The tax loss carryforwards included in deferred tax assets expire at various dates, but primarily extend up to 20 years. Realization is dependent on the abilities of the companies to generate sufficient taxable income prior to the expiration of the tax loss carryforwards. Valuation allowance has been recorded for these deferred tax assets to the carryforwards except for those expected to be realized, as realization of these deferred tax assets is not assured. Deferred tax liabilities have not been provided on the undistributed profit of affiliates, as it is deemed that any distributions will not give rise to tax liabilities. Deferred tax assets have not been provided for losses of subsidiaries, as the utilization of these losses is currently not able to be determined. 39 The issuance of shares upon conversion of convertible bonds and the exercise of stock purchase warrants is accounted for by crediting an amount equal to at least 50% of the amount of each issuance to the common stock account and the balance to the capital surplus account in accordance with certain provisions of the Commercial Code of Japan, which became effective October 1, 1982. Appropriations of retained earnings for the year ended March 31, 2000, which included year-end cash dividends of ¥9,814 million ($92,587 thousand), were recorded on the Company’s statutory books of account after approval at the general shareholders’ meeting held on June 29, 2000, and will be included in the following year’s consolidated balance sheet. The increase arising from a merger during the year ended March 31, 1999 reflects the issuance of stock in connection with the merger of Fujitsu Towa Electron Ltd. with the Company in October 1998.  Commitments outstanding at March 31, 2000 for purchases of property, plant and equipment were approximately ¥1,390 million ($13,113 thousand). Contingent liabilities for guarantee contracts amounted to ¥58,635 million ($553,160 thousand) at March 31, 2000. Of the total contingent liabilities, guarantees given for employees’ housing loans were ¥28,674 million ($270,509 thousand) in the aggregate. The Group enters into derivative transactions related to foreign currency exchange and interest rates to reduce the risk exposure arising from fluctuations in foreign currency exchange rates and interest rates, to reduce the costs of the funds financed, and to improve their return on invested funds. The Group basically enters into derivative transactions only to cover their actual requirements for the effective management of receivables/liabilities, and not for speculative or dealing purposes. The Group, in principle, has no intention to use derivative financial instruments which would increase market risk. Furthermore, the counterparties to the derivative transactions are thoroughly assessed in terms of their credit risk. Therefore, the Group believes that their derivative financial instruments entail minimal market and credit risk. Notional amounts of derivative financial instruments Basic Policies for Derivative Trading Purpose of Derivative Trading 12. Shareholders’ Equity Number of shares 1998 1999 2000 Balance at beginning of year 1,841,435,783 1,862,355,910 1,884,139,404 Exercise of warrants 16,661,107 20,275,164 58,018,995 Conversion of bonds 4,259,020 328,628 20,781,208 Increase arising from a merger — 1,179,702 — Balance at end of year 1,862,355,910 1,884,139,404 1,962,939,607 The changes in the number of issued shares of common stock during the years ended March 31, 1998, 1999 and 2000 were as follows: Yen U.S. Dollars (millions) (thousands) 1999 2000 2000 Forward foreign exchange contracts: To buy foreign currencies ¥ 73,658 ¥ 32,418 $ 305,830 To sell foreign currencies 37,537 18,419 173,764 Interest rate and currency swap contracts 259,343 209,292 1,974,453 Options contracts: Purchased 33,489 10,987 103,651 Written 38,887 8,577 80,915 The notional amounts related to the forward foreign exchange contracts, the interest rate and currency swap contracts and options contracts at March 31, 1999 and 2000 were as follows: 13. Commitments and Contingent Liabilities 14. Derivative Financial Instruments