Stockholm 2526 June 2001

1
Consumer Product Recall Conference

• Stockholm 25-26 June 2001
• Jan Klejs Pedersen, Senior Director, Global
  Quality, LEGO Company

2
LEGO Primo Ladybird rattle

• Product recall, May/June 1998
• Three suffocation incidents
• Compliance with the rattle standard
• Background information
• On May 20th decided to voluntary recall from all
  markets
• 70-80 countries, selling out 770K
• Complete co-operation
• Everywhere LEGO Sales Companies respond
  positively
• Information package and the recommendations from
  the Crisis Communication Center prepared. Result
  - Unified message and a smooth process globally
• Media and consumers world wide responded
  positively

3
Product recall strategy

• Fast reaction
• Honest, adequate and direct communication
• Contact as many consumers as possible
• Remove the product immediately from small
  children and from the shelves in the shops
• Have as much as possible returned from the retail
  trade
• Safeguarding our image and consumer confidence

4
Action taken

• Families visited in Holland, Germany and France
  in the period May 19-26
• Production and distribution stopped on May 20
• Crisis Communication Center established in
  Copenhagen and in Billund on May 22
• The incidents and the decision about the recall
  reported with the Danish Consumer Board ( May 20
  ) and via this board to CEN
• Information given to CPSC via QA/LSI (May 26)
• Press releases distributed to media world wide on
  May 22 (local language) and to the LEGO
  organization world wide.

5
Action taken

• Recall information on www.LEGO.com/parents on May
  23
• Detailed information package distributed to LEGO
  Companies on May 23 for
• The Media
• Product recall advertising
• The trade
• The product safety authorities
• Questions and answers distributed to LEGO
  Companies on May 24th
• CD ROM containing the product recall
  advertisement forwarded to LEGO Companies on May
  24 th
• Local free telephone and internet hotlines for
  consumers and journalists established on May 25th

6
Action taken

• Questions from journalists and consumers answered
  24 hours by the Crisis Communication Center in
  the period May 22-26
• LEGO Companies serviced by the Crisis
  Communication Center in the period May 22-June 9
• Product recall advertising campaigns launched
  world wide in the period May 25-June 7

7
Key facts and figures

• Statistics in relation to the recall
• Approx. 38 of the ladybird rattle returned (
  Retail Consumers)
• The numbers of returns from consumers, 154.500 or
  30 of the 525.000 units that were sold by
  retailers
• The costs associated to the recall DKK 34 mill (
  Close to USD 5.3 million)
• To ensure the optimal environmental solution, the
  returned rattles were disassembled and the
  material granulated for subsequent reuse

8
Consumer/trade reactions

• Visit to the families
• 6 families were visited in France, Holland and
  Germany
• Reactions from the trade
• mostly positive
• Reactions from consumers
• Statements from a German survey

9
Lessons learned

• New safety procedures in the development phase
• Review of the existing product program within
  LEGO Primo and DUPLO brand ( 0-5)
• The communication process from the consumer to
  LEGO Company -early warning system
• Crisis management and communication plan -
• Update procedure for product recall
• Improvement of the communication process between
  Task force and the persons involved in the
  countries

10
Conclusion

• How to execute a product recall
• Effective communication internally - externally
• Roles and responsibilities have to be defined -
  Task force groups defined
• The effectiveness of the recall
• Follow-up from the media

11
Closing remarks

• Importance of product safety
• As a dependable partner for parents - to maintain
  a sustainable relationship to the parents
• To set the standard regarding safety
• To safeguard the brand name
• Leading to safety and quality ( GKC -1963 - from
  the ten LEGO product characteristics)
• Children are (still) our vital concern