Mattel 2012 Annual Report Download - page 99

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During 2012, 2011, and 2010, Mattel did not have any other assets or liabilities measured and reported at
fair value on a non-recurring basis in periods subsequent to initial recognition.
Other Financial Instruments
Mattel’s financial instruments include cash and equivalents, accounts receivable and payable, short-term
borrowings, and accrued liabilities. The carrying value of these instruments approximates fair value because of
their short-term nature.
The estimated fair value of Mattel’s long-term debt, including the current portion, was $1.63 billion
(compared to a carrying value of $1.50 billion) as of December 31, 2012 and $1.63 billion (compared to a
carrying value of $1.55 billion) as of December 31, 2011. The estimated fair values have been calculated based
on broker quotes or rates for the same or similar instruments and are classified as Level 2 within the fair value
hierarchy.
Note 11—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, Los Angeles, California, and New
York, New York, and American Girl store leases in Alpharetta, Georgia, Bloomington, Minnesota, Chesterfield,
Missouri, Columbus, Ohio, Dallas, Texas, Houston, Texas, Lone Tree, Colorado, Lynnwood, Washington,
McLean, Virginia, Miami, Florida, Natick, Massachusetts, and Overland Park, Kansas 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. During 2012, 2011, and 2010, contingent rental expense was not material. The following table shows
the future minimum obligations under lease commitments in effect at December 31, 2012:
Capitalized
Leases
Operating
Leases
(In thousands)
2013 ............................................................... $ 294 $ 98,287
2014 ............................................................... 294 76,764
2015 ............................................................... 294 67,568
2016 ............................................................... 294 59,243
2017 ............................................................... 294 49,199
Thereafter ........................................................... 615 158,684
$ 2,085(a) $509,745
(a) Includes $0.5 million of imputed interest.
Rental expense under operating leases amounted to $116.5 million, $113.3 million, and $117.8 million for
2012, 2011, and 2010, respectively, net of sublease income of $0.9 million, $0.9 million, and $0.5 million in
2012, 2011, and 2010, 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
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