Sony 2000 Annual Report Download - page 83

SONY CORPORATION ANNUAL REPORT 2000
81
14. Pension and severance plans
Upon terminating employment, employees of Sony
Corporation and subsidiaries in Japan are entitled,
under most circumstances, to lump-sum indemnities or
pension payments as described below. For employees
voluntarily retiring, under normal circumstances, mini-
mum payment is an amount based on current rates of
pay and lengths of service. In calculating the minimum
payment for employees involuntarily retiring, including
employees retiring due to meeting mandatory retirement
age requirements, Sony may grant additional benefits.
With respect to directors’ and statutory auditors’ resigna-
tions, lump-sum severance indemnities are calculated
using a similar formula and are normally paid subject to
the approval of Sony’s stockholders.
Sony Corporation and most subsidiaries in Japan
have contributory funded defined benefit pension plans,
which are pursuant to the Japanese Welfare Pension
Insurance Law. The contributory pension plans cover a
portion of the governmental welfare pension program,
under which the contributions are made by the compa-
nies and their employees, and an additional portion
representing the substituted noncontributory pension
Japanese plans:
Yen in millions Dollars in millions
Year ended March 31 Year ended
1998 1999 2000 March 31 , 2000
Service cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥35,318 ¥41,743 ¥ 46,306 $ 437
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,303 14,020 1 4,898 1 41
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . (7,978) (9,618) (1 1,236) (106)
Amortization of net transition asset . . . . . . . . . . . . . . . . . (375) (375) (375) (4)
Recognized actuarial loss. . . . . . . . . . . . . . . . . . . . . . . . . 6,369 8,032 5,733 54
Amortization of prior service cost . . . . . . . . . . . . . . . . . . 1,178 1,234 1 ,335 1 3
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . ¥47,815 ¥55,036 ¥ 56,661 $ 535
Foreign plans:
Yen in millions Dollars in millions
Year ended March 31 Year ended
1998 1999 2000 March 31 , 2000
Service cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥15,625 ¥15,842 ¥ 1 7,836 $ 1 68
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,911 5,333 6,095 58
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . (3,900) (4,475) (4,989) (47)
Amortization of net transition asset . . . . . . . . . . . . . . . . . (122) (122) (1 08) (1)
Recognized actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . 308 342 (46) (1)
Amortization of prior service cost . . . . . . . . . . . . . . . . . . (70) (274) (1 42) (1)
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . ¥16,752 ¥16,646 ¥ 18,646 $ 176
plans. Under the contributory pension plans, the
defined benefits representing the noncontributory
portion of the plans, in general, cover 60% of the
indemnities under the existing regulations to employ-
ees. The remaining indemnities are covered by severance
payments by the companies. The pension benefits are
determined based on years of service and the compen-
sation amounts, as stipulated in the aforementioned
regulations, are payable at the option of the retiring
employee in a lump-sum amount or on a monthly
pension. Contributions to the plans are funded through
several financial institutions in accordance with the
applicable laws and regulations.
Most foreign subsidiaries have defined benefit
pension plans or severance indemnity plans which
substantially cover all of their employees, under which
the cost of benefits is currently funded or accrued.
Benefits awarded under these plans are based primarily
on current rate of pay and lengths of service.
The components of net pension and severance costs
for the years ended March 31, 1998, 1999 and 2000
were as follows: