Notes to Consolidated Financial Statements
NSK Ltd. and Consolidated Subsidiaries For the year ended March 31, 2007
9. Long-Term Debt
At March 31, 2007 and 2006, long-term debt consisted of the following:
| Millions of yen | Thousands of U.S. dollars |
||
| As of March 31, | 2007 | 2006 | 2007 |
|---|---|---|---|
| Secured loans from banks, insurance companies and others, due through 2012 at interest rates ranging from 1.50 percent to 6.15 percent |
¥ 788 | ¥ 1,473 | $ 6,678 |
Unsecured loans from banks, insurance companies and others, |
55,553 | 55,736 | 470,788 |
| Unsecured yen bonds: | |||
| At interest rates ranging from 0.86 percent to 3.08 percent, due through 2017 |
125,000 | 95,000 | 1,059,322 |
| 181,342 | 152,210 | 1,536,797 | |
| Less current portion | (33,654) | (24,476) | (285,203) |
| ¥147,687 | ¥127,733 | $1,251,585 | |
The aggregate annual maturities of long-term debt subsequent to March 31, 2007 are summarized as follows:
| Millions of yen | Thousands of U.S. dollars |
|
| Year ending March 31, | ||
|---|---|---|
| 2008 | ¥ 33,654 | $ 285,203 |
| 2009 | 25,163 | 213,246 |
| 2010 | 17,269 | 146,347 |
| 2011 | 25,237 | 213,873 |
| 2012 and thereafter | 80,016 | 678,102 |
| ¥181,342 | $1,536,797 | |
The assets pledged as collateral for short-term debt, notes and accounts payable and long-term debt at March 31, 2007 were as follows:
| Millions of yen | Thousands of U.S. dollars |
|
| As of March 31, 2007 | ||
|---|---|---|
| Investment securities | ¥ 142 | $ 1,203 |
| Property, plant and equipment, at net book value | 6,739 | 57,110 |
| ¥6,881 | $58,314 | |
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, 2007 and 2006 for the Company’s and the subsidiaries’ defined benefit plans:
| Millions of yen | Thousands of U.S. dollars |
||
| As of March 31, | 2007 | 2006 | 2007 |
|---|---|---|---|
| Retirement benefit obligation | ¥(168,882) | ¥(166,006) | $(1,431,203) |
| Plan assets at fair value | 216,152 | 182,663 | 1,831,797 |
| Surplus of plan assets over retirement benefit obligation | 47,270 | 16,657 | 400,593 |
| Unrecognized actuarial gain or loss | (42,969) | (24,616) | (364,144) |
| Unrecognized prior service cost | (6,130) | 262 | (51,949) |
| Net retirement benefit obligation | (1,829) | (7,696) | (15,500) |
| Prepaid pension cost | 38,063 | 33,731 | 322,568 |
| Accrued retirement benefits | ¥ (39,893) | ¥ (41,428) | $ (338,076) |
The components of retirement benefit expenses for the years ended March 31, 2007 and 2006 are outlined as follows:
| Millions of yen | Thousands of U.S. dollars |
||
| Year ended March 31, | 2007 | 2006 | 2007 |
|---|---|---|---|
| Service cost | ¥5,533 | ¥4,961 | $46,890 |
| Interest cost | 6,556 | 5,183 | 55,559 |
| Expected return on plan assets | (7,417) | (4,824) | (62,856) |
| Amortization of actuarial gain or loss | (1,951) | 1,679 | (16,534) |
| Amortization of prior service cost | (419) | 12 | (3,551) |
| Net period retirement benefit costs | 2,301 | 7,012 | 19,500 |
| Contribution to defined contribution plans | 575 | 594 | 4,873 |
| Total | ¥2,877 | ¥7,606 | $24,381 |
The assumptions used in accounting for the above plans were as follows:
| Year ended March 31, | 2007 | 2006 |
|---|---|---|
| Discount rate | Mainly 2.2% | Mainly 2.2% |
| Expected rate of return on plan assets | Mainly 2.2% | Mainly 2.2% |
11. Shareholders’ Equity
The new Corporation Law of Japan (the “Law”), which superseded most of the provisions of the Commercial Code of Japan, went into effect on May 1, 2006. The Law provides that an amount equal to 10% of the amount to be distributed as distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the common stock account. Such distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if certain conditions are met, but neither the capital reserve nor the legal reserve is available for distributions.
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, 2007 and 2006 amounted to ¥10,100 million ($85,593 thousand) and ¥9,728 million, respectively.