Sony 1998 Annual Report Download - page 70

[68] Sony Corporation Annual Report 1998
On November 20, 1991, the company made a free share distribution of 33,908,621 shares for which no account-
ing entry is required in Japan. Had the distribution been accounted for in the manner adopted by companies in the
United States of America, ¥201,078 million ($1,523,318 thousand) would have been transferred from retained
earnings to the appropriate capital accounts.
Conversions of convertible debt into common stock are accounted for in accordance with the provisions of the
Japanese Commercial Code by crediting approximately one-half of the conversion proceeds to the common stock
account and the remainder to the additional paid-in capital account.
The Japanese Commercial Code provides that an amount equal to at least 10% of cash dividends and other distri-
butions from retained earnings paid by the parent company and its Japanese subsidiaries be appropriated as a legal
reserve. The amounts of statutory retained earnings of the parent company available for the payments of dividends
to stockholders as of March 31, 1997 and 1998 were ¥507,253 million and ¥555,643 million ($4,209,417 thousand),
respectively. These amounts include cash dividends for the six-month periods ended March 31, 1997 and 1998,
respectively, which have been incorporated in the accompanying consolidated financial statements.
The appropriations of retained earnings for the year ended March 31, 1998, which have been incorporated in the
accompanying consolidated financial statements, will be proposed for approval at the general stockholders’ meeting
to be held on June 26, 1998 and will be recorded in the statutory books of account, in accordance with the Japa-
nese Commercial Code, after stockholders’ approval.
The ordinary general meeting of stockholders held on June 27, 1997 authorized the company, pursuant to the
Japanese regulations, to acquire and retire up to a total not exceeding 30 million outstanding shares of its common
stock with its profit, on and after June 28, 1997, whenever deemed necessary by the Board of Directors in view of
general economic conditions, the company’s business performance and financial condition and other factors. At
March 31, 1998, no common stock had been acquired under this authorization.
On May 7, 1998, the company’s Board of Directors resolved the following proposals to be approved by the general
stockholders’ meeting to be held on June 26, 1998. The proposals resolve that (a) in addition to the shares dis-
cussed in the preceding paragraph, on and after June 27, 1998, the company may, by a resolution of the Board of
Directors, acquire and retire up to a total not exceeding 30 million outstanding shares of its common stock with its
additional paid-in capital at prices in total not exceeding ¥400 billion ($3,030,303 thousand) and (b) the company
may grant share subscription rights to directors and/or employees pursuant to the Japanese regulations.
In February 1998, the company adopted a cash stock appreciation rights plan (the “SARs”) as an incentive plan
for selected employees. Under the terms of the plan, the SARs may be exercised during the period from 1999 until
2004. No compensation expense was recognized for the SARs in the year ended March 31, 1998 as the company’s
stock price did not exceed the strike price of the SARs.
An analysis of the changes in the minimum pension liability adjustment and the cumulative translation adjust-
ment are presented below:
Yen in millions Dollars in thousands
Year ended March 31 Year ended
1996 1997 1998 March 31, 1998
Minimum pension liability adjustment:
Balance, beginning of year . . . . . . . . . . . . . . . . . . . — — ——
Valuation adjustment, net of related income taxes. . . — — ¥(5,714) $(43,288)
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . — — ¥(5,714) $(43,288)
Cumulative translation adjustment:
Balance, beginning of year . . . . . . . . . . . . . . . . . . . ¥(411,167) ¥(302,503) ¥(181,221) $(1,372,886)
Aggregate translation adjustment for the year. . . . . . 114,461 127,705 35,985 272,614
Income taxes for the year allocated to translation
adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,797) (6,423) 4,511 34,174
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . ¥(302,503) ¥(181,221) ¥(140,725) $(1,066,098)