Rayovac 2007 Annual Report Download - page 63

SPECTRUM BRANDS | 2007 ANNUAL REPORT 61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Spectrum Brands, Inc.
The net underfunded status of $40,815 is recognized in the
accompanying Consolidated Balance Sheet as $1,157 within
Other Assets for our overfunded plans and $41,972 within Total
Employee Benefi t Obligations for our underfunded plans.
Included in AOCI as of September 30, 2007 are the following
amounts that have not yet been recognized as components of net
periodic pension cost: unrecognized net losses of $6,580 and
unrecognized net prior service costs of $1,799. The net loss, and
net prior services costs in AOCI expected to be recognized dur-
ing Fiscal 2008 are $275 and $249, respectively.
At September 30, 2007, the Company’s total pension and
deferred compensation benefi t obligation of $118,589 consisted
of $38,069 associated with U.S. plans and $80,520 associated
with international plans. The fair value of the Company’s assets
of $73,422 consisted of $28,012 associated with U.S. plans and
$45,410 associated with international plans. The weighted aver-
age discount rate used for the Company’s domestic plans was
approximately 6.3% and approximately 5.6% for its interna-
tional plans. The weighted average expected return on plan
assets used for the Company’s domestic plans was approximately
8.0% and approximately 5.4% for its international plans.
At September 30, 2006, the Company’s total pension and
deferred compensation benefi t obligation of $113,391 consisted
of $37,223 associated with U.S. plans and $76,168 associated
with international plans. The fair value of the Company’s assets
of $63,133 consisted of $25,197 associated with U.S. plans and
$37,936 associated with international plans. The weighted
average discount rate used for the Company’s domestic plans
was approximately 6.3% and approximately 4.6% for its inter-
national plans. The weighted average expected return on plan
assets used for the Company’s domestic plans was approximately
8.0% and approximately 5.5% for its international plans.
Pension and Deferred Compensation Benefits Other Benefits
2007 2006 2005 2007 2006 2005
Components of net periodic benefit cost
Service cost $ 3,197 $ 4,686 $ 2,319 $ 223 $ 614 $ 293
Interest cost 6,294 5,215 4,695 163 299 186
Expected return on assets (4,146) (3,838) (2,724) – – –
Amortization of prior service cost 703 404 319 – 22 28
Amortization of transition obligation – 34 – – – –
(Gain) loss on curtailments – – (92) – – –
Recognized net actuarial loss (gain) 208 1,607 501 (58) – –
Net periodic benefit cost $ 6,256 $ 8,108 $ 5,018 $ 328 $ 935 $ 507
The contributions to the domestic pension plans between July 1
and September 30 were $2,153 in 2007, and $839 in 2006. 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 respective 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 Average Allocation
Target Actual
Asset Category 2008 2007 2006
Equity Securities 25-60% 32% 27%
Fixed Income Securities 40% 15% 15%
Other 75-100% 53% 58%
Total 100%
100% 100%
The weighted average expected long-term rate of return on
total assets is 6.4%.
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, diversify-
ing among asset classes, if appropriate, and among investment
managers, 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 Fiscal 2007 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 lia-
bilities; therefore, debt maturities are not signifi cant to the
plan performance.