Fujitsu 1998 Annual Report Download - page 36

Fujitsu annual report 1998
34
Financial Section
Notes to Consolidated Financial Statements
(j) Leases
Leased assets are recorded in property, plant and equipment
and lease liabilities are included in long-term liabilities under finance
leases except those in Japan. The Company and its consolidated
subsidiaries in Japan treat finance leases in the same way as oper-
ating leases.
(k) Retirement and severance benefits
Employees who terminate their service with the Group are
generally entitled to annuities or lump-sum severance payments
based on their current basic rates of pay and length of service.
The Company and its consolidated subsidiaries in Japan have
contributory defined benefit plans with insurance companies, trust
banks and investment management companies to supplement the
public welfare pension plan. The plans entitle eligible employees
upon retirement to receive either a lump-sum payment or annuity
payments for life, or a combination of both.
Most consolidated subsidiaries outside Japan have defined ben-
efit plans and/ or defined contribution plans covering substantially
all employees. The costs of benefits for annuities and lump-sum
severance payments are currently funded or accrued.
(l) Provision for loss on repurchase of computers
Certain computers manufactured by the Group are sold to Japan
Electronic Computer Company Limited (“JECC”) and other leasing
companies and financial institutions for leasing to the ultimate users
under contracts which require that the Group repurchase the
computers if they are returned by the users after a certain period.
Based on past experience, an estimated amount for the loss arising
from such repurchases is provided at the point of sale and is charged
to income.
(m) Income taxes
The Company has adopted the liability method of tax effect ac-
counting to recognize the effect of all temporary differences in the
recognition of assets and liabilities for tax and their financial re-
porting purposes.
(n) Earnings or loss per share
Basic earnings or loss per share is computed based on the
weighted average number of shares of common stock outstanding
during the respective years.
Diluted earnings per share is computed based on the weighted
average number of shares after consideration of the dilutive effect of
potential ordinary shares including warrants and convertible bonds.
(o) Derivative financial instruments
Gains and losses on derivative financial instruments used to
reduce exposures regarding receivables and liabilities denominated
in foreign currencies are recognized over the lives of the contracts.
They offset gains and losses arising from the related receivables
and liabilities.
The differentials to be paid or received related to swap contracts
are recognized over the lives of the contracts.
2. U.S. dollar amounts
The Company and its consolidated subsidiaries in Japan main-
tain their books of account in yen. The U.S. dollar amounts included
in the accompanying consolidated financial statements and the notes
thereto represent the arithmetic results of translating yen into dol-
lars at ¥ 1 32 = US$1, the approximate rate of exchange prevailing
on March 31, 1998. The U.S. dollar amounts are included solely
for the convenience of the reader and the translation is not in-
tended to imply that the assets and liabilities which originated in
yen have been or could readily be converted, realized or settled in
U.S. dollars at the above or any other rate.
3. Acquisition
In September 1997, the Company acquired a 58% shares of
Amdahl Corporation, a leading U.S. information systems supplier,
for ¥ 111,072 million ($841,455 thousand) in cash. Upon this ac-
quisition, Amdahl Corporation became a wholly owned consoli-
dated subsidiary of Fujitsu Limited.
The acquisition was accounted for as a purchase and the oper-
ating results of the acquired company has been included in the
accompanying consolidated financial statements since the date of
acquisition. The excess of the purchase price over the estimated
fair value of the net assets has been recorded as goodwill.
Out of the total goodwill, which amounted to ¥ 111,791 million
($846,902 thousand), ¥ 15,236 million ($1 15,424 thousand) was
expensed upon acquisition and ¥ 96,555 million ($7 31,477
thousand) is to be amortized on a straight-line basis over a ten-
year period.
The amortization of goodwill for the year ended March 31, 1998
amounted to ¥ 4,816 million ($36,485 thousand).