ADVANTEST CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
Yen (Millions) | ||||||||
Assets | June 30, 2009 | March 31, 2009 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | ¥ | 102,222 | 105,455 | |||||
Short-term investments | 15,492 | 25,114 | ||||||
Trade receivables, net | 8,275 | 10,415 | ||||||
Inventories | 11,756 | 9,737 | ||||||
Other current assets | 7,403 | 6,586 | ||||||
Total current assets | 145,148 | 157,307 | ||||||
Investment securities | 7,401 | 6,679 | ||||||
Property, plant and equipment, net of accumulated depreciation of 35,039 million yen and 34,372 million yen, as of June 30, 2009 and March 31, 2009, respectively | 33,269 | 33,974 | ||||||
Intangible assets, net of accumulated amortization of 2,424 million yen and 2,397 million yen, as of June 30, 2009 and March 31, 2009, respectively | 1,425 | 1,470 | ||||||
Other assets | 2,779 | 2,629 | ||||||
Total assets | ¥ | 190,022 | 202,059 |
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Advantest’s Annual Report on Form 20-F for the year ended March 31, 2009 are an integral part of the consolidated financial statements.
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
Yen (Millions) | ||||||||
Liabilities and Stockholders’ Equity | June 30, 2009 | March 31, 2009 | ||||||
Current liabilities: | ||||||||
Trade accounts payable | ¥ | 4,578 | 4,767 | |||||
Other accounts payable | 667 | 6,409 | ||||||
Accrued expenses | 4,355 | 6,043 | ||||||
Accrued warranty expenses | 2,642 | 2,811 | ||||||
Other current liabilities | 2,127 | 1,507 | ||||||
Total current liabilities | 14,369 | 21,537 | ||||||
Accrued pension and severance costs | 14,244 | 13,996 | ||||||
Other liabilities | 2,555 | 2,910 | ||||||
Total liabilities | 31,168 | 38,443 | ||||||
Commitments and contingent liabilities | ||||||||
Stockholders’ equity: | ||||||||
Common stock, | ||||||||
Authorized 440,000,000 shares; issued 199,566,770 shares | 32,363 | 32,363 | ||||||
Capital surplus | 40,322 | 40,320 | ||||||
Retained earnings | 190,167 | 194,848 | ||||||
Accumulated other comprehensive income (loss) | (14,669 | ) | (14,587 | ) | ||||
Treasury stock, 20,843,986 shares and 20,843,298 shares | ||||||||
as of June 30, 2009 and March 31, 2009, respectively | (89,329 | ) | (89,328 | ) | ||||
Total stockholders’ equity | 158,854 | 163,616 | ||||||
Total liabilities and stockholders’ equity | ¥ | 190,022 | 202,059 |
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Advantest’s Annual Report on Form 20-F for the year ended March 31, 2009 are an integral part of the consolidated financial statements.
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Yen (Millions) | ||||||||
Three months ended | Three months ended | |||||||
June 30, 2008 | June 30, 2009 | |||||||
Net sales | ¥ | 26,458 | 7,613 | |||||
Cost of sales | 12,710 | 3,361 | ||||||
Gross profit | 13,748 | 4,252 | ||||||
Research and development expenses | 6,732 | 4,411 | ||||||
Selling, general and administrative expenses | 8,842 | 4,358 | ||||||
Operating income (loss) | (1,826 | ) | (4,517 | ) | ||||
Other income (expense): | ||||||||
Interest and dividends income | 687 | 240 | ||||||
Interest expense | (3 | ) | (1 | ) | ||||
Other, net | 843 | 545 | ||||||
Total other income (expense) | 1,527 | 784 | ||||||
Income (loss) before income taxes and equity | ||||||||
in earnings (loss) of affiliated company | (299 | ) | (3,733 | ) | ||||
Income tax expense (benefit) | (178 | ) | 8 | |||||
Equity in earnings (loss) of affiliated company | (31 | ) | (46 | ) | ||||
Net income (loss) | ¥ | (152 | ) | (3,787 | ) | |||
Yen | ||||||||
Three months ended | Three months ended | |||||||
June 30, 2008 | June 30, 2009 | |||||||
Net income (loss) per share: | ||||||||
Basic | ¥ | (0.85 | ) | (21.19 | ) | |||
Diluted | (0.85 | ) | (21.19 | ) |
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Advantest’s Annual Report on Form 20-F for the year ended March 31, 2009 are an integral part of the consolidated financial statements.
- 3 -
ADVANTEST CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Yen (Millions) | ||||||||
Three months ended | Three months ended | |||||||
June 30, 2008 | June 30, 2009 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | ¥ | (152 | ) | (3,787 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) | ||||||||
operating activities: | ||||||||
Depreciation and amortization | 2,267 | 940 | ||||||
Deferred income taxes | (1,146 | ) | (270 | ) | ||||
Stock option compensation expense | - | 2 | ||||||
Changes in assets and liabilities: | ||||||||
Trade receivables | 7,737 | 2,119 | ||||||
Inventories | 455 | (2,062 | ) | |||||
Trade accounts payable | (3,432 | ) | (142 | ) | ||||
Other accounts payable | 759 | (5,580 | ) | |||||
Accrued expenses | (2,710 | ) | (1,710 | ) | ||||
Accrued warranty expenses | (436 | ) | (178 | ) | ||||
Accrued pension and severance costs | (122 | ) | 242 | |||||
Other | (697 | ) | (795 | ) | ||||
Net cash provided by (used in) operating activities | 2,523 | (11,221 | ) | |||||
Cash flows from investing activities: | ||||||||
(Increase) decrease in short-term investments | - | 9,515 | ||||||
Proceeds from sale of non-marketable investment securities | 34 | - | ||||||
Proceeds from sale of property, plant and equipment | 42 | 7 | ||||||
Purchases of intangible assets | (65 | ) | (11 | ) | ||||
Purchases of property, plant and equipment | (1,537 | ) | (472 | ) | ||||
Other | (3 | ) | (77 | ) | ||||
Net cash provided by (used in) investing activities | (1,529 | ) | 8,962 | |||||
Cash flows from financing activities: | ||||||||
Dividends paid | (4,209 | ) | (853 | ) | ||||
Other | (1 | ) | (2 | ) | ||||
Net cash used in financing activities | (4,210 | ) | (855 | ) | ||||
Net effect of exchange rate changes on cash and cash equivalents | 2,786 | (119 | ) | |||||
Net change in cash and cash equivalents | (430 | ) | (3,233 | ) | ||||
Cash and cash equivalents at beginning of period | 147,348 | 105,455 | ||||||
Cash and cash equivalents at end of period | ¥ | 146,918 | 102,222 |
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Advantest’s Annual Report on Form 20-F for the year ended March 31, 2009 are an integral part of the consolidated financial statements.
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(1) Accounting Principles, Procedures and the Presentation of the Consolidated Financial Statements
(a) Terminology, Form and Method of Preparation of the Consolidated Financial Statements
Advantest Corporation (the “Company”) and its consolidated subsidiaries (collectively “Advantest”) prepares the consolidated financial statements in accordance with the accounting principles, procedures, terminology, form and method of preparation required in the United States of America in connection with its issuance of American Depository Shares as established under Accounting Research Bulletins (“ARB”), Accounting Principles Board (“APB”) statements, Statements of Financial Accounting Standards (“SFAS”) and other relevant sources (collectively “U.S. GAAP”).
Advantest prepared the interim consolidated financial statements that accompany these notes in conformity with U.S. GAAP, consistent in all material respects with those applied in Advantest’s Annual Report on Form 20-F for the year ended March 31, 2009 except for changes discussed in Note (2)-(b).
The interim financial statements are unaudited, but reflect all normal adjustments that are, in the opinion of management, necessary to provide a fair presentation of results for the interim periods presented. This interim information should be read with the consolidated financial statements in Advantest’s Annual Report on Form 20-F for the year ended March 31, 2009.
Subsequent events have been evaluated through July 31, 2009, which is the date the accompanying consolidated financial statements were issued.
(b) Preparation of the Consolidated Financial Statements and Registration with the U.S. Securities and Exchange Commission
The Company became listed on the New York Stock Exchange on September 17, 2001 (local time) by means of an issuance of American Depository Shares, and has been filing a Form 20-F (equivalent to the Annual Securities Report in Japan) with the U.S. Securities and Exchange Commission since the year ended March 31, 2002. Advantest prepares the consolidated financial statements in its Form 20-F in accordance with U.S. GAAP.
(c) Significant differences from the preparation of financial statements under Japanese GAAP
Of the accounting principles, procedures and method of presentation adopted by Advantest, the following is a brief summary description of the significant differences from the preparation of financial statements using the accounting principles, procedure and method of presentation under Japanese GAAP, as required under the Financial Instruments and Exchange Law of Japan:
(i) Allowance for compensated absences
In accordance with SFAS No. 43, “Accounting for Compensated Absences”, an allowance is provided for the right of employees to receive compensated absences in the future.
(ii) Accrued pension and severance costs
In accordance with SFAS No. 87, “Employers’ Accounting for Pensions” and SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligation) of pension plans is recognized in the consolidated balance sheets.
(iii) Goodwill
In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, goodwill is no
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
longer amortized, but instead is tested for impairment at least annually.
(2) Description of Business and Summary of Significant Accounting Policies and Practices
(a) | Description of Business |
Advantest manufactures and sells semiconductor and component test system products and mechatronics-related products such as test handlers and device interfaces. Advantest also engages in research and development activities and provides maintenance and support services associated with these products.
Description of the business by segment is as follows:
The semiconductor and component test system segment provides customers with test system products for the semiconductor industry and the electronic parts industry. Product lines provided in the semiconductor and component test system segment include test systems for memory semiconductors for memory semiconductor devices and test systems for SoC (“System-on-a-Chip”) semiconductors for non memory semiconductor devices.
The mechatronics system segment provides product lines such as test handlers, mechatronic-applied products for handling semiconductor devices, device interfaces that serve as interfaces with the devices that are measured and operations related to nano-technology products.
The services, support and others segment consists of comprehensive customer solutions provided in connection with the above segments, support services, equipment lease business and others.
(b) | Accounting Change and Accounting Standards Not Yet Adopted |
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141R is effective for fiscal years beginning on or after December 15, 2008. Advantest adopted SFAS 141R in the first quarter beginning April 1, 2009, which did not have an impact on its consolidated results of operations and financial condition.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statement, an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008. Advantest adopted SFAS 160 in the first quarter beginning April 1, 2009, which did not have an impact on its consolidated results of operations and financial condition.
- 6 -
ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS165 requires the disclosure of the date through which subsequent events have been evaluated, as well as whether that date is the date the financial statements were issued or the date the financial statements were available to be issued. SFAS 165 is effective for interim periods ending after June 15, 2009. Advantest adopted SFAS 165 in the first quarter beginning April 1, 2009, which did not have an impact on its financial statements.
(c) | Reclassification |
Certain reclassifications have been made to the prior year’s consolidated financial statement to conform with the presentation used for the first quarter ended June 30, 2009.
(3) Inventories
Inventories at June 30, 2009 and March 31, 2009 are composed of the following:
Yen (Millions) | ||||||||
June 30, 2009 | March 31, 2009 | |||||||
Finished goods | ¥ | 4,985 | 4,305 | |||||
Work in process | 4,945 | 3,988 | ||||||
Raw materials and supplies | 1,826 | 1,444 | ||||||
¥ | 11,756 | 9,737 |
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(4) Investment Securities
Marketable securities consist of equity securities. The acquisition cost, gross unrealized gains, gross unrealized losses and fair value at June 30, 2009 and March 31, 2009 were as follows:
Yen (Millions) | ||||||||
June 30, 2009 | March 31, 2009 | |||||||
Noncurrent: | ||||||||
Available-for-sale: | ||||||||
Equity securities | ||||||||
Acquisition cost | ¥ | 2,890 | 2,890 | |||||
Gross unrealized gains | 935 | 277 | ||||||
Gross unrealized losses | 70 | 152 | ||||||
Fair value | ¥ | 3,755 | 3,015 |
Neither gross realized gains nor losses on available-for-sale equity securities were recognized for the three months ended June 30, 2009.
Gross unrealized losses on available-for-sale equity securities and the fair value of the related securities, aggregated by length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2009 and March 31, 2009, were as follows:
Yen (Millions) | |||||||||
June 30, 2009 | |||||||||
Less than 12 months | 12 months or longer | ||||||||
Fair value | Gross unrealized losses | Fair value | Gross unrealized losses | ||||||
Noncurrent: | |||||||||
Available-for-sale: | |||||||||
Equity securities | ¥ | 1,008 | 70 | - | - |
Yen (Millions) | |||||||||
March 31, 2009 | |||||||||
Less than 12 months | 12 months or longer | ||||||||
Fair value | Gross unrealized losses | Fair value | Gross unrealized losses | ||||||
Noncurrent: | |||||||||
Available-for-sale: | |||||||||
Equity securities | ¥ | 1,313 | 140 | 49 | 12 |
- 8 -
ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Advantest maintains non-marketable investment securities, which are recorded at cost. The carrying amounts of non-marketable investment securities were ¥3,646 million and ¥3,664 million at June 30, 2009 and March 31, 2009, respectively. For non-marketable equity securities which Advantest identified events or changes in circumstances that might have had significant adverse effect on the fair value of the investments, the fair value approximate the carrying value. Advantest has not estimated the fair value of other non-marketable equity securities of ¥1,726 million and ¥1,150 million at June 30, 2009 and March 31, 2009, respectively, since it is not practicable to estimate the fair value of the investments. It is because of the lack of readily determinable fair values and difficulty in estimating fair value without incurring excessive cost.
(5) Derivative Financial Instruments
Derivative
Advantest uses foreign exchange forward contracts and currency options to manage currency exposure, resulting from changes in foreign currency exchange rates, on trade receivables. However, these contracts do not qualify for hedge accounting since they do not meet the hedging criteria specified by Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended.
Foreign exchange contracts generally have maturities of several months. These contracts are used to reduce Advantest’s risk associated with exchange rate movements, as gains and losses on these contracts are intended to offset exchange losses and gains on underlying exposures. Changes in fair value of foreign exchange contracts are recognized in earnings under the caption of other income (expense).
Advantest does not, as a matter of policy, enter into derivative transactions for the purpose of speculation.
Advantest had foreign exchange contracts to exchange currencies among Japanese yen, US dollar and Euro at June 30, 2009 and March 31 2009. The notional amounts of these contracts at June 30, 2009 and March 31, 2009 were as follows:
Yen (Millions) | ||||||||
June 30, 2009 | March 31, 2009 | |||||||
Foreign exchange contracts | ¥ | 4,145 | 763 |
- 9 -
ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
The fair value of derivative instruments not designated as hedging instruments under SFAS 133 at June 30, 2009 and March 31, 2009 was as follows:
Yen | |||||||||||
(Millions) | |||||||||||
June 30, 2009 | March 31, 2009 | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Assets | |||||||||||
Foreign exchange contracts | Other current assets | ¥ | 29 | Other current assets | ¥ | 4 | |||||
Liabilities | |||||||||||
Foreign exchange contracts | Other current liabilities | ¥ | - | Other current liabilities | ¥ | 0 |
The effect of derivative instruments not designated as hedging instruments under SFAS 133 on consolidated statements of operations for the three months ended June 30, 2009 was as follows:
Yen (Millions) | |||||
Location of Gain (Loss) Recognized in income on Derivatives | Amount of Gain (Loss) Recognized in Income on Derivatives | ||||
Foreign exchange contracts | Other income (expense) | ¥ | 138 |
Concentration of credit risk
Derivative financial instruments contain an element of risk in the event the counterparties are unable to meet the terms of the agreements. However, Advantest minimizes risk exposure by limiting the counterparties to major international banks and financial institutions meeting established credit guidelines. Management of Advantest does not expect any counterparty to default on its obligations and, therefore, does not expect to incur any losses due to counterparty default on its obligations.
Advantest generally does not require or place collateral for these derivative financial instruments.
- 10 -
ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(6) Fair Value Measurement
Disclosure about the fair value of Financial Instruments
The following table presents the carrying amounts and estimated fair values of Advantest’s financial instruments at June 30, 2009 and March 31, 2009, except for cash and cash equivalents, short-term investments, trade receivables, other current assets, trade accounts payable and accrued expenses for which fair value approximate their carrying amounts. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Yen (Millions) | ||||||||||||||||
June 30, 2009 | March 31, 2009 | |||||||||||||||
Carrying amount | Fair value | Carrying amount | Fair value | |||||||||||||
Financial assets: | �� | |||||||||||||||
Investment securities for which it is | ||||||||||||||||
practicable to estimate fair value | ¥ | 3,755 | 3,755 | ¥ | 3,015 | 3,015 | ||||||||||
Foreign exchange contracts | 29 | 29 | 4 | 4 | ||||||||||||
Financial liabilities: | ||||||||||||||||
Foreign exchange contracts | ¥ | - | - | ¥ | 0 | 0 |
The carrying amounts shown in the table are included in the consolidated balance sheets under the indicated captions. And the carrying amounts of foreign exchange contracts are included in other current assets and other current liabilities.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
Cash and cash equivalents, short-term investments, trade receivables, other current assets, trade accounts payable, and accrued expenses (nonderivatives): The carrying amounts approximate fair value because of the short maturity of these instruments.
Available-for-sale equity securities: The fair values of available-for-sale equity securities are based on quoted market prices at the reporting date for those investments.
Foreign exchange contracts: The fair value of foreign exchange contracts are estimated by obtaining quotes from financial institutions.
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Fair Value Hierarchy
SFAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following three levels:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 - Observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly.
Level 3 - Unobservable inputs for the asset or liability.
Assets/Liabilities Measured at Fair Value on a Recurring Basis
As of June 30, 2009 and as of March 31, 2009, carrying amount of financial assets and liabilities that were measured at fair value on a recurring basis by level is as follows:
Yen (Millions) | ||||||||||||||||
Fair Value Measurements at June 30, 2009 | ||||||||||||||||
Quoted Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Financial Assets | ||||||||||||||||
Available-for-sale equity securities | ¥ | 3,755 | 3,755 | - | - | |||||||||||
Foreign exchange contracts | 29 | - | 29 | - | ||||||||||||
Total assets measured at fair value | ¥ | 3,784 | 3,755 | 29 | - |
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Yen (Millions) | ||||||||||||||||
Fair Value Measurements at March 31, 2009 | ||||||||||||||||
Quoted Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Financial Assets | ||||||||||||||||
Available-for-sale equity securities | ¥ | 3,015 | 3,015 | - | - | |||||||||||
Foreign exchange contracts | 4 | - | 4 | - | ||||||||||||
Total assets measured at fair value | ¥ | 3,019 | 3,015 | 4 | - | |||||||||||
Financial Liabilities | ||||||||||||||||
Foreign exchange contracts | ¥ | 0 | - | 0 | - | |||||||||||
Total liabilities measured at fair value | ¥ | 0 | - | 0 | - |
The table does not include assets and liabilities which are measured at historical cost or any basis other than fair value. Advantest’s financial assets and liabilities measured at fair value consist of available-for-sale equity securities and foreign exchange contracts. Adjustments to fair value of available-for-sale equity securities are recorded as an increase or decrease, net of tax, in accumulated other comprehensive income (loss) except where losses are considered to be other than temporary, in which case the losses are recorded in other income (expense). Changes in fair value of foreign exchange contracts are recognized in earnings under the caption of other income (expense).
(7) Income Taxes
As of June 30, 2008, the estimated annual effective tax rate for FY2008 is approximately 59.4 percent. The estimated annual effective tax rate for FY2008 differs from the 40.4 percent statutory income tax rate primarily due to the effects of foreign tax rates and undistributed earnings of foreign subsidiaries.
As of June 30, 2009, the estimated annual effective tax rate for FY2009 is approximately (0.2) percent. The estimated annual effective tax rate for FY2009 differs from the 40.4 percent statutory income tax rate primarily due to the estimated net increase in valuation allowance for deferred tax assets and the effects of foreign tax rates.
- 13 -
ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(8)Other Comprehensive Income (Loss)
The components of other comprehensive income (loss), net of tax, are as follows:
Yen (Millions) | ||||
Three months ended June 30, 2008 | ||||
Net income (loss) | ¥ | (152 | ) | |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | 2,401 | |||
Net unrealized gains (losses) on investment securities: | ||||
Net unrealized gains (losses) arising during the period | 530 | |||
Less reclassification adjustments for net gains (losses) realized in earnings | 16 | |||
Net unrealized gains (losses) | 546 | |||
Pension related adjustment | 11 | |||
Total comprehensive income (loss) | ¥ | 2,806 |
Yen (Millions) | ||||
Three months ended June 30, 2009 | ||||
Net income (loss) | ¥ | (3,787 | ) | |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (578 | ) | ||
Net unrealized gains (losses) on investment securities: | ||||
Net unrealized gains (losses) arising during the period | 438 | |||
Less reclassification adjustments for net gains (losses) realized in earnings | - | |||
Net unrealized gains (losses) | 438 | |||
Pension related adjustment | 58 | |||
Total comprehensive income (loss) | ¥ | (3,869 | ) |
- 14 -
ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(9) Stock-Based Compensation
In April 2009, stock options were issued to certain employees of foreign subsidiaries under a stock option plan approved by the Board of Directors. The number of granted shares totaled 12,000. Options were granted with an exercise price of ¥2,653 per share that is equal to the higher of (1) 1.05 times the average price of the Company’s common shares of the preceding month on the date of grant, (2) the closing price of the Company’s common shares traded on the Tokyo Stock Exchange on the date of grant and (3) ¥2,653 per share that is equal to the exercise price of the July 2008 options. The options have an exercise period of 4 years and are exercisable from May 1, 2009.
Stock based compensation expense recognized was ¥2 million, which was included in selling, general and administrative expenses for the three months ended June 30, 2009. No tax benefit was recognized for the three months ended June 30, 2009.
The weighted average fair value per share for stock option that was granted during the three months ended June 30, 2009 was ¥189.
(10) Accrued Pension and Severance Costs
The components of net periodic benefit cost recognized are as follows:
Yen (Millions) Three months ended | ||||||||
June 30, 2008 | June 30, 2009 | |||||||
Service cost | ¥ | 405 | 328 | |||||
Interest cost | 175 | 186 | ||||||
Expected return on plan assets | (86 | ) | (70 | ) | ||||
Amortization of unrecognized: | ||||||||
Net actuarial (gain) or loss | 71 | 140 | ||||||
Prior service (benefit) cost | (52 | ) | (44 | ) | ||||
Net periodic benefit cost | ¥ | 513 | 540 |
(11) Dividends
Based on the resolution for the payment of year-end dividends at the Board of Directors held on May 26, 2009, Advantest paid cash dividends totaling ¥894 million, ¥5 per share of common stock on June 2, 2009 to stockholders of record on March 31, 2009.
- 15 -
ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(12) Accrued Warranty Expenses
Advantest issues contractual product warranties under which it generally guarantees the performance of products delivered and services rendered for a certain period. Changes in accrued warranty expenses for the three months ended June 30, 2008 and 2009 were summarized as follows:
Yen (Millions) Three months ended | |||||
June 30, 2008 | June 30, 2009 | ||||
Balance at beginning of period | ¥ | 3,143 | 2,811 | ||
Addition | 1,107 | 508 | |||
Utilization | (1,542) | (686) | |||
Translation adjustments | 0 | 9 | |||
Balance at end of period | ¥ | 2,708 | 2,642 |
(13) Other income (expense)
Other income (expense) includes exchange gains of ¥834 million and ¥425 million for the three months ended June 30, 2008 and 2009, respectively.
- 16 -
ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(14) Operating Segment and Geographic Information
(Operating Segment Information)
Advantest manufactures and sells semiconductor and component test system products and mechatronics-related products such as test handlers and device interfaces. Advantest also engages in research and development activities and provides maintenance and support services associated with these products. In accordance with SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information”, Advantest has three operating and reportable segments, which are the design, manufacturing, and sale of semiconductor and component test systems, mechatronics systems and services, support and others. These operating segments are determined based on the nature of the products and the markets.
Operating segment information for the three months ended June 30, 2008 and 2009 are as follows:
Yen (Millions) | ||||||||||||
Three months ended June 30, 2008 | ||||||||||||
Semiconductor and Component Test System Business | Mechatronics System Business | Services, Support and Others | Elimination and Corporate | Total | ||||||||
Net sales to unaffiliated customers | ¥ | 16,883 | 5,212 | 4,363 | - | 26,458 | ||||||
Inter-segment sales | 84 | 9 | - | (93) | - | |||||||
Net sales | 16,967 | 5,221 | 4,363 | (93) | 26,458 | |||||||
Operating income (loss) before stock option compensation expense | 681 | (1,426) | 437 | (1,518) | (1,826) | |||||||
Adjustment: | ||||||||||||
Stock option compensation expense | - | |||||||||||
Operating income (loss) | ¥ | (1,826) |
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Yen (Millions) | ||||||||||||
Three months ended June 30, 2009 | ||||||||||||
Semiconductor and Component Test System Business | Mechatronics System Business | Services, Support and Others | Elimination and Corporate | Total | ||||||||
Net sales to unaffiliated customers | ¥ | 4,047 | 1,356 | 2,210 | - | 7,613 | ||||||
Inter-segment sales | 4 | - | - | (4) | - | |||||||
Net sales | 4,051 | 1,356 | 2,210 | (4) | 7,613 | |||||||
Operating income (loss) before stock option compensation expense | (2,822) | (951) | 271 | (1,013) | (4,515) | |||||||
Adjustment: | ||||||||||||
Stock option compensation expense | 2 | |||||||||||
Operating income (loss) | ¥ | (4,517) |
Adjustments to operating income (loss) in Corporate principally represent corporate general and administrative expenses and research and development expenses related to fundamental research activities that are not allocated to operating segments.
Advantest uses the operating income (loss) before stock option compensation expense for management’s analysis of business segment results.
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Consolidated Net Sales by Geographical Areas)
Net sales to unaffiliated customers for the three months ended June 30, 2008 and 2009 are as follows:
Yen (Millions) | ||
Three months ended June 30, 2008 | ||
Japan | ¥ | 6,489 |
Americas | 2,835 | |
Europe | 420 | |
Asia | 16,714 | |
Total | ¥ | 26,458 |
Yen (Millions) | ||
Three months ended June 30, 2009 | ||
Japan | ¥ | 1,976 |
Americas | 1,138 | |
Europe | 1,052 | |
Asia | 3,447 | |
Total | ¥ | 7,613 |
(Notes) | 1. | Net sales to unaffiliated customers are based on the customer’s location. |
2. | Each of the segments includes primarily the following countries or regions: |
(1) | Americas | U.S.A., Republic of Costa Rica, etc. |
(2) | Europe | Israel, Germany, Ireland, Portugal, etc. |
(3) | Asia | South Korea, Taiwan, China, etc. |
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Supplemental Segment Information
(Geographic Segment Information / Based on Location of the Company and its Affiliates)
The following table sets forth the net sales and operating income (loss) for the three months ended June 30, 2008 and 2009, classified by location of office from which product was shipped. This information is provided as supplemental information in addition to the requirements of SFAS No. 131 in consideration of the disclosure requirements under the Financial Instruments and Exchange Law of Japan.
Yen (Millions) | ||||||||||||||
Three months ended June 30, 2008 | ||||||||||||||
Japan | Americas | Europe | Asia | Elimination and Corporate | Total | |||||||||
Net sales to unaffiliated customers | ¥ | 15,496 | 5,023 | 884 | 5,055 | - | 26,458 | |||||||
Inter-segment sales | 7,010 | 741 | 221 | 1,569 | (9,541) | - | ||||||||
Sales | 22,506 | 5,764 | 1,105 | 6,624 | (9,541) | 26,458 | ||||||||
Operating income (loss) | ¥ | (2,772) | 651 | (109) | 2,089 | (1,685) | (1,826) |
Yen (Millions) | ||||||||||||||
Three months ended June 30, 2009 | ||||||||||||||
Japan | Americas | Europe | Asia | Elimination and Corporate | Total | |||||||||
Net sales to unaffiliated customers | ¥ | 3,459 | 2,400 | 589 | 1,165 | - | 7,613 | |||||||
Inter-segment sales | 2,696 | 802 | 340 | 817 | (4,655) | - | ||||||||
Sales | 6,155 | 3,202 | 929 | 1,982 | (4,655) | 7,613 | ||||||||
Operating income (loss) | ¥ | (4,442) | 182 | 267 | 477 | (1,001) | (4,517) |
(Notes) | 1. | Geographical segments are organized by physical proximity of countries or regions. |
2. | Each of the geographical segments includes primarily the following countries or regions: |
(1) | Americas | U.S.A., etc. |
(2) | Europe | Germany, etc. |
(3) | Asia | South Korea, Taiwan, Singapore, etc. |
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ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(15) Per Share Data
The following table sets forth the computation of basic and diluted net income (loss) per share for the three months ended June 30, 2008 and 2009:
Yen (Millions) except share and per share data | ||||
Three months ended June 30, 2008 | Three months ended June 30, 2009 | |||
Numerator: | ||||
Net income (loss) | ¥ | (152) | (3,787) | |
Denominator: | ||||
Basic weighted average shares of common stock outstanding | 178,725,896 | 178,723,064 | ||
Dilutive effect of exercise of stock options | - | - | ||
Diluted weighted average shares of common stock outstanding | 178,725,896 | 178,723,064 | ||
Basic net income (loss) per share | ¥ | (0.85) | (21.19) | |
Diluted net income (loss) per share | ¥ | (0.85) | (21.19) |
At June 30, 2008 and 2009, Advantest had outstanding stock options into 4,429,980 and 3,842,980 shares of common stock, respectively, which were anti-dilutive and excluded from the calculation of diluted net income per share but could potentially dilute net income per share in future periods.
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