MATTEL INC /DE/

(Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments, consisting of only those of a normal recurring nature, considered necessary for a fair statement of the financial position and interim results of Mattel, Inc. and its subsidiaries ("Mattel") as of and for the periods presented have been included.

The December 31, 2025 balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the consolidated financial statements do not include all of the annual disclosures required by GAAP. As Mattel's business is seasonal, results for interim periods are not necessarily indicative of those that may be expected for a full year. The financial information included herein should be read in conjunction with Mattel's consolidated financial statements and related notes in the 2025 Annual Report on Form 10-K.

Certain prior period amounts have been reclassified to conform to the current period presentation.

2. Business Combination

On March 2, 2026 (the "Acquisition Date"), Mattel acquired the remaining 50% equity interest in Mattel163 Limited ("Mattel163"), a mobile games studio, from its previous joint venture partner, NetEase Hong Kong Digital Interactive Limited. As a result of the transaction, Mattel163 became a wholly owned subsidiary of Mattel, and its financial results subsequent to the Acquisition Date are included in Mattel's consolidated financial statements.

The acquisition of Mattel163 is expected to advance Mattel's digital games business and is expected to add development, publishing, and digital customer acquisition expertise. Mattel expects to leverage Mattel163's capabilities to increase its mobile games output and enhance alignment with the broader Mattel product roadmap.

The estimated enterprise fair value at the Acquisition Date was $357.2 million. The purchase price for the remaining 50% equity interest was $178.6 million, including working capital and other adjustments, and was subject to customary post-closing adjustments. The purchase price is comprised of cash consideration, a portion of which is a holdback payable following the Acquisition Date.

The transaction was accounted for as a business combination under the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations. Since Mattel held a 50% equity interest in Mattel163 immediately prior to the Acquisition Date and accounted for that investment under the equity method, Mattel remeasured its previously held equity interest to its estimated fair value of $178.6 million as of the Acquisition Date and recognized a gain of $147.9 million in other non-operating income, net in the consolidated statement of operations for the three months ended March 31, 2026. Accordingly, the gain is included in the consolidated statement of operations for the nine months ended September 30, 2026.

The fair value of Mattel's previously held equity interest was estimated using an income approach and incorporates significant unobservable inputs (Level 3), including projected future cash flows, long-term revenue growth rates, royalty rates, and discount rates.

Mattel allocated the total acquisition-date fair value to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the Acquisition Date. The following table summarizes the preliminary allocation of the total acquisition-date fair value:

Identifiable intangible assets consist of developed technology of $126.7 million with an estimated weighted-average useful life of 8.6 years, customer relationships of $27.9 million with an estimated weighted-average useful life of 2.8 years, and internally developed software of $6.6 million with an estimated useful life of 5.0 years, for a total of $161.2 million with an estimated weighted-average useful life of 8.1 years. The fair value of developed technology and customer relationships was determined using an income approach, and the fair value of internally developed software was determined using a cost approach. Each valuation methodology incorporates significant unobservable inputs (Level 3), including projected future cash flows, long-term revenue growth rates, projected technology obsolescence, royalty rates, and discount rates.

The excess of the total acquisition-date fair value over the preliminary fair value of the net identifiable assets acquired was recorded as goodwill. The goodwill recognized was primarily attributable to the assembled workforce and strategic benefits that are expected to be achieved. Approximately $39 million of the goodwill is expected to be deductible for income tax purposes.

The fair values assigned to assets acquired and liabilities assumed are preliminary and subject to change as additional information becomes available during the measurement period, which may extend up to one year from the Acquisition Date. Mattel is continuing to finalize the valuation of certain assets and liabilities, and adjustments to the preliminary values recorded may result in additional adjustments to goodwill.

During the three months ended September 30, 2026, Mattel recognized approximately $3 million and less than $1 million of acquisition-related expenses, including professional fees and integration expenses, within other selling and administrative expenses and cost of sales, respectively. During the nine months ended September 30, 2026, Mattel recognized approximately $9 million and $1 million of acquisition-related expenses, including professional fees and integration expenses, within other selling and administrative expenses and cost of sales, respectively. In addition, during the first quarter of 2026, Mattel recognized approximately $7 million of expense related to the settlement of a pre-existing relationship between Mattel and Mattel163, which was accounted for separately from the business combination and recorded within other selling and administrative expenses.

Pro forma and actual results of operations for this acquisition have not been presented because they are not material.

3. Accounts Receivable, Net

Mattel estimates current expected credit losses based on collection history and management's assessment of the current economic trends, business environment, customers' financial condition, accounts receivable aging, and customer disputes that may impact the level of future credit losses. Accounts receivable were net of allowances for credit losses of $19.6 million, $8.4 million, and $17.4 million as of September 30, 2026, September 30, 2025, and December 31, 2025, respectively.

4. Inventories

Inventories included the following:

5. Property, Plant, and Equipment, Net

Property, plant, and equipment, net included the following:

Purchases of property, plant, and equipment within the consolidated statements of cash flows were adjusted for unpaid balances of $52.5 million, $25.9 million, and $50.2 million as of September 30, 2026, September 30, 2025, and December 31, 2025, respectively.

6. Goodwill and Identifiable Intangible Assets, Net

Goodwill

Mattel's reporting units are: (i) North America, which consists of the United States and Canada, (ii) International, and (iii) American Girl. Goodwill related to the American Girl reporting unit is included in the North America operating segment. Mattel's reportable segments are: (i) North America and (ii) International. Certain components of the operating segments have been aggregated into a single reporting unit as the components have similar economic characteristics. The similar economic characteristics include the nature of the products, the nature of the production processes, the customers, and the manner in which the products are distributed. Mattel tests its goodwill for impairment annually in the third quarter and whenever events or changes in circumstances indicate that the carrying amount of a reporting unit may exceed its fair value.

Mattel performed a quantitative goodwill impairment assessment as of August 1, 2026, and determined that goodwill was not impaired. The quantitative goodwill impairment assessment includes the use of certain assumptions and estimates to calculate the estimated fair value of Mattel's reporting units. To the extent assumptions, estimates, or market factors, including seasonality, differ from Mattel's current estimates, the estimated fair value of Mattel's reporting units may be susceptible to significant changes. The reporting unit that is most susceptible to changes in assumptions and estimates, given its smaller size, is American Girl, as excess fair value over carrying value is a lesser dollar and percentage value than the other reporting units.

The change in the carrying amount of goodwill by reporting unit for the nine months ended September 30, 2026 is shown below. Mattel recognized additions to goodwill of approximately $194 million during the nine months ended September 30, 2026 related to the acquisition of Mattel163 in the first quarter of 2026. Brand-specific goodwill held by foreign subsidiaries is allocated to Mattel's reporting units based on the reporting unit selling those brands, thereby causing foreign currency translation impact.

Identifiable Intangible Assets, Net

Mattel's identifiable intangible assets, net consisted of the following:

Mattel's amortizable identifiable intangible assets primarily consist of trademarks, trade names, and developed technology. Mattel recognized additions to amortizable identifiable intangible assets of approximately $161 million during the nine months ended September 30, 2026 related to the acquisition of Mattel163 in the first quarter of 2026. Mattel tests its amortizable identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. Mattel's amortizable identifiable intangible assets werenot impaired during the three and nine months ended September 30, 2026 and 2025.

7. Accrued Liabilities

Accrued liabilities included the following:

8. Supplier Finance Program

Mattel has an agreement with a third-party financial institution that allows certain participating suppliers the opportunity to voluntarily finance payment obligations of Mattel under a supplier finance program. Under this program, participating suppliers may accelerate the timing of collection of their receivables due from Mattel, prior to their scheduled due dates, by selling one or more of their receivables at a discounted price to the third-party financial institution. The range of payment terms Mattel negotiates with suppliers is consistent, regardless of whether the suppliers participate in the supplier finance program, and Mattel does not have any economic interest in any suppliers' decision to participate in the supplier finance program. Suppliers participating in the program are able to select which individual Mattel invoices they sell to the third-party financial institution. All Mattel payments of the full amounts due to participating suppliers are paid on the invoice due date based on the terms originally negotiated with the supplier, regardless of whether the individual invoice due to the supplier is sold to the third-party financial institution. Included in Mattel's accounts payable in the consolidated balance sheets as of each of September 30, 2026, September 30, 2025, and December 31, 2025 were $164.6 million, $163.6 million, and $86.7 million of outstanding payment obligations due to suppliers, respectively, under the supplier finance program. All payment activities related to the supplier finance program were presented within operating activities in the consolidated statements of cash flows.

9. Seasonal Financing

On July 15, 2024, Mattel entered into a revolving credit agreement (the "Credit Agreement"), among Mattel, as the borrower, Bank of America, N.A., as administrative agent, and the other lenders and financial institutions party thereto, providing for $1.40 billion in aggregate principal amount of senior unsecured revolving credit facilities (the "Credit Facility"). The Credit Facility matures on July 15, 2029. In connection with the Credit Facility, Mattel terminated the commitments and satisfied all outstanding obligations under Mattel's prior revolving credit agreement, dated as of September 15, 2022 (as amended), among Mattel, as the borrower, Bank of America, N.A., as administrative agent, and the other lenders and financial institutions party thereto, which provided for a senior secured revolving credit facility in an aggregate principal amount of $1.40 billion.

Borrowings under the Credit Facility bear interest at a floating rate, which for U.S. dollar-denominated loans can be, at Mattel's option, either (a) Term SOFR (as defined in the Credit Agreement), plus an applicable margin ranging from 0.875% to 1.375% per annum, or (b) Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.000% to 0.375% per annum, in each case, such applicable margins to be determined based on Mattel's debt rating.

In addition to paying interest on the outstanding principal amount under the Credit Facility, Mattel is required to pay (i) an unused line fee per annum of the average daily unused portion of the Credit Facility, (ii) a letter of credit fronting fee based on a percentage of the aggregate face amount of outstanding letters of credit, and (iii) certain other customary fees and expenses of the lenders and agents.

The Credit Agreement contains customary covenants, including, but not limited to, (a) restrictions on Mattel's and its subsidiaries' ability to merge and consolidate with other companies, dispose of all or substantially all assets, incur indebtedness, or grant liens or other security interests on assets, in each case, subject to certain customary exceptions and (b) the requirement that the obligations of Mattel under the Credit Facility be guaranteed by any existing or future direct or indirect domestic subsidiary of Mattel that guarantees other indebtedness of Mattel in an aggregate principal or committed amount in excess of $50 million, subject to certain customary exceptions. As of September 30, 2026, no subsidiaries of Mattel were required to guarantee the Credit Facility.

The Credit Agreement requires the maintenance of (a) an interest coverage ratio of not less than 2.75 to 1.00 as of the end of each fiscal quarter and (b) a total leverage ratio as of the end of each fiscal quarter, not to exceed (x)3.75 to 1.00 with respect to fiscal quarters ending on March 31, June 30, and December 31 of each year, and (y)4.00 to 1.00 with respect to fiscal quarters ending on September 30 of each year. The total leverage ratio financial covenant is subject to a step-up to 4.25 to 1.00, with respect to fiscal quarters in which certain material acquisitions are consummated, and for a period of four fiscal quarters thereafter, and subject to certain customary exceptions.

As of September 30, 2026, Mattel was in compliance with all covenants contained in the Credit Agreement. Mattel hadno borrowings outstanding under the Credit Facility andno other short-term borrowings outstanding as of September 30, 2026, September 30, 2025, and December 31, 2025. Outstanding letters of credit under the Credit Facility totaled approximately $13 million, $9 million, and $9 million as of September 30, 2026, September 30, 2025, and December 31, 2025, respectively.

The Credit Agreement is a material agreement, and failure to comply with its covenants may result in an event of default under the terms of the Credit Facility. If Mattel were to default under the terms of the Credit Facility, its ability to meet its seasonal financing requirements could be adversely affected.

10. Long-Term Debt

On November 17, 2025, Mattel issued $600.0 million aggregate principal amount of 5.000% 2025 Senior Notes due November 2030 (the "2025 Notes"). The 2025 Notes were issued pursuant to a base indenture, dated November 17, 2025 (the "Base Indenture") between Mattel and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), as supplemented by the first supplemental indenture with respect to the 2025 Notes, dated November 17, 2025 (the "Supplemental Indenture" and, together with the Base Indenture, the "Indenture"), between Mattel and the Trustee. The 2025 Notes pay interest semi-annually in arrears on May 17 and November 17 of each year, beginning on May 17, 2026, to the holders of record on the immediately preceding May 1 and November 1, respectively. The 2025 Notes will mature on November 17, 2030.

Prior to October 17, 2030 (one month prior to the maturity date), Mattel may redeem the 2025 Notes at its option, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the 2025 Notes being redeemed, plus a corresponding "make-whole premium" as set forth in the Base Indenture, plus, in either case, accrued and unpaid interest thereon to (but not including) the redemption date. Additionally, on or after October 17, 2030, Mattel may redeem the 2025 Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the 2025 Notes being redeemed, plus accrued and unpaid interest, if any, to (but not including) the redemption date.

The holders of the 2025 Notes have the right to require Mattel to repurchase the 2025 Notes of any series at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of repurchase upon the occurrence of a Change of Control Triggering Event (as defined in the Base Indenture), except to the extent that Mattel has exercised its right to redeem all of the 2025 Notes as described above.

The 2025 Notes are Mattel's senior unsecured obligations. Under the terms of the Indenture, the 2025 Notes, without giving effect to collateral arrangements, rank pari passu in right of payment with all existing and future senior indebtedness of Mattel, including indebtedness of Mattel under the Existing Notes and the Credit Agreement (each as defined in the Base Indenture). The 2025 Notes are senior in right of payment to any future subordinated indebtedness of Mattel, if any. The 2025 Notes are structurally subordinated to all existing and future indebtedness and other liabilities of all subsidiaries of Mattel including indebtedness of the subsidiaries that borrow under or guarantee any obligations under the Credit Agreement, if any, and guarantees of the Existing Notes, if any. The 2025 Notes are effectively subordinated to any existing and future secured indebtedness of Mattel, including indebtedness of Mattel under capital leases, if any, to the extent of the value of the collateral securing such indebtedness.

The Indenture governing the 2025 Notes contains covenants that limit Mattel's ability to, among other things, create liens, enter into certain sale and leaseback transactions, or to engage in certain consolidation, merger, and sale of asset transactions. These restrictions are subject to a number of exceptions.

The net proceeds from the 2025 Notes, together with cash on hand, were used to redeem all outstanding 3.375% 2021 Senior Notes due April 2026 and pay related fees and expenses.

Long-term debt included the following:

Mattel's 2019 Senior Notes due 2027 were issued pursuant to an indenture dated November 20, 2019, and its 2021 Senior Notes due 2026 and 2021 Senior Notes due 2029 were issued pursuant to an indenture dated March 19, 2021. These indentures contain covenants that limit Mattel's (and some of its subsidiaries') ability to, among other things: (i) incur additional debt or issue certain preferred shares; (ii) pay dividends on or make other distributions in respect of their capital stock or make other restricted payments; (iii) make investments in unrestricted subsidiaries; (iv) create liens; (v) enter into certain sale/leaseback transactions; (vi) merge or consolidate, or sell, transfer, or otherwise dispose of substantially all of their assets; and (vii) designate future guarantors. The indentures also provided that certain of these covenants would be suspended if Mattel achieved a debt rating of BBB-, Baa3, and/or BBB- (or higher) from any two of S&P, Moody's, and Fitch, respectively, and no event of default has occurred.

As of October 2026, Mattel has maintained credit ratings with Fitch of BBB- with a stable outlook, S&P of BBB with a stable outlook, and Moody's of Baa3 with a stable outlook. As a result of the current credit ratings and no events of default, the covenants limiting Mattel's ability to incur additional debt or issue certain preferred shares, pay dividends on or make other distributions in respect of its capital stock or make other restricted payments, and make investments in unrestricted subsidiaries are suspended. Further certain provisions of the covenant limiting Mattel's ability to merge or consolidate, or sell, transfer, or otherwise dispose of substantially all of its assets and designate future guarantors are also suspended. If Mattel ceases to have credit ratings of BBB-, Baa3, and/or BBB- (or higher) from any two of S&P, Moody's, and Fitch, respectively, Mattel will thereafter be subject to the suspended covenants with respect to future events.

11. Accumulated Other Comprehensive Income (Loss)

The following tables present changes in the accumulated balances for each component of other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications from accumulated other comprehensive income (loss):

The following tables present the classification and amount of the reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of operations:

(a)The amortization of prior service (cost) credit and recognized actuarial loss are included in the computation of net periodic benefit cost. Refer to "Note 16 to the Consolidated Financial Statements—Employee Benefit Plans" for additional information regarding Mattel's net periodic benefit cost.

Currency Translation Adjustments

During the nine months ended September 30, 2026, currency translation adjustments, before reclassification, resulted in a net loss of $19.3 million, primarily due to the weakening of the Euro, Indonesian rupiah, and British pound sterling against the U.S. dollar, partially offset by the strengthening of the Chinese yuan against the U.S. dollar. In connection with the acquisition of Mattel163, $2.7 million of accumulated currency translation losses related to Mattel's previously held equity interest were recognized in other non-operating (income) expense, net within the consolidated statement of operations.

During the nine months ended September 30, 2025, currency translation adjustments resulted in a net gain of $105.7 million, primarily due to the strengthening of the Russian ruble, Mexican peso, and British pound sterling against the U.S. dollar.

12. Foreign Currency Transaction Exposure

Currency transaction gains (losses) included in the consolidated statements of operations were as follows:

13. Derivative Instruments

Mattel seeks to mitigate its exposure to foreign currency transaction risk by monitoring its foreign currency transaction exposure for the year and partially hedging such exposure using foreign currency forward exchange contracts. Mattel uses foreign currency forward exchange contracts as cash flow hedges primarily to hedge its purchases and sales of inventory denominated in foreign currencies. These contracts have maturity dates of up to 24 months. These derivative instruments are designated as cash flow hedges, and are reported in Mattel's consolidated balance sheets at fair value, with changes in the fair value recorded in other comprehensive income ("OCI") and subsequently reclassified into earnings when the hedged transactions are recognized in earnings. Mattel uses foreign currency forward exchange contracts to hedge intercompany loans and advances denominated in foreign currencies. Mattel does not use hedge accounting for these contracts, and as such, changes in fair value are recorded in the period of change in the consolidated statements of operations. Mattel utilizes derivative contracts to hedge certain purchases of commodities, which were not material. As of September 30, 2026, September 30, 2025, and December 31, 2025, Mattel held foreign currency forward exchange contracts and other commodity derivative instruments, with notional amounts of approximately $815 million, $840 million, and $677 million, respectively.

The following tables present Mattel's derivative assets and liabilities:

The following tables present the classification and amount of gains and losses, net of tax, from derivatives reported in the consolidated statements of operations:

The gains and losses reclassified from accumulated other comprehensive loss to the consolidated statements of operations during the three and nine months ended September 30, 2026 and 2025 were offset by the recognition of the underlying hedged transactions.

As of September 30, 2026, approximately $7 million of net gains included in accumulated other comprehensive income (loss) are expected to be reclassified into the consolidated statements of operations within the next twelve months.

The net gains and losses on foreign currency forward exchange and other contracts recognized in the consolidated statements of operations during the three and nine months ended September 30, 2026 and September 30, 2025 were offset by foreign currency transaction gains and losses on the related underlying balances.

14. Fair Value Measurements

The following tables present information about Mattel's financial assets and liabilities measured and reported in the financial statements at fair value on a recurring basis as of September 30, 2026, September 30, 2025, and December 31, 2025 and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value. The three levels of the fair value hierarchy are as follows:

•Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

•Level 2 – Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

•Level 3 – Valuations based on inputs that are unobservable, supported by little or no market activity, and that are significant to the fair value of the assets or liabilities.

(a)The fair value of the foreign currency forward exchange and other contracts was based on dealer quotes of market forward rates and reflects the amount that Mattel would receive or pay at their maturity dates for contracts involving the same notional amounts, currencies, and maturity dates.

Other Financial Instruments

Mattel's financial instruments included cash and equivalents, accounts receivable and payable, accrued liabilities, short-term borrowings, and long-term debt. The fair values of these instruments, excluding long-term debt, approximate their carrying amounts because of their short-term nature. Cash and equivalents were classified as Level 1, and all other financial instruments were classified as Level 2 within the fair value hierarchy.

The estimated fair value of Mattel's long-term debt was $2.22 billion (compared to an aggregate principal amount of $2.35 billion) as of September 30, 2026, $2.31 billion (compared to an aggregate principal amount of $2.35 billion) as of September 30, 2025, and $2.32 billion (compared to an aggregate principal amount of $2.35 billion) as of December 31, 2025. The estimated fair values have been calculated based on broker quotes or rates for the same or similar instruments and were classified as Level 2 within the fair value hierarchy.

15. Earnings Per Share

The following table reconciles basic and diluted earnings per common share for the three and nine months ended September 30, 2026 and 2025:

(a)For the three and nine months ended September 30, 2026, share-based awards totaling 7.0 and 7.1 million common shares, respectively, were excluded from the calculation of diluted net income per common share because their effect would be antidilutive. For the three and nine months ended September 30, 2025, share-based awards totaling 5.3 million common shares and 6.3 million common shares, respectively, were excluded from the calculation of diluted net income per common share because their effect would be antidilutive.

16. Employee Benefit Plans

Mattel and certain of its subsidiaries have qualified and nonqualified retirement plans covering substantially all employees of these companies, which are more fully described in Part II, Item 8 "Financial Statements and Supplementary Data—Note 4 to the Consolidated Financial Statements–Employee Benefit Plans" in the 2025 Annual Report on Form 10-K.

The components of Mattel's net periodic benefit cost for defined benefit pension plans were as follows:

The components of Mattel's net periodic benefit credit for postretirement benefit plans were as follows:

Mattel's service cost component is recorded within operating income while other components of net periodic benefit costs for defined benefit pension and postretirement benefit plans are recorded within other non-operating (income) expense, net.

During the nine months ended September 30, 2026, Mattel made cash contributions totaling approximately $4 million related to its defined benefit pension and postretirement benefit plans. During the remainder of 2026, Mattel expects to make additional cash contributions of approximately $10 million.

During the second quarter of 2026, Mattel approved the termination of the Cash Balance Plan, a U.S. qualified defined benefit pension plan. Mattel expects to complete the termination in 2027 through lump-sum distributions and the purchase of group annuity contracts, subject to regulatory requirements.

17. Share-Based Payments

Mattel has various stock compensation plans, which are described in Part II, Item 8 "Financial Statements and Supplementary Data—Note 9 to the Consolidated Financial Statements—Share-Based Payments" in the 2025 Annual Report on Form 10-K. Under the Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan, Mattel has the ability to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance RSUs ("performance awards"), dividend equivalent rights, and shares of common stock to officers, employees, non-employee directors, and consultants providing services to Mattel. Stock options are granted with exercise prices at the fair market value of Mattel's common stock on the applicable grant date and expire no later thanten years from the grant date. Stock options, RSUs, and performance awards related to Mattel's long-term incentive program ("LTIP") generally provide for vesting over, or at the end of, a period ofthree years from the grant date.

Compensation expense related to stock options, RSUs, and performance awards was as follows:

Share-based compensation for the three and nine months ended September 30, 2026 included the reversal of previously recognized compensation expense resulting from the expected forfeiture of unvested share-based awards in connection with the resignation and subsequent departure of Mattel’s former Chief Executive Officer, which occurred on September 29, 2026 and October 2, 2026, respectively.

As of September 30, 2026, $94.3 million of compensation expense related to unvested share-based awards remained unrecognized and is expected to be recognized over a weighted-average period of 2.0 years.

Mattel uses treasury shares purchased under its share repurchase program to satisfy exercises of stock options and the vesting of RSUs and performance awards. Cash received from stock option exercises, net of taxes, was $3.6 million and $5.5 million for the nine months ended September 30, 2026 and 2025, respectively.

On May 1, 2026, annual performance awards were granted to officers and key employees of Mattel under the 2026 LTIP. Those awards may be earned based on Mattel's performance against three-year cumulative Adjusted Net Income goals and Mattel's relative Total Shareholder Return ("TSR"), as measured over the applicable performance periods. Performance awards granted under the 2025 LTIP may be earned based on Mattel's relative TSR over athree-year performance measurement period. Performance awards granted prior to 2025 that impact the periods presented may be earned based on Mattel's performance against three-year cumulative Adjusted Free Cash Flow targets, with the final payout subject to modification based on Mattel's relative TSR over the same periods. The actual number of shares earned under both the 2026 LTIP and prior LTIP awards may range from 0% to 200% of the target award, depending on performance against the applicable metrics. The grant-date fair value of the annual performance awards is recognized over the service period, which commences on the date of grant and ends upon the completion of the performance period and approval of applicable company performance measures and relative TSR for the respective performance periods.

In October 2026, Mattel granted certain share-based awards to new executive officers, in connection with their commencement of employment:

(i)a Make-Whole RSU award totaling 0.5 million restricted stock units with an estimated grant date fair value of $7.7 million. The award vested upon grant but it is subject to repayment if employment is terminated under certain circumstances during thetwo-year period following the executive's start date. The repayment provisions result in a substantivetwo-year service condition and, accordingly compensation in the amount subject to repayment will be recognized over thetwo-year service period.

(ii)Inducement Performance-Based RSU awards ("Inducement PSU") totaling 0.7 million performance-based restricted stock units, which will cliff vest at the end of thethree-year performance period beginning on the respective grant dates, generally subject to continued employment with Mattel and Mattel achieving a specified relative total shareholder return ("TSR") performance. The grant date fair value of the awards was estimated using a Monte Carlo valuation methodology and totaled $8.5 million, in aggregate, which will be recognized over the respective three-year service periods.

(iii)Annual Long-Term Incentive Awards totaling 0.5 million performance awards granted under the 2026 LTIP and 0.5 million RSUs with terms consistent with Mattel’s 2026 annual equity awards to other senior executives. The estimated grant date fair values of the performance awards and the RSUs were $9.2 million and $8.7 million, respectively.

The aggregate estimated grant-date fair value of these awards was approximately $34.1 million, which will be recognized as compensation expense over the applicable service periods.

18. Other Selling and Administrative Expenses

Other selling and administrative expenses included the following:

(a)Design and development expenses included incentive and share-based compensation expenses totaling approximately $1 million and $12 million during the three and nine months ended September 30, 2026, respectively. During the three and nine months ended September 30, 2025, incentive and share-based compensation expenses were not included in design and development expenses and werenot material.

19. Restructuring Charges

Optimizing for Profitable Growth

On February 7, 2024, Mattel announced the Optimizing for Profitable Growth program (the "OPG program"), a multi-year cost savings program that follows the Optimizing for Growth program (the "OFG program"), which concluded in the fourth quarter of 2023. The OPG program is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel's global supply chain, including its manufacturing footprint. The OPG program includes cost savings actions in connection with discontinuing production at a plant in China as previously announced in the third quarter of 2023, as well as savings from other previous actions taken in 2023 that were not recognized in the OFG program.

In connection with the OPG program, Mattel recorded severance and other restructuring costs in the following cost and expense categories within operating income in the consolidated statements of operations:

(a)Severance and other restructuring charges recorded within cost of sales in the consolidated statements of operations are included in segment income in "Note 22 to the Consolidated Financial Statements—Segment Information."

(b)Severance and other restructuring charges recorded within other selling and administrative expenses in the consolidated statements of operations are included in unallocated corporate and other operating expenses in "Note 22 to the Consolidated Financial Statements—Segment Information."

The following tables summarize Mattel's severance and other restructuring charges activity within operating income related to the OPG program:

(a)Other restructuring charges consist primarily of expenses associated with the consolidation of manufacturing and distribution facilities.

As of September 30, 2026, in connection with the OPG program, Mattel recorded cumulative severance and other restructuring charges of approximately $136 million, which included approximately $25 million of severance charges recorded within other selling and administrative expenses during 2023. Cumulative other restructuring charges include approximately $5 million of non-cash charges. Total cash expenditures are expected to be up to approximately $140 million, and total non-cash charges are expected to be approximately $5 million.

20. Income Taxes

Mattel's provision for income taxes was $96.8 million and $64.6 million for the three and nine months ended September 30, 2026, respectively, and $86.9 million and $72.5 million for the three and nine months ended September 30, 2025, respectively. Mattel recognized a net discrete income tax expense of $9.9 million for the three months ended September 30, 2026, primarily related to income tax expense associated with International Emergency Economic Powers Act ("IEEPA") tariff refunds, partially offset by discrete tax benefits related to previously unrecognized tax benefits. Mattel recognized a net discrete income tax expense of $10.7 million for the nine months ended September 30, 2026, primarily related to income tax expense associated with IEEPA tariff refunds and interest expense accrued on previously unrecognized tax benefits, partially offset by discrete tax benefits related to previously unrecognized tax benefits. Mattel recognized a net discrete income tax benefit of $2.3 million during the three months ended September 30, 2025. Mattel recognized a net discrete income tax benefit of $12.6 million for the nine months ended September 30, 2025, primarily related to a change in its indefinite reinvestment assertion with respect to certain foreign subsidiary earnings.

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. For the three and nine months ended September 30, 2026 and 2025, Mattel had no changes to the valuation allowance recorded against its deferred tax assets.

On July 4, 2025, H.R.1 - the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States. The OBBBA contains significant provisions, including the permanent extension or restoration of certain expiring corporate income tax provisions, originally introduced by the Tax Cuts and Jobs Act of 2017, and incremental modifications to the international tax framework. The legislation has multiple effective dates, with certain provisions effective for the tax year beginning after December 31, 2024, and others effective for tax years beginning after December 31, 2025. Mattel has evaluated the OBBBA provisions that have been enacted and has included the related impact in the provision for income taxes for the three and nine months ended September 30, 2026.

21. Contingencies

Litigation Related to Yellowstone do Brasil Ltda.

In April 1999, Yellowstone do Brasil Ltda. (formerly known as Trebbor Informática Ltda.) ("Yellowstone") filed a lawsuit against Mattel do Brasil before the 15th Civil Court of Curitiba, State of Parana, requesting the annulment of its security bonds and promissory notes given to Mattel do Brasil as well as damages due to an alleged breach of an oral exclusive distribution agreement between the parties relating to the supply and sale of toys in Brazil. Yellowstone's complaints sought alleged loss of profits plus an unspecified amount of damages.

Mattel do Brasil filed its defenses to these claims and simultaneously presented a counterclaim for unpaid accounts receivable for goods supplied to Yellowstone.

In April 2018, Mattel do Brasil entered into a settlement agreement to resolve this matter, but the settlement remains the subject of ongoing appeals.

In October 2018, the Superior Court of Justice issued a final ruling in favor of Yellowstone on the merits of Yellowstone's claims. Previously, the courts had ruled in Mattel's favor on its counterclaim.

In October 2019, Mattel reached an agreement with Yellowstone's former counsel regarding payment of the attorney's fees portion of the judgment. In November 2019, Yellowstone initiated an action to enforce its judgment against Mattel, but did not account for an offset for Mattel's counterclaim. In January 2020, Mattel obtained an injunction, staying Yellowstone's enforcement action pending resolution of Mattel's appeal to enforce the parties' April 2018 settlement. As of September 30, 2026, Mattel assessed its probable loss related to this matter and has accrued an estimated liability, which is not material.

Litigation Related to the Fisher-Price Rock 'n Play Sleeper

A products liability lawsuit filed in April 2023 remains pending against Fisher-Price, Inc. and Mattel, Inc. alleging that a product defect in the Fisher-Price Rock 'n Play Sleeper (the "Sleeper") caused the fatality of a child. In August 2026, a settlement in that case was reached, which is subject to court approval. A similar products liability lawsuit was filed in October 2026 in Los Angeles Superior Court. More than sixty other lawsuits involving the Sleeper have been settled and/or dismissed.

The lawsuits seek compensatory damages, punitive damages, attorneys' fees, costs, and interest. Mattel believes that it has substantial defenses to the allegations made and intends to vigorously defend against them. As of September 30, 2026, Mattel assessed its probable loss related to the matter and has accrued an estimated liability, which is not material.

Insurance Litigation

On January 6, 2023, Mattel, Inc. and Fisher-Price, Inc. filed a lawsuit against their products liability insurers in the Superior Court of the State of Delaware seeking a declaratory judgment regarding the obligations of the insurers to defend and indemnify Mattel for the Sleeper products liability lawsuits. On March 28, 2025 and June 2, 2025, the court issued summary judgment rulings which determined, among other things, that the Sleeper products liability claims constitute a single occurrence under Mattel's insurance policies, and that each claim is allocated to the policy year in which the incident occurred. In February 2026, the parties entered into a stipulation, which the court subsequently entered, permitting an immediate appeal to the Delaware Supreme Court of the issues decided to date. As of September 30, 2026, Mattel assessed its probable loss related to this matter and has accrued an estimated liability, which is not material.

Litigation Related to the Fisher-Price Snuga Swings

A number of putative class action lawsuits were filed against Fisher-Price, Inc. and Mattel, Inc. between October 2024 and February 2025 asserting claims for false advertising, breach of contract, breach of warranty, fraud, negligence, and other claims in connection with the marketing and sale of Fisher-Price Snuga Swings (the "Swings"). In general, the lawsuits allege that the Swings were falsely marketed and sold as safe for infant use, particularly infant sleep, and failed to disclose a risk of suffocation. The lawsuits propose nationwide and several state consumer classes comprised of those who purchased the Swings. The lawsuits have been consolidated before a single judge in the United States District Court for the Western District of New York. In May 2025, the parties reached a contingent settlement of the litigation, which is subject to court approval.

The lawsuits seek unspecified compensatory damages, punitive and treble damages, statutory damages, restitution, rescission, disgorgement, attorneys' fees, costs, interest, and injunctive relief. Mattel believes that it has substantial defenses to the allegations in the lawsuits and, to the extent the settlement is not finalized or approved, intends to vigorously defend against them. As of September 30, 2026, Mattel assessed its probable loss related to this matter and has accrued an estimated liability, which is not material.

U.S. Tariff Recovery

In February 2026, the U.S. Supreme Court ruled that tariffs imposed under IEEPA on goods imported into the United States were unauthorized. On March 4, 2026, the U.S. Court of International Trade ("CIT") issued an order directing the U.S. Customs and Border Protection ("CBP") to process refunds of the IEEPA tariffs. CBP subsequently implemented a phased refund process through its Consolidated Administration and Processing of Entries system, launching Phase 1 on April 20, 2026 and Phase 2 on June 29, 2026, and Phase 3 on October 6, 2026, initially for certain eligible importers. The CIT's refund order has been appealed, and the IEEPA tariffs and related refund framework remain subject to ongoing legal proceedings, further guidance from CBP, as well as other refund process developments. Following the U.S. Supreme Court's decision on IEEPA tariffs, temporary global tariffs were imposed on imports under Section 122 of the Trade Act of 1974 ("Section 122"), which expired on July 24, 2026. These Section 122 tariffs are currently subject to legal challenge and in May 2026, the CIT issued a ruling that the Section 122 tariffs are unauthorized by the statute, although this ruling is currently stayed pending appeal. Following the expiration of the Section 122 tariffs, additional tariffs have been imposed under Section 301 of the Trade Act of 1974 and other statutory authorities.

Mattel accounts for potential refunds of IEEPA tariffs as gain contingencies. During the three and nine months ended September 30, 2026, Mattel received and recognized approximately $88 million of tariff refunds under Phase 2 of the IEEPA tariff refund process as a reduction to cost of sales. Mattel also received approximately $4 million of related interest, which was recognized as interest income. The tariff refunds recognized and received under Phase 1 of the IEEPA refund process were not material. As of September 30, 2026, Mattel had not recognized a receivable for additional IEEPA tariff refunds because they were not realized or realizable. The amount and timing of any additional tariff refunds remain uncertain, and additional refunds, if recognized, could be material.

Litigation Related to IEEPA Tariffs

In July and August 2026, three putative class actions were filed in the United States District Court for the Central District of California against Mattel, Inc., American Girl, LLC, and/or American Girl Brands, LLC asserting claims for unjust enrichment, money had and received, unfair competition under section 17200 of the California Business & Professions Code, and declaratory judgment in connection with IEEPA tariff refunds. In general, the lawsuits allege that Mattel and American Girl should not be able to retain IEEPA refunds they receive if costs associated with those tariffs were previously passed on to consumers. The lawsuits propose a nationwide class of consumers who purchased products with raised prices due to government tariffs.

The lawsuits seek unspecified compensatory damages, statutory damages, punitive damages, restitution, disgorgement, attorneys' fees, costs, interest, and declaratory and injunctive relief. Mattel believes that it has substantial defenses to the allegations in the lawsuits and intends to vigorously defend against them. A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.

22. Segment Information

Mattel designs, manufactures, and markets a broad variety of toy products worldwide, which are sold to its customers and directly to consumers.

Segment Data

Mattel'sreportable segments are: (i) North America and (ii) International. The North America and International segments sell products across Mattel's categories, although some products are developed or adapted for particular international markets.

Mattel's reportable segments are aligned to the structure used by its Chief Executive Officer, who is also the Chief Operating Decision Maker ("CODM"), to allocate resources and assess performance. Mattel's CODM evaluates segment performance based on each segment's income. The CODM also uses this metric in the annual budgeting and quarterly forecasting process to inform decisions about allocating capital and other resources to each segment.

The following tables present information regarding segment income and significant expense information for Mattel's reportable segments. Unallocated corporate and other operating expenses include operating costs not allocated to individual segments, including charges related to incentive and share-based compensation, corporate headquarters functions managed on a worldwide basis, the impact of changes in foreign currency exchange rates on intercompany transactions, and certain severance and other restructuring costs. It is impracticable for Mattel to present net sales by categories, brands, or products, as trade discounts and other allowances are generally recorded in the financial accounting systems by customer.

(a)Cost of sales included the impact of severance and other restructuring charges of less than $1 million and approximately $2 million for the three months ended September 30, 2026 and September 30, 2025, respectively, and approximately $1 million and $6 million for the nine months ended September 30, 2026 and September 30, 2025, respectively, which were allocated to the North America and International segments.

The following table is a reconciliation of segment income to income before income taxes for the periods indicated:

(a)For the three months ended September 30, 2026 and September 30, 2025, unallocated corporate and other operating expenses included the impact of: 1) incentive compensation of approximately $(2) million and $8 million, respectively, 2) share-based compensation of approximately $(1) million and $22 million, respectively, and 3) severance and other restructuring charges of approximately $3 million and $1 million, respectively.

For the nine months ended September 30, 2026 and September 30, 2025, unallocated corporate and other operating expenses included the impact of: 1) incentive compensation of approximately $46 million and $51 million, respectively, 2) share-based compensation of approximately $32 million and $61 million, respectively, and 3) severance and other restructuring charges of approximately $22 million and $24 million, respectively.

The following tables present information regarding depreciation and amortization by segment, as well as assets by segment.

Segment assets were comprised of accounts receivable and inventories, net of applicable reserves and allowances.

Geographic Information

The following table presents information regarding Mattel's net sales by geographic area. Net sales are attributed to countries based on the location of the customer:

23. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In July 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 provides the option to apply a practical expedient to address implementation challenges related to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under revenue recognition (Topic 606) and assets acquired through business combinations. The practical expedient allows entities to assume that current conditions as of the balance sheet date remain unchanged over the life of these assets when developing forecasts. The guidance allows entities to bypass the requirement to incorporate macro-economic data into their forecast when such data is not expected to materially affect the estimate. Mattel adopted the guidance in ASU 2025-05 effective January 1, 2026 prospectively and applied the practical expedient. The adoption of this new accounting standard did not have a material impact on Mattel's consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses for public business entities. ASU 2024-03 requires enhanced disclosures of each expense caption in the income statement to improve transparency and provide financial statement users with more detailed information about the nature, amount, and timing of expenses impacting financial performance. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The guidance in ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The ASU may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. Mattel is currently evaluating the impact of the adoption of ASU 2024-03 on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 modernizes certain aspects of the accounting for software costs to develop or obtain software for internal use under Accounting Standards Codification 350-40. The ASU requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose. The guidance in ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The amendments in ASU 2025-06 permit entities to apply the new guidance using a prospective, retrospective, or modified transition approach. Mattel is currently evaluating the impact of the adoption of ASU 2025-06 on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the applicability of Topic 270 and interim disclosure requirements, including a principle requiring disclosure of events since the end of the most recent annual reporting period that have a material impact on an entity. The amendments are effective for interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Mattel is currently evaluating the impact of ASU 2025-11 on its interim financial statement disclosures.