Mattel 2001 Annual Report Download - page 68

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Note 7—Commitments and Contingencies
Leases
Mattel routinely enters into noncancelable lease agreements for premises and equipment used in the
normal course of business. The following table shows the future minimum obligations under lease
commitments in effect at December 31, 2001 (in thousands):
Capitalized
Leases
Operating
Leases
2002 ............................................................. $ 300 $ 38,800
2003 ............................................................. 300 29,800
2004 ............................................................. 300 26,800
2005 ............................................................. 300 20,700
2006 ............................................................. 300 16,200
Thereafter ......................................................... 8,600 35,800
$10,100(a) $168,100
(a) Includes $7.9 million of imputed interest.
Rental expense under operating leases amounted to $60.9 million, $60.8 million and $59.9 million for
2001, 2000 and 1999, respectively, net of sublease income of $0.9 million, $0.7 million and $0.6 million in
2001, 2000 and 1999, respectively.
Commitments
In the normal course of business, Mattel enters into contractual arrangements to obtain and protect
Mattel’s right to create and market certain products, and for future purchases of goods and services to ensure
availability and timely delivery. Such arrangements include royalty payments pursuant to licensing agreements
and commitments for future inventory purchases. Certain of these commitments routinely contain provisions for
guaranteed or minimum expenditures during the terms 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.
The largest commitment involves Mattel’s agreement with Disney Enterprises, Inc., which expires in
December 2004. This licensing agreement, which contains annual minimum royalty guarantees, permits Mattel
to produce toys based on classic Disney characters such as Mickey Mouse, Winnie the Poohand the Disney
Princesses, as well as any new infant and preschool toys based on film and television properties created by
Disney.
Licensing and related agreements provide for terms extending from 2002 through 2010 and contain
provisions for future minimum payments as shown in the following table (in thousands):
Minimum
Payments
2002 ...................................................................... $106,000
2003 ...................................................................... 84,000
2004 ...................................................................... 81,000
2005 ...................................................................... 28,000
2006 ...................................................................... 23,000
Thereafter .................................................................. 57,000
$379,000
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