Mattel 2009 Annual Report Download - page 98

Note 14—Commitments and Contingencies
Leases
Mattel routinely enters into noncancelable lease agreements for premises and equipment used in the normal
course of business. Certain of these leases include escalation clauses that adjust rental expense to reflect changes
in price indices, as well as renewal options. In addition to minimum rental payments, certain of Mattel’s leases
require additional payments to reimburse the lessors for operating expenses such as real estate taxes,
maintenance, utilities, and insurance. Rental expense is recorded on a straight-line basis, including escalating
minimum payments. The American Girl Place®leases in Chicago, Illinois, New York, New York, and
Los Angeles, California and American Girl Boutique and Bistro®leases in Dallas, Texas, Atlanta, Georgia,
Natick, Massachusetts, Bloomington, Minnesota, and Denver, Colorado also contain provisions for additional
rental payments based on a percentage of the sales of each store after reaching certain sales benchmarks.
Contingent rental expense is recorded in the period in which the contingent event becomes probable. The
following table shows the future minimum obligations under lease commitments in effect at December 31, 2009:
Capitalized
Leases
Operating
Leases
(In thousands)
2010 ................................................................... $ 300 $ 94,000
2011 ................................................................... 300 79,000
2012 ................................................................... 300 64,000
2013 ................................................................... 300 44,000
2014 ................................................................... 300 36,000
Thereafter ............................................................... 1,500 205,000
$3,000(a) $522,000
(a) Includes $0.9 million of imputed interest.
Rental expense under operating leases amounted to $121.9 million, $105.3 million, and $93.0 million for
2009, 2008, and 2007, respectively, net of sublease income of $0.1 million, $0.7 million, and $1.0 million in
2009, 2008, and 2007, 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
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 provide for terms extending from 2010 through 2014 and thereafter and
contain provisions for future minimum payments as shown in the following table:
Minimum
Payments
(In thousands)
2010 ........................................................................... $ 43,000
2011 ........................................................................... 84,000
2012 ........................................................................... 45,000
2013 ........................................................................... 31,000
2014 ........................................................................... 19,000
Thereafter ...................................................................... 19,000
$241,000
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