Mattel 2001 Annual Report Download - page 57

expire during the years 2002 to 2020, while $133.8 million of the tax credits expire during the years 2002 to
2020 with the remainder having no expiration date. Utilization of these loss and credit carryforwards is subject
to annual limitations, and Mattel has established a valuation allowance for the carryforwards, which are not
expected to be utilized.
Certain foreign subsidiaries have net operating loss carryforwards totaling $210.2 million ($118.1 million
with no expiration date, $78.8 million expiring during the years 2002 to 2006, and $13.3 million expiring after
2006).
Generally accepted accounting principles require that tax benefits related to the exercise by employees of
nonqualified stock options be credited to additional paid-in capital. In 2001, 2000 and 1999, nonqualified stock
options exercised resulted in credits to additional paid-in capital totaling $6.0 million, $2.3 million and $15.0
million, respectively.
The Internal Revenue Service has completed its examination of the Mattel, Inc. federal income tax returns
through December 31, 1994 and is currently examining Mattel’s federal income tax returns for fiscal years 1995
through 1997.
Note 3—Employee Benefits
Mattel and certain of its subsidiaries have retirement plans covering substantially all employees of these
companies. Expense related to these plans totaled $23.7 million, $31.6 million, and $18.6 million in 2001, 2000
and 1999, respectively. Expense for 2000 included $10.8 million for retirement benefits related to the departure
of certain senior executives during the first quarter.
Pension Plans
Mattel provides defined benefit pension plans, which satisfy the requirements of the Employee Retirement
Income Security Act of 1974 (‘‘ERISA’’). With the exception of the Fisher-Price Pension Plan, activity related
to Mattel’s pension plans, including those of foreign subsidiaries, was not significant during any year.
The components of net pension income for the Fisher-Price Pension Plan, based upon a December
valuation date for the years ended December 31, 2001, 2000 and 1999, are detailed below (in thousands):
For the Year Ended
2001 2000 1999
Service cost ................................................... $2,897 $ 2,609 $ 2,829
Interest cost ................................................... 12,857 12,173 14,655
Expected return on plan assets ...................................... (22,939) (23,843) (27,237)
Amortization of:
Unrecognized prior service cost ................................. 108 109 88
Unrecognized net asset ....................................... — — (1,284)
Curtailment gain ................................................ (700) — —
Plan amendment loss ............................................ 1,944 — 1,386
Net pension income ............................................. $(5,833) $(8,952) $(9,563)
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
2001 2000
Funded status of the plan ................................................ $37,699 $58,111
Unrecognized net loss (gain) .............................................. 22,764 (3,739)
Unrecognized prior service cost ........................................... 863 1,121
Prepaid pension asset ................................................... $61,326 $55,493
49