Sony 2006 Annual Report Download - page 118

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116
Foreign plans:
Years ended March 31 2004 2005 2006
Discount rate . . . . . . . . . . . .
6.3% 5.8% 5.4%
Expected return on plan
assets . . . . . . . . . . . . . . . .
8.3 7.8 7.8
Rate of compensation
increase . . . . . . . . . . . . . . .
4.1 4.0 3.7
Japanese plans:
Years ended March 31 2004 2005 2006
Discount rate . . . . . . . . . . . .
1.9% 2.4% 2.3%
Expected return on plan
assets . . . . . . . . . . . . . . . .
4.0 3.2 3.5
Rate of compensation
increase . . . . . . . . . . . . . . .
3.0 3.3 3.4
As required under FAS No. 87, “Employers’ Accounting for
Pensions”, the assumptions are reviewed in accordance with
changes in circumstances.
To determine the expected long-term rate of return on pen-
sion plan assets, Sony considers the current and expected
asset allocations, as well as historical and expected long-term
rate of returns on various categories of plan assets.
Following FAS No.132(R), “Employers’ Disclosure about
Pensions and Other Postretirement Benefits”, the weighted-
average rate of compensation increase is calculated based on
the pay-related plans only. The point-based plan discussed
above is excluded from the calculation because payments made
under the plan are not based on employee compensation.
Weighted-average pension plan asset allocations based on the fair value of such assets as of March 31, 2005 and 2006 were
as follows:
Japanese plans:
March 31 2005 2006
Equity securities . . . . . . . . . . . . . . . . . . .
28.0% 38.1%
Debt securities . . . . . . . . . . . . . . . . . . . .
34.7 47.7
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . .
33.7 6.0
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.6 8.2
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0% 100.0%
Foreign plans:
March 31 2005 2006
Equity securities . . . . . . . . . . . . . . . . . . .
68.3% 69.1%
Debt securities. . . . . . . . . . . . . . . . . . . .
23.4 20.8
Real estate . . . . . . . . . . . . . . . . . . . . . .
4.0 6.8
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3 3.3
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0% 100.0%
For the pension plans of Sony Corporation and most of its
subsidiaries in Japan, the target allocation as of March 31,
2006, is, as a result of our Asset Liability management, 34% of
public equity, 56% of fixed income securities and 10% of other.
When determining an appropriate asset allocation, diversification
among assets is duly considered.
The actual asset allocation as of March 31, 2005 for Sony’s
principal pension plans did not meet the aforementioned target
allocation as the Sony Employees’ Pension Fund tentatively held
cash to be paid to the Japanese government in relation to the
transfer of the substitutional portion of the benefit obligation.
As a result from the transfer of the Japanese Government of
the substitution portion of Sony’s Employee Pension Fund in
September 2005, pension plan assets of the Japanese plans as
of March 31, 2006 decreased as compared to March 31, 2005.
Sony makes contributions to its contributory funded defined
benefit pension plans as required by government regulation or
as deemed appropriate by management after considering the
fair value of plan assets, expected return on plan assets and the
present value of benefit obligations. Sony expects to contribute
approximately ¥33 billion ($286 million) to the Japanese plans
and approximately ¥6 billion ($52 million) to the foreign plans
during the fiscal year ending March 31, 2007.
The future benefit payments are expected as follows:
Japanese plans Foreign plans
Yen in Dollars in Yen in Dollars in
millions millions millions millions
Year ending March 31:
2007 . . . . . . . . . . . . .
¥ 17,336 $ 148 ¥ 7,262 $ 62
2008 . . . . . . . . . . . . .
19,081 163 6,764 58
2009 . . . . . . . . . . . . .
21,002 180 7,532 64
2010 . . . . . . . . . . . . .
25,400 217 8,326 71
2011 . . . . . . . . . . . . .
29,102 249 8,994 77
2012–2016 . . . . . . . .
162,183 1,386 56,418 482
Weighted-average assumptions used to determine net pension and severance costs for the fiscal years ended March 31, 2004,
2005 and 2006 were as follows: