Pioneer 2015 Annual Report Download - page 15

a. Basis of Consolidated Financial Statements
The accompanying consolidated financial statements
have been prepared in accordance with the provisions
set forth in the Japanese Financial Instruments and
Exchange Act and its related accounting regulations
and in accordance with accounting principles gen-
erally accepted in Japan (“Japanese GAAP”), which
are different in certain respects as to the application
and disclosure requirements of International Financial
Reporting Standards (“IFRS”).
In preparing these consolidated financial state-
ments, certain reclassifications and rearrangements
have been made to the consolidated financial state-
ments issued in Japan in order to present them in a
form which is more familiar to readers outside Japan.
In addition, certain reclassifications have been made
in the 2014 consolidated financial statements to con-
form to the classifications used in 2015.
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 trans-
lations 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 ¥120 to $1.00, the approximate rate of exchange
a. Consolidation
The consolidated financial statements as of March 31,
2015 include the accounts of the Company and its
73 (80 in 2014) subsidiaries.
Under the control or influence concept, those
companies in which the Company, directly or indi-
rectly, is able to exercise control over operations are
fully consolidated, and those companies over which
the Group has the ability to exercise significant influ-
ence are accounted for by the equity method.
Investments in seven (six in 2014) associated
companies are accounted for by the equity method.
The excess of cost of an acquisition over the fair
value of the net assets of an acquired subsidiary at the
date of acquisition is being amortized over a period
not exceeding 20 years.
All significant intercompany balances and trans-
actions have been eliminated in consolidation. All
material unrealized profit included in assets resulting
from transactions within the Group is also eliminated.
1. Basis of Presentation
2. Summary of Significant Accounting Policies
as of March 31, 2015. 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 and its subsidiaries (together, the
“Group”) are engaged in the development, manufacture
and sale of electronic products. The Group is a leading
global manufacturer of consumer- and business-use
electronic products such as car electronics and audio/
video. The principal production activities of the Group
are carried out in Asia including Japan, Brazil, and the
United States. The Group’s products are generally sold
under its own brand names, principally “Pioneer.” The
Group 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 manufactur-
ing) basis, the Group markets certain products, such as
car electronics products to other companies.
On March 2, 2015, the Group transferred its
home AV, telephones, headphone-related and DJ
equipment businesses. Details are described in Note
21. Business Combination.
b. Unification of Accounting Policies Applied
to Foreign Subsidiaries for the Consolidated
Financial Statements
In May 2006, the Accounting Standards Board of
Japan (the “ASBJ”) issued ASBJ Practical Issues Task
Force (PITF) No. 18, “Practical Solution on Unification
of Accounting Policies Applied to Foreign Subsid-
iaries for Consolidated Financial Statements.” PITF
No. 18 prescribes that the accounting policies and
procedures applied to a parent company and its sub-
sidiaries for similar transactions and events under
similar circumstances should in principle be unified
for the preparation of the consolidated financial state-
ments. However, financial statements prepared by
foreign subsidiaries in accordance with either IFRS or
the generally accepted accounting principles in the
United States of America tentatively may be used for
the consolidation process, except for the following
items which should be adjusted in the consolidation
process so that net income is accounted for in ac-
cordance with Japanese GAAP, unless they are not
material: (a) amortization of goodwill; (b) scheduled
amortization of actuarial gain or loss of pensions that has
been recorded in equity through other comprehensive
Millions of Yen
Thousands of
U.S. Dollars
(Note 1)
2015 2014 2015
Operating Activities:
Income before income taxes and minority interests ¥ 25,230 ¥ 5,665 $ 210,250
Adjustments for:
Income taxes—paid (4,504) (3,362) (37,533)
Depreciation and amortization 23,543 24,883 196,192
Insurance income for disaster – (630) –
Proceeds from insurance income for disaster – 128 –
Gain on sales and disposals of property, plant and equipment—net (327) (1,328) (2,725)
Loss on impairment of property, plant and equipment 1,331 14 11,092
Gain on sales of investment securities—net (1,596) – (13,300)
Gain on business transfer—net (44,889) – (374,075)
Changes in assets and liabilities:
Decrease (increase) in receivables 10,807 (8,648) 90,058
Decrease in inventories 3,917 9,773 32,642
(Decrease) increase in trade payables (3,843) 11,278 (32,025)
Increase in accrued expenses 16,196 2,960 134,967
(Decrease) in provision for restructuring costs – (6,211) –
(Decrease) increase in accrued pension and severance costs (2,135) 225 (17,792)
Other—net 10,834 (505) 90,283
Net cash provided by operating activities 34,564 34,242 288,034
Investing Activities:
Decrease (increase) in time deposits 1,093 (305) 9,108
Proceeds from sales of property, plant and equipment 4,188 4,536 34,900
Payment for purchase of property, plant and equipment (25,046) (26,053) (208,717)
Proceeds from sale of investment securities 4,609 – 38,408
Payment for purchase of investment securities (4,086) (150) (34,050)
Proceeds from business transfer (Note 22) 57,124 – 476,033
Payment for business transfer (Note 22) (1,122) – (9,350)
Other—net 120 110 1,001
Net cash provided by (used in) investing activities 36,880 (21,862) 307,333
Financing Activities:
(Decrease) increase in short-term borrowings—net (5,481) 818 (45,675)
Increase in long-term debt 42,954 56,325 357,950
Repayments of long-term debt (91,857) (66,732) (765,475)
Repayments of lease obligations (2,093) (1,924) (17,442)
Proceeds from sale and lease back transactions 1,043 2,030 8,692
Proceeds from issuance of new shares – 8,643 –
Other—net 10 (47) 83
Net cash used in financing activities (55,424) (887) (461,867)
Foreign Currency Translation Adjustments on Cash and Cash Equivalents 1,752 1,444 14,600
Net Increase in Cash and Cash Equivalents 17,772 12,937 148,100
Cash and Cash Equivalents, Beginning of Year 33,904 20,967 282,533
Cash and Cash Equivalents, End of Year ¥ 51,676 ¥ 33,904 $ 430,633
See notes to consolidated financial statements.
Pioneer Corporation and Its Subsidiaries
Year ended March 31, 2015
Pioneer Corporation and its Subsidiaries
Year Ended March 31, 2015
Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements
26 Pioneer Corporation Annual Report 2015 27
Pioneer Corporation Annual Report 2015