Toshiba 1998 Annual Report Download - page 47

Toshiba Corporation Annual Report 1998 45.
Certain of th e secured loan agreem ents contain provisions which perm it the lenders to require addition al collateral.
Substan tially all of the un secured loan agreements perm it the lenders to require collateral or guaran tors for such
loans. Certain of the secured and un secured loan agreem ents require prior approval by the banks an d trustees before
an y distribution s (includin g cash dividends) m ay be made from current or retain ed earnin gs.
Assets pledged as collateral for short-term borrowin gs and lon g-term debt at March 31, 1998 are property, plant and
equipm en t with a book value of ¥38,927 m illion ($294,902 th ousand), fin ance receivables, n et of ¥1,403 m illion
($10,629 thousan d) an d lon g-term fin ance receivables, n et of ¥845 m illion ($6,402 thousan d).
The agreem en ts of the convertible yen deben tures (1) establish certain restrictions on the paym en t of dividen ds an d
(2) perm it early redemption of th e deben tures at the option of the compan y, in wh ole or in part, at defin ed prices.
At March 31, 1998, 138,517 thousan d sh ares of com m on stock would be issued upon conversion of all convertible
deben tures of the com pan y.
The aggregate an nual m aturities of long-term debt are as follows: Million s Thousan ds of
Year ending March 31 of yen U.S. dollars
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 367,552 $ 2,784,485
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221,754 1,679,954
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224,337 1,699,523
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,825 892,614
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,354 1,184,500
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292,080 2,212,727
¥1,379,902 $10,453,803
9. LIABILITY FOR SEVERANCE INDEMNITIES:
All em ployees wh ose services with th e com pany an d its subsidiaries are term inated are usually en titled to lum p-sum
severan ce in dem n ities determ ined by referen ce to their curren t basic rate of pay, len gth of service and con ditions
under which the term ination occurs. The obligation for the severance indem n ity benefits is provided for through
accruals and fun ding of tax-qualified pen sion plans and contributory trusteed employee pen sion fun ds.
Certain subsidiaries h ave tax-qualified pen sion plans wh ich cover all or a part of th e in dem n ities payable to
qualified employees at the tim e of term in ation . Th e fun ding policy for the plan s is to con tribute am ounts required to
m ain tain sufficien t plan assets to provide for accrued ben efits, subject to th e lim itation on deductibility im posed by
Japanese incom e tax laws.
The com pan y and several subsidiaries also h ave contributory trusteed em ployee pension fun ds. Th e contributory
em ployee pension fun ds are com prised of a portion coverin g part of th e severance indemnities ben efits and an other
portion coverin g social security benefits, to which th e com pany, subsidiaries an d em ployees m ake contribution s.
The tran sition obligation resulting from th e adoption of SFAS No. 87, “Employers’ Accounting for Pension s”, an d
prior service cost are being am ortized over the rem ain ing service years of the em ployees, and th e “projected unit
credit” actuarial meth od is being used to determ ine th e n et periodic pension cost and the projected ben efit obligation .
Net periodic pen sion cost for 1998 an d 1997 in cluded the following com pon ents: Thousands of
Million s of yen U.S. dollars
Years ended March 31 1998 1997 1998
Service cost – ben efits earned during th e year . . . . . . . . . . . . . . . . . ¥ 40,781 ¥ 40,648 $ 308,947
In terest cost on projected ben efit obligation . . . . . . . . . . . . . . . . . . 56,552 51,993 428,424
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,194) (31,368) (137,833)
Net am ortization and deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,431 24,054 41,144
Net periodic pen sion cost . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 84,570 ¥ 85,327 $ 640,682
A weigh ted average discoun t rate of 4.0 percen t and 4.5 percen t, an expected lon g-term rate of return on plan assets
of 4.0 percen t, and an assum ed rate of in crease in salary levels of 3.0 percent were used in developin g th e n et periodic
pen sion cost for 1998 an d 1997, respectively.