Kenwood 2001 Annual Report Download - page 24

KENWOOD Corporation Annual Report 2001
22
The company and certain consolidated subsidiaries have
unfunded retirement benefit plans and have recorded employees'
retirement allowances at 40% of the amount which would be
required if all employees voluntarily terminated their employment at
the balance sheet date prior to April 1, 2000.
Effective April 1, 2000, the Company and domestic consolidated
subsidiaries adopted a new accounting standard for employees'
retirement benefits and accounted for the liability for retirement
benefits based on projected benefit obligations and plan assets at
the balance sheet date. The transitional obligation of 14,974
million ($120,758 thousand), determined as of the beginning of
year, is being amortized over fifteen years. As a result, net periodic
benefit costs, as compared with the prior method, increased by 
971million ($ 7,831 thousand) and loss before income taxes and
minority interests increased by 971 million ($ 7,831 thousand).
(j) Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of operations.
The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax
bases of assets and liabilities. Deferred taxes are measured by
applying currently enacted tax laws to the temporary differences.
(k) Leases
All leases of the Company and domestic subsidiaries are
accounted for as operating leases. Under Japanese accounting
standards for leases, finance leases that deem to transfer
ownership of the leased property to the lessee are to be capitalized,
while other finance leases are permitted to be accounted for as
operating lease transactions if certain "as if capitalized" information
is disclosed in the notes to the lessee's financial statements.
(l) Derivative financial Instruments
The Group uses a variety of derivative financial instruments,
including foreign currency forward contracts and interest rate
swaps as a means of hedging exposure to foreign currency and
interest rate risks. The Group dose not enter into derivatives for
trading or speculative purposes.
Effective April 1, 2000, the Group adopted a new accounting
standard for derivative financial instruments and a revised accounting
standard for foreign currency transactions. These standards require
that: a) all derivatives be recognized as either assets or liabilities and
measured at fair value, and gains or losses on derivative transactions
are recognized in the statements of operations and b) for derivatives
used for hedging purposes, if derivatives qualify for hedge
accounting because of high correlation and effectiveness between
the hedging instruments and the hedged items, gains or losses on
derivatives are deferred until maturity of the hedged transactions.
The foreign currency forward contracts are utilized to hedge foreign
currency exposures for export sales and procurement of raw
materials from overseas suppliers. Trade receivables and payables
denominated in foreign currencies are translated at the contracted
rates if the forward contracts qualify for hedge accounting.
Forward contracts applied for forecasted transactions are also
measured at the fair value and the unrealized gains  losses are
deferred until the underlying transactions are completed.
Interest rate swaps are utilized to hedge interest rate exposures
of long-term debt. These swaps which qualify for hedge
accounting are measured at market value at the balance sheet
date and the unrealized gains or losses are recognized in income.
As a result of adopting the new accounting standard for
derivative financial instruments, loss before income taxes and
minority interests decreased by  138 million ($ 1,113 thousand).
(m) Appropriations of Retained Earnings
Appropriations of retained earnings are reflected in the financial
statements for the following year upon shareholders' approval.
The amount of fair value of the available-for-sale securities was
10,472million ($84,452thousand) and the unrealized losses, net of
applicable taxes and minority interests were 3,492million
($28,161thousand) at the balance sheet date.
Proceeds from sales of available-for-sale securities for the year
ended March 31, 2001, were 824 million ($6,645thousand). Gross
realized gains and losses on these sales, computed on the moving
average cost basis, were 363 million ($2,927 thousand) and
12 million ($97thousand), respectively.
2. Investment Securities
3. Leases
 ฀
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Due in one year or less
Due from one year to five years
Due from five years to ten years
Total
The available-for-sale securities as of March 31, 2001, include
debt securities as follows:
Maturity Millions
of yen Thousands of U.S. dollars
The Group leases certain machinery, computer equipment, office
space and other assets. Total lease payments under finance leases
were  2,443 million ( $ 19,702 thousand) and  2,104 million for the
years ended March 31, 2001 and 2000, respectively.
Pro forma information of leased property on an "as if capitalized" basis, such as acquisition cost, accumulated depreciation, and net lease
property under finance lease as of March 31, 2001 and 2000 are as follows:
Carrying amounts and aggregate market values of quoted investment securities, consisting of marketable equity securities and bonds,
were 14,838 million and 14,056 million as of March 31, 2000.
Machinery and equipment
Tools, furniture and fixtures
Others
Total
  
Thousands of U.S. dollars
Acquisition
cost
Accumulated
depreciation
Accumulated
depreciation
Net leased
property
Net leased
property
Acquisition
cost
Millions of yen
Acquisition
cost
Accumulated
depreciation
Net leased
property
฀
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฀
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Due after one year
Total
Millions
of yen Thousands of U.S. dollars
Obligations under finance leases as of March 31, 2001 and 2000 are
due as follows:
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