A severe lack of cash left Golden Books with little choice but to seek a buyer for the company, the publisher's delayed 10-k filing with the Securities & Exchange Commission shows. If the proposed asset purchase with Bain Capital (News, June 11) is not completed, Golden will look for other alternatives that could include the breakup of the company or a complete reorganization under Chapter 11. Under terms of the current purchase agreement, a meeting to establish bidding procedures is to be held shortly, and a hearing to approve the asset sale will take place 40 days after the initial meeting.
The company's operating performance in 2000 did little to improve its financial condition. Golden lost $100.2 million in the year on sales of $149 million. The loss includes a $74.6-million charge related to writing down the value of its assets; cost of sales in the year was $83.9 million and selling, general and administrative expenses were $73.7 million. The company finished 2000 with a capital deficiency of $114.5 million, compared to $4.5 million at the end of 1999, and the worth of its total assets was cut to $170.2 million from $290 million a year earlier. The gradual downsizing of Golden has reduced the number of employees to 440 from 560 at the end of 1999 and 950 at the close of 1998.
In 2000, revenues fell 5.2% in Golden's children's publishing operation to $128.8 million, due primarily to lower sales of Pokémon product that were only partially offset by higher sales of Powerpuff Girls, Scooby-Doo, Disney and Barbie products. Entertainment revenues were down 18.6%, to $20.1 million. Although Disney product accounted for 24% of total revenues in 2000, Golden terminated its agreement with the company early last year (News, Mar. 27, 2000), maintaining that it is looking to focus on more profitable product lines. Golden will continue to sell the Disney materials through January 31, 2002. Online sales through its Web site generated "minimal" revenue, the company reported. And in a note that shows how difficult things are for Golden, the company said that the group that acquired Golden's Wisconsin printing facility filed for Chapter 7 earlier this year, a move that not only caused some disruptions in delivering product, but which also wiped out $2.7 million in preferred stock held by Golden, which it had received as part of the sale price.
Despite Golden's dismal year, company chairman Dick Snyder received a bonus of $950,000, although his base salary was cut to $765,384 from $950,000 in 1999. Under his most recent contract, which expires May 8, 2003, he is entitled to a base salary of $750,000 plus a bonus of up to 200% of his salary. Bain would need to pay Snyder double his base salary as well as any bonus earned if it wants to buy out Snyder's contract.
