Yamaha 2008 Annual Report Download - page 80

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78 Yamaha Corporation
16. LEGAL RESERVE AND ADDITIONAL PAID-IN CAPITAL
The Corporation Law of Japan (the “Law”) provides that amounts from capital surplus and retained earnings may be distributed to
the shareholders at any time by resolution of the shareholders or by the Board of Directors if certain provisions are met subject to
the extent of the applicable sources of such distributions. The Law further provides that amounts equal to 10% of such distribu-
tions be transferred to additional paid-in capital included in capital surplus or the legal reserve based on the applicable sources of
such distributions until the sum of additional paid-in capital and the legal reserve equals 25% of the capital stock account.
17. RETIREMENT BENEFITS
The Company and its domestic consolidated subsidiaries have defined benefit pension plans, i.e., the Welfare Pension Fund
Plan (WPFP), tax-qualified pension plans and lump-sum payment plans, which substantially cover all employees who are entitled
upon retirement to lump-sum or annuity payments, the amounts of which are determined by reference to their basic rates of pay,
length of service, and the conditions under which termination occurs. Certain employees may be entitled to additional special
retirement benefits which have not been provided for based on the conditions under which termination occurs. In addition, cer-
tain overseas consolidated subsidiaries have defined benefit and contribution pension plans.
The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the accompanying
consolidated balance sheets at March 31, 2008 and 2007 for the Company’s and the consolidated subsidiaries’ defined benefit
pension plans:
Millions of Yen
Thousands of
U.S. Dollars
(Note 3)
2008 2007 2008
Retirement benefit obligation ¥(150,685) ¥(162,791) $(1,503,992)
Plan assets at fair value 102,705 122,430 1,025,102
Unfunded retirement benefit obligation (47,980) (40,360) (478,890)
Unrecognized actuarial gain or loss 25,783 12,663 257,341
Unrecognized prior service cost (2,601) 1,458 (25,961)
Net retirement benefit obligation at transition (24,798) (26,238) (247,510)
Prepaid pension expenses 512 902 5,110
Accrued retirement benefits ¥ (25,311) ¥ (27,140) $ (252,630)
Note that the Company and one domestic consolidated subsidiary discontinued their approved retirement annuity system on April 1, 2007, and are making the transition to a
corporate pension plan and lump-sum retirement payment plan.
The components of retirement benefit expenses for the years ended March 31, 2008 and 2007 are outlined as follows:
Millions of Yen
Thousands of
U.S. Dollars
(Note 3)
2008 2007 2008
Service cost ¥ 5,318 ¥ 5,535 $ 53,079
Interest cost 2,997 3,134 29,913
Expected return on plan assets (4,696) (4,696) (46,871)
Amortization of prior service cost (157) 264 (1,567)
Amortization of actuarial gain or loss 3,218 3,088 32,119
Additional retirement benefit expenses 1,407 3,551 14,043
Total ¥ 8,089 ¥10,876 $ 80,737