Pioneer 2009 Annual Report Download - page 29

Annual Report 2009 27
1. BASIS OF PRESENTATIONS
a. Basis of Consolidated Financial Statements
The accompanying consolidated financial statements have
been prepared in accordance with the provisions set forth in
the Financial Instruments and Exchange Act of Japan and its
related accounting regulations and in conformity with
accounting principles generally accepted in Japan
(“Japanese GAAP”), which are different in certain respects as
to application and disclosure requirements of International
Financial Reporting Standards.
In preparing these consolidated financial statements,
certain reclassifications and rearrangements have been made
to the consolidated financial statements issued domestically in
order to present them in a form which is more familiar to
readers outside Japan.
The consolidated financial statements are stated in
Japanese yen, the currency of the country in which Pioneer
Corporation (Pioneer Kabushiki Kaisha; the “Company”) is
incorporated and operates. The translations of Japanese yen
amounts into U.S. dollar amounts are included solely for the
convenience of readers outside Japan and have been made
at the rate of ¥98 to $1.00, the approximate rate of exchange
at March 31, 2009. Such translations should not be construed
as representations that the Japanese yen amounts could be
converted into U.S. dollars at that or any other rate.
b. Nature of Operations
The Company is engaged in the development, manufacture
and sale of electronic products. The Company is a leading
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Pioneer Corporation and Subsidiaries
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Consolidation
The consolidated financial statements as of March 31, 2009
include the accounts of the Company and its 116 significant
(120 in 2008) subsidiaries (together, the “Group”).
Under the control or influence concept, those companies
in which the Company, directly or indirectly, is able to exercise
control over operations are fully consolidated, and those
companies over which the Group has the ability to exercise
significant influence are accounted for by the equity method.
Investments in six (six in 2008) affiliated companies are
accounted for by the equity method.
Investments in the remaining affiliated companies are
global manufacturer of consumer- and business-use electronic
products such as car electronics and audio/video. 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 consumer 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.
In the year ended March 31, 2009, the Company’s financial
position deteriorated as a result of a sharp drop in operating
revenue, large losses and significant net cash used in
operating activities. To address this situation, the Company is
implementing a drastic restructuring centered on conducting
business portfolio realignment. Going forward, the Company
will position 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 by the end of the year ending
March 31, 2010.
stated at cost. If the equity method of accounting had been
applied to the investments in these companies, the effect on
the accompanying consolidated financial statements would
not be material.
The excess of the cost of an acquisition over the fair value
of the net assets of the acquired subsidiary at the date of
acquisition is being amortized over 20 years.
All significant intercompany balances and transactions
have been eliminated in consolidation. All material unrealized
profit included in assets resulting from transactions within the
Group is eliminated.