Pioneer 2008 Annual Report Download - page 47

Annual Report 2008 45
In the United States, the Company established PUSA
Receivables Funding Corporation, a wholly owned, bankruptcy-
remote, special-purpose entity, and set up an accounts
receivable securitization program of eligible trade accounts
receivable. A bankruptcy-remote subsidiary is a company that
has been structured to make it highly unlikely that it would be
drawn into a bankruptcy of the Company. Through this pro-
gram, the Company can securitize and sell, without recourse,
on a revolving basis, an undivided interest up to $100 million in
a pool of receivables to third-party conduits owned by a bank.
The value assigned to undivided interests retained in securi-
tized trade receivables is based on the relative fair values of the
interest retained and sold in the securitization. The Company
has assumed that the fair value of the retained interest is
equivalent to its carrying value as the receivables are short-
term in nature and high quality. These securitization transac-
tions are accounted for as sales in accordance with SFAS No.
140, “Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities,” because the Com-
pany has surrendered control over the receivables.
The Company sold a total of ¥9,706 million, ¥18,723
million and ¥14,743 million ($147,430 thousand) of receivables
under this program for the years ended March 31, 2006, 2007
and 2008, respectively. The Company’s subordinated net
retained interest in accounts receivable for securitization which
has been recorded as a component of accounts receivable,
was ¥6,918 million and ¥6,368 million ($63,680 thousand) at
March 31, 2007 and 2008, respectively. The Company recog-
nized a loss of ¥42 million and a gain of ¥8 million and ¥16
million ($160 thousand) on the securitization of receivables for
the years ended March 31, 2006, 2007 and 2008, respectively.
The Company continues to service the sold receivables and is
compensated at what is believed to be market rates. Accord-
ingly, no servicing asset or liability has been recorded.
In Japan and foreign countries, the Company set up sev-
eral accounts receivable sale programs of eligible trade
accounts receivable. Through these programs, the Company
can sell receivables, without recourse, to financial institutions.
These transactions are accounted for as sales in accordance
with SFAS No. 140 because the Company has surrendered
control over the receivables. The Company sold a total of
¥5,636 million, ¥11,691 million and ¥18,303 million ($183,030
thousand) of receivables under these programs for the years
ended March 31, 2006, 2007 and 2008, respectively. Losses
from these transactions were ¥24 million, ¥14 million and ¥40
million ($400 thousand) for the years ended March 31, 2006,
2007 and 2008, respectively. Although the Company contin-
ues servicing the sold receivables, no servicing liabilities are
recorded because costs for collection of the sold receivables
are immaterial.
8. Inventories:
Inventories at March 31, 2007 and 2008 are comprised of the following:
Millions of Yen
Thousands of
U.S. Dollars
2007 2008 2008
Finished products ¥ 54,683 ¥ 54,404 $ 544,040
Work in process 21,687 21,818 218,180
Materials and supplies 28,961 27,946 279,460
Total ¥105,331 ¥104,168 $1,041,680
7. Accounts receivable securitization programs: