Rayovac 2005 Annual Report Download - page 107

Pension Benefits Other Benefits
2005 2004 2003 2005 2004 2003
Components of Net Periodic Benefit Cost
Service cost $2,319 $1,733 $1,537 $293 $269 $285
Interest cost 4,695 3,973 3,599 186 175 207
Expected return on assets (2,724) (2,153) (1,404) – – –
Amortization of prior service cost 319 404 374 28 28 –
(Gain) loss on curtailments (92) (110) 628 – – (354)
Recognized net actuarial loss (gain) 501 762 (375) – – 32
Net periodic benefit cost $5,018 $4,609 $4,359 $507 $472 $170
Pension plan assets and obligations are measured
at June 30 each year for the Company’s domestic
plans and September 30 each year for its foreign
plans. The contributions to the pension plans between
July 1 and September 30 were $2,448 in 2005 and
$255 in 2004. All of the Company’s plans individually
have accrued benefi t costs.
The discount rate is used to calculate the projected
benefi t obligation. The discount rate used is based on
the rate of return on government bonds of the respec-
tive countries as well as current market conditions.
Below is a summary allocation of all pension plan
assets along with expected long-term rates of return
by asset category as of the measurement date.
Weighted
Weighted Average Average
Allocation Expected
Target Actual Long-Term
Rate of
2006 2005 2004 Return
Equity Securities 38% 41% 34% 10.3%
Fixed Income Securities 22 22 7 5.6
Other 40
37 59 5.0
Total 100% 100% 100% 7.3%
The Company has established formal investment
policies for the assets associated with these plans.
Policy objectives include maximizing long-term return
at acceptable risk levels, diversifying among asset
classes, if appropriate, and among investment manag-
ers, as well as establishing relevant risk parameters
within each asset class. Specifi c asset class targets
are based on the results of periodic asset liability
studies. The investment policies permit variances from
the targets within certain parameters. The weighted
average expected long-term rate of return is based on
a fi scal 2005 review of such rates. The plan assets
currently do not include holdings of Spectrum
common stock.
The Company’s Fixed Income Securities portfolio is
invested primarily in commingled funds and managed
for overall return expectations rather than matching
duration against plan liabilities; therefore, debt maturi-
ties are not signifi cant to the plan performance.
The Company’s Other portfolio consists of insurance
policies in which all pension assets in the United
Kingdom, Germany and the Netherlands are invested.
The Company expects to contribute approximately
$4,627 to its pension plans in 2006. The Company’s
expected future pension benefi t payments for fi scal
2006 – fi scal 2015 are as follows:
2006 $ 3,266
2007 3,368
2008 3,473
2009 3,658
2010 3,901
2011 to 2015 23,854
The Company has recorded an additional minimum
pension liability of $24,215 and $16,209 at Septem-
ber 30, 2005 and 2004, respectively, to recognize the
underfunded position of its benefi t plans. An intangible
asset of $3,191 and $2,288 at September 30, 2005
and 2004, respectively, equal to the unrecognized
prior service cost and net transition obligation of
these plans, has also been recorded. The excess of
the additional minimum liability over the unrecognized
prior service cost, net of tax, $16,702 and $9,961 at
September 30, 2005 and 2004, respectively, has
been recorded as a component of Accumulated other
comprehensive income.
The Company sponsors a supplemental executive
retirement plan for eligible employees. Each October 1,
the account of each participant is credited by an
amount equal to 15% of the participant’s salary. In
addition, each quarter each account is credited by an
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
2005 ANNUAL REPORT 87