Mattel 2002 Annual Report Download - page 34

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A summary of the components of the financial realignment plan and the timeframe to complete
implementation of the plan is as follows (in millions):
Actual Charges
Projected
Charges
For the Year Ended
2000 2001 2002 2003 Total
Grossprofit............................................... $ 78.6 $28.2 $10.4 $10.0 $127.2
Advertising and promotion expenses ........................... 4.8 0.3 — — 5.1
Other selling and administrative expenses ....................... 13.4 6.0 13.3 8.9 41.6
Restructuring and other charges ............................... 22.9 15.7 24.6 7.4 70.6
Other non-operating expense, net .............................. 5.5 — — — 5.5
Pre-tax charges ............................................ $125.2 $50.2 $48.3 $26.3 $250.0
Approximate after-tax charges ................................ $ 84 $ 35 $ 32 $ 19 $ 170
The charges referred to above represent expenditures for the following major initiatives:
• Reduce excess manufacturing capacity;
• Terminate a variety of licensing and other contractual arrangements that do not deliver an adequate level
of profitability;
• Eliminate product lines that do not meet required levels of profitability;
• Improve supply chain performance and economics;
• Implement an information technology strategy aimed at achieving operating efficiencies;
• Eliminate positions at US-based headquarters locations in El Segundo, Fisher-Price and Pleasant
Company through a combination of layoffs, elimination of open requisitions, attrition and retirements;
and
• Close and consolidate certain international offices.
Future pre-tax implementation costs of $26.3 million have not been accrued as of December 31, 2002.
Management expects to record these remaining costs in 2003.
In February 2003, as part of its financial realignment plan, Mattel announced the consolidation of its US
Girls and US Boys-Entertainment segments into one segment, renamed Mattel Brands. Additionally, Pleasant
Company, which was previously part of the US Girls segment, is now a separate segment for management
reporting purposes in 2003. The creation of the Mattel Brands segment will result in the streamlining and
consolidating of redundant activities that supported the US Girls and US Boys-Entertainment businesses. Costs
associated with this reorganization include elimination of approximately 5% of executive level positions,
including the position of president of the Girls division.
In January 2002, as part of the financial realignment plan, Mattel implemented further headcount reductions
of approximately 240 positions or 7% at its US-based headquarters locations through a combination of layoffs,
elimination of open requisitions, attrition, and retirements. Additionally, in 2002, Mattel commenced a long-term
information technology strategy aimed at achieving operating efficiencies and cost savings across all disciplines.
The program is focused on simplifying Mattel’s organization by defining common global processes based on
industry best practices, streamlining its organizational structure by eliminating redundancies, and upgrading its
systems to provide greater visibility to information and data on a global basis.
In April 2001, as part of the financial realignment plan, Mattel announced the closure of its Murray,
Kentucky, manufacturing and distribution facilities as part of the North American Strategy. Production from this
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