Square Enix 2006 Annual Report Download - page 61

5 8 5 9
A n n u a l R e p o r t 2 0 0 6
The future benefit payments for the plan are expected
as follows:
Thousands of
Years ending March 31 Millions of yen U.S. dollars
2007 ¥0,500 $04,257
2008 503 4,280
2009 577 4,913
2010 516 4,392
2011 518 4,409
2012–2016 2,873 24,458
Retirement Benefit to Directors and Statutory Auditors
In order to prepare for the payment of retirement benefit to the
Company’s directors and statutory auditors in the future, the
Company internally funds a retirement allowance. The Board
of Directors determined the certain formula for calculation of
retirement benefits, pursuant to which, the benefits are calcu-
lated based on a certain fixed amount multiplied by the number
of years of office and the coefficient predetermined by the
Board according to the title of directors. New legislature, the
Japanese Corporation Law (“ JCL” ), was introduced effective
May 1st, 2006 as an amendment of former Japanese Commer-
cial Code (“ JCC” ). The JCL requires the Company to have its
shareholders’ approval for payment, and the Company accrues
retirement allowance according to such formula until the
benefits are approved by the shareholders. The balances of
¥189 million and ¥55 million at March 31, 2006 and March 31,
2005, respectively, are presented as “ other long-term liabilities”
in the consolidated balance sheets. Charges to income for the
directors’ and corporate auditors’ retirement plans were ¥19
million, ¥121 million and ¥6 million in 2006, 2005 and 2004,
respectively.
1 5 . L o n g -T e r m D e b t
Long-term debt as of March 31, 2006 is as follows:
Thousands of
Millions of yen U.S. dollars
2006 2006
Unsecured Zero Coupon Convertible Debenture,
due in November 2010 ¥50,000 $425,651
Total Long-term debt ¥50,000 $425,651
Yen denominated unsecured zero coupon convertible
debenture was privately issued offshore on November 25, 2005
to Daiwa Securities SMBC Europe Limited, a UK corporation.
The debenture indenture has a provision that the conversion
price per share shall be adjusted once in a year on the 3rd Friday
in every November (“ the date of price adjustment” ) in 2006
and thereafter to the price 6% below the average of volume-
weighted average prices of underlying stock of the Company at
the Tokyo Stock Exchange (“ TSE” ) for ten consecutive trading
days on or before the date of price adjustment. Notwithstanding
the foregoing, the conversion price shall not be adjusted below
the floor price, which is equal to the closing price of underlying
stock of the Company at the TSE as of November 8, 2005, the
date one-day before the date when the Company decided the
issue. The Company has an option, (“ Option” ), to move the
floor price per share to the market price of underlying stock at
the time of the exercise of Option or ¥1,700, whichever is then
greater. The Option is exercisable only once throughout the life
of debenture. The initial conversion price per share applicable
on or before the date of first price adjustment and the floor
price per share are ¥5,100 and ¥3,400, respectively. As of the
date of issuance of this report, the Company has not exercised
the Option.
If underlying stock is traded at the price of 115% of conver-
sion price then applicable for 10 consecutive trading days on
the TSE, the Company is able to redeem the debenture in full
at par, with the irrevocable 30 days advanced notice to the debt
holder commencing from the end of such 10 consecutive trading
days, at any time during the period on or after November 25,
2005 until November 24, 2010. The Company is also given the
right to redeem the debenture in full at 1.015 of its face value,
with the irrevocable 30 days advanced notice to the debt holder
prior to the redemption, on or after November 28, 2005 before
the exercise of the Option. Once the Option is exercised, the
Company is able to redeem the debenture in full at par, with
the irrevocable 30 days advanced notice to the debt holder
prior to the redemption, after the date 6 months after the date
of exercise of the Option until November 24, 2010.
Line of Credit
As of March 31, 2006, the Company had an unused line of
credit with a bank in the amount of ¥71,000 million at various
rates expiring in 2007. No guarantee is provided for such
line-of-credit.
1 6 . In c o m e T a x e s
Domestic and foreign income before income taxes are as follows:
Thousands of
Years ended March 31 Millions of yen U.S. dollars
2006 2005 2004 2006
Domestic ¥0,195 ¥21,745 ¥4,577 $01,665
Foreign 2,934 2,547 3,031 24,979
Total ¥3,129 ¥24,292 ¥7,608 $26,644