mat-20211231
false2021FYMATTEL INC /DE/0000063276http://fasb.org/us-gaap/2021-01-31#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2021-01-31#AccruedLiabilitiesCurrentP5YP5Y2.72.351.92.72.351.900000632762021-01-012021-12-3100000632762021-06-30iso4217:USD00000632762022-02-14xbrli:shares00000632762021-12-3100000632762020-12-31iso4217:USDxbrli:shares00000632762020-01-012020-12-3100000632762019-01-012019-12-3100000632762019-12-3100000632762018-12-310000063276us-gaap:CommonStockMember2018-12-310000063276us-gaap:AdditionalPaidInCapitalMember2018-12-310000063276us-gaap:TreasuryStockMember2018-12-310000063276us-gaap:RetainedEarningsMember2018-12-310000063276us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000063276us-gaap:RetainedEarningsMember2019-01-012019-12-310000063276us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310000063276us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310000063276us-gaap:TreasuryStockMember2019-01-012019-12-310000063276us-gaap:CommonStockMember2019-12-310000063276us-gaap:AdditionalPaidInCapitalMember2019-12-310000063276us-gaap:TreasuryStockMember2019-12-310000063276us-gaap:RetainedEarningsMember2019-12-310000063276us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000063276us-gaap:RetainedEarningsMember2020-01-012020-12-310000063276us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310000063276us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310000063276us-gaap:TreasuryStockMember2020-01-012020-12-310000063276us-gaap:CommonStockMember2020-12-310000063276us-gaap:AdditionalPaidInCapitalMember2020-12-310000063276us-gaap:TreasuryStockMember2020-12-310000063276us-gaap:RetainedEarningsMember2020-12-310000063276us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000063276us-gaap:RetainedEarningsMember2021-01-012021-12-310000063276us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-12-310000063276us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310000063276us-gaap:TreasuryStockMember2021-01-012021-12-310000063276us-gaap:CommonStockMember2021-12-310000063276us-gaap:AdditionalPaidInCapitalMember2021-12-310000063276us-gaap:TreasuryStockMember2021-12-310000063276us-gaap:RetainedEarningsMember2021-12-310000063276us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000063276us-gaap:BuildingMembersrt:MinimumMember2021-01-012021-12-310000063276us-gaap:BuildingMembersrt:MaximumMember2021-01-012021-12-310000063276us-gaap:OtherMachineryAndEquipmentMembersrt:MinimumMember2021-01-012021-12-310000063276us-gaap:OtherMachineryAndEquipmentMembersrt:MaximumMember2021-01-012021-12-310000063276us-gaap:SoftwareAndSoftwareDevelopmentCostsMembersrt:MinimumMember2021-01-012021-12-310000063276us-gaap:SoftwareAndSoftwareDevelopmentCostsMembersrt:MaximumMember2021-01-012021-12-310000063276us-gaap:LeaseholdImprovementsMembersrt:MinimumMember2021-01-012021-12-310000063276us-gaap:LeaseholdImprovementsMembersrt:MaximumMember2021-01-012021-12-310000063276us-gaap:ToolsDiesAndMoldsMember2021-01-012021-12-310000063276us-gaap:LandMember2021-12-310000063276us-gaap:LandMember2020-12-310000063276us-gaap:BuildingMember2021-12-310000063276us-gaap:BuildingMember2020-12-310000063276us-gaap:OtherMachineryAndEquipmentMember2021-12-310000063276us-gaap:OtherMachineryAndEquipmentMember2020-12-310000063276us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2021-12-310000063276us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-12-310000063276us-gaap:ToolsDiesAndMoldsMember2021-12-310000063276us-gaap:ToolsDiesAndMoldsMember2020-12-310000063276us-gaap:LeaseholdImprovementsMember2021-12-310000063276us-gaap:LeaseholdImprovementsMember2020-12-310000063276us-gaap:ConstructionInProgressMember2021-12-310000063276us-gaap:ConstructionInProgressMember2020-12-310000063276country:MXus-gaap:LandAndBuildingMember2021-01-012021-03-3100000632762021-01-012021-03-310000063276mat:NorthAmericaSegmentMember2019-12-310000063276mat:InternationalMember2019-12-310000063276mat:AmericanGirlMember2019-12-310000063276mat:NorthAmericaSegmentMember2020-01-012020-12-310000063276mat:InternationalMember2020-01-012020-12-310000063276mat:AmericanGirlMember2020-01-012020-12-310000063276mat:NorthAmericaSegmentMember2020-12-310000063276mat:InternationalMember2020-12-310000063276mat:AmericanGirlMember2020-12-310000063276mat:NorthAmericaSegmentMember2021-01-012021-12-310000063276mat:InternationalMember2021-01-012021-12-310000063276mat:AmericanGirlMember2021-01-012021-12-310000063276mat:NorthAmericaSegmentMember2021-12-310000063276mat:InternationalMember2021-12-310000063276mat:AmericanGirlMember2021-12-3100000632762021-07-012021-09-300000063276us-gaap:PensionPlansDefinedBenefitMember2021-01-012021-12-310000063276us-gaap:PensionPlansDefinedBenefitMember2020-01-012020-12-310000063276us-gaap:PensionPlansDefinedBenefitMember2019-01-012019-12-310000063276mat:DefinedContributionRetirementPlansMember2021-01-012021-12-310000063276mat:DefinedContributionRetirementPlansMember2020-01-012020-12-310000063276mat:DefinedContributionRetirementPlansMember2019-01-012019-12-310000063276us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-01-012021-12-310000063276us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2020-01-012020-12-310000063276us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2019-01-012019-12-310000063276mat:DeferredCompensationandExcessBenefitPlansMember2021-01-012021-12-310000063276mat:DeferredCompensationandExcessBenefitPlansMember2020-01-012020-12-310000063276mat:DeferredCompensationandExcessBenefitPlansMember2019-01-012019-12-31xbrli:pure0000063276mat:PriorToAgeSixtyFiveMember2021-01-012021-12-310000063276mat:PriorToAgeSixtyFiveMember2020-01-012020-12-310000063276mat:PriorToAgeSixtyFiveMember2019-01-012019-12-310000063276mat:AfterAgeSixtyFiveMember2021-01-012021-12-310000063276mat:AfterAgeSixtyFiveMember2020-01-012020-12-310000063276mat:AfterAgeSixtyFiveMember2019-01-012019-12-310000063276mat:PriorToAgeSixtyFiveMember2021-12-310000063276mat:PriorToAgeSixtyFiveMember2020-12-310000063276mat:PriorToAgeSixtyFiveMember2019-12-310000063276mat:AfterAgeSixtyFiveMember2021-12-310000063276mat:AfterAgeSixtyFiveMember2020-12-310000063276mat:AfterAgeSixtyFiveMember2019-12-310000063276us-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:PensionPlansDefinedBenefitMember2019-12-310000063276us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2020-12-310000063276us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2019-12-310000063276us-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-12-310000063276us-gaap:DefinedBenefitPlanEquitySecuritiesUsMember2021-12-310000063276us-gaap:DefinedBenefitPlanEquitySecuritiesNonUsMember2021-12-310000063276us-gaap:FixedIncomeSecuritiesMember2021-12-310000063276us-gaap:RealEstateInvestmentMember2021-12-310000063276us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:ForeignCorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignCorporateDebtSecuritiesMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:ForeignCorporateDebtSecuritiesMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:ForeignCorporateDebtSecuritiesMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:MutualFundMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel2Memberus-gaap:MutualFundMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:MutualFundMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:MutualFundMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:MoneyMarketFundsMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276mat:OtherPlanAssetsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276mat:OtherPlanAssetsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276mat:OtherPlanAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276mat:OtherPlanAssetsMemberus-gaap:FairValueInputsLevel12And3Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMembermat:InsuranceBuyInPolicyMember2021-12-310000063276us-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMembermat:InsuranceBuyInPolicyMember2021-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:PensionPlansDefinedBenefitMembermat:InsuranceBuyInPolicyMember2021-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:PensionPlansDefinedBenefitMembermat:InsuranceBuyInPolicyMember2021-12-310000063276us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:DefinedBenefitPlanEquitySecuritiesUsMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:DefinedBenefitPlanEquitySecuritiesNonUsMemberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:PensionPlansDefinedBenefitMembermat:DefinedBenefitPlanCollectiveTrustFundInternationalFixedIncomeMember2021-12-310000063276us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:PensionPlansDefinedBenefitMembermat:DefinedBenefitPlanCollectiveTrustFundDiversifiedFundsMember2021-12-310000063276us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:PensionPlansDefinedBenefitMembermat:DefinedBenefitPlanCollectiveTrustFundRealEstateMember2021-12-310000063276us-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:PensionPlansDefinedBenefitMember2021-12-310000063276us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:ForeignCorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignCorporateDebtSecuritiesMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:ForeignCorporateDebtSecuritiesMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:ForeignCorporateDebtSecuritiesMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:MutualFundMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel2Memberus-gaap:MutualFundMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:MutualFundMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:MutualFundMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:MoneyMarketFundsMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276mat:OtherPlanAssetsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276mat:OtherPlanAssetsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276mat:OtherPlanAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276mat:OtherPlanAssetsMemberus-gaap:FairValueInputsLevel12And3Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMembermat:InsuranceBuyInPolicyMember2020-12-310000063276us-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMembermat:InsuranceBuyInPolicyMember2020-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:PensionPlansDefinedBenefitMembermat:InsuranceBuyInPolicyMember2020-12-310000063276us-gaap:FairValueInputsLevel12And3Memberus-gaap:PensionPlansDefinedBenefitMembermat:InsuranceBuyInPolicyMember2020-12-310000063276us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:DefinedBenefitPlanEquitySecuritiesUsMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:DefinedBenefitPlanEquitySecuritiesNonUsMemberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:PensionPlansDefinedBenefitMembermat:DefinedBenefitPlanCollectiveTrustFundInternationalFixedIncomeMember2020-12-310000063276us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:PensionPlansDefinedBenefitMembermat:DefinedBenefitPlanCollectiveTrustFundDiversifiedFundsMember2020-12-310000063276us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:PensionPlansDefinedBenefitMembermat:DefinedBenefitPlanCollectiveTrustFundRealEstateMember2020-12-310000063276us-gaap:FairValueInputsLevel1Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel2Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:PensionPlansDefinedBenefitMember2020-12-3100000632762017-12-310000063276us-gaap:RevolvingCreditFacilityMember2017-12-200000063276us-gaap:RevolvingCreditFacilityMember2021-03-190000063276mat:RevolvingCreditFacilityAssetBasedMembermat:CreditAgreementMember2021-12-310000063276mat:CreditAgreementMembermat:RevolvingCreditFacilitySecuredMember2021-12-310000063276us-gaap:RevolvingCreditFacilityMembermat:CreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMember2019-11-202019-11-200000063276us-gaap:RevolvingCreditFacilityMembermat:CreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MaximumMember2019-11-202019-11-200000063276us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMembermat:CreditAgreementMembersrt:MinimumMember2019-11-202019-11-200000063276us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMembermat:CreditAgreementMembersrt:MaximumMember2019-11-202019-11-200000063276mat:CreditAgreementMember2021-12-310000063276mat:CreditAgreementMember2020-12-310000063276us-gaap:RevolvingCreditFacilityMembermat:USBorrowersAndUSGuarantorsExcludingMattelMembermat:CreditAgreementMember2021-01-012021-12-310000063276us-gaap:RevolvingCreditFacilityMembermat:VotingEquityInterestsMembermat:CreditAgreementMember2021-01-012021-12-310000063276us-gaap:RevolvingCreditFacilityMembermat:CreditAgreementMembermat:NonVotingEquityInterestsMember2021-01-012021-12-310000063276us-gaap:RevolvingCreditFacilityMembermat:CreditAgreementMember2021-12-310000063276us-gaap:RevolvingCreditFacilityMembermat:CreditAgreementMember2019-11-202019-11-200000063276us-gaap:RevolvingCreditFacilityMembermat:CreditAgreementMember2019-11-20mat:tradingDay0000063276us-gaap:RevolvingCreditFacilityMembermat:CreditAgreementMember2020-12-310000063276us-gaap:RevolvingCreditFacilityMember2021-12-310000063276mat:ForeignBankLoansMember2021-12-310000063276us-gaap:RevolvingCreditFacilityMember2020-12-310000063276mat:ForeignBankLoansMember2020-12-310000063276mat:DomesticUnsecuredCommittedRevolvingCreditFacilityAndOtherShortTermBorrowingsMember2021-01-012021-12-310000063276mat:DomesticUnsecuredCommittedRevolvingCreditFacilityAndOtherShortTermBorrowingsMember2020-01-012020-12-310000063276us-gaap:SeniorNotesMembermat:SeniorNotesTwentyTwentyOneDueTwentyTwentySixMember2021-03-190000063276mat:SeniorNotesTwentyTwentyOneDueTwentyTwentyNineMemberus-gaap:SeniorNotesMember2021-03-190000063276mat:SeniorNotesTwentyTwentyOneDueTwentyTwentyNineMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2021-03-192021-03-190000063276mat:SeniorNotesTwentyTwentyOneDueTwentyTwentyNineMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMember2021-03-192021-03-190000063276mat:SeniorNotesTwentyTwentyOneDueTwentyTwentySixMember2021-03-192021-03-190000063276mat:SeniorNotesTwentyTwentyOneDueTwentyTwentyNineMember2021-03-192021-03-190000063276mat:SeniorNotesTwentyTwentyOneDueTwentyTwentySixMembersrt:MinimumMember2021-03-192021-03-190000063276srt:MaximumMembermat:SeniorNotesTwentyTwentyOneDueTwentyTwentySixMember2021-03-192021-03-190000063276mat:SeniorNotesTwentyTwentyOneDueTwentyTwentyNineMembersrt:MinimumMember2021-03-192021-03-190000063276mat:SeniorNotesTwentyTwentyOneDueTwentyTwentyNineMembersrt:MaximumMember2021-03-192021-03-1900000632762019-12-012019-12-310000063276us-gaap:SeniorNotesMembermat:SeniorNotesTwentyTwentyOneDueTwentyTwentySixMember2021-12-310000063276mat:SeniorNotesTwentyTwentyOneDueTwentyTwentyNineMemberus-gaap:SeniorNotesMember2021-12-310000063276mat:SeniorNotesTwentySeventeenAndTwentyEighteenMemberus-gaap:SeniorNotesMember2021-01-012021-12-310000063276us-gaap:SeniorNotesMembermat:SeniorNotesTwentyTenMember2021-12-310000063276us-gaap:SeniorNotesMembermat:SeniorNotesTwentyTenMember2020-12-310000063276mat:SeniorNotesTwentyElevenMemberus-gaap:SeniorNotesMember2021-12-310000063276mat:SeniorNotesTwentyElevenMemberus-gaap:SeniorNotesMember2020-12-310000063276mat:SeniorNotesTwentyThirteenMemberus-gaap:SeniorNotesMember2021-12-310000063276mat:SeniorNotesTwentyThirteenMemberus-gaap:SeniorNotesMember2020-12-310000063276mat:SeniorNotesTwentySeventeenAndTwentyEighteenMemberus-gaap:SeniorNotesMember2021-12-310000063276mat:SeniorNotesTwentySeventeenAndTwentyEighteenMemberus-gaap:SeniorNotesMember2020-12-310000063276mat:SeniorNotesTwentyNineteenMemberus-gaap:SeniorNotesMember2021-12-310000063276mat:SeniorNotesTwentyNineteenMemberus-gaap:SeniorNotesMember2020-12-310000063276us-gaap:SeniorNotesMembermat:SeniorNotesTwentyTwentyOneDueTwentyTwentySixMember2020-12-310000063276mat:SeniorNotesTwentyTwentyOneDueTwentyTwentyNineMemberus-gaap:SeniorNotesMember2020-12-310000063276us-gaap:SeniorNotesMembermat:SeniorNotesTwentyTwentyOneMember2021-12-310000063276us-gaap:CommonStockMember2021-01-012021-12-310000063276us-gaap:CommonStockMember2020-01-012020-12-310000063276us-gaap:CommonStockMember2019-01-012019-12-3100000632762013-07-170000063276us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310000063276us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-12-310000063276us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-310000063276us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310000063276us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-12-310000063276us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-01-012021-12-310000063276us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-012021-12-310000063276us-gaap:AccumulatedTranslationAdjustmentMember2021-01-012021-12-310000063276us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310000063276us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-12-310000063276us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-12-310000063276us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310000063276us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-12-310000063276us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-12-310000063276us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-12-310000063276us-gaap:AccumulatedTranslationAdjustmentMember2019-12-310000063276us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-01-012020-12-310000063276us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-01-012020-12-310000063276us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-01-012020-12-310000063276us-gaap:AccumulatedTranslationAdjustmentMember2020-01-012020-12-310000063276us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2018-12-310000063276us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2018-12-310000063276us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2018-12-310000063276us-gaap:AccumulatedTranslationAdjustmentMember2018-12-310000063276us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-01-012019-12-310000063276us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-01-012019-12-310000063276us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-01-012019-12-310000063276us-gaap:AccumulatedTranslationAdjustmentMember2019-01-012019-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-01-012020-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-01-012019-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember2021-01-012021-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember2020-01-012020-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember2019-01-012019-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2021-01-012021-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2020-01-012020-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember2019-01-012019-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMembermat:AccumulatedDefinedBenefitPlansAdjustmentSettlementGainLossAttributabletoParentMember2021-01-012021-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMembermat:AccumulatedDefinedBenefitPlansAdjustmentSettlementGainLossAttributabletoParentMember2020-01-012020-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMembermat:AccumulatedDefinedBenefitPlansAdjustmentSettlementGainLossAttributabletoParentMember2019-01-012019-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMembermat:AccumulatedDefinedBenefitPlansAdjustmentCurtailmentGainLossAttributabletoParentMember2021-01-012021-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMembermat:AccumulatedDefinedBenefitPlansAdjustmentCurtailmentGainLossAttributabletoParentMember2020-01-012020-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMembermat:AccumulatedDefinedBenefitPlansAdjustmentCurtailmentGainLossAttributabletoParentMember2019-01-012019-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-012021-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-01-012020-12-310000063276us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-01-012019-12-310000063276srt:MaximumMember2021-12-310000063276us-gaap:EmployeeStockOptionMembermat:Amended2010PlanMember2021-12-310000063276us-gaap:EmployeeStockOptionMembermat:Amended2010PlanMembersrt:MaximumMember2021-01-012021-12-310000063276us-gaap:EmployeeStockOptionMembermat:Amended2010PlanMember2021-01-012021-12-31mat:Age0000063276us-gaap:RestrictedStockUnitsRSUMembermat:Amended2010PlanMember2021-01-012021-12-310000063276mat:Amended2010PlanMember2021-12-310000063276mat:GrantsPriorToMarch12019Memberus-gaap:EmployeeStockOptionMembermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:StockAppreciationRightsSARSMembermat:GrantsPriorToMarch12019Membermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:RestrictedStockMembermat:GrantsPriorToMarch12019Membermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:RestrictedStockUnitsRSUMembermat:GrantsPriorToMarch12019Membermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:StockAppreciationRightsSARSMembermat:GrantsOnOrAfterMarch12019Membermat:Amended2010PlanMember2021-01-012021-12-310000063276mat:GrantsOnOrAfterMarch12019Memberus-gaap:EmployeeStockOptionMembermat:Amended2010PlanMember2021-01-012021-12-310000063276mat:GrantsOnOrAfterMarch22020Memberus-gaap:EmployeeStockOptionMembermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:StockAppreciationRightsSARSMembermat:GrantsOnOrAfterMarch22020Membermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:StockAppreciationRightsSARSMembermat:GrantsOnOrAfterMarch22021Membermat:Amended2010PlanMember2021-01-012021-12-310000063276mat:GrantsOnOrAfterMarch22021Memberus-gaap:EmployeeStockOptionMembermat:Amended2010PlanMember2021-01-012021-12-310000063276mat:TargetPerformanceGoalsMembermat:Amended2010PlanMember2021-12-310000063276mat:MaximumAchievementGoalsMembermat:Amended2010PlanMember2021-12-310000063276us-gaap:EmployeeStockOptionMember2021-01-012021-12-310000063276us-gaap:EmployeeStockOptionMember2020-01-012020-12-310000063276us-gaap:EmployeeStockOptionMember2019-01-012019-12-310000063276mat:MarketBasedOptionsMember2018-01-012018-12-310000063276mat:Amended2010PlanMembersrt:MinimumMembermat:MarketBasedOptionsMember2018-12-310000063276mat:Amended2010PlanMembersrt:MaximumMembermat:MarketBasedOptionsMember2018-12-310000063276mat:Amended2010PlanMembermat:MarketBasedOptionsMember2018-01-012018-12-310000063276us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-12-310000063276us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-12-310000063276us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-12-310000063276us-gaap:RestrictedStockUnitsRSUMember2020-12-310000063276us-gaap:RestrictedStockUnitsRSUMember2019-12-310000063276us-gaap:RestrictedStockUnitsRSUMember2018-12-310000063276us-gaap:RestrictedStockUnitsRSUMember2021-12-310000063276us-gaap:PerformanceSharesMember2021-01-012021-12-310000063276us-gaap:PerformanceSharesMember2020-01-012020-12-310000063276us-gaap:PerformanceSharesMember2019-01-012019-12-31mat:incentiveProgram0000063276us-gaap:PerformanceSharesMembersrt:MinimumMember2021-01-012021-12-310000063276us-gaap:PerformanceSharesMembersrt:MaximumMember2021-01-012021-12-310000063276us-gaap:PerformanceSharesMember2020-12-310000063276us-gaap:PerformanceSharesMember2019-12-310000063276us-gaap:PerformanceSharesMember2018-12-310000063276us-gaap:PerformanceSharesMember2021-12-310000063276us-gaap:RestrictedStockMembermat:GrantsOnOrAfterMarch12019Membermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:RestrictedStockMembermat:GrantsOnOrAfterMarch22020Membermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:RestrictedStockMembermat:GrantsOnOrAfterMarch22021Membermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:RestrictedStockUnitsRSUMembermat:GrantsOnOrAfterMarch12019Membermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:RestrictedStockUnitsRSUMembermat:GrantsOnOrAfterMarch22020Membermat:Amended2010PlanMember2021-01-012021-12-310000063276mat:GrantsOnOrAfterMarch22021Memberus-gaap:RestrictedStockUnitsRSUMembermat:Amended2010PlanMember2021-01-012021-12-310000063276us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2021-12-310000063276us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310000063276us-gaap:FairValueMeasurementsRecurringMember2021-12-310000063276us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000063276us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-12-310000063276us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000063276us-gaap:FairValueMeasurementsRecurringMember2020-12-310000063276srt:MaximumMember2021-01-012021-12-310000063276us-gaap:ForeignExchangeForwardMember2021-12-310000063276us-gaap:ForeignExchangeForwardMember2020-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2021-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2020-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:OtherNoncurrentAssetsMember2021-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:OtherNoncurrentAssetsMember2020-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMember2021-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMember2020-12-310000063276us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2021-12-310000063276us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2020-12-310000063276us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:OtherNoncurrentAssetsMember2021-12-310000063276us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:OtherNoncurrentAssetsMember2020-12-310000063276us-gaap:NondesignatedMember2021-12-310000063276us-gaap:NondesignatedMember2020-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:AccruedLiabilitiesMemberus-gaap:ForeignExchangeForwardMember2021-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:AccruedLiabilitiesMemberus-gaap:ForeignExchangeForwardMember2020-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:ForeignExchangeForwardMember2021-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:ForeignExchangeForwardMember2020-12-310000063276us-gaap:AccruedLiabilitiesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2021-12-310000063276us-gaap:AccruedLiabilitiesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2020-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CostOfSalesMemberus-gaap:ForeignExchangeForwardMember2021-01-012021-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CostOfSalesMemberus-gaap:ForeignExchangeForwardMember2020-01-012020-12-310000063276us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CostOfSalesMemberus-gaap:ForeignExchangeForwardMember2019-01-012019-12-310000063276us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:NonoperatingIncomeExpenseMember2021-01-012021-12-310000063276us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:NonoperatingIncomeExpenseMember2020-01-012020-12-310000063276us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:NonoperatingIncomeExpenseMember2019-01-012019-12-310000063276us-gaap:CostOfSalesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2021-01-012021-12-310000063276us-gaap:CostOfSalesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2020-01-012020-12-310000063276us-gaap:CostOfSalesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2019-01-012019-12-310000063276us-gaap:NondesignatedMember2021-01-012021-12-310000063276us-gaap:NondesignatedMember2020-01-012020-12-310000063276us-gaap:NondesignatedMember2019-01-012019-12-310000063276mat:WorkersCompensationRisksMember2021-12-310000063276mat:GeneralAndAutomobileLiabilityRisksMember2021-12-310000063276mat:ProductLiabilityLossesOccurringPriorToFebruary12020Member2020-12-310000063276mat:ProductLiabilityLossesOccurringAfterFebruary12020Member2021-12-310000063276mat:PropertyRisksMember2021-12-310000063276srt:MinimumMembermat:SleeperMember2021-01-012021-12-31mat:class0000063276mat:SleeperMember2021-12-31mat:lawsuit00000632762019-12-012020-01-31mat:stockholder00000632762020-04-012020-04-30mat:complaint0000063276mat:WhistleblowerLetterMember2021-10-252021-10-250000063276mat:WhistleblowerLetterMember2021-12-310000063276mat:NorthAmericaSegmentMemberus-gaap:OperatingSegmentsMember2021-01-012021-12-310000063276mat:NorthAmericaSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-12-310000063276mat:NorthAmericaSegmentMemberus-gaap:OperatingSegmentsMember2019-01-012019-12-310000063276mat:InternationalMemberus-gaap:OperatingSegmentsMember2021-01-012021-12-310000063276mat:InternationalMemberus-gaap:OperatingSegmentsMember2020-01-012020-12-310000063276mat:InternationalMemberus-gaap:OperatingSegmentsMember2019-01-012019-12-310000063276us-gaap:OperatingSegmentsMembermat:AmericanGirlMember2021-01-012021-12-310000063276us-gaap:OperatingSegmentsMembermat:AmericanGirlMember2020-01-012020-12-310000063276us-gaap:OperatingSegmentsMembermat:AmericanGirlMember2019-01-012019-12-310000063276us-gaap:OperatingSegmentsMember2021-01-012021-12-310000063276us-gaap:OperatingSegmentsMember2020-01-012020-12-310000063276us-gaap:OperatingSegmentsMember2019-01-012019-12-310000063276us-gaap:CorporateNonSegmentMember2021-01-012021-12-310000063276us-gaap:CorporateNonSegmentMember2020-01-012020-12-310000063276us-gaap:CorporateNonSegmentMember2019-01-012019-12-310000063276mat:NorthAmericaSegmentMemberus-gaap:OperatingSegmentsMember2021-12-310000063276mat:NorthAmericaSegmentMemberus-gaap:OperatingSegmentsMember2020-12-310000063276mat:NorthAmericaSegmentMemberus-gaap:OperatingSegmentsMember2019-12-310000063276mat:InternationalMemberus-gaap:OperatingSegmentsMember2021-12-310000063276mat:InternationalMemberus-gaap:OperatingSegmentsMember2020-12-310000063276mat:InternationalMemberus-gaap:OperatingSegmentsMember2019-12-310000063276us-gaap:OperatingSegmentsMembermat:AmericanGirlMember2021-12-310000063276us-gaap:OperatingSegmentsMembermat:AmericanGirlMember2020-12-310000063276us-gaap:OperatingSegmentsMembermat:AmericanGirlMember2019-12-310000063276us-gaap:OperatingSegmentsMember2021-12-310000063276us-gaap:OperatingSegmentsMember2020-12-310000063276us-gaap:OperatingSegmentsMember2019-12-310000063276us-gaap:CorporateNonSegmentMember2021-12-310000063276us-gaap:CorporateNonSegmentMember2020-12-310000063276us-gaap:CorporateNonSegmentMember2019-12-310000063276srt:NorthAmericaMembermat:NorthAmericaSegmentMember2021-01-012021-12-310000063276srt:NorthAmericaMembermat:NorthAmericaSegmentMember2020-01-012020-12-310000063276srt:NorthAmericaMembermat:NorthAmericaSegmentMember2019-01-012019-12-310000063276us-gaap:EMEAMembermat:InternationalSegmentMember2021-01-012021-12-310000063276us-gaap:EMEAMembermat:InternationalSegmentMember2020-01-012020-12-310000063276us-gaap:EMEAMembermat:InternationalSegmentMember2019-01-012019-12-310000063276mat:InternationalSegmentMembersrt:LatinAmericaMember2021-01-012021-12-310000063276mat:InternationalSegmentMembersrt:LatinAmericaMember2020-01-012020-12-310000063276mat:InternationalSegmentMembersrt:LatinAmericaMember2019-01-012019-12-310000063276mat:InternationalSegmentMembersrt:AsiaPacificMember2021-01-012021-12-310000063276mat:InternationalSegmentMembersrt:AsiaPacificMember2020-01-012020-12-310000063276mat:InternationalSegmentMembersrt:AsiaPacificMember2019-01-012019-12-310000063276mat:InternationalSegmentMember2021-01-012021-12-310000063276mat:InternationalSegmentMember2020-01-012020-12-310000063276mat:InternationalSegmentMember2019-01-012019-12-310000063276srt:NorthAmericaMember2021-12-310000063276srt:NorthAmericaMember2020-12-310000063276srt:NorthAmericaMember2019-12-310000063276us-gaap:NonUsMember2021-12-310000063276us-gaap:NonUsMember2020-12-310000063276us-gaap:NonUsMember2019-12-310000063276country:US2021-01-012021-12-310000063276country:US2020-01-012020-12-310000063276country:US2019-01-012019-12-310000063276country:US2021-12-310000063276country:US2020-12-310000063276country:US2019-12-310000063276us-gaap:CustomerConcentrationRiskMembermat:ThreeLargestCustomersMemberus-gaap:SalesRevenueNetMember2021-01-012021-12-310000063276mat:WalMartMember2021-01-012021-12-310000063276mat:TargetMember2021-01-012021-12-310000063276mat:AmazonMember2021-01-012021-12-310000063276mat:TwoLargestCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2020-01-012020-12-310000063276mat:WalMartMember2020-01-012020-12-310000063276mat:TargetMember2020-01-012020-12-310000063276mat:AmazonMember2020-01-012020-12-310000063276mat:TwoLargestCustomersMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2019-01-012019-12-310000063276mat:WalMartMember2019-01-012019-12-310000063276mat:TargetMember2019-01-012019-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:CostOfSalesMember2021-01-012021-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:CostOfSalesMember2020-01-012020-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:CostOfSalesMember2019-01-012019-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2019-01-012019-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMember2021-01-012021-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMember2020-01-012020-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMember2019-01-012019-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:EmployeeSeveranceMember2020-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:EmployeeSeveranceMember2021-01-012021-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:EmployeeSeveranceMember2021-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:OtherRestructuringMember2020-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:OtherRestructuringMember2021-01-012021-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:OtherRestructuringMember2021-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMember2020-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMember2021-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:EmployeeSeveranceMember2019-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:EmployeeSeveranceMember2020-01-012020-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:OtherRestructuringMember2019-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMemberus-gaap:OtherRestructuringMember2020-01-012020-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMember2019-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMembersrt:MinimumMember2021-12-310000063276mat:OptimizingForGrowthFormerlyCapitalLightInitiativeMembersrt:MaximumMember2021-12-310000063276country:MXus-gaap:LandAndBuildingMember2021-01-012021-12-3100000632762020-05-310000063276us-gaap:EmployeeSeveranceMember2021-01-012021-12-310000063276us-gaap:OtherRestructuringMember2021-01-012021-12-310000063276mat:StructuralSimplificationCostSavingsProgramMember2021-01-012021-12-310000063276us-gaap:OtherNoncurrentAssetsMember2021-12-310000063276us-gaap:OtherNoncurrentAssetsMember2020-12-310000063276us-gaap:OtherNoncurrentLiabilitiesMember2021-12-310000063276us-gaap:OtherNoncurrentLiabilitiesMember2020-12-310000063276mat:PeriodOfExpirationWithinFiveYearsMember2021-12-310000063276mat:PeriodOfExpirationBeyondFiveYearsMember2021-12-310000063276mat:NoExpirationDateMember2021-12-310000063276mat:FederalAndStateTaxAuthorityMember2021-12-310000063276us-gaap:ForeignCountryMember2021-12-310000063276mat:FederalAndStateTaxAuthorityMember2020-12-310000063276us-gaap:ForeignCountryMember2020-12-310000063276us-gaap:OperatingIncomeLossMember2021-01-012021-12-310000063276us-gaap:OperatingIncomeLossMember2020-01-012020-12-310000063276us-gaap:OperatingIncomeLossMember2019-01-012019-12-310000063276us-gaap:OtherNonoperatingIncomeExpenseMember2021-01-012021-12-310000063276us-gaap:OtherNonoperatingIncomeExpenseMember2020-01-012020-12-310000063276us-gaap:OtherNonoperatingIncomeExpenseMember2019-01-012019-12-310000063276srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMemberus-gaap:RetainedEarningsMember2018-01-010000063276srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMembermat:ToolingMisstatementMemberus-gaap:RetainedEarningsMember2018-01-010000063276srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMemberus-gaap:RetainedEarningsMembermat:OtherMisstatementsMember2018-01-010000063276srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMemberus-gaap:RetainedEarningsMember2020-01-010000063276srt:ScenarioPreviouslyReportedMember2020-12-310000063276srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember2020-12-310000063276srt:ScenarioPreviouslyReportedMember2020-01-012020-12-310000063276srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember2020-01-012020-12-310000063276srt:ScenarioPreviouslyReportedMember2019-01-012019-12-310000063276srt:RevisionOfPriorPeriodErrorCorrectionAdjustmentMember2019-01-012019-12-310000063276us-gaap:AllowanceForCreditLossMember2020-12-310000063276us-gaap:AllowanceForCreditLossMember2021-01-012021-12-310000063276us-gaap:AllowanceForCreditLossMember2021-12-310000063276us-gaap:AllowanceForCreditLossMember2019-12-310000063276us-gaap:AllowanceForCreditLossMember2020-01-012020-12-310000063276us-gaap:AllowanceForCreditLossMember2018-12-310000063276us-gaap:AllowanceForCreditLossMember2019-01-012019-12-310000063276us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2020-12-310000063276us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2021-01-012021-12-310000063276us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2021-12-310000063276us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2019-12-310000063276us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2020-01-012020-12-310000063276us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2018-12-310000063276us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember2019-01-012019-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2021
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.
El Segundo, CA 90245-5012
(Address of principal executive offices)
Registrant’s telephone number, including area code (310) 252-2000
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
______________________________________________________
 Securities registered pursuant to Section 12(g) of the Act:
NONE
______________________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  ý    No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ¨    No  ý
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  ý    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  ý    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 ý  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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ý    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes      No  
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $7,014,261,001 based upon the closing market price as of the close of business June 30, 2021, the last business day of the registrant’s most recently completed second fiscal quarter.
Number of shares outstanding of registrant’s common stock, $1.00 par value, as of February 14, 2022: 352,240,900 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Mattel, Inc. 2022 Proxy Statement, filed with the Securities and Exchange Commission (“SEC”) within 120 days after the closing of the registrant's fiscal year (incorporated into Part III to the extent stated herein).



MATTEL, INC. AND SUBSIDIARIES
  Page
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
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 Annual Report on Form 10-K 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," "believes," and "targeted," among others, generally identify forward-looking statements. These forward-looking statements are based on currently available operating, financial, economic, and other information and assumptions, and are subject to a number of significant risks and uncertainties. A variety of factors, many of which are beyond Mattel's control, could cause actual future results to differ materially from those projected in the forward-looking statements, and are currently, and in the future may 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 and uncertainty regarding the COVID-19 pandemic (and actions taken in response to it by governments, businesses, and individuals) on Mattel's business operations, financial results and financial position and on the global economy, including its impact on Mattel's sales; (ii) Mattel’s ability to design, develop, produce, manufacture, source, ship, and distribute products on a timely and cost-effective basis; (iii) sufficient interest in and demand for the products and entertainment Mattel offers by retail customers and consumers to profitably recover Mattel’s costs; (iv) downturns in economic conditions affecting Mattel’s markets which can negatively impact retail customers and consumers, and which can result in lower employment levels and lower consumer disposable income and spending, including lower spending on purchases of Mattel’s products; (v) 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; (vi) potential difficulties or delays Mattel may experience in implementing cost savings and efficiency enhancing initiatives; (vii) 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; (viii) currency fluctuations, including movements in foreign exchange rates and inflation, which can lower Mattel’s net revenues and earnings, and significantly impact Mattel’s costs; (ix) the concentration of Mattel’s customers, potentially increasing the negative impact to Mattel of difficulties experienced by any of Mattel’s customers, such as bankruptcies or liquidations or a general lack of success, or changes in their purchasing or selling patterns; (x) the inventory policies of Mattel’s retail customers, as well as the concentration of Mattel’s revenues in the second half of the year, which coupled with reliance by retailers on quick response inventory management techniques, increases the risk of underproduction, overproduction, and shipping delays; (xi) legal, reputational, and financial risks related to security breaches or cyberattacks; (xii) work disruptions, including as a result of supply chain disruption such as plant and port closures, which may impact Mattel’s ability to manufacture or deliver product in a timely and cost-effective manner; (xiii) the impact of competition on revenues, margins, and other aspects of Mattel’s business, including the ability to offer products that consumers choose to buy instead of competitive products, the ability to secure, maintain, and renew popular licenses from licensors of entertainment properties, and the ability to attract and retain talented employees and adapt to evolving workplace models; (xiv) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xv) changes in laws or regulations in the United States and/or in other major markets, such as China or Russia, in which Mattel operates, including, without limitation, with respect to taxes, tariffs, trade policies, or product safety, as well as political and/or economic instability in those markets, which may increase Mattel’s product costs and other costs of doing business, and reduce Mattel’s earnings; (xvi) failure to realize the planned benefits from any investments or acquisitions made by Mattel; (xvii) the impact of other market conditions or third party actions or approvals, including those that result in any significant failure, inadequacy, or interruption from vendors or outsourcers, which could reduce demand for Mattel’s products, delay or increase the cost of implementation of Mattel’s programs, or alter Mattel’s actions and reduce actual results; (xviii) changes in financing markets or the inability of Mattel to obtain financing on attractive terms; (xix) the impact of litigation, arbitration, or regulatory decisions or settlement actions; (xx) Mattel's ability to navigate regulatory frameworks in connection with new areas of investment, product development, or other business activities, such as non-fungible tokens and cryptocurrency; (xxi) uncertainty from the expected discontinuance of London Interbank Offer Rate ("LIBOR") and transition to any other interest rate benchmark; and (xxii) other risks and uncertainties detailed in Part I, Item 1A "Risk Factors." Mattel does not update forward-looking statements and expressly disclaims any obligation to do so, except as required by law.
3


PART I
Item 1.    Business.
Throughout this report "Mattel" refers to Mattel, Inc. and/or one or more of its family of companies. Mattel is a leading global toy company and owner of one of the strongest catalogs of children’s and family entertainment franchises in the world. Mattel creates innovative products and experiences that inspire, entertain, and develop children through play. Mattel is focused on the following evolved strategy to grow its intellectual property ("IP") driven toy business and expand its entertainment offering:
Accelerate topline growth through scaling Mattel’s portfolio, growing franchise brands, and advancing e-commerce and direct-to-consumer business, and increasing profitability by continuing to optimize operations; and
Expand entertainment offering to capture the full value of Mattel's IP in highly accretive business verticals, including content, consumer products, and digital experiences.
Mattel is the owner of a portfolio of iconic brands and partners with global entertainment companies to license other intellectual property. Mattel's portfolio of owned and licensed brands and products are organized into the following categories:
Dolls—including brands such as Barbie, Monster High, American Girl, Polly Pocket, Spirit (Universal), and Enchantimals. Mattel's Dolls portfolio is driven by the flagship Barbie brand and a collection of complementary brands offered globally. Empowering girls since 1959, Barbie has inspired the limitless potential of every girl by showing them that they can be anything. With an extensive portfolio of dolls and accessories, content, gaming, and lifestyle products, American Girl is best known for imparting valuable life lessons through its inspiring dolls and books, featuring diverse characters from past and present. Its products are sold directly to consumers via its catalog, website, and proprietary retail stores.
Infant, Toddler, and Preschool—including brands such as Fisher-Price and Thomas & Friends, Power Wheels, and Fireman Sam. As a leader in play and child development, Fisher-Price’s mission is to provide meaningful solutions for parents and enrich children’s lives from birth to school readiness, helping families get the best possible start. Thomas & Friends is an award-winning preschool train brand franchise that brings meaningful life lessons of friendship and teamwork to kids through content, toys, live events, and other lifestyle categories.
Vehicles—including brands such as Hot Wheels, including Hot Wheels Monster Trucks and Hot Wheels Mario Kart (Nintendo), Matchbox, and CARS (Disney Pixar). In production for over 50 years, Hot Wheels continues to push the limits of performance and design and ignites the challenger spirit of kids, adults, and collectors. From die-cast vehicles to tracks, playsets, and accessories, the Mattel Vehicles portfolio has broad appeal that engages and excites kids of all ages.
Action Figures, Building Sets, Games, and Other—including brands such as Masters of the Universe, MEGA, UNO, Lightyear (Disney Pixar), Jurassic World (NBCUniversal), WWE, and Star Wars (Disney). Mattel’s action figure portfolio is comprised of product lines associated with licensed entertainment franchises that are driven by major theatrical releases, such as Lightyear and Jurassic World, as well as product lines from Mattel’s owned IP, including Masters of the Universe. As the challenger brand in Building Sets, MEGA sparks creativity through the power of connection with builders of all ages and fans of global franchises. UNO is the classic matching card game that is easy to learn and fast fun for everyone. Other includes Plush, which contains product offerings associated with theatrical releases from Mattel’s licensed entertainment franchises.
Business Segments
Mattel's operating segments are: (i) North America, which consists of the United States and Canada; (ii) International; and (iii) American Girl.  The North America and International segments sell products across Mattel's categories, although some products are developed and adapted for particular international markets.
For additional information on Mattel’s worldwide gross billings by brand category, see Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations."
4


North America Segment
The North America segment markets and sells toys and consumer products in the United States and Canada across all of Mattel's categories.
Dolls
Barbie will continue to deliver innovation, purpose-driven marketing campaigns, and engaging toys connected to a strong system of play. Barbie has broad product offerings, with product lines designed to appeal to children from ages three to nine, complemented by a Barbie Signature line with high-quality dolls that appeal to fans of all ages. In 2022, Barbie will be featured in four Netflix content releases, introduce exciting new launches in the Extra and Reveal product lines, and introduce high profile partnerships and pop culture collaborations, all while celebrating the 60th anniversary of the Dreamhouse and the launch of an all-new Dream Camper.
In 2022, Polly Pocket will refresh its product offering with new compact playset innovation, brand new themes, and the fourth season of its popular animated content series on streaming and broadcast platforms globally. There are also two new product launches in Fall 2022; a product line tied to Chris "Ludacris" Bridges' series "Karma's World" and the much-anticipated re-launch of the powerhouse franchise Monster High.
Infant, Toddler, and Preschool
In 2022, Fisher-Price will continue its focus on surprising and delighting consumers as a trusted partner for families with infants and preschoolers, by continuing to create brand love through innovative products and inviting adults back into the world of childhood. Design-led innovation will continue to drive new product offerings, including Meditation Mouse, a calming toy for toddlers designed to teach self-soothing techniques, and expansion of the Linkamals product line to toddlers. Mattel will also scale its portfolio of Little People products to include Barbie's Lil' Dreamhouse and Hot Wheel's Racing Loops. New preschool toys from Imaginext will include product lines associated with highly-anticipated theatrical releases: The Batman (Warner Brothers), Jurassic World: Dominion (NBCUniversal), and Lightyear (Disney Pixar).
Vehicles
In 2022, industry leader Hot Wheels will look to continue its strong momentum as a multigenerational franchise with consumer interest levels at historic highs. Hot Wheels product offerings will excite and delight with revitalized Hot Wheels City playsets for expanded fun across the system of play, new product lines for the Jurassic World: Dominion (NBCUniversal) and Lightyear (Disney Pixar) theatrical releases, and digital ways to collect with the NFT Garage series. In the second half of the year, Hot Wheels will enter new vehicle play patterns and categories, all while upholding the quality and performance of Hot Wheels. Mattel will also continue to partner with Disney Pixar for CARS, driving excitement around the new content CARS on the Road by launching an all-new content-inspired product line in Fall 2022. Finally, die-cast category pioneer Matchbox will continue year two of its re-launch with exciting new products and an evolution of the “Drive Your Adventure” brand campaign that will feature exciting new licenses, and new episodes of the popular series on YouTube Matchbox Adventures.
Action Figures, Building Sets, Games, and Other
Mattel Action Figures will continue to collaborate with key licensor partners, such as Disney, NBCUniversal, WWE, and Microsoft, to bring innovative products to the global marketplace. Key 2022 product lines to be based on entertainment franchises include NBCUniversal’s Jurassic World: Dominion, Minions: Rise of Gru, and Disney Pixar’s Lightyear, each with a theatrical release scheduled for Summer 2022. Mattel will complement its portfolio with the continued expansion of Masters of the Universe. Masters of the Universe products will be bolstered by more Netflix animated content coming in 2022 and global brand support targeted to both new and existing fans.
In Building Sets, MEGA sparks creativity through the power of connection with builders of all ages and fans of global franchises. Partnerships with some of the world’s top franchises including Pokémon, Barbie, Hot Wheels, and Paw Patrol, invite consumers to try MEGA building sets, while innovative building play, authentic details, compatible quality, and accessible value encourages consumers to stay in the MEGA building collection. In 2022, parents of preschoolers can discover how the MEGA Bloks preschool building system enhances playtime and early childhood development beyond the Big Building Bag.
Mattel Games consists of some of the most beloved Games IP in the world including UNO, Pictionary, Skip-Bo, Blokus, and many others. In 2022, UNO will introduce a new card-based extension to its portfolio, UNO All Wild and lean deeper into collectible cards with UNO Ultimate Marvel. Additionally, Mattel will introduce new game extensions and partnerships that celebrate pop culture. Mattel will also continue to extend key brands and products, including a new licensed extension of the Pictionary line, Pictionary Air.
5


Mattel Plush will collaborate with partners Disney’s Lucasfilm, Pixar, and Marvel, Microsoft’s Minecraft, NBCUniversal’s Jurassic World, and many more. In 2022, the Plush portfolio is expected to benefit from multiple tentpole moments capitalizing on this strong entertainment slate.
International Segment
Products marketed and sold by the International segment are generally the same as those marketed and sold by the North America segment, although some are developed or adapted for particular international markets. Mattel’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% of worldwide consolidated net sales during 2021.
American Girl Segment
The American Girl segment is a direct marketer, retailer, and children’s publisher dedicated to its mission to help girls grow up with confidence and character. American Girl is best known for its line of historical and contemporary characters that feature 18” dolls, books, and accessories that inspire girls to face the world with courage, resilience, and kindness. The contemporary Truly Me and Create Your Own lines encourage girls to express their imaginations and creativity by choosing a doll that looks like them or custom-creating one that’s completely unique from more than one million options. Bitty Baby introduces younger girls to nurturing play until they are ready for WellieWishers, a sweet group of girls who focus on empathy and being a good friend. American Girl also publishes best-selling fiction and non-fiction books, as well as an array of popular digital content. The American Girl segment sells products directly to consumers via its catalog, website, in its proprietary retail stores in the United States, at select retailers nationwide, and at specialty boutiques and franchise stores in Canada.
In January 2022, American Girl introduced its newest Girl of the Year, Corinne Tan. Corinne is a Chinese American growing up with her family in Aspen, Colorado. She loves hitting the slopes, being a big sister, and training her new puppy to be a search-and-rescue dog.
Competition and Industry Background
Mattel is a worldwide leader in the manufacture, marketing, and sale of toys, games, and other products related to play, learning, and development. Competition in the toy industry is based primarily on quality, play value, brands, and price. Mattel offers a diverse range of products for children of all ages and families that include, among others, toys for infants and preschoolers, dolls, vehicles, action figures, construction toys, youth electronics, games, including digital, puzzles, plush, educational toys, technology-related products, media-driven products, and fashion-related toys. The North America segment competes with several large toy companies, including Hasbro, Jazwares, Just Play Products, LEGO, MGA Entertainment, Melissa & Doug, Spin Master, VTech, Zuru, 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, LEGO, MGA Entertainment, Playmobil, Ravensburger, Simba, 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’s book publishers and retailers.
Competition among the above companies is intensifying due to trends towards shorter life cycles for individual toy products and an increasing use of more sophisticated technology among consumers. In addition, Mattel competes with companies that sell non-toy products, such as electronic consumer products, video games, as well as content and other entertainment companies.  Competition continues to be heavily influenced by the fact that a small number of retailers account for a large portion of all toy sales, allocate the shelf space from which toys are viewed, and have direct contact with parents and children through in-store and online purchases. Such retailers can and do promote their own private-label toys, facilitate the sale of competitors’ toys, showcase toys online based on proprietary algorithms, and allocate shelf space to one type of toy over another. Online distributors are able to promote a wide variety of toys and represent a wide variety of toy manufacturers.
6


Seasonality
Mattel’s business is highly seasonal, with consumers making a large percentage of all toy purchases during the traditional holiday season. A significant portion of Mattel’s customers’ purchasing occurs in the third and fourth quarters of Mattel’s fiscal year in anticipation of holiday buying. These seasonal purchasing patterns and requisite production lead times create risk to Mattel’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 increase the risk 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. Additionally, as retailers manage their inventories, Mattel experiences cyclical ordering patterns for products and product lines that may cause its sales to vary significantly from period to period.
In anticipation of retail sales during the traditional holiday season, Mattel significantly increases its production in advance of the peak selling period, resulting in a corresponding build-up of inventory levels in the first three quarters of its fiscal year. Seasonal shipping patterns result in significant peaks in the third and fourth quarters in the respective levels of inventories and accounts receivable, which result in seasonal working capital financing requirements. See Part II, Item 8 "Financial Statements and Supplementary Data—Note 5 to the Consolidated Financial Statements—Seasonal Financing and Debt."
Sales
Mattel’s products are sold throughout the world. Products within the North America segment are sold directly to retailers, including omnichannel retailers, discount and free-standing toy stores, chain stores, department stores, other retail outlets, and, to a limited extent, wholesalers. Mattel also operates small retail outlets at certain corporate offices as a service to its employees and as an outlet for its products. Products within the International segment 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. Mattel also has retail outlets in Latin America that serve as outlets for its products. American Girl products and its children's publications are sold directly to consumers and select retailers in North America. Mattel has retail space in Chicago, Illinois; Los Angeles, California; and New York, New York for its flagship American Girl stores, and in 9 other cities across the United States for its American Girl boutique stores, each of which features children’s products from the American Girl segment. Additionally, Mattel sells certain of its products online through websites of one or more of its subsidiaries.
During 2021, Mattel’s three largest customers (Walmart at $1.17 billion, Target at $0.74 billion, and Amazon at $0.62 billion) accounted for approximately 46% of worldwide consolidated net sales. During 2020, Mattel's three largest customers (Walmart at $1.07 billion, Target at $0.62 billion, and Amazon at $0.47 billion) accounted for approximately 47% of worldwide consolidated net sales. Within countries in the International segment, there is also a concentration of sales to certain large customers that do not operate in the United States, none of which exceeded 10% of worldwide consolidated net sales. The customers and the degree of concentration vary depending upon the region or nation. See Part I, Item 1A "Risk Factors" and Part II, Item 8 "Financial Statements and Supplementary Data—Note 13 to the Consolidated Financial Statements—Segment Information."
Licenses and Distribution Agreements
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’s business and operations.
Mattel has entered into agreements to license entertainment properties, including among others, Disney Enterprises (including Disney Princess and Frozen, Star Wars, Pixar (including CARS, Lightyear, and Toy Story) and certain other Disney films and television properties), NBCUniversal (including Fast and Furious, Jurassic World, Minions, and Spirit), Viacom International relating to its Nickelodeon properties (including Blaze and the Monster Machines), Warner Bros. (including Batman, Superman, Wonder Woman, and Justice League), Microsoft (including Halo and Minecraft), WWE, and Sanrio.
Royalty expense for 2021, 2020, and 2019 was $184.3 million, $158.5 million, and $220.2 million, respectively. See Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Commitments" and Part II, Item 8 "Financial Statements and Supplementary Data—Note 12 to the Consolidated Financial Statements—Commitments and Contingencies."
Mattel licenses a number of its trademarks and other property rights to others for use in connection with the sale of their products. Mattel also distributes some third-party finished products that are independently designed and manufactured.
7


Trademarks, Copyrights, and Patents
Most of Mattel’s products are sold under 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 customarily seeks trademark, copyright, and/or patent protection covering its products, and it owns or has applications pending or registrations for U.S. and foreign trademarks, copyrights, and patents covering many of its products. Although a number of these trademarks, copyrights, and patents relate to product lines that are significant to Mattel’s business and operations, Mattel does not believe it is dependent on a single trademark, copyright, or patent. Mattel believes its rights to these properties are adequately protected, but there can be no assurance that its rights can be successfully asserted in the future or will not be invalidated, circumvented, or challenged.
Manufacturing and Materials
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’s principal manufacturing facilities are located in China, Indonesia, Malaysia, Mexico, and Thailand. In conjunction with Mattel's cost savings programs, Mattel discontinued production in 2019 at three plants located in China, Indonesia, and Mexico and discontinued production in 2021 at its plant located in Canada. To help avoid disruption of its product supply due to political instability, civil unrest, economic instability, changes in government policies or regulations, natural and manmade disasters, and other risks, Mattel produces its products in multiple facilities across multiple countries. Mattel believes that the existing production capacity at its owned and third-party manufacturers’ facilities is sufficient to handle expected volume in the foreseeable future.
Mattel bases its production schedules for toy products on customer orders and forecasts, taking into account historical trends, results of market research, and current market information. Actual shipments of products ordered and order cancellation rates are affected by consumer acceptance of product lines, strength of competing products, marketing strategies of retailers, changes in buying patterns of both retailers and consumers, and overall economic conditions. Unexpected changes in these factors could result in a lack of product availability or excess inventory in a particular product line.
The majority of Mattel’s raw materials are available from numerous suppliers but may be subject to fluctuations in price. See Part I, Item 1A "Risk Factors."
Advertising and Marketing
Mattel supports its product lines with extensive advertising and consumer promotions. Advertising takes place at varying levels throughout the year and peaks during the traditional holiday season. Advertising includes television and radio commercials, social media, and magazine, newspaper, and internet advertisements. Promotions include in-store displays, sweepstakes, merchandising materials, major events focusing on products, and tie-ins with various consumer products companies.
During 2021, 2020, and 2019, Mattel incurred advertising and promotion expenses of $545.7 million (10.0% of net sales), $525.8 million (11.5% of net sales), and $550.2 million (12.2% of net sales), respectively.
Financial Instruments
Currency exchange rate fluctuations may impact Mattel’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 24 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.
8


For additional information regarding foreign currency contracts, see Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" and Part II, Item 8 "Financial Statements and Supplementary Data—Note 11 to the Consolidated Financial Statements—Derivative Instruments."
Government Regulations
Mattel’s products sold in the United States are subject to the provisions of the Consumer Product Safety Act, as amended by the Consumer Product Safety Improvement Act of 2008, 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’s products sold worldwide are subject to the provisions of similar laws and regulations in many jurisdictions, including the European Union ("EU") and Canada. Mattel believes that it is in substantial compliance with these laws and regulations.
Mattel maintains a quality control program to help ensure compliance with applicable product safety requirements. Nonetheless, Mattel has experienced, and may in the future experience, issues in products that result in recalls, withdrawals, or replacements of products. A product recall could have a material adverse effect on Mattel’s results of operations and financial condition, depending on the product affected by the recall and the extent of the recall efforts required. A product recall could also negatively affect Mattel’s reputation and the sales of other Mattel products. See Part I, Item 1A "Risk Factors."
Mattel’s advertising and marketing activities are subject to the Federal Trade Commission Act and the Children’s Television Act of 1990 and may also be subject to other rules and regulations promulgated by the Federal Trade Commission, and the Federal Communications Commission, as well as laws of certain countries that regulate advertising, advertising to children, and related activities. In addition, Mattel’s web-based products and services and other online and digital communications activity are or may be subject to U.S. and foreign privacy-related regulations, including the U.S. Children’s Online Privacy Protection Act of 1998 and the EU General Data Protection Regulation and related national regulations. Privacy-related laws also exist in some U.S. states, including the recently enacted California Consumer Protection Act. Mattel believes that it is in substantial compliance with these laws and regulations.
Mattel’s worldwide operations are subject to the requirements of various environmental laws and regulations in the jurisdictions where those operations are located. Mattel believes that it is in substantial compliance with these laws and regulations. Mattel’s operations are from time to time the subject of investigations, conferences, discussions, and negotiations with various federal, state, and local environmental agencies within and outside the United States with respect to the discharge or cleanup of hazardous waste. Mattel is not aware of any material cleanup liabilities. In addition, Mattel continues to monitor existing and pending environmental laws and regulations within the United States and elsewhere related to climate change and greenhouse gas emissions.
Mattel is subject to various other federal, state, local, and international laws and regulations applicable to its business. Mattel believes that it is in substantial compliance with these laws and regulations.
Human Capital
Mattel believes recruiting, developing, and motivating a talented global workforce are key to its long-term growth and success. Through Mattel’s focus on employee engagement, diversity, equity, and inclusion, training and development, health and safety, and employee well-being, Mattel endeavors to create a supportive and rewarding environment where employees are encouraged to explore, innovate, grow, and lead.
As of December 31, 2021, Mattel had approximately 36,300 employees (including temporary and seasonal employees) working in over 35 countries worldwide to create innovative products and experiences that inspire, entertain, and develop children through play. Approximately 31,900 employees (88% of the total workforce) are located outside the United States, with a significant global manufacturing labor workforce of approximately 27,000 employees. The remaining workforce focuses on the design, marketing, sales, finance, and other aspects of Mattel’s business.
9


Mattel’s Board of Directors and Governance and Social Responsibility Committee are involved in the oversight of how the company fosters its culture and receive regular updates on the company’s workforce management, including its diversity, equity, and inclusion initiatives.
Employee Engagement
Mattel regularly collects feedback to measure employee engagement on an ongoing basis through its annual global engagement survey, which measures employee job satisfaction and is used to help improve the employee experience and strengthen its workplace culture.
Diversity, Equity, and Inclusion
Mattel is committed to fostering a culture where all employees have the opportunity to realize their full potential. Mattel values and shares a wide range of ideas and voices that help evolve and broaden its perspectives, with a reach that extends to consumers, customers, business partners, and suppliers.
In August 2021, Mattel published its 2020 Citizenship Report, which described goals and initiatives related to its diversity, equity, and inclusion efforts. The report highlighted Mattel’s near-term progress toward achieving its goals as of April 2021, including the following achievements:
Achieved 100% base pay equity globally for all employees performing similar work with comparable roles and experience in similar markets. This includes base pay equity by gender globally and pay equity by ethnicity in the United States.

Increased representation of women at all levels of the organization, with women comprising 58% of Mattel’s global workforce and 49% of all management positions, excluding manufacturing labor. Mattel remains focused on actions to increase such representation, including strengthening relationships with schools, networks, and organizations to establish a talent pipeline of women for Technology, Supply Chain, and Finance positions.
We believe Mattel's Employee Resource Groups ("ERGs") are an integral component of fostering an inclusive culture and enhancing engagement at Mattel. Mattel employees have created and lead ten ERGs which, bring together members and allies of underrepresented identities across the global organization. The ERGs organize learning opportunities, cultural celebrations, and community outreach, elevate important issues, encourage open and honest conversations, and collect critical feedback.
Mattel has been recognized for its diversity, equity, and inclusion efforts, including by the Human Rights Campaign Foundation as one of the country’s top places to work for LGBTQ+ equality. For the third consecutive year, Mattel received a perfect score on the Human Rights Campaign Foundation’s Corporate Equality Index, a leading benchmarking survey and report measuring corporate policies and practices related to LGBTQ+ workplace equality. Mattel was also ranked among Forbes 2021 World’s Best Employers and Best Employers for Women; named to Fast Company’s List of the 100 Best Workplaces for Innovators in 2021 and Newsweek’s 100 Most Loved Workplaces for 2021; and recognized as a Great Place to Work for 2021.
Training and Development
We believe continuously developing skills and capabilities for the future is essential to operating as an IP-driven, high-performing toy 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 2021, employees at all levels around the globe participated in several hundred thousand hours of learning content across professional, management development, and technical training. This included both online classes and instructor-led training.
Health and Safety, and Employee Well-Being
Mattel is focused on creating a safe and healthy workplace for all of its employees. In 1997, Mattel became one of the first companies to create standards for responsible manufacturing. Since then, these principles have become the foundation for Mattel's Responsible Supply Chain Commitment, a comprehensive set of standards and oversight processes that establish Mattel’s expectations for responsible factory working conditions, environmental protections, social compliance, health, and safety in both its own manufacturing facilities and those of its supply chain partners.
10


Over the course of the COVID-19 pandemic, Mattel has prioritized protecting the health and safety of its employees while at the same time mitigating the disruption to its business. Mattel implemented stringent health and safety measures, process controls, operating procedures, and training to help provide a safe and sanitary working environment for employees. Mattel also transitioned employees, as appropriate based on role, to a work-from-home system and increased the use of virtual meeting technologies.
Mattel offers several benefits to promote employee well-being, including flexible work hours and/or paid time off, health and welfare insurance options, retirement plans, and basic and supplemental employee life insurance for eligible individuals. To supplement Mattel’s comprehensive health and wellness programs, it introduced specific programs targeted at unique issues arising during the pandemic, including working from home, maintaining work/life balance, and improving health and happiness.
Available Information
Mattel files its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the SEC. The SEC maintains an Internet website that contains reports, proxy, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
Mattel’s internet website address is http://corporate.mattel.com. Mattel makes available on its internet website, free of charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC.
Item 1A.    Risk Factors.
If any of the risks, events, and uncertainties described in the cautionary risk factors listed below actually occurs, Mattel’s business, financial condition and results of operations could be adversely affected, and such effects could at times be material. The risk factors listed below are not exhaustive. Other sections of this Annual Report on Form 10-K include additional factors that could materially and adversely impact Mattel’s business, financial condition and results of operations. Moreover, Mattel operates in a very competitive and rapidly changing environment. New factors emerge from time to time, and it is not possible for management to predict the impact of all of these factors on Mattel’s business, financial condition, or results of operations, or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. These factors are also currently, and in the future may be, amplified by the COVID-19 pandemic, the global economic climate and additional or unforeseen circumstances, developments, or risks. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this Annual Report on Form 10-K and any other public statement made by Mattel or its representatives may turn out to be wrong. Mattel expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.
Business Operations
Mattel is not always able to successfully identify and/or satisfy consumer preferences, which could cause its business, financial condition, and results of operations to be adversely affected.
Mattel’s business and operating results depend largely upon the appeal of its products, driven by both innovation and marketing. Consumer preferences, particularly with children as the end users of Mattel’s products, are continuously changing. 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. Mattel offers a diverse range of products for children of all ages and families that includes, among others, toys for infants 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. Mattel competes domestically and internationally with a wide range of large and small manufacturers, marketers, and sellers of toys, video games, consumer electronics such as tablets and mobile devices, and other play products, as well as retailers, which means that Mattel’s market position is always at risk. Mattel’s ability to maintain its current product sales and increase its product sales or establish product sales with new, innovative toys, depends on Mattel’s ability to satisfy play preferences, enhance existing products, develop and introduce new products, and achieve market acceptance of these products. 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, and an evolving path to purchase.
11


In addition, entertainment media has become increasingly important for consumers to experience Mattel's brands and its partners' brands. The extent to which Mattel's entertainment offerings are successful can significantly impact the demand for its products and its financial performance. Consumer acceptance of Mattel’s entertainment offerings is impacted by factors beyond its control, including critical reviews, promotions, the popularity of movies and television programs released into the marketplace at or near the same time, the availability of alternative forms of entertainment, general economic conditions, and public preferences generally.
Mattel's failure to successfully meet the challenges outlined above in a timely and cost-effective manner could decrease demand for its products and entertainment offerings and may adversely affect Mattel’s business, financial condition, and results of operations.
High levels of competition and low barriers to entry make it difficult to achieve, maintain, or build upon the success of Mattel’s brands, products, and product lines.
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’s products. In addition, competition for access to entertainment properties has and may continue to lessen Mattel’s ability to secure, maintain, and renew popular licenses to entertainment products developed by other parties and licensed to Mattel, or require Mattel to pay licensors higher royalties and higher minimum guaranteed payments 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 entertainment industry are low. In a very short period of time, new market participants with a popular product idea or entertainment property can become a significant source of competition for Mattel and its products. Reduced demand for Mattel’s brands, products, and product lines as a result of these factors may adversely affect Mattel’s business, financial condition, and results of operations.
Inaccurately anticipating changes and trends in popular culture, media and movies, fashion, or technology can adversely affect Mattel’s sales, financial condition, and results of operations.
Successful movies and characters in children’s literature affect play preferences, and many products depend on media-based intellectual property licenses including trademarks, trade names, copyrights, patents, trade secrets, and rights under intellectual property license agreements and other agreements with third parties. 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’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, or impacts of COVID-19 such as delayed productions and theater closures, have at times in the past caused, and could in the future 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 expects that children will continue to be interested in product offerings incorporating sophisticated technology, such as video games, consumer electronics, and social and digital media, at increasingly younger ages. To the extent Mattel seeks to introduce sophisticated technology products, such products tend to have higher design, development, and production costs, follow longer timelines, and require different competencies compared to Mattel’s more traditional toys and games. The pace of change in product offerings and consumer tastes for sophisticated technology products is potentially even greater than for Mattel’s more traditional products, and consequently the window for consumer interest in such products may be shorter than for traditional toys and games.
Any inability by Mattel to accurately anticipate trends in popular culture, movies, media, fashion, or technology may cause its products not to be accepted by children, parents, or families and may adversely affect its sales, financial condition, and results of operations.
Mattel’s failure to successfully market or advertise its products could have an adverse effect on Mattel’s business, financial condition, and results of operations.
Mattel’s products are marketed worldwide through a diverse spectrum of advertising and promotional programs. Mattel’s ability to sell products is dependent in part upon the success of these programs. Mattel’s business, financial condition, and results of operations could be adversely affected by its failure to successfully market its products or by an increase in its media or other advertising or promotional costs.
12


Mattel’s business is highly seasonal, and its operating results depend, in large part, on sales during the relatively brief traditional holiday season. Events that disrupt Mattel’s business during its peak demand times can adversely and disproportionately affect Mattel’s business, financial condition, and results of operations.
Mattel’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 majority of retail sales occurring during the period from September through December. In recent years, many consumers have delayed their purchases until just before the holidays. As a result, Mattel’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.
In addition, as a result of the seasonal nature of Mattel’s business, Mattel may be adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events, such as public health crises and pandemics, terrorist attacks, economic shocks, severe weather due to climate change or otherwise, earthquakes or other catastrophic events, that harm the retail environment or consumer buying patterns during its key selling season, or by events, such as strikes, disruptions in transportation, or port delays, that interfere with the manufacture or shipment of goods during the critical months leading up to the holiday purchasing season.
Mattel has significant customer concentration, so that economic difficulties or changes in the purchasing policies or patterns of its key customers could have an adverse effect on Mattel’s business, financial condition, and results of operations.
A small number of customers account for a large share of Mattel’s worldwide consolidated net sales. In 2021, Mattel’s three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 46% of net sales (Walmart at $1.17 billion, Target at $0.74 billion, and Amazon at $0.62 billion) and its ten largest customers, in the aggregate, accounted for approximately 53% of net sales. This concentration exposes Mattel to risk of a material adverse effect if one or more of Mattel’s large customers were to significantly reduce purchases for any reason, favor competitors or new entrants, or increase their direct competition with Mattel by expanding their private-label business. Such risk has been exacerbated by the COVID-19 pandemic, which has resulted in increased reliance on Mattel's largest customers due to forced or voluntary store closures by its specialty retail customers. Customers make no binding long-term commitments to Mattel regarding purchase volumes and make all purchases by delivering one-time purchase orders. Any customer reducing its overall purchases of Mattel’s products, reducing the number and variety of Mattel’s products that it carries, and the shelf space allotted for Mattel’s products, or otherwise seeking to materially change the terms of the business relationship at any time could adversely affect Mattel’s business, financial condition, and results of operations.
Liquidity problems or bankruptcy of Mattel’s key customers could have an adverse effect on Mattel’s business, financial condition, and results of operations.
Mattel’s sales to customers are typically made on credit without collateral. There is a risk that key customers will not pay, or that payment may be delayed, because of bankruptcy, contraction of credit availability to such customers, weak retail sales, or other factors beyond the control of Mattel, which could increase Mattel’s exposure to losses from bad debts. In addition, when key customers cease doing business with Mattel as a result of bankruptcy, or significantly reduce the number of stores operated, it can have an adverse effect on Mattel’s business, financial condition, and results of operations.
Failure to successfully implement new initiatives or meet product introduction schedules can have an adverse effect on Mattel’s business, financial condition, and results of operations.
Mattel has 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’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’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. Failure to achieve any of these initiatives could harm Mattel’s business, financial condition, and results of operations.
13


From time to time, Mattel anticipates introducing new products, product lines, or brands at a certain time in the future. There is no guarantee that Mattel will be able to manufacture, source, ship, and distribute new or continuing products in a timely manner and on a cost-effective basis. Unforeseen delays or difficulties in the development process or significant increases in the planned cost of development for new Mattel products may cause the introduction date for products to be later than anticipated or, in some situations, may cause a product or new product introduction to be discontinued. Failure to successfully implement any of these initiatives or launches, or the failure of any of these initiatives or launches to produce the results anticipated by management, could have an adverse effect on Mattel’s business, financial condition, and results of operations.
Mattel’s business depends in large part on the success of its vendors and outsourcers, and Mattel’s brands and reputation are subject to harm from actions taken by third parties that are outside Mattel’s control. In addition, any significant failure, inadequacy, or interruption from such vendors or outsourcers could harm Mattel’s ability to effectively operate its business.
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 affecting the quality of these services or systems, results in risk of damage to Mattel’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’s operations, and significant capital investments could be required to remediate the problem.
The production and sale of private-label toys by Mattel’s retail customers may result in lower purchases of Mattel-branded products by those retail customers.
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 two of its largest retail customers, Walmart 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. In some cases, retailers who sell these private-label toys are larger than Mattel and have substantially more resources than Mattel.
Mattel depends on key personnel and may not be able to hire, retain, and integrate sufficient qualified personnel to maintain and expand its business.
Mattel’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. 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. If Mattel fails to retain, hire, train, and integrate qualified employees and contractors, Mattel may not be able to maintain or expand its business.
Market Conditions
The COVID-19 pandemic and actions taken by governments, businesses, and individuals in response to it could adversely affect Mattel’s business, financial position, sales, and results of operations.
The global COVID-19 pandemic and the actions taken by governments, businesses, and individuals in response to it have resulted in significant global economic disruption, including, but not limited to, temporary business closures, reduced retail traffic, volatility in financial markets, restrictions on travel, and safer-at-home protocols. Such disruptions in the markets in which Mattel, 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’s business, financial position, sales, and results of operations. Negative impacts may result from, among other things:
Declines in net sales as a result of retail store closures (including specialty retailers and Mattel’s brick-and-mortar American Girl retail stores), limited re-openings, evolving safer-at-home protocols, and limitations on the capacity of e-commerce in certain markets;
14


Disruptions to the design, development, manufacturing, and/or distribution operations of Mattel and/or its third-party suppliers resulting in limitations on Mattel’s ability to design, develop, manufacture, and distribute products effectively, efficiently, and in a timely manner;
Disruptions or restrictions on the ability of Mattel’s employees, suppliers, and manufacturers to work effectively, including due to illness, quarantines, government actions, and facility closures or other similar restrictions;
Increased operational risks, including increased risks of accounts receivable collection, insolvency of retailers (particularly specialty retailers), delays in payment, and negotiations with third parties over payment terms or the ability to perform under certain contracts or licenses; and
Any currently unforeseen effects of COVID-19.
Any one of these factors, or a combination thereof, could impact Mattel’s ability to meet demand for its products. To the extent any of these disruptions become prolonged or recur, particularly during seasonally high periods of production or distribution, Mattel’s ability to meet demand may be materially impacted.
Since mid-March 2020, the majority of Mattel’s corporate workforce has been working remotely. Mattel continues to actively develop a plan to safely bring employees back to its offices, which will be based on need and governmental, health, and safety guidelines.
The impact of the COVID-19 pandemic continues to be fluid and uncertain, making it difficult to forecast the ultimate impact it could have on Mattel’s future operations. If Mattel’s business experiences prolonged effects from the occurrence of adverse public health conditions due to COVID-19 or other similar public health incidents, Mattel’s business, financial position, sales, and results of operations could be materially impacted.
Significant increases in the price of commodities, transportation, or labor, if not offset by declines in other input costs, or a reduction or interruption in the delivery of raw materials, components, and finished products from Mattel’s vendors, could adversely affect Mattel’s business, financial condition, and results of operations.
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’s products may not be sustainable and could result in lower sales. Mattel’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, lockouts, an outbreak of a severe public health pandemic, 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, such as fuel or resin (which is an oil-based product used in plastics), or otherwise, have at times in the past and could in the future adversely affect Mattel’s business, financial condition, and results of operations.
Significant changes in currency exchange rates or the ability to transfer capital across borders could have an adverse effect on Mattel’s business, financial condition, and results of operations.
Mattel operates facilities and sells products in numerous countries outside the United States. During 2021, Mattel’s International segment net sales were 41% of Mattel’s total consolidated net sales. Furthermore, Mattel’s net investment in its foreign subsidiaries and its results of operations and cash flows are subject to changes in currency exchange rates and regulations. Highly inflationary economies of certain foreign countries can result in foreign currency devaluation, which negatively impacts Mattel’s profitability. 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’s ability to transfer capital across borders 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’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’s business, financial condition, and results of operations.
15


The deterioration of global economic conditions could adversely affect Mattel’s business, financial condition, and results of operations.
Mattel designs, manufactures, and markets a wide variety of toy products worldwide through sales to retailer customers and directly to consumers. Mattel’s performance is impacted by the level 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 job losses, foreclosures, bankruptcies, reduced access to credit, falling home prices, lower consumer confidence, and other macroeconomic factors that affect consumer spending behavior. Any of these factors can reduce the amount that consumers spend on the purchase of Mattel’s products. Deterioration of global economic conditions have at times in the past adversely affected Mattel's business and financial results. Future deterioration of global economic conditions or disruptions in credit markets 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 ability to raise additional capital if needed, or otherwise adversely affect Mattel’s business, financial condition, and results of operations. For instance, Mattel's business, financial condition and results of operations could be adversely affected by the economic impact of changes in trade relations among the United States and other countries, such as China, including the United States-Mexico-Canada Agreement which became effective in 2020, or changes in the EU, such as Brexit. For further discussion of these risks, see the below risk factor "Political developments, including trade relations, and the threat or occurrence of war or terrorist activities could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions."
In addition to experiencing potentially lower revenues during times of economic difficulty, in an effort to maintain sales during such times, Mattel may need to increase promotional spending or take other steps to encourage retailer and consumer purchase of its products. Those steps may increase costs and/or decrease operating margins and are not always successful.
An increasing portion of Mattel's business may come from new and emerging markets, and growing business in new and emerging markets presents additional challenges.
An increasing portion of Mattel's net revenues may come from new and emerging markets, including China, India, and Russia. 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 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.
Failure to properly manage the risks described above could adversely affect Mattel's business, financial condition, and results of operations.
Political developments, including trade relations, and the threat or occurrence of war or terrorist activities could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions.
Mattel’s business is worldwide in scope, including operations in over 50 countries and territories. Political instability, civil unrest, the deterioration of the political situation in a country in which Mattel has significant sales or operations, or the breakdown of trade relations between the United States and a foreign country in which Mattel has significant manufacturing facilities or other operations, could adversely affect Mattel’s business, financial condition, and results of operations. For example, a change in trade status between the 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 United States. The United States has commenced certain trade actions, including imposing increased tariffs on certain goods imported into the United States from China, which has resulted in retaliatory tariffs by China. In addition, the United States has commended certain trade actions as a result of the Russia-Ukraine conflict, which are widely expected to result in retaliatory measures or actions, including tariffs, by Russia. Any increased trade barriers or restrictions on global trade imposed by the United States, or further retaliatory trade measures taken by China, Russia, or other countries in response, could adversely affect Mattel's business, financial condition, and results of operations.
In addition, the occurrence of war or hostilities between countries or threat of terrorist activities, and the responses to and results of these activities, could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions.
16


Disruptions in Mattel’s manufacturing operations or supply chain due to political instability, civil unrest, or disease could adversely affect Mattel’s business, financial position, sales, and results of operations.
Mattel owns, operates, and manages manufacturing facilities and utilizes third-party manufacturers and suppliers throughout Asia, primarily in China, Indonesia, Malaysia, and Thailand, and in Mexico. The risk of political instability and civil unrest exists in certain of these countries, which could temporarily or permanently damage the manufacturing operations of Mattel or its third-party manufacturers located there. Outbreaks of communicable diseases have also been known to occur in certain of these countries. For example, the COVID-19 pandemic began in Wuhan, Hubei Province, China and has caused supply chain disruption for Mattel, its suppliers, and its customers that contributed to lower net sales in the first half of 2020 and may cause lower net sales to the extent they remain issues in the future. Other disruptions from public health crises such as these result from, among other things, workers contracting diseases, restrictions on factory openings, restrictions on travel, restrictions on shipping, and the closure of critical infrastructure. The design, development, and manufacture of Mattel’s products could suffer if a significant number of Mattel’s employees or the employees of its third-party manufacturers or their suppliers' contract communicable diseases, or if Mattel, Mattel’s third-party manufacturers, or their suppliers' are adversely affected by other impacts of such diseases. In addition, the contingency plans Mattel has developed to help mitigate the impact of disruptions in its manufacturing operations and supply chain may not prevent its business, financial position, sales, and results of operations from being adversely affected by a significant disruption to its manufacturing operations or suppliers.
Earthquakes or other catastrophic events out of Mattel’s control may damage its facilities or those of its contractors and adversely affect Mattel’s business, financial condition, and results of operations.
Mattel has significant operations near major earthquake faults, including its corporate headquarters in El Segundo, California. A catastrophic event where Mattel has important operations, such as an earthquake, tsunami, flood, typhoon, fire, or other natural or manmade disaster, including as a result of climate change, could disrupt Mattel’s operations or those of its contractors and impair production or distribution of its products, damage inventory, interrupt critical functions, or otherwise affect its business negatively, adversely affecting Mattel’s business, financial condition, and results of operations.
Global climate change and our commitments to reduce our carbon footprint presents challenges to our business that could adversely affect us.
The effects of global climate change create financial and operational risks to our business, both directly and indirectly. 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 climate change. In August 2021, Mattel announced its goal to reduce absolute Scope 1 and Scope 2 GHG emissions 50% by 2030. While Mattel has been and remains committed to being responsive to climate change and to reducing its carbon footprint, there can be no assurance that Mattel’s current and future strategic plans to achieve its goals will be successful, that related costs may not be higher than expected, that proposed regulation or deregulation related to climate change will not be more aggressive than Mattel’s sustainability measures and result in higher costs, or that any investments Mattel makes in furtherance of achieving such goals will meet expectations or any binding or non-binding legal standards regarding sustainability performance, any one of which could have an adverse effect on Mattel’s financial condition and results of operations. Mattel’s failure to achieve its goals regarding climate change could damage its reputation, causing investors, consumers, and other stakeholders to lose confidence in Mattel and its brands, and negatively impact Mattel’s operations. Additionally, consumers and customers may put an increased priority on purchasing products that are sustainably manufactured and packaged, requiring Mattel to incur increased costs for additional transparency, due diligence, and reporting.
Financial and Accounting
To the extent Mattel is unable to realize the anticipated cost savings from its previously announced cost savings programs or incurs additional and/or unexpected costs to realize such cost savings, Mattel's business, financial condition, and results of operations could be adversely affected.
Mattel has 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 $35.2 million, $40.6 million, and $37.6 million in 2021, 2020, and 2019, respectively, to achieve such cost savings, and expects to incur additional costs during 2022. There can be no assurance that Mattel will be able to realize the cost savings from its previously announced cost savings programs in the anticipated amounts or within the anticipated timeframes or at all. In addition, any cost savings that Mattel realizes may be offset, in whole or in part, by reductions in net sales or through increases in other expenses. Failure to realize the expected cost savings from these cost savings programs could have an adverse effect on Mattel’s business, financial condition, and results of operations.
17


The amounts of anticipated cost savings and anticipated expenses related thereto are based on Mattel’s current estimates, but they involve risks, uncertainties, assumptions, and other factors that may cause actual results, performance, or achievements to be materially different from those described herein. Assumptions relating to the plans and amounts related thereto involve subjective decisions and judgments with respect to, among other things, the estimated impact of certain operational adjustments, including marketing efficiency, labor management, material input cost fluctuations, plant transition costs, and other cost and savings adjustments, as well as future economic, competitive, industry and market conditions, and future business decisions, all of which are inherently uncertain and may be beyond the control of Mattel’s management. Although Mattel’s management believes these estimates and assumptions to be reasonable, there can be no assurance that the assumptions or estimates described herein will prove to be accurate or that the objectives and plans expressed will be achieved. Neither Mattel’s independent registered public accounting firm nor any other independent registered public accounting firm, has examined, compiled, or performed any procedures with respect to these amounts, nor have they expressed any opinion, or any other form of assurance, on such information or their achievability.
Accordingly, there can be no assurance that the anticipated cost savings will be realized or that the impact of the efforts to achieve such cost savings will not be significantly different than currently anticipated. Mattel undertakes no obligation to update or otherwise revise or reconcile its expectations regarding its cost savings efforts, whether as a result of new information, future events, or otherwise.
Mattel has in the past engaged, and may in the future engage, in acquisitions, mergers, dispositions, or other strategic transactions, which can affect Mattel's revenues, profit, profit margins, debt-to-capital ratio, capital expenditures, or other aspects of Mattel’s business. In addition, Mattel has certain anti-takeover provisions in its bylaws that may make it more difficult for a third party to acquire Mattel without its consent, which may adversely affect Mattel’s stock price.
Mattel regularly considers, and from time to time engages in, discussions and negotiations regarding acquisitions, mergers, dispositions, or other strategic transactions that could affect the profit, revenues, profit margins, debt-to-capital ratio, capital expenditures, or other aspects of Mattel’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’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’s stock price.
The level of returns on pension plan assets and the actuarial assumptions used for valuation purposes could affect Mattel’s earnings in future periods. Changes in standards and government regulations could also affect its pension plan expense and funding requirements.
Assumptions used in determining projected benefit obligations and the fair value of plan assets for Mattel’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.
If Mattel’s goodwill becomes impaired, Mattel’s results of operations could be adversely affected.
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’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."
18


Mattel’s stock price has been volatile over the past several years and could decline in the future, resulting in losses for Mattel's investors.
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’s attention and resources, adversely affecting Mattel's business. There is a purported 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, and individual defendants. In addition, stockholders have filed derivative actions in the United States District Court for the District of Delaware and the Central District of California, as well as the Court of Chancery for the State of Delaware, making allegations that are substantially identical to, or are based upon, the allegations of the class action lawsuit. For more information, see Part II, Item 8 "Financial Statements and Supplementary Data—Note 12 to the Consolidated Financial Statements—Commitments and Contingencies—Litigation."
Ineffective internal control over financial reporting could affect Mattel's ability to record, process, and report financial information accurately, impair its ability to prepare financial statements, negatively affect investor confidence, and cause reputational harm.
Effective internal controls are necessary for companies 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 processes could lead to violations, unintentional or otherwise, of laws and regulations. In the past, Mattel has determined that there were certain material weaknesses in its internal control over financial reporting, which have since been remediated. If the additional controls and procedures that Mattel has implemented to remediate the material weaknesses prove to be insufficient or if Mattel identifies other control deficiencies that individually or together constitute significant deficiencies or material weaknesses, 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, remediation efforts, and any related litigation, government investigations, or regulatory enforcement actions will require management attention and resources, cause Mattel to incur unanticipated costs, and negatively affect investor confidence in Mattel’s financial statements, cause Mattel reputational harm, and raise other risks to its operations.
Legal and Regulatory
Mattel relies extensively on information technology in its operations, and any material failure, inadequacy, interruption, or security breach of that technology could have an adverse effect on its business, financial condition, and results of operations.
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. Many of these systems are managed by third-party service providers. Mattel uses third-party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support, and other functions. A small and growing volume of Mattel’s consumer products and services are web-based, and some are offered in conjunction with business partners or such third-party service providers. Mattel and its business partners and third-party service providers collect, process, store, and transmit consumer data, including personal information, in connection with those products and services. Failure to follow applicable regulations related to those activities, or to prevent or mitigate data loss or other security breaches, including breaches of Mattel’s business partners’ technology and systems, can expose Mattel or its customers to a risk of loss or misuse of such information, which can adversely affect Mattel’s operating results, result in regulatory enforcement, other litigation and potential liability for Mattel, and otherwise harm its business. Mattel’s ability to effectively manage its business and coordinate the production, distribution, and sale of its products and services depends significantly on the reliability and capacity of these systems and third-party service providers.
19


Mattel has exposure to security risks similar to those faced by other large companies that have data stored on their information technology systems, and is not always successful in preventing attacks or other cyber incidents. For example, in 2020, Mattel experienced a ransomware attack. That attack was contained, Mattel restored its operations, and no exfiltration of any sensitive business data or retail customer, supplier, consumer, or employee data was identified; however, there can be no assurance that Mattel will be able to mitigate negative impacts in the same way in the event of future attacks or other cyber
incidents.
The systems and processes that Mattel has developed to protect personal information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third-party provider as well as enhancements to the security of Mattel's systems and processes following the July 2020 ransomware attack, do not provide absolute security, and any failure or inadequacy of such systems or processes could have an adverse effect on Mattel's business, financial condition, and results of operations. While Mattel carries cyber and business continuity insurance commensurate with its size and the nature of its operations, there can be no guarantee that costs incurred as a result of cyber events will be covered completely. The recent global shift to remote work environments (including for Mattel’s employees, customers, sellers, suppliers, vendors, and other third parties) may amplify these security risks or introduce additional security vulnerabilities.
If Mattel’s or its third-party service providers' systems fail to operate effectively or are damaged, destroyed, or shut down, or there are problems with transitioning to upgraded or replacement systems, or there are future security breaches in these systems, any of which could occur as a result of natural disasters, software or equipment failures, telecommunications failures, loss or theft of equipment, acts of terrorism, circumvention of security systems, or other cyber-attacks, including denial-of-service attacks, Mattel could experience delays or decreases in product sales and reduced efficiency of its operations. Additionally, any of these types of events could lead to violations of privacy laws, loss of customers, or loss, misappropriation or corruption of confidential information, trade secrets, or data, which could expose Mattel to potential litigation, regulatory actions, sanctions, or other statutory penalties, any or all of which could adversely affect its business and cause it to incur significant losses and remediation costs.
As a global company, Mattel is subject to a variety of continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data. 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, which greatly increases the jurisdictional reach of EU law and became effective in May 2018, added a broad array of requirements for handling personal data, including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance. Mattel’s ongoing compliance with the EU General Data Protection Regulation and other privacy and data protection laws, such as the California Consumer Privacy Act and the U.S. Children's Online Privacy Protection Act of 1998, imposes significant costs and challenges that are likely to increase over time, including as Mattel introduces sophisticated digital and smart technology products.
Mattel faces risks related to protecting its proprietary intellectual property and information and is subject to third-party claims that Mattel is infringing on their intellectual property rights, either of which could adversely affect Mattel's business, financial condition, and results of operations.
The value of Mattel’s business depends on its ability to protect its intellectual property and information, including its trademarks, trade names, copyrights, patents, trade secrets, and rights under intellectual property license agreements and other agreements with third parties, in the United States and around the world, as well as its customer, employee, and consumer data. From time to time, third parties have challenged, and may in the future try to challenge, Mattel's ownership of its intellectual property in the United States and around the world. Responding to any infringement claim, regardless of its validity, may be costly and time-consuming and may divert management and key personnel from business operations. 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.
In addition, Mattel's business is subject to the risk of third parties counterfeiting its products or infringing on its intellectual property rights. The steps Mattel has taken may not prevent unauthorized use of its intellectual property, particularly in foreign countries where the laws may not protect its intellectual property as fully as in the United States. Mattel at times resorts to litigation to protect its intellectual property rights, which could result in substantial costs and diversion of resources. Mattel's failure to protect its proprietary intellectual property and information, including with respect to any successful challenge to Mattel’s ownership of its intellectual property or significant infringements of its intellectual property, could have an adverse effect on Mattel’s business, financial condition, and results of operations.
20


Mattel has acquired, and may in the future acquire, certain intellectual property from third parties. Declines in the profitability of these acquired brands may impact Mattel’s ability to recover the carrying value of the related assets and could result in an impairment charge. Reduction in net earnings caused by impairment charges could harm Mattel’s results of operations.
Unfavorable resolution of, or adverse developments in, legal proceedings, other investigations, or regulatory matters could have an adverse effect on Mattel’s business, financial condition, and results of operations.
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’s business, financial condition, and results of operations. Regardless of their outcome, these matters may result in substantial costs and expenses, significantly divert the attention of management, or interrupt Mattel’s normal business operations. There can be no assurance that Mattel will be able to prevail in, or achieve a favorable settlement of, any of these matters.
For example, as previously disclosed, in October 2019, Mattel announced the results of an independent investigation conducted by the Audit Committee of Mattel’s Board of Directors into allegations contained in an anonymous whistleblower letter. Following the investigation, Mattel restated certain of its previously issued financial statements. Mattel has incurred, and may continue to incur, unanticipated costs in connection with or related to the investigation and restatement, as well as litigation and regulatory inquiries resulting therefrom. For example, Mattel has been responding to subpoenas from the SEC, seeking documents related to the whistleblower letter and subsequent investigation, and is cooperating with the SEC’s investigation. Mattel is also responding to requests from the United States Attorney's Office for the Southern District of New York ("SDNY") related to this matter. Mattel cannot predict the eventual scope, duration, or outcome of potential legal action by the SEC or SDNY, if any, or whether any such action could have a material impact on Mattel's financial condition, results of operations, or cash flows.
Mattel is subject to various laws and government policies or regulations in numerous jurisdictions, violation of which could subject it to sanctions.  In addition, changes in such laws or policies or regulations may lead to increased costs, changes in Mattel’s effective tax rate, or the interruption of normal business operations that could adversely affect Mattel’s business, financial condition, and results of operations.
Mattel operates in a highly regulated environment in the U.S. and international markets.  U.S. federal, state, and local governmental entities, and foreign governments regulate many aspects of Mattel’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), 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, in 2021 Mattel launched its Hot Wheels NFT series involving use of cryptocurrency. Mattel may continue to transact in cryptocurrency or make investments involving cryptocurrency, and must comply with applicable regulations, which continue to evolve. The steps Mattel takes to comply with these laws, regulations, and policies do not ensure that Mattel will be in compliance in the future.  Compliance with these various laws, regulations, and policies imposes significant costs on Mattel’s business, and failure to comply could result in monetary liabilities and other penalties and could lead to negative media attention and consumer dissatisfaction, which could have an adverse effect on Mattel’s business, financial condition, and results of operations.
New tax laws and interpretations of tax law are taken into account for financial statement purposes in the quarter or year that they become applicable. Tax authorities are increasingly scrutinizing the tax positions of companies and Mattel has tax audits pending in several jurisdictions. The United States federal and state governments, countries in the European Union, as well as a number of countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase Mattel’s tax obligations in jurisdictions where Mattel operates its business. For example, the current administration has proposed increasing the tax rate on U.S. corporations, changes to the global intangible low-taxed income (GILTI) tax regime, implementing a corporate minimum tax, and other corporate tax proposals that could adversely impact Mattel’s business. It is uncertain if, and to what extent, various states will conform to new tax laws. If United States or other foreign tax authorities change applicable tax laws or successfully challenge how or where Mattel’s profits are currently recognized, Mattel’s overall taxes could increase, and Mattel’s business, financial condition or results of operations may be adversely impacted.
In addition, increases in import and excise duties and/or sales or value added taxes in the jurisdictions in which Mattel operates could affect the affordability of Mattel’s products and, therefore, reduce demand.
21


From time to time, issues with products lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory or other actions by governmental authorities, which could divert resources, affect business operations, decrease sales, increase costs, and put Mattel at a competitive disadvantage, any of which could have an adverse effect on Mattel’s business, financial condition, and results of operations.
Mattel has in the past experienced, and may in the future experience, issues with products that lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory actions by governmental authorities. These issues and activities have resulted in increased governmental scrutiny and inquiries, harm to Mattel’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’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 recent periods were less favorable than in the past 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’s business operations, decrease sales, increase legal fees and other costs, and put Mattel at a competitive disadvantage compared to other manufacturers not affected by similar issues with products, any of which could have an adverse effect on Mattel’s business, financial condition, and results of operations.
Mattel’s current and future operating procedures and product requirements may increase costs, adversely affect its relationship with vendors, and make it more difficult for Mattel to produce, purchase, and deliver products on a timely basis to meet market demands. Future conditions may require Mattel to adopt further changes that may increase its costs and further affect its relationship with vendors.
Mattel’s current operating procedures and product requirements, including testing requirements and standards, have imposed costs on both Mattel and the vendors from which it purchases products. Changes in business conditions, including those resulting from new legislative and regulatory requirements, have in the past caused, and in the future could cause, further revisions of Mattel’s operating procedures and product requirements. Changes in Mattel’s operating procedures and product requirements can delay delivery of products and increase costs. Mattel’s relationships with its existing vendors may be adversely affected as a result of these changes, making Mattel more dependent on a smaller number of vendors. Mattel is not currently dependent on a single supplier or group of suppliers. Some vendors may choose not to continue to do business with Mattel or not to accommodate Mattel’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’s products. Because of the seasonal nature of Mattel’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’s ability to meet market demand in a timely manner.
Indebtedness
Mattel’s substantial indebtedness could adversely affect its ability to raise additional capital to fund its operations, limit its ability to react to changes in the economy or its industry, and expose it to interest rate risk to the extent of its variable rate debt.
At December 31, 2021, Mattel had $2.57 billion of indebtedness on a consolidated basis, consisting primarily of 3.375% Senior Notes due 2026, 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 $1.40 billion of commitments under its senior secured revolving credit facilities, subject to borrowing base capacity. For more information, see Part II, Item 8 "Financial Statements and Supplementary Data—Note 5 to the Consolidated Financial Statements—Seasonal Financing and Debt."
Subject to the limits contained in the credit agreement that governs Mattel’s senior secured revolving credit facilities, the indenture that governs the notes and Mattel’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’s high level of debt would increase. Specifically, Mattel’s substantial indebtedness could have important consequences. For example, it could:
Require Mattel to dedicate a substantial portion of its cash flow from operations to payments on Mattel’s indebtedness, thereby reducing the availability of Mattel’s cash flow to fund acquisitions, working capital, capital expenditures, research and development efforts, and other general corporate purposes;
Increase Mattel’s vulnerability to, and limit Mattel’s flexibility in planning for or reacting to, changes in its business and the industries in which it operates;
22


Restrict Mattel from making strategic acquisitions or cause Mattel to make non-strategic divestitures;
Expose Mattel to the risk of increased interest rates as borrowings under its senior secured revolving credit facilities will be subject to variable rates of interest;
Expose Mattel to additional risks related to currency exchange rates and repatriation of funds;
Place Mattel at a competitive disadvantage compared to its competitors that have less debt; and
Limit Mattel’s ability to obtain additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions, and general corporate or other purposes.
Mattel’s credit ratings have fluctuated in recent years. If Mattel’s credit ratings decline, its cost of issuing new debt could increase. Mattel may be hindered from obtaining, or required to incur incremental costs to obtain, additional credit in tight credit markets. Further, Mattel’s ability to issue additional debt could be adversely affected by other factors, including market conditions.
In addition, the indenture governing the notes and the agreements governing Mattel’s senior secured revolving credit facilities contain affirmative and negative covenants that limit Mattel’s ability to engage in activities that may be in its long-term best interests. Mattel’s failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of Mattel’s debts.
To service Mattel’s indebtedness, Mattel requires a significant amount of cash and Mattel’s ability to generate cash depends on many factors beyond Mattel’s control.
Mattel’s ability to make cash payments on and to refinance its indebtedness, and to fund planned capital expenditures, depends on Mattel’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’s control.
Mattel’s business may not generate sufficient cash flow from operations and future borrowings may not be available under Mattel’s senior secured revolving credit facilities in an amount sufficient to enable Mattel to pay its indebtedness or to fund its other liquidity needs. In such circumstances, Mattel may need to refinance all or a portion of its indebtedness upon or before maturity. Mattel may not be able to refinance any of Mattel’s indebtedness, including its senior secured revolving credit facilities and the notes, on commercially reasonable terms or at all. If Mattel cannot service its indebtedness, Mattel may need to take actions such as selling assets, issuing additional equity, reducing or delaying capital expenditures, strategic acquisitions, investments, and alliances. There can be no assurance that such actions, if necessary, will be effected on commercially reasonable terms or at all. The credit agreement governing Mattel’s senior secured revolving credit facilities and the indenture governing the notes will restrict Mattel’s ability to sell assets and use the proceeds from such sales.
If Mattel is unable to generate sufficient cash flow or is otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on its indebtedness, or if Mattel otherwise fails to comply with the various covenants in the instruments governing its indebtedness, Mattel could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness will have the right to elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under Mattel’s senior secured revolving credit facilities will have the right to elect to terminate their commitments thereunder, cease making further loans, and institute foreclosure proceedings against Mattel’s assets, and Mattel could be forced into bankruptcy or liquidation. Declines in Mattel’s operating performance may require Mattel to obtain waivers in the future from the required lenders under its senior secured revolving credit facilities to avoid being in default. If Mattel breaches its covenants under its senior secured revolving credit facilities and seeks a waiver, Mattel may not be able to obtain a waiver from the required lenders. If this occurs, Mattel would be in default under its senior secured revolving credit facilities, the lenders could exercise their rights, as described above, and Mattel could be forced into bankruptcy or liquidation.
23


Mattel’s variable rate indebtedness subjects Mattel to interest rate risk, which could cause Mattel’s debt service obligations to increase significantly.
Borrowings under Mattel’s senior secured revolving credit facilities 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 increase, Mattel’s debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains the same, and Mattel’s net income and cash flows, including cash available for servicing its indebtedness, will correspondingly decrease. Assuming Mattel's senior secured revolving credit facilities are 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 secured revolving credit facilities, each one-eighth point change in interest rates would result in a $1.8 million change in annual interest expense on Mattel’s indebtedness under its senior secured revolving credit facilities. Any interest rate swaps that Mattel enters into with respect to its variable rate indebtedness may not fully mitigate Mattel’s interest rate risk.
The phaseout of LIBOR, or the replacement of LIBOR with a different reference rate, may adversely affect Mattel’s borrowing costs.
LIBOR is an interest rate benchmark used as a reference rate for a wide range of financial transactions, including derivatives and loans. Borrowings under Mattel’s senior secured revolving credit facilities will bear interest at a variable rate, primarily based on LIBOR. In July 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. It is unclear whether or not LIBOR will cease to exist at that time (and if so, what reference rate will replace it) or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of LIBOR, with the support of the United States Federal Reserve and the United Kingdom’s Financial Conduct Authority, announced plans to consult on ceasing publication of USD LIBOR on December 31, 2021 for only the one week and two month USD LIBOR tenors, and on June 30, 2023 for all other USD LIBOR tenors. While this announcement extends the transition period to June 2023, the United States Federal Reserve concurrently issued a statement advising banks to stop new USD LIBOR issuances by the end of 2021. In light of these recent announcements, the future of LIBOR at this time is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phaseout could cause LIBOR to perform differently than in the past or cease to exist.
The Alternative Reference Rates Committee ("ARRC") has identified the Secured Overnight Financing Rate ("SOFR") as the recommended alternative for use in financial and other derivatives contracts that are currently indexed to U.S. dollar LIBOR. At this time, it is not possible to predict the effect any modification or discontinuation of LIBOR, or the establishment of alternative reference rates such as SOFR, will have on Mattel. Although regulators and IBA have made clear that the recent announcements should not be read to say that LIBOR has ceased or will cease, in the event LIBOR does cease to exist, Mattel's credit agreements and related agreements would transition from LIBOR to SOFR, which may result in interest rates and/or payments that do not correlate over time with the interest rates and/or payments that would have been made on its obligations if LIBOR was available in its current form.
Mattel is dependent upon its lenders for financing to execute its business strategy and meet its liquidity needs. If Mattel’s lenders are unable to fund borrowings under their credit commitments or Mattel is unable to borrow, it could adversely affect Mattel’s business, financial condition, and results of operations.
There is risk that one or more of Mattel's lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments, including but not limited to extending credit up to the maximum amount permitted by a credit facility and otherwise accessing capital and/or honoring loan commitments. If Mattel’s lenders are unable to fund borrowings under their credit commitments or Mattel is unable to borrow, it could be difficult to replace Mattel’s senior secured revolving credit facilities on similar terms, which could adversely affect Mattel's business, financial condition, and results of operations.
Item 1B.    Unresolved Staff Comments.
None.
24


Item 2.    Properties.
Mattel owns its corporate headquarters in El Segundo, California, consisting of approximately 335,000 square feet, and an adjacent office building consisting of approximately 55,000 square feet. Mattel also leases buildings in El Segundo consisting of approximately 327,000 square feet. All segments use these facilities. Mattel also owns facilities in East Aurora, New York, consisting of approximately 607,000 square feet, which is used by the North America segment and for brand and corporate support functions. American Girl owns its headquarters facilities in Middleton, Wisconsin, consisting of approximately 180,000 square feet, a warehouse in Middleton, consisting of approximately 215,000 square feet, and distribution facilities in Middleton and DeForest, Wisconsin, consisting of a total of approximately 498,000 square feet, all of which are used by the American Girl segment. Mattel also owns its principal manufacturing facilities located in Indonesia, Malaysia, Mexico, and Thailand.
Mattel maintains leased offices in the United States, in Arkansas, California, and Minnesota, and leased warehouse and distribution facilities in California, Pennsylvania, Texas, and in Mississauga, Canada, all of which are used by the North America segment. Mattel leases retail and related office space in Chicago, Illinois; Los Angeles, California; and New York, New York for its American Girl Place stores, and in 9 other cities across the United States for its American Girl stores. Internationally, Mattel has offices and/or warehouse space in over 30 countries. The primary locations for facilities leased and used by the International segment are in China, Hong Kong, Australia, Mexico, the Netherlands, Germany, Italy, France, and the United Kingdom. Mattel also leases office space and principal manufacturing facilities in China, which support the North America, International, and American Girl segments. Additionally, Mattel leases a facility in Montreal, Canada, consisting of approximately 817,000 square feet, which is used for brand support and previously for manufacturing functions, which were discontinued in 2021. The facility in Montreal, Canada is used by both the North America and International segments.
For all remaining leases that are scheduled to expire within the next twelve months, Mattel may negotiate new lease agreements, renew existing lease agreements, or utilize alternate facilities. See Part II, Item 8 "Financial Statements and Supplementary Data—Note 7 to the Consolidated Financial Statements—Leases." Mattel believes that its owned and leased facilities, in general, are suitable and adequate for its present and currently foreseeable needs.
Item 3.    Legal Proceedings.
See Part II, Item 8 "Financial Statements and Supplementary Data—Note 12 to the Consolidated Financial Statements—Commitments and Contingencies—Litigation."
Item 4.    Mine Safety Disclosures.
Not applicable.
25


PART II
Item 5.     Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.
Market Information
Mattel’s common stock, par value $1.00 per share, is traded under the symbol "MAT" on The Nasdaq Global Select Market.
Holders of Record
As of February 14, 2022, Mattel had approximately 19,000 holders of record of its common stock.
Dividends
See Part II, Item 8 "Financial Statements and Supplementary Data—Note 6 to the Consolidated Financial Statements —Stockholders’ Equity—Dividends."
Recent Sales of Unregistered Securities
During the fourth quarter of 2021, Mattel did not sell any unregistered securities.
Issuer Purchases of Equity Securities
During 2021, 2020, and 2019, Mattel did not repurchase any shares of its common stock.
The following table provides certain information with respect to Mattel’s purchases of its common stock during the fourth quarter of 2021:
Total Number of Shares (or Units) Purchased (a)Average Price Paid per Share (or Unit)Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or  Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (b)
Period:
October 1 - 313,106 $21.81 — $203,016,273 
November 1 - 303,785 21.45 — 203,016,273 
December 1 - 314,299 21.56 — 203,016,273 
Total11,190 $21.59 — $203,016,273 
(a)The total number of shares purchased represents shares withheld from employees to satisfy minimum tax withholding obligations that occur upon settlement of equity awards. These shares were not purchased as part of a publicly announced repurchase plan or program.
(b)Mattel's share repurchase program was first announced on July 21, 2003. On July 17, 2013, the Board of Directors authorized Mattel to increase its share repurchase program by $500.0 million. At December 31, 2021, share repurchase authorizations of $203.0 million had not been executed. Repurchases under the program will take place from time to time, depending on market conditions. Mattel’s share repurchase program has no expiration date.
26


Performance Graph
The following graph compares the performance of Mattel's common stock with that of the S&P 500 Index and the S&P 500 Consumer Discretionary Index. The Cumulative Total Return listed below assumes an initial investment of $100 on December 31, 2016 and reinvestment of dividends.
https://cdn.kscope.io/8fbca50cee396e4a509b44c64f417f2b-mat-20211231_g1.jpg
December 31,
201620172018201920202021
Cumulative Total Return:
Mattel, Inc.$100.00 $58.15 $37.77 $51.23 $65.98 $81.52 
S&P 500$100.00 $121.82 $116.47 $153.13 $181.29 $233.28 
S&P 500 Consumer Discretionary$100.00 $113.49 $103.97 $132.67 $146.93 $174.30 
27


Item 6.    Reserved.
Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the consolidated financial statements and the related notes. See Item 8 "Financial Statements and Supplementary Data." Note that amounts within this Item shown in millions may not foot due to rounding.
Mattel has omitted discussion of 2019 results where it would be redundant to the discussion previously included in Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations," of Mattel’s Annual Report on Form 10-K for the year ended December 31, 2020.
The following discussion includes currency exchange rate impact, a non-GAAP financial measure within the meaning of Regulation G promulgated by the SEC ("Regulation G"), to supplement the financial results as reported in accordance with generally accepted accounting principles ("GAAP"). The currency exchange rate impact reflects the portion (expressed as a percentage) of changes in Mattel's reported results that are attributable to fluctuations in currency exchange rates. Mattel uses this non-GAAP financial measure to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. Management believes that the disclosure of this non-GAAP financial measure provides useful supplemental information to investors to allow them to better evaluate ongoing business performance and certain components of Mattel's results. This measure is not, and should not be viewed as, a substitute for GAAP financial measures.
The following discussion also includes the use of gross billings, a key performance indicator. Gross billings represent amounts invoiced to customers. It does not include the impact of sales adjustments, such as trade discounts and other allowances. Mattel presents changes in gross billings as a metric for comparing its aggregate, categorical, brand, and geographic results to highlight significant trends in Mattel's business. Changes in gross billings are discussed because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and not associated with categories, brands, and individual products.
Overview
Mattel is a leading global toy company and owner of one of the strongest catalogs of children’s and family entertainment franchises in the world. Mattel creates innovative products and experiences that inspire, entertain, and develop children through play. Mattel is focused on the following evolved strategy to grow its IP-driven toy business and expand its entertainment offering:
Accelerate topline growth through scaling Mattel’s portfolio, growing franchise brands, and advancing e-commerce and direct-to-consumer business, and increasing profitability by continuing to optimize operations; and
Expand entertainment offering to capture the full value of Mattel's IP in highly accretive business verticals, including content, consumer products, and digital experiences.
COVID-19 Update
The impact of the coronavirus disease ("COVID-19") and the actions taken by governments, businesses, and individuals in response to it 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.
Strong consumer demand for toys in 2021 contributed to year-over-year increases in net sales across all reportable segments and brand categories, despite COVID-19 disruption and local restrictions negatively impacting certain segments and locations. Mattel’s first half of 2020 results and net sales were significantly and negatively impacted by COVID-19.
While COVID-19 has caused manufacturing and distribution disruption for Mattel and the manufacturers and distribution network it relies upon, to date, this disruption, including temporary plant and port closures, has not materially impacted Mattel’s ability to meet demand for its products. To the extent COVID-19 causes further manufacturing and distribution disruption, particularly during seasonally-high periods of production and/or distribution, Mattel’s ability to meet demand may be materially impacted.
28


Input cost inflation adversely affected Mattel’s gross margin in 2021 due to the increased demand for raw materials and distribution services associated with the impact of COVID-19. Mattel has been able to mitigate a portion of the adverse impact with the benefits of fixed cost absorption, pricing actions, and cost savings programs. Mattel anticipates that input cost inflation will have a significant adverse impact on Mattel’s gross margin in the first half of 2022. To the extent input cost inflation becomes more widespread and/or more significant than anticipated, it may have a material effect on Mattel’s results of operations and financial condition.
Prolonged disruption to Mattel’s customers, supply chain, or other critical operations during 2022 would result in material adverse effects to Mattel’s business. The future impact of COVID-19 on Mattel’s business, results of operations, financial position, and cash flows remains uncertain at this time due to rapidly evolving circumstances. Mattel continues to closely monitor the situation and is actively managing its business as developments occur. It is reasonably likely that the pandemic and its resulting effects could have other unforeseen consequences that affect Mattel’s business. Refer to Part I, Item 1A "Risk Factors" for further discussion regarding potential impacts of COVID-19 on Mattel’s business.

Results of Operations
Consolidated Results
The following table includes Mattel’s consolidated results for 2021 and 2020:
For the Year EndedYear/Year Change
December 31, 2021December 31, 2020
Amount% of Net
Sales
Amount% of Net
Sales
%Basis Points
of Net Sales
(In millions, except percentage and basis point information)
Net sales$5,457.7 $4,588.4 19 %— 
Cost of sales2,831.1 51.9 %2,345.3 51.1 %21 %80 
Gross profit$2,626.7 48.1 %$2,243.1 48.9 %17 %(80)
Advertising and promotion expenses545.7 10.0 %525.8 11.5 %%(150)
Other selling and administrative expenses1,351.4 24.8 %1,342.6 29.3 %%(450)
Operating income729.6 13.4 %374.7 8.2 %95 %520 
Interest expense253.9 4.7 %198.3 4.3 %28 %40 
Interest (income)(3.5)-0.1 %(3.9)-0.1 %-11 %— 
Other non-operating expense, net8.4 2.7 
Income before income taxes470.8 8.6 %177.7 3.9 %165 %470 
(Benefit) provision for income taxes(420.4)65.5 
Income from equity method investments11.8 11.5 
Net income$903.0 16.5 %$123.6 2.7 %n/m1,380 
n/m - Not Meaningful
29


Sales
The following table provides a summary of Mattel’s consolidated gross billings by categories, along with supplemental information by brand for 2021 and 2020:
 For the Year Ended% Change as
Reported
Currency
Exchange Rate
Impact
December 31, 2021December 31, 2020
(In millions, except percentage information)
Gross Billings by Categories
Dolls$2,299.1 $1,886.4 22 %%
Infant, Toddler, and Preschool1,220.9 1,154.5 %%
Vehicles1,252.8 1,110.0 13 %%
Action Figures, Building Sets, Games, and Other1,308.9 991.6 32 %%
Gross Billings$6,081.6 $5,142.6 18 %%
Sales Adjustments(623.9)(554.2)
Net Sales$5,457.7 $4,588.4 19 %%
Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie$1,679.3 $1,350.1 24 %— %
Hot Wheels1,068.3 954.2 12 %%
Fisher-Price and Thomas & Friends1,128.2 1,065.5 %%
Other2,205.8 1,772.8 24 %%
Gross Billings$6,081.6 $5,142.6 18 %%
Gross billings were $6.08 billion in 2021, an increase of $939.0 million, or 18%, as compared to $5.14 billion in 2020, with a favorable impact from changes in currency exchange rates of one percentage point. The increase in gross billings was due to higher billings across all categories.
Dolls gross billings increased 22%, of which 18% was driven by higher billings of Barbie products, primarily due to positive brand momentum and point of sale demand ("POS"), and 3% was due to initial billings of Spirit products.
Infant, Toddler, and Preschool gross billings increased 6%, driven by higher billings of Fisher-Price and Thomas & Friends, primarily due to higher billings of infant and newborn products.
Vehicles gross billings increased 13%, of which 10% was due to higher billings of Hot Wheels products driven by positive brand momentum and POS, which benefited from in-store impulse shopping.
Action Figures, Building Sets, Games, and Other gross billings increased 32%, of which 12% was driven by higher billings of Jurassic World, 10% was driven by initial billings of Masters of the Universe, and 6% was driven by higher billings from Plush.
Sales adjustments represent arrangements with Mattel’s customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. Such programs are based primarily on customer purchases, customer performance of specified promotional activities, and other specified factors such as sales to consumers. Sales adjustments increased to $623.9 million in 2021, as compared to $554.2 million in 2020, due to higher gross billings. Sales adjustments as a percentage of net sales was relatively consistent at 11.4% in 2021, as compared to 12.1% in 2020.
Cost of Sales
Cost of sales increased by $485.7 million, or 21%, to $2.83 billion in 2021 from $2.35 billion in 2020. Within cost of sales, product and other costs increased by $426.0 million, or 22%, to $2.36 billion in 2021 from $1.93 billion in 2020; freight and logistics expenses increased by $33.9 million, or 13%, to $285.9 million in 2021 from $252.1 million in 2020; and royalty expense increased by $25.8 million, or 16%, to $184.3 million in 2021 from $158.5 million in 2020.
30


Gross Margin
Gross margin decreased to 48.1% in 2021 from 48.9% in 2020. The decrease in gross margin was primarily due to cost inflation resulting from higher raw material and freight costs and unfavorable foreign exchange, partially offset by favorable fixed cost absorption, incremental realized savings from cost savings programs, and pricing actions.
Advertising and Promotion Expenses
Advertising and promotion expenses primarily consist of: (i) media costs, which include the media, planning, and buying fees for television, print, and online advertisements, (ii) non-media costs, which include commercial and website production, merchandising, and promotional costs, (iii) retail advertising costs, which include consumer direct catalogs, and (iv) generic advertising costs, which include trade show costs. Advertising and promotion expenses as a percentage of net sales decreased to 10.0% in 2021 from 11.5% in 2020 driven by a 19% increase in net sales, as compared to an increase in advertising and promotion expense of 4%, or $19.9 million. The increase in advertising and promotion expense to $545.7 million in 2021 from $525.8 million in 2020 was due to higher media spend.
Other Selling and Administrative Expenses
Other selling and administrative expenses were $1.35 billion in 2021, as compared to $1.34 billion in 2020. The increase in other selling and administrative expenses was primarily due to higher employee compensation costs, including comparisons to cost-savings actions taken in the prior year in response to COVID-19, partially offset by incremental realized savings from cost savings programs.
Interest Expense
Interest expense was $253.9 million in 2021, as compared to $198.3 million in 2020. The increase in interest expense was due to losses on extinguishment of debt of $101.7 million from the redemptions of the 6.75% Senior Notes due December 2025 ("2025 Notes") in 2021. This was partially offset by lower interest expense in 2021 due to the impact of the aggregate repayments of the 2025 Notes and a lower interest rate associated with the partial refinancing of the 2025 Notes.
(Benefit) Provision for Income Taxes
Mattel’s benefit from income taxes was $420.4 million in 2021, as compared to a provision for income taxes of $65.5 million in 2020. The 2021 benefit from income taxes included a $540.8 million release of valuation allowances related to U.S. federal, state, and certain foreign deferred tax assets and a $19.1 million tax benefit related to reassessments of prior year's tax liabilities based on the status of audits and settlements in various jurisdictions. The 2020 income tax provision included a $5.1 million tax expense related to enacted tax law changes and the assessment of the future realizability of certain deferred tax assets, and a $4.3 million tax expense related to reassessments of prior year's tax liabilities based on the status of audits and settlements in various jurisdictions.
Evaluating the need for and the amount of a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence to determine whether it is more likely than not that these assets will be realizable. Mattel routinely assesses the positive and negative evidence for this realizability, including the evaluation of sustained profitability and three years of cumulative pretax income for each tax jurisdiction. During the twelve months ended December 31, 2021, Mattel continued to see improved and sustained profitability, which presents objective positive evidence for the realizability of certain deferred tax assets. As such, based on the overall analysis of the positive and negative evidence in each tax jurisdiction, during 2021 Mattel released the valuation allowances related to U.S. federal, state, and certain foreign deferred tax assets, except for certain tax assets that are primarily expected to expire before utilization. Valuation allowance releases for the year ended December 31, 2021 resulted in recognition of a portion of these deferred tax assets and a benefit to Mattel's provision for income taxes of $540.8 million. As of December 31, 2021, Mattel’s valuation allowances on its federal and state deferred tax assets and foreign deferred tax assets were approximately $18 million and $83 million, respectively. Changes in the valuation allowances in 2020 primarily related to interest limitations and credits generated. As of December 31, 2020, Mattel's valuation allowances on its federal and state deferred tax assets and foreign deferred tax assets were approximately $319 million and $313 million, respectively.
31


Segment Results
North America Segment
The following table provides a summary of Mattel’s net sales, segment operating income, and gross billings by categories, along with supplemental information by brand, for the North America segment for 2021 and 2020:
 For the Year Ended% Change as
Reported
Currency
Exchange Rate
Impact
 December 31, 2021December 31, 2020
 (In millions, except percentage information)
Net Sales$2,968.3 $2,426.5 22 %— %
Segment Operating Income872.5 621.9 40 %
Gross Billings by Categories
Dolls$1,011.1 $770.6 31 %— %
Infant, Toddler, and Preschool758.8 703.3 %— %
Vehicles633.0 529.2 20 %%
Action Figures, Building Sets, Games, and Other752.0 586.6 28 %— %
Gross Billings$3,154.9 $2,589.7 22 %%
Sales Adjustments(186.6)(163.2)
Net Sales$2,968.3 $2,426.5 22 %— %
Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie$903.5 $704.2 28 %— %
Hot Wheels529.5 446.6 19 %%
Fisher-Price and Thomas & Friends685.5 634.9 %— %
Other1,036.4 804.0 29 %— %
Gross Billings$3,154.9 $2,589.7 22 %%
Gross billings for the North America segment were $3.15 billion in 2021, an increase of $565.2 million, or 22%, as compared to $2.59 billion in 2020. The increase in the North America segment gross billings was due to higher billings across all categories.
Dolls gross billings increased 31%, of which 26% was due to higher billings of Barbie products and 4% was due to initial billings of Spirit products.
Infant, Toddler, and Preschool gross billings increased 8%, of which 7% was due to higher billings of Fisher-Price and Thomas & Friends products.
Vehicles gross billings increased 20%, of which 16% was driven by higher billings of Hot Wheels products.
Action Figures, Building Sets, Games, and Other gross billings increased 28%, of which 11% was driven by higher billings of Jurassic World, 10% was driven by initial billings of Masters of the Universe, and 6% was driven by higher billings of Plush.
Sales adjustments increased to $186.6 million in 2021, as compared to $163.2 million in 2020, due to higher gross billings. Sales adjustments as a percentage of net sales was relatively consistent at 6.3% in 2021, as compared to 6.7% in 2020.
Cost of sales increased 21% in 2021, as compared to a 22% increase in net sales, primarily due to higher product and other costs. Gross margin in 2021 increased primarily due to favorable fixed cost absorption, incremental realized savings from cost savings programs, and pricing actions, partially offset by cost inflation due to higher raw materials and freight costs. North America segment operating income was $872.5 million in 2021, as compared to segment operating income of $621.9 million in 2020, driven by higher gross profit.
32


International Segment
The following table provides a summary of Mattel’s net sales, segment operating income, and gross billings by categories, along with supplemental information by brand, for the International segment for 2021 and 2020:
For the Year Ended% Change as
Reported
 Currency
Exchange Rate
Impact
December 31, 2021December 31, 2020
(In millions, except percentage information)
Net Sales$2,219.2 $1,903.5 17 %%
Segment Operating Income350.0 272.4 28 %
Gross Billings by Categories
Dolls$1,010.1 $849.4 19 %%
Infant, Toddler, and Preschool462.1 451.2 %%
Vehicles619.8 580.8 %%
Action Figures, Building Sets, Games, and Other556.8 405.0 38 %%
Gross Billings$2,648.8 $2,286.4 16 %%
Sales Adjustments(429.6)(382.8)
Net Sales$2,219.2 $1,903.5 17 %%
Supplemental Gross Billings Disclosure
Gross Billings by Top 3 Power Brands
Barbie$775.8 $645.9 20 %%
Hot Wheels538.8 507.6 %%
Fisher-Price and Thomas & Friends442.7 430.6 %%
Other891.4 702.2 27 %%
Gross Billings$2,648.8 $2,286.4 16 %%
Gross billings for the International segment were $2.65 billion in 2021, an increase of $362.4 million, or 16%, as compared to $2.29 billion in 2020, with a favorable impact from changes in currency exchange rates of two percentage points. The increase in International segment gross billings was due to higher billings across all categories.
Dolls gross billings increased 19%, of which 15% was driven by higher billings of Barbie products and 3% was due to initial billings of Spirit products.
Infant, Toddler, and Preschool gross billings increased 2%, due to higher billings of Fisher-Price and Thomas & Friends products.
Vehicles gross billings increased 7%, of which 6% was due to higher billings of Hot Wheels products.
Action Figures, Building Sets, Games, and Other gross billings increased 38%, due to higher billings of the following products: 13% from Jurassic World, 11% from initial billings of Masters of the Universe, 5% from Plush, and 4% from MEGA.
Sales adjustments increased to $429.6 million in 2021, as compared to $382.8 million in 2020, due to higher gross billings. Sales adjustments as a percentage of net sales was relatively consistent at 19.4% in 2021, as compared to 20.1% in 2020.
Cost of sales increased 24% in 2021, as compared to a 17% increase in net sales, primarily driven by higher product and other costs. Gross margin in 2021 decreased primarily due to cost inflation resulting from higher raw materials and freight costs, unfavorable foreign exchange and product mix, partially offset by pricing actions, incremental realized savings from cost savings programs, and the favorable impact of fixed cost absorption. International segment operating income was $350.0 million in 2021, as compared to a segment operating income of $272.4 million in 2020, primarily driven by higher gross profit, partially offset by higher advertising and promotion expenses.
33


American Girl Segment
The following table provides a summary of Mattel’s net sales, segment operating income (loss), and gross billings for the American Girl segment for 2021 and 2020:
For the Year Ended% Change as
Reported
Currency
Exchange Rate
Impact
December 31, 2021December 31, 2020
(In millions, except percentage information)
Net Sales$270.3 $258.4 %— %
Segment Operating Income (Loss)5.4 (14.1)
American Girl Segment
Total Gross Billings$277.9 $266.5 %— %
Sales Adjustments(7.6)(8.1)
Total Net Sales$270.3 $258.4 %— %
Gross billings for the American Girl segment were $277.9 million in 2021, an increase of $11.4 million, or 4%, as compared to $266.5 million in 2020. The increase in American Girl gross billings was driven by higher billings in proprietary retail channels, which in the prior year was negatively impacted by retail disruption due to COVID-19.
Sales adjustments as a percentage of net sales remained relatively consistent at 2.8% in 2021, as compared to 3.1% in 2020.
Cost of sales increased 3% in 2021, as compared to a 5% increase in net sales, primarily due to higher product and other costs. Gross margin in 2021 increased slightly, primarily driven by the incremental realized savings from cost savings programs and favorable fixed cost absorption, substantially offset by product mix and input cost inflation. American Girl segment operating income was $5.4 million in 2021, as compared to segment operating loss of $14.1 million in 2020; the improvement was primarily due to higher net sales, lower other selling and administrative expenses, and lower advertising and promotion expenses.
Cost Savings Programs
Optimizing for Growth (formerly Capital Light)
In February 2021, Mattel announced the Optimizing for Growth program, a multi-year cost savings program that integrates and expands upon the previously announced Capital Light program (the “Program”). Targeted annual gross cost savings from actions that are expected to be completed beginning 2021 through 2023 are $250 million. Of the $250 million in targeted gross cost savings, approximately 50% is expected to benefit cost of sales, 40% is expected to benefit other selling and administrative expenses, and 10% is expected to benefit advertising and promotion expense. Estimated total cash expenditures associated with the Program, excluding previous actions taken under the Capital Light program, are expected to be approximately $100 to $125 million.
Mattel estimates the cost of actions for the Program, excluding previous actions taken under the Capital Light program, to be as follows:
Optimizing for Growth - ActionsEstimate of Cost
Employee severance$20 to $25 million
Real estate/supply chain optimization and other restructuring costs$15 to $25 million
Non-cash charges$55 to $60 million
Total estimated severance and restructuring costs$90 to $110 million
Information technology enhancements and other investments$65 to $75million
Total estimated actions$155 to $185 million
34


Cumulatively, in conjunction with previous actions taken under the Capital Light program prior to 2021, targeted annual gross cost savings for the Program are $325 million by 2023, with total expected cash expenditures of approximately $140 to $165 million, and total non-cash charges of $70 to $75 million. Of the $325 million in targeted gross cost savings, approximately 60% is expected to benefit cost of sales, 30% is expected to benefit other selling and administrative expenses, and 10% is expected to benefit advertising and promotion expense.
In connection with the Program, Mattel has recorded severance and other restructuring costs in the following cost and expense categories within the consolidated statements of operations:
For the Year Ended
 
December 31, 2021

December 31, 2020

December 31, 2019
 (In millions)
Cost of sales (a)$2.9 $5.7 $18.6 
Other selling and administrative expenses (b)32.3 7.2 19.0 
$35.2 $12.9 $37.6 
(a)Severance and other restructuring costs recorded within cost of sales in the consolidated statements of operations are included in segment operating income (loss) in "Note 13 to the Consolidated Financial Statements—Segment Information." During the year ended December 31, 2021, $2.9 million was recorded within cost of sales, of which $2.0 million and $0.9 million are included in the North America and International segments, respectively. During the year ended December 31, 2020, $5.7 million was recorded within cost of sales, of which $3.5 million and $2.2 million are included in the North America and International segments, respectively. During the year ended December 31, 2019, $18.6 million was recorded within cost of sales, of which $10.4 million, $8.0 million, and $0.2 million are included in the North America, International, and American Girl segments, respectively.
(b)Severance and other restructuring costs recorded within other selling and administrative expenses in the consolidated statements of operations are included in corporate and other expense in "Note 13 to the Consolidated Financial Statements—Segment Information."
As of December 31, 2021, Mattel had recorded cumulative severance and other restructuring charges related to the Program of approximately $86 million, which include approximately $21 million of non-cash charges. As of December 31, 2021, Mattel realized cumulative cost savings (before severance, restructuring costs, and cost inflation) in connection with the Program of approximately $172 million, which include $144 million within cost of sales, $20 million within other selling and administrative expenses, and $9 million within advertising and promotion expenses.
Other Cost Savings Actions
In connection with Mattel's continued efforts to further streamline its organizational structure and restore profitability, in May 2020, Mattel committed to a planned 4% reduction in its non-manufacturing workforce. The timing of this action was accelerated due to the impact of COVID-19. As a result of the reduction in force actions initiated in 2020, Mattel realized approximately $40 million of run-rate cost savings exiting 2020. During the year ended December 31, 2020, Mattel recorded severance charges of approximately $19 million, primarily related to actions taken to streamline its organizational structure.
During the year ended December 31, 2020, Mattel recorded additional severance and other restructuring charges of approximately $9 million, related to actions initiated in the prior year associated with the Structural Simplification cost savings program.
Income Taxes
See Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Provision for Income Taxes."
Liquidity and Capital Resources
Mattel’s primary sources of liquidity are its cash and equivalents balances, including access to earnings of certain foreign subsidiaries, short-term borrowing facilities, including its $1.40 billion senior secured revolving credit facilities, and access to capital markets to fund its operations and obligations. Such obligations may include investing and financing activities such as capital expenditures and debt service. Of Mattel’s $731.4 million in cash and equivalents as of December 31, 2021, approximately $244.6 million were held by foreign subsidiaries.
35


Cash flows from operating activities could be negatively impacted by decreased demand for Mattel's products, which could result from factors such as, but not limited to, adverse economic conditions and changes in public and consumer preferences, or by increased costs associated with manufacturing and distribution of products or shortages in raw materials or component parts. Additionally, Mattel's ability to issue long-term debt and obtain seasonal financing could be adversely
affected by factors such as, but not limited to, global economic crises and tight credit environments, an inability to meet its debt
covenant requirements and its senior secured revolving credit facilities covenants, or deterioration of Mattel's credit ratings. As
discussed above under Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations—COVID-19 Update," many of the aforementioned factors have been and may be adversely affected by COVID-19. However, based on Mattel’s current business plan and factors known to date, including the currently known impacts of COVID-19, it is expected that existing cash and equivalents, cash flows from operations, availability under the senior secured credit revolving facilities, and access to capital markets will be sufficient to meet working capital and operating expenditure requirements for the next twelve months. Refer to Part I, Item 1A "Risk Factors" for further discussion regarding potential impacts of COVID-19 on Mattel’s business.
The U.S. Tax Act, enacted on December 22, 2017, provides Mattel with a reduced cost to access the earnings of its foreign subsidiaries. As such, Mattel has evaluated its intentions related to its indefinite reinvestment assertion and has recorded a $19.0 million deferred tax liability as of December 31, 2021, related to approximately $3.45 billion of foreign earning that will not be indefinitely reinvested.
With the passage of the U.S. Tax Act, repatriations of foreign cash generally will not be taxable for U.S. federal income tax, but may be subject to state income tax and/or foreign withholding tax, in addition to any local country distribution requirements.
Current Market Conditions
Mattel is exposed to financial market risk resulting from changes in interest and foreign currency exchange rates. Mattel continues to actively manage its capital structure and believes that it has sufficient liquidity to run its business.
Subject to market conditions, Mattel intends to utilize its senior secured revolving credit facilities or alternative forms of financing to meet its short-term liquidity needs. As of December 31, 2021, there were no amounts outstanding under the senior secured revolving credit facilities. Market conditions could affect certain terms of other debt instruments that Mattel enters into from time to time.
Mattel monitors the third-party depository institutions that hold Mattel's cash and equivalents. Mattel’s emphasis is primarily on safety and liquidity of principal, and secondarily on maximizing the yield on those funds. Mattel diversifies its cash and equivalents among counterparties and securities to minimize risks.
Mattel is subject to credit risks relating to the ability of its counterparties in hedging transactions to meet their contractual payment obligations. The risks related to creditworthiness and nonperformance have been considered in the fair value measurements of Mattel’s foreign currency forward exchange contracts. Mattel closely monitors its counterparties and takes action, as necessary, to manage its counterparty credit risk.
Mattel expects that some of its customers and vendors may experience difficulty in obtaining the liquidity required to buy inventory or raw materials. Mattel monitors its customers’ financial condition and their liquidity in order to mitigate Mattel’s accounts receivable collectability risks, and customer terms and credit limits are adjusted, if necessary. Additionally, Mattel uses a variety of financial arrangements to ensure collectability of accounts receivable of customers deemed to be a credit risk, including requiring letters of credit, purchasing various forms of credit insurance with unrelated third parties, or requiring cash in advance of shipment.
Mattel sponsors defined benefit pension plans and postretirement benefit plans for its employees. Actual returns below the expected rate of return, along with changes in interest rates that affect the measurement of the liability, would impact the amount and timing of Mattel’s future contributions to these plans.
Cash Flow Activities
Cash flows provided by operating activities were $485.5 million in 2021, as compared to $285.7 million in 2020. The increase in cash flows provided by operating activities was primarily due to higher net income, excluding the impact of the release of valuation allowances on deferred tax assets and other non-cash charges, partially offset by higher working capital usage.
36


Cash flows used for investing activities were $105.1 million in 2021, as compared to $132.1 million in 2020. The decrease in cash flows used for investing activities was primarily due to proceeds from the disposal of assets and a business of $43.6 million and higher proceeds for foreign currency forward exchange contracts in 2021, partially offset by an increase in capital expenditures in 2021.
Cash flows used for financing activities were $402.1 million in 2021, as compared to $5.8 million in 2020. The increase in cash flows used from financing activities in 2021 was primarily due to cash used for repayment and refinancing of the 2025 Notes in 2021.
During 2021 and 2020, Mattel did not repurchase any shares of its common stock. Mattel's share repurchase program was first announced on July 21, 2003. On July 17, 2013, the Board of Directors authorized Mattel to increase its share repurchase program by $500.0 million. At December 31, 2021, share repurchase authorizations of $203.0 million had not been executed. Repurchases under the program will take place from time to time, depending on market conditions. Mattel's share repurchase program has no expiration date.
During 2021 and 2020, Mattel did not pay any dividends to holders of its common stock. The payment of dividends on common stock is at the discretion of the Board of Directors and is subject to customary limitations.
Seasonal Financing
See Item 8 "Financial Statements and Supplementary Data—Note 5 to the Consolidated Financial Statements—Seasonal Financing and Debt."
Credit Ratings
In 2021, Fitch changed Mattel's long-term credit rating from B to BB with a stable outlook. In February 2022, Fitch further changed Mattel's long-term credit rating from BB to BB+ with a positive outlook. In 2021, Moody's changed Mattel's long-term credit rating from B1 to Ba2 and maintained a stable outlook. In 2021, Standard & Poor's changed Mattel's long-term credit rating from B to BB with a positive outlook. In February 2022, Standard & Poor's further changed Mattel's long-term credit rating from BB to BB+ with a positive outlook.
Financial Position
Mattel’s cash and equivalents decreased $30.8 million to $731.4 million at December 31, 2021, as compared to $762.2 million at December 31, 2020, primarily due to cash used for repayment and refinancing of the 2025 Notes in 2021, and capital expenditures. The decreases were partially offset by cash flow provided by operating activities and proceeds from the disposal of assets and a business during 2021.
Accounts receivable increased $38.7 million to $1.07 billion at December 31, 2021, as compared to $1.03 billion at December 31, 2020, driven by higher net sales in the fourth quarter of 2021, as compared to the fourth quarter of 2020, partially offset by improved collections.
Inventory increased $248.7 million to $777.2 million at December 31, 2021, as compared to $528.5 million at December 31, 2020, primarily due to cost inflation and higher inventory to meet expected future demands.
Prepaid expenses and other current assets increased $121.2 million to $293.3 million at December 31, 2021, as compared to $172.1 million at December 31, 2020, primarily due to receivables from insurers related to a legal settlement.
Accounts payable and accrued liabilities increased $243.5 million to $1.57 billion at December 31, 2021, as compared to $1.33 billion at December 31, 2020, primarily due to an accrued legal settlement and increased payables associated with cost inflation.

37


A summary of Mattel’s capitalization is as follows:
 December 31, 2021December 31, 2020
 (In millions, except percentage information)
Cash and equivalents$731.4 $762.2 
Short-term borrowings— 1.0 
2010 Senior Notes due October 2040250.0 250.0 
2011 Senior Notes due November 2041300.0 300.0 
2013 Senior Notes due March 2023250.0 250.0 
2017/2018 Senior Notes due December 2025— 1,500.0 
2019 Senior Notes due December 2027600.0 600.0 
2021 Senior Notes due April 2026600.0 — 
2021 Senior Notes due April 2029600.0 — 
Debt issuance costs and debt discount(29.0)(45.3)
Total debt2,571.0 62 %2,855.7 82 %
Stockholders’ equity1,568.8 38 610.1 18 
Total capitalization (debt plus equity)$4,139.8 100 %$3,465.8 100 %
In 2021, Mattel used the net proceeds from the issuance of $600 million of 3.375% Senior Notes due 2026 and $600 million of 3.750% Senior Notes due 2029, plus cash on hand, to redeem and retire $1.50 billion in aggregate principal amount of the 2025 Notes and pay related prepayment premiums and transaction fees and expenses. As a result of the redemptions, Mattel incurred losses on extinguishment of debt of $101.7 million, comprised of $76.0 million of prepayment premiums and a $25.7 million write-off of the unamortized debt issuance costs, which was recorded within interest expense in the consolidated statements of operations.
Total debt, including short-term borrowings, was $2.57 billion at December 31, 2021, as compared to $2.86 billion at December 31, 2020. The decrease was due to the aggregate repayments of the 2025 Notes.
Stockholders’ equity increased $958.7 million to $1.57 billion at December 31, 2021, as compared to $610.1 million at December 31, 2020, primarily due to net income in 2021.
Off-Balance Sheet Arrangements
Mattel is required to provide standby letters of credit to support certain obligations that arise in the ordinary course of business and may choose to provide letters of credit in place of posting cash collateral. Although the letters of credit are off-balance sheet, the majority of the obligations to which they relate are reflected as liabilities in the consolidated balance sheets. Outstanding letters of credit totaled approximately $10 million and $11 million as of December 31, 2021 and December 31, 2020, respectively.
Commitments
In the normal course of business, Mattel enters into debt agreements, and contractual arrangements to obtain and protect Mattel’s right to create and market certain products and for future purchases of goods and services to ensure availability and timely delivery. These arrangements include commitments for royalty payments pursuant to licensing agreements, which routinely contain provisions for guarantees or minimum expenditures during the terms of the contracts, and future inventory and service purchases. Mattel also has defined benefit and postretirement benefit plans, which require future cash contributions and benefit payments. Additionally, Mattel routinely enters into noncancelable lease agreements for premises and equipment used, which contain minimum rental payments.
38


The following table summarizes Mattel’s contractual commitments and obligations:
 Total20222023202420252026Thereafter
 (In millions)
Long-term debt$2,600.0 $— $250.0 $— $— $600.0 $1,750.0 
Interest on long-term debt1,083.8 117.7 111.5 109.9 109.9 94.7 540.1 
Leases (a)437.9 92.3 79.8 67.3 57.1 45.3 96.2 
Minimum guarantees under licensing and similar agreements284.443.7 117.7 73.7 49.4 — — 
Defined benefit and postretirement benefit plans361.9 37.5 36.1 38.5 36.8 35.7 177.3 
Purchases of inventory, services, and other449.6 370.0 49.3 22.2 5.3 2.8 — 
Total$5,217.6 $661.2 $644.4 $311.6 $258.5 $778.5 $2,563.6 
(a) See Item 8 "Financial Statements and Supplementary Data—Note 7 to the Consolidated Financial Statements—Leases."
Liabilities for uncertain tax positions for which a cash tax payment is not expected to be made in the next twelve months are classified as other noncurrent liabilities. Due to the uncertainty regarding the periods in which examinations will be completed and limited information related to current audits, Mattel is not able to make reasonably reliable estimates of the periods in which cash settlements will occur with taxing authorities for the noncurrent liabilities.
Litigation
The content of Item 8 "Financial Statements and Supplementary Data—Note 12 to the Consolidated Financial Statements—Commitments and Contingencies—Litigation" is hereby incorporated by reference in this Item 7.
Employee Savings Plan
Mattel sponsors a 401(k) savings plan, the Mattel, Inc. Personal Investment Plan (the "Plan"), for its domestic employees. Contributions to the Plan include voluntary contributions by eligible employees and employer automatic and matching contributions by Mattel. The Plan allows employees to allocate both their voluntary contributions and their employer automatic and matching contributions to a variety of investment funds, including a fund that is invested in Mattel common stock (the "Mattel Stock Fund"). Employees are not required to allocate any of their Plan account balance to the Mattel Stock Fund, allowing employees to limit or eliminate their exposure to market changes in Mattel’s stock price. Furthermore, the Plan limits the percentage of the employee’s total account balance that may be allocated to the Mattel Stock Fund to 25%. Employees may generally reallocate their account balances on a daily basis. However, pursuant to Mattel’s insider trading policy, employees classified as insiders under Mattel’s insider trading policy are limited to certain periods in which they may make allocations into or out of the Mattel Stock Fund.
Application of Critical Accounting Policies and Estimates
Mattel makes certain estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses. The accounting policies and estimates described below are those Mattel considers most critical in preparing its consolidated financial statements. Management has discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of its Board of Directors, and the Audit Committee has reviewed the disclosures included below. These accounting policies and estimates include significant judgments made by management using information available at the time the estimates are made. As described below, however, these estimates could change materially if different information or assumptions were used instead.
For a summary of Mattel’s significant accounting policies, estimates, and methods used in the preparation of Mattel’s consolidated financial statements, see Item 8 "Financial Statements and Supplementary Data—Note 1 to the Consolidated Financial Statements—Summary of Significant Accounting Policies."
39


Accounts Receivable—Allowance for Credit Losses
The allowance for credit losses is 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. Management believes the accounting estimate related to the allowance for credit losses is a "critical accounting estimate" because significant judgment is required to evaluate the creditworthiness of its customers when estimating the collectability of its accounts receivable. In addition, the allowance requires a high degree of judgment since it involves estimation of the impact of both current and future economic factors in relation to its customers’ ability to pay amounts owed to Mattel. Significant changes in the assumptions used to develop the estimate could materially affect key financial measures, including other selling and administrative expenses, net income, and accounts receivable.
Mattel’s products are sold throughout the world. Products within the North America segment are sold directly to retailers, including discount and free-standing toy stores, chain stores, department stores, other retail outlets and, to a limited extent, wholesalers, and directly to consumers. Products within the International segment 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.
In recent years, the mass-market retail channel has experienced significant shifts in market share among competitors, causing some large retailers to experience liquidity problems. Mattel’s sales to customers are typically made on credit without collateral and are highly concentrated in the third and fourth quarters due to the seasonal nature of toy sales, which results in a substantial portion of trade receivables being collected during the latter half of the year and the first quarter of the following year. There is a risk that customers will not pay, or that payment may be delayed, because of bankruptcy, financial difficulty, or other factors beyond the control of Mattel. This could increase Mattel’s exposure to losses from bad debts.
A small number of customers account for a large share of Mattel’s net sales and accounts receivable. In 2021, Mattel’s three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 46% of net sales, and its ten largest customers, in the aggregate, accounted for approximately 53% of net sales. As of December 31, 2021, Mattel’s three largest customers accounted for approximately 47% of net accounts receivable, and its ten largest customers accounted for approximately 56% of net accounts receivable. Should one or more of Mattel’s large customers experience bankruptcy or financial difficulty, the allowance for credit losses may not be sufficient to cover such losses.
Mattel has procedures to mitigate its risk of exposure to losses from bad debts. Credit limits and payment terms are established based on the underlying criteria that collectability must be reasonably assured at the levels set for each customer. Extensive evaluations are performed on an ongoing basis throughout the fiscal year of each customer’s financial performance, cash generation, financing availability, and liquidity status. Customers are reviewed at least annually, with more frequent reviews being performed, if necessary, based on the customers’ financial condition and the level of credit being extended. For customers who are experiencing financial difficulty, management performs additional financial analyses prior to shipping to those customers on credit. Customers’ terms and credit limits are adjusted or revoked, if necessary, to reflect the results of the review. Mattel uses a variety of financial arrangements to ensure collectability of accounts receivable of customers, including requiring letters of credit, purchasing various forms of credit insurance with unrelated third parties, or requiring cash in advance of shipment.
The following table summarizes Mattel’s allowance for credit losses:
December 31,
2021
December 31,
2020
 (In millions, except percentage information)
Allowance for credit losses$10.7 $15.9 
As a percentage of total accounts receivable1.0 %1.5 %
Changes in the allowance for credit losses reflect management’s assessment of the factors noted above, including changes in current economic trends, business environment, past due accounts, disputed balances with customers, and the financial condition of customers. The allowance for credit losses is also affected by the time at which uncollectable accounts receivable balances are actually written off.
40


Inventories—Obsolescence Reserve
Inventories are stated at the lower of cost or net realizable value. Inventory obsolescence reserves are recorded for damaged, obsolete, excess, and slow-moving inventory. Inventory obsolescence expense is charged to cost of sales and establishes a lower cost basis for the inventory. Management believes that the accounting estimate related to the obsolescence reserve is a "critical accounting estimate" because significant judgment is required to evaluate whether there will be future demand for inventories held by Mattel as well as the prices at which customers are willing to pay for Mattel’s inventories. As more fully described below, obsolescence reserves required for Mattel’s inventory could be impacted by changes in public and consumer preferences, demand for product, or changes in the buying patterns of both retailers and consumers and inventory management of customers. Significant changes in the assumptions used to develop the estimate could materially affect key financial measures, including gross profit, net income, and inventories.
In the toy industry, orders are typically subject to cancellation or change at any time prior to shipment. Actual shipments of products ordered and order cancellation rates are affected by consumer acceptance of product lines, strength of competing products, marketing strategies of retailers, changes in buying patterns of both retailers and consumers, and overall economic conditions. Unexpected changes in these factors could result in excess inventory in a particular product line, which would require management to record a valuation adjustment on such inventory.
Mattel bases its production schedules for toy products on customer orders and forecasts, taking into account historical trends, results of market research, and current market information. Mattel ships products in accordance with delivery schedules specified by its customers, who usually request delivery within three months. In anticipation of retail sales in the traditional holiday season, Mattel significantly increases its production in advance of the peak selling period, resulting in a corresponding build-up of inventory levels in the first three quarters of its fiscal year. These seasonal purchasing patterns and requisite production lead times create risk to Mattel’s business associated with the underproduction of popular toys and the overproduction of toys that do not match consumer demand. Retailers are also attempting to manage their inventories more tightly, requiring Mattel to ship products closer to the time the retailers expect to sell the products to consumers. These factors increase inventory valuation risk because Mattel’s inventory levels may be adversely impacted by the need to pre-build products before orders are placed.
When conditions in the domestic and global economies become uncertain, it is difficult to estimate the level of growth or contraction for the economy as a whole. It is even more difficult to estimate growth or contraction in various parts of the economy, including the economies in which Mattel participates. Because all components of Mattel’s budgeting and forecasting are dependent upon estimates of growth or contraction in the markets it serves and demand for its products, economic uncertainty makes estimates of future demand for products more difficult. Such economic changes may affect the sales of Mattel’s products and its corresponding inventory levels, which could potentially impact the valuation of its inventory.
At the end of each quarter, management within each business segment, North America, International, and American Girl, performs a detailed review of its inventory on an item-by-item basis and identifies products that are believed to be impaired. Management assesses the need for, and the amount of, an obsolescence reserve based on the following factors:
Customer and/or consumer demand for the item;
Overall inventory positions of Mattel’s customers;
Strength of competing products in the market;
Quantity on hand of the item;
Sales price of the item;
Mattel’s cost for the item; and
Length of time the item has been in inventory.
The timeframe between when an estimate is made and the time of disposal depends on the above factors and may vary significantly. Generally, slow-moving inventory is liquidated during the next annual selling cycle.
41


The following table summarizes Mattel’s obsolescence reserve:
December 31,
2021
December 31,
2020
 (In millions, except percentage information)
Obsolescence reserve$31.3 $34.8 
As a percentage of gross inventory3.9 %6.2 %
Goodwill
Mattel tests goodwill for impairment annually or more often if an event or circumstance indicates that an impairment may have occurred. Management believes that the accounting estimates related to the fair value estimates of its goodwill are “critical accounting estimates” because assessing goodwill for impairment involves a high degree of judgment due to the prospective assumptions that underlie the fair value assessments, such as projecting future cash flows for Mattel’s reporting units and estimating the weighted-average cost of capital that a market participant would use as a discount rate. Significant changes in the assumptions used in the goodwill impairment tests could materially affect key financial measures, including net income and goodwill.
For purposes of evaluating whether goodwill is impaired, goodwill is allocated to various reporting units, which are at the operating segment level. Mattel’s reporting units are: (i) North America, (ii) International, and (iii) American Girl. Mattel then assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. This qualitative assessment is used as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test.
When the quantitative goodwill impairment test is necessary, impairment is determined by estimating the fair value of a reporting unit and comparing that value to the reporting unit’s carrying value. If the carrying amount of the reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to the excess, limited by the amount of goodwill in that reporting unit.
When performing the quantitative goodwill impairment test, Mattel determines the fair value based upon both the discounted cash flows that the business can be expected to generate in the future (the "Income Approach") and the market approach. The Income Approach valuation method requires Mattel to make projections of revenue, gross margin, operating costs, and working capital investment for the reporting unit over a multi-year period. Additionally, management must make an estimate of a weighted-average cost of capital that a market participant would use as a discount rate. Changes in these projections or estimates would impact the estimated fair value, which could significantly change the amount of any impairment ultimately recorded. The Income Approach valuation method is utilized for all reporting units. The market approach determines fair value utilizing earnings multiples of comparable public companies, which are reflective of the market in which each respective reporting unit operates, and recent comparable market transactions. The market approach is utilized for the North America and International reporting units.
In the third quarter of 2021, Mattel performed a qualitative assessment to determine whether it was more likely than not that the book value of each reporting unit exceeded its fair value. As a result of Mattel's qualitative assessment, it was determined that goodwill was not impaired. There were no events or changes in circumstances subsequent to the third quarter assessment that indicate that the carrying value of a reporting unit may exceed its fair value as of December 31, 2021. See Item 8 “Financial Statements and Supplementary Data—Note 3 to the Consolidated Financial Statements—Goodwill and Other Intangibles”
Sales Adjustments
Mattel routinely enters into arrangements with its customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. Such programs are based primarily on customer purchases, customer performance of specified promotional activities, and other specified factors such as sales to consumers. Management believes that the accounting estimates related to sales adjustments are “critical accounting estimates” because significant judgment is required to estimate related accruals, such as estimating future customer sales volume to support volume-based sales incentives, estimating volumes of defective products to support reserves for defective merchandise, and estimating future customer performance and consumer preferences that could impact the discretionary sales promotions. Significant changes in the assumptions used to develop the estimates could impact Mattel’s results of operations or financial condition.
42


The above-described programs primarily involve fixed amounts or percentages of sales to customers. The accruals for such programs, which can either be contractual or discretionary in nature, are based on an assessment of customer purchases, customer performance of specified promotional activities, and other specified factors such as customer sales volume. While certain sales adjustment amounts are readily determinable at year-end and do not require estimates, other sales adjustments (i.e., discretionary sales adjustments) require significant judgment by management to make these estimates. In making these estimates, management considers all available information, including the overall business environment, historical trends, and information from customers.
Accruals for these programs are recorded as sales adjustments that reduce gross billings in the period the related sale is recognized. Sales adjustments for such programs totaled $623.9 million or 11.4% as a percent of net sales in 2021 and $554.2 million or 12.1% as a percent of net sales in 2020.
Benefit Plan Assumptions
Mattel and certain of its subsidiaries have defined benefit and other postretirement benefit plans covering substantially all employees of these companies. Mattel’s benefit plan obligations and related expenses are determined using actuarial valuations based on specific assumptions used for each plan. Management believes that benefit plan obligations and related expenses are "critical accounting estimates" because significant judgment is required when determining the assumptions used in the actuarial valuations, due to their forward-looking nature, such as:
Weighted-average discount rate to be used to measure future plan obligations and interest cost component of plan income or expense;
Rate of future compensation increases (for certain defined benefit pension plans);
Expected long-term rate of return on plan assets (for funded plans); and
Health care cost trend rates (for other postretirement benefit plans).
Significant changes in these assumptions could impact Mattel’s results of operations or financial condition. Management believes that the assumptions utilized to record its obligations under its plans are reasonable based on the plans’ experience and advice received from its outside actuaries. Mattel reviews its benefit plan assumptions annually and modifies its assumptions based on current rates and trends as appropriate. The effects of such changes in assumptions are amortized as part of plan income or expense in future periods.
At the end of each fiscal year, Mattel determines the weighted-average discount rate used to calculate the projected benefit obligation. The discount rate is an estimate of the current interest rate at which the benefit plan liabilities could be effectively settled at the end of the year. The discount rate also impacts the interest cost component of plan income or expense. As of December 31, 2021, Mattel determined the discount rate for its domestic benefit plans used in determining the projected and accumulated benefit obligations to be 2.5%, as compared to 2.2% as of December 31, 2020. In estimating this rate, Mattel reviews rates of return on high-quality corporate bond indices, which approximate the timing and amount of benefit payments. Assuming all other benefit plan assumptions remain constant, a one percentage point decrease in the discount rate would result in an immaterial change in benefit plan expense during 2022.
As a result of the curtailment of Mattel's domestic defined benefit pension plans, the rate of future compensation increase was not applicable for the 2021 and 2020 benefit obligation and net periodic pension cost calculations.
The long-term rate of return on plan assets is based on management’s expectation of earnings on the assets that secure Mattel’s funded defined benefit pension plans, taking into account the mix of invested assets, the arithmetic average of past returns, economic and stock market conditions and future expectations, and the long-term nature of the projected benefit obligation to which these investments relate. The long-term rate of return is used to calculate the expected return on plan assets that is used in calculating pension income or expense. The difference between this expected return and the actual return on plan assets is deferred, net of tax, and is included in accumulated other comprehensive loss. The net deferral of past asset gains or losses affects the calculated value of plan assets and, ultimately, future pension income or expense. Mattel’s long-term rate of return used in determining plan expense for its domestic defined benefit pension plans was 5.0% in 2021 and 5.5% in 2020. Assuming all other benefit plan assumptions remain constant, a one percentage point decrease in the expected return on plan assets would result in an immaterial change in benefit plan expense during 2022. See Item 8 "Financial Statements and Supplementary Data—Note 4 to the Consolidated Financial Statements—Employee Benefit Plans."
43


The health care cost trend rates used by Mattel for its other postretirement benefit plans reflect management’s best estimate of expected claim costs over the next ten years. These trend rates impact the service and interest cost components of plan expense. Rates ranging from 7.0% in 2021 to 4.5% in 2027, with rates assumed to stabilize in 2027 and thereafter, were used in determining plan expense for 2021. These rates are reviewed annually and are estimated based on historical costs for participants in the other postretirement benefit plans as well as estimates based on current economic conditions. As of December 31, 2021, Mattel maintained the health care cost trend rates for its other postretirement benefit plan obligation at 7.0% for all participants. For all participants, the cost trend rates are estimated to reduce to 4.5% by 2028, with rates assumed to stabilize in 2028. Assuming all other postretirement benefit plan assumptions remain constant, a one percentage point increase in the assumed health care cost trend rates would result in an immaterial change in benefit plan expense during 2022.
Share-Based Payments
Mattel recognizes the cost of service-based employee share-based payment awards based on the estimated fair value of the award as of the grant date. The related expense is recognized on a straight-line attribution basis over the requisite employee service period, net of estimated forfeitures. Management believes that the estimated fair value of share-based payment awards include "critical accounting estimates" because significant judgement is required to determine the estimated fair value, including the expected life of the award, expected volatility of Mattel’s stock price, expected dividend yield, and the amount of awards that will be forfeited prior to vesting. Significant changes in the assumptions used to develop the estimated fair value of share-based payment awards could materially affect key financial measures, including net income.
With the exception of certain market-based options granted in 2018, which were valued using a Monte Carlo valuation methodology, Mattel estimates the fair value of options granted using the Black-Scholes valuation model. The expected life of the options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience. Expected stock price volatility is based on the historical volatility of Mattel’s stock for a period approximating the expected life, the expected dividend yield is based on Mattel’s most recent actual annual dividend payout, and the risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues approximating the expected life.
There were no market-based options granted during 2021 and 2020. The weighted-average grant-date fair value of options granted during 2021 and 2020, valued using the Black-Scholes valuation model was $9.31 and $4.60, respectively. The following weighted-average assumptions were used in determining the fair value of options granted:
20212020
Expected life (in years)6.25.9
Risk-free interest rate0.8 %0.3 %
Volatility factor43.6 %43.7 %
Dividend yield— %— %
The following tables summarize the sensitivity of valuation assumptions within the calculation of stock option fair values, if all other assumptions are held constant:
Increase in Assumption FactorIncrease (Decrease) in
Fair Value
Expected life (in years)17.0 %
Risk-free interest rate%4.3 %
Volatility factor%1.9 %
Dividend yield%(10.0)%
(Decrease) in Assumption FactorIncrease (Decrease) in
Fair Value
Expected life (in years)(1)(7.8)%
Risk-free interest rate(1)%(4.3)%
Volatility factor(1)%(2.0)%
Dividend yieldN/AN/A
44


Mattel recognized total share-based compensation expense related to stock options, restricted stock units ("RSUs"), and performance RSUs ("performance awards") of $60.1 million and $60.2 million during 2021 and 2020, respectively, which is included in other selling and administrative expenses in the consolidated statements of operations. As of December 31, 2021, total unrecognized compensation cost related to unvested share-based payments totaled $89.5 million and is expected to be recognized over a weighted-average period of 2.1 years. See Item 8 "Financial Statements and Supplementary Data—Note 8 to the Consolidated Financial Statements—Share-Based Payments"
Income Taxes
Mattel’s income tax provision and related income tax assets and liabilities are based on actual and expected future income, U.S. and foreign statutory income tax rates, and tax regulations and planning opportunities in the various jurisdictions in which Mattel operates. Management believes that the accounting estimates related to income taxes are "critical accounting estimates" because significant judgment is required in interpreting tax regulations in the United States and in foreign jurisdictions, evaluating Mattel’s worldwide uncertain tax positions, and assessing the likelihood of realizing certain tax benefits. Actual results could differ materially from those judgments, and changes in judgments could materially affect Mattel’s consolidated financial statements.
Certain income and expense items are accounted for differently for financial reporting and income tax purposes. As a result, the income tax expense reflected in Mattel’s consolidated statements of operations is different than that reported in Mattel’s tax returns filed with the taxing authorities. Some of these differences are permanent, such as expenses that are not deductible in Mattel’s tax return, and some are temporary differences that reverse over time, such as depreciation expense. These timing differences create deferred income tax assets and liabilities. Deferred income tax assets generally represent items that can be used as a tax deduction or credit in Mattel’s tax returns in future years for which Mattel has already recorded a tax benefit in its consolidated statements of operations. Mattel records a valuation allowance to reduce its deferred income tax assets if, based on the weight of available evidence, management believes expected future taxable income is not likely to support the use of a deduction or credit in that jurisdiction. Management evaluates the level of Mattel’s valuation allowances at least annually, and more frequently if actual operating results differ significantly from forecasted results.
Mattel records unrecognized tax benefits for U.S. federal, state, local, and foreign tax positions related primarily to transfer pricing, tax credits claimed, tax nexus, and apportionment. For each reporting period, management applies a consistent methodology to measure unrecognized tax benefits and all unrecognized tax benefits are reviewed periodically and adjusted as circumstances warrant. Mattel’s measurement of its unrecognized tax benefits is based on management’s assessment of all relevant information, including prior audit experience, the status of audits, conclusions of tax audits, lapsing of applicable statutes of limitations, identification of new issues, and any administrative guidance or developments. Mattel recognizes unrecognized tax benefits in the first financial reporting period in which information becomes available indicating that such benefits will more likely than not (a greater than 50 percent likelihood) be realized.
In the normal course of business, Mattel is regularly audited by federal, state, local, and foreign tax authorities. The ultimate settlement of any particular issue with the applicable taxing authority could have a material impact on Mattel’s consolidated financial statements. See Item 8 "Financial Statements and Supplementary Data—Note 15 to the Consolidated Financial Statements—Income Taxes."
New Accounting Pronouncements
See Item 8 "Financial Statements and Supplementary Data—Note 1 to the Consolidated Financial Statements—Summary of Significant Accounting Policies."
Non-GAAP Financial Measure
To supplement the financial results presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), Mattel presents a non-GAAP financial measure within the meaning of Regulation G promulgated by the SEC. The non-GAAP financial measure that Mattel presents is currency exchange rate impact. Mattel uses this measure to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. Mattel believes that the disclosure of this non-GAAP financial measure provides useful supplemental information to investors to be able to better evaluate ongoing business performance and certain components of Mattel's results. This measure is not, and should not be viewed as, a substitute for GAAP financial measures and may not be comparable to similarly-titled measures used by other companies.
45


Currency Exchange Rate Impact
The currency exchange rate impact reflects the portion (expressed as a percentage) of changes in Mattel's reported results that are attributable to fluctuations in currency exchange rates.
For entities reporting in currencies other than the U.S. dollar, Mattel calculates the percentage change of period-over-period results at constant currency exchange rates (established as described below) by translating current period and prior period results using these rates. It then determines the currency exchange rate impact percentage by calculating the difference between the percentage change at such constant currency exchange rates and the percentage change at actual exchange rates.
The constant currency exchange rates are determined by Mattel at the beginning of each year and are applied consistently during the year. They are generally different from the actual exchange rates in effect during the current or prior period due to volatility in actual foreign exchange rates. Mattel considers whether any changes to the constant currency rates are appropriate at the beginning of each year. The exchange rates used for these constant currency calculations are generally based on prior year actual exchange rates.
Mattel believes that the disclosure of the percentage impact of foreign currency changes is useful supplemental information for investors to be able to gauge Mattel’s current business performance and the longer-term strength of its overall business since foreign currency changes could potentially mask underlying sales trends. The disclosure of the percentage impact of foreign exchange allows investors to calculate the impact on a constant currency basis and also enhances their ability to compare financial results from one period to another.
Key Performance Indicator
Gross billings represent amounts invoiced to customers. It does not include the impact of sales adjustments, such as trade discounts and other allowances. Mattel presents changes in gross billings as a metric for comparing its aggregate, categorical, brand, and geographic results to highlight significant trends in Mattel's business. Changes in gross billings are discussed because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and not associated with categories, brands, and individual products.
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.
Foreign Currency Exchange Rate Risk
Currency exchange rate fluctuations impact Mattel’s results of operations and cash flows. Inventory transactions denominated in the Euro, Mexican peso, British pound sterling, Canadian dollar, Russian ruble, Australian dollar, and Polish zloty were the primary transactions that caused foreign currency transaction exposure for Mattel in 2021. Mattel seeks to mitigate its exposure to market risk by monitoring its foreign currency transaction exposure for the year and partially hedging such exposure using foreign currency forward exchange contracts primarily to hedge its purchase and sale of inventory and other intercompany transactions denominated in foreign currencies. These contracts generally have maturity dates of up to 24 months. For those intercompany receivables and payables that are not hedged, the transaction gains or losses are recorded in the consolidated statements of operations in the period in which the exchange rate changes as part of operating income or other non-operating expense, net based on the nature of the underlying transaction. Transaction gains or losses on hedged intercompany inventory transactions are recorded in the consolidated statements of operations in the period in which the inventory is sold to customers. In addition, Mattel manages its exposure to currency exchange rate fluctuations through the selection of currencies used for international borrowings. Mattel does not trade in financial instruments for speculative purposes.
Mattel’s financial position is also impacted by currency exchange rate fluctuations on translation of its net investments in subsidiaries with non-U.S. dollar functional currencies. Assets and liabilities of subsidiaries with non-U.S. dollar functional currencies are translated into U.S. dollars at fiscal year-end exchange rates. Income, expense, and cash flow items are translated at weighted-average exchange rates prevailing during the fiscal year. The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive loss within stockholders’ equity. Mattel’s primary currency translation adjustments in 2021 were related to its net investments in entities having functional currencies denominated in the Turkish lira, Chilean peso, Mexican peso, Euro, and Brazilian real.
46


There are numerous factors impacting the amount by which Mattel’s financial results are affected by foreign currency translation and transaction gains and losses resulting from changes in currency exchange rates, including, but not limited to, the level of foreign currency forward exchange contracts in place at a given time and the volume of foreign currency-denominated transactions in a given period. However, assuming that such factors were held constant, Mattel estimates that a one percent change in the U.S. dollar would have impacted Mattel's 2021 net sales by approximately 0.4% and net income per share by approximately $0.01.
Mattel’s foreign currency forward exchange contracts that were used to hedge firm commitments and anticipated transactions as of December 31, 2021 are shown below. All contracts in the following table are against the U.S. dollar and are maintained by reporting units with a U.S. dollar functional currency, with the exception of the Indonesian rupiah contracts, which are maintained by entities with an Indonesian rupiah functional currency.
 BuySell
 Contract
Amount
Weighted-Average
Contract
Rate
Fair
Value
Contract
Amount
Weighted-Average
Contract
Rate
Fair
Value
 (In thousands of U.S. dollars, except for rates)
Australian dollar (a)$— — $— $80,337 0.73 $895 
British pound sterling (a)45,557 1.34 335 — — — 
Canadian dollar (a)37,509 0.78 536 58,806 0.79 343 
Czech koruna11,959 22.36 309 — — — 
Danish krone2,915 6.60 32 — — — 
Euro (a)73,122 1.13 395 301,661 1.18 10,139 
Hungarian forint6,029 325.92 66 — — — 
Indonesian rupiah 59,955 14,921 1,486 — — — 
Japanese yen— — — 10,093 114 88 
Mexican peso23,298 20.73 262 3,839 20.51 20 
New Zealand dollar (a)6,783 0.67 106 — — — 
Polish zloty22,470 4.10 423 — — — 
Russian ruble63,163 73.78 (723)— — — 
Singapore dollar11,854 1.37 205 — — — 
South African rand— — — 1,326 15.92 
Swiss franc26,803 0.92 429 — — —