1Contents
Consolidated Financial Highlights
Consolidated Six-Year Financial Summary
Financial Review
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ Report to the Consolidated
Financial Statements
Non-Consolidated Balance Sheets
Non-Consolidated Statements of Income
Non-Consolidated Statements of Shareholders’ Equity
Notes to Non-Consolidated Financial Statements
Independent Auditors’ Report to the Non-Consolidated
Financial Statements
Non-Consolidated Six-Year Financial Summary
Organization
Board of Directors
Investor Information
Main Facilities23468910112122242526323334353637Note: All dollar figures herein refer to U.S. currency. Japanese yen amounts have been translated, for convenience only, at the rate of 120円.20=US1,ドル the
approximate exchange rate prevailing on March 31, 2003.2Consolidated Financial Highlights
11,824,543ドル
1,497,621
535,100
00,0001ドル.120.4234,979,750ドル
6,990,3912003For the year:
Operating revenues
Operating income
Net income
Per share of common stock
(yen and U.S. dollars):
Net income:
Basic
Diluted
Cash dividends applicable to the year
At year-end:
Total assets
Total shareholders’ equity
1,421,310円
180,014
64,319
0,0135円.13
50.00
4,204,566円
840,24520031,458,066円
197,758
61,120
0,0128円.90
60.00
4,290,132円
824,92820021,448,376円
212,032
59,191
0,0124円.83
123.65
60.00
4,166,489円
810,0182001Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2003, 2002 and 2001
Millions of yen
(except for per share data)
Thousands of
U.S. dollars
(except for
per share data)
(Billions of yen) (Billions of yen)
Operating revenues (left scale)
Net income (right scale)
1,200
1,500900600300060754530150
’99 ’00 ’01 ’02 ’03
(Billions of yen)
4,000
5,000
3,000
2,000
1,0000’99 ’00 ’01 ’02 ’03
4,124 4,142 4,166 4,290 4,205
1,430 1,429 1,448 1,458 1,4212623
59 6164Operating RevenuesandNet Income
Total Assets311,824,543ドル
11,236,897
587,646
10,326,922
9,739,226
587,696
648,062
851,606
319,609
535,100
$ 1.120.4234,979,750ドル
29,311,755
16,511,664
6,990,3912003For the year:
Operating revenues
Electric
Other
Operating expenses
Electric
Other
Interest charges
Income before
income taxes
and minority interests
Income taxes
Net income
Per share of common stock
(yen and U.S. dollars):
Net income:
Basic
Diluted
Cash dividends
applicable to the year
At year-end:
Total assets
Net property
Long-term debt, less
current maturities
Total shareholders’ equity
1,421,310円
1,350,675
70,635
1,241,296
1,170,655
70,641
77,897
102,363
38,417
64,319
\ 135.13
50.00
4,204,566円
3,523,273
1,984,702
840,24520031,428,559円
1,392,148
36,411
1,246,791
1,211,227
35,564
107,190
39,490
16,058
22,934
0,0048円.37
48.21
50.00
4,141,718円
3,528,297
2,137,509
725,5162000Consolidated Six-Year Financial Summary
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31,
Millions of yen
(except for per share data)
Thousands of
U.S. dollars
(except for
per share data)
1,430,164円
1,387,855
42,309
1,259,056
1,219,999
39,057
111,753
60,077
33,885
25,835
0,0054円.48
54.21
50.00
4,123,686円
3,596,203
2,276,929
659,58819991,444,068円
1,409,492
34,576
1,238,582
1,206,622
31,960
134,781
71,475
37,420
33,655
0,0070円.97
70.45
50.00
4,165,131円
3,665,153
2,365,687
659,98919981,448,376円
1,410,010
38,366
1,236,344
1,199,237
37,107
89,952
97,447
37,595
59,191
0,0124円.83
123.65
60.00
4,166,489円
3,459,859
2,071,192
810,01820011,458,066円
1,381,440
76,626
1,260,308
1,184,382
75,926
85,653
99,464
39,808
61,120
0,0128円.90
60.00
4,290,132円
3,595,794
2,130,149
824,9282002Note: All dollar figures herein refer to U.S. currency. Japanese yen amounts have been translated, for convenience only, at the rate of 120円.20=US1,ドル the
approximate exchange rate prevailing on March 31, 2003.4securities. This was partially offset by 8円.9 billion in loss
on discounted operations, recorded when affiliate Kyushu
Telecommunication Network Co., Inc., disposed of
facilities in line with a management decision to withdraw
from the personal handyphone system (PHS) business.
Capital Investment Policy: Kyushu Electric’s capital expenditure
plans focus on lowering the costs of providing electricity, while,
at the same time, stabilizing long-term supplies.
Management is striving to improve the efficiency of its
capital spending by accurately projecting future demand as
well as increase the reliability of its facilities and operating
technologies by streamlining the facilities setup, reviewing
design and construction standards and diversifying purchasing.
To satisfy the growth in demand for power, the Company
is taking comprehensive steps that will allow it to maintain
secure energy supplies and balance its power development—
centered on nuclear power—to ensure economy and reduce
environmental impact.
We are expanding our 500-kilovolt trunk line system
to support new power development and serve demand
increases as well as installing more efficient transmission
Consolidated Financial Review
Operating Results: In fiscal 2002, ended March 31, 2003,
the Japanese economy showed some signs of improvement,
including a turnaround in production as a result of rising
exports. Nevertheless, the economy remained generally
sluggish, reflecting weak personal consumption caused by
the worsening unemployment situation and concerns over
prospects for the global economy.
In this operating environment, the Kyushu Electric Group’s
power sales volume improved 1.6%. This was mainly due to
rises in production among iron and steel makers, machinery
manufacturers and other large industrial customers. Residential
(lighting) and commercial demand advanced 1.8%.
As a result of these factors, the Company’s sales volume
increased 1.7%, to 76.6 billion kilowatt-hours.
Total operating revenues declined 2.5%, however, to
1,421円.3 billion, owing to a rate reduction in October 2002.
Total operating expenses were down 1.5%, to 1,241円.3
billion. This was due to decreased fuel costs and a
Groupwide effort to enhance efficiency and cut spending.
Operating income fell 9.0%, to 180円.0 billion.
In contrast, net income climbed 5.2%, to 64円.3 billion,
largely due to 23円.1 billion in gain on sale of investment
Hydroelectric
Thermal
Nuclear
Internal-combustion engine
Generating facilities
Transmission, transformation
and distribution facilities
Upgrading of existing facilities
Nuclear fuel and other facilities
(Thousands of megawatts)162012840
(Billions of yen)320400240160800
’99 ’00 ’01 ’02 ’03 ’99 ’00 ’01 ’02 ’03
Generating Capacity Capital Investments5and distribution facilities in keeping with medium- and
long-term demand projections. In addition, we are laying
distribution lines underground as part of our efforts to
reduce the impact of our activities on the environment.
Capital expenditures were 30円.7 billion lower than
initially planned, at 241円.6 billion. This followed efforts to
streamline spending on design, construction and procure-
ment.
The construction of new facilities has proceeded
smoothly. The 700-megawatt Unit No. 2 of the Reihoku
Thermal Power Station came on line in June 2003.
A 1,200-megawatt pumped storage hydroelectric power sta-
tion in Omarugawa will start commercial operations when
the first 300 megawatts come on line in July 2007, followed
by an additional 300 megawatts and 600 megawatts in July
2008 and July 2010, respectively.
Financing: Kyushu Electric relies mainly on internal funding
for its capital investment requirements, complemented by
diverse sources of low-cost external financing.
In fiscal 2002, capital investment and the redemption of
corporate bonds and borrowings were 843円.2 billion, down
5.4% from the previous fiscal year. Bond redemptions and
loan repayments rose 1.3%, to 601円.6 billion.
Internal reserves increased 17.8%, to 398円.9 billion.
Proceeds from issuance of bonds increased 3.1%, to
165円.0 billion, of which net proceeds were 164円.3 billion.
Borrowings fell 28.9%, to 280円.0 billion.
Cash Flows: Net cash provided by operating activities
increased 17.7%, to 459円.6 billion. This reflected efforts to
cut fuel and other costs and a reduction in income taxes paid,
which offset the impact of the decrease in electricity rates.
Net cash used in investing activities was down 27.8%, to
244円.4 billion, largely owing to a decline in capital expenditures
including nuclear fuel and an increase in proceeds from sales
of investment securities and collections of advances.
Net cash used in financing activities surged 229.8%, to
222円.8 billion, largely owing to a significant increase in
repayments of interest-bearing debt.
As a result of these factors, cash and cash equivalents at
end of year stood at 45円.4 billion, down 7円.6 billion from
the end of the previous fiscal year.
Japan’s Electric Utility Law: The Electric Utility Law
of 1964 governs Japan’s electric power companies
and their activities. The law’s principal objectives are
to protect the interests of users, to promote the
development of the electric power industry, and to
assure that the production and provision of electric
power is conducted in a safe and nonpolluting manner.
The law effectively permits the country’s nine regional
electric power companies to monopolize the retail sale
of electric power in their respective areas, but it also
requires that electric power rates be set at levels that
reflect the companies’ actual operating costs and are
fair to both suppliers and consumers.
On March 21, 2000, the government implemented
the revised Electric Utility Law, deregulating the
retailing of high-voltage power.
The revised Electric Utility Law came into effect on
June 11, 2003. The new law provides for the expansion
of high-voltage power retailing in stages. The Japanese
government is assessing specific policies for full
liberalization by April 2007.
Internal reserves
Bonds
Borrowings
(Billions of yen)8001,0006004002000
’99 ’00 ’01 ’02 ’03
Sources of Funds670,305,516ドル
2,743,552
73,049,068
981,489
42,755,824
43,737,313
29,311,755
1,896,739
693,453
443,028
862,737
172,529
2,171,747
377,845
754,118
(10,649)
372,221
80,807
25,167
1,599,509
34,979,750ドル2003PROPERTY (Note 3):
Plant and equipment
Construction in progress
Total
Less—
Contributions in aid of construction
Accumulated depreciation
Total
Net property
NUCLEAR FUEL
INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 4)
Investments in and advances to non-consolidated subsidiaries
and associated companies
Deferred tax assets (Note 8)
Other assets
Total investments and other assets
CURRENT ASSETS:
Cash and cash equivalents
Receivables
Allowance for doubtful accounts
Inventories, principally fuel, at average cost
Deferred tax assets (Note 8)
Prepaid expenses and other
Total current assets
TOTAL
\ 8,450,723
329,775
8,780,498
117,975
5,139,250
5,257,225
3,523,273
227,988
83,353
53,252
103,701
20,738
261,044
45,417
90,645
(1,280)
44,741
9,713
3,025
192,261
\ 4,204,5662003\ 8,264,172
336,031
8,600,203
115,057
4,889,352
5,004,409
3,595,794
218,500
114,032
48,150
78,810
26,673
267,665
53,109
96,500
(1,283)
48,208
8,054
3,585
208,173
\ 4,290,1322002Consolidated Balance Sheets
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
March 31, 2003 and 2002
Millions of yen
Thousands of
U.S. dollars (Note 1)
See notes to consolidated financial statements.
ASSETS716,511,664ドル
1,500,208
2,506,747
864,093
68,228
21,450,940
2,305,433
1,738,228
274,542
731,223
281,456
654,726
73,253
411,522
6,470,383
68,036
1,974,251
258,627
4,633,569
128,869
(4,925)
6,990,391
34,979,750ドル
LONG-TERM LIABILITIES:
Long-term debt, less current maturities (Note 5)
Liability for employees’ retirement benefits (Note 6)
Reserve for reprocessing of irradiated nuclear fuel
Reserve for decommissioning of nuclear power units
Other
Total long-term liabilities
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 5)
Short-term borrowings (Note 7)
Commercial paper
Notes and accounts payable (Note 12)
Accrued income taxes
Accrued expenses
Reserve for loss on discontinued operations (Note 2. l.)
Other
Total current liabilities
MINORITY INTERESTS
COMMITMENTS AND CONTINGENCIES (Note 14)
SHAREHOLDERS’ EQUITY (Note 9):
Common stock, authorized, 1,000,000,000 shares;
issued 474,183,951 shares in 2003 and 2002
Capital surplus
Retained earnings
Unrealized gain on available-for-sale securities
Treasury stock, at cost—486,831 shares in 2003 and
26,132 shares in 2002
Total shareholders’ equity
TOTAL
\ 1,984,702
180,325
301,311
103,864
8,201
2,578,403
277,113
208,935
33,000
87,893
33,831
78,698
8,805
49,465
777,740
8,178
237,305
31,087
556,955
15,490
(592)
840,245
\ 4,204,566
\ 2,130,149
176,247
266,528
97,208
6,127
2,676,259
233,871
278,635
57,000
79,447
12,052
77,935
41,216
780,156
8,789
237,305
31,087
519,000
37,587(51)824,928
\ 4,290,132
LIABILITIES AND SHAREHOLDERS’ EQUITY 2003
2003 2002
Millions of yen
Thousands of
U.S. dollars (Note 1)811,236,897ドル
587,646
11,824,543
9,739,226
587,696
10,326,922
1,497,621
648,062
(192,255)
74,376
115,832
646,015
851,606
436,273
(116,664)
319,609
531,997
3,103
$ 535,1002003OPERATING REVENUES:
Electric
Other
Total operating revenues
OPERATING EXPENSES (Notes 10 and 13):
Electric
Other
Total operating expenses
OPERATING INCOME
OTHER EXPENSES (INCOME):
Interest charges
Gain on sales of investment securities
Loss on discontinued operations
Other—net
Total other expenses—net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS
INCOME TAXES (Note 8):
Current
Deferred
Total income taxes
INCOME BEFORE MINORITY INTERESTS IN NET
LOSS OF CONSOLIDATED SUBSIDIARIES
MINORITY INTERESTS IN NET LOSS OF
CONSOLIDATED SUBSIDIARIES
NET INCOME
\ 1,350,675
70,635
1,421,310
1,170,655
70,641
1,241,296
180,014
77,897
(23,109)
8,940
13,923
77,651
102,363
52,440
(14,023)
38,417
63,946373\ 64,3192003\ 1,381,440
76,626
1,458,066
1,184,382
75,926
1,260,308
197,758
85,653
12,641
98,294
99,464
38,221
1,587
39,808
59,656
1,464
\ 61,1202002Consolidated Statements of Income
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2003 and 2002
See notes to consolidated financial statements.
PER SHARE OF COMMON STOCK (Note 2. r.):
Basic net income
Cash dividends applicable to the year
\ 135.13
50.00
\ 128.90
60.00
1ドル.120.42Millions of yen
Thousands of
U.S. dollars (Note 1)
Yen U.S. dollars9Common stock Unrealized Treasury stock
gain on
Retained available-for-
Shares Amount Capital surplus earnings sale securities Shares Amount
Consolidated Statements of Shareholders’ Equity
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2003 and 2002
Thousands of shares/Millions of yen
See notes to consolidated financial statements.
BALANCE AT APRIL 1, 2001 474,184 237,305円 31,087円 484,964円 \(56,664 1 00円(2)
Adjustment of retained earnings for
newly consolidated subsidiaries (116)
Adjustment of retained earnings for
change in scope of application of
equity method 1,773
Net income 61,120
Cash dividends, 60円 per share (28,451)
Bonuses to directors and
corporate auditors (290)
Net increase in treasury stock 25 (49)
Net decrease in unrealized gain on
available-for-sale securities (19,077)
BALANCE AT MARCH 31, 2002 474,184 237,305 31,087 519,000 37,587 26 (51)
Net income 64,319
Cash dividends, 55円 per share (26,077)
Bonuses to directors and
corporate auditors (287)
Increase in treasury stock 461 (541)
Net decrease in unrealized gain on
available-for-sale securities (22,097)
BALANCE AT MARCH 31, 2003 474,184 237,305円 31,087円 556,955円 \(15,490 487 \(592)
Unrealized
gain on
Retained available-for-
Common stock Capital surplus earnings sale securities Treasury stock
Thousands of U.S. dollars (Note 1)
BALANCE AT MARCH 31, 2002 1,974,251ドル 258,627ドル 4,317,804ドル $(312,704 0,ドル(424)
Net income 535,100
Cash dividends, 0ドル.46 per share (216,947)
Bonuses to directors and
corporate auditors (2,388)
Increase in treasury stock (4,501)
Net decrease in unrealized gain on
available-for-sale securities (183,835)
BALANCE AT MARCH 31, 2003 1,974,251ドル 258,627ドル 4,633,569ドル $(128,869 $(4,925)10Consolidated Statements of Cash Flows
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2003 and 2002
See notes to consolidated financial statements.
$(0,851,606
(258,502)
2,509,559
33,927
289,376
55,374
76,938
119,176
(192,255)
73,253
18,927
28,844
(5,582)
(12,047)
235,574
2,972,562
3,824,168
(2,219,368)
(122,263)
240,192
67,504
(2,033,935)
1,366,963
(1,509,301)
431,032
(1,144,734)
(579,867)
(199,667)
(216,889)
(1,772)
(1,854,235)8(63,994)
441,839
$(0,377,8452003CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paid
Depreciation and amortization
Provision for liability for employees’ retirement benefits
Provision for reserve for reprocessing of irradiated nuclear fuel
Provision for reserve for decommissioning of nuclear power units
Loss on disposal of plant and equipment
Nuclear fuel transferred to reprocessing costs
Gain on sales of investment securities
Provision for reserve for loss on discontinued operations
Cash contribution for liquidation of an associated company
Changes in assets and liabilities, net of effects from newly
consolidated subsidiaries:
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease in trade payable
Decrease in interest payable
Other—net
Total adjustments
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures including nuclear fuel
Payments for investments and advances
Proceeds from sales of investment securities and collections of advances
Proceeds from acquisition of additional interests of a subsidiary
which caused initial consolidation, net of cash acquired (Note 11)
Other—net
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of bonds
Repayments of bonds and notes
Proceeds from long-term bank loans
Repayments of long-term bank loans
Net decrease in short-term borrowings
Net increase (decrease) in commercial paper
Cash dividends paid
Other—net
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND
CASH EQUIVALENTS
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED
SUBSIDIARIES AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
\(102,363
(31,072)
301,649
4,078
34,783
6,656
9,248
14,325
(23,109)
8,805
2,275
3,467
(671)
(1,448)
28,316
357,302
459,665
(266,768)
(14,696)
28,871
8,114
(244,479)
164,309
(181,418)
51,810
(137,597)
(69,700)
(24,000)
(26,070)
(213)
(222,879)1(7,692)
53,109
\(045,4172003\(099,464
(56,647)
294,414
3,090
37,047
4,597
9,993
2,900
(3,746)
(343)
(1,563)
(7,047)
(2,115)
10,503
291,083
390,547
(328,546)
(17,812)
3,618
5,028
(1,030)
(338,742)
159,223
(181,469)
83,655
(138,427)
(18,950)
57,000
(28,446)
(166)
(67,580)
(15,775)93667,948
\(053,1092002Millions of yen
Thousands of
U.S. dollars (Note 1)11Notes to Consolidated Financial Statements
Kyushu Electric Power Company, Incorporated and Consolidated Subsidiaries
Years Ended March 31, 2003 and 2002
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been
prepared in accordance with the provisions set forth in the Japanese
Securities and Exchange Law and the Japanese Electric Utility Law
and their related accounting regulations. Kyushu Electric Power
Company, Incorporated (the "Company") and its consolidated
subsidiaries (together the "Companies") maintain their accounts
and records in accordance with the provisions set forth in the
Commercial Code of Japan (the "Code") and in conformity with
accounting principles and practices generally accepted in Japan,
which are different in certain respects as to application and
disclosure requirements of International Financial Reporting
Standards. The consolidated financial statements are not intended
to present the financial position, results of operations and cash flows
in accordance with accounting principles and practices generally
accepted in countries and jurisdictions other than Japan.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to the
financial statements issued domestically in order to present them in
a form which is more familiar to readers outside Japan.
The United States dollar amounts included herein are provided
solely for the convenience of readers and are stated at the rate of
120円.20=US1,ドル the approximate exchange rate prevailing on
March 31, 2003. The translations should not be construed as
representations that the Japanese yen amounts could be converted
into United States dollars at that or any other rate.
Certain reclassifications have been made to the consolidated financial
statements for 2002 to conform to classifications used in 2003.
2. Summary of Significant Accounting Policies
a. Consolidation and Application of the Equity Method—The consolidated
financial statements include the accounts of the Company and its
thirteen significant subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
Investments in six significant associated companies are accounted for
by the equity method.
As for the consolidation scope of subsidiaries and associated
companies, the Company adopts the control or influence concept.
Under the control or influence concept, those companies in which
the Company, directly or indirectly, is able to exercise control over
operations are fully consolidated, and those companies over which
the Companies have the ability to exercise significant influence are
accounted for by the equity method.
The excess of the cost of an acquisition over the fair value of the
net assets of the acquired subsidiary at the date of acquisition is
being amortized over a period of 5 years.
Consolidation of the remaining subsidiaries and the application
of the equity method to the remaining associated companies would
not have a material effect on the accompanying consolidated
financial statements.
b. Property and Depreciation—Property is stated at cost. Contributions
in aid of construction including those made by customers are
deducted from the cost of the related assets.
Depreciation is principally computed using the declining-balance
method based on the estimated useful lives of the assets.
c. Amortization of Nuclear Fuel—Amortization of nuclear fuel is
computed based on the proportion of current heat production to
the estimated total heat production over the estimated useful life of
the nuclear fuel.
d. Investment Securities—The accounting standard for financial
instruments requires all applicable securities to be classified and
accounted for, depending on management’s intent, as follows:
i) held-to-maturity debt securities are stated at cost with
discounts or premiums amortized throughout the holding periods;
ii) available-for-sale securities, which are not classified as the
aforementioned securities and investment securities in non-
consolidated subsidiaries and associated companies, are stated at
market value; and securities without market value are stated at cost.
The Companies record unrealized gains or losses on available-
for-sale securities, net of deferred taxes, in shareholders’ equity
presented as "Unrealized gain on available-for-sale securities."
For other than temporary declines in fair value, investments
securities are written down to net realized value by a charge
to income.
e. Investments in Non-Consolidated Subsidiaries and Associated
Companies—Investments in non-consolidated subsidiaries and
associated companies, except those of the six associated companies
accounted for by the equity method, are stated at cost; however,
they are written down to appropriate values if the investments have
been significantly impaired in value of a permanent nature.
f. Cash Equivalents—Cash equivalents are certain 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 funds investing in bonds that
represent short-term investments, all of which mature or become
due within three months of the date of acquisition.12g. Foreign Currency Transactions—Receivables and payables
denominated in foreign currencies are translated into Japanese yen
at the rates in effect at each balance sheet date.
h. Derivatives and Hedging Activities—The Company enters into
foreign exchange forward contracts and currency swaps to hedge
market risk from the fluctuations in foreign exchange rates
associated with liabilities denominated in foreign currencies.
The Company and Oita Liquefied Natural Gas Company Inc.
("Oita LNG"), a consolidated subsidiary of the Company, enter into
interest swaps to hedge market risk from the changes in interest rates
associated with floating rate liabilities.
The Company enters into weather derivatives to hedge
fluctuation risk of electric operating revenues from the changes in
summer temperature.
The accounting standard for derivative financial instruments and
the accounting standard for foreign currency transactions require
that: a) all derivatives be recognized as either assets or liabilities and
measured at market value, and gains or losses on the derivatives be
recognized currently in the income statements and b) for derivatives
for hedging purposes, if derivatives qualify for hedge accounting
because of high correlation and high hedge effectiveness between the
hedging instruments and the hedged items, gains or losses on the
derivatives be deferred until maturities of the hedged transactions.
The long-term debt denominated in foreign currencies for
which the foreign exchange forward contracts are used to hedge
the foreign currency fluctuations are translated at the contracted
rate, since such treatment is also allowed to be incorporated under
the standards if the forward contracts qualify for hedge accounting.
The interest swaps which qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value but
the differential paid or received under the swap agreements are
recognized in interest expense, which treatment is also allowed
under the standards.
The Company and Oita LNG do not enter into derivatives for
trading or speculative purposes.
i. Severance Payments and Pension Plans—The Companies have
unfunded retirement plans for all of their employees and the
Company and most of the consolidated subsidiaries also have
contributory funded defined benefit pension plans covering
substantially all of their employees.
Under the accounting standard for employees’ retirement
benefits, the amount of the liability for employees’ retirement
benefits is determined based on the projected benefit obligations
and plan assets of the pension fund at the end of the fiscal year.
Retirement benefits for directors and corporate auditors are
charged to income when authorized by the shareholders.
j. Reserve for Reprocessing of Irradiated Nuclear Fuel—The annual
provision for the costs of reprocessing irradiated nuclear fuel is
calculated to state the related reserve at 60% of the amount that
would be required to reprocess all of the irradiated nuclear fuel in
accordance with the regulatory authority.
k. Reserve for Decommissioning of Nuclear Power Units—Provision is
made for future disposition costs of nuclear power units based on a
proportion of the current generation of electric power to the
estimated total generation of electric power of each unit.
l. Reserve for Loss on Discontinued Operations—Provision is made for
losses on withdrawal from the Personal Handyphone System
("PHS") business of Kyushu Telecommunication Network Co.,
Inc., a consolidated subsidiary of the Company. The amount is
estimated based primarily on disposal of equipment.
m. Income Taxes—The provision for income taxes is computed based
on the pretax income included in the consolidated statements of
income. The asset and liability approach is used to recognize
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferred taxes are
measured by applying currently enacted tax laws to the
temporary differences.
n. Appropriations of Retained Earnings—Appropriations of retained
earnings at each year end are reflected in the financial statements
for the following year upon shareholders’ approval.
o. Special Reserves—The Japanese Special Taxation Measures Law
permits companies in Japan to take as tax deductions certain
reserves, if recorded in the books of account, that are not required
for financial reporting purposes. These reserves must be reversed to
taxable income in future periods in accordance with the law.
The Code requires that the special reserves, except for the
reserve for fluctuations in water level, be recorded as a component
of shareholders’ equity (see Note 9).
A reserve for fluctuations in water level is recorded when the
volume of water for generating hydroelectric power is abundant
and available for future power generation, and reversed in years
when there is an insufficient volume of water, in accordance
with the Japanese Electric Utility Law and related accounting
regulations. Under the law and regulations, this reserve must be
shown as a liability.
Neither provision nor reversal of the reserve was made for the
years ended March 31, 2003 and 2002.
p. Bond Issuance Costs and Bond Discount Charges—Bond issuance
costs are charged to income when paid or incurred. Bond discount
charges are amortized over the term of the related bonds.
q. Treasury Stock—Effective April 1, 2002, the Company adopted
a new accounting standard for treasury stock issued by the
Accounting Standards Board of Japan ("ASB"). The standard
requires that where an associated company holds a parent
company’s stock, a portion which is equivalent to the parent
company’s interest in such stock should be presented as treasury
stock as a separate component of shareholders’ equity and the
carrying value of the investment in the associated company should
be reduced by the same amount. Prior to April 1, 2002, no
accounting treatment was required for a parent company’s stock
held by an associated company.13r. Net Income and Cash Dividends per Share—Prior to April 1, 2002, the
basic earnings per share ("EPS") was computed by net income by
the weighted-average number of common shares outstanding
during the year. Effective April 1, 2002, the Company adopted a
new accounting standard for earnings per share of common stock
issued by ASB. Under the standard, basic EPS is computed by
dividing net income available to common shareholders by the
weighted-average number of common shares outstanding during
the year and diluted EPS reflects the potential dilution that could
occur if securities were exercised or converted into common stock.
Basic EPS for the year ended March 31, 2002 computed in
accordance with the new accounting standard is 128円.36.
Diluted EPS is not disclosed for the years ended March 31, 2003
and 2002, because it is anti-dilutive.
Cash dividends per share represent actual amounts applicable to
earnings of the respective year.
s. Research and Development Costs—Research and development costs
are charged to income as incurred.
t. Leases—All leases are accounted for as operating leases. Under
Japanese accounting standard for leases, finance leases that
deem to transfer ownership of the leased property to the lessee
are to be capitalized, while other finance leases are permitted to
be accounted for as operating lease transactions if certain "as if
capitalized" information is disclosed in the notes to the lessee’s
financial statements.
3. Property
The major classes of property as of March 31, 2003 and 2002 were as follows:
$ 4,510,907
13,064,825
12,560,283
1,019,076
31,155,091
12,325,782
7,515,624
10,732,130
2,942,479
239,651
5,394,759
2,743,552
73,049,068
981,489
42,755,824
$ 29,311,7552003Original costs:
Electric power production facilities:
Hydroelectric power
Thermal power
Nuclear power
Internal-combustion engine power
Transmission facilities
Transformation facilities
Distribution facilities
General facilities
Other electricity-related facilities
Other plant and equipment
Construction in progress
Total
Less contributions in aid of construction
Less accumulated depreciation
Carrying value
\ 542,211
1,570,392
1,509,746
122,493
3,744,842
1,481,559
903,378
1,290,002
353,686
28,806
648,450
329,775
8,780,498
117,975
5,139,250
\ 3,523,27320030,535,508円
1,593,219
1,506,789
120,465
3,755,981
1,412,726
850,637
1,274,589
346,934
5,782
617,523
336,031
8,600,203
115,057
4,889,352
3,595,794円2002Millions of yen
Thousands of
U.S. dollars1409,273,902ドル
634,692
245,532
3,452,871
254,734
4,955,366
18,817,097
2,305,433
16,511,664ドル2003Domestic bonds, 0.2% to 6.9%, due serially to 2023
U.S. dollar bonds and notes, 6.375% to 7.25%, due 2004 to 2008
Swiss franc bonds, 4.0% to 4.25%, due 2003 to 2007
Deutsche mark bonds, 4.75%, due 2003
Loans from The Development Bank of Japan, 0.95% to 7.4%, due serially to 2023
Loans, principally from banks and insurance companies, 0.25% to 5.7%, due serially to 2025
Collateralized
Unsecured
Total
Less current maturities
Long-term debt, less current maturities
1,114,723円
76,290
29,513
415,035
30,619
595,635
2,261,815
277,113
1,984,702円20031,065,922円
76,290
60,182
34,550
462,075
39,975
625,026
2,364,020
233,871
2,130,149円2002Long-term debt consisted of the following at March 31, 2003 and 2002:
5. Long-Term Debt
Millions of yen
Thousands of
U.S. dollars
4. Investment Securities
The carrying amounts and aggregate fair values of investment securities at March 31, 2003 and 2002 were as follows:
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Other securities
Held-to-maturity
13,239円83850924,785円05
320円1437,704円824514Cost
Unrealized
gains
Unrealized
losses Fair value
Available-for-sale securities and held-to-maturity securities whose fair value were not readily determinable as of March 31, 2003 and 2002
were as follows:
16,954円93750959,777円6700円676,031円931515110,141ドル67316
4,235
206,198ドル042
2,662ドル116313,677ドル67200
4,277
336,581ドル
14,567
24,126
375,274ドル2003Available-for-sale:
Equity securities
Other securities
Held-to-maturity
Total
40,457円
1,751
2,900
45,108円200332,612円
1,680
3,160
37,452円2002Millions of yen
Thousands of
U.S. dollars2003Cost
Unrealized
gains
Unrealized
losses Fair value2002Cost
Unrealized
gains
Unrealized
losses Fair value2003Millions of yen
Thousands of
U.S. dollars156. Severance Payments and Pension Plans
Employees terminating their employment with the Companies,
either voluntarily or upon reaching mandatory retirement age, are
entitled, under most circumstances, to severance payments based on
their rate of pay at the time of termination, length of service and
certain other factors. As for the Company, if the termination is
made voluntarily at one of a number of specified ages, the employee
is entitled to certain additional payments.20042005200620072008Thereafter
Total
Thousands of
U.S. dollars
Millions of yen
0,277,113円
175,684
223,864
229,675
247,839
1,107,640
2,261,815円
02,305,433ドル
1,461,597
1,862,429
1,910,774
2,061,889
9,214,975
18,817,097ドル
Year ending
March 31
The outstanding domestic bonds and Swiss franc bonds may be
redeemed prior to maturity at the option of the Company, in whole
or in part, at prices 100% of the principal amount for the domestic
bonds and in whole at prices ranging from 100.25% to 100.75% of
the principal amount for Swiss franc bonds.
All of the Company’s assets are subject to certain statutory
preferential rights established to secure bonds, notes, loans received
from The Development Bank of Japan and bonds transferred to
banks under debt assumption agreements (see Note 14).
Certain assets of the consolidated subsidiaries, amounting to
81,929円 million (681,606ドル thousand), are pledged as collateral for
a portion of their long-term debt.
Certain long-term loan agreements include, among other things,
provisions that allow the lenders the right to approve, if desired, any
appropriations of retained earnings including dividends. However, to
date, no lender has exercised this right.
The annual maturities of long-term debt outstanding at March
31, 2003 were as follows:
Additionally, the Company and most of the consolidated
subsidiaries have contributory funded defined benefit pension plans
covering substantially all of their employees. In general, eligible
employees retiring at the mandatory retirement age receive pension
payments for the remainder of their lives. As for the Company,
eligible employees retiring after at least 20 years of service but
before the mandatory retirement age, receive a lump-sum payment
upon retirement and annuities for a period of 10 years.
The components of net periodic benefit costs for the years ended March 31, 2003 and 2002 are as follows:
$(4,356,015
(1,922,454)
(937,779)
4,426
$(1,500,2082003Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Unrecognized prior service cost
Net liability
\(523,593
(231,079)
(112,721)532\(180,3252003\(481,838
(248,994)
(56,811)214\(176,2472002The liability for employees’ retirement benefits at March 31, 2003 and 2002 consisted of the following:
Millions of yen
Thousands of
U.S. dollars
130,050ドル
99,310
(5,324)
110,399
(1,215)
333,220ドル2003Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Amortization of prior service cost
Net periodic benefit costs
15,632円
11,937
(640)
13,270
(146)
40,053円200315,681円
11,719
(1,768)
11,724(53)37,303円2002Millions of yen
Thousands of
U.S. dollars
A reconciliation between the normal effective statutory tax rate for the year ended March 31, 2002, and the actual effective tax rate reflected
in the accompanying consolidated statements of income is as follows:
Normal effective statutory tax rate
Equity in earnings of associated companies
Valuation allowance
Expenses not deductible for income tax purposes
Other—net
Actual effective tax rate
Such reconciliation for the year ended March 31, 2003 is not disclosed because the difference between the normal effective statutory tax
rate and the actual effective tax rate is immaterial.200236.1%
(0.2)2.80.80.540.0%167. Short-Term Borrowings
Short-term borrowings are generally represented by 365-day notes, bearing interest at rates ranging from 0.1% to 0.43% and from 0.15917% to
1.0% at March 31, 2003 and 2002, respectively.
8. Income Taxes
The Companies are subject to several income taxes. The aggregate normal statutory tax rates for the Company approximated 36.1% for 2003
and 2002.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31,
2003 and 2002 are as follows:
Deferred tax assets:
Pension and severance costs
Depreciation
Tax loss carryforwards
Reserve for reprocessing of irradiated nuclear fuel
Reserve for decommissioning of nuclear power units
Unrealized profits arising from the elimination of intercompany transactions in consolidation
Other
Less valuation allowance
Deferred tax assets
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Reserve for depreciation of nuclear power production facilities under construction
Other
Deferred tax liabilities
Net deferred tax assets
Assumptions for actuarial computations for the years ended March 31, 2003 and 2002 are as follows:
2003 2002
Discount rate mainly 2.0% 2.5%
Expected rate of return on plan assets mainly 0.0% mainly 0.5%
Recognition period of actuarial gain/loss mainly 5 years mainly 5 years
Amortization period of prior service cost 5 years 5 years
0,452,804ドル
157,263
99,493
87,329
84,725
75,416
196,439
(105,740)
1,047,729ドル
0,073,769ドル
17,546
12,920
0,104,235ドル
0,943,494ドル2003\ 054,427
18,903
11,959
10,497
10,184
9,065
23,612
(12,710)
\ 125,937
\ 008,867
2,109
1,553
\ 012,529
\ 113,4082003\ 048,389
12,798
6,539
10,497
10,184
9,482
24,574
(8,711)
\ 113,752
\ 021,414
4,219
1,279
\ 026,912
\ 086,8402002Millions of yen
Thousands of
U.S. dollars1762,121ドル20062,321ドル2003Reserve for:
Depreciation of nuclear power production facilities under construction
Losses on overseas investments
Total
\ 7,46724\ 7,491200311,201円2511,226円20029. Shareholders’ Equity
As described in Note 2. o., certain special reserves were included in retained earnings. Such reserves at March 31, 2003 and 2002 were
as follows:
Japanese companies are subject to the Code to which certain
amendments became effective from October 1, 2001.
The Code was revised whereby common stock par value was
eliminated resulting in all shares being recorded with no par value
and at least 50% of the issue price of new shares is required to be
recorded as common stock and the remaining net proceeds as
additional paid-in capital, which is included in capital surplus.
The Code permits Japanese companies, upon approval of the
Board of Directors, to issue shares to existing shareholders without
consideration as a stock split. Such issuance of shares generally does
not give rise to changes within the shareholders’ accounts.
The revised Code also provides that an amount at least equal to
10% of the aggregate amount of cash dividends and certain other
appropriations of retained earnings associated with cash outlays
applicable to each period shall be appropriated as a legal reserve
(a component of retained earnings) until such reserve and
additional paid-in capital equals 25% of common stock. The
amount of total additional paid-in capital and legal reserve that
exceeds 25% of the common stock may be available for dividends
by resolution of the shareholders. In addition, the Code permits the
transfer of a portion of additional paid-in capital and legal reserve
to the common stock by resolution of the Board of Directors.
The revised Code eliminated restrictions on the repurchase and
use of treasury stock allowing Japanese companies to repurchase
treasury stock by a resolution of the shareholders at the general
shareholders’ meeting and dispose of such treasury stock by resolution
of the Board of Directors beginning April 1, 2002. The repurchased
amount of treasury stock cannot exceed the amount available for
future dividends plus amount of common stock, additional paid-in
capital or legal reserve to be reduced in the case where such reduction
was resolved at the general shareholders meeting.
The amount of retained earnings available for dividends under
the Code was 454,118円 million (3,778,020ドル thousand) as of March
31, 2003, based on the amount recorded in the Company’s general
books of account. In addition to the provision that requires an
appropriation for a legal reserve in connection with the cash
payment, the Code imposes certain limitations on the amount
of retained earnings available for dividends.
Dividends are approved by the shareholders at a meeting held
subsequent to the fiscal year to which the dividends are applicable.
Semiannual interim dividends may also be paid upon resolution of
the Board of Directors, subject to certain limitations imposed by
the Code.
Millions of yen
Thousands of
U.S. dollars
10. Research and Development Costs
Research and development costs charged to income were 10,953円 million (91,123ドル thousand) and 12,163円 million for the years ended March
31, 2003 and 2002, respectively.
On March 31, 2003, a tax reform law concerning enterprise tax
was enacted in Japan which changed the normal effective statutory
tax rate applicable to consolidated subsidiaries effective for years
beginning on or after April 1, 2004. The effect of this change was
to decrease deferred tax assets by 138円 million (1,148ドル thousand)
and to increase unrealized gain on available-for-sale securities by
11円 million (92ドル thousand) at March 31, 2003. And the effect on
deferred taxes in the consolidated statements of income for the year
ended March 31, 2003 was an increase of approximately 149円
million (1,240ドル thousand).18Millions of yen
Acquisition cost
Accumulated depreciation
Net leased equipment
March 31, 2003
460,133ドル
225,507
234,626ドル
237,912ドル
108,219
129,693ドル
222,221ドル
117,288
104,933ドル
Acquisition cost
Accumulated depreciation
Net leased equipment200307,732円
20,470
28,202円
Due within one year
Due after one year
Total
Millions of yen
13. Leases
The Companies lease certain computer and other equipment. Total
lease payments under finance lease arrangements were 8,426円
million (70,100ドル thousand) and 7,405円 million for the years
ended March 31, 2003 and 2002, respectively.
Pro forma information of leased equipment such as acquisition
cost, accumulated depreciation and lease obligations, all of which
included imputed interest expense, under finance leases that do not
transfer ownership of the leased equipment to the lessee on an "as
if capitalized" basis at March 31, 2003 and 2002 were as follows:
Obligations under finance leases which included the imputed
interest expense at March 31, 2003 and 2002 were as follows:
$ 64,326
170,300
234,626ドル200207,372円
19,045
26,417円2003Thousands of
U.S. dollars
General facilities Other
Thousands of U.S. dollars
Total
March 31, 2003
55,308円
27,106
28,202円
28,597円
13,008
15,589円
26,711円
14,098
12,613円
General facilities Other Total
12. Related Party Transactions
Significant transactions of the Company with an associated company for the years ended March 31, 2003 and 2002 were as follows:
KYUDENKO CORPORATION
Transactions:
Order for construction works of distribution facilities and other
Balances at year ended:
Payables for construction works
365,374ドル
47,895200343,918円
5,757200348,937円
6,7542002Millions of yen
Thousands of
U.S. dollars
11. Additional Cash Flow Information
The Company acquired a majority of an associated company, Kyushu Telecommunication Network Co., Inc. on April 3, 2001. Assets acquired
and liabilities assumed in acquisition were as follows:
Assets acquired
Liabilities assumed
Minority interests in consolidated subsidiaries
Cost of acquisition of common stock of Kyushu Telecommunication Network Co., Inc.
Cash and cash equivalents held by Kyushu Telecommunication Network Co., Inc.
Cost of acquisition of common stock of Kyushu Telecommunication Network Co., Inc.
Net proceeds
\(121,710
(106,624)
(2,086)
\(013,000
\(018,028
(13,000)
\(005,028
Millions of yen
Millions of yen
Acquisition cost
Accumulated depreciation
Net leased equipment
March 31, 2002
49,623円
23,206
26,417円
21,046円
9,822
11,224円
28,577円
13,384
15,193円
General facilities Other Total1914. Commitments and Contingencies
At March 31, 2003, the Companies had a number of fuel purchase commitments, most of which specify quantities and dates for fuel deliveries.
However, purchase prices are contingent upon fluctuations in market prices.
Contingent liabilities as of March 31, 2003 were as follows:
Under the debt assumption agreements, the Company was contingently liable for the redemption of the domestic bonds transferred to banks.
15. Segment Information
Information by business segments for the years ended March 31, 2003 and 2002 is as follows:
a. Sales and Operating Income
Co-guarantees of loans, mainly in connection with procurement of fuel
Guarantees of employees’ loans
Guarantees under debt assumption agreements
Other
Millions of yen Thousands of U.S. dollars
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income
1,421,310円
1,421,310
1,241,296
0,180,014円
070,635円
122,222
192,857
189,557
003,300円\(124,622)
(124,622)
(125,491)
\(000,869
Millions of yen
March 31, 2003
1,350,675円
2,400
1,353,075
1,177,230
0,175,845円
Electric Other
Eliminations/
Corporate Consolidated
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income
11,824,543ドル
11,824,543
10,326,922
01,497,621ドル
0,587,646ドル
1,016,822
1,604,468
1,577,013
0,027,455ドル$(1,036,788)
(1,036,788)
(1,044,018)
$(0,007,230
11,236,897ドル
19,966
11,256,863
9,793,927
01,462,936ドル
Thousands of U.S. dollars
March 31, 2003
Electric Other
Eliminations/
Corporate Consolidated
114,192円
56,956
192,440
9,864
0,950,017ドル
473,844
1,600,998
82,063
Sales to customers
Intersegment sales
Total sales
Operating expenses
Operating income
1,458,066円
1,458,066
1,260,308
0,197,758円
076,626円
122,058
198,684
193,211
005,473円\(125,120)
(125,120)
(125,438)
\(000,318
Millions of yen
March 31, 2002
1,381,440円
3,062
1,384,502
1,192,535
0,191,967円
Electric Other
Eliminations/
Corporate Consolidated2016. Subsequent Events
At the general shareholders’ meeting held on June 27, 2003, the Company’s shareholders approved the following appropriations of retained
earnings as of March 31, 2003, and the purchase of treasury stock:
a. Appropriations of Retained Earnings
Year-end cash dividends, 25円.00 (0ドル.21) per share
Bonuses to directors and corporate auditors
98,586ドル
1,165
11,850円140Millions of yen Thousands of U.S. dollars
b. Purchase of Treasury Stock
The Company is authorized to repurchase up to 20 million shares of the Company’s common stock (aggregate amount of 35円 billion), which
is effective until the next general shareholders’ meeting.
Other consisted of providing telephone lines and wirelines,
cellular, obtaining, storing, gasifying and supplying LNG, heat
supply business and others.
Geographic segment information is not shown due to the
Company having no overseas operations nor foreign consolidated
subsidiaries.
Information for overseas sales is not disclosed due to overseas
sales being immaterial compared with consolidated net sales.
Total assets
Depreciation
Capital expenditures
34,979,750ドル
2,509,559
2,130,116
3,744,376ドル
264,717
212,188
$(833,311)
(26,747)
(44,642)
32,068,685ドル
2,271,589
1,962,570
b. Total Assets, Depreciation and Capital Expenditures
Total assets
Depreciation
Capital expenditures
4,204,566円
301,649
256,040
450,074円
31,819
25,505
\(100,164)
(3,215)
(5,366)
3,854,656円
273,045
235,901
Millions of yen
March 31, 2003
Electric Other
Eliminations/
Corporate Consolidated
Thousands of U.S. dollars
March 31, 2003
Electric Other
Eliminations/
Corporate Consolidated
Total assets
Depreciation
Capital expenditures
4,290,132円
294,414
327,908
471,386円
29,028
45,166
\(101,261)
(3,275)
(4,118)
3,920,007円
268,661
286,860
Millions of yen
March 31, 2002
Electric Other
Eliminations/
Corporate Consolidated21To the Board of Directors of
Kyushu Electric Power Company, Incorporated:
We have audited the accompanying consolidated balance sheets of Kyushu Electric Power Company, Incorporated and consolidated
subsidiaries as of March 31, 2003 and 2002, and the related consolidated statements of income, shareholders’ equity, and cash flows for the
years then ended, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards, procedures and practices generally accepted and applied in Japan. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position
of Kyushu Electric Power Company, Incorporated and consolidated subsidiaries as of March 31, 2003 and 2002, and the consolidated results of
their operations and their cash flows for the years then ended in conformity with accounting principles and practices generally accepted in Japan.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.
June 27, 2003
INDEPENDENT AUDITORS’ REPORT
Tohmatsu & Co.
Fukuoka Sanwa Building,
10-24, Tenjin 1-chome,
Chuo-ku, Fukuoka 810-0001, Japan
Tel: +81-92-751-0931
Fax: +81-92-714-5585
www.tohmatsu.co.jp2266,171,456ドル
2,737,920
68,909,376
951,863
40,841,814
41,793,677
27,115,699
1,896,739
668,111
944,326
737,188
129,659
2,479,284
267,429
638,802
(9,626)
223,586
67,937
15,175
1,203,303
32,695,025ドル2003PROPERTY (Note 3):
Plant and equipment
Construction in progress
Total
Less—
Contributions in aid of construction
Accumulated depreciation
Total
Net property
NUCLEAR FUEL
INVESTMENTS AND OTHER ASSETS:
Investment securities
Investments in and advances to subsidiaries and
associated companies (Note 4)
Deferred tax assets (Note 8)
Other assets
Total investments and other assets
CURRENT ASSETS:
Cash and cash equivalents
Receivables
Allowance for doubtful accounts
Fuel and supplies, at average cost
Deferred tax assets (Note 8)
Prepaid expenses and other
Total current assets
TOTAL
\ 7,953,809
329,098
8,282,907
114,414
4,909,186
5,023,600
3,259,307
227,988
80,307
113,508
88,610
15,585
298,010
32,145
76,784
(1,157)
26,875
8,166
1,824
144,637
3,929,942円2003\ 7,782,271
333,276
8,115,547
111,492
4,682,005
4,793,497
3,322,050
218,500
110,682
105,382
64,252
16,746
297,062
33,354
79,377
(1,130)
27,343
6,487
1,697
147,128
3,984,740円2002Non-Consolidated Balance Sheets
Kyushu Electric Power Company, Incorporated
March 31, 2003 and 2002
See notes to non-consolidated financial statements.
Millions of yen
Thousands of
U.S. dollars (Note 1)
ASSETS2315,425,374ドル
1,373,137
2,506,747
864,093
35,108
20,204,459
2,044,601
1,658,070
274,542
601,947
270,591
696,290
314,542
5,860,583
1,974,251
258,627
493,561
3,780,865
125,516
(2,837)
6,629,983
32,695,025ドル2003LONG-TERM LIABILITIES:
Long-term debt, less current maturities (Note 5)
Liability for employees’ retirement benefits (Note 6)
Reserve for reprocessing of irradiated nuclear fuel
Reserve for decommissioning nuclear power units
Other
Total long-term liabilities
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 5)
Short-term borrowings (Note 7)
Commercial paper
Accounts payable
Accrued income taxes
Accrued expenses
Other
Total current liabilities
COMMITMENTS AND CONTINGENCIES (Note 12)
SHAREHOLDERS’ EQUITY (Note 9):
Common stock, authorized, 1,000,000,000 shares;
issued, 474,183,951 shares in 2003 and 2002
Capital surplus:
Additional paid-in capital
Retained earnings:
Legal reserve
Unappropriated
Unrealized gain on available-for-sale securities
Treasury stock—at cost, 197,942 shares in 2003
and 26,132 shares in 2002
Total shareholders’ equity
TOTAL
1,854,130円
165,051
301,311
103,864
4,220
2,428,576
245,761
199,300
33,000
72,354
32,525
83,694
37,808
704,442
237,305
31,087
59,326
454,460
15,087
(341)
796,924
3,929,942円20031,971,185円
161,269
266,528
97,208
3,044
2,499,234
202,086
258,455
57,000
57,843
10,300
83,564
33,305
702,553
237,305
31,087
59,326
418,131
37,155(51)782,953
3,984,740円2002LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of yen
Thousands of
U.S. dollars (Note 1)2411,256,863ドル
46,032
11,302,895
1,588,253
1,147,696
870,898
2,062,196
1,321,556
414,002
55,374
67,180
115,499
783,910
500,957
300,824
565,582
9,793,927
68,852
9,862,779
1,440,116
612,496
(192,255)
128,328
72,279
620,848
819,268
411,822
(112,903)
298,919
$ 520,3492003OPERATING REVENUES
Electric
Other
Total operating revenues
OPERATING EXPENSES (Notes 10 and 11):
Electric:
PersonnelFuelPurchased power
Depreciation
Maintenance
Reprocessing costs of irradiated nuclear fuel
Decommissioning costs of nuclear power units
Disposal cost of high-level radioactive waste (Note 2. k.)
Disposition of property
Taxes other than income taxes
Subcontract feeRentOther
Total
Other
Total operating expenses
OPERATING INCOME
OTHER EXPENSES (INCOME):
Interest charges
Gain on sales of investment securities
Loss on devaluation of investments in subsidiaries and
associated companies
Other—net
Total other expenses—net
INCOME BEFORE INCOME TAXES
INCOME TAXES (Note 8):
Current
Deferred
Total income taxes
NET INCOME
1,353,075円
5,533
1,358,608
190,908
137,953
104,682
247,876
158,851
49,763
6,656
8,075
13,883
94,226
60,215
36,159
67,983
1,177,230
8,276
1,185,506
173,102
73,622
(23,109)
15,425
8,688
74,626
98,476
49,501
(13,571)
35,930
0,062,546円2003Non-Consolidated Statements of Income
Kyushu Electric Power Company, Incorporated
Years Ended March 31, 2003 and 2002
See notes to non-consolidated financial statements.
1,384,502円
4,332
1,388,834
186,870
150,959
98,034
244,946
177,962
39,529
4,597
7,640
20,165
93,236
58,638
37,051
72,908
1,192,535
5,011
1,197,546
191,288
81,500
7,554
89,054
102,234
34,691
2,391
37,082
0,065,152円2002PER SHARE OF COMMON STOCK (Note 2. p.):
Basic net income
Cash dividends applicable to the year
131円.64
50.00
137円.40
60.00
1ドル.100.42Millions of yen
Thousands of
U.S. dollars (Note 1)
Yen U.S. dollars25Non-Consolidated Statements of Shareholders’ Equity
Kyushu Electric Power Company, Incorporated
Years Ended March 31, 2003 and 2002
See notes to non-consolidated financial statements.
Common stock Capital surplus Retained earnings Unrealized Treasury stock
gain on
Additional Legal available-for-
Shares Amount paid-in capital reserve Unappropriated sale securities Shares Amount
Thousands of shares/Millions of yen
BALANCE AT APRIL 1, 2001 474,184 237,305円 31,087円 59,326円 381,570円 \(56,382
Net income 65,152
Cash dividends, 60円 per share (28,451)
Bonuses to directors and
corporate auditors (140)
Net increase in treasury stock 26 0円(51)
Net decrease in unrealized gain
on available-for-sale securities (19,227)
BALANCE AT MARCH 31, 2002 474,184 237,305 31,087 59,326 418,131 37,155 26 (51)
Net income 62,546
Cash dividends, 55円 per share (26,077)
Bonuses to directors and
corporate auditors (140)
Increase in treasury stock 172 (290)
Net decrease in unrealized gain
on available-for-sale securities (22,068)
BALANCE AT MARCH 31, 2003 474,184 237,305円 31,087円 59,326円 454,460円 \(15,087 198 \(341)
Capital surplus Retained earnings Unrealized
gain on
Additional Legal available-for-
Common stock paid-in capital reserve Unappropriated sale securities Treasury stock
Thousands of U.S. dollars (Note 1)
BALANCE AT MARCH 31, 2002 1,974,251ドル 258,627ドル 493,561ドル 3,478,628ドル $(309,110 0,ドル(424)
Net income 520,349
Cash dividends, 0ドル.46 per share (216,947)
Bonuses to directors and
corporate auditors (1,165)
Increase in treasury stock (2,413)
Net decrease in unrealized gain
on available-for-sale securities (183,594)
BALANCE AT MARCH 31, 2003 1,974,251ドル 258,627ドル 493,561ドル 3,780,865ドル $(125,516 $(2,837)26Notes to Non-Consolidated Financial Statements
Kyushu Electric Power Company, Incorporated
Years Ended March 31, 2003 and 2002
1. Basis of Presenting Non-Consolidated Financial Statements
The accompanying non-consolidated financial statements of
Kyushu Electric Power Company, Incorporated (the "Company")
have been prepared in accordance with the provisions set forth in
the Commercial Code of Japan (the "Code") and the Japanese
Electric Utility Law and their related accounting regulations, and
in conformity with accounting principles and practices generally
accepted in Japan, which are different in certain respects as to
application and disclosure requirements of International Financial
Reporting Standards. The non-consolidated financial statements
are not intended to present the financial position and results of
operations in accordance with accounting principles and practices
generally accepted in countries and jurisdictions other than Japan.
As consolidated statements of cash flows and certain disclosures
are presented in the consolidated financial statements of the
Company, non-consolidated statements of cash flows and certain
disclosures are not presented herein in accordance with accounting
procedures generally accepted in Japan.
In preparing these non-consolidated financial statements, certain
reclassifications and rearrangements have been made to the
financial statements issued domestically in order to present them in
a form which is more familiar to readers outside Japan.
The United States dollar amounts included herein are provided
solely for the convenience of readers and are stated at the rate of
120円.20=US1,ドル the approximate exchange rate prevailing on
March 31, 2003. The translations should not be construed as
representations that the Japanese yen amounts could be converted
into United States dollars at that or any other rate.
Certain reclassifications have been made to the non-consolidated
financial statements for 2002 to conform to classifications used
in 2003.
2. Summary of Significant Accounting Policies
a. Property and Depreciation—Property is stated at cost. Contributions
in aid of construction including those made by customers are
deducted from the cost of the related assets.
Depreciation is computed using the declining-balance method
based on the estimated useful lives of the assets.
b. Amortization of Nuclear Fuel—Amortization of nuclear fuel is
computed based on the proportion of current heat production to
the estimated total heat production over the estimated useful life of
the nuclear fuel.
c. Investment Securities—The accounting standard for financial
instruments requires all applicable securities to be classified and
accounted for, depending on management’s intent, as follows:
i) held-to-maturity debt securities are stated at cost with discounts
or premiums amortized throughout the holding periods;
ii) available-for-sale securities, which are not classified as the
aforementioned securities and investment securities in subsidiaries
and associated companies, are stated at market value; and securities
without market value are stated at cost.
The Company records unrealized gains or losses on available-
for-sale securities, net of deferred taxes, in shareholders’ equity
presented as "Unrealized gain on available-for-sale securities."
For other than temporary declines in fair value, investment
securities are written down to net realized value by a charge
to income.
d. Investments in Subsidiaries and Associated Companies—Investments
in subsidiaries and associated companies are stated at cost; however,
they are written down to appropriate values if the investments
have been significantly impaired in value of a permanent nature.
e. Cash Equivalents—Cash equivalents are certain short-term
investments that are readily convertible into cash and that are
exposed to insignificant risk of changes in value. Cash equivalents
include time deposits, which mature or become due within three
months of the date of acquisition.
f. Foreign Currency Transactions—Receivables and payables
denominated in foreign currencies are translated into Japanese yen
at the rates in effect at each balance sheet date.
g. Derivatives and Hedging Activities—The Company enters into
foreign exchange forward contracts and currency swaps to hedge
market risk from the fluctuations in foreign exchange rates
associated with liabilities denominated in foreign currencies.
The Company enters into interest swaps to hedge market risk
from the changes in interest rates associated with floating rate
liabilities.
The Company enters into weather derivatives to hedge
fluctuation risk of electric operating revenues from the changes
in summer temperature.
The accounting standard for derivative financial instruments and
the accounting standard for foreign currency transactions require
that: a) all derivatives be recognized as either assets or liabilities and
measured at market value, and gains or losses on the derivatives be
recognized currently in the income statements and b) for derivatives
for hedging purposes, if derivatives qualify for hedge accounting
because of high correlation and high hedge effectiveness between the
hedging instruments and the hedged items, gains or losses on the
derivatives be deferred until maturities of the hedged transactions.27The long-term debt denominated in foreign currencies for
which the foreign exchange forward contracts are used to hedge
the foreign currency fluctuations are translated at the contracted
rate, since such treatment is also allowed to be incorporated under
the standards if the forward contracts qualify for hedge accounting.
The interest swaps which qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value but
the differential paid or received under the swap agreements are
recognized in interest expense, which treatment is also allowed
under the standards.
The Company does not enter into derivatives for trading or
speculative purposes.
h. Severance Payments and Pension Plans—The Company has an
unfunded retirement plan for all of its employees and a contributory
funded defined benefit pension plan covering substantially all of its
employees.
Under the accounting standard for employees’ retirement
benefits, the amount of the liability for employees’ retirement
benefits is determined based on the projected benefit obligations
and plan assets of the pension fund at the end of the fiscal year.
Retirement benefits for directors and corporate auditors are
charged to income when authorized by the shareholders.
i. Reserve for Reprocessing of Irradiated Nuclear Fuel—The annual
provision for the costs of reprocessing irradiated nuclear fuel is
calculated to state the related reserve at 60% of the amount that
would be required to reprocess all of the irradiated nuclear fuel in
accordance with the regulatory authority.
j. Reserve for Decommissioning of Nuclear Power Units—Provision is
made for future disposition costs of nuclear power units based on a
proportion of the current generation of electric power to the
estimated total generation of electric power of each unit.
k. Disposal Cost of High-Level Radioactive Waste—The Company pays
contributions to Nuclear Waste Management Organization of
Japan in order to fund costs for the ultimate disposal of high-level
radioactive waste. The contributions are charged to income
when paid.
l. Income Taxes—The provision for income taxes is computed based
on the pretax income included in the non-consolidated statements
of income. The asset and liability approach is used to recognize
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferred taxes are
measured by applying currently enacted tax laws to the temporary
differences.
m. Special Reserves—The Japanese Special Taxation Measures Law
permits companies in Japan to take as tax deductions certain
reserves, if recorded in the books of account, that are not required
for financial reporting purposes. These reserves must be reversed to
taxable income in future periods in accordance with the law.
The Code requires that the special reserves, except for the
reserve for fluctuations in water level, be recorded as a component
of shareholders’ equity (see Note 9).
A reserve for fluctuations in water level is recorded when the
volume of water for generating hydroelectric power is abundant
and available for future power generation, and reversed in years
when there is an insufficient volume of water, in accordance
with the Japanese Electric Utility Law and related accounting
regulations. Under the law and regulations, this reserve must
be shown as a liability.
Neither provision nor reversal of the reserve was made for the
years ended March 31, 2003 and 2002.
n. Operating Revenues and Expenses—Prior to April 1, 2002, revenues,
expenses and interest expense related to incidental businesses (heat
supply business, fiber optic cable core rental, supplying LNG and
other) were included in "Other—net," an item of "OTHER
EXPENSES (INCOME)."
Effective April 1, 2002, in accordance with a recent revision
to the accounting rules for electric utility companies, the related
revenues to these incidental businesses are stated in "OPERATING
REVENUES" as "Other," the related expenses are stated in
"OPERATING EXPENSES" as "Other," and the related interest
expense is included in "Interest charges."
Reclassifications have been made in the non-consolidated
statements of income for the year ended March 31, 2002 to
conform to the aforementioned classification used in 2003.
o. Bond Issuance Costs and Bond Discount Charges—Bond issuance
costs are charged to income when paid or incurred. Bond discount
charges are amortized over the term of the related bonds.
p. Net Income and Cash Dividends per Share—Prior to April 1, 2002,
the basic earnings per share ("EPS") was computed by net income
by the weighted-average number of common shares outstanding
during the year. Effective April 1, 2002, the Company adopted a
new accounting standard for earning per share of common stock
issued by the Accounting Standards Board of Japan. Under the
standard, basic EPS is computed by dividing net income available
to common shareholders by the weighted-average number of
common shares outstanding during the year and diluted EPS
reflects the potential dilution that could occur if securities were
exercised or converted into common stock.
Basic EPS for the year ended March 31, 2002 computed in
accordance with the new accounting standard is 137円.11.
Diluted EPS is not disclosed for the years ended March 31, 2003
and 2002, because it is anti-dilutive.
Cash dividends per share represent actual amounts applicable
to earnings of the respective year.
q. Research and Development Costs—Research and development costs
are charged to income as incurred.
r. Leases—All leases are accounted for as operating leases. Under
Japanese accounting standard for leases, finance leases that
deem to transfer ownership of the leased property to the lessee
are to be capitalized, while other finance leases are permitted to
be accounted for as operating lease transactions if certain "as if
capitalized" information is disclosed in the notes to the lessee’s
financial statements.28Original costs:
Electric power production facilities:
Hydroelectric power
Thermal power
Nuclear power
Internal-combustion engine power
Transmission facilities
Transformation facilities
Distribution facilities
General facilities
Other electricity-related facilities
Other plant and equipment
Construction in progress
Total
Less contributions in aid of construction
Less accumulated depreciation
Carrying value
3. Property
The major classes of property as of March 31, 2003 and 2002 were as follows:
$ 4,522,388
13,171,631
12,643,727
1,038,868
31,376,614
12,385,691
7,632,013
11,047,421
3,028,602
239,651
461,464
2,737,920
68,909,376
951,863
40,841,814
$ 27,115,6992003\ 543,591
1,583,230
1,519,776
124,872
3,771,469
1,488,760
917,368
1,327,900
364,038
28,806
55,468
329,098
8,282,907
114,414
4,909,186
\ 3,259,3072003\ 536,832
1,606,239
1,517,017
122,865
3,782,953
1,418,972
864,361
1,310,589
357,243
5,782
42,371
333,276
8,115,547
111,492
4,682,005
\ 3,322,0502002Millions of yen
Thousands of
U.S. dollars
4. Investments in Subsidiaries and Associated Companies
The carrying amounts and aggregate fair values of investments in subsidiaries and associated companies whose market values were available at
March 31, 2003 and 2002 were as follows:
Associated company 4,303円 8,940円 4,637円 2,766円 7,898円 5,132円 35,799ドル 74,376ドル 38,577ドル
2003 2002
Carrying
amount Fair value
Unrealizedgain2003
Millions of yen
Thousands of
U.S. dollars
Carrying
amount Fair value
UnrealizedgainCarrying
amount Fair value
Unrealizedgain29
6. Severance Payments and Pension Plans
Employees terminating their employment with the Company,
either voluntarily or upon reaching mandatory retirement age, are
entitled, under most circumstances, to severance payments based
on their rate of pay at the time of termination, length of service
and certain other factors. If the termination is made voluntarily at
one of a number of specified ages, the employee is entitled to
certain additional payments.
7. Short-Term Borrowings
Short-term borrowings are generally represented by 365-day notes, bearing interest at rates ranging from 0.15917% to 0.34667% and from
0.15917% to 0.3875% at March 31, 2003 and 2002, respectively.
The outstanding domestic bonds and Swiss franc bonds may be
redeemed prior to maturity at the option of the Company, in whole
or in part, at prices 100% of the principal amount for the domestic
bonds and in whole at prices ranging from 100.25% to 100.75% of
the principal amount for Swiss franc bonds.
All of the Company’s assets are subject to certain statutory
preferential rights established to secure bonds, notes, loans received
from The Development Bank of Japan and bonds transferred to
banks under debt assumption agreements (see Note 12).
Certain long-term loan agreements include, among other
things, provisions that allow the lenders the right to approve, if
desired, any appropriations of retained earnings including dividends.
However, to date, no lender has exercised this right.
The annual maturities of long-term debt outstanding at March
31, 2003 were as follows:20042005200620072008Thereafter
Total
Thousands of
U.S. dollars
Millions of yen
0,245,761円
148,037
199,451
201,851
234,095
1,070,696
2,099,891円
02,044,601ドル
1,231,589
1,659,326
1,679,293
1,947,546
8,907,620
17,469,975ドル
Year ending
March 31
Additionally, the Company has a contributory funded defined
benefit pension plan covering substantially all of its employees. In
general, eligible employees retiring at the mandatory retirement
age receive pension payments for the remainder of their lives.
Eligible employees retiring after at least 20 years of service but
before the mandatory retirement age, receive a lump-sum payment
upon retirement and annuities for a period of 10 years.
Domestic bonds, 0.2% to 6.9%, due serially to 2023
U.S. dollar bonds and notes, 6.375% to 7.25%, due 2004 to 2008
Swiss franc bonds, 4.0% to 4.25%, due 2003 to 2007
Deutsche mark bonds, 4.75%, due 2003
Loans from The Development Bank of Japan, 0.95% to 6.9%, due serially to 2023
Unsecured loans, principally from banks and insurance companies, 0.25% to 5.7%, due serially to 2021
Total
Less current maturities
Long-term debt, less current maturities
5. Long-Term Debt
Long-term debt consisted of the following at March 31, 2003 and 2002:
09,277,646ドル
634,692
245,532—2,898,960
4,413,145
17,469,975
2,044,601
15,425,374ドル20031,115,173円
76,290
29,513—348,455
530,460
2,099,891
245,761
1,854,130円20031,066,373円
76,290
60,182
34,550
388,425
547,451
2,173,271
202,086
1,971,185円2002Millions of yen
Thousands of
U.S. dollars
8. Income Taxes
The Company is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rates
of approximately 36.1% for 2003 and 2002.30A reconciliation between the normal effective statutory tax
rate for the years ended March 31, 2003 and 2002 and the actual
effective tax rate reflected in the accompanying non-consolidated
statements of income is not disclosed because the difference
between those rates is immaterial.
9. Shareholders’ Equity
As described in Note 2. m., certain special reserves were included in unappropriated (a component of retained earnings). Such reserves at March
31, 2003 and 2002 were as follows:
Deferred tax assets:
Pension and severance costs
Depreciation
Reserve for reprocessing of irradiated nuclear fuel
Reserve for decommissioning of nuclear power units
Deferred charges
Other
Deferred tax assets
Deferred tax liabilities
Unrealized gain on available-for-sale securities
Reserve for depreciation of nuclear power production facilities under construction
Other
Deferred tax liabilities
Net deferred tax assets
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at March 31, 2003 and 2002 are as follows:
62,121ドル20062,321ドル2003Reserve for:
Depreciation of nuclear power production facilities under construction
Losses on overseas investments
Total
7,467円247,491円200311,201円2511,226円2002Millions of yen
Thousands of
U.S. dollars
At March 31, 2001 and 2000
413,686ドル
138,652
87,329
84,725
50,849
118,644
893,885ドル
070,915ドル
17,546299088,760ドル
805,125ドル2003049,725円
16,666
10,497
10,184
6,112
14,261
107,445円
008,524円
2,10936010,669円
096,776円200344,135円
11,553
10,497
10,184
9,438
10,168
95,975円
20,990円
4,2192725,236円
70,739円2002Millions of yen
Thousands of
U.S. dollars
Japanese companies are subject to the Code to which certain
amendments became effective from October 1, 2001.
The Code was revised whereby common stock par value was
eliminated resulting in all shares being recorded with no par value
and at least 50% of the issue price of new shares is required to be
recorded as common stock and the remaining net proceeds as
additional paid-in capital. The Code permits companies, upon
approval of the Board of Directors, to issue shares to existing
shareholders without consideration as a stock split. Such issuance
of shares generally does not give rise to changes within the
shareholders’ accounts.
The revised Code also provides that an amount at least equal to
10% of the aggregate amount of cash dividends and certain other
appropriations of retained earnings associated with cash outlays
applicable to each period shall be appropriated as a legal reserve
until such reserve and additional paid-in capital equals 25% of
common stock. The amount of total additional paid-in capital
and legal reserve that exceeds 25% of the common stock may
be available for dividends by resolution of the shareholders. In
addition, the Code permits the transfer of a portion of additional
paid-in capital and legal reserve to the common stock by resolution
of the Board of Directors.
The revised Code eliminated restrictions on the repurchase and
use of treasury stock allowing companies to repurchase treasury
stock by a resolution of the shareholders at the general shareholders
meeting and dispose of such treasury stock by resolution of the Board
of Directors beginning April 1, 2002. The repurchased amount
of treasury stock cannot exceed the amount available for future
dividend plus amount of common stock, additional paid-in capital
or legal reserve to be reduced in the case where such reduction was
resolved at the general shareholders meeting.
The amount of retained earnings available for dividends under
the Code was 454,118円 million (3,778,020ドル thousand) as of March
31, 2003, based on the amount recorded in the Company’s general
books of account. In addition to the provision that requires an
appropriation for a legal reserve in connection with the cash
payment, the Code imposes certain limitations on the amount
of retained earnings available for dividends.
Dividends are approved by the shareholders at a meeting held
subsequent to the fiscal year to which the dividends are applicable.
Semiannual interim dividends may also be paid upon resolution of
the Board of Directors, subject to certain limitations imposed by
the Code.3110. Research and Development Costs
Research and development costs charged to income were 10,180円 million (84,692ドル thousand) and 11,273円 million for the years ended
March 31, 2003 and 2002, respectively.
11. Leases
The Company leases certain computer and other equipment. Total
lease payments under finance lease arrangements were 6,079円
million (50,574ドル thousand) and 6,240円 million for the years ended
March 31, 2003 and 2002, respectively.
Pro forma information of leased equipment such as acquisition
cost, accumulated depreciation and lease obligations, all of which
included imputed interest expense, under finance leases that do not
transfer ownership of the leased equipment to the lessee on an "as
if capitalized" basis at March 31, 2003 and 2002 were as follows:
Obligations under finance leases which included the imputed
interest expense at March 31, 2003 and 2002 were as follows:
12. Commitments and Contingencies
At March 31, 2003, the Company had a number of fuel purchase commitments, most of which specify quantities and dates for fuel deliveries.
However, purchase prices are contingent upon fluctuations in market prices.
Contingent liabilities as of March 31, 2003 were as follows:
Under the debt assumption agreements, the Company was contingently liable for the redemption of the domestic bonds transferred to banks.
Millions of yen
Acquisition cost
Accumulated depreciation
Net leased equipment
March 31, 2003
298,353ドル
161,315
137,038ドル
14,443ドル
6,107
08,336ドル
283,910ドル
155,208
128,702ドル
Acquisition cost
Accumulated depreciation
Net leased equipment200305,155円
11,317
16,472円
Due within one year
Due after one year
Total
Millions of yen
042,887ドル
94,151
137,038ドル200205,801円
13,867
19,668円2003Thousands of
U.S. dollars
General facilities Other
Thousands of U.S. dollars
Total
March 31, 2003
\ 35,862
19,390
\ 16,472
\ 1,736734\ 1,002
\ 34,126
18,656
\ 15,470
General facilities Other Total
Co-guarantees of loans, mainly in connection with procurement of fuel
Guarantees of employees’ housing loans
Guarantees under debt assumption agreements
Other
114,192円
56,864
192,440
10,624
0,950,017ドル
473,078
1,600,998
88,386
Millions of yen Thousands of U.S. dollars
13. Subsequent Events
At the general shareholders’ meeting held on June 27, 2003, the Company’s shareholders approved the following appropriations of retained
earnings as of March 31, 2003, and the purchase of treasury stock:
a. Appropriations of Retained Earnings
Year-end cash dividends, 25円.00 (0ドル.21) per share
Bonuses to directors and corporate auditors
98,586ドル
1,165
11,850円140Millions of yen Thousands of U.S. dollars
b. Purchase of Treasury Stock
The Company is authorized to repurchase up to 20 million shares of the Company’s common stock (aggregate amount of 35円 billion), which
is effective until the next general shareholders’ meeting.
Millions of yen
Acquisition cost
Accumulated depreciation
Net leased equipment
March 31, 2002
\ 39,381
19,713
\ 19,668
\ 1,424553\ 0,871
\ 37,957
19,160
\ 18,797
General facilities Other Total32To the Board of Directors of
Kyushu Electric Power Company, Incorporated:
We have audited the accompanying non-consolidated balance sheets of Kyushu Electric Power Company, Incorporated as of March 31, 2003
and 2002, and the related non-consolidated statements of income and shareholders’ equity for the years then ended, all expressed in Japanese
yen. These non-consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these non-consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards, procedures and practices generally accepted and applied in Japan. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Kyushu Electric Power Company, Incorporated as of March 31, 2003 and 2002, and the results of its operations for the years then ended in
conformity with accounting principles and practices generally accepted in Japan.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.
June 27, 2003
INDEPENDENT AUDITORS’ REPORT
Tohmatsu & Co.
Fukuoka Sanwa Building,
10-24, Tenjin 1-chome,
Chuo-ku, Fukuoka 810-0001, Japan
Tel: +81-92-751-0931
Fax: +81-92-714-5585
www.tohmatsu.co.jp
Non-Consolidated Six-Year Financial Summary
Kyushu Electric Power Company, Incorporated
Years Ended March 31,33Millions of yen
(except for per share data)
11,302,895ドル
4,704,650
6,197,887
400,358
9,862,779
1,588,253
1,147,696
870,898
2,062,196
1,321,556
414,002
55,374
67,180
115,499
783,910
500,957
300,824
634,434
612,496
819,268
520,349
$ 1.100.4232,695,025ドル
27,115,699
15,425,374
6,629,9832003For the year:
Operating revenues
Residential (lighting)
Commercial and
industrial
Other
Operating expenses
PersonnelFuelPurchased power
Depreciation
Maintenance
Reprocessing costs
of irradiated
nuclear fuel
Decommissioning
costs of nuclear
power units
Disposal cost of high-
level radioactive waste
Disposition of
property
Taxes other than
income taxes
Subcontract feeRentOther
Interest charges
Income before
income taxes
Net income
Per share of common
stock (yen and
U.S. dollars):
Net income:
Basic
Diluted
Cash dividends
applicable to the year
At year-end:
Total assets
Net property
Long-term debt, less
current maturities
Total shareholders’ equity
Number of employees
1,358,608円
565,499
744,986
48,123
1,185,506
190,908
137,953
104,682
247,876
158,851
49,763
6,656
8,075
13,883
94,226
60,215
36,159
76,259
73,622
98,476
62,546
0,0131円.64
50.00
3,929,942円
3,259,307
1,854,130
796,924
13,96420031,393,650円
564,029
768,596
61,025
1,219,369
214,311
122,886
93,725
278,897
183,902
41,070
6,304
18,582
94,842
61,364
35,249
68,237
104,426
36,084
22,986
000,48円.47
48.32
50.00
3,959,244円
3,396,462
2,078,459
675,368
14,4282000Note: All dollar figures herein refer to U.S. currency. Japanese yen amounts have been translated, for convenience only, at the rate of 120円.20=US1,ドル the
approximate exchange rate prevailing on March 31, 2003.
1,389,306円
561,808
776,828
50,670
1,226,308
219,815
123,499
89,423
290,068
181,616
28,618
5,886
16,701
97,039
67,190
35,340
71,113
109,039
53,509
23,434
000,49円.42
49.21
50.00
3,948,892円
3,453,364
2,203,865
618,024
14,44519991,410,921円
562,675
815,263
32,983
1,213,446
187,491
129,631
87,685
312,497
187,860
19,457
5,513
17,047
94,787
67,813
33,458
70,207
131,791
65,735
30,702
000,64円.75
64.30
50.00
3,994,351円
3,523,684
2,301,914
618,439
14,60919981,411,500円
570,045
777,747
63,708
1,207,968
203,897
146,097
94,098
263,043
173,521
22,510
6,898
11,411
21,465
94,448
64,457
36,168
69,955
87,724
94,075
60,140
00,126円.83
125.63
60.00
4,006,257円
3,339,874
2,016,036
765,670
14,34820011,388,834円
567,230
761,498
60,106
1,197,546
186,870
150,959
98,034
244,946
177,962
39,529
4,597
7,640
20,165
93,236
58,638
37,051
77,919
81,500
102,234
65,152
00,137円.40
60.00
3,984,740円
3,322,050
1,971,185
782,953
14,1912002Thousands of
U.S. dollars
(except for
per share data)34Organization
General Meeting
of Stockholders
Nuclear Power Operation Dept.
Nuclear Power Projects Dept.
Power System Engineering Dept.
Power System Operation Dept.
Transmission and
System Operation
Division
Thermal Power Dept.
Thermal Power
Generation Division
Business Development Dept.
Business Development
Division
Plant Siting and
Environmental
Affairs Headquarters
Marketing Dept.
Energy Solutions Dept.
Overseas Business Dept.
Distribution Dept.
Customer Services
Division
Corporate Planning Office
Management Administration Office
Secretary Sec.
Public Relations Dept.
General Affairs Dept.
Human Resources Dept.
Accounting and Finance Dept.
Materials and Fuels Dept.
Civil Engineering Dept.
Information and Communications Business Dept.
Information Systems Dept.
Telecommunications Dept.
Research Laboratory
Branch Offices
Construction Office (Power Plants)
Survey Office
Transmission and Substation
Construction Office
Tokyo Branch Office
Thermal Power Stations
Geothermal Power Stations
Nuclear Power Stations
Customer Service Offices
Power System Maintenance Offices
Board of Directors
Chairman
President
Executive
Vice-Presidents
Managing Directors
Directors
Board of
Managing Directors
Board of Corporate
Auditors
Corporate Auditors
Power Plant Siting Affairs Dept.
Facilities Siting Dept.
Environmental Affairs Dept.
Corporate Auditors’ Office
Nuclear Power
Generation Division
Information and
Communications
Division
(As of July 1, 2003)35Chairman
President
Executive Vice-Presidents
Managing Directors
Directors
Corporate Auditors
Board of Directors
Michisada Kamata
Shingo Matsuo
Hidemi Ashizuka
Hiroaki Okui
Shigehiko Matsumoto
Mitsuaki Sato
Kowashi Imamura
Kiyohiko Matsushita
Kouichi Hashida
Yukio Tanaka
Taku Ishii
Takahiro Higuchi
Kyouichi Hiratsuka
Morimasa Takeda
Tokihisa Ichinose
Tomokazu Odahara
Keiji Mizuguchi
Noriyuki Ueda
Takeshi Koga
Hajime Sankoda
Yoshihiro Tomizawa
Kiyoko Nishimura
Kimiya Nakazato
(As of July 1, 2003)36Head Office
Tokyo Branch Office
Date of Establishment
Paid-in Capital
Number of Shares Authorized
Number of Shares Issued
Number of Employees
Investor Information
1-82, Watanabe-dori 2-chome,
Chuo-ku, Fukuoka 810-8720, Japan
Tel: (092) 761-3031
http://www.kyuden.co.jp
7-1, Yurakucho 1-chome,
Chiyoda-ku, Tokyo 100-0006, Japan
Tel: (03) 3281-4931
May 1, 1951
237,304,863,699円
1,000,000,000
474,183,951
13,964
(As of March 31, 2003)
Main Facilities
(As of March 31, 2003)37