Mattel 2014 Annual Report Download - page 82

remains subject to examination in major foreign jurisdictions, including Hong Kong for the 2008 through 2014
tax years, Brazil, Mexico and Netherlands for the 2009 through 2014 tax years and Russia for the 2011 through
2014 tax years. Based on the current status of federal, state, local and foreign audits, Mattel believes it is
reasonably possible that in the next 12 months, the total unrecognized tax benefits could decrease by $8.7 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.
The income tax provision included net tax benefits of $42.6 million, $32.2 million, and $16.0 million in
2014, 2013, and 2012, respectively. The 2014 net tax benefits primarily relate 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, partially offset by a tax charge related to a 2014 tax restructuring for the HIT
Entertainment and MEGA Brands operations. The 2013 and 2012 net tax benefits primarily related to the
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.
The cumulative amount of undistributed earnings of foreign subsidiaries that Mattel intends to indefinitely
reinvest and upon which no deferred US income taxes have been provided is approximately $6.4 billion as of
December 31, 2014. Management periodically reviews the undistributed earnings of its foreign subsidiaries and
reassesses the intent to indefinitely reinvest such earnings. It is not practicable for Mattel to determine the
deferred tax liability associated with these undistributed earnings due to the availability of foreign tax credits, the
complexity of our international holding company structure, the rules governing the utilization of foreign tax
credits, and the interplay between utilization of such foreign tax credits and Mattel’s other significant tax
attributes.
US GAAP requires that windfall income tax benefits related to the exercise of nonqualified stock options
and vesting of other stock compensation awards be credited to additional paid-in capital in the period in which
such amounts reduce current taxes payable. The exercise of nonqualified stock options and vesting of other stock
compensation awards resulted in an increase to additional paid-in capital for related windfall income tax benefits
totaling $21.2 million, $50.4 million, and $35.8 million in 2014, 2013, and 2012, respectively.
Note 4—Employee Benefit Plans
Mattel and certain of its subsidiaries have qualified and nonqualified retirement plans covering substantially
all employees of these companies. These plans include defined benefit pension plans, defined contribution
retirement plans, postretirement benefit plans, and deferred compensation and excess benefit plans. In addition,
Mattel makes contributions to government-mandated retirement plans in countries outside the US where its
employees work.
A summary of retirement plan expense is as follows:
For the Year
2014 2013 2012
(In thousands)
Defined contribution retirement plans ................................... $43,819 $43,694 $40,266
Defined benefit pension plans ......................................... 18,124 30,747 33,597
Deferred compensation and excess benefit plans ........................... 4,840 9,298 5,740
Postretirement benefit plans ........................................... 1,461 2,245 1,607
$68,244 $85,984 $81,210
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