Toshiba 1997 Annual Report Download - page 43

41.
8. Liability for severance indemnities:
All employees whose services with the company and its subsidiaries are terminated are usually entitled to lump-sum severance
indemnities determined by reference to their current basic rate of pay, length of service and conditions under which the termina-
tion occurs. The obligation for the severance indemnity benefits is provided for through accruals and funding of tax-qualified
pension plans and contributory trusteed employee pension funds.
Certain subsidiaries have tax-qualified pension plans which cover all or a part of the indemnities payable to qualified employees
at the time of termination. The funding policy for the plans is to contribute amounts required to maintain sufficient plan assets to
provide for accrued benefits, subject to the limitation on deductibility imposed by Japanese income tax laws.
The company and several subsidiaries also have contributory trusteed employee pension funds. The contributory employee
pension funds are comprised of a portion covering part of the severance indemnities benefits and another portion covering social
security benefits, to which the company, subsidiaries and employees make contributions.
The transition obligation resulting from the adoption of SFAS No. 87, “Employers’ Accounting for Pensions,” and prior service
cost are being amortized over the remaining service years of the employees, and the “projected unit credit” actuarial method is
being used to determine the net periodic pension cost and the projected benefit obligation.
Net periodic pension cost for 1997 and 1996 included the following components:
Thousands of
Millions of yen U.S. dollars
Years ended March 31 1997 1996 1997
Service cost – benefits earned during the year . . . . . . . . . . . . . . . . . . . . ¥ 40,648 ¥ 40,437 $ 327,806
Interest cost on projected benefit obligation . . . . . . . . . . . . . . . . . . . . . 51,993 55,774 419,298
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31,368) (40,091) (252,967)
Net amortization and deferral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,054 34,726 193,984
Net periodic pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 85,327 ¥ 90,846 $ 688,121
A weighted average discount rate of 4.5 percent and 5.0 percent, an expected long-term rate of return on plan assets of 4.0
percent, and an assumed rate of increase in salary levels of 3.0 percent and 3.5 percent were used in developing the net periodic
pension cost for 1997 and 1996, respectively.
The funded status of the plans and amounts recognized in the consolidated balance sheets at March 31, 1997 and 1996, were as follows:
Thousands of
Millions of yen U.S. dollars
March 31 1997 1996 1997
Actuarial present value of benefit obligation:
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 862,978 ¥ 730,218 $ 6,959,500
Non vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196,292 174,903 1,583,000
Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,059,270 ¥ 905,121 $ 8,542,500
Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,263,801 ¥1,113,179 $10,191,944
Plan assets at fair value, primarily stocks,
bonds and other fixed income investments . . . . . . . . . . . . . . . . . . . . 637,607 585,506 5,141,992
Excess of projected benefit obligation over plan assets . . . . . . . . . . . . . 626,194 527,673 5,049,952
Unrecognized net obligation at transition . . . . . . . . . . . . . . . . . . . . . . (109,289) (121,314) (881,363)
Unrecognized prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53,766) (56,120) (433,597)
Unrecognized net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (126,999) (18,874) (1,024,186)
Additional minimum pension liability . . . . . . . . . . . . . . . . . . . . . . . . 85,523 –689,702
Net pension liability (liability for severance indemnities) . . . . . . . . . . . ¥ 421,663 ¥ 331,365 $ 3,400,508
At March 31, 1997, the company recognized an additional minimum pension liability of ¥85,523 million ($689,702 thousand)
and an equal amount as intangible asset in accordance with SFAS No. 87.
The aggregate annual maturities of long-term debt are as follows:
Millions Thousands of
Year ending March 31 of yen U.S. dollars
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥205,633 $1,658,331
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311,808 2,514,581
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,399 979,024
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,761 820,653
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,210 421,049
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131,042 1,056,790
¥923,853 $7,450,428