Mattel 2003 Annual Report Download - page 99

of this decision, the Consumer Software segment was reported as a discontinued operation effective
March 31, 2000, and the consolidated statements of operations were reclassified to segregate the operating results
of the Consumer Software segment.
On October 18, 2000, Mattel disposed of Learning Company to an affiliate of Gores Technology Group in
return for a contractual right to receive future consideration based on income generated from its business
operations and/or the net proceeds derived by the new company upon the sale of its assets or other liquidation
events, or 20% of its enterprise value at the end of five years.
In 2001, Mattel received proceeds totaling $10.0 million from Gores Technology Group as a result of
liquidation events related to Gores Technology Group’s sale of the entertainment and education divisions of the
former Learning Company. Mattel also incurred additional costs of approximately $10 million in 2001 related to
the wind down of the Consumer Software segment. Accordingly, no income was recorded in the consolidated
statement of operations for discontinued operations.
In 2002, Gores Technology Group completed the sale and liquidation of non-cash proceeds related to the
sales of the education and productivity divisions of the former Learning Company. Mattel recognized a gain from
discontinued operations of $27.3 million, net of taxes, in the consolidated statement of operations in 2002.
Summary financial information for the discontinued operations for 2002 is as follows (in millions):
Gain on disposal ....................................................................... $43.3
Actual and estimated losses during phase-out period .......................................... —
43.3
Provision for income taxes ............................................................... 16.0
Net gain on disposal ................................................................ 27.3
Gain from discontinued operations ........................................................ $27.3
Item 9. Changes in and Disagreements with Auditors on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
As of December 31, 2003, Mattel’s disclosure controls and procedures were evaluated. Based on this
evaluation, Robert A. Eckert, Mattel’s principal executive officer, and Kevin M. Farr, Mattel’s principal financial
officer, concluded that these disclosure controls and procedures were effective as of December 31, 2003, in
timely alerting them to material information relating to Mattel required to be included in Mattel’s periodic
reports.
Beginning in the fourth quarter of 2002, Mattel began and continues to implement a planned conversion to
new and upgraded financial and human resources information technology systems. Mattel has evaluated the
effect on its internal control over financial reporting of this conversion and determined that this conversion has
not materially affected, and is not reasonably likely to materially affect, Mattel’s internal control over financial
reporting. Mattel has not made any significant changes to its internal control over financial reporting or in other
factors that could significantly affect these controls subsequent to December 31, 2003.
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