Mattel 2007 Annual Report Download - page 87

Net deferred income tax assets are reported in the consolidated balance sheets as follows:
December 31,
2007 2006
(In thousands)
Prepaid expenses and other current assets ...................................... $ 69,872 $ 72,406
Other noncurrent assets ..................................................... 467,531 503,168
Current liabilities .......................................................... (1,121) (1,148)
Other noncurrent liabilities .................................................. (40,353) (8,735)
$495,929 $565,691
As of December 31, 2007, Mattel has federal and foreign loss carryforwards totaling $271.5 million and tax
credit carryforwards of $242.2 million. Utilization of these loss and tax credit carryforwards is subject to annual
limitations. Mattel’s loss and tax credit carryforwards expire in the following periods:
Loss
Carryforwards
Tax Credit
Carryforwards
(In millions)
2008 – 2012 ....................................................... $ 58.5 $ 136.9
Thereafter ........................................................ 137.4 97.0
No expiration date .................................................. 75.6 8.3
Total ........................................................ $ 271.5 $ 242.2
Management considered all available evidence and determined that a valuation allowance of $164.6 million
was required as of December 31, 2007 for those loss and tax credit carryforwards that are not expected to provide
future tax benefits. Changes in the valuation allowance for 2007 include increases in the valuation allowance for
2007 foreign losses without benefits, and a decrease in the valuation allowance for loss carryforwards that were
utilized and those that expired and were written off. Management believes it is more-likely-than-not that Mattel
will generate sufficient taxable income in the appropriate future periods to realize the benefit of the remaining net
deferred income tax assets of $495.9 million.
Differences between the provision for income taxes at the US federal statutory income tax rate and the
provision in the consolidated statements of operations are as follows:
For the Year
2007 2006 2005
(In thousands)
Provision at US federal statutory rates .............................. $246,189 $ 239,315 $228,217
Increase (decrease) resulting from:
Foreign earnings taxed at different rates, including withholding
taxes ................................................... (122,916) (104,846) (70,942)
Foreign losses without income tax benefit ....................... 15,581 15,738 10,110
State and local taxes, net of US federal benefit .................... 3,263 1,314 583
Repatriation of foreign earnings under the Jobs Act, including state
taxes ................................................... — — 107,010
Adjustments to previously accrued taxes ........................ (42,008) (63,016) (38,572)
Other .................................................... 3,296 2,324 (1,376)
Provision for income taxes ....................................... $103,405 $ 90,829 $235,030
Effective January 1, 2007, Mattel adopted FIN 48, Accounting for Uncertainty in Income Taxes,an
interpretation of SFAS No. 109. FIN 48 clarifies the accounting for income taxes by prescribing the minimum
recognition threshold an uncertain tax position is required to meet before benefits are recognized in the financial
statements. In accordance with FIN 48, Mattel first determines whether it is more-likely-than-not (a greater than
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