Contents
Financial Review .......................................................... 1
Consolidated Balance Sheet ........................................ 6
Consolidated Statement of Operations ........................ 8
Consolidated Statement of Comprehensive Income ...... 9
Consolidated Statement of Changes in Equity ............ 10
Consolidated Statement of Cash Flows ........................12
Notes to Consolidated Financial Statements ................13
Independent Auditor s Report .................................... 44
Financial Review
Overview of the Fiscal Year Ended March 2015
that was converted into a consolidated subsidiary in March 2014. In other
During the fiscal year ended March 31, 2015, the global economy as a
words, excluding the effects of selling Geobit, net sales generated by the
whole continued to grow gradually. More specifically, the U.S. economy
Professional Systems Segment s existing businesses increased. The Optical
continued to show growth in consumer spending, employment, and
& Audio Segment posted a significant decline in net sales as a result of
corporate capital investment, while the Chinese economy slowed in some
product refinements and other business reforms conducted in the Creation
sectors. On the other hand, Europe s economy remained sluggish, and
(former Imaging) Business, in response to sharp contractions of both
emerging countries saw economic growth slow. Regarding Japan s
domestic and overseas markets for consumer-use video camera products.
economy, the export environment improved and production began to
Net sales of the Entertainment Software Segment also dropped, which was
recover against the backdrop of a weaker yen and the U.S. economy s
attributable to a downturn in sales of the content business, having been
recovery. In addition, consumer spending grew gradually, supported by the
adversely affected by a shrinking market and changes in the compositions
government s economic policy, although it signaled weakness due to
of products. Furthermore, the transfer of shares of JVC America, Inc.
falling consumer confidence.
(hereinafter, referred to as JAI ) in the U.S., which was executed in the
Under these circumstances, net sales of the JVCKENWOOD Group for
the fiscal year ended March 31, 2015 declined from a year earlier, mainly
first quarter of the fiscal year ended March 31, 2015, resulted in significant
declines in the net sales of other business segments.
due to the disposal of some businesses. On the other hand, operating
income increased significantly from the previous fiscal year. This was mainly
attributed to the favorable impacts of business restructuring, including
comprehensive cost cuts and reforms to sales operations undertaken from
the third quarter of the previous fiscal year, as well as the Group s efforts
to reduce fixed costs by carrying out structural reforms during the previous
fiscal year. As a result, positive effects have steadily emerged in operating
results from the first quarter of the fiscal year ended March 31, 2015.
The following profit-and-loss exchange rates were used when
Net sales (YoY change)
Car Ele: Car Electronics
Pro: Professional Systems
Optical Audio: Optical & Audio
Soft: Entertainment Software
CE: Car Electronics
PS: Professional Systems
O&A: Optical & Audio
SE: Entertainment Software
(Billion Yen)
350
300
CE
-
250
200
PS
-
O&A
-
SE
-
Others
-
316.3
285.0
150
preparing the financial statements for the fiscal year ended March 31,
2015.
100
0
1Q
2Q
3Q
4Q
Profit-and-loss
U.S. $
¥102
¥104
¥114
¥119
exchange rates
Euro
¥140
¥138
¥143
¥134
FY2013
U.S. $
¥99
¥99
¥100
¥103
(Reference)
Euro
¥129
¥131
¥137
¥141
Sales and Income
▶ Consolidated Operating Results ••••••••••
＊Net Sales
Net sales for the fiscal year ended March 31, 2015 declined by
approximately 31,300 million yen, or 9.9%, year-on-year to 285,010
million yen.
The OEM Business posted an increase in sales of dealer option
products, which was driven mainly by new orders and Shinwa International
Holdings Limited (hereinafter, referred to as Shinwa ), a company that was
converted into a consolidated subsidiary in June 2013, which performed
FYE 3/’14
FYE 3/’15
＊Operating Income
Operating income for the fiscal year ended March 31, 2015 increased
significantly by approximately 2,100 million yen, or 48.6%, year-on-year to
6,571 million yen. As described above, this was mainly attributed to the
favorable impacts of business restructuring, such as comprehensive cost
cuts and reforms to sales operations undertaken from the third quarter of
the previous fiscal year, as well as the Group s efforts to reduce fixed costs
by carrying out structural reforms in the previous fiscal year. As a result,
positive effects have steadily emerged in operating results since the first
quarter of the fiscal year ended March 31, 2015.
The Car Electronics Segment s operating results improved significantly,
marking a return to an operating profit from the operating loss posted in
the previous fiscal year. The big swing to profitability was mainly attributed
to the strong recovery of the Consumer Business, as a result of business
reforms undertaken from the third quarter of the previous fiscal year. The
Optical & Audio Segment also increased its operating income, backed by
significant improvements in the Creation (former Imaging) Business, as a
result of business reforms.
strongly and made a substantial contribution throughout the entire fiscal
year under review. However, the OEM Business was hit severely by a drop
in sales of genuine products due to a slump in market demand, resulting in
a decline in overall net sales of the Car Electronics Segment. The
Operating income (YoY change)
(Billion Yen)
7
Professional Systems Segment s sales decreased due to the negative
6
impacts of the sale of all shares of Kenwood Geobit Corporation
5
(hereinafter, referred to as Geobit ) in March 2014. Geobit had operated
4
primarily as a seller of mobile phone devices and was divested in line with
the corporate strategy of focusing on core businesses. However, the
Communications Business posted an increase in net sales. This was mainly
attributable to a rebound in sales of professional-use wireless terminals in
North America, the largest market, as well as additional sales revenue from
CE
+
O&A
+
SE
-
Others
+
6.6
3
2
PS
-
4.4
1
0
FYE 3/’14
FYE 3/’15
EF Johnson Technologies, Inc. (hereinafter, referred to as EFJT ), a company
Annual Report 2015
1
＊Ordinary Income
Ordinary income for the fiscal year ended March 31, 2015 increased by
approximately 3,200 million yen year-on-year to 3,176 million yen with a
swing to profitability from the loss posted in the previous fiscal year. The
upturn in ordinary income was mainly attributed to a substantial rise in
operating income, as well as improved non-operating profit or loss, as a
result of factors such as reduced commissions for borrowings and a decline
in interest payments.
▶ Net Sales and Earnings by Business Segment
＊Car Electronics Segment
••••
Net sales of the Car Electronics Segment for the fiscal year ended March
31, 2015 declined by approximately 4,000 million yen, or 3.2%, year-onyear to 120,746 million yen, while operating income increased by
approximately 1,400 million yen year-on-year to 1,348 million yen, marking
a return to profit from the loss posted in the previous fiscal year.
Net Sales:
In the Consumer Business, sales of Saisoku-Navi, an SSD-type AV car
navigation system, were negatively impacted by a decline in domestic
Ordinary income (YoY change)
(Billion Yen)
4
Increased
non-operating
income
3
hike and a shrinking market, while in overseas markets, sales in the U.S.
and Asia marked strong performance. As a result, net sales of the
Consumer Business were almost on a par with the previous fiscal year.
2
3.2
Improved
operating
income
1
demand as a reaction to last-minute demand before a consumption tax
Decreased
non-operating
expenses
intake during the fiscal year ended March 31, 2015 and to a strong
contribution by Shinwa, which became a consolidated subsidiary in June
0
(0.1)
-1
The OEM Business posted an increase in net sales. This was largely
because sales of dealer option products were strong due to new order
2013, although sales of genuine products for automobile makers, such as
FYE 3/’14
FYE 3/’15
SSD-type AV car navigation systems, declined.
The Home Audio Business was transferred from the Optical & Audio
Segment on November 1, 2014, and its net sales dropped significantly,
＊Net Income
The JVCKENWOOD Group achieved a turnaround during the fiscal year
ended March 31, 2015, with net income increasing sharply by
approximately 11,200 million yen year-on-year to 4,654 million yen. This
improvement in net income was due to a substantial increase in ordinary
income, posting a gain on sales of property, plant and equipment
(approximately 5,400 million yen) and a decrease in costs of structural
reforms, as well as a non-recurring adjustment of income tax-deferred of
approximately 1,500 million yen posted as profit in connection with
deferred tax assets created by the integration with the U.S. subsidiary.
These positive factors offset an extraordinary loss of approximately 1,100
million yen incurred due to the transfer of JAI shares in the first quarter of
the fiscal year ended March 31, 2015.
mainly due to struggling sales of low-end products.
Operating Income:
The OEM Business saw swelling losses due to an increase in
development costs invested in next-generation businesses. The Home
Audio Business also faced worsening losses due to the sales downturn.
The Consumer Business marked a significant improvement as a result of
business reforms underway since the third quarter of the previous fiscal
year, posting a significant increase in operating income.
Car Electronics
Net Sales (YoY change)
(Billion Yen)
Operating income (YoY change)
(Billion Yen)
HA: Home Audio
150
Net income (YoY change)
100
(Billion Yen)
6
Income
tax, etc.
4
2
Improved
extraordinary
income/loss
0
-2
-4
(6.6)
-6
-8
2
FYE 3/’14
3
OEM HA
124.8
120.7
HA
Consumer
Others*
OEM
2
Consumer
OEM
1
4.7
50
0
Increased
ordinary
income
FYE 3/’15
0
Consumer
*Others: Inter-segment
elimination
FYE 3/’14
FYE 3/’15
-1
HA
1.3
(0.0)
FYE 3/’14
FYE 3/’15
＊Professional Systems Segment
Net sales of the Professional Systems Segment for the fiscal year ended
March 31, 2015 declined by approximately 5,000 million yen, or 5.5%,
year-on-year to 85,264 million yen, due largely to the sale of Geobit, which
was worth approximately 13,000 million yen, although strong operating
performance, mainly led by the Communications Business, boosted sales.
Operating income decreased by approximately 700 million yen, or 17.5%,
year-on-year to 3,260 million yen. In other words, excluding the effects of
selling Geobit, net sales generated by existing businesses increased.
Net Sales:
The Communications Business logged an increase in net sales, which
was mainly attributable to a rebound in sales of professional-use wireless
terminals on the back of growing private-sector demand in North America,
the largest market, and new revenue contributed by EFJT, a consolidated
subsidiary incorporated into the Group in March 2014.
In the Pro Systems Business, declining sales in overseas markets were
covered by brisk sales in domestic markets. As a result, overall net sales
were almost on a par with the previous fiscal year. The Healthcare Business,
which primarily handles information equipment, was transferred from
Totoku Electric Co., Ltd. in July 2013, and contributed to sales growth
throughout the fiscal year ended March 31, 2015.
Operating Income:
Operating income of the Communications Business was lower than in
the previous fiscal year, mainly because EFJT s sales synergies were below
expectations, although sales of professional-use wireless terminals
recovered mainly in North American private-sector markets.
The Pro Systems Business increased its operating income due to the
positive effects of structural reforms executed in the previous fiscal year.
Development costs of next-generation businesses increased from a year
earlier, resulting in increased losses.
＊Optical & Audio Segment
Net sales of the Optical & Audio Segment for the fiscal year ended March
31, 2015 decreased by approximately 15,500 million yen, or 26.4%,
year-on-year to 43,356 million yen, while operating income increased
significantly by approximately 800 million yen, or 1,363.3%, year-on-year
to 878 million yen.
Net Sales:
The Creation (former Imaging) Business posted a substantial decline in
net sales, due largely to the consolidation of its product lineup as part of
business-reform measures, which were undertaken in response to
substantial contractions of both domestic and overseas markets for
consumer video camera products.
The Image & Optical Business marked a significant fall in net sales,
because of declining sales of high-definition 4K models in the projector
field.
In the AV Accessory Business, declining sales mainly in overseas
markets were covered by increased sales in domestic markets, and overall
net sales increased.
Operating Income:
The Creation (former Imaging) Business reduced its losses significantly
and posted a swing to profit for the fiscal year ended March 31, 2015, as
a result of business reforms from the third quarter of the previous fiscal
year.
The Image & Optical Business posted a significant decline in operating
income because net sales fell.
The AV Accessory Business also recorded a decline in operating
income, due mainly to changes in product mix caused by intensifying
competition in the U.S. market.
Optical & Audio
Net sales (YoY change)
Professional Systems
(Billion Yen)
Net sales (YoY change)
(Billion Yen)
120
100
80
60
Operating income (YoY change)
(Billion Yen)
COM: Communications
Pro: Pro System
Health
COM Pro care
90.2
Others* 85.3
Others*
Healthcare
0
1
COM
*Others: Sales of Geobit
FYE 3/’14
FYE 3/’15
0
4.0
3.3
*Others: Next-generation
development and
investment, etc.
FYE 3/’14
58.9 Creation
Others
AV
40 Accessory
Image &
30 Optical
COM Pro Health
care
Others*
3
2
60
50
4
Pro
40
20
5
70
Operating income (YoY change)
(Billion Yen)
AV
Accessory
Others*
43.4
Image &
Optical
20 Creation
*Others: Next-generation
10
development and
investment, etc.
0
FYE 3/’14
FYE 3/’15
3.5
*Others: Next-generation development
and investment, etc.
3
Image &
Optical
2.5
2
Creation
1.5
Others*
1
0.5
0
AV
Accessory
0.1
FYE 3/’14
0.9
FYE 3/’15
FYE 3/’15
Annual Report 2015
3
＊Entertainment Software Segment
Net sales of the Entertainment Software Segment for the fiscal year ended
March 31, 2015 declined by approximately 1,600 million yen, or 4.9%,
year-on-year to 29,833 million yen, while operating income fell by
approximately 300 million yen, or 21.5%, year-on-year to approximately
1,002 million yen.
Net Sales:
The Content Business marked a decline in net sales, due largely to a
shrinking market and changes to the compositions of titles. Net sales of
the OEM Business fell, mainly because of a decrease in the number of OEM
products caused by changes in the market environment and other factors.
Operating Income:
Operating income of both the Content Business and the OEM Business
declined due to a decrease in net sales.
【Major hits at Teichiku Entertainment】
・ KANJANI LIVE TOUR JUKE BOX, a Blu-ray/DVD and Omoidama and
ER2, singles from KANJANI
・ Ariakekai, a single from Takeshi Kitayama
・ Izakaya Hotaru, a single from Kaori Uesugi
・ Anya no Shinjutate, and Ah…Antagawa, a single from Sayuri Ishikawa
・ Michiharuka, a single from Takeshi Kitayama and Saburo Kitajima
・ Mondomuyo Selection Gold Prize, and Utano Homare Shiro, an album
and Konyamo Hajimatteirudaro, a single from Dohatsuten
・ SHOUT, an album from STARDUST REVUE
・ Waremoko-Utsuriyuku Hibi, a single from Miyuki Kawanaka
・ Kitano Koshu, a single from Joji Yamamoto
・ BACK TO MELLOW, an album and SONG COMPOSITE SPECIAL IN
NIHONBASHI, DVD from Yuji Nakada
・ Koma, a single from Aya Shimazu
・ Inochino Haru, and Inochino Hito, singles from Yoshimi Tendo
Entertainment Software
Net sales (YoY change)
Operating income (YoY change)
(Billion Yen)
(Billion Yen)
35
1.5
30
31.4
Content
OEM
OEM
29.8
Net sales and operating income (loss) by business segment are listed below.
Aggregate operating income (loss) by business segment is consistent with the operating income
(loss) in the consolidated statements of operations. Net sales include inter-segment sales and
transfers.
OEM
1
20
15
Content
0.5
10
1.3
Open-Air Concert Hall, Blu-ray/DVD from Fudanjuku
Net Sales, Operating Income and Losses by Business Segment
Content
25
・ Fudanjuku Ranbu TOUR 2014 ~ Ichigo Nijuichie ~ FINAL at Hibiya
1.0
Fiscal year ended March 2015 (April 1, 2014 to March 31, 2015)
5
0
FYE 3/’14
FYE 3/’15
0
Business segment
FYE 3/’14
FYE 3/’15
Car Electronics
The following major hits were recorded in the fiscal year ended March
2015.
【Major hits at Victor Entertainment】
・ Yes we are/Kokokara, and Top Of The World/ Amazing Discovery, and
Kareinaru Gyakushu/Humor shichauyo, singles, and Mr. S, an album,
and Mr. S saikou de saikou no CONCERT TOUR, a Blu-ray/DVD from
Professional Systems
Optical & Audio
Entertainment
Software
SMAP
・ Crazy Crazy/Sakura no Mori, a single from Gen Hoshino
Others
・ OVERTONE, an album from KEYTALK
Inter-segment
・ Reshiki, an album from Rekishi
・ Tokyo VICTORY, a single and Budo, an album from Southern All Stars
・ THE PIER, an album from QURULI
・ SAKANATRIBE 2014 -LIVE at TOKYO DOME CITY HALL, Blu-ray/DVD
from Sakanaction
・ MIETA, an album from Kaera Kimura
・ Silly, a single and 20, an album from Leo Ieiri
・ Boys! an album from THE BAWDIES
・ Happy, an album from Sakurako Ohara
4
Total
Net sales
Operating income
Net sales
Operating income
Net sales
Operating income
Net sales
FYE3/’15
(Millions of yen)
FYE3/’14
YoY
comparison
120,746
124,771
(4,025)
1,348
(38)
+1,386
85,264
90,237
(4,973)
3,260
3,950
(690)
43,356
58,900
(15,544)
878
61
+817
29,833
31,382
(1,549)
Operating income
1,002
1,276
(274)
Net sales
5,821
11,057
(5,236)
+910
Operating income
83
(827)
Net sales
(10)
(4)
(6)
Net sales
285,010
316,343
(31,333)
+2,149
Operating income
6,571
4,422
Ordinary Income (Loss)
3,176
(70)
+3,246
Net Income (Loss)
4,654
(6,572)
+11,226
Analysis of Financial Position
▶ Analysis of assets, liabilities and net equity •••••
＊Assets
Total assets rose by approximately 11,500 million yen from the end of the
previous fiscal year to 278,670 million yen. This was mainly due to
increases in merchandise and finished goods, software, and retirement
benefit-related assets. Software increased as a result of active
development-related investments, and retirement benefit-related assets
increased in line with an increase in pension assets.
＊Liabilities
Total liabilities declined by approximately 7,900 million yen from the end of
the previous fiscal year to 199,448 million yen. This was due to a decline in
other accounts payable associated with the payment of expenses for
employment-related structural reforms carried out in the previous fiscal
year and the repayment of bank loans. Interest-bearing debts (sum of
loans payable and bonds payable) decreased by 8,000 million yen from the
end of the previous fiscal year to 73,618 million yen. Net debts (amount
obtained by subtracting cash and deposits from interest-bearing debts)
declined by approximately 7,900 million yen from the end of the previous
fiscal year to 18,541 million yen.
＊Net equity
Retained earnings for the fiscal year ended March 31, 2015 increased by
approximately 4,800 million yen from the end of the previous fiscal year to
22,181 million yen, due mainly to net income recorded for the fiscal year
ended March 31, 2015. Total shareholders equity also increased by
approximately 4,500 million yen from the end of the previous fiscal year to
77,217 million yen.
Total net equity increased by approximately 19,400 million yen from
the end of the previous fiscal year to 79,221 million yen. This was mainly
because total other comprehensive income increased by approximately
15,600 million yen. More specifically, shareholders equity, foreign currency
translation adjustment, and remeasurements of defined benefits plans
increased. In the case of the foreign currency translation adjustment, the
value of the Japanese yen against the U.S. dollar and other Asian
currencies declined from the end of the previous fiscal year, resulting in an
increase in the adjustment related to capital contributions made to
overseas affiliates.
The shareholders equity ratio also rose 6.4% point from the end of
the previous fiscal year to 25.8%, due to an increase in net equity.
＊Cash flows from investing activities
Net cash used in investing activities for the fiscal year ended March 31,
2015 was 3,857 million yen, reflecting a year-on-year decrease of
approximately 6,800 million yen in cash spent. This was primarily due to a
lack of payments made for the acquisition of subsidiaries shares
accompanying a change in the scope of consolidation and receipt of cash
for the transfer of land use rights and buildings of JVC Manufacturing
Malaysia Sdn.Bhd., although cash was paid for the acquisition of intangible
fixed assets.
＊Cash flows from financing activities
Net cash used in financing activities for the fiscal year ended March 31,
2015 was 7,515 million yen, reflecting a year-on-year decrease of
approximately 2,100 million yen in cash spent. This was mainly due to the
repayment of bank loans, although no payments were made for bond
redemptions.
The balance of cash and cash equivalents at the end of the fiscal year
ended March 31, 2015 declined by approximately 300 million yen from the
end of the previous fiscal year to 54,453 million yen.
Basic Policies for the Payment of Dividends
JVCKENWOOD s most important issues include stable distribution of profits
and ensuring necessary management resources for future growth. The
dividends paid out of reserves and other amounts appropriated are
determined based on profitability and financial conditions as a whole.
With regard to the dividend for the fiscal year ended March 2015,
based on the revision to the earnings forecast announcement of April 21,
2015, JVCKENWOOD resumed an annual dividend (year-end) of JPY 5 per
share.
Subsequent Events
＊Acquisition of shares of ASK Industries S.p.A. (to
Make it into a Subsidiary)
＊Transfer of shares of Teichiku Entertainment, Inc.
For the details, please refer to 22. Subsequent Events of page 41.
▶ Cash flow analysis •••••••••••••••••
＊Cash flows from operating activities
Net cash generated by operating activities for the fiscal year ended March
31, 2015 was 8,575 million yen, reflecting a year-on-year decline of
approximately 6,400 million yen. This was primarily due to a decline in
other accounts payable as a result of payments of expenses for
employment-related structural reforms, etc. carried out in the previous
fiscal year, in spite of posting income before income taxes and minority
interests for the fiscal year ended March 31, 2015.
Annual Report 2015
5
Consolidated Balance Sheet
JVC KENWOOD Corporation and its Consolidated Subsidiaries
As of March 31, 2015
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
ASSETS
2015
2015
2014
Current Assets:
Cash and cash equivalents (Notes 5 and 14)
Time deposits (Note 14)
¥
54,453
371
¥
54,738
166
$
453,133
3,087
Notes and accounts receivable (Notes 5 and 14):
Trade
Unconsolidated subsidiaries and associated companies
Other
Allowance for doubtful receivables
57,860
115
4,006
(1,613)
57,331
77
4,537
(1,556)
481,485
957
33,336
(13,423)
25,836
2,936
8,382
4,103
4,590
161,039
22,767
3,415
8,406
3,781
4,707
158,369
214,995
24,432
69,751
34,143
38,197
1,340,093
27,704
59,332
46,982
75,657
401
210,076
(156,640)
53,436
28,217
65,791
56,350
79,607
1,432
231,397
(176,977)
54,420
230,540
493,734
390,963
629,583
3,337
1,748,157
(1,303,487)
444,670
4,745
3,777
39,486
443
216
3,686
7,998
9,819
29,729
10,058
7,000
24,720
50
8,542
54,363
¥ 267,152
66,556
81,709
247,391
Inventories (Note 5):
Finished goods
Work in process
Raw materials and supplies
Deferred tax assets (Note 18)
Other current assets (Note 5)
Total current assets
Property, Plant and Equipment (Notes 5, 8 and 13):
Land (Note 3)
Buildings and structures
Machinery and equipment
Furniture and fixtures
Construction in progress
Total
Accumulated depreciation
Net property, plant, and equipment
Investments and Other Assets:
Investment securities (Notes 5, 14 and 15)
Investments in and advances to unconsolidated subsidiaries and
associated companies
Goodwill
Software (Note 5)
Asset for retirement benefits (Note 17)
Issuance cost of stock acquisition rights
Other (Notes 5 and 18)
Total investments and other assets
TOTAL ASSETS
See notes to consolidated financial statements.
6
11,461
64,195
¥ 278,670
95,374
534,202
$ 2,318,965
Consolidated Balance Sheet (continued)
JVC KENWOOD Corporation and its Consolidated Subsidiaries
As of March 31, 2015
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
LIABILITIES AND EQUITY
Current Liabilities:
Notes and accounts payable (Note 14):
Trade
Unconsolidated subsidiaries and associated companies
Other
Short-term bank loans (Notes 5 and 14)
Current portion of long-term debt (Notes 5 and 14)
Accrued expenses (Note 14)
Income taxes payable (Note 14)
Warranty reserves
Sales return reserves
Other current liabilities (Notes 15 and 18)
Total current liabilities
Long-term Liabilities:
Long-term debt (Notes 5 and 14)
Liability for retirement benefits (Note 17)
Deferred tax liabilities (Notes 3 and 18)
Other
Total long-term liabilities
2015
¥
30,033
41
10,544
16,827
49,139
19,196
1,931
1,506
1,418
8,724
139,359
2015
2014
¥
27,943
15
14,459
17,310
10,083
18,311
1,398
1,742
1,433
8,153
100,847
$
249,921
341
87,742
140,027
408,912
159,740
16,069
12,532
11,800
72,598
1,159,682
7,974
33,357
16,155
2,604
60,090
54,668
34,167
14,753
2,892
106,480
66,356
277,582
134,435
21,669
500,042
10,000
45,574
83,215
379,246
22,181
(539)
10,000
45,875
807
17,422
(537)
570
3,376
(6,383)
(3,000)
71,779
7,442
79,221
¥ 278,670
205
3,210
(13,441)
(11,011)
52,530
7,295
59,825
¥ 267,152
4,743
28,094
(53,116)
(24,965)
597,312
61,929
659,241
$ 2,318,965
Commitments and Contingent Liabilities (Notes 4, 13 and 16)
Equity (Notes 10 and 11)
Common stock, authorized – 400,000,000 shares
Issued – 139,000,201 shares in 2015 and 2014
Capital surplus
Stock acquisition rights
Retained earnings
Less: Treasury stock, at cost:
Common stock 340,000 shares in 2015
Common stock 335,800 shares in 2014
Accumulated other comprehensive income:
Net unrealized gain on available-for-sale securities
Land revaluation surplus (Note 3)
Foreign currency translation adjustments
Defined retirement benefit plans
Total
Minority interests
Total equity
TOTAL LIABILITIES AND EQUITY
184,580
(4,485)
See notes to consolidated financial statements.
Annual Report 2015
7
Consolidated Statement of Operations
JVC KENWOOD Corporation and its Consolidated Subsidiaries
For the year ended March 31, 2015
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
2015
Net Sales
Cost of Sales (Note 7)
Gross profit
Selling, General and Administrative Expenses (Notes 6 and 7)
Operating income
Other Income (Expenses):
Interest and dividend income
Interest expense
Foreign exchange loss
Equity in earnings of associated companies
Borrowing costs
Reversal of warranty reserves
Gain (loss) on sales of property, plant and equipment, net (Note 8)
Gain on sales of investment securities, net
(Loss) gain on sales of shares in subsidiaries and associated companies, net
Gain on reversal of stock acquisition rights
Loss on disposal of property, plant and equipment (Note 8)
Loss on impairment of long-lived assets
Settlement received
Gain from bargain purchase
Loss on disposal of inventory from discountinued business
Business structure improvement expenses
Employment structure improvement expenses (Note 17)
Other, net
Other Expenses, Net
¥
Income Taxes (Note 18):
Current
Deferred
Total income taxes
Net Income (Loss) before Minority Interests
Minority Interests in Net Income
Net Income (Loss)
¥
401
(1,945)
(1,079)
3
(467)
52
5,415
190
(1,105)
807
(176)
Income (Loss) before Income Taxes and Minority Interests
¥
316,343
232,494
83,849
79,427
4,422
See notes to consolidated financial statements.
8
2,371,723
1,664,716
707,007
652,326
54,681
3,337
(16,185)
(8,979)
25
(3,886)
433
45,061
1,581
(9,195)
6,715
(1,465)
(85)
(469)
580
641
(445)
(296)
(1,238)
(58)
59
(677)
(4,496)
(1,460)
(7,032)
(3,703)
(2,463)
(10,302)
(483)
491
6,630
(2,610)
55,172
2,635
(1,520)
1,115
5,515
861
4,654
1,496
1,834
3,330
(5,940)
632
(6,572)
21,927
(12,648)
9,279
45,893
7,165
38,728
¥
33.56
5.00
$
U.S. Dollars (Note 1)
2015
¥
$
294
(2,245)
(921)
32
(982)
263
(1)
110
2,384
Yen
Per Share of Common Stock (Notes 2(u) and 21):
Basic net income (loss)
Cash dividends applicable to the year
2015
2014
285,010
200,049
84,961
78,390
6,571
2015
2014
¥
(47.39)
$
0.28
0.04
Consolidated Statement of Comprehensive Income
JVC KENWOOD Corporation and its Consolidated Subsidiaries
For the year ended March 31, 2015
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
2015
Net Income (Loss) before Minority Interests
Other Comprehensive Income (Note 9):
Unrealized gain on available-for-sale securities
Land revaluation surplus
Foreign currency translation adjustments
2015
2014
¥ 5,515
¥ (5,940)
$ 45,893
354
166
8,076
7,981
11
2,946
1,382
67,205
66,414
5,153
Defined retirement benefit plans
Share of other comprehensive income of unconsolidated
subsidiaries and associated companies accounted for by the equity
method
Total other comprehensive income
Comprehensive income
16,577
¥ 22,092
4,585
¥ (1,355)
137,947
$ 183,840
Total Comprehensive Income Attributable to:
Owners of the parent
Minority interests
¥ 20,253
1,839
¥ (2,187)
832
$ 168,537
15,303
(579)
See notes to consolidated financial statements.
Annual Report 2015
9
Consolidated Statement of Changes in Equity
JVC KENWOOD Corporation and its Consolidated Subsidiaries
For the year ended March 31, 2015
Thousands
Millions of Yen
Number of Shares of
Common Stock
Outstanding (Note 11)
138,668
Balance, April 1, 2013
Common Stock
(Notes 10 and 11)
Capital Surplus
(Note 10)
¥ 10,000
¥ 45,875
Stock Acquisition
Retained Earnings Treasury Stock
Rights
(Notes 10 and 11) (Notes 10 and 11)
(Notes 10 and 11)
¥ 807
Cash dividends
Net loss
¥ 24,687
(693)
(6,572)
(4)
Purchase of treasury stock
¥ (536)
(1)
Net change in the year
Balance, March 31, 2014
(April 1, 2014, as previously reported)
138,664
10,000
45,875
807
17,422
Cumulative effects of accounting
change
(537)
(196)
10,000
Balance, April 1, 2014 (as restated)
45,875
Transfer to retained earning from
capital surplus
807
17,226
(301)
(537)
301
4,654
Net income
(4)
Purchase of treasury stock
(2)
¥ (807)
Net change in the year
138,660
Balance, March 31, 2015
¥ 10,000
¥ 45,574
¥ 22,181
¥ (539)
Millions of Yen
Accumulated Other Comprehensive Income
Unrealized Gain
Foreign Currency
Defined
Land Revaluation
on Available-forTranslation retirement benefit
Surplus (Notes 3)
Sale Securities
Adjustments
plans
Balance, April 1, 2013
¥ 250
¥ 3,210
¥ (17,871)
Cash dividends
Net loss
Purchase of treasury stock
(45)
Net change in the year
Balance, March 31, 2014
(April 1, 2014, as previously reported)
205
4,430
3,210
(13,441)
¥ 66,422
(693)
(6,572)
(1)
¥ (11,011)
(6,626)
(11,011)
Cumulative effects of accounting
change
Minority
Interests
Total
52,530
¥
818
6,477
¥ 67,240
(693)
(6,572)
(1)
(149)
7,295
59,825
(196)
205
Balance, April 1, 2014 (as restated)
3,210
(13,441)
(11,011)
52,334
Total Equity
(196)
7,295
59,629
147
¥ 7,442
4,654
(2)
14,940
¥ 79,221
Transfer to retained earning from
capital surplus
Net income
Purchase of treasury stock
Net change in the year
Balance, March 31, 2015
365
¥ 570
See notes to consolidated financial statements.
10
166
¥ 3,376
4,654
(2)
7,058
8,011
14,793
¥ (6,383) ¥ (3,000) ¥ 71,779
Consolidated Statement of Changes in Equity (continued)
JVC KENWOOD Corporation and its Consolidated Subsidiaries
For the year ended March 31, 2015
Thousands of U.S. Dollars
Common Stock
(Notes 10 and 11)
Balance, March 31, 2014
(April 1, 2014, as
previously reported)
$ 83,215
Capital Surplus
(Note 10)
Stock Acquisition Rights Retained Earnings Treasury Stock
(Notes 10 and 11) (Notes 10 and 11) (Notes 10 and 11)
$ 381,751
$ 6,715
$ 144,978
Cumulative effects of
accounting change
$ (4,469)
(1,631)
Balance, April 1, 2014 (as
restated)
83,215
381,751
Tr a n s f e r t o r e t a i n e d
earning from capital
surplus
6,715
143,347
(2,505)
(4,469)
2,505
38,728
Net income
(16)
Purchase of treasury stock
$ (6,715)
Net change in the year
$ 83,215
Balance, March 31, 2015
$ 379,246
$ 184,580
$ (4,485)
Thousands of U.S. Dollars
Accumulated Other Comprehensive Income
Unrealized Gain
Foreign Currency
Defined
Land Revaluation
on Available-forTranslation retirement benefit
Surplus (Notes 3)
Sale Securities
Adjustments
plans
Balance, March 31, 2014
(April 1, 2014, as
previously reported)
$ 1,707
$ 26,713
$ (111,850)
$ (91,629) $ 437,131
Cumulative effects of
accounting change
Balance, April 1, 2014 (as
restated)
Total
Minority
Interests
Total Equity
$ 60,706
$ 497,837
(1,631)
1,707
26,713
(111,850)
(91,629)
435,500
(1,631)
60,706
496,206
1,223
$ 61,929
38,728
(16)
124,323
$ 659,241
Tr a n s f e r t o r e t a i n e d
earning from capital
surplus
Net income
Purchase of treasury stock
Net change in the year
Balance, March 31, 2015
3,036
$ 4,743
1,381
$ 28,094
58,734
$ (53,116)
38,728
(16)
66,664
123,100
$ (24,965) $ 597,312
See notes to consolidated financial statements.
Annual Report 2015
11
Consolidated Statement of Cash Flows
JVC KENWOOD Corporation and its Consolidated Subsidiaries
For the year ended March 31, 2015
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
2015
Operating Activities:
Income (loss) before income taxes and minority interests
Adjustments to reconcile Income (loss) before income taxes and
minority interests to net cash provided by operating activities:
Income taxes−paid
Depreciation
Amortization of goodwill
Loss on impairment of long-lived assets
Equity in earnings of associated companies
Loss (gain) on sales of shares in subsidiaries and associated companies, net
Gain on reversal of stock acquisition rights
Loss on disposal of property, plant and equipment
(Gain) loss on sales of property, plant and equipment, net
Changes in assets and liabilities:
Decrease in trade notes and accounts receivable
(Increase) decrease in inventories
Increase (decrease) in trade notes and accounts payable
(Decrease) Increase in accounts payable - other
Increase (decrease) in accrued expenses
Decrease in allowance for doubtful receivables
Increase in liability for retirement benefits
Increase in asset for retirement benefits
Other, net (Note 12)
Total adjustments
Net cash provided by operating activities
Investing Activities:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of software and other intangibles
Proceeds from sales of software and intangibles
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from sales of shares in subsidiaries and associated companies
(Note 12)
Proceeds from purchases of investments in subsidiaries and
associated companies resulting in change of scope of
consolidation (Note 12)
Purchases of investments in subsidiaries resulting in change of scope
of consolidation (Note 12)
Payments for absorption-type company split resulting in change of
scope of consolidation
Other, net
Net cash used in investing activities
Financing Activities:
Increase (decrease) in short-term bank loans, net
Proceeds from long-term debt
Repayments of long-term debt
Redemption of bonds
Cash dividends paid
Other, net
Net cash used in financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year
See notes to consolidated financial statements.
12
2015
2014
￥ 6,630
¥ (2,610)
$ 55,172
(2,113)
10,465
537
(1,518)
10,986
330
469
(32)
(2,384)
(17,583)
87,085
4,469
(3)
1,105
(807)
176
(5,415)
85
1
(25)
9,195
(6,715)
1,465
(45,061)
979
(460)
77
(4,159)
128
(259)
4,821
(2,403)
(724)
1,945
8,575
6,543
11,718
(8,696)
4,260
(3,460)
(395)
488
(2,576)
1,735
17,554
14,944
8,147
(3,828)
641
(34,609)
1,065
(2,155)
40,118
(19,997)
(6,027)
(16,185)
71,357
(4,923)
834
(6,554)
7,171
(961)
490
568
(4,863)
565
(4,396)
(40,967)
6,940
(54,539)
59,674
(7,997)
4,078
4,727
(221)
206
3,085
1,424
(5,935)
(482)
(3,857)
(551)
2,500
(10,213)
(563)
40
(10,658)
(4,012)
(32,096)
749
(7,515)
4,244
47,562
(52,678)
(6,000)
(693)
(2,017)
(9,582)
(4,585)
20,804
(84,988)
6,233
(62,536)
2,512
(285)
54,738
¥ 54,453
2,508
(2,788)
57,526
¥ 54,738
20,903
(2,372)
455,505
$ 453,133
Notes to Consolidated Financial Statements
JVC KENWOOD Corporation and its Consolidated subsidiaries
For the year ended March 31, 2015
1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements of JVC KENWOOD Corporation (the Company ) and its consolidated subsidiaries (together, the
Group ) have been prepared based on the consolidated financial statements which were filed with the Financial Services Agency ( FSA ) pursuant to
provisions set forth in the Japanese Financial Instruments and Exchange Act, and in accordance with accounting principles generally accepted in Japan
( Japanese GAAP ) which are different in respects as to application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial
statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications
have been made in the 2014 consolidated financial statements to conform to the classifications used in 2015.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company was incorporated and
operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have
been made at the rate of ¥120.17 to $1, the approximate rate of exchange at March 31, 2015. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
2. Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements as of March 31, 2015, include the accounts of the Company and its 93 (103 in 2014) significant subsidiaries.
Consolidation of the remaining subsidiaries would not have a material effect on the accompanying consolidated financial statements.
Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able to exercise control over
operations excluding insignificant companies are fully consolidated, and those companies over which the Company has the ability to exercise significant
influence excluding insignificant companies are accounted for by the equity method.
During the fiscal year ended March 31, 2015, PT. JVCKENWOOD Indonesia was newly found and has been included in the scope of
consolidation.
The Company s consolidated subsidiary JVC France S.A.S. merged with Kenwood Electronics France S.A. and changed its name to
JVCKENWOOD France S.A.S. As a result, Kenwood Electronics France S.A. ceased to exist and was excluded from the scope of consolidation. The
Company s consolidated subsidiary Kenwood U.S.A. Corporation merged with JVC Americas Corp. ( JAC ) and changed its name to JVCKENWOOD
USA Corporation. As a result, JAC ceased to exist and was excluded from the scope of consolidation. The Company s consolidated subsidiary JVC
Deutschland GmbH merged with Kenwood Electronics Deutschland GmbH and changed its name to JVCKENWOOD Deutschland GmbH. As a result,
Kenwood Electronics Deutschland GmbH ceased to exist and was excluded from the scope of consolidation. The Company s consolidated subsidiary
JVCKENWOOD Engineering Corporation merged with JVCKENWOOD Technobrain Corporation. As a result, JVCKENWOOD Technobrain Corporation
ceased to exist and was excluded from the scope of consolidation. The Company s consolidated subsidiaries Kenwood Electronics Gulf Fze, JVC Beijing
Electronic Industries Co., Ltd., JVC Logistics Europe N.V., Shinwa Technology (Shenzhen) Limited, SEL (Shenzhen) Limited, and JVC Entertainment, Inc.
were liquidated and JVC America, Inc. ( JAI ) was sold, so they were excluded from the scope of consolidation.
Investment in one (one in 2014) associated company, Victor Advanced Media Co. Ltd., is accounted for by the equity method.
Unconsolidated companies which are not accounted for by the equity method include Speedstar Music, Inc. and four other companies (five in
2014). Associated companies which are not accounted for by the equity method include TAISHITA Label Music Co., ltd. and eight other companies
(eight in 2014). Investments in these companies are not accounted for by the equity method, because proportionate share of their net income and
retained earnings has only a slight effect on the consolidated financial statements and is therefore considered insignificant overall.
Of the Company s consolidated subsidiaries, the fiscal year end of each of JVC de Mexico, S.A. de C.V., Limited Liability Company JVC
KENWOOD RUS, Limited Liability Company JVC KENWOOD Ukraine, JVC (China) Investment Co., Ltd., Beijing JVC AV Equipment Co., Ltd., Shanghai
Kenwood Electronics Co., Ltd., Kenwood Electronics Trading (Shanghai) Co., Ltd., and Shinwa International Holdings Limited ( Shinwa ) and its 13
subsidiaries is December 31. Financial statements based on provisional settlement dates are used for each of the aforementioned subsidiaries in the
preparation of the Company s consolidated financial statements.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profits included in assets
resulting from transactions within the Group have been eliminated.
(b) Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements
The accounting standard for unification of accounting policies applied to foreign subsidiaries for the consolidated financial statements prescribes that
the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances
should in principle be unified for the preparation of the consolidated financial statements. However, financial statements prepared by foreign
subsidiaries in accordance with either International Financial Reporting Standards or generally accepted accounting principles in the United States of
America tentatively may be used for the consolidation process, except for the following items that should be adjusted in the consolidation process so
that net income is accounted for in accordance with Japanese GAAP unless they are not material: 1) amortization of goodwill; 2) scheduled
amortization of actuarial gain or loss of pensions that has been directly recorded in equity; 3) expensing capitalized development costs of R&D; 4)
cancellation of the fair value model of accounting for property, plant and equipment and investment properties and incorporation of the cost model of
accounting; and 5) exclusion of minority interests from net income, if contained in net income.
Annual Report 2015
13
(c) Unification of Accounting Policies Applied to Foreign Associated Companies for the Equity Method
The accounting standard requires adjustments to be made to conform the associate s accounting policies for similar transactions and events under
similar circumstances to those of the parent company when the associate s financial statements are used in applying the equity method unless it is
impracticable to determine such adjustments. In addition, financial statements prepared by foreign associated companies in accordance with either
International Financial Reporting Standards or generally accepted accounting principles in the United States of America tentatively may be used in
applying the equity method if the following items are adjusted so that net income is accounted for in accordance with Japanese GAAP unless they are
not material: 1) amortization of goodwill; 2) scheduled amortization of actuarial gain or loss of pensions that has been directly recorded in equity; 3)
expensing capitalized development costs of R&D; 4) cancellation of the fair value model of accounting for property, plant and equipment and
investment properties and incorporation of the cost model of accounting; and 5) exclusion of minority interests from net income, if contained in net
income.
(d) Business Combinations
The accounting standard for business combinations requires companies to account for business combinations in accordance with the following policies:
1) Business combinations should be accounted for by the purchase method except combinations of entities under common control and joint ventures.
2) In-process research and development costs acquired in the business combination should be capitalized as an intangible asset. 3) The acquirer should
recognize the bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired
and all of the liabilities assumed have been identified after a review of the procedures used in the purchase price allocation.
(e) Inventories
Inventories are principally stated at the lower of cost determined by the gross-average method or net selling value. Inventories held by some foreign
subsidiaries are principally stated at the lower of cost determined by the first-in, first-out method or market price.
(f) Cash Equivalents
Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash
equivalents include time deposits, certificates of deposit and commercial paper, all of which mature or become due within three months of the date of
acquisition.
(g) Foreign Currency Transactions and Financial Statements
All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange
rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated statement of operations.
The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rate as of the
balance sheet date except for equity, which is translated at the historical rate.
Revenue and expense accounts of consolidated foreign subsidiaries are translated into Japanese yen at the average exchange rate.
Differences arising from such translation are included in Foreign currency translation adjustments and Minority interests in a separate
component of equity.
(h) Allowance for Doubtful Receivables
The Company and its domestic consolidated subsidiaries provide an allowance for doubtful receivables in an amount sufficient to cover expected
probable losses on collection of receivables. It consists of an estimated uncollectible amount with respect to certain identified doubtful receivables and
an amount calculated using the actual percentage of collection losses with respect to the other receivables. Foreign consolidated subsidiaries provide
an estimated uncollectible amount of receivables.
(i) Marketable and Investment Securities
Debt and equity securities excluding shares of associated companies are classified as available-for-sale securities based on management s intention.
Available-for-sale securities other than nonmarketable securities are reported at fair value with unrealized gains and losses, net of applicable
taxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.
(j) Derivatives and Hedging Activities
The Group uses foreign currency forward contracts and interest rate swaps as means of hedging exposure to fluctuations in foreign currency exchange
and interest rates. The Group does not enter into derivatives for trading or speculative purposes.
All derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are
recognized in the consolidated statement of operations.
Interest rate swaps are employed to hedge interest rate exposures of bank loans. The interest rate swaps which qualify for hedge accounting and
meet specific matching criteria are not remeasured at market value but the differential paid or received under the agreements is recognized and
included in interest expenses (Short-cut method).
(k) Property, Plant and Equipment (excluding Leased Assets)
Property, plant and equipment is stated at cost. Depreciation is primarily calculated by the straight-line method based on the estimated useful lives of
the assets. The ranges of useful lives are as follows:
Buildings and structures
14
2 to 60 years
Machinery and equipment
2 to 16 years
Furniture and fixtures
1 to 20 years
(l) Intangible Assets (excluding Leased Assets)
Internal use software is carried at cost less accumulated amortization which is calculated by the straight-line method principally over their estimated
useful lives, 3 to 5 years. Internally developed software, incorporated as part of a product, is carried at cost less accumulated amortization, which is
calculated by the proportion of the actual sales volume of the products during the current year to the estimated total sales volume over the estimated
salable years of the products or by the straight-line method over the estimated salable years of the products, 1 to 3 years, with consideration for the
nature of the products. Goodwill and other intangible assets are carried at cost less accumulated amortization which is calculated by the straight-line
method over 8 to 20 years for goodwill and 2 to 20 years for other intangible assets.
(m) Long-Lived Assets
The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset
group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted
future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be
measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows
from the continued use and eventual disposition of the asset or net selling price at disposition.
(n) Leases
The accounting standard for lease transactions requires that all finance lease transactions be capitalized to recognize lease assets and lease obligations
in the balance sheet. In addition, the revised accounting standard permits leases that existed at the transition date and do not transfer ownership of
the leased property to the lessee to continue to be accounted for as operating lease transactions.
All other leases are accounted for as operating leases.
Finance leases that do not transfer ownership of the leased property to the lessee are depreciated by the straight-line method over the lease
term with zero residual value.
(o) Accounting Standards Applicable to Significant Revenue and Costs
Under the accounting standard for construction contracts, construction revenue and construction costs are recognized by the percentage-ofcompletion method if the outcome of a construction contract is deemed to be estimated reliably. When total construction revenue, total construction
costs and the stage of completion of the contract at the balance sheet date can be reliably measured, the outcome of a construction contract can be
estimated reliably. If the outcome of a construction contract cannot be reliably estimated, the completed-contract method is applied. When it is
probable that the total construction costs exceed total construction revenue, an estimated loss on the contract is immediately recognized by providing
for a loss on construction contracts.
(p) Issuance Cost of Stock Acquisition Rights
Issuance cost of stock acquisition rights is amortized over three years using the straight-line method.
(q) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statement of operations. The asset and liability
approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted income tax rates to the
temporary differences.
The Group files a tax return under the consolidated corporate-tax system which allows companies to base tax payments on the combined profits
or losses of the parent company and its wholly-owned domestic subsidiaries.
(r) Retirement and Pension Plans
The Company and certain domestic consolidated subsidiaries have noncontributory funded defined benefit pension plans and unfunded retirement
benefit plans which cover employees. In addition, there are instances where the Company undertakes premium severance payments at the time of
employees retirement. Certain foreign consolidated subsidiaries have noncontributory and contributory retirement benefit plans.
The Group accounts for the liability for retirement benefits based on projected benefit obligations and fair value of plan assets at the balance
sheet date. Unrecognized prior service costs are amortized on a straight-line basis over 10 years, which is determined within the average remaining
service periods for the employees.
Unrecognized actuarial gains or losses are amortized on a straight-line basis over 10 years, which is determined to be within the average
remaining service periods for the employees, from the following year in which it occurs.
The transitional obligation is amortized over 15 years.
In May 2012, the ASBJ issued ASBJ Statement No. 26, Accounting Standard for Retirement Benefits and ASBJ Guidance No. 25, Guidance on
Accounting Standard for Retirement Benefits, which replaced the accounting standard for retirement benefits that had been issued by the Business
Accounting Council in 1998 with an effective date of April 1, 2000, and the other related practical guidance, and were followed by partial amendments
from time to time through 2009.
(1) Treatment in the balance sheet
Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to be recognized in profit or loss are recognized
within equity (accumulated other comprehensive income), after adjusting for tax effects, and any resulting deficit or surplus is recognized as a liability
(liability for retirement benefits) or asset (asset for retirement benefits).
Annual Report 2015
15
(2) Treatment in the statement of operations and the statement of comprehensive income
The revised accounting standard does not change how to recognize actuarial gains and losses and past service costs in profit or loss. Those amounts
are recognized in profit or loss over a certain period no longer than the expected average remaining service period of the employees. However,
actuarial gains and losses and past service costs that arose in the current period and have not yet been recognized in profit or loss are included in
other comprehensive income, and actuarial gains and losses and past service costs that were recognized in other comprehensive income in prior
periods and then recognized in profit or loss in the current period, are treated as reclassification adjustments.
(3) Amendments relating to the method of attributing expected benefit to periods and relating to the discount rate and expected future salary
increases
The revised accounting standard also made certain amendments relating to the method of attributing expected benefit to periods and relating to the
discount rate and expected future salary increases.
This accounting standard and the guidance for (1) and (2) above are effective for the end of annual periods beginning on or after April 1, 2013, and for
(3) above are effective for the beginning of annual periods beginning on or after April 1, 2014, or for the beginning of annual periods beginning on or
after April 1, 2015, subject to certain disclosure in March 2015, all with earlier application being permitted from the beginning of annual periods
beginning on or after April 1, 2013. However, no retrospective application of this accounting standard to consolidated financial statements in prior
periods is required.
The Company applied the revised accounting standard and guidance for retirement benefits for (1) and (2) above, effective March 31, 2014, and
for (3) above, effective April 1, 2014.
With respect to (3) above, the Company changed the method of attributing the expected benefit to periods from a straight-line basis to a
benefit formula basis and the method of determining the discount rate from using the period which approximates the expected average remaining
service period to using a single weighted average discount rate reflecting the estimated timing and amount of benefit payment, and recorded the
effect of (3) above as of April 1, 2014, in retained earnings.
As a result, asset for retirement benefits as of April 1, 2014, decreased by ￥2,323 million ($19,331 thousand), liability for retirement benefits as
of April 1, 2014, decreased by ￥1,269 million ($10,560 thousand) and retained earnings as of April 1, 2014, decreased by ￥195 million ($1,631
thousand), and operating income, income before income taxes and minority interests for the year ended March 31, 2015, decreased by ￥394 million
($3,279 thousand).
(s) Warranty Reserves
In connection with warranty service which might be required in a certain period related to products sold, the Group recognizes warranty reserves
estimated based on a percentage of the warranty expenses incurred.
(t) Sales Return Reserves
The Group provides for losses relating to the return of products sold including CDs, DVDs, audio tapes, and Blu-ray discs by posting an estimated
amount based on the subject rates of returned goods.
(u) Per Share Information
Basic net income or loss per share is computed by dividing net income or loss available to common shareholders by the weighted-average number of
common shares outstanding for the period.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into common stock. Diluted
net income per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of the year (or at the
time of issuance) with an applicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants.
Diluted net income per share is not presented as the effect of including potential common shares is anti-dilutive.
Cash dividends per share presented in the accompanying consolidated statement of operations are dividends applicable to the respective fiscal
years, including dividends to be paid after the end of the year.
(v) New Accounting Pronouncements
Accounting Standards for Business Combinations and Consolidated Financial Statements ̶ On September 13, 2013, the ASBJ issued revised ASBJ
Statement No. 21, Accounting Standard for Business Combinations, revised ASBJ Guidance No. 10, Guidance on Accounting Standards for Business
Combinations and Business Divestitures, and revised ASBJ Statement No. 22, Accounting Standard for Consolidated Financial Statements.
Major accounting changes are as follows:
(1) Transactions with non-controlling interest
A parent s ownership interest in a subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amount
of minority interest is adjusted to reflect the change in the parent s ownership interest in its subsidiary while the parent retains its controlling interest
in its subsidiary. Under the current accounting standard, any difference between the fair value of the consideration received or paid and the amount
by which the minority interest is adjusted is accounted for as an adjustment of goodwill or as profit or loss in the consolidated statement of
operations.
Under the revised accounting standard, such difference shall be accounted for as capital surplus as long as the parent retains control over its
subsidiary.
16
(2) Presentation of the consolidated balance sheet
In the consolidated balance sheet, minority interest under the current accounting standard will be changed to non-controlling interest under the
revised accounting standard.
(3) Presentation of the consolidated statement of operations
In the consolidated statement of operations, income before minority interest under the current accounting standard will be changed to net
income under the revised accounting standard, and net income under the current accounting standard will be changed to net income attributable
to owners of parent under the revised accounting standard.
(4) Provisional accounting treatments for a business combination
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, an
acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. Under the current
accounting standard guidance, the impact of adjustments to provisional amounts recorded in a business combination on profit or loss is recognized
as profit or loss in the year in which the measurement is completed. Under the revised accounting standard guidance, during the measurement
period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the
acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and that would have
affected the measurement of the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting for the business
combination had been completed at the acquisition date.
(5) Acquisition-related costs
Acquisition-related costs are costs, such as advisory fees or professional fees, which an acquirer incurs to effect a business combination. Under the
current accounting standard, the acquirer accounts for acquisition-related costs by including them in the acquisition costs of the investment. Under
the revised accounting standard, acquisition-related costs shall be accounted for as expenses in the periods in which the costs are incurred.
The above accounting standards and guidance for transactions with non-controlling interest, acquisition-related costs and presentation changes in
the consolidated financial statements are effective for the beginning of annual periods beginning on or after April 1, 2015. Earlier application is
permitted from the beginning of annual periods beginning on or after April 1, 2014, except for the presentation changes in the consolidated financial
statements. In the case of earlier application, all accounting standards and guidance above, except for the presentation changes, should be applied
simultaneously. Either retrospective or prospective application of the revised accounting standards and guidance for transactions with non-controlling
interest and acquisition-related costs is permitted. In retrospective application of the revised standards and guidance for transactions with noncontrolling interest and acquisition-related costs, accumulated effects of retrospective adjustments for all transactions with non-controlling interest
and acquisition-related costs which occurred in the past shall be reflected as adjustments to the beginning balance of capital surplus and retained
earnings for the year of the first-time application.
In prospective application, the new standards and guidance for transactions with non-controlling interest and acquisition-related costs shall
be applied prospectively from the beginning of the year of the first-time application. The changes in presentation shall be applied to all periods
presented in financial statements containing the first-time application of the revised standards and guidance.
The revised standards and guidance for provisional accounting treatments for a business combination are effective for a business combination
which occurs on or after the beginning of annual periods beginning on or after April 1, 2015. Earlier application is permitted for a business combination
which occurs on or after the beginning of annual periods beginning on or after April 1, 2014.
The Company expects to apply the revised accounting standards and guidance for transactions with non-controlling interest, acquisitionrelated costs and presentation changes in the consolidated financial statements from April 1, 2015, and for provisional accounting treatments for a
business combination which occurs on or after April 1, 2015, and is in the process of measuring the effects of applying the revised accounting
standards and guidance in future applicable periods.
3. Land Revaluation Surplus
In accordance with the Law of Land Revaluation (Law No. 34, promulgated on March 31, 1998), the Company elected to revaluate land used for
business operations. As a result, the Company recorded amounts for land revaluation surplus, net of income taxes of ¥3,376 million ($28,094
thousand) and ¥3,210 million, and deferred tax liabilities relating to revaluation of ¥1,606 million ($13,364 thousand) and ¥1,773 million as of March
31, 2015 and 2014, respectively.
Revaluation Method
The revaluation of land used for business operations is calculated by undertaking a rational adjustment of the value of a standard parcel of land
located in close proximity to the subject land used for business operations as stipulated under Article 6 of the Land Price Publication Act as specified
under Article 2, Paragraph 1 of the Order for Enforcement on the Law on Revaluation of Land (Enforcement Order No. 119 enacted on March 31,
1998).
Annual Report 2015
17
Date of Revaluation: March 31, 2000
The differences between the market value of land used for business operations subject to revaluation as of the fiscal year end and the book value of
land after revaluation as of March 31, 2000 were as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
2014
¥ (5,328)
2015
¥ (5,393)
$ (44,337)
4. Contingent Liabilities
(1) Notes receivable factored with recourse and guarantee of bank loans for employees
The contingent liabilities of the Group as of March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
2014
¥ 402
303
¥ 705
Notes receivable factored with recourse
Guarantee of bank loans for employees
Total
¥ 420
368
¥ 788
Thousands of
U.S. Dollars
2015
$ 3,345
2,522
$ 5,867
(2) Other contingent liabilities
The Company s consolidated subsidiary JVC (Philippines), Inc. ( JPL ) was charged approximately 600 million Philippine pesos (including interest and
additional charges) in back taxes by the Philippines Bureau of Internal Revenue for corporate tax, value-added tax and withholding tax for the fiscal
year ended March 31, 2004, on December 2, 2008.
JPL viewed this claim as unreasonable, and appealed the entirety of the claim in the Philippine Court of Tax Appeals on April 30, 2009, but the
court found the filing invalid, and on May 27, 2014 the case was dismissed.
As a result, in order to profess the appropriateness of its tax procedures and case filing, JPL appealed to the Philippine Supreme Court on July
18, 2014. In addition, JPL is proceeding with the procedure for settlement with the Philippines Bureau of Internal Revenue based on the Philippines
Special Measures Act.
The total amount of back taxes if interest up until the consolidated fiscal year ended March 31, 2015 is included will be approximately one
billion Philippine pesos (using the exchange rate as of the end of fiscal year ended March 31, 2015, ¥2,700 million ($22,468 thousand)). Reserves
have not been posted for this amount.
5. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans, which generally consist of notes to banks and bank overdrafts, are due within one year. The annual average interest rates
applicable to the short-term bank loans as of March 31, 2015 and 2014, were 2.05% and 2.08%, respectively.
Long-term debt as of March 31, 2015 and 2014, consisted of the following:
Thousands of
U.S. Dollars
Millions of Yen
2015
2014
Series 7 unsecured bonds 2.66% due in
2015
Loans from banks with interest rate principally
at 2.13％ (2015) and 2.11% (2014)
Obligations under finance leases
¥ 5,947
¥ 5,812
$ 49,488
50,844
58,542
423,101
322
397
2,679
Total
57,113
49,139
¥ 7,974
64,751
10,083
¥ 54,668
475,268
408,912
$ 66,356
Less current portion
Long-term debts, less current portion
2015
The aggregate annual maturities of the current portion of long-term debt and long-term debt, excluding finance leases, at March 31, 2015, were as
follows:
Years ending March 31
Thousands of U.S. Dollars
¥ 48,956
$ 407,390
2017
6,019
50,087
2018
1,488
12,382
2019
228
1,898
2020
100
832
¥ 56,791
$ 472,589
Total
18
Millions of Yen
2016
The aggregate annual maturities of lease obligations at March 31, 2015, were as follows:
Years ending March 31
Millions of Yen
Thousands of U.S. Dollars
2016
¥ 183
$ 1,522
2017
75
624
2018
42
350
2019
16
133
2020
6
50
¥ 322
$ 2,679
Total
As of March 31, 2015 and 2014, the carrying amounts of assets pledged as collateral for short-term bank loans and the current portion of long-term
debt of ¥43,433 million ($361,430 thousand) and ¥18,571 million and long-term debt of ¥98 million ($816 thousand) and ¥29,316 million, respectively,
were as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
2014
¥ 4,168
2015
¥ 520
$ 34,684
12,151
3,711
101,115
7,066
2,567
58,800
495
329
4,119
7,342
7,596
61,097
Machinery and equipment
76
103
632
Furniture and fixtures
64
7
533
201,598
Cash and cash equivalents
Notes and accounts receivable-trade
Inventories
Other current assets
Buildings and structures
24,226
24,602
Software
Land
2
6
17
Investment securities
5
0
42
Investment and other assets-other
Total
32
20
266
¥ 55,627
¥ 39,461
$ 462,903
As of March 31, 2015 and 2014, in regard to the above pledged assets, the total amounts of collaterals were limited to the maximum amounts of
¥31,403 million ($261,321 thousand) and ¥31,315 million, respectively, based on the loan agreements.
The Company concluded loan agreements with banks to establish efficient fund procurement in order to secure its working capital in the fiscal years
ended March 31, 2015 and 2014.
＜1＞ Commitment Agreement of Syndicated Loans
The outstanding balance of the agreement was as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
Total commitment line of credit
Borrowings
Available amount
2014
¥ 14,500
¥ 14,500
8,410
14,500
¥ 6,090
2015
$ 120,662
69,984
$ 50,678
The above commitment line agreement was amended to the total commitment line of credit for ¥10 billion as of the end of the consolidated fiscal
year ended March 31, 2015, however the borrowing was executed based on the former agreement whose total commitment line was ¥14.5 billion.
This agreement is subject to the following financial covenants after amendment:
(1) Maintain the amount of total stockholders equity as of both of the end of March 2015 and the end of September 2015 at no less than 75% of
total stockholders equity on the Company s consolidated balance sheet as of each end of the fiscal years ended March 2014 and March 2015.
(2) As of the end of each account s settlement period and each cumulative second quarter, the Company will not incur operating losses as
recorded in its consolidated statement of operations for two consecutive periods.
＜2＞ Syndicated Loans Agreement
The outstanding balance of the agreement was as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
Executed amount
¥ 28,958
2014
¥ 29,140
2015
$ 240,975
Annual Report 2015
19
The above agreement is subject to the following financial covenants:
(1) Maintain the amount of total stockholders equity recorded on the Company s consolidated balance sheet as of the end of each quarter and
fiscal year at not less than 75% of the total stockholders equity recorded on the Company s consolidated balance sheet as of the end of the
previous fiscal year.
(2) As of the end of each cumulative second quarter and each fiscal year, the Company will not incur operating losses as recorded in its
consolidated statement of operations for two consecutive periods.
＜3＞ Term Loan Agreement
The outstanding balance of the agreement was as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
Executed amount
2014
¥ 11,305
¥ 12,635
2015
$ 94,075
The above agreement is subject to the following financial covenants:
(1) Maintain the sum of the aggregate total of the maximum amounts of commitment agreements and the unpaid balance of the principal of
specific term loan agreements at not less than ¥30 billion ($249,646 thousand).
(2) Maintain the amount of total stockholders equity recorded on the Company s consolidated balance sheet as of the end of each fiscal year and
second quarter from the second quarter of the fiscal year ended March 31, 2014, at not less than 75% of the total stockholders equity
recorded on the Company s consolidated balance sheet as of the fiscal year prior to that fiscal year or second quarter, or as of March 31, 2013,
whichever amount is largest.
(3) As of the end of each cumulative second quarter and each account s settlement period, the Company will not incur operating losses as
recorded in its consolidated statement of operations for two consecutive periods from the end of the cumulative second quarter of the fiscal
year ended March 31, 2014.
＜4＞ Syndicated Loans Agreement
The outstanding balance of the agreement was as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
Executed amount
¥ 929
2014
2015
¥ 3,465
$ 7,731
The above agreement is subject to the following financial covenants:
(1) Maintain the amount of total stockholders equity recorded on the Company s consolidated balance sheet as of the end of each second
quarter and fiscal year at not less than 90% of the total stockholders equity recorded on the Company s consolidated balance sheet as of the
end of the previous fiscal year.
(2) As of the end of each cumulative second quarter and each account s settlement period, the Company will not incur operating losses as
recorded in its consolidated statement of operations for two consecutive periods.
＜5＞ Loan Agreement
The outstanding balance of the agreement was as follows:
Thousands of
U.S. Dollars
Millions of Yen
Executed amount
2015
2014
¥ 2,100
¥ 2,800
2015
$ 17,475
The above agreement is subject to the following financial covenants:
(1) Maintain the amount of total stockholders equity recorded on the Company s consolidated balance sheet as of the end of each fiscal year
from the end of the fiscal year ended March 31, 2013, at not less than 90% of the total stockholders equity recorded on the Company s
consolidated balance sheet as of the end of the previous fiscal year.
(2) As of the end of each account s settlement period, the Company will not incur operating losses as recorded in its consolidated statement of
operations for two consecutive periods from the end of the fiscal year ended March 31, 2013.
＜6＞ Syndicated Loans Agreement
The outstanding balance of the agreement was as follows:
Thousands of
U.S. Dollars
Millions of Yen
Executed amount
20
2015
2014
¥ 4,000
¥ 4,000
2015
$ 33,286
The above agreement is subject to the following financial covenants:
(1) Maintain the amount of total stockholders equity recorded on the Company s consolidated balance sheet as of the end of each second
quarter and fiscal year at not less than 75% of the total stockholders equity recorded on the Company s consolidated balance sheet as of the
end of the previous fiscal year.
(2) As of the end of each cumulative second quarter and each account s settlement period, the Company will not incur operating losses as
recorded in its consolidated statement of operations for two consecutive periods.
6. Selling, General and Administrative Expenses
Major components of selling, general and administrative expenses for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
Advertising and promotion expenses
Provision of allowance for doubtful accounts
Personnel expenses
2015
¥ 12,233
$ 81,093
55
(53)
458
780
1,121
6,491
38,948
40,472
324,108
6,201
6,737
51,602
Provision for warranties
Transportation expenses
2014
¥ 9,745
7. Research and Development Costs
Research and development costs charged to income were ¥21,592 million ($179,679 thousand) and ¥21,455 million for the years ended March 31,
2015 and 2014, respectively.
8. Long-Lived Assets
Major components of gain on sales of property, plant and equipment, net for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
Gain on sales of property, plant and
equipment:
Buildings and structures
2014
2015
¥ 2
¥ 45
$ 17
106
75
882
Furniture and fixtures
17
8
Intangible fixed assets
5,303
Machinery and equipment
Total
Loss on sales of property, plant and
equipment:
Buildings and structures
¥ 5,428
¥ 1
141
44,129
¥ 128
$ 45,169
$ 8
Machinery and equipment
8
¥ 9
Furniture and fixtures
2
5
17
Land
2
115
16
¥ 13
¥ 129
$ 108
¥ 5,415
¥ (1)
$ 45,061
Total
Gain (loss) on sales of property, plant and
equipment, net
67
Note: The gain on sale of intangible assets for the consolidated fiscal year ended March 31, 2015 is due to the sale of the land use rights of JVC
Manufacturing Malaysia Sdn. Bhd.
Major components of loss on disposal of property, plant and equipment, for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
Buildings and structures
Machinery and equipment
Furniture and fixtures
Construction-in-process
Other
Total
2014
2015
¥ 7
¥ 23
$ 58
12
24
100
7
20
149
58
1,241
1
18
8
¥ 176
¥ 85
$ 1,465
Annual Report 2015
21
9. Other Comprehensive Income
Other comprehensive income for the years ended Mach 31, 2015 and 2014, was as follows:
Thousands of
U.S. Dollars
2015
Millions of Yen
2015
Unrealized gain (loss) on available-for-sale
securities:
Gains arising during the year
2014
¥ 680
¥ 110
$ 5,659
Reclassification adjustments
(190)
(101)
(1,581)
Amount before income tax effect
490
9
4,078
Income tax effect
(136)
2
(1,132)
¥ 354
¥ 11
$ 2,946
Total
Land revaluation surplus:
¥ 166
Income tax effect
$ 1,382
¥ 166
Total
$ 1,382
Foreign currency translation adjustments:
¥ 8,463
Gains arising during the year
Reclassification adjustments
¥ 5,153
$ 70,425
¥ 5,153
$ 67,205
(387)
¥ 8,076
Total
(3,220)
Defined retirement benefit plans:
¥ 7,723
$ 64,267
Reclassification adjustments
1,353
11,259
Amount before income tax effect
9,076
75,526
Income tax effect
(1,095)
(9,112)
¥ 7,981
$ 66,414
Adjustments arising during the year
Total
Share of other comprehensive income of
unconsolidated subsidiaries and
associated companies accounted for by
the equity method:
Gains arising during the year
¥ 305
Reclassification adjustments
(884)
¥ (579)
Total
Total other comprehensive income
¥ 16,577
¥ 4,585
$ 137,947
10. Equity
Japanese companies have been subject to the Companies Act of Japan (the Companies Act ). The significant provisions in the Companies Act that
affect financial and accounting matters are summarized below:
a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution
at the shareholders meeting. For companies that meet certain criteria including: (1) having a Board of Directors, (2) having independent auditors,
(3) having an Audit & Supervisory Board, and (4) the term of service of the directors being prescribed as one year rather than the normal twoyear term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal
year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria. The Companies Act permits
companies to distribute dividends-in-kind (noncash assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the
company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.
b) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings)
or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends
until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act,
the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common
stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain
conditions upon resolution of the shareholders.
22
c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of
Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by
a specific formula. Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The Companies Act also
provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented
as a separate component of equity or deducted directly from stock acquisition rights.
11. Consolidated Statement of Changes in Equity
For the fiscal year ended March 31, 2015
1. Matters relating to the class and number of shares issued and the class and number of treasury stock
Number of shares as
Number of shares as
of April 1, 2014
Increase
Decrease
of March 31, 2015
(Thousands of shares) (Thousands of shares) (Thousands of shares) (Thousands of shares)
Number of shares issued:
Common stock
Total
139,000
139,000
139,000
139,000
Treasury stock:
Common stock (Note)
Total
336
4
0
340
336
4
0
340
Note: The increase of four thousand shares of treasury stock is attributable to the share purchase demand of odd stocks by holders of shares less than
one unit.
2. Matters relating to stock acquisition rights
Classification
The Company
Breakdown of
stock acquisition
rights
Class of shares
underlying stock
acquisition rights
Series 1 stock
acquisition rights
Total
Common stock
The number of shares underlying stock acquisition rights
(Thousands of shares)
April1, 2014
Increase
Decrease
March 31, 2015
26,725
26,725
26,725
26,725
Balance as of March 31, 2015
(Millions of
Yen)
(Thousands of
U.S. Dollars)
Notes: The decrease in series 1 stock acquisition rights is due to retirement of stocks.
3. Matters relating to dividends
(1) Dividends paid
None.
(2) Dividends, for which the record date was in the year ended March 31, 2015, and the effective date is in the year ending March 31, 2016, were as
follows.
Resolution
Board of Directors
meeting on
May 13, 2015
Class of shares
Total amount of dividends
Common stock
(Millions of
Yen)
¥ 693
(Thousands of
U.S. ollars)
$ 5,767
Resources of
dividends
Dividends per share
(Yen)
Retained
earnings
¥ 5.00
Record Date
Effective date
March 31,
2015
June 1,
2015
(U.S. Dollars)
$ 0.04
For the fiscal year ended March 31, 2014
1. Matters relating to the class and number of shares issued and the class and number of treasury stock
Number of shares as
Number of shares as
of April 1, 2013
Increase
Decrease
of March 31, 2014
(Thousands of shares) (Thousands of shares) (Thousands of shares) (Thousands of shares)
Number of shares issued:
Common stock
Total
139,000
139,000
139,000
139,000
Treasury stock:
Common stock (Note)
Total
332
4
336
332
4
336
Note: The increase of four thousand shares of treasury stock is attributable to the share purchase demand of odd stocks by holders of shares less than
one unit.
Annual Report 2015
23
2. Matters relating to stock acquisition rights
Classification
Breakdown of stock
acquisition rights
The Company
Series 1 stock
acquisition rights
Total
Class of shares
underlying stock
acquisition rights
Common stock
The number of shares underlying stock acquisition rights
(Thousands of shares)
April 1, 2013
Increase
Decrease
March 31, 2014
Balance as of
March 31, 2014
(Millions of Yen)
26,431
294
26,725
807
26,431
294
26,725
807
3. Matters relating to dividends
(1) Dividends paid
Resolution
Class of shares
Board of Directors
meeting on
May 15, 2013
Common stock
Total amount
of dividends
(Millions of
Yen)
Dividends per
share
(Yen)
¥ 693
¥ 5.00
Record Date
Effective date
March 31, 2013
June 3, 2013
(2) Dividends, for which the record date was in the year ended March 31, 2014, and the effective date is in the year ending March 31, 2015.
None.
12. Supplemental Information for Consolidated Statement of Cash Flows
(1) Cash paid for interest, cash received for dividends and interest and insurance income arising from natural disasters for the years ended March 31,
2015 and 2014, were as follows:
Thousands of
U.S. Dollars
2015
Millions of Yen
2015
Cash paid for interest
Cash received for dividends and interest
Insurance income arising from natural
disasters
2014
¥ 1,782
¥ 2,095
$ 14,829
401
294
3,337
706
(2) Shinwa and its 15 subsidiaries became consolidated subsidiaries of the Company in the fiscal year ended March 31, 2014. Assets and liabilities of
these companies at the date of consolidation, acquisition cost and proceeds (net) from acquisition of newly consolidated subsidiaries were as
follows:
Millions of Yen
Current assets
Non-current assets
Negative goodwill
Current liabilities
Long-term liabilities
Accumulated other comprehensive income
Minority interests
6,312
(641)
(7,304)
(422)
901
(6,137)
Acquisition cost
5,480
Equity method book value before additional
acquisition of shares
(4,226)
Additional acquisition cost
1,254
Cash and cash equivalents of Shinwa
Proceeds from acquisition of Shinwa, net
24
¥ 12,771
2,678
¥ 1,424
(3) EF Johnson Technologies, Inc. ( EFJT ) and its subsidiary became consolidated subsidiaries of the Company in the fiscal year ended March 31,
2014. Assets and liabilities of these companies as of the date of consolidation, acquisition cost and payments for purchase of newly consolidated
subsidiaries were as follows:
Millions of Yen
¥ 3,333
Currents assets
Non-current assets
366
Goodwill
5,912
Current liabilities
(2,889)
Long-term liabilities
(139)
Acquisition cost
6,583
Cash and cash equivalents of EFJT
612
Accounts payable non-trade
Payments for purchases of EFJT, net
36
¥ (5,935)
(4) Kenwood Geobit Corporation ( Geobit ) was sold and excluded from the scope of consolidation in the fiscal year ended March 31, 2014. Assets
and liabilities of Geobit at the date of deconsolidation, sales amounts and proceeds (net) from sales of Geobit were as follows:
Millions of Yen
¥ 3,202
Current assets
Non-current assets
Current liabilities
211
(2,769)
Long-term liabilities
(58)
Ancillary expenses
66
Gain on sale of shares in subsidiaries and
affiliates
2,385
Contingent payments
163
Proceeds from sales of shares
3,200
Cash and cash equivalents of Geobit
Proceeds from sales of Geobit, net
(115)
¥ 3,085
(5) JAI was sold and excluded from the scope of consolidation in the fiscal year ended March 31, 2015. Assets and liabilities of JAI at the date of
deconsolidation, sales amounts and proceeds (net) from sales of JAI were as follows:
Millions of Yen
Thousands of
U.S. Dollars
¥ 1,666
Current assets
$ 13,863
Non-current assets
742
6,174
Current liabilities
(635)
(5,284)
Long-term liabilities
(100)
(832)
Ancillary expenses
198
1,648
(1,105)
(9,195)
Loss on sale of shares in subsidiaries and
affiliates
Proceeds from sales of shares
766
6,374
Ancillary expenses
(198)
(1,647)
Cash and cash equivalents of JAI
Proceeds from sales of JAI, net
(0)
(0)
¥ 568
$ 4,727
13. Leases
The Group leases mainly host computers, servers and software.
Obligations under noncancelable operating leases for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
2014
2015
¥ 1,251
¥ 1,056
1,395
1,576
11,609
¥ 2,646
¥ 2,632
$ 22,019
Operating leases:
Due within one year
Due after one year
Total
$ 10,410
Annual Report 2015
25
14. Financial Instruments and Related Disclosures
(1) Management Policy with Respect to Financial Instruments
Taking into consideration its capital investment and other plans, the Group largely procures essential funds through indirect financing, such as loans
from banks and other financial institutions and direct financing including the issuance of corporate bonds. Surplus funds held on a temporary basis
are mainly channeled into highly liquid financial assets for fund management purposes. In addition, short-term working capital is procured through
bank loans, as required. The Group also utilizes derivative financial instruments to hedge the various risks described as follows and does not enter
into derivative transactions for investment, trading or speculative purposes.
(2) Details of Financial Instruments and Associated Risks
The trade notes and accounts receivable are exposed to the credit risk of customers. In addition, trade notes and accounts receivable denominated in
foreign currencies that arise in the course of global business development are subject to the risk of fluctuation in foreign currency exchange rates,
and in principle, the Company utilizes foreign currency forward contracts including forecasted transactions.
Investment securities are essentially composed of company shares with which the Group maintains business relationships. These financial
instruments are exposed to market fluctuation risks.
Maturities of notes and accounts payable are generally within four months. A certain portion denominated in foreign currencies is subject to
the risk of fluctuation in foreign currency exchange rates and the Company utilizes foreign currency forward contracts including forecasted
transactions.
Bank loans and bonds aim to procure funds necessary for working capital (mainly short term) and capital investment; and the redemption date
of a bond is four months after the settlement day at the longest. Most bank loans and bonds are exposed to interest fluctuation risks due to floating
rates while derivative transactions (interest rate swaps) are employed to hedge interest fluctuation risks for some bank loans.
Derivative transactions comprise foreign currency forward contract transactions entered into for the purpose of managing the risk of
fluctuation in foreign currency exchange rates applicable to trade notes and accounts receivable and payable and forecasted transactions
denominated in foreign currencies, and interest rate swaps entered into for the purpose of hedging against fluctuations in interest rates applicable to
bank loans. For details regarding hedge methods, hedged items, hedging policies, methods for evaluating hedge efficacy and related items, please
refer to Note 2 (j).
(3) Risk Management for Financial Instruments
Credit Risk Management
Credit risk is the risk of the economic loss that arises when a trading partner is unable to meet the terms and conditions of contractual obligations,
such as the payment of principal and/or interest. People in charge of each business department, in accordance with the credit risk management
policy, regularly monitor conditions of major customers regarding trade receivables, as well as conduct credit research in order to identify risk, in a
timely manner, and reduce the risk of uncollectibility due to financial deterioration, etc. In addition, the Group utilizes credit guarantee for customers
to reduce risk.
The counterparties to derivative transactions are limited to major financial institutions. Accordingly, the Group is confident that little or no
credit risk exists as a result of contractual default.
Market Risks (Foreign Currency Exchange and Interest Rate Risks) Management
The Group, in principle, utilizes foreign currency forward contracts including forecasted transactions to manage identified risks of fluctuation in
exchange rates for trade notes and accounts receivable and payable denominated in foreign currencies by individual foreign currency and by month.
In addition, the Group engages in interest rate swaps in order to control the risk of fluctuations in interest payable on certain bank loans.
The portfolio of investment securities is continuously evaluated considering market conditions and relationship with issuers, i.e.,
counterparties, by regularly reviewing their market value or the financial performance of issuers.
Derivative transactions entered into are undertaken in accordance with the authority, rules and regulations stipulated under the Group s
internal policies. Each transaction is, in effect, undertaken by the director responsible for finance of each Group company or an individual or party
designated by the director responsible for finance of each Group company. In addition to the authorization of the responsible director, details of the
transaction are reported to the responsible director in each instance.
Liquidity Risk Management
Liquidity risk refers to the possible inability of the Group to meet its obligations on the date of an instrument s maturity. Based on the information
obtained from each department and division, the Group ensures that all appropriate cash management plans are prepared and updated in a timely
manner. At the same time, the Group manages the risks associated with liquidity through a variety of initiatives, including the maintenance of
liquidity.
(4) Supplemental Important Matters Relating to the Fair Values of Financial Instruments
The fair values of financial instruments are measured based on their quoted market prices, if available, or their reasonably assessed values, if quoted
market prices are not available. The fair values of financial instruments for which quoted market prices are not available are calculated based on
certain assumptions. Accordingly, fair values may differ if different assumptions are used.
(5) Fair Values of Financial Instruments
The fair values of financial instruments are based on their quoted market prices. In the event quoted market prices are not available for certain
financial instruments, other assessment methods are applied. Financial instruments for which fair values are extremely difficult to determine are not
included.
26
(a) Fair Value of Financial Instruments
March 31, 2015
Millions of Yen
Carrying amount
Cash and cash equivalents
Time deposits
Notes and accounts receivable-trade,
unconsolidated subsidiaries and
associated companies
¥ 54,453
371
371
(1,322)
Notes and accounts receivable-trade,
unconsolidated subsidiaries and
associated companies, net
56,653
56,653
2,400
2,400
¥ 113,877
¥ 113,877
¥ 30,033
¥ 30,033
Short-term bank loans
16,827
16,827
Income taxes payable
1,931
1,931
57,113
57,816
¥ 105,904
¥ 106,607
Total
Notes and accounts payable-trade,
unconsolidated subsidiaries and
associated companies
Long-term debt, including current portion
Total
Unrealized gain/loss
57,975
Allowance for doubtful receivables
Investment securities
Fair value
¥ 54,453
¥ 703
¥ 703
March 31, 2014
Millions of Yen
Carrying amount
Cash and cash equivalents
Time deposits
Notes and accounts receivable-trade,
unconsolidated subsidiaries and
associated companies
Allowance for doubtful receivables
Notes and accounts receivable-trade,
unconsolidated subsidiaries and
associated companies, net
Investment securities
Total
Notes and accounts payable-trade,
unconsolidated subsidiaries and
associated companies
Short-term bank loans
Income taxes payable
Long-term debt, including current portion
Total
Fair value
¥ 54,738
¥ 54,738
166
166
Unrealized gain/loss
57,408
(1,339)
56,069
56,069
2,296
2,296
¥ 113,269
¥ 113,269
¥ 27,958
¥ 27,958
17,310
17,310
1,398
1,398
64,751
66,583
¥ 111,417
¥ 113,249
¥ 1,832
¥ 1,832
Annual Report 2015
27
March 31, 2015
Thousands of U.S. Dollars
Carrying amount
Cash and cash equivalents
Unrealized gain/loss
$ 453,133
3,087
3,087
Time deposits
Notes and accounts receivable-trade,
unconsolidated subsidiaries and
associated companies
Fair value
$ 453,133
482,442
Allowance for doubtful receivables
(11,001)
Notes and accounts receivable-trade,
unconsolidated subsidiaries and
associated companies, net
471,441
Investment securities
471,441
19,972
19,972
$ 947,633
$ 947,633
$ 249,921
$ 249,921
Short-term bank loans
140,027
140,027
Income taxes payable
16,069
16,069
475,268
481,118
$ 881,285
$ 887,135
Total
Notes and accounts payable-trade,
unconsolidated subsidiaries and
associated companies
Long-term debt, including current portion
Total
$ 5,850
$ 5,850
Cash and Cash Equivalents and Time Deposits
The carrying values of cash and cash equivalents and time deposits approximate fair value because of their short maturities.
Investment Securities
The fair values of investment securities are measured at the quoted market price of the stock exchange for the equity instruments. Fair value
information for investment securities by classification is included in Note 15.
Receivables, Payables, Short-Term Bank Loans and Income Taxes Payable.
The carrying values of these items approximate fair value because of their short maturities.
Long-Term Debt and Current Portion of Long-Term Debt
The fair values of long-term debt are determined by discounting the cash flows related to the debt over its remaining period at the rate which reflects
the Company s credit risk.
The fair values of bonds are determined by discounting total amounts of principal and interest over their remaining periods at the rates which
reflect the Company s credit risk.
Some bank loans meet specific matching criteria for interest rate swaps, and therefore, their fair value is determined by discounting the total
amount of principal and interest of the loans accounted for together with the interest rate swaps at an interest rate which is reasonably expected to
be applied if a similar bank loan is made. Other loans with floating interest rates are carried at cost because the costs approximate their fair value as
the loans are short term and reflect market interest rates.
Derivatives
Fair value information for derivatives is included in Note 16.
(b) Financial instruments whose fair value cannot be reliably determined
Carrying amount
Millions of Yen
2015
Unlisted equity securities
Unlisted foregin bonds
Investments in and advances to
unconsolidated subsidiaries and
associated companies
Thousands of U.S. Dollars
2014
2015
¥ 2,312
¥ 1,454
$ 19,239
33
27
275
443
216
3,686
Since it is extremely difficult to determine the fair values of the above financial instruments as their quoted market prices are not available, they are not
included in investment securities as described in (a) Fair value of financial instruments.
28
(6) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen
Due in one
year or less
March 31, 2015
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
¥ 54,453
371
Cash and cash equivalents
Time Deposits
Notes and accounts receivable-trade,
unconsolidated subsidiaries and
associated companies
57,975
¥ 112,799
Total
Millions of Yen
Due in one
year or less
March 31, 2014
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
¥ 54,738
166
Cash and cash equivalents
Time Deposits
Notes and accounts receivable-trade,
unconsolidated subsidiaries and
associated companies
57,408
¥ 112,312
Total
Thousands of U.S. Dollars
March 31, 2015
Due in one
year or less
Cash and cash equivalents
Time Deposits
$ 453,133
3,087
Notes and accounts receivable-trade,
unconsolidated subsidiaries and
associated companies
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
482,442
$ 938,662
Total
Annual maturities of bonds, long-term bank loans, obligations under finance leases and other interest-bearing debt at March 31, 2015 and 2014, were
as follows:
March 31, 2015
Short-term bank loans
Bonds
Due in one
year or less
¥ 16,827
Due after one year
through two years
Millions of Yen
Due after two years Due after three years
through three years
through four years
Due after four years
through five years
Due after
five years
5,947
Long-term bank loans
Obligations under finance
lease
Other
Total
March 31, 2014
Short-term bank loans
43,009
¥ 6,019
¥ 1,488
¥ 228
¥ 100
183
75
42
16
6
¥ 6,094
¥ 1,530
¥ 244
¥ 106
2,160
¥ 68,126
Due in one
year or less
¥ 17,310
Bonds
Long-term bank loans
Obligations under finance
lease
Other
Total
Due after one year
through two years
¥ 5,812
Millions of Yen
Due after two years Due after three years
through three years
through four years
Due after four years
through five years
9,907
43,011
¥ 4,817
¥ 783
¥ 24
176
150
50
17
4
¥ 48,973
¥ 4,867
¥ 800
¥ 28
Due after
five years
895
¥ 28,288
Annual Report 2015
29
March 31, 2015
Short-term bank loans
Bonds
Due in one
year or less
$ 140,027
Due after one year
through two years
Thousands of U.S. Dollars
Due after two years Due after three years
through three years
through four years
Due after four years
through five years
Due after
five years
49,488
Long-term bank loans
Obligations under finance
lease
Other
Total
357,902
$ 50,087
$ 12,382
$ 1,898
$ 832
1,522
624
350
133
50
$ 50,711
$ 12,732
$ 2,031
$ 882
17,975
$ 566,914
15. Investment Securities
Investment securities as of March 31, 2015 and 2014, consisted of the following:
Thousands of
U.S. Dollars
Millions of Yen
2015
2014
2015
¥ 4,712
33
¥ 4,745
¥ 3,750
27
¥ 3,777
Noncurrent:
Equity securities
Corporate bonds
Total
$ 39,211
275
$ 39,486
The cost and aggregate fair values of investment securities as of March 31, 2015 and 2014, were as follows:
Millions of Yen
2015
Cost
Unrealized gains
Unrealized losses
Fair value
Securities classified as:
Available-for-sale:
Equity securities
¥ 1,794
¥ 642
¥ 36
¥ 2,400
Millions of Yen
2014
Cost
Unrealized gains
Unrealized losses
Fair value
Securities classified as:
Available-for-sale:
Equity securities
¥ 2,091
¥ 279
¥ 74
¥ 2,296
Thousands of U.S. Dollars
2015
Cost
Unrealized gains
Unrealized losses
Fair value
Securities classified as:
Available-for-sale:
Equity securities
$ 14,929
$ 5,343
$ 300
$ 19,972
Proceeds from sales of available-for-sale securities for the years ended March 31, 2015 and 2014, were ¥495 million ($4,119 thousand) and ¥206
million, respectively. Gross realized gains and losses on these sales, computed on the moving-average cost basis, were ¥190 million ($1,581 thousand)
and nil for the year ended March 31, 2015 and ¥110 million and ¥0 million for the year ended March 31, 2014, respectively.
Investment securities include loaned securities of ¥1,984 million ($16,510 thousand) and ¥490 million; and deposited cash of ¥1,654 million
($13,764 thousand) and ¥377 million as collateral which was presented as other current liabilities as of March 31, 2015 and 2014, respectively.
Impairment losses relating to marketable securities for each of the fiscal years ended March 31, 2015 and 2014, were ¥22 million ($183
thousand) (available-for-sale equity securities ¥22 million ($183 thousand)) and ¥222 million (available-for-sale equity securities ¥222 million),
respectively. With respect to the treatment of impairment losses, when the fair value of a security as of the end of the fiscal year is less than 50% of its
acquisition cost, the Group recognizes the difference between the fair value and the acquisition cost as an impairment loss. For securities whose fair
value as of the end of the fiscal year decreases by approximately 30% to 50% from its acquisition cost, the Group recognizes an impairment loss for
required amounts determined based on its recoverability.
30
16. Derivatives
The Group had the following derivative contracts outstanding at March 31, 2015 and 2014:
Derivative transactions to which hedge accounting is not applied
Millions of Yen
Contract amount
2015
Contract amount due
Fair value (Note 1)
after One Year
Unrealized gain/loss
Foregin currency forward contracts:
Selling:
¥ 1,301
¥ (2)
¥ (2)
British Pound
799
(2)
(2)
Ruble
386
(7)
(7)
Brazilian Real
165
4
4
300
300
(1)
(1)
¥ 292
¥ 292
Euro
Buying:
U.S. Dollar
12,641
Canadian Dollar
1,232
Singapore Dollar
1,833
Thai Baht
¥ 6,512
638
Total
¥ 18,995
¥ 6,512
Millions of Yen
Contract amount
2014
Contract amount due
Fair value (Note 1)
after One Year
Unrealized gain/loss
Foregin currency forward contracts:
Selling:
¥ 2,971
¥ (3)
¥ (3)
British Pound
770
(1)
(1)
Ruble
375
(3)
(3)
1,782
(41)
(41)
7,361
(3)
(3)
¥ (51)
¥ (51)
Euro
Brazilian Real
Buying:
U.S. Dollar
Canadian Dollar
Total
792
¥ 14,051
Thousands of U.S. Dollars
Contract amount
2015
Contract amount due
Fair value (Note 1)
after One Year
Unrealized gain/loss
Foregin currency forward contracts:
Selling:
$ 10,826
$ (17)
$ (17)
British Pound
6,649
(17)
(17)
Ruble
3,212
(58)
(58)
Brazilian Real
1,373
34
34
2,496
2,496
(8)
(8)
$ 2,430
$ 2,430
Euro
Buying:
U.S. Dollar
105,193
Canadian Dollar
10,252
Singapore Dollar
15,253
Thai Baht
$ 54,190
5,310
Total
$ 158,068
$ 54,190
Annual Report 2015
31
Derivative transactions to which hedge accounting is applied
Millions of Yen
2015
Interest rate swaps (Short-cut method)
Hedged item
Bank loans
Contract amount
due after one year
¥ 5,400
Contract amount
¥ 46,363
Fair value
(Note 2)
Millions of Yen
2014
Interest rate swaps (Short-cut method)
Hedged item
Bank loans
Contract amount
due after one year
¥ 46,545
Contract amount
¥ 49,775
Fair value
(Note 2)
Thousands of U.S. Dollars
2015
Interest rate swaps (Short-cut method)
Hedged item
Bank loans
Contract amount
$ 385,812
Contract amount
due after one year
$ 44,936
Fair value
(Note 2)
Notes:
1. The fair value of derivative transactions is measured at the quoted price and exchange rate obtained from the financial institution.
2. Items that meet the specific matching criteria of interest rate swaps are accounted for together with bank loans classified as hedged items (Short-cut
method). Accordingly, their fair values are included in the bank loans.
17. Retirement Benefit Plans
Retirement benefit plans for the fiscal years ended March 31, 2015 and 2014, were as follows:
＜1＞ Overview of Retirement Benefit Plan
The Company and domestic consolidated subsidiaries use a defined benefit plan, with a defined benefit corporate pension plan and retirement
lump sum plan. Premium severance pay is paid in some instances of employee retirement.
Some consolidated subsidiaries apply the simplified method to calculate liabilities (or assets) for retirement benefits and retirement benefit
costs.
Some overseas consolidated subsidiaries have defined contribution plans in addition to defined benefit plans.
Some domestic consolidated subsidiaries participate in multi-employer pension funds, where pension asset amounts cannot be rationally
allocated based on their contributions, so the same accounting methods are used as for defined contribution plans.
＜2＞ Defined Benefit Plan
(1) The changes in defined benefit obligation for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
Millions of Yen
Balance at beginning of year
(as previously reported)
Cumulative effect of accounting change
Balance at beginning of year (as restated)
2014
2015
¥ 109,161
$ 881,476
109,161
890,255
1,055
106,982
8,779
Current service cost
3,338
2,921
27,777
Interest cost
1,407
1,453
11,709
Actuarial (gains) losses
(2,428)
803
(20,205)
Benefits paid
(6,506)
(8,955)
(54,140)
(1,539)
Exchange differences on foreign plans
(185)
322
Others
359
222
2,988
¥ 102,967
¥ 105,927
$ 856,845
Balance at end of year
32
2015
¥ 105,927
(2) The changes in plan assets for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
Millions of Yen
2015
Balance at beginning of year
2014
¥ 96,480
2015
¥ 95,411
$ 802,863
Expected return on plan assets
2,315
2,292
19,264
Actuarial gains
5,001
2,007
41,616
Contributions from the employer
Benefits paid
939
1,037
7,814
(5,473)
(4,385)
(45,544)
Others
Balance at end of year
77
118
641
¥ 99,339
¥ 96,480
$ 826,654
(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets
as of March 31, 2015 and 2014
Thousands of
U.S. Dollars
Millions of Yen
2015
Funded defined benefit obligation
Plan assets
Unfunded defined benefit obligation
Net liability arising from defined benefit
obligation
2014
¥ 70,855
2015
¥ 72,889
(99,339)
(96,480)
(826,654)
(28,484)
(23,591)
(237,031)
32,112
33,038
267,222
¥ 3,628
¥ 9,447
$ 30,191
Thousands of
U.S. Dollars
Millions of Yen
2015
Liability for retirement benefits
Asset for retirement benefits
Net liability arising from defined benefit
obligation
$ 589,623
2014
2015
¥ 33,357
¥ 34,167
$ 277,582
(29,729)
(24,720)
(247,391)
¥ 3,628
¥ 9,447
$ 30,191
(4) The components of net periodic benefit costs for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
Millions of Yen
Service cost
2015
2014
¥ 3,338
¥ 2,921
2015
$ 27,777
Interest cost
1,407
1,453
11,709
Expected return on plan assets
(2,315)
(2,292)
(19,264)
Recognized actuarial losses
10,926
1,313
1,277
Amortization of prior service cost
(101)
(438)
(840)
Amortization of transitional obligation
435
710
3,620
Costs calculated by the simplified method
Net periodic benefit costs
469
334
3,902
¥ 4,546
¥ 3,965
$ 37,830
Note: In addition to the above retirement benefit, premium severance pay of ¥1,238 million ($10,302 thousand) and ¥4,496 million are included
in the employment structure improvement expenses under other expenses for the years ended March 31, 2015 and 2014, respectively.
(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for the years
ended March 31, 2015 and 2014
Thousands of
U.S. Dollars
Millions of Yen
2015
2014
¥ (101)
Prior service cost
Actuarial gains
8,771
Transitional obligation
Total
2015
$ (840)
72,988
435
3,620
¥ 9,105
$ 75,768
Annual Report 2015
33
(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as
of March 31, 2015 and 2014
Thousands of
U.S. Dollars
Millions of Yen
2015
Unrecognized prior service cost
2014
¥ (718)
$ (5,134)
(3,631)
5,140
(30,216)
Unrecognized actuarial (gains) losses
Unrecognized transitional obligation
435
¥ (4,248)
Total
2015
¥ (617)
¥ 4,857
$ (35,350)
(7) Plan assets
1. Components of plan assets
Plan assets as of March 31, 2015 and 2014 consisted of the following:
2015
2014
Debt investments
43.3%
Equity investments
27.7
30.6
General account of life insurance company
11.5
12.6
Others
Total
41.0%
17.5
15.8
100.0%
100.0%
2. Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which are expected currently and in the
future from the various components of plan assets.
(8) Assumptions used for the years ended March 31, 2015 and 2014, were set forth as follows:
2015
2014
Discount rate
1.32%
Expected rate of return on plan assets
2.43
2.43
2.47 ∼ 4.22
2.47 ∼ 4.22
Assumed salary-increase rate
1.32%
＜3＞ Defined Contribution Plan
The required amount for the defined contribution plans (including the multi-employer system s integrated employees pension fund system which
will be financially handled in the same way as the defined contribution plans) was ¥975 million ($8,114 thousand) and ¥871 million for the
consolidated fiscal years ended March 31, 2015 and 2014, respectively.
Items for the multi-employer pension funds where required contributions are treated as retirement benefit expenses are as follows:
(1) Funding condition of multi-employer pension funds
Thousands of
U.S. Dollars
Millions of Yen
The fair value of plan assets
The total amount of actuarial liability based
on pension financing calculations and
minimum reserve. (note)
Net balance
2014
2013
2014
¥ 303,721
¥ 281,339
$ 2,527,428
299,821
290,987
2,494,974
¥ 3,900
¥ (9,648)
$ 32,454
Note: The above items are listed as the Amount of benefit obligations for pension financing calculations for the consolidated fiscal year ended
March 31, 2014.
(2) The Group s ratio in multi-employer pension funds based on contributions
As of March 31, 2013
0.238%
As of March 31, 2014
0.259%
(3) Supplementary explanation
The primary factors for the balance in (1) above are past service liabilities balance (¥20,431 million ($170,017 thousand) and ¥21,969 million for the
years ended March 31, 2015 and 2014, respectively), surplus (¥12,011 million ($99,950 thousand) and ¥12,320 million for the years ended March
31, 2015 and 2014, respectively), and general reserve (¥12,320 million ($102,521 thousand)) for the year ended March 31, 2015 for pension
financing calculations. The amounts of principal and interest of past service liabilities in this plan are amortized equally over 20 years.
The ratio in (2) above does not agree to the actual contribution ratio of the Group.
34
18. Income Taxes
Under the consolidated corporate-tax system, the normal effective statutory tax rates of the Company and its domestic subsidiaries were 35.6% and
38.0% for the years ended March 31, 2015 and 2014, respectively. The tax effects of significant temporary differences and tax loss carryforwards,
which resulted in deferred tax assets and liabilities as of March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars
Millions of Yen
Deferred tax assets:
2015
2014
¥ 3,306
¥ 4,931
$ 27,511
359
882
2,987
Liability for retirement benefits
9,482
10,752
78,905
Provision for inventory reserves
1,557
1,770
12,957
60,223
69,799
501,148
8,558
10,597
71,216
(74,645)
(92,413)
(621,162)
¥ 8,840
¥ 6,318
$ 73,562
¥ 9,511
¥ 8,641
$ 79,146
3,563
4,198
29,650
Depreciation
Valuation difference due to application
of purchase method accounting
Net operating loss carryforwards
Other
Less valuation allowance
Total
2015
Deferred tax liabilities:
Asset for retirement benefits
Valuation difference due to application
of purchase method accounting
Land revaluation surplus
1,606
1,773
13,364
Other
2,835
2,004
23,591
¥ 16,616
$ 145,751
Total
Deferred tax liabilities, net
¥ 17,515
¥ 8,675
¥ 10,298
$ 72,189
Net deferred tax liabilities as of March 31, 2015 and 2014, were recorded in the consolidated balance sheets as follows:
Thousands of
U.S. Dollars
Millions of Yen
Current assets-deferred tax assets
Investments and other assets-other
2015
2014
¥ 4,103
¥ 3,781
$ 34,143
3,506
834
29,176
129
160
1,073
16,155
14,753
134,435
¥ 8,675
¥ 10,298
$ 72,189
Current liabilities-other
Long-term liabilities-deferred tax liabilities
2015
A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statement
of operations for the year ended March 31, 2015 was as follows:
2015
Normal effective statutory tax rate
(Reconciliation)
Expenses not deductible for income tax
purposes
Dividend and other income not taxable
Gain on sales of investment and other
assets of foreign subsidiaries not
taxable
Per capita inhabitant tax
Foreign tax
Changes in valuation allowance
Effect of changes of income tax rates on
deferred taxes
Lower income tax rates applicable to income
in foreign subsidiaries
Undistributed earnings in foreign
subsidiaries
Transfer pricing adjustments
2014
35.6％
48.0
(12.4)
(21.8)
1.6
2.3
(27.5)
(5.9)
(15.6)
6.9
7.2
Other
(1.6)
Actual effective tax rate
16.8％
Annual Report 2015
35
Due to loss before income taxes and minority interests, a breakdown by major factors that have caused significant difference between the normal
effective statutory tax rate and the income tax rate after applying tax effect accounting reflected in the accompanying consolidated statement of
operations for the year ended March 31, 2014, was omitted.
New tax reform laws enacted in 2015 in Japan changed the normal effective statutory tax rate from 35.6% to 33.0% for the fiscal year
beginning on or after April 1, 2015, and to 32.2% for the fiscal year beginning on or after April 1, 2016. The effect of these changes was to decrease
deferred tax liabilities, net of deferred tax assets, by ¥1,329 million ($11,059 thousand) and increase accumulated other comprehensive income for net
unrealized gain on available-for-sale securities by ¥10 million ($83 thousand), land revaluation surplus by ¥166 million ($1,381 thousand), and defined
retirement benefit plans by ¥760 million ($6,325 thousand) in the consolidated balance sheet as of March 31, 2015, and to decrease deferred income
taxes in the consolidated statement of operations for the year ended March 31, 2015 by ¥393 million ($3,270 thousand).
19. Business Combinations and Divestitures
Business combination through share acquisition
Acquisition of EFJT Shares
1. Amounts of assets and liabilities adjusted to original allocation of the acquisition cost
Regarding the allocation of the acquisition cost for EFJT which was acquired in the fiscal year ended March 31, 2014, since the fair value computation
of assets and liabilities was not completed at the end of the fiscal year ended March 31, 2014, the information available at the time was used to
perform the accounting procedures temporarily and the allocation of acquisition cost was not finalized.
The allocation of acquisition cost was finalized in the fiscal year ended March 31, 2015, with the primary details given below.
Goodwill after adjustment
Adjustments
Millions of Yen
Goodwill (before adjustment)
Current assets
Intangible assets
¥ 5,913
Thousands of
U.S. Dollars
$ 49,205
(56)
(466)
(2,367)
(19,697)
Current liabilities
(93)
(774)
Additional payment
145
1,207
Total amount of adjustments
Goodwill (after adjustment)
(2,371)
(19,730)
¥ 3,542
$ 29,475
2. Amount of goodwill recognized, reason for recognition, method and period for amortization of goodwill
(1) Amount of goodwill recognized
¥3,542 million ($29,475 thousand)
(2) Reason for recognition
Since the net amount of assets and liabilities assumed was lower than the share acquisition cost, the difference was recognized as goodwill.
(3) Method and period for amortization of goodwill
Amortized by the straight-line method over 20 years
Business Divestiture
1. Overview of the business divestiture
Transfer of all shares of JAI held by JAC, an American consolidated subsidiary
(1) Name of the company the shares of JAI were transferred to
Cinram Group Inc.
(2) Name and business of the divested company
Company name: JVC America, Inc.
Business: CD/DVD production and sales
(3) Overview and purpose of the sales of share in subsidiary
JAI was mainly engaged in the manufacturing and sale of CD/DVD disks for personal computers and game software. In addition to manufacturing
disks, JAI conducted fulfillment operations such as packaging, shipping, and inventory management in recent years, satisfying the supply chain needs
of software content providers. However, the market for packaged software products such as CD/DVD disks saw a noticeable shrinking trend,
particularly in overseas markets, due to the widespread culture of downloading content and the penetration of broadband within the internet
environment, and this trend is expected to continue. In response to such change in the environment surrounding the industry, the Company decided
to transfer the shares of JAI to Cinram Group, which engages in manufacturing, sales and fulfillment operations of CD/DVD disks, as did JAI. Through
this transfer, the Company expects the condition of over-supply in the industry will improve, and JAI will improve its capacity utilization and maintain
its employees.
(4) Effective date of the business divestiture
June 17, 2014
36
(5) Legal form of the business divestiture
Share transfer, with compensation in cash etc.
2. Overview of the implemented accounting process
(1) Transfer profits and losses
Loss on sales of shares ¥1,105 million ($9,195 thousand)
(2) Value for assets and liabilities transferred as of business divestiture
Millions of Yen
Current assets
¥ 1,666
Non-current assets
Total assets
Thousands of
U.S. Dollars
$ 13,864
742
6,174
¥ 2,408
$ 20,038
¥ 635
$ 5,284
Current liabilities
Long-term liabilities
Total liabilities
100
832
¥ 735
$ 6,116
(3) Accounting procedures
The difference between the value of the assets received upon transfer and the amount of shareholder s equity relevant to the transferred business
was recorded as transfer profits and losses.
3. Reportable segment divested business was included in
Others segment
4. The amount of profits and losses related to divested business included in the consolidated statement of operations for the fiscal year ended March
31, 2015
Net sales: ¥787 million ($6,549 thousand)
Operating income: (¥193) million (($1,606) thousand)
20. Segment Information
1. Overview of reportable segments
Reportable segments are the Company s constituent business units for which separate financial information can be obtained and those which are
periodically examined by the Board of Directors for the purposes of determining the allocation of resources and evaluating results of operations.
The Group has put in place operating divisions and operating control divisions in each operating company. Each operating division and operating
control division formulates comprehensive strategies and engages in business activities according to products and services handled in and outside
Japan.
(Changes in reportable segments)
With the decision to transfer all of JAI s shares made at the Company s board of directors meeting held on May 14, 2014 causing changes to business
management classification, starting from the consolidated fiscal year ended March 31, 2015 JAI s classification has been changed from the
Entertainment Software Segment to Other.
As of November 1, 2014, organizational changes have been made based on reforming the home business and enhancing the OEM business.
Along with this organizational change, the details of the businesses in their reporting segments have been changed from the consolidated fiscal year
ended March 31, 2015, with the primary changes listed below.
The home audio business and optical pickup business which had been included in the Optical & Audio Segment have been shifted to the Car
Electronics Segment. The professional video camera business which had been included in the Professional Systems Segment has been shifted to the
Optical & Audio Segment in order to consolidate it with the consumer video camera business. Part of the video camera business research functions
which had been included in Other have been shifted to the Optical & Audio Segment.
Part of the research and production for the Professional Systems Segment was carried out in the Optical & Audio Segment, but it has been
shifted to the Professional Systems Segment to integrate development, production and sales. With this change, compared to previous methods, the
internal sales and transfer amounts for the segment have decreased.
(Car electronics segment)
Production and sales of car AV systems, car navigation systems, home audio, optical pickup, etc.
(Professional systems segment)
Production and sale of professional system equipment such as land mobile radio equipment, video surveillance equipment, video equipment, audio
equipment, display equipment and medical imaging displays, etc.
(Optical & audio segment)
Production and sales of consumer video cameras, professional video cameras, projectors, AV accessories, etc.
Annual Report 2015
37
(Entertainment software segment)
Planning, production and sale of audio and video software and manufacture of CDs and DVDs
(Others)
Interior furniture, other
The segment information for the fiscal year ended March 31, 2014 is also disclosed using the new reportable segments for the fiscal year ended March
31, 2015.
2. Methods of measurement for the amounts of sales, profit or loss, assets and other items for each reportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2.
As indicated in Note 2(r), Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012, hereinafter referred to as the
Retirement Benefits Accounting Standard) and Guidance on the Accounting Standard for Retirement Benefits, (ASBJ Guidance No. 25, March 26,
2015, hereinafter referred to as the Retirement Benefits Guidance) were applied from the fiscal year ended March 31, 2015, regarding Paragraph 35 of
the Retirement Benefits Accounting Standard and Paragraph 67 of the Retirement Benefits Guidance, to review its calculation methods for the
projected retirement benefit obligation and service cost, change the method for attributing the expected benefit to periods of service from a straightline basis to a benefit formula basis, and change the method for deciding the discount rate from using the years that are close to average remaining
service period of employees as a basis to a single weighted average discount rate that reflects the amount for the period for which retirement benefit
payment is expected.
With these changes, compared to previous methods, segment earnings for the consolidated fiscal year ended March 31, 2015 decreased by ¥111
million ($924 thousand) for the Car Electronics Segment, ¥141 million ($1,173 thousand) for the Professional Systems Segment, ¥76 million ($632
thousand) for the Optical & Audio Segment, ¥61 million ($508 thousand) for the Entertainment software Segment, and ¥5 million ($42 thousand) for
the Other Segment.
3. Information relating to sales, profit or loss, assets and other items for each reportable segment
For the year ended March 31, 2015
Millions of Yen
Car
electronics
Reportable segment
Professional
Optical &
Entertainment
systems
audio
software
Total
Others
(Note 1)
Total
Adjustment
(Note 3)
Consolidated
financial
statements
(Note 2)
Sales
Sales to customers
Intersegment sales or
transfers
Total
¥ 120,736
¥ 85,264
¥ 43,356
¥ 29,833
¥ 279,189
10
¥ 5,821
¥ 285,010
10
10
¥ 285,010
¥ (10)
¥ 120,746
¥ 1,348
¥ 85,264
¥ 43,356
¥ 29,833
¥ 279,199
¥ 5,821
¥ 285,020
Segment profit
Segment assets
104,487
78,647
40,321
22,910
246,365
13,891
260,256
4,423
3,760
1,509
485
10,177
288
10,465
10,465
5,505
4,585
1,532
433
12,055
75
12,130
12,130
¥ 3,260
¥ 878
¥ 1,002
¥ 6,488
¥ 83
¥ 6,571
¥ (10) ¥ 285,010
¥ 18,414
¥ 6,571
278,670
Other items
Depreciation
Increase in property, plant
and equipment and
intangible assets
For the year ended March 31, 2014
Millions of Yen
Car
electronics
Reportable segment
Professional
Optical &
Entertainment
systems
audio
software
Total
Others
(Note 1)
Total
Adjustment
(Note 3)
¥ 11,057
¥ 316,343
Consolidated
financial
statements
(Note 2)
Sales
¥ 90,237
¥ 58,900
¥ 31,382
¥ 305,286
¥ 124,771
¥ 58,900
¥ 31,382
¥ 305,290
¥ 11,057
¥ 316,347
Segment profit (loss)
¥ (38)
¥ 90,237
Segment assets
98,646
73,501
41,190
22,241
235,578
9,367
244,945
5,054
3,325
1,668
476
10,523
463
10,986
10,986
3,096
3,735
1,652
140
8,623
206
8,829
8,829
Sales to customers
Intersegment sales or
transfers
Total
¥ 124,767
4
4
¥ 3,950
¥ 61
¥ 1,276
¥ 5,249
4
¥ (827)
¥ 4,422
¥ 316,343
¥ (4)
¥ (4) ¥ 316,343
¥ 22,207
¥ 4,422
267,152
Other items
Depreciation
Increase in property, plant
and equipment and
intangible assets
38
For the year ended March 31, 2015
Thousands of U.S. Dollars
Car
electronics
Reportable segment
Professional
Optical &
Entertainment
systems
audio
software
Total
Others
(Note 1)
Total
Adjustment
(Note 3)
Consolidated
financial
statements
(Note 2)
Sales
$ 1,004,710
Sales to customers
Intersegment sales or
transfers
Total
$ 709,528
$ 360,789
$ 248,257
83
$ 2,323,284
$ 48,439
$ 2,371,723
83
$ 2,371,723
$ (83)
83
$ 1,004,793
$ 11,217
$ 709,528
$ 360,789
$ 248,257
$ 2,323,367
$ 48,439
$ 2,371,806
Segment profit
Segment assets
869,492
654,465
335,533
190,647
2,050,137
115,595
2,165,732
36,806
31,289
12,557
4,036
84,688
2,397
87,085
87,085
45,810
38,154
12,749
3,603
100,316
624
100,940
100,940
$ 27,129
$ 7,306
$ 8,338
$ 53,990
$ 691
$ 54,681
$ (83) $ 2,371,723
$ 153,233
$ 54,681
2,318,965
Other items
Depreciation
Increase in property, plant
and equipment and
intangible assets
Notes:
1. The Others section consists of business segments that are not included in other reportable segments, including interior furniture and service
parts etc.
2. The total amount of segment profit and loss is equivalent to the amount of operating income recorded in the consolidated statement of
operations.
3. Corporate assets included in Adjustment of ¥18,414 million ($153,233 thousand) as of March 31, 2015 and ¥22,207 million as of March 31,
2014, mainly consisted of the cash, cash equivalents and long-term investment assets (investment securities) of the Company.
(Related information)
1. Information about geographical areas
For the year ended March 31, 2015
(1) Sales
Millions of Yen
Japan
¥ 106,117
America
¥ 83,074
Europe
¥ 41,871
Asia
¥ 49,055
Others
¥ 4,893
Total
¥ 285,010
(2) Property, plant and equipment
Millions of Yen
Japan
¥ 37,837
America
¥ 1,379
Europe
¥ 1,305
Asia
¥ 12,908
Others
¥ 7
Total
¥ 53,436
For the year ended March 31, 2014
(1) Sales
Millions of Yen
Japan
¥ 132,326
America
¥ 84,371
Europe
¥ 49,052
Asia
¥ 44,936
Others
¥ 5,658
Total
¥ 316,343
(2) Property, plant and equipment
Millions of Yen
Japan
¥ 38,485
America
¥ 2,132
Europe
¥ 1,453
Asia
¥ 12,338
Others
¥ 12
Total
¥ 54,420
For the year ended March 31, 2015
(1) Sales
Thousands of U.S. Dollars
Japan
America
Europe
Asia
$ 883,057
$ 691,304
$ 348,431
$ 408,213
Others
$ 40,718
Total
$ 2,371,723
Annual Report 2015
39
(2) Property, plant and equipment
Thousands of U.S. Dollars
Japan
$ 314,863
America
Europe
$ 11,475
Asia
$ 10,860
$ 107,414
Others
Total
$ 58
$ 444,670
2. Information about major customers
There are no customers who account for 10% or more of total net sales for the years ended March 31, 2015 and 2014, as posted in the Company s
consolidated statement of operations. Accordingly, this information has been omitted.
(Information relating to loss on impairment of long-lived assets by reportable segment)
For the year ended March 31, 2015
None.
For year ended March 31, 2014
Car electronics
Professional
systems
Loss on
impairment
Millions of Yen
Optical & audio
Entertainment
software
Others
Eliminations/
Corporate
¥ 469
Total
¥ 469
(Information relating to the amortization and ending balance of goodwill by reportable segment)
For the year ended March 31, 2015
Car electronics
Amortization of
goodwill
Ending balance
Professional
systems (Note 19)
Millions of Yen
Optical & audio
Entertainment
software
Others
Eliminations/
Corporate
Total
¥ 512
¥ 21
¥ 4
¥ 537
¥ 7,872
¥ 124
¥ 2
¥ 7,998
For the year ended March 31, 2014
Car electronics
Amortization of
goodwill
Ending balance
Professional
systems
Millions of Yen
Optical & audio
Entertainment
software
Others
Eliminations/
Corporate
Total
¥ 309
¥ 20
¥ 1
¥ 330
¥ 9,926
¥ 126
¥ 6
¥ 10,058
For the year ended March 31, 2015
Car electronics
Amortization of
goodwill
Ending balance
Professional
systems (Note 19)
Thousands of U.S. Dollars
Optical & audio
Entertainment
software
Others
Eliminations/
Corporate
Total
$ 4,261
$ 175
$ 33
$ 4,469
$ 65,507
$ 1,032
$ 17
$ 66,556
(Information relating to bargain purchase gain by reportable segment)
For the year ended March 31, 2015
None.
For the year ended March 31, 2014
For the Car electronics segment, with the additional acquisition of Shinwa shares, Shinwa and its 15 subsidiaries have been included in the scope of
consolidation, where previously they were accounted for by the equity method, and bargain purchase gain has occurred.
¥641 million in bargain purchase gain was posted as a result for the fiscal year ended March 31, 2014.
40
21. Net Income per Share
Reconciliations of the differences between basic and diluted net income per share ( EPS ) for the years ended March 31, 2015 and 2014, were as follows:
Fiscal year ended March 31, 2015
Millions of Yen
Thousands of Shares
Net income
Weighted-average
Net income available to common
shareholders
¥ 4,654
138,662
Yen
U.S. Dollars
EPS
¥ 33.56
＄0.28
Although there were dilutive shares, information relating to diluted net income per share is not presented in the accompanying consolidated financial
statements for the year ended March 31, 2015 because they had no dilutive effect.
Fiscal year ended March 31, 2014
Millions of Yen
Thousands of Shares
Net loss
Weighted-average
Net loss available to common
shareholders
¥ (6,572)
138,666
Yen
EPS
¥ (47.39)
Although there were dilutive shares, information relating to diluted net income per share is not presented in the accompanying consolidated financial
statements because the Group incurred a net loss for the year ended March 31, 2014.
22. Subsequent Events
1. Company Acquisition by Acquisition of Shares
At the Company s board of directors meeting held on January 30, 2015, the decision was made to acquire all shares issued by ASK Industries S.p.A.
( ASK Industries ), which deals in car parts such as speakers, amplifiers and antennas mostly for European major automobile manufacturers, and on
April 1, 2015 the acquisition of all shares was completed.
(1) Goal and reasons for acquisition of company by share acquisition
Acquiring full ownership of ASK Industries would enable JVCKENWOOD to expand its OEM business and access ASK Industries strong partnerships
with leading European automobile manufacturers and extensive distribution channels, and offer CD/DVD mechanisms for vehicles as well as car
electronics systems centered on car navigation and audio systems to ASK Industries customers, to whom JVCKENWOOD has not had enough
opportunities to offer its products so far. The acquisition is also expected to pave the way for further growth in the genuine product field by offering
an integrated system combining both companies products.
Furthermore, the acquisition is expected to promote the commercialization of Digital Cockpit Systems including Head-Up Displays, carmounted full HD cameras, electronic meters, and electronic mirrors in the business field of innovative Advanced Driver Assistance Systems on which
JVCKENWOOD is focusing as a new-generation business.
Becoming a subsidiary of JVCKENWOOD will enable ASK Industries to expand its sales distribution channels for its own car-mounted
components, such as in-vehicle speakers and amplifiers, by securing strong partnerships with Japanese automobile manufacturers and the
distribution channels JVCKENWOOD has established. Collaboration with JVCKENWOOD in product development, technology enhancement, and
manufacturing will also help ASK Industries to accelerate the commercialization of advanced technology while reducing production costs and
improving operating efficiency, supporting the growth of consolidated performance.
(2) Name of shareholders from whom shares were acquired
Maria Isabella Olivieri
Paolo Tontini
Carlo Sancisi
Loretta Sancisi
Paola Sancisi
Luigi Perasso
Giorgio Tontini
(3) Company name, business details, and size of company being acquired
Company name: ASK Industries S.p.A.
Business details: Design, manufacture, and sales of car electronics products (speakers, amplifiers, antennas, cables)
Size (as of December 2014): Consolidated total assets 123 million euros Consolidated sales 150 million euros
(4) Date of transaction
April 1, 2015
(5) Number of shares acquired, acquisition price and ownership ratio after acquisition
Number of shares acquired: 1,125
Acquisition price: 25.1 million euros
Ownership ratio after acquisition: 100％
Annual Report 2015
41
(6) Procurement of funds for payment and payment method
Funds on hand
(7) Other important provisions
None.
2. Transfer of shares in subsidiary
On March 27, 2015, the Company entered into a contract to transfer shares of its subsidiary Teichiku Entertainment, Inc. ( TEICHIKU ), involved in
planning, producing and selling music/video software, to Xing Inc. ( Xing ), and on April 28, 2015 all shares held were transferred.
(1) Goal and reasons for sale of shares of important subsidiaries, etc.
TEICHIKU s domestic sales of music and video software are shrinking gradually due to changes such as transformation of recording media and artists.
Under such circumstances, shifting to new businesses that go beyond sales of software will be critical if TEICHIKU is to be competitive in the future.
In view of the changing environment surrounding the industry, JVCKENWOOD concluded that it would be beneficial for TEICHIKU to build a new
partnership with XING, a Karaoke service provider, so that TEICHIKU can pursue its future growth, from the viewpoint of promoting collaborations in
the field of J-Pop and Enka (traditional Japanese ballads).
The share transfer will enable TEICHIKU to achieve further growth and increase its enterprise value by developing a new business model,
which differs from the existing one centered on packaged media, by creating synergies with the on-line karaoke business, which is the core business
of XING.
(2) Name of counterparty
Xing Inc.
(3) Date of transfer
April 28, 2015
(4) Name, business, and intercompany transactions of the subsidiary
Name: Teichiku Entertainment, Inc.
Business details: Planning, production and sales of music/video software
Transaction details: The Company and Teichiku did not have any direct transactions. There are transactions involving contracts for subcontracting
work between the Company subsidiaries and TEICHIKU.
(5) Number of shares, sale price, gain on sales and ownership ratio after sale for shares
Number of shares held before sale: 2,374,275 (Number of voting rights: 2,374,275) (Ownership ratio: 96.08%)
Number of shares sold: 2,374,275 (Number of voting rights: 2,374,275)
Number of shares held after sale: − (Number of voting rights: −)
(Ownership ratio−%)
Sale price: approximately ¥1.64 billion ($13,629 thousand)
Gain on sales: approximately ¥350 million ($2,922 thousand) is gain on sales of shares in subsidiary
(6) Other important provisions
None.
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Annual Report 2015
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