Mattel 2005 Annual Report Download - page 76
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A summary of the components of Mattel’s net benefit cost for the years ended December 31 is as follows (in
thousands):
Defined Benefit Pension Plans Postretirement Benefit Plans
2005 2004 2003 2005 2004 2003
Service cost .............................. $ 10,016 $ 7,998 $ 7,162 $ 119 $ 121 $ 129
Interest cost .............................. 23,117 21,584 21,019 3,245 3,404 3,570
Expected return on plan assets ............... (23,889) (22,146) (21,383) — — —
Amortization of:
Prior service cost ..................... 1,920 (599) (492) — — —
Net actuarial loss ..................... 10,993 7,877 2,479 1,507 1,498 1,345
Plan amendment loss ...................... — — 7,594———
Net periodic benefit cost .................... 22,157 14,714 16,379 4,871 5,023 5,044
Special termination benefits ................. — 519 ————
Net benefit cost ........................... $ 22,157 $ 15,233 $ 16,379 $4,871 $5,023 $5,044
Net periodic benefit cost for Mattel’s domestic defined benefit pension and postretirement benefit plans was
calculated on January 1 of each year using the following assumptions:
For the Year
2005 2004 2003
Defined benefit pension plans:
Discount rate ....................................................... 5.7% 6.0% 6.5%
Weighted average rate of future compensation increases ..................... 4.4% 4.4% 4.4%
Long-term rate of return on plan assets .................................. 8.0% 8.0% 8.0%
Postretirement benefit plans:
Discount rate ....................................................... 5.7% 6.0% 6.5%
Annual increase in Medicare Part B premium ............................. 6.0% 4.0% 4.0%
Health care cost trend rate:
Pre-65 ........................................................ 10.0% 8.0% 9.0%
Post-65 ....................................................... 11.0% 9.0% 10.5%
Ultimate cost trend rate (pre- and post-65) ................................ 5.0% 5.5% 5.5%
Year that the rate reaches the ultimate cost trend rate:
Pre-65 ........................................................ 2010 2007 2007
Post-65 ....................................................... 2011 2007 2007
Discount rates, weighted average rates of future compensation increases, and long-term rates of return on
plan assets for Mattel’s foreign defined benefit pension plans differ from the assumptions used for Mattel’s
domestic defined benefit pension plans due to differences in local economic conditions in which the non-US
plans are based. The rates shown in the preceding table are indicative of the weighted average rates of all
Mattel’s defined benefit pension plans given the relative insignificance of the foreign plans to the consolidated
total.
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