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## Notes to Consolidated Financial Statements 

Assets pledged as collateral for bank loans and long-term debt at March 31, 1999 and 2000 are presented below: 

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As is customary in Japan, substantially all loans from banks (including short-term loans) are made under general agreements which provide that, at the request of the banks, the borrower is required to provide collateral or guarantors (or additional collateral or guarantors, as appropriate) with respect to such loans, and that all assets pledged as collateral under such agreements will be applicable to all present and future indebtedness to the banks concerned. These general agreements further provide that the banks have the right, as the indebtedness matures or becomes due prematurely by default, to offset deposits at the banks against the indebtedness due to the banks. 

The current conversion prices of the 1.4%, 1.9%, 1.95% and 2.0% convertible bonds issued by the Company are ¥1,751.50, ¥998.00, ¥998.00 and ¥998.00 per share, respectively, and the current exercise price of the warrants issued with the 3 $^{1}$/$_{8}$% bonds is ¥1,220.00 per share. The conversion and exercise prices referred to above are subject to adjustment in certain circumstances, including stock splits or free share distributions of common stock. At March 31, 2000, approximately 116 million shares of common stock were reserved for the conversion or exercise of all outstanding convertible bonds and warrants. 

Certain outstanding convertible bonds and notes can be repurchased at any time and may be redeemed at the option of the Company, in whole or in part, at prices ranging from 105% to 100% of their principal amounts. 

The aggregate annual maturities of long-term debt subsequent to March 31, 2000 are summarized as follows: 

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Bonds with detachable stock purchase warrants issued on or after April 1, 1994 have been accounted for separately as amounts attributable to the bonds and the stock purchase warrants. As for bonds with warrants issued before that date, the value of the stock purchase warrants has not been computed retroactively as the warrants are not detachable. 

The aggregate amount attributable to stock purchase warrants is reported in other current liabilities in conformity with accounting principles generally accepted in Japan. The warrants outstanding at March 31, 1999 and 2000 amounted to ¥8,477 million and ¥1,971 million ($18,594 thousand), respectively. 

Convertible bonds are treated solely as bonds and no value inherent in their conversion feature is recognized in accordance with accounting principles generally accepted in Japan. The total amount of the convertible bonds has been included in long-term debt. 

## 10. Pension and Severance Plans 

Upon retirement, employees of the Group are entitled to a lump-sum payment or annuity payments for life as described below. The Company and its consolidated subsidiaries in Japan adopt severance benefit plans, under which the cost of benefits is not funded and the liabilities for the benefits are accrued. Under the plans, employees are entitled to lump-sum payments based on their current basic rates of pay and length of service. Accrued severance benefits in the consolidated balance sheets are stated at the present value of the vested benefit obligation which would be required to be paid if all employees voluntarily terminated their services as of the balance sheet date. Provisions for employees’ severance benefits charged to income for the years ended March 31, 1998, 1999 and 2000 amounted to ¥25,352 million, ¥31,975 million and ¥33,959 million ($320,368 thousand), respectively. 

In addition to the plans described above, the Company and its consolidated subsidiaries in Japan have contributory defined benefit plans with insurance companies, trust banks and investment management companies to supplement the public welfare pension plan. The plans entitle the eligible employees upon retirement to receive either a lump-sum payment or annuity payments for life, or a combination of both. These plans include a substitutional portion of the benefits under the National Welfare Pension Plan of Japan (“the NWP Plan”). The plans require that the liability reserve and the annual contributions be calculated actuarially by the open aggregate cost method for the substitutional portion of the NWP Plan, and by the entry-age normal cost method for the remainder. 

