Nikon 2002 Annual Report Download - page 25

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(m) Derivatives and Hedging Activities
The Group enters into derivative financial instruments (“derivatives”), including contracts of foreign exchange forward, currency option, foreign cur-
rency swap and interest rate swap to hedge foreign exchange risk and interest rate exposures. The Group does not hold or issue derivatives for
trading or speculative purposes.
All derivatives are recognized principally as either assets or liabilities and measured at fair value, and gains or losses on derivative transac-
tions are recognized in the statements of operations. For derivatives used for hedging purpose, 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 exchange forward contracts and currency option contracts employed to hedge foreign exchange exposures for export sales and pur-
chases are measured at fair value and the related unrealized gains or losses are recognized in income. Forward contracts entered into for forecast-
ed transactions are also measured at fair value but the unrealized gains or losses on qualifying hedges are deferred until the underlying transac-
tions are completed. The foreign currency swaps used to hedge the foreign currency fluctuations of long-term debt denominated in foreign curren-
cies are measured at fair value and the unrealized gains or losses are included in the carrying amounts of the debt. The interest rate swaps are
remeasured at market value and the differential paid or received under the swap agreements are recognized in income.
(n) Revenue Recognition
The Securities and Exchange Commission (“SEC”) in the United States of America issued Staff Accounting Bulletin No.101 (“SAB 101”), “Revenue
Recognition in Financial Statements,” which clarified delivery criteria. Certain foreign subsidiaries adopted the provisions of SAB 101 effective from
April 1, 2000. As a result of adopting the provisions of SAB 101, net sales and operating income decreased by ¥22,146 million and ¥4,547 mil-
lion for the fiscal year ended March 31, 2001, respectively.
(o) Per Share Information
Net income or loss per share is computed based on the weighted average number of shares of common stock outstanding during each year. The
average number of common shares used in the computation was 369,833,275 shares and 369,924,491 shares for the fiscal years ended March
31, 2002 and 2001, respectively.
Cash dividends per share shown in the consolidated statements of operations are presented on an accrual basis and include interim dividends
paid and year ended dividends to be approved after the balance sheet date.
Diluted net income per share of common stock is not disclosed herein because the Company has not issued any securities that are potentially
dilutive for the year ended March 31, 2001, and because of the Company’s net loss position for the year ended March 31, 2002.
3. ACCOUNTING CHANGE
Effective April 1, 2001, service revenue and the related cost, which were previously presented in selling, general and administrative expenses as
net amounts, are separately presented in net sales and cost of sales.
The effect of this change was to increase net sales, cost of sales, and selling, general and administrative expenses by ¥25,735 million
($193,136 thousand), ¥14,710 million ($110,391 thousand) and ¥11,025 million ($82,745 thousand), respectively, for the fiscal year ended
March 31, 2002. This accounting change had no effect on operating income and income before income taxes and minority interests.