Brother International 2007 Annual Report Download - page 12

10 Brother Annual Report 2007
Capital Expenditures
Fiscal years ended March 31
(¥ billion)
30
25
20
15
10
5
02006 20072005
18.8 18.7
29.0
Depreciation &
Amortization
Fiscal years ended March 31
(¥ billion)
20
15
10
5
02006 20072005
14.2
16.8
18.4
Interest-bearing Debt
Debt Equity Ratio
Fiscal years ended March 31
100
80
60
40
20
02006 20072005
37.5
80.7
(¥ billion)
Interest-bearing Debt
Debt Equity Ratio
(%)
0.5
0.4
0.3
0.2
0.1
0
0.5
0.2
0.2
35.3
Performance by Area (including inter-segment sales)
1) Japan
Sales in Japan amounted to ¥428,628 million mainly because of strong sales of communications
and printing equipment and machine tools. There w as an increase in selling, general and
administrative expenses, which include research and development expenses. But this w as offset by
the higher sales of communications and printing equipment and machine tools and the w eaker yen,
resulting in operating income of ¥25,295 million.
2) The Americas
Sales totaled ¥188,178 million because of brisk sales of communications and printing equipment
and electronic stationery products. Operating income w as ¥8,206 million, primarily a reflection of
grow th in regional sales, mainly of communications and printing equipment.
3) Europe
Strong sales of communications and printing equipment and electronic stationery products resulted
in sales of ¥174,727 million. Due to grow th in sales, mainly of communications and printing
equipment, operating income w as ¥11,613 million.
4) Asia and Other Areas
Strong sales of communications and printing equipment for sale in Europe w ere mainly responsible
for regional sales of ¥256,311 million. Operating income w as ¥4,461 million primarily because of a
decline in industrial sew ing machines earnings.
Fund Procurement, Liquidity and Cash Flows
1) Fund Procurement and Liquidity
The Brother Group's main financial policy is to maintain an appropriate level of liquidity and to
ensure a flexible and efficient source of funds for its current and future business activities. Based
on this policy, the group has a cash management system for the efficient use of cash and cash
equivalents at group companies. In addition, credit facilities with several financial institutions have
been established to supplement liquidity. As a result, the Brother Group is able to hold loans to the
absolute minimum by preventing the uneven distribution of liquidity among group companies.
Liquidity is defined as the sum of cash and cash equivalents and the unused portion of credit
facilities. As of M arch 31, 2007, cash and cash equivalents totaled ¥70,377 million and the entire
¥30,000 million of credit facilities with financial institutions w as unused. This resulted in total liquidity
of ¥100,377 million. M anagement believes this provides adequate liquidity for the entire fiscal year
with regard to seasonal fluctuations in the demand for funds, loans that are due w ithin one year
and risks involving the operating environment.
For fund procurement activities, the basic policy is to use short-term loans of not more than
one year that are denominated in local currencies to meet w orking capital requirements. For long-term
funding used to acquire production facilities and other equipment, the basic policy is to use internal
resources along with fixed-rate, long-term loans and bonds. As of M arch 31, 2007, short-term loans
totaled ¥13,188 million, most of w hich are denominated in yen and U.S. dollars. Long-term loans
(including the current portion) totaled ¥5,220 million, most of w hich are fixed-rate loans denominated
in yen. Bonds (including the current portion) totaled ¥16,850 million, all of which are denominated
in yen.
The Brother Group has acquired credit ratings from Rating and Investment Information, Inc. In
June 2007, the long-term debt and issuance rating was raised from A- to A. The commercial paper
rating is a-1. Management believes that it should maintain credit ratings at an adequate level to
ensure access to financial and capital markets.