(Advantest’s consolidated financial statements are prepared in accordance with U.S. GAAP)
1. Consolidated Results of FY2015 Q2 (April 1, 2015 through September 30, 2015)
(% changes as compared with the corresponding period of the previous fiscal year)
(Note) Quarterly comprehensive income (loss): FY2015 Q2 (Y) 4,494 million (60.6%);FY2014 Q2 (Y) 11,407 million -%
2. Dividends
3. Projected Results for FY2015 (April 1, 2015 through March 31, 2016)
(% changes as compared with the corresponding period of the previous fiscal year)
Please see “(3) Prospects for the Current Fiscal Year” on page 6 for details.
4. Others
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.
Advantest Corporation (FY2015 Q2)
Contents
| 1. | Business Results | | P. 4 |
| | (1) | Analysis of Business Results | | P. 4 |
| | (2) | Analysis of Financial Condition | | P. 6 |
| | (3) | Prospects for the Current Fiscal Year | | P. 6 |
| 2. | Others | | P. 7 |
| | (1) | Use of Simplified Accounting Method and Special Accounting Policy for Quarterly Consolidated Financial Statements | | P. 7 |
| 3. | Consolidated Financial Statements | | P. 8 |
| | (1) | Consolidated Balance Sheets (Unaudited) | | P. 8 |
| | (2) | Consolidated Statements of Operations (Unaudited) | | P.10 |
| | (3) | Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | | P.12 |
| | (4) | Consolidated Statements of Cash Flows (Unaudited) | | P.13 |
| | (5) | Notes to Consolidated Financial Statements | | P.14 |
| | | (Notes on Going Concern) | | P.14 |
| | | (Notes on Significant Changes to Stockholders’ Equity) | | P.14 |
| | | (Segment Information) | | P.14 |
Advantest Corporation (FY2015 Q2)
1. Business Results
(1) Analysis of Business Results
Consolidated Financial Results of FY2015 Q2 (April 1, 2015 through September 30, 2015)
| | | | | | | | | (in billion yen) |
| | | Six months ended September 30, 2014 | | | Six months ended September 30, 2015 | | | As compared to the corresponding period of the previous fiscal year increase (decrease) |
| Orders received | | | 87.4 | | | | 71.1 | | | | (18.7 | %) |
| Net sales | | | 78.9 | | | | 86.7 | | | | 9.8 | % |
| Operating income | | | 6.4 | | | | 6.7 | | | | 5.6 | % |
| Income before income taxes | | | 8.0 | | | | 6.3 | | | | (21.4 | %) |
| Net income | | | 4.6 | | | | 4.4 | | | | (3.4 | %) |
During Advantest’s first half of fiscal year 2015, the global economy maintained its moderate growth trend supported by an improvement in the American economy, although growth was less than initially anticipated due to a slowdown in the Chinese economy.
Semiconductor-related markets benefited from robust investments related to advanced semiconductors used in smartphones and data centers, particularly memory semiconductors. However, macroeconomic factors including falling stock prices and declines in international trade contributed to declining forward visibility, which impacted consumer spending in China and other countries, causing semiconductor manufacturers to limit their new orders for manufacturing equipment.
Amid this increasingly challenging environment, Advantest focused on promoting sales of semiconductor and component test systems while also seeking to increase profitability of its ATE-related peripheral business and other businesses.
As a result, orders received were (Y) 71.1 billion (18.7% decrease in comparison to the corresponding period of the previous fiscal year), net sales were (Y) 86.7 billion (9.8% increase in comparison to the corresponding period of the previous fiscal year), and operating income was (Y) 6.7 billion (5.6% increase in comparison to the corresponding period of the previous fiscal year), representing gains in both net sales and profits. Income before income taxes was (Y) 6.3 billion (21.4% decrease in comparison to the corresponding period of the previous fiscal year) and net income was (Y) 4.4 billion (3.4% decrease in comparison to the corresponding period of the previous fiscal year). The percentage of net sales to overseas customers was 94.2% (92.8% in the corresponding period of the previous fiscal year).
Conditions of business segments are described below.
Advantest Corporation (FY2015 Q2)
<Semiconductor and Component Test System Segment>
| | | | | | | | | (in billion yen) |
| | | Six months ended September 30, 2014 | | | Six months ended September 30, 2015 | | | As compared to the corresponding period of the previous fiscal year increase (decrease) |
| Orders received | | | 63.9 | | | | 39.0 | | | | (38.9 | %) |
| Net sales | | | 55.0 | | | | 51.2 | | | | (6.9 | %) |
| Operating income | | | 7.9 | | | | 2.8 | | | | (64.8 | %) |
The Semiconductor and Component Test System Segment logged strong sales of memory test systems, reflecting memory semiconductor manufacturers’ proactive capital expenditures. However, non-memory test system sales were slow since the summer due to declines in the PC market and lower sales of smartphones in China.
As a result of the above, orders received were (Y) 39.0 billion (38.9% decrease in comparison to the corresponding period of the previous fiscal year), net sales were (Y) 51.2 billion (6.9% decrease in comparison to the corresponding period of the previous fiscal year), and operating income was 2.8 billion (64.8% decrease in comparison to the corresponding period of the previous fiscal year).
< Mechatronics System Segment>
| | | | | | | | | (in billion yen) |
| | | Six months ended September 30, 2014 | | | Six months ended September 30, 2015 | | | As compared to the corresponding period of the previous fiscal year increase (decrease) |
| Orders received | | | 11.9 | | | | 17.8 | | | | 49.7 | % | |
| Net sales | | | 11.1 | | | | 20.3 | | | | 82.5 | % | |
| Operating income | | | 0.7 | | | | 4.5 | | | 6.3 times | |
The Mechatronics System Segment also benefited from proactive capital expenditures by memory semiconductor manufacturers, which contributed to a strong quarter for the device interface business. Additionally, the nanotechnology business saw strong sales amid growing demand for further miniaturization of semiconductors and electronic materials.
As a result of the above, orders received were (Y) 17.8 billion (49.7% increase in comparison to the corresponding period of the previous fiscal year), net sales were (Y) 20.3 billion (82.5% increase in comparison to the corresponding period of the previous fiscal year), and operating income was 4.5 billion (6.3 times increase in comparison to the corresponding period of the previous fiscal year).
<Services, Support and Others Segment>
| | | | | | | | | (in billion yen) |
| | | Six months ended September 30, 2014 | | | Six months ended September 30, 2015 | | | As compared to the corresponding period of the previous fiscal year increase (decrease) |
| Orders received | | | 11.7 | | | | 14.2 | | | | 21.7 | % |
| Net sales | | | 12.9 | | | | 15.2 | | | | 18.0 | % |
| Operating income | | | 1.6 | | | | 2.3 | | | | 48.7 | % |
Advantest Corporation (FY2015 Q2)
The Services, Support and Others Segment continued to generate higher net sales and profits from its field services business due to increasing number of annual maintenance contracts. SSD test systems, a new business, also saw strong sales.
As a result of the above, orders received were (Y) 14.2 billion (21.7% increase in comparison to the corresponding period of the previous fiscal year), net sales were (Y) 15.2 billion (18.0% increase in comparison to the corresponding period of the previous fiscal year), and operating income was 2.3 billion (48.7% increase in comparison to the corresponding period of the previous fiscal year).
(2) Analysis of Financial Condition
Total assets at September 30, 2015 amounted to (Y) 259.8 billion, a decrease of (Y) 13.3 billion compared to March 31, 2015, primarily due to a decrease of (Y) 11.1 billion and (Y) 1.5 billion in cash and cash equivalents and property, plant and equipment, respectively. The amount of total liabilities was (Y) 116.1 billion, a decrease of (Y) 16.1 billion compared to March 31, 2015, primarily due to a redemption of (Y) 10.0 billion in corporate bonds and a decrease of (Y) 5.0 billion in trade accounts payable. Stockholders’ equity was (Y) 143.7 billion. Equity to assets ratio was 55.3%, an increase of 3.7 percentage points from March 31, 2015.
(Cash Flow Condition)
Cash and cash equivalents held at September 30, 2015 were (Y) 86.5 billion, a decrease of (Y) 11.1 billion from March 31, 2015. Significant cash flows during the first half of this fiscal year and their causes are described below.
Net cash provided by operating activities was (Y) 1.5 billion (net cash inflow of (Y) 13.4 billion in the corresponding period of the previous fiscal year). This amount was primarily attributable to a decrease of (Y) 4.7 billion and (Y) 1.6 billion in trade accounts payable and customer prepayments, respectively, and adjustments of non cash items such as depreciation and amortization in addition to the net income of (Y) 4.4 billion.
Net cash used in investing activities was (Y) 1.4 billion (net cash outflow of (Y) 0.1 billion in the corresponding period of the previous fiscal year). This amount was primarily attributable to payments for acquisition of tangible fixed assets in the amount of (Y) 1.4 billion.
Net cash used in financing activities was (Y) 11.7 billion (net cash outflow of (Y) 0.8 billion in the corresponding period of the previous fiscal year). This amount was primarily attributable to redemption of corporate bonds (Y) 10.0 billion and dividends paid of (Y) 1.7 billion.
(3) Prospects for the Current Fiscal Year
Advantest expects that the trend for a society with greater safety and comfort, as embodied in the global adoption of smartphones and acceleration of computerization of automobiles, will drive future growth in the semiconductor industry and related markets.
Regarding the business environment for the current fiscal year, Advantest expects that its non-memory test system business will face difficult conditions for a while but expects that demand will recover in the new year when an increase in production of semiconductors for high-end smartphones is anticipated. Memory test systems are expected to continue to attract robust customer interest through the fiscal year since major semiconductor manufacturers are planning to expand their DRAM and NAND flash memory production capacity.
Additionally, Advantest anticipates growth in its mechatronics system business, including device interfaces and nanotechnology products, and services, support and others business due to its strategy to increase profitability.
Due to the recent slowdown in demand for non-memory test systems starting in the summer and the expected decrease in the percentage of net sales constituting high profitability products, Advantest has revised its full-year forecast as follows: net sales of (Y) 160.0 billion; operating income of (Y) 10.0 billion; and net income of (Y) 6.7 billion. These forecasts are based on foreign exchange rates of 120 JPY to 1 USD and 135 JPY to 1 Euro.
Advantest Corporation (FY2015 Q2)
2. Others
(1) 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 half, its best estimate of the annual effective tax rate for the full fiscal year and uses 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.
