Mattel 2012 Annual Report Download - page 79

Net deferred income tax assets are reported in the consolidated balance sheets as follows:
December 31,
2012 2011
(In thousands)
Prepaid expenses and other current assets ................................ $ 253,664 $ 110,422
Other noncurrent assets .............................................. 374,667 473,832
Accrued liabilities .................................................. (152) (194)
Other noncurrent liabilities ........................................... (122,140) (41,242)
$ 506,039 $ 542,818
As of December 31, 2012, Mattel has federal and foreign loss carryforwards totaling $442.0 million and tax
credit carryforwards of $59.4 million, which excludes 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)
2013 – 2017 ....................................................... $ 66.2 $ 21.4
Thereafter ......................................................... 83.5 33.7
No expiration date .................................................. 292.3 4.3
Total ......................................................... $ 442.0 $ 59.4
Management considered all available evidence under existing tax law and anticipated expiration of tax statutes
and determined that a valuation allowance of $59.3 million was required as of December 31, 2012 for those loss and
tax credit carryforwards that are not expected to provide future tax benefits. In addition, management determined that a
valuation allowance of $8.4 million was required as of December 31, 2012 for those deferred tax assets for which there
is not sufficient evidence as to its ultimate utilization, primarily related to certain foreign affiliates. Changes in the
valuation allowance for 2012 include increases in the valuation allowance for 2012 foreign losses without benefits,
increases in the valuation allowances for certain deferred tax assets acquired in the acquisition of HIT Entertainment
and decreases in the valuation allowance for expiration and projected utilization of tax loss and tax credit
carryforwards. 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 $506.0 million.
Changes in enacted tax laws, audits in various jurisdictions around the world, settlements or acquisitions, could
negatively impact Mattel’s ability to fully realize all of the benefits of its remaining net deferred tax assets.
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
2012 2011 2010
(In thousands)
Provision at US federal statutory rates .............................. $330,766 $ 339,736 $ 296,389
(Decrease) increase resulting from:
Foreign earnings taxed at different rates, including withholding
taxes .................................................. (157,488) (139,476) (138,352)
Foreign losses without income tax benefit ....................... 1,047 2,883 5,398
State and local taxes, net of US federal benefit ................... 6,856 4,833 12,535
Adjustments to previously accrued taxes ........................ (16,000) (6,800) (638)
Foreign tax credit benefit, net of cost to repatriate foreign earnings . . . — — (16,200)
Other .................................................... 3,400 989 2,830
Provision for income taxes ....................................... $168,581 $ 202,165 $ 161,962
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