Omron 2004 Annual Report Download - page 58

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56
The fair value of each option grant was estimated as of the grant date using the Black-Scholes option-pricing model with the follow-
ing assumptions:
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend yield. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.271%
25.0
0.559
3.5 years
0.560%
20.0
0.576
3.5 years
2003 2002
0.738%
45.0
0.857
3.5 years
2004
The Black-Scholes option valuation model used by the Company was developed for use in estimating the fair value of fully tradable
options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly sub-
jective assumptions including the expected stock price volatility. It is management’s opinion that the Company’s stock options have
characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materi-
ally affect the fair value estimate, the existing models do not necessarily provide a reliable single measure of the fair value of its stock
options.
10. OTHER EXPENSES, NET
Other expenses (income), net for the years ended March 31, 2004, 2003 and 2002 consisted of the following:
Loss on impairment of investment securities and other assets . . . . . . . . . . . .
Net loss on sales and disposals of property, plant and equipment . . . . . . . . .
Loss on impairment of property, plant and equipment . . . . . . . . . . . . . . . . . .
Net loss (gain) on sales of short-term investments and investment securities .
Net loss (gain) on sales of business entities . . . . . . . . . . . . . . . . . . . . . . . . . .
Voluntary early retirement program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥17,199
1,314
6,815
(1,008)
—
—
3,545
¥27,865
$22,764
4,519
387
(9,802)
4,660
—
(5,094)
$17,434
Thousands of
U.S. dollars
Millions of yen
2002 2004
¥2,269
11
4,231
1,221
(1,550)
18,968
1,508
¥26,658
2003
¥ 2,413
479
41
(1,039)
494
—
(540)
¥ 1,848
2004
The Companies assessed the potential impairment of certain long-lived assets in consideration of future alternate uses, including dis-
posal by sale. As a result, certain land and buildings, principally dormitories in 2004 and 2002, and laboratories in 2003, were deemed
to be impaired and written down to fair value. The estimated fair value of these assets was primarily determined by independent real
estate appraisals of land and buildings.
During the year ended March 31, 2003 the Company and most domestic subsidiaries implemented a voluntary early retirement pro-
gram to all employees fulfilling certain conditions such as age and duration of employment. Employees accepting this offer received an
additional lump sum payment, along with their previously earned retirement benefits.