Ricoh 2004 Annual Report Download - page 46

In accordance with the provisions of SFAS 87, Ricoh has recorded an
adjustment for minimum pension liability at March 31, 2003 and 2004.
This liability represents the excess of the accumulated benefit obligations
over the fair value of plan assets and severance costs already recognized
before recording the minimum pension liability. This excess is primarily
attributable to a substantial reduction in the discount rate used in pension
calculation and loss on plan assets. A corresponding amount was
recognized as an intangible asset to the extent of the unrecognized prior
service cost, and the balance was recorded as a component of accumulated
other comprehensive income (loss), net of tax.
The projected benefit obligations, accumulated benefit obligations, and
fair value of plan assets for the pension plans with accumulated benefit
obligations in excess of plan assets were ¥453,956 million, ¥387,481 million
and ¥218,058 million, respectively, as of March 31, 2003 and ¥240,470
million ($2,312,212 thousand), ¥229,387 million ($2,205,644 thousand)
and ¥194,654 million ($1,871,673 thousand), respectively, as of March 31,
2004.
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Equity securities
Debt securities
Life insurance company general accounts
Other
Total
2004
2003
55.6%
24.5%
17.9%
2.0%
100.0%
52.8%
2.4%
20.0%
24.8%
100.0%
Ricoh’s domestic benefit plan asset allocation at March 31, 2003 and 2004 are as follows:
The total fair value of plan assets for domestic plan as of March 31,
2004 was ¥159,989 million ($1,538,356 thousand).
Common stock and bonds of the Company and certain of its domestic
subsidiaries included in plan asset was immaterial at March 31, 2003 and 2004.
Ricoh’s investment policies and strategies for the pension benefits do
not use target allocations for the individual asset categories. Ricoh’s
investment goals are to maximize returns subject to specific risk
management policies. Its risk management policies permit investments in
mutual funds and debt and equity securities and prohibit direct investment
in derivative financial instruments. Ricoh addresses diversification by the
use of mutual fund investments whose underlying investments are in
domestic and international fixed income securities and domestic and
international equity securities. These mutual funds are readily marketable
and can be sold to fund benefit payment obligations as they become
payable.
As discussed in Note 5, Ricoh contributed certain marketable equity
securities to an employee retirement benefit trust. The securities held in this
trust are qualified as plan assets under SFAS 87.
Ricoh uses a December 31 measurement date for the domestic pension
plan.
Ricoh expects to contribute ¥8,240 million ($79,231 thousand) to the
domestic pension plan in 2004.
Employees of certain domestic subsidiaries not covered by the EPF plan
and directors of the Company are primarily covered by unfunded retirement
allowances plans. The payments to directors are subject to shareholders’
approval.
12. SHAREHOLDERS’ INVESTMENT
The Japanese Commercial Code provides that an amount equal to at least
10% of cash dividends and other distributions from retained earnings paid
by the Company and its domestic subsidiaries be appropriated as a legal
reserve. No further appropriation is required when the total amount of the
legal reserve and additional paid-in capital equals 25% of common stock.
Legal reserves included in retained earnings as of March 31, 2003 and 2004
were ¥16,903 million and ¥16,894 million ($162,442 thousand),
respectively, and are restricted from being used as dividends.
Semiannual cash dividends are approved by the shareholders after the
end of each fiscal period or are declared by the Board of Directors after the
end of each interim six-month period. Such dividends are payable to
shareholders of record at the end of each such fiscal or interim six-month
period. At the general meeting to be held on June 25, 2004, the shareholders
will be asked to approve the declaration of a cash dividend (¥10 per share)
on the common stock totaling ¥7,389 million ($71,048 thousand), which
will be paid to shareholders of record as of March 31, 2004. The declaration
of this dividend has not been reflected in the consolidated financial
statements as of March 31, 2004.
The Japanese Commercial Code provides that at least one-half of the
proceeds from shares issued is included in common stock. In conformity
therewith, the Company has divided the principal amount of bonds
converted into common stock between common stock and additional paid-
in capital.
The amount of retained earnings legally available for dividend
distribution is that recorded in the Company’s non-consolidated books and
amounted to ¥308,412 million ($2,965,500 thousand) as of March 31,
2004.
The Japanese Commercial Code allows the Company to purchase
treasury stock for any reason at any time by the resolution of the Board of
Directors. On June 27, 2002, the shareholders of the Company approved to
purchase treasury stock up to 8 million shares for a maximum total cost of
¥20,000 million during the period up to the resolution of next Ordinary
General Shareholders’ Meeting which was held on June 26, 2003. In
accordance with this approval, the Company repurchased 8 million shares
and retired 7 million shares during the year ended March 31, 2003. The
retirement of common stock reduced retained earnings during the year
ended March 31, 2003 by ¥13,328 million.