Nikon 2006 Annual Report Download - page 42

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of the Company’s common stock in the period from June 28, 2005 to June 27, 2013, from June 30, 2006, to June 29, 2014, and from June
30, 2007 to June 29, 2015 respectively. The options will be granted at an exercise price of 105% of the fair market value of the Company’s
common stock at the prior month of the date of option grant.
17,000 shares of the stock option approved by the Company’s shareholders on June 27, 2003 were exercised for the year ended
March 31, 2006.
On May 1, 2006, a new corporate law (the “Corporate Law”) became effective, which reformed and replaced the Code with various revisions
that would, for the most part, be applicable to events or transactions which occur on or after May 1, 2006 and for the fiscal years ending on
or after May 1, 2006. The significant changes in the Corporate Law that affect financial and accounting matters are summarized below;
(a) Dividends
Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution
at the shareholders meeting. For companies that meet certain criteria such as ; (1) having the Board of Directors, (2) having independent auditors,
(3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal
term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) if the company has prescribed
so in its articles of incorporation.
The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to a certain limitation and
additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the
company so stipulate. Under the Code, certain limitations were imposed on the amount of capital surplus and retained earnings available for
dividends. The Corporate Law also provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The
limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.
(b) Increases/decreases and transfer of common stock, reserve and surplus
The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal reserve ( a component of retained
earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such
dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the
Code, the aggregate amount of additional paid-in capital and legal reserve that exceeds 25% of the common stock may be made available for
dividends by resolution of the shareholders. Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may be
reversed without limitation of such threshold. The Corporate Law also provides that common stock, legal reserve, additional paid-in capital,
other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.
(c) Treasury stock and treasury stock acquisition rights
The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of
Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is deter-
mined by specific formula.
Under the Corporate Law, stock acquisition rights, which were previously presented as a liability, are now presented as a separate
component of shareholders’ equity.
The Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury
stock acquisition rights are presented as a separate component of shareholders’ equity or deducted directly from stock acquisition rights.
On December 9, 2005, the ASBJ published a new accounting standard for presentation of shareholders’ equity. Under this accounting
standard, certain items which were previously presented as liabilities are now presented as components of shareholders’ equity. Such items
include stock acquisition rights, minority interest, and any deferred gain or loss on derivatives accounted for under hedge accounting. This
standard is effective for fiscal years ending on or after May 1, 2006.
9. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the fiscal years ended March 31, 2006 and 2005 principally consisted of the following:
Advertising expenses
Provision of warranty costs
Employees’ salaries
Employees’ retirement benefit plan
Employees’ bonuses and others
Research and development costs
Thousands of
U.S. Dollars
2006
$ 396,565
60,700
259,666
34,256
127,794
316,159
2005
¥ 42,551
5,305
27,963
3,256
11,926
33,561
2006
¥ 46,585
7,130
30,503
4,024
15,012
37,139
Millions of Yen