Yamaha 2001 Annual Report Download - page 22

20
Management’s Discussion and Analysis
INCOME ANALYSIS
Net Sales
In fiscal 2001, ended March 31, 2001, the Company recorded a decline in net
sales of 1.7%, to ¥519.1 billion (US$4.19 billion). If currency exchange increases
of ¥1.5 billion, owing to changes in accounting standards, and the impact of
exiting the storage heads business (¥20.2 billion) had been excluded, net sales
would have risen 2.3%, to ¥11.5 billion.
Despite the impact of YAMAHA’s withdrawal from the storage heads business
and a decline in musical instruments sales, domestic sales increased slightly (¥0.6
billion), up 0.2%, to ¥308.5 billion (US$2.49 billion), owing to rising sales of
sound source chips for mobile phones and other telecommunications-related
parts, as well as an expansion of ringer melody distribution service and growth in
sales of interior automotive components.
Overseas sales fell ¥9.3 billion, or 4.2%, to ¥210.6 billion (US$1.70 billion),
due to a substantial decline in revenue following the withdrawal from the storage
heads business.
Cost of Sales and Other Expenses
During the term under review, despite foreign currency losses of ¥17.0 billion
resulting from the yen’s rise, the cost of sales dropped ¥25.6 billion, to ¥346.2
billion (US$2.79 billion). Consequently, the cost of sales ratio improved about
4%, owing to a ¥10.3 billion decline in depreciation expenses due to the afore-
mentioned withdrawal from the storage heads business and the sale of a semicon-
ductor manufacturing plant as well as reduced personnel costs following the
implementation of special early retirement initiatives in the previous fiscal year,
and a revision in the merchandise mix principally to improve the profitability of
semiconductor operations. Furthermore, the Group was able to substantially
reduce manufacturing costs thanks to a decline in materials procurement costs
and the shifting of production overseas. Selling, general and administrative
expenses increased ¥1.8 billion, to ¥149.9 billion (US$1.21 billion), owing to
higher advertising and other costs.
Operating Income and Net Income
As a result of the aforementioned factors, operating income for fiscal 2001
improved ¥15.0 billion, to ¥23.0 billion (US$0.19 billion). Because costs relating
to the restructuring implemented a year earlier were turned around within the
year, costs from the prior service cost of the pension plan were not carried into
the year under review. Thus, net income surged to ¥54 billion, allowing for a
return to profitability for the first time in three years.
FINANCIAL POSITION
Accompanying changes in accounting standards, we transferred the foreign
currency translation adjustment account from assets to shareholders’ equity, and,
although total assets decreased, inventories rose ¥20.2 billion from the previous
fiscal year-end. Notes and bills receivable, and accounts receivable rose ¥12.1
billion, resulting in a year-on-year decrease in total assets of ¥20.6 billion, to
¥522.5 billion (US$4.22 billion).
Liabilities grew ¥4.0 billion to ¥322.0 billion (US$2.60 billion), owing to an
increase in borrowings accompanying the abolishment of the employee deposit
system, as well as an increase in working capital.
Total current assets expanded ¥25.9 billion, to ¥231.9 billion (US$1.87
billion), and total current liabilities contracted ¥2.9 billion, to ¥175.4 billion
-5
0
5
10
15
20
25
30
’01’00’99’98’97
Operating Income
and Operating Margin
(Billions of Yen, %)
4.9
4.0
4.4
0
1.5
Operating Income
Operating Margin
0
100
200
300
400
500
600
700
'01'00'99'98'97
Sales by Business Segment
(Billions of Yen)
Storage heads
Other business
Musical instruments and AV•IT
0
100
200
300
400
500
600
700
800
’01’00’99’98’97
Sales by Geographical Segment
(Billions of Yen)
North AmericaJapan
OthersEurope
Note: The 1997 figures include Japan
and all overseas sales only.