Eisai Co., Ltd. Annual Report 2001 - Eisai GmbH

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30 (e) Property, plant and equipment Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment of the Company and its consolidated domestic subsidiaries is computed substantially by the declining-balance method at rates based on the estimated useful lives of the assets, while the straight-line method is principally applied to the property, plant and equipment of consolidated foreign subsidiaries. The range of useful lives of the Company and its consolidated domestic subsidiaries is principally from 15 to 65 years for buildings and from 6 to 7 years for machinery and equipment. (f) Leases Leases related to the Company and its consolidated domestic subsidiaries are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, while other finance leases are permitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the notes to the lessee’s financial statements. (g) Income taxes The provision for income taxes is computed based on the pretax income included in the consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax rates to the temporary differences. (h) Retirement and Pension Plans Under the employees’ retirement plans for the Company and certain consolidated subsidiaries, prior to April 1, 2000, the annual provision for retirement benefits is calculated to state the liability for employees principally at the amount that would be required if all employees voluntarily terminated their employment at each balance sheet date, less amounts funded by a contributory pension plan disregarding a portion specified by government regulations Effective April 1, 2000, the Company and its consolidated domestic subsidiaries adopted a new accounting standard for employees’ retirement benefits and accounted for the liability for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. The transitional obligation in the amount of ¥32,358 million ($260,952 thousand), determined as of the beginning of year in the Company, was offset by the contribution of certain available-for-sale securities with a fair value of ¥15,128 million ($122,000 thousand) to the employee retirement benefit trusts for the Company’s contributory pension plans in April 2000, and a related non-cash gain of ¥1,383 million ($11,153 thousand) was recorded as “Gain on securities contributed to the retirement benefit trust”. The securities held in this trust are qualified as plan assets. The remaining unfunded balance of ¥17,230 million ($138,952 thousand) as well as ¥772 million ($6,226 thousand) of the transitional obligaiton in the consolidated subsidiaries is being amortized over 5 years and charged to income and presented as operating expenses in the statements of income. As a result, net periodic retirement benefit costs as compared with the prior method, increased by ¥13,857 million ($111,750 thousand) and income before income taxes and minority interests decreased by ¥14,006 million ($112,952 thousand). Retirement benefits to directors and corporate auditors are provided at the amount which would be required if all directors and corporate auditors retired at the balance sheet date. (i) Appropriations of retained earnings Appropriations of retained earnings are reflected in the financial statements for the following year upon shareholders’ approval. (j) Research and development expenses Research and development expenses are charged to income as incurred. (k) Deferred charges Stock issuance costs and start-up costs are charged to income as incurred. Prior to April 1, 2000, certain subsidiaries capitalized start-up costs as deferred charges. Effective April 1, 2000, however, all the start-up costs were charged to income to unify accounting policies of the Gourp. The effect of this change was to decrease income before income taxes and minority interests for the year ended March 31, 2001, by ¥302 million ($2,435 thousand). (l) Foreign currency transactions Prior to April 1, 2000, short-term receivables and payables denominated in foreign currencies were translated into Japanese yen at the current exchange rates at each balance sheet date, while long-term receivables and payables denominated in foreign currencies were translated at historical rates. Effective April 1, 2000, the Group adopted a revised accounting standard for foreign currency transactions. In accordance with the revised standard, all short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the income statement to the extent that they are not hedged by forward exchange contracts. (m) Foreign currency financial statements The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rates as of the balance sheet date except for shareholders’ equity, which is translated at the historical rate. Prior to April 1, 2000, differences arising from such translation were shown as “Foreign currency translation adjustments” as either all asset or liability in the consolidated balance sheet. Effective April 1, 2000, such differences are shown as “Foreign currency translation adjustments” in a separate component of shareholders’ equity in accordance with the revised accounting standard for foreign currency transactions. Revenue and expense accounts of the consolidated foreign subsidiaries are translated into yen at the average exchange rates. Eisai Annual Report 2001
(n) Derivatives and Hedging Activities The Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange. 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. Effective April 1, 2000, the Group adopted a new accounting standard for derivative financial instruments and a revised accounting standard for foreign currency transactions. These standards require that: a) all derivatives be recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the income statement 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 exchange exposures for export sales and contract research 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. Effect on income before income taxes and minority interests of adopting the new accounting standards for derivative financial instruments was immaterial. (o) Per share information The computation of net income per share is based on the weighted average number of shares of common stock outstanding during each year, retroactively adjusted for stock splits. The weighted average number of common shares used in the computation was 296,433,302 shares for 2001 and 296,422,817 shares for 2000. Diluted net income per share of common stock assumes full conversion of the outstanding convertible bonds at the beginning of the year with an applicable adjustment for related interest expense, net of tax. 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. Note 3. Investments Marketable and investment securities as of March 31, 2001 and 2000, consisted of the following: Millions of yen Thousands of U.S. dollars 2001 2000 2001 Current: Marketable equity securities ¥33,063 Government and corporate bonds ¥11,532 9,103 $ 93,000 Trust fund investments and other 598 9,153 4,823 Total ¥12,130 ¥51,319 $ 97,823 Non-current: Marketable equity securities ¥24,844 ¥4,064 $200,355 Government and corporate bonds 38,672 8 311,871 Trust fund investments and other 11,901 95,976 Total ¥75,417 ¥4,072 $608,202 Information regarding each category of the securities classified as available-for-sale and held-to-maturity at March 31, 2001 was as follows: Millions of yen Thousands of U.S. dollars 2001 2001 Unrealized Unrealized Fair Unrealized Unrealized Fair Cost Gains Losses Value Cost Gains Losses Value Securities classified as: Available-for-sale: Equity securities ¥23,136 ¥4,674 ¥(2,966) ¥24,844 $186,581 $37,693 $(23,919) $200,355 Debt securities Trust fund investments 270 7 277 2,177 57 2,234 and other 12,516 66 (83) 12,499 100,936 532 (669) 100,799 Held-to-maturity 49,927 214 (602) 49,539 402,637 1,726 (4,855) 399,508 Availabe-for-sale securities and held-to-maturity securities whose fair value is not readily determinable as of March 31, 2001 were as follows: Carrying amount Thousands of Millions of yen U.S. dollars Available-for-sale: Equity securities ¥1,489 $12,008 Total ¥1,489 $12,008 Eisai Annual Report 2001 31
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Page 3 and 4: CONSOLIDATED FINANCIAL HIGHLIGHTS E
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Page 7 and 8: Fiscal 2001 marks the conclusion of
Page 9 and 10: humanity-based sales activities the
Page 11 and 12: Selected Research Candidates (As of
Page 13 and 14: working together to develop antican
Page 15 and 16: REVIEW OF OPERATIONS PHARMACEUTICAL
Page 17 and 18: Consumer Health Care Products The c
Page 19 and 20: REINFORCING OUR RELATIONSHIP WITH S
Page 21 and 22: FINANCIAL SECTION Contents 20 Finan
Page 23: Net Income Current income taxes for
Page 26 and 27: 24 CONSOLIDATED FINANCIAL STATEMENT
Page 28 and 29: 26 Consolidated Statements of Incom
Page 30 and 31: 28 Consolidated Statements of Cash
Page 34 and 35: 32 Proceeds from sales of available
Page 36 and 37: 34 Note 7. Retirement and Pension P
Page 38 and 39: 36 III. Actual lease payments, Depr
Page 40 and 41: 38 Eisai Annual Report 2001 Million
Page 42 and 43: 40 JAPAN AND OVERSEAS OPERATIONS No
Page 44 and 45: 42 MAJOR PRODUCTS Prescription Phar
Page 46 and 47: 44 CORPORATE INFORMATION (As of Mar

Eisai Co., Ltd. Annual Report 2001 - Eisai GmbH

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