Mattel 2006 Annual Report Download - page 86
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does not have any defined benefit pension plans for which the plan assets exceed the accumulated benefit
obligation.
The assumptions used in determining the projected and accumulated benefit obligations of Mattel’s
domestic defined benefit pension and postretirement benefit plans are as follows:
December 31,
2006 2005
Defined benefit pension plans:
Discount rate ............................................................. 5.7% 5.4%
Weighted average rate of future compensation increases ........................... 4.0% 4.4%
Postretirement benefit plans:
Discount rate ............................................................. 5.7% 5.4%
Annual increase in Medicare Part B premium ................................... 6.0% 6.0%
Health care cost trend rate:
Pre-65 .............................................................. 9.0% 9.0%
Post-65 ............................................................. 11.0% 10.0%
Ultimate cost trend rate (pre- and post-65) ...................................... 5.0% 5.0%
Year that the rate reaches the ultimate cost trend rate:
Pre-65 .............................................................. 2011 2010
Post-65 ............................................................. 2013 2011
The estimated future benefit payments for Mattel’s defined benefit pension and postretirement benefit plans
are as follows (in thousands):
Defined Benefit
Pension Plans
Postretirement
Benefit Plans
Before Subsidy
Benefit of
Medicare Part D
Subsidy
2007 ............................................... $ 20,870 $ 4,109 $ (375)
2008 ............................................... 21,092 4,183 (403)
2009 ............................................... 20,711 4,191 (411)
2010 ............................................... 20,025 4,248 (423)
2011 ............................................... 20,421 4,280 (425)
2012 – 2016 ......................................... 125,098 21,317 (2,123)
Mattel expects to make cash contributions totaling approximately $15 million to its defined benefit pension
and postretirement benefit plans in 2007, including approximately $10 million for benefit payments for its
unfunded plans.
Mattel’s domestic defined benefit pension plan assets are comprised of the following:
December 31,
2006 2005
Equity securities .......................................................... 75% 70%
Debt securities ........................................................... 23 26
Cash ................................................................... 2 4
100% 100%
Mattel periodically commissions an actuarial study of the plans’ assets and liabilities to determine an asset
allocation that would best match cash flows from the plans’ assets to expected benefit payments. The percentage
allocation of plan assets as of December 31, 2006 approximates the target allocation of such assets. The
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