JVC 1999 Annual Report Download - page 27

JVC 1999 25
Research and development
Research and development expenditures for new products or improve-
ment of existing products are charged to income as incurred.
Income taxes
Current income taxes are provided for the amounts currently payable
for each year based on taxable income. Deferred income taxes are
provided on significant temporary differences between income for finan-
cial reporting purposes and income for taxation purposes. No provision
for income taxes is made on undistributed earnings of foreign sub-
sidiaries 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 85% 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.
Cash dividends per share represent the actual amount declared as
applicable to the respective years.
Reclassifications
Certain prior year amounts have been reclassified to conform to 1999
presentation. These changes had no impact on previously reported re-
sults of operations or shareholders’ equity.
3. 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
management policy in all aspects of its operations based on the
principle of “mutual development through competition.” There is no re-
lationship of financial assistance between the two companies. Each
company has a right of access to the technology developed by the
other. At March 31, 1999, 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, 1999 and
1998 were as follows:
Thousands of
Millions of yen U.S. dollars
1999 1998 1999
Due from Matsushita ....................... ¥ 167 ¥ 112 $ 1,380
Due to Matsushita ........................... 3,011 3,238 24,884
Sales to and purchases from Matsushita for the years ended March
31, 1999, 1998 and 1997 were as follows:
Thousands of
Millions of yen U.S. dollars
1999 1998 1997 1999
Net sales......................... ¥ 1,352 ¥ 1,125 ¥ 1,558 $ 11,174
Net purchases................. 30,558 33,225 34,965 252,545
4. INVENTORIES
Inventories at March 31, 1999 and 1998 were as follows:
Thousands of
Millions of yen U.S.dollars
1999 1998 1999
Finished goods........................... ¥ 87,851 ¥101,254 $ 726,041
Work in process ......................... 17,834 20,681 147,388
Raw materials and supplies........ 22,894 27,690 189,207
.................................................. ¥128,579 ¥149,625 $1,062,636
5. MARKETABLE EQUITY SECURITIES
The aggregate book value, market value and unrealized gains pertain-
ing to marketable equity securities included in “marketable securities”
and “investments and advances — other” in the accompanying consol-
idated balance sheets at March 31, 1999 and 1998 were as follows:
Thousands of
Millions of yen U.S.dollars
1999 1998 1999
Marketable securities:
Book value................................. ¥ 2,689 ¥ 112 $ 22,223
Market value .............................. 2,898 513 23,950
Unrealized gains......................... ¥ 209 ¥ 401 $ 1,727
Investments and
advances—other:
Book value................................. ¥10,137 ¥10,484 $ 83,776
Market value .............................. 21,112 19,737 174,479
Unrealized gains......................... ¥10,975 ¥ 9,253 $ 90,703
6. EQUITY IN INCOME OF AFFILIATED COMPANIES
In accordance with the new disclosure requirements effective from the
year ended March 31, 1999, equity in income of affiliated companies is
included in other income (expenses). Prior year amounts, which were
presented between income taxes and net income (loss), have been re-
classified to conform to the 1999 presentation.