FY2005 Interim Consolidated Financial Results
(Prepared in accordance with U.S. GAAP)
(Six months ended September 30, 2005)
October 26, 2005
Company name : Advantest Corporation
(URL http://www.advantest.co.jp/investors/)
Stock exchanges on which shares are listed : Tokyo Stock Exchange
Stock code number : 6857
Location of head office : Tokyo Prefecture
Company representative : Toshio Maruyama, Representative Board Director, President and CEO
Contact person : Hiroshi Nakamura, Manager, Accounting Department
(03) 3214-7500
Date of Board of meeting to approve the interim
financial results : October 26, 2005
Adoption of U.S. GAAP : Yes
1. Consolidated Results of FY2005 Interim (April 1, 2005 through September 30, 2005)
(1) Consolidated Financial Results
- --------------------------------------------------------------------------------------------------------------------------
Net sales Operating income Income before income taxes
- --------------------------------------------------------------------------------------------------------------------------
Million yen Million yen Million yen
FY2005 interim 107,099 (26.9%) 22,660 (49.3%) 24,502 (46.8%)
FY2004 interim 146,589 135.3% 44,661 10.1 times 46,085 12.4 times
- --------------------------------------------------------------------------------------------------------------------------
FY2004 239,439 60,719 61,808
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Net income Net income per share (basic) Net income per share
(diluted)
- --------------------------------------------------------------------------------------------------------------------------
Million yen Yen Yen
FY2005 interim 14,614 (47.5%) 158.06 157.51
FY2004 interim 27,814 11.3 times 282.96 282.37
- --------------------------------------------------------------------------------------------------------------------------
FY2004 38,078 389.54 388.51
- --------------------------------------------------------------------------------------------------------------------------
Note 1: There were no investments in affiliates that have been accounted for
under the equity method in FY2005 interim, FY2004 interim and FY2004,
respectively.
Note 2: Average number of shares outstanding on a consolidated basis was
92,458,229 shares during FY2005 interim, 98,295,932 shares during FY2004
interim and 97,750,345 shares during FY2004, respectively.
Note 3: No change in accounting policies during FY 2005 interim.
Note 4: The percentages shown in the above items including net sales and
operating income are changes in comparison to the corresponding period
of the previous fiscal year. The multiples shown for operating income,
income before income taxes and net income are changes in comparison to
the corresponding period of the previous fiscal year.
(2) Consolidated Financial Position
- --------------------------------------------------------------------------------------------------------------------------
Total assets Stockholders' equity Equity-to-assets ratio Stockholders' equity
per share
- --------------------------------------------------------------------------------------------------------------------------
Million yen Million yen % Yen
FY2005 interim 320,069 222,602 69.5 2,405.62
FY2004 interim 349,951 249,928 71.4 2,542.41
- --------------------------------------------------------------------------------------------------------------------------
FY2004 296,769 206,749 69.7 2,236.97
- --------------------------------------------------------------------------------------------------------------------------
Note: Outstanding number of shares on a consolidated basis at the end of each
period was 92,534,082 in FY2005 interim, 98,303,393 in FY2004 interim
and 92,423,615 shares in FY2004, respectively.
(3) Consolidated Cash Flows
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from Cash flows from Cash flows from Cash and cash
operating activities investing activities financing activities equivalents at end of
period
- --------------------------------------------------------------------------------------------------------------------------
Million yen Million yen Million yen Million yen
FY2005 interim 16,798 (2,818) (1,531) 135,226
FY2004 interim 44,545 (5,308) (2,255) 139,911
- --------------------------------------------------------------------------------------------------------------------------
FY2004 90,327 (8,250) (63,036) 120,986
- --------------------------------------------------------------------------------------------------------------------------
- 1 -
(4) Scope of Consolidation and Equity Method
Number of consolidated subsidiaries: 40 companies
Number of unconsolidated subsidiaries: none
Number of affiliates accounted for under the equity method: none
(5) Changes in Scope of Consolidation and Equity Method
Consolidated subsidiaries
(Newly included) 1 company
(Excluded) none
Affiliates accounted for under the equity method
(Newly included) none
(Excluded) none
2. Projected Results for FY2005 (April 1, 2005 through March 31, 2006)
- --------------------------------------------------------------------------------
Net sales Income before Net income
income taxes
- --------------------------------------------------------------------------------
Million yen Million yen Million yen
FY2005 240,000 61,000 37,000
- --------------------------------------------------------------------------------
(Reference) Projected net income per share for the fiscal year: (Y)399.85
Figures presented in this Earning Digest have been rounded to the nearest
million yen.
For a discussion of the assumptions and other factors upon which these
projections are based, please refer to "Prospects for the Fiscal Year" appearing
elsewhere in the document.
Cautionary Statement with Respect to Forward-Looking Statements
This document contains "forward-looking statements" that are based on
Advantest's current expectations, estimates and projections. These
forward-looking statements are subject to known and unknown risks, uncertainties
and other factors that may cause Advantest's actual results, levels of activity,
performance or achievements to be materially different from those expressed or
implied by such forward-looking statements. These factors include: (i) changes
in demand for the products and services produced and offered by Advantest's
customers, including semiconductors, communications services and electronic
goods; (ii) circumstances relating to Advantest's investment in technology,
including its ability to timely develop products that meet the changing needs of
semiconductor manufacturers and communications network equipment and components
makers and service providers; (iii) significant changes in the competitive
environment in the major markets where Advantest purchases materials, components
and supplies for the production of its products or where its products are
produced, distributed or sold; and (iv) changes in economic conditions, currency
exchange rates or political stability in the major markets where Advantest
procures materials, components and supplies for the production of its principal
products or where its products are produced, distributed or sold. A discussion
of these and other factors which may affect Advantest's actual results, levels
of activity, performance or achievements is contained in the "Operating and
Financial Review and Prospects", "Key Information - Risk Factors" and
"Information on the Company" sections and elsewhere in Advantest's annual report
on Form 20-F, which is on file with the United States Securities and Exchange
Commission.
- 2 -
Advantest Corporation - Consolidated (FY 2005 Interim)
1. Management Policy
Advantest's Basic Management Policy
- -----------------------------------
Advantest believes that its philosophy of management is to support
leading-edge technology at its forefront. Its basic management policy consists
of the following elements: increasing corporate value, improving shareholder and
customer satisfaction and achieving excellence.
Business Strategy
- -----------------
While maintaining "Measurements" as our core competence, Advantest
intends to improve its corporate value by establishing an operation and finance
structure that responds timely to changes in the global market, and also aims to
increase market share by introducing fine products that will inspire the market
demands of the next generation. To achieve these objectives, Advantest is driven
to further strengthen its product development operations and improve production
efficiency by selectively focusing on certain businesses, while strengthening
its overseas operations and support system in the U.S., Europe and Asia.
Further, Advantest seeks to increase the level of customer satisfaction
by maximizing the functions of our test systems by providing them with a
solution for businesses to improve business efficiency.
On October 1, 2005, Advantest launched a company-wide initiative called
"Activate 21". Not only does this initiative, which is set to end with FY2008,
continue with the improvements and reforms initiated with "Initiative 21", which
ended with the previous fiscal year, but also implements reforms that emphasizes
cost and efficiency from a global perspective.
Target Financial Index
- ----------------------
Advantest applies the "AVA" (Advantest Value Added), a financial index
incorporating the concept of EVA(R) (Economic Value Added) *(1), as a
significant performance indicator, along with profit margin, ROE and cash flows,
to measure its business performance. Specifically, Advantest will continue to
set the minimum return-on-investment ratio ("hurdle rate") for evaluating AVA at
8% and a mid-term target at 12% with an aim to increase corporate value and
shareholder value.
*(1)"EVA(R)" is a registered trademark of Stern Stewart & Co.
Basic Policy on Distribution of Profits
- ---------------------------------------
Advantest believes that shareholder value is premised on the
realization of long-term and continued growth in corporate value.
With respect to the distribution of profits, Advantest has adopted a
policy of maintaining consistent dividend payouts after taking into
consideration of business performance and financial condition.
Retained profits are research and development, streamlining efforts,
overseas expansion and investing in new businesses to enable the strengthening
of its business position and creation of corporate value.
Advantest's Views and Policies on Lowering its Investment Unit
- --------------------------------------------------------------
- 3 -
As part of its capital policy, Advantest has long recognized the
importance of increasing the market liquidity of its shares, promoting long-term
and stable holding of its shares among investors and expanding its investor
base. Back in August 1995, the company reduced the minimum investment unit for
its shares from 1,000 to 100 shares.
As Advantest considers the current liquidity level of its shares to be
sufficient and expects any further reduction of investment unit to require
significant costs, it is cautious about implementing any further reductions and
will do so only after careful consideration of prevailing market conditions,
business performance, share prices and other factors.
Advantest's Basic View on Corporate Governance; Status of Implementation of
- ---------------------------------------------------------------------------
Corporate Governance
- --------------------
[Advantest's Basic View on Corporate Governance]
Advantest intends to strengthen its global competitiveness by enhancing
information disclosure to all stakeholders, including its investors
(shareholders) and customers.
[Status of Implementation of Corporate Governance]
(1) Functions of the Company's Organization
In order to ensure timely response to rapid changes in the business
environment and to strengthen corporate governance, Advantest implemented the
executive officer's structure and separates its decision-making functions and
operational function.
As the decision making body of the operation, the board of directors
set the group's business policies and purpose, monitor and manage the operation
of business, and delegate significant authority for executing operations
speedily and efficiently.
Advantest adopts a Board of Corporate Auditors system, and the Board of
Corporate Auditors is comprised of 4 auditors (of which 2 are external
auditors). Each auditor, based on the policies and plans adopted by the Board of
Corporate Auditors, audit the board's fulfillment of its duties by attending
significant meetings such as the Board of Directors meeting and investigating
the company's business and finance.
(2) Status of the Internal Controls System, Risk Management System and
Corporate Audit
In order to strengthen the corporate structure for Corporate Social
Responsibility, Advantest has implemented the "CSR (Corporate Social
Responsibility) Committee" and placed under it the "Disclosure Committee",
"Internal Controls Committee", "Environmental Policy Supervisory Committee",
"Information Security Committee", "Human Rights Committee", "Human Resource
Complaints Processing Committee", and "Behavior Norms Committee" that are
expanding its activities. In particular, the "Internal Controls Committee" that
was implemented in order to strengthen the Internal Controls process and risk
management structure is taking measures to establish the three objectives of
internal controls that are "Reliability of Financial Reports", "Compliance with
the Law" and "Business Effectiveness and Efficiency". Also, the Auditing Group
with an internal audit responsibility monitors the internal controls procedures
and its application on a daily basis and identifies comments and advises
improvement as part of operational audit. Furthermore, the Auditing Group, Board
of Corporate Auditors and outside audit firm coordinate amongst each other,
exchange information regarding audit schedule, audit status and internal
controls, and conduct meetings periodically and whenever necessary.
- 4 -
Advantest's basic principle is to conduct business with high ethical
standards, integrity and social justice. As such, Advantest has developed the
"Advantest Behavior Norms" and in the "Code of Ethics for Officers", Advantest
clarified that the officers will act with integrity and ethically. In April
2005, in response to applicable regulations and to achieve a higher level of
consciousness about ethical value, the "Advantest Behavior of Norms" was
revised, and the "Corporate Ethics Helpline" was established to handle comments,
reports and to advise regarding accounting, internal controls, and audit. Also
the "Behavior Norms Committee" was established to strengthen compliance.
Matters Relating to Parent Companies
- ------------------------------------
Advantest does not have a parent company as of the end of this interim
period.
2. Business Results and Financial Condition
(1) Business Results
Interim Fiscal Period Results
- -----------------------------
During this interim fiscal period, although inventory control in the IT
related industries continued during the first half of this interim period,
Advantest's operating environment was favorable, as stimulated by the strong
demand for consumer digital products and personal computers, particularly
notebooks computers, and due to the trend towards recovery in capital
expenditures by the semiconductor industry. In particular, the increased demand
for portable audio players worldwide and the spread of flat screen television
led to an increase in semiconductor sale. In addition, the trend towards a
weaker yen in currency exchange was a positive factor.
Under this environment, Advantest made concentrated efforts to increase
orders input received and expand sales through the timely introduction of new
products that meet customers' demands. Advantest continued to make efforts to
improve productivity and profitability through reorganization of its
manufacturing operations, as well as by implementing measures to further reduce
lead-time and to reduce costs.
As a result of the above, as compared to the corresponding interim
period of the previous fiscal year, during which Advantest achieved the highest
net sales of any interim period, orders input received decreased by 2.9% to
(Y)121.6 billion, net sales decreased by 26.9% to (Y)107.1 billion, net income
before income taxes decreased by 46.8% to (Y)24.5 billion, and interim net
income decreased by 47.5% to (Y)14.6 billion. As compared to the second half of
the previous fiscal year, however, Advantest returned to an increase in profit
and an increase in income as orders input received increased by 18.9%, net sales
increased by 15.3%, net income before income taxes increased by 55.8%, and
interim net income increased by 42.4% indicating a recovery trend. Overseas
sales as a percentage of total sales were 67.7%, as compared with 74.3% in the
corresponding interim period of the previous fiscal year.
Condition of Business by Segment
(Semiconductor and Component Test System Segment)
In this segment, as inventory adjustment by IT related industries
approached completion, and demand for new test systems increased as a result of
increased production of semiconductors.
- 5 -
In the memory test system market, due to increased production of NAND
type flash memory used in products such as portable audio players, sales in
flash memory test systems remained strong domestically and overseas. With
respect to DRAM test systems, sales remained strong due to respective sales in
high-speed memory semiconductor test system for DDR2, a high-speed,
high-efficiency and memory test systems for DRAM for consumer digital products
in certain geographic areas.
In the market of non-memory semiconductor test system, stimulated by
strong sales in personal computers, sales of the T2000, a test system compatible
with OPENSTAR(R)*(2), was very strong. In addition, sales in SoC semiconductor
test system for game devices and devices used in consumer digital products and
sales of test systems for LCD driver IC remained positive domestically and in
Taiwan. With respect to other test systems, sales of test systems for CCD, used
in digital cameras, and the test systems for semiconductors related to
automobiles remained steady.
As a result of the above, orders input received was (Y)93.7 billion
(2.5% decrease in comparison to the corresponding interim period of the previous
fiscal year), sales was (Y)80.8 billion (28.6% decrease) and operating income
was (Y)21.0 billion (44.4% decrease).
(Mechatronics System Segment)
Stimulated by the positive sales of the T2000 and non-memory test
systems for digital consumer products, sales in non-memory semiconductor test
handlers remained steady. Sales of memory test handlers was weaker due to a lag
in the sales of DRAM test systems. On the other hand, sales of device interface
products was steady, due to the increased demand for flash memory semiconductor
and semiconductor for SoC.
As a result, orders input received was (Y)21.7 billion (12.1% decrease
in comparison with the corresponding interim period of the previous fiscal
year), sales was (Y)20.5 billion (27.1% decrease) and operating income was
(Y)4.6 billion (53.9% decrease).
(Services, Support and Others Segment)
In this segment, orders input received was (Y)9.1 billion (9.7%
decrease in comparison with the corresponding interim period of the previous
fiscal year), sales was (Y)8.5 billion (21.5% decrease) and operating income
was (Y)1.9 billion (154.9% increase).
*(2)OPENSTAR(R): The name of an open architecture standard published by the
STC (Semiconductor Testing Consortium, Inc.). OPENSTAR(R) is a registered
trademark or a trademark of STC in the United States, Japan and other
countries.
Distribution of Profits
As described above, sales in this interim fiscal period indicate a
trend towards recovery. Due to potential uncertainties affecting its operating
environment, however, Advantest decided, based on its profit distribution policy
described above to distribute an interim dividend of (Y)25 per share.
Prospects for the Fiscal Year
- -----------------------------
- 6 -
Regarding its operating environment in the upcoming fiscal year,
Advantest expects to see expanded volume and application of flash memory used
for digital cameras or portable audio players, and a continuing increase in the
demand for non-memory semiconductors for consumer digital products. With respect
to DRAM, Advantest expects a rapid shift to DDR2 for servers and high-tech
personal computers. Furthermore, continued active capital expenditures relating
to 300mm wafers by the semiconductor manufactures and foundries are expected.
On the other hand, restrained capital expenditures as a result of poor
supply and demand balance, an issue unique to the semiconductor market,
increased prices of raw materials such as oil, currency risk attributable to a
strong yen, and strengthened downward pressure on prices as a result of the
above-mentioned factors may affect our results.
In order to respond to these conditions, Advantest plans to continue
its efforts to increase orders input received and expand sales through the
timely introduction of new products that meets customers' needs by strengthening
marketing and development structure. To further strengthen its cost
competitiveness, Advantest will make continued efforts to improve profitability
by reviewing its operational process company wide and improving manufacturing
efficiency.
As a result of the above, Advantest's current estimates for the full
year are as follows:
(Consolidated) (million yen)
- ---------------------------------------------------------------------------------------------------------------
Net Sales Income before income Net Income
taxes
- ---------------------------------------------------------------------------------------------------------------
Previous forecast (A) 240,000 60,000 37,000
(as of April 26, 2005)
- ---------------------------------------------------------------------------------------------------------------
Revised forecast (B) 240,000 61,000 37,000
- ---------------------------------------------------------------------------------------------------------------
Increase / decrease (B-A) 0 1,000 0
- ---------------------------------------------------------------------------------------------------------------
(Non-Consolidated)(Parent Company only) (million yen)
- ---------------------------------------------------------------------------------------------------------------
Net Sales Ordinary income Net Income
- ---------------------------------------------------------------------------------------------------------------
Previous forecast (A) 205,000 44,000 28,000
(as of April 26, 2005)
- ---------------------------------------------------------------------------------------------------------------
Revised forecast (B) 210,000 48,000 31,000
- ---------------------------------------------------------------------------------------------------------------
Increase / decrease (B-A) 5,000 4,000 3,000
- ---------------------------------------------------------------------------------------------------------------
Profit Distribution Forecast
Based on the prospects for the upcoming fiscal year and the profit
distribution policy described above, Advantest expects to distribute an interim
dividend of (Y)25 per share (or (Y)50 per share for the fiscal year including
an interim dividend of (Y)25 per share), as originally forecasted.
(2) Financial Condition
Cash and cash equivalents held at September 30, 2005 were (Y)135.2
billion, an increase of (Y)14.2 billion from March 31, 2005. Significant cash
flows during this interim fiscal period and their causes are described below.
Net cash provided by operating activities was an inflow of (Y)16.8
billion. This amount was primarily attributable to net income of (Y)14.6
billion.
Net cash used in investing activities were an outflow of (Y)2.8
billion. This amount was primarily attributable to capital expenditures of
(Y)4.0 billion, purchase of investment securities of (Y)1.9 billion and
proceeds from sale of investment securities of (Y)3.0 billion.
Net cash used in financing activities was an outflow of (Y)1.5
billion. This amount was primarily attributable to the payment of dividends
((Y)2.3 billion) and proceeds from sale of treasury stock of (Y)0.8 billion.
- 7 -
Advantest Corporation - Consolidated (FY2005 Interim)
Interim Consolidated Financial Statements and other information
Interim Consolidated Balance Sheets
- --------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Summarized balance
sheet of FY2004
(As of September 30, 2004) (As of September 30, 2005) (As of March 31, 2005)
- --------------------------------------------------------------------------------------------------------------------------
Amount Amount Amount
(in Percentage (in Percentage (in Percentage
million (%) million (%) million (%)
Notes yen) yen) yen)
- --------------------------------------------------------------------------------------------------------------------------
(Assets)
Cash and cash equivalents 139,911 135,226 120,986
Trade accounts receivable, less *1 86,222 59,038 56,702
allowance for doubtful accounts
Inventories 32,687 34,471 29,585
Deferred tax assets 12,411 15,329 13,673
Other current assets 2,504 4,156 2,985
------------ ------------ ------------
Total current assets 273,735 78.2 248,220 77.6 223,931 75.5
Investment securities Note 4 6,882 2.0 7,687 2.4 7,772 2.6
Property, plant and equipment, net *2 *3 51,938 14.8 51,423 16.1 51,364 17.3
Deferred tax assets 11,781 3.4 7,629 2.4 8,438 2.9
Intangible assets, at cost, less 3,334 1.0 2,930 0.9 3,090 1.0
accumulated amortization
Other assets 2,281 0.6 2,180 0.6 2,174 0.7
------------ ------------ ------------
Total assets 349,951 100.0 320,069 100.0 296,769 100.0
------------ ------------ ------------
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- 8 -
Advantest Corporation - Consolidated (FY2005 Interim)
- --------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Summarized balance
sheet of FY2004
(As of September 30, 2004) (As of September 30, 2005) (As of March 31, 2005)
- --------------------------------------------------------------------------------------------------------------------------
Amount Amount Amount
(in Percentage (in Percentage (in Percentage
million (%) million (%) million (%)
Notes yen) yen) yen)
- --------------------------------------------------------------------------------------------------------------------------
(Liabilities)
Current portion of long-term *3 4,543 20,047 20,043
debt
Trade accounts payable 24,985 29,577 23,196
Income taxes payable 5,025 9,110 7,278
Accrued expenses 8,809 11,039 13,865
Accrued warranty expenses 4,746 4,180 4,090
Deferred revenue 4,252 4,654 2,220
Other current liabilities 5,109 2,923 3,302
------------ ------------ -------------
Total current liabilities 57,469 16.4 81,530 25.5 73,994 24.9
Long-term debt, excluding current *3 20,062 5.7 15 0.0 40 0.0
portion
Accrued pension and severance cost 18,866 5.4 12,361 3.9 12,605 4.3
Other liabilities 3,512 1.1 3,561 1.1 3,381 1.1
------------ ------------ -------------
Total liabilities 99,909 28.6 97,467 30.5 90,020 30.3
------------ ------------ -------------
(Minority interests)
Minority interests 114 0.0 - - - -
(Stockholders' equity)
Common stock 32,363 9.3 32,363 10.1 32,363 10.9
Capital surplus Note 3 33,732 9.6 36,018 11.3 35,263 11.9
Retained earnings Note 3 202,661 57.9 222,213 69.4 210,121 70.8
Accumulated other comprehensive *4 (6,157) (1.8) (2,865) (0.9) (4,878) (1.6)
income (loss)
Treasury stock (12,671) (3.6) (65,127) (20.4) (66,120) (22.3)
------------ ------------ -------------
Total stockholders' equity 249,928 71.4 222,602 69.5 206,749 69.7
------------ -------------
Total liabilities and 349,951 100.0 320,069 100.0 296,769 100.0
stockholders' equity
------------ ------------ -------------
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- 9 -
Advantest Corporation - Consolidated (FY2005 Interim)
(Notes)
- -----------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim FY2004
(As of September 30, 2004) (As of September 30, 2005) (As of March 31, 2005)
- -----------------------------------------------------------------------------------------------------------------------------
Amount Amount Amount
(in million yen) (in million yen) (in million yen)
- -----------------------------------------------------------------------------------------------------------------------------
*1. Allowance for doubtful accounts 2,472 2,164 2,174
- -----------------------------------------------------------------------------------------------------------------------------
*2. Accumulated depreciation on property, 66,602 71,264 67,914
plant and equipment
- -----------------------------------------------------------------------------------------------------------------------------
*3. Collateralized assets and secured obligations
Property, plant and equipment 398 388 393
Obligations secured by the above 31 17 24
- -----------------------------------------------------------------------------------------------------------------------------
*4. Accumulated other comprehensive income (loss)
Foreign currency translation (5,720) (4,393) (6,452)
adjustments
Net unrealized gains (loss) on 746 1,528 1,574
available-for-sale securities
Minimum pension liability adjustments (1,183) - -
- -----------------------------------------------------------------------------------------------------------------------------
5. Net assets per share (in yen) 2,542.41 2,405.62 2,236.97
- -----------------------------------------------------------------------------------------------------------------------------
- 10 -
Advantest Corporation - Consolidated (FY2005 Interim)
Interim Consolidated Statements of Income
- ----------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Summarized statement of
income of FY2004
(April 1, 2004 through (April 1, 2005 through (April 1, 2004 through
September 30, 2004) September 30, 2005) March 31, 2005)
- ----------------------------------------------------------------------------------------------------------------------------
Notes Amount Percentage Amount Percentage Amount Percentage
(in million yen) (%) (in million yen) (%) (in million yen) (%)
- ----------------------------------------------------------------------------------------------------------------------------
Net sales 146,589 100.0 107,099 100.0 239,439 100.0
Cost of sales 68,238 46.6 51,714 48.3 115,994 48.4
--------- --------- ---------
Gross profit 78,351 53.4 55,385 51.7 123,445 51.6
Research and development 12,087 8.2 12,877 12.0 26,280 11.0
expenses
Selling, general and Note 3 21,603 14.8 19,848 18.5 36,446 15.2
administrative expenses
--------- --------- ---------
Operating income (loss) Note 3 44,661 30.4 22,660 21.2 60,719 25.4
Other income (expense):
Interest and dividend 212 715 597
income
Interest expense (225) (205) (441)
Minority interests (loss) (85) - (84)
Other 1,522 1,424 1.0 1,332 1,842 1.7 1,017 1,089 0.4
---------------- ---------------- ----------------
Income (loss) before income
taxes Note 3 46,085 31.4 24,502 22.9 61,808 25.8
Income Taxes 18,271 12.4 9,888 9.3 23,730 9.9
--------- --------- ---------
Net income (loss) Note 3 27,814 19.0 14,614 13.6 38,078 15.9
--------- --------- ---------
- ----------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim FY2004
(April 1, 2004 through (April 1, 2005 through (April 1, 2004 through
September 30, 2004) September 30, 2005) March 31, 2005)
- ------------------------------------------------------------------------------------------------------------------------
Notes Amount Amount Amount
(in yen) (in yen) (in yen)
- ------------------------------------------------------------------------------------------------------------------------
Net income per share
Basic Note 3 282.96 158.06 389.54
Diluted Note 3 282.37 157.51 388.51
- ------------------------------------------------------------------------------------------------------------------------
- 11 -
Advantest Corporation - Consolidated (FY2005 Interim)
Interim Consolidated Statements of Stockholders' Equity
- ------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Statement of stockholders'
equity of FY2004
(April 1, 2004 through (April 1, 2005 through (April 1, 2004 through
September 30, 2004) September 30, 2005) March 31, 2005)
- ------------------------------------------------------------------------------------------------------------------------
Amount Amount Amount
Notes (in million yen) (in million yen) (in million yen)
- ------------------------------------------------------------------------------------------------------------------------
Common stock :
Balance at beginning of period 32,363 32,363 32,363
-------------------------------------------------------------------------
Balance at end of period 32,363 32,363 32,363
-------------------------------------------------------------------------
Capital surplus : Note 3
Balance at beginning of period 32,973 35,263 32,973
Stock option compensation expense 759 755 2,290
-------------------------------------------------------------------------
Balance at end of period 33,732 36,018 35,263
-------------------------------------------------------------------------
Retained earnings : Note 3
Balance at beginning of period 177,404 210,121 177,404
Net income (loss) 27,814 14,614 38,078
Cash dividends (2,458) (2,311) (4,915)
Loss on disposal of treasury stock (99) (211) (446)
-------------------------------------------------------------------------
Balance at end of period 202,661 222,213 210,121
-------------------------------------------------------------------------
Accumulated other comprehensive
income (loss) :
Balance at beginning of period (8,061) (4,878) (8,061)
Other comprehensive income 1,904 2,013 3,183
(loss), net of tax
-------------------------------------------------------------------------
Balance at end of period (6,157) (2,865) (4,878)
-------------------------------------------------------------------------
Treasury stock :
Balance at beginning of period (12,911) (66,120) (12,911)
Treasury stock purchased (11) (14) (54,513)
Exercise of stock options 249 1,006 1,302
Treasury stock sold 2 1 2
-------------------------------------------------------------------------
Balance at end of period (12,671) (65,127) (66,120)
-------------------------------------------------------------------------
Total stockholders' equity 249,928 222,602 206,749
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Disclosure of comprehensive Note 3
income (loss):
Net income (loss) 27,814 14,614 38,078
Other comprehensive income (loss), 1,904 2,013 3,183
net of tax
-------------------------------------------------------------------------
Total comprehensive income (loss) 29,718 16,627 41,261
- --------------------------------------------------------------------------------------------------------------------
- 12 -
Advantest Corporation - Consolidated (FY2005 Interim)
Interim Consolidated Statements of Cash Flows
- ----------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Summarized statement of
cash flows of FY2004
(April 1, 2004 through (April 1, 2005 through (April 1, 2004 through
September 30, 2004) September 30, 2005) March 31, 2005)
- ----------------------------------------------------------------------------------------------------------------------------------
Amount Amount Amount
(in million yen) (in million yen) (in million yen)
- ----------------------------------------------------------------------------------------------------------------------------------
I Cash flows from operating activities:
Net income (loss) 27,814 14,614 38,078
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 4,035 3,962 8,285
Deferred income taxes 13,081 (679) 13,540
Stock option compensation expense 759 755 2,290
Decrease (increase) in trade accounts (8,544) (1,826) 20,953
receivable
Decrease (increase) in inventories 17,171 (4,670) 20,218
Increase (decrease) in trade accounts (14,455) 5,805 (16,375)
payable
Increase (decrease) in income taxes payable 1,074 1,792 3,311
Increase (decrease) in accrued expenses (196) (2,864) 4,445
Increase (decrease) in accrued warranty 1,625 50 969
expenses
Increase (decrease) in deferred revenue (514) 2,268 (2,456)
Increase (decrease) in accrued pension and 876 (243) (3,409)
severance cost
Other 1,819 (2,166) 478
------------------------------------------------------------------------------
Net cash provided by operating activities 44,545 16,798 90,327
------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- 13 -
Advantest Corporation - Consolidated (FY2005 Interim)
- ----------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Summarized statement of
cash flows of FY2004
(April 1, 2004 through (April 1, 2005 through (April 1, 2004 through
September 30, 2004) September 30, 2005) March 31, 2005)
- ----------------------------------------------------------------------------------------------------------------------------------
Amount Amount Amount
(in million yen) (in million yen) (in million yen)
- ----------------------------------------------------------------------------------------------------------------------------------
II Cash flows from investing activities:
Proceeds from sale of available-for-sale 634 2,964 1,428
marketable securities
Proceeds from sale of non-marketable 45 - 50
securities
Purchases of non-marketable securities - (1,900) -
Proceeds from sale of property, plant and 31 190 132
equipment
Purchases of intangible assets (204) (238) (470)
Purchases of property, plant and equipment (4,818) (3,776) (8,738)
Other (996) (58) (652)
------------------------------------------------------------------------------
Net cash used in investing activities (5,308) (2,818) (8,250)
------------------------------------------------------------------------------
III Cash flows from financing activities:
Principal payments on long-term debt (21) (21) (4,543)
Proceeds from sale of treasury stock - 796 939
Payments to acquire treasury stock (7) (12) (54,511)
Dividends paid (2,453) (2,307) (4,907)
Other 226 13 (14)
------------------------------------------------------------------------------
Net cash used in financing activities (2,255) (1,531) (63,036)
------------------------------------------------------------------------------
IV Net effect of exchange rate changes on cash 1,783 1,791 799
and cash equivalents
------------------------------------------------------------------------------
V Net change in cash and cash equivalents 38,765 14,240 19,840
VI Cash and cash equivalents at beginning of 101,146 120,986 101,146
period
------------------------------------------------------------------------------
VII Cash and cash equivalents at end of period 139,911 135,226 120,986
- ----------------------------------------------------------------------------------------------------------------------------------
- 14 -
Advantest Corporation - Consolidated (FY2005 Interim)
Organization of the Advantest Group
The following diagram shows the business relationships among the major
affiliated companies of the Advantest Group.
__________________________________________________________________________________________________________________________
=====================================================================================================================
Customers and Distributors
=====================================================================================================================
Sales and Support Companies
------------------------------------------------------------------------------------
Advantest America, Inc. Advantest Taiwan Inc.
Advantest (Europe) GmbH Advantest Korea Co., Ltd.
Advantest (Singapore) Pte. Ltd. Advantest (Suzhou) Co., Ltd.
------------------------------------------------------------------------------------
Development, manufacturing and sales Manufacturing Company Service Companies
companies
------------------------------------ -------------------------- -----------------------------------
Japan Engineering Co., Ltd Advantest Engineering Advantest Customer Support
Advantest Kyushu Systems Co., Ltd (M)Sdn. Bhd. Corporation
Advantest Finance Inc.
Electronic Retrofit Corporation.
Advantest Logistics Co., Ltd.
Advanfacilities Co., Ltd.
Advantest Technical Information
Service Corporation
Advantest Laboratories Co., Ltd.
Advantest Staff Resource
Corporation
Advantest Media Service Corporation
Advantest Information Systems, Inc.
------------------------------------ -------------------------- -----------------------------------
=====================================================================================================================
Advantest Corporation
=====================================================================================================================
Manufacturing Company Manufacturing Companies Research and Development Companies
------------------------------------ -------------------------- ----------------------------------
Advantest Manufacturing, Inc. Advanmechatec Co., Ltd. Advantest Laboratories Co., Ltd.
Advantest DI Corporation Advantest Europe R&D S.A.R.L.
------------------------------------ -------------------------- ----------------------------------
Development companies
- ------------------------------------
Advansoft Development
Corporation
Advantest Tokyo Systems Co., Ltd.
Advantest Tohoku Systems Co., Ltd.
Advantest Kansai Systems Co., Ltd.
Advantest America R&D Center,
Inc.
- ------------------------------------
_____________________________________________________________________________________________________________________
Semi-Conductor and Component Test System Mechatronics System Services, Support and Others
_____________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________
There are 11 other consolidated subsidiaries in addition to those mentioned in
the above diagram. Consolidated subsidiaries (23 domestic; 17 overseas; 40
total)
- ---: Main flow of products and services
- 15 -
Notes to the Interim Consolidated Financial Statements
(Note 1) Accounting Principles, Procedures and the Presentation of the Interim
Consolidated Financial Statements
(a) Terminology, Form and Method of Preparation of the Interim Consolidated
Financial Statements
Advantest prepares these interim consolidated financial statements in
accordance with the accounting principles, procedures, terminology, form
and mode of preparation required in the U.S. in connection with its
issuance of American Depository Shares as established under Accounting
Research Bulletins ("ARB"), Accounting Principles Board ("APB") statements,
Statements of Financial Accounting Standards ("SFAS") and other relevant
sources (collectively "U.S. GAAP"). However, Advantest Corporation and its
consolidated subsidiaries prepare their unconsolidated financial statements
in accordance with accounting principles generally accepted in the country
of their domicile. Certain adjustments and reclassifications have been
incorporated in the accompanying consolidated financial statements to
present them in conformity with accounting principles generally accepted in
the U.S.
(b) The Preparation of Consolidated Financial Statements and Registration with
the U.S. Securities and Exchange Commission
Advantest Corporation began listing on the New York Stock Exchange on
September 17, 2001 (local time) by means of an issuance of American
Depository Shares, and is registered with the U.S. Securities and Exchange
Commission on Form 20-F (equivalent to the Annual Securities Report in
Japan) since FY2001. In connection with the registration on Form 20-F,
Advantest prepares its consolidated financial statements in accordance with
U.S. GAAP.
(c) Scope of Consolidation and Application of the Equity Method
Advantest's interim consolidated financial statements include financial
statements of Advantest Corporation and its majority-owned subsidiaries.
All significant intercompany balances and transactions have been eliminated
in consolidation.
The following table sets forth the number of consolidated subsidiaries and
equity method affiliates of Advantest:
- ---------------------------------------------------------------------------------------------------------------
FY 2005 Interim FY 2004 Increase (decrease)
(As of September 30, 2005) (As of March 31, 2005)
- ---------------------------------------------------------------------------------------------------------------
Domestic 23 22 1
-----------------------------------------------------------------------------------------------
Overseas 17 17 0
-----------------------------------------------------------------------------------------------
Consolidated subsidiaries 40 39 1
- ---------------------------------------------------------------------------------------------------------------
Equity method affiliates - - -
- ---------------------------------------------------------------------------------------------------------------
Total 40 39 1
- ---------------------------------------------------------------------------------------------------------------
Changes in the scope of consolidation:
Newly included (1): Advantest Technology Solutions Corporation *1
*1 Advantest Technology Solutions Corporation was established on July 1, 2005
as a subsidiary to conduct semiconductor design validation system business.
- 16 -
(Note 2) Summary of Significant Accounting Policies and Practices
There was no change in accounting policies and practices.
(Note 3) Restatement of the Interim Consolidated Financial Statements for the
Previous Interim Period
Advantest measures its stock-based compensation cost based on the fair
value method as defined in SFAS No.123 (revised 2004) ("No.123R") Share-Based
Payment, and recognized such cost as an expense in the statements of income.
Advantest has retrospectively applied this accounting method effective April 1,
2004 by using the "modified retrospective" approach prescribed by the said
statement in the fiscal year ended March 2005.
The SFAS No. 123R Share-Based Payment was released after Advantest
filed its interim report. For this reason, until the previous interim
consolidated period, Advantest accounted for its stock-based compensation cost
based on the intrinsic value method prescribed by Accounting Principle Board
Opinion No.25, "Accounting for Stock Issued to Employees" and related
interpretations as allowed under the SFAS No.123 "Accounting for Stock-Based
Compensation". Advantest had not recognized its stock-based compensation cost in
the statements of income for the previous interim fiscal period. As such, in
connection with the retrospective application of the SFAS No.123R Share-Based
Payment effective April 1, 2004, the interim consolidated financial statements
for the previous interim period have been restated.
Due to the restatement made to the interim consolidated financial
statements for the previous interim period, selling, general and administrative
expense increased by (Y)759 million. Operating income, net income before income
taxes and interim net income for the previous decreased by the same amount.
Basic interim net income per share decreased by (Y)7.72, and diluted net income
per share decreased by (Y)7.70. Capital surplus increased and retained earnings
decreased by (Y)759 million in the interim consolidated balance sheet at the end
of the previous interim. Comprehensive income for the previous interim period
decreased by the same amount accordingly. Due to a decrease of (Y)759 million in
interim net income, the interim consolidated cash flow statement for the
previous interim period has been restated as well.
The impacts on the segment information have been discussed in the notes
to the segment information.
A fair value for stock options is calculated based on the Black-Scholes
Option Pricing Model.
Stock-based compensation expenses recognized are (Y)2,290 million in
FY 2004, and (Y)755 million in FY 2005 Interim.
A weighted average fair value per share for stock options that were
granted in FY 2004 Interim and FY 2005 Interim were (Y)2,991 and (Y)2,930,
respectively. These figures were calculated based on the Black-Scholes Option
Pricing Model by using the following weighted average estimates.
FY 2004 Interim FY 2005 Interim
-----------------------------------------------
Expected dividend yield 0.6% 0.5%
Risk free interest rate 0.6% 0.7%
Volatility 56.6% 51.1%
Expected life 4 years 4 years
- 17 -
(Note 4) Investment Securities
Investment securities consist of equity securities. As of September 30,
2004, September 30, 2005 and March 31, 2005, with respect to marketable
securities, aggregate fair value is (Y)4,287 million, (Y)4,344 million and
(Y)6,328 million, cost of (Y)3,177 million, (Y)1,784 million and (Y)3,803
million, gross unrealized gains, which are based on the specific-identification
method, is (Y)1,440 million, (Y)2,560 million and (Y)2,516 million, gross
unrealized losses as of September 30, 2004 is (Y)319 million yen.
For FY 2004 interim, FY 2005 interim and FY 2004, gross realized gains
were (Y)629 million, (Y)934 million and (Y)934 million. Gross realized gains and
losses are principally included in "Other Income (expense)" in the interim
consolidated statements of income and consolidated statements of income, as well
as "other" of cash flows from operating activities in the interim consolidated
statements of cash flows and the consolidated statements of cash flows.
Advantest maintains long-term investment securities, included in
marketable securities and other investments, issued by nonpublic companies,
which are recorded at cost and periodically assess for impairment.
(Note 5) Basic and diluted net income (loss) per share
Basic and diluted net income (loss) per share was computed as follows:
FY 2004 Interim
---------------
Numerator
Net Income 27,814 million yen
Denominator
Basic weighted average shares 98,295,932 shares
Dilutive effect of exercise of stock options
and warrants 206,598 shares
Diluted weighted average shares 98,502,530 shares
FY 2005 Interim
---------------
Numerator
Net Income 14,614 million yen
Denominator
Basic weighted average shares 92,458,229 shares
Dilutive effect of exercise of stock options 320,756 shares
Diluted weighted average shares 92,778,985
shares
FY 2004
-------
Numerator
Net Income 38,078 million yen
Denominator
Basic weighted average shares 97,750,345 shares
Dilutive effect of exercise of stock options
and warrants 260,394 shares
98,010,739 shares
Diluted weighted average shares
- 18 -
At September 30, 2004, September 30, 2005 and March 31, 2005, stock options and
warrants representing, upon exercise, 1,799,500 shares, 7,000 shares and 7,000
shares, respectively, were outstanding but were not included in the computation
for the interim net income per share (diluted) because the foregoing did not
have any dilutive effect.
- 19 -
Advantest Corporation - Consolidated (FY2005 Interim)
(Segment Information)
1. Business Segment Information
- ------------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim FY2004
(April 1, 2004 through (April 1, 2005 through (April 1, 2004 through
September 30, 2004) September 30, 2005) March 31, 2005)
- ------------------------------------------------------------------------------------------------------------------------------------
Amount (in Percentage Amount (in Percentage Amount (in Percentage
million yen) (%) million yen) (%) million yen) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Semiconductor Sales to unaffiliated 107,920 95.4 78,244 96.8 173,938 96.3
and customers
Component
Test Intersegment sales 5,252 4.6 2,588 3.2 6,747 3.7
System
- --------
---------------------------------------------------------------------------------------------------------------------
Net sales 113,172 100.0 80,832 100.0 180,685 100.0
---------------------------------------------------------------------------------------------------------------------------
Operating expenses 75,382 66.6 59,829 74.0 130,061 72.0
---------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 37,790 33.4 21,003 26.0 50,624 28.0
---------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Mechatronics 27,794 98.9 20,320 99.2 45,821 98.8
System Sales to unaffiliated customers
- --------
Intersegment sales 306 1.1 161 0.8 574 1.2
---------------------------------------------------------------------------------------------------------------------
Net sales 28,100 100.0 20,481 100.0 46,395 100.0
---------------------------------------------------------------------------------------------------------------------------
Operating expenses 18,150 64.6 15,890 77.6 32,733 70.6
---------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 9,950 35.4 4,591 22.4 13,662 29.4
---------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Services, Sales to unaffiliated customers 10,875 100.0 8,535 100.0 19,680 100.0
Support
and Intersegment sales - - - - - -
Others
- --------
---------------------------------------------------------------------------------------------------------------------
Net sales 10,875 100.0 8,535 100.0 19,680 100.0
---------------------------------------------------------------------------------------------------------------------------
Operating expenses 10,110 93.0 6,585 77.2 16,278 82.7
---------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 765 7.0 1,950 22.8 3,402 17.3
---------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Elimination Sales to unaffiliated customers - - - - - -
and
Corporate Intersegment sales (5,558) 100.0 (2,749) 100.0 (7,321) 100.0
- --------
---------------------------------------------------------------------------------------------------------------------
Net sales (5,558) 100.0 (2,749) 100.0 (7,321) 100.0
---------------------------------------------------------------------------------------------------------------------------
Operating expenses (2,473) - 1,380 - 675 -
---------------------------------------------------------------------------------------------------------------------------
Operating income (loss) (3,085) - (4,129) - (7,996) -
---------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Consolidated Sales to unaffiliated customers 146,589 100.0 107,099 100.0 239,439 100.0
- --------
Intersegment sales - - - - - -
---------------------------------------------------------------------------------------------------------------------
Net sales 146,589 100.0 107,099 100.0 239,439 100.0
---------------------------------------------------------------------------------------------------------------------------
Operating expenses 101,169 69.0 83,684 78.1 179,747 75.1
---------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 45,420 31.0 23,415 21.9 59,692 24.9
---------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
(Notes)
1. Adjustments to operating income (loss) included in Corporate mainly consist
of research and development expenses for basic research activities, which
are not allocated to corporate general administrative expenses and segment
by business sector.
2. Stock option compensation expense of (Y)759 million and (Y)755 million in
FY2004 interim and FY2005 interim, respectively are not included in
operating income in the business segment information. Operating income in
the business segment information for FY 2004 does not include the temporary
profit of (Y)3,317 million which arose from a return of the substitutional
portion of its Employee's Pension Fund Plans and the stock option
compensation expense of (Y)2,290 million. Therefore these operating income
do not match with the operating income in the consolidated statements of
income and the interim consolidated statements of income. Such exclusion
was made since such items are not included in the performance review of
each business segment by management.
2. Geographic Segment Information (Based on Location of Customers)
Net sales to unaffiliated customers
- ------------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim FY2004
(April 1, 2004 through (April 1, 2005 through (April 1, 2004 through
September 30, 2004) September 30, 2005) March 31, 2005)
- ------------------------------------------------------------------------------------------------------------------------------------
Amount (in Percentage Amount (in Percentage Amount (in Percentage
million yen) (%) million yen) (%) million yen) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Americas 13,494 9.2 11,452 10.7 23,024 9.6
---------------------------------------------------------------------------------------------------------------------------------
Europe 7,557 5.2 7,117 6.6 12,270 5.1
---------------------------------------------------------------------------------------------------------------------------------
Asia 87,869 59.9 53,923 50.4 144,120 60.2
---------------------------------------------------------------------------------------------------------------------------------
Total Overseas 108,920 74.3 72,492 67.7 179,414 74.9
---------------------------------------------------------------------------------------------------------------------------------
Japan 37,669 25.7 34,607 32.3 60,025 25.1
---------------------------------------------------------------------------------------------------------------------------------
Consolidated 146,589 100.0 107,099 100.0 239,439 100.0
- ------------------------------------------------------------------------------------------------------------------------------------
- 20 -
Advantest Corporation - Supplemental Information (FY2005 Interim)
Supplemental Information to the FY2005 Interim Earnings Digest
*All consolidated figures were prepared in accordance with U.S. GAAP.
1. Summary of FY2005 Interim Results (April 1, 2005 through September 30, 2005)
(Consolidated) (Rounded to the nearest million yen)
---------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Percentage change (%) FY2004
=================================================================================================================================
Net sales 146,589 107,099 (26.9) 239,439
---------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 44,661 22,660 (49.3) 60,719
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 46,085 24,502 (46.8) 61,808
---------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 27,814 14,614 (47.5) 38,078
---------------------------------------------------------------------------------------------------------------------------------
Total assets 349,951 320,069 (8.5) 296,769
---------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity 249,928 222,602 (10.9) 206,749
--------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share (basic) (in yen) 282.96 158.06 (44.1) 389.54
---------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share (diluted) (in yen) 282.37 157.51 (44.2) 388.51
---------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity per share (in yen) 2,542.41 2,405.62 (5.4) 2,236.97
---------------------------------------------------------------------------------------------------------------------------------
Net interest expense (13) 510 - 156
---------------------------------------------------------------------------------------------------------------------------------
ROE(%) - - - 17.8
---------------------------------------------------------------------------------------------------------------------------------
(Non-Consolidated) (Parent Company only, Japanese GAAP) (Truncated after the million yen)
---------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Percentage change (%) FY2004
=================================================================================================================================
Net sales 121,065 101,484 (16.2) 203,315
---------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 28,346 21,161 (25.3) 41,910
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 30,185 24,589 (18.5) 43,365
---------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 18,684 16,524 (11.6) 28,421
---------------------------------------------------------------------------------------------------------------------------------
Total assets 286,780 255,783 (10.8) 238,109
---------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity 204,749 173,999 (15.0) 159,074
---------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share (in yen) 190.09 178.72 (6.0) 288.68
---------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity per share (in yen) 2082.83 1,880.38 (9.7) 1,718.95
---------------------------------------------------------------------------------------------------------------------------------
Dividends per share (in yen) 25.00 25.00 - 50.00
---------------------------------------------------------------------------------------------------------------------------------
2. Consolidated Net Sales by Business and Geographic Segment (Rounded to the nearest million yen)
---------------------------------------------------------------------------------------------------------------------------------
By Business Segment FY2004 interim FY2005 interim Percentage change (%) FY2004
=================================================================================================================================
Semiconductor and Component 113,172 80,832 (28.6) 180,685
Test System
---------------------------------------------------------------------------------------------------------------------------------
Mechatronics System 28,100 20,481 (27.1) 46,395
---------------------------------------------------------------------------------------------------------------------------------
Services, Support and Others 10,875 8,535 (21.5) 19,680
---------------------------------------------------------------------------------------------------------------------------------
Intercompany transactions elimination (5,558) (2,749) - (7,321)
---------------------------------------------------------------------------------------------------------------------------------
Total net sales 146,589 107,099 (26.9) 239,439
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
By Geographic Segment FY2004 interim FY2005 interim Percentage change (%) FY2004
=================================================================================================================================
Japan 37,669 34,607 (8.1) 60,025
----------------------------------------------------------------------------------------------------------------------------
Americas 13,494 11,452 (15.1) 23,024
----------------------------------------------------------------------------------------------------------------------------
Europe 7,557 7,117 (5.8) 12,270
----------------------------------------------------------------------------------------------------------------------------
Asia 87,869 53,923 (38.6) 144,120
---------------------------------------------------------------------------------------------------------------------------------
Total overseas 108,920 72,492 (33.4) 179,414
---------------------------------------------------------------------------------------------------------------------------------
- 21 -
Advantest Corporation - Consolidated (FY2005 Interim)
3. Consolidated Orders input received and Orders backlog by Business Segment (Rounded to the nearest million yen)
---------------------------------------------------------------------------------------------------------------------------------
Orders input received FY2004 interim FY2005 interim Percentage change (%) FY2004
=================================================================================================================================
Semiconductor and Component 96,156 93,732 (2.5) 171,079
Test System
----------------------------------------------------------------------------------------------------------------------------
Mechatronics System 24,631 21,652 (12.1) 43,833
----------------------------------------------------------------------------------------------------------------------------
Services, Support and Others 10,026 9,051 (9.7) 19,117
----------------------------------------------------------------------------------------------------------------------------
Intercompany transactions elimination (5,569) (2,849) - (6,547)
----------------------------------------------------------------------------------------------------------------------------
Total orders input received 125,244 121,586 (2.9) 227,482
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Orders backlog FY2004 interim FY2005 interim Percentage change (%) FY2004
=================================================================================================================================
Semiconductor and Component 24,636 44,946 82.4 32,046
Test System
----------------------------------------------------------------------------------------------------------------------------
Mechatronics System 5,753 7,831 36.1 6,660
----------------------------------------------------------------------------------------------------------------------------
Services, Support and Others 563 1,364 142.3 848
----------------------------------------------------------------------------------------------------------------------------
Intercompany transactions elimination (801) (116) - (16)
----------------------------------------------------------------------------------------------------------------------------
Total orders backlog 30,151 54,025 79.2 39,538
---------------------------------------------------------------------------------------------------------------------------------
(Note) The amount of orders input received for any given period consists of the
sum of the revenues for such period and the amount of backlog at the end
of such period less the backlog at the beginning of such period. Orders
input received are recorded upon receipt of a written customer order.
4. Consolidated Cash Flows (Rounded to the nearest million yen)
---------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Percentage change (%) FY2004
=================================================================================================================================
Operating activities 44,545 16,798 (62.3) 90,327
----------------------------------------------------------------------------------------------------------------------------
Investing activities (5,308) (2,818) - (8,250)
----------------------------------------------------------------------------------------------------------------------------
(Free cash flows) 39,237 13,980 (64.4) 82,077
----------------------------------------------------------------------------------------------------------------------------
Financing activities (2,255) (1,531) - (63,036)
----------------------------------------------------------------------------------------------------------------------------
Total cash flows 36,982 12,449 (66.3) 19,041
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period 139,911 135,226 (3.3) 120,986
- ------------------------------------------------------------------------------------------------------------------------------------
5. Consolidated Outstanding Interest-bearing liabilities (Rounded to the nearest million yen)
---------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Percentage change (%) FY2004
=================================================================================================================================
Bonds and warrant bonds 24,500 20,000 (18.4) 20,000
----------------------------------------------------------------------------------------------------------------------------
Loans and lease obligations 126 89 (29.2) 97
----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 24,626 20,089 (18.4) 20,097
- ------------------------------------------------------------------------------------------------------------------------------------
6. Consolidated Capital Expenditure, Depreciation and Amortization and Research and Development Expenses
(Rounded to the nearest million yen)
---------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Percentage change (%) FY2004
=================================================================================================================================
Capital expenditures 5,194 3,701 (28.7) 9,348
---------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 4,035 3,962 (1.8) 8,285
---------------------------------------------------------------------------------------------------------------------------------
Research and development expenses 12,087 12,877 6.5 26,280
---------------------------------------------------------------------------------------------------------------------------------
7. Number of Employees (Advantest Corporation and Consolidated Subsidiaries) (Persons)
---------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim Percentage change (%) FY2004
=================================================================================================================================
Non-Consolidated (Parent Company only) 1,450 1,455 0.3 1,433
---------------------------------------------------------------------------------------------------------------------------------
Domestic 1,355 1,347 (0.6) 1,350
----------------------------------------------------------------------------------------------------------------------------
Overseas 770 785 1.9 782
----------------------------------------------------------------------------------------------------------------------------
Consolidated Subsidiaries total 2,125 2,132 0.3 2,132
---------------------------------------------------------------------------------------------------------------------------------
Consolidated full-time employee total 3,575 3,587 0.3 3,565
---------------------------------------------------------------------------------------------------------------------------------
- 22 -
Advantest Corporation - Supplemental Information (FY2005 Interim)
8. Supplemental Segment Information
Segment Information by geographic area (Based on Location of Advantest and its
Subsidiaries)
(Rounded to the nearest million yen)
- ------------------------------------------------------------------------------------------------------------------------------------
FY2004 interim FY2005 interim FY2004
(April 1, 2004 (April 1, 2005 (April 1, 2004
through Percentage through Percentage through Percentage
September 30, 2004) (%) September 30, 2005) (%) March 31, 2005) (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Sales to unaffiliated 60,205 - 54,121 - 110,095 -
customers
Intersegment sales 64,367 - 53,079 - 101,609 -
-----------------------------------------------------------------------------------------------------------------------
Net sales 124,572 100.0 107,200 100.0 211,704 100.0
-----------------------------------------------------------------------------------------------------------------------------
Operating expenses 89,910 72.2 79,295 74.0 160,283 75.7
-----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 34,662 27.8 27,905 26.0 51,421 24.3
-----------------------------------------------------------------------------------------------------------------------------
Americas Sales to unaffiliated 38,685 - 28,257 - 55,877 -
customers
Intersegment sales 1,224 - 1,558 - 2,601 -
-----------------------------------------------------------------------------------------------------------------------
Net sales 39,909 100.0 29,815 100.0 58,478 100.0
-----------------------------------------------------------------------------------------------------------------------------
Operating expenses 34,380 86.1 28,071 94.2 54,388 93.0
-----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 5,529 13.9 1,744 5.8 4,090 7.0
-----------------------------------------------------------------------------------------------------------------------------
Europe Sales to unaffiliated 8,754 - 6,982 - 16,307 -
customers
Intersegment sales 449 - 665 - 934 -
-----------------------------------------------------------------------------------------------------------------------
Net sales 9,203 100.0 7,647 100.0 17,241 100.0
-----------------------------------------------------------------------------------------------------------------------------
Operating expenses 7,634 83.0 7,007 91.6 15,333 88.9
-----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 1,569 17.0 640 8.4 1,908 11.1
-----------------------------------------------------------------------------------------------------------------------------
Asia Sales to unaffiliated 38,945 - 17,739 - 57,160 -
customers
Intersegment sales 3,843 - 3,552 - 7,523 -
-----------------------------------------------------------------------------------------------------------------------
Net sales 42,788 100.0 21,291 100.0 64,683 100.0
-----------------------------------------------------------------------------------------------------------------------------
Operating expenses 36,934 86.3 19,402 91.1 56,621 87.5
-----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 5,854 13.7 1,889 8.9 8,062 12.5
-----------------------------------------------------------------------------------------------------------------------------
Elimination Sales to unaffiliated
and customers - - - - - -
Corporate
Intersegment sales (69,883) - (58,854) - (112,667) -
-----------------------------------------------------------------------------------------------------------------------
Net sales (69,883) - (58,854) - (112,667) -
-----------------------------------------------------------------------------------------------------------------------------
Operating expenses (66,930) - (49,336) - (107,905) -
-----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) (2,953) - (9,518) - (4,762) -
-----------------------------------------------------------------------------------------------------------------------------
Consolidated Sales to unaffiliated 146,589 - 107,099 - 239,439 -
customers
Intersegment sales - - - - - -
-----------------------------------------------------------------------------------------------------------------------
Net sales 146,589 100.0 107,099 100.0 239,439 100.0
-----------------------------------------------------------------------------------------------------------------------------
Operating expenses 101,928 69.5 84,439 78.8 178,720 74.6
-----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 44,661 30.5 22,660 21.2 60,719 25.4
-----------------------------------------------------------------------------------------------------------------------------
(Note) Adjustments to operating income (loss) included in Corporate mainly
consist of research and development expenses for basic research activities,
which are not allocated to corporate general administrative expenses and segment
by geographic area. In addition, during this interim period, stock option
compensation expense of (Y)759 million and (Y)755 million in FY2004 interim
and FY2005 interim, respectively are included in Corporate operating expenses.
For FY2004, Corporate operating expenses include the temporary profit of
(Y)3,317 million which arose from a return of the substitutional portion of its
Employee's Pension Fund Plans and the stock option compensation expense of
(Y)2,290 million.
- 23 -