Millions of yen 2011 Contract amount Contract amount over one year Fair value Special treatment for interest rate swaps: Interest rate swaps (Hedged item: Long-term debt) Receive floating and pay fixed ... \3,319 \3,203 (*) (*) Because the interest rate swaps are accounted for with long-term debt as the hedged item, the fair value of the swaps is included in the fair value of the long-term debt. 22. 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 0.79% at December 31, 2012 and 2011. Long-term debt at December 31, 2012 and 2011 consisted of the following: Millions of yen Thousands of U.S. dollars 2012 2011 2012 Loans with collateral from banks, insurance companies and other, bearing annual interest rates of 1.31% and 0.93% for current portion of long-term debt and lease obligations, and long-term debt and lease obligations less current portion at December 31, 2012, respectively ............. \10,039 \10,324 $115,953 10,039 10,324 115,953 Less: current portion .................................. (3,893) (884) (44,971) \ 6,145 \ 9,440 $ 70,981 Assets pledged as collateral for short-term bank loans and long-term debt at December 31, 2012 and 2011 were as follows: Millions of yen Thousands of U.S. dollars 2012 2011 2012 Property, plant and equipment at net book value ...................................... \17,557 \18,239 $202,792 The aggregate annual maturities of long-term debt and lease obligations subsequent to December 31, 2013 were summarized as follows: Year ending December 31, Millions of yen Thousands of U.S. dollars 2014 ................................................................................................... \4,909 $56,709 2015 ................................................................................................... 579 6,693 2016 ................................................................................................... 411 4,755 2017 ................................................................................................... 52 609 23. Retirement Benefit Plans for Employees The Company and its consolidated subsidiaries have a defined benefit plan consisting of a defined benefit corporate pension plan and a retirement lump-sum payment plan 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. Further, their defined contribution plan consists of a defined contribution pension plan. A retirement benefit trust has also been established. 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, 2012 and 2011 related to the Company’s and the consolidated subsidiaries’ defined benefit plans: Millions of yen Thousands of U.S. dollars 2012 2011 2012 Projected benefit obligation ................ \(10,320) \(10,740) $(119,203) Plan assets at fair value ............................ 10,503 9,296 121,310 Funded status ................................................ 182 (1,443) 2,107 Unrecognized actuarial gain ................ 2,265 3,603 26,161 Unrecognized prior service cost ........ (137) (178) (1,592) Prepaid pension cost................................. (2,764) (2,515) (31,929) Accrued retirement benefits ................ \ (454) \ (534) $ (5,252) The components of net periodic retirement benefit expenses for the years ended December 31, 2012 and 2011 were outlined as follows: Millions of yen Thousands of U.S. dollars 2012 2011 2012 Service cost ..................................................... \ 492 \ 502 $ 5,687 Interest cost..................................................... 156 171 1,812 Expected return on plan assets .......... (80) (86) (924) Amortization of actuarial loss............... 417 376 4,818 Amortization of unrecognized prior service cost ....................................... (19) (20) (222) Other (*) ............................................................. 284 255 3,285 Total ..................................................................... \1,251 \1,198 $14,456 (*) Contribution to defined contribution plan The assumptions used in accounting for the defined benefit plans for the years ended December 31, 2012 and 2011 were as follows: 2012 2011 Discount rate ....................................................................... Mainly 1.5% Mainly 1.5% Expected rate of return on plan assets ............... Mainly 1.0% Mainly 1.0% 24. 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% for the years ended December 31, 2012 and 2011. The effective tax rates reflected in the consolidated statements of income for the years ended December 31, 2012 and 2011 differ from the statutory tax rate for the following reasons: 2012 2011 Statutory tax rate ...................................................................... 40.5% 40.5% Effect of: Permanent difference . entertainment expenses ... 0.6 0.4 Permanent difference . dividend income ......... (0.5) (5.5) Inhabitants’ per capita taxes ....................................... 0.5 0.4 Amortization of goodwill .............................................. 0.0 0.5 Equity in earnings of affiliates..................................... (0.8) (0.9) Valuation allowance ......................................................... (2.7) 2.3 Different tax rates applied to income of foreign consolidated subsidiaries ......................... (0.9) (3.7) Tax deduction of experiment and research expenses ................................................ (1.9) (0.6) Income taxes-prior years ............................................... (4.9) . Gain on negative goodwill........................................... . (6.6) Other, net ................................................................................ 0.8 1.3 Effective tax rates ...................................................................... 30.7% 28.2% Notes to Consolidated Financial Statements 44 Annual Report 2012