JVC 1998 Annual Report Download - page 27

JVC 1998 25
Income taxes
Current income taxes are provided for the amounts currently payable
for each year based on taxable income. Deferred income taxes are pro-
vided on significant temporary differences between income for financial
reporting purposes and income for taxation purposes.
No provision for income taxes is made on undistributed earnings of
foreign subsidiaries and affiliated companies as the Company considers
that such earnings are permanently reinvested.
Employees’ retirement benefits and pension plans
The Company has funded pension plans and unfunded benefit plans to
provide retirement benefits for substantially all employees. Approximate-
ly 87% of total retirement benefits for employees is covered by funded
pension plans.
Upon retirement or termination of employment for reasons other
than dismissal for cause, eligible employees are entitled to lump-sum
and/or annuity payments based on their current rates of pay and length
of service.
Employees’ retirement benefits is principally stated at 40% (100%
for certain employees whose age reached 55) of the amount which
would be required to be paid (less the amount which is expected to be
covered by the pension plans) if all eligible employees voluntarily termi-
nated their employment at the balance sheet date, plus the unamor-
tized balance of certain previously accumulated amounts.
Costs with respect to the pension plans are funded as accrued in an
amount determined actuarially. Prior service costs are being funded
over 10 years and the resultant charges to income are offset by amorti-
zation of the excess amount of employees’ retirement benefits which is
expected to be covered by the pension plans.
Certain of the consolidated subsidiaries also have employees’ retire-
ment benefit plans and funded pension plans similar to those of the
Company.
Amounts per share of common stock
The computation of net income per share is based on the weighted av-
erage number of shares of common stock outstanding during each
year.
Diluted net income per share of the common stock for the year
ended March 31, 1996 was not shown since the outstanding convert-
ible bonds had no dilutive effect on the net income per share data for
1996.
Cash dividends per share represent the actual amount declared as
applicable to the respective years.
3. CHANGE IN ACCOUNTING POLICY
In the year ended March 31, 1996, one of domestic consolidated sub-
sidiaries changed its accounting for production cost of karaoke soft-
ware from direct charging to income when announced to sell to capital-
izing to inventories and amortizing by the declining balance method
over two years. This change was made to get better matching of cost
with revenue under the condition that the software is expected to be
sold continuously and the sales volume is expected to increase. This
change resulted in increases in operating income and income before in-
come taxes, minority interests and equity in loss by ¥863 million, re-
spectively. As to effect on segment information, see Note 14.
4. TRANSACTIONS WITH MATSUSHITA ELECTRIC
INDUSTRIAL CO., LTD.
The Company is a subsidiary of Matsushita Electric Industrial Co., Ltd.
(“Matsushita”). The Company’s relationship with Matsushita dates back
to 1954 when Matsushita acquired a controlling equity interest in the
Company. Since then the Company has pursued an independent man-
agement policy in all aspects of its operations based on the principle of
“mutual development through competition.” There is no relationship of
financial assistance between the two companies. Each company has a
right of access to the technology developed by the other. At March 31,
1998, Matsushita held 133,227 thousand shares of common stock of
the Company, 52.40% of the total outstanding shares.
Main account balances with Matsushita at March 31, 1998 and
1997, were as follows:
Thousands of
Millions of yen U.S. dollars
1998 1997 1998
Due from Matsushita ....................... ¥ 112 ¥ 136 $ 848
Due to Matsushita ........................... 3,238 2,807 24,530
Sales to and purchases from Matsushita for the years ended March
31, 1998, 1997 and 1996, were as follows:
Thousands of
Millions of yen U.S. dollars
1998 1997 1996 1998
Net sales......................... ¥ 1,125 ¥ 1,558 ¥ 2,231 $ 8,523
Net purchases................. 33,225 34,965 34,273 251,705
5. INVENTORIES
Inventories at March 31, 1998 and 1997, were as follows:
Thousands of
Millions of yen U.S.dollars
1998 1997 1998
Finished goods........................... ¥101,254 ¥ 88,749 $ 767,076
Work in process ......................... 20,681 18,040 156,674
Raw materials and supplies........ 27,690 20,660 209,773
.................................................. ¥149,625 ¥127,449 $1,133,523
Financial Section