9. Short-Term Bank Loans and Long-Term Debt Short-term bank loans, principally unsecured, consisted of notes payable to banks bearing annual interest rates of 0.94% and 1.20% at December 31, 2009 and 2008, respectively. Long-term debt at December 31, 2009 and 2008 consisted of the following: Millions of yen Thousands of U.S. dollars 2009 2008 2009 Loans with collateral from banks, insurance companies and other, bearing annual interest rates of 1.61% and 1.48% for current portion of long-term debt and lease obligations and long-term debt and lease obligations less current portion at December 31, 2009, respectively................ \11,181 \9,856 $121,408 11,181 9,856 121,408 Less: current portion................................... (868) (1,858) (9,435) \10,312 \7,997 $111,972 Assets pledged as collateral for short-term bank loans and long-term debt at December 31, 2009 and 2008 were as follows: Millions of yen Thousands of U.S. dollars 2009 2008 2009 Property, plant and equipment at net book value....................................... \19,672 \23,975 $213,595 The aggregate annual maturities of long-term debt and lease obligations subsequent to December 31, 2010 were summarized as follows: Year ending December 31, Millions of yen Thousands of U.S. dollars 2011.................................................................................................... \4,165 $45,226 2012.................................................................................................... 862 9,369 2013.................................................................................................... 3,837 41,667 2014.................................................................................................... 756 8,215 10. Retirement Benefit Plans for Employees The Company and its domestic consolidated subsidiaries have defined benefit plans, tax-qualified pension plans and lump-sum payment plans covering substantially all employees who are entitled to lump-sum or annuity payments, the amounts of which are determined by reference to their basic rates of pay, length of service and the conditions under which termination occurs. The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the consolidated balance sheets as of December 31, 2009 and 2008 related to the Company’s and the consolidated subsidiaries’ defined benefit plans: Millions of yen Thousands of U.S. dollars 2009 2008 2009 Projected benefit obligation................. \(15,895) \(16,157) $(172,593) Plan assets at fair value............................. 13,082 11,464 142,051 Funded status................................................. (2,812) (4,693) (30,541) Unrecognized actuarial gain................. 4,028 5,460 43,745 Unrecognized prior service cost......... (177) (203) (1,930) Prepaid pension cost................................. 1,607 1,219 17,449 Accrued retirement benefits................. \ (568) \ (655) $ (6,175) The components of net periodic retirement benefit expenses for the years ended December 31, 2009 and 2008 were outlined as follows: Millions of yen Thousands of U.S. dollars 2009 2008 2009 Service cost...................................................... \ 730 \780 $ 7,931 Interest cost..................................................... 306 317 3,324 Expected return on plan assets........... (166) (191) (1,803) Amortization of actuarial loss............... 441 87 4,795 Amortization of unrecognized prior service cost........................................ (25) (25) (280) Total...................................................................... \1,286 \968 $13,966 The assumptions used in accounting for the defined benefit plans were as follows: December 31, 2009 2008 Discount rate........................................................................ Mainly 2.0% Mainly 2.0% Expected rate of return on plan assets................ Mainly 2.0% Mainly 2.0% 11. Income Taxes The Company and its domestic consolidated subsidiaries are subject to a number of taxes based on earnings, i.e. corporation tax, inhabitants’ taxes and enterprise tax, which, in the aggregate, resulted in a statutory tax rate of approximately 40.5 percent for the years ended December 31, 2009 and 2008. The effective tax rate reflected in the consolidated statements of income for the year ended December 31, 2008 differs from the statutory tax rate for the following reasons: 2008 Statutory tax rate...................................................................................................... 40.5% Effect of: Permanent difference . entertainment expenses........................ 2.0 Permanent difference . dividend income......................................... (1.4) Inhabitants’ taxes per capital...................................................................... 1.2 Amortization of goodwill.............................................................................. 1.9 Equity in earnings of affiliates.................................................................... (1.6) Valuation allowance......................................................................................... 23.5 Different tax rates applied to income of foreign consolidated subsidiaries......................................................... 2.1 Tax deduction of experiment and research expenses............... (4.5) Other, net................................................................................................................ (1.4) Effective tax rate........................................................................................................ 62.4% A reconciliation for the year ended December 31, 2009 is not presented herein as the difference between the statutory tax rate and the effective tax rate was less than 5 percent of the statutory tax rate. Toagosei Co., Ltd. 33