Mattel 2013 Annual Report Download - page 98

Download and view the complete annual report

Please find page 98 of the 2013 Mattel annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

The estimated fair value of Mattel’s long-term debt, including the current portion, was $1.62 billion
(compared to a carrying value of $1.60 billion) as of December 31, 2013 and $1.63 billion (compared to a
carrying value of $1.50 billion) as of December 31, 2012. 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, Charlotte,
North Carolina, Chesterfield, Missouri, Columbus, Ohio, Dallas, Texas, Houston, Texas, Lone Tree, Colorado,
Lynnwood, Washington, McLean, Virginia, Miami, Florida, Natick, Massachusetts, Orlando, Florida, Overland
Park, Kansas, and Palo Alto, California 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 2013, 2012, and 2011, contingent
rental expense was not material. The following table shows the future minimum obligations under lease
commitments in effect at December 31, 2013:
Capitalized
Leases
Operating
Leases
(In thousands)
2014 .................................................................. $ 294 $103,927
2015 .................................................................. 294 89,387
2016 .................................................................. 294 82,389
2017 .................................................................. 294 60,941
2018 .................................................................. 294 44,294
Thereafter .............................................................. 321 163,544
$ 1,791(a) $544,482
(a) Includes $0.4 million of imputed interest.
Rental expense under operating leases amounted to $111.0 million, $116.5 million, and $113.3 million for
2013, 2012, and 2011, respectively, net of sublease income of $0.9 million, $0.9 million, and $0.9 million in
2013, 2012, and 2011, 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 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.
90