Mattel 2000 Annual Report Download - page 48

forty six
Mattel, Inc. and Subsidiaries
NOTE 12 - SUPPLEMENTAL FINANCIAL INFORMATION
As of Year End
(In thousands) 2000 1999
Inventories include the following:
Raw materials and work in process $ 34,357 $ 41,452
Finished goods 455,385 394,864
$ 489,742 $ 436,316
Intangibles, net include the following:
Goodwill $1,124,318 $1,191,227
Other 12,539 9,395
$1,136,857 $1,200,622
Other assets include the following:
Deferred income taxes $ 515,210 $ 185,912
Other 250,461 248,794
$ 765,671 $ 434,706
Short-term borrowings include the following:
Notes payable $ 68,386 $ 121,805
Commercial paper 158,017 247,744
$ 226,403 $ 369,549
Accrued liabilities include the following:
Advertising and promotion $ 142,196 $ 155,192
Royalties 137,173 99,249
Restructuring and other charges 64,661 130,552
Other 359,352 329,640
$ 703,382 $ 714,633
For the Year
(In thousands) 2000 1999 1998
Selling and administrative expenses
include the following:
Research and development $179,525 $171,537 $168,743
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $168,591 $134,086 $103,627
Income taxes 44,839 81,345 93,936
Noncash investing and financing activities:
Common stock issued for acquisitions:
Settlement of earn-out agreements $ - $ 5,547 $ 5,572
Sofsource, Inc. - - 45,000
Mindscape, Inc. - - 30,000
Conversion of 5-1/2% Notes - - 96,695
Receipt of marketable securities from sale of business 42,167 - -
Issuance of stock warrant 5,789 - -
NOTE 13 - DISCONTINUED OPERATIONS
In May 1999, Mattel completed its merger with Learning Company, in
which Learning Company was merged with and into Mattel, with
Mattel being the surviving corporation. Learning Company had been a
leading publisher of consumer software for home personal computers,
including educational, productivity and entertainment software. Each
share of Learning Company Series A Preferred Stock was converted
into 20 shares of Learning Company common stock immediately prior
to the consummation of the merger. Pursuant to the merger agree-
ment, each outstanding share of Learning Company common stock
was then converted into 1.2 shares of Mattel common stock upon con-
summation of the merger. As a result, approximately 126 million
Mattel common shares were issued in exchange for all shares of
Learning Company common stock outstanding as of the merger date.
The outstanding share of Learning Company special voting stock was
converted into one share of Mattel Special Voting Preferred Stock.
Each outstanding exchangeable share of Learning Company’s Canadian
subsidiary, Softkey Software Products Inc., remains outstanding, but
upon consummation of the merger became exchangeable for 1.2
shares of Mattel common stock. This transaction was accounted for as
a pooling of interests.
On March 31, 2000, Mattel’s board of directors resolved to dis-
pose of its Consumer Software segment, which was comprised primarily
of Learning Company. As a result of this decision, the Consumer
Software segment was reported as a discontinued operation effective
March 31, 2000, and the consolidated financial statements were
reclassified to segregate the net investment in, and the liabilities and
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 com-
pany upon the sale of its assets or other liquidating events, or 20% of
its enterprise value at the end of five years.
In December 2000 and January 2001, Mattel entered into
worldwide, multi-year licensing agreements with Vivendi Universal
Publishing and THQ, respectively, for the development and publishing
of gaming, educational and productivity software based on Mattel’s
brands, which Mattel had previously developed and sold directly
through its Mattel Media division.
Summary financial information for the discontinued operations
is as follows (in millions):
For the Year
2000 1999 1998
Net sales $ 337.9 $ 919.5 $ 922.9
Loss before income taxes $(179.6) $(280.9) $ (67.8)
(Benefit) provision for income taxes (53.0) (90.1) 54.4
Net loss (126.6) (190.8) (122.2)
Loss on disposal (406.8) - -
Actual and estimated losses during phase-out period (238.3) - -
(645.1) - -
Benefit for income taxes (170.6) - -
Net loss on disposal (474.5) - -
Total loss from discontinued operations $(601.1) $(190.8) $(122.2)
As of Year End
2000 1999
Accounts receivable, net $ 33.1 $ 268.0
Inventories 4.0 108.0
Other current assets 1.8 192.2
Intangibles, net - 192.7
Other noncurrent assets 1.6 154.2
Current liabilities (29.0) (252.1)
5-1/2% Notes and other long-term liabilities - (201.0)
Net investment in discontinued operations $ 11.5 $ 462.0
Actual losses of the Consumer Software segment from the
measurement date of March 31, 2000 as well as estimated losses
through the date of disposal have been recorded as part of the loss
from discontinued operations for 2000.
Transaction costs of approximately $17 million related to the
disposal of Learning Company, primarily consisting of severance, have
been accrued as of December 31, 2000 and are included in accrued
liabilities in the consolidated balance sheets.