Mattel 2010 Annual Report Download - page 73

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 statement and income tax reporting purposes. Mattel’s deferred
income tax assets (liabilities) are composed of the following:
December 31,
2010 2009
(In thousands)
Tax credit carryforwards .................................................. $134,044 $ 209,173
Research and development expenses ......................................... 184,132 187,010
Loss carryforwards ....................................................... 54,747 56,228
Allowances and reserves .................................................. 138,938 122,219
Deferred compensation .................................................... 115,822 111,237
Postretirement benefits .................................................... 63,707 66,220
Other .................................................................. 49,395 37,122
Gross deferred income tax assets ........................................ 740,785 789,209
Intangible assets ......................................................... (116,919) (100,839)
Other .................................................................. (8,649) (9,255)
Gross deferred income tax liabilities ..................................... (125,568) (110,094)
Deferred income tax asset valuation allowances ................................ (44,917) (112,048)
Net deferred income tax assets .............................................. $570,300 $ 567,067
Net deferred income tax assets are reported in the consolidated balance sheets as follows:
December 31,
2010 2009
(In thousands)
Prepaid expenses and other current assets ...................................... $135,612 $131,402
Other noncurrent assets ..................................................... 477,320 481,240
Accrued liabilities ......................................................... (319) (775)
Other noncurrent liabilities .................................................. (42,313) (44,800)
$570,300 $567,067
As of December 31, 2010, Mattel has federal and foreign loss carryforwards totaling $133.1 million and tax
credit carryforwards of $134.0 million, which does not include carryforwards that do not meet the threshold for
recognition in the financial statements. 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)
2011 – 2015 ....................................................... $ 55.9 $ 84.3
Thereafter ......................................................... 6.5 46.6
No expiration date .................................................. 70.7 3.1
Total ......................................................... $133.1 $134.0
Management considered all available evidence under existing tax law and anticipated expiration of tax
statutes and determined that a valuation allowance of $44.9 million was required as of December 31, 2010 for
those loss and tax credit carryforwards that are not expected to provide future tax benefits. Changes in the
valuation allowance for 2010 include increases in the valuation allowance for 2010 foreign losses without
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