Source: finance

# 9. RETIREMENT BENEFIT PLANS

The Company and its domestic consolidated subsidiaries have defined benefit plans, i.e., welfare pension fund plans ("WPPF"), tax-qualified pension plans and lump-sum payment plans, covering substantially all employees who are entitled 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 foreign consolidated subsidiaries have defined benefit and contribution plans.

The accrued retirement benefit obligations, funded status of the plans and the amounts recognized in the consolidated balance sheets as of March 31, 2005 and 2004 for the Company's and the consolidated subsidiaries' defined benefit plans:

|  | 2004<br>*Millions of yen* |  | 2003 | *Thousands of<br>U.S. dollars*<br>2004 |
|---|---|---|---|---|
|  | *For the year ended<br>Mar. 31, 2004* | *For the year ended<br>Mar. 31, 2003* |  | *For the year ended<br>Mar. 31, 2004* |
| Retirement benefit obligation | ¥(1,217,260) | ¥(1,041,423) |  | $(11,376,262) |
| Plan assets at fair value | 500,815 | 377,109 |  | 4,680,514 |
| Unfunded retirement benefit obligation | (716,445) | (664,314) |  | (6,695,748) |
| Unrecognized net retirement benefit obligation at transition | 120,718 | 131,666 |  | 1,128,206 |
| Unrecognized actuarial gain or loss | 154,689 | 152,867 |  | 1,445,691 |
| Unrecognized prior service cost | (66,720) | (51,833) |  | (623,551) |
| Net retirement benefit obligation | (507,758) | (441,614) |  | (4,745,402) |
| Prepaid pension cost | 445 | 682 |  | 4,159 |
| Accrued retirement benefits | ¥ (508,203) | ¥ (442,296) |  | $ (4,749,561) |

The substitutional portion of the benefits under the WPPF has been included in the amounts shown in the above table.

The Company received the approval from the Minister of Health, Labor and Welfare ("MHLW") in the year ended March 31, 2003 with respect to its application for exemption from the obligation for benefits related to future employees services under the substitutional portion of the WPPF. Consequently, in the year ended March 31, 2003, the Company and the domestic consolidated subsidiaries recognized expenses and gains related to the transitional provision stipulated in "Practical Guidelines for Accounting for Retirement Benefits," the Company and the domestic consolidated subsidiaries accounted for the separation of the substitutional portion of the benefit obligation from the corporate portion of the benefit obligation under their WPPFs as of the dates of approval for their exemption assuming that the transfer to the Japanese government of the substitutional portion of the benefit obligation and related pension plan assets had been completed as of those dates. As a result, the Company recognized a loss of ¥30,945 million for the year ended March 31, 2003 and the domestic consolidated subsidiaries recognized an aggregate gain of ¥3,660 million and an aggregate loss of ¥1,587 million for the year ended March 31, 2004. The pension assets to be transferred were calculated at ¥35,770 million for the domestic consolidated subsidiaries at March 31, 2004 and ¥241,203 million for the Company at March 31, 2003.

The components of retirement benefit expenses for the years ended March 31, 2005, 2004 and 2003 are outlined as follows:

|  | 2004<br>*Millions of yen* |  | 2002 | *Thousands of<br>U.S. dollars*<br>2004 |
|---|---|---|---|---|
|  | *For the year ended<br>Mar. 31, 2004* | *For the year ended<br>Mar. 31, 2003* |  | *For the year ended<br>Mar. 31, 2004* |
| Service cost | ¥47,802 | ¥48,418 | ¥ 51,543 | $446,748 |
| Interest cost | 33,288 | 33,012 | 45,269 | 311,103 |
| Expected return on plan assets | (17,999) | (15,523) | (26,768) | (168,215) |
| Amortization of net retirement benefit obligation at transition | 12,009 | 14,169 | 24,280 | 112,234 |
| Amortization of actuarial gain or loss | 12,298 | 8,589 | 1,464 | 114,934 |
| Amortization of prior service cost | (5,431) | (7,049) | (7,762) | (50,757) |
| Other | 179 | 157 | 5 | 1,673 |
| Retirement benefit expenses | 82,146 | 81,773 | 88,031 | 767,720 |
| (Gain) loss on return of the substitutional portion of<br>welfare pension fund plans | (1,107) | (5,594) | 30,945 | (10,346) |
| Total | ¥81,039 | ¥86,179 | ¥120,036 | $757,374 |