Yamaha 2007 Annual Report Download - page 32

61 Yamaha Annual Report 2007 62
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
Yamaha Corporation (the “Company”) and its domestic subsidiaries maintain their accounting records and prepare their financial
statements in accordance with accounting principles generally accepted in Japan, and its overseas subsidiaries maintain their
books of account in conformity with those of their respective countries of domicile. The Company and all consolidated subsidiaries
are referred to herein as the “Yamaha Group.” The accompanying consolidated financial statements are prepared on the basis of
accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards, and are compiled from the consolidated financial statements prepared
by the Company as required by the Securities and Exchange Law of Japan. Certain reclassifications have been made to present the
accompanying consolidated financial statements in a format which is familiar to readers outside Japan.
As permitted, amounts of less than one million yen have been omitted. As a result, the totals shown in the accompanying con-
solidated financial statements (both in yen and U.S. dollars) do not necessarily agree with the sums of the individual amounts.
(b) Basis of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The consolidated financial statements include the accounts of the parent company and all subsidiaries over which it exerts substan-
tial control either through majority ownership of voting stock and/or by other means. As a result, the accompanying consolidated
financial statements include the accounts of the Company and 93 consolidated subsidiaries for the years ended March 31, 2007
and 2006.
All significant intercompany balances and transactions have been eliminated in consolidation.
Investments in affiliates (other than subsidiaries as defined above) whose decision-making and control over their own operations
is significantly affected in various ways by the Yamaha Group are accounted for by the equity method. Investments in three
affiliates (Yamaha Motor Co., Ltd., Korg Inc. and one other affiliate) have been accounted for by the equity method for the years
ended March 31, 2007 and 2006.
Investments in unconsolidated subsidiaries and affiliates not accounted for by the equity method are carried at cost.
Certain overseas subsidiaries are consolidated on the basis of fiscal periods ending December 31, which differs from the balance
sheet date of the Company; however, all necessary adjustments between the fiscal year end of these overseas subsidiaries and that of
the Company have been made, thus enabling them to report financial results equivalent to those as of and for the fiscal year end.
All assets and liabilities of subsidiaries are revalued at fair value on acquisition and, if applicable, the excess of cost over the underly-
ing net assets at the dates of acquisition is presented as goodwill and amortized over a period of five years on a straight-line basis.
(c) Foreign currency translation
Monetary assets and liabilities of the Company and its domestic consolidated subsidiaries denominated in foreign currencies are
translated at the exchange rates in effect at each balance sheet date if not hedged by forward foreign exchange contracts, or at the
contracted rates of exchange when hedged by forward foreign exchange contracts. The resulting exchange gain or loss is recog-
nized as other income or expense.
Assets and liabilities of the overseas consolidated subsidiaries are translated at the exchange rates in effect at each balance
sheet date and revenue and expense accounts are translated at the average rates of exchange in effect during the year. Translation
adjustments are presented as a component of net assets and minority interests in the consolidated financial statements.
(d) Cash and cash equivalents
Cash on hand and in banks, and all highly liquid investments, generally with a maturity of three months or less when purchased,
which are readily convertible into known amounts of cash and are so near maturity that they represent only an insignificant risk of
any change in value attributable to changes in interest rates, are considered cash and cash equivalents.
(e) Securities
Securities owned by the Yamaha Group have been classified into two categories, held-to-maturity and other, in accordance with the
accounting standard for financial instruments. Under this standard, held-to-maturity debt securities are either amortized or accumu-
lated to face value by the straight-line method. Marketable securities classified as other securities are carried at fair value with any
changes in unrealized holding gain or loss, net of the applicable income taxes, included directly in net assets. Non-marketable secu-
rities classified as other securities are carried at cost. If the market value of marketable securities classified as other securities has
declined significantly, such securities are written down to fair value, thus establishing a new cost basis. The amount of each write-
down is charged to income as an impairment loss unless the fair value is deemed recoverable. The Company has established a poli-
cy for the recognition of impairment loss if the market value at the year end has declined more than 30% and a recovery to fair value
is not anticipated.
Cost of securities sold is determined by the weighted-average method.
(f) Inventories
Inventories of the Company and its domestic consolidated subsidiaries are stated principally at the lower of cost or market, cost
being determined by the last-in, first-out method. Inventories of the Company’s overseas consolidated subsidiaries are stated princi-
pally at the lower of cost or market, cost being determined by the moving average method.
Consolidated Statements of Cash Flows
Yamaha Corporation and Consolidated Subsidiaries
Years ended March 31, 2007 and 2006
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes
and minority interests to net cash provided by operating activities:
Depreciation and amortization
Loss on impairment of fixed assets
Amortization of goodwill (Note 3)
Changes in allowance for doubtful accounts
Loss on revaluation of investment securities
Loss on revaluation of investments in affiliates
Changes in employees’ retirement benefits
Interest and dividend income
Interest expense
Foreign exchange loss (gain)
Equity in earnings of unconsolidated subsidiaries and affiliates
Gain on sales of investment securities other than those of subsidiaries
Loss on sales or disposal of property, net
Structural reform expenses
Special retirement payment
Changes in operating assets and liabilities:
Accounts and notes receivable — trade
Inventories
Accounts and notes payable — trade
Other, net
Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from (purchases of) time deposits
Purchases of property
Proceeds from sales of property
Purchases of investment securities
Proceeds from sales and redemption of investment securities
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Decrease in short-term loans
Proceeds from long-term debt
Repayment of long-term debt
Resort membership deposits received
Refund of resort membership deposits
Purchases of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Increase due to inclusion in consolidation
Decrease due to exclusion from consolidation
Cash and cash equivalents at end of the year (Note 16)
See notes to consolidated financial statements.
2007
$ 280,398
169,047
40,051
4,295
(1,415)
119
1,008
(7,268)
(9,183)
8,234
415
(150,479)
(263)
9,005
26,650
6,167
(38,433)
(19,161)
44,659
(14,477)
349,386
29,115
(8,225)
(33,698)
336,569
2,152
(193,672)
9,267
(9,852)
652
1,465
(189,979)
(16,612)
35,875
(43,634)
102
(8,208)
(313)
(34,951)
(2,101)
(69,852)
12,402
89,140
300,161
—
(263)
$ 389,039
2006
¥ 35,842
18,944
—
507
(177)
83
118
(379)
(907)
1,081
(107)
(14,838)
(605)
181
—
—
3,008
4,944
(1,716)
(5,135)
40,843
2,730
(1,084)
(16,979)
25,510
(77)
(20,401)
2,327
(732)
619
160
(18,104)
(1,753)
4,556
(22,404)
10
(1,352)
(23)
(4,642)
(223)
(25,834)
1,783
(16,644)
50,393
1,685
—
¥ 35,434
2007
¥ 33,101
19,956
4,728
507
(167)
14
119
(858)
(1,084)
972
49
(17,764)
(31)
1,063
3,146
728
(4,537)
(2,262)
5,272
(1,709)
41,245
3,437
(971)
(3,978)
39,732
254
(22,863)
1,094
(1,163)
77
173
(22,427)
(1,961)
4,235
(5,151)
12
(969)
(37)
(4,126)
(248)
(8,246)
1,464
10,523
35,434
—
(31)
¥ 45,926
Millions of Yen
Thousands of
U.S. Dollars (Note 4)
Notes to Consolidated Financial Statements
Yamaha Corporation and Consolidated Subsidiaries
March 31, 2007