Mattel 2008 Annual Report Download - page 74

Deferred income taxes are provided principally for tax credit carryforwards, research and development
expenses, net operating loss carryforwards, employee compensation-related expenses and certain other reserves
that are recognized in different years for financial reporting and income tax reporting purposes. Mattel’s deferred
income tax assets (liabilities) are comprised of the following:
December 31,
2008 2007
(In thousands)
Tax credit carryforwards .................................................. $258,671 $ 242,174
Research and development expenses ......................................... 190,615 193,104
Loss carryforwards ....................................................... 92,153 87,447
Allowances and reserves .................................................. 84,777 91,170
Deferred compensation .................................................... 73,522 66,035
Intangible assets ......................................................... — 8,635
Postretirement Benefits ................................................... 81,092 24,794
Other .................................................................. 24,270 33,236
Gross deferred income tax assets ........................................ 805,100 746,595
Intangible assets ......................................................... (83,245) (69,699)
Other .................................................................. (16,360) (16,414)
Gross deferred income tax liabilities ..................................... (99,605) (86,113)
Deferred income tax asset valuation allowances ................................ (150,963) (164,553)
Net deferred income tax assets .............................................. $554,532 $ 495,929
Net deferred income tax assets are reported in the consolidated balance sheets as follows:
December 31,
2008 2007
(In thousands)
Prepaid expenses and other current assets ..................................... $ 78,531 $ 69,872
Other noncurrent assets ................................................... 524,451 467,531
Accrued liabilities ........................................................ (850) (1,121)
Other noncurrent liabilities ................................................. (47,600) (40,353)
$ 554,532 $ 495,929
As of December 31, 2008, Mattel has federal and foreign loss carryforwards totaling $307.5 million and tax
credit carryforwards of $258.7 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)
2009 – 2013 ....................................................... $ 64.9 $ 145.4
Thereafter ........................................................ 173.5 104.3
No expiration date .................................................. 69.1 9.0
Total ........................................................ $ 307.5 $ 258.7
Management considered all available evidence under existing tax law and anticipated expiration of tax
statutes and determined that a valuation allowance of $151.0 million was required as of December 31, 2008 for
those loss and tax credit carryforwards that are not expected to provide future tax benefits. Changes in the
valuation allowance for 2008 include increases in the valuation allowance for 2008 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
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