Panasonic 2003 Annual Report Download - page 70

68 Matsushita Electric Industrial 2003
20. Commitments and Contingent Liabilities
The Company provides guarantees to third parties on
bank loans provided to its employees, associated compa-
nies and customers. The guarantees for the employees
are principally made for their housing loans. The guar-
antees for the associated companies and customers are
made to enhance the credit of these companies. For
each guarantee provided, the Company would have to
perform under the guarantee if the guaranteed party
defaults on a payment. The maximum amount of
undiscounted payments the Company would have to
make in the event of default is ¥9,169 million ($76,408
thousand). The carrying amount of the liabilities recog-
nized for the Company’s obligations as a guarantor
under those guarantees at March 31, 2003 was insignifi-
cant.
A financial subsidiary of the Company provides guar-
antees to third parties on certain consumer loans of its
customers. For each guarantee provided, the subsidiary
would have to perform under the guarantee if the guar-
anteed party defaults on a payment. The maximum
amount of undiscounted payments the subsidiary would
have to make in the event of default is ¥27,917 million
($232,642 thousand). The carrying amount of the lia-
bilities recognized for the subsidiary’s obligations as a
guarantor under those guarantees at March 31, 2003
was insignificant.
The Company and certain subsidiaries provide guar-
antees to third parties on certain obligations of their
consolidated subsidiaries. At March 31, 2003, these guar-
antees amounted to ¥9,849 million ($82,075 thousand).
The Company issues contractual product warranties
under which it generally guarantees the performance of
products delivered and services rendered for a certain
period or term. The change in accrued warranty costs
for the year ended March 31, 2003 is summarized as
follows:
Thousands of
Millions of yen U.S. dollars
2003 2003
Balance at beginning of year ......................................................................... ¥ 20,202 $168,350
Liabilities accrued for warranties issued
during the period ....................................................................................... 38,102 317,517
Wa r ranty claims paid during the period ........................................................ (33,293) (277,442)
Changes in liabilities for pre-existing warranties during
the period, including expirations ................................................................ (177) (1,475)
Balance at end of year................................................................................... ¥ 24,834 $206,950
At March 31, 2003, commitments outstanding for
the purchase of property, plant and equipment approxi-
mated ¥10,695 million ($89,125 thousand).
Contingent liabilities at March 31, 2003 for dis-
counted export bills of exchange amounted to ¥5,220
million ($43,500 thousand).
Liabilities for environmental remediation costs are
recorded when it is probable that obligations have been
incurred and the amounts can be reasonably estimated.
In January 2003, the Company announced that dis-
posed electric equipment that contained
polychlorinated biphenyls (“PCB equipment”) might
be buried in the ground of its 4 manufacturing facili-
ties and 1 former manufacturing facility. The
applicable laws require that PCB equipment be appro-
priately maintained and disposed of by July 2016. The
Company estimated the total cost of ¥4,388 million
($36,567 thousand) for necessary actions such as inves-
tigating whether the PCB equipment is buried at the
facilities, including excavations, which amount has
been accrued since it represents management’s best
estimate of the cost, but the payments are not consid-
ered to be fixed and reliably determinable. This
amount does not include any costs that may be
incurred to maintain and dispose of the PCB equip-
ment should such equipment be discovered. These
costs are currently not estimable, as the amount of
PCB equipment buried is unknown, and due to the
lack of established technology to dispose of the PCB
equipment.
There are a number of legal actions against the
Company and certain subsidiaries. Management is of
the opinion that damages, if any, resulting from these
actions will not have a material effect on the Compa-
ny’s consolidated financial statements.