Hitachi 2005 Annual Report Download - page 48

Hitachi, Ltd. Annual Report 2006
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(v) Disclosures about Segments of an Enterprise and Related Information
SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” establishes standards for the
manner in which a public business enterprise is required to report financial and descriptive information about its operating
segments. This standard defines operating segments as components of an enterprise for which separate financial
information is available and evaluated regularly as a means for assessing segment performance and allocating resources
to segments. A measure of profit or loss, total assets and other related information is required to be disclosed for each
operating segment. Further, this standard requires the disclosure of information concerning revenues derived from the
enterprise’s products or services, countries in which it earns revenue or holds assets and major customers. However,
certain foreign issuers are presently exempted from the segment disclosure requirements of SFAS No. 131 in filings with
the United States Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934, and the Company
has not presented the segment information required to be disclosed in the footnotes to the consolidated financial statements
under SFAS No. 131.
(w) Guarantees
The Company recognizes, at the inception of the guarantees, a liability for the fair value of the obligation undertaken in
issuing the guarantee for guarantees issued or modified after December 31, 2002, in accordance with the FASB
Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others, an interpretation of SFAS No. 5, 57, and 107 and rescission of FASB Interpretation No. 34.”
(x) New Accounting Standards
In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4.” The
amendments made by SFAS No. 151 clarify that abnormal amounts of costs should be recognized as current-period charges
rather than as a portion of the inventory cost. In addition, SFAS No. 151 requires that allocation of fixed production overheads
to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS No. 151 is
effective for inventory costs incurred during fiscal years beginning after June 15, 2005. SFAS No. 151 is not expected to
have a material effect on the consolidated financial position or results of operations of the Company and subsidiaries.
In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an amendment of APB Opinion
No. 29.” The amendments made by SFAS No. 153 is based on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged and adopted a broader exception for exchanges of
nonmonetary assets that do not have commercial substance and should be measured based on the recorded amount of
the asset relinquished. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning
after June 15, 2005. SFAS No. 153 is not expected to have a material effect on the consolidated financial position or
results of operations of the Company and subsidiaries.
In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment,” which is a revision of SFAS
No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 123 (R) supersedes APB No. 25, “Accounting for Stock
Issued to Employees,” and amends SFAS No. 95, “Statement of Cash Flows.” SFAS No. 123 (R) requires all share-based
payments to employees, including grants of employee stock options, to be recognized in the income statement based on
their fair values. Pro forma disclosure is no longer an alternative. Also, the SEC issued Staff Accounting Bulletin No. 107,
in which interpretations expressed views of the staff regarding the interaction between SFAS No. 123 (R) and certain SEC
rules and regulations, and provided the staff’s views regarding the valuation of share-based payment arrangements for
public companies. The provisions of SFAS No. 123 (R) is effective no later than the beginning of the first fiscal year
beginning after June 15, 2005, as deferred by the SEC. SFAS No. 123 (R) is not expected to have a material effect on the
consolidated financial position or results of operations of the Company and subsidiaries.