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Restructuring Charges

9 Months Ended

Sep. 30, 2019

Restructuring and Related Activities [Abstract]

Restructuring Charges

Restructuring Charges

Structural Simplification Cost Savings Program

During the third quarter of 2017, Mattel initiated its Structural Simplification cost savings program. The major initiatives of the Structural Simplification cost savings program include:

• Reducing manufacturing complexity, including SKU reduction, and implementing process improvement initiatives at owned and co-manufacturing facilities;

• Streamlining the organizational structure and reducing headcount expense to better align with the revenue base; and

• Optimizing advertising spend.

In connection with the Structural Simplification cost savings program, Mattel recorded severance and other restructuring charges of $3.4 million and $18.6 million during the three and nine months ended September 30, 2019, respectively, within other selling and administrative expenses in the consolidated statements of operations, which is included in corporate and other expense in "Note 23 to the Consolidated Financial Statements—Segment Information." Mattel recorded severance and other restructuring charges of $31.2 million and $103.9 million during the three and nine months ended September 30, 2018, respectively. Of the total charges recorded during the three months ended September 30, 2018, $25.5 million was recorded within other selling and administrative expenses and $5.7 million was recorded within cost of sales in the consolidated statements of operations. Of the total charges recorded during the nine months ended September 30, 2018, $98.2 million was recorded within other selling and administrative expenses and $5.7 million was recorded within cost of sales in the consolidated statements of operations.

The following table summarizes Mattel's severance and other restructuring charges activity related to the Structural Simplification cost savings program for the nine months ended September 30, 2019:

	Liability at December 31, 2018				Charges				Payments/Utilization				Liability at September 30, 2019
	(In thousands)
Severance	$	27,670			$	10,179			$	(27,174	)		$	10,675
Other restructuring charges (a)	13,722				8,383				(18,320		)		3,785
	$	41,392			$	18,562			$	(45,494	)		$	14,460

______________________________________________________________________

(a) Consists primarily of consulting fees.

To date, Mattel has recorded cumulative severance and other restructuring charges of $173.5 million and expects to incur total severance and restructuring charges of approximately $179 million related to the Structural Simplification cost savings program.

Capital Light Initiative

During the first quarter of 2019, Mattel announced the commencement of its Capital Light initiative to optimize Mattel's manufacturing footprint (including the sale or consolidation of manufacturing facilities), increase the productivity of its plant infrastructure, and achieve additional efficiencies across its entire supply chain. In connection with the Capital Light initiative, Mattel recorded severance and other restructuring charges of $16.3 million and $27.8 million during the three and nine months ended September 30, 2019, respectively. Of the total charges recorded during the three months ended September 30, 2019, $7.9 million was recorded within other selling and administrative expenses and $8.4 million was recorded within cost of sales in the consolidated statements of operations. Of the total charges recorded during the nine months ended September 30, 2019, $15.9 million was recorded within other selling and administrative expenses which is included in corporate and other expense in "Note 23 to the Consolidated Financial Statements—Segment Information" and $11.9 million was recorded within cost of sales in the consolidated statements of operations which is included in North America, International, and corporate and other expense in "Note 23 to the Consolidated Financial Statements—Segment Information.".

The following table summarizes Mattel's severance and other restructuring charges activity related to the Capital Light initiative for the nine months ended September 30, 2019:

	Liability at December 31, 2018				Charges				Payments/Utilization				Liability at September 30, 2019
	(In thousands)
Severance	$	—			$	15,879			$	(1,114	)		$	14,765
Other restructuring charges (a)	—				11,913				(6,374		)		5,539
	$	—			$	27,792			$	(7,488	)		$	20,304

______________________________________________________________________

(a) Consists primarily of plant restructuring non-cash charges and exit obligation.

To date, Mattel has recorded cumulative severance and other restructuring charges of $27.8 million. Mattel expects to incur total severance and restructuring charges, excluding non-cash charges, of approximately $34 million related to the Capital Light initiative.

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- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 420
-URI http://asc.fasb.org/topic&trid=2175745

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