Olympus 2005 Annual Report Download - page 38

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(g) PENSIO N AND RETIREMENT ALLO W ANCE PLANS
Employees of the Company, certain domestic consolidated subsidiaries and foreign consolidated subsidiaries are covered by funded pension plans.
Employees of domestic co nsolidated subsidiaries, and directors o f the Co mpany and a couple of domestic consolidated subsidiaries are
covered primarily by unfunded retirement allowance plans.
The amounts of pension payments and retirement allowances are generally determined on the basis of length of service and basic salary
at the time of termination of service.
It is the Company’s policy to fund amounts required to maintain sufficient plan assets to provide fo r accrued benefits based on a certain
percentage of wage and salary costs. The plan assets consist principally of interest-bearing bo nds and listed equity securities.
The Company and its consolidated subsidiaries provided allowance for employees’ severance and retirement benefits at March 31, 2005
based on the amounts of projected benefit o bligation and the fair value of the plan assets at that date.
Net transition o bligation will be recognized as an expense in equal amounts o ver mainly 5 years commencing with the year ended March
31, 2001 .
Allo wance for employees’ severance and retirement benefits was included in the liability section of the consolidated balance sheets
to gether with severance and retirement allowance for directors as of March 3 1 , 2005 and 2004.
(h) RETURN OF SUBSTITUTIONAL PO RTIO N OF EMPLO YEES’ PENSIO N INSURANCE
Employees of Japanese companies are compulsorily included in the W elfare Pensio n Insurance Scheme operated by the government.
Employers are legally required to deduct employees’ welfare pension insurance contributions from their payroll and to pay them to the gov-
ernment together with employers’ own contributions. For companies that have established their own Emplo yees’ Pension Fund, which meets
certain legal requirements, it is possible to transfer a part of their welfare pension insurance contributions (so-called substitutional portion of
the government’s scheme ) to their own Employees’ Pension Fund under the government’s permission and supervision.
Based on the newly enacted Defined Benefit Corporate Pension Law, the Company decided to restructure its Employees’ Pension Fund, and was
permitted by the Minister of Health, Labour and Welfare on December 1, 200 3 to be released from its obligatio n for payments for the substitutional
portion of the Employees’ Pension Insurance Scheme. Pension assets for the substitutional portio n maintained by the Employees’ Pension Fund were
transferred back on February 2 7, 2004 to the government’s scheme. As a result, the Co mpany recorded gains amounting to ¥8,584 million.
(i) PRO VISIO N FO R LO SSES O N BUSINESS RESTRUCTURING
To provide fo r the loss that will appear during the execution of restructuring of the Imaging Systems Business hereafter, the amount of
expected loss is appropriated. The main matters are write-o ff for inventories and special retirement allowance. W rite-off for invento ries was
deducted from inventories on the consolidated balance sheet as of March 31, 2005.
(j) RESEARCH AND DEVELO PMENT
Expenses relating to research and development activities are charged to income as incurred. Total amounts charged to inco me were ¥47,720
million ($433,81 8 thousand), ¥3 8,671 million and ¥34,735 million for the years ended March 31, 2005, 2 0 04 and 2003, respectively.
(k) CERTAIN LEASE TRANSACTIO NS
Finance leases that do not transfer titles to lessees are acco unted for in the same manner as operating leases.
(
l ) INCOME TAXES
The Company adopts the accounting standard that reco gnizes tax effects of temporary differences between the financial statement carrying
amounts and the tax basis of assets and liabilities. The provision for income taxes is computed based on the pretax income included in the
consolidated statements of operations. The asset and liability approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences.
Part of subsidiaries adopted the consolidated taxation system.
(m) PRO FO RMA STANDARD TAXATIO N
In line with announcement of Practice Report No. 12 “Practical Treatment Co ncerning Presentation of Pro Forma Standard Taxation Po rtion of
Enterprise Tax o n Corporation in Statements of Income” issued by the Accounting Standards Board of Japan, the enterprise taxes levied in
proportion to added value and capital, amounting to ¥809 million ($7,355 thousand), were reco gnized as “Selling, general and administra-
tive expenses” effective fiscal 200 5 under this report.
(n) AMO UNTS PER SHARE
Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number o f com-
mon shares outstanding for each fiscal year. Diluted EPS is similar to basic EPS except that the weighted-average of common shares outstand-
ing is increased by the number of additional co mmon shares that would have been outstanding if the potentially dilutive common shares had
been issued. For the years ended for March 31, 2005, 2 004 and 2003, there were no dilutive common shares. Accordingly, the Company’s
basic and dilutive earnings per share co mputations are the same for the periods presented.
Cash dividends per common share are the amounts applicable to the respective periods.
(o) TRANSLATION O F FO REIGN CURRENCY FINANCIAL STATEMENTS
In accordance with the accounting standards for foreign currency translations, assets and liabilities denominated in foreign functio nal curren-
cies are translated at exchange rates at the balance sheet date. Shareho lders’ equity accounts are translated at historical exchange rates.