Nikon 2006 Annual Report Download - page 41

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The liability for employees’ retirement benefits at March 31, 2006 and 2005 consisted of the following:
Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Unrecognized prior service cost
Prepayment of service cost
Net Liability
Thousands of
U.S. Dollars
2006
$ 874,832
(859,380)
7,545
118,639
141,636
2,800
$ 144,436
2005
¥100,138
(78,359)
(18,867)
15,666
18,578
113
¥ 18,691
2006
¥ 102,767
(100,951)
886
13,936
16,638
329
¥ 16,967
Millions of Yen
The components of net periodic benefit costs for the fiscal years ended March 31, 2006 and 2005 were as follows:
Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Amortization of prior service cost
Net periodic benefit costs
Thousands of
U.S. Dollars
2006
$ 27,301
23,382
(16,521)
25,493
(14,622)
$ 45,033
2005
¥ 3,353
2,628
(1,752)
3,049
(1,718)
¥ 5,560
2006
¥ 3,207
2,747
(1,941)
2,995
(1,718)
¥ 5,290
Millions of Yen
Assumptions used for the fiscal years ended March 31, 2006 and 2005 were principally set forth as follows:
Discount rate
Expected rate of return on plans assets
Recognition period of actuarial gain (loss)
Amortization period of prior service cost
2005
2.5%
2.0%
10 years
10 years
2006
2.5%
2.0%
10 years
10 years
8. SHAREHOLDERS’ EQUITY
Through may 1, 2006, Japanese companies are subject to the Commercial Code of Japan (the “Code”).
The Code requires that all shares of common stock be issued with no par value and at least 50% of the issue price of new shares is
required to be recorded as common stock and the remaining net proceeds are required to be presented as additional paid-in capital, which
is included in capital surplus. The Code permits Japanese companies, upon approval of the Board of Directors, to issue shares to existing
shareholders without consideration by way of a stock split. Such issuance of shares generally does not give rise to changes within the
shareholders’ accounts.
The Code also provides that an amount of 10% or more of the aggregate amount of cash dividends and certain other appropriations of
retained earnings associated with cash outlays applicable to each period (such as bonuses to directors) shall be appropriated as a legal reserve
(a component of retained earnings) until the total of such reserve and additional paid-in capital equals 25% of common stock. The amount of
total legal reserve and additional paid-in capital that exceeds 25% of the common stock may be available for dividends by resolution of the
shareholders after transferring such excess in accordance with the Code. In addition, the Code permits the transfer of a portion of additional
paid-in capital and legal reserve to the common stock by resolution of the Board of Directors.
The Code allows Japanese companies to purchase treasury stock and dispose of such treasury stock upon resolution of the Board of
Directors. The aggregate purchased amount of treasury stock cannot exceed the amount available for future dividends plus the amount of
common stock, additional paid-in capital or legal reserve that could be transferred to retained earnings or other capital surplus other than
additional paid-in capital upon approval of such transfer at the annual general meeting of shareholders.
In addition to the provision that requires an appropriation for a legal reserve in connection with the cash outlays, the Code also imposes
certain limitations on the amount of capital surplus and retained earnings available for dividends. The amount of capital surplus and retained
earnings available for dividends under the Code was ¥73,124 million ($ 624,086 thousand) as of March 31, 2006, based on the amount
recorded in the parent company’s general books of account.
Dividends are approved by the shareholders at a meeting held subsequent to the end of the fiscal year to which the dividends are applicable.
Semiannual interim dividends may also be paid upon resolution of the Board of Directors, subject to certain limitations imposed by the Code.
At the general shareholders’ meeting held on June 27, 2003, June 29, 2004, and June 29, 2005, the Company’s shareholders approved
a stock option for the Company’s directors and administrative directors and appropriation of retained earnings.
The plan provides for granting options to directors and administrative directors to purchase up to 203,000 , 210,000 and 178,000 shares
As a result, the projected benefit obligation is to be decreased by ¥1,505 million ($12,813 thousand) and the amount is being amortized
as prior service cost over 10 years from the time of accrual.