Pioneer 2008 Annual Report Download - page 39

Annual Report 2008 37
Notes to Consolidated Financial Statements
Pioneer Corporation and Subsidiaries
1. Basis of presentation and significant accounting policies:
1) Basis of Presentation
Basis of Financial Statements—
The accompanying consolidated financial statements are
stated in Japanese yen, the currency of the country in which
Pioneer Corporation (Pioneer Kabushiki Kaisha) (the “parent
company”) is incorporated. The translation of Japanese yen
amounts into U.S. dollar amounts for the year ended March
31, 2008 is included solely for the convenience of readers
outside Japan and has been made at the rate of ¥100 to
US$1.00, the approximate rate of exchange prevailing at the
Tokyo Foreign Exchange Market at March 31, 2008. Such
translation should not be construed as a representation that
Japanese yen amounts could be converted into U.S. dollars at
the above or any other rate.
The accompanying consolidated financial statements have
been prepared on the basis of accounting principles generally
accepted in the United States (“U.S. GAAP”) concerning the
operations of the parent company and its majority-owned
subsidiaries (together, the “Company”), except for the omission
of segment information as required by Statement of Financial
Accounting Standards (“SFAS”) No. 131, “Disclosures about
Segments of an Enterprise and Related Information.”
The accompanying consolidated financial statements
reflect the adjustments which management believes are nec-
essary to conform them with U.S. GAAP. Effect has been given
in the consolidated financial statements to adjustments which,
because of either customary accounting practices in Japan or
income tax law requirements, have not been entered in the
Company’s general books of account.
Nature of Operations—
The Company is engaged in the development, manufacture and
sale of electronic products. The Company is a leading global
manufacturer of consumer- and business-use electronic prod-
ucts such as car electronics, audio/video and plasma displays.
The principal production activities of the Company are
carried out in Asia including Japan, the United States, and
Europe. The Company’s products are generally sold under its
own brand names, principally “Pioneer.” The principal markets
for the Company are Japan, the United States, Europe and
Asia. The Company sells its products to customers in con-
sumer and commercial markets through its sales offices in
Japan, and its sales subsidiaries and independent distributors
overseas. On an OEM (original equipment manufacturing)
basis, the Company markets certain products, such as car
electronics products, to other companies.
Use of Estimates—
The preparation of the consolidated financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the dates
of these statements and the reported amounts of revenues
and expenses during the reporting period.
Due to the inherent uncertainty involved in making esti-
mates, actual results could differ from those estimates.
2) Summary of Significant Accounting Policies
Consolidation and Investments in Affiliated Companies—
The consolidated financial statements include the accounts of
the parent company and its majority-owned subsidiaries.
Investments in 20% to 50% owned companies are accounted
for by the equity method of accounting. All significant inter-
company transactions have been eliminated.
Foreign Currency Translation—
For all significant foreign operations, the functional currency is
the local currency. Generally, all asset and liability accounts of
foreign operations are translated into Japanese yen at year-
end rates and all revenue and expense accounts are translated
at rates prevailing at the time of the transactions. The resulting
translation adjustments are accumulated and reported as a
component of accumulated other comprehensive income (loss).
Foreign currency assets and liabilities are translated at
year-end exchange rates and resulting exchange gains and
losses are recognized in earnings currently.
Revenue Recognition—
Sales are generally recorded when merchandise is shipped or
delivered to customers. Recognition of sales occurs when the
title and risks and rewards of ownership are transferred to
customers based on sales contracts. In certain cases, terms of
the contract require the product to pass customer inspection
after delivery and the Company records the sale upon satisfac-
tory customer acceptance. Royalty revenue, which is based on
actual amounts produced or sold by the licensee, is recog-
nized when either a royalty report or payment is received from
the licensee, whichever is earlier. Until such time, this revenue
is not considered to have met the recognition criterion of being
fixed or determinable, nor is collectibility reasonably assured.
The Company normally does not accept returns except for
warranty issues, noncompliance with purchase order