Epson 2006 Annual Report Download - page 65

Seiko Epson Annual Report 2006 63
The assumptions used for the actuarial computation of the retirement benefit obligations for the years ended
March 31, 2004, 2005 and 2006 were primarily as follows:
Year ended March 31
2004 2005 2006
Discount rate 2.5% 2.5% 2.5%
Long-term rate of return on plan assets 3.5 3.0 3.0
The Company and one consolidated subsidiary changed approximately half of its tax qualified defined benefit
plans to new tax qualified defined contribution plans and the remaining half from tax qualified defined benefit plans
to new tax qualified corporate defined benefit plans effective from the year beginning April 1, 2004. As a result of this
transfer, gain on transition of retirement benefit plan of ¥207 million was recorded in other income for the year
ended March 31, 2005 in accordance with “Accounting for Transition of Retirement Benefit Plans” (“Financial
Accounting Standards Implementation Guidance No. 1” issued by Accounting Standards Board of Japan).
The Company had entered into a retirement benefit trust agreement with an outside trust company and contributed
certain marketable securities to the employee retirement benefit trust. In December 2004, the Company canceled
the retirement benefit trust agreement and trusted marketable securities of ¥6,625 million were returned to the
Company. As a result, prepaid pension cost at March 31, 2005 decreased. Loss on return of trusted marketable
securities of ¥328 million was recorded in other expenses for the year ended March 31, 2005.
Additional severance costs of ¥2,285 million, which related to specific prior pension costs for foreign subsidiaries,
were recorded in the consolidated statements of income for the year ended March 31, 2005.
10. Consolidation adjustment:
A consolidation adjustment, representing the excess of cost over net equity of investments in subsidiaries as at
March 31, 2005, included in intangible assets account, was ¥4,619 million. A consolidation adjustment, representing
the less of cost under net equity of investments in subsidiaries as at March 31, 2006, included in other long-term
liabilities account, was ¥3,968 million ($33,779 thousand).
11. Shareholders’ equity:
The Company’s retained earnings consists of unappropriated retained earnings and legal reserves required by the
Commercial Code of Japan. The retained earnings accumulated by the Company are initially recorded as unappro-
priated retained earnings and later transferred to legal reserve upon approval at the shareholders’ meeting.
Under the Commercial Code of Japan, the Company is permitted to transfer to retained earnings the portion of
statutory reserve (additional paid-in capital and legal reserve) in excess of 25% of common stock upon approval at
the shareholders’ meeting. Any transferred portions will be available for dividend distribution. The Company does
not currently make such transfers.
Under the Commercial Code of Japan, the appropriation of retained earnings for a fiscal year is made by resolution
of shareholders at a general meeting to be held within three months after the balance sheet date, and accordingly
such appropriations are recorded at the time of resolution. The Company may pay interim dividends by resolution of
the board of directors once during each fiscal year in accordance with the Commercial Code of Japan and the
Company’s Articles of Incorporation.