Omron 1999 Annual Report Download - page 32

Basis of Financial Statements
The accompanying consolidated financial statements, stated in Japanese yen, include certain adjustments, not
recorded on the books of account, to present these statements in accordance with accounting principles
as generally accepted in the United States, except for the omission of segment information as required by the
Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise
and Related Information.” The recognition and measurement provisions of SFAS No. 115, “Accounting for
Certain Investments in Debt and Equity Securities,” were applied in the current year, retroactively to April 1,
1994, and all prior years’ financial statements have been restated. The principal adjustments include accrual of
certain expenses, accounting for termination and retirement benefits, accrual of deferred income taxes relating
to these adjustments and other temporary differences, and accounting for prior years’ stock dividends at mar-
ket value.
Certain reclassifications have been made to amounts previously reported in order to conform to 1999 classifi-
cations.
Principles of Consolidation
The consolidated financial statements include the accounts of OMRON Corporation (the “Company”) and its
subsidiaries (together the “Companies”). All significant intercompany accounts and transactions have been
eliminated. Costs in excess of the fair value of net assets acquired are amortized on a straight-line basis over
five years.
The Companies’ investments in companies in which ownership is from 20% to 50% (associates) are stated
at cost plus equity in undistributed net income or loss.
Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting prin-
ciples requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash Equivalents
Cash equivalents consist of highly liquid investments with original maturities of three months or less, including
time deposits, securities purchased with resale agreements and money market instruments.
Short-Term Investments and Investment Securities
In 1999, the Companies adopted SFAS No. 115. Under this statement, the Companies classify all their mar-
ketable debt and equity securities as available-for-sale and carry them at market value with a corresponding
recognition of the net unrealized holding gains or losses as a separate component of other comprehensive
income, net of tax, until recognized. Prior to the adoption of SFAS No. 115, marketable debt and equity securi-
ties were carried at the lower of aggregate cost or market. The Companies have restated the prior years’ con-
solidated financial statements to reflect the effects of the retroactive adoption of SFAS No. 115. A summary of
the effects of the restatement is presented in Note 15. Other investments are stated at the lower of cost or
estimated net realizable value. The cost of securities sold is determined on the average cost basis.
Inventories
Inventories are stated at the lower of cost, determined by the first-in, first-out method, or market.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation of property, plant and equipment has been com-
puted principally on a declining-balance method based upon the estimated useful lives of the assets.
Advertising Costs
Advertising costs are charged to earnings as incurred. Advertising expense was ¥9,822 million ($81,174 thou-
sand), ¥10,329 million and ¥8,473 million for the years ended March 31, 1999, 1998 and 1997, respectively.
Termination and Retirement Benefits
Termination and retirement benefits are accounted for in accordance with SFAS No. 87, “Employers’
Accounting for Pensions.” The Companies adopted SFAS No. 132, “Employers’ Disclosures about Pensions
and Other Postretirement Benefits,” in the year ended March 31, 1999. SFAS No. 132 revises employers’ dis-
closures about pensions and other postretirement benefit plans. SFAS No. 132 does not change the recogni-
tion and measurement of the plans, and does not affect the Companies’ consolidated financial position and
results of operations. All prior years’ disclosures have been restated to conform with the provisions of SFAS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OMRON Corporation and Subsidiaries
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1. Summary of
Significant
Accounting
Policies