Omron 2005 Annual Report Download - page 56

54
eign currency” hedge). The Companies formally document all rela-
tionships between hedging instruments and hedged items, as
well as its risk management objective and strategy for undertaking
various hedge transactions. This process includes linking all deriva-
tives that are designated as cash flow or foreign currency hedges
to specific assets and liabilities on the consolidated balance sheet
or to specific firm commitments or forecasted transactions. Based
on the Companies’ policy, all foreign exchange forward contracts
and foreign currency options entered into must be highly effective
in offsetting changes in cash flows of hedged items.
Changes in fair value of a derivative that is highly effective
and that is designated and qualifies as a cash flow or foreign cur-
rency hedge are recorded in other comprehensive income (loss),
until earnings are affected by the variability in cash flows of the
designated hedged item.
Cash Dividends
Cash dividends are reflected in the consolidated financial state-
ments at proposed amounts in the year to which they are applica-
ble, even though payment is not approved by shareholders until
the annual general meeting of shareholders held early in the fol-
lowing fiscal year. Resulting dividends payable are included in
Other current liabilities in the consolidated balance sheets.
Net income, as reported ...................................................................
Deduct:
Total stock-based employee compensation expense
determined under fair value based method for all awards .......
Pro forma net income .......................................................................
Net income per share (yen and U.S. dollars):
Basic — as reported ......................................................................
Basic — pro forma.........................................................................
Diluted — as reported ...................................................................
Diluted — pro forma ......................................................................
¥511
91
¥420
¥2.1
1.7
2.1
1.7
$282,019
907
$281,112
$ 1.18
1.18
1.17
1.16
Thousands of
U.S. dollars
(except per
share data)
Millions of yen
(except per share data)
2003 2005
¥26,811
106
¥26,705
¥ 110.7
110.2
107.5
107.1
2004
¥30,176
97
¥30,079
¥ 126.5
126.1
124.8
124.4
2005
New Accounting Standards
Share Based Payment — In December 2004, the FASB issued
SFAS No. 123 (revised 2004), “Share Based Payment”. This state-
ment is applicable to awards issued after the effective date and all
awards prior to the effective date that remain unvested on the
effective date and requires that all equity-based compensation be
recorded in the consolidated financial statements at the grant date
fair value. In April 2005, the Securities and Exchange Commission
announced a deferral of the effective date of SFAS No. 123
(revised 2004). Under this deferral, SFAS No. 123 (revised 2004) is
required to be adopted as of the beginning of the Companies’ first
annual reporting period that begins after June 15, 2005. The
Companies do not expect SFAS No. 123 (revised 2004) to have
material effect on the consolidated financial statements.
Revenue Recognition
The Companies recognize revenue when persuasive evidence of
an arrangement exists, delivery has occurred and title and risk of
loss has transferred, the sales price is fixed or determinable, and
collectibility is probable. These criteria are met when products are
received by customers or services are performed.
Stock-Based Compensation
The Companies account for stock-based awards to employees
using the intrinsic value method in accordance with APB Opinion
No. 25, “Accounting for Stock Issued to Employees,” including
related interpretations, and follow the disclosure only provision of
SFAS No. 123, “Accounting for Stock Based Compensation.”
At March 31, 2005, the Company had a stock-based employ-
ee compensation plan, which is described more fully in Note 9.
No stock-based employee compensation cost is reflected in the
results of operations, as all options granted under those plans
had an exercise price exceeding the market value of the underly-
ing common stock on the date of grant. The following table illus-
trates the effect on net income and net income per share if the
Company had applied the fair value recognition provisions of
SFAS No. 123, to stock-based employee compensation.