Yamaha 2007 Annual Report Download - page 28

53 Yamaha Annual Report 2007 54
Real Interest-Bearing Liabilities*
One of the goals of the “YSD50” medium-term business plan that
ended in March 2007 was to improve the Company’s financial health
by eliminating real interest-bearing liabilities—defined as borrowings,
less cash and bank deposits. At the fiscal 2007 year-end, borrowings
amounted to ¥25,551 million and cash and bank deposits were
¥46,702 million. This marked yet another consecutive year in which
Yamaha improved its net financial position on this basis.
Net Assets
Effective fiscal 2007, Yamaha applied a new accounting standard relat-
ing to the balance-sheet presentation of net assets, which equaled
¥351,398 million at March 31, 2007. Shareholders’ equity at the fiscal
2007 year-end based on the previous accounting standard totaled
¥346,873 million. The equity ratio was 62.0% at March 31, 2007,
increasing by 1.2 points from 60.8% at the previous year-end. Return
on equity (ROE) was 8.4%.
Cash Flows
Net cash provided by operating activities in fiscal 2007 was ¥39,732
million. Operating cash flow grew by 55.8% or ¥14,222 million com-
pared with the fiscal 2006 figure of ¥25,510 million. This was due mainly
to reduced income tax payments.
Net cash used in investing activities totaled ¥22,427 million. This
represented an increase in cash outflow of ¥4,323 million, or 23.9%,
compared with the fiscal 2006 figure of ¥18,104 million. In addition to
an increase in purchases of tangible fixed assets associated with higher
capital investment, this was also due to lower proceeds from sales of
tangible fixed assets and investment securities.
Net cash used in financing activities totaled ¥8,246 million. This
represented a decrease in cash outflow of ¥17,588 million, or 68.1%,
compared with the fiscal 2006 figure of ¥25,834 million. This mainly
reflected reduced absorption of cash due to decreases in short-term
loans and long-term debt repayments.
As a result of the above, the fiscal 2007 year-end balance of cash
and cash equivalents equaled ¥45,926 million, including the net effect of
exchange rate movements and changes in the scope of consolidation.
This represented a year-on-year increase of ¥10,492 million, or 29.6%.
Capital Expenditures and Depreciation
Capital expenditures in fiscal 2007 totaled ¥25,152 million, rising
by ¥2,270 million, or 9.9% compared with the previous year’s
figure of ¥22,882 million. The musical instruments business posted
a year-on-year increase in capital expenditures of ¥2,940 million,
or 24.8%, to ¥14,817 million. This reflected investments in molds
for new products; investments to expand production capacity at
Hangzhou Yamaha Musical Instruments Co., Ltd. and PT. Yamaha
Indonesia; and higher capital spending associated with moves to
consolidate piano production in Japan.
At ¥4,395 million, capital expenditures in the electronic equipment
and metal products business were ¥1,093 million, or 19.9%, lower
than the figure of ¥5,488 million recorded in the previous year. Total
depreciation and amortization expense amounted to ¥19,956 million,
increasing by ¥1,012 million compared with the fiscal 2006 figure of
¥18,944 million.
R&D Expenses
R&D expenses were on a par with the previous year at ¥24,220
million. The ratio of R&D expenses to net sales was 0.1 points lower
than in the previous year, declining from 4.5% to 4.4%.
Most of this spending was directed at product development
in electronic and digital musical instruments, in the AV/IT and in
semiconductor businesses. R&D budgets also funded programs to
develop basic sound-related technologies in areas such as speakers,
sound field control, voice synthesis, sound sources, and DSP*;
innovations in HIC**, such as actuators and sensors; materials for
audio equipment; and technologies related to the environment.
* Digital Signal Processor (Processing) (DSP) refers to general digital signal-processing
technologies developed by Yamaha, including various original technologies for
processing digital audio and music. Practical applications include sound field
controls in AV equipment, effecters used in professional mixing consoles,
mobile phone sound generation and 3D sound technologies.
** HIC (Human Interface Component) is a device and material with qualities that
enhance the functional performance of musical instruments and AV equipment by
improving the human, emotional and comfort interface. An example would be a
device that can help create a truly quiet sound environment.
Performance Forecasts
The year ending March 2008 is the first year of Yamaha’s new
medium-term business plan, “Yamaha Growth Plan 2010
(YGP2010).” By pursuing steady progress through a number of
measures, Yamaha aims to achieve growth in its core business
domain centered on musical instruments. Under the new plan this
domain has been dubbed “The Sound Company.”
Yamaha forecasts consolidated net sales of ¥551.0 billion in
fiscal 2008, on a par with the fiscal 2007 result. This figure repre-
sents real year-on-year sales growth of 3.3% once the effects of the
decisions made in fiscal 2007 to sell the electronic metal products
business and four resorts in the recreation business are taken into
account. Yamaha forecasts consolidated operating income of ¥30.0
billion, an increase of ¥2.3 billion relative to fiscal 2007. Although a
change in depreciation accounting standards is projected to lower
profits by ¥2.3 billion, management expects higher sales and the
benefits of yen depreciation to provide an offsetting effect. At the
level of net income, the sale of part of the Company’s stake in
Yamaha Motor Co., Ltd. will eliminate gains due to equity in earnings
of unconsolidated subsidiaries and affiliates, which equaled ¥17.8
billion in fiscal 2007. However, management expects the resulting
gain on sales of investment securities and other exceptional items to
outweigh this effect. Yamaha forecasts consolidated net income of
¥32.5 billion in fiscal 2008, an increase of ¥4.6 billion over the fiscal
2007 figure of ¥27.9 billion.
These forecasts assume exchange rates of ¥115 per U.S.$1 and
¥148 per €1 during fiscal 2008.
0
10,000
20,000
30,000
40,000
03/3 04/3 05/3 06/3 07/3
17,305
Free Cash Flows
(Millions of Yen)
03/3 04/3 05/3 06/3 07/3
0
10,000
20,000
30,000
Capital Expenditures
Musical Instruments and AV/IT
Electronic Equipment and Metal Products
Others
Depreciation
Capital Expenditures/Depreciation
(Millions of Yen)
03/3 04/3 05/3 06/3 07/3
0
10,000
20,000
30,000
24,220
Musical Instruments
Lifestyle-Related Products
AV/IT Electronic Equipment
and Metal Products
Others
R&D Expenses
(Millions of Yen)
03/3 04/3 05/3 06/3 07/3
0
60,000
120,000
180,000
240,000
300,000
360,000
Net Assets
(Millions of Yen)
03/3 04/3 05/3 06/3 07/3
0
20,000
40,000
60,000
80,000
100,000
Interest-Bearing Liabilities
(Millions of Yen)
* Real interest-bearing liabilities refers to long- and short-term loans, less cash and deposits.