July 19, 2018
Joseph J. Euteneuer
Chief Financial Officer
Mattel, Inc.
333 Continental Blvd.
El Segundo, California 90245-5012
Re: Mattel, Inc.
Form 10-K for the Year Ended December 31, 2017
Form 10-Q for the Quarter Ended March 31, 2018
Form 8-K furnished April 26, 2018
File No. 001-05647
Dear Mr. Euteneuer:
We have reviewed your filing and have the following comments. In some of
our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-K for the Year Ended December 31, 2017
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
2017 Compared to 2016, page 26
1. We refer to your discussion of the changes in sales from 2016 to 2017 by
Brand and
Segment beginning on page 27. We note that decreases in sales are
explained by "lower
sales of Other Girls, Construction and Arts & Crafts, American Girl, and
Fisher-Price
Friends products, partially offset by higher sales of Entertainment
products." In this
regard, you explain the decrease in sales by stating that sales in
certain brands or segments
also decreased, but you do not explain the reasons for the change. Please
revise to provide
a more robust discussion of the reasons for the changes in sales such as
whether outside
Joseph J. Euteneuer
FirstName LastNameJoseph J. Euteneuer
Mattel, Inc.
Comapany NameMattel, Inc.
July 19, 2018
July 19, 2018 Page 2
Page 2
FirstName LastName
trends or factors (e.g. children's movies releases ) were a cause of
the resulting change in
your revenues. To the extent applicable, your discussion of changes in
expenses should
be similarly revised given we note a discussion of increased royalty
expenses on page 28
without a discussion of why the royalties increased.
Financial Statements
Notes to Consolidated Financial Statements
Note 10 - Fair Value Measurements, page 88
2. We note from page 89 that you performed fair value measurement of
assets on a non-
recurring basis during 2017. Please revise to provide the fair values
of the relevant assets
in a tabular format as required by ASC 820-10-50-8.
Form 10-Q for the Quarter Ended March 31, 2018
Financial Statements
Notes to Consolidated Financial Statements
2. Accounts Receivable, page 8
3. We refer to your reversal of sales of $30 million recorded during the
first quarter of 2018.
In addition, we note from your December 31, 2017 10-K, a prior
reversal of sales in the
third quarter of 2017. Please explain to us why you believe reversing
previously recorded
revenue in the first quarter was appropriate. In this regard,
considering the uncertainty
surrounding the bankruptcy of Toys 'R' Us during 2017, please tell us
why you believed
the sales recorded during the first quarter of 2018 were initially
appropriately recognized,
including whether they were considered probable for collection under
ASC 606-10-25-
1.e. Your response should clearly address the factors that led to the
reversals in both
periods and your expectations for collection of amounts due from Toy
'R' Us given the
liquidations.
4. In a related matter, we note the bad debt expense of $57 million
recorded during the first
quarter of 2018. Please explain to us why you believe this amount was
collectible as of
December 31, 2017 and describe the factors that led you to believe
that accounts
receivable were no longer collectible subsequent to year end. As part
of your response,
please clarify your process for revenue recognition during 2017
considering the Toys 'R'
Us bankruptcy and your reversal of sales related to the bankruptcy
during the third quarter
of 2017. Your response should also address how you considered whether
collectibility
was reasonably assured under SAB Topic 13 when you recognized the
related revenue as
of December 31, 2017. We may have further comment upon receipt of your
response.
15. Revenues
Revenue Recognition and Sales Adjustments, page 18
5. We note your disclosure that you enter into symbolic and functional
licensing
arrangements, whereby the licensee pays Mattel royalties based on
sales of licensed
Joseph J. Euteneuer
Mattel, Inc.
July 19, 2018
Page 3
product, and in certain cases are subject to minimum guaranteed
amounts. If material,
please tell us, and revise to disclose how you recognize revenue for
both functional and
symbolic licensing arrangements. Your response and revised disclosure
should also
explain when you recognize both royalties and any minimum guarantee.
See guidance in
ASC 606-10-55-58 and 65. Also see disclosure guidance in ASC
606-10-50-12 and 17.
6. We note that you enter into arrangements with customers to provide
sales incentives,
support customer promotions, and provide allowances for returns and
defective
merchandise. If material, please tell us, and revise to disclose how
you account for
returns, if different from other variable consideration. For example,
please tell us and
revise to disclose if you record a refund liability and asset for the
right to recover goods
from the customer at the time of sale. See guidance in ASC
606-10-32-10 and 606-10-55-
23.
Form 8-K furnished April 26, 2018
Exhibit 99.1
Exhibit VII, page 1
7. We note that your earnings release discloses the non-GAAP measures Net
Sales As
Adjusted, Gross Profit As Adjusted, Operating Loss As Adjusted, Net
Loss per Common
Share As Adjusted, Adjusted EBITDA, and Gross Sales As Adjusted, which
add back the
revenue that was previously reversed and/or bad debt expense related
to Toys R Us.
Please tell us why you believe these adjustments are appropriate given
that you
determined that the receipt of such sales was uncollectible and not
appropriately
recognized as revenue, and it appears you will no longer have sales to
Toys 'R' Us in the
future given its liquidation. In this regard, the non-GAAP measures
for which you have
added back the reversed sales from Toys 'R' Us appear to create
non-GAAP measures that
are not consistent with the guidance in Question 100.04 of the
Non-GAAP Compliance
and Disclosure Interpretations and Rule 100(b) of Regulation G. Please
explain or revise
to remove these Non-GAAP measures.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Heather Clark at 202-551-3624 or Claire Erlanger at
202-551-3301 if
you have questions regarding comments on the financial statements and related
matters.
FirstName LastNameJoseph J. Euteneuer
Comapany NameMattel, Inc.
Division of
Corporation Finance
July 19, 2018 Page 3 Office of
Transportation and Leisure
FirstName LastName