Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Pre-tax Income

Consolidated pre-tax income consists of the following:

	For the Year
	2014		2013		2012
	(In thousands)
US operations	$	39,149	$	231,372	$	104,707
Foreign operations		547,761		867,756		840,338
	$	586,910	$	1,099,128	$	945,045

Provision (Benefit) for Current and Deferred Income Taxes

The provision (benefit) for current and deferred income taxes consists of the following:

	For the Year
	2014			2013			2012
	(In thousands)
Current
Federal	$	(25,075	)	$	38,227		$	69,639
State		(2,029	)		6,447			8,660
Foreign		106,998			130,878			126,465
		79,894			175,552			204,764
Deferred
Federal		21,987			30,342			(26,489	)
State		8,233			(512	)		520
Foreign		(22,078	)		(10,198	)		(10,214	)
		8,142			19,632			(36,183	)
Provision for income taxes	$	88,036		$	195,184		$	168,581

Deferred Income Tax Assets (Liabilities)

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,
	2014			2013
	(In thousands)
Tax credit carryforwards	$	54,674		$	77,396
Research and development expenses		189,694			187,477
Loss carryforwards		172,347			124,201
Allowances and reserves		233,434			202,141
Deferred compensation		91,530			111,850
Postretirement benefits		50,235			37,479
Intangible assets		30,803			—
Other		68,604			66,599
Gross deferred income tax assets		891,321			807,143
Intangible assets		(298,444	)		(282,737	)
Other		(3,868	)		(5,555	)
Gross deferred income tax liabilities		(302,312	)		(288,292	)
Deferred income tax asset valuation allowances		(133,297	)		(64,641	)
Net deferred income tax assets	$	455,712		$	454,210

Balance Sheet Classification of Deferred Income Tax Assets (Liabilities)

Net deferred income tax assets are reported in the consolidated balance sheets as follows:

	December 31,
	2014			2013
	(In thousands)
Prepaid expenses and other current assets	$	195,841		$	195,872
Other noncurrent assets		385,434			373,638
Accrued liabilities		(181	)		(109	)
Other noncurrent liabilities		(125,382	)		(115,191	)
	$	455,712		$	454,210

Expiration of Loss and Tax Credit Carryforwards

Mattel’s loss and tax credit carryforwards expire in the following periods:

	Loss Carryforwards		Tax Credit Carryforwards
	(In thousands)
2015 – 2019	$	251,698	$	25,620
Thereafter		376,764		42,890
No expiration date		241,478		3,959
Total	$	869,940	$	72,469

Reconciliation of Provision for Income Taxes at US Federal Statutory Rate to Provision in Statements of Operations

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
	2014			2013			2012
	(In thousands)
Provision at US federal statutory rate	$	205,419		$	384,695		$	330,766
(Decrease) increase resulting from:
Foreign earnings taxed at different rates, including withholding taxes		(107,409	)		(165,768	)		(157,488	)
Foreign losses without income tax benefit		20,140			3,215			1,047
State and local taxes, net of US federal benefit		3,760			4,854			6,856
Adjustments to previously accrued taxes		(55,026	)		(32,200	)		(16,000	)
Tax restructuring		12,400			—			—
Other		8,752			388			3,400
Provision for income taxes	$	88,036		$	195,184		$	168,581

Reconciliation of Unrecognized Tax Benefits

A reconciliation of unrecognized tax benefits is as follows:

	For the Year
	2014			2013			2012
	(In thousands)
Unrecognized tax benefits at January 1	$	111,370		$	285,560		$	262,560
Increases for positions taken in current year		9,886			12,997			14,800
Increases for positions taken in a prior year		53,221			14,289			21,030
Decreases for positions taken in a prior year		(51,421	)		(186,555	)		(700	)
Decreases for settlements with taxing authorities		(9,493	)		(5,135	)		(800	)
Decreases for lapses in the applicable statute of limitations		(13,206	)		(9,786	)		(11,330	)
Unrecognized tax benefits at December 31	$	100,357		$	111,370		$	285,560