Mitsubishi 2002 Annual Report Download - page 49

Download and view the complete annual report

Please find page 49 of the 2002 Mitsubishi annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 70

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70

47
(k) Amounts per share
The computation of basic net income (loss) per share is based on the weighted average number of shares outstanding
during each year. Diluted net income per share is computed based on the weighted average number of shares of common
stock outstanding each year after giving effect to the dilutive potential of common shares to be issued upon the exercise
of warrants and the conversion of convertible bonds. Diluted net income per share is not presented as a loss was
recorded for the year ended March 31, 2001. Cash dividends per share represent cash dividends declared and paid in
each respective year.
(l) Appropriations (dispositions) of retained earnings (deficit)
Cash dividends, bonuses to directors and corporate auditors and other appropriations or dispositions of retained earnings
(deficit) are recorded in the financial year in which the appropriations (dispositions) are approved at a general meeting of
the stockholders.
(m) Leases
Noncancelable lease transactions at MMC and its domestic consolidated subsidiaries are accounted for as operating
leases regardless of whether such leases are classified as operating or capital leases, except that lease agreements which
stipulate the transfer of ownership of the leased property to the lessee are accounted for as capital leases.
Noncancelable lease transactions at the foreign subsidiaries except for operating leases are capitalized.
(n) Research and development costs
Research and development costs are expensed when incurred.
(o) Derivative financial instruments
MMC and its consolidated subsidiaries are exposed to risks arising from fluctuations in foreign currency exchange rates
and interest rates. In order to manage those risks, MMC and its consolidated subsidiaries enter into various derivative
agreements including forward foreign exchange contracts and interest rate swaps. Forward foreign exchange contracts are
utilized to manage risks arising from forecasted export of finished goods and related foreign currency receivables. Interest
rate swaps are utilized to manage interest rate risk for debts. MMC and its consolidated subsidiaries do not utilize deriva-
tives for trading purposes.
Forward foreign exchange contracts related to forecasted export of finished goods are accounted for using deferral
hedge accounting. Deferral hedge accounting requires unrealized gains or losses to be deferred as liabilities or assets. See
Note 2.
MMC and its consolidated subsidiaries have also developed a hedging policy to control various aspects of the deriva-
tive transactions including authorization levels and transaction volumes. Based on this policy, MMC and its consolidated
subsidiaries hedge, within certain limits, the risks arising from changes in foreign currency exchange rates and interest
rates. MMC and its consolidated subsidiaries review, every month, the effectiveness of all hedging policies considering the
cumulative cash flows and changes in the market.