Years ended March 31, 1998 and 1997
1. Basis of
Presenting Consolidated Financial
Statements |
Kobe Steel, Ltd. (the "Company") and its consolidated domestic
subsidiaries maintain their accounts and records in accordance with the
provisions set forth in the Japanese Commercial Code and the Securities
and Exchange Law and in conformity with accounting principles and
practices generally accepted in Japan, which are different from the
accounting and disclosure requirements of International Accounting
Standards. デュエルビッツ入金不要ボーナスccounts of overseas consolidated subsidiaries are based on
their accounting records maintained in conformity with generally accepted
accounting principles and practices prevailing in the respective countries
of domicile.
The accompanying consolidated financial statements are a translation of
the audited consolidated financial statements of デュエルビッツ入金不要ボーナスompany which were
prepared in accordance with accounting principles and practices generally
accepted in Japan from the accounts and records maintained by デュエルビッツ入金不要ボーナスompany
and its consolidated subsidiaries and were filed with the Minister of
Finance ("MOF") as required by the Securities and Exchange Law.
In preparing the accompanying consolidated financial statements,
certain reclassifications have been made in デュエルビッツ入金不要ボーナスonsolidated financial
statements issued domestically in order to present them in a form which is
more familiar to readers outside Japan. デュエルビッツ入金不要ボーナスonsolidated statements of
cash flows have been prepared for the purpose of inclusion in the
consolidated financial statements, although such statements are not
customarily prepared in Japan and are not required to be filed with MOF.
Certain prior year amounts have been reclassified to conform to 1999
presentation. These changes had no impact on previously reported results
of operations or shareholders' equity.
The translation of the Japanese yen amounts into U.S. dollars are
included solely for デュエルビッツ入金不要ボーナスonvenience of the reader, using the prevailing
exchange rate at March 31, 1999, which was 120.55 yen to U.S..00. The
convenience translations should not be construed as representations that
the Japanese yen amounts have been, could have been, or could in the
future be, converted into U.S. dollars at this or any other rate of
exchange.
2. Summary of
Accounting Policies |
(1) Consolidation デュエルビッツ入金不要ボーナスonsolidated financial statements include
the accounts of デュエルビッツ入金不要ボーナスompany and its significant majority-owned
subsidiaries (the "Group"). For the year ended March 31, 1999, the
accounts of 115 (110 in 1998) subsidiaries have been included in the
consolidated financial statements. Intercompany transactions and accounts
have been eliminated.
Investments in unconsolidated subsidiaries and 20 percent to 50 percent
owned affiliates, except for insignificant companies, are accounted for by
the equity method. For the year ended March 31, 1999, 48 (49 in 1998)
affiliates were accounted for by the equity method.
The difference, if considered significant, between デュエルビッツ入金不要ボーナスost of
investments and the equity in their net assets at their dates of
acquisition is amortized over five years (forty years for acquisitions
made by certain foreign consolidated subsidiaries).
When デュエルビッツ入金不要ボーナスompany's share of the net losses of an affiliate exceeds the
adjusted cost of the investment, デュエルビッツ入金不要ボーナスompany discontinues applying the
equity method and the investment is reduced to zero. At March 31, 1999 and
1998, デュエルビッツ入金不要ボーナスompany's share of such accumulated losses which were not
reflected in デュエルビッツ入金不要ボーナスarrying amount of investments were 193 million yen
(,601 thousand) and 609 million yen, respectively.
(2) Cash Equivalents The Group considers time deposits (due
within one year) to be cash equivalents.
(3) Allowance for Doubtful Accounts The allowance for
doubtful accounts is provided in amounts considered to be sufficient to
cover possible losses on collection. With respect to デュエルビッツ入金不要ボーナスompany and
consolidated domestic subsidiaries it is determined by adding the
uncollectable amounts individually estimated for doubtful accounts to a
maximum amount permitted for tax purposes, which is calculated
collectively. The allowance for doubtful accounts of foreign consolidated
subsidiaries is determined by estimates of management.
(4) Marketable Securities and Investments in
Securities Listed equity securities included in both marketable
securities and investments in securities, except for certain equity
securities of unconsolidated subsidiaries and affiliates, in which the
Company's ownership equals or exceeds 25 percent, are principally stated
at the lower of moving average cost or market value. Other securities,
excluding investments accounted for by the equity method, are stated at
moving average cost. If significant impairment of value is deemed
permanent, cost is appropriately reduced.
Commencing with the year ended March 31, 1999, デュエルビッツ入金不要ボーナスompany records
recoveries of write-downs of securities in accordance with a revision in
デュエルビッツ入金不要ボーナスorporation Tax Law. There was no effect on net loss resulting from
adopting this accounting policy.
(5) Inventories Inventories are valued at cost, as determined
principally by the following methods:
Two main works in the Iron and Steel Sector and the three
main plants in デュエルビッツ入金不要ボーナスluminum and Copper
Sector.......... ..................................................Last-in,
first-out method Finished goods and work in process in one plant in
the Iron and Steel Sector and the Machinery and Electronics and
Information
Sector.......... ..................................................Specific
identification
method Others.......... ...................................................Average
method
(6) Depreciation of Plant and Equipment Depreciation of plant
and equipment is principally provided using the straight-line method over
estimated useful lives.
Effective April 1, 1998, in accordance with a revision in the
Corporation Tax Law, デュエルビッツ入金不要ボーナスompany and its domestic consolidated
subsidiaries shortened the estimated useful lives of buildings, excluding
building fixtures. The effect of this change was to increase loss before
income taxes by 1,078 million yen (,942 thousand). The effect on segment
information is stated in Note 11. Segment Information.
(7) Long-term Construction Contracts Sales and the related
costs of certain long-term (over one year) construction contracts of the
Company are recognized by the percentage of completion method.
(8) Research and Development Expenses Effective April 1,
1998, デュエルビッツ入金不要ボーナスompany and certain domestic consolidated subsidiaries changed
their methods of accounting for expenses in respect of the development of
new products and research into and the application of new technologies
(being in each case expenses which were expected to contribute to future
sales) from deferring and amortizing over five years to charging directly
to income. This change was made to improve the financial reporting of the
Company and certain domestic consolidated subsidiaries in accordance with
the "Opinion Concerning Establishment of Accounting Standards for Research
and Development Costs, etc." by the Business Accounting Deliberation
Council, etc.
The effect of this change was to increase the loss before income taxes
by 7,936 million yen (,832 thousand). The effect on segment information
is stated in Note 11. Segment Information.
(9) Amortization of Consolidation Difference In accordance
with the new disclosure requirements effective from the year ended March
31, 1999, amortization of consolidation difference is included in selling,
general and administrative expenses. Prior year amounts, which were
presented between income taxes and net loss, have been reclassified to
conform to the 1999 presentation.
(10) Equity in Earnings of Affiliated Companies In accordance
with the new disclosure requirements effective from the year ended March
31, 1999, equity in losses of affiliated companies is included in other
income (expenses). Prior year amounts, which were presented between income
taxes and net loss, have been reclassified to conform to the 1999
presentation.
(11) Income taxes デュエルビッツ入金不要ボーナスompany and its domestic consolidated
subsidiaries provided income taxes at the amounts currently payable for
the year ended March 31, 1998. Deferred taxes relating to temporary
differences between financial accounting and tax reporting were also
recognized by certain foreign consolidated subsidiaries and in respect of
the elimination of intercompany profits and other tax effects resulting
from consolidation.
Effective April 1, 1998, デュエルビッツ入金不要ボーナスompany and its domestic consolidated
subsidiaries adopted the new accounting standard, which recognizes tax
effects of temporary differences between デュエルビッツ入金不要ボーナスarrying amounts of assets
and liabilities for tax and financial reporting.
The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of
temporary differences between デュエルビッツ入金不要ボーナスarrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for
income tax purposes.
デュエルビッツ入金不要ボーナスmount of deferred income taxes attributable to the net tax effects
of the temporary differences at April 1, 1998 of 6,769 million yen
(,151 thousand) is reflected as an adjustment to the retained earnings
brought forward from the previous year. Prior years' financial statements
have not been restated.
The effect for the year ended March 31, 1999 was to decrease net loss
by 26,304 million yen (8,200 thousand).
Also, the new disclosure requirements effective from the year ended
March 31, 1999, require that enterprise tax, which is levied on taxable
income at a normal tax rate of approximately 11%, be included in income
taxes. Prior year amounts, which were included in selling, general and
administrative expenses, have been reclassified to conform to the 1999
presentation.
(12) Employees' Retirement Benefits Substantially all
employees of デュエルビッツ入金不要ボーナスompany and its domestic consolidated subsidiaries are
entitled to a lump-sum payment at the time of retirement. The amount is,
in general, determined on the basis of length of service, base salary at
the date of retirement and cause of retirement. In デュエルビッツ入金不要ボーナスase of involuntary
retirement, the employee is entitled to a greater payment than in デュエルビッツ入金不要ボーナスase
of voluntary retirement.
Employees of デュエルビッツ入金不要ボーナスompany whose employment is terminated after the age
of 50 may elect to take part of their retirement benefits in the form of
pension payments. The funds required to make pension payments are
entrusted to an outside trustee. The liability in respect of lump-sum
retirement benefits is stated at the present value of the unfunded portion
of the expected future retirement benefits attributable to eligible
employees' years of service as at the balance sheet date. Prior service
costs in respect of the pension plan, less that portion of the provision
in respect of lump-sum retirement benefits no longer required by reason of
the introduction of the pension scheme, are amortized on the declining
balance method at the rate of 15 percent per annum.
デュエルビッツ入金不要ボーナスompany's domestic consolidated subsidiaries provide for retirement
benefits principally at the rate of 40 percent of the expected future
retirement benefits attributable to eligible employees' years of service
as at the balance sheet date. Certain foreign consolidated subsidiaries
also have retirement benefit plans covering eligible employees.
During the year ended March 31, 1999, to improve the financial
soundness of the pension plan, デュエルビッツ入金不要ボーナスompany reduced the assumed rate of
return on fund assets and reduced the rate of benefits to employees. The
Company also changed its funding method from a full year contribution in
March of each year to monthly funding. As a result, for the year ended
March 31, 1999, only one month funding was contributed and charged to
expenses. The effect of these changes was to decrease loss before income
taxes by 6,997 million yen (,042 thousand). The effect on segment
information is stated in Note 11. Segment Information.
(13) Allowance for Special Repairs Blast furnaces and hot
blast stoves, including related machinery and equipment, periodically
require substantial component replacement and repair. The estimated future
costs of such work are provided for and charged to income on a
straight-line basis over the period to the date of デュエルビッツ入金不要ボーナスnticipated
replacement and repair. The difference between such estimated costs and
actual costs is charged or credited to income at the time the repairs take
place.
For the year ended March 31, 1999, デュエルビッツ入金不要ボーナスompany reversed the allowances
for special repairs, which exceeded the future revised cost of repairs to
hot blast stoves located in the Kakogawa Works and the Kobe Works, and
which was related to two blast furnaces located in the Kobe Works which
were shut down and disposed. Reversal of the allowance for special repairs
is shown in the accompanying consolidated statements of operations.
(14) Translation of Foreign Currencies Current receivables
and payables denominated in foreign currencies are translated at
historical rates in accordance with Statement No. 55 of デュエルビッツ入金不要ボーナスudit
Committee of the Japanese Institute of Certified Public Accountants.
All other assets and liabilities denominated in foreign currencies are
translated at historical rates except those, including bonds denominated
in foreign currencies, hedged by forward exchange contracts. Such bonds
are translated into Japanese yen at デュエルビッツ入金不要ボーナスontracted forward exchange rates
and the difference between the amount at デュエルビッツ入金不要ボーナスontracted forward exchange
rate and the amount at the spot rate at the date of issue of the bonds is
deferred and in other current and long-term liabilities in the
consolidated balance sheets. The deferred income is amortized over the
life of the forward exchange contracts.
Financial statements of consolidated foreign subsidiaries are
translated into Japanese yen at the year end rate except for shareholders'
equity accounts which are translated at historical rates.
(15) Leases Finance leases which do not transfer ownership
and do not have bargain purchase provisions are accounted for in the same
manner as operating leases by デュエルビッツ入金不要ボーナスompany and consolidated domestic
subsidiaries.
(16) Net Loss per 1,000 Shares Computations of net loss per
1,000 shares are based on the weighted average number of shares
outstanding during the year.
3. Differences
between Japanese Accounting Principles and International Accounting
Standards |
デュエルビッツ入金不要ボーナスccompanying consolidated financial statements of the Group are
prepared in conformity with accounting principles generally accepted in
Japan, which differ from International Accounting Standards ("IAS") mainly
in the following respects:
(1) Leases IAS 17 requires that finance leases be reflected
in the lessee's accounts by recording an asset and liability equal to the
lower of the net fair value of the leased property and the present value
of the minimum lease payments. The asset should be depreciated and rentals
apportioned between finance charges and reduction of the outstanding
liability. As described in Note 2 (15), in Japan, finance leases may be
accounted for in the same manner as operating leases. For the years ended
March 31, 1999 and 1998, デュエルビッツ入金不要ボーナスompany had no finance leases that were
required to be capitalized.
It has not been practicable to quantify the effect on net income of
this difference in accounting policy.
(2) Translation of Foreign Currencies As described in Note 2
(14), assets and liabilities denominated in foreign currencies are
translated at historical exchange rates. This is not in accordance with
IAS 21 which requires foreign currency monetary items to be translated at
the rate of exchange in effect at each balance sheet date.
The effect of applying IAS 21 to the financial statements would be to
increase the loss before income taxes for the year ended March 31, 1999 by
approximately 1,900 million yen (,761 thousand) and decrease income
before income taxes for the year ended March 31, 1998 by approximately 900
million yen.
Financial statements of foreign subsidiaries are translated into
Japanese yen in the manner described in Note 2 (14). This translation
policy is not in accordance with IAS 21 which requires income and expenses
be translated at exchange rates at the dates of the transactions.
(3) Inventories As noted in Note 2 (5), デュエルビッツ入金不要ボーナスompany and
consolidated domestic subsidiaries value inventories at cost. IAS 2
requires that inventories be measured at the lower of cost and net
realizable value. Furthermore, for determining デュエルビッツ入金不要ボーナスost of certain
inventories デュエルビッツ入金不要ボーナスompany applies the last-in, first-out (LIFO) method which
is an allowed alternative treatment under IAS 2 for which additional
disclosure is required.
It has not been practicable to quantify the effect on net income of
this difference in accounting policy and determine デュエルビッツ入金不要ボーナスdditional
disclosure required under IAS 2 when the LIFO method is applied.
(4) Employees' Retirement Benefits デュエルビッツ入金不要ボーナスompany and its
domestic consolidated subsidiaries provide for the liability in respect of
lump-sum retirement benefits as described in Note 2 (12).
Under IAS 19, pension costs are recognized and computed using a
particular actuarial approach known as デュエルビッツ入金不要ボーナスccrued benefit valuation
method or, alternatively, the projected benefit valuation method.
It has not been practicable to quantify the effect on net income of
this difference in accounting policy.
(5) Financial Instruments Market value information relating
to marketable securities and information relating to the nature, amounts,
and unrealized gains and losses on outstanding derivative transactions are
required to be disclosed in the non-consolidated financial statements in
Japan. IAS 25 and 32 require disclosure, on a consolidated basis, for each
class of financial asset, financial liability, and equity instrument,
information relating to the extent and nature, accounting policies and
methods adopted, exposure to interest rate and credit risk, and fair
values.
Since the required disclosure information is not available on a
consolidated basis, デュエルビッツ入金不要ボーナスonsolidated financial statement disclosure is not
in accordance with IAS 25 and 32. |