Mattel 2003 Annual Report Download - page 36

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 American Girl
through a combination of layoffs, elimination of open requisitions, attrition and retirements; and
•Close and consolidate certain international offices.
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 US. Additionally,
American Girl Brands, which was previously part of the US Girls segment, is now a separate segment for
management reporting purposes in 2003. Costs associated with this reorganization include elimination of
approximately 5% of executive-level positions, including the position of president of the Girls division.
In 2002, as part of its financial realignment plan, 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 its financial realignment plan, Mattel announced the closure of its manufacturing
and distribution facilities in Murray, Kentucky, as part of the North American Strategy. Production from this
facility has been consolidated into other Mattel-owned and -operated facilities in North America. Manufacturing
ceased at the Murray location at the end of May 2002. In 2003, Mattel substantially completed the consolidation
of two of its manufacturing facilities in Mexico to further streamline manufacturing within North America.
The components of the restructuring charges since inception of the plan are as follows (in millions):
Severance
and Other
Compensation
Asset
Writedowns
Lease
Termination
Costs Other
Total
Restructuring
Charge
2000 charges .............................. $18.5 $ 2.2 $ 1.0 $ 1.2 $ 22.9
Amounts incurred ...................... (2.8) (2.2) — (0.4) (5.4)
Balance at year end 2000 .................... 15.7 — 1.0 0.8 17.5
2001 charges .......................... 9.3 0.7 1.5 4.2 15.7
Amounts incurred ...................... (16.2) (0.7) (0.6) (4.0) (21.5)
Balance at year end 2001 .................... 8.8 — 1.9 1.0 11.7
2002 charges .......................... 19.4 — 1.2 4.0 24.6
Amounts incurred ...................... (24.3) — (1.8) (4.4) (30.5)
Balance at year end 2002 .................... 3.9 — 1.3 0.6 5.8
2003 charges .......................... 12.9 — (0.3) 0.1 12.7
Amounts incurred ...................... (16.2) — (0.6) (0.6) (17.4)
Balance at year end 2003 .................... $ 0.6 $ — $0.4 $0.1 $ 1.1
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