Pioneer 2014 Annual Report Download

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Annual Report 2014
For the Year Ended March 31, 2014

Table of contents

  • Page 1
    Annual Report 2014 For the Year Ended March 31, 2014

  • Page 2
    ..., Home Electronics, and Others businesses and sales by geographic market Released the carrozzeria Cyber Navi car navigation system to the Japanese market with a new feature that allows drivers to share view images recorded by an on-board camera and traffic information Installed club sound systems...

  • Page 3
    ... the world, maintaining a high market share in the car consumer market. ¥108.0 billion Home Electronics 21.7 % Pioneer offers products for audio and visual enjoyment, including the world's leading DJ equipment, home AV products, optical discrelated products, and equipment for cable-TV systems...

  • Page 4
    ...DVD/CD writer, capable of wirelessly recording and playing Blu-ray Discs at high transmission speeds Released a high-precision pedaling monitoring system for competitive cyclists Previewed a smartphone-linked, automotive-use head-up display at IFA 2013, one of the world's largest electronics shows...

  • Page 5
    ... IVI (In-Vehicle Infotainment): A system for providing a wide range of information and entertainment in a vehicle Exhibited next-generation car electronics product "NEX,*" a new concept which connects cars to networks, at 2014 International CES, one of the world's largest technology trade shows, in...

  • Page 6
    ... net sales in fiscal 2014 rose 10.2% year on year, to ¥498.1 billion. Despite a decline in sales of optical disc drive-related products, the positive effect of the Japanese yen's depreciation combined with increased sales of Car Electronics, primarily in our OEM business, resulted in overall sales...

  • Page 7
    ... number of shares outstanding, excluding treasury stock. 3. Free cash flows represent the sum of cash flows from operating activities and cash flows from investing activities. Maintaining Stable Earnings and Cultivating New Businesses In Home Electronics, we will leverage our DJ equipment business...

  • Page 8
    ... new business and vehicle information opportunities, including the provision of information Smartphone, Tablet Car Navigation to support safe driving and the generation of cloudHuge amounts of data from smartphone Information from high-precision automotive equipment based services as well as driving...

  • Page 9
    ...of Cyber Navi-equipped vehicles for leasing and car sharing fleets in July 2014. We are currently developing HUDs for the consumer market, but we are also working to have the devices installed as OEM products for automakers and are considering entering the automotive parts market as a display device...

  • Page 10
    ... firmware update with several 2014 Pioneer car electronics products in North America and Western Europe, followed later in the year in additional countries where CarPlay is available. With Pioneer car electronics products, drivers can make and receive calls, compose and respond to text messages, use...

  • Page 11
    ... source Safe light OLED Pioneer's Products Create New Markets In 1997, we became the first company to successfully mass-produce OLED displays, and since that time Pioneer has been a leader in the OLED market. We established the manufacturing subsidiary Pioneer OLED Lighting Devices Corporation in...

  • Page 12
    ... emphasis on user needs and a professional brand design concept. DJ Equipment Designed to Meet User Needs Pioneer's DJ equipment business began 20 years ago, in 1994. The market at that time was mostly for analog turntables. DJs who used CDs had to manage with commercial-use players, but the...

  • Page 13
    ... clubs around the world. CDJ-2000NXS DJ player for professional DJs and clubs DJM-900NXS High-end DJ mixer for professional DJs and clubs DDJ-SZ DJ controller for professional DJs and clubs New Directions for DJ Equipment Business Along with the increased popularity in recent years of electronic...

  • Page 14
    ... an increase in SG&A expenses due to the negative impact of foreign exchange rate movements. Main Products Audio Systems Audio Components DJ Equipment Equipment for Cable-T V Systems Blu-ray Disc Players Blu-ray Disc Drives DVD Players DVD Drives AV Accessories -5 2012 -2.8 2013 2014 DJ Equipment...

  • Page 15
    ...an increase in SG&A expenses resulting from investment in new businesses. Main Products and Services Factory Automation Systems Speaker Units Electronic Devices and Parts Organic Light-emitting Diode Displays Telephones Business-use AV Systems Electronic Manufacturing Services Map Software Licensing...

  • Page 16
    ... has a wide viewing angle, a new spatial image display that is not possible with liquid crystal or other conventional flat-panel displays is achieved. In addition to spatial staging, we see this technology being used in product displays, electronic signs, game equipment, and housing and construction...

  • Page 17
    ... Japan* 2 to create next-generation ITS. Using the car navigation position-recognition technologies, map displays, and HMI*3 technologies that Pioneer has developed to date, we have developed a system that obtains the location information of other vehicles and pedestrians through vehicle-to-vehicle...

  • Page 18
    ...the Companies Act of Japan, Pioneer has elected to structure its corporate governance system with a Board of Corporate Auditors. The Board of Directors decides on fundamental issues such as management policies and supervises the execution of business activities, while the Board of Corporate Auditors...

  • Page 19
    ... Report Group Executive Committee Business execution Compensation Committee (Chair: outside director) Internal audit Report and make recommendations Submit Approve Special Committee (Chair: outside director) Business Divisions and Group Companies "Rules of the Pioneer Group" • "Pioneer...

  • Page 20
    ... on our Group Philosophy of "Move the Heart and Touch the Soul," Pioneer aims to meet the social needs of a diverse range of stakeholders through sound corporate activities, to continue to be a company that is trusted by society. Pioneer's corporate citizenship activities focus on the areas of audio...

  • Page 21
    ...Officers Hideki Okayasu Directors Mikio Ono Satoshi Matsumoto Kunio Kawashiri Masahiro Tanizeki Shunichi Sato Managing Executive Officers Satoshi Matsumoto Masanori Koshoubu Masanori Kurosaki Board of Corporate Auditors Full Time Corporate Auditor Senior Executive Officers Haruyuki Inohana...

  • Page 22
    ... Operations Financial Review Consolidated Balance Sheet Consolidated Statement of Operations Consolidated Statement of Comprehensive Income (Loss) Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements Independent Auditor's Report

  • Page 23
    ... activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of year Return on assets (ROA) (%) Return on equity (ROE) (%) Average foreign exchange rate (yen/U.S. dollars) Average foreign exchange rate (yen/euro) Number of employees 0.01...

  • Page 24
    ...196,827 million. Home Electronics sales rose 12.6% year on year, to ¥108,026 million. Although sales of optical disc drive-related products declined, the positive effect of the Japanese yen's depreciation, combined with increased sales of DJ equipment and equipment for cable-TV systems, resulted in...

  • Page 25
    ... l R e po r t 2 0 1 4 23 • Operating income Cost of sales increased to ¥396,705 million from ¥359,847 million a year earlier. Cost of sales accounted for 79.7% of net sales, remaining on the same level as in fiscal 2013. Selling, general and administrative (SG&A) expenses increased to ¥90,177...

  • Page 26
    ... Balance Sheet Pioneer Corporation and Its Subsidiaries March 31, 2014 Millions of Yen ASSETS Current Assets: Thousands of U.S. Dollars (Note 1) 2014 2013 2014 Cash and cash equivalents (Note 14) Time deposits (Note 14) Receivables (Note 14): Trade receivables Inventories (Note 4) Deferred tax...

  • Page 27
    ... in 2013 Accumulated other comprehensive income (loss): Unrealized gain on available-for-sale securities Deferred loss on derivatives under hedge accounting Foreign currency translation adjustments Pension adjustments recognized by foreign consolidated subsidiaries Defined retirement benefit plans...

  • Page 28
    ... Statement of Operations Pioneer Corporation and Its Subsidiaries Year ended March 31, 2014 Millions of Yen Thousands of U.S. Dollars (Note 1) Net Sales Cost of Sales (Note 10) Gross profit Selling, General and Administrative Expenses (Note 10) Operating income Other Income (Expenses): 2014...

  • Page 29
    ... Statement of Changes in Equity Pioneer Corporation and Its Subsidiaries Year ended March 31, 2014 Millions of Yen Shareholders' Equity Deferred Unrealized Loss on Gain (Loss) Derivatives on Availablefor-Sale Under Hedge Accounting Securities Accumulated Other Comprehensive Income (Loss) Pension...

  • Page 30
    28 P i o n eer Co r po r at io n An n u al R eport 2 0 1 4 Consolidated Statement of Cash Flows Pioneer Corporation and Its Subsidiaries Year ended March 31, 2014 Millions of Yen Thousands of U.S. Dollars (Note 1) 2014 Operating Activities: 2013 ¥(10,801) (5,169) 25,413 (291) 1,788 3 61 (253) ...

  • Page 31
    ... commercial markets through its sales offices in Japan, and its sales subsidiaries and independent distributors overseas. On an OEM (original equipment manufacturing) basis, the Group markets certain products, such as car electronics products to other companies. 2. Summary of Significant Accounting...

  • Page 32
    ... for Equity Method of Accounting for Investments." The new standard requires adjustments to be made to conform the associate's accounting policies for similar transactions and events under similar circumstances to those of the parent company when the associate's financial statements are used in...

  • Page 33
    ... principally using the declining-balance method based on the estimated useful lives of the assets, while the straight-line method is applied to property, plant and equipment of foreign subsidiaries and leased property. j. Long-lived Assets The Group reviews its long-lived assets for impairment...

  • Page 34
    ... and the capitalized amount of the related asset retirement cost. n. 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 1-3 years, while software used by the Group is...

  • Page 35
    ... not hedged by forward exchange contracts. r. Foreign Currency Financial Statements The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rate as of the consolidated balance sheet date, except for equity, which is translated at...

  • Page 36
    ... corporate-tax system, which allows companies to base tax payments on the combined profits or losses of the parent company and its wholly owned domestic subsidiaries from the fiscal year ended March 31, 2014. w. Changes in the Method of Presentations Consolidated Balance Sheet Prior to April 1, 2013...

  • Page 37
    ...a quoted market price in an active market. The information for these investments is disclosed in Note 14. The Group recognized impairment loss of ¥5,040 million for the investment securities (available-for-sale equity securities) for the year ended March 31, 2013. Available-for-sale securities that...

  • Page 38
    ... for the year ended March 31, 2014. As of March 31, 2013, the Group holds certain idle properties in Shizuoka and other areas in Japan. Impairment loss on those properties for the year ended March 31, 2013, was ¥45 million. The carrying amounts, changes in such balances and market prices of such...

  • Page 39
    ...796 2,942 10 - - $669,855 As of March 31, 2014 and 2013, the following assets were pledged as collateral for short-term borrowings and long-term debt of the Group: Millions of Yen Thousands of U.S. Dollars 2014 Building and structures Land Investment securities Total ¥14,016 12,953 4,594 ¥31,563...

  • Page 40
    ... by defined Year ended March 31, 2014 Defined benefit pension plans (1) The changes in projected benefit obligation for the year ended March 31, 2014, were as follows: Millions of Yen Thousands of U.S. Dollars benefit pension plans. Under such plans, the related cost of benefit is funded or...

  • Page 41
    ... for projected benefit obligation ¥34,585 (594) ¥33,991 $335,777 (5,767) $330,010 (4) The components of net periodic retirement benefit costs for the year ended March 31, 2014, were as follows: Millions of Yen Thousands of U.S. Dollars Service cost Interest cost Expected return on plan assets...

  • Page 42
    ... as of March 31, 2014. Year ended March 31, 2013 Accrued pension and severance costs for the year ended March 31, 2013, were as follows: Japan Millions of Yen Projected benefit obligation Fair value of plan assets Unfunded retirement obligation Unrecognized prior service gain Unrecognized actuarial...

  • Page 43
    ...15 years Projected benefit obligation Fair value of plan assets Accrued pension and severance costs ¥(15,492) 10,895 ¥ (4,597) The components of net periodic retirement benefit costs for the year ended March 31, 2013, were as follows: Millions of Yen Service cost Interest cost Expected return...

  • Page 44
    ... Board of Directors' meeting held on May 13, 2013, the Company issued new shares through a third-party allotment to NTT DOCOMO, INC., with the aim to build the business alliance smoothly with respect to the business related to cloud information services for automobile users, as follows: (1) Number...

  • Page 45
    ... 2014 and 2013, were as follows: Millions of Yen Thousands of U.S. Dollars 2014 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 Accrued pension and severance costs Tax...

  • Page 46
    ... change was immaterial. 10. Research and Development Costs Research and development costs charged to income were ¥26,891 million ($261,078 thousand) and ¥33,671 million for the years ended March 31, 2014 and 2013, respectively. 11. Leases The Group leases certain land, machinery and equipment...

  • Page 47
    ... Note 15 for more details about derivatives. The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31, 2014 and 2013. Market risk management (foreign exchange risk and interest rate risk) Foreign currency trade receivables and payables are exposed to...

  • Page 48
    ...Fair Value 2014 Unrealized Gain/Loss Cash and cash equivalents Time deposits Receivables: Trade receivables Allowance for doubtful receivables (*1) Investment securities: Available-for-sale securities Total Short-term borrowings Current portion of long-term debt Trade payables Income taxes payable...

  • Page 49
    ... quoted market price of the stock exchange for the equity instruments. The information of the fair value for the investment securities by classification is included in Note 3. Trade payables, short-term borrowings and income tax payable The carrying values of trade payables, short-term borrowings...

  • Page 50
    ... at io n An n u al R eport 2 0 1 4 15. Derivatives The Group enters into foreign currency forward contracts to hedge foreign exchange risk associated with certain assets and liabilities denominated in foreign currencies. The Group also enters into currency swap contracts to manage its interest rate...

  • Page 51
    ... transactions to which hedge accounting is applied as of March 31, 2014. Millions of Yen 2013 Contract Amount Due After 1 Year Hedged Item Contract Amount Fair Value Foreign currency forward contracts: Buying U.S. dollars Selling euro Total Trade payables Trade receivables ¥14,539 9,407...

  • Page 52
    ... the years ended March 31, 2014 and 2013, were the following: Millions of Yen Thousands of U.S. Dollars 2014 Unrealized gain on available-for-sale securities Gains (losses) arising during the year Reclassification adjustments to profit or loss Amount before income tax effect Income tax effect Total...

  • Page 53
    ... "Car Electronics" produces and sells car navigation systems, car stereos, car AV systems, car speakers and others. "Home Electronics" produces and sells audio systems, audio components, DJ equipment, equipment for cable-TV systems, Blu-ray Disc players, Blu-ray Disc drives, DVD players, DVD drives...

  • Page 54
    ... 2014 Reportable Segment Car Electronics Home Electronics Reconciliations Others Total Consolidated Sales: Sales to external customers Intersegment sales Total sales Segment income (loss) Segment assets Other items: Depreciation and amortization Amortization of goodwill Increase in property, plant...

  • Page 55
    ... equipment and intangible assets are capital investments principally in software. 4. Adjustments are made to reconcile segment income (loss) to operating income presented in the accompanying consolidated statement of operations. Thousands of U.S. Dollars 2014 Reportable Segment Car Electronics Home...

  • Page 56
    ...Name of Major Customer Toyota Motor Corporation Sales $683,146 Related Segment Name Car Electronics Information about major customers for the year ended March 31, 2013, has been omitted since there are no external customers who constituted more than 10% of net sales on the consolidated statement...

  • Page 57
    ...55 (6) Information about unamortized balance of goodwill by segment Millions of Yen 2014 Reportable Segment Car Electronics Home Electronics Corporate Others Total Consolidated Unamortized balance of goodwill - - - - ¥564 ¥564 Millions of Yen 2013 Reportable Segment Car Electronics Home...

  • Page 58
    ... consolidated balance sheet of Pioneer Corporation and its subsidiaries as of March 31, 2014, and the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash ï¬,ows for the year then ended, and a summary of significant accounting policies and...

  • Page 59
    ... 57 General Information on Shares Stock Listing Tokyo Stock Exchange (Since 1961) Share Information (As of March 31, 2014) Number of Shares of Common Stock Issued 372,223,436 shares Note: During fiscal 2014, the Company issued new shares as follows: Number of new shares issued June 28, 2013 Third...

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