Yamaha 2002 Annual Report Download - page 23

Yamaha Corporation Annual Report 2002 Management’s Discussion and Analysis
21
FINANCIAL POSITION
At the end of the interim period, inventories exceeded ¥100.0 billion.
However, during the second half of fiscal 2002, the Company intensi-
fied efforts to scale back production and liquidate inventories, suc-
ceeding in reducing inventories to near optimal levels by the end of
the term.
In fiscal 2002, due to the revaluation of the Company’s landholdings,
land assets increased ¥20.0 billion compared with the previous term.
However, inventories were down ¥13.4 billion following the implemen-
tation of an inventory reduction policy, notes and accounts receivable
decreased ¥13.9 billion, and the Company’s shareholdings in banks
and other companies were down. As a result, total assets decreased
¥12.8 billion, to ¥509.7 billion, of which ¥4.6 billion was assets from
newly consolidated subsidiaries.
Deferred income tax liabilities increased due to the revaluation of
YA MAHA’s landholdings; however, as operating funds* decreased, the
Company was able to reduce borrowings and notes and accounts
payable. As a result, total liabilities decreased ¥19.0 billion, to ¥303.0
billion. Current assets were down ¥20.7 billion, to ¥211.1 billion, and
current liabilities fell ¥30.9 billion, to ¥144.5 billion, while working
capital increased ¥10.1 billion, to ¥66.6 billion. The liquidity ratio
was 146.1%, a 13.9 percentage point increase compared with the
previous term.
Despite recording a net loss for the term, shareholders’ equity
increased ¥5.2 billion, to ¥202.0 billion, due to rises in the reserve
for land revaluation and translation adjustments.
* Operating funds = notes and accounts receivable + inventories
INTEREST-BEARING LIABILITIES
The balance of interest-bearing liabilities, after the deduction of cash
and bank deposits, decreased ¥15.3 billion, to ¥55.1 billion, paralleling
adecline in operating funds that coincided with decreases in inventories
and notes and accounts receivable.
CASH FLOWS
Cash and cash equivalents at end of year were up ¥7.8 billion, to
¥40.5 billion. Due to inventory reductions and a decrease in notes
and accounts receivable, net cash provided by operating activities was
¥29.0 billion, compared with an outflow in the previous year. On the
other hand, net cash used in investing activities equaled ¥10.4 billion.
As a result, free cash flow—the net increase in cash and cash equiva-
lents—of ¥18.6 billion was recorded.
EXCHANGE RATES
Calculated using the average conversion rate prevailing during the term,
the yen weakened, falling ¥14 against the U.S. dollar and ¥10 against
the euro, resulting in a ¥20.4 billion rise in net sales. Similarly, the
weakness of the yen against the euro and other currencies contributed
to profits, as the Company recorded ¥6.7 billion in foreign currency
gains. Sales conversion rates and settlement rates were as follows:
Sales conversion rates: US$1=¥124.97 (¥110.51 in fiscal 2001)
A 1=¥110.44 (¥100.36 in fiscal 2001)
Settlement rates: US$1=¥123.74 (¥108.58 in fiscal 2001)
A 1=¥106.82 (¥98.40 in fiscal 2001)
01020304050
’02
’01
’00
’99
’98
Capital Expenditures
and Depreciation (Billions of Yen)
Capital Depreciation
expenditures
35.4
36.4
28.6
17.3
18.8
020406080
’02
’01
’00
’99
’98
Interest-Bearing Liabilities (Billions of Yen, %)
Interest-bearing Interest-bearing liabilities
liabilities to total assets ratio
Note: Interest-bearing liabilities=
loans + convertible bonds – cash and bank deposits
13.9
14.9
10.0
13.5
10.8
050100 150 200 250
’02
’01
’00
’99
’98
Total Shareholders’ Equity
and ROE (Billions of Yen, %)
Total shareholders’ ROE
equity
6.0
–7.1
–18.7
6.4
–5.2