Mattel 2002 Annual Report Download - page 68

As of December 31, 2002, Mattel has US net operating loss carryforwards totaling $724.9 million and credit
carryforwards of $147.6 million for federal income tax purposes. The net operating loss carryforwards expire
during the years 2003 to 2020, while $143.3 million of the tax credits expire during the years 2003 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 that are not expected to be
utilized.
Certain foreign subsidiaries have net operating loss carryforwards totaling $174.1 million ($150.5 million
with no expiration date, $23.0 million expiring during the years 2003 to 2007, and $0.6 million expiring after
2007).
Generally accepted accounting principles require that tax benefits related to the exercise of stock warrants
and nonqualified stock options be credited to additional paid-in capital. In 2002, warrants and nonqualified stock
options exercised resulted in credits to additional paid-in capital totaling $5.7 million and $4.2 million,
respectively. In 2001 and 2000, nonqualified stock options exercised resulted in credits to additional paid-in
capital totaling $6.0 million and $2.3 million, respectively.
The Internal Revenue Service has completed its examination of the Mattel, Inc. federal income tax returns
through December 31, 1997.
Note 4—Employee Benefits
Mattel and certain of its subsidiaries have retirement plans covering substantially all employees of these
companies. Expense related to Mattel’s retirement and other postretirement benefit plans totaled $34.1 million,
$27.3 million, and $34.9 million in 2002, 2001 and 2000, 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, are detailed below (in thousands):
For the Year Ended
2002 2001 2000
Servicecost ..................................................... $ 3,217 $ 2,897 $ 2,609
Interest cost ..................................................... 13,438 12,857 12,173
Expected return on plan assets ....................................... (21,442) (22,939) (23,843)
Amortization of unrecognized prior service cost ......................... 80 108 109
Curtailment gain .................................................. — (700) —
Planamendmentloss .............................................. — 1,944 —
Netpensionincome ............................................... $ (4,707) $ (5,833) $ (8,952)
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