Mattel 2002 Annual Report Download - page 65

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In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, which supersedes EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity. SFAS No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred.
EITF Issue No. 94-3 required recognition of a liability at the date an entity commits to an exit plan. All
provisions of SFAS No. 146 will be effective for exit or disposal activities that are initiated after December 31,
2002. Consistent with the provisions of SFAS No. 146, Mattel will apply this statement prospectively. Mattel
does not expect that the adoption of SFAS No. 146 will have a material effect on its consolidated financial
position or results of operations.
In November 2002, the FASB issued FIN 45, Guarantor’s Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 requires that upon issuance of a
guarantee, the entity (i.e., the guarantor) must recognize a liability for the fair value of the obligation it assumes
under that guarantee. FIN 45’s provisions for initial recognition and measurement will be effective on a
prospective basis to guarantees issued or modified after December 31, 2002. Consistent with the provisions of
FIN 45, Mattel will apply this statement prospectively.As required by FIN 45, the disclosure provisions have
been included in Mattel’s consolidated financial statements for the year ended 2002.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation—Transition
and Disclosure, which amends SFAS No. 123. SFAS No. 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures
in both annual and interim financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results of operations.
Note 2—Goodwill and Intangible Assets
The change in the carrying amount of goodwill by reporting unit for the year ended 2002 is shown below.
Brand-specific goodwill held by foreign subsidiaries is allocated to the US reporting units selling those brands,
thereby causing foreign currency translation impact to the US reporting units (in thousands).
Balance
Dec. 31,
2001
Impairment
Charge
Foreign
Exchange
Balance
Dec. 31,
2002
Pleasant Company .................................... $ 607,562 $(399,991) $ — $207,571
US Girls ............................................ 29,794 — 2,175 31,969
US Boys-Entertainment ................................ 53,749 — 220 53,969
US Infant & Preschool ................................. 215,379 — 552 215,931
International ......................................... 182,878 — 10,835 193,713
$1,089,362 $(399,991) $13,782 $703,153
Identifiable intangibles of $14.5 million, $20.5 million and $25.8 million for the years ended 2002, 2001 and
2000, respectively, are included in other assets in the consolidated balance sheets. Amortization expense related
to identifiable intangibles was not significant to the results of operations during any year.
As a result of implementing SFAS No. 142, Mattel recorded a one-time transition adjustment of
$252.2 million, net of tax, as the cumulative effect of change in accounting principles resulting from the
transitional impairment test of the Pleasant Company reporting unit goodwill. In the third quarter of 2002, Mattel
performed the annual impairment test required by SFAS No. 142 and determined that its goodwill was not
impaired as of September 30, 2002.
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