-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QGtsrhZBL1TvaKivr/dAioUcUqQVzdxqYXwaqcYMVNv0kd3I3sfWlXLefxlgvFwY h/As/JTPk/SSQxd5Wezqsw== 0000751968-98-000015.txt : 19980817 0000751968-98-000015.hdr.sgml : 19980817 ACCESSION NUMBER: 0000751968-98-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GALOOB TOYS INC CENTRAL INDEX KEY: 0000751968 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 941716574 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09599 FILM NUMBER: 98688854 BUSINESS ADDRESS: STREET 1: 500 FORBES BLVD CITY: SOUTH SAN FRANCISCO STATE: CA ZIP: 94080 BUSINESS PHONE: 4159521678 MAIL ADDRESS: STREET 1: 500 FORBES BLVD CITY: SOUTH SAN FRANCISCO STATE: CA ZIP: 94080 FORMER COMPANY: FORMER CONFORMED NAME: GALOOB LEWIS TOYS INC /DE/ DATE OF NAME CHANGE: 19920703 10-Q 1 GALOOB TOYS, INC SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934 For the transition period from to ------ ------ Commission file number 1-9599 GALOOB TOYS, INC (Exact name of registrant as specified in its charter) Delaware 94-1716574 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 500 Forbes Boulevard, South San Francisco, California 94080 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (650) 952-1678 Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 18,124,864 shares of common stock, par value $.01, as of June 30, 1998. GALOOB TOYS, INC. AND SUBSIDIARIES INDEX PART 1 - FINANCIAL INFORMATION Item 1 Page - Condensed Consolidated Balance Sheets - Condensed Consolidated Statements of Operations - Condensed Consolidated Statements of Cash Flows - Notes to Condensed Consolidated Financial Statements Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations PART 2 - OTHER INFORMATION Item 1 - Legal Proceedings Item 6 - Exhibits and Reports on Form 8-K SIGNATURE Part 1. Financial Information Item 1. Financial Statements GALOOB TOYS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except shares and per share data)
June 30, June 30, Dec. 31, 1998 1997 1997 ----------- ----------- ----------- (Unaudited) (Unaudited) ASSETS Current Assets: Cash and cash equivalents $30,041 $16,693 $3,359 Accounts receivable, net 34,372 59,216 73,810 Inventories 20,280 22,477 24,707 Tooling and related costs 11,907 18,708 12,434 Prepaid expenses and other assets 14,830 17,448 9,900 Deferred income taxes -- 12,275 -- ----------- ----------- ----------- Total Current Assets 111,430 146,817 124,210 Land, building and equipment, net 10,419 10,186 10,451 Indebtedness from related party 950 950 950 Other assets 9,450 7,824 10,276 License rights 42,880 -- 43,250 Deferred income taxes 20,455 -- 18,646 ----------- ----------- ----------- Total Assets $195,584 $165,777 $207,783 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $12,071 $12,094 $19,156 Accrued expenses 18,901 13,170 21,520 Income taxes payable 839 450 734 ----------- ----------- ----------- Total Current Liabilities 31,811 25,714 41,410 Other liabilities 4,463 4,184 4,343 Deferred income taxes -- 1,071 -- ----------- ----------- ----------- Total Liabilities 36,274 30,969 45,753 ----------- ----------- ----------- SHAREHOLDERS' EQUITY Preferred stock Authorized 1,000,000 shares -- -- -- Common stock, par value $.01 per share Authorized 50,000,000 shares Issued and outstanding 18,124,864 shares, 18,019,864 shares and 18,108,864 shares 181 180 181 Warrants 40,427 -- 40,350 Additional paid-in capital 171,887 170,865 171,745 Retained earnings (deficit) (52,621) (35,673) (49,682) Cumulative translation adjustment (564) (564) (564) ----------- ----------- ----------- Total Shareholders' Equity 159,310 134,808 162,030 ----------- ----------- ----------- Total Liabilities and Shareholders' Equity $195,584 $165,777 $207,783 =========== =========== ===========
The accompanying notes are an integral part of these Consolidated Financial Statements. GALOOB TOYS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 1998 1997 1998 1997 --------- --------- --------- --------- Net revenues $40,018 $52,356 $70,280 $92,954 Costs of products sold 24,716 28,872 41,394 51,726 --------- --------- --------- --------- Gross margin 15,302 23,484 28,886 41,228 Operating expenses: Advertising and promotion 4,153 7,496 8,599 14,882 Other selling and administrative 6,088 6,932 13,207 14,939 Royalties, research and development 6,439 7,912 12,216 14,476 --------- --------- --------- --------- Total operating expenses 16,680 22,340 34,022 44,297 --------- --------- --------- --------- Earnings (loss) from operations (1,378) 1,144 (5,136) (3,069) Micro Machines license rights and litigation settlement -- (22,949) -- (22,949) Interest expense (170) (49) (361) (118) Other income (expense), net 433 355 749 824 --------- --------- --------- --------- Earnings (loss) before income taxes (1,115) (21,499) (4,748) (25,312) Income tax benefit (424) (8,384) (1,809) (9,871) --------- --------- --------- --------- Net earnings (loss) ($691) ($13,115) ($2,939) ($15,441) ========= ========= ========= ========= Average common shares outstanding 18,110 18,020 18,116 17,992 Net earnings (loss) per common share ($0.04) ($0.73) ($0.16) ($0.86)
The accompanying notes are an integral part of these Consolidated Financial Statements. GALOOB TOYS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except shares) (Unaudited)
SIX MONTHS ENDED JUNE 30, ------------------- 1998 1997 --------- --------- CASH FLOW FROM OPERATING ACTIVITIES: Net earnings (loss) ($2,939) ($15,441) Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 828 484 Changes in assets and liabilities: Accounts receivable 39,438 43,106 Inventories 4,427 (2,503) Tooling and related costs 527 (3,272) Prepaid expenses and other current assets (4,930) (5,087) Other assets 1,006 (2,363) Deferred taxes (1,809) (9,871) Accounts payable (7,085) (7,561) Accrued expenses and other liabilities (2,499) (7,346) Income taxes payable 105 (1,221) --------- --------- Net cash (used in) provided by operating activities 27,069 (11,075) --------- --------- CASH FLOW FROM INVESTING ACTIVITIES: Investment in land, building and equipment, net (529) (593) --------- --------- Net cash (used in) provided by investing activities (529) (593) --------- --------- CASH FLOW FROM FINANCING ACTIVITIES: Repayments under long-term debt agreements -- (17) Proceeds from issuance of common stock 142 575 Other, net -- (117) --------- --------- Net cash (used in) provided by financing activities 142 441 --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 26,682 (11,227) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,359 27,920 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $30,041 $16,693 ========= =========
The accompanying notes are an integral part of these Consolidated Financial Statements. GALOOB TOYS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 1998 (Unaudited) NOTE A - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated balance sheets as of June 30, 1998 and 1997 and the condensed consolidated statements of operations for the three and six month periods ended June 30, 1998 and 1997 and the condensed consolidated statements of cash flows for the six month periods ended June 30, 1998 and 1997 have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 1998 and 1997 have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 1997. Certain amounts in the financial statements of prior years have been reclassified to conform with the current year's presentation. The results of operations for the three and six month periods ended June 30, 1998 and 1997 are not necessarily indicative of the operating results for the full year. NOTE B - LOAN AGREEMENT On April 1, 1993, the Company entered into a Loan and Security agreement with Congress Financial Corporation. On March 31, 1995, this original agreement was amended and restated in full, including increasing the credit limit to $40 million, with a provision to increase the limit to $60 million at the option of the Company. On December 19, 1997, the loan agreement was amended, increasing the credit limit to $75 million and extending the term of the loan agreement until December 2000 . Borrowing availability is determined by a formula based on both accounts receivable and inventories. The current interest rate is equal to prime with a LIBOR option. The Company also agreed to pay an unused line fee of 0.25% and certain management fees. In consideration of this amendment, the Company paid loan fees of $750,000. The loan fee is included in other assets and is being amortized straight-line over the term of the loan. NOTE C - INVENTORIES (in thousands)
June 30, December 31, ---------------------- ------------ 1998 1997 1997 ---------- ---------- ------------ Finished goods $19,810 $21,983 $24,291 Raw materials and parts 470 494 416 ---------- ---------- ------------ $20,280 $22,477 $24,707 ========== ========== ============
NOTE D - RESEARCH AND DEVELOPMENT Research and development expenses amounted to $1.6 million and $3.0 million for the three months ended June 30, 1998 and 1997, respectively, and $2.8 million and $5.8 million for the six months ended June 30, 1998 and 1997, respectively. Part 1. Financial Information Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following table sets forth for the periods indicated the percentage relationships between revenues and certain expense and earnings items:
Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 1998 1997 1998 1997 --------- --------- --------- --------- Net revenues 100.0% 100.0% 100.0% 100.0% Costs of products sold 61.8% 55.2% 58.9% 55.6% --------- --------- --------- --------- Gross margin 38.2% 44.8% 41.1% 44.4% Advertising and promotion 10.4% 14.3% 12.2% 16.0% Other selling and administrative 15.2% 13.2% 18.8% 16.1% Royalties, research and development 16.1% 15.1% 17.4% 15.6% --------- --------- --------- --------- Earnings (loss) from operations -3.5% 2.2% -7.3% -3.3% Micro Machines license rights and litigation settlement -- -43.8% -- -24.7% Interest expense -0.4% -0.1% -0.5% -0.1% Other income (expense), net 1.1% 0.7% 1.1% 0.9% Income tax benefit 1.1% 16.0% 2.5% 10.6% --------- --------- --------- --------- Net earnings (loss) -1.7% -25.0% -4.2% -16.6% ========= ========= ========= =========
Net revenues decreased 24% to $40.0 million in the second quarter of 1998 as compared to $52.4 million in the second quarter of 1997. Domestic sales decreased 29% to $25.4 million while international sales decreased 13% to $14.6 million. The Company's worldwide sales of boys' toys decreased 62% in the second quarter of 1998 as compared to the second quarter of 1997. Sales for the second quarter of 1997 were driven by the demand for Star Wars (TM) toys created by the theatrical re-release of the Star Wars Trilogy. The absence of a similar film event in the first half of 1998 led to comparatively lower worldwide sales of boys' toys. The Company's worldwide sales of girls' toys increased 322% in the second quarter of 1998 as compared to the second quarter of 1997. This increase was attributable to sales of the Company's Spice Girls (TM), Anastasia (TM) and Pound Puppies (R) product lines. Net revenues decreased 24% to $70.3 million in the six months ended June 30 ,1998 as compared to $ 93.0 million in the six months ended June 30, 1997. Domestic sales for the same period decreased 31% to $45.9 million while international sales decreased 7% to $24.4 million. The Company's worldwide sales of boys' toys decreased 63% in the six months ended June 30 ,1998 as compared to the six months ended June 30, 1997. The Company's worldwide sales of girls' toys increased 186% in the six months ended June 30 ,1998 as compared to the six months ended June 30, 1997. The change in sales of boys' and girls toys was attributable to the same factors noted for the changes in the second quarter. Gross margin decreased $8.2 million to $15.3 million in the second quarter of 1998 from $23.5 million in the second quarter of 1997. The lower sales volume decreased gross margin by $ 5.5 million, and a decrease in the gross margin rate accounted for $ 2.7 million of the decrease. The gross margin rate decreased to 38.2% in the second quarter of 1998 as compared to 44.8 % in the second quarter of 1997. The decrease in the gross margin rate was primarily attributable to a shift from full gross margin, promoted products to lower gross margin, non-promoted products. Gross margin decreased $12.3 million to $28.9 million in the six months ended June 30, 1998 from $41.2 million in the six months ended June 30,1997. The lower sales volume decreased gross margin by $ 10.0 million, and a decrease in the gross margin rate accounted for $ 2.3 million The gross margin rate decreased to 41.1% in the six months ended June 30, 1998, as compared to 44.4 % in the six months ended June 30, 1997. The change in the gross margin rate was primarily attributable to the same factor noted for the change in the second quarter. Advertising and promotion expenses were $4.2 million, or 10.4% of net revenues in the second quarter of 1998, as compared to $7.5 million, or 14.3% of net revenues in the second quarter of 1997. For the six months ended June 30, 1998, these expenses were $8.6 million, or 12.2%, of net revenues as compared to $14.9 million, or 16.0%, in the six months ended June 30 ,1997. The decrease in the advertising and promotion expenses was attributable to a reduction in television advertising, trade show and product promotion expenses which was primarily due to the Company's shift in sales from promoted products to non-promoted products. Other selling and administrative expenses were $6.1 million in the second quarter of 1998, as compared to $6.9 million in the second quarter of 1997. For the six months ended June 30,1998, these expenses were $13.2 million, as compared to $14.9 million in the six months ended June 30, 1997. The decrease in other selling and administrative expenses in the second quarter and the six months ended June 30, 1998 was primarily related to lower personnel and legal costs. Royalties, research and development expenses were $6.4 million, or 16.1%, of net revenues in the second quarter of 1998 as compared to $7.9 million, or 15.1%, of net revenues in the second quarter of 1997. For the six months ended June 30, 1998, these expenses were $12.2 million, or 17.4%, of net revenues as compared to $14.5 million, or 15.6%, of net revenues in the six months ended June 30, 1997. The increase in royalties, research and development expenses as a percentage of net revenues in the second quarter and the six months ended June 30, 1998 was primarily attributable to higher royalty expenses, partially offset by reductions in research and development spending. The reductions in research and development spending are primarily related to efficiencies associated with the Company's restructured product portfolio. In the third quarter of 1997, the Company discontinued all of the male action lines it introduced in 1996 and 1997, and all future male action properties under development in order to maximize the future value of the rights the Company was awarded to market small-scale toys for the next three Star Wars films and the classic Star Wars Trilogy. During the second quarter of 1997, the Company acquired all outstanding rights to its line of miniature vehicles, playsets and accessories marketed under the Micro Machines (R) brand and settled related litigation. In 1986, the Licensor of such rights ("the Licensor") licensed a concept to the Company that contributed to the origination of Micro Machines. The Company had paid royalties to the Licensor on the majority of Micro Machine sales. The settlement agreement eliminated all future royalty payments to the Licensor, effective after March 31, 1997. The agreement also ended litigation between the Company and the Licensor over past royalties claimed by the Licensor and the extent of the Licensor's rights in the Micro Machines brand. The Company recorded a pre-tax charge to earnings of $22.9 million in the second quarter of 1997 relating to this transaction. Additionally, the Company capitalized $4.5 million, which is being amortized. Interest expense and other income in the second quarter and the six months ended June 30, 1998 were relatively unchanged from the second quarter and the six months ended June 30, 1997, respectively. The income tax benefit in the second quarter and the six months ended June 30, 1998 and 1997 reflects the quarterly application of the estimated annual rate based upon projected full year earnings. Many currently installed computer systems and software products, including several used by the Company, are coded to accept only two- digit entries in the date code field. Beginning in the year 2000 these date code fields will need to accept four-digit entries to distinguish 21st - Century dates from 20th- Century dates. As a result, computer systems and/or software used by many companies will need to be upgraded or replaced to comply with such "Year 2000" requirements. The Company's current information technology systems are not Year 2000 compliant. As a result, the Company has purchased new enterprise software, which accommodates forward century dating through the use of the Julian dating format. The Company began a comprehensive phased implementation of the new software in late 1997. The application development phase is in process and the data conversion phase also has begun. The testing phase for the new software will begin in the fourth quarter of 1998. The Company expects its new software to be operational and Year 2000 compliant in mid-1999. As of June 30, 1998, the Company had incurred expenditures of $2.2 million in connection with this software implementation and expects to incur total expenditures of approximately $5.0 million to $6.0 million. Although no assurances can be given, the Company believes that its new enterprise software will be operational prior to the year 2000. The Company has performed a preliminary assessment of its material non- information technology systems and, based upon this preliminary assessment, believes that these systems are Year 2000 compliant. The Company has yet to determine if the information technology systems of the Company's customers, vendors and other third parties with whom the Company has material relationships, are Year 2000 compliant. The Company intends to contact these third parties during the third quarter of 1998 in order to assess their Year 2000 readiness. If the Company's information technology systems, its non-information technology systems, or the information technology systems of its material third-party business partners, are not Year 2000 compliant, it could have a negative impact on the Company's business, financial condition, and results of operations. No contingency plans yet have been developed for these possibilities. Disclosure Regarding Forward-Looking Statements All statements other than statements of historical fact included in this Form 10-Q Report, including, without limitation the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance or achievements of results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include among others: the Company's dependence on timely development, introduction and customer acceptance of continuing and new products (including those products to be developed under the new Star Wars license); the continuing trend of increased concentration of the Company's revenues in the second half of the fiscal year, together with the increased reliance by retailers on quick response inventory management, which increases the risk of the Company's underproduction of popular items, overproduction of less popular items and failure to achieve tight and compressed shipping schedules; possible weakness of the Company's markets; the impact of competition on revenues, margin and pricing; the effect of currency fluctuations; other risks and uncertainties as may be disclosed from time to time in the Company's public announcements; the gross national product in the United States and other countries, which also influences demand for the Company's products; customer inventory levels; and the cost and availability of raw materials and changes in trade conditions regarding China. All subsequent written and oral forward looking statements attributable to the Company or persons acting on behalf of one or both of them are expressly qualified in their entirety by such Cautionary Statements. Liquidity, Financial Resources and Capital Expenditures Demand for the Company's products is greatest in the third and fourth quarters of the year. As a result, collections of accounts typically peak in the fourth quarter and early first quarter of the following year. Due to the seasonality of its revenues and collections, the Company's working capital requirements and availability of working capital fluctuate significantly during the year. The Company's seasonal financing requirements are usually highest during the fourth quarter of each calendar year. On April 1, 1993, the Company entered into a Loan and Security agreement with Congress Financial Corporation. On March 31, 1995, this original agreement was amended and restated in full, including increasing the credit limit to $40 million, with a provision to increase the limit to $60 million at the option of the Company. On December 19, 1997, the loan agreement was amended, increasing the credit limit to $75 million and extending the term of the loan agreement until December 2000 . Borrowing availability is determined by a formula based on both accounts receivable and inventories. The current interest rate is equal to prime with a LIBOR option. The Company also agreed to pay an unused line fee of 0.25% and certain management fees. In consideration of this amendment, the Company paid loan fees of $750,000. During the six months ended June 30, 1998, the Company generated $27.1 million of cash from its operating activities primarily from the collections of accounts receivable. As of June 30, 1998, the Company had cash and cash equivalents of $30.0 million. Working capital was $79.6 million at June 30, 1998, as compared to $82.8 million at December 31, 1997 and $121.1 million at June 30, 1997. The ratio of current assets to current liabilities was 3.5 to 1.0 at June 30, 1998 as compared to 3.0 to 1.0 at December 31, 1997 and 5.7 to 1.0 at June 30, 1997. On October 14, 1997, the Company entered into an exclusive, worldwide license with Lucas Licensing Ltd. to make small-scale figures, vehicles, playsets and accessories for the next three Star Wars movies, and the Company's current rights to market such small-scale toys based on the original Star Wars trilogy were also included. The licensing agreement calls for minimum commitments, primarily in the form of advance payments against future royalties, of $148.1 million payable throughout the release schedule of the three new films. The first payment is due upon the theatrical release of the first film, which is anticipated to be in May, 1999. The Company expects that its cash flow from operations, cash on hand and borrowings under the extended credit arrangement will be sufficient to meet its working capital and capital expenditure requirements and provide the Company with adequate liquidity to meet its anticipated operating needs for the foreseeable future. Part 1. Financial Information Item 3. Quantitative and Qualitative Disclosures About Market Risk Not required. Part II - OTHER INFORMATION Item 1. Legal Proceedings Manufacturer Litigation In January 1991, the Company, through its wholly owned subsidiary, Galco, filed a lawsuit in Hong Kong against Kader Industrial Co., Ltd. ("Kader"), alleging damages suffered by both Galco and the Company as a result of Kader's defective manufacturing of two lead doll items for the Company's Bouncin' Babies toy line in 1990. Kader filed counterclaims alleging breach of 17 individual contracts. In August 1996, the trial court rendered a decision in favor of Kader on the general issue of liability in this matter, including an award of damages based on Kader's counterclaims which was approximately $250,000, plus prejudgment interest. In addition, the court awarded certain litigation costs to Kader. In March 1998, the Company settled all of the open matters in this litigation. The settlement will not result in any additional material liabilities to the Company. The Company is involved in various litigation and other legal matters which are defended and handled in the ordinary course of business. None of these matters is expected to result in outcomes having a material adverse effect on the Company's consolidated financial position or results of operation. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K - None Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GALOOB TOYS, INC. (Registrant) Date: August 14, 1998 By: /s/ Kathleen R. McElwee -------------------------- Kathleen R. McElwee Senior Vice President and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the financial statements of Galoob Toys, Inc. for the quar and six months ended June 30, 1998, and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1998 APR-01-1998 JUN-30-1998 30,041 0 42,630 8,258 20,280 111,430 17,543 7,124 195,584 31,811 0 0 0 181 159,129 195,584 40,018 40,018 24,716 24,716 16,680 0 170 (1,115) (424) (691) 0 0 0 (691) ($0.04) ($0.04)
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