Yamaha 2007 Annual Report Download - page 27

51 Yamaha Annual Report 2007 52
Minority Interests
Minority interests equaled ¥493 million, which was on a par with the fig-
ure recorded in the previous year.
Net Income
As a result of the above, net income for the year decreased by ¥257
million, or 0.9% compared with fiscal 2006, falling from ¥28,123 million
to ¥27,866 million. At 5.1%, the net return on sales was 0.2 points
lower than the figure of 5.3% posted in the previous year. Net income
per share equaled ¥135.19, compared with ¥136.04 in fiscal 2006.
Foreign Exchange Rate Movements and Risk Hedging
Sales at overseas consolidated subsidiaries are calculated using the
average exchange rates recorded during the year. On this basis, in fis-
cal 2007 the yen fell by ¥4 against the U.S. dollar compared with the
previous year, to ¥117 per $1. The year-on-year effect of this change
was an increase of ¥3.2 billion in sales at overseas consolidated sub-
sidiaries. The yen also depreciated against the euro during fiscal 2007
by ¥12 compared with the previous year, for an average exchange rate
of ¥150 to €1. This resulted in a year-on-year gain in sales of ¥5.9 bil-
lion. Overall, the net effect on sales of foreign exchange rate move-
ments, including fluctuations of the yen against such other currencies
as the Australian and Canadian dollars, was a gain of ¥14.7 billion com-
pared with fiscal 2006.
Although movements in the U.S. dollar-yen exchange rate resulted
in virtually no net impact on profits, the average yen settlement rate
against the euro during fiscal 2007 was ¥144 to €1, representing a
depreciation of ¥9 relative to the previous year. The effect of this on
profits was a gain of ¥4.0 billion. Including the effects of other curren-
cies, the net effect on profits of exchange rate movements was a gain
of ¥5.6 billion compared with fiscal 2006.
Yamaha undertakes most of its hedging operations against curren-
cy risks in Japan. U.S. dollar-related currency fluctuation risks are
hedged by marrying risk associated with dollar receipts from exports
with risk associated with dollar payments for imported products. The
Company hedges the value of risks associated with the euro and the
Australian and Canadian dollars by projecting related export revenues
and purchasing relevant three-month currency forwards.
Dividends
Total dividends per share in fiscal 2007 equaled ¥22.50. This repre-
sented an increase of ¥2.50 per share compared with the previous
year, reflecting the growth in operating income. The consolidated divi-
dend payout ratio increased by 1.9 points to 16.6%, from 14.7% in the
previous year. Based on net income less equity in earnings of uncon-
solidated subsidiaries and affiliates that does not generate cash, the
dividend payout ratio equaled 40.0%.
Financial Position and Liquidity
Financing Policy
Reflecting the relatively non-capital-intensive nature of the business,
Yamaha finances its capital needs primarily from cash-on-hand, operat-
ing cash flows and bank loans. Yamaha’s basic financing policy is to
procure stable, low-cost funding while preserving sufficient liquidity.
Management commissions long-term senior debt rating assess-
ments from credit rating agencies each year to gain an independent
external evaluation of the Company’s finances. The latest published rat-
ings are shown below.
Rating agency Long-term senior
debt rating
Rating and Investment Information, Inc. (R&I) A (Stable)
Japan Credit Rating Agency, Ltd. (JCR) AA- (Stable)
Current Assets and Liabilities
Total current assets at March 31, 2007 amounted to ¥231,033 million,
an increase compared with the previous year-end of ¥21,652 million, or
10.3%. This was mainly due to increases in cash and bank deposits
and in trade notes and accounts receivable, among others. Total cur-
rent liabilities at March 31, 2007 equaled ¥136,656 million, an increase
of ¥19,609 million, or 16.8%, compared with the previous year-end.
Besides higher accrued expenses and other factors, this was due to
the transfer from long-term to current liabilities of resort membership
deposits worth ¥9.3 billion in the recreation business segment to reflect
the anticipated repayment of these deposits in fiscal 2008.
The current ratio at the fiscal 2007 year-end was 169.1%, repre-
senting a fall of 9.8 points compared with the figure of 178.9% from
a year earlier. Management expects liquidity to remain high during
fiscal 2008.
Assets
Total assets at March 31, 2007 amounted to ¥559,031 million, an
increase of ¥39,054 million, or 7.5% compared with the fiscal 2006
year-end. Current assets increased by ¥21,652 million, or 10.3%, to
¥231,033 million. In addition to the year-on-year increase of ¥10,273
million, or 28.2%, in cash and deposits from ¥36,429 million to ¥46,702
million, trade notes and accounts receivable and inventories increased
due to the effects of yen depreciation.
The total value of fixed assets rose by ¥17,403 million, or 5.6%, to
¥327,998 million, compared with ¥310,595 million at the previous fiscal
year-end. This primarily reflected an appreciation in the value of invest-
ment securities of ¥17,467 million, or 13.1%, compared with the fiscal
2006 year-end. This gain was the result of an increase in the net asset
value of Yamaha Motor Co., Ltd., an equity method affiliate.
Liabilities
Total liabilities at March 31, 2007 amounted to ¥207,633 million, an
increase of ¥8,134 million, or 4.1% compared with the fiscal 2006 year-
end. Current liabilities increased in year-on-year terms by 16.8% or
¥19,609 million, to ¥136,656 million. Contributory factors included:
higher accrued expenses and income taxes payable; the transfer from
long-term to current liabilities of resort membership deposits due to the
anticipated repayment of these deposits in fiscal 2008 in connection
with the planned sale of four resorts in the recreation business seg-
ment; and provisions to cover structural reform expenses related to clo-
sures associated with the decisions made to liquidate one
manufacturing subsidiary in Taiwan and two manufacturing subsidiaries
in the United States.
Total long-term liabilities at March 31, 2007 amounted to ¥70,977
million, a decrease of ¥11,475 million, or 13.9% compared with the
previous year-end. The main reason was the aforementioned transfer of
resort membership deposits to current liabilities.
0
8
16
24
6
12
18
24
03/3 04/3 05/3 06/3 07/3
Dividends per shareDividend payout ratio
22.50
16.6
Dividend Payout Ratio/Dividends per Share
(%/ Yen)
03/3 04/3 05/3 06/3 07/3
100
140
180
220
Current Ratio
(%)