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As filed with the Securities and Exchange Commission on April 29, 1999
Registration No. 333-73177
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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MATTEL, INC.
(Exact name of Registrant as specified in its charter)
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Delaware 95-1567322
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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333 Continental Boulevard
El Segundo, California 90245-5012
(310) 252-2000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Lee B. Essner, Esq.
Assistant General Counsel and Assistant Secretary
333 Continental Boulevard
El Segundo, California 90245-5012
(310) 252-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Thomas C. Sadler, Esq.
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
(213) 485-1234
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement of the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act, or until the registration statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not issue these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 29, 1999
PROSPECTUS
Mattel, Inc.
10,734,400 Shares of Common Stock
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This prospectus relates to the shares of Mattel common stock that we must
issue to you:
. if you elect to exchange your Exchangeable Non-Voting Shares issued by our
Canadian subsidiary, Softkey Software Products Inc. for shares of our
common stock; or
. if you elect to convert your 5 -1/2% Senior Convertible Notes due 2000 of
Mattel into shares of our common stock.
Holders of Exchangeable Shares.
You may exchange your exchangeable shares for shares of our common stock at
any time. When you exchange your exchangeable shares for our common stock, you
will receive shares of our common stock for each exchangeable share. You
also will receive a cash amount equal to any declared and unpaid dividends on
the exchangeable shares if the record date is prior to the date of exchange.
February 4, 2005 is the automatic redemption date. On that date, Softkey will
redeem or we will acquire all of the then outstanding exchangeable shares by
delivering, for each exchangeable share, shares of our common stock
plus a cash amount equal to any declared and unpaid dividends. In this
prospectus, we use the word "exchange" to refer to an exchange by you, a
redemption by Softkey and the acquisition of your exchangeable shares by
Mattel.
Holders of Notes.
You may convert your notes into shares of our common stock at any time prior
to November 1, 2000, the maturity date for the notes. If you convert your notes
you will receive a number of shares of our common stock determined by (1)
dividing the principal amount of your notes by a conversion price of $53 and
(2) multiplying the resulting number by . The conversion price may be
adjusted in some circumstances. We may redeem the notes prior to
November 1, 2000. If we call the notes for redemption, your conversion rights
generally expire on the day immediately prior to the redemption date.
Our common stock is listed on the New York Stock Exchange and the Pacific
Exchange, Inc. under the symbol "MAT." On April 26, 1999, the last reported
sales price of our common stock on the New York Stock Exchange was $25.75 per
share. We have not engaged any broker, dealer or underwriter in connection with
this offering of our common stock.
See the section entitled "Risk Factors" beginning on page 3 for a discussion
of the risks associated with an investment in our common stock as a result of
the exchange of your exchangeable shares or the conversion of your notes.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
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The date of this prospectus is , 1999.
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TABLE OF CONTENTS
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Page
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The Company............................................................ 1
Use of Proceeds........................................................ 1
Recent Developments.................................................... 2
Risk Factors........................................................... 3
Plan of Distribution Relating to Exchange of Exchangeable Shares....... 8
Plan of Distribution Relating to Conversion of Notes................... 13
Description of Mattel Capital Stock.................................... 16
Income Tax Considerations Regarding Our Common Stock, the Exchange of
Exchangeable Shares and the Conversion of Notes....................... 19
Forward-Looking Statements............................................. 33
Where You Can Find More Information.................................... 34
Incorporation of Certain Documents by Reference........................ 34
Legal Matters.......................................................... 35
Experts................................................................ 35
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Mattel, Inc. has not authorized any person to give you any information or to
make any representation not contained or incorporated by reference in this
prospectus. You must not rely upon any information or representation not
contained or incorporated by reference in this prospectus as if we had
authorized it. This prospectus is not an offer to sell or the solicitation of
an offer to buy any securities other than the registered securities to which it
relates and this prospectus is not an offer to sell or the solicitation of an
offer to buy securities in any jurisdiction where, or to any person to whom, it
is unlawful to make such offer or solicitation. You should not assume that the
information contained in this prospectus is correct on any date after the date
of this prospectus, even though this prospectus is delivered or shares are sold
under this prospectus on a later date.
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THE COMPANY
General.
Mattel designs, manufactures, and markets a broad variety of children's
products on a worldwide basis through both sales to retailers and direct to
consumers. Our business is dependent in great part on our ability each year to
redesign, restyle and extend existing core products and product lines, to
design and develop innovative new products and product lines and to expand our
marketing capability. Our portfolio of brands can be grouped in the following
four categories:
. Girls - including Barbie(R) fashion dolls and accessories, collector
dolls, Fashion Magic(R) American Girl(R), Cabbage Patch Kids(R), and
Polly Pocket(R);
. Infant and Preschool - including Fisher Price(R), Disney preschool and
plush, Power Wheels(R), Sesame Street(R), See "N Say(R), Magna Doodle(R)
and View-Master(R);
. Entertainment - including Disney, Nickelodeon, games and puzzles; and
. Wheels - including Hot Wheels(R), Matchbox(R), Tyco Electric Racing(R),
and Tyco Radio Control(R).
As a result of our recent merger with The Learning Company, Inc. we now also
develop and publish a broad range of high-quality branded consumer software for
personal computers that educate across every age category, from young children
to adults. Our primary emphasis is in education and productivity software, but
we also offer a selection of lifestyle and to a lesser extent, entertainment
products, both in North America and internationally.
Our principal executive offices are located at 333 Continental Boulevard, El
Segundo, California 90245-5012. Our telephone number is (310) 252-2703.
Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "we," "us," "our," the "Company" or "Mattel"
mean Mattel, Inc.
USE OF PROCEEDS
We will not receive any cash proceeds when you exchange your exchangeable
shares for shares of our common stock or when you convert your notes into
shares of our common stock.
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RECENT DEVELOPMENTS
On April 15, 1999, we announced that as a result of the merger with Learning
Company and a planned realignment of Mattel's operations to reduce overhead
costs, we expect to incur a pre-tax charge of approximately $300 million to
$350 million against results of operations during the second quarter of 1999.
We also announced that the planned realignment was expected to include the
closure of some of our facilities and a workforce reduction affecting over
3,000 positions, or more than 10% of our employees at that time. The planned
realignment will consist of consolidating some manufacturing and distribution
operations, eliminating duplicative facilities, and terminating various
distributor and licensing arrangements. Approximately $75 million of the pre-
tax charge is expected to be related to merger transaction costs, approximately
$90 million is expected to be related to merger integration costs, and $135
million to $185 million is expected to be related to Mattel restructuring
costs. Of the total pre-tax charge, approximately $35 million represents non-
cash asset write-downs. We expect to fund this restructuring through existing
cash balances and internally generated cash from operations. We expect the
combined actions to result in cost savings of approximately $50 million in 1999
and at least $400 million over the following three years. However, the amount
of the expected cost savings are preliminary estimates and we cannot assure you
that our actions will result in these expected cost savings. See "Risk Factors"
beginning on page 3 of this prospectus. We expect the restructuring activities
to be substantially complete by the second quarter of 2000.
On April 15, 1999, we also announced that we will spend an initial $50
million to launch an Internet venture, which we expect to result in the
creation of a new subsidiary later this year, a portion of which may be offered
to the public. We expect that we will be able to offset a portion of our
investment in the Internet venture with the 1999 cost savings from the
restructuring discussed above. Our goal is to create a premier online
destination and E-commerce site to better serve children and their families.
Our strategy to reach this goal is premised on attracting consumers to our
sites by bringing together the branded proprietary content of both Mattel and
Learning Company on one "Mattel.com" Web destination. After the merger with
Learning Company, we expect to have over 80 websites and a database of
approximately 25 million consumers.
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RISK FACTORS
You should carefully consider the following factors in addition to other
information contained in or incorporated by reference into this prospectus
before you decide to invest in our common stock by exchanging your exchangeable
shares or converting your notes.
We may not realize the expected benefits from the merger with Learning Company,
such as cost savings, operating efficiencies, revenue enhancements and other
synergies, due to difficulties integrating Mattel and Learning Company.
We merged with Learning Company with the expectation that the merger will
result in a number of benefits, including cost savings, operating efficiencies,
revenue enhancements and other synergies. Integrating the operations and
personnel of Mattel and Learning Company will be a complex process, and we
cannot assure you that the integration will be completed rapidly or will result
in the realization of the anticipated benefits of the merger. The successful
integration of the two companies will require, among other things, integration
of their sales and marketing groups and coordination of their research and
development efforts. The diversion of the attention of our management and any
difficulties encountered in the process of combining the companies could cause
the disruption of, or a loss of momentum in, the activities of our business.
Further, the process of combining the companies could negatively affect
employee morale and our ability to retain some key employees after the merger.
In addition, the announcement and completion of the merger could cause
customers to delay or change orders for Learning Company's products as a result
of uncertainty over the integration of its software products. The inability to
successfully integrate the operations and personnel of the companies, or any
significant delay in achieving integration, could have a material adverse
effect on our business, financial condition and results of operations after the
merger.
We expect to incur a pre-tax charge of approximately $300 million to $350
million to be taken in the second quarter of 1999.
On April 15, 1999, we announced that as a result of the merger with Learning
Company and a planned realignment of Mattel's operations to reduce overhead
costs, we expect to incur a pre-tax charge of approximately $300 million to
$350 million against results of operations during the second quarter of 1999.
Approximately $75 million of the pre-tax charge is expected to be related to
merger transactions costs, approximately $90 million is expected to be related
to merger integration costs and $135 million to $185 million is expected to be
related to Mattel restructuring costs. We expect the combined actions to result
in cost savings of approximately $50 million in 1999 and at least $400 million
over the following three years. However, the amount of the expected cost
savings are preliminary estimates and we cannot assure you that our actions
will result in these expected cost savings. Further, amount of the merger
transaction costs, merger integration costs and restructuring costs are also
preliminary estimates and may change. Actual merger transaction costs, merger
integration costs and restructuring costs may substantially exceed our
estimates and could have an adverse effect on our financial condition and
results of operations.
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Many of our significant customers have shifted to just-in-time inventory
management systems, which may limit our ability to accurately forecast reorders
of our products by retailers and reduce or delay sales of our products.
Many of our significant customers have recently shifted to "just-in-time"
inventory management systems to track sales of particular products. These
customers are timing reorders so that they are being filled by suppliers closer
to the time of purchase by consumers, rather than maintaining large on-hand
inventories to meet consumer demand. While these systems reduce a retailer's
investment in inventory, they increase pressure on suppliers like us to fill
orders promptly and shift a significant portion of inventory risk and carrying
costs to the supplier. These systems may also limit our ability to accurately
forecast reorders and create potential volatility in our operating results. The
limited inventory carried by retailers may also reduce or delay retail sales.
This in turn could impair our ability to obtain reorders of our products in
quantities necessary to permit us to achieve planned sales and income growth.
In addition, we may be required to incur substantial additional expenses to
fill late reorders in order to ensure that our products are available at retail
locations prior to the peak holiday buying season. The failure of anticipated
reorders to materialize could have a material adverse effect on our business,
financial condition and results of operations. The recent shift to just-in-time
inventory management by one of our largest customers, Toys R Us, Inc., resulted
in an approximately $250 million decrease in our net sales in 1998 as compared
to 1997. Because many of our customers have only recently shifted to just-in-
time inventory management systems, the full impact of this shift is uncertain.
It is not clear if more of our customers will shift to just-in-time inventory
management systems or the extent to which those retailers that have shifted
will ultimately reduce their overall inventories of our products.
The toy business is seasonal and therefore our annual operating results will
depend, in large part, on our sales during the relatively brief holiday season.
Sales of toy products at retail are seasonal, with a majority of retail sales
occurring during the period from September through December. This seasonality
is increasing as large toy retailers become more efficient in their control of
inventory levels through the just-in-time inventory management systems
described in the preceding paragraph. As a result, our annual operating results
will depend, in large part, on our sales during the relatively brief holiday
season. This seasonal pattern requires significant use of working capital
mainly to manufacture inventory during the year, prior to the holiday season,
and requires accurate forecasting of demand for products during the holiday
season. Our failure to accurately predict and respond to consumer demand may
have a material adverse effect on our business, financial condition and results
of operations.
Our business is dependent on our two largest customers, which together
accounted for approximately 31.8% of Mattel's net sales in fiscal 1998.
A small number of our customers account for a large share of our net sales.
For the year ended December 31, 1998, Wal-Mart Stores, Inc. accounted for
approximately 16.5% of Mattel's net sales, Toys R Us, Inc. accounted for
approximately 15.3% of Mattel's net sales, and Mattel's ten largest customers
in the aggregate accounted for approximately 52.9% of
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net sales. If some of these customers were to cease doing business with us, or
to significantly reduce the amount of their purchases from us, it could have a
material adverse effect on our business, financial condition and results of
operations.
Consumer preferences are difficult to predict and the introduction of new
products is critical in the toy industry.
Toy Industry. Our business and operating results depend largely upon the
appeal of our products. Our continued success in the toy industry will depend
on our ability to redesign, restyle and extend our existing core products and
product lines and to develop, introduce and gain customer acceptance of new
products and product lines. However, consumer preferences in the toy industry
are continuously changing and are difficult to predict. Individual products
typically have short life cycles. There can be no assurance that:
. any of our current toy products or product lines will continue to be
popular for any significant period of time;
. any new products and product lines introduced by us will achieve an
adequate degree of market acceptance; or
. any new products' life cycles will be sufficient to permit us to recover
development, manufacturing, marketing and other costs of the products.
A decline in the popularity of our existing toy products and product lines or
the failure of new toy products and product lines to achieve and sustain market
acceptance and to produce acceptable margins could have a material adverse
effect on our business, financial condition and results of operations.
Consumer Software Industry. Due to the merger with Learning Company our
presence in the consumer software industry was greatly expanded. The consumer
software industry is also subject to a high level of uncertainty due to
changing consumer preferences as well as rapidly changing technology. Consumer
software products are susceptible to factors similar to those listed in the
above discussion of the impact of consumer preferences on toy products.
Additionally, consumer software products typically have short life spans of
only 12 months to 24 months. Revenues from consumer software products typically
decline significantly as they reach the end of their life spans.
In addition, to gain and maintain a viable market for their products,
software companies must continue to create or acquire innovative new products
reflecting technological changes in hardware and software and update current
products into newly accepted hardware and software formats. Personal computer
hardware, in particular, is steadily advancing in power and functionality,
which has expanded the market for increasingly complex and flexible software
products. The demand for increasingly complex and flexible software products
has also resulted in longer periods necessary for research and development of
new products and a greater degree of unpredictability in the time necessary to
develop products. Furthermore, the rapid changes in the market and the
increasing number of new products available to
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consumers have increased the risk that consumers may not accept any specific
title that we may publish. If we fail to develop or acquire new consumer
software products that achieve and sustain market acceptance it could have a
material adverse effect on our business, financial condition and operating
results.
Our sales and manufacturing operations outside the United States subject us to
risks normally associated with international operations.
For the year ended December 31, 1998, Mattel's international gross sales
comprised approximately 34% of its total consolidated gross sales and Learning
Company's international gross sales comprised approximately 15% of its total
consolidated gross sales. We expect our international sales to continue to
account for a significant and growing portion of our revenues. Additionally, we
own and operate manufacturing facilities and utilize third-party manufacturers
principally in China, Indonesia, Malaysia and Mexico. These sales and
manufacturing operations are subject to the risks normally associated with
international operations, including:
. currency conversion risks and currency fluctuations;
. limitations, including taxes, on the repatriation of earnings;
. political instability, civil unrest and economic instability;
. greater difficulty enforcing intellectual property rights and weaker
laws protecting such rights;
. greater difficulty and expense in conducting business abroad;
. complications in complying with foreign laws and changes in governmental
policies;
. transportation delays and interruptions; and
. the imposition of tariffs.
These risks could negatively impact our international sales and manufacturing
operations, which could have a material adverse effect on our business,
financial condition and results of operations.
All foreign countries in which our products are manufactured currently enjoy
"normal trade relations" status under United States tariff laws, which provides
a favorable category of United States import duties. As a result of continuing
concerns in the United States Congress regarding China's human rights policies,
and disputes regarding Chinese trade policies, including the country's
inadequate protection of United States intellectual property rights, there has
been, and may be in the future, opposition to the extension of "normal trade
relations" status for China. The loss of "normal trade relations" status for
China would result in a substantial increase in the import duty of toys
manufactured in China and imported into the United States and would result in
increased costs. These increases in import duties and costs could have a
material adverse effect on our business, financial condition and results of
operations.
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We are dependent on our intellectual property rights and we cannot assure you
that we will be able to successfully protect these rights.
We rely on a combination of trade secret, copyright, trademark, patent and
other proprietary rights laws to protect our rights to valuable intellectual
property related to our core brands. We also rely on license and other
agreements to establish ownership rights and to maintain confidentiality. We
cannot assure you that our intellectual property rights can be successfully
asserted in the future or will not be invalidated, circumvented or challenged.
Technological developments and the Internet may create new risks to our ability
to protect our intellectual property. In addition, laws of some foreign
countries in which our products may be sold do not protect intellectual
property rights to the same extent as the laws of the United States. The
failure to protect our proprietary information and any successful intellectual
property challenges or infringement proceedings against us could have a
material adverse effect on our business, financial condition and results of
operations.
The exchange of your exchangeable shares may be a taxable event and your tax
consequences will vary depending on a number of factors.
The exchange of your exchangeable shares for shares of our common stock is
generally a taxable event in Canada and the United States. A summary of the
material Canadian and United States federal income tax considerations generally
applicable under the Income Tax Act (Canada) or the Internal Revenue Code of
1986, as amended, if you exchange your exchangeable shares for our common stock
is included later in this prospectus under the section titled "Income Tax
Considerations Regarding Our Common Stock, the Exchange of Exchangeable Shares
and the Conversion of Notes." Your tax consequences can vary depending on a
number of factors, including:
. the residency of the holder;
. the method of the exchange; and
. the length of time that the exchangeable shares were held prior to
exchange.
Canadian and United States federal income tax considerations will vary
according to your particular circumstances. You should consult with your own
tax advisor as to the tax consequences to you of exchanging your exchangeable
shares for our common stock.
The Canadian and United States trading markets are different and the market
prices for the exchangeable shares and our common stock may not be equivalent.
The exchangeable shares are listed on the Toronto Stock Exchange. Our common
stock is listed on the New York Stock Exchange and the Pacific Exchange, Inc.
We do not plan to list the exchangeable shares or our common stock on any other
stock exchange in Canada or the United States. As a result, the price at which
the exchangeable shares will trade will be based upon the market for these
shares on the Toronto Stock Exchange and the price at which our common stock
will trade will be based upon the market for these shares on the New York Stock
Exchange and the Pacific Exchange, Inc. We believe that the market price of the
exchangeable shares on the Toronto Stock Exchange and the market price of our
common stock on the New York Stock Exchange and the Pacific Exchange, Inc. will
reflect essentially equivalent values. Nevertheless, because our common stock
and the exchangeable
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shares trade on different exchanges, there is a possibility that the market
prices may not be equivalent or even similar.
Our common stock will be foreign property in Canada.
So long as the exchangeable shares are listed on a prescribed stock exchange
in Canada, which currently includes the Toronto Stock Exchange, they will not
be foreign property under the Income Tax Act (Canada) for trusts governed by
registered pension plans, registered retirement savings plans, registered
retirement income funds and deferred profit sharing plans or for some other
tax-exempt persons. Our common stock, however, will be foreign property for
these plans or persons.
PLAN OF DISTRIBUTION RELATING TO EXCHANGE
OF EXCHANGEABLE SHARES
General.
Our common stock may be issued to you as follows:
. you may require at any time that your exchangeable shares be exchanged
for shares of our common stock at a rate of shares of our common
stock for each exchangeable share;
. Softkey may redeem the outstanding exchangeable shares on February 4,
2005 for shares of our common stock for each exchangeable share;
and
. upon liquidation of Mattel or Softkey, you may be required to, or may
elect to, exchange your exchangeable shares for shares of our
common stock for each exchangeable share.
We have not engaged any broker, dealer or underwriter in connection with this
offering of our common stock.
The following is a summary that highlights the material rights, privileges,
restrictions and conditions relating to the terms on which our common stock may
be issued to you in exchange for your exchangeable shares. The specific
provisions governing the exchangeable shares are set forth in the Articles of
Arrangement of Softkey Software Products Inc. and the Voting and Exchange Trust
Agreement as amended and supplemented by the Voting and Exchange Trust
Supplement, each of which is included as an exhibit to the registration
statement of which this prospectus is a part. You should read the Articles of
Arrangement, the Voting and Exchange Trust Agreement and the Voting and
Exchange Trust Supplement for a more complete understanding of the exchangeable
shares.
Election by holders to exchange.
As a holder of exchangeable shares, you have the right at any time to retract
(that is, to require Softkey to redeem) any or all of the exchangeable shares
you hold. If you decide to retract your exchangeable shares you will receive
shares of our common stock for
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each exchangeable share plus a cash amount equal to any declared and unpaid
dividends if the record date for the dividend is prior to the date of exchange.
You may elect to retract your exchangeable shares by presenting to Softkey's
transfer agent:
. a certificate or certificates representing the number of exchangeable
shares to be retracted;
. a written notice of retraction, the form of which you may obtain from
Softkey or its transfer agent, specifying the number of exchangeable
shares you want to retract and the retraction date; and
. any other documents as Softkey or its transfer agent may require to
effect the retraction of the exchangeable shares.
The retraction date is the date you indicate in your notice of retraction
that you want the retraction to occur. The date you indicate may not be less
than five nor more than ten business days after Softkey receives your notice of
retraction. The address to send your exchangeable shares, notice of retraction
and other documents is listed under "Delivery of our common stock" on page 12.
Softkey will not be required to redeem exchangeable shares if the redemption
would be contrary to solvency requirements or other provisions of applicable
law. In that event, we will purchase each exchangeable share not redeemed by
Softkey for shares of our common stock plus a cash amount equal to any
declared and unpaid dividends if the record date for the dividend is prior to
the date of purchase.
Softkey must immediately notify Mattel of the receipt of any notice of
retraction because we have an overriding "retraction call right" to purchase
all of the exchangeable shares specified in any notice of retraction. If we
exercise our retraction call right, we will deliver to the transfer agent for
payment to you, for each exchangeable share presented for retraction,
shares of our common stock plus a cash amount equal to any declared and unpaid
dividends if the record date for the dividend is prior to the date of purchase.
We will advise Softkey within two business days of Softkey's receipt of the
notice of retraction whether we will exercise the retraction call right.
Softkey will advise you if we do not exercise our retraction call right.
You may revoke your notice of retraction at any time prior to the close of
business on the business day preceding the retraction date. If you revoke your
notice of retraction, your exchangeable shares will not be purchased by Mattel
or redeemed by Softkey. If you do not revoke your notice of retraction, each
exchangeable share that you requested Softkey to redeem will be, as described
above, either:
. acquired by Mattel if we exercise our retraction call right; or
. redeemed by Softkey.
Automatic redemption of exchangeable shares.
February 4, 2005 is the automatic redemption date. On that date, Softkey may
redeem all of the then outstanding exchangeable shares by delivering, for each
exchangeable share,
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shares of our common stock plus a cash amount equal to any declared and
unpaid dividends. Softkey will, at least 120 days prior to the automatic
redemption date, provide the registered holders of the exchangeable shares with
written notice of the proposed redemption of the exchangeable shares. This
automatic redemption is subject to applicable law and to our redemption call
right described below.
On at least 60 days' prior written notice to holders of the exchangeable
shares, the board of directors of Softkey may:
. extend the automatic redemption date to a later date; or
. accelerate the automatic redemption date to an earlier date if less than
500,000 exchangeable shares are outstanding, other than exchangeable
shares held by Mattel and entities controlled by or under common control
with Mattel, and subject to permitted anti-dilutive adjustments.
Notwithstanding any proposed redemption of the exchangeable shares, we have
an overriding redemption call right to purchase, on the automatic redemption
date, all but not less than all of the exchangeable shares then outstanding. We
may exercise our redemption call right by notifying Softkey and the transfer
agent for the exchangeable shares of our intention to exercise such right at
least 125 days prior to the automatic redemption date. The transfer agent will
notify you whether or not we exercise our redemption call right. If we exercise
our redemption call right, we will deliver to the transfer agent for payment to
you on the automatic redemption date, for each exchangeable share, shares
of our common stock plus a cash amount equal to any declared and unpaid
dividends.
Liquidation rights.
Softkey's liquidation. If Softkey liquidates, dissolves or winds-up or
otherwise distributes its assets among its shareholders for purposes of winding
up its affairs, you will receive from Softkey, for each exchangeable share, a
liquidation payment equal to shares of our common stock plus a cash amount
equal to any declared and unpaid dividends if the record date for the dividend
is prior to the date of payment. The liquidation payment will be paid to you as
a holder of exchangeable shares before payment is made to any holder of any
class of stock ranking junior to the exchangeable shares. The payment of the
liquidation payment is subject to applicable law and to our liquidation call
right described below.
We may exercise our liquidation call right by notifying Softkey and the
transfer agent for the exchangeable shares of our intention to exercise such
right at least 55 days prior to the date of Softkey's voluntary liquidation,
dissolution or winding-up and at least 5 business days prior to Softkey's
involuntary liquidation, dissolution or winding-up. The transfer agent will
notify you whether or not we exercise our liquidation call right. If we
exercise our liquidation call right, we will deliver to the transfer agent for
payment to you, for each exchangeable share, shares of our common stock
plus a cash amount equal to any declared and unpaid dividends if the record
date for the dividend is prior to the date of payment.
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If there is a Softkey insolvency event, as a holder of exchangeable shares
you may instruct CIBC Mellon Trust Company, the trustee under the Voting and
Exchange Trust Agreement, to exercise the trustee's exchange right and require
Mattel to purchase any or all of your exchangeable shares for the liquidation
payment. A Softkey insolvency event means:
. the institution by Softkey of any proceeding asking that Softkey be
adjudicated as bankrupt or insolvent or to be dissolved or wound up, or
the consent of Softkey to the institution of bankruptcy, insolvency,
dissolution or winding up proceedings against it;
. the filing of a petition, answer or consent seeking dissolution or
winding up under any bankruptcy, insolvency or analogous laws, and
Softkey's failure to contest in good faith any of these proceedings
commenced within 15 days of becoming aware of it;
. Softkey's consent to the filing of any petition referenced above or to
the appointment of a receiver;
. Softkey's making of a general assignment for the benefit of creditors;
. Softkey's admission in writing of its inability to pay its debts
generally as they become due; or
. Softkey's not being permitted, pursuant to solvency requirements of
applicable law, to redeem any exchangeable shares presented for
retraction.
Upon notice from the trustee of the exercise of the exchange right, we will
deliver to the trustee for payment to you, for each outstanding exchangeable
share, shares of our common stock plus a cash amount equal to any
declared and unpaid dividends if the record date for the dividend is prior to
the date of purchase.
Liquidation of Mattel. If there is a Mattel insolvency event, in order for
you to participate on an equal basis with the holders of our common stock, each
outstanding exchangeable share will be automatically exchanged for
shares of our common stock plus a cash amount equal to any declared and unpaid
dividends. A Mattel insolvency event means:
. our board of directors decides to institute voluntary liquidation,
dissolution, or winding-up proceedings or to effect any other
distribution of our assets among our stockholders for the purpose of
winding up our affairs; or
. our receipt of notice of, or our otherwise becoming aware of, any
threatened or instituted claim, suit or other proceedings with respect
to our involuntary liquidation, dissolution or winding-up or to effect
any other distribution of our assets among our stockholders for the
purpose of winding up our affairs.
To effect the automatic exchange of exchangeable shares for shares of our
common stock, we will be deemed to have purchased each exchangeable share
outstanding on the fifth business day prior to the time of the Mattel
insolvency event.
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Adjustments.
The number of shares of our common stock for which each exchangeable share is
exchangeable will be adjusted to reflect any:
. stock split;
. reverse split;
. stock dividend, including any dividend or distribution of securities
convertible into our common stock;
. amalgamation, merger or reorganization;
. recapitalization;
. reclassification; or
. other similar change regarding our common stock.
Fractional shares of our common stock.
We will not issue you fractional shares of our common stock upon exchange of
exchangeable shares. Instead we will pay you cash for any fractional portion
based on the market price of the shares of our common stock.
Delivery of our common stock.
To retract your exchangeable shares, follow the instructions listed under
"Election by holders to exchange" on page 8.
As described above, you may also receive shares of our common stock plus any
additional cash amount payable if or when:
. Softkey redeems or we exercise our redemption call right to acquire all
of the outstanding exchangeable shares on the automatic redemption date;
or
. Softkey liquidates or we exercise our liquidation call right.
To receive shares of our common stock and any additional cash amount payable
in the above listed circumstances you must present to Softkey's transfer agent,
CIBC Mellon Trust Company:
. a certificate or certificates representing the number of exchangeable
shares to be retracted or purchased; and
. any other documents as Softkey or the transfer agent may require to
effect the transfer of your exchangeable shares.
If a Softkey insolvency event occurs and you instruct the trustee under the
Voting and Exchange Trust Agreement to exercise the trustee's exchange right by
requiring us to purchase the exchangeable shares for the liquidation payment,
then you must present to CIBC Mellon Trust Company, as trustee, in addition to
the certificates and other documents described above, a notice of exercise of
the exchange right in the form contained on the reverse side of the
exchangeable share certificates.
The address to mail your certificates and other documents is: CIBC Mellon
Trust Company, P.O. Box 7010, Adelaide Street Postal Station, Toronto, ON, M5C
2W9. The address to hand deliver, or send by messenger, your certificates and
other documents is: CIBC Mellon Trust Company, 199 Bay Street, Securities
Level, Toronto, ON, M5L 169, Attn: Courier Window.
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PLAN OF DISTRIBUTION RELATING TO CONVERSION OF NOTES
The notes will mature on November 1, 2000 unless previously redeemed or
converted. You are entitled through the close of business on November 1, 2000,
subject to prior redemption, to convert your notes or portions of your notes
into a number of shares of our common stock determined by:
(1) dividing the principal amount of your notes by a conversion price of
$53, and
(2) multiplying the resulting number by .
The conversion price of $53 per share may be adjusted as described below. You
may only convert your notes or portions of your notes in denominations of
$1,000 or multiples of $1,000. However, if notes are called for redemption, the
conversion rights will expire at the close of business on the business day
immediately prior to the date fixed for redemption, unless we default in
payment of the redemption price. If you exercise your option to require us to
repurchase the notes upon a change of control, a note or portion of a note may
be converted only if you withdraw your election to require us to repurchase
your notes.
Except as described below, we will not make any adjustments on conversion of
notes for any interest accrued or for dividends on any common stock issued. If
you surrender your notes for conversion after a record date for the payment of
interest and prior to the next succeeding interest payment date, your notes
must be accompanied by funds equal to the interest payable on such succeeding
interest payment date on the principal amount converted. We are not required to
issue fractional shares of common stock upon conversion of notes. Instead we
will pay cash for any fractional shares based upon the market price of our
common stock on the last business day prior to the date of conversion.
The conversion price may be adjusted under the indenture if we take some
types of actions, including if we:
. issue our common stock as a dividend or distribution on our common
stock;
. issue to all holders of our common stock some types of rights or
warrants to purchase our common stock at less than the current market
price;
. subdivide, combine or reclassify our common stock under some
circumstances;
. distribute to all holders of our common stock (1) our capital stock
(other than common stock), (2) evidences of indebtedness of Mattel or
(3) assets, including securities, but excluding:
(a) the dividends, rights, warrants and distributions referred to above;
(b) dividends and distributions in connection with Mattel's liquidation,
dissolution or winding up; and
(c) dividends and distributions paid exclusively in cash other than as
described below;
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. make an all cash distribution to all holders of our common stock in an
aggregate amount that, combined with all other all-cash distributions we
made within the preceding 12 months for which no adjustment was made,
exceeds 20% of Mattel's market capitalization; and
. purchase our common stock pursuant to a tender offer made by us or any
of our subsidiaries involving an aggregate amount of consideration that,
together with:
(a) any cash and the fair market value of any other consideration
payable in any other tender offer by us or any of our subsidiaries
for our common stock expiring within the 12 months preceding the
tender offer for which no adjustment was made, and
(b) the aggregate amount of any such all-cash distributions referred to
in the immediately preceding bullet point to all holders of our
common stock within the 12 months preceding the expiration of the
tender offer for which no adjustment was made,
exceeds 20% of Mattel's market capitalization on the expiration of the
tender offer.
Except as stated above, we will not adjust the conversion price:
. if we issue our common stock or any securities convertible into or
exchangeable for our common stock or carrying the right to purchase any
of the foregoing;
. unless the adjustments would require a change of at least 1% of the
conversion price then in effect; except that any adjustment that would
otherwise be required to be made will be carried forward and taken into
account in any subsequent adjustment; and
. for shares of common stock issued pursuant to a plan for reinvestment of
dividends or interest.
If we:
. reclassify or change our common stock, other than changes in par value
or from par value to no par value, or resulting from a subdivision or a
combination, or
. consolidate or merge or sell or convey to another corporation all or
substantially all of our property and assets,
and as a result, holders of our common stock are entitled to receive stock,
other securities, other property or assets, including cash, in exchange for our
common stock, then you may thereafter convert your notes into the kind and
amount of stock, other securities or other property or assets which you would
have owned or been entitled to receive upon the reclassification, change,
consolidation, merger, sale or conveyance had you converted your notes into
common stock immediately prior to the reclassification, change, consolidation,
merger, sale or conveyance.
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In the event of a taxable distribution to holders of our common stock or
other transaction resulting in any adjustment of the conversion price, you may,
in some circumstances, be deemed to have received a distribution subject to the
United States income tax as a dividend. In some other circumstances, the
absence of such an adjustment may result in a taxable dividend to the holders
of our common stock.
We may, to the extent permitted by law, reduce the conversion price by any
amount for any period of at least 20 days. We will give you at least 15 days'
notice of this decrease. However, we can only reduce the conversion price if
our board of directors determines that the decrease is in our best interests.
Their determination will be conclusive. If we determine it is advisable, we may
also reduce the conversion price to avoid or diminish any income tax to our
stockholders resulting from any dividend or distribution of stock, or rights to
acquire stock, or from any event treated as such for income tax purposes.
Delivery of our common stock.
To receive shares of our common stock plus any cash payable for fractional
shares upon conversion of your notes you must present and/or surrender to State
Street Bank and Trust Company, the trustee for the notes:
. your note, duly endorsed, along with any funds required if you
surrender after a record date for payment of interest and prior to the
next succeeding payment of interest date; and
. a written notice of conversion in the form provided with the notes, or
any other notice that is acceptable to Mattel, that:
(a) states that you elect to convert your notes;
(b) indicates the name(s) and address(es) in which the certificate(s)
for shares of our common stock should be issued; and
(c) is accompanied by transfer taxes, if any.
If you want Mattel to issue shares of common stock in a name other than that
registered for your note, your note must be duly endorsed by the registered
holder or accompanied by instruments of transfer in a form satisfactory to
Mattel and executed by the person surrendering the note for conversion.
Once you have satisfied the requirements for conversion, and subject to any
restrictions on transfers if the shares issued are in a name other than that of
the registered holder, we will issue and deliver to you at our office a
certificate or certificates for the number of full shares issuable upon
conversion and a check or cash for any amount of declared but unpaid dividends.
To convert any beneficial interest in a note in global form you must complete
the instruction form for conversion required by The Depository Trust Company's
book-entry conversion program and comply with any additional requirements.
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DESCRIPTION OF MATTEL CAPITAL STOCK
The following is a summary of the material terms of our capital stock.
Because it is only a summary, it does not contain all information that may be
important to you. Therefore, you should read carefully the more detailed
provisions of our certificate of incorporation, our bylaws, as amended, the
Rights Agreement described below and the Deposit Agreement, dated June 24,
1996, among Tyco Toys, Inc., Midatlantic Bank, N.A., as depositary, and all
holders from time to time of depositary receipts thereunder, as amended on
March 27, 1997.
General.
As of the date of this prospectus, our authorized capital stock consists of:
. 1,000,000,000 shares of common stock, par value $1.00 per share;
. 3,000,000 shares of preferred stock, par value $1.00 per share, of which
772,800 shares have been designated as Series C preferred stock and one
share has been designated as special voting preferred stock, par value
$1.00 per share; and
. 20,000,000 shares of preference stock, par value $.01 per share, of
which 2,000,000 shares have been designated Series E junior
participating preference stock.
No other classes of capital stock are authorized under our certificate of
incorporation. The issued and outstanding shares of common stock and preferred
stock are duly authorized, validly issued, fully paid and nonassessable.
Common Stock.
Holders of our common stock have no preemptive, redemption or conversion
rights. The holders of our common stock are entitled to receive dividends when
and as declared by our board of directors out of funds legally available for
the payments. Upon liquidation, dissolution or winding up, the holders of our
common stock may share ratably in our net assets after payment of liquidating
distributions to holders of our preferred stock or our preference stock, if
any. Each holder of our common stock is entitled to one vote per share of
common stock held of record by such holder and may cumulate its votes in the
election of directors. Each outstanding share of our common stock is
accompanied by a right to purchase 128/37,500ths, as adjusted to reflect a
series of stock splits, of a Series E preference share. Our board has reserved
1,924,900 Series E preference shares for issuance. There are currently no
Series E preference shares outstanding. See "--Description of preference share
purchase rights."
The registrar and transfer agent for our common stock is BankBoston, N.A.
Description of preference share purchase rights.
On February 7, 1992, our board of directors declared a dividend of one
preference share purchase right for each outstanding share of our common stock.
The description and terms of the purchase rights are set forth in a rights
agreement between Mattel and BankBoston, N.A., formerly The First National Bank
of Boston, as rights agent. The purchase rights have anti-takeover effects that
are intended to discourage coercive or unfair takeover tactics and to
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encourage any potential acquirer to negotiate a price fair for all our
stockholders. The purchase rights may cause substantial dilution to an
acquiring party that attempts to acquire Mattel on terms not approved by our
board of directors, but the purchase rights will not interfere with any
negotiated merger or other business combination. See "Where You Can Find More
Information" on page 34.
If any person or group acquires beneficial ownership of 20% or more of the
outstanding shares of our common stock and the exchangeable shares, each holder
of a purchase right, other than a purchase right beneficially owned by the
acquiring person, will thereafter have the right to receive upon exercise that
number of shares of our common stock having a market value of two-times the
exercise price of the purchase right. In addition, if after such acquisition of
20% or more of the outstanding shares of our common stock and the exchangeable
shares, we are acquired in a merger or other business combination or
transaction of 50% or more of our consolidated assets or earning power are
sold, other than resulting from a qualifying offer, each holder of a purchase
right will receive, upon exercise of that purchase right at the prevailing
exercise price of the purchase right, that number of shares of common stock of
the acquiring company which, at the time of such transaction, will have a
market value of two times the exercise price of the purchase right.
Preferred Stock.
Our board of directors has the power, without further vote of stockholders,
to authorize the issuance of up to 3,000,000 shares of preferred stock and
20,000,000 shares of preference stock and to fix and determine the terms,
limitations and relative rights and preferences of any shares of preferred
stock or preference stock. This power includes the authority to establish
voting, dividend, redemption, conversion, liquidation and other rights of any
such shares. Other than as described in this prospectus, there are no shares of
our preferred stock or our preference stock currently outstanding.
Series C Mandatorily Convertible Redeemable Preferred Stock; Series C
Depositary Shares.
We have issued and outstanding 771,920 shares of Series C preferred stock. In
addition, there are 19,298,000 of Series C depositary shares outstanding. The
shares of Series C preferred stock are represented by the Series C depositary
shares, each such share representing one twenty-fifth of a share of Series C
preferred stock. Subject to the terms of a deposit agreement, each owner of a
Series C depositary share is entitled to all the rights and preferences of the
Series C preferred stock represented thereby, and subject, proportionately, to
all of the limitations of the Series C preferred stock represented thereby,
contained in the Certificate of Designation relating to the Series C preferred
stock.
The holders of Series C preferred stock have the right with the holders of
common stock to vote in the election of directors and upon each other matter
coming before any meeting of the holders of common stock. Each share of Series
C preferred stock is entitled to 12.219 votes and each Series C depositary
share has 0.48876 votes. The holders of Series C preferred stock and common
stock vote together as one class on all matters except as otherwise provided by
law or by our certificate of incorporation.
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Special Voting Preferred Stock.
We issued a single share of special voting preferred stock to the trustee
under the Voting and Exchange Trust Supplement pursuant to which each holder of
exchangeable shares, other than us, our subsidiaries or any other entity we
control, will be entitled to instruct the trustee to cast a number of votes
attached to the share of special voting preferred stock equal to the number of
shares of our common stock for which the exchangeable shares held by that
holder are exchangeable. Except as otherwise required by law or our certificate
of incorporation, the holder of record of the special voting preferred stock
will have a number of votes equal to multiplied by the number of
exchangeable shares outstanding from time to time which are not owned by us,
our subsidiaries or any other entity we control. The holder of the share of
special voting preferred stock will vote together with the holders of our
common stock and Series C preferred stock as a single class on all matters,
except as may be required by applicable law or our certificate of
incorporation. The holder of the share of special voting preferred stock will
be entitled to receive $10.00 upon Mattel's liquidation, dissolution or winding
up out of any of Mattel's assets available for distribution to stockholders.
The share of special voting preferred stock is senior to our common stock upon
liquidation, dissolution or winding up. The holder of the share of special
voting preferred stock will not be entitled to receive dividends. When the
share of special voting preferred stock has no votes attached to it because
there are no exchangeable shares outstanding not owned by us, our subsidiaries
or any other entity we control, and there are no shares of stock, debt, options
or other agreements of Softkey that could give rise to the issuance of any
exchangeable share, to any person, other than to Mattel or any entity we
control, we are required to redeem the share of special voting preferred stock
for $10.00.
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INCOME TAX CONSIDERATIONS REGARDING OUR COMMON STOCK, THE EXCHANGE OF
EXCHANGEABLE SHARES AND THE CONVERSION OF NOTES
Canadian federal income tax considerations.
In the opinion of Osler, Hoskin & Harcourt, counsel for Mattel and Softkey,
the following is a summary of the material Canadian federal income tax
considerations generally applicable under the Income Tax Act (Canada) (the
"Canadian Tax Act") to holders of exchangeable shares who acquire our common
stock upon the exchange of exchangeable shares.
This summary is based on the current provisions of the Canadian Tax Act, the
regulations thereunder and counsel's understanding of the current
administrative practices of Revenue Canada, Customs, Excise and Taxation. This
summary also takes into account the proposed amendments to the Canadian Tax Act
and the regulations thereunder publicly announced by the Minister of Finance
prior to the date of this prospectus and assumes that all the proposed
amendments will be enacted in their present form. However, we cannot assure you
that the proposed amendments will be enacted in the form proposed, or at all.
Except for the foregoing, this summary does not take into account or anticipate
any changes in law, whether by legislative, administrative or judicial decision
or action, nor does it take into account provincial, territorial or foreign tax
legislation or considerations, which may differ from the Canadian federal
income tax considerations described herein. No assurances can be given that
subsequent changes in law or administrative policy will not affect or modify
the opinions expressed herein. This summary summarizes the opinion of Osler,
Hoskin & Harcourt included as exhibit 8.2 to the registration statement of
which this prospectus forms a part.
The Canadian federal income tax considerations applicable to each Softkey
shareholder will vary according to each Softkey shareholder's particular
circumstances. This summary is not intended to be, and should not be construed
to be, legal or tax advice to any particular Softkey shareholder. Accordingly,
Softkey shareholders should consult with their own tax advisors as to the tax
consequences to them of exchanging their exchangeable shares for our common
stock in their particular circumstances. No advance income tax ruling has been
obtained from revenue Canada customs, excise and taxation to confirm the tax
consequences of any of the transactions described herein.
For the purposes of the Canadian Tax Act, all amounts relating to the
acquisition, holding or disposition of our common stock, including dividends,
adjusted cost base and proceeds of disposition, must be converted into Canadian
dollars based on the prevailing United States dollar exchange rate at the time
that the amounts arise.
Softkey shareholders resident in Canada.
The following portion of the summary is applicable only to Softkey
shareholders who, for purposes of the Canadian Tax Act and any relevant
bilateral tax treaty, and at all relevant times, are resident or deemed to be
resident in Canada, hold their exchangeable shares and will hold their shares
of our common stock as capital property and deal at arm's length with
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Softkey and Mattel. This summary does not apply to a shareholder with respect
to whom we are or will be a foreign affiliate within the meaning of the
Canadian Tax Act or who holds more than 10% of the exchangeable shares.
The exchangeable shares and our common stock will generally be considered to
be capital property to a holder thereof provided that the holder does not hold
any of the shares in the course of carrying on a business of buying and selling
shares and has not acquired the shares in a transaction considered to be an
adventure in the nature of trade. Some holders who might not otherwise be
considered to hold their exchangeable shares as capital property may be
entitled, in some circumstances, to have them treated as capital property by
making the election provided by subsection 39(4) of the Canadian Tax Act. This
election will not, however, be available where a Softkey shareholder has made
an election under subsection 85(1) or subsection 85(2) of the Canadian Tax Act
in connection with the acquisition of the exchangeable shares. In addition, the
mark-to-market rules contained in the Canadian Tax Act relating to financial
institutions, including some financial institutions, registered securities
dealers and corporations controlled by one or more of the foregoing, will deem
such financial institutions not to hold their exchangeable shares or our common
stock as capital property for the purposes of the Canadian Tax Act. Softkey
shareholders that are financial institutions should consult their own tax
advisors to determine the tax consequences to them of the application of the
mark-to-market rules.
Redemption or exchange of exchangeable shares. A Softkey shareholder will be
considered under the Canadian Tax Act to have disposed of exchangeable shares
on:
. a redemption, including pursuant to a notice of retraction, of such
exchangeable shares by Softkey; or
. our acquisition of such exchangeable shares pursuant to:
(a) our liquidation, redemption or retraction call rights;
(b) the exercise by the trustee under the Voting and Exchange Trust
Agreement of an exchange right upon your instructions if there is a
Softkey insolvency event; or
(c) an automatic exchange if there is a Mattel insolvency.
The Canadian federal income tax consequences of such a disposition are
significantly different for the holder depending on whether the event giving
rise to the disposition is a redemption by Softkey or an acquisition by Mattel.
A Softkey shareholder who exercises the right to require redemption of an
exchangeable share by giving a notice of retraction cannot control whether the
exchangeable share will be acquired by Mattel under the retraction call right
or redeemed by Softkey. The holder will, however, be notified if the retraction
call right will not be exercised in which case the holder may cancel the notice
of retraction and retain the exchangeable share.
On the redemption, including pursuant to a notice of retraction, of an
exchangeable share by Softkey, the holder of an exchangeable share will be
deemed to have received a taxable dividend equal to the amount, if any, by
which the redemption proceeds exceed the paid-up capital, for purposes of the
Canadian Tax Act, at that time, of the exchangeable
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share so redeemed. The redemption proceeds are the fair market value at that
time of our common stock received by the holder from Softkey on the redemption
plus the amount of any accrued but unpaid dividends on the exchangeable share.
A shareholder who is an individual will be required to include in income
dividends deemed to be received on the exchangeable shares, subject to the
gross-up and dividend tax credit rules normally applicable to taxable dividends
received from taxable Canadian corporations.
In the case of a shareholder that is a corporation, other than a "specified
financial institution" as defined in the Canadian Tax Act, dividends deemed to
be received on the exchangeable shares will be included in computing the
corporation's income and will generally be deductible in computing its taxable
income unless there is any denial of the dividend deduction as discussed below.
A corporation is a specified financial institution for purposes of the Canadian
Tax Act if it is a bank, a trust company, a credit union, an insurance
corporation or a corporation whose principal business is the lending of money
to persons with whom the corporation is dealing at arm's length or the
purchasing of debt obligations issued by such persons or a combination thereof,
and corporations controlled by or related to such entities.
In the case of a shareholder that is a specified financial institution, such
a dividend will be deductible in computing its taxable income only if either:
. the specified financial institution did not acquire the exchangeable
shares in the ordinary course of the business carried on by the
institution; or
. at the time of the deemed receipt of the dividend by the specified
financial institution, the exchangeable shares are listed on a
prescribed stock exchange in Canada, which currently includes the
Toronto Stock Exchange, and the specified financial institution, either
alone or together with persons with whom it does not deal at arm's
length, is not deemed to receive dividends in respect of more than 10%
of the issued and outstanding exchangeable shares.
A shareholder that is a "private corporation," as defined in the Canadian Tax
Act, or any other corporation resident in Canada and controlled or deemed to be
controlled by or for the benefit of an individual or related group of
individuals may be liable under Part IV of the Canadian Tax Act to pay a
refundable tax of 33- 1/3% on dividends deemed to be received on the
exchangeable shares to the extent that such dividends are deductible in
computing the shareholder's taxable income.
If we or any other person with whom we do not deal at arm's length is a
specified financial institution at a point in time that a dividend is deemed to
be paid on an exchangeable share, then, unless the exemption described below
applies, dividends deemed to be received by a shareholder that is a corporation
will not be deductible in computing taxable income but will be fully includable
in taxable income under Part I of the Canadian Tax Act. A shareholder that is a
"Canadian-controlled private corporation," as defined in the Canadian Tax Act,
may be liable to pay an additional refundable tax of 6- 2/3% on
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deemed dividends that are not deductible in computing taxable income. This
denial of the dividend deduction for a corporate shareholder will not in any
event apply if:
. at the time a dividend is deemed to be received, the exchangeable shares
are listed on a prescribed stock exchange, which currently includes the
Toronto Stock Exchange;
. we are "related" to Softkey for the purpose of the Canadian Tax Act;
. the recipient, together with persons with whom the recipient does not
deal at arm's length or any partnership or trust of which the recipient
or person is a member or beneficiary, respectively, is not deemed to
receive dividends on more than 10% of the issued and outstanding
exchangeable shares.
We are currently "related" to Softkey for the purpose of the Canadian Tax Act
and we will continue to be related to Softkey so long as we continue to control
Softkey.
The exchangeable shares will be "taxable preferred shares" and "short-term
preferred shares" for purposes of the Canadian Tax Act. Accordingly, Softkey
will be subject to a 66- 2/3% tax under Part VI.1 of the Canadian Tax Act on
dividends deemed to be paid on the exchangeable shares and will be entitled to
deduct 9/4 of the tax payable in computing its taxable income under Part I of
the Canadian Tax Act.
On the redemption, the holder of an exchangeable share will also be
considered to have disposed of the exchangeable share for proceeds of
disposition equal to the redemption proceeds less the amount of such deemed
dividend. A holder will in general realize a capital loss or a capital gain
equal to the amount by which the adjusted cost base to the holder of the
exchangeable share exceeds or is less than such proceeds of disposition. The
general tax treatment of capital gains and capital losses is discussed below
under the heading "Capital gains and capital losses." In the case of a
shareholder that is a corporation, in some circumstances the amount of any such
deemed dividend may be treated as proceeds of disposition and not as a
dividend.
On the exchange of an exchangeable share by the holder thereof with us for
our common stock the holder will be considered to have disposed of the
exchangeable share for proceeds of disposition equal to the fair market value
at that time of our common stock received on such exchange plus any declared
and unpaid dividends in respect of such exchangeable share. Such holder will in
general realize a capital gain or a capital loss equal to the amount by which
the proceeds of disposition of the exchangeable share, net of any reasonable
costs of disposition, exceed or are less than the adjusted cost base to the
holder of the exchangeable share. The general tax treatment of capital gains
and capital losses is discussed below under the heading "Capital gains and
losses."
The cost of our common stock received on the redemption of an exchangeable
share by Softkey will be equal to the fair market value of our common stock
received on the redemption. The cost of our common stock received on the
exchange of an exchangeable share with us will be equal to the fair market
value of our common stock received on the exchange. The cost of any of this
common stock will be averaged with the adjusted cost base of any of our other
common stock held by the Softkey shareholder immediately before
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that time for the purposes of determining the holder's adjusted cost base of
our common stock.
Dividends on our common stock. Dividends on our common stock must be included
in the recipient's income for the purposes of the Canadian Tax Act. These
dividends received by a holder who is an individual will not be subject to the
gross-up and dividend tax credit rules in the Canadian Tax Act. A holder that
is a corporation will include these dividends in computing its taxable income.
A holder that is a Canadian controlled private corporation may be liable to pay
an additional refundable tax of 6- 2/3% on these dividends. United States non-
resident withholding tax paid in respect of these dividends, as discussed under
the heading "United States Federal Tax Considerations" below, will be eligible
for foreign tax credit or deduction treatment where applicable under the
Canadian Tax Act.
Disposition of our common stock. A disposition or deemed disposition of our
common stock by a holder will generally result in a capital gain or capital
loss equal to the amount by which the proceeds of disposition, net of any
reasonable costs of disposition, exceed or are less than the adjusted cost base
to the holder of our common stock. The general tax treatment of capital gains
and capital losses is discussed below under the heading "Capital gains and
losses."
Capital gains and losses. A Softkey shareholder's taxable capital gain or
allowable capital loss from the disposition of exchangeable shares or our
common stock will be equal to three-quarters of the amount of the shareholder's
capital gain or capital loss in respect of such disposition. A Softkey
shareholder must include any such taxable capital gain in income for the
taxation year of disposition, and may, subject to the detailed provisions of
the Canadian Tax Act, deduct any such allowable capital loss from taxable
capital gains in the year in which such allowable capital loss is realized.
Under the detailed rules contained in the Canadian Tax Act, any remaining
allowable capital loss may generally be applied to reduce net taxable capital
gains realized by the holder in the three preceding taxation years or in any
subsequent taxation year.
If the holder of an exchangeable share is a corporation, the amount of any
capital loss arising from a disposition or deemed disposition of an
exchangeable share may be reduced by the amount of dividends received or deemed
to have been received by it on such an exchangeable share to the extent and
under circumstances prescribed by the Canadian Tax Act. Similar rules may apply
where a corporation is a member of a partnership or a beneficiary of a trust
that owns exchangeable shares or where a trust or partnership of which a
corporation is a beneficiary or a member is a member of a partnership or a
beneficiary of a trust that owns exchangeable shares.
Capital gains realized by an individual may be subject to alternative minimum
tax under the Canadian Tax Act depending on the individual's circumstances.
Softkey shareholders that are "Canadian controlled private corporations," as
defined in the Canadian Tax Act, may be liable to pay an additional 6- 2/3%
refundable tax in respect of taxable capital gains realized.
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Eligibility for investment. We have indicated to counsel that we will
maintain the listing of our common stock on the New York Stock Exchange or
another prescribed exchange.
Qualified Investments. Provided our common stock is listed on a prescribed
stock exchange, which currently includes the New York Stock Exchange, our
common stock and our purchase rights will be qualified investments under the
Canadian Tax Act for trusts governed by registered retirement savings plans,
registered retirement income funds and deferred profit sharing plans. Under
proposed amendments to the Canadian Tax Act, our common stock and our purchase
rights will also be qualified investments for trusts governed by a registered
education savings plan.
Our common stock and the purchase rights will be foreign property under the
Canadian Tax Act.
Softkey shareholders not resident in Canada.
The following portion of the summary is applicable only to Softkey
shareholders:
. who, for purposes of the Canadian Tax Act or any relevant bilateral
treaty, have not been and will not be resident or deemed to be resident
in Canada at any time while they have held exchangeable shares or will
hold our common stock;
. to whom exchangeable shares are not "taxable Canadian property" as
defined in the Canadian Tax Act; and
. who do not use or hold and are not deemed to use or hold such shares in
connection with carrying on a business in Canada and who do not carry on
an insurance business in Canada.
Generally, the exchangeable shares and our common stock will not be taxable
Canadian property if:
. these shares are listed on a prescribed stock exchange, which currently
includes the Toronto Stock Exchange and the New York Stock Exchange;
. the holder does not use or hold, and is not deemed to use or hold, these
shares in connection with carrying on a business in Canada; and
. none of the holder, persons with whom the holder does not deal at arm's
length or the holder together with such persons owned or had under
option at any time during the immediately preceding five year period,
25% or more of the issued shares of any class or series of the capital
stock of Softkey or Mattel, as the case may be.
The exchangeable shares are listed on the Toronto Stock Exchange and we
intend to use our best efforts to cause Softkey to maintain such listing. We
also intend to maintain the listing of our common stock on the New York Stock
Exchange or another prescribed stock exchange.
A non-resident shareholder will not be subject to tax under the Canadian Tax
Act, on the exchange of an exchangeable share for our common stock, except to
the extent the
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exchange results in a redemption of an exchangeable share, or on the sale or
other disposition of our common stock. A holder whose exchangeable shares are
redeemed either under Softkey's redemption right or pursuant to a notice of
retraction will be deemed to receive a dividend as described above for
shareholders resident in Canada under the heading "Redemption or exchange of
exchangeable shares." The amount of such deemed dividend will be subject to the
tax treatment accorded to dividends described below.
Dividends deemed to be paid on the exchangeable shares are subject to non-
resident withholding tax under the Canadian Tax Act at the rate of 25% although
such rate may be reduced under the provisions of an applicable income tax
treaty. Under the Income Tax Treaty between Canada and the United States
effective August 16, 1984, as amended, the rate is generally reduced to 15% in
respect of dividends paid to a person who is the beneficial owner of such
shares and who is resident in the United States for purposes of the Income Tax
Treaty.
United States federal tax considerations.
The following summary sets forth the opinion of Latham & Watkins, counsel to
Mattel, as to the material United States federal income and estate tax
considerations relating to the conversion of the notes, the exchange of
exchangeable shares for our common stock and the acquisition, ownership and
disposition of our common stock, but does not purport to be a complete analysis
of all the potential tax considerations relating thereto. This summary is based
on the provisions of the Internal Revenue Code of 1986, as amended, the
applicable Treasury Regulations promulgated or proposed thereunder, judicial
authority and current administrative rulings and practice, all of which are
subject to change, possibly on a retroactive basis. This summary deals only
with holders that hold notes or exchangeable shares, or will hold our common
stock, as "capital assets" within the meaning of Section 1221 of the Code. This
summary does not address tax considerations applicable to investors that may be
subject to special tax rules, such as banks, tax-exempt organizations,
insurance companies, dealers in securities or currencies, persons that will
hold exchangeable shares or our common stock as a position in a hedging
transaction, "straddle" or "conversion transaction" for tax purposes, or
persons that have a "functional currency" other than the United States dollar.
We have not sought any ruling from the Internal Revenue Service with respect to
the statements made and the conclusions reached in the following summary, and
there can be no assurance that the Internal Revenue Service will agree with
such statements and conclusions.
Investors considering the conversion of their notes or exchange of
exchangeable shares for our common stock should consult their tax advisors with
respect to the application of United States federal income and estate tax laws
to their particular circumstances, as well as any tax consequences arising
under the laws of any state, local or foreign taxing jurisdiction or under any
applicable tax treaty.
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United States holder.
As used herein, the term "United States holder" means a beneficial owner of
notes, exchangeable shares or common stock that is a "United States person" for
United States federal income tax purposes. A "United States person" is:
. a citizen or resident of the United States, including an alien
individual who is a lawful permanent resident of the United States or
who meets the "substantial presence" test under Section 7701(b) of the
Code;
. a corporation or partnership, including entities treated as corporations
or partnerships for federal income tax purposes, created or organized in
the United States or under the laws of the United States, any state, or
the District of Columbia;
. an estate the income of which is subject to Unites States federal income
taxation regardless of its source; or
. a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States persons who
have the authority to control all substantial decisions of the trust.
Conversion of notes. A United States holder will generally not recognize gain
or loss upon conversion of notes into our common stock except with respect to
cash received in lieu of fractional shares, or any amounts attributable to
accrued and unpaid interest on the notes, which latter amounts will be treated
as interest for United States federal income tax purposes. Cash paid in lieu of
a fractional share of common stock upon a conversion of notes will result in a
United States holder recognizing gain or loss, which will be capital gain or
loss to the extent that the amount of such cash exceeds or is exceeded by the
portion of the adjusted tax basis of a note allocable to such fractional share.
The United States holder's tax basis in the common stock received upon such
conversion (excluding any common stock attributable to accrued and unpaid
interest) will be the same as such holder's adjusted tax basis in the notes at
the time of the conversion, reduced by the portion of the holder's adjusted tax
basis in the notes allocated to any fractional share of common stock exchanged
for cash, and the holding period for the common stock received upon the
conversion will include the holding period of the notes that were converted.
The United States holder's tax basis in any common stock received upon the
conversion of notes that is attributable to accrued and unpaid interest on the
notes will equal the fair market value of the common stock on the date of the
conversion, and the United States holder's holding period in such common stock
will begin on the day after the conversion.
Exchange of exchangeable shares. A United States holder will generally
recognize capital gain or loss upon the exchange of exchangeable shares for
shares of our common stock equal to the difference between the fair market
value of shares of common stock received, other than common stock received for
declared but unpaid dividends, and such holder's adjusted tax basis in the
exchangeable shares surrendered in the exchange. Accordingly, the United States
holder will have a tax basis in the common stock received upon the exchange
(excluding any common stock received for declared but unpaid dividends, the
material tax consequences of receipt of which are discussed below) equal to
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the fair market value of the common stock on the date of the exchange, and the
United States holder's holding period in the common stock will begin on the day
after of the exchange.
Alternatively, an exchange by a United States holder of exchangeable shares
for common stock may be characterized as a tax-free exchange, except to the
extent of common stock received for declared but unpaid dividends, if the
exchangeable shares are treated as our stock or are treated as having been
acquired by Mattel in exchange for common stock in a transaction that qualifies
as a reorganization under the Code. It is not possible to predict whether the
exchangeable shares would be characterized as our stock, or whether an exchange
of exchangeable shares for common stock would otherwise qualify as a tax-free
exchange, because such characterization may be dependent upon future events. If
an exchange of exchangeable shares for common stock qualifies as a tax-free
exchange, a United States holder will not recognize gain or loss upon the
exchange, will have a tax basis in the common stock received in the exchange
equal to such holder's adjusted tax basis in the exchangeable shares
surrendered, and will have a holding period in the common stock which includes
the holding period in the exchangeable shares.
Regardless of whether an exchange of exchangeable shares for common stock is
taxable or tax-free, a United States holder will recognize ordinary income to
the extent of common stock received in the exchange for declared but unpaid
dividends on the exchangeable shares. A United States holder will have a tax
basis in the shares of common stock received for declared but unpaid dividends
on the exchangeable shares equal to the fair market value of the common stock
on the date of the exchange, and the United States holder's holding period in
those shares of common stock will begin on the day after the exchange.
Canadian tax, if any, imposed on an exchange of exchangeable shares for
common stock may be available as a credit against a United States holder's
United States federal income tax liability, subject to applicable limitations.
A United States holder who is not eligible for a credit may be able to deduct
the Canadian taxes paid, if any, in computing United States federal income
subject to tax.
Dividends on common stock. The amount of any distribution by us in respect of
our common stock will be equal to the amount of cash and the fair market value,
on the date of distribution, of any property distributed. Generally, any such
distributions to a United States holder of our common stock will be treated:
. first, as a dividend to the extent of our current and accumulated
earnings and profits;
. next, as a tax-free return of capital to the extent of the holder's
adjusted tax basis in our common stock; and
. thereafter as gain from the sale of exchange of such stock.
A United States holder will generally recognize ordinary income to the extent
that any distribution we make is treated as a dividend, and will generally
recognize capital gain to the extent that any distribution we make is treated
as gain from the sale or exchange of the holder's common stock.
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Non-United States holders.
As used herein, the term "Non-United States holder" means any beneficial
owner of our common stock that is not a United States holder.
Conversion of notes. A Non-United States holder will generally not recognize
gain or loss upon a conversion of notes into our common stock. However, cash
paid in lieu of a fractional share of our common stock upon a conversion of
notes may result in recognition of gain or loss that would be subject to rules
discussed below applicable to a Non-United States holder's sale, exchange or
other disposition of, or exchange of exchangeable shares for, common stock.
Shares of common stock received upon a conversion of notes that are
attributable to accrued and unpaid interest on the notes will be treated as
interest paid to a Non-United States holder. Generally, amounts treated as
interest paid to a Non-United States holder will not be subject to United
States federal income tax or withholding tax if such interest is not
effectively connected with the Non-United States holder's conduct of a trade or
business within the United States and the Non-United States holder:
(1) does not actually or constructively own 10% or more of the total voting
power of all of our voting stock and is not a "controlled foreign
corporation" with respect to which we are a "related person" within the
meaning of the Code; and
(2) certifies, under penalty of perjury that it is not a United States
person and provides its name and address.
Except in the case of interest that is effectively connected with a Non-
United States holder's conduct of a trade or business within the United States,
interest received by a Non-United States holder which does not qualify for
exemption from taxation will be subject to federal income tax and withholding
at a rate of 30% unless reduced or eliminated by an applicable tax treaty. A
Non-United States holder whose interest income in respect of a note is
effectively connected with the holder's conduct of a trade or business within
the United States will be subject to regular federal income tax on this income
in generally the same manner as United States holders, and general federal
income tax return filing requirements would apply. In addition, a Non-United
States holder that is a corporation may be subject to a branch profits tax
equal to 30% of its effectively connected income, unless it qualifies for a
lower rate under an applicable tax treaty. Even though such effectively
connected interest would be subject to United States federal income tax, and
may be subject to the branch profits tax, such interest will not be subject to
United States withholding tax if the holder delivers a properly completed IRS
Form 4224 or successor form to us or our paying agent.
Dividends on common stock. Dividends paid to a Non-United States holder of
our common stock, excluding any dividends that are effectively connected with
the holder's conduct of a trade or business in the United States, will be
subject to United States federal withholding tax at a 30% rate or lower rate
provided under an applicable income tax treaty. Under current Treasury
Regulations, dividends paid to an address in a foreign country are presumed to
be paid to a resident of that country, unless the payor has knowledge to the
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contrary, for purposes of the 30% withholding tax discussed above and, under
the current interpretation of Treasury Regulations, for purposes of determining
the applicability of a tax treaty rate. Under Treasury Regulations that are
effective for payments made after December 31, 1999, however, Non-United States
holders wishing to claim the benefit of an applicable treaty rate would be
required to satisfy some certification requirements. A Non-United States holder
that is eligible for a reduced rate of United States withholding tax pursuant
to a tax treaty may obtain a refund of any excess amounts currently withheld by
making an appropriate claim for refund with the Internal Revenue Service.
Except to the extent that an applicable tax treaty otherwise provides, a Non-
United States holder will be taxed in the same manner as a United States holder
on dividends paid that are effectively connected with the conduct of a trade or
business in the United States by the Non-United States holder. If such Non-
United States holder is a foreign corporation, it may also be subject to a
United States branch profits tax on such effectively connected income at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.
Even though such effectively connected dividends are subject to United States
federal income tax, and may be subject to the branch profits tax, they will not
be subject to United States withholding tax if the holder delivers a properly
completed IRS Form 4224 or successor form to us or our paying agent.
Disposition of common stock; exchange of exchangeable shares. A Non-United
States holder generally will not be subject to United States federal income tax
or withholding tax on any gain recognized on the sale, exchange or other
disposition of our common stock, or upon the exchange of exchangeable shares
for common stock, unless:
(a) such gain is effectively connected with the conduct of a United States
trade or business by the Non-United States holder and, if a tax treaty
applies, attributable to a United States permanent establishment
maintained by the Non-United States holder;
(b) in the case of a Non-United States holder who is an individual, such
holder is present in the United States for a period or periods
aggregating 183 days or more during the taxable year of the
disposition and the individual either has a "tax home" in the United
States or the gain is attributable to an office or other fixed place
of business maintained by the individual in the United States; or
(c) the holder is subject to tax pursuant to the provisions of the Code
applicable to some United States expatriates.
If an individual Non-United States holder is described in (a) or (c) above,
the holder will be taxed on the net gain derived from the sale, exchange, or
other disposition under regular United States federal income tax rates. If an
individual Non-United States holder is described in (b) above, the holder
generally will be subject to withholding tax at a 30% rate on the gain derived
from the sale, exchange, or other disposition, which gain may be offset by such
holder's United States capital losses. If a Non-United States holder that is a
corporation is described under (a) above, it will be taxed on such gain under
regular graduated United States federal income tax rates and, in addition,
under some circumstances
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will be subject to the 30% branch profits tax discussed above, unless it
qualifies for a lower rate under an applicable income tax treaty.
Our discussion of the United States federal income tax consequences of a sale
or other disposition of our common stock by a Non-United States holder assumes
that we are not and have not been at any time a "United States real property
holding corporation" (a "USRPHC"), and our stock does not constitute a "United
States real property interest" (a "USRPI"), as each are defined in Section
897(c) of the Code. Under present law, we would be a USRPHC if the fair market
value of our United Stated real property interests is at least equal to 50% of
the sum of the fair market value of:
(a)our United States real property interests;
(b) our interests in real property located outside the United States; and
(c) our other assets which are used or held for use in a trade or
business.
We have determined that we are not a USRPHC and do not expect to become one
in the future. However, if we were a USRPHC at any time during the shorter of
the five-year period preceding a Non-United States holder's disposition of
common stock and the period during which such holder held the common stock, and
provided the common stock is "regularly traded on an established securities
market" for tax purposes, our common stock would constitute a USRPI to the Non-
United States holder if such holder held, directly or indirectly, common stock
with a fair market value in excess of 5% of the fair market value of all our
common stock outstanding at any time during the shorter of the periods
described above. In such a case, the Non-United States holder would be subject
to a withholding tax of 10% of the proceeds of any disposition of the holder's
common stock.
Federal estate tax consequences to a Non-United States holder. Shares of our
common stock actually or beneficially held, other than through a foreign
corporation, by an individual Non-United States holder at the time of his or
her death, or previously transferred subject to some retained rights or powers,
will be included in the value of such holder's gross estate for United States
federal estate tax purposes unless otherwise provided by an applicable estate
tax treaty.
Information reporting and backup withholding.
General. Some "reportable payments" we make on our common stock may be
subject to information reporting requirements and backup withholding tax at a
rate of 31%. We must annually report to the Internal Revenue Service and to
each United States and Non-United States holder the amount of dividends paid to
such holder and the amount of tax withheld on such amounts. These information
reporting requirements apply regardless of whether we are required to withhold
tax on any dividends we pay to any holder. Additionally, copies of the
information returns reporting any dividends paid and backup withholding tax
collected may be made available to the tax authorities in the country in which
a Non-United States holder resides, under an applicable income tax treaty.
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United States holders. United States holders are generally not subject to
backup withholding tax unless the United States holder:
. fails to furnish or certify a proper taxpayer identification number to
the payor in the manner requested;
. is notified by the Internal Revenue Service of a failure to report
payment of dividends and interest properly; or
. under some circumstances, fails to certify that the holder has not been
notified by the Internal Revenue Service that the holder is subject to
backup withholding for failure to report dividend and interest payments.
Non-United States holders. Dividends paid to a Non-United States holder that
are subject to the 30% or reduced treaty rate of withholding previously
discussed will be exempt from backup withholding. Otherwise, backup withholding
may apply to dividends paid to Non-United States holders that are not "exempt
recipients" and that fail to provide some information regarding their foreign
status in the manner required by the Code and applicable Treasury Regulations.
If paid to an address outside the United States, dividends on common stock held
by a Non-United States holder will generally not be subject to backup
withholding. However, under Treasury Regulations generally applicable to
dividend payments made after December 31, 1999, dividend payments to a Non-
United States holder will be subject to backup withholding unless applicable
certification requirements are satisfied.
Information reporting and backup withholding will not apply to payments of
interest on the notes by us or our agent to a Non-United States holder if the
Non-United States holder certifies as to its status as a Non-United States
holder under penalty of perjury or otherwise establishes an exemption and we or
our agents do not have actual knowledge that the holder is a United States
person or that the conditions of any other exemption are not in fact satisfied.
Information reporting requirements and backup withholding will not apply to any
exchange of exchangeable shares or the payment of the proceeds of the sale of
our common stock by a Non-United States holder effected outside the United
States by a foreign office of a "broker", as defined in applicable Treasury
Regulations, unless such broker:
(a) is a United States person;
(b) is a foreign person that derives 50% or more of its gross income for
some periods from the conduct of a trade or business in the United
States;
(c) is a controlled foreign corporation for United States federal income
tax purposes; or
(d) for taxable years beginning after December 31, 1999, is a partnership
in which one or more United States persons in the aggregate own more
than 50% of the income or capital interests, or the partnership is
engaged in a trade or business in the United States.
Payment of the proceeds of any such sale effected outside the United States
by a foreign office of any broker that is described in (a) through (d) above
will not be subject to
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backup withholding, but will be subject to information reporting requirements
unless such broker has documentary evidence in its records that the beneficial
owner is a Non-United States holder and some other conditions are met, or the
beneficial owner otherwise establishes an exemption. Payment of the proceeds of
any such sale to or through the United States office of a broker is subject to
information reporting and backup withholding, unless the beneficial owner of
common stock:
. provides a Form W-8 or a suitable substitute form signed under penalties
of perjury that includes its name and address and certifies as to its
Non-United States holder status; or
. is a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of
its trade or business and provides a statement to us or its agent under
penalties of perjury in which it certifies that a Form W-8 or a suitable
substitute form has been received by it from the Non-United States
holder or qualifying intermediary and furnishes us or its agent with a
copy thereof.
Backup withholding is not an additional tax. Any amounts withheld from a
payment to a holder of our common stock under the backup withholding rules will
be allowed as a credit against such holder's United States federal income tax
and may entitle the holder to a refund, provided that the holder furnishes
required information to the Internal Revenue Service.
New withholding regulations. New Treasury Regulations regarding the
information reporting and withholding rules applicable to Non-United States
holders are generally effective for payments made after December 31, 1999,
subject to some transition rules. These new Treasury Regulations do not
significantly alter the substantive withholding and information reporting
requirements but rather unify current certification procedures and forms and
clarify reliance standards. These regulations also alter the procedures for
claiming benefits of an income tax treaty, clarify the duties of United States
payors making payments to foreign persons and modify the rules concerning
withholding on payments made to foreign persons through foreign intermediaries.
On January 15, 1999 the Internal Revenue Service issued Notice 99-8, proposing
some changes to these new Treasury Regulations for non-resident aliens and
foreign corporations and providing a model "qualified intermediary" withholding
agreement to be entered into with the Internal Revenue Service to allow some
institutions to certify on behalf of their Non-United States person customers
or account holders investing in United States securities. Non-United States
holders should consult their tax advisors regarding the impact, if any, of
these new Treasury Regulations on their acquisition, holding, and disposition
of our common stock.
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FORWARD-LOOKING STATEMENTS
We believe this prospectus and the documents that we incorporate by reference
contain "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are
subject to numerous risks and uncertainties and are based on the beliefs and
assumptions of our management based on information currently available to them.
You can identify forward-looking statements by the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should," "likely,"
"seeks," "approximately," "intends," "plans," "pro forma," "strategy,"
"estimates" or "anticipates" or the negative of these words and phrases or
similar words or phrases.
Forward-looking statements are not guarantees of performance and you should
not rely on them as predictions of future events. They involve risks,
uncertainties and assumptions. Our future results and stockholder values may
differ materially from those expressed in the forward-looking statements. Many
of the factors that will determine these results and values are beyond our
ability to control or predict. You are cautioned not to put undue reliance on
any forward-looking statements. For those statements, we claim the protection
of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
For a discussion of some of the factors that may cause actual results to
differ materially from those suggested by the forward-looking statements,
please read carefully the information under "Risk Factors" beginning on page 3.
In addition to the Risk Factors and other important factors discussed elsewhere
in this prospectus or in the documents which are incorporated by reference into
this prospectus, you should understand that the following important factors
could affect our future results and could cause results to differ materially
from those suggested by the forward-looking statements:
. increased competitive pressures, both domestically and internationally
may affect sales of our products and impede our ability to maintain our
market share and pricing goals;
. changes in United States, global or regional economic conditions may
affect sales of our products and increase costs associated with
manufacturing and distributing our products;
. changes in United States and global financial and equity markets,
including significant interest rate fluctuations, may increase the cost
of external financing for our operations, and currency fluctuations,
which may negatively impact our reportable income;
. problems arising from the potential inability of computers to properly
recognize and process date-sensitive information beyond January 1, 2000
may result in an interruption in, or a failure of, our normal business
activities or operations or the normal business activities or operations
of our suppliers and customers;
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. changes in laws or regulations, third party relations and approvals,
decisions of courts, regulators and governmental bodies may adversely
affect our business or ability to compete; and
. other risks and uncertainties as may be detailed from time to time in
our public announcements and Securities and Exchange Commission filings.
This list of factors that may affect future performance and the accuracy of
forward-looking statements is illustrative, but by no means exhaustive.
Accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any reports, statements and other information we file with the SEC at the SEC's
public reference rooms at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices in New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to the public from commercial document retrieval services and at the web site
maintained by the SEC at http://www.sec.gov. Our common stock is listed on both
the New York Stock Exchange and the Pacific Exchange, Inc. You may inspect
information that Mattel files, and Learning Company previously filed, with the
New York Stock Exchange at the offices of the New York Stock Exchange at 20
Broad Street, New York, New York 10005. You may also inspect information that
Mattel files with the Pacific Exchange, Inc. at the Securities Qualification
Department of the Pacific Exchange, Inc. at 115 Samsone Street, San Francisco,
California 94104.
We have filed a registration statement on Form S-3 with the SEC under the
Securities Act of 1933, as amended. This prospectus is part of that
registration statement. As allowed by SEC rules, this prospectus does not
contain all the information you can find in the registration statement or the
exhibits to the registration statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is an important part of this prospectus.
Any statement contained in a document which is incorporated by reference in
this prospectus is automatically updated and superseded if information
contained in this prospectus, or information that we later file with the SEC,
modifies or replaces this information. We incorporate by reference the
following documents:
. Registration Statement on Form S-4, as amended, file no. 333-71587;
. Annual Report on Form 10-K for the year ended December 31, 1998;
. Current Reports on Form 8-K filed on February 3, 1999, March 5, 1999,
April 8, 1999 and April 16, 1999 (2 reports);
34
<PAGE>
. Registration Statements on Form 8-A and Form 8-A/A, filed on February
13, 1992 and March 9, 1992, respectively;
. Annual Report of The Learning Company, Inc. on Form 10-K and Form 10-K/A
for the fiscal year ended January 2, 1999; and
. Current Reports of The Learning Company, Inc. on Form 8-K and Form 8-K/A
filed on January 11, 1999 and March 26, 1999 (3 reports).
We are also incorporating by reference all documents filed by us with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, as amended, after the date of this prospectus and prior to the
termination of the offering.
We may have sent you some of the documents incorporated by reference, but you
can obtain any of them through us or the SEC. Documents incorporated by
reference are available from us without charge, excluding all exhibits unless
they are specifically incorporated by reference in this document. Stockholders
may obtain documents incorporated by reference in this prospectus by requesting
them in writing or by telephone from us at the following address:
Mattel, Inc.
Attention: Robert Normile, Secretary
333 Continental Boulevard
El Segundo, CA 90245
Telephone: (310) 252-2703
LEGAL MATTERS
Certain legal matters in connection with the common stock offered hereby are
being passed upon for Mattel by Lee B. Essner, Esquire, Assistant General
Counsel and Assistant Secretary of Mattel. Material federal U.S. tax
consequences are being passed upon for Mattel by Latham & Watkins, Los Angeles,
California. Material Canadian federal income tax consequences are being passed
upon for Mattel by Osler, Hoskin and Harcourt, Toronto, Canada.
EXPERTS
Our consolidated financial statements incorporated into this prospectus by
reference to our Annual Report on Form 10-K for the 1998 fiscal year have been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, in reliance upon the authority of said firm as experts
in auditing and accounting and, with respect to the historical financial
statements of Tyco Toys, Inc. for the year ended December 31, 1996, in reliance
on the report of Deloitte & Touche LLP, independent auditors, in reliance upon
the authority of said firm as experts in accounting and auditing. The
consolidated financial statements of The Learning Company, Inc. incorporated by
reference into this prospectus by reference to Learning Company's Annual Report
on Form 10-K and Form 10-K/A for the 1998 fiscal year have been so incorporated
in reliance on the reports of PricewaterhouseCoopers LLP, independent certified
public accountants, in reliance upon the authority of said firm as experts in
auditing and accounting.
35
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other expenses of issuance and distribution.
The expenses, other than underwriting discounts and commissions, in
connection with the offering of the securities being registered are set forth
below. All of such expenses are estimates.
<TABLE>
<S> <C>
SEC registration fee.............................................. $78,335
-------
Accounting fees and expenses...................................... *
Legal fees and expenses........................................... *
Listing fees...................................................... *
Miscellaneous..................................................... *
-------
Total........................................................... $ *
=======
</TABLE>
- --------
* To be completed by amendment.
Item 15. Indemnification of directors and officers.
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify, subject to the standards set forth therein, any
person who was or is a party in any action in connection with any action, suit
or proceeding brought or threatened by reason of the fact that the person is or
was a director, officer, employee or agent of such corporation, or is or was
serving as such with respect to another entity at the request of such
corporation. The Delaware General Corporation law also provides that a Delaware
corporation may purchase insurance on behalf of any such director, officer,
employee or agent.
We have adopted provisions in Article Seventh of our Restated Certificate of
Incorporation, as amended, which require us to indemnify any and all persons
whom we have the power to indemnify pursuant to the Delaware General
Corporation Law against any and all expenses, judgments, fines, amounts paid in
settlement, and any other liabilities to the fullest extent permitted by the
Delaware General Corporation Law.
Article Seventh of the Certificate of Incorporation also empowers us by
action of our board of directors to purchase and maintain insurance, at our
expense, to protect ourself and such persons against any such expense,
judgment, fine, amount paid in settlement or other liability, whether or not we
would have the power to indemnify any such individual under the Delaware
General Corporation Law.
In addition, Section 1 of Article VI of our Bylaws requires that each person
who was or is made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she, or a
person of whim he or she is the legal representative, is or was our director,
officer, employee or agent or is or was serving at our request as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefits plans, whether the basis of such
II-1
<PAGE>
proceeding is alleged action in an official capacity as a director, officer,
employee or agent, or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by us to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits us to provided broader
indemnification rights than the law permitted us to provide prior to such
amendment) against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that except for claims by such persons for non-payment of entitled
indemnification claims against us, we shall indemnify such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by our
board of directors, Article VI of the Bylaws specifies that the right to
indemnification so provided is a contract right, sets forth some procedural and
evidentiary standards applicable to the enforcement of a claim under Article VI
of the Bylaws, entitles the persons to be indemnified to be reimbursed for the
expenses of prosecuting any such claim against us and entitles them to have all
expenses incurred in advance of the final disposition of a proceeding paid by
us. Such provisions, however, are intended to be in furtherance and not in
limitation of the general right to indemnification provided in the Certificate
of Incorporation.
We have entered into indemnity agreements with some of our directors,
including directors who are also our officers and employees, and some of our
senior officers. The indemnity agreements provide that we will pay any costs
which an indemnitee actually and reasonably incurs because of claims made
against him or her by reason of the fact that he or she is or was our director
or officer. The payments to be made under the indemnity agreements include, but
are not limited to, expense of investigation, judicial or administrative
proceedings or appeals, damages, judgments, fines, amounts paid in settlement,
and attorneys' fees and disbursements, except we are not obligated to make any
payment under the indemnity agreements which we are prohibited by law from
paying as indemnity, or where (a) indemnification is provided to an indemnitee
under an insurance policy, except for amounts in excess of insurance coverage,
(b) the claim is one for which an indemnitee is otherwise indemnified by us,
(c) final determination is rendered in a claim based upon the indemnitee
obtaining a personal profit or advantage to which he or she is not legally
entitled, (d) final determination is rendered on a claim for an accounting of
profits made in connection with a violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or similar state or common law provisions, or
(e) the indemnitee was adjudged to be deliberately dishonest.
Section 102(b)(7) of the Delaware General Corporation Law enables a Delaware
corporation to provide in its certificate of incorporation for the elimination
or limitation of the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Any such provision cannot eliminate or
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<PAGE>
limit a director's liability (1) for any breach of the director's duty of
loyalty to the corporation or its stockholders; (2) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (3) under Section 174 of the Delaware General Corporation Law (which
imposes liability on directors for unlawful payment of dividends or unlawful
stock purchase or redemption); or (4) for any transaction from which the
director derived an improper personal benefit.
Article Seventh of our Certificate of Incorporation eliminates the liability
of our director to us or our stockholders for monetary damages for breach of
fiduciary duty as a director to the full extent permitted by the Delaware
General Corporation Law.
Our directors and officers and those of our subsidiaries are insured under
some insurance policies against claims made during the period of the policies
against liabilities arising out of claims for some acts in their capacities as
directors and officers of us and our subsidiaries.
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
3.1 Restated Certificate of Incorporation of Mattel, Inc. (incorporated
by reference to Exhibit 3.0 to Mattel, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1993).
3.2 Certificate of Amendment of Restated Certificate of Incorporation of
Mattel, Inc. (incorporated by reference to Exhibit B to Mattel,
Inc.'s Proxy Statement dated March 23, 1996).
3.3 Certificate of Amendment of Restated Certificate of Incorporation of
Mattel, Inc. (incorporated by reference to Exhibit B to Mattel,
Inc.'s Proxy Statement dated March 30, 1998).
3.4 Bylaws of Mattel, Inc., as amended to date (incorporated by
reference to Exhibit 4.3 to Mattel, Inc.'s Registration Statement on
Form S-3, Registration No. 333-36571).
3.5 Form of Certificate of Designations, Preferences, Rights and
Limitations of Special Voting Preferred Stock of Mattel, Inc.
(incorporated by reference to Exhibit 3.5 of Mattel, Inc.'s Form S-
4, Registration No. 333-71587).
4.1 Rights Agreement, dated as of February 7, 1992, between Mattel, Inc.
and The First National Bank of Boston, as Rights Agent (incorporated
by reference to Exhibit 1 to Mattel, Inc.'s Registration Statement
on Form 8-A, dated February 12, 1992).
4.2 Specimen Stock Certificate with respect to Mattel, Inc. Common Stock
(incorporated by reference to Mattel, Inc.'s Current Report on Form
8-A, dated February 28, 1996).
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
4.3 Indenture dated as of October 16, 1995 between The Learning Company,
Inc. and State Street Bank and Trust Company, as Trustee for 5-1/2%
Senior Notes due 2000 (incorporated by reference to Exhibit 10.21 to
The Learning Company, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995).
4.4 First Supplemental Indenture dated as of November 22, 1995 by and
between The Learning Company, Inc. and State Street Bank and Trust
Company, as Trustee for 5-1/2% Senior Notes due 2000 (incorporated by
reference to The Learning Company, Inc.'s Registration Statement on
Form S-3, Registration No. 333-00145).
*4.5 Form of Second Supplemental Indenture to be entered into by Mattel,
Inc. and State Street Bank and Trust Company, as Trustee.
(Mattel, Inc. has not filed some long-term debt instruments under
which the principal amount of securities authorized to be issued does
not exceed 10% of the total assets of Mattel, Inc. Copies of such
agreements will be provided to the Securities and Exchange Commission
upon request.)
*5.1 Opinion of Lee B. Essner, Esq. as to the validity of the securities
being registered.
*8.1 Opinion of Latham & Watkins as to tax matters.
*8.2 Opinion of Osler, Hoskin & Harcourt as to tax matters.
12.1 Computation of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and Preferred Stock Dividends
(incorporated by reference to Exhibit 12.0 to Mattel Inc.'s Annual
Report on Form 10-K for the fiscal year ended December 31, 1998).
*23.1 Consent of PricewaterhouseCoopers LLP.
*23.2 Consent of Deloitte and Touche LLP.
*23.3 Consent of PricewaterhouseCoopers LLP.
*23.4 Consent of Latham & Watkins (included in Exhibit 8.1 above).
*23.5 Consent of Osler, Hoskin & Harcourt (included in Exhibit 8.2 above).
*23.6 Consent of Lee B. Essner, Esq. (included in Exhibit 5.1 above).
**24.1 Power of Attorney with respect to Mattel, Inc.
99.1 Plan of Arrangement of Softkey Software Products Inc. under Section
182 of the Business Corporations Act (Ontario) (incorporated by
reference to Exhibit 4.4 of The Learning Company, Inc.'s Registration
Statement on Form S-3, Registration No. 333-40549).
99.2 Voting and Exchange Trust Agreement, dated as of February 4, 1994
among The Learning Company, Inc., Softkey Software Products Inc. and
R-M Trust Company, as Trustee (incorporated by reference to Exhibit
4.3 to The Learning Company, Inc.'s Registration Statement on Form S-
3, Registration No. 333-40549).
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
99.3 Support Agreement, dated as of February 4, 1994 between The Learning
Company, Inc. and Softkey Software Products Inc. (incorporated by
reference to Exhibit 99.4 of Mattel, Inc.'s Form S-4, Registration No.
333-71587).
99.4 Form of Voting and Exchange Trust Supplement to be entered into by
Mattel, Inc., The Learning Company, Inc., Softkey Software Products
Inc. and CIBC Mellon Trust Company, as Trustee (incorporated by
reference to Exhibit 99.5 of Mattel, Inc.'s Form S-4, Registration No.
333-71587).
99.5 Form of Support Agreement Amending Agreement to be entered into by
Mattel, Inc., The Learning Company, Inc. and Softkey Software Products
Inc. (incorporated by reference to Exhibit 99.6 of Mattel, Inc.'s Form
S-4, Registration No. 333-71587).
99.6 Form of Rights Agreement to be entered into by Softkey Software
Products Inc., Mattel, Inc. and CIBC Mellon Trust Company, as Trustee
(incorporated by reference to Exhibit 99.7 of Mattel, Inc.'s Form S-4,
Registration No. 333-71587).
</TABLE>
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* Filed herewith.
** Previously filed.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
provided however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement
II-5
<PAGE>
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act (and where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) That:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of El Segundo, State of California, on April 29, 1999.
MATTEL, INC.
Harry J. Pearce*
By: _________________________________
Name: Harry J. Pearce
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Jill E. Barad* Chairman of the Board, April 29, 1999
____________________________________ President and Chief
Jill E. Barad Executive Officer
Harry J. Pearce* Chief Financial Officer April 29, 1999
____________________________________ (Principal Financial
Harry J. Pearce Officer)
Kevin M. Farr* Senior Vice President and April 29, 1999
____________________________________ Corporate Controller
Kevin M. Farr (Principal Accounting
Officer)
Dr. Harold Brown* Director April 29, 1999
____________________________________
Dr. Harold Brown
Tully M. Friedman* Director April 29, 1999
____________________________________
Tully M. Friedman
Joseph C. Gandolfo* Director and President, April 29, 1999
____________________________________ Worldwide Manufacturing
Joseph C. Gandolfo Operations
Ronald M. Loeb* Director April 29, 1999
____________________________________
Ronald M. Loeb
Ned Mansour* Director and President, April 29, 1999
____________________________________ Corporate Operations
Ned Mansour
</TABLE>
S-1
<PAGE>
<TABLE>
<S> <C> <C>
Dr. Andrea L. Rich* Director April 29, 1999
____________________________________
Dr. Andrea L. Rich
William D. Rollnick* Director April 29, 1999
____________________________________
William D. Rollnick
Pleasant T. Rowland* Vice-Chairman of the Board April 29, 1999
____________________________________ and President, Pleasant
Pleasant T. Rowland Company
Christopher A. Sinclair* Director April 29, 1999
____________________________________
Christopher A. Sinclair
John L. Vogelstein* Director April 29, 1999
____________________________________
John L. Vogelstein
</TABLE>
/s/ Lee B. Essner
*By: _____________________
Lee B. Essner
Attorney-in-Fact
April 29, 1999
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
3.1 Restated Certificate of Incorporation of Mattel, Inc. (incorporated
by reference to Exhibit 3.0 to Mattel, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1993).
3.2 Certificate of Amendment of Restated Certificate of Incorporation of
Mattel, Inc. (incorporated by reference to Exhibit B to Mattel,
Inc.'s Proxy Statement dated March 23, 1996).
3.3 Certificate of Amendment of Restated Certificate of Incorporation of
Mattel, Inc. (incorporated by reference to Exhibit B to Mattel,
Inc.'s Proxy Statement dated March 30, 1998).
3.4 Bylaws of Mattel, Inc., as amended to date (incorporated by
reference to Exhibit 4.3 to Mattel, Inc.'s Registration Statement on
Form S-3, Registration No. 333-36571).
3.5 Form of Certificate of Designations, Preferences, Rights and
Limitations of Special Voting Preferred Stock of Mattel, Inc.
(incorporated by reference to Exhibit 3.5 of Mattel, Inc.'s Form S-
4, Registration No. 333-71587).
4.1 Rights Agreement, dated as of February 7, 1992, between Mattel, Inc.
and The First National Bank of Boston, as Rights Agent (incorporated
by reference to Exhibit 1 to Mattel, Inc.'s Registration Statement
on Form 8-A, dated February 12, 1992).
4.2 Specimen Stock Certificate with respect to Mattel, Inc. Common Stock
(incorporated by reference to Mattel, Inc.'s Current Report on Form
8-A, dated February 28, 1996).
4.3 Indenture dated as of October 16, 1995 between The Learning Company,
Inc. and State Street Bank and Trust Company, as Trustee for 5-1/2%
Senior Notes due 2000 (incorporated by reference to Exhibit 10.21 to
The Learning Company, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995).
4.4 First Supplemental Indenture dated as of November 22, 1995 by and
between The Learning Company, Inc. and State Street Bank and Trust
Company, as Trustee for 5-1/2% Senior Notes due 2000 (incorporated
by reference to The Learning Company, Inc.'s Registration Statement
on Form S-3, Registration No. 333-00145).
*4.5 Form of Second Supplemental Indenture to be entered into by Mattel,
Inc. and State Street Bank and Trust Company, as Trustee.
(Mattel, Inc. has not filed some long-term debt instruments under
which the principal amount of securities authorized to be issued
does not exceed 10% of the total assets of Mattel, Inc. Copies of
such agreements will be provided to the Securities and Exchange
Commission upon request.)
*5.1 Opinion of Lee B. Essner, Esq. as to the validity of the securities
being registered.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
*8.1 Opinion of Latham & Watkins as to tax matters.
*8.2 Opinion of Osler, Hoskin & Harcourt as to tax matters.
12.1 Computation of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and Preferred Stock Dividends
(incorporated by reference to Exhibit 12.0 to Mattel, Inc's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998).
*23.1 Consent of PricewaterhouseCoopers LLP.
*23.2 Consent of Deloitte and Touche LLP.
*23.3 Consent of PricewaterhouseCoopers LLP.
*23.4 Consent of Latham & Watkins (included in Exhibit 8.1 above).
*23.5 Consent of Osler, Hoskin & Harcourt (included in Exhibit 8.2 above).
*23.6 Consent of Lee B. Essner, Esq. (included in Exhibit 5.1 above).
**24.1 Power of Attorney with respect to Mattel, Inc.
99.1 Plan of Arrangement of Softkey Software Products Inc. under Section
182 of the Business Corporations Act (Ontario) (incorporated by
reference to Exhibit 4.4 of The Learning Company, Inc.'s Registration
Statement on Form S-3, Registration No. 333-40549).
99.2 Voting and Exchange Trust Agreement, dated as of February 4, 1994
among The Learning Company, Inc., Softkey Software Products Inc. and
R-M Trust Company, as Trustee (incorporated by reference to Exhibit
4.3 to The Learning Company, Inc.'s Registration Statement on Form S-
3, Registration No. 333-40549).
99.3 Support Agreement, dated as of February 4, 1994 between The Learning
Company, Inc. and Softkey Software Products Inc. (incorporated by
reference to Exhibit 99.4 of Mattel, Inc.'s Form S-4, Registration
No. 333-71587).
99.4 Form of Voting and Exchange Trust Supplement to be entered into by
Mattel, Inc., The Learning Company, Inc., Softkey Software Products
Inc. and CIBC Mellon Trust Company, as Trustee (incorporated by
reference to Exhibit 99.5 of Mattel, Inc.'s Form S-4, Registration
No. 333-71587).
99.5 Form of Support Agreement Amending Agreement to be entered into by
Mattel, Inc., The Learning Company, Inc. and Softkey Software
Products Inc. (incorporated by reference to Exhibit 99.6 of Mattel,
Inc.'s Form S-4, Registration No. 333-71587).
99.6 Form of Rights Agreement to be entered into by Softkey Software
Products Inc., Mattel, Inc. and CIBC Mellon Trust Company, as Trustee
(incorporated by reference to Exhibit 99.7 of Mattel, Inc.'s Form S-
4, Registration No. 333-71587).
</TABLE>
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* Filed herewith.
** Previously filed.
<PAGE>
EXHIBIT 4.5
THE LEARNING COMPANY, INC.,
MATTEL, INC.
AND
STATE STREET BANK AND TRUST COMPANY,
as Trustee
SECOND SUPPLEMENTAL INDENTURE
Dated as of May 13, 1999
to
INDENTURE
Dated as of October 16, 1995
SECOND SUPPLEMENTAL INDENTURE dated as of May 13, 1999, among THE LEARNING
COMPANY, INC., a Delaware corporation (the "Company"), MATTEL, INC., a Delaware
corporation ("Mattel"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts banking corporation (the "Trustee"). Capitalized terms used and
not otherwise defined herein shall have the respective meanings assigned to
them in the Indenture referenced below.
W I T N E S S E T H :
WHEREAS, the Company (under its former name, SoftKey International Inc.) and
the Trustee have heretofore executed and delivered a certain Indenture, dated
as of October 16, 1995, and a First Supplemental Indenture, dated as of
November 22, 1995 (as so amended, the "Indenture"), relating to the Company's 5
1/2% Senior Convertible Notes Due 2000 (the "Notes");
WHEREAS, the Company and Mattel have heretofore executed and delivered a
certain Agreement and Plan of Merger, dated as of December 13, 1999 (the
"Merger Agreement"), pursuant to which the Company will be merged (the
"Merger") with and into Mattel, with Mattel as the surviving corporation;
WHEREAS, pursuant to the Merger Agreement, upon consummation of the Merger,
each issued and outstanding share of common stock of the Company (the "Common
Stock") will be converted into and represent the right to receive shares of
common stock of Mattel;
WHEREAS, Section 12.1 of the Indenture permits the Company to merge with or
into another corporation if certain terms and conditions are satisfied;
WHEREAS, Section 12.2 of the Indenture provides that in case of any such
merger and upon the assumption by the Successor Company, by supplemental
indenture, of the due and
<PAGE>
punctual payment of the principal of, premium, if any, and interest on all of
the Notes and the due and punctual performance of all of the covenants and
conditions of the Indenture to be performed by the Company, such Successor
Company shall succeed to and be substituted for the Company, with the same
effect as if it had been named in the Indenture as the party of the first part,
and that the person named as the "Company" in the first paragraph of the
Indenture may be dissolved, wound up and liquidated at any time thereafter and
shall be released from its liabilities as obligor and maker of the Notes and
from its obligations under the Indenture;
WHEREAS, Section 15.6 of the Indenture provides that upon any merger of the
Company with another corporation as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property and assets
(including cash) with respect to or in exchange for such Common Stock, then the
successor corporation shall execute with the Trustee a supplemental indenture
providing that such Note shall be convertible into the kind and amount of
shares of stock and other securities or property or assets (including cash)
receivable upon such merger by a holder of a number of shares of Common Stock
issuable upon conversion of such Notes immediately prior to such merger, and
that such supplemental indenture shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
Article XV of the Indenture;
WHEREAS, Section 11.1(c) of the Indenture provides, among other things, that,
without the consent of the holders of the Notes, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental to the Indenture to evidence the succession of another
person to the Company, or successive successions, and the assumption by the
Successor Company of the covenants, agreements and obligations of the Company
pursuant to Article XII of the Indenture;
WHEREAS, the execution and delivery of this Second Supplemental Indenture has
been authorized by a Board Resolution of the Company, by resolutions adopted by
the board of directors of Mattel, and by the Trustee; and
WHEREAS, all conditions precedent and requirements necessary to make this
Second Supplemental Indenture a valid and legally binding instrument in
accordance with its terms have been complied with, performed and fulfilled and
the execution and delivery hereof have been in all respects duly authorized.
NOW, THEREFORE, each party, intending to be legally bound hereby, agrees as
follows for the benefit of the other parties and for the equal and ratable
benefit of all holders of the Notes:
ARTICLE I
ASSUMPTION OF OBLIGATIONS
SECTION 1.1. Mattel hereby assumes, from and after the Effective Time, all
the obligations of the Company under the Indenture and the Notes, including,
but not limited to, the due and punctual payment of the principal of, premium,
if any, and interest on all of the
<PAGE>
Notes and the due and punctual performance of all of the covenants and
conditions of the Indenture to be performed by the Company.
ARTICLE II
AMENDMENTS
SECTION 2.1. The following definition shall be added to Section 1.1 of the
Indenture, after the definition of "DWAC":
"Effective Time" has the meaning ascribed to it in that certain Agreement and
Plan of Merger, dated as of December 13, 1998, between Mattel, Inc. and The
Learning Company, Inc.
SECTION 2.2. All references to "SoftKey International Inc." contained in the
Indenture (including any exhibit, annex or attachment thereto, but excluding
the signature page) and relating to any time period subsequent to the Effective
Time, are hereby deleted and references to Mattel, Inc. are inserted in lieu
thereof.
SECTION 2.3. Section 15.1 of the Indenture is hereby amended by deleting
Section 15.1 in its entirety and substituting the following:
"Section 15.1 Right to Convert. Subject to and upon compliance with the
provisions of this Indenture, the holder of any Note shall have the right, at
his option, at any time after 60 days following the latest date of original
issuance of the Notes and prior to the close of business on November 1, 2000
(except that, with respect to any Note or portion of a Note which shall be
called for redemption or delivered for repurchase, such right shall terminate,
except as provided in the fourth paragraph of Section 15.2, at the close of
business on the last Trading Day prior to the date fixed for redemption of such
Note or portion of a Note unless the Company shall default in payment due upon
redemption thereof) to convert the principal amount of any such Note, or any
portion of such principal amount which is $1,000 or an integral multiple
thereof, into that number of fully paid and nonassessable shares of Common
Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Note or portion thereof surrendered for conversion by
the Conversion Price in effect at such time and multiplying the resulting
number of shares by , by surrender of the Note so to be converted in
whole or in part in the manner provided in Section 15.2. A holder of Notes is
not entitled to any rights of a holder of Common Stock until such holder has
converted his Notes to Common Stock, and only to the extent such Notes are
deemed to have been converted to Common Stock under this Article XV."
SECTION 2.4. The first paragraph of Section 16.4 of the Indenture is hereby
amended by deleting the phrase "SoftKey International Inc., One Atheneaum
Street, Cambridge, MA 02142," in its entirety and substituting the phrase
"Mattel, Inc., 333 Continental Boulevard, El Segundo, CA 90245,".
<PAGE>
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Except to the extent specifically provided therein, no provision
of this Second Supplemental Indenture or any future supplemental indenture is
intended to modify, and the parties do hereby adopt and confirm, the provisions
of Section 318(c) of the Trust Indenture Act of 1939, as amended, which amend
and supersede provisions of the Indenture, as amended by this Second
Supplemental Indenture.
SECTION 3.2. Nothing in this Second Supplemental Indenture is intended to or
shall provide any rights to any parties other than those expressly contemplated
by this Second Supplemental Indenture.
SECTION 3.3. This Second Supplemental Indenture shall be deemed to be a
contract made under the substantive laws of New York and for all purposes shall
be construed in accordance with the substantive laws of New York without regard
to the principles of conflicts of laws.
SECTION 3.4. This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 3.5. Except as expressly modified hereby, all the provisions of the
Indenture are and shall continue to be in full force and effect. Each reference
in the Indenture to "this Indenture", "hereunder", "hereof" and words of like
import referring to the Indenture and each reference in any other transaction
document relating to the Indenture shall mean the Indenture as amended hereby.
SECTION 3.6. This Second Supplemental Indenture shall become a legally
effective and binding instrument upon the later of (i) execution and delivery
hereof by all parties hereto and (ii) the Effective Time.
[signature page follows]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested all as of the day and year first above written.
THE LEARNING COMPANY, INC.
By __________________________________
Name:
Title:
Attest:
_____________________________________
MATTEL, INC.
By __________________________________
Name:
Title:
Attest:
_____________________________________
STATE STREET BANK AND
TRUST COMPANY,
as Trustee
By __________________________________
Name:
Title:
Attest:
_____________________________________
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF LEE B. ESSNER]
, 1999
Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245-5012
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
Reference is made to the registration statement on Form S-3 (the
"Registration Statement") being filed by Mattel, Inc., a Delaware corporation
(the "Company"), with the Securities and Exchange Commission for the purpose of
registering under the Securities Act of 1933, as amended (the "Securities
Act"), securities of the Company to be issued or reserved for issuance in
connection with (i) the exchange by holders of Exchangeable Non-Voting Shares
of Softkey Software Products Inc. (the "Exchangeable Shares") into shares of
common stock, $1.00 par value per share, of the Company (the "Common Stock"),
and (ii) the conversion by holders of 5 1/2% Senior Convertible Notes due 2000
of the Company (the "Notes") into shares of Common Stock. The securities
covered by the Registration Statement are (i) up to 10,734,400 shares of the
Common Stock issuable in connection with the exchange of the Exchangeable
Shares or conversion of the Notes and (ii) the preference share purchase rights
of the Company (the "Rights") issuable together with such shares of Common
Stock. The shares of Common Stock covered by the Registration Statement are
sometimes referred to herein as the "Shares."
I have examined originals or copies, certified or otherwise identified to my
satisfaction, of such corporate records, certificates of public officials, and
other documents as I have deemed necessary or relevant as a basis for my
opinion set forth herein.
Based on and subject to the foregoing and subject further to the assumptions
set forth below, I am of the opinion that (i) when the Shares have been issued
in the manner contemplated by the Registration Statement such Shares will be
validly issued, fully paid, and non-assessable and (ii) when the Rights
issuable together with the Shares have been issued in accordance with the
Rights Agreement dated February 7, 1992 between the Company and the First
National Bank of Boston, as Rights Agent (the "Rights Agreement"), such Rights
will be validly issued and will be binding obligations of the Company entitled
to the benefits of the Rights Agreement.
I express no opinion other than on the laws of the State of California and
General Corporation Law of the State of Delaware (including applicable case
law).
<PAGE>
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to me under the caption "Legal Matters" in the
Registration Statement. In giving this consent, I do not thereby admit that I
am in the category of persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
Lee B. Essner
Assistant General Counsel
and Assistant Secretary
<PAGE>
EXHIBIT 8.1
[LETTERHEAD OF LATHAM & WATKINS]
, 1999
Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as tax counsel to Mattel, Inc., a Delaware corporation (the
"Company"), in connection with its issuance of up to 10,734,400 shares of $1.00
par value common stock of the Company pursuant to the registration statement
filed with the Securities and Exchange Commission (the "Commission") on Form S-
3 on , 1999, (file No. 333-73177), as amended (together with all
exhibits thereto and documents incorporated by reference therein, the
"Registration Statement"). You have requested our opinion concerning the
material federal income tax consequences to certain persons acquiring the
securities described above in connection with the Registration Statement.
In formulating our opinion, we have examined such documents, corporate
records, or other instruments as we deemed necessary or appropriate, including
(1) the Registration Statement, (2) the Articles of Arrangement with respect to
the exchangeable shares, (3) the Voting and Exchange Trust Agreement and the
Voting and Exchange Trust Supplement with respect to the exchangeable shares,
(4) the indenture and the other documents and agreements relating to the notes,
and such other documents, corporate records, and instruments as we have deemed
necessary or appropriate for purposes of this opinion. In addition, we have
obtained such additional information as we deemed relevant and necessary
through consultation with various officers and representatives of the Company.
We have made such further legal and factual examinations and inquiries as we
deemed necessary or appropriate for purposes of this opinion. We have not made
an independent investigation or audit of the facts contained in the above
referenced documents or otherwise discovered through our consultation with
officers and representatives of the Company.
In our examination, we have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures thereon, the
legal capacity of natural persons executing such documents and the conformity
to authentic original documents of all documents submitted to us as copies. Our
opinion set forth below further assumes (1) the accuracy of (a) the statements
and facts set forth in the Registration Statement and in the other documents
examined by us, and (b) the statements made to us by the officers and
representatives of the Company, in connection with formulating our opinion, (2)
the consummation of the exchange of exchangeable shares in the manner
contemplated by, and in accordance with the terms set forth in, the Articles of
Arrangement, the Voting and Exchange Trust Agreement, the Voting and Exchange
Trust Supplement, and the
<PAGE>
Mattel, Inc.
, 1999
Page 2
Registration Statement, and (3) the consummation of the conversion of notes in
the manner contemplated by, and in accordance with the terms set forth in, the
indenture and the other documents and agreements relating to the notes, and the
Registration Statement.
We are opining herein as to the effect on the subject transaction only of the
federal income tax laws of the United States and we express no opinion with
respect to the applicability thereto, or the effect thereon, of other federal
laws, the laws of any state or other jurisdiction or as to any matters of
municipal law or the laws of any other local agencies within any state.
Based on such facts, assumptions and representations, it is our opinion that
the information set forth in the Registration Statement under the caption
"Income Tax Considerations Regarding Our Common Stock, the Exchange of
Exchangeable Shares and the Conversion of Notes--United States federal tax
considerations" describes, subject to the limitations set forth therein, the
material federal income tax considerations relevant to the acquisition of the
Company's common stock pursuant to the Registration Statement.
No opinion is expressed as to any matter not discussed herein.
This opinion is based on various statutory provisions of the Internal Revenue
Code of 1986, as amended, regulations promulgated thereunder and
interpretations thereof by the Internal Revenue Service and the courts having
jurisdiction over such matters, all of which are subject to change either
prospectively or retroactively. Also, any variation or difference in the facts
from those set forth in the Registration Statement may affect the conclusions
stated herein. This opinion is rendered to you as of the date of this letter,
and we undertake no obligation to update this opinion after the effectiveness
of the Registration Statement.
Except as provided below, this opinion is rendered only to you, and is for
your use in connection with the issuance of common stock by the Company
pursuant to the Registration Statement. This opinion may not be relied upon by
you for any other purpose, or furnished to, quoted to, or relied upon by any
other person, firm or corporation, for any purpose, without our prior written
consent, except that this opinion may be relied upon by the investors who
acquire common stock of the Company pursuant to the Registration Statement. We
hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of our name under the captions "Income Tax
Considerations Regarding Our Common Stock, the Exchange of Exchangeable Shares
and the Conversion of Notes--United States federal tax considerations" and
"Legal Matters" in the Registration Statement. In giving this consent, we do
not hereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules or
regulations of the Commission promulgated thereunder.
Very truly yours,
<PAGE>
EXHIBIT 8.2
[LETTERHEAD OF OSLER, HOSKIN & HARCOURT]
, 1999
Mattel, Inc.
333 Continental Boulevard
El Segundo CA 90245
Ladies and Gentlemen:
Re: Registration Statement on Form S-3
We have acted as Canadian tax counsel to Mattel, Inc., a Delaware corporation
(the "Company"), in connection with its issuance of up to 10,734,440 shares of
$1.00 par value common stock of the Company pursuant to the registration
statement filed with the Securities and Exchange Commission (the "Commission")
on Form S-3 on , 1999, (file No. 333-73177), as amended (together
with all exhibits thereto and documents incorporated by reference therein, the
"Registration Statement"). You have requested our opinion concerning the
material Canadian federal income tax consequences to certain persons acquiring
the securities described above upon the exchange of exchangeable shares as
contemplated in the Registration Statement.
In formulating our opinion, we have examined such documents, corporate records,
or other instruments as we deemed necessary or appropriate, including (1) the
Registration Statement, (2) the Articles of Arrangement with respect to the
exchangeable shares and (3) the Voting and Exchange Trust Agreement and the
Voting and Exchange Trust Supplement with respect to the exchangeable shares,
and such other documents, corporate records, and instruments as we have deemed
necessary or appropriate for purposes of this opinion. We have made such
further legal examinations and inquiries as we deemed necessary or appropriate
for purposes of this opinion. We have not made an independent investigation or
audit of the facts contained in the above referenced documents.
In our examination, we have assumed the authenticity of all documents submitted
to us as originals, the genuineness of all signatures thereon, the legal
capacity of natural persons executing such documents and the conformity to
authentic original documents of all documents submitted to us as copies. Our
opinion set forth below further assumes (1) the accuracy of the statements and
facts set forth in the Registration Statement and in the other documents
examined by us, in connection with formulating our opinion and (2) the
consummation of the exchange of exchangeable shares in the manner contemplated
by, and in accordance with the terms set forth in, the Articles of Arrangement,
the Voting and Exchange Trust Agreement, the Voting and Exchange Trust
Supplement, and the Registration Statement.
We are opining herein as to the effect on the subject transaction only of the
federal income tax laws of Canada and we express no opinion with respect to the
applicability thereto, or the effect thereon, of any provincial, territorial or
foreign tax legislation.
<PAGE>
Based on such facts, assumptions and representations, it is our opinion that
the information set forth in the Registration Statement under the caption
"Income Tax Considerations Regarding Our Common Stock, the Exchangeable Shares
and the Conversion of Notes--Canadian federal income tax considerations"
describes, subject to the limitations set forth therein, the material Canadian
federal income tax considerations relevant to the acquisition of the Company's
common stock upon the exchange of exchangeable shares as contemplated in the
Registration Statement.
No opinion is expressed as to any matter not discussed herein.
This opinion is based on the current provisions of the Canadian Tax Act, the
regulations thereunder and our understanding of the current administrative
practices of Revenue Canada, Customs, Excise and Taxation. The opinion also
takes into account the proposed amendments to the Canadian Tax Act and the
regulations thereunder publicly announced by the Minister of Finance prior to
the date of this opinion and assumes that all such proposed amendments will be
enacted in their present form. However, we cannot assure you that the proposed
amendments will be enacted in the form proposed, or at all. Except for the
foregoing, this opinion does not take into account or anticipate any changes in
law, whether by legislative, administrative or judicial decision or action.
Also, any variation or difference in the facts from those set forth in the
Registration Statement may affect the conclusions stated herein. This opinion
is rendered to you as of the date of this letter, and we undertake no
obligation to update this opinion after the effectiveness of the Registration
Statement.
Except as provided below, this opinion is rendered only to you, and is for your
use in connection with the issuance of common stock by the Company pursuant to
the Registration Statement. This opinion may not be relied upon by you for any
other purpose, or furnished to, quoted to, or relied upon by any other person,
firm or corporation, for any purpose, without our prior written consent, except
that this opinion may be relied upon by the investors who acquire common stock
of the Company pursuant to the Registration Statement. We hereby consent to the
filing of this opinion as an exhibit to the Registration Statement and to the
use of our name under the caption "Income Tax Considerations Regarding Our
Common Stock, the Exchangeable Shares and the Conversion of Notes--Canadian
federal income tax considerations" in the Registration Statement. In giving
this consent, we do not hereby admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules or regulations of the Commission promulgated thereunder.
Very truly yours,
-2-
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Mattel, Inc. of
our report dated February 1, 1999, which appears on page 52 of the 1998 Annual
Report to Shareholders, which is incorporated by reference in its Annual Report
on Form 10-K for the year ended December 31, 1998. We also consent to the
incorporation by reference of our report on the Financial Statement Schedule,
which appears in such Annual Report on Form 10-K. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Los Angeles, California
April 28, 1999
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of Mattel, Inc. of our reports dated February 4, 1997
(except for note 15, as to which the date is March 27, 1997) relating to the
consolidated financial statements of Tyco Toys, Inc. and subsidiaries, not
presented separately herein, appearing in Mattel, Inc.'s Current Reports on
Form 8-K dated July 30, 1997 and April 17, 1997. We also consent to the
reference to our firm under the caption "Experts".
DELOITTE AND TOUCHE LLP
/s/ DELOITTE AND TOUCHE LLP
Philadelphia, Pennsylvania
February 25, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in Amendment No. 1 to the
registration statement of Mattel, Inc. on Form S-3 of our report dated March
26, 1999 relating to the financial statements and financial statement schedule,
which appears in The Learning Company, Inc.'s Annual Report on Form 10-K for
the fiscal year ended January 2, 1999. We also consent to the reference to our
firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 28, 1999
