Rayovac 2004 Annual Report Download - page 90

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RAYOVAC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
Pension Benefits Other Benefits
2004 2003 2002 2004 2003 2002
Components of net periodic benefit cost
Service cost .................................. $1,733 $ 1,537 $ 693 $269 $ 285 $299
Interest cost .................................. 3,973 3,599 1,512 175 207 188
Actual return on assets ......................... (3,204) (1,404) 1,279 — — —
Amortization of prior service cost ................ 404 374 315 28 — —
(Gain) loss on curtailments ...................... (110) 628 — — (354) —
Recognized net actuarial loss (gain) ............... 1,813 (375) (2,433) — 32 32
Net periodic benefit cost ........................ $4,609 $ 4,359 $ 1,366 $472 $ 170 $519
Pension plan assets and obligations are measured at June 30 each year for the Company’s domestic plans
and September 30 each year for our foreign plans. The contributions to the pension plans between July 1 and
September 30 were $255 in 2004 and $0 in 2003. All of the Company’s plans individually have accrued benefit
costs.
Pension assets of the North American and the United Kingdom plans represent approximately 77 percent of
pension plan assets. Below is a summary of pension plan asset allocations of those assets along with expected
long-term rates of return as of the measurement date by asset category.
Weighted Average
Allocation
Weighted
Average
Expected
Long-Term
Rate of Return
Target Actual
Asset Category 2005 2004 2003
Equity Securities ................................................ 48% 49% 41% 10.0%
Fixed Income Securities .......................................... 21 20 16 4.5
Other ......................................................... 31 31 43 6.5
Total ......................................................... 100% 100% 100% 7.8%
We have established formal investment policies for the assets associated with these plans. Policy objectives
include maximizing long-term return at acceptable risk levels, diversifying among asset classes, if appropriate,
and among investment managers, as well as establishing relevant risk parameters within each asset class. Specific
asset class targets are based on the results of periodic asset liability studies. The investment policies permit
variances from the targets within certain parameters. The weighted average expected long-term rate of return is
based on a fiscal 2004 review of such rates. The plan assets currently do not include holdings of Rayovac
common stock.
The Company’s Fixed Income Securities portfolio is invested primarily in commingled funds and managed
for overall return expectations rather than matching duration against plan liabilities; therefore, debt maturities are
not significant to the plan performance.
The Company’s Other portfolio consists of insurance policies in which all pension assets in the United
Kingdom are invested.
The Company expects to contribute approximately $1,200 to its North America and United Kingdom
pension plans in 2005. The Company’s expected future pension benefit payments for fiscal 2005 – fiscal 2014
are as follows:
2005 ................................................. $1,058
2006 ................................................. 1,109
2007 ................................................. 1,147
2008 ................................................. 1,205
2009 ................................................. 1,302
2010 to 2014 ........................................... 7,390
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