RNS Number:5759K
All Nippon Airways Co Ld
30 April 2003
ANA Reports Financial Results for Fiscal 2002
TOKYO April 30th, 2002 The ANA Group today reported a consolidated net loss of
Y28.2 billion (US$235.4 million) for the fiscal year 2002, which ended March
31st 2003. This compares with operating revenues of Y1,215.9 billion (US$10.1
billion), an actual year on year increase of +0.9%. Operating loss was Y2.5
billion (US$21.6 million), and recurring loss was Y17.2 billion (US$143.6
million).
Consolidated results refer to the ANA Group as a whole, including subsidiaries
that are not directly related to air transport, such as ANA Hotels. The total
number of companies included in these results is 133.
On a non-consolidated basis, referring to ANA (All Nippon Airways Co Ltd) alone,
the airline reported a net loss for the period of Y17.0 billion (US$ 142.0
million). Operating revenues were Y940.5 billion (US$7.8 billion), showing a
year on year increase of 2.8%. An operating loss of Y8.2 billion (US$68.8
million) was reported, and recurring loss ran at Y20.0 billion (US$ 167.1
million).
These results reflect the harsh operating environment of severe price
competition in the wake of the Japan Airlines/ Japan Air System merger, and the
cost of increased promotional campaigns to stimulate falling demand. This is
figured against a background of depressed economic activity in Japan as a whole.
The double blow of the Iraq war and the Sars outbreak at the very end of the
final quarter of the financial year had a negative impact on international
passenger numbers, which from September 2002 had actually shown a sharp
increase, after initial slow growth in the first half of the financial year.
Passenger numbers for the ANA Group Airlines* for the period under discussion
were 47.1 million on domestic routes, and 3.8 million on international,
demonstrating an increase of 2.9% and 10.1% respectively; total passengers
carried were 50.9 million, an increase of 3.4%. Available Seat Kilometres (ASK)
for the period were up 2.6% on domestic routes to 62,565,065 (thousand seat km),
and down -3.5% on international routes to 25,974,398 (thousand seat km).
Domestic and international load factors were up 1% and 6% to 64.6% and 72.1%
respectively.
ANA Group Airlines carried almost 580 thousand tons of cargo, an increase of
7.3%. Broken in to international and domestic operations, the respective
figures are 195.6 thousand tons (+27.9%) and 384 thousand tons (-0.8%). This
reflects strong demand, particularly from the Chinese market, in response to
which ANA began cargo freighter operations to China in September 2002.
Mail services by Group airlines saw an overall decline of 3.2% to 89.5 thousand
tons. This can be broken down into 11.2 thousand tons on international routes
(+54.7%) and 78.3 thousand tons on domestic (-8.2%).
All comparisons are year on year.
Looking to the present fiscal year (ending March 2004), ANA will continue to
press ahead with its three year cost reduction and reform plans, which are based
on improvements in network, the streamlining of the fleet and other moves to
realise greater efficiency and cost savings. Although world economic
uncertainty still remains following the end of the war with Iraq and the
continuing effect of the outbreak of Severe Acute Respiratory Syndrome, mid to
long term the demand for international flights to China and other parts of Asia
is expected to grow. Demand in Japan has also shown a stable recovery and
appears to continue to grow despite the deflationary spiral. As a group, ANA
expects to achieve a consolidated net income of Y15.0 billion (US$125.0 million),
and a recurring profit of Y15.0 billion (US$125.0 million) in fiscal 2003.
Contact : Rob Henderson r.henderson@ana.co.jp
*ANA Group airlines
Domestic routes: ANA (All Nippon Airways), ANK (Air Nippon), ADK (Air Hokkaido),
ANN (Air Nippon Network)
International routes: ANA (All Nippon Airways), ANK (Air Nippon), AJX (Air
Japan)
Note:
All monetary figures are rounded down. For comparison purposes only, figures
quoted in US$ are calculated at a rate of 1 US$ = Y120.
Operating income/ loss = operating revenues minus operating costs
Recurring profit/ loss = operating income/ loss minus income/ loss from
activities not related to the main field of operation
Fiscal year ended March 31, 2003
Consolidated financial results
All Nippon Airways Co., Ltd. (9202)
1. Consolidated financial highlights for the period ended March 31, 2003 (Fiscal
2002)
(1) Consolidated operating results
Yen (Millions rounded down)
Fiscal 2002 Year on Fiscal 2001 Year on
year (%) year (%)
Operating revenues 1,215,909 0.9% 1,204,514 (5.9%)
Operating income (loss) (2,597) - 22,968 (72.1%)
Recurring profit (loss) (17,236) - 1,400 (97.8%)
Net income (loss) (28,256) - (9,456) -
Net income (loss) per share (18.42 yen) (6.17 yen)
Diluted net income (loss) per share - -
Net income (loss) / Shareholders' equity (21.7%) (6.5%)
Recurring profit (loss) / Total assets (1,2%) 0.1%
Recurring profit (loss) / Operating revenues (1.4%) 0.1%
Notes:1. Gain (loss) on equity method: Fiscal 2002: 364m Fiscal 2001:
(804m)
2. Average number of shares of outstanding during the period (consolidated):
Fiscal 2002: 1,533,940,445 shares Fiscal 2001: 1,533,744,749 shares
3. Changes in the accounting policy during the period: none
(2) Consolidated financial positions Yen (Millions rounded down)
Fiscal 2002 Fiscal 2001
Total assets 1,442,573 1,510,982
Shareholders' equity 121,954 138,641
Shareholders' equity ratio 8.5% 9.2%
Shareholders' equity per share 79.57yen 90.40yen
Note:Number of shares of outstanding at balance sheet date (consolidated)
Fiscal 2002: 1,532,694,609 shares Fiscal 2001: 1,533,704,681 shares
(3) Consolidated cash flows Yen (Millions rounded down)
Fiscal 2002 Fiscal 2001
Cash flows from operating activities 85,952 33,993
Cash flows from investing activities (52,478) (123,927)
Cash flows from financing activities (63,364) 69,104
Cash and cash equivalents at the end of the 158,121 188,648
period
(4) Scope of consolidation and application of the equity method
Number of consolidated subsidiaries: 109
Number of non-consolidated subsidiaries accounted for by the equity method: 6
Number of affiliates accounted for by the equity method: 18
(5) Change of scope of consolidation and application of the equity method
Consolidation Equity method
Newly added 1 -
Excluded 10 3
2. Forecast of consolidated operating results for the period ending March 31,
2004
Yen (Millions rounded down)
Operating revenues 1,245,000
Recurring profit (loss) 15 ,000
Net income (loss) 15, 000
Note:Forecast of net income per share: 9.79yen
This forecast is made based on (1) the information available to ANA as of the
date of publication of this material and (2) assumptions as of the same date
with respect to the various factors which might have impact on the future
financial result of ANA. The reader should be aware that actual results could
differ materially due to various factors with reference to attachment page 13.
1. The ANA Group
The ANA Group comprises All Nippon Airways Co., Ltd (ANA) and its 143
subsidiaries and 41 affiliates. Of those companies, 109 are consolidated
subsidiaries and 24 are accounted for by the equity method. The Group's
operations are classified into four business segments: air transportation,
travel services, hotel operations, and other businesses. For each segment, the
fields of business and the operational positions of the parent company,
subsidiaries, and affiliates are described below:
As of March 31, 2003
No. of of which, of which, equity No. of of which,
Operational segment subsidiaries consolidated method affiliates equity method
Air Transportation 31 30 - 6 3
Travel Services 16 13 - 3 3
Hotel Operations 23 22 - 1 1
Other Businesses 73 44 6 31 11
Group Total 143 109 6 41 18
Air Transportation
Within the ANA group, the air transportation business and aircraft operation
business, which principally consist of passenger services, cargo and airmail
transportation, are mainly operated by ANA, Air Nippon Co., Ltd (subsidiary of
ANA), Air Japan Co., Ltd (subsidiary of ANA), and Nippon Cargo Airlines
(affiliate of ANA).
International Airport Utility Co., Ltd., ANA TELEMART Co., Ltd, ANA Aircraft
Co., Ltd and other companies in the ANA group provide services incidental to the
air transportation business and aircraft operation business, which include
airport customer services, telephone reservation and information services and
the maintenance of ANA aircraft. Passenger services, cargo handlings and
aircraft maintenance services are also provided to domestic and overseas
airlines other than the members of the ANA Group as clients of ANA.
Travel Services
Package tours under the brand names of ANA Hallo Tour and ANA Sky Holiday are
mainly planned and marketed by ANA Sales and Tours Co., Ltd, a holding company,
and its wholly owned subsidiaries, All Nippon Airways World Tours Co., Ltd., ANA
Sky Holiday Tours Co., Ltd., and All Nippon Airways Travel Co., Ltd. The
package tours mainly consists of air transportation services provided by ANA and
Air Nippon Co., Ltd, and accommodation services provided by ANA Hotels.
Overseas, ANA World Tours (Europe) Ltd. and other companies provide a range of
services to customers traveling on ANA Hallo Tour brand packages and sell
airline tickets and travel products.
Hotel Operations
Subsidiaries and affiliates, centered on ANA Hotels, Ltd., are providing a wide
range of hotel services including provision of lodging, meals, banquets, and
wedding receptions.
Other Businesses
Group companies provide communications, trading and sales, real estate, building
management, ground transportation and distribution, aircraft equipment
maintenance, and other services. ANA Information Systems Planning Co., Ltd.,
Infini Travel Information, Inc., and other members of the Group are principally
developing terminals and software for airline-related information. ANA Logistics
Services Co., Ltd., are operating warehouses for imported air cargo. All Nippon
Airways Trading Co., Ltd., and others are mainly conducting import-export of
airline related materials sold through stores and catalogs. ANA Real Estate Co.,
Ltd., and other companies carry out the sale, rental and management of real
estate, and affiliate Jamco Corporation and others provide the maintenance of
aircraft equipment. All Nippon Airways Co., Ltd., and ANA Group subsidiaries and
affiliates are customers for these products and services.
2. Management Policy
1. Keynote
While giving top priority to safety operation of airlines, we aim at wining
confidence of our customer and shareholders by improving the quality of air
transportation services and drastically increase the profit of the ANA group on
the whole.
2. Medium Term Management Strategies
Based on the Medium Term Management Plan, the Group has endeavored to improve
its profitability and to strengthen its financial position since the fiscal year
1999. However, the circumstances surrounding the Group have undergone dramatic
changes since fiscal year 2001 due to the September 11 terrorist attacks in the
United States and fierce domestic competition generated by the merger between
Japan Airlines and Japan Air System. To cope with the difficult situation, the
Group has reviewed the plans for route and flight volumes and implemented
measures in order to spur various demands. Additionally, the entire group has
reduced costs to improve the Group's profitability. However we are far from
where we should be.
In this severe management environment we have adopted the "ANA Group Corporate
Strategy Plan" providing guidelines for corporate management in the fiscal years
2002 and 2003 and the "Corporate Reform Plan" containing specific measures to
implement the Strategy Plan, and have steadily addressed each task in the Plan.
Under these plans, the ANA Group continues its endeavors to become a leading
corporate group in Asia with air transportation as its core. Its primary
target, however, is not to become the biggest airline company in Asia, but
rather to become the best company in quality of service, customer satisfaction
and value creation. Based on these targets, we make further efforts to pursue
"value creating management," so that income from domestic operations will be
stabilized, profitability from international operations improved and the
earnings of the ANA Group as a whole will improve in the fiscal year 2003 to
achieve dividend payment. We now determined to put into practice the following
action plans in order to increase customer satisfaction, and to improve our
financial conditions, and to pursue value creation.
(1) Group Management System
For the purpose of the formation of the unified corporate strategy and efficient
management, ANA is positioned as a holding company which is holding members of
the Group. Under the group management system, strategic management functions of
all the members of the Group are unified. We expect the competitive power of
the Group in the market place is strengthened under the Group Management System.
We also clarify the responsibility of the performance of each four business
unit (air transportation, hotel, real estate and trading) and establish the
operation system which allows us to implement the business strategy efficiently.
For this purpose, we have reviewed in this interim period the operation of the
transportation companies in the Group in accordance with the airline route.
ANA Business strategic function of the Group
Air transportation business strategic function of the Group
Business Strategy
Related Business
Group airline companies (Air
Nippon Co., Ltd., Air Japan
Co., Ltd, etc.)
(2) Management Strategy Implementation System
The tenure for each member of the Board of Directors and corporate officers has
been changed to one year with a view to clarifying the management accountability
for target achievement per fiscal year. Putting the right persons in the right
positions precisely, we will make both the management strategy implementation
systems of the Group and business implementation system of each member of the
Group more efficiently.
(3) Management Control System
Management Control for "ANA Group" shall be executed based on each group
business operations, namely, air transportation, hotel, real estates and
trading. Meanwhile, "ANA's Value Creation (AVC)" management index, which was
introduced during the year under review, will be revised and during the current
fiscal year so that all group companies will have common value standards under
their respective AVC. AVC is ANA's management index introduced in the fiscal
year 2001 to create the shareholder value, and represents a balance obtained by
subtracting the amount of capital spent from after-tax operational profits.
Target control under the new system will be executed with the aim of increasing
the shareholder value by raising AVC number.
(4) Sales System
ANA Sales & Tours Co., Ltd ("AST") started its business operation in April 2002.
AST was a holding company of three travel agencies in the Group, namely, All
Nippon Airways World Tours Co., Ltd., All Nippon Airways Travel Co., Ltd. and
All Nippon Airways Sky Holiday Tours Co., Ltd. established in January 2001 under
the name of ANA Sales Holdings Co., Ltd. ANA Sales Holdings changed its name
into AST after merged its three subsidiaries. With this fresh start AST is
aiming at assuming more delegation of ANA business, progressing more integration
of business resources of its former subsidiaries, such as "Sales Network",
"Know-How" and "Personnel", strengthening sales capability, reducing cost,
increasing competitiveness of travel packages sold under ANA Brand, and
improving profitability of the group on the whole.
(5) Domestic Route Operations
With respect to domestic flights the ANA Group aims to improve its profitability
by adding flights to high demand routes such as Tokyo-Osaka, Tokyo-Fukuoka,
Kansai-Fukuoka, and Fukuoka-Okinawa routes, while continuing restructuring of
flight routes including reducing or canceling flights in low demand routes.
Additionally, ANA will reduce the flight operation cost thorough expansion of
delegating the flight operations to Air Nippon Co., Ltd. and integration of
aircrafts models. ANA also plans to introduce new flight operation delegation
system to meet the variable flight operation demand more flexibly.
Furthermore, the Company launched the new regional flight services by using
turboprop aircrafts departing from or arriving at Itami Airport and strives
expansion of network of domestic routes with starting operation of Osaka-Kochi
route by Air Nippon Network, a subsidiary of ANA, using Bombardier DHC-8-400
from October.
(6) International Route Operations
In addition to increase fights on China routes such as Tokyo-Dalian,
Tokyo-Tsingtao, and Tokyo-Xiamen routes, ANA establishes daily service on
Kansai-Beijing route. ANA continues to increase its transportation capacity in
short distance Asian routes, with the emphasis on the China routs, and establish
transportation network in Asia. On the other hand, Tokyo-Honolulu and
Kansai-Seoul routes were transferred to Air Japan Co., Ltd., its subsidiary, in
order to reduce operation cost. Moreover, expanding the routes of Boeing 747
-400 with a new first class seats equipped with the biggest
full-flat-wide-bed-seats in the world surrounded by partition making private
place setting surrounding the seat, ANA continues to distinguish itself from its
competitors to attract more customers.
(7) Related Business Operations
With primary emphasis on maximizing return on investment, the ANA Group will,
under the Corporate Reform Plan, seek to improve the profitability of hotel,
trading, real estates, and other diversified businesses. Steps will be taken to
reduce interest-bearing debts through curtailment of investments by optimum
redistribution of existing management resources and recovery of cash by selling
and securitisation of its assets. Furthermore, in hotel business, the Company
will seek to further increase of GOP (Gross Operating Profit) through
introduction of hotel management system in ANA Hotels Ltd., to support our chain
hotels operation and enhancement of equipment and products of each hotel. ANA
will increase the corporate value of its hotel business and securitize its
assets in relation to the hotel business to achieve off-balance treatment to
enhance its balance sheet.
Recognizing the hardship of current management environment under constant
progress of deflation economy, ANA has adopted, in addition to the "Corporate
Reform Plan", the "Cost Reduction Plan" in order to implement fundamental reform
of cost structure over three years from fiscal 2003 to 2005. By the
accomplishment of the following each item in the "Cost Reduction Plan" along
with the "Corporate Reform Plan", the Company will reduce cost approximately
amounting to 30 billion Yen in the entire group in the last planned fiscal year.
(1) Downsizing of aircrafts by reflecting trends in demand
(2) Integration of model of aircrafts, from 9 models at present to 6
models
(3) Restructuring of routes operated by turboprop aircrafts
(DHC-8-400) and improvement of operation by small aircrafts
(4) Reducing employees and facility at airports by restructuring of
routes and aircrafts
(5) Reexamination of retirement allowance and pension plan
(6) Reduction of the level of the retirement benefits paid from
trustee employee pension funds
(7) Reexamination of wages for management employees.
(8) Comprehensive reexamination of wages systems for non-management
employees
(9) Personnel reduction of 1,200 employees
3. Corporate Performance and Financial Conditions
1. OVERVIEW
In the first half of the current fiscal year, we could see a sign of recovery of
Japanese economy, such modest increase in production based on the expansion of
export to China and other Asian countries. In the latter half of the fiscal
year, however, the economic situation surrounding Japan became in severity
evidenced by further plunge in stock price due to general concern about the
future of US economy and uncertainty of international political situation.
Moreover, the recovery of Japanese economy was slowing down due to the continual
slowdown in consumer spending reflecting severe employment situation and income
environment based on aggravation of deflation. We have to admit that the
Japanese economy has not yet recovered in full scale. .
Under these circumstances, ANA's consolidated revenue totaled Y1,215.9 billion
(up 9.5%), operating loss Y2.5 billion, and recurring loss Y17.2 billion. The net
loss for the year stood at Y28.2 billion after transfer of extraordinary profits
from the sale of investment securities to loss on sale of affiliated
enterprises, extraordinary losses including those resulting from appraisal on
investment securities, corporate tax and adjustments of tax amounts through tax
effect accounting.
On a parent company basis, revenue for the period came to Y940.5 billion (up
2.8%), operating loss Y8.2 billion, and recurring loss Y20.0 billion. Following
an extraordinary loss on the reorganization of the hotel business, net loss for
the year was Y17.0 billion.
The following is a summary of operating results by business segment.
Air Transportation
As for domestic airline business, the merger between Japan Airline Co., Ltd and
Japan Air System Co., Ltd to establish Japan Airline System, an integrated
holding company of both companies in October 2002 has lead fierce competition
among airline companies, such as air fare reduction competitions and various
campaigns to attract domestic airline customers.
As for international airline business, demand has been recovered slowly since
the bottom of demand due to simultaneous multiple terrorist attacks in the
United States. In particular, all the airline companies enhanced routes with a
central focus on the China routes because of increase in demand of international
transportation based on economic expansion in Asian areas. However, tension of
Iraqi situation had a serious impact on demand for passenger services in the
latter half.
While we increased the number of flights with a central focus on main lines
arriving and departing at Haneda Airport in prospect of demand in domestic
lines, we drastically expanded transportation capacity in highly profitable
lines by code share with other airline companies including Hokkaido
International Airlines Co., Ltd. and also enhanced our services by connecting
with international flights arriving and departing at Narita Airport. We have
thus endeavored to expand our income through efforts to increase revenue beyond
the framework of the group. In addition to the above, the slot of ANA group at
Narita has been dramatically increased with the start of the operation of a
provisional parallel runway at Narita Airport on April 18, 2002. . This allowed
us to establish the foundation of international air transportation network using
Narita as the hub, which is the realization of our long waiting dream since
1986, the year of the inauguration of our international flights. A large
bottleneck impeding our international business development has been gotten rid
of at last and we are now able to make full-fledged efforts to meet the high
demand of business customers in the metropolitan market. Accordingly, we
enhanced our routes including short-distance Asian routes and we opened new
routes and increased the number of flights in the China routes with good
prospect of growth in demand because of its high profitability.
However, under the circumstances where business demand was in sluggish growth in
domestic routes due to lag in business recovery, price competition among airline
companies grew more intense and business demand in international routes was
declined due to the tension of Iraqi situation. As a result of the above,
revenue from air transportation for the year under review totaled Y992.4 billion
(up 1.4%) and operating loss was Y6.9 billion.
Domestic Passenger Services
As for domestic passenger services, we increased main routes in high demand such
as Tokyo to Sapporo, Osaka, Fukuoka, Okayama, Hiroshima, Takamatsu, Kagoshima at
Haneda Airport or competing routes with JR and enhanced our competitiveness. In
addition, Air Nippon Co., Ltd. newly established Tokyo-Ishigaki route and
Kansai-Ishigaki route, while four routes were suspended as well as reducing some
routes and entrusting operation to Air Nippon Co., Ltd. Moreover, from February
we started code share with Hokkaido International Airline Co., Ltd. regarding 12
flights of 6 round trips between Tokyo and Sapporo which said company is
operating. As a result, our flights increased to 24 round trips between Tokyo
to Sapporo and our number of flights are comparable to those of Japan Airline
System Co., Ltd. which dramatically enhanced its transportation capacity by
integration. At the same time, we newly established Narita-Fukuoka route and
added more flights on Narita-Sapporo, Narita-Osaka and Narita-Nagoya routes in
addition to establishment of Narita-Sendai by code share respectively with the
Fair Incorporated and Nakanihon Airline Co., Ltd. and have made efforts to
improve connection services between international and domestic routes at Narita
Airport called "ANA Connection".
As for marketing, in July, we launched "Web Wari" (web discount) which offers a
discount of up to 29% in fares if reservations were made via the Internet or by
a mobile phone. Moreover, in the last half, we launched gIchinichi Norihodaih
(unlimited flight for a day) fare whereby passengers could take all the flights
in domestic routes unlimitedly for 10,000 yen for a day or "Furusato Waribiki",
discounted fares by destination whereby passengers could take a specific route
for 10,000 yen in addition to the established super-discount fares "Chowari".
We have thus endeavored to stimulate demand by satisfying the diversifying
passengers' needs precisely. In addition to the above, as for the co-venture
commodity with JR, "Air Rail", we newly added business partners, Shikoku Railway
Company, East Japan Railway Company and Hokkaido Railway Company to the present
business partner, "Kyushu Railway Company" and have endeavored to enhance
services.
As a result, the number of domestic route passengers increased 2.9% to 47.13
million. However, revenue decreased 2.4% to Y646.8 billion due to substantial
drop in unit price for a passenger by intensive price competition among airline
companies.
Domestic Cargo and Mail Service
Domestic distribution of goods slumped amidst the sluggish economy and some air
cargoes were switched to land transportation due to tightened inspections for
explosives following the terrorist attacks of the last year. As a result, the
volume of handling has been changing to the lower level than that for the
previous fiscal year from the beginning of this fiscal year. Although the
volume in September showed a recovery from the slow demand that had continued
after the terrorist incidents and the volume exceeded that for the previous
fiscal year, the recovery of demand was slow and the volume in the latter half
of the fiscal year was again below that for the previous fiscal year. Under
these circumstances, we adopted Boeing 767-300F, cargo flight which had been
mainly used for domestic services or charter flights, and we flexibly changed in
kinds of airplanes in response to the demand of cargos and took various measures
to increase revenue.
As a result, compared with the previous fiscal year, the volume of cargo carried
during the current fiscal year decreased by 0.8% to 383,000 tons and revenue
dropped by 1.7% to Y24.3 billion.
As for the mail service, in July and November, the Postal Service Agency
implemented large-scale switch of means of transportation from air
transportation to cargo truck. Consequently, the volume was far below that for
the previous fiscal year and the tonnage during this fiscal year decreased by
8.2% to 78,000 tons and revenue was dropped by 8.1 % to Y10.5 billion compared to
those for the previous fiscal year.
International Passenger Services
With substantial increase in the slots at Narita, we opened new Narita-Xiamen
and Narita-Taipei routes and doubled the daily flights in Narita-Beijing,
Narita-Shanghai, Narita-Hong Kong, Narita-Seoul and Kansai-Shanghai routes, and
concentrated our efforts on expanding the short-distance Asian route network,
primarily the China routes which have a strong increase of demand.
Consequently, the number of passengers on the China routes increased drastically
and especially the number of passengers in business class rose remarkably. In
addition, we operated daily flights from Narita to San Francisco, Honolulu,
Frankfurt, Singapore and so on and also improved the convenience for passengers
using flights to China and Asian area via Narita from Europe and the United
States for business.
As for services, we introduced "New Style CLUB ANA" which enables to recline
seats flatly for business class and "Premium Economy" in economy class which
offers seats with the same distance between seats and the width as those for
business class in Boeing 747-400 which is in service between Narita to London
from April. From the last half of this fiscal year, we also increased flights
with the above Boeing 747-400 for the route between Tokyo and Frankfurt.
Furthermore, from December, we introduced Boeing 747-400 which has first class
providing a full flat wide bed sheet with partition which enables each seat to
be a complete compartment for the route between Narita and London, and we have
thus endeavored to differentiate us from other airline companies in order to
satisfy the customersf needs.
As for marketing, we implemented moderation of the criteria for application of
"Biji Wari" (business discount) which offers regular discount fare for business
class based on advance purchase system and expansion of applicable cities for
such service. In addition, we carried out revision of system for increase of
business demand and various campaigns. For example, from October we offers
"Okaeri Hire Service" (hired car service for return) whereby passengers using
business class both ways could take a hired car from an airport to designated
place on their arrival or "Okaeri Taxi Campaign" (taxi service for return) which
provides a taxi coupon to passengers who used first or business class both ways
on the Asian and China routes.
As a result, the number of international flight passengers during this fiscal
year increased by 10.1% to 3,780,000 and revenue increased by 9.3% to Y185.4
billion.
International Cargo and Mail Services
Reflecting signs of recovery of US economy, our international cargo and mail
service business showed steady growth in the first half of the fiscal year.
This good performance continued in the latter half of the fiscal year.
Contributing factors to the continued grow in the latter half includes (1)
temporary shift of cargo transportation route from sea to air due to harbor
strike in West Coast of the United States, (2) increase of cross border
commodity flow due to growing international tension in relation to Iraq, (3)
steady automobile parts commodity flow all over the world (significant
contribution factor). In September of 2002, we introduced Boeing 767-300F, our
first aircraft exclusively used to cargo transportation and tried to expand the
cargo transportation services mainly to and from China. We started "PRIO",
international priority service, started from April 2001. We newly introduced
"PRIO DOOR", "PRIO COOL", "PRIO SPACE" AND "PRIO SENSITIVE" to the lineup of
Prio from the end of this fiscal year in order to respond to more demanding and
diversified international transportation needs.
As a result, the total volume of international cargo during the period increased
by 27.9% to 195 thousand tons and revenue was up 22.6% to Y40.3 billion.
With respect to the Mail Services, incoming mail from abroad continued to grow
reflecting (1) the increase of flights on China route, (2) introduction of daily
flight service between Narita and San Francisco and (3) newly established
international mail services from Europe to Japan.
As a result, the total amount of international mail handled during the year
increased by 54.7% from the previous fiscal year to 11 thousand tons and revenue
was up 36.7% to Y3 billion.
Other Business
The ANA Group sought to expand revenues from such other sources as providing
other carriers with aircraft maintenance, passenger check-in, baggage loading
and other ground services, as well as from increased in-flight sales. The
revenues from these sources increased by 9.7% to Y81.8 billion.
Changes in Fleet Composition
The following shows the changes in ANA Groupfs feet composition during this
fiscal year.
Equipment A B C D E F Remarks
Boeing 747-200B 1 -1 1 sold in April 2002
Boeing 747-100SR - - 1 -1 1 returned in Sept. 2002
Boeing 767-300 3 4 - - - 7 1 purchased in May 2002
2 purchased in Aug. 2002
1 leased in June 2002
2 leased in July 2002
1 leased in Aug. 2002
Boeing 767-200 - - 4 - 1 -5 1 returned in June 2002
1 returned in Sept. 2002
1 returned in Jan. 2003
1 returned in March 2003
1 removed in Sept. 2002
Airbus A321-100 - 6 - - 6 0 6 sold in September. 2002
6 leased in Sept. 2002
Boeing 737-500 - 2 - - - 2 1 leased in April 2002
1 leased in May 2002
Bombardier DHC-8-300 - 2 - - - 2 1 leased in April 2002
1 leased in Jan. 2003
YS-11 - - - - 3 -3 1 sold in May 2002
1 sold in Nov. 2003
1 sold in Jan. 2003
Total 3 14 5 - 11 1
Legend: A = Purchased; B = Leased from; C = Returned; D = Leased to; E = Sold/Removed; F = Change
Travel Services
Our travel services had to endure under difficult situation for travel service
industry due to recession of domestic economy and growing international tension
generated from Iraq.
In the last fiscal year, demand for tour to Kansai area was high reflecting the
popularity of the Universal Studio in Japan opened in last fiscal year. The
demand for tour to Kansai in this fiscal year did not continue to be in the high
level as before. Package price of all tour was forced to reduce due to increase
of competition among domestic airline companies. Domestic travel performance on
the whole fortunately exceed that in the previous fiscal year both in terms of
numbers of passengers and the amount of sales as the result of our aggressive
marketing focusing on Hokkaido ski tours Okinawa tour.
For overseas tours, we made marketing effort focusing on "safety tour"
responding to very slow recovery of demand for overseas tour after the terrorist
attack. We also introduced Club ANA with reasonable fee arrangement. As a
result of our marketing effort, the number of tourist and revenue were increased
in this fiscal year compare to those in previous fiscal year. Our aggressive
marketing effort was not fruitful partly due to the occurrence of Iraq war and
SARS at the end of this fiscal year.
Total revenue in the travel service sector, including both domestic and
international, reached Y162.8 billion for the year, an increase of 2.7% from the
previous year, resulting in operating profit of Y500 million.
Hotel Business
As for domestic hotel business, ANA hotels, as a series of supporting entire
hotel chain under the restructuring plan, have established and implemented new
marketing system to increase revenue of the entire hotel change and introduced
and implemented effective income control method by introducing uniform
accounting standard including IT system. To increase the quality of facilities
and business operation of ANA Hotel Tokyo, our flagship, renovation of the lower
and middle floors of the Hotel were underwent and "Premium Floor" and "Premium
Upper Floor were created. To reduce energy cost and destruction of environment,
ANA Hotel Tokyo, Narita and Hiroshima underwent reforms in their energy
facilities to lower energy consumption during the Hotel business operation.
As for hotel business outside of Japan, we sold shares in Beijing Shinseiki
Hanten in June 2002, ANA Hotel Vienna in July 2002, ANA Harbor Grand Hotel
Sydney in August 2002. These sales of shares were reflecting our effort to
improve our financial conditions by redeeming capital investment and applying
the proceeds to reduce interest bearing debt. We completed our restructuring
plan for hotels overseas.
During this fiscal year, we continued to face the unprecedented hardship in
hotel industry: the recession of both Japan and US; (2) reduction of business,
in particular accommodation and banquet business partly due to Iraq war; (3)
change of the value of the customers that leads the reduction of the usage of
Hotels, and (4) excessive competitions among competitors.
As a result, revenue from the hotel business during the fiscal year totaled Y72.7
billion, down 3.9% from the previous year, and operating loss stood at Y1.2
billion.
Other Businesses
Infini Travel Information Co., Ltd., providing a reservation and ticketing
system for international flights, substantially increased in revenue and profits
mainly due to the recovery from the aftermath of last year's synchronized
terrorist attacks and the substantial increase in the number of overseas
tourists.
Revenue from trading and selling of goods by ANA Trading Co., Ltd by ANA Trading
Co., Ltd exceeded the results of the same period of the previous year in all
businesses except aircraft parts. Especially wide range of businesses such as
in-flight sales of ANA 50th anniversary project, sales of semiconductor parts
into new market and sales of banana made in Philippine under private brand had
substantially increased sales. However, total revenue showed a decline due to
substantial decrease of revenue from aircraft parts business.
ANA Real Estate Co., Ltd. which sells and rents real estate and maintains
buildings, renovated a number of buildings to provide high quality office
environment required by tenant company, and was successful in maintaining high
occupancy ratios and in increasing rental revenue and profits. Due to
declaration of extraordinary loss by dissolution of a subsidiary company
previously doing golf courses development business, loss of Y1.1 billion for the
current term was declared.
ANA Information System Planning Co., Ltd is receiving orders from the Group for
developing, maintaining and operation information system of the Group. The
Company was strongly supporting the Group to establish IT infrastructure of the
business operation system of the Group on the whole. The Company also steadily
operate its business of (1) developing, maintaining and operating information
systems of passenger, cargo, transportation, crew, aircraft maintenance of the
Group, (2) providing similar services to the customers outside of the Group, and
(3) developing, maintaining and operating IT infrastructure. As the result of
the good performance of the Company in this fiscal year, the revenue of the
company increased compare to the previous fiscal year.
As a result, total sales of Other Businesses during this reporting period came
to Y173.1 billion, down 8.0% from the same period of the previous year, while the
operating profit was posted at Y5.3 billion.
2. CASH FLOW
The trend of indicators of cash flow of ANA Group is as follows:
Fiscal 1999 Fiscal 2000 Fiscal 2001 Fiscal 2002
Capital-to-assess ratio (%) 6.4 10.4 9.2 8.5
Capital-to-assess ratio calculated at fair 28.0 43.9 34.8 23.4
market value
Redemption period (year) 14.4 6.3 29.9 11.0
Interest coverage ratio 2.0 4.2 1.2 3.8
* Capital-to-assess ratio: Shareholders' Equity / Total Assets
Capital-to-assess ratio calculated at fair market value: total fair
market value of sharesstock
Redemption period (year): Interest-bearing debtsliability / Cash flows
from operating activities
Interest coverage ratio: Cash flows from operating activities / Interest payment
(1) Each indicator is calculated based on the information included in the
consolidated financial statements by financial value in the consolidated basis
(2) Aggregated amount of the fair market value of shares Total market value is
calculated as follows: Average share price at Closing stock average at the end
of fiscal period x Total number of outstanding shares at the end of fiscal
period.
(3) The number of the Cash flows from operating activities employed is employed
from the numbers used in the Cash flows from operating activities of
Consolidated cash flows statement. The number of the interest-bearing debts is
based on the number of interest-bearing debts booked on the Consolidated Balance
Sheet.Interest-bearing liability covers liabilities which interest has been paid
out of liabilities accounted for in Consolidated balance sheet.
3. BASIC POLICY for DIVIDEND
The Company considers it an important task to strive to strengthen stable
management base and to reward its shareholders with a proper return.
During the fiscal year under review, the Company was beset with a number of
unfavorable factors. There was a severe price competition among the airline
companies, since the business demand in domestic line saw a sluggish growth due
to the slow economic recovery. Also, the business demand for international
flights was decreased due to the tense condition concerning Iraq. Furthermore,
the Company suffered an extraordinary net loss in non-consolidated settlement as
a result of the reorganization of the hotel business including withdrawal from
oversea hotel business. Therefore, the Company regretfully cannot help pass
over dividends to its shareholders followed by the previous fiscal year.
4. FORECAST for NEXT FISCAL YEAR
Regarding the forecast for the results of the next fiscal year, it seems that
the domestic demand continue to be a lower level since uncertainty over economic
conditions in Japan remains. Regarding the overseas, there still remains
uncertainty over the economic recovery in USA after the war with Iraq and also
the effect of the rapid expansion of Sever Acute Respiratory Syndrome (SARS) in
Asia to the world economy is concerned. .
Under these circumstances, it is likely that, in the Japanese airline industry,
the demand for international flights would remain sluggish for the time being
and it is also difficult to expect a significant increase of the demand for
domestic flights. However, the demand for international flights to China and
other Asian countries is expected to grow up in a mid-and-long
term and demand for domestic flights has shown a stable recovery and also
appears to continue to grow up even in the deflationary situation in Japan.
Under these economic circumstances, the Company will continue to implement
"Group Management Reform Plan" and also carry out the reform of cost calculation
during three years from fiscal year 2003 to fiscal year 2005 based on "Further
Cost Reduction Plan", which was newly introduced, in order to resume dividend
from fiscal year 2003 to be ended March 31, 2004.
Regarding travel services, hotel business, and other businesses, the Company
will aim to improve its profit by increase of revenue due to the aggressive
marketing efforts and continual cost cutter.
For the fiscal year ending in March 2004, the Company calculates sales amount
of Y1,245.5 billion (grew by 29.1 billion compared with the previous year),
operating income of Y25.0 billion (grew by Y27.5 billion compared with the
previous year), recurring income of Y15.0 billion (grew by Y32.2 billion compared
with the previous year), and net income of 15.0 billion (grew by Y43.2 billion
compared with the previous year) in consolidated basis.
Assumption used in arriving at these figures are an exchange rate of 125 yen to
1 dollar and market price of Dubai crude oil, which is an indicator of jet fuel
price, of US$24 per barrel. The future profit and investment plan of the
Company are as follows:
(O) Forecast of Consolidated Operating Result (Unit: 100million yen)
Classification Fiscal year 2002 ending March 2003 Fiscal year 2003 ending March 2004
(Forecast)
(Actual results)
Operating revenues 12,159 12,450
Operating expenses 12,185 12,200
Operating profit ^ 25 250
Recurring profit ^ 172 150
Net income ^ 282 150
Total 9,454 10,010
interest-bearing
liability
Lease liability 2,947 2,820
(O) Forecast for Non-Consolidated Operating Result (Unit: 100 million yen)
Classification Fiscal year 2002 ending March 2003 Fiscal year 2003 ending March 2004
(Forecast)
(Actual results)
Operating revenues 9,405 9,880
Operating expenses 9,487 9,700
Operating profit ^ 82 180
Recurring profit ^ 200 100
Net income ^ 170 50
Total 7,776 8,540
interest-bearing
liability
Lease@liability 2,662 2,720
(O) Investment Plan of ANA Group
(Units: 100 million yen)
Fiscal 2003 (Forecast)
Flight Aircraft 930
Service Repair of cabin 70
System 140
Others 120
Sub total 1,260
Diversification business 50
Total 1,310
(1) Consolidated Balance Sheets Unit: Ymillion
Assets Fiscal 2002 Fiscal 2001 Difference
Current assets 355,996 407,833 (51,837)
Cash and deposits 154,876 159,340 (4,464)
Trade accounts receivable 94,435 92,783 1,652
Marketable securities 2,458 27,370 (24,912)
Inventories 55,803 55,001 802
Deferred tax assets 12,405 6,213 6,192
Other current assets 36,393 70,067 (33,674)
Allowance for doubtful accounts (374) (2,941) 2,567
Fixed assets 1,085,905 1,101,623 (15,718)
(Tangible fixed assets) (851,044) (910,130) ((59,086))
Buildings and structures 180,959 210,743 (29,784)
Aircraft 437,231 445,371 (8,140)
Machinery, Equipment and vehicles 17,423 18,618 (1,195)
Tools and fixtures 16,118 19,158 (3,040)
Land 115,537 119,966 (4,429)
Construction in progress 83,776 96,274 (12,498)
(Intangible fixed assets) (42,679) (30,622) (12,057)
Consolidation adjustment account - 77 (77)
Other intangible fixed assets 42,679 30,545 12,134
(Investments and others) (192,182) (160,871) (31,311)
Investment securities 67,572 63,639 3,933
Long-term loans receivables 27,941 25,978 1,963
Deferred tax assets 49,713 23,489 26,224
Other investments 54,002 54,712 (710)
Allowance for doubtful accounts (7,046) (6,947) (99)
Deferred assets 672 1,526 (854)
Total assets 1,442,573 1,510,982 (68,409)
Unit: Ymillion
Liabilities Fiscal 2002 Fiscal 2001 Difference
Current liabilities 317,938 444,863 (126,925)
Trade accounts payable 126,911 123,896 3,015
Short-term loans 22,132 77,586 (55,454)
Current portion of long-term debt 61,784 74,685 (12,901)
Current portion of bonds payable - 69,210 (69,210)
Accrued income taxes 2,695 1,744 951
Bonus payment reserve 14,350 14,338 12
Other current liabilities 90,066 83,404 6,662
Long-term liabilities 992,375 915,189 77,186
Bonds payable 351,732 302,789 48,943
Long-term loans payable 509,747 493,553 16,194
Accrued employeesf retirement benefits 106,780 88,980 17,800
Consolidation adjustment account 666 - 666
Other long-term liabilities 23,450 29,867 (6,417)
Total liabilities 1,310,313 1,360,052 (49,739)
Minority interest 10,306 12,289 (1,983)
Shareholders' equity
Common stock 86,239 86,239 -
Capital surplus 104,228 104,232 (4)
Earned surplus (67,388) (39,198) (28,190)
Unrealized gains (losses) on securities 223 560 (337)
Foreign currency translation adjustment (404) (12,462) 12,058
Treasury stock (944) (730) (214)
Total shareholdersf equity 121,954 138,641 (16,687)
Total liabilities, minority interest and shareholdersf 1,442,573 1,510,982 (68,409)
equity
Note: Accumulated depreciation: Fiscal 2002:880,443 million, Fiscal 2001:
888,347 million
Unit: Ymillion
(2) Consolidated Statements of Income (Loss)
Fiscal 2002 Fiscal 2001 Difference
Operating revenues and expenses
Operating revenues 1,215,909 1,204,514 11,395
Operating expenses 957,167 923,361 33,806
Sales, General and administrative expenses 261,339 258,185 3,154
Operating income (loss) (2,597) 22,968 (25,565)
Non-operating income and expenses
Non-operating income 47,504 31,682 15,822
Interest income 5,116 6,386 (1,270)
Others 42,388 25,296 17,092
Non-operating expenses 62,143 53,250 8,893
Interest expenses 25,283 28,758 (3,475)
Others 36,860 24,492 12,368
Total Recurring Profit (loss) (17,236) 1,400 (18,636)
Extraordinary gains 1,578 1,922 (344)
Gain on sale of investment securities 527 1,132 (605)
Gains on sales of fixed assets 204 490 (286)
Others 847 300 547
Extraordinary losses 39,163 10,500 28,663
Loss on sales of affiliates 22,890 I 22,890
Loss on liquidation of affiliates 4,024 I 4,024
Valuation loss on investment securities 3,373 2,127 1,246
Special retirement benefit 3,191 1,312 1,879
Others 5,685 7,061 (1,376)
Net income (loss) before taxes (54,821) (7,178) (47,643)
Corporate, inhabitant and enterprise tax 3,888 6,115 (2,227)
Deferred taxes (31,717) (3,871) (27,846)
Minority interest 1,264 34 1,230
Net income (loss) (28,256) (9,456) (18,800)
(3)Consolidated Statements of Surplus Unit: Ymillion
Fiscal 2002 Fiscal 2001
Capital surplus
Capital surplus at the beginning of period 104,232 104,232
Decrease in surplus 4 -
Decrease resulting from disposal of treasury stock 4 -
Capital surplus at the end of period 104,228 104,232
Earned surplus
Earned surplus at the beginning of period (39,198) (24,004)
Increase in surplus 103 959
Increase resulting from excluded consolidated 103 959
subsidiaries
Decrease in surplus 28,293 16,153
Net loss 28,256 9,456
Decrease resulting from newly consolidated subsidiaries 37 6
Decrease resulting from changes in equity interest in - 6,647
subsidiaries and affiliates
Decrease resulting from excluded affiliates - 35
Director bonus - 9
Earned surplus at the end of period (67,388) (39,198)
(4) Consolidated Statement of Cash Flows
Unit: Ymillion
Fiscal 2002 Fiscal 2001
I. Cash flows from operating activities
Net income (loss) before taxes (54,821) (7,178)
Depreciation 61,852 61,337
Loss (gain) on sale of fixed assets, loss on removal of fixed 14,302 7,474
assets (Net)
Loss (gain) on sale and revaluation of marketable securities (Net) 3,628 1,269
Loss on sale of affiliates 22,890 -
Loss on liquidation of affiliates 2,503 -
Increase (Decrease) in Allowance for doubtful accounts (142) 2,871
Increase (Decrease) in employeesf retirement benefits 17,802 11,399
Interest expenses 25,283 28,758
Interest and dividends income (6,843) (7,143)
Currency loss (gain) 48 1,101
Rebate on purchasing aircraft (5,976) -
Special retirement benefit 3,191 1,312
Decrease (Increase) in trade accounts receivable (2,239) 8,846
Decrease (Increase) in other receivable 27,741 (18,132)
Increase (Decrease) in trade accounts payable 3,269 (12,957)
Others (10,978) (5,638)
Sub-total 101,510 73,319
Interest and dividend received 6,875 7,143
Interest paid (22,392) (28,889)
Corporation and other taxes paid (6,155) (18,726)
Receipt of rebate on purchasing aircraft 5,976 -
Special retirement benefit paid (3,191) (1,312)
Others 3,329 2,458
Net cash provided by (used in) operating activities 85,952 33,993
II. Cash flows from investing activities
Payment for acquisition of tangible fixed assets (112,570) (124,530)
Proceeds from sale of tangible fixed assets 72,805 7,432
Payment for acquisition of intangible fixed assets (17,293) (7,878)
Payment for acquisition of investment securities (13,143) -
Proceeds from sale of investment securities 2,153 2,949
Proceeds from sale of subsidiariesf stock 16,998 -
in connection with changes in scope of consolidated companies
Payment for lending (2,240) (6,833)
Proceeds from collection of loans 6,412 7,465
Others (5,600) (2,532)
Net cash provided by (used in) investing activities (52,478) (123,927)
III. Cash flows from financing activities
Increase (Decrease) in short-term loans (49,366) (3,777)
Proceeds from long-term loans 110,710 169,463
Repayment of long-term loans (103,446) (78,506)
Proceeds from issuance of bonds 49,748 19,904
Redemption of bonds (70,267) (31,510)
Payment for acquisition of treasury stock (391) (46)
Others (352) (6,424)
Net cash provided by (used in) financing activities (63,364) 69,104
IV. Effect of exchange rate changes on cash and cash equivalents (795) 1,786
V. Net increase (decrease) in cash and cash equivalents (30,685) (19,044)
VI. Cash and cash equivalents at the beginning of the period 188,648 207,717
VII. Net increase (decrease) resulting from changes in scope of 158 (25)
consolidated companies
VIII. Cash and cash equivalents at the end of the period 158,121 188,648
Notes to Consolidated Financial Statements
All Nippon Airways Co., Ltd. and its consolidated subsidiaries
Fiscal 2002 and 2001
1.Important items for the basis for preparation of consolidated financial
statements
All Nippon Airways Co., Ltd. (the "Company") and its domestic subsidiaries
maintain their books of account in accordance with the relevant provisions under
the Japanese -Commercial Code and in conformity with accounting principles and
practices generally accepted in Japan, which may -differ in some material
respects from -accounting principles and practices generally -accepted in
countries and jurisdictions other than Japan. The Companyfs foreign subsidiaries
maintain their books of account in conformity with accounting principles -and
practices of the countries of their domiciles.
2.Summary of significant accounting policies
(a) Principles of consolidation and accounting for investments in
non-consolidated subsidiaries and affiliates
The consolidated financial statements include the accounts of the Company and
all of its important subsidiaries. All important intercompany -accounts and
transactions have been eliminated.
Investments in certain subsidiaries and important affiliates are -accounted for
by the equity method of accounting. The difference between the cost and the
underlying net equity in the net assets on dates of acquisition of consolidated
subsidiaries and companies accounted for by the equity method of accounting is
amortized using the straight-line method over a period of five years.
Investments in non-consolidated subsidiaries and affiliates not accounted for
by the equity method of accounting are stated at cost. The companies' equity in
undistributed earnings of these companies is not significant.
The accounts of certain foreign subsidiaries have fiscal years ending on
December 31. The necessary adjustments for significant transactions, if any, are
made on consolidation.
(b) Foreign currency translation
Foreign currency receivables and payables are translated into yen at the rates
of exchange in effect on the balance sheet date, and translation adjustments are
made included in profit and loss account.
The balance sheet accounts of foreign consolidated subsidiaries are translated
into yen at the rates of exchange in effect on the balance sheet date, except
for components of shareholders' equity which are translated at historical
exchange rates. Revenues and expenses are translated at the rates of exchange
prevailing when such transactions are made. Foreign currency translation
adjustments are presented as a component of shareholdersf equity.
(c) Marketable securities and investment securities
Held-to-maturity securities are carried at amortized cost. Marketable securities
classified as other securities are carried at fair value with changes in
unrealized holding gain or loss, net of the applicable income taxes, included
directly in shareholdersf equity.
Non-marketable securities classified as other securities are carried at cost.
Cost of securities sold is determined by the moving average method.
(d) Derivatives
The Company and its subsidiaries use derivatives, such as forward foreign
exchange contracts, interest rate swaps and commodity options and swaps, to
limit their exposure to fluctuations in foreign exchange rates, interests rates
and commodity prices. The Company and its subsidiaries do not use derivatives
for trading purposes.
Derivative financial instruments are carried at fair value with changes in
unrealized gain or loss charged or credited to operations, except for those
which meet the criteria for deferral hedge accounting under which an unrealized
gain or loss is deferred as an asset or a liability. Receivables and payables
hedged by qualified forward exchange contracts are translated at the
corresponding foreign exchange contract rates.
(e) Allowance for doubtful receivables
A general provision is made for doubtful receivables based on past experience.
Provisions are made against specific receivables as and when required.
(f) Inventories
Inventories are stated at cost determined by the moving average method.
(g) Property and equipment and depreciation
Property and equipment are stated at cost less accumulated -depreciation.
Depreciation of property and equipment is computed based on estimated -useful
lives by the following methods:
Flight equipment .....................................................Straight-line method
Buildings.............................................................Straight-line method
Other ground property and equipment.................... Declining balance method
The Company and some of the subsidiaries employ principally the following useful
lives, based upon the Companyfs estimated durability of such aircraft:
International type equipment............................. 20 years
Domestic type equipment................................. 17 years
(h) Intangible assets and amortization
Intangible assets included in other assets are amortized by the straight-line
method. Cost of software purchased for internal use is amortized by the
straight-line method for 5 years, the estimated useful life of purchased
software.
(i) Bonus payment reserve
Provisions are made for bonus payment for employees of the Company and
subsidiaries. The accrued amounts of estimated bonus payments on balance sheet
date are stated as bonus payment reserve.
(j) Retirement benefits
The retirement benefit plan of the Company and some of the subsidiaries covers
substantially all employees other than directors, officers and statutory
auditors. Under the terms of this plan, eligible employees are entitled, upon
mandatory retirement or earlier voluntary severance, to lump-sum payments
based on their compensation at the time of leaving and years of service with the
Company and subsidiaries.
The Company and certain significant domestic subsidiaries have trustee employee
pension funds to provide coverage for part of the lump-sum benefits or monthly
pension. Several subsidiaries have tax-qualified pension plans which cover all
or part of the lump-sum benefits.
Accrued retirement benefits for employees on the balance sheet date are provided
mainly at an amount calculated based on the retirement benefit obligation and
the fair market value of the pension plan assets as of the balance sheet date,
as adjusted for unrecognized net retirement benefit obligation at transition,
unrecognized actuarial gain or loss and unrecognized prior service cost. The
retirement benefit obligation is attributed to each period by the straight-line
method over the estimated service years of eligible employees. The net
retirement benefit obligation at transition is being amortized principally for a
period of 15 years by the straight-line method. Actuarial gains and losses are
amortized in the year following the year in which the gain or loss is recognized
primarily by the straight-line method over periods which are shorter than the
average remaining service years of employees. Prior service cost is being
amortized as incurred by the straight-line method over periods which are shorter
than the average -remaining service years of the employees.
(k) Appropriation of retained earnings
The appropriation of unappropriated retained earnings of the Company with
respect to a financial period is made by resolution of the Company's
shareholders at a general meeting of shareholders to be held subsequent to the
close of the financial period and the accounts for that period do not therefore
reflect such appropriation.
(l) Leases
Finance lease transactions other than those that are expected to transfer
ownership of the assets to the lessee are accounted for as operating leases.
(m) Bond issuance costs
Bond issuance costs are principally capitalized and amortized over a period of
three years.
(n) Cash equivalents
For the purpose of the statements of cash flows, cash and short-term, highly
liquid investments with a maturity of three months or less are treated as cash
equivalents.
Additional Information
(a) Consolidated tax return system
The Company and few subsidiaries applied a consolidated tax return system from
Fiscal 2002.
(b) Change in accounting standard
The Company applied "Accounting standard concerning treasury stock and use of
legal reserves" (No.1 of corporate accounting standard) as from Fiscal 2002.
This change of accounting standard did not have a material effect on profit and
loss for Fiscal 2002. Also, in accordance with the enforcement regulation of the
Commercial Code, the shareholder's equity in the balance sheet is classified
into capital stock, capital surplus, accumulated income and others.
Furthermore, the Company applied "Accounting standard concerning net income per
share"(No. 2 of corporate accounting standard)and "Guideline for accounting
standard concerning net income per share" (No. 4 of corporate accounting standard)
as from Fiscal 2002. There are no effects due to the aforementioned change in
accounting standards.
3.Retirement benefit plans
The Company and its domestic consolidated subsidiaries have defined benefit
plans, i.e., welfare pension fund plans, tax qualified pension plans and
lump-sum payment plans, covering substantially all employees who are entitled to
lump-sum or annuity payments, the amount of which are determined by reference to
their basic rates of pay, length of service, and the conditions under which
termination occurs.
From April 1, 2003, the Company changed a part of pension program and adopted
the contributory defined pension benefit plan. At the same time, the Company
reduced the level of the retirement benefits paid from trustee employee pension
funds and revised the benefits calculation which is the lump-sum benefits based
on employeesf personal results.
These changes make the reduction of approximately Y39,509 million of the
retirement benefit obligation and approximately Y2,822 million of the pension and
severance cost in Fiscal 2003.
The following table sets out the funded and accrued status of the plans, and the
amounts recognized in the consolidated balance sheets on the ending date of
Fiscal 2002 and 2001 for the Company and consolidated subsidiariesf defined
benefit plans:
Yen (Millions)
Fiscal 2002 Fiscal 2001
Retirement benefit obligation (398,377) (395,755)
Plan assets at fair value 112,482 123,006
Unfunded retirement benefit obligation (285,895) (272,749)
Unrecognized net transitional retirement benefit obligation 87,852 95,190
Unrecognized actuarial loss 94,115 91,599
Unrecognized prior service cost (2,216) (2,467)
Gross amount recognized (106,144) (88,427)
Prepaid pension cost 636 553
Accrued employeesf retirement benefits (106,780) (88,980)
The government sponsored portion of the benefits under the welfare pension fund
plans has been included in the amounts shown in the above table.
The components of retirement benefit expenses are as follows:
Yen (Millions)
Fiscal 2002 Fiscal 2001
Service cost 19,504 15,561
Interest cost 9,664 10,865
Expected return on plan assets (6,065) (6,276)
Amortization of net retirement benefit obligation at transition 7,321 7,362
Amortization of actuarial loss 7,032 1,493
Amortization of prior service cost (251) (68)
Net periodic pension and severance cost 37,205 28,937
4.Income taxes
The tax effect of temporary differences that give rise to a significant portion
of the deferred tax assets and liabilities is as follows:
Yen (Millions)
Fiscal 2002 Fiscal 2001
Deferred tax assets:
Tax loss carry-forward 35,509 21,493
Accrued employeesf retirement benefits 30,876 18,904
Unrealized gain on inventories and property and equipment 7,595 9,302
Bonus payment reserve 4,994 3,865
Allowance for doubtful accounts 2,644 3,618
Others 11,932 10,295
Total gross deferred tax assets 93,550 67,477
Less valuation allowance (29,648) (31,023)
Total net deferred tax assets 63,902 36,454
Deferred tax liabilities:
Special depreciation reserve and special account reserve for Reduction - (3,663)
in land value
Unrealized gains (losses) on securities (1,516) -
Others (426) (3,100)
Total gross deferred tax liabilities (1,942) (6,763)
Net deferred tax assets 61,960 29,691
Deferred tax assets are described on the consolidated balance sheets as
follows:
Yen (millions)
Fiscal 2002 Fiscal 2001
Current assets - Deferred tax assets 12,405 6,213
Investments - Deferred tax assets 49,713 23,489
Other long-term liabilities (158) (11)
Reconciliation of the difference between the statutory tax rate and the
effective income tax rate on the ending date of Fiscal 2002 and 2001 is not
disclosed because of the loss before income taxes and minority interests.
5.Leases
(a) Finance leases
Finance lease transactions other than those that are expected to transfer
ownership of the assets to the lessee are accounted for as operating leases.
Information on finance leases which are not recorded as assets and liabilities
is summarized as follows.
Estimated acquisition costs, accumulated depreciation and net book value of
leased assets are as follows:
Yen (Millions)
Fiscal 2002 Fiscal 2001
Aircraft:
Estimated acquisition cost 268,654 237,621
Estimated amount of accumulated depreciation 144,017 120,046
Estimated net book value 124,637 117,575
Others:
Estimated acquisition cost 28,315 27,390
Estimated amount of accumulated depreciation 15,000 10,573
Estimated net book value 13,315 16,817
Total:
Estimated acquisition cost 296,969 265,011
Estimated amount of accumulated depreciation 159,017 130,619
Estimated net book value 137,952 134,392
Outstanding finance lease obligations are as follows:
Yen (Millions)
Fiscal 2002 Fiscal 2001
Current portion of finance lease obligations 30,847 28,300
Long-term finance lease obligations 115,877 118,840
146,724 147,140
Estimated amount of depreciation, estimated finance charges and lease expenses
are as follows:
Yen (Millions)
Fiscal 2002 Fiscal 2001
Estimated amount of depreciation
by the straight-line method over the lease period 29,179 25,587
Estimated interest cost 4,295 4,695
Annual lease expenses charged to income were Y34,111 million ($283,785 thousand)
and Y29,999 million in Fiscal 2002 and 2001 respectively.
(b) Operating leases
The rental payments required under operating leases that have initial or
remaining non-cancelable lease terms in excess of one year are as follows:
Yen (Millions)
Fiscal 2002 Fiscal 2001
Current portion of operating lease obligations 43,187 43,377
Long-term operating lease obligations 104,767 134,475
147,954 177,852
6.Contingent liabilities
The Company and consolidated subsidiaries were contingently liable as guarantor
of loans, principally to affiliates, amounting to Y2,488 million on the ending
date of Fiscal 2002, Y6,648 million on that of Fiscal 2001.
7.Segment information
The Company and consolidated subsidiaries conduct operations in air
transportation, travel services, hotel operations and other businesses.
Businesses other than air transportation, travel services and hotel operations
are insignificant to the consolidated results of operations of the Company and
its consolidated subsidiaries and, accordingly, are included in "Other
businesses" in the following industry segment information.
Other segment information of the Company and its subsidiaries such as
geographical breakdown of sales and assets is not disclosed because of its
insignificance.
Segment information is as follows:
Fiscal 2002
Yen (Millions)
Air Travel Hotel Other Total Intercompany Consolidated
transportation services operations businesses eliminations
Operating revenues 911,484 144,940 59,547 99,938 1,215,909 - 1,215,909
Intra-group sales 81,003 17,930 13,166 73,251 185,350 (185,350) -
and transfers
Total 992,487 162,870 72,713 173,189 1,401,259 (185,350) 1,215,909
Operating expenses 999,400 162,286 73,987 167,865 1,403,538 (185,032) 1,218,506
Operating income (6,913) 584 (1,274) 5,324 (2,279) (318) (2,597)
(loss)
Identifiable 1,179,728 37,153 111,191 180,789 1,508,861 (66,288) 1,442,573
assets
Depreciation 53,602 733 4,026 3,491 61,852 - 61,852
And amortization
Capital 121,734 1,345 4,435 3,042 130,556 (693) 129,863
expenditure
Fiscal 2001
Yen (Millions)
Air Travel Hotel Other Total Intercompany Consolidated
transportation services operations businesses eliminations
Operating revenues 900,847 143,367 63,366 96,934 1,204,514 - 1,204,514
Intra-group sales 77,564 15,166 12,305 91,235 196,270 (196,270) -
and transfers
Total 978,411 158,533 75,671 188,169 1,400,784 (196,270) 1,204,514
Operating expenses 959,662 158,615 76,335 183,181 1,377,793 (196,247) 1,181,546
Operating income 18,749 (82) (664) 4,988 22,991 (23) 22,968
(loss)
Identifiable 1,195,497 37,437 146,311 215,917 1,595,162 (84,180) 1,510,982
assets
Depreciation 52,527 527 4,571 3,712 61,337 - 61,337
and amortization
Capital 121,451 1,601 6,749 2,748 132,549 (141) 132,408
expenditure
8.Supplementary cash flow information
Reconciliation of the difference between cash stated in the consolidated balance
sheets is as follows:
Yen (Millions)
Fiscal 2002 Fiscal 2001
Cash 154,876 159,340
Time deposits with maturities of more than three months (504) (728)
Marketable securities 2,458 27,370.
Marketable securities with maturities of more than three months (62) (68)
Short-term investments with maturities of three months or less,
included in prepaid expenses and other current assets 1,353 2,734
Cash and cash equivalents at end of year 158,121 188,648
Significant non-cash transactions are as follows:
Fiscal 2002 None
Fiscal 2001 Yen(Millions)
Conversion of convertible bonds:
Credited to common stock 159
Credited to capital surplus 159
320
9.Breakdown of Operating RevenuesiConsolidatedj
Unit: million
Fiscal 2002 % of Fiscal 2001 % of Difference
total total
Domestic routes
Passenger 646,854 46.2 662,772 47.3 (15,918)
Cargo 24,330 1.7 24,746 1.8 (416)
Mail 10,561 0.8 11,491 0.8 (930)
Baggage handling 314 0.0 294 0.0 20
Subtotal 682,059 48.7 699,303 49.9 (17,244)
International routes
Passenger 185,481 13.3 169,660 12.1 15,821
Cargo 40,393 2.9 32,937 2.4 7,456
Mail 3,061 0.2 2,240 0.2 821
Baggage handling 559 0.0 551 0.0 8
Subtotal 229,494 16.4 205,388 14.7 24,106
Revenues from scheduled flights 911,553 65.1 904,691 64.6 6,862
Other operating revenues 80,934 5.7 73,720 5.3 7,214
Subtotal 992,487 70.8 978,411 69.9 14,076
Travel services
Package tours(Domestic) 105,430 7.5 99,507 7.1 5,923
Package tours(International) 38,489 2.7 35,772 2.5 2,717
Other revenues 18,951 1.4 23,254 1.7 (4,303)
Subtotal 162,870 11.6 158,533 11.3 4,337
Hotel operations
Guestrooms 24,676 1.8 26,093 1.9 (1,417)
Banquets 18,788 1.3 20,509 1.4 (1,721)
Foods and drinks 16,702 1.2 17,906 1.3 (1,204)
Other revenues 12,547 0.9 11,163 0.8 1,384
Subtotal 72,713 5.2 75,671 5.4 (2,958)
Other businesses
Trading and retailing 118,653 8.5 135,181 9.6 (16,528)
Information 19,641 1.4 19,815 1.4 (174)
And telecommunication
Real estate 16,820 1.2 16,254 1.2 566
&building maintenance
Other revenues 18,075 1.3 16,919 1.2 1,156
Subtotal 173,189 12.4 188,169 13.4 (14,980)
Total operating revenue 1,401,259 100.0 1,400,784 100.0 475
Intercompany eliminations (185,350) - (196,270) - 10,920
Operating revenue(Consolidated) 1,215,909 - 1,204,514 - 11,395
Notes:
1.Segment breakdown is based on classifications employed for internal
management.
2.Segment operating revenue includes inter-segment transactions.
10.Overview of Airline Operating Results (Consolidated)
Fiscal 2002 Fiscal 2001 Year on
year (%)
Domestic routes
Number of passengers 47,133,040 45,795,753 102.9
Available seat-km (thousand km) 62,565,065 60,980,320 102.6
Revenue passenger-km(thousand km) 40,388,420 38,779,691 104.1
Passenger loadfactor 64.6 63.6 1.0
Cargo(tons) 383,583 386,727 99.2
Mail(tons) 78,354 85,328 91.8
International routes
Number of passengers 3,785,755 3,438,201 110.1
Available seat-km (thousand km) 25,974,398 26,927,960 96.5
Revenue passenger-km (thousand km) 18,726,902 17,799,257 105.2
Passenger load factor 72.1 66.1 6.0
Cargo(tons) 195,669 152,942 127.9
Mail(tons) 11,236 7,264 154.7
Total
Number of passengers 50,918,795 49,233,954 103.4
Available seat-km (thousand km) 88,539,463 87,908,280 100.7
Revenue passenger-km (thousand km) 59,115,322 56,578,948 104.5
Passenger load factor 66.8 64.4 2.4
Cargo(tons) 579,252 539,669 107.3
Mail(tons) 89,590 92,592 96.8
Notes:
Domestic routes: ANA + ANK + Air Hokkaido Co. Ltd. (ADK) + Air Nippon Network
Co. Ltd. (ANN)
International routes: ANA + ANK + AJX
Each result does not include results of charter flights.
International passengers represent revenue passengers.
11.Subsequent events
On March 31, 2003, the Company issued notes due 2006 in the amount of Y30,000
million with 0.80% interest rate. Paid-in date is April 21, 2003, and redemption
date is April 21, 2006.
Fiscal year ended March 31, 2003
Nonconsolidated financial results
All Nippon Airways Co., Ltd. (9202)
1. Nonconsolidated financial highlights for the period ended March 31, 2003
(1) Nonconsolidated operating results Yen(Millions rounded down)
Fiscal 2002 Year on Fiscal 2001 Year on
year (%) year (%)
Operating revenues 940,503 2.8% 915,008 (5.3%)
Operating income (loss) (8,259) - 18,448 (72.2%)
Recurring profit (loss) (20,051) - (715) -
Net income (loss) (17,042) - (12,878) -
Net income (loss) per share (11.10yen) - (8.38yen) -
Diluted net income (loss) per share - - - -
Net income (loss) / Shareholdersf equity (11.6%) (7.9%)
Recurring profit (loss) / Total assets (1.7%) (0.1%)
Recurring profit (loss) / Operating revenues (2.1%) (0.1%)
Notes:1. Average number of shares of outstanding during the period
Fiscal 2002 1,535,558,747 shares Fiscal 2001 1,535,973,206 shares
2. Changes in the accounting policy during the period: none
(2) Dividends
Yen
Fiscal 2002 Fiscal 2001
Annual dividend per share
Interim - -
Year-end 0.00 0.00
Total amount of dividends (Yen million) - -
Pay-out ratio - -
Dividend ratio for shareholderfs equity - -
(3) Nonconsolidated financial positions Yen (Millions
rounded down)
Fiscal 2002 Fiscal 2001
Total assets 1,191,543 1,202,542
Shareholdersf equity 138,761 156,313
Shareholdersf equity ratio 11.6% 13.0%
Shareholdersf equity per share 90.44yen 101.77yen
Note:1. Number of shares of outstanding at balance sheet date
Fiscal 2002: 1,536,082,686 shares Fiscal 2001: 1,536,082,686 shares
2. Number of treasury stocks at balance sheet date
Fiscal 2002: 1,731,564 shares Fiscal 2001: 149,548 shares
2. Forecast of non-consolidated operating results for the period ending March
31, 2004
Yen (Millions rounded down)
Operating revenues 988,000
Recurring profit (loss) 10,000
Net income (loss) 5,000
Annual dividend per share 3.00yen
Note:Forecast of net income per share: 3.26yen
This forecast involve risks, uncertainties and other factors since it reflects
managementfs views in light of the information currently available as of the
date hereof. The reader should be aware that actual results could differ
materially due to various factors.
(1) Nonconsolidated Balance Sheets Unit:Ymillion
Assets Fiscal 2002 Fiscal 2001 Difference
Current assets 270,325 327,718 (57,393)
Cash and deposits 109,257 115,960 (6,702)
Trade accounts receivable 74,497 68,728 5,769
Marketable securities 1,650 24,682 (23,032)
Inventories 46,536 45,657 878
Prepaid expenses 3,467 3,376 91
Short-term loans receivable 7,938 25,880 (17,942)
Other accounts receivable 7,857 20,822 (12,965)
Deferred tax assets 6,687 3,249 3,438
Other current assets 12,447 19,527 (7,079)
Allowance for doubtful accounts (16) (167) 150
Fixed assets 921,020 874,399 46,621
(Tangible fixed assets) (696,606) (699,555) ( (2,948) )
Buildings 96,552 101,059 (4,506)
Structures 1,903 2,065 (162)
Aircraft 434,392 418,574 15,818
Machinery and equipment 10,143 11,406 (1,263)
Transportation equipment other than aircraft 2,326 1,788 537
Tools and fixtures 12,086 12,459 (372)
Land 58,852 59,972 (1,120)
Construction in progress 80,350 92,230 (11,880)
(Intangible fixed assets) (35,274) (24,352) (10,922)
Telephone deposits 355 430 (75)
Software 31,047 19,538 11,508
Other intangible assets 3,871 4,383 (511)
(Investments and others) (189,139) (150,492) (38,647)
Investment securities 34,064 25,978 8,086
Investments in subsidiaries and affiliates 53,481 70,601 (17,119)
Bonds of subsidiaries and affiliates - 5,500 (5,500)
Advances to subsidiaries and affiliates 60 60 -
Long-term loans receivables 51,708 26,887 24,821
Housing loans to employees 812 202 610
Long-term prepaid expenses 2,724 1,535 1,188
Deferred tax assets 45,682 15,352 30,329
Other investments 29,288 24,800 4,487
Allowance for doubtful accounts (28,683) (20,426) (8,257)
Deferred assets 197 423 (226)
Bond issuance expenses 197 423 (226)
Total assets 1,191,543 1,202,542 (10,999)
Unit:Ymillion
Liabilities Fiscal 2002 Fiscal 2001 Difference
Current liabilities 227,684 287,294 (59,610)
Trade accounts payable 93,959 91,289 2,670
Current portion of long-term debt 50,185 52,020 (1,834)
Current portion of bonds payable - 69,210 (69,210)
Non-operating accounts payable 9,512 6,563 2,949
Accrued expenses 21,313 24,778 (3,465)
Accrued income taxes - 55 (55)
Deposits 6,301 669 5,631
Advance ticket sales 32,397 29,422 2,975
Bonus payment reserve 7,163 7,290 (126)
Other current liabilities 6,850 5,995 854
Long-term liabilities 825,097 758,934 66,162
Bonds payable 351,732 302,789 48,943
Long-term loans payable 375,662 367,979 7,683
Long-term unearned income 98 102 (3)
Accrued employeesf retirement benefits 85,064 70,176 14,887
Reserve for losses on related businesses 448 448 -
Other long-term liabilities 12,092 17,439 (5,347)
Total liabilities 1,052,781 1,046,229 6,552
Shareholdersf equity
Common stock 86,239 86,239 -
Capital surplus 104,232 104,232 -
Capital reserve 21,632 104,232 (82,600)
Other surplus 82,600 - 82,600
Earned Surplus (51,640) (34,598) (17,042)
Earned surplus reserve 10,301 10,301 -
Reserve 6,641 7,588 (946)
Special depreciation reserve 4,255 5,202 (946)
Other reserve 1,600 1,600 -
Land devaluation reserve 785 785 -
Unappropriated net loss 68,583 52,487 16,096
Unrealized gains on securities 368 487 (118)
Treasury Stock (439) (48) (390)
Total shareholders' equity 138,761 156,313 (17,551)
Total liabilities and shareholdersf equity 1,191,543 1,202,542 (10,999)
Note: Accumulated Depreciation: Fiscal 2002 Y800,969 million. Fiscal 2001
Y796,247million
(2)Nonconsolidated Statements of Income (Loss) Unit:Ymillion
Fiscal 2002 Fiscal 2001 Difference
Operating revenues and expenses
Operating revenues 940,503 915,008 25,494
Operating expenses 776,321 728,889 47,432
Sales, General and administrative expenses 172,440 167,670 4,769
Operating income (Loss) (8,259) 18,448 (26,707)
Non-operating income and expenses
Non-operating income 38,763 22,038 16,724
Interest and income 1,118 835 282
Others 37,644 21,202 16,442
Non-operating expenses 50,555 41,203 9,352
Interest expenses 17,262 19,234 (1,972)
Others 33,292 21,968 11,324
Total Recurring income (loss) (20,051) (715) (19,335)
Extraordinary gains 1,256 1,517 (261)
Gains on sales of securities of affiliates 753 - 753
Gains on sales of marketable securities 499 1,517 (1,017)
Others 2 - 2
Extraordinary losses 31,764 16,816 14,947
Loss on sale of stock of affiliates 8,844 39 8,804
Provision for doubtful accounts 8,377 7,513 864
Valuation loss on shares of affiliates 5,825 5,713 112
Valuation loss on marketable securities 3,113 1,984 1,129
Special retirement benefits 2,922 1,048 1,873
Others 2,680 517 2,162
Net income (loss) before taxes (50,559) (16,014) (34,544)
Corporate, inhabitant and enterprise tax (354) 3,154 (3,508)
Deferred taxes (33,162) (6,290) (26,871)
Net income (loss) (17,042) (12,878) (4,164)
Loss at the beginning of the period 51,541 39,609 11,931
Unappropriated loss 68,583 52,487 16,096
(3) Statement of surplus and deficit Unit:million
Fiscal 2002 Fiscal 2001
(1) Appropriation of other capital surplus
Other capital surplus 82,600 -
Appropriation of other capital surplus
Transfer to earned surplus reserve 51,640 -
Other capital surplus carried forward 30,959 -
(2)Appropriation of Unappropriated loss at end of the year
Unappropriated loss at end of the year 68,583 52,487
Appropriation of loss
Reversal from Voluntary Reserve
Reversal of reserve for special depreciation 4,255 946
Reversal of reserve for other reserve 1,600 -
Reversal of reserve for land devaluation reserve 785 -
Transfers from other capital surplus 51,640 -
Total 58,282 946
Unappropriated loss carried forward 10,301 51,541
Notes to Nonconsolidated Financial Statements
All Nippon Airways Co., Ltd.
Fiscal 2002 and 2001
1.Summary of significant accounting policies
(a) Marketable securities and investment securities
Held-to-maturity securities are carried at amortized cost. Marketable securities
classified as other securities are carried at fair value with changes in
unrealized holding gain or loss, net of the applicable income taxes, included
directly in shareholders' equity.
Non--marketable securities classified as other securities are carried at cost.
Cost of securities sold is determined by the moving average method.
Investments in subsidiaries and affiliates are stated at cost determined by the
moving average method.
(b) Derivatives
Derivatives, such as forward foreign exchange contracts, interest rate swaps and
commodity options and swaps, are used, to limit their exposure to fluctuations
in foreign exchange rates, interest rates, and commodity prices. These are not
used for trading purposes.
Derivative financial instruments are carried at fair value with changes in
unrealized gain or loss charged or credited to operations, except for those
which meet the criteria for deferral hedge accounting under which an unrealized
gain or loss is deferred as an asset or a liability. Receivables and payables
hedged by qualified forward exchange contracts are translated at the
corresponding foreign exchange contract rates.
(c) Inventories
Inventories are stated at cost. Cost is determined by the moving average method
for aircraft spare parts, and first-in, first-out method for miscellaneous
supplies.
(d) Property and equipment and depreciation
Property and equipment are stated at cost less accumulated -depreciation.
Depreciation of property and equipment is computed based on estimated -useful
lives by the following methods:
Flight equipment .....................................................Straight-line method
Buildings.............................................................Straight-line method
Other ground property and equipment.................... Declining balance method
The Company employs principally the following useful lives, based upon the
Companyfs estimated durability of such aircraft:
International type equipment............................. 20 years
Domestic type equipment................................. 17 years
(e) Intangible assets and amortization
Intangible assets included in other assets are amortized by the straight-line
method. Cost of software purchased for internal use is amortized by the
straight-line method over 5 years, the estimated useful life of purchased
software.
(f) Bond issuance costs
Bond issuance costs are principally -capitalized and amortized over a period
of three years .
(g) Foreign currency translation
Foreign currency receivables and payables are translated into yen at the
rates of exchange in effect at the balance sheet date, and translation
adjustments are made included in profit and loss account.
(h) Allowance for doubtful receivables
A general provision is made for doubtful receivables based on past
experience. Provisions are made against specific receivables as and when
required.
(I) Bonus payment reserve
Provisions are made for bonus payment for employees of the company. The accrued
amounts of estimated bonus payments at balance sheet date are stated as bonus
payment reserve.
(j) Retirement benefits
Accrued retirement benefits for employees at the balance sheet date are provided
mainly at an amount calculated based on the retirement benefit obligation and
the fair market value of the pension plan assets as of the balance sheet date,
as adjusted for unrecognized net retirement benefit obligation at transition,
-unrecognized actuarial gain or loss and unrecognized prior service cost. The
retirement benefit obligation is attributed to each period by the straight-line
method over the estimated service years of the eligible employees. The net
retirement benefit obligation at transition is being amortized principally over
a period of 15 years by the straight-line method. Actuarial gains and losses are
amortized in the year following the year in which the gain or loss is recognized
primarily by the straight-line method over periods which are shorter than the
average remaining service years of employees. Prior service cost is being
amortized as incurred by the straight-line method over periods which are shorter
than the average remaining service years of the employees.
(k) Reserve for losses on related businesses
Provisions are made for estimated losses from investments in subsidiaries and
affiliates.
(l) Leases
Finance lease transactions other than those that are expected to transfer
ownership of the assets to the lessee are accounted for as operating leases.
(m) Revenue recognition
Passenger revenues are recorded when services are rendered.
(n) Consumption taxes
Consumption taxes are excluded from the amounts of profit and loss statements.
2.Notes to balance sheets
Contingent liability as guarantor of loans, principally to affiliates, amounted
to 85,855 million at the ending date of Fiscal 2002, 69,298 million at that of
Fiscal 2001.
3.Additional Information
(a)Consolidated tax return system
The Company applied a consolidated tax return system from Fiscal 2002.
(b) Change in accounting standard
The Company applied "Accounting standard concerning treasury stock and use of
legal reserves" (No.1 of corporate accounting standard) as from Fiscal 2002.
This change of accounting standard did not have a material effect on profit and
loss for Fiscal 2002. Also, in accordance with the enforcement regulation of the
Commercial Code, the shareholder's equity in the balance sheet is classified
into capital stock, capital surplus, accumulated income and others.
Furthermore, the Company applied "Accounting standard concerning net income per
share"(No. 2 of corporate accounting standard)and "Guideline for accounting
standard concerning net income per share" (No. 4 of corporate accounting standard)
as from Fiscal 2002. There are no effects due to the aforementioned change in
accounting standards.
4.Subseqent events
(a) Issue of notes
On March31, 2003, the Company issued notes in the amount of 30,000million with
0.80% interest rate. Paid-in date is April 21,2003,and redemption date is April
21,2006.
(b) The contributory defined pension benefit plan
From April 1, 2003, the Company changed a part of pension program and
adopted the contributory defined pension benefit plan. At the same time, the
Company reduced the level of the retirement benefits paid from trustee employee
pension funds and revised the benefits calculation which is the lump-sum
benefits based on employeesf personal results.
These change make the reduction of approximately Y39,509 million of the
retirement benefit obligation and approximately Y2,822 million of the pension and
severance cost in Fiscal 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR URVARONRSOAR