Mazda 2007 Annual Report Download - page 74
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of transferring the substitutional portion on the date permission was received from the MHLW for
financial accounting purposes. The Company and the other Domestic Companies did not apply this
transitional provision in the year ended March 31, 2004.
On March 31, 2004, estimated plan assets to be returned to the government were ¥144,871 million. If
the transitional provision had been adopted in the year ended March 31, 2004, based on the estimated
plan assets at March 31, 2004, the effect of the adoption on the consolidated statement of income for
the year ended March 31, 2004 would have been to increase other income by ¥47,517 million.
On July 31, 2005, the Company and the other Domestic Companies obtained approval from the
MHLW to be relieved from the retirement benefit obligation of the substitutional portion which relates
to past employee services and to transfer of the retirement benefit obligation of the substitutional portion
and the related plan assets to the government. On March 28, 2006, the transfer of the plan assets
attributable to the substitutional portion to the government was completed. The effect of the transfer
on the consolidated statement of income for the year ended March 31, 2006 was to increase other
income by ¥59,611 million.
Other than defined benefit plan, defined contribution plan has been adopted. Accrued pension cost
of defined contribution plan was included in consolidated statement of income by ¥1,949 million.
10. Contingent Liabilities
Contingent liabilities at March 31, 2007 were as follows:
Thousands of
Millions of yen U.S. dollars
Discounted trade notes receivable ¥00,348 $002,949
Factoring of receivables with recourse 24,471 207,381
Guarantees of loans and similar agreements 9,096 77,085
Letters of undertaking to provide guarantees for leases for factory facilities 21,339 180,839
11. Equity
The Corporate Law (“the Law”) became effective on May 1, 2006, replacing the Commercial Code
(“the Code”). Under Japanese laws and regulations, the entire amount paid for new shares is required
to be designated as common stock. However, a company may, by a resolution of the Board of
Directors, designate an amount not exceeding one half of the price of the new shares as additional
paid-in capital, which is included in capital surplus.
Under the Law, in cases where dividend distribution of surplus is made, the smaller of an amount
equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional
paid-in capital and legal earnings reserve, must be set aside as additional paid-in capital or legal earnings
reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated
balance sheets. Under the Code, companies were required to set aside an amount equal to at least
10% of cash dividends and other cash appropriations as legal earnings reserve until the total of legal
earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit by a
resolution of the shareholders' meeting or could be capitalized by a resolution of the Board of Directors.
Under the Law, both of these appropriations generally require a resolution of the shareholders’meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the
Code, however, additional paid-in capital and legal earnings reserve could be transferred to retained
earnings by the resolution of the shareholders’meeting as long as the total amount of legal earnings
reserve and additional paid-in capital remained equal to or exceeded 25% of the common stock bal-
ance. Under the Law, all additional paid-in capital and legal earnings reserve may be transferred to