(Reference) Standalone performance
Standalone performance for the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)
(1) Standalone operating results
| (Percentages indicate year-on-year changes) |
| | Net sales | Operating income | Ordinary income | Net income |
| | Millions of yen | % | Millions of yen | % | Millions of yen | % | Millions of yen | % |
| Fiscal year ended March 31, 2019 | 394,661 | (14.6) | 6,602 | (77.8) | 17,726 | (46.3) | 15,974 | (51.7) |
| Fiscal year ended March 31, 2018 | 462,158 | 23.4 | 29,680 | 126.3 | 33,013 | 58.6 | 33,084 | 65.3 |
| | Basic earnings per share | Diluted earnings per share |
| | Yen | Yen |
| Fiscal year ended March 31, 2019 | 79.60 | 79.56 |
| Fiscal year ended March 31, 2018 | 168.88 | 168.82 |
(2) Standalone financial position
| | Total assets | Net assets | Equity ratio | Net assets per share |
| | Millions of yen | Millions of yen | % | Yen |
| As of | | | | |
| March 31, 2019 | 373,633 | 211,438 | 56.5 | 1,000.60 |
| March 31, 2018 | 320,362 | 173,315 | 54.0 | 883.77 |
| (Reference) Equity | | |
| As of March 31, 2019: | ¥211,142 million | |
| As of March 31, 2018: | ¥173,134 million | |
* Earnings reports are not subject to audit by external auditors.
* Explanation and other special notes concerning the appropriate use of earnings forecast
(Notes on forward-looking statements)
The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to ALPS ALPINE CO., LTD. (the “Company”) and certain assumptions deemed to be reasonable, and are not intended to guarantee the achievement of these forecasts. Actual results may differ materially from the forecasts due to various factors. Please refer to “(4) Forecast” under “1. Overview of Financial Results for the Fiscal Year Ended March 31, 2019” on page 5 of the attached materials for the assumptions used in the forecasts and notes regarding the use of the forecasts.
(Access to supplementary material on earnings)
Supplementary material on earnings is available on the Company’s website on Friday, April 26, 2019.
| ○ | Supplementary Materials – Contents |
| 1. | Overview of Financial Results | 2 |
| | (1) Overview of financial results | 2 |
| | (2) Overview of financial position | 4 |
| | (3) Overview of cash flows | 4 |
| | (4) Forecast | 5 |
| | (5) Basic policy for distribution of earnings and dividends for the fiscal year ended March 31, 2019 and for the fiscal year ending March 31, 2020 | 6 |
| | (6) Business risk | 6 |
| | | |
| 2. | Information Regarding the Company | 7 |
| | | |
| 3. | Management Policy, Business Environment and Challenges Facing | 7 |
| | (1) The Company’s basic management policy | 7 |
| | (2) The Company’s mid- and long-term business strategy and target management indicators | 7 |
| | (3) The Company’s business environment and challenges facing | 8 |
| | | |
| 4. | Basic Policy for Accounting Policy Selection | 8 |
| | | |
| 5. | Consolidated Financial Statements and Significant Notes Thereto | 9 |
| | (1) Consolidated balance sheet | 9 |
| | (2) Consolidated statement of income and comprehensive income | 11 |
| | (3) Consolidated statement of changes in net assets | 12 |
| | (4) Consolidated statement of cash flows | 14 |
| | (5) Notes to consolidated financial statements | 15 |
| | (Notes on going concern assumptions) | 15 |
| | (Important matters underlying the preparation of consolidated financial statements) | 15 |
| | (Additional information) | 15 |
| | (Omission of disclosures) | 15 |
| | (Segment information) | 16 |
| | (Per share information) | 19 |
| | (Subsequent events) | 19 |
| | | |
| 6. | Separate Financial Statements | 20 |
| | (1) Balance sheet | 20 |
| | (2) Statement of income | 22 |
| | (3) Statement of changes in net assets | 23 |
| | | |
| 7. | Other | 25 |
| | (1) Sales results of the Electronic Components Segment | 25 |
| | (2) Change of Directors and Officers | 25 |
1．Overview of Financial Results for the Fiscal Year Ended March 31, 2019
(1) Overview of financial results for the fiscal year ended March 31, 2019
Regarding the global economy during the fiscal year ended March 31, 2019, consumer spending improved in the U.S. on the back of improving labor market and increasing consumer income and corporate performance also remained strong. On the other hand, in Europe, although domestic demand was firm, exports remained sluggish, leading to a downward economy. In China, trade frictions had a huge impact and the economy has been stagnant. In Japan, although consumer spending and public investment were slightly weak in the second half of the current fiscal year, exports and capital investment remained firm and the economy remained solid.
Operating results for the fiscal year ended March 31, 2019 are summarized below. Net sales shown below represent net sales to external parties, after elimination of inter-segment sales (e.g., sales made by the Electronic Components Segment to the Automotive Infotainment Segment (supply of products) or sales made by the Logistics Segment to the Electronic Components Segment and the Automotive Infotainment Segment (provision of logistics services)).
(Results of each operating segment)
| (i) | Electronic Components Segment |
In the electronics industry, although an economic slowdown had certain impact on the automotive market, an increasing number of automakers as well as electronics industry are actively moving forward with next generation CASE (Connected, Autonomous, Shared & Services, Electric) and those companies were spurred to invest in CASE development activities. On the other hand, negative growth has had repercussions for the smartphone market. Each market of EHII (Energy, Healthcare, Industry, IoT) has made progress in IoT (Internet of Things) development and the application of AI (Artificial Intelligence) and robotics has also been expanding.
Under these circumstances surrounding the Electronic Components Segment, in the automotive market, we recorded steady sales for modules and radio frequency communication products. However, in the consumer market, the sales for various smartphone related products for the fiscal year ended March 31, 2019 decreased compared to the previous fiscal year. The Japanese yen depreciated more than we had expected. However, the reduced demand for smartphone related products was not fully offset by the depreciation in the Japanese yen, and overall, net sales and operating income for the fiscal year ended March 31, 2019 both decreased compared to the previous fiscal year.
[Automotive market]
In the automotive market within the Electronic Components Segment, we recorded steady sales for module products such as electric shifters and door modules, as well as radio frequency communication products such as Bluetooth®, W-LAN and LTE. The Company formed a strategic partnership with a Chinese state enterprise to accelerate C-V2X (Cellular Vehicle to Everything), automotive communication technology, in China. Also, all of the Company’s overseas manufacturing companies have transitioned to “IATF16949”, the international standard for quality management system. Moreover, the Company has received various awards from Japanese and foreign automakers.
Net sales in this market for the fiscal year ended March 31, 2019 amounted to ¥277.8 billion, a decrease of 1.9% compared to the previous fiscal year.
[Consumer market]
In the consumer market within the Electronic Components Segment, the sales of certain component products including switches and camera actuators were weak due to reduced demand in the smartphone market. In EHII, we actively promoted proposal activities such as displaying our products at exhibitions held in countries such as China, India, Malaysia, in order to introduce our products into emerging markets for optical communication and IoT.
Net sales in this market for the fiscal year ended March 31, 2019 amounted to ¥190.7 billion, a decrease of 17.4% compared to the previous fiscal year.
As a result, net sales in the Electronic Components Segment for the fiscal year ended March 31, 2019 amounted to ¥468.6 billion, a decrease of 8.8%, and operating income amounted to ¥29.6 billion, a decrease of 44.1% compared to the previous fiscal year.
| (ii) | Automotive Infotainment Segment |
In the automotive industry, the CASE domains are seeing major changes that are unparalleled in other industries, such as the constant connection to the internet, autonomous driving, automobile sharing services, and a shift toward vehicle electrification such as with hybrid cars and electric vehicles. As represented by the entry of electronics companies into the automobile industry, collaboration between the in-car IT field which centers on infotainment systems, and new fields such as autonomous driving and AI is expanding, leading to intensified competition among companies beyond the frameworks of the business area or industry.
Under these circumstances, in the Automotive Infotainment Segment, we exhibited demo cars equipped with our high-quality premium sound system at a motor show in China, which has become the world's largest automotive market, in an effort to appeal the Alpine brand. In the domestic market, a new float-type navigation system, which was developed for vehicles that cannot have a large screen monitor installed, was introduced. We also focused on expanding sales for “Alpine Style Customized Cars,” which are equipped with system products built around navigation systems, as well as high-quality vehicle interiors. In the North American aftermarket, we launched new products of the same type that are compatible with Apple CarPlay and Android Auto in an effort to gain new customers. In the OEM market for automakers, while sales of navigation systems and displays for high-end European car manufacturers were strong, we made further effort to increase sales for speakers and audio amplifiers that pursue realistic sound quality, as well as thin and light speakers that are fuel efficient and environment-friendly, to further expand business.
As one of the initiatives to establish more solid foundation for future growth, we have increased investment in capital in Neusoft Reach Automotive Technology (Shanghai) Co., Ltd., which is an affiliated company accounted for using the equity method, in order to strengthen our commitment to the Chinese market in which the markets for electric vehicles and car sharing services are expected to expand. Furthermore, focusing on the sound quality in the vehicles, which has become increasingly important with the realization of autonomous driving, we formed a capital and business alliance with Faital S.p.A., Italian manufacturer of high-class speakers.
As a result, net sales in the Automotive Infotainment Segment for the fiscal year ended March 31, 2019 amounted to ¥303.5 billion, an increase of 13.4%, and operating income amounted to ¥13.9 billion, an increase of 1.4% compared to the previous fiscal year.
* Apple CarPlay is a trademark of Apple Inc., registered in the U.S. and other countries. Android Auto is a trademark of Google Inc., registered in the U.S. and other countries.
In the electronic component industry, which is a major source of customers of the Logistics Segment, the demand for electronic components related to automobiles has been solid but smartphones- and equipment-related shipments have been weak since the second half of the current fiscal year.
With such a demand trend, in this segment, we expanded our bases of operations, warehouses and network on a global basis, and promoted sales activities through proposals in collaboration between domestic and overseas bases. In Japan, the construction of a large warehouse in Kazo City, Saitama Prefecture was completed and started operation in May last year, whose high-quality storage condition and service has contributed to the expansion of the volume of cargo handled. Overseas, we have made our efforts to expand our bases of operations to build more solid business foundation. In China, the Jiangsu Taichung warehouse near Shanghai was expanded to accommodate an increased demand. In ASEAN and South Asia, the Singapore warehouse was relocated aiming to expand storage business, and we also launched export and storage businesses in India. In Thailand, where higher cargo volume for electronic components and auto parts is expected, construction of a new warehouse started, and we also prepared for launch of business in Vietnam. In North America, in addition to our existing customs bond business, we worked to expand our Mexico business, and in Europe, we are establishing a business location in Hungary to launch our business in Eastern Europe. Also, we signed an agreement with Logicom Co., Ltd. to establish a joint venture to build competitive high-value-added logistics services for automotive parts and to expand our business.
As a result, net sales in the Logistics Segment for the fiscal year ended March 31, 2019 amounted to ¥66.8 billion, an increase of 3.4%, and operating income amounted to ¥4.7 billion, a decrease of 4.3% compared to the previous fiscal year.
On the consolidated basis, the Alps Group, consisting of three operating segments noted above and other, recorded net sales of ¥851.3 billion, operating income of ¥49.6 billion, ordinary income of ¥43.6 billion, and net income attributable to owners of parent of ¥22.1 billion for the fiscal year ended March 31, 2019, which were decreases of 0.8%, 31.0%, 34.6% and 53.3%, respectively, compared to the previous fiscal year.
| (2) | Overview of financial position for the fiscal year ended March 31, 2019 |
(Assets, Liabilities and Net Assets)
Total assets as of March 31, 2019 were ¥675.7 billion, an increase of ¥5.8 billion from the end of the previous fiscal year. Equity increased by ¥6.4 billion due to factors such as increase in capital surplus and retained earnings, to ¥365.3 billion, and equity ratio was 54.1%.
Current assets as of March 31, 2019 were ¥402.9 billion, an increase of ¥2.5 billion from the end of the previous fiscal year, due to factors such as increases in cash and deposits.
Non-current assets as of March 31, 2019 were ¥272.8 billion, an increase of ¥3.2 billion from the end of the previous fiscal year, due to factors such as increases in buildings and structures and intangible assets.
Current liabilities as of March 31, 2019 were ¥188.0 billion, a decrease of ¥9.6 billion from the end of the previous fiscal year, due to factors such as increases in provision for product warranties and short-term borrowings, and decreases in trade notes and accounts payable and accrued income taxes.
Non-current liabilities as of March 31, 2019 were ¥92.3 billion, an increase of ¥35.9 billion from the end of the previous fiscal year, due to factors such as an increase in long-term borrowings and a decrease in deferred tax liabilities.
“Partial Amendments to Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan Statement No. 28, February 16, 2018) has been applied from the beginning of the fiscal year ended March 31, 2019. Therefore, the balance sheet amounts as of the end of the previous fiscal year have been restated for comparative purposes.
| (3) | Overview of cash flows for the fiscal year ended March 31, 2019 |
The balance of cash and cash equivalents (the “cash”) as of March 31, 2019 was ¥118.3 billion, a decrease of ¥2.4 billion from the end of the previous fiscal year.
(Cash flows from operating activities)
The increase in cash from operating activities for the fiscal year ended March 31, 2019 was ¥72.6 billion, compared to an increase of ¥70.3 billion for the previous fiscal year. The increase was mainly related to an increase in cash due to ¥44.1 billion of depreciation and amortization, ¥41.1 billion of income before income taxes, and ¥4.7 billion increase in trade and other payables, as well as a decrease in cash due to ¥15.8 billion of income taxes paid and ¥1.9 billion decrease in allowance for doubtful accounts.
(Cash flows from investing activities)
The decrease in cash from investing activities for the fiscal year ended March 31, 2019 was ¥67.4 billion, compared to a decrease of ¥66.7 billion for previous fiscal year. The decrease was mainly related to a decrease in cash due to ¥60.8 billion used for acquisition of property, plant and equipment and intangible assets and ¥4.7 billion increase in time deposits.
(Cash flows from financing activities)
The decrease in cash from financing activities for the fiscal year ended March 31, 2019 was ¥6.9 billion, compared to a decrease of ¥2.9 billion for the previous fiscal year. The decrease was mainly related to a decrease in cash due to ¥17.5 billion used for purchase of treasury stock, ¥11.5 billion used for purchase of treasury stock of subsidiaries, ¥8.8 billion of cash dividends paid, ¥6.0 billion of cash dividends paid to non-controlling interests, and ¥4.2 billion decrease in short-term loans payable, as well as an increase in cash due to ¥46.0 billion of proceeds from long-term loans payable.
Movement of the Company’s management indicators related to financial position are as follows:
| | Fiscal year ended March 31, 2015 | Fiscal year ended March 31, 2016 | Fiscal year ended March 31, 2017 | Fiscal year ended March 31, 2018 | Fiscal year ended March 31, 2019 |
| Equity ratio (%) | | | | | |
| Equity ratio based on market value (%) | | | | | |
| Debt redemption period (years) | | | | | |
| Interest coverage ratio | | | | | |
| Equity ratio: | Equity / Total assets |
| Equity ratio based on market value: | Market capitalization / Total assets |
| Debt redemption period: | Interest-bearing liabilities / Operating cash flows |
| Interest coverage ratio: | Operating cash flows / Interest expenses paid |
* Each indicator is calculated using financial figures on a consolidated basis.
* Market capitalization is calculated by multiplying closing price of the stock at the end of the year by number of shares issued and outstanding at the end of the year.
* Operating cash flows are derived from cash flows from operating activities on the consolidated statement of cash flows. Interest-bearing liabilities are aggregate of corporate bonds, convertible bonds, bonds with subscription rights to shares, and borrowings on the consolidated balance sheet. Interest expenses paid is derived from interest paid on the consolidated statement of cash flows.
* “Partial Amendments to Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan Statement No. 28, February 16, 2018) has been applied from the beginning of the fiscal year ended March 31, 2019. Indicators for the previous fiscal years have been recalculated to apply the standard retrospectively.
The outlook for the global economy is becoming increasingly uncertain due to the rapidly changing international situation, including the United States' protectionist policies, the direction of BREXIT in the United Kingdom, and the slowdown in the Chinese economy. As a result, there are concerns about a slowdown in the Japanese economy.
In this economic environment, the Group launched its 1st Mid-Term Business Plan. In order to realize our vision of becoming an “Innovative T-Shaped Company (ITC101)” we will accelerate the integration synergies and develop new products for high value-added business in order to achieve greater results faster. Especially, we aim to expand our logistics business through expansion of global network and promote group-wide business operations to enhance our corporate value.
| (i) | Electronic Components Segment |
In the Electronic Components Segment, while we accelerate new proposals for CASE and development of new system and module for Premium HMI (Human Machine Interface) that realizes comfortable vehicle operation and interior space, we will focus on developing new device products for high-value-added domains that can be differentiated from other device products.
For the fiscal year ending March 31, 2020, net sales in the Electronic Components Segment is expected to be ¥458.0 billion, a decrease of 2.3% compared to the fiscal year ended March 31, 2019, and operating income is expected to be ¥30.0 billion, an increase of 1.3% compared to the fiscal year ended March 31, 2019.
| (ii) | Automotive Infotainment Segment |
In order to respond to CASE, a new trend within the automotive industry, the Automotive Infotainment Segment will strengthen development of Premium HMI that offers both driver and passenger a richer space and experience through the fusion of Electronic Components Segment’s sensing device and communication device technology and this segment’s software technology, aiming to create more appealing products.
For the fiscal year ending March 31, 2020, net sales in the Automotive Infotainment Segment is expected to be ¥322.5 billion, an increase of 6.2% compared to the fiscal year ended March 31, 2019, and operating income is expected to be ¥14.5 billion, an increase of 4.2% compared to the fiscal year ended March 31, 2019.
The Logistics Segment will continue to expand its business bases and network to expand businesses globally by focusing on external sales around two axes: market and customers.
For the fiscal year ending March 31, 2020, net sales in the Logistics Segment is expected to be ¥73.2 billion, an increase of 9.4% compared to the fiscal year ended March 31, 2019, and operating income is expected to be ¥4.7 billion, a decrease of 0.5% compared to the fiscal year ended March 31, 2019.
<Consolidated earnings forecasts for the fiscal year ending March 31, 2020>
Net Sales: ¥868.5 billion (2.0% increase compared to the fiscal year ended March 31, 2019)
of which, ¥438.0 billion for the six months ending September 30, 2019
Operating income: ¥50.0 billion (0.7% increase compared to the fiscal year ended March 31, 2019)
of which, ¥23.5 billion for the six months ending September 30, 2019
Ordinary income: ¥47.0 billion (7.8% increase compared to the fiscal year ended March 31, 2019)
of which, ¥22.0 billion for the six months ending September 30, 2019
Net income attributable to owners of parent: ¥31.5 billion (42.4% increase compared to the fiscal year ended March 31, 2019)
of which, ¥15.0 billion for the six months ending September 30, 2019
Estimated exchange rates used in the earnings forecasts are as follows:
$US 1= ¥110.00 €1=¥125.00
| (5) | Basic policy for distribution of earnings and dividends for the fiscal year ended March 31, 2019 and for the fiscal year ending March 31, 2020 |
Our basic policy is to actively adopt shareholder return measures such as share buybacks according to surplus capital and financial capacity, in addition to making profit distribution decision based on the consolidated profit of Electronic Components Segment and Automotive Infotainment Segment, considering the balance of (i) return profits to shareholders, (ii) allocate funds to R&D and capital investment for future business development and enhanced competitiveness, and (iii) retain profit internally.
We determine profit allocation in consideration of a balance of all three elements with respect to internal reserves as described above. In accordance with this policy, we will make a proposal at the 86th Ordinary General Meeting of Shareholders to pay a year-end dividend of ¥25 per share for the fiscal year ended March 31, 2019, taking into overall consideration of our financial performance, financial position, and shareholder expectations for dividends. Further, we plan the following dividend distributions in the fiscal year ending March 31, 2020:
Interim dividend ¥20, Year-end dividend ¥20, Total of ¥40 (per share)
This information is omitted because there is no new risk to disclose other than those disclosed in the Annual Securities Report filed on June 22, 2018.
Forward looking statements, forecasts, plans, policies, strategies in these material that are not finalized facts, are derived from the Company’s forecast based on the information that was available as of the report release date and certain assumptions deemed to be reasonable. Actual results may differ materially from the forecasts due to various risk factors and uncertainties.
2．Information Regarding the Company
This information is omitted because there is no material change from disclosures in “Overview of business” and “Affiliated companies” in the Annual Securities Report filed on June 22, 2018.
3．Management Policy, Business Environment and Challenges Facing
(1) The Company’s basic management policy
The Group has three pillars: Electronic Components Segment, Automotive Infotainment Segment and Logistics Segment, each of which develops synergy from close collaboration with each other and operates its business globally.
Our goal is to become an “Innovative T-shaped Company (ITC101)”. By integrating “vertical I-Shaped” strength being the developing of core devices to create competitive products and “horizontal I-Shaped” strength being the developing of systems utilizing a wide range of devices and technologies, and by providing new values, the Company is determined to become an “Innovative T-Shaped Company” with the aim of ¥1 trillion net sales and 10% operating income margin by 2024. To this end, the Alps Company will promote the “evolution from component supplier to functional device partner”, and the Alpine Company will “evolve into mobility life creator with in-house core devices”.
Guided by a philosophy of “creating new value that satisfies stakeholders and is friendly to the Earth”, the Electronic Components Segment aims to realize comfortable communication between people and media. The Company’s approach to “monozukuri” is summed up in the phrase, “perfecting the art of electronics,” meaning we create products that are “Right (optimal)”, “Unique (distinctive)”, and “Green (environment-friendly)”. In other words, it is a product that has not only sophisticated appearances but also high-quality functions with environmental considerations such as energy and resource savings. To realize this, we are constantly pursuing advanced monozukuri based on various unique technologies such as microfabrication, mold processing, software/IC design, and material processing. In addition to component products such as switches and sensors, and module products, we are also working on new product development and business domains such as green devices.
In the Automotive Infotainment Segment, by integrating the Electronic Components Segment’s in-car device/module products and the Automotive Infotainment Segment’s products for automakers, and with the synergy effect of the technologies cultivated by both segments and their respective fields of expertise, going forward, we will work on creative and innovative product development to provide services that offer safe, comfortable and impressive driver and passenger experiences and to realize high-quality transportation spaces.
In the Logistics Segment, Alps Logistics Co., Ltd. handles electronic components as its main cargo, under a corporate philosophy of “pursuing the best form of logistics that supports monozukuri and contributing to enriching the society”, and its business domain is defined as an “integrated logistics service specializing in electronic components”.
Each group company collaborates with each other under the corporate philosophy, promotes medium- and short-term management plans, and aims to expand business and maximize corporate value.
(2) The Company’s mid- and long-term business strategy and target management indicators
The 1st Mid-Term Business Plan for the three-year period from April 2019 to the end of March 2022 has started. Our goal is to become an “Innovative T-shaped Company (ITC101)”. We aim to achieve net sales of ¥1 trillion and operating income margin of 10% by 2024, by evolving from component supplier to functional device partner and by evolving into mobility life creator with in-house core devices.
In the Electronic Components Segment, we aim to integrate our three core technologies including HMI, sensors and connectivity, and evolve them into functional devices that incorporate software.
In the Automotive Infotainment Segment, amid changes in the usage style of automobiles, we aim to develop proposal-based system products that consider the entire car lifestyle, and expand further to develop high-value-added products that combine these products with core devices cultivated through the Electronic Components Segment.
In the Logistics Segment, the 4th Mid-Term Business Plan for the three-year period from the fiscal year ending March 31, 2020 has started. Our Mid-Term Business Plan is to “provide the best form of logistics that keeps evolving to more customers.” We will take initiatives to “achieve consolidated net sales of ¥120 billion” and to “improve corporate quality”.
(3) The Company’s business environment and challenges facing
While environment surrounding the Group is extremely difficult to forecast amid growing uncertainty, demand for electronics products and vehicles is expected to grow, driven by the increased demand for high-performance and multi-functional products in developed countries, and the increasing demand in emerging countries is expected to lead the growth in medium- and long-term.
In the Electronic Components Segment, the automotive market, in which electronics is becoming increasingly important, and the smartphone market, which is experiencing high demand for high-performance components despite slowing growth, and the VR market, which is emerging, are expected to continue to expand. We will continue to create highly competitive products from the three technological domains of HMI, Sensors and Connectivity to meet those needs. In order to accelerate development and improve productivity and quality, we will further strengthen our efforts of our technology, sales, and manufacturing divisions to create Number 1 products.
In addition, as our customers are expanding globally and demand for specific products fluctuates dramatically over a short period of time, we need to implement and establish a more robust and flexible production system. In addition to promoting the establishment of production bases in Japan and overseas, we will also increase profitability by improving productivity, including that of our back-office divisions. Furthermore, in EHII market which has a wide range of business models, we will work to establish a business foundation through the development of proprietary products and collaborations and alliances with other companies.
In the Automotive Infotainment Segment, today’s automotive industry has entered a phase of tremendous transformation that is said to occur only once every 100 years. In particular, the four domains which are referred to as CASE are seeing, major changes that are unparalleled by other industries, such as the constant connection to the internet, autonomous driving, automobile sharing services, and a shift toward vehicle electrification such as with hybrid cars and electric vehicles. In addition, the trend of mergers and acquisitions that transcend the framework of the automobile industry is accelerating even faster than in the past, as exemplified by the expansion of IT companies into the automotive industry. Focusing management resources on CASE domains will continue to be a trend in the automobile industry as a whole, and suppliers such as HMI are expected not only to develop module products, but also to propose total system solutions for the entire automotive industry.
In light of these rapidly changing market conditions for automotive infotainment equipment, to develop new products that combine the strengths of the Electronic Components Segment and the business, and to shorten the lead time for commercialization are urgent issues. By creating synergies through the business integration, we will respond swiftly to these issues and meet the expectations of customers.
In the Logistics Segment, the electronic components industry, which is our main customer, is expected to continue growing due to the advancement of computerization of various equipment and automobiles as well as the expansion of demand in emerging countries. On the other hand, customers’ need for logistics reforms is becoming sophisticated and diverse due to progress in optimizing production and rationalizing production and sales in response to changes in products and markets. Under these circumstance, by pursuing “the best form of logistics” for each customer and providing it to more customers, we aim to grow further globally.
We will also contribute to the revenue of other businesses by strengthening sales activities outside the Group.
4．Basic Policy for Accounting Policy Selection
Considering the comparability of consolidated financial statements between periods and companies, for the time being, the Company and the Group intends to prepare consolidated financial statements based on Japanese generally accepted accounting principles.
With regard to the application of IFRS, our policy is to take appropriate actions considering domestic and foreign trends while improving the system environment.
5. Consolidated Financial Statements and Significant Notes Thereto
(1) Consolidated balance sheet
| | | (Millions of yen) |
| |
As of March 31, 2018
| As of March 31, 2019 |
| Assets | | |
| Current assets | | |
| Cash and deposits | 121,554 | 122,079 |
| Trade notes and accounts receivable | 160,107 | 156,875 |
| Merchandise and finished goods | 59,693 | 58,314 |
| Work in process | 11,496 | 10,574 |
| Raw material and supplies | 24,936 | 26,946 |
| Others | 22,955 | 28,434 |
| Allowance for doubtful accounts | (436) | (320) |
| Total current assets | 400,307 | 402,905 |
| Non-current assets | | |
| Property, plant and equipment | | |
| Buildings and structures | 134,447 | 146,174 |
| Accumulated depreciation and impairment loss | (95,739) | (96,552) |
| Buildings and structures, net | 38,708 | 49,621 |
| Machinery, equipment and vehicles | 232,870 | 248,709 |
| Accumulated depreciation and impairment loss | (163,616) | (177,574) |
| Machinery, equipment and vehicles, net | 69,254 | 71,134 |
| Tools, furniture and fixtures and molds | 136,845 | 140,058 |
| Accumulated depreciation and impairment loss | (116,956) | (118,017) |
| Tools, furniture and fixtures and molds, net | 19,888 | 22,040 |
| Land | 30,574 | 30,899 |
| Construction in progress | 27,465 | 13,949 |
| Total property, plant and equipment, net | 185,891 | 187,646 |
| Intangible assets, net | 18,572 | 23,248 |
| Investments and other assets | | |
| Investment securities | 25,261 | 27,220 |
| Deferred tax assets | 17,469 | 16,600 |
| Retirement benefit assets | 46 | 61 |
| Others | 25,048 | 18,877 |
| Allowance for doubtful accounts | (2,722) | (842) |
| Total investments and other assets | 65,103 | 61,917 |
| Total non-current assets | 269,567 | 272,811 |
| Total assets | 669,874 | 675,717 |
| | | (Millions of yen) |
| |
As of March 31, 2018
| As of March 31, 2019 |
| Liabilities | | |
| Current liabilities | | |
| Trade notes and accounts payable | 73,764 | 69,596 |
| Short-term borrowings | 36,810 | 38,245 |
| Accrued expenses | 18,151 | 17,863 |
| Accrued income taxes | 7,602 | 4,689 |
| Provision for bonuses | 11,991 | 10,574 |
| Provision for directors’ bonuses | 259 | 125 |
| Provision for product warranties | 6,960 | 8,791 |
| Other provisions | 253 | 370 |
| Others | 41,867 | 37,773 |
| Total current liabilities | 197,660 | 188,029 |
| Non-current liabilities | | |
| Long-term borrowings | 33,610 | 70,570 |
| Deferred tax liabilities | 2,646 | 1,038 |
| Defined benefit liabilities | 14,262 | 14,739 |
| Provision for directors’ retirement benefits | 223 | 206 |
| Provision for environmental measures | 590 | 590 |
| Others | 5,008 | 5,181 |
| Total non-current liabilities | 56,341 | 92,326 |
| Total liabilities | 254,001 | 280,356 |
| Net assets | | |
| Shareholders’ equity | | |
| Common stock | 38,730 | 38,730 |
| Capital surplus | 56,065 | 126,561 |
| Retained earnings | 213,790 | 227,078 |
| Treasury stock | (3,497) | (18,283) |
| Total shareholders’ equity | 305,088 | 374,086 |
| Accumulated other comprehensive income | | |
| Unrealized gains on securities | 4,734 | 3,194 |
| Deferred gains (losses) on hedges | (0) | 12 |
| Revaluation reserve for land | (505) | (496) |
| Foreign currency translation adjustments | (5,339) | (7,628) |
| Remeasurements of defined benefit plans | (2,800) | (3,822) |
| Total accumulated other comprehensive loss | (3,912) | (8,740) |
| Subscription rights to shares | 333 | 361 |
| Non-controlling interests | 114,362 | 29,652 |
| Total net assets | 415,872 | 395,360 |
| Total liabilities and net assets | 669,874 | 675,717 |
(2) Consolidated statement of income and comprehensive income
| | | (Millions of yen) |
| | Fiscal year ended March 31, 2018 | Fiscal year ended March 31, 2019 |
| Net sales | 858,317 | 851,332 |
| Cost of sales | 669,721 | 689,337 |
| Gross profit | 188,596 | 161,995 |
| Selling, general and administrative expenses | 116,688 | 112,353 |
| Operating income | 71,907 | 49,641 |
| Non-operating income | | |
| Interest income | 560 | 705 |
| Dividend income | 426 | 481 |
| Gain on settlement of molds | 347 | － |
| Subsidy income | 309 | 471 |
| Miscellaneous income | 853 | 1,060 |
| Total non-operating income | 2,497 | 2,718 |
| Non-operating expenses | | |
| Interest expense | 768 | 1,297 |
| Foreign exchange losses | 3,064 | 2,082 |
| Share of loss of entities accounted for using equity method | 25 | 1,584 |
| Commission fee | 2,354 | 2,586 |
| Miscellaneous expenses | 1,474 | 1,202 |
| Total non-operating expense | 7,687 | 8,754 |
| Ordinary income | 66,717 | 43,605 |
| Extraordinary income | | |
| Gain on sale of non-current assets | 366 | 544 |
| Gain on sale of investment securities | － | 554 |
| Others | 245 | 94 |
| Total extraordinary income | 612 | 1,193 |
| Extraordinary loss | | |
| Loss on disposal of non-current assets | 880 | 595 |
| Impairment loss | 275 | 1,839 |
| Business structure improvement expenses | 39 | 860 |
| Others | 911 | 314 |
| Total extraordinary loss | 2,107 | 3,609 |
| Income before income taxes | 65,222 | 41,189 |
| Current income taxes | 13,350 | 10,890 |
| Deferred income taxes | (3,059) | 1,124 |
| Total income taxes | 10,291 | 12,014 |
| Net income | 54,931 | 29,174 |
| Net income attributable to: | | |
| Owners of parent | 47,390 | 22,114 |
| Non-controlling interests | 7,541 | 7,059 |
| Other comprehensive income (loss) | | |
| Unrealized gains (losses) on securities | 1,176 | (2,689) |
| Deferred gains (losses) on hedges | (1) | 1 |
| Foreign currency translation adjustments | 4,010 | (3,162) |
| Remeasurements of defined benefit plans | 2,696 | (628) |
| Share of other comprehensive loss of investments accounted for using the equity method | (36) | (1,230) |
| Total other comprehensive income (loss) | 7,845 | (7,708) |
| Comprehensive income | 62,776 | 21,465 |
| Comprehensive income attributable to: | | |
| Owners of parent | 52,971 | 18,123 |
| Non-controlling interests | 9,805 | 3,341 |
(3) Consolidated statement of changes in net assets
For the fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018)
| | | | | (Millions of yen) |
| | Shareholders’ equity |
| | Common stock | Capital surplus | Retained earnings | Treasury stock | Total shareholders’ equity |
Balance at the beginning of the year | 38,730 | 56,071 | 172,677 | (3,493) | 263,985 |
| Changes during the year | | | | | |
| Dividends | | | (6,268) | | (6,268) |
Net income attributable to owners of parent | | | 47,390 | | 47,390 |
| Purchase of treasury stock | | | | (3) | (3) |
| Disposal of treasury stock | | | | | － |
Reversal of revaluation reserve for land | | | (8) | | (8) |
| Share exchange | | | | | － |
Change in shares of parent arising from transactions with non-controlling shareholders | | (5) | | | (5) |
Changes in items other than shareholders' equity, net | | | | | |
| Total changes during the year | － | (5) | 41,112 | (3) | 41,103 |
| Balance at the end of the year | 38,730 | 56,065 | 213,790 | (3,497) | 305,088 |
| Accumulated other comprehensive income | Subscription rights to shares | Non-controlling interests | Total net assets |
| | Unrealized gains on securities | Deferred losses on hedges | Revaluation reserve for land | Foreign currency translation adjustments | Remeasurements of defined benefit plans | Total accumulated other comprehensive income (loss) |
Balance at the beginning of the year | 4,479 | (0) | (506) | (8,481) | (4,976) | (9,483) | 248 | 106,365 | 361,114 |
| Changes during the year | | | | | | | | | |
| Dividends | | | | | | | | | (6,268) |
Net income attributable to owners of parent | | | | | | | | | 47,390 |
| Purchase of treasury stock | | | | | | | | | (3) |
| Disposal of treasury stock | | | | | | | | | － |
Reversal of revaluation reserve for land | | | | | | | | | (8) |
| Share exchange | | | | | | | | | － |
Change in shares of parent arising from transactions with non-controlling shareholders | | | | | | | | | (5) |
Changes in items other than shareholders' equity, net | 255 | (0) | 0 | 3,141 | 2,176 | 5,571 | 85 | 7,997 | 13,654 |
| Total changes during the year | 255 | (0) | 0 | 3,141 | 2,176 | 5,571 | 85 | 7,997 | 54,757 |
| Balance at the end of the year | 4,734 | (0) | (505) | (5,339) | (2,800) | (3,912) | 333 | 114,362 | 415,872 |
For the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)
| | | | | (Millions of yen) |
| | Shareholders’ equity |
| | Common stock | Capital surplus | Retained earnings | Treasury stock | Total shareholders’ equity |
Balance at the beginning of the year | 38,730 | 56,065 | 213,790 | (3,497) | 305,088 |
| Changes during the year | | | | | |
| Dividends | | | (8,815) | | (8,815) |
Net income attributable to owners of parent | | | 22,114 | | 22,114 |
| Purchase of treasury stock | | | | (17,704) | (17,704) |
| Disposal of treasury stock | | 17 | | 33 | 51 |
Reversal of revaluation reserve for land | | | (11) | | (11) |
| Share exchange | | 70,515 | | 2,884 | 73,400 |
Change in shares of parent arising from transactions with non-controlling shareholders | | (36) | | | (36) |
Changes in items other than shareholders' equity, net | | | | | |
| Total changes during the year | － | 70,496 | 13,288 | (14,786) | 68,997 |
| Balance at the end of the year | 38,730 | 126,561 | 227,078 | (18,283) | 374,086 |
| | Accumulated other comprehensive income | Subscription rights to shares | Non- controlling interests | Total net assets |
| | Unrealized gains (losses) on securities | Deferred gains (losses) on hedges | Revaluation reserve for land | Foreign currency translation adjustments | Remeasurements of defined benefit plans | Total accumulated other comprehensive loss |
Balance at the beginning of the year | 4,734 | (0) | (505) | (5,339) | (2,800) | (3,912) | 333 | 114,362 | 415,872 |
| Changes during the year | | | | | | | | | |
| Dividends | | | | | | | | | (8,815) |
Net income attributable to owners of parent | | | | | | | | | 22,114 |
| Purchase of treasury stock | | | | | | | | | (17,704) |
| Disposal of treasury stock | | | | | | | | | 51 |
Reversal of revaluation reserve for land | | | | | | | | | (11) |
| Share exchange | | | | | | | | | 73,400 |
Change in shares of parent arising from transactions with non-controlling shareholders | | | | | | | | | (36) |
Changes in items other than shareholders' equity, net | (1,540) | 13 | 9 | (2,289) | (1,021) | (4,828) | 28 | (84,709) | (89,509) |
| Total changes during the year | (1,540) | 13 | 9 | (2,289) | (1,021) | (4,828) | 28 | (84,709) | (20,511) |
| Balance at the end of the year | 3,194 | 12 | (496) | (7,628) | (3,822) | (8,740) | 361 | 29,652 | 395,360 |
(4) Consolidated statement of cash flows
| | | (Millions of yen) |
| | Fiscal year ended March 31, 2018 | Fiscal year ended March 31, 2019 |
| Cash flows from operating activities | | |
| Income before income taxes | 65,222 | 41,189 |
| Depreciation and amortization | 36,004 | 44,188 |
| Impairment loss | 275 | 1,839 |
| Decrease in allowance for doubtful accounts | (82) | (1,985) |
| Increase (decrease) in provision for bonuses | 1,481 | (1,386) |
| Increase in provision for product warranties | 822 | 1,901 |
| Decrease in liability for defined benefit liabilities | (1,467) | (879) |
| Interest and dividend income | (986) | (1,186) |
| Interest expense | 768 | 1,297 |
| Share of loss of entities accounted for using equity method | 25 | 1,584 |
| (Increase) decrease in trade and other receivables | (9,229) | 1,457 |
| Increase in inventories | (4,700) | (912) |
| Increase (decrease) in trade and other payables | (4,283) | 4,739 |
| Others | (474) | (3,513) |
| Subtotal | 83,375 | 88,332 |
| Interest and dividend received | 1,139 | 1,386 |
| Interest paid | (771) | (1,237) |
| Income taxes paid | (13,356) | (15,810) |
| Net cash provided by operating activities | 70,387 | 72,671 |
| Cash flows from investing activities | | |
| Increase in time deposits | (1,047) | (4,700) |
| Proceeds from withdrawal of time deposits | 1,262 | 1,690 |
| Acquisition of property, plant and equipment | (61,075) | (52,348) |
| Proceeds from sales of property, plant and equipment | 769 | 1,153 |
| Acquisition of intangible assets | (6,233) | (8,546) |
| Proceeds from sales of investment securities | 1 | 1,283 |
| Purchase of shares of affiliated companies | (127) | (1,296) |
| Payments for investments in capital | 0 | (3,303) |
| Others | (272) | (1,335) |
| Net cash used in investing activities | (66,722) | (67,405) |
| Cash flows from financing activities | | |
| Net decrease in short-term loans payable | (2,703) | (4,200) |
| Proceeds from long-term loans payable | 10,697 | 46,052 |
| Repayment of long-term loans payable | (1,874) | (3,155) |
| Purchase of treasury stock | (3) | (17,521) |
| Contribution to money held in trust for purchase of treasury stock | － | (1,989) |
| Purchase of treasury stock of subsidiaries | (0) | (11,570) |
| Cash dividends paid | (6,268) | (8,815) |
| Cash dividends paid to non-controlling interests | (2,048) | (6,035) |
| Others | (754) | 325 |
| Net cash used in financing activities | (2,957) | (6,910) |
| Effect of exchange rate changes on cash and cash equivalents | 2,079 | (815) |
| Net increase (decrease) in cash and cash equivalents | 2,786 | (2,460) |
| Cash and cash equivalents at the beginning of the year | 117,991 | 120,778 |
| Cash and cash equivalents at the end of the year | 120,778 | 118,318 |
(5) Notes to consolidated financial statements
(Notes on going concern assumptions)
(Important matters underlying the preparation of consolidated financial statements)
| 1. | Matters concerning scope of consolidation |
The Company has 84 consolidated subsidiaries.
Two companies, TEDA ALPS LOGISTICS SHANGHAI CO., LTD., which was newly established, and Greina Technologies, Inc., whose shares were acquired by the Company, have been included in the scope of consolidation from the fiscal year ended March 31, 2019.
ALPINE ELECTRONICS R&D EUROPE GmbH and ALPINE ELECTRONICS DE ESPANA, S.A. were excluded from the scope of consolidation because they were extinguished as a result of the absorption-type merger with consolidated subsidiary ALPINE ELECTRONICS GmbH as the surviving company, and ALPINE ELECTRONICS RESEARCH OF AMERICA, INC. was excluded from the scope of consolidation because it was extinguished as a result of the absorption-type merger with consolidated subsidiary ALPINE ELECTRONICS OF AMERICA, INC. as the surviving company. ALPINE ELECTRONICS FRANCE S.A.R.L. was excluded from the scope of consolidation because it was liquidated.
The Company has four non-consolidated subsidiaries, including ALPINE DO BRASIL LTDA. All of those non-consolidated companies are small in terms of total assets, net sales, net income (equity equivalent) and retained earnings (equity equivalent) and have not had a significant impact on the consolidated financial statements as a whole and therefore, they were excluded from the scope of consolidation.
| 2. | Matters concerning the application of the equity method |
Investments in the following five affiliates are accounted for by the equity method:
NEUSOFT XIKANG ALPS (SHENYANG) TECHNOLOGY CO., LTD., Device & System Platform Development Center Co., Ltd., NEUSOFT CORPORATION, NEUSOFT REACH AUTOMOTIVE TECHNOLOGY (SHANGHAI) CO., LTD., and DALIAN NEUSOFT HOLDINGS CO., LTD.
The Company has four non-consolidated subsidiaries including ALPINE DO BRASIL LTDA. and seven affiliates not accounted for by the equity method. All of those companies are small in terms of net income (equity equivalent) and retained earnings (equity equivalent) and have not had a significant impact on the consolidated financial statements as a whole. As such, the equity method has not been applied to those companies.
If the closing date of a company accounted for by the equity method is different from the consolidated closing date, the financial statements for each affiliate’s fiscal year are used for consolidation, but the consolidated financial statements are adjusted to include significant transactions that occurred during the period between each affiliate’s closing date and the consolidated closing date.
(Additional information)
(Adoption of “Partial Amendments to Accounting Standard for Tax Effect Accounting”)
“Partial Amendments to Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan Statement No. 28, February 16, 2018) has been applied from the beginning of the fiscal year ended March 31, 2019. Deferred tax assets are presented as part of investments and other assets, and deferred tax liabilities are presented as part of non-current liabilities.
(Omission of disclosures)
Disclosures of notes regarding changes in presentation, consolidated balance sheet, consolidated statement of income and comprehensive income, consolidated statement of changes in net assets, consolidated statement of cash flows, lease transactions, financial instruments, securities, derivative transactions, retirement benefits, stock options, tax effect accounting, asset retirement obligations, real estate for lease, and related party information are omitted because we believe those information is not significant enough to be disclosed in this report.
(Segment information)
| 1. | Overview of reportable segment |
The Company's operating segments are components of its business for which separate financial information is available and which are subject to periodic review by the Board of Directors in order to decide how resources should be allocated and to evaluate financial results.
The Company has group companies for each product and service, and the Company and each group company formulate comprehensive strategies for the products and services we deliver and conduct our business activities.
The Company consists of segments which are classified based on types of products and services and similarities of sales market and it has three reportable segments: Electronic Components Segment, Automotive Infotainment Segment and Logistics Segment.
The Electronic Components Segment develops, manufactures and sells various electronic components. The Automotive Infotainment Segment develops, manufactures and sells in-car audio equipment and information and communication equipment. The Logistics Segment provides transportation, storage, forwarding and other services.
| 2. | Calculation method for net sales, profit/loss, assets, liabilities and other items by reportable segment |
Income of reportable segments is based on operating income. Intersegment sales and transfers are based on actual transactions.
| 3. | Information concerning net sales, profit/loss, assets, liabilities and other items by reportable segment |
For the fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018)
| | | | | | | | (Millions of yen) |
| | Reportable segment | Other (Note 1) | Total | Adjustments (Note 2) | Amount on consolidated financial statements (Note 3) |
| | Electronic Components Segment | Automotive Infotainment Segment | Logistics Segment | Sub-total |
| Net sales | | | | | | | | |
| External | 514,031 | | | | | | － | |
Inter-segment sales and transfers | | | | | | | (75,985) | |
| Total | | | | | | | (75,985) | |
| Segment profit | | | | | | | (1,391) | |
| Segment assets (Note 4) | | | | | | | (76,035) | |
| Segment liabilities (Note 4) | | | | | | | (46,590) | |
| Other items | | | | | | | | |
Depreciation and amortization | | | | | | | 25 | |
Increase in property, plant and equipment and intangible assets | | | | | | | 60 | |
(Note)
| 1. | “Other” represents business segments not included in the reportable segments, and includes the development of systems, office services, financing and leasing businesses. |
| 2. | The adjustments are as follows: |
| (1) | The adjustment of ¥(1,391) million to segment profit represents reclassification adjustments upon consolidation and eliminations of inter-segment transactions. |
| (2) | The adjustment of ¥(76,035) million to segment assets represents eliminations of inter-segment transactions. |
| (3) | The adjustment of ¥(46,590) million to segment liabilities represents eliminations of inter-segment transactions. |
| 3. | Segment profit is reconciled to operating income of the consolidated financial statements. |
| 4. | “Partial Amendments to Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan Statement No. 28, February 16, 2018) has been applied from the beginning of the fiscal year ended March 31, 2019. Financial position figures are those after applicable retrospective adjustments. |
For the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)
(Millions of yen)
|
Reportable segment
| Other (Note 1) | Total | Adjustments (Note 2) | Amount on consolidated financial statements (Note 3) |
| | Electronic Components Segment | Automotive Infotainment Segment | Logistics Segment | Sub-total |
| Net sales | | | | | | | | |
| External | 468,605 | 303,593 | 66,888 | 839,087 | 12,244 | 851,332 | － | 851,332 |
Inter-segment sales and transfers | 15,663 | 7,576 | 38,031 | 61,271 | 14,993 | 76,265 | (76,265) | － |
| Total | 484,269 | 311,170 | 104,919 | 900,359 | 27,238 | 927,597 | (76,265) | 851,332 |
| Segment profit | 29,607 | 13,921 | 4,722 | 48,250 | 1,430 | 49,681 | (39) | 49,641 |
| Segment assets | 473,866 | 218,143 | 75,603 | 767,614 | 44,057 | 811,672 | (135,955) | 675,717 |
| Segment liabilities | 198,580 | 79,632 | 25,082 | 303,295 | 37,818 | 341,114 | (60,758) | 280,356 |
| Other items | | | | | | | | |
Depreciation and amortization | 33,995 | 7,412 | 2,287 | 43,695 | 455 | 44,150 | 37 | 44,188 |
Increase in property, plant and equipment and intangible assets | 33,210 | 13,597 | 5,533 | 52,341 | 562 | 52,903 | 24 | 52,928 |
(Note)
| 1. | “Other” represents business segments not included in the reportable segments, and includes the development of systems, office services, financing and leasing businesses. |
| 2. | The adjustments are as follows: |
| (1) | The adjustment of ¥(39) million to segment profit represents reclassification adjustments upon consolidation and eliminations of inter-segment transactions. |
| (2) | The adjustment of ¥(135,955) million to segment assets represents eliminations of inter-segment transactions. |
| (3) | The adjustment of ¥(60,758) million to segment liabilities represents eliminations of inter-segment transactions. |
| 3. | Segment profit is reconciled to operating income of the consolidated financial statements. |
For the fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018)
| 1. | Information by product and service |
This information is omitted because such information is disclosed in “Segment information”.
| | | | | | (Millions of yen) |
| | Japan | China | United States | Germany | Others | Total |
| | | | | | | |
(Note) Net sales are attributed by country or region based on the customers’ locations.
| (2) | Property, plant and equipment |
| | (Millions of yen) |
| | Japan | China | Others | Total |
| | | | | |
| 3. | Information on major customers |
This information is omitted because there are no customers that account for 10% or more of net sales in the consolidated statements of income and comprehensive income.
For the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)
| 1. | Information by product and service |
This information is omitted because such information is disclosed in “Segment information”.
| | | | | | (Millions of yen) |
| | China | Japan | United States | Germany | Others | Total |
| | | | | | | |
(Note) Net sales are attributed by country or region based on the customers’ locations.
| (2) | Property, plant and equipment |
| | (Millions of yen) |
| | Japan | China | Others | Total |
| | | | | |
| 3. | Information on major customers |
This information is omitted because there are no customers that account for 10% or more of net sales in the consolidated statements of income and comprehensive income.
| c. | Information concerning impairment loss on non-current assets by reportable segment |
For the fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018)
| | | | | | | (Millions of yen) | |
| | | Electronic Components Segment | Automotive Infotainment Segment | Logistics Segment | Other | All/Elimination | Total | |
| | | | | | | | | |
For the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)
| | | | | | | (Millions of yen) | |
| | | Electronic Components Segment | Automotive Infotainment Segment | Logistics Segment | Other | All/Elimination | Total | |
| | | | | | | | | |
| d. | Information concerning amortization of goodwill unamortized balance by reportable segment |
This information is omitted because the amount is insignificant.
| e. | Information concerning gain on negative goodwill by reportable segment |
(Per share information)
| | For the fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018) | For the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019) |
| Net assets per share | 1,537.37 yen | 1,731.36 yen |
| Earnings per share | 241.91 yen | 110.19 yen |
| Diluted earnings per share | 241.82 yen | 110.14 yen |
(Note 1) The basis for calculating book-value per share is as follows:
| | As of March 31, 2018 | As of March 31, 2019 |
| Total net assets (millions of yen) | 415,872 | 395,360 |
| Amount deducted from total net assets (millions of yen) | 114,695 | 30,014 |
| (Subscription rights to shares (millions of yen)) | (333) | (361) |
| (Non-controlling interests (millions of yen)) | (114,362) | (29,652) |
| Total net assets related to common stock at the end of the year (millions of yen) | 301,176 | 365,346 |
| Number of common stock used in calculating net assets per share at the end of the year (thousand) | 195,904 | 211,016 |
(Note 2) The basis for calculating earnings per share and diluted earnings per share is as follows:
| | For the fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018) | For the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019) |
| Earnings per share | | |
| Net income attributable to owners of parent (millions of yen) | 47,390 | 22,114 |
| Amount not attributable to common shareholders (millions of yen) | － | － |
| Net income attributable to owners of parent related to common stock (millions of yen) | 47,390 | 22,114 |
| Average number of shares during the year (thousand) | 195,904 | 200,694 |
| | | |
| Diluted earnings per share | | |
| Adjustment to net income attributable to owners of parent (millions of yen) | － | － |
| Increase in number of common stock (thousand) | 73 | 94 |
| (Subscription rights to shares) | (73) | (94) |
| Summary of dilutive shares that were not included in the calculation of diluted earnings per share because they have no dilutive effect | － | － |
(Subsequent events)
No items to report.
6. Non-consolidated Financial Statements
(1) Balance sheet
| | | (Millions of yen) |
| | As of March 31, 2018 | As of March 31, 2019 |
| Assets | | |
| Current assets | | |
| Cash and deposits | 25,550 | 29,264 |
| Notes receivable | 897 | 791 |
| Accounts receivable - trade | 88,751 | 78,262 |
| Merchandise and finished goods | 15,543 | 13,829 |
| Work in process | 5,371 | 4,495 |
| Raw material and supplies | 5,333 | 5,472 |
| Advance payments | 31 | 183 |
| Prepaid expenses | 1,505 | 1,414 |
| Accounts receivable - other | 9,616 | 11,392 |
| Income taxes receivable | － | 1,458 |
| Short-term loans receivable from subsidiaries and affiliated companies | 15,095 | 22,442 |
| Others | 1,070 | 2,047 |
| Allowance for doubtful accounts | (73) | (62) |
| Total current assets | 168,693 | 170,993 |
| Non-current assets | | |
| Property, plant and equipment | | |
| Buildings | 10,197 | 19,273 |
| Structures | 785 | 1,159 |
| Machinery and equipment | 27,344 | 29,118 |
| Vehicles | 67 | 77 |
| Tools, furniture and fixtures | 2,656 | 3,313 |
| Molds | 2,911 | 3,143 |
| Land | 17,255 | 17,252 |
| Construction in progress | 15,852 | 5,672 |
| Total property, plant and equipment, net | 77,070 | 79,009 |
| Intangible assets | | |
| Patent right | 92 | 77 |
| Leasehold right | 236 | 236 |
| Trademark right | － | 26 |
| Software | 10,483 | 10,972 |
| Telephone subscription right | 42 | 42 |
| Right of using facilities | 0 | 1 |
| Total intangible assets, net | 10,855 | 11,355 |
| Investments and other assets | | |
| Investment securities | 2,627 | 1,377 |
| Shares of subsidiaries and affiliated companies | 39,854 | 89,725 |
| Investments in capital | 12 | 11 |
| Investments in capital of subsidiaries and affiliated companies | 11,187 | 11,154 |
| Long-term loans receivable from employees | 99 | 93 |
| Claims provable in rehabilitation | 2,606 | 803 |
| Long-term prepaid expenses | 484 | 419 |
| Prepaid pension cost | 151 | 115 |
| Guarantee deposits | 67 | 66 |
| Deferred tax assets | 9,225 | 9,281 |
| Others | 60 | 57 |
| Allowance for doubtful accounts | (2,634) | (831) |
| Total investments and other assets | 63,743 | 112,274 |
| Total non-current assets | 151,669 | 202,639 |
| Total assets | 320,362 | 373,633 |
| | | (Millions of yen) |
| | As of March 31, 2018 | As of March 31, 2019 |
| Liabilities | | |
| Current liabilities | | |
| Accounts payable - trade | 48,820 | 44,569 |
| Short-term borrowings | 24,848 | 21,594 |
| Current portion of long-term borrowings | － | 1,000 |
| Lease obligations | 119 | 39 |
| Accounts payable - other | 26,932 | 15,126 |
| Accrued expenses | 4,556 | 3,241 |
| Accrued income taxes | 2,284 | 177 |
| Advance received | 312 | 247 |
| Deposits received | 212 | 217 |
| Provision for bonuses | 5,859 | 4,742 |
| Provision for directors’ bonuses | 156 | 31 |
| Provision for product warranties | 1,469 | 1,954 |
| Provision for loss on inventory | 296 | 429 |
| Others | 139 | 159 |
| Total current liabilities | 116,009 | 93,531 |
| Non-current liabilities | | |
| Long-term borrowings | 25,000 | 64,000 |
| Lease obligations | 77 | 38 |
| Long-term accounts payable - other | 627 | 133 |
| Provision for retirement benefits | 4,345 | 3,398 |
| Provision for environmental measures | 590 | 590 |
| Asset retirement obligations | 308 | 414 |
| Others | 89 | 88 |
| Total non-current liabilities | 31,038 | 68,663 |
| Total liabilities | 147,047 | 162,194 |
| Net assets | | |
| Shareholders’ equity | | |
| Common stock | 38,730 | 38,730 |
| Capital surplus | | |
| Legal capital surplus | 53,830 | 99,993 |
| Other capital surplus | 3,514 | 3,532 |
| Total capital surplus | 57,344 | 103,525 |
| Retained earnings | | |
| Other retained earnings | | |
| Retained earnings brought forward | 79,737 | 86,896 |
| Total retained earnings | 79,737 | 86,896 |
| Treasury stock | (3,497) | (18,341) |
| Total shareholders’ equity | 172,314 | 210,811 |
| Valuation and translation adjustments | | |
| Unrealized gains on securities | 819 | 331 |
| Total valuation and translation adjustments | 819 | 331 |
| Subscription rights to shares | 180 | 295 |
| Total net assets | 173,315 | 211,438 |
| Total liabilities and net assets | 320,362 | 373,633 |
(2) Statement of income
| | | (Millions of yen) |
| | Fiscal year ended March 31, 2018 | Fiscal year ended March 31, 2019 |
| Net sales | 462,158 | 394,661 |
| Cost of sales | 377,510 | 336,666 |
| Gross profit | 84,648 | 57,995 |
| Selling, general and administrative expenses | 54,967 | 51,393 |
| Operating income | 29,680 | 6,602 |
| Non-operating income | | |
| Dividend income | 6,331 | 12,632 |
| Miscellaneous income | 910 | 898 |
| Total non-operating income | 7,242 | 13,531 |
| Non-operating expenses | | |
| Interest expense | 364 | 507 |
| Foreign exchange losses | 1,880 | － |
| Commission fee | 1,177 | 1,398 |
| Miscellaneous expenses | 486 | 500 |
| Total non-operating expense | 3,909 | 2,406 |
| Ordinary income | 33,013 | 17,726 |
| Extraordinary income | | |
| Gain on sale of non-current assets | 260 | 387 |
| Gain on sales of investment securities | 0 | 540 |
| Others | 0 | － |
| Total extraordinary income | 261 | 927 |
| Extraordinary loss | | |
| Impairment loss | 0 | 1,583 |
| Loss on valuation of investment securities | 627 | 359 |
| Others | 850 | 185 |
| Total extraordinary loss | 1,477 | 2,128 |
| Income before income taxes | 31,797 | 16,525 |
| Current income taxes | 1,703 | 393 |
| Deferred income taxes | (2,990) | 157 |
| Total income taxes | (1,287) | 551 |
| Net income | 33,084 | 15,974 |
(3) Statement of changes in net assets
For the fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018)
| | | | | | | | (Millions of yen) |
| | Shareholders’ equity |
| | Common stock | Capital surplus | Retained earnings | Treasury stock | Total shareholders’ equity |
| | Legal capital surplus | Other capital surplus | Total capital surplus | Other retained earnings | Total retained earnings |
| | Retained earnings brought forward |
| Balance at the beginning of the year | 38,730 | 53,830 | 3,514 | 57,344 | 52,921 | 52,921 | (3,493) | 145,502 |
| Changes during the year | | | | | | | | |
| Dividends | | | | | (6,268) | (6,268) | | (6,268) |
| Net income | | | | | 33,084 | 33,084 | | 33,084 |
| Purchase of treasury stock | | | | | | | (3) | (3) |
| Disposal of treasury stock | | | | | | | | － |
| Share exchange | | | | | | | | － |
| Changes in items other than shareholders' equity, net | | | | | | | | |
| Total changes during the year | － | － | － | － | 26,815 | 26,815 | (3) | 26,812 |
| Balance at the end of the year | 38,730 | 53,830 | 3,514 | 57,344 | 79,737 | 79,737 | (3,497) | 172,314 |
| | Valuation and translation adjustments | Subscription rights to shares | Total net assets | |
| | Unrealized gains on securities | Total valuation and translation adjustments |
| Balance at the beginning of the year | 544 | 544 | 128 | 146,175 | |
| Changes during the year | | | | | |
| Dividends | | | | (6,268) | |
| Net income | | | | 33,084 | |
| Purchase of treasury stock | | | | (3) | |
| Disposal of treasury stock | | | | － | |
| Share exchange | | | | － | |
| Changes in items other than shareholders' equity, net | 275 | 275 | 51 | 327 | |
| Total changes during the year | 275 | 275 | 51 | 27,139 | |
| Balance at the end of the year | 819 | 819 | 180 | 173,315 | |
For the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)
| | | | | | | | (Millions of yen) |
| | Shareholders’ equity |
| | Common stock | Capital surplus | Retained earnings | Treasury stock | Total shareholders’ equity |
| | Legal capital surplus | Other capital surplus | Total capital surplus | Other retained earnings | Total retained earnings |
| | Retained
earnings brought forward |
| Balance at the beginning of the year | 38,730 | 53,830 | 3,514 | 57,344 | 79,737 | 79,737 | (3,497) | 172,314 |
| Changes during the year | | | | | | | | |
| Dividends | | | | | (8,815) | (8,815) | | (8,815) |
| Net income | | | | | 15,974 | 15,974 | | 15,974 |
| Purchase of treasury stock | | | | | | | (17,762) | (17,762) |
| Disposal of treasury stock | | | 17 | 17 | | | 33 | 51 |
| Share exchange | | 46,163 | | 46,163 | | | 2,884 | 49,048 |
| Changes in items other than shareholders' equity, net | | | | | | | | |
| Total changes during the year | － | 46,163 | 17 | 46,181 | 7,158 | 7,158 | (14,843) | 38,496 |
| Balance at the end of the year | 38,730 | 99,993 | 3,532 | 103,525 | 86,896 | 86,896 | (18,341) | 210,811 |
| | | | | | |
| | Valuation and translation adjustments | Subscription rights to shares | Total net assets | |
| | Unrealized gains (losses) on securities | Total valuation and translation adjustments |
| Balance at the beginning of the year | 819 | 819 | 180 | 173,315 | |
| Changes during the year | | | | | |
| Dividends | | | | (8,815) | |
| Net income | | | | 15,974 | |
| Purchase of treasury stock | | | | (17,762) | |
| Disposal of treasury stock | | | | 51 | |
| Share exchange | | | | 49,048 | |
| Changes in items other than shareholders' equity, net | (487) | (487) | 115 | (372) | |
| Total changes during the year | (487) | (487) | 115 | 38,123 | |
| Balance at the end of the year | 331 | 331 | 295 | 211,438 | |
7. Other
(1) Sales results of the Electronic Components Segment
Sales results of Electronic Components Segment for the fiscal year ended March 31, 2019 are as follows:
| | | For the fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018) | For the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019) | Changes in net sales |
| | Net sales (Millions of yen) | Percentage (%) | Net sales (Millions of yen) | Percentage (%) | Amount (Millions of yen) | Percentage (%) |
| Electronic Components Segment | | | | | | |
| | Automotive market | | | | | | |
| | Consumer market | | | | | | |
(Note) Percentage represents ratio to the consolidated net sales.
(2) Change of Directors and Officers (expected effective date is June 21, 2019)
(i) Candidate for Director to be newly appointed who is not a Member of the Audit and Supervisory Committee |
| Director | Yasuo Sasao | Senior Vice President, CTO, ALPS-New Components and ALPS-Engineering |
| (ii) Candidate for Director to be newly appointed who is a Member of the Audit and Supervisory Committee |
| | Yuko Gomi | Lawyer (T. Kunihiro & Co. Attorneys-at-Law, Partner) |
| | *Yuko Gomi is a candidate for outside director. |
| (iii) Retiring Directors |
| | Yoichiro Kega | Director
Vice President, HR & General Affairs, Legal & Intellectual Property, Export & Import Administration |
| | Satoko Hasegawa | Director (Outside), Audit and Supervisory Committee Member |
| | * Mr. Kega will continue his current responsibilities as a vice president. |
| (iv) Officer to be promoted |
| Managing Director | Tetsuhiro Saeki | Vice President, Information Systems, ALPS-Electronic Components Sales & Marketing |
| (v) Officers to be appointed |
| Officer | Satoshi Kodaira | General Manager, ALPS-Quality 1 |
| Officer | Kazutoshi Ogamoto | General Manager, ALPS-Production Manufacturing Operations 2 |
| Officer | Hiroshi Yamagami | General Manager, ALPS-Production Manufacturing Operations 1 |
| Officer | Yoshikatsu Watanabe | General Manager, ALPINE-Product Design |
| (vi) Retiring Officers |
| | Yoshitada Amagishi | Senior Vice President, CMO, ALPS-Production |
| | Hitoshi Edagawa | Vice President, ALPS-Production Engineering |
| | Takeshi Daiomaru | Vice President, ALPS-New Business, Consumer Modules, Components and ALPS-Engineering |
| | Akihiko Okayasu | Vice President, ALPS-Material Control 1 |
| | Shuji Taguchi | Vice President, CQO, ALPINE-Quality 2 |
| | Yasuhiro Ikeuchi | Vice President, ALPINE-European Operations |
| | | |
This document includes “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. To the extent that statements in this document do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Company in light of the information currently available, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the actual results, performance, achievements or financial position of the Company to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements.
The Company undertakes no obligation to publicly update any forward-looking statements after the date of this document. Investors are advised to consult any further disclosures by the Company in its subsequent domestic filings in Japan and filings with the U.S. Securities and Exchange Commission.
The risks, uncertainties and other factors referred to above include, but are not limited to:
| (1) | economic and business conditions in and outside Japan; |
| (2) | changes in demand for and material prices of automobiles, smart phones and consumer electrical equipment and machines, which are the main markets of the Company’s products, and changes in exchange rates; |
| (3) | changes in the competitive landscape, including the changes in the competition environment and the relationship with major customers; |
| (4) | further intensified competition in the electronic components business, automotive infotainment business and logistics business; |
| (5) | increased instability of the supply system of certain important components; |
| (6) | change in the product strategies or other similar matters, cancellation of a large-quantity order, or bankruptcy, of the major customers; |
| (7) | costs and expenses, as well as adverse impact to the group’s reputation, resulting from any product defects; |
| (8) | suspension of licenses provided by other companies of material intellectual property rights; |
| (9) | changes in interest rates on loans and other indebtedness of the Company, as well as changes in financial markets; |
| (10) | adverse impact to liquidity due to acceleration of indebtedness; |
| (11) | changes in the value of assets (including pension assets) such as securities and investment securities; |
| (12) | changes in laws and regulations (including environmental regulations) relating to the Company’s business activities; |
| (13) | increases in tariffs, imposition of import controls and other developments in the Company’s main overseas markets; |
| (14) | unfavorable political factors, terrorism, war and other social disorder; |
| (15) | interruptions in or restrictions on business activities due to natural disasters, accidents and other causes; |
| (16) | environmental pollution countermeasures costs; |
| (17) | violation of laws or regulations, or the filing of a lawsuit; and |
| (18) | inability or difficulty of realizing synergies or added value by the Business Integration by the integrated group. |
