XML 35 R23.htm IDEA: XBRL DOCUMENT
v3.22.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Consolidated pre-tax income consists of the following:
| For the Year Ended
| December 31, 2022 |  | December 31, 2021 |  | December 31, 2020
| (In thousands)
U.S. operations | $ | 221,149 |  |  | $ | 9,612 |  |  | $ | (172,478) |
Foreign operations | 283,186 |  |  | 461,152 |  |  | 350,135 |
Consolidated pre-tax income excluding equity method investments | $ | 504,335 |  |  | $ | 470,764 |  |  | $ | 177,657 |
The provision (benefit) for current and deferred income taxes consists of the following:
| For the Year Ended
| December 31, 2022 |  | December 31, 2021 |  | December 31, 2020
| (In thousands)
Current |  |  |  |  |
Federal | $ | — |  |  | $ | (9,819) |  |  | $ | — |
State | 2,359 |  |  | (4,060) |  |  | (575) |
Foreign | 62,278 |  |  | 81,899 |  |  | 78,870 |
| 64,637 |  |  | 68,020 |  |  | 78,295 |
Deferred |  |  |  |  |
Federal | 55,805 |  |  | (229,217) |  |  | 1,164 |
State | 2,440 |  |  | (27,970) |  |  | (481) |
Foreign | 12,969 |  |  | (231,214) |  |  | (13,429) |
| 71,214 |  |  | (488,401) |  |  | (12,746) |
Provision (benefit) for income taxes | $ | 135,851 |  |  | $ | (420,381) |  |  | $ | 65,549 |
Deferred income taxes are provided principally for tax credit carryforwards, net operating loss carryforwards, interest expense, research and development expenses, employee compensation-related expenses, right-of-use assets, lease liabilities, 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, 2022 |  | December 31, 2021
| (In thousands)
Tax credit carryforwards | $ | 70,346 |  |  | $ | 100,575 |
Research and development expenses | 45,640 |  |  | 27,996 |
Net operating loss carryforwards | 94,977 |  |  | 124,792 |
Interest expense | 79,862 |  |  | 90,671 |
Allowances and reserves | 119,458 |  |  | 102,634 |
Deferred compensation | 41,411 |  |  | 66,183 |
Postretirement benefits | 22,852 |  |  | 31,841 |
Intangible assets | 212,497 |  |  | 219,629 |
Lease liabilities | 82,349 |  |  | 70,712 |
Other | 43,885 |  |  | 46,382 |
Gross deferred income tax assets | 813,277 |  |  | 881,415 |
Intangible assets | (177,522) |  |  | (189,021) |
Right-of-use assets | (74,642) |  |  | (63,206) |
Other | (52,502) |  |  | (40,781) |
Gross deferred income tax liabilities | (304,666) |  |  | (293,008) |
Deferred income tax asset valuation allowances | (92,134) |  |  | (101,489) |
Net deferred income tax assets | $ | 416,477 |  |  | $ | 486,918 |
Net deferred income tax assets are reported in the consolidated balance sheets as follows:
| December 31, 2022 |  | December 31, 2021
| (In thousands)
Deferred income tax assets | $ | 471,672 |  |  | $ | 526,906 |
Other noncurrent liabilities | (55,195) |  |  | (39,988) |
| $ | 416,477 |  |  | $ | 486,918 |
As of December 31, 2022, Mattel had U.S. federal and foreign loss carryforwards totaling $307.7 million and U.S. federal, state, and foreign tax credit carryforwards of $70.3 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 Carryforward |  | Tax Credit Carryforward
| (In thousands)
2023–2027 | $ | 33,390 |  |  | $ | — |
Thereafter | 114,825 |  |  | 45,624 |
No expiration date | 159,453 |  |  | 24,722 |
Total | $ | 307,668 |  |  | $ | 70,346 |
Evaluating the need for and the amount of a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence to determine whether it is more-likely-than-not that these assets will be realizable. Mattel routinely assesses the positive and negative evidence for this realizability, including the evaluation of sustained profitability and three years of cumulative pretax income for each tax jurisdiction. During the twelve months ended December 31, 2021, Mattel continued to see improved and sustained profitability, which presented objective positive evidence for the realizability of certain deferred tax assets. As such, based on the overall analysis of the positive and negative evidence in each tax jurisdiction, during 2021 Mattel released the valuation allowances related to certain U.S. federal, state, and foreign deferred tax assets, except for certain tax assets that are primarily expected to expire before utilization. Valuation allowance releases for the year ended December 31, 2021, resulted in recognition of a portion of these deferred tax assets and a benefit to Mattel's provision for income taxes of $540.8 million. As of December 31, 2021, Mattel's valuation allowances on its U.S. federal and state deferred tax assets and foreign deferred tax assets were approximately $18 million and $83 million, respectively. Changes in the valuation allowances in 2022 primarily related to utilization and expiration of tax attributes and functional currency fluctuations. As of December 31, 2022, Mattel's valuation allowances on its U.S. federal and state deferred tax assets and foreign deferred tax assets were approximately $18 million and $74 million, respectively. Differences between the provision for income taxes at the U.S. federal statutory income tax rate and the provision in the consolidated statements of operations are as follows:
| For the Year Ended
| December 31, 2022 |  | December 31, 2021 |  | December 31, 2020
| (In thousands)
Provision at U.S. federal statutory rate | $ | 105,910 |  |  | $ | 98,861 |  |  | $ | 37,308 |
Differences resulting from: |  |  |  |  |
Changes in valuation allowances | — |  |  | (540,803) |  |  | 14,576 |
Foreign earnings taxed at different rates, including foreign losses without benefit | 16,877 |  |  | 35,468 |  |  | 5,711 |
Tax related to pass-through income | 5,340 |  |  | 2,487 |  |  | 2,409 |
Non deductible executive compensation | 5,141 |  |  | 7,115 |  |  | 5,968 |
State and local taxes, net of U.S. federal benefit (expense) | 5,027 |  |  | (983) |  |  | (1,056) |
Adjustments to previously accrued taxes | (9,471) |  |  | (19,101) |  |  | 5,354 |
Change in indefinite reinvestment assertion | 10,600 |  |  | 7,000 |  |  | — |
Other | (3,573) |  |  | (10,425) |  |  | (4,721) |
Provision (benefit) for income taxes | $ | 135,851 |  |  | $ | (420,381) |  |  | $ | 65,549 |
In assessing whether uncertain tax positions should be recognized in its financial statements, Mattel first determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more likely than not recognition threshold, Mattel presumes that the position will be examined by the appropriate taxing authority that would have full knowledge of all relevant information. For tax positions that meet the more likely than not recognition threshold, Mattel measures the amount of benefit recognized in the financial statements at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Mattel recognizes unrecognized tax benefits in the first financial reporting period in which information becomes available indicating that such benefits will more likely than not be realized. Mattel records a reserve for unrecognized tax benefits for U.S. federal, state, local, and foreign tax positions related primarily to transfer pricing, tax credits claimed, tax nexus, and apportionment. For each reporting period, management applies a consistent methodology to measure unrecognized tax benefits, and all unrecognized tax benefits are reviewed periodically and adjusted as circumstances warrant. Mattel's measurement of its reserve for unrecognized tax benefits is based on management's assessment of all relevant information, including prior audit experience, the status of audits, conclusions of tax audits, lapsing of applicable statutes of limitations, identification of new issues, and any administrative guidance or developments. A reconciliation of the reserve for unrecognized tax benefits is as follows:
| For the Year Ended
| December 31, 2022 |  | December 31, 2021 |  | December 31, 2020
| (In thousands)
Unrecognized tax benefits at January 1 | $ | 118,781 |  |  | $ | 140,309 |  |  | $ | 137,929 |
Increases for positions taken in current year | 5,034 |  |  | 5,113 |  |  | 5,969 |
Increases for positions taken in a prior year | 8,037 |  |  | 3,658 |  |  | 5,811 |
Decreases for positions taken in a prior year | (7,315) |  |  | (1,324) |  |  | (3,127) |
Decreases for settlements with taxing authorities | (1,236) |  |  | (2,852) |  |  | (3,410) |
Decreases for lapses in the applicable statute of limitations | (9,244) |  |  | (26,123) |  |  | (2,863) |
Unrecognized tax benefits at December 31 | $ | 114,057 |  |  | $ | 118,781 |  |  | $ | 140,309 |
Of the $114.1 million of unrecognized tax benefits as of December 31, 2022, $113.2 million would impact the effective tax rate if recognized, and $0.9 million would result in an increase in the valuation allowance. Mattel recognized a decrease of interest and penalties of $5.3 million in 2022, a decrease of $1.5 million in 2021, and a decrease of $2.1 million in 2020, related to unrecognized tax benefits, which are reflected in the provision (benefit) for income taxes in the consolidated statements of operations. As of December 31, 2022, Mattel accrued $15.9 million in interest and penalties related to unrecognized tax benefits, all of which would impact the effective tax rate if recognized. As of December 31, 2021, Mattel accrued $21.2 million in interest and penalties related to unrecognized tax benefits, all of which would impact the effective tax rate if recognized. In the normal course of business, Mattel is regularly audited by U.S. federal, state, local, and foreign tax authorities. Mattel remains subject to IRS examination for the 2019 through 2022 tax years. Mattel files multiple state and local income tax returns and remains subject to examination in various jurisdictions, including California for the 2018 through 2022 tax years, New York for the 2019 through 2022 tax years, and Wisconsin for the 2015 through 2022 tax years. Mattel files multiple foreign income tax returns and remains subject to examination in various foreign jurisdictions including Hong Kong for the 2016 through 2022 tax years, Mexico for the 2017 through 2022 tax years, Netherlands for the 2018 through 2022 tax years, Cyprus for the 2019 through 2022 tax years, China for the 2010 through 2022 tax years, and United Kingdom for the 2017 through 2022 tax years. Based on the current status of U.S. federal, state, local, and foreign audits, Mattel believes it is reasonably possible that in the next 12 months, the total unrecognized tax benefits could decrease by $14.3 million related to the settlement of tax audits and/or the expiration of statutes of limitations. The ultimate settlement of certain issues with the applicable taxing authority could have a material impact on Mattel's consolidated financial statements. Mattel has recorded a deferred tax liability of $28.0 million and $19.0 million related to undistributed earnings of certain foreign subsidiaries as of December 31, 2022 and 2021, respectively. During 2022, Mattel recorded an approximately $9 million deferred tax liability on $2.60 billion of undistributed foreign earnings for which deferred taxes had not previously been recorded. Taxes have not been provided on approximately $2.40 billion of undistributed foreign U.S. GAAP retained earnings. The determination of any incremental tax liability associated with these earnings is not practicable due to the complexity of local country withholding rules and interactions with tax treaties, foreign exchange considerations, and the diversity of state income tax treatment on actual distribution. Mattel will remit reinvested earnings of its foreign subsidiaries for which a deferred tax liability has been recorded when Mattel determines that it is advantageous for business operations or cash management purposes.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration