JVC 2002 Annual Report Download - page 41

ANNUAL REPORT 2 0 0 2 3 9
1 0 . CONTINGENT LIABILITIES
The contingent liabilities of the Company and its consolidated
subsidiaries at March 31, 2002 were as follows:
Thousands of
Millions of yen U.S. dollars
As endorser of export bills
discounted with banks ¥19,626 $147,564
As guarantor for loans to employees 2,426 18,241
As guarantor for loan to affiliated
company and lease obligations of
affiliated company and others 2,150 16,165
¥24,202 $181,970
1 1 . STOCKH OLDERS’ EQUITY
Under the Commercial Code of Japan (the “Code”), at least 50% of
the issue price of new shares is required to be designated as stated
capital. The portion which is to be designated as stated capital is
determined by resolution of the Board of Directors. Proceeds in excess
of the amounts designated as stated capital are credited to additional
paid-in capital.
Effective October 1, 2001, the Code provides that an amount equal
to at least 10% of cash dividends and other cash appropriations shall be
appropriated and set aside as a legal reserve until the total amount of
legal reserve and additional paid-in capital equals 25% of common stock.
The legal reserve and additional paid-in capital may be used to elimi-
nate or reduce a deficit by resolution of the stockholders’ meeting or
may be capitalized by resolution of the Board of Directors. On condition
that the total amount of legal reserve and additional paid-in capital
remains being equal to or exceeding 25% of common stock, they are
available for distributions or certain other purposes by the resolution of
stockholders’ meeting. Legal reserve is included in retained earnings in
the accompanying consolidated financial statements.
The maximum amount that the Company can distribute as dividends
is calculated based on the non-consolidated financial statements of
the Company and in accordance with the Code.
1 2 . DERIVATIVE FINANCIAL INSTRUMENTS
The Company and its consolidated subsidiaries use derivative financial
instruments in the normal course of their business to manage the
exposure to fluctuations in foreign exchange rates and interest rates.
The primary classes of derivatives used by the Company and its consoli-
dated subsidiaries are forward exchange contracts, option contracts
and interest rate swap contracts.
These derivative financial transactions are executed and managed
by the Company’s accounting department and are authorized by the
Director responsible for accounting matters under the supervision by
the Board of Directors.
The following summarizes hedging derivative financial instruments
used by the Companies and items hedged:
Hedging instruments: Hedged items:
Forward exchange contracts Foreign currency trade receivables
and option contracts and trade payables, future transactions
denominated in a foreign currency
Interest rate swap contracts Interest on bonds
The Companies evaluate hedge effectiveness by comparing the
cumulative changes in cash flows from or the changes in fair value
of hedged items and the corresponding changes in the hedging
derivative instruments.
The following tables summarize market value information as of March
31, 2001 of derivative transactions for which hedge accounting has not
been applied:
Millions of yen
Contract Market Recognized
March 31, 200 1 amount value gain (loss)
Swap contracts:
Receive fixed/pay floating ¥5,000 ¥(1) ¥(1)
Pay fixed/receive floating 5,000 ¥ 1 ¥ 1
The fair value of interest rate swap contracts are estimated based on
the quotes obtained from financial institutions.
As the companies applied hedge accounting to all derivatives in
2002, market value information for 2002 is not disclosed.
1 3 . LEASE INFORMATI ON
The Companies lease certain buildings and structures, vehicles,
machinery and equipment and other assets under non-capitalized
finance and operating leases. Finance leases which do not transfer
ownership to lessees are not capitalized and are accounted for in
the same manner as operating leases. Certain information for such
non-capitalized finance and operating leases is as follows.
Lessee:
(1) A summary of assumed amounts of acquisition cost, accumulated
depreciation and net book value at March 31, 2002 and 2001 is
as follows:
Millions of yen
Acquisition Accumulated Net book
cost depreciation value
2 0 0 2 :
Buildings and structures ¥ 1,2 2 3 ¥ 4 4 6 ¥ 7 7 7
Vehicles, machinery and
equipment 7 ,8 8 2 3 ,6 8 8 4 ,1 9 4
Tools, furniture and fixtures 1 2 ,5 7 5 6 , 2 2 1 6 ,3 5 4
Leasehold rights 1 8 3 7 9 1 0 4
Software 5 6 2 7 2 9
¥2 1 ,9 1 9 ¥1 0 ,4 6 1 ¥1 1 ,4 5 8
Millions of yen
Acquisition Accumulated Net book
cost depreciation value
2001:
Buildings and structures ¥ 1,975 ¥1,023 ¥ 952
Vehicles, machinery and
equipment 9,119 3,341 5,778
Tools, furniture and fixtures 11,361 5,446 5,915
Leasehold rights 122 56 66
Software 115 83 32
¥22,692 ¥9,949 ¥12,743
Millions of yen
Acquisition Accumulated Net book
cost depreciation value
2 0 0 2 :
Buildings and structures $ 9 ,1 9 5 $ 3 ,3 53 $ 5,84 2
Vehicles, machinery and
equipment 59,263 27,729 31,534
Tools, furniture and fixtures 94,549 46,775 47,774
Leasehold rights 1,376 594 782
Software 421 203 218
$164,804 $78,954 $86,150