FORM 6-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Commission File Number: 333-13896
Supplement For the month of February 2010.
Total number of pages: 58
The exhibit index is located on page 1
NIDEC CORPORATION
(Translation of registrant’s name into English)
338 KuzeTonoshiro-Cho,
Minami-Ku,Kyoto 601-8205 Japan
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:
Form 20-F X Form 40-F __
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes __ No X
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_____
Information furnished on this form:
EXHIBITS
Exhibit Number
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 22, 2010 | ||||
NIDEC CORPORATION | ||||
By: /S/ Masahiro Nagayasu | ||||
General Manager, Investor Relations |
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NEWS RELEASE
NIDEC CORPORATION
New York Stock Exchange symbol: NJ
Stock exchange code (Tokyo, Osaka): 6594
FOR IMMEDIATE RELEASE
Contact: | |
Masahiro Nagayasu | |
General Manager | |
Investor Relations | |
+81-75-935-6140 | |
ir@jp.nidec.com |
QUARTERLY FINANCIAL STATEMENTS (U.S. GAAP)
RESULTS FOR THE THIRD QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2009 (Unaudited)
(FROM APRIL 1, 2009 TO DECEMBER 31, 2009)
CONSOLIDATED
Released on February 22, 2010
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NIDEC CORPORATION
338 Kuzetonoshiro-cho,
Minami-ku, Kyoto 601-8205 Japan
CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE THIRD QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2009 (Unaudited) |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Yen in millions | U.S. dollars in thousands | ||
(except per share amounts) | |||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
Net sales | ¥140,802 | ¥152,391 | $1,654,625 |
Operating income | 10,100 | 23,516 | 255,331 |
(Loss) income on continuing operations before income taxes | (2,010) | 25,299 | 274,691 |
(Loss) income on continuing operations attributable to Nidec Corporation | (2,387) | 16,315 | 177,144 |
Loss on discontinued operations attributable to Nidec Corporation | (2,390) | - | - |
Net (loss) income attributable to Nidec Corporation | ¥(4,777) | ¥16,315 | $177,144 |
Per share data | |||
Earning per share - basic | |||
(Loss) income on continuing operations attributable to Nidec Corporation | ¥(16.57) | ¥117.13 | $1.27 |
Loss on discontinued operations attributable to Nidec Corporation | (16.59) | - | - |
Net (loss) income attributable to Nidec Corporation | (33.16) | 117.13 | 1.27 |
Earning per share - diluted | |||
(Loss) income on continuing operations attributable to Nidec Corporation | (16.57) | 117.13 | $1.27 |
Loss on discontinued operations attributable to Nidec Corporation | (16.59) | - | - |
Net (loss) income attributable to Nidec Corporation | ¥(33.16) | ¥117.13 | $1.27 |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Yen in millions | U.S. dollars in thousands | ||
(except per share amounts) | |||
For the nine months ended December 31 | |||
2008 | 2009 | 2009 | |
Net sales | ¥504,078 | ¥421,134 | $4,572,573 |
Operating income | 50,878 | 51,837 | 562,834 |
Income from continuing operations before income taxes | 41,369 | 47,773 | 518,708 |
Income from continuing operations attributable to Nidec Corporation | 25,659 | 31,032 | 336,938 |
Loss on discontinued operations attributable to Nidec Corporation | (2,596) | (929) | (10,087) |
Net income attributable to Nidec Corporation | ¥23,063 | ¥30,103 | $326,851 |
Per share data | |||
Earning per share - basic | |||
Income from continuing operations attributable to Nidec Corporation | ¥177.37 | ¥222.78 | $2.42 |
Loss on discontinued operations attributable to Nidec Corporation | (17.95) | (6.66) | (0.07) |
Net income attributable to Nidec Corporation | 159.42 | 216.12 | 2.35 |
Earning per share - diluted | |||
Income from continuing operations attributable to Nidec Corporation | 173.54 | 222.78 | 2.42 |
Loss on discontinued operations attributable to Nidec Corporation | (17.60) | (6.66) | (0.07) |
Net income attributable to Nidec Corporation | ¥155.94 | ¥216.12 | $2.35 |
CONDENSED CONSOLIDATED BALANCE SHEETS
Yen in millions | U.S. dollars in thousands | ||
2009 | |||
March 31 | December 31 | December 31 | |
Current assets | ¥402,016 | ¥348,619 | $3,785,222 |
Investments | 14,893 | 16,509 | 179,251 |
Property, plant, equipment and others | 285,975 | 289,356 | 3,141,759 |
Total assets | 702,884 | 654,484 | 7,106,232 |
Current liabilities | 317,743 | 251,386 | 2,729,489 |
Long-term liabilities | 27,454 | 28,473 | 309,153 |
Total liabilities | 345,197 | 279,859 | 3,038,642 |
Total Nidec Corporation shareholders’ equity | 297,148 | 315,684 | 3,427,622 |
Noncontrolling interests | 60,539 | 58,941 | 639,968 |
Total liabilities and equity | ¥702,884 | ¥654,484 | $7,106,232 |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Yen in millions | U.S. dollars in thousands | ||
For the nine months ended December 31 | |||
2008 | 2009 | 2009 | |
Net cash provided by operating activities | ¥47,195 | ¥67,147 | $729,066 |
Net cash used in investing activities | (37,924) | (30,765) | (334,039) |
Net cash provided by (used in) financing activities | 16,628 | (114,395) | (1,242,074) |
Effect of exchange rate changes on cash and cash equivalents | (11,922) | (5,398) | (58,610) |
Net increase (decrease) in cash and cash equivalents | 13,977 | (83,411) | (905,657) |
Cash and cash equivalents at beginning of period | 100,809 | 200,966 | 2,182,041 |
Cash and cash equivalents at end of period | ¥114,786 | ¥117,555 | $1,276,384 |
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended and Section 21E of the U.S. Securities Exchange Act of 1934, as amended) about Nidec and its group companies (the "Nidec Group"). These forward-looking statements are based on the current expectations, assumptions, estimates and projections of the Nidec Group in light of the information currently available to them. These forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate," "plan," "forecast" or similar words. These statements discuss future expectations, identify strategies, contain projections of the results of ope rations or financial condition of the Nidec Group, or state other forward-looking information. Known and unknown risks, uncertainties and other factors could cause the actual results to differ materially from those contained in any forward-looking statement. The Nidec Group cannot assure that the expectations expressed in these forward-looking statements will turn out to be correct. Actual results could be materially different from and worse than our expectations as a result of certain factors, including, but not limited to (i) the Nidec Group's ability to design, develop, mass produce and win acceptance of their products, (ii) general economic conditions in the computer, information technology and other relevant product markets, particularly levels of consumer spending, (iii) exchange rate fluctuations, particularly between the Japanese yen and the U.S. dollar and other currencies in which the Nidec Group makes significant sales or in which the Nidec Group's assets and liabilities are denominated, (iv) the Nidec Group's ability to acquire and successfully integrate companies with complementary technologies and product lines, and (v) adverse changes in laws, regulations or economic policies in any of the countries where the Nidec Group has manufacturing or other operations.
As used in this document, references to “we,” ”our”, “us” and "Nidec Group" are to Nidec Corporation and, except as the context otherwise requires, its consolidated subsidiaries; “U.S. dollar” or “$” means the lawful currency of the United States of America, and "Japanese yen", “yen” or “¥” means the lawful currency of Japan; and “U.S. GAAP” means accounting principles generally accepted in the United States, and “Japanese GAAP” means accounting principles generally accepted in Japan.
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Results of Operations — Three and Nine Months Ended December 31, 2009 Compared to Three and Nine Months Ended December 31, 2008 (Unaudited)
As of December 31, 2008, we discontinued our optical pickup unit, or OPU, business which had been included within "electronic and optical components". All prior period OPU amounts have been reclassified to discontinued operations pursuant to the FASB Accounting Standards Codification™ (ASC), 205-20 "Presentation of Financial Statements-Discontinued Operations" (Formerly Statement of Financial Accounting Standards (SFAS) No.144, "Accounting for the impairment or disposal of Long-Lived Assets") to enable comparisons between the relevant amounts for the three and nine months ended December 31, 2008 and 2009.
As of September 30, 2009, we discontinued our semiconductor manufacturing equipment business which had been included within "machinery". All prior period semiconductor manufacturing equipment amounts have been reclassified to discontinued operations pursuant to the ASC 205-20 "Presentation of Financial Statements-Discontinued Operations" to enable comparisons between the relevant amounts for the three and nine months ended December 31, 2008 and 2009.
Net Sales
(Yen in millions) For the three months ended December 31 | ||||
2008 | 2009 | Inc/Dec | Inc/Dec % | |
Net sales: | ||||
Small precision motors: | ||||
Hard disk drives spindle motors | ¥37,533 | ¥52,996 | ¥15,463 | 41.2% |
Other small precision brushless DC motors | 16,331 | 19,752 | 3,421 | 20.9 |
Brushless DC fans | 8,948 | 8,072 | (876) | (9.8) |
Other small precision motors | 5,821 | 4,215 | (1,606) | (27.6) |
Sub-total | 68,633 | 85,035 | 16,402 | 23.9 |
Mid-size motors | 15,898 | 18,043 | 2,145 | 13.5 |
Machinery | 19,330 | 12,173 | (7,157) | (37.0) |
Electronic and optical components | 29,784 | 28,911 | (873) | (2.9) |
Others | 7,157 | 8,229 | 1,072 | 15.0 |
Consolidated total | ¥140,802 | ¥152,391 | ¥11,589 | 8.2% |
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(Yen in millions) For the nine months ended December 31 | ||||
2008 | 2009 | Inc/Dec | Inc/Dec % | |
Net sales: | ||||
Small precision motors: | ||||
Hard disk drives spindle motors | ¥147,358 | ¥150,626 | ¥3,268 | 2.2% |
Other small precision brushless DC motors | 61,638 | 55,748 | (5,890) | (9.6) |
Brushless DC fans | 31,369 | 24,233 | (7,136) | (22.7) |
Other small precision motors | 18,211 | 12,829 | (5,382) | (29.6) |
Sub-total | 258,576 | 243,436 | (15,140) | (5.9) |
Mid-size motors | 63,500 | 49,874 | (13,626) | (21.5) |
Machinery | 57,993 | 29,071 | (28,922) | (49.9) |
Electronic and optical components | 101,298 | 78,189 | (23,109) | (22.8) |
Others | 22,711 | 20,564 | (2,147) | (9.5) |
Consolidated total | ¥504,078 | ¥421,134 | ¥(82,944) | (16.5)% |
Our net sales increased ¥11,589 million, or 8.2%, from ¥140,802 million for the three months ended December 31, 2008 to ¥152,391 million for the three months ended December 31, 2009. This increase was mainly due to the recent recovery in the global economy positively affecting our small precision motors business.
Our net sales decreased ¥82,944 million, or 16.5%, from ¥504,078 million for the nine months ended December 31, 2008 to ¥421,134 million for the nine months ended December 31, 2009.
(Small precision motors)
Net sales of small precision motors increased ¥16,402 million, or 23.9%, from ¥68,633 million for the three months ended December 31, 2008 to ¥85,035 million for the three months ended December 31, 2009. Net sales of each product group included in the “small precision motors” are discussed in further detail below.
Compared to the three months ended September 30, 2009, net sales of small precision motors for the three months ended December 31, 2009 decreased ¥1,094 million, or 1.3%. This decrease was mainly due to the appreciation of the Japanese yen against the U.S. dollar.
Net sales of small precision motors decreased ¥15,140 million, or 5.9%, from ¥258,576 million for the nine months ended December 31, 2008 to ¥243,436 million for the nine months ended December 31, 2009.
Hard disk drives spindle motors
Net sales of hard disk drives ("HDDs") spindle motors increased ¥15,463 million, or 41.2%, from ¥37,533 million for the three months ended December 31, 2008 to ¥52,996 million for the three months ended December 31, 2009. Net sales of spindle motors for 2.5-inch HDDs and 3.5-inch HDDs for the three months ended December 31, 2009 increased approximately 30% and 50%, respectively, as compared to the three months ended December 31, 2008. These increases were primarily due to approximately 60% and 70% increases in our unit shipments of spindle motors for 2.5-inch HDDs and 3.5-inch HDDs, respectively, resulting from increased customer demand. Net sales of hard disk drives spindle motors accounted for 26.7% of total net sales for the three months ended December 31, 2008 and 34.8% of total net sales for the three months ended December 31, 2009.
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Net sales of HDDs spindle motors increased ¥3,268 million, or 2.2%, from ¥147,358 million for the nine months ended December 31, 2008 to ¥150,626 million for the nine months ended December 31, 2009.
Other small precision brushless DC motors
Net sales of other small precision brushless DC motors increased ¥3,421 million, or 20.9%, from ¥16,331 million for the three months ended December 31, 2008 to ¥19,752 million for the three months ended December 31, 2009. This was mainly due to an increase in sales of motors for optical disk drives by Nidec Corporation and its direct-line subsidiaries resulting from the recent recovery in the global economy from the recession. Net sales of other small precision brushless DC motors accounted for 11.6% of total net sales for the three months ended December 31, 2008 and 13.0% of total net sales for the three months ended December 31, 2009.
Net sales of other small precision brushless DC motors decreased ¥5,890 million, or 9.6%, from ¥61,638 million for the nine months ended December 31, 2008 to ¥55,748 million for the nine months ended December 31, 2009.
Brushless DC fans
Net sales of brushless DC fans decreased ¥876 million, or 9.8%, from ¥8,948 million for the three months ended December 31, 2008 to ¥8,072 million for the three months ended December 31, 2009. This decrease was mainly due to a decline in customer demand resulting from the world-wide economic slowdown. Net sales of brushless DC fans accounted for 6.4% of total net sales for the three months ended December 31, 2008 and 5.3% of total net sales for the three months ended December 31, 2009.
Net sales of brushless DC fans decreased ¥7,136 million, or 22.7%, from ¥31,369 million for the nine months ended December 31, 2008 to ¥24,233 million for the nine months ended December 31, 2009.
Other small precision motors
Net sales of other small precision motors decreased ¥1,606 million, or 27.6%, from ¥5,821 million for the three months ended December 31, 2008 to ¥4,215 million for the three months ended December 31, 2009. This decrease was mainly due to decreases in sales by the Nidec Brilliant and Nidec Servo groups resulting from the world-wide economic slowdown. Net sales of other small precision motors accounted for 4.0% of total net sales for the three months ended December 31, 2008 and 2.7% of total net sales for the three months ended December 31, 2009.
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Net sales of other small precision motors decreased ¥5,382 million, or 29.6%, from ¥18,211 million for the nine months ended December 31, 2008 to ¥12,829 million for the nine months ended December 31, 2009.
(Mid-size motors)
Net sales of mid-size motors increased ¥2,145 million, or 13.5%, from ¥15,898 million for the three months ended December 31, 2008 to ¥18,043 million for the three months ended December 31, 2009. This increase was mainly due to an increase in sales of mid-size motors for automobiles and an increase in sales of mid-size motors for home appliances, although sales of mid-size motors for industrial use decreased for the three months ended December 31, 2009 compared to the same period of the previous fiscal year. However, sales of mid-size motors for industrial use increased for the three months ended December 31, 2009 compared to the three months ended September 30, 2009. Net sales of mid-size motors accounted for 11.3% of our total net sales for the three months ended December 31, 2008 and 11.8% of total net sales for the three months ended December 31, 2009.
Compared to the three months ended September 30, 2009, net sales of mid-size motors for the three months ended December 31, 2009 increased ¥1,916 million, or 11.9%. Sales of mid-size motors for automobiles manufactured by Nidec Motors and Actuators, and sales of mid-sized motors for power steering, increased approximately ¥300 million, respectively, for the three months ended December 31, 2009 compared to the three months ended September 30, 2009. Sales of mid-size motors for home appliances and industrial use increased approximately ¥1,200 million for the three months ended December 31, 2009 compared to the three months ended September 30, 2009.
Net sales of mid-size motors decreased ¥13,626 million, or 21.5%, from ¥63,500 million for the nine months ended December 31, 2008 to ¥49,874 million for the nine months ended December 31, 2009.
(Machinery)
Net sales of machinery decreased ¥7,157 million, or 37.0%, from ¥19,330 million for the three months ended December 31, 2008 to ¥12,173 million for the three months ended December 31, 2009. This was mainly due to decreases in sales at the Nidec Sankyo, Nidec Copal and Nidec-Read groups. In particular, the Nidec Sankyo group's sales for the three months ended December 31, 2009 decreased approximately ¥4,000 million compared to the three months ended December 31, 2008 mainly due to a decrease in sales of liquid crystal display, or "LCD", panel handling robots. Net sales of machinery accounted for 13.7% of our total net sales for the three months ended December 31, 2008 and 8.0% of total net sales for the three months ended December 31, 2009.
Compared to the three months ended September 30, 2009, net sales of machinery for the three months ended December 31, 2009 increased ¥2,874 million, or 30.9%. Sales at Nidec Sankyo of machinery increased approximately ¥1,600 million, or 45%, as sales of LCD panel handling robots increased, and sales at Nidec Tosok, Nidec-Shimpo, Nidec-Kyori and Nidec-Read increased approximately ¥400 million, ¥300 million, ¥300 million and ¥200 million, respectively, for the three months ended December 31, 2009 compared to the three months ended September 30, 2009.
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Net sales of machinery decreased ¥28,922 million, or 49.9%, from ¥57,993 million for the nine months ended December 31, 2008 to ¥29,071 million for the nine months ended December 31, 2009.
(Electronic and optical components)
Net sales of electronic and optical components decreased ¥873 million, or 2.9%, from ¥29,784 million for the three months ended December 31, 2008 to ¥28,911 million for the three months ended December 31, 2009. This decrease was mainly due to a decrease in sales of switches by the Nidec Copal Electronics group, and a decrease in sales of engineering plastics and electronic components by the Nidec Sankyo group. Net sales of electronic and optical components accounted for 21.2% of our total net sales for the three months ended December 31, 2008 and 19.0% of total net sales for the three months ended December 31, 2009.
Compared to the three months ended September 30, 2009, net sales of electronic and optical components for the three months ended December 31, 2009 increased ¥1,939 million, or 7.2%. This increase was mainly due to an increase of approximately ¥1,200 million, or 23%, in sales at Nidec Copal Electronics for the three months ended December 31, 2009 compared to the three months ended September 30, 2009.
Net sales of electronic and optical components decreased ¥23,109 million, or 22.8%, from ¥101,298 million for the nine months ended December 31, 2008 to ¥78,189 million for the nine months ended December 31, 2009.
(Others)
Net sales of other products increased ¥1,072 million, or 15.0%, from ¥7,157 million for the three months ended December 31, 2008 to ¥8,229 million for the three months ended December 31, 2009. This increase was mainly due to an increase in sales of automobile parts by the Nidec Tosok group. Net sales of other products accounted for 5.1% of total net sales for the three months ended December 31, 2008 and 5.4% of total net sales for the three months ended December 31, 2009.
Compared to the three months ended September 30, 2009, net sales of other products for the three months ended December 31, 2009 increased ¥1,499 million, or 22.3%. This increase was mainly due to an increase of approximately ¥1,100 million, or 22%, in sales of automobile components manufactured by Nidec Tosok between the two periods.
Net sales of other products decreased ¥2,147 million, or 9.5%, from ¥22,711 million for the nine months ended December 31, 2008 to ¥20,564 million for the nine months ended December 31, 2009.
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Cost of products sold
Our cost of products sold decreased ¥1,007 million, or 0.9%, from ¥111,111 million for the three months ended December 31, 2008 to ¥110,104 million for the three months ended December 31, 2009. This decrease was primarily due to cost reduction efforts and an increase in sales of products with lower production costs such as HDDs spindle motors.
As a percentage of net sales, our cost of products sold decreased from 78.9% for the three months ended December 31, 2008 to 72.3% for the three months ended December 31, 2009.
Our cost of products sold decreased ¥76,470 million, or 19.5%, from ¥391,802 million for the nine months ended December 31, 2008 to ¥315,332 million for the nine months ended December 31, 2009.
Selling, general and administrative expenses
Our selling, general and administrative expenses decreased ¥389 million, or 3.1%, from ¥12,727 million for the three months ended December 31, 2008 to ¥12,338 million for the three months ended December 31, 2009. This decrease was due mainly to a decrease in provision for doubtful accounts receivable.
As a percentage of net sales, our selling, general and administrative expenses decreased from 9.0% for the three months ended December 31, 2008 to 8.1% for the three months ended December 31, 2009.
Our selling, general and administrative expenses decreased ¥4,242 million, or 10.6%, from ¥40,013 million for the nine months ended December 31, 2008 to ¥35,771 million for the nine months ended December 31, 2009.
Research and development expenses
Our research and development expenses decreased ¥431 million, or 6.3%, from ¥6,864 million for the three months ended December 31, 2008 to ¥6,433 million for the three months ended December 31, 2009. This decrease was primarily due to cost reduction efforts, partially offset by an increase in research and development expenses relating to mid-size motors for automobiles in response to increased orders for our new products for electric vehicles ("EV") and hybrid electric vehicles ("HEV").
As a percentage of net sales, our research and development expenses decreased from 4.9% for the three months ended December 31, 2008 to 4.2% for the three months ended December 31, 2009.
Our research and development expenses decreased ¥3,191 million, or 14.9%, from ¥21,385 million for the nine months ended December 31, 2008 to ¥18,194 million for the nine months ended December 31, 2009.
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Operating income
As a result of the foregoing, our operating income increased ¥13,416 million, or 132.8%, from ¥10,100 million for the three months ended December 31, 2008 to ¥23,516 million for the three months ended December 31, 2009.
As a percentage of net sales, our operating income increased from 7.2% for the three months ended December 31, 2008 to 15.4% for the three months ended December 31, 2009.
Our operating income increased ¥959 million, or 1.9%, from ¥50,878 million for the nine months ended December 31, 2008 to ¥51,837 million for the nine months ended December 31, 2009.
Other income (expense)
We had net other income of ¥1,783 million for the three months ended December 31, 2009, as compared to net other expense of ¥12,110 million for the three months ended December 31, 2008. This change was mainly due to our recording a net exchange gain of ¥1,750 million for the three months ended December 31, 2009, as compared to a net foreign exchange loss of ¥12,827 million for the three months ended December 31, 2008. Foreign exchange fluctuations can have a significant impact on our results of operations and financial condition, as we have a substantial amount of U.S. dollar-based purchases of inventory and sales of products.
Our net other expense decreased ¥5,445 million, or 57.3%, from ¥9,509 million for the nine months ended December 31, 2008 to ¥4,064 million for the nine months ended December 31, 2009.
The Japanese yen to U.S. dollar exchange rates were ¥103.57 to the U.S. dollar as of September 30, 2008 and ¥91.03 to the U.S. dollar as of December 31, 2008. The Japanese yen to U.S. dollar exchange rates were ¥90.21 to the U.S. dollar as of September 30, 2009 and ¥92.10 to the U.S. dollar as of December 31, 2009.
Income (loss) from continuing operations before income taxes
As a result of the foregoing, we had income from continuing operations before income taxes of ¥25,299 million for the three months ended December 31, 2009, as compared to a loss on continuing operations before income taxes in the amount of ¥2,010 million for the three months ended December 31, 2008.
As a percentage of net sales, our income from continuing operations before income taxes for the three months ended December 31, 2009 was 16.6%. The ratio of our loss from continuing operations before income taxes to net sales for the three months ended December 31, 2008 was 1.4%.
Our income from continuing operations before income taxes increased ¥6,404 million, or 15.5%, from ¥41,369 million for the nine months ended December 31, 2008 to ¥47,773 million for the nine months ended December 31, 2009.
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Income taxes
Our income taxes increased ¥7,135 million, or 4,054.0%, from ¥176 million for the three months ended December 31, 2008 to ¥7,311 million for the three months ended December 31, 2009. This increase was primarily due to the improvement in our income from continuing operations before income taxes.
Our income taxes increased ¥2,466 million, or 21.7%, from ¥11,340 million for the nine months ended December 31, 2008 to ¥13,806 million for the nine months ended December 31, 2009.
The estimated effective income tax rate for the nine months ended December 31, 2009 was higher compared to the corresponding prior period of the previous fiscal year. This was mainly due to the net impact of increases in tax (benefit) on undistributed earnings, in liabilities for unrecognized tax benefits, and a decrease in valuation allowance. The increase in tax (benefit) on undistributed earnings was mainly due to a decrease in tax sparing credit resulting from changes in Japanese tax law. The decrease in valuation allowance was mainly due to a decrease in tax losses as a result of improved performance by some of our foreign subsidiaries. The increase in liabilities for unrecognized tax benefits was mainly due to an increase in the impact of our tax positions in prior years.
For more information, see Note 9 to our unaudited condensed consolidated interim financial statements included elsewhere in this report.
Income (loss) from continuing operations
As a result of the foregoing, we had income from continuing operations of ¥18,020 million for the three months ended December 31, 2009, compared to a loss on continuing operations of ¥2,171 million for the three months ended December 31, 2008.
Our income from continuing operations increased ¥3,969 million, or 13.3%, from ¥29,951 million for the nine months ended December 31, 2008 to ¥33,920 million for the nine months ended December 31, 2009.
Loss on discontinued operations
We discontinued the OPU business of Nidec Sankyo Corporation as of December 31, 2008 and semiconductor manufacturing equipment business of Nidec Tosok Corporation as of September 30, 2009. For details, see Note 11 to our unaudited condensed consolidated interim financial statements included elsewhere in this report.
We recorded ¥3,276 million of loss on discontinued operations for the three months ended December 31, 2008 and no loss on discontinued operations for the three months ended December 31, 2009, because all activity from discontinued operations had ceased for the fiscal year ended March 31, 2009.
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Our loss on discontinued operations decreased ¥2,299 million, or 64.1%, from ¥3,586 million for the nine months ended December 31, 2008 to ¥1,287 million for the nine months ended December 31, 2009.
Consolidated net income (loss)
As a result of the foregoing, we had consolidated net income of ¥18,020 million for the three months ended December 31, 2009, as compared to a consolidated net loss of ¥5,447 million for the three months ended December 31, 2008.
Our consolidated net income increased ¥6,268 million, or 23.8%, from ¥26,365 million for the nine months ended December 31, 2008 to ¥32,633 million for the nine months ended December 31, 2009.
Net income (loss) attributable to noncontrolling interests
We had net income attributable to noncontrolling interests of ¥1,705 million for the three months ended December 31, 2009, as compared to a net loss attributable to noncontrolling interests in the amount of ¥670 million for the three months ended December 31, 2008. This change was primarily due to an increase in the income of some of our group companies, including Nidec Sankyo Corporation, Nidec Copal Corporation, Nidec Servo Corporation and their respective subsidiaries.
Our net income attributable to noncontrolling interests decreased ¥772 million, or 23.4%, from ¥3,302 million for the nine months ended December 31, 2008 to ¥2,530 million for the nine months ended December 31, 2009.
Net income (loss) attributable to Nidec Corporation
As a result of the foregoing, we had net income attributable to Nidec Corporation of ¥16,315 million for the three months ended December 31, 2009, as compared to a net loss attributable to Nidec Corporation of ¥4,777 million for the three months ended December 31, 2008.
As a percentage of net sales, our net income attributable to Nidec Corporation for the three months ended December 31, 2009 was 10.7%. The ratio of our net loss attributable to Nidec Corporation to net sales for the three months ended December 31, 2008 was 3.4%.
Our net income attributable to Nidec Corporation increased ¥7,040 million, or 30.5%, from ¥23,063 million for the nine months ended December 31, 2008 to ¥30,103 million for the nine months ended December 31, 2009.
15
Segment Information
Based on the applicable criteria set forth in ASC 280, " Segment Reporting " (formerly SFAS No.131, “Disclosures about Segments of an Enterprise and Related Information.”), we have 14 reportable operating segments on which we report in our consolidated financial statements. These reportable operating segments are based on legal entities. As described below, one of the reportable segments is NCJ, while the others are NCJ’s 13 consolidated subsidiaries: NET, NCC, NCD, NCS, NCH, NCF, NSNK, NCPL, NTSC, NCEL, NSRV, NTMC and NMA. For the information required by ASC280, see Note 13 to our unaudited condensed consolidated interim financial statements included elsewhere in this report.
Beginning in the current quarterly reporting period ended December 31, 2009, we have changed our segment reporting in line with the changes we made in our management decision-making process. In August 2009, we integrated the operations of Nidec Electronics GmbH into those of Nidec Motors & Actuators (Germany) GmbH within the NMA segment, and also integrated the operations in China previously included within the NCD segment, other than the DC motors and fans operations, and the in-car motors operations previously included in the All Others segment into the NMA segment, to enhance our automobiles motors businesses. In October 2009, we reorganized the operations of Nidec Shibaura Corporation ("NSBC") and those of Nidec Power Motor Corporation into Nidec Techno Motor Holdings Corporation ("NTMC") to enhance our mid-size motors businesses. As a result, we have newly created an NTMC segment consisting of our op erations relating to mid-size motors for home appliances and industrial use, which were previously included in the NSBC segment and the All Others segment. The NSCJ and NNSN segments are no longer reported as reportable segments and are included in the All Other segment in the current period due to their immateriality. All prior period information has been reclassified in accordance with the current period presentation to enable comparisons between the relevant amounts for the three months ended December 31, 2008 and 2009.
The NCJ segment comprises Nidec Corporation in Japan, which primarily produces and sells hard disk drive ("HDD") motors, DC motors, fans, and Mid-size motors.
The NET segment comprises Nidec Electronics (Thailand) Co., Ltd. and Nidec Precision (Thailand) Co., Ltd., subsidiaries in Thailand, which primarily produce and sell HDD motors.
The NCC segment comprises Nidec (Zhejiang) Corporation, a subsidiary in China, which primarily produces and sells HDD motors.
The NCD segment comprises Nidec (Dalian) Limited, a subsidiary in China excluding mid-size motors businesses, which primarily produces and sells DC motors and fans.
The NCS segment comprises Nidec Singapore Pte. Ltd., a subsidiary in Singapore, which primarily sells HDD motors, DC motors, fans, and pivot assemblies.
The NCH segment comprises Nidec (H.K.) Co., Ltd., a subsidiary in Hong Kong, which primarily sells HDD motors, DC motors and fans.
16
The NCF segment comprises Nidec Philippines Corporation and Nidec Precision Philippines Corporation, subsidiaries in The Philippines, which primarily produce and sell HDD motors.
The NSNK segment comprises Nidec Sankyo Corporation, a subsidiary in Japan, which primarily produces and sells DC motors, machinery, and electronic parts.
The NCPL segment comprises Nidec Copal Corporation, a subsidiary in Japan, which primarily produces and sells optical and electronic parts and machinery.
The NTSC segment comprises Nidec Tosok Corporation, a subsidiary in Japan, which primarily produces and sells automobile parts and machinery.
The NCEL segment comprises Nidec Copal Electronics Corporation, a subsidiary in Japan, which primarily produces and sells electronic parts.
The NSRV segment comprises Nidec Servo Corporation in Japan, which primarily produces and sells DC motors, fans and other small precision motors.
The NTMC segment comprises Nidec Techno Motor Holdings Corporation, a subsidiary in Japan, and its subsidiaries in Japan, China and Thailand, which primarily produce and sell mid-size motors.
The NMA segment comprises Nidec Motors & Actuators (Germany) GmbH, other subsidiaries in Europe and North America, and other manufacturing subsidiaries in China, which primarily produce and sell in-car motors.
The All Others segment comprises subsidiaries that are operating segments but not designated as reportable segments as they are not material.
In accordance with ASC 205-20, "Presentation of Financial Statements- Discontinued Operations" (formerly SFAS No.144, “Accounting for the impairment or disposal of Long-Lived Assets.”), amounts in the segment information do not reflect discontinued operations, and segment information for prior periods has been reclassified.
17
We evaluate our financial performance based on segment income and loss, which consists of sales and operating revenues less operating expenses. Segment income or loss is determined using the accounting principles in the segment’s country of domicile. NCJ, NSNK, NCPL, NTSC, NCEL and NSRV apply Japanese GAAP. NET applies Thai accounting principles. NCC and NCD apply Chinese accounting principles. NCH applies Hong Kong accounting principles. NCS applies Singaporean accounting principles, NCF applies Philippine accounting principles, NTMC mainly applies Japanese GAAP, and NMA applies mainly International Financial Reporting Standards (“IFRS”). Thus, our segment data have not been prepared under U.S. GAAP on a basis that is consistent with our consolidated financial statements or on any other single basis that is consistent between segments. Among the differences between U.S. GAAP and the underlying accounting principl es used by the operating segments, the principal differences that affect our segment operating income or loss include accounting for pension and severance costs and leases. We believe that the monthly segment information is available on a timely basis and that it is sufficiently accurate at the operating income and loss level for us to manage our business.
The first of the following two tables shows net sales to external customers and net sales to other operating segments by reportable operating segment for the three months ended December 31, 2008 and 2009. The second table shows operating income or loss by reportable operating segment, which includes net sales to other operating segments, for the three months ended December 31, 2008 and 2009:
Yen in millions | U.S. dollars in thousands | ||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
NCJ | |||
Net sales to external customers | ¥13,291 | ¥18,144 | $197,003 |
Net sales to other operating segments | 16,488 | 20,207 | 219,403 |
Sub total | 29,779 | 38,351 | 416,406 |
NET | |||
Net sales to external customers | 15,869 | 22,573 | 245,092 |
Net sales to other operating segments | 7,985 | 11,430 | 124,104 |
Sub total | 23,854 | 34,003 | 369,196 |
NCC | |||
Net sales to external customers | 4,048 | 6,102 | 66,254 |
Net sales to other operating segments | 458 | 803 | 8,719 |
Sub total | 4,506 | 6,905 | 74,973 |
NCD | |||
Net sales to external customers | 1,330 | 1,502 | 16,309 |
Net sales to other operating segments | 5,306 | 6,658 | 72,291 |
Sub total | 6,636 | 8,160 | 88,600 |
NCS | |||
Net sales to external customers | 5,334 | 6,501 | 70,586 |
Net sales to other operating segments | 53 | 113 | 1,227 |
Sub total | 5,387 | 6,614 | 71,813 |
NCH | |||
Net sales to external customers | 9,458 | 12,718 | 138,089 |
Net sales to other operating segments | 1,414 | 789 | 8,567 |
Sub total | 10,872 | 13,507 | 146,656 |
18
Yen in millions | U.S. dollars in thousands | ||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
NCF | |||
Net sales to external customers | 1,846 | 3,564 | 38,697 |
Net sales to other operating segments | 4,363 | 5,642 | 61,259 |
Sub total | 6,209 | 9,206 | 99,956 |
NSNK | |||
Net sales to external customers | 14,322 | 8,710 | 94,571 |
Net sales to other operating segments | 2,795 | 2,875 | 31,216 |
Sub total | 17,117 | 11,585 | 125,787 |
NCPL | |||
Net sales to external customers | 12,244 | 12,365 | 134,256 |
Net sales to other operating segments | 2,105 | 1,228 | 13,333 |
Sub total | 14,349 | 13,593 | 147,589 |
NTSC | |||
Net sales to external customers | 5,163 | 6,741 | 73,192 |
Net sales to other operating segments | 33 | 41 | 445 |
Sub total | 5,196 | 6,782 | 73,637 |
NCEL | |||
Net sales to external customers | 4,972 | 4,696 | 50,988 |
Net sales to other operating segments | 1,416 | 1,324 | 14,376 |
Sub total | 6,388 | 6,020 | 65,364 |
NSRV | |||
Net sales to external customers | 4,350 | 3,609 | 39,186 |
Net sales to other operating segments | 763 | 1,449 | 15,733 |
Sub total | 5,113 | 5,058 | 54,919 |
NTMC | |||
Net sales to external customers | 9,104 | 8,858 | 96,178 |
Net sales to other operating segments | 212 | 221 | 2,400 |
Sub total | 9,316 | 9,079 | 98,578 |
NMA | |||
Net sales to external customers | 6,437 | 8,351 | 90,673 |
Net sales to other operating segments | 1,922 | 2,425 | 26,330 |
Sub total | 8,359 | 10,776 | 117,003 |
All Others | |||
Net sales to external customers | 28,480 | 26,350 | 286,103 |
Net sales to other operating segments | 38,700 | 48,770 | 529,532 |
Sub total | 67,180 | 75,120 | 815,635 |
Total | |||
Net sales to external customers | 136,248 | 150,784 | 1,637,177 |
Net sales to other operating segments | 84,013 | 103,975 | 1,128,935 |
Adjustments (*) | 4,554 | 1,607 | 17,448 |
Intersegment elimination | (84,013) | (103,975) | (1,128,935) |
Consolidated total (net sales) | ¥140,802 | ¥152,391 | $1,654,625 |
(*) See Note 13 to our unaudited interim consolidated financial statements included elsewhere in this report.
19
Yen in millions | U.S. dollars in thousands | ||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
Operating income or loss: | |||
NCJ | ¥468 | ¥2,648 | $28,751 |
NET | 3,948 | 6,547 | 71,086 |
NCC | (211) | 653 | 7,090 |
NCD | 553 | 1,353 | 14,691 |
NCS | 55 | 68 | 738 |
NCH | 140 | 169 | 1,835 |
NCF | 485 | 2,094 | 22,736 |
NSNK | 1,004 | 989 | 10,738 |
NCPL | 307 | 492 | 5,342 |
NTSC | 42 | 403 | 4,376 |
NCEL | 480 | 539 | 5,852 |
NSRV | (325) | 206 | 2,237 |
NTMC | (4) | 621 | 6,743 |
NMA | (444) | 159 | 1,726 |
All Others | 3,030 | 6,969 | 75,668 |
Total | 9,528 | 23,910 | 259,609 |
Adjustments (*) | 572 | (394) | (4,278) |
Consolidated total | ¥10,100 | ¥23,516 | $255,331 |
(*) See Note 13 to our unaudited interim consolidated financial statements included elsewhere in this report.
Net sales of NCJ increased ¥8,572 million, or 28.8%, from ¥29,779 million for the three months ended December 31, 2008 to ¥38,351 million for the three months ended December 31, 2009. This increase was primarily due to an increase in sales in our core business, hard disk drives spindle motors, despite the appreciation of the Japanese yen against other currencies. NCJ's net sales to external customers increased ¥4,853 million, or 36.5%, from ¥13,291 million for the three months ended December 31, 2008 to ¥18,144 million for the three months ended December 31, 2009. Net sales of NCJ to other operating segments of NCJ increased ¥3,719 million, or 22.6%, from ¥16,488 million for the three months ended December 31, 2008 to ¥20,207 million for the three months ended December 31, 2009. NCJ's operating income increased ¥2,180 million, or 465.8%, from ¥468 million for the three months e nded December 31, 2008 to ¥2,648 million for the three months ended December 31, 2009. This increase was primarily due to the increase in sales and an increase in royalty and commission fees from subsidiaries.
Net sales of NET increased ¥10,149 million, or 42.5%, from ¥23,854 million for the three months ended December 31, 2008 to ¥34,003 million for the three months ended December 31, 2009. This was primarily due to an increase in demand for hard disk drives spindle motors from our main customers. NET's operating income increased ¥2,599 million, or 65.8%, from ¥3,948 million for the three months ended December 31, 2008 to ¥6,547 million for the three months ended December 31, 2009. This was primarily due to the increase in sales and a reduction in production costs.
20
Net sales of NCC increased ¥2,399 million, or 53.2%, from ¥4,506 million for the three months ended December 31, 2008 to ¥6,905 million for the three months ended December 31, 2009. This was primarily due to an increase in demand for hard disk drives spindle motors from one of our main customers. NCC recorded operating income of ¥653 million for the three months ended December 31, 2009, compared to an operating loss of ¥211 million for the three months ended December 31, 2008. This was primarily due to an increase in sales of products with higher margins and a reduction in production costs.
Net sales of NCD increased ¥1,524 million, or 23.0%, from ¥6,636 million for the three months ended December 31, 2008 to ¥8,160 million for the three months ended December 31, 2009. This was primarily due to an increase in demand for small precision motors. NCD's operating income increased ¥800 million, or 144.7%, from ¥553 million for the three months ended December 31, 2008 to ¥1,353 million for the three months ended December 31, 2009. This was primarily due to the increase in sales and a reduction in production costs.
Net sales of NCS increased ¥1,227 million, or 22.8%, from ¥5,387 million for the three months ended December 31, 2008 to ¥6,614 million for the three months ended December 31, 2009, primarily resulting from an increase in demand for hard disk drives spindle motors from our main customers. NCS's operating income increased ¥13 million, or 23.6%, from ¥55 million for the three months ended December 31, 2008 to ¥68 million for the three months ended December 31, 2009. This was primarily due to the increase in sales.
Net sales of NCH increased ¥2,635 million, or 24.2%, from ¥10,872 million for the three months ended December 31, 2008 to ¥13,507 million for the three months ended December 31, 2009, mainly resulting from an increase in demand for brushless DC motors. NCH's operating income increased ¥29 million, or 20.7%, from ¥140 million for the three months ended December 31, 2008 to ¥169 million for the three months ended December 31, 2009. This was primarily due to the increase in sales.
Net sales of NCF increased ¥2,997 million, or 48.3%, from ¥6,209 million for the three months ended December 31, 2008 to ¥9,206 million for the three months ended December 31, 2009, mainly resulting from an increase in demand for hard disk drives spindle motors from our main customers. NCF's operating income increased ¥1,609 million, or 331.8%, from ¥485 million for the three months ended December 31, 2008 to ¥2,094 million for the three months ended December 31, 2009. This increase was primarily due to the increase in sales and a reduction in production costs.
Net sales of NSNK decreased ¥5,532 million, or 32.3%, from ¥17,117 million for the three months ended December 31, 2008 to ¥11,585 million for the three months ended December 31, 2009. This was primarily due to decreases in sales of LCD panel handling robots and lens actuators. NSNK's operating income decreased ¥15 million, or 1.5%, from ¥1,004 million for the three months ended December 31, 2008 to ¥989 million for the three months ended December 31, 2009. This was primarily due to the decrease in sales, which more than offset the positive effect of lower production costs.
21
Net sales of NCPL decreased ¥756 million, or 5.3%, from ¥14,349 million for the three months ended December 31, 2008 to ¥13,593 million for the three months ended December 31, 2009. This was primarily due to a decrease in sales of camera shutters for mobile phones and system equipment such as industrial robots. However, NCPL's operating income increased ¥185 million, or 60.3%, from ¥307 million for the three months ended December 31, 2008 to ¥492 million for the three months ended December 31, 2009. This was primarily due to a reduction in production costs.
Net sales of NTSC increased ¥1,586 million, or 30.5%, from ¥5,196 million for the three months ended December 31, 2008 to ¥6,782 million for the three months ended December 31, 2009. This was primarily due to an increase in demand for automobile parts. NTSC's operating income increased ¥361 million, or 859.5%, from ¥42 million for the three months ended December 31, 2008 to ¥403 million for the three months ended December 31, 2009. This increase was primarily due to the increase in sales and a reduction in production costs.
Net sales of NCEL decreased ¥368 million, or 5.8%, from ¥6,388 million for the three months ended December 31, 2008 to ¥6,020 million for the three months ended December 31, 2009. This decrease was primarily due to a decrease in sales of electronic components. However, NCEL's operating income increased ¥59 million, or 12.3%, from ¥480 million for the three months ended December 31, 2008 to ¥539 million for the three months ended December 31, 2009. This increase was primarily due to a reduction in production costs.
Net sales of NSRV decreased ¥55 million, or 1.1%, from ¥5,113 million for the three months ended December 31, 2008 to ¥5,058 million for the three months ended December 31, 2009. This was primarily due to a decrease in demand for small precision motors. NSRV recorded operating income of ¥206 million for the three months ended December 31, 2009, compared to an operating loss of ¥325 million for the three months ended December 31, 2008. This was primarily due to NSRV's efforts to reduce cost.
Net sales of NTMC decreased ¥237 million, or 2.5%, from ¥9,316 million for the three months ended December 31, 2008 to ¥9,079 million for the three months ended December 31, 2009. This was primarily due to a decrease in demand for mid-size motors for industrial use. NTMC recorded operating income of ¥621 million for the three months ended December 31, 2009, compared to an operating loss of ¥4 million for the three months ended December 31, 2008. This increase was primarily due to a reduction in production costs.
Net sales of NMA increased ¥2,417 million or 28.9%, from ¥8,359 million for the three months ended December 31, 2008 to ¥10,776 million for the three months ended December 31, 2009. This was primarily due to an increase in demand for mid-size motors for automobiles. NMA recorded operating income of ¥159 million for the three months ended December 31, 2009, compared to an operating loss of ¥444 million for the three months ended December 31, 2008. This was primarily due to the increase in sales.
22
Within the All Others segment, net sales increased ¥7,940 million, or 11.8%, from ¥67,180 million for the three months ended December 31, 2008 to ¥75,120 million for the three months ended December 31, 2009. This was primarily due to an increase in sales in many business lines within this segment. Operating income of this segment increased ¥3,939 million, or 130.0%, from ¥3,030 million for the three months ended December 31, 2008 to ¥6,969 million for the three months ended December 31, 2009. This was primarily due to the increases in sales.
Liquidity and Capital Resources
Our total assets decreased ¥48,400 million, or 6.9%, from ¥702,884 million as of March 31, 2009 to ¥654,484 million as of December 31, 2009. This was mainly due to a decrease in cash and cash equivalents of ¥83,411 million, as described below under “Cash Flows”. Offsetting this decrease was an increase in trade accounts receivable of ¥26,094 million between March 31, 2009 and December 31, 2009 corresponding to the recovery in sales.
Our total liabilities decreased ¥65,338 million, or 18.9%, from ¥345,197 million as of March 31, 2009 to ¥279,859 million as of December 31, 2009. The decrease was mainly due to a decrease in short-term borrowings of ¥98,610 million as a result of our repayments of such borrowings. Offsetting this decrease was an increase in trade notes and accounts payable of ¥29,215 million between March 31, 2009 and December 31, 2009 corresponding to an increase in production to meet the recovery in sales demand.
Our working capital, defined as current assets less current liabilities, increased ¥12,960 million, or 15.4%, from ¥84,273 million as of March 31, 2009 to ¥97,233 million as of December 31, 2009.
Our total shareholders’ equity increased ¥18,536 million, or 6.2%, from ¥297,148 million as of March 31, 2009 to ¥315,684 million as of December 31, 2009. The increase was primarily due to an increase in retained earnings of ¥22,442 million, partially offset by a decrease in foreign currency translation adjustments of ¥5,330 million. As a result, the ratio of stockholders’ equity to total assets increased 5.9% from 42.3% as of March 31, 2009 to 48.2% as of December 31, 2009.
Cash Flows
As of April 1, 2009, NIDEC adopted ASC 810, “Consolidation”. Amounts for prior periods were reclassified to conform to the current period presentation.
Net cash provided by operating activities increased ¥19,952 million from ¥47,195 million for the nine months ended December 31, 2008 to ¥67,147 million for the nine months ended December 31, 2009. The increased cash inflows from operating activities were primarily due to an increase in our consolidated net income of ¥6,268 million and a positive impact from changes in operating assets and liabilities of ¥10,317 million. The changes in operating assets and liabilities of ¥10,317 million consisted of an increase in operating assets of ¥36,678 million offset by an increase in notes and accounts payable of ¥46,995 million. Operating assets and notes and accounts payable increased primarily as a result of the recovery in sales during the nine months ended December 31, 2009.
23
Net cash used in investing activities decreased ¥7,159 million from ¥37,924 million for the nine months ended December 31, 2008 to ¥30,765 million for the nine months ended December 31, 2009. The decreased cash outflows in investing activities were primarily due to a decrease in additions to property, plant and equipment of ¥4,674 million and a decrease in purchases of marketable securities of ¥3,600 million. On the other hand, acquisitions of business, net of cash acquired increased ¥1,823 million.
Net cash used in financing activities was ¥114,395 million for the nine months ended December 31, 2009, while net cash provided by financing activities was ¥16,628 million for the nine months ended December 31, 2008. The increased cash outflows in financing activities were mainly due to a decrease in short-term borrowings of ¥185,716 million.
As a result of the foregoing factors and the effect of exchange rate changes on cash and cash equivalents, our total outstanding balance of cash and cash equivalents decreased ¥83,411 million from ¥200,966 million as of March 31, 2009 to ¥117,555 million as of December 31, 2009.
Net cash provided by operating activities increased ¥8,052 million from ¥11,453 million for the three months ended December 31, 2008 to ¥19,505 million for the three months ended December 31, 2009. The increased cash inflows from operating activities were primarily due to an increase in our consolidated net income of ¥23,467 million corresponding to the recovery in sales, which was partially offset by decreases in operating assets and liabilities of ¥10,446 million and a negative impact from a decrease in foreign currency adjustments of ¥11,838 million. The changes in operating assets and liabilities of ¥10,446 million consisted of an increase in operating assets of ¥48,305 million and an increase in notes and accounts payable of ¥37,859 million. Operating assets and notes and accounts payable increased primarily due to the recovery in sales.
Net cash used in investing activities increased ¥2,794 million from ¥13,081 million for the three months ended December 31, 2008 to ¥15,875 million for the three months ended December 31, 2009. The increased cash outflows in investing activities were primarily due to an increase in additions to property, plant and equipment of ¥3,330 million.
Net cash used in financing activities was ¥7,313 million for the three months ended December 31, 2009, while net cash provided by financing activities was ¥14,914 million for the three months ended December 31, 2008. The increased cash outflows in financing activities were mainly due to a decrease in short-term borrowings of ¥72,511 million, offset in part by the absence of redemption of corporate bonds, which we recorded in the amount ¥26,412 million for the three months ended December 31, 2008.
As a result of the foregoing factors and the effect of exchange rate changes on cash and cash equivalents, our total outstanding balance of cash and cash equivalents decreased ¥1,856 million from ¥119,411 million as of September 30, 2009 to ¥117,555 million as of December 31, 2009.
24
NIDEC CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||
March 31, 2009 | December 31, 2009 | December 31, 2009 | |
Current assets: | |||
Cash and cash equivalents | ¥200,966 | ¥117,555 | $1,276,384 |
Trade notes and accounts receivable, net of allowance for doubtful accounts of ¥717 million on March 31, 2009 and ¥410 million ($4,452 thousand) on December 31, 2009 | |||
Notes | 11,663 | 10,377 | 112,671 |
Accounts | 111,548 | 137,642 | 1,494,484 |
Inventories: | |||
Finished goods | 26,521 | 27,126 | 294,528 |
Raw materials | 13,004 | 17,490 | 189,902 |
Work in progress | 14,567 | 14,577 | 158,274 |
Project in progress | 1,124 | 987 | 10,717 |
Supplies and other | 2,259 | 2,617 | 28,414 |
Other current assets | 20,364 | 20,248 | 219,848 |
Total current assets | 402,016 | 348,619 | 3,785,222 |
Marketable securities and other securities investments | 13,344 | 15,894 | 172,573 |
Investments in and advances to affiliated companies | 1,549 | 615 | 6,678 |
14,893 | 16,509 | 179,251 | |
Property, plant and equipment: | |||
Land | 39,386 | 39,741 | 431,498 |
Buildings | 112,934 | 124,601 | 1,352,888 |
Machinery and equipment | 255,887 | 257,575 | 2,796,688 |
Construction in progress | 11,835 | 10,612 | 115,223 |
420,042 | 432,529 | 4,696,297 | |
Less - Accumulated depreciation | (230,357) | (239,436) | (2,599,739) |
189,685 | 193,093 | 2,096,558 | |
Goodwill | 71,060 | 71,098 | 771,965 |
Other non-current assets, net of allowance for doubtful accounts of ¥1,594 million on March 31, 2009 and ¥1,430 million ($15,527 thousand) on December 31, 2009 | 25,230 | 25,165 | 273,236 |
Total assets | ¥702,884 | ¥654,484 | $7,106,232 |
The accompanying notes are an integral part of these financial statements.
25
NIDEC CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||
March 31, 2009 | December 31, 2009 | December 31, 2009 | |
Current liabilities: | |||
Short-term borrowings | ¥221,342 | ¥122,732 | $1,332,595 |
Current portion of long-term debt | 1,883 | 1,383 | 15,016 |
Trade notes and accounts payable | 70,398 | 99,613 | 1,081,574 |
Other current liabilities | 24,120 | 27,658 | 300,304 |
Total current liabilities | 317,743 | 251,386 | 2,729,489 |
Long-term liabilities: | |||
Long-term debt | 2,578 | 2,129 | 23,116 |
Accrued pension and severance costs | 15,684 | 15,341 | 166,569 |
Other long-term liabilities | 9,192 | 11,003 | 119,468 |
Total long-term liabilities | 27,454 | 28,473 | 309,153 |
Commitments and contingencies (Note 10) | |||
Equity: | |||
Common stock authorized: 480,000,000 shares issued and outstanding: 145,075,080 shares on March 31, 2009 and 145,075,080 shares on December 31, 2009 | 66,551 | 66,551 | 722,595 |
Additional paid-in capital | 69,162 | 69,215 | 751,520 |
Retained earnings | 212,955 | 235,397 | 2,555,885 |
Accumulated other comprehensive income (loss): | |||
Foreign currency translation adjustments | (26,324) | (31,654) | (343,692) |
Unrealized (losses) gains on securities, net of reclassification adjustments | (417) | 955 | 10,369 |
Pension liability adjustments | (723) | (717) | (7,785) |
Treasury stock, at cost: 5,782,871 shares on March 31, 2009 and 5,783,913 shares on December 31, 2009 | (24,056) | (24,063) | (261,270) |
Total Nidec Corporation shareholders’ equity | 297,148 | 315,684 | 3,427,622 |
Noncontrolling interests | 60,539 | 58,941 | 639,968 |
Total equity | 357,687 | 374,625 | 4,067,590 |
Total liabilities and equity | ¥702,884 | ¥654,484 | $7,106,232 |
The accompanying notes are an integral part of these financial statements.
26
NIDEC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
Net sales | ¥140,802 | ¥152,391 | $1,654,625 |
Operating expenses: | |||
Cost of products sold | 111,111 | 110,104 | 1,195,483 |
Selling, general and administrative expenses | 12,727 | 12,338 | 133,963 |
Research and development expenses | 6,864 | 6,433 | 69,848 |
130,702 | 128,875 | 1,399,294 | |
Operating income | 10,100 | 23,516 | 255,331 |
Other income (expense): | |||
Interest and dividend income | 767 | 225 | 2,443 |
Interest expense | (346) | (144) | (1,564) |
Foreign exchange (loss) gain, net | (12,827) | 1,750 | 19,001 |
Gain (loss) from marketable securities, net | 127 | (233) | (2,530) |
Other, net | 169 | 185 | 2,010 |
(12,110) | 1,783 | 19,360 | |
(Loss) income on continuing operations before income taxes | (2,010) | 25,299 | 274,691 |
Income taxes | (176) | (7,311) | (79,381) |
Equity in net gain of affiliated companies | 15 | 32 | 347 |
(Loss) income on continuing operations | (2,171) | 18,020 | 195,657 |
Loss on discontinued operations | (3,276) | - | - |
Consolidated net (loss) income | (5,447) | 18,020 | 195,657 |
Less: Net loss (income) attributable to noncontrolling interests | 670 | (1,705) | (18,513) |
Net (loss) income attributable to Nidec Corporation | ¥(4,777) | ¥16,315 | $177,144 |
|
|
|
|
Yen | U.S. dollars | ||
Per share data: | |||
Earning per share – basic | |||
(Loss) income on continuing operations attributable to Nidec Corporation | ¥(16.57) | ¥117.13 | $1.27 |
Loss on discontinued operations attributable to Nidec Corporation | (16.59) | - | - |
Net (loss) income attributable to Nidec Corporation | (33.16) | 117.13 | 1.27 |
Earning per share - diluted | |||
(Loss) income on continuing operations attributable to Nidec Corporation | (16.57) | 117.13 | $1.27 |
Loss on discontinued operations attributable to Nidec Corporation | (16.59) | - | - |
Net (loss) income attributable to Nidec Corporation | (33.16) | 117.13 | 1.27 |
Cash dividends | ¥30.00 | ¥25.00 | $0.27 |
The accompanying notes are an integral part of these financial statements.
27
NIDEC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME - (Continued)
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
Net income attributable to Nidec Corporation | |||
(Loss) income on continuing operations attributable to Nidec Corporation | ¥(2,387) | ¥16,315 | $177,144 |
Loss on discontinued operations attributable to Nidec Corporation | (2,390) | - | - |
Net (loss) income attributable to Nidec Corporation | ¥(4,777) | ¥16,315 | $177,144 |
The accompanying notes are an integral part of these financial statements.
28
NIDEC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||
For the nine months ended December 31 | |||
2008 | 2009 | 2009 | |
Net sales | ¥504,078 | ¥421,134 | $4,572,573 |
Operating expenses: | |||
Cost of products sold | 391,802 | 315,332 | 3,423,800 |
Selling, general and administrative expenses | 40,013 | 35,771 | 388,393 |
Research and development expenses | 21,385 | 18,194 | 197,546 |
453,200 | 369,297 | 4,009,739 | |
Operating income | 50,878 | 51,837 | 562,834 |
Other income (expense): | |||
Interest and dividend income | 2,032 | 602 | 6,536 |
Interest expense | (1,053) | (539) | (5,852) |
Foreign exchange loss, net | (10,151) | (3,953) | (42,921) |
Gain from marketable securities, net | 70 | 7 | 76 |
Other, net | (407) | (181) | (1,965) |
(9,509) | (4,064) | (44,126) | |
Income from continuing operations before income taxes | 41,369 | 47,773 | 518,708 |
Income taxes | (11,340) | (13,806) | (149,902) |
Equity in net loss of affiliated companies | (78) | (47) | (511) |
Income from continuing operations | 29,951 | 33,920 | 368,295 |
Loss on discontinued operations | (3,586) | (1,287) | (13,974) |
Consolidated net income | 26,365 | 32,633 | 354,321 |
Less: Net income attributable to noncontrolling interests | (3,302) | (2,530) | (27,470) |
Net income attributable to Nidec Corporation | ¥23,063 | ¥30,103 | $326,851 |
|
|
|
|
Yen | U.S. dollars | ||
Per share data: | |||
Earning per share - basic | |||
Income from continuing operations attributable to Nidec Corporation | ¥177.37 | ¥222.78 | $2.42 |
Loss on discontinued operations attributable to Nidec Corporation | (17.95) | (6.66) | (0.07) |
Net income attributable to Nidec Corporation | 159.42 | 216.12 | 2.35 |
Earning per share - diluted | |||
Income from continuing operations attributable to Nidec Corporation | 173.54 | 222.78 | 2.42 |
Loss on discontinued operations attributable to Nidec Corporation | (17.60) | (6.66) | (0.07) |
Net income attributable to Nidec Corporation | 155.94 | 216.12 | 2.35 |
Cash dividends | ¥60.00 | ¥55.00 | $0.60 |
The accompanying notes are an integral part of these financial statements.
29
NIDEC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME - (Continued)
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||
For the nine months ended December 31 | |||
2008 | 2009 | 2009 | |
Net income attributable to Nidec Corporation | |||
Income from continuing operations attributable to Nidec Corporation | ¥25,659 | ¥31,032 | $336,938 |
Loss on discontinued operations attributable to Nidec Corporation | (2,596) | (929) | (10,087) |
Net income attributable to Nidec Corporation | ¥23,063 | ¥30,103 | $326,851 |
The accompanying notes are an integral part of these financial statements.
30
NIDEC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Yen in millions | U.S. dollars | ||
For the nine months ended December 31 | |||
2008 | 2009 | 2009 | |
Cash flows from operating activities: | |||
Consolidated net income | ¥26,365 | ¥32,633 | $354,321 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 26,123 | 23,064 | 250,423 |
Gain from marketable securities, net | (70) | (7) | (76) |
Loss on sales, disposal or impairment of property, plant and equipment | 554 | 970 | 10,532 |
Equity in net losses of affiliated companies | 78 | 47 | 511 |
Foreign currency adjustments | 8,803 | 4,432 | 48,122 |
Changes in operating assets and liabilities: | |||
Decrease (increase) in notes and accounts receivable | 14,781 | (23,319) | (253,192) |
Increase in inventories | (6,306) | (4,884) | (53,029) |
(Decrease) increase in notes and accounts payable | (17,551) | 29,444 | 319,696 |
Other | (5,582) | 4,767 | 51,758 |
Net cash provided by operating activities | 47,195 | 67,147 | 729,066 |
Cash flows from investing activities: | |||
Additions to property, plant and equipment | (31,277) | (26,603) | (288,849) |
Proceeds from sales of property, plant and equipment | 590 | 538 | 5,841 |
Purchases of marketable securities | (3,607) | (7) | (76) |
Acquisitions of business, net of cash acquired | (756) | (2,579) | (28,002) |
Other | (2,874) | (2,114) | (22,953) |
Net cash used in investing activities | (37,924) | (30,765) | (334,039) |
Cash flows from financing activities: | |||
Increase (decrease) in short-term borrowings | 84,222 | (101,494) | (1,101,998) |
Repayments of long-term debt | (1,525) | (1,281) | (13,909) |
Redemption of corporate bonds | (26,412) | - | - |
Purchases of treasury stock | (6,473) | (7) | (76) |
Payments for additional investments in subsidiaries | (7,869) | (2,821) | (30,630) |
Payment for loan to shareholder | (14,500) | - | - |
Dividends paid to shareholders of Nidec Corporation | (8,699) | (7,661) | (83,181) |
Dividends paid to noncontrolling interests | (2,203) | (1,196) | (12,986) |
Other | 87 | 65 | 706 |
Net cash provided by (used in) financing activities | 16,628 | (114,395) | (1,242,074) |
Effect of exchange rate changes on cash and cash equivalents | (11,922) | (5,398) | (58,610) |
Net increase (decrease) in cash and cash equivalents | 13,977 | (83,411) | (905,657) |
Cash and cash equivalents at beginning of period | 100,809 | 200,966 | 2,182,041 |
Cash and cash equivalents at end of period | ¥114,786 | ¥117,555 | $1,276,384 |
The accompanying notes are an integral part of these financial statements.
31
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of preparation:
The accompanying interim consolidated financial statements of NIDEC Corporation (the “Company”, and together with its consolidated subsidiaries, “NIDEC”) have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The interim consolidated financial statements are unaudited but include all adjustments, consisting of only normal recurring adjustments, which the Company considers necessary for a fair presentation of the consolidated financial position and the consolidated results of its operations and cash flows. Results for the nine months ended December 31, 2009 are not necessarily indicative of results that may be expected for the full year. The consolidated balance sheet at March 31, 2009, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for c omplete financial statements. For further information, refer to the audited consolidated financial statements and footnotes thereto for the year ended March 31, 2009, included on Form 20-F.
U.S. dollar amounts are included solely for the convenience of readers at the rate of ¥92.10 = US$1, the approximate current exchange rate at December 31, 2009. Certain reclassifications in the consolidated balance sheets as of March 31, 2009, consolidated statements of income for the three and nine months ended December 31, 2008 and consolidated statements of cash flows for the nine months ended December 31, 2008 have been made to conform to the presentation used for the nine months ended December 31, 2009.
As of December 31, 2008, NIDEC discontinued its optical pickup unit ("OPU") business. The results of the OPU business were previously recorded in the NSNK and All Others reporting segments. Moreover, as of September 30, 2009, NIDEC discontinued its semiconductor manufacturing equipment business. The results of the semiconductor manufacturing equipment business were previously recorded in the NTSC and All Others reporting segments. The operating results of the discontinued businesses and exit costs with related taxes were recorded as "loss on discontinued operations" in the consolidated statement of income in accordance with ASC 205-20, "Presentation of Financial Statements- Discontinued Operations" (formerly SFAS No.144, “Accounting for the impairment or disposal of Long-Lived Assets.”) All prior period information has been reclassified to be consistent with the current period presentation .
32
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
As of April 1, 2009, NIDEC adopted ASC 810, “Consolidation” (formerly SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”). Upon adoption, noncontrolling interests, which were previously referred to as minority interests and classified in the mezzanine section between liabilities and equity on the consolidated balance sheets, are now included as a separate component of total equity. Consolidated net income on the consolidated statements of income now includes the net income (loss) attributable to noncontrolling interests. In addition, payments for additional investments in subsidiaries, which were previously classified in the cash flows from investing activities on the consolidated statements of cash flows, are now included in cash flows from financing activities. Prior period amounts were reclassified to conform to the current period presentation.
2. New accounting pronouncements:
Accounting Changes
As of September 15, 2009, NIDEC adopted the FASB Accounting Standards Codification™ (ASC) 105, “Generally Accepted Accounting Principles” (formerly Statement of Financial Accounting Standards (SFAS) No. 168, “The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162”). ASC 105 replaces SFAS No. 162 “the Hierarchy of Generally Accepted Accounting Principles” and establishes the FASB Accounting Standards Codification™ as the single source of authoritative nongovernmental U.S. Generally Accepted Accounting Principles (other than guidance issued by the SEC). The adoption of ASC 105 had no impact on NIDEC’s consolidated financial position, results of operations or liquidity.
As of April 1, 2009, NIDEC adopted ASC 820, “Fair Value Measurements and Disclosures” (formerly SFAS No. 157, “Fair Value Measurements”) for certain nonfinancial assets and liabilities. FASB Staff Position (FSP) No. FAS 157-2, “Effective Date of FASB Statement No. 157” delays the effective date of ASC 820 for one year for nonfinancial assets and liabilities. The adoption of ASC 820 did not have a material impact on NIDEC’s consolidated financial position, results of operations or liquidity.
As of April 1, 2009, NIDEC adopted ASC 805, “Business Combinations” (formerly SFAS No. 141 (revised 2007), “Business Combinations”). ASC 805 requires that assets acquired, liabilities assumed, contractual contingencies, and contingent consideration be measured at fair value as of the acquisition date, that acquisition-related costs be expensed as incurred, that restructuring costs generally be expensed in periods subsequent to the acquisition date, and the changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expense. The adoption of ASC 805 did not have a material impact on NIDEC’s consolidated financial position, results of operations or liquidity since NIDEC did not acquire any
33
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
material businesses for the nine months ended December 31, 2009. Any future impact, however, will depend on the number, size, and nature of any business combination transactions that we may complete.
As of April 1, 2009, NIDEC adopted ASC 810, “Consolidation” (formerly SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”). ASC 810 recharacterizes minority interests in a subsidiary as non-controlling interests and requires the presentation of noncontrolling interests as equity in consolidated balance sheets, and separate identification and presentation in consolidated statements of income of net income attributable to the entity and the noncontrolling interest. ASC 810 also requires all transactions for changes in a parent’s ownership interest in a subsidiary that do not result in the subsidiary ceasing to be a subsidiary to be recognized as equity transactions. Upon adoption, noncontrolling interests, which were previously referred to as minority interests and classified in the mezzanine section between liabilities and equity on the consolida ted balance sheets, are now included as a separate component of total equity. Consolidated net income on the consolidated statements of income now includes the net income (loss) attributable to noncontrolling interests. In addition, payments for additional investments in subsidiaries, which were previously classified in the cash flows from investing activities on the consolidated statements of cash flows, are now included in cash flows from financing activities. Prior period amounts were reclassified to conform to the current period presentation.
As of June 15, 2009, NIDEC adopted ASC 855, “Subsequent Events” (formerly SFAS No. 165, “Subsequent Events”). ASC 855 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. ASC 855 requires the disclosure of the date through which subsequent events have been evaluated. The evaluation date is described in note No. 14 “Subsequent events”.
Recent Accounting Pronouncements to be adopted in future periods
In December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan Assets". FSP No. FAS 132(R)-1 provides guidance on employers' disclosures of a defined benefit pension or other postretirement plan. Specifically, employers are required to disclose information about fair value measurements of plan assets. FSP No. FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009. As FSP No. FAS 132(R)-1 is a provision for disclosure, the adoption of FSP No. FAS 132(R)-1 will not have any impact on Nidec's consolidated financial position, results of operations and liquidity.
34
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
In December 2009, the FASB issued ASU No. 2009-16, “Accounting for Transfers of Financial Assets” This accounting standard codified SFAS No.166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140”. ASU 2009-16 requires more information about transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. ASU 2009-16 also eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets. ASU 2009-16 is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. NIDEC is currently evaluating the potential impact fr om adopting ASU 2009-16 on its consolidated financial position, results of operations and liquidity.
In December 2009, the FASB issued ASU No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.” This accounting standard codified SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)”. ASU 2009-17 requires an enterprise to perform an analysis to identify the primary beneficiary of all variable interest entities and also requires ongoing reassessments of whether an enterprise is the primary beneficiary of all variable interest entities. ASU 2009-17 is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. NIDEC is currently evaluating the potential impact from adopting ASU 2009-17 on its consolidated financial position, results of operations and liquidity.
3. Acquisitions
On August 4, 2009, NIDEC acquired the additional 60.0% of the voting rights of NTN-Nidec (Zhejiang) Corporation, currently NIDEC BEARING (ZHEJIANG) CORPORATION (“NBCC”), and NTN-NIDEC (THAILAND) CO.,LTD., currently NIDEC BEARING (THAILAND) CO., LTD. (“NBTC”). NIDEC previously owned 40.0% of the voting rights of NBCC and NBTC prior to August 4, 2009. As a result, NIDEC acquired all of the voting rights of NBCC and NBTC. These acquisitions did not have a material impact on NIDEC’s consolidated financial position, results of operations or liquidity.
35
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
4. Goodwill
Due to the discontinuation of NIDEC's semiconductor manufacturing equipment operations, an impairment loss of ¥230 million of goodwill in NTSC (Nidec Tosok Corporation) segment was recorded as "Loss on discontinued operations" in the consolidated statement of income in accordance with ASC 205-20 "Presentation of Financial Statements-Discontinued Operations" (formerly SFAS No.144, “Accounting for the impairment or disposal of Long-Lived Assets.”).
The changes in the carrying amount of goodwill for the nine months ended December 31, 2009 are as follows:
Yen in millions | U.S dollars in thousands | |
Balance as of April 1, 2009 | ||
Goodwill | ¥71,417 | $775,429 |
Accumulated impairment losses | (357) | (3,876) |
71,060 | 771,553 | |
Acquisition | 1,031 | 11,194 |
Impairment loss | (230) | (2,497) |
Translation adjustments | (763) | (8,285) |
Balance as of December 31, 2009 | ||
Goodwill | 71,685 | 778,338 |
Accumulated impairment losses | (587) | (6,373) |
¥71,098 | $771,965 | |
36
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
5. Marketable securities and other securities investments:
Marketable securities and other securities investments include debt and equity securities of which the aggregate fair value, gross unrealized gains and losses and cost are as follows:
Yen in millions | ||||
March 31, 2009 | ||||
Cost | Gross unrealized gains | Gross unrealized losses | Fair value | |
Available-for-sale | ||||
Equity securities | ¥9,285 | ¥3,502 | ¥656 | ¥12,131 |
Held-to-maturity | ||||
Japanese government debt securities | 201 | - | - | 201 |
¥9,486 | ¥3,502 | ¥656 | ¥12,332 | |
Securities not practicable to fair value | ||||
Equity securities | ¥1,012 | |||
|
|
|
|
|
Yen in millions | ||||
December 31, 2009 | ||||
Cost | Gross unrealized gains | Gross unrealized losses | Fair value | |
Available-for-sale | ||||
Equity securities | ¥9,021 | ¥6,120 | ¥188 | ¥14,953 |
Held-to-maturity | ||||
Japanese government debt securities | 201 | - | - | 201 |
¥9,222 | ¥6,120 | ¥188 | ¥15,154 | |
Securities not practicable to fair value | ||||
Equity securities | ¥740 | |||
|
|
|
|
|
37
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
U.S. dollars in thousands | ||||
December 31, 2009 | ||||
Cost | Gross unrealized gains | Gross unrealized losses | Fair value | |
Available-for-sale | ||||
Equity securities | $97,948 | $66,450 | $2,041 | $162,357 |
Held-to-maturity | ||||
Japanese government debt securities | 2,182 | - | - | 2,182 |
$100,130 | $66,450 | $2,041 | $164,539 | |
Securities not practicable to fair value | ||||
Equity securities | $8,034 | |||
The net unrealized gain on available-for-sale securities included as a component of accumulated other comprehensive income, net of applicable taxes, increased by ¥1,372million ($14,897 thousand) during the nine months ended December 31, 2009, and decreased by ¥1,433 million during the year ended March 31, 2009.
Proceeds from sales of available-for-sale securities was ¥17 million ($185 thousand) for the three months ended December 31, 2009. On those sales, gross realized gains were ¥9 million ($98 thousand) and gross realized losses were ¥0 million ($0 thousand) for the three months ended December 31, 2009.
Proceeds from sales of available-for-sale securities were ¥19 million ($206 thousand) for the nine months ended December 31, 2009. On those sales, gross realized gains was ¥10 million ($109 thousand) and gross realized losses was ¥0 million ($0 thousand) for the nine months ended December 31, 2009.
NIDEC holds long-term investment securities that are classified as “marketable securities and other securities investments.” The securities issued by various non-public companies are recorded at cost, as their fair values are not readily determinable. NIDEC’s management employs a systematic methodology to assess the recoverability of such investments by reviewing the financial position of the underlying companies and the prevailing market conditions in which these companies operate to determine if NIDEC’s investment in each individual company is impaired and whether the impairment is other-than-temporary. If any impairment is determined to be other-than-temporary, the cost of the investment is written-down by the impaired amount and the amount is recognized currently as a realized loss.
38
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The following table presents the gross unrealized losses on, and fair value of, NIDEC’s investment securities, aggregated by investment category and length of time that individual investment securities have been in a continuous unrealized loss position.
Yen in millions | ||||
March 31, 2009 | ||||
Less than 12 months | 12 months or more | |||
Fair value | Unrealized loss | Fair value | Unrealized loss | |
Equity securities | ¥1,950 | ¥468 | ¥552 | ¥188 |
Yen in millions | ||||
December 31, 2009 | ||||
Less than 12 months | 12 months or more | |||
Fair value | Unrealized loss | Fair value | Unrealized loss | |
Equity securities | ¥1,051 | ¥133 | ¥300 | ¥55 |
U.S. dollars in thousands | ||||
December 31, 2009 | ||||
Less than 12 months | 12 months or more | |||
Fair value | Unrealized loss | Fair value | Unrealized loss | |
Equity securities | $11,412 | $1,444 | $3,257 | $597 |
NIDEC presumes an investment securities is impaired if the fair value declines below the securities' original cost. Among the impaired investment securities, NIDEC presumes a decline in value of equity securities is other-than-temporary if the fair value is 20% or more below the original cost for an extended period of time. The presumption of an other-than-temporary impairment may be overcome if there is evidence to support that the decline is temporary in nature due to the existence of other factors which overcome the duration or magnitude of the decline. On the other hand, even if a decline is less than 20%, there may be cases where impairment losses are recognized when specific factors indicate the decline in the fair value is other-than-temporary. As of December 31, 2009, NIDEC determined that the decline in value for equity securities with unrealized losses shown in the above table is temporary in nature.
As of December 31, 2009 and March 31, 2009, held-to-maturity securities of ¥201 million ($2,182 thousand) and ¥201 million were pledged as collateral for the deferred payments of certain taxes based on the Japanese Custom Act and Consumption Tax Law, respectively.
39
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
6. Equity:
A summary of the changes in equity in the consolidated balance sheet for the nine months ended December 31, 2008 and 2009 was as follows:
Yen in millions | |||
Nidec Corporation total | Noncontrolling interests | Total equity | |
For the nine months ended December 31, 2008: | |||
Balance at March 31, 2008 | ¥319,584 | ¥68,186 | ¥387,770 |
Adjustment to apply the measurement date provision of ASC 715, net of tax | (111) | (22) | (133) |
Comprehensive income: | |||
Net income | 23,063 | 3,302 | 26,365 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | (19,143) | (1,646) | (20,789) |
Unrealized losses on securities, net of reclassification adjustment | (2,110) | (865) | (2,975) |
Pension liability adjustments | (227) | 3 | (224) |
Total comprehensive income | 1,583 | 794 | 2,377 |
Conversion of convertible debt | 606 | - | 606 |
Purchase of treasury stock | (6,473) | - | (6,473) |
Payment for loan to shareholder | (14,500) | - | (14,500) |
Dividends paid to shareholders of Nidec Corporation | (8,699) | - | (8,699) |
Dividends paid to noncontrolling interests | - | (2,203) | (2,203) |
Capital transaction with consolidated subsidiaries and other | - | (5,031) | (5,031) |
Balance at December 31, 2008 | ¥291,990 | ¥61,724 | ¥353,714 |
|
|
|
|
For the nine months ended December 31, 2009: | |||
Balance at March 31, 2009 | ¥297,148 | ¥60,539 | ¥357,687 |
Comprehensive income: | |||
Net income | 30,103 | 2,530 | 32,633 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | (5,330) | (435) | (5,765) |
Unrealized gains from securities, net of reclassification adjustment | 1,372 | 407 | 1,779 |
Pension liability adjustments | 6 | 11 | 17 |
Total comprehensive income | 26,151 | 2,513 | 28,664 |
Purchase of treasury stock | (7) | - | (7) |
Dividends paid to shareholders of Nidec Corporation | (7,661) | - | (7,661) |
Dividends paid to noncontrolling interests | - | (1,196) | (1,196) |
Capital transaction with consolidated subsidiaries and other | 53 | (2,915) | (2,862) |
Balance at December 31, 2009 | ¥315,684 | ¥58,941 | ¥374,625 |
40
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
U.S. dollars in thousands | |||
Nidec Corporation total | Noncontrolling interests | Total equity | |
For the nine months ended December 31, 2009: | |||
Balance at March 31, 2009 | $3,226,363 | $657,319 | $3,883,682 |
Comprehensive income: | |||
Net income | 326,851 | 27,470 | 354,321 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | (57,872) | (4,723) | (62,595) |
Unrealized gains from securities, net of reclassification adjustment | 14,897 | 4,419 | 19,316 |
Pension liability adjustments | 65 | 119 | 184 |
Total comprehensive income | 283,941 | 27,285 | 311,226 |
Purchase of treasury stock | (76) | - | (76) |
Dividends paid to shareholders of Nidec Corporation | (83,181) | - | (83,181) |
Dividends paid to noncontrolling interests | - | (12,986) | (12,986) |
Capital transaction with consolidated subsidiaries and other | 575 | (31,650) | (31,075) |
Balance at December 31, 2009 | $3,427,622 | $639,968 | $4,067,590 |
41
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
7. Pension and severance plans:
The amounts of net periodic benefit cost in pension and severance plans for the three months ended December 31, 2008 and 2009 were as follows:
Yen in millions | U.S. dollars in thousands | ||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
Net periodic pension cost for defined benefit plan: | |||
Service cost | ¥330 | ¥321 | $3,485 |
Interest cost | 137 | 137 | 1,488 |
Expected return on plan assets | (39) | (32) | (347) |
Amortization of net actuarial (gain) loss | (1) | 32 | 347 |
Amortization of prior service credit | (16) | (16) | (174) |
Net periodic pension cost for defined benefit plan | 411 | 442 | 4,799 |
Cost for multiemployer pension plan | 69 | 69 | 749 |
Cost for defined contribution plans | ¥80 | ¥71 | $771 |
The amounts of net periodic benefit cost in pension and severance plans for the nine months ended December 31, 2008 and 2009 were as follows:
Yen in millions | U.S. dollars in thousands | ||
For the nine months ended December 31 | |||
2008 | 2009 | 2009 | |
Net periodic pension cost for defined benefit plan: | |||
Service cost | ¥1,122 | ¥993 | $10,782 |
Interest cost | 433 | 411 | 4,462 |
Expected return on plan assets | (118) | (94) | (1,021) |
Amortization of net actuarial (gain) loss | (8) | 94 | 1,021 |
Amortization of prior service credit | (47) | (47) | (510) |
Net periodic pension cost for defined benefit plan | 1,382 | 1,357 | 14,734 |
Cost for multiemployer pension plan | 187 | 158 | 1,716 |
Cost for defined contribution plans | ¥258 | ¥254 | $2,758 |
42
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
8. Earnings per share:
The tables below set forth a reconciliation of the differences between basic and diluted income attributable to Nidec Corporation per share for the three and nine months ended December 31, 2008 and 2009:
Yen in millions | Thousands of shares | Yen | U.S. dollars | |
Net income (loss) attributable to Nidec Corporation | Weighted- average shares | Net income (loss) attributable to Nidec Corporation per share | ||
For the three months ended December 31, 2008: | ||||
Basic net income attributable to Nidec Corporation per share: | ||||
Loss on continuing operations attributable to Nidec Corporation | ¥(2,387) | 144,098 | ¥(16.57) | |
Loss on discontinued operations attributable to Nidec Corporation | (2,390) | 144,098 | (16.59) | |
Net loss attributable to Nidec Corporation available to common shareholders | (4,777) | 144,098 | (33.16) | |
Effect of dilutive securities: | ||||
Zero coupon 0.0% convertible bonds | (3) | 727 | ||
Diluted net income attributable to Nidec Corporation per share: | ||||
Loss on continuing operations attributable to Nidec Corporation | (2,387) | 144,098 | (16.57) | |
Loss on discontinued operations attributable to Nidec Corporation | (2,390) | 144,098 | (16.59) | |
Net loss for computation attributable to Nidec Corporation | ¥(4,777) | 144,098 | ¥(33.16) | |
For the three months ended December 31, 2009: | ||||
Basic net income attributable to Nidec Corporation per share: | ||||
Net income attributable to Nidec Corporation available to common shareholders | 16,315 | 139,291 | 117.13 | 1.27 |
Diluted net income attributable to Nidec Corporation per share: | ||||
Net income for computation attributable to Nidec Corporation | ¥16,315 | 139,291 | ¥117.13 | $1.27 |
43
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Yen in millions | Thousands of shares | Yen | U.S. dollars | |
Net income (loss) attributable to Nidec Corporation | Weighted- average shares | Net income (loss) attributable to Nidec Corporation per share | ||
For the nine months ended December 31, 2008: | ||||
Basic net income attributable to Nidec Corporation per share: | ||||
Income from continuing operations attributable to Nidec Corporation | ¥25,659 | 144,669 | ¥177.37 | |
Loss on discontinued operations attributable to Nidec Corporation | (2,596) | 144,669 | (17.95) | |
Net income attributable to Nidec Corporation available to common shareholders | 23,063 | 144,669 | 159.42 | |
Effect of dilutive securities: | ||||
Zero coupon 0.0% convertible bonds | (48) | 2,919 | ||
Diluted net income attributable to Nidec Corporation per share: | ||||
Income from continuing operations attributable to Nidec Corporation | 25,611 | 147,588 | 173.54 | |
Loss on discontinued operations attributable to Nidec Corporation | (2,596) | 147,588 | (17.60) | |
Net income for computation attributable to Nidec Corporation | ¥23,015 | 147,588 | ¥155.94 | |
For the nine months ended December 31, 2009: | ||||
Basic net income attributable to Nidec Corporation per share: | ||||
Income from continuing operations attributable to Nidec Corporation | ¥31,032 | 139,292 | ¥222.78 | $2.42 |
Loss on discontinued operations attributable to Nidec Corporation | (929) | 139,292 | (6.66) | (0.07) |
Net income attributable to Nidec Corporation available to common shareholders | 30,103 | 139,292 | 216.12 | 2.35 |
Diluted net income attributable to Nidec Corporation per share: | ||||
Income from continuing operations attributable to Nidec Corporation | 31,032 | 139,292 | 222.78 | 2.42 |
Loss on discontinued operations attributable to Nidec Corporation | (929) | 139,292 | (6.66) | (0.07) |
Net income for computation attributable to Nidec Corporation | ¥30,103 | 139,292 | ¥216.12 | $2.35 |
NIDEC has no dilutive securities outstanding for the three and nine months ended December 31, 2009, and therefore there is no difference between basic and diluted income attributable to Nidec Corporation per share.
44
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
9. Income taxes:
NIDEC is subject to a number of different income taxes, which, in the aggregate, indicate statutory rates in Japan of approximately 41.0% for the nine months ended December 31, 2008 and 2009. Reconciliation of the differences between the statutory tax rates and the estimated effective income tax rates are as follows:
For the nine months ended December 31 | ||
2008 | 2009 | |
Statutory tax rate | 41.0% | 41.0% |
Increase (reduction) in taxes resulting from: | ||
Tax benefit in foreign subsidiaries | (21.5) | (21.5) |
Tax (benefit) on undistributed earnings | (0.3) | 3.4 |
Valuation allowance | 4.8 | 2.3 |
Liabilities for unrecognized tax benefits | 2.8 | 4.9 |
Other | 0.6 | (1.2) |
Estimated effective income tax rate | 27.4% | 28.9% |
The estimated effective income tax rate for the nine months ended December 31, 2009 was higher compared to the corresponding prior period. This was mainly due to the net impact of increases in tax (benefit) on undistributed earnings, in liabilities for unrecognized tax benefits, decrease in valuation allowance. The increase in tax (benefit) on undistributed earnings was mainly due to the change in the Japanese tax law. The decrease in valuation allowance was mainly due to decrease in tax losses as a result of recovery of performance of foreign subsidiaries. The increase in liabilities for unrecognized tax benefits was mainly due to increase in the provisions for tax positions of prior years.
10. Contingencies:
NIDEC has guaranteed approximately ¥155 million ($1,683 thousand) of bank loans for employees in connection with their housing costs at December 31, 2009. If an employee defaults on his/her loan payments, NIDEC would be required to perform under the guarantee. The undiscounted maximum amount of NIDEC’s obligation to make future payments in the event of defaults is approximately ¥155 million ($1,683 thousand). The current carrying amount of the liabilities for our obligations under the guarantee is zero.
45
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
11. Discontinued Operations
As of December 31, 2008, NIDEC discontinued its optical pickup unit ("OPU") business. The results of the OPU business were previously recorded in the NSNK and All Others reporting segment. NIDEC discontinued the OPU business by winding down operations in an effort to concentrate management resources and focus capital and R&D expenditures on other growing businesses.
As of September 30, 2009, NIDEC discontinued the semiconductor manufacturing equipment (“SME”) business included within the NTSC (Nidec Tosok Corporation) and “All Others” segments, in order to improve profitability by prioritizing NIDEC’s investment of management resources to the development and production of new products in the automobile parts and measuring equipment businesses, areas with more potential for growth than the SME business. Total exit costs were ¥1,835 million ($19,924 thousand) (net of tax ¥1,174 million ($12,747 thousand)), which includes an impairment loss of ¥230 million ($2,497 thousand) of goodwill, loss on disposal of inventories and fixed assets, and other closing costs. The operating results of the SME business and exit costs with related taxes were recorded as "net loss on discontinued operations" in the consolidated statement of income in accordance wi th ASC 205-20 "Presentation of Financial Statements-Discontinued Operations" (formerly SFAS No.144, “Accounting for the impairment or disposal of Long-Lived Assets.”). All prior period information has been reclassified to be consistent with the current period presentation.
Operating results of discontinued operations for the three months and the nine months ended December 31, 2008 and 2009 were as follows:
Yen in millions | U.S. dollars in thousands | |||||
For the three months ended December 31 | For the three months ended December 31, | |||||
2008 | 2009 | 2009 | ||||
OPU business | SME business | Total | ||||
Net sales | ¥1,260 | ¥384 | ¥1,644 | ¥- | $- | |
Loss on discontinued operations before income taxes | (4,756) | (68) | (4,824) | - | - | |
Income taxes | 1,543 | 5 | 1,548 | - | - | |
Loss on discontinued operations | ¥(3,213) | ¥(63) | ¥(3,276) | ¥- | $- | |
46
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||||
For the nine months ended December 31 | For the nine months ended December 31, | ||||
2008 | 2009 | 2009 | |||
OPU business | SME business | Total | |||
Net sales | ¥7,698 | ¥2,328 | ¥10,026 | ¥604 | $6,558 |
Loss on discontinued operations before income taxes | (5,080) | (66) | (5,146) | (2,047) | (22,226) |
Income taxes | 1,557 | 3 | 1,560 | 760 | 8,252 |
Loss on discontinued operations | ¥(3,523) | ¥(63) | ¥(3,586) | ¥(1,287) | $(13,974) |
12. Fair Value:
Under Statement of ASC 820, “Fair Value Measurements and Disclosures” (formerly SFAS No. 157, “Fair Value Measurements”), fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect NIDEC’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels.
Level 1 inputs are quoted prices in active markets for identical assets or liabilities.
Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs (other than quoted prices) that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 inputs are unobservable inputs for the asset or liability.
47
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Assets and liabilities that are measured at Fair Value on a Recurring Basis:
The following table provides information by level for assets and liabilities that are measured at fair value, as defined by ASC 820, on a recurring basis.
Yen in millions | ||||
Fair Value at | Fair Value Measurements Using Inputs Considered as | |||
March 31, 2009 | Level 1 | Level 2 | Level 3 | |
Assets: | ||||
Marketable securities | ¥12,332 | ¥12,332 | - | - |
Liabilities: | ||||
Derivative liabilities | ¥3 | - | ¥3 | - |
Yen in millions | ||||
Fair Value at | Fair Value Measurements Using Inputs Considered as | |||
December 31, 2009 | Level 1 | Level 2 | Level 3 | |
Assets: | ||||
Marketable securities | ¥15,154 | ¥15,154 | - | - |
Liabilities: | ||||
Derivative liabilities | ¥0 | - | ¥0 | - |
U.S. dollars in thousands | ||||
Fair Value at | Fair Value Measurements Using Inputs Considered as | |||
December 31, 2009 | Level 1 | Level 2 | Level 3 | |
Assets: | ||||
Marketable securities | $164,539 | $164,539 | - | - |
Liabilities: | ||||
Derivative liabilities | $0 | - | $0 | - |
Level 1 marketable securities are comprised primarily of equity securities, which are valued using an unadjusted quoted market price in active markets with sufficient volume and frequency of transactions. Level 2 derivatives are valued using quotes obtained from counterparties or third parties, which are periodically validated by pricing models using observable market inputs, such as foreign currency exchange rates and interest rates.
48
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Fair value of financial instruments:
The estimated fair values of NIDEC’s financial instruments are summarized as follows:
Yen in millions | ||
March 31, 2009 | ||
Carrying amount | Estimated fair value | |
Asset (Liability): | ||
Cash and cash equivalents | ¥200,966 | ¥200,966 |
Short-term investments | 2,932 | 2,932 |
Short-term loan receivable | 84 | 84 |
Long-term loan receivable | 292 | 301 |
Short-term borrowings | (221,342) | (221,342) |
Long-term debt including the current portion and excluding capital lease obligation | ¥(663) | ¥(652) |
Yen in millions | U.S. dollars in thousands | |||
December 31, 2009 | December 31, 2009 | |||
Carrying amount | Estimated fair value | Carrying amount | Estimated fair value | |
Asset (Liability): | ||||
Cash and cash equivalents | ¥117,555 | ¥117,555 | $1,276,384 | $1,276,384 |
Short-term investments | 6,016 | 6,016 | 65,320 | 65,320 |
Short-term loan receivable | 152 | 152 | 1,650 | 1,650 |
Long-term loan receivable | 362 | 365 | 3,931 | 3,963 |
Short-term borrowings | (122,732) | (122,732) | (1,332,595) | (1,332,595) |
Long-term debt including the current portion and excluding capital lease obligation | ¥(658) | ¥(623) | $(7,144) | $(6,764) |
The following are explanatory notes relating to the financial instruments.
Cash and cash equivalents, short-term investments, short-term loans receivable and short-term borrowings: In the normal course of business, substantially all cash and cash equivalents, time deposits short-term loans receivable and short-term borrowing are highly liquid and are carried at amounts that approximate fair value.
Long-term loan receivable: The fair value of long-term loans was estimated by discounting expected future cash flows.
Long-term debt: The fair value of long-term bank loans (including the current portion and excluding the capital lease obligation) was estimated based on the discounted amounts of future cash flows using NIDEC’s current incremental borrowing rates for similar liabilities.
49
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
13. Segment data:
In accordance with ASC 205-20, "Presentation of Financial Statements- Discontinued Operations" (formerly SFAS No.144, “Accounting for the impairment or disposal of Long-Lived Assets.”), amounts in the segment information do not reflect discontinued operations, and previous fiscal year’s segment information has been reclassified.
(1) Enterprise-wide information
The following table provides product information for the three months ended December 31, 2008 and 2009:
Yen in millions | U.S. dollars in thousands | ||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
Net sales: | |||
Small precision motors: | |||
Hard disk drives spindle motors | ¥37,533 | ¥52,996 | $575,418 |
Other small precision brushless DC motors | 16,331 | 19,752 | 214,463 |
Brushless DC fans | 8,948 | 8,072 | 87,644 |
Other small precision motors | 5,821 | 4,215 | 45,765 |
Sub-total | 68,633 | 85,035 | 923,290 |
Mid-size motors | 15,898 | 18,043 | 195,906 |
Machinery | 19,330 | 12,173 | 132,172 |
Electronic and optical components | 29,784 | 28,911 | 313,908 |
Others | 7,157 | 8,229 | 89,349 |
Consolidated total | ¥140,802 | ¥152,391 | $1,654,625 |
The following table provides product information for the nine months ended December 31, 2008 and 2009:
Yen in millions | U.S. dollars in thousands | ||
For the nine months ended December 31 | |||
2008 | 2009 | 2009 | |
Net sales: | |||
Small precision motors: | |||
Hard disk drives spindle motors | ¥147,358 | ¥150,626 | $1,635,461 |
Other small precision brushless DC motors | 61,638 | 55,748 | 605,299 |
Brushless DC fans | 31,369 | 24,233 | 263,116 |
Other small precision motors | 18,211 | 12,829 | 139,294 |
Sub-total | 258,576 | 243,436 | 2,643,170 |
Mid-size motors | 63,500 | 49,874 | 541,520 |
Machinery | 57,993 | 29,071 | 315,646 |
Electronic and optical components | 101,298 | 78,189 | 848,958 |
Others | 22,711 | 20,564 | 223,279 |
Consolidated total | ¥504,078 | ¥421,134 | $4,572,573 |
50
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
(2) Operating segment information
Beginning in the current quarterly reporting period ended December 31, 2009, NIDEC has changed our segment reporting in line with the changes NIDEC made in our management decision-making process. In August 2009, NIDEC integrated the operations of Nidec Electronics GmbH into those of Nidec Motors & Actuators (Germany) GmbH within the NMA segment, and also integrated the operations in China previously included within the NCD segment, other than the DC motors and fans operations, and the in-car motors operations previously included in the All Others segment into the NMA segment, to enhance its automobiles motors businesses. In October 2009, NIDEC reorganized the operations of Nidec Shibaura Corporation ("NSBC") and those of Nidec Power Motor Corporation into Nidec Techno Motor Holdings Corporation ("NTMC") to enhance its mid-size motors businesses. As a result, NIDEC has newly created an NTMC segment consist ing of its operations relating to mid-size motors for home appliances and industrial use, which were previously included in the NSBC segment and the All Others segment. The NSCJ and NNSN segments are no longer reported as reportable segments and are included in the All Other segment in the current period due to their immateriality. All prior period information has been reclassified in accordance with the current period presentation to enable comparisons between the relevant amounts for the three months ended December 31, 2008 and 2009.
NIDEC evaluates performance based on segmental profit and loss, which consists of sales and operating revenues less operating expenses. Segmental income or loss is determined using the accounting principles in the segment’s country of domicile. NCJ, NSNK, NCPL, NTSC, NCEL,NSRV’s operating income or loss is determined using Japanese GAAP, NET applies Thai accounting principles, NCC and NCD apply Chinese accounting principles, NCS applies Singaporean accounting principles, NCH applies Hong Kong accounting principles, NCF applies Philippine accounting principles, NTMC mainly applies Japanese GAAP, and NMA applies mainly International Financial Reporting Standards (IFRS). Therefore NIDEC’s segmental data has not been prepared under U.S. GAAP on a basis that is consistent with the consolidated financial statements or on any other single basis that is consistent between segments. While there are several differences betw een U.S. GAAP and the underlying accounting bases used by management, the principal differences that affect segmental operating profit or loss are accounting for pension and severance costs, and leases. Management believes that the monthly segmental information is available on a timely basis and that it is sufficiently accurate at the segment income or loss level for management’s purposes.
51
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The following tables show revenue from external customers and other financial information by operating segment for the three and nine months ended December 31, 2008 and 2009, respectively:
Business segment
Yen in millions | U.S. dollars in thousands | ||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
Net sales to external customers: | |||
NCJ | ¥13,291 | ¥18,144 | $197,003 |
NET | 15,869 | 22,573 | 245,092 |
NCC | 4,048 | 6,102 | 66,254 |
NCD | 1,330 | 1,502 | 16,309 |
NCS | 5,334 | 6,501 | 70,586 |
NCH | 9,458 | 12,718 | 138,089 |
NCF | 1,846 | 3,564 | 38,697 |
NSNK | 14,322 | 8,710 | 94,571 |
NCPL | 12,244 | 12,365 | 134,256 |
NTSC | 5,163 | 6,741 | 73,192 |
NCEL | 4,972 | 4,696 | 50,988 |
NSRV | 4,350 | 3,609 | 39,186 |
NTMC | 9,104 | 8,858 | 96,178 |
NMA | 6,437 | 8,351 | 90,673 |
All Others | 28,480 | 26,350 | 286,103 |
Total | 136,248 | 150,784 | 1,637,177 |
Adjustments*1 | 4,554 | 1,607 | 17,448 |
Consolidated total | ¥140,802 | ¥152,391 | $1,654,625 |
*1 The revenues of subsidiaries not included in management reports due to their immateriality are main components of Adjustments.
52
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Business segment
Yen in millions | U.S. dollars in thousands | ||
For the nine months ended December 31 | |||
2008 | 2009 | 2009 | |
Net sales to external customers: | |||
NCJ | ¥49,745 | ¥48,318 | $524,625 |
NET | 65,672 | 65,386 | 709,946 |
NCC | 14,996 | 17,350 | 188,382 |
NCD | 6,316 | 4,991 | 54,191 |
NCS | 22,826 | 19,131 | 207,720 |
NCH | 30,988 | 36,305 | 394,191 |
NCF | 6,414 | 8,212 | 89,164 |
NSNK | 41,480 | 23,228 | 252,204 |
NCPL | 45,050 | 32,380 | 351,574 |
NTSC | 16,950 | 16,346 | 177,481 |
NCEL | 15,550 | 12,298 | 133,529 |
NSRV | 16,525 | 10,985 | 119,273 |
NTMC | 33,636 | 25,053 | 272,020 |
NMA | 28,959 | 22,591 | 245,288 |
All Others | 98,766 | 74,699 | 811,063 |
Total | 493,873 | 417,273 | 4,530,651 |
Adjustments*1 | 10,205 | 3,861 | 41,922 |
Consolidated total | ¥504,078 | ¥421,134 | $4,572,573 |
*1 The revenues of subsidiaries not included in management reports due to their immateriality are the main components of Adjustments.
53
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
Net sales to other operating segments: | |||
NCJ | ¥16,488 | ¥20,207 | $219,403 |
NET | 7,985 | 11,430 | 124,104 |
NCC | 458 | 803 | 8,719 |
NCD | 5,306 | 6,658 | 72,291 |
NCS | 53 | 113 | 1,227 |
NCH | 1,414 | 789 | 8,567 |
NCF | 4,363 | 5,642 | 61,259 |
NSNK | 2,795 | 2,875 | 31,216 |
NCPL | 2,105 | 1,228 | 13,333 |
NTSC | 33 | 41 | 445 |
NCEL | 1,416 | 1,324 | 14,376 |
NSRV | 763 | 1,449 | 15,733 |
NTMC | 212 | 221 | 2,400 |
NMA | 1,922 | 2,425 | 26,330 |
All Others | 38,700 | 48,770 | 529,532 |
Total | 84,013 | 103,975 | 1,128,935 |
Intersegment elimination | ¥(84,013) | ¥(103,975) | $(1,128,935) |
Consolidated total | - | - | - |
54
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||
For the nine months ended December 31 | |||
2008 | 2009 | 2009 | |
Net sales to other operating segments: | |||
NCJ | ¥61,057 | ¥56,985 | $618,730 |
NET | 24,542 | 30,196 | 327,861 |
NCC | 1,811 | 2,480 | 26,927 |
NCD | 23,800 | 18,303 | 198,730 |
NCS | 156 | 266 | 2,888 |
NCH | 4,565 | 3,393 | 36,840 |
NCF | 19,335 | 17,227 | 187,047 |
NSNK | 9,159 | 7,980 | 86,645 |
NCPL | 5,930 | 3,052 | 33,138 |
NTSC | 173 | 114 | 1,238 |
NCEL | 4,746 | 3,370 | 36,591 |
NSRV | 3,157 | 3,491 | 37,904 |
NTMC | 660 | 613 | 6,656 |
NMA | 6,328 | 6,699 | 72,736 |
All Others | 139,886 | 129,849 | 1,409,870 |
Total | 305,305 | 284,018 | 3,083,801 |
Intersegment elimination | ¥(305,305) | ¥(284,018) | $(3,083,801) |
Consolidated total | - | - | - |
55
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||
For the three months ended December 31 | |||
2008 | 2009 | 2009 | |
Operating income or loss: | |||
NCJ | ¥468 | ¥2,648 | $28,751 |
NET | 3,948 | 6,547 | 71,086 |
NCC | (211) | 653 | 7,090 |
NCD | 553 | 1,353 | 14,691 |
NCS | 55 | 68 | 738 |
NCH | 140 | 169 | 1,835 |
NCF | 485 | 2,094 | 22,736 |
NSNK | 1,004 | 989 | 10,738 |
NCPL | 307 | 492 | 5,342 |
NTSC | 42 | 403 | 4,376 |
NCEL | 480 | 539 | 5,852 |
NSRV | (325) | 206 | 2,237 |
NTMC | (4) | 621 | 6,743 |
NMA | (444) | 159 | 1,726 |
All Others | 3,030 | 6,969 | 75,668 |
Total | 9,528 | 23,910 | 259,609 |
U.S. GAAP adjustments to accrue pension and severance costs | (3) | 90 | 977 |
Consolidation adjustments mainly related to elimination of intercompany profits | 992 | (508) | (5,516) |
Reclassification *1 | (21) | (131) | (1,422) |
Others *2 | (396) | 155 | 1,683 |
Consolidated total | ¥10,100 | ¥23,516 | $255,331 |
*1 Some items are reclassified from other expenses (income) and included in operating expenses (income). Reclassification mainly includes gain (loss) from sales (or disposal) of fixed assets.
*2 Others mainly includes profit or loss of subsidiaries not included in management reports due to their immateriality.
56
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Yen in millions | U.S. dollars in thousands | ||
For the nine months ended December 31 | |||
2008 | 2009 | 2009 | |
Operating income or loss: | |||
NCJ | ¥6,847 | ¥5,865 | $63,681 |
NET | 13,006 | 16,670 | 180,999 |
NCC | 33 | 1,292 | 14,028 |
NCD | 2,652 | 3,432 | 37,264 |
NCS | 189 | 174 | 1,889 |
NCH | 490 | 452 | 4,908 |
NCF | 2,277 | 4,707 | 51,107 |
NSNK | 4,128 | 1,220 | 13,246 |
NCPL | 2,263 | 729 | 7,915 |
NTSC | 933 | 1,043 | 11,325 |
NCEL | 1,963 | 1,000 | 10,858 |
NSRV | (617) | 255 | 2,769 |
NTMC | 1,354 | 993 | 10,782 |
NMA | 195 | 11 | 119 |
All Others | 14,397 | 14,354 | 155,853 |
Total | 50,110 | 52,197 | 566,743 |
U.S. GAAP adjustments to accrue pension and severance costs | (14) | 270 | 2,932 |
Consolidation adjustments mainly related to elimination of intercompany profits | 878 | (490) | (5,320) |
Reclassification *1 | (19) | (676) | (7,340) |
Others *2 | (77) | 536 | 5,819 |
Consolidated total | ¥50,878 | ¥51,837 | $562,834 |
*1 Some items are reclassified from other expenses (income) and included in operating expenses (income). Reclassification mainly includes gain (loss) from sales (or disposal) of fixed assets.
*2 Others mainly includes profit or loss of subsidiaries not included in management reports due to their immateriality.
57
NIDEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
14. Subsequent events
NIDEC has performed an evaluation of subsequent events through February 15, 2010, the date that the financial statements were issued in Japan.
Acquisition of household motor business of ACC
On January 26, 2010, NIDEC's consolidated subsidiary, Nidec Techno Motor Holdings Corporation ("NTMC") completed the acquisition of the household motor business of Appliances Components Companies S.p.A. (“ACC”) based in Italy.
(Name of the new subsidiaries)
1) NIDEC SOLE MOTOR CORPORATION S.R.L. (“NSMC”), in Italy
2) NIDEC SOLE MOTOR HUNGARY K.F.T. (“NSMH”), in Hungary
(Share ownership structure)
NSMC in Italy has become a wholly-owned subsidiary of NTMC and owns all of the ownership of NSMH.
(Purpose of Transaction)
NTMC plans to bring NSMC under its umbrella alongside its subsidiary Nidec Shibaura Corporation's household motor business in order to leverage NSMC' strong market position and customer relationships in Europe. Amid heightening global awareness of environmental issues, NIDEC expects that the introduction of its carbon emission reducing brushless motor technology to NSMC will make possible development of environmentally friendly, next generation products that will meet the needs of various European customers.
(Business Description)
Manufacturing, development and sales of household motor for washing machine, dryer and dish washer
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