JVC 2006 Annual Report Download - page 51

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Victor Company of Japan, Limited 49
The Company provided allowance for employees’ severance and retirement benefits as of the balance sheet
dates based on the estimated amounts of projected benefit obligation and the fair value of plan assets at those
dates.
The excess of the projected benefit obligation over the total of the fair value of plan assets as of April 1, 2000 and
the liabilities for severance and retirement benefits recorded as of April 1, 2000 (the “net transition obligation”) is rec-
ognized in expenses in equal amounts primarily over 15 years commencing with the year ended March 31, 2001.
Prior service costs are recognized in income or expenses using the straight-line method over 10 years, and
actuarial gains and losses are recognized in expenses using the straight-line method over 10 years commencing
with the succeeding period.
Amounts per share of common stock
The computation of net income per share is based on the weighted average number of shares of common stock
outstanding during each year.
Diluted net income per share assumes dilution that could occur if convertible bonds or similar securities were
converted into common stock resulting in the issuance of common stock. The Company did not have securities
that could potentially dilute net income per common share in the year ended March 31, 2006 and diluted net
income per share is not disclosed because there was a net loss in the year ended March 31, 2005.
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 the 2006 presentation. These changes had no
impact on previously reported results of operations or stockholders’ equity.
CHANGE IN ACCOUNTING METHOD
In the fiscal year ended March 31, 2006, the Company and consolidated domestic companies adopted the new
accounting standard for impairment of fixed assets (“Opinion Concerning Establishment of Accounting Standard
for Impairment of Fixed Assets” issued by the Business Accounting Deliberation Council on August 9, 2002) and
the “Implementation guidance for the accounting standard for impairment of fixed assets” (the Financial Accounting
Standard Implementation Guidance No. 6 issued by the Accounting Standards Board of Japan on October 31,
2003). This change had no effect to the consolidated statements of operations for the year ended March 31, 2006.
RELATIONSHIP WITH MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
The Company is a subsidiary of Matsushita Electric Industrial Co., Ltd. (“Matsushita”). At March 31, 2006, Matsushita
held 133,227 thousand shares of common stock of the Company, 52.67% of the total outstanding shares.
Transactions between the Company and Matsushita for the years ended March 31, 2006, 2005 and 2004, and
the account balances between the two companies at March 31, 2006 and 2005 are not material.
INVENTORIES
Inventories as of March 31, 2006 and 2005 are as follows:
Thousands of
Millions of yen U.S. dollars
2006 2005 2006
Finished goods ¥91,687 ¥93,764 $783,650
Work in process 9,295 11,979 79,444
Raw materials and supplies 18,113 18,962 154,812
¥119,095 ¥124,705 $1,017,906
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