1Contents
Consolidated Financial Highlights....................................
Consolidated Six-Year Financial Summary ........................
Consolidated Financial Review ........................................
Consolidated Balance Sheets ..........................................
Consolidated Statements of Income .................................
Consolidated Statements of Shareholders’ Equity .............
Consolidated Statements of Cash Flows ..........................
Notes to Consolidated Financial Statements ....................
Independent Auditors’ Report to the Consolidated
Financial Statements ....................................................
Non-Consolidated Balance Sheets ...................................
Non-Consolidated Statements of Income ..........................
Non-Consolidated Statements of Shareholders’ Equity ......
Notes to Non-Consolidated Financial Statements..............
Independent Auditors’ Report to the Non-Consolidated
Financial Statements ....................................................
Non-Consolidated Six-Year Financial Summary .................
Organization ..................................................................
Board of Directors ..........................................................
Investor Information .......................................................
Main Facilities ...............................................................234689101121222425263233343536372
Consolidated Financial Highlights
13,175,083ドル
1,883,613
689,122
00,0001ドル.450.4738,950,847ドル
8,622,9102004For the year:
Operating revenues
Operating income
Net income
Per share of common stock
(yen and U.S. dollars):
Net income:
Basic
Diluted
Cash dividends applicable to the year
At year-end:
Total assets
Total shareholders’ equity
1,391,684円
198,966
72,792
0,0153円.05
50.00
4,114,378円
910,83820041,421,310円
180,014
64,319
0,0135円.13
50.00
4,204,566円
840,24520031,458,066円
197,758
61,120
0,0128円.90
60.00
4,290,132円
824,9282002Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2004, 2003 and 2002
Millions of Yen
(except for per share data)
Thousands of
U.S. Dollars
(except for
per share data)
(Billions of yen) (Billions of yen)
Operating revenues (left scale)
Net income (right scale)
1,200
1,500900600300060754530150
’00 ’01 ’02 ’03 ’04
(Billions of yen)
4,000
5,000
3,000
2,000
1,0000’00 ’01 ’02 ’03 ’04
4,142 4,166 4,290 4,205 4,114
1,429 1,448 1,458 1,4212359 61641,39273Operating RevenuesandNet Income
Total Assets
Note: All dollar figures herein refer to U.S. currency. Japanese yen amounts have been translated, for convenience only, at the rate of 105円.63=US1,ドル the
approximate exchange rate prevailing on March 31, 2004.313,175,083ドル
12,390,827
784,256
11,291,470
10,490,429
801,041
730,105
1,064,574
370,027
689,122
$ 1.450.4738,950,847ドル
32,139,117
17,594,547
8,622,9102004For the year:
Operating revenues
Electric
Other
Operating expenses
Electric
Other
Interest charges
Income before
income taxes
and minority interests
Income taxes
Net income
Per share of common stock
(yen and U.S. dollars):
Net income:
Basic
Diluted
Cash dividends
applicable to the year
At year-end:
Total assets
Net property
Long-term debt, less
current maturities
Total shareholders’ equity
1,391,684円
1,308,843
82,841
1,192,718
1,108,104
84,614
77,121
112,451
39,086
72,792
\ 153.05
50.00
4,114,378円
3,394,855
1,858,512
910,83820041,448,376円
1,410,010
38,366
1,236,344
1,199,237
37,107
89,952
97,447
37,595
59,191
0,0124円.83
123.65
60.00
4,166,489円
3,459,859
2,071,192
810,0182001Consolidated Six-Year Financial Summary
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31,
Millions of Yen
(except for per share data)
Thousands of
U.S. Dollars
(except for
per share data)
1,428,559円
1,392,148
36,411
1,246,791
1,211,227
35,564
107,190
39,490
16,058
22,934
0,0048円.37
48.21
50.00
4,141,718円
3,528,297
2,137,509
725,51620001,430,164円
1,387,855
42,309
1,259,056
1,219,999
39,057
111,753
60,077
33,885
25,835
0,0054円.48
54.21
50.00
4,123,686円
3,596,203
2,276,929
659,58819991,458,066円
1,381,440
76,626
1,260,308
1,184,382
75,926
85,653
99,464
39,808
61,120
0,0128円.90
60.00
4,290,132円
3,595,794
2,130,149
824,92820021,421,310円
1,350,675
70,635
1,241,296
1,170,655
70,641
77,897
102,363
38,417
64,319
\ 135.13
50.00
4,204,566円
3,523,273
1,984,702
840,2452003Note: All dollar figures herein refer to U.S. currency. Japanese yen amounts have been translated, for convenience only, at the rate of 105円.63=US1,ドル the
approximate exchange rate prevailing on March 31, 2004.4in nuclear power output, a decrease in depreciation and
amortization, and groupwide efficiency efforts.
Operating income thus climbed 10.5%, to 199円.0 billion.
Net income jumped 13.2%, to 72円.8 billion, reflecting the
absence of extraordinary gains and losses.
Capital Investment Policy: Kyushu Electric’s capital
expenditure plans focus on lowering the costs of providing
electricity and stabilizing long-term supplies.
Management is striving to improve the efficiency of its
capital spending by both accurately projecting future
demand and increasing the reliability of its facilities and
operating technologies through the streamlining of facilities
setup, review of design and construction standards and
diversification of purchasing.
To satisfy the growth in demand for power, the Company
is taking comprehensive steps that will allow it to maintain
secure energy supplies while balancing its power develop-
ment, centered on nuclear power, to ensure economy and
reduce environmental impact.
Consolidated Financial Review
Operating Results: In fiscal 2003, ended March 31, 2004,
the recovery of the Japanese economy gained momentum.
Production turned around on export growth, private-sector
capital investment rose and personal consumption improved,
as unemployment became less of a concern. These factors
offset sluggish public-sector spending.
Power sales volume increased 1.3% from a year earlier on
higher electrical machinery production among large indus-
trial customers. Residential (lighting) and commercial
demand grew 0.7%, reflecting new convenience store open-
ings. This increase was despite a cooler summer and warmer
winter, which dampened demand for air-conditioning and
heating. Consequently, the Company’s sales volume
advanced 0.8%, to 77.3 billion kilowatt-hours.
Total operating revenues were down 2.1%, to 1,391円.7
billion. This was largely due to the impact of a rate reduc-
tion in October 2002, which offset higher power volume
sales and the expanded scope of consolidation.
Total operating expenses decreased 3.9%, to 1,192円.7
billion. This stemmed from lower fuel costs owing to a rise
Hydroelectric
Thermal
Nuclear
Internal-combustion engine
Generating facilities
Transmission, transformation
and distribution facilities
Upgrading of existing facilities
Nuclear fuel and other facilities
(Thousands of megawatts)162012840
(Billions of yen)240300180120600
’00 ’01 ’02 ’03 ’04 ’00 ’01 ’02 ’03 ’04
Generating Capacity Capital Investment5In keeping with medium- and long-term demand
prospects, we are developing new power sources while serv-
ing demand increases and installing transmission and distrib-
ution facilities. We are laying distribution lines underground
to help reduce environmental impact.
Capital expenditures for the period amounted to 206円.9
billion, 19円.7 billion lower than we initially planned. This
reflected efficiency initiatives, including spending cuts on
design, construction and procurement.
The 700-megawatt Unit No. 2 of the Reihoku Thermal
Power Station came on line in July 2003. We are continu-
ing work on a pumped storage hydroelectric power station
in Omarugawa. The first 300 megawatts will come on line
in July 2007, followed by 300 megawatts in July 2008 and a
further 600 megawatts in July 2010.
Financing: Kyushu Electric mainly funds its capital
investment requirements internally, supported by diverse
sources of low-cost external financing.
In fiscal 2003, capital investment and the redemption of
corporate bonds and borrowings were 912円.5 billion, up
8.2%. Bond redemptions and loan repayments increased
17.3%, to 705円.6 billion.
Internal reserves dropped 10.7%, to 356円.4 billion.
Proceeds from the issue of bonds and notes declined 12.1%,
to 145円.0 billion, of which net proceeds were 144円.4
billion. Borrowings soared 47.0%, to 411円.7 billion.
Cash Flows: Net cash provided by operating activities
decreased 15.8%, to 386円.8 billion. This drop was due
mainly to reductions in electricity rates.
Net cash used in investing activities fell 18.3%, to 199円.8
billion, largely because of lower capital expenditures.
Net cash used in financing activities decreased 11.1%, to
198円.2 billion, reflecting a cut in interest-bearing debt.
As a result of these factors, cash and cash equivalents at
end of year stood at 37円.5 billion, down 7円.9 billion from
the close of fiscal 2002.
Japan’s Electric Utility Law: The Electric Utility Law
of 1964 governs Japan’s electric power companies
and their activities. The law’s principal objectives are
to protect the interests of users, to promote the
development of the electric power industry, and to
assure that the production and provision of electric
power is conducted in a safe and nonpolluting manner.
The law effectively permits the country’s nine regional
electric power companies to monopolize the retail sale
of electric power in their respective areas, but it also
requires that electric power rates be set at levels that
reflect the companies’ actual operating costs and are
fair to both suppliers and consumers.
On March 21, 2000, the government implemented
the revised Electric Utility Law, deregulating the
retailing of high-voltage power.
The revised Electric Utility Law came into effect on
June 11, 2003. The new law provides for the expansion
of high-voltage power retailing in stages. The Japanese
government is assessing specific policies for full
liberalization by April 2007.
Internal reserves
Bonds
Borrowings
(Billions of yen)8001,0006004002000
’00 ’01 ’02 ’03 ’04
Sources of Funds681,537,186ドル
2,268,532
83,805,718
1,189,274
50,477,327
51,666,601
32,139,117
2,223,365
1,066,042
516,974
1,046,398
174,960
2,804,374
355,202
859,027
(12,610)
391,423
142,194
48,755
1,783,991
38,950,847ドル2004PROPERTY (Note 3):
Plant and equipment
Construction in progress
Total
Less—
Contributions in aid of construction
Accumulated depreciation
Total
Net property
NUCLEAR FUEL
INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 4)
Investments in and advances to non-consolidated subsidiaries
and associated companies
Deferred tax assets (Note 9)
Other assets
Total investments and other assets
CURRENT ASSETS:
Cash and cash equivalents
Receivables
Allowance for doubtful accounts
Inventories, principally fuel, at average cost
Deferred tax assets (Note 9)
Prepaid expenses and other
Total current assets
TOTAL
\ 8,612,773
239,625
8,852,398
125,623
5,331,920
5,457,543
3,394,855
234,854
112,606
54,608
110,531
18,481
296,226
37,520
90,739
(1,332)
41,346
15,020
5,150
188,443
\ 4,114,37820048,450,723円
329,775
8,780,498
117,975
5,139,250
5,257,225
3,523,273
227,988
83,353
53,252
103,701
20,738
261,044
45,417
90,645
(1,280)
44,741
9,713
3,025
192,261
4,204,566円2003Consolidated Balance Sheets
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
March 31, 2004 and 2003
Millions of Yen
Thousands of
U.S. Dollars (Note 1)
See notes to consolidated financial statements.
ASSETS717,594,547ドル
1,901,562
3,104,241
998,741
102,016
23,701,107
1,660,314
2,313,046
549,086
696,989
306,305
677,308
9,363
311,275
6,523,686
19,105
84,039
2,246,568
294,367
5,762,151
328,600
(1,998)
(6,778)
8,622,910
38,950,847ドル
LONG-TERM LIABILITIES:
Long-term debt, less current maturities (Note 6)
Liability for employees’ retirement benefits (Note 7)
Reserve for reprocessing of irradiated nuclear fuel
Reserve for decommissioning of nuclear power units
Other
Total long-term liabilities
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 6)
Short-term borrowings (Note 8)
Commercial paper
Notes and accounts payable (Note 12)
Accrued income taxes
Accrued expenses
Reserve for loss on discontinued operations (Note 2. l.)
Other
Total current liabilities
RESERVE FOR FLUCTUATIONS IN WATER LEVEL
MINORITY INTERESTS
COMMITMENTS AND CONTINGENCIES (Note 15)
SHAREHOLDERS’ EQUITY (Note 10):
Common stock, authorized, 1,000,000,000 shares;
issued 474,183,951 shares in 2004 and 2003
Capital surplus
Retained earnings
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Treasury stock—at cost, 571,164 shares in 2004 and
486,831 shares in 2003
Total shareholders’ equity
TOTAL
\ 1,858,512
200,862
327,901
105,497
10,776
2,503,548
175,379
244,327
58,000
73,623
32,355
71,54498932,880
689,097
2,018
8,877
237,305
31,094
608,656
34,710
(211)
(716)
910,838
\ 4,114,378
1,984,702円
180,325
301,311
103,864
8,201
2,578,403
277,113
208,935
33,000
87,893
33,831
78,698
8,805
49,465
777,740
8,178
237,305
31,087
556,955
15,490
(592)
840,245
4,204,566円
LIABILITIES AND SHAREHOLDERS’ EQUITY 2004
2004 2003
Millions of Yen
Thousands of
U.S. Dollars (Note 1)812,390,827ドル
784,256
13,175,083
10,490,429
801,041
11,291,470
1,883,613
730,105
69,829
799,934
1,083,679
19,105
1,064,574
562,179
(192,152)
370,027
694,547
(5,425)
$ 689,1222004OPERATING REVENUES (Note 13):
Electric
Other
Total operating revenues
OPERATING EXPENSES (Notes 11 and 13):
Electric
Other
Total operating expenses
OPERATING INCOME
OTHER EXPENSES (INCOME):
Interest charges
Gain on sales of investment securities
Loss on discontinued operations
Other—net
Total other expenses—net
INCOME BEFORE INCOME TAXES, AND PROVISION FOR RESERVE
FOR FLUCTUATIONS IN WATER LEVEL AND MINORITY
INTERESTS
PROVISION FOR RESERVE FOR FLUCTUATIONS IN WATER LEVEL
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS
INCOME TAXES (Note 9):
Current
Deferred
Total income taxes
INCOME BEFORE MINORITY INTERESTS IN NET
LOSS (INCOME) OF CONSOLIDATED SUBSIDIARIES
MINORITY INTERESTS IN NET LOSS (INCOME) OF
CONSOLIDATED SUBSIDIARIES
NET INCOME
\ 1,308,843
82,841
1,391,684
1,108,104
84,614
1,192,718
198,966
77,121
7,376
84,497
114,469
2,018
112,451
59,383
(20,297)
39,086
73,365
(573)
\ 0,072,79220041,350,675円
70,635
1,421,310
1,170,655
70,641
1,241,296
180,014
77,897
(23,109)
8,940
13,923
77,651
102,363
102,363
52,440
(14,023)
38,417
63,9463730,064,319円2003Consolidated Statements of Income
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2004 and 2003
See notes to consolidated financial statements.
PER SHARE OF COMMON STOCK (Note 2. r.):
Basic net income
Cash dividends applicable to the year
\ 153.05
50.00
135円.13
50.00
1ドル.450.47Millions of Yen
Thousands of
U.S. Dollars (Note 1)
Yen U.S. Dollars9Common Stock Unrealized Foreign Treasury Stock
Gain on Currency
Capital Retained Available-for- Translation
Shares Amount Surplus Earnings Sale Securities Adjustment Shares Amount
Consolidated Statements of Shareholders’ Equity
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2004 and 2003
Thousands of Shares/Millions of Yen
See notes to consolidated financial statements.
BALANCE AT APRIL 1, 2002 474,184 237,305円 31,087円 519,000円 \(37,587 26 0円(51)
Net income 64,319
Cash dividends, 55円 per share (26,077)
Bonuses to directors and
corporate auditors (287)
Increase in treasury stock 461 (541)
Net decrease in unrealized gain
on available-for-sale securities (22,097)
BALANCE AT MARCH 31, 2003 474,184 237,305 31,087 556,955 15,490 487 (592)
Adjustment of capital surplus and
retained earnings for newly
consolidated subsidiaries 7 2,846
Adjustment of retained earnings
for change in scope of
application of equity method 74
Net income 72,792
Cash dividends, 50円 per share (23,699)
Bonuses to directors and
corporate auditors (312)
Increase in treasury stock 84 (124)
Net increase in unrealized gain
on available-for-sale securities 19,220
Net decrease in foreign currency
translation adjustment \(211)
BALANCE AT MARCH 31, 2004 474,184 237,305円 31,094円 608,656円 \(34,710 \(211) 571 \ (716)
Unrealized Foreign
Gain on Currency
Capital Retained Available-for- Translation
Common Stock Surplus Earnings Sale Securities Adjustment Treasury Stock
Thousands of U.S. Dollars (Note 1)
BALANCE AT MARCH 31, 2003 2,246,568ドル 294,301ドル 5,272,697ドル $(146,644 $(5,604)
Adjustment of capital surplus and
retained earnings for newly
consolidated subsidiaries 66 26,943
Adjustment of retained earnings
for change in scope of
application of equity method 701
Net income 689,122
Cash dividends, 0ドル.47 per share (224,359)
Bonuses to directors and
corporate auditors (2,953)
Increase in treasury stock (1,174)
Net increase in unrealized gain on
available-for-sale securities 181,956
Net decrease in foreign currency
translation adjustment $(1,998)
BALANCE AT MARCH 31, 2004 2,246,568ドル 294,367ドル 5,762,151ドル $(328,600 $(1,998) $(6,778)10Consolidated Statements of Cash Flows
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2004 and 2003
See notes to consolidated financial statements.
$(1,064,574
(578,065)
2,705,387
171,987
251,728
15,460
107,545
1,742
19,105
(73,994)
(23,942)
42,280
(7,470)
(39,544)
5,500
2,597,719
3,662,293
(2,005,311)
(58,970)
99,394
73,067
(1,891,820)
1,366,667
(2,851,605)
670,245
(1,357,474)
284,683
236,675
(224,302)
(1,231)
(1,876,342)
(663)
(106,532)
31,771
429,963
$(0,355,2022004CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paid
Depreciation and amortization
Provision for liability for employees’ retirement benefits
Provision for reserve for reprocessing of irradiated nuclear fuel
Provision for reserve for decommissioning of nuclear power units
Loss on disposal of plant and equipment
Nuclear fuel transferred to reprocessing costs
Provision for reserve for fluctuations in water level
Gain on sales of investment securities
Provision for (reversal of ) reserve for loss on discontinued operations
Changes in assets and liabilities, net of effects from newly
consolidated subsidiaries:
Decrease (increase) in trade receivables
Decrease in inventories
Decrease in trade payable
Decrease in interest payable
Other—net
Total adjustments
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures including nuclear fuel
Payments for investments and advances
Proceeds from sales of investment securities and collections of advances
Other—net
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of bonds
Repayments of bonds and notes
Proceeds from long-term bank loans
Repayments of long-term bank loans
Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial paper
Cash dividends paid
Other—net
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND
CASH EQUIVALENTS
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED
SUBSIDIARIES AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
\(112,451
(61,061)
285,770
18,167
26,590
1,633
11,3601842,018
(7,816)
(2,529)
4,466
(789)
(4,177)581274,397
386,848
(211,821)
(6,229)
10,499
7,718
(199,833)
144,361
(301,215)
70,798
(143,390)
30,071
25,000
(23,693)
(130)
(198,198)(70)(11,253)
3,356
45,417
\(037,5202004\(102,363
(31,072)
301,649
4,078
34,783
6,656
9,248
14,325
(23,109)
8,805
2,275
3,467
(671)
(1,448)
28,316
357,302
459,665
(266,768)
(14,696)
28,871
8,114
(244,479)
164,309
(181,418)
51,810
(137,597)
(69,700)
(24,000)
(26,070)
(213)
(222,879)1(7,692)
53,109
\(045,4172003Millions of Yen
Thousands of
U.S. Dollars (Note 1)11Notes to Consolidated Financial Statements
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2004 and 2003
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been
prepared in accordance with the provisions set forth in the Japanese
Securities and Exchange Law and the Japanese Electric Utility Law
and their related accounting regulations. Kyushu Electric Power
Company, Incorporated (the "Company") and its consolidated
subsidiaries (together the "Companies") maintain their accounts
and records in accordance with the provisions set forth in the
Commercial Code of Japan (the "Code") and in conformity with
accounting principles generally accepted in Japan, which are
different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to the
financial statements issued domestically in order to present them in
a form which is more familiar to readers outside Japan.
The United States dollar amounts included herein are provided
solely for the convenience of readers and are stated at the rate of
105円.63=US1,ドル the approximate exchange rate prevailing on
March 31, 2004. The translations should not be construed as
representations that the Japanese yen amounts could be converted
into United States dollars at that or any other rate.
2. Summary of Significant Accounting Policies
a. Consolidation and Application of the Equity Method—The consolidated
financial statements as of March 31, 2004 include the accounts of
the Company and its nineteen (thirteen for 2003) subsidiaries.
All significant intercompany transactions and balances have been
eliminated in consolidation. Investments in thirteen (nil for 2003)
non-consolidated subsidiaries and eleven (six for 2003) associated
companies are accounted for by the equity method.
The Company adopts the control or influence concept. Under
the control or influence concept, those companies in which the
Company, directly or indirectly, is able to exercise control over
operations are treated as subsidiaries and those companies over
which the Companies have the ability to exercise significant
influence are treated as associated companies.
The excess of the cost of an acquisition over the fair value of the
net assets of the acquired subsidiary at the date of acquisition is
being amortized over a period of 5 years.
Consolidation of the remaining subsidiaries and the application
of the equity method to the remaining non-consolidated
subsidiaries and associated companies would not have a material
effect on the accompanying consolidated financial statements.
b. Property and Depreciation—Property is stated at cost. Contributions
in aid of construction including those made by customers are
deducted from the cost of the related assets.
Depreciation is principally computed using the declining-balance
method based on the estimated useful lives of the assets.
c. Amortization of Nuclear Fuel—Amortization of nuclear fuel is
computed based on the proportion of current heat production to
the estimated total heat production over the estimated useful life of
the nuclear fuel.
d. Investment Securities—The accounting standard for financial
instruments requires all applicable securities to be classified and
accounted for, depending on management’s intent, as follows:
i) held-to-maturity debt securities are stated at cost with
discounts or premiums amortized throughout the holding periods;
ii) available-for-sale securities, which are not classified as the
aforementioned securities and investment securities in non-
consolidated subsidiaries and associated companies, are stated at
market value; and securities without market value are stated at cost.
The Companies record unrealized gains or losses on available-
for-sale securities, net of deferred taxes, in shareholders’ equity
presented as "Unrealized gain on available-for-sale securities."
For other than temporary declines in fair value, investment
securities are written down to net realized value by a charge
to income.
e. Cash Equivalents—Cash equivalents are short-term investments
that are readily convertible into cash and that are exposed to
insignificant risk of changes in value. Cash equivalents include time
deposits and bond funds, all of which mature or become due
within three months of the date of acquisition.
f. Foreign Currency Transactions—Receivables and payables
denominated in foreign currencies are translated into Japanese yen
at the rates in effect as of each balance sheet date.12g. Foreign Currency Financial Statements—The balance sheet accounts
of the foreign subsidiary, which is not consolidated but accounted
for by the equity method, are translated into Japanese yen at the
current exchange rate as of the balance sheet date except for
shareholders’ equity, which is translated at the historical rate.
Differences arising from such translation were shown as "Foreign
currency translation adjustments" in a separate component of
shareholders’ equity.
h. Derivatives and Hedging Activities—The accounting standard for
derivative financial instruments and the accounting standard for
foreign currency transactions require that: a) all derivatives be
recognized as either assets or liabilities and measured at market
value, and gains or losses on the derivatives be recognized currently
in the income statements and b) for derivatives for hedging
purposes, if derivatives qualify for hedge accounting because of
high correlation and high hedge effectiveness between the hedging
instruments and the hedged items, gains or losses on the derivatives
be deferred until maturities of the hedged transactions.
The long-term debt denominated in foreign currencies for
which the foreign exchange forward contracts are used to hedge
the foreign currency fluctuations are translated at the contracted
rate, since such treatment is also allowed to be incorporated under
the standards if the forward contracts qualify for hedge accounting.
The 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 in interest expense, which treatment is also allowed
under the standards.
i. Severance Payments and Pension Plans—The Companies have
unfunded retirement plans for all of their employees and the
Company and most of the consolidated subsidiaries also have
contributory funded defined benefit pension plans covering
substantially all of their employees.
Under the accounting standard for employees’ retirement
benefits, the amount of the liability for employees’ retirement
benefits is determined based on the projected benefit obligations
and plan assets of the pension fund at the end of the fiscal year.
Retirement benefits for directors and corporate auditors are
charged to income when authorized by the shareholders.
j. Reserve for Reprocessing of Irradiated Nuclear Fuel—The annual
provision for the costs of reprocessing irradiated nuclear fuel is
calculated to state the related reserve at 60% of the amount that
would be required to reprocess all of the irradiated nuclear fuel in
accordance with the regulatory authority.
k. Reserve for Decommissioning of Nuclear Power Units—Provision is
made for future disposition costs of nuclear power units based on a
proportion of the current generation of electric power to the
estimated total generation of electric power of each unit.
l. Reserve for Loss on Discontinued Operations—Provision is made for
losses on withdrawal from the Personal Handyphone System
("PHS") business of Kyushu Telecommunication Network Co.,
Inc., a consolidated subsidiary of the Company. The amount is
estimated based primarily on disposal of equipment.
m. 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 laws to the
temporary differences.
n. Appropriations of Retained Earnings—Appropriations of retained
earnings at each year end are reflected in the financial statements
for the following year upon shareholders’ approval.
o. Special Reserves—The Japanese Special Taxation Measures Law
permits companies in Japan to take as tax deductions certain
reserves, if recorded in the books of account, that are not required
for financial reporting purposes. These reserves must be reversed to
taxable income in future periods in accordance with the law.
The Code requires that the special reserves, except for the
reserve for fluctuations in water level, be recorded as a component
of shareholders’ equity (see Note 10).
A reserve for fluctuations in water level is recorded when the
volume of water for generating hydroelectric power is abundant
and available for future power generation, and reversed in years
when there is an insufficient volume of water, in accordance
with the Japanese Electric Utility Law and related accounting
regulations. Under the law and regulations, this reserve must be
shown as a liability.
p. Bond Issuance Costs and Bond Discount Charges—Bond issuance
costs are charged to income when paid or incurred. Bond discount
charges are amortized over the term of the related bonds.
q. Treasury Stock—The accounting standard for treasury stock
requires that where an associated company holds a parent
company’s stock, a portion which is equivalent to the parent
company’s interest in such stock should be presented as treasury
stock as a separate component of shareholders’ equity and the
carrying value of the investment in the associated company should
be reduced by the same amount.
r. Net Income and Cash Dividends per Share—Basic earnings per share
("EPS") is computed by dividing net income available to common
shareholders by the weighted-average number of common shares
outstanding during the year and diluted EPS reflects the potential
dilution that could occur if securities were exercised or converted
into common stock.13Diluted EPS is not disclosed for the years ended March 31, 2004
and 2003, because potentially dilutive securities are not issued.
Cash dividends per share represent actual amounts applicable to
earnings of the respective year.
s. Research and Development Costs—Research and development costs
are charged to income as incurred.
t. Leases—All leases are accounted for as operating leases. Under
Japanese accounting standard 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.
u. New Accounting Pronouncements—In August 2002, the Business
Accounting Council issued a Statement of Opinion, "Accounting
for Impairment of Fixed Assets," and in October 2003 the
Accounting Standards Board of Japan (ASB) issued ASB Guidance
No. 6, "Guidance for Accounting Standard for Impairment of
Fixed Assets." These new pronouncements are effective for fiscal
years beginning on or after April 1, 2005 with early adoption
permitted for fiscal years ending on or after March 31, 2004.
The new accounting standard requires an entity to review its
long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset or asset
group may not be recoverable. An impairment loss would be rec-
ognized if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected to result
from the continued use and eventual disposition of the asset or
asset group. The impairment loss would be measured as the
amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash
flows from the continued use and eventual disposition of the asset
or the net selling price at disposition.
The Companies expect to adopt these pronouncements as of
April 1, 2004 and are currently in the process of assessing the effect
of adoption of these pronouncements.
3. Property
The major classes of property as of March 31, 2004 and 2003 were as follows:
$ 5,155,448
15,783,357
14,325,760
1,168,314
36,432,879
14,260,608
8,589,737
12,162,009
3,406,636
272,707
6,412,610
2,268,532
83,805,718
1,189,274
50,477,327
$ 32,139,1172004Original costs:
Electric power production facilities:
Hydroelectric power
Thermal power
Nuclear power
Internal-combustion engine power
Transmission facilities
Transformation facilities
Distribution facilities
General facilities
Other electricity-related facilities
Other plant and equipment
Construction in progress
Total
Less contributions in aid of construction
Less accumulated depreciation
Carrying amount
\ 544,570
1,667,196
1,513,230
123,409
3,848,405
1,506,348
907,334
1,284,672
359,843
28,806
677,364
239,625
8,852,398
125,623
5,331,920
\ 3,394,8552004\ 542,211
1,570,392
1,509,746
122,493
3,744,842
1,481,559
903,378
1,290,002
353,686
28,806
648,450
329,775
8,780,498
117,975
5,139,250
\ 3,523,2732003Millions of Yen
Thousands of
U.S. Dollars1409,438,019ドル
358,421
279,400
3,518,167
233,362
5,427,492
19,254,861
1,660,314
17,594,547ドル2004Domestic bonds, 0.2% to 6.9%, due serially to 2024
U.S. dollar bonds and notes, 6.375% to 7.25%, due 2004 to 2008
Swiss franc bonds, 4.0%, due 2007
Loans from The Development Bank of Japan, 0.95% to 6.9%, due serially to 2024
Loans, principally from banks and insurance companies, 0.25% to 5.7%, due serially to 2025
Collateralized
Unsecured
Total
Less current maturities
Long-term debt, less current maturities
\ 996,938
37,860
29,513
371,624
24,650
573,306
2,033,891
175,379
1,858,512円20041,114,723円
76,290
29,513
415,035
30,619
595,635
2,261,815
277,113
1,984,702円2003Long-term debt consisted of the following at March 31, 2004 and 2003:
6. Long-Term Debt
Millions of Yen
Thousands of
U.S. Dollars
4. Investment Securities
The carrying amounts and aggregate fair values of investment securities at March 31, 2004 and 2003 were as follows:
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other securities
Held-to-maturity
13,035円513950254,359円15214円1667,380円6128504Cost
Unrealized
Gains
Unrealized
Losses Fair Value
Available-for-sale securities and held-to-maturity securities whose fair value were not readily determinable as of March 31, 2004 and 2003
were as follows:
123,403ドル471,316
4,752
514,617ドル104719133ドル151637,887ドル571,212
4,771
381,189ドル
15,952
24,993
422,134ドル2004Available-for-sale:
Equity securities
Other securities
Held-to-maturity
Total
40,265円
1,685
2,640
44,590円200440,457円
1,751
2,900
45,108円2003Millions of Yen
Thousands of
U.S. Dollars2004Cost
Unrealized
Gains
Unrealized
Losses Fair Value2003Cost
Unrealized
Gains
Unrealized
Losses Fair Value2004Millions of Yen
Thousands of
U.S. Dollars
13,239円83850924,785円05
320円1437,704円824514All of the Company’s assets are subject to certain statutory
preferential rights established to secure bonds, notes, loans received
from The Development Bank of Japan and bonds transferred to
banks under debt assumption agreements (see Note 15).
Certain assets of the consolidated subsidiaries, amounting to
76,585円 million (725,031ドル thousand), are pledged as collateral for a
portion of their long-term debt at March 31, 2004.
5. Pledged Assets
Investments in associated companies held by a consolidated
subsidiary, amounting to 5,807円 million (54,975ドル thousand), are
pledged as collateral for bank loans of the associated companies at
March 31, 2004.157. Severance Payments and Pension Plans
Employees terminating their employment with the Companies,
either voluntarily or upon reaching mandatory retirement age, are
entitled, under most circumstances, to severance payments based on
their rate of pay at the time of termination, length of service and
certain other factors. As for the Company, if the termination is
made voluntarily at one of a number of specified ages, the employee
is entitled to certain additional payments.20052006200720082009Thereafter
Total
Thousands of
U.S. Dollars
Millions of Yen
0,175,379円
223,622
205,096
198,662
168,140
1,062,992
2,033,891円
01,660,314ドル
2,117,031
1,941,645
1,880,735
1,591,783
10,063,353
19,254,861ドル
Year ending
March 31
The outstanding domestic bonds and Swiss franc bonds may be
redeemed prior to maturity at the option of the Company, in whole
or in part, at prices 100% of the principal amount for the domestic
bonds and in whole at prices ranging from 100.25% to 100.50% of
the principal amount for Swiss franc bonds.
Certain long-term loan agreements include, among other things,
provisions that allow the lenders the right to approve, if desired, any
appropriations of retained earnings including dividends. However, to
date, no lender has exercised this right.
The annual maturities of long-term debt outstanding at March
31, 2004 were as follows:
Additionally, the Company and most of the consolidated
subsidiaries have contributory funded defined benefit pension plans
covering substantially all of their employees. In general, eligible
employees retiring at the mandatory retirement age receive pension
payments for the remainder of their lives. As for the Company,
eligible employees retiring after at least 20 years of service but
before the mandatory retirement age, receive a lump-sum payment
upon retirement and annuities for a period of 10 years.
The components of net periodic benefit costs for the years ended March 31, 2004 and 2003 are as follows:
$(4,967,585
(2,634,138)
(433,684)
1,799
$(1,901,5622004Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Unrecognized prior service cost
Net liability
\(524,726
(278,244)
(45,810)190\(200,8622004\(523,593
(231,079)
(112,721)532\(180,3252003The liability for employees’ retirement benefits at March 31, 2004 and 2003 consisted of the following:
Millions of Yen
Thousands of
U.S. Dollars
164,073ドル
98,163
(4,998)
252,428
(918)
508,748ドル2004Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Amortization of prior service cost
Net periodic benefit costs
17,331円
10,369
(528)
26,664(97)53,739円200415,632円
11,937
(640)
13,270
(146)
40,053円2003Millions of Yen
Thousands of
U.S. Dollars
A reconciliation between the normal effective statutory tax rate
for the years ended March 31, 2004 and 2003, and the actual effec-
tive tax rates reflected in the accompanying consolidated statements
of income is not disclosed because the difference between those
rates is immaterial.
On March 31, 2003, a tax reform law concerning enterprise tax
was enacted in Japan which changed the normal effective statutory168. Short-Term Borrowings
Short-term borrowings are generally represented by 365-day notes, bearing interest at rates ranging from 0.08633% to 1.375% and from 0.1%
to 0.43% at March 31, 2004 and 2003, respectively.
9. Income Taxes
The Companies are subject to several income taxes. The aggregate normal statutory tax rates for the Company approximated 36.1% for 2004
and 2003.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31,
2004 and 2003 are as follows:
Deferred tax assets:
Pension and severance costs
Depreciation
Tax loss carryforwards
Reserve for reprocessing of irradiated nuclear fuel
Reserve for decommissioning of nuclear power units
Unrealized profits arising from the elimination of intercompany transactions in consolidation
Other
Less valuation allowance
Deferred tax assets
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Reserve for depreciation of nuclear power production facilities under construction
Other
Deferred tax liabilities
Net deferred tax assets
Assumptions for actuarial computations for the years ended March 31, 2004 and 2003 are as follows:
2004 2003
Discount rate mainly 2.0% mainly 2.0%
Expected rate of return on plan assets mainly 0.0% mainly 0.0%
Recognition period of actuarial gain/loss mainly 5 years mainly 5 years
Amortization period of prior service cost 5 years 5 years
0,629,603ドル
221,055
122,683
99,375
96,412
95,399
250,516
(132,500)
1,382,543ドル
0,186,292ドル
8,000
0,194,292ドル
1,188,251ドル2004\ 066,505
23,350
12,959
10,497
10,184
10,077
26,462
(13,996)
\ 146,038
\ 019,678845\ 020,523
\ 125,5152004\ 054,427
18,903
11,959
10,497
10,184
9,065
23,612
(12,710)
\ 125,937
\ 008,867
2,109
1,553
\ 012,529
\ 113,4082003Millions of Yen
Thousands of
U.S. Dollars
tax rate applicable to consolidated subsidiaries effective for years
beginning on or after April 1, 2004. The effect of this change was
to decrease deferred tax assets by 138円 million and to increase
unrealized gain on available-for-sale securities by 11円 million at
March 31, 2003. The effect on deferred taxes in the consolidated
statements of income for the year ended March 31, 2003 was an
increase of approximately 149円 million.1735,350ドル21835,568ドル2004Reserve for:
Depreciation of nuclear power production facilities under construction
Losses on overseas investments
Total
\ 3,73423\ 3,7572004\ 7,46724\ 7,491200310. Shareholders’ Equity
As described in Note 2. o., certain special reserves were included in retained earnings. Such reserves at March 31, 2004 and 2003 were
as follows:
The Code requires at least 50% of the issue price of new shares
to be recorded as common stock and the remaining net proceeds as
additional paid-in capital, which is included in capital surplus. The
Code permits Japanese companies, upon approval of the Board of
Directors, to issue shares to existing shareholders without considera-
tion as a stock split. Such issuance of shares generally does not give
rise to changes within the shareholders’ accounts.
The Code also provides that an amount at least equal to 10% of
the aggregate amount of cash dividends and certain other appropri-
ations of retained earnings associated with cash outlays applicable to
each period shall be appropriated as a legal reserve (a component of
retained earnings) until such reserve and additional paid-in capital
equals 25% of common stock. The amount of total additional paid-
in capital and legal reserve that exceeds 25% of the common stock
may be available for dividends by resolution of the shareholders. In
addition, the Code permits the transfer of a portion of additional
paid-in capital and legal reserve to common stock by resolution of
the Board of Directors.
The Code allows Japanese companies to repurchase treasury
stock by a resolution of the shareholders at the general sharehold-
ers’ meeting and dispose of such treasury stock by resolution of the
Board of Directors. The repurchased amount of treasury stock can-
not exceed the amount available for future dividends plus amount
of common stock, additional paid-in capital or legal reserve to be
reduced in the case where such reduction was resolved at the
general shareholders’ meeting.
The amount of retained earnings available for dividends under
the Code was 500,294円 million (4,736,287ドル thousand) as of March
31, 2004, based on the amount recorded in the Company’s general
books of account. In addition to the provision that requires an
appropriation for a legal reserve in connection with the cash pay-
ment, the Code imposes certain limitations on the amount of
retained earnings available for dividends.
Dividends are approved by the shareholders at a meeting held
subsequent to the fiscal year to which the dividends are applicable.
Semiannual interim dividends may also be paid upon resolution of
the Board of Directors, subject to certain limitations imposed by
the Code.
Millions of Yen
Thousands of
U.S. Dollars
11. Research and Development Costs
Research and development costs charged to income were 10,677円 million (101,079ドル thousand) and 10,953円 million for the years ended
March 31, 2004 and 2003, respectively.
12. Related Party Transactions
Significant transactions of the Company with an associated company for the years ended March 31, 2004 and 2003 were as follows:
KYUDENKO CORPORATION
Transactions:
Order for construction works of distribution facilities and other
Balances at year ended:
Payables for construction works
416,009ドル
59,046200443,943円
6,237200443,918円
5,7572003Millions of Yen
Thousands of
U.S. Dollars
(b) Lessor
Revenue under finance leases were 2円 million (19ドル thousand) for
the year ended March 31, 2004.
Pro forma information of leased property such as acquisition
costs accumulated depreciation under finance leases for the year
ended March 31, 2004 were as follows:
Millions of Yen
Acquisition cost
Accumulated depreciation
Net leased equipment
2,206ドル572,419ドル
Other Plant
and Equipment
Other Plant
and Equipment
233円6227円
Thousands of
U.S. Dollars
Millions of Yen
Acquisition cost
Accumulated depreciation
Net leased equipment
March 31, 2004
61,897円
30,510
31,387円
36,632円
16,060
20,572円
25,265円
14,450
10,815円
General facilities Other Total18585,979ドル
288,838
297,141ドル
346,795ドル
152,040
194,755ドル
239,184ドル
136,798
102,386ドル
Acquisition cost
Accumulated depreciation
Net leased equipment200407,602円
23,806
31,408円
Due within one year
Due after one year
Total
Millions of Yen
13. Leases
(a) Lessee
The Companies lease certain computer and other equipment. Total
lease payments under finance lease arrangements were 8,837円
million (83,660ドル thousand) and 8,426円 million for the years
ended March 31, 2004 and 2003, respectively.
Pro forma information of leased equipment such as acquisition
cost, accumulated depreciation and lease obligations, all of which
included imputed interest expense, under finance leases that do not
transfer ownership of the leased equipment to the lessee on an "as
if capitalized" basis at March 31, 2004 and 2003 were as follows:
Obligations under finance leases which included the imputed
interest expense at March 31, 2004 and 2003 were as follows:
071,968ドル
225,372
297,340ドル200307,732円
20,470
28,202円2004Thousands of
U.S. Dollars
General facilities Other
Thousands of U.S. Dollars
Total
March 31, 2004
Future lease revenue under finance leases which included the
imputed interest revenue at March 31, 2004 was as follows:
The above - mentioned amounts include sublease agreements.
Depreciation expense relating to the leased assets arrangements
mentioned above was 6円 million (57ドル thousand) for the year ended
March 31, 2004.
035円347382円
Due within one year
Due after one year
Total
Millions of Yen
0,331ドル
3,285
3,616ドル
Thousands of
U.S. Dollars
Millions of Yen
Acquisition cost
Accumulated depreciation
Net leased equipment
March 31, 2003
55,308円
27,106
28,202円
28,597円
13,008
15,589円
26,711円
14,098
12,613円
General facilities Other Total
The above - mentioned amounts include sublease agreements.
The Company enters into foreign exchange forward contracts,
currency swaps, interest rate swaps, energy swap agreements and
weather derivatives to manage its exposures to fluctuations in for-
eign exchanges, interest rates, fuel price and electric operating
revenues, respectively.
Oita Liquefied Natural Gas Company, Inc. ("Oita LNG"), a
consolidated subsidiary of the Company, enters into interest rate
swaps to manage its exposure to fluctuations in interest rates.
The Company and Oita LNG do not enter into derivatives for
trading or speculative purposes.
Foreign exchange forward contracts, currency swaps, interest
rate swaps and energy swap agreements are subject to market
risk which is the exposure created by potential fluctuations in
market conditions.
14. Derivatives
Weather derivatives are subject to electric power business risk
which is the exposure created by potential fluctuations in summer
temperature changes.
The Company and Oita LNG do not anticipate any losses arising
from credit risk which is the possibility that a loss may result from
counterparties’ failure to perform according to the terms and
conditions of the contract, because the counterparites to those
derivatives have high credit ratings.
The execution and control of derivatives are controlled by the
Accounting & Finance Department of the Company and by the
Operation Department of Oita LNG based on internal policies or
approval of the management.1915. Commitments and Contingencies
At March 31, 2004, the Companies had a number of fuel purchase commitments, most of which specify quantities and dates for fuel deliveries.
However, most of purchase prices are contingent upon fluctuations in market prices.
Contingent liabilities as of March 31, 2004 were as follows:
Under the debt assumption agreements, the Company was contingently liable for the redemption of the domestic bonds transferred to banks.
16. Segment Information
Information by business segments for the years ended March 31, 2004 and 2003 is as follows:
a. Sales and Operating Income
Co-guarantees of loans, mainly in connection with procurement of fuel
Guarantees of employees’ loans
Guarantees under debt assumption agreements
Other
Millions of Yen Thousands of U.S. Dollars
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income
1,421,310円
1,421,310
1,241,296
0,180,014円
070,635円
122,222
192,857
189,557
003,300円\(124,622)
(124,622)
(125,491)
\(000,869
Millions of Yen
March 31, 2003
1,350,675円
2,400
1,353,075
1,177,230
0,175,845円
Electric Other
Eliminations/
Corporate Consolidated
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income
13,175,083ドル
13,175,083
11,291,470
01,883,613ドル
0,784,256ドル
1,196,829
1,981,085
1,948,698
0,032,387ドル$(1,219,332)
(1,219,332)
(1,233,220)
$(0,013,888
12,390,827ドル
22,503
12,413,330
10,575,992
01,837,338ドル
Thousands of U.S. Dollars
March 31, 2004
Electric Other
Eliminations/
Corporate Consolidated
121,496円
58,865
284,490
3,962
1,150,204ドル
557,275
2,693,269
37,508
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income
1,391,684円
1,391,684
1,192,718
0,198,966円
082,841円
126,421
209,262
205,841
003,421円
\(000,000
(128,798)
(128,798)
(130,265)
\(001,467
Millions of Yen
March 31, 2004
1,308,843円
2,377
1,311,220
1,117,142
0,194,078円
Electric Other
Eliminations/
Corporate Consolidated2017. Subsequent Event
At the general shareholders’ meeting held on June 29, 2004, the Company’s shareholders approved the following appropriations of retained
earnings as of March 31, 2004:
Appropriations of Retained Earnings
Year-end cash dividends, 25円.00 (0ドル.24) per share
Bonuses to directors and corporate auditors
112,165ドル
1,325
11,848円140Millions of Yen Thousands of U.S. Dollars
Other consisted of providing telephone lines and wirelines,
obtaining, storing, gasifying and supplying LNG, heat supply
business and others.
Geographic segment information is not shown due to the
Company having no overseas operations nor foreign consolidated
subsidiaries.
Information for overseas sales is not disclosed due to overseas
sales being immaterial compared with consolidated net sales.
Total assets
Depreciation
Capital expenditures
38,950,847ドル
2,705,387
2,062,918
4,223,052ドル
306,059
233,419
$(1,038,180)
(35,132)
(35,369)
35,765,975ドル
2,434,460
1,864,868
b. Total Assets, Depreciation and Capital Expenditures
Total assets
Depreciation
Capital expenditures
4,114,378円
285,770
217,906
446,081円
32,329
24,656
\(109,663)
(3,711)
(3,736)
3,777,960円
257,152
196,986
Millions of Yen
March 31, 2004
Electric Other
Eliminations/
Corporate Consolidated
Thousands of U.S. Dollars
March 31, 2004
Electric Other
Eliminations/
Corporate Consolidated
Total assets
Depreciation
Capital expenditures
4,204,566円
301,649
256,040
450,074円
31,819
25,505
\(100,164)
(3,215)
(5,366)
3,854,656円
273,045
235,901
Millions of Yen
March 31, 2003
Electric Other
Eliminations/
Corporate Consolidated21To the Board of Directors of
Kyushu Electric Power Company, Incorporated:
We have audited the accompanying consolidated balance sheets of Kyushu Electric Power Company, Incorporated and consolidated
subsidiaries as of March 31, 2004 and 2003, and the related consolidated statements of income, shareholders’ equity, and cash flows for the
years then ended, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position
of Kyushu Electric Power Company, Incorporated and consolidated subsidiaries as of March 31, 2004 and 2003, and the consolidated results of
their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in Japan.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.
June 29, 2004
INDEPENDENT AUDITORS’ REPORT
Deloitte Touche Tohmatsu
Fukuoka Sanwa Building
10-24, Tenjin 1-chome
Chuo-ku, Fukuoka 810-0001
Japan
Tel: +81-92-751-0931
Fax: +81-92-714-5585
www.deloitte.com/jp
Member of
Deloitte Touche Tohmatsu2276,920,922ドル
2,221,793
79,142,715
1,153,933
48,158,828
49,312,761
29,829,954
2,223,365
1,030,124
1,086,841
877,970
135,312
3,130,247
268,333
696,024
(10,802)
247,770
115,393
33,362
1,350,080
36,533,646ドル2004PROPERTY (Note 3):
Plant and equipment
Construction in progress
Total
Less—
Contributions in aid of construction
Accumulated depreciation
Total
Net property
NUCLEAR FUEL
INVESTMENTS AND OTHER ASSETS:
Investment securities
Investments in and advances to subsidiaries and
associated companies (Note 4)
Deferred tax assets (Note 9)
Other assets
Total investments and other assets
CURRENT ASSETS:
Cash and cash equivalents
Receivables
Allowance for doubtful accounts
Fuel and supplies, at average cost
Deferred tax assets (Note 9)
Prepaid expenses and other
Total current assets
TOTAL
\ 8,125,157
234,688
8,359,845
121,890
5,087,017
5,208,907
3,150,938
234,854
108,812
114,803
92,740
14,293
330,648
28,344
73,521
(1,141)
26,172
12,189
3,524
142,609
3,859,049円2004\ 7,953,809
329,098
8,282,907
114,414
4,909,186
5,023,600
3,259,307
227,988
80,307
113,508
88,610
15,585
298,010
32,145
76,784
(1,157)
26,875
8,166
1,824
144,637
3,929,942円2003Non-Consolidated Balance Sheets
Kyushu Electric Power Company, Incorporated
March 31, 2004 and 2003
See notes to non-consolidated financial statements.
Millions of Yen
Thousands of
U.S. Dollars (Note 1)
ASSETS2316,516,766ドル
1,739,705
3,104,241
998,741
62,350
22,421,803
1,389,369
2,214,333
549,086
511,152
277,241
743,965
247,884
5,933,030
19,105
2,246,568
294,301
561,640
4,740,500
320,912
(4,213)
8,159,708
36,533,646ドル2004LONG-TERM LIABILITIES:
Long-term debt, less current maturities (Note 6)
Liability for employees’ retirement benefits (Note 7)
Reserve for reprocessing of irradiated nuclear fuel
Reserve for decommissioning nuclear power units
Other
Total long-term liabilities
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 6)
Short-term borrowings (Note 8)
Commercial paper
Accounts payable
Accrued income taxes
Accrued expenses
Other
Total current liabilities
RESERVE FOR FLUCTUATIONS IN WATER LEVEL
COMMITMENTS AND CONTINGENCIES (Note 13)
SHAREHOLDERS’ EQUITY (Note 10):
Common stock, authorized, 1,000,000,000 shares;
issued, 474,183,951 shares in 2004 and 2003
Capital surplus:
Additional paid-in capital
Retained earnings:
Legal reserve
Unappropriated
Unrealized gain on available-for-sale securities
Treasury stock—at cost, 254,093 shares in 2004
and 197,942 shares in 2003
Total shareholders’ equity
TOTAL
1,744,666円
183,765
327,901
105,497
6,586
2,368,415
146,759
233,900
58,000
53,993
29,285
78,585
26,184
626,706
2,018
237,305
31,087
59,326
500,739
33,898
(445)
861,910
3,859,049円20041,854,130円
165,051
301,311
103,864
4,220
2,428,576
245,761
199,300
33,000
72,354
32,525
83,694
37,808
704,442
237,305
31,087
59,326
454,460
15,087
(341)
796,924
3,929,942円2003LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of Yen
Thousands of
U.S. Dollars (Note 1)2412,413,330ドル
67,376
12,480,706
1,907,962
1,197,643
908,217
2,197,775
1,450,648
255,969
15,460
75,764
131,904
859,121
571,287
342,545
661,697
10,575,992
99,659
10,675,651
1,805,055
696,449
86,822
783,271
1,021,784
19,105
1,002,679
516,661
(177,790)
338,871
$ 663,8082004OPERATING REVENUES (Note 12)
Electric
Other
Total operating revenues
OPERATING EXPENSES (Notes 11 and 12):
Electric:
PersonnelFuelPurchased power
Depreciation
Maintenance
Reprocessing costs of irradiated nuclear fuel
Decommissioning costs of nuclear power units
Disposal cost of high-level radioactive waste (Note 2. k.)
Disposition of property
Taxes other than income taxes
Subcontract feeRentOther
Total
Other
Total operating expenses
OPERATING INCOME
OTHER EXPENSES (INCOME):
Interest charges
Gain on sales of investment securities
Loss on devaluation of investments in subsidiaries and
associated companies
Other—net
Total other expenses—net
INCOME BEFORE INCOME TAXES AND PROVISION FOR RESERVE
FOR FLUCTUATIONS IN WATER LEVEL
PROVISION FOR RESERVE FOR FLUCTUATIONS IN WATER LEVEL
INCOME BEFORE INCOME TAXES
INCOME TAXES (Note 9):
Current
Deferred
Total income taxes
NET INCOME
1,311,220円
7,117
1,318,337
201,538
126,507
95,935
232,151
153,232
27,038
1,633
8,003
13,933
90,749
60,345
36,183
69,895
1,117,142
10,527
1,127,669
190,668
73,566
9,171
82,737
107,931
2,018
105,913
54,575
(18,780)
35,795
0,070,118円2004Non-Consolidated Statements of Income
Kyushu Electric Power Company, Incorporated
Years Ended March 31, 2004 and 2003
See notes to non-consolidated financial statements.
1,353,075円
5,533
1,358,608
190,908
137,953
104,682
247,876
158,851
49,763
6,656
8,075
13,883
94,226
60,215
36,159
67,983
1,177,230
8,276
1,185,506
173,102
73,622
(23,109)
15,425
8,688
74,626
98,476
98,476
49,501
(13,571)
35,930
0,062,546円2003PER SHARE OF COMMON STOCK (Note 2. o.):
Basic net income
Cash dividends applicable to the year
147円.65
50.00
131円.64
50.00
1ドル.400.47Millions of Yen
Thousands of
U.S. Dollars (Note 1)
Yen U.S. Dollars25Non-Consolidated Statements of Shareholders’ Equity
Kyushu Electric Power Company, Incorporated
Years Ended March 31, 2004 and 2003
See notes to non-consolidated financial statements.
Common Stock Capital Surplus Retained Earnings Unrealized Treasury Stock
Gain on
Additional Legal Available-for-
Shares Amount Paid-in Capital Reserve Unappropriated Sale Securities Shares Amount
Thousands of shares/Millions of Yen
BALANCE AT APRIL 1, 2002 474,184 237,305円 31,087円 59,326円 418,131円 \(37,155 26 0円(51)
Net income 62,546
Cash dividends, 55円 per share (26,077)
Bonuses to directors and
corporate auditors (140)
Increase in treasury stock 172 (290)
Net decrease in unrealized gain
on available-for-sale securities (22,068)
BALANCE AT MARCH 31, 2003 474,184 237,305 31,087 59,326 454,460 15,087 198 (341)
Net income 70,118
Cash dividends, 50円 per share (23,699)
Bonuses to directors and
corporate auditors (140)
Increase in treasury stock 56 (104)
Net increase in unrealized gain
on available-for-sale securities 18,811
BALANCE AT MARCH 31, 2004 474,184 237,305円 31,087円 59,326円 500,739円 \(33,898 254 \(445)
Capital Surplus Retained Earnings Unrealized
Gain on
Additional Legal Available-for-
Common Stock Paid-in Capital Reserve Unappropriated Sale Securities Treasury Stock
Thousands of U.S. Dollars (Note 1)
BALANCE AT MARCH 31, 2003 2,246,568ドル 294,301ドル 561,640ドル 4,302,376ドル $(142,828 $(3,228)
Net income 663,808
Cash dividends, 0ドル.47 per share (224,359)
Bonuses to directors and
corporate auditors (1,325)
Increase in treasury stock (985)
Net increase in unrealized gain
on available-for-sale securities 178,084
BALANCE AT MARCH 31, 2004 2,246,568ドル 294,301ドル 561,640ドル 4,740,500ドル $(320,912 $(4,213)26Notes to Non-Consolidated Financial Statements
Kyushu Electric Power Company, Incorporated
Years Ended March 31, 2004 and 2003
1. Basis of Presenting Non-Consolidated Financial Statements
The accompanying non-consolidated financial statements of
Kyushu Electric Power Company, Incorporated (the "Company")
have been prepared in accordance with the provisions set forth in
the Commercial Code of Japan (the "Code") and the Japanese
Electric Utility Law and their related accounting regulations, and
in conformity with accounting principles generally accepted in
Japan, which are different in certain respects as to application and
disclosure requirements of International Financial Reporting
Standards.
As consolidated statements of cash flows and certain disclosures
are presented in the consolidated financial statements of the
Company, non-consolidated statements of cash flows and certain
disclosures are not presented herein in accordance with accounting
procedures generally accepted in Japan.
In preparing these non-consolidated financial statements, certain
reclassifications and rearrangements have been made to the
financial statements issued domestically in order to present them in
a form which is more familiar to readers outside Japan.
The United States dollar amounts included herein are provided
solely for the convenience of readers and are stated at the rate of
105円.63=US1,ドル the approximate exchange rate prevailing on
March 31, 2004. The translations should not be construed as
representations that the Japanese yen amounts could be converted
into United States dollars at that or any other rate.
2. Summary of Significant Accounting Policies
a. Property and Depreciation—Property is stated at cost. Contributions
in aid of construction including those made by customers are
deducted from the cost of the related assets.
Depreciation is computed using the declining-balance method
based on the estimated useful lives of the assets.
b. Amortization of Nuclear Fuel—Amortization of nuclear fuel is
computed based on the proportion of current heat production to
the estimated total heat production over the estimated useful life of
the nuclear fuel.
c. Investment Securities—The accounting standard for financial
instruments requires all applicable securities to be classified and
accounted for, depending on management’s intent, as follows:
i) held-to-maturity debt securities are stated at cost with discounts
or premiums amortized throughout the holding periods;
ii) available-for-sale securities, which are not classified as the
aforementioned securities and investment securities in subsidiaries
and associated companies, are stated at market value; and securities
without market value are stated at cost.
The Company records unrealized gains or losses on available-
for-sale securities, net of deferred taxes, in shareholders’ equity
presented as "Unrealized gain on available-for-sale securities."
For other than temporary declines in fair value, investment
securities are written down to net realized value by a charge
to income.
d. Investments in Subsidiaries and Associated Companies—Investments
in subsidiaries and associated companies are stated at cost; however,
they are written down to appropriate values if the investments
have been significantly impaired in value of a permanent nature.
e. Cash Equivalents—Cash equivalents are short-term investments
that are readily convertible into cash and that are exposed to
insignificant risk of changes in value. Cash equivalents include time
deposits, which mature or become due within three months of the
date of acquisition.
f. Foreign Currency Transactions—Receivables and payables
denominated in foreign currencies are translated into Japanese yen
at the rates in effect as of each balance sheet date.
g. Derivatives and Hedging Activities—The accounting standard for
derivative financial instruments and the accounting standard for
foreign currency transactions require that: a) all derivatives be
recognized as either assets or liabilities and measured at market value,
and gains or losses on the derivatives be recognized currently in the
income statements and b) for derivatives for hedging purposes, if
derivatives qualify for hedge accounting because of high correlation
and high hedge effectiveness between the hedging instruments and
the hedged items, gains or losses on the derivatives be deferred until
maturities of the hedged transactions.27The long-term debt denominated in foreign currencies for
which the foreign exchange forward contracts are used to hedge
the foreign currency fluctuations are translated at the contracted
rate, since such treatment is also allowed to be incorporated under
the standards if the forward contracts qualify for hedge accounting.
The 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 in interest expense, which treatment is also allowed
under the standards.
h. Severance Payments and Pension Plans—The Company has an
unfunded retirement plan for all of its employees and a contributory
funded defined benefit pension plan covering substantially all of its
employees.
Under the accounting standard for employees’ retirement
benefits, the amount of the liability for employees’ retirement
benefits is determined based on the projected benefit obligations
and plan assets of the pension fund at the
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of the fiscal year.
Retirement benefits for directors and corporate auditors are
charged to income when authorized by the shareholders.
i. Reserve for Reprocessing of Irradiated Nuclear Fuel—The annual
provision for the costs of reprocessing irradiated nuclear fuel is
calculated to state the related reserve at 60% of the amount that
would be required to reprocess all of the irradiated nuclear fuel in
accordance with the regulatory authority.
j. Reserve for Decommissioning of Nuclear Power Units—Provision is
made for future disposition costs of nuclear power units based on a
proportion of the current generation of electric power to the
estimated total generation of electric power of each unit.
k. Disposal Cost of High-Level Radioactive Waste—The Company pays
contributions to Nuclear Waste Management Organization of
Japan in order to fund costs for the ultimate disposal of high-level
radioactive waste. The contributions are charged to income
when paid.
l. Income Taxes—The provision for income taxes is computed based
on the pretax income included in the non-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 laws to the temporary
differences.
m. Special Reserves—The Japanese Special Taxation Measures Law
permits companies in Japan to take as tax deductions certain
reserves, if recorded in the books of account, that are not required
for financial reporting purposes. These reserves must be reversed to
taxable income in future periods in accordance with the law.
The Code requires that the special reserves, except for the
reserve for fluctuations in water level, be recorded as a component
of shareholders’ equity (see Note 10).
A reserve for fluctuations in water level is recorded when the
volume of water for generating hydroelectric power is abundant
and available for future power generation, and reversed in years
when there is an insufficient volume of water, in accordance
with the Japanese Electric Utility Law and related accounting
regulations. Under the law and regulations, this reserve must
be shown as a liability.
n. Bond Issuance Costs and Bond Discount Charges—Bond issuance
costs are charged to income when paid or incurred. Bond discount
charges are amortized over the term of the related bonds.
o. Net Income and Cash Dividends per Share—The basic earnings per
share ("EPS") is computed by dividing net income available to
common shareholders by the weighted-average number of
common shares outstanding during the year and diluted EPS
reflects the potential dilution that could occur if securities were
exercised or converted into common stock.
Diluted EPS is not disclosed for the years ended March 31, 2004
and 2003, because potentially dilutive securities are not issued.
Cash dividends per share represent actual amounts applicable
to earnings of the respective years.
p. Research and Development Costs—Research and development costs
are charged to income as incurred.
q. Leases—All leases are accounted for as operating leases. Under
Japanese accounting standard 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.
r. New Accounting Pronouncements—In August 2002, the Business
Accounting Council issued a Statement of Opinion, "Accounting
for Impairment of Fixed Assets," and in October 2003 the
Accounting Standards Board of Japan (ASB) issued ASB Guidance
No. 6, "Guidance for Accounting Standard for Impairment of
Fixed Assets." These new pronouncements are effective for fiscal
years beginning on or after April 1, 2005 with early adoption
permitted for fiscal years ending on or after March 31, 2004.
The new accounting standard requires an entity to review its
long-lived assets for impairment whenever events for changes in
circumstances indicate that the carrying amount of an asset or asset
group may not be recoverable. An impairment loss would be rec-
ognized if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected to result
from the continued use and eventual disposition of the asset or
asset group. The impairment loss would be measured as the
amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash
flows from the continued use and eventual disposition of the asset
or the net selling price at disposition.
The Companies expects to adopt these pronouncements as of28Domestic bonds, 0.2% to 6.9%, due serially to 2024
U.S. dollar bonds and notes, 6.375% to 7.25%, due 2004 to 2008
Swiss franc bonds, 4.0%, due 2007
Loans from The Development Bank of Japan, 0.95% to 6.9%, due serially to 2024
Unsecured loans, principally from banks and insurance companies, 0.25% to 5.7%, due serially to 2021
Total
Less current maturities
Long-term debt, less current maturities
6. Long-Term Debt
Long-term debt consisted of the following at March 31, 2004 and 2003:
09,442,280ドル
358,421
279,400
2,923,014
4,903,020
17,906,135
1,389,369
16,516,766ドル20040,997,388円
37,860
29,513
308,758
517,906
1,891,425
146,759
1,744,666円20041,115,173円
76,290
29,513
348,455
530,460
2,099,891
245,761
1,854,130円2003Millions of Yen
Thousands of
U.S. Dollars
Original costs:
Electric power production facilities:
Hydroelectric power
Thermal power
Nuclear power
Internal-combustion engine power
Transmission facilities
Transformation facilities
Distribution facilities
General facilities
Other electricity-related facilities
Other plant and equipment
Construction in progress
Total
Less contributions in aid of construction
Less accumulated depreciation
Carrying amount
3. Property
The major classes of property as of March 31, 2004 and 2003 were as follows:
$ 5,171,826
15,938,095
14,423,033
1,191,111
36,724,065
14,407,157
8,738,284
12,582,268
3,505,548
272,707
690,893
2,221,793
79,142,715
1,153,933
48,158,828
$ 29,829,9542004\ 546,300
1,683,541
1,523,505
125,817
3,879,163
1,521,828
923,025
1,329,065
370,291
28,806
72,979
234,688
8,359,845
121,890
5,087,017
\ 3,150,9382004\ 543,591
1,583,230
1,519,776
124,872
3,771,469
1,488,760
917,368
1,327,900
364,038
28,806
55,468
329,098
8,282,907
114,414
4,909,186
\ 3,259,3072003Millions of Yen
Thousands of
U.S. Dollars
4. Investments in Subsidiaries and Associated Companies
The carrying amounts and aggregate fair values of investments in subsidiaries and associated companies whose market values were available at
March 31, 2004 and 2003 were as follows:
Associated company 4,303円 10,634円 6,331円 40,736ドル 100,672ドル 59,936ドル
2004 2003
Carrying
amount Fair value
Unrealizedgain2004
Millions of Yen
Thousands of
U.S. Dollars
Carrying
amount Fair value
UnrealizedgainCarrying
amount Fair value
Unrealizedgain4,303円 8,940円 4,637円
All of the Company’s assets are subject to certain statutory preferential rights established to secure bonds, notes, loans received from The
Development Bank of Japan and bonds transferred to banks under debt assumption agreements (see Note 13).
5. Pledged Assets297. Severance Payments and Pension Plans
Employees terminating their employment with the Company,
either voluntarily or upon reaching mandatory retirement age, are
entitled, under most circumstances, to severance payments based
on their rate of pay at the time of termination, length of service
and certain other factors. If the termination is made voluntarily at
one of a number of specified ages, the employee is entitled to
certain additional payments.
8. Short-Term Borrowings
Short-term borrowings are generally represented by 365-day notes, bearing interest at rates ranging from 0.08633% to 0.33917% and from
0.15917% to 0.34667% at March 31, 2004 and 2003, respectively.
The outstanding domestic bonds and Swiss franc bonds may be
redeemed prior to maturity at the option of the Company, in whole
or in part, at prices 100% of the principal amount for the domestic
bonds and in whole at prices ranging from 100.25% to 100.5% of
the principal amount for Swiss franc bonds.
Certain long-term loan agreements include, among other
things, provisions that allow the lenders the right to approve, if
desired, any appropriations of retained earnings including dividends.
However, to date, no lender has exercised this right.
The annual maturities of long-term debt outstanding at March
31, 2004 were as follows:20052006200720082009Thereafter
Total
Thousands of
U.S. Dollars
Millions of Yen
0,146,759円
198,173
175,573
182,818
155,141
1,032,961
1,891,425円
01,389,369ドル
1,876,105
1,662,151
1,730,739
1,468,721
9,779,050
17,906,135ドル
Year ending
March 31
Additionally, the Company has a contributory funded defined
benefit pension plan covering substantially all of its employees. In
general, eligible employees retiring at the mandatory retirement
age receive pension payments for the remainder of their lives.
Eligible employees retiring after at least 20 years of service but
before the mandatory retirement age, receive a lump-sum payment
upon retirement and annuities for a period of 10 years.
9. Income Taxes
The Company is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rates
of approximately 36.1% for 2004 and 2003.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at March 31, 2004 and 2003 are as follows:
Deferred tax assets:
Pension and severance costs
Depreciation
Reserve for reprocessing of irradiated nuclear fuel
Reserve for decommissioning of nuclear power units
Deferred charges
Other
Deferred tax assets
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Reserve for depreciation of nuclear power production facilities under construction
Other
Deferred tax liabilities
Net deferred tax assets
At March 31, 2001 and 2000
0,574,704ドル
207,763
99,375
96,412
48,708
148,130
1,175,092ドル
0,181,293ドル4360,181,729ドル
0,993,363ドル2004060,706円
21,946
10,497
10,184
5,145
15,647
124,125円
019,150円46019,196円
104,929円2004049,725円
16,666
10,497
10,184
6,112
14,261
107,445円
008,524円
2,10936010,669円
096,776円2003Millions of Yen
Thousands of
U.S. Dollars30A reconciliation between the normal effective statutory tax rate for the year ended March 31, 2004 and the actual effective tax rate reflected
in the accompanying statements of income is as follows:
10. Shareholders’ Equity
As described in Note 2. m., certain special reserves were included in unappropriated (a component of retained earnings). Such reserves at March
31, 2004 and 2003 were as follows:
35,350ドル21835,568ドル2004Reserve for:
Depreciation of nuclear power production facilities under construction
Losses on overseas investments
Total
3,734円233,757円20047,467円247,491円2003Millions of Yen
Thousands of
U.S. Dollars
The Code requires at least 50% of the issue price of new shares
to be recorded as common stock and the remaining net proceeds
as additional paid-in capital. The Code permits companies, upon
approval of the Board of Directors, to issue shares to existing
shareholders without consideration as a stock split. Such issuance
of shares generally does not give rise to changes within the
shareholders’ accounts.
The Code also provides that an amount at least equal to 10% of
the aggregate amount of cash dividends and certain other
appropriations of retained earnings associated with cash outlays
applicable to each period shall be appropriated as a legal reserve
until such reserve and additional paid-in capital equals 25% of
common stock. The amount of total additional paid-in capital
and legal reserve that exceeds 25% of the common stock may
be available for dividends by resolution of the shareholders. In
addition, the Code permits the transfer of a portion of additional
paid-in capital and legal reserve to the common stock by resolution
of the Board of Directors.
The Code allows companies to repurchase treasury stock by a
resolution of the shareholders at the general shareholders’ meeting
and dispose of such treasury stock by resolution of the Board of
Directors. The repurchased amount of treasury stock cannot
exceed the amount available for future dividend plus amount of
common stock, additional paid-in capital or legal reserve to be
reduced in the case where such reduction was resolved at the
general shareholders meeting.
The amount of retained earnings available for dividends under
the Code was 500,294円 million (4,736,287ドル thousand) as of March
31, 2004, based on the amount recorded in the Company’s general
books of account. In addition to the provision that requires an
appropriation for a legal reserve in connection with the cash
payment, the Code imposes certain limitations on the amount
of retained earnings available for dividends.
Dividends are approved by the shareholders at a meeting held
subsequent to the fiscal year to which the dividends are applicable.
Semiannual interim dividends may also be paid upon resolution of
the Board of Directors, subject to certain limitations imposed by
the Code.
Normal effective statutory tax rate
Extra tax credit on the Japanese Special Taxation Measures Law
Other—net
Actual effective tax rate
36.1%
(2.7)0.433.8%2004Such reconciliation for the year ended March 31, 2003 is not disclosed because the difference between the normal effective statutory tax
rate and the actual effective tax rate is immaterial.
11. Research and Development Costs
Research and development costs charged to income were 9,701円 million (91,839ドル thousand) and 10,180円 million for the years ended
March 31, 2004 and 2003, respectively.
12. Leases
(a) Lessee
The Company leases certain computer and other equipment. Total lease payments under finance lease arrangements were 5,544円 million
(52,485ドル thousand) and 6,079円 million for the years ended March 31, 2004 and 2003, respectively.
2004
04,943円
9,981
14,924円
Due within one year
Due after one year
Total
Millions of Yen
046,796ドル
94,490
141,286ドル200305,155円
11,317
16,472円2004Thousands of
U.S. Dollars31Pro forma information of leased equipment such as acquisition
cost, accumulated depreciation and lease obligations, all of which
included imputed interest expense, under finance leases that do not
transfer ownership of the leased equipment to the lessee on an "as
if capitalized" basis at March 31, 2004 and 2003 were as follows:
Obligations under finance leases which included the imputed
interest expense at March 31, 2004 and 2003 were as follows:
13. Commitments and Contingencies
At March 31, 2004, the Company had a number of fuel purchase commitments, most of which specify quantities and dates for fuel deliveries.
However, purchase prices are contingent upon fluctuations in market prices.
Contingent liabilities as of March 31, 2004 were as follows:
Under the debt assumption agreements, the Company was contingently liable for the redemption of the domestic bonds transferred to banks.
Millions of Yen
Acquisition cost
Accumulated depreciation
Net leased equipment
March 31, 2004
322,257ドル
180,971
141,286ドル
15,696ドル
8,009
07,687ドル
306,561ドル
172,962
133,599ドル
Acquisition cost
Accumulated depreciation
Net leased equipment
General facilities Other
Thousands of U.S. Dollars
Total
March 31, 2004
\ 34,040
19,116
\ 14,924
\ 1,658846\ 0,812
\ 32,382
18,270
\ 14,112
General facilities Other Total
Co-guarantees of loans, mainly in connection with procurement of fuel
Guarantees of employees’ housing loans
Guarantees under debt assumption agreements
Other
121,496円
58,805
284,490
4,306
1,150,204ドル
556,707
2,693,269
40,765
Millions of Yen Thousands of U.S. Dollars
14. Subsequent Event
At the general shareholders’ meeting held on June 29, 2004, the Company’s shareholders approved the following appropriations of retained
earnings as of March 31, 2004:
Appropriations of Retained Earnings
Year-end cash dividends, 25円.00 (0ドル.24) per share
Bonuses to directors and corporate auditors
112,165ドル
1,325
11,848円140Millions of Yen Thousands of U.S. Dollars
Millions of Yen
Acquisition cost
Accumulated depreciation
Net leased equipment
March 31, 2003
\ 35,862
19,390
\ 16,472
\ 1,736734\ 1,002
\ 34,126
18,656
\ 15,470
General facilities Other Total
(b) Lessor
Revenues under finance leases were 2円 million (19ドル thousand) for
the year ended March 31, 2004.
Pro forma information of leased property such as acquisition cost
and accumulated depreciation under finance leases for the year
ended March 31, 2004 were as follows:
Millions of Yen
Acquisition cost
Accumulated depreciation
Net leased equipment
2,206ドル572,419ドル
Other plant
and equipment
Other plant
and equipment
233円6227円
Thousands of
U.S. Dollars
Future lease revenue under finance leases which included the
imputed interest revenue at March 31, 2004 was as follows:
Depreciation expense relating to the leased assets arrangements
mentioned above was 6円 million (57ドル thousand) for the year ended
March 31, 2004.
024円331355円
Due within one year
Due after one year
Total
Millions of Yen
0,227ドル
3,134
3,361ドル
Thousands of
U.S. Dollars32To the Board of Directors of
Kyushu Electric Power Company, Incorporated:
We have audited the accompanying non-consolidated balance sheets of Kyushu Electric Power Company, Incorporated as of March 31, 2004
and 2003, and the related non-consolidated statements of income and shareholders’ equity for the years then ended, all expressed in Japanese
yen. These non-consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these non-consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Kyushu Electric Power Company, Incorporated as of March 31, 2004 and 2003, and the results of its operations for the years then ended in
conformity with accounting principles generally accepted in Japan.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.
June 29, 2004
INDEPENDENT AUDITORS’ REPORT
Deloitte Touche Tohmatsu
Fukuoka Sanwa Building
10-24, Tenjin 1-chome
Chuo-ku, Fukuoka 810-0001
Japan
Tel: +81-92-751-0931
Fax: +81-92-714-5585
www.deloitte.com/jp
Member of
Deloitte Touche Tohmatsu
Non-Consolidated Six-Year Financial Summary
Kyushu Electric Power Company, Incorporated
Years Ended March 31,33Millions of Yen
(except for per share data)
12,480,706ドル
5,214,238
6,863,155
403,313
10,675,651
1,907,962
1,197,643
908,217
2,197,775
1,450,648
255,969
15,460
75,764
131,904
859,121
571,287
342,545
761,356
696,449
1,002,679
663,808
$ 1.400.4736,533,646ドル
29,829,954
16,516,766
8,159,7082004For the year:
Operating revenues
Residential (lighting)
Commercial and
industrial
Other
Operating expenses
PersonnelFuelPurchased power
Depreciation
Maintenance
Reprocessing costs
of irradiated
nuclear fuel
Decommissioning
costs of nuclear
power units
Disposal cost of high-
level radioactive waste
Disposition of
property
Taxes other than
income taxes
Subcontract feeRentOther
Interest charges
Income before
income taxes
Net income
Per share of common
stock (yen and
U.S. dollars):
Net income:
Basic
Diluted
Cash dividends
applicable to the year
At year-end:
Total assets
Net property
Long-term debt, less
current maturities
Total shareholders’ equity
Number of employees
1,318,337円
550,780
724,955
42,602
1,127,669
201,538
126,507
95,935
232,151
153,232
27,038
1,633
8,003
13,933
90,749
60,345
36,183
80,422
73,566
105,913
70,118
0,0147円.65
50.00
3,859,049円
3,150,938
1,744,666
861,910
13,66020041,411,500円
570,045
777,747
63,708
1,207,968
203,897
146,097
94,098
263,043
173,521
22,510
6,898
11,411
21,465
94,448
64,457
36,168
69,955
87,724
94,075
60,140
00,126円.83
125.63
60.00
4,006,257円
3,339,874
2,016,036
765,670
14,3482001Note: All dollar figures herein refer to U.S. currency. Japanese yen amounts have been translated, for convenience only, at the rate of 105円.63=US1,ドル the
approximate exchange rate prevailing on March 31, 2004.
1,393,650円
564,029
768,596
61,025
1,219,369
214,311
122,886
93,725
278,897
183,902
41,070
6,304
18,582
94,842
61,364
35,249
68,237
104,426
36,084
22,986
000,48円.47
48.32
50.00
3,959,244円
3,396,462
2,078,459
675,368
14,42820001,389,306円
561,808
776,828
50,670
1,226,308
219,815
123,499
89,423
290,068
181,616
28,618
5,886
16,701
97,039
67,190
35,340
71,113
109,039
53,509
23,434
000,49円.42
49.21
50.00
3,948,892円
3,453,364
2,203,865
618,024
14,44519991,388,834円
567,230
761,498
60,106
1,197,546
186,870
150,959
98,034
244,946
177,962
39,529
4,597
7,640
20,165
93,236
58,638
37,051
77,919
81,500
102,234
65,152
00,137円.40
60.00
3,984,740円
3,322,050
1,971,185
782,953
14,19120021,358,608円
565,499
744,986
48,123
1,185,506
190,908
137,953
104,682
247,876
158,851
49,763
6,656
8,075
13,883
94,226
60,215
36,159
76,259
73,622
98,476
62,546
0,0131円.64
50.00
3,929,942円
3,259,307
1,854,130
796,924
13,9642003Thousands of
U.S. Dollars
(except for
per share data)34Organization
General Meeting
of Shareholders
Nuclear Power Operation Dept.
Nuclear Power Projects Dept.
Power System Engineering Dept.
Power System Operation Dept.
Transmission and
System Operation
Division
Thermal Power Dept.
Thermal Power
Generation Division
Business Development Dept.
Business Development
Division
Plant Siting and
Environmental
Affairs Headquarters
Marketing Dept.
Energy Solutions Dept.
Overseas Business Dept.
Distribution Dept.
Customer Services
Division
Corporate Planning Office
Management Administration Office
Secretary Sec.
Public Relations Dept.
General Affairs Dept.
Human Resources Dept.
Accounting and Finance Dept.
Materials and Fuels Dept.
Civil Engineering Dept.
Information and Communications Business Dept.
Information Systems Dept.
Telecommunications Dept.
Research Laboratory
Branch Offices
Construction Office (Power Plants)
Survey Office
Transmission and Substation
Construction Office
Tokyo Branch Office
Thermal Power Stations
Geothermal Power Stations
Nuclear Power Stations
Customer Service Offices
Power System Maintenance Offices
Board of Directors
Chairman
President
Executive
Vice-Presidents
Managing Directors
Directors
Board of
Managing Directors
Board of Corporate
Auditors
Corporate Auditors
Power Plant Siting Affairs Dept.
Facilities Siting Dept.
Environmental Affairs Dept.
Corporate Auditors’ Office
Nuclear Power
Generation Division
Information and
Communications
Division
(As of July 1, 2004)35Chairman
President
Executive Vice-Presidents
Managing Directors
Directors
Corporate Auditors
Board of Directors
Michisada Kamata
Shingo Matsuo
Hidemi Ashizuka
Hiroaki Okui
Shigehiko Matsumoto
Mitsuaki Sato
Kowashi Imamura
Kiyohiko Matsushita
Kouichi Hashida
Yukio Tanaka
Taku Ishii
Takahiro Higuchi
Kyouichi Hiratsuka
Morimasa Takeda
Tokihisa Ichinose
Tomokazu Odahara
Keiji Mizuguchi
Noriyuki Ueda
Hajime Sankoda
Tooru Soufukuwaki
Kiyoko Nishimura
Kimiya Nakazato
Zengo Ishimura
(As of July 1, 2004)36Head Office
Tokyo Branch Office
Date of Establishment
Paid-in Capital
Number of Shares Authorized
Number of Shares Issued
Number of Employees
Investor Information
1-82, Watanabe-dori 2-chome,
Chuo-ku, Fukuoka 810-8720, Japan
Tel: (092) 761-3031
http://www.kyuden.co.jp
7-1, Yurakucho 1-chome,
Chiyoda-ku, Tokyo 100-0006, Japan
Tel: (03) 3281-4931
May 1, 1951
237,304,863,699円
1,000,000,000
474,183,951
13,660
(As of March 31, 2004)
1,400