FINANCIAL SECTION Notes to Consolidated Financial Statements 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. At March 31  2004  the Group had committed line contracts with banks aggregating ·265 499 million ($2 504 708 thousand). Of the total credit limit  ·107 014 million ($1 009  566 thousand) was used as the above short-term and long-term borrowings  and the rest ·158 485 million ($1 495 142 thousand) was unused. The current conversion prices of the 1.4% and zero coupon convertible bonds issued by the Company are ·1 751.50 and ·1 201.00 per share  respectively. Each conversion price is sub ject to adjustment in certain circumstances  including stock splits or free share distributions of common stock. At March 31  2004  these convertible bonds were convertible into approximately 231 million shares of common stocks. 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 100% of their principal amounts. The aggregate annual maturities of long-term debt subsequent to March 31  2004 are summarized as follows: Convertible bonds are treated solely as liabilities and value inherent in their conversion feature is not recognized as equity in accordance with accounting principles generally accepted in Japan. The total amount of the convertible bonds has been included in “long-term debt.” The Company and the majority of the consolidated subsidiaries in Japan have unfunded lump-sum retirement plans which  in general  cover all employees who retire before a retirement age prescribed in their internal codes. The employees are entitled to the benefits primarily based on their length of service and basic salary as of the retirement date. In addition  the Company and the majority of the consolidated subsidiaries in Japan participate in contributory defined benefit plans which cover substantially all employees. The major contributory defined benefit plan (the “Plan”)  which is referred to as the Fujitsu Welfare Pension Fund  entitles employees upon retirement at the normal retirement age to either a lump-sum payment or pension annuity payments for life commencing at age 60  or a combination of both based on their length of service  basic salary as of the retirement date and the number of years of participation in the Plan. The contributions of the Company and the subsidiaries covered by the Plan and their employees are made to the Fujitsu Welfare Pension Fund which is an external organization. Regarding the employees’ pension plan  in response to the enactment of the Japanese Welfare Pension Insurance Law on defined-benefit pension plans  the Fujitsu Welfare Pension Fund applied for an exemption from the obligation to pay benefits for future employee services related to the substitutional portion  and on March 23  2004 received approval of the exemption from the Minister of Health  Labour and Welfare. The majority of the consolidated subsidiaries outside Japan have defined benefit plans and/or defined contribution plans covering substantially all their employees. The balances of the projected benefit obligation and plan assets  funded status and the amounts recognized in the consolidated financial statements as of March 31  2003 and 2004  and the components of net periodic benefit cost for the years ended March 31  2002  2003 and 2004 are summarized as follows: 46 Yen U.S. Dollars Years ending March 31 (millions) (thousands) 2005 ·204 367 $1 927 991 2006 107 151 1 010 858 2007 167 097 1 576 387 2008 160 481 1 513 972 2009 and thereafter 459 643 4 336 254 Projected benefit obligation and plan assets Yen U.S.Dollars (millions) (thousands) At March 31 (Consolidated domestic accounts) 2003 2004 2004 Projected benefit obligation ·(1 677 032) ·(1 209 288) $(11 408 377) Plan assets 809 565 799 058 7 538 283 Projected benefit obligation in excess of plan assets (867 467) (410 230) (3 870 094) Unrecognized net obligation at transition 183 011 98 874 932 773 Unrecognized actuarial loss 658 079 335 285 3 163 066 Unrecognized prior service cost (reduced obligation) (69 840) (682) (6 434) Prepaid pension cost (29 258) (102 447) (966 481) Accrued retirement benefits · (125 475) · (79 200) $ (747 170) 10. Retirement Benefits