Advantest Corporation (FY2010 Q1)
FY2010 First Quarter Consolidated Financial Results
(Prepared in accordance with U.S. GAAP)
(Period ended June 30, 2010)
(Unaudited)
July 28, 2010
Company name | : | Advantest Corporation (URL http://www.advantest.co.jp/investors/en-index.shtml) |
Stock exchanges on which shares are listed | : | First section of the Tokyo Stock Exchange |
Stock code number | : | 6857 |
Company representative | : | Haruo Matsuno, Representative Director, President and CEO |
Contact person | : | Hiroshi Nakamura, Managing Executive Officer and Senior Vice President, Corporate Administration Group (03) 3214-7500 |
Quarterly Report Filing Date (as planned) | : | July 30, 2010 |
Quarterly Results Supplemental Materials | : | Yes |
Quarterly Results Presentation Meeting | : | Yes |
(Rounded to the nearest million yen) |
(1) Consolidated Financial Results (Accumulated)
(% changes as compared with the corresponding period of the previous fiscal year)
Net sales | Operating income (loss) | Income (loss) before income taxes and equity in earnings (loss) of affiliated company | Net income (loss) | |||||
Million yen | % increase (decrease) | Million yen | % increase (decrease) | Million yen | % increase (decrease) | Million yen | % increase (decrease) | |
FY2010 Q1 | 23,535 | 209.2 | 1,813 | - | 1,629 | - | 788 | - |
FY2009 Q1 | 7,613 | (71.2) | (4,517) | - | (3,733) | - | (3,787) | - |
Net income (loss) per share - basic | Net income (loss) per share - diluted | ||||
Yen | Yen | ||||
FY2010 Q1 | 4.41 | 4.41 | |||
FY2009 Q1 | (21.19) | (21.19) |
(2) Consolidated Financial Position
Total assets | Net assets | Equity-to-assets ratio | Net assets per share | |||||
Million yen | Million yen | % | Yen | |||||
FY2010 Q1 | 187,329 | 147,465 | 78.7 | 825.11 | ||||
FY2009 | 188,663 | 150,242 | 79.6 | 840.65 |
2. Dividends
Dividend per share | |||||
(Record Date) | First quarter end | Second quarter end | Third quarter end | Year end | Annual total |
yen | yen | yen | yen | yen | |
FY2009 | - | 5.00 | - | 5.00 | 10.00 |
FY2010 | - | N/A | N/A | N/A | N/A |
FY2010 (forecast) | N/A | 5.00 | - | Undecided | Undecided |
(Note) Revision of dividends forecast for this period: Yes
The dividend forecast for the fiscal year ending March 31, 2011 has not been decided. Advantest takes earnings forecast into consideration and intends to promptly disclose the relevant dividend forecast when such forecast becomes available.
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Advantest Corporation (FY2010 Q1)
3. Projected Results for FY2010 (April 1, 2010 through March 31, 2011)
(% changes as compared with the corresponding period of the previous fiscal year)
Net sales | Operating income | Income before income taxes and equity in earnings of affiliated company | Net income | Net income per share | ||||||
Million yen | % increase (decrease) | Million yen | % increase (decrease) | Million yen | % increase (decrease) | Million yen | % increase (decrease) | Yen | ||
FY2010 Q2 | 53,000 | 182.4 | 5,000 | - | 4,900 | - | 3,100 | - | 17.35 | |
(cumulative term) | ||||||||||
FY2010 | - | - | - | - | - | - | - | - | - |
(Note) Revision of earnings forecast for this period: Yes
Advantest did not report the earnings forecast for the fiscal year ending March 31, 2011 in late April of this year due to difficulty in forecasting trends in the demand for semiconductors and investment plans for semiconductor related capital expenditures. At this time, we are able to disclose the earnings forecast for the six months ending September 30, 2010, taking into account trends in orders input received and other factors in the first quarter. Such earnings forecast is disclosed above. As to the earnings forecast for the fiscal year ending March 31, 2011, Advantest intends to promptly disclose the relevant earnings forecast when such disclosure becomes possible.
4. Others (Please see “Business Results” 2. Others on page 7 for details.)
(1) | Material changes in subsidiaries during this period (changes in scope of consolidation resulting from changes in subsidiaries): None |
(2) | Use of simplified accounting method and special accounting policy for quarterly consolidated financial statements: Yes |
(3) | Changes in accounting principles, procedures and the presentation of the quarterly consolidated financial statements: |
1) | Changes based on revisions of accounting standard: None |
2) | Changes other than 1) above: None |
(4) | Number of issued and outstanding stock (common stock): |
1) | Number of issued and outstanding stock at the end of each fiscal period (including treasury stock): FY2010 Q1 199,566,770 shares; FY2009 199,566,770 shares. |
2) | Number of treasury stock at the end of each fiscal period: FY2010 Q1 20,845,697 shares; FY2009 20,845,178 shares. |
3) | Average number of outstanding stock for each period (cumulative term): FY2010 Q1 178,721,418 shares; FY2009 Q1 178,723,064 shares. |
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Advantest Corporation (FY2010 Q1)
Implementation status of quarterly review procedures
This quarterly financial results report is not subject to quarterly review procedures by independent auditors under Japan’s Financial Instruments and Exchange Law. At the time of release of this report, such quarterly review procedures under the Financial Instruments and Exchange Law have not been completed.
Explanation on the Appropriate Use of Future Earnings Projections and Other Special Instructions
This document contains “forward-looking statements” that are based on Advantest’s current expectations, estimates and projections. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause Advantest’s actual results, levels of activities, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. These factors include: (i) changes in demand for the products and services produced and offered by Advantest’s customers, including semiconductors, communications services and electronic goods; (ii) circumstances relating to Advantest’s investment in technology, including its ability to timely develop products that meet the changing needs of semiconductor manufacturers, communications network equipment and components makers and service providers; (iii) significant changes in the competitive environment in the major markets where Advantest purchases materials, components and supplies for the production of its products or where its products are produced, distributed or sold; and (iv) changes in economic conditions, currency exchange rates or political stability in the major markets where Advantest procures materials, components and supplies for the production of its principal products or where its products are produced, distributed or sold. A discussion of these and other factors which may affect Advantest’s actual results, levels of activities, performance or achievements is contained in the “Operating and Financial Review and Prospects”, “Key Information - Risk Factors” and “Information on the Company” sections and elsewhere in Advantest’s annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission.
Contents
1. | Business Results | P. 4 | |
(1) | Analysis of Business Results | P. 4 | |
(2) | Analysis of Financial Condition | P. 6 | |
(3) | Prospects for the Upcoming Fiscal Year | P. 7 | |
2. | Others | P. 7 | |
(1) | Material changes in subsidiaries during this period (changes in scope of consolidation resulting from changes in subsidiaries) | P. 7 | |
(2) | Use of simplified accounting method and special accounting policy for quarterly consolidated financial statements | P. 7 | |
(3) | Changes in accounting principles, procedures and the presentation of the quarterly consolidated financial statements | P. 7 | |
3. | Consolidated Financial Statements and Other Information | P. 8 | |
(1) | Consolidated Balance Sheets (Unaudited) | P. 8 | |
(2) | Consolidated Statements of Operations (Unaudited) | P.10 | |
(3) | Consolidated Statements of Cash Flows (Unaudited) | P.11 | |
(4) | Notes on Preconditions to Going Concerns | P.12 | |
(5) | Segment Information | P.12 | |
(6) | Notes on Significant Changes to Stockholders’ Equity | P.12 |
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Advantest Corporation (FY2010 Q1)
1. Business Results
(1) Analysis of Business Results
Consolidated Financial Results of FY2010 Q1 (April 1, 2010 through June 30, 2010)
(in billion yen) | ||||
Three months ended June 30, 2009 | Three months ended June 30, 2010 | As compared to the corresponding period of the previous fiscal year Increase (decrease) | ||
Orders input received | 11.6 | 30.8 | 164.9% | |
Net sales | 7.6 | 23.5 | 209.2% | |
Operating income (loss) | (4.5) | 1.8 | - | |
Income (loss) before income taxes and equity in earnings (loss) of affiliated company | (3.7) | 1.6 | - | |
Net income (loss) | (3.8) | 0.8 | - |
In the first quarter of FY2010, despite the European financial crisis and other factors that threatened to hamper global economic growth, the overall recovery trend steadily strengthened, primarily led by expansion in China and the other emerging countries economies.
Supported by increasing demand for consumer electronics, principally flat-screen televisions, PCs and smartphones, the semiconductor market demand continued its recovery, which encouraged manufacturers to increase their capital investment activities.
Amid these positive shifts in the business environment, Advantest increased earnings by expanding sales of key product lines, gaining new customers, and shipping products to meet customers’ tight delivery schedules.
As a result of the above, net sales were (Y) 23.5 billion (a 209.2% increase in comparison to the corresponding period of the previous fiscal year), orders input received was (Y) 30.8 billion (a 164.9% increase in comparison to the corresponding period of the previous fiscal year), operating income was (Y) 1.8 billion ((Y) 6.3 billion improvement in comparison to the corresponding period of the previous fiscal year), income before income taxes and equity in loss of affiliated company was (Y) 1.6 billion ((Y) 5.4 billion improvement in comparison to the corresponding period of the previous fiscal year), net income was (Y) 0.8 billion ((Y) 4.6 billion improvement in comparison to the corresponding period of the previous fiscal year). The percentage of net sales to overseas customers was 78.7%, compared to 74.0% in the corresponding period of the previous fiscal year.
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Advantest Corporation (FY2010 Q1)
Conditions of business by segment are described below.
<Semiconductor and Component Test System Segment>
(in billion yen) | ||||
Three months ended June 30, 2009 | Three months ended June 30, 2010 | As compared to the corresponding period of the previous fiscal year Increase (decrease) | ||
Orders input received | 7.4 | 21.6 | 190.7% | |
Net sales | 4.1 | 15.8 | 289.3% | |
Operating income (loss) | (2.8) | 2.1 | - |
In the Semiconductor and Component Test System Segment, revenues grew dramatically as a result of increased capital expenditures by semiconductor manufacturers, reflecting the recovery of the semiconductor market.
In the memory semiconductor test system, Advantest saw stronger demand for its products, principally in test systems for high-performance DDR3-DRAM, driven by active capital investment from manufacturers of DRAM devices for the PC and cellular phone markets.
In the non-memory semiconductor test system, test systems for the microprocessors used in PCs and portable and wireless devices saw strong demand, as did test systems for consumer ICs and LCD driver ICs, used in flat-screen televisions and other display applications.
As a result of the above, orders input received was (Y) 21.6 billion (a 190.7% increase in comparison to the corresponding period of the previous fiscal year), net sales were (Y) 15.8 billion (a 289.3% increase in comparison to the corresponding period of the previous fiscal year) and operating income was (Y) 2.1 billion ((Y) 4.9 billion improvement in comparison to the corresponding period of the previous fiscal year).
<Mechatronics System Segment>
(in billion yen) | ||||
Three months ended June 30, 2009 | Three months ended June 30, 2010 | As compared to the corresponding period of the previous fiscal year Increase (decrease) | ||
Orders input received | 1.7 | 5.8 | 235.6% | |
Net sales | 1.4 | 4.0 | 197.1% | |
Operating income (loss) | (1.0) | (0.0) | - |
Demand also improved in the Mechatronics System Segment, primarily led by test handlers and the device interface products used together with test systems, chiefly supported by DRAM makers’ increased appetite for capital investment.
As a result of the above, orders input received was (Y) 5.8 billion (a 235.6% increase in comparison to the corresponding period of the previous fiscal year), net sales were (Y) 4.0 billion (a 197.1% increase in comparison to the corresponding period of the previous fiscal year) and operating loss was (Y) 18 million ((Y) 0.9 billion improvement in comparison to the corresponding period of the previous fiscal year).
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Advantest Corporation (FY2010 Q1)
<Services, Support and Others Segment>
(in billion yen) | ||||
Three months ended June 30, 2009 | Three months ended June 30, 2010 | As compared to the corresponding period of the previous fiscal year Increase (decrease) | ||
Orders input received | 2.5 | 3.7 | 50.0% | |
Net sales | 2.2 | 3.9 | 74.9% | |
Operating income | 0.3 | 0.7 | 152.1% |
The Services, Support and Others Segment recorded robust customer demand for maintenance services.
As a result of the above, orders input received was (Y) 3.7 billion (a 50.0% increase in comparison to the corresponding period of the previous fiscal year), net sales were (Y) 3.9 billion (a 74.9% increase in comparison to the corresponding period of the previous fiscal year) and operating income was (Y) 0.7 billion (a 152.1% increase in comparison to the corresponding period of the previous fiscal year).
(2) Analysis of Financial Condition
Total assets at June 30, 2010 amounted to (Y) 187.3 billion, a decrease of (Y) 1.3 billion compared to March 31, 2010, primarily due to decrease of (Y) 11.6 billion in cash and cash equivalents, increase of (Y) 5.3 billion and (Y) 3.8 billion in short-term investments and trade receivables, respectively. The amount of total liabilities was (Y) 39.9 billion, an increase of (Y) 1.4 billion compared to March 31, 2010, primarily due to increase in trade accounts payable. Stockholders’ equity was (Y) 147.5 billion. Equity to assets ratio was 78.7%, a decrease of 0.9 percentage point from March 31, 2010.
(Cash Flow Condition)
Cash and cash equivalents held at June 30, 2010 were (Y) 84.9 billion, a decrease of (Y) 11.6 billion from March 31, 2010. Significant cash flows during the first quarter of this fiscal year and their causes are described below.
Net cash used in operating activities was (Y) 2.9 billion (Net cash outflow (Y) 11.2 billion in the corresponding period of the previous fiscal year) mainly due to the combination of net income of (Y) 0.8 billion, increase in trade receivables in the amount of (Y) 4.5 billion, inventories in the amount of (Y) 3.1 billion and trade accounts payable in the amount of (Y) 3.2 billion.
Net cash used in investing activities was (Y) 5.9 billion (Net cash inflow (Y) 9.0 billion in the corresponding period of the previous fiscal year). This amount was primarily attributable to increase in short-term investments in the amount of (Y) 5.4 billion and purchases of property, plant and equipment in the amount of (Y) 0.4 billion.
Net cash used in financing activities was (Y) 0.9 billion (Net cash outflow (Y) 0.9 billion in the corresponding period of the previous fiscal year). This amount was primarily attributable to (Y) 0.9 billion dividends paid.
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Advantest Corporation (FY2010 Q1)
(3) Prospects for the Upcoming Fiscal Year
Amid expanding global demand for semiconductors used in portable and wireless devices and other consumer electronics, automobiles, and other products, semiconductor manufacturers are proactively implementing capital investment directed towards capacity expansion, process shrinks, and productivity enhancement, leading Advantest to forecast that the overall recovery trend in the company’s business environment will continue.
In this operating environment, Advantest will focus on developing new products optimized for a broad array of cost-sensitive test needs. In July 2010, the company merged with two wholly owned subsidiaries providing manufacturing and maintenance services, implementing a reorganization aimed at improving efficiency. Advantest will continue to strive to enhance revenues and earnings by reinforcing its ability to respond to economic trends and market fluctuations.
For the six months ending September 30, 2010, Advantest forecasts net sales of (Y) 53.0 billion, operating income of (Y) 5.0 billion, income before income taxes and equity in earnings of affiliated company of (Y) 4.9 billion and net income of (Y) 3.1 billion.
2. Others
(1) Material changes in subsidiaries during this period (changes in scope of consolidation resulting from changes in subsidiaries): None
(2) Use of simplified accounting method and special accounting policy for quarterly consolidated financial statements:
Tax expense is measured using an estimated annual effective tax rate. Advantest makes, at the end of the first quarter, its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis. The estimated effective tax rate includes the deferred tax effects of expected year-end temporary differences and carryforwards, and the effects of valuation allowances for deferred tax assets.
(3) Changes in accounting principles, procedures and the presentation of the quarterly consolidated financial statements: None
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Advantest Corporation (FY2010 Q1)
3. Consolidated Financial Statements and Other Information
(1) Consolidated Balance Sheets (Unaudited)
Yen (Millions) | ||||||||
Assets | June 30, 2010 | March 31, 2010 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | ¥ | 84,857 | 96,439 | |||||
Short-term investments | 15,760 | 10,498 | ||||||
Trade receivables, net | 19,696 | 15,930 | ||||||
Inventories | 19,525 | 16,590 | ||||||
Other current assets | 3,949 | 4,292 | ||||||
Total current assets | 143,787 | 143,749 | ||||||
Investment securities | 7,599 | 8,077 | ||||||
Property, plant and equipment, net | 32,005 | 32,881 | ||||||
Intangible assets, net | 1,440 | 1,445 | ||||||
Other assets | 2,498 | 2,511 | ||||||
Total assets | ¥ | 187,329 | 188,663 |
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Advantest Corporation (FY2010 Q1)
Yen (Millions) | ||||||||
Liabilities and Stockholders’ Equity | June 30, 2010 | March 31, 2010 | ||||||
Current liabilities: | ||||||||
Trade accounts payable | ¥ | 14,028 | 11,430 | |||||
Accrued expenses | 4,439 | 4,894 | ||||||
Accrued warranty expenses | 2,660 | 2,802 | ||||||
Other current liabilities | 2,387 | 2,793 | ||||||
Total current liabilities | 23,514 | 21,919 | ||||||
Accrued pension and severance costs | 13,778 | 13,765 | ||||||
Other liabilities | 2,572 | 2,737 | ||||||
Total liabilities | 39,864 | 38,421 | ||||||
Commitments and contingent liabilities | ||||||||
Stockholders’ equity: | ||||||||
Common stock | 32,363 | 32,363 | ||||||
Capital surplus | 40,463 | 40,463 | ||||||
Retained earnings | 181,501 | 181,606 | ||||||
Accumulated other comprehensive income (loss) | (17,530 | ) | (14,859 | ) | ||||
Treasury stock | (89,332 | ) | (89,331 | ) | ||||
Total stockholders’ equity | 147,465 | 150,242 | ||||||
Total liabilities and stockholders’ equity | ¥ | 187,329 | 188,663 |
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Advantest Corporation (FY2010 Q1)
(2) Consolidated Statements of Operations (Unaudited)
Yen (Millions) | ||||||||
Three months ended | Three months ended | |||||||
June 30, 2009 | June 30, 2010 | |||||||
Net sales | ¥ | 7,613 | 23,535 | |||||
Cost of sales | 3,361 | 11,941 | ||||||
Gross profit | 4,252 | 11,594 | ||||||
Research and development expenses | 4,411 | 4,941 | ||||||
Selling, general and administrative expenses | 4,358 | 4,840 | ||||||
Operating income (loss) | (4,517 | ) | 1,813 | |||||
Other income (expense): | ||||||||
Interest and dividend income | 240 | 117 | ||||||
Interest expense | (1 | ) | (1 | ) | ||||
Other, net | 545 | (300 | ) | |||||
Total other income (expense) | 784 | (184 | ) | |||||
Income (loss) before income taxes and equity in earnings (loss) of affiliated company | (3,733 | ) | 1,629 | |||||
Income taxes | 8 | 831 | ||||||
Equity in earnings (loss) of affiliated company | (46 | ) | (10 | ) | ||||
Net income (loss) | ¥ | (3,787 | ) | 788 | ||||
Yen | ||||||||
Three months ended | Three months ended | |||||||
June 30, 2009 | June 30, 2010 | |||||||
Net income (loss) per share: | ||||||||
Basic | ¥ | (21.19 | ) | 4.41 | ||||
Diluted | (21.19 | ) | 4.41 |
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Advantest Corporation (FY2010 Q1)
(3) Consolidated Statements of Cash Flows (Unaudited)
Yen (Millions) | ||||||||
Three months ended | Three months ended | |||||||
June 30, 2009 | June 30, 2010 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | ¥ | (3,787 | ) | 788 | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 940 | 999 | ||||||
Deferred income taxes | (270 | ) | 167 | |||||
Stock option compensation expense | 2 | — | ||||||
Changes in assets and liabilities: | ||||||||
Trade receivables | 2,119 | (4,491 | ) | |||||
Inventories | (2,062 | ) | (3,130 | ) | ||||
Trade accounts payable | (142 | ) | 3,219 | |||||
Other accounts payable | (5,580 | ) | (121 | ) | ||||
Accrued expenses | (1,710 | ) | (376 | ) | ||||
Accrued warranty expenses | (178 | ) | (128 | ) | ||||
Accrued pension and severance costs | 242 | 111 | ||||||
Other | (795 | ) | 102 | |||||
Net cash used in operating activities | (11,221 | ) | (2,860 | ) | ||||
Cash flows from investing activities: | ||||||||
(Increase) decrease in short-term investments | 9,515 | (5,448 | ) | |||||
Proceeds from sale of property, plant and equipment | 7 | 3 | ||||||
Purchases of property, plant and equipment | (472 | ) | (435 | ) | ||||
Purchases of intangible assets | (11 | ) | (61 | ) | ||||
Other | (77 | ) | 7 | |||||
Net cash provided by (used in) investing activities | 8,962 | (5,934 | ) | |||||
Cash flows from financing activities: | ||||||||
Dividends paid | (853 | ) | (854 | ) | ||||
Other | (2 | ) | (1 | ) | ||||
Net cash used in financing activities | (855 | ) | (855 | ) | ||||
Net effect of exchange rate changes on cash and cash equivalents | (119 | ) | (1,933 | ) | ||||
Net change in cash and cash equivalents | (3,233 | ) | (11,582 | ) | ||||
Cash and cash equivalents at beginning of period | 105,455 | 96,439 | ||||||
Cash and cash equivalents at end of period | ¥ | 102,222 | 84,857 |
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Advantest Corporation (FY2010 Q1)
(4) Notes on Preconditions to Going Concerns: None
(5) Segment Information
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 | ) |
Yen (Millions) | ||||||||||||||||
Three months ended June 30, 2010 | ||||||||||||||||
Semiconductor and Component Test System Business | Mechatronics System Business | Services, Support and Others | Elimination and Corporate | Total | ||||||||||||
Net sales to unaffiliated customers | ¥ | 15,644 | 4,025 | 3,866 | - | 23,535 | ||||||||||
Inter-segment sales | 124 | 3 | - | (127 | ) | - | ||||||||||
Net sales | 15,768 | 4,028 | 3,866 | (127 | ) | 23,535 | ||||||||||
Operating income (loss) before stock option compensation expense | 2,085 | (18 | ) | 684 | (938 | ) | 1,813 | |||||||||
Adjustment: | ||||||||||||||||
Stock option compensation expense | - | |||||||||||||||
Operating income (loss) | ¥ | 1,813 |
(Notes)
1. | 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. |
2. | Advantest uses the operating income (loss) before stock option compensation expense for management’s analysis of business segment results. |
(6) Notes on Significant Changes to Stockholders’ Equity: None
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