Omron 1999 Annual Report Download - page 38

The expense recorded for the contributory termination and retirement plan included the following compo-
nents for the years ended March 31, 1999 and 1998:
Thousands of
Millions of yen U.S. dollars
1999 1998 1999
Service cost, less employees’ contributions................................................. ¥10,227 ¥ 8,670 $ 84,521
Interest cost on projected benefit obligation ................................................ 5,411 5,758 44,719
Expected return on plan assets .................................................................... (3,252) (2,938) (26,876)
Net amortization and deferral ....................................................................... 1,982 2,168 16,380
Employees’ contributions ............................................................................. (1,012) (990) (8,364)
Net expense.......................................................................................... ¥13,356 ¥12,668 $110,380
The Companies also have unfunded noncontributory termination plans administered by the Companies.
These plans provide lump-sum termination benefits and are paid at the earlier of the employee’s termination or
mandatory retirement age, except for payments to directors and corporate auditors, which require approval by
the shareholders before payment. The Companies record provisions for termination benefits sufficient to state
the liability equal to the plans’ vested benefits, which exceed the plans’ accumulated benefit obligations.
The consolidated liabilities for the noncontributory termination plans as of March 31, 1999 and 1998
were ¥1,697 million ($14,025 thousand) and ¥1,488 million, respectively. The consolidated expenses for
the noncontributory termination and retirement plans for the years ended March 31, 1999, 1998 and 1997 were
¥84 million ($694 thousand), ¥146 million and ¥420 million, respectively.
The Japanese Commercial Code (the “Code”) requires at least 50% of the issue price of new shares, with the
minimum of the par value thereof, to be recorded as common stock. The portion which is to be recorded as
common stock is determined by resolution of the Board of Directors. Proceeds in excess of the amounts des-
ignated as common stock have been credited to additional paid-in capital.
Under the Code, the Company is required to record an amount at least equal to 10% of the amounts paid
as an appropriation of retained earnings, including dividends and other distributions, to be appropriated and
set aside as a legal reserve until such reserve equals 25% of the common stock. This reserve is not available
for dividends but may be used to eliminate or reduce a deficit by resolution of the shareholders or may be
transferred to common stock by resolution of the Board of Directors.
The Company may transfer portions of additional paid-in capital and legal reserve to common stock by res-
olution of the Board of Directors. The Company may also transfer portions of unappropriated retained earn-
ings, available for dividends, to common stock by resolution of the shareholders.
Under the Code, the amount legally available for dividends is based on retained earnings as recorded in the
books of the Company for Japanese financial reporting purposes. At March 31, 1999, retained earnings amounting
to ¥100,120 million ($827,438 thousand) were available for future dividends, subject to the legal reserve
requirements.
The provision for income taxes for the years ended March 31, 1999, 1998 and 1997 consisted of the following:
Thousands of
Millions of yen U.S. dollars
1999 1998 1997 1999
Current income tax expense ...................................................... ¥12,426 ¥24,579 ¥22,915 $102,694
Deferred income tax expense (benefit),
exclusive of the following ......................................................... (8,591) (1,305) 342 (71,000)
Change in the beginning of the year balance of
the valuation allowance for deferred tax assets....................... (142) (176) (305) (1,174)
Adjustments of deferred tax assets and liabilities
for enacted change in tax rates................................................ 2,351 273 — 19,430
Total.................................................................................... ¥ 6,044 ¥23,371 ¥22,952 $ 49,950
36
8. Shareholders’
Equity
9. Income Taxes