Hitachi 2010 Annual Report Download - page 97

95
Hitachi, Ltd. Annual Report 2010
As of March 31, 2010, outstanding commitments for the purchase of property, plant and equipment were approximately
¥35,906 million ($386,086 thousand).
It is a common practice in Japan for companies, in the ordinary course of business, to receive promissory notes in the
settlement of trade accounts receivable and to subsequently discount such notes to banks or to transfer them by endorsement
to suppliers in the settlement of accounts payable. As of March 31, 2010 and 2009, the Company and subsidiaries were
contingently liable for trade notes discounted and endorsed in the following amounts:
Millions of yen
Thousands of
U.S. dollars
2010 2009 2010
Notes discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥3,497 ¥3,877 $37,602
Notes endorsed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,538 3,807 27,290
¥6,035 ¥7,684 $64,892
A certain subsidiary is contingently liable for the transfer of export receivables with recourse. As of March 31, 2010, the amount
of transfer of export receivables with recourse was ¥11,322 million ($121,742 thousand).
The Company and its subsidiaries provide warranties for certain of their products. The accrued product warranty costs are
based primarily on historical experience of actual warranty claims. The changes in accrued product warranty costs for the
years ended March 31, 2010, 2009 and 2008 are summarized as follows:
Millions of yen
Thousands of
U.S. dollars
2010 2009 2008 2010
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 60,449 ¥ 73,715 ¥ 82,316 $ 649,989
Expense recognized upon issuance of warranties . . . . . . . . . . . 20,806 34,990 38,420 223,720
Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,696) (43,369) (43,675) (233,290)
Other, including effect of foreign currency translation . . . . . . . . . (2,602) (4,887) (3,346) (27,978)
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 56,957 ¥ 60,449 ¥ 73,715 $ 612,441
On June 15, 2006, Hamaoka Nuclear Power Station No. 5 of Chubu Electric Power Co., Inc. shut down due to turbine
damage. As a precautionary measure, on July 5, 2006, Shika Nuclear Power Station No. 2 of Hokuriku Electric Power Company,
which uses the same type of turbines, was shut down for an examination of the turbines and the examination revealed damage
to the turbine vanes. A provision for the repair costs was accrued.
In September 2008, Chubu Electric Power Co., Inc. filed suit against the Company to claim for compensation for consequential
losses of ¥41,800 million mostly composed of the additional costs to switch to thermal power arising from the shutdown at
Hamaoka Nuclear Power Station No. 5. In May 2009, Hokuriku Electric Power Company filed suit against the Company to
claim for compensation for consequential losses of ¥20,200 million mostly composed of the additional costs to switch to
thermal power arising from the shutdown at Shika Nuclear Power Station No. 2. The Company is vigorously defending itself
in these lawsuits. The Company has not accrued for consequential losses related to these lawsuits. However, there can be
no assurance that the Company will not be liable for any amount claimed.
In January 2007, the European Commission ordered the Company and one of its affiliated companies to pay a fine for
infringement of EC antitrust rules regarding alleged antitrust violations for the gas insulated switchgear equipment used at
substations. In April 2007, the Company lodged an appeal with the Court of First Instance of the European Communities
requesting the court to annul the decision of the European Commission. The determination has not been rendered at present,
but the Company accrued the reasonably estimated amount for the fine.