Mattel 2012 Annual Report Download - page 100

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commitments primarily for future inventory purchases. Certain of these commitments routinely contain
provisions for guarantees or minimum expenditures during the term of the contracts. Current and future
commitments for guaranteed payments reflect Mattel’s focus on expanding its product lines through alliances
with businesses in other industries.
Licensing and similar agreements in effect at December 31, 2012 contain provisions for future minimum
payments as shown in the following table:
Licensing and
Similar
Agreements
(In thousands)
2013 ......................................................................... $ 56,801
2014 ......................................................................... 78,195
2015 ......................................................................... 48,883
2016 ......................................................................... 18,078
2017 ......................................................................... 1,004
Thereafter ..................................................................... 250
$ 203,211
Royalty expense for 2012, 2011, and 2010 was $240.2 million, $262.4 million, and $245.9 million,
respectively.
The following table shows the future minimum obligations for purchases of inventory, other assets, and
services at December 31, 2012:
Other
Purchase
Obligations
(In thousands)
2013 ......................................................................... $ 356,603
2014 ......................................................................... 18,487
2015 ......................................................................... 15,500
2016 ......................................................................... 3,401
2017 ......................................................................... —
$ 393,991
Insurance
Mattel has a wholly owned subsidiary, Far West Insurance Company, Ltd. (“Far West”), that was established
to insure Mattel’s workers’ compensation, general, automobile, product liability, and foreign property risks. Far
West insures the first $1.0 million per occurrence for workers’ compensation risks, the first $0.5 million for general
and automobile liability risks, the first $2.0 million per occurrence and $2.0 million per year for product liability
risks, and $0.5 million per occurrence for foreign property risks. Various insurance companies, that have an “A” or
better AM Best rating at the time the policies are purchased, reinsure Mattel’s risk in excess of the amounts insured
by Far West. Mattel’s liability for reported and incurred but not reported claims at December 31, 2012 and 2011
totaled $17.0 million and $16.3 million, respectively, and is included in other noncurrent liabilities. Loss reserves
are accrued based on Mattel’s estimate of the aggregate liability for claims incurred.
Litigation
In April 2004, Mattel filed a lawsuit in Los Angeles County Superior Court against Carter Bryant
(“Bryant”), a former Mattel design employee. The suit alleges that Bryant aided and assisted a Mattel competitor,
MGA Entertainment, Inc. (“MGA”), during the time he was employed by Mattel, in violation of his contractual
88