MATTEL INC /DE/

Previous wording

If any of the risks, events, and uncertainties described 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 or outcomes, or the timing of those results or outcomes, 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 global economic or geopolitical climate and additional or unforeseen circumstances, developments, or risks. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results or outcomes. 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. The risk factors below describe factors, events, or contingencies that could have an adverse effect on Mattel and are not intended as an exhaustive discussion of whether any such factors, events, or contingencies have or have not occurred. Mattel expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Current wording

If any of the risks, events, and uncertainties described 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 or outcomes, or the timing of those results or outcomes, 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 global economic or geopolitical climate and additional or unforeseen circumstances, developments, or risks. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results or outcomes. 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. The risk factors below reflect Mattel's beliefs and opinions as to factors, events, or contingencies that could have an adverse effect on Mattel and are not intended as an exhaustive discussion of whether any such factors, events, or contingencies have or have not occurred. Mattel expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise, except as required by law.

Previous wording

Mattel's business and operating results depend largely upon the appeal of its products, driven by both innovation and marketing. Consumer preferences are continuously changing and can vary by geographical markets. Product life cycles and consumer preferences continue to be affected by the rapidly increasing use and proliferation of social and digital media by consumers, and the speed with which information is shared. 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 and can result in short consumer life cycles. Mattel offers a wide range of products for children, fans of all ages, and families that includes, among others, toys for infants, toddlers, and preschoolers, toys for school-aged children, dolls, vehicles, action figures, building sets, games, including digital, puzzles, plush, educational toys, technology-related products, media-driven products, and fashion-related items. Mattel competes domestically and internationally with a wide range of large and small manufacturers, marketers, and sellers of such products, consumer electronics, such as tablets and mobile devices, and other play products, as well as retailers, which means that Mattel's market position is always at risk. Mattel's ability to maintain or increase its current product sales, or establish product sales with new, innovative toys, depends on Mattel's ability to satisfy play preferences, enhance existing products, develop and introduce new products, and achieve market acceptance of these products. These challenges are intensifying due to trends towards shorter life cycles for individual toy products, the phenomenon of children outgrowing traditional toys at younger ages, an increasing use of more sophisticated technology in toys, including machine learning and AI, and an evolving path to purchase.

Current wording

Mattel's business and operating results depend largely upon the appeal of its products, driven by both innovation and marketing. Consumer preferences are continuously changing and can vary by geographical markets. Product life cycles and consumer preferences continue to be affected by the rapidly increasing use and proliferation of social and digital media by consumers, and the speed with which information is shared. 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 and can result in short consumer life cycles. Mattel offers a wide range of products across multiple age groups and consumer segments that include, among others, toys for infants, toddlers, preschoolers, and school-aged children, as well as products targeted towards adult fans and collectors, dolls, vehicles, action figures, building sets, games, including digital, puzzles, plush, educational, and technology-enabled products, media-driven products, and fashion-related items. Mattel competes domestically and internationally with a wide range of large and small manufacturers, marketers, and sellers of such products, consumer electronics, such as tablets and mobile devices, and other play products, as well as retailers, which means that Mattel's market position is always at risk. Mattel's ability to maintain or increase its current product sales, or establish product sales with new, innovative toys, depends on Mattel's ability to satisfy play preferences, enhance existing products, develop and introduce new products, and achieve market acceptance of these products. These challenges are intensifying due to trends towards shorter life cycles for individual toy products, children outgrowing traditional toys at younger ages, an increasing incorporation of more technology in toys, including machine learning and AI, and an evolving path to purchase.

Previous wording

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 lessened, and may in the future continue to lessen, Mattel's ability to secure, maintain, and renew popular licenses to entertainment products developed by other parties and licensed to Mattel on beneficial terms, if at all, or require Mattel to pay licensors higher royalties and higher minimum guaranteed payments 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 industry and entertainment industry are low and the increasing prevalence of digital media has further increased the ability for new participants to enter Mattel's markets, and broadened the array of companies Mattel competes with. New market participants with a popular product idea or entertainment property can become a significant source of competition for Mattel and its products in a very short period of time. Reduced demand for Mattel's brands, products, and product lines as a result of these factors may adversely affect Mattel's business, financial condition, and results of operations.

Current wording

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 lessened, and may in the future continue to lessen, Mattel's ability to secure, maintain, and renew popular licenses to entertainment products developed by other parties and licensed to Mattel on beneficial terms, if at all, or require Mattel to pay licensors higher royalties and higher minimum guaranteed payments 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, entertainment, and digital games industries are low and the increasing prevalence of digital media has further increased the ability for new participants to enter Mattel's markets, and broadened the array of companies Mattel competes with. New market participants with a popular product idea or entertainment property can become a significant source of competition for Mattel and its products in a very short period of time. Reduced demand for Mattel's brands, products, and product lines as a result of these factors may adversely affect Mattel's business, financial condition, and results of operations.

Previous wording

Inaccurately anticipating changes and trends in popular culture, media, fashion, or technology can adversely affect Mattel's sales, financial condition, and results of operations.

Current wording

Inaccurately anticipating changes and trends in popular culture, media, fashion, or technology can adversely affect Mattel's business, financial condition, and results of operations.

Previous wording

Mattel expects that children will continue to be interested in product offerings incorporating sophisticated technology, such as digital games, consumer electronics, and social and digital media, at increasingly younger ages. As Mattel introduces more sophisticated technology products, such products tend to have higher design, development, and production costs, follow longer timelines, and require different competencies compared to Mattel's more traditional toys and games. The 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.

Current wording

Mattel expects that children will continue to be interested in product offerings incorporating technology, such as digital games, consumer electronics, and social and digital media, at increasingly younger ages. As Mattel introduces more products incorporating technology, 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 products incorporating technology is potentially even greater 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.

Previous wording

Any inability by Mattel to accurately anticipate trends in popular culture, media, fashion, or technology may cause its products not to be accepted by children, parents, fans, or families and may adversely affect its sales, financial condition, and results of operations.

Current wording

Any inability by Mattel to accurately anticipate trends in popular culture, media, fashion, or technology may cause its products not to be accepted by children, parents, fans, or families and may adversely affect its business, financial condition, and results of operations.

Previous wording

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 large percentage of all toy purchases occurring during the relatively brief traditional holiday season. As a result, Mattel's operating results depend, in large part, on sales during the 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.

Current wording

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 large percentage of all toy purchases occurring during the relatively brief traditional holiday season. As a result, Mattel's operating results depend, in large part, on sales during the 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, and a number of retailers have moved a portion of their ordering from direct import to domestic shipping, which has further shifted orders to later in the year, especially the fourth quarter. These actions have resulted, and may result in the future, in supply chain disruption and more build-up of inventories. 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.

Previous wording

In addition, as a result of the seasonal nature of Mattel's business, Mattel may be adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events, such as pandemics or other public health crises, terrorist attacks, economic shocks, severe weather due to climate change or otherwise, earthquakes or other catastrophic events, that harm the retail environment or consumer buying patterns during its key selling season, or by other events, such as strikes, disruptions in transportation, port delays, regional conflict, tariffs, trade restrictions, or trade barriers, and geopolitical and macro-economic factors, including high inflation and high interest rates, that interfere with the manufacture or shipment of goods during the critical months leading up to the holiday purchasing season.

Current wording

In addition, as a result of the seasonal nature of Mattel's business, Mattel may be adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events, such as pandemics or other public health crises, terrorist attacks, economic shocks, severe weather due to climate change or otherwise, earthquakes or other catastrophic events, that harm the retail environment or consumer buying patterns during its key selling season, or by other events, such as strikes, disruptions in transportation, port delays, regional conflicts, tariffs, trade restrictions, or trade barriers, and geopolitical and macro-economic factors, including high inflation and high interest rates, that interfere with the manufacture or shipment of goods during the critical months leading up to the holiday purchasing season.

Previous wording

A small number of customers account for a large share of Mattel's worldwide consolidated net sales. In 2024, Mattel's three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 44% of worldwide consolidated net sales (Walmart at $1.17 billion, Target at $0.68 billion, and Amazon at$0.51 billion) and its ten largest customers, in the aggregate, accounted for approximately 51% of net sales. This concentration exposes Mattel to risk of a material adverse effect if one or more of Mattel's large customers were to significantly reduce purchases for any reason, favor competitors or new entrants, redeploy their retail floor space to other product categories, alter the manner in which they promote Mattel's products or the resources they devote to promoting and selling Mattel's products, or increase their direct competition with Mattel by expanding their private-label business. 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.

Current wording

A small number of customers account for a large share of Mattel's worldwide consolidated net sales. In 2025, Mattel's three largest customers, Walmart, Target, and Amazon, in the aggregate, accounted for approximately 42% of worldwide consolidated net sales (Walmart at $1.08 billion, Target at $0.63 billion, and Amazon at $0.52 billion) and its ten largest customers, in the aggregate, accounted for approximately 49% of worldwide consolidated 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, redeploy their retail floor space to other product categories, alter the manner in which they promote Mattel's products or the resources they devote to promoting and selling Mattel's products, or increase their direct competition with Mattel by expanding their private-label business. 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.

Previous wording

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.

Current wording

Failure to successfully implement new initiatives or meet product introduction schedules could have an adverse effect on Mattel's business, financial condition, and results of operations.

Previous wording

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.

Current wording

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 such 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.

Previous wording

As a part of its efforts to cut costs, achieve better efficiencies, and increase productivity and service quality, Mattel relies significantly on vendor and outsourcing relationships with third parties for services and systems including manufacturing, transportation, logistics, and information technology. Any shortcoming of a Mattel vendor or outsourcer, particularly an issue related to compliance or reputation, or affecting the quality of these services or systems, risks 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.

Current wording

As a part of its efforts to cut costs, achieve better efficiencies, and increase productivity and service quality, Mattel relies significantly on vendor and outsourcing relationships with third parties for services and systems including manufacturing, transportation, logistics, and information technology. Any shortcoming of a Mattel vendor or outsourcer, particularly an issue related to compliance or reputation, or affecting the quality of these services or systems, risks 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 could cause delays in product sales and reduce the efficiency of Mattel's operations, and significant capital investments could be required to remediate the problem.

Previous wording

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.

Current wording

The production and sale of private-label, retailer-owned, and exclusive-branded toys by Mattel's retail customers may result in lower purchases of Mattel-branded products by those retail customers.

Previous wording

Mattel designs, manufactures, and markets a wide variety of 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 and entertainment products are often impacted by a number of factors beyond Mattel's control, including, inflation, job losses, foreclosures, bankruptcies, reduced access to credit, interest rates, tax rates, investment losses, lower consumer confidence, and other macro-economic factors that affect consumer spending behavior. These or other factors can reduce the amount that consumers spend on the purchase of Mattel's products. Deterioration of global or regional economic conditions have at times adversely affected Mattel's business, financial condition, and results of operations. Unfavorable economic conditions can also impair the ability of those with whom Mattel does business to satisfy their obligations to us. Future deterioration of global or regional 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.

Current wording

Mattel designs, manufactures, and markets a wide variety of 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, entertainment, and digital game products are often impacted by a number of factors beyond Mattel's control including inflation, job losses, foreclosures, bankruptcies, reduced access to credit, interest rates, tax rates, investment losses, lower consumer confidence, tariffs, and other macro-economic factors that affect consumer spending behavior. These or other factors can reduce the amount that consumers spend on the purchase of Mattel's products. Deterioration of global or regional economic conditions has at times adversely affected Mattel's business, financial condition, and results of operations. Unfavorable economic conditions can also impair the ability of those with whom Mattel does business to satisfy their obligations to it. Future deterioration of global or regional 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.

Previous wording

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 purchases of its products. Those steps may increase costs and/or decrease profit margins and are not always successful. During periods of increased inflation, such as Mattel is currently facing, Mattel has increased prices of certain products, and may in the future need to increase prices further in order to cover increased costs of goods sold, which may reduce demand for products. There can be no guarantee that Mattel will be able to successfully increase prices in the future or that the price increases Mattel has already taken will offset the entirety of additional costs it has incurred and may incur in the future. The inability to adequately increase prices to offset increased costs and inflationary pressures, or otherwise mitigate the impact of these macro-economic conditions and market disruptions, may also increase costs and/or decrease profit margins.

Current wording

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 purchases of its products. Those steps may increase costs and/or decrease profit margins and are not always successful. During periods of increased inflation, Mattel has increased prices of certain products, and may in the future need to increase prices further, in order to cover increased costs of goods sold, which may reduce demand for products. There can be no guarantee that Mattel will be able to successfully increase prices in the future or that the price increases Mattel has already taken will offset the entirety of additional costs it has incurred and may incur in the future. The inability to adequately increase prices to offset increased costs and inflationary pressures, or otherwise mitigate the impact of these macro-economic conditions and market disruptions, may also increase costs and/or decrease profit margins.

Previous wording

Mattel operates facilities and sells products in numerous countries outside the United States. During 2024, Mattel's International segment net sales were 41% of Mattel's total consolidated net sales. Furthermore, Mattel's net investment in its foreign subsidiaries and its results of operations and cash flows are subject to changes in currency exchange rates and regulations. Significant inflation in economies of certain foreign countries can result in foreign currency devaluation, which negatively impacts Mattel's profitability. 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, such as currency control regulations in China, and may also impact the fluctuation of currencies in the countries where Mattel conducts business or has invested capital. 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.

Current wording

Mattel operates facilities and sells products in numerous countries outside the United States. During 2025, Mattel's International segment net sales were 44% 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. Significant inflation in 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, such as currency control regulations in China, and may also impact the fluctuation of currencies in the countries where Mattel conducts business or has invested capital. 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.

Previous wording

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.

Current wording

An increasing portion of Mattel's business may come from new or emerging markets, and growing business in these markets presents additional challenges.

Previous wording

An increasing portion of Mattel's net revenues may come from new and emerging markets, including China and India. Operating in new and emerging markets, each with its own unique consumer preferences and business climates, presents additional challenges that Mattel must meet. In addition, sales and operations in new and emerging markets are subject to other risks associated with international operations. Such risks include complications in complying with different laws in varying jurisdictions; dealing with changes in governmental policies and the evolution of laws and regulations that impact Mattel's product offerings and related enforcement; difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets, which are often quite different from those in the 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, trade restrictions, trade barriers, quotas, or other protectionist measures.

Current wording

An increasing portion of Mattel's net revenues may come from new or emerging markets, including China and India. Operating in new or 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 or 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, trade restrictions, trade barriers, quotas, or other trade measures. Failure to properly manage these risks could adversely affect Mattel's business, financial condition, and results of operations.

Previous wording

Disruptions due to political instability, civil unrest, the threat or occurrence of war or terrorist activities, pandemics or other public health crises, or earthquakes or other natural disasters out of Mattel's control and actions taken by governments, businesses, and individuals in response to such events could adversely affect Mattel's business, financial condition, and results of operations.

Current wording

Disruptions due to political instability, civil unrest, the threat or occurrence of war or terrorist activities, pandemics or other public health crises, climate change, or earthquakes or other natural disasters out of Mattel's control and actions taken by governments, businesses, and individuals in response to such events could adversely affect Mattel's business, financial condition, and results of operations.

Previous wording

Mattel's business and operations could be materially and adversely affected by political instability, civil unrest, the threat or occurrence of war or terrorist activities, pandemics or other public health crises, earthquakes, natural disasters, and other natural or man-made economic, political, or environmental disruptions. Disruptions, and government responses to any disruption, could adversely affect Mattel's business, financial condition, and results of operations and may vary based on the length and severity of the disruption. For example, the COVID-19 pandemic and the actions taken by governments, businesses, and individuals in response thereto affected how Mattel and its suppliers and partners operated their businesses, caused supply chain disruption and retail store closures, and adversely affected Mattel's operating results.

Current wording

Mattel's business and operations could be materially and adversely affected by political instability, civil unrest, the threat or occurrence of war or terrorist activities, pandemics or other public health crises, earthquakes, natural disasters, and other natural or man-made economic, political, or environmental disruptions. Disruptions, and government responses to any disruption, could adversely affect Mattel's business, financial condition, and results of operations and may vary based on the length and severity of the disruption.

Previous wording

Mattel owns, operates, and manages manufacturing facilities and utilizes third-party manufacturers and suppliers throughout Asia, primarily in China, Indonesia, Malaysia, Vietnam and Thailand, and in Mexico. Risks from political instability, civil unrest, the threat or occurrence of war or terrorist activities, and other geopolitical or macro-economic conditions exist in certain of these countries, which could temporarily or permanently damage the manufacturing operations of Mattel or its third-party manufacturers located there. In addition, 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 wildfire, power outage, or other natural or manmade disaster, including as a result of climate change, could disrupt Mattel's operations or those of its business partners and impair production or distribution of its products, damage inventory, interrupt critical functions, or otherwise affect its business negatively.

Current wording

In addition, 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 wildfire, power outage, or other natural or manmade disaster, including as a result of climate change, could disrupt Mattel's operations or those of its business partners and impair production or distribution of its products, damage inventory, interrupt critical functions, or otherwise affect its business negatively.

Previous wording

Political developments, including trade relations, and/or trade actions could adversely impact Mattel, its personnel and facilities, its customers and suppliers, retail and financial markets, and general economic conditions.

Current wording

Political developments, including in trade relations, and/or trade actions could adversely impact Mattel, its customers or suppliers, and general economic conditions.

Previous wording

Mattel's business is worldwide in scope, and political instability, civil unrest, the deterioration of the political, economic, or social situation in a country in which Mattel has significant sales or operations, or the breakdown of trade relations between the 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. 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. For example, the United States has implemented certain trade actions directed at China, including imposing increased tariffs on certain goods imported into the United States from China, which has resulted in retaliatory tariffs by China. China has also implemented various trade actions directed at the United States. Further trade actions by the United States or China, or trade actions by or directed toward other countries, such as Mexico or Canada, could result in diverting more production to, or sourcing from, countries other than China or Mexico, could raise the cost of Mattel products in those markets, and could cause customers in those markets to seek domestic or non-U.S. sources for products that Mattel sells, or to be pressured or incentivized by foreign governments not to purchase goods of U.S. companies, all of which could harm Mattel's future sales in these those markets, adversely affecting Mattel's business, financial condition, and results of operations.

Current wording

Mattel's business is worldwide in scope, and political instability, civil unrest, or the deterioration of the political, economic, or social situation or changes to trade policy or the breakdown of trade relations with the United States in a country in which Mattel has significant manufacturing, operations, or sales, or from which Mattel sources raw materials, components, or finished products could adversely affect Mattel's business, financial condition, and results of operations.

Previous wording

In addition, the United States, United Kingdom, and European Union, among other jurisdictions, have each imposed export controls, as well as financial and economic sanctions, currency controls, and other trade actions, on certain products, technologies, industry sectors, and parties in Russia and Belarus as a result of the Russia-Ukraine war, which have resulted and could further result in retaliatory measures and actions by Russia. Any increased trade barriers or restrictions on global trade imposed by the United States, whether toward China, Russia, or other countries, or further retaliatory trade measures or currency controls taken by China, Russia, or other countries in response, could further adversely affect Mattel's business, financial condition, and results of operations.

Current wording

In addition, the United States, United Kingdom, and EU, among other jurisdictions, have each imposed export controls, as well as financial and economic sanctions, currency controls, and other trade actions, on certain products, technologies, industry sectors, and parties in Russia and Belarus as a result of the Russia-Ukraine war, which have resulted and could further result in retaliatory measures and actions by Russia.

Previous wording

Evolving stakeholder expectations, regulatory requirements, and increasing scrutiny relating to sustainability matters including with respect to climate change, could expose Mattel to potential liabilities, increase costs, cause reputational harm, and cause other adverse impacts to Mattel's business.

Current wording

Evolving and sometimes conflicting stakeholder expectations, regulatory requirements, and scrutiny relating to sustainability matters, could expose Mattel to potential liabilities, increase costs, cause reputational harm, and cause other adverse impacts to Mattel's business.

Previous wording

In addition, Mattel expects to incur capital expenditures, compliance costs, and other costs to comply with increasingly stringent sustainability laws, compliance reporting, and enforcement policies, including those related to the environment. Foreign, federal, state, and local governments have and may in the future focus on enacting laws and regulations regarding the management of, or disclosure regarding, sustainability matters, such as, among other topics, climate change and the regulation of greenhouse gas (“GHG”) emissions, energy use, sustainability claims and labeling requirements, responsible sourcing, and the recyclability or recoverability of packaging and products. For example, in October 2023, California enacted legislation addressing the disclosure of GHG emissions, climate-related risks, certain environmental claims, and the use or sale of voluntary carbon offsets. Federal agencies, such as the Securities and Exchange Commission and other U.S. agencies, have at times in the past increased their focus on climate, human capital, or other sustainability-related disclosures, claims, and practices. Global efforts have been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global sustainability issues. Further, the EU has passed a variety of sustainability-related directives and regulations in recent years as part of its Green Deal, such as the Corporate Sustainability Reporting Directive, which will require sustainability reporting across a broad range of sustainability topics for both EU and non-EU companies, and the Corporation Sustainability Due Diligence Directive, which will require both EU and non-EU companies to take certain steps to address human rights- and climate-related risks and impacts. Compliance with this evolving legislative and regulatory landscape will require management’s time and resources, impose increased costs, and could result in operational disruptions. Further, Mattel’s failure to comply with sustainability-related laws and regulations could lead to government enforcement actions, penalties, litigation, and/or reputational harm.

Current wording

Mattel expects to incur capital expenditures, compliance costs, and other costs to comply with evolving (and at times inconsistent) sustainability laws, regulations, compliance reporting, and enforcement policies by foreign, federal, state, and local governments, including those related to the environment, which may expose Mattel to additional legal, financial, or reputational risks and unpredictable reporting obligations or business requirements. Foreign, federal, state, and local governments have enacted, and may in the future focus on enacting, laws and regulations regarding the management of, or disclosure regarding, sustainability matters, such as, among other topics, climate change and the regulation of greenhouse gas ("GHG") emissions, energy use, sustainability claims and labeling requirements, responsible sourcing, and the recyclability or recoverability of packaging and products. Compliance with this evolving and sometimes conflicting legislative and regulatory landscape will require management's time and resources, impose increased costs, and could result in operational disruptions. Mattel's failure to comply with sustainability-related laws and regulations could lead to government enforcement actions, penalties, litigation, and/or reputational harm.

Previous wording

A variety of Mattel's stakeholders, including regulators, investors, advisory firms, rating agencies, and customers, are establishing laws, regulations, expectations, and/or assessments reflecting their varied and evolving expectations on corporate practices, including transparency, due diligence, and reporting related to sustainability matters, such as climate change, plastic use, human rights and/or labor standards, responsible sourcing, the recyclability or recoverability of packaging and products, human capital management, product safety and quality, and other sustainability matters. In particular, customers and consumers may continue to put a premium on purchasing products that are sustainably manufactured and packaged, and Mattel may need to incur additional costs in order to effectively source materials that are more sustainable. As Mattel's sustainability practices, stakeholder expectations, and voluntary and regulatory sustainability disclosure standards and policies continue to evolve, Mattel has developed, and may further develop, sustainability-related goals and disclosures in these areas. Current sustainability goals are based on Mattel management's current assumptions related to scientific or technological developments, carbon markets, and other matters that are subject to change in the future and which may be outside of Mattel's control, as well as standards for measuring progress that are still developing and subject to a number of significant risks and uncertainties. Mattel's efforts to be responsive to climate change, including to reduce its carbon footprint, and other sustainability matters, cannot provide assurance that Mattel will successfully achieve its sustainability goals, that related costs may not be higher than expected, that proposed regulation or deregulation related to climate change and other sustainability matters will not be more aggressive than Mattel's measures and result in higher costs (or require additional resources), or that any investments Mattel makes in furtherance of achieving such goals will meet expectations for all stakeholders or any applicable binding or non- binding standards, any one of which could have an adverse effect on Mattel's financial condition, results of operations, reputation, or stock price. In addition, Mattel's efforts on these topics may harm its reputation or competitive position and negatively impact its ability to retain existing or attract new employees, customers, and business relationships. Further, being associated with activities by business partners or other affiliates that have or are perceived to have individual or cumulative adverse impacts on the climate, human rights, or other sustainability matters could negatively affect Mattel's reputation and impose additional costs.

Current wording

A variety of Mattel's stakeholders, including regulators, investors, advisory firms, rating agencies, and customers, are establishing laws, regulations, expectations, and/or assessments reflecting their varied and evolving, and sometimes conflicting, expectations on corporate practices, including transparency, due diligence, and reporting related to sustainability matters. In particular, customers and consumers may continue to put a premium on purchasing products that are sustainably manufactured and packaged, and Mattel may need to incur additional costs in order to effectively source materials that are more sustainable. As Mattel's sustainability practices, stakeholder expectations, and voluntary and regulatory sustainability disclosure standards and policies continue to evolve, Mattel has developed, and may further develop, sustainability-related goals and disclosures in these areas. Statements regarding Mattel's current sustainability goals or targets are based on management's current assumptions related to matters that are subject to change in the future and are subject to a number of significant risks and uncertainties, some of which are outside of Mattel's control. Mattel cannot provide assurance that it will successfully achieve or maintain its sustainability goals or that related costs may not be higher than expected, that proposed regulation or deregulation related to climate change and other sustainability matters will not be more aggressive than Mattel's measures and result in higher costs (or require additional resources), or that any investments Mattel makes in furtherance of achieving such goals will meet expectations for all stakeholders or any applicable binding or non-binding standards, any one of which could have an adverse effect on Mattel's financial condition, results of operations, reputation, or stock price. Further, being associated with activities by business partners or other affiliates that have or are perceived to have individual or cumulative adverse impacts on the climate, human rights, or other sustainability matters could negatively affect Mattel's reputation and impose additional costs.

Previous wording

Climate and other sustainability-related litigation has increased in recent years, such as claims involving the failure of organizations to mitigate their negative impacts on climate change, the failure of organizations to adapt to climate change, the insufficiency or inaccuracy of disclosure around climate or other sustainability-related risks, the failure to meet stated sustainability-related goals, or the failure to adequately meet standards regarding human rights and/or labor conditions. If Mattel's sustainability practices do not or are perceived to not meet or align with investor or other stakeholder expectations and standards (which are continually evolving and may disagree with or emphasize different priorities than the ones Mattel chooses to focus on), or if Mattel fails to achieve, is perceived to have failed to achieve or been delayed in achieving, its sustainability goals, it could negatively affect consumer or customer preference for Mattel's products, as well as expose Mattel to reputational harm or litigation.

Current wording

Climate and other sustainability-related litigation has increased in recent years, such as claims involving the failure of organizations to mitigate their negative impacts on climate change, the failure of organizations to adapt to climate change, the insufficiency or inaccuracy of disclosure around climate or other sustainability-related risks, the failure to meet stated sustainability-related goals, or the failure to adequately meet standards regarding human rights and/or labor conditions. If Mattel's sustainability practices do not, or are perceived to not, meet or align with investor or other stakeholder expectations and standards (which are continually evolving and sometimes conflicting), or if Mattel fails to achieve, or is perceived to have failed to achieve, its sustainability goals or targets, it could negatively affect consumer or customer preference for Mattel's products and Mattel's ability to retain existing or attract new employees, customers, and business relationships, as well as expose Mattel to business or reputational harm, government enforcement actions, or litigation.

Previous wording

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.

Current wording

Mattel has in the past engaged, and may in the future engage, in mergers, acquisitions, dispositions, investments, 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.

Previous wording

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.

Current wording

Mattel regularly considers, and from time to time engages in, discussions and negotiations regarding mergers, acquisitions, dispositions, investments, or other strategic transactions that could affect the revenues, profit, 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 merger partners, acquisition targets, or investments or that, if identified, it will be able to complete these transactions on terms acceptable to Mattel and to potential acquisition or investment targets or merger partners. There can also be no assurance that Mattel will be successful in realizing the planned benefits from any such investments, mergers, or acquisitions, or 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.

Previous wording

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. 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 Intangible Assets, Net."

Current wording

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. 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 Identifiable Intangible Assets, Net."

Previous wording

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, with the potential to adversely affect Mattel's business. For example, Mattel and certain other defendants have been party to certain class actions and certain derivative actions. For more information, see Part II, Item 8 "Financial Statements and Supplementary Data—Note 13 to the Consolidated Financial Statements—Commitments and Contingencies—Litigation."

Current wording

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, with the potential to adversely affect Mattel's business. For example, Mattel and certain other defendants have been party to certain class actions and certain derivative actions.

Previous wording

Mattel identified a material weakness in its internal control over financial reporting which, if not remediated appropriately or timely, 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.

Current wording

Any material weakness in Mattel's internal control over financial reporting, if not remediated appropriately or timely, 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.

Previous wording

Effective internal controls are necessary for Mattel 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 over financial reporting could lead to violations, unintentional or otherwise, of laws and regulations. As disclosed in Part II, Item 9A "Controls and Procedures," Mattel determined that there is a material weakness in its internal control over financial reporting and as a result, its disclosure controls and procedures and internal control over financial reporting are not effective as of December 31, 2024. While Mattel is in the process of implementing its remediation plan to address the material weakness, there can be no assurance that the efforts will fully remediate the material weakness in a timely manner. If Mattel is unable to remediate the material weakness, or is otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, Mattel's ability to record, process, and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected. Litigation, government investigations, or regulatory enforcement actions arising out of any such failure or alleged failure could subject Mattel to civil and criminal penalties that could materially and adversely affect Mattel's reputation, financial condition, and operating results. The material weakness, remediation efforts, and any related litigation, government investigations, or regulatory enforcement actions will require management attention and resources and cause Mattel to incur unanticipated costs, and could negatively affect investor confidence in Mattel's financial statements, cause Mattel reputational harm, and raise other risks to its operations.

Current wording

Effective internal controls are necessary for Mattel 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 over financial reporting could lead to violations, unintentional or otherwise, of laws and regulations. As disclosed in Part II, Item 9A "Controls and Procedures," Mattel previously determined that there was a material weakness in its internal control over financial reporting, which has been remediated as of December 31, 2025. If the additional controls and procedures that Mattel has implemented to remediate the material weakness prove to be ineffective or if Mattel identifies other control deficiencies that individually or together constitute a material weakness, 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 results of operations. A material weakness, remediation efforts, and any related litigation, government investigations, or regulatory enforcement actions will require management attention and resources and cause Mattel to incur unanticipated costs, and could negatively affect investor confidence in Mattel's financial statements, cause Mattel reputational harm, and raise other risks to its operations.

Previous wording

Mattel relies extensively on information technology systems across its operations, including for management of its supply chain, sale and delivery of its products and services, reporting its results of operations, collection and storage of consumer data, personal data of customers, employees and other stakeholders, and various other processes and transactions. If Mattel does not allocate and effectively manage the resources necessary to build, sustain, and protect an appropriate technology infrastructure, it could be subject to transaction errors, processing inefficiencies, loss of customers, business disruptions, shutdowns, or loss of or damage to IP through security breach. Many of these systems are managed by third-party service providers. Mattel relies on such third parties to provide services on a timely and effective basis, but Mattel ultimately does not control their performance. Mattel uses third-party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, regulatory compliance, 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. In addition, Mattel's distributors, suppliers, and other external business partners utilize their own information technology systems that are subject to similar risks to Mattel as described above. Their failure to perform as expected or as required by contract, or a cyber-attack on them that disrupts their systems, could result in significant disruptions and costs to Mattel's operations or, in the case of third-party service providers, a penetration of Mattel's systems. Mattel and its business partners and third-party service providers collect, process, store, and transmit consumer data, including personal and payment 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.

Current wording

Mattel relies extensively on information technology systems across its operations, including for management of its supply chain, sale and delivery of its products and services, reporting its results of operations, collection and storage of consumer data, personal data of customers, employees and other stakeholders, and various other processes and transactions. If Mattel does not allocate and effectively manage the resources necessary to build, sustain, and protect an appropriate technology infrastructure, it could be subject to transaction errors, processing inefficiencies, loss of customers, business disruptions, shutdowns, or loss of or damage to IP through security breach. Many of these systems are managed by third-party service providers. Mattel relies on such third parties to provide services on a timely and effective basis, but Mattel ultimately does not control their performance. Mattel uses third-party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, regulatory compliance, 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. In addition, Mattel's distributors, suppliers, and other external business partners utilize their own information technology systems that are subject to similar risks to Mattel as described above. Their failure to perform as expected or as required by contract, or a cyberattack on them that disrupts their systems, could result in significant disruptions and costs to Mattel's operations or, in the case of third-party service providers, a penetration of Mattel's systems. Mattel and its business partners and third-party service providers collect, process, store, and transmit consumer data, including personal and payment 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 compromises, including compromises 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, 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.

Previous wording

Mattel has exposure to security risks similar to those faced by other large companies that have data stored on their information technology systems, such as security breaches, cyber-attacks, and other hacking activities such as denial of service, malware, and ransomware, and is not always successful in preventing attacks or other cyber incidents. For example, in July 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.

Current wording

Mattel has exposure to security risks similar to those faced by other large companies that have data stored on their information technology systems, such as security compromises, cyberattacks, and other hacking activities such as denial of service, malware, and ransomware, and is not always successful in preventing attacks or other cyber incidents. There can be no assurance that Mattel will be able to mitigate negative impacts in the event of such attacks or other cyber incidents.

Previous wording

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 prevent, detect, and minimize 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. Remote or hybrid work environments (including for Mattel's employees, customers, sellers, suppliers, vendors, and other third parties) may amplify these security risks or introduce additional security vulnerabilities. Additionally, the prevalence and increasing sophistication of AI may increase the frequency or efficacy of cyberattacks against Mattel.

Current wording

The systems and processes that Mattel has developed to protect personal information and prevent data loss and other security compromises, including systems and processes designed to prevent, detect, and minimize the impact of a security compromise at a third-party provider, 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. Remote or hybrid work environments (including for Mattel's employees, customers, sellers, suppliers, vendors, and other third parties) may amplify these security risks or introduce additional security vulnerabilities. Additionally, the prevalence and increasing sophistication of AI may increase the frequency or efficacy of cyberattacks against Mattel, and any use of AI by Mattel or the third parties on which it depends to operate its business may create new cybersecurity vulnerabilities, including those which may not be recognized at this time.

Previous wording

Mattel's information systems require an ongoing commitment of significant resources to maintain, upgrade and enhance existing systems and develop or contract for new systems in order to keep pace with continuing changes in information processing technology, emerging cybersecurity risks and threats, evolving industry, legal and regulatory standards and requirements, and other changes in Mattel's business, among other things. Mattel has made and expects to continue to make significant investments in updating and integrating IT systems; however, those investments could turn out to be insufficient or fail to yield the expected results. 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.

Current wording

Mattel's information systems require an ongoing commitment of significant resources to maintain, upgrade and enhance existing systems and develop or contract for new systems in order to keep pace with continuing changes in information processing technology, emerging cybersecurity risks and threats, evolving industry, legal and regulatory standards and requirements, and other changes in Mattel's business, among other things. Mattel has made and expects to continue to make significant investments in updating and integrating IT systems; however, those investments could turn out to be insufficient or fail to yield the expected results. 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 compromises 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 or data protection laws, breach of contract allegations, 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.

Previous wording

If Mattel fails to comply with applicable U.S. and foreign laws related to privacy, data security, AI, and data protection, it could adversely affect Mattel's operating results and financial condition.

Current wording

If Mattel fails to comply with applicable U.S. and foreign laws related to privacy, data security, AI, and data protection, it could adversely affect Mattel's business, financial condition and results of operations.

Previous wording

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, AI, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data. For example, Mattel is or may become subject to a variety of laws and regulations such as the European Union's General Data Protection Regulation ("GDPR"), EU Artificial Intelligence Act ("EU AI Act"), China's Personal Information Protection Law ("PIPL"), California's Consumer Privacy Act ("CCPA"), or the U.S. Children's Online Privacy Protection Act of 1998 ("COPPA") regarding privacy, data protection, AI (including automated decision-making) and data security. These laws and regulations are continuously evolving and developing, creating significant uncertainty 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 GDPR, which greatly increases the jurisdictional reach of EU law and became effective in May 2018, added a broad array of requirements for handling personal data, including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance. The EU AI Act, which was adopted in 2024 and will be implemented in phases beginning 2025 through 2030, imposes certain requirements and limitations on developers and deployers of AI systems designated as "high risk," including in some cases AI systems designed for interaction with children. The requirements will apply to companies based outside the EU but operating on the EU market, and will carry the potential for substantial penalties for non-compliance. China's PIPL imposes additional operational requirements relating to processing personal information and provides for penalties and enforcement mechanisms. China has recently enacted complex and highly restrictive cybersecurity, data localization, and cross border data transfer laws. The CCPA requires covered companies to provide additional disclosures and data rights to data subjects. The California Privacy Rights Act ("CPRA"), which became operative on January 1, 2023, established the California Privacy Protection Agency to enforce Californians' privacy rights under the CCPA. Since the CCPA was enacted, several other states have enacted or are in the process of enacting privacy, data protection, and AI-related laws, which may also impose obligations on companies developing and using AI or automated decision-making technologies.

Current wording

As a global company, Mattel is subject to a variety of continuously evolving and developing laws, regulations, and Executive Orders in the United States and abroad regarding privacy, data protection, AI, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data. For example, Mattel is or may become subject to a variety of laws and regulations such as the EU's General Data Protection Regulation ("GDPR"), EU Artificial Intelligence Act, the EU Data Act, China's Personal Information Protection Law ("PIPL"), California's Consumer Privacy Act ("CCPA"), California Privacy Rights Act ("CPRA"), U.S. Children's Online Privacy Protection Act of 1998 ("COPPA"), or Executive Order 14117 regarding privacy, data protection, AI (including automated decision-making) and data security. These laws and regulations are continuously evolving and developing, creating significant uncertainty as privacy and data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements.