Pioneer : Announces Business Results for 1Q Fiscal 2015 (PDF 149 KB)

For Immediate Release

August 5, 2014

Pioneer Corporation today announced its consolidated first-quarter business results for the period ended June 30, 2014.

(In millions of yen except per share information) Three months ended June 30

2014 2013 Percent change

Net sales ¥113,334 ¥109,257 +3.7%

For the first quarter of fiscal 2015, the three months ended June 30, 2014, consolidated net sales increased 3.7% year on year, to ¥113,334 million, primarily from increased consumer-market sales of Car Electronics and a positive effect from the Japanese yen's depreciation.

Operating income was ¥265 million, compared with an operating loss of ¥7,568 million for the first quarter of fiscal 2014, from an improved cost of sales ratio and lower selling, general and administrative (SG&A) expenses. The net loss was reduced to ¥2,089 million, compared with a net loss of ¥10,076 million for the first quarter of fiscal 2014, mainly because of the improvement in operating income.

During the first quarter of fiscal 2015, the average value of the Japanese yen declined 3.3% against the U.S. dollar year on year, to ¥102.16=1 U.S. dollar, and 7.9%

against the euro, to ¥140.07=1 euro.

For further information, please contact:

Investor Relations Division

Pioneer Corporation, Japan

Phone: +81-44-580-3211 / Fax: +81-44-580-4064

E-mail: pioneer_ir@post.pioneer.co.jp

IR Website: http://pioneer.jp/ir-e/

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Car Electronics sales grew 4.2% year on year, to ¥82,427 million. Car navigation system sales increased. Consumer-market sales rose on increased sales in Japan and overseas. OEM sales increased as well, with growth in overseas sales, primarily in China, more

than offsetting a decline in sales in Japan. Car audio product sales also grew. Consumer- market sales rose on increased sales, primarily in North America and Central and South America, and despite lower sales in Europe. OEM sales increased as well, with growth in Southeast Asia and China more than offsetting declines in North America and Japan. OEM sales accounted for 56% of total Car Electronics sales, compared with 58% a year earlier.

By geographic region, sales in Japan declined 2.1%, to ¥33,622 million, and overseas sales grew 9.1%, to ¥48,805 million.

The segment recorded operating income of ¥1,994 million, compared with an operating loss of ¥3,077 million for the first quarter of fiscal 2014, from an improved cost of sales ratio and lower SG&A expenses, combined with higher sales.

Home Electronics sales increased 1.0% year on year, to ¥21,266 million. Although sales of home AV products declined, sales of optical disc drive-related products, DJ equipment and equipment for cable-TV systems grew. Segment sales also benefited from the positive effect of the Japanese yen's depreciation.

By geographic region, sales in Japan rose 15.5%, to ¥8,022 million, while overseas sales declined 6.1%, to ¥13,244 million.

The segment's operating loss contracted to ¥1,373 million, compared with an operating loss of ¥3,510 million for the first quarter of fiscal 2014, from an improved cost of sales ratio and lower SG&A expenses.

In the Others segment, sales rose 5.8% year on year, to ¥9,641 million, primarily from increased sales of electronic devices and parts, and despite lower sales of factory automation systems.

By geographic region, sales in Japan increased 12.7%, to ¥5,716 million, while overseas sales declined 2.9%, to ¥3,925 million.

The segment's operating loss was reduced to ¥229 million, compared with an operating loss of ¥999 million for the first quarter of fiscal 2014, from a reduction in SG&A expenses and an improved cost of sales ratio.

Notes: 1. Operating income (loss) in each business segment represents operating income (loss) before elimination of intersegment transactions.
2. In the first quarter of fiscal 2015, telephones were reclassified from the Others segment to the
Home Electronics segment. Accordingly, figures for the first quarter of fiscal 2014 have been reclassified to conform with the presentation used in the first quarter of fiscal 2015.

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Total assets as of June 30, 2014 were ¥321,656 million, a decrease of ¥6,257 million

from March 31, 2014. Although inventories increased, the decline in total assets reflected a decrease in trade receivables. Inventories grew ¥2,376 million, to ¥72,747 million, reflecting inventory buildups in Car Electronics and Home Electronics based on sales plans for the second quarter onward. Trade receivables decreased ¥9,283 million, to

¥76,277 million, reflecting lower sales for the first quarter of fiscal 2015 compared with sales in the fourth quarter of fiscal 2014.

Total liabilities were ¥245,632 million, a ¥4,465 million decrease from March 31,

2014. This was primarily the result of a ¥1,179 million decrease in liabilities related to retirement benefits, associated with changes in accounting standards, as well as a

¥1,109 million reduction in income taxes payable and an ¥889 million decrease in accrued expenses.

Total equity was ¥76,024 million, a decrease of ¥1,792 million from March 31,

2014, the result of recording a ¥2,089 million net loss for the quarter, and a ¥1,212 million decrease in foreign currency translation adjustments from the Japanese yen's appreciation since March 31, 2014.

During the three months ended June 30, 2014, operating activities provided net cash in the amount of ¥5,013 million, a ¥6,144 million decrease from the year-earlier period. Despite a ¥9,388 million decrease in the loss before income taxes and minority interests and the absence of the year-earlier ¥6,211 million decrease in provision for restructuring costs, an ¥8,897 million decrease in the amount of increase in trade payables, an ¥837 million decrease in accrued expenses, compared with a year-earlier ¥7,263 million increase, and a ¥2,839 million additional increase in inventories resulted in an overall decrease.

Investing activities used net cash in the amount of ¥4,805 million, a ¥1,683 million decrease from the year-earlier period. This was mainly because of a ¥1,865 million decrease in outlays for the purchase of noncurrent assets.

Financing activities used net cash in the amount of ¥916 million, compared with

¥8,229 million of net cash provided in the year-earlier period, which reflected the ¥8,823 million provided from the capital increase through third-party allotments in the first quarter of fiscal 2014.

Foreign currency translation adjustments on cash and cash equivalents were a negative ¥266 million, compared with a positive ¥605 million in the year-earlier period.

As a result, cash and cash equivalents as of June 30, 2014, totaled ¥32,930

million, a ¥974 million decrease from March 31, 2014.

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Consolidated business forecasts for fiscal 2015, ending March 31, 2015, have not been changed from those announced on May 12, 2014.

(In millions of yen)

Forecasts for fiscal 2015

Results for fiscal 2014

Percent change

Forecasts for fiscal 2015

Results for fiscal 2014

Percent change

Net sales ¥243,000 ¥236,330 +2.8% ¥515,000 ¥498,051 +3.4% Operating income 3,000 569 +427.2 12,500 11,169 +11.9

Ordinary income

(loss) 500 (1,953) - 7,500 5,111 +46.7

Net income (loss) ¥ (1,500) ¥ (4,951) -% ¥ 2,000 ¥ 531 +276.6%

For the above consolidated business forecasts, the yen-U.S. dollar and yen-euro exchange rate assumptions for the second quarter onward remain unchanged at ¥100 and ¥135, respectively.

Cautionary Statement with Respect to Forward-Looking Statements

Statements made in this release with respect to our current plans, estimates, strategies and beliefs, and other statements that are not historical facts are forward-looking statements about our future performance. These statements are based on management's assumptions and beliefs in light of the information currently available to it. We caution that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. It is not our obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We disclaim any such obligation. Risks and uncertainties that might affect us include, but are not limited to: (i) general economic conditions in our markets, particularly levels of consumer spending, and levels of demand in the major industrial sectors which we serve; (ii) exchange rates, particularly between the Japanese yen and the euro, the U.S. dollar, and other currencies in which we make significant sales or in which our assets and liabilities are denominated; (iii) our ability to continuously design and develop and win acceptance for our products in extremely competitive markets; (iv) our ability to successfully implement our business strategies; (v) the success of our
joint ventures, alliances and other business relationships with third parties; (vi) our ability to access funding; (vii) our continued ability to devote sufficient resources to research and development, and capital
expenditure; (viii) our ability to ensure the quality of our products; (ix) conditions in which we are able to
continuously procure key parts essential to our manufacturing operations; and (x) the outcome of contingencies.

Pioneer Corporation is a leading global manufacturer of consumer- and business-use electronics products such as car electronics, audio and video products. Its shares are traded on the Tokyo Stock Exchange.

# # # # # #

Attached are consolidated financial statements for the three months ended June 30,

2014.

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Pioneer Corporation-Consolidated

ASSETSCurrent assets:

March 31,

2014
(In millions of yen) June 30,

2014

Total current assets 211,412 206,571

Noncurrent assets:

Property, plant and equipment:

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Pioneer Corporation-Consolidated

LIABILITIESCurrent liabilities:

March 31,

2014
(In millions of yen)
June 30,

2014
Trade payables ¥ 71,657 ¥ 71,003
Short-term borrowings 22,178 21,544
Current portion of long-term debt 65,270 65,270
Income taxes payable 2,817 1,708
Accrued expenses 28,973 28,084
Warranty reserve 2,290 2,181

Other current liabilities 18,631 19,052
Total current liabilities 211,816 208,842

Long-term liabilities:
Liabilities related to retirement benefits 34,585 33,406

Other long-term liabilities 3,696 3,384

Total long-term liabilities 38,281 36,790

Total liabilities 250,097 245,632

EQUITYShareholders' equity:

Common stock 91,732 91,732
Capital surplus 56,016 56,016
Retained earnings 17,849 16,556

Treasury stock (11,051) (11,051) Total shareholders' equity 154,546 153,253
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities 1,168 1,236
Deferred gain on derivatives under hedge accounting - 70

Foreign currency translation adjustments (59,688) (60,900) Defined retirement benefit plans (23,567) (23,001) Total accumulated other comprehensive loss (82,087) (82,595)

Minority interests 5,357 5,366

Total equity 77,816 76,024

Total liabilities and equity ¥ 327,913 ¥ 321,656

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Pioneer Corporation-Consolidated

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(In millions of yen) Three months ended June 30

2013 2014

Pioneer Corporation-Consolidated

(In millions of yen) Three months ended June 30

2013 2014

Loss before minority interests ¥(10,236) ¥(1,989) Other comprehensive income (loss):
Unrealized gain on available-for-sale securities 1,314 68
Deferred gain on derivatives under hedge accounting 1 70

Foreign currency translation adjustments 3,077 (1,275) Portion of other comprehensive gain (loss) of associates 165 (28) Pension adjustments recognized by foreign subsidiaries (147) - Defined retirement benefit plans - 566

Total other comprehensive income (loss) 4,410 (599) Comprehensive loss ¥ (5,826) ¥(2,588)
Comprehensive loss attributable to:
Shareholders of the parent company ¥(5,804) ¥(2,597) Minority interests ¥ (22) ¥ 9

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Pioneer Corporation-Consolidated

Cash flows from operating activities:

(In millions of yen) Three months ended June 30

2013 2014
Loss before income taxes and minority interests ¥ (9,391) ¥ (3) Depreciation and amortization 6,502 5,474
Increase in accrued pension and severance costs 264 - Decrease in liabilities related to retirement benefits - (312) Decrease in provision for restructuring costs (6,211) - Interest and dividends income (49) (64) Interest expenses 669 646
Decrease in trade receivables 6,943 8,512
Increase in inventories (106) (2,945) Increase in trade payables 9,048 151

Increase (decrease) in accrued expenses 7,263 (837) Other-net (1,980) (3,113) Subtotal 12,952 7,509
Interest and dividends income received 49 137

Interest expenses paid (651) (574) Income taxes paid (1,193) (2,059)
Net cash provided by operating activities 11,157 5,013

Cash flows from investing activities:
Increase (decrease) in time deposits (161) 82
Purchase of noncurrent assets (6,864) (4,999) Proceeds from sale of noncurrent assets 653 41
Net decrease from sale of subsidiary stock resulting in change in

scope of consolidation - (154) Other-net (116) 225

Net cash used in investing activities (6,488) (4,805) Cash flows from financing activities:
Net decrease in short-term borrowings (202) (488)

Proceeds from issuance of new shares 8,823 - Repayments of lease obligations (388) (428) Other-net (4) -
Net cash provided by (used in) financing activities 8,229 (916)

Foreign currency translation adjustments on cash and cash

equivalents 605 (266) Net increase (decrease) in cash and cash equivalents 13,503 (974) Cash and cash equivalents, beginning of period 20,967 33,904
Cash and cash equivalents, end of period ¥34,470 ¥32,930

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Pioneer Corporation-Consolidated

Effective from the first quarter of fiscal 2015, the Company has applied ASBJ Statement No. 26, issued on May 17, 2012, "Accounting Standard for Retirement Benefits" (hereinafter the "Retirement Benefit Accounting Standard") and ASBJ Guidance No. 25, May 17, 2012, "Guidance on Accounting Standard for Retirement Benefits" (hereinafter the "Guidance on Retirement Benefits"), in accordance with the provisions of Paragraph 35 of the Retirement Benefit Accounting Standard and Paragraph 67 of the Guidance on Retirement Benefits. Consequently, the Company has changed the method of attributing projected benefit to periods from the straight-line basis to the benefit formula basis in line with the revision of the method for calculating retirement benefit obligations and service costs. With respect to the method for the determining the discount rate, the Company has been using a single weighted-average discount rate that reflects the periods until the expected payment of retirement benefits and the amount of projected benefits every such
period.
With regard to the application of the Retirement Benefit Accounting Standard, etc., in accordance with the transitional treatment provided in Paragraph 37 of the Retirement Benefit Accounting Standard, the effect of the changing the method for calculating retirement benefit obligations and service costs was recognized by adjusting retained earnings at the beginning of the first quarter of fiscal 2015.
As a result, liabilities related to retirement benefits at the beginning of the first quarter of fiscal 2015 decreased by ¥812 million and retained earnings increased by ¥796 million. The impact of these changes on profit and loss for the first quarter of fiscal 2015 was immaterial.

Three months ended June 30
(In millions of yen)

2013 2014 Percent

Car Electronics:

Amount Ratio Amount Ratio

change

Japan ¥ 34,352 31.4% ¥ 33,622 29.7% -2.1% Overseas 44,736 41.0 48,805 43.0 +9.1
Total 79,088 72.4 82,427 72.7 +4.2

Home Electronics:
Japan 6,944 6.4 8,022 7.1 +15.5
Overseas 14,111 12.9 13,244 11.7 -6.1

Total 21,055 19.3 21,266 18.8 +1.0

Others:
Japan 5,070 4.6 5,716 5.0 +12.7
Overseas 4,044 3.7 3,925 3.5 -2.9

Total 9,114 8.3 9,641 8.5 +5.8

Consolidated:
Japan 46,366 42.4 47,360 41.8 +2.1
Overseas 62,891 57.6 65,974 58.2 +4.9

Total ¥ 109,257 100.0% ¥ 113,334 100.0% +3.7%

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Pioneer Corporation-Consolidated

(In millions of yen)

Sales:
Sales to external
customers ¥79,088 ¥21,055 ¥ 9,114 ¥109,257 - ¥109,257

Intersegment sales 190 51 2,049 2,290 ¥(2,290) - Total sales 79,278 21,106 11,163 111,547 (2,290) 109,257

Segment loss ¥ (3,077) ¥ (3,510) ¥ (999) ¥ (7,586) ¥ 18 ¥ (7,568)
Notes:
1. Reconciliations of ¥18 million recorded for segment loss include elimination of intersegment transactions of ¥94 million and corporate expenses of ¥(76) million that are not allocated to any segment. Corporate expenses principally consist of allocation variance of general and administrative expenses, and general and administrative expenses and R&D expenses which are not attributable to any segment.
2. Adjustments are made to reconcile segment loss to operating loss presented in the accompanying consolidated statements of operations.
(In millions of yen)

Sales:

Sales to external

Notes:
1. Reconciliations of ¥(127) million recorded for segment income (loss) include elimination of intersegment transactions of ¥195 million and corporate expenses of ¥(322) million that are not allocated to any segment. Corporate expenses principally consist of allocation variance of general
and administrative expenses, and general and administrative expenses and R&D expenses which are not attributable to any segment.
2. Adjustments are made to reconcile segment income (loss) to operating income presented in the accompanying consolidated statements of operations.

In the first quarter of fiscal 2015, telephones were reclassified from the Others segment to the Home Electronics segment. Accordingly, figures for the first quarter of fiscal 2014 have been reclassified to conform with the presentation used in the first quarter of fiscal 2015.

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