A N N U A L R E P O R T 1 9 9 9

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Marketable Securities and Investment Securities Listed securities included in cash and cash equivalents and invested securities (non-current) are primarily stated at the lower of cost or market, cost being determined by the moving average method. Other securities are primarily stated at moving average cost (see table on page 31). Effective April 1, 1996, the Company changed its valuation method for listed securities from moving average cost to the lower of cost or market, cost being determined by the moving average method to reflect the decline of stock prices more immediately. As a result of this change, income before income taxes for the year ended March 31, 1997, decreased by ¥7,185 million ($59,380 thousand). Commencing with the year ended March 31, 1999, the Company records recoveries of write-downs of securities in accordance with revisions in the Corporation Tax Law. There was no effect on net income resulting from the adoption of this accounting policy. Allowance for Doubtful Receivables Pursuant to the change in the Corporation Tax Law effective in the year ended March 31, 1999, the Company adopted the policy of providing the allowance for doubtful receivables in an amount sufficient to cover possible losses on collection by estimating individually uncollectible amounts and applying a percentage based on collection experience to the remaining accounts. The Company previously provided the allowance using the formula provided by the Corporation Tax Law. The effect of this change was to decrease selling, general and administrative expenses and other expenses by ¥462 million ($3,818 thousand) and ¥46 million ($380 thousand), respectively, and to increase operating income and income before income taxes by ¥462 million ($3,818 thousand) and ¥2,004 million ($16,562 thousand), respectively. The effect of this change on the business segments is described in Note 9. 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 of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Effective April 1, 1997, the Company changed its method of accounting for income taxes to recognize the tax effect attributable to temporary differences. This change was made to present a more accurate relationship between income before income taxes and income taxes (current and deferred). Income taxes based on temporary differences between tax and financial reporting purposes are reflected as deferred income taxes in the consolidated financial statements. As a result of this change, income before income taxes for the year ended March 31, 1998, decreased by ¥4,982 million ($41,174 thousand) and the beginning balance of retained earnings for fiscal 1998 increased by ¥12,828 million ($106,017 thousand). Effective April 1, 1998, the Company adopted the new accounting standard issued in October 1998, which requires more accurate calculation regarding the recognition of the tax effects attributable to temporary differences. As a result of this change, total assets increased by ¥938 million ($7,752 thousand), net income decreased by ¥62 million ($512 thousand) and the ending the balance of retained earnings increased by ¥938 million ($7,752 thousand). Termination and Retirement Plans The Company and certain consolidated subsidiaries have unfunded termination and retirement allowances plans covering all of their employees. In addition, the Company and certain subsidiaries have tax-qualified pension plans and a contributory trusted employee pension fund. Under the plans, employees are entitled to receive lump-sum payments at the time of termination or pension payments in case of termination at retirement age. The amounts of the termination and retirement allowances are determined on the basis of length of service and basic salary at the time of termination or retirement. Accruals have been made for allowances equal to 50% of the amount payable if all employees had voluntarily terminated their employment at the end of each fiscal year, less the amount provided by the non-contributory welfare pension fund. Under the funded pension plans, the annual payments, including amortization of the past service costs over 8 to 20 years, are charged to income. The net assets of the pension plans as at March 31, 1998, the latest date for available information, were ¥117,767 million ($973,281 thousand). The aggregate unfunded past service costs amounted to approximately ¥8,202 million ($67,785 thousand) as at March 31, 1998, based on an assumed rate of return of 5.5%. Amortization of the past service costs under the funded pension plan is shown as other expenses in the accompanying consolidated statements of income. Retirement allowance to directors and corporate auditors is provided and determined based on the pertinent rules. The estimated amount to be paid if all directors and corporate auditors retire on the balance sheet date is also calculated based on these rules. The total provisions and payments, including provisions for the retirement allowance to directors and corporate auditors, charged to income under the plans for the years ended March 31, 1997, 1998 and 1999, were as follows: Millions of yen Thousands of dollars 1997 ¥15,043 $124,322 1998 14,743 121,843 1999 17,954 148,380 Research and Development Expenses relating to research and development activities are charged to income as incurred. Research and development expenses include practical-application research expenses of the Technical Development Departments, in addition other research expenses are incurred by the Toppan Technical Research Institute. The amounts for the years ended March 31, 1997, 1998 and 1999, were as follows: Millions of yen Thousands of dollars 1997 ¥15,874 $131,190 1998 17,131 141,579 1999 18,875 155,992 30
Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all time deposits and current marketable securities to be cash equivalents in conformity with the definition used in the Company’s annual security report filed with the Minister of Finance. Reclassifications Certain reclassifications have been made to previously reported 1997 and 1998 amounts to conform to the 1999 presentation. These reclassifications had no effect on previously reported net income or total shareholders’ investment. Millions of yen Thousands of dollars 1998 1999 1999 Marketable securities— Marketable equity securities ¥ 6,659 ¥ 6,036 $ 49,884 Interest-bearing bonds and other 78,352 101,624 839,868 ¥85,011 ¥107,660 $889,752 Investment securities— Marketable equity securities ¥54,543 ¥53,716 $443,934 Non-marketable equity securities 8,780 7,125 58,884 Interest-bearing bonds and other 140 1,281 10,587 ¥63,463 ¥62,122 $513,405 Interest-bearing bonds represent primarily those issued by the government, government-sponsored agencies and banks. The unrealized gains applicable to current and non-current marketable equity securities as at the respective balance sheet dates were as follows: Millions of yen Thousands of dollars 1998 1999 1999 Current ¥13,800 ¥ 7,713 $ 63,744 Non-current 51,854 64,578 533,702 2. Investments in and Advances to Affiliates (a) Combined unaudited financial information of affiliates as at each balance sheet date and for each of the years presented was as follows: Millions of yen Thousands of dollars 1998 1999 1999 Financial Position: Assets— Current assets ¥215,350 ¥198,903 $1,643,826 Investments and other assets 180,965 177,084 1,463,505 ¥396,315 ¥375,987 $3,107,331 Liabilities— Current liabilities ¥139,752 ¥120,165 $ 993,099 Long-term liabilities 93,053 92,865 767,479 Shareholders’ investment 163,510 162,957 1,346,753 ¥396,315 ¥375,987 $3,107,331 31
Page 1 and 2: A N N U A L R E P O R T 1 9 9 9 Top
Page 3 and 4: FINANCIAL HIGHLIGHTS Toppan Printin
Page 5 and 6: Toppan is working to establish a fo
Page 7 and 8: With only one year remaining until
Page 9 and 10: ? Japan’s printing industry has a
Page 11 and 12: ? A large number of companies offer
Page 13 and 14: ? Electronics operations already ac
Page 15 and 16: Eco- Creativity To enable us to ful
Page 17 and 18: Securities and Cards In this field,
Page 19 and 20: Industrial Materials Toppan has use
Page 21 and 22: Management’s Discussion and Analy
Page 23 and 24: Cash Dividends per Share (¥) 15 10
Page 25 and 26: Toppan Printing Co., Ltd. and Subsi
Page 27 and 28: Liabilities and Shareholders’ Inv
Page 29 and 30: CONSOLIDATED STATEMENTS OF SHAREHOL
Page 31: NOTES TO CONSOLIDATED FINANCIAL STA
Page 35 and 36: The aggregate annual maturities of
Page 37 and 38: 1997 Millions of yen Printing Other
Page 39 and 40: Board of Directors and Auditors 38
Page 41 and 42: Hiromichi Fujita Kenji Ejima Naoki
Page 43 and 44: D INDUSTRIAL MATERIALS Toppan Kenza
Page 45 and 46: D Siam Printing and Packaging Co.,
Page 47 and 48: Produced and printed in Japan by To

A N N U A L R E P O R T 1 9 9 9

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