Sony 2000 Annual Report Download - page 85

SONY CORPORATION ANNUAL REPORT 2000
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Japanese plans:
March 31
1998 1999 2000
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0% 2.7% 2.7%
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0% 4.0% 4.0%
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0% 3.0% 3.0%
Foreign plans:
March 31
1998 1999 2000
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5-8.0% 4.4-7.3% 4.5-7.5%
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5-9.8% 6.9-9.8% 6.5-9.1 %
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5-4.9% 2.8-4.8% 2.0-4.8%
Assumptions used as of March 31, 1998, 1999 and
2000 were as follows:
15. Restructuring charges
Sony discontinued its engineering, sales, and marketing
operations for the cellular phone business in North
America by September 30, 1999 and focused its effort
on the research and development of next-generation
telecommunications technology. As a result, Sony
recorded a one-time expense totaling ¥9,646 million
($91 million) in the year ended March 31, 2000. This
charge consisted of facility closing costs of ¥7,420
million ($70 million), machinery and equipment write-
downs of ¥1,802 million ($17 million) and personnel
related costs of ¥424 million ($4 million).
As required under FAS 87 “Employers’ Accounting
for Pensions”, the assumptions are reviewed in accor-
dance with changes in circumstances. Amounts arising
from actuarial loss for the years ended March 31, 1999
and 2000 were primarily due to changes in the discount
rate and to the change in the method of calculating the
benefit obligation to adjust for the backloading of the
benefits as well as to a review of certain assumptions,
respectively.
Under FAS 87, Sony has recorded a pension liability
to cover the amount of the projected benefit obligation
in excess of plan assets, considering unrealized items and
the minimum pension liability. The minimum pension
liability which Sony has recognized on substantially all
of the Japanese plans at March 31, 1999 and on substan-
tially all of the Japanese subsidiaries’ plans at March 31,
2000 represents the excess of accumulated benefit
obligation over plan assets and accrued pension and
severance costs already recognized before recording the
minimum pension liability. A corresponding amount
was recognized as an intangible asset to the extent of
unrecognized prior service cost, and the balance was
recorded as a component of accumulated other compre-
hensive income, net of tax. The accumulated benefit
obligation of the Japanese plans was ¥461,815 million as
of March 31, 1999. As of March 31, 2000, the accumu-
lated benefit obligation and fair value of plan assets of
the plans for which Sony has recognized the minimum
pension liability were ¥232,624 million ($2,195 million)
and ¥140,147 million ($1,322 million), respectively.
As discussed in Note 10, in December 1998, Sony
Corporation contributed certain marketable equity
securities to an employee retirement benefit trust. The
securities held in this trust are qualified as plan assets
under U.S. GAAP.