Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Mattel's provision for income taxes was $11.9 million and $2.7 million for the three months ended March 31, 2020 and 2019, respectively. During the three months ended March 31, 2020, Mattel recognized a net discrete tax expense of $6.4 million primarily related to an expense for reassessments of prior years' tax liabilities and income taxes recorded on a discrete basis in various jurisdictions. During the three months ended March 31, 2019, Mattel recognized a net discrete tax benefit of $1.9 million, primarily related to a benefit for reassessments of prior years' tax liabilities and income taxes recorded on a discrete basis in various jurisdictions. As a result of the establishment of a valuation allowance on U.S. deferred tax assets in 2017, there was no U.S. tax benefit provided for U.S. losses during the three months ended March 31, 2020 and 2019.

In the normal course of business, Mattel is regularly audited by federal, state, and foreign tax authorities. Based on the current status of federal, 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 $12 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.

In April 2020, Mattel initiated an analysis of withholding tax regimes in Europe and potential changes in the interpretation of withholding tax rules which may subject Mattel to withholding tax for years remaining open under the applicable statute of limitation.  Due to the age and diversity of the laws in question, as well as the applicability of numerous tax treaties, the analysis is complex and ongoing.  Though Mattel believes it is in compliance with all tax laws in the jurisdictions in which it operates, the completion of its analysis in the second quarter of 2020 could result in an adjustment to its income tax expense.  A reasonable estimate of the potential impact cannot be made at this time.