Let’s Call Her Barbie

Bill and Hold

Bill and Hold

1973

It’s late February and Ruth has broken out a soft pale blue cashmere sweater that day. It’s the first time she’s been able to wear anything formfitting since her mastectomy. Finally, after a three-year hunt, she found someone who could custom-make a prosthetic breast for her.

Peyton Massey is in Santa Monica and has earned a reputation for making prosthetic feet, arms and legs, mostly for Vietnam vets. She figured a breast couldn’t be that much more difficult and convinced Massey to give it a try. Her Peyton Massey breast is more comfortable, but still far from perfect. It weighs about a pound and the nipple is too large. When she takes off her bra at night, there are deep grooves in her shoulder from where her strap has been digging into her skin. If she wears the breast for too long, it aggravates her nerve damage, and whenever she sweats, the plastic leeches a chemical smell that she tries to mask with too much perfume.

With her fake breast and her cashmere sweater, she pushes through the turnstile and heads to her office. She sees a press release on her desk. for immediate release. mattel announces fourth quarter and full year earnings… The press release has already gone out, so she’s not sure why they even bothered giving her a copy. As she reads, she’s surprised to see that the numbers are much stronger than expected. Mattel has just come off two devastating years of losses. First with the factory fire in Mexico and then the dockworkers’ strike, followed by their $30 million loss—and all that was before the BBB, which is how they’re referring to Barbie’s Big Boob disaster and the decision to flatten her feet. Ruth considers asking to see a financial statement but reminds herself that Malibu Barbie and Hot Wheels have been huge sellers. The numbers are encouraging, and the timing is perfect with Toy Fair right around the corner.

Oh, Toy Fair. The mere thought of it fills Ruth with despair. If she could, she’d gladly skip the whole thing. Jack isn’t going this year, which is a first. They’ve decided to send Barcus instead. She’s not looking forward to the meet and greets, the shocked looks on everyone’s faces when they see the change in her from the year before. There’s more gray in her hair, more padding around her middle, as she’s gone up another dress size since last year. Not that it matters. Her figure’s shot. She hates shopping for clothes because everything she likes is too low-cut, too tight across the hips. She’ll never be able to wear the kind of outfits she used to. Not even with the prosthetic that Peyton Massey made for her. And the thing is, she can see ways to improve it—just some tweaks would make it so much better—but she’s too exhausted to even broach the subject with Peyton.

The only bright spot about going to Toy Fair is that they’ll see Ken, Suzie and their grandchildren while they’re in New York. But the night before they’re expected to leave, Ethan Clark in investor relations; David Larsen, their new general counsel; and Simon Richards turn up on their doorstep.

What in the hell is so urgent that they’re here at our home? It’s late. Ruth’s in her bathrobe without her prosthetic. She’s already taken off all her makeup and feels naked. A dish of ice cream with two spoons sits on the coffee table melting. Elliot’s in a pair of pajamas. Everyone politely pretends to ignore this intimate look into the Handlers’ private lives.

“What the hell’s going on?” asks Ruth, pinching her bathrobe closed.

“Something rather damaging has been brought to our attention.” Ethan pauses, a clenched fist pressed to his lips. “I know you’re both aware of the press release that went out about two weeks ago. It talked about a big turnaround in gross profits and painted a rosy outlook for the first quarter revenues. Since you approved that press release, Elliot, we’re here to ask you where you got your information from.”

“Where else—from Rosenberg,” says Elliot. “Seymour handles all the forecasting now.”

“And do you recall how he delivered that information to you?” asks David.

“What do you mean, how ?” Ruth feels like Elliot’s being cross-examined. “It was in Rosenberg’s press release,” she says.

“Well, the financial statement was less than accurate. You should know that the press release Mattel issued was full of misleading projections,” says David.

They don’t like the sound of this, but Ruth and Elliot aren’t yet fully understanding what David’s saying.

“Whose idea was it to implement this bill and hold strategy?” asks Simon.

“It was Seymour’s,” says Elliot, recalling the day Rosenberg called an emergency meeting because he was worried about the sales numbers. Rosenberg said they needed orders on their books.

“Even more than money in the bank,” said Rosenberg, “what we need are the orders. We can’t afford to disappoint our stockholders. So what we’re gonna do is implement a bill and hold strategy. We’ll have the sales force write up the orders—that’s the bill part—and instead of shipping right away, we store the merchandise in our warehouses—that’s the hold part. Bill and hold . It buys us time. It’s a Band-Aid, but trust me,” said Rosenberg. “I know what I’m doing here.”

“Bill and hold’s a perfectly kosher practice,” says Elliot defensively. Rosenberg didn’t invent that. Ruth has been using bill and hold for ages.

“Yes, it is kosher,” says David, nodding, fully agreeing, fishing some documents out of his briefcase. “But offering cancelations and returns on bill and hold orders while still keeping them on your books is not only not kosher,” he says, “it’s illegal.”

“Wait a minute,” Ruth says. “What are you talking about?”

“ Someone directed your entire sales force to offer customers the option to return or even cancel their bill and hold orders,” says Simon. “But those orders are still on your books as sales.”

She and Elliot both look clobbered. Their minds are scrambling to piece together this onslaught of accusations.

“Look here”—Ethan points to a line item on a financial statement—“on June 8, 1971, Sears placed a Hot Wheels order for $600,000. Any idea what the actual total was for their order?”

She and Elliot shrug. They have no idea.

“The final order for Sears came in at $65,000. Yet over here”—he turns to another document—“we’re showing $600,000 as revenue.”

“Maybe it’s a mistake,” suggests Elliot.

Ethan goes back to the first document. “Here we have FAO Schwarz. April 18, 1971. Order for hold is listed at $120,000. That final order amounted to $35,000, and yet”—he shifts to the second report—“we have $120,000 in revenue. Here’s another order placed on March 21, canceled on August 5. Ordered on May 3, canceled on July 9.”

“There’s a pattern here,” says Simon.

“And all together,” adds Ethan, “we’re claiming over $14 million in bill and hold orders—the majority of which were either canceled or returned. Mattel didn’t fulfill even a fraction of those. So unlike the press release we issued and the story the Wall Street Journal and other financial papers ran, not only are we not going to see an increase in revenue for first quarter—we’re actually going to be showing another substantial loss.”

Ruth covers her mouth, thinking she might actually throw up.

“We need to get out in front of this,” says David. “We need to issue a correction. Pronto.”

Ruth knew something was off about that press release and curses herself for not having checked the financial statement. But what good would that have done? The release had already been sent out.

“Get Rosenberg on the phone,” she says to Simon. “I want to talk to him.”

But after several attempts to reach him, both at the office and at home, Rosenberg is nowhere to be found.

She calls her secretary instead, waking her up. “Get a locksmith,” she says. “First thing in the morning I want the locks changed on Rosenberg’s office door. And when that sonofabitch shows up tomorrow, have security escort him off the premises.”