MATTEL INC /DE/MAT
MATTEL INC /DE/ Income Taxes Disclosure
Income Taxes
For the years ended December 31, 2024 and 2023, gross income taxes paid were $100.3 million and $93.6 million, respectively.
Consolidated pre-tax income consisted of the following:
| For the Year Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| U.S. operations | $ | 179,094 | $ | 250,455 | $ | 150,361 | |||||||||||
| Foreign operations | 280,395 | 372,050 | 315,043 | ||||||||||||||
| Consolidated pre-tax income excluding equity method investments | $ | 459,489 | $ | 622,505 | $ | 465,404 | |||||||||||
The provision for current and deferred income taxes consisted of the following:
| For the Year Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | 8,559 | $ | 40,647 | $ | 8,256 | |||||||||||
| State | 18,205 | 5,888 | 4,669 | ||||||||||||||
| Foreign | 85,927 | 76,562 | 79,843 | ||||||||||||||
| 112,691 | 123,097 | 92,768 | |||||||||||||||
| Deferred | |||||||||||||||||
| Federal | 6,662 | (15,645) | (24,711) | ||||||||||||||
| State | (6,096) | (2,463) | 1,986 | ||||||||||||||
| Foreign | (23,483) | 637 | 199,432 | ||||||||||||||
| (22,917) | (17,471) | 176,707 | |||||||||||||||
| Provision for income taxes | $ | 89,774 | $ | 105,626 | $ | 269,475 | |||||||||||
Mattel's deferred income tax assets (liabilities) were composed of the following:
| December 31, 2025 | December 31, 2024 | ||||||||||
| (In thousands) | |||||||||||
| Tax credit carryforwards | $ | 17,853 | $ | 20,007 | |||||||
| Research and development expenses | 164,980 | 129,836 | |||||||||
| Net operating loss carryforwards | 89,101 | 87,398 | |||||||||
| Interest expense | 28,093 | 50,214 | |||||||||
| Allowances and reserves | 108,594 | 96,264 | |||||||||
| Intangible assets | 33,360 | 31,209 | |||||||||
| Deferred compensation | 65,833 | 71,880 | |||||||||
| Postretirement benefits | 15,944 | 19,138 | |||||||||
| Lease liabilities | 85,704 | 83,301 | |||||||||
| Other | 39,021 | 45,819 | |||||||||
| Gross deferred income tax assets | 648,483 | 635,066 | |||||||||
| Intangible assets | (172,409) | (167,607) | |||||||||
| Right-of-use assets | (77,563) | (75,266) | |||||||||
| Other | (25,111) | (42,026) | |||||||||
| Gross deferred income tax liabilities | (275,083) | (284,899) | |||||||||
| Deferred income tax asset valuation allowances | (100,454) | (97,661) | |||||||||
| Net deferred income tax assets | $ | 272,946 | $ | 252,506 | |||||||
Net deferred income tax assets and other noncurrent liabilities were reported in the consolidated balance sheets as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||
| (In thousands) | |||||||||||
| Deferred income tax assets | $ | 312,913 | $ | 296,862 | |||||||
| Other noncurrent liabilities | (39,967) | (44,356) | |||||||||
| $ | 272,946 | $ | 252,506 | ||||||||
As of December 31, 2025, Mattel had U.S. federal and foreign loss carryforwards totaling $359.6 million and U.S. federal, state, and foreign tax credit carryforwards of $17.7 million, which exclude 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) | |||||||||||
| 2026–2030 | $ | 5,067 | $ | — | |||||||
| Thereafter | 42,376 | 1,494 | |||||||||
| No expiration date | 312,169 | 16,163 | |||||||||
| $ | 359,612 | $ | 17,657 | ||||||||
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. As of December 31, 2025, the valuation allowance of $100.5 million was primarily due to foreign net operating loss carryforwards and foreign tax credits that Mattel does not expect to utilize.
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:
| For the Year Ended | |||||||||||
| December 31, 2025 | |||||||||||
| Amount | Percent | ||||||||||
| (In thousands) | |||||||||||
| Provision at U.S. federal statutory rate | $ | 96,493 | 21.0 | % | |||||||
| State and local income tax, net of federal income tax effect (a) | 1,533 | 0.3 | |||||||||
| Foreign tax effects: | |||||||||||
| Hong Kong | |||||||||||
| Income not subject to tax | (10,482) | (2.3) | |||||||||
| Minimum top-up tax | 5,816 | 1.3 | |||||||||
| Other adjustments | (3,364) | (0.7) | |||||||||
| Netherlands | 7,431 | 1.6 | |||||||||
| Other foreign jurisdictions | 8,469 | 1.8 | |||||||||
| Effect of cross-border tax laws: | |||||||||||
| Foreign-derived intangible income | (7,918) | (1.7) | |||||||||
| Subpart F income inclusion | (18,895) | (4.1) | |||||||||
| Other | 3,441 | 0.7 | |||||||||
| Tax credits: | |||||||||||
| Research and development tax credits | (7,920) | (1.7) | |||||||||
| Nontaxable or nondeductible items | |||||||||||
| Non-deductible executive compensation | 6,104 | 1.3 | |||||||||
| Other | (2,723) | (0.6) | |||||||||
| Changes in unrecognized tax benefits | 11,789 | 2.6 | |||||||||
| Provision for income taxes | $ | 89,774 | 19.5 | % | |||||||
(a)The states and local jurisdictions that contribute to the majority (greater than 50%) of the effect in this category include Pennsylvania and California.
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:
| For the Year Ended | ||||||||||||||
| December 31, 2024 | December 31, 2023 | |||||||||||||
| (In thousands) | ||||||||||||||
| Provision at U.S. federal statutory rate | $ | 130,726 | $ | 97,735 | ||||||||||
| Differences resulting from: | ||||||||||||||
| Changes in valuation allowances | 13,362 | 2,343 | ||||||||||||
| Foreign earnings taxed at different rates, including foreign losses without benefit | (9,111) | (12,480) | ||||||||||||
| Foreign-derived intangible income | (8,006) | (364) | ||||||||||||
| Tax related to pass-through income | 5,125 | 3,869 | ||||||||||||
| Non deductible executive compensation | 5,941 | 7,248 | ||||||||||||
| State and local taxes, net of U.S. federal benefit | 7,711 | 8,480 | ||||||||||||
| Adjustments to previously accrued taxes | 5,553 | 9,943 | ||||||||||||
| Tax on undistributed earnings of foreign subsidiaries | 1,100 | (1,000) | ||||||||||||
| Research and development tax credit | (6,163) | (7,248) | ||||||||||||
| Discrete tax impact related to intra-group IP transfer | (34,762) | 161,388 | ||||||||||||
| Other | (5,850) | (439) | ||||||||||||
| Provision for income taxes | $ | 105,626 | $ | 269,475 | ||||||||||
In 2025, Mattel recognized a net income tax benefit of $26.8 million, primarily due to a change of its indefinite reinvestment assertion with respect to certain foreign subsidiary earnings and release of previously unrecognized tax benefits. In 2024, Mattel recognized a net income tax benefit of $34.8 million related to tax elections filed to amortize certain intangible assets transferred as part of Mattel's intra-group IP rights transfer and establishment of certain U.S. deferred tax assets.
A reconciliation of the reserve for unrecognized tax benefits is as follows:
| For the Year Ended | |||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Unrecognized tax benefits at January 1 | $ | 134,853 | $ | 129,970 | $ | 114,057 | |||||||||||
| Increases for positions taken in current year | 7,135 | 9,123 | 5,855 | ||||||||||||||
| Increases for positions taken in a prior year | 17,373 | 12,715 | 18,831 | ||||||||||||||
| Decreases for positions taken in a prior year | (2,074) | (7,983) | (4,841) | ||||||||||||||
| Decreases for settlements with taxing authorities | (498) | (2,940) | (273) | ||||||||||||||
| Decreases for lapses in the applicable statute of limitations | (3,320) | (6,032) | (3,659) | ||||||||||||||
| Unrecognized tax benefits at December 31 | $ | 153,469 | $ | 134,853 | $ | 129,970 | |||||||||||
Gross unrecognized tax benefits related to uncertain tax positions as of December 31, 2025, 2024, and 2023, were $153.5 million, $134.9 million, and $130.0 million, respectively. The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as other noncurrent liabilities and a reduction of deferred tax assets in the consolidated balance sheets. If recognized, the resulting tax benefit would affect Mattel's effective tax rates during the years ended December 31, 2025, 2024, and 2023 by $125.4 million, $107.7 million, and $110.7 million, respectively.
Mattel includes interest and penalties related to unrecognized tax benefits within the provision for income taxes in the consolidated statements of operations and in other noncurrent liabilities in the consolidated balance sheets. During the years ended December 31, 2025, 2024, and 2023, Mattel recorded $1.1 million, $1.7 million, and $1.5 million, respectively, of net interest and penalties in the provision for income taxes in the consolidated statements of operations. The amount of interest and penalties accrued as of December 31, 2025, 2024, and 2023 were $20.1 million, $19.0 million, and $17.3 million, respectively, 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 2022 through 2025 tax years. Mattel files multiple state and local income tax returns and remains subject to examination in various jurisdictions, including California for the 2014 through 2025 tax years. Mattel files multiple foreign income tax returns and remains subject to examination in various foreign jurisdictions including Hong Kong for the 2019 through 2025 tax years, Mexico for the 2020 through 2025 tax years, Netherlands for the 2021 through 2025 tax years, and China for the 2021 through 2025 tax years. The ultimate settlement of certain issues with the applicable taxing authority could have a material impact on Mattel's consolidated financial statements.
As of December 31, 2025, Mattel has recorded a $13.8 million deferred tax liability related to $701.2 million of foreign undistributed earnings that it expects to repatriate based on business or cash needs. Mattel intends to indefinitely reinvest all other foreign earnings. The incremental tax liability related to those earnings is not practicable to determine 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.
The amount of income taxes paid (net of refunds received) by Mattel were as follows:
| For the Year Ended | |||||
| December 31, 2025 | |||||
| (In thousands) | |||||
| Federal | $ | 10,825 | |||
| State and local | 9,287 | ||||
| Foreign | |||||
| Hong Kong | 17,870 | ||||
| Netherlands | 15,840 | ||||
| Brazil | 5,577 | ||||
| China | 5,476 | ||||
| All other foreign | 42,973 | ||||
| Total income taxes paid (net of refunds received) | $ | 107,848 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 25, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.