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On March 31, 2007, the Company adopted the recognition and disclosure provisions of SFAS No. 158. SFAS No. 158 requires
the Company to recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit
obligations) of its pension plans in the consolidated balance sheet, with a corresponding adjustment to accumulated other
comprehensive income (loss), net of tax. The adjustment to accumulated other comprehensive income (loss) represents the
net unrecognized actuarial losses and unrecognized prior service costs. Prior to March 31, 2007, these amounts were netted
against the plan’s funded status in the consolidated balance sheet pursuant to the provisions of SFAS No. 87. These amounts
are subsequently recognized as net periodic benefit cost pursuant to the Company’s historical accounting policy for amortizing
such amounts. Furthermore, actuarial gains and losses that are not recognized as net periodic benefit cost in the same periods
are recognized as a component of other comprehensive income (loss). Those amounts are subsequently recognized as a
component of net periodic benefit cost on the same basis.
The incremental effects of adopting the provisions of SFAS No. 158 on the Company’s consolidated balance sheet as of
March 31, 2007 are presented in the following table. The adoption of SFAS No. 158 had no effect on the Company’s
consolidated statement of operations for the year ended March 31, 2007 or for any prior period presented, and it will not
effect the Company’s operating results in future periods. Had the Company not been required to adopt SFAS No. 158 as of
March 31, 2007, it would have recognized an additional minimum liability pursuant to the provisions of SFAS No. 87. The
effect of recognizing the additional minimum liability is included in the table below in the column labeled “Before Application
of SFAS No. 158.”
Millions of yen
Before
application of
SFAS No. 158 Adjustment
After
application of
SFAS No. 158
2007
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 676,287 ¥11,267 ¥ 687,554
Investments and advances, including affiliated companies . . . . . . . . . . . . . . . 1,052,979 (3,255) 1,049,724
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,418,075 53,348 1,471,423
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 870,107 32,057 902,164
Retirement and severance benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 760,199 58,258 818,457
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,080,285 (6,536) 1,073,749
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (66,031) (22,419) (88,450)
Net periodic benefit cost for the funded benefit pension plans and the unfunded lump-sum payment plans for the years ended
March 31, 2009, 2008 and 2007 consists of the following components:
Millions of yen
Thousands of
U.S. dollars
2009 2008 2007 2009
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 72,064 ¥ 71,577 ¥ 72,648 $ 735,347
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,701 56,079 55,888 558,173
Expected return on plan assets for the period . . . . . . . . . . . . . . (45,804) (44,911) (40,253) (467,388)
Amortization of prior service benefit . . . . . . . . . . . . . . . . . . . . . . (21,103) (23,627) (18,571) (215,336)
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,857 58,326 56,388 733,235
Transfer to defined contribution pension plan . . . . . . . . . . . . . . . (1,289) (1,611) 1,039 (13,153)
Curtailment gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –(388) – –
Employees’ contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (489) (346) (362) (4,990)
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥129,937 ¥115,099 ¥126,777 $1,325,888
Prior to the adoption of the recognition provisions of SFAS No. 158 on March 31, 2007, unrecognized prior service benefit
and cost and unrecognized actuarial gain and loss were amortized using the straight-line method over the average remaining
service period of active employees.
66 Hitachi, Ltd.
Annual Report 2009