MATTEL INC /DE/ (Form: 10-Q, Received: 10/27/2015 13:52:56)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-05647

MATTEL, INC.

(Exact name of registrant as specified in its charter)

Delaware

95-1567322

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)


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

(310) 252-2000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report):

NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Number of shares outstanding of registrant’s common stock, $1.00 par value, as of October 16, 2015:

339,354,128 shares

MATTEL, INC. AND SUBSIDIARIES


		Page
	PART I

Item 1.	Financial Statements		3

	Consolidated Balance Sheets		3

	Consolidated Statements of Operations		4

	Consolidated Statements of Comprehensive Income (Loss)		5

	Consolidated Statements of Cash Flows		6

	Notes to Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		41

Item 4.	Controls and Procedures		42

	PART II

Item 1.	Legal Proceedings		43

Item 1A.	Risk Factors		43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		43

Item 3.	Defaults Upon Senior Securities		43

Item 4.	Mine Safety Disclosures		43

Item 5.	Other Information		43

Item 6.	Exhibits		44

	Signature		46

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements.

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	September 30, 2015			September 30, 2014			December 31, 2014
	(Unaudited; in thousands, except share data)
ASSETS
Current Assets
Cash and equivalents	$	289,697		$	262,172		$	971,650
Accounts receivable, net		1,451,250			1,695,358			1,094,452
Inventories		870,785			824,270			561,755
Prepaid expenses and other current assets		571,487			543,673			559,074

Total current assets		3,183,219			3,325,473			3,186,931

Noncurrent Assets
Property, plant, and equipment, net		721,299			710,612			737,869
Goodwill		1,387,959			1,398,984			1,392,925
Other noncurrent assets		1,357,053			1,458,478			1,404,258

Total Assets	$	6,649,530		$	6,893,547		$	6,721,983

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings	$	161,008		$	52,500		$	—
Accounts payable		560,668			456,594			430,259
Accrued liabilities		688,004			653,798			639,844
Income taxes payable		31,918			47,388			18,783

Total current liabilities		1,441,598			1,210,280			1,088,886

Noncurrent Liabilities
Long-term debt		2,100,000			2,100,000			2,100,000
Other noncurrent liabilities		535,269			515,433			584,026

Total noncurrent liabilities		2,635,269			2,615,433			2,684,026

Stockholders’ Equity
Common stock $1.00 par value, 1.0 billion shares authorized; 441.4 million shares issued		441,369			441,369			441,369
Additional paid-in capital		1,779,176			1,751,566			1,767,096
Treasury stock at cost: 102.1 million shares, 102.6 million shares, and 103.3 million shares, respectively		(2,503,757	)		(2,508,837	)		(2,533,566	)
Retained earnings		3,660,796			3,876,423			3,896,261
Accumulated other comprehensive loss		(804,921	)		(492,687	)		(622,089	)

Total stockholders’ equity		2,572,663			3,067,834			2,949,071

Total Liabilities and Stockholders’ Equity	$	6,649,530		$	6,893,547		$	6,721,983

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


	For the Three Months Ended						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(Unaudited; in thousands, except per share amounts)
Net Sales	$	1,791,968		$	2,021,424		$	3,702,869		$	4,029,853
Cost of sales		912,371			1,000,286			1,899,966			2,034,614

Gross Profit		879,597			1,021,138			1,802,903			1,995,239
Advertising and promotion expenses		213,245			218,746			420,417			409,433
Other selling and administrative expenses		365,579			392,913			1,135,617			1,169,101

Operating Income		300,773			409,479			246,869			416,705
Interest expense		21,409			21,009			62,516			57,220
Interest (income)		(1,990	)		(1,773	)		(5,757	)		(5,238	)
Other non-operating (income), net		(4,785	)		(3,937	)		(2,984	)		(5,665	)

Income Before Income Taxes		286,139			394,180			193,094			370,388
Provision for income taxes		62,355			62,344			38,838			21,445

Net Income	$	223,784		$	331,836		$	154,256		$	348,943

Net Income Per Common Share—Basic	$	0.66		$	0.97		$	0.45		$	1.02

Weighted average number of common shares		339,420			338,728			338,954			339,216

Net Income Per Common Share—Diluted	$	0.66		$	0.97		$	0.45		$	1.02

Weighted average number of common and potential common shares		339,790			340,329			339,544			341,167

Dividends Declared Per Common Share	$	0.38		$	0.38		$	1.14		$	1.14

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	For the Three Months Ended						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(Unaudited; in thousands)
Net Income	$	223,784		$	331,836		$	154,256		$	348,943
Other Comprehensive (Loss) Income, Net of Tax:
Currency translation adjustments		(90,486	)		(117,713	)		(179,802	)		(80,335	)
Defined benefit pension plan adjustments		6,724			2,217			6,311			6,962
Net unrealized (losses) gains on derivative instruments:
Unrealized holding gains		8,866			19,745			32,367			15,437
Reclassification adjustment for realized (gains) losses included in net income		(19,152	)		3,328			(41,708	)		8,925

		(10,286	)		23,073			(9,341	)		24,362

Other Comprehensive (Loss) Income, Net of Tax		(94,048	)		(92,423	)		(182,832	)		(49,011	)

Comprehensive Income (Loss)	$	129,736		$	239,413		$	(28,576	)	$	299,932

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

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Nine Months Ended
	September 30, 2015			September 30, 2014
	(Unaudited; in thousands)
Cash Flows From Operating Activities:
Net income	$	154,256		$	348,943
Adjustments to reconcile net income to net cash flows used for operating activities:
Depreciation		173,026			151,959
Amortization		24,396			25,213
Deferred income taxes		(14,551	)		(23,677	)
Tax deficiency (benefit) from share-based payment arrangements		3,114			(19,746	)
Share-based compensation		41,130			36,510
(Decrease) increase from changes in assets and liabilities, net of acquired assets and liabilities:
Accounts receivable		(411,829	)		(442,843	)
Inventories		(349,476	)		(215,316	)
Prepaid expenses and other current assets		(24,369	)		(5,737	)
Accounts payable, accrued liabilities, and income taxes payable		180,969			(288	)
Other, net		996			672

Net cash flows used for operating activities		(222,338	)		(144,310	)

Cash Flows From Investing Activities:
Purchases of tools, dies, and molds		(95,751	)		(102,803	)
Purchases of other property, plant, and equipment		(74,856	)		(69,323	)
Payments for acquisition, net of cash acquired		—			(423,309	)
Payments for foreign currency forward exchange contracts		(68,443	)		(9,362	)
Other, net		33,091			439

Net cash flows used for investing activities		(205,959	)		(604,358	)

Cash Flows From Financing Activities:
Payments of short-term borrowings, net		—			(4,278	)
Proceeds from short-term borrowings, net		161,008			52,500
Payments of long-term borrowings		—			(44,587	)
Proceeds from long-term borrowings, net		—			495,459
Share repurchases		—			(128,165	)
Payments of dividends on common stock		(386,102	)		(386,360	)
Proceeds from exercise of stock options		10,458			20,866
Tax (deficiency) benefit from share-based payment arrangements		(3,114	)		19,746
Other, net		(12,216	)		(45,237	)

Net cash flows used for financing activities		(229,966	)		(20,056	)

Effect of Currency Exchange Rate Changes on Cash		(23,690	)		(8,320	)

Decrease in Cash and Equivalents		(681,953	)		(777,044	)
Cash and Equivalents at Beginning of Period		971,650			1,039,216

Cash and Equivalents at End of Period	$	289,697		$	262,172

The accompanying notes are an integral part of these 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 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 for interim periods are not necessarily indicative of those that may be expected for a full year.

The year-end balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the consolidated financial statements do not include all disclosures required by GAAP.

The financial information included herein should be read in conjunction with Mattel’s consolidated financial statements and related notes in its 2014 Annual Report on Form 10-K.

2.	Accounts Receivable

Accounts receivable are net of allowances for doubtful accounts of $26.0 million, $22.0 million, and $26.3 million as of September 30, 2015, September 30, 2014, and December 31, 2014, respectively.

3.	Inventories

Inventories include the following:


	September 30, 2015		September 30, 2014		December 31, 2014
	(In thousands)
Raw materials and work in process	$	126,261	$	125,536	$	88,395
Finished goods		744,524		698,734		473,360

	$	870,785	$	824,270	$	561,755

4.	Property, Plant, and Equipment

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


	September 30, 2015			September 30, 2014			December 31, 2014
	(In thousands)
Land	$	27,055		$	27,609		$	27,465
Buildings		273,139			273,261			274,452
Machinery and equipment		748,247			701,476			728,299
Software		327,190			331,324			316,374
Tools, dies, and molds		820,772			773,059			782,507
Capital leases		23,970			23,970			23,970
Leasehold improvements		242,060			239,407			242,177

		2,462,433			2,370,106			2,395,244
Less: accumulated depreciation		(1,741,134	)		(1,659,494	)		(1,657,375	)

	$	721,299		$	710,612		$	737,869

5.	Goodwill

Goodwill is allocated to various reporting units, which are at the operating segment level, for purposes 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. In the third quarter of 2015, Mattel performed its annual impairment tests and determined that goodwill was not impaired since each reporting unit’s fair value exceeded its carrying value.

The change in the carrying amount of goodwill by operating segment for the nine months ended September 30, 2015 is shown below. Brand-specific goodwill held by foreign subsidiaries is allocated to the North America and American Girl operating segments selling those brands, thereby causing a foreign currency translation impact for these operating segments.


	December 31, 2014		Currency Exchange Rate Impact			September 30, 2015
	(In thousands)
North America	$	720,939	$	(1,035	)	$	719,904
International		458,766		(3,501	)		455,265
American Girl		213,220		(430	)		212,790

Total goodwill	$	1,392,925	$	(4,966	)	$	1,387,959

Acquisition of MEGA Brands Inc.

On April 30, 2014, Mattel acquired MEGA Brands Inc., a corporation incorporated under the laws of Canada (“MEGA Brands”), pursuant to the Arrangement Agreement dated as of February 27, 2014, between MEGA Brands, Mattel Overseas Operations Ltd., a corporation incorporated under the laws of Bermuda, Mattel-MEGA Holdings Inc., a corporation incorporated under the laws of Canada (the “Purchasing Subsidiary”), and, with respect to certain provisions thereof, Mattel (the “Arrangement Agreement”). Pursuant to the terms set forth in the Arrangement Agreement, Mattel indirectly acquired, through the Purchasing Subsidiary, 100% of the issued and outstanding common shares and warrants of MEGA Brands for total cash consideration of $454.9 million, including payment for cash acquired of $31.6 million. The acquisition of MEGA Brands builds upon Mattel’s portfolio of brands by expanding into the construction building sets and arts and crafts categories.

The total purchase consideration was allocated to the assets acquired and liabilities assumed based on their estimated fair values. As a result of the acquisition, Mattel recognized $95.0 million of identifiable intangible assets (primarily related to trade names and existing product lines), $40.6 million of net assets acquired (which included $31.6 million of cash, $36.6 million of accounts receivable, $83.0 million of inventory, $32.5 million of property, plant, and equipment, $66.6 million of accounts payable and accrued liabilities, $44.6 million of long-term debt, and $31.9 million of other net liabilities), and $319.3 million of goodwill, which is not deductible for tax purposes. The fair values of the identifiable intangible assets related to trade names were based on the relief from royalty method, using Level 3 inputs within the fair value hierarchy, which included forecasted future cash flows, long-term revenue growth rates, royalty rates, and discount rates. The fair values of the identifiable intangible assets related to existing product lines were estimated based on the multi-period excess earnings method, using Level 3 inputs within the fair value hierarchy, which included forecasted future cash flows, long-term revenue growth rates, and discount rates. Goodwill relates to a number of factors built into the purchase price, including the future earnings and cash flow potential of the business, as well as the complementary strategic fit and the resulting synergies it brings to Mattel’s existing operations.

Mattel finalized the valuation of the assets acquired and liabilities assumed in the first quarter of 2015, which resulted in adjustments to the purchase price allocation during the measurement period. As such, Mattel has retrospectively adjusted the provisional amounts recorded in its consolidated balance sheets as of September 30, 2014 and December 31, 2014 as if the valuation of the assets acquired and liabilities assumed was finalized on the acquisition date. For the consolidated balance sheet as of September 30, 2014, the retrospective adjustments resulted in a decrease to net assets acquired of approximately $9 million and an increase to goodwill of approximately $9 million. For the consolidated balance sheet as of December 31, 2014, the retrospective adjustments resulted in an increase to net assets acquired of approximately $1 million and a decrease to goodwill of approximately $1 million.

During the three and nine months ended September 30, 2015, Mattel recognized approximately $3 million and $13 million of integration costs, respectively. During the three and nine months ended September 30, 2014, Mattel recognized approximately $5 million and $9 million of integration costs, respectively. There were no transaction costs during the three months ended September 30, 2014. During the nine months ended September 30, 2014, Mattel recognized approximately $7 million of transaction costs. Integration and transaction costs are recorded within other selling and administrative expenses in the consolidated statements of operations. The pro forma and actual results of operations for this acquisition have not been presented because they are not material.

6.	Other Noncurrent Assets

Other noncurrent assets include the following:


	September 30, 2015		September 30, 2014		December 31, 2014
	(In thousands)
Nonamortizable identifiable intangibles	$	492,979	$	506,363	$	498,517
Deferred income taxes		390,109		419,197		385,434
Identifiable intangibles (net of amortization of $124.6 million, $89.0 million, and $103.6 million, respectively)		219,311		249,520		240,227
Other		254,654		283,398		280,080

	$	1,357,053	$	1,458,478	$	1,404,258

In connection with the acquisition of MEGA Brands, as more fully described in “Note 5 to the Consolidated Financial Statements—Goodwill” of this Quarterly Report on Form 10-Q, Mattel recognized $95.0 million of amortizable identifiable intangible assets, primarily related to trade names and existing product lines.

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 2015, Mattel performed its annual impairment assessments and determined that its nonamortizable intangible assets were not impaired.

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 determined to not be impaired during the three and nine months ended September 30, 2015.

7.	Accrued Liabilities

Accrued liabilities include the following:


	September 30, 2015		September 30, 2014		December 31, 2014
	(In thousands)
Advertising and promotion	$	116,529	$	87,306	$	88,132
Royalties		111,082		102,504		112,823
Taxes other than income taxes		70,815		71,190		53,182
Other		389,578		392,798		385,707

	$	688,004	$	653,798	$	639,844

8.	Seasonal Financing

Mattel maintains and periodically amends or replaces its domestic unsecured committed revolving credit facility with a commercial bank group. The credit facility is used as a back-up to Mattel’s commercial paper program, which is used as the primary source of financing for the seasonal working capital requirements of its domestic subsidiaries. The agreement governing the credit facility was amended and restated on June 8, 2015 to, among other things, (i) extend the maturity date of the credit facility to June 9, 2020, (ii) amend the definition of consolidated earnings before interest, taxes, depreciation, and amortization (“Consolidated EBITDA”) used in calculating Mattel’s financial ratio covenants, and (iii) increase the maximum allowed consolidated debt-to-Consolidated EBITDA ratio to 3.50 to 1. The aggregate commitments under the credit facility remain at $1.60 billion, with an “accordion feature,” which allows Mattel to increase the aggregate availability under the credit facility to $1.85 billion under certain circumstances. In addition, applicable interest rate margins remain within a range of 0.00% to 0.75% above the applicable base rate for base rate loans and 0.88% to 1.75% above the applicable LIBOR for Eurodollar rate loans, and the commitment fees range from 0.08% to 0.25% of the unused commitments under the credit facility, in each case depending on Mattel’s senior unsecured long-term debt rating.

The proportion of unamortized debt issuance costs from the prior credit facility renewal related to creditors involved in both the prior credit facility and amended credit facility and borrowing costs incurred as a result of the amendment were deferred, and such costs will be amortized over the term of the amended credit facility.

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

9.	Long-Term Debt

Long-term debt includes the following:


	September 30, 2015		September 30, 2014		December 31, 2014
	(In thousands)
2010 Senior Notes due October 2020 and October 2040	$	500,000	$	500,000	$	500,000
2011 Senior Notes due November 2016 and November 2041		600,000		600,000		600,000
2013 Senior Notes due March 2018 and March 2023		500,000		500,000		500,000
2014 Senior Notes due May 2019		500,000		500,000		500,000

		2,100,000		2,100,000		2,100,000
Less: current portion		—		—		—

Total long-term debt	$	2,100,000	$	2,100,000	$	2,100,000

10.

Other Noncurrent Liabilities

Other noncurrent liabilities include the following:


	September 30, 2015		September 30, 2014		December 31, 2014
	(In thousands)
Benefit plan liabilities	$	203,251	$	183,933	$	229,963
Noncurrent tax liabilities		168,704		166,244		171,181
Other		163,314		165,256		182,882

	$	535,269	$	515,433	$	584,026

11.

Accumulated Other Comprehensive Income (Loss)

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


	For the Three Months Ended September 30, 2015
	Derivative Instruments			Defined Benefit Pension Plans			Currency Translation Adjustments			Total
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of June 30, 2015	$	30,970		$	(161,920	)	$	(579,923	)	$	(710,873	)
Other comprehensive income (loss) before reclassifications		8,866			(103	)		(90,486	)		(81,723	)
Amounts reclassified from accumulated other comprehensive income (loss)		(19,152	)		6,827			—			(12,325	)

Net (decrease) increase in other comprehensive income (loss)		(10,286	)		6,724			(90,486	)		(94,048	)

Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2015	$	20,684		$	(155,196	)	$	(670,409	)	$	(804,921	)


	For the Nine Months Ended September 30, 2015
	Derivative Instruments			Defined Benefit Pension Plans			Currency Translation Adjustments			Total
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2014	$	30,025		$	(161,507	)	$	(490,607	)	$	(622,089	)
Other comprehensive income (loss) before reclassifications		32,367			(1,053	)		(179,802	)		(148,488	)
Amounts reclassified from accumulated other comprehensive income (loss)		(41,708	)		7,364			—			(34,344	)

Net (decrease) increase in other comprehensive income (loss)		(9,341	)		6,311			(179,802	)		(182,832	)

Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2015	$	20,684		$	(155,196	)	$	(670,409	)	$	(804,921	)



	For the Three Months Ended September 30, 2014
	Derivative Instruments			Defined Benefit Pension Plans			Currency Translation Adjustments			Total
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of June 30, 2014	$	(9,500	)	$	(127,201	)	$	(263,563	)	$	(400,264	)
Other comprehensive income (loss) before reclassifications		19,745			139			(117,713	)		(97,829	)
Amounts reclassified from accumulated other comprehensive income (loss)		3,328			2,078			—			5,406

Net increase (decrease) in other comprehensive income (loss)		23,073			2,217			(117,713	)		(92,423	)

Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2014	$	13,573		$	(124,984	)	$	(381,276	)	$	(492,687	)


	For the Nine Months Ended September 30, 2014
	Derivative Instruments			Defined Benefit Pension Plans			Currency Translation Adjustments			Total
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2013	$	(10,789	)	$	(131,946	)	$	(300,941	)	$	(443,676	)
Other comprehensive income (loss) before reclassifications		15,437			511			(80,335	)		(64,387	)
Amounts reclassified from accumulated other comprehensive income (loss)		8,925			6,451			—			15,376

Net increase (decrease) in other comprehensive income (loss)		24,362			6,962			(80,335	)		(49,011	)

Accumulated Other Comprehensive Income (Loss), Net of Tax, as of September 30, 2014	$	13,573		$	(124,984	)	$	(381,276	)	$	(492,687	)

The following 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 September 30, 2015			For the Three Months Ended September 30, 2014			Statements of Operations Classification
	(In thousands)
Derivative Instruments
Gain (loss) on foreign currency forward exchange contracts	$	18,909		$	(3,671	)	Cost of sales
		243			343		Provision for income taxes

	$	19,152		$	(3,328	)	Net income

Defined Benefit Pension Plans
Amortization of prior service (cost) credit	$	(6	)	$	264		(a)
Recognized actuarial loss		(3,172	)		(3,462	)	(a)
Settlement loss		(5,233	)		—		Other selling and administrative expenses

		(8,411	)		(3,198	)
		1,584			1,120		Provision for income taxes

	$	(6,827	)	$	(2,078	)	Net income



	For the Nine Months Ended September 30, 2015			For the Nine Months Ended September 30, 2014			Statements of Operations Classification
	(In thousands)
Derivative Instruments
Gain (loss) on foreign currency forward exchange contracts	$	41,290		$	(9,248	)	Cost of sales
		418			323		Provision for income taxes

	$	41,708		$	(8,925	)	Net income

Defined Benefit Pension Plans
Amortization of prior service credit	$	522		$	792		(a)
Recognized actuarial loss		(13,030	)		(10,788	)	(a)
Curtailment gain		8,639			—		Other selling and administrative expenses
Settlement loss		(5,233	)		—		Other selling and administrative expenses

		(9,102	)		(9,996	)
		1,738			3,545		Provision for income taxes

	$	(7,364	)	$	(6,451	)	Net income

(a)

The amortization of prior service (cost) credit and recognized actuarial loss are included in the computation of net periodic benefit cost. Refer to “Note 15 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 US dollar. The translation of its net investments in subsidiaries with non-US 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 dollar functional currencies are translated into US 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 loss of $179.8 million for the nine months ended September 30, 2015, primarily due to the weakening of the Euro, Mexican peso, and Brazilian real against the US dollar. Currency translation adjustments resulted in a net loss of $80.3 million for the nine months ended September 30, 2014, primarily due to the weakening of the Euro, Mexican peso, and Brazilian real against the US dollar.

12.

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 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 and a cross currency swap contract to hedge intercompany loans and advances denominated in foreign currencies. Due to the short-term nature of the contracts involved, Mattel has not designated 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 September 30, 2015, September 30, 2014, and December 31, 2014, Mattel held foreign currency forward exchange contracts with notional amounts of approximately $972 million, $1.11 billion, and $1.19 billion, respectively. As of September 30, 2015, Mattel also held a cross currency swap contract with a notional amount of approximately $30 million.

The following table presents Mattel’s derivative assets and liabilities:


	Derivative Assets
	Balance Sheet Classification	Fair Value
		September 30, 2015		September 30, 2014		December 31, 2014
				(In thousands)
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Prepaid expenses and other current assets	$	21,138	$	31,908	$	31,982
Foreign currency forward exchange contracts	Other noncurrent assets		1,027		1,829		1,443

Total derivatives designated as hedging instruments		$	22,165	$	33,737	$	33,425

Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	Prepaid expenses and other current assets	$	827	$	165	$	318
Cross currency swap contract	Prepaid expenses and other current assets		5,288		—		—

Total derivatives not designated as hedging instruments		$	6,115	$	165	$	318

Total		$	28,280	$	33,902	$	33,743


	Derivative Liabilities
	Balance Sheet Classification	Fair Value
		September 30, 2015		September 30, 2014		December 31, 2014
				(In thousands)
Derivatives designated as hedging instruments:
Foreign currency forward exchange contracts	Accrued liabilities	$	6,773	$	5,697	$	2,408
Foreign currency forward exchange contracts	Other noncurrent liabilities		672		395		36

Total derivatives designated as hedging instruments		$	7,445	$	6,092	$	2,444

Derivatives not designated as hedging instruments:
Foreign currency forward exchange contracts	Accrued liabilities	$	816	$	6,504	$	10,954

Total		$	8,261	$	12,596	$	13,398

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 September 30, 2015				For the Three Months Ended September 30, 2014					Statements of Operations Classification
	Amount of Gain (Loss) Recognized in OCI		Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations		Amount of Gain (Loss) Recognized in OCI		Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations			Statements of Operations Classification
	(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward exchange contracts	$	8,866	$	19,152	$	19,745	$	(3,328	)		Cost of sales


	For the Nine Months Ended September 30, 2015				For the Nine Months Ended September 30, 2014					Statements of Operations Classification
	Amount of Gain (Loss) Recognized in OCI		Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations		Amount of Gain (Loss) Recognized in OCI		Amount of Gain (Loss) Reclassified from Accumulated OCI to Statements of Operations			Statements of Operations Classification
	(In thousands)
Derivatives designated as hedging instruments
Foreign currency forward exchange contracts	$	32,367	$	41,708	$	15,437	$	(8,925	)		Cost of sales

The net gains of $19.2 million and $41.7 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three and nine months ended September 30, 2015, respectively, and the net losses of $3.3 million and $8.9 million reclassified from accumulated other comprehensive loss to the consolidated statements of operations for the three and nine months ended September 30, 2014, respectively, are offset by the changes in cash flows associated with the underlying hedged transactions.


	Amount of Gain (Loss) Recognized in the Statements of Operations						Statements of Operations Classification
	For the Three Months Ended September 30, 2015			For the Three Months Ended September 30, 2014			Statements of Operations Classification
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward exchange contracts	$	(14,711	)	$	(26,632	)	Non-operating income/expense
Cross currency swap contract		6,085			—		Non-operating income/expense
Foreign currency forward exchange contracts		896			292		Cost of sales

Total	$	(7,730	)	$	(26,340	)


	Amount of Gain (Loss) Recognized in the Statements of Operations						Statements of Operations Classification
	For the Nine Months Ended September 30, 2015			For the Nine Months Ended September 30, 2014			Statements of Operations Classification
	(In thousands)
Derivatives not designated as hedging instruments
Foreign currency forward exchange contracts	$	(55,033	)	$	(16,863	)	Non-operating income/expense
Cross currency swap contract		5,288			—		Non-operating income/expense
Foreign currency forward exchange contracts		(3	)		978		Cost of sales

Total	$	(49,748	)	$	(15,885	)

The net losses of $7.7 million and $49.7 million recognized in the consolidated statements of operations for the three and nine months ended September 30, 2015, respectively, and the net losses of $26.3 million and $15.9 million recognized in the consolidated statements of operations for the three and nine months ended September 30, 2014, respectively, are offset by foreign currency transaction gains and losses on the related hedged balances.

13.

Fair Value Measurements

The following table presents information about Mattel’s assets and liabilities measured and reported in the financial statements at fair value 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:


	September 30, 2015
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange contracts (a)	$	—	$	22,992	$	—	$	22,992
Cross currency swap contract (a)		—		5,288		—		5,288

Total assets	$	—	$	28,280	$	—	$	28,280

Liabilities:
Foreign currency forward exchange contracts (a)	$	—	$	8,261	$	—	$	8,261


	September 30, 2014
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange contracts (a)	$	—	$	33,902	$	—	$	33,902
Auction rate security (b)		—		—		31,142		31,142

Total assets	$	—	$	33,902	$	31,142	$	65,044

Liabilities:
Foreign currency forward exchange contracts (a)	$	—	$	12,596	$	—	$	12,596


	December 31, 2014
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Foreign currency forward exchange contracts (a)	$	—	$	33,743	$	—	$	33,743
Auction rate security (b)		—		—		30,960		30,960

Total assets	$	—	$	33,743	$	30,960	$	64,703

Liabilities:
Foreign currency forward exchange contracts (a)	$	—	$	13,398	$	—	$	13,398

(a)

The fair values of the foreign currency forward exchange contracts and the cross currency swap contract are based on dealer quotes of market forward rates and reflect 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 auction rate security was estimated using a discounted cash flow model based on (i) estimated interest rates, timing, and amount of cash flows, (ii) credit spreads, recovery rates, and credit quality of the underlying securities, (iii) illiquidity considerations, and (iv) market correlation.

During the quarter, Mattel sold its auction rate security and received proceeds of $32.3 million, resulting in a gain of $1.3 million for the nine months ended September 30, 2015. The following table presents information about Mattel’s investments measured and reported at fair value on a recurring basis using significant Level 3 inputs:


	Level 3
	(In thousands)
Balance at December 31, 2014	$	30,960
Proceeds from sale		(32,250	)
Gain on sale		1,290

Balance at September 30, 2015	$	—

Other Financial Instruments

Mattel’s financial instruments include cash and equivalents, accounts receivable and payable, short-term borrowings, and accrued liabilities. The fair values of these instruments approximate their carrying values because of their short-term nature and 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 $2.15 billion (compared to a carrying value of $2.10 billion) as of September 30, 2015, $2.19 billion (compared to a carrying value of $2.10 billion) as of September 30, 2014, and $2.18 billion (compared to a carrying value of $2.10 billion) as of December 31, 2014. 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.

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 of Mattel’s restricted stock units (“RSUs”) are considered participating securities because they contain 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 and nine months ended September 30, 2015 and 2014:


	For the Three Months Ended						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(In thousands, except per share amounts)
Basic:
Net income	$	223,784		$	331,836		$	154,256		$	348,943
Less: net income allocable to participating RSUs (a)		(1,036	)		(2,338	)		(2,393	)		(2,521	)

Net income available for basic common shares	$	222,748		$	329,498		$	151,863		$	346,422

Weighted average common shares outstanding		339,420			338,728			338,954			339,216

Basic net income per common share	$	0.66		$	0.97		$	0.45		$	1.02

Diluted:
Net income	$	223,784		$	331,836		$	154,256		$	348,943
Less: net income allocable to participating RSUs (a)		(1,035	)		(2,330	)		(2,393	)		(2,523	)

Net income available for diluted common shares	$	222,749		$	329,506		$	151,863		$	346,420
Weighted average common shares outstanding		339,420			338,728			338,954			339,216
Weighted average common equivalent shares arising from:
Dilutive stock options and non-participating RSUs		370			1,601			590			1,951

Weighted average number of common and potential common shares		339,790			340,329			339,544			341,167

Diluted net income per common share	$	0.66		$	0.97		$	0.45		$	1.02

(a)

During the three and nine months ended September 30, 2015 and 2014, Mattel allocated a proportionate share of both dividends and undistributed earnings to participating RSUs.

The calculation of potential common shares assumes the exercise of dilutive stock options and vesting of non-participating RSUs, net of assumed treasury share repurchases at average market prices. Nonqualified stock options and non-participating RSUs totaling 14.9 million and 8.6 million shares were excluded from the calculation of diluted net income per common share for the three and nine months ended September 30, 2015, respectively, because they were antidilutive. Nonqualified stock options and non-participating RSUs totaling 3.6 million and 2.2 million shares were excluded from the calculation of diluted net income per common share for the three and nine months ended September 30, 2014, respectively, because they were antidilutive.

15.

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 2014 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						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(In thousands)
Service cost	$	624		$	2,120		$	4,988		$	7,432
Interest cost		7,036			6,747			19,568			20,666
Expected return on plan assets		(7,356	)		(7,826	)		(22,629	)		(23,849	)
Amortization of prior service cost (credit)		6			(264	)		(522	)		(792	)
Recognized actuarial loss		3,138			3,600			12,919			10,776
Curtailment gain		—			—			(8,639	)		—
Settlement loss		5,233			—			5,233			—

	$	8,681		$	4,377		$	10,918		$	14,233


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

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(In thousands)
Service (credit) cost	$	(1	)	$	11		$	41		$	51
Interest cost		270			129			896			1,033
Recognized actuarial loss (gain)		34			(138	)		111			12

	$	303		$	2		$	1,048		$	1,096

During the nine months ended September 30, 2015, Mattel made cash contributions totaling approximately $31 million and $2 million related to its defined benefit pension and postretirement benefit plans, respectively. During the remainder of 2015, Mattel expects to make additional cash contributions of approximately $5 million.

16.

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 7 to the Consolidated Financial Statements–Share-Based Payments” in its 2014 Annual Report on Form 10-K. Under the Mattel, Inc. 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 years from the date of grant. Both stock options and time-vesting RSUs generally provide for vesting over a period of three years from the date of grant.

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				For the Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(In thousands)
Stock option compensation expense	$	4,644	$	3,448	$	11,833	$	7,682
RSU compensation expense		9,196		8,590		29,297		28,828

	$	13,840	$	12,038	$	41,130	$	36,510

As of September 30, 2015, total unrecognized compensation cost related to unvested share-based payments totaled $97.1 million and is expected to be recognized over a weighted-average period of 2.1 years.

Mattel uses treasury shares purchased under its share repurchase program to satisfy stock option exercises and the vesting of RSUs. Cash received for stock option exercises for the nine months ended September 30, 2015 and 2014 was $10.5 million and $20.9 million, respectively.

17.

Other Selling and Administrative Expenses

Other selling and administrative expenses include the following:


	For the Three Months Ended				For the Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(In thousands)
Design and development	$	54,278	$	53,215	$	164,824	$	154,274
Identifiable intangible asset amortization		7,035		11,818		20,963		22,071

18.

Foreign Currency Transaction Gains and Losses

Currency exchange rate fluctuations 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 in the consolidated statements of operations. For hedges of 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 as well as the offsetting transaction gains or losses on the related hedged items, along with unhedged items, are recognized in other non-operating income (expense), net in the consolidated statements of operations. Inventory purchase and sale transactions denominated in the Euro, British pound sterling, Mexican peso, Brazilian real, and Indonesian rupiah are the primary transactions that cause foreign currency transaction exposure for Mattel.

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


	For the Three Months Ended					For the Nine Months Ended
	September 30, 2015			September 30, 2014		September 30, 2015			September 30, 2014
	(In thousands)
Operating income	$	(16,463	)	$	13,881	$	7,976		$	29,672
Other non-operating income (expense), net		(2,926	)		3,729		(6,324	)		2,805

Net transaction (losses) gains	$	(19,389	)	$	17,610	$	1,652		$	32,477

19.

Income Taxes

Mattel’s provision for income taxes was $38.8 million and $21.4 million for the nine months ended September 30, 2015 and 2014, respectively. During the three and nine months ended September 30, 2015, Mattel recognized net discrete tax expense of $0.8 million and net discrete benefits of $2.8 million, respectively, primarily related to reassessments of prior years’ tax liabilities based on the status of audits and tax filings in various jurisdictions around the world, settlements, and enacted tax law changes. During the three and nine months ended September 30, 2014, Mattel recognized net discrete tax benefits of $15.1 million and $51.4 million, respectively, primarily related to reassessments of prior years’ tax liabilities based on the status of audits and tax filings in various jurisdictions around the world, settlements, and enacted tax law changes.

Mattel may incur a capital loss, for tax purposes only, in the next twelve months due to the sale of assets that are not significant to its business. This capital loss is due to the disposition of assets with significant tax basis in excess of book basis. Mattel does not expect to utilize this capital loss of approximately $300 million in the applicable five-year carryforward period for tax purposes, and thus is fully offset with a corresponding valuation allowance.

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 $3 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.

20. 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. Mattel believes that MGA’s claim should be barred as a matter of law, and intends to vigorously defend against it. 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. In light of that ruling, Mattel believes that it is reasonably possible that damages in this matter could range from $0 to approximately $12.5 million. In addition, Mattel believes that if such damages are awarded, it is reasonably possible that pre-judgment interest, ranging from $0 to approximately $10 million, could be awarded. Mattel may be entitled to an offset against any damages awarded to MGA. Mattel has not quantified the amount of any such offset as it is not currently estimable. As Mattel believes a loss in this matter is reasonably possible but not probable, 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 15 ^th 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 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 in February 2015, which was made available to Mattel do Brasil on October 7, 2015. Yellowstone’s special appeal seeks 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.

Mattel believes that it is reasonably possible that a loss in this matter could range from $0 to approximately $11.2 million. The high end of this range, approximately $11.2 million, is based on the calculation of the current amount of the damages (reported in the first court-appointed examination report submitted in the lawsuit), and loss of profits (indicated in the complaint by Yellowstone), including interest, inflation, currency adjustments, plus attorney’s fees. Mattel do Brasil will be entitled to offset its counterclaim award of approximately $5 million, the current amount including inflation, and currency adjustment, against such loss. The existence of procedural matters that will be addressed to the Superior Court of Justice adds some uncertainty to the final outcome of the matter. Mattel do Brasil believes, however, that it has valid legal grounds for an appeal of the Appeals Court decision and currently does not believe that a loss is probable for this matter. Accordingly, a liability has not been accrued to date. Mattel do Brasil may be required by the Trial Court to place a bond or the full amount of the damage award in escrow pending an appeal decision by the Superior Courts.

21.

Segment Information

Mattel, through its subsidiaries, sells a broad variety of toy products which are grouped into four major brand categories, including the Construction and Arts & Crafts brand category, which was introduced in the second quarter of 2014:

Mattel Girls & Boys Brands —including Barbie ^® fashion dolls and accessories (“Barbie”), Monster High ^® , Disney Classics ^® , Ever After High ^® , Little Mommy ^® , and Polly Pocket ^® (collectively “Other Girls”), Hot Wheels ^® and Matchbox ^® vehicles and play sets (collectively “Wheels”), and CARS ^® , Disney Planes™, BOOMco™, Radica ^® , Toy Story ^® , Max Steel ^® , WWE ^® Wrestling, Batman ^® , and games and puzzles (collectively “Entertainment”).

Fisher-Price Brands —including Fisher-Price ^® , Little People ^® , BabyGear™, Laugh & Learn ^® , and Imaginext ^® (collectively “Core Fisher-Price”), Thomas & Friends™, Dora the Explorer ^® , Mickey Mouse ^® Clubhouse, and Disney Jake and the Never Land Pirates ^® (collectively “Fisher-Price Friends”), and Power Wheels ^® .

American Girl Brands —including Truly Me™, BeForever™, and Bitty Baby ^® . American Girl Brands products are sold directly to consumers via its catalog, website, and proprietary retail stores. Its children’s publications are also sold to certain retailers.

Construction and Arts & Crafts Brands —including MEGA BLOKS ^® , RoseArt ^® , and Board Dudes ^® .

Mattel’s operating segments are: (i) North America, which consists of the US and Canada, (ii) International, and (iii) American Girl. The North America and International segments sell products in the Mattel Girls & Boys Brands, Fisher-Price Brands, and Construction and Arts & Crafts Brands categories, although some are developed and adapted for particular international markets.

Segment Data

The following tables present information about revenues, income, and assets by segment. 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). Mattel records these adjustments in its financial accounting systems at the time of sale to each customer, but the adjustments are not allocated to individual products. For this reason, Mattel’s chief operating decision maker uses gross sales by segment as one of the metrics to measure segment performance. Such sales adjustments are included in the determination of segment income from operations based on the adjustments recorded in the financial accounting systems. Segment income represents each segment’s operating income, while consolidated operating income represents income from operations before net interest, other non-operating income (expense), 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, share-based payments, and 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 Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(In thousands)
Revenues by Segment
North America	$	1,069,116		$	1,124,463		$	2,053,053		$	2,079,357
International		798,584			989,228			1,732,125			2,048,403
American Girl		115,651			119,025			313,504			317,314

Gross sales		1,983,351			2,232,716			4,098,682			4,445,074
Sales adjustments		(191,383	)		(211,292	)		(395,813	)		(415,221	)

Net sales	$	1,791,968		$	2,021,424		$	3,702,869		$	4,029,853


	For the Three Months Ended						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(In thousands)
Segment Income
North America	$	230,216		$	257,496		$	283,356		$	345,716
International		142,576			183,142			160,250			245,476
American Girl		7,142			7,618			5,617			15,599

		379,934			448,256			449,223			606,791
Corporate and other expense (a)		(79,161	)		(38,777	)		(202,354	)		(190,086	)

Operating income		300,773			409,479			246,869			416,705
Interest expense		21,409			21,009			62,516			57,220
Interest (income)		(1,990	)		(1,773	)		(5,757	)		(5,238	)
Other non-operating (income), net		(4,785	)		(3,937	)		(2,984	)		(5,665	)

Income before income taxes	$	286,139		$	394,180		$	193,094		$	370,388

(a)

Corporate and other expense includes severance and other termination-related costs of $13.3 million and $61.1 million for the three and nine months ended September 30, 2015, respectively, and $5.0 million and $39.1 million for the three and nine months ended September 30, 2014, respectively, and share-based compensation expense of $13.8 million and $41.1 million for the three and nine months ended September 30, 2015, respectively, and $12.0 million and $36.5 million for the three and nine months ended September 30, 2014, respectively.

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


	September 30, 2015		September 30, 2014		December 31, 2014
	(In thousands)
Assets by Segment
North America	$	1,011,546	$	1,078,388	$	698,357
International		1,063,727		1,244,067		778,849
American Girl		147,517		160,754		108,667

		2,222,790		2,483,209		1,585,873
Corporate and other		99,245		36,419		70,334

Accounts receivable and inventories, net	$	2,322,035	$	2,519,628	$	1,656,207

The table below presents worldwide revenues by brand category:


	For the Three Months Ended						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(In thousands)
Worldwide Revenues by Brand Category
Mattel Girls & Boys Brands	$	1,120,612		$	1,323,273		$	2,327,555		$	2,669,111
Fisher-Price Brands		625,277			663,446			1,226,023			1,263,655
American Girl Brands		109,879			113,291			300,128			302,375
Construction and Arts & Crafts Brands		118,480			123,415			221,560			185,015
Other		9,103			9,291			23,416			24,918

Gross sales		1,983,351			2,232,716			4,098,682			4,445,074
Sales adjustments		(191,383	)		(211,292	)		(395,813	)		(415,221	)

Net sales	$	1,791,968		$	2,021,424		$	3,702,869		$	4,029,853

22.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition, and most industry-specific guidance. The core principle of the guidance 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. ASU 2014-09 was originally effective for interim and annual reporting periods beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date, which defers the effective date to annual reporting periods beginning after December 15, 2017. Early application is permitted after December 15, 2016. Mattel is currently evaluating the impact of the adoption of ASU 2014-09 and ASU 2015-14 on its operating results and financial position.

In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period , which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 will be effective for interim and annual reporting periods beginning after December 15, 2015. Early application is permitted. Mattel is currently evaluating the impact of the adoption of ASU 2014-12 on its operating results and financial position.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. ASU 2015-03 will not change the amortization of debt issuance costs, which will continue to follow the existing accounting guidance. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which permits debt issuance costs associated with line-of-credit arrangements to be deferred and presented as an asset in the balance sheet and subsequently amortized ratably over the term of the line-of-credit arrangement. ASU 2015-03 and ASU 2015-15 will be effective for interim and annual reporting periods beginning after December 15, 2015. Early application is permitted. Mattel is currently evaluating the impact of the adoption of ASU 2015-03 and ASU 2015-15 on its operating results and financial position.

In May 2015, the FASB issued ASU 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. ASU 2015-07 additionally removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. ASU 2015-07 will be effective for interim and annual reporting periods beginning after December 15, 2015. Early application is permitted. Mattel is currently evaluating the impact of the adoption of ASU 2015-07 on its financial statement disclosures.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which requires an entity that uses first-in, first-out or average cost to measure its inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 will be effective for interim and annual reporting periods beginning after December 15, 2016. Early application is permitted. Mattel is currently evaluating the impact of the adoption of ASU 2015-11 on its operating results and financial position.

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments , which requires that an acquirer recognize adjustments to provisional amounts recognized in a business combination in the reporting period in which the adjustment amounts are determined. It also requires disclosure of the adjustment recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 eliminates the requirement to retrospectively revise comparative information for prior periods. ASU 2015-16 will be effective for interim and annual reporting periods beginning after December 15, 2015. Early application is permitted. Mattel is currently evaluating the impact of the adoption of ASU 2015-16 on its financial statement disclosures.

23.

Subsequent Event

On October 15, 2015, Mattel announced that its Board of Directors declared a fourth quarter dividend of $0.38 per common share. The dividend is payable on December 11, 2015 to stockholders of record on November 25, 2015.

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 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 certain 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. The non-GAAP financial measures discussed below include gross sales, adjusted gross margin and adjusted gross profit, adjusted other selling and administrative expenses, adjusted operating income, adjusted earnings (loss) per share, and constant currency. Mattel uses these metrics to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. These measures are not, and should not be viewed as, substitutes for GAAP financial measures. Refer to “Non-GAAP Financial Measures” below in this Quarterly Report on Form 10-Q for a more detailed discussion, including reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

Factors That May Affect Future Results

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

Mattel is including this Cautionary Statement to make applicable and take advantage of 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. They often include words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “seeks,” “aims,” “estimates,” “projects,” “on track” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” or “may.” A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. These forward-looking statements are all based on currently available operating, financial, economic and competitive information and are subject to various risks and uncertainties. Mattel’s actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties detailed in Part 1, Item 1A “Risk Factors” in Mattel’s 2014 Annual Report on Form 10-K. Mattel expressly disclaims any obligation to update or revise any forward looking statement, whether as a result of new developments or otherwise.

Overview

Mattel designs, manufactures, and markets a broad variety of toy products worldwide which are sold to its customers and directly to consumers. Mattel is the owner of a portfolio of global brands with untapped intellectual property potential. Its products are among the most widely recognized toy products in the world. Mattel’s portfolio of brands and products are grouped into four major brand categories, including the Construction and Arts & Crafts brand category, which was introduced in the second quarter of 2014 with the acquisition of MEGA Brands:

Mattel Girls & Boys Brands —including Barbie fashion dolls and accessories (“Barbie”), Monster High, Disney Classics, Ever After High, Little Mommy, and Polly Pocket (collectively “Other Girls”), Hot Wheels and Matchbox vehicles and play sets (collectively “Wheels”), and CARS, Disney Planes, BOOMco, Radica, Toy Story, Max Steel, WWE Wrestling, Batman, and games and puzzles (collectively “Entertainment”).

Fisher-Price Brands —including Fisher-Price, Little People, BabyGear, Laugh & Learn, and Imaginext (collectively “Core Fisher-Price”), Thomas & Friends, Dora the Explorer, Mickey Mouse Clubhouse, and Disney Jake and the Never Land Pirates (collectively “Fisher-Price Friends”), and Power Wheels.

American Girl Brands —including Truly Me, BeForever, and Bitty Baby. American Girl Brands products are sold directly to consumers via its catalog, website, and proprietary retail stores. Its children’s publications are also sold to certain retailers.

Construction and Arts & Crafts Brands —including MEGA BLOKS, RoseArt, and Board Dudes.

In order to leverage Mattel’s intellectual properties, as well as a number of premier licensed entertainment properties, and its capabilities as a world-class toy maker, management plans to sharpen and expand its strategic priorities:

•

First, with a rapid refocus of Mattel’s culture, Mattel is getting back to embracing brand building, creativity, and innovation, and management will put a premium on speed and personal accountability.

•

Additionally, Mattel is organizing around the following six strategic priorities:

•

Exploiting the franchise strength of its core brands;

•

Re-establishing toy leadership;

•

Strengthening its global supply chain;

•

Achieving distinctiveness and excellence in its commercial organization;

•

Rapidly expanding into emerging markets; and

•

Continuously driving cost improvement.

Management is focused on putting Mattel back on track for growth and improved profitability.

Third Quarter 2015 Overview

During the third quarter of 2015, Mattel continued to make progress on its turnaround, cultural transformation, and strategic priorities. Mattel has substantially transformed its management team to lead this change. Financial results for the third quarter of 2015 were somewhat mixed; however, absent the impact of foreign currency, the results were generally in line with management’s expectations and reflected progress on cost savings initiatives to help fund investments in the turnaround. Mattel is also encouraged by improved consumer takeaway for most core brands through better marketing and retail execution, which has contributed to increased shelf space productivity. However, Mattel continues to address foreign exchange headwinds across many key markets, continued declines in Monster High, and softness in a number of entertainment properties across the portfolio. It is also focused on addressing challenges caused by losses in shelf space over the past 12 months. Mattel’s third quarter 2015 financial highlights include the following:

•

Gross sales in the third quarter of 2015 were down 3% in constant currency, and down 11% as reported, compared to the third quarter of 2014.

•

Net sales in the third quarter of 2015 were down 4% in constant currency, and down 11% as reported, compared to the third quarter of 2014.

•

Adjusted gross margin in the third quarter of 2015 was 49.1%, a decrease of 170 basis points from adjusted gross margin in the third quarter of 2014. Gross margin, as reported, in the third quarter of 2015 was 49.1%, a decrease of 140 basis points from the third quarter of 2014.

•

Adjusted operating income was $321.6 million in the third quarter of 2015, as compared to adjusted operating income of $434.5 million in the third quarter of 2014. Operating income, as reported, in the third quarter of 2015 was $300.8 million compared to operating income of $409.5 million in the third quarter of 2014.

•

Adjusted earnings per share was $0.71 in the third quarter of 2015, as compared to adjusted earnings per share of $0.98 in the third quarter of 2014. Earnings per share, as reported, in the third quarter of 2015 was $0.66 compared to earnings per share of $0.97 in the third quarter of 2014.

Results of Operations—Third Quarter

Consolidated Results

Net sales for the third quarter of 2015 were $1.79 billion, an 11% decrease as reported, and a 4% decrease in constant currency, as compared to $2.02 billion in the third quarter of 2014. Net income for the third quarter of 2015 was $223.8 million, or $0.66 per diluted share, as compared to net income of $331.8 million, or $0.97 per diluted share, in the third quarter of 2014. Adjusted earnings per share in the third quarter of 2015 was $0.71 compared to adjusted earnings per share of $0.98 in the third quarter of 2014. Adjusted earnings per share for the third quarter of 2015 was negatively impacted by lower gross profit, partially offset by lower other selling and administrative expenses and lower advertising and promotion expenses.

The following table provides a summary of Mattel’s consolidated results for the third quarter of 2015 and 2014 (in millions, except percentage and basis point information):


	For the Three Months Ended September 30,												Year/Year Change
	2015						2014						Year/Year Change
	Amount			% of Net Sales			Amount			% of Net Sales			%			Basis Points of Net Sales
Net sales	$	1,792.0			100.0	%	$	2,021.4			100.0	%		–11	%		—

Gross profit	$	879.6			49.1	%	$	1,021.1			50.5	%		–14	%		–140
Advertising and promotion expenses		213.2			11.9			218.7			10.8			–3	%		110
Other selling and administrative expenses		365.6			20.4			392.9			19.4			–7	%		100

Operating income		300.8			16.8			409.5			20.3			–27	%		–350
Interest expense		21.4			1.2			21.0			1.0			2	%		20
Interest (income)		(2.0	)		–0.1			(1.8	)		–0.1			12	%		—
Other non-operating (income), net		(4.7	)					(3.9	)

Income before income taxes	$	286.1			16.0	%	$	394.2			19.5	%		–27	%		–350

Sales

Net sales for the third quarter of 2015 were $1.79 billion, an 11% decrease as reported, and a 4% decrease in constant currency, as compared to $2.02 billion in the third quarter of 2014.

The following table provides a summary of Mattel’s consolidated gross sales by brand for the third quarter of 2015 and 2014:


	For the Three Months Ended September 30,				% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	2015		2014		% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	(In millions, except percentage information)
Mattel Girls & Boys Brands:
Barbie	$	302.0	$	352.9		–14	%		–10	%		–4	%
Other Girls		320.4		451.4		–29	%		–9	%		–20	%
Wheels		266.9		252.2		6	%		–13	%		19	%
Entertainment		231.3		266.8		–13	%		–9	%		–4	%

		1,120.6		1,323.3		–15	%		–10	%		–5	%
Fisher-Price Brands:
Core Fisher-Price		426.8		437.2		–2	%		–7	%		5	%
Fisher-Price Friends		162.3		188.3		–14	%		–5	%		–9	%
Other Fisher-Price		36.2		37.9		–5	%		–1	%		–4	%

		625.3		663.4		–6	%		–7	%		1	%
American Girl Brands		109.9		113.3		–3	%		–1	%		–2	%
Construction and Arts & Crafts Brands		118.5		123.4
Other		9.1		9.3

Total Gross Sales	$	1,983.4	$	2,232.7		–11	%		–8	%		–3	%

Gross sales were $1.98 billion in the third quarter of 2015, a decrease of $249.3 million or 11% as reported, and a decrease of 3% in constant currency, compared to the third quarter of 2014. The decrease in gross sales in constant currency was due to lower sales of Other Girls products, partially offset by higher sales of Wheels products. Of the 20% decrease in Other Girls gross sales in constant currency, 17% was due to lower sales of Monster High products and 2% was due to lower sales of Disney Princess products. The 19% increase in Wheels gross sales in constant currency was due to higher sales of Hot Wheels products.

Cost of Sales

Cost of sales as a percentage of net sales was 50.9% in the third quarter of 2015, as compared to 49.5% in the third quarter of 2014. Cost of sales decreased by $87.9 million, or 9%, to $912.4 million in the third quarter of 2015 from $1.00 billion in the third quarter of 2014, as compared to an 11% decrease in net sales. Within cost of sales, product and other costs decreased by $83.6 million, or 10%, to $736.2 million in the third quarter of 2015 from $819.8 million in the third quarter of 2014; freight and logistics expenses decreased by $9.8 million, or 10%, to $89.4 million in the third quarter of 2015 from $99.2 million in the third quarter of 2014; royalty expenses increased by $5.5 million, or 7%, to $86.8 million in the third quarter of 2015 from $81.3 million in the third quarter of 2014.

Gross Margin

Gross margin decreased to 49.1% in the third quarter of 2015 from 50.5% in the third quarter of 2014. Adjusted gross margin decreased to 49.1% in the third quarter of 2015 from 50.8% in the third quarter of 2014. The decrease in adjusted gross margin was due to unfavorable foreign exchange, higher royalty expenses, and higher product-related costs, partially offset by price increases and Funding Our Future savings.

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 increased to 11.9% in the third quarter of 2015 from 10.8% in the third quarter of 2014, primarily as a result of Mattel’s investments to support core brands throughout the year.

Other Selling and Administrative Expenses

Other selling and administrative expenses, as reported, were $365.6 million, or 20.4% of net sales, in the third quarter of 2015, as compared to $392.9 million, or 19.4% of net sales, in the third quarter of 2014. Adjusted other selling and administrative expenses were $344.8 million, or 19.2% of net sales, in the third quarter of 2015, as compared to $374.6 million, or 18.5% of net sales, in the third quarter of 2014. The decrease in adjusted other selling and administrative expenses was primarily due to Funding Our Future gross savings of approximately $24 million.

Provision for Income Taxes

Mattel’s provision for income taxes was $62.4 million and $62.3 million in the third quarter of 2015 and 2014, respectively. Mattel recognized net discrete tax expense of $0.8 million and net discrete tax benefits of $15.1 million in the third quarter 2015 and 2014, respectively, primarily related to reassessments of prior years’ tax liabilities based on the status of audits and tax filings in various jurisdictions around the world, settlements, and enacted tax law changes.

North America Segment

The following table provides a summary of Mattel’s gross sales by brand for the North America segment for the third quarter of 2015 and 2014:


	For the Three Months Ended September 30,				% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	2015		2014		% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	(In millions, except percentage information)
Mattel Girls & Boys Brands:
Barbie	$	156.0	$	170.1		–8	%		—			–8	%
Other Girls		161.7		207.7		–22	%		–1	%		–21	%
Wheels		140.1		123.8		13	%		–1	%		14	%
Entertainment		129.1		117.7		10	%		—			10	%

		586.9		619.3		–5	%		—			–5	%
Fisher-Price Brands:
Core Fisher-Price		266.3		263.1		1	%		–1	%		2	%
Fisher-Price Friends		94.7		118.3		–20	%		–1	%		–19	%
Other Fisher-Price		34.9		34.0		3	%		—			3	%

		395.9		415.4		–5	%		–1	%		–4	%
Construction and Arts & Crafts Brands		83.3		86.4
Other		3.0		3.4

Total Gross Sales	$	1,069.1	$	1,124.5		–5	%		–1	%		–4	%

Gross sales for the North America segment were $1.07 billion in the third quarter of 2015, a decrease of $55.4 million or 5% as reported, and 4% in constant currency, compared to the third quarter of 2014. The decrease in the North America segment gross sales in constant currency was primarily due to lower sales of Other Girls and Fisher-Price Friends products, partially offset by higher sales of Wheels and Entertainment products. Of the 21% decrease in Other Girls gross sales in constant currency, 10% was due to lower sales of Monster High products and 8% was due to lower sales of Disney Princess products. Of the 19% decrease in Fisher-Price Friends gross sales in constant currency, 7% was due to lower sales of Disney Jake and the Never Land Pirates products, 5% was due to lower sales of Thomas & Friends products, and 4% was due to lower sales of Minnie Mouse products. Of the 14% increase in Wheels gross sales in constant currency, 15% was due to higher sales of Hot Wheels products. Of the 10% increase in Entertainment gross sales in constant currency, 17% was due to higher sales of Minecraft ^® products and 7% was due to higher sales of games and puzzles products, partially offset by lower sales of Disney Planes products of 15%. Cost of sales decreased 4% in the third quarter of 2015, compared to a 6% decrease in net sales, primarily due to Funding Our Future savings, partially offset by higher royalty expenses. Gross margins in the third quarter of 2015 decreased as a result of higher product-related costs, unfavorable product mix, and higher royalty expenses, partially offset by price increases and Funding Our Future savings.

North America segment income decreased by 11% to $230.2 million in the third quarter of 2015, as compared to $257.5 million in the third quarter of 2014, primarily due to lower gross profit and higher advertising and promotion expenses, partially offset by lower other selling and administrative expenses.

International Segment

The following table provides a summary of percentage changes in gross sales within the International segment in the third quarter of 2015 versus 2014:

% Change in
Gross Sales as Reported

Currency Exchange
Rate Impact

% Change in
Gross Sales in
Constant Currency

Total International Segment

–19

–17

–2

Europe

–18

–13

–5

Latin America

–29

–27

–2

Asia Pacific

–9

The following table provides a summary of Mattel’s gross sales by brand for the International segment for the third quarter of 2015 and 2014:


	For the Three Months Ended September 30,				% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	2015		2014		% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	(In millions, except percentage information)
Mattel Girls & Boys Brands:
Barbie	$	146.0	$	182.8		–20	%		–18	%		–2	%
Other Girls		158.6		243.7		–35	%		–16	%		–19	%
Wheels		126.8		128.4		–1	%		–24	%		23	%
Entertainment		102.3		149.1		–31	%		–15	%		–16	%

		533.7		704.0		–24	%		–18	%		–6	%
Fisher-Price Brands:
Core Fisher-Price		160.5		174.1		–8	%		–18	%		10	%
Fisher-Price Friends		67.6		70.0		–3	%		–12	%		9	%
Other Fisher-Price		1.3		3.9		–68	%		–9	%		–59	%

		229.4		248.0		–8	%		–16	%		8	%
Construction and Arts & Crafts Brands		35.2		37.0
Other		0.3		0.2

Total Gross Sales	$	798.6	$	989.2		–19	%		–17	%		–2	%

Gross sales for the International segment were $798.6 million in the third quarter of 2015, a decrease of $190.6 million or 19% as reported, and 2% in constant currency, compared to the third quarter of 2014. The decrease in the International segment gross sales in constant currency was primarily due to lower sales of Other Girls and Entertainment products, partially offset by higher sales of Wheels and Core Fisher-Price products. Of the 19% decrease in Other Girls gross sales in constant currency, 23% was due to lower sales of Monster High products, partially offset by higher sales of Disney Princess products of 3%. Of the 16% decrease in Entertainment gross sales in constant currency, 15% was due to lower sales of Disney Planes products. Of the 23% increase in Wheels gross sales in constant currency, 22% was due to higher sales of Hot Wheels products. Of the 10% increase in Core Fisher-Price gross sales in constant currency, 11% was due to higher sales of infant products. Cost of sales decreased 23% in the third quarter of 2015, as compared to a 19% decrease in net sales, primarily due to Funding Our Future savings and lower freight and logistics expenses. Gross margins increased as a result of Funding Our Future savings and price increases, partially offset by unfavorable product mix, higher product-related costs, and unfavorable foreign exchange.

International segment income decreased 22% to $142.6 million in the third quarter of 2015, as compared to $183.1 million in the third quarter of 2014, primarily due to lower gross profit, partially offset by lower other selling and administrative expenses.

American Girl Segment

The following table provides a summary of Mattel’s gross sales by brand for the American Girl segment for the third quarter of 2015 and 2014:


	For the Three Months Ended September 30,				% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	2015		2014		% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	(In millions, except percentage information)
American Girl Segment:
American Girl Brands	$	109.9	$	113.3		–3	%		–1	%		–2	%
Other Brands		5.8		5.7		2	%		–7	%		9	%

Total American Girl Segment	$	115.7	$	119.0		–3	%		–1	%		–2	%

Gross sales for the American Girl segment were $115.7 million in the third quarter of 2015, a decrease of $3.3 million or 3% as reported, and 2% in constant currency, compared to the third quarter of 2014. Cost of sales decreased 4% in the third quarter of 2015, as compared to a 2% decrease in net sales, primarily due to Funding Our Future savings, lower product and other costs, and lower freight and logistics expenses. Gross margins increased as a result of Funding Our Future savings.

American Girl segment income decreased 6% to $7.1 million in the third quarter of 2015, as compared to $7.6 million in the third quarter of 2014, primarily due to lower gross profit and higher advertising and promotion expenses.

Results of Operations—First Nine Months

Consolidated Results

Net sales for the first nine months of 2015 were $3.70 billion, an 8% decrease as reported, and a 1% decrease in constant currency, as compared to $4.03 billion in the first nine months of 2014. Net income for the first nine months of 2015 was $154.3 million, or $0.45 per diluted share, as compared to net income of $348.9 million, or $1.02 per diluted share, in the first nine months of 2014. Adjusted earnings per share in the first nine months of 2015 was $0.63 compared to adjusted earnings per share of $1.06 in the first nine months of 2014. Adjusted earnings per share for the first nine months of 2015 was negatively impacted by lower gross profit, higher advertising and promotion expenses, and higher income tax expense, partially offset by lower other selling and administrative expenses.

The following table provides a summary of Mattel’s consolidated results for the first nine months of 2015 and 2014 (in millions, except percentage and basis point information):


	For the Nine Months Ended September 30,												Year/Year Change
	2015						2014						Year/Year Change
	Amount			% of Net Sales			Amount			% of Net Sales			%			Basis Points of Net Sales
Net sales	$	3,702.9			100.0	%	$	4,029.9			100.0	%		–8	%		—

Gross profit	$	1,802.9			48.7	%	$	1,995.2			49.5	%		–10	%		–80
Advertising and promotion expenses		420.4			11.4			409.4			10.2			3	%		120
Other selling and administrative expenses		1,135.6			30.7			1,169.1			29.0			–3	%		170

Operating income		246.9			6.7			416.7			10.3			–41	%		–360
Interest expense		62.5			1.7			57.2			1.4			9	%		30
Interest (income)		(5.8	)		–0.2			(5.2	)		–0.1			10	%		–10
Other non-operating (income), net		(2.9	)					(5.7	)

Income before income taxes	$	193.1			5.2	%	$	370.4			9.2	%		–48	%		–400

Sales

Net sales for the first nine months of 2015 were $3.70 billion, an 8% decrease as reported, and a 1% decrease in constant currency, as compared to $4.03 billion in the first nine months of 2014.

The following table provides a summary of Mattel’s consolidated gross sales by brand for the first nine months of 2015 and 2014:


	For the Nine Months Ended September 30,				% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	2015		2014		% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	(In millions, except percentage information)
Mattel Girls & Boys Brands:
Barbie	$	578.3	$	683.6		–15	%		–9	%		–6	%
Other Girls		685.9		875.2		–22	%		–10	%		–12	%
Wheels		559.5		522.7		7	%		–12	%		19	%
Entertainment		503.9		587.6		–14	%		–8	%		–6	%

		2,327.6		2,669.1		–13	%		–10	%		–3	%
Fisher-Price Brands:
Core Fisher-Price		823.1		837.1		–2	%		–7	%		5	%
Fisher-Price Friends		326.5		354.6		–8	%		–6	%		–2	%
Other Fisher-Price		76.5		72.0		6	%		–1	%		7	%

		1,226.1		1,263.7		–3	%		–6	%		3	%
American Girl Brands		300.1		302.4		–1	%		—			–1	%
Construction and Arts & Crafts Brands		221.6		185.0
Other		23.3		24.9

Total Gross Sales	$	4,098.7	$	4,445.1		–8	%		–8	%		—

Gross sales were $4.10 billion in the first nine months of 2015, a decrease of $346.4 million or 8% as reported, or flat in constant currency, compared to the first nine months of 2014. Gross sales in constant currency remained flat primarily due to higher sales of Wheels products, offset by lower sales of Other Girls products. Of the 19% increase in Wheels gross sales in constant currency, 18% was due to higher sales of Hot Wheels products. Of the 12% decrease in Other Girls gross sales in constant currency, 18% was due to lower sales of Monster High products, partially offset by higher sales of Disney Princess products of 6%. The Construction and Arts & Crafts Brands products were included in Mattel’s results beginning in May 2014 as a result of the MEGA Brands acquisition.

Cost of Sales

Cost of sales as a percentage of net sales was 51.3% in the first nine months of 2015, as compared to 50.5% in the first nine months of 2014. Cost of sales decreased by $134.7 million, or 7%, to $1.90 billion in the first nine months of 2015 from $2.03 billion in the first nine months of 2014, as compared to an 8% decrease in net sales. Within cost of sales, product and other costs decreased by $142.6 million, or 9%, to $1.51 billion in the first nine months of 2015 from $1.65 billion in the first nine months of 2014; freight and logistics expenses decreased by $10.6 million, or 5%, to $214.1 million in the first nine months of 2015 from $224.7 million in the first nine months of 2014; royalty expenses increased by $18.5 million, or 12%, to $176.6 million in the first nine months of 2015 from $158.1 million in the first nine months of 2014.

Gross Margin

Gross margin decreased to 48.7% in the first nine months of 2015 from 49.5% in the first nine months of 2014. Adjusted gross margin decreased to 48.7% in the first nine months of 2015 from 49.9% in the first nine months of 2014. The decrease in adjusted gross margin was due to higher product-related costs, unfavorable foreign exchange, and higher royalty expenses, partially offset by price increases and Funding Our Future savings.

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 increased to 11.4% in the first nine months of 2015 from 10.2% in the first nine months of 2014, primarily as a result of Mattel’s investments to support core brands throughout the year.

Other Selling and Administrative Expenses

Other selling and administrative expenses, as reported, were $1.14 billion, or 30.7% of net sales, in the first nine months of 2015, as compared to $1.17 billion, or 29.0% of net sales, in the first nine months of 2014. Adjusted other selling and administrative expenses were $1.05 billion, or 28.4% of net sales, in the first nine months of 2015, as compared to $1.10 billion, or 27.3% of net sales, in the first nine months of 2014. The decrease in adjusted other selling and administrative expenses was primarily due to Funding Our Future gross savings of approximately $46 million and a favorable impact from changes in currency exchange rates of approximately $36 million, partially offset by investments in strategic initiatives of approximately $27 million.

Non-Operating Items

Interest expense increased by $5.3 million to $62.5 million in the first nine months of 2015 from $57.2 million in the first nine months of 2014, primarily due to higher average outstanding long-term borrowings.

Provision for Income Taxes

Mattel’s provision for income taxes was $38.8 million and $21.4 million in the first nine months of 2015 and 2014, respectively. Mattel recognized net discrete tax benefits of $2.8 million and $51.4 million in the first nine months of 2015 and 2014, respectively, primarily related to reassessments of prior years’ tax liabilities based on the status of audits and tax filings in various jurisdictions around the world, settlements, and enacted tax law changes.

North America Segment

The following table provides a summary of Mattel’s gross sales by brand for the North America segment for the first nine months of 2015 and 2014:


	For the Nine Months Ended September 30,				% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	2015		2014		% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	(In millions, except percentage information)
Mattel Girls & Boys Brands:
Barbie	$	268.4	$	289.5		–7	%		—			–7	%
Other Girls		330.6		393.7		–16	%		—			–16	%
Wheels		273.3		241.0		13	%		–1	%		14	%
Entertainment		275.5		274.5		—			–1	%		1	%

		1,147.8		1,198.7		–4	%		—			–4	%
Fisher-Price Brands:
Core Fisher-Price		485.1		470.2		3	%		–1	%		4	%
Fisher-Price Friends		177.4		205.2		–14	%		–1	%		–13	%
Other Fisher-Price		74.7		66.7		12	%		—			12	%

		737.2		742.1		–1	%		–1	%		—
Construction and Arts & Crafts Brands		158.8		129.5
Other		9.3		9.1

Total Gross Sales	$	2,053.1	$	2,079.4		–1	%		—			–1	%

Gross sales for the North America segment were $2.05 billion in the first nine months of 2015, a decrease of $26.3 million or 1% as reported and in constant currency, compared to the first nine months of 2014. The decrease in gross sales in constant currency was due to lower sales of Other Girls and Fisher-Price Friends products, partially offset by higher sales of Wheels products. Of the 16% decrease in Other Girls gross sales in constant currency, 10% was due to lower sales of Monster High products and 3% was due to lower sales of Disney Princess products. Of the 13% decrease in Fisher-Price Friends gross sales in constant currency, 6% was due to lower sales of Disney Jake and the Never Land Pirates products and 3% was due to lower sales of Minnie Mouse products. Of the 14% increase in Wheels gross sales in constant currency, 13% was due to higher sales of Hot Wheels products. The Construction and Arts & Crafts Brands products were included in Mattel’s results beginning in May 2014 as a result of the MEGA Brands acquisition. Cost of sales remained flat in the first nine months of 2015, as compared to a 2% decrease in net sales. Gross margins decreased as a result of higher product-related costs, partially offset by Funding Our Future savings and price increases.

North America segment income decreased by 18% to $283.4 million in the first nine months of 2015, as compared to $345.7 million in the first nine months of 2014, primarily due to lower gross profit and higher advertising and promotion expenses, partially offset by lower other selling and administrative expenses.

International Segment

The following table provides a summary of percentage changes in gross sales within the International segment in the first nine months of 2015 versus 2014:

% Change in
Gross Sales
as Reported

Currency Exchange
Rate Impact

% Change in
Gross Sales
in Constant Currency

Total International Segment

–15

–16

Europe

–18

–15

–3

Latin America

–22

—

Asia Pacific

-8

The following table provides a summary of Mattel’s gross sales by brand for the International segment for the first nine months of 2015 and 2014:


	For the Nine Months Ended September 30,				% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	2015		2014		% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	(In millions, except percentage information)
Mattel Girls & Boys Brands:
Barbie	$	309.9	$	394.1		–21	%		–16	%		–5	%
Other Girls		355.3		481.5		–26	%		–16	%		–10	%
Wheels		286.1		281.7		2	%		–20	%		22	%
Entertainment		228.4		313.1		–27	%		–15	%		–12	%

		1,179.7		1,470.4		–20	%		–17	%		–3	%
Fisher-Price Brands:
Core Fisher-Price		338.0		366.9		–8	%		–16	%		8	%
Fisher-Price Friends		149.1		149.4		—			–13	%		13	%
Other Fisher-Price		1.8		5.3		–67	%		–8	%		–59	%

		488.9		521.6		–6	%		–14	%		8	%
Construction and Arts & Crafts Brands		62.8		55.5
Other		0.7		0.9

Total Gross Sales	$	1,732.1	$	2,048.4		–15	%		–16	%		1	%

Gross sales for the International segment were $1.73 billion in the first nine months of 2015, a decrease of $316.3 million or 15% as reported, and an increase of 1% in constant currency, compared to the first nine months of 2014. The increase in the International segment gross sales in constant currency was primarily due to higher sales of Wheels and Fisher-Price Friends products, partially offset by lower sales of Entertainment and Other Girls products. The 22% increase in Wheels gross sales in constant currency was due to higher sales of Hot Wheels products. Of the 13% increase in Fisher-Price Friends gross sales in constant currency, 19% was due to higher sales of Thomas & Friends products, partially offset by lower sales of Disney Jake and the Never Land Pirates products of 3% and lower sales of Nickelodeon products of 2%. The 12% decrease in Entertainment gross sales in constant currency was due to lower sales of Disney Planes products. Of the 10% decrease in Other Girls gross sales in constant currency, 25% was due to lower sales of Monster High products, partially offset by higher sales of Disney Princess products of 13%. The Construction and Arts & Crafts Brands products were included in Mattel’s results beginning in May 2014 as a result of the MEGA Brands acquisition. Cost of sales decreased 18% in the first nine months of 2015, as compared to a 16% decrease in net sales, primarily due to lower freight and logistics expenses, partially offset by higher royalty expenses. Gross margins increased as a result of Funding Our Future savings and price increases, partially offset by higher product-related costs and unfavorable foreign exchange.

International segment income decreased by 35% to $160.3 million in the first nine months of 2015, as compared to $245.5 million in the first nine months of 2014, driven primarily by lower gross profit, partially offset by lower other selling and administrative expenses.

American Girl Segment

The following table provides a summary of Mattel’s gross sales by brand for the American Girl segment for the first nine months of 2015 and 2014:


	For the Nine Months Ended September 30,				% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	2015		2014		% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	(In millions, except percentage information)
American Girl Segment:
American Girl Brands	$	300.1	$	302.4		–1	%		—			–1	%
Other Brands		13.4		14.9		–11	%		–13	%		2	%

Total American Girl Segment	$	313.5	$	317.3		–1	%		–1	%		—

Gross sales for the American Girl segment were $313.5 million in the first nine months of 2015, a decrease of $3.8 million or 1% as reported, or flat in constant currency, compared to the first nine months of 2014. Cost of sales decreased 1% in the first nine months of 2015, as compared to a 2% decrease in net sales, primarily due to lower freight and logistics expense, partially offset by higher royalty expenses. Gross margins decreased as a result of higher closeout sales.

American Girl segment income decreased $10.0 million to $5.6 million in the first nine months of 2015, as compared to $15.6 million in the first nine months of 2014, primarily due to lower gross profit, higher other selling and administrative expenses, and higher advertising and promotion expenses.

Funding Our Future

In 2015, Mattel initiated its current cost savings program, Funding Our Future, which targets cumulative gross cost savings of approximately $250 million to $300 million by the end of 2016. The cost savings program is designed to generate cost savings through various initiatives, which include simplifying Mattel’s organization structure and optimizing its processes and supply chain.

For the third quarter of 2015, Mattel realized gross cost savings, excluding severance charges and investments, of approximately $45 million (or approximately $33 million of net savings, including severance charges and investments). Of the gross cost savings realized in the third quarter of 2015, approximately $17 million was reflected within gross profit, approximately $24 million within other selling and administrative expenses, and approximately $4 million within advertising and promotion expenses.

For the first nine months of 2015, Mattel realized gross cost savings, excluding severance charges and investments, of approximately $93 million (or approximately $43 million of net savings, including severance charges and investments). Of the gross cost savings realized in the first nine months of 2015, approximately $41 million was reflected within gross profit, approximately $46 million within other selling and administrative expenses, and approximately $6 million within advertising and promotion expenses.

Income Taxes

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 $3 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.

Liquidity and Capital Resources

Mattel’s primary sources of liquidity are its cash and equivalents balances, access to short-term borrowing facilities, including its $1.60 billion domestic unsecured committed revolving credit facility (“Credit Facility”), 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, which include maintaining consolidated debt-to-earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and interest coverage ratios, 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 $289.7 million in cash and equivalents as of September 30, 2015, approximately $210 million is held by foreign subsidiaries. Mattel may need to accrue and pay additional income taxes if some or all of the undistributed earnings of foreign subsidiaries were repatriated. Mattel does not intend nor foresee a need to repatriate undistributed earnings of foreign subsidiaries. Mattel has several liquidity options to fund its domestic operations and obligations, including investing and financing activities such as dividends, share repurchases, and debt service. Positive cash flows generated annually by its domestic operations, the Credit Facility, and access to both long-term and short-term public and private debt markets at highly competitive interest rates are available to fund domestic operations and obligations. If these sources are not adequate, Mattel also has the ability to repatriate highly taxed foreign earnings, receive repayment of intercompany loans to foreign subsidiaries, and distribute liquidating dividends from foreign subsidiaries, all of which would have a very nominal impact, if any, on Mattel’s tax liabilities. Mattel believes that its policy to indefinitely reinvest the earnings of its foreign subsidiaries will not result in and is not reasonably likely to result in a material change to Mattel’s liquidity position.

Current Market Conditions

Mattel is exposed to financial market risk resulting from changes in interest and foreign currency exchange rates. Mattel believes that it has ample liquidity to fund its business needs, including beginning of year cash and equivalents, cash flows from operations, and access to the commercial paper markets and its Credit Facility, which it uses for seasonal working capital requirements. As of September 30, 2015, Mattel had remaining borrowing resources totaling $1.44 billion available under the Credit Facility, and Mattel has not experienced any limitations on its ability to access this source of liquidity. Market conditions could affect certain terms of other debt instruments that Mattel enters into from time to time.

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

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

Mattel expects that some of its customers and vendors may experience difficulty in obtaining the liquidity required to buy inventory or raw materials. Mattel monitors its customers’ financial condition and their liquidity in order to mitigate Mattel’s accounts receivable collectibility risks, and customer terms and credit limits are adjusted, if necessary. Additionally, Mattel uses a variety of financial arrangements to help 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.

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.

Capital and Investment Framework

To guide future capital deployment decisions, with a goal of maximizing stockholder value, Mattel’s Board of Directors established the following capital and investment framework:

•

To maintain approximately $800 million to $1 billion in year-end cash available to fund a substantial portion of seasonal working capital,

•

To maintain a year-end debt-to-capital ratio of about 35%,

•

To invest in capital expenditures required to maintain and grow the business,

•

To make strategic opportunistic acquisitions, and

•

To return excess funds to stockholders through dividends and share repurchases.

Over the long term, assuming annual cash flows from operating activities remain strong, Mattel plans to use its free cash flows to invest in strategic acquisitions and to return funds to stockholders through cash dividends and share repurchases. Mattel’s share repurchase program has no expiration date and repurchases will take place from time to time, depending on market conditions. The ability to successfully implement the capital deployment plan is directly dependent on Mattel’s ability to generate strong annual cash flows from operating activities. There is no assurance that Mattel will continue to generate strong annual cash flows from operating activities or achieve its targeted goals for investing activities.

Operating Activities

Cash flows used for operating activities were $222.3 million in the first nine months of 2015, as compared to $144.3 million in the first nine months of 2014. The increase in cash flows used for operating activities was primarily due to lower net income, partially offset by lower working capital usage.

Investing Activities

Cash flows used for investing activities were $206.0 million in the first nine months of 2015, as compared to $604.4 million in the first nine months of 2014. The decrease in cash flows used for investing activities was primarily due to the prior year acquisition of MEGA Brands.

Financing Activities

Cash flows used for financing activities were $230.0 million in the first nine months of 2015, as compared to $20.1 million in the first nine months of 2014. The increase in cash flows used for financing activities was primarily due to lower proceeds from long-term borrowings, partially offset by lower share repurchases and higher proceeds from short-term borrowings.

Seasonal Financing

Mattel maintains and periodically amends or replaces its domestic unsecured committed revolving credit facility with a commercial bank group. The credit facility is used as a back-up to Mattel’s commercial paper program, which is used as the primary source of financing for the seasonal working capital requirements of its domestic subsidiaries. The agreement governing the credit facility was amended and restated on June 8, 2015 to, among other things, (i) extend the maturity date of the credit facility to June 9, 2020, (ii) amend the definition of consolidated earnings before interest, taxes, depreciation, and amortization (“Consolidated EBITDA”) used in calculating Mattel’s financial ratio covenants and (iii) increase the maximum allowed consolidated debt-to-Consolidated EBITDA ratio to 3.50 to 1. The aggregate commitments under the credit facility remain at $1.60 billion, with an “accordion feature,” which allows Mattel to increase the aggregate availability under the credit facility to $1.85 billion under certain circumstances. In addition, applicable interest rate margins remain within a range of 0.00% to 0.75% above the applicable base rate for base rate loans and 0.88% to 1.75% above the applicable LIBOR for Eurodollar rate loans, and commitment fees range from 0.08% to 0.25% of the unused commitments under the credit facility, in each case depending on Mattel’s senior unsecured long-term debt rating.

Mattel is required to meet financial ratio covenants at the end of each quarter and fiscal year, using the formulae specified in the credit agreement to calculate the ratios. Mattel was in compliance with such covenants at the end of the nine months ended September 30, 2015. As of September 30, 2015, Mattel’s consolidated debt-to-EBITDA ratio, as calculated per the terms of the credit agreement, was 2.76 to 1 (compared to a maximum allowed of 3.50 to 1), and Mattel’s interest coverage ratio was 9.70 to 1 (compared to a minimum required of 3.50 to 1).

To finance seasonal working capital requirements of certain foreign subsidiaries, Mattel avails itself of individual short-term credit lines with a number of banks. Mattel expects to extend the majority of these credit lines throughout 2015.

Mattel believes its cash on hand, amounts available under its credit facility, and its foreign credit lines will be adequate to meet its seasonal financing requirements in 2015.

Financial Position

Mattel’s cash and equivalents decreased $682.0 million to $289.7 million at September 30, 2015, as compared to $971.7 million at December 31, 2014. The decrease was primarily due to working capital usage, dividend payments, and purchases of tools, dies, and molds and other property, plant, and equipment.

Accounts receivable increased $356.8 million to $1.45 billion at September 30, 2015, as compared to $1.09 billion at December 31, 2014. Inventory increased $309.0 million to $870.8 million at September 30, 2015, as compared to $561.8 million at December 31, 2014. The increases in accounts receivable and inventory were due to the seasonality of Mattel’s business.

Accounts payable and accrued liabilities increased $178.6 million to $1.25 billion at September 30, 2015, as compared to $1.07 billion at December 31, 2014. The increase was primarily due to the timing and amount of payments for various liabilities, including advertising and promotion and compensation-related accruals.

Noncurrent long-term debt was $2.10 billion as of both September 30, 2015 and December 31, 2014.

A summary of Mattel’s capitalization is as follows:


	September 30, 2015				September 30, 2014				December 31, 2014
	(In millions, except percentage information)
2010 Senior Notes	$	500.0	10	%	$	500.0	9	%	$	500.0	9	%
2011 Senior Notes		600.0	12			600.0	10			600.0	11
2013 Senior Notes		500.0	10			500.0	9			500.0	9
2014 Senior Notes		500.0	10			500.0	9			500.0	9

Total noncurrent long-term debt		2,100.0	42			2,100.0	37			2,100.0	38
Other noncurrent liabilities		535.3	10			515.4	9			584.0	10
Stockholders’ equity		2,572.7	48			3,067.8	54			2,949.1	52

	$	5,208.0	100	%	$	5,683.2	100	%	$	5,633.1	100	%

Mattel’s debt-to-total capital ratio, including short-term borrowings and the current portion of long-term debt, increased from 41.2% at September 30, 2014 to 46.8% at September 30, 2015 as a result of lower stockholders’ equity and higher short-term borrowings.

Litigation

See Item 1 “Financial Statements—Note 20 to the Consolidated Financial Statements—Contingencies” of this Quarterly Report on Form 10-Q.

Application of Critical Accounting Policies and Estimates

Mattel’s critical accounting policies and estimates are included in its Annual Report on Form 10-K for the year ended December 31, 2014 and did not change during the first nine months of 2015.

New Accounting Pronouncements

See Item 1 “Financial Statements—Note 22 to the Consolidated Financial Statements—New Accounting Pronouncements” of this Quarterly Report on Form 10-Q.

Non-GAAP Financial Measures

To supplement the financial results presented in accordance with GAAP, Mattel presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measures included in this Quarterly Report on Form 10-Q include gross sales, adjusted gross margin and adjusted gross profit, adjusted other selling and administrative expenses, adjusted operating income, adjusted earnings per share, and constant currency. 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. These measures are not, and should not be viewed as, substitutes for GAAP financial measures.

Gross Sales

Gross sales represent sales to customers, excluding the impact of sales adjustments. Net sales, as reported, include the impact of sales adjustments, such as trade discounts and other allowances. Mattel presents changes in gross sales as a metric for comparing its aggregate, brand, and geographic results to highlight significant trends in Mattel’s business. Changes in gross sales are discussed because, while Mattel records the details of such sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally not associated with individual products, making net sales less meaningful.

A reconciliation between net sales and gross sales is as follows:


	For the Three Months Ended September 30,				% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	2015		2014		% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	(In millions, except percentage information)
Net Sales	$	1,792.0	$	2,021.4		–11	%		–7	%		–4	%
Sales adjustments		191.4		211.3

Gross Sales	$	1,983.4	$	2,232.7		–11	%		–8	%		–3	%


	For the Nine Months Ended September 30,				% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	2015		2014		% Change as Reported			Currency Exchange Rate Impact			% Change in Constant Currency
	(In millions, except percentage information)
Net Sales	$	3,702.9	$	4,029.9		–8	%		–7	%		–1	%
Sales adjustments		395.8		415.2

Gross Sales	$	4,098.7	$	4,445.1		–8	%		–8	%		—

Adjusted Gross Margin and Adjusted Gross Profit

Adjusted gross margin represents Mattel’s reported gross profit, adjusted to exclude the impact of inventory fair value markup above cost associated with the acquisition of a business, as a percentage of net sales. Adjusted gross margin is presented to provide additional perspective on underlying trends in Mattel’s core gross margin. A reconciliation between gross margin and adjusted gross margin is as follows:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014
	(In millions)
Gross Profit	$	879.6		$	1,021.1		$	1,802.9		$	1,995.2
Gross Margin		49.1	%		50.5	%		48.7	%		49.5	%
Adjustments
MEGA Brands Inventory Fair Value Markup Above Cost		—			6.7			—			15.1

Adjusted Gross Profit	$	879.6		$	1,027.8		$	1,802.9		$	2,010.3
Adjusted Gross Margin		49.1	%		50.8	%		48.7	%		49.9	%

Adjusted Other Selling and Administrative Expenses

Adjusted other selling and administrative expenses represents Mattel’s reported other selling and administrative expenses, adjusted to exclude the impact of expenses associated with the acquisition and integration of an acquired business and restructuring and restructuring-related expenses. Adjusted other selling and administrative expenses is presented to provide additional perspective on underlying trends in Mattel’s core other selling and administrative expenses. A reconciliation between other selling and administrative expenses and adjusted other selling and administrative expenses is as follows:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014
	(In millions)
Other Selling and Administrative Expenses	$	365.6		$	392.9		$	1,135.6		$	1,169.1
Adjustments
MEGA Brands Integration & Acquisition Costs		(3.3	)		(4.6	)		(13.6	)		(15.8	)
MEGA Brands Intangible Asset Amortization Expense		(4.2	)		(9.6	)		(12.5	)		(14.7	)
Severance Expense		(13.3	)		(4.1	)		(56.9	)		(38.1	)

Adjusted Other Selling and Administrative Expenses	$	344.8		$	374.6		$	1,052.6		$	1,100.5

Adjusted Operating Income

Adjusted operating income represents Mattel’s reported operating income, adjusted to exclude the impact of inventory fair value markup above cost associated with the acquisition of a business, expenses associated with the acquisition and integration of an acquired business and the impact of restructuring and restructuring-related expenses. Adjusted operating income is presented to provide additional perspective on underlying trends in Mattel’s core operating results. A reconciliation between operating income and adjusted operating income is as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2015		2014		2015		2014
	(In millions)
Operating Income	$	300.8	$	409.5	$	246.9	$	416.7
Adjustments
MEGA Brands Inventory Fair Value Markup Above Cost		—		6.7		—		15.1
MEGA Brands Integration & Acquisition Costs		3.3		4.6		13.6		15.8
MEGA Brands Intangible Asset Amortization Expense		4.2		9.6		12.5		14.7
Severance Expense		13.3		4.1		56.9		38.1

Adjusted Operating Income	$	321.6	$	434.5	$	329.9	$	500.4

Adjusted Earnings Per Share

Adjusted earnings per share represents Mattel’s reported diluted earnings per common share, adjusted to exclude the impact of inventory fair value markup above cost associated with the acquisition of a business, expenses associated with the acquisition and integration of an acquired business, the impact of restructuring and restructuring-related expenses and certain tax benefits. Each adjustment is tax effected, if necessary, and divided by the reported weighted average number of common and potential common shares to determine the per-share impact of the adjustment. Adjusted earnings per share is presented to provide additional perspective on underlying trends in Mattel’s core earnings. A reconciliation between earnings per share and adjusted earnings per share is as follows:


	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2015		2014			2015			2014
	(In millions)
Earnings Per Share	$	0.66	$	0.97		$	0.45		$	1.02
Adjustments
MEGA Brands Inventory Fair Value Markup Above Cost		—		0.02			—			0.03
MEGA Brands Integration & Acquisition Costs		0.01		0.01			0.03			0.04
MEGA Brands Intangible Asset Amortization Expense		0.01		0.02			0.03			0.03
Severance Expense		0.03		0.01			0.13			0.09
Discrete Tax Items		—		(0.05	)		(0.01	)		(0.15	)

Adjusted Earnings Per Share	$	0.71	$	0.98		$	0.63		$	1.06

Constant Currency

Percentage changes in results expressed in constant currency are presented excluding the impact from changes in currency exchange rates. To present this information, current period and prior period results for entities reporting in currencies other than US dollar are translated using consistent exchange rates, rather than using the actual exchange rate in effect during the respective periods. The difference between the current period and prior period results using the consistent exchange rates reflects the changes in the underlying performance results, excluding the impact from changes in currency exchange rates. Mattel analyzes constant currency results to provide additional perspective on changes in underlying trends in Mattel’s operating performance. A reconciliation of constant currency changes in gross sales by brand to the actual changes, including the impact from changes in currency exchange rates, is provided above in “Results of Operations–Third Quarter” and “Results of Operations–First Nine Months” of this Quarterly Report on Form 10-Q. A reconciliation of constant currency changes in net sales to the actual changes, including the impact from changes in currency exchange rates, is provided above under “Gross Sales.”

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Foreign Currency Exchange Rate Risk

Currency exchange rate fluctuations impact Mattel’s results of operations and cash flows. Inventory purchase and sale transactions denominated in the Euro, British pound sterling, Mexican peso, Brazilian real, and Indonesian rupiah are the primary transactions that caused foreign currency transaction exposure for Mattel. Mattel seeks to mitigate its exposure to market risk by monitoring its foreign currency transaction exposure for the year and partially hedging such exposure, using derivative instruments including foreign currency forward exchange contracts primarily to hedge its purchase and sale of inventory and other intercompany transactions denominated in foreign currencies. These contracts generally have maturity dates of up to 18 months. For those intercompany receivables and payables that are not hedged, the transaction gains or losses are recorded in the consolidated statement of operations in the period in which the exchange rate changes as part of operating income or other non-operating (income) expense, net based on the nature of the underlying transaction. Transaction gains or losses on hedged intercompany inventory transactions are recorded in the consolidated statement of operations in the period in which the inventory is sold to customers. In addition, Mattel manages its exposure to currency exchange rate fluctuations through the selection of currencies used for international borrowings. Mattel does not trade in financial instruments for speculative purposes.

Mattel’s financial position is also impacted by currency exchange rate fluctuations on translation of its net investments in subsidiaries with non-US dollar functional currencies. Assets and liabilities of subsidiaries with non-US dollar functional currencies are translated into US 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 loss within stockholders’ equity. Mattel’s primary currency translation exposures during the first nine months of 2015 were related to its net investments in entities having functional currencies denominated in the Euro, Mexican peso, and Brazilian real.

There are numerous factors impacting the amount by which Mattel’s financial results are affected by foreign currency translation and transaction gains and losses resulting from changes in currency exchange rates, including, but not limited to, the level of foreign currency forward exchange contracts in place at a given time and the volume of foreign currency denominated transactions in a given period. However, assuming that such factors were held constant, Mattel estimates that a 1 percent change in the US dollar Trade-Weighted Index would impact Mattel’s net sales by approximately 0.5% and its full year earnings per share by approximately $0.01 to $0.02.

Venezuelan Operations

Since January 1, 2010, Mattel has accounted for Venezuela as a highly inflationary economy as the three-year cumulative inflation rate for Venezuela exceeded 100%. Accordingly, Mattel’s Venezuelan subsidiary uses the US dollar as its functional currency, and monetary assets and liabilities denominated in Venezuelan bolívar fuerte (“BsF”) generate income or expense for changes in value associated with foreign currency exchange rate fluctuations against the US dollar. From January 2010 through January 2013, Mattel’s Venezuelan subsidiary used the Sistema de Transacciones con Títulos en Moneda Extranjera (“SITME”) rate, which was quoted at 5.30 BsF per US dollar as of December 31, 2012, to remeasure monetary assets and liabilities denominated in BsF.

During February 2013, the Central Bank of Venezuela revised its official exchange rate to 6.30 BsF per US dollar and eliminated the SITME rate. Since February 2013, Mattel’s Venezuelan subsidiary has used the official exchange rate as its remeasurement rate.

During March 2013, the Venezuelan government introduced a complementary currency exchange system, the Sistema Complementario de Administración de Divisas 1 (“SICAD 1”). SICAD 1 was intended to function as an auction system, allowing entities in specific sectors to bid for US dollars to be used for specified import transactions. During February 2014, the Venezuelan government introduced an additional currency exchange system, the Sistema Complementario de Administración de Divisas 2 (“SICAD 2”), which was expected to provide a greater supply of US dollars from sources other than the Venezuelan government and increase participation to all sectors and companies. Mattel was not able to access US dollars in Venezuela through SICAD 1 due to various factors, including restrictions placed on eligible participants, the amount of US dollars available to purchase through the auction process, and the ineligibility of past import transactions to be settled through SICAD 1. Additionally, Mattel was not able to access US dollars through SICAD 2 due to restrictions associated with SICAD 2 and limited access to the SICAD 2 system.

During February 2015, the Venezuelan government announced the launch of a new three-tiered currency exchange platform, which includes a new exchange system called the Marginal Currency System (“SIMADI”). The first tier is used for food, medicine, agriculture, and other essential goods and uses the existing official exchange rate of 6.30 BsF per US dollar. The second tier is a merger of the SICAD 1 and SICAD 2 systems, which will continue to hold periodic auctions for entities in specific sectors. The third tier is the new SIMADI system, which is intended to be a market-driven exchange that allows for legal trading of foreign currency based on supply and demand.

Mattel continues to be unable to access US dollars in Venezuela through the merged SICAD system due to restrictions placed on eligible participants, the amount of US dollars available to purchase through the auction process, and the ineligibility of past import transactions to be settled through SICAD. As such, Mattel does not believe it would have been appropriate to use the SICAD rate as its remeasurement rate as of September 30, 2015. However, had Mattel used the SICAD rate of 13.50 BsF per US dollar as of September 30, 2015 as its remeasurement rate, it would have recognized a pre-tax charge of approximately $12 million in its consolidated statement of operations.

Mattel has not accessed US dollars in Venezuela through the SIMADI system due to the restrictions associated with SIMADI and the limited access to the exchange. As such, Mattel does not believe it would have been appropriate to use the SIMADI rate as its remeasurement rate as of September 30, 2015. However, Mattel is continuing to evaluate its remeasurement rate. Had Mattel used the SIMADI rate of 199.42 BsF per US dollar as of September 30, 2015 as its remeasurement rate, it would have recognized a pre-tax charge of approximately $22 million in its consolidated statement of operations.

Mattel’s Venezuelan subsidiary represented less than 0.01% of Mattel’s consolidated net sales in the first nine months of 2015 and had approximately $22 million of net monetary assets denominated in BsF as of September 30, 2015. Venezuela currency matters, along with economic and political instability, continue to impact the operating results of Mattel’s Venezuelan subsidiary. If the Venezuelan bolívar fuerte significantly devalues in the future, or if the economic or political conditions significantly worsen, Mattel may consider ceasing operations of its Venezuelan subsidiary, which could result in a pre-tax charge to its consolidated statement of operations of up to $95 million.

Greek Operations

During July 2015, Greece defaulted on its debt to the International Monetary Fund, which has led to renewed concerns about its economic and financial stability and the possibility that it will no longer use the Euro as its national currency. If Greece ceases to use the Euro as its national currency, the net monetary assets of Mattel’s Greek subsidiary would be subject to remeasurement, with the remeasurement gains and losses impacting the consolidated statements of operations. In the first nine months of 2015, Mattel’s Greek subsidiary represented less than 1% of Mattel’s consolidated net sales, and net monetary assets for Mattel’s Greek subsidiary and other subsidiaries subject to currency exchange risk in Greece were approximately $13 million.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of September 30, 2015, Mattel’s disclosure controls and procedures were evaluated, with the participation of Mattel’s principal executive officer and principal financial officer, to assess whether they are effective in providing reasonable assurance that information required to be disclosed by Mattel in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Based on this evaluation, Christopher A. Sinclair, Mattel’s principal executive officer, and Kevin M. Farr, Mattel’s principal financial officer, concluded that these disclosure controls and procedures were effective as of September 30, 2015.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2015, Mattel made no changes to its internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings.

The content of Part I, Item 1 “Financial Statements—Note 20 to the Consolidated Financial Statements—Contingencies” of this Quarterly Report on Form 10-Q is hereby incorporated by reference in its entirety in this Item 1.

Item 1A.

Risk Factors.

There have been no material changes to the risk factors disclosed under Part I, Item 1A “Risk Factors” in Mattel’s 2014 Annual Report on Form 10-K.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Equity Securities

During the third quarter of 2015, Mattel did not sell any unregistered equity securities.

Issuer Purchases of Equity Securities

This table provides certain information with respect to Mattel’s purchases of its common stock during the third quarter of 2015:


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⁾
July 1—31		3,704	$	24.28		—	$	203,016,273
August 1—31		250,971		23.21		—		203,016,273
September 1—30		2,178		22.67		—		203,016,273

Total		256,853	$	23.22		—	$	203,016,273

(1)

The total number of shares purchased relates to 256,853 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.

(2)

Mattel’s share repurchase program was first announced on July 21, 2003. On July 17, 2013, the Board of Directors authorized Mattel to increase its share repurchase program by $500.0 million. At September 30, 2015, share repurchase authorizations of $203.0 million had not been executed. Repurchases under the program will take place from time to time, depending on market conditions. Mattel’s share repurchase program has no expiration date.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures.

Not applicable.

Item 5.

Other Information.

None.

Item 6.

Exhibits.


		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	September 1, 2015

4.0	Specimen Stock Certificate with respect to Mattel’s Common Stock	10-Q	001-05647	4.0	August 3, 2007

10.1*+	Letter Agreement between Mattel, Inc. (“Mattel”) and Timothy J. Kilpin, dated August 10, 2015, regarding Mr. Kilpin’s separation from Mattel

10.2*+	Letter Agreement between Mattel and Geoffrey H. Walker, dated June 29, 2015, regarding Mr. Walker’s promotion to EVP Commercial – North America

10.3*+	Form Grant Agreement for RSUs to Non-Employee Directors under the Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Incentive Plan (“Amended 2010 Plan”)

10.4*+	Form Grant Agreement for RSUs to Participants in the Mattel, Inc. Executive Severance Plan under the Amended 2010 Plan

10.5*+	Form Grant Agreement for RSUs to Participants in the Mattel, Inc. Executive Severance Plan B under the Amended 2010 Plan

10.6*+	Form Grant Agreement for RSUs to Employees under the Amended 2010 Plan

10.7*+	Form Grant Agreement for NQSOs to Participants in the Mattel, Inc. Executive Severance Plan under the Amended 2010 Plan

10.8*+	Form Grant Agreement for NQSOs to Participants in the Mattel, Inc. Executive Severance Plan B under the Amended 2010 Plan

10.9*+	Form Grant Agreement for NQSOs to Employees under the Amended 2010 Plan

12.0*	Computation of Ratio of Earnings to Fixed Charges

31.0*	Certification of Principal Executive Officer dated October 27, 2015 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.1*	Certification of Principal Financial Officer dated October 27, 2015 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.0**	Certifications of Principal Executive Officer and Principal Financial Officer dated October 27, 2015 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*	XBRL Instance Document

101.SCH*	XBRL Taxonomy Extension Schema Document

101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

+	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.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


MATTEL, INC. Registrant

By:		/s/ J OSEPH B. J OHNSON
		Joseph B. Johnson Senior Vice President and Corporate Controller (Duly authorized officer and chief accounting officer)

Date: October 27, 2015

Exhibit 10.1

August 10, 2015

Timothy J. Kilpin

c/o Mattel, Inc.

333 Continental Blvd.

El Segundo, CA 90245

Dear Tim,

This letter (this “ Letter Agreement ”) memorializes our discussions with respect to your upcoming separation of employment (the “ Separation ”) with Mattel, Inc. (“ Mattel ”) on November 2, 2015 (the “ Termination Date ”), including with respect to your employment through the Termination Date and with respect to the application of certain terms of the Mattel, Inc. Executive Severance Plan B (the “ Severance Plan ”) and the participation letter relating to the Severance Plan, dated as of July 18, 2014, between you and Mattel (the “ Participation Letter ”). This Letter Agreement also serves as notice to you pursuant to Section 15 of the Severance Plan; and, you specifically agree and acknowledge to waive the requirement in Section 2(f) that the Termination Date be no more than fifteen (15) days after the actual receipt of the notice of termination.

Service Through The Termination Date . You will immediately cease to serve as President, Toy Box and from August 10, 2015 through the Termination Date, you shall be an Executive Advisor, reporting to the Chief Operating Officer of Mattel or his designee, with such duties as shall reasonably be requested of you by the Chief Operating Officer or his designee. Pursuant to the terms of the Severance Plan, you will be eligible to receive a pro-rated annual bonus that you would have received under the Mattel Incentive Plan (the “ MIP ”) for fiscal year 2015, if any, as if you had remained employed through the regularly scheduled payment date for such MIP bonus, based on the number of days in fiscal year 2015 you were employed with the Company, payable following the end of fiscal year 2015 in accordance with the applicable terms of the MIP and the Severance Plan.

Severance Benefits . For purposes of the Severance Plan, the Separation is currently deemed a Covered Termination (as defined in the Severance Plan) pursuant to Section 2(e) thereof. In connection with the Separation, you will be entitled to the severance payments and benefits set forth in Section 3(b) of the Severance Plan, subject to your execution following the Termination Date of the release (the “ Release ”) in substantially the form attached as Exhibit A to the Participation Letter (and the Release becoming irrevocable within 55 days of the Termination Date).

Resignation From All Positions . You agree to tender your resignation from any and all positions you occupy as an officer or director of the Company by signing the resignation letter in the form of Exhibit A to this Agreement and returning it to me along with this Agreement.

Severance Plan . You agree and acknowledge that the Severance Plan and your Participation Letter remain in full effect and that this Letter Agreement shall not interfere with or restrict the right of the Company to discharge you for Cause (i.e., if your employment terminates for any reason other than a Covered Termination prior to November 2, 2015, you acknowledge that you will not be eligible for the severance benefits under the Severance Plan). The Termination Date shall be the “Date of Termination” for all purposes of the Severance Plan.

Full Agreement . This Letter Agreement, the Severance Plan, the Participation Letter, the Release and the 2012 Employee Confidentiality and Inventions Agreement (effective May 1, 2012) (the “2012 Agreement”) or any agreement superseding the 2012 Agreement (collectively, the “ Agreements ”) constitute the full understanding of you, Mattel and the Company with respect to the Separation. Without limiting the generality of the foregoing, you expressly acknowledge and agree that except as specifically set forth in the Agreements, you are not entitled to receive any severance pay or benefits from Mattel, the Company and its affiliates.

Governing Law . This letter shall be governed by and construed in accordance with the laws of the State of California, without reference to principles of conflict of laws. The dispute resolution provisions of the Severance Plan shall apply to this Letter Agreement.

Miscellaneous . This Letter Agreement may be amended, modified or changed only by a written instrument executed by you and Mattel. The captions of this Letter Agreement are not part of the provisions hereof and shall have no force or effect. This Letter Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.


Sincerely,

Mattel, Inc.

By:		/s/ Alan Kaye
		Alan Kaye
		Executive Vice President, Chief Human Resources Officer


Acknowledged and Agreed:

/s/ Timothy J. Kilpin
Timothy J. Kilpin

- 2 -

Exhibit A

Date:

Mattel, Inc.

333 Continental Boulevard

El Segundo, California 90245

Re:

Resignation from director and officer positions with Mattel and/or its subsidiaries

Ladies and Gentlemen:

I hereby resign from any position I occupy as a director or officer of Mattel, Inc. and/or any direct or indirect subsidiary of Mattel, Inc., effective as of .

Very truly yours,


Signature:

Name:

- 3 -

Exhibit 10.2

June 29, 2015

Geoff Walker

Dear Geoff,

Mattel Sales Corporation (the “Company”) is pleased to extend you an offer for the position of Executive Vice President Commercial – North America at the Business Unit Leadership job level located at Company Headquarters in El Segundo, California, and to outline the terms surrounding your transfer effective June 8, 2015.

SALARY

Your annualized base salary will remain at $530,000, payable on a bi-weekly basis, less applicable federal and state taxes and other required withholdings.

BONUS – MATTEL INCENTIVE PLAN

You will continue to be eligible to participate in the Mattel Incentive Plan (MIP) at a target of 70% and a maximum of 140%.

LONG-TERM INCENTIVE PROGRAM

You will continue to be eligible to participate in the 2014 – 2016 Long-Term Incentive Program (LTIP) at a target of $1,000,000.

SPECIAL MOBILITY BONUS

You will receive a special mobility bonus in the amount of $200,000, less applicable federal and state taxes and other required withholdings, to assist with your relocation to Company Headquarters in El Segundo, California, to be paid within 30 days of your transfer date.

With respect to this special mobility bonus, if within two years of your transfer date, you choose to voluntarily terminate your employment with the Company or you are discharged for “cause” as defined below, you will be required to repay this amount in full within 30 days of your termination date.

SPECIAL HOME SALE ASSISTANCE

If a loss is incurred on the sale of your home in Buffalo, New York, you will receive reimbursement of up to $200,000, less applicable federal and state taxes and other required withholdings.

With respect to this special home sale assistance, if within two years of the payment date, you choose to voluntarily terminate your employment with the Company or you are discharged for “cause” as defined below, you will be required to repay this amount in full within 30 days of your termination date.

RELOCATION ASSISTANCE

The Company will provide services to assist you with your move to your work location in El Segundo, California. These services may include travel, temporary accommodations, shipment of household goods, expense reimbursement, etc., in accordance with the Mattel Relocation Program. (Summary is attached).

With respect to relocation services, if within one year of your relocation date, you choose to voluntarily terminate your employment with the Company, or you are discharged for “cause” as defined below, you agree to reimburse the Company within 30 days of your termination date for any relocation expenses incurred by the Company on your behalf.

For purposes of the repayment of relocation expenses, special mobility bonus, special home sale assistance, and without altering the at-will employment offered by the Company, “cause” shall mean the Company’s good faith belief that you: (i) neglected significant duties you were required to perform or violated a material Company policy, rule or guideline; (ii) engaged in an act of dishonesty, fraud, misrepresentation or other act of moral turpitude; (iii) engaged in an act or omission in the course of your employment which constitutes gross negligence; or (iv) willfully failed to obey a lawful direction of the Board or the Company.

STOCK – ANNUAL EQUITY GRANT

You will continue to be eligible to receive an annual equity grant. Typically, annual equity grants are made around August 1 of each year. Your annual equity grant recommendation may vary each year and will be submitted to the Compensation Committee of the Board of Directors for approval. Currently, the Company’s equity portfolio approach encompasses two grants: RSUs and stock options.

CAR ALLOWANCE

As an executive, you will continue to be eligible to receive a monthly automobile allowance in the amount of $2,000 for all your automobile expenses, payable on a biweekly basis, less applicable federal and state taxes and other required withholdings, upon the end of any rental car use. The car allowance is intended to cover all automobile expenses including mileage, gasoline, maintenance and insurance.

DEFERRED COMPENSATION

As a U.S. executive, you will continue to be eligible to participate in the Company’s Deferred Compensation Plan. Under this plan, you may elect to defer a portion of your salary or annual MIP bonus, with various investment and payment options available.

FINANCIAL COUNSELING

As a senior executive, you will continue to be eligible to receive financial counseling services from The Ayco Company paid for by Mattel, subject to imputed income and tax, or alternatively, you may elect to receive reimbursement from Mattel of up to $10,000 per year, less applicable taxes, for financial counseling services through a company of your choice.

STOCK OWNERSHIP

As a Business Unit Leadership level executive, you will continue to be subject to stock ownership guidelines established as a multiple of base salary. Your stock ownership requirement is two times your base salary. You will have until December 31, 2018 to attain your targeted level of ownership.

HEALTH & WELFARE

You will continue to participate in Mattel’s benefit programs.

VACATION

As an executive, you may continue to take an appropriate amount of paid vacation, subject to the needs of the business and management’s discretion. You do not have a specified vacation award, and therefore vacation tracking in Mattel’s E-Time system is not necessary. For leaves of absence, different practices apply.

GENERAL INFORMATION

This offer letter is only a summary of your compensation and benefits. More details and plan provisions are provided in our Summary Plan Descriptions, Plan Documents or program summaries, which govern and are subject to periodic modification and revision.

This offer letter supersedes any prior communications you may have had with Company employees and/or representatives, and reflects the entire understanding between you and the Company, regarding the terms of employment being offered to you. No Company employee and/or representative has the authority to make any promise related to this offer that is not contained in this letter and, by signing below, you affirm that you have not signed this offer letter in reliance on any such promise. By signing below, you confirm that your negotiation, acceptance and/or performance of the terms of this offer does not violate any contract or arrangement you may have with any third party. If the Company (in its sole discretion) determines that your confirmation may be inaccurate for any reason, it can be a basis for terminating your employment “with cause.” By signing below, you agree to indemnify the Company against any claims that may be brought against the Company relating to any allegation that you violated any contract or arrangement between you and such third party.

The terms of this offer letter do not imply employment for a definite period. This means that your employment will be at-will, and either you or the Company can terminate it at any time, for any or no reason, with or without cause or advance notice. This at-will relationship cannot be changed by any statement, act, series of events, or pattern of conduct and can only be changed by an express, written agreement signed by the Chief Human Resources Officer or Chief Executive Officer of Mattel, Inc.

Also, please note that as an executive of the Company, and an officer, you will continue to be considered an Insider for purposes of Mattel’s Insider Trading Policy and are subject to window period restrictions. This means that you are restricted to conducting transactions in Mattel stock ONLY during open window periods. Examples of such transactions include sales of shares underlying a stock option (including sales of shares to generate cash to pay the exercise price) and changes in elections in the Mattel stock fund of Mattel’s 401(k) plan. For more information about this Policy and its restrictions, you can access and/or obtain a copy of the Policy on Mattel’s Code of Conduct website.

Geoff, we are sincerely pleased to provide you with this letter detailing the terms of this new assignment and look forward to a mutually beneficial arrangement. Please review the terms contained herein and sign below to indicate your understanding and concurrence. Also, note that I have enclosed two copies of the letter so that you can return a signed copy to me and retain one for your records. If I can answer any questions, please do not hesitate to call me.

Sincerely,

/s/ Alan Kaye

Alan Kaye

Executive Vice President and Chief Human Resources Officer


Agreed and accepted:

/s/ Geoff Walker				8 -5-15
Geoff Walker				Date

Exhibit 10.3

GRANT AGREEMENT FOR

RESTRICTED STOCK UNITS TO OUTSIDE DIRECTORS UNDER THE

MATTEL, INC. AMENDED AND RESTATED

2010 EQUITY AND LONG-TERM COMPENSATION PLAN

This is a Grant Agreement between Mattel, Inc. (“ Mattel ”) and the Outside Director of Mattel (the “ Holder ”) named in the Notice of Grant of Restricted Stock Units (the “ Notice ”), which Notice is deemed a part of this Grant Agreement.

Recitals

Mattel has adopted the Amended and Restated 2010 Equity and Long-Term Compensation Plan (the “ Plan ”) for the granting to selected service providers of awards based upon shares of Common Stock of Mattel. This Grant Agreement is being executed pursuant to Section 14 of the Plan. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Plan.

Restricted Stock Units

1. Grant . Effective as of the grant date specified in the Notice (the “ Grant Date ”), Mattel grants to the Holder the number of restricted stock units based on shares of Common Stock set forth in the Notice (the “ Units ”), subject to adjustment, forfeiture and the other terms and conditions set forth in the Notice and this Grant Agreement. Mattel and the Holder acknowledge that the Units (i) are being granted hereunder in exchange for the Holder’s agreement to provide services to the Company after the Grant Date, for which the Holder will otherwise not be fully compensated, and which Mattel deems to have a value at least equal to the aggregate par value of the shares, if any, that the Holder may become entitled to receive under this Grant Agreement, and (ii) will, except as provided in Section 3 hereof, be forfeited by the Holder if the Holder’s Severance occurs before they vest, as more fully set forth in this Grant Agreement and the Plan.

2. Normal Vesting . Except as otherwise provided in Section 3 hereof, the Units shall vest in the time and manner set forth in the Notice.

3. Consequences of the Holder’s Severance . The consequences of the Holder’s Severance shall be as follows:

(i) in the case of the Holder’s Severance for Cause prior to the Settlement Date, all of the Units (whether vested or unvested, or deferred pursuant to a deferral election made by the Holder in accordance with Section 5 hereof) shall be forfeited as of the date of the Severance;

(ii) in the case of the Holder’s Severance as a result of Retirement, Disability or death, the Units that have not yet vested shall vest as of the date of the Severance; and

(iii) in all other cases, the Units that have not yet vested shall be forfeited as of the date of the Severance.

4. Consequences of Vesting and Payout of Units.

(i) Subject to any deferral election made by the Holder in accordance with Section 5 hereof, upon the applicable Settlement Date (as specified in Section 4(ii) hereof) of a vested Unit, Mattel shall settle each Unit by delivering to the Holder one share of Common Stock for each Unit that so vested. Mattel shall (A) issue or cause to be delivered to the Holder (or the Holder’s Heir, as defined below, if applicable) one or more stock certificates representing such shares, or (B) cause a book entry for such shares to be made in the name of the Holder (or the Holder’s Heir, if applicable). In the case of the Holder’s death, the Common Stock to be delivered in settlement of vested Units shall be delivered to the Holder’s beneficiary or beneficiaries (as designated in the manner determined by the Committee), or if no beneficiary is so designated or if no beneficiary survives the Holder, then the Holder’s administrator, executor, personal representative, or other person to whom the Units are transferred by means of the Holder’s will or the laws of descent and distribution (such beneficiary, beneficiaries or other person(s), the “ Holder’s Heir ”).

(ii) Mattel believes that the Units constitute “deferred compensation” within the meaning of Section 409A of the Code (“ Section 409A ”). To the extent that the Units are not exempt from the provisions of Section 409A, this Grant Agreement shall be interpreted in a manner consistent with complying with such provisions. If Mattel determines after the Grant Date that an amendment to this Grant Agreement is necessary or advisable so that the Units comply with Section 409A, it may make such amendment, effective as of the Grant Date or at any later date, without the consent of the Holder. Consistent with the intent to comply with Section 409A to the extent applicable, the following shall apply:

A. Subject to any deferral election made by the Holder in accordance with Section 6 hereof, the “ Settlement Date ” with respect to any vested Unit shall be the first to occur of:

1. the third anniversary of the Grant Date;

2. the date of the Holder’s Severance (other than a Severance for Cause); provided that if the Holder is a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code) (a “ Specified Employee ”) as of the date of the Holder’s Severance, the Settlement Date shall be the earlier of (a) the date that is six calendar months following the Holder’s Severance or (b) the date of the Holder’s death;

3. the date of the Holder’s death;

4. the date of the Holder’s Disability, if such Disability qualifies the Holder as “disabled” within the meaning of Section 409A(a)(2)(A)(ii) of the Code, and

5. the date of a Change in Control that qualifies as an event described in Section 409A(a)(2)(A)(v) of the Code.

The determination of whether the Holder is a Specified Employee shall be made by Mattel pursuant to the methodology adopted by Mattel in accordance with Section 409A, which methodology may be amended or replaced at any time and from time to time by Mattel, as and to the extent permitted by Section 409A.

B. If a Change in Control occurs that does not qualify as an event described in Section 409A(a)(2)(A)(v) of the Code, the amount that shall be provided on the applicable Settlement Date (if such Settlement Date occurs following such Change in Control) in settlement of any Unit that vested as a result of such Change in Control shall be a cash amount that equals the Fair Market Value of a share of Common Stock as of the date of such Change in Control, plus interest thereon through the Settlement Date at the federal funds rate (as reported in the Wall Street Journal or any other information source reasonably selected by the Committee), compounded daily.

C. Under no circumstances may this Grant Agreement be amended or terminated in a manner that violates Section 409A.

5. Deferral Election . The Holder may elect to defer the Settlement Date (and, therefore, the receipt of any shares of Common Stock that otherwise would have been delivered to the Holder on the Settlement Date specified in Section 4(ii)(A) hereof in accordance with the terms and conditions of the Mattel, Inc. Deferred Compensation Plan for Non-Employee Directors (the “ Director DCP ”) and Section 409A. If the Holder makes a timely and valid election under the Director DCP, settlement of each deferred Unit shall be made pursuant to the terms of the Director DCP.

6. Compliance with Law.

(i) No shares of Common Stock shall be issued and delivered pursuant to a vested Unit unless and until all applicable registration requirements of the Securities Act of 1933, as amended, all applicable listing requirements of any national securities exchange on which the Common Stock is then listed, and all other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery, shall have been complied with and are in full force. In particular, the Committee may require certain investment (or other) representations and undertakings in connection with the issuance of securities in connection with the Plan in order to comply with applicable law.

(ii) If any provision of this Grant Agreement is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law. Furthermore, if any provision of this Grant Agreement is determined to be illegal under any applicable law, such provision shall be null and void to the extent necessary to comply with applicable law, but the other provisions of this Grant Agreement shall remain in full force and effect.

7. Assignability . The Units shall not be transferable by the Holder, other than upon the death of the Holder in accordance with such beneficiary designation procedures or other procedures as Mattel may prescribe from time to time.

8. Certain Corporate Transactions . In the event of certain corporate transactions, the Units shall be subject to adjustment as provided in Section 17 of the Plan. In addition, in the event of a Change in Control, the Units shall be subject to the provisions of Section 18 of the Plan.

9. No Additional Rights.

(i) Neither the granting of the Units nor their vesting or settlement shall (a) affect or restrict in any way the power of Mattel to take any and all actions otherwise permitted under applicable law, (b) confer upon the Holder the right to continue performing services for the Company, or (c) interfere in any way with the right of the Company to terminate the services of the Holder at any time, with or without Cause.

(ii) The Holder acknowledges that (a) this is a one-time grant, (b) the making of this grant does not mean that the Holder will receive any similar grant or grants in the future, or any future grants at all, and (c) this grant does not in any way entitle the Holder to future grants under the Plan, if any, and Mattel retains sole and absolute discretion as to whether to make any additional grants to the Holder in the future and, if so, the quantity, terms, conditions and provisions of any such grants.

(iii) Without limiting the generality of subsections (i) and (ii) immediately above, if there is a Severance of the Holder, the Holder shall not be entitled to any compensation for any loss of any right or benefit or prospective right or benefit relating to the Units or under the Plan which he or she might otherwise have enjoyed, whether such compensation is claimed by way of damages for wrongful termination of services or other breach of contract or by way of compensation for loss of office or otherwise.

10. Rights as a Stockholder . Neither the Holder nor the Holder’s Heir shall have any rights as a stockholder with respect to any shares represented by the Units unless and until shares of Common Stock have been issued in settlement thereof.

11. Data Privacy Consent. By accepting the grant of the Units, the Holder hereby agrees and consents to:

(i) the collection, use, processing and transfer by the Company of certain personal information about the Holder (the “ Data ”);

(ii) any members of the Company transferring Data amongst themselves for the purposes of implementing, administering and managing the Plan;

(iii) the use of such Data by any such person for such purposes; and

(iv) the transfer to and retention of such Data by third parties in connection with such purposes.

For the purposes of subsection (i) above, “Data” means the Holder’s name, home address and telephone number, date of birth, any tax or other identification number, details of all rights to acquire Common Stock granted to the Holder and of Common Stock issued or transferred to the Holder pursuant to the Plan.

12. Compliance with Plan . The Units and this Grant Agreement are subject to, and Mattel and the Holder agree to be bound by, all of the terms and conditions of the Plan as it shall be amended from time to time, and the rules, regulations and interpretations relating to the Plan as may be adopted by the Committee, all of which are incorporated herein by reference. No amendment to the Plan or the Grant Agreement shall adversely affect the Units or this Grant Agreement without the consent of the Holder. In the case of a conflict between the terms of the Plan and this Grant Agreement, the terms of the Plan shall govern and this Grant Agreement shall be deemed to be modified accordingly.

13. Governing Law . The interpretation, performance and enforcement of this Grant Agreement shall be governed by the laws of the State of Delaware without regard to principles of conflicts of laws. The Holder may only exercise his or her rights in respect of the Plan, the Grant Agreement and these Units to the extent that it would be lawful to do so, and Mattel would not, in connection with this Grant Agreement, be in breach of the laws of any jurisdiction to which the Holder may be subject. The Holder shall be solely responsible to seek advice as to the laws of any jurisdiction to which he or she may be subject, and a participation by a Holder in the Plan shall be on the basis of a warranty by the Holder that the Holder may lawfully so participate without Mattel being in breach of the laws of any such jurisdiction.

Exhibit 10.4

GRANT AGREEMENT FOR

RESTRICTED STOCK UNITS UNDER THE

MATTEL, INC. AMENDED AND RESTATED

2010 EQUITY AND LONG-TERM COMPENSATION PLAN

This is a Grant Agreement (this “ Grant Agreement ”) between Mattel, Inc. (“ Mattel ”) and the individual (the “ Holder ”) named in the Notice of Grant – Restricted Stock Units (the “ Notice ”). The Notice accompanying this Grant Agreement is deemed a part of this Grant Agreement.

Recitals

Mattel has adopted the Amended and Restated 2010 Equity and Long-Term Compensation Plan, as may be amended from time to time (the “ Plan ”), for the granting to selected employees of awards based upon shares of Common Stock of Mattel. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Plan. This Grant Agreement incorporates certain provisions required by the terms of the Mattel, Inc. Executive Severance Plan, as may be amended from time to time (the “ Severance Plan ”).

Restricted Stock Units

1. Grant . Effective as of the grant date specified in the Notice (the “ Grant Date ”), Mattel grants to the Holder the number of restricted stock units based on shares of Common Stock set forth in the Notice (the “ Units ”), subject to adjustment, forfeiture and the other terms and conditions set forth in the Notice and this Grant Agreement. Mattel and the Holder acknowledge that the Units (a) are being granted hereunder in exchange for the Holder’s agreement to provide services to the Company after the Grant Date, for which the Holder will otherwise not be fully compensated, and which the Company deems to have a value at least equal to the aggregate par value of the shares, if any, that the Holder may become entitled to receive under this Grant Agreement; (b) will, except as provided in Section 3, be forfeited by the Holder if the Holder’s Severance occurs before they vest; and (c) are subject to cancellation if the Holder engages in certain conduct detrimental to the Company, in each case as more fully set forth in this Grant Agreement and the Plan.

2. Normal Vesting . Except as otherwise provided in Section 3, the Units shall vest in the time and manner set forth in the Notice.

3. Consequences of the Holder’s Severance . The consequences of the Holder’s Severance shall be as follows, subject to Section 4 below.

(a)

In the case of the Holder’s Severance for Cause, the Units that have not yet vested shall be forfeited as of the date of the Severance.

(b)

In the case of the Holder’s Severance that occurs at least six (6) months after the Grant Date as a result of Involuntary Retirement, death or Disability, the Units that have not yet vested shall vest as of the date of the Severance.

(c)

In the case of the Holder’s Severance that constitutes a Covered Termination (as defined in the Severance Plan) other than within 24 months following a Change of Control (as defined in the Severance Plan), the Units that have not yet vested shall vest pro-rata (i.e., vest based on the number of full months of the Holder’s employment during the vesting period over the total number of months in the vesting period) as of the date of the Severance. Notwithstanding the foregoing, if such Severance constitutes an Involuntary Retirement and the date of such Involuntary Retirement is at least six (6) months after the Grant Date, then the Units that have not yet vested shall vest as of the date of the Severance.

(d)

In the case of the Holder’s Severance that constitutes a Covered Termination within 24 months following a Change of Control, the Units that have not yet vested shall vest as of the date of the Severance.

(e)

In the case of the Holder’s Severance in all other circumstances, the Units that have not yet vested shall be forfeited as of the date of the Severance.

4. Termination, Rescission and Recapture . The Holder specifically acknowledges that the Units and any Common Stock or cash delivered in settlement thereof are subject to the provisions of Section 19 of the Plan, entitled “Termination, Rescission and Recapture,” which can cause the forfeiture of the Units and/or the recapture of any Common Stock and/or cash delivered in settlement thereof and/or the proceeds of the sale of any such Common Stock. Except as provided in the next sentence, as a condition of the vesting and settlement of the Units, the Holder will be required to certify that he or she is in compliance with the terms and conditions of the Plan (including the conditions set forth in Section 19 of the Plan) and, if a Severance has occurred, to state the name and address of his or her then-current employer or any entity for which the Holder performs business services and his or her title, and shall identify any organization or business in which the Holder owns a greater-than-five-percent equity interest. Section 19 of the Plan is inapplicable, and accordingly such certification shall not be required, after a Severance of the Holder that occurs within the 24-month period after a Change in Control.

5. Consequences of Vesting . Upon the vesting of a Unit, Mattel shall settle each Unit by delivering to the Holder on or within five (5) business days following the vesting date of such Unit one share of Common Stock or a cash payment equal to the Fair Market Value of a share of Common Stock as of the date of such vesting (the “ Settlement Date ”) for each Unit that so vested, as Mattel may in its sole discretion determine (and Mattel may settle some Units in Common Stock and some in cash), subject to Section 7 below. In the case of Units settled by delivery of Common Stock, Mattel shall (a) issue or cause to be delivered to the Holder one or more stock certificates representing such shares, or (b) cause a book entry for such shares to be made in the name of the Holder.

6. Code Section 409A . Mattel believes that the Units do not constitute “deferred compensation” within the meaning of Section 409A of the Code. If Mattel determines after the Grant Date that an amendment to this Grant Agreement is necessary or advisable to ensure that the Units will not be subject to Section 409A, or alternatively to ensure that they comply with Section 409A, it may make such amendment, effective as of the Grant Date or at any later date, without the consent of the Holder.

7. Tax Withholding . The Company shall withhold from the cash and/or Common Stock deliverable in settlement of the Units, an amount necessary to satisfy the income taxes, social taxes, payroll taxes and other taxes required to be withheld in connection with such vesting and settlement. If such payment is in the form of shares of Common Stock deliverable on the Settlement Date, the Fair Market Value of such shares on the Settlement Date shall not exceed the sums necessary to pay the tax withholding based on the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income, rounded up to the nearest whole number of shares (unless higher withholding is permissible without adverse accounting consequences to Mattel). If any such taxes are required to be withheld at a date earlier than the Settlement Date, then notwithstanding any other provision of this Grant Agreement, the Company may (a) satisfy such obligation by causing the forfeiture of a number of Units having a Fair Market Value on such earlier date equal to the amount necessary to satisfy the minimum required amount of such withholding (unless higher withholding is permissible without adverse accounting consequences to Mattel), or (b) make such other arrangements with the Holder for such withholding as may be satisfactory to the Company in its sole discretion.

8. Compliance with Law .

(a)

No shares of Common Stock shall be issued and delivered pursuant to a vested Unit unless and until all applicable registration requirements of the Securities Act of 1933, as amended, all applicable listing requirements of any national securities exchange on which the Common Stock is then listed, and all other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery, shall have been complied with and are in full force. In particular, the Committee may require certain investment (or other) representations and undertakings in connection with the issuance of securities in connection with the Plan in order to comply with applicable law.

(b)

If any provision of this Grant Agreement is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law. Furthermore, if any provision of this Grant Agreement is determined to be illegal under any applicable law, such provision shall be null and void to the extent necessary to comply with applicable law, but the other provisions of this Grant Agreement shall remain in full force and effect.

9. Assignability . The Units shall not be transferable by the Holder, other than upon the death of the Holder in accordance with such beneficiary designation procedures or other procedures as Mattel may prescribe from time to time.

10. Certain Corporate Transactions . In the event of certain corporate transactions, the Units shall be subject to adjustment as provided in Section 17 of the Plan. In the event of a Change in Control, subject to Section 4 above, these Units shall be subject to the provisions of Section 18 of the Plan.

11. No Additional Rights .

(a)

Neither the granting of the Units nor their vesting or settlement shall (i) affect or restrict in any way the power of Mattel to take any and all actions otherwise permitted under applicable law, (ii) confer upon the Holder the right to continue in the employment of or performing services for the Company, or (iii) interfere in any way with the right of the Company to terminate the services of the Holder at any time, with or without Cause.

(b)

The Holder acknowledges that (i) this is a one-time grant, (ii) the making of this grant does not mean that the Holder will receive any similar grant or grants in the future, or any future grants at all, and (iii) this grant does not in any way entitle the Holder to future grants under the Plan, if any, and Mattel retains sole and absolute discretion as to whether to make any additional grants to the Holder in the future and, if so, the quantity, terms, conditions and provisions of any such grants.

(c)

Without limiting the generality of subsections (a) and (b) immediately above and subject to Section 3 above, if there is a Severance of the Holder, the Holder shall not be entitled to any compensation for any loss of any right or benefit or prospective right or benefit relating to the Units or under the Plan which he or she might otherwise have enjoyed, whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or otherwise.

12. Rights as a Stockholder . The Holder shall not have any rights as a stockholder with respect to any shares represented by the Units unless and until shares of Common Stock have been issued in settlement thereof.

13. Data Privacy Waiver . By accepting the grant of the Units, the Holder hereby agrees and consents to:

(a)

the collection, use, processing and transfer by the Company of certain personal information about the Holder (the “ Data ”);

(b)

any members of the Company transferring Data amongst themselves for the purposes of implementing, administering and managing the Plan;

(c)

the use of such Data by any such person for such purposes; and

(d)

the transfer to and retention of such Data by third parties in connection with such purposes.

For the purposes of subsection (a) above, “Data” means the Holder’s name, home address and telephone number, date of birth, other employee information, any tax or other identification number, details of all rights to acquire Common Stock granted to the Holder and of Common Stock issued or transferred to the Holder pursuant to the Plan.

14. Compliance with Plan . The Units and this Grant Agreement are subject to, and Mattel and the Holder agree to be bound by, all of the terms and conditions of the Plan, as it shall be amended from time to time, and the rules, regulations and interpretations relating to the Plan as may be adopted by the Committee, all of which are incorporated herein by reference. No amendment to the Plan or this Grant Agreement shall adversely affect the Units without the consent of the Holder. In the case of a conflict between the terms of the Plan and this Grant Agreement, the terms of the Plan shall govern and this Grant Agreement shall be deemed to be modified accordingly.

15. No Advice Regarding Grant . Mattel is not providing any tax, legal or financial advice, nor is Mattel making any recommendations, regarding the Holder’s participation in the Plan or the Holder’s acquisition or sale of the underlying Common Stock. The Holder is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

16. Governing Law . The interpretation, performance and enforcement of this Grant Agreement shall be governed by the laws of the State of Delaware without regard to principles of conflicts of laws.

Exhibit 10.5

GRANT AGREEMENT FOR

RESTRICTED STOCK UNITS UNDER THE

MATTEL, INC. AMENDED AND RESTATED

2010 EQUITY AND LONG-TERM COMPENSATION PLAN

Recitals

Mattel has adopted the Amended and Restated 2010 Equity and Long-Term Compensation Plan, as may be amended from time to time (the “ Plan ”), for the granting to selected employees of awards based upon shares of Common Stock of Mattel. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Plan. This Grant Agreement incorporates certain provisions required by the terms of the Mattel, Inc. Executive Severance Plan B, as may be amended from time to time (the “ Severance Plan ”).

Restricted Stock Units

2. Normal Vesting . Except as otherwise provided in Section 3, the Units shall vest in the time and manner set forth in the Notice.

3. Consequences of the Holder’s Severance . The consequences of the Holder’s Severance shall be as follows, subject to Section 4 below.

(a)

In the case of the Holder’s Severance for Cause, the Units that have not yet vested shall be forfeited as of the date of the Severance.

(b)

(c)

(d)

(e)

In the case of the Holder’s Severance in all other circumstances, the Units that have not yet vested shall be forfeited as of the date of the Severance.

8. Compliance with Law .

(a)

(b)

11. No Additional Rights .

(a)

(b)

(c)

13. Data Privacy Waiver . By accepting the grant of the Units, the Holder hereby agrees and consents to:

(a)

the collection, use, processing and transfer by the Company of certain personal information about the Holder (the “ Data ”);

(b)

any members of the Company transferring Data amongst themselves for the purposes of implementing, administering and managing the Plan;

(c)

the use of such Data by any such person for such purposes; and

(d)

the transfer to and retention of such Data by third parties in connection with such purposes.

Exhibit 10.6

GRANT AGREEMENT FOR

RESTRICTED STOCK UNITS UNDER THE

MATTEL, INC. AMENDED AND RESTATED

2010 EQUITY AND LONG-TERM COMPENSATION PLAN

Recitals

Restricted Stock Units

2. Normal Vesting . Except as otherwise provided in Section 3, the Units shall vest in the time and manner set forth in the Notice.

3. Consequences of the Holder’s Severance . The consequences of the Holder’s Severance shall be as follows, subject to Section 4 below:

(a) in the case of the Holder’s Severance for Cause, the Units that have not yet vested shall be forfeited as of the date of the Severance;

(b) in the case of the Holder’s Severance that occurs at least six (6) months after the Grant Date as a result of Involuntary Retirement, death or Disability, the Units that have not yet vested shall vest as of the date of the Severance;

(c) in the case of the Holder’s Severance by the Company without Cause within the 24-month period following a Change in Control, the Units that have not yet vested shall vest as of the date of the Severance; and

(d) in the case of the Holder’s Severance in all other circumstances, the Units that have not yet vested shall be forfeited as of the date of the Severance.

delivered in settlement thereof and/or the proceeds of the sale of any such Common Stock. Except as provided in the next sentence, as a condition of the vesting and settlement of the Units, the Holder will be required to certify that he or she is in compliance with the terms and conditions of the Plan (including the conditions set forth in Section 19 of the Plan) and, if a Severance has occurred, to state the name and address of his or her then-current employer or any entity for which the Holder performs business services and his or her title, and shall identify any organization or business in which the Holder owns a greater-than-five-percent equity interest. Section 19 of the Plan is inapplicable, and accordingly such certification shall not be required, after a Severance of the Holder that occurs within the 24-month period after a Change in Control.

(unless higher withholding is permissible without adverse accounting consequences to Mattel) by means of certified check, cashier’s check or wire transfer.

Further, if the Holder becomes subject to taxation in more than one country between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Holder acknowledges that the Company may be required to withhold or account for taxes in more than one country. In the event the withholding requirements for the applicable taxes are not satisfied, no shares of Common Stock will be issued to the Holder (or the Holder’s estate) upon vesting of the Units unless and until satisfactory arrangements (as determined by Mattel in its sole discretion) have been made by the Holder with respect to the payment of any such applicable taxes. By accepting the Units, the Holder expressly consents to the methods of withholding as provided hereunder. All other taxes related to the Units and any shares of Common Stock delivered in settlement thereof shall be the sole responsibility of the Holder.

8. Compliance with Law .

(a) No shares of Common Stock shall be issued and delivered pursuant to a vested Unit unless and until all applicable registration requirements of the Securities Act of 1933, as amended, all applicable listing requirements of any national securities exchange on which the Common Stock is then listed, and all other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery, shall have been complied with and are in full force. In particular, the Committee may require certain investment (or other) representations and undertakings in connection with the issuance of securities in connection with the Plan in order to comply with applicable law.

(b) If any provision of this Grant Agreement is determined to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted by applicable law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law. Furthermore, if any provision of this Grant Agreement is determined to be illegal under any applicable law, such provision shall be null and void to the extent necessary to comply with applicable law, but the other provisions of this Grant Agreement shall remain in full force and effect.

(c) If the Holder is a resident of or employed in a country other than the United States, the Holder agrees, as a condition to the grant of the Units, to repatriate all payments attributable to the shares of Common Stock and/or cash acquired under the Plan (including, but not limited to, dividends and any proceeds derived from the sale of the shares of Common Stock acquired pursuant to this Units) in accordance with local foreign exchange rules and regulations in the Holder’s country of residence (and country of employment, if different). In addition, the Holder agrees to take any and all actions, and consents to any and all actions taken by Mattel, as may be required to allow Mattel to comply with local laws, rules and regulations in the Holder’s country of residence (and country of employment, if different). Finally, the Holder agrees to take any and all actions that may be required to comply with the Holder’s personal legal and tax obligations under local laws, rules and regulations in the Holder’s country of residence (and country of employment, if different).

(d) If the Holder is a resident of or employed in a country that is a member of the European Union, the grant of the Units and this Grant Agreement are intended to comply with the age discrimination provisions of the EU Equal Treatment Framework Directive, as implemented into local law (the “ Age Discrimination Rules ”). To the extent that a court or tribunal of competent jurisdiction determines that any provision of the Units is invalid or unenforceable, in whole or in part, under the Age Discrimination Rules, Mattel, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to render it valid and enforceable to the full extent permitted under local law.

(e) Upon the issuance of shares of Common Stock in settlement of vested Units, Mattel may require the Holder to sell such shares at any time to the extent the Holder’s continued holding of such shares is prohibited under applicable law or is administratively burdensome (in which case, this Grant Agreement shall provide Mattel with the authority to issue sales instructions in relation to such shares of Common Stock on the Holder’s behalf).

10. Certain Corporate Transactions . In the event of certain corporate transactions, the Units shall be subject to adjustment as provided in Section 17 of the Plan. In the event of a Change in Control, these Units shall be subject to the provisions of Section 18 of the Plan.

11. No Additional Rights .

(a) Neither the granting of the Units nor their vesting or settlement shall (i) affect or restrict in any way the power of Mattel to take any and all actions otherwise permitted under applicable law, (ii) confer upon the Holder the right to continue in the employment of or performing services for the Company, or (iii) interfere in any way with the right of the Company to terminate the services of the Holder at any time, with or without Cause.

(b) The Holder acknowledges that (i) this is a one-time grant, (ii) the making of this grant does not mean that the Holder will receive any similar grant or grants in the future, or any future grants at all, (iii) the Plan and the benefits the Holder may derive from participation in the Plan are not part of the employment conditions and/or benefits provided by the Company, (iv) any modifications or amendments of the Plan by Mattel, or a termination of the Plan by Mattel, shall not constitute a change or impairment of the terms and conditions of the Holder’s employment with the Company, and (v) this grant does not in any way entitle the Holder to future grants under the Plan, if any, and Mattel retains sole and absolute discretion as to whether to make any additional grants to the Holder in the future and, if so, the quantity, terms, conditions and provisions of any such grants.

(c) Without limiting the generality of subsections (a) and (b) immediately above and subject to Section 3 above, if there is a Severance of the Holder, the Holder shall not be entitled to any compensation for any loss of any right or benefit or prospective right or benefit relating to the Units or under the Plan which he or she might otherwise have enjoyed, whether

such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or otherwise.

(d) The Holder’s participation in the Plan is voluntary. The value of the Units and any other awards granted under the Plan is an extraordinary item of compensation outside the scope of the Holder’s employment (and the Holder’s employment contract, if any). Any grant under the Plan, including the grant of the Units, is not part of the Holder’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.

13. Data Privacy Consent .

(a) The Company hereby notifies the Holder of the following in relation to the Holder’s personal data and the collection, processing and transfer of such data in relation to the grant of the Units and the Holder’s participation in the Plan, pursuant to applicable personal data protection laws. The collection, processing and transfer of the Holder’s personal data is necessary for Mattel’s administration of the Plan and the Holder’s participation in the Plan, and the Holder’s denial and/or objection to the collection, processing and transfer of personal data may affect the Holder’s ability to participate in the Plan. As such, the Holder voluntarily acknowledges, consents and agrees (where required under applicable law) to the collection, use, processing and transfer of personal data as described herein.

(b) The Company holds certain personal information about the Holder, including (but not limited to) the Holder’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Company, details of all Units or any other entitlement to shares of Common Stock awarded, canceled, purchased, vested, unvested or outstanding in the Holder’s favor, for the purpose of managing and administering the Plan (“Data”). The Data may be provided by the Holder or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing the Holder’s participation in the Plan. The data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Holder’s country of residence. Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought. The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for the Holder’s participation in the Plan.

implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, the United States or elsewhere throughout the world. The Holder hereby authorizes (where required under applicable law) the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Holder’s participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of Common Stock on the Holder’s behalf to a broker or other third party with whom the Holder may elect to deposit any shares of Common Stock acquired pursuant to the Plan.

(d) The Holder may, at any time, exercise the Holder’s rights provided under applicable personal data protection laws, which may include the right to (a) obtain confirmation as to the existence of the Data, (b) verify the content, origin and accuracy of the Data, (c) request the integration, update, amendment, deletion, or blockage (for breach of applicable laws) of the Data, and (d) to oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Plan and the Holder’s participation in the Plan. The Holder may seek to exercise these rights by contacting the Holder’s local HR manager.

15. Governing Law . The interpretation, performance and enforcement of this Grant Agreement shall be governed by the laws of the State of Delaware without regard to principles of conflicts of laws. The Holder may only exercise his or her rights in respect of the Plan, the Grant Agreement and these Units to the extent that it would be lawful to do so, and Mattel would not, in connection with this Grant Agreement, be in breach of the laws of any jurisdiction to which the Holder may be subject. The Holder shall be solely responsible to seek advice as to the laws of any jurisdiction to which he or she may be subject, and a participation by a Holder in the Plan shall be on the basis of a warranty by the Holder that the Holder may lawfully so participate without Mattel being in breach of the laws of any such jurisdiction.

16. No Advice Regarding Grant . Mattel is not providing any tax, legal or financial advice, nor is Mattel making any recommendations, regarding the Holder’s participation in the Plan or the Holder’s acquisition or sale of the underlying Common Stock. The Holder is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

17. English Language . The Holder acknowledges and agrees that it is the Holder’s express intent that the Grant Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Units, be drawn up in English. If the

Holder has received the Grant Agreement, the Plan or any other documents related to the Units translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

18. Addendum . Notwithstanding any provision of this Grant Agreement to the contrary, the Units shall be subject to any special terms and conditions for the Holder’s country of residence (and country of employment, if different) as are set forth in the applicable addendum to the Grant Agreement (the “ Addendum ”). Further, if the Holder transfers residence and/or employment to another country reflected in an Addendum to the Grant Agreement, the special terms and conditions for such country will apply to the Holder to the extent Mattel determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the operation and administration of the Units and the Plan (or Mattel may establish alternative terms and conditions as may be necessary or advisable to accommodate the Holder’s transfer). Any applicable Addendum shall constitute part of this Grant Agreement.

19. Additional Requirements . Mattel reserves the right to impose other requirements on the Units, any shares of Common Stock acquired pursuant to the Units, and the Holder’s participation in the Plan, to the extent Mattel determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the operation and administration of the Units and the Plan. Such requirements may include (but are not limited to) requiring the Holder to sign any agreements or undertakings that may be necessary or advisable to accomplish the foregoing.

********************************

ADDENDUM TO GRANT AGREEMENT

FOR RESTRICTED STOCK UNITS UNDER THE

MATTEL, INC. AMENDED AND RESTATED 2010 EQUITY AND LONG-TERM

COMPENSATION PLAN

In addition to the terms of the Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan (the “ Plan ”) and the Grant Agreement for Restricted Stock Units (the “ Grant Agreement ”), the Units are subject to the following additional terms and conditions as set forth in this addendum to the extent Holder resides and/or is employed in one of the countries addressed herein (the “ Addendum ”). Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Plan and the Grant Agreement. To the extent the Holder transfers residence and/or employment to another country, the special terms and conditions for such country as reflected in this Addendum (if any) will apply to the Holder to the extent Mattel determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the operation and administration of the Units and the Plan (or Mattel may establish alternative terms and conditions as may be necessary or advisable to accommodate the Holder’s transfer).

Canada

1. English Language . The following provisions apply if the Holder is a resident of Quebec:

The Holder acknowledges and agrees that it is the Holder’s express intent that the Grant Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Units, be drawn up in English. If the Holder has received the Grant Agreement, the Plan or any other documents related to the Units translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

Langue anglaise . Le détenteu (« Holder ») reconnaît et consent que c’est l’intention expresse du détenteur que cette convention (« Grant Agreement »), le Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan, ainsi que tous les documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à toute unité d’action assujettie à des restrictions (« Units »), soit rédigés en anglais. Si le détenteur (« Holder ») reçoit cette convention (« Grant Agreement »), le Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan ou tout autre document lié aux unités d’action assujettie à des restrictions (« Units ») dans une langue autre que l’anglais, et si le sens de la version traduite est différent de la version anglaise, la version anglaise contrôlera.

China

Notwithstanding anything to the contrary in the Plan or the Grant Agreement, the following provisions will apply if the Holder is a PRC national or is otherwise determined to be subject to

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the requirements imposed by the State Administration of Foreign Exchange (“ SAFE ”) as determined by the Company:

1. Mandatory Sale of shares of Common Stock . Upon the issuance of shares of Common Stock in settlement of vested Units, Mattel may require the Holder to sell such shares at any time to the extent the Holder’s continued holding of such shares is prohibited under applicable law or is administratively burdensome (in which case, this Grant Agreement shall provide Mattel with the authority to issue sales instructions in relation to such shares of Common Stock on the Holder’s behalf).

The Holder further agrees that Mattel is authorized to instruct its designated broker to assist with any mandatory sale of the shares of Common Stock (on the Holder’s behalf pursuant to this authorization), and the Holder expressly authorizes such broker to complete the sale of such shares of Common Stock. The Holder acknowledges that Mattel’s designated broker is under no obligation to arrange for the sale of the shares of Common Stock at any particular price. Upon the sale of the shares of Common Stock, Mattel agrees to pay the cash proceeds from the sale, less any brokerage fees or commissions, to the Holder in accordance with applicable exchange control laws and regulations and provided any liability for taxes resulting from the vesting of the Units has been satisfied.

2. Exchange Control Obligations . The Holder understands and agrees that, due to exchange control laws in China, the Holder will be required to immediately repatriate to China the sale of any shares of Common Stock acquired at vesting of the Units and any dividends received in relation to the shares of Common Stock. The Holder furthers understand that, under local law, such repatriation of the cash proceeds will need to be effectuated through a special exchange control account established by Mattel or a Subsidiary or Affiliate in China, and the Holder hereby consents and agrees that the proceeds from the sale of shares of Common Stock acquired under the Plan and any dividends received in relation to the shares of Common Stock may be transferred to such special account prior to being delivered to the Holder. The proceeds may be paid to the Holder in U.S. dollars or local currency at Mattel’s discretion. In the event the proceeds are paid to Holder in U.S. dollars, the Holder understands that he or she will be required to set up a U.S. dollar bank account in China and provide the bank account details to his or her employer and/or Mattel so that the proceeds may be deposited into this account. The Holder also understands and acknowledges that Mattel may face delays in distributing the proceeds to the Holder due to exchange control requirements in China. As a result, the Holder understands and acknowledges that neither Mattel nor his or her employer can be held liable for any delay in delivering the proceeds to the Holder.

If the proceeds are paid to the Holder in local currency, the Holder acknowledges that Mattel is under no obligation to secure any particular foreign exchange conversion rate and acknowledges that Mattel may face delays in converting the proceeds into local currency due to exchange control restrictions in China. The Holder agrees that Mattel cannot be held liable for any delay in delivering the proceeds to the Holder. The Holder agrees to bear any currency fluctuation risk between the time the shares of Common Stock are sold or dividends are paid and the time the (i) applicable taxes are converted to local currency and remitted to the tax authorities, and (ii) net proceeds are converted to local currency and distributed to the Holder through the special exchange control account.

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The Holder agrees to sign any agreements, forms and/or consents that may be reasonably requested by Mattel (or Mattel’s designated broker) to effectuate any of the remittances, transfers, conversions or other processes affecting the proceeds. The Holder further agrees to comply with any other requirements that may be imposed by Mattel in the future in order to facilitate compliance with exchange control requirements in China.

France

1. English Language . The Holder acknowledges and agrees that it is the Holder’s express intent that the Grant Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Units, be drawn up in English. If the Holder has received the Grant Agreement, the Plan or any other documents related to the Units translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

Langue anglaise . Le détenteur (« Holder ») reconnaît et accepte que c’est l’intention expresse du détenteur que la présente convention (« Grant Agreement »), le Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan, ainsi que tous les documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu du droit sur des actions assujetties à des restrictions (« Units »), soient rédigés en anglais. Si le détenteur (« Holder ») reçoit la présente convention (« Grant Agreement »), le Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan ou tout autre document lié aux droits sur des actions assujetties à des restrictions (« Units ») dans une langue autre que l’anglais, et si la signification de la version traduite est différente de la version anglaise, la version anglaise prévaudra.

Hong Kong

1. IMPORTANT NOTICE . If the Holder is a resident of Hong Kong, the following provisions apply, notwithstanding any other provision of this Grant Agreement: The contents of the Plan, the Notice, this Grant Agreement, the Addendum, the Plan and all other related materials pertaining to the Units and/or the Plan (the “Materials”) have not been reviewed by any regulatory authority in Hong Kong. The Holder is hereby advised to exercise caution in relation to the offer thereunder. If the Holder has any doubts about any of the contents of the Materials, the Holder should obtain independent professional advice.

Mexico

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the scope of the Holder’s employment contract, if any. The Units are not part of the Holder’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Holder’s employer.

Netherlands

1. Waiver of Termination Rights . The Holder waives any and all rights to compensation or damages as a result of any termination of employment for any reason whatsoever, insofar as those rights result or may result from (a) the loss or diminution in value of such rights or entitlements under the Plan, or (b) the Holder ceasing to have rights under, or ceasing to be entitled to any awards under the Plan as a result of such termination.

Russia

1. No Offering of Securities in Russia . The grant of the Units is not intended to be an offering of securities within the territory of the Russian Federation, and the Holder acknowledges and understands that the Holder will be unable to make any subsequent sale of the Common Stock acquired pursuant to the Units in the Russian Federation.

Spain

1. Severance for Cause . Notwithstanding anything to the contrary in the Plan or the Grant Agreement, “Cause” shall be defined in the Plan, irrespective of whether the Severance is or is not considered a fair termination (i.e., “despido procedente”) under Spanish legislation.

2. Acknowledgement of Discretionary Nature of the Plan; No Vested Rights . In accepting the Units, the Holder acknowledges that the Holder consents to participation in the Plan and have received a copy of the Plan. The Holder understands that Mattel has unilaterally, gratuitously and in its sole discretion granted the Units under the Plan to individuals who may be employees of Mattel or its Subsidiaries and Affiliates throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind Mattel or any of its Subsidiaries or Affiliates on an ongoing basis. Consequently, the Holder understands that the Units are granted on the assumption and condition that the Units and the shares of Common Stock acquired upon vesting of the Units shall not become a part of any employment contract (either with Mattel or any of its Subsidiaries or Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, the Holder understands that this grant would not be made to the Holder but for the assumptions and conditions referenced above. Thus, the Holder acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the Units shall be null and void.

The Holder understands and agrees that, as a condition of the grant of the Units and unless otherwise provided in the Grant Agreement, the unvested portion of the Units as of the date of the Holder’s Severance will be forfeited without entitlement to the underlying shares of Common Stock or to any amount of indemnification in the event of the termination of employment by

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reason of, but not limited to, (i) material modification of the terms of employment under Article 41 of the Workers’ Statute or (ii) relocation under Article 40 of the Workers’ Statute. The Holder acknowledges that the Holder has read and specifically accepts the conditions referred to in the Grant Agreement regarding the impact of a Severance on the Holder’s Units.

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Exhibit 10.7

GRANT AGREEMENT FOR A

NON-QUALIFIED STOCK OPTION UNDER THE

MATTEL, INC. AMENDED AND RESTATED

2010 EQUITY AND LONG-TERM COMPENSATION PLAN

This is a Grant Agreement (this “ Grant Agreement ”) between Mattel, Inc. (“ Mattel ”) and the individual (the “ Holder ”) named in the Notice of Grant – Non-Qualified Stock Option (the “ Notice ”). The Notice accompanying this Grant Agreement is deemed a part of this Grant Agreement.

Recitals

Option

1. Terms . Effective as of the grant date specified in the Notice (the “ Grant Date ”), Mattel grants to the Holder a Non-Qualified Stock Option (this “ Option ”) to purchase, on the terms and conditions set forth in the Notice and this Grant Agreement, all or any part of the aggregate number of shares of Common Stock subject to the Option as set forth in the Notice. The Option shall remain outstanding until and shall expire on the tenth anniversary of the Grant Date as specified in the Notice (the “ Expiration Date ”), unless and to the extent this Option is terminated or forfeited before such date pursuant to Section 5 or Section 6 below. The per-share exercise price of this Option equals the Fair Market Value of a share of Common Stock on the Grant Date, and is set forth in the Notice.

2. Vesting and Exercisability . Except as otherwise provided in Section 6 regarding the effects of the Holder’s Severance, this Option shall vest and become exercisable in the time and manner set forth in the Notice.

3. Method of Exercising . In order to exercise this Option in whole or in part, the Holder shall follow such procedures as may be established by Mattel from time to time, including through any automated system that Mattel may establish for itself or using the services of a third party, such as a system using an internet website or interactive voice response. In order for such exercise to be considered effective, the Holder must satisfy the withholding obligations of Section 4 below and the certification obligation of Section 5 below, and make full payment of the exercise price for the shares being purchased in accordance with such methods as the Committee may approve from time to time. As of the Grant Date, the following forms of payment are available:

(a)

cash; and

(b)

by the delivery to Mattel or its designated agent of an irrevocable written notice of exercise form together with irrevocable instructions to a broker-dealer to sell a sufficient portion of the shares of Common Stock and to timely deliver the sale proceeds directly to Mattel to pay the exercise price of this Option.

5. Termination, Rescission and Recapture . The Holder specifically acknowledges that this Option is subject to the provisions of Section 19 of the Plan, entitled “Termination, Rescission and Recapture,” which can cause the forfeiture of this Option, the rescission of Common Stock acquired upon the exercise of this Option and/or the recapture of proceeds of the sale of such Common Stock. Except as provided in the next sentence, as a condition of the exercise of this Option, the Holder will be required to certify that he or she is in compliance with the terms and conditions of the Plan (including the conditions set forth in Section 19 of the Plan) and, if a Severance has occurred, to state the name and address of his or her then-current employer or any entity for which the Holder performs business services and his or her title, and shall identify any organization or business in which the Holder owns a greater-than-five-percent equity interest. Section 19 of the Plan is inapplicable, and accordingly such certification shall not be required, in connection with any exercise after a Severance of the Holder that occurs within the 24-month period following a Change in Control.

6. Consequences of the Holder’s Severance . The consequences of the Holder’s Severance for this Option shall be as follows, subject to Section 5 above.

(a)

In the case of the Holder’s Severance for Cause, this Option (whether vested or unvested) shall terminate immediately on the date of the Severance.

(b)

In the case of the Holder’s Severance that occurs at least six (6) months after the Grant Date as a result of Retirement, death or Disability, this Option shall become fully vested and exercisable immediately, to the extent not previously vested and exercisable, and shall remain exercisable until the earlier of (i) the fifth anniversary of the date of the Severance, or (ii) the Expiration Date.

(c)

In the case of the Holder’s Severance that constitutes a Covered Termination (as defined in the Severance Plan), this Option shall become fully vested and exercisable immediately, to the extent not previously vested and exercisable, and shall remain exercisable until the earlier of (i) three (3) years following the date of the Severance, or (ii) the Expiration Date. Notwithstanding the foregoing, if such Severance constitutes a Retirement and the date of such Retirement is at least six (6) months after the Grant Date, then the Holder will be able to exercise this Option until the fifth anniversary of the date of the Severance (but in no event past the Expiration Date).

(d)

In the case of the Holder’s Severance in all other circumstances, (i) any portion of this Option that has previously vested shall remain exercisable until the earlier of (A) 90 days following the date of the Severance, or (B) the Expiration Date, and (ii) any portion of this Option that has not previously vested shall terminate immediately on the date of the Severance. Notwithstanding the foregoing clause (i), if such Severance occurs during the 24-month period following a Change in Control, then the Holder will be able to exercise this Option until two (2) years following the date of the Severance (but in no event past the Expiration Date).

7. Compliance with Law .

(a)

No shares issuable upon the exercise of this Option shall be issued and delivered unless and until all applicable registration requirements of the Securities Act of 1933, as amended, all applicable listing requirements of any national securities exchange on which the Common Stock is then listed, and all other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery, shall have been complied with and are in full force. In particular, the Committee may require certain investment (or other) representations and undertakings in connection with the issuance of securities in connection with the Plan in order to comply with applicable law.

(b)

being understood that the term “Holder” includes such guardian, legal representative and other transferee; provided, that references to employment or other provision of services to the Company (such as the terms “Disability,” “Retirement” and “Severance”) shall continue to refer to the employment of, or provision of services by, the original Holder named above.

9. Certain Corporate Transactions . In the event of certain corporate transactions, this Option shall be subject to adjustment as provided in Section 17 of the Plan. In the event of a Change in Control, subject to Section 6 above, this Option shall be subject to the provisions of Section 18 of the Plan.

10. No Additional Rights .

(a)

Neither the granting of this Option nor its exercise shall (i) affect or restrict in any way the power of Mattel to take any and all actions otherwise permitted under applicable law, (ii) confer upon the Holder the right to continue in the employment of or performing services for the Company, or (iii) interfere in any way with the right of the Company to terminate the services of the Holder at any time, with or without Cause.

(b)

(c)

Without limiting the generality of subsections (a) and (b) immediately above and subject to Section 6 above, if there is a Severance of the Holder, the Holder shall not be entitled to any compensation for any loss of any right or benefit or prospective right or benefit under this Option or the Plan which he or she might otherwise have enjoyed, whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or otherwise.

11. Rights as a Stockholder . Neither the Holder nor any other person legally entitled to exercise this Option shall have any rights as a stockholder with respect to any shares covered by this Option until such shares have been issued to the Holder following the exercise of this Option.

12. Compliance with Plan . This Option and this Grant Agreement are subject to, and Mattel and the Holder agree to be bound by, the terms and conditions of the Plan as it shall be amended from time to time, and the rules, regulations and interpretations relating to the Plan as may be adopted by the Committee, all of which are incorporated herein by reference. No amendment to the Plan or this Grant Agreement shall adversely affect this Option without the consent of the Holder. In the event of a conflict between the terms of the Plan and this Grant Agreement, the terms of the Plan shall govern and this Grant Agreement shall be deemed to be modified accordingly.

13. Data Privacy Waiver. By accepting the grant of this Option, the Holder hereby agrees and consents to:

(a)

the collection, use, processing and transfer by the Company of certain personal information about the Holder (the “ Data ”);

(b)

any members of the Company transferring Data amongst themselves for the purposes of implementing, administering and managing the Plan;

(c)

the use of such Data by any such person for such purposes; and

(d)

the transfer to and retention of such Data by third parties in connection with such purposes.

14. No Advice Regarding Grant . Mattel is not providing any tax, legal or financial advice, nor is Mattel making any recommendations, regarding the Holder’s participation in the Plan or the Holder’s acquisition or sale of the underlying Common Stock. The Holder is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

15. Governing Law . The interpretation, performance and enforcement of this Option shall be governed by the laws of the State of Delaware without regard to principles of conflicts of laws.

Exhibit 10.8

GRANT AGREEMENT FOR A

NON-QUALIFIED STOCK OPTION UNDER THE

MATTEL, INC. AMENDED AND RESTATED

2010 EQUITY AND LONG-TERM COMPENSATION PLAN

Recitals

Mattel has adopted the Amended and Restated 2010 Equity and Long-Term Compensation Plan, as may be amended from time to time (the “ Plan ”), for the granting to selected employees of awards based upon shares of Common Stock of Mattel. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Plan. This Grant Agreement incorporates certain provisions required by the terms of the Mattel, Inc. Executive Severance Plan B, as may be amended from time to time (the “ Severance Plan ”).

Option

(a)

cash; and

(b)

6. Consequences of the Holder’s Severance . The consequences of the Holder’s Severance for this Option shall be as follows, subject to Section 5 above.

(a)

In the case of the Holder’s Severance for Cause, this Option (whether vested or unvested) shall terminate immediately on the date of the Severance.

(b)

(c)

(d)

7. Compliance with Law .

(a)

(b)

10. No Additional Rights .

(a)

(b)

(c)

13. Data Privacy Waiver. By accepting the grant of this Option, the Holder hereby agrees and consents to:

(a)

the collection, use, processing and transfer by the Company of certain personal information about the Holder (the “ Data ”);

(b)

any members of the Company transferring Data amongst themselves for the purposes of implementing, administering and managing the Plan;

(c)

the use of such Data by any such person for such purposes; and

(d)

the transfer to and retention of such Data by third parties in connection with such purposes.

15. Governing Law . The interpretation, performance and enforcement of this Option shall be governed by the laws of the State of Delaware without regard to principles of conflicts of laws.

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Exhibit 10.9

GRANT AGREEMENT FOR A

NON-QUALIFIED STOCK OPTION UNDER THE

MATTEL, INC. AMENDED AND RESTATED

2010 EQUITY AND LONG-TERM COMPENSATION PLAN

Recitals

Option

(a)

cash; and

(b)

timely deliver the sale proceeds directly to Mattel to pay the exercise price of this Option.

Notwithstanding anything to the contrary in this Grant Agreement, if the Holder resides and/or is employed in a country where the local foreign exchange rules and regulations either preclude the remittance of currency out of the country for purposes of paying the exercise price, or require the Company and/or the Holder to secure any legal or regulatory approvals, complete any legal or regulatory filings, or undertake any additional steps for remitting currency out of the country, Mattel may restrict the method of exercise to a form of cashless exercise or such other form(s) of exercise (as it determines in its sole discretion). In addition, Mattel may require the Holder to sell any shares of Common Stock acquired under the Plan at such times as may be required to comply with any local legal, regulatory or tax requirements (in which case, this Grant Agreement shall give Mattel the authority to issue sales instructions with respect to shares of Common Stock acquired under the Plan on the Holder’s behalf).

4. Tax Withholding . As a condition to exercising this Option in whole or in part, the Holder shall pay, or make provisions satisfactory to the Company for payment of, any income tax, social tax, payroll tax and other taxes required to be withheld in connection with such exercise. Payment for such taxes may be in any of the forms of payment specified above in Section 3. To the extent permitted by applicable law and with the consent of Mattel, payment for such taxes also may be in the form of shares of Common Stock that would otherwise be issued upon the exercise of this Option, provided that the Fair Market Value of such shares shall not exceed the sums necessary to pay the tax withholding based on the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income, rounded up to the nearest whole number of shares (unless higher withholding is permissible without adverse accounting consequences to Mattel). The Company may, in its discretion, withhold any amount necessary to pay the applicable taxes from the Holder’s regular salary/wages or any other amounts payable to the Holder, with no withholding of shares of Common Stock, or may require the Holder to submit payment equivalent to the minimum taxes required to be withheld (unless higher withholding is permissible without adverse accounting consequences to Mattel) by means of certified check, cashier’s check or wire transfer. By accepting the Option, the Holder expressly consents to the methods of withholding as provided hereunder. In the event the withholding requirements for applicable taxes are not satisfied, no shares of Common Stock will be issued to the Holder (or the Holder’s estate) upon exercise of the Option unless and until satisfactory arrangements (as determined by Mattel in its sole discretion) have been made by the Holder with respect to the payment of applicable taxes.

Further, if the Holder becomes subject to taxation in more than one country between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Holder acknowledges that Mattel and/or his or her employer (or former employer, as applicable) may be required to withhold or account for taxes in more than one country. All other taxes related to the Option and any shares of Common Stock delivered in settlement thereof shall be the sole responsibility of the Holder.

5. Termination, Rescission and Recapture . The Holder specifically acknowledges that this Option is subject to the provisions of Section 19 of the Plan, entitled “Termination,

Rescission and Recapture,” which can cause the forfeiture of this Option, the rescission of Common Stock acquired upon the exercise of this Option and/or the recapture of proceeds of the sale of such Common Stock. Except as provided in the next sentence, as a condition of the exercise of this Option, the Holder will be required to certify that he or she is in compliance with the terms and conditions of the Plan (including the conditions set forth in Section 19 of the Plan) and, if a Severance has occurred, to state the name and address of his or her then-current employer or any entity for which the Holder performs business services and his or her title, and shall identify any organization or business in which the Holder owns a greater-than-five-percent equity interest. Section 19 of the Plan is inapplicable, and accordingly such certification shall not be required, in connection with any exercise after a Severance of the Holder that occurs within the 24-month period following a Change in Control.

6. Consequences of the Holder’s Severance . The consequences of the Holder’s Severance for this Option shall be as follows, subject to Section 5 above.

(a) In the case of the Holder’s Severance for Cause, this Option (whether vested or unvested) shall terminate immediately on the date of the Severance.

(b) In the case of the Holder’s Severance that occurs at least six (6) months after the Grant Date as a result of Retirement, death or Disability, this Option shall become fully vested and exercisable immediately, to the extent not previously vested and exercisable, and shall remain exercisable until the earlier of (i) the fifth anniversary of the date of the Severance, or (ii) the Expiration Date.

(c) In the case of the Holder’s Severance by the Company without Cause within the 24-month period following a Change in Control, this Option shall become fully vested and exercisable, and shall remain exercisable until the earlier of (i) two (2) years following the date of Severance, or (ii) the Expiration date. Notwithstanding the foregoing, if such Severance constitutes a Retirement and the date of such Retirement is at least six (6) months after the Grant Date, then the Holder will be able to exercise this Option until the fifth anniversary of the date of the Severance (but in no event past the Expiration Date).

(d) In the case of the Holder’s Severance in all other circumstances, (i) any portion of this Option that has previously vested shall remain exercisable until the earlier of (A) 90 days following the date of the Severance, or (B) the Expiration Date, and (ii) any portion of this Option that has not previously vested shall terminate immediately on the date of the Severance. Notwithstanding the foregoing clause (i), if such Severance occurs during the 24-month period following a Change in Control, then the Holder will be able to exercise this Option until two (2) years following the date of the Severance (but in no event past the Expiration Date).

7. Compliance with Law .

(a) No shares issuable upon the exercise of this Option shall be issued and delivered unless and until all applicable registration requirements of the Securities Act of 1933, as amended, all applicable listing requirements of any national securities exchange on which the Common Stock is then listed, and all other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery, shall have been complied with and are in full force. In particular, the Committee may require certain investment (or other) representations and

undertakings in connection with the issuance of securities in connection with the Plan in order to comply with applicable law.

(c) If the Holder is a resident of or employed in a country other than the United States, the Holder agrees, as a condition to the grant of the Option grant, to repatriate all payments attributable to the shares of Common Stock and/or cash acquired under the Plan (including, but not limited to, dividends and any proceeds derived from the sale of the shares of Common Stock acquired pursuant to this Option) in accordance with local foreign exchange rules and regulations in the Holder’s country of residence (and country of employment, if different). In addition, the Holder agrees to take any and all actions, and consent to any and all actions taken by Mattel, as may be required to allow Mattel to comply with local laws, rules and regulations in the Holder’s country of residence (and country of employment, if different). Finally, the Holder agrees to take any and all actions that may be required to comply with the Holder’s personal legal and tax obligations under local laws, rules and regulations in the Holder’s country of residence (and country of employment, if different).

(d) If the Holder is a resident of or employed in a country that is a member of the European Union, the grant of the Option and this Grant Agreement are intended to comply with the age discrimination provisions of the EU Equal Treatment Framework Directive, as implemented into local law (the “ Age Discrimination Rules ”). To the extent that a court or tribunal of competent jurisdiction determines that any provision of the Option is invalid or unenforceable, in whole or in part, under the Age Discrimination Rules, Mattel, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to render it valid and enforceable to the full extent permitted under local law.

8. Assignability . This Option shall not be transferable by the Holder, other than upon the death of the Holder in accordance with such beneficiary designation procedures or other procedures as Mattel may prescribe from time to time. This Option shall be exercisable, subject to the terms of the Plan and this Grant Agreement, only by the Holder, the guardian or legal representative of the Holder as provided in Section 9(c) of the Plan, or any person to whom this Option is permissibly transferred pursuant to this Section 8 and Section 16(a) of the Plan, it being understood that the term “Holder” includes such guardian, legal representative and other transferee; provided, that references to employment or other provision of services to the Company (such as the terms “Disability,” “Retirement” and “Severance”) shall continue to refer to the employment of, or provision of services by, the original Holder named above.

9. Certain Corporate Transactions . In the event of certain corporate transactions, this Option shall be subject to adjustment as provided in Section 17 of the Plan. In the event of a Change in Control, this Option shall be subject to the provisions of Section 18 of the Plan.

10. No Additional Rights .

(a) Neither the granting of this Option nor its exercise shall (i) affect or restrict in any way the power of Mattel to take any and all actions otherwise permitted under applicable law, (ii) confer upon the Holder the right to continue in the employment of or performing services for the Company, or (iii) interfere in any way with the right of the Company to terminate the services of the Holder at any time, with or without Cause.

(b) The Holder acknowledges that (i) this is a one-time grant, (ii) the making of this grant does not mean that the Holder will receive any similar grant or grants in the future, or any future grants at all, (iii) the Plan and the benefits the Holder may derive from participation in the Plan are not part of the employment conditions and/or benefits provided by the Company, (iv) any modifications or amendments of the Plan by Mattel, or a termination of the Plan by Mattel, shall not constitute a change or impairment of the terms and conditions of the Holder’s employment with the Company and (v) this grant does not in any way entitle the Holder to future grants under the Plan, if any, and Mattel retains sole and absolute discretion as to whether to make any additional grants to the Holder in the future and, if so, the quantity, terms, conditions and provisions of any such grants.

(c) Without limiting the generality of subsections (a) and (b) immediately above and subject to Section 6 above, if there is a Severance of the Holder, the Holder shall not be entitled to any compensation for any loss of any right or benefit or prospective right or benefit under this Option or the Plan which he or she might otherwise have enjoyed, whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or otherwise.

(d) The Holder’s participation in the Plan is voluntary. The value of the Option and any other awards granted under the Plan is an extraordinary item of compensation outside the scope of the Holder’s employment (and the Holder’s employment contract, if any). Any grant under the Plan, including the grant of the Option, is not part of the Holder’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.

amendment to the Plan or this Grant Agreement shall adversely affect this Option without the consent of the Holder. In the event of a conflict between the terms of the Plan and this Grant Agreement, the terms of the Plan shall govern and this Grant Agreement shall be deemed to be modified accordingly.

13. Data Privacy Consent.

(a) The Company hereby notifies the Holder of the following in relation to the Holder’s personal data and the collection, processing and transfer of such data in relation to the grant of the Option and the Holder’s participation in the Plan, pursuant to applicable personal data protection laws. The collection, processing and transfer of the Holder’s personal data is necessary for Mattel’s administration of the Plan and the Holder’s participation in the Plan, and the Holder’s denial and/or objection to the collection, processing and transfer of personal data may affect the Holder’s ability to participate in the Plan. As such, the Holder voluntarily acknowledges, consents and agrees (where required under applicable law) to the collection, use, processing and transfer of personal data as described herein.

(b) The Company holds certain personal information about the Holder, including (but not limited to) the Holder’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Company, details of all Options or any other entitlement to shares of Common Stock awarded, canceled, purchased, vested, unvested or outstanding in the Holder’s favor, for the purpose of managing and administering the Plan (“Data”). The Data may be provided by the Holder or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing the Holder’s participation in the Plan. The data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which the Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Holder’s country of residence. Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought. The Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for the Holder’s participation in the Plan.

(c) The Company will transfer Data as necessary for the purpose of implementation, administration and management of the Holder’s participation in the Plan, and the Company may further transfer Data to any third parties assisting Mattel in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, the United States or elsewhere throughout the world. The Holder hereby authorizes (where required under applicable law) the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Holder’s participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of Common Stock on the Holder’s behalf to a broker or other third party with whom the Holder may elect to deposit any shares of Common Stock acquired pursuant to the Plan.

14. Governing Law . The interpretation, performance and enforcement of this Option shall be governed by the laws of the State of Delaware without regard to principles of conflicts of laws. The Holder may only exercise his or her rights in respect of the Plan, the Grant Agreement and this Option to the extent that it would be lawful to do so, and Mattel would not, in connection with this Option, be in breach of the laws of any jurisdiction to which the Holder may be subject. The Holder shall be solely responsible to seek advice as to the laws of any jurisdiction to which he or she may be subject, and a participation by a Holder in the Plan shall be on the basis of a warranty by the Holder that the Holder may lawfully so participate without Mattel being in breach of the laws of any such jurisdiction.

16. English Language . The Holder acknowledges and agrees that it is the Holder’s express intent that the Grant Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Option, be drawn up in English. If the Holder has received the Grant Agreement, the Plan or any other documents related to the Option translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

17. Addendum . Notwithstanding any provision of this Grant Agreement to the contrary, the Option shall be subject to any special terms and conditions for the Holder’s country of residence (and country of employment, if different) as are set forth in the applicable addendum to the Grant Agreement (the “ Addendum ”). Further, if the Holder transfers residence and/or employment to another country reflected in an Addendum to the Grant Agreement, the special terms and conditions for such country will apply to the Holder to the extent Mattel determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the operation and administration of the Option and the Plan (or Mattel may establish alternative terms and conditions as may be necessary or advisable to accommodate the Holder’s transfer). Any applicable Addendum shall constitute part of this Grant Agreement.

18. Additional Requirements . Mattel reserves the right to impose other requirements on the Option, any shares of Common Stock acquired pursuant to the Option, and the Holder’s participation in the Plan, to the extent Mattel determines, in its sole discretion, that

such other requirements are necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the operation and administration of the Option and the Plan. Such requirements may include (but are not limited to) requiring the Holder to sign any agreements or undertakings that may be necessary or advisable to accomplish the foregoing.

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ADDENDUM TO GRANT AGREEMENT

FOR A NON-QUALIFIED STOCK OPTION UNDER THE

MATTEL, INC. AMENDED AND RESTATED 2010 EQUITY AND LONG-TERM

COMPENSATION PLAN

In addition to the terms of the Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan (the “ Plan ”) and the Grant Agreement for a Non-Qualified Stock Option (the “ Grant Agreement ”), the Option is subject to the following additional terms and conditions as set forth in this addendum to the extent Holder resides and/or is employed in one of the countries addressed herein (the “ Addendum ”). Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Plan and the Grant Agreement. To the extent the Holder transfers residence and/or employment to another country, the special terms and conditions for such country as reflected in this Addendum (if any) will apply to the Holder to the extent Mattel determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local laws, rules and regulations, or to facilitate the operation and administration of the Option and the Plan (or Mattel may establish alternative terms and conditions as may be necessary or advisable to accommodate the Holder’s transfer).

Canada

1. English Language . The following provisions apply if the Holder is a resident of Quebec:

The Holder acknowledges and agrees that it is the Holder’s express intent that the Grant Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Option, be drawn up in English. If the Holder has received the Grant Agreement, the Plan or any other documents related to the Option translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

Langue anglaise . Le détenteur (« Holder ») reconnaît et consent que c’est l’intention expresse du détenteur que cette convention (« Grant Agreement »), le Mattel, Inc. 2010 Equity and Long-Term Compensation Plan, ainsi que tous les documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à toute options d’achat d’actions (« Option »), soit rédigés en anglais. Si le détenteur (« Holder ») reçoit cette convention (« Grant Agreement »), le Mattel, Inc. 2010 Equity and Long-Term Compensation Plan ou tout autre document lié aux options d’achat d’actions (« Options ») dans une langue autre que l’anglais, et si le sens de la version traduite est différent de la version anglaise, la version anglaise contrôlera.

China

1. Mandatory Cashless Exercise . Notwithstanding any provision in the Grant Agreement or the Plan to the contrary, if the Holder is resident in China, the Holder may exercise the Option only by means of a cashless “sell-all” exercise. Under a cashless “sell-all” exercise,

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all of the shares of Common Stock issuable upon the exercise of the Option will be sold and the sales proceeds (net from the payment of the exercise price and the withholding of Tax-Related Items pursuant to Section 4 of the Grant Agreement) will be paid to the Holder in cash.

The following provisions apply if the Holder is a PRC national or is otherwise determined to be subject to the requirements imposed by the State Administration of Foreign Exchange (“ SAFE ”) as determined by Mattel:

2. Tax Withholding . Notwithstanding any provision in the Grant Agreement or the Plan to the contrary, due to exchange control laws in China, the amount necessary to pay the taxes specified in Section 4 of the Agreement will be withheld from the proceeds of the sale of shares of Common Stock issuable upon exercise of the Option.

3. Consequences of the Holder’s Severance . The following provisions supplement Section 6 of the Grant Agreement. This Option (whether vested or unvested) may need to be terminated and Mattel may require the Holder to sell any shares of Common Stock held at the time of or after the Holder’s Severance at any time to the extent the Holder’s continued holding of such Options and/or shares of Common Stock is prohibited under applicable law or is administratively burdensome. In such case, the Holder understands and agrees that this Option (whether vested or unvested) shall be terminated and this Grant Agreement shall provide Mattel with the authority to issue sales instructions in relation to such shares of Common Stock on the Holder’s behalf.

4. Exchange Control Obligations . The Holder understands and agrees that, due to exchange control laws in China, the Holder will be required to immediately repatriate to China the cash proceeds from any dividends received in relation to the shares of Common Stock and the sale of any shares of Common Stock acquired upon exercise of this Option. The Holder furthers understand that, under local law, such repatriation of the cash proceeds will need to be effectuated through a special exchange control account established by Mattel or a Subsidiary or Affiliate in China, and the Holder hereby consents and agrees that the proceeds from the sale of shares of Common Stock acquired under the Plan and any dividends received in relation to the shares of Common Stock may be transferred to such special account prior to being delivered to the Holder. The proceeds may be paid to the Holder in U.S. dollars or local currency at Mattel’s discretion. In the event the proceeds are paid to the Holder in U.S. dollars, the Holder understands that he or she will be required to set up a U.S. dollar bank account in China and provide the bank account details to his or her employer and/or Mattel so that the proceeds may be deposited into this account. The Holder also understands and acknowledges that Mattel may face delays in distributing the proceeds to the Holder due to exchange control requirements in China. As a result, the Holder understands and acknowledges that neither Mattel nor his or her employer can be held liable for any delay in delivering the proceeds to Holder.

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(i) applicable taxes are converted to local currency and remitted to the tax authorities, and (ii) net proceeds are converted to local currency and distributed to the Holder through the special exchange control account.

France

1. English Language . The Holder acknowledges and agrees that it is the Holder’s express intent that the Grant Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Option, be drawn up in English. If the Holder has received the Grant Agreement, the Plan or any other documents related to the Option translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

Langue anglaise . Le détenteur (« Holder ») reconnaît et accepte que c’est l’intention expresse du détenteur que la présente convention (« Grant Agreement »), le Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan, ainsi que tous les documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de toute l’options d’achat d’actions (« Option »), soient rédigés en anglais. Si le détenteur (« Holder ») reçoit la présente convention (« Grant Agreement »), le Mattel, Inc. Amended and Restated 2010 Equity and Long-Term Compensation Plan ou tout autre document lié à l’options d’achat d’actions (« Option ») dans une langue autre que l’anglais, et si la signification de la version traduite est différente de la version anglaise, la version anglaise prévaudra.

Hong Kong

1 IMPORTANT NOTICE . The contents of the Plan, the Notice, this Grant Agreement, the Addendum, the Plan and all other materials pertaining to the Option and/or the Plan (the “ Materials ”) have not been reviewed by any regulatory authority in Hong Kong. The Holder is hereby advised to exercise caution in relation to the offer thereunder. If the Holder has any doubts about any of the contents of the Materials, the Holder should obtain independent professional advice.

Italy

1. Mandatory Cashless Sell-All Exercise . Notwithstanding any provision in the Grant Agreement to the contrary, if the Holder is resident in Italy, the Holder may exercise the Option only by means of a cashless “sell-all” exercise unless the amendments to the Italian Financial Services Act, which became effective 13 November 2012, permit the acquisition of

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shares of Common Stock pursuant to the exercise of the Option without the involvement of an authorized financial intermediary in Italy (in which case, the Holder may utilize any method of exercise permitted under the Grant Agreement). Under a cashless “sell-all” exercise, all of the shares of Common Stock issuable upon the exercise of the Option will be sold and the sales proceeds (net from the payment of the exercise price and the withholding of applicable taxes pursuant to Section 4 of the Grant Agreement) will be paid to the Holder in cash.

Mexico

1. Extraordinary Item of Compensation . The Holder expressly recognizes and acknowledges that the Holder’s participation in the Plan is a result of the discretionary and unilateral decision of Mattel, as well as the Holder’s free and voluntary decision to participate in the Plan in accordance with the terms and conditions of the Plan, the Grant Agreement and this Addendum. As such, the Holder acknowledges and agrees that Mattel may, in its sole discretion, amend and/or discontinue the Holder’s participation in the Plan at any time and without any liability. The value of the Option is an extraordinary item of compensation outside the scope of the Holder’s employment contract, if any. The Option is not part of the Holder’s regular or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or any similar payments, which are the exclusive obligations of the Holder’s employer.

Russia

1. No Offering of Securities in Russia . The grant of the Option is not intended to be an offering of securities within the territory of the Russian Federation, and the Holder acknowledges and understands that the Holder will be unable to make any subsequent sale of the Common Stock acquired pursuant to the Option in the Russian Federation.

Spain

2. Acknowledgement of Discretionary Nature of the Plan; No Vested Rights . In accepting the Option, the Holder acknowledges that the Holder consents to participation in the Plan and has received a copy of the Plan. The Holder understands that Mattel has unilaterally, gratuitously and in its sole discretion granted the Option under the Plan to individuals who may be employees of Mattel or its Subsidiaries and Affiliates throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind Mattel or any of its Subsidiaries or Affiliates on an ongoing basis. Consequently, the Holder understands that the Option is granted on the assumption and condition that the Option and the shares of Common Stock acquired upon exercise of the Option shall not become a part of any employment contract (either with Mattel or any of its Subsidiaries or Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, the

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Holder understands that this grant would not be made to the Holder but for the assumptions and conditions referenced above. Thus, the Holder acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the Option shall be null and void.

The Holder understands and agrees that, as a condition of the grant of the Option, the unvested portion of the Option as of the date of the Holder’s Severance and any vested portion of the Option not exercised within the post-termination exercise period set out in the Grant Agreement will be forfeited without entitlement to the underlying shares of Common Stock or to any amount of indemnification in the event of the termination of employment by reason of, but not limited to, (i) material modification of the terms of employment under Article 41 of the Workers’ Statute or (ii) relocation under Article 40 of the Workers’ Statute. The Holder acknowledges that the Holder has read and specifically accepts the conditions referred to in the Grant Agreement regarding the impact of a Severance on the Holder’s Option.

United Kingdom

1. Exclusion of Claim . The Holder acknowledges and agrees that the Holder shall have no entitlement to compensation or damages in consequence of the termination of the Holder’s employment with the Company for any reason whatsoever and whether or not in breach of contract, insofar as such entitlement arises or may arise from the Holder’s ceasing to have rights under or to be entitled to exercise the Holder’s Option as a result of such termination, or from the loss or diminution in value of the Holder’s Option. Upon the grant of the Holder’s Option, the Holder shall be deemed irrevocably to have waived any such entitlement.

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EXHIBIT 12.0

MATTEL, INC. AND SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES


(Unaudited; in thousands, except ratios)	For the Nine Months Ended September 30, 2015		For the Years Ended December 31,
(Unaudited; in thousands, except ratios)			2014		2013		2012		2011		2010
Earnings Available for Fixed Charges:
Income from continuing operations before income taxes	$	193,094	$	586,910	$	1,099,128	$	945,045	$	970,673	$	846,825
Add:
Interest expense		62,516		79,271		78,505		88,835		75,332		64,839
Appropriate portion of rents (a)		28,497		40,291		37,006		33,736		30,696		34,544

Earnings available for fixed charges	$	284,107	$	706,472	$	1,214,639	$	1,067,616	$	1,076,701	$	946,208

Fixed Charges:
Interest expense	$	62,516	$	79,271	$	78,505	$	88,835	$	75,332	$	64,839
Appropriate portion of rents (a)		28,497		40,291		37,006		33,736		30,696		34,544

Fixed charges	$	91,013	$	119,562	$	115,511	$	122,571	$	106,028	$	99,383

Ratio of earnings to fixed charges		3.12 X		5.91 X		10.52 X		8.71 X		10.15 X		9.52 X

(a)

Portion of rental expenses that is deemed representative of an interest factor, which is one-third of total rental expense.

EXHIBIT 31.0

CERTIFICATION

I, Christopher A. Sinclair, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mattel, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2015

By:

/ S / C HRISTOPHER A. S INCLAIR

Christopher A. Sinclair

Chairman and Chief Executive Officer

(Principal executive officer)

EXHIBIT 31.1

CERTIFICATION

I, Kevin M. Farr, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mattel, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2015

By:

/ S / K EVIN M. F ARR

Kevin M. Farr

Chief Financial Officer

(Principal financial officer)

EXHIBIT 32.0

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Mattel, Inc. a Delaware corporation (the “Company”), on Form 10-Q for the quarter ended September 30, 2015, as filed with the Securities and Exchange Commission (the “Report”), Christopher A. Sinclair, Chairman and Chief Executive Officer, and Kevin M. Farr, Chief Financial Officer, of the Company, do each hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) that, to his knowledge:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: October 27, 2015	By:	/ S / C HRISTOPHER A. S INCLAIR
		Christopher A. Sinclair
		Chairman and Chief Executive Officer

		/s/ K EVIN M. F ARR
		Kevin M. Farr
		Chief Financial Officer