Toshiba 2004 Annual Report Download - page 58

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10. ACCRUED PENSION AND SEVERANCE COSTS
All employees who retire or are terminated are usually entitled to lump-sum severance indemnities or pension benefit
determined by reference to their current basic rate of pay, length of service and conditions under which their employment
terminates. The obligation for the severance indemnity benefit is provided for through accruals, funding of tax-qualified
non-contributory pension plans, contributory trusteed employee pension funds, and the corporate pension plan.
Toshiba Corporation and certain subsidiaries in Japan have Employees’ Pension Fund (“ EPF” ) Plans, which are
contributory defined benefit pension plans under the Japanese Welfare Pension Insurance Law (“ JWPIL” ). These plans
are composed of a substitutional portion which is the obligation related to the government-defined benefit prescribed
by JWPIL, and a corporate portion based on a contributory defined benefit arrangement established at the discretion of
Toshiba Corporation and these subsidiaries. Among several EPF Plans that the Company participated in, the Toshiba
EPF Plan was reorganized and became a corporate pension plan under the Japanese Defined Benefit Corporate Pension
Law during the year ended March 31, 2004.
Certain subsidiaries in Japan have tax-qualified non-contributory 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 uses a March 31 measurement date for the majority of its plans.
The changes in the benefit obligations and plan assets and reconciliations of net amount recognized to funded
status and accrued pension and severance costs for the years ended March 31, 2004 and 2003 were as follows:
Thousands of
Millions of yen U.S. dollars
March 3 1 2004 2003 2004
Change in benefit obligation:
Benefit obligation at beginning of year ¥1,936,297 ¥1,816,656 $18,266,953
Service cost 45,689 52,287 431,028
Interest cost 55,075 59,053 519,575
Plan participants’ contributions 2,86 9 5,308 27,066
Plan amendments (18,40 3) 25,046 (173,613)
Actuarial loss 32,130 95,969 303,113
Benefits paid (91,90 1) (102,338) (866,99 1)
Divestitures (15,6 04) (14,273) (147,207)
Return of substitutional portion to the government (654,0 57) —(6,170 ,349)
Foreign currency exchange impact (1,591) (1,411) (15,009)
Benefit obligation at end of year ¥1,290,504 ¥1,936,297 $12,174,566
Change in plan assets:
Fair value of plan assets at beginning of year ¥ 844,767 ¥ 988,112 $ 7,969,500
Actual return on plan assets 122 ,120 (126,700) 1,152,07 6
Employer contribution 68,343 41,627 644,745
Plan participants’ contributions 2,86 9 5,308 27,066
Benefits paid (47,33 8) (53,972) (446,585)
Divestitures (4,449) (8,191) (41,971)
Return of substitutional portion to the government (366,9 27) —(3,461 ,576)
Foreign currency exchange impact (1,553) (1,417) (14,651)
Fair value of plan assets at end of year ¥ 617,832 ¥ 844,767 $ 5,828,604
Funded status ¥ 67 2,672 ¥1,091,530 $ 6,345,962
Unrecognized actuarial loss (515,8 51) (861,688) (4,866,51 9)
Unrecognized net obligation at transition (24 ,520) (36,911) (231,321)
Unrecognized prior service cost 59,875 46,950 564,859
Net amount recognized ¥ 192,176 ¥ 239,881 $ 1,812,981
Amounts recognized in the consolidated balance
sheets consist of:
Accrued pension and severance costs ¥ 601,566 ¥ 950,997 $ 5,675,151
Accumulated other comprehensive loss, pre-tax (4 09,390) (711,116) (3,8 62,170)
Net amounts recognized ¥ 19 2,176 ¥ 239,881 $ 1,812,981
Accumulated benefit obligation at end of year ¥1,2 21,653 ¥1,796,972 $11,525,028