The Company satisfies its capital requirements and seasonal working
capital needs with cash flow primarily from borrowings and operations. The
Company's primary capital needs have consisted of funding for business
acquisitions, inventory, property, plant and equipment, customer receivables,
letters of credit, entertainment character or corporate trademark licenses and
international expansion. The Company has significantly underperformed relative
to desired milestones toward the future minimum guaranteed royalty obligation
for a particular entertainment character license. The Company is currently in
negotiations and may receive some concessions from the licensor. However, the
Company is unable to determine if the concessions, if any, would be sufficient
to prevent the Company from incurring a loss from its inability to meet the
minimum guaranteed royalties. Management is unable at this time to estimate the
range of the loss.
5. WRITE-OFF OF ACCOUNTS RECEIVABLE
During the third quarter of fiscal 1999, the Company wrote-off $3.3
million of accounts receivable related to the commencement of insolvency
proceedings by the Company's Mexico distributor. The write-off was included in
selling, general and administrative expenses.
OTHER EVENTS
On February 17, 1999, Play by Play Toys & Novelties, Inc.'s (the
"Company") announced that Raymond Braun, who joined the Company in 1997 as
Chief Financial Officer, was promoted to President and Chief Operating Officer.
Mr. Braun fills a position previously held by Mark Gawlik, who has left the
Company to pursue other interests. Mr. Gawlik is expected to resign as a member
of the Company's Board of Directors.
On July 22, 1999, Play By Play Toys & Novelties, Inc. (the "Company")
received the resignation of James F. Place from his position as a Director
of the Company.
On August 25, 1999, Play By Play Toys & Novelties, Inc. (the "Company")
received the resignation of Francisco Saez Moya from his position as President
of Play By Play Toys & Novelties Europa, S.A. and Vice Chairman of the Board of
Directors of the Company. |
