Omron 2003 Annual Report Download - page 43

The Company and its domestic subsidiaries sponsor termination and retirement benefit plans which cover sub-
stantially all domestic employees. Benefits are based on the employee’s years of service, with some plans consid-
ering compensation and certain other factors. If the termination is involuntary, the employee is usually entitled to
greater payments than in the case of voluntary termination.
The Company and its domestic subsidiaries fund a portion of the obligations under these plans. The general
funding policy is to contribute amounts computed in accordance with actuarial methods acceptable under
Japanese tax law. The Company and substantially all domestic subsidiaries have a contributory termination and
retirement plan which is interrelated with the Japanese government social welfare program and consists of a basic
portion requiring employee and employer contributions plus an additional portion established by the employers.
Periodic pension benefits required under the basic portion are prescribed by the Japanese Ministry of Health,
Labour and Welfare, commence at age 65 and continue until the death of the surviving spouse. Benefits under the
additional portion are usually paid in a lump sum at the earlier of termination or retirement although periodic pay-
ments are available under certain conditions.
The following table is the reconciliation of beginning and ending balances of the benefit obligations and the fair
value of the plan assets at March 31:
Thousands of
Millions of yen U.S. dollars
2003 2002 2003
Change in benefit obligation:
Benefit obligation at beginning of year........................................................ ¥ 232,178 ¥205,907 $1,934,817
Service cost, less employees’ contributions ............................................... 9,611 8,401 80,092
Interest cost................................................................................................. 5,804 6,042 48,367
Employees’ contributions ............................................................................ 942 1,053 7,850
Plan amendments........................................................................................ —(4,504) —
Actuarial losses............................................................................................ 13,340 20,138 111,167
Benefits paid ............................................................................................... (8,829) (3,590) (73,575)
Settlement paid ........................................................................................... (4,668) (1,269) (38,900)
Benefit obligation at end of year.............................................................. ¥ 248,378 ¥232,178 $2,069,818
Change in plan assets:
Fair value of plan assets at beginning of year ............................................. 119,487 121,875 995,725
Actual return on plan assets........................................................................ (17,608) (7,974) (146,733)
Employers’ contributions............................................................................. 6,233 6,922 51,942
Employees’ contributions ............................................................................ 942 1,053 7,850
Benefits paid................................................................................................ (3,743) (2,389) (31,192)
Fair value of plan assets at end of year ................................................... ¥ 105,311 ¥119,487 $877,592
Funded status.................................................................................................. (143,067) (112,691) (1,192,226)
Unrecognized net actuarial loss ...................................................................... 113,301 81,051 944,175
Unrecognized prior service credit ................................................................... (3,904) (4,204) (32,532)
Unrecognized transition obligation.................................................................. 268 538 2,233
Net amount recognized ........................................................................... ¥(33,402) ¥(35,306) $(278,350)
Amounts recognized in the consolidated balance sheets:
Accrued liability ........................................................................................... ¥(117,382) ¥(71,899) $(978,183)
Accumulated other comprehensive loss (gross of tax) ............................... 83,980 36,593 699,833
Net amount recognized ........................................................................... ¥(33,402) ¥(35,306) $(278,350)
Accumulated benefit obligation at end of year........................................... ¥ 222,693 ¥191,386 $1,855,775
The provisions of SFAS No. 87, “Employers’ Accounting for Pensions,” require the recognition of an additional
minimum pension liability for each defined benefit plan to the extent that a plan’s accumulated benefit obligation
exceeds the fair value of plan assets and accrued pension liabilities. The net change in the minimum pension liabili-
ty is reflected as other comprehensive income, net of related tax effect. The unrecognized transition obligation, the
unrecognized net actuarial loss and the prior service credit are being amortized over 15 years.
8. Termination and
Retirement
Benefits
Annual Report 2003 • 41