Eisai Co., Ltd. Annual Report 2001 - Eisai GmbH

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Note 7. Retirement and Pension Plans
The Company and certain consolidated subsidiaries have severance payment plans for employees, directors and corporate auditors.
Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the
rate of pay at the time of termination, years of service and certain other factors. Such retirement benefits are made in the form of a
lump-sum severance payment from the Company or from certain consolidated subsidiaries and/or annuity payments from a trustee.
Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or
by voluntary retirement at certain specific ages prior to the mandatory retirement age. The liability for retirement benefits at March 31,
2001 for directors and corporate auditors is ¥1,946 million ($15,693 thousand). The retirement benefits for directors and corporate
auditors are paid subject to the approval of the shareholders.
Effective April 1, 2000, the Company and its consolidated domestic subsidiaries adopted a new accounting standard for
employees’ retirement benefits.
The liability for employees’ retirement benefits at March 31, 2001 consisted of the followings:
Thousands of
Millions of yen U.S. dollars
Projected benefit obligation ¥131,937 $1,064,008
Fair value of plan assets (82,053) (661,718)
Unrecognized transitional obligation (14,401) (116,137)
Unrecognized actuarial loss (17,963) (144,863)
Unrecognized prior service cost 13,884 111,968
Net liability ¥ 31,404 $ 253,258
The components of net periodic retirement benefit costs for the year ended March 31, 2001 are as follows:
Millions of yen
Thousands of
U.S. dollars
Service cost ¥ 5,670 $ 45,726
Interest cost 4,735 38,186
Expected return on plan assets (2,987) (24,089)
Amortization of transitional obligation 18,728 151,032
Amortization of prior service cost (1,543) (12,444)
Contribution and others 390 3,145
Net periodic retirement benefit costs ¥24,993 $201,556
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 4.0%
Amortization period of prior service cost 5 years
Recognition period of actuarial gain / loss 5 years
Amortization period of transitional obligation 5 years
The amount contributed to the fund and charged to income for the year ended March 31, 2000 was ¥4,050 million.
Note 8. Shareholders’ Equity
Common Stock and Additional Paid-in Capital
The changes in the number of issued shares of common stock during the years ended March 31, 2001 and 2000, were as follows:
2001 2000
Balance, beginning of year 296,450,675 296,414,231
Shares issued upon conversion of bonds 2,313 36,444
Balance, end of year 296,452,988 296,450,675
Under the Japanese Commercial Code (the “Code”), an amount comprising at least 50% of the issue price of new shares, with a
minimum of the par value thereof, is required to be designated as stated capital. The portion which is designated as stated capital is
determined by resolution of the Board of Directors. Proceeds in excess of amounts designated as stated capital are credited to
additional paid-in capital.
Under the Code, the Company may issue new shares of common stock to the existing shareholders without consideration, by
resolution of the Board of Directors, to the extent that the amount calculated by multiplying the number of outstanding shares after the
issuance by par value per share does not exceed the stated capital, and that the amount calculated by dividing the total amount of
shareholders’ equity by the number of outstanding shares after the issuance shall not be less than ¥50. These issuances of the new
shares are treated as stock splits.
Retained Earnings
The Code provides that an amount at least equal to 10% of the aggregate amount of cash dividends and certain other cash payments
which are made as appropriation of the retained earnings applicable to each fiscal period shall be aprropriated and set aside as a legal
reserve until such reserve equals 25% of the stated capital. This reserve amount, which is included in retained earnings, totals ¥7,622
million ($61,468 thousand) and ¥6,948 million as of March 31, 2001 and 2000, respectively, and is not available for dividends but
may be used to reduce a deficit by resolution of the shareholders.
Eisai Annual Report 2001