Omron 2005 Annual Report Download - page 64

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Japanese companies are subject to the Japanese Commercial
Code (the “Code”) to which various amendments have become
effective since October 1, 2001.
The Code was revised whereby common stock par value
was eliminated resulting in all shares being recorded with no par
value and at least 50% of the issue price of new shares is
required to be recorded as common stock and the remaining net
proceeds as additional paid-in capital, which is included in capital
surplus. The Code permits Japanese companies, upon approval
of the Board of Directors, to issue shares to existing shareholders
without consideration as a stock split. Such issuance of shares
generally does not give rise to changes within the shareholders’
accounts.
The revised Code also provides that an amount at least equal
to 10% of the aggregate amount of cash dividends and certain
other appropriations of retained earnings associated with cash
outlays applicable to each period shall be appropriated as a legal
reserve (a component of retained earnings) until such reserve and
capital surplus equals 25% of common stock. The amount of
total capital surplus and legal reserve that exceeds 25% of the
common stock may be available for dividends by resolution of the
shareholders. In addition, the Code permits the transfer of a por-
tion of capital surplus and legal reserve to the common stock by
resolution of the Board of Directors.
The revised Code eliminated restrictions on the repurchase
and use of treasury stock allowing Japanese companies to repur-
chase treasury stock by a resolution of the shareholders at the
general shareholders meeting or by resolution of the Board of
Directors provided it is stipulated in the articles of incorporation
and to dispose of such treasury stock by resolution of the Board
of Directors. The repurchased amount of treasury stock cannot
exceed the amount available for future dividends plus amount of
common stock, capital surplus or legal reserve to be reduced in
the case where such reduction was resolved at the general share-
holders meeting.
The Code permits companies to transfer a portion of addition-
al paid-in capital and legal reserve to stated capital by resolution of
the Board of Directors. The Code also permits companies to trans-
fer a portion of unappropriated retained earnings, available for divi-
dends, to stated capital by resolution of the shareholders.
Dividends are approved by the shareholders at a meeting
held subsequent to the fiscal year to which the dividends are
applicable. Semiannual interim dividends may also be paid upon
resolution of the Board of Directors, subject to certain limitations
Thousands of
U.S. dollars
Millions of yen
2006 ...............................................................................................................................................
2007 ...............................................................................................................................................
2008 ...............................................................................................................................................
2009 ...............................................................................................................................................
2010 ...............................................................................................................................................
2011-2015 ......................................................................................................................................
$50,645
57,047
68,589
76,832
84,252
462,271
¥ 5,419
6,104
7,339
8,221
9,015
49,463
Years ending March 31
Certain employees of European subsidiaries are covered by a
defined benefit pension plan. The projected benefit obligation for
the plan and related fair value of plan assets were ¥1,979 million
($18,495 thousand) and ¥1,599 million ($14,944 thousand),
respectively, at March 31, 2005 and ¥1,285 million and ¥1,125
million, respectively, at March 31, 2004.
The Companies also have unfunded noncontributory termi-
nation plans administered by the Companies. These plans pro-
vide 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 aggregate liability for the termination plans excluding the
funded contributory termination and retirement plan in Japan, as
of March 31, 2005 and 2004 was ¥4,710 million ($44,019 thou-
sand) and ¥3,954 million, respectively. The aggregate net periodic
benefit cost for such plans for the years ended March 31, 2005,
2004 and 2003 was ¥1,241 million ($11,598 thousand), ¥1,688
million and ¥890 million, respectively.
Cash Flows
Contributions
The Company expects to contribute ¥5,910 million ($55,234
thousand) to its domestic termination and retirement benefit
plans in the year ending March 31, 2006.
Estimated Future Benefit Payments
The following benefit payments, which reflect expected
future service, as appropriate, are expected to be paid:
9. Shareholders’ Equity