Mattel 2001 Annual Report Download - page 73

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•Improve supply chain performance and economics;
•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.
In April 2001, as part of the financial realignment plan, Mattel announced the closure of its Murray,
Kentucky manufacturing facility (the ‘‘North American Strategy’’). Production from this facility will be
consolidated into other Mattel-owned and operated facilities in North America with the final shutdown of
Murray operations occurring in 2002. This action is one of the realignment measures taken to lower costs.
Mattel believes this action was necessary in order to maintain a competitive cost structure in today’s global
marketplace.
In 2000, Mattel recorded a $22.9 million pre-tax restructuring charge as part of the initial phase of the
financial realignment plan. This charge, combined with a $7.0 million adjustment to the 1999 restructuring
plan, resulted in $15.9 million of net pre-tax restructuring and other charges in 2000. The $22.9 million charge
related to the elimination of positions at headquarters locations in El Segundo, Fisher-Price and Pleasant
Company, closure of certain international offices, and consolidation of facilities. During 2001, Mattel recorded
a $15.7 million pre-tax restructuring charge as part of the financial realignment plan, largely related to the
North American Strategy. Total worldwide headcount reduction as a result of the restructuring is planned to be
approximately 1,700 employees, of which approximately 1,100 are related to the North American Strategy.
From inception through December 31, 2001, a total of approximately $19 million has been incurred related to
the termination of nearly 980 employees, of which approximately 640 were terminated during 2001.
The components of the restructuring charges are as follows (in millions):
2000
Charges
Amounts
Incurred
Balance
Dec. 31,
2000
2001
Charges
Amounts
Incurred
Balance
Dec. 31,
2001
Severance and other compensation .............. $19 $(3) $16 $ 9 $(16) $ 9
Asset writedowns ........................... 2 (2) —
Lease termination costs ....................... 1 — 1 2 (1) 2
Other .................................... 1 — 1 5 (5) 1
Total restructuring charge ................. $23 $(5) $18 $16 $(22) $12
1999 Restructuring and Other Charges
During 1999, Mattel initiated a restructuring plan for its continuing operations and incurred certain other
nonrecurring charges totaling $281.1 million, approximately $218 million after-tax. The 1999 restructuring plan
was aimed at leveraging global resources in the areas of manufacturing, marketing and distribution, eliminating
duplicative functions worldwide and achieving improved operating efficiencies. As of December 31, 2000, the
restructuring activities provided for by this charge were complete and substantially all amounts previously
accrued had been paid as of December 31, 2001.
Other charges incurred in 1999 principally related to the 1998 recall of Mattel’s Power Wheelsvehicles
and environmental remediation costs related to a former manufacturing facility on a leased property in
Beaverton, Oregon. The liability remaining related to these charges was approximately $22 million and $24
million at December 31, 2001 and 2000, respectively.
Note 10—Segment Information
The tables below present information about segment revenues, operating profit and assets. Mattel’s
reportable segments are separately managed business units and are divided on a geographic basis between
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