JAKKS PACIFIC INC Leases Disclosure
Note 13—Leases
The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. The Company has operating leases for corporate offices, warehouses, and certain equipment. The Company’s leases have remaining terms of 1 to 5 years, some of which include options to extend the lease for up to 10 years, and some of which include options to terminate the lease within 1 year. As of December 31, 2024, the Company’s weighted average remaining lease term is approximately 4 years and the weighted average discount rate used to calculate the Company’s lease liability is approximately 6.79%. As of December 31, 2023, the Company’s weighted average remaining lease term is approximately 4 years and the weighted average discount rate used to calculate the Company’s lease liability is approximately 7.31%.
Under ASC 842, total operating lease costs for the years ended December 31, 2024, 2023 and 2022 were $12.5 million, $12.4 million, and $19.1 million, respectively. Of the $12.5 million for the year ended December 31, 2024, $2.1 million was related to short-term and variable lease costs, including common area maintenance charges, management fees, taxes and storage fees. Sublease rental income was $1.6 million in 2024. Of the $12.4 million for the year ended December 31, 2023, $3.3 million was related to short-term and variable lease costs, including common area maintenance charges, management fees, taxes and storage fees. Sublease rental income was $1.5 million in 2023. Of the $19.1 million for the year ended December 31, 2022, $10.7 million was related to short-term and variable lease costs, including common area maintenance charges, management fees, taxes and storage fees. Sublease rental income was $2.2 million in 2022.
The Company had a cash outflow of $9.1 million, $10.7 million and $11.5 million related to operating leases for the years ended December 31, 2024, 2023 and 2022, respectively.
The following table represents a reconciliation of the Company’s undiscounted future minimum lease payments under operating leases to the lease liability excluding minimum lease payments for executed and legally enforceable leases that have not yet commenced as of December 31, 2024 (in thousands):
| Year ending December 31, | ||||
| 2025 | $ | 11,702 | ||
| 2026 | 15,935 | |||
| 2027 | 15,832 | |||
| 2028 | 15,823 | |||
| 2029 | 6,715 | |||
| Thereafter | 36 | |||
| Total lease payments | 66,043 | |||
| Imputed interest | (9,519 | ) | ||
| Total | $ | 56,524 | ||
As of December 31, 2024 and 2023, the minimum lease payments for executed and legally enforceable leases that have not yet commenced were .
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.