Mattel 2014 Annual Report Download - page 103

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Licensing and similar agreements in effect at December 31, 2014 contain provisions for future minimum
payments as shown in the following table:
Licensing and
Similar
Agreements
(In thousands)
2015 ......................................................................... $ 62,938
2016 ......................................................................... 108,960
2017 ......................................................................... 66,063
2018 ......................................................................... 29,092
2019 ......................................................................... 17,465
Thereafter ..................................................................... 60
$ 284,578
Royalty expense for 2014, 2013, and 2012 was $242.4 million, $246.9 million, and $240.2 million,
respectively.
The following table shows the future minimum obligations for purchases of inventory, services, and other as
of December 31, 2014:
Other
Purchase
Obligations
(In thousands)
2015 ......................................................................... $ 363,013
2016 ......................................................................... 21,116
2017 ......................................................................... 2,573
2018 ......................................................................... 708
2019 ......................................................................... —
$ 387,410
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 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 up to $1.0 million per occurrence for 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, 2014 and 2013 totaled $14.2 million and $15.8 million, respectively, and is included in other
noncurrent liabilities in the consolidated balance sheets. Loss reserves are accrued based on Mattel’s estimate of
the aggregate liability for claims incurred.
Litigation
Litigation Related to Carter Bryant and MGA Entertainment, Inc.
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
97