[Advantest logo]
Advantest Corporation
Interim Business Report for FY2005
(April 1, 2005 through September 30, 2005)
[Cover graphics]
To Our Shareholders
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Let us report on the business results of Advantest (the "Company") on a
consolidated basis during the interim period of fiscal year 2005 (April 1, 2005
through September 30, 2005).
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.
Interim dividends of (Y)25 per share as compared to (Y)25 in the
corresponding interim period for the previous fiscal year will be distributed to
shareholders beginning on December 1, 2005, as resolved by the Board of
Directors' Meeting on October 26, 2005.
We look forward to your continued support and guidance.
November 2005
[Picture of Toshio Maruyama]
Toshio Maruyama
(Representative Board Director, President and CEO)
Summary of Consolidated Results (U.S. GAAP)
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Amounts of less than one million are rounded.
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FY2003 FY2004 FY2004 FY2005
Interim Interim
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(in millions of Yen)
Incoming orders 208,961 227,482 125,244 121,586
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(in millions of Yen)
Net sales 174,218 239,439 146,589 107,099
Semiconductor and 123,489 180,685 113,172 80,832
Component Test System
Mechatronics System 34,225 46,395 28,100 20,481
Services, Support and 20,465 19,680 10,875 8,535
Others
Intercompany transactions (3,961) (7,321) (5,558) (2,749)
elimination
Overseas portion of net 116,228 179,414 108,920 72,492
sales
Operating income (loss) 30,960 60,719 44,661 22,660
Net income (loss) 17,329 38,078 27,814 14,614
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(in Yen)
Net income (loss) per share 176.37 389.54 282.96 158.06
(basic)
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(in millions of Yen)
Total assets 330,808 296,769 349,951 320,069
Stockholders' equity 221,768 206,749 249,928 222,602
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(in Yen)
Stockholders' equity per 2,256.59 2,236.97 2,542.41 2,405.62
share
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* Figures for FY2003 are restated based on the current three business segments
that were regrouped as of April 1, 2004.
** In connection with the retrospective application of the SFAS No.123R
Share-Based Payment effective April 1, 2004, the consolidated financial
statements for the interim FY 2004 have been restated.
*** "Net income (loss) per share (basic)" was calculated based on the average
number of issued shares (excluding treasury stock) during the period.
**** "Stockholders' equity per share" was calculated based on the number of
issued shares (excluding treasury stock) as of the end of the period.
[Charts illustrating information presented in the above table]
Business Results 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.
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), 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).
[Picture of the Memory test system T5377S]
[Picture of the SoC test system T2000]
*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.
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).
[Picture of the Dynamic Test Handler M4741A]
Services, Support and Others
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).
Prospects for the Fiscal Year
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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, net sales for the fiscal year are currently
estimated at (Y)240.0 billion, while income before income taxes is estimated at
(Y)61.0 billion and net income at (Y)37.0 billion.
(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.
Consolidated Financial Statements (U.S. GAAP)
Amounts of less than one million are rounded.
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Balance Sheets
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FY2004 FY2005 interim
(as of (as of
March 31, September 30,
2005) 2005)
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(in millions of Yen)
(Assets)
Current assets 223,931 248,220
Cash and cash equivalents 120,986 135,226
Trade accounts receivable, less allowance 56,702 59,038
for doubtful accounts
Inventories 29,585 34,471
Deferred tax assets 13,673 15,329
Other current assets 2,985 4,156
Investment securities 7,772 7,687
Property, plant and equipment, net 51,364 51,423
Deferred tax assets 8,438 7,629
Intangible assets, at cost, less 3,090 2,930
accumulated amortization
Other assets 2,174 2,180
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Total assets 296,769 320,069
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(Liabilities) (in millions of Yen)
Current liabilities 73,994 81,530
Current installments of long-term debt 20,043 20,047
Trade accounts payable 23,196 29,577
Income taxes payable 7,278 9,110
Accrued expenses 13,865 11,039
Accrued warranty expenses 4,090 4,180
Deferred revenue 2,220 4,654
Other current liabilities 3,302 2,923
Long-term debt, excluding current installments 40 15
Accrued pension and severance cost 12,605 12,361
Other long-term liabilities 3,381 3,561
Total liabilities 90,020 97,467
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(Stockholders' equity)
Common stock 32,363 32,363
Capital surplus 35,263 36,018
Retained earnings 210,121 222,213
Accumulated other comprehensive income (loss) (4,878) (2,865)
Treasury stock (66,120) (65,127)
Total stockholders' equity 206,749 222,602
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Total liabilities and stockholders' equity 296,769 320,069
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Statements of Income
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FY2004 FY2005
Interim Interim
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(in millions of Yen)
Net sales 146,589 107,099
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Cost of sales 68,238 51,714
Gross Profit 78,351 55,385
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Research and development expenses 12,087 12,877
Selling, general and administrative 21,603 19,848
expenses
Operating income 44,661 22,660
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Other income (expense) 1,424 1,842
Income before income taxes 46,085 24,502
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Income taxes 18,271 9,888
Net income 27,814 14,614
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Statements of Cash Flows
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FY2004 FY2005
Interim Interim
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(in millions of Yen)
Cash flows provided by operating activities 44,545 16,798
Cash flows used in investing activities (5,308) (2,818)
Cash flows used in financing activities (2,255) (1,531)
Net effect of exchange rate changes on cash and 1,783 1,791
cash equivalents
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Net change in cash and cash equivalents 38,765 14,240
Cash and cash equivalents at beginning of year 101,146 120,986
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Cash and cash equivalents at end of year 139,911 135,226
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Consolidated Subsidiaries
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40 subsidiaries (23 in Japan and 17 overseas)
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Advantest Laboratories Ltd.
Advantest Customer Support Corporation
Advanmechatec Co., Ltd.
Advantest Manufacturing, Inc.
Advantest DI Corporation
Japan Engineering Co., Ltd.
Advantest Finance Inc.
Advantest America, Inc.
Advantest (Europe) GmbH
Advantest Taiwan Inc.
Advantest (Singapore) Pte. Ltd.
Advantest Korea Co., Ltd.
Advantest (Suzhou) Co., Ltd.
and 27 others
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Summary of Unconsolidated Results
Amounts of less than one million are truncated.
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FY2003 FY2004 FY2004 FY2005
Interim Interim
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(in millions of Yen)
Net sales 150,558 203,315 121,065 101,484
Semiconductor and Component 113,365 161,749 96,920 83,344
Test System
Mechatronics System 28,777 36,536 21,202 16,701
Services, Support and Others 8,415 5,028 2,943 1,438
Export portion of net sales 97,744 148,018 84,119 69,501
Operating income (loss) 23,776 41,910 28,346 21,161
Net income (loss) 11,957 28,421 18,684 16,524
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(in Yen)
Net income (loss) per share 119.97 288.68 190.09 178.72
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(in Yen)
Dividends per share 40.00 50.00 25.00 25.00
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(in millions of Yen)
Total assets 277,047 238,109 286,780 255,783
Stockholders' equity 188,891 159,074 204,749 173,999
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(in Yen)
Stockholders' equity per share 1,920.33 1,718.95 2,082.83 1,880.38
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* Figures for FY2003 are restated based on the current three business segments
that were regrouped as of April 1, 2004.
** "Net income (loss) per share" was calculated based on the average number of
issued shares during the period. Treasury stock was excluded from such number.
*** "Stockholders' equity per share" was calculated based on the number of
issued shares as of the end of the period. Treasury stock was excluded from such
number.
[Charts illustrating the information presented in the above table]
Unconsolidated Financial Statements (Japanese GAAP)
Amounts of less than one million are truncated.
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Balance Sheets
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FY2004 FY2005 interim
(as of (as of
March 31, September 30,
2005) 2005)
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(in millions of Yen)
(Assets)
Current assets 166,050 184,726
Cash and deposits 68,676 78,440
Trade accounts receivables 55,983 66,252
Inventories 22,586 21,861
Deferred tax assets 10,032 9,510
Other current assets 8,771 8,661
Noncurrent assets 72,058 71,057
Property, plant and equipment 39,778 39,141
Buildings 15,372 14,869
Land 18,141 18,108
Other 6,264 6,163
Intangible fixed assets 1,437 1,286
Investments and other assets 30,842 30,629
Investment in affiliated 16,390 16,470
companies
Deferred tax assets 4,137 3,679
Other 10,314 10,479
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Total assets 238,109 255,783
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(in millions of Yen)
(Liabilities)
Current liabilities 69,495 72,311
Trade accounts payable 22,642 27,718
Current installments of bonds 20,000 20,000
Income tax payable 4,116 7,021
Accrued warranty expenses 4,345 4,435
Other current liabilities 18,391 13,137
Noncurrent liabilities 9,539 9,472
Long-term borrowings 40 15
Allowance for retirement benefits 7,100 7,043
Allowance for officers' 1,509 1,523
retirement benefits
Other noncurrent liabilities 888 890
Total liabilities 79,034 81,783
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(Stockholders' equity)
Common stock 32,362 32,362
Capital surplus 32,973 32,973
Retained earnings 158,563 172,363
Net unrealized holding gains on 1,294 1,426
available-for-sale securities
Treasury stock (66,119) (65,126)
Total stockholders' equity 159,074 173,999
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Total liabilities and 238,109 255,783
stockholders' equity
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Statements of Income
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FY2004 FY2005
Interim Interim
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(in millions of Yen)
Net sales 121,065 101,484
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Cost of sales 63,908 53,972
Gross profit 57,156 47,512
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Selling, general and administrative 28,809 26,350
expenses
Operating income 28,346 21,161
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Non-operating income 3,611 4,769
Non-operating expenses 1,772 1,341
Ordinary income 30,185 24,589
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Income before income taxes 30,185 24,589
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Income taxes 137 7,173
Income taxes - deferred 11,364 891
Net income 18,684 16,524
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Corporate Overview
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Registered name ADVANTEST CORPORATION
Registered office 1-32-1 Asahi-cho, Nerima-ku, Tokyo
Head office Shin Marunouchi Center Building
1-6-2, Marunouchi, Chiyoda-ku,
Tokyo, JAPAN 100-0005
(03) 3214-7500
Date registered December 2, 1954
Number of employees 3,587 (consolidated)
(as of September 30, 2005) 1,455 (unconsolidated)
* Employee numbers above do not include
temporary employees
Listed stock exchanges Tokyo Stock Exchange, First Section
(Code: 6857)
New York Stock Exchange (Ticker Symbol: ATE)
Board of Directors, Corporate Auditors and Executive Officers (as of September
30, 2005)
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Board of Directors and
Corporate Auditors
Chairman of the Board Shimpei Takeshita
Representative Board Director Toshio Maruyama
Board Director and Senior Hiroshi Oura
Executive Advisor
Board Director Junji Nishiura
Board Director Hiroji Agata
Board Director Hitoshi Owada
Board Director Takashi Tokuno
Standing Corporate Auditor Noboru Yamaguchi
Standing Corporate Auditor Tadahiko Hirano
Corporate Auditor Naoyuki Akikusa
Corporate Auditor Takashi Takaya
Executive Officers
President and CEO Toshio Maruyama
Senior Executive Officer Junji Nishiura
Senior Executive Officer Hiroji Agata
Managing Executive Officer Hitoshi Owada
Managing Executive Officer Takashi Tokuno
Managing Executive Officer Kenichi Mitsuoka
Managing Executive Officer Yuri Morita
Managing Executive Officer Jiro Katoh
Managing Executive Officer Takao Tadokoro
Managing Executive Officer Hiroyasu Sawai
Managing Executive Officer Hiroshi Tsukahara
Executive Officer Masao Shimizu
Executive Officer Masao Araki
Executive Officer Yuichi Kurita
Executive Officer Yoshiro Yagi
Executive Officer Hideaki Imada
Executive Officer Shinichiro Umeda
Executive Officer Akira Hatakeyama
Executive Officer Yasuhiro Kawata
Executive Officer Takashi Sugiura
Executive Officer Shinichiro Kuroe
Major Shareholders (as of September 30, 2005)
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Name of shareholder Number of shares Percentage in
(in thousands) voting rights
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Mizuho Trust & Banking Co., Ltd. (retirement 10,071 10.90%
benefit trust (Fujitsu account), re-trust
trustees, Trust & Custody Services Bank, Ltd.)
The Master Trust Bank of Japan, Ltd.
(trust account) 8,698 9.41
Japan Trustee Services Bank, Ltd.
(trust account) 7,326 7.93
BNP Paribas Securities (Japan) Ltd. 2,694 2.91
Societe Generale Paris OBE dept. 1,755 1.89
Nomura Securities Co., Ltd. 1,746 1.89
The Dai-ichi Mutual Life Insurance Company 1,724 1.86
Morgan Whitefriars Equity Derivatives 1,631 1.76
Shinsei Bank, Limited 1,627 1.76
Fukoku Mutual Life Insurance Company 1,546 1.67
1. 7,249 thousand treasury shares held by the Company have not been included in
the table above.
2. Mizuho Trust & Banking Co., Ltd. holds 10,071 thousand shares of common stock
referred above as the trustee of a retirement benefit plan of Fujitsu Limited,
and exercises its voting rights pursuant to instructions given by Fujitsu
Limited.
Share Data (as of September 30, 2005)
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Total number of authorized shares----------------------------------220,000,000
Total number of issued shares--------------------------------------99,783,385
Number of shareholders---------------------------------------------25,777
Shareholders by Category
Category Number of Number of shares Percentage
shareholders (in thousands)
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Financial institutions and securities firms 156 45,361 45.5
Foreign nationals and entities 477 36,303 36.4
Other corporate investors 334 9,915 9.9
Other individual investors 24,810 8,202 8.2
Guide to Common Stock
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End of fiscal year March 31 of each year
General meeting of shareholders June of each year
Record date for determination of March 31 of each year (for interim
shareholders entitled to receive dividends: September 30)
dividends declared
Public notices http://www.advantest.co.jp/investors/
However, in the case of accidents or
other inevitable circumstances that
prevent the Company from posting public
notices on the above-mentioned
Company's website, public notices are
carried in the Nihon Keizai Shimbun
Transfer agent Head Office of Tokyo Securities
Transfer Agent Co., Ltd.
Business office of transfer agent Tougin Building 3rd floor
1-4-2 Marunouchi, Chiyoda-ku
Tokyo, JAPAN 100-0005
(0120) 49-7009 [toll-free],
(03) 3212-4611
Other offices of transfer agent Sales offices of Tokyo Securities
Transfer Agent Co., Ltd.
Head office and all branch offices of
Mitsui Trust Holdings, Inc., throughout
Japan
Number of shares per unit 100 shares
Notice: Requests for repurchase and additional repurchase of fractional shares
The transfer agent specified above handles shareholders' requests with
respect to repurchases and additional repurchases of fractional shares. Any
additional repurchase requests of fractional shares are suspended starting
on the twelfth business days prior to March 31 and September 30, and ending
on March 31 and September 30, inclusive. In addition, the transfer agent
may suspend any additional repurchase requests of fractional shares for a
certain period of time as specified by the Company.
Notice: Registration of lost share certificates
A shareholder can request the transfer agent to register lost share
certificates. Upon registering lost share certificates, the serial number
of the lost share certificates will be published in the registration book
of lost share certificates and will be made available for public
inspection. If no one challenges or the registration of the lost share
certificate is not cancelled for a period of one year, the lost share
certificate will be invalidated, and a new share certificate may be issued
to the shareholder. The basic registration fee for lost share certificates
is the sum of (Y)10,000 and (Y)500 for each lost share certificate.
*For inquires, please contact the transfer agent specified above.
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