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7. Severance Indemnities and Pension Plans 

Under the Group’s pension plans, employees terminating their employment are, in most circum- stances, entitled to pension payments based on their average pay during their employment, length of service and certain other factors. 

Effective April 1, 2000, the Group adopted a new accounting standard for employees’ retire- 

ment benefits. The liabilities for employees’ retirement benefits at March 31, 2001 consisted of the following: 

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The components of net periodic benefit costs for the year ended March 31, 2001 were as fol- lows: 

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Assumptions used for the year ended March 31, 2001 are set forth as follows: 

Discount rate: 3.5% Expected rate of return on plan assets: 3.5% Recognition period of actuarial gain/loss: 10 years Amortization period of transitional obligation: 7 years 

The amounts contributed to the fund, which were charged to income for the year ended March 31, 2000, were ¥35,409 million. 

Liability for retirement benefits at March 31, 2001 and 2000 included retirement benefits for directors and corporate auditors of ¥793 million and ¥940 million, respectively. The retirement benefits for directors and corporate auditors are paid subject to the approval of the shareholders. 

8. Shareholders’ Equity 

The Code requires at least 50% of the issue price of new shares, with a minimum of the par value thereof, to be designated as stated capital as determined by resolution of the Board of Directors. Proceeds in excess of amounts designated as stated capital are credited to additional paid-in capital. 

The Code also requires companies to appropriate from retained earnings to a legal reserve an amount equal to at least 10% of all cash payments which are made as an appropriation of retained earnings until such reserve equals 25% of stated capital. This reserve is not available for dividends but may be used to reduce a deficit by resolution of the shareholders. Such legal reserve included in retained earnings was ¥5,895 million and ¥5,595 million at March 31, 2001 and 2000, respectively. 

The Company may transfer portions of additional paid-in capital and the legal reserve to stated capital by resolution of the Board of Directors. The Company may also transfer portions of unappropriated retained earnings, available for dividends, to stated capital by resolution of the shareholders. 

Under the Code, the Company may issue new common shares to existing shareholders with- out consideration as a stock split pursuant to resolution of the Board of Directors. The Company may make such a stock split to the extent that the aggregate par value of the shares outstanding after the stock split does not exceed the stated capital. However, the amount calculated by divid- ing the total amount of shareholders’ equity by the number of outstanding shares after the stock split shall not be less than ¥50. 

