Depreciation expense as lessor, which is reflected in the accompa- nying consolidated statements of income, computed by the straight- line method was ¥63 million ($525 thousand) and ¥119 million for the years ended March 31, 2003 and 2002, respectively. Depreciation expense as lessee, which is not reflected in the accompanying consolidated statements of income, computed by the straight-line method was ¥157 million ($1,308 thousand) and ¥86 million for the years ended March 31, 2003 and 2002, respectively. The amounts of unearned lease income and obligations, acquisi- tion cost and depreciation under finance leases include the imputed interest income portion and interest expense portion, respectively. The Company enters into foreign exchange forward contracts and currency option contracts to hedge foreign exchange risk associated with certain assets and liabilities on construction contracts denomi- nated in foreign currencies. It is the Company’s policy to use deriva- tives only for the purpose of reducing foreign exchange risks associ- ated with such assets or liabilities. The Company does not hold or issue derivatives for trading purposes. trolled by the Company’s financing department. Each derivative transaction is periodically reported to the Company’s accounting department and executive officers. Forward exchange contracted amounts which are assigned to associated assets or liabilities and are reflected on the balance sheet at year end are not subject to the disclosure of market value infor- mation. All of the derivative contracts outstanding at March 31, 2003 and 2002, qualified for hedge accounting and disclosures of market value information are not required to be and have not been present- ed herein. Because the counterparties to these derivatives are limited to major international financial institutions, the Company does not anticipate any losses arising from credit risk. The basic policies for the use of derivatives are approved by the management and the execution and control of derivatives are con- At March 31, 2003, the Group had the following contingent lia- bilities: Reconciliation of the differences between basic and diluted net income per share ("EPS") for the year ended March 31, 2003, is as follows: Diluted net income per share for the year ended March 31, 2002, is not disclosed because no dilutive securities were outstanding dur- ing the year. 17. NET INCOME PER SHARE 16. CONTINGENT LIABILITIES 15. DERIVATIVES Guarantees and similar items for bank loans ..................................................................... ¥ 7,231 $ 60,258 Millions of Yen Thousands of U.S. Dollars Basic EPS — Net income available to common shareholders ........ ¥ 2,000 185,293 ¥ 10.79 $ 0.09 Effect of dilutive securities — Warrants ....................................... 362 Diluted EPS — Net income for computation ................................ ¥ 2,000 185,655 ¥ 10.77 $ 0.09 Thousands of Shares Weighted-average Shares Yen U.S. Dollars Millions of Yen Net Income EPS 41