Mattel 2006 Annual Report Download - page 83

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Adoption of SFAS No. 158
In the fourth quarter of 2006, Mattel adopted SFAS No. 158, Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R).
SFAS No. 158 requires an entity to (i) recognize in its statement of financial position an asset for a defined
benefit postretirement plan’s overfunded status or a liability for a plan’s underfunded status, (ii) measure a
defined benefit postretirement plan’s assets and obligations that determine its funded status as of the end of the
employer’s fiscal year, and (iii) recognize changes in the funded status of a defined benefit postretirement plan in
comprehensive income in the year in which the changes occur. SFAS No. 158 does not change the amount of net
periodic benefit cost included in net income or address the various measurement requirements associated with
postretirement benefit plan accounting. The requirement to measure plan assets and benefit obligations as of the
date of the fiscal year-end statement of financial position is consistent with Mattel’s current accounting
treatment. Retrospective application of SFAS No. 158 is not permitted and accordingly, results for the prior
periods have not been restated.
The impact of adopting SFAS No. 158 on the December 31, 2006 consolidated balance sheet is as follows
(in thousands):
Before Adoption
of
SFAS No. 158 Adjustments
After Adoption
of SFAS No. 158
Other noncurrent assets (a) ................................ $ 697,029 $ 26,644 $ 723,673
Total assets ............................................ 4,929,240 26,644 4,955,884
Other noncurrent liabilities (b) ............................. 223,889 80,787 304,676
Total noncurrent liabilities ................................ 859,603 80,787 940,390
Accumulated other comprehensive (loss), net of tax (c) ......... (222,718) (54,143) (276,861)
Total stockholders’ equity ................................ 2,487,117 (54,143) 2,432,974
(a) Intangible assets and deferred tax assets totaled $0 and $60,353, respectively, after the adoption of
SFAS No. 158.
(b) Noncurrent accrued benefit liability totaled $176,584 after the adoption of SFAS No. 158.
(c) Accumulated other comprehensive (loss) for pension benefits totaled $(101,393) after the adoption of
SFAS No. 158.
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
2006 2005 2004 2006 2005 2004
Service cost .............................. $ 12,110 $ 10,016 $ 7,998 $ 106 $ 119 $ 121
Interest cost .............................. 24,234 23,117 21,584 2,690 3,245 3,404
Expected return on plan assets ............... (25,804) (23,889) (22,146) — — —
Amortization of prior service cost ............ 1,933 1,920 (599) — — —
Recognized actuarial loss ................... 9,205 10,993 7,877 918 1,507 1,498
Net periodic benefit cost .................... 21,678 22,157 14,714 3,714 4,871 5,023
Special termination benefits ................. — — 519———
Net benefit cost ........................... $ 21,678 $ 22,157 $ 15,233 $3,714 $4,871 $5,023
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