Canon 2003 Annual Report Download - page 67

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65
Information with respect to domestic plans is as follows:
Measurement date
The Company and certain of its domestic subsidiaries use a
October 1 measurement date for the majority of its plans.
Assumptions
Weighted-average assumptions used to determine
benefit obligations at December 31: 2003 2002
Discount rate 2.5% 2.5%
Assumed rate of increase in future compensation levels 1.9% 3.3%
“model” portfolio when and to the extent considered necessary to
achieve the expected long-term rate of return on plan assets.
Equity securities include common stock of the Company and
certain of its domestic subsidiaries in the amounts of ¥796 million
($7,439 thousand) (0.2 percent of total domestic plan assets) and
¥1,477 million (0.4 percent of total domestic plan assets) at
December 31, 2003 and 2002, respectively.
Cash flows
Canon expects to contribute ¥40,044 million ($374,243 thousand)
to its domestic defined benefit plan in the year ending December
31, 2004.
Weighted-average assumptions used to determine net
periodic benefit cost for the years ended December 31: 2003 2002 2001
Discount rate 2.5% 2.5% 3.0%
Assumed rate of increase in future compensation levels 3.3% 3.3% 2.1%
Expected long-term rate of return on domestic plan assets 3.1% 3.0% 4.0%
Canon determines the expected long-term rate of return based on
the expected long-term return of the various asset categories in
which it invests. Canon considers the current expectations for
future returns and the actual historical returns of each plan asset
category.
Obligations
The accumulated benefit obligation for all domestic defined benefit
plans was ¥647,447 million ($6,050,907 thousand) and ¥652,416
million at December 31, 2003 and 2002, respectively.
Asset Category
2003 2002
Equity securities
29.6% 35.6%
Debt securities
26.8% 32.8%
Cash
21.8% 6.8%
Life insurance company general accounts
21.1% 24.1%
Other
0.7% 0.7%
100.0% 100.0%
Canon’s investment policies are designed to ensure adequate plan
assets are available to provide future payments of pension benefits
to eligible participants. Taking into account the expected long-term
rate of return on plan assets, Canon formulates a “model” portfolio
comprised of the optimal combination of equity securities and debt
securities. Plan assets are invested in individual equity and debt
securities using the guidelines of the “model” portfolio in order to
produce a total return that will match the expected return on a
mid-term to long-term basis. Canon evaluates the gap between
expected return and actual return of invested plan assets on an
annual basis to determine if such differences necessitate a revision
in the formulation of the “model” portfolio. Canon revises the
Plan assets
Canon’s domestic benefit plan weighted-average asset allocations
at December 31, 2003 and 2002 by asset category are as follows: