Konica Minolta 2003 Annual Report Download - page 36

KONICA M INOLTA HOLDINGS, INC. 2 0 0 3
Pag e 34
Securities
Securities held by the Company and its subsidiaries are classified into two
categories:
Investments of the Company in equity securities issued by unconsoli-
dated subsidiaries and affiliates are accounted for by the equity method.
Exceptionally, investments in certain unconsolidated subsidiaries and affiliates
are stated at cost because the effect of application of the equity method
would be immaterial.
Other securities for which market quotations are available are stated at
fair value.
Net unrealized gains or losses on these securities are reported as a sep-
arate item in shareholders’ equity at a net-of-tax amount.
Other securities for which market quotations are unavailable are stated at
cost, except as stated in the following paragraph.
However, in cases where the fair value of equity securities issued by
unconsolidated subsidiaries and affiliates, or other securities has declined
significantly and such impairment of the value is not deemed temporary,
those securities are written down to the fair value and the resulting losses are
included in net profit or loss for the period.
Hedge Accounting
Gains or losses arising from changes in fair value of the derivatives desig-
nated as “hedging instruments” are deferred as an asset or liability and
included in net profit or loss in the same period during which the gains and
losses on the hedged items or transactions are recognized.
The derivatives designated as hedging instruments by the Company are
principally interest swaps, commodity swaps, and forward exchange con-
tracts. The related hedged items are trade accounts receivable and payable,
raw materials, long-term bank loans, and debt securities issued by the
Company.
The Company has a policy to utilize the above hedging instruments in
order to reduce the Company’s exposure to the risk of interest rate, com-
modity price, and exchange rate. Thus, the Company’s purchases of the
hedging instruments are limited to, at maximum, the amounts of the hedged
items.
The Company evaluates effectiveness of its hedging activities by refer-
ence to the accumulated gains or losses on the hedging instruments and the
related hedged items from the commencement of the hedges.
(j) Accrued Retirement Benefits
Pension and severance costs for employees are accrued based on the esti-
mates of projected benefit obligations and the plan assets at the end of
current fiscal year. The actuarial difference is amortized mainly over a period
of 10 years, which is within the average remaining service period, using
straight-line method from the next year in which they arise.
The prior service cost is amortized mainly over a 10-year period, which is
within the average remaining service period, using straight-line method from
the time when the difference was generated.
Pursuant to the Defined Benefit Enterprise Pension Plan Law, the
Company and several consolidated subsidiaries obtained approval from the
Minister of Health, Labor and Welfare for the exemption from the payment for
future benefits of the Entrusted Government’s Portion. The Company and
several consolidated subsidiaries applied accounting for Liquidation of the
Entrusted Government’s Portion at the date of approval resulting in relin-
quishment of the entrusted portion of the retirement benefit obligation of
welfare pension funds and the related pension fund assets, which is allowed
as an alternative accounting method in accordance with article 47-2 of
Accounting Committee Report No.13 “Practical Guidance for Accounting for
Retirement Benefits (Interim Report)” issued by the Japanese Institute of
Certified Public Accountants. The effect to the statements of income result-
ing from the accounting treatment applied is described in Note 12.
Retirement Benefits Plan.
On April 30, 2003, the Company, upon enactment of Defined
Contribution Pension Plan Law, transferred a portion of defined benefit
pension plan to a defined contribution pension plan. Pursuant to Financial
Accounting Standards Implementation Guidance No.1 “Accounting for
Transfers between Retirement Benefit Plans” issued by Accounting Standard
Board of Japan, and “Report of Practical Issues No.2 Practical Treatment of
Accounting for Transfers between Retirement Benefit Plans” issued by the
Accounting Standards Board of Japan, the effect resulting from the account-
ing treatment applied to the statements of income are described in Note 12.
Retirement Benefits Plan.
(k) Per Share Data
Net income per share of common stock has been computed based on the
weighted average number of shares outstanding during the year.
Cash dividends per share shown for each year in the accompanying
consolidated statements are dividends declared as applicable to the respec-
tive years.
3. U.S. Dollar Amounts
Amounts in U.S. dollars are included solely for the convenience of readers
outside Japan. The rate of ¥120.20=US$1, the rate of exchange on March
31, 2003, has been used in translation. The inclusion of such amounts is not
intended to imply that Japanese yen have been or could be readily con-
verted, realized or settled in U.S. dollars at this rate or any other rate.
4. Cash and Cash Equivalents
Cash and cash equivalents consisted of:
Thousands of
Millions of yen U.S. dollars
2003 2002 2003
Cash and bank deposits ¥51,876 ¥47,359 $431,581
Money management funds 0300 0
Cash and cash equivalents ¥51,876 ¥47,659 $431,581