Mattel 2003 Annual Report Download - page 70

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Note 2—Goodwill and Intangible Assets
The change in the carrying amount of goodwill by reporting unit for the years ended 2003 and 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).
Mattel
Brands US
Girls Division
Mattel
Brands US
Boys Division
Fisher-Price
Brands US
American Girl
Brands Int’l Total
Balance at year end 2001 ..... $29,794 $53,749 $215,379 $ 607,562 $182,878 $1,089,362
Impairment charge .......... — — — (399,991) — (399,991)
Impact of currency exchange
rate changes ............. 2,175 220 552 — 10,835 13,782
Balance at year end 2002 ..... 31,969 53,969 215,931 207,571 193,713 703,153
Impact of currency exchange
rate changes ............. 3,172 253 747 — 14,924 19,096
Balance at year end 2003 ..... $35,141 $54,222 $216,678 $ 207,571 $208,637 $ 722,249
Identifiable intangibles of $15.1 million and $14.5 million as of year end 2003 and 2002, respectively, are
included in other assets in the consolidated balance sheets. Amortization expense related to identifiable
intangibles is not significant to the results of operations during any year.
As a result of implementing SFAS No. 142, Mattel recorded a 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 American Girl Brands reporting unit goodwill. In the third quarter of 2003, Mattel performed the annual
impairment test required by SFAS No. 142 and determined that its goodwill was not impaired as of
September 30, 2003.
Prior to implementing SFAS No. 142, Mattel reviewed all goodwill assets for impairment under the
methodology of SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of.The undiscounted cash flows associated with all goodwill assets were in excess of the book
value of the related goodwill assets, including the American Girl Brands goodwill. Therefore, no goodwill assets,
including the American Girl Brands goodwill, were considered impaired under SFAS No. 121.
The following table provides a reconciliation of the net income reported for the year ended 2001, adjusted to
exclude amortization of goodwill that is no longer required under SFAS No. 142 (in thousands, except per share
amounts):
Earnings Per Share
Amount Basic Diluted
Reported net income ..................................... $298,919 $0.69 $0.68
Addback: goodwill amortization, net of tax ................... 34,668 0.08 0.08
Adjusted net income ..................................... $333,587 $0.77 $0.76
Note 3—Income Taxes
Consolidated pre-tax income from continuing operations consists of the following (in thousands):
For the Year
2003 2002 2001
US operations ........................................... $166,884 $ 89,461 $ 29,431
Foreign operations ....................................... 573,970 532,036 400,579
$740,854 $621,497 $430,010
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