JVC 2005 Annual Report Download - page 51

Liability for employees’ retirement benefits included in liabilities in
the consolidated balance sheets for 2005 and 2004 and the related
expenses for 2005, 2004 and 2003, which were determined based
on the amounts obtained by actuarial calculations, are as follows:
Thousands of
Millions of yen U.S. dollars
2005 2004 2005
Projected benefit obligation:
Projected benefit
obligation ¥(133,997) ¥(158,211) ¥(1,252,308)
Unamortized prior
service costs (17,866) —(166,972)
Unamortized actuarial
differences 21,893 27,624 204,607
Less fair value of plan
assets 97,470 94,377 910,935
Less unrecognized net
transition obligation 16,016 17,623 149,682
Liability for severance
and retirement benefits ¥0(16,484) ¥0(18,587) ¥0,(154,056)
Thousands of
Millions of yen U.S. dollars
2005 2004 2003 2005
Severance and retirement benefits expenses:
Service costs ¥05,581 ¥06,973 ¥07,103 $052,159
Interest costs on projected benefit obligation 3,774 4,795 6,383 35,271
Expected return on plan assets (2,348) (2,000) (3,080) (21,944)
Amortization of net transition obligation 1,598 1,603 1,994 14,934
Amortized actuarial differences 3,608 5,039 3,151 33,720
Amortized prior service costs (940) — (297) (8,785)
Severance and retirement benefits expenses 11,273 16,410 15,254 105,355
Gain on return of substitutional portion of Employees’ Pension Insurance —— 3,456 —
Total ¥11,273 ¥16,410 ¥11,798 $105,355
Not included in the above table is special retirement payments amount-
ing to ¥6,530 million ($61,028 thousand), ¥452 million and ¥4,260 mil-
lion which were expensed in 2005, 2004 and 2003, respectively.
The discount rate and the rate of expected return on plan assets
used by the Company are 2.7% and 3.0% in 2005, and 2.7% and
3.0% in 2004, and 3.0% and 3.0% in 2003, respectively.
10CONTINGENT LIABILITIES
The contingent liabilities of the Companies at March 31, 2005 are
as follows:
Thousands of
Millions of yen U.S. dollars
As endorser of export bills discounted
with banks ¥4,044 $37,794
As guarantor for loans to employees 2,110 19,720
As guarantor for lease obligations of
affiliated company and others 151 1,411
¥6,305 $58,925
11STOCKHOLDERS’ EQUITY
Under the Japanese Commercial Code (the “Code”), at least 50%
of the issue price of new shares is required to be designated as
common stock. The portion which is to be designated as common
stock is determined by resolution of the Board of Directors.
Proceeds in excess of the amounts designated as common stock
are credited to additional paid-in capital, which is included in capi-
tal surplus.
The Code provides that an amount equal to at least 10% of
cash dividends and other cash appropriations shall be appropriat-
ed and set aside as a legal earnings reserve until the total amount
of the legal earnings reserve and additional paid-in capital equals
25% of common stock.
The legal earnings reserve and additional paid-in capital may be
used to eliminate or reduce a deficit by resolution of the stockhold-
ers’ meeting or may be capitalized by resolution of the Board of
Directors.
On condition that the total amount of the legal earnings reserve
and additional paid-in capital remains being equal to or exceeding
25% of common stock, they are available for distributions or cer-
tain other purposes by the resolution of the stockholders’ meeting.
The legal earnings reserve is included in retained earnings in the
accompanying financial statements.
Victor Company of Japan, Limited 49