SUMITOMO REALTY & DEVELOPMENT CO., LTD. Sumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries As of March 31, 2016 and 2015
2016 | 2015 | 2016 | ||
Current assets: | $ 1,662,529 | |||
Cash, time and notice deposits (Notes 3, 5 and 6) | ¥ 187,234 | ¥ | 151,367 | |
Notes and accounts receivable-trade (Note 6) | 19,665 | 27,597 | 174,614 | |
Allowance for doubtful accounts | (48) | (78) | (426) | |
Inventories (Note 4) | 855,816 | 801,950 | 7,599,148 | |
Deferred income taxes (Note 12) | 13,638 | 10,825 | 121,097 | |
Other current assets | 45,884 | 34,042 | 407,423 | |
Total current assets Investments: Investments in unconsolidated subsidiaries and affiliates (Note 6) Investments in securities and other (Notes 6 and 7) Allowance for doubtful accounts | 1,122,189 | 1,025,703 | 9,964,385 | |
57,401 | 56,233 | 509,687 | ||
321,296 | 337,427 | 2,852,921 | ||
(9,801) | (11,914) | (87,026) | ||
Total investments Property and equipment: Land (Notes 4, 5 and 19) Buildings and structures (Notes 4, 5 and 19) Machinery and equipment (Notes 5 and 19) Leased assets Construction in progress (Notes 4, 5 and 19) | 368,896 | 381,746 | 3,275,582 | |
2,317,729 | 2,259,845 | 20,580,083 | ||
1,039,019 | 933,641 | 9,225,884 | ||
28,851 | 26,224 | 256,180 | ||
3,040 | 3,396 | 26,993 | ||
36,448 | 106,738 | 323,637 | ||
3,425,087 | 3,329,844 | 30,412,777 | ||
Accumulated depreciation | (436,504) | (406,489) | (3,875,901) | |
Net property and equipment Other assets: Guarantee and lease deposits paid to lessors (Note 6) Leasehold rights and other intangible assets Deferred income taxes (Note 12) Other | 2,988,583 | 2,923,355 | 26,536,876 | |
103,981 | 107,252 | 923,291 | ||
51,718 | 54,015 | 459,226 | ||
12,684 | 13,534 | 112,627 | ||
27,864 | 18,199 | 247,415 | ||
Total other assets | 196,247 | 193,000 | 1,742,559 | |
Total assets | ¥4,675,915 | ¥4,523,804 | $41,519,402 | |
Assets
Millions of yen
Thousands of U.S. dollars (Note 1)
2016 | 2015 | 2016 | |||
Current liabilities: | $ 698,970 | ||||
Short-term debt (Notes 6 and 8) | ¥ | 78,718 | ¥ | 87,000 | |
Long-term debt due within one year (Notes 6 and 8) | 316,737 | 380,863 | 2,812,440 | ||
Long-term non-recourse debt due within one year (Notes 5, 6 and 8) | 121,964 | 69,191 | 1,082,969 | ||
Notes and accounts payable-trade (Note 6) | 54,316 | 66,963 | 482,294 | ||
Accrued income taxes | 30,046 | 26,519 | 266,791 | ||
Accrued bonuses | 4,216 | 3,726 | 37,436 | ||
Deposits received (Notes 6 and 13) | 71,619 | 61,172 | 635,935 | ||
Other current liabilities (Notes 12 and 13) | 154,799 | 102,109 | 1,374,525 | ||
Total current liabilities Long-term liabilities: Long-term debt due after one year (Notes 6 and 8) Long-term non-recourse debt due after one year (Notes 5, 6 and 8) Guarantee and deposits received (Notes 6 and 13) Net defined benefit liability (Note 9) Other long-term liabilities (Notes 12 and 13) | 832,415 | 797,543 | 7,391,360 | ||
2,344,819 | 2,115,356 | 20,820,627 | |||
296,663 | 374,618 | 2,634,195 | |||
249,800 | 328,393 | 2,218,078 | |||
6,081 | 5,434 | 53,996 | |||
28,860 | 42,921 | 256,260 | |||
Total long-term liabilities Contingent liabilities (Note 20) Net assets (Note 14): Shareholders' equity Common stock: Authorized -1,900,000 thousand shares Issued -476,086 thousand shares Capital surplus Retained earnings Treasury stock | 2,926,223 | 2,866,722 | 25,983,156 | ||
122,805 | 122,805 | 1,090,437 | |||
132,748 | 132,750 | 1,178,725 | |||
569,740 | 494,276 | 5,058,959 | |||
(4,335) | (4,247) | (38,492) | |||
Total shareholders' equity Accumulated other comprehensive income (loss) Net unrealized holding gains on securities Net deferred losses on hedges Foreign currency translation adjustments Remeasurements of defined benefit plans | 820,958 | 745,584 | 7,289,629 | ||
72,262 | 88,799 | 641,644 | |||
(4,247) | (1,615) | (37,711) | |||
(510) | (550) | (4,529) | |||
(364) | 244 | (3,232) | |||
Total accumulated other comprehensive income | 67,141 | 86,878 | 596,172 | ||
Non-controlling interests | 29,178 | 27,077 | 259,085 | ||
Total net assets | 917,277 | 859,539 | 8,144,886 | ||
Total liabilities and net assets | ¥4,675,915 | ¥4,523,804 | $41,519,402 | ||
Liabilities and Net Assets
Millions of yen
Thousands of U.S. dollars (Note 1)
See accompanying notes.
CONSOLIDATED STATEMENTS OF INCOMESumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries For the years ended March 31, 2016, 2015 and 2014
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSSumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries For the years ended March 31, 2016, 2015 and 2014
Millions of yen
Thousands of U.S. dollars (Note 1)
Thousands Millions of yen
2016 | 2015 | 2014 | 2016 | |
Revenue from operations ¥854,964 ¥806,835 ¥780,273 Costs and expenses: Cost of revenue from operations 614,191 579,964 558,987 Selling, general and administrative expenses 66,532 60,976 60,815 680,723 640,940 619,802 Operating income 174,241 165,895 160,471 Other income (expenses): Interest expense, net (24,398) (26,049) (26,911) Dividend income 5,483 5,063 4,569 Gain on sale of property and equipment 115 4 19 Loss on sale of property and equipment - (3) (3) Loss on impairment of fixed assets (Note 10) (10,806) (3,811) (15,068) Loss on disposal of property and equipment (1,146) (3,105) (1,919) Gain on sale of investments in securities 428 - 1,430 Loss on sale of investments in securities (76) - - Loss on devaluation of investments in securities (466) (30) (96) Dividend to partnership investors (1,387) (1,776) (2,174) Other, net (6,434) (5,521) (5,196) (38,687) (35,228) (45,349) Income before income taxes 135,554 130,667 115,122 Income taxes (Note 12): Current 49,989 44,785 45,125 Deferred (5,259) 2,661 (2,521) Total 44,730 47,446 42,604 Profit 90,824 83,221 72,518 Profit attributable to non-controlling interests 3,026 2,654 2,821 | $7,591,582 5,453,658 590,765 6,044,423 1,547,159 (216,640) 48,686 1,021 - (95,951) (10,176) 3,800 (675) (4,138) (12,316) (57,129) (343,518) 1,203,641 443,873 (46,696) 397,177 806,464 26,869 | |||
Profit attributable to owners of parent | ¥ 87,798 | ¥ 80,567 | ¥ 69,697 | $ 779,595 |
Shareholders' equity Accumulated other comprehensive income (loss)
Number of shares of
Total
Net unrealized
holding gains Net deferred
Foreign currency
Remeasure- ments of defined
Total accumulated other
Non-
common
Common
Capital
Retained
Treasury
shareholders'
(losses) on
gains (losses) translation
benefit
comprehensive controlling
Total net
stock
stock
surplus
earnings
stock
equity
securities
on hedges
adjustments
plans
income (loss)
interests
assets
Balance at April 1, 2013 476,086 ¥122,805 ¥132,749 ¥363,384 ¥(3,779) ¥615,159 ¥ 19,981 ¥(1,393) ¥(6,736) ¥ - ¥ 11,852 ¥21,854 ¥648,865
Profit attributable to owners of parent | - - - | 69,697 | - | 69,697 | - | - - | - - | - 69,697 | |
Foreign currency translation adjustments | - - - | - | - | - | - | - 3,374 | - 3,374 | - 3,374 | |
Net unrealized holding gains on securities | - - - | - | - | - | 17,782 | - - | - 17,782 | - 17,782 | |
Acquisition of treasury stock | - - - | - | (363) | (363) | - | - - | - - | - (363) | |
Disposal of treasury stock | - - 1 | - | 1 | 2 | - | - - | - - | - 2 | |
Cash dividends paid: | |||||||||
Final for prior year (¥10 per share) | - - - (4,741) | - (4,741) | - - - - - - (4,741) | ||||||
Interim for current year (¥10 per share) | - - - (4,740) | - (4,740) | - - - - - - (4,740) | ||||||
Profit attributable to non-controlling interests | - - - - - - - - | - - - | 2,730 | 2,730 | |||||
Net deferred losses on hedges | - - - - - - - (248) | - - (248) | - | (248) | |||||
Remeasurements of defined benefit plans - - - - - - - - - 174 174 - 174
- | - | - | (410) | - | (410) | - | - | - | - | - | - | (410) |
476,086 | 122,805 | 132,750 | 423,190 | (4,141) | 674,604 | 37,763 | (1,641) | (3,362) | 174 | 32,934 | 24,584 | 732,122 |
- | - | - | 80,567 | - | 80,567 | - | - | - | - | - | - | 80,567 |
- | - | - | - | - | - | - | - | 2,812 | - | 2,812 | - | 2,812 |
- | - | - | - | - | - | 51,036 | - | - | - | 51,036 | - | 51,036 |
- | - | - | - | (106) | (106) | - | - | - | - | - | - | (106) |
Balance at April 1, 2014 476,086 ¥122,805 ¥132,750 ¥423,600 ¥(4,141) ¥675,014 ¥ 37,763 ¥(1,641) ¥(3,362) ¥ 174 ¥ 32,934 ¥24,584 ¥732,532 Cumulative effects of changes in
accounting policies
Restated balance
Profit attributable to owners of parent Foreign currency translation adjustments Net unrealized holding gains on securities Acquisition of treasury stock
Cash dividends paid:
Final for prior year (¥10 per share) - - - (4,741) - (4,741) - - - - - - (4,741)
Interim for current year (¥10 per share) - - - (4,740) - (4,740) - - - - - - (4,740) Profit attributable to non-controlling interests - - - - - - - - - - - 2,493 2,493 Net deferred gains on hedges - - - - - - - 26 - - 26 - 26
Remeasurements of defined benefit plans - - - - - - - - - 70 70 - 70
accounting policies | - - - | - | - | - | - | - - | - - | - - | ||
Restated balance | 476,086 122,805 132,750 | 494,276 | (4,247) | 745,584 | 88,799 | (1,615) (550) | 244 86,878 | 27,077 859,539 | ||
Profit attributable to owners of parent | - - - | 87,798 | - | 87,798 | - | - - | - - | - 87,798 | ||
Foreign currency translation adjustments | - - - | - | - | - | - | - 40 | - 40 | - 40 | ||
Net unrealized holding losses on securities | - - - | - | - | - | (16,537) | - - | - (16,537) | - (16,537) | ||
Acquisition of treasury stock | - - - | - | (89) | (89) | - | - - | - - | - (89) | ||
Disposal of treasury stock | - - 0 | - | 1 | 1 | - | - - | - - | - 1 | ||
Change in scope of consolidation | - - - | (1,906) | - | (1,906) | - | - - | - - | - (1,906) | ||
Cash dividends paid: | ||||||||||
Yen | U.S. dollars (Note 1) | Final for prior year (¥11 per share) Interim for current year (¥11 per share) | - - - (5,214) - - - (5,214) | - (5,214) - (5,214) | - - - - - - (5,214) - - - - - - (5,214) | |||||
Change in treasury shares of parent arising from transactions with | ||||||||||
Balance at April 1, 2015 476,086 ¥122,805 ¥132,750 ¥494,276 ¥(4,247) ¥745,584 ¥ 88,799 ¥(1,615) ¥ (550) ¥ 244 ¥ 86,878 ¥27,077 ¥859,539 Cumulative effects of changes in
2016 | 2015 | 2014 | 2016 | |
Amounts per share of common stock: Profit attributable to owners of parent: -Basic -Diluted Cash dividend applicable to the year | ¥185.23 - 22.00 | ¥169.97 - 21.00 | ¥147.02 - 20.00 | $1.64 |
- | ||||
0.20 |
non-controlling shareholders - - (2) - - (2) - - - - - - (2) Profit attributable to non-controlling interests - - - - - - - - - - - 2,101 2,101 Net deferred losses on hedges - - - - - - - (2,632) - - (2,632) - (2,632)
Remeasurements of defined benefit plans - - - - - - - - - (608) (608) - (608)
Balance at March 31, 2016 476,086 ¥122,805 ¥132,748 ¥569,740 ¥(4,335) ¥820,958 ¥ 72,262 ¥(4,247) ¥ (510) ¥(364) ¥ 67,141 ¥29,178 ¥917,277See accompanying notes.
Thousands of U.S. dollars (Note 1)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMESumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries For the years ended March 31, 2016, 2015 and 2014
2016 | 2015 2014 | 2016 | |
Profit ¥ 90,824 ¥ 83,221 ¥72,518 | $ 806,464 | ||
Other comprehensive income (loss) (Note 18) | |||
Net unrealized holding gains (losses) on securities (16,514) 51,057 17,796 | (146,635) | ||
Net deferred gains (losses) on hedges (2,649) 10 (262) | (23,522) | ||
Foreign currency translation adjustments 59 3,498 4,220 | 524 | ||
Remeasurements of defined benefit plans (710) 65 - | (6,304) | ||
Total other comprehensive income (loss) (19,814) 54,630 21,754 | (175,937) | ||
Comprehensive income ¥ 71,010 ¥137,851 ¥94,272 | $ 630,527 | ||
Comprehensive income attributable to: | |||
Owners of the parent ¥ 68,061 ¥134,511 ¥90,604 | $ 604,342 | ||
Non-controlling interests 2,949 3,340 3,668 | 26,185 | ||
Millions of yen
Thousands of U.S. dollars (Note 1)
Shareholders' equity | Accumulated other comprehensive income (loss) | Non- controlling Total net interests assets $240,428 $7,632,206 - - | |
Total Common Capital Retained Treasury shareholders' stock surplus earnings stock equity $1,090,437 $1,178,743 $4,388,883 $(37,711) $6,620,352 - - - - - | Net Remeasure- Total unrealized Foreign ments of accumulated holding gains Net deferred currency defined other (losses) on losses on translation benefit comprehensive securities hedges adjustments plans income (loss) $ 788,483 $(14,340) $(4,884) $ 2,167 $ 771,426 - - - - - | ||
1,090,437 1,178,743 4,388,883 (37,711) 6,620,352 | 788,483 (14,340) (4,884) 2,167 771,426 | 240,428 7,632,206 | |
- - 779,595 - 779,595 | - - - - - | - 779,595 | |
- - - - - | - - 355 - 355 | - 355 | |
- - - - - | (146,839) - - - (146,839) | - (146,839) | |
- - - (790) (790) | - - - - - | - (790) | |
- 0 - 9 9 | - - - - - | - 9 | |
- - (16,925) - (16,925) | - - - - - | - (16,925) | |
- - (46,297) - (46,297) | - - - - - | - (46,297) | |
- - (46,297) - (46,297) | - - - - - | - (46,297) | |
- (18) - - (18) | - - - - - | - (18) | |
- - - - - | - - - - - | 18,657 18,657 | |
- - - - - | - (23,371) - - (23,371) | - (23,371) | |
- - - - - | - - - (5,399) (5,399) | - (5,399) | |
$1,090,437 $1,178,725 $5,058,959 $(38,492) $7,289,629 | $ 641,644 $(37,711) $(4,529) $(3,232) $ 596,172 | $259,085 $8,144,886 | |
Balance at April 1, 2015
Cumulative effects of changes in
accounting policies
Restated balance
Profit attributable to owners of parent Foreign currency translation adjustments Net unrealized holding losses on securities Acquisition of treasury stock
Disposal of treasury stock Change in scope of consolidation Cash dividends paid:
Final for prior year ($0.10 per share) Interim for current year ($0.10 per share)
Change in treasury shares of parent arising from transactions with non-controlling shareholders
Profit attributable to non-controlling interests Net deferred losses on hedges
Remeasurements of defined benefit plans
Balance at March 31, 2016
See accompanying notes.
See accompanying notes.
CONSOLIDATED STATEMENTS OF CASH FLOWSSumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries For the years ended March 31, 2016, 2015 and 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSumitomo Realty & Development Co., Ltd. and its consolidated subsidiaries As of and for the years ended March 31, 2016, 2015 and 2014
Millions of yen
Thousands of U.S. dollars (Note 1)
2016 | 2015 | 2014 | 2016 | |
Cash flows from operating activities: | ¥ 135,554 | ¥ 130,667 | ¥ 115,122 | $ 1,203,641 |
Income before income taxes | ||||
Depreciation and amortization | 34,574 | 33,519 | 35,311 | 306,997 |
Loss on impairment of fixed assets (Note 10) | 10,806 | 3,811 | 15,068 | 95,951 |
Provision for (Reversal of) allowance for doubtful accounts | (2,095) | (583) | (3,006) | (18,602) |
Decrease in net defined benefit liability | (388) | (212) | (155) | (3,445) |
Gain on sale of property and equipment, net | (115) | (1) | (16) | (1,021) |
Loss on disposal of property and equipment | 1,146 | 3,105 | 1,919 | 10,176 |
Gain on sale of investments in securities, net | (352) | - | (1,430) | (3,126) |
Loss on devaluation of investments in securities | 466 | 30 | 96 | 4,138 |
Interest and dividend income | (5,574) | (5,261) | (4,629) | (49,494) |
Interest expense | 24,489 | 26,247 | 26,971 | 217,448 |
Increase (Decrease) in notes and accounts receivable-trade | 7,442 | (8,741) | (530) | 66,081 |
Increase in inventories | (51,302) | (88,915) | (24,292) | (455,532) |
Increase (Decrease) in notes and accounts payable-trade | (12,363) | 21,446 | 6,671 | (109,776) |
Increase (Decrease) in advances received | 10,981 | (3,507) | 4,261 | 97,505 |
Other, net | 9,118 | (7,725) | 7,549 | 80,961 |
Total | 162,387 | 103,880 | 178,910 | 1,441,902 |
Proceeds from interest and dividend income | 5,574 | 5,261 | 4,629 | 49,494 |
Payments for interest | (24,870) | (26,747) | (28,205) | (220,831) |
Payments for income tax and other taxes | (46,985) | (47,327) | (38,340) | (417,199) |
Net cash provided by operating activities | 96,106 | 35,067 | 116,994 | 853,366 |
Cash flows from investing activities: | ||||
Payments for purchases of property and equipment | (91,297) | (149,517) | (181,471) | (810,664) |
Proceeds from sale of property and equipment | 404 | 141 | 109 | 3,587 |
Payments for purchases of investments in securities | (18,118) | (22,335) | (26,813) | (160,877) |
Proceeds from sale and redemption of investments in securities | 1,838 | 14,324 | 3,857 | 16,320 |
Payments for guarantee and lease deposits paid to lessors | (1,373) | (1,088) | (1,296) | (12,191) |
Proceeds from guarantee and lease deposits paid to lessors | 4,658 | 5,691 | 14,813 | 41,360 |
Payments for guarantee and lease deposits received | (12,400) | (11,635) | (13,992) | (110,105) |
Proceeds from guarantee and lease deposits received | 26,047 | 18,415 | 15,395 | 231,282 |
Receipts of deposits from partnership investors | 721 | 1,994 | 2,381 | 6,402 |
Restitution of deposits from partnership investors | (24,835) | (74,876) | (105,667) | (220,520) |
Other, net | 8,971 | (2,032) | (2,765) | 79,657 |
Net cash used in investing activities | (105,384) | (220,918) | (295,449) | (935,749) |
Cash flows from financing activities: | ||||
Decrease in short-term debt, net | (8,282) | (57,900) | (52,500) | (73,539) |
Proceeds from issuance of bonds | 40,000 | 110,000 | 140,000 | 355,177 |
Redemption of bonds | (60,000) | (80,000) | (70,000) | (532,765) |
Proceeds from non-recourse bonds | 5,000 | 3,000 | 8,000 | 44,397 |
Redemption of non-recourse bonds | (8,264) | (8,348) | (8,848) | (73,380) |
Proceeds from long-term loans payable | 566,200 | 505,800 | 354,500 | 5,027,526 |
Repayment of long-term loans payable | (380,863) | (200,085) | (213,392) | (3,381,842) |
Proceeds from long-term non-recourse loans | 39,600 | 23,800 | 67,900 | 351,625 |
Repayment of long-term non-recourse loans | (61,518) | (69,440) | (76,190) | (546,244) |
Decrease in assignment of receivables | (1,700) | (2,777) | (7,829) | (15,095) |
Increase in treasury stocks, net | (88) | (106) | (360) | (781) |
Cash dividends paid | (11,277) | (10,323) | (10,327) | (100,133) |
Other, net | (73,827) | (25,806) | (33,499) | (655,541) |
Net cash provided by financing activities | 44,981 | 187,815 | 97,455 | 399,405 |
Effect of exchange rate changes on cash and cash equivalents | 126 | 2,078 | 2,491 | 1,119 |
Net increase (decrease) in cash and cash equivalents | 35,830 | 4,042 | (78,509) | 318,150 |
Cash and cash equivalents at beginning of year | 150,265 | 146,223 | 224,732 | 1,334,265 |
Decrease in cash and cash equivalents resulting from exclusion of subsidiaries from consolidation | (106) | - | - | (941) |
Cash and cash equivalents at end of year (Note 3) | ¥ 185,989 | ¥ 150,265 | ¥ 146,223 | $ 1,651,474 |
-
Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of Sumitomo Realty & Devel- opment Co., Ltd. ("the Company") and its consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.
The accounts of the Company's overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. The accompanying consolidated financial statements have been restructured and translated into English (with certain expanded disclosure) from the consolidated financial state- ments of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese-language consolidated financial statements, but
not required for fair presentation, is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2016, which was ¥112.62 to U.S.$1. The translation should not be construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or any other rate
of exchange.
- Accounting policies
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and significant companies over which the Company has power of control through majority voting rights or existence of certain conditions evidencing control by the Company.
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to minority shareholders, are recorded based on the fair value at the time the Company acquired control of the respective subsidiaries.
All significant intercompany balances, transactions and profits have been elimi- nated in consolidation.
Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the year-end rate.
Financial statements of consolidated overseas subsidiaries are translated into Japanese yen at the year-end rate, except for shareholders' equity accounts, which are translated at historical rates, and income statement items resulting from transactions with the Company, which are translated at the rates used by the Company.
Differences arising from translation are presented as "Foreign currency transla- tion adjustments" in net assets.
Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-term, highly liquid investments with maturities not exceeding three months at the time of purchase are considered to be cash and cash equivalents.
Recognition of revenue
Revenues from sales operations of condominiums, detached houses and land lots are recognized when the units are delivered and accepted by customers. Revenues from leasing operations of office buildings, residences and other properties are recognized as rent accrues over the lease term.
Inventories
Inventories are stated at cost, determined by the specific identification method principally. The carrying amount of inventories is written down when the profitabil- ity declines.
Securities
Held-to-maturity securities are stated at amortized cost. Investments in subsidiaries and affiliates that are not consolidated or accounted for using the equity method are stated at moving-average cost. Available-for-sale securities with available fair values are stated at fair value. Unrealized gains and losses on these securities are reported, net of applicable income taxes, as a separate component of net assets. Realized gains and losses on the sale of such securities are computed using moving-average cost.
Preferred equity securities are stated at cost determined by the specific identification method, and securities with no available fair value are stated at moving-average cost.
Investments in limited partnerships, which are regarded as securities under the Financial Instruments and Exchange Law, are accounted for in a manner similar to the equity method based on the recent financial statements.
If the market value of held-to-maturity securities, investments in subsidiaries and affiliates and available-for-sale securities declines significantly, such securities are stated at fair value and the difference between fair value and the carrying amount is recognized as a loss in the period of the decline. If the fair value of investments in unconsolidated subsidiaries and affiliated companies not accounted for using the equity method is not readily available, such securities should be written down to the net asset value with a corresponding charge in the income statement in the event net asset value declines significantly. In these cases, such fair value or the net asset value will be the carrying amount of the securities at the beginning of the next fiscal year.
See accompanying notes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property and equipment
The Company and its consolidated domestic subsidiaries depreciate buildings using the straight-line method, and other property and equipment using the declining- balance method over their estimated useful lives. The consolidated overseas subsidiaries depreciate property and equipment using primarily the straight-line method in accordance with the accounting principles in the respective countries.
Leased assets related to finance lease transactions without title transfer are depreciated using the straight-line method over the lease periods as their useful lives with no residual value.
Estimated useful lives used in the computation of depreciation are generally as follows:
Buildings and structures 6 to 60 years Machinery and equipment 2 to 20 years Leased assets Lease periods
Software costs
Software costs are amortized using the straight-line method over the estimated useful lives (five years).
Allowance for doubtful accounts
The Company and its consolidated subsidiaries provide for doubtful accounts at an estimated uncollectable amount based on the evaluation of certain identified doubt- ful and bankrupt receivables plus an amount calculated using the percentage of actual collection losses in certain reference periods with respect to remaining receivables.
Lease transactions
Leased assets related to finance lease transactions without title transfer are depreciated using the straight-line method over the lease periods as their useful lives with no residual value.
The Company and its consolidated subsidiaries use the accounting procedures that conform to methods related to normal lease transactions with respect to finance lease transactions without title transfer with a lease transaction start date prior to March 31, 2009.
Income taxes
Income taxes are provided for on the basis of income for financial statement purposes. The tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statements and income tax purposes are recognized as deferred income taxes.
Employees' severance and retirement benefits
The Company and certain of its consolidated subsidiaries provide two types of post-employment benefit plans, lump-sum payment plans and defined benefit corporate pension plans, under which all eligible employees are entitled to benefits
based on their current rate of pay, length of service and the conditions under which termination occurs.
For the calculation of retirement benefit obligations, the estimated amount of retirement benefits is allocated to the respective fiscal years by the straight-line method.
Some of the Company's consolidated subsidiaries calculate net defined benefit liability and retirement benefit expenses by using a simplified method in which retirement benefit obligations are equal to the amount that would be paid if all employees resigned voluntarily at the end of the fiscal year.
Prior service costs are recognized as expenses in the period in which they are incurred, and actuarial gains and losses are recognized as expenses in the following period.
Effective from the year ended March 31, 2015, the Company and its consoli- dated subsidiaries ("the Group") adopted the main clause of Article 35 of "Accounting Standard for Retirement Benefits" (ASBJ Statement No. 26 on May 17, 2012) and the main clause of Article 67 of "Guidance on Accounting Standard for Retirement Benefits" (ASBJ Guidance No. 25 on March 26, 2015). Accordingly, the Group reviewed the calculation methods of retirement benefit obligations and service costs, and revised the method of determining the discount rate from the method using the discount rate based on approximate number of the average remaining service years of employees to the method using the single weighted-average discount rate reflecting the estimated period and amount of benefit payment.
In accordance with the transitional treatment set forth in Article 37 of the Accounting Standard for Retirement Benefits, the effect of the changes in the calcula- tion methods of retirement benefit obligations and service costs is recognized as an adjustment to retained earnings at the beginning of the year ended March 31, 2015.
As a result, net defined benefit liability increased by ¥637 million and retained earnings decreased by ¥410 million as of April 1, 2014. In addition, operating income and income before income taxes and minority interests on the consolidated statement of income for the year ended March 31, 2015 decreased by ¥11 million, respectively.
Construction contracts
The construction projects for which the outcome of the portion completed by the end of the fiscal year under review can be reliably estimated are accounted for by the percentage-of-completion method (the degree of completion of each construction project is estimated using the cost-comparison method), while other construction projects are accounted for by the completed-contract method.
Derivative transactions and hedge accounting
The Company and its consolidated subsidiaries state derivative financial instruments at fair value and recognize changes in the fair value as gains or losses unless derivative financial instruments are used for hedging purposes and qualify for hedge accounting.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Company and its consolidated subsidiaries defer recognition of gains or losses resulting from changes in fair value of the derivative financial instruments until the related gains or losses on the hedged items are recognized.
However, in cases where foreign exchange forward contracts are used as hedges and meet certain hedging criteria (regarding foreign exchange contracts), the foreign exchange forward contracts and hedged items are accounted for in the following manner:
If a foreign exchange forward contract is executed to hedge an existing foreign currency receivable or payable,
the difference, if any, between the Japanese yen amount of the hedged foreign currency receivable or payable translated using the spot rate at the inception date of the contract and the carrying amount of the receivable or payable is recognized in the income statement in the period which includes the inception date; and
the discount or premium on the contract (that is, the difference between the Japa- nese yen amount of the contract translated using the contracted forward rate and that translated using the spot rate at the inception date of the contract) is recog- nized over the term of the contract.
If a foreign exchange forward contract is executed to hedge a future transaction denominated in a foreign currency, the future transaction will be recorded using the contracted forward rate, and no gains or losses on the foreign exchange forward contract are recognized.
Amounts per share of common stock
The computation of earnings per share is based on the weighted-average number of shares of common stock outstanding during each year.
Diluted earnings per share is computed based on the amount of profit attribut- able to owners of parent on common stock and the weighted-average number
of shares of common stock outstanding during each year after giving effect to the dilutive potential of shares of common stock to be issued upon the exercise of stock options.
Diluted earnings per share is not presented as there are no potential shares. Cash dividends per share represent actual amounts applicable to the respective year.
Business combinations and related matters
Effective from the year ended March 31, 2016, the Group adopted "Accounting Standard for Business Combinations" (ASBJ Statement No. 21 on September 13, 2013), "Accounting Standard for Consolidated Financial Statements" (ASBJ State- ment No. 22 on September 13, 2013) and "Accounting Standard for Business Divestitures" (ASBJ Statement No. 7 on September 13, 2013), and then records the amount of difference of the changes in equity in subsidiaries which the Company keeps its control as capital surplus, and expenses acquisition-related cost in the fiscal year which such cost is incurred. For business combinations conducted after
the beginning of the fiscal year, the Group has changed to the method to reflect the effect of change in the allocation of acquisition cost based on finalization of provi- sional accounting treatment in consolidated financial statements for a fiscal year which a date of business combinations belongs to. In addition, the Group has changed the presentation of net income, and also changed the presentation from minority interests to non-controlling interests. Certain reclassifications have been made to consolidated financial statements for the previous fiscal year to reflect the change of the presentation.
The Group adopted the Accounting Standard for Business Combinations and other standards in accordance with the transitional treatments stipulated in Article 58-2 (4) of the Accounting Standard for Business Combinations, Article 44-5 (4) of the Accounting Standard for Consolidated Financial Statements and Article 57-4 (4) of the Accounting Standard for Business Divestitures from the beginning of the fiscal year.
In the consolidated statements of cash flows for the fiscal year, cash flow related to the acquisition or sale of shares of subsidiaries not accompanied by a change in the scope of consolidation is classified as "cash flows from financing activities," while costs related to acquisition of shares of subsidiaries accompanied by a change in the scope of consolidation and cash flow for expenses incurred by acquisition or sale of shares of subsidiaries not accompanied by a change in the scope of consolidation are classified as "cash flows from operating activities."
The impacts on the consolidated financial statements and per share informa- tion are insignificant.
New accounting pronouncements (Accounting standards issued not but yet effective)
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Outline
The implementation guideline for the recoverability of deferred tax assets, reviews and reflects the following treatments basically following the framework of Audit Committee Report No. 66 "Audit Treatment of Judgments with Regard to Recover- ability of Deferred Tax Assets" in which companies are classified into five categories and the amount of deferred tax assets are estimated according to such categories.
Treatment of companies which do not meet any of the requirements to be classi- fied as Category 1 to 5
Requirements for Category 2 or Category 3
Treatment of future deductible temporary differences of which scheduling is impracticable for companies that fall under Category 2
Treatment of a period in which taxable income before adjusting future temporary differences can be rationally estimated for companies that fall under Category 3
Treatment of a case in which companies which meet the requirement to be classi- fied as Category 4 fall under Category 2 or 3
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Scheduled date of adoption
The implementation guidance is scheduled to be adopted from the beginning of the year ending March 31, 2017.
- Impact of the adoption
Also, if interest rate swap contracts are used as a hedge and meet certain hedg- ing criteria (regarding interest rate swap contracts), the net amount to be paid or received under the interest rate swap contracts is added to or deducted from the interest on the assets or liabilities relative to which the swap contract was executed as a hedge.
"Implementation Guidance on Recoverability of Deferred Tax Assets" (ASBJ Guidance No. 26 on March 28, 2016)
The impact of adopting the implementation guidance is under evaluation at the time of preparation of the consolidated financial statements.
Sumitomo Realty & Devolpment Co. Ltd. published this content on 23 August 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 24 August 2016 00:59:02 UTC.
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