Olympus 2002 Annual Report Download - page 32

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(f) Marketable and investment securities
Prior to April 1, 2000, marketable securities listed on securities exchanges were stated at the lower of average cost or market on an
item-by-item basis and securities other than listed securities are stated at moving-average cost. Funds in trust represented short-
term funds deposited with and managed by trust banks and securities companies. Funds consisted mainly of marketable equity
securities and interest-bearing bonds and each individual fund was stated at its acquisition cost.
Effective April 1, 2000, the Company and its consolidated subsidiaries adopted the Japanese accounting standard on
accounting for financial instruments (“Opinion Concerning Establishment of Accounting Standard for Financial Instruments”
issued by the Business Accounting Deliberation Council on January 22, 1999).
In accordance with the accounting standard, the Company and its consolidated subsidiaries examined the intent of holding
each securities and classified those securities into four categories.
Held-to-maturity debt securities are stated at amortized cost. Equity securities issued by non-consolidated subsidiaries and
affiliated companies are stated at moving-average cost. Available-for-sale securities with fair market values are stated at fair market
value, and those with no fair market values at moving-average cost. Unrealized gains and losses on these securities are reported, net
of applicable income taxes, as a separate component of the shareholders’ equity. Realized gain on sale of such securities is computed
using the moving-average cost.
As a result of adopting the accounting standard for financial instruments, income before income taxes increased by ¥2,016
million ($16,128 thousand). Also, based on the examination of the intent of holding each security upon application of the
accounting standard at April 1, 2000, trading securities as well as held-to-maturity debt securities and available-for-sale securities
maturing within one year from the balance sheet date are included in current assets, and other securities are included in invest-
ments and other assets. As a result, at March 31, 2001, securities in current assets decreased by ¥93,018 million ($744,144 thou-
sand), and short-term loans and investment securities increased with ¥34,835 million ($278,680 thousand) and ¥58,183 million
($465,464 thousand), respectively, compared with what would have been reported under the previous accounting policy.
(g) Inventories
Inventories are principally stated at the lower of cost (first-in first-out) or market.
(h) Property, plant and equipment
Property, plant and equipment is stated at cost. Depreciation is mainly computed by the declining balance method at rates based
on the estimated useful lives of the relevant assets. The effective annual rates of depreciation as of March 31, 2002, 2001 and 2000
were as follows:
2002 2001 2000
Buildings and structures....................................................................................................... 9.5% 8.8% 8.9%
Machinery and equipment................................................................................................... 41.5% 37.3% 34.1%
(i) Pension and retirement allowance plans
Employees of the Company, certain domestic consolidated subsidiaries and foreign consolidated subsidiaries are covered by funded
pension plans.
Employees of domestic consolidated subsidiaries, and directors of the Company and a couple of domestic consolidated
subsidiaries are covered primarily by unfunded retirement allowance plans.
The amounts of pension payments and retirement allowances are generally determined on the basis of length of service and
basic salary at the time of termination of service.
It is the Company’s policy to fund amounts required to maintain sufficient plan assets to provide for accrued benefits based
on a certain percentage of wage and salary costs. The plan assets consist principally of interest-bearing bonds and listed equity
securities.
Effective April 1, 2000, the Company and its consolidated subsidiaries adopted the accounting standard, “Opinion on
Setting Accounting Standard for Employees’ Severance and Pension Benefits’’, issued by the Business Accounting Deliberation
Council on June 16 1998.Under which allowance and expenses for severance and pension benefits are determined based on the
amounts actuarially calculated using certain assumptions.
The Company and its consolidated subsidiaries provided allowance for employees’ severance and retirement benefits at
March 31, 2002 based on the amounts of projected benefit obligation and the fair value of the plan assets at that date.
Net transition obligation amounting to ¥7,782 million ($62,256 thousand) will be recognized as expense in equal amounts
over 5 years commencing with the year ended March 31, 2001.
As a result of the adoption of the accounting standard, in the fiscal year ended March 31, 2001, severance and pension
benefit expense increased by ¥246 million ($1,968 thousand), operating income and income before income taxes decreased by
¥241 million ($1,928 thousand), respectively, compared with what would have been recorded under the previous accounting
standard.
Allowance for employees’ severance and retirement benefits included in the liability section of the consolidated balance sheet
together with severance and retirement allowance for directors as of March 31, 2001.