Mattel 2000 Annual Report Download - page 36

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Mattel, Inc. and Subsidiaries
Reconciliation of the funded status of Fisher-Price’s domestic
pension plan to the related prepaid asset included in the consolidated
balance sheets is as follows (in thousands):
As of Year End
2000 1999
Funded status of the plan $ 58,111 $ 65,401
Unrecognized net gain (3,739) (19,551)
Unrecognized prior service cost 1,121 692
Prepaid pension asset $55,493 $ 46,542
Reconciliation of the assets and liabilities of Fisher-Price’s
domestic pension plan are as follows (in thousands):
As of Year End
2000 1999
Change in Plan Assets
Plan assets at fair value, beginning of year $222,793 $197,912
Actual return on plan assets 18,391 35,588
Benefits paid (8,034) (10,707)
Plan assets at fair value, end of year $233,150 $222,793
Change in Projected Benefit Obligation
Projected benefit obligation, beginning of year $157,392 $156,577
Service cost 2,609 2,829
Interest cost 12,173 14,655
Plan amendments - 2,003
Actuarial loss (gain) 10,899 (7,965)
Benefits paid (8,034) (10,707)
Projected benefit obligation, end of year $175,039 $157,392
For the Period Ended
2000 1999 1998
Assumptions:
Weighted average discount rate 7.50% 8.00% 7.50%
Rate of future compensation increases 4.00% 4.00% 4.00%
Long-term rate of return on plan assets 11.00% 11.00% 11.00%
Other Retirement Plans
Domestic employees are eligible to participate in 401(k) savings plans
sponsored by Mattel or its subsidiaries, which are defined contribution
plans satisfying ERISA requirements. Mattel also maintains unfunded
supplemental executive retirement plans that are nonqualified defined
benefit plans covering certain key executives. For 2000, 1999 and
1998, the accumulated and vested benefit obligations and related
expense of these plans were not significant.
Deferred Compensation and Excess Benefit Plans
Mattel provides a deferred compensation plan that permits certain
officers and key employees to elect to defer portions of their com-
pensation. The deferred compensation plan, together with certain
contributions made by Mattel and employees to an excess benefit
plan, earn various rates of return. The liability for these plans as of
December 31, 2000 and 1999 was $69.0 million and $65.1 million,
respectively. Mattel’s contribution to these plans and the related
administrative expense were not significant to the results of opera-
tions during any year.
Mattel has purchased group trust-owned life insurance
contracts designed to assist in funding these programs. The cash
surrender value of these policies, valued at $56.6 million and
$55.7 million as of December 31, 2000 and 1999, respectively,
are held in an irrevocable rabbi trust which is included in other
assets in the consolidated balance sheets.
Postretirement Benefits
Fisher-Price has an unfunded postretirement health insurance plan cov-
ering certain eligible domestic employees hired prior to January 1, 1993.
Details of the expense for the Fisher-Price plan recognized in the con-
solidated statements of operations are as follows (in thousands):
For the Year
2000 1999 1998
Service cost $ 201 $ 224 $ 218
Interest cost 2,886 2,531 2,416
Recognized net actuarial loss 202 - -
Net postretirement benefit cost $3,289 $2,755 $2,634
Amounts included in the consolidated balance sheets for this
plan are as follows (in thousands):
As of Year End
2000 1999
Current retirees $31,468 $29,988
Fully eligible active employees 3,980 3,013
Other active employees 4,272 4,162
Accumulated postretirement benefit obligation 39,720 37,163
Unrecognized net actuarial loss (9,105) (6,254)
Accrued postretirement benefit liability $30,615 $30,909
Reconciliation of the liabilities of Fisher-Price’s postretirement
health insurance plan is as follows (in thousands):
As of Year End
2000 1999
Change in Accumulated Postretirement Benefit Obligation
Accumulated postretirement benefit obligation, beginning of year $37,163 $33,601
Service cost 201 224
Interest cost 2,886 2,531
Actuarial loss 3,053 4,538
Benefits paid, net of participant contributions (3,583) (3,731)
Accumulated postretirement benefit obligation, end of year $39,720 $37,163
The discount rates used in determining the accumulated postre-
tirement benefit obligation were 7.50% for 2000, 8.00% for 1999 and
7.50% for 1998. For all participants, the health care cost trend rate for
expected claim costs was assumed to be 7.50% in 2000, decreasing
one-half percentage point per year through 2003 and remaining con-
stant at 5.50% in 2004 and thereafter. A one percentage point increase
or decrease in the assumed health care cost trend rate for each future
year would have the following effect on the accumulated postretirement