Mattel 2002 Annual Report Download - page 71

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The discount rates used in determining the accumulated postretirement benefit obligation were 6.5% for
2002, 7.0% for 2001 and 7.5% for 2000.
For all participants, the health care cost trend rate for expected claim costs was assumed to be as follows:
Year Pre-65 Post-65
2003 ................................................. 9.0% 10.5%
2004 ................................................. 8.0% 9.0%
2005 ................................................. 7.0% 7.5%
2006 ................................................. 6.0% 6.0%
2007 and thereafter ...................................... 5.5% 5.5%
A one percentage point increase/(decrease) in the assumed health care cost trend rate for each future year
would impact the accumulated postretirement benefit obligation as of year end 2002 by $5.5 million and $(5.0)
million, respectively, while a one percentage point increase/(decrease) would impact the service and interest cost
recognized for 2002 by $0.3 million and $(0.3) million, respectively.
Domestic employees of Mattel participate in a contributory postretirement benefit plan. The ongoing costs
and obligations associated with the Mattel, Inc. plan are not significant to the financial position and results of
operations during any year.
Incentive Awards
Mattel has annual incentive compensation plans for officers and key employees based on Mattel’s
performance and subject to certain approvals of the Compensation/Options Committee of the board of directors.
For 2002, 2001 and 2000, $73.5 million, $36.2 million and $33.7 million, respectively, were charged to operating
expense for awards under these plans.
In November 2000, the Compensation/Options Committee of the board of directors approved the Long-
Term Incentive Plan covering certain key executives of Mattel, Inc. for the performance period from August 15,
2000 through December 31, 2002. Awards are based upon the financial performance of Mattel during the
performance period and are paid in the quarter following the end of the performance period. For 2002, 2001 and
2000, $32.5 million, $4.9 million and $8.3 million, respectively, were charged to operating expense for this plan.
In June 1999, the stockholders approved the Amended and Restated Mattel Long-Term Incentive Plan. The
Compensation/Options Committee of the board of directors terminated this plan in November 2000, and no
expense was recorded related to this plan.
For 2002, 2001 and 2000, $10.7 million, $11.1 million and $11.6 million, respectively, was charged to
operating expense for costs related to the recruitment and retention of senior executives.
Note 5—Seasonal Financing and Long-Term Debt
Seasonal Financing
Mattel maintains and periodically amends or replaces an unsecured committed revolving credit facility with
a commercial bank group that is used as the primary source of financing the seasonal working capital
requirements of its domestic and certain foreign subsidiaries. In March 2002, Mattel amended and restated its
existing unsecured committed revolving credit facility into a $1.060 billion, 3-year facility that expires in 2005.
Interest is charged at various rates selected by Mattel, ranging from market commercial paper rates to the bank
reference rate. The unsecured committed revolving credit facility contains a variety of covenants, including
financial covenants that require Mattel to maintain certain consolidated debt-to-capital and interest coverage
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