SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March 25, 1999
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THE LEARNING COMPANY, INC.
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(Exact Name of Registrant as Specified in its Charter
Delaware
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(State or Other Jurisdiction of Incorporation)
1-12375 94-2562108
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(Commission File Number) (IRS Employer Identification No.)
One Athenaeum Street, Cambridge, Massachusetts 02142
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(Address of principal executive offices) (Zip Code)
(617) 494-1200
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Registrant's Telephone Number, Including Area Code
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
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In March 1998, The Learning Company, Inc. (the "Company") acquired
Mindscape, Inc. and certain affiliated companies ("Mindscape") for approximately
$152 million in a business combination accounted for as a purchase. The Company
allocated $103 million of the purchase price to in-process technology. The
Company believes that the amount recorded as an in-process technology charge at
the date of its acquisition was determined in a manner consistent with appraisal
practices utilized at the time of the acquisition. Subsequent to the
acquisition, in a letter dated September 9, 1998 to the American Institute of
Certified Public Accountants, the Chief Accountant of the Securities and
Exchange Commission (the "SEC") reiterated the views of the staff of the SEC
(the "Staff") on certain appraisal practices employed in the determination of
the fair value of the in-process technology and other intangible assets.
The Company has had discussions with the Staff concerning the application
of the methodology to the valuation of the incomplete technology and other
intangible assets as detailed in the September 9, 1998 letter from the Chief
Accountant, and as a result of these discussions, the Company has implemented
the methodology. The Company has restated its previously issued results to
reflect the discussions with the Staff and to apply the appropriate guidance and
policies. The purchase price of Mindscape has been allocated by the Company
based upon the application of the recent guidance and certain of the Company's
financial statements have been restated. After applying the guidance and
policy, the allocation of the Mindscape purchase price was changed for in-
process technology from $103 million to $40 million; for complete and core
technology from $13 million to $22 million; and for brands and trade names from
$30 million to $38 million, resulting in a change to goodwill from $9.85 million
to $55.85 million.
The Company is filing today with the SEC the following reports to reflect
its restatement:
1. Form 10-Q/A, Amendment No. 1 to Quarterly Report on Form 10-Q for the
quarterly period ended April 4, 1998;
2. Form 10-Q/A, Amendment No. 1 to Quarterly Report on Form 10-Q for the
quarterly period ended July 4, 1998;
3. Form 10-Q/A, Amendment No. 1 to Quarterly Report on Form 10-Q for the
quarterly period ended October 3, 1998;
4. Form 8-K/A, Amendment No. 5 to Current Report on Form 8-K, dated March
27, 1998; and
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5. Form 8-K/A, Amendment No. 3 to Current Report on Form 8-K, dated August
31, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 25, 1999 THE LEARNING COMPANY, INC.
(Registrant)
By: /s/ R. Scott Murray
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R. Scott Murray
Executive Vice President and
Chief Financial Officer