Brother International 2010 Annual Report Download - page 32

Notes to Consolidated Financial Statements
Brother Industries, Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2010 and 2009
Retirement Allowances for Directors and Corporate Auditors
Retirement allowances for directors and corporate auditors are paid subject to approval of the shareholders in accordance with the Companies Act
of Japan.
Certain domestic consolidated subsidiaries recorded liabilities for their unfunded retirement allowance plan covering all of their directors and
corporate auditors.
Employees’ Retirement Benefits
Under the pension plan, employees terminating their employment are, in most circumstances, entitled to pension payments based on their aver-
age pay during their employment, length of service and certain other factors.
The Company and certain domestic subsidiaries had two types of pension plans for employees: a non-contributory and a contributory funded
defined benefit pension plan. The contributory funded defined benefit pension plan, applied by the Company and established under the Japa-
nese Welfare Pension Insurance Law, covered a substitutional portion of the government and a corporate portion established at the discretion of
the Company. The Company transferred the substitutional portion of the pension obligations and related assets to the government in March
2006. The Company and certain domestic subsidiaries implemented a defined contribution pension plan in fiscal 2005 and on October 1, 2009 by
which a part of the former contributory and non-contributory defined benefit pension plans were terminated. The Company and certain domes-
tic subsidiaries applied accounting treatments specified in the guidance as described in Note 2(15). Certain foreign subsidiaries have defined
benefit pension plans and defined contribution pension plans.
The liability for employees’ retirement benefits at March 31, 2010 and 2009 consisted of the following:
Millions of Yen
Thousands of
U.S. Dollars
2010 2009 2010
Projected benefit obligation ¥ (52,374) ¥ (54,490) $ (563,161)
Fair value of plan assets 44,610 40,552 479,677
Unrecognized actuarial loss 14,395 19,220 154,784
Unrecognized prior service benefit (257) (355) (2,763)
Net asset 6,374 4,927 68,537
Prepaid pension cost 13,406 10,787 144,150
Liability for employees’ retirement benefits ¥ (7,032) ¥ (5,860) $ (75,613)
The components of net periodic benefit costs for the years ended March 31, 2010 and 2009 are as follows:
Millions of Yen
Thousands of
U.S. Dollars
2010 2009 2010
Service cost ¥ 1,993 ¥ 2,173 $ 21,431
Interest cost 1,578 1,710 16,968
Expected return on plan assets (1,448) (1,822) (15,570)
Recognized actuarial loss 1,941 897 20,871
Amortization of prior service benefit 43 (78) 462
Additional retirement payments and others * 164 430 1,763
Loss on transfer to defined contribution pension plan 2,985 —32,097
Contribution to defined contribution pension plans 1,022 774 10,989
Net periodic retirement benefits cost ¥ 8,278 ¥ 4,084 $ 89,011
*Includes special termination benefits of ¥327 million paid by a certain consolidated subsidiary for the year ended March 31, 2009.
Assumptions used for the years ended March 31, 2010 and 2009 were as follows:
2010 2009
Periodic recognition of projected benefit obligation Straight-line method Straight-line method
Discount rate Principally from 1.5% to 2.0% Principally from 1.5% to 2.0%
Expected rate of return on plan assets Principally 3.0% Principally 3.0%
Recognition period of actuarial gain / loss Principally from 7 years to 17 years Principally from 7 years to 16 years
Amortization period of prior service benefit / cost Principally from 7 years to 16 years Principally from 7 years to 14 years
30 Brother Annual Report 2010