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Financial Information:
Annual Report 2005
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Notes to Consolidated
Financial Statements |
| NSK Ltd. and Subsidiaries
For the year ended March 31, 2005 |
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10. Retirement Benefit Plans
The Company and its domestic subsidiaries have defined
benefit plans, i.e., tax-qualified pension plans and lumpsum
payment plans, covering substantially all employees
who are entitled to lump-sum or annuity payments, the
amounts of which are determined by reference to their
basic rates of pay, length of service, and the conditions
under which termination occurs. Certain foreign subsidiaries
also have defined benefit pension plans.
The following tables set forth the funded and accrued status of the plans, and
the amounts recognized in the consolidated
balance sheets as of March 31, 2005 and 2004 for the Company’s and the
subsidiaries’ defined benefit plans:
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Millions of yen |
Thousands of
U.S. dollars |
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| As of March 31, |
2005 |
2004 |
2005 |
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| Retirement benefit obligation |
¥(145,613) |
¥(134,145) |
$(1,360,869) |
| Plan assets at fair value |
134,756 |
117,871 |
1,259,402 |
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| Unfunded retirement benefit obligation |
(10,856) |
(16,273) |
(101,458) |
| Unrecognized plan assets |
- |
(3,737) |
- |
| Unrecognized actuarial gain or loss |
11,524 |
24,202 |
107,701 |
| Unrecognized prior service cost |
504 |
715 |
4,710 |
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| Net retirement benefit obligation |
1,172 |
4,906 |
10,953 |
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| Prepaid pension cost |
35,454 |
22,223 |
331,346 |
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| Accrued retirement benefits |
¥(34,281) |
¥(17,316) |
$(320,383) |
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Effective September 1, 2004, the Company and
certain domestic subsidiaries amended their tax-qualified
pension plans so that a portion of the benefits under the
plans was transferred to newly established defined contribution
plans. In this connection, the Company and the
domestic subsidiaries recognized a gain of ¥1,059 million
($9,897 thousand) for the year ended March 31, 2005.
The assets of ¥9,804 million ($91,626 thousand) are being
transferred to the defined contribution plans over a
period of four years.
The components of retirement benefit expenses for the years ended March 31, 2005
and 2004 are outlined as follows:
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Millions of yen |
Thousands of
U.S. dollars |
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| Year ended March 31, |
2005 |
2004 |
2005 |
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| Service cost |
¥4,933 |
¥5,449 |
$46,103 |
| Interest cost |
4,894 |
2,420 |
45,738 |
| Expected return on plan assets |
(4,549) |
(1,775) |
(42,514) |
| Amortization of actuarial gain or loss |
1,796 |
3,621 |
16,785 |
| Amortization of prior service cost |
166 |
177 |
1,551 |
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| Net periodic retirement benefit costs |
7,241 |
9,893 |
67,673 |
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| Gain on partial termination of defined benefit plans |
(1,059) |
- |
(9,897) |
| Contribution to defined contribution plans |
230 |
- |
2,150 |
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| Total |
¥6,412 |
¥9,893 |
$59,925 |
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The assumptions used in accounting for the above plans were as follows:
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| Year ended March 31, |
2005 |
2004 |
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| Discount rate |
Mainly 2.2% |
Mainly 2.2% |
| Expected rate of return on plan assets |
Mainly 2.2% |
Mainly 2.2% |
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11. Shareholders’ Equity
In accordance with the Commercial Code of Japan (the “Code”),
the Company has provided a legal reserve, which was included in retained earnings.
The Code provides that an amount equal to at least 10% of the
amount to be disbursed as a distribution of earnings be
appropriated to the legal reserve until the total of such
reserve and the additional paid-in capital account equals
25% of the common stock account. The legal reserve
amounted to ¥10,292 million ($96,187 thousand) and ¥10,292 million at March 31, 2005 and 2004, respectively.
The Code provides that neither additional paid-in
capital nor the legal reserve is available for dividends, but
both may be used to reduce or eliminate a deficit by resolution
of the shareholders or may be transferred to common
stock by resolution of the Board of Directors. The
Code also provides that if the total amount of additional
paid-in capital and the legal reserve exceeds 25% of the
amount of common stock, the excess may be distributed
to the shareholders either as a return of capital or as dividends
subject to the approval of the shareholders.
12. Research and Development Costs
Research and development costs included in selling,
general and administrative expenses and manufacturing
costs for the years ended March 31, 2005 and 2004
amounted to ¥9,806 million ($91,645 thousand) and ¥8,722 million, respectively.
13. Commitments and Contingencies
(a) At March 31, 2005, the Company and its subsidiaries had the following contingent
liabilities:
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| As of March 31, 2005 |
Millions of yen |
Thousands of
U.S. dollars |
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| As guarantor of indebtedness of: |
| Employees |
¥203 |
$1,897 |
| Affiliated companies |
257 |
2,402 |
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¥460 |
$4,299 |
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(b) Under the terms of a permit for commencing economic
activity within the Walbrzych Special Economic
Zone, NSK Steering Systems Europe (Polska) Sp. z o. o.
was/is committed to make investments amounting to
PLN128 million by December 31, 2007. NSK Steering
Systems Europe (Polska) Sp. z o. o. made investments of
PLN31 million through December 31, 2004 in accordance
with this agreement.
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