Throughout this report "Mattel" refers to Mattel, Inc. and/or one or more of its family of companies.subsidiaries. Mattel is a leading global children'stoy and family entertainment company that specializes in the design and productionowner of quality toys and consumer products. Mattel's products are amongone of the most widely recognized toy productsiconic brand portfolios in the world. Mattel's mission is to "createMattel creates innovative products and experiences that inspire fans, entertain audiences, and develop children through play." In order to deliver on this mission, Mattel is focused on the following two-partevolved strategy to transform Mattel into angrow its intellectual property ("IP") driven high-performing toy company:business and expand its entertainment offering:

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

Mattel's operating segments are: (i) North America, which consists of the U.S.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.

The North America segment markets and sells toys and consumer products in the U.S.United States and Canada across all of Mattel's categories.

Products marketed and sold by the International segment are generally the same as those developedmarketed and marketedsold by the North America segment, although some are developed or adapted for particular international markets. Mattel’sMattel's products are sold directly to retailers and wholesalers in most European, Latin American, and Asian countries, and 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 6%8% of worldwide consolidated net sales during 2020.2023.

Mattel is a worldwide leader in the manufacture, marketing, and sale of toys, games, and other products related to play, learning, and development. Competition in the toy industry is based primarily on quality, play value, brands, and price. 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, construction toys, youth electronics, hand-held and otherbuilding sets, games, including digital, puzzles, plush, educational toys, technology-related products, media-driven products, and fashion-related toys.items. The North America segment competes with several large toy companies, including Hasbro, JAKKS Pacific, Jazwares, Just Play Products, LEGO, MGA Entertainment, Melissa & Doug,the Pokémon Company, Spin Master, VTech, many smaller toy companies, and manufacturers of video games and consumer electronics. The International segment competes with global toy companies including Hasbro, JAKKS Pacific, Just Play Products,Jazwares, LEGO, MGA Entertainment, Playmobil, Ravensburger, Simba,the Pokémon Company, Spin Master, VTech, 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 American Girl segment competes with companies that manufacture dolls and accessories, and with children’schildren's book publishers and retailers.

Mattel’sMattel's business is highly seasonal, with consumers making a large percentage of all toy purchases during the traditional holiday season. A significant portion of Mattel’s customers’retailer purchasing typically occurs in the third and fourth quarters of Mattel’sMattel's fiscal year in anticipation of holiday buying. These seasonal purchasing patterns and requisite production lead times create risk to Mattel’sMattel's business associated with the underproduction of popular toys and the overproduction of less popular toys that do not match consumer demand. Retailers have also been attempting to manage their inventories more tightly in recent years, requiring Mattel to ship products closer to the time the retailers expect to sell the products to consumers. These factors increaseThe seasonality of Mattel's business increases the risk that Mattel may not be able to meet demand for certain products at peak demand times or that Mattel’sMattel's own inventory levels may be adversely impacted by the need to pre-build products before orders are placed. Additionally, as retailers manage their inventories, Mattel experiences cyclical ordering patterns for products and product lines thatIn addition, this seasonality may cause itsMattel's sales to vary significantly from period to period.

Mattel has license agreements with third parties that permit Mattel to utilize the trademark, characters, or inventions of the licensor in products that Mattel sells. A number of these licenses relate to product lines that are significant to Mattel’sMattel's business and operations.

Most of Mattel’sMattel's products are sold under and are associated with trademarks, trade names, and copyrights, and some of these products incorporate devices or designs for which patent protection has been, or is being, pursued. Trademarks, copyrights, and patents are significant assets of Mattel in that they provide product recognition, acceptance, and exclusive rights to Mattel's innovations around the world.

Mattel manufactures toy products for all segments in both company-owned facilities and through third-party manufacturers. Products are also purchased from unrelated entities that design, develop, and manufacture those products. To provide greater flexibility in the manufacture and delivery of its products, and as part of a continuing effort to reduce manufacturing costs, Mattel has concentrated production of most of its core products in company-owned facilities and generally uses third-party manufacturers for the production of non-core products.

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. Advertising includes television and radio commercials, social media, and magazine, newspaper,catalogs, and internet advertisements. Promotions include in-store displays, sweepstakes, merchandising materials, major events focusing on products, and tie-ins with various consumer products companies.

Currency exchange rate fluctuations may impact Mattel’sMattel's results of operations and cash flows. 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 generally have maturity dates of up to 1824 months. In addition, Mattel manages its exposure to currency exchange rate fluctuations through the selection of currencies used for international borrowings. Mattel does not trade in financial instruments for speculative purposes.

Mattel’sMattel's products sold in the U.S.United States are subject to the provisions of the Consumer Product Safety Act, as amended by the Consumer Product Safety Improvement Act of 2008, and the Federal Hazardous Substances Act, and the Consumer Product Safety Improvement Act of 2008, and may also be subject to the requirements of the Flammable Fabrics Act or the Food, Drug, and Cosmetics Act and the regulations promulgated pursuant to such statutes. These statutes and the related regulations ban from the market consumer products that fail to comply with applicable product safety laws, regulations, and standards. The Consumer Product Safety Commission may require the recall, repurchase, replacement, or repair of any such banned products or products that otherwise create a substantial risk of injury and may seek penalties for regulatory noncompliance under certain circumstances. Similar laws exist in some U.S. states. Mattel believes that it is in substantial compliance with these federal and state laws and regulations.

Mattel is committed to fostering a leading benchmarkingculture where all employees have the opportunity to realize their full potential. Management regularly collects feedback to measure employee engagement and job satisfaction on an ongoing basis through its annual global engagement survey, which is used to help improve the employee experience and report measuring corporate policiesstrengthen its workplace culture. Mattel values a wide range of ideas and practicesvoices that help evolve and broaden its perspectives, with a reach that extends to consumers, customers, business partners, and suppliers.

Mattel believes continuously developing skills and capabilities for the future is essential to transforming Mattel intooperating as an IP-driven, high performinghigh-performing toy and family entertainment company. 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 2020,2023, employees at all levels around the globe participated in almost 600,000several hundred thousand hours of learning content acrossonline classes and instructor-led training regarding professional development, management development, and technical training. This included both online and instructor-led training.

Mattel is committed to providingfocused on creating a safe and ethical working environmenthealthy workplace for all of its employees, including the factories where Mattel products are made. Mattel has led the wayemployees. This is reflected in formalizing this principle into action. For example, in 1997, Mattel became onea comprehensive set of the first companies to create standards and oversight processes that guide its efforts to manufacture responsibly. Today, these standards are known as Mattel’s Responsible Supply Chain Commitment, and they set forth ethical and environmentalestablish Mattel's expectations for Mattel’sresponsible working conditions, environmental protections, social compliance, health, and safety in both its own manufacturing facilities and those of its supply chain partners.

Mattel’sMattel's business and operating results depend largely upon the appeal of its products, driven by both innovation and marketing. Consumer preferences, particularly with children as the end users of Mattel’sMattel's products, are continuously changing.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. Mattel is not always able to identify trends in consumer preferences or identify and satisfy consumer preferences in a timely manner. Significant, sudden shifts in demand are caused by "hit" toys and trends, which are often unpredictable.unpredictable and can result in short consumer life cycles. Mattel offers a diverse range of products for children, fans of all ages, and families that includes, among others, toys for infants, toddlers, and preschoolers, toys for school-aged children, youth electronics, digital media, hand-held and other games, puzzles, educational toys, media-driven products, and fashion-related toys.items. 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’sMattel's market position is always at risk. Mattel’sMattel's ability to maintain its current product sales and increase its product sales or establish product sales with new, innovative toys, depends on Mattel’sMattel's ability to satisfy play preferences, enhance existing products, develop and introduce new products, and achieve market acceptance of these products. 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.

Mattel faces competitors who are also constantly monitoring and attempting to anticipate consumer tastes, seeking ideas which will appeal to consumers, and introducing new products that compete with Mattel’sMattel's products. In addition, competition for access to entertainment properties has lessened, and may in the future continue to lessen, Mattel’sMattel's ability to secure, maintain, and renew popular licenses to entertainment products developed by other parties and licensed to Mattel on beneficial terms, if at all, or require Mattel to pay licensors higher royalties and higher minimum guaranteed payments in order to obtain or retain these licenses. As a licensee of entertainment properties, Mattel has no guarantee that a particular property or brand will translate into a successful toy, game, or other product. In addition, the barriers to entry for new participants in the toy products industry and

Successful movies, television programs, video games, and characters in children’schildren's literature affect play preferences, and many products depend on media-based intellectual property licenses.licenses including trademarks, trade names, copyrights, patents, trade secrets, and rights under intellectual property license agreements and other agreements with third parties. Media-based licenses can cause a line of toys or other products to gain immediate success among children, parents, or families. Trends in media, movies, and children’schildren's characters change swiftly and contribute to the transience and uncertainty of play preferences. In addition, certain developments in the entertainment industry, including labor strikes, could cause delays in the release of new movies and television programs. Such delays could adversely affect the sales of Mattel’s products based on such movies and television programs and the success of the movies and television programs that Mattel produces and distributes. Mattel attempts to respond to such trends and developments by modifying, refreshing, extending, and expanding its product offerings on an annual basis.

Mattel’sMattel's products are marketed worldwide through a diverse spectrum of advertising, marketing, and promotional programs. Mattel’sprograms, including the use of digital and social media to reach consumers. Mattel's ability to sell products is dependent in part upon the success of these programs. Mattel’sAs such, Mattel's business, financial condition, and results of operations could be adversely effectedaffected by its failure to successfully market its products or by an increase in its media or other advertising, marketing, or promotional costs.

Mattel’sMattel's business is subject to risks associated with the underproduction of popular toys and the overproduction of toys that are less popular with consumers. Sales of toy products at retail are highly seasonal, with a majoritylarge percentage of retail salesall toy purchases occurring during the period from September through December. In recent years, many consumers have delayed their purchases until just before the holidays.relatively brief traditional holiday season. As a result, Mattel’sMattel's operating results depend, in large part, on sales during the relatively brief traditional holiday season. Retailers attempt to manage their inventories tightly, which requires Mattel to ship products closer to the time the retailers expect to sell the products to consumers. This in turn results in shorter lead times for production. 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. These factors may decrease sales or increase the risks that Mattel may not be able to meet demand for certain products at peak demand times or that Mattel’s own inventory levels may be adversely impacted by the need to pre-build products before orders are placed.

Mattel has at times in the past announced, and in the future may announce, initiatives to reduce its costs, optimize its manufacturing footprint, increase its efficiency, improve the execution of its core business, globalize and extend Mattel’sMattel's brands, catch new trends, create new brands, offer new innovative products and improve existing products, enhance product safety, develop people, improve productivity, simplify processes, and maintain customer service levels, as well as initiatives designed to drive sales growth, capitalize on Mattel’sMattel's scale advantage, and improve its supply chain. These initiatives involve investment of capital and complex decision-making as well as extensive and intensive execution, and the success of these initiatives is not assured. In addition,Failure to achieve any of these initiatives could harm Mattel's business, financial condition, and results of operations.

As a part of its efforts to cut costs, achieve better efficiencies, and increase productivity and service quality, Mattel relies significantly on vendor and outsourcing relationships with third parties for services and systems including manufacturing, transportation, logistics, and information technology. Any shortcoming of a Mattel vendor or outsourcer, particularly an issue related to compliance or reputation, or affecting the quality of these services or systems, results in risk ofrisks damage to Mattel’sMattel's reputation and brand value, and potentially adverse effects to Mattel's business, financial condition, and results of operations. In addition, problems with transitioning these services and systems to, or operating failures with, these vendors and outsourcers cause delays in product sales and reduce the efficiency of Mattel’sMattel's operations, and significant capital investments could be required to remediate the problem.

In recent years, consumer goods companies, including those in the toy business, generally have experienced the phenomenon of retail customers developing their own private-label products that directly compete with the products of traditional manufacturers. Some retail chains and online retailers that are customers of Mattel, including three of its largest retail customers, Walmart, Amazon and Target, sell private-label toys designed, manufactured, and branded by the retailers themselves. These toys may be sold at prices lower than comparable toys sold by Mattel and may result in lower purchases of Mattel-branded products by these retailers.retailers and reduce overall consumer demand for Mattel products. In some cases, retailers who sell these private-label toys are larger than Mattel and have substantially more resources than Mattel.

Mattel’sMattel's future success depends partly on the continued contribution of key executives, designers, and technical, sales, marketing, manufacturing, entertainment, and other personnel. The loss of services of any of Mattel’s key personnel could harm Mattel’s business. Recruiting and retaining skilled personnel is costly and highly competitive. If Mattel fails to retain, hire, train, and integrate qualified employees and contractors, Mattel may not be ablekey personnel, Mattel's ability to maintain or expand its business could be harmed. Recruiting and retaining qualified personnel is costly and highly competitive. Labor shortages and increased labor costs as a result of increased competition for qualified talent, higher employee turnover rates, increases in employee benefit costs, wage inflation, or other disruptions to Mattel's workforce can negatively impact its business. In addition, changes to Mattel's current and future work environments may not meet the needs or expectations of its employees or be perceived as less favorable compared to other companies' policies, which could negatively impact Mattel's ability to hire and retain qualified personnel.

The global COVID-19 pandemicMattel designs, manufactures, and markets a wide variety of toy products worldwide through sales to retailer customers and directly to consumers. Mattel's performance is impacted by the actions takenlevel of discretionary consumer spending, which remains relatively weak in many countries around the world in which Mattel does business. Consumers' discretionary purchases of toy products are often impacted by governments, businesses,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 individuals in response to it have resulted in significantother macro-economic factors that affect consumer spending behavior. These or other factors can reduce the amount that consumers spend on the purchase of Mattel's products. Deterioration of global economic disruption, including, but not limitedconditions 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 temporary business closures, reduced retail traffic, volatilitysatisfy their obligations to us. Future deterioration of global economic conditions or disruptions in financialcredit markets restrictions on travel, and safer-at-home protocols. Such disruptions in the markets in which Mattel operates could potentially have a material adverse effect on Mattel's liquidity and capital resources, including increasing Mattel's cost of capital or its employees, consumers, customers, partners, licensees, licensors, suppliers, and manufacturers operate, can have, and at times in the past have had, a significant negative impact on Mattel’sability to raise additional capital if needed, or otherwise adversely affect Mattel's business, financial position, sales,condition, and results of operations. Negative impacts

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. Because of market conditions, timing of pricing decisions, and other factors, there can be no assurance that Mattel will be able to offset any of these increased costs by adjusting the prices of its products. Increases in prices of Mattel’sMattel's products may not be sustainable and could result in lower sales. Mattel’sMattel's ability to meet customer demand depends, in part, on its ability to obtain timely and adequate delivery of materials, parts, and components from its suppliers and internal manufacturing capacity. Mattel has experienced shortages in the past, including shortages of raw materials and components. Additionally, as Mattel cannot guarantee the stability of its major suppliers, major suppliers may stop manufacturing components at any time with little or no notice. If Mattel is required to use alternative sources, it may be required to redesign some aspects of the affected products, which may involve delays and additional expense. 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 pandemic,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 in the pastadversely affected and could in the future adversely affect Mattel’sMattel's business, financial condition, and results of operations.

Mattel operates facilities and sells products in numerous countries outside the U.S.United States. During 2020, Mattel’s2023, Mattel's International segment net sales were 41% of Mattel’sMattel's total consolidated net sales. Furthermore, Mattel’sMattel'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’sMattel's profitability. Mattel's efforts to mitigate the exposure of its results of operations to fluctuations in currency exchange rates by aligning its prices with the local currency cost of acquiring inventory, distributing earnings in U.S. dollars, and partially hedging this exposure using foreign currency forward exchange contracts may ultimately be unsuccessful. Government action may restrict Mattel’sMattel'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. Significant changes in currency exchange rates, reductions in Mattel’sMattel's ability to transfer its capital across borders, and changes in government-fixed currency exchange rates, including the Chinese yuan, could have an adverse effect on Mattel’sMattel's business, financial condition, and results of operations.

An increasing portion of Mattel's net revenues may come from new and emerging markets, including China India, and Russia.India. Operating in new and emerging markets, each with its own unique consumer preferences and business climates, presents additional challenges that Mattel must meet. In addition, sales and operations in new and emerging markets are subject to other risks associated with international 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 U.S.;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.

Mattel’sMattel's business is worldwide in scope, including operations in over 50 countries and territories. Politicalpolitical instability, civil unrest, the deterioration of the political, economic, or social situation in a country in which Mattel has significant sales or operations, or the breakdown of trade relations between the U.S.United States and a foreign country in which Mattel has significant manufacturing facilities or other operations, could adversely affect Mattel’sMattel's business, financial condition, and results of operations. For example, aA change in trade status between the U.S.United States and a foreign country could result in a substantial increase in the import duty of toys manufactured in that foreign country and imported into the U.S. The U.S.United States. For example, the United States has commencedimplemented certain trade actions directed at China, including imposing increased tariffs on certain goods imported into the U.S.United States from China, which has resulted in retaliatory tariffs by China. China has also implemented various trade actions directed at the United States. 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.

The effects of global climate change create financial, operational, and reputational risks to Mattel's business, financial position, sales,both directly and resultsindirectly. There is a general consensus that greenhouse gas ("GHG") emissions are linked to global climate change, and that these emissions must be reduced dramatically to avert the worst effects of operations.

Mattel has implemented and continues to implement a series of cost savings programs as described in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Cost Savings Programs." Mattel incurred costs of $40.6 million and $59.1 million in 2020 and 2019, respectively, to achieve such cost savings, and expects to incur additional costs during 2021.

Mattel regularly considers, and from time to time engages in, discussions and negotiations regarding acquisitions, mergers, or dispositions, or other strategic transactions that could affect the profit, revenues, profit margins, debt-to-capital ratio, capital expenditures, or other aspects of Mattel’sMattel's business. There can be no assurance that Mattel will be able to identify suitable acquisition targets or merger partners or that, if identified, it will be able to complete these transactions on terms acceptable to Mattel and to potential acquisition targets or merger partners. There can also be no assurance that Mattel will be successful in integrating any acquired company into its overall operations, or that any such acquired company will operate profitably or will not otherwise adversely impact Mattel’sMattel's results of operations. Further, Mattel cannot be certain that key talented individuals at those acquired companies will continue to work for Mattel after the acquisition or that they will continue to develop popular and profitable products or services. 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’sMattel's stock price.

Assumptions used in determining projected benefit obligations and the fair value of plan assets for Mattel’sMattel's pension plan are evaluated by Mattel in consultation with outside actuaries. In the event that Mattel determines that changes are warranted in the assumptions used, such as the discount rate or expected long term rate of return, its future pension benefit expenses could increase or decrease. Due to changing market conditions or changes in the participant population, the actuarial assumptions that Mattel uses may differ from actual results, which could have an impact on its pension and postretirement liability and related costs. 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.

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. Declines in profitability of Mattel’sMattel's reporting units may impact the fair value of its reporting units, which could result in an impairment of its goodwill, adversely affecting its results of operations. For more information, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Application of Critical Accounting Policies and Estimates—Goodwill" and Part II, Item 8 "Financial Statements and Supplementary Data—Note 3 to the Consolidated Financial Statements—Goodwill and Other Intangibles.Intangible Assets, Net."

All the factors discussed in this section or any other material announcements or events can affect Mattel's stock price. In addition, quarterly fluctuations in Mattel's operating results, changes in investor and analyst perception of Mattel's business risks and conditions of its business, Mattel's ability to meet earnings estimates and other performance expectations of financial analysts or investors, unfavorable commentary or downgrades of Mattel's stock by research analysts, fluctuations in the stock prices of Mattel's peer companies or in stock markets in general, and general economic or political conditions can also cause the price of Mattel's stock to change. 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’smanagement's attention and resources, with the potential to adversely affectingaffect Mattel's business. There is a purportedFor example, Mattel and certain other defendants have recently been party to certain class action alleging federal securities laws violations currently pending in the United States District Court for the Central District of California against Mattel, PricewaterhouseCoopers LLP,actions and individual defendants. In addition, stockholders have filedcertain derivative actions in the United States District Court for the District of Delaware making allegations that are substantially identical to, or are based upon, the allegations of the class action lawsuit.actions. For more information, see Part II, Item 8 "Financial Statements and Supplementary Data—Note 1213 to the Consolidated Financial Statements—Commitments and Contingencies—Litigation."

Effective internal controls are necessary for companiesMattel to provide reliable and accurate financial reporting and financial statements for external purposes in accordance with generally accepted accounting principles. A failure to maintain effective internal control processesover financial reporting could lead to violations, unintentional or otherwise, of laws and regulations. As disclosed in Part II, Item 9A “Controls"Controls and Procedures” in Mattel's Annual Report on Form 10-K/A for the year ended December 31, 2018,Procedures," Mattel determined that there were certainis a material weaknessesweakness in its internal control over financial reporting. Mattel determined that the material weaknesses were remediatedreporting and thatas a result, its disclosure controls and procedures and internal control over financial reporting wasare not effective as of December 31, 2019.2023. 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. If the additional controls and procedures that Mattel has implementedis unable to remediate the material weaknesses proveweakness, or is otherwise unable to be insufficientmaintain effective internal control over financial reporting or if Mattel identifies other control deficiencies that individually or together constitute significant deficiencies or material weaknesses,disclosure controls and procedures, Mattel's ability to record, process, and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected. Litigation, government investigations, or regulatory enforcement actions arising out of any such failure or alleged failure could subject Mattel to civil and criminal penalties that could materially and adversely affect Mattel's reputation, financial condition, and operating results. Similarly, the control deficiency,The material weakness, remediation efforts, and any related litigation, or government investigations, or regulatory enforcement actions will require management attention and resources and cause Mattel to incur unanticipated costs, and could negatively affect investor confidence in Mattel’sMattel's financial statements, cause Mattel reputational harm, and raise other risks to its operations.

Mattel relies extensively on information technology systems across its operations, including for management of its supply chain, sale and delivery of its products and services, reporting its results of operations, collection and storage of consumer data, personal data of customers, employees and other stakeholders, and various other processes and transactions. 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. 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,

As a global company, Mattel is subject to a variety of continuously evolving and developing laws and regulations in the U.S.United States and abroad regarding privacy, data protection, AI, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data. SignificantFor example, Mattel is or may become subject to a variety of laws and regulations such as the European Union's General Data Protection Regulation ("GDPR"), EU Artificial Intelligence Act ("EU AI Act"), China's Personal Information Protection Law ("PIPL"), California's Consumer Privacy Act ("CCPA"), or the U.S. Children's Online Privacy Protection Act of 1998 ("COPPA") regarding privacy, data protection, AI (including automated decision-making) and data security. These laws and regulations are continuously evolving and developing, creating significant uncertainty exists as privacy and data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements. For example, the EU General Data Protection Regulation,GDPR, which greatly increases

The value of Mattel’sMattel'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 U.S.United States and around the world, as well as its customer, employee, and consumer data. 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 U.S.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. 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.

Mattel is, from time to time, involved in litigation or other disputes, investigations, and regulatory matters. An unfavorable resolution of these matters could have an adverse effect on Mattel’sMattel's business, financial condition, and results of operations. Regardless of their outcome, these matters may result in substantial costs and expenses, significantly divert the

Mattel operates in a highly regulated environment in the U.S.United States and international markets. U.S. federal, state, and local governmental entities, and foreign governments regulate many aspects of Mattel’sMattel's business, including its products and the importation and exportation of its products, and these laws and regulations can change frequently. 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), and regulations regarding currency and financial matters, anticorruption standards (such as the U.S. Foreign Corrupt Practices Act), environmental matters, advertising directed toward children, product content, and privacy and data protection, as well as other administrative and regulatory restrictions. In addition, as Mattel enters into new areas of investment, product development, or other business activities, it will have to learn to navigate the regulatory framework surrounding those areas, which may be continuing to develop. For example, Mattel has launched several non-fungible token projects, and its own digital collectibles marketplace. 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 or regulations do not ensure that Mattel will be in compliance in the future. Compliance with these various laws, regulations, and policies imposes significant costs on Mattel’sMattel's business, and failure to comply could result in monetary liabilities and other penalties and could lead to negative media

Mattel has at times 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. These issues and activities have resulted in increased governmental scrutiny and inquiries, harm to Mattel’sMattel's reputation, reduced demand by consumers for its products, decreased willingness by retailer customers to purchase or provide marketing support for those products, adverse impacts on Mattel’sMattel's ability to enter into licensing agreements for products on competitive terms, absence or increased cost of insurance, or additional safety and testing requirements. For example, the insurance terms Mattel negotiated for the period from February 1, 2020 to December 31, 2021certain prior periods were less favorable than in the pastpreceding periods as a result of past claims, product liability incidents, changes in market conditions, and other factors. These issues and activities can divert development and management resources, adversely affect Mattel’sMattel'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’sMattel's business, financial condition, and results of operations.

Mattel’sMattel'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 at times in the past caused, and in the future could cause, further revisions in Mattel’sof Mattel's operating procedures and product requirements. Changes in Mattel’sMattel's operating procedures and product requirements can delay delivery of products and increase costs. Mattel’sMattel'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. Some vendors may choose not to continue to do business with Mattel or not to accommodate Mattel’sMattel's needs to the extent that they have done in the past. In addition, rising production costs, contraction of credit availability, and labor shortages have caused a substantial contraction in the number of toy manufacturers in China and other countries in Asia, decreasing the number of potential vendors to manufacture Mattel’sMattel's products. Because of the seasonal nature of Mattel’sMattel's business and the demands of its customers for deliveries with short lead times, Mattel depends upon the cooperation of its vendors to meet market demand for its products in a timely manner. There can be no assurance that existing and future events will not require Mattel to adopt additional requirements and incur additional costs, and impose those requirements and costs on its vendors, which may adversely affect its relationship with those vendors and Mattel’sMattel's ability to meet market demand in a timely manner.

At December 31, 2020,2023, Mattel had $2.85$2.33 billion of indebtedness on a consolidated basis, consisting primarily of 6.75%3.375% Senior Notes due 2025 and2026, 5.875% Senior Notes due 2027, and 3.750% Senior Notes due 2029, as well as Senior Notes issued in prior years. In addition, Mattel has $1.60$1.40 billion of commitments under its senior secured revolving credit facilities, subject to borrowing base capacity.facility. For more information, see Part II, Item 8 "Financial Statements and Supplementary Data—Note 56 to the Consolidated Financial Statements—Seasonal Financing and Debt."

Subject to the limits contained in the credit agreement that governs Mattel’s senior securedMattel's revolving credit facilities,facility, the indentureindentures that governsgovern the notes, and Mattel’sMattel's other debt instruments, Mattel may incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. To the extent Mattel does so, the risks related to Mattel’sMattel's high level of debt would increase. Specifically, Mattel’sMattel's substantial indebtedness could have important consequences. For example, it could:

Mattel’sMattel's ability to make cash payments on and to refinance its indebtedness, and to fund planned capital expenditures, depends on Mattel’sMattel's ability to generate significant operating cash flow in the future. This, to a significant extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond Mattel’sMattel's control.

Borrowings under Mattel’s senior securedMattel's revolving credit facilitiesfacility will be at variable rates of interest and will expose Mattel to interest rate risk. Interest rates are currently at historically low levels. If interest rates continue to increase, Mattel’sMattel's debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains the same, and Mattel’sMattel's net income and cash flows, including cash available for servicing its indebtedness, will correspondingly decrease. Assuming Mattel's senior secured revolving credit facilities arefacility is fully drawn up to the maximum commitment level and the interest rates are above the interest rate floor set forth in the credit agreement governing Mattel’s senior securedMattel's revolving credit facilities,facility, each one-eighth point change in interest rates would result in a $2.0$1.75 million change in annual interest expense on Mattel’sMattel's indebtedness under its senior secured revolving credit facilities.facility. Any interest rate swaps that Mattel enters into with respect to its variable rate indebtedness may not fully mitigate Mattel’sMattel's interest rate risk.

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’sMattel'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 senior securedMattel's revolving credit facilitiesfacility on similar terms, which could adversely affect Mattel's business, financial condition, and results of operations.

None.

See Part II, Item 8 "Financial Statements and Supplementary Data—Note 1213 to the Consolidated Financial Statements—Commitments and Contingencies—Litigation."

Not applicable.

Mattel’sMattel's common stock, par value $1.00 per share, is traded under the symbol "MAT" on The Nasdaq Global Select Market.

As of February 8, 2021,March 4, 2024, Mattel had approximately 24,00015,000 holders of record of its common stock.

See Part II, Item 8 "Financial Statements and Supplementary Data—Note 67 to the Consolidated Financial Statements —Stockholders’—Stockholders' Equity—Dividends."

During the fourth quarter of 2020,2023, Mattel did not sell any unregistered securities.

During 2020, 2019,2023, Mattel repurchased 10.4 million shares of its common stock at a cost of $203.0 million. During 2022 and 2018,2021, Mattel did not repurchase any shares of its common stock.

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, 20152018 and reinvestment of dividends.

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.

Mattel is a leading global toy and family entertainment company and owner of one of the strongest catalogs of children’s and family entertainment franchisesmost iconic brand portfolios in the world, creatingworld. Mattel creates innovative products and experiences that inspire fans, entertain audiences, and develop children through play. Mattel is focused on the following two-part strategy to transform Mattel into an intellectual property ("IP") driven, high-performinggrow its IP-driven toy company:business and expand its entertainment offering:

A novel strain of coronavirus disease ("COVID-19") was reportedThe ongoing war between Russia and Ukraine has led to volatility and disruption in December 2019these countries. The length and characterized as a pandemic by the World Health Organization in March 2020. The impact of COVID-19the ongoing war is highly unpredictable. While Mattel has no direct operations in Ukraine, its operations in Russia have experienced significant disruption. Mattel paused all shipments into Russia in early 2022, and the actions taken by governments, businesses, and individualsnet sales in response to itthese countries have resulted in significant global economic disruption, including, but not limited to, temporary business closures, reduced retail traffic, volatility in financial markets, and restrictions on travel.

The following table provides a summary of Mattel’spresents Mattel's consolidated results for 20202023 and 2019:2022:

Gross billings were $5.14$6.10 billion in 2020,2023, an increase of $73.2$53.6 million, or 1%, as compared to $5.06$6.05 billion in 2019,2022, with an unfavorablea favorable impact from changes in currency exchange rates of twoone percentage points.point. The increase in gross billings was primarily driven bydue to higher billings of Dolls.

Cost of sales as a percentage of net sales was 51.1% in 2020, as compared to 56.0% in 2019. Cost of sales decreased by $183.7$95.8 million, or 7%3%, to $2.34$2.86 billion in 20202023 from $2.52$2.95 billion in 2019, as compared to a 2% increase in net sales.2022. Within cost of sales, product and other costs decreased by $128.6$139.3 million, or 6%, to $1.93$2.28 billion in 20202023 from $2.06$2.42 billion in 2019;2022, freight and logistics expenses increased by $6.59$24.4 million, or 3%8%, to $253.5$327.0 million in 20202023 from $247.0$302.6 million in 2019;2022, and royalty expense decreasedincreased by $61.8$19.0 million, or 28%8%, to $158.5$249.8 million in 20202023 from $220.2$230.8 million in 2019. Cost of sales in 2019 included the impact of approximately $22 million related to the inclined sleeper product recalls. Within cost of sales, certain inbound freight costs were previously classified as freight and logistics costs. Mattel reclassified such inbound freight costs from freight and logistics expenses to present all inbound freight costs within product and other costs for the periods and segments presented.2022.

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, newspaper inserts, fliers, and mailers,catalogs; and (iv) generic advertising costs, which include trade show costs. Advertising and promotion expenses as a percentage of net sales decreasedwere relatively flat in 2023 at 9.6% in 2023, compared to 11.3%9.8% in 2020 from 12.2% in 2019, primarily driven by strategic reductions in advertising spend due to strong POS and the impact of COVID-19.2022.

Other selling and administrative expenses were $1.35$1.50 billion, or 29.4%27.5% of net sales, in 2020,2023, as compared to $1.39$1.27 billion, or 30.9%23.4% of net sales, in 2019.2022. The decreaseincrease in other selling and administrative expenses was mainly drivenprimarily due to higher incentive compensation of $152.2 million, market-related pay increases of $38.1 million, higher severance and restructuring charges of $34.7 million, and a prior year gain on sale of assets of $26.9 million, partially offset by incremental realized savings from cost savings programs, the absenceOptimizing for Growth program of write-offs of American Girl retail store assets of approximately $26 million in 2019, and lower severance and other restructuring charges. This was partially offset by increased costs related to the impact of the inclined sleeper product recalls and higher incentive and share based compensation expense.$46.0 million.

Interest expense was $198.3$123.8 million in 2020,2023, as compared to $201.0$132.8 million in 2019.2022. The reduction indecrease was primarily due to lower interest expense wasof $8.2 million in 2023 due to debt extinguishment coststhe $250.0 million repayment of $9.2 million in 2019 associated with the early redemption2013 Senior Notes due March 2023 in the fourth quarter of 2019 of the 2010 Senior Notes2022.

Interest income increased to $25.2 million in 2023, as compared to $9.4 million in 2022, due October 2020 and the 2016 Senior Notes due August 2021 as well as lower fees associated with the $1.60 billion senior secured revolving credit facilities. The reduction in interest expense was partially offset by theto higher average interest rates associated with the 2019 Senior Notes due December 2027 issuedon invested cash in 2023.

Other non-operating income, net was $2.3 million in 2023, as compared to other non-operating expense, net of $47.8 million in 2022. In the fourth quarter of 20192022, the liquidation of Mattel's subsidiary in Argentina was substantially completed, and Mattel recognized its cumulative currency translation adjustments of $45.4 million as compared to the 2010 Senior Notesa loss in other non-operating expense, net. See Item 7A "Quantitative and 2016 Senior Notes.Qualitative Disclosures About Market Risk—Argentina Operations" for more information.

Mattel’sMattel's provision for income taxes was $68.6$269.5 million in 2020,2023, as compared to $55.2$135.9 million in 2019.2022. 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 20202023 income tax provision included a $5.1 millionnet tax expense related to enacted tax law changes and the assessment of the future realizability of certain deferred tax assets, and a $4.3$9.9 million, tax expenseincluding $19.2 million related to reassessments of prior year's tax liabilities based on the status of audits and settlements in various jurisdictions.jurisdictions, partially offset by $9.2 million of benefits from the expiration of certain statutes of limitations. The 20192022 income tax provision included a $13.4an $11.0 million tax benefitexpense related to the release of valuation allowances in certain foreign subsidiaries' deferred tax jurisdictions,liabilities of undistributed earnings and a $16.9$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.

The following table providestables provide a summary of Mattel’sMattel's net sales, segment operating income, and gross billings by categories, along with supplemental information by brand, for the North America segment for 20202023 and 2019:2022:

Gross billingsNet sales for the North America segment in 2023 were $2.59$3.00 billion, in 2020, an increase of $155.5$15.4 million or 6%1%, as compared to $2.43$2.99 billion in 2019.2022. The increase in net sales was the result of an increase in gross billings of $32.2 million, partially offset by an increase in sales adjustments of $16.8 million.

Gross billings were $3.22 billion in 2023, an increase of $32.2 million, or 1%, as compared to $3.19 billion in 2022. The increase in the North America segment gross billings was primarily driven bydue to higher billings of Dolls.Dolls and Vehicles, partially offset by lower billings of Action Figures, Building Sets, Games, and Other and Infant, Toddler, and Preschool.

The following table providestables provide a summary of Mattel’sMattel's net sales, segment operating income, and gross billings by categories, along with supplemental information by brand, for the International segment for 20202023 and 2019:2022:

Gross billings for the International segment were $2.28$2.67 billion in 2020, a decrease2023, an increase of $80.3$41.1 million, or 3%2%, as compared to $2.36$2.63 billion in 2019,2022, with an unfavorablea favorable impact from changes in currency exchange rates of twofour percentage points. The decreaseincrease in the International 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.