Suzuki 2004 Annual Report Download - page 20

SUZUKI MOTOR CORPORATION
The net cash used in investing activities increased to 140,979 million yen, 42,614 million yen, which is more
than the previous fiscal year, due to purchases of marketable securities, etc.
As a result, the balance of cash and cash equivalents at the end of this fiscal year decreased by 50,483
million yen to 188,259 million yen in comparison with the previous fiscal year.
(2) Demand for money
During this fiscal year, we invested a total amount of 84,914 million yen on a number of objectives, such as
new model production, production volume increase, rationalization, R&D for new models and technical
innovation, distribution, sales channel and IT related investments. The costs of these investments were covered
by retained earnings. Planned capital expenditure spending for the next fiscal year is 134,000 million yen,
mainly from our own funds, but we shall also select proper financial sources depending on the circumstances.
3. Significant accounting policies
For information regarding significant accounting policies, please refer to the NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS.
4. Risks in operations
Risks which may possibly affect the operating results, stock price and financial situation of the Suzuki group
are as follows:
(1) Macro-economic changes
Although the domestic economy continues its process of slight recovery, personal consumption remains
inactive. It is possible that prolonged sluggish economy and the reduced purchasing will of consumers could
drastically decrease demand for products, such as motorcycles, automobiles and outboard motors and
adversely affect the business performances of the Suzuki group.
The Suzuki group has business operations all over the world and our dependence on overseas manufacturing
plants, especially in developing countries in the Asian region, has been increasing year by year. Sudden
changes in the economic situation and unexpected events could possibly have an impact on the business
performances of the Suzuki group. Furthermore, it is possible that unexpected changes in and adoptions of
different tax systems in each country also could affect our operating results.
(2) Price fluctuation
In the past, the prices of our products have drastically fluctuated within a short period of time in certain
markets. These fluctuations were brought on by the various factors, such as sudden changes in demand,
supply shortages of parts and materials, unstable economic situations, revisions of import restrictions, and
intensified price competition. There is no guarantee that these fluctuations will not be prolonged nor that these
fluctuations will never occur in markets where they have never occurred before. It is possible that drastic price
fluctuations could damage our operating results in any market where the Suzuki group is operating.
(3) Foreign exchange fluctuation
The Company exports motorcycles, automobiles, outboard motors and their parts from Japan to many
countries in the world and our overseas manufacturing bases also export products and parts to a number of
countries. Foreign exchange fluctuations affect our business operations and our financial situation as well as our
competitiveness.
Furthermore, foreign exchange fluctuations affect the pricing of products sold in foreign currencies and the
purchasing price of materials. Overseas sales accounted for 62.6% of our consolidated net sales in the fiscal
year ending March 31,2004 and a large proportion of our transactions are denominated in foreign currencies,
such as the US dollar and the Euro. To reduce the risk of foreign exchange fluctuations, we utilize hedging
instruments, such as forward exchange contracts. However, it is impossible to hedge all risks. The appreciation
of the Yen against other currencies could possibly adversely affect our operating results.
(4) Environmental restrictions
The manufacturing of motorcycles, automobiles and outboard motors are subject to various laws and
regulations regarding exhaust emissions levels, fuel consumption, noise, safety and the amount of the output of
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