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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ___________________________________________________________ 
FORM 10-Q
 ___________________________________________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to  
Commission File Number 001-05647
___________________________________________________________ 
MATTEL, INC.
(Exact name of registrant as specified in its charter)
___________________________________________________________ 
Delaware 95-1567322
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
333 Continental Blvd. 90245-5012
El Segundo,CA 
(Address of principal executive offices) (Zip Code)
(310) 252-2000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report):
NONE
__________________________________________________________ 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $1.00 per shareMATThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filer   Accelerated filer 
Non-accelerated filer 
  Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Number of shares outstanding of registrant's common stock, $1.00 par value, as of July 15, 2020: 346,897,357 shares
1


MATTEL, INC. AND SUBSIDIARIES
  Page
PART I
PART II
2


(Cautionary Statement Under the Private Securities Litigation Reform Act of 1995)
Mattel is including this Cautionary Statement to caution investors and qualify for the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the "Act") for forward-looking statements. This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Act. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. The use of words such as "anticipates," "expects," "intends," "plans," "confident that" and "believes," among others, generally identify forward-looking statements. These forward-looking statements are based on currently available operating, financial, economic and other information and assumptions, and are subject to a number of significant risks and uncertainties. A variety of factors, many of which are beyond our control, could cause actual future results to differ materially from those projected in the forward-looking statements, and are currently, or in the future could be, amplified by the COVID-19 pandemic. Specific factors that might cause such a difference include, but are not limited to: (i) potential impacts of the COVID-19 pandemic on our business operations, financial results and financial position and on the global economy, including its impact on our sales; (ii) Mattel’s ability to design, develop, produce, manufacture, source and ship products on a timely and cost-effective basis, as well as interest in and purchase of those products by retail customers and consumers in quantities and at prices that will be sufficient to profitably recover Mattel’s costs; (iii) downturns in economic conditions affecting Mattel’s markets which can negatively impact retail customers and consumers, and which can result in lower employment levels, lower consumer disposable income and spending, including lower spending on purchases of Mattel’s products; (iv) other factors which can lower discretionary consumer spending, such as higher costs for fuel and food, drops in the value of homes or other consumer assets, and high levels of consumer debt; (v) potential difficulties or delays Mattel may experience in implementing cost savings and efficiency enhancing initiatives; (vi) other economic and public health conditions or regulatory changes in the markets in which Mattel and its customers and suppliers operate, which could create delays or increase Mattel’s costs, such as higher commodity prices, labor costs or transportation costs, or outbreaks of disease; (vii) currency fluctuations, including movements in foreign exchange rates, which can lower Mattel’s net revenues and earnings, and significantly impact Mattel’s costs; (viii) the concentration of Mattel’s customers, potentially increasing the negative impact to Mattel of difficulties experienced by any of Mattel’s customers, or changes in their purchasing or selling patterns; (ix) the future willingness of licensors of entertainment properties for which Mattel currently has licenses or would seek to have licenses in the future to license those products to Mattel; (x) the inventory policies of Mattel’s retail customers, including retailers’ potential decisions to lower their inventories, even if it results in lost sales, as well as the concentration of Mattel’s revenues in the second half of the year, which coupled with reliance by retailers on quick response inventory management techniques increases the risk of underproduction of popular items, overproduction of less popular items and failure to achieve compressed shipping schedules; (xi) legal, reputational, and financial risks related to security breaches or cyberattacks; (xii) the increased costs of developing more sophisticated digital and smart technology products, and the corresponding supply chain and design challenges associated with such products; (xiii) work disruptions, which may impact Mattel’s ability to manufacture or deliver product in a timely and cost-effective manner; (xiv) the bankruptcy and liquidation of Mattel’s significant retailers, or the general lack of success of one of Mattel’s significant retailers which could negatively impact Mattel’s revenues or bad debt exposure; (xv) the impact of competition on revenues, margins and other aspects of Mattel’s business, including the ability to offer products which consumers choose to buy instead of competitive products, the ability to secure, maintain and renew popular licenses and the ability to attract and retain talented employees; (xvi) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xvii) changes in laws or regulations in the United States and/or in other major markets, such as China, in which Mattel operates, including, without limitation, with respect to taxes, tariffs, trade policies, or product safety, which may increase Mattel’s product costs and other costs of doing business, and reduce Mattel’s earnings; (xviii) failure to realize the planned benefits from any investments or acquisitions made by Mattel; (xix) the impact of other market conditions, third party actions or approvals and competition which could reduce demand for Mattel’s products or delay or increase the cost of implementation of Mattel’s programs or alter Mattel’s actions and reduce actual results; (xx) changes in financing markets or the inability of Mattel to obtain financing on attractive terms; (xxi) the impact of litigation, arbitration, or regulatory decisions or settlement actions; (xxii) uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; and (xxiii) other risks and uncertainties detailed in Part 1, Item 1A "Risk Factors" in Mattel's 2019 Annual Report on Form 10-K, as amended (the "2019 Annual Report on Form 10-K") and in Part II, Item 1A "Risk Factors" of this Quarterly Report on Form 10-Q. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so, except as required by law.

3


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30,
2020
June 30,
2019
December 31,
2019
 (Unaudited; in thousands, except share data)
ASSETS
Current Assets
Cash and equivalents$461,557  $194,125  $630,028  
Accounts receivable, net of allowances for credit losses of $18.7 million, $21.3 million, and $18.5 million, respectively650,502  755,698  936,359  
Inventories702,592  722,394  495,504  
Prepaid expenses and other current assets211,418  243,305  186,083  
Total current assets2,026,069  1,915,522  2,247,974  
Noncurrent Assets
Property, plant, and equipment, net506,555  595,838  550,139  
Right-of-use assets, net282,474  317,085  303,187  
Goodwill1,382,858  1,386,057  1,390,714  
Other noncurrent assets794,724  832,127  833,212  
Total Assets$4,992,680  $5,046,629  $5,325,226  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings$400,000  $45,000  $  
Accounts payable402,220  416,430  459,357  
Accrued liabilities563,633  585,674  769,513  
Income taxes payable15,732  22,618  48,037  
Total current liabilities1,381,585  1,069,722  1,276,907  
Noncurrent Liabilities
Long-term debt2,850,841  2,855,194  2,846,751  
Noncurrent lease liabilities246,414  284,947  270,853  
Other noncurrent liabilities427,692  410,571  439,001  
Total noncurrent liabilities3,524,947  3,550,712  3,556,605  
Stockholders' Equity
Common stock $1.00 par value, 1.0 billion shares authorized; 441.4 million shares issued441,369  441,369  441,369  
Additional paid-in capital1,844,075  1,831,952  1,825,569  
Treasury stock at cost: 94.4 million shares, 95.9 million shares, and 94.6 million shares, respectively(2,314,967) (2,349,874) (2,318,921) 
Retained earnings1,093,268  1,342,410  1,413,181  
Accumulated other comprehensive loss(977,597) (839,662) (869,484) 
Total stockholders' equity86,148  426,195  491,714  
Total Liabilities and Stockholders' Equity$4,992,680  $5,046,629  $5,325,226  
The accompanying notes are an integral part of these consolidated financial statements.
4


MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months EndedFor the Six Months Ended
June 30,
2020
June 30,
2019
June 30,
2020
June 30,
2019
 (Unaudited; in thousands, except per share amounts)
Net Sales$732,136  $860,063  $1,326,206  $1,549,309  
Cost of sales411,288  518,679  750,175  968,135  
Gross Profit320,848  341,384  576,031  581,174  
Advertising and promotion expenses60,172  84,489  136,454  153,954  
Other selling and administrative expenses306,817  308,311  635,529  605,647  
Operating Loss(46,141) (51,416) (195,952) (178,427) 
Interest expense49,615  46,234  98,595  93,192  
Interest (income)(1,025) (1,532) (3,108) (3,804) 
Other non-operating expense (income), net1,602  (294) 3,743  1,610  
Loss Before Income Taxes(96,333) (95,824) (295,182) (269,425) 
Provision for income taxes12,839  12,163  24,732  14,858  
Net Loss$(109,172) $(107,987) $(319,914) $(284,283) 
Net Loss Per Common Share - Basic$(0.31) $(0.31) $(0.92) $(0.82) 
Weighted-average number of common shares346,875  345,941  346,778  345,946  
Net Loss Per Common Share - Diluted$(0.31) $(0.31) $(0.92) $(0.82) 
Weighted-average number of common and potential common shares346,875  345,941  346,778  345,946  
The accompanying notes are an integral part of these consolidated financial statements.
5


MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 For the Three Months EndedFor the Six Months Ended
 June 30,
2020
June 30,
2019
June 30,
2020
June 30,
2019
 (Unaudited; in thousands)
Net Loss$(109,172) $(107,987) $(319,914) $(284,283) 
Other Comprehensive Income (Loss), Net of Tax
Currency translation adjustments26,843  (1,170) (118,791) 12,963  
Employee benefit plan adjustments518  624  3,578  847  
Net unrealized (losses) gains on available-for-sale security(80) (1,944) 115  (67) 
Net unrealized gains on derivative instruments:
Unrealized holding gains4,704  3,254  13,894  9,072  
Amounts reclassified from accumulated other comprehensive loss(3,699) (2,492) (6,909) (3,251) 
1,005  762  6,985  5,821  
Other Comprehensive Income (Loss), Net of Tax28,286  (1,728) (108,113) 19,564  
Comprehensive Loss$(80,886) $(109,715) $(428,027) $(264,719) 

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


MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
June 30,
2020
June 30,
2019
 (Unaudited; in thousands)
Cash Flows From Operating Activities
Net loss$(319,914) $(284,283) 
Adjustments to reconcile net loss to net cash flows used for operating activities:
Depreciation81,984  103,580  
Amortization19,652  20,338  
Asset impairments4,716  6,845  
Share-based compensation23,414  24,310  
Bad debt expense6,460  2,487  
Inventory obsolescence20,929  35,351  
Deferred income taxes5,784  36  
Changes in assets and liabilities:
Accounts receivable248,008  217,754  
Inventories(241,833) (207,984) 
Prepaid expenses and other current assets(30,923) (8,154) 
Accounts payable, accrued liabilities, and income taxes payable(305,316) (301,942) 
Other, net24,007  (8,857) 
Net cash flows used for operating activities(463,032) (400,519) 
Cash Flows From Investing Activities
Purchases of tools, dies, and molds(25,824) (20,933) 
Purchases of other property, plant, and equipment(34,367) (27,248) 
(Payments for) proceeds from foreign currency forward exchange contracts, net(21,746) 3,992  
Other, net1,005  484  
Net cash flows used for investing activities(80,932) (43,705) 
Cash Flows From Financing Activities
Proceeds from short-term borrowings, net400,000  40,824  
Other, net(693) (158) 
Net cash flows provided by financing activities399,307  40,666  
Effect of Currency Exchange Rate Changes on Cash(23,814) 3,202  
Decrease in Cash and Equivalents(168,471) (400,356) 
Cash and Equivalents at Beginning of Period630,028  594,481  
Cash and Equivalents at End of Period$461,557  $194,125  
The accompanying notes are an integral part of these consolidated financial statements.
7


MATTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common
Stock
Additional
Paid-In
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
 (Unaudited; in thousands)
Balance, December 31, 2019$441,369  $1,825,569  $(2,318,921) $1,413,181  $(869,484) $491,714  
Net loss—  —  —  (210,741) —  (210,741) 
Other comprehensive loss, net of tax—  —  —  —  (136,399) (136,399) 
Issuance of treasury stock for restricted stock units vesting—  (3,777) 2,811  —  —  (966) 
Share-based compensation—  14,275  —  —  —  14,275  
Balance, March 31, 2020$441,369  $1,836,067  $(2,316,110) $1,202,440  $(1,005,883) $157,883  
Net loss—  —  —  (109,172) —  (109,172) 
Other comprehensive income, net of tax—  —  —  —  28,286  28,286  
Issuance of treasury stock for restricted stock units vesting—  (944) 833  —  —  (111) 
Deferred compensation—  (186) 310  —  —  124  
Share-based compensation—  9,138  —  —  —  9,138  
Balance, June 30, 2020$441,369  $1,844,075  $(2,314,967) $1,093,268  $(977,597) $86,148  
Common
Stock
Additional
Paid-In
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
 (Unaudited; in thousands)
Balance, December 31, 2018$441,369  $1,812,682  $(2,354,617) $1,626,693  $(859,226) $666,901  
Net loss—  —  —  (176,296) —  (176,296) 
Other comprehensive income, net of tax—  —  —  —  21,292  21,292  
Issuance of treasury stock for restricted stock units vesting—  (1,829) 1,442  —  —  (387) 
Share-based compensation—  11,865  —  —  —  11,865  
Balance, March 31, 2019$441,369  $1,822,718  $(2,353,175) $1,450,397  $(837,934) $523,375  
Net loss—  —  —  (107,987) —  (107,987) 
Other comprehensive loss, net of tax—  —  —  —  (1,728) (1,728) 
Issuance of treasury stock for restricted stock units vesting—  (3,060) 3,025  —  —  (35) 
Deferred compensation—  (151) 276  —  —  125  
Share-based compensation—  12,445  —  —  —  12,445  
Balance, June 30, 2019$441,369  $1,831,952  $(2,349,874) $1,342,410  $(839,662) $426,195  

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


MATTEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.  Basis of Presentation
The accompanying unaudited consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments, consisting of only those of a normal recurring nature, considered necessary for a fair statement of the financial position and interim results of Mattel, Inc. and its subsidiaries ("Mattel") as of and for the periods presented have been included.
The December 31, 2019 balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the consolidated financial statements do not include all of the annual disclosures required by GAAP. As Mattel's business is seasonal, results for interim periods are not necessarily indicative of those that may be expected for a full year. The financial information included herein should be read in conjunction with Mattel's consolidated financial statements and related notes in the 2019 Annual Report on Form 10-K.
2.  Accounts Receivable
Mattel estimates current expected credit losses based on collection history and management’s assessment of the current economic trends, business environment, customers’ financial condition, accounts receivable aging, and customer disputes that may impact the level of future credit losses. Accounts receivable are net of allowances for credit losses of $18.7 million, $21.3 million, and $18.5 million as of June 30, 2020, June 30, 2019, and December 31, 2019, respectively.
3.  Inventories
Inventories include the following:
June 30,
2020
June 30,
2019
December 31,
2019
 (In thousands)
Raw materials and work in process$139,256  $129,937  $103,123  
Finished goods563,336  592,457  392,381  
$702,592  $722,394  $495,504  
4.  Property, Plant, and Equipment
Property, plant, and equipment, net includes the following: 
June 30,
2020
June 30,
2019
December 31,
2019
 (In thousands)
Land$24,938  $25,133  $25,112  
Buildings295,948  298,768  302,956  
Machinery and equipment753,388  873,294  812,509  
Software370,392  409,209  364,391  
Tools, dies, and molds601,811  818,166  747,706  
Leasehold improvements179,545  237,150  183,250  
2,226,022  2,661,720  2,435,924  
Less: accumulated depreciation(1,719,467) (2,065,882) (1,885,785) 
$506,555  $595,838  $550,139  
9


During the three months ended December 31, 2019, in conjunction with the Capital Light program, as further discussed in "Note 19 to the Consolidated Financial Statements—Restructuring Charges," Mattel discontinued production at one of its plants based in Mexico and has committed to a plan to dispose of the land and building. These assets meet the held for sale criteria and are actively being marketed for sale. The estimated fair value of the land and building, less costs to dispose, was determined to exceed its net book value of $8.4 million and $12.1 million as of June 30, 2020 and December 31, 2019, respectively, and are included within property, plant and equipment, net in the consolidated balance sheets.
5.  Goodwill
Goodwill is allocated to various reporting units, which are at the operating segment level, for the purpose of evaluating whether goodwill is impaired. Mattel's reporting units are: (i) North America, (ii) International, and (iii) American Girl. Mattel tests its goodwill for impairment annually in the third quarter and whenever events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value.
The change in the carrying amount of goodwill by operating segment for the six months ended June 30, 2020 is shown below. Brand-specific goodwill held by foreign subsidiaries is allocated to the North America segment, thereby causing a foreign currency translation impact.
 December 31,
2019
Currency
Exchange Rate
Impact
June 30,
2020
(In thousands)
North America$732,430  $(1,957) $730,473  
International450,713  (5,899) 444,814  
American Girl207,571    207,571  
$1,390,714  $(7,856) $1,382,858  
6.  Other Noncurrent Assets
Other noncurrent assets include the following: 
June 30,
2020
June 30,
2019
December 31,
2019
 (In thousands)
Identifiable intangible assets (net of accumulated amortization of $267.7 million, $228.2 million, and $248.0 million, respectively)$524,153  $566,737  $553,114  
Deferred income taxes59,827  49,937  67,900  
Mattel's amortizable intangible assets primarily consist of trademarks. Mattel tests its amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Mattel's amortizable intangible assets were not impaired during the three and six months ended June 30, 2020 and 2019.
7.  Accrued Liabilities
Accrued liabilities include the following: 
June 30,
2020
June 30,
2019
December 31,
2019
 (In thousands)
Current lease liabilities$81,225  $75,071  $74,065  
Advertising and promotion62,025  63,516  93,804  
Royalties30,998  52,683  94,228  
10


8.  Seasonal Financing
On December 20, 2017, Mattel entered into a syndicated facility agreement, which was subsequently amended in 2018 and 2019 (as amended, the "Credit Agreement"), as a borrower (in such capacity, the "Borrower") and guarantor thereunder, along with certain of the Borrower's domestic and foreign subsidiaries as additional borrowers and/or guarantors thereunder, Bank of America, N.A., as global administrative agent, collateral agent and Australian security trustee, and the other lenders and financial institutions from time to time party thereto, providing up to $1.60 billion in aggregate principal amount of senior secured revolving credit facilities (the "senior secured revolving credit facilities"). The senior secured revolving credit facilities consist of (i) an asset based lending facility with aggregate commitments up to $1.31 billion, subject to borrowing base capacity, secured by substantially all of the accounts receivable and inventory of the Borrower and certain of its subsidiaries who are borrowers and/or guarantors under the Credit Agreement, as well as (ii) a revolving credit facility with $294.0 million in aggregate commitments secured by certain fixed assets and intellectual property of the U.S. borrowers under the Credit Agreement, and certain equity interests in the borrower and guarantor subsidiaries under the Credit Agreement. The senior secured revolving credit facilities will mature on November 18, 2022.
Borrowings under the senior secured revolving credit facilities (i) are limited by jurisdiction-specific borrowing base calculations based on the sum of specified percentages of eligible accounts receivable, eligible inventory and certain fixed assets and intellectual property, as applicable, minus the amount of any applicable reserves, and (ii) bear interest at a floating rate, which can be either, at the Borrower's option, (a) an adjusted LIBOR rate plus an applicable margin ranging from 1.25% to 2.75% per annum or (b) an alternate base rate plus an applicable margin ranging from 0.25% to 1.75% per annum, in each case, such applicable margins to be determined based on the Borrower's average borrowing availability remaining under the senior secured revolving credit facilities.
In addition to paying interest on the outstanding principal under the senior secured revolving credit facilities, the Borrower is required to pay (i) an unused line fee per annum of the average daily unused portion of the senior secured revolving credit facilities, (ii) a letter of credit fronting fee based on a percentage of the aggregate face amount of outstanding letters of credit, and (iii) certain other customary fees and expenses of the lenders and agents.
Mattel had borrowings under the senior secured revolving credit facilities of $400 million and $45 million as of June 30, 2020 and June 30, 2019, respectively, and had no borrowings under the senior secured revolving credit facilities as of December 31, 2019. Outstanding letters of credit under the senior secured revolving credit facilities totaled approximately $13 million, $70 million, and $55 million as of June 30, 2020, June 30, 2019, and December 31, 2019, respectively.