Mattel 1998 Annual Report Download - page 51

Mattel, Inc. and Subsidiaries 49
During 1996, the Company received comments from the
Securities and Exchange Commission regarding its accounting for
certain royalties and participation fees in prior periods. The Company
commenced an investigation with the assistance of outside legal
counsel and an independent accounting firm. A report issued as a
result of the investigation concluded that no evidence was found that
the Company accounted for sales and costs associated with sales in
a manner that is inconsistent with generally accepted accounting
principles. The report also concluded that the Company’s accounting
treatment for royalties, which was adopted with the concurrence
of Mattel’s independent accountants, represented a reasonable
application of generally accepted accounting principles given the f
acts and circumstances as they existed at the time the accounting
decisions were made. While the Company believes that its accounting
treatment was correct, Mattel recognized a catch-up adjustment in the
amount of $21.8 million before taxes in the fourth quarter of 1996.
Note 8 - Segment Information
In the 1998 fourth quarter, the Company adopted Statement of
Financial Accounting Standards No. 131, Disclosures about Segments
of an Enterprise and Related Information. This statement supercedes
Statement of Financial Accounting Standards No. 14, Financial
Reporting for Segments of a Business Enterprise, replacing the “industry
segment” approach with the “management” approach. The manage-
ment approach designates the internal organization that is used by
management for making operating decisions and assessing performance
as the source of the Company’s reportable segments. This statement
requires disclosure of certain information by reportable segment,
geographic area and major customer.
Mattel designs, manufactures and markets a broad variety of
children’s products on a worldwide basis. These product lines are
grouped into four major categories which represent the Company’s
operating segments, as follows:
Girls - including Barbie®fashion dolls and accessories, collector dolls,
software, Fashion Magic®, American Girl®, Cabbage Patch Kids®, and
Polly Pocket®
Infant and Preschool - including Fisher-Price®, Disney preschool and
plush, Power Wheels®, Sesame Street®, See ‘N Say®, Magna
Doodle®, and View-Master®
Entertainment - including Disney, Nickelodeon®, games and puzzles
Wheels - including Hot Wheels®, Matchbox®,Tyco®Electric Racing,
and Tyco®Radio Control
These operating segments all have similar economic characteris-
tics, market children’s products, and share the same production process.
Based on these similarities, the Company’s products can be aggregated
into one reportable segment for purposes of this disclosure.
The table below presents information by geographic area (in
thousands). Revenues are attributed to countries based on location
of customer. Long-lived assets principally include net property, plant
and equipment, and goodwill.
Long-Lived
Net Sales Assets
1998
United States $3,298,838 $1,301,237
Europe and Canada 1,096,287 222,893
Asia and Latin America 386,767 411,118
4,781,892 1,935,248
Corporate and other - 245,985
Consolidated total $4,781,892 $2,181,233
1997
United States $3,307,576 $ 577,727
Europe and Canada 1,143,378 166,423
Asia and Latin America 383,662 346,549
4,834,616 1,090,699
Corporate and other - 229,625
Consolidated total $4,834,616 $1,320,324
1996
United States $2,829,123 $ 582,038
Europe and Canada 1,275,706 231,805
Asia and Latin America 430,503 364,079
4,535,332 1,177,922
Corporate and other - 191,917
Consolidated total $4,535,332 $1,369,839
Credit is granted to customers on an unsecured basis, and
generally provides for extended payment terms which result in a
substantial portion of trade receivables being collected during the
latter half of the year. Customers accounting for more than 10% of
the Company’s consolidated net sales and related accounts receivable
are as follows (in millions):
1998 1997 1996
Worldwide sales for the year ended
Toys R Us $729.3 $859.5 $1,039.6
Wal-Mart 790.8 739.1 555.9
Accounts receivable as of December 31
Toys R Us $148.9 $260.7 $ 185.0
Wal-Mart 291.4 178.6 90.4