Pioneer 2015 Annual Report Download - page 23

New tax reform laws enacted in 2015 in Japan changed the normal effective statutory tax rate for the fiscal year
beginning on or after April 1, 2015, to approximately 33% and for the fiscal year beginning on or after April 1, 2016,
to approximately 32%. The effect of these changes was immaterial.
Net deferred tax assets as of March 31, 2015 and 2014, were included in the following accounts:
Millions of Yen
Thousands of
U.S. Dollars
2015 2014 2015
Current assets:
Deferred tax assets ¥4,563 ¥ 4,542 $38,025
Investments and other assets:
Deferred tax assets 2,049 5,697 17,075
Long-term liabilities:
Other long-term liabilities ¥ (781) ¥(1,547) $ (6,508)
11. Research and Development Costs
15. Gain on Business Transfer
16. Loss on Business Transfer
Research and development costs charged to income were ¥28,196 million ($234,967 thousand) and ¥26,891 million
for the years ended March 31, 2015 and 2014, respectively.
Gain on business transfer for the year ended March 31, 2015, was due to the transfer of the Group’s business relating
to development, manufacturing and sale of DJ equipment.
Loss on business transfer for the year ended March 31, 2015, was due to the transfer of the Group’s home AV
business, telephone business and headphone-related business.
12. Leases
The Group leases certain land, machinery and equipment, office space, warehouses and computer equipment.
The minimum rental commitments under noncancelable operating leases as of March 31, 2015 and 2014, were
as follows:
Millions of Yen
Thousands of
U.S. Dollars
2015 2014 2015
Operating leases:
Due within one year ¥1,621 ¥1,602 $13,508
Due over one year 3,050 3,547 25,417
Total ¥4,671 ¥5,149 $38,925
The Group recorded insurance proceeds, for which
the amounts were fixed, as insurance income for
disaster in the consolidated statement of operations for
the year ended March 31, 2014. These insurance pro-
ceeds totaled ¥568 million on damaged property, plant
and equipment and inventories for its consolidated
subsidiaries resulting from the flooding that occurred
in Thailand during October 2011 and ¥62 million on
damaged buildings and structures for its consolidated
subsidiaries resulting from the snow disaster that
occurred in Japan during February 2014.
13. Insurance Income for Disaster
14. Restructuring Costs
Restructuring costs for the year ended March 31, 2015, were mainly for additional retirement benefits for an early
retirement incentive plan. Restructuring costs for the year ended March 31, 2014, were mainly for the organization
restructuring expenses of foreign subsidiaries.
(1) Group policy for financial instruments
The Group has a policy to invest cash surplus, if any,
only in short-term deposits or other financial instru-
ments of a similar nature. The Group raises funds by
bank loans and/or from capital markets through bonds.
Derivatives are used, not for speculative purposes, but
to manage exposure to financial risks as described in
(2) below.
(2) Nature and extent of risks arising from financial
instruments
Receivables such as trade receivables are exposed to
customer credit risk. Although receivables in foreign
currencies are exposed to the market risk of fluctuation
in foreign currency exchange rates, the position, net
of payables in foreign currencies, is hedged by using
forward foreign currency contracts. Investment securi-
ties, mainly equity instruments in the companies with
which the Company has business and capital alliances,
are exposed to the risk of market price fluctuations.
Payment terms of payables, such as trade pay-
ables, are less than one year. Payables in foreign
currencies arising from imports of raw materials and
finished products are exposed to the market risk of
fluctuation in foreign currency exchange rates.
Long-term loans bear floating interest rates, and
are exposed to variable interest rate risk based on the
short-term prime rate and Tokyo Interbank Offered
Rate (“TIBOR”).
Derivatives include forward foreign currency con-
tracts which are used to manage exposure to market
risks from changes in foreign currency exchange rates
of receivables and payables and currency swaps
which are used to manage exposure to market risks
from changes in foreign currency exchange rates of
loan receivables and bank loans. Please see Note 18
for more details about derivatives.
(3) Risk management for financial instruments
Credit risk management
Credit risk is the risk of economic loss arising from a
counterparty’s failure to repay or service debt according
to the contractual terms. The Group manages its
credit risk from receivables on the basis of inter-
nal guidelines, which include monitoring of payment
terms and balances of major customers by each busi-
ness administration department to identify the default
risk of customers in the early stages. With respect to
derivative transactions, the Group manages its expo-
sure to credit risk by limiting its transactions to high
credit, major financial institutions in accordance with
its internal guidelines. Please see Note 18 for more
details about derivatives.
The maximum credit risk exposure of financial
assets is limited to their carrying amounts as of March 31,
2015 and 2014.
Market risk management (foreign exchange risk and
interest rate risk)
Foreign currency trade receivables and payables are
exposed to market risk resulting from fluctuations in
foreign currency exchange rates. Such foreign ex-
change risk in the Company and certain consolidated
subsidiaries is hedged principally by forward foreign
currency contracts in accordance with internal guide-
lines. Currency swaps are used to manage exposure
to future market risks from changes in foreign cur-
rency exchange rate of loan receivables and bank
loans payables in foreign currencies based on the
internal guidelines.
Investment securities, mainly equity instruments
in the companies with which the Company has busi-
ness alliances, are monitored for their market values
on a regular basis.
Execution and management of derivative trans-
actions related to currency and interest rates are
managed by the corporate treasury department based
on the internal guidelines. Hedging policies are dis-
cussed and determined among the president, and
other directors who are responsible for finance, busi-
ness strategies, and each of the business segments,
based on the internal guidelines. Outstanding posi-
tions and fair value of derivatives are reported to the
directors in charge on a regular basis.
17. Financial Instruments and Related Disclosures
42 Pioneer Corporation Annual Report 2015 43
Pioneer Corporation Annual Report 2015