Nikon 2003 Annual Report Download - page 29

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(m) Foreign Currency Financial Statements
The balance sheet accounts and revenue and expense accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the
current exchange rates except for shareholders’ equity, which is translated at the historical exchange rates.
Differences arising from such translation are shown as “Foreign currency translation adjustments” in a separate component of
shareholders’ equity.
(n) Derivatives and Hedging Activities
The Group enters into derivative financial instruments (“derivatives”), including contracts of foreign exchange forward, currency option,
foreign currency swap and interest rate swap to hedge foreign exchange risk and interest rate exposures. The Group does not hold or issue
derivatives for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: All derivatives are recognized
principally as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the statements
of operations. For derivatives used for hedging purpose, if derivatives qualify for hedge accounting because of high correlation and effectiveness
between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.
The foreign exchange forward contracts and currency option contracts employed to hedge foreign exchange exposures for export sales
and purchases are measured at fair value and the related unrealized gains or losses are recognized in income. Forward contracts entered into
for forecasted transactions are also measured at fair value but the unrealized gains or losses on qualifying hedges are deferred until the under-
lying transactions are completed. The foreign currency swaps used to hedge the foreign currency fluctuations of long-term debt denominated
in foreign currencies are measured at fair value and the unrealized gains or losses are included in the carrying amounts of the debt. The interest
rate swaps are remeasured at market value and the differential paid or received under the swap agreements are recognized in income.
(o) Per Share Information
Effective April 1, 2002, the Company adopted a new accounting standard for earnings per share of common stock issued by the Accounting
Standards Board of Japan. Under the new standard, basic net income per share is computed by dividing net income available to common
shareholders, which is more precisely computed than under previous practices, by the weighted-average number of common shares
outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into common stock.
Diluted net income per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of
the year (or at the time of issuance) with an applicable adjustment for related interest expense, net of tax and full exercise of outstanding
warrants. Basic net income per share for the year ended March 31, 2003 is computed in accordance with the new standard, and diluted
net income per share is not disclosed because of the Company’s net loss position. There is no effect on the calculation of per share information
for the year ended March 31, 2002, by applying the new standard.
Cash dividends per share presented in the accompanying consolidated statements of operations are dividends applicable to the respective
years including dividends to be paid after the end of the year.