Omron 2003 Annual Report Download - page 39

At March 31, 2003, the Company had a stock-based employee compensation plan, which is described more fully
in Note 9. No stock-based employee compensation cost is reflected in the results of operations, as all options
granted under those plans had an exercise price exceeding the market value of the underlying common stock on
the date of grant. The following table illustrates the effect on net income (loss) and earnings per share if the Company
had applied the fair value recognition provisions of SFAS No. 123, to stock-based employee compensation.
Thousands of
Millions of yen U.S. dollars
(except per share data) (except per share data)
2003 2002 2001 2003
Net income (loss), as reported................................................. ¥511 ¥(15,773) ¥22,297 $4,258
Deduct:
Total stock-based employee compensation
expense determined under fair value based
method for all awards ........................................................ 91 100 78 758
Pro forma net income (loss)..................................................... ¥420 ¥(15,873) ¥22,219 $3,500
Earnings per share (yen and U.S. dollars):
Basic – as reported .............................................................. ¥2.1 ¥(63.5) ¥ 87.4 $0.02
Basic – pro forma................................................................. 1.7 (63.9) 87.1 0.01
Diluted – as reported............................................................ 2.1 (63.5) 85.3 0.02
Diluted – pro forma .............................................................. 1.7 (63.9) 85.0 0.01
New Accounting Standards
In August 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligation,” which is effective
for financial statements issued for fiscal years beginning after June 15, 2002. The pronouncement addresses the
recognition and remeasurement of obligations associated with the retirement of a tangible long-lived asset. The
Companies expect that the adoption of SFAS No. 143 will not be material.
In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit and Disposal
Activities.” SFAS No. 146 nullifies Emerging Issues Task Force (“EITF”) Issue 94-3, “Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring).” Under EITF Issue 94-3, a liability for an exit cost is recognized at the date of an entity’s commit-
ment to an exit plan. Under SFAS No. 146, the liabilities associated with an exit or disposal activity will be mea-
sured at fair value and recognized when the liability is incurred and meets the definition of a liability in the conceptu-
al framework of the FASB. This statement is effective for exit or disposal activities initiated after December 31,
2002. The adoption of SFAS No. 146 did not have a material impact on the operating results or financial position of
the Companies.
In November 2002, the FASB issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 addresses the
disclosures to be made by a guarantor about its obligations under certain guarantees it has issued and clarifies the
accounting for such guarantees. FIN No. 45 requires the recognition of a liability by a guarantor for the fair value of
the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of FIN No.
45 are effective on a prospective basis to guarantees issued or modified after December 31, 2002, and the disclo-
sure requirements are effective for periods ending after December 15, 2002. The adoption of FIN No. 45 did not
have a material impact on the operating results or financial position of the Companies.
In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and
Disclosure,” an amendment of SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 148 amends
the disclosure requirements for stock-based compensation for annual periods ending after December 15, 2002 and
for interim periods beginning after December 15, 2002. The disclosure requirements apply to all companies, includ-
ing those that continue to recognize stock-based compensation under the intrinsic value provisions of APB Opinion
25. SFAS No. 148 also provides three alternative transition methods for companies that choose to adopt the fair
value measurement provisions of SFAS No. 123. The Company has adopted the pro forma disclosure requirements
of SFAS No. 148 during the year ended March 31, 2003.
In January 2003, EITF reached a final consensus on Issue 03-2, “Accounting for the Transfer to the Japanese
Government of the Substitutional Portion of Employee Pension Fund Liabilities.” EITF Issue 03-2 addresses
accounting for a transfer to the Japanese government of a substitutional portion of an Employees’ Pension Fund
plan which is a defined benefit pension plan established under the Welfare Pension Insurance Law. The Company
has not yet decided if they will apply for the transfer.
In February 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities,” which addresses the
consolidation by business enterprises of variable interest entities, which have one or both of the following charac-
teristics: (1) the equity investment at risk is not sufficient to permit the entity to finance its activities without addition-
Annual Report 2003 • 37