Bridgestone 2004 Annual Report Download - page 45

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Financial Section
NOTE 7—RETIREMENT AND PENSION PLANS
The Company and its domestic subsidiaries have severance payment plans for employees, directors (members of the Board of
Directors) and corporate auditors.
Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the
rate of pay at the time of termination, years of service and certain other factors. Such retirement benefits are made in the form of lump-
sum severance payment from the Company or from its domestic subsidiaries and annuity payments from a trustee. Employees are
entitled to larger payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary
retirement at certain specific ages prior to the mandatory retirement age.
The Company and certain domestic subsidiaries have two types of pension plans for employees: a non-contributory and a contribu-
tory funded defined benefit pension plan. The contributory funded defined benefit pension plan, established under the Japanese
Welfare Pension Insurance Law, covers a substitutional portion of the governmental pension program managed by the Company on
behalf of the government and a corporate portion established at the discertion of the Company. In accordance with the Defined Benefit
Pension Plan Law enacted in April 2002, the Company applied for an exemption from obligation to pay benefits for future employee
services related to the subsitutional portion which would result in the transfer of the pension obligations and related assets to the gov-
ernment upon approval. The Company obtained approval for exemption from the future obligation from the Ministry of Health,
Labor and Welfare on January 1, 2004.
The substitutional portion of the plan assets which will be transferred to the government in 2005 is measured to be approximately
¥90 billion as at December 31, 2004. If such substitutional portion were transferred to the government on December 31, 2004, income
before income taxes and minority interests would have increased by approximately ¥77 billion. The Company and certain domestic
subsidiaries intend to recognize a gain or loss on exemption from pension obligations of the substitutional portion of the governmen-
tal program in the fiscal year of 2005 when the pension obligations and related plan assets are transferred to the government. The
impact on its consolidated results of operation, when finally settled, may differ from the amounts noted above because the amount of
the benefit obligation and the related plan assets to be transferred to the government may change.
The liability for employees’ retirement benefits at December 31, 2004 and 2003 consisted of the following:
Thousands of
Millions of yen U.S. dollars
2004 2003 2004
Projected benefit obligation ¥ 685,060 ¥ 696,372 $ 6,573,841
Fair value of plan assets (423,945) (419,491) (4,068,180)
Unrecognized prior service cost 38,407 (333) 368,554
Unrecognized actual loss (108,069) (86,154) (1,037,031)
Unrecognized transitional obligation (11,806) (13,783) (113,290)
Prepaid benefit cost 20,169 26,324 193,542
Other 42,204 31,740 404,990
Net liability ¥ 242,020 ¥ 234,675 $ 2,322,426
Certain subsidiaries adopt a simplified method in calculating their retirement benefit obligation.
Of the accrued pension and liability for retirement benefits noted above, a liability for postretirement benefits of ¥37,715 million
($361,913 thousand) and ¥34,863 million is included in the consolidated balance sheets at December 31, 2004 and 2003, respectively.
In addition to the above, certain subsidiaries also participate in a multi-employer pension plan covering all of their employees. There
existed ¥221 million ($2,120 thousand) and ¥807 million at December 31, 2004 and 2003, respectively, of pension assets at fair value in
the multi-employer pension plan; however, the portion of these assets belonging to the subsidiaries could not be reasonably calculated.