Pioneer 2007 Annual Report Download - page 52

PIONEER CORPORATION51
The aggregate annual maturities of long-term debt during the
five years ending March 31, 2012 and thereafter are as follows:
Thousands of
Years ending March 31 Millions of Yen U.S. Dollars
2008 ¥ 6,577 $ 55,737
2009 13,671 115,856
2010 3,271 27,720
2011 64,446 546,153
2012 3,151 26,703
2013 and thereafter 1,476 12,509
Total ¥92,592 $784,678
Substantially all short-term and long-term loans from
banks are made under agreements which, as is customary in
Japan, provide that the bank may, under certain conditions,
require the borrower to provide collateral (or additional collat-
eral) or guarantors with respect to the loans, and that the
bank may treat any collateral, whether furnished as security
for short-term or long-term loans or otherwise, as collateral
for all indebtedness to such bank. The Company has no com-
pensating balance arrangements with any lending bank.
12. Pension plans and accrued severance cost:
The parent company and major domestic subsidiaries have
non-contributory defined benefit pension plans which cover
substantially all of their employees. The benefits are in the form
of annuity payments and/or lump-sum payments and are deter-
mined based on the sum of cumulative points. The points are
accumulated based on years of service, job class and conditions
under which termination occurs. The Company’s policy is to
fund amounts required to maintain sufficient plan assets to
provide for accrued benefits, subject to the limitation on
deductibility imposed by the Japanese income tax laws.
The Company also sponsors a domestic non-contributory
defined-benefit Corporate Pension Fund (“CPF”) under the
Defined Benefit Corporate Pension Law of Japan, which covers
substantially all of its Japanese employees. The benefits are
determined based on the sum of cumulative points; which are
accumulated based on years of service, job class and conditions
under which termination occurs.
The Company sponsored a domestic defined-benefit welfare
pension plan (the “Welfare Pension Plan”) under the Japanese
government’s welfare pension regulations, covering substan-
tially all of its Japanese employees. The benefits under the
Welfare Pension Plan were primarily based on years of service
and the average compensation during years of service. The
Welfare Pension Plan consisted of a substitutional portion
which, management considered, represented the welfare
pension plan of the government, and a corporate portion
representing a non-contributory plan established by the
Company. The substitutional portion was contributory and
specified by the governmental regulations. The Welfare Pension
Plan was administered by a board of trustees composed of
management and labor representatives.
On October 29, 2003, the Company received approval from
the Japanese government for exemption from the obligation to
pay benefits for future employee services related to the substi-
tutional portion, and on November 1, 2004, approval for
exemption from the obligation to pay benefits for past employee
services related to the substitutional portion. Accordingly, on
March 11, 2005, the benefit obligation of the substitutional
portion and the related government-specified portion of plan
assets of the Welfare Pension Plan were transferred to the
Japanese government.
Upon completion of the transfer, in accordance with EITF
Issue No. 03-2, “Accounting for the Transfer to the Japanese
Government of the Substitutional Portion of Employee Pension
Fund Liabilities,” the Company recorded the transaction for the
year ended March 31, 2005. The transfer resulted in the
Company recording a subsidy from the government of ¥48,697
million, representing the difference between the accumulated
benefit obligation of the substitutional portion and the related
plan assets that were transferred. Additionally, the Company
recorded a reduction in net periodic benefit cost related to the
derecognition of previously accrued salary progression of
¥2,402 million and a settlement loss of ¥51,893 million. Out of
the total amount of derecognition of previously accrued salary
progression and settlement loss, ¥25,339 million was allocated
to cost of sales, and ¥24,152 million to selling, general and
administrative expenses.