UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ___________________________________________________________ 

FORM 10-Q

 ___________________________________________________________ 

(Mark One)

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

For the quarterly period ended June 30, 2021

or

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

Commission File Number 001-05647

___________________________________________________________ 

MATTEL, INC.

(Exact name of registrant as specified in its charter)

___________________________________________________________ 

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

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

(310) 252-2000

(Registrant's telephone number, including area code)

NONE

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

__________________________________________________________ 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $1.00 per share	MAT	The Nasdaq Global Select Market

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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

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

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

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

Number of shares outstanding of registrant's common stock, $1.00 par value, as of July 26, 2021: 348,970,305 shares

1

MATTEL, INC. AND SUBSIDIARIES

		Page
	PART I
Item 1.	Financial Statements	4
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations	5
	Consolidated Statements of Comprehensive Income (Loss)	6
	Consolidated Statements of Cash Flows	7
	Consolidated Statements of Stockholders' Equity	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	51
	PART II
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
	Signature	54

2

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

Mattel is including this Cautionary Statement to caution investors and qualify for the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the "Act") for forward-looking statements. This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Act. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. The use of words such as "anticipates," "expects," "intends," "plans," "confident that," "believes," and "targeted," among others, generally identify forward-looking statements. These forward-looking statements are based on currently available operating, financial, economic, and other information and assumptions, and are subject to a number of significant risks and uncertainties. A variety of factors, many of which are beyond Mattel's control, could cause actual future results to differ materially from those projected in the forward-looking statements, and are currently, and in the future may be, amplified by the COVID-19 pandemic. Specific factors that might cause such a difference include, but are not limited to: (i) potential impacts of and uncertainty regarding the COVID-19 pandemic (and actions taken in response to it by governments, businesses, and individuals) on Mattel's business operations, financial results and financial position and on the global economy, including its impact on Mattel's sales; (ii) Mattel’s ability to design, develop, produce, manufacture, source, ship, and distribute products on a timely and cost-effective basis; (iii) sufficient interest in and demand for the products and entertainment we offer by retail customers and consumers to profitably recover Mattel’s costs; (iv) downturns in economic conditions affecting Mattel’s markets which can negatively impact retail customers and consumers, and which can result in lower employment levels and lower consumer disposable income and spending, including lower spending on purchases of Mattel’s products; (v) other factors which can lower discretionary consumer spending, such as higher costs for fuel and food, drops in the value of homes or other consumer assets, and high levels of consumer debt; (vi) potential difficulties or delays Mattel may experience in implementing cost savings and efficiency enhancing initiatives; (vii) other economic and public health conditions or regulatory changes in the markets in which Mattel and its customers and suppliers operate, which could create delays or increase Mattel’s costs, such as higher commodity prices, labor costs or transportation costs, or outbreaks of disease; (viii) currency fluctuations, including movements in foreign exchange rates and inflation, which can lower Mattel’s net revenues and earnings, and significantly impact Mattel’s costs; (ix) the concentration of Mattel’s customers, potentially increasing the negative impact to Mattel of difficulties experienced by any of Mattel’s customers, such as bankruptcies or liquidations or a general lack of success, or changes in their purchasing or selling patterns; (x) the inventory policies of Mattel’s retail customers, as well as the concentration of Mattel’s revenues in the second half of the year, which coupled with reliance by retailers on quick response inventory management techniques increases the risk of underproduction, overproduction, and shipping delays; (xi) legal, reputational, and financial risks related to security breaches or cyberattacks; (xii) work disruptions, including as a result of supply chain disruption such as plant and port closures, which may impact Mattel’s ability to manufacture or deliver product in a timely and cost-effective manner; (xiii) the impact of competition on revenues, margins, and other aspects of Mattel’s business, including the ability to offer products which consumers choose to buy instead of competitive products, the ability to secure, maintain, and renew popular licenses from licensors of entertainment properties, and the ability to attract and retain talented employees; (xiv) the risk of product recalls or product liability suits and costs associated with product safety regulations; (xv) changes in laws or regulations in the United States and/or in other major markets, such as China, in which Mattel operates, including, without limitation, with respect to taxes, tariffs, trade policies, or product safety, which may increase Mattel’s product costs and other costs of doing business, and reduce Mattel’s earnings; (xvi) failure to realize the planned benefits from any investments or acquisitions made by Mattel; (xvii) the impact of other market conditions or third party actions or approvals, including that result in any significant failure, inadequacy, or interruption from vendors or outsourcers, which could reduce demand for Mattel’s products, delay or increase the cost of implementation of Mattel’s programs, or alter Mattel’s actions and reduce actual results; (xviii) changes in financing markets or the inability of Mattel to obtain financing on attractive terms; (xix) the impact of litigation, arbitration, or regulatory decisions or settlement actions; (xx) uncertainty from the expected discontinuance of LIBOR and transition to any other interest rate benchmark; and (xxi) other risks and uncertainties detailed in Part I, Item 1A "Risk Factors" in Mattel's 2020 Annual Report on Form 10-K (the "2020 Annual Report on Form 10-K") and subsequent periodic filings. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so, except as required by law.

3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30, 2021		June 30, 2020		December 31, 2020
	(Unaudited; in thousands, except share data)
ASSETS
Current Assets
Cash and equivalents	$	384,743	$	461,557	$	762,181
Accounts receivable, net of allowances for credit losses of $12.3 million, $18.7 million and $15.9 million, respectively	784,084		650,502		1,033,966
Inventories	818,037		727,864		528,474
Prepaid expenses and other current assets	186,965		174,218		172,070
Total current assets	2,173,829		2,014,141		2,496,691
Noncurrent Assets
Property, plant, and equipment, net	459,828		471,866		473,794
Right-of-use assets, net	343,793		282,474		291,601
Goodwill	1,392,779		1,382,858		1,393,834
Other noncurrent assets	870,829		847,366		878,970
Total Assets	$	5,241,058	$	4,998,705	$	5,534,890
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings	$	214	$	400,000	$	969
Accounts payable	438,913		402,220		495,363
Accrued liabilities	647,425		541,833		831,922
Income taxes payable	35,838		15,732		27,125
Total current liabilities	1,122,390		1,359,785		1,355,379
Noncurrent Liabilities
Long-term debt	2,839,119		2,850,841		2,854,664
Noncurrent lease liabilities	306,094		246,414		249,353
Other noncurrent liabilities	445,736		435,565		465,350
Total noncurrent liabilities	3,590,949		3,532,820		3,569,367
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	1,848,201		1,844,075		1,842,680
Treasury stock at cost: 92.4 million shares, 94.4 million shares and 93.2 million shares, respectively	(2,262,223)		(2,314,967)		(2,282,939)
Retained earnings	1,435,688		1,113,220		1,553,610
Accumulated other comprehensive loss	(935,316)		(977,597)		(944,576)
Total stockholders’ equity	527,719		106,100		610,144
Total Liabilities and Stockholders’ Equity	$	5,241,058	$	4,998,705	$	5,534,890

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

4

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended				For the Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(Unaudited; in thousands, except per share amounts)
Net Sales	$	1,026,366	$	732,136	$	1,900,558	$	1,326,206
Cost of sales	538,361		413,225		1,000,716		747,073
Gross Profit	488,005		318,911		899,842		579,133
Advertising and promotion expenses	88,328		60,172		162,424		136,454
Other selling and administrative expenses	350,537		306,817		654,407		635,529
Operating Income (Loss)	49,140		(48,078)		83,011		(192,850)
Interest expense	38,144		49,615		168,627		98,595
Interest (income)	(584)		(1,025)		(1,403)		(3,108)
Other non-operating expense (income), net	533		2,662		(555)		5,684
Income (Loss) Before Income Taxes	11,047		(99,330)		(83,658)		(294,021)
Provision for income taxes	20,644		12,839		40,949		24,732
Income from equity method investments	4,060		1,060		6,685		1,941
Net Loss	$	(5,537)	$	(111,109)	$	(117,922)	$	(316,812)
Net Loss Per Common Share - Basic	$	(0.02)	$	(0.32)	$	(0.34)	$	(0.91)
Weighted-average number of common shares	349,441		346,875		349,244		346,778
Net Loss Per Common Share - Diluted	$	(0.02)	$	(0.32)	$	(0.34)	$	(0.91)
Weighted-average number of common and potential common shares	349,441		346,875		349,244		346,778

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

5

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	For the Three Months Ended				For the Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
	(Unaudited; in thousands)
Net Loss	$	(5,537)	$	(111,109)	$	(117,922)	$	(316,812)
Other Comprehensive Income (Loss), Net of Tax
Currency translation adjustments	20,932		26,843		(7,201)		(118,791)
Employee benefit plan adjustments	2,221		518		4,569		3,578
Net unrealized gains (losses) on available-for-sale security	1,268		(80)		3,232		115
Net unrealized gains on derivative instruments:
Unrealized holding (losses) gains	(771)		2,594		9,331		16,022
Reclassification adjustments included in net loss	2,060		(1,589)		(671)		(9,037)
	1,289		1,005		8,660		6,985
Other Comprehensive Income (Loss), Net of Tax	25,710		28,286		9,260		(108,113)
Comprehensive Income (Loss)	$	20,173	$	(82,823)	$	(108,662)	$	(424,925)

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

6

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Six Months Ended
	June 30, 2021		June 30, 2020
	(Unaudited; in thousands)
Cash Flows From Operating Activities:
Net Loss	$	(117,922)	$	(316,812)
Adjustments to reconcile net loss to net cash flows used for operating activities:
Depreciation	72,727		81,984
Amortization	19,058		19,652
Share-based compensation	30,280		23,414
Bad debt expense	877		6,460
Inventory obsolescence	21,263		20,929
Deferred income taxes	7,588		5,784
Income from equity method investments	(6,685)		(1,941)
Loss on extinguishment of long-term borrowings	83,213		—
(Gain) loss on sale of assets/business, net	(21,839)		2,572
Changes in assets and liabilities:
Accounts receivable	239,567		248,008
Inventories	(338,313)		(244,935)
Prepaid expenses and other current assets	(14,700)		(19,423)
Accounts payable, accrued liabilities, and income taxes payable	(211,295)		(318,005)
Other, net	(5,189)		23,048
Net cash flows used for operating activities	(241,370)		(469,265)
Cash Flows From Investing Activities:
Purchases of tools, dies, and molds	(34,355)		(26,384)
Purchases of other property, plant, and equipment	(40,317)		(27,574)
Proceeds from (payments of) foreign currency forward exchange contracts, net	4,402		(21,746)
Proceeds from sale of assets/business	43,075		1,029
Other, net	—		(24)
Net cash flows used for investing activities	(27,195)		(74,699)
Cash Flows From Financing Activities:
(Payments of) proceeds from short-term borrowings, net	(755)		400,000
Payments of long-term borrowings	(1,287,022)		—
Proceeds from long-term borrowings, net	1,185,117		—
Other, net	(5,115)		(693)
Net cash flows (used for) provided by financing activities	(107,775)		399,307
Effect of Currency Exchange Rate Changes on Cash and Equivalents	(1,098)		(23,814)
Decrease in Cash and Equivalents	(377,438)		(168,471)
Cash and Equivalents at Beginning of Period	762,181		630,028
Cash and Equivalents at End of Period	$	384,743	$	461,557

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

7

MATTEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

	Common Stock		Additional Paid-In Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	(Unaudited; in thousands)
Balance, December 31, 2020	$	441,369	$	1,842,680	$	(2,282,939)	$	1,553,610	$	(944,576)	$	610,144
Net loss	—		—		—		(112,385)		—		(112,385)
Other comprehensive loss, net of tax	—		—		—		—		(16,450)		(16,450)
Issuance of treasury stock for stock option exercises	—		(803)		1,913		—		—		1,110
Issuance of treasury stock for restricted stock units vesting	—		(20,031)		13,065		—		—		(6,966)
Share-based compensation	—		15,112		—		—		—		15,112
Balance, March 31, 2021	$	441,369	$	1,836,958	$	(2,267,961)	$	1,441,225	$	(961,026)	$	490,565
Net loss	—		—		—		(5,537)		—		(5,537)
Other comprehensive income, net of tax	—		—		—		—		25,710		25,710
Issuance of treasury stock for stock option exercises	—		(676)		2,830		—		—		2,154
Issuance of treasury stock for restricted stock units vesting	—		(3,212)		2,683		—		—		(529)
Deferred compensation	—		(37)		225		—		—		188
Share-based compensation	—		15,168		—		—		—		15,168
Balance, June 30, 2021	$	441,369	$	1,848,201	$	(2,262,223)	$	1,435,688	$	(935,316)	$	527,719
	Common Stock		Additional Paid-In Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	(Unaudited; in thousands)
Balance, December 31, 2019	$	441,369	$	1,825,569	$	(2,318,921)	$	1,430,031	$	(869,484)	$	508,564
Net loss	—		—		—		(205,702)		—		(205,702)
Other comprehensive loss, net of tax	—		—		—		—		(136,399)		(136,399)
Issuance of treasury stock for restricted stock units vesting	—		(3,777)		2,811		—		—		(966)
Share-based compensation	—		14,275		—		—		—		14,275
Balance, March 31, 2020	$	441,369	$	1,836,067	$	(2,316,110)	$	1,224,329	$	(1,005,883)	$	179,772
Net loss	—		—		—		(111,109)		—		(111,109)
Other comprehensive income, net of tax	—		—		—		—		28,286		28,286
Issuance of treasury stock for restricted stock units vesting	—		(944)		833		—		—		(111)
Deferred compensation	—		(186)		310		—		—		124
Share-based compensation	—		9,138		—		—		—		9,138
Balance, June 30, 2020	$	441,369	$	1,844,075	$	(2,314,967)	$	1,113,220	$	(977,597)	$	106,100

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

8

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 statement of the financial position and interim results of Mattel, Inc. and its subsidiaries ("Mattel") as of and for the periods presented have been included.

The December 31, 2020 balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the consolidated financial statements do not include all of the annual disclosures required by GAAP. As Mattel's business is seasonal, results for interim periods are not necessarily indicative of those that may be expected for a full year. The financial information included herein should be read in conjunction with Mattel's consolidated financial statements and related notes in the 2020 Annual Report on Form 10-K.

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

Revision of Previously Issued Consolidated Financial Statements

During the quarter ended June 30, 2021, Mattel identified a misstatement in its accounting for inventory tooling expenses, which were expensed to cost of sales rather than first being capitalized into the cost of inventory, which resulted in an understatement of inventory balances and a misstatement of cost of sales. Mattel also identified a misstatement related to the timing of disbursements for certain capital expenditures, that resulted in a cash flow misclassification between operating activities and investing activities. Mattel evaluated the misstatements and concluded that the misstatements were not material, either individually or in aggregate, to its current or previously issued consolidated financial statements.

To correct the immaterial misstatements, Mattel has elected to revise its previously issued consolidated financial statements as of December 31, 2020 and 2019, and for each of the three years ended December 31, 2020, 2019, and 2018 and its unaudited consolidated financial statements as of and for the quarters and year-to-date periods ended March 31, 2020 and 2021, June 30, 2020, and September 30, 2020. The revision of the historical consolidated financial statements also includes the correction of other immaterial misstatements in its consolidated statement of operations that Mattel had previously recorded as out of period adjustments, as well as other previously identified balance sheet misclassifications. Mattel had previously determined that these misstatements did not, either individually or in the aggregate, result in a material misstatement of its previously issued consolidated financial statements and reached the same conclusion when aggregating with the recently identified misstatements. Further information regarding the misstatements and related revision is included in Note 24 - Revision for Immaterial Misstatements.

Accordingly, the accompanying financial statements and relevant footnotes to the consolidated financial statements in this Quarterly Report on Form 10-Q have been revised to correct for such misstatements. Mattel will present the revision of its previously issued consolidated financial statements as of December 31, 2020 and for the years ended December 31, 2020 and 2019 in connection with the future filing of its 2021 Annual Report on Form 10-K. Additionally, Mattel will present the revision of its previously issued consolidated financial statements as of and for the three months ended March 31, 2021 and as of and for the three and nine months ended September 30, 2020 in connection with the future filings of its Quarterly Reports on Form 10-Q.

2.     Accounts Receivable

Mattel estimates current expected credit losses based on collection history and management’s assessment of the current economic trends, business environment, customers’ financial condition, and accounts receivable aging that may impact the level of future credit losses. Accounts receivable are net of allowances for credit losses of $12.3 million, $18.7 million, and $15.9 million as of June 30, 2021, June 30, 2020, and December 31, 2020, respectively.

9

3.     Inventories

Inventories include the following:

	June 30, 2021		June 30, 2020		December 31, 2020
	(In thousands)
Raw materials and work in process	$	169,794	$	139,256	$	110,010
Finished goods	648,243		588,608		418,464
	$	818,037	$	727,864	$	528,474

4.     Property, Plant, and Equipment

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

	June 30, 2021		June 30, 2020		December 31, 2020
	(In thousands)
Land	$	21,969	$	24,938	$	24,913
Buildings	321,540		332,067		335,407
Machinery and equipment	768,758		753,388		772,349
Software	348,983		342,150		344,268
Tools, dies, and molds	614,597		601,811		607,915
Leasehold improvements	116,473		143,427		131,578
	2,192,320		2,197,781		2,216,430
Less: accumulated depreciation	(1,732,492)		(1,725,915)		(1,742,636)
	$	459,828	$	471,866	$	473,794

During the three months ended March 31, 2021, Mattel completed the sale of a manufacturing plant based in Mexico, which included land and buildings, resulting in a pre-tax gain of $15.8 million. The assets sold were previously designated as held for sale, and included within property, plant, and equipment, net in the consolidated balance sheets as of December 31, 2020 and June 30, 2020.

5.     Goodwill

Goodwill is allocated to various reporting units, which are at the operating segment level, for the purpose of evaluating whether goodwill is impaired. Mattel's reporting units are: (i) North America, (ii) International, and (iii) American Girl. Components of the operating segments have been aggregated into a single reporting unit as the components have similar economic characteristics. The similar economic characteristics include the nature of the products, the nature of the production processes, the customers, and the manner in which the products are distributed. Mattel tests its goodwill for impairment annually in the third quarter and whenever events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

The change in the carrying amount of goodwill by operating segment for the six months ended June 30, 2021 is shown below. Brand-specific goodwill held by foreign subsidiaries is allocated to the North America segment, thereby causing a foreign currency translation impact. During the first quarter of 2021, Mattel sold its arts, crafts, and stationery business resulting in a reduction of goodwill of approximately $2 million.

	December 31, 2020		Dispositions		Currency Exchange Rate Impact		June 30, 2021
	(In thousands)
North America	$	733,401	$	(1,290)	$	371	$	732,482
International	452,862		(1,056)		920		452,726
American Girl	207,571		—		—		207,571
	$	1,393,834	$	(2,346)	$	1,291	$	1,392,779

10

6.     Other Noncurrent Assets

Other noncurrent assets include the following: 

	June 30, 2021		June 30, 2020		December 31, 2020
	(In thousands)
Identifiable intangible assets (net of accumulated amortization of $306.0 million, $267.7 million, and $286.9 million, respectively)	$	500,811	$	524,153	$	518,190
Deferred income taxes	73,744		59,827		72,682

Mattel's amortizable intangible assets primarily consist of trademarks. Mattel 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. Mattel's amortizable intangible assets were not impaired during the three and six months ended June 30, 2021 and 2020.

7.     Accrued Liabilities

Accrued liabilities include the following:

	June 30, 2021		June 30, 2020		December 31, 2020
	(In thousands)
Current lease liabilities	$	71,481	$	81,225	$	79,540
Incentive compensation	69,850		46,177		126,601
Advertising and promotion	61,370		53,025		163,181
Royalties	34,165		30,998		54,442

8.     Seasonal Financing

On December 20, 2017, Mattel entered into a syndicated facility agreement, which was subsequently amended in 2018, 2019, and 2021 (as amended, the "Credit Agreement"), as a borrower (in such capacity, the "Borrower") and guarantor thereunder, along with certain of the Borrower's domestic and foreign subsidiaries as additional borrowers and/or guarantors thereunder.

On March 19, 2021, Mattel entered into the fourth amendment to the Credit Agreement, which amended certain terms, including, but not limited to, certain components of the borrowing base, a reduction of the aggregate principal commitments of the senior secured revolving credit facilities (the "senior secured revolving credit facilities") from $1.60 billion to $1.40 billion, and an extension of the maturity date from November 18, 2022 to March 19, 2024.

The senior secured revolving credit facilities consist of (i) an asset based lending facility with aggregate commitments up to $1.11 billion, subject to borrowing base capacity, secured by substantially all of the accounts receivable and inventory of the Borrower and certain of its subsidiaries who are borrowers and/or guarantors under the Credit Agreement, as well as (ii) a revolving credit facility with $294.0 million in aggregate commitments secured by certain fixed assets and intellectual property of the U.S. borrowers under the Credit Agreement, and certain equity interests in the borrower and guarantor subsidiaries under the Credit Agreement.

Borrowings under the senior secured revolving credit facilities (i) are limited by jurisdiction-specific borrowing base calculations based on the sum of specified percentages of eligible accounts receivable, eligible inventory and certain fixed assets and intellectual property, as applicable, minus the amount of any applicable reserves, and (ii) bear interest at a floating rate, which can be either, at the Borrower's option, (a) an adjusted LIBOR rate plus an applicable margin ranging from 1.25% to 1.75% per annum or (b) an alternate base rate plus an applicable margin ranging from 0.25% to 0.75% per annum, in each case, such applicable margins to be determined based on the Borrower's average borrowing availability remaining under the senior secured revolving credit facilities.

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

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Mattel had no borrowings under the senior secured revolving credit facilities as of June 30, 2021, $400.0 million of borrowings as of June 30, 2020, and no borrowings under the senior secured revolving credit facilities as of December 31, 2020. Outstanding letters of credit under the senior secured revolving credit facilities totaled approximately $10 million, $13 million, and $11 million as of June 30, 2021, June 30, 2020, and December 31, 2020, respectively.

As of June 30, 2021, Mattel was in compliance with all covenants contained in the Credit Agreement. The Credit Agreement is a material agreement, and failure to comply with the covenants may result in an event of default under the terms of the senior secured revolving credit facilities. If Mattel were to default under the terms of the senior secured revolving credit facilities, its ability to meet its seasonal financing requirements could be adversely affected.

9.     Long-Term Debt

Long-term debt includes the following:

	June 30, 2021		June 30, 2020		December 31, 2020
	(In thousands)
2010 Senior Notes due October 2040	$	250,000	$	250,000	$	250,000
2011 Senior Notes due November 2041	300,000		300,000		300,000
2013 Senior Notes due March 2023	250,000		250,000		250,000
2017/2018 Senior Notes due December 2025	275,000		1,500,000		1,500,000
2019 Senior Notes due December 2027	600,000		600,000		600,000
2021 Senior Notes due April 2026	600,000		—		—
2021 Senior Notes due April 2029	600,000		—		—
Debt issuance costs and debt discount	(35,881)		(49,159)		(45,336)
	$	2,839,119	$	2,850,841	$	2,854,664

On March 19, 2021, Mattel issued (i) $600 million aggregate principal amount of 3.375% Senior Notes due 2026 (the "2026 Notes") and (ii) $600 million aggregate principal amount of 3.750% Senior Notes due 2029 (the "2029 Notes" and, together with the 2026 Notes, the "Notes"). The 2026 Notes will mature on April 1, 2026 and the 2029 Notes will mature on April 1, 2029, unless earlier redeemed in accordance with their respective terms. The Notes are guaranteed by Mattel’s existing and, subject to certain exceptions, future wholly owned domestic restricted subsidiaries that guarantee Mattel’s senior secured revolving credit facilities or certain other indebtedness.

The net proceeds from the offering, together with cash on hand, were used to redeem $1,225 million in aggregate principal amount of Mattel’s outstanding 6.750% Senior Notes due December 2025 (the "2025 Notes") and pay related prepayment premiums and transaction fees and expenses. As a result of the partial redemption of the 2025 Notes, Mattel incurred a loss on extinguishment of $83.2 million, comprised of $62.0 million of prepayment premium costs and a $21.2 million write-off of the unamortized debt issuance costs, which was recorded within interest expense in the consolidated statements of operations. Following completion of the partial redemption of the 2025 Notes, $275 million aggregate principal amount of the 2025 Notes remained outstanding.

On June 21, 2021, Mattel issued a conditional notice of redemption to holders of its 2025 Notes for the redemption of the remaining $275 million outstanding aggregate principal amount of the 2025 Notes on July 1, 2021 (the "Redemption Date") at a price equal to 105.063% of the principal amount of the 2025 Notes redeemed plus accrued and unpaid interest to, but excluding, the Redemption Date. The conditional notice was subject to the condition precedent that Mattel receive funds from the senior secured revolving credit facilities sufficient to consummate the redemption (the "Condition Precedent") and provided Mattel the right to delay the Redemption Date or modify or rescind such notice in the event the Condition Precedent was not satisfied or waived by the Redemption Date, which, consequently, gave Mattel the right to defer settlement of the 2025 Notes for a period greater than one year after June 30, 2021. The Condition Precedent was satisfied and Mattel fully redeemed the 2025 Notes on the Redemption Date using cash on hand and funds from the senior secured revolving credit facilities.

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10.     Other Noncurrent Liabilities

Other noncurrent liabilities include the following:

	June 30, 2021		June 30, 2020		December 31, 2020
	(In thousands)
Benefit plan liabilities	$	210,048	$	209,501	$	225,957
Deferred income tax liability	69,374		58,007		60,892
Noncurrent income tax payable	67,161		71,037		71,342

11.     Accumulated Other Comprehensive Income (Loss)

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

	For the Three Months Ended June 30, 2021
	Derivative Instruments		Available-for-Sale Security		Employee Benefit Plans		Currency Translation Adjustments		Total
	(In thousands)
Accumulated Other Comprehensive Loss, Net of Tax, as of March 31, 2021	$	(7,998)	$	(5,558)	$	(184,506)	$	(762,964)	$	(961,026)
Other comprehensive (loss) income before reclassifications	(771)		1,268		(254)		20,932		21,175
Amounts reclassified from accumulated other comprehensive loss	2,060		—		2,475		—		4,535
Net increase in other comprehensive (loss) income	1,289		1,268		2,221		20,932		25,710
Accumulated Other Comprehensive Loss, Net of Tax, as of June 30, 2021	$	(6,709)	$	(4,290)	$	(182,285)	$	(742,032)	$	(935,316)

	For the Six Months Ended June 30, 2021
	Derivative Instruments		Available-for-Sale Security		Employee Benefit Plans		Currency Translation Adjustments		Total
	(In thousands)
Accumulated Other Comprehensive Loss, Net of Tax, as of December 31, 2020	$	(15,369)	$	(7,522)	$	(186,854)	$	(734,831)	$	(944,576)
Other comprehensive income (loss) before reclassifications	9,331		3,232		(259)		(7,201)		5,103
Amounts reclassified from accumulated other comprehensive loss	(671)		—		4,828		—		4,157
Net increase (decrease) in other comprehensive income (loss)	8,660		3,232		4,569		(7,201)		9,260
Accumulated Other Comprehensive Loss, Net of Tax, as of June 30, 2021	$	(6,709)	$	(4,290)	$	(182,285)	$	(742,032)	$	(935,316)

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	For the Three Months Ended June 30, 2020
	Derivative Instruments		Available-for-Sale Security		Employee Benefit Plans		Currency Translation Adjustments		Total
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of March 31, 2020	$	17,021	$	(8,065)	$	(166,797)	$	(848,042)	$	(1,005,883)
Other comprehensive income (loss) before reclassifications	2,594		(80)		(1,203)		26,843		28,154
Amounts reclassified from accumulated other comprehensive income (loss)	(1,589)		—		1,721		—		132
Net increase (decrease) in other comprehensive income (loss)	1,005		(80)		518		26,843		28,286
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of June 30, 2020	$	18,026	$	(8,145)	$	(166,279)	$	(821,199)	$	(977,597)

	For the Six Months Ended June 30, 2020
	Derivative Instruments		Available-for-Sale Security		Employee Benefit Plans		Currency Translation Adjustments		Total
	(In thousands)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of December 31, 2019	$	11,041	$	(8,260)	$	(169,857)	$	(702,408)	$	(869,484)
Other comprehensive income (loss) before reclassifications	16,022		115		499		(118,791)		(102,155)
Amounts reclassified from accumulated other comprehensive income (loss)	(9,037)		—		3,079		—		(5,958)
Net increase (decrease) in other comprehensive income (loss)	6,985		115		3,578		(118,791)		(108,113)
Accumulated Other Comprehensive Income (Loss), Net of Tax, as of June 30, 2020	$	18,026	$	(8,145)	$	(166,279)	$	(821,199)	$	(977,597)

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
	June 30, 2021		June 30, 2020		Statements of Operations Classification
	(In thousands)
Derivative Instruments
(Loss) gain on foreign currency forward exchange and other contracts	$	(1,969)	$	1,512	Cost of sales
Tax effect of net (loss) gain	(