Ricoh 2005 Annual Report Download - page 46

In accordance with the provisions of SFAS 87, Ricoh has recorded an
adjustment for minimum pension liability at March 31, 2004 and 2005.
This liability represents the excess of the accumulated benefit
obligations over the fair value of plan assets and severance costs already
recognized before recording the minimum pension liability. This excess
is primarily attributable to a substantial reduction in the discount rate
used in pension calculation and loss on plan assets. A corresponding
amount was recognized as an intangible asset to the extent of the
unrecognized prior service cost, and the balance was recorded as a
component of accumulated other comprehensive income ( loss) , net of
tax.
The projected benefit obligations and the fair value of plan assets for the
pension plans with projected benefit obligations in excess of plan assets,
and the accumulated benefit obligations and the fair value of plan
assets for the pension plans with accumulated benefit obligations in
excess of plan assets are as follows:
45 ANNUAL REPORT 2005
Thousands of
Millions of Yen U.S. Dollars
2004 2005 2005
Plans with projected benefit obligations in excess of plan assets:
Projected benefit obligations ¥308,004 ¥338,201 $3,160,757
Fair value of plan assets 210,976 235,161 2,197,766
Plans with accumulated benefit obligations in excess of plan assets:
Accumulated benefit obligations ¥229,387 ¥228,695 $2,137,336
Fair value of plan assets 194,654 196,723 1,838,533
Ricoh’s benefit plan asset allocation at March 31, 2004 and 2005 are as follows:
2004 2005
Equity securities 50.3% 48.5%
Debt securities 14.6% 27.1%
Life insurance company general accounts 15.4% 14.8%
Other 19.7% 9 .6 %
Total 100.0% 100.0%
As discussed in Note 5, Ricoh contributed certain marketable equity
securities to an employee retirement benefit trust. The securities held in
this trust are qualified as plan assets under SFAS 87.
Common stock and bonds of the Company and certain of its domestic
subsidiaries included in plan assets were immaterial at March 31, 2004
and 2005.
Ricoh’s investment policies and strategies for the pension benefits do
not use target allocations for the individual asset categories. Ricoh’s
investment goals are to maximize returns subject to specific risk
management policies. Its risk management policies permit investments
in mutual funds and debt and equity securities and prohibit direct
investment in derivative financial instruments. Ricoh addresses
diversification by the use of mutual fund investments whose underlying
investments are in domestic and international fixed income securities
and domestic and international equity securities. These mutual funds
are readily marketable and can be sold to fund benefit payment
obligations as they become payable.
Ricoh uses a December 31 measurement date for the pension plans.
Ricoh expects to contribute ¥12,260 million ( $114,579 thousand) to its
pension plan for the year ended March 31, 2006.
The following benefit payments, which reflect expected future service, as
appropriate, are expected to be paid:
Thousands of
Years ending March 31 Millions of Yen U.S. Dollars
2006 ¥11,559 $108,028
2007 13,342 124,691
2008 16,382 153,103
2009 17,151 160,290
2010 17,657 165,019
2011 – 2015 84,421 788,981
Employees of certain domestic subsidiaries not covered by the EPF plan
and directors of the Company are primarily covered by unfunded
retirement allowances plans. The payments to directors are subject to
shareholders’ approval.