MATTEL, INC. AND SUBSIDIARIES



		Page

	PART I

Item 1.	Financial Statements	4

	Consolidated Balance Sheets	4

	Consolidated Statements of Operations	5

	Consolidated Statements of Comprehensive Loss	6

	Consolidated Statements of Cash Flows	7

	Notes to Consolidated Financial Statements	89

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3134

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4246

Item 4.	Controls and Procedures	4347

	PART II

Item 1.	Legal Proceedings	4448

Item 1A.	Risk Factors	4448

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4448

Item 3.	Defaults Upon Senior Securities	4448

Item 4.	Mine Safety Disclosures	4448

Item 5.	Other Information	4448

Item 6.	Exhibits	4549

	Signature	4750

(Cautionary Statement Under the Private Securities Litigation Reform Act of 1995)

Mattel is including this Cautionary Statement to caution investors and qualify for the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the "Act") for forward-looking statements. This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Act. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. The use of words such as "anticipates," "expects," "intends," "plans," "confident that" and "believes," among others, generally identify forward-looking statements. These forward-looking statements are based on currently available operating, financial, economic and other information, and are subject to a number of significant risks and uncertainties. A variety of factors, many of which are beyond our control, could cause actual future results to differ materially from those projected in the forward-looking statements. Specific factors that might cause such a difference include, but are not limited to: (i) Mattel’s ability to design, develop, produce, manufacture, source and ship products on a timely and cost-effective basis, as well as interest in and purchase of those products by retail customers and consumers in quantities and at prices that will be sufficient to profitably recover Mattel’s costs; (ii) downturns in economic conditions affecting Mattel’s markets which can negatively impact retail customers and consumers, and which can result in lower employment levels, lower consumer disposable income and spending, including lower spending on purchases of Mattel’s products; (iii) other factors which can lower discretionary consumer spending, such as higher costs for fuel and food, drops in the value of homes or other consumer assets, and high levels of consumer debt; (iv) potential difficulties or delays Mattel may experience in implementing cost savings and efficiency enhancing initiatives; (v) other economic and public health conditions or regulatory changes in the markets in which Mattel and its customers and suppliers operate, which could create delays or increase Mattel’s costs, such as higher commodity prices, labor costs or transportation costs, or outbreaks of disease; (vi) currency fluctuations, including movements in foreign exchange rates, which can lower Mattel’s net revenues and earnings, and significantly impact Mattel’s costs; (vii) the concentration of Mattel’s customers, potentially increasing the negative impact to Mattel of difficulties experienced by any of Mattel’s customers, including the bankruptcy and liquidation of Toys "R" Us, Inc., or changes in their purchasing or selling patterns; (viii) the future willingness of licensors of entertainment properties for which Mattel currently has licenses or would seek to have licenses in the future to license those products to Mattel; (ix) the inventory policies of Mattel’s retail customers, including retailers’ potential decisions to lower their inventories, even if it results in lost sales, as well as the concentration of Mattel’s revenues in the second half of the year, which coupled with reliance by retailers on quick response inventory management techniques increases the risk of underproduction of popular items, overproduction of less popular items and failure to achieve compressed shipping schedules; (x) the increased costs of developing more sophisticated digital and smart technology products, and the corresponding supply chain and design challenges associated with such products; (xi) work disruptions, which may impact Mattel’s ability to manufacture or deliver product in a timely and cost-effective manner; (xii) the bankruptcy and liquidation of Toys "R" Us, Inc. or other of Mattel’s significant retailers, or the general lack of success of one of Mattel’s significant retailers which could negatively impact Mattel’s revenues or bad debt exposure; (xiii) the impact of competition on revenues, margins and other aspects of Mattel’s business, including the ability to offer products which consumers choose to buy instead of competitive products, the ability to secure, maintain and renew popular licenses and the ability to attract and retain talented employees; (xiv) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xv) changes in laws or regulations in the United States and/or in other major markets, such as China, in which Mattel operates, including, without limitation, with respect to taxes, tariffs, trade policies, or product safety, which may increase Mattel’s product costs and other costs of doing business, and reduce Mattel’s earnings, (xvi) failure to realize the planned benefits from any investments or acquisitions made by Mattel, (xvii) the impact of other market conditions, third party actions or approvals and competition which could reduce demand for Mattel’s products or delay or increase the cost of implementation of Mattel’s programs or alter Mattel’s actions and reduce actual results; (xviii) changes in financing markets or the inability of Mattel to obtain financing on attractive terms (xix) the impact of litigation or arbitration decisions or settlement actions; and (xx) other risks and uncertainties detailed in Part 1, Item 1A "Risk Factors" in Mattel’s ~~2017~~2018 Annual Report on Form 10-K. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so, except as required by law.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	March 31, 2018			March 31, 2017			December 31, 2017			March 31, 2019			March 31, 2018			December 31, 2018
	(Unaudited; in thousands, except share data)									(Unaudited; in thousands, except share data)
ASSETS
Current Assets
Cash and equivalents	$	526,724		$	381,887		$	1,079,221		$	380,107		$	526,724		$	594,481
Accounts receivable, net	676,119			806,800			1,128,610			624,477			676,119			970,083
Inventories	677,732			769,799			600,704			615,828			677,732			542,889
Prepaid expenses and other current assets	341,095			362,879			303,053			274,674			341,095			244,987
Total current assets	2,221,670			2,321,365			3,111,588			1,895,086			2,221,670			2,352,440
Noncurrent Assets
Property, plant, and equipment, net	756,684			783,469			785,285			622,251			756,684			657,595
Right-of-use assets, net										327,419			—			—
Goodwill	1,397,217			1,389,920			1,396,669			1,388,758			1,397,217			1,386,424
Other noncurrent assets	928,519			1,426,175			944,961			848,853			928,519			847,006
Total Assets	$	5,304,090		$	5,920,929		$	6,238,503		$	5,082,367		$	5,304,090		$	5,243,465
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings	$	—		$	180,000		$	—		$	—		$	—		$	4,176
Current portion of long-term debt	—			250,000			250,000
Accounts payable	398,360			481,412			572,166			324,949			398,360			537,965
Accrued liabilities	578,909			450,316			792,139			661,911			578,909			700,421
Income taxes payable	9,910			9,316			9,498			19,409			9,910			10,046
Total current liabilities	987,179			1,371,044			1,623,803			1,006,269			987,179			1,252,608
Noncurrent Liabilities
Long-term debt	2,871,771			1,884,982			2,873,119			2,853,454			2,871,771			2,851,723
Noncurrent lease liabilities										294,812			—			—
Other noncurrent liabilities	462,674			448,962			484,126			409,315			462,674			469,669
Total noncurrent liabilities	3,334,445			2,333,944			3,357,245			3,557,581			3,334,445			3,321,392
Stockholders’ Equity
Common stock $1.00 par value, 1.0 billion shares authorized; 441.4 million shares issued	441,369			441,369			441,369			441,369			441,369			441,369
Additional paid-in capital	1,817,139			1,798,726			1,808,391			1,822,718			1,817,139			1,812,682
Treasury stock at cost: 97.4 million shares, 98.8 million shares, and 97.6 million shares, respectively	(2,385,850		)	(2,422,197		)	(2,389,877		)
Treasury stock at cost: 95.9 million shares, 97.4 million shares, and 96.1 million shares, respectively										(2,353,175		)	(2,385,850		)	(2,354,617		)
Retained earnings	1,848,957			3,301,875			2,179,358			1,445,539			1,848,957			1,629,257
Accumulated other comprehensive loss	(739,149		)	(903,832		)	(781,786		)	(837,934		)	(739,149		)	(859,226		)
Total stockholders’ equity	982,466			2,215,941			1,257,455			518,517			982,466			669,465
Total Liabilities and Stockholders’ Equity	$	5,304,090		$	5,920,929		$	6,238,503		$	5,082,367		$	5,304,090		$	5,243,465

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS



	For the Three Months Ended
	March��31, 2019			March 31, 2018
	(Unaudited; in thousands, except per share amounts)
Net Sales	$	689,246		$	708,372
Cost of sales	449,456			489,499
Gross Profit	239,790			218,873
Advertising and promotion expenses	69,465			70,837
Other selling and administrative expenses	301,284			424,617
Operating Loss	(130,959		)	(276,581		)
Interest expense	46,958			41,079
Interest (income)	(2,272		)	(3,147		)
Other non-operating expense (income), net	1,904			(608		)
Loss Before Income Taxes	(177,549		)	(313,905		)
Provision for (benefit from) income taxes	6,169			(2,652		)
Net Loss	$	(183,718	)	$	(311,253	)
Net Loss Per Common Share - Basic	$	(0.53	)	$	(0.90	)
Weighted average number of common shares	345,852			344,434
Net Loss Per Common Share - Diluted	$	(0.53	)	$	(0.90	)
Weighted average number of common and potential common shares	345,852			344,434

For the Three Months Ended
March 31,
2018 March 31,
2017
(Unaudited; in thousands, except per share amounts)
Net Sales $ 708,372
$ 735,618
Cost of sales 489,499
456,840
Gross Profit 218,873
278,778
Advertising and promotion expenses 70,837
73,562
Other selling and administrative expenses 424,617
330,829
Operating Loss (276,581 ) (125,613 )
Interest expense 41,079
22,030
Interest (income) (3,147 ) (2,466 )
Other non-operating (income) expense, net (608 ) 494
Loss Before Income Taxes (313,905 ) (145,671 )
Benefit from income taxes (2,652 ) (32,440 )
Net Loss $ (311,253 ) $ (113,231 )
Net Loss Per Common Share—Basic $ (0.90 ) $ (0.33 )
Weighted average number of common shares 344,434
342,914
Net Loss Per Common Share—Diluted $ (0.90 ) $ (0.33 )
Weighted average number of common and potential common shares 344,434
342,914
Dividends Declared Per Common Share $ —
$ 0.38

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the Three Months Ended
March 31,
2018 March 31,
2017
(Unaudited; in thousands)
Net Loss $ (311,253 ) $ (113,231 )
Other Comprehensive Income (Loss), Net of Tax:
Currency translation adjustments 41,989
54,269
Defined benefit pension plan adjustments 1,616
1,055
Net unrealized losses on available-for-sale security (80 ) (1,314 )
Net unrealized losses on derivative instruments:
Unrealized holding losses (5,319 ) (12,584 )
Reclassification adjustment for realized losses (gains) included in net loss 4,431
(2,229 )
(888 ) (14,813 )
Other Comprehensive Income (Loss), Net of Tax 42,637
39,197
Comprehensive Loss $ (268,616 ) $ (74,034 )



	For the Three Months Ended
	March 31, 2019			March 31, 2018
	(Unaudited; in thousands)
Net Loss	$	(183,718	)	$	(311,253	)
Other Comprehensive Income, Net of Tax
Currency translation adjustments	14,133			41,989
Defined benefit pension plan adjustments	223			1,616
Net unrealized gains (losses) on available-for-sale security	1,877			(80		)
Net unrealized gains (losses) on derivative instruments:
Unrealized holding gains (losses)	5,818			(5,319		)
Reclassification adjustment for realized (losses) gains included in net loss	(759		)	4,431
	5,059			(888		)
Other Comprehensive Income, Net of Tax	21,292			42,637
Comprehensive Loss	$	(162,426	)	$	(268,616	)

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Three Months Ended						For the Three Months Ended
	March 31, 2018			March 31, 2017			March 31, 2019			March 31, 2018
	(Unaudited; in thousands)						(Unaudited; in thousands)
Cash Flows From Operating Activities:
Net loss	$	(311,253	)	$	(113,231	)	$	(183,718	)	$	(311,253	)
Adjustments to reconcile net loss to net cash flows used for operating activities:
Depreciation	58,539			59,312			52,071			58,539
Amortization	10,198			5,239			10,429			10,198
Asset impairments	4,737			—
Deferred income taxes	(1,026		)	(45,434		)
Share-based compensation	14,423			12,671			11,865			14,423
Bad debt expense	58,837			5,790			2,745			58,837
Inventory obsolescence	19,949			14,259			21,452			19,949
Increase (decrease) from changes in assets and liabilities, net of acquired assets and liabilities:
Deferred income taxes							(66		)	(1,026		)
Increase (decrease) from changes in assets and liabilities:
Accounts receivable	402,927			318,020			351,450			402,927
Inventories	(100,347		)	(160,262		)	(94,698		)	(100,347		)
Prepaid expenses and other current assets	(40,052		)	(24,980		)	(28,417		)	(40,052		)
Accounts payable, accrued liabilities, and income taxes payable	(367,298		)	(363,469		)	(327,821		)	(367,298		)
Other, net	(23,366		)	(17,956		)	(8,102		)	(18,629		)
Net cash flows used for operating activities	(273,732		)	(310,041		)	(192,810		)	(273,732		)
Cash Flows From Investing Activities:
Purchases of tools, dies, and molds	(21,013		)	(29,286		)	(10,706		)	(21,013		)
Purchases of other property, plant, and equipment	(26,424		)	(41,046		)	(13,409		)	(26,424		)
Proceeds from foreign currency forward exchange contracts	23,250			25,928
Proceeds from foreign currency forward exchange contracts, net							4,703			23,250
Other, net	(6,675		)	(291		)	212			(6,675		)
Net cash flows used for investing activities	(30,862		)	(44,695		)	(19,200		)	(30,862		)
Cash Flows From Financing Activities:
Payments of short-term borrowings, net	—			(192,168		)
Proceeds from short-term borrowings, net	—			180,000
Payments of short-term borrowings							(4,176		)	—
Payments of long-term borrowings	(250,000		)	—			—			(250,000		)
Payments of dividends on common stock	—			(130,129		)
Proceeds from exercise of stock options	—			1,415
Other, net	(1,516		)	(1,764		)	(173		)	(1,516		)
Net cash flows used for financing activities	(251,516		)	(142,646		)	(4,349		)	(251,516		)
Effect of Currency Exchange Rate Changes on Cash	3,613			9,738			1,985			3,613
Decrease in Cash and Equivalents	(552,497		)	(487,644		)	(214,374		)	(552,497		)
Cash and Equivalents at Beginning of Period	1,079,221			869,531			594,481			1,079,221
Cash and Equivalents at End of Period	$	526,724		$	381,887		$	380,107		$	526,724

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY



	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
	(Unaudited; in thousands)
Balance, December 31, 2018	$	441,369	$	1,812,682		$	(2,354,617	)	$	1,629,257		$	(859,226	)	$	669,465
Net loss	—		—			—			(183,718		)	—			(183,718		)
Other comprehensive income, net of tax	—		—			—			—			21,292			21,292
Issuance of treasury stock for restricted stock units vesting	—		(1,829		)	1,442			—			—			(387		)
Share-based compensation	—		11,865			—			—			—			11,865
Balance, March 31, 2019	$	441,369	$	1,822,718		$	(2,353,175	)	$	1,445,539		$	(837,934	)	$	518,517

Balance, December 31, 2017	$	441,369	$	1,808,391		$	(2,389,877	)	$	2,179,358		$	(781,786	)	$	1,257,455
Cumulative effect of accounting change	—		—			—			(19,148		)	—			(19,148		)
Net loss	—		—			—			(311,253		)	—			(311,253		)
Other comprehensive income, net of tax	—		—			—			—			42,637			42,637
Issuance of treasury stock for restricted stock units vesting	—		(5,675		)	4,027			—			—			(1,648		)
Share-based compensation	—		14,423			—			—			—			14,423
Balance, March 31, 2018	$	441,369	$	1,817,139		$	(2,385,850	)	$	1,848,957		$	(739,149	)	$	982,466

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

MATTEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1.	Basis of Presentation

The accompanying unaudited consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments, consisting of only those of a normal recurring nature, considered necessary for a fair ~~presentation~~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. ~~As Mattel’s business is seasonal, results~~

Mattel adopted Accounting Standards Update ("ASU") No. 2016-02—Leases (Topic 842) and its related amendments (collectively "the new lease standard") on January 1, 2019 using the modified retrospective transition method. Prior periods were not retrospectively adjusted and continue to be reported under the accounting standards in effect for ~~interim~~those periods, ~~are not necessarily indicative~~as further discussed in "Note 5 to the Consolidated Financial Statements—Leases."

Mattel modified its reporting structure for revenues and reorganized its regional sales reporting structure in the first quarter of ~~those that may be expected for a full year.~~2019. Prior period amounts have been reclassified to conform to the current ~~year~~period presentation, as further discussed in ~~"Note 16 to the Consolidated Financial Statements—Employee Benefit Plans" and~~ "Note 23 to the Consolidated Financial Statements—Segment Information."

The ~~year-end~~December 31, 2018 balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the consolidated financial statements do not include all 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 its ~~2017~~2018 Annual Report on Form 10-K.


2.	Accounts Receivable

Accounts receivable are net of allowances for doubtful accounts of $24.3 million, $24.9 million, ~~$23.3 million,~~ and ~~$25.4~~$22.0 million as of March 31, ~~2018,~~2019, March 31, ~~2017,~~2018, and December 31, ~~2017,~~2018, respectively. AsDuring the first quarter of 2018, as a result of the Toys "R" Us liquidation, Mattel reversed net sales ~~which occurred during the first quarter of 2018~~ and related accounts receivable of approximately $30 ~~million. Further, Mattel~~million and recorded bad debt expense of approximately $57 ~~million related to outstanding Toys "R" Us receivables as of December 31, 2017.~~million.


3.	Inventories

Inventories include the following:



	March 31, 2019		March 31, 2018		December 31, 2018
	(In thousands)
Raw materials and work in process	$	118,143	$	119,704	$	115,966
Finished goods	497,685		558,028		426,923
	$	615,828	$	677,732	$	542,889

March 31,
2018 March 31,
2017 December 31,
2017
(In thousands)
Raw materials and work in process $ 119,704
$ 121,746
$ 101,690
Finished goods 558,028
648,053
499,014
$ 677,732
$ 769,799
$ 600,704


4.	Property, Plant, and Equipment

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



	March 31, 2019			March 31, 2018			December 31, 2018
	(In thousands)
Land	$	25,071		$	25,197		$	25,023
Buildings	298,022			298,780			294,227
Machinery and equipment	885,178			896,388			875,308
Software	398,071			387,551			400,488
Tools, dies, and molds	814,078			877,181			831,743
Capital leases	—			23,927			23,927
Leasehold improvements	241,769			245,299			240,636
	2,662,189			2,754,323			2,691,352
Less: accumulated depreciation	(2,039,938		)	(1,997,639		)	(2,033,757		)
	$	622,251		$	756,684		$	657,595

March 31,
2018 March 31,
2017 December 31,
2017
(In thousands)
Land $ 25,197
$ 25,186
$ 25,114
Buildings 298,780
285,051
303,495
Machinery and equipment 896,388
850,723
902,861
Software 387,551
364,495
384,568
Tools, dies, and molds 877,181
880,171
887,442
Capital leases 23,927
23,970
24,279
Leasehold improvements 245,299
270,659
213,238
2,754,323
2,700,255
2,740,997
Less: accumulated depreciation (1,997,639 ) (1,916,786 ) (1,955,712 )
$ 756,684
$ 783,469
$ 785,285

5. Leases

Mattel adopted the new lease standard on January 1, 2019 using the modified retrospective transition method. Prior periods were not retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. Mattel elected the package of practical expedients permitted under the transition guidance within the new lease standard, which among other things, allowed Mattel to continue to account for existing leases based on the historical lease classification. Mattel also elected the practical expedients to exclude right-of-use ("ROU") assets and lease liabilities for leases with an initial term of 12 months or less from the balance sheet, and to combine lease and non-lease components for property leases, which primarily relate to ancillary expenses such as common area maintenance charges and management fees.

Mattel determines if an arrangement is a lease at inception by assessing whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Mattel’s leases are primarily related to property leases for its retail stores, warehouses, and corporate offices. Mattel's leases have remaining lease terms of one to 14 years, and often include one or more options to renew for up to 10 years. Renewal and termination options are included in the lease term when it is reasonably certain that Mattel will exercise the option.

In addition, certain of Mattel’s lease agreements include contingent rental payments based on a percentage of sales. Contingent rental expense is recorded in the period in which the contingent event becomes probable. Mattel's lease agreements do not contain any material residual guarantees or material restrictive covenants.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As substantially all of Mattel's leases do not provide an implicit rate, Mattel uses its incremental borrowing rate, based on the information available at the lease commencement date, to determine the present value of lease payments. Based on the present value of lease payments for Mattel's existing leases, Mattel recorded net lease assets and lease liabilities of approximately $343 million and $390 million, respectively, upon adoption. The net lease assets were adjusted for deferred rent, lease incentives, and prepaid rent. Mattel had no material finance leases. The new lease standard did not materially impact Mattel's consolidated statements of operations and had no impact on Mattel's consolidated statements of cash flows.

The impact of the new lease standard on the March 31, 2019 consolidated balance sheet was as follows:



	March 31, 2019
	(In thousands, except years and percentage information)
Right-of-use assets, net	$	327,419

Accrued liabilities	$	77,092
Noncurrent lease liabilities	294,812
Total lease liabilities, net	$	371,904

Weighted average remaining lease term	6.8 years

Weighted average discount rate	8.3		%

Operating lease costs are recognized on a straight-line basis over the lease term. Total operating lease costs for the three months ended March 31, 2019 were $34.1 million, which included approximately $9 million related to short-term and variable lease costs.

Supplemental cash flow information related to leases was as follows:



	March 31, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows	$	26,426

The following table shows the future maturities of lease liabilities for leases in effect as of March 31, 2019:



Years Ending December 31,	Lease Liabilities
	(In thousands)
2019 (excluding the three months ended March 31, 2019)	$	78,289
2020	91,791
2021	76,050
2022	56,502
2023	42,406
Thereafter	149,099
Total lease payments	494,137
Less: imputed interest	(122,233		)
Total	$	371,904

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease standard (Topic 840), future minimum obligations under lease commitments in effect at December 31, 2018 were as follows:



	Capital Leases			Operating Leases
	(In thousands)
2019	$	294		$	110,794
2020	25			83,566
2021	—			72,606
2022	—			59,191
2023	—			56,123
Thereafter	—			133,716
	$	319	(a)	$	515,996


(a)	Includes minimal imputed interest.

Rental expense under operating leases were $127.1 million for 2018.


5.6.	Goodwill

Goodwill is allocated to various reporting units, which are at the operating segment level, for ~~purposes~~the purpose of evaluating whether goodwill is impaired. Mattel’s reporting units are: (i) North America, (ii) International, and (iii) American Girl. Mattel tests its goodwill for impairment annually in the third quarter and whenever events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

The change in the carrying amount of goodwill by operating segment for the three months ended March 31, ~~2018~~2019 is shown below. Brand-specific goodwill held by foreign subsidiaries is allocated to the North America ~~and American Girl~~ operating ~~segments selling those brands,~~segment, thereby causing a foreign currency translation ~~impact for these operating segments. In the first quarter of 2018, Mattel sold certain assets related to its Corolle business and wrote off approximately $4 million of goodwill.~~impact.



	December 31, 2018		Currency Exchange Rate Impact		March 31, 2019
	(In thousands)
North America	$	731,234	$	632	$	731,866
International	447,619		1,702		449,321
American Girl	207,571		—		207,571
	$	1,386,424	$	2,334	$	1,388,758

December 31,
2017 Dispositions Currency
Exchange Rate
Impact March 31,
2018
(In thousands)
North America $ 733,034
$ —
$ 1,194
$ 734,228
International 452,152
—
3,266
455,418
American Girl 211,483
(4,018 ) 106
207,571
$ 1,396,669
$ (4,018 ) $ 4,566
$ 1,397,217


6.7.	Other Noncurrent Assets

Other noncurrent assets include the following:



	March 31, 2019		March 31, 2018		December 31, 2018
	(In thousands)
Identifiable intangibles (net of accumulated amortization of $218.3 million, $179.0 million, and $207.9 million, respectively)	$	580,497	$	635,143	$	587,528
Deferred income taxes	50,510		78,922		49,937
Other	217,846		214,454		209,541
	$	848,853	$	928,519	$	847,006

March 31,
2018 March 31,
2017 December 31,
2017
(In thousands)
Identifiable intangibles (net of amortization of $179.0 million, $157.9 million, and $168.8 million, respectively) $ 635,143
$ 198,156
$ 639,203
Deferred income taxes 78,922
554,056
76,750
Nonamortizable identifiable intangibles —
461,179
—
Other 214,454
212,784
229,008
$ 928,519
$ 1,426,175
$ 944,961

Mattel tests nonamortizable intangible assets, including trademarks and trade names, for impairment annually in the third quarter and whenever events or changes in circumstances indicate that the carrying values may exceed the fair values. During the third quarter of 2017, Mattel discontinued the use of a trademark. In the fourth quarter of 2017, Mattel concluded that a triggering event had occurred related to its remaining nonamortizable intangible asset and determined that it was not impaired, but that the intangible asset was no longer nonamortizable.

~~Mattel also~~ tests its amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Amortizable intangible assets were not impaired during the three months ended March 31, ~~2018.~~2019.

~~During~~


8.	Accrued Liabilities

Accrued liabilities include the third quarter of 2017, Mattel established a valuation allowance on certain deferred tax assets, the benefits of which Mattel believes will likely not be realized. Refer to Part II, Item 8 "Financial Statements and Supplementary Data—Note 14 to the Consolidated Financial Statements—Income Taxes" in its 2017 Annual Report on Form 10-K for additional information.following:



	March 31, 2019		March 31, 2018		December 31, 2018
	(In thousands)
Current lease liabilities	$	77,092	$	—	$	—
Advertising and promotion	56,553		72,179		86,935
Royalties	46,483		46,698		108,109
Taxes other than income taxes	28,202		28,281		54,317
Other	453,581		431,751		451,060
	$	661,911	$	578,909	$	700,421


7.	~~Accrued Liabilities~~

~~Accrued liabilities include the following:~~

March 31,
2018 March 31,
2017 December 31,
2017
(In thousands)
Advertising and promotion $ 72,179
$ 31,325
$ 165,572
Royalties 46,698
46,973
111,669
Taxes other than income taxes 28,281
30,209
74,626
Other 431,751
341,809
440,272
$ 578,909
$ 450,316
$ 792,139


8.9.	Seasonal Financing

On December 20, 2017, Mattel, Inc. ~~and certain of its domestic subsidiaries (“U.S. Borrowers”) and a Canadian subsidiary (“Canadian Borrower”)~~ entered into a syndicated facility agreement ~~(the “Credit Agreement”~~(as amended, the "Credit Agreement"), as a borrower thereunder (in such capacity, the "Borrower"), along with certain of the Borrower’s other subsidiaries as additional borrowers and/or guarantors thereunder, ~~with Bank of America, N.A., as global administrative agent, collateral agent, Australian security trustee, and lender, and the other lenders and financial institutions party thereto,~~ providing for $1.60 billion in aggregate principal amount of senior secured revolving credit facilities (the ~~“senior~~"senior secured revolving credit ~~facilities”~~facilities"), consisting of (i) an asset based lending facility with aggregate commitments of $1.31 billion, subject to borrowing base capacity, secured by substantially all of the accounts receivable and inventory of the Borrower and its subsidiaries who are borrowers and/or guarantors under the Credit Agreement, as well as (ii) a revolving credit facility with $294.0 million in aggregate commitments secured by certain fixed assets and intellectual property ~~of the U.S. Borrowers~~ and ~~certain~~various equity interests in ~~various~~the borrower and guarantor subsidiaries ~~of Mattel, subject to borrowing base capacity (the “Fixed Asset & IP Facility”).~~under the Credit Agreement. The senior secured revolving credit facilities will mature on ~~December 20, 2020.~~

On March 28, 2018 and March 29, 2018, Mattel, Inc. and certain of its subsidiaries entered into various foreign joinder agreements to the Credit Agreement. The foreign joinder agreements join the relevant foreign borrowers and foreign lenders to the Credit Agreement, as contemplated therein, making portions of the senior secured revolving credit facilities available to other subsidiaries of Mattel, Inc. such that, together with the initial entry into the Credit Agreement, the senior secured revolving credit facilities are available to certain subsidiaries of Mattel, Inc., in their capacity as borrowers, located in the following jurisdictions: (i) the United States (the “U.S. Borrowers”), (ii) Canada (the “Canadian Borrower”), (iii) Germany, the Netherlands and the United Kingdom (the “European (GNU) Borrowers”), (iv) Spain (the “Spanish Borrower”), (v) France (the “French Borrower”), and (vi) Australia (the “Australian Borrower”), in each case through subfacilities in each such jurisdiction (each, a “Subfacility”). Through the initial Credit Agreement and the foreign joinder agreements, certain additional domestic and foreign subsidiaries of Mattel, Inc. are also parties to the Credit Agreement as guarantors of various obligations of the borrowers under the Credit Agreement as further described below.June 1, 2021.

Borrowings under the senior secured revolving credit facilities will (i) be limited by jurisdiction-specific borrowing base calculations based on the sum of specified percentages of eligible accounts receivable, eligible inventory and certain fixed assets and intellectual property, as applicable, minus the amount of any applicable reserves, and (ii) bear interest at a floating rate, which can be either, at the Borrower’s option, (a) an adjusted LIBOR rate plus an applicable margin ranging from 1.25% to 3.00% per annum or (b) an alternate base rate plus an applicable margin ranging from 0.25% to 2.00% per annum, in each case, such applicable margins to be determined based on the Borrower’s average borrowing availability remaining under the senior secured revolving credit facilities.

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

~~The U.S. Borrowers, as well as certain~~ Mattel ~~U.S. subsidiaries that are guarantors (the “U.S. Guarantors”), are guaranteeing the obligations of all Borrowers~~had no borrowings under the senior secured revolving credit ~~facilities. Additionally,~~facilities as of March 31, 2019, March 31, 2018, and December 31, 2018. Outstanding letters of credit under the ~~obligations~~senior secured revolving credit facilities totaled approximately $70 million, $42 million, and $89 million as of ~~the Canadian Borrower, the French Borrower, the Spanish Borrower, the European (GNU) Borrowers~~March 31, 2019, March, 31, 2018, and the Australian Borrower (collectively, the “Foreign Borrowers”), are each guaranteed by the obligations of the other Foreign Borrowers, as well as additional foreign subsidiaries of Mattel, Inc. that are guarantors (the “Foreign Guarantors”).

The U.S. Subfacility is secured by liens on substantially all of the U.S. Borrowers’ and the U.S. Guarantors’ accounts receivable and inventory (the “U.S. Current Assets Collateral”). The Canadian Subfacility, the French Subfacility, the Spanish Subfacility, the European (GNU) Subfacility and the Australian Subfacility are, each secured by a first priority lien on (i) the accounts receivable and inventory of the applicable Foreign Borrower(s) and Foreign Guarantors under such facility, and (ii) the U.S. Current Assets Collateral. The Fixed Asset & IP Facility is secured by a first priority lien on certain owned real property in the U.S., certain U.S. trademarks and patents and 100% of the equity interests in the U.S. Borrowers (aside from Mattel) and U.S. Guarantors, as well as 65% of the voting equity interests and 100% of the non-voting equity interests in Mattel Holdings Limited. The Fixed Asset & IP Facility is also secured by 65% of the voting equity interests of such additional Foreign Borrowers and Foreign Guarantors that are directly owned by a U.S. Borrower or U.S. Guarantor.December 31, 2018, respectively.

The Credit Agreement contains customary covenants, including, but not limited to, restrictions on the Borrower’s and its subsidiaries’ ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances, or investments, pay dividends, sell or otherwise transfer assets outside of the ordinary course, optionally prepay or modify terms of any junior indebtedness, enter into transactions with affiliates, or change their line of business.

The Credit Agreement requires the maintenance of a fixed charge coverage ratio of 1.00 to 1.00 at the end of each fiscal quarter when excess availability under the senior secured revolving credit facilities is less than the greater of (x) $100 million and (y) 10% of the aggregate amount available thereunder (the "Availability Threshold") and on the last day of each subsequent fiscal quarter ending thereafter until no event of default exists and excess availability is greater than the Availability Threshold for at least 30 consecutive days.

~~As Mattel had no borrowings to-date under~~

Since the ~~senior secured revolving credit facilities,~~execution of the Credit Agreement, the fixed charge coverage ratio covenant ~~was~~has not been in effect as no event of ~~March 31, 2018.~~default has occurred and as Mattel's excess availability has been greater than $100 million and the Availability Threshold. As of March 31, ~~2018,~~2019, Mattel was in compliance with all covenants contained in the Credit Agreement. The Credit Agreement is a material agreement, and failure to comply with the covenants may result in an event of default under the terms of the senior secured revolving credit facilities. If Mattel were to default under the terms of the senior secured revolving credit facilities, its ability to meet its seasonal financing requirements could be adversely affected.


9.10.	Long-Term Debt

Long-term debt includes the following:



	March 31, 2019			March 31, 2018			December 31, 2018
	(In thousands)
2010 Senior Notes due October 2020 and October 2040	$	500,000		$	500,000		$	500,000
2011 Senior Notes due November 2041	300,000			300,000			300,000
2013 Senior Notes due March 2023	250,000			250,000			250,000
2014 Senior Notes due May 2019	—			500,000			—
2016 Senior Notes due August 2021	350,000			350,000			350,000
2017/2018 Senior Notes due December 2025	1,500,000			1,000,000			1,500,000
Debt issuance costs and debt discount	(46,546		)	(28,229		)	(48,277		)
	2,853,454			2,871,771			2,851,723
Less: current portion	—			—			—
Total long-term debt	$	2,853,454		$	2,871,771		$	2,851,723

March 31,
2018 March 31,
2017 December 31,
2017
(In thousands)
2010 Senior Notes due October 2020 and October 2040 $ 500,000
$ 500,000
$ 500,000
2011 Senior Notes due November 2041 300,000
300,000
300,000
2013 Senior Notes due March 2018 and March 2023 250,000
500,000
500,000
2014 Senior Notes due May 2019 500,000
500,000
500,000
2016 Senior Notes due August 2021 350,000
350,000
350,000
2017 Senior Notes due December 2025 1,000,000
—
1,000,000
Debt issuance costs and debt discount (28,229 ) (15,018 ) (26,881 )
2,871,771
2,134,982
3,123,119
Less: current portion —
(250,000 ) (250,000 )
Total long-term debt $ 2,871,771
$ 1,884,982
$ 2,873,119

In December 2017, Mattel issued $1.00 billion aggregate principal amount of 6.75% senior unsecured notes due December 31, 2025 ("2017 Senior Notes"). The 2017 Senior Notes were issued pursuant to an indenture, dated December 20, 2017, among Mattel, the guarantors named therein, and MUFG Union Bank, N.A., as Trustee (the "Indenture"). Interest on the 2017 Senior Notes is payable semi-annually in arrears on June 30 and December 31 of each year, beginning on June 30, 2018. Mattel may redeem all or part of the 2017 Senior Notes at any time, or from time to time prior to December 31, 2020, at its option, at a redemption price equal to 100% of the principal amount, plus a "make whole" premium, plus accrued and unpaid interest on the 2017 Senior Notes being redeemed to, but excluding, the redemption date. Mattel may also redeem up to 40% of the principal amount of the 2017 Senior Notes at any time, or from time to time prior to December 31, 2020, at its option, at a redemption price equal to 106.75% of the principal amount, plus accrued and unpaid interest on the 2017 Senior Notes being redeemed to, but excluding, the redemption date, with the net cash proceeds of sales of one or more equity offerings by Mattel, or any direct or indirect parent of Mattel. Mattel may redeem all or part of the 2017 Senior Notes at any time, or from time to time on or after December 31, 2020, at its option, at a redemption price including a call premium that varies from 0% to 5.063%, depending on the year of redemption, plus accrued and unpaid interest on the 2017 Senior Notes being redeemed to, but excluding, the redemption date.

In March 2018, Mattel repaid $250.0 million of its 2013 Senior Notes in connection with ~~its~~the scheduled maturity. In May 2018, Mattel issued $500.0 million aggregate principal amount of its 6.75% senior unsecured notes due December 31, 2025 ("2018 Senior Notes"). In June 2018, Mattel used the net proceeds from the issuance of the 2018 Senior Notes, plus cash on hand, to redeem and retire all of its 2014 Senior Notes due May 6, 2019 at a redemption price equal to the principal amount, plus accrued and unpaid interest.


~~10.~~11.	Other Noncurrent Liabilities

Other noncurrent liabilities include the following:



	March 31, 2019		March 31, 2018		December 31, 2018
	(In thousands)
Benefit plan liabilities	$	183,294	$	186,114	$	166,289
Noncurrent tax liabilities	143,723		127,912		150,960
Other	82,298		148,648		152,420
	$	409,315	$	462,674	$	469,669

March 31,
2018 March 31,
2017 December 31,
2017
(In thousands)
Benefit plan liabilities $ 186,114
$ 179,720
$ 168,539
Noncurrent tax liabilities 127,912
98,208
124,330
Other 148,648
171,034
191,257
$ 462,674
$ 448,962
$ 484,126


~~11.~~12.	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 out of accumulated other comprehensive income (loss):



	For the Three Months Ended March 31, 2019
	Derivative Instruments			Available-for-Sale Security			Defined Benefit Pension Plans			Currency Translation Adjustments			Total
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2018	$	11,411		$	(6,547	)	$	(142,763	)	$	(721,327	)	$	(859,226	)
Other comprehensive income (loss) before reclassifications	5,818			1,877			(1,206		)	14,133			20,622
Amounts reclassified from accumulated other comprehensive income (loss)	(759		)	—			1,429			—			670
Net increase in other comprehensive income (loss)	5,059			1,877			223			14,133			21,292
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of March 31, 2019	$	16,470		$	(4,670	)	$	(142,540	)	$	(707,194	)	$	(837,934	)

For the Three Months Ended March 31, 2018
Derivative
Instruments
Available-for-Sale
Security
Defined Benefit
Pension Plans Currency
Translation
Adjustments Total
(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2017 $ (21,098 ) $ (2,799 ) $ (143,213 ) $ (614,676 ) $ (781,786 )
Other comprehensive (loss) income before reclassifications (5,319 ) (80 ) (208 ) 41,989
36,382
Amounts reclassified from accumulated other comprehensive income (loss) 4,431
—
1,824
—
6,255
Net (decrease) increase in other comprehensive income (888 ) (80 ) 1,616
41,989
42,637
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of March 31, 2018 $ (21,986 ) $ (2,879 ) $ (141,597 ) $ (572,687 ) $ (739,149 )

For the Three Months Ended March 31, 2017
Derivative
Instruments
Available-for-Sale
Security
Defined Benefit
Pension Plans Currency
Translation
Adjustments Total
(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2016 $ 17,469
$ 3,149
$ (157,704 ) $ (805,943 ) $ (943,029 )
Other comprehensive (loss) income before reclassifications (12,584 ) (1,314 ) (100 ) 54,269
40,271
Amounts reclassified from accumulated other comprehensive income (loss) (2,229 ) —
1,155
—
(1,074 )
Net (decrease) increase in other comprehensive income (14,813 ) (1,314 ) 1,055
54,269
39,197
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of March 31, 2017 $ 2,656
$ 1,835
$ (156,649 ) $ (751,674 ) $ (903,832 )



	For the Three Months Ended March 31, 2018
	Derivative Instruments			Available-for-Sale Security			Defined Benefit Pension Plans			Currency Translation Adjustments			Total
	(In thousands)
Accumulated Other Comprehensive Loss, Net of Tax, as of December 31, 2017	$	(21,098	)	$	(2,799	)	$	(143,213	)	$	(614,676	)	$	(781,786	)
Other comprehensive (loss) income before reclassifications	(5,319		)	(80		)	(208		)	41,989			36,382
Amounts reclassified from accumulated other comprehensive loss	4,431			—			1,824			—			6,255
Net (decrease) increase in other comprehensive (loss) income	(888		)	(80		)	1,616			41,989			42,637
Accumulated Other Comprehensive Loss, Net of Tax, as of March 31, 2018	$	(21,986	)	$	(2,879	)	$	(141,597	)	$	(572,687	)	$	(739,149	)

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

For the Three Months Ended
March 31,
2018 March 31,
2017
Statements of Operations
Classification
(In thousands)
Derivative Instruments
(Loss) gain on foreign currency forward exchange contracts $ (4,383 ) $ 2,207
Cost of sales
Tax effect of net (loss) gain (48 ) 22
Benefit from income taxes
$ (4,431 ) $ 2,229
Net loss
Defined Benefit Pension Plans

Amortization of prior service credit (cost) $ 501
$ (8 ) (a)
Recognized actuarial loss (2,317 ) (1,857 ) (a)
Settlement loss (42 ) —
Other non-operating income/expense
(1,858 ) (1,865 )
Tax effect of net (loss) gain 34
710
Benefit from income taxes
$ (1,824 ) $ (1,155 ) Net loss



	For the Three Months Ended
	March 31, 2019			March 31, 2018			Statements of Operations Classification
	(In thousands)
Derivative Instruments
Gain (loss) on foreign currency forward exchange contracts	$	927		$	(4,383	)	Cost of sales
Tax effect of net gain (loss)	(168		)	(48		)	Provision for (benefit from) income taxes
	$	759		$	(4,431	)	Net loss
Defined Benefit Pension Plans
Amortization of prior service credit (a)	$	493		$	501		Other non-operating expense (income), net
Recognized actuarial loss (a)	(1,737		)	(2,317		)	Other non-operating expense (income), net
Settlement loss	—			(42		)	Other non-operating expense (income), net
	(1,244		)	(1,858		)
Tax effect of net loss	(185		)	34			Provision for (benefit from) income taxes
	$	(1,429	)	$	(1,824	)	Net loss

~~__________________________________________~~ _______________________________________


(a)	The amortization of prior service credit ~~(cost)~~ 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" of this Quarterly Report on Form 10-Q for additional information regarding Mattel’s net periodic benefit cost.

Currency Translation Adjustments

Mattel’s reporting currency is the USU.S. dollar. The translation of its net investments in subsidiaries with ~~non-US~~non-U.S. dollar functional currencies subjects Mattel to the impact of currency exchange rate fluctuations in its results of operations and financial position. Assets and liabilities of subsidiaries with ~~non-US~~non-U.S. dollar functional currencies are translated into USU.S. dollars at fiscal period-end exchange rates. Income, expense, and cash flow items are translated at weighted average exchange rates prevailing during the fiscal period. The resulting currency translation adjustments are recorded as a component of accumulated other comprehensive income (loss) within stockholders’ equity. Currency translation adjustments resulted in a net gain of $14.1 million for the three months ended March 31, 2019, primarily due to the strengthening of the British pound sterling and Russian ruble against the U.S. dollar. Currency translation adjustments resulted in a net gain of $42.0 million for the three months ended March 31, 2018, primarily due to the strengthening of the Euro, British pound sterling, and Mexican peso against the USU.S. dollar. Currency translation adjustments resulted in a net gain of $54.3 million for the three months ended March 31, 2017, primarily due to the strengthening of the Mexican peso and Euro against the US dollar.


~~12.~~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 generally have maturity dates of up to 18 months. These derivative instruments have been designated as effective cash flow hedges, whereby the unsettled hedges are reported in Mattel’s consolidated balance sheets at fair value, with changes in the fair value of the hedges reflected in other comprehensive ~~(loss)~~ income ("OCI"). Realized gains and losses for these contracts are recorded in the consolidated statements of operations in the period in which the inventory is sold to customers. Additionally, Mattel uses foreign currency forward exchange contracts to hedge intercompany loans and advances denominated in foreign currencies. Due to the short-term nature of the contracts involved, Mattel ~~has~~does not ~~designated~~use hedge accounting for these contracts, ~~as hedging instruments,~~ and as such, changes in fair value are recorded in the period of change in the consolidated statements of operations. As of March 31, ~~2018,~~2019, March 31, ~~2017,~~2018, and December 31, ~~2017,~~2018, Mattel held foreign currency forward exchange contracts with notional amounts of $1.10 billion, ~~$1.48~~$1.10 billion, and ~~$987.7~~$962.1 million, respectively.

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



	Derivative Assets
	Fair Value						Balance Sheet Classification
	March 31, 2019		March 31, 2018		December 31, 2018		Balance Sheet Classification
	(In thousands)
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	$	16,703	$	1,787	$	12,122	Prepaid expenses and other current assets
Foreign currency forward exchange contracts	3,041		390		1,613		Other noncurrent assets
Total derivatives designated as hedging instruments	$	19,744	$	2,177	$	13,735

Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	$	377	$	1,424	$	2,357	Prepaid expenses and other current assets
Total	$	20,121	$	3,601	$	16,092

	Derivative Liabilities
	Fair Value						Balance Sheet Classification
	March 31, 2019		March 31, 2018		December 31, 2018		Balance Sheet Classification
	(In thousands)
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	$	1,045	$	17,456	$	954	Accrued liabilities
Foreign currency forward exchange contracts	146		1,419		185		Other noncurrent liabilities
Total derivatives designated as hedging instruments	$	1,191	$	18,875	$	1,139

Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	$	4,992	$	4,663	$	1,771	Accrued liabilities
Total	$	6,183	$	23,538	$	2,910

Derivative Assets
Balance Sheet Classification Fair Value
March 31,
2018 March 31,
2017 December 31,
2017
(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward exchange contracts
Prepaid expenses and other
current assets
$ 1,787
$ 12,198
$ 2,175
Foreign currency forward exchange contracts Other noncurrent assets 390
2,683
115
Total derivatives designated as hedging instruments $ 2,177
$ 14,881
$ 2,290
Derivatives not designated as hedging instruments
Foreign currency forward exchange contracts
Prepaid expenses and other
current assets
$ 1,424
$ 2,303
$ 5,514
Total $ 3,601
$ 17,184
$ 7,804

Derivative Liabilities
Balance Sheet Classification Fair Value
March 31,
2018 March 31,
2017 December 31,
2017
(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward exchange contracts Accrued liabilities $ 17,456
$ 7,808
$ 15,970
Foreign currency forward exchange contracts Other noncurrent liabilities 1,419
706
3,159
Total derivatives designated as hedging instruments $ 18,875
$ 8,514
$ 19,129
Derivatives not designated as hedging instruments
Foreign currency forward exchange contracts Accrued liabilities $ 4,663
$ 6,671
$ 191
Total $ 23,538
$ 15,185
$ 19,320

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



	For the Three Months Ended
	March 31, 2019				March 31, 2018						Statements of Operations Classification
	Amount of Gain Recognized in OCI		Amount of Gain Reclassified from Accumulated OCI to Statement of Operations		Amount of (Loss) Recognized in OCI			Amount of (Loss) Reclassified from Accumulated OCI to Statement of Operations			Statements of Operations Classification
	(In thousands)
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	$	5,818	$	759	$	(5,319	)	$	(4,431	)	Cost of sales

For the Three Months Ended
March 31, 2018 March 31, 2017
Statements of
Operations
Classification

Amount of
(Loss) Recognized
in OCI

Amount of
(Loss) Reclassified from
Accumulated OCI
to Statements of
Operations

Amount of
(Loss) Recognized
in OCI

Amount of
Gain
Reclassified from
Accumulated OCI
to Statements of
Operations

(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward exchange contracts $ (5,319 ) $ (4,431 ) $ (12,584 ) $ 2,229
Cost of sales

The net gain of $0.8 million and the net loss of $4.4 ~~million and net gain of $2.2~~ million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively, are offset by the changes in cash flows associated with the underlying hedged transactions.

Amount of Gain
Recognized in the
Statements of Operations

Statements of Operations
Classification
For the Three Months Ended
March 31,
2018 March 31,
2017
(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward exchange contracts $ 14,688
$ 25,569
Other non-operating income/expense
Foreign currency forward exchange contracts —
386
Cost of sales
Total $ 14,688
$ 25,955



	Amount of (Loss) Gain Recognized in the Statements of Operations					Statements of Operations Classification
	For the Three Months Ended
	March 31, 2019			March 31, 2018
	(In thousands)
Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	$	(498	)	$	14,688	Other non-operating expense (income), net

The net ~~gains~~loss of ~~$14.7~~$0.5 million and ~~$26.0~~net gain of $14.7 million recognized in the consolidated statements of operations for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively, are offset by foreign currency transaction gains and losses on the related hedged balances.


~~13.~~14.	Fair Value Measurements

The following tables present information about Mattel’s assets and liabilities measured and reported in the financial statements at fair value on a recurring basis as of March 31, 2019, March 31, 2018, and December 31, 2018 and indicates 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.

Mattel’s financial assets and liabilities ~~measured and reported at fair value on a recurring basis~~ include the following:


	March 31, 2018								March 31, 2019
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)								(In thousands)
Assets:
Foreign currency forward exchange contracts (a)	$	—	$	3,601	$	—	$	3,601	$	—	$	20,121	$	—	$	20,121
Available-for-sale security (b)	8,911		—		—		8,911		7,150		—		—		7,150
Total assets	$	8,911	$	3,601	$	—	$	12,512	$	7,150	$	20,121	$	—	$	27,271
Liabilities:
Foreign currency forward exchange contracts (a)	$	—	$	23,538	$	—	$	23,538	$	—	$	6,183	$	—	$	6,183

	March 31, 2017								March 31, 2018
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)								(In thousands)
Assets:
Foreign currency forward exchange contracts (a)	$	—	$	17,184	$	—	$	17,184	$	—	$	3,601	$	—	$	3,601
Available-for-sale security (b)	13,624		—		—		13,624		8,911		—		—		8,911
Total assets	$	13,624	$	17,184	$	—	$	30,808	$	8,911	$	3,601	$	—	$	12,512
Liabilities:
Foreign currency forward exchange contracts (a)	$	—	$	15,185	$	—	$	15,185	$	—	$	23,538	$	—	$	23,538

	December 31, 2017								December 31, 2018
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)								(In thousands)
Assets:
Foreign currency forward exchange contracts (a)	$	—	$	7,804	$	—	$	7,804	$	—	$	16,092	$	—	$	16,092
Available-for-sale security (b)	8,991		—		—		8,991		5,243		—		—		5,243
Total assets	$	8,991	$	7,804	$	—	$	16,795	$	5,243	$	16,092	$	—	$	21,335
Liabilities:
Foreign currency forward exchange contracts (a)	$	—	$	19,320	$	—	$	19,320	$	—	$	2,910	$	—	$	2,910

____________________________________________


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


(b)	The fair value of the available-for-sale security is based on the quoted price on an active public exchange.

Other Financial Instruments

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

The estimated fair value of Mattel’s long-term debt, including the current portion, was $2.71 billion (compared to a carrying value of $2.90 billion) as of March 31, 2019, $2.68 billion (compared to a carrying value of $2.90 billion) as of March 31, 2018, ~~$2.19~~and $2.49 billion (compared to a carrying value of ~~$2.15 billion) as of March 31, 2017, and $3.01 billion (compared to a carrying value of $3.15~~$2.90 billion) as of December 31, ~~2017.~~2018. The estimated fair values have been calculated based on broker quotes or rates for the same or similar instruments and are classified as Level 2 within the fair value hierarchy.


~~14.~~15.	Earnings Per Share

Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. ~~Certain~~Prior to June 30, 2018, certain of Mattel’s restricted stock units ("RSUs") ~~are~~were considered participating securities because they ~~contain~~contained nonforfeitable rights to dividend equivalents.

Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of common stock and participating securities. The remaining undistributed earnings are then allocated to common stock and participating securities as if all of the net income for the period had been distributed. Basic earnings per common share excludes dilution and is calculated by dividing net income allocable to common shares by the weighted average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net income allocable to common shares by the weighted average number of common shares for the period, as adjusted for the potential dilutive effect of non-participating share-based awards.

The following table reconciles earnings per common share for the three months ended March 31, ~~2018~~2019 and ~~2017:~~2018:


	For the Three Months Ended						For the Three Months Ended
	March 31, 2018			March 31, 2017			March 31, 2019			March 31, 2018
	(In thousands, except per share amounts)						(In thousands, except per share amounts)
Basic:
Net loss	$	(311,253	)	$	(113,231	)	$	(183,718	)	$	(311,253	)
Less: net loss allocable to participating RSUs (a)	—			—
Less: Net loss allocable to participating RSUs (a)							—			—
Net loss available for basic common shares	$	(311,253	)	$	(113,231	)	$	(183,718	)	$	(311,253	)
Weighted average common shares outstanding	344,434			342,914			345,852			344,434
Basic net loss per common share	$	(0.90	)	$	(0.33	)	$	(0.53	)	$	(0.90	)
Diluted:
Net loss	$	(311,253	)	$	(113,231	)	$	(183,718	)	$	(311,253	)
Less: net loss allocable to participating RSUs (a)	—			—
Less: Net loss allocable to participating RSUs (a)							—			—
Net loss available for diluted common shares	$	(311,253	)	$	(113,231	)	$	(183,718	)	$	(311,253	)
Weighted average common shares outstanding	344,434			342,914			345,852			344,434
Weighted average common equivalent shares arising from:
Dilutive stock options and non-participating RSUs(b)	—			—			—			—
Weighted average number of common and potential common shares	344,434			342,914			345,852			344,434
Diluted net loss per common share	$	(0.90	)	$	(0.33	)	$	(0.53	)	$	(0.90	)

_______________________________________


(a)	~~During~~Mattel did not have participating RSUs for the three months ended March 31, 2019. For the three months ended March 31, 2018, ~~and 2017,~~ Mattel did not allocate its net loss to its participating RSUs as its participating RSUs ~~are~~were not obligated to share in ~~Mattel's losses.~~the losses of the Company.

Mattel was in a net loss position during the three months ended March 31, 2018 and 2017, and, accordingly, all outstanding nonqualified stock options and non-participating RSUs were excluded from the calculation of diluted earnings per common share because their effect would be antidilutive.


~~15.~~(b)	~~Revenues~~Mattel was in a net loss position for the three months ended March 31, 2019 and 2018, and, accordingly, all outstanding nonqualified stock options and non-participating RSUs were excluded from the calculation of diluted earnings per common share because their effect would be antidilutive.

Effective January 1, 2018, Mattel adopted ASU 2014-09 and its related amendments (collectively, the "new revenue standards") using the modified retrospective transition method, which was applied to all contracts not completed as of that date. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standards, while prior periods were not adjusted.

The cumulative effect of the adoption of the new revenue standards on January 1, 2018 was reflected as a net reduction of approximately $29 million to the opening balance of retained earnings associated with certain licensing contracts. The adoption of the new revenue standards did not have a material impact on Mattel's consolidated balance sheets or consolidated statements of earnings as of or for the three months ended March 31, 2018.

~~Revenue Recognition and Sales Adjustments~~

Substantially all of Mattel's revenues continue to be recognized upon shipment or upon receipt of finished goods by the customer, depending on the contract terms. Additionally, Mattel routinely enters into arrangements with its customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. Such programs, which can be either contractual or discretionary in nature, are based primarily on customer purchases, customer performance of specified promotional activities, and other specified factors such as sales to consumers. Mattel bases its estimates for these programs on agreed upon customer contract terms as well as historical experience. The costs of these programs are considered variable consideration and are recorded as sales adjustments that reduce gross sales in the period the related sale is recognized. Based on Mattel's analysis of the new revenue standards, revenue recognition from the sale of finished goods to customers, which represents substantially all of Mattel's revenues, was not impacted by the adoption of the new revenue standards.

Mattel also enters into symbolic and functional licensing arrangements, whereby the licensee pays Mattel royalties based on sales of licensed product, and in certain cases are subject to minimum guaranteed amounts. The timing of revenue recognition for certain of these licensing arrangements with minimum guarantees changed under the new revenue standards, which under the new revenue standards is based on the determination of whether the license of intellectual property ("IP") is symbolic or functional IP.

~~Disaggregated Revenues~~

~~For a presentation of Mattel's revenues disaggregated by segment, brand, and geography, see "Note 23 to the Consolidated Financial Statements—Segment Information."~~

~~Practical Expedient~~

Mattel applied the practical expedient prescribed in the new revenue standards and did not evaluate contracts of one year or less for the existence of a significant financing component. Multi-year contracts were not significant.


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 its ~~2017~~2018 Annual Report on Form 10-K.

A summary of the components of net periodic benefit cost for Mattel’s defined benefit pension plans is as follows:



	For the Three Months Ended
	March 31, 2019			March 31, 2018
	(In thousands)
Service cost	$	956		$	1,084
Interest cost	4,840			4,642
Expected return on plan assets	(5,444		)	(5,674		)
Amortization of prior service cost	16			8
Recognized actuarial loss	1,833			2,397
Settlement loss	—			42
	$	2,201		$	2,499

For the Three Months Ended
March 31,
2018 March 31,
2017
(In thousands)
Service cost $ 1,084
$ 1,166
Interest cost 4,642
5,320
Expected return on plan assets (5,674 ) (5,733 )
Amortization of prior service cost 8
8
Recognized actuarial loss 2,397
1,820
Settlement loss 42
—
$ 2,499
$ 2,581

A summary of the components of net periodic benefit ~~cost~~credit for Mattel's postretirement benefit plans is as follows:



	For the Three Months Ended
	March 31, 2019			March 31, 2018
	(In thousands)
Interest cost	$	50		$	52
Amortization of prior service credit	(509		)	(509		)
Recognized actuarial gain	(96		)	(80		)
	$	(555	)	$	(537	)

For the Three Months Ended
March 31,
2018 March 31,
2017
(In thousands)
Service cost $ —
$ 1
Interest cost 52
255
Amortization of prior service credit (509 ) —
Recognized actuarial (gain) loss (80 ) 37
$ (537 ) $ 293

~~In accordance with ASU 2017-07,~~ ~~Compensation-Retirement Benefits (Topic 715):Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~, which went into effect for interim and annual reporting periods beginning on January 1, 2018, Mattel's service cost component is recorded within operating income, presented in the same line items as other employee compensation costs arising from employee services rendered in the period, while other components of net periodic pension cost and postretirement benefit cost are recorded outside of income from operations, presented in other non-operating (income) expense, net. Prior period amounts have been retrospectively adjusted, which resulted in a reclassification of $1.4 million of expense from other selling and administrative expenses to other non-operating income/expense, net.

During the three months ended March 31, ~~2018,~~2019, Mattel made cash contributions totaling approximately $2$1 million related to its defined benefit pension and postretirement benefit plans. During the remainder of ~~2018,~~2019, Mattel expects to make additional cash contributions of approximately ~~$17~~$5 million.


17.	Share-Based Payments

Mattel has various stock compensation plans, which are more fully described in Part II, Item 8 "Financial Statements and Supplementary Data—Note 78 to the Consolidated Financial ~~Statements–~~Statements—Share-Based Payments" in its ~~2017~~2018 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, RSUs, performance awards, dividend equivalent rights, and shares of common stock to officers, employees, and other persons 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 than ~~ten~~10 years from the date of grant. ~~Both stock~~Stock options and ~~time-vesting~~ RSUs generally provide for vesting over a period of three years from the date of grant.

As of March 31, ~~2018, Mattel has~~2019, two long-term incentive programs were in ~~place:~~place with the following performance cycles: (i) a January 1, ~~2016–~~2017–December 31, ~~2018~~2019 performance cycle and (ii) a January 1, ~~2017–~~2018–December 31, ~~2019~~2020 performance cycle. During the three months ended March 31, 2018, Mattel recognized no expense related to the 2017–2019 performance-related component or the 2016–2018 performance related component and recognized minimal expense related to the 2017–2019 market-related component and the 2016–2018 market-related component.

Compensation expense, included within other selling and administrative expenses in the consolidated statements of operations, related to stock options and RSUs is as follows:



	For the Three Months Ended
	March 31, 2019		March 31, 2018
	(In thousands)
Stock option compensation expense	$	2,406	$	2,684
RSU compensation expense (a)	9,459		11,739
	$	11,865	$	14,423

_______________________________________


(a)	Includes compensation expense of $0.8 million associated with Mattel's long-term incentive programs for the three months ended March 31, 2019.

For the Three Months Ended
March 31,
2018 March 31,
2017
(In thousands)
Stock option compensation expense $ 2,684
$ 3,073
RSU compensation expense 11,739
9,598
$ 14,423
$ 12,671

As of March 31, ~~2018,~~2019, total unrecognized compensation cost related to unvested share-based payments totaled ~~$87.0~~$83.0 million and is expected to be recognized over a weighted-average period of ~~1.9~~2.0 years.

Mattel uses treasury shares purchased under its share repurchase program to satisfy stock option exercises and the vesting of RSUs. ~~There~~No cash was ~~no cash~~ received for stock option exercises during the three months ended March 31, ~~2018~~2019 and ~~there was $1.4 million in cash received for stock option exercises during the three months ended March 31, 2017.~~2018.


18.	Other Selling and Administrative Expenses

Other selling and administrative expenses include the following:



	For the Three Months Ended
	March 31, 2019		March 31, 2018
	(In thousands)
Design and development	$	42,445	$	52,140
Identifiable intangible asset amortization	10,429		10,198

For the Three Months Ended
March 31,
2018 March 31,
2017
(In thousands)
Design and development $ 52,140
$ 51,812
Identifiable intangible asset amortization 10,198
4,189


19.	Foreign Currency Transaction ~~Gains and Losses~~Exposure

Currency exchange rate fluctuations may impact Mattel’s results of operations and cash flows. Mattel’s currency transaction exposures include gains and losses realized on unhedged inventory purchases and unhedged receivables and payables balances that are denominated in a currency other than the applicable functional currency. Gains and losses on unhedged inventory purchases and other transactions associated with operating activities are recorded in the components of operating ~~income to which they relate~~loss in the consolidated statements of operations. ~~For hedges of~~Gains and losses on unhedged intercompany loans and advances ~~which do not qualify for hedge accounting treatment, the gains or losses on the hedges resulting from changes in fair value~~are recorded as ~~well as the offsetting transaction gains or losses on the related hedged items, along with unhedged items, are recognized in~~a component of other non-operating ~~expense/income,~~expense (income), net in the consolidated statements of ~~operations.~~operations in the period in which the currency exchange rate changes. Inventory ~~purchase and sale~~ transactions denominated in the Euro, Mexican peso, ~~Chinese renminbi,~~ British pound sterling, Australian dollar, Canadian dollar, ~~Australian dollar, and~~ Russian ruble, ~~are~~and Brazilian real were the primary transactions that ~~cause~~caused foreign currency transaction exposure for ~~Mattel.~~Mattel in the first quarter of 2019.

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

For the Three Months Ended
March 31,
2018 March 31,
2017
(In thousands)
Operating income (loss) $ 7,731
$ (28,149 )
Other non-operating expense, net 587
16
Net transaction gains (losses) $ 8,318
$ (28,133 )



	For the Three Months Ended
	March 31, 2019			March 31, 2018
	(In thousands)
Operating (loss) income	$	(3,770	)	$	7,731
Other non-operating (expense) income, net	(1,668		)	587
Net transaction (losses) gains	$	(5,438	)	$	8,318


20.	Restructuring Charges

During the third quarter of 2017, Mattel initiated its Structural Simplification ~~Cost Savings~~cost savings program ~~with plans~~and remains on-track to ~~target at least~~exceed $650 million in ~~net cost~~run-rate savings ~~by 2020.~~exiting 2019.

The major initiatives of the Structural Simplification ~~Cost Savings~~cost savings program include:

Reducing manufacturing complexity, including SKU reduction, and implementing process improvement initiatives at owned and co-manufacturing facilities;

Streamlining the organizational structure and reducing headcount expense to better align with the revenue base; and

Optimizing advertising spend.

During the three months ended March 31, 2019 and 2018, in connection with the Structural Simplification ~~Cost Savings~~cost savings program, Mattel recorded severance and other restructuring charges of $8.7 million and $24.9 million, respectively, within other selling and administrative expenses in the consolidated statements of operations, which is included in corporate and other expense in "Note 23 to the Consolidated Financial Statements—Segment Information." ~~Mattel expects to incur total charges of approximately $160 million during 2018 and 2019 related to the Structural Simplification Cost Savings program.~~

The following table summarizes Mattel's severance and other restructuring costs ~~activity:~~activity for the three months ended March 31, 2019:


	Liability at December 31, 2017		Charges		Payments/Utilization			Liability at March 31, 2018		Liability at December 31, 2018		Charges		Payments/Utilization			Liability at March 31, 2019
	(In thousands)									(In thousands)
Severance	$	29,794	$	19,286	$	(12,526	)	$	36,554	$	27,670	$	2,958	$	(12,673	)	$	17,955
Other restructuring costs(a)	5,394		5,636		(5,209		)	5,821		13,722		5,773		(7,689		)	11,806
	$	35,188	$	24,922	$	(17,735	)	$	42,375	$	41,392	$	8,731	$	(20,362	)	$	29,761


(a)	Consists primarily of consulting fees.

To date, Mattel has recorded cumulative severance and other restructuring charges of $163.7 million and expects to incur total severance and restructuring charges of approximately $200 million related to the Structural Simplification cost savings program.


21.	Income Taxes

Mattel’s ~~benefit from~~provision for income taxes was ~~$2.7 million and $32.4~~$6.2 million for the three months ended March 31, ~~2018 and 2017, respectively.~~2019, as compared to a benefit from income taxes of $2.7 million for the three months ended March 31, 2018. During the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, Mattel recognized net discrete tax expense of ~~$4.5~~$1.5 million and ~~$0.5~~$4.5 million, respectively, primarily related to reassessments of prior years' tax liabilities and income taxes recorded on a discrete basis in various jurisdictions. ~~In 2017, Mattel established~~As a result of the establishment of a valuation allowance on ~~its~~ U.S. deferred tax assets ~~and has provided~~in 2017, there was no U.S. tax benefit provided for U.S. losses during the three months ended March 31, 2019 and 2018.

In the normal course of business, Mattel is regularly audited by federal, state, and foreign tax authorities. Based on the current status of federal, state, and foreign audits, Mattel believes it is reasonably possible that in the next twelve months, the total unrecognized tax benefits could decrease by approximately ~~$28~~$6 million related to the settlement of tax audits and/or the expiration of statutes of limitations. The ultimate settlement of any particular issue with the applicable taxing authority could have a material impact on Mattel’s consolidated financial statements.

~~On December 22, 2017, H.R.1, also known as~~Mattel adopted ASU 2018-02, Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income on January 1, 2019. Under the Tax Cuts and Jobs Act ~~("Tax Act" or~~(the "U.S. Tax ~~Reform"~~Act"), ~~was enacted. The Securities Exchange Commission has issued guidance under Staff Accounting Bulletin 118 that allows for companies~~deferred taxes were adjusted to ~~provide provisional amounts for certain~~reflect the reduction of the federal income tax rate to the newly enacted federal income tax rate, which left the tax effects on items within accumulated other comprehensive income (loss) stranded at historical tax rates. ASU 2018-02 permits the reclassification of disproportionate tax effects in accumulated other comprehensive income (loss) caused by the U.S. Tax Act to retained earnings. Mattel elected not to reclassify income tax effects of the Tax Act for which the company can provide a reasonable estimate. The guidance also provides that a company may not have the necessary information available, prepared, or analyzed for certain income tax effects of the Tax Act, in which case the company would not be expected to provide a provisional amount for those specific items. Additionally, the guidance allows for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts.

As of December 31, 2017, Mattel reasonably estimated and recorded provisional amounts associated with the impact of the corporate tax rate change. Mattel has not made any additional measurement-period adjustments related to these items during the quarter. Mattel continues to gather additional information to complete the accounting for these items and will complete our accounting within the prescribed measurement period.

Mattel has not yet been able to reasonably estimate the impact of the deemed repatriation of accumulated foreign earnings and no provisional adjustments have been recorded as of March 31, 2018. Mattel is continuing to evaluate the impact of this provision of the Tax Act and will complete the accounting for this item within the prescribed measurement period. In addition, Mattel may re-evaluate the intentions related to the ~~indefinite reinvestment assertion, as the incremental tax expense from repatriation~~U.S. Tax Act out of ~~foreign earnings may be significantly less under the Tax Act.~~

In January 2018, the Financial Accounting Standards Board ("FASB") issued guidance stating that a company must make an accounting policy election of either (i) treating taxes due on future U.S. inclusions in taxable income related to Global Intangible Low-Taxed Income ("GILTI") as a current-period expense when incurred (the "period cost method") or (ii) factoring such amountsaccumulated other comprehensive loss and into ~~a company’s measurement of its deferred taxes (the "deferred method").~~retained earnings. Mattel ~~has elected the period cost method and has considered the estimated 2018 GILTI impact in its 2018 tax expense.~~

~~On January 1, 2018, Mattel adopted ASU 2016-16,~~ ~~Intra-Entity Transfers of Assets Other Than Inventory, which required Mattel to recognize the income~~releases tax effects ~~of intercompany sales~~from accumulated other comprehensive loss utilizing the portfolio approach with respect to pension and transfers of assets other than inventory in the period in which the transfer occurs. Previously, the income tax effect of intercompany transfers of assets was deferred until the asset was sold to an outside party or otherwise recognized (e.g., depreciated, amortized, impaired). The new guidance requires Mattel to defer only the income tax effects of intercompany transfers of inventory. A cumulative effect adjustment of approximately $9 million was recorded as an increase to beginning retained earnings in the first quarter of 2018.postretirement benefit plan obligations.


22.	Contingencies

Litigation Related to Carter Bryant and MGA Entertainment, Inc.

In April 2004, Mattel filed a lawsuit in Los Angeles County Superior Court against Carter Bryant ("Bryant"), a former Mattel design employee. The suit alleges that Bryant aided and assisted a Mattel competitor, MGA Entertainment, Inc. ("MGA"), during the time he was employed by Mattel, in violation of his contractual and other duties to Mattel. In September 2004, Bryant asserted counterclaims against Mattel, including counterclaims in which Bryant sought, as a putative class action representative, to invalidate Mattel’s Confidential Information and Proprietary Inventions Agreements with its employees. Bryant also removed Mattel’s suit to the United States District Court for the Central District of California. In December 2004, MGA intervened as a party-defendant in Mattel’s action against Bryant, asserting that its rights to Bratz properties are at stake in the litigation.

Separately, in November 2004, Bryant filed an action against Mattel in the United States District Court for the Central District of California. The action sought a judicial declaration that Bryant’s purported conveyance of rights in Bratz was proper and that he did not misappropriate Mattel property in creating Bratz.

In April 2005, MGA filed suit against Mattel in the United States District Court for the Central District of California. MGA’s action alleges claims of trade dress infringement, trade dress dilution, false designation of origin, unfair competition, and unjust enrichment. The suit alleges, among other things, that certain products, themes, packaging, and/or television commercials in various Mattel product lines have infringed upon products, themes, packaging, and/or television commercials for various MGA product lines, including Bratz. The complaint also asserts that various alleged Mattel acts with respect to unidentified retailers, distributors, and licensees have damaged MGA and that various alleged acts by industry organizations, purportedly induced by Mattel, have damaged MGA. MGA’s suit alleges that MGA has been damaged in an amount "believed to reach or exceed tens of millions of dollars" and further seeks punitive damages, disgorgement of Mattel’s profits and injunctive relief.

In June 2006, the three cases were consolidated in the United States District Court for the Central District of California. On July 17, 2006, the Court issued an order dismissing all claims that Bryant had asserted against Mattel, including Bryant’s purported counterclaims to invalidate Mattel’s Confidential Information and Proprietary Inventions Agreements with its employees, and Bryant’s claims for declaratory relief.

On January 12, 2007, Mattel filed an Amended Complaint setting forth counterclaims that included additional claims against Bryant as well as claims for copyright infringement, Racketeer Influenced and Corrupt Organizations ("RICO") violations, misappropriation of trade secrets, intentional interference with contract, aiding and abetting breach of fiduciary duty and breach of duty of loyalty, and unfair competition, among others, against MGA, its Chief Executive Officer Isaac Larian, certain MGA affiliates and an MGA employee. The RICO claim alleged that MGA stole Bratz and then, by recruiting and hiring key Mattel employees and directing them to bring with them Mattel confidential and proprietary information, unfairly competed against Mattel using Mattel’s trade secrets, confidential information, and key employees to build their business.

Mattel sought to try all of its claims in a single trial, but in February 2007, the Court decided that the consolidated cases would be tried in two phases, with the first trial to determine claims and defenses related to Mattel’s ownership of Bratz works and whether MGA infringed those works. On May 19, 2008, Bryant reached a settlement agreement with Mattel and is no longer a defendant in the litigation. In the public stipulation entered by Mattel and Bryant in connection with the resolution, Bryant agreed that he was and would continue to be bound by all prior and future Court Orders relating to Bratz ownership and infringement, including the Court’s summary judgment rulings.

The first phase of the first trial resulted in a unanimous jury verdict on July 17, 2008 in favor of Mattel. The jury found that almost all of the Bratz design drawings and other works in question were created by Bryant while he was employed at Mattel; that MGA and Isaac Larian intentionally interfered with the contractual duties owed by Bryant to Mattel, aided and abetted Bryant’s breaches of his duty of loyalty to Mattel, aided and abetted Bryant’s breaches of the fiduciary duties he owed to Mattel, and converted Mattel property for their own use. The same jury determined that defendants MGA, Larian, and MGA Entertainment (HK) Limited infringed Mattel’s copyrights in the Bratz design drawings and other Bratz works, and awarded Mattel total damages of approximately $100 million against the defendants. On December 3, 2008, the Court issued a series of orders rejecting MGA’s equitable defenses and granting Mattel’s motions for equitable relief, including an order enjoining the MGA party defendants from manufacturing, marketing, or selling certain Bratz fashion dolls or from using the "Bratz" name. The Court stayed its December 3, 2008 injunctive orders until further order of the Court.

The parties filed and argued additional motions for post-trial relief, including a request by MGA to enter judgment as a matter of law on Mattel’s claims in MGA’s favor and to reduce the jury’s damages award to Mattel. Mattel additionally moved for the appointment of a receiver. On April 27, 2009, the Court entered an order confirming that Bratz works found by the jury to have been created by Bryant during his Mattel employment were Mattel’s property and that hundreds of Bratz female fashion dolls infringe Mattel’s copyrights. The Court also upheld the jury’s award of damages in the amount of $100 million and ordered an accounting of post-trial Bratz sales. The Court further vacated the stay of the December 3, 2008 orders.

MGA appealed the Court’s equitable orders to the Court of Appeals for the Ninth Circuit. On December 9, 2009, the Ninth Circuit heard oral argument on MGA’s appeal and issued an order staying the District Court’s equitable orders pending a further order to be issued by the Ninth Circuit. On July 22, 2010, the Ninth Circuit vacated the District Court’s equitable orders. The Ninth Circuit stated that, because of several jury instruction errors it identified, a significant portion-if not all-of the jury verdict and damage award should be vacated.

In its opinion, the Ninth Circuit found that the District Court erred in concluding that Mattel’s Invention Agreement unambiguously applied to "ideas;" that it should have considered extrinsic evidence in determining the application of the agreement; and if the conclusion turns on conflicting evidence, it should have been up to the jury to decide. The Ninth Circuit also concluded that the District Judge erred in transferring the entire brand to Mattel based on misappropriated names and that the Court should have submitted to the jury, rather than deciding itself, whether Bryant’s agreement assigned works created outside the scope of his employment and whether Bryant’s creation of the Bratz designs and sculpt was outside of his employment. The Court then went on to address copyright issues which would be raised after a retrial, since Mattel "might well convince a properly instructed jury" that it owns Bryant’s designs and sculpt. The Ninth Circuit stated that the sculpt itself was entitled only to "thin" copyright protection against virtually identical works, while the Bratz sketches were entitled to "broad" protection against substantially similar works; in applying the broad protection, however, the Ninth Circuit found that the lower court had erred in failing to filter out all of the unprotectable elements of Bryant’s sketches. This mistake, the Court said, caused the lower court to conclude that all Bratz dolls were substantially similar to Bryant’s original sketches.

Judge Stephen Larson, who presided over the first trial, retired from the bench during the course of the appeal, and the case was transferred to Judge David O. Carter. After the transfer, Judge Carter granted Mattel leave to file a Fourth Amended Answer and Counterclaims which focused on RICO, trade secret and other claims, and added additional parties, and subsequently granted in part and denied in part a defense motion to dismiss those counterclaims.

Later, on August 16, 2010, MGA asserted several new claims against Mattel in response to Mattel’s Fourth Amended Answer and Counterclaims, including claims for alleged trade secret misappropriation, an alleged violation of RICO, and wrongful injunction. MGA alleged, in summary, that, for more than a decade dating back to 1992, Mattel employees engaged in a pattern of stealing alleged trade secret information from competitors "toy fair" showrooms, and then sought to conceal that alleged misconduct. Mattel moved to strike and/or dismiss these claims, as well as certain MGA allegations regarding Mattel’s motives for filing suit. The Court granted that motion as to the wrongful injunction claim, which it dismissed with prejudice, and as to the allegations about Mattel’s motives, which it struck. The Court denied the motion as to MGA’s trade secret misappropriation claim and its claim for violations of RICO.

The Court resolved summary judgment motions in late 2010. Among other rulings, the Court dismissed both parties’ RICO claims; dismissed Mattel’s claim for breach of fiduciary duty and portions of other claims as "preempted" by the trade secrets act; dismissed MGA’s trade dress infringement claims; dismissed MGA’s unjust enrichment claim; dismissed MGA’s common law unfair competition claim; and dismissed portions of Mattel’s copyright infringement claim as to "later generation" Bratz dolls.

Trial of all remaining claims began in early January 2011. During the trial, and before the case was submitted to the jury, the Court granted MGA’s motions for judgment as to Mattel’s claims for aiding and abetting breach of duty of loyalty and conversion. The Court also granted a defense motion for judgment on portions of Mattel’s claim for misappropriation of trade secrets relating to thefts by former Mattel employees located in Mexico.

The jury reached verdicts on the remaining claims in April 2011. In those verdicts, the jury ruled against Mattel on its claims for ownership of Bratz-related works, for copyright infringement, and for misappropriation of trade secrets. The jury ruled for MGA on its claim of trade secret misappropriation as to 26 of its claimed trade secrets and awarded $88.5 million in damages. The jury ruled against MGA as to 88 of its claimed trade secrets. The jury found that Mattel’s misappropriation was willful and malicious.

In early August 2011, the Court ruled on post-trial motions. The Court rejected MGA’s unfair competition claims and also rejected Mattel’s equitable defenses to MGA’s misappropriation of trade secrets claim. The Court reduced the jury’s damages award of $88.5 million to $85.0 million. The Court awarded MGA an additional $85.0 million in punitive damages and approximately $140 million in attorney’s fees and costs. The Court entered a judgment which totaled approximately $310 million in favor of MGA.

On August 11, 2011, Mattel appealed the judgment, challenging on appeal the entirety of the District Court’s monetary award in favor of MGA, including both the award of $170 million in damages for alleged trade secret misappropriation and approximately $140 million in attorney’s fees and costs. On January 24, 2013, the Ninth Circuit Court of Appeals issued a ruling on Mattel’s appeal. In that ruling, the Court found that MGA’s claim for trade secrets misappropriation was not compulsory to any Mattel claim and could not be filed as a counterclaim-in-reply. Accordingly, the Court of Appeals vacated the portion of the judgment awarding damages and attorney’s fees and costs to MGA for prevailing on its trade secrets misappropriation claim, totaling approximately $172.5 million. It ruled that, on remand, the District Court must dismiss MGA’s trade secret claim without prejudice. In its ruling, the Court of Appeals also affirmed the District Court’s award of attorney’s fees and costs under the Copyright Act. Accordingly, Mattel recorded a litigation accrual of approximately $138 million during the fourth quarter of 2012 to cover these fees and costs.

Because multiple claimants asserted rights to the attorney’s fees portion of the judgment, on February 13, 2013, Mattel filed a motion in the District Court for orders permitting Mattel to interplead the proceeds of the judgment and releasing Mattel from liability to any claimant based on Mattel’s payment of the judgment.

On February 27, 2013, MGA filed a motion for leave to amend its prior complaint in the existing federal court lawsuit so that it could reassert its trade secrets claim. Mattel opposed that motion. On December 17, 2013, the District Court denied MGA’s motion for leave to amend and entered an order dismissing MGA’s trade secrets claim without prejudice. Also on December 17, 2013, following a settlement between MGA and certain insurance carriers, the District Court denied Mattel’s motion for leave to interplead the proceeds of the judgment.

On December 21, 2013, a stipulation regarding settlement with insurers and payment of judgment was filed in the District Court, which provided that (i) Mattel would pay approximately $138 million, including accrued interest, in full satisfaction of the copyright fees judgment, (ii) all parties would consent to entry of an order exonerating and discharging the appeal bond posted by Mattel, and (iii) MGA’s insurers would dismiss all pending actions related to the proceeds of the copyright fees judgment, including an appeal by Evanston Insurance Company in an action against Mattel that was pending in the Ninth Circuit. On December 23, 2013, Mattel paid the copyright fees judgment in the total sum, including interest, of approximately $138 million. On December 26, 2013, the District Court entered an order exonerating and discharging the appeal bond posted by Mattel, and on December 27, 2013, MGA filed an acknowledgment of satisfaction of judgment. On December 30, 2013, Evanston Insurance Company’s appeal in its action against Mattel was dismissed.

On January 13, 2014, MGA filed a new, but virtually identical, trade secrets claim against Mattel in Los Angeles County Superior Court. In its complaint, MGA purports to seek damages in excess of $1 billion. On December 3, 2014, the Court overruled Mattel’s request to dismiss MGA’s case as barred as a result of prior litigation between the parties. On July 31, 2017, Mattel filed a motion for summary judgment on the grounds that MGA’s complaint is barred by the statute of limitations. On February 13, 2018, the Court granted Mattel's summary judgment motion. Consistent with this ruling, the Court entered judgment for Mattel on March 8, 2018. On April 24, 2018, MGA filed a Notice of Appeal of the ~~judgment.~~judgment, and on December 20, 2018, MGA ~~can seek to appeal such a judgment to the California Court of Appeal.~~filed its opening appellate brief. On April 18, 2019, Mattel filed its responsive appellate brief. Mattel does not presently believe that damages in any amount are reasonably possible. Accordingly, no liability has been accrued to date.

Litigation Related to Yellowstone do Brasil Ltda.

Yellowstone do Brasil Ltda. (formerly known as Trebbor Informática Ltda.) was a customer of Mattel’s subsidiary Mattel do Brasil Ltda. when a commercial dispute arose between Yellowstone and Mattel do Brasil regarding the supply of product and related payment terms. As a consequence of the dispute, in April 1999, Yellowstone filed a declarative action against Mattel do Brasil before the 15th Civil Court of Curitiba - State of Parana (the "Trial Court"), requesting the annulment of its security bonds and promissory notes given to Mattel do Brasil as well as requesting the Trial Court to find Mattel do Brasil liable for damages incurred as a result of Mattel do Brasil’s alleged abrupt and unreasonable breach of an oral exclusive distribution agreement between the parties relating to the supply and sale of toys in Brazil. Yellowstone’s complaint sought alleged loss of profits of approximately $1 million, plus an unspecified amount of damages consisting of: (i) compensation for all investments made by Yellowstone to develop Mattel do Brasil’s business; (ii) reimbursement of the amounts paid by Yellowstone to terminate labor and civil contracts in connection with the business; (iii) compensation for alleged unfair competition and for the goodwill of trade; and (iv) compensation for non-pecuniary 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 the approximate amount of $4 million.

During the evidentiary phase a first accounting report was submitted by a court-appointed expert. Such report stated that Yellowstone had invested approximately $3 million in its business. Additionally, the court-appointed expert calculated a loss of profits compensation of approximately $1 million. Mattel do Brasil challenged the report since it was not made based on the official accounting documents of Yellowstone and since the report calculated damages based only on documents unilaterally submitted by Yellowstone.

The Trial Court accepted the challenge and ruled that a second accounting examination should take place in the lawsuit. Yellowstone appealed the decision to the Court of Appeals of the State of Parana (the "Appeals Court"), but it was upheld by the Appeals Court.

The second court-appointed expert’s report submitted at trial did not assign a value to any of Yellowstone’s claims and found no evidence of causation between Mattel do Brasil’s actions and such claims.

In January 2010, the Trial Court ruled in favor of Mattel do Brasil and denied all of Yellowstone’s claims based primarily on the lack of any causal connection between the acts of Mattel do Brasil and Yellowstone’s alleged damages. Additionally, the Trial Court upheld Mattel do Brasil’s counterclaim and ordered Yellowstone to pay Mattel do Brasil approximately $4 million. The likelihood of Mattel do Brasil recovering this amount was uncertain due to the fact that Yellowstone was declared insolvent and filed for bankruptcy protection. In February 2010, Yellowstone filed a motion seeking clarification of the decision which was denied.

In September 2010, Yellowstone filed a further appeal with the Appeals Court. Under Brazilian law, the appeal was de novo and Yellowstone restated all of the arguments it made at the Trial Court level. Yellowstone did not provide any additional information supporting its unspecified alleged damages. The Appeals Court held hearings on the appeal in March and April 2013. On July 26, 2013, the Appeals Court awarded Yellowstone approximately $17 million in damages, plus attorney's fees, as adjusted for inflation and interest. The Appeals Court also awarded Mattel do Brasil approximately $7.5 million on its counterclaim, as adjusted for inflation. On August 2, 2013, Mattel do Brasil filed a motion with the Appeals Court for clarification since the written decision contained clear errors in terms of amounts awarded and interest and inflation adjustments. Mattel do Brasil’s motion also asked the Appeals Court to decide whether Yellowstone’s award could be offset by the counterclaim award, despite Yellowstone’s status as a bankrupt entity. Yellowstone also filed a motion for clarification on August 5, 2013. A decision on the clarification motions was rendered on November 11, 2014, and the Appeals Court accepted partially the arguments raised by Mattel do Brasil. As a result, the Appeals Court awarded Yellowstone approximately $14.5 million in damages, as adjusted for inflation and interest, plus attorney's fees. The Appeals Court also awarded Mattel do Brasil approximately $7.5 million on its counterclaim, as adjusted for inflation. The decision also recognized the existence of legal rules that support Mattel do Brasil’s right to offset its counterclaim award of approximately $7.5 million. Mattel do Brasil filed a new motion for clarification with the Appeals Court on January 21, 2015, due to the incorrect statement made by the reporting judge of the Appeals Court, that the court-appointed expert analyzed the "accounting documents" of Yellowstone. On April 26, 2015, a decision on the motion for clarification was rendered. The Appeals Court ruled that the motion for clarification was denied and imposed a fine on Mattel do Brasil equal to 1% of the value of the claims made for the delay caused by the motion. On July 3, 2015, Mattel do Brasil filed a special appeal to the Superior Court of Justice based upon both procedural and substantive grounds. This special appeal ~~seeks~~sought to reverse the Appeals Court's decision of July 26, 2013, and to reverse the fine as inappropriate under the law. This special appeal was submitted to the Appeals Court ~~which must rule on its admissibility before it is transferred to the Superior Court.~~.

Yellowstone also filed a special appeal with the Appeals Court in February 2015, which was made available to Mattel do Brasil on October 7, 2015. Yellowstone's special appeal ~~seeks~~sought to reverse the Appeals Court decision with respect to: (a) the limitation on Yellowstone's loss of profits claim to the amount requested in the complaint, instead of the amount contained in the first court-appointed experts report, and (b) the award of damages to Mattel do Brasil on the counterclaim, since the specific amount was not requested in Mattel do Brasil's counterclaim brief.

On October 19, 2015, Mattel do Brasil filed its answer to the special appeal filed by Yellowstone and Yellowstone filed its answer to the special appeal filed by Mattel do Brasil. On April 4, 2016, the Appeals Court rendered a decision denying the admissibility of Mattel’s and Yellowstone’s special appeals. On May 11, 2016, both Mattel and Yellowstone filed interlocutory ~~appeals and are awaiting the decision.~~

appeals.

On August 31, 2017, the reporting justice for the Appeals Court denied Yellowstone’s interlocutory appeal. As to Mattel, the reporting justice reversed the fine referenced above that had been previously imposed on Mattel for filing a motion for clarification. However, the reporting justice rejected ~~Mattel’s~~Mattel's arguments on the merits of ~~Yellowstone’s~~Yellowstone's damages claims. On September 22, 2017, Mattel filed a further appeal to the full panel of five appellate justices to challenge the merits of Yellowstone’s damages claims. Yellowstone did not file a further appeal.

In April 2018, Mattel do Brasil entered into a settlement agreement to resolve this matter, ~~for $5.0 million Brazilian real. The~~but the settlement ~~is subject to approval~~was later rejected by the ~~Brazilian courts~~courts.

On October 2, 2018, the Appeals Court rejected Mattel’s merits appeal, and asaffirmed the prior rulings in favor of ~~March 31, 2018,~~Yellowstone. The actual amount to be paid by Mattel to Yellowstone has ~~accrued a reserve of approximately $1.5 million.~~yet to be determined.

2017 Securities Litigation

A purported class action lawsuit is pending in the United States District Court for the Central District of California, (consolidating Waterford Township Police & Fire Retirement System v. Mattel, Inc., et al., filed June 27, 2017; and Lathe v. Mattel, Inc., et al., filed July 6, 2017) against Mattel, Christopher A. Sinclair, Richard Dickson, Kevin M. Farr, and Joseph B. Johnson alleging federal securities laws violations in connection with statements allegedly made by the defendants during the period October 20, 2016 through April 20, 2017. In general, the lawsuit asserts allegations that the defendants artificially inflated Mattel’s common stock price by knowingly making materially false and misleading statements and omissions to the investing public about retail customer inventory, the alignment between point-of-sale and shipping data, and Mattel’s overall financial condition. The lawsuit alleges that the defendants’ conduct caused the plaintiff and other stockholders to purchase Mattel common stock at artificially inflated prices. On May 24, 2018, the Court granted Mattel’s motion to dismiss the class action lawsuit, and on June 25, 2018, the plaintiff filed a motion informing the Court he would not be filing an amended complaint. Judgment was entered in favor of Mattel and the individual defendants on September 19, 2018. The plaintiff filed his Notice of Appeal on October 16, 2018 and his opening appellate brief on February 25, 2019.

In addition, a stockholder has filed a derivative action in the United States District Court for the District of Delaware (Lombardi v. Sinclair, et al., filed December 21, 2017) making allegations that are substantially identical to, or are based upon, the allegations of the class action lawsuit. The defendants in the derivative action are the same as those in the class action lawsuit plus Margaret H. Georgiadis, Michael J. Dolan, Trevor A. Edwards, Frances D. Fergusson, Ann Lewnes, Dominic Ng, Vasant M. Prabhu, Dean A. Scarborough, Dirk Van de Put, and Kathy W. Loyd. On February 26, 2018, the derivative action was stayed pending further developments in the class action litigation.

The lawsuits seek unspecified compensatory damages, attorneys’ fees, expert fees, costs, and/or injunctive relief. Mattel believes that the allegations in the lawsuits are without merit 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.

2019 Securities Litigation

A purported class action lawsuit is pending in the United States District Court for the Central District of California (Wyatt v. Mattel, Inc., et al., filed March 6, 2019) against Mattel, Ynon Kreiz, and Joseph J. Euteneuer alleging federal securities laws violations in connection with statements allegedly made by the defendants during the period February 7, 2019 through February 15, 2019. In general, the lawsuit alleges that the defendants artificially inflated Mattel’s common stock price by knowingly making materially false and misleading statements and omissions to the investing public about demand for and supply of Mattel’s products and the impact on Mattel’s business, operations, and prospects for 2019. The lawsuit alleges that the defendants’ conduct caused the plaintiff and other stockholders to purchase Mattel common stock at artificially inflated prices.

The lawsuit seeks unspecified compensatory damages, attorneys’ fees, expert fees, and/or costs. Mattel believes that the allegations in the lawsuit are without merit 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.

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

Purported class action lawsuits against Fisher-Price, Inc. and Mattel, Inc. have been filed in the United States District Courts for the Western District of New York (Drover-Mundy, et. al. v. Fisher-Price, Inc., et al., filed April 18, 2019, and Mulvey v. Fisher-Price, Inc., et al., filed April 19, 2019), the District of New Jersey (Kimmel v. Fisher-Price, Inc., et al., filed April 11, 2019), and the Central District of California (Black v. Mattel, Inc., et al., filed April 23, 2019). The lawsuits assert claims for false advertising, negligent product design, breach of warranty, fraud, and other claims in connection with the marketing and sale of the Fisher-Price Rock 'n Play Sleeper (the "Sleeper"). In general, the lawsuits allege that the Sleeper should not have been marketed and sold as safe and fit for prolonged and overnight sleep for infants. The lawsuits propose consumer classes comprised of those who purchased the Sleeper as marketed as safe for prolonged and overnight sleep, and/or a class of all children who sustained an injury or death due to the alleged defective design of the Sleeper, and their parents.

The lawsuits purport to certify classes nationwide and in particular states, and seek unspecified compensatory damages, punitive damages, statutory damages, restitution, disgorgement, attorneys’ fees, costs, interest, declaratory relief, and/or injunctive relief. Mattel believes that the allegations in the lawsuits are without merit 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.

A fifth purported class action seeking to certify a consumer class, and seeking similar remedies, has been threatened against Fisher-Price and Mattel but has not yet been filed.


23.	Segment Information

Mattel designs, manufactures, and markets a broad variety of toy products worldwide, which are sold to its customers and directly to consumers. In the first quarter of 2019, there were no changes to Mattel's commercial operations which impacted its operating segments. However, Mattel modified its reporting structure for revenues, as outlined below, and reorganized its ~~brands~~regional sales reporting structure ~~in 2018 as outlined below.~~within the International segment. Prior period amounts have been reclassified to conform to the current ~~year~~period presentation.

~~Mattel’s portfolio of~~Dolls—including brands such as Barbie, American Girl, Enchantimals, and Polly Pocket.

Infant/Toddler/Preschool—including brands such as Fisher-Priceand ~~products are classified as Power Brands, which includes Barbie, Hot Wheels, Fisher-Price and~~ Thomas & Friends, Power Wheels, Fireman Sam, and ~~American Girl Brands,~~Shimmer and Shine (Nickelodeon).

Vehicles—including brands such as Hot Wheels,Matchbox, and CARS (Disney Pixar).

Action Figures/Building Sets/Games—including brands such as MEGA,UNO, Toy ~~Box, which includes Owned Brands~~ Story (Disney Pixar), Jurassic World (Universal), and ~~Partner Brands.~~ WWE.

Mattel’s operating segments are: (i) North America, which consists of the USU.S. and Canada, (ii) International, and (iii) American Girl. The North America and International segments sell products ~~in both the Power Brands, excluding American Girl, and Toy Box~~across categories, although some products are developed and adapted for particular international markets.

Segment Data

The following tables present information about revenues, ~~income,~~loss, and assets by segment. ~~In the following tables,~~ Mattel does not include sales adjustments such as trade discounts and other allowances in the calculation of segment revenues (referred to as "gross sales" and reconciled to net sales in ~~Part I, Item 2 "Management’s Discussion and Analysis of Financial Condition and Results of Operations–Non-GAAP Financial Measures" of this Quarterly Report on Form 10-Q)~~the tables below). Mattel records these adjustments in its financial accounting systems at the time of sale to each customer, but the adjustments are not allocated to ~~brands or~~ individual products. For this reason, Mattel’s ~~chief operating decision maker~~Chief Operating Decision Maker ("CODM") uses gross and net sales by segment as ~~one of the~~ metrics to measure segment performance. Such sales adjustments are included in the determination of segment ~~income~~loss from operations based on the adjustments recorded in the financial accounting systems. Segment ~~income~~loss represents each segment’s operating ~~income,~~loss, while consolidated operating ~~income~~loss represents ~~income~~loss from operations before net interest, other non-operating ~~expense/income,~~expense (income), net, and income taxes as reported in the consolidated statements of operations. The corporate and other expense category includes costs not allocated to individual segments, including charges related to incentive compensation, severance and other restructuring costs, share-based ~~payments, and~~compensation, corporate headquarters functions managed on a worldwide basis, and the impact of changes in foreign currency exchange rates on intercompany transactions.


	For the Three Months Ended						For the Three Months Ended
	March 31, 2018			March 31, 2017			March 31, 2019			March 31, 2018
	(In thousands)						(In thousands)
Revenues by Segment
North America	$	348,390		$	362,318		$	369,391		$	348,390
International	384,134			366,336			365,178			384,134
American Girl	67,487			85,984			45,557			67,487
Gross sales	800,011			814,638			780,126			800,011
Sales adjustments	(91,639		)	(79,020		)	(90,880		)	(91,639		)
Net sales	$	708,372		$	735,618		$	689,246		$	708,372


	For the Three Months Ended						For the Three Months Ended
	March 31, 2018			March 31, 2017			March 31, 2019			March 31, 2018
	(In thousands)						(In thousands)
Segment Loss
North America (a)	$	(106,750	)	$	(19,340	)	$	(21,585	)	$	(106,750	)
International (a)	(72,265		)	(24,842		)	(24,303		)	(72,265		)
American Girl (a)	(14,843		)	(5,785		)	(14,254		)	(14,843		)
	(193,858		)	(49,967		)	(60,142		)	(193,858		)
Corporate and other expense (b)	(82,723		)	(75,646		)	(70,817		)	(82,723		)
Operating loss	(276,581		)	(125,613		)	(130,959		)	(276,581		)
Interest expense	41,079			22,030			46,958			41,079
Interest (income)	(3,147		)	(2,466		)	(2,272		)	(3,147		)
Other non-operating (income) expense, net	(608		)	494
Other non-operating expense (income), net							1,904			(608		)
Loss before income taxes	$	(313,905	)	$	(145,671	)	$	(177,549	)	$	(313,905	)

__________________________________________

(a)

Segment loss for the three months ended March 31, 2019 included a $27.3 million charge attributable to the Rock 'n Play product recall, all of which was recorded in the North America segment. For additional information, see "Note 25 to the Consolidated Financial Statements—Subsequent Event." Segment loss for the three months ended March 31, 2018 ~~includes~~included $86.8 million of net sales reversal and bad debt expense attributable to the Toys ~~“R”~~"R" Us liquidation. ~~The~~Of the $86.8 million of charges recognized for the three months ended March 31, 2018, $71.6 million, $12.1 million, and $3.1 million was recorded in the North America, International, and American Girl segments, ~~recorded charges of $71.6 million, $12.1 million, and $3.1 million respectively~~. ~~No charge was recorded in Corporate and other expense.~~respectively.


(b)	Corporate and other expense ~~includes~~included severance and restructuring expenses of ~~$24.9~~$8.7 million and ~~$3.0~~$24.9 million for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively, and share-based compensation expense of ~~$14.4~~$11.9 million and ~~$12.7~~$14.4 million for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively.

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



	March 31, 2019		March 31, 2018		December 31, 2018
	(In thousands)
Assets by Segment
North America	$	520,812	$	523,535	$	615,654
International	569,214		620,718		728,870
American Girl	39,998		94,592		43,748
	1,130,024		1,238,845		1,388,272
Corporate and other	110,281		115,006		124,700
Accounts receivable and inventories, net	$	1,240,305	$	1,353,851	$	1,512,972

March 31,
2018 March 31,
2017 December 31,
2017
(In thousands)
Assets by Segment
North America $ 523,535
$ 624,539
$ 692,232
International 620,718
675,996
829,185
American Girl 94,592
150,373
100,184
1,238,845
1,450,908
1,621,601
Corporate and other 115,006
125,691
107,713
Accounts receivable, net and inventories $ 1,353,851
$ 1,576,599
$ 1,729,314

The table below presents worldwide revenues by ~~brand category:~~categories:

For the Three Months Ended
March 31,
2018 March 31,
2017
(In thousands)
Worldwide Revenues by Brand Category (a)
Barbie $ 152,691
$ 123,390
Hot Wheels 144,940
125,679
Fisher-Price and Thomas & Friends 187,795
205,044
American Girl 67,427
85,813
Toy Box 247,158
274,712
Gross sales 800,011
814,638
Sales adjustments (91,639 ) (79,020 )
Net sales $ 708,372
$ 735,618



	For the Three Months Ended
	March 31, 2019			March 31, 2018
	(In thousands)
Worldwide Revenues by Categories (a)
Dolls	$	252,886		$	257,357
Infant/Toddler/Preschool	193,626			226,646
Vehicles	183,361			188,933
Action Figures/Building Sets/Games	150,253			127,075
Gross sales	780,126			800,011
Sales adjustments	(90,880		)	(91,639		)
Net sales	$	689,246		$	708,372

__________________________________________


(a)	Mattel modified its reporting structure for revenues in the first quarter of 2019 to disclose revenues by categories.

The table below presents supplemental disclosure of worldwide revenue:

~~(a) Mattel reorganized its brands reporting structure in 2018. Prior period amounts have been reclassified to conform to the current year presentation.~~



	For the Three Months Ended
	March 31, 2019			March 31, 2018
	(In thousands)
Worldwide Revenues by Top 3 Power Brands
Barbie	$	163,478		$	152,691
Hot Wheels	150,536			144,940
Fisher-Price and Thomas & Friends	172,398			187,795
Other	293,714			314,585
Gross sales	780,126			800,011
Sales adjustments	(90,880		)	(91,639		)
Net sales	$	689,246		$	708,372

Geographic Information

The table below ~~present~~presents information by geographic area. Revenues are attributed to countries based on location of the customer.



	For the Three Months Ended
	March 31, 2019			March 31, 2018
	(In thousands)
Revenues
North America	$	414,948		$	415,877
International (a)
EMEA	216,349			229,544
Latin America	75,250			74,468
Asia Pacific	73,579			80,122
Total International	365,178			384,134
Gross sales	780,126			800,011
Sales adjustments	(90,880		)	(91,639		)
Net sales	$	689,246		$	708,372

For the Three Months Ended
March 31,
2018 March 31,
2017
(In thousands)
Revenues
North America $ 415,877
$ 448,302
International (a)
Europe 168,338
156,561
Latin America 74,468
69,768
Global Emerging Markets 141,328
140,007
Total International 384,134
366,336
Gross sales 800,011
814,638
Sales adjustments (91,639 ) (79,020 )
Net sales $ 708,372
$ 735,618

__________________________________________

(a) Mattel reorganized its regional reporting structure in 2018. As a result, Global Emerging Markets, which was previously disclosed as Asia Pacific, includes Russia, Turkey, the Middle East, and Africa, which were previously included within Europe. Prior period amounts have been reclassified to conform to the current year presentation.

(a)

Mattel reorganized its regional sales reporting structure in the first quarter of 2019. As a result, the new regions are Europe, the Middle East, and Africa ("EMEA"), Latin America, and Asia Pacific. The Middle East, Africa, Russia, and Turkey were previously included in the Asia Pacific region (previously Global Emerging Markets) and are now included in EMEA (previously Europe). Prior period amounts have been reclassified to conform to the current period presentation.


24.	New Accounting Pronouncements

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in ASC 605,~~ ~~Revenue Recognition~~, and most industry specific guidance. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance establishes a five-step model to achieve that core principle and also requires additional disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. Recently Adopted Accounting Pronouncements

Mattel adopted ~~ASU 2014-09 and its related amendments~~the new lease standard on January 1, ~~2018~~2019 using the modified retrospective transition method. ~~For additional information, see~~Prior periods were not retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods, as further discussed in "Note 155 to the Consolidated Financial ~~Statements — Revenues.~~Statements—Leases."

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~, which requires a lessee to recognize a lease asset and lease liability on its balance sheet for all leases with a term greater than 12 months. ASU 2016-02 will be effective for interim and annual reporting periods beginning on January 1, 2019. Mattel is currently evaluating the impact of the adoption of ASU 2016-02 on its operating results and financial position, which based on a preliminary assessment, is expected to have a material impact on its financial position.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments~~, which adds and clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows, including proceeds from insurance claim settlements, proceeds from the settlement of corporate-owned life insurance, and distributions received from equity method investees. ASU 2016-15 became effective for interim and annual reporting periods beginning on January 1, 2018. The adoption of ASU 2016-15 in the first quarter of 2018 did not have a material effect on Mattel’s consolidated financial statements.

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory~~, which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 became effective for interim and annual reporting periods beginning on January 1, 2018. For additional information, see "Note 21 to the Consolidated Financial Statements - Income Taxes."

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations: Clarifying the Definition of a Business~~, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses and refines the definition of the term output. ASU 2017-01 became effective for interim and annual reporting periods beginning on January 1, 2018. The adoption of ASU 2017-01 in the first quarter of 2018 did not have a material effect on Mattel’s consolidated financial statements.

~~In February 2017, the FASB issued ASU 2017-05,~~ ~~Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets~~, which clarifies the scope on recently established guidance on nonfinancial asset derecognition as well as the accounting for partial sales of nonfinancial assets. ASU 2017-05 became effective for interim and annual reporting periods beginning on January 1, 2018. The adoption of ASU 2017-05 in the first quarter of 2018 did not have a material effect on Mattel’s consolidated financial statements.

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~, which requires entities that sponsor defined benefit plans to (i) present service cost within operations, if such a subtotal is presented, (ii) other components of net benefit costs should be presented separately outside of income from operations, if such a subtotal is presented, and (iii) only the service cost component should be capitalized, when applicable. If a separate line item is not used, the line item in the income statement where the other components of net benefit costs are included must be disclosed. Further, gains and losses from curtailments and settlements, and the cost of certain termination benefits should be reported in the same manner as other components of net benefit cost. ASU 2017-07 became effective for interim and annual reporting periods beginning on January 1, 2018. The retrospective adoption of ASU 2017-07 in the first quarter of 2018 did not have a material effect on Mattel’s consolidated financial statements, as discussed in "Note 16 to the Consolidated Financial Statements—Employee Benefit Plans."

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation: Scope of Modification Accounting~~, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. ASU 2017-09 became effective prospectively for interim and annual reporting periods beginning on January 1, 2018. The adoption of ASU 2017-09 in the first quarter of 2018 did not have a material effect on Mattel’s consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities, which expands the hedging strategies eligible for hedge accounting and changes both how companies assess hedge effectiveness and presentation and disclosure requirements. Mattel adopted ASU 2017-12 ~~will be effective for interim and annual reporting periods beginning~~ on January 1, ~~2019. Early application is permitted in any interim period after issuance of the update. Mattel is currently evaluating the impact of~~2019 and the adoption ~~of ASU 2017-12~~did not have a material impact on its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits the reclassification of disproportionate tax effects in accumulated other comprehensive income (loss) caused by the U.S. Tax ~~Cuts and Jobs~~ Act ~~of 2017 (the "2017 Act")~~ to retained earnings. Mattel adopted ASU 2018-02 on January 1, 2019 and the adoption did not have a material impact on its consolidated financial statements. For additional information, see "Note 21 to the Consolidated Financial Statements—Income Taxes."

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of current stock compensation recognition standards to include share-based payment transactions for acquiring goods and services from nonemployees. Mattel adopted ASU 2018-07 on January 1, 2019 and the adoption did not have a material impact on its consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements, including the consideration of costs and benefits. ASU 2018-13 will become effective for interim and annual reporting periods beginning on January 1, ~~2019.~~2020. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty will be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments will be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. In addition, early adoption of ~~the amendments in this Update~~any removed or modified disclosures, but delayed adoption of any additional disclosures until their effective date, is ~~permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued.~~permitted. Mattel is currently evaluating the impact of the adoption of ASU ~~2017-12~~2018-13 on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General: Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. ASU 2018-14 will become effective for the fiscal year beginning on January 1, 2021. Early adoption is permitted and the amendments will be applied on a retrospective basis to all periods presented. Mattel is currently evaluating the impact of the adoption of ASU 2018-14 on its consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, Consolidation: Targeted Improvements to Related Party Guidance for Variable Interest Entities, which improves the accounting for variable interest entities by considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. ASU 2018-17 will become effective for interim and annual reporting periods beginning on January 1, 2020. Early adoption is permitted. The amendments should be applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. Mattel is currently evaluating the impact of the adoption of ASU 2018-17 on its consolidated financial statements.


25.	Subsequent Event

~~Margaret H. Georgiadis, Mattel's current Chief Executive Officer (“CEO”), notified the Board of Directors (the “Board”) of her intention to resign from her role as CEO and as~~On April 12, 2019, Mattel announced a ~~director~~voluntary recall of the ~~Board, effective~~Fisher-Price Rock 'n Play Sleeper. During the first quarter of 2019, Mattel recorded a reduction to net sales for estimated retailer returns of $5.4 million and a $21.9 million charge to cost of sales for the affected inventory, consumer renumeration obligations, and other recall-related costs, resulting in a total reduction to gross profit of $27.3 million. Recall charges were based on ~~April 26, 2018 (the “Transition Date”). On April 17, 2018, Ynon Kreiz was appointed as CEO~~estimates associated with the expected levels of ~~Mattel, effective as of the Transition Date. Ms. Georgiadis will serve as an Executive Advisor to the CEO of Mattel until May 10, 2018.~~affected product at retail and historical consumer response rates.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

In the discussion that follows, "Mattel" refers to Mattel, Inc. and/or one or more of its family of companies.

The following discussion should be read in conjunction with the consolidated financial ~~information~~statements and related notes that appear in Part I, Item 1 of this Quarterly Report on Form 10-Q. Mattel’s business is seasonal with consumers making a large percentage of all toy purchases during the traditional holiday season; therefore, results of operations are comparable only with corresponding periods.

The following discussion also includes gross sales and currency exchange rate impact, non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission ("Regulation G"), to supplement the financial results as reported in accordance with GAAP. Gross sales represent sales to customers, excluding the impact of sales adjustments, such as trade discounts and other allowances. The currency exchange rate impact reflects the portion (expressed as a percentage) of changes in Mattel's reported results that are attributable to fluctuations in currency exchange rates. Mattel uses these non-GAAP financial measures to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. Management believes that the disclosure of non-GAAP financial measures provides useful supplemental information to investors to allow them to better evaluate ongoing business performance and certain components of Mattel's results. These measures are not, and should not be viewed as, a substitute for GAAP financial measures. Refer to "Non-GAAP Financial Measures" in this Quarterly Report on Form 10-Q for a more detailed discussion, including a reconciliation of gross sales, a non-GAAP financial measure, to net sales, its most directly comparable GAAP financial measure.

Note that amounts within this Item shown in millions may not foot due to rounding.

Overview

Mattel ~~designs, manufactures,~~is a leading global children’s entertainment company that specializes in the design and ~~markets a broad variety~~production of quality toys and consumer products. Mattel's products are among the most widely recognized toy products ~~worldwide which are sold~~in the world. Mattel's mission is to ~~its customers~~"create innovative products and ~~directly~~experiences that inspire, entertain, and develop children through play." In order to ~~consumers.~~deliver on this mission, Mattel ~~reorganized its~~is focused on the following two-part strategy to transform Mattel from a toy manufacturing company into an intellectual property ("IP") driven, high-performing toy company:


•	In the short- to mid-term, restore profitability by reshaping operations and regain topline growth by growing Mattel's Power Brands (Barbie, Hot Wheels, Fisher-Price and Thomas & Friends, and American Girl) and expanding Mattel's brand portfolio.

In the mid- to long-term, capture the full value of Mattel's IP through franchise management and the development of Mattel's online retail and e-commerce capabilities.

Mattel is the owner of a portfolio of global brands ~~reporting in 2018 as outlined below to better align~~ with ~~internal reporting on gross sales. Prior period amounts have been reclassified to conform to the current year presentation.~~

~~Mattel’s~~vast intellectual property potential. Mattel's portfolio of brands and products are ~~classified~~organized into the following categories:

Dolls—including brands such as ~~Power Brands~~ Barbie.American Girl, Enchantimals, and ~~Toy Box:~~

~~Power Brands include:~~

~~Barbie~~— Polly Pocket. Empowering girls since 1959, Barbie has inspired the limitless potential of every girl by showing them that they can be anything. With an extensive portfolio of dolls and accessories, content, gaming, and lifestyle products, Barbie is the premier fashion doll for children around the world.

~~Hot Wheels—Now celebrating its 50th year in production,~~ ~~Hot Wheels~~ ~~pushes the limits of performance and design and ignites the challenger spirit of kids, adults, and collectors. From die-cast cars, to tracks, playsets, and advanced play products, the~~ ~~Hot Wheels~~ ~~portfolio has broad appeal that engages and excites kids.~~

~~Fisher-Price and Thomas & Friends—An institution in learning and child development for over 85 years,~~ ~~Fisher-Price~~ ~~is driven to enrich children's lives from birth to school readiness, helping families provide their children with the best possible start.~~ ~~Thomas & Friends, a key property in the~~ ~~Fisher-Price~~ ~~portfolio, is an award-winning preschool train brand franchise that brings meaningful life lessons of friendship and teamwork to kids through content, toy, live events, and other lifestyle categories.~~

American Girl~~—A beloved brand since the first catalog debuted in 1986,~~ ~~American Girl~~ is best known for imparting valuable life lessons through its inspiring dolls and books, featuring diverse characters from past and present. Its products are sold directly to consumers via its catalog, website, and proprietary retail stores.

~~Toy Box includes new and innovative products from Mattel-owned and licensed entertainment properties:~~

~~Owned Brands~~Infant/Toddler/Preschool—~~Mattel has an engaging portfolio of owned~~including brands such as ~~MEGA BLOKS~~Fisher-Price and Thomas & Friends, ~~Uno~~, ~~Enchantimals~~, ~~Monster High~~, ~~Polly Pocket~~, ~~Turning MECARD~~,Power Wheels, Fireman Sam,, and ~~Matchbox~~.

~~Partner Brands—Mattel brings top entertainment properties to life through innovative toy design, in partnership with Disney (CARS~~, ~~Mickey Mouse Clubhouse), WWE Wrestling, Nickelodeon (~~Shimmer and Shine, ~~Blaze and the Monster Machines~~), ~~DC Comics~~ (~~Batman~~, ~~DC Super Hero Girls), Warner Brothers (Jurassic World), Universal (Fast and Furious) and Mojang (Minecraft~~) (Nickelodeon).

~~Mattel's vision is to "inspire the wonder of childhood as the global leader~~An institution in learning and child development for over 85 years, Fisher-Price is driven to enrich children's lives from birth to school readiness, helping families provide their children with the best possible start. Thomas & Friends is an award-winning preschool train brand franchise that brings meaningful life lessons of friendship and teamwork to kids through ~~play.~~content, toys, live events, and other lifestyle categories.

Vehicles—including brands such as Hot Wheels, Matchbox, and CARS (Disney Pixar). In production for over 50 years, Hot Wheels continues to push the limits of performance and design and ignites the challenger spirit of kids, adults, and collectors. From diecast cars, to tracks, playsets, and advanced play products, the Hot Wheels portfolio has broad appeal that engages and excites kids.

Action Figures/Building Sets/Games—including brands such as MEGA,UNO, Toy Story (Disney Pixar), Jurassic World (Universal), and WWE. From big blocks to small bricks, first builders to advanced collectors, MEGA creates products that spark purposeful play and encourage kids and adults to "build beyond." ~~In order~~America's number one game, UNO is the classic matching card game that is easy to ~~deliver on this vision, Mattel is focused on the following five-pillar strategy:~~

~~Build Mattel's Power Brands into connected 360-degree play systems~~pick up and ~~experiences;~~

~~Accelerate emerging markets growth with digital-first solutions;~~

~~Focus and strengthen Mattel's innovation pipeline;~~

~~Reshape Mattel's operations to enable this strategy - leaner, faster, and smarter - via commercial realignment, supply chain transformation and IT transformation; and~~

~~Reignite Mattel's culture and team.~~fast fun for everyone.

Results of Operations—First Quarter

Consolidated Results

Net sales for the first quarter of ~~2018~~2019 were ~~$708.4~~$689.2 million, a 4%3% decrease, as compared to ~~$735.6~~$708.4 million in the first quarter of ~~2017,~~2018, with ~~a favorable~~an unfavorable impact from changes in currency exchange rates of 34 percentage points. AsNet loss for the first quarter of 2019 was $183.7 million, or $0.53 per share, as compared to a ~~result~~net loss of ~~the Toys "R" Us liquidation, Mattel reversed net sales which occurred~~$311.3 million, or $0.90 per share, in the first quarter of 2018, ~~of approximately $30 million. Gross margin in~~primarily due to lower other selling and administrative expenses and higher gross profit. Net loss for the first quarter of ~~2018 excludes these net sales, but~~2019 includes ~~the corresponding cost of sales for the inventory sold to Toys "R" Us. Further, Mattel recorded bad debt expense~~approximately $27 million related to ~~outstanding Toys "R" Us receivables as of December 31, 2017 of approximately $57 million within other selling and administrative expenses.~~the Rock 'n Play product recall. Net loss for the first quarter of 2018 ~~was $311.3~~includes a sales reversal of approximately $30 million ~~or $0.90 per diluted share,~~and bad debt expense of approximately $57 million as ~~compared to~~ a ~~net loss~~result of ~~$113.2 million, or $0.33 per diluted share, in~~ the ~~first quarter of 2017. Net loss for the first quarter of 2018 was negatively impacted by lower gross profit, higher other selling and administrative expenses, and higher interest expense.~~Toys "R" Us liquidation.

The following table provides a summary of Mattel’s consolidated results for the first quarter of ~~2018~~2019 and ~~2017:~~2018:


	For the Three Months Ended										Year/Year Change			For the Three Months Ended										Year/Year Change
	March 31, 2018					March 31, 2017					Year/Year Change			March 31, 2019					March 31, 2018					Year/Year Change
	Amount			% of Net Sales		Amount			% of Net Sales		%		Basis Points of Net Sales	Amount			% of Net Sales		Amount			% of Net Sales		%		Basis Points of Net Sales
	(In millions, except percentage and basis point information)													(In millions, except percentage and basis point information)
Net sales	$	708.4		100.0	%	$	735.6		100.0	%	-4	%	—	$	689.2		100.0	%	$	708.4		100.0	%	-3	%	—
Gross profit	$	218.9		30.9	%	$	278.8		37.9	%	-21	%	-700	$	239.8		34.8	%	$	218.9		30.9	%	10	%	390
Advertising and promotion expenses	70.8			10.0	%	73.6			10.0	%	-4	%	—	69.5			10.1	%	70.8			10.0	%	-2	%	10
Other selling and administrative expenses	424.6			59.9	%	330.8			45.0	%	28	%	1,490	301.3			43.7	%	424.6			59.9	%	-29	%	-1,620
Operating loss	(276.6		)	-39.0	%	(125.6		)	-17.1	%	120	%	-2,190	(131.0		)	-19.0	%	(276.6		)	-39.0	%	-53	%	2,000
Interest expense	41.1			5.8	%	22.0			3.0	%	86	%	280	47.0			6.8	%	41.1			5.8	%	14	%	100
Interest (income)	(3.1		)	-0.4	%	(2.5		)	-0.3	%	28	%	-10	(2.3		)	-0.3	%	(3.1		)	-0.4	%	-28	%	10
Other non-operating (income) expense, net	(0.6		)			0.6
Other non-operating expense (income), net														1.9					(0.6		)
Loss before income taxes	$	(313.9	)	-44.3	%	$	(145.7	)	-19.8	%	115	%	-2,450	$	(177.5	)	-25.8	%	$	(313.9	)	-44.3	%	-43	%	1,850

Sales

Net sales for the first quarter of ~~2018~~2019 were ~~$708.4~~$689.2 million, a 4% decrease of $19.2 million or 3%, as compared to ~~$735.6~~$708.4 million in the first quarter of ~~2017,~~2018, with ~~a favorable~~an unfavorable impact from changes in currency exchange rates of 34 percentage points.

The following table provides a summary of Mattel’s consolidated gross sales by categories, along with supplemental information by brand, for the first quarter of ~~2018~~2019 and ~~2017:~~2018:

For the Three Months Ended % Change as
Reported Currency
Exchange Rate
Impact
March 31,
2018 March 31,
2017
(In millions, except percentage information)
Power Brands:
Barbie $ 152.7
$ 123.4
24 % 6 %
Hot Wheels 144.9
125.7
15 % 4 %
Fisher-Price and Thomas & Friends 187.8
205.0
-8 % 4 %
American Girl 67.4
85.8
-21 % 1 %
Total Power Brands 552.9
539.9
2 % 3 %

Toy Box:
Owned Brands 130.7
139.4
-6 % 4 %
Partner Brands 116.5
135.3
-14 % 3 %
Total Toy Box 247.2
274.7
-10 % 4 %

Total Gross Sales 800.0
814.6
-2 % 3 %
Sales Adjustments (91.6 ) (79.0 )
Total Net Sales $ 708.4
$ 735.6
-4 % 3 %



	For the Three Months Ended						% Change as Reported		Currency Exchange Rate Impact
	March 31, 2019			March 31, 2018			% Change as Reported		Currency Exchange Rate Impact
	(In millions, except percentage information)
Revenues by Categories (a)
Dolls	$	252.9		$	257.4		-2	%	-5	%
Infant/Toddler/Preschool	193.6			226.6			-15	%	-4	%
Vehicles	183.4			188.9			-3	%	-5	%
Action Figures/Building Sets/Games	150.3			127.1			18	%	-4	%
Gross Sales	$	780.1		$	800.0		-2	%	-4	%
Sales Adjustments	(90.9		)	(91.6		)
Net Sales	$	689.2		$	708.4		-3	%	-4	%

Supplemental Revenue Disclosure:
Revenues by Top 3 Power Brands
Barbie	$	163.5		$	152.7		7	%	-6	%
Hot Wheels	150.5			144.9			4	%	-5	%
Fisher-Price and Thomas & Friends	172.4			187.8			-8	%	-3	%
Other	293.7			314.6			-7	%	-4	%
Gross Sales	$	780.1		$	800.0		-2	%	-4	%

__________________________________________

(a) Mattel modified its reporting structure for revenues in the first quarter of 2019 to disclose revenues by categories.

Gross sales were $780.1 million in the first quarter of 2019, a decrease of $19.9 million or 2%, as compared to $800.0 million in the first quarter of 2018, ~~a decrease of $14.6 million or 2%, as compared to $814.6 million in the first quarter of 2017,~~ with ~~a favorable~~an unfavorable impact from changes in currency exchange rates of 34 percentage points. ~~The decrease~~Gross sales in ~~gross sales was primarily a result~~the first quarter of 2018 included the Toys "R" Us ~~liquidation for which Mattel reversed~~sales reversal of approximately $30 ~~million of gross sales. Lower Toy Box sales were partially offset by higher Power Brands sales.~~

million. The ~~2% increase in Power Brands gross sales was due to higher sales of~~ ~~Barbie~~ ~~and~~ ~~Hot Wheels~~ ~~products, partially offset by lower sales of~~ ~~American Girl~~ ~~products. The 24% increase in~~ ~~Barbie~~ ~~gross sales was primarily driven by positive POS momentum and the introduction of new product lines. The 15% increase in~~ ~~Hot Wheels~~ ~~was driven by higher sales of core diecast and tracks and playsets products. The 21%~~ decrease in ~~American Girl~~first quarter of 2019 gross sales ~~was due to lower sales across channels.~~

~~The 10% decrease in Toy Box Brands~~ was primarily due to lower sales of ~~Toy Box Partner Brands.~~ Infant/Toddler/Preschool, partially offset by higher sales of Action Figures/Building Sets/Games.

Of the ~~14%~~2% decrease in ~~Toy Box Partner Brands~~Dolls gross sales, 10% was due to lower sales of American Girl products,partially offset by higher sales of Barbie products of 5% and Polly Pocket products of 5%. The decrease in sales of American Girl productswas primarily due to lower sales in proprietary retail and direct channels.

Of the 15% decrease in Infant/Toddler/Preschool gross sales, 7% was due to lower sales of ~~licensed vehicles~~Fisher-Price and Thomas & Friends products and 7%5% was due to lower sales of ~~DC Super Hero Girls~~Fisher-Price Friends products. The decrease in sales of Fisher-Price and Thomas & Friends products was primarily due to lower sales of infant, Imaginext, and Thomas & Friends products. The decrease in sales of Fisher-Price Friends products was primarily due to expected declines of partner brands.

Of the 3% decrease in Vehicles gross sales, 5% was due to lower sales of CARS products, partially offset by higher sales of Hot Wheels products of 3%.

Of the 18% increase in Action Figure/Building Sets/Games gross sales, 17% was due to initial sales of Toy Story 4 products in advance of its theatrical release in the second quarter of 2019.

Cost of Sales

Cost of sales as a percentage of net sales was 65.2% in the first quarter of 2019, as compared to 69.1% in the first quarter of 2018. Cost of sales decreased by $40.0 million, or 8%, to $449.5 million in the first quarter of 2019 from $489.5 million in the first quarter of 2018, as compared to ~~62.1% in the first quarter of 2017. Cost of sales increased by $32.7 million, or 7%, to $489.5 million in the first quarter of 2018 from $456.8 million in the first quarter of 2017, as compared to~~ a 4%3% decrease in net sales. Within cost of sales, product and other costs ~~increased~~decreased by ~~$14.0~~$29.2 million, or 4%8%, to $351.2 million in the first quarter of 2019 from $380.4 million in the first quarter of ~~2018 from $366.4~~2018; freight and logistics expenses decreased by $11.4 million, or 15%, to $63.0 million in the first quarter of ~~2017; freight and logistics expenses increased by $12.5 million, or 20%, to~~2019 from $74.5 million in the first quarter of ~~2018 from $62.0~~2018; and royalty expense increased by $0.6 million, or 2%, to $35.2 million in the first quarter of ~~2017; and royalty expense increased by $6.2 million, or 22%, to~~2019 from $34.6 million in the first quarter of ~~2018 from $28.4 million~~2018.

Gross Margin

Gross margin increased to 34.8% in the first quarter of ~~2017.~~

~~Gross Margin~~

~~Gross margin decreased to~~2019 from 30.9% in the first quarter of ~~2018~~2018. The increase in gross margin was primarily driven by Structural Simplification savings, and the benefit from ~~37.9% in~~the absence of the first quarter of ~~2017. The decrease in gross margin was driven by higher product-related costs, an unfavorable impact from the~~2018 Toys "R" Us ~~liquidation,~~sales reversal of approximately $30 million, and ~~higher freight and logistics expenses,~~favorable product mix, partially offset by ~~favorable product mix. As a result~~the impact of the ~~Toys "R" Us net sales reversal, gross margin includes the~~Rock 'n Play product recall of approximately $27 million and input cost inflation of ~~sales for the inventory sold, but excludes the corresponding net sales.~~

raw materials and plant labor.

Advertising and Promotion Expenses

Advertising and promotion expenses primarily consist of: (i) media costs, which primarily include the media, planning, and buying fees for television, print, and online advertisements, (ii) non-media costs, which primarily include commercial and website production, merchandising, and promotional costs, (iii) retail advertising costs, which primarily include consumer direct catalogs, newspaper inserts, fliers, and mailers, and (iv) generic advertising costs, which primarily include trade show costs. Advertising and promotion expenses as a percentage of net sales in the first quarter of ~~2018~~2019 was ~~10.0%~~10.1%, orwhich was flat as compared to the first quarter ~~2017.~~of 2018.

Other Selling and Administrative Expenses

Other selling and administrative expenses were $301.3 million, or 43.7% of net sales, in the first quarter of 2019, as compared to $424.6 million, or 59.9% of net sales, in the first quarter of ~~2018, as compared to $330.8 million, or 45.0% of net sales, in the first quarter of 2017.~~2018. The ~~increase~~decrease in other selling and administrative expenses was primarily ~~due to~~driven by the benefit from the absence of the first quarter of 2018 Toys "R" Us bad debt expense of approximately $57 million ~~recorded~~and incremental Structural Simplification savings.

Interest Expense

Interest expense was $47.0 million in the first quarter of 2019, as ~~a result~~compared to $41.1 million in the first quarter of ~~the Toys "R" Us liquidation and~~2018. The increase in interest expense was due to higher ~~severance and restructuring costs of approximately $25 million.~~interest rates on refinanced debt.

Provision for (Benefit from) Income Taxes

Mattel’s ~~benefit from~~provision for income taxes was ~~$2.7 million and $32.4~~$6.2 million for the three months ended March 31, ~~2018 and 2017, respectively.~~2019, as compared to a benefit from income taxes of $2.7 million for the three months ended March 31, 2018. During the ~~first quarter of~~three months ended March 31, 2019 and 2018, ~~and 2017,~~ Mattel recognized net discrete tax expense of ~~$4.5~~$1.5 million and ~~$0.5~~$4.5 million, respectively, primarily related to reassessments of prior ~~years’~~years' tax liabilities and income taxes recorded on a discrete basis in various jurisdictions.

North America Segment

The following table provides a summary of Mattel’s gross sales ~~by brand~~ for the North America segment by categories, along with supplemental information by brand, for the first quarter of ~~2018~~2019 and ~~2017:~~2018:



	For the Three Months Ended						% Change as Reported		Currency Exchange Rate Impact
	March 31, 2019			March 31, 2018			% Change as Reported		Currency Exchange Rate Impact
	(In millions, except percentage information)
Revenues by Categories (a)
Dolls	$	80.3		$	69.3		16	%	—	%
Infant/Toddler/Preschool	108.0			118.8			-9	%	—	%
Vehicles	85.0			83.2			2	%	—	%
Action Figures/Building Sets/Games	96.2			77.2			25	%	—	%
Gross Sales	$	369.4		$	348.4		6	%	—	%
Sales Adjustments	(28.0		)	(22.2		)
Net Sales	$	341.4		$	326.2		5	%	—	%

Supplemental Revenue Disclosure:
Revenues by Top 3 Power Brands
Barbie	$	69.3		$	60.5		15	%	—	%
Hot Wheels	67.1			63.5			6	%	—	%
Fisher-Price and Thomas & Friends	96.6			99.8			-3	%	—	%
Other	136.5			124.6			10	%	—	%
Gross Sales	$	369.4		$	348.4		6	%	—	%

_________________________________________

For the Three Months Ended % Change as
Reported Currency
Exchange Rate
Impact
March 31,
2018 March 31,
2017
(In millions, except percentage information)
Power Brands:
Barbie $ 60.5
$ 46.9
29 % — %
Hot Wheels 63.5
53.6
19 % 1 %
Fisher-Price and Thomas & Friends 99.8
108.9
-8 % 1 %
Total Power Brands 223.9
209.4
7 % — %

Toy Box:
Owned Brands 57.1
71.2
-20 % — %
Partner Brands 67.4
81.7
-18 % — %
Total Toy Box 124.5
153.0
-19 % — %

Total Gross Sales 348.4
362.3
-4 % — %
Sales Adjustments (22.2 ) (20.1 )
Total Net Sales $ 326.2
$ 342.2
-5 % — %

(a) Mattel modified its reporting structure for revenues in the first quarter of 2019 to disclose revenues by categories.

Gross sales for the North America segment were $369.4 million in the first quarter of 2019, an increase of $21.0 million, or 6%, as compared to $348.4 million in the first quarter of ~~2018, a decrease of $13.9 million, or 4%, as compared to $362.3 million~~2018. Gross sales in the first quarter of ~~2017.~~2018 includes the Toys "R" Us sales reversal of approximately $27 million. The ~~decrease~~increase in the North America segment gross sales was primarily ~~a result~~due to higher sales of ~~the Toys "R" Us liquidation for which Mattel reversed approximately $27 million of gross sales. Lower Toy Box sales were~~Action Figures/Building Sets/Games and Dolls, partially offset by ~~higher Power Brands sales.~~lower sales of Infant/Toddler/Preschool.

~~The 7%~~Of the 16% increase in ~~Power Brands~~Dolls gross sales, 13% was due to higher sales of Barbie products and ~~Hot Wheels~~ ~~products.~~7% was due to higher sales of Polly Pocket products, partially offset by lower sales of DC Super Hero Girls products of 3%. The ~~29%~~ increase in sales of Barbie ~~gross sales~~products was primarily driven by positive POS brand momentum, ~~and~~including the ~~introduction~~celebration of ~~new product lines. The 19% increase in~~ ~~Hot Wheels~~ ~~was driven by higher sales of core diecast and tracks and playsets products.~~Barbie’s 60^th Anniversary.

~~The 19%~~Of the 9% decrease in ~~Toy Box~~Infant/Toddler/Preschool gross sales, 7% was due to lower sales of ~~Toy Box Owned Brands~~Fisher-Price Friends and ~~Toy Box Partner Brands.~~ Thomas & Friends products.

Of the ~~20% decrease~~2% increase in ~~Toy Box Owned Brands~~Vehicles gross sales, ~~8% was due to lower sales of~~ ~~MEGA BLOKS~~ ~~products, 6% was due to lower sales of~~ ~~Monster High~~ ~~products, and~~ 4% was due to higher sales of Hot Wheels products, partially offset by lower sales of ~~Fuhu~~ ~~tablets products. Of the 18% decrease~~CARS products of 1%.

The 25% increase in ~~Toy Box Partner Brands~~Action Figures/Building Sets/Games gross sales ~~16%~~ was primarily due to ~~lower~~initial sales of ~~vehicles.~~Toy Story 4 products in advance of its theatrical release in the second quarter of 2019.

Cost of sales ~~increased 11%~~decreased 5% in the first quarter of ~~2018,~~2019, as compared to a 5% ~~decrease~~increase in net sales, primarily due to ~~higher~~lower freight and logistics expenses and lower product and other costs, ~~and higher freight and logistics expenses.~~driven by Structural Simplification savings. Gross margin in the first quarter of ~~2018 decreased~~2019 increased primarily due to ~~an unfavorable impact~~the benefit from the absence of the first quarter of 2018 Toys "R" Us ~~liquidation, higher freight~~sales reversal of approximately $27 million, Structural Simplification savings, and ~~logistics expenses, and higher product-related costs,~~favorable product mix, partially offset by ~~favorable product mix. As a result~~the impact of the ~~Toys "R" Us net sales reversal, gross margin includes the~~Rock 'n Play product recall of approximately $27 million and input cost inflation of ~~sales for the inventory sold, but excludes the corresponding net sales.~~raw materials and plant labor.

North America segment loss ~~increased~~was $21.6 million in the first quarter of 2019, as compared to segment loss of $106.8 million in the first quarter of 2018, ~~as compared~~primarily due to ~~$19.3 million in~~higher gross profit and lower other selling and administrative expenses. North America segment loss for the first quarter of ~~2017, primarily due to lower gross profit and higher other selling and administrative expenses, which were impacted by~~2019 includes the ~~Toys "R" Us liquidation, including a net sales reversal~~impact of the Rock 'n Play product recall of approximately $27 million. North America segment loss for the first quarter of 2018 includes approximately $27 million of sales reversal and bad debt expense of approximately $44 ~~million.~~million as a result of the Toys "R" Us liquidation.

International Segment

The following table provides a summary of percentage changes in net sales within the International segment in the first quarter of ~~2018~~2019 versus ~~2017:~~2018:


	% Change in Net Sales as Reported		Currency Exchange Rate Impact		% Change in Net Sales as Reported		Currency Exchange Rate Impact
Total International Segment (a)	2	%	7	%	-4	%	-8	%
Europe	4	%	15	%
EMEA					-6	%	-10	%
Latin America	6	%	1	%	2	%	-7	%
Global Emerging Markets	-2	%	4	%
Asia Pacific					-5	%	-5	%

The following table provides a summary of percentage changes in gross sales within the International segment in the first quarter of ~~2018~~2019 versus ~~2017:~~2018:


	% Change in Gross Sales as Reported		Currency Exchange Rate Impact		% Change in Gross Sales as Reported		Currency Exchange Rate Impact
Total International Segment (a)	5	%	8	%	-5	%	-9	%
Europe	8	%	14	%
EMEA					-6	%	-10	%
Latin America	7	%	2	%	1	%	-8	%
Global Emerging Markets	1	%	4	%
Asia Pacific					-8	%	-5	%

__________________________________________

(a)

The following table provides a summary of Mattel’s gross sales ~~by brand~~ for the International segment by categories, along with supplemental brand information, for the first quarter of ~~2018~~2019 and ~~2017:~~2018:

For the Three Months Ended % Change as
Reported Currency
Exchange Rate
Impact
March 31,
2018 March 31,
2017
(In millions, except percentage information)
Power Brands:
Barbie $ 92.2
$ 76.5
21 % 9 %
Hot Wheels 81.5
72.1
13 % 7 %
Fisher-Price and Thomas & Friends 88.0
96.1
-9 % 6 %
Total Power Brands 261.6
244.7
7 % 7 %

Toy Box:
Owned Brands 73.5
68.0
8 % 9 %
Partner Brands 49.1
53.6
-8 % 8 %
Total Toy Box 122.5
121.6
1 % 8 %

Total Gross Sales 384.1
366.3
5 % 8 %
Sales Adjustments (66.9 ) (54.8 )
Total Net Sales $ 317.2
$ 311.5
2 % 7 %



	For the Three Months Ended						% Change as Reported		Currency Exchange Rate Impact
	March 31, 2019			March 31, 2018			% Change as Reported		Currency Exchange Rate Impact
	(In millions, except percentage information)
Revenues by Categories (a)
Dolls	$	127.1		$	120.7		5	%	-11	%
Infant/Toddler/Preschool	85.6			107.9			-21	%	-7	%
Vehicles	98.4			105.8			-7	%	-9	%
Action Figures/Building Sets/Games	54.1			49.8			9	%	-8	%
Gross Sales	$	365.2		$	384.1		-5	%	-9	%
Sales Adjustments	(61.8		)	(66.9		)
Net Sales	$	303.4		$	317.2		-4	%	-8	%

Supplemental Revenue Disclosure:
Revenues by Top 3 Power Brands
Barbie	$	94.2		$	92.2		2	%	-10	%
Hot Wheels	83.5			81.5			2	%	-10	%
Fisher-Price and Thomas & Friends	75.8			88.0			-14	%	-7	%
Other	111.7			122.5			-9	%	-8	%
Gross Sales	$	365.2		$	384.1		-5	%	-9	%

__________________________________________

(a) Mattel modified its reporting structure for revenues in the first quarter of 2019 to disclose revenues by categories.

Gross sales for the International segment were $365.2 million in the first quarter of 2019, a decrease of $18.9 million, or 5%, as compared to $384.1 million in the first quarter of 2018, with an ~~increase of $17.8 million, or 5%, as compared to $366.3 million in the first quarter of 2017, with a favorable~~unfavorable impact from changes in currency exchange rates of 89 percentage points. The ~~increase~~decrease in the International segment gross sales was primarily ~~due to~~as a result of lower sales of Infant/Toddler/Preschool and Vehicles, partially offset by higher ~~Power Brands sales.~~sales of Dolls.

~~The 7%~~Of the 5% increase in ~~Power Brands~~Dolls gross sales, 5% was due to higher sales of ~~Barbie~~Polly Pocket products and ~~Hot Wheels~~2% was due to higher sales of Barbie products. ~~The~~

Of the 21% ~~increase~~decrease in ~~Barbie~~Infant/Toddler/Preschool gross sales, 11% was ~~primarily driven by positive POS momentum~~due to lower sales of Fisher-Price and Thomas and Friends products and 5% was due to lower sales of Fisher-Price Friends products. This decline was consistent with theoverall category decline of Infant/Toddler/Preschool in EMEA.

Of the ~~introduction~~7% decrease in Vehicles gross sales, 8% was due to lower sales of ~~new product lines. The 13% increase in~~ ~~Hot Wheels~~ ~~was driven~~CARS products, partially offset by higher sales of ~~core diecast~~Hot Wheels products of 2%.

Of the 9% increase in Action Figures/Building Sets/Games gross sales, 12% was due to higher sales of Jurassic World products as initial 2018 shipments were primarily in the second quarter of 2018 for its June 2018 theatrical release and ~~tracks~~7% was due to initial sales of Toy Story 4 products in advance of its theatrical release in the second quarter of 2019. This was partially offset by lower sales of MEGA products of 3% and ~~playsets products.~~Owned Action Figures products of 3%.

Cost of sales ~~increased 25%~~decreased 9% in the first quarter of ~~2018,~~2019, as compared to a ~~2% increase~~4% decrease in net sales, primarily due to ~~higher~~lower product and other ~~costs.~~costs, driven by Structural Simplification savings. Gross margin in the first quarter of ~~2018 decreased as a result~~2019 increased primarily due to Structural Simplification savings, favorable product mix, and price increases, partially offset by input cost inflation of ~~higher product-related costs~~raw materials and ~~higher royalty expense.~~plant labor.

International segment loss ~~increased~~was $24.3 million in the first quarter of 2019, as compared to a segment loss of $72.3 million in the first quarter of 2018, ~~as compared to $24.8 million in the first quarter of 2017,~~ primarily due to lower ~~gross profit and higher~~ other selling and administrative ~~expenses.~~expenses and higher gross profit.

American Girl Segment

The following table provides a summary of ~~Mattel’s~~Mattel's gross sales ~~by brand~~ for the American Girl segment for the first quarter of ~~2018~~2019 and ~~2017:~~2018:


	For the Three Months Ended						% Change as Reported		Currency Exchange Rate Impact		For the Three Months Ended						% Change as Reported		Currency Exchange Rate Impact
	March 31, 2018			March 31, 2017			% Change as Reported		Currency Exchange Rate Impact		March 31, 2019			March 31, 2018			% Change as Reported		Currency Exchange Rate Impact
	(In millions, except percentage information)										(In millions, except percentage information)
American Girl Segment:
Total Gross Sales	$	67.5		$	86.0		-22	%	—	%	$	45.6		$	67.5		-32	%	—	%
Sales Adjustments	(2.5		)	(4.1		)					(1.1		)	(2.5		)
Total Net Sales	$	65.0		$	81.9		-21	%	—	%	$	44.4		$	65.0		-32	%	-1	%

Gross sales for the American Girl segment were $45.6 million in the first quarter of 2019, a decrease of $21.9 million, or 32%, as compared to $67.5 million in the first quarter of ~~2018, a~~2018. The 32% decrease in American Girl gross sales was primarily due to lower sales in proprietary retail and direct channels.

Cost of ~~$18.5 million, or 22%, as compared to $86.0 million~~sales decreased 34% in the first quarter of ~~2017. The 22% decrease in~~ ~~American Girl~~ ~~gross sales was due to lower sales across channels. In the first quarter of 2018, Mattel sold certain assets related to its Corolle business.~~

~~Cost of sales decreased 20% in the first quarter of 2018,~~2019, as compared to a ~~21%~~32% decrease in net ~~sales.~~sales, primarily due to lower product and other costs, driven by Structural Simplification savings. Gross margin in the first quarter of ~~2018 was flat as compared~~2019 increased primarily due to favorable product mix, partially offset by the ~~first quarter~~unfavorable impact of ~~2017.~~fixed cost absorption due to lower sales.

American Girl segment loss was $14.3 million in the first quarter of 2019, as compared to a segment loss of $14.8 million in the first quarter of 2018, ~~as compared to segment loss of $5.8 million in the first quarter of 2017,~~ primarily due to lower other selling and administrative expenses, partially offset by lower gross profit.

Structural Simplification Cost Savings Program

The major initiatives of the Structural Simplification ~~Cost Savings~~cost savings program include:

Reducing manufacturing complexity, including SKU reduction, and implementing process improvement initiatives at owned and co-manufacturing facilities;

Streamlining the organizational structure and reducing headcount expense to better align with the revenue base; and

Optimizing advertising spend.

Mattel realized cost savings (before severance, investments, and ~~investments)~~cost inflation) of approximately ~~$13~~$68 million (approximately $31 million within gross profit, approximately $35 million within other selling and administrative expenses, and approximately $2 million within advertising and promotion expenses) during the ~~first quarter of 2018.~~three months ended March 31, 2019.

In connection with the Structural Simplification ~~Cost Savings~~cost savings program, Mattel recorded severance and other restructuring charges of $8.7 million and $24.9 million ~~within~~during the three months ended March 31, 2019 and 2018, respectively. Of the total charges recorded during the three months ended March 31, 2019, $3.0 million related to severance charges and $5.8 million related to other ~~selling~~restructuring costs, which consisted primarily of consulting fees. Of the total charges recorded during the three months ended March 31, 2018, $19.3 million related to severance charges and ~~administrative expenses~~$5.6 million related to other restructuring costs, which consisted primarily of consulting fees. To date, Mattel has recorded cumulative severance and other restructuring charges of $163.7 million and expects to incur total severance and restructuring charges of approximately $200 million related to the Structural Simplification cost savings program.

During the first quarter of 2019, Mattel announced the commencement of its Capital Light initiative to optimize Mattel’s manufacturing footprint (including the sale or consolidation of manufacturing facilities), increase the productivity of its plant infrastructure, and achieve additional efficiencies across its entire supply chain. Mattel expects that this initiative will result in incremental Structural Simplification savings, costs, and non-cash charges.

Income Taxes

Mattel’s provision for income taxes was $6.2 million for the ~~consolidated statements~~three months ended March 31, 2019, as compared to a benefit from income taxes of ~~operations~~$2.7 million for the three months ended March 31, 2018. ~~Mattel expects to incur total charges of approximately $160 million during 2018 and 2019 related to the Structural Simplification Cost Savings program.~~

~~Income Taxes~~

~~Mattel’s benefit from income taxes was $2.7 million and $32.4 million for the three months ended March 31, 2018 and 2017, respectively.~~ During the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, Mattel recognized net discrete tax expense of ~~$4.5~~$1.5 million and ~~$0.5~~$4.5 million, respectively, primarily related to reassessments of prior years' tax liabilities and income taxes recorded on a discrete basis in various jurisdictions.

In 2017, Mattel established a valuation allowance on its U.S. deferred tax assets and has provided no U.S. tax benefit for the three months ended March 31, 2018. Therefore, Mattel’s 2018 tax expense or benefit is expected to be driven by income or loss in taxable jurisdictions outside the U.S.

As of December 31, 2017, Mattel reasonably estimated and recorded provisional adjustments associated with the impact of the corporate tax rate change. Mattel has not made any additional measurement-period adjustments related to these items during the quarter. Mattel continues to gather additional information to complete the accounting for these items and will complete our accounting within the prescribed measurement period.

Mattel has not yet been able to reasonably estimate the impact of the deemed repatriation of accumulated foreign earnings and no provisional adjustments were recorded. Mattel is continuing to evaluate the impact of this provision of the Act and will complete the accounting for this item within the prescribed measurement period.

~~On January 1, 2018, Mattel adopted ASU 2016-16,~~ ~~Intra-Entity Transfers of Assets Other Than Inventory~~, which required Mattel to recognize the income tax effects of intercompany sales and transfers of assets other than inventory in the period in which the transfer occurs. Previously, the income tax effect of intercompany transfers of assets was deferred until the asset was sold to an outside party or otherwise recognized (e.g., depreciated, amortized, impaired). The new guidance requires Mattel to defer only the income tax effects of intercompany transfers of inventory. A cumulative effect adjustment of approximately $9 million was recorded as an increase to beginning retained earnings in the first quarter of 2018.

Liquidity and Capital Resources

Mattel’s primary sources of liquidity are its cash and equivalents balances, including access to earnings of its foreign subsidiaries, short-term borrowing facilities, including its $1.60 billion senior secured revolving credit facilities, ~~("the new senior secured revolving credit facilities"),~~ and issuances of long-term debt securities. Cash flows from operating activities could be negatively impacted by decreased demand for Mattel’s products, which could result from factors such as adverse economic conditions and changes in public and consumer preferences, or by increased costs associated with manufacturing and distribution of products or shortages in raw materials or component parts. Additionally, Mattel’s ability to issue long-term debt and obtain seasonal financing could be adversely affected by factors such as global economic crises and tight credit environments, an inability to meet its debt covenant requirements and its ~~new~~ senior secured revolving credit facility covenants, or a deterioration of Mattel’s credit ratings. Mattel’s ability to conduct its operations could be negatively impacted should these or other adverse conditions affect its primary sources of liquidity.

Of Mattel’s ~~$526.7~~$380.1 million in cash and equivalents as of March 31, ~~2018,~~2019, approximately ~~$313~~$373 million iswas held by foreign subsidiaries. Mattel has several liquidity options to fund its operations and obligations; such obligations may include investing and financing activities such as debt service, dividends, and share repurchases. ~~Positive cash~~Cash flows generated ~~annually~~ by its worldwide operations, the ~~new~~ senior secured revolving credit facilities, alternative forms of financing, and access to ~~both public and private debt~~capital markets are available to fund ~~domestic~~Mattel's operations and obligations.

U.S. Tax Reform, enacted on December 22, 2017, will provide Mattel with greater access to earnings of its foreign subsidiaries, and Mattel may re-evaluate the intentions related to the indefinite reinvestment assertion. U.S. Tax Reform does impose a one-time transition tax on the deemed repatriation of the historical earnings of Mattel’s foreign subsidiaries. Mattel has significant deferred tax assets which can be used to reduce the one-time repatriation tax and therefore, does not expect the one time repatriation tax to be material to either its cash flows or liquidity.

In October 2017, Mattel's Board of Directors determined to suspend Mattel's quarterly dividend beginning in the fourth quarter of 2017 in order to increase financial flexibility, strengthen the balance sheet, and facilitate strategic investments. Mattel paid dividends of $0.38 per share to holders of its common stock in the first quarter of 2017.

Current Market Conditions

Mattel is exposed to financial market risk resulting from changes in interest and foreign currency exchange rates. Mattel continues to actively manage its capital structure and believes that it has ~~ample~~sufficient liquidity to ~~fund~~run its business needs, including beginning of year cash and equivalents, cash flows from operations, and access to its new senior secured revolving credit facilities, which it uses for seasonal working capital requirements.business.

Subject to market conditions, Mattel intends to utilize its ~~new~~ senior secured revolving credit facilities or alternative forms of financing to meet its short-term liquidity needs. As of March 31, ~~2018,~~2019, there were no amounts outstanding and approximately $70 million in outstanding letters of credit under the ~~new~~ senior secured revolving credit facilities.

Market conditions could affect certain terms of other debt instruments that Mattel enters into from time to time.

Mattel monitors the third-party depository institutions that hold ~~its~~Mattel's cash and equivalents. Mattel’s emphasis is primarily on safety and liquidity of principal, and secondarily on maximizing the yield on those funds. Mattel diversifies its cash and equivalents among counterparties and securities to minimize risks.

Mattel is subject to credit risks relating to the ability of its counterparties in hedging transactions to meet their contractual payment obligations. The risks related to creditworthiness and nonperformance have been considered in the fair value measurements of Mattel’s foreign currency forward exchange contracts. Mattel closely monitors its counterparties and takes action, as necessary, to manage its counterparty credit risk.

Mattel expects that some of its customers and vendors may experience difficulty in obtaining the liquidity required to buy inventory or raw materials. Mattel monitors its customers’ financial condition and their liquidity in order to mitigate Mattel’s accounts receivable collectibility risks, and customer terms and credit limits are adjusted, if necessary. Additionally, Mattel uses a variety of financial arrangements to ensure collectibility of accounts receivable of customers deemed to be a credit risk, including requiring letters of credit, factoring, purchasing various forms of credit insurance with unrelated third parties, or requiring cash in advance of shipment. AsDuring the first quarter of 2018, as a result of the Toys "R" Us liquidation, Mattel ~~wrote off approximately $87 million of~~reversed net sales and related accounts receivable ~~in the first quarter~~ of ~~2018. While these receivables may be recovered as a result~~approximately $30 million and recorded bad debt expense of ~~the liquidation proceedings, collectibility was not considered probable as of March 31, 2018.~~approximately $57 million.

Mattel sponsors defined benefit pension plans and postretirement benefit plans for its employees. Actual returns below the expected rate of return, along with changes in interest rates that affect the measurement of the liability, would impact the amount and timing of Mattel’s future contributions to these plans.

Operating Activities

Cash flows used for operating activities were $192.8 million in the first quarter of 2019, as compared to $273.7 million in the first ~~three months~~quarter of ~~2018, as compared to $310.0 million in the first three months of 2017.~~2018. The cash flows used for operating activities decreased primarily due to a lower net loss, excluding non-cash charges, and lower working capital ~~usage, partially offset by a higher net loss, excluding the impact of non-cash charges.~~usage.

Investing Activities

Cash flows used for investing activities were $19.2 million in the first quarter of 2019, as compared to $30.9 million in the first ~~three months~~quarter of ~~2018, as compared to $44.7 million in the first three months of 2017.~~2018. The decrease in cash flows used for investing activities was primarily driven by lower capital spending.

Financing Activities

Cash flows used for financing activities were $4.3 million in the first quarter of 2019, as compared to $251.5 million in the first ~~three months~~quarter of ~~2018, as compared to $142.6 million in the first three months of 2017.~~2018. The ~~increase~~decrease in cash flows used for financing activities was primarily driven by ~~the~~repayments of long-term borrowings of $250.0 million ~~repayment of senior notes which matured in the first quarter of 2018, partially offset by $130.1 million of dividend payments~~ during the first quarter of ~~2017.~~2018.

Seasonal Financing

See Item 1 "Financial Statements—Note 89 to the Consolidated Financial Statements—Seasonal Financing" of this Quarterly Report on Form 10-Q.

Financial Position

Mattel’s cash and equivalents decreased ~~$552.5~~$214.4 million to ~~$526.7~~$380.1 million at March 31, ~~2018,~~2019, as compared to ~~$1.08 billion~~$594.5 million at December 31, ~~2017.~~2018. The decrease was primarily due to the ~~$250.0 million repayment of senior notes which matured in the first quarter of 2018 and a~~ net loss, excluding non-cash ~~charges.~~charges, for the three months ended March 31, 2019.

Accounts receivable decreased ~~$452.5~~$345.6 million to ~~$676.1~~$624.5 million at March 31, ~~2018,~~2019, as compared to ~~$1.13 billion~~$970.1 million at December 31, ~~2017,~~2018, primarily due to ~~the seasonality of Mattel's business, the write off of approximately $87 million of Toys "R" Us~~seasonal declines in accounts receivable as year-end receivables ~~in the first quarter of 2018, and tighter working capital management.~~are collected. Inventory increased ~~$77.0~~$72.9 million to ~~$677.7~~$615.8 million at March 31, ~~2018,~~2019, as compared to ~~$600.7~~$542.9 million at December 31, ~~2017,~~2018, primarily due to ~~seasonality.~~seasonal inventory build.

Accounts payable and accrued liabilities decreased ~~$387.0 million~~ to ~~$977.3~~$986.9 million at March 31, ~~2018,~~2019, as compared to ~~$1.36~~$1.24 billion at December 31, ~~2017.~~2018. The decrease was primarily due to the timing and amount of payments for various liabilities, including advertising and royalties.

As of March 31, 2019 and December 31, 2018, Mattel had $0 and $4.2 million, respectively, of short-term borrowings outstanding.

A summary of Mattel’s capitalization is as follows:


	March 31, 2018					March 31, 2017					December 31, 2017					March 31, 2019					March 31, 2018					December 31, 2018
	(In millions, except percentage information)															(In millions, except percentage information)
Cash and equivalents	$	526.7				$	381.9				$	1,079.2				$	380.1				$	526.7				$	594.5

Short-term borrowings	—			—	%	180.0			4	%	—			—	%	—			—	%	—			—	%	4.2			—	%
2010 Senior Notes	500.0			13		500.0			11		500.0			11
2011 Senior Notes	300.0			8		300.0			6		300.0			7
2013 Senior Notes	250.0			6		500.0			11		500.0			11
2014 Senior Notes	500.0			13		500.0			11		500.0			11
2016 Senior Notes	350.0			9		350.0			8		350.0			8
2017 Senior Notes	1,000.0			26		—			—		1,000.0			23
2010 Senior Notes due October 2020 and October 2040																500.0			15		500.0			13		500.0			14
2011 Senior Notes due November 2041																300.0			9		300.0			8		300.0			8
2013 Senior Notes due March 2023																250.0			6		250.0			6		250.0			7
2014 Senior Notes due May 2019																—			—		500.0			13		—			—
2016 Senior Notes due August 2021																350.0			10		350.0			9		350.0			10
2017/2018 Senior Notes due December 2025																1,500.0			45		1,000.0			26		1,500.0			42
Debt issuance costs and debt discount	(28.2		)	—		(15.0		)	—		(26.9		)	—		(46.5		)	—		(28.2		)	—		(48.3		)	—
Total debt	2,871.8			75		2,315.0			51		3,123.1			71		2,853.5			85		2,871.8			75		2,855.9			81
Stockholders’ equity	982.5			25		2,215.9			49		1,257.5			29		518.5			15		982.5			25		669.5			19
Total capitalization (debt plus equity)	$	3,854.3		100	%	$	4,530.9		100	%	$	4,380.6		100	%	$	3,372.0		100	%	$	3,854.3		100	%	$	3,525.4		100	%



Delaware		95-1567322
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



333 Continental Blvd. El Segundo, CA		90245-5012
333 Continental Blvd. El Segundo, CA		90245-5012
(Address of principal executive offices)		(Zip Code)



Large accelerated filer	ý	Accelerated filer	¨

Non-accelerated filer	¨ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	¨

		Emerging growth company	¨



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2019.



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to



	December 31, 2017		Dispositions			Currency Exchange Rate Impact		March 31, 2018
	(In thousands)
North America	$	733,034	$	—		$	1,194	$	734,228
International	452,152		—			3,266		455,418
American Girl	211,483		(4,018		)	106		207,571
	$	1,396,669	$	(4,018	)	$	4,566	$	1,397,217



	For the Three Months Ended March 31, 2018
	Derivative Instruments			Available-for-Sale Security			Defined Benefit Pension Plans			Currency Translation Adjustments			Total
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2017	$	(21,098	)	$	(2,799	)	$	(143,213	)	$	(614,676	)	$	(781,786	)
Other comprehensive (loss) income before reclassifications	(5,319		)	(80		)	(208		)	41,989			36,382
Amounts reclassified from accumulated other comprehensive income (loss)	4,431			—			1,824			—			6,255
Net (decrease) increase in other comprehensive income	(888		)	(80		)	1,616			41,989			42,637
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of March 31, 2018	$	(21,986	)	$	(2,879	)	$	(141,597	)	$	(572,687	)	$	(739,149	)


Period	Total Number of Shares (or Units) Purchased (1)	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2)		Total Number of Shares (or Units) Purchased (a)	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (b)
Jan 1—31	36,549	$	15.85	—	$	203,016,273	16,944	$	11.84	—	$	203,016,273
Feb 1—28	58,157	16.07		—	203,016,273		10,722	14.42		—	203,016,273
March 1—31	8,750	13.60		—	203,016,273		2,311	13.00		—	203,016,273
Total	103,456	$	15.79	—	$	203,016,273	29,977	$	12.85	—	$	203,016,273


~~(1)~~(a)	The total number of shares purchased relates to ~~103,456~~29,977 shares withheld from employees to satisfy minimum tax withholding obligations that occur upon vesting of restricted stock units. These shares were not purchased as part of a publicly announced repurchase plan or program.



		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	File No.	Exhibit(s)	Filing Date
3.0	Restated Certificate of Incorporation of Mattel, Inc.	8-K	001-05647	99.0	May 21, 2007
3.1	Amended and Restated Bylaws of Mattel, Inc.	8-K	001-05647	3.1	January 30, 2017
4.0	Specimen Stock Certificate with respect to Mattel, Inc.	10-Q	001-05647	4.0	August 3, 2007
12.0*	Computation of Ratio of Earnings to Fixed Charges
31.0*	Certification of Principal Executive Officer dated April 26, 2018 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.1*	Certification of Principal Financial Officer dated April 26, 2018 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.0**	Certifications of Principal Executive Officer and Principal Financial Officer dated April 26, 2018 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Foreign Joinder Agreement, dated as of March 29, 2018, by and among Mattel France, each of the French Revolving Lenders party thereto, Bank of America Merrill Lynch International Limited, in its capacity as French Swingline Lender and Bank of America, N.A., in its capacity as Global Administrative Agent under the Syndicated Facility Agreement dated as of December 20, 2017, among Mattel, Inc., each of the other borrowers and guarantors party thereto, the lenders party thereto, Bank of America, N.A., as Global Administrative Agent, Collateral Agent and Australian Security Trustee, and the other parties thereto.	8-K	001-05647	99.1	April 3, 2018
99.2	Foreign Joinder Agreement, dated as of March 28, 2018, by and among Mattel España, S.A., each of the Spanish Revolving Lenders party thereto, Bank of America Merrill Lynch International Limited, in its capacity as Spanish Swingline Lender and Bank of America, N.A., in its capacity as Global Administrative Agent under the Syndicated Facility Agreement dated as of December 20, 2017, among Mattel, Inc., each of the other borrowers and guarantors party thereto, the lenders party thereto, Bank of America, N.A., as Global Administrative Agent, Collateral Agent and Australian Security Trustee, and the other parties thereto.	8-K	001-05647	99.2	April 3, 2018
99.3	Foreign Joinder Agreement, dated as of March 29, 2018, by and among Mattel Europa B.V., Mattel U.K. Limited, HIT Entertainment Limited, Gullane (Thomas) Limited, Mattel GMBH, each of the European (GNU) Subsidiary Guarantors party thereto, each of the European (GNU) Revolving Lenders party thereto and Bank of America, N.A., in its capacity as European (GNU) Swingline Lender and its capacity as Global Administrative Agent under the Syndicated Facility Agreement dated as of December 20, 2017, among Mattel, Inc., each of the other borrowers and guarantors party thereto, the lenders party thereto, Bank of America, N.A., as Global Administrative Agent, Collateral Agent and Australian Security Trustee, and the other parties thereto.	8-K	001-05647	99.3	April 3, 2018



+	Management contract or compensatory plan or arrangement.
*	Filed herewith.
**	Furnished herewith. This exhibit should not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934.



	MATTEL, INC. Registrant

	By:		/s/ J~~OSEPH~~ ~~B. JOHNSON~~ Joseph J. Euteneuer
			Joseph ~~B. Johnson~~ ~~Senior Vice President and Corporate~~ ~~Controller (Duly authorized~~J. Euteneuer Chief Financial Officer ~~and~~ ~~Chief Accounting~~ (Principal Financial Officer)