Casio 2007 Annual Report Download - page 38

36 CASIO COMPUTER CO., LTD.
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, 2007 and 2006 consists of the following:
Thousands of
Millions of Yen U.S. Dollars
2007 2006 2007
Projected benefit obligation........................................................................ ¥63,771 ¥62,265 $540,432
Unrecognized prior service costs ................................................................. 9,996 10,935 84,712
Unrecognized actuarial differences ............................................................. (675) (1,611) (5,720)
Less fair value of pension assets*................................................................ (62,666) (59,323) (531,068)
Less unrecognized net transition obligation ................................................ (3,511) (4,920) (29,754)
Prepaid pension cost................................................................................... 80 56 678
Liabilities for the employees’ severance and retirement benefits............. ¥6,995 ¥7,402 $59,280
* Including employee retirement benefit trust
Included in the consolidated statements of income for the years ended March 31, 2007 and 2006 are employees’ severance
and retirement benefit expenses comprised of the following:
Thousands of
Millions of Yen U.S. Dollars
2007 2006 2007
Service cost—benefits earned during the year............................................. ¥3,124 ¥2,932 $26,475
Interest cost on projected benefit obligation ............................................... 1,463 1,329 12,398
Expected return on plan assets ................................................................... (1,696) (1,217) (14,373)
Amortization of prior service costs .............................................................. (910) (912) (7,712)
Amortization of actuarial differences .......................................................... 442 1,135 3,746
Amortization of net transition obligation .................................................... 1,200 1,230 10,169
Other ........................................................................................................ 122 121 1,034
Employees’ severance and retirement benefit expenses.......................... ¥3,745 ¥4,618 $31,737
The discount rate and the rate of expected return on plan assets used by the Company are 2.5% and 3.0% in both 2007 and 2006.
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 at the beginning is amortized on a straight-line basis over five years as other expenses.
11. Shareholders’ Equity / Net Assets
The Japanese Corporate Law (“the Law”) became effective on May 1, 2006, replacing the Japanese Commercial Code (“the
Code”). The Law is generally applicable to events and transactions occurring after April 30, 2006 and for fiscal years ending after
that date.
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of
the new shares as additional paid-in capital, which is included in capital surplus.
Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the divi-
dend or the excess, if any, of 25% of common stock over the total of additional paid-in-capital and legal earnings reserve must be
set aside as additional paid-in-capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accom-
panying consolidated balance sheets.