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Annual Report 2006
Notes to Consolidated Financial Statements
10. Retirement Benefit Plans
The Company and its domestic subsidiaries have defined benefit plans, i.e., tax-qualified pension plans and lump-sum 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, 2006 and 2005 for the Company’s and the subsidiaries’ defined benefit plans:
| Millions of yen |
Thousands of
U.S. dollars |
| As of March 31, |
2006 |
2005 |
2006 |
| Retirement benefit obligation |
¥(166,006) |
¥(145,613) |
$(1,418,855) |
| Plan assets at fair value |
182,663 |
134,756 |
1,561,222 |
| Unfunded retirement benefit obligation |
16,657 |
(10,856) |
142,368 |
| Unrecognized actuarial gain or loss |
(24,616) |
11,524 |
(210,393) |
| Unrecognized prior service cost |
262 |
504 |
2,239 |
| Net retirement benefit obligation |
(7,696) |
1,172 |
(65,778) |
| Prepaid pension cost |
33,731 |
35,454 |
288,299 |
| Accrued retirement benefits |
¥ (41,428) |
¥ (34,281) |
$ (354,085) |
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 for the year ended March 31, 2005. The assets of ¥9,804 million 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, 2006 and 2005 are outlined as follows:
| Millions of yen |
Thousands of
U.S. dollars |
| Year ended March 31, |
2006 |
2005 |
2006 |
| Service cost |
¥4,961 |
¥4,933 |
$42,402 |
| Interest cost |
5,183 |
4,894 |
44,299 |
| Expected return on plan assets |
(4,824) |
(4,549) |
(41,231) |
| Amortization of actuarial gain or loss |
1,679 |
1,796 |
14,350 |
| Amortization of prior service cost |
12 |
166 |
103 |
| Net periodic retirement benefit costs |
7,012 |
7,241 |
59,932 |
| Gain on partial termination of defined benefit plans |
- |
(1,059) |
- |
| Contribution to defined contribution plans |
594 |
230 |
5,077 |
| Total |
¥7,606 |
¥6,412 |
$65,009 |
The assumptions used in accounting for the above plans were as follows:
| Year ended March 31, |
2006 |
2005 |
| 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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