Toyota 2006 Annual Report Download - page 115

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113
In June 2001, the CDBPPL was enacted and allowed any EPF
to terminate its operation relating to the Substitutional
Portion that in the past an EPF had operated and managed in
lieu of the government, subject to approval from the Japanese
Minister of Health, Labour and Welfare. In September 2003,
Toyota Motor Pension Fund, the parent company’s EPF under
JWPIL, obtained the approval from the Minister for the exemp-
tion from benefit payments related to employee services of the
Substitutional Portion. In January 2004, Toyota Motor Pension
Fund completed the transfer of the plan assets attributable to
the Substitutional Portion to the government. In addition,
during the years ended March 31, 2004 and 2005, sub-
sidiaries in Japan that had EPFs under JWPIL also completed
the transfer of the plan assets attributable to the
Substitutional Portion in compliance with the same proce-
dures followed by the parent company.
In accordance with the consensus on EITF Issue No. 03-2,
Accounting for the Transfer to the Japanese Government of
the Substitutional Portion of Employee Pension Fund Liabilities
(“EITF 03-2”), Toyota accounted the entire separation process,
upon completion of transfer of the plan assets attributable to
the Substitutional Portion to the government, as a single set-
tlement transaction. During the years ended March 31, 2004
and 2005, Toyota recognized settlement losses of ¥323,715
million and ¥96,066 million, respectively, as part of net peri-
odic pension costs which are the proportionate amounts of
the net unrecognized losses immediately prior to the separa-
tion related to the entire EPFs under JWPIL, and which are
determined based on the proportion of the projected benefit
obligation settled to the total projected benefit obligation
immediately prior to the separation. Toyota also recognized as
reductions of net periodic pension costs totaling ¥109,885
million and ¥21,722 million for the years ended March 31,
2004 and 2005, respectively, which resulted in gains attrib-
uted to the derecognition of previously accrued salary pro-
gression. In addition, Toyota recognized gains of ¥320,867
million and ¥121,553 million for the years ended March 31,
2004 and 2005, respectively, which represented the differ-
ences between the obligation settled and the assets trans-
ferred to the government. These gains and losses are reflected
in the consolidated statement of income for the years ended
March 31, 2004 and 2005 as follows:
Yen in millions
For the year ended March 31, 2004
Costs of Selling, general
products sold and administrative Total
Settlement losses ................................................................................................................ ¥(288,177) ¥ (35,538) ¥(323,715)
Gains on derecognition of previously accrued salary progression.......................................... 98,079 11,806 109,885
Gains on difference between the obligation settled and the assets transferred ..................... — 320,867 320,867
Total........................................................................................................................... ¥(190,098) ¥297,135 ¥ 107,037
Yen in millions
For the year ended March 31, 2005
Costs of Selling, general
products sold and administrative Total
Settlement losses ................................................................................................................ ¥(85,379) ¥ (10,687) ¥ (96,066)
Gains on derecognition of previously accrued salary progression.......................................... 19,494 2,228 21,722
Gains on difference between the obligation settled and the assets transferred ..................... — 121,553 121,553
Total........................................................................................................................... ¥(65,885) ¥113,094 ¥ 47,209
All these gains and losses are non-cash gains and losses,
and reported on a net basis in “Pension and severance costs,
less payments” in the consolidated statements of cash flows
for the years ended March 31, 2004 and 2005.
During the year ended March 31, 2006, no gains or losses
relating to the transfer to the government of the
Substitutional Portion of the EPF liabilities.
Toyota uses a March 31 measurement date for the majority
of its benefit plans.