Pioneer 2009 Annual Report Download

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ANNUAL REPORT 2009
Our Best
Giving
ANNUAL REPORT 2009
For the Year Ended March 31, 2009

Table of contents

  • Page 1
    Giving Our ANNUAL REPORT 2009 Best ANNUAL REPORT 2009 For the Year Ended March 31, 2009

  • Page 2
    Pioneer Corporation is committed to realizing its group philosophy, "Move the Heart and Touch the Soul," with more people around the world. Ever since its founding in 1938, Pioneer has brought to market numerous breakthrough electronics products. We currently face an extremely challenging business ...

  • Page 3
    Giving Our Contents 16 Management 17 Financial Section Best 2 To Our Stakeholders 8 Review of Operations 10 R&D and Intellectual Properties 12 Corporate Social Responsibility 14 Corporate Governance 50 General Information on Shares Annual Report 2009 1

  • Page 4
    ... medium-term business plan, which revolves around our growth strategy for the core Car Electronics business. We Report Our Fiscal 2009 Performance Effective from fiscal 2009, the year ended March 31, 2009, Pioneer has changed its accounting principles for preparing consolidated financial statements...

  • Page 5
    ... of the yen's appreciation. In fiscal 2009, Pioneer used net cash of ¥38.3 billion in investing activities, mainly for capital expenditures in the Car Electronics business, in addition to using net cash of ¥61.6 billion in operating activities. Consequently, free cash flows were a negative ¥99...

  • Page 6
    ... Home Electronics Operating revenue ¥73.0 billion Home AV products Car navigation systems Car speakers Car AV products Home-use speakers Car audio products Cable TV set-top boxes DJ equipment Sharp Corporation on the establishment of a joint venture in the optical disc business on June 25, 2009...

  • Page 7
    ... Industry Corporation (Group). Overseas, Pioneer seeks to develop new car entertainment by focusing on car AV products. The relaunched Air Navi series features enhanced basic functionality, in addition to offering communications functions that realize telematics capabilities. Annual Report 2009...

  • Page 8
    ...Expand to new business domains Home Electronics Business Going forward, Pioneer will develop the Home Electronics business centered on home AV products, DJ equipment and cable TV set-top boxes, after completing withdrawal from the display business and starting an optical disc joint venture. In home...

  • Page 9
    ... to developing hallmark Pioneer products featuring innovative technologies and unique added value, especially car navigation systems, car audio products, home AV products, DJ equipment and cable TV set-top boxes. Your continued understanding and support will be vital to this endeavor. June 25, 2009...

  • Page 10
    ... Main Products -20 • Plasma Displays • DVD Players • LCD TVs • DVD Drives • DVD Recorders • Blu-ray Disc Recorders • Equipment for Cable-TV Systems 2008 2009 -40 • Blu-ray Disc Players • Blu-ray Disc Drives • Audio Systems • Audio Components • DJ Equipment 8 PIONEER...

  • Page 11
    ... Main Products and Services 20 2.5 Revenue and Income (Loss) (Billions of Yen) Revenue 80 Income (Loss) 10 60 7.5 40 5 • Organic Light-Emitting Diode Displays • Factory Automation Systems • Electronics Devices and Parts • AV Accessories • Speaker Units • Telephones • Business-use...

  • Page 12
    ... mobile communications services getting under way overseas as well, the regions in which this mobile network playback technology can be utilized will expand. Internet Home Driving Pioneer is committed to promoting the development of vehicle network environments and to continued R&D activities...

  • Page 13
    ... that Support Business Pioneer owns a large number of patents in such fields as car navigation systems, optical discs, and audio systems, and is continuously filing new patents. As a result, Pioneer ranks 11th among approximately 17,000 companies in Japan in terms of the number of published patent...

  • Page 14
    ... our corporate value by earning the trust of society. Social Contribution Based on Pioneer's group philosophy "Move the Heart and Touch the Soul," Pioneer conducts social contribution activities, with active participation by employees, centered on the themes of "audio/video," "environmental...

  • Page 15
    ... searched; and utilize the Web service Smart Loop Drive Report, which allows drivers to check their eco-driving status based on their driving record, thereby supporting and helping to raise awareness of eco-driving among drivers. In the future, Pioneer will continue to supply eco-friendly products...

  • Page 16
    ... for shareholders to elect directors. Furthermore, the Company has adopted an executive officer system to expedite business execution and clarify the responsibilities for each business. reports on these issues to the Board of Directors. In fiscal 2009, the Group Executive Committee held 29 meetings...

  • Page 17
    ... director of the Company, to enhance and bolster the risk management system for risks associated with the Group's businesses. The committee devises measures to identify risks and prevent crises. Response policies for material risks are set out in the "Rules of the Pioneer Group" and managed...

  • Page 18
    ... Officer, and General Manager of Corporate Communications Division Satoshi Matsumoto Managing Director In charge of Quality Control Division and Creative Sound & Voice Business Group Masanori Koshoubu Managing Director General Manager of Research & Development Group and in charge of Network...

  • Page 19
    ... of Operations 19 Financial Review 22 Consolidated Balance Sheets 24 Consolidated Statements of Operations 25 Consolidated Statements of Changes in Equity 26 Consolidated Statements of Cash Flows 27 Notes to Consolidated Financial Statements 49 Independent Auditors' Report Annual Report 2009 17

  • Page 20
    ... number of treasury stock from the number of issued shares. 8. In fiscal 2006, Pioneer sold a subsidiary engaged in the development of cable TV software and, in fiscal 2007, sold subsidiaries involved in the electronics devices and parts business. For these, Pioneer applied SFAS No. 144, "Accounting...

  • Page 21
    ... billion because of lower sales of both car audio products and car navigation systems, partly due to lackluster auto sales worldwide. In car navigation systems, consumermarket sales declined year on year, mainly due to lower sales in North America, Japan and Europe. Meanwhile, OEM sales rose on the...

  • Page 22
    ... benefits and expenses related to withdrawal from plasma display business, and a loss of ¥14.9 billion on impairment of investment securities mainly due to falling prices of shares held by the Company. Income (loss) before income taxes and minority interests As a result the foregoing, Pioneer...

  • Page 23
    ...a year earlier. Net cash used in investing activities was ¥38.3 billion, down from ¥92.6 billion in fiscal 2008. This was mainly due to a payment for the purchase of investment securities of ¥20.5 billion in fiscal 2008, primarily for the purchase of Sharp Corporation shares as part of a business...

  • Page 24
    ... BALANCE SHEETS Pioneer Corporation and Subsidiaries March 31, 2009 and 2008 Millions of Yen Thousands of U.S. Dollars (Note 1) ASSETS Current Assets: Cash and cash equivalents Receivables (Note 6): Trade receivables Allowance for doubtful receivables Inventories (Notes 4 and 6) Deferred tax...

  • Page 25
    ... Total long-term liabilities Equity (Note 8): Common stock, no par value Authorized, 400,000,000 shares; Issued: 210,063,836 shares in 2009 and 2008 Capital surplus Retained earnings Unrealized gain on available-for-sale securities Deferred gain on derivatives under hedge accounting Foreign currency...

  • Page 26
    ... of property, plant and equipment (Note 5) Exchange loss Equity in earnings (losses) of affiliated companies-net Loss on impairment of investment securities Restructuring costs (Note 13) Others-net Other expenses-net Income (loss) before income taxes and minority interests Income Taxes (Note...

  • Page 27
    CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Pioneer Corporation and Subsidiaries Years ended March 31, 2009 and 2008 Millions of Yen Thousands of U.S. Dollars (Note 1) 2009 2008 2009 Common Stock Balance, beginning of year Issuance of new shares Balance, end of year Capital Surplus Balance, ...

  • Page 28
    ... policy Other-net Net cash used in investing activities Financing Activities: Net increase in short-term borrowings Repayment of long-term debt Dividends paid Proceeds from issuance of new shares Other-net Net cash provided by financing activities Effect of Exchange Rate Changes on Cash and Cash...

  • Page 29
    ...the Car Electronics business as a core business. In addition, the Company will develop the Home Electronics business in three main areas: home AV products, DJ equipment and cable TV set-top boxes. In the display business, the Company will completely withdraw the business after ending plasma TV sales...

  • Page 30
    ... costs of research and development costs; 4) cancellation of the fair value model accounting for property, plant and equipment and investment properties and incorporation of the cost model accounting; 5) recording the prior year's effects of changes in accounting policies in the income statement...

  • Page 31
    ...asset or the net selling price at disposition. l. Research and Development Costs and Intangible Assets Research and development costs are charged to income as incurred. Software for sale is amortized by the straight-line method over 2- 3 years, while software used by the Company is amortized by the...

  • Page 32
    ... in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the income statement to the extent that they are not hedged by forward exchange contracts. 30 PIONEER CORPORATION

  • Page 33
    ...interests method of accounting is no longer allowed. (2) The current accounting standard accounts for the research and development costs to be charged to income as incurred. Under the revised standard, an in-process research and development (IPR&D) acquired by the business combination is capitalized...

  • Page 34
    ... in investment securities in the accompanying consolidated balance sheets. Available-for-sale securities and bonds that the Group sold during the year ended March 31, 2009 and 2008 were as follows: Millions of Yen Thousands of U.S. Dollars 2009 2008 2009 Proceeds from Sales: Equity securities...

  • Page 35
    ...net selling price and the amount of decrease was recorded in other income (expenses) as loss on impairment of property, plant and equipment. The book value of the business-use asset group and for-sale asset group was reduced to nominal value. As for the idle asset group, the market price information...

  • Page 36
    ... cash-flow generating unit independent of each other. The Group anticipated difficulty to restore the profitability in the plasma display and DVD recorder businesses. As to patent rights of plasma display panels, on March 7, 2008, the Board of Directors decided to cease inhouse production of plasma...

  • Page 37
    ... of the 30 consecutive trading days is at least 120% of the conversion price on or after March 4, 2007 and prior to maturity, or (2) if the laws or regulations of Japan having power to tax is changed, or (3) if a resolution is passed at the general meeting of shareholders of the Company to become...

  • Page 38
    ... income tax laws. The Company also sponsors a domestic non-contributory defined-benefit Corporate Pension Fund ("CPF") under the Defined Benefit Corporate Pension Law of Japan, which covers substantially all of its Japanese employees. The benefits are determined based on the sum of cumulative points...

  • Page 39
    ...pension costs ¥ 4,082 2,366 (2,703) (103) 2,172 317 ¥ 6,131 ¥ 4,136 2,287 (3,336) (113) 1,292 345 ¥ 4,611 $ 41,653 24,143 (27,582) (1,051) 22,163 3,235 $ 62,561 2009 2008 Discount rate Expected rate of return on plan assets Method of attributing the projected benefits to periods of service...

  • Page 40
    ... Equity section of the accompanying consolidated balance sheets. Net periodic pension costs related to the retirement benefits for the years ended March 31, 2009 and 2008 were as follows: Millions of Yen Thousands of U.S. Dollars 2009 2008 2009 Service cost Interest cost Expected return on plan...

  • Page 41
    ...as a separate component of equity or deducted directly from stock acquisition rights. 9. STOCK OPTIONS The Company has incentive stock option plans for directors, executive officers and selected employees. In accordance with approval at the ordinary general meetings of shareholders on June 29, 2004...

  • Page 42
    ... plans as of March 31, 2009 is as follows: Yen Years ended March 31 Persons Granted Exercisable Period Weighted-Average Exercise Price Number of Shares 2005 2006 420 436 From July 3, 2006 to June 30, 2009 From July 2, 2007 to June 30, 2010 2,944 1,828 315,900 315,100 A summary of the status...

  • Page 43
    ...: Millions of Yen Thousands of U.S. Dollars 2009 2008 2009 Deferred tax assets: Write-down of inventories Accrued expenses Excess depreciation Loss on impairment of property, plant and equipment Loss on impairment of investment securities Tax loss carryforwards Others Valuation allowance Total...

  • Page 44
    ... Research and development costs charged to income were ¥54,790 million ($559,082 thousand) and ¥59,420 million for the years ended March 31, 2009 and 2008, respectively. 12. LEASES The Group leases certain land, machinery and equipment, office space, warehouses, computer equipment and employees...

  • Page 45
    ...) (10) 65 44 Thousands of U.S. Dollars 2009 Contract Amount Fair Value Unrealized Gain/Loss Foreign currency forward contracts: Buying U.S. dollars Buying Sterling pound Selling U.S. dollars Selling Euro Currency Option contracts: Euro call Euro put Swap contracts: Receiving Japanese yen, paying...

  • Page 46
    ...to overseas customers of the Group for the years ended March 31, 2009 and 2008 was as follows: a. Business Segments (1) Sales and operating loss Millions of Yen 2009 Car Electronics Home Electronics Others Corporate Eliminations Consolidated Sales to customers Intersegment sales Operating revenue...

  • Page 47
    ... (loss) Millions of Yen 2008 Car Electronics Home Electronics Others Corporate Eliminations Consolidated Sales to customers Intersegment sales Operating revenue Operating expenses Operating income (loss) ¥373,883 2,002 375,885 349,784 ¥ 26,101 ¥329,530 670 330,200 348,121 ¥ (17,921) ¥ 71...

  • Page 48
    ..., car stereos, car AV systems and car speakers Home Electronics: Plasma displays, LCD TVs, DVD recorders, DVD players, DVD drives, Blu-ray Disc recorders, Blu-ray Disc players, Blu-ray Disc drives, audio systems, audio components, DJ equipment and equipment for cable TV systems Others: Organic light...

  • Page 49
    ... - 774,477 765,261 ¥ 9,216 ¥562,276 Thousands of U.S. Dollars 2009 Japan North America Europe Other Regions Corporate Eliminations Consolidated Sales to customers Interarea transfer Operating revenue Operating expenses Operating income (loss) Total assets $2,269,908 2,210,776 4,480,684 5,100...

  • Page 50
    ...Blu-ray Disc market. Outline of the new company is as follows. Company name: Pioneer Digital Design and Manufacturing Corporation Headquarters: Kawasaki-shi, Kanagawa, Japan sale of optical-disc-related products and parts Main businesses: Development, design, manufacture and 48 PIONEER CORPORATION

  • Page 51
    ...have audited the accompanying consolidated balance sheets of Pioneer Corporation (the "Company") and consolidated subsidiaries (together, the "Group") as of March 31, 2009 and 2008, and the related consolidated statements of operations, changes in equity, and cash flows for the years then ended, all...

  • Page 52
    ... stock held by the Company. Principal Shareholders (Ten Largest Shareholders) Name of Shareholder Number of shares held (thousand) Shareholdings (%) Sharp Corporation The Master Trust Bank of Japan, Ltd. (Trust Account) Japan Trustee Services Bank, Ltd. (Trust Account) Japan Trustee Services...

  • Page 53
    ... strategies, in light of technological developments in and affecting our businesses; (vi) our continued ability to devote sufficient resources to research and development, and capital expenditure; (vii) our ability to continuously enhance our brand image; (viii) the success of our joint ventures...

  • Page 54
    http://pioneer.jp/e/ Printed in Japan with soy ink on environmentally friendly paper.