Annual Report 2013

4. Revaluation of landThe Company and three of its consolidated subsidiaries revalued their land properties usedfor business under the “Law concerning Revaluation Reserve for Land” (Law No. 34 issuedon March 31, 1998). The income tax portion on variances due to revaluation is stated inthe “Deferred tax liabilities for land revaluation” account in the “Liabilities” section on theConsolidated Balance Sheet and the revaluation variances, net of the income tax portion,are stated in the “Revaluation reserve for land” account in the “net assets” section on theConsolidated Balance Sheet.?Revaluation methodThe land sites for the refi neries were valued in accordance with the appraisal provided inParagraph 5 of Article 2 of the “Enforcement Ordinance for the Law concerning theRevaluation Reserve for Land” (Government Ordinance No. 119 issued on March 31, 1998),and other land sites were valued by referring to the road ratings provided in Paragraph 4 ofArticle 2 of the “Enforcement Ordinance for the Law concerning the Revaluation Reservefor Land,” as well as making some rational adjustments.?Date of revaluationMarch 31, 2002 (and December 31, 2001 completed by one consolidated subsidiary)(Notes to Consolidated Statements of Income)3. Business structure improvement expensesThe Company recorded expenses related to the closure of the refi nery and the legalmeasures associated with the operations of the refi nery as business structure improvementexpenses under the extraordinary loss on the consolidated statements of income forFY2012, with the breakdown of major items including:Expenses related to the closure of the refi nery ?7,666Expenses related to the legal measures associated with the operations of the refi nery ?12,668The amount of business structure improvement expenses includes ?12,003 milliontransferred to the provision for business structure improvement.4. Loss on accident of asphalt leakageThe Company recorded the loss from the asphalt leakage at the Chiba Refi nery that tookplace in June 2012 as a loss on an asphalt leakage accident under extraordinary loss on theconsolidated statements of income for FY2012, with the breakdown of major items including:Fixed costs incurred during the period of suspended operations ?11,808Restoration expenses, etc. ?2,495(Millions of yen)FY2011(As of March 31, 2012)FY2012(As of March 31, 2013)? Difference between the total amount of the revalued landat fair value as of March 31 of each year and their totalcarrying amount after revaluation ?(101,499) ?(105,828)(Millions of yen)FY2011(From April 1, 2011to March 31, 2012)FY2012(From April 1, 2012to March 31, 2013)1. Selling, general and administrative expensesOutsourcing expense ?22,238 ?22,419Salaries and wages ?19,829 ?19,851Freight expense ?20,481 ?17,009Rent expense ?13,094 ?12,963Depreciation expense ?6,823 ?6,362Retirement and severance benefi t payment to employees ?2,156 ?2,422Amount transferred to allowance for doubtful accounts ?162 ?1402. Research and development expenses includedin administrative expenses and production cost ?3,791 ?3,765