Description
The report for the financial year 2011 - 2012 of alpine.
VIE-X088(for the Japanese market)
Annual Report 2011-2012
For the year ended March 31, 2011
Message from the President
Dear Shareholders,
First of all, I would like to convey my sincere condolences to all victims of the recent TohokuPaci?c Ocean Earthquake. We have of fices and factories in Iwaki City in Fukushima Prefecture. Although some of our buildings were damaged and production lines overturned, all of our employees escaped unharmed. However, some of our employees’ homes were tragically damaged by the tsunami and some lost family members. Immediately after the disaster, life-lines were cut off, forcing us to stop operations for two weeks, but our employees worked hard to restore our production plans and work areas as quickly as possible, as did city officials to restore local infrastructure. We are deeply grateful for the generous assistance and cooperation of many people which helped us to resume operations on March 28 and I would like to take this opportunity to thank them all. Af ter resuming operations, par ts procurement problems appeared, but the entire company tackled this dilemma to maintain our supplies to our clients. However, I believe that unpredictable circumstances such as the problem of parts procurement, adjustments to production by auto makers, and so on will continue for some time. Turning to the global market environment, the U.S., which is one of our company's most important markets, is showing trends of recovery. And Chinese market continues strong sales of medium class and luxury class cars. Those are all bright signs indicative of improved business performance. I am afraid that the aftermath of the earthquake will have some impact on this trend, but we are working hard to normalize our production activities and expand our business. I think that this disaster will lead to a demand for products incorporating environmental technologies to achieve lower electric power consumption or lighter weight etc., and further evolve and expand the use of electronics in in-car equipment. Our company will promote growth strategies which have been undertaken in the past integrating functions of in-car equipment, for example, through links with smart phones, and providing drivers with new levels of safety and comfort represented by ITS. And in the growing Chinese market, our business scale has been growing steadily as we have aggressively pursued orders from auto makers inside China. We are striving to enhance our competitive strength by aggressively pursuing development, procurement and production inside China, to expand our business in growing markets including China. We have experienced an unprecedented disaster, but our company has united to overcome this dif?cult situation, and based on this experience, will gain new con?dence and grow even faster as a global Mobile Media Solution Company. I humbly ask you, our shareholders, to continue to give us your strong support and encouragement as in the past. June, 2011
Toru Usami President & CEO
2
For The Restoration
Impact of the Earthquake and Tsunami in Northeast Japan
Damage and Losses
Injuries
None of Alpine’s 3,187 employees were injured during the earthquake and tsunami
Damage
Property damage
• Some damage to buildings (fallen ceilings, cracks in walls) • Production lines and component shelving overturned
Infrastructure
• Water supply interrupted. Returned to normal on March 25. • Residential areas where employees live were without water until mid-April
Iwaki Of?ce
• Production halted for two weeks after the earthquake because of infrastructure damage (water supply stoppage, lack of materials) • Returned to normal operation on March 28 • Production partially resumed on March 22 • Full return to normal operation on March 28
Restart
Plant
Extraordinary losses
Losses
(reported in the financial statements for the fiscal year that ended March 31, 2011)
Approximately 1.5 billion yen • Repairs to damaged structures and facilities • Fixed costs incurred while operations were halted
Solder splashed from solder tank
Overturned production line
Damage to component shelving
After restoration (Alpine Precision, Inc.)
After restoration (Alpine Electronics Manufacturing, Inc.)
3
Consolidated Financial Highlights
Years ended March 31, 2009, 2010 and 2011
millions of yen
thousands of U.S.Dollars
2009 For the year: Net sales Overseas Sales Operating income Net income Net cash provided by operating activities Free cash ?ow Capital expenditures R&D expenses ROA (Return on assets) (%) ROE (Return on equity) (%) Amounts per share of common stock: Net income(loss) (¥) Dividends from surplus applicable to the year (¥) At year-end: Total net assets Total assets 96,874 132,423 (133.17) 10.00 ¥196,667 166,873 (10,645) (9,291) 10,680 (2,170) 10,160 28,266 (6.2) (8.8)
2010 ¥168,586 138,335 227 (1,250) 9,859 5,896 4,379 20,589 (0.9) (1.3) (17.92) 0.00 97,036 153,429
2011 ¥201,257 165,972 11,155 6,030 14,371 10,021 4,882 19,512 3.9 6.2 86.43 20.00 98,760 153,784
2011 $2,420,409 1,996,055 134,155 72,520 172,832 120,517 58,713 234,660 3.9 6.2 1.04 0.24 1,187,733 1,849,477
Notes: 1. The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2011, which was ¥83.15 to U.S.$1. 2. R&D expenses include labor cost and other expenses reported as cost of sales. 3. Effective from the year ended March, 2011, the Company and its consolidated subsidiaries adopted the Accounting Standard of Presenation of Comprehensive income (Accounting Standards Board of Japan Statement No.25, June 30, 2010).
Net Sales
(Billions of yen)
Operating Income
(Billions of yen)
11.2
196.7
168.6
201.3 -10.6 0.2
2009
2010
2011 2009 2010 2011
Net Income
(Billions of yen)
Total Assets
(Billions of yen)
6.0 -9.3 -1.3 132.4 153.4 153.8
2009
2010
2011
2009
2010
2011
4
Operational Review
Operational Review
Audio Products
In Japan, sales of high-end speaker systems targeting minivan owners were strong, but head unit sales were diminished by price competition, resulting in ?at growth overall. In North America, sales of popularly priced CD players were healthy, but strong priceconsciousness among consumers created a tough environment for higher value-added products. In the European market, sound system sales, primarily of high quality speakers, were strong, but sales of Bluetooth-equipped CD players shrank in the face of severe price competition. OEM sales to automakers improved as major customers recovered from Lehman Shock and increased production. Sales in both Europe and North America were strong, and sales in China showed healthy growth. As a result of all these factors, sales in this division totaled 69.8 billion yen (down 0.8% year-on-year).
Information and Communications Products
In Japan, our BIG-X car navigation system offered an 8-inch screen, the largest on the market, improved maps, and simpler operation. Filling out our car navigation line-up, we added the X08S to the highly acclaimed X08 series and introduced the X05, a ?ash memory equipped model offering exceptional cost performance. Sales of our “Perfect Fit” installation kits tailored to the aesthetics of specific car models and of camera systems connected to car navigation systems to enhance driving safety were healthy. To strengthen sales, TV commercials were developed. In North America, our popularly priced car navigation systems introduced in the last fiscal year encountered stiff price competition, but their outstanding features won high marks from consumers. The popularly priced car navigation systems introduced in Europe posted healthy sales. In the OEM sector, the installation ratio of our cabin display products gradually recovered. Sales of highend multifunction navigation systems often installed in luxury cars increased, supported by the recovery of luxury and large car sales in North America and the rapid growth of mid-sized and luxury car sales in China. As a result, this division’s sales reached 131.3 billion yen (a 33.9% increase, year-on-year).
Sales by region
?100 million yen? (100 million yen)
Sales by segment
1,313
1200
906
800
?769? 1000 ?981?
600
800
500
?416? 400 ?302? 600
?704? 698
353
400 ?198?
221
200
200
0 0
America Europe Japan Other Asia
( )=2009FY
Audio products segment
Information and communication products segment
5
Growth Strategies
Safe, Comfortable, Green, and Convenient Mobility
Today, drivers control multiple sets of information from the cockpit. These include both car and traffic-related information and on-board entertainment systems. We believe that reducing the burden on the driver of controlling all that information will contribute to a safer motoring experience. We are addressing this issue through Alps Electric Co.,Ltd. and TAA (Toshiba Alpine Automotive Technology Corporation), a joint venture between Alpine and Toshiba. Both partners are contributing technologies to develop high-value-added automotive information centers that meet diverse customer needs, with particular focus on driver-centered systems that optimize information display and control in the cockpit.
Heads-up displays
Input devices, sensors Communications modules ALPS
Center displays
Alpine System Integration
Support for Safety and Comfort
TAA
HMI Information Management
Toshiba Alpine Automotive
Display devices Heads-up displays
*HMI: Human Machine Interface
Meter displays
Towards Cockpit HMI Integration
Implementing Growth Strategies
Link Strategy
The spread of smart phones has increased demand for links between smart phones and on-board, in-cabin automotive systems. Alpine is pursuing a strategy of linking on-board systems with mobile IT devices, smart phones and tablet-type PC's. In North America, we were among the ?rst to offer a dedicated head unit supporting the Internet music application, Pandora. Along with major automakers, we are founding members of the consortium promoting Nokia’s new Terminal Mode standard. Our goal is to supply on-board information centers, high value-added products, that connect with the Internet.
Car navigation systems linked with smart phones
AVNCD Strategy
Intelligent Transportation Systems (ITS) for the nation’s expressways is a national priority in Japan. Service has already begun in several locations. ITS roadside sensors have been installed at 1,600 locations, and the data they provide is used by next-generation ITS-compatible car navigation systems to support safer driving and provide dynamic route guidance. Since bandwidth is much larger than that provided by existing VICS systems, a wider variety of data can be supplied. Thus, for example, images can be used to illustrate traf?c congestion information. Alpine is aggressively developing ITS-related technologies that offer new business opportunities, providing Internet access at service areas and making possible online transactions.
Next-generation vehicle with on-board ITS
Green Strategy
Alpine is contributing to improved fuel efficiency by providing lighter products that consume less electricity. We are also focusing on the development of car navigation systems that can reduce waste by providing optimal routing guidance, light, compact amplifiers that use less power, and rare-earth-free speakers that use no rare earths at all. With soaring prices for rare earths, minimizing their use is not only environmentally friendly but also will enhance the price competitiveness of Alpine products.
6
A rare-earth-free speaker
Operational Review Topics
Perfect Fit Makes BIG-X a Triple Award Winner
Display is
43%larger
than our 7" models.
Earlier model
BIG-X X008
Alpine’s BIG-X, the first consumer car navigation system to offer an 8-inch display, is a triple-award winner. Selected for Japan’s Daily Auto News’ Grand Prize for Accessories, 2010, it was also awarded the Auto Sound Grand Prix 2010 by Car Audio and Auto Sound magazines. BIG-X won high praise not only for its large, high-de?nition screen, but also for its “live” sound quality. It was the ?rst all-in-one car navigation system to be awarded Auto Sound’s grand prix. In addition, because BIG-X is equipped with an 8-inch display, separate versions had to be developed to fit the center console panels of different car models. Alpine’s highly praised Perfect Fit system set new industry standards by supplying customers with
both optimal installation and customizable sound. In recognition of this achievement, it was selected as Car Goods Magazine’s Car Goods of the Year 2010. BIG-X met consumer needs for better visibility with the larger screen, increased ease of use, and enjoyment of high definition digital TV, resulting in a 30% increase in car navigation unit sales in Japan. Fiscal 2011 also saw the introduction of the new Perfect Fit series to ensure a beautiful ?nish of installation like OEM systems. New system solution approach with rear-view cameras and rear seat entertainment systems along with "Perfect Fit" differentiates Alpine from other companies.
Alps/Alpine Technology Exhibition
From November of last year to March of this year, Alpine and Alps joined together to present cutting-edge technology proposals to major automakers. This technology exhibition differed from earlier exhibitions in adopting a workshop format to invite only automaker key personnel, a targeting strategy that facilitated vigorous communication between presenters and visitors. The technologies presented were divided into ?ve categories: HMI, AVNC, LINK, DA and ECO. Teams from both Alps and Alpine worked together to present proposals that highlighted the strengths of the group as a whole. The star of the show was the HMI Cockpit jointly presented by Alps, Alpine, and Toshiba Alpine Automotive Technology. Other exhibits were linked to current market trends. Alpine will continue to use technology exhibitions to present advanced technologies to our customers, understand their needs, and lay the foundations for new business.
*HMI: Human Machine Interface; AVNC: Audio Visual Navigation Communication; DA: Drive Assist
Invitation to the technology exhibition
7
China and Other Emerging Markets
In China, which has now surpassed the U.S.A. as the world’s largest new car sales market, Alpine established an R&D center in Dalian in 1996. We now have two plants and six sales offices in China. On the R&D front, our strong partnership with Neusoft, China’s No. 1 provider of IT solutions, enhances our competitive edge in quick delivery of high-quality, cost-effective solutions to our customers. We have embraced a designed-in-market, made-in-market policy and are building a fully integrated production and sales operation in China. A pillar for our Chinese operation is our business with current Japanese and European automakers in China, while also aggressively pursuing business from local Chinese automakers. Our goals include growing our business by creating leading edge products and solidifying a strong brand position in the local consumer market.
?Alpine sales of?ce ?Alpine manufacturing plant ?Alpine development center ?Changchun ?Shenyang ??Dalian ?Beijing
?Chengdu
??Shanghai, Taicang
?Wuhan
?Guangzhou
Alpine’s expansion into China
Brand-building by Participation in Global Events
Alpine exhibited its products at the Tokyo Auto Salon 2011 with NAPAC, a custom car event held from January 14-16, 2011, showcasing its BIG-X car navigation system with a display 1.43 times bigger than earlier models. To reinforce our brand image and reputation for technological capability in China, now the world leader in annual new car sales, we also participated in the April 19-21 Shanghai Motor Show. In addition to the first demonstration car equipped with a top-view camera for the consumer market, our exhibits included a variety of OEM products.
Alpine booth at Tokyo Auto Salon
Alpine booth at Shanghai Motor Show
Appreciation Award
This award expresses Honda’s appreciation of our continuing effort to improve our performance in the pricing category, in recognition of our efforts to develop new technologies and secure new business in the face of stiffening price competition.
Plaque commemorating the award from Honda
No. 1 in Prestigious Customer Satisfaction Survey
Continuous and meticulous quality improvement is a top priority at Alpine. In a recent questionnaire survey conducted by one of North America s most renowned survey research firms, our CD player was rated No. 1. But for us this is only the next step in an ongoing pursuit of manufacturing quality and customer satisfaction.
8
Dalian-Fukushima, Industry-University Personnel Development Project
Alpine has inked an agreement with Aizu University in Japan and the Dalian Neusoft Institute of Information in China to develop a new IT Personnel Development Project. This program will allow outstanding students from the Dalian Neusoft Institute to receive training in advanced IT technology and Japanese language skills at Aizu University, then continue their training during internships at Alpine. This program meets a growing need for individuals who can serve as bridges between Japan and China, at a time when business and social exchanges between the two countries are ?ourishing. By promoting the training and employment of outstanding individuals who understand the cultures and business environments of both China and Japan, local partnerships between businesses and universities like this one contribute to the globalization of both countries. They also contribute to growing our business in China as a key dimension of our growth strategy.
Receiving exchange students • IT training Dalian • Language training
?
Aizu-Wakamatsu ? Internships Alpine?
• Employment
Personnel development tie-up among three institutions
Promoting Local CSR
In fiscal 2010, Alpine subsidiary, Alpine Giken was awarded the Fukushima Governor’s Prize for its contributions to Fukushima Protocol efforts to combat global warming. This prize was given in recognition of efforts that included environmental investments in energy-saving air conditioning and LED lighting, together with a “Turn It Off” program to encourage each and every employee to turn off electrical switches when equipment is not in use. The result was a reduction in carbon dioxide emissions by more than 10% year-onyear. In addition, many of our group employees pitched in as volunteers in rescue and recovery efforts following the earthquake and tsunami on March 11. These are only two examples of our company’s continuing effort to build closer ties with our local communities and contribute to their revival.
Then Alpine Giken former President Sakai receives an award from Fukushima Governor Sato
9
Directors and Auditors
Seizo Ishiguro Chairman
Toru Usami President & CEO
Hirofumi Morioka Managing Director
Shigekazu Hori Managing Director
Hitoshi Kajiwara Managing Director
Seishi Kai Managing Director
(As of July 2011)
Chairman President & CEO Managing Directors Directors
Seizo Ishiguro Toru Usami Hirofumi Morioka Hitoshi Kajiwara Masataka Kataoka Toshinori Kobayashi Naoki Mizuno Toji Tanaka Hideo Kojima Shigekazu Hori Seishi Kai Satoshi Soma Koichi Endo Kaname Kurashima Taisuke Yonemori
Auditors
10
Financial Section
Financial Highlights Consolidated Financial Review Consolidated Balance Sheets 12 14 16
Consolidated Statements of Operations 18 and Comprehensive Income Consolidated Statements of Changes in Net Assets Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors’ Report 19 20 21 35
11
Financial Highlights
Millions of Yen,unless stated otherwise
2001
2002
2003
2004
2005
2006
For the year:
Net sales (Overseas Sales) Operating income(loss) Net income(loss) Comprehensive income Net cash provided by operating activities Free cash flow Depreciation Capital expenditures R&D expenses ROA (Return on assets) (%) 181,615 129,522 4,445 3,284 – 1,921 (3,602) 5,385 6,307 12,628 2.7 5.4 196,092 157,032 7,022 3,914 – 15,728 8,513 5,552 6,808 14,718 2.8 5.6 222,367 177,017 12,306 6,138 – 14,389 6,290 5,723 8,218 17,644 4.1 8.3 213,020 170,984 11,320 7,253 – 10,491 3,021 6,496 8,940 19,144 4.9 9.4 222,779 180,828 10,148 7,932 – 12,472 3,229 7,332 10,402 22,438 5.3 9.4 253,983 215,281 9,671 6,175 – 12,887 3,032 8,616 10,778 28,695 3.8 6.2
ROE (Return on equity) (%)
At year-end:
Current assets Total Property, plant and equipment Current liabilities Noncurrent liabilities Capital stock Retained earnings Total shareholders' equity Total net assets Total assets Equity ratio (%)
85,046 23,649 53,094 6,403 19,928 26,002 67,145 – 127,772 52.6
102,396 22,466 55,754 17,944 19,928 29,247 72,467 – 147,412 49.2
106,180 22,898 58,669 15,869 20,012 34,393 74,738 – 150,230 49.8
99,031 22,714 48,681 15,534 20,026 40,500 80,336 – 145,127 55.4
105,372 25,544 50,826 15,807 20,360 47,275 88,830 – 156,507 56.7
109,910 27,647 52,173 5,004 25,921 52,213 110,782 – 169,553 65.3
Amounts per share of common stock:
Net income(loss) (¥) Diluted net income (¥) Dividends from surplus applicable to the year (¥) Shareholders' equity (¥) 56.40 54.60 10.00 1,106.38 64.49 – 12.50 1,194.19 99.78 86.86 17.50 1,227.79 117.94 102.85 17.50 1,319.41 128.97 112.58 20.00 1,446.99 91.71 88.35 20.00 1,587.05
Notes: 1. R&D expenses include labor and other expenses reported as cost of sales. 2. Effective from the year ended March 31, 2007, the Company and its consolidated subsidiaries adopted the new accounting standard for presentation of net assets ("Accounting Standard for Presentation of Net Assets in the Balance Sheet and its Implementation Guidance" issued by the Business Accounting Deliberation Council on December 9, 2005). 3. Effective from the year ended March, 2011, the Company and its consolidated subsidiaries adopted the Accounting Standard of Presenation of Comprehensive income (Accounting Standards Board of Japan Statement No.25, June 30, 2010).
12
Thousands of U.S.Dollars
2007
2008
2009
2010
2011
2011
For the year:
Net sales (Overseas Sales) Operating income(loss) Net income(loss) Comprehensive income Net cash provided by operating activities Free cash flow Depreciation Capital expenditures R&D expenses ROA (Return on assets) (%) 265,055 228,379 10,110 5,729 – 16,399 4,512 9,326 12,620 30,347 3.3 5.0 252,072 219,056 7,012 3,554 – 9,963 (4,138) 10,655 13,673 29,337 2.0 3.0 196,667 166,873 (10,645) (9,291) – 10,680 (2,170) 10,336 10,160 28,266 (6.2) (8.8) 168,586 138,335 227 (1,250) – 9,859 5,896 8,352 4,379 20,589 (0.9) (1.3) 201,257 165,972 11,155 6,030 2,383 14,371 10,021 7,442 4,882 19,512 3.9 6.2
2,420,409 1,996,055 134,155 72,520
28,659
172,832 120,517 89,501 58,713 234,660 3.9 6.2
ROE (Return on equity) (%)
At year-end:
Current assets Total Property, plant and equipment Current liabilities Noncurrent liabilities Capital stock Retained earnings Total shareholders' equity Total net assets Total assets Equity ratio (%)
114,938 30,090 53,763 6,514 25,921 57,344 – 120,908 181,185 65.7
103,756 32,851 48,265 3,255 25,921 58,592 – 116,265 167,785 68.5
75,134 28,903 30,499 5,050 25,921 47,839 – 96,874 132,423 72.4
96,185 25,875 39,306 17,087 25,921 46,550 – 97,036 153,429 62.7
102,931 22,042 42,183 12,841 25,921 51,797 – 98,760 153,784 63.7
1,237,896 265,087 507,312 154,432 311,738 622,935 – 1,187,733 1,849,477 63.7
Amounts per share of common stock:
Net income(loss) (¥) Diluted net income (¥) Dividends from surplus applicable to the year (¥) Shareholders' equity (¥) 82.12 – 25.00 1,706.54 50.95 – 25.00 1,646.38 (133.17) – 10.00 1,374.95 (17.92) – 0.00 1,379.61 86.43 – 20.00 1,403.69
1.04 – 0.24 16.88
13
Consolidated Financial Review
During the fiscal year ended March 31, 2011, the world economy saw favorable demand trends in emerging economies, particularly in Asia. However, in Europe, the recovery in the German economy was offset by the recurrence of financial instability in certain countries and economic conditions remain patchy in this region. Meanwhile in the United States, although some economic indicators continue to improve, uncertainty still hangs over the future and the overall economic climate continues to be severe. The automobile industry saw a modest recovery in new vehicle sales with China, spurred by ongoing economic growth, maintaining its place as the leading country in terms of unit sales of new cars for the second year running, and the symbolic relisting of General Motors taking place on the New York Stock Exchange. The industry in Europe was buoyed by robust exports by German manufacturers of luxury cars. In Japan, sales of new cars, which had been firm owing to government subsidies for purchases of environment-friendly cars, dropped precipitously in the second half of the year in the wake of the termination of this support. The car electronics industry experienced major changes in its market, with sales of portable navigation devices (PNDs) falling in line with the spread of smartphones and tablet PCs. Domestic after-market sales of navigation systems were as a consequence of the increase in new-vehicle sales. But demand for home electronics fell in the second half of the year following the withdrawal of subsidies under the “eco-point” system, and demand for car electronic products was also hit by this shift. In Europe, however, factory installation rates for navigation systems and displays saw gradual recovery as demand is apparently shifting back toward mid-sized luxury and large vehicles following the trend for compact cars after the Lehman shock. In this environment, Alpine launched three new navigation systems in the domestic aftermarket and sought to raise product appeal and expand sales by proposing “vehicle-specific car-life solutions.” In addition, to secure business growth in the expanding Chinese market, Alpine worked to enhance brand recognition by participating in the Beijing Motor Show, and began supplying products suited for local automakers. Meanwhile, although yen appreciation, coupled with tight supplies for in-vehicle-use display panels, pushed up the cost of parts and materials, we worked to improve operating performance by continuously promoting our “CHALLENGE 30+ (Plus)” program of structural reforms launched in the previous fiscal year.
Overseas Sales
(Millions of Yen)
228,379
219,056 166,873 138,335 165,972
2007 2008 2009 2010 2011
Capital Expenditures
(Millions of Yen) 13,673 12,620 10,160
Performance by Segment
Audio Products
In the Audio Products segment, we carried out aggressive proposal-based marketing in the domestic after-market of high-end speakers and amplifiers for minivans with clear cabin audio reproduction, leading to strong sales. However, intensified price competition contributed to flat sales of head units such as CD players. Sales of affordably priced CD players were firm in the North American market but amid users’ greater appetite for low prices, high-added-value products such as head units that can be linked to Pandora Internet radio via smartphones, experienced harsh selling conditions. In the European market, sound system products with upgraded cabin audio quality centered on high-grade speakers posted steady sales, although in step with severe price competition Bluetooth-enabled CD players saw a sluggish market and sales dropped. Sales of OEM products to automobile manufacturers increased in line with recovering production and sales in Europe and the United States of new automobiles by major customers, as well as robust demand in the Chinese market. As a result of the above factors, sales by the Audio Products segment during the term decreased by 0.8% compared to the corresponding period of the previous fiscal year, to ¥69,898 million (US$840.6 million).
4,379 4,882
2007 2008 2009 2010 2011
Total Assets/Net Assets
(Millions of Yen)
181,185
167,785 153,036 153,784 132,423 96,874 97,036 98,760
Information and Communication Equipment Segment
In this segment, in the domestic after-market, we sought to strengthen our navigation line-up by launching the X05, which has on-board flash memory and offers superior cost performance, adding to the “Big X”, which received a 2010 product Grand Prix from automotive industry trade publication Nikkan Jidosha Shimbun, with its 8-inch screen (the largest on the after-market) making maps and text easier to read and with a touch panel for improved operating convenience, and the X08S car navigation system, successor to the X08, which earned acclaim in the preceding fiscal year. Further, in anticipation of lower new vehicle sales following the termination of government subsidies for purchases of environmentfriendly cars, we also worked to expand the number of car models that can adopt our “perfect fit” series, which is attractively fitted to individual car models. Also, firm sales of a camera system that links to a vehicle’s navigation system to support driving safety contributed to expanded sales in the segment. In addition, in an effort to increase sales we aired a television
120,908 116,265
2007 2008 2009 2010
Total Assets Net Assets Net Assets for the years from 2006 is recalculated.
2011
14
commercial to stimulate consumer spending. Sales of our affordably priced navigation systems that were newly launched into the North American market were strong, thanks to customer appreciation of the superior functionality, despite being affected by increasingly severe price competition. In Europe, sales of integrated products were lower due to the impact of worsening market conditions, but sales of affordably priced navigation systems introduced during the term were robust. In OEM products to automobile manufacturers, installation rates of in-cabin display products contributed to increased unit sales. Such sales were also boosted by a continuing recovery in production and sales of large and high-end vehicles in North America, which have high installation rates for highly functional products such as navigation systems, and favorable sales of high-end new vehicles by European manufacturers in the Chinese market. As a result of the above factors, segment sales increased by 33.9% year on year, to ¥131,359 million (US$ 1,579.8 million). The number of consolidated subsidiaries is 27 companies, with 8 companies in Japan and 19 overseas. The number of companies accounted for by the equity method at the end of the fiscal year is 1.
Cash Flows
(Millions of Yen)
16,399
14,371 9,963 10,680 9,859 5,896 10,021
4,512
(2,170) (4,138) 2007 2008 2009 2010 2011
Net cash provided by operating activities Free Cash Flow
Investment
Capital expenditures decreased by 11.5% to ¥4,882 million (US$58.7 million). By segment, investment in the Audio Products business totaled ¥2,012 million (US$24.2 million), and that in the Information and Communication Equipment business amounted to ¥2,864 million (US$34.4 million). R&D expenses decreased by 5.2% to ¥19,512 million (US$234.7 million). R&D expenses amounted to 9.7% of net sales, down 2.5 percentage points.
Return on Equity/Return on Assets
(%)
Cash Flows
5.0 3.0 3.3 2.0 (0.9) (6.2) (1.3)
6.2 3.9
For the fiscal year under review, cash and cash equivalents at the end of the period totaled ¥43,884 million (US$527.8 million), a increase of ¥4,040 million (US$48.6 million), or 10.1%, compared with the previous fiscal year-end.
Cash flows from operating activities
Net cash provided by operating activities amounted to ¥14,371 million (US$172.8 million), an increase of 45.8%. This was mainly the result of inflows provided by Income before income taxes and minority interests of ¥8,510 million (US$102.3 million), depreciation and amortization of ¥7,442 million (US$89.5 million), increase in notes and accounts payable-trade of ¥1,424 million (US$17.1 million), increase in notes and accounts receivable-trade of ¥1,395 million (US$16.8 million), and increase in inventories of ¥5,010 million (US$60.3 million),.
(8.8) 2007 2008 2009 2010 2011
Return on Equity Ruturn on Assets
Cash flows from investing activities
Net cash used in investing activities was ¥4,350 million (US$52.3 million), up 9.8% compared with the previous fiscal year. Principal components were payments for the purchase of property, plant and equipment of ¥3,708 million (US$44.6 million) and for the purchase of intangible assets of ¥1,255 million (US$15.1 million).
Cash Dividends
(¥) 25.0 25.0 20.00
Cash flows from financing activities
Net cash used in financing activities totaled ¥5,411 million (US$65.1 million), compared to the net cash provided with ¥8,150 million in the previous fiscal year. The principal component was repayment of long-term loans payable of ¥4,602 million (US$55.3 million) and payment of cash dividends of ¥698 million (US$8.4 million).
Financial Position
10.0
Total assets at the end of the year increased by 0.2% to ¥153,784 million (US$1,849.5 million), due to an increase in cash and cash equivalents, inventories, and due to a decrease in property, plant and equipment, and investments. As a result of the increase in retained earnings and decrease in valuation difference on available-for-sale securities and in foreign currency translation adjustment, total net assets increased by 1.8% to ¥98,760 million (US$1,187.7 million). The equity ratio increased by 1.0 percentage points to 63.7%. Return on equity was 6.2%. Return on assets was 3.9%.
0.0 2007 2008 2009 2010 2011
15
ALPINE ELECTRONICS, INC.
Consolidated Balance Sheets
March 31, 2011 and 2010 Millions of Yen Thousands of U.S. Dollars(Note 1)
ASSETS Current assets: Cash and cash equivalents Notes and accounts receivable-trade : Unconsolidated subsidiaries and affiliates Trade Allowance for doubtful accounts Inventories (Note 4) Deferred tax assets (Note 9) Other Total current assets
2011
2010
2011
¥ 43,884
¥ 39,844
$ 527,769
730 27,462 (249) 21,480 2,062 7,562 102,931
1,191 27,100 (350) 17,748 1,546 9,106 96,185
8,779 330,271 (2,995) 258,329 24,799 90,944 1,237,896
Property, plant and equipment Land Buildings and structures Machinery, equipment and vehicles Lease assets Construction in progress 4,811 22,818 65,018 288 173 93,108 Accumulated depreciation Total property, plant and equipment (71,066) 22,042 4,997 23,321 65,946 385 837 95,486 (69,611) 25,875 57,859 274,420 781,936 3,464 2,080 1,119,759 (854,672) 265,087
Investments and other assets: Investments in subsidiaries and affiliates (Note 3) Investments (Note 3) Deferred tax assets (Note 9) Other Total investments and other assets 8,976 12,632 342 6,861 28,811 9,200 13,268 464 8,437 31,369 107,949 151,918 4,113 82,514 346,494
¥153,784
See accompanying notes
¥153,429
$1,849,477
16
Millions of Yen
Thousands of U.S. Dollars(Note 1)
LIABILITIES AND NET ASSETS Current liabilities: Short-term loans payable (Note 5) Notes and accounts payable-trade : Unconsolidated subsidiaries and affiliates Trade Income taxes payable Accrued expenses Deferred tax liabilities (Note 9) Provision for product warranties Other Total current liabilities ¥
2011
2010
2011
48
¥
43
$
577
774 20,513 1,018 10,083 196 4,777 4,774 42,183
1,476 21,447 601 9,045 – 3,917 2,777 39,306
9,309 246,699 12,243 121,263 2,357 57,450 57,414 507,312
Noncurrent liabilities: Long-term loans payable due after one year (Note 5) Provision for retirement benefits (Note 7) Provision for directors' retirement benefits Deferred tax liabilities (Note 9) Other Total noncurrent liabilities 5,400 735 616 4,629 1,461 12,841 10,002 659 642 4,953 831 17,087 64,943 8,840 7,408 55,670 17,571 154,432
Contingent liabilities (Note 6)
Net Assets (Note 8): Capital stock: Authorized —160,000,000 shares Issued Capital surplus Retained earnings Treasury stock — 69,784,501 shares 25,921 24,906 51,797 (28) 25,921 24,906 46,550 (29) 311,738 299,531 622,935 (337)
Valuation difference on available-for-sale securities Revaluation reserve for land Foreign currency translation adjustment
4,839 (1,311) (8,195)
5,260 (1,395) (4,964)
58,196 (15,767) (98,557)
Minority interests
831
787
9,994
Total net assets
98,760 ¥153,784
97,036 ¥153,429
1,187,733 $1,849,477
See accompanying notes
17
ALPINE ELECTRONICS, INC.
Consolidated Statements of Operations and Comprehensive Income
Years ended March 31, 2011, 2010 and 2009 Millions of Yen Thousands of U.S. Dollars(Note 1)
2011 Net sales (Note 13) Costs and expenses (Note 13): Cost of sales Selling,general and administrative expenses Operating income(loss) (Note 13) Other income (expenses): Interest and dividends income Interest expenses Foreign exchange gains (losses) Equity in earnings of affiliates Loss on sales and retirement of noncurrent assets Gain on sales of investment securities Loss on valuation of investment securities Gain on sales of subsidiaries and affiliates' stock Prior compensation expense for products Provision for product warranties Gain on settlement and/or valuation of option Loss on valuation of inventories Gain on exchanges of land use rights Loss on valuation of noncurrent assets Loss on abolishment of retirement benefit plan Loss on disaster (Note 12) Other Income(loss) before income taxes and minority interests Income taxes (Note 9): Current Deferred Income(loss) before minority interests Minority interests in loss (income) Net income(loss) Minority interests in income Income before minority interests Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Share of other comprehensive income of associates accounted for using equity method Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of the parent Comprehensive income attributable to minority interests ¥201,257 158,801 31,301 190,102 11,155 494 (198) (1,253) 950 (102) – (3) 4 (51) (103) 102 – – – (513) (1,555) (417) (2,645) 8,510 2,501 (85) 2,416 6,094 (64) 6,030 64 6,094 (380) (2,857) (474) (3,711) ¥ 2,383 2,378 5
2010 ¥168,586 140,149 28,210 168,359 227 444 (150) (628) 1,358 (344) – (233) – (434) – 128 – 224 – – – (580) (215) 12 1,226 66 1,292 (1,280) 30 (1,250) – – – – – – – – –
Yen
2009 ¥196,667 171,519 35,793 207,312 (10,645) 752 (122) 3,528 1,143 (343) 118 (52) – – – 2,578 (1,091) – (493) – – 592 6,610 (4,035) 30 5,103 5,133 (9,168) (123) (9,291) – – – – – – – – –
2011 $2,420,409 1,909,814 376,440 2,286,254 134,155 5,941 (2,381) (15,069) 11,425 (1,227) – (36) 48 (613) (1,239) 1,227 – – – (6,170) (18,701) (5,015) (31,810) 102,345 30,078 (1,022) 29,056 73,289 (769) 72,520 769 73,289 (4,570) (34,360) (5,700) (44,630) 28,659 28,599 60
U.S.Dollars(Note 1)
¥
¥
$
2011 Amounts per share of common stock: Net income(loss) Diluted net income Dividends from surplus applicable to the year
See accompanying notes
2010 ¥(17.92) – 0.00
2009 ¥(133.17) – 10.00
2011 $1.04 – 0.24
¥86.43 – 20.00
18
ALPINE ELECTRONICS,INC.
Consolidated Statements of Changes in Net Assets
Years ended March 31,2011,2010 and 2009 Millions of Yen Valuation difference on available–for– sale securities Revaluation reserve for land Foreign currency translation adjustment
Capital stock
Capital surplus
Retained earnings
Treasury stock
Minority interests
Total net assets
Balance at March 31, 2008 Net income(loss) Effect of changes in accounting policies applied to foreign subsidaries Purchase of treasury stock Disposal of treasury stock Dividends from surplus (¥25.0 per share) Other Balance at March 31, 2009 Net income(loss) Change in retained earnings of foreign subsidiaries by US GAAP applied new accounting policies Purchase of treasury stock Disposal of treasury stock Other Balance at March 31, 2010 Net income(loss) Reversal of revaluation for land Purchase of treasury stock Disposal of treasury stock Dividends from surplus (¥10.0 per share) Other Balance at March 31, 2011
25,921
24,906
58,592 (9,291) 282
(31)
4,753
(1,395)
2,112
1,407
116,265 (9,291) 282
(0) (0) (1,744) 0 ¥25,921 ¥24,906 (0) ¥47,839 (1,250) (39) (1) (1) 1 ¥25,921 ¥24,906 0 ¥46,550 6,030 (84) (1) (1) (698) 1 ¥25,921 ¥24,906 (1) ¥51,797 ¥(28) (421) ¥4,839 ¥(1,311) (3,231) ¥(8,195) 44 ¥831 2 84 ¥(29) 1 2,170 ¥5,260 ¥(1,395) (555) ¥(4,964) (164) ¥787 ¥(29) (1,663) ¥3,090 ¥(1,395) (6,521) ¥(4,409) (456) ¥951 2
(0) 2 (1,744) (8,640) ¥96,874 (1,250) (39) (1) 0 1,452 ¥97,036 6,030 – (1) 1 (698) (3,608) ¥98,760
Capital stock
Capital surplus
Retained earnings
Thousands of U.S. Dollars(Note1) Valuation difference on available–for– Revaluation Treasury sale reserve for stock securities land
Foreign currency translation adjustment
Minority interests
Total net assets
Balance at March 31, 2010 Net income(loss) Reversal of revaluation for land Purchase of treasury stock Disposal of treasury stock Dividends from surplus ($0.12 per share) Other Balance at March 31, 2011
$311,738 $299,531 $559,831 72,520 (1,010)
$(349)
$63,259
$(16,777) $(59,699)
$9,465 $1,166,999 72,520
1,010 (12)
– (12) 12 (8,394)
(12) (8,394) 12 (12)
24
(5,063) $(337) $58,196
(38,858) $(15,767) $(98,557)
529
(43,392)
$311,738 $299,531 $622,935
$9,994 $1,187,733
Notes: 1. Dividends from surplus per share is calculated based on actual payment of dividends during the period.
19
ALPINE ELECTRONICS, INC.
Consolidated Statements of Cash Flows
Years ended March 31, 2011, 2010 and 2009 Millions of Yen Thousands of U.S. Dollars(Note 1)
2011
Cash flows from operating activities: Income (loss) before income taxes and minority interests Adjustments to reconcile income (loss) before income taxes and minority interests to cash provided by operating activities: Depreciation and amortization (Note13) Increase (decrease) in provision for retirement benefits Increase (decrease) in provision for directors' retirement benefits Interest and dividends income Interest expenses Equity in earnings of affiliates Loss (gain) on sale of property, plant and equipment Gain on exchanges of land use rights Decrease (increase) in notes and accounts receivable–trade Decrease (increase) in inventories Increase (decrease) in notes and accounts payable–trade Increase (decrease) in provision for product warranties Gain on valuation of options Gain on settlement and valuation of options Other–net Subtotal Interest and dividends income received Interest expenses paid Income taxes paid Income taxes refund Net cash provided by operating activities Cash flows from investing activities: Purchase of short–term investment securities Proceeds of sales of short–term investment securities Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Proceeds from sales of investments Purchase of investments in subsidiaries Purchase of stocks of subsidiaries and affiliates Payments of loans receivable Collection of loans receivable Other–net Net cash used in investment activities Cash flows from financing activities: Net increase (decrease) in short–term loans payable Proceeds from long–term loans payable Repayment of long–term loans payable Cash dividends paid Cash dividends paid to minority shareholders Proceeds from stock issuance to minority shareholders Other–net Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period See accompanying notes ¥ 8,510
2010
¥ 12
2009
¥ (4,035)
2011
$ 102,345
7,442 83 (25) (494) 198 (950) (33) – (1,395) (5,010) 1,424 836 – (102) 5,729 16,213 877 (203) (2,595) 79 14,371
8,352 38 (90) (444) 150 (1,358) (45) (224) (10,845) 1,129 10,973 502 – (128) 1,983 10,005 443 (144) (973) 528 9,859
10,336 (16) 28 (752) 122 (1,143) 11 – 10,241 6,349 (9,234) (814) (2,578) – 2,133 10,648 783 (119) (1,669) 1,037 10,680
89,501 998 (301) (5,941) 2,381 (11,425) (397) – (16,777) (60,252) 17,126 10,054 – (1,227) 68,900 194,985 10,547 (2,441) (31,209) 950 172,832
(3,000) 3,000 (3,708) 248 (1,255) – – – (3,660) 3,021 1,004 (4,350)
– – (2,998) 215 (1,222) – (44) – (1,483) 1,792 (223) (3,963)
– – (7,139) 88 (3,156) 131 (544) (245) (1,858) 66 (193) (12,850)
(36,079) 36,079 (44,594) 2,983 (15,093) – – – (44,017) 36,331 12,075 (52,315)
7 – (4,602) (698) (13) – (105) (5,411) (570) 4,040 39,844 ¥43,884
(1,594) 10,002 – (2) (163) 43 (136) 8,150 (343) 13,703 26,141 ¥39,844
1,576 – – (1,744) (16) – (145) (329) (1,519) (4,018) 30,159 ¥ 26,141
84 – (55,346) (8,394) (156) – (1,263) (65,075) (6,855) 48,587 479,182 $ 527,769
20
ALPINE ELECTRONICS, INC.
Notes to Consolidated Financial Statements
March 31, 2011, 2010 and 2009
1. Basis of Presenting Consolidated Financial Statements
Alpine Electronics, Inc. (“the Company”), a Japanese corporation, is a subsidiary of Alps Electric Co., Ltd. (40.7% owned), a Japanese listed company. The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. The accounts of overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. However, as described in Note 2(21), necessary adjustments are made upon consolidation. The accompanying consolidated financial statements have been restructured and translated into English (with some expanded descriptions and the inclusion of consolidated statements of changes in net assets) from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Some supplementary information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements. The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2011, which was ¥83.15 to U.S.$1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies
(1) Consolidation
The consolidated financial statements include the accounts of the Company and substantially all of its subsidiaries (“the Companies”) which are controlled through substantial ownership of majority voting rights or existence of certain conditions. All significant intercompany transactions and account balances are eliminated in consolidation. value are stated at fair market value. Unrealized holding gains and losses on these securities are reported, net of applicable income taxes, as a separate component of the net assets. Realized gain on sale of such securities is computed using the moving-average cost. Available-for-sale securities with no fair market value are stated at moving-average cost. If the market value of equity securities issued by subsidiaries and affiliates which are not consolidated or on the equity method and available-for-sale securities declines significantly, such securities are stated at fair market value and the difference between the fair market value and the carrying amount is recognized as loss in the period of the decline. If the fair market value of equity securities issued by subsidiaries and affiliates is not readily available, such securities should be written down to net asset value in the event net asset value has significantly declined. Unrealized losses on these securities are reported in the statements of operations.
(2) Equity method
Investment securities in affiliates (all companies 20% to 50% owned and certain others 15% to 20% owned) are accounted for by the equity method in the consolidated financial statements for 2011, 2010 and 2009. Effective from the year ended March 31, 2011, the Companies adopted “Accounting Standard for Equity Method of Accounting for Investments” (Statement No.16 issued by the Accounting Standards Board of Japan on March 10, 2008) and “Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using Equity Method” (Practical Issues Task Force No.24 issued on March 10, 2008). The impact on income before income taxes and minority interests is nothing.
(5) Allowance for doubtful accounts
The Companies provide allowance for doubtful accounts to cover probable losses on collection by estimating uncollectible amounts individually in addition to amounts for possible losses on collection in the past.
(6) Inventories (3) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand, readily-available deposits and short-term highly liquid investments with maturities of not exceeding three months at the time of purchase are considered to be cash and cash equivalents. Inventories held by the Company and its domestic consolidated subsidiaries are principally stated at cost determined by the weightedaverage method. The value in the balance sheet is calculated by the method of write-down of the carrying amount based on the decline of the profitability. Inventories held by the foreign consolidated subsidiaries are principally stated at the lower of market or cost, mainly determined by the weightedaverage method or the moving-average method. Effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries adopted the new accounting standard, “Accounting Standard for Measurement of Inventories” (Statement No.9 issued by the Accounting Standards Board of Japan on July 5, 2006). As a result of the adopting the standard, operating loss decreased by ¥31 million and loss before income taxes and minority interests increased by ¥1,060 million for the fiscal year ended March 31, 2009. In addition, as a result of reviewing the classification by adopting the standard, the classification for Loss on abandonment of inventories
(4) Securities
The intent of holding each security is examined and securities are classified as (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to be held to maturity (hereafter, “held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and affiliates, and (d) for all other securities that are not classified in any of the above categories (hereafter, “available-for-sale securities”). The Companies had no trading securities or held-to-maturity debt securities. Equity securities issued by subsidiaries and affiliates which are not consolidated or accounted for using the equity method are stated at moving-average cost. Available-for-sale securities with fair market
21
was changed from Selling, general and administrative expenses to Cost of sales as same as Loss on valuation of inventories due to a minor significance of dividing the classification from the point of the decline of the profitability. As a result of the changing the classification, in comparison to the previous accounting method, cost of sales increased by ¥99 million and gross margin decreased by same amount and operating loss and loss before income taxes and minority interests were no impact.
The Company and its consolidated subsidiaries will continue to use accounting procedures that conform to methods related to normal lease transactions with respect to finance lease transactions do not transfer ownership to the lessee start date prior to the initial year of application of the new method. The impact on operating loss and loss before income taxes and minority interests is minor. Estimated useful lives are as follows: Buildings …………… 2 – 50 years Machinery …………… 2 – 11 years Equipment …………… 2 – 25 years (Dies ………………… 1 – 2 year)
(7) Property, plant, equipment and depreciation
Property, plant and equipment are stated at cost except for certain land. The Companies compute depreciation of property, plant and equipment, except for certain buildings, using the declining-balance method at rates based on the useful lives prescribed by Japanese tax regulations, while the foreign consolidated subsidiaries use the straight-line method over the estimated useful lives. Depreciation of buildings purchased after March 31, 1998, is computed using the straight-line method by the Company and its domestic consolidated subsidiaries, because of an amendment to Japanese tax regulations. From the year ended March 31, 2008, in accordance with the amendment to the Corporate Tax Law, the Company and its domestic consolidated subsidiaries changed their depreciation method for tangible fixed assets acquired on or after April 1, 2007 to a method based on the amended Corporate Tax Law. In addition, due to the amendment to the Corporate Tax Law, for tangible fixed assets which had been acquired on or before March 31, 2007, the remaining book value of the assets based on the previous Corporate Tax Law is evenly depreciated over the five years starting from the period subsequent to the year the depreciable limits have reached. From the year ended March 31, 2009, in accordance with the amendment to the Corporate Tax Law, the Company and its domestic consolidated subsidiaries changed the useful lives of machinery from 8-10 years to 7 years. As a result, in comparison to the previous accounting method, operating loss and loss before income taxes and minority interests increased by ¥142 million for the fiscal year ended March 31, 2009. Regarding the depreciation method for lease assets related to finance lease transactions do not transfer ownership to the lessee, the Company and its consolidated subsidiaries adopt the straight-line method that assumes the years of service lives are lease periods and residual values are zero. The Company and its consolidated subsidiaries formerly used accounting procedures that conform to methods related to normal lease transactions with respect to finance lease transactions do not transfer ownership to the lessee. Effective from the year ended March 31, 2009, the Company and its consolidated subsidiaries adopted "Accounting Standard for Lease Transactions"(Statement No.13 originally issued on June 17, 1993 by the First Committee of the Business Accounting Council and revised on March 30, 2007) and "Guidance on Accounting Standard for Lease Transactions "(Guidance No.16 originally issued on January 18, 1994 by the Accounting System Committee of the Japanese Institute of Certified Public Accountants and revised on March 30, 2007) and use accounting procedures conforming to methods related to normal sales and purchase transactions.
(8) Land revaluation
Pursuant to “Law Concerning Revaluation of Land” and the revisions thereof, the Company elected one-time revaluation of land used for business operations at fair value as of March 31, 2002. Due to the revaluation, book value of the land was reduced by ¥1,395 million to ¥3,212 million as of March 31, 2002, and the related unrealized loss is reported as a separate component of net assets. According to the revised Law, the Company is not permitted to revalue the land at any time for subsequent declines or appreciation in the fair values of the land. The excess of the revalued amounts of the revalued land over the fair values as of March 31, 2011 and 2010 amounted to ¥1,200 million (US$14,432 thousand) and ¥1,230 million, respectively. The indicator as of March 31, 2011 was described as same as of March 31, 2010 due to difficulty of recognizing the fair values as of March 31, 2011 by earthquakes and others.
(9) Employees’ bonuses
Liabilities for employees’ bonuses are mainly provided based on the estimate of the amounts to be paid in the future, based on the accrual basis at the balance sheet date.
(10) Directors’ bonuses
Liabilities for directors’ bonuses are mainly provided based on the estimate of the amounts to be paid in the future, based on the accrual basis at the balance sheet date.
(11) Provision for retirement benefits
The Company and its five domestic subsidiaries have unfunded lump-sum benefit and funded pension plans covering all employees. Under the terms of the plans, eligible employees are entitled, upon reaching mandatory retirement age or earlier voluntary severance, to severance and retirement benefit payments based on the length of their services, base salary at the time of termination and cause of termination. Allowances and expenses for severance and retirement benefits are determined based on the amounts actuarially calculated using certain assumptions. The Companies provide allowance for employees’ severance and retirement benefits based on the estimated amount of projected benefit obligation and the fair value of the plan assets at the balance sheet date. Effective from the year ended March 31, 2010, the Company applied the “Partial Amendments to Accounting Standard for Retirement Benefits (Part3)” (Statement No.19 issued by the Accounting Standards Board of
22
Japan on July 31, 2008). The application of this standard had no effect on the consolidated financial statements.
(19) Derivative transactions and hedge accounting
The Companies state derivative financial instruments at fair value and recognize changes in the fair value as gains or losses unless derivative financial instruments are used for hedging purposes. If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gains or losses resulting from changes in fair value of derivative financial instruments until the related losses or gains on the hedged items are recognized.
(12) Provision for directors’ retirement benefits
The Company and its domestic consolidated subsidiaries provide for retirement benefits for directors, based on the bylaws and on the accrual basis at the balance sheet date.
(13) Provision for product warranties
The Company and certain of its consolidated subsidiaries provide accrued warranty costs for goods sold based on historical experience of actual after-sales service costs.
(20) Reclassifications
Certain prior year amounts have been reclassified to conform to the 2011 presentation. These changes had no impact on previously reported results of operations.
(14) Foreign currency translation
Receivables, payables and investments denominated in foreign currencies are translated into Japanese yen using the exchange rate at the balance sheet date, except that investments in unconsolidated subsidiaries and affiliated companies are translated using the historical rates. The Company and its domestic subsidiaries include foreign currency translation adjustments in the net assets in the consolidated balance sheets. Financial statements of the foreign consolidated subsidiaries are translated into Japanese yen using the year-end rate for assets and liabilities, except that net assets accounts and investments in unconsolidated subsidiaries and affiliated companies not on the equity method are translated using the historical rates. The average exchange rate for the year is used for translation of income and expenses.
(21) Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements
Effective from the year ended March 31, 2009, the Company adopted "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements" (Practical Issues Task Force No.18 (“PITF No.18”) issued by the Accounting Standards Board of Japan on May 17, 2006) and made the necessary adjustments to the consolidated financial statements. PITF No. 18 requires that accounting policies and procedures applied by a parent company and its subsidiaries to similar transactions and events under similar circumstances should, in principle, be unified for the preparation of the consolidated financial statements. PITF No. 18, however, as a tentative measure, allows a parent company to prepare consolidated financial statements using foreign subsidiaries’ financial statements prepared in accordance with either International Financial Reporting Standards or U.S. generally accepted accounting principles. In this case, adjustments for the following six items are required in the consolidation process so that their impacts on net income are accounted for in accordance with Japanese GAAP unless the impact is not material. (a) Goodwill not subjected to amortization (b) Actuarial gains and losses of defined benefit plans recognized outside profit or loss (c) Capitalized expenditures for research and development activities (d) Fair value measurement of investment properties, and revaluation of property, plant and equipment, and intangible assets (e) Retrospective treatment of a change in accounting policies (f) Accounting for net income attributable to minority interests As a result, in comparison to the previous accounting method, operating loss decreased by ¥68 million and loss before income taxes and minority interests decreased by ¥75 million for the fiscal year ended March 31, 2009.
(15) Research and development costs
Research and development costs are charged to income when incurred and included in costs and expenses.
(16) Income taxes
The Companies recognize tax effects of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities. The provision for income taxes is computed based on the pretax income included in the consolidated statements 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.
(17) Amounts per share of common stock
Computations of net income per share of common stock are based on the weighted-average number of shares of common stock outstanding during each fiscal year. Diluted net income per share is computed based on the weighted-average number of common stock and contingent issuance of common stock from convertible debentures. Cash dividends per share represent actual amounts applicable to the respective years.
(22) Asset retirement obligations
Effective from the year ended March 31, 2011, the Companies adopted "Accounting Standard for Asset Retirement Obligations" (Statement No.18 issued by the Accounting Standards Board of Japan on March 31, 2008) and "Guidance on Accounting Standard for Asset Retirement Obligations" (Guidance No.21 issued by the Accounting Standards Board of Japan on March 31, 2008). The impact on operating income and income before income taxes and minority interests is minor.
(18) Software costs
The Company included software in other assets and depreciated it using the straight-line method over the estimated useful lives (from three to five years).
23
(23) Adoption of consolidated taxation system
The Company and certain of its consolidated subsidiaries have received approval from the Commissioner of the National Tax Agency of Japan to adopt the consolidated taxation system effective the fiscal year ending March 31, 2012. From the fiscal year ended March 31, 2011, accounting treatment and presentation regarding deferred taxes have been based on the “Practical Solution on Tax Effect Accounting under the Consolidated Taxation System (Part 1)”(ASBJ PITF No.5), and the “Practical Solution on Tax Effect Accounting under the Consolidated Taxation System (Part 2)”(ASBJ PITF No.7), under the assumption that the Company would adopt the consolidated taxation system.
(24) Comprehensive income
Effective from the fiscal year ended March 31, 2011, the Company adopted the “Accounting Standard for Presentation of Comprehensive Income” (Accounting Standard Board of Japan (“ASBJ”) Statement No. 25 on June 30, 2010) and the “Revised Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22, revised on June 20, 2010).As a result of the adoption of the standard, the Company prepared the consolidated statement of comprehensive income for the fiscal year ended March 31, 2011.
24
3. Securities
Acquisition cost, book value and the related unrealized gains or losses of the available-for-sale securities with available fair values as of March 31, 2011 and 2010 were as follows:
Millions of Yen
2011
Securities with book values exceeding acquisition costs: Equity securities Other securities: Equity securities Total
Acquisition cost
Book value
Difference
¥3,991 218 ¥4,209
¥12,116 164 ¥12,280
Millions of Yen
¥8,125 (54) ¥8,071
2010
Securities with book values exceeding acquisition costs: Equity securities Other securities: Equity securities Total
Acquisition cost
Book value
Difference
¥3,996 209 ¥4,205
¥12,787 128 ¥12,915
Thousands of U.S. Dollars
¥8,791 (81) ¥8,710
2011
Securities with book values exceeding acquisition costs: Equity securities Other securities: Equity securities Total Securities not stated at fair value as of March 31, 2011, and 2010 were as follows:
Acquisition cost
Book value
Difference
$47,998 2,622 $50,620
$145,713 1,972 $147,685
$97,715 (650) $97,065
Millions of Yen
Thousands of U.S. Dollars
2011
Equity securities issued by subsidiaries and affiliated companies not consolidated or accounted for using the equity method Other securities: Non-listed equity securities Total There was no sale of available-for-sale securities in the year ended March 31, 2011 and 2010.
2010 ¥8,991 107 ¥9,098
2011 $105,436 1,251 $106,687
¥8,767 104 ¥8,871
25
4. Inventories
Inventories at March 31, 2011 and 2010 comprised the following:
Millions of Yen Thousands of U.S. Dollars
Finished goods Work in process Raw materials and supplies Total
2011 ¥14,202 1,244 6,034 ¥21,480
2010 ¥12,833 670 4,245 ¥17,748
2011 $170,800 14,961 72,568 $258,329
5. Short-Term and Long-Term Debt
Short-term loans payable generally consisted of overdrafts from banks with interest rates are 2.15% at March 31, 2011, and 1.71% at March 31, 2010. Long-term loans payable from banks with interest rate are ranging from 1.70% to 1.94% at March 31, 2011, and ranging from 1.85% to 4.10% at March 31, 2010.
Millions of Yen Thousands of U.S. Dollars
Short-term loans payable Short-term lease obligations Long-term loans payable Long-term lease obligations Total
2011 ¥ 48 75 5,400 61 ¥5,584
2010 ¥ 43 91 10,002 87 ¥10,223
2011 577 902 64,943 734 $67,156 $
At March 31, 2011 and 2010, there was no pledge of collateral for long-term secured debt. The annual maturities of long-term debt at March 31, 2011 are as follows: Years ending March 31 2013 2014 2015 Total
Millions of Yen Thousands of U.S. Dollars
5,423 27
11
65,219 325
132
¥5,461
$65,676
The Company has credit lines from banks, and the total unused credit available at March 31, 2011 was ¥14,600 million (US$175,586 thousand), and at March 31, 2010 was ¥15,000 million.
6. Contingent Liabilities
The Company and its consolidated subsidiaries had no outstanding issues contingently liable for at March 31, 2011.
26
7. Provision for Retirement Benefits
Provision for retirement benefits included in the liability in the consolidated balance sheets and the related expenses for 2011 and 2010, which were determined based on the amounts obtained by actuarial calculations, were as follows:
Millions of Yen Thousands of U.S. Dollars
Projected benefit obligation Unamortized actuarial differences Pension assets Prepaid pension expense Provision for retirement benefits:
2011 ¥(10,094) 1,975 8,305 (921) ¥ (735)
2010 ¥(10,767) 2,231 9,029 (1,152) ¥ (659)
2011 $(121,395) 23,752 99,879 (11,076) $ (8,840)
The components of employee’s severance and pension expenses for the years ended March31, 2011, 2010 and 2009 were as follows.
Millions of Yen Thousands of U.S. Dollars
Service costs – Benefits earned during the year Interest costs on projected benefit obligation Expected return on plan assets Amortization of actuarial differences Other expenses (Defined Contribution, etc.) Loss on abolishment of retirement benefit plan Total
2011 ¥ 533 221
(192) 224 141 513
2010 ¥526 215
(186) 194 174 -
2009 ¥476 211
(205) 171 144 -
2011 $ 6,410 2,658
(2,309) 2,694 1,695 6,170
¥1,440
¥923
¥797
$17,318
An overseas subsidiary withdrew from the defined benefit pension scheme in a multi-employer pension fund, and the loss on abolishment of retirement benefit plan was ¥513 million (US$6,170 thousand) for the year ended March 31, 2011. The discount rate and the rate of expected return on plan assets used by the Company were mainly 2.5% for 2011, 2010 and 2009. The estimated amount of all retirement benefits to be paid at the future retirement date was allocated equally to each service year using the estimated number of total service years. Prior service costs were recognized as expense within one year, and actuarial gains or losses were recognized as income or expense using the straight-line method mainly over 16 years.
8. Net assets
The Japanese Corporate Law (“the Law”) became effective on May 1, 2006, replacing the Japanese Commercial Code (“the Code”). The Law is generally applicable to events and transactions occurring after April 30, 2006 and for fiscal years ending after that date. Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus. Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in-capital and legal earnings reserve must be set aside as additional paid-in-capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets. Under the Law, legal earnings reserve and additional paid-in capital can be used to eliminate or reduce a deficit, and also can be capitalized by a resolution of the shareholders’ meeting. Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in-capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends. The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company in accordance with Japanese laws and regulations. At the annual shareholders’ meeting held on June 23, 2011, the shareholders approved cash dividends amounting to ¥697 million ($8,390 thousand). Such appropriations have not been accrued in the consolidated financial statements as of March 31, 2011. Such appropriations are recognized in the period in which they are approved by the shareholders.
27
9. Income Taxes
The Companies are subject to a number of taxes based on income, which, in the aggregate, indicate statutory rates in Japan of approximately 40% for the years ended March 31, 2011, 2010 and 2009. Reconciliation of the statutory tax rate and the Company’s effective tax rate for the year ended March 31, 2009 was not described due to loss before income taxes and minority interests. The main components of difference between the statutory tax rate and the Company’s effective tax rate for the year ended March 31, 2010 were the taxes against income before income taxes and minority interests ¥12 million were ¥1,292 million and the main components of the taxes were increase of valuation reserve by ¥1,257 million and resident tax based on per capita by ¥22 million. The following table summarizes the significant differences between the statutory tax rate and the Companies’ effective tax rate for financial statement purpose for the years ended March 31, 2011.
Statutory tax rate Non-taxable dividend income Differences in foreign subsidiaries Non-deductible expenses Equity in earnings of affiliated company Valuation reserve Dividend income of subsidiaries Other Effective tax rate
2011 40.4% (9.2) (6.6)
2.4 (1.5) (7.1) 10.0 0.0 28.4%
The significant components of the Companies’ deferred tax assets and liabilities as of March 31, 2011 and 2010 were as follows:
Millions of Yen Thousands of U.S. Dollars
2011
Deferred tax assets: Provision for product warranties Depreciation Provision for retirement benefits Accrued expenses Elimination of unrealized profit Carried deficit Other Valuation reserve Offset allowed against deferred tax liabilities Total deferred tax assets Deferred tax liabilities: Valuation difference on available-for-sale securities Other Offset allowed against deferred tax assets Total deferred tax liabilities Net deferred tax assets(liabilities)
2010 ¥860
1,504 163 94 92 4,472 2,026 (6,485) (716)
2011 $ 10,980
29,609 2,514 2,225 1,275 30,199 36,067 (72,616) (11,341) $ 28,912 $ 39,254 30,114
¥
913
2,462 209 185 106 2,511 2,999 (6,038) (943)
¥ 2,404 ¥ 3,264
2,504
¥ 2,010 ¥ 3,522
2,147
(943) ¥ 4,825 ¥(2,421)
(716) ¥ 4,953 ¥(2,943)
(11,341) $ 58,027 $(29,115)
28
10. Derivative Financial Instruments
The Companies have entered into forward exchange contracts, currency option contracts and currency swap contracts with banks as hedges against receivables denominated in foreign currencies. These derivative financial transactions are executed by the Company’s accounting department solely for hedging purposes under the internal control rules and the supervision by the Board of Directors. The Companies do not anticipate any credit loss from nonperformance by the counterparties to forward exchange contracts because the counterparties are creditworthy securities companies of Japan. Hedging derivative financial instruments used by the Companies and items hedged are as follows: Hedging instruments: ……………………………… Forward foreign exchange contracts Currency option contracts Currency swap contracts Hedged items: ……………………………………… Foreign currency trade receivables and payables, The Companies evaluate hedge effectiveness semi-annually by comparing the cumulative changes in cash flows or the changes in fair value of hedged items and the corresponding changes in the hedging derivative instruments. The outstanding contract amounts of derivative financial transactions and their market values at March 31, 2011 and 2010, are summarized as follows:
Millions of Yen Contract value
2011
Currency related Forward foreign exchange contracts To sell U.S. dollars To sell Euro
Total
Over one year
Fair value
Recognized gains (losses)
¥2,510 3,991
¥–
¥ (26) (154)
¥ (26) (154) ¥(180)
–
Millions of Yen Contract value
2010
Currency related Forward foreign exchange contracts To sell U.S. dollars To sell Euro Currency option To sell Euro To buy Euro
Total
Over one year
Fair value
Recognized gains (losses)
¥3,104 4,754 4,115 113 2,058 145
¥– – – – – –
¥ (58) 34
¥ (58) 34
– 496
– 496 ¥472
Millions of Yen Contract value
2011
Currency related Forward foreign exchange contracts To sell U.S. dollars To sell Euro
Total
Over one year
Fair value
Recognized gains (losses)
$30,186 47,998
$– –
$ (313) (1,852)
$ (313) (1,852) $(2,165)
The fair values of forward foreign exchange contracts were estimated based on the market as of March 31, 2011 and 2010. The fair values of currency option contracts were estimated based on the offered price from the financial institutions. Lower figures of Currency option’s Contract value total show the option premium. All currency option contracts are zero cost option contracts.
29
11. Lease Information
Finance leases contracted before March 31, 2008, except for those leases for which the ownership of the leased assets are considered to be transferred to the lessees, are accounted for in the same manner as operating leases. At March 31, 2011 and 2010, the equivalent amounts of purchase price, accumulated depreciation and book value of leased properties were as follows:
Millions of Yen Thousands of U.S. Dollars
2011
Purchase price equivalent of machinery and equipment Accumulated depreciation equivalent of machinery and equipment Net book value equivalent The future minimum lease payments under finance leases at March 31, 2011 and 2010 were as follows:
2010 ¥447 436 ¥ 11
2011 $1,130 1,118 $ 12
¥94 93 ¥ 1
Millions of Yen
Thousands of U.S. Dollars
Current Non-current Total
2011 ¥1 0 ¥1
2010 ¥ 9 2 ¥11
2011 $12 0 $12
Such finance lease payments of the Companies amounted to ¥7 million (US$84 thousand), ¥64 million and ¥104 million for the years ended March 31, 2011, 2010 and 2009, respectively. The equivalent of depreciation expense amounting to ¥7 million (US$84 thousand) in 2011, ¥64 million in 2010, and ¥104 million in 2009, was computed using the straight-line method over the lease terms assuming no residual value. The future minimum lease payments under non-cancelable operating leases at March 31, 2011 and 2010 were as follows:
Millions of Yen Thousands of U.S. Dollars
Current Non-current Total
2011 ¥302 341 ¥643
2010 ¥255 261 ¥516
2011 $3,632 4,101 $7,733
30
12. Loss on disaster
Loss on disaster included costs for recovery, salaries and depreciation in the period of closedown, loss on inventories and fixed assets damaged by the Great East Japan Earthquake, and others.
13. Segment Information
Effective from the year ended March 31, 2011, the Companies adopted “Accounting Standard for Disclosures about Segments of an Enterprises and Related Information” (Statement No.17 issued by the Accounting Standards Board of Japan on March 27, 2009) and “Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (Guidance No.20 issued by the Accounting Standards Board of Japan on March 21, 2008). Segment Information Information about reportable segments for the years ended March 31, 2011 was as follows: Outline of reporting segments Reporting segments of the Companies are the organizational units for which separated financial information is available, and on the basis of which the Board of Directors makes decision on the allocation of management resources and examines financial performance on a regular basis. The Companies’ primary business activities are manufacture and sales of Car audio products and Information and communication equipment. The Companies are comprised of two reportable segments classified by Audio products business and Information and communication equipment business. The primary products included in Audio products business are car audio products of CD player, Amplifier and Speaker etc. The primary products included in Information and communication equipment business are car navigation and car communication products. Basis of measurement about reported segment net sales, segment income or loss, segment assets and other material items The accounting treatment for each reportable segment is largely the same as that set forth in the “Basis of Presenting Consolidated Financial Statements.” The profits of reportable segment are operating income. Internal sales between individual segments or amount transferred are calculated based on actual transactions. Information about reported segment net sales, segment income or loss, segment assets and other material items
Millions of Yen Audio products business Information and communication equipment business
2011
Net sales: Outside customers Inter–segment Total Segment income (Operating income) Segment assets Depreciation expense Increase in property, plant and equipment and intangible assets
Total
Adjustment
Consolidated
¥69,898
637 70,535
¥131,359
159 131,518
¥201,257
796 202,053
¥
– (796) (796)
¥201,257
– 201,257
¥ 3,610 ¥36,273 ¥ 2,981
2,012
¥ 12,062 ¥ 83,049 ¥ 4,120
2,864
¥ 15,672 ¥ 119,322 ¥ 7,101
4,876
¥ (4,517) ¥34,462 ¥ 341
6
¥ 11,155 ¥153,784 ¥ 7,442
4,882
Thousands of U.S. Dollars Audio products business Information and communication equipment business
2011
Net sales: Outside customers Inter–segment Total Segment income (Operating income) Segment assets Depreciation expense Increase in property, plant and equipment and intangible assets
Total
Adjustment
Consolidated
$840,625 7,661 848,286 $ 43,416 $436,236 $ 35,851 24,197
$1,579,784 1,912 1,581,696 $ $ $ 145,063 998,785 49,549 34,444
$2,420,409 9,573 2,429,982 $ $ 188,479 85,400 58,641 $ 1,435,021
$
– (9,573) (9,573)
$2,420,409 – 2,420,409 $ 134,155 $1,849,477 $ 89,501 58,713
$ (54,324) $414,456 $ 4,101 72
31
Relevant Information Relevant Information for the years ended March 31, 2011 was as follows: Information about products and services Information about products and services is omitted as the Company classifies such segments in the same way as it does its reportable segments. Information about geographic areas Net sales
Millions of Yen
2011
Japan
America
Germany
Other areas
Total
¥35,285
¥39,631
¥56,522
Thousands of U.S. Dollars
¥69,819
¥201,257
2011
Japan
America
Germany
Other areas
Total
$424,354
$476,621
$679,759
$839,675
$2,420,409
(Note) Net sales are geographically classified by country or region in which customers are located. Property, plant and equipment
Millions of Yen
2011
Japan
China
Hungary
Other areas
Total
¥11,175
¥5,167
¥3,286
Thousands of U.S. Dollars
¥2,414
¥22,042
2011
Japan
China
Hungary
Other areas
Total
$134,395
Information about major customers
$62,141
$39,519
$29,032
$265,087
Millions of Yen
2011
Customers
Net sales
Relevant segment
BMW AG Daimler AG
¥26,630 ¥23,037
Audio products business, information and communication equipment business Audio products business, information and communication equipment business
Thousands of U.S. Dollars
2011
Customers
Net sales
Relevant segment
BMW AG Daimler AG
$320,265 $277,054
Audio products business, information and communication equipment business Audio products business, information and communication equipment business
Information about impairment loss on fixed assets in reportable segments Not applicable Information about amortized amount of goodwill and unamortized balance of goodwill by reportable segments Information about amortized amount of goodwill and unamortized balance of goodwill by reportable segments is omitted as the amount was insignificant. Information about gain on negative goodwill by reportable segments Not applicable The Companies’ primary business activities include (1) Audio Products business, which consists of car audio systems and audio accessories, etc., and (2) Information and Communication Equipment business, which consists of car communications and electronic components. A summary of net sales, costs and expenses, operating income, identifiable assets, depreciation expense, and capital expenditures by business segment for the years ended March 31, 2010 and 2009 were as follows:
32
Millions of Yen Audio products business Information and communication equipment business Elimination and/or corporate
2010
. Sales and operating income Net sales: Outside customers Inter-segment Total Costs and expenses Operating income . Identifiable assets Depreciation expense Capital expenditures
Total
Consolidated
¥ 70,463 567 71,030
¥ 98,123 217 98,340
¥ 168,586 784 169,370 ¥
¥
– (784) (784)
¥ 168,586 – 168,586 ¥
69,933
¥ 1,097 ¥44,136 4,035 2,085
94,506
¥ 3,834 ¥76,156 4,222 2,288
164,439 4,931 ¥120,292
8,257 4,373
Millions of Yen
3,920
¥ (4,704) ¥33,137 95 6
168,359 227 ¥153,429
8,352 4,379
2009
. Sales and operating income Net sales: Outside customers Inter-segment Total Costs and expenses Operating income (loss) . Identifiable assets Depreciation expense Capital expenditures
Audio products business
Information and communication equipment business
Total
Elimination and/or corporate
Consolidated
¥88,409 699 89,108
¥108,258 337 108,595
¥196,667 1,036 197,703
¥
– (1,036) (1,036)
¥196,667 – 196,667
89,441
¥ (333) 5,609 5,323 ¥46,867
112,304
¥ (3,709) ¥ 61,735 4,644 4,831
201,745
¥ (4,042) ¥108,602 10,253 10,154
5,567
¥ (6,603) ¥23,821 83 6
207,312
¥ (10,645) ¥132,423 10,336 10,160
The effects of the changes in accounting policies and procedures on segment information were as follows: (1)As explained in Note 2 (6), effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries adopted the new accounting standard, “Accounting Standard for Measurement of Inventories” (Statement No.9 issued by the Accounting Standards Board of Japan on July 5, 2006). As a result of the adopting the standard, in comparison to the previous accounting method, operating loss on “Audio products business” decreased by ¥34 million and operating loss on “Information and communication equipment business” increased by ¥3million for the fiscal year ended March 31, 2009. (2)As explained in Note 2 (21), effective from the year ended March 31, 2009, the Company adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (Practical Issues Task Force No.18 issued by the Accounting Standards Board of Japan on May 17, 2006) and made the necessary adjustments to the consolidated financial statements. As a result, in comparison to the previous accounting method, operating loss on “Audio products business” decreased by ¥26million and operating loss on “Information and communication equipment business” decreased by ¥42 million for the fiscal year ended March 31, 2009. Geographic area information with respect to net sales, costs and expenses, operating income, and identifiable assets for the years ended March 31, 2010 and 2009 were as follows:
Millions of Yen Elimination and/or corporate
2010
. Sales and operating income Net sales: Outside customers Inter-segment Total Costs and expenses Operating income . Identifiable assets
Japan
North America
Europe
Asia
Other areas
Total
Consolidated
¥34,432 95,441 129,873 128,087 ¥ 1,786 ¥89,254
¥42,081 187 42,268 41,542 ¥ 726 ¥19,664
¥76,919 24,811 101,730 100,607 ¥ 1,123 ¥34,122
¥13,742 25,836 39,578 37,774 ¥ 1,804 ¥29,904
¥1,412 1 1,413 1,259 ¥ 154 ¥ 675
¥168,586 146,276 314,862 309,269 ¥ 5,593 ¥173,619
¥
–
¥168,586 – 168,586 168,359 ¥ 227 ¥153,429
(146,276) (146,276) (140,910) ¥ (5,366) ¥(20,190)
33
Millions of Yen Elimination and/or corporate
2009
. Sales and operating income Net sales: Outside customers Inter-segment Total Costs and expenses Operating income (loss) . Identifiable assets
Japan
North America
Europe
Asia
Other areas
Total
Consolidated
¥32,951 117,477 150,428 156,679 ¥ (6,251) ¥79,655
¥54,951 909 55,860 56,875 ¥ (1,015) ¥16,790
¥91,974 28,454 120,428 121,236 ¥ (808) ¥27,749
¥15,426 42,648 58,074 55,810 ¥ 2,264 ¥26,175
¥1,365 21 1,386 1,314 ¥ 72 ¥ 419
¥196,667 189,509 386,176 391,914 ¥ (5,738) ¥150,788
¥
–
¥196,667 – 196,667 207,312 ¥ (10,645) ¥132,423
(189,509) (189,509) (184,602) ¥ (4,907) ¥(18,365)
The effects of the changes in accounting policies and procedures on segment information were as follows: (1)As explained in Note 2 (6), effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries adopted the new accounting standard, “Accounting Standard for Measurement of Inventories” (Statement No.9 issued by the Accounting Standards Board of Japan on July 5, 2006). As a result of the adopting the standard, in comparison to the previous accounting method, operating loss on “Japan” decreased by ¥31 million for the fiscal year ended March 31, 2009. (2)As explained in Note 2 (21), effective from the year ended March 31, 2009, the Company adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (Practical Issues Task Force No.18 issued by the Accounting Standards Board of Japan on May 17, 2006) and made the necessary adjustments to the consolidated financial statements. As a result, in comparison to the previous accounting method, operating loss on “Europe” decreased by ¥46 million and operating loss on “Asia” decreased by ¥22 million for the fiscal year ended March 31, 2009. The overseas sales by geographic area in 2010 and 2009 were as follows:
Millions of Yen
2010
. Overseas sales . Consolidated sales . Ratio of overseas sales (%)
North America
Europe
Asia
Other areas
Total
¥41,596 24.7%
¥76,927 45.6%
¥17,896 10.6%
Millions of yen
¥1,916 1.2%
¥138,335 168,586 82.1%
2009
. Overseas sales . Consolidated sales . Ratio of overseas sales (%)
North America
Europe
Asia
Other areas
Total
¥54,308 27.6%
¥91,994 46.8%
¥18,555 9.5%
¥2,016 1.0%
¥166,873 196,667 84.9%
Overseas sales consist of export sales by the Company and sales by the overseas consolidated subsidiaries except for their export sales to Japan.
34
Independent Auditors’ Report
To the Board of Directors of ALPINE ELECTRONICS, INC.: We have audited the accompanying consolidated balance sheets of ALPINE ELECTRONICS,INC. and consolidated subsidiaries as of March 31, 2011 and 2010, and the related consolidated statements of operations, changes in net assets and cash flows for each of the three years in the period ended March 31, 2011 expressed in Japanese yen, including the related consolidated statements of operations and comprehensive income for the year ended March 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to independently express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ALPINE ELECTRONICS, INC. and subsidiaries as of March 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2011, in conformity with accounting principles generally accepted in Japan. Without qualifying our opinion, we draw attention to the following: As discussed in Note 2(6) to the consolidated financial statements, effective from the year ended March 31, 2009, ALPINE ELECTRONICS, INC. and domestic consolidated subsidiaries adopted new accounting standard, “Accounting Standard for Measurement of Inventories”. The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2011 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1 to the consolidated financial statements.
Tokyo, Japan June 16, 2011
35
Corporate Data Global Network / Investor Information
Alpine Electronics, Inc. Iwaki Headquarters
20-1, Yoshima-Kogyodanchi, Iwaki, Fukushima 970-1192 Phone: +81-246-36-4111
Tokyo Headquarters
1-1-8, Nishi-Gotanda, Shinagawa-ku, Tokyo 141-8501 Phone: +81-3-3494-1101
Date of Establishment
May 1967
Paid-in Capital
¥25,920 million
Stock Exchange Listing
Tokyo Stock Exchange
Total Issued Stocks
69,784,501 (As of March 31, 2011)
Number of Stockholders
4,852 (As of March 31, 2011)
Number of Employees (Consolidated)
10,835 (As of March 31, 2011)
Alpine on the Internet
http://www.alpine.com/e/investor/
Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation Corporate Agency Department 10-11, Higashisuna 7-chome, Koto-ku, Tokyo 137-8081 Phone: 0120-232-711
The Alps Group
Alpine Electronics, Inc. is a consolidated subsidiary of Alps Electric Co., Ltd., one of the world’s leading manufacturers of electric components. The Alps Group comprises Alps Electric Co.,Ltd., 84 subsidiaries and 8 af?liates; the Group is primarily involved in electronic components, audio equipment, logistics, and other businesses. Alpine is the Alps Group’s specialized supplier of quality car audio and navigation systems.
Alps Electric Co., Ltd.
Alpine Electronics, Inc.
Alps Logistics Co., Ltd.
36
Global Network
? ?? ? ?? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ? ?
? ? ? ?
? Headquarters ? Regional ? Sales
?
? ??
Headquarters
?
??
??
Of?ce ? Manufacturing Plant
? Development
Center
North and Latin America
Europe
Asia and Oceania
Japan
ALPINE ELECTRONICS OF AMERICA, INC. (L.A.)
ALPINE ELECTRONICS OF AMERICA, INC. (DETROIT)
ALPINE ELECTRONICS (EUROPE) GMBH (MUNICH)
ALPINE ELECTRONICS GMBH (STUTTGART)
ALPINE ELECTRONICS (CHINA) CO., LTD. (BEIJING)
TAICANG ALPINE ELECTRONICS CO., LTD.
DALIAN ALPINE ELECTRONICS CO., LTD.
HEADQUARTERS (IWAKI)
ALCOM ELECTRONICS DE MEXICO S.A. DE C.V.
ALPINE ELECTRONICS MANUFACTURING OF EUROPE, LTD. (HUNGARY)
ALPINE ELECTRONICS OF U.K., LTD.
DALIAN R&D CENTER
ALPINE ELECTRONICS OF ASIA PACIFIC CO., LTD (BANGKOK)
ALPINE TECHNOLOGY MANUFACTURING (THAILAND) CO., LTD.
NEUSOFT CORPORATION (SHENYANG)
ALPINE ELECTRONICS MANUFACTURING, INC.
ALPINE ELECTRONICS, INC. Headquarters : IWAKI Headquarters : TOKYO TOCHIGI OFFICE NAGOYA OFFICE Overseas Subsidiaries / Overseas Af?liates North and Latin America ALPINE ELECTRONICS OF AMERICA, INC. ALPINE ELECTRONICS RESEARCH OF AMERICA, INC. ALPINE ELECTRONICS OF CANADA, INC. ALCOM ELECTRONICS DE MEXICO, S.A. DE C.V. ALPINE DO BRAZIL LTDA. Europe ALPINE ELECTRONICS (EUROPE) GMBH ALPINE ELECTRONICS R&D EUROPE GMBH ALPINE ELECTRONICS GMBH
ALPINE ELECTRONICS OF U.K., LTD. ALPINE ELECTRONICS OF AUSTRALIA PTY.LTD. ALPINE ELECTRONICS FRANCE S.A.R.L. NEUSOFT CORPORATION. ALPINE ITALIA S.P.A. ALPINE ELECTRONICS DE ESPAÑA, S.A. ALPINE ELECTRONICS MANUFACTURING OF EUROPE, LTD. ALPINE DISTRIBUTION NETWORK S.P.A. ALDINET ALPINE TECHNOLOGY MANUFACTURING, INC. Asia and Oceania ALPINE ELECTRONICS (CHINA) CO., LTD. ALPINE ELECTRONICS (CHINA) CO., LTD. (DALIAN R&D CENTER) DALIAN ALPINE ELECTRONICS CO., LTD. ALPINE CUSTOMERS SERVICE CO., LTD. TAICANG ALPINE ELECTRONICS CO., LTD. ALPINE KYOTO SALES, INC. ALPINE ELECTRONICS HONG KONG, LTD. ALPINE HYOGO SALES, INC. ALPINE ELECTRONICS OF ASIA PACIFIC CO.,LTD. TOSHIBA ALPINE AUTOMOTIVE TECHNOLOGY, INC. ALPINE OF ASIA PACIFIC INDIA PVT.LTD. ALPINE TECHNOLOGY MANUFACTURING (THAILAND) CO., LTD. ALPINE INFORMATION SYSTEM, INC. ALPINE BUSINESS SERVICE, INC. ALPINE PRECISION, INC. ALPINE GIKEN, INC. Domestic Subsidiaries / Domestic Af?liates ALPINE ELECTRONICS MARKETING, INC. ALPINE ELECTRONICS MANUFACTURING, INC.
37
Iwaki Headquarters: 20-1, Yoshima-Kogyodanchi, Iwaki, Fukushima 970-1192 Phone: +81-246-36-4111 Fax: +81-246-36-8309 Tokyo Headquarters: 1-1-8, Nishi-gotanda, Shinagawa-ku, Tokyo 141-8501 Phone: +81-3-3494-1101 Fax: +81-3-3494-1109
doc_807208105.pdf
The report for the financial year 2011 - 2012 of alpine.
VIE-X088(for the Japanese market)
Annual Report 2011-2012
For the year ended March 31, 2011
Message from the President
Dear Shareholders,
First of all, I would like to convey my sincere condolences to all victims of the recent TohokuPaci?c Ocean Earthquake. We have of fices and factories in Iwaki City in Fukushima Prefecture. Although some of our buildings were damaged and production lines overturned, all of our employees escaped unharmed. However, some of our employees’ homes were tragically damaged by the tsunami and some lost family members. Immediately after the disaster, life-lines were cut off, forcing us to stop operations for two weeks, but our employees worked hard to restore our production plans and work areas as quickly as possible, as did city officials to restore local infrastructure. We are deeply grateful for the generous assistance and cooperation of many people which helped us to resume operations on March 28 and I would like to take this opportunity to thank them all. Af ter resuming operations, par ts procurement problems appeared, but the entire company tackled this dilemma to maintain our supplies to our clients. However, I believe that unpredictable circumstances such as the problem of parts procurement, adjustments to production by auto makers, and so on will continue for some time. Turning to the global market environment, the U.S., which is one of our company's most important markets, is showing trends of recovery. And Chinese market continues strong sales of medium class and luxury class cars. Those are all bright signs indicative of improved business performance. I am afraid that the aftermath of the earthquake will have some impact on this trend, but we are working hard to normalize our production activities and expand our business. I think that this disaster will lead to a demand for products incorporating environmental technologies to achieve lower electric power consumption or lighter weight etc., and further evolve and expand the use of electronics in in-car equipment. Our company will promote growth strategies which have been undertaken in the past integrating functions of in-car equipment, for example, through links with smart phones, and providing drivers with new levels of safety and comfort represented by ITS. And in the growing Chinese market, our business scale has been growing steadily as we have aggressively pursued orders from auto makers inside China. We are striving to enhance our competitive strength by aggressively pursuing development, procurement and production inside China, to expand our business in growing markets including China. We have experienced an unprecedented disaster, but our company has united to overcome this dif?cult situation, and based on this experience, will gain new con?dence and grow even faster as a global Mobile Media Solution Company. I humbly ask you, our shareholders, to continue to give us your strong support and encouragement as in the past. June, 2011
Toru Usami President & CEO
2
For The Restoration
Impact of the Earthquake and Tsunami in Northeast Japan
Damage and Losses
Injuries
None of Alpine’s 3,187 employees were injured during the earthquake and tsunami
Damage
Property damage
• Some damage to buildings (fallen ceilings, cracks in walls) • Production lines and component shelving overturned
Infrastructure
• Water supply interrupted. Returned to normal on March 25. • Residential areas where employees live were without water until mid-April
Iwaki Of?ce
• Production halted for two weeks after the earthquake because of infrastructure damage (water supply stoppage, lack of materials) • Returned to normal operation on March 28 • Production partially resumed on March 22 • Full return to normal operation on March 28
Restart
Plant
Extraordinary losses
Losses
(reported in the financial statements for the fiscal year that ended March 31, 2011)
Approximately 1.5 billion yen • Repairs to damaged structures and facilities • Fixed costs incurred while operations were halted
Solder splashed from solder tank
Overturned production line
Damage to component shelving
After restoration (Alpine Precision, Inc.)
After restoration (Alpine Electronics Manufacturing, Inc.)
3
Consolidated Financial Highlights
Years ended March 31, 2009, 2010 and 2011
millions of yen
thousands of U.S.Dollars
2009 For the year: Net sales Overseas Sales Operating income Net income Net cash provided by operating activities Free cash ?ow Capital expenditures R&D expenses ROA (Return on assets) (%) ROE (Return on equity) (%) Amounts per share of common stock: Net income(loss) (¥) Dividends from surplus applicable to the year (¥) At year-end: Total net assets Total assets 96,874 132,423 (133.17) 10.00 ¥196,667 166,873 (10,645) (9,291) 10,680 (2,170) 10,160 28,266 (6.2) (8.8)
2010 ¥168,586 138,335 227 (1,250) 9,859 5,896 4,379 20,589 (0.9) (1.3) (17.92) 0.00 97,036 153,429
2011 ¥201,257 165,972 11,155 6,030 14,371 10,021 4,882 19,512 3.9 6.2 86.43 20.00 98,760 153,784
2011 $2,420,409 1,996,055 134,155 72,520 172,832 120,517 58,713 234,660 3.9 6.2 1.04 0.24 1,187,733 1,849,477
Notes: 1. The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2011, which was ¥83.15 to U.S.$1. 2. R&D expenses include labor cost and other expenses reported as cost of sales. 3. Effective from the year ended March, 2011, the Company and its consolidated subsidiaries adopted the Accounting Standard of Presenation of Comprehensive income (Accounting Standards Board of Japan Statement No.25, June 30, 2010).
Net Sales
(Billions of yen)
Operating Income
(Billions of yen)
11.2
196.7
168.6
201.3 -10.6 0.2
2009
2010
2011 2009 2010 2011
Net Income
(Billions of yen)
Total Assets
(Billions of yen)
6.0 -9.3 -1.3 132.4 153.4 153.8
2009
2010
2011
2009
2010
2011
4
Operational Review
Operational Review
Audio Products
In Japan, sales of high-end speaker systems targeting minivan owners were strong, but head unit sales were diminished by price competition, resulting in ?at growth overall. In North America, sales of popularly priced CD players were healthy, but strong priceconsciousness among consumers created a tough environment for higher value-added products. In the European market, sound system sales, primarily of high quality speakers, were strong, but sales of Bluetooth-equipped CD players shrank in the face of severe price competition. OEM sales to automakers improved as major customers recovered from Lehman Shock and increased production. Sales in both Europe and North America were strong, and sales in China showed healthy growth. As a result of all these factors, sales in this division totaled 69.8 billion yen (down 0.8% year-on-year).
Information and Communications Products
In Japan, our BIG-X car navigation system offered an 8-inch screen, the largest on the market, improved maps, and simpler operation. Filling out our car navigation line-up, we added the X08S to the highly acclaimed X08 series and introduced the X05, a ?ash memory equipped model offering exceptional cost performance. Sales of our “Perfect Fit” installation kits tailored to the aesthetics of specific car models and of camera systems connected to car navigation systems to enhance driving safety were healthy. To strengthen sales, TV commercials were developed. In North America, our popularly priced car navigation systems introduced in the last fiscal year encountered stiff price competition, but their outstanding features won high marks from consumers. The popularly priced car navigation systems introduced in Europe posted healthy sales. In the OEM sector, the installation ratio of our cabin display products gradually recovered. Sales of highend multifunction navigation systems often installed in luxury cars increased, supported by the recovery of luxury and large car sales in North America and the rapid growth of mid-sized and luxury car sales in China. As a result, this division’s sales reached 131.3 billion yen (a 33.9% increase, year-on-year).
Sales by region
?100 million yen? (100 million yen)
Sales by segment
1,313
1200
906
800
?769? 1000 ?981?
600
800
500
?416? 400 ?302? 600
?704? 698
353
400 ?198?
221
200
200
0 0
America Europe Japan Other Asia
( )=2009FY
Audio products segment
Information and communication products segment
5
Growth Strategies
Safe, Comfortable, Green, and Convenient Mobility
Today, drivers control multiple sets of information from the cockpit. These include both car and traffic-related information and on-board entertainment systems. We believe that reducing the burden on the driver of controlling all that information will contribute to a safer motoring experience. We are addressing this issue through Alps Electric Co.,Ltd. and TAA (Toshiba Alpine Automotive Technology Corporation), a joint venture between Alpine and Toshiba. Both partners are contributing technologies to develop high-value-added automotive information centers that meet diverse customer needs, with particular focus on driver-centered systems that optimize information display and control in the cockpit.
Heads-up displays
Input devices, sensors Communications modules ALPS
Center displays
Alpine System Integration
Support for Safety and Comfort
TAA
HMI Information Management
Toshiba Alpine Automotive
Display devices Heads-up displays
*HMI: Human Machine Interface
Meter displays
Towards Cockpit HMI Integration
Implementing Growth Strategies
Link Strategy
The spread of smart phones has increased demand for links between smart phones and on-board, in-cabin automotive systems. Alpine is pursuing a strategy of linking on-board systems with mobile IT devices, smart phones and tablet-type PC's. In North America, we were among the ?rst to offer a dedicated head unit supporting the Internet music application, Pandora. Along with major automakers, we are founding members of the consortium promoting Nokia’s new Terminal Mode standard. Our goal is to supply on-board information centers, high value-added products, that connect with the Internet.
Car navigation systems linked with smart phones
AVNCD Strategy
Intelligent Transportation Systems (ITS) for the nation’s expressways is a national priority in Japan. Service has already begun in several locations. ITS roadside sensors have been installed at 1,600 locations, and the data they provide is used by next-generation ITS-compatible car navigation systems to support safer driving and provide dynamic route guidance. Since bandwidth is much larger than that provided by existing VICS systems, a wider variety of data can be supplied. Thus, for example, images can be used to illustrate traf?c congestion information. Alpine is aggressively developing ITS-related technologies that offer new business opportunities, providing Internet access at service areas and making possible online transactions.
Next-generation vehicle with on-board ITS
Green Strategy
Alpine is contributing to improved fuel efficiency by providing lighter products that consume less electricity. We are also focusing on the development of car navigation systems that can reduce waste by providing optimal routing guidance, light, compact amplifiers that use less power, and rare-earth-free speakers that use no rare earths at all. With soaring prices for rare earths, minimizing their use is not only environmentally friendly but also will enhance the price competitiveness of Alpine products.
6
A rare-earth-free speaker
Operational Review Topics
Perfect Fit Makes BIG-X a Triple Award Winner
Display is
43%larger
than our 7" models.
Earlier model
BIG-X X008
Alpine’s BIG-X, the first consumer car navigation system to offer an 8-inch display, is a triple-award winner. Selected for Japan’s Daily Auto News’ Grand Prize for Accessories, 2010, it was also awarded the Auto Sound Grand Prix 2010 by Car Audio and Auto Sound magazines. BIG-X won high praise not only for its large, high-de?nition screen, but also for its “live” sound quality. It was the ?rst all-in-one car navigation system to be awarded Auto Sound’s grand prix. In addition, because BIG-X is equipped with an 8-inch display, separate versions had to be developed to fit the center console panels of different car models. Alpine’s highly praised Perfect Fit system set new industry standards by supplying customers with
both optimal installation and customizable sound. In recognition of this achievement, it was selected as Car Goods Magazine’s Car Goods of the Year 2010. BIG-X met consumer needs for better visibility with the larger screen, increased ease of use, and enjoyment of high definition digital TV, resulting in a 30% increase in car navigation unit sales in Japan. Fiscal 2011 also saw the introduction of the new Perfect Fit series to ensure a beautiful ?nish of installation like OEM systems. New system solution approach with rear-view cameras and rear seat entertainment systems along with "Perfect Fit" differentiates Alpine from other companies.
Alps/Alpine Technology Exhibition
From November of last year to March of this year, Alpine and Alps joined together to present cutting-edge technology proposals to major automakers. This technology exhibition differed from earlier exhibitions in adopting a workshop format to invite only automaker key personnel, a targeting strategy that facilitated vigorous communication between presenters and visitors. The technologies presented were divided into ?ve categories: HMI, AVNC, LINK, DA and ECO. Teams from both Alps and Alpine worked together to present proposals that highlighted the strengths of the group as a whole. The star of the show was the HMI Cockpit jointly presented by Alps, Alpine, and Toshiba Alpine Automotive Technology. Other exhibits were linked to current market trends. Alpine will continue to use technology exhibitions to present advanced technologies to our customers, understand their needs, and lay the foundations for new business.
*HMI: Human Machine Interface; AVNC: Audio Visual Navigation Communication; DA: Drive Assist
Invitation to the technology exhibition
7
China and Other Emerging Markets
In China, which has now surpassed the U.S.A. as the world’s largest new car sales market, Alpine established an R&D center in Dalian in 1996. We now have two plants and six sales offices in China. On the R&D front, our strong partnership with Neusoft, China’s No. 1 provider of IT solutions, enhances our competitive edge in quick delivery of high-quality, cost-effective solutions to our customers. We have embraced a designed-in-market, made-in-market policy and are building a fully integrated production and sales operation in China. A pillar for our Chinese operation is our business with current Japanese and European automakers in China, while also aggressively pursuing business from local Chinese automakers. Our goals include growing our business by creating leading edge products and solidifying a strong brand position in the local consumer market.
?Alpine sales of?ce ?Alpine manufacturing plant ?Alpine development center ?Changchun ?Shenyang ??Dalian ?Beijing
?Chengdu
??Shanghai, Taicang
?Wuhan
?Guangzhou
Alpine’s expansion into China
Brand-building by Participation in Global Events
Alpine exhibited its products at the Tokyo Auto Salon 2011 with NAPAC, a custom car event held from January 14-16, 2011, showcasing its BIG-X car navigation system with a display 1.43 times bigger than earlier models. To reinforce our brand image and reputation for technological capability in China, now the world leader in annual new car sales, we also participated in the April 19-21 Shanghai Motor Show. In addition to the first demonstration car equipped with a top-view camera for the consumer market, our exhibits included a variety of OEM products.
Alpine booth at Tokyo Auto Salon
Alpine booth at Shanghai Motor Show
Appreciation Award
This award expresses Honda’s appreciation of our continuing effort to improve our performance in the pricing category, in recognition of our efforts to develop new technologies and secure new business in the face of stiffening price competition.
Plaque commemorating the award from Honda
No. 1 in Prestigious Customer Satisfaction Survey
Continuous and meticulous quality improvement is a top priority at Alpine. In a recent questionnaire survey conducted by one of North America s most renowned survey research firms, our CD player was rated No. 1. But for us this is only the next step in an ongoing pursuit of manufacturing quality and customer satisfaction.
8
Dalian-Fukushima, Industry-University Personnel Development Project
Alpine has inked an agreement with Aizu University in Japan and the Dalian Neusoft Institute of Information in China to develop a new IT Personnel Development Project. This program will allow outstanding students from the Dalian Neusoft Institute to receive training in advanced IT technology and Japanese language skills at Aizu University, then continue their training during internships at Alpine. This program meets a growing need for individuals who can serve as bridges between Japan and China, at a time when business and social exchanges between the two countries are ?ourishing. By promoting the training and employment of outstanding individuals who understand the cultures and business environments of both China and Japan, local partnerships between businesses and universities like this one contribute to the globalization of both countries. They also contribute to growing our business in China as a key dimension of our growth strategy.
Receiving exchange students • IT training Dalian • Language training
?
Aizu-Wakamatsu ? Internships Alpine?
• Employment
Personnel development tie-up among three institutions
Promoting Local CSR
In fiscal 2010, Alpine subsidiary, Alpine Giken was awarded the Fukushima Governor’s Prize for its contributions to Fukushima Protocol efforts to combat global warming. This prize was given in recognition of efforts that included environmental investments in energy-saving air conditioning and LED lighting, together with a “Turn It Off” program to encourage each and every employee to turn off electrical switches when equipment is not in use. The result was a reduction in carbon dioxide emissions by more than 10% year-onyear. In addition, many of our group employees pitched in as volunteers in rescue and recovery efforts following the earthquake and tsunami on March 11. These are only two examples of our company’s continuing effort to build closer ties with our local communities and contribute to their revival.
Then Alpine Giken former President Sakai receives an award from Fukushima Governor Sato
9
Directors and Auditors
Seizo Ishiguro Chairman
Toru Usami President & CEO
Hirofumi Morioka Managing Director
Shigekazu Hori Managing Director
Hitoshi Kajiwara Managing Director
Seishi Kai Managing Director
(As of July 2011)
Chairman President & CEO Managing Directors Directors
Seizo Ishiguro Toru Usami Hirofumi Morioka Hitoshi Kajiwara Masataka Kataoka Toshinori Kobayashi Naoki Mizuno Toji Tanaka Hideo Kojima Shigekazu Hori Seishi Kai Satoshi Soma Koichi Endo Kaname Kurashima Taisuke Yonemori
Auditors
10
Financial Section
Financial Highlights Consolidated Financial Review Consolidated Balance Sheets 12 14 16
Consolidated Statements of Operations 18 and Comprehensive Income Consolidated Statements of Changes in Net Assets Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Independent Auditors’ Report 19 20 21 35
11
Financial Highlights
Millions of Yen,unless stated otherwise
2001
2002
2003
2004
2005
2006
For the year:
Net sales (Overseas Sales) Operating income(loss) Net income(loss) Comprehensive income Net cash provided by operating activities Free cash flow Depreciation Capital expenditures R&D expenses ROA (Return on assets) (%) 181,615 129,522 4,445 3,284 – 1,921 (3,602) 5,385 6,307 12,628 2.7 5.4 196,092 157,032 7,022 3,914 – 15,728 8,513 5,552 6,808 14,718 2.8 5.6 222,367 177,017 12,306 6,138 – 14,389 6,290 5,723 8,218 17,644 4.1 8.3 213,020 170,984 11,320 7,253 – 10,491 3,021 6,496 8,940 19,144 4.9 9.4 222,779 180,828 10,148 7,932 – 12,472 3,229 7,332 10,402 22,438 5.3 9.4 253,983 215,281 9,671 6,175 – 12,887 3,032 8,616 10,778 28,695 3.8 6.2
ROE (Return on equity) (%)
At year-end:
Current assets Total Property, plant and equipment Current liabilities Noncurrent liabilities Capital stock Retained earnings Total shareholders' equity Total net assets Total assets Equity ratio (%)
85,046 23,649 53,094 6,403 19,928 26,002 67,145 – 127,772 52.6
102,396 22,466 55,754 17,944 19,928 29,247 72,467 – 147,412 49.2
106,180 22,898 58,669 15,869 20,012 34,393 74,738 – 150,230 49.8
99,031 22,714 48,681 15,534 20,026 40,500 80,336 – 145,127 55.4
105,372 25,544 50,826 15,807 20,360 47,275 88,830 – 156,507 56.7
109,910 27,647 52,173 5,004 25,921 52,213 110,782 – 169,553 65.3
Amounts per share of common stock:
Net income(loss) (¥) Diluted net income (¥) Dividends from surplus applicable to the year (¥) Shareholders' equity (¥) 56.40 54.60 10.00 1,106.38 64.49 – 12.50 1,194.19 99.78 86.86 17.50 1,227.79 117.94 102.85 17.50 1,319.41 128.97 112.58 20.00 1,446.99 91.71 88.35 20.00 1,587.05
Notes: 1. R&D expenses include labor and other expenses reported as cost of sales. 2. Effective from the year ended March 31, 2007, the Company and its consolidated subsidiaries adopted the new accounting standard for presentation of net assets ("Accounting Standard for Presentation of Net Assets in the Balance Sheet and its Implementation Guidance" issued by the Business Accounting Deliberation Council on December 9, 2005). 3. Effective from the year ended March, 2011, the Company and its consolidated subsidiaries adopted the Accounting Standard of Presenation of Comprehensive income (Accounting Standards Board of Japan Statement No.25, June 30, 2010).
12
Thousands of U.S.Dollars
2007
2008
2009
2010
2011
2011
For the year:
Net sales (Overseas Sales) Operating income(loss) Net income(loss) Comprehensive income Net cash provided by operating activities Free cash flow Depreciation Capital expenditures R&D expenses ROA (Return on assets) (%) 265,055 228,379 10,110 5,729 – 16,399 4,512 9,326 12,620 30,347 3.3 5.0 252,072 219,056 7,012 3,554 – 9,963 (4,138) 10,655 13,673 29,337 2.0 3.0 196,667 166,873 (10,645) (9,291) – 10,680 (2,170) 10,336 10,160 28,266 (6.2) (8.8) 168,586 138,335 227 (1,250) – 9,859 5,896 8,352 4,379 20,589 (0.9) (1.3) 201,257 165,972 11,155 6,030 2,383 14,371 10,021 7,442 4,882 19,512 3.9 6.2
2,420,409 1,996,055 134,155 72,520
28,659
172,832 120,517 89,501 58,713 234,660 3.9 6.2
ROE (Return on equity) (%)
At year-end:
Current assets Total Property, plant and equipment Current liabilities Noncurrent liabilities Capital stock Retained earnings Total shareholders' equity Total net assets Total assets Equity ratio (%)
114,938 30,090 53,763 6,514 25,921 57,344 – 120,908 181,185 65.7
103,756 32,851 48,265 3,255 25,921 58,592 – 116,265 167,785 68.5
75,134 28,903 30,499 5,050 25,921 47,839 – 96,874 132,423 72.4
96,185 25,875 39,306 17,087 25,921 46,550 – 97,036 153,429 62.7
102,931 22,042 42,183 12,841 25,921 51,797 – 98,760 153,784 63.7
1,237,896 265,087 507,312 154,432 311,738 622,935 – 1,187,733 1,849,477 63.7
Amounts per share of common stock:
Net income(loss) (¥) Diluted net income (¥) Dividends from surplus applicable to the year (¥) Shareholders' equity (¥) 82.12 – 25.00 1,706.54 50.95 – 25.00 1,646.38 (133.17) – 10.00 1,374.95 (17.92) – 0.00 1,379.61 86.43 – 20.00 1,403.69
1.04 – 0.24 16.88
13
Consolidated Financial Review
During the fiscal year ended March 31, 2011, the world economy saw favorable demand trends in emerging economies, particularly in Asia. However, in Europe, the recovery in the German economy was offset by the recurrence of financial instability in certain countries and economic conditions remain patchy in this region. Meanwhile in the United States, although some economic indicators continue to improve, uncertainty still hangs over the future and the overall economic climate continues to be severe. The automobile industry saw a modest recovery in new vehicle sales with China, spurred by ongoing economic growth, maintaining its place as the leading country in terms of unit sales of new cars for the second year running, and the symbolic relisting of General Motors taking place on the New York Stock Exchange. The industry in Europe was buoyed by robust exports by German manufacturers of luxury cars. In Japan, sales of new cars, which had been firm owing to government subsidies for purchases of environment-friendly cars, dropped precipitously in the second half of the year in the wake of the termination of this support. The car electronics industry experienced major changes in its market, with sales of portable navigation devices (PNDs) falling in line with the spread of smartphones and tablet PCs. Domestic after-market sales of navigation systems were as a consequence of the increase in new-vehicle sales. But demand for home electronics fell in the second half of the year following the withdrawal of subsidies under the “eco-point” system, and demand for car electronic products was also hit by this shift. In Europe, however, factory installation rates for navigation systems and displays saw gradual recovery as demand is apparently shifting back toward mid-sized luxury and large vehicles following the trend for compact cars after the Lehman shock. In this environment, Alpine launched three new navigation systems in the domestic aftermarket and sought to raise product appeal and expand sales by proposing “vehicle-specific car-life solutions.” In addition, to secure business growth in the expanding Chinese market, Alpine worked to enhance brand recognition by participating in the Beijing Motor Show, and began supplying products suited for local automakers. Meanwhile, although yen appreciation, coupled with tight supplies for in-vehicle-use display panels, pushed up the cost of parts and materials, we worked to improve operating performance by continuously promoting our “CHALLENGE 30+ (Plus)” program of structural reforms launched in the previous fiscal year.
Overseas Sales
(Millions of Yen)
228,379
219,056 166,873 138,335 165,972
2007 2008 2009 2010 2011
Capital Expenditures
(Millions of Yen) 13,673 12,620 10,160
Performance by Segment
Audio Products
In the Audio Products segment, we carried out aggressive proposal-based marketing in the domestic after-market of high-end speakers and amplifiers for minivans with clear cabin audio reproduction, leading to strong sales. However, intensified price competition contributed to flat sales of head units such as CD players. Sales of affordably priced CD players were firm in the North American market but amid users’ greater appetite for low prices, high-added-value products such as head units that can be linked to Pandora Internet radio via smartphones, experienced harsh selling conditions. In the European market, sound system products with upgraded cabin audio quality centered on high-grade speakers posted steady sales, although in step with severe price competition Bluetooth-enabled CD players saw a sluggish market and sales dropped. Sales of OEM products to automobile manufacturers increased in line with recovering production and sales in Europe and the United States of new automobiles by major customers, as well as robust demand in the Chinese market. As a result of the above factors, sales by the Audio Products segment during the term decreased by 0.8% compared to the corresponding period of the previous fiscal year, to ¥69,898 million (US$840.6 million).
4,379 4,882
2007 2008 2009 2010 2011
Total Assets/Net Assets
(Millions of Yen)
181,185
167,785 153,036 153,784 132,423 96,874 97,036 98,760
Information and Communication Equipment Segment
In this segment, in the domestic after-market, we sought to strengthen our navigation line-up by launching the X05, which has on-board flash memory and offers superior cost performance, adding to the “Big X”, which received a 2010 product Grand Prix from automotive industry trade publication Nikkan Jidosha Shimbun, with its 8-inch screen (the largest on the after-market) making maps and text easier to read and with a touch panel for improved operating convenience, and the X08S car navigation system, successor to the X08, which earned acclaim in the preceding fiscal year. Further, in anticipation of lower new vehicle sales following the termination of government subsidies for purchases of environmentfriendly cars, we also worked to expand the number of car models that can adopt our “perfect fit” series, which is attractively fitted to individual car models. Also, firm sales of a camera system that links to a vehicle’s navigation system to support driving safety contributed to expanded sales in the segment. In addition, in an effort to increase sales we aired a television
120,908 116,265
2007 2008 2009 2010
Total Assets Net Assets Net Assets for the years from 2006 is recalculated.
2011
14
commercial to stimulate consumer spending. Sales of our affordably priced navigation systems that were newly launched into the North American market were strong, thanks to customer appreciation of the superior functionality, despite being affected by increasingly severe price competition. In Europe, sales of integrated products were lower due to the impact of worsening market conditions, but sales of affordably priced navigation systems introduced during the term were robust. In OEM products to automobile manufacturers, installation rates of in-cabin display products contributed to increased unit sales. Such sales were also boosted by a continuing recovery in production and sales of large and high-end vehicles in North America, which have high installation rates for highly functional products such as navigation systems, and favorable sales of high-end new vehicles by European manufacturers in the Chinese market. As a result of the above factors, segment sales increased by 33.9% year on year, to ¥131,359 million (US$ 1,579.8 million). The number of consolidated subsidiaries is 27 companies, with 8 companies in Japan and 19 overseas. The number of companies accounted for by the equity method at the end of the fiscal year is 1.
Cash Flows
(Millions of Yen)
16,399
14,371 9,963 10,680 9,859 5,896 10,021
4,512
(2,170) (4,138) 2007 2008 2009 2010 2011
Net cash provided by operating activities Free Cash Flow
Investment
Capital expenditures decreased by 11.5% to ¥4,882 million (US$58.7 million). By segment, investment in the Audio Products business totaled ¥2,012 million (US$24.2 million), and that in the Information and Communication Equipment business amounted to ¥2,864 million (US$34.4 million). R&D expenses decreased by 5.2% to ¥19,512 million (US$234.7 million). R&D expenses amounted to 9.7% of net sales, down 2.5 percentage points.
Return on Equity/Return on Assets
(%)
Cash Flows
5.0 3.0 3.3 2.0 (0.9) (6.2) (1.3)
6.2 3.9
For the fiscal year under review, cash and cash equivalents at the end of the period totaled ¥43,884 million (US$527.8 million), a increase of ¥4,040 million (US$48.6 million), or 10.1%, compared with the previous fiscal year-end.
Cash flows from operating activities
Net cash provided by operating activities amounted to ¥14,371 million (US$172.8 million), an increase of 45.8%. This was mainly the result of inflows provided by Income before income taxes and minority interests of ¥8,510 million (US$102.3 million), depreciation and amortization of ¥7,442 million (US$89.5 million), increase in notes and accounts payable-trade of ¥1,424 million (US$17.1 million), increase in notes and accounts receivable-trade of ¥1,395 million (US$16.8 million), and increase in inventories of ¥5,010 million (US$60.3 million),.
(8.8) 2007 2008 2009 2010 2011
Return on Equity Ruturn on Assets
Cash flows from investing activities
Net cash used in investing activities was ¥4,350 million (US$52.3 million), up 9.8% compared with the previous fiscal year. Principal components were payments for the purchase of property, plant and equipment of ¥3,708 million (US$44.6 million) and for the purchase of intangible assets of ¥1,255 million (US$15.1 million).
Cash Dividends
(¥) 25.0 25.0 20.00
Cash flows from financing activities
Net cash used in financing activities totaled ¥5,411 million (US$65.1 million), compared to the net cash provided with ¥8,150 million in the previous fiscal year. The principal component was repayment of long-term loans payable of ¥4,602 million (US$55.3 million) and payment of cash dividends of ¥698 million (US$8.4 million).
Financial Position
10.0
Total assets at the end of the year increased by 0.2% to ¥153,784 million (US$1,849.5 million), due to an increase in cash and cash equivalents, inventories, and due to a decrease in property, plant and equipment, and investments. As a result of the increase in retained earnings and decrease in valuation difference on available-for-sale securities and in foreign currency translation adjustment, total net assets increased by 1.8% to ¥98,760 million (US$1,187.7 million). The equity ratio increased by 1.0 percentage points to 63.7%. Return on equity was 6.2%. Return on assets was 3.9%.
0.0 2007 2008 2009 2010 2011
15
ALPINE ELECTRONICS, INC.
Consolidated Balance Sheets
March 31, 2011 and 2010 Millions of Yen Thousands of U.S. Dollars(Note 1)
ASSETS Current assets: Cash and cash equivalents Notes and accounts receivable-trade : Unconsolidated subsidiaries and affiliates Trade Allowance for doubtful accounts Inventories (Note 4) Deferred tax assets (Note 9) Other Total current assets
2011
2010
2011
¥ 43,884
¥ 39,844
$ 527,769
730 27,462 (249) 21,480 2,062 7,562 102,931
1,191 27,100 (350) 17,748 1,546 9,106 96,185
8,779 330,271 (2,995) 258,329 24,799 90,944 1,237,896
Property, plant and equipment Land Buildings and structures Machinery, equipment and vehicles Lease assets Construction in progress 4,811 22,818 65,018 288 173 93,108 Accumulated depreciation Total property, plant and equipment (71,066) 22,042 4,997 23,321 65,946 385 837 95,486 (69,611) 25,875 57,859 274,420 781,936 3,464 2,080 1,119,759 (854,672) 265,087
Investments and other assets: Investments in subsidiaries and affiliates (Note 3) Investments (Note 3) Deferred tax assets (Note 9) Other Total investments and other assets 8,976 12,632 342 6,861 28,811 9,200 13,268 464 8,437 31,369 107,949 151,918 4,113 82,514 346,494
¥153,784
See accompanying notes
¥153,429
$1,849,477
16
Millions of Yen
Thousands of U.S. Dollars(Note 1)
LIABILITIES AND NET ASSETS Current liabilities: Short-term loans payable (Note 5) Notes and accounts payable-trade : Unconsolidated subsidiaries and affiliates Trade Income taxes payable Accrued expenses Deferred tax liabilities (Note 9) Provision for product warranties Other Total current liabilities ¥
2011
2010
2011
48
¥
43
$
577
774 20,513 1,018 10,083 196 4,777 4,774 42,183
1,476 21,447 601 9,045 – 3,917 2,777 39,306
9,309 246,699 12,243 121,263 2,357 57,450 57,414 507,312
Noncurrent liabilities: Long-term loans payable due after one year (Note 5) Provision for retirement benefits (Note 7) Provision for directors' retirement benefits Deferred tax liabilities (Note 9) Other Total noncurrent liabilities 5,400 735 616 4,629 1,461 12,841 10,002 659 642 4,953 831 17,087 64,943 8,840 7,408 55,670 17,571 154,432
Contingent liabilities (Note 6)
Net Assets (Note 8): Capital stock: Authorized —160,000,000 shares Issued Capital surplus Retained earnings Treasury stock — 69,784,501 shares 25,921 24,906 51,797 (28) 25,921 24,906 46,550 (29) 311,738 299,531 622,935 (337)
Valuation difference on available-for-sale securities Revaluation reserve for land Foreign currency translation adjustment
4,839 (1,311) (8,195)
5,260 (1,395) (4,964)
58,196 (15,767) (98,557)
Minority interests
831
787
9,994
Total net assets
98,760 ¥153,784
97,036 ¥153,429
1,187,733 $1,849,477
See accompanying notes
17
ALPINE ELECTRONICS, INC.
Consolidated Statements of Operations and Comprehensive Income
Years ended March 31, 2011, 2010 and 2009 Millions of Yen Thousands of U.S. Dollars(Note 1)
2011 Net sales (Note 13) Costs and expenses (Note 13): Cost of sales Selling,general and administrative expenses Operating income(loss) (Note 13) Other income (expenses): Interest and dividends income Interest expenses Foreign exchange gains (losses) Equity in earnings of affiliates Loss on sales and retirement of noncurrent assets Gain on sales of investment securities Loss on valuation of investment securities Gain on sales of subsidiaries and affiliates' stock Prior compensation expense for products Provision for product warranties Gain on settlement and/or valuation of option Loss on valuation of inventories Gain on exchanges of land use rights Loss on valuation of noncurrent assets Loss on abolishment of retirement benefit plan Loss on disaster (Note 12) Other Income(loss) before income taxes and minority interests Income taxes (Note 9): Current Deferred Income(loss) before minority interests Minority interests in loss (income) Net income(loss) Minority interests in income Income before minority interests Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Share of other comprehensive income of associates accounted for using equity method Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of the parent Comprehensive income attributable to minority interests ¥201,257 158,801 31,301 190,102 11,155 494 (198) (1,253) 950 (102) – (3) 4 (51) (103) 102 – – – (513) (1,555) (417) (2,645) 8,510 2,501 (85) 2,416 6,094 (64) 6,030 64 6,094 (380) (2,857) (474) (3,711) ¥ 2,383 2,378 5
2010 ¥168,586 140,149 28,210 168,359 227 444 (150) (628) 1,358 (344) – (233) – (434) – 128 – 224 – – – (580) (215) 12 1,226 66 1,292 (1,280) 30 (1,250) – – – – – – – – –
Yen
2009 ¥196,667 171,519 35,793 207,312 (10,645) 752 (122) 3,528 1,143 (343) 118 (52) – – – 2,578 (1,091) – (493) – – 592 6,610 (4,035) 30 5,103 5,133 (9,168) (123) (9,291) – – – – – – – – –
2011 $2,420,409 1,909,814 376,440 2,286,254 134,155 5,941 (2,381) (15,069) 11,425 (1,227) – (36) 48 (613) (1,239) 1,227 – – – (6,170) (18,701) (5,015) (31,810) 102,345 30,078 (1,022) 29,056 73,289 (769) 72,520 769 73,289 (4,570) (34,360) (5,700) (44,630) 28,659 28,599 60
U.S.Dollars(Note 1)
¥
¥
$
2011 Amounts per share of common stock: Net income(loss) Diluted net income Dividends from surplus applicable to the year
See accompanying notes
2010 ¥(17.92) – 0.00
2009 ¥(133.17) – 10.00
2011 $1.04 – 0.24
¥86.43 – 20.00
18
ALPINE ELECTRONICS,INC.
Consolidated Statements of Changes in Net Assets
Years ended March 31,2011,2010 and 2009 Millions of Yen Valuation difference on available–for– sale securities Revaluation reserve for land Foreign currency translation adjustment
Capital stock
Capital surplus
Retained earnings
Treasury stock
Minority interests
Total net assets
Balance at March 31, 2008 Net income(loss) Effect of changes in accounting policies applied to foreign subsidaries Purchase of treasury stock Disposal of treasury stock Dividends from surplus (¥25.0 per share) Other Balance at March 31, 2009 Net income(loss) Change in retained earnings of foreign subsidiaries by US GAAP applied new accounting policies Purchase of treasury stock Disposal of treasury stock Other Balance at March 31, 2010 Net income(loss) Reversal of revaluation for land Purchase of treasury stock Disposal of treasury stock Dividends from surplus (¥10.0 per share) Other Balance at March 31, 2011
25,921
24,906
58,592 (9,291) 282
(31)
4,753
(1,395)
2,112
1,407
116,265 (9,291) 282
(0) (0) (1,744) 0 ¥25,921 ¥24,906 (0) ¥47,839 (1,250) (39) (1) (1) 1 ¥25,921 ¥24,906 0 ¥46,550 6,030 (84) (1) (1) (698) 1 ¥25,921 ¥24,906 (1) ¥51,797 ¥(28) (421) ¥4,839 ¥(1,311) (3,231) ¥(8,195) 44 ¥831 2 84 ¥(29) 1 2,170 ¥5,260 ¥(1,395) (555) ¥(4,964) (164) ¥787 ¥(29) (1,663) ¥3,090 ¥(1,395) (6,521) ¥(4,409) (456) ¥951 2
(0) 2 (1,744) (8,640) ¥96,874 (1,250) (39) (1) 0 1,452 ¥97,036 6,030 – (1) 1 (698) (3,608) ¥98,760
Capital stock
Capital surplus
Retained earnings
Thousands of U.S. Dollars(Note1) Valuation difference on available–for– Revaluation Treasury sale reserve for stock securities land
Foreign currency translation adjustment
Minority interests
Total net assets
Balance at March 31, 2010 Net income(loss) Reversal of revaluation for land Purchase of treasury stock Disposal of treasury stock Dividends from surplus ($0.12 per share) Other Balance at March 31, 2011
$311,738 $299,531 $559,831 72,520 (1,010)
$(349)
$63,259
$(16,777) $(59,699)
$9,465 $1,166,999 72,520
1,010 (12)
– (12) 12 (8,394)
(12) (8,394) 12 (12)
24
(5,063) $(337) $58,196
(38,858) $(15,767) $(98,557)
529
(43,392)
$311,738 $299,531 $622,935
$9,994 $1,187,733
Notes: 1. Dividends from surplus per share is calculated based on actual payment of dividends during the period.
19
ALPINE ELECTRONICS, INC.
Consolidated Statements of Cash Flows
Years ended March 31, 2011, 2010 and 2009 Millions of Yen Thousands of U.S. Dollars(Note 1)
2011
Cash flows from operating activities: Income (loss) before income taxes and minority interests Adjustments to reconcile income (loss) before income taxes and minority interests to cash provided by operating activities: Depreciation and amortization (Note13) Increase (decrease) in provision for retirement benefits Increase (decrease) in provision for directors' retirement benefits Interest and dividends income Interest expenses Equity in earnings of affiliates Loss (gain) on sale of property, plant and equipment Gain on exchanges of land use rights Decrease (increase) in notes and accounts receivable–trade Decrease (increase) in inventories Increase (decrease) in notes and accounts payable–trade Increase (decrease) in provision for product warranties Gain on valuation of options Gain on settlement and valuation of options Other–net Subtotal Interest and dividends income received Interest expenses paid Income taxes paid Income taxes refund Net cash provided by operating activities Cash flows from investing activities: Purchase of short–term investment securities Proceeds of sales of short–term investment securities Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Proceeds from sales of investments Purchase of investments in subsidiaries Purchase of stocks of subsidiaries and affiliates Payments of loans receivable Collection of loans receivable Other–net Net cash used in investment activities Cash flows from financing activities: Net increase (decrease) in short–term loans payable Proceeds from long–term loans payable Repayment of long–term loans payable Cash dividends paid Cash dividends paid to minority shareholders Proceeds from stock issuance to minority shareholders Other–net Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period See accompanying notes ¥ 8,510
2010
¥ 12
2009
¥ (4,035)
2011
$ 102,345
7,442 83 (25) (494) 198 (950) (33) – (1,395) (5,010) 1,424 836 – (102) 5,729 16,213 877 (203) (2,595) 79 14,371
8,352 38 (90) (444) 150 (1,358) (45) (224) (10,845) 1,129 10,973 502 – (128) 1,983 10,005 443 (144) (973) 528 9,859
10,336 (16) 28 (752) 122 (1,143) 11 – 10,241 6,349 (9,234) (814) (2,578) – 2,133 10,648 783 (119) (1,669) 1,037 10,680
89,501 998 (301) (5,941) 2,381 (11,425) (397) – (16,777) (60,252) 17,126 10,054 – (1,227) 68,900 194,985 10,547 (2,441) (31,209) 950 172,832
(3,000) 3,000 (3,708) 248 (1,255) – – – (3,660) 3,021 1,004 (4,350)
– – (2,998) 215 (1,222) – (44) – (1,483) 1,792 (223) (3,963)
– – (7,139) 88 (3,156) 131 (544) (245) (1,858) 66 (193) (12,850)
(36,079) 36,079 (44,594) 2,983 (15,093) – – – (44,017) 36,331 12,075 (52,315)
7 – (4,602) (698) (13) – (105) (5,411) (570) 4,040 39,844 ¥43,884
(1,594) 10,002 – (2) (163) 43 (136) 8,150 (343) 13,703 26,141 ¥39,844
1,576 – – (1,744) (16) – (145) (329) (1,519) (4,018) 30,159 ¥ 26,141
84 – (55,346) (8,394) (156) – (1,263) (65,075) (6,855) 48,587 479,182 $ 527,769
20
ALPINE ELECTRONICS, INC.
Notes to Consolidated Financial Statements
March 31, 2011, 2010 and 2009
1. Basis of Presenting Consolidated Financial Statements
Alpine Electronics, Inc. (“the Company”), a Japanese corporation, is a subsidiary of Alps Electric Co., Ltd. (40.7% owned), a Japanese listed company. The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. The accounts of overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. However, as described in Note 2(21), necessary adjustments are made upon consolidation. The accompanying consolidated financial statements have been restructured and translated into English (with some expanded descriptions and the inclusion of consolidated statements of changes in net assets) from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Some supplementary information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements. The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2011, which was ¥83.15 to U.S.$1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies
(1) Consolidation
The consolidated financial statements include the accounts of the Company and substantially all of its subsidiaries (“the Companies”) which are controlled through substantial ownership of majority voting rights or existence of certain conditions. All significant intercompany transactions and account balances are eliminated in consolidation. value are stated at fair market value. Unrealized holding gains and losses on these securities are reported, net of applicable income taxes, as a separate component of the net assets. Realized gain on sale of such securities is computed using the moving-average cost. Available-for-sale securities with no fair market value are stated at moving-average cost. If the market value of equity securities issued by subsidiaries and affiliates which are not consolidated or on the equity method and available-for-sale securities declines significantly, such securities are stated at fair market value and the difference between the fair market value and the carrying amount is recognized as loss in the period of the decline. If the fair market value of equity securities issued by subsidiaries and affiliates is not readily available, such securities should be written down to net asset value in the event net asset value has significantly declined. Unrealized losses on these securities are reported in the statements of operations.
(2) Equity method
Investment securities in affiliates (all companies 20% to 50% owned and certain others 15% to 20% owned) are accounted for by the equity method in the consolidated financial statements for 2011, 2010 and 2009. Effective from the year ended March 31, 2011, the Companies adopted “Accounting Standard for Equity Method of Accounting for Investments” (Statement No.16 issued by the Accounting Standards Board of Japan on March 10, 2008) and “Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using Equity Method” (Practical Issues Task Force No.24 issued on March 10, 2008). The impact on income before income taxes and minority interests is nothing.
(5) Allowance for doubtful accounts
The Companies provide allowance for doubtful accounts to cover probable losses on collection by estimating uncollectible amounts individually in addition to amounts for possible losses on collection in the past.
(6) Inventories (3) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand, readily-available deposits and short-term highly liquid investments with maturities of not exceeding three months at the time of purchase are considered to be cash and cash equivalents. Inventories held by the Company and its domestic consolidated subsidiaries are principally stated at cost determined by the weightedaverage method. The value in the balance sheet is calculated by the method of write-down of the carrying amount based on the decline of the profitability. Inventories held by the foreign consolidated subsidiaries are principally stated at the lower of market or cost, mainly determined by the weightedaverage method or the moving-average method. Effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries adopted the new accounting standard, “Accounting Standard for Measurement of Inventories” (Statement No.9 issued by the Accounting Standards Board of Japan on July 5, 2006). As a result of the adopting the standard, operating loss decreased by ¥31 million and loss before income taxes and minority interests increased by ¥1,060 million for the fiscal year ended March 31, 2009. In addition, as a result of reviewing the classification by adopting the standard, the classification for Loss on abandonment of inventories
(4) Securities
The intent of holding each security is examined and securities are classified as (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to be held to maturity (hereafter, “held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and affiliates, and (d) for all other securities that are not classified in any of the above categories (hereafter, “available-for-sale securities”). The Companies had no trading securities or held-to-maturity debt securities. Equity securities issued by subsidiaries and affiliates which are not consolidated or accounted for using the equity method are stated at moving-average cost. Available-for-sale securities with fair market
21
was changed from Selling, general and administrative expenses to Cost of sales as same as Loss on valuation of inventories due to a minor significance of dividing the classification from the point of the decline of the profitability. As a result of the changing the classification, in comparison to the previous accounting method, cost of sales increased by ¥99 million and gross margin decreased by same amount and operating loss and loss before income taxes and minority interests were no impact.
The Company and its consolidated subsidiaries will continue to use accounting procedures that conform to methods related to normal lease transactions with respect to finance lease transactions do not transfer ownership to the lessee start date prior to the initial year of application of the new method. The impact on operating loss and loss before income taxes and minority interests is minor. Estimated useful lives are as follows: Buildings …………… 2 – 50 years Machinery …………… 2 – 11 years Equipment …………… 2 – 25 years (Dies ………………… 1 – 2 year)
(7) Property, plant, equipment and depreciation
Property, plant and equipment are stated at cost except for certain land. The Companies compute depreciation of property, plant and equipment, except for certain buildings, using the declining-balance method at rates based on the useful lives prescribed by Japanese tax regulations, while the foreign consolidated subsidiaries use the straight-line method over the estimated useful lives. Depreciation of buildings purchased after March 31, 1998, is computed using the straight-line method by the Company and its domestic consolidated subsidiaries, because of an amendment to Japanese tax regulations. From the year ended March 31, 2008, in accordance with the amendment to the Corporate Tax Law, the Company and its domestic consolidated subsidiaries changed their depreciation method for tangible fixed assets acquired on or after April 1, 2007 to a method based on the amended Corporate Tax Law. In addition, due to the amendment to the Corporate Tax Law, for tangible fixed assets which had been acquired on or before March 31, 2007, the remaining book value of the assets based on the previous Corporate Tax Law is evenly depreciated over the five years starting from the period subsequent to the year the depreciable limits have reached. From the year ended March 31, 2009, in accordance with the amendment to the Corporate Tax Law, the Company and its domestic consolidated subsidiaries changed the useful lives of machinery from 8-10 years to 7 years. As a result, in comparison to the previous accounting method, operating loss and loss before income taxes and minority interests increased by ¥142 million for the fiscal year ended March 31, 2009. Regarding the depreciation method for lease assets related to finance lease transactions do not transfer ownership to the lessee, the Company and its consolidated subsidiaries adopt the straight-line method that assumes the years of service lives are lease periods and residual values are zero. The Company and its consolidated subsidiaries formerly used accounting procedures that conform to methods related to normal lease transactions with respect to finance lease transactions do not transfer ownership to the lessee. Effective from the year ended March 31, 2009, the Company and its consolidated subsidiaries adopted "Accounting Standard for Lease Transactions"(Statement No.13 originally issued on June 17, 1993 by the First Committee of the Business Accounting Council and revised on March 30, 2007) and "Guidance on Accounting Standard for Lease Transactions "(Guidance No.16 originally issued on January 18, 1994 by the Accounting System Committee of the Japanese Institute of Certified Public Accountants and revised on March 30, 2007) and use accounting procedures conforming to methods related to normal sales and purchase transactions.
(8) Land revaluation
Pursuant to “Law Concerning Revaluation of Land” and the revisions thereof, the Company elected one-time revaluation of land used for business operations at fair value as of March 31, 2002. Due to the revaluation, book value of the land was reduced by ¥1,395 million to ¥3,212 million as of March 31, 2002, and the related unrealized loss is reported as a separate component of net assets. According to the revised Law, the Company is not permitted to revalue the land at any time for subsequent declines or appreciation in the fair values of the land. The excess of the revalued amounts of the revalued land over the fair values as of March 31, 2011 and 2010 amounted to ¥1,200 million (US$14,432 thousand) and ¥1,230 million, respectively. The indicator as of March 31, 2011 was described as same as of March 31, 2010 due to difficulty of recognizing the fair values as of March 31, 2011 by earthquakes and others.
(9) Employees’ bonuses
Liabilities for employees’ bonuses are mainly provided based on the estimate of the amounts to be paid in the future, based on the accrual basis at the balance sheet date.
(10) Directors’ bonuses
Liabilities for directors’ bonuses are mainly provided based on the estimate of the amounts to be paid in the future, based on the accrual basis at the balance sheet date.
(11) Provision for retirement benefits
The Company and its five domestic subsidiaries have unfunded lump-sum benefit and funded pension plans covering all employees. Under the terms of the plans, eligible employees are entitled, upon reaching mandatory retirement age or earlier voluntary severance, to severance and retirement benefit payments based on the length of their services, base salary at the time of termination and cause of termination. Allowances and expenses for severance and retirement benefits are determined based on the amounts actuarially calculated using certain assumptions. The Companies provide allowance for employees’ severance and retirement benefits based on the estimated amount of projected benefit obligation and the fair value of the plan assets at the balance sheet date. Effective from the year ended March 31, 2010, the Company applied the “Partial Amendments to Accounting Standard for Retirement Benefits (Part3)” (Statement No.19 issued by the Accounting Standards Board of
22
Japan on July 31, 2008). The application of this standard had no effect on the consolidated financial statements.
(19) Derivative transactions and hedge accounting
The Companies state derivative financial instruments at fair value and recognize changes in the fair value as gains or losses unless derivative financial instruments are used for hedging purposes. If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gains or losses resulting from changes in fair value of derivative financial instruments until the related losses or gains on the hedged items are recognized.
(12) Provision for directors’ retirement benefits
The Company and its domestic consolidated subsidiaries provide for retirement benefits for directors, based on the bylaws and on the accrual basis at the balance sheet date.
(13) Provision for product warranties
The Company and certain of its consolidated subsidiaries provide accrued warranty costs for goods sold based on historical experience of actual after-sales service costs.
(20) Reclassifications
Certain prior year amounts have been reclassified to conform to the 2011 presentation. These changes had no impact on previously reported results of operations.
(14) Foreign currency translation
Receivables, payables and investments denominated in foreign currencies are translated into Japanese yen using the exchange rate at the balance sheet date, except that investments in unconsolidated subsidiaries and affiliated companies are translated using the historical rates. The Company and its domestic subsidiaries include foreign currency translation adjustments in the net assets in the consolidated balance sheets. Financial statements of the foreign consolidated subsidiaries are translated into Japanese yen using the year-end rate for assets and liabilities, except that net assets accounts and investments in unconsolidated subsidiaries and affiliated companies not on the equity method are translated using the historical rates. The average exchange rate for the year is used for translation of income and expenses.
(21) Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements
Effective from the year ended March 31, 2009, the Company adopted "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements" (Practical Issues Task Force No.18 (“PITF No.18”) issued by the Accounting Standards Board of Japan on May 17, 2006) and made the necessary adjustments to the consolidated financial statements. PITF No. 18 requires that accounting policies and procedures applied by a parent company and its subsidiaries to similar transactions and events under similar circumstances should, in principle, be unified for the preparation of the consolidated financial statements. PITF No. 18, however, as a tentative measure, allows a parent company to prepare consolidated financial statements using foreign subsidiaries’ financial statements prepared in accordance with either International Financial Reporting Standards or U.S. generally accepted accounting principles. In this case, adjustments for the following six items are required in the consolidation process so that their impacts on net income are accounted for in accordance with Japanese GAAP unless the impact is not material. (a) Goodwill not subjected to amortization (b) Actuarial gains and losses of defined benefit plans recognized outside profit or loss (c) Capitalized expenditures for research and development activities (d) Fair value measurement of investment properties, and revaluation of property, plant and equipment, and intangible assets (e) Retrospective treatment of a change in accounting policies (f) Accounting for net income attributable to minority interests As a result, in comparison to the previous accounting method, operating loss decreased by ¥68 million and loss before income taxes and minority interests decreased by ¥75 million for the fiscal year ended March 31, 2009.
(15) Research and development costs
Research and development costs are charged to income when incurred and included in costs and expenses.
(16) Income taxes
The Companies recognize tax effects of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities. The provision for income taxes is computed based on the pretax income included in the consolidated statements 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.
(17) Amounts per share of common stock
Computations of net income per share of common stock are based on the weighted-average number of shares of common stock outstanding during each fiscal year. Diluted net income per share is computed based on the weighted-average number of common stock and contingent issuance of common stock from convertible debentures. Cash dividends per share represent actual amounts applicable to the respective years.
(22) Asset retirement obligations
Effective from the year ended March 31, 2011, the Companies adopted "Accounting Standard for Asset Retirement Obligations" (Statement No.18 issued by the Accounting Standards Board of Japan on March 31, 2008) and "Guidance on Accounting Standard for Asset Retirement Obligations" (Guidance No.21 issued by the Accounting Standards Board of Japan on March 31, 2008). The impact on operating income and income before income taxes and minority interests is minor.
(18) Software costs
The Company included software in other assets and depreciated it using the straight-line method over the estimated useful lives (from three to five years).
23
(23) Adoption of consolidated taxation system
The Company and certain of its consolidated subsidiaries have received approval from the Commissioner of the National Tax Agency of Japan to adopt the consolidated taxation system effective the fiscal year ending March 31, 2012. From the fiscal year ended March 31, 2011, accounting treatment and presentation regarding deferred taxes have been based on the “Practical Solution on Tax Effect Accounting under the Consolidated Taxation System (Part 1)”(ASBJ PITF No.5), and the “Practical Solution on Tax Effect Accounting under the Consolidated Taxation System (Part 2)”(ASBJ PITF No.7), under the assumption that the Company would adopt the consolidated taxation system.
(24) Comprehensive income
Effective from the fiscal year ended March 31, 2011, the Company adopted the “Accounting Standard for Presentation of Comprehensive Income” (Accounting Standard Board of Japan (“ASBJ”) Statement No. 25 on June 30, 2010) and the “Revised Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22, revised on June 20, 2010).As a result of the adoption of the standard, the Company prepared the consolidated statement of comprehensive income for the fiscal year ended March 31, 2011.
24
3. Securities
Acquisition cost, book value and the related unrealized gains or losses of the available-for-sale securities with available fair values as of March 31, 2011 and 2010 were as follows:
Millions of Yen
2011
Securities with book values exceeding acquisition costs: Equity securities Other securities: Equity securities Total
Acquisition cost
Book value
Difference
¥3,991 218 ¥4,209
¥12,116 164 ¥12,280
Millions of Yen
¥8,125 (54) ¥8,071
2010
Securities with book values exceeding acquisition costs: Equity securities Other securities: Equity securities Total
Acquisition cost
Book value
Difference
¥3,996 209 ¥4,205
¥12,787 128 ¥12,915
Thousands of U.S. Dollars
¥8,791 (81) ¥8,710
2011
Securities with book values exceeding acquisition costs: Equity securities Other securities: Equity securities Total Securities not stated at fair value as of March 31, 2011, and 2010 were as follows:
Acquisition cost
Book value
Difference
$47,998 2,622 $50,620
$145,713 1,972 $147,685
$97,715 (650) $97,065
Millions of Yen
Thousands of U.S. Dollars
2011
Equity securities issued by subsidiaries and affiliated companies not consolidated or accounted for using the equity method Other securities: Non-listed equity securities Total There was no sale of available-for-sale securities in the year ended March 31, 2011 and 2010.
2010 ¥8,991 107 ¥9,098
2011 $105,436 1,251 $106,687
¥8,767 104 ¥8,871
25
4. Inventories
Inventories at March 31, 2011 and 2010 comprised the following:
Millions of Yen Thousands of U.S. Dollars
Finished goods Work in process Raw materials and supplies Total
2011 ¥14,202 1,244 6,034 ¥21,480
2010 ¥12,833 670 4,245 ¥17,748
2011 $170,800 14,961 72,568 $258,329
5. Short-Term and Long-Term Debt
Short-term loans payable generally consisted of overdrafts from banks with interest rates are 2.15% at March 31, 2011, and 1.71% at March 31, 2010. Long-term loans payable from banks with interest rate are ranging from 1.70% to 1.94% at March 31, 2011, and ranging from 1.85% to 4.10% at March 31, 2010.
Millions of Yen Thousands of U.S. Dollars
Short-term loans payable Short-term lease obligations Long-term loans payable Long-term lease obligations Total
2011 ¥ 48 75 5,400 61 ¥5,584
2010 ¥ 43 91 10,002 87 ¥10,223
2011 577 902 64,943 734 $67,156 $
At March 31, 2011 and 2010, there was no pledge of collateral for long-term secured debt. The annual maturities of long-term debt at March 31, 2011 are as follows: Years ending March 31 2013 2014 2015 Total
Millions of Yen Thousands of U.S. Dollars
5,423 27
11
65,219 325
132
¥5,461
$65,676
The Company has credit lines from banks, and the total unused credit available at March 31, 2011 was ¥14,600 million (US$175,586 thousand), and at March 31, 2010 was ¥15,000 million.
6. Contingent Liabilities
The Company and its consolidated subsidiaries had no outstanding issues contingently liable for at March 31, 2011.
26
7. Provision for Retirement Benefits
Provision for retirement benefits included in the liability in the consolidated balance sheets and the related expenses for 2011 and 2010, which were determined based on the amounts obtained by actuarial calculations, were as follows:
Millions of Yen Thousands of U.S. Dollars
Projected benefit obligation Unamortized actuarial differences Pension assets Prepaid pension expense Provision for retirement benefits:
2011 ¥(10,094) 1,975 8,305 (921) ¥ (735)
2010 ¥(10,767) 2,231 9,029 (1,152) ¥ (659)
2011 $(121,395) 23,752 99,879 (11,076) $ (8,840)
The components of employee’s severance and pension expenses for the years ended March31, 2011, 2010 and 2009 were as follows.
Millions of Yen Thousands of U.S. Dollars
Service costs – Benefits earned during the year Interest costs on projected benefit obligation Expected return on plan assets Amortization of actuarial differences Other expenses (Defined Contribution, etc.) Loss on abolishment of retirement benefit plan Total
2011 ¥ 533 221
(192) 224 141 513
2010 ¥526 215
(186) 194 174 -
2009 ¥476 211
(205) 171 144 -
2011 $ 6,410 2,658
(2,309) 2,694 1,695 6,170
¥1,440
¥923
¥797
$17,318
An overseas subsidiary withdrew from the defined benefit pension scheme in a multi-employer pension fund, and the loss on abolishment of retirement benefit plan was ¥513 million (US$6,170 thousand) for the year ended March 31, 2011. The discount rate and the rate of expected return on plan assets used by the Company were mainly 2.5% for 2011, 2010 and 2009. The estimated amount of all retirement benefits to be paid at the future retirement date was allocated equally to each service year using the estimated number of total service years. Prior service costs were recognized as expense within one year, and actuarial gains or losses were recognized as income or expense using the straight-line method mainly over 16 years.
8. Net assets
The Japanese Corporate Law (“the Law”) became effective on May 1, 2006, replacing the Japanese Commercial Code (“the Code”). The Law is generally applicable to events and transactions occurring after April 30, 2006 and for fiscal years ending after that date. Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus. Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in-capital and legal earnings reserve must be set aside as additional paid-in-capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets. Under the Law, legal earnings reserve and additional paid-in capital can be used to eliminate or reduce a deficit, and also can be capitalized by a resolution of the shareholders’ meeting. Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in-capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends. The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company in accordance with Japanese laws and regulations. At the annual shareholders’ meeting held on June 23, 2011, the shareholders approved cash dividends amounting to ¥697 million ($8,390 thousand). Such appropriations have not been accrued in the consolidated financial statements as of March 31, 2011. Such appropriations are recognized in the period in which they are approved by the shareholders.
27
9. Income Taxes
The Companies are subject to a number of taxes based on income, which, in the aggregate, indicate statutory rates in Japan of approximately 40% for the years ended March 31, 2011, 2010 and 2009. Reconciliation of the statutory tax rate and the Company’s effective tax rate for the year ended March 31, 2009 was not described due to loss before income taxes and minority interests. The main components of difference between the statutory tax rate and the Company’s effective tax rate for the year ended March 31, 2010 were the taxes against income before income taxes and minority interests ¥12 million were ¥1,292 million and the main components of the taxes were increase of valuation reserve by ¥1,257 million and resident tax based on per capita by ¥22 million. The following table summarizes the significant differences between the statutory tax rate and the Companies’ effective tax rate for financial statement purpose for the years ended March 31, 2011.
Statutory tax rate Non-taxable dividend income Differences in foreign subsidiaries Non-deductible expenses Equity in earnings of affiliated company Valuation reserve Dividend income of subsidiaries Other Effective tax rate
2011 40.4% (9.2) (6.6)
2.4 (1.5) (7.1) 10.0 0.0 28.4%
The significant components of the Companies’ deferred tax assets and liabilities as of March 31, 2011 and 2010 were as follows:
Millions of Yen Thousands of U.S. Dollars
2011
Deferred tax assets: Provision for product warranties Depreciation Provision for retirement benefits Accrued expenses Elimination of unrealized profit Carried deficit Other Valuation reserve Offset allowed against deferred tax liabilities Total deferred tax assets Deferred tax liabilities: Valuation difference on available-for-sale securities Other Offset allowed against deferred tax assets Total deferred tax liabilities Net deferred tax assets(liabilities)
2010 ¥860
1,504 163 94 92 4,472 2,026 (6,485) (716)
2011 $ 10,980
29,609 2,514 2,225 1,275 30,199 36,067 (72,616) (11,341) $ 28,912 $ 39,254 30,114
¥
913
2,462 209 185 106 2,511 2,999 (6,038) (943)
¥ 2,404 ¥ 3,264
2,504
¥ 2,010 ¥ 3,522
2,147
(943) ¥ 4,825 ¥(2,421)
(716) ¥ 4,953 ¥(2,943)
(11,341) $ 58,027 $(29,115)
28
10. Derivative Financial Instruments
The Companies have entered into forward exchange contracts, currency option contracts and currency swap contracts with banks as hedges against receivables denominated in foreign currencies. These derivative financial transactions are executed by the Company’s accounting department solely for hedging purposes under the internal control rules and the supervision by the Board of Directors. The Companies do not anticipate any credit loss from nonperformance by the counterparties to forward exchange contracts because the counterparties are creditworthy securities companies of Japan. Hedging derivative financial instruments used by the Companies and items hedged are as follows: Hedging instruments: ……………………………… Forward foreign exchange contracts Currency option contracts Currency swap contracts Hedged items: ……………………………………… Foreign currency trade receivables and payables, The Companies evaluate hedge effectiveness semi-annually by comparing the cumulative changes in cash flows or the changes in fair value of hedged items and the corresponding changes in the hedging derivative instruments. The outstanding contract amounts of derivative financial transactions and their market values at March 31, 2011 and 2010, are summarized as follows:
Millions of Yen Contract value
2011
Currency related Forward foreign exchange contracts To sell U.S. dollars To sell Euro
Total
Over one year
Fair value
Recognized gains (losses)
¥2,510 3,991
¥–
¥ (26) (154)
¥ (26) (154) ¥(180)
–
Millions of Yen Contract value
2010
Currency related Forward foreign exchange contracts To sell U.S. dollars To sell Euro Currency option To sell Euro To buy Euro
Total
Over one year
Fair value
Recognized gains (losses)
¥3,104 4,754 4,115 113 2,058 145
¥– – – – – –
¥ (58) 34
¥ (58) 34
– 496
– 496 ¥472
Millions of Yen Contract value
2011
Currency related Forward foreign exchange contracts To sell U.S. dollars To sell Euro
Total
Over one year
Fair value
Recognized gains (losses)
$30,186 47,998
$– –
$ (313) (1,852)
$ (313) (1,852) $(2,165)
The fair values of forward foreign exchange contracts were estimated based on the market as of March 31, 2011 and 2010. The fair values of currency option contracts were estimated based on the offered price from the financial institutions. Lower figures of Currency option’s Contract value total show the option premium. All currency option contracts are zero cost option contracts.
29
11. Lease Information
Finance leases contracted before March 31, 2008, except for those leases for which the ownership of the leased assets are considered to be transferred to the lessees, are accounted for in the same manner as operating leases. At March 31, 2011 and 2010, the equivalent amounts of purchase price, accumulated depreciation and book value of leased properties were as follows:
Millions of Yen Thousands of U.S. Dollars
2011
Purchase price equivalent of machinery and equipment Accumulated depreciation equivalent of machinery and equipment Net book value equivalent The future minimum lease payments under finance leases at March 31, 2011 and 2010 were as follows:
2010 ¥447 436 ¥ 11
2011 $1,130 1,118 $ 12
¥94 93 ¥ 1
Millions of Yen
Thousands of U.S. Dollars
Current Non-current Total
2011 ¥1 0 ¥1
2010 ¥ 9 2 ¥11
2011 $12 0 $12
Such finance lease payments of the Companies amounted to ¥7 million (US$84 thousand), ¥64 million and ¥104 million for the years ended March 31, 2011, 2010 and 2009, respectively. The equivalent of depreciation expense amounting to ¥7 million (US$84 thousand) in 2011, ¥64 million in 2010, and ¥104 million in 2009, was computed using the straight-line method over the lease terms assuming no residual value. The future minimum lease payments under non-cancelable operating leases at March 31, 2011 and 2010 were as follows:
Millions of Yen Thousands of U.S. Dollars
Current Non-current Total
2011 ¥302 341 ¥643
2010 ¥255 261 ¥516
2011 $3,632 4,101 $7,733
30
12. Loss on disaster
Loss on disaster included costs for recovery, salaries and depreciation in the period of closedown, loss on inventories and fixed assets damaged by the Great East Japan Earthquake, and others.
13. Segment Information
Effective from the year ended March 31, 2011, the Companies adopted “Accounting Standard for Disclosures about Segments of an Enterprises and Related Information” (Statement No.17 issued by the Accounting Standards Board of Japan on March 27, 2009) and “Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (Guidance No.20 issued by the Accounting Standards Board of Japan on March 21, 2008). Segment Information Information about reportable segments for the years ended March 31, 2011 was as follows: Outline of reporting segments Reporting segments of the Companies are the organizational units for which separated financial information is available, and on the basis of which the Board of Directors makes decision on the allocation of management resources and examines financial performance on a regular basis. The Companies’ primary business activities are manufacture and sales of Car audio products and Information and communication equipment. The Companies are comprised of two reportable segments classified by Audio products business and Information and communication equipment business. The primary products included in Audio products business are car audio products of CD player, Amplifier and Speaker etc. The primary products included in Information and communication equipment business are car navigation and car communication products. Basis of measurement about reported segment net sales, segment income or loss, segment assets and other material items The accounting treatment for each reportable segment is largely the same as that set forth in the “Basis of Presenting Consolidated Financial Statements.” The profits of reportable segment are operating income. Internal sales between individual segments or amount transferred are calculated based on actual transactions. Information about reported segment net sales, segment income or loss, segment assets and other material items
Millions of Yen Audio products business Information and communication equipment business
2011
Net sales: Outside customers Inter–segment Total Segment income (Operating income) Segment assets Depreciation expense Increase in property, plant and equipment and intangible assets
Total
Adjustment
Consolidated
¥69,898
637 70,535
¥131,359
159 131,518
¥201,257
796 202,053
¥
– (796) (796)
¥201,257
– 201,257
¥ 3,610 ¥36,273 ¥ 2,981
2,012
¥ 12,062 ¥ 83,049 ¥ 4,120
2,864
¥ 15,672 ¥ 119,322 ¥ 7,101
4,876
¥ (4,517) ¥34,462 ¥ 341
6
¥ 11,155 ¥153,784 ¥ 7,442
4,882
Thousands of U.S. Dollars Audio products business Information and communication equipment business
2011
Net sales: Outside customers Inter–segment Total Segment income (Operating income) Segment assets Depreciation expense Increase in property, plant and equipment and intangible assets
Total
Adjustment
Consolidated
$840,625 7,661 848,286 $ 43,416 $436,236 $ 35,851 24,197
$1,579,784 1,912 1,581,696 $ $ $ 145,063 998,785 49,549 34,444
$2,420,409 9,573 2,429,982 $ $ 188,479 85,400 58,641 $ 1,435,021
$
– (9,573) (9,573)
$2,420,409 – 2,420,409 $ 134,155 $1,849,477 $ 89,501 58,713
$ (54,324) $414,456 $ 4,101 72
31
Relevant Information Relevant Information for the years ended March 31, 2011 was as follows: Information about products and services Information about products and services is omitted as the Company classifies such segments in the same way as it does its reportable segments. Information about geographic areas Net sales
Millions of Yen
2011
Japan
America
Germany
Other areas
Total
¥35,285
¥39,631
¥56,522
Thousands of U.S. Dollars
¥69,819
¥201,257
2011
Japan
America
Germany
Other areas
Total
$424,354
$476,621
$679,759
$839,675
$2,420,409
(Note) Net sales are geographically classified by country or region in which customers are located. Property, plant and equipment
Millions of Yen
2011
Japan
China
Hungary
Other areas
Total
¥11,175
¥5,167
¥3,286
Thousands of U.S. Dollars
¥2,414
¥22,042
2011
Japan
China
Hungary
Other areas
Total
$134,395
Information about major customers
$62,141
$39,519
$29,032
$265,087
Millions of Yen
2011
Customers
Net sales
Relevant segment
BMW AG Daimler AG
¥26,630 ¥23,037
Audio products business, information and communication equipment business Audio products business, information and communication equipment business
Thousands of U.S. Dollars
2011
Customers
Net sales
Relevant segment
BMW AG Daimler AG
$320,265 $277,054
Audio products business, information and communication equipment business Audio products business, information and communication equipment business
Information about impairment loss on fixed assets in reportable segments Not applicable Information about amortized amount of goodwill and unamortized balance of goodwill by reportable segments Information about amortized amount of goodwill and unamortized balance of goodwill by reportable segments is omitted as the amount was insignificant. Information about gain on negative goodwill by reportable segments Not applicable The Companies’ primary business activities include (1) Audio Products business, which consists of car audio systems and audio accessories, etc., and (2) Information and Communication Equipment business, which consists of car communications and electronic components. A summary of net sales, costs and expenses, operating income, identifiable assets, depreciation expense, and capital expenditures by business segment for the years ended March 31, 2010 and 2009 were as follows:
32
Millions of Yen Audio products business Information and communication equipment business Elimination and/or corporate
2010
. Sales and operating income Net sales: Outside customers Inter-segment Total Costs and expenses Operating income . Identifiable assets Depreciation expense Capital expenditures
Total
Consolidated
¥ 70,463 567 71,030
¥ 98,123 217 98,340
¥ 168,586 784 169,370 ¥
¥
– (784) (784)
¥ 168,586 – 168,586 ¥
69,933
¥ 1,097 ¥44,136 4,035 2,085
94,506
¥ 3,834 ¥76,156 4,222 2,288
164,439 4,931 ¥120,292
8,257 4,373
Millions of Yen
3,920
¥ (4,704) ¥33,137 95 6
168,359 227 ¥153,429
8,352 4,379
2009
. Sales and operating income Net sales: Outside customers Inter-segment Total Costs and expenses Operating income (loss) . Identifiable assets Depreciation expense Capital expenditures
Audio products business
Information and communication equipment business
Total
Elimination and/or corporate
Consolidated
¥88,409 699 89,108
¥108,258 337 108,595
¥196,667 1,036 197,703
¥
– (1,036) (1,036)
¥196,667 – 196,667
89,441
¥ (333) 5,609 5,323 ¥46,867
112,304
¥ (3,709) ¥ 61,735 4,644 4,831
201,745
¥ (4,042) ¥108,602 10,253 10,154
5,567
¥ (6,603) ¥23,821 83 6
207,312
¥ (10,645) ¥132,423 10,336 10,160
The effects of the changes in accounting policies and procedures on segment information were as follows: (1)As explained in Note 2 (6), effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries adopted the new accounting standard, “Accounting Standard for Measurement of Inventories” (Statement No.9 issued by the Accounting Standards Board of Japan on July 5, 2006). As a result of the adopting the standard, in comparison to the previous accounting method, operating loss on “Audio products business” decreased by ¥34 million and operating loss on “Information and communication equipment business” increased by ¥3million for the fiscal year ended March 31, 2009. (2)As explained in Note 2 (21), effective from the year ended March 31, 2009, the Company adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (Practical Issues Task Force No.18 issued by the Accounting Standards Board of Japan on May 17, 2006) and made the necessary adjustments to the consolidated financial statements. As a result, in comparison to the previous accounting method, operating loss on “Audio products business” decreased by ¥26million and operating loss on “Information and communication equipment business” decreased by ¥42 million for the fiscal year ended March 31, 2009. Geographic area information with respect to net sales, costs and expenses, operating income, and identifiable assets for the years ended March 31, 2010 and 2009 were as follows:
Millions of Yen Elimination and/or corporate
2010
. Sales and operating income Net sales: Outside customers Inter-segment Total Costs and expenses Operating income . Identifiable assets
Japan
North America
Europe
Asia
Other areas
Total
Consolidated
¥34,432 95,441 129,873 128,087 ¥ 1,786 ¥89,254
¥42,081 187 42,268 41,542 ¥ 726 ¥19,664
¥76,919 24,811 101,730 100,607 ¥ 1,123 ¥34,122
¥13,742 25,836 39,578 37,774 ¥ 1,804 ¥29,904
¥1,412 1 1,413 1,259 ¥ 154 ¥ 675
¥168,586 146,276 314,862 309,269 ¥ 5,593 ¥173,619
¥
–
¥168,586 – 168,586 168,359 ¥ 227 ¥153,429
(146,276) (146,276) (140,910) ¥ (5,366) ¥(20,190)
33
Millions of Yen Elimination and/or corporate
2009
. Sales and operating income Net sales: Outside customers Inter-segment Total Costs and expenses Operating income (loss) . Identifiable assets
Japan
North America
Europe
Asia
Other areas
Total
Consolidated
¥32,951 117,477 150,428 156,679 ¥ (6,251) ¥79,655
¥54,951 909 55,860 56,875 ¥ (1,015) ¥16,790
¥91,974 28,454 120,428 121,236 ¥ (808) ¥27,749
¥15,426 42,648 58,074 55,810 ¥ 2,264 ¥26,175
¥1,365 21 1,386 1,314 ¥ 72 ¥ 419
¥196,667 189,509 386,176 391,914 ¥ (5,738) ¥150,788
¥
–
¥196,667 – 196,667 207,312 ¥ (10,645) ¥132,423
(189,509) (189,509) (184,602) ¥ (4,907) ¥(18,365)
The effects of the changes in accounting policies and procedures on segment information were as follows: (1)As explained in Note 2 (6), effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries adopted the new accounting standard, “Accounting Standard for Measurement of Inventories” (Statement No.9 issued by the Accounting Standards Board of Japan on July 5, 2006). As a result of the adopting the standard, in comparison to the previous accounting method, operating loss on “Japan” decreased by ¥31 million for the fiscal year ended March 31, 2009. (2)As explained in Note 2 (21), effective from the year ended March 31, 2009, the Company adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (Practical Issues Task Force No.18 issued by the Accounting Standards Board of Japan on May 17, 2006) and made the necessary adjustments to the consolidated financial statements. As a result, in comparison to the previous accounting method, operating loss on “Europe” decreased by ¥46 million and operating loss on “Asia” decreased by ¥22 million for the fiscal year ended March 31, 2009. The overseas sales by geographic area in 2010 and 2009 were as follows:
Millions of Yen
2010
. Overseas sales . Consolidated sales . Ratio of overseas sales (%)
North America
Europe
Asia
Other areas
Total
¥41,596 24.7%
¥76,927 45.6%
¥17,896 10.6%
Millions of yen
¥1,916 1.2%
¥138,335 168,586 82.1%
2009
. Overseas sales . Consolidated sales . Ratio of overseas sales (%)
North America
Europe
Asia
Other areas
Total
¥54,308 27.6%
¥91,994 46.8%
¥18,555 9.5%
¥2,016 1.0%
¥166,873 196,667 84.9%
Overseas sales consist of export sales by the Company and sales by the overseas consolidated subsidiaries except for their export sales to Japan.
34
Independent Auditors’ Report
To the Board of Directors of ALPINE ELECTRONICS, INC.: We have audited the accompanying consolidated balance sheets of ALPINE ELECTRONICS,INC. and consolidated subsidiaries as of March 31, 2011 and 2010, and the related consolidated statements of operations, changes in net assets and cash flows for each of the three years in the period ended March 31, 2011 expressed in Japanese yen, including the related consolidated statements of operations and comprehensive income for the year ended March 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to independently express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ALPINE ELECTRONICS, INC. and subsidiaries as of March 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2011, in conformity with accounting principles generally accepted in Japan. Without qualifying our opinion, we draw attention to the following: As discussed in Note 2(6) to the consolidated financial statements, effective from the year ended March 31, 2009, ALPINE ELECTRONICS, INC. and domestic consolidated subsidiaries adopted new accounting standard, “Accounting Standard for Measurement of Inventories”. The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2011 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1 to the consolidated financial statements.
Tokyo, Japan June 16, 2011
35
Corporate Data Global Network / Investor Information
Alpine Electronics, Inc. Iwaki Headquarters
20-1, Yoshima-Kogyodanchi, Iwaki, Fukushima 970-1192 Phone: +81-246-36-4111
Tokyo Headquarters
1-1-8, Nishi-Gotanda, Shinagawa-ku, Tokyo 141-8501 Phone: +81-3-3494-1101
Date of Establishment
May 1967
Paid-in Capital
¥25,920 million
Stock Exchange Listing
Tokyo Stock Exchange
Total Issued Stocks
69,784,501 (As of March 31, 2011)
Number of Stockholders
4,852 (As of March 31, 2011)
Number of Employees (Consolidated)
10,835 (As of March 31, 2011)
Alpine on the Internet
http://www.alpine.com/e/investor/
Transfer Agent
Mitsubishi UFJ Trust and Banking Corporation Corporate Agency Department 10-11, Higashisuna 7-chome, Koto-ku, Tokyo 137-8081 Phone: 0120-232-711
The Alps Group
Alpine Electronics, Inc. is a consolidated subsidiary of Alps Electric Co., Ltd., one of the world’s leading manufacturers of electric components. The Alps Group comprises Alps Electric Co.,Ltd., 84 subsidiaries and 8 af?liates; the Group is primarily involved in electronic components, audio equipment, logistics, and other businesses. Alpine is the Alps Group’s specialized supplier of quality car audio and navigation systems.
Alps Electric Co., Ltd.
Alpine Electronics, Inc.
Alps Logistics Co., Ltd.
36
Global Network
? ?? ? ?? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ?? ? ? ? ? ? ? ? ?
? ? ? ?
? Headquarters ? Regional ? Sales
?
? ??
Headquarters
?
??
??
Of?ce ? Manufacturing Plant
? Development
Center
North and Latin America
Europe
Asia and Oceania
Japan
ALPINE ELECTRONICS OF AMERICA, INC. (L.A.)
ALPINE ELECTRONICS OF AMERICA, INC. (DETROIT)
ALPINE ELECTRONICS (EUROPE) GMBH (MUNICH)
ALPINE ELECTRONICS GMBH (STUTTGART)
ALPINE ELECTRONICS (CHINA) CO., LTD. (BEIJING)
TAICANG ALPINE ELECTRONICS CO., LTD.
DALIAN ALPINE ELECTRONICS CO., LTD.
HEADQUARTERS (IWAKI)
ALCOM ELECTRONICS DE MEXICO S.A. DE C.V.
ALPINE ELECTRONICS MANUFACTURING OF EUROPE, LTD. (HUNGARY)
ALPINE ELECTRONICS OF U.K., LTD.
DALIAN R&D CENTER
ALPINE ELECTRONICS OF ASIA PACIFIC CO., LTD (BANGKOK)
ALPINE TECHNOLOGY MANUFACTURING (THAILAND) CO., LTD.
NEUSOFT CORPORATION (SHENYANG)
ALPINE ELECTRONICS MANUFACTURING, INC.
ALPINE ELECTRONICS, INC. Headquarters : IWAKI Headquarters : TOKYO TOCHIGI OFFICE NAGOYA OFFICE Overseas Subsidiaries / Overseas Af?liates North and Latin America ALPINE ELECTRONICS OF AMERICA, INC. ALPINE ELECTRONICS RESEARCH OF AMERICA, INC. ALPINE ELECTRONICS OF CANADA, INC. ALCOM ELECTRONICS DE MEXICO, S.A. DE C.V. ALPINE DO BRAZIL LTDA. Europe ALPINE ELECTRONICS (EUROPE) GMBH ALPINE ELECTRONICS R&D EUROPE GMBH ALPINE ELECTRONICS GMBH
ALPINE ELECTRONICS OF U.K., LTD. ALPINE ELECTRONICS OF AUSTRALIA PTY.LTD. ALPINE ELECTRONICS FRANCE S.A.R.L. NEUSOFT CORPORATION. ALPINE ITALIA S.P.A. ALPINE ELECTRONICS DE ESPAÑA, S.A. ALPINE ELECTRONICS MANUFACTURING OF EUROPE, LTD. ALPINE DISTRIBUTION NETWORK S.P.A. ALDINET ALPINE TECHNOLOGY MANUFACTURING, INC. Asia and Oceania ALPINE ELECTRONICS (CHINA) CO., LTD. ALPINE ELECTRONICS (CHINA) CO., LTD. (DALIAN R&D CENTER) DALIAN ALPINE ELECTRONICS CO., LTD. ALPINE CUSTOMERS SERVICE CO., LTD. TAICANG ALPINE ELECTRONICS CO., LTD. ALPINE KYOTO SALES, INC. ALPINE ELECTRONICS HONG KONG, LTD. ALPINE HYOGO SALES, INC. ALPINE ELECTRONICS OF ASIA PACIFIC CO.,LTD. TOSHIBA ALPINE AUTOMOTIVE TECHNOLOGY, INC. ALPINE OF ASIA PACIFIC INDIA PVT.LTD. ALPINE TECHNOLOGY MANUFACTURING (THAILAND) CO., LTD. ALPINE INFORMATION SYSTEM, INC. ALPINE BUSINESS SERVICE, INC. ALPINE PRECISION, INC. ALPINE GIKEN, INC. Domestic Subsidiaries / Domestic Af?liates ALPINE ELECTRONICS MARKETING, INC. ALPINE ELECTRONICS MANUFACTURING, INC.
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Iwaki Headquarters: 20-1, Yoshima-Kogyodanchi, Iwaki, Fukushima 970-1192 Phone: +81-246-36-4111 Fax: +81-246-36-8309 Tokyo Headquarters: 1-1-8, Nishi-gotanda, Shinagawa-ku, Tokyo 141-8501 Phone: +81-3-3494-1101 Fax: +81-3-3494-1109
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