Mattel 2003 Annual Report Download - page 90

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Expenditures were made for the following initiatives under the plan:
•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 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. 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 have greater
visibility to information and data on a global basis.
In 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.
In connection with the financial realignment plan, Mattel recorded $75.9 million of pre-tax restructuring
charges, of which $1.1 million was not yet paid as of year end 2003. These charges were largely related to the
elimination of positions at its US-based headquarters locations in El Segundo, Fisher-Price and American Girl,
implementation of the North American Strategy, closure of certain international offices, and consolidation of
facilities. From the inception of the plan through year end 2003, a total of $59.5 million has been incurred related
to the termination of nearly 2,570 employees, of which approximately 220 were terminated during 2003. Of the
2,570 employee terminations, approximately 1,300 related to the North American Strategy.
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