Casio 2006 Annual Report Download - page 37

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Annual Report 2006
9. Employees’ Severance and Retirement Benefits
The liabilities for the employees’ severance and retirement benefits included in the liability section of the consolidated balance
sheets at March 31, 2006 and 2005 consists of the following:
Thousands of
Millions of Yen U.S. Dollars
2006 2005 2006
Projected benefit obligation........................................................................ ¥62,265 ¥55,771 $532,179
Unrecognized prior service costs ................................................................. 10,935 11,846 93,461
Unrecognized actuarial differences ............................................................. (1,611) (12,260) (13,769)
Less fair value of pension assets*................................................................ (59,323) (42,286) (507,034)
Less unrecognized net transition obligation ................................................ (4,920) (6,150) (42,051)
Prepaid pension cost................................................................................... 56 40 479
Liabilities for the employees’ severance and retirement benefits............. ¥7,402 ¥6,961 $63,265
* Including employee retirement benefit trust
Included in the consolidated statements of income for the years ended March 31, 2006 and 2005 are employees’ severance
and retirement benefit expenses comprised of the following:
Thousands of
Millions of Yen U.S. Dollars
2006 2005 2006
Service cost—benefits earned during the year............................................. ¥2,932 ¥2,829 $25,060
Interest cost on projected benefit obligation ............................................... 1,329 1,263 11,359
Expected return on plan assets ................................................................... (1,217) (878) (10,402)
Amortization of prior service costs .............................................................. (912) (844) (7,795)
Amortization of actuarial differences .......................................................... 1,135 1,049 9,701
Amortization of net transition obligation .................................................... 1,230 1,230 10,513
Other ........................................................................................................ 121 119 1,034
Employees’ severance and retirement benefit expenses.......................... ¥4,618 ¥4,768 $39,470
The discount rate and the rate of expected return on plan assets used by the Company are 2.5% and 3.0% in both 2006 and 2005.
The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year
using the estimated number of total service years. Actuarial gains and losses are to be recognized in expenses using the straight-line
method over 9–15 years (a certain period not exceeding the average of the estimated remaining service lives commencing with the
next period). Prior service costs are to be recognized in expenses using the straight-line method over 9–15 years (a certain period
not exceeding the average of the estimated remaining service lives).
10. Retirement Benefits for Directors and Corporate Auditors
Effective April 1, 2002, the Company changed its accounting policy for retirement benefits for directors and corporate auditors.
Previously, retirement benefits to directors and corporate auditors were recognized after the approval at the shareholders’
meeting and charged to income when paid.
Under the new policy, the Company and certain subsidiaries fully accrue retirement benefits if all directors and corporate audi-
tors had retired at each balance sheet date.
The cumulative effect of ¥2,295 million at the beginning is amortized on a straight-line basis over five years as other expenses.