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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 2, 1999.
Commission file number : 1-12375
The Learning Company, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 94-2562108
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(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
One Athenaeum Street
Cambridge, Massachusetts 02142
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 494-1200
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on which Registered
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Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
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The aggregate market value of voting stock of the registrant held by
non-affiliates of the registrant as of March 12, 1999 was approximately
$2,191,482,673. As of March 12, 1999, 84,498,299 shares of the registrant's
common stock were outstanding.
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Table of Contents
PART IV
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14. Exhibits, Financial Statement Schedules and Reports on Form 8-K......4
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The undersigned registrant hereby amends in its entirety Part IV of
its Annual Report on Form 10-K for the year ended January 2, 1999.
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PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report
(1) FINANCIAL STATEMENTS
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Consolidated Financial Statements:
Report of Independent Accountants 35
Consolidated Balance Sheets as of December 31, 36
1998 and 1997
Consolidated Statements of Operations for the 37
Years Ended December 31, 1998, 1997 and 1996
Consolidated Statements of Stockholders' Equity 38
for the Years Ended December 31, 1998, 1997
and 1996
Consolidated Statements of Cash Flows for the Years 40
Ended December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements 42
Financial Statement Schedule of Valuation and 61
Qualifying Accounts for the Years Ended
December 31, 1998, 1997 and 1996
(2) FINANCIAL STATEMENT SCHEDULE
Consolidated Supplementary Financial Schedule:
Schedule II - Valuation and Qualifying Accounts
(3) EXHIBITS
See the Exhibit Index attached to this Annual Report.
(b) Reports on Form 8-K
On each of November 4 and November 10, 1998, the Company filed an amendment to
its Current Report on Form 8-K dated August 31, 1998 reporting the completion of
the Company's acquisition of Broderbund. On December 16, 1998, the Company filed
a Current Report on Form 8-K reporting the signing of a definitive agreement for
the merger of the Company into Mattel.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
THE LEARNING COMPANY, INC.
By: /s/ R. SCOTT MURRAY
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R. Scott Murray
Executive Vice President and
Chief Financial Officer
(principal financial and
accounting officer)
Date: April 19, 1999
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EXHIBIT INDEX
Exhibit #
Number Description
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2.1 Agreement and Plan of Merger dated as of December 13, 1998
between the Company and Mattel(1)
2.2 Stock Option Agreement dated as of December 13, 1998 between
the Company and Mattel(1)
3.1 Restated Certificate of Incorporation, as amended(2)
3.2 Certificate of Designation of Series A Convertible
Participating Preferred Stock Setting Forth the Powers,
Preferences, Rights, Qualifications, Limitations and
Restrictions of such Series of Preferred Stock(3)
3.3 Bylaws of the Company, as amended(4)
4.1 Indenture dated as of October 16, 1995 between the Company and
State Street Bank and Trust Company, as Trustee, for 5 1/2%
Senior Convertible Notes due 2000 (the "Indenture")(5)
4.2 First Supplemental Indenture to the Indenture, dated as of
November 22, 1995, by and between the Company and State Street
Bank and Trust Company, as Trustee(6)
4.3 Note Resale Registration Rights Agreement dated as of October
23, 1995 by and between the Company, on the one hand, and the
Initial Purchasers set forth therein, on the other hand (the
"Registration Rights Agreement")(6)
4.4 Letter Agreement dated November 22, 1995 amending the
Registration Rights Agreement(6)
4.5 Form of Securities Resale Registration Rights Agreement by and
among the Company and Tribune Company(7)
4.6 Voting and Exchange Trust Agreement dated as of February 4,
1994 among the Company and SoftKey Software Products Inc. and
R-M Trust Company, as Trustee(8)
4.7 Plan of Arrangement of SoftKey Software Products Inc. under
Section 182 of the Business Corporations Act (Ontario)(8)
4.8 Special Warrant Indenture dated March 12, 1998 between SoftKey
Software Products Inc. and CIBC Mellon Trust Company(9)
4.9 Registration Rights Agreement dated as of August 26, 1997
among the Company and Thomas H. Lee Company, Thomas H. Lee
Equity Fund III, L.P., Thomas H. Lee Foreign Fund III, L.P.,
Bain Capital Fund V, L.P., Bain Capital V-B. L.P., BCIP
Associates, L.P., BCIP Trust Associates, L.P., Centre Capital
Investors II, L.P., Centre Capital Tax-Exempt Investors II,
L.P., Centre Capital Offshore Investors II, L.P., State Board
of Administration of Florida, Centre Parallel Management
Partners, L.P. and Centre Partners Coinvestment, L.P. (4)
10.1 Employment Agreement dated as of April 9, 1997 between the
Company and Michael Perik(10)*
10.2 Letter Agreement dated November 4, 1998 amending the
Employment Agreement dated as of April 9, 1997 between the
Company and Michael Perik(17)*
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10.3 Amended and Restated Employment Agreement dated as of
December 13, 1998 between the Company and Michael Perik(17)*
10.4 Employment Agreement dated as of April 9, 1997 between the
Company and Kevin O'Leary(10)*
10.5 Letter Agreement dated November 4, 1998 amending the
Employment Agreement dated as of April 9, 1997 between the
Company and Kevin O'Leary(17)*
10.6 Amended and Restated Employment Agreement dated as of
December 13, 1998 between the Company and Kevin O'Leary(17)*
10.7 Employment Agreement dated as of May 22, 1997 and between the
Company and R. Scott Murray(11)*
10.8 Letter Agreement dated November 4, 1998 amending the
Employment Agreement dated as of May 22, 1997 between the
Company and Scott Murray(17)*
10.9 Employment Agreement dated October 5, 1998 between the Company
and David E. Patrick(17)*
10.10 Employment Agreement dated as of December 13, 1995, as
amended, between Mindscape, Inc. and John Moore(17)*
10.11 Employment Agreement dated as of October 5, 1998 between the
Company and Gregory L. Bestick(17)*
10.12 Employment Agreement dated February 6, 1997 between the
Company and Neal S. Winneg(4)*
10.13 Amendment No. 1 dated October 5, 1998 to Employment Agreement
dated February 6, 1997 between the Company and
Neal S. Winneg(17)*
10.14 Agreement dated as of September 22, 1998 between the Company
and Robert Gagnon(17)*
10.15 Restricted Stock Agreement dated January 30, 1998 between the
Company and Michael J. Perik(9)*
10.16 Restricted Stock Agreement dated January 30, 1998 between the
Company and Kevin O'Leary(9)*
10.17 Amended and Restated Credit Agreement dated as of May 6, 1998
among Fleet National Bank, as agent, Goldman Sachs Credit
Partners L.P., as syndication agent, the lenders named
therein, TLC Multimedia Inc., Learning Company Properties
Inc., TEC Direct, Inc., Learning Services, Inc., Skills Bank
Corporation, Microsystems Software, Inc. and Mindscape, Inc.
(the "Credit Agreement")(2)
10.18 First Amendment to the Credit Agreement dated as of July 1,
1998(2)
10.19 Second Amendment to the Credit Agreement dated as of July 24,
1998(2)
10.20 Third Amendment to the Credit Agreement dated as of August 7,
1998(13)
10.21 Fourth Amendment to the Credit Agreement dated as of December
1, 1998(17)
10.22 Receivables Purchase Agreement dated as of June 30, 1997 among
The Learning Company Funding, Inc. ("Funding"), Lexington
Partner Capital Company ("Lexington"), Fleet National Bank
("Fleet"), TLC Multimedia Inc. and the Company ( the
"Receivables Purchase Agreement")(11)
10.23 Receivables Sales Agreement dated as of June 30, 1997 between
TLC Multimedia Inc. and Funding(11)
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10.24 Capital Contribution Agreement dated as of June 30, 1997 by
and among TLC Multimedia Inc., Funding and the Company(11)
10.25 First Amendment dated as of May 6, 1998 to the Receivables
Purchase Agreement(2)
10.26 Second Amendment dated as of August 7, 1998 to the Receivables
Purchase Agreement(13)
10.27 Sublease Agreement dated as of January 5, 1995 between Mellon
Financial Services Corporation #1 and SoftKey Inc.(14)
10.28 Continuing Guaranty of Lease dated as of January 5, 1995 by
the Company in favor of Mellon Financial Services Corporation
#1(14)
10.29 1994 Non-Employee Director Stock Option Plan, as amended and
restated effective February 5, 1996(15)*
10.30 Form of Stock Option Agreement under 1994 Non-Employee
Director Stock Option Plan(15)*
10.31 Long-Term Equity Incentive Plan, restated as of August 31,
1998(13)*
10.32 Form of Stock Option Agreement under 1990 Long Term Equity
Incentive Plan(15)*
10.33 1996 Stock Option Plan, restated as of March 5, 1998(2)*
10.34 Form of Stock Option Agreement under 1996 Stock Option
Plan(15)*
10.35 1996 Non-Employee Director Stock Option Plan(3)*
10.36 Form of Stock Option Agreement under 1996 Non-Employee
Director Stock Option Plan(4)*
10.37 1997 Employee Stock Purchase Plan(3)*
10.38 Form of Standstill Agreement between the Company and Tribune
Company(7)
10.39 Securities Purchase Agreement dated as of August 26, 1997
among the Company and Thomas H. Lee Company, Thomas H. Lee
Equity Fund III, L.P. and Thomas H. Lee Foreign Fund III,
L.P.(16)
10.40 Securities Purchase Agreement dated as of August 26, 1997
among the Company and Bain Capital Fund V, L.P., Bain Capital
V-B. L.P., BCIP Associates, L.P. and BCIP Trust Associates,
L.P.(16)
10.41 Securities Purchase Agreement dated as of August 26, 1997
among the Company and Centre Capital Investors II, L.P.,
Centre Capital Tax-Exempt Investors II, L.P., Centre Capital
Offshore Investors II, L.P. State Board of Administration of
Florida, Centre Parallel Management Partners, L.P. and Centre
Partners Coinvestment, L.P.(16)
21.1 Subsidiaries of the Company(17)
23.1 Consent of PricewaterhouseCoopers LLP
27.1 Financial Data Schedule(17)
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# The Company will furnish a copy of any exhibit upon the payment of a
specified reasonable fee.
* Denotes management contract or compensatory plan or arrangement.
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1 Incorporated by reference to exhibits filed with the Company's Current
Report on Form 8-K dated December 13, 1998.
2 Incorporated by reference to exhibits filed with the Company's Quarterly
Report on Form 10-Q for the quarterly period ended July 4, 1998.
3 Incorporated by reference to exhibits filed with the Company's Definitive
Proxy Statement filed October 24, 1997.
4 Incorporated by reference to exhibits filed with the Company's Annual
Report on Form 10-K for the year ended January 3, 1998.
5 Incorporated by reference to exhibits filed with the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 1995.
6 Incorporated by reference to exhibits filed with the Company's
Registration Statement on Form S-3 (Reg . No. 333-145) filed January 26,
1996.
7 Filed as exhibits to the Agreement and Plan of Merger dated November 30,
1995 by and among the Company, Cubsco I, Inc., Cubsco II, Inc., Tribune
Company, Compton's NewMedia, Inc. and Compton's Learning Company,
incorporated by reference to exhibits filed with the Company's Current
Report on Form 8-K dated December 11, 1995.
8 Incorporated by reference to exhibits filed with the Company's
Registration Statement on Form S-3 (Reg . No. 333-40549) filed December 3,
1997.
9 Incorporated by reference to exhibits filed with the Company's Quarterly
Report on Form 10-Q for the quarterly period ended April 4, 1998.
10 Incorporated by reference to exhibits filed with the Company's Quarterly
Report on Form 10-Q for the quarterly period ended April 5, 1997.
11 Incorporated by reference to exhibits filed with the Company's Quarterly
Report on Form 10-Q for the quarterly period ended July 5, 1997.
13 Incorporated by reference to exhibits filed with the Company's Quarterly
Report on Form 10-Q for the quarterly period ended October 3, 1998.
14 Incorporated by reference to exhibits filed with the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
15 Incorporated by reference to exhibits filed with the Company's Annual
Report on Form 10-K for the year ended January 6, 1996.
16 Incorporated by reference to exhibits filed with the Company's Current
Report on Form 8-K dated August 26, 1997.
17 Incorporated by reference to exhibits filed with the Company's Annual
Report on Form 10-K for the year ended January 2, 1999.
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Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
of The Learning Company, Inc. (formerly known as SoftKey International, Inc.)
on Form S-3 (File Nos. 33-73422, 33-63073, 333-00145, 333-02385, 333-03271,
333-10009, 333-40543, 333-40549, 333-48009, 333-50915, 333-56641, 333-57397,
333-62171) and Form S-8 (File Nos. 33-75134, 33-92920, 33-92922, 33-61931,
333-00107, 333-02337, 333-04619, 333-40539, 333-42449, 333-43653, 333-45113,
333-45115, 333-57335, 333-59123, 333-67045, 333-67047, 333-70705), in the
Definitive Proxy Statement on Schedule 14A of The Learning Company, Inc.
filed on March 26, 1999, and in the Prospectus constituting part of the
Registration Statement of Mattel, Inc. on Form S-4 (File No. 333-71587) of our
report dated March 26, 1999 on our audits of the consolidated balance sheets
and financial statement schedule of valuation and qualifying accounts of The
Learning Company, Inc. as of January 2, 1999 and January 3, 1998 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended January 2, 1999, which
report is included in this Annual Report on Form 10-K/A.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 20, 1999
