Ricoh 2006 Annual Report Download - page 47

46
ANNUAL REPORT 2006
To Our Shareholders and
Customers
General Information
by Business Area Ricoh's Core Values Solutions Environmental Financial Section
In accordance with the provisions of SFAS 87, Ricoh has recorded an
adjustm ent for minim um pension liability at March 31, 2005 and 2006.
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 minim um pension liability. This excess
is prim arily 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 incom e ( loss) , net of
tax.
The projected benefit obligations and the fair value of plan assets for the
pension plans with projected benefit obligations in excess of plan assets,
and the accum ulated benefit obligations and the fair value of plan
assets for the pension plans with accum ulated benefit obligations in
excess of plan assets are as follows:
Thousands of
Millions of Yen U.S. Dollars
2005 2006 2006
Plans with projected benefit obligations in excess of plan assets:
Projected benefit obligations ¥338,201 ¥222,095 $1,898,248
Fair value of plan assets 235,161 129,327 1,105,359
Plans with accum ulated benefit obligations in excess of plan assets:
Accum ulated benefit obligations ¥281,411 ¥190,144 $1,625,162
Fair value of plan assets 216,249 118,214 1,010,376
Ricoh’s benefit plan asset allocation at March 31, 2005 and 2006 are as follows:
2005 2006
Equity securities 48.5% 51.7%
Debt securities 27.1% 21.1%
Life insurance company general accounts 14.8% 20.5%
Other 9.6% 6 .7 %
Total 100.0% 100.0%
As discussed in Note 5, Ricoh contributed certain m arketable equity
securities to an employee retirem ent benefit trust. The securities held in
this trust are qualified as plan assets under SFAS 87.
Com mon stock and bonds of the Company and certain of its domestic
subsidiaries included in plan assets were imm aterial at March 31, 2005
and 2006.
Ricoh’s investment policies and strategies for the pension benefits do
not use target allocations for the individual asset categories. Ricoh’s
investm ent goals are to maximize returns subj ect to specific risk
management policies. Its risk management policies perm it investments
in m utual funds and debt and equity securities and prohibit direct
investm ent in derivative financial instruments. Ricoh addresses
diversification by the use of m utual fund investm ents whose underlying
investm ents are in domestic and international fixed income securities
and domestic and international equity securities. These m utual funds
are readily marketable and can be sold to fund benefit paym ent
obligations as they become payable.
Ricoh uses a Decem ber 31 measurem ent date for the pension plans.
Ricoh expects to contribute ¥13,080 million ( $111,795 thousand) to its
pension plans for the year ending March 31, 2007.
The following benefit paym ents, which reflect expected future service, as
appropriate, are expected to be paid:
Thousands of
Years ending March 31 Millions of Yen U.S. Dollars
2007 ¥15,162 $129,590
2008 17,613 150,538
2009 18,622 159,162
2010 19,594 167,470
2011 18,856 161,162
2012– 2016 96,302 823,094
Employees of certain domestic subsidiaries not covered by the EPF plan
and directors of the Com pany are primarily covered by unfunded
retirem ent allowances plans. The payments to directors are subject to
shareholders’ approval.