Toshiba 1998 Annual Report Download - page 41

Toshiba Corporation Annual Report 1998 39.
stated at the lower of cost or m arket in the aggregate an d investm ents oth er than m arketable equity securities in other
investm en ts (non-current) are stated at cost less any sign ificant decline in fair value assessed to be oth er th an tem porary.
Realized gains an d losses on th e sale of securities are based on the average cost of all th e un its of a particular
security h eld at the tim e of sale.
Inventories –
Raw m aterials an d fin ish ed products are stated at the lower of cost or market, cost bein g determin ed prin cipally by
th e average and first-in , first-out m eth ods, respectively.
Work in process is stated at the lower of cost or estim ated realizable value, cost bein g determ ined by accum ulated
production costs for con tract item s and at production costs determined by the first-in , first-out m eth od for regular
production item s.
In accordan ce with gen eral in dustry practice, items with lon g m anufacturin g periods are in cluded am on g inven tories
even when n ot realizable within one year.
Property, plant and equipm ent and depreciation –
Property, plant and equipm ent, including significant ren ewals and addition s, are carried at cost. Wh en retired or
otherwise disposed of, the cost and related depreciation are cleared from the respective accoun ts an d th e n et differen ce,
less an y am oun t realized on disposal, is included in earn ings. Main ten ance an d repairs, in cluding minor renewals an d
betterm en ts, are ch arged to incom e as in curred.
Depreciation is com puted generally by a declining-balance m ethod at rates based on th e estim ated useful lives of
th e related assets, according to general class, type of con struction and use.
Incom e taxes –
Deferred in com e taxes are recorded to reflect th e expected future tax consequences of tem porary differences between th e
tax basis of assets an d liabilities an d th eir reported am oun ts in th e finan cial statem en ts, an d are m easured by applying
currently enacted tax laws.
Liability for severance indem nities –
The com pan y and its subsidiaries have various retirem ent ben efit plans coverin g substantially all em ployees. Curren t
service costs of the retirem ent benefit plans are accrued in th e period. Prior service costs resulting from am en dm en ts to
th e plans are am ortized over th e average rem ain in g service period of em ployees expected to receive ben efits (See Note 9).
Net incom e per share –
The com pan y adopted Statem ent of Fin ancial Accounting Stan dards (SFAS) No. 128, “Earn ings per Sh are” (EPS) in the
year ended March 31, 1998. Th is standard prescribes the m eth od for calculating basic an d diluted EPS, and also requires
dual presentation of these two EPS am ounts on th e face of the incom e statement and requires a reconciliation of th e
num erator an d denom inator of the basic EPS computation to th e num erator an d den om inator of the diluted EPS
com putation (See Note 15). Basic EPS is com puted based on the weighted-average n um ber of shares of com m on stock
outstan din g durin g each period. Diluted EPS assum es th e dilution th at would occur if dilutive con vertible debentures
were converted in to com m on stock. All prior-period EPS data presen ted h ave been restated to con form with SFAS No. 128.
Financial instrum ents –
The com pan y uses a variety of derivative finan cial in strumen ts, wh ich in clude forward exch ange con tracts, in terest
rate swap agreem en ts and curren cy swap agreem en ts, for the purpose of curren cy exchan ge rate and in terest rate risk
m anagem ent. Refer to Note 16 for descriptions of th ese fin ancial instrum en ts, includin g th e m eth ods used to
account for th em .
New accounting standards –
In June 1997, the Finan cial Accounting Stan dards Board (FASB) issued Statem en t of Fin ancial Accoun tin g Standards
(SFAS) No.130, “Reporting Com prehensive In com e” an d No. 131, “Disclosures about Segmen ts of an Enterprise and
Related Inform ation ”. In February 1998, the FASB issued SFAS No. 132, “Employers’ Disclosures about Pen sions and
Other Postretirem ent Benefits”.
SFAS No. 130 requires that all items th at are required to be recognized un der accounting stan dards as com pon ents
of com prehensive in com e be reported in a fin ancial statem ent th at is displayed with th e same prom inence as oth er
finan cial statem en ts. In the case of the com pan y, this statem ent is effective for the fiscal year begin n ing April 1, 1998.
SFAS No. 131 chan ges th e way th at public busin ess enterprises report certain in form ation about operating seg-
m en ts, th e geographic areas in which th ey operate, and their m ajor custom ers. SFAS No. 131 supercedes SFAS No. 14.
In th e case of the com pan y, this statem ent is effective for the fiscal year begin n ing April 1, 1998. Th e segm ent infor-
m ation required to be disclosed in finan cial statemen ts under th e provision of SFAS No. 14 is not currently presented
in the accom panyin g con solidated fin ancial statem ents.