to achieve a high level of representation for women, who comprised 57% of Mattel's global workforce and 48% of managers and above in 2022. * • Continued to achieve a high level of representation for ethnically diverse employees, who made up 45% of U.S. employees in 2022. * • Mattel remains focused on actions to increase such representation, including strengthening relationships with schools, networks, and organizations to establish a talent pipeline of women for Technology, Supply Chain, and Finance positions. * Excludes manufacturing labor and temporary and seasonal employees.
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Mattel believes that Mattel's Employee Resource Groups ("ERGs") are an integral component of fostering an inclusive culture and enhancing engagement at Mattel. Mattel employees have created and continue to lead ten ERGs, which bring together members and allies of underrepresented identities across the global organization.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf Mattel's sustainability practices do not meet, or are not viewed as meeting, investor or other stakeholder expectations and standards (which are continually evolving and may emphasize different priorities than the ones Mattel chooses to focus on), or if Mattel does not or appears not to achieve its sustainability goals, then investors, consumers, and other stakeholders could lose confidence in Mattel and its brands, damaging Mattel's reputation and negatively impacting operations. 17 Financial and Accounting To the extent Mattel is unable to realize the anticipated cost savings from its previously announced cost savings programs or incurs additional and/or unexpected costs to realize such cost savings, Mattel's business, financial condition, and results of operations could be adversely affected.
Biggest changeFinancial and Accounting To the extent Mattel is unable to realize the anticipated cost savings from its previously announced cost savings programs or incurs additional and/or unexpected costs to realize such cost savings, Mattel's business, financial condition, and results of operations could be adversely affected.
Mattel's ability to maintain its current product sales and increase its product sales or establish product sales with new, innovative toys, depends on Mattel's ability to satisfy play preferences, enhance existing products, develop and introduce new products, and achieve market acceptance of these products.
Mattel's ability to maintain or increase its current product sales, or establish product sales with new, innovative toys, depends on Mattel's ability to satisfy play preferences, enhance existing products, develop and introduce new products, and achieve market acceptance of these products.
In a very short period of time, new market participants with a popular product idea or entertainment property can become a significant source of competition for Mattel and its products. Reduced demand for Mattel's brands, products, and product lines as a result of these factors may adversely affect Mattel's business, financial condition, and results of operations.
New market participants with a popular product idea or entertainment property can become a significant source of competition for Mattel and its products in a very short period of time. Reduced demand for Mattel's brands, products, and product lines as a result of these factors may adversely affect Mattel's business, financial condition, and results of operations.
For example, it could: • Require Mattel to dedicate a substantial portion of its cash flow from operations to payments on Mattel's indebtedness, thereby reducing the availability of Mattel's cash flow to fund acquisitions, working capital, capital expenditures, research and development efforts, and other general corporate purposes; • Increase Mattel's vulnerability to, and limit Mattel's flexibility in planning for or reacting to, changes in its business and the industries in which it operates; • Restrict Mattel from making strategic acquisitions or cause Mattel to make non-strategic divestitures; • Expose Mattel to the risk of increased interest rates as borrowings under its revolving credit facility will be subject to variable rates of interest; • Expose Mattel to additional risks related to currency exchange rates and repatriation of funds; • Place Mattel at a competitive disadvantage compared to its competitors that have less debt; and • Limit Mattel's ability to obtain additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions, and general corporate or other purposes.
For example, it could: • Require Mattel to dedicate a substantial portion of its cash flow from operations to payments on Mattel's indebtedness, thereby reducing the availability of Mattel's cash flow to fund acquisitions, working capital, capital expenditures, research and development efforts, and other general corporate purposes; • Increase Mattel's vulnerability to, and limit Mattel's flexibility in planning for or reacting to, changes in its business and the industries in which it operates; • Restrict Mattel from making strategic acquisitions or cause Mattel to make non-strategic divestitures; • Expose Mattel to the risk of increased interest rates as borrowings under its revolving credit facility will be subject to variable rates of interest; • Expose Mattel to additional risks related to currency exchange rates and repatriation of funds; • Place Mattel at a competitive disadvantage compared to its competitors that have less debt; and 23 • Limit Mattel's ability to obtain additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions, and general corporate or other purposes.
A catastrophic event where Mattel has important operations, such as an earthquake, tsunami, flood, typhoon, fire, power outage, or other natural or manmade disaster, including as a result of climate change, could disrupt Mattel's operations or those of its business partners and impair production or distribution of its products, damage inventory, interrupt critical functions, or otherwise affect its business negatively.
A catastrophic event where Mattel has important operations, such as an earthquake, tsunami, flood, typhoon, fire or wildfire, power outage, or other natural or manmade disaster, including as a result of climate change, could disrupt Mattel's operations or those of its business partners and impair production or distribution of its products, damage inventory, interrupt critical functions, or otherwise affect its business negatively.
In addition, Mattel has certain anti-takeover provisions in its bylaws that may make it more difficult for a third party to acquire Mattel without its consent, which may adversely affect Mattel's stock price. The level of returns on pension plan assets and the actuarial assumptions used for valuation purposes could affect Mattel's earnings in future periods.
In addition, Mattel has certain anti-takeover provisions in its bylaws that may make it more difficult for a third party to acquire Mattel without its consent, which may adversely affect Mattel's stock price. 18 The level of returns on pension plan assets and the actuarial assumptions used for valuation purposes could affect Mattel's earnings in future periods.
Mattel relies on such third parties to provide services on a timely and effective basis, but Mattel ultimately does not control their performance. Mattel uses third-party technology and systems for a variety of reasons, including, without limitation, 19 encryption and authentication technology, employee email, content delivery to customers, regulatory compliance, back-office support, and other functions.
Mattel relies on such third parties to provide services on a timely and effective basis, but Mattel ultimately does not control their performance. Mattel uses third-party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, regulatory compliance, back-office support, and other functions.
In addition, the United States, United Kingdom, and European Union, among other jurisdictions, have each imposed export controls, as well as financial and economic sanctions, currency controls, and other trade actions, on certain products, technologies, industry sectors, and parties in Russia as a result of the Russia-Ukraine war, which have resulted and could further result in retaliatory measures and actions by Russia.
In addition, the United States, United Kingdom, and European Union, among other jurisdictions, have each imposed export controls, as well as financial and economic sanctions, currency controls, and other trade actions, on certain products, technologies, industry sectors, and parties in Russia and Belarus as a result of the Russia-Ukraine war, which have resulted and could further result in retaliatory measures and actions by Russia.
Funding obligations are determined based on the value of assets and liabilities on a specific date as required under relevant government regulations for each plan. Future pension funding requirements, and the timing of funding payments, could be affected by legislation enacted by the relevant governmental authorities. 18 If Mattel's goodwill becomes impaired, Mattel's results of operations could be adversely affected.
Funding obligations are determined based on the value of assets and liabilities on a specific date as required under relevant government regulations for each plan. Future pension funding requirements, and the timing of funding payments, could be affected by legislation enacted by the relevant governmental authorities. If Mattel's goodwill becomes impaired, Mattel's results of operations could be adversely affected.
These policies or regulations include accounting standards, taxation requirements (including changes in applicable income tax rates, new tax laws, and revised tax law interpretations), product safety and other safety standards, trade restrictions, duties and tariffs (including international trade laws and regulations, export controls, and economic sanctions), regulations regarding currency and financial matters, anticorruption standards (such as the U.S.
These policies or regulations include accounting standards, taxation requirements (including changes in applicable income tax rates, new tax laws, and revised tax law interpretations), product safety and other safety standards, duties and tariffs (including international trade laws and regulations, export controls, and economic sanctions), trade restrictions, trade barriers, regulations regarding currency and financial matters, anticorruption standards (such as the U.S.
Business Operations Mattel and its license partners are not always able to successfully identify and/or satisfy consumer preferences, which could cause Mattel ' s business, financial condition, and results of operations to be adversely affected. Mattel's business and operating results depend largely upon the appeal of its products, driven by both innovation and marketing.
Business Operations Mattel and its license partners are not always able to successfully identify and/or satisfy consumer preferences, which could cause Mattel ' s business, financial condition, and results of operations to be adversely affected. 10 Mattel's business and operating results depend largely upon the appeal of its products, driven by both innovation and marketing.
A significant drop in the price of Mattel's stock would expose Mattel to the risk of securities class action lawsuits, which could result in substantial costs and divert management's attention and resources, with the potential to adversely affect Mattel's business. For example, Mattel and certain other defendants have recently been party to certain class actions and certain derivative actions.
A significant drop in the price of Mattel's stock would expose Mattel to the risk of securities class action lawsuits, which could result in substantial costs and divert management's attention and resources, with the potential to adversely affect Mattel's business. For example, Mattel and certain other defendants have been party to certain class actions and certain derivative actions.
Consumers' discretionary purchases of toy products are often impacted by a number of factors beyond Mattel's control, including, inflation, job losses, foreclosures, bankruptcies, reduced access to credit, interest rates, tax rates, investment losses, lower consumer confidence, and other macro-economic factors that affect consumer spending behavior.
Consumers' discretionary purchases of toy and entertainment products are often impacted by a number of factors beyond Mattel's control, including, inflation, job losses, foreclosures, bankruptcies, reduced access to credit, interest rates, tax rates, investment losses, lower consumer confidence, and other macro-economic factors that affect consumer spending behavior.
These factors are also currently, and in the future may be, amplified by the global economic or geopolitical climate and additional or unforeseen circumstances, developments, or risks. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results.
These factors are also currently, and in the future may be, amplified by the global economic or geopolitical climate and additional or unforeseen circumstances, developments, or risks. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results or outcomes.
For example, the GDPR, which greatly increases 20 the jurisdictional reach of EU law and became effective in May 2018, added a broad array of requirements for handling personal data, including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance.
For example, the GDPR, which greatly increases the jurisdictional reach of EU law and became effective in May 2018, added a broad array of requirements for handling personal data, including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance.
An unfavorable resolution of these matters could have an adverse effect on Mattel's business, financial condition, and results of operations. Regardless of their outcome, these matters may result in substantial costs and expenses, significantly divert the 21 attention of management, or interrupt Mattel's normal business operations.
An unfavorable resolution of these matters could have an adverse effect on Mattel's business, financial condition, and results of operations. Regardless of their outcome, these matters may result in substantial costs and expenses, significantly divert the attention of management, or interrupt Mattel's normal business operations.
Unforeseen delays or difficulties in the development process or significant increases in the planned cost of development for new Mattel products may cause the introduction date for products to be later than anticipated or, in some situations, may cause a product or new product introduction to be discontinued.
Unforeseen delays or difficulties in the development process or significant 13 increases in the planned cost of development for new Mattel products may cause the introduction date for products to be later than anticipated or, in some situations, may cause a product or new product introduction to be discontinued.
Legal and Regulatory Mattel relies extensively on information technology in its operations, and any material failure, inadequacy, interruption, or security breach of that technology could have an adverse effect on its business, financial condition, and results of operations.
Legal and Regulatory 19 Mattel relies extensively on information technology in its operations, and any material failure, inadequacy, interruption, or security breach of that technology could have an adverse effect on its business, financial condition, and results of operations.
Mattel's operations may be vulnerable to the adverse effects of climate change, which are predicted to increase the frequency and severity of weather events and other natural cycles such as wildfires, heatwaves, floods, and droughts.
Mattel's operations may be vulnerable to the adverse effects of climate change, which are predicted to increase the frequency and severity of weather events and other natural cycles such as wildfires, heatwaves, storms, floods, and droughts.
Mattel expects that children will continue to be interested in product offerings incorporating sophisticated technology, such as video games, consumer electronics, and social and digital media, at increasingly younger ages.
Mattel expects that children will continue to be interested in product offerings incorporating sophisticated technology, such as digital games, consumer electronics, and social and digital media, at increasingly younger ages.
Failure to successfully implement any of these initiatives or launches, or the failure of any of these initiatives or launches to produce the 13 results anticipated by management, could have an adverse effect on Mattel's business, financial condition, and results of operations.
Failure to successfully implement any of these initiatives or launches, or the failure of any of these initiatives or launches to produce the results anticipated by management, could have an adverse effect on Mattel's business, financial condition, and results of operations.
Significant changes in currency exchange rates or the ability to transfer capital across borders could have an adverse effect on Mattel's business, financial condition, and results of operations. Mattel operates facilities and sells products in numerous countries outside the United States. During 2023, Mattel's International segment net sales were 41% of Mattel's total consolidated net sales.
Significant changes in currency exchange rates or the ability to transfer capital across borders could have an adverse effect on Mattel's business, financial condition, and results of operations. Mattel operates facilities and sells products in numerous countries outside the United States. During 2024, Mattel's International segment net sales were 41% of Mattel's total consolidated net sales.
New factors emerge from time to time, and it is not possible for management to predict the impact of all of these factors on Mattel's business, financial condition, or results of operations, or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
New factors emerge from time to time, and it is not possible for management to predict the impact of all of these factors on Mattel's business, financial condition, or results of operations, or the extent to which any factor, or combination of factors, may cause actual results or outcomes, or the timing of those results or outcomes, to differ materially from those contained in any forward-looking statements.
In addition, the availability of copyright protection and other legal protections for IP generated by certain new technologies, such as generative AI, is uncertain. The steps Mattel has taken may not prevent unauthorized use of its intellectual property, particularly in foreign countries where the laws may not protect its intellectual property as fully as in the United States.
In addition, the availability of copyright protection and other legal protections for IP generated by certain new technologies, such as generative AI, is uncertain. The steps Mattel has taken may not prevent unauthorized use of its IP, particularly in foreign countries where the laws may not protect its IP as fully as in the United States.
These challenges are intensifying due to trends towards shorter life cycles for individual toy products, the phenomenon of children outgrowing traditional toys at younger ages, an increasing use of more sophisticated technology in toys, including machine learning and artificial intelligence ("AI"), and an evolving path to purchase.
These challenges are intensifying due to trends towards shorter life cycles for individual toy products, the phenomenon of children outgrowing traditional toys at younger ages, an increasing use of more sophisticated technology in toys, including machine learning and AI, and an evolving path to purchase.
Mattel's failure to successfully market or advertise its products could have an adverse effect on Mattel's business, financial condition, and results of operations. Mattel's products are marketed worldwide through a diverse spectrum of advertising, marketing, and promotional programs, including the use of digital and social media to reach consumers.
Mattel's failure to successfully market or advertise its products could have an adverse effect on Mattel's business, financial condition, and results of operations. Mattel's products are marketed worldwide through a wide spectrum of advertising, marketing, and promotional programs, including the use of digital and social media to reach consumers.
Reductions or interruptions in supplies or in the delivery of finished products, whether resulting from more stringent regulatory requirements, disruptions in transportation, port delays, labor strikes or disputes, lockouts, loss or impairment of key manufacturing facilities, discontinuity or disruptions in information technology systems, changes in trade policy, an outbreak of a severe public health crisis, natural disasters, including severe weather due to climate change or otherwise, the occurrence or threat of wars or other conflicts, or a significant increase in the price of one or more supplies (or an inability to procure sufficient supplies), such as fuel or resin (which is an oil-based product used in plastics), or otherwise, have at times adversely affected and could in the future adversely affect Mattel's business, financial condition, and results of operations.
Reductions or interruptions in supplies or in the delivery of finished products, whether resulting from more stringent regulatory requirements, disruptions in transportation, port delays, labor strikes or disputes, lockouts, loss or impairment of key manufacturing facilities, discontinuity or disruptions in information technology systems, changes in trade policy, including the imposition of tariffs, trade restrictions, or trade barriers, an outbreak of disease or a severe public health crisis, natural disasters, including severe weather due to climate change or otherwise, the occurrence or threat of wars or other conflicts, or a significant increase in the price of one or more supplies (or an inability to procure sufficient supplies), such as fuel or resin (which is an oil-based product used in plastics), or otherwise, have at times adversely affected and could in the future adversely affect Mattel's business, financial condition, and results of operations.
Any increased trade barriers or restrictions on global trade imposed by the United States, or further retaliatory trade measures or currency controls taken by China, Russia, or other countries in response, could further adversely affect Mattel's business, financial condition, and results of operations.
Any increased trade barriers or restrictions on global trade imposed by the United States, whether toward China, Russia, or other countries, or further retaliatory trade measures or currency controls taken by China, Russia, or other countries in response, could further adversely affect Mattel's business, financial condition, and results of operations.
Government action may restrict Mattel's ability to transfer capital across borders, such as recently enacted currency control regulations in China, and may also impact the fluctuation of currencies in the countries where Mattel conducts business or has invested capital.
Government action may restrict Mattel's ability to transfer capital across borders, such as currency control regulations in China, and may also impact the fluctuation of currencies in the countries where Mattel conducts business or has invested capital.
As disclosed in Part II, Item 9A "Controls and Procedures," Mattel determined that there is a material weakness in its internal control over financial reporting and as a result, its disclosure controls and procedures and internal control over financial reporting are not effective as of December 31, 2023.
As disclosed in Part II, Item 9A "Controls and Procedures," Mattel determined that there is a material weakness in its internal control over financial reporting and as a result, its disclosure controls and procedures and internal control over financial reporting are not effective as of December 31, 2024.
If Mattel does not allocate and effectively manage the resources necessary to build, sustain, and protect an appropriate technology infrastructure, it could be subject to transaction errors, processing inefficiencies, loss of customers, business disruptions, shutdowns, or loss of or damage to intellectual property through security breach. Many of these systems are managed by third-party service providers.
If Mattel does not allocate and effectively manage the resources necessary to build, sustain, and protect an appropriate technology infrastructure, it could be subject to transaction errors, processing inefficiencies, loss of customers, business disruptions, shutdowns, or loss of or damage to IP through security breach. Many of these systems are managed by third-party service providers.
These or other factors can reduce the amount that consumers spend on the purchase of Mattel's products. Deterioration of global economic conditions have at times adversely affected Mattel's business and financial results. Unfavorable economic conditions can also impair the ability of those with whom Mattel does business to satisfy their obligations to us.
These or other factors can reduce the amount that consumers spend on the purchase of Mattel's products. Deterioration of global or regional economic conditions have at times adversely affected Mattel's business, financial condition, and results of operations. Unfavorable economic conditions can also impair the ability of those with whom Mattel does business to satisfy their obligations to us.
Compliance with these various laws, regulations, and policies imposes significant costs on Mattel's business, and failure to comply could result in monetary liabilities and other penalties and could lead to negative media attention and consumer dissatisfaction, which could have an adverse effect on Mattel's business, financial condition, and results of operations.
Compliance with these various laws, regulations, and policies imposes significant costs on Mattel's business, and failure to comply could result in monetary liabilities and other penalties and could also lead to negative media attention, reputational damage, and consumer dissatisfaction, which could have an adverse effect on Mattel's business, financial condition, and results of operations.
The value of Mattel's business depends on its ability to protect its intellectual property and information, including its trademarks, trade names, copyrights, patents, trade secrets, and rights under intellectual property license agreements and other agreements with third parties, in the United States and around the world, as well as its customer, employee, and consumer data.
The value of Mattel's business depends on its ability to protect its IP and information, including its trademarks, trade names, copyrights, patents, trade secrets, and rights under IP license agreements and other agreements with third parties, in the United States and around the world, as well as its customer, employee, and consumer data.
Mattel competes domestically and internationally with a wide range of large and small manufacturers, marketers, and sellers of toys, video games, consumer electronics such as tablets and mobile devices, and other play products, as well as retailers, which means that Mattel's market position is always at risk.
Mattel competes domestically and internationally with a wide range of large and small manufacturers, marketers, and sellers of such products, consumer electronics, such as tablets and mobile devices, and other play products, as well as retailers, which means that Mattel's market position is always at risk.
From time to time, third parties have challenged, and may in the future try to challenge, Mattel's ownership of its intellectual property in the United States and around the world. Responding to any infringement claim, regardless of its validity, may be costly and time-consuming and may divert management and key personnel from business operations.
From time to time, third parties have challenged, and may in the future try to challenge, Mattel's ownership of its IP in the United States and around the world. Responding to any infringement claim, regardless of its validity, may be costly and time-consuming and may divert management and key personnel from business operations.
Mattel's efforts to be responsive to climate change, to reduce its carbon footprint, and regarding other sustainability matters cannot provide assurance that Mattel will successfully achieve its sustainability goals, that related costs may not be higher than expected, that proposed regulation or deregulation related to climate change and other sustainability matters will not be more aggressive than Mattel's measures and result in higher costs (or require additional resources), or that any investments Mattel makes in furtherance of achieving such goals will meet expectations for all stakeholders or any applicable binding or non-binding legal standards, any one of which could have an adverse effect on Mattel's financial condition, results of operations, or reputation.
Mattel's efforts to be responsive to climate change, including to reduce its carbon footprint, and other sustainability matters, cannot provide assurance that Mattel will successfully achieve its sustainability goals, that related costs may not be higher than expected, that proposed regulation or deregulation related to climate change and other sustainability matters will not be more aggressive than Mattel's measures and result in higher costs (or require additional resources), or that any investments Mattel makes in furtherance of achieving such goals will meet expectations for all stakeholders or any applicable binding or non- 17 binding standards, any one of which could have an adverse effect on Mattel's financial condition, results of operations, reputation, or stock price.
Market Conditions The deterioration of global economic conditions could adversely affect Mattel's business, financial condition, and results of operations. Mattel designs, manufactures, and markets a wide variety of toy products worldwide through sales to retailer customers and directly to consumers.
Market Conditions The deterioration of global or regional economic conditions could adversely affect Mattel's business, financial condition, and results of operations. Mattel designs, manufactures, and markets a wide variety of products worldwide through sales to retailer customers and directly to consumers.
Mattel's ongoing compliance with the GDPR and other privacy and data protection laws, such as the PIPL, CCPA, CPRA, and COPPA, as well as initiatives to comply with new legal regimes relating to privacy, data protection, and AI, imposes significant costs and challenges that are likely to increase over time, including as Mattel introduces sophisticated digital and smart technology products, including products that incorporate AI.
Mattel's ongoing efforts to comply with the GDPR and other privacy and data protection laws, such as the PIPL, CCPA, CPRA, and COPPA, as well as initiatives to comply with new legal regimes relating to privacy, data protection, and AI, impose significant costs and challenges that are likely to increase over time, including as Mattel introduces sophisticated digital and smart technology products, including products that incorporate AI.
Findings of infringement on the intellectual property rights of any third party by Mattel, its distributors, its licensors, or its manufacturers may require obtaining a license to use those rights, which may not be obtainable on reasonable terms, if at all.
Findings of infringement on the IP rights of any third party by Mattel, its distributors, its licensors, or its manufacturers may require obtaining a license to use those rights, which may not be obtainable on reasonable terms, if at all.
Mattel's credit ratings have fluctuated in recent years. If Mattel's credit ratings decline, its cost of issuing new debt could increase. Mattel may be hindered from obtaining, or required to incur incremental costs to obtain, additional credit in tight credit markets. Further, Mattel's ability to issue additional debt could be adversely affected by other factors, including market conditions.
Mattel's credit ratings have fluctuated over time. If Mattel's credit ratings decline, its cost of issuing new debt could increase. Mattel may be hindered from obtaining, or required to incur incremental costs to obtain, additional credit in tight credit markets. Further, Mattel's ability to issue additional debt could be adversely affected by other factors, including market conditions.
Mattel faces risks related to protecting its proprietary intellectual property and information and is subject to third-party claims that Mattel is infringing on their intellectual property rights, either of which could adversely affect Mattel's business, financial condition, and results of operations.
Mattel faces risks related to protecting its proprietary IP and information and is subject to third-party claims that Mattel is infringing on their IP rights, either of which could adversely affect Mattel's business, financial condition, and results of operations.
Mattel's failure to protect its proprietary intellectual property and information, including with respect to any successful challenge to Mattel's ownership of its intellectual property or significant infringements of its intellectual property, could have an adverse effect on Mattel's business, financial condition, and results of operations. Mattel has acquired, and may in the future acquire, certain intellectual property from third parties.
Mattel's failure to protect its proprietary IP and information, including with respect to any successful challenge to Mattel's 21 ownership of its IP or significant infringements of its IP, could have an adverse effect on Mattel's business, financial condition, and results of operations. Mattel has acquired, and may in the future acquire, certain IP from third parties.
Furthermore, Mattel's net investment in its foreign subsidiaries and its results of operations and cash flows are subject to changes in currency exchange rates and regulations. Highly inflationary economies of certain foreign countries can result in foreign currency devaluation, which negatively impacts Mattel's profitability.
Furthermore, Mattel's net investment in its foreign subsidiaries and its results of operations and cash flows are subject to changes in currency exchange rates and regulations. Significant inflation in economies of certain foreign countries can result in foreign currency devaluation, which negatively impacts Mattel's profitability.
Disruptions, and government responses to any disruption, could adversely affect Mattel's business, financial position, sales, and results of operations and may vary based on the length and severity of the disruption.
Disruptions, and government responses to any disruption, could adversely affect Mattel's business, financial condition, and results of operations and may vary based on the length and severity of the disruption.
Successful movies, television programs, video games, and characters in children's literature affect play preferences, and many products depend on media-based intellectual property licenses including trademarks, trade names, copyrights, patents, trade secrets, and rights under intellectual property license agreements and other agreements with third parties.
Successful movies, television programs, digital games, and characters in children's literature affect play preferences, and many products depend on media-based IP licenses including trademarks, trade names, copyrights, patents, trade secrets, and rights under IP license agreements and other agreements with third parties.
Mattel at times resorts to litigation to protect its intellectual property rights, which could result in substantial costs and diversion of resources.
Mattel at times resorts to litigation to protect its IP rights, which could result in substantial costs and diversion of resources.
Cost increases, whether resulting from rising costs of materials, transportation, services, labor, or compliance with existing or future regulatory requirements, impact the profit margins realized by Mattel on the sale of its products.
Cost increases, whether resulting from rising costs of materials, transportation, services, labor, or compliance with existing or future regulatory requirements, including tariffs, trade restrictions, or trade barriers, impact the profit margins realized by Mattel on the sale of its products.
From time to time, issues with products lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory or other actions by governmental authorities, which could divert resources, affect business operations, decrease sales, increase costs, and put Mattel at a competitive disadvantage, any of which could have an adverse effect on Mattel's business, financial condition, and results of operations.
From time to time, issues with products lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory or other actions by governmental authorities, which could divert resources, affect business operations, decrease sales, increase costs, and put Mattel at a competitive disadvantage, any of which could have an adverse effect on Mattel's business, financial condition, and results of operations. 22 Mattel has in the past experienced, and may in the future experience, issues with products that lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory actions by governmental authorities.
Such risks include complications in complying with different laws in varying jurisdictions; dealing with changes in governmental policies and the evolution of laws and regulations that impact Mattel's product offerings and related enforcement; difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets, which are often quite different from those in the United States; difficulties in moving materials and products from one country to another, including port congestion, strikes and other transportation delays and interruptions; potential challenges to Mattel's transfer pricing determinations and other aspects of its cross border transactions; and the impact of tariffs, quotas, or other protectionist measures. 15 Failure to properly manage these risks could adversely affect Mattel's business, financial condition, and results of operations.
Such risks include complications in complying with different laws in varying jurisdictions; dealing with changes in governmental policies and the evolution of laws and regulations that impact Mattel's product offerings and related enforcement; difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets, which are often quite different from those in the United States; difficulties in moving 15 materials and products from one country to another, including port congestion, strikes and other transportation delays and interruptions; potential challenges to Mattel's transfer pricing determinations and other aspects of its cross border transactions; and the impact of tariffs, trade restrictions, trade barriers, quotas, or other protectionist measures.
Goodwill accounts for a significant amount of Mattel's assets. Mattel tests its goodwill for impairment annually or more often if an event or circumstance indicates that an impairment may have occurred. For purposes of evaluating whether goodwill is impaired, goodwill is allocated to various reporting units, which are at the operating segment level.
Goodwill accounts for a significant amount of Mattel's assets. Mattel tests its goodwill for impairment annually or more often if an event or circumstance indicates that an impairment may have occurred. For purposes of evaluating whether goodwill is impaired, goodwill is allocated to various reporting units.
Consumer preferences, particularly with children as the end users of Mattel's products, are continuously changing and can vary by geographical markets. Product life cycles and consumer preferences continue to be affected by the rapidly increasing use and proliferation of social and digital media by consumers, and the speed with which information is shared.
Consumer preferences are continuously changing and can vary by geographical markets. Product life cycles and consumer preferences continue to be affected by the rapidly increasing use and proliferation of social and digital media by consumers, and the speed with which information is shared.
Such goals are based on Mattel management's current assumptions related to scientific or technological developments, carbon markets, the workforce and hiring market, and other matters that are subject to change in the future and which are outside of Mattel's control, as well as standards for measuring progress that are still in development, and subject to a number of significant risks and uncertainties.
Current sustainability goals are based on Mattel management's current assumptions related to scientific or technological developments, carbon markets, and other matters that are subject to change in the future and which may be outside of Mattel's control, as well as standards for measuring progress that are still developing and subject to a number of significant risks and uncertainties.
To the extent Mattel seeks to introduce sophisticated technology products, such products tend to have higher design, development, and production costs, follow longer timelines, and require different competencies compared to Mattel's more traditional toys and games.
As Mattel introduces more sophisticated technology products, such products tend to have higher design, development, and production costs, follow longer timelines, and require different competencies compared to Mattel's more traditional toys and games.
The recent global shift to remote work environments (including for Mattel's employees, customers, sellers, suppliers, vendors, and other third parties) may amplify these security risks or introduce additional security vulnerabilities. Additionally, AI may increase the frequency or efficacy of cyberattacks against Mattel.
Remote or hybrid work environments (including for Mattel's employees, customers, sellers, suppliers, vendors, and other third parties) may amplify these security risks or introduce additional security vulnerabilities. Additionally, the prevalence and increasing sophistication of AI may increase the frequency or efficacy of cyberattacks against Mattel.
The effects of climate change may cause disruptions in Mattel's operations, including its supply chain and the productivity of its third-party manufacturers, increase Mattel's production costs, impose capacity restraints, and impact the types of products that consumers purchase, all of which may cause Mattel to suffer losses and additional costs to maintain or resume operations.
The effects of climate change may cause disruptions to Mattel's operations, including by disrupting its supply chain and the productivity of its third-party manufacturers, increasing Mattel's production costs, imposing capacity restraints, and impacting the types of products that consumers purchase, all of which may cause Mattel to suffer losses and additional costs to maintain or resume operations.
Mattel may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for Mattel's products. In addition, Mattel may incur capital expenditures, compliance costs, and other costs to comply with increasingly stringent environmental laws, compliance reporting, and enforcement policies.
Mattel may also be subject to decreased availability or less favorable pricing for certain commodities that are necessary for Mattel's products. In addition, Mattel expects to incur capital expenditures, compliance costs, and other costs to comply with increasingly stringent sustainability laws, compliance reporting, and enforcement policies, including those related to the environment.
For example, the global economy has been negatively impacted as a result of the Russia-Ukraine war, and Mattel's operations in Russia have experienced significant disruption. Mattel has paused all shipments into Russia and expects, for the foreseeable future, decreased revenues from Russia and Ukraine.
For example, the global economy has been negatively impacted as a result of the Russia-Ukraine war as well as the conflict in the Middle East, and Mattel's operations in Russia have experienced significant disruption. Mattel has paused all shipments into Russia and expects, for the foreseeable future, decreased revenues compared with those prior to the war from Russia and Ukraine.
Disruptions due to political instability, civil unrest, future pandemics or other public health crises, or earthquakes or other natural disasters out of Mattel's control and actions taken by governments, businesses, and individuals in response to such events could adversely affect Mattel's business, financial position, sales, and results of operations.
Disruptions due to political instability, civil unrest, the threat or occurrence of war or terrorist activities, pandemics or other public health crises, or earthquakes or other natural disasters out of Mattel's control and actions taken by governments, businesses, and individuals in response to such events could adversely affect Mattel's business, financial condition, and results of operations.
This concentration exposes Mattel to risk of a material adverse effect if one or more of Mattel's large customers were to significantly reduce purchases for any reason, favor competitors or new entrants, redeploy their retail floor space to other product categories, or increase their direct competition with Mattel by expanding their private-label business.
This concentration exposes Mattel to risk of a material adverse effect if one or more of Mattel's large customers were to significantly reduce purchases for any reason, favor competitors or new entrants, redeploy their retail floor space to other product categories, alter the manner in which they promote Mattel's products or the resources they devote to promoting and selling Mattel's products, or increase their direct competition with Mattel by expanding their private-label business.
Mattel's business and operations could be materially and adversely affected by political instability, civil unrest, future pandemics or other public health crises, earthquakes, natural disasters, and other natural or man-made economic, political, or environmental disruptions.
Mattel's business and operations could be materially and adversely affected by political instability, civil unrest, the threat or occurrence of war or terrorist activities, pandemics or other public health crises, earthquakes, natural disasters, and other natural or man-made economic, political, or environmental disruptions.
Since the CCPA was enacted, several other states have enacted and are in the process of enacting similar comprehensive privacy schemes, certain of which also impose obligations on companies developing and using AI or automated decision-making technologies.
Since the CCPA was enacted, several other states have enacted or are in the process of enacting privacy, data protection, and AI-related laws, which may also impose obligations on companies developing and using AI or automated decision-making technologies.
During periods of increased inflation, such as Mattel is currently facing, Mattel has increased prices of certain products, and may in the future need to increase prices further in order to cover increased costs of goods sold, which may reduce demand for products.
Those steps may increase costs and/or decrease profit margins and are not always successful. During periods of increased inflation, such as Mattel is currently facing, Mattel has increased prices of certain products, and may in the future need to increase prices further in order to cover increased costs of goods sold, which may reduce demand for products.
Political developments, including trade relations, and the threat or occurrence of war or terrorist activities, and/or trade actions could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions.
Political developments, including trade relations, and/or trade actions could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions.
Further trade actions by the United States or China could result in diverting more production to, or sourcing from, countries other than China, and could cause customers in some countries or regions, such as China, to seek domestic or non-U.S. sources for products that Mattel sells, or to be pressured or incentivized by foreign governments not to purchase goods of U.S. companies, all of which could harm Mattel's future sales in these markets.
Further trade actions by the United States or China, or trade actions by or directed toward other countries, such as Mexico or Canada, could result in diverting more production to, or sourcing from, countries other than China or Mexico, could raise the cost of Mattel products in those markets, and could cause customers in those markets to seek domestic or non-U.S. sources for products that Mattel sells, 16 or to be pressured or incentivized by foreign governments not to purchase goods of U.S. companies, all of which could harm Mattel's future sales in these those markets, adversely affecting Mattel's business, financial condition, and results of operations.
There is risk that one or more of Mattel's lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments, including but not limited to extending credit up to the maximum amount permitted by a credit facility and otherwise accessing capital and/or honoring loan commitments.
If Mattel's lenders are unable to fund borrowings under their credit commitments or Mattel is unable to borrow, it could adversely affect Mattel's business, financial condition, and results of operations. 24 There is risk that one or more of Mattel's lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments, including but not limited to extending credit up to the maximum amount permitted by a credit facility and otherwise accessing capital and/or honoring loan commitments.
If Mattel's lenders are unable to fund borrowings under their credit commitments or Mattel is unable to borrow, it could adversely affect Mattel's business, financial condition, and results of operations.
If Mattel's lenders are unable to fund borrowings under their credit commitments or Mattel is unable to borrow, it could be difficult to replace Mattel's revolving credit facility on similar terms, which could adversely affect Mattel's business, financial condition, and results of operations.
In 2023, Mattel's three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 44% of worldwide consolidated net sales (Walmart at $1.13 billion, Target at $0.67 billion, and Amazon at $0.60 billion ) and its ten largest customers, in the aggregate, accounted for approximately 50% of net sales.
In 2024, Mattel's three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 44% of worldwide consolidated net sales (Walmart at $1.17 billion, Target at $0.68 billion, and Amazon at $0.51 billion ) and its ten largest customers, in the aggregate, accounted for approximately 51% of net sales.
Any or all of the forward-looking statements contained in this Annual Report on Form 10-K and any other public statement made by Mattel or its representatives may turn out to be wrong. Mattel expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.
Any or all of the forward-looking statements contained in this Annual Report on Form 10-K and any other public statement made by Mattel or its representatives may turn out to be wrong.
Mattel's relationships with its existing vendors may be adversely affected as a result of these changes, making Mattel more dependent on a smaller number of vendors. Mattel is not currently dependent on a single supplier or group of suppliers.
Changes in Mattel's operating procedures and product requirements can delay delivery of products and increase costs. Mattel's relationships with its existing vendors may be adversely affected as a result of these changes, making Mattel more dependent on a smaller number of vendors. Mattel is not currently dependent on a single supplier or group of suppliers.
Additionally, any of these types of events could lead to violations of privacy laws, loss of customers, or loss, misappropriation or corruption of confidential information, trade secrets, or data, which could expose Mattel to potential litigation, regulatory actions, sanctions, or other statutory penalties, any or all of which could adversely affect its business and cause it to incur significant losses and remediation costs.
Additionally, any of these types of events could lead to violations of privacy laws, loss of customers, or loss, misappropriation or corruption of confidential information, trade secrets, or data, which could expose Mattel to potential litigation, regulatory actions, sanctions, or other statutory penalties, any or all of which could adversely affect its business and cause it to incur significant losses and remediation costs. 20 If Mattel fails to comply with applicable U.S. and foreign laws related to privacy, data security, AI, and data protection, it could adversely affect Mattel's operating results and financial condition.
Indebtedness Mattel's substantial indebtedness could adversely affect its ability to raise additional capital to fund its operations, limit its ability to react to changes in the economy or its industry, and expose it to interest rate risk to the extent of its variable rate debt.
Indebtedness Mattel's substantial indebtedness could adversely affect its ability to raise additional capital to fund its operations, limit its ability to react to changes in the economy or its industry, and expose it to interest rate risk to the extent of its variable rate debt. At December 31, 2024, Mattel had $2.33 billion of indebtedness on a consolidated basis.
While Mattel is actively engaged in the planning for, and implementation of, remediation efforts to address the material weakness, there can be no assurance that the efforts will fully remediate the material weakness in a timely manner.
While Mattel is in the process of implementing its remediation plan to address the material weakness, there can be no assurance that the efforts will fully remediate the material weakness in a timely manner.
In addition, as a result of the seasonal nature of Mattel's business, Mattel may be adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events, such as 12 pandemics or other public health crises, terrorist attacks, economic shocks, severe weather due to climate change or otherwise, earthquakes or other catastrophic events, that harm the retail environment or consumer buying patterns during its key selling season, or by events, such as strikes, disruptions in transportation, or port delays, that interfere with the manufacture or shipment of goods during the critical months leading up to the holiday purchasing season.
Management believes that the increase in "last minute" shopping during the holiday season and the popularity of gift cards (which often shift purchases to after the holiday season) may negatively impact customer re-orders during the holiday season. 12 In addition, as a result of the seasonal nature of Mattel's business, Mattel may be adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events, such as pandemics or other public health crises, terrorist attacks, economic shocks, severe weather due to climate change or otherwise, earthquakes or other catastrophic events, that harm the retail environment or consumer buying patterns during its key selling season, or by other events, such as strikes, disruptions in transportation, port delays, regional conflict, tariffs, trade restrictions, or trade barriers, and geopolitical and macro-economic factors, including high inflation and high interest rates, that interfere with the manufacture or shipment of goods during the critical months leading up to the holiday purchasing season.
These issues and activities can divert development and management resources, adversely affect Mattel's business operations, decrease sales, increase legal fees and other costs, and put Mattel at a competitive disadvantage compared to other manufacturers not affected by similar issues with products, any of which could have an adverse effect on Mattel's business, financial condition, and results of operations. 22 Mattel's current and future operating procedures and product requirements may increase costs, adversely affect its relationship with vendors, and make it more difficult for Mattel to produce, purchase, and deliver products on a timely basis to meet market demands.
These issues and activities can divert development and management resources, adversely affect Mattel's business operations, decrease sales, increase legal fees and other costs, and put Mattel at a competitive disadvantage compared to other manufacturers not affected by similar issues with products, any of which could have an adverse effect on Mattel's business, financial condition, and results of operations.
Media-based licenses can cause a line of toys or other products to gain immediate success among children, parents, or families. Trends in media, and children's characters change swiftly and contribute to the transience and uncertainty of play preferences. Mattel attempts to respond to such trends and developments by modifying, refreshing, extending, and expanding its product offerings on an annual basis.
Media-based licenses can cause a line of toys or other products to gain immediate success among children, parents, or families. Trends in media, and children's characters change swiftly and contribute to the transience and uncertainty of play preferences.
Changes in business conditions, including those resulting from new legislative and regulatory requirements, have in the past caused, and in the future could cause, further revisions of Mattel's operating procedures and product requirements. Changes in Mattel's operating procedures and product requirements can delay delivery of products and increase costs.
Mattel's current operating procedures and product requirements, including testing requirements and standards, have imposed costs on both Mattel and the vendors from which it purchases products. Changes in business conditions, including those resulting from new legislative and regulatory requirements, have in the past caused, and in the future could cause, further revisions of Mattel's operating procedures and product requirements.
Additionally, as consumers and customers continue to put an increased priority on purchasing products that are sustainably manufactured and packaged, Mattel may need to incur increased costs in order to effectively source materials that are more sustainable, as well as increased costs for additional transparency, due diligence, and reporting.
In particular, customers and consumers may continue to put a premium on purchasing products that are sustainably manufactured and packaged, and Mattel may need to incur additional costs in order to effectively source materials that are more sustainable.
The steps Mattel takes to comply with these laws, regulations, and policies do not ensure that Mattel will be in compliance in the future.
Mattel may continue to make investments involving cryptocurrency and may transact in cryptocurrency, and must comply with applicable regulations, which continue to evolve. The steps Mattel takes to comply with these laws, regulations, and policies do not ensure that Mattel will be in compliance in the future.
Risks from political instability, civil unrest, and other geopolitical or macro-economic conditions exist in certain of these countries, which could temporarily or permanently damage the manufacturing operations of Mattel or its third-party manufacturers located there. In addition, Mattel has significant operations near major earthquake faults, including its corporate headquarters in El Segundo, California.
Risks from political instability, civil unrest, the threat or occurrence of war or terrorist activities, and other geopolitical or macro-economic conditions exist in certain of these countries, which could temporarily or permanently damage the manufacturing operations of Mattel or its third-party manufacturers located there.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, Mattel's IT organization has a steering committee comprised of internal privacy and cybersecurity experts, chaired by Mattel's Chief Information Security Officer ("CISO"), which is responsible for the development and maintenance of Mattel's privacy and information security programs and regularly reports to Mattel's Chief Technology Officer ("CTO").
Biggest changeIn addition, Mattel's IT organization has a steering committee comprised of internal privacy and cybersecurity experts, chaired by Mattel's Chief Information Security Officer ("CISO"), which is responsible for the development and maintenance of Mattel's privacy and information security programs and regularly reports to Mattel's Chief Technology Officer ("CTO"). 25 Mattel is subject to cybersecurity threats that could have a material adverse impact on its results of operations, financial condition, and liquidity, as further discussed in Item 1A "Risk Factors" under the headings of Legal and Regulatory.
The Audit Committee of the Board of Directors (the "Audit Committee") oversees the Company's assessment and management of material cybersecurity risks. The CTO reports to the Audit Committee on Mattel's cybersecurity, including material cybersecurity risks and mitigation, at least annually. The CTO reports and escalates cybersecurity incidents to management and the Audit Committee as appropriate.
The Audit Committee of the Board of Directors (the "Audit Committee") oversees Mattel's assessment and management of material cybersecurity risks. The CTO reports to the Audit Committee on Mattel's cybersecurity, including material cybersecurity risks and mitigation, at least annually. The CTO reports and escalates cybersecurity incidents to management and the Audit Committee as appropriate.
The CISO provides regular updates to Mattel's CTO regarding critical and major severity security incidents involving Company systems, security incidents involving third parties that have the potential to impact Mattel's operations or involve sensitive customer, supplier, consumer, or employee data, and mitigation and remediation implemented to address such threats or incidents.
The CISO provides regular updates to Mattel's CTO regarding critical and major severity security incidents involving Mattel systems, security incidents involving third parties that have the potential to impact Mattel's operations or involve sensitive customer, supplier, consumer, or employee data, and mitigation and remediation implemented to address such threats or incidents.
A team led by the CISO implements and maintains systems designed to detect and prevent cybersecurity threats, monitors important developments that may present risk to Company and third-party systems, and oversees the results of internal and third-party security reviews.
A team led by the CISO implements and maintains systems designed to detect and prevent cybersecurity threats, monitors important developments that may present risk to Mattel and third-party systems, and oversees the results of internal and third-party security reviews.
As part of its cybersecurity risk management program, Mattel utilizes cybersecurity assessors, consultants, auditors, and other third-parties to assist its internal team with network security, cloud security, endpoint security, data loss prevention, and security information and event management. In addition, Mattel utilizes a variety of third-party technology, information systems, and service providers to help identify, isolate, and mitigate security incidents.
As part of its cybersecurity risk management program, Mattel utilizes cybersecurity assessors, consultants, auditors, and other third-parties to assist its internal team with network security, cloud security, endpoint security, identity and access management, data loss prevention, and security information and event management.
However, there can be no assurance that Mattel will be able to mitigate negative impacts in the same way in the event of future attacks or other cyber incidents. 25 Governance Mattel's CISO has more than twenty years of cybersecurity industry experience at Mattel and elsewhere and is responsible for coordinating cybersecurity efforts within Mattel, with a focus on cybersecurity threat prevention, detection, and mitigation, as well as enhancement of privacy and security measures, including security updates, security architecture and engineering, and identity access management.
Governance Mattel's CISO has more than twenty years of cybersecurity industry experience at Mattel and elsewhere and is responsible for coordinating cybersecurity efforts within Mattel, with a focus on cybersecurity threat prevention, detection, and mitigation, as well as enhancement of privacy and security measures, including security updates, security architecture and engineering, and identity access management.
Mattel is not aware of having experienced any cybersecurity threats or incidents to date that have materially affected or are reasonably likely to materially affect Mattel, its business strategy, results of operation or financial condition.
Mattel is not aware of having experienced any cybersecurity threats or incidents to date that have materially affected or are reasonably likely to materially affect Mattel, its business strategy, results of operation or financial condition. However, there can be no assurance that Mattel will be able to mitigate negative impacts in the event of future attacks or other cyber incidents.
Removed
Mattel is subject to cybersecurity threats that could have a material adverse impact on its results of operations, financial condition, and liquidity, as further discussed in Item 1A "Risk Factors" under the headings of Legal and Regulatory.
Added
In addition, Mattel utilizes a variety of third-party technology, information systems, and service providers to help identify, isolate, and mitigate security incidents.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeMattel maintains leased offices in the United States, in Arkansas, California, and Minnesota, and leased warehouse and distribution facilities in California, Pennsylvania, Texas, and in Mississauga, Canada, all of which are used by the North America segment.
Biggest changeMattel maintains leased offices in the United States, in Arkansas, California, and Minnesota, a leased warehouse in Wisconsin, distribution facilities in California, Pennsylvania, Texas, and in Mississauga, Canada, and retail and related office space in Chicago, Illinois; Los Angeles, California; and New York, New York for its flagship American Girl stores, and in four other cities across the United States for its American Girl boutique stores, all of which are used by the North America segment.
Mattel also owns facilities in East Aurora, New York, consisting of approximately 607,000 square feet, which is used by the North America segment and for brand and corporate support functions. American Girl owns its distribution facility in DeForest, Wisconsin, consisting of approximately 350,000 square feet. Mattel also owns its principal manufacturing facilities located in Indonesia, Malaysia, Mexico, and Thailand.
Mattel also owns facilities in East Aurora, New York, consisting of approximately 607,000 square feet, used by the North America segment and for brand and corporate support functions and a distribution facility in DeForest, Wisconsin, consisting of approximately 350,000 square feet, which is used by the North America segment.
Mattel leases facilities used by the International segment in various foreign jurisdictions, including China, Mexico, and the United Kingdom. Mattel also leases office space and principal manufacturing facilities in China, which support the North America, International, and American Girl segments.
Internationally, Mattel has offices and/or warehouse space in over 30 countries. Mattel leases facilities used by the International segment in various foreign jurisdictions, including China, France, Mexico, and the United Kingdom. Mattel also leases office space and principal manufacturing facilities in China, which support the North America and International segments.
Item 2. Properties. Mattel owns its corporate headquarters in El Segundo, California, consisting of approximately 360,000 square feet, and an adjacent office building consisting of approximately 55,000 square feet. Mattel also leases buildings in El Segundo consisting of approximately 327,000 square feet. All segments use these facilities.
Item 2. Properties. Mattel owns its corporate headquarters in El Segundo, California, consisting of approximately 360,000 square feet, and an adjacent office building consisting of approximately 55,000 square feet. In 2024, Mattel purchased another building in El Segundo that will serve as its Global Design Center, consisting of approximately 168,000 square feet.
Removed
Mattel leases corporate office space in Middleton, Wisconsin for American Girl, retail and related office space in Chicago, Illinois; Los Angeles, California; and New York, New York for its flagship American Girl stores, and in five other cities across the United States for its American Girl boutique stores. Internationally, Mattel has offices and/or warehouse space in over 30 countries.
Added
Mattel also leases buildings in El Segundo consisting of approximately 387,000 square feet. All segments use these facilities.
Added
Mattel also owns its principal manufacturing facilities located in Indonesia, Malaysia, Mexico, and Thailand.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring 2022 and 2021, Mattel did not repurchase any shares of its common stock.
Biggest changeIssuer Purchases of Equity Securities During 2024, Mattel repurchased 21.0 million shares of its common stock at a cost of $400.0 million. During 2023, Mattel repurchased 10.4 million shares of its common stock at a cost of $203.0 million. During 2022, Mattel did not repurchase any shares of its common stock.
Mattel's share repurchase program has no expiration date. 27 Performance Graph The following graph compares the performance of Mattel's common stock with that of the S&P 500 Index and the S&P 500 Consumer Discretionary Index. The Cumulative Total Return listed below assumes an initial investment of $100 on December 31, 2018 and reinvestment of dividends.
Mattel's share repurchase program has no expiration date. 27 Performance Graph The following graph compares the performance of Mattel's common stock with that of the S&P 500 Index and the S&P 500 Consumer Discretionary Index. The Cumulative Total Return listed below assumes an initial investment of $100 on December 31, 2019 and reinvestment of dividends.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Market Information Mattel's common stock, par value $1.00 per share, is traded under the symbol "MAT" on The Nasdaq Global Select Market. Holders of Record As of March 4, 2024, Mattel had approximately 15,000 holders of record of its common stock.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Market Information Mattel's common stock, par value $1.00 per share, is traded under the symbol "MAT" on The Nasdaq Global Select Market. Holders of Record As of February 6, 2025, Mattel had approximately 14,000 holders of record of its common stock.
Dividends See Part II, Item 8 "Financial Statements and Supplementary Data—Note 7 to the Consolidated Financial Statements —Stockholders' Equity—Dividends." Recent Sales of Unregistered Securities During the fourth quarter of 2023, Mattel did not sell any unregistered securities. Issuer Purchases of Equity Securities During 2023, Mattel repurchased 10.4 million shares of its common stock at a cost of $203.0 million.
Dividends See Part II, Item 8 "Financial Statements and Supplementary Data—Note 7 to the Consolidated Financial Statements —Stockholders' Equity—Dividends." Recent Sales of Unregistered Equity Securities During the fourth quarter of 2024, Mattel did not sell any unregistered equity securities.
The following table provides certain information with respect to Mattel's purchases of its common stock during the fourth quarter of 2023: 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) Period: October 1 - 31 1,710,604 $ 18.82 1,710,221 $ 60,975,153 November 1 - 30 3,173,304 19.23 3,171,631 — December 1 - 31 3,835 18.88 — — Total 4,887,743 $ 19.08 4,881,852 $ — (a) The total number of shares purchased includes 5,891 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.
The following table provides certain information with respect to Mattel's purchases of its common stock during the fourth quarter of 2024: 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) (In millions) Period: October 1 - 31 1,122,377 $ 19.66 1,119,197 $ 709.7 November 1 - 30 5,784,466 18.98 5,780,765 600.0 December 1 - 31 1,940 17.79 — 600.0 Total 6,908,783 $ 19.09 6,899,962 $ 600.0 (a) The total number of shares purchased includes 8,821 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.
During February 2024, Mattel executed $100.0 million of share repurchases under the new program. Repurchases under the program will take place from time to time, depending on market conditions.
(b) On February 5, 2024, the Board of Directors authorized a $1.00 billion share repurchase program. As of December 31, 2024, Mattel had a remaining authorization of $600.0 million under the program. Repurchases under the share repurchase program will take place from time to time, depending on market conditions.
December 31, 2018 2019 2020 2021 2022 2023 Cumulative Total Return: Mattel, Inc. $ 100.00 $ 135.64 $ 174.67 $ 215.82 $ 178.58 $ 188.99 S&P 500 $ 100.00 $ 126.17 $ 143.39 $ 178.85 $ 155.42 $ 180.90 S&P 500 Consumer Discretionary $ 100.00 $ 126.53 $ 165.74 $ 211.63 $ 167.12 $ 207.71 28 Item 6. Reserved.
December 31, 2019 2020 2021 2022 2023 2024 Cumulative Total Return: Mattel, Inc. $ 100.00 $ 128.78 $ 159.11 $ 131.66 $ 139.34 $ 130.85 S&P 500 $ 100.00 $ 118.39 $ 152.34 $ 124.73 $ 157.48 $ 196.85 S&P 500 Consumer Discretionary $ 100.00 $ 133.30 $ 165.87 $ 104.45 $ 148.63 $ 193.43 28 Item 6. Reserved.
Removed
(b) Mattel's share repurchase program was first announced on July 21, 2003. On July 17, 2013, the Board of Directors approved a $500.0 million increase to Mattel's share repurchase authorization and, as of December 31, 2023, such authorization was exhausted. On February 5, 2024, the Board of Directors authorized a new $1.00 billion share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn connection with the OFG program, Mattel recorded severance and other restructuring costs in the following cost and expense categories within operating income in the consolidated statements of operations: For the Year Ended December 31, 2023 December 31, 2022 December 31, 2021 (In millions) Cost of sales (a) $ (1.3) $ 10.7 $ 2.9 Other selling and administrative expenses (b) 32.3 23.6 32.3 $ 31.0 $ 34.3 $ 35.2 (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 14 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 14 to the Consolidated Financial Statements—Segment Information." As of December 31, 2023, Mattel had recorded cumulative severance and other restructuring charges related to the OFG program, including previous actions taken under the Capital Light program, of approximately $196 million, which included approximately $73 million of non-cash charges.
Biggest changeThe 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 other restructuring costs $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 Year Ended December 31, 2024 December 31, 2023 (In millions) Cost of sales (a) $ 4.3 $ — Other selling and administrative expenses (b) 44.9 25.3 $ 49.2 $ 25.3 (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 14 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 14 to the Consolidated Financial Statements—Segment Information." As of December 31, 2024, Mattel had recorded cumulative severance and other restructuring charges related to the OPG program of approximately $74 million, which included approximately $2 million of non-cash charges.
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.
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.
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.
The disclosure of the percentage impact of foreign 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.
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.
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.
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 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.
Additionally, Mattel uses a variety of financial arrangements to support the collectability of accounts receivable of customers deemed to be a credit risk, including requiring letters of credit, purchasing various forms of credit insurance with unrelated third parties, or requiring cash in advance of shipment. Mattel sponsors defined benefit pension plans and postretirement benefit plans for its employees.
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. 37 Mattel sponsors defined benefit pension plans and postretirement benefit plans for its employees.
Mattel ships products in accordance with delivery schedules specified by its customers, who usually request delivery within three months. In anticipation of retail sales in the traditional holiday season, Mattel significantly increases its production in advance of the peak selling period, resulting in a corresponding build-up of inventory levels in the first three quarters of its fiscal year.
Mattel ships products in accordance with delivery schedules specified by its customers, who usually request delivery within three months. In anticipation of retail sales in the traditional holiday season, Mattel significantly increases its production in advance of the peak selling period, resulting in a corresponding build-up of inventory levels in the first three quarters of the year.
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.
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 Credit Facility covenants, or deterioration of Mattel's credit ratings.
Mattel believes that the disclosure of the percentage impact of foreign 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 foreign currency changes could potentially mask underlying sales trends.
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 constant currency exchange rates are determined by Mattel at the beginning of each year and are applied consistently during the year. They are generally different from the actual exchange rates in effect during the current or prior period due to volatility in actual foreign 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.
There were no events or changes in circumstances subsequent to the third quarter assessment that indicate that the carrying amount of a reporting unit may exceed its fair value as of December 31, 2023. Sales Adjustments Mattel routinely enters into arrangements with its customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise.
There were no events or changes in circumstances subsequent to the third quarter assessment that indicate that the carrying amount of a reporting unit may exceed its fair value as of December 31, 2024. Sales Adjustments Mattel routinely enters into arrangements with its customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise.
There is a risk that customers will not pay, or that payment may be delayed, because of bankruptcy, financial difficulty, or other factors beyond the control of Mattel. This could increase Mattel's exposure to losses from bad debts. 42 A small number of customers account for a large share of Mattel's net sales and accounts receivable.
There is a risk that customers will not pay, or that payment may be delayed, because of bankruptcy, financial difficulty, or other factors beyond the control of Mattel. This could increase Mattel's exposure to losses from bad debts. 40 A small number of customers account for a large share of Mattel's net sales and accounts receivable.
Unexpected changes in these factors could result in excess inventory in a particular product line, which would require management to record a valuation adjustment on such inventory. 43 Mattel bases its production schedules for toy products on customer orders and forecasts, taking into account historical trends, results of market research, and current market information.
Unexpected changes in these factors could result in excess inventory in a particular product line, which would require management to record a valuation adjustment on such inventory. 41 Mattel bases its production schedules for toy products on customer orders and forecasts, taking into account historical trends, results of market research, and current market information.
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. 46 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.
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. 44 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.
Such economic changes may affect the sales of Mattel's products and its corresponding inventory levels, which could potentially impact the valuation of its inventory. At the end of each quarter, management within each business segment, North America, International, and American Girl, performs a detailed review of its inventory on an item-by-item basis.
Such economic changes may affect the sales of Mattel's products and its corresponding inventory levels, which could potentially impact the valuation of its inventory. At the end of each quarter, management within each business segment, North America and International, performs a detailed review of its inventory on an item-by-item basis.
Mattel has omitted discussion of 2021 results where it would be redundant to the discussion previously included in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations," of Mattel's Annual Report on Form 10-K for the year ended December 31, 2022.
Mattel has omitted discussion of 2022 results where it would be redundant to the discussion previously included in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations," of Mattel's Annual Report on Form 10-K for the year ended December 31, 2023.
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 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) general advertising costs, which include trade show costs.
Mattel utilizes the income approach for each of its reporting units and the market approach is also utilized for the North America and International reporting units. The income approach determines the fair value based upon the discounted cash flows that the business can be expected to generate in the future.
Mattel utilizes the income approach for each of its reporting units and also utilizes the market approach for the North America and International reporting units. The income approach determines the fair value based upon the discounted cash flows that the business can be expected to generate in the future.
In general, Mattel's inventory obsolescence estimates have historically been within expectations and in line with the reserves established, and although possible, significant variation is not expected in the future. If significant changes in the assumptions used to develop the estimate occur, they could materially affect key financial measures, including cost of sales and inventories.
In general, Mattel's inventory obsolescence estimates have historically been within expectations and in line with the reserves established, and although possible, significant variation is not expected in the future. If significant changes in the assumptions used to develop the estimate occur, they could materially affect key financial statement line items, including cost of sales and inventories.
A hypothetical 1% increase or decrease to inventory reserves as a percentage of gross inventory at December 31, 2023 and 2022 would have impacted 2023 and 2022 cost of sales by approximately $6 million and $9 million, respectively. Goodwill Mattel tests goodwill for impairment annually or more often if an event or circumstance indicates that an impairment may have occurred.
A hypothetical 1% increase or decrease to inventory reserves as a percentage of gross inventory at December 31, 2024 and 2023 would have impacted 2024 and 2023 cost of sales by approximately $5 million and $6 million, respectively. Goodwill Mattel tests goodwill for impairment annually or more often if an event or circumstance indicates that an impairment may have occurred.
A hypothetical 1% increase or decrease to the allowance for credit losses as a percentage of accounts receivable would have impacted 2023 and 2022 other selling and administrative expenses by approximately $11 million and $9 million, respectively. Inventories—Obsolescence Reserve Inventories are stated at the lower of cost or net realizable value.
A hypothetical 1% increase or decrease to the allowance for credit losses as a percentage of accounts receivable would have impacted 2024 and 2023 other selling and administrative expenses by approximately $10 million and $11 million, respectively. Inventories—Obsolescence Reserve Inventories are stated at the lower of cost or net realizable value.
As of December 31, 2023, Mattel's three largest customers accounted for approximately 41% of net accounts receivable, and its ten largest customers accounted for approximately 49% of net accounts receivable. Should one or more of Mattel's large customers experience bankruptcy or financial difficulty, the allowance for credit losses may not be sufficient to cover such losses.
As of December 31, 2024, Mattel's three largest customers accounted for approximately 41% of net accounts receivable, and its ten largest customers accounted for approximately 51% of net accounts receivable. Should one or more of Mattel's large customers experience bankruptcy or financial difficulty, the allowance for credit losses may not be sufficient to cover such losses.
A hypothetical 1% increase or decrease in Mattel's sales adjustments as a percentage of net sales during the years ended December 31, 2023 and 2022 would have impacted 2023 and 2022 net sales by approximately $54 million. 45 Income Taxes Mattel's income tax provision and related income tax assets and liabilities are based on actual and expected future income, U.S. federal and foreign statutory income tax rates, and tax regulations and planning opportunities in the various jurisdictions in which Mattel operates.
A hypothetical 1% increase or decrease in Mattel's sales adjustments as a percentage of net sales during the years ended December 31, 2024 and 2023 would have impacted 2024 and 2023 net sales and accounts receivable by approximately $54 million. 43 Income Taxes Mattel's income tax provision and related income tax assets and liabilities are based on actual and expected future income, U.S. federal and foreign statutory income tax rates, and tax regulations and planning opportunities in the various jurisdictions in which Mattel operates.
As of December 31, 2023 and 2022, the unrecognized tax benefit balance, inclusive of interest and penalties and net of federal tax benefit, was $144.9 million and $127.7 million, respectively. In the normal course of business, Mattel is regularly audited by U.S. federal, state, local, and foreign tax authorities.
As of December 31, 2024 and 2023, the unrecognized tax benefit balance, inclusive of interest and penalties, and net of U.S. federal tax benefit was $151.7 million and $144.9 million, respectively. In the normal course of business, Mattel is regularly audited by U.S. federal, state, local, and foreign tax authorities.
The increase in the International segment gross billings was due to higher billings of Dolls and Vehicles, partially offset by lower billings of Action Figures, Building Sets, Games and Other and Infant, Toddler, and Preschool.
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 products, partially offset by higher billings of Vehicles products.
As such, Mattel has evaluated its intentions related to its indefinite reinvestment assertion and has recorded a $23 million deferred tax liability related to approximately $556 million of foreign earnings that will not be indefinitely reinvested. Current Market Conditions Mattel is exposed to financial market risk resulting from changes in interest and foreign currency exchange rates.
As such, Mattel has evaluated its intentions related to its indefinite reinvestment assertion and has recorded a $22.1 million deferred tax liability related to approximately $559 million of foreign earnings that will not be indefinitely reinvested. Current Market Conditions Mattel is exposed to financial market risk resulting from changes in interest and foreign currency exchange rates.
Although the letters of credit are off-balance sheet, the majority of the obligations to which they relate are reflected as liabilities in the consolidated balance sheets. Outstanding letters of credit totaled approximately $9 million and $8 million as of December 31, 2023 and 2022, respectively.
Although the letters of credit are off-balance sheet, the majority of the obligations to which they relate are reflected as liabilities in the consolidated balance sheets. Outstanding letters of credit totaled approximately $9 million as of December 31, 2024 and 2023.
Mattel performed a quantitative goodwill impairment assessment as of August 1, 2023, and the resulting calculations indicated that the fair values exceeded the carrying amounts of Mattel's reporting units by 4.3 times, 1.7 times, and 1.8 times for the North America, International, and American Girl reporting units, respectively.
Mattel performed a quantitative goodwill impairment assessment as of August 1, 2024, and the resulting calculations indicated that the fair values exceeded the carrying amounts of Mattel's reporting units by 4.2 times, 2.2 times, and 1.8 times for the North America, International, and American Girl reporting units, respectively.
The following table summarizes Mattel's allowance for credit losses: December 31, 2023 December 31, 2022 (In millions, except percentage information) Allowance for credit losses $ 8.8 $ 27.6 As a percentage of total accounts receivable 0.8 % 3.1 % Changes in the allowance for credit losses reflect management's assessment of the factors noted above, including changes in current economic trends, business environment, past due accounts, disputed balances with customers, and the financial condition of customers.
The following table summarizes Mattel's allowance for credit losses: December 31, 2024 December 31, 2023 (In millions, except percentage information) Allowance for credit losses $ 8.2 $ 8.8 As a percentage of total accounts receivable 0.8 % 0.8 % Changes in the allowance for credit losses reflect management's assessment of the factors noted above, including changes in current economic trends, business environment, past due accounts, disputed balances with customers, and the financial condition of customers.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the consolidated financial statements and the related notes. See Item 8 "Financial Statements and Supplementary Data." Note that amounts within this Item shown in millions may not foot due to rounding.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the consolidated financial statements and the related notes. See Item 8 "Financial Statements and Supplementary Data." Amounts shown in millions or billions within this Item 7 may not sum due to rounding.
Mattel expects to make cash contributions totaling approximately $14 million to its defined benefit pension and postretirement benefit plans in 2024, substantially all of which will be for benefit payments for its under-funded plans. Cash Flow Activities Cash flows provided by operating activities were $869.8 million in 2023, as compared to $442.8 million in 2022.
Mattel expects to make cash contributions totaling approximately $21 million to its defined benefit pension and postretirement benefit plans in 2025, substantially all of which will be for benefit payments for its under-funded plans. Cash Flow Activities Cash flows provided by operating activities were $800.6 million in 2024, as compared to $869.8 million in 2023.
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. Changes in the valuation allowances in 2022 primarily related to utilization and expiration of tax attributes and currency fluctuations.
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. Changes in the valuation allowances in 2023 primarily related to changes in the assessment of the future realizability of certain deferred tax assets, utilization and expiration of tax attributes, and currency fluctuations.
In 2023, Mattel's three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 44% of net sales, and its ten largest customers, in the aggregate, accounted for approximately 50% of net sales.
In 2024, Mattel's three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 44% of net sales, and its ten largest customers, in the aggregate, accounted for approximately 51% of net sales.
The allowance for credit losses is also affected by the time at which uncollectable accounts receivable balances are actually written off. For the year ended December 31, 2023, Mattel recorded a benefit related to its allowance for credit losses of approximately $2 million, which was recognized as other selling and administrative income.
The allowance for credit losses is also affected by the time at which uncollectable accounts receivable balances are actually written off. For the year ended December 31, 2024, Mattel recorded a charge related to its allowance for credit losses of approximately $3 million, which was recognized as other selling and administrative expense.
Consistent with prior periods, 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 December 31, 2023, Mattel had no outstanding borrowings under the Revolving Credit Facility and approximately $9 million in outstanding letters of credit under the Revolving Credit Facility.
Mattel intends to utilize its existing cash and cash equivalents, cash flow from operations, and borrowings under the Credit Facility to meet its short-term liquidity needs. At December 31, 2024, Mattel had no outstanding borrowings under the Credit Facility and approximately $9 million in outstanding letters of credit under the Credit Facility.
Additionally, sales adjustments may include foreign currency transaction gains and losses from the remeasurement of accounts receivable denominated in currencies that are different from the relevant entity's functional currency. Sales adjustments increased to $660.6 million in 2023, as compared to $613.6 million in 2022.
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 $653.7 million in 2024, as compared to $660.6 million in 2023.
Significant changes in the assumptions used to develop the estimate could materially affect key financial measures, including other selling and administrative expenses, net income, and accounts receivable. Mattel's products are sold throughout the world.
Significant changes in the assumptions used to develop the estimate could materially affect key financial statement line items, including other selling and administrative expenses, and accounts receivable. Mattel's products are sold throughout the world.
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" for further discussion regarding potential impacts on Mattel's business.
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" for further discussion regarding potential impacts on Mattel's business.
Accruals for these programs are recorded as sales adjustments that reduce gross billings in the period the related sale is recognized. Sales adjustments for such programs totaled $660.6 million or 12.1% as a percentage of net sales in 2023 and $613.6 million or 11.3% as a percentage of net sales in 2022.
Accruals for these programs are recorded as sales adjustments that reduce gross billings in the period the related sale is recognized. Sales adjustments for such programs totaled $653.7 million or 12.2% as a percentage of net sales in 2024 and $660.6 million or 12.1% as a percentage of net sales in 2023.
The following table summarizes Mattel's obsolescence reserve: December 31, 2023 December 31, 2022 (In millions, except percentage information) Obsolescence reserve $ 46.7 $ 41.8 As a percentage of gross inventory 7.5 % 4.5 % For the years ended December 31, 2023 and 2022, Mattel recorded a charge related to its inventory obsolescence reserve of approximately $64 million and $65 million, respectively, which was recognized as cost of sales.
The following table summarizes Mattel's obsolescence reserve: December 31, 2024 December 31, 2023 (In millions, except percentage information) Obsolescence reserve $ 33.0 $ 46.7 As a percentage of gross inventory 6.2 % 7.5 % For the years ended December 31, 2024 and 2023, Mattel recorded a charge related to its inventory obsolescence reserve of approximately $46 million and $64 million, respectively, which was recognized as cost of sales.
Management evaluates the level of Mattel's valuation allowances at least annually, and more frequently if actual operating results differ significantly from forecasted results. Changes in the valuation allowances in 2022 primarily related to utilization and expiration of tax attributes and currency fluctuations.
Management evaluates the level of Mattel's valuation allowances at least annually, and more frequently if actual operating results differ significantly from forecasted results. Changes in the valuation allowances in 2023 primarily related to changes in assessment of the future realizability of certain deferred tax assets, utilization and expiration of tax attributes, and currency fluctuations.
Such obligations may include capital expenditures, debt service, future royalty payments pursuant to licensing agreements, future inventory and service purchases, and required cash contributions and payments related to benefit plans. Of Mattel's $1.26 billion in cash and equivalents at December 31, 2023, $578.1 million was held by foreign subsidiaries, including $57.2 million held in Russia.
Such obligations may include capital expenditures, debt service, future royalty payments pursuant to licensing agreements, future inventory and service purchases, and required cash contributions and payments related to benefit plans. Of Mattel's $1.39 billion in cash and equivalents at December 31, 2024, $728.1 million was held by foreign subsidiaries, including $48.9 million held in Russia.
As of December 31, 2022, Mattel's valuation allowances on its U.S. federal and state deferred tax assets and foreign deferred tax assets were approximately $16 million and $74 million, respectively.
As of December 31, 2024, Mattel's valuation allowances on its U.S. federal and state deferred tax assets and foreign deferred tax assets were approximately $12 million and $85 million, respectively.
Mattel's cash held in Russia can be used within the country; however, its movement out of Russia is currently limited. 38 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.
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.
For the year ended December 31, 2022, Mattel recorded a charge related to its allowance for credit losses of approximately $18 million, which was recognized as other selling and administrative expenses.
For the year ended December 31, 2023, Mattel recorded a benefit related to its allowance for credit losses of approximately $2 million, which was recognized as other selling and administrative income.
As of December 31, 2023, Mattel's valuation allowances on its U.S. federal and state deferred tax assets and foreign deferred tax assets were approximately $14 million and $71 million, respectively. As of December 31, 2023 and 2022, Mattel had recorded net deferred tax assets of $243.1 million and $416.5 million, respectively.
As of December 31, 2024, Mattel's valuation allowances on its U.S. federal and state deferred tax assets and foreign deferred tax assets were approximately $12 million and $85 million, respectively. As of December 31, 2024 and 2023, Mattel has recorded net deferred tax assets of $252.5 million and $243.1 million, respectively.
Significant changes in the assumptions used to develop the estimate could materially affect key financial measures, including gross profit, net income, and inventories. In the toy industry, orders are typically subject to cancellation or change at any time prior to shipment.
Significant changes in the assumptions used to develop the estimate could materially affect key financial statement line items, including cost of sales and inventories. In the toy industry, orders are typically subject to cancellation or change at any time prior to shipment.
Advertising and promotion expenses as a percentage of net sales were relatively flat in 2023 at 9.6% in 2023, compared to 9.8% in 2022. Other Selling and Administrative Expenses Other selling and administrative expenses were $1.50 billion, or 27.5% of net sales, in 2023, as compared to $1.27 billion, or 23.4% of net sales, in 2022.
Advertising and promotion expenses as a percentage of net sales were relatively flat at 9.4% in 2024, compared to 9.6% in 2023. Other Selling and Administrative Expenses Other selling and administrative expenses were $1.53 billion, or 28.5% of net sales, in 2024, an increase of $35.2 million, as compared to $1.50 billion, or 27.5% of net sales, in 2023.
The increase in the North America segment gross billings was primarily due to higher billings of Dolls and Vehicles, partially offset by lower billings of Action Figures, Building Sets, Games, and Other and Infant, Toddler, and Preschool.
The decrease in the North America segment gross billings was primarily due to lower billings of Dolls and Infant, Toddler, and Preschool products, partially offset by higher billings of Vehicles and Action Figures, Building Sets, Games, and Other products. 33 Dolls gross billings decreased 6%, due to lower billings of Barbie, which benefited from the Barbie movie in the prior year.
The increase in gross billings was due to higher billings of Dolls and Vehicles, partially offset by lower billings of Action Figures, Building Sets, Games, and Other and Infant, Toddler, and Preschool.
The decrease in gross billings was due to lower billings of Dolls and Infant, Toddler, and Preschool products, partially offset by higher billings of Vehicles and Action Figures, Building Sets, Games, and Other products. Dolls gross billings decreased 8%, due to lower billings of Barbie, which benefited from the Barbie movie in the prior year.
Provision for Income Taxes Mattel's provision for income taxes was $269.5 million in 2023, as compared to $135.9 million in 2022. In 2023, Mattel completed an intra-group transfer of certain IP rights, resulting in a net tax expense of $161.4 million related to the write-down of certain foreign deferred tax assets and the establishment of certain U.S. deferred tax assets.
The decrease in provision for income taxes was the result of the intra-group transfer of certain IP rights in the prior year, resulting in a net tax expense of $161.4 million related to the write-down of certain foreign deferred tax assets and establishment of certain U.S. deferred tax assets.
Significant changes in the assumptions used in the goodwill impairment tests could materially affect key financial measures, including net income and goodwill. 44 For purposes of evaluating whether goodwill is impaired, goodwill is allocated to various reporting units, which are at the operating segment level. Mattel's reporting units are: (i) North America, (ii) International, and (iii) American Girl.
Significant changes in the assumptions used in the goodwill impairment tests could materially affect key financial statement line items, including other selling and administrative expenses and goodwill. 42 Goodwill is allocated to reporting units for purposes of evaluating whether goodwill is impaired. Mattel's reporting units are: (i) North America, (ii) International, and (iii) American Girl.
Segment Results North America 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 North America segment for 2023 and 2022: For the Year Ended % Change as Reported Currency Exchange Rate Impact December 31, 2023 December 31, 2022 (In millions, except percentage information) Net Sales $ 3,003.2 $ 2,987.8 1 % — % Segment Operating Income 793.4 765.9 4 % Net sales for the North America segment in 2023 were $3.00 billion, an increase of $15.4 million or 1%, as compared to $2.99 billion in 2022.
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 2024 and 2023: For the Year Ended % Change as Reported Currency Exchange Rate Impact December 31, 2024 December 31, 2023 (In millions, except percentage information) Net Sales $ 3,168.1 $ 3,210.4 -1 % — % Segment Operating Income 840.0 787.7 7 % Net sales for the North America segment in 2024 were $3.17 billion, a decrease of $42.4 million, or 1%, as compared to $3.21 billion in 2023.
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.
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.
Stockholders' equity increased $92.9 million to $2.15 billion at December 31, 2023, as compared to $2.06 billion at December 31, 2022, primarily due to net income in 2023 of $214.4 million and the impact of share-based compensation on additional paid-in capital of $83.3 million, partially offset by share repurchases of $203.0 million.
Stockholders' equity increased $114.9 million to $2.26 billion at December 31, 2024, as compared to $2.15 billion at December 31, 2023, primarily due to net income in 2024 of $541.8 million and the impact of share-based compensation on additional paid-in capital of $79.4 million, partially offset by share repurchases of $400.0 million and other comprehensive loss of $89.5 million.
Financial Position Mattel's cash and equivalents increased $500.1 million to $1.26 billion at December 31, 2023, as compared to $761.2 million at December 31, 2022, primarily due to cash flow provided by operating activities of $869.8 million, partially offset by share repurchases of $203.0 million and capital expenditures of $160.3 million.
Financial Position Mattel's cash and equivalents increased $126.5 million to $1.39 billion at December 31, 2024, as compared to $1.26 billion at December 31, 2023, primarily due to cash flow provided by operating activities of $800.6 million, partially offset by share repurchases of $400.0 million and capital expenditures of $202.6 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.
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.
Additionally, Mattel routinely enters into noncancelable lease agreements for premises and equipment used, which contain minimum rental payments. 41 The following table summarizes Mattel's contractual commitments and obligations: Total 2024 2025 2026 2027 2028 Thereafter (In millions) Long-term debt $ 2,350.0 $ — $ — $ 600.0 $ 600.0 $ — $ 1,150.0 Interest on long-term debt 854.4 109.9 109.9 94.7 88.1 54.4 397.4 Leases 414.1 93.2 84.2 69.7 39.4 27.5 100.1 Minimum guarantees under licensing and similar agreements 234.5 90.0 93.7 25.5 24.9 0.4 — Defined benefit and postretirement benefit plans 351.9 37.3 36.3 35.5 34.5 34.9 173.4 Purchases of inventory, services, and other 395.5 283.9 49.9 30.3 25.3 6.1 — Total $ 4,600.4 $ 614.3 $ 374.0 $ 855.7 $ 812.2 $ 123.3 $ 1,820.9 Liabilities for uncertain tax positions for which a cash tax payment is not expected to be made in the next twelve months are classified as other noncurrent liabilities.
Additionally, Mattel routinely enters into noncancelable lease agreements for premises and equipment used, which contain minimum rental payments. 39 The following table summarizes Mattel's contractual commitments and obligations: Total 2025 2026 2027 2028 2029 Thereafter (In millions) Long-term debt $ 2,350.0 $ — $ 600.0 $ 600.0 $ — $ 600.0 $ 550.0 Interest on long-term debt 744.6 109.9 94.7 88.1 54.4 37.5 360.0 Leases 438.5 93.3 83.5 52.5 39.9 35.6 133.7 Minimum guarantees under licensing and similar agreements 153.9 94.6 30.7 26.4 1.7 0.5 — Defined benefit and postretirement benefit plans 351.5 38.9 36.3 35.0 35.5 35.2 170.6 Purchases of inventory, services, and other 489.5 298.7 95.8 42.2 16.5 6.7 29.6 Total $ 4,528.0 $ 635.4 $ 941.0 $ 844.2 $ 148.0 $ 715.5 $ 1,243.9 Liabilities for uncertain tax positions for which a cash tax payment is not expected to be made in the next twelve months are classified as other noncurrent liabilities.
Net sales were impacted by higher gross billings of $53.6 million, which were partially offset by increases in sales adjustments of $47.0 million. 30 Gross billings represent amounts invoiced to a customer and do not include the impact of sales adjustments, such as trade discounts and other allowances.
The decrease in net sales was primarily due to a decrease in gross billings of $68.6 million. 30 Gross billings represent amounts invoiced to a customer and do not include the impact of sales adjustments, such as trade discounts and other allowances.
Additionally, in February 2024, Mattel announced the Optimizing for Profitable Growth program, a multi-year cost savings program that follows the Optimizing for Growth program and is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel's global supply chain, including its manufacturing footprint, with targeted annual gross cost savings of $200.0 million between 2024 and 2026.
During 2024, Mattel executed $400.0 million of share repurchases and has a remaining authorization of $600.0 million as of December 31, 2024. 29 Additionally, in February 2024, Mattel announced the OPG program, a multi-year cost savings program that follows the Optimizing for Growth program ("OFG program") and is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel's global supply chain, including its manufacturing footprint.
The improvements to working capital were partially offset by changes in net income, excluding the changes to deferred tax assets of $176.4 million and other non-cash items. Cash flows used for investing activities were $142.4 million in 2023, as compared to $144.2 million in 2022.
The unfavorable changes to working capital were partially offset by an increase in net income, excluding the impact of non-cash items. Cash flows used for investing activities were $189.0 million in 2024, as compared to $142.4 million in 2023.
Infant, Toddler, and Preschool gross billings decreased 11%, of which 7% was due to lower billings of Fisher-Price products and 2% was due to lower billings of Power Wheels products. Vehicles gross billings increased 10%, due to higher billings of Hot Wheels products.
Infant, Toddler, and Preschool gross billings decreased 6%, due to lower billings of Baby Gear and Power Wheels products. Vehicles gross billings increased 6%, due to higher billings of Hot Wheels products.
The decrease in cash flows used for financing activities was primarily due to the $250.0 million repayment of the 3.15% Senior Notes due March 2023 in 2022, partially offset by $203.0 million of share repurchases in 2023. During 2023, Mattel repurchased 10.4 million shares of its common stock at a cost of $203.0 million.
The increase in cash flows used for financing activities was primarily due to $197.0 million of higher share repurchases in 2024 compared to 2023. During 2024, Mattel repurchased 21.0 million shares of its common stock at a cost of $400.0 million. During 2023, Mattel repurchased 10.4 million shares of its common stock at a cost of $203.0 million.
North America segment operating income was $793.4 million in 2023, as compared to segment operating income of $765.9 million in 2022, due to higher gross profit of $42.9 million, partially offset by higher other selling and administrative expenses of $15.9 million. 34 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 2023 and 2022: For the Year Ended % Change as Reported Currency Exchange Rate Impact December 31, 2023 December 31, 2022 (In millions, except percentage information) Net Sales $ 2,230.8 $ 2,220.0 — % 3 % Segment Operating Income 299.1 295.8 1 % Net sales for the International segment in 2023 were $2.23 billion, relatively flat as compared to $2.22 billion in 2022.
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 2024 and 2023: For the Year Ended % Change as Reported Currency Exchange Rate Impact December 31, 2024 December 31, 2023 (In millions, except percentage information) Net Sales $ 2,211.5 $ 2,230.8 -1 % -1 % Segment Operating Income 389.0 299.1 30 % Net sales for the International segment in 2024 were $2.21 billion, a decrease of $19.3 million, or 1%, as compared to $2.23 billion in 2023.
Cost of sales decreased by $8.2 million, or 8%, to $97.9 million in 2023 from $106.1 million in 2022, as compared to a 9% decrease in net sales, primarily due to a decrease of product and other costs of $9.8 million.
Cost of sales decreased by $95.2 million, or 8%, to $1.14 billion in 2024 from $1.23 billion in 2023, primarily due to a decrease of product and other costs of $92.4 million.
Income Taxes See Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Provision for Income Taxes." 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.
In connection with these actions, Mattel recorded severance charges of $3.4 million within other selling and administrative expenses in the consolidated statement of operations. 36 Income Taxes See Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Provision for Income Taxes." 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 in aggregate principal amount of senior unsecured revolving credit facilities (the "Credit Facility"), which on July 15, 2024 replaced the $1.40 billion prior credit facility, and access to capital markets to fund its operations and obligations.
Results of Operations Consolidated Results The following table presents Mattel's consolidated results for 2023 and 2022: For the Year Ended Year/Year Change December 31, 2023 December 31, 2022 Amount % of Net Sales Amount % of Net Sales % Basis Points of Net Sales (In millions, except percentage and basis point information) Net sales $ 5,441.2 $ 5,434.7 — % Cost of sales 2,857.5 52.5 % 2,953.3 54.3 % -3 % (180) Gross profit 2,583.7 47.5 % 2,481.4 45.7 % 4 % 180 Advertising and promotion expenses 524.8 9.6 % 534.3 9.8 % -2 % (20) Other selling and administrative expenses 1,497.3 27.5 % 1,271.6 23.4 % 18 % 410 Operating income 561.7 10.3 % 675.5 12.4 % -17 % (210) Interest expense 123.8 2.3 % 132.8 2.4 % -7 % (10) Interest (income) (25.2) -0.5 % (9.4) -0.2 % 169 % (30) Other non-operating (income) expense, net (2.3) 47.8 Income before income taxes 465.4 8.6 % 504.3 9.3 % -8 % (70) Provision for income taxes 269.5 135.9 (Income) from equity method investments (18.4) (25.4) Net income $ 214.4 3.9 % $ 393.9 7.2 % -46 % (330) Sales Net sales in 2023 were $5.44 billion, relatively flat as compared to $5.43 billion in 2022.
Results of Operations Consolidated Results The following table presents Mattel's consolidated results for 2024 and 2023: For the Year Ended Year/Year Change December 31, 2024 December 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 $ 5,379.5 $ 5,441.2 -1 % Cost of sales 2,645.5 49.2 % 2,857.5 52.5 % -7 % (330) Gross profit 2,734.1 50.8 % 2,583.7 47.5 % 6 % 330 Advertising and promotion expenses 507.3 9.4 % 524.8 9.6 % -3 % (20) Other selling and administrative expenses 1,532.5 28.5 % 1,497.3 27.5 % 2 % 100 Operating income 694.3 12.9 % 561.7 10.3 % 24 % 260 Interest expense 118.8 2.2 % 123.8 2.3 % -4 % (10) Interest (income) (51.5) -1.0 % (25.2) -0.5 % 104 % (50) Other non-operating expense (income), net 4.5 (2.3) Income before income taxes 622.5 11.6 % 465.4 8.6 % 34 % 300 Provision for income taxes 105.6 269.5 (Income) from equity method investments (24.9) (18.4) Net income $ 541.8 10.1 % $ 214.4 3.9 % 153 % 620 Sales Net sales in 2024 were $5.38 billion, a decrease of $61.7 million, or 1%, as compared to $5.44 billion in 2023.
The following tables provide a summary of Mattel's consolidated gross billings by categories, along with supplemental information by brand, for 2023 and 2022: For the Year Ended % Change as Reported Currency Exchange Rate Impact December 31, 2023 December 31, 2022 (In millions, except percentage information) Gross Billings by Categories Dolls $ 2,394.2 $ 2,084.0 15 % 2 % Infant, Toddler, and Preschool 1,000.8 1,117.5 -10 % 1 % Vehicles 1,641.0 1,450.8 13 % 2 % Action Figures, Building Sets, Games, and Other 1,065.8 1,396.1 -24 % 1 % Gross Billings $ 6,101.8 $ 6,048.3 1 % 1 % Supplemental Gross Billings Disclosure Gross Billings by Top 3 Power Brands Barbie $ 1,537.8 $ 1,490.6 3 % 1 % Hot Wheels 1,432.4 1,251.4 14 % 2 % Fisher-Price 852.6 935.9 -9 % 1 % Other 2,279.0 2,370.4 -4 % 1 % Gross Billings $ 6,101.8 $ 6,048.3 1 % 1 % Gross billings were $6.10 billion in 2023, an increase of $53.6 million, or 1%, as compared to $6.05 billion in 2022, with a favorable impact from changes in currency exchange rates of one percentage point.
The following tables provide a summary of Mattel's consolidated gross billings by categories, along with supplemental information by brand, for 2024 and 2023: For the Year Ended % Change as Reported Currency Exchange Rate Impact December 31, 2024 December 31, 2023 (In millions, except percentage information) Gross Billings by Categories Dolls $ 2,200.5 $ 2,394.2 -8 % -1 % Infant, Toddler, and Preschool 951.3 1,000.8 -5 % -1 % Vehicles 1,791.2 1,641.0 9 % -1 % Action Figures, Building Sets, Games, and Other 1,090.4 1,065.8 2 % -1 % Gross Billings $ 6,033.3 $ 6,101.8 -1 % -1 % Supplemental Gross Billings Disclosure Gross Billings by Top 3 Power Brands Barbie $ 1,350.1 $ 1,537.8 -12 % -1 % Hot Wheels 1,575.0 1,432.4 10 % -1 % Fisher-Price (a) 700.8 681.5 3 % -1 % Other 2,407.4 2,450.2 -2 % — % Gross Billings $ 6,033.3 $ 6,101.8 -1 % -1 % (a) Beginning in the first quarter of 2024, the Fisher-Price power brand was revised to exclude Baby Gear and Imaginext products.
Prepaid expenses and other current assets decreased $6.0 million to $207.5 million at December 31, 2023, as compared to $213.5 million at December 31, 2022, primarily due to a decrease in derivative receivables of $13.3 million.
Prepaid expenses and other current assets increased $26.6 million to $234.1 million at December 31, 2024, as compared to $207.5 million at December 31, 2023, primarily due to an increase in derivative receivables of $16.5 million.
Significant changes in the assumptions used to develop the estimates could impact Mattel's results of operations or financial condition. The above-described programs primarily involve fixed amounts or percentages of sales to customers.
Significant changes in the assumptions used to develop the estimates could materially affect key financial statement line items, including net sales and accounts receivable. The above-described programs primarily involve fixed amounts or percentages of sales to customers.
Accounts payable and accrued liabilities increased $158.4 million to $1.31 billion at December 31, 2023, as compared to $1.15 billion at December 31, 2022, primarily due to higher accrued incentive compensation of $137.8 million. 40 A summary of Mattel's capitalization is as follows: December 31, 2023 December 31, 2022 (In millions, except percentage information) Cash and equivalents $ 1,261.4 $ 761.2 2010 Senior Notes due October 2040 250.0 250.0 2011 Senior Notes due November 2041 300.0 300.0 2019 Senior Notes due December 2027 600.0 600.0 2021 Senior Notes due April 2026 600.0 600.0 2021 Senior Notes due April 2029 600.0 600.0 Debt issuance costs and debt discount (20.0) (24.4) Total debt 2,330.0 52 % 2,325.6 53 % Stockholders' equity 2,149.2 48 2,056.3 47 Total capitalization (debt plus equity) $ 4,479.2 100 % $ 4,381.9 100 % On December 30, 2022, Mattel used cash on hand to redeem and retire the $250 million aggregate principal amount of the 2013 Senior Notes due 2023.
Accounts payable and accrued liabilities decreased $30.9 million to $1.28 billion at December 31, 2024, as compared to $1.31 billion at December 31, 2023, primarily due to a decrease of $43.2 million in accounts payable, partially offset by an increase in accrued advertising expense of $18.1 million. 38 A summary of Mattel's capitalization is as follows: December 31, 2024 December 31, 2023 (In millions, except percentage information) Cash and equivalents $ 1,387.9 $ 1,261.4 2010 Senior Notes due October 2040 250.0 250.0 2011 Senior Notes due November 2041 300.0 300.0 2019 Senior Notes due December 2027 600.0 600.0 2021 Senior Notes due April 2026 600.0 600.0 2021 Senior Notes due April 2029 600.0 600.0 Debt issuance costs and debt discount (15.6) (20.0) Total debt 2,334.4 51 % 2,330.0 52 % Stockholders' equity 2,264.1 49 2,149.2 48 Total capitalization (debt plus equity) $ 4,598.5 100 % $ 4,479.2 100 % Total debt was $2.33 billion at December 31, 2024, flat as compared to $2.33 billion at December 31, 2023.
In general, Mattel's allowance for credit loss estimates has historically been within its expectations and in line with the reserves established, and although possible, significant variation is not expected in the future. If significant changes in the assumptions used to develop the estimates occur, they could materially affect key financial measures, including other selling and administrative expenses and accounts receivable.
In general, Mattel's allowance for credit loss estimates has historically been within its expectations and in line with the reserves established, and although possible, significant variation is not expected in the future.
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, that were not included in the OFG program. Targeted annual gross cost savings from actions associated with the OPG program, which are expected to be completed beginning 2024 through 2026, are $200 million.
The OPG program includes cost savings actions in connection with discontinuing production at a plant in China, as previously announced in the third quarter of 2023, as well as savings from other previous actions taken in 2023 that were not recognized in the OFG program.
Sales adjustments increased to $438.6 million in 2023, as compared to $408.2 million in 2022. Sales adjustments as a percentage of net sales increased to 19.7% in 2023 from 18.4% in 2022.
Sales adjustments decreased to $427.2 million in 2024, as compared to $438.6 million in 2023. Sales adjustments as a percentage of net sales were relatively consistent at 19.3% in 2024 as compared to 19.7% in 2023.
The payment of dividends on common stock is at the discretion of the Board of Directors and is subject to customary limitations. Seasonal Financing See Item 8 "Financial Statements and Supplementary Data—Note 6 to the Consolidated Financial Statements—Seasonal Financing and Debt." Credit Ratings In 2023, Fitch maintained Mattel's credit rating of BB+ with a positive outlook.
Seasonal Financing See Item 8 "Financial Statements and Supplementary Data—Note 6 to the Consolidated Financial Statements—Seasonal Financing and Debt." Credit Ratings In 2024, Fitch changed Mattel's credit rating from BB+ to BBB- with a stable outlook, Standard & Poor's changed Mattel's credit rating from BBB- to BBB with a stable outlook, and Moody's maintained Mattel's credit rating of Baa3 with a stable outlook.
The 2022 income tax provision included an $11.0 million tax expense related to certain foreign subsidiaries' deferred tax liabilities of undistributed earnings and a $15.2 million tax benefit related to reassessments of prior year's tax liabilities based on the status of audits and settlements in various jurisdictions. 32 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.
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.
American Girl segment operating loss was $5.7 million in 2023, as compared to segment operating income of $0.2 million in 2022, primarily due to lower gross profit of $11.4 million, offset by lower advertising and promotion expenses of $3.2 million and lower other selling and administrative expenses of $2.3 million.
North America segment operating income was $840.0 million in 2024, as compared to $787.7 million in 2023, due to higher gross profit of $78.7 million, partially offset by higher other selling and administrative expenses of $33.2 million.
The increase in gross margin was primarily due to incremental realized savings from the Optimizing for Growth program of 130 basis points, favorable mix of 110 basis points, which primarily related to the release of the Barbie movie, favorable pricing, net of higher sales adjustments of 100 basis points, and cost deflation of 60 basis points, partially offset by unfavorable fixed cost absorption due to lower production volume and other supply chain costs of 220 basis points.
The increase in gross margin was primarily due to favorable supply chain and other efficiencies of 130 basis points, incremental realized savings from the OPG program of 90 basis points, lower inventory management costs of 60 basis points, including lower close-out sales and inventory obsolescence, cost deflation of 50 basis points, and favorable foreign currency exchange and other factors of 90 basis points, partially offset by unfavorable mix of 90 basis points primarily related to the prior year benefit from the Barbie movie.
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.
As of December 31, 2024 and 2023, Mattel has recorded net deferred tax assets of $252.5 million and $243.1 million, respectively. 32 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.
As of December 31, 2022, Mattel's valuation allowances on its U.S. federal and state deferred tax assets and foreign deferred tax assets were approximately $16 million and $74 million, respectively.
As of December 31, 2023, Mattel's valuation allowances on its U.S. federal and state deferred tax assets and foreign deferred tax assets were approximately $14 million and $71 million, respectively. Changes in the valuation allowances in 2024 primarily related to changes in assessment of the future realizability of certain deferred tax assets, utilization and expiration of tax attributes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBuy Sell Contract Amount Weighted-Average Contract Rate Fair Value Contract Amount Weighted-Average Contract Rate Fair Value (In thousands of U.S. dollars, except for rates) Australian dollar (a) $ — — $ — $ 75,109 0.67 $ (1,096) British pound sterling (a) — — — 9,085 1.27 15 Canadian dollar (a) 12,002 0.75 107 24,548 0.75 (180) Czech koruna 2,740 22.36 6 — — — Euro (a) 30,880 1.10 158 312,151 1.10 (3,524) Hungarian forint 5,916 350.50 62 — — — Japanese yen — — — 7,909 143.54 (142) Mexican peso — — — 52,399 17.86 (1,773) Polish zloty 17,869 3.95 99 — — — South African rand — — — 2,919 18.39 15 Swiss franc 4,418 0.86 111 — — — $ 73,825 $ 543 $ 484,120 $ (6,685) (a) The weighted-average contract rate for these contracts is quoted in U.S. dollar per local currency.
Biggest changeBuy Sell Contract Amount Weighted-Average Contract Rate Fair Value Contract Amount Weighted-Average Contract Rate Fair Value (In thousands of U.S. dollars, except for rates) Australian dollar (a) $ — — $ — $ 81,286 0.65 $ 3,876 British pound sterling (a) 20,939 1.27 (307) — — — Canadian dollar (a) — — — 54,643 0.73 2,179 Czech koruna 4,559 23.87 (83) — — — Euro (a) — — — 276,626 1.10 14,397 Hungarian forint 5,553 390.29 (97) — — — Indonesia rupiah 56,496 16,409.72 501 — — — Japanese yen — — — 7,747 153.06 205 Mexican peso — — — 21,074 20.12 751 Polish zloty 24,439 4.07 (356) — — — South African rand — — — 1,497 18.18 61 Swiss franc 3,543 0.89 (58) — — — $ 115,529 $ (400) $ 442,873 $ 21,469 (a) The weighted-average contract rate for these contracts is quoted in U.S. dollar per local currency.
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 (income) expense, net based on the nature of the underlying transaction.
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.
Mattel seeks to mitigate its exposure to market 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.
Mattel seeks to mitigate its 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 the purchase of foreign currencies, fair value reflects the amount, based on dealer quotes, that Mattel would pay at maturity for contracts involving the same notional amounts, currencies, and maturity dates, if they had been entered into as of December 31, 2023.
For the purchase of foreign currencies, fair value reflects the amount, based on dealer quotes, that Mattel would pay at maturity for contracts involving the same notional amounts, currencies, and maturity dates, if they had been entered into as of December 31, 2024.
For the sale of foreign currencies, fair value reflects the amount, based on dealer quotes, that Mattel would receive at maturity for contracts involving the same notional amounts, currencies, and maturity dates, if they had been entered into as of December 31, 2023.
For the sale of foreign currencies, fair value reflects the amount, based on dealer quotes, that Mattel would receive at maturity for contracts involving the same notional amounts, currencies, and maturity dates, if they had been entered into as of December 31, 2024.
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 2023 net sales by approximately 0.4% and would have less than a $0.01 impact to Mattel's net income per share. 47 Mattel's foreign currency forward e xchange contracts that were used to hedge firm commitments and anticipated transactions as of December 31, 2023 are shown below.
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 2024 net sales by approximately 0.4% and would have less than a $0.01 impact to Mattel's net income per share. 45 Mattel's foreign currency forward e xchange contracts that were used to hedge firm commitments and anticipated transactions as of December 31, 2024 are shown below.
Had Mattel not entered into hedges to limit the effect of currency exchange rate fluctuations on its results of operations and cash flows, its earnings before income taxes would have decreased by approximately $30 million in 2023 and decreased by approximately $19 million in 2022.
Had Mattel not entered into hedges to limit the effect of currency exchange rate fluctuations on its results of operations and cash flows, its earnings before income taxes would have decreased by approximately $30 million in each of 2024 and 2023.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Foreign Currency Exchange Rate Risk Currency exchange rate fluctuations impact Mattel's results of operations and cash flows. Unhedged transactions denominated in the Chinese yuan and Euro were the primary transactions that caused foreign currency transaction exposure for Mattel in 2023.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Foreign Currency Exchange Rate Risk Currency exchange rate fluctuations impact Mattel's results of operations and cash flows. The Euro and Chinese yuan were the primary currencies that caused foreign currency transaction exposure for Mattel in 2024.
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 year-end exchange rates.
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 period-end exchange rates. Income, expense, and cash flow items are translated at weighted-average exchange rates prevailing during the period.
As of December 31, 2023, these contracts had a contract amount of $45.6 million and a fair value asset of less than $0.1 million.
As of December 31, 2024, these contracts had a contract amount of $69.0 million and a fair value liability of $1.4 million.
Mattel's primary currency translation adjustments in 2023 were related to its net investments in entities having functional currencies denominated in the Mexican peso, Russian ruble, and British pound sterling.
The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive loss within stockholders' equity. Mattel's primary currency translation adjustments in 2024 were related to its net investments in entities having functional currencies denominated in the Mexican peso, Russian ruble, and Brazilian real.
Mattel's Turkey subsidiary represented approximately 1% of Mattel's consolidated net sales for the year ended December 31, 2023. Argentina Operations During the third quarter of 2021, Mattel began a process to liquidate its subsidiary in Argentina. The liquidation was substantially completed during the fourth quarter of 2022.
Mattel's Turkey subsidiary represented approximately 1% of Mattel's consolidated net sales for the year ended December 31, 2024. 46
Removed
Income, expense, and cash flow items are translated at weighted-average exchange rates prevailing during the fiscal year. The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive loss within stockholders' equity.
Removed
Prior to the substantial completion of the liquidation, Mattel had recorded $45.4 million of currency translation adjustments in accumulated other comprehensive loss within its consolidated balance sheet.
Removed
As a result of the substantially complete liquidation, the cumulative currency translation adjustments were removed from accumulated other comprehensive loss and recognized as a loss in other non-operating expense within the consolidated statement of operations in the fourth quarter of 2022. 48

Other MAT 10-K year-over-year comparisons