Kyushu Electric Power Company, Incorporated
A n n u a l R e p o r t 2 0 0 5 For the year ended March 31, 2005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
13,115,427ドル
1,989,899
831,282
00,0001ドル.750.5637,703,314ドル
9,116,9542005For 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
1,408,728円
213,735
89,288
0,0187円.91
60.00
4,049,713円
979,25220051,391,684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
840,2452003Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2005, 2004 and 2003
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
1,5009006003000801006040200
’01 ’02 ’03 ’04 ’05
(Billions of yen)
4,000
5,000
3,000
2,000
1,0000’01 ’02 ’03 ’04 ’05
4,166 4,290 4,205
4,050
1,448 1,458 1,421
59 61 64731,40989Operating Revenues
and Net Income
Total Assets
1,392
4,114
Note: All dollar figures herein refer to U.S. currency. Japanese yen amounts have been translated, for convenience only, at the rate of 107円.41=US1,ドル the
approximate exchange rate prevailing on March 31, 2005.313,115,427ドル
12,294,768
820,659
11,125,528
10,313,230
812,298
461,056
1,366,698
538,665
831,282
$ 1.750.5637,703,314ドル
30,730,285
16,196,444
9,116,9542005For 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
1,408,728円
1,320,581
88,147
1,194,993
1,107,744
87,249
49,522
146,797
57,858
89,288
\ 187.91
60.00
4,099,713円
3,300,740
1,739,660
979,25220051,458,066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
824,9282002Consolidated 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)
1,448,376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
810,01820011,428,559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
725,51620001,421,310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
840,24520031,391,684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
910,8382004Note: All dollar figures herein refer to U.S. currency. Japanese yen amounts have been translated, for convenience only, at the rate of 107円.41=US1,ドル the
approximate exchange rate prevailing on March 31, 2005.4Total operating expenses decreased 0.2%, to 1,195円.0
billion. This low rise was despite higher power production
and increased fuel costs, and was due to groupwide cost-
reduction efforts and a management efficiency drive that cut
capital and personnel costs.
Operating income thus rose 7.4%, to 213円.7 billion. Net
income climbed 22.7%, to 89円.3 billion, despite extraordi-
nary losses of 10円.5 billion stemming from the application
of new accounting standards for losses on property.
Capital Investment Policy: Kyushu Electric’s capital
expenditure plans focus on lowering the costs of providing
electricity while stabilizing long-term supplies.
Management is striving to improve the efficiency of its
capital spending by (1) accurately projecting future demand
and (2) increasing the reliability of its facilities and operating
technologies by streamlining the facilities setup, reviewing
design and construction standards and diversifying purchasing.
To satisfy growing demand for power, the Company is tak-
ing comprehensive steps to maintain secure energy supplies
Consolidated Financial Review
Operating Results: In fiscal 2004, ended March 31, 2005,
the Japanese economy initially showed signs of a turnaround
on the strength of rises in exports and private-sector capital
investment. But the recovery pace slowed from the second
half of the term as personal consumption flattened and
export growth decelerated.
Power sales volume advanced 3.1% from a year earlier on
higher production among integrated circuit (IC) and chemi-
cals makers, offsetting the impact of cement plant closures
on consumption among large industrial customers.
Residential (lighting) and commercial demand increased
4.1%. This reflected new shop and restaurant openings as
well as a hotter summer, which boosted air-conditioning
demand. The Company’s sales volume therefore increased
3.8%, to 80.2 billion kilowatt-hours.
Total operating revenues increased 1.2%, to 1,408円.7
billion. This was mainly because of overall gains in power
volume sales, which offset the impact of a rate reduction
and lower power volume sales to other electric power
companies.
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
’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05
Generating Capacity Capital Investment5while balancing its power development, centered on nuclear
power, to ensure economy and reduce environmental impact.
In 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 were 800円 million higher than we
initially planned, at 200円.1 billion. This reflected the costs
of restoration from typhoon damage, which overshadowed
efficiency initiatives that included spending cuts on design,
construction and procurement.
We are continuing work on a 1,200-megawatt 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 2004, capital investment and the redemption of
corporate bonds and borrowings were 738円.6 billion, down
19.1%. Bond redemptions and loan repayments decreased
23.7%, to 538円.5 billion.
Internal reserves increased 7.9%, to 384円.7 billion.
Proceeds from the issue of bonds and notes dropped 31.0%,
to 100円.0 billion, of which net proceeds were 99円.6 billion.
Borrowings fell 38.2%, to 254円.3 billion.
Cash Flows: Net cash provided by operating activities
increased 8.4%, to 419円.3 billion. This rise was due mainly
to higher residential electricity revenues.
Net cash used in investing activities dropped 3.1%, to
193円.6 billion, largely because of lower capital expenditures.
Net cash used in financing activities rose 11.5%, to 221円.0
billion, reflecting a decline in interest-bearing debt.
As a result of these factors, cash and cash equivalents at
end of year stood at 42円.8 billion, down 5円.3 billion from
the close of fiscal 2003.
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. Power retailing extended to all high-
voltage users from April 2005. The Japanese
government has decided to assess specific policies for
full liberalization by April 2007.
Internal reserves
Bonds
Borrowings
(Billions of yen)8001,0006004002000
’01 ’02 ’03 ’04 ’05
Sources of Funds680,074,109ドル
2,705,036
82,779,145
1,189,908
50,858,952
52,048,860
30,730,285
2,263,998
1,062,257
508,630
1,073,727
193,837
2,838,451
398,762
906,471
(11,973)
360,134
141,151
76,035
1,870,580
37,703,314ドル2005PROPERTY (Notes 3 and 12):
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
\ 8,600,760
290,548
8,891,308
127,808
5,462,760
5,590,568
3,300,740
243,176
114,097
54,632
115,329
20,820
304,878
42,831
97,364
(1,286)
38,682
15,161
8,167
200,919
\ 4,049,7132005\ 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
\ 4,114,3782004Consolidated Balance Sheets
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
March 31, 2005 and 2004
Millions of Yen
Thousands of
U.S. Dollars (Note 1)
See notes to consolidated financial statements.
ASSETS716,196,444ドル
1,912,625
3,265,040
1,028,824
170,636
22,573,569
2,014,915
1,707,225
721,227
330,239
758,784
357,592
5,889,982
43,590
79,219
2,209,338
289,489
6,286,109
343,674
(2,532)
(9,124)
9,116,954
37,703,314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 13)
Accrued income taxes
Accrued expenses
Other
Total current liabilities
RESERVE FOR FLUCTUATIONS IN WATER LEVEL
MINORITY INTERESTS
COMMITMENTS AND CONTINGENCIES (Note 16)
SHAREHOLDERS’ EQUITY (Note 10):
Common stock, authorized, 1,000,000,000 shares;
issued 474,183,951 shares in 2005 and 2004
Capital surplus
Retained earnings
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Treasury stock—at cost, 699,439 shares in 2005 and
571,164 shares in 2004
Total shareholders’ equity
TOTAL
\ 1,739,660
205,435
350,698
110,506
18,328
2,424,627
216,422
183,373
77,467
35,471
81,501
38,409
632,643
4,682
8,509
237,305
31,094
675,191
36,914
(272)
(980)
979,252
\ 4,049,713
\ 1,858,512
200,862
327,901
105,497
10,776
2,503,548
175,379
244,327
58,000
73,623
32,355
71,544
33,869
689,097
2,018
8,877
237,305
31,094
608,656
34,710
(211)
(716)
910,838
\ 4,114,378
LIABILITIES AND SHAREHOLDERS’ EQUITY 2005
2005 2004
Millions of Yen
Thousands of
U.S. Dollars (Note 1)812,294,768ドル
820,659
13,115,427
10,313,230
812,298
11,125,528
1,989,899
461,056
97,756
39,587
598,399
1,391,500
24,802
1,366,698
596,341
(57,676)
538,665
828,033
3,249
$ 831,2822005OPERATING REVENUES (Note 14):
Electric
Other
Total operating revenues
OPERATING EXPENSES (Notes 11 and 14):
Electric
Other
Total operating expenses
OPERATING INCOME
OTHER EXPENSES (INCOME):
Interest charges
Loss on impairment of fixed assets (Note 12)
Other—net
Total other expenses—net
INCOME BEFORE INCOME TAXES, 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
\ 1,320,581
88,147
1,408,728
1,107,744
87,249
1,194,993
213,735
49,522
10,500
4,252
64,274
149,461
2,664
146,797
64,053
(6,195)
57,858
88,939349\ 0,089,2882005\ 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)
\ 0,072,7922004Consolidated Statements of Income
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2005 and 2004
See notes to consolidated financial statements.
PER SHARE OF COMMON STOCK (Note 2. r.):
Basic net income
Cash dividends applicable to the year
\ 187.91
60.00
\ 153.05
50.00
1ドル.750.56Millions of Yen
Thousands of
U.S. Dollars (Note 1)
Yen U.S. Dollars (Note 1)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, 2005 and 2004
Thousands of Shares/Millions of Yen
See notes to consolidated financial statements.
BALANCE AT APRIL 1, 2003 474,184 237,305円 31,087円 556,955円 15,490円 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 31,094 608,656 34,710 (211) 571 (716)
Adjustment of retained earnings
for exclusion of an equity
method accounted company 104
Adjustment of retained earnings
for the merger of a non-
consolidated subsidiary with
a consolidated subsidiary 1,137
Net income 89,288
Cash dividends, 50円 per share (23,695)
Bonuses to directors and
corporate auditors (299)
Increase in treasury stock 128 (264)
Net increase in unrealized gain
on available-for-sale securities 2,204
Net decrease in foreign currency
translation adjustment (61)
BALANCE AT MARCH 31, 2005 474,184 237,305円 31,094円 675,191円 36,914円 \(272) 699 \(980)
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, 2004 2,209,338ドル 289,489ドル 5,666,660ドル 323,154ドル $(1,964) $(6,666)
Adjustment of retained earnings
for exclusion of an equity
method accounted company 968
Adjustment of retained earnings
for the merger of a non-
consolidated subsidiary with
a consolidated subsidiary 10,586
Net income 831,282
Cash dividends, 0ドル.47 per share (220,603)
Bonuses to directors and
corporate auditors (2,784)
Increase in treasury stock (2,458)
Net increase in unrealized gain on
available-for-sale securities 20,520
Net decrease in foreign currency
translation adjustment (568)
BALANCE AT MARCH 31, 2005 2,209,338ドル 289,489ドル 6,286,109ドル 343,674ドル $(2,532) $(9,124)10Consolidated Statements of Cash Flows
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2005 and 2004
See notes to consolidated financial statements.
$(1,366,698
(572,526)
2,460,758
97,756
42,091
212,243
46,634
83,400
16,889
24,802
(9,208)
(13,993)
24,793
14,859
(5,735)
114,030
2,536,793
3,903,491
(1,920,706)
(76,427)
121,739
73,364
(1,802,030)
927,586
(732,036)
455,432
(1,378,829)
(567,489)
(539,987)
(220,631)
(1,983)
(2,057,937)7543,599
1,816
4,031
349,316
$(0,398,7622005CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paid
Depreciation and amortization
Loss on impairment of fixed assets
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
Reversal of reserve for loss on discontinued operations
Changes in assets and liabilities, net of effects from newly consolidated
subsidiaries and merger of a non-consolidated subsidiary with a
consolidated subsidiary:
Increase in trade receivables
Decrease in inventories
Increase (decrease) in trade payables
Decrease in interest payables
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
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 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED
SUBSIDIARIES AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS OF A NON-CONSOLIDATED
SUBSIDIARY MERGED WITH A CONSOLIDATED SUBSIDIARY
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
\(146,797
(61,495)
264,310
10,500
4,521
22,797
5,009
8,958
1,814
2,664
(989)
(1,503)
2,663
1,596
(616)
12,248
272,477
419,274
(206,303)
(8,209)
13,076
7,880
(193,556)
99,632
(78,628)
48,918
(148,100)
(60,954)
(58,000)
(23,698)
(213)
(221,043)84,683195433
37,520
\(042,8312005\(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
\(037,5202004Millions 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, 2005 and 2004
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
consolidated financial statements issued domestically in order to
present them in a form which is more familiar to readers
outside Japan. In addition, certain reclassifications have been made
to the consolidated financial statements for the year ended March
31, 2004 to conform to the classifications used in the consolidated
financial statements for the year ended March 31, 2005.
The United States dollar amounts included herein are provided
solely for the convenience of readers and are stated at the rate of
107円.41=US1,ドル the approximate exchange rate prevailing on
March 31, 2005. 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, 2005 include the accounts of
the Company and its twenty-one (nineteen for 2004) subsidiaries.
All significant intercompany transactions and balances have been
eliminated in consolidation. Investments in thirteen non-
consolidated subsidiaries and eleven 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. Impairment of Fixed Assets—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 Standards 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 Companies adopted the new accounting standard for
impairment of fixed assets as of April 1, 2004.
The Companies review their fixed assets including leased
property for impairment whenever events or changes in
circumstance indicate the carrying amount of an asset or asset
group may not be recoverable. An impairment loss would be
recognized 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 effect of adoption of the new accounting standard for
impairment of fixed assets was to decrease income before income
taxes and minority interests for the year ended March 31, 2005 by
10,500円 million (97,756ドル thousand).12d. 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.
e. 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 realizable value by a charge
to income.
f. 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.
g. 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.
h. 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.
i. 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 used for hedging
purposes, if derivatives qualify for hedge accounting because of
high correlation and effectiveness between the hedging instruments
and the hedged items, gains or losses on 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 charges, which treatment is also allowed
under the standards.
j. 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.
k. 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.
l. 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.
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 tax deductions for 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.13The 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.
Diluted EPS is not disclosed for the years ended March 31, 2005
and 2004, because potentially dilutive securities were not
outstanding.
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.
3. Property
The major classes of property as of March 31, 2005 and 2004 were as follows:
05,088,874ドル
14,661,289
14,122,568
1,161,363
35,034,094
13,901,881
8,542,547
11,977,470
3,503,696
601,089
6,513,332
2,705,036
82,779,145
1,189,908
50,858,952
30,730,285ドル2005Original 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
\ 546,596
1,574,769
1,516,905
124,742
3,763,012
1,493,201
917,555
1,286,500
376,332
64,563
699,597
290,548
8,891,308
127,808
5,462,760
\ 3,300,7402005\ 544,570
1,667,196
1,513,230
123,409
3,848,405
1,506,348
907,334
1,284,673
359,843
28,806
677,364
239,625
8,852,398
125,623
5,331,920
\ 3,394,8552004Millions of Yen
Thousands of
U.S. Dollars1409,480,589ドル
352,481
274,770
3,085,411
196,071
4,822,037
18,211,359
2,014,915
16,196,444ドル2005Domestic bonds, 0.2% to 4.65%, due serially to 2024
U.S. dollar notes, 7.25%, due 2008
Swiss franc bonds, 4.0%, due 2007
Loans from The Development Bank of Japan, 0.69% to 6.9%, due serially to 2025
Loans, principally from banks and insurance companies, 0.25% to 5.1%, due serially to 2025
Collateralized
Unsecured
Total
Less current maturities
Long-term debt, less current maturities
1,018,310円
37,860
29,513
331,404
21,060
517,935
1,956,082
216,422
1,739,660円2005\ 996,938
37,860
29,513
371,624
24,650
573,306
2,033,891
175,379
1,858,512円2004Long-term debt consisted of the following at March 31, 2005 and 2004:
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, 2005 and 2004 were as follows:
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other securities
Held-to-maturity
13,043円140463
57,743円91
01円171
70,785円132463CostUnrealized
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, 2005 and 2004
were as follows:
121,432ドル
1,303
4,311
537,594ドル849
009ドル1589
659,017ドル
1,229
4,311
353,887ドル
21,655
22,158
397,700ドル2005Available-for-sale:
Equity securities
Other securities
Held-to-maturity
Total
38,011円
2,326
2,380
42,717円200540,265円
1,685
2,640
44,590円2004Millions of Yen
Thousands of
U.S. Dollars2005Cost
Unrealized
Gains
Unrealized
Losses Fair Value2004Cost
Unrealized
Gains
Unrealized
Losses Fair Value2005Millions of Yen
Thousands of
U.S. Dollars
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 16).
Certain assets of the consolidated subsidiaries, amounting to
74,187円 million (690,690ドル thousand), are pledged as collateral for a
portion of their long-term debt and short-term borrowings at
March 31, 2005.
5. Pledged Assets
Investments in associated companies held by a consolidated
subsidiary, amounting to 5,934円 million (55,246ドル thousand), are
pledged as collateral for bank loans of the associated companies at
March 31, 2005.
13,035円513950254,359円15214円1667,380円612850415
7. 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
credits earned in each year of service, 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.20062007200820092010Thereafter
Total
Thousands of
U.S. Dollars
Millions of Yen
0,216,422円
188,083
201,966
163,002
155,988
1,030,621
1,956,082円
02,014,915ドル
1,751,076
1,880,328
1,517,568
1,452,267
9,595,205
18,211,359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% 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, 2005 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 several fixed terms selected by them. 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.
The components of net periodic benefit costs for the years ended March 31, 2005 and 2004 are as follows:
$(4,561,326
(2,780,272)
(156,894)
288,465
$(1,912,6252005Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Unrecognized prior service cost
Net liability
\(489,932
(298,629)
(16,852)
30,984
\(205,4352005\(524,726
(278,244)
(45,810)190\(200,8622004The liability for employees’ retirement benefits at March 31, 2005 and 2004 consisted of the following:
Millions of Yen
Thousands of
U.S. Dollars
144,661ドル
89,098
(30,081)
176,501
(72,135)
308,044ドル2005Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Amortization of prior service cost
Net periodic benefit costs
15,538円
9,570
(3,231)
18,958
(7,748)
33,087円200517,331円
10,369
(528)
26,664(97)53,739円2004Millions of Yen
Thousands of
U.S. Dollars168. Short-Term Borrowings
Short-term borrowings are generally represented by 365-day notes, bearing interest at rates ranging from 0.12417% to 2.46% and from 0.08633%
to 1.375% at March 31, 2005 and 2004, 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 2005
and 2004.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31,
2005 and 2004 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
Other
Deferred tax liabilities
Net deferred tax assets
Assumptions for actuarial computations for the years ended March 31, 2005 and 2004 are as follows:
2005 2004
Discount rate mainly 2.0% mainly 2.0%
Expected rate of return on plan assets mainly 1.0% mainly 0.0%
Recognition period of actuarial gain/loss mainly 5 years mainly 5 years
Amortization period of prior service cost mainly 5 years 5 years
0,664,408ドル
234,438
107,625
97,728
94,814
86,677
319,365
(187,757)
1,417,298ドル
0,194,731ドル
8,025
0,202,756ドル
1,214,542ドル2005\ 071,364
25,181
11,560
10,497
10,184
9,310
34,303
(20,167)
\ 152,232
\ 020,916862\ 021,778
\ 130,4542005\ 066,505
23,350
12,959
10,497
10,184
10,077
26,462
(13,996)
\ 146,038
\ 019,678845\ 020,523
\ 125,5152004Millions of Yen
Thousands of
U.S. Dollars
A reconciliation between the normal effective statutory tax rate for the years ended March 31, 2005 and the actual effective tax rates reflected
in the accompanying consolidated statements of income is as follows:
Normal effective statutory tax rate
Valuation allowance
Extra tax credit on the Japanese Special Taxation Measures Law
Other—net
Actual effective tax rate
Such reconciliation for the year ended March 31, 2004 is not disclosed because the difference between the normal effective statutory tax
rate and the actual effective tax rate is immaterial.
36.1%5.3(2.1)0.139.4%200517
196ドル
196ドル2005Reserve for:
Depreciation of nuclear power production facilities under construction
Losses on overseas investments
Total\ 21\ 212005\ 3,73423\ 3,757200410. Shareholders’ Equity
As described in Note 2. o., certain special reserves were included in retained earnings. Such reserves at March 31, 2005 and 2004 were
as follows:
The Code requires that all shares of common stock are recorded
with no par value and 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 the common stock by resolution
of the Board of Directors.
The Code allows public companies to repurchase treasury stock
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 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.
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. The amount of retained earnings available
for dividends under the Code was 565,582円 million (5,265,637ドル
thousand) as of March 31, 2005, based on the amount recorded in
the Company’s general books of account.
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 9,856円 million (91,761ドル thousand) and 10,677円 million for the years ended March 31,
2005 and 2004, respectively.
13. Related Party Transactions
Significant transactions of the Company with an associated company for the years ended March 31, 2005 and 2004 were as follows:
KYUDENKO CORPORATION
Transactions:
Order for construction works of distribution facilities and other
Balances at year ended:
Payables for construction works
393,408ドル
45,824200542,256円
4,922200543,943円
6,2372004Millions of Yen
Thousands of
U.S. Dollars
12. Loss on Impairment of Fixed Assets
The Companies reviewed their fixed assets including leased property for impairment as of the year ended March 31, 2005 and, as a result,
recognized an impairment loss of 10,500円 million (97,756ドル thousand) as other expenses mainly for idle assets which will not be used in the
future due to the changes in business plan and the carrying amount of these assets was written down to the recoverable amount.
The recoverable amount of these assets was mainly measured by the respective net selling prices which were based on appraisal valuation and
assessed value of fixed assets.
(b) Lessor
Revenues under finance leases were 77円 million (717ドル thousand)
and 2円 million for the years ended March 31, 2005 and 2004,
respectively.
Information of leased property such as acquisition cost and
accumulated depreciation under finance leases for the years ended
March 31, 2005 and 2004 was as follows:
Millions of Yen
Acquisition cost
Accumulated depreciation
Accumulated impairment loss
Net leased equipment
March 31, 2005
60,516円
27,73183131,954円
35,932円
13,08383122,018円
24,584円
14,648
09,936円
General facilities Other Total18563,411ドル
258,179
7,737
297,495ドル
334,531ドル
121,804
7,737
204,990ドル
228,880ドル
136,375
092,505ドル
Acquisition cost
Accumulated depreciation
Accumulated impairment loss
Net leased equipment200507,955円
24,913
32,868円
Due within one year
Due after one year
Total
Millions of Yen
14. Leases
(a) Lessee
The Companies lease certain computer and equipment.
For the year ended March 31, 2005, the Companies recorded an
impairment loss of 831円 million (7,737ドル thousand) on certain leased
property held under finance leases that do not transfer ownership
and an allowance for impairment loss on leased property, which is
included in long-term liabilities—other.
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, 2005 and 2004 were as follows:
Obligations under finance leases which included the imputed
interest expense at March 31, 2005 and 2004 were as follows:
074,062ドル
231,943
306,005ドル200407,602円
23,806
31,408円2005Thousands of
U.S. Dollars
General facilities Other
Thousands of U.S. Dollars
Total
March 31, 2005
Future lease revenue under finance leases which included the
imputed interest revenue at March 31, 2005 and 2004 were as
follows:
The above-mentioned amounts include sublease agreements.
Depreciation expense relating to the leased assets arrangements
mentioned above was 246円 million (2,290ドル thousand) and 6円
million for the years ended March 31, 2005 and 2004, respectively.
The above-mentioned amounts include sublease agreements.
Allowance for impairment loss on leased property of 808円
million (7,523ドル thousand) as of March 31, 2005 is not included in
the obligations under finance leases.
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 Total20058,102円
8,12523831
Depreciation expense
Lease payments
Reversal of allowance for
impairment loss
Impairment loss
Millions of Yen
Depreciation expense and other information under financial leases:
75,431ドル
75,6452147,73720048,837円
8,8372005Thousands of
U.S. Dollars
Depreciation expense, which is not reflected in the accompanying
statements of income, is computed by the straight-line method.20050,119円
1,071
1,190円
Due within one year
Due after one year
Total
Millions of Yen
01,108ドル
9,971
11,079ドル2004035円347382円2005Thousands of
U.S. Dollars2005780円252528円
Acquisition cost
Accumulated depreciation
Net leased equipment
Millions of Yen
7,262ドル
2,346
4,916ドル2004233円6227円2005Thousands of
U.S. Dollars
Other plant
and equipment
Other plant
and equipment1916. Commitments and Contingencies
At March 31, 2005, 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, 2005 were as follows:
Under the debt assumption agreements, the Company was contingently liable for the redemption of the domestic bonds transferred to banks.
17. Segment Information
Information by business segments for the years ended March 31, 2005 and 2004 is as follows:
Industry Segments
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
118,440円
62,442
215,245
5,146
1,102,691ドル
581,343
2,003,957
47,910
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.
15. 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.
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income (loss)
Total assets
Depreciation
Impairment loss
Capital expenditures
1,408,728円
1,408,728
1,194,993
0,213,735円
4,049,713円
264,310
10,500
210,530
053,432円
88,805
142,237
135,022
007,215円
303,875円
15,509
3,472
11,264
\(125,705)
(125,705)
(127,645)
\(001,949
\(107,927)
(3,397)
(2,825)
1,320,581円
2,415
1,322,996
1,117,674
0,205,322円
3,722,737円
234,484
6,691
190,360
Millions of Yen2005Electric Other
Eliminations/
Corporate Consolidated
IT and
telecommunications
034,715円
34,485
69,200
69,951
000円(751)
131,028円
17,71433711,7312018. Subsequent Event
At the general shareholders’ meeting held on June 29, 2005, the Company’s shareholders approved the following appropriations of retained
earnings as of March 31, 2005:
Appropriations of Retained Earnings
Year-end cash dividends, 35円.00 (0ドル.33) per share
Bonuses to directors and corporate auditors
154,390ドル
1,303
16,583円140Millions of Yen Thousands of U.S. Dollars
IT and telecommunications consisted of providing telephone
lines and wirelines.
Other consisted of 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.
Information for overseas sales is not disclosed due to overseas
sales being immaterial compared with consolidated net sales.
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income (loss)
Total assets
Depreciation
Capital expenditures
Millions of Yen2004Electric Other
Eliminations/
Corporate Consolidated
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income (loss)
Total assets
Depreciation
Impairment loss
Capital expenditures
13,115,427ドル
13,115,427
11,125,528
01,989,899ドル
37,703,314ドル
2,460,758
97,756
1,960,060
0,497,458ドル
826,785
1,324,243
1,257,071
0,067,172ドル
2,829,113ドル
144,391
32,325
104,869
$(1,170,328)
(1,170,328)
(1,188,474)
$(0,018,146
$(1,004,813)
(31,626)
(26,301)
12,294,768ドル
22,484
12,317,252
10,405,679
01,911,573ドル
34,659,128ドル
2,183,074
62,294
1,772,275
Thousands of U.S. Dollars2005Electric Other
Eliminations/
Corporate Consolidated
1,391,684円
1,391,684
1,192,718
0,198,966円
4,114,378円
285,770
217,906
045,690円
92,403
138,093
131,015
007,078円
314,564円
15,482
8,690
\(129,318)
(129,318)
(130,785)
\(001,467
\(112,648)
(3,711)
(3,736)
1,308,843円
2,377
1,311,220
1,117,142
0,194,078円
3,777,960円
257,152
196,986
IT and
telecommunications
037,151円
34,538
71,689
75,346
\ 0(3,657)
134,502円
16,847
15,966
IT and
telecommunications
0,323,201ドル
321,059
644,260
651,252
000ドル(6,992)
1,219,886ドル
164,919
3,137
109,217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 (together the "Companies") as of March 31, 2005 and 2004, 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, 2005 and 2004, 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.
As discussed in Note 2.c. to the consolidated financial statements, the Companies adopted the new accounting standard for impairment of
fixed assets as of April 1, 2004.
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, 2005
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2275,452,118ドル
2,711,275
78,163,393
1,155,544
48,367,992
49,523,536
28,639,857
2,263,998
1,025,733
1,051,950
914,850
164,081
3,156,614
291,267
709,943
(10,874)
223,676
114,877
50,247
1,379,136
35,439,605ドル2005PROPERTY (Notes 3 and 12):
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
\ 8,104,312
291,218
8,395,530
124,117
5,195,206
5,319,323
3,076,207
243,176
110,174
112,990
98,264
17,624
339,052
31,285
76,255
(1,168)
24,025
12,339
5,397
148,133
3,806,568円2005\ 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2004Non-Consolidated Balance Sheets
Kyushu Electric Power Company, Incorporated
March 31, 2005 and 2004
See notes to non-consolidated financial statements.
Millions of Yen
Thousands of
U.S. Dollars (Note 1)
ASSETS2315,228,750ドル
1,753,068
3,265,040
1,028,824
116,618
21,392,300
1,764,705
1,619,030
529,988
315,809
817,754
304,013
5,351,299
43,590
2,209,338
289,424
552,332
5,272,219
335,685
(6,582)
8,652,416
35,439,605ドル2005LONG-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 14)
SHAREHOLDERS’ EQUITY (Note 10):
Common stock, authorized, 1,000,000,000 shares;
issued, 474,183,951 shares in 2005 and 2004
Capital surplus:
Additional paid-in capital
Retained earnings:
Legal reserve
Unappropriated
Unrealized gain on available-for-sale securities
Treasury stock—at cost, 380,989 shares in 2005
and 254,093 shares in 2004
Total shareholders’ equity
TOTAL
1,635,720円
188,297
350,698
110,506
12,526
2,297,747
189,547
173,900
56,926
33,921
87,835
32,654
574,783
4,682
237,305
31,087
59,326
566,289
36,056
(707)
929,356
3,806,568円20051,744,666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2004LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of Yen
Thousands of
U.S. Dollars (Note 1)2412,317,252ドル
94,637
12,411,889
1,730,770
1,333,405
982,711
1,958,719
1,477,553
247,910
46,634
71,939
138,311
855,097
621,721
339,475
601,434
10,405,679
129,523
10,535,202
1,876,687
433,116
62,294
19,849
515,259
1,361,428
24,802
1,336,626
568,606
(64,165)
504,441
$ 832,1852005OPERATING REVENUES (Note 13)
Electric
Other
Total operating revenues
OPERATING EXPENSES (Notes 11 and 13):
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. l.)
Disposition of property
Taxes other than income taxes
Subcontract feeRentOther
Total
Other
Total operating expenses
OPERATING INCOME
OTHER EXPENSES:
Interest charges
Loss on impairment of fixed assets (Note 12)
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
1,322,996円
10,165
1,333,161
185,902
143,221
105,553
210,386
158,704
26,628
5,009
7,727
14,856
91,846
66,779
36,463
64,600
1,117,674
13,912
1,131,586
201,575
46,521
6,691
2,132
55,344
146,231
2,664
143,567
61,074
(6,892)
54,182
0,089,385円2005Non-Consolidated Statements of Income
Kyushu Electric Power Company, Incorporated
Years Ended March 31, 2005 and 2004
See notes to non-consolidated financial statements.
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2004PER SHARE OF COMMON STOCK (Note 2. p.):
Basic net income
Cash dividends applicable to the year
188円.33
60.00
147円.65
50.00
1ドル.750.56Millions of Yen
Thousands of
U.S. Dollars (Note 1)
Yen U.S. Dollars (Note 1)25Non-Consolidated Statements of Shareholders’ Equity
Kyushu Electric Power Company, Incorporated
Years Ended March 31, 2005 and 2004
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, 2003 474,184 237,305円 31,087円 59,326円 454,460円 15,087円 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 31,087 59,326 500,739 33,898 254 (445)
Net income 89,385
Cash dividends, 50円 per share (23,695)
Bonuses to directors and
corporate auditors (140)
Increase in treasury stock 127 (262)
Net increase in unrealized gain
on available-for-sale securities 2,158
BALANCE AT MARCH 31, 2005 474,184 237,305円 31,087円 59,326円 566,289円 36,056円 381 \(707)
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, 2004 2,209,338ドル 289,424ドル 552,332ドル 4,661,940ドル 315,594ドル $(4,143)
Net income 832,185
Cash dividends, 0ドル.47 per share (220,603)
Bonuses to directors and
corporate auditors (1,303)
Increase in treasury stock (2,439)
Net increase in unrealized gain
on available-for-sale securities 20,091
BALANCE AT MARCH 31, 2005 2,209,338ドル 289,424ドル 552,332ドル 5,272,219ドル 335,685ドル $(6,582)26Notes to Non-Consolidated Financial Statements
Kyushu Electric Power Company, Incorporated
Years Ended March 31, 2005 and 2004
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
principles generally accepted in Japan.
In preparing these non-consolidated financial statements,
certain reclassifications and rearrangements have been made to the
Company’s financial statements issued domestically in order to pre-
sent 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
107円.41=US1,ドル the approximate exchange rate prevailing on
March 31, 2005. 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. Impairment of Fixed Assets—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 Standards 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 Company adopted the new accounting standard for
impairment of fixed assets as of April 1, 2004.
The Company reviews its fixed assets including leased property
for impairment whenever events or changes in circumstance
indicate the carrying amount of an asset or asset group may not
be recoverable. An impairment loss would be recognized 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 effect of adoption of the new accounting standard for
impairment of fixed assets was to decrease income before income
taxes for the year ended March 31, 2005 by 6,691円 million
(62,294ドル thousand).
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 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 realizable value by a charge
to income.
e. 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.
f. 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.27g. Foreign Currency Transactions—Receivables and payables
denominated in foreign currencies are translated into Japanese yen
at the rates in effect as of the balance sheet date.
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 used for hedging purposes,
if derivatives qualify for hedge accounting because of high
correlation and effectiveness between the hedging instruments and
the hedged items, gains or losses on 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 charges, which treatment is also allowed
under the standards.
i. 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 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. 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.
m. 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.
n. Special Reserves—The Japanese Special Taxation Measures Law
permits companies in Japan to take tax deductions for 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.
o. 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.
p. 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.
Diluted EPS is not disclosed for the years ended March 31, 2005
and 2004, because potentially dilutive securities were not
outstanding.
Cash dividends per share represent actual amounts applicable
to earnings of the respective years.
q. Research and Development Costs—Research and development costs
are charged to income as incurred.
r. 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.28Domestic bonds, 0.2% to 4.65%, due serially to 2024
U.S. dollar notes, 7.25%, due 2008
Swiss franc bonds, 4.0%, due 2007
Loans from The Development Bank of Japan, 0.95% to 6.9%, due serially to 2025
Unsecured loans, principally from banks and insurance companies, 0.25% to 5.1%, 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, 2005 and 2004:
09,484,778ドル
352,481
274,770
2,547,612
4,333,814
16,993,455
1,764,705
15,228,750ドル20051,018,760円
37,860
29,513
273,639
465,495
1,825,267
189,547
1,635,720円20050,997,388円
37,860
29,513
308,758
517,906
1,891,425
146,759
1,744,666円2004Millions 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, 2005 and 2004 were as follows:
05,105,670ドル
14,804,227
14,215,511
1,183,428
35,308,836
14,050,712
8,690,010
12,394,042
3,597,207
601,089
810,222
2,711,275
78,163,393
1,155,544
48,367,992
28,639,857ドル20050,548,400円
1,590,122
1,526,888
127,112
3,792,522
1,509,187
933,394
1,331,244
386,376
64,563
87,026
291,218
8,395,530
124,117
5,195,206
3,076,207円20050,546,300円
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
3,150,938円2004Millions 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, 2005 and 2004 were as follows:
Associated company 4,303円 15,205円 10,902円 40,061ドル 141,560ドル 101,499ドル
2005 2004
Carrying
amount Fair value
Unrealizedgain2005
Millions of Yen
Thousands of
U.S. Dollars
Carrying
amount Fair value
UnrealizedgainCarrying
amount Fair value
Unrealizedgain4,303円 10,634円 6,331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 14).
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 credits earned in each year of service, 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 0.12417% to 0.34250% and from
0.08633% to 0.33917% at March 31, 2005 and 2004, 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 100.25% 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, 2005 were as follows:20062007200820092010Thereafter
Total
Thousands of
U.S. Dollars
Millions of Yen
0,189,547円
166,841
184,102
146,763
143,721
994,293
1,825,267円
01,764,705ドル
1,553,310
1,714,012
1,366,381
1,338,060
9,256,987
16,993,455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 several fixed terms selected
by them. Eligible employees retiring after at least 20 years of ser-
vice but before the mandatory retirement age, receive a lump-sum
payment upon retirement and annuities.
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 2005 and 2004.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at March 31, 2005 and 2004 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
Less valuation allowance
Deferred tax assets
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Other
Deferred tax liabilities
Net deferred tax assets
At March 31, 2001 and 2000
0,606,629ドル
222,465
97,728
94,814
45,043
202,076
(49,036)
1,219,719ドル
0,189,638ドル3540,189,992ドル
1,029,727ドル2005065,158円
23,895
10,497
10,184
4,838
21,705
(5,267)
131,010円
020,369円38020,407円
110,603円2005060,706円
21,946
10,497
10,184
5,145
15,647
124,125円
019,150円46019,196円
104,929円2004Millions of Yen
Thousands of
U.S. Dollars
Such reconciliation for the year ended March 31, 2005 is not disclosed because the difference between the normal effective statutory tax
rate and the actual effective tax rate is immaterial.
Normal effective statutory tax rate
Extra tax credit on the Japanese Special Taxation Measures Law
Other—net
Actual effective tax rate
A 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:
36.1%
(2.7)0.433.8%200430
(a) Lessee
The Company leases certain computer and other equipment.
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, 2005 and 2004 were as follows:
10. Shareholders’ Equity
As described in Note 2. n., certain special reserves were included in unappropriated (a component of retained earnings). Such reserves at March
31, 2005 and 2004 were as follows:
196ドル
196ドル2005Reserve for:
Depreciation of nuclear power production facilities under construction
Losses on overseas investments
Total
21円
21円20053,734円233,757円2004Millions of Yen
Thousands of
U.S. Dollars
The Code requires that all shares of common stock are recorded
with no par value and at least 50% of the issue price of new shares
is required to be recorded as common stock and the remaining net
proceeds as additional paid-in capital. The Code permits compa-
nies, 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 public companies to repurchase treasury stock
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
shareholders meeting.
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. The amount of retained earnings available
for dividends under the Code was 565,582円 million (5,265,637ドル
thousand) as of March 31, 2005, based on the amount recorded in
the Company’s general books of account.
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.
11. Research and Development Costs
Research and development costs charged to income were 9,140円 million (85,094ドル thousand) and 9,701円 million for the years ended
March 31, 2005 and 2004, respectively.
12. Loss on Impairment of Fixed Assets
The Company reviewed its fixed assets including leased property for impairment as of the year ended March 31, 2005 and, as a result,
recognized an impairment loss of 6,691円 million (62,294ドル thousand) as other expenses mainly for idle assets which will not be used in the future
due to the changes in business plan and the carrying amount of these assets was written down to the recoverable amount.
The recoverable amount of these assets was mainly measured by the respective net selling prices which were based on assessed value of
fixed assets.
13. Leases
Millions of Yen
Acquisition cost
Accumulated depreciation
Net leased equipment
March 31, 2005
\ 32,528
18,575
\ 13,953
\ 1,689
1,012
\ 0,677
\ 30,839
17,563
\ 13,276
General facilities Other Total
2005
04,738円
9,215
13,953円
Due within one year
Due after one year
Total
Millions of Yen
044,111ドル
85,793
129,904ドル200404,943円
9,981
14,924円2005Thousands of
U.S. Dollars31Obligations under finance leases which included the imputed
interest expense at March 31, 2005 and 2004 were as follows:
14. Commitments and Contingencies
At March 31, 2005, 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, 2005 were as follows:
Under the debt assumption agreements, the Company was contingently liable for the redemption of the domestic bonds transferred to banks.
302,840ドル
172,936
129,904ドル
15,725ドル
9,422
06,303ドル
287,115ドル
163,514
123,601ドル
Acquisition cost
Accumulated depreciation
Net leased equipment
General facilities Other
Thousands of U.S. Dollars
Total
March 31, 2005
Co-guarantees of loans, mainly in connection with procurement of fuel
Guarantees of employees’ housing loans
Guarantees under debt assumption agreements
Other
118,440円
62,394
215,245
5,223
1,102,691ドル
580,896
2,003,957
48,627
Millions of Yen Thousands of U.S. Dollars
15. Subsequent Event
At the general shareholders’ meeting held on June 29, 2005, the Company’s shareholders approved the following appropriations of retained
earnings as of March 31, 2005:
Appropriations of Retained Earnings
Year-end cash dividends, 35円.00 (0ドル.33) per share
Bonuses to directors and corporate auditors
154,390ドル
1,303
16,583円140Millions of Yen Thousands of U.S. Dollars
(b) Lessor
Revenues under finance leases were 77円 million (717ドル thousand)
and 2円 million for the years ended March 31, 2005 and 2004,
respectively.
Information of leased property such as acquisition cost and
accumulated depreciation under finance leases for the years ended
March 31, 2005 and 2004 was as follows:
Future lease revenue under finance leases which included the
imputed interest revenue at March 31, 2005 and 2004 were
as follows:
Depreciation expense relating to the leased assets arrangements
mentioned above was 246円 million (2,290ドル thousand) and 6円
million for the years ended March 31, 2005 and 2004, respectively.20055,363円
5,363
Depreciation expense
Lease payments
Millions of Yen
Depreciation expense and other information under financial leases:
49,930ドル
49,93020045,544円
5,5442005Thousands of
U.S. Dollars
Depreciation expense, which is not reflected in the accompanying
statements of income, is computed by the straight-line method.20050,077円9941,071円
Due within one year
Due after one year
Total
Millions of Yen
0,717ドル
9,254
9,971ドル2004024円331355円2005Thousands of
U.S. Dollars2005780円252528円
Acquisition cost
Accumulated depreciation
Net leased equipment
Millions of Yen
7,262ドル
2,346
4,916ドル2004233円6227円2005Thousands of
U.S. Dollars
Other plant
and equipment
Other plant
and equipment
Millions of Yen
Acquisition cost
Accumulated depreciation
Net leased equipment
March 31, 2004
\ 34,040
19,116
\ 14,924
\ 1,658846\ 0,812
\ 32,382
18,270
\ 14,112
General facilities Other Total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, 2005
and 2004, 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, 2005 and 2004, and the results of its operations for the years then ended in
conformity with accounting principles generally accepted in Japan.
As discussed in Note 2.b. to the non-consolidated financial statements, the Company adopted the new accounting standard for impairment of
fixed assets as of April 1, 2004.
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, 2005
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)
12,411,889ドル
5,276,520
6,855,153
280,216
10,535,201
1,730,770
1,333,405
982,711
1,958,719
1,477,553
247,910
46,634
71,939
138,311
855,097
621,721
339,475
730,957
433,116
1,336,626
832,185
$ 1.750.5635,439,605ドル
28,639,856
15,228,750
8,652,4162005For 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
1,333,161円
566,751
736,312
30,098
1,131,586
185,902
143,221
105,553
210,386
158,704
26,628
5,009
7,727
14,856
91,846
66,779
36,463
78,512
46,521
143,567
89,385
0,0188円.33
60.00
3,806,568円
3,076,207
1,635,720
929,356
13,50520051,388,834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
14,1912002Note: All dollar figures herein refer to U.S. currency. Japanese yen amounts have been translated, for convenience only, at the rate of 107円.41=US1,ドル the
approximate exchange rate prevailing on March 31, 2005.
1,411,500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
14,34820011,393,650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
14,42820001,358,608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
13,96420031,318,337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
13,6602004Thousands of
U.S. Dollars
(except for
per share data)34Organization
General Meeting
of Stockholders
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
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
Board of
Directors
Chairman
President
Executive
Vice President
Managing Director
Director
Board of
Managing Directors
Board of Corporate
Auditors
Corporate Auditor
Facilities Siting Dept.
Environmental Affairs Dept.
Corporate Audit Office
Nuclear Power
Generation Division
Information and
Communications
Division
Plant Siting and
Environmental
Affairs Headquarter
Power Plant Siting Affairs Dept.
(As of August 31, 2005)35Board of Directors
Chairman
President
Executive Vice-President
Managing Director
Director
Corporate Auditor
Michisada Kamata
Shingo Matsuo
Hidemi Ashizuka
Mitsuaki Sato
Kowashi Imamura
Yukio Tanaka
Kouichi Hashida
Takahiro Higuchi
Kyouichi Hiratsuka
Morimasa Takeda
Tokihisa Ichinose
Tomokazu Odahara
Hachirou Kurano
Nobuyoshi Yokoe
Hitoshi Kiyota
Katsuhiko Higuchi
Shuuzou Katayama
Yasumichi Hinago
Keiji Mizuguchi
Noriyuki Ueda
Hajime Sankoda
Tooru Soufukuwaki
Kimiya Nakazato
Zengo Ishimura
Michiyo Koike
(As of June 29, 2005)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
13,505
(As of March 31, 2005)
1,800
1,400
Printed in Japan
September 2005