Please read this case and help me Develop a simple plan of reorganization.

| Homework Help - Q&A from On x ( Topic: Week 2 Discussion 2: Toys X G A Casebook on Corporate Renew X + X C 8 https://www.google.com/books/edition/_/ObVqDwAAQBAJ?hl=en&gbpv=18pg=PR3&printsec=frontcover Sign in b Google Books Page 21 Search in this book Q X A Casebo Developing a Plan of Reorganization + By Harlan D. Platt, Ma 5. Toys and More, Inc. Preview Overview Get Lester Vorkman and his wife, Julie, had founded Toys and More, Inc. (TAMI), in 1987. Their concept of high-quality educational toys About this edition quickly found a receptive audience among the burgeoning number of dual-income families with too little time to spend with their chil- dren. From 1 store in 1987 they expanded to 3 in 1989 and 7 in 1991. ISBN: 978047 A public offering in 1992 raised nearly $120 million, which Lester er 4, 2004 Published: April 1 and Julie soon leveraged with $200 million in a junk bond paying 12 percent interest. By 1999 the chain had 114 company stores, an In- orie B. Platt Publisher: Univers ternet web site, and a toy-software research division. That year Author: Harlan Lester and Julie turned the management of the enterprise over to a professional team because they had decided it was time to spend Editors: Harlan more time with their grandchildren. Kathy Berkstone, the new CEO, had merchandising experience with a consumer products company and finance experience with an 19 Create Citation investment bank, and she was the mother of three children. Neither Kathy nor, for that matter, anyone else was prepared for the dramatic downturn in TAMI's business starting in 2000 (see tables 1 and 2). The A Casebook on Corporat initial pressure came from Wal-Mart stores, which that year began a inance in the College of turnaround management big push for toy sales. That was followed in 2001 by devastating ter- ortheastern University. surged in the past decad rorist acts that sent the economy into a tailspin. Finally, the bursting needed by successful tu of the Internet bubble in 2001 and 2002 both diminished TAMI's sales reorganization; and defin on the Web (see table 3) and also reduced the value of the Internet issues. business. Making things still worse, the computer software division, which had not had a successful new product in eighteen months, was The cases challenge stu corporate renewal is pra second edition of Princi This case was prepared by Harlan D. Platt. used with other manager Source: Publisher 21 Get book 48 F 8:10 PM Mostly cloudy Search 5/2/2023 1| Homework Help - Q&A from On x ( Topic: Week 2 Discussion 2: Toys X G A Casebook on Corporate Renew X + X C 8 https://www.google.com/books/edition/_/ObVqDWAAQBAJ?hl=en&gbpv=1&pg=PR3&printsec=frontcover Sign in b Google Books Page 22 Search in this book Q Q X 22 Ethical and Legal Issues A Casebo experiencing an internal revolt among its developers and was in dis- + By Harlan D. Platt, Ma array. TAMI filed for bankruptcy protection in January 2004. A team of turnaround consultants came in immediately. Janie Goodney, one of the consultants, replaced Kathy Berkstone as CEO. She immediately Preview TABLE 1. Toys and More, Inc., Income Statements 2000-2003 ($ millions) 2003 2002 2001 2000 Overview Get Revenue 750.00 810.00 834.30 942.76 Cost of goods sold 525.75 566.27 579.00 650.50 Gross profit 224.25 243.73 255.30 292.26 Selling, general, and administrative expenses 215.00 230.00 236.00 254.26 R&D 1.00 1.30 1.60 2.00 About this edition Nonrecurring expense 33.0 Operating income -24.75 12.43 17.70 35.99 Interest 24.60 25.88 26.20 26.32 ISBN: 97804 Taxes -19.74 -5.38 -3,40 3.87 er 4, 2004 Published: April 1 Net income 29.61 -8.07 -5,10 5.80 orie B. Platt Publisher: Univers Author: Harlan TABLE 2. Toys and More, Inc., Balance Sheet ($ millions) 2003 2002 2001 2000 Editors: Harlan Assets Cash 101.30 78.57 77.90 90.98 19 Create Citation Receivables 34.25 59.79 52.09 19-80 Inventory 172.50 198.00 190.22 216.83 Total current 308.05 336.36 320.2 327.61 A Casebook on Corporat Net property, plant and equipment 48.75 389.00 421.00 438.38 inance in the College of turnaround management Goodwill 24.00 25.5 27.00 28.50 ortheastern University. surged in the past decad Total assets 680.80 750.86 768.21 794.49 needed by successful tu reorganization; and defin Liabilities and owners' equity issues. Payables 160.66 162.65 167.53 189.31 Bank debt 15.0 47.00 55.0 58.0 The cases challenge stu Total current 175.66 209.65 222.53 247.31 corporate renewal is pra Long term debt 200.00 200.00 200.00 200.00 second edition of Princi Total liabilities 375.66 409.65 422.53 447.31 used with other manager Owners' equity 305.14 341.21 45.68 347.18 Source: Publisher Total liabilities + owners' equity 680.80 750.86 768.21 794.49 Get book 48 F 8:10 PM Mostly cloudy Search 5/2/2023 1| Homework Help - Q&A from On x () Topic: Week 2 Discussion 2: Toys X G A Casebook on Corporate Renew X + X C 8 https://www.google.com/books/edition/_/ObVqDWAAQBAJ?hl=en&gbpv=18pg=PR3&printsec=frontcover Sign in b Google Books Page 23 Search in this book Q X Toys and More, Inc. 23 A Casebo performed a four-wall analysis on the 114 stores to find out which By Harlan D. Platt, Ma ones were profitable on an independent store basis (i.e., ignoring + overhead charges). Following this, the bankruptcy court approved her request to shut 16 stores. Leases on these stores were rejected. TAMI assumed the leases on the remaining stores, though before doing so Janie's team successfully renegotiated their terms and con- Preview ditions. For the stores that remained, lease related costs declined by 13 percent. The turnaround team also systematically analyzed the firm's operations, focusing mainly on the distribution, ordering, and Overview Get back-office functions. A variety of functions were outsourced while others were made more efficient. Janie's assessment of the Internet site was pessimistic. Her re- search uncovered the fact that parents buying expensive educational About this edition toys wanted to pick up and feel the items, making them unlikely web consumers. Lester and Julie, who remained on the company's board ISBN: 978047 of directors and who held nineteen percent of its common stock, dis- er 4, 2004 puted her findings. They argued that the site had been profitable and Published: April 1 should be profitable in the future if only the company stocked it with orie B. Platt Publisher: Univers unique and worthy toys. Opposing comments came from the banks whose loans were secured by TAMI's inventories, accounts receiv- Author: Harlan ables, goodwill, and intellectual property. The bank insisted that the Editors: Harlan Internet division be shut. Certain creditors, on the other hand, were pushing Janie to liquidate the entire firm. Reluctantly, Janie sided with the creditors and closed down the web site one Friday near clos- 19 Create Citation ing time. While this action did not improve Janie's standing with re- maining employees it seems to assure support among creditors for the plan of reorganization that Janie was in the process of crafting. Fi- A Casebook on Corporat nally, she agreed to sell the software division to employees for $1 plus inance in the College of turnaround management warrants convertible into 25 percent of its stock. Any future products ortheastern University. surged in the past decad would be shown to TAMI for a right of first refusal. needed by successful tu Janie viewed the plan of reorganization as her principal assign- reorganization; and defin ment. The steps she followed in preparing the plan were as follows. issues. TABLE 3. Toys and More, Inc., Segment Sales Record The cases challenge stu Segment Percentage Sales corporate renewal is pra 2003 2002 2001 2000 second edition of Princi used with other manager Stores 28.6 96.0 36.3 94.5 Web site 2.3 2.4 3.4 Source: Publisher Software 0.2 1.7 1.3 2.1 Get book 48 F Mostly cloudy Search 8:11 PM 5/2/2023