Konica Minolta 2014 Annual Report Download - page 70

(3) Net retirement benefi t costs
Millions of yen
2013
a. Service costs ............................................... ¥ 4,597
b. Interest costs ............................................... 3,885
c. Expected return on plan assets ................... (2,196)
d. Amortization of actuarial differences ........... 1,739
e. Amortization of prior service costs .............. (1,234)
f. Retirement benefi t costs (a+b+c+d+e) ....... 6,793
g. Gain/loss on changing to the defi ned
contribution pension plan ............................ 0
h. Contributions to defi ned contribution
pension plans ............................................... 3,492
Total (f+g+h) .................................................... ¥10,285
Note: Retirement benefi t costs of consolidated subsidiaries using a simplifi ed method
are included in ”a. Service costs”.
(4) Actuarial assumptions
The principal actuarial assumptions used in the calculation of the
above information are as follows:
2013
Method of attributing retirement
benefi ts to periods of service
Periodic allocation
method for projected
benefi t obligations
Discount rate .............................................. Mainly 1.7%
Expected rate of return on plan assets ....... Mainly 1.25%
Amortization of unrecognized prior
service cost ............................................... Mainly 10 years
Amortization of unrecognized actuarial
differences ................................................ Mainly 10 years
24. Derivatives
The Companies utilize derivative instruments, including foreign currency exchange forward contracts, currency options, currency
swaps, and interest rate swaps, to hedge against the adverse effects of fl uctuations in foreign currency exchange rates and interest
rates. Additionally, the Companies have a policy of limiting the activity of such transactions to only hedge identifi ed exposures and not
to hold transactions for speculative or trading purposes.
Risks associated with derivative transactions
Although the Companies are exposed to credit-related risks and risks associated with changes in interest rates and foreign exchange
rates, such derivative instruments are limited to hedging purposes only and the risks associated with these transactions are limited.
All derivative contracts entered into by the Companies are with selected major fi nancial institutions based upon their credit ratings and
other factors. Such credit-related risks are not anticipated to have a signifi cant impact on the Companies’ results.
Risk control system for derivative transactions
In order to manage market and credit risks, the Finance Division of the Company is responsible for setting or managing the position
limits and credit limits under the Company’s internal policies for derivative instruments. Resources are assigned to each function,
including transaction execution, administration, and risk management, independently, in order to clarify the responsibility and role of
each function.
The principal policies on foreign currency exchange instruments and other derivative instruments of the Company and its subsidiar-
ies are approved by the Management Committee of the Company. All derivative instruments are reported monthly to the respective
responsible offi cer. Market risks and credit risk for subsidiaries are controlled and assessed based on internal rules. Derivative instru-
ments are approved by the Finance Manager of the Company and the President or equivalent of other subsidiaries, respectively.
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KONICA MINOLTA, INC. Annual Report 2014