Pioneer 2008 Annual Report Download - page 28

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PIONEER CORPORATION
26
Cash flows
Net cash provided by operating activities in fiscal 2008 was
¥22.0 billion. This was primarily due to adjustments for non-
cash expenses, such as depreciation and amortization of
¥33.3 billion, impairment losses of ¥23.3 billion on long-lived
assets, and deferred income taxes of ¥13.3 billion. These
outweighed the following factors reducing cash: a net loss of
¥18.0 billion, a decrease in accrued liabilities of ¥12.3 billion
and a gain on sale and disposal of fixed assets, net of ¥11.7
billion, for which we received most of the cash proceeds as a
deposit from the buyer in fiscal 2007.
Net cash used in investing activities was ¥72.4 billion. This
reflected capital expenditures of ¥42.0 billion, mainly related to
the Car Electronics business and the newly established
Kawasaki Plant, as well as ¥19.8 billion for the purchase of
Sharp Corporation shares as part of the business and capital
alliance with Sharp. Additionally, ¥14.7 billion was paid for
additional investments in subsidiaries, mainly for making
Tohoku Pioneer Corporation a wholly owned subsidiary.
Net cash provided by financing activities was ¥35.9 billion,
largely attributable to the proceeds of ¥41.4 billion from a
third-party allotment of newly issued Pioneer shares to Sharp.
As a result of these activities and the effect of changes in
exchange rates on cash and cash equivalents of overseas
subsidiaries, cash and cash equivalents decreased by ¥20.6
billion to ¥81.2 billion at the end of fiscal 2008, from ¥101.8
billion at the end of fiscal 2007.
The alliance with Sharp provided net cash of ¥21.6 billion,
after offsetting the aforementioned purchase of Sharp shares
against the above proceeds from the third-party allotment of
newly issued Pioneer shares to Sharp.
Capital requirements
Our requirements for operating capital are primarily for the
purchase of raw materials and parts for manufacturing our
products. Also, operating expenses, including manufacturing
expenses and SGA expenses, require a substantial amount of
operating capital. Payroll and payroll-benefits, and marketing
expenses, such as those for advertising and sales promotion,
account for a significant portion of operating expenses. Our
expenditure for R&D is included in various operating expenses,
and payroll for R&D-related personnel accounts for a substan-
tial portion of R&D expenses.
We believe that our ability to generate positive operating
cash flows and liquidity discussed in the following financial
management section provides sufficient resources to fund
future operating capital requirements and capital expenditures.
Liquidity and Capital Resources