Pioneer 2007 Annual Report Download - page 29

Annual Report 2007 28
Financial management
At present, funds required for operating capital and capital
expenditures are generally financed through internally gener-
ated cash and debt or equity financing. With regard to debt
financing, short-term debt financing with maturities of one
year or less is utilized to fund operating capital requirements.
Short-term borrowing is generally arranged locally by each
consolidated subsidiary based on its capital requirements. At
March 31, 2007, short-term borrowings of ¥12.0 billion were
principally in Japanese yen and euro. On the other hand, fi-
nancing of long-term funding requirements such as invest-
ments in production facilities through debt and equity
securities markets are arranged in Japan, and long-term bor-
rowing from financial institutions is arranged locally by each
consolidated subsidiary. At March 31, 2007, substantially all of
the long-term debt of ¥92.6 billion, including the portion due
within one year, was comprised of ¥61.2 billion of zero coupon
convertible bonds due 2011 including ¥1.2 billion unamortized
issue premium, ¥10.0 billion of unsecured bonds due 2008,
and capital lease obligations and other loans arranged locally.
We believe that our financial position is sound and also we
believe we have an ability to generate positive operating cash
flows. Accordingly, together with uncommitted and unused
credit lines of ¥264.4 billion, we believe we have sufficient
resources to fund future requirements for operating capital and
for capital expenditures to sustain the growth of Pioneer. Also,
the parent company and its four subsidiaries in Japan and
China entered into a three-year global credit facility agreement
for the amount of ¥70.0 billion, which includes ¥67.0 billion
unused portion included in the abovementioned unused credit
lines, effective from May 2005. This will ensure that these
companies in Japan and China have an efficient and stable
financing source for their operational funding needs.
Contractual obligations and
off-balance sheet arrangements
The following summarizes our contractual obligations at March
31, 2007:
Billions of Yen
Payment Due by Period
Less than 1–3 3–5 More than
Total 1 year years years 5 years
Contractual obligations:
Long-term debt ¥91.4 ¥ 6.6 ¥16.9 ¥66.4 ¥1.5
Operating leases 10.5 3.2 3.9 1.6 1.8
Purchase commitment 35.5 35.5 – – –
Interest payments 3.3 1.1 1.6 0.6 –
Contribution to defined
benefit plans 7.1 7.1 – – –
Notes: 1. Total long-term debt of ¥91.4 billion does not include a ¥1.2
billion unamortized issue premium on convertible bonds.
2. Long-term debt includes capital lease obligations.
3. The amount that we will contribute under our defined pension
plans is based on a number of factors, primarily rate of salary
increase and the number of employees. As such, we have esti-
mated the amount of such contribution for the year ending March
31, 2008 but not for the years thereafter.
The ¥35.5 billion purchase commitment outstanding at
March 31, 2007 was for raw materials, property, plant and
equipment and advertising. This included a part of our ¥47.0
billion capital expenditures plan for fiscal 2008.
We provide guarantees covering a nine-month period to
third parties who provide loans to our affiliated companies. If
our affiliated companies were to default on a payment within
the contract period of nine months, we would have to pay the
guaranteed amount. The maximum potential amount of
undiscounted future payments we could be required to make
under the guarantee is ¥0.2 billion at March 31, 2007.