Annual Report 2012


>> P.43

¥88,579MILLIONANDANETINCREASEINSHORT-TERMLOANSANDCOM-MERCIALPAPEROF¥17,564MILLION.FUNDINGREQUIREMENTSTHE“K”LINEGROUP’SMAJORWORKINGCAPITALREQUIREMENTCOMESFROMSHIPPINGBUSINESSEXPENSESINCONNECTIONWITHCONTAINER-SHIPSERVICESANDBULKSHIPPINGSERVICES.THESEEXPENSESINCLUDEOPERATINGCOSTSSUCHASPORTCHARGES,CARGOHANDLINGCOSTSANDFUELCOSTS;VESSELEXPENSESSUCHASCREWEXPENSESANDREPAIREXPENSESOFVESSELS;ANDCHARTERINGEXPENSES.OTHEREXPENSESARECOSTSOFSERVICEOPERATIONSSUCHASLABORCOSTINCONNECTIONWITHTHEOPERATIONOFTHELOGISTICS/HARBORTRANSPORTATIONBUSINESSANDGENERALADMINISTRATIVEEXPENSESFORTHEGROUP’SBUSINESSOP-ERATIONS,SUCHASPERSONNELEXPENSES,INFORMATIONPROCESSINGCOSTSANDOTHERNON-PERSONNELEXPENSES.CAPITALREQUIREMENTSAREINVESTMENTSINVESSELS,LOGISTICSFACILITIESANDTERMINALFACILITIES.INfiSCALYEAR2011,THECOMPANYMADECAPITALINVESTMENTSOF¥239,197MILLION.FINANCIALPOLICYTHECOMPANYPLACESIMPORTANCEONSECURINGLOW-COST,STABLEFUNDSTOSUPPORTTHE“K”LINEGROUP’SBUSINESSCONTINUITYANDEXPANSION.THECOMPANYMEETSLONG-TERMFUNDINGREQUIREMENTSMAINLYBYMEANSOFLONG-TERMDEBTFROMfiNANCIALINSTITUTIONS,SUPPLEMENTEDBYTHEISSUANCEOFBONDSANDTHEISSUANCEOFNEWSHARES.THECOMPANYPROCURESSHORT-TERMOPERATINGFUNDSBYMEANSOFBANKLOANSANDTHEISSUANCEOFCOMMERCIALPAPERANDINVESTSTEMPORARYSURPLUSFUNDSINHIGHLYSTABLEANDLIQUIDfiNANCIALASSETS.THECOMPANYEMPLOYSACASHMANAGEMENTSYSTEMTOEFFECTIVELYUTILIZESURPLUSFUNDSOFGROUPCOMPANIESINJAPANANDOVERSEAS.THECOMPANYSECURESLIQUIDITYBYPREPARINGFORANYURGENTCAPITALREQUIREMENTSBYMEANSOFACOMMERCIALPAPERISSUANCEPROGRAMOFUPTO¥60.0BILLION,A¥47.0BILLIONLINEOFCREDITESTAB-LISHEDUNDEROVERDRAFTAGREEMENTSWITHfiNANCIALINSTITUTIONS,ANDTHEESTABLISHMENTOFA¥15.0BILLIONCOMMITMENTLINEWITHfiNANCIALINSTITUTIONSINJAPAN.“K”LINEHASBEENRATEDBYTWOJAPANESEANDONEOVERSEASRATINGfiRM.ASOFJUNE26,2012,THECOMPANYHASARATINGOFBBB+FROMJAPANCREDITRATINGAGENCY,LTD.(JCR),BBB-FROMRATINGANDINVESTMENTINFORMATION,INC.(R&I)ANDBBFROMSTANDARD&POOR’S(S&P).THECOMPANYALSOHASSHORT-TERMCREDITRATINGS(COMMERCIALPAPERRATINGS)OFJ-2FROMJCRANDA-2FROMR&I.FINANCIALPOSITIONTOTALASSETSONMARCH31,2012WERE¥1,066,649MILLION,ANIN-CREASEOF¥34,143MILLIONFROMTHEENDOFTHEPREVIOUSfiSCALYEAR.CURRENTASSETSINCREASEDBY¥17,899MILLIONTO¥280,744MILLION,MAINLYDUETOANINCREASEINCASHANDCASHEQUIVALENTS.FIXEDASSETSINCREASEDBY¥16,244MILLIONFROMTHEENDOFTHEPREVIOUSfiSCALYEARTO¥785,905MILLION.VESSELS,PROPERTYANDEQUIPMENTINCREASEDBY¥34,722MILLIONTO¥618,450MILLION,MAINLYDUETOTHEPURCHASEOFVESSELS.INVESTMENTSANDOTHERAS-SETSDECREASEDBY¥18,067MILLIONTO¥157,502MILLION,MAINLYDUETOADECREASEININVESTMENTSINSECURITIESATTRIBUTABLETOADECLINEINTHEMARKETVALUEOFLISTEDSTOCKS.TOTALLIABILITIESONMARCH31,2012WERE¥806,714MILLION,ANINCREASEOF¥89,195MILLIONFROMTHEENDOFTHEPREVIOUSfiSCALYEAR.CURRENTLIABILITIESINCREASEDBY¥20,617MILLIONTO¥224,329MILLION,MAINLYDUETOANINCREASEINCOMMERCIALPAPER.LONG-TERMLIABILITIESINCREASEDBY¥68,578MILLIONTO¥582,385MILLION,MAINLYDUETOANINCREASEINLONG-TERMDEBT.NETASSETSONMARCH31,2012WERE¥259,935MILLION,ADE-CREASEOF¥55,051MILLIONFROMTHEENDOFTHEPREVIOUSfiSCALYEAR.SHAREHOLDERS’EQUITYWAS¥326,870MILLION.THECHANGEINSHARE-HOLDERS’EQUITYISMAINLYATTRIBUTABLETOADECREASEOF¥45,226MIL-LIONINRETAINEDEARNINGS.ACCUMULATEDOTHERCOMPREHENSIVELOSSINCREASEDBY¥3,871MILLIONFROMTHEENDOFTHEPREVIOUSfiSCALYEARTONEGATIVE¥84,297MILLION,MAINLYATTRIBUTABLETO¥7,992MIL-LIONINNETUNREALIZEDHOLDINGLOSSONINVESTMENTSINSECURITIESAND¥9,808MILLIONINTRANSLATIONADJUSTMENTS.BASICDIVIDENDPOLICYANDDIVIDENDPAYMENTFORTHECURRENTANDFOLLOWINGFISCALYEARTHECOMPANYCONSIDERSITANIMPORTANTPRIORITYTOMAXIMIZESHAREHOLDERRETURNSWHILEGIVINGDUECONSIDERATIONTOTHEMAINPRI-ORITYINTHEMANAGEMENTPLAN,WHICHISTOMAINTAINTHEINTERNALRESERVESNECESSARYFORCAPITALINVESTMENTFORSUSTAINEDGROWTHANDFORIMPROVEMENTANDSTRENGTHENINGOFTHECORPORATESTRUC-TURE.OURPOLICYISTOGRADUALLYINCREASETHEDIVIDENDPAYOUTRATIOASAPERCENTAGEOFCONSOLIDATEDNETINCOMEWITHTHEAIMOFACHIEVINGAPAYOUTRATIOOF30%INTHEMID-2010S.THECOMPANY’SYEAR-ENDDIVIDEND(RECORDDATEOFMARCH31OFEVERYYEAR)ISSUBJECTTORESOLUTIONBYTHEANNUALSHAREHOLDERS’MEETING.WITHREGARDTOTHEINTERIMDIVIDEND,ASPRESCRIBEDINTHEARTICLESOFINCORPORATION,“BYRESOLUTIONOFTHEBOARDOFDIRECTORS,ANINTERIMDIVIDENDMAYBEDISTRIBUTEDBYTHECOMPANYASOFTHERECORDDATEOFSEPTEMBER30OFEVERYYEAR.”REGRETTABLY,THECOMPANYHASDECIDEDNOTTOPAYCASHDIVIDENDSFORfiSCAL2011BECAUSEOFTHENETLOSSRECORDEDATATIMEOFMARKEDWORSENINGOFBUSINESSCONDITIONS.ADECISIONONTHEDIVIDENDFORfiSCAL2012HASNOTBEENMADEATTHISTIME.AFURTHERANNOUNCEMENTABOUTTHEDIVIDENDWILLBEMADEONCETHECOMPANYHASDETERMINEDTHATAFORECASTISPOS-SIBLE,TAKINGINTOCONSIDERATIONFACTORSSUCHASTHEOUTLOOKFORTHEFULLYEARANDTHEfiNANCIALSITUATION.THE“K”LINEGROUPWILLWORKINUNISONTORIGOROUSLYPURSUECOSTREDUCTIONSANDSERVICERATIONALIZATIONANDMAKEMAXIMUMEFFORTSTOENSUREPROfiTABILITYANDRESUMEDIVIDENDPAYMENTSINfiS-CAL2012.DIVIDENDPOLICY43ANNUALREPORT2012


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