Olympus 2004 Annual Report Download - page 43

O LYMPUS 2 0 0 4 4 1
8 . SEVERANCE AN D RETIREMEN T ALLO W ANCE
As explained in “No te 1 . SUMMARY O F SIG NIFICAN T ACCO UNTING PO LICIES,” effective April 1 , 2000, the Co mpany and its co nso lidated
subsidiaries ado pted the accounting standard for emplo yees’ severance and retirement benefits, under which the liabilities and expenses for
severance and retirement benefits are determined based o n the amo unts o btained by actuarial calculations. The Company restructured the
pensio n scheme entirely with transferring back the substitutional po rtio n of the Emplo yees’ Pension Insurance Scheme and establishing the
new Emplo yees’ Pension Fund in fiscal 2 004.
The liabilities for severance a nd retirements benefits included in the liability section of the co nsolidated balance sheet as o f March 31,
2 0 04 and 200 3 , consist o f the follo wing:
Thousands of
M illions of yen U.S. dollars
2 0 0 4 2 0 0 3 2 0 0 4
Pro jected benefit obligatio n ...................................................................................... ¥ 8 4 ,280 ¥ 9 6,7 7 7 $ 7 66,1 8 2
Unrecognized prior service costs ............................................................................... 689 5 , 1 5 7 6,264
Unrecognized actuarial difference ............................................................................. (18,010) (25,781) (1 6 3 ,7 2 7 )
Fair value of pension assets...................................................................................... (67,844) (60,133) (6 1 6 ,7 6 4 )
Unreco g nized net transition o blig atio n ....................................................................... (1 ,1 61) (3 ,1 1 3 ) (1 0 ,5 5 5 )
Prepaid pension expenses ........................................................................................ 8,692 —7 9 ,0 1 8
Allowance for emplo yees’ severance and retirement benefits .......................................... ¥ 6,6 4 6 ¥ 12,9 0 7 $ 60,4 1 8
Severance and retirement allo wance for directors ......................................................... ¥ 1 ,257 ¥ 1,1 3 6 $ 11,4 2 7
To tal severance and retirement allo wance ................................................................... ¥ 7,9 0 3 ¥ 14,0 4 3 $ 71,8 4 5
Included in the co nsolidated statements o f income for the year ended March 31,2 0 0 4 and 2 0 0 3 , are emplo yees’ severance and retirement
benefit expenses co mprising the following:
Thousands of
M illions of yen U.S. dollars
2004 2 0 0 3 2004
Service co sts— benefits earned during the year............................................................. ¥ 3,2 6 4 ¥ 5,3 3 0 $ 29,673
Interest co st o n projected benefit o bligation................................................................. 2 ,078 2 ,1 5 5 1 8 ,8 9 1
Expected return on plan assets .................................................................................. (2,478) (1 ,8 1 0 ) (2 2 ,5 2 7 )
Amortization of actuarial difference ........................................................................... 6,206 5 , 0 8 7 5 6 ,4 1 8
Amortization of prior service costs............................................................................. (967) (8 9 1 ) (8 ,7 9 1 )
Amo rtizatio n o f net transitio n o bligatio n ..................................................................... 1 ,4 0 7 1 ,5 5 6 1 2 , 7 9 1
Severance and pension benefit expense ...................................................................... ¥ 9 ,5 1 0 ¥ 11 ,4 27 $ 86,455
The discount rates used by the Co mpany are 2 .0 % in fiscal 2004 and 2 .5 % in fiscal 2 003. The rates of expected return o n plan assets used
by the Co mpany are 4 .0 % in fiscal 2 0 0 4 and 3.0% in fiscal 2003. The estimated amo unt o f all retirement benefits to be paid at the future
retirement date is allocated equally to each service year using the estimated number o f to tal service years. Prior service co sts and net transi-
tio n obligatio n are both recog nized as expense (o r income) in equal amounts over 5 years, and actuarial g ains (o r losses) are recognized as
inco me (or expense) in equal amounts over 5 years. Pensio n assets fo r the substitutio nal po rtion maintained by the Emplo yees’ Pensio n Fund
were transferred back o n February 27, 2 0 0 4 to the government’s scheme. As a result, the Co mpany recorded g ains amounting to ¥ 8 ,5 8 4 mil-
lio n ($7 8 ,0 3 6 tho usand).
9 . IN CO ME TAXES
Inco me taxes applicable to the Co mpany and its do mestic consolidated subsidiaries co nsist o f co rpo rate tax, inhabita nt ta x and enterprise
tax, which in the ag greg ate resulted in normal statuto ry rates of appro ximately 4 1 .8 % for the years ended March 3 1 , 2 004, 2 0 0 3 and
2 0 02. Income taxes o f foreign co nsolidated subsidiaries are based generally o n tax rates applicable in their co untries of inco rporation.
The follo wing table summarizes the significant differences between the statuto ry tax rate and the Company’s effective tax rate for co nsoli-
dated fina ncial sta tement purpo ses for the years ended March 3 1, 2004 , 2 0 0 3 and 2 002.
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