III – LAS RAÍCES SOCIALES DEL BANDOLERISMO
2. La ciudad: agiotaje, miseria y protesta social
The following assets were pledged as collateral for short-term and long-term debt at March 31, 2011:
U.S. dollars
Yen (Millions) (Thousands) Property and equipment, at net book value:
Flight equipment ... ¥678,034 $8,154,347
Ground property and equipment ... 41,596 500,252
¥719,630 $8,654,600
The aggregate annual maturities of long-term debt after March 31, 2011 are as follows:
U.S. dollars
Year ending March 31, Yen (Millions) (Thousands)
2012 ... ¥146,229 $ 1,758,616
2013 ... 109,897 1,321,671
2014 ... 119,583 1,438,159
2015 and thereafter ... 562,944 6,770,222
¥938,653 $11,288,671
As is customary in Japan, short-term and long-term bank loans are made under general agreements which provide that security and guarantees for future and present indebtedness will be given upon request of the bank, and that the bank shall have the right, as the obligation becomes due, or in the event of default and certain other
specified events, to offset cash deposits against such obligations due to the bank.
Certain bonds and notes and foreign currency loans are guaranteed by domestic and foreign banks.
3.2% notes due 2017 ... ¥ 20,000 ¥ 20,000 $ 240,529 3% notes due 2011 ... 10,000 10,000 120,264 1.7% notes due 2011 ... — 10,000 — 2.27% notes due 2014 ... 10,000 10,000 120,264 1.44% notes due 2011 ... 10,000 10,000 120,264 2.09% notes due 2014 ... 10,000 10,000 120,264 1.97% notes due 2015 ... 15,000 15,000 180,396 1.24% notes due 2011 ... — 30,000 — 1.84% notes due 2013 ... 10,000 10,000 120,264 2.45% notes due 2018 ... 10,000 10,000 120,264 1.71% notes due 2015 ... 20,000 — 240,529 115,000 135,000 1,383,042
Loans, principally from banks:
Secured, bearing interest from 0.67% to 2.70% in 2011 and
0.81% to 2.70% in 2010, maturing in installments through 2025 .... 407,786 401,026 4,904,221
Unsecured, bearing interest from 1.09% to 2.29% in 2011 and
1.09% to 5.59% in 2010, maturing in installments through 2018 ... 372,411 327,403 4,478,785 780,197 728,429 9,383,006
Finance lease obligations
Finance lease agreements expiring through 2024 ... 43,456 49,166 522,621
938,653 912,595 11,288,671
Less current portion ... 146,229 151,679 1,758,616
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 amounts of which are determined by reference to their basic rates of pay, length of service and the conditions under which termination occurs.
One domestic consolidated subsidiary applied for an exemption from the payment of the benefits related to future and past employee services and received approval from the Minister of Health, Labour and Welfare on February 1, 2008 and April 1, 2009 and paid the minimum policy reserve to the Japanese government on March 11,
2010. As a result, gain on return of substituted portion of welfare pension fund was recognized in the amount of ¥1,723 million for the year ended March 31, 2010.
One domestic consolidated subsidiary applied for an exemption from the payment of the benefits related to future and past employee services and received approval from the Minister of Health, Labour and Welfare on May 1, 2008 and January 1, 2011, and gain on return of substituted portion of welfare pension fund was recognized in the amount of ¥38 million ($457 thousand) for the year ended March 31, 2011.
The following table sets out the funded and accrued status of the plans and the amounts recognized in the consolidated balance sheets as of March 31, 2011 and 2010 for the Company and consolidated subsidiaries’ defined benefit plans:
U.S. dollars
Yen (Millions) (Thousands)
2011 2010 2011
Retirement benefit obligation ... ¥(269,579) ¥(268,131) $(3,242,080)
Plan assets at fair value ... 95,924 96,703 1,153,625
Unfunded retirement benefit obligation ... (173,655) (171,428) (2,088,454)
Unrecognized net transitional retirement benefit obligation ... 25,700 32,125 309,079
Unrecognized actuarial loss ... 41,327 40,501 497,017
Unrecognized prior service cost ... (16,760) (20,406) (201,563)
¥(123,388) ¥(119,208) $(1,483,920)
Prepaid pension cost ... 12 217 144
Accrued employees’ retirement benefits ... ¥(123,400) ¥(119,425) $(1,484,064)
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 for the years ended March 31, 2011, 2010 and 2009 are as follows:
U.S. dollars
Yen (Millions) (Thousands)
2011 2010 2009 2011
Service cost ... ¥10,766 ¥10,778 ¥10,407 $129,476
Interest cost ... 6,527 6,682 6,508 78,496
Expected return on plan assets ... (3,466) (3,302) (4,022) (41,683)
Amortization of net transitional retirement
benefit obligation ... 6,425 6,423 6,534 77,269
Amortization of actuarial loss ... 6,284 7,147 5,411 75,574
Amortization of prior service cost ... (3,831) (3,997) (3,854) (46,073)
Net periodic pension and severance cost ... ¥22,705 ¥23,731 ¥20,984 $273,060
Besides the above net periodic pension and severance cost, the costs for other retirement and pension plans such as a defined contribution plan and for supplemental retirement benefit were ¥980 million ($11,785 thousand) and ¥192 million ($2,309 thousand),
respectively, for the year ended March 31, 2011, and ¥921 million and ¥4,467 million for the year ended March 31, 2010, and ¥789 million and ¥660 million for the year ended March 31, 2009.
(a) Overview of asset retirement obligations
The Company and its subsidiaries enter into agreements with national government entities that allow for the use of Japanese government property and have entered into real estate lease contracts for the Head Office, sales branches, airport branches and some other offices. As the Company and its subsidiaries have restoration obligations for such properties at the end of each lease period, related legal obligations required by law and the contracts are recorded on the Balance Sheet as asset retirement obligations.
(b) Calculation of asset retirement obligations
The Company and its subsidiaries estimate the expected period of use as 4 to 32 years and calculate the amount of asset retirement obligations with a discount rate of 0.13% to 2.27%.
The following table indicates the changes in asset retirement obligations for the year ended March 31, 2011:
U.S. dollars
Yen (Millions) (Thousands) Balance at April 1, 2010 ... ¥2,980 $35,838
Accretion expense ... 89 1,070
Liabilities settled ... (270) (3,247)
Others ... (208) (2,501)
Balance at March 31, 2011 ... ¥2,591 $31,160
2. Asset retirement obligations not recorded on the consolidated balance sheet The Company and its subsidiaries enter into agreements with
national government entities that allow for the use of Japanese government property and have entered into real estate lease contracts for land and office at airport facilities including Tokyo International Airport, Narita International Airport, New Chitose Airport, Chubu Centrair International Airport, Osaka International Airport, Kansai International Airport, Fukuoka Airport and Naha Airport, and at training facilities in Shimojishima Airport. The
Company and its subsidiaries have restoration obligations when they vacate and clear such facilities. However, as the roles of the above airports are especially important in public transportation, it is beyond the control of the Company alone to determine when to vacate and clear such facilities, and it is also impossible to make reasonable estimates as there are currently no relocation plans for the above properties. Therefore, the Company and its subsidiaries do not record asset retirement obligations for the related liabilities.
The Company is subject to a number of taxes on income (corporation tax, inhabitants taxes and enterprise tax) which in aggregate resulted in a normal statutory tax rate of 40.16% in 2011 and 2010.
The Company is subject to the consolidated taxation system for consolidated taxation purposes, and has consolidated all qualified, wholly owned domestic subsidiaries.
The tax effect of temporary differences that give rise to a significant portion of the deferred tax assets and liabilities at March 31, 2011 and 2010 is as follows:
U.S. dollars
Yen (Millions) (Thousands)
2011 2010 2011
Deferred tax assets:
Tax loss carry-forward ... ¥ 58,411 ¥ 77,120 $ 702,477
Accrued employees’ retirement benefits ... 49,433 47,986 594,503
Loss on evaluation for hedging exchange ... 13,850 8,870 166,566
Unrealized gain on inventories and property and equipment ... 13,720 13,342 165,003
Accrued bonuses to employees ... 11,619 4,674 139,735
Valuation loss on investments in securities ... 2,534 2,306 30,475
Asset retirement obligations ... 1,026 — 12,339
Accrued enterprise and office tax ... 1,022 595 12,291
Other ... 8,201 13,207 98,628
Total gross deferred tax assets ... 159,816 168,100 1,922,020
Less valuation allowance ... (5,589) (12,463) (67,215)
Total net deferred tax assets ... 154,227 155,637 1,854,804
Deferred tax liabilities:
Gain on evaluation for hedging exchange ... (17,207) — (206,939)
Special depreciation reserve ... (4,987) (4,060) (59,975)
Unrealized holding gain on securities ... (1,139) (1,724) (13,698)
Other ... (1,111) (986) (13,361)
Total gross deferred tax liabilities ... (24,444) (6,770) (293,974)
Net deferred tax assets ... ¥129,783 ¥148,867 $1,560,829
A reconciliation of the difference between the statutory tax rate and the effective income tax rate for the years ended March 31, 2010 and March 31, 2009 is not disclosed because of the loss before income taxes and minority interests.
The reconciliation for the year ended March 31, 2011 is as follows:
2011
Statutory tax rate ... 40.16%
Reconciliation:
Entertainment expenses not qualifying for deduction ... 1.78
Inhabitants tax per capita levy ... 0.53
Loss on antitrust proceedings ... 6.81
Change in valuation allowance and related adjustments ... (13.46)
Other ... (1.49)
Effective income tax rate ... 34.33%
As lessee
(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 assets. Tangible fixed lease assets include mainly aircraft, flight equipment and host computers. Intangible fixed lease assets include software. The amortization method for leased assets is described in “2. Summary of significant accounting policies (m) Leased assets and amortization.”
As lessee
(b) Operating leases
The rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year at March 31, 2011 and 2010 are as follows:
U.S. dollars
Yen (Millions) (Thousands)
2011 2010 2011
Current portion of operating lease obligations ... ¥ 31,362 ¥ 33,974 $ 377,173
Long-term operating lease obligations ... 145,595 143,343 1,750,992
¥176,957 ¥177,317 $2,128,165
Note: No impairment loss was allocated to leased assets.
As lessor
(c) Operating leases
The rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year at March 31, 2011 and 2010 are as follows:
U.S. dollars
Yen (Millions) (Thousands)
2011 2010 2011
Current portion of operating lease obligations ... ¥1,153 ¥1,331 $13,866
Long-term operating lease obligations ... 2,188 3,636 26,313
¥3,341 ¥4,967 $40,180
Note: No impairment loss was allocated to leased assets.
11
Leases
2010 Other comprehensive income:
Net unrealized holding gain on securities ... ¥ 130 Deferred gain on hedging instruments ... 69,385 Foreign currency translation adjustments ... (194) Share of other comprehensive income of associates accounted for by the equity-method ... 6 Total other comprehensive income ... ¥69,327
Total comprehensive income attributable to:
Owners of All Nippon Airways Co., Ltd. ... ¥11,929 Minority interests ... ¥ (170)
Supplementary information for consolidated statements of changes in net assets at March 31, 2011 consisted of the following:
(a) Type and number of outstanding shares
Number of shares
(Thousands)
Balance at Increase in shares Decrease in shares Balance at Type of shares beginning of year during the year during the year end of year Issued stock: Common stock ... 2,524,959 — — 2,524,959 Total ... 2,524,959 — — 2,524,959 Treasury stock: Common stock (*1,*2,*3) ... 18,528 1,026 3,651 15,903 Total ... 18,528 1,026 3,651 15,903
(*1) Treasury stock increased by 188 thousand shares due to the repurchase of shares less than one unit and one thousand shares due to the purchase by the affiliate and 836 thousand shares due to the change of scope of equity method.
(*2) Treasury stock decreased by 48 thousand shares due to the sale of shares less than one unit and 3,603 thousand shares due to the sale by the ESOP Trust. (*3) Treasury stock includes 10,233 thousand shares of the Company owned by the ESOP Trust as of March 31, 2011.
(b) Dividends
(1) Dividends paid to shareholders
Amount Amount Amount Amount
Resolution Type of (Millions (Thousands of per share per share Shareholders’ Effective Date of approval approved by shares of yen) U.S. dollars) (Yen) (U.S. dollars) cut-off date date
None
(2) Dividends with a shareholders’ cut-off date during the current fiscal year but an effective date subsequent to the current fiscal year
Amount Amount Amount Amount
Resolution Type of (Millions (Thousands of per share per share Shareholders’ Effective Date of approval approved by shares of yen) U.S. dollars) Paid from (Yen) (U.S. dollars) cut-off date date June 20, 2011 Annual general Common ¥5,018 $60,348 Retained ¥2.00 $0.02 March 31, June 21,
meeting of shareholders stock (*1) earnings 2011 2011
(*1) The ¥22 million ($264 thousand) paid to the ESOP Trust and the affiliates is not included in total dividends amount because the Company’s shares owned by the ESOP Trust and the affiliates are recognized as treasury stock.
In accordance with the Law, the Company provides a legal reserve which is included in retained earnings. The Law provides that an amount equal to at least 10% of the amounts to be disbursed as distributions of earnings be appropriated to the legal reserve until the total of the legal reserve and the additional paid-in capital account equals 25% of the common stock account. The Law provides that neither additional paid-in capital nor the legal reserve is available for the payment of dividends, but both may be used to reduce or eliminate a deficit by resolution of the shareholders or may be
transferred to common stock by resolution of the Board of Directors. The Law also provides that, if the total amount of additional paid-in capital and the legal reserve exceeds 25% of the amount of common stock, the excess may be distributed to the shareholders either as a return of capital or as dividends subject to the approval of the shareholders. Under the Law, however, such distributions can be made at anytime by resolution of the shareholders or by the Board of Directors if certain conditions are met.
At March 31, 2011, commitments outstanding for the acquisition or construction of property and equipment amounted to ¥773,686 million ($9,304,702 thousand).
The Company and consolidated subsidiaries were contingently liable as guarantor of loans, principally to affiliates, amounting to ¥814 million ($9,789 thousand) at March 31, 2011.
At March 31, 2010, commitments outstanding for the acquisition or construction of property and equipment amounted to ¥914,286 million.
The Company and consolidated subsidiaries were contingently liable as guarantor of loans, principally to affiliates, amounting to ¥482 million at March 31, 2010.