Omron 2005 Annual Report Download - page 61

59
2006 ..............................................................................................................................................
2007 ..............................................................................................................................................
2008 ..............................................................................................................................................
2009 ..............................................................................................................................................
2010 ..............................................................................................................................................
Thereafter.......................................................................................................................................
Total ...............................................................................................................................................
$26,159
24,383
21,421
16,336
15,327
134,776
$238,402
Thousands of
U.S. dollars
¥ 2,799
2,609
2,292
1,748
1,640
14,421
¥25,509
Millions of yen
Years ending March 31
8. Termination and Retirement Benefits
Rental expense amounted to ¥11,151 million ($104,215 thousand), ¥11,059 million and ¥12,818 million for the years ended March 31,
2005, 2004 and 2003, respectively.
The Company and its domestic subsidiaries sponsor termination
and retirement benefit plans which cover substantially all domestic
employees. Benefits are based on the employee’s years of service,
with some plans considering compensation and certain other fac-
tors. If the termination is involuntary, the employee is usually enti-
tled to greater payments than in the case of voluntary termination.
The Company and its domestic subsidiaries fund a portion of
the obligations under these plans. The general funding policy is to
contribute amounts computed in accordance with actuarial meth-
ods acceptable under Japanese tax law. The Company and sub-
stantially all domestic subsidiaries have a contributory termination
and retirement plan which is interrelated with the Japanese gov-
ernment social welfare program and consists of a substitutional
portion requiring employee and employer contributions plus an
additional portion established by the employers.
Periodic pension benefits required under the substitutional por-
tion are prescribed by the Japanese Ministry of Health, Labour and
Welfare, commence at age 65 and continue until the death of the
surviving spouse. Benefits under the additional portion are usually
paid in a lump sum at the earlier of termination or retirement
although periodic payments are available under certain conditions.
In January 2003, Emerging Issues Task Force (“EITF”) reached
a final consensus on Issue 03-2, “Accounting for the Transfer to
the Japanese Government of the Substitutional Portion of
Employee Pension Fund Liabilities.” EITF Issue 03-2 addresses
accounting for a transfer to the Japanese government of a substi-
tutional portion of an Employees’ Pension Fund plan.
7. Leases
The Companies do not have any material capital lease agree-
ments.
The Companies have operating lease agreements primarily
involving offices and equipment for varying periods. Leases that
expire generally are expected to be renewed or replaced by other
leases. At March 31, 2005, future minimum rental payments appli-
cable to non-cancelable leases having initial or remaining non-can-
celable lease terms in excess of one year were as follows:
The process of separating the substitutional portion from the
corporate portion occurs in four phases. EITF Issue 03-2 requires
that the separation process should be accounted for upon com-
pletion of the transfer to the government of the substitutional por-
tion of the benefit obligation and related plan assets as the culmi-
nation of a series of steps in a single settlement transaction.
Under the consensus reached, at the time the assets are trans-
ferred to the government in an amount sufficient to complete the
separation process, the transaction is considered to be complete
and the elimination of the entire substitutional portion of the ben-
efit obligation would be accounted for as a settlement at that
time. The difference between the obligation settled and the
assets transferred to the government should be accounted for as
a subsidy from the government.
The Company received the Japanese government’s approval of
exemption from the obligation for benefits related to future
employee service in April, 2004 and past employee service in
May, 2005 with respect to the substitutional portion of its pension
plan. The effect on the consolidated financial statements of the
future transfer of the assets and liabilities related to the substitu-
tional portion of its pension plan has not yet been determined.
Effective April 2004, the Company introduced an amended
plan to establish a new formula for determining pension bene-
fits including a “point-based benefits system,” under which ben-
efits are calculated based on accumulated points allocated to
employees each year according to their job classification and
performance.