Konica Minolta 2006 Annual Report Download - page 44

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Securities
Securities held by the Companies are classified into two
categories:
Investments by the Companies in equity securities issued
by unconsolidated subsidiaries and affiliates are accounted
for using the equity method; however, 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 net of tax as a separate component of shareholders’
equity.
Other securities for which market quotations are unavail-
able are stated at cost, except 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 deemed other than
temporary. In these instances, securities are written down to
the fair value and the resulting losses are charged to income
during the period.
Hedge Accounting
Gains or losses arising from changes in fair value of deriva-
tives designated as “hedging instruments” are deferred as an
asset or a liability and charged or credited to income in the
same period that the gains and losses on the hedged items
or transactions are recognized.
Derivatives designated as hedging instruments by the
Companies are principally interest rate swaps, commodity
swaps and forward foreign currency exchange contracts.
The related hedged items are trade accounts receivable
and payable, raw materials, long-term bank loans and debt
securities issued by the Companies.
The Companies have a policy to utilize the above hedg-
ing instruments in order to reduce the Companies’ exposure
to the risk of interest rate, commodity price and exchange
rate fluctuations. As such, the Companies’ purchases of the
hedging instruments are limited to, at maximum, the amounts
of the hedged items.
The Companies evaluate the effectiveness of their hedg-
ing activities by reference to the accumulated gains or losses
on the hedging instruments and the related hedged items
from the commencement of the hedges.
(k) Leases
Finance leases, other than those which are deemed to
transfer the ownership of the leased assets to lessees, are
accounted for using a method similar to that used for
ordinary operating leases.
(l) Retirement Benefit Plans
Retirement Benefits for Employees
Pension and severance costs for employees are accrued
based on the actuarial valuation of projected benefit
obligations and the plan assets at the end of each fiscal year.
The actuarial difference is amortized over the average remain-
ing service period (mainly 10 years), using the straight-line
method from the year subsequent to that in which the
actuarial difference was incurred or determined.
Accrued retirement Benefits for Directors and Statutory
Auditors
To provide for the payment of directors' retirement benefits,
consolidated subsidiaries record a reserve for benefits for
retired directors and statutory auditors in an actual amount
equal to the amount needed at the end of the period under
review based on the Company's regulations.
(Additional information)
At its Annual Meeting of Shareholders held on June 24, 2005,
the company abolished its directors' retirement benefits
system, with the aim of raising morale and increasing the will-
ingness of its directors and executive officers to work toward
improving performance, as well as to clarify management
responsibility.
This system was replaced with a stock option compensa-
tion scheme.
(m) Accounting standards regarding accrued
retirement benefits in the United Kingdom
Effective the year ended March 31, 2006, consolidated sub-
sidiaries Konica Minolta Business Solutions (UK) Ltd. and
Konica Minolta Photo Imaging (UK) Ltd. have implemented
adoption of a new accounting standard for retirement benefits
in the United Kingdom.
Retained earnings decreased by ¥2,611 million ($22,227
thousand) since the net retirement benefit obligation at the
transition date and actuarial gains and losses were charged
directly to retained earnings for the year ended March 31,
2006.
(n) Appropriation of Retained Earnings
Appropriations of retained earnings reflected in the accompa-
nying consolidated financial statements have been recorded
after approval by the board of directors as required under the
Commercial Code of Japan. In addition to year-end dividends,
the board of directors may declare interim cash dividends by
resolution to the shareholders of record as of September 30 of
each year.
(o) Per Share Data
Net income (loss) per share of common stock has been
computed based on the weighted-average number of shares
outstanding during the fiscal year.
Cash dividends per share shown for each fiscal year in
the accompanying consolidated statements are dividends
declared as applicable to the respective fiscal years.
3. U.S. Dollar Amounts
Amounts in U.S. dollars are included solely for the conve-
nience of readers outside Japan. The rate of ¥117.47=US$1,
the rate of exchange on March 31, 2006, 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 as of March 31 consist of:
Thousands of
Millions of yen U.S. dollars
March 31 March 31
2006 2005 2006
Cash on hand and
in banks ¥80,878 ¥59,330 $688,499
Marketable securities —155 —
Cash and cash equivalents ¥80,878 ¥59,485 $688,499