19.

Income Taxes

Mattel’s provision for income taxes was $11.0 million and $17.5 million for the six months ended June 30, 2013 and 2012, respectively. During the three and six months ended June 30, 2013, Mattel recognized net discrete tax benefits of $11.2 million and $15.2 million, respectively, primarily related to reassessments of prior years’ tax liabilities based on the status of current audits and tax filings in various jurisdictions, settlements, and enacted tax law changes. During the three and six months ended June 30, 2012, Mattel recognized net discrete tax benefits of $10.5 million, primarily related to reassessments of prior years’ tax liabilities based on the status of audits and tax filings in various jurisdictions, settlements, and enacted tax law changes.

In the normal course of business, Mattel is regularly audited by the Internal Revenue Service (“IRS”). In June 2013, Mattel met with the IRS Office of Appeals to continue resolution discussions related to the issues that remained unresolved following the examination of Mattel’s 2008 and 2009 federal income tax returns by the IRS. Mattel anticipates the appeals process will involve additional discussions before these disputed issues are resolved. Mattel continues to believe in its interpretations of the relevant legal, administrative, and other applicable guidance on the tax issues disputed by the IRS. However, if the disputed issues are resolved in a manner inconsistent with Mattel’s expectations, such an outcome could have a material impact on its financial statements. At this time, Mattel believes it is reasonably possible that in the next twelve months, the total unrecognized tax benefits could decrease by approximately $185 million to $205 million, of which a majority relates to a capital loss for which Mattel recognized no financial statement benefit.

Mattel is also regularly audited by state and foreign tax authorities. Based on the current status of state and foreign audits, Mattel believes it is reasonably possible that in the next twelve months, the total unrecognized tax benefits could decrease by approximately $9 million related to the settlement of tax audits and/or the expiration of statutes of limitations. The ultimate settlement of any particular issue with the applicable taxing authority could have a material impact on Mattel’s consolidated financial statements.