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THE BIG PICTURE ANNUAL REPORT 2 00 2
YEAR ENDED M ARCH 3 1 , 20 0 2
VICTOR COM PANY OF JAPAN, LIM ITED

Table of contents

  • Page 1
    VICTOR COM PAN Y OF J APAN , LIM ITED TH E B IG PICTURE A N N U A L REP ORT 2 0 0 2 YEA R EN D ED M A R CH 3 1 , 2 0 0 2

  • Page 2
    ... regard thereto or any change in events, conditions or circumstances on which any statement is based. FINANCIAL HIGHLIGHTS Victor Company of Japan, Limited and its consolidated subsidiaries Years ended March 31 Thousands of U.S. dollars (Note 1) Millions of yen 2002 For the year: 2001 ¥934,350...

  • Page 3
    ... year for JVC in Europe and Asia. Double-digit growth in these markets helped lift consolidated net sales 2 .1 % year on year, to ¥ 9 5 4 .2 billion (U S$ 7 ,1 7 4 million). H owever, this impressive performance was overshadowed by the effects of the persistent slump and declining selling prices...

  • Page 4
    ... of Victor Company of Japan, Limited (JVC) in June 2001, my first priority was to bolster the company's financial footing by correcting our over-reliance on using inventories to generate profit. I also concluded that realigning our growth strategy to effectively allocate resources to businesses that...

  • Page 5
    .... The aim is to create a resilient corporate structure capable of absorbing further declines in selling prices while generating profits. We have already taken a number of steps toward achieving a non-consolidated breakeven point of ¥ 5 0 0 billion in sales by fiscal 2 0 0 3 . These steps included...

  • Page 6
    ...difficulties as weak consumer demand and falling prices have prevented chain store expansion programs from meeting sales targets. To avoid insolvency, they are now being forced to merge with rivals and shift from products that generate low returns to selling high-value-added products. At JVC, we are...

  • Page 7
    ... areas- high-definition displays, networkable AV systems and digital high-density storage. This approach will be reinforced in other areas of JVC- strengthening our core components business and augmenting the value chain in the software and media business- to ultimately generate new corporate value.

  • Page 8
    ...: high market visibility and a global market presence; outstanding development capabilities in digital audio and visual technology; and a team of engineers able to develop products that offer consumers unrivaled entertainment value. Drawing out these strengths is up to us- management and employees...

  • Page 9
    JVC CLOSE UP

  • Page 10
    ..., from image compression and high-density recording technologies to miniature, highprecision mechatronics. This wealth of electronic expertise lies at the heart of our competitiveness and supports our efforts to develop market-leading products. We are now using these core technologies to drive an...

  • Page 11
    ... NG PRI ORI TY BUSI NESS AREAS JVC's New Priority Business Areas Consumer & Professional Electronics Components High-Definition Displays Networkable AV Systems Digital HD Storage Software & Media Added Value TV Video Audio Materials and Components (Upstream) Content (Downstream) At...

  • Page 12
    ... REPORT 2 0 0 2 High-Band Digit al Video (DV) Cam cor der GR-DVP7 JVC DV Camcorders are market leaders. The GR-DVP7 is a case in point- with its ultra-compact, flat-surface design, it is as stylish as it is powerful. Megapixel CCD and a Super High-Band Processor ensure this elegant camera delivers...

  • Page 13
    ... The slim, floor-standing design of the AV42PD20 boasts a depth of only 19.9 cm (without pedestal), allowing users to position the unit almost anywhere. High-definition picture quality and a theatre-like audio experience generated by the latest 3D Sound System are driving strong overseas sales of...

  • Page 14
    ... REPORT 2 0 0 2 M ARKET PRESENCE Over the years, JVC has built up a formidable presence in the global market. This has been achieved through incremental enhancements to marketing and product development capabilities that have helped us to win impressive regional market shares. As we drive forward...

  • Page 15
    ... year-on-year increases in sales: 2 1 1 % for DVD audio and video recorders, 3 1 % for TVs and 2 5 % for DV camcorders. In the European market, cost is not the main consideration for many consumers. We are therefore developing a lineup of high-end products that offer superior sound and picture...

  • Page 16
    ...Syst em s VS-DT2000R The VS-DT2000R is a slim, stylish, layout-free audio system framed by a pair of Direct-Drive Pole Speakers. The design gives the option to lie the system flat, stand it upright or even hang it on the wall, while the ultra-thin, high-polymer diaphragms in the full-range speakers...

  • Page 17
    AN N UAL REPORT 2 0 0 2 1 5 High-Band Digit al Video (DV) Cam cor der GR-DV3000 The GR-DV3000, on sale in major international markets, incorporates a newly developed F1.2 aspherical lens. This allows the camera to gather twice the light of a conventional F1.8 lens and gives the user the ability to...

  • Page 18
    1 6 AN N UAL REPORT 2 0 0 2 NEW CHALLENGES Our three-year "Value Creation 2 1 " plan targets an operating margin of 3 .9 % and improved capital cost management (CCM). To achieve these goals by fiscal 2 0 0 4 , we need to lower our breakeven point and generate stronger cash flow. Achieving this ...

  • Page 19
    ... withdrawing from low-end television manufacturing in China and unprofitable businesses, such as magnetic heads. These steps to realign JVC's manufacturing stance are part of a global picture where we are shifting production to optimal locations. This will see plants in Japan positioned as "mother...

  • Page 20
    ... DILA-SX070 In our Components & Devices business, we are focusing on the development of core components that give added value to JVC products. One example is the D-ILA panel module, a JVC high-performance liquid crystal device for projectors that enables the display of high-resolution video and...

  • Page 21
    AN N UAL REPORT 2 0 0 2 1 9 Spindle M ot or s for Opt ical Disc Dr ives JVC's spindle motors for optical disc drives are quiet, low-vibrating and resistant to shock.

  • Page 22
    ..., camcorders, televisions, stereo systems, car audio systems, DVD players, CD radio cassette tape players and telephones ¥ 83.9 9.0 % Professional-use and educationaluse systems, information systems, karaoke systems and projectors ¥ 61.5 6.6 % Components for use in computer displays, video heads...

  • Page 23
    ... problems of anemic consumer spending and falling prices in Japan, although JVC did rack up healthy sales of a new model that combines a VHS video deck and a DVD player. Overseas, the European and Asian markets held up well, thanks to rising sales of DVD players, car audio systems, color televisions...

  • Page 24
    ... could not escape the impact of depressed mobile phone and PC markets and falling prices. However, there were a few bright spots- motors for hard disk drives (HDDs) and optical disc products, and optical pickups for car CD players. ENTERTAINMENT SOFTWARES & MEDIAS N ET IN COM E (LOSS) Net income...

  • Page 25
    ... used of ¥ 26.4 billion last year. This was mainly due to efforts Investments and advances declined 5 0 .9 %, or ¥ 21.5 billion, to ¥ 20.8 billion (US$156 million). This was mainly attributable to sales of cross-shareholdings. Property, plant and equipment (less accumulated depreciation) fell...

  • Page 26
    ..., multimedia, digital broadcasting and communications networks. The Technology Section in the Operations Division, works closely with Group companies to design and commercialize products developed by Group company R&D organi zat i ons. Overseas, t he JVC Laborat ory of America and t he JVC Singapore...

  • Page 27
    ... video recorders and 10 televisions that meet energysaving standards for electrical appliances set out in Japan's Energy Conservation Law. In our manufacturing operations, we reduced factory CO2 emissions by 10% and achieved a recycling ratio of 97%* . * Recycling ratio = recycled amount / (recycled...

  • Page 28
    ... System, Logistics, Software, and Interior Furniture Business Managing Directors Motoo Nishimura General Manager, Corporate Planning Headquarters; in charge of Investor Relations and International Marketing Katsuhisa Muto Executive Vice President, AV & Multimedia Company; General Manager, Home AV...

  • Page 29
    AN N UAL REPORT 2 0 0 2 2 7 FIVE-YEAR SUM M ARY Victor Company of Japan, Limited and its consolidated subsidiaries Years ended March 31 Thousands of U.S. dollars (Note 1) Millions of yen 2002 For the year: 2001 2000 1999 1998 2002 $ 7 ,1 7 4 ,2 2 6 4 ,7 0 8 ,3 3 8 2 ,4 6 5 ,8 8 8 5 ,1 4 6 ,3 ...

  • Page 30
    ...and advances to non-consolidated subsidiaries and affiliated companies (Note 5) Other (Notes 5 and 8) Total investments and advances 3 ,1 6 4 1 7 ,5 8 8 2 0 ,7 5 2 4,535 37,694 42,229 2 3 ,7 8 9 1 3 2 ,2 4 1 1 5 6 ,0 3 0 Property, plant and equipment: Land Buildings Machinery and equipment (Note...

  • Page 31
    ...2002 $ 2 7 0 ,6 3 2 2 0 4 ,2 7 1 9 1 2 ,0 3 8 1 2 ,8 1 2 6 0 ,0 6 0 4 3 ,2 6 3 1 4 4 ,3 9 1 1 0 0 ,9 2 5 1 1 3 ,6 4 6 1 ,8 6 2 ,0 3 8 Bank loans (Note 7) Current portion of long-term debt (Note 7) Notes and accounts payable: Trade Construction Non-consolidated subsidiaries and affiliated companies...

  • Page 32
    3 0 AN N UAL REPORT 2 0 0 2 CONSOLIDATED STATEM ENTS OF OPERATIONS Victor Company of Japan, Limited and its consolidated subsidiaries Years ended March 31, 2002, 2001 and 2000 Thousands of U.S. dollars (Note 1) Millions of yen 2002 Net sales Costs and expenses: ¥ 9 5 4 ,1 7 2 2001 2000 2002 $...

  • Page 33
    ... ENTS OF STOCKHOLDERS' EQUITY Victor Company of Japan, Limited and its consolidated subsidiaries Years ended March 31, 2002, 2001 and 2000 Millions of yen Number of shares of common stock (Thousands) Additional paid-in capital Net unrealized holding gains on securities Foreign currency translation...

  • Page 34
    3 2 AN N UAL REPORT 2 0 0 2 CONSOLIDATED STATEM ENTS OF CASH FLOW S Victor Company of Japan, Limited and its consolidated subsidiaries Years ended March 31, 2002, 2001 and 2000 Thousands of U.S. dollars (Note 1) Millions of yen 2002 Cash flows from operating activities: 2001 2000 2002 $ (2 8 9 ...

  • Page 35
    AN N UAL REPORT 2 0 0 2 3 3 NOTES TO CONSOLIDATED FINANCIAL STATEM ENTS Victor Company of Japan, Limited and its consolidated subsidiaries Years ended March 31, 2002, 2001 and 2000 1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS Foreign currency translation Victor Company of Japan (the...

  • Page 36
    ... subsidiaries use the straight-line method. The ranges of useful lives for computing depreciation are generally as follows: Buildings Machinery and equipment 20 to 50 years 03 to 07 years Expenditures for maintenance and repairs are charged to income as incurred. Software costs In accordance with...

  • Page 37
    ... dilution that could occur if convertible bonds or similar securities were converted into common stock exercised to result in the issuance of common stock. As the result of computation for the year ended March 31, 2001, and as the Company reported net losses for the years ended March 31, 2002 and

  • Page 38
    ... in stockholders' equity. As a result, unrealized loss from changes in fair market values of trading securities and loss before income taxes and minority interests in the consolidated statement of operations for the year ended March 31, 2002 decreased by ¥ 230 million ($1,729 t housand) and net...

  • Page 39
    ... rate and the Company' s effective tax rate for financial statement purposes for the year ended March 31, 2001. 2001 7,938 3,474 11,009 9,657 43,496 24,912 ¥ 18,584 Statutory tax rate Lower tax rates of overseas subsidiaries Expenses not deductible for tax purposes Effect of changes in valuation...

  • Page 40
    ... rate and the rate of expected return on plan assets used by the Company are 3.5% and 3.0% in 2002, and 4.0% and 3.0% in 2001, respectively. The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using the estimated number...

  • Page 41
    ... at March 31, 2002 were as follows: Millions of yen Thousands of U.S. dollars As endorser of export bills discounted with banks As guarantor for loans to employees As guarantor for loan to affiliated company and lease obligations of affiliated company and others Swap contracts: Receive fixed/pay...

  • Page 42
    ... lease payments over acquisition cost of leased property is deemed as accumulated interest expenses and allocated for each period on the basis of the interest method. Lessor: 2002: Buildings and structures Vehicles, machinery and equipment Tools, furniture and fixtures Leasehold rights Software...

  • Page 43
    ...-related business and Entertainment business were changed into five segments - Consumer electronics business, Professional electronics business, Components & Devices business, Entertainment Softwares & Medias business and Other business. Consolidated financial data for the year ended March...

  • Page 44
    ...U.S. dollars Consumer electronics business Professional electronics business Components & Devices business Entertainment Softwares & Medias business Eliminations and unallocation Other business Total Consolidated total 2002: Sales External sales Intersegment sales Total sales Operating expenses...

  • Page 45
    ... pension plans, " effective April 1 , 2 0 0 0 , the Companies adopted the new accounting standard, " Opinion on Setting Accounting Standard for Employees' Severance and Pension Benefits, " issued by the Business Accounting Deliberation Council on June 16, 1998. As a result, in the year ended March...

  • Page 46
    ... statements referred to above present fairly the consolidated financial position of Victor Company of Japan, Limited and subsidiaries as of March 31, 2002 and 2001 and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 31, 2002...

  • Page 47
    ...-939-200 JVC Industrial de Mexico, S.A. de C.V. Av. Sor Juana In és De La Cruz #19710, Parque Industrial La Frontera, Tijuana, B.C. 22515, Mexico Telephone: 619-671-1111 JVC Video Manufacturing Europe GmbH Quickborner Strasse 78-80, 13439 Berlin, Germany Telephone: 030-41902353 JVC Latin America...

  • Page 48
    ...: 02-2715-4217 JVC Electronics Singapore Pte. Ltd. 79, Ayer Rajah Crescent, Singapore 139955 Singapore Telephone: 6776-4711 Kuang Yuan Co., Ltd. 7 Kong-Yeh 5th Road, Pin-Zeng Industrial Zone, Pin-Zeng, Taoyuan, Taiwan. Telephone: 03-469-4376 JVC Sales & Service (Malaysia) Sdn. Bhd. 5, Jalan U1/23...

  • Page 49
    ....) JVC Disc America, Co. (Division of JVC America, Inc.) JVC Industrial de Mexico, S.A. de C.V. JVC Manufacturing U.K. Ltd. JVC Video Manufacturing Europe GmbH JVC Electronics Singapore Pte. Ltd. JVC Electronics Malaysia Sdn. Bhd. JVC Video Malaysia Sdn. Bhd. JVC Electronics (Thailand) Co., Ltd. JVC...

  • Page 50
    ... (Europe) GmbH JVC Asia Pte. Ltd. JVC Electronics Singapore Pte. Ltd. JVC Electronics Malaysia Sdn. Bhd. JVC Sales & Service (Thailand) Co., Ltd. JVC Manufacturing (Thailand) Co., Ltd. JVC Components (Thailand) Co., Ltd. P.T. JVC Electronics Indonesia JVC Gulf Fze JVC Korea Co., Ltd. JVC (China...

  • Page 51

  • Page 52
    VICTOR COMPANY OF JAPAN, LIMITED This annual report was printed on recycled paper. Printed in Japan