Omron 2007 Annual Report Download - page 60

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Goodwill and Other Intangible Assets
The Companies account for its goodwill and other intangible
assets in accordance with SFAS No.142, “Goodwill and Other
Intangible Assets,” which requires that goodwill no longer be
amortized, but instead tested for impairment at least annually.
SFAS No.142 also requires recognized intangible assets be
amortized over their respective estimated useful lives and
reviewed for impairment. Any recognized intangible asset
determined to have an indefinite useful life is not to be
amortized, but instead tested for impairment until its life is
determined to no longer be indefinite.
Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying
amount of an asset to undiscounted cash flows expected to be
generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds
the fair value. Assets to be disposed of other than by sale are
considered held and used until disposed of. Assets to be dis-
posed of by sale are reported at the lower of the carrying amount
or fair value less costs to sell.
Advertising Costs
Advertising costs are charged to earnings as incurred. Advertising
expense was ¥10,315 million ($87,415 thousand), ¥10,290 million
and ¥8,718 million for the years ended March 31, 2007, 2006
and 2005, respectively.
Shipping and Handling Charges
Shipping and handling charges were ¥8,851 million ($75,008
thousand), ¥7,627 million and ¥7,720 million for the years ended
March 31, 2007, 2006 and 2005, respectively, and are included in
selling, general and administrative expenses in the consolidat-
ed statements of income.
Termination and Retirement Benefits
Termination and retirement benefits are accounted for in
accordance with SFAS No. 87, “Employers’ Accounting for
Pensions” and SFAS No. 158, “Employers’ Accounting for
Defined Benefit Pension and Other Postretirement Plans”
based on the fiscal year-end fair value of plan assets and the
projected benefit obligations of employees, and are disclosed
in accordance with SFAS No. 132 (revised 2003), “Employers’
Disclosures about Pensions and Other Postretirement
Benefits” and SFAS No. 158. The provision for termination and
retirement benefits includes amounts for directors and
corporate auditors of the Company.
The Company and certain of its domestic subsidiaries pre-
viously used December 31 as the measurement date for pro-
jected benefit obligation and plan assets of the termination and
retirement benefits. During the year ended March 31, 2006, the
companies changed the measurement date to March 31. The
purpose of this change was to enable more timely reflection of
factors, such as the effect of plan amendments and fluctuation of
number of employees in accounting for the termination and
retirement benefits, in the projected benefit obligation and retire-
ment benefit expense.
A cumulative effect (net of tax) of this change was recog-
nized in the consolidated statement of income for the year ended
March 31, 2006, which reduced net income for the period by
¥1,201 million.
On March 31, 2007, the Companies adopted the recognition
and disclosure provisions of SFAS No. 158.
SFAS No. 158 required the Companies to recognize the
funded status (i.e., the difference between the fair value of
plan assets and the projected benefit obligations) of their
pension plans in the March 31, 2007 consolidated balance
sheet, with a corresponding adjustment to accumulated other
comprehensive income (loss) as pension liability adjustments.
Before adoption of SFAS No. 158, an additional minimum
pension liability was recognized based on a plan’s accumulated
benefit obligation (projected benefit obligation, less future
compensation increase), pursuant to SFAS No. 87. The
incremental effects of adopting the provisions of SFAS No.
158 on the accompanying consolidated balance sheet at
March 31, 2007 are presented in the following table.
Adjustments After Application of
SFAS No.158
Before Application
of SFAS No.158
Termination and retirement benefits
Deferred income taxes (Investments and other assets)
Accumulated other comprehensive loss
Millions of yen
¥(48,219)
15,456
(369)
¥(4,481)
1,837
(2,644)
¥(52,700)
17,293
(3,013)
Adjustments After Application of
SFAS No.158
Before Application
of SFAS No.158
Termination and retirement benefits
Deferred income taxes (Investments and other assets)
Accumulated other comprehensive loss
Thousands of U.S. dollars
$(408,635)
130,983
(3,127)
$(37,975)
15,568
(22,407)
$(446,610)
146,551
(25,534)