Mattel 2010 Annual Report Download - page 97
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and timely delivery. Such arrangements include royalty payments pursuant to licensing agreements and
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, 2010 provide for terms extending from 2011
through 2015 and contain provisions for future minimum payments as shown in the following table:
Licensing and
Similar
Agreements
(In thousands)
2011 ........................................................................... $ 64,000
2012 ........................................................................... 74,000
2013 ........................................................................... 55,000
2014 ........................................................................... 37,000
2015 ........................................................................... 21,000
$251,000
Royalty expense for 2010, 2009, and 2008 was $245.9 million, $188.5 million, and $241.2 million,
respectively.
The following table shows the future minimum obligations for purchases of inventory, other assets, and
services at December 31, 2010:
Other
Purchase
Obligations
(In thousands)
2011 ........................................................................... $378,000
2012 ........................................................................... 18,000
2013 ........................................................................... 17,000
2014 ........................................................................... 15,000
2015 ........................................................................... 14,000
Thereafter ...................................................................... 3,000
$445,000
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, and product liability risks. Far West
insures the first $1.0 million per occurrence of Mattel’s workers’ compensation, the first $0.5 million for general
and automobile liability risks, and the first $2.0 million per occurrence and $2.0 million per year of product
liability 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, 2010 and 2009 totaled $16.9 million and $17.4 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.
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