Contents

31 Consolidated Eleven-year Financial Summary,
and Summary of the Year Ended March 31, 2014
33 Management Discussion and Analysis
35 Business Risk Factors
37 Consolidated Balance Sheet
39 Consolidated Statement of Operations
40 Consolidated Statement of Comprehensive Income
41 Consolidated Statement of Changes in Equity
42 Consolidated Statement of Cash Flows
43 Notes to Consolidated Financial Statements
43 1. Basis of Presenting Consolidated Financial Statements
2. Summary of Significant Accounting Policies
47 3. Property
48 4. Investment Securities
49 5. Pledged Assets
6. Long-Term Debt
7. Severance Payments and Pension Plans
53 8. Reserve for Reprocessing of Irradiated Nuclear Fuel
9. Asset Retirement Obligations
10. Short-Term Borrowings
54 11. Income Taxes
55 12. Equity
13. Research and Development Costs
14. Related Party Disclosure
56 15. Financial Instruments and Related Disclosures
60 16. Derivatives
61 17. Commitments and Contingencies
18. Comprehensive Income
62 19. Segment Information
64 20. Subsequent Events
67 Independent Auditor’s Report
68 Nonconsolidated Five-year Financial Summary
69 Nonconsolidated Balance Sheet
71 Nonconsolidated Statement of Operations
Financial Information
Section 1
Kyushu Electric Power Summary
Section 2
Management Message
Section 3
Special Report
Section 4
Management Base
Kyushu Electric Power Company Annual Report 2014
30/76
Section 5
Financial Information
Consolidated Eleven-year Financial Summary
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31
Millions of Yen
For the Year: 2004 2005 2006 2007 2008 2009
Operating revenues . . . . . . . . . . . . . . . . . . 1,391,683円 1,408,728円 1,401,751円 1,408,327円 1,482,351円 1,524,193円
Electric. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,308,843 1,320,581 1,311,995 1,307,737 1,363,423 1,398,577
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,840 88,146 89,755 100,590 118,927 125,616
Operating expenses . . . . . . . . . . . . . . . . . . 1,192,718 1,194,993 1,230,466 1,253,154 1,376,811 1,439,470
Electric. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,108,104 1,107,744 1,140,797 1,155,413 1,260,615 1,317,216
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,614 87,249 89,669 97,741 116,195 122,254
Interest charges . . . . . . . . . . . . . . . . . . . . . 77,120 49,522 41,129 38,354 36,937 35,770
Income (loss) before income
taxes and minority interests . . . . . . . . . . 112,450 146,796 120,790 112,887 72,463 55,859
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 39,085 57,857 43,038 46,075 29,853 21,481
Net income (loss) . . . . . . . . . . . . . . . . . . . . 72,792 89,288 76,849 65,967 41,726 33,991YenPer Share of Common Stock:
Basic net income (loss) . . . . . . . . . . . . . . . 153円.05 187円.91 161円.67 139円.37 88円.19 71円.84
Cash dividends applicable to
the year. . . . . . . . . . . . . . . . . . . . . . . . . . . 50.00 60.00 60.00 60.00 60.00 60.00
At Year-End: Millions of Yen
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . 4,114,378円 4,049,713円 4,102,319円 4,038,838円 4,059,775円 4,110,877円
Net property . . . . . . . . . . . . . . . . . . . . . . . . 3,394,855 3,300,739 3,217,981 3,140,200 3,109,292 3,080,446
Long-term debt, less current portion . . . . 1,858,512 1,739,660 1,724,178 1,689,106 1,712,949 1,811,744
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . 910,837 979,251 1,052,785 1,092,600 1,084,212 1,072,374
(U.S. dollar amounts have been translated from yen, for convenience, at the rate of 102円.92 = U.S.1,ドル the approximate rate of exchange at March 31, 2014.)
Note: Figures less than a million yen are rounded down.
Summary of the Year Ended March 31, 2014
Ordinary loss and net loss for the third consecutive fiscal year
Although the effects of a weak yen and increased purchases from renewable energy sources
made fuel costs and costs for power purchases rise, the size of the deficit for the year under
review decreased due to the effects of the rate hike and fuel adjustments, as well as in-
creased renewable energy subsidies, and in addition we worked to cut costs, for example by
streamlining maintenance costs and cutting personnel costs.
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Financial Information
31/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
Millions of Yen
Thousands of
U.S. Dollars
For the Year: 2010 2011 2012 2013 2014 2014
Operating revenues . . . . . . . . . . . . . 1,444,941円 1,486,083円 1,508,084円 1,545,919円 1,791,152円 17,403,352ドル
Electric. . . . . . . . . . . . . . . . . . . . . . 1,310,085 1,354,204 1,367,610 1,406,218 1,633,023 15,866,925
Other . . . . . . . . . . . . . . . . . . . . . . . 134,856 131,878 140,474 139,700 158,129 1,536,426
Operating expenses . . . . . . . . . . . . . 1,345,214 1,387,174 1,692,939 1,845,347 1,886,974 18,334,379
Electric. . . . . . . . . . . . . . . . . . . . . . 1,220,536 1,261,425 1,562,055 1,715,262 1,746,890 16,973,284
Other . . . . . . . . . . . . . . . . . . . . . . . 124,677 125,748 130,883 130,085 140,083 1,361,095
Interest charges . . . . . . . . . . . . . . . . 35,292 34,025 34,025 37,407 39,429 383,104
Income (loss) before income
taxes and minority interests . . . . . 67,610 48,318 (214,750) (334,298) (73,732) (716,408)
Income taxes . . . . . . . . . . . . . . . . . . 25,404 19,245 (48,760) (2,195) 20,786 201,971
Net income (loss) . . . . . . . . . . . . . . . 41,812 28,729 (166,390) (332,470) (96,096) (933,701)
Yen U.S. Dollars
Per Share of Common Stock:
Basic net income (loss) . . . . . . . . . . 88円.38 60円.73 \(351.80) \(702.98) \(203.19) $(1.97)
Cash dividends applicable to
the year. . . . . . . . . . . . . . . . . . . . . . 60.00 60.00 50.00
At Year-End: Millions of Yen
Thousands of
U.S. Dollars
Total assets. . . . . . . . . . . . . . . . . . . . 4,054,192円 4,185,460円 4,428,093円 4,526,513円 4,549,852円 44,207,658ドル
Net property . . . . . . . . . . . . . . . . . . . 3,037,054 3,033,125 2,997,232 2,941,114 2,941,142 28,576,979
Long-term debt, less current portion 1,724,972 1,714,429 2,188,601 2,526,729 2,804,896 27,253,173
Total equity . . . . . . . . . . . . . . . . . . . . 1,089,066 1,079,679 888,131 557,799 494,232 4,802,107
Operating Income (Loss)/Net Income (Loss)
Billions of Yen
Operating Income (Loss) Net Income (Loss)20142013201220112010200920082007200620052004-400-300-200-1000100200300Operating Revenues
Billions of Yen
1,0005001,500
2,000
0 20142013201220112010200920082007200620052004
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Financial Information
32/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
Management Discussion and Analysis
Kyushu Electric Power Company, Incorporated, and Consolidated Subsidiaries
Year Ended March 31, 2014
Operating Results
In the year ended March 31, 2014, Kyushu Electric
Power recorded a 15.9% year-on-year increase in
operating revenues, to 1,791円.1 billion. This was
due to higher electricity sales revenues stemming
from higher unit charges as a result of the increase in
electricity rates and the fuel cost adjustment system,
as well as to higher subsidies based on feed-in tariffs
for renewable energy sources.
With regard to expenditures, operating expenses
increased 2.3% year on year, to 1,886円.9 billion,
because despite efforts to streamline maintenance
costs and reduce personnel costs, fuel costs were
higher due to the impact of the weak yen, and there
was an increase in purchases from renewable energy
sources. As a result of the above factors, performance
at the operating level improved 203円.6 billion
compared to the previous fiscal year, resulting in an
operating loss of 95円.8 billion.
Other revenues rose by 9.6%, to 15円.5 billion,
due to increases in investment returns from equity-
method affiliates. Other expenses rose 11.3%, to
51円.1 billion, due to an increase in interest charges
and other factors.
Ordinary revenues were up 15.8%, to 1,806円.7
billion, while ordinary expenses increased 2.5%, to
1,938円.1 billion. This caused the ordinary loss to
shrink 199円.7 billion, to 131円.4 billion.
Furthermore, the water flow rate fell to 86.7%
of the ordinary level (100%) during the year under
review. Consequently, the reserve for fluctuations in
water levels was drawn down by 4円.3 billion (the full
amount).
In addition, the sale of real estate and negotiable
securities as part of our rationalization efforts, as well
as the establishment of a retirement benefit trust,
resulted in the posting of extraordinary income of
53円.4 billion.
Deferred income taxes increased due to a year-
on-year decrease in the temporary difference in tax-
effect accounting associated with the establishment of
a retirement benefit trust, resulting in a 22円.9 billion
year-on-year increase in income taxes, to 20円.7
billion.
As a result, the net loss decreased 236円.3 billion
compared to the previous fiscal year, to 96円 billion.
The net loss per share was 203円.19, reflecting an
improvement of 499円.79 over the previous year’s
figure.
Segment Information
(Before Elimination of Internal Transactions)
(1) Electric Power
The total volume of electrical sales increased 0.8%,
to 84.45 billion kWh. Contributing to this result was
an increase in general demand, which includes both
domestic lighting and commercial, stemming from a
1.1% year-on-year rise in air conditioning demand
because of high temperatures during the June –
October period. Meanwhile, power demand from
large-scale industrial customers was flat, as a fall in
electronics and non-ferrous metal production offset a
rise in demand due to increased steel production.
On the supply side, the shutdown of nuclear power
plants persisted and a drought caused a reduction
in hydro power, but we were able to address this
situation by purchasing power from other producers.
Analysis of the energy mix, including power generated
by Kyushu Electric Power and power purchased from
other companies, shows that nuclear power accounted
for 0%, thermal power for 89%, hydroelectric for 6%
and new energy sources for 5% of total power.
Electric Power
Billions of Yen6000
1,200
1,800-6004000800
1,200-4002010 2011 2012 2013 2014
1,312.182.91,634.8
-121.6
1,369.5
-199.9
1,408.3
-312.6
1,356.386.5Sales (left) Operating Income (Loss) (right)
Energy-related Business
Billions of Yen100501502000639120
2010 2011 2012 2013 2014
163.87.4171.010.3164.54.7160.62.5158.03.0Sales (left) Operating Income (right)
IT and Telecommunications
Billions of Yen5025751000639120
2010 2011 2012 2013 201499.16.389.711.396.96.694.57.696.26.4
Sales (left) Operating Income (right)
Electricity Sales Volume and Peak Load
Millions of kWh Thousands of kW
70,000
60,000
50,000
40,000
30,000
20,000
10,000014,000
13,000
12,000
11,000
15,000
16,000
17,00002010200920082007200620052004 2011 2012 2013 2014
56,684
20,584
58,982
21,217
60,765
22,191
60,706
23,693
62,873
25,209
61,859
24,024
60,985
22,407
63,636
23,838
61,408
23,944
60,173
23,614
60,827
23,623
Peak Load (right) General Demand (left) Large-scale Industrial (left)
15,560
16,094 15,890
16,807 16,934 16,978
16,013
16,760
14,951
14,810
15,833
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Financial Information
33/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
As a result, electric power segment sales rose 16.1%
year on year, to 1,634円.8 billion, owing to an increase
in electricity sales revenues due to higher unit charges
resulting from the increase in electricity rates and
the fuel cost adjustment system, as well as higher
subsidies based on feed-in tariffs for renewable energy
sources. Although the effects of the weak yen and
increased purchases from renewable energy sources
made fuel costs and costs for power purchases rise,
the operating loss amount contracted 191円.0 billion,
to 121円.6 billion, due to the effects of the rate hike,
fuel adjustments, and higher renewable energy
subsidies, in addition to which we worked to cut costs,
for example by streamlining maintenance costs and
cutting personnel costs.
(2) Energy-Related Business
Sales increased 6.5% year on year, to 171円.0 billion
due to increases in power plant maintenance work
and construction of the new mega-solar plant, with
increased revenue from gas sales as well. As a result,
operating income rose 302.1%, to 10円.3 billion.
(3) IT and Telecommunications
Sales declined 5.1%, to 89円.7 billion, due to reduced
data systems development, although revenues from
data transmission services for mobile communications
providers increased. Operating income increased
49.2%, to 11円.3 billion, due to cost-cutting efforts and
a decrease in depreciation expenses in the fiber optic
core cable leasing business.
(4) Other Business
Sales were 27円.1 billion, about the same as the
previous fiscal year. Operating income increased
31.8%, to 3円.2 billion, due to a decrease in
depreciation expenses on rental assets.
Financial Position
(1) Cash Flows
Cash used in operating activities declined 95.6%, with
a net outlay of 5円.9 billion due to increases in thermal
power fuel costs and power purchases, despite an
increase in revenue from electrical power sales and
cost-cutting efforts.
Cash used in investment activities increased
4.8%, to 184円.9 billion, because despite an increase
in revenues from the sale of real estate and negotiable
securities as part of our rationalization efforts, outlays
associated with safety enhancement work at nuclear
power plants also increased.
Cash flows provided by financing activities
decreased 52.4%, to 196円.3 billion.
As a result, cash and cash equivalents on March
31, 2014, stood at 384円.7 billion, an increase of 5円.5
billion from the end of the previous fiscal year.
(2) Assets, Liabilities and Net Assets
Total assets increased 0.5% year on year, to 4,549円.8
billion, because while depreciation continued and
a portion of the Company’s stock holdings was
provisioned as retirement benefit trust assets, the
construction in progress account associated with safety
enhancement work at nuclear power plants increased,
as did accounts receivable.
Total liabilities grew 2.2%, to 4,055円.6 billion,
because despite a decrease due to application of
"Accounting Standards Concerning Retirement Allowance
Reserves" (revised in May 2012) and the establishment
of a retirement benefit trust, interest-bearing debt
increased, with outstanding interest-bearing debt
expanding 205円.9 billion, to 3,116円.7 billion.
Despite an increase due to application of
"Accounting Standards Concerning Retirement
Allowance, net assets fell 11.4% from the previous
fiscal year-end, to 494円.2 billion, mainly because of
the posting of a net loss. The equity ratio was 10.5%.
Other
Billions of Yen20103003.01.54.50
2010 2011 2012 2013 201426.53.227.13.227.33.127.22.426.03.3
Sales (left) Operating Income (right)ROA%0-2.52.5-5.0 2010 2011 2012 2013 2014
1.6 1.5-2.7-4.6-1.5Consolidated Interest-bearing Debt and Equity Ratio
Billions of Yen %
5,000
4,000
3,000
2,000
1,000012618243002010200920082007200620052004 2011 2012 2013 2014
910.8
979.2
1,052.7
1,081.6
1,067.0
1,054.7
1,071.7
1,062.4
870.3
539.6
475.5
4,114.3
2,336.2
4,049.7
2,139.4
4,102.3
2,104.9
4,038.8
2,031.7
4,059.7
2,040.0
4,110.8
2,110.6
4,054.1
2,004.7
4,185.4
2,089.4
4,428.0
2,483.2
4,526.5
2,910.7
4,549.8
3,116.7
Total Assets (left) Interest-bearing Debt (left) Shareholders’ Equity (left) Equity Ratio (right)22.124.2
25.7 26.8 26.3 25.726.425.419.711.9 10.5ROE%0-2525-50 2010 2011 2012 2013 2014
3.9 2.7
-17.2
-47.2
-18.9
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Financial Information
34/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
Business Risk Factors
The following is a list of some significant risk factors that may impact on the operating results, financial position, and other aspects of the Group (consolidated).
Forward-looking statements in this report reflect the judgment of the Company as of March 31, 2014.1.Changes in systems
affecting the electricity
business
Discussions towards the implementation of electricity system reform (the liberalization of the retail power sector
as a whole in order to give customers a greater range of choice, the invigoration of the wholesale power market
in order to stimulate a competitive environment, and the realization of broader coverage and greater neutrality in
the transmission and distribution sector) are proceeding.
The government has also approved the Basic Energy Plan, which established the nation’s basic orientation
in relation to energy supply and demand in cabinet and progressing with deliberations such as the best mix of
energy in the future.
Changes such as these to the systems affecting the electricity business could have an impact on the
Group’s performance.2.Status of environment
surrounding nuclear
power
We still believe that nuclear power generation is important in terms of energy security and global warming concerns.
Based on the lessons learned from the accident at the Fukushima Daiichi Nuclear Power Station, we will strictly
comply with the New Nuclear Regulatory Requirements and continue our voluntary efforts in order to achieve the
world’s highest safety standards.At the same time, we will work to ease the concerns of local residents regarding
nuclear power generation.
However, depending on the status of operation of our nuclear power stations as it will be affected by the
future trends in regulations (the progress of governmental studies towards restart, etc.) and other factors, it is
possible that the results of the Kyushu Electric Group will be affected by factors including increases in costs
such as fuel costs and the cost of procuring funds, and our judgment regarding the realizability of our deferred
tax assets resulting from the continuation of these cost burdens.3.Fluctuations in
electricity sales volume
Electricity sales volume in the electricity business fluctuates according to factors such as economic trends,
temperature changes, the spread of residential solar power systems, and trends in regulations and institutional
reforms relating to energy conservation. As a result, changes in these factors could have an impact on the
Group’s performance.
4. Fuel price fluctuations
Fuel expenses in electricity business fluctuate as a result of trends in CIF prices and in the foreign exchange
markets because we procure sources of fuel for thermal power generation including liquefied natural gas (LNG)
and coal from overseas.
However, fluctuations in fuel prices are reflected in electric rates through the fuel cost adjustment system,
which helps to ease the impact of fuel price volatility on the Group’s performance.
5. Nuclear fuel cycle costs
The uncertainties in the long-term prospects of nuclear fuel cycle operations pose a risk, but operator risk is
being reduced through measures proposed by the Japanese government. However, the Group’s performance
could be affected by discussion trends related to nuclear fuel cycle policy and increased costs based on revised
cost estimates for future expenses.
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Financial Information
35/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary6.Cost of measures to
combat global warming
In response to global warming, the Group aims for more efficient power generation that uses less carbon, and
to this end the Group conducts a variety of measures, such as safe and stable nuclear power station operations,
active development and introduction of renewable energy, and maintenance and improvement of total thermal
efficiency for thermal power stations. Future changes in policies related to global warming could have an impact
on the Group’s performance.7.Businesses other than
electricity
The Group is enhancing its revenue basis by utilizing the Group’s management resources and steadily develop-
ing new business area beyond electricity business. In the business operation, we put emphasis on the profit-
ability and work to improve efficiency while pursuing the growth. In case securing the planned profits cannot be
achieved due to the worsening business conditions, the Group’s performance may be affected.8.Interest rate
fluctuations
The Group’s balance of interest-bearing debt as of the end of March 2014 is 3,116円.7 billion, which accounts
for 69% of total assets of the Group. Future changes in interest rates have potential to affect the Group’s
financial condition.
However, 96% of outstanding interest-bearing debt comprises long-term debt, and most of these bear
interest at fixed rates. The impact of fluctuating interest rates on the Group’s performance is therefore viewed
as limited.
9. Leakage of information
The Group has established strict internal frameworks to manage in-house information and personal informa-
tion, which Group companies hold, to ensure information security. Additionally, we have implemented thorough
information management by establishing internal policies and guidelines on handling information as well as
familiarizing employees with the handling procedures. However, in case of the leaking of in-house information
and personal information, the Group’s performance may be affected.
10. Natural disasters
To ensure a stable supply of electricity to our customers, the Group implements inspection and maintenance of
the facilities systematically to prevent any trouble from occurring. However, large-scale natural disasters such as
typhoons, torrential rains and earthquakes or tsunami as well as unexpected accidents and illicit acts have the
potential to affect the Group’s performance.
We are also developing a risk management system and are preparing for numerous risks that may have a
material impact on business operations. Proper actions not taken in response to a risk may adversely affect the
Group’s performance.
11. Compliance
To be worthy of the trust of all its stakeholders, the Group conducts its business activities from the perspective
of its customers and local people in the regions it operate in by working together to fully instill an awareness of
compliance and complying with laws and regulations. However, if problems such as compliance violations were
to cause the Group’s social credibility to decline, this could have an impact on the Group’s performance.
The Group will continue to work to build trust-based relationships with all its stakeholders.
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Financial Information
36/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
Consolidated Balance Sheet
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
March 31, 2014
Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2014 2013 2014
ASSETS
PROPERTY (Note 3):
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,668,646円 9,628,349円 93,943,323ドル
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329,749 220,817 3,203,942
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,998,396 9,849,166 97,147,265
Less-
Contributions in aid of construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,824 160,700 1,591,762
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,893,429 6,747,352 66,978,523
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,057,253 6,908,052 68,570,286
Net property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,941,142 2,941,114 28,576,979
NUCLEAR FUEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281,522 278,941 2,735,356
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,275 122,388 828,562
Investments in and advances to nonconsolidated subsidiaries
and affiliated companies (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102,311 103,813 994,087
Reserve funds for reprocessing of irradiated nuclear fuel
(Notes 8 and 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
261,058 240,155 2,536,519
Assets for retirement benefits (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 2,329
Deferred tax assets (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,426 176,988 1,422,722
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,229 20,186 284,003
Total investments and other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624,541 663,534 6,068,223
CURRENT ASSETS:
Cash and cash equivalents (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384,769 379,207 3,738,529
Receivables (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183,568 144,428 1,783,599
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (855) (945) (8,312)
Inventories, principally fuel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,559 73,077 802,168
Deferred tax assets (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,137 31,203 321,970
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,466 15,950 189,142
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702,644 642,922 6,827,098
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,549,852円 4,526,513円 44,207,658ドル
See notes to consolidated financial statements.
Section 5
Financial Information
37/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2014 2013 2014
LIABILITIES AND EQUITY
LONG-TERM LIABILITIES:
Long-term debt, less current portion (Notes 6 and 15) . . . . . . . . . . . . . . . . . . . . . . . . 2,804,896円 2,526,729円 27,253,173ドル
Liability for retirement benefits (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,237 163,875 497,840
Reserve for reprocessing of irradiated nuclear fuel (Note 8). . . . . . . . . . . . . . . . . . . . 332,882 346,913 3,234,377
Asset retirement obligations (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,989 221,025 1,972,302
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,831 40,382 367,581
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,429,837 3,298,927 33,325,275
CURRENT LIABILITIES:
Current portion of long-term debt (Notes 6 and 15). . . . . . . . . . . . . . . . . . . . . . . . . . . 204,144 243,288 1,983,521
Short-term borrowings (Notes 10 and 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,521 119,532 1,151,588
Commercial paper (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000
Notes and accounts payable (Notes 14 and 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,725 151,460 1,629,663
Accrued income taxes (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,448 2,197 33,505
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,719 76,038 813,446
Deferred tax liabilities (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 87 728
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,148 39,873 467,822
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625,782 665,478 6,080,276
RESERVE FOR FLUCTUATIONS IN WATER LEVEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,308
COMMITMENTS AND CONTINGENCIES (Note 17)
EQUITY (Note 12):
Common stock,
authorized, 1,000,000,000 shares; issued,
474,183,951 shares in 2014 and 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237,304 237,304 2,305,721
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,130 31,130 302,473
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174,871 252,145 1,699,100
Treasury stock-at cost,
1,214,196 shares in 2014 and 1,246,883 shares in 2013. . . . . . . . . . . . . . . . . . . (2,340) (2,373) (22,738)
Accumulated other comprehensive income:
Unrealized gain on available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,352 19,212 22,857
Deferred gain on derivatives under hedge accounting . . . . . . . . . . . . . . . . . . . . . . . 4,235 3,747 41,156
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (450) (1,481) (4,380)
Defined retirement benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,429 276,225
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475,533 539,684 4,620,415
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,699 18,114 181,691
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494,232 557,799 4,802,107
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,549,852円 4,526,513円 44,207,658ドル
See notes to consolidated financial statements.
Section 5
Financial Information
38/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
Consolidated Statement of Operations
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2014
Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2014 2013 2014
OPERATING REVENUES:
Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,633,023円 1,406,218円 15,866,925ドル
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,129 139,700 1,536,426
Total operating revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,791,152 1,545,919 17,403,352
OPERATING EXPENSES (Note 13):
Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,746,890 1,715,262 16,973,284
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,083 130,085 1,361,095
Total operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,886,974 1,845,347 18,334,379
OPERATING LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (95,821) (299,428) (931,027)
OTHER (INCOME) EXPENSES:
Interest charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,429 37,407 383,104
Gain on sales of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,173) (254,309)
Gain on sales of investment securities (Note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,524) (53,672)
Gain on contribution of securities to retirement benefit trust (Note 4). . . . . . . . . . . . (21,711) (210,953)
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,800) (5,629) (36,929)
Total other (income) expenses-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,780) 31,777 (172,759)
LOSS BEFORE INCOME TAXES AND (REVERSAL OF) PROVISION FOR RESERVE
FOR FLUCTUATIONS IN WATER LEVEL AND MINORITY INTERESTS . . . . . . . . . . . . . . . . (78,040) (331,206) (758,267)
(REVERSAL OF) PROVISION FOR RESERVE FOR FLUCTUATIONS IN WATER LEVEL . . . . (4,308) 3,092 (41,858)
LOSS BEFORE INCOME TAXES AND MINORITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . (73,732) (334,298) (716,408)
INCOME TAXES (Note 11):
Current. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,131 3,674 49,858
Deferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,655 (5,869) 152,113
Total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,786 (2,195) 201,971
NET LOSS BEFORE MINORITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (94,519) (332,102) (918,380)
MINORITY INTERESTS IN NET INCOME OF CONSOLIDATED SUBSIDIARIES. . . . . . . . . . (1,576) (367) (15,321)
NET LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ (96,096) \ (332,470) $ (933,701)
Yen U.S. Dollars
PER SHARE OF COMMON STOCK (Note 2.r):
Basic net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(203.19) \(702.98) $(1.97)
Cash dividends applicable to the year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
See notes to consolidated financial statements.
Section 5
Financial Information
39/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
Consolidated Statement of Comprehensive Income
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2014
Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2014 2013 2014
NET LOSS BEFORE MINORITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ (94,519) \(332,102) $ (918,380)
OTHER COMPREHENSIVE (LOSS) INCOME (Note 18):
Unrealized (loss) gain on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . (16,670) 6,503 (161,974)
Deferred gain on derivatives under hedge accounting . . . . . . . . . . . . . . . . . . . . . . . . 464 3,918 4,512
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,429) (709) (13,891)
Defined retirement benefit plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (683) (6,644)
Share of other comprehensive income in
nonconsolidated subsidiaries and affiliated companies. . . . . . . . . . . . . . . . . . . . . . . 2,816 1,529 27,361
Total other comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,503) 11,242 (150,636)
COMPREHENSIVE LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(110,023) \(320,860) $(1,069,017)
TOTAL COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO:
Owners of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(111,780) \(321,237) $(1,086,093)
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,757 376 17,076
See notes to consolidated financial statements.
Section 5
Financial Information
40/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
Consolidated Statement of Changes in Equity
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2014
Thousands of Shares/Millions of Yen
Common Stock
Capital
Surplus
Retained
Earnings
Treasury Stock Accumulated Other Comprehensive Income
Total
Minority
Interests Total Equity
Shares Amount Shares Amount
Unrealized
Gain on
Available-
for-Sale
Securities
Deferred
Gain on
Derivatives
under Hedge
Accounting
Foreign
Currency
Translation
Adjustments
Defined
Retirement
Benefit Plans
BALANCE AT APRIL 1, 2012 . . . . . . . . 474,183 237,304円 31,133円 \ 594,080 1,236 \(2,366) 12,331円 \ (179) \(1,907) \ 870,396 17,735円 \ 888,131
Net loss . . . . . . . . . . . . . . . . . . . . . . . (332,470) (332,470) (332,470)
Cash dividends, 20円 per share . . . . (9,464) (9,464) (9,464)
Purchase of treasury stock. . . . . . . . 12 (10) (10) (10)
Disposal of treasury stock . . . . . . . . (2) (1) 3 1 1
Net change in the year . . . . . . . . . . . 6,880 3,927 425 11,232 379 11,612
BALANCE AT MARCH 31, 2013. . . . . . 474,183 237,304円 31,130円 \ 252,145 1,246 \(2,373) 19,212円 3,747円 \(1,481) \ 539,684 18,114円 \ 557,799
Cumulative effects of changes in
accounting policies . . . . . . . . . . . . . 18,822 28,773円 47,596 (291) 47,304
Restated Balance. . . . . . . . . . . . . . . . . 474,183 237,304円 31,130円 270,967円 1,246 \(2,373) 19,212円 3,747円 \(1,481) 28,773 587,280円 17,822円 \ 605,103
Net loss . . . . . . . . . . . . . . . . . . . . . . . (96,096) (96,096) (96,096)
Purchase of treasury stock. . . . . . . . (32) (18) (18) (18)
Disposal of treasury stock . . . . . . . . 51 51 51
Net change in the year . . . . . . . . . . . (16,859) 488 1,031 (344) (15,684) 876 (14,807)
BALANCE AT MARCH 31, 2014. . . . . . 474,183 237,304円 31,130円 174,871円 1,214 \(2,340) \ 2,352 4,235円 \ (450) 28,429円 475,533円 18,699円 \ 494,232
Thousands of U.S. Dollars (Note 1)
Common
Stock
Capital
Surplus
Retained
Earnings
Treasury
Stock
Accumulated Other Comprehensive Income
Total
Minority
Interests Total Equity
Unrealized
Gain on
Available-
for-Sale
Securities
Deferred
Gain on
Derivatives
under Hedge
Accounting
Foreign
Currency
Translation
Adjustments
Defined
Retirement
Benefit Plans
BALANCE AT MARCH 31, 2013. . . . . . . . . . . . . . . 2,305,721ドル 302,473ドル 2,449,913ドル $(23,059) 186,669ドル 36,410ドル $(14,399) 5,243,730ドル 176,007ドル 5,419,738ドル
Cumulative effects of changes in
accounting policies . . . . . . . . . . . . . . . . . . . . . . 182,888 279,569ドル 462,458 (2,834) 459,624
Restated Balance. . . . . . . . . . . . . . . . . . . . . . . . . . 2,305,721ドル 302,473ドル 2,632,801ドル $(23,059) 186,669ドル 36,410ドル $(14,399) 279,569 5,706,189ドル 173,172ドル 5,879,362ドル
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (933,701) (933,701) (933,701)
Purchase of treasury stock. . . . . . . . . . . . . . . . . (182) (182) (182)
Disposal of treasury stock . . . . . . . . . . . . . . . . . 504 503 503
Net change in the year . . . . . . . . . . . . . . . . . . . . (163,812) 4,745 10,018 (3,344) (152,392) 8,518 (143,873)
BALANCE AT MARCH 31, 2014. . . . . . . . . . . . . . . 2,305,721ドル 302,473ドル 1,699,100ドル $(22,738) $ 22,857 41,156ドル $ (4,380) 276,225ドル 4,620,415ドル 181,691ドル 4,802,107ドル
See notes to consolidated financial statements.
Section 5
Financial Information
41/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
Consolidated Statement of Cash Flows
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2014
Millions of Yen
Thousands of U.S.
Dollars (Note 1)
2014 2013 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss before income taxes and minority interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ (73,732) \(334,298) $ (716,408)
Adjustments for:
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,965) (3,976) (38,525)
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,856 212,735 1,971,009
Decommissioning costs of nuclear power units . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,978 2,627 19,224
Reversal of reserve for reprocessing of irradiated nuclear fuel . . . . . . . . . . . . . . . . (14,031) (11,738) (136,332)
Loss on disposal of plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,438 8,338 62,560
(Reversal of) provision in reserve for fluctuation in water level . . . . . . . . . . . . . . . . (4,308) 3,092 (41,858)
Gain on sales of fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,173) (254,309)
Gain on sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,524) (53,672)
Gain on contributions of securities to retirement benefit trust . . . . . . . . . . . . . . . . (21,711) (210,953)
Changes in assets and liabilities:
Increase in reserve funds for reprocessing of irradiated nuclear fuel . . . . . . . . . (20,902) (19,862) (203,096)
Increase in trade receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,493) (8,284) (393,443)
(Increase) decrease in inventories, principally fuel . . . . . . . . . . . . . . . . . . . . . . . . (9,481) 4,830 (92,125)
(Decrease) increase in trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,534) 7,567 (53,778)
(Decrease) increase in liability for retirement benefits . . . . . . . . . . . . . . . . . . . . . (10,577) 10,024 (102,776)
Other-net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,239 (6,187) 186,937
Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,809 199,167 658,860
Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,922) (135,130) (57,548)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures including nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (236,378) (183,922) (2,296,719)
Proceeds from sales of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,591 2,403 268,089
Payments for investments and advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,966) (442) (28,823)
Proceeds from sales of investment securities and collections of advances . . . . . . . 14,845 3,640 144,241
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,943 1,774 116,050
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (184,963) (176,546) (1,797,161)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194,488 139,736 1,889,703
Repayments of bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (163,842) (120,000) (1,591,935)
Proceeds from long-term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280,344 439,967 2,723,905
Repayments of long-term loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (76,447) (69,296) (742,786)
Net (decrease) increase in short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,011) 1,531 (9,826)
Net (decrease) increase in commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33,000) 33,000 (320,637)
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,134) (12,690) (40,168)
Net cash provided by financing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196,397 412,248 1,908,253
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS 51 690 496
NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,561 101,262 54,040
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR. . . . . . . . . . . . . . . . . . . . . . . . 379,207 277,945 3,684,490
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 384,769 \ 379,207 $ 3,738,529
See notes to consolidated financial statements.
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Management Base
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Kyushu Electric Power Summary
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
Kyushu Electric Power Company, Incorporated (the "Company") has prepared
the accompanying consolidated financial statements in accordance with the
provisions set forth in the Japanese Financial Instruments and Exchange Act,
the Electricity Business Act and their related accounting regulations and in
accordance with accounting principles generally accepted in Japan, which are
different in certain respects as to application and disclosure requirements of
International Financial Reporting Standards, especially accounting related to
the nuclear power generation is regulated by the above accounting regulations,
which are dependent on a governmental long-term nuclear energy policy.
In preparing these consolidated financial statements, certain reclas-
sifications 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, 2013, to conform to the classifications used in the consolidated
financial statements for the year ended March 31, 2014.
The U.S. dollar amounts included herein are provided solely for the
convenience of readers outside Japan and are stated at the rate of 102円.92
= U.S. 1,ドル the approximate exchange rate prevailing on March 31, 2014. The
translations should not be construed as representations that the Japanese
yen amounts could be converted into U.S. dollars at that or any other rate.
Japanese yen figures less than a million yen are rounded down to the
nearest million yen, except for per share data. As a result, the totals shown
in the accompanying consolidated financial statements (both in yen and U.S.
dollars) do not necessarily agree with the sum of the individual amounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Consolidation and Application of the Equity Method— The consolidated
financial statements as of March 31, 2014, include the accounts of the
Company and its 40 subsidiaries (together, the "Companies"). All significant
intercompany transactions and balances have been eliminated in consolida-
tion. Investments in 17 nonconsolidated subsidiaries and 14 affiliated compa-
nies are accounted for by the equity method.
The Company adopts the control and influence concept. Under the
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 affiliated companies.
Consolidation of the remaining subsidiaries and the application of the
equity method to the remaining affiliated companies would not have a material
effect on the accompanying consolidated financial statements.
The fiscal year-end of four consolidated subsidiaries and several noncon-
solidated subsidiaries and affiliated companies is December 31. The Company
consolidates such consolidated subsidiaries’ financial statements and accounts
for investments in such nonconsolidated subsidiaries and affiliated companies
by the equity method using their financial results for the year ended December
31. The effects of any significant transactions during the period between the
subsidiaries’ and affiliated companies’ fiscal year-end and the Company’s
fiscal year-end are reflected in the consolidated financial statements.
b. Business Combination— Major requirements under the Accounting
Standards Board of Japan (the "ASBJ") Statement No. 21, "Accounting Stan-
dard for Business Combinations" are as follows: (a) The standard requires
accounting for business combinations only by the purchase method. (b) Under
the standard, in-process research and development acquired in the business
combination are capitalized as an intangible asset. (c) Under the standard, the
acquirer recognizes the bargain purchase gain in profit or loss immediately
on the acquisition date after reassessing and confirming that all of the assets
acquired and all of the liabilities assumed have been identified after a review
of the procedures used in the purchase price allocation.
c. 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. Depreciation of easements
related to transmission lines is computed using the straight-line method
based on the estimated useful lives of the transmission lines.
On October 1, 2013, the Japanese government, i.e., the Ministry of
Economy, Trade and Industry (the "METI"), revised accounting regulations
applicable to electric utility providers. Under the revised accounting regula-
tions, properties, which are required for decommissioning of nuclear power
units or which need maintenance and management even after nuclear power
units have been in the process of decommissioning, are to be included
in "Plant and equipment." Retroactive application will not be conducted
in accordance with the stipulations of the regulations. This change had
no effect on consolidated financial statements for the year ended March
Notes to Consolidated Financial Statements
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Year Ended March 31, 2014
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31, 2014, because the Company did not have nuclear power units in the
process of decommissioning.
d. Impairment of Fixed Assets— The Companies review their fixed assets
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.
e. Amortization of Nuclear Fuel— Amortization of nuclear fuel is computed
based on the proportion of current heat produced to the estimated total
potential heat production over the estimated useful life of the nuclear fuel.
f. Investment Securities— Investment securities are classified and account-
ed for, depending on management’s intent, as follows:
(a) Held-to-maturity debt securities are stated at cost with discounts or premi-
ums amortized throughout the holding periods; (b) Available-for-sale securi-
ties, which are not classified as the aforementioned securities and investment
securities in nonconsolidated subsidiaries and affiliated companies, are stated
at market value; and nonmarketable securities are stated at cost.
The Companies record unrealized gains or losses on available-for-sale
securities, net of deferred taxes, in 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.
g. 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 mutual fund
investments in bonds that represent short-term investments, all of which
mature or become due within three months of the date of acquisition.
h. Inventories— Inventories are stated at the lower of cost, principally
determined by the average method, or net selling value.
i. 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.
j. Foreign Currency Financial Statements— The balance sheet accounts of
the consolidated foreign subsidiaries, and nonconsolidated foreign subsidiar-
ies and foreign affiliated companies which are accounted for by the equity
method, are translated into Japanese yen at the current exchange rate as of
the balance sheet date except for equity, which is translated at the histori-
cal rate. Differences arising from such translation are shown as "Foreign
currency translation adjustments" under accumulated other comprehensive
income in a separate component of equity.
Revenue and expense accounts of consolidated foreign subsidiaries are
translated into yen at the average exchange rate.
k. Derivatives and Hedging Activities— Derivative financial instruments are
classified and accounted for as follows: (a) All derivatives are recognized as
either assets or liabilities and measured at fair value, and gains or losses on
derivative transactions are recognized in the consolidated statement of opera-
tions and (b) for such derivatives used for hedging purposes, if derivatives
qualify for hedge accounting because of high correlation and effectiveness
between the hedging instruments and the hedged items, gains or losses on
derivatives are deferred until maturity of the hedged transactions.
Liabilities denominated in foreign currencies for which foreign exchange
forward contracts and currency swaps are used to hedge the foreign cur-
rency fluctuations are translated at the contracted rate if the forward con-
tracts and currency swaps qualify for hedge accounting. Forward contracts
and currency swaps applied for committed transactions are measured at
fair value and the unrealized gains/losses are deferred until the underlying
transactions are completed.
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 and
included in interest charges.
l. Severance Payments and Pension Plans— The Companies have unfund-
ed retirement plans for most 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.
Effective April 1, 2000, the Companies adopted a new accounting
standard for retirement benefits and accounted for the liability for retire-
ment benefits based on the projected benefit obligations and plan assets at
the balance sheet date. The projected benefit obligations are attributed to
periods on a straight-line basis. Actuarial gains and losses are amortized on
a straight-line basis over mainly 5 years within the average remaining service
period. Past service costs are amortized on a straight-line basis over mainly 5
years within the average remaining service period.
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In May 2012, the ASBJ issued ASBJ Statement No. 26, "Accounting
Standard for Retirement Benefits" and ASBJ Guidance No. 25, "Guidance on
Accounting Standard for Retirement Benefits," which replaced the account-
ing standard for retirement benefits that had been issued by the Business
Accounting Council in 1998 with an effective date of April 1, 2000, and the
other related practical guidance, and were followed by partial amendments
from time to time through 2009.
(a) Under the revised accounting standard, actuarial gains and losses and
past service costs that are yet to be recognized in profit or loss are
recognized within equity (accumulated other comprehensive income),
after adjusting for tax effects, and any resulting deficit or surplus is
recognized as a liability (liability for retirement benefits) or asset (asset
for retirement benefits).
(b) The revised accounting standard does not change how to recognize
actuarial gains and losses and past service costs in profit or loss. Those
amounts are recognized in profit or loss over a certain period no longer
than the expected average remaining service period of the employees.
However, actuarial gains and losses and past service costs that arose in
the current period and have not yet been recognized in profit or loss are
included in other comprehensive income and actuarial gains and losses
and past service costs that were recognized in other comprehensive
income in prior periods and then recognized in profit or loss in the cur-
rent period shall be treated as reclassification adjustments.
(c) The revised accounting standard also made certain amendments relating
to the method of attributing expected benefit to periods and relating to
the discount rate and expected future salary increases.
This accounting standard and the guidance for (a) and (b) above are
effective for the end of annual periods beginning on or after April 1, 2013,
and for (c) above are effective for the beginning of annual periods beginning
on or after April 1, 2014, or for the beginning of annual periods beginning
on or after April 1, 2015, subject to certain disclosure in March 2015, both
with earlier application being permitted from the beginning of annual periods
beginning on or after April 1, 2013. However, no retrospective application of
this accounting standard to consolidated financial statements in prior periods
is required.
The Companies early applied the revised accounting standard and guid-
ance for retirement benefits for (a), (b) and (c) above effective April 1, 2013,
and changed the method of attributing expected benefit to periods from a
straight-line basis to a benefit formula basis. The Companies recorded the
effect of (a) and (b) above as of April 1, 2013, in accumulated other compre-
hensive income, and the effect of (c) above as of April 1, 2013, in retained
earnings. As a result, accumulated other comprehensive income and retained
earnings as of April 1, 2013, increased by 28,773円 million (279,569ドル
thousand) and by 18,822円 million (182,888ドル thousand), respectively, and
loss before income taxes and minority interests for the year ended March 31,
2014, decreased by 512円 million (4,978ドル thousand). In addition, basic net
loss per share for the year ended March 31, 2014 decreased by 0円.76.
m. Reserve for Reprocessing of Irradiated Nuclear Fuel— This reserve is
provided for reprocessing costs of irradiated nuclear fuel. The annual provi-
sion is calculated in accordance with the accounting regulations set by the
Japanese Government applicable to electric utility providers in Japan.
n. Asset Retirement Obligations— Under ASBJ Statement No. 18, "Account-
ing Standard for Asset Retirement Obligations," an asset retirement obligation
is defined as a legal obligation imposed either by law or contract that results
from the acquisition, construction, development and the normal operation of
a tangible fixed asset and is associated with the retirement of such tangible
fixed asset. The asset retirement obligation is recognized as the sum of
the discounted cash flows required for the future asset retirement. The
Company recognizes the asset retirement obligation as the sum of the future
decommissioning costs of nuclear power unit imposed by the "Law on the
Regulation of Nuclear Source Material, Nuclear Fuel Material and Reactors,"
discounted at 2.3%.
On October 1, 2013, the METI revised the accounting regulations and
related regulations concerning allocation of asset retirement costs of nuclear
power units. Prior to October 1, 2013, asset retirement costs of nuclear
power units were allocated to expense through depreciation based on a
proportion of the current generation of electric power to the estimated total
life-time generation of electric power of each unit. Effective October 1, 2013,
the asset retirement costs are allocated to expense through depreciation
based on the straight-line method over a period totaling the remaining useful
life and expected safe storage period. This change in accounting estimate
increased loss before income taxes and minority interests for the year ended
March 31, 2014, by 4,967円 million (48,266ドル thousand).
In addition, with the revision of such regulations, the expected period,
used to calculate discounted value of asset retirement obligations of nuclear
power units, was prolonged by number of the years that are expected for safe
storage. As a result, asset retirement obligations and assets retirement costs
as of March 31, 2014, decreased by 19,952円 million (193,863ドル thousand).
o. Income Taxes— The provision for income taxes is computed based on
the pretax income included in the consolidated statement of operations. 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.
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Kyushu Electric Power Summary
Deferred taxes are measured by applying currently enacted tax laws to the
temporary differences.
p. Reserve for Fluctuations in Water Level— This reserve is provided to
stabilize the Company’s income level based on the Electricity Business Act
and related accounting regulations. This reserve 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. Also, this reserve must be shown as a liability under the act
and regulations.
q. Treasury Stock— The accounting standard for treasury stock requires
that where an affiliated 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 equity and the
carrying value of the investment in the affiliated company should be reduced
by the same amount.
r. Net Income and Cash Dividends per Share— Basic earnings per share
("EPS") are computed by dividing net income available to common sharehold-
ers 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, 2014 and
2013, because potentially dilutive securities were not outstanding.
Cash dividends per share represent actual amounts applicable to earn-
ings of the respective years.
s. Research and Development Costs— Research and development costs
are charged to income as incurred.
t. New Accounting Pronouncements
Accounting Standards for Business Combinations and Consolidated Financial
Statements— On September 13, 2013, the ASBJ issued revised ASBJ
Statement No. 21, "Accounting Standard for Business Combinations," revised
ASBJ Guidance No. 10, "Guidance on Accounting Standards for Business
Combinations and Business Divestitures," and revised ASBJ Statement No.
22, "Accounting Standard for Consolidated Financial Statements."
Major accounting changes are as follows:
(a) Transactions with noncontrolling interest
A parent’s ownership interest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary. The carrying
amount of minority interest is adjusted to reflect the change in the
parent’s ownership interest in its subsidiary while the parent retains
its controlling interest in its subsidiary. Under the current accounting
standard, any difference between the fair value of the consideration
received or paid and the amount by which the minority interest is
adjusted is accounted for as an adjustment of goodwill or as profit or loss
in the consolidated statement of operation. Under the revised accounting
standard, such difference shall be accounted for as capital surplus as
long as the parent retains control over its subsidiary.
(b) Presentation of the consolidated balance sheet
In the consolidated balance sheet, "minority interest" under the current
accounting standard will be changed to "noncontrolling interest" under
the revised accounting standard.
(c) Presentation of the consolidated statement of operations
In the consolidated statement of operations, "income before minority
interest" under the current accounting standard will be changed to "net
income" under the revised accounting standard, and "net income" under
the current accounting standard will be changed to "net income attribut-
able to owners of the parent" under the revised accounting standard.
(d) Provisional accounting treatments for a business combination
If the initial accounting for a business combination is incomplete by
the end of the reporting period in which the business combination
occurs, an acquirer shall report in its financial statements provisional
amounts for the items for which the accounting is incomplete. Under
the current accounting standard guidance, the impact of adjustments to
provisional amounts recorded in a business combination on profit or loss
is recognized as profit or loss in the year in which the measurement is
completed. Under the revised accounting standard guidance, during the
measurement period, which shall not exceed one year from the acquisi-
tion, the acquirer shall retrospectively adjust the provisional amounts
recognized at the acquisition date to reflect new information obtained
about facts and circumstances that existed as of the acquisition date and
that would have affected the measurement of the amounts recognized as
of that date. Such adjustments shall be recognized as if the accounting
for the business combination had been completed at the acquisition date.
(e) Acquisition-related costs
Acquisition-related costs are costs, such as advisory fees or professional
fees, which an acquirer incurs to effect a business combination. Under
the current accounting standard, the acquirer accounts for acquisition-
related costs by including them in the acquisition costs of the investment.
Under the revised accounting standard, acquisition-related costs shall be
accounted for as expenses in the periods in which the costs are incurred.
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The above accounting standards and guidance for "transactions with
noncontrolling interest," "acquisition-related costs" and "presentation
changes in the consolidated financial statements" are effective for the
beginning of annual periods beginning on or after April 1, 2015. Earlier
application is permitted from the beginning of annual periods beginning
on or after April 1, 2014, except for the presentation changes in the
consolidated financial statements. In case of earlier application, all
accounting standards and guidance above, except for the presentation
changes, should be applied simultaneously. Either retrospective or
prospective application of the revised accounting standards and
guidance for "transactions with noncontrolling interest" and "acquisition-
related costs" is permitted. In retrospective application of the revised
standards and guidance for "transactions with noncontrolling interest"
and "acquisition-related costs," accumulated effects of retrospective
adjustments for all "transactions with noncontrolling interest" and
"acquisition-related costs" which occurred in the past shall be reflected
as adjustments to the beginning balance of capital surplus and retained
earnings for the year of the first-time application.
In prospective application, the new standards and guidance for
"transactions with noncontrolling interest" and "acquisition-related
costs" shall be applied prospectively from the beginning of the year of
the first-time application. The changes in presentation shall be applied
to all periods presented in financial statements containing the first-time
application of the revised standards and guidance.
The revised standards and guidance for "provisional accounting
treatments for a business combination" are effective for a business
combination which will occur on or after the beginning of annual periods
beginning on or after April 1, 2015. Earlier application is permitted for
a business combination which will occur on or after the beginning of
annual periods beginning on or after April 1, 2014.
In addition with the revision of the above standards and a guidance,
the ASBJ issued the following relevant revised statements and guidances;
revised ASBJ Statement No. 7, "Accounting Standard for Business
Divestitures," revised ASBJ Statement No. 2, "Accounting Standard for
Earnings per Share," and revised ASBJ Guidance No. 4, "Guidance on
Accounting Standard for Earnings per Share."
The Companies expect to apply the revised accounting standards
and guidance from the beginning of the annual period beginning on April
1, 2015, and are in the process of measuring the effects of applying the
revised accounting standards and guidance in future applicable periods.
3. PROPERTY
The breakdown of property at March 31, 2014 and 2013, was as follows:
Millions of Yen
Thousands of
U.S. Dollars
2014 2013 2014
Costs:
Electric power production facilities:
Hydroelectric power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 805,336 \ 805,385 $ 7,824,875
Thermal power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,469,915 1,469,187 14,282,121
Nuclear power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,630,816 1,625,719 15,845,479
Internal-combustion engine power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,138 128,329 1,254,747
Renewable power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,990 106,843 1,058,981
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,144,197 4,135,465 40,266,205
Transmission facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,759,126 1,750,094 17,092,173
Transformation facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 978,919 976,841 9,511,464
Distribution facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,389,531 1,371,329 13,501,080
General facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384,405 392,018 3,734,995
Other electricity-related facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,782 40,914 56,180
Other plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,006,683 961,684 9,781,224
Construction in progress. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329,749 220,817 3,203,942
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,998,396 9,849,166 97,147,265
Less-
Contributions in aid of construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,824 160,700 1,591,762
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,893,429 6,747,352 66,978,523
Carrying amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,941,142円 2,941,114円 28,576,979ドル
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Management Base
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Kyushu Electric Power Summary
4. INVESTMENT SECURITIES
The costs and aggregate fair values of investment securities at March 31, 2014 and 2013, were as follows:
Millions of Yen
March 31, 2014 Cost Unrealized Gains Unrealized Losses Fair Value
Securities classified as:
Available-for-sale:
Equity securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,230円 3,217円 348円 6,099円
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,350 285 1 1,634
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363 34 0 398
Held-to-maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,505 4 151 1,359
Millions of Yen
March 31, 2013 Cost Unrealized Gains Unrealized Losses Fair Value
Securities classified as:
Available-for-sale:
Equity securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,215円 28,274円 500円 40,989円
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,239 665 28 2,875
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361 19 3 377
Held-to-maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,536 8 205 2,339
Thousands of U.S. Dollars
March 31, 2014 Cost Unrealized Gains Unrealized Losses Fair Value
Securities classified as:
Available-for-sale:
Equity securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,391ドル 31,265ドル 3,387ドル 59,268ドル
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,124 2,775 16 15,883
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,532 339 2 3,869
Held-to-maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,632 45 1,472 13,206
The information for available-for-sale securities which were sold during the year ended March 31, 2014, was as follows:
Millions of Yen
Proceeds Realized Gains Realized Losses
Available-for-sale:
Equity securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,763円 5,386円 \ 5
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560 138 78
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,323円 5,524円 83円
Thousands of U.S. Dollars
Proceeds Realized Gains Realized Losses
Available-for-sale:
Equity securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,000ドル 52,332ドル $ 50
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,441 1,340 757
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,441ドル 53,672ドル 808ドル
The Company contributed certain securities with a fair value of 32,021円 million (311,126ドル thousand) to the retirement benefit trust for the Company’s retirement
benefit plans and recognized a noncash gain of 21,711円 million (210,953ドル thousand) for the year ended March 31, 2014.
Such information for the year ended March 31, 2013, is not disclosed because realized gains and losses on sales of available-for-sale securities for the fiscal year
is immaterial.
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5. PLEDGED ASSETS
All of the Company’s assets amounting to 4,218,037円 million (40,983,656ドル
thousand) are subject to certain statutory preferential rights established to secure
bonds and loans borrowed from the Development Bank of Japan Inc. and bonds
transferred to banks under debt assumption agreements (see Note 17).
Certain assets of the consolidated subsidiaries, amounting to 50,588円
million (491,527ドル thousand), are pledged as collateral for a portion of their
long-term debt at March 31, 2014.
Investments in affiliated companies held by a consolidated subsidiary,
amounting to 24,746円 million (240,444ドル thousand), are pledged as collateral
for bank loans of the affiliated companies and the subsidiary of the affiliated
company at March 31, 2014.
6. LONG-TERM DEBT
Long-term debt at March 31, 2014 and 2013, consisted of the following:
Millions of Yen
Thousands of
U.S. Dollars
2014 2013 2014
Yen bonds, 0.281% to 3.65%, due serially to 2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,243,414円 1,193,392円 12,081,365ドル
Swiss franc bonds, 2.625%, due 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,861
Loans from the Development Bank of Japan Inc., 0.58% to 4.60%,
due serially to 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291,843 278,145 2,835,638
Loans, principally from banks and insurance companies, 0.25% to 2.475%,
due serially to 2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateralized. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,097 33,322 321,581
Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,429,795 1,234,421 13,892,298
Obligations under finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,890 11,874 105,810
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,009,040 2,770,018 29,236,694
Less current portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204,144 243,288 1,983,521
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,804,896円 2,526,729円 27,253,173ドル
The annual maturities of long-term debt outstanding at March 31, 2014, were as follows:
Year ending March 31 Millions of Yen
Thousands of
U.S. Dollars
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 204,144 1,983,521ドル
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375,055 3,644,150
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361,297 3,510,464
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390,609 3,795,270
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391,029 3,799,351
Thereafter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,286,905 12,503,936
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,009,040円 29,236,694ドル
7. SEVERANCE PAYMENTS AND PENSION PLANS
Employees terminating their employment with the Companies, either volun-
tarily 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.
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 Company has established
retirement benefit trusts for the Company’s defined retirement benefit plan.
The Company and certain consolidated subsidiaries calculate liability for
retirement benefits and periodic benefit costs related to defined retirement
benefit plans by the simplified method. Under the simplified method, projected
benefit obligations are principally stated at the necessary payment amounts
for voluntary retirement as of the end of the fiscal year. The simplified method
for accounting for defined retirement benefit plans is allowed for a specified
small-sized entity under accounting principles generally accepted in Japan.
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Year Ended March 31, 2014
Defined retirement benefit plans (excluding plans applying the simplified method)
(1) The changes in defined benefit obligation for the year ended March 31, 2014, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
Balance at beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468,221円 4,549,371ドル
Cumulative effects of changes in accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,869) (261,068)
Restated balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441,352 4,288,302
Current service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,260 138,559
Interest cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,300 80,648
Actuarial losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,136 11,040
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,452) (286,168)
Prior service cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,291 12,544
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,056) (10,265)
Balance at end of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435,831円 4,234,662ドル
(2) The changes in plan assets for the year ended March 31, 2014, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
Balance at beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,077円 3,401,455ドル
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,194 89,333
Actuarial gains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,597 44,673
Contributions from the employer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,395 91,284
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,355) (168,634)
Contribution of securities to retirement benefit trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,021 311,126
Balance at end of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387,930円 3,769,238ドル
(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets as of March 31, 2014
Millions of Yen
Thousands of
U.S. Dollars
Funded defined benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430,742円 4,185,217ドル
Plan assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (387,930) (3,769,238)
42,812 415,978
Unfunded defined benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,088 49,445
Net liability for defined benefit obligation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,901円 465,423ドル
(4) The components of net periodic benefit costs for the year ended March 31, 2014, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
Current service cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,260円 138,559ドル
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,300 80,648
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,194) (89,333)
Recognized actuarial gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (934) (9,082)
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,861) (27,798)
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 1,400
Net periodic benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,715円 94,394ドル
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(5) Other comprehensive income on defined retirement benefit plans as of March 31, 2014
Millions of Yen
Thousands of
U.S. Dollars
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(4,152) $(40,342)
Actuarial gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,526 24,550
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(1,625) $(15,792)
(6) Accumulated other comprehensive income on defined retirement benefit plans as of March 31, 2014
Millions of Yen
Thousands of
U.S. Dollars
Unrecognized prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,099円 146,714ドル
Unrecognized actuarial gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,444 256,942
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,544円 403,657ドル
(7) Plan assets as of March 31, 2014
a. Components of plan assets
Plan assets consisted of the followings:
Debt investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45%
Equity investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
General account of life insurance companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
b. Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering distribution of plan assets currently and in the future and the long-term rates of return which
are expected currently and in the future from the various components of the plan assets.
(8) Assumptions used for the year ended March 31, 2014, were set forth as follows:
Discount rate Mainly 2.0%
Expected rate of return on plan assets Mainly 2.5%
Defined retirement benefit plans applying the simplified method
(1) The changes in the net carrying amount of liabilities and assets for the year ended March 31, 2014, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
Balance at beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,445円 33,479ドル
Periodic benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 1,683
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (199) (1,936)
Contributions from the employer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (323) (3,139)
Balance at end of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,096円 30,087ドル
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(2) Reconciliation between the liability and asset recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets as of
March 31, 2014 were as follows:
Millions of Yen
Thousands of
U.S. Dollars
Funded defined benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,680円 45,475ドル
Plan assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,414) (42,890)
266 2,584
Unfunded defined benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,830 27,502
Net carrying amount of liabilities and assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,096 30,087
Liabilities for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,336 32,416
Assets for retirement benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (239) (2,329)
Net carrying amount of liabilities and assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,096円 30,087ドル
(3) Periodic benefit costs
Millions of Yen
Thousands of
U.S. Dollars
Periodic benefit costs calculated under the simplified method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173円 1,683ドル
Defined contribution plans
The required contribution to defined contribution plans by the Company and its certain consolidated subsidiaries for the year ended March 31, 2014 was 1,377円
million (13,386ドル thousand).
Year Ended March 31, 2013
The liability for employees’ retirement benefits at March 31, 2013, consisted of the following:
Millions of Yen
Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 475,455
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (353,866)
Unrecognized actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,917
Unrecognized prior service cost (deduction of liability). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,195
Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
Net liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 163,875
The components of net periodic benefit costs for the year ended March 31, 2013 were as follows:
Millions of Yen
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,671円
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,727
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,701)
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,384
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (896)
Net periodic benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,185円
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8. RESERVE FOR REPROCESSING OF IRRADIATED NUCLEAR FUEL
The reserve is provided for reprocessing costs of irradiated nuclear fuel
resulting from operation of nuclear power production facilities. The annual
provision is calculated in accordance with the accounting regulations set by
the Japanese Government applicable to electric utility providers in Japan.
The reserve consists of three portions and each of them is calculated in
different ways.
(a) The costs reprocessed in Japan Nuclear Fuel Limited ("JNFL") are calcu-
lated based on the expected future cash flows discounted at 1.5% and
1.6% at March 31, 2014 and 2013, respectively,
(b) The costs reprocessed in the other reprocessing companies are calculated
based on the quantities to be reprocessed as of each balance sheet date
and contracted reprocessing rate,
(c) The costs of irradiated nuclear fuels which have no authorized definite
reprocessing plan are calculated based on the expected future cash flows
discounted at 4.0%.
As of April 1, 2005, unrecognized prior costs of 130,495円 million, which
had not been recognized in the past as liability, were incurred because new
accounting regulations to estimate the reprocessing costs for irradiated
nuclear fuel were applicable on or after April 1, 2005. These costs were
amortized on a straight-line basis over 15 years. The Company recalculated
an estimate in accordance with a specific law. As a result, the unrecognized
prior costs as of April 1, 2008 were changed from 104,397円 million to
90,977円 million, and these costs are amortized over 12 years, beginning
on April 1, 2008. The balance of unrecognized past costs as of March 31,
2014 was 45,488円 million (441,981ドル thousand). The Company is permitted
to recover these reprocessing costs by including them in the admitted cost
elements for electric rate.
In addition, if any changes are made in the assumptions for the calcula-
tions of the reserve, such as expected future cash flows and the discount
rate, unrecognized difference might be incurred. The balance of unrecognized
difference as of March 31, 2014 is a gain of 9,197円 million (89,362ドル
thousand). In accordance with the accounting regulations, the difference will
be amortized on a straight-line basis beginning the following year the change
was made, over the period in which the irradiated nuclear fuel was produced.
The annual amortization is treated as operating expenses.
An independent fund managing body was set up based on a specific law,
and the Company is obliged to contribute the same amounts as the balance
of reserve for reprocessing of irradiated nuclear fuel to reserve funds in 15
years from 2005. The reserve funds are provided to ensure the appropriate
reprocessing of irradiated nuclear fuel and presented as "Reserve funds for
reprocessing of irradiated nuclear fuel."
Assumptions for actuarial computations for the year ended March 31, 2013 were as follows:
Discount rate Mainly 2.0 %
Expected rate of return on plan assets Mainly 2.0 %
Recognition period of actuarial gain/loss Mainly 5 years
Amortization period of prior service cost Mainly 5 years
9. ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2014 and 2013, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2014 2013 2014
Balance at beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221,025円 212,008円 2,147,550ドル
Net change in the year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,015) 9,017 (175,042)
Balance at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,010 221,025 1,972,508
Less current portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 205
Asset retirement obligations, less current portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,989円 221,025円 1,972,302ドル
10. SHORT-TERM BORROWINGS
Short-term borrowings were generally represented by bank loans, bearing interest at rates ranging from 0.26% to 1.88% for the years ended March 31, 2014 and 2013.
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11. INCOME TAXES
The Companies are subject to national and local income taxes. The aggregate normal statutory tax rates for the Company approximated 33.2% for the years ended
March 31, 2014 and 2013.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31, 2014 and 2013,
were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2014 2013 2014
Deferred Tax Assets:
Tax loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 189,067 \ 156,014 $ 1,837,035
Liability for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,320 51,837 382,046
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,109 33,683 321,696
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,782 26,332 201,925
Reserve for reprocessing of irradiated nuclear fuel. . . . . . . . . . . . . . . . . . . . . . . . . . . 22,243 22,192 216,127
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,689 65,245 502,230
Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (163,834) (128,180) (1,591,861)
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 192,378 \ 227,126 $ 1,869,201
Deferred Tax Liabilities:
Gain on contributions of securities to retirement benefit trust . . . . . . . . . . . . . . . . . . 5,914 57,467
Deferred gain on derivatives under hedge accounting . . . . . . . . . . . . . . . . . . . . . . . . 1,915 1,870 18,610
Capitalized assets retirement costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,330 7,047 12,932
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,976 10,108 38,636
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 13,137 \ 19,026 $ 127,647
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 179,240 \ 208,100 $ 1,741,554
A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statements of opera-
tions for the years ended March 31, 2014 and 2013, were as follows:
2014 2013
Normal effective statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.2% 33.2%
Valuation allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48.6) (29.1 )
Difference of tax rates on special income tax for reconstruction funding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8.8) (3.4)
Amendment for consolidation of gains on sales of investments in an affiliated company. . . . . . . . . . . . . . . . . . . (1.7)
Elimination of unrealized gains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.8)
Other - net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.5) 0.0
Actual effective tax rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28.2)% 0.7%
The stated difference of tax rates on special income tax for reconstruc-
tion funding for the fiscal year ended March 31, 2014 includes a negative
4.1% adjustment of deferred tax assets at year-end resulting from tax-rate
changes which are mentioned below.
New tax reform laws enacted in 2014 in Japan changed the normal
effective statutory tax rate for the fiscal year beginning on or after April 1,
2014, from approximately 33.2% to 30.7%. The effect of this change was to
decrease deferred tax assets in the consolidated balance sheet as of March
31, 2014, by 2,537円 million (24,650ドル thousand), to increase income taxes—
deferred in the consolidated statement of operations for the year then ended
by 3,058円 million (29,717ドル thousand), and to increase accumulated other
comprehensive income in the consolidated balance sheet by 516円 million
(5,015ドル thousand). Decrease of deferred tax liabilities in the consolidated
balance sheet was immaterial.
At March 31, 2014, the Company and certain subsidiaries have tax
loss carryforwards aggregating 614,847円 million (5,974,029ドル thousand),
which are available to be offset against taxable income of the Company and
these subsidiaries and will expire in 9 years. At March 31, 2014, the tax loss
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carryforwards for the Company amounting to 115,270円 million (1,119,996ドル
thousand), 311,672円 million (3,028,301ドル thousand), and 175,798円 million
(1,708,112ドル thousand) will expire in the year ending March 31, 2023, 2022,
and 2021, respectively.
12. EQUITY
Japanese companies are subject to the Companies Act of Japan (the
"Companies Act"). The significant provisions in the Companies Act that affect
financial and accounting matters are summarized below:
(a) Dividends
Under the Companies Act, companies can pay dividends at any time during
the fiscal year in addition to the year-end dividend upon resolution at the
shareholders’ meeting. For companies that meet certain criteria, the Board
of Directors may declare dividends (except for dividends-in-kind) at any
time during the fiscal year if the Company has prescribed so in its articles of
incorporation. However, the Company cannot do so because it does not meet
all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind
(noncash assets) to shareholders subject to a certain limitation and addi-
tional requirements.
Semiannual interim dividends may also be paid once a year upon
resolution by the Board of Directors if the articles of incorporation of the
Company so stipulate. The Companies Act provides certain limitations on
the amounts available for dividends or the purchase of treasury stock. The
limitation is defined as the amount available for distribution to the sharehold-
ers, but the amount of net assets after dividends must be maintained at no
less than 3円 million.
(b) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must
be appropriated as a legal reserve (a component of retained earnings) or as
additional paid-in capital (a component of capital surplus) depending on the
equity account that was charged upon the payment of such dividends until
the total of aggregate amount of legal reserve and additional paid-in capital
equals 25% of the common stock. Under the Companies Act, the total amount
of additional paid-in capital and legal reserve may be reversed without
limitation. The Companies Act also provides that common stock, legal reserve,
additional paid-in capital, other capital surplus and retained earnings can be
transferred among the accounts under certain conditions upon resolution of
the shareholders.
(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock
and dispose of such treasury stock by resolution of the Board of Directors.
The amount of treasury stock purchased cannot exceed the amount available
for distribution to the shareholders, which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a sepa-
rate component of equity. The Companies Act also provides that companies
can purchase both treasury stock acquisition rights and treasury stock. Such
treasury stock acquisition rights are presented as a separate component of
equity or deducted directly from stock acquisition rights.
13. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were 6,423円 million (62,416ドル thousand) and 8,175円 million for the years ended March 31, 2014 and 2013, respectively.
14. RELATED PARTY DISCLOSURES
Significant transactions of the Company with an affiliated company for the years ended March 31, 2014 and 2013 were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2014 2013 2014
KYUDENKO CORPORATION
Transactions:
Purchase of construction works on distribution facilities and other . . . . . . . . . . . . 32,593円 34,840円 316,683ドル
Balances at year end:
Payables for construction works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,807 4,577 36,991
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15. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Items Pertaining to Financial Instruments
(a) The Companies’ policy for financial instruments
The Companies use mainly long-term debt, including bonds and loans, to
raise funds required for investments in electric utility plant and equipment
and repayments of bonds and loans. Cash surpluses, if any, are invested in
low-risk financial assets. Derivatives are used not for speculative purposes,
but to avoid financial risks as described in (b) below.
(b) Nature and extent of risks arising from financial instruments and risk
control system
Investment securities, mainly held-to-maturity debt securities and equity
securities issued by companies related through business, and investments in
and advances to nonconsolidated subsidiaries and affiliated companies which
have a quoted market price in an active market are exposed to the risk of
market price fluctuations. Such market risk is managed by monitoring market
values and financial position of issuers on a regular basis. Investment securi-
ties and investments in and advances to nonconsolidated subsidiaries and
affiliated companies which do not have a quoted market price in an active
market are managed by monitoring financial position of issuers on a regular
basis. In addition, the Company requires its nonconsolidated subsidiaries and
affiliated companies to submit business plans and performance reports, and
to consult in advance on any items that could have a significant impact on the
Companies’ business activities.
Reserve funds for reprocessing of irradiated nuclear fuel are provided
in accordance with a specific law to ensure the appropriate reprocessing of
irradiated nuclear fuel resulting from operation of nuclear power production
facilities.
Receivables are exposed to customer credit risk. Payment term is set
forth in electric power supply agreements and so on. The Companies manage
their credit risk from receivables by monitoring of payment term and balances
of each customer and identifying and reducing the default risk of customers
in early stage.
Bonds and loans are mainly used to raise funds for investments in
electric utility plant and equipment.
Although a part of loans is exposed to market risk from changes in vari-
able interest rates, a consolidated subsidiary of the Company mitigates such
risk from long-term loans by using interest rate swaps.
Payments terms of notes and accounts payable are less than one year.
Although a part of accounts payable to purchase fuel in foreign currencies is
exposed to the market risk of fluctuations in foreign exchange, such risk is
mitigated by using foreign exchange forward contracts and currency swaps.
The Companies use foreign exchange forward contracts, currency swaps,
interest rate swaps and energy swap agreements to manage their exposures
to fluctuations in foreign exchange, interest rates and fuel price. Please see
Note 16 for more details about derivatives.
Liquidity risk comprises the risk that the Companies cannot meet their
contractual obligations in full on maturity dates. The Companies manage their
liquidity risk by holding adequate volumes of liquid assets based on monthly
financial planning and diversifying sources of their financing.
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Fair values of financial instruments
The carrying amounts and aggregate fair values of financial instruments at March 31, 2014 and 2013, were as follows:
Millions of Yen
March 31, 2014 Carrying Amount Fair Value Unrecognized Loss
Investment securities:
Held-to-maturity debt securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 1,505 \ 1,359 \ 146
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,132 8,132
Investments in and advances to nonconsolidated subsidiaries and affiliated companies . . . 15,382 13,298 2,083
Reserve funds for reprocessing of irradiated nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . 261,058 261,058
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384,769 384,769
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183,568 183,568
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 854,417 \ 852,187 2,230円
Long-term debt:
Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,243,414円 1,283,048円 39,634円
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,754,736 1,799,739 45,003
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,521 118,521
Notes and accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,725 167,725
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,448 3,448
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,287,845円 3,372,483円 84,637円
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 6,239 \ 6,239
Millions of Yen
March 31, 2013 Carrying Amount Fair Value Unrecognized Loss
Investment securities:
Held-to-maturity debt securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 2,536 \ 2,339 \ 197
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,242 44,242
Investments in and advances to nonconsolidated subsidiaries and affiliated companies . . . 19,687 9,324 10,362
Reserve funds for reprocessing of irradiated nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . 240,155 240,155
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379,207 379,207
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,428 144,428
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 830,258 \ 819,698 10,559円
Long-term debt:
Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,212,254円 1,249,339円 37,085円
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,545,889 1,570,373 24,483
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,532 119,532
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000 33,000
Notes and accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,460 151,460
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,197 2,197
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,064,335円 3,125,904円 61,569円
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 5,726 \ 5,726
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Thousands of U.S. Dollars
March 31, 2014 Carrying Amount Fair Value Unrecognized Loss
Investment securities:
Held-to-maturity debt securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,632 $ 13,206 $ 1,426
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,021 79,021
Investments in and advances to nonconsolidated subsidiaries and affiliated companies . . . 149,461 129,216 20,245
Reserve funds for reprocessing of irradiated nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . 2,536,519 2,536,519
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,738,529 3,738,529
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,783,599 1,783,599
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,301,765 8,280,094ドル $ 21,671
Long-term debt:
Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,081,365ドル 12,466,466ドル 385,100ドル
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,049,518 17,486,780 437,262
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,151,588 1,151,588
Notes and accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,629,663 1,629,663
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,505 33,505
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,945,641ドル 32,768,005ドル 822,363ドル
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,619 $ 60,619
The securities whose fair value cannot be reliably determined are
excluded from investment securities and investments in and advances to
nonconsolidated subsidiaries and affiliated companies (see (b) below).
Advances are excluded from investments in and advances to nonconsoli-
dated subsidiaries and affiliated companies because they are immaterial.
Long-term debt contains its current portion, and obligations under
finance leases are excluded because they are immaterial.
Derivatives are stated at the net amount.
(a) Methods used to calculate fair values of financial instruments
Investment securities and investments in and advances to nonconsolidated
subsidiaries and affiliated companies
The fair values of investment securities and investments in and advances to
nonconsolidated subsidiaries and affiliated companies are measured at the
quoted market price of the exchanges for the equity securities and some of
debt securities, principally at the quoted price obtained from the financial
institution for other debt securities. Fair value information for investment
securities by classification is included in Note 4.
Reserve funds for reprocessing of irradiated nuclear fuel
Reserve funds for reprocessing of irradiated nuclear fuel are provided in accor-
dance with a specific law to ensure the appropriate reprocessing of irradiated
nuclear fuel resulting from operation of nuclear power production facilities.
The funds must be used in accordance with a plan approved by the
Japanese Government. The fair value is based on the carrying amount
determined by discounting the cash flows related to the using plan.
Cash and cash equivalent, and receivables
The carrying amounts of cash and cash equivalents, and receivables approxi-
mate fair values because of their short maturities.
Bonds
The fair values of bonds are based on market price. The fair values are deter-
mined by discounting the cash flows related to the bonds at the Company’s
assumed corporate borrowing rate.
Long-term loans
The fair values of long-term loans at fixed interest rates are determined by
discounting the cash flows related to the loans at the Company’s assumed
corporate borrowing rate. Because loans at variable interest rates reflect
short-term movements in market interest rates and there has been no
substantial change in the Company’s credit position since the loans were
implemented, the carrying amounts approximate fair values. A part of loans
is subjected to interest rate swaps, which qualify for hedge accounting and
meet specific matching criteria (see Note 16), and the fair values are deter-
mined by discounting the cash flows related to the loans with the interest rate
swaps at the Company’s assumed corporate borrowing rate.
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Short-term borrowings, commercial paper, notes and accounts payable, and
accrued income taxes
The carrying amounts of short-term borrowings, commercial paper, notes and
accounts payable and accrued income taxes approximate fair values because
of their short maturities.
(b) Financial instruments whose fair value cannot be reliably determined
Millions of Yen
Thousands of
U.S. Dollars
2014 2013 2014
Investment securities:
Available-for-sale:
Equity securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 73,260 \ 73,141 $ 711,824
Other securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,375 2,468 23,083
Investments in and advances to nonconsolidated subsidiaries and
affiliated companies:
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,372 71,202 703,187
Other securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,424 7,819 91,573
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,433円 154,632円 1,529,668ドル
Maturity analysis for financial assets and securities with contractual maturities
Millions of Yen
March 31, 2014
Due in one
year or less
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
Investment securities:
Held-to-maturity debt securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 299円 20円 1,186円
Available-for-sale securities with contractual maturities . . . . . . . . 37 10 1,634
Reserve funds for reprocessing of irradiated nuclear fuel . . . . . . . . \ 27,626
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384,769
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183,568
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 595,964円 337円 30円 2,820円
Thousands of U.S. Dollars
March 31, 2014
Due in one
year or less
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
Investment securities:
Held-to-maturity debt securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,914ドル 194ドル 11,523ドル
Available-for-sale securities with contractual maturities . . . . . . . . 364 105 15,883
Reserve funds for reprocessing of irradiated nuclear fuel . . . . . . . . $ 268,428
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,738,529
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,783,599
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,790,558ドル 3,278ドル 299ドル 27,407ドル
Reserve funds for reprocessing of irradiated nuclear fuel are provided for
reprocessing costs of irradiated nuclear fuel charged by JNFL. The using plan
for the reserve funds is disclosed only for amounts due in one year or less, to
comply with agreements with JNFL and to avoid any disadvantages, possibly
caused by disclosure, to the interested parties.
Please see Note 6 for annual maturities of long-term debt.
Derivatives
Fair value information for derivatives is included in Note 16.
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16. DERIVATIVES
The Company enters into foreign exchange forward contracts, interest rate
swaps and energy swap agreements to manage its exposures to fluctuations
in foreign exchanges, interest rates and fuel price, respectively.
A consolidated subsidiary of the Company enters into interest rate swaps
to manage exposure to fluctuations in interest rates.
The Companies do not enter into derivatives for trading or specula-
tive purposes.
Foreign exchange forward contracts, currency swaps, interest rate swaps
and energy swap agreements are not subject to any market risk except for
abandoning potential income by market fluctuations in hedged items.
The Companies 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
counterparties to those derivatives have high credit ratings.
The derivative transactions are executed by the specific sections, and the
administrative section monitors them based on internal policies.
Derivative transactions to which hedge accounting is applied
Millions of Yen
March 31, 2014 Hedged Item Contract Amount
Contract Amount
due after One Year Fair Value
Currency swaps:
Buying USD (Note a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts
payable 67,869円 6,197円 5,800円
Energy swap agreements:
(fixed-price payment; floating-price receipt) (Note a). . . . . . . . . . . . .
Accounts
payable \ 1,430 438円
Interest rate swaps:
(fixed-rate payment; floating-rate receipt) (Note c) . . . . . . . . . . . . . .
Long-term
loans \ 3,970 2,698円
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,239円
Millions of Yen
March 31, 2013 Hedged Item Contract Amount
Contract Amount
due after One Year Fair Value
Currency swaps:
Buying CHF (Note b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bonds 19,183円
Buying USD (Note a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts
payable 31,599円 17,383円 4,979円
Energy swap agreements:
(fixed-price payment; floating-price receipt) (Note a). . . . . . . . . . . . .
Accounts
payable \ 4,045 \ 1,430 \ 746
Interest rate swaps:
(fixed-rate payment; floating-rate receipt) (Note c) . . . . . . . . . . . . . .
Long-term
loans \ 2,592 \ 1,870
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,726円
Thousands of U.S. Dollars
March 31, 2014 Hedged Item Contract Amount
Contract Amount
due after One Year Fair Value
Currency swaps:
Buying USD (Note a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts
payable 659,437ドル 60,212ドル 56,362ドル
Energy swap agreements:
(fixed-price payment; floating-price receipt) (Note a). . . . . . . . . . . . .
Accounts
payable $ 13,899 $ 4,257
Interest rate swaps:
(fixed-rate payment; floating-rate receipt) (Note c) . . . . . . . . . . . . . .
Long-term
loans $ 38,573 26,214ドル
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,619ドル
Notes:
a) The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.
b) Bonds denominated in foreign currencies for which currency swaps are used to hedge the foreign currency fluctuations are translated at the contracted rate if the currency swaps qualify for
hedge accounting. As a result, the fair values of currency swaps are determined as yen-denominated bonds by discounting the cash flows related to the bonds at the Company’s assumed
corporate borrowing rate.
c) 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 is recognized and included in interest charges. As a result, the fair values of interest rate swaps are included in those of hedged items (i.e., long-term loans) in Note 15.
d) The contract or notional amounts of derivatives, which are shown in the above table, do not represent the amounts exchanged by the parties and do not measure the Companies’ exposure to
market risk.
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17. COMMITMENTS AND CONTINGENCIES
At March 31, 2014, 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 at March 31, 2014 were as follows:
Millions of Yen
Thousands of
U.S. Dollars
Co-guarantees of loans, mainly in connection with procurement of fuel. . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,243円 954,563ドル
Guarantees of employees’ loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,196 740,351
Guarantees under debt assumption agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 680,139
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,431 159,657
Under the debt assumption agreements, the Company was contingently liable for the redemption of the domestic bonds transferred to banks.
18. COMPREHENSIVE INCOME
The components of other comprehensive income for the year ended March 31, 2014 and 2013, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2014 2013 2014
Other comprehensive (loss) income:
Unrealized gain on available-for-sale securities
Gains arising during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 2,758 \ 9,240 $ 26,803
Reclassification adjustments to profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,843) 217 (260,820)
Amount before income tax effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,084) 9,458 (234,016)
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,414 (2,955) 72,041
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(16,670) \ 6,503 $(161,974)
Deferred gain on derivatives under hedge accounting:
Gains arising during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 1,233 \ 6,041 $ 11,988
Adjustments for amounts transferred to the initial carrying amounts of hedged items. . . (720) (216) (7,005)
Amount before income tax effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512 5,824 4,982
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48) (1,906) (470)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 464 \ 3,918 $ 4,512
Foreign currency translation adjustments:
Adjustments arising during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ (1,429) \ (709) $ (13,891)
Adjustments related to defined retirement benefit plans:
Gains arising during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 3,461 $ 33,632
Reclassification adjustments to profit or loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,086) (49,425)
Amount before income tax effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,625) (15,792)
Income tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 941 9,148
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ (683) $ (6,644)
Share of other comprehensive income in nonconsolidated subsidiaries and
affiliated companies:
Gains arising during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 2,699 \ 1,504 $ 26,232
Reclassification adjustments to profit or loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 24 1,128
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ 2,816 \ 1,529 $ 27,361
Total other comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(15,503) 11,242円 $(150,636)
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19. SEGMENT INFORMATION
(1) Description of reportable segments
The Companies’ reportable segments are those for which financial informa-
tion is available separately and regular evaluation by the Company’s manage-
ment is being performed in order to decide how resources are allocated
among the Companies. Therefore, the Companies consist of the industry
electric power, energy related business, information technology (IT) and
telecommunications and other.
The energy related business consists of obtaining, storing, gasifying,
supplying and selling LNG and other businesses related to energy.
IT and telecommunications consists of provision of telecommunications.
Other consists of environment and recycling, lifestyle-oriented services
and others.
(2) Methods of measurement for the amounts of sales, profit, assets and
other items for each reportable segment
The accounting policies of each reportable segment are consistent to those
disclosed in Note 2, "Summary of Significant Accounting Policies."
a. Adoption of revised accounting standard and guidance for retire-
ment benefits
As described in Note 2.l, the Companies early applied the revised account-
ing standard and guidance for retirement benefits effective April 1, 2013,
and changed the method of attributing expected benefit to periods from a
straight-line basis to a benefit formula basis. As a result, segment loss of
Electric Power for the year ended March 31, 2014 decreased by 540円 million
(5,255ドル thousand).
b. Change in method of allocation of asset retirement costs of nuclear
power units
As described in Note 2.n, on October 1, 2013, the METI revised the account-
ing regulations and related regulations concerning allocation of asset retire-
ment costs of nuclear power units. Prior to October 1, 2013, asset retirement
costs of nuclear power units were allocated to expense through depreciation
based on a proportion of the current generation of electric power to the
estimated total life-time generation of electric power of each unit. Effec-
tive October 1, 2013, the asset retirement costs are allocated to expense
through depreciation based on the straight-line method over a period totaling
the remaining useful life and expected safe storage period. This change in
accounting estimate increased segment loss of Electric Power for the year
ended March 31, 2014 by 4,967円 million (48,266ドル thousand).
(3) Information about sales, profit, assets and other items at March 31, 2014 and 2013, was as follows:
Millions of Yen2014Reportable segment
Reconciliations Consolidated
Electric Power
Energy related
Business
IT and
Telecommuni-
cations Other Total
Sales:
Sales to external customers. . . . 1,633,023円 \ 78,150 \ 65,841 \ 14,137 1,791,152円 1,791,152円
Intersegment sales or transfers. . 1,805 92,856 23,907 13,004 131,573 \(131,573)
Total . . . . . . . . . . . . . . . . . . . . 1,634,829円 171,007円 \ 89,748 \ 27,142 1,922,726円 \(131,573) 1,791,152円
Segment (loss) profit . . . . . . . . . . . \ (121,615) \ 10,367 \ 11,342 \ 3,266 \ (96,639) \ 818 \ (95,821)
Segment assets . . . . . . . . . . . . . . . 4,057,306 345,698 136,493 136,780 4,676,279 (126,427) 4,549,852
Other:
Depreciation . . . . . . . . . . . . . . . . 172,341 9,210 18,432 5,550 205,534 (2,678) 202,856
Increase in property and
nuclear fuel. . . . . . . . . . . . . . . . . 216,181 23,927 19,808 1,438 261,355 (4,351) 257,004
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Kyushu Electric Power Summary
Millions of Yen2013Reportable segment
Reconciliations Consolidated
Electric Power
Energy related
Business
IT and
Telecommuni-
cations Other Total
Sales:
Sales to external customers . . . . 1,406,218円 \ 65,997 \ 60,732 \ 12,970 1,545,919円 1,545,919円
Intersegment sales or transfers. . 2,121 94,637 33,849 14,310 144,918 \(144,918)
Total . . . . . . . . . . . . . . . . . . . . 1,408,339円 160,634円 \ 94,581 \ 27,281 1,690,837円 \(144,918) 1,545,919円
Segment (loss) profit . . . . . . . . . . . \ (312,666) \ 2,578 \ 7,600 \ 2,477 \ (300,010) \ 581 \ (299,428)
Segment assets . . . . . . . . . . . . . . . 4,053,317 325,456 141,469 149,749 4,669,992 (143,479) 4,526,513
Other:
Depreciation . . . . . . . . . . . . . . . . 180,189 10,241 18,716 6,358 215,505 (2,770) 212,735
Increase in property and
nuclear fuel. . . . . . . . . . . . . . . . . 155,668 9,662 17,421 1,528 184,281 (2,985) 181,295
Thousands of U.S. Dollars2014Reportable segment
Reconciliations Consolidated
Electric Power
Energy related
Business
IT and
Telecommuni-
cations Other Total
Sales:
Sales to external customers . . . . 15,866,925ドル $ 759,333 $ 639,730 $ 137,362 17,403,352ドル 17,403,352ドル
Intersegment sales or transfers. . 17,538 902,221 232,288 126,358 1,278,406 $(1,278,406)
Total . . . . . . . . . . . . . . . . . . . . 15,884,464ドル 1,661,554ドル $ 872,018 $ 263,721 18,681,758ドル $(1,278,406) 17,403,352ドル
Segment (loss) profit . . . . . . . . . . . $ (1,181,654) $ 100,731 $ 110,211 $ 31,735 $ (938,976) $ 7,948 $ (931,027)
Segment assets . . . . . . . . . . . . . . . 39,421,940 3,358,908 1,326,213 1,328,998 45,436,061 (1,228,402) 44,207,658
Other:
Depreciation . . . . . . . . . . . . . . . . 1,674,514 89,489 179,097 53,930 1,997,031 (26,022) 1,971,009
Increase in property and
nuclear fuel. . . . . . . . . . . . . . . . . 2,100,482 232,486 192,464 13,976 2,539,408 (42,283) 2,497,125
Notes:
(a) Reconciliations of segment (loss) profit and segment assets are intersegment transaction eliminations.
(b) Segment (loss) profit is adjusted to reflect operating loss in the consolidated statement of operations.
Geographic segment information is not disclosed because the Companies’ overseas operations are immaterial.
Information for overseas sales is not disclosed due to overseas sales being immaterial compared with consolidated net sales.
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Section 3
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Section 2
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Management Base
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Kyushu Electric Power Summary
20. SUBSEQUENT EVENTS
a. Issuance of Preferred Stock
The Company resolved to issue 1,000 shares of Class A preferred stock for
100,000円 million (971,628ドル thousand) by way of third-party allotment to
the Development Bank of Japan Inc. at the Board of Directors meeting held
on April 30, 2014. Furthermore, the Company obtained the approval for a
partial revision of the Company’s Articles of Incorporation for the issuance of
the preferred stock and issuance of the preferred stock at the shareholders’
meeting held on June 26, 2014.
(1) Way of offering
Third-party allotment to the Development Bank of Japan Inc.
(2) Class and number of new shares to be issued
1,000 shares of Class A preferred stock
(3) Issue price
100円 million (971ドル thousand) per share
(4) Total amount of the issue price
100,000円 million (971,628ドル thousand)
(5) Amount of preferred stock and additional paid-in capital to be increased
Amount of preferred stock to be increased: 50,000円 million (485,814ドル
thousand) (50円 million per share (485ドル thousand))
Amount of additional paid-in capital to be increased: 50,000円 million
(485,814ドル thousand) (50円 million per share (485ドル thousand))
(6) Payment date (issue date)
August 1, 2014 (scheduled)
(7) Uses of proceeds
The proceeds from issuance of the Preferred Stock are planned to be used
entirely for construction to enhance the safety of the Company’s nuclear
power plants to meet new regulations for safety of nuclear power plants.
(8) Characteristics of the Preferred Stock
The Preferred Stock provides no provision for acquisition or right to
request acquisition using the common stock as consideration that will not
dilute common stock. These stocks also do not provide any voting rights
at the general shareholders meeting.
The Preferred Stock has a provision for acquisition allowing the
Company to acquire this Preferred Stock in exchange for cash the day
after the payment date or thereafter. Furthermore, the Preferred Stock
will provide the Preferred Shareholders the right to request acquisition of
this Preferred Stock in exchange for cash of the Company the day after
the payment date or thereafter if the Preferred Shareholders follow the
prescribed procedures, but the exercise of this right by the Preferred
Shareholders is limited by the agreement to underwriting of the Pre-
ferred Stock.
Annual preferred dividend for the Preferred Stock is 3,500円 thou-
sand (34ドル thousand) per share.
b. Reduction of Preferred Stock and Additional Paid-in Capital
At the Board of Directors meeting held on April 30, 2014, in preparation for
future flexible capital management strategies, the Company resolved that
capital stock and additional paid-in capital be reduced and transferred to other
capital surplus, which constitutes the amount available for distribution to the
shareholders, upon issuance of Class A preferred stock mentioned in "Issuance
of Preferred Stock" above on condition that the issue comes into effect.
(1) Reduced capital stock
50,000円 million (485,814ドル thousand)
As the issuance of Preferred Stock increases the Company’s preferred
stock by 50,000円 million (485,814ドル thousand), the total amounts of
common stock and preferred stock after the effective date of the reduc-
tion will not fall below the amounts before the effective date.
(2) Reduced additional paid-in capital
50,000円 million (485,814ドル thousand)
As the issuance of Preferred Stock increases the Company’s additional
paid-in capital by 50,000円 million (485,814ドル thousand), the additional
paid-in capital after the effective date of the reduction will not fall below
the amounts before the effective date.
(3) Method of reducing capital stock and additional paid-in capital
In accordance with the Companies Act, the Company will reduce capital
stock and additional paid-in capital and transfer them to other capital surplus.
(4) Time Schedule
April 30, 2014: Resolution at the Board of Directors Meeting
June 30, 2014: Date of public notice of the reduction for creditors to
raise objections
July 31, 2014: Deadline for creditors to raise objections
August 1, 2014: Effective date of the reduction
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Kyushu Electric Power Summary
c. Conversion of Kyushu Telecommunication Network Co., Ltd., to a
wholly owned subsidiary and transfer of the optical fiber core cable
leasing business
At the Board of Directors meeting held on May 16, 2014, a basic policy was
resolved and on the same day a basic agreement between the Company and
Kyushu Telecommunication Network Co., Ltd. ("QTNet"), a consolidated subsid-
iary of the Company, was concluded regarding a share exchange (the "Share
Exchange") under which the Company is the wholly owning parent company
and QTNet" is a wholly owned subsidiary company. Also at the Board of Direc-
tors meeting on the same day, a basic agreement between the Company and
QTNet was concluded regarding the transfer of the Company’s optical fiber
core cable leasing business (the "Transfer") to QTNet.
(1) Objectives of the Share Exchange and the Transfer
Since 2000, the Company has laid optical fiber cable leased optical fiber
core to telecommunications carriers, including QTNet, and conducted
businesses ancillary to the optical fiber core cable leasing service.
However, taking into account the difficult management environment and
electricity system reform, the Company recognizes the need to concen-
trate on the energy business, chiefly the electricity business.
On the other hand, QTNet, which is the Group’s core company for the
IT and telecommunications business, employs the Company’s optical fiber
core cable to provide an optical fiber broadband service (BBIQ) and corpo-
rate data communication services. In the face of increasingly stringent
competition, QTNet has the urgent need to enhance its competitiveness.
Consequently, the decision was made to convert QTNet into a wholly
owned subsidiary of the Company through the Share Exchange, thereby
creating a structure that would facilitate rapid and flexible Group man-
agement in the IT and telecommunications business.
Furthermore, transferring the Company’s optical fiber core cable
leasing service and related optical fiber facilities to QTNet on this basis
should encourage more efficient operational management throughout the
Group by concentrating management resources, while at the same time
enhancing QTNet’s self-directive operational structure.
(2) Overview of the Share Exchange
a. Profile of the Company becoming a Wholly Owned Subsidiary through the Share Exchange
Name Kyushu Telecommunication Network Co., Ltd.
Headquarters 12-20 Tenjin 1-chome, Chuo-ku, Fukuoka
Representative Hiroyuki Akiyoshi, President and Representative Director
Capital 22,020円 million (213,952ドル thousand) (as of March 31, 2014)
Equity 30,606円 million (297,385ドル thousand) (as of March 31, 2014)
Total assets 80,948円 million (786,522ドル thousand) (as of March 31, 2014)
Businesses Telecommunications business and others
b. Method of the Share Exchange
The Company is to be the wholly owning parent company and QTNet is to
be the wholly owned subsidiary company by the Share Exchange. For the
Company, the Share Exchange is to be conducted under procedures for a
short-form share exchange based on the provisions of the Companies Act
that does not require approval at the shareholders’ meeting. For QTNet, the
Share Exchange is to be conducted under procedures for a summary share
exchange based on the provisions of the Companies Act that do not require
approval at the shareholder’s meeting.
c. Share allocation in the Share Exchange
Share allocation ratio in the Share Exchange is expected to be resolved
by both companies’ Boards of Directors, after negotiation between both
companies based on evaluation prepared by third-party evaluation agencies.
d. Date of the Share Exchange (Effective Date)
November 14, 2014 (scheduled)
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Management Base
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(3) Overview of the Transfer
a. Businesses to be Transferred
Optical fiber core cable leasing service and related optical fiber facilities
b. Method of the Transfer
The optical fiber core cable leasing service are to be transferred to QTNet
through the company split(*). However, the optical fiber facilities that QTNet
uses are to be sold to QTNet under a separate transfer contract.
(*) This is an absorption-type company split (the "Absorption-Type Company Split") in which the
Company is the splitting company and QTNet is the succeeding company. In line with the
Absorption-Type Company Split, as a consideration for the assets, QTNet will issue new shares,
all of which shall be allocated to the Company.
c. Company Name Following the Merger
Kyushu Telecommunication Network Co., Ltd.
d. Date of the Company Split and Sale (Effective Date)
March 1, 2015 (scheduled)
(4) Overview of Accounting Process to be Conducted
The Share Exchange and the Absorption-Type Company Split are expected to
be conducted as a transaction under common control in accordance with the
Accounting Standard for Business Combinations (ASBJ Statement No. 21, as
announced on December 26, 2008) and Guidance on Accounting Standard
for Business Combinations and Accounting Standard for Business Divestitures
(ASBJ Guidance No. 10, as announced on December 26, 2008).
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Section 3
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Section 2
Management Message
Section 4
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Section 1
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Kyushu Electric Power Summary
Nonconsolidated Five-year Financial Summary
Kyushu Electric Power Company, Incorporated
Years Ended March 31
Millions of Yen
Thousands of
U.S. Dollars
For the Year: 2010 2011 2012 2013 2014 2014
Operating revenues. . . . . . . . . . . . 1,339,807円 1,387,517円 1,406,770円 1,448,876円 1,682,994円 16,352,451ドル
Electric . . . . . . . . . . . . . . . . . . . . . . 1,312,103 1,356,317 1,369,537 1,408,339 1,634,829 15,884,464
Other . . . . . . . . . . . . . . . . . . . . . . . 27,704 31,199 37,232 40,536 48,165 467,987
Operating expenses. . . . . . . . . . . . . 1,229,154 1,269,718 1,569,533 1,721,006 1,756,444 17,066,118
Personnel. . . . . . . . . . . . . . . . . . . . 172,720 162,650 167,965 151,844 113,781 1,105,533
Fuel . . . . . . . . . . . . . . . . . . . . . . . . 213,007 284,857 520,282 679,722 754,442 7,330,378
Purchased power . . . . . . . . . . . . . 113,668 137,063 206,042 269,582 314,961 3,060,252
Depreciation . . . . . . . . . . . . . . . . . 196,741 197,977 202,151 180,180 172,333 1,674,442
Maintenance . . . . . . . . . . . . . . . . . 195,118 175,986 176,007 147,924 103,155 1,002,285
Reprocessing costs of irradiated
nuclear fuel. . . . . . . . . . . . . . . . . . 33,787 30,795 21,631 17,352 16,502 160,347
Decommissioning costs of nuclear
power units. . . . . . . . . . . . . . . . . . 9,093 7,524 3,106 2,627 1,978 19,224
Disposal cost of high-level
radioactive waste. . . . . . . . . . . . . 10,372 8,885 6,010 3,247 3,861 37,521
Disposition of property . . . . . . . . . 16,478 15,181 15,334 14,501 10,600 102,996
Taxes other than income taxes . . 87,473 87,680 83,142 82,265 84,339 819,468
Subcontract fee. . . . . . . . . . . . . . . 79,226 67,728 65,948 64,485 62,182 604,183
Rent . . . . . . . . . . . . . . . . . . . . . . . . 34,333 32,789 31,276 29,298 26,920 261,564
Other . . . . . . . . . . . . . . . . . . . . . . . 67,133 60,598 70,634 77,974 91,384 887,919
Interest charges . . . . . . . . . . . . . . . . 33,145 32,150 32,266 35,581 38,009 369,309
Income (loss) before income taxes. . 50,356 35,778 (229,754) (343,051) (75,619) (734,741)
Net income (loss) . . . . . . . . . . . . . . . 28,307 20,443 (174,983) (338,050) (90,939) (883,597)
Per share of common stock: Yen U.S. Dollars
Basic net income (loss) . . . . . . . . . . 59円.80 43円.19 \(369.74) \(714.33) \(192.17) $(1.87)
Cash dividends applicable to
the year . . . . . . . . . . . . . . . . . . . . . . 60.00 60.00 50.00
At year-end: Millions of Yen
Thousands of
U.S. Dollars
Total assets . . . . . . . . . . . . . . . . . . . 3,776,569円 3,890,891円 4,110,950円 4,201,704円 4,218,037円 40,983,656ドル
Net property . . . . . . . . . . . . . . . . . . . 2,811,063 2,811,194 2,757,023 2,704,014 2,687,936 26,116,752
Long-term debt,
less current portion. . . . . . . . . . . . . 1,641,073 1,627,260 2,090,311 2,425,739 2,692,319 26,159,345
Total equity. . . . . . . . . . . . . . . . . . . . 984,109 967,515 766,700 429,287 341,405 3,317,194
(U.S. dollar amounts have been translated from yen, for convenience, at the rate of 102円.92 = U.S. 1,ドル the approximate rate of exchange at March 31, 2014.)
* Figures less than a million yen are rounded down.
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Kyushu Electric Power Summary
Nonconsolidated Balance Sheet
Kyushu Electric Power Company, Incorporated
March 31, 2014 (Unaudited)
Millions of Yen
Thousands of
U.S. Dollars
2014 2013 2014
ASSETS
PROPERTY:
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,975,468円 8,948,491円 87,208,205ドル
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,704 215,616 3,018,889
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,286,172 9,164,108 90,227,094
Less-
Contributions in aid of construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,949 152,797 1,515,248
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,442,287 6,307,295 62,595,093
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,598,236 6,460,093 64,110,342
Net property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,687,936 2,704,014 26,116,752
NUCLEAR FUEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281,522 278,941 2,735,356
INVESTMENTS AND OTHER ASSETS:
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,994 113,301 748,099
Investments in and advances to subsidiaries and affiliated companies . . . . . . . . . . 149,634 150,372 1,453,893
Reserve funds for reprocessing of irradiated nuclear fuel . . . . . . . . . . . . . . . . . . . . . 261,058 240,155 2,536,519
Deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,299 158,382 1,372,906
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,986 17,701 262,210
Total investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655,973 679,914 6,373,628
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334,476 324,155 3,249,870
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,366 120,344 1,490,151
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (519) (512) (5,045)
Fuel and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,306 59,839 653,969
Deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,225 28,283 283,962
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,749 6,723 85,010
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592,605 538,834 5,757,919
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,218,037円 4,201,704円 40,983,656ドル
(U.S. dollar amounts have been translated from yen, for convenience, at the rate of 102円.92 = U.S. 1,ドル the approximate rate of exchange at March 31, 2014.)
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Kyushu Electric Power Summary
Millions of Yen
Thousands of
U.S. Dollars
2014 2013 2014
LIABILITIES AND EQUITY
LONG-TERM LIABILITIES:
Long-term debt, less current portion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,692,319円 2,425,739円 26,159,345ドル
Liability for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,526 147,341 724,121
Reserve for reprocessing of irradiated nuclear fuel. . . . . . . . . . . . . . . . . . . . . . . . . . . 332,882 346,913 3,234,377
Asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201,142 219,450 1,954,362
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,581 15,700 131,962
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,314,453 3,155,145 32,204,168
CURRENT LIABILITIES:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181,395 219,011 1,762,491
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,000 117,000 1,117,372
Commercial paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,495 132,333 1,413,679
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,061 82,448 826,477
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,226 29,170 342,271
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562,179 612,964 5,462,292
RESERVE FOR FLUCTUATIONS IN WATER LEVEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,308
EQUITY:
Common stock,
authorized, 1,000,000,000 shares; issued,
474,183,951 shares in 2014 and 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237,304 237,304 2,305,721
Capital surplus:
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,087 31,087 302,056
Other capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 19 192
Retained earnings:
Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,326 59,326 576,430
Retained earnings - carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,078 81,997 107,646
Unrealized gain on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418 17,826 4,062
Deferred gain on derivatives under hedge accounting . . . . . . . . . . . . . . . . . . . . . . . . 4,323 3,859 42,009
Treasury stock-at cost,
962,489 shares in 2014 and 948,557 shares in 2013 . . . . . . . . . . . . . . . . . . . . . (2,153) (2,134) (20,923)
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341,405 429,287 3,317,194
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,218,037円 4,201,704円 40,983,656ドル
Section 5
Financial Information
70/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary
Nonconsolidated Statement of Operations
Kyushu Electric Power Company, Incorporated
Year Ended March 31, 2014 (Unaudited)
Millions of Yen
Thousands of
U.S. Dollars
2014 2013 2014
OPERATING REVENUES:
Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,634,829円 1,408,339円 15,884,464ドル
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,165 40,536 467,987
Total operating revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,682,994 1,448,876 16,352,451
OPERATING EXPENSES:
Electric:
Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,781 151,844 1,105,533
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 754,442 679,722 7,330,378
Purchased power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314,961 269,582 3,060,252
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,333 180,180 1,674,442
Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,155 147,924 1,002,285
Reprocessing costs of irradiated nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,502 17,352 160,347
Decommissioning costs of nuclear power units . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,978 2,627 19,224
Disposal cost of high-level radioactive waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,861 3,247 37,521
Disposition of property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,600 14,501 102,996
Taxes other than income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,339 82,265 819,468
Subcontract fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,182 64,485 604,183
Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,920 29,298 261,564
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,384 77,974 887,919
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,756,444 1,721,006 17,066,118
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,787 33,683 376,869
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,795,232 1,754,689 17,442,987
OPERATING LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (112,237) (305,812) (1,090,536)
OTHER (INCOME) EXPENSES:
Interest charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,009 35,581 369,309
Gain on sales of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,141) (263,714)
Gain on sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,006) (58,358)
Gain on sales of investments of an affiliated company . . . . . . . . . . . . . . . . . . . . . . . . (2,481) (24,108)
Gain on contribution of securities to retirement benefit trust . . . . . . . . . . . . . . . . . . . (21,711) (210,953)
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,979) (1,434) (126,111)
Total other (income) expenses-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,310) 34,146 (313,936)
LOSS BEFORE INCOME TAXES AND (REVERSAL OF) PROVISION FOR RESERVE FOR
FLUCTUATIONS IN WATER LEVEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79,927) (339,959) (776,599)
(REVERSAL OF) PROVISION FOR RESERVE FOR FLUCTUATIONS IN WATER LEVEL . . . (4,308) 3,092 (41,858)
LOSS BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (75,619) (343,051) (734,741)
INCOME TAXES:
Current. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370 64 3,598
Deferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,949 (5,065) 145,258
Total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,320 (5,001) 148,856
NET LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \ (90,939) \ (338,050) $ (883,597)
Yen U.S. Dollars
PER SHARE OF COMMON STOCK:
Basic net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(192.17) \(714.33) $(1.87)
Cash dividends applicable to the year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(U.S. dollar amounts have been translated from yen, for convenience, at the rate of 102円.92= U.S. 1,ドル the approximate rate of exchange at March 31, 2014.)
Section 5
Financial Information
71/76 Kyushu Electric Power Company Annual Report 2014
Section 3
Special Report
Section 2
Management Message
Section 4
Management Base
Section 1
Kyushu Electric Power Summary