Toshiba 2004 Annual Report Download - page 59

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The components of the net periodic pension and severance cost for the years ended March 31, 2004 and 2003 are as
follows:
Thousands of
Millions of yen U.S. dollars
Years ended March 31 200 4 2003 2004
Service cost—benefits earned during the year ¥ 45,689 ¥ 52,287 $ 431,028
Interest cost on projected benefit obligation 55,075 59,053 519,576
Expected return on plan assets (31,052) (35,546) (292,943)
Amortization of unrecognized net obligation at transition 12,025 12,025 113,443
Amortization of prior service cost (5,170) (5,972) (48,774)
Recognized actuarial loss 42,857 29,184 404,311
Settlement loss 188,106 —1,7 74,585
Net periodic pension and severance cost ¥307,5 30 ¥111,031 $2,901,226
For the year ended March 31, 2004, the Company contributed certain marketable equity securities, not including
those of the Company and affiliates, to employee retirement benefit trusts, with no cash proceeds thereon. The fair
value of these securities at the time of contribution was ¥34,426 million ($324,774 thousand). The Company expects
to contribute ¥45,137 million ($425,821 thousand) to its domestic pension and severance plans in the year ending
March 31, 2005.
In January 2003, the Emerging Issue Task Force reached a consensus on Issue No. 03-2 (“ EITF 03-2” ),
Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund
Liabilities, which addresses accounting for a transfer to the Japanese government of a substitutional portion of EPF
Plans. In September 2002, the Company received an approval from the Japanese government to transfer the future
benefit obligation related to the substitutional portion. In December 2003, the Company received an approval to
separate the remaining substitutional portion related to past service by its employees. In March 2004, the Company
completed the transfer of the substitutional portion of the benefit obligation and the related government-specified
portion of the plan assets which were computed by the Japanese government, and was relieved of all related
obligations. The Company has accounted for the entire process at completion of the transfer to the Japanese
government of the substitutional portion of the benefit obligation and the related plan asset, as a single settlement
transaction in accordance with EITF 03-2.
As a result, the Company recorded a gain of ¥48,945 million ($461,745 thousand) for the year ended March 31,
2004. The subsidy of ¥237,051 million ($2,236,330 thousand) from the government is calculated as the difference
between the obligation settled and the assets transferred determined pursuant to the government formula, less
derecognized amounts of previously accrued salary progression at the time of settlement of ¥50,079 million
($472,443 thousand).
Weighted-average assumptions used to determine benefit obligations as of March 31, 2004 and 2003 and net
periodic pension and severance cost for the years then ended were as follows:
March 3 1 2004 2003
Discount rate 2.7% 3.0%
Rate of compensation increase 3.0% 1.9%
Years ended March 31 2004 2003
Discount rate 3.0% 3.5%
Expected long-term return on plan assets 4.0% 4.0%
Rate of compensation increase 1.9% 2.1%
Following is information about domestic pension and severance plans:
The Company determines the expected long-term rate of return in consideration of the target allocation of the plan
assets, the current expectation of long-term returns on the assets and actual returns on plan assets.