Pentax 2004 Annual Report Download - page 53

Revenue and expense accounts of the consolidated overseas
subsidiaries and associated companies are translated into Japanese
yen at the monthly average exchange rates.
o. Derivatives and Hedging Activities—The Group uses derivative
financial instruments to manage its exposures to fluctuations in
foreign currency exchange rates. Foreign exchange forward
contracts are utilized by the Group to reduce foreign currency
exchange risks. The Group does not enter into derivatives for
trading or speculative purposes.
Derivative financial instruments and foreign currency transac-
tions are classified and accounted for as follows: (a) all derivatives
are recognized as either assets or liabilities and measured at fair
value, and gains or losses on derivative transactions are recognized
in the statements of income and (b) for derivatives used for
hedging purposes, 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 employed to hedge
foreign currency exchange rate exposures for export sales are
measured at the fair value and the unrealized gains/losses are
recognized in income. Forward contracts applied for forecasted
(or committed) transactions are also measured at the fair value but
the unrealized gains/losses are deferred until the underlying
transactions are completed.
Long-term debt denominated in foreign currencies for which
foreign exchange forward contracts are used to hedge the foreign
currency fluctuations are translated at the contracted rate if the
forward contracts qualify for hedge accounting.
Interest rate swaps which qualify for hedge accounting and
meet specific matching criteria are not remeasured at market value
but the differential paid or received under the swap agreements
are recognized and included in interest expense or income.
p. Per Share Information—Effective April 1, 2002, the Company
adopted a new accounting standard for earnings per share of
common stock issued by ASB. 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 the outstanding stock options were exercised
into common stock. Diluted net income per share of common
stock assumes full exercise of the outstanding stock options at the
beginning of the year (or at the time of grant). Basic net income
and diluted net income per share for the years ended March 31,
2004, 2003 and 2002 are computed in accordance with the new
standard.
Cash dividends per share presented in the accompanying
consolidated statements of income are dividends applicable to the
respective years including dividends to be paid after the end of the
year.
No»3REORGANIZATION
(1) Reorganization of Subsidiaries
On September 30, 2001, the Company purchased the minority
interest of Hoya Optikslip AB (“HOSL“) in Sweden for ¥384 million
to become a wholly owned consolidated subsidiary. Previously,
HOSL had been accounted for by the equity method.
On October 1, 2001, Welfare Corporation, which had been a
wholly owned unconsolidated subsidiary of the Company, was
merged into Hoya Healthcare Corporation (“HHC“). On January
1, 2002, Welfare Corporation was then split up from HHC.
On March 31, 2002, the Company increased its ownership of
Thai Hoya Lens Ltd. to become a consolidated subsidiary, which
had been accounted for by the equity method.
On June 30, 2003, the Company acquired the voting rights of
Hoya Candeo Optronics Corporation ("HCOC," former Hoya-
Schott Corporation) to become a consolidated subsidiary, which
had been accounted for by the equity method.
(2) Merger of the Company with Subsidiaries
On March 1, 2003, the Company merged with Hoya Techno
Process Corporation and two other companies, which had been
wholly owned unconsolidated subsidiaries of the Company.
(3) Transfer of Business
On March 31, 2003, a part of the hearing aid business in the eye
care field was transferred to a third party.
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