Kenwood 2004 Annual Report Download - page 23

Total assets
Shareholders' equity
Equity ratio
Interest coverage ratio (Note)
(Millions of yen)
Current
fiscal year Previous fiscal year Year-on- year change
135,763
20,161
14.9%
12.61
142,124
13,704
9.6%
—
6,361
+6,457
฀
—
+5.3
percentage point
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financial activities
Effect of exchange rate changes on
cash and cash equivalents
Cash and cash equivalents
at beginning of year
Net increase (decrease) in cash
and cash equivalents
Cash and cash equivalents at end of year
Net increase (decrease) in cash
and cash equivalents in accordance
with change of consolidated subsidiaries
(Millions of yen)
10,358
5,895
968
210
5,220
21,686
157
27,064
27,502
7,674
12,783
409
6,634
27,064
0
33,698
+17,144
1,779
13,751
199
+1,414
+5,378
157
+6,634
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
Communications business฀
With the phasing out of its cell phone terminals through corporate
restructuring, the Company focused on the radio business. This led the
communications business sector to sharply improve profitability. In the
radio market, demand sagged in the first half of the year as the war
against Iraq made itself felt, but, steadily recovered after the
headquarters was relocated to Atlanta in the United States (the largest
market), and improved the coordination of its marketing, development
and production. With development of digital radios progressing
smoothly, the Company launched new products based on the
Association of Public-Safety Communication Officials (APCO) standard in
the USA. It also plans to switch to digital systems for its Formula One
racing radio communications.
On February 6 of this year, Kenwood and Toyo Communication
Equipment negotiated the Company's acquisition of the latter's radio
business, and the two parties on April 9 signed an agreement for the
business transfer. Accordingly, the Company will acquire the radio
business from Toyo Communication Equipment on June 1. This is
expected to increase the Company's presence in the commercial-use
radio sector (especially for government and municipal offices and
electric power companies) in Japan, as well as provide the Company
with a strong contact nexus in the sector. Furthermore, the Company
will obtain radio business-related resources and technologies. Using
these benefits as a springboard, the Company will strive to further
expand its radio business at home.฀
฀
Home electronics business฀
Through business restructuring efforts, the Company concentrated on
home theater systems, pure audio equipment, and portable audio
devices in terms of product categories, in the related sales territories as
Japan, Europe and the United States. Resultant reorganization of
production and marketing structures led to a reduction in fixed costs. In
addition, production innovation and introduction of new products
generated favorable effects, while European sales continued to be
strong. As a result, the Company's earnings improved significantly and
turned to a profit in the second half of the year, weathering a decline in
sales.฀
฀
฀
Consolidated financial position฀
฀
Assets, liabilities and shareholders' equity at the end of the year
under review฀
Total assets decreased ¥6.361 billion from the previous year to ¥135.763
billion at the end of March 2004. Due to the effects of restructuring and
production innovation, cash and deposits increased ¥6.619 billion, while
trade notes and accounts receivable dropped ¥3.674 billion, inventories
fell ¥7.650 billion and tangible fixed assets sagged ¥2.159 billion.
Total liabilities declined ¥12.462 billion to ¥115.596 billion. The
Company reduced short-term bank borrowings by ¥6.253 billion and
long-term debt by ¥2.324 billion, benefiting from strong cash flows from
operating activities.
Total shareholders' equity was ¥20.161 billion, up ¥6.457 billion from
¥13.704 billion posted at the end of the previous fiscal year. The growth
was attributed to an increase of ¥24.460 billion in retained earnings, as
a result of disposition of capital surplus worth ¥17.087 billion and
booking of net income totaling ¥7.318 billion.
฀
Cash flows฀
Cash flows from operating activities increased ¥17.144 billion, or more
than 150%, from the preceding year and the Company reported an
income of ¥27.502 billion, due mainly to a reduction in inventories
through production innovations, increased net income and contraction in
accounts receivable due to the reforms in marketing structure that
started during the previous year.
Cash flows from investing activities saw a net spending of ¥7.674
billion, ¥1.779 billion more than the previous year, due chiefly to
acquisition of tangible and intangible fixed assets and spending related
to making a Chinese joint venture into a wholly owned subsidiary.
Cash flows from financial activities decreased ¥13.751 billion and
posted a net spending of ¥12.783 billion, as a result of proactive
repayment of borrowings due to the strong cash flows from operating
activities.
Current
fiscal year Previous fiscal year Year-on- year change
Kenwood Corporation 23