Mattel 2005 Annual Report Download - page 92

and cash flows. During the duration of the plan, Mattel recorded a total pre-tax charge of $250.0 million, or
approximately $171 million after-tax, of which approximately $123 million represented cash expenditures and
$48 million represented non-cash asset write-downs.
Charges relating to the financial realignment plan were recorded in the following captions in the
consolidated statements of operations (in millions):
For the Year
2003
Gross profit ...................................................................... $ 4.1
Other selling and administrative expenses .............................................. 8.6
Restructuring and other charges ...................................................... 12.7
Other non-operating (income) expense, net ............................................. 0.9
Pre-tax charges ............................................................... $ 26.3
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 (now Mattel Girls & Boys Brands
US). Costs associated with this reorganization included the elimination of approximately 5% of executive-level
positions, including the position of president of the Girls division. Also in 2003, Mattel substantially completed the
consolidation of two of its manufacturing facilities in Mexico to streamline manufacturing within North America.
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 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. Also in 2002, Mattel completed the closure of its
manufacturing and distribution facilities in Murray, Kentucky, as part of the North American Strategy.
Mattel recorded pre-tax restructuring charges of $12.7 million during 2003, of which no amounts remain
unpaid as of December 31, 2005. These charges were largely related to the elimination of positions at its
US-based headquarters locations in El Segundo, Fisher-Price and American Girl, costs associated with the North
American Strategy, closure of certain international offices, and consolidation of facilities. From the inception of
the plan through 2003, Mattel terminated the employment of approximately 2,570 employees.
The components of the restructuring charge and reconciliation of the liability are as follows (in millions):
Severance and
Other
Compensation
Lease
Termination
Costs Other
Total
Restructuring
Charge
Balance at December 31, 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 December 31, 2003 ..................... 0.6 0.4 0.1 1.1
Amounts incurred ........................... (0.5) (0.4) (0.1) (1.0)
Balance at December 31, 2004 ..................... 0.1 — — 0.1
Amounts incurred ........................... (0.1) — — (0.1)
Balance at December 31, 2005 ..................... $ — $ — $ — $ —
In 2003, Mattel recorded a net restructuring charge totaling $4.8 million in the consolidated statement of
operations, representing $12.7 million of restructuring charges related to the financial realignment plan that were
partially offset by a $7.9 million adjustment to a reserve accrued in 1999 associated with the closure of a
manufacturing facility in Beaverton, Oregon.
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