Epson 2016 Annual Report Download - page 28

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27
as greater spending on advertising and sales promotions to increase brand recognition and increased spending
on research and development on new products.
As a result, business profit was ¥84.9 billion, down ¥16.3 billion (16.1%) year over year.
Segment profit (business profit) in each reporting segment was as follows.
Segment profit in the printing solutions segment was ¥104.7 billion, a year-over-year decrease of ¥6.7 billion
(6.0%). This decrease was due to a combination of factors, including but not limited to foreign exchange
effects; ink cartridge printer price competition in Japan and North America; the stronger U.S. dollar, which
caused the cost of products manufactured overseas to rise; and strategic investment and spending.
Segment profit in the visual communications segment was ¥15.5 billion, a year-over-year decrease of ¥3.8
billion (19.7%). In addition to foreign exchange effects, this decrease was largely due to a decrease in sales of
high added value products that was connected to a decline in education market orders in Europe.
Segment profit in the wearable and industrial products segment was ¥9.8 billion, a year-over-year decline of
¥0.5 billion (5.0%). This decline resulted from factors such as lower semiconductor revenue and higher watch
manufacturing costs.
Segment loss in the “other” segment was ¥0.5 billion, compared to a ¥0.3 billion loss in the previous fiscal year.
As for adjustments, segment loss increased to ¥44.6 billion compared to the ¥39.6 billion loss incurred in the
previous fiscal year. Adjustments consisted primarily of patent royalties and R&D expenses for basic research
that do not belong to a reporting segment, and SG&A expenses, primarily comprising expenses associated with
new businesses and Head Office functions.
Other operating income, other operating expenses, and profit from operating activities
Other operating income was ¥14.8 billion, a year-over-year decrease of ¥25.0 billion (62.9%). Other operating
income decreased mainly because the figure from the previous fiscal year included a ¥30.0 billion positive
effect associated with reduced past service costs accompanying changes in the defined-benefit plan in Japan.
Other operating expenses totaled ¥5.7 billion, a year-over-year decrease of ¥4.0 billion (41.5%). This decrease
was mainly due to the recording of a foreign exchange gain this fiscal year, whereas in the previous fiscal year
Epson recorded a ¥2.5 billion foreign exchange loss.
Finance income and finance costs
Finance income was ¥1.6 billion, a year-over-year decrease of ¥1.6 billion (49.5%). The decrease in finance
income was primarily due to a decrease in interest income. Finance costs were ¥4.2 billion, a year-over-year
increase of ¥1.9 billion (83.3%). The increase in finance costs was primarily due to an increase in foreign
exchange loss.
Profit before tax
The foregoing resulted in profit before tax of ¥91.5 billion, a year-over-year decrease of ¥41.0 billion (30.9%).
Income taxes
Income taxes were ¥45.4 billion, a year-over-year increase of ¥26.7 billion (143.8%). While tax expenses were
lower in the previous fiscal year due to the recognition of deferred tax assets arising from the carryforward of
unused tax losses, this fiscal year income taxes increased mainly due to an increase in tax expenses resulting
from the partial reversal of deferred tax assets arising from the carryforward of unused tax losses.
Profit for the year
Profit for the year was ¥46.0 billion, down ¥66.7 billion (59.2%) year over year.
(2) Liquidity and capital resources
Cash flow
Net cash provided by operating activities was ¥113.0 billion, an increase of ¥4.2 billion compared to the
previous fiscal year. Although the decrease in profit for the period and trade payables were a ¥66.7 billion and
¥8.9 billion negative impact, respectively, net cash provided by operating activities increased mainly because of
a ¥26.8 billion effect from increased net defined benefit liabilities, a ¥26.7 billion effect from increased income
taxes, and a ¥25.8 billion effect resulting from a decrease in inventories.
Net cash used in investing activities totaled ¥51.5 billion, increasing by ¥18.8 billion year on year. This increase