Omron 2009 Annual Report Download - page 78

76
Notes to Consolidated Financial Statements
Omron Corporation and Subsidiaries
11. Shareholders’ Equity
Japanese companies are subjected to the Corporate Law.
The Corporate Law requires that all shares of com-
mon stock be issued with no par value and at least 50% of
amount paid of the issue price of new shares is required
to be recorded as common stock and the remaining net
proceeds are required to be presented as additional paid-
in capital, which is included in capital surplus. The
Corporate Law permits Japanese companies, upon
approval of the Board of Directors, to issue shares to
existing shareholders without consideration by way of a
stock split. Such issuance of shares generally does not
give rise to changes within the shareholders’ accounts.
The Corporate Law also requires that an amount equal
to 10% of dividends must be appropriated as a legal
reserve or as additional paid-in capital (a component of
capital surplus) depending on the equity account charged
upon the payment of such dividends until the total of
aggregate amount of legal reserve and additional paid-in
capital equals 25% of the common stock. Under the
Corporate Law, the total amount of additional paid-in cap-
ital and legal reserve may be reversed without limitation of
such threshold. The Corporate Law also provides that
common stock, legal reserve, additional paid-in capital,
other capital surplus and retained earnings can be trans-
ferred among the accounts under certain conditions upon
resolution of the shareholders.
The assets in the retirement benefit trust at March 31,
2009 and 2008 consisted of 95.3%, 98.1% equity secu-
rities, respectively, and consisted of 4.7%, 1.9% other,
respectively.
The Company investment policies are designed to
ensure that adequate plan assets are available to provide
future payments of pension benefits to eligible partici-
pants. Taking into account the expected long-term rate
of return on plan assets, the Company formulates a model
portfolio comprised of the optimal combination of equity
and debt securities in order to produce a total return that
will match the expected return on a mid-term to long-
term basis.
Target allocation of plan assets is 20% equity securi-
ties, 66% debt securities and life insurance company gen-
eral account and 14% other for both 2009 and 2008.
The Company evaluates the gap between expected
return and actual return of invested plan assets on an annu-
al basis to determine if such differences necessitate a revi-
sion in the model portfolio. The Company revises the model
portfolio to the extent considered necessary to achieve the
expected long-term rate of return on plan assets.
Equity securities include a common stock of the
Company in the amounts of ¥6 million ($61 thousand)
(0.01% of total domestic plan assets), and ¥4 million
(0.00% of total domestic plan assets) at March 31, 2009,
and 2008, respectively.
Cash Flows
Contributions
The Companies expect to contribute ¥8,567 million
($87,418 thousand) to their domestic termination and retire-
ment benefit plans in the year ending March 31, 2010.
Estimated Future Benefit Payments
The following benefit payments, which reflect expected
future service, as appropriate, are expected to be paid:
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 ¥2,691 million ($27,459 thousand) and ¥2,135 million
($21,786 thousand), respectively, at March 31, 2009 and
¥2,891 million and ¥2,691 million, respectively, at March
31, 2008.
The Companies also have unfunded noncontributory
termination plans administered by the Companies. These
plans provide lump-sum termination benefits are paid at
the earlier of the employee’s termination or mandatory
retirement age, except for payments to directors and cor-
porate 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’ accu-
mulated benefit obligations.
The aggregate liability for the termination plans exclud-
ing the funded contributory termination and retirement
plan in Japan, as of March 31, 2009 and 2008 was ¥4,776
million ($48,735 thousand) and ¥5,068 million, respec-
tively. The aggregate net periodic benefit cost for such
plans for the years ended March 31, 2009, 2008 and 2007
was ¥702 million ($7,163 thousand), ¥258 million and
¥1,167 million, respectively.
Years ending March 31
2010
2011
2012
2013
2014
2015-2019
Millions of yen
Thousands of
U.S. dollars
¥ 6,114
7,215
6,880
7,054
6,805
35,983
$ 62,388
73,622
70,204
71,980
69,439
367,173