Omron 2002 Annual Report Download - page 40

retirement age, except for payments to directors and corporate auditors which require approval by the shareholders
before payment. The Companies record provisions for termination benefits sufficient to state the liability equal to the
plans’ vested benefits, which exceed the plans’ accumulated benefit obligations.
The consolidated liability for the noncontributory termination plans as of March 31, 2002 and 2001 was ¥3,468 mil-
lion ($26,075 thousand) and ¥2,034 million, respectively. The consolidated expense for the noncontributory termination
and retirement plans for the years ended March 31, 2002, 2001 and 2000 was ¥2,385 million ($17,932 thousand),
¥1,015 million and ¥1,041 million, respectively.
In June 2001, the Japanese Government issued a new law that regulates retirement benefit plans. Under the new
law, effective April 1, 2002, the Company can transfer the obligation for the basic portion and corresponding plan
assets to the social welfare plan subject to approval by the government. The Company has not yet decided if they will
apply for the transfer of the basic portion but if such an application is made and accepted, it may result in a settlement
or curtailment under SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Plans
and for Termination Benefits.” The Company has also not determined the amount of any gain or loss that would result
under such circumstances.
Japanese companies are subject to the Japanese Commercial Code (the “Code”) to which certain amendments
became effective as from October 1, 2001. Prior to October 1, 2001, the Code required at least 50% of the issue price
of new shares, with a minimum of the par value thereof, to be designated as stated capital as determined by resolution
of the Board of Directors. Proceeds in excess of amounts designated as stated capital were credited to additional
paid-in capital. Effective October 1, 2001, the Code was revised and common stock par values were eliminated result-
ing in all shares being recorded with no par value.
Prior to October 1, 2001, the Code also provided that an amount at least equal to 10% of the aggregate amount of
cash dividends and certain other cash payments which are made as an appropriation of retained earnings applicable
to each fiscal period shall be appropriated and set aside as a legal reserve until such reserve equals 25% of stated
capital. Effective October 1, 2001, the revised Code allows for such appropriations to be set aside as a legal reserve
until the total additional paid-in capital and legal reserve equals 25% of stated capital. The amount of total additional
paid-in capital and legal reserve which exceeds 25% of stated capital can be transferred to retained earnings by reso-
lution of the shareholders, which may be available for dividends.
Under the Code, companies may issue new common shares to existing shareholders without consideration as a
stock split pursuant to a resolution of the Board of Directors. Prior to October 1, 2001, the amount calculated by divid-
ing the total amount of shareholders’ equity by the number of outstanding shares after the stock split could not be less
than ¥50. The revised Code eliminated this restriction.
Prior to October 1, 2001, the Code imposed certain restrictions on the repurchase and use of treasury stock.
Effective October 1, 2001, the Code eliminated these restrictions allowing companies to repurchase treasury stock by
a resolution of the shareholders at the general shareholders’ meeting and dispose of such treasury stock by resolution
of the Board of Directors after March 31, 2002. The repurchased amount of treasury stock cannot exceed the amount
available for future dividend plus amount of stated capital, additional paid-in capital or legal reserve to be reduced in
the case where such reduction was resolved at the general shareholders’ meeting.
The Code permits companies to transfer a portion of additional paid-in capital and legal reserve to stated capital by
resolution of the Board of Directors. The Code also permits companies to transfer a portion of unappropriated retained
earnings, available for dividends, to stated capital by resolution of the shareholders.
Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividends
are applicable. Semiannual interim dividends may also be paid upon resolution of the Board of Directors, subject to
certain limitations imposed by the Code.
Under the Code, the amount legally available for dividends is based on retained earnings as recorded in the books
of the Company for Japanese financial reporting purposes. At March 31, 2002, retained earnings amounting to
¥62,621 million ($470,835 thousand) were available for future dividends subject to legal reserve requirements.
Stock Options
In June 1998, the Company introduced stock-based compensation plans. Stock options are granted to directors
and certain officers to purchase shares of common stock at a price not less than market price at the date of grant.
Options are granted with vesting periods of 1-2 years. As of March 31, 2002, options outstanding are summarized as follows:
Grant date Authorized and Option Exercisable Exercised and
granted shares exercise price term (forfeited or expired) shares
June 25, 1998 158,000 ¥2,162 July 1, 1999 - 73,000
June 30, 2001 (85,000)
June 25, 1999 158,000 ¥1,839 July 1, 2001 - 10,000
June 30, 2004 (5,000)
June 27, 2000 260,000 ¥2,936 July 1, 2002 - June 30, 2005 —
June 26, 2001 292,000 ¥2,306 July 1, 2003 - June 30, 2006 —
38 Omron Corporation
8. Shareholders’
Equity