FY2006 Consolidated Financial Results
(Prepared in accordance with U.S. GAAP)
(Year ended March 31, 2007)
April 25, 2007
Company name : Advantest Corporation
(URL http://www.advantest.co.jp/investors/)
Stock exchanges on which
shares are listed : First section of the Tokyo Stock Exchange
Stock code number : 6857
Company representative : Toshio Maruyama, Representative Board Director,
President and CEO
Contact person : Hiroshi Nakamura, Executive Officer, Vice
President of the Corporate Affairs Group
(03) 3214-7500
Date of general
shareholders' meeting
(as planned) : June 27, 2007
Dividend payable date
(as planned) : June 28, 2007
Annual report filing date
(as planned) : June 28, 2007
(Rounded to the nearest million yen)
1. Consolidated Results of FY2006 (April 1, 2006 through March 31, 2007)
(1) Consolidated Financial Results
(% changes as compared with the previous fiscal year)
-------------------------- --------------------------- -------------------------- ----------------------------------
Net sales Operating income Income before income Net income
taxes
-------------------------- --------------------------- -------------------------- ----------------------------------
% increase % increase % increase % increase
Million yen (decrease) Million yen (decrease) Million yen (decrease) Million yen (decrease)
FY2006 235,012 (7.4) 56,792 (11.9) 61,090 (9.4) 35,556 (14.1)
FY2005 253,922 6.0 64,458 6.2 67,454 9.1 41,374 8.7
- ------ -------------------------- --------------------------- -------------------------- ----------------------------------
------------------ -------------------- --------------- ---------------------- --------------------------
Ratio of income Ratio of operating
Net Income per Net income per share Net income to before taxes to total income
share (basic) (diluted) equity ratio assets to net sales
------------------ -------------------- --------------- ---------------------- --------------------------
Yen Yen % % %
FY2006 190.01 188.85 12.9 17.0 24.2
FY2005 223.17 221.98 17.8 20.8 25.4
------------------ -------------------- --------------- ---------------------- --------------------------
(Note) Equity in earnings(losses) of equity method affiliates: (Y)(14) million in FY2006, none in FY2005
(2) Consolidated Financial Position
- -------- ---------------------------- -------------------------- -------------------------------- ---------------------------------
Total assets Net assets Equity-to-assets ratio Net assets
per share
- -------- ---------------------------- -------------------------- -------------------------------- ---------------------------------
Million yen Million yen % Yen
FY2006 366,374 294,797 80.5 1,570.99
FY2005 350,776 257,927 73.5 1,381.85
- -------- ---------------------------- -------------------------- -------------------------------- ---------------------------------
(3) Consolidated Cash Flows
- -------- ---------------------------- -------------------------- -------------------------------- ---------------------------------
Cash flows from Cash flows from Cash flows from Cash and cash equivalents
operating activites investing activities financing activities at end of period
- -------- ---------------------------- -------------------------- -------------------------------- ---------------------------------
Million yen Million yen Million yen Million yen
FY2006 48,951 (8,013) (3,662) 196,395
FY2005 59,480 (8,542) (18,336) 157,925
- -------- ---------------------------- -------------------------- -------------------------------- ---------------------------------
(Note) On October 1, 2006, a one to two stock split was made to shares of the common stock. Per share information for each period
is calculated based on the assumption that the stock split was made at the beginning of the previous fiscal year.
- 1 -
2. Dividends
- ---------------------------------------------------------------------- ----------------- -------------- -------------------
Dividend per share Ratio of total
- ---------------------------------------------------------------------- Total dividend Payout ratio amount of
(Record Date) Interim Year end Annual total paid (annual) (consolidated) dividends to net
assets
(consolidated)
- ---------------------------------------------------------------------- ----------------- -------------- -------------------
yen yen yen Million yen % %
FY2005 25.00 45.00 70.00 6,513 15.7 2.8
FY2006 35.00 32.50 67.50 9,373 26.3 3.4
- ---------------------------------------------------------------------- ----------------- -------------- -------------------
FY2007 25.00 25.00 50.00 23.5
(forecast)
- ---------------------------------------------------------------------- ----------------- -------------- -------------------
(Note) On October 1, 2006, a one to two stock split was made to shares of the common stock. The year end dividend per share for
FY2006 prior to the stock split is valued at (Y) 65, and the aggregate amount of the dividend per share is valued at (Y)100,
an increase in dividend payment of (Y)30 as compared to the previous fiscal year.
3. Projected Results for FY2007 (April 1, 2007 through March 31, 2008)
(% changes as compared with the previous fiscal year and the corresponding period of the previous fiscal year)
- ---------------- ----------------------- ----------------------- ----------------------- ----------------------- ------------------
Income before income Net income per
Net sales Operating income taxes Net income share (diluted)
- ---------------- ----------------------- ----------------------- ----------------------- ----------------------- ------------------
% increase % increase % increase % increase
Million yen (decrease) Million yen (decrease) Million yen (decrease) Million yen (decrease) Yen
FY2007 interim 120,000 (0.4) 26,000 (19.3) 27,000 (20.5) 17,500 (21.2) 93.26
FY2007 255,000 8.5 60,000 5.6 62,000 1.5 40,000 12.5 213.16
- ---------------- ----------------------- ----------------------- ----------------------- ----------------------- ------------------
4. Others
(1) Material changes in Subsidiaries during this fiscal period (Changes in
Scope of consolidation resulting from changes in subsidiaries): None
(2) Changes in Accounting Principles, Procedures and the Presentation of the
Consolidated Financial Statements
(1) Changes based on revisions of accounting standard: Yes
(2) Changes other than (1) above: None
(Note) Please see "Significant Accounting Policies" on page 16 for details.
(3) Number of issued and outstanding shares (Common Stock)
(1) Number of issued and outstanding shares at the end of each fiscal year
(including treasury shares): FY2006 199,566,770 shares, FY2005 199,566,770
shares.
(2) Number of treasury shares at the end of each fiscal year:
FY2006 11,916,485 shares, FY2005 12,913,472 shares.
(3) Average number of issued and outstanding shares in each fiscal year:
FY2006 187,128,842 shares, FY2005 185,389,026 shares.
(Note) 1. For the number of shares used to calculate net income per share,
please see "Per Share Information" on page 22.
2. On October 1, 2006, a one to two stock split was made to shares of the
common stock. Per share information for each period is calculated
based on the number of issued and outstanding shares after such stock
split.
- 2 -
(Reference) Selected Non-Consolidated Financial Data
1. Non-consolidated Results of FY2006 (April 1, 2006 through March 31, 2007)
(1) Non-Consolidated Financial Results
(Truncated after the million yen)
(% changes as compared with the previous fiscal year)
- ------- --------------------------- ----------------------------- --------------------------- -------------------------------------
Net sales Operating income Income before income Net income
taxes
- ------- --------------------------- ----------------------------- --------------------------- -------------------------------------
% increase % increase % increase % increase
Million yen (decrease) Million yen (decrease) Million yen (decrease) Million yen (decrease)
FY2006 197,753 (9.2) 41,503 (16.6) 43,638 (19.0) 29,436 (16.5)
FY2005 217,688 7.1 49,746 18.7 53,878 24.2 35,273 24.1
- ------- --------------------------- ----------------------------- --------------------------- -------------------------------------
- ------- -------------------------- -------------------------
Net income per share Net income per share
(basic) (diluted)
- ------- -------------------------- -------------------------
Yen Yen
FY2006 157.31 156.34
FY2005 378.34 376.33
- ------- --------------------------- ------------------------
(Note) On October 1, 2006, a one to two stock split was made to shares of the
common stock. Basic net income per share and diluted net income per share
for FY2005 were calculated based on the number of issued and outstanding
shares before such stock split. Retrospectively applying the effect of
the stock split as at the beginning of the fiscal year, basic net income
per share would be (Y)189.17 and diluted net income per share would be
(Y)188.16.
(2) Non-consolidated Financial Position
- ------- -------------------------- -------------------------- -------------------------------- ------------------------------------
Total assets Net assets Equity-to-assets ratio Net assets
per share
- ------- -------------------------- -------------------------- -------------------------------- ------------------------------------
Million yen Million yen % Yen
FY2006 289,697 224,805 76.8 1,185.55
FY2005 274,538 197,226 71.8 2,111.11
- ------- -------------------------- -------------------------- -------------------------------- ------------------------------------
(Reference) Total equity: FY2006 (Y)222,468 million, FY2005 (Y)197,226 million
(Note) On October 1, 2006, a one to two stock split was made to shares of the
common stock. Net assets per share for FY2005 were calculated based on the
number of issued and outstanding shares before such stock split. Retrospectively
applying the effect of the stock split as at the beginning of the fiscal year,
net assets per share would be (Y)1,055.55.
For assumptions underlying the forecast and other related items, please see
page 4 of the attachment, "1. Business Results"
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.
- 3 -
Advantest Corporation - Consolidated (FY2006)
1. Business Results
(1) Analysis of Business Results
Fiscal Year Results
- -------------------
During the fiscal year, Advantest's operating environment remained mostly
steady, supported by an increase in demand in flat-panel TVs and game devices,
even though substantial decline in the price of flash memory semiconductors led
some semiconductor manufacturers to restrict their capital expenditures.
Furthermore, favorable factors for Advantest included increased investments by
semiconductor manufacturers with respect to 300 mm wafer manufacturing capacity,
as well as increased capital expenditures by DRAM semiconductor manufacturers
from the second half of the fiscal year, in preparation for the launch of sales
of computers equipped with a new operating system.
In light of this environment, Advantest made concentrated efforts to
increase orders received and expand sales with a focus on providing quality
products and services and comprehensive test solutions that meet various kinds
of customer demands. Advantest continued to make efforts to implement a thorough
inventory control based on the just-in-time production system, to improve the
quality of products and to reduce costs.
As a result of the above, as compared to the previous fiscal year, orders
received decreased by 6.4% to (Y)242.9 billion. Net sales decreased by 7.4% to
(Y)235.0 billion, income before income taxes for the fiscal year decreased by
9.4% to (Y)61.1 billion, and net income for the fiscal year decreased by 14.1%
to (Y)35.6 billion. Overseas sales as a percentage of total sales were 69.0%, as
compared with 68.0% in the previous fiscal year.
[Condition of Business by Segment]
(Semiconductor and Components Test System Segment)
In this segment, although capital expenditures for non memory
semiconductors, which were positive in the previous fiscal year, stagnated,
capital expenditures for DRAM semiconductors has increased since the second half
of the fiscal year, resulting in an overall steady growth.
In the memory test system market, the price of the DRAM semiconductors
remained mostly stable throughout the fiscal year. Furthermore, investments in
Korea and Taiwan with respect to DDR2-SDRAM semiconductors that are used in
personal computers with a new operating system have rapidly increased since the
second half of the fiscal year. Consequently, sales of test systems for high
speed memory semiconductors remained positive. On the other hand, sales of test
systems for flash memory semiconductors decreased from the second half of the
fiscal year, due to the decline in capital expenditures of semiconductor
manufacturers resulting from the substantial decrease in the price of flash
memory semiconductors.
In the market of non-memory semiconductor test system, sales of test
systems for semiconductors for digital consumer devices remained steady.
However, sales of T2000, a test system for micro processing units (MPU), which
was positive in the previous fiscal year, decreased due primarily to a decrease
in capital expenditures of Advantest's major customers. Similarly, sales of test
systems for LCD driver IC, which was positive in the previous fiscal year,
started to decrease as a result of the adjustment of liquid crystal display
panel inventories.
As a result of the above, orders received was (Y)175.1 billion (10.5%
decrease in comparison to the previous fiscal year), sales was (Y)167.8 billion
(12.3% decrease) and operating income was (Y)48.6 billion (15.5% decrease).
- 4 -
Advantest Corporation (FY2006)
(Mechatronics System Segment)
Although sales of non-memory semiconductor test handlers decreased, sales
of memory semiconductor test handlers remained positive throughout the fiscal
year. In addition, sales of device interface products, especially those
targeting memory semiconductors, were positive.
As a result of the above, orders received was (Y)54.9 billion (10.8%
increase in comparison to the previous fiscal year), sales was (Y)52.0 billion
(7.8% increase) and operating income was (Y)13.6 billion (14.0% increase).
(Services, Support and Others Segment)
In this segment, orders input received was (Y)18.0 billion (6.4% decrease
in comparison with the previous fiscal year), sales was (Y)18.3 billion (3.9%
decrease) and operating income was (Y)2.9 billion (25.5% decrease).
Prospects for the Upcoming Fiscal Year
- --------------------------------------
With respect to its operations in the upcoming fiscal year, Advantest
expects that personal computers with a new operating system will be increasingly
accepted in the market. This is expected to continue to stimulate capital
expenditures in DDR2-SDRAM semiconductors which are used in the new operating
system, as well as revitalize capital expenditures for MPUs which are crucial to
these computers. In the field of digital consumer devices, it is expected that
demand for mobile devices with advanced functions will grow and investment for
increased production of flat-panel TVs will increase, with a view to meeting
customer demand in the foresight of the 2008 Beijing Olympics.
Accordingly, Advantest's operating environment is becoming more favorable.
Yet, Advantest's results may be impacted by restrained capital expenditures as a
result of aggrevated supply and demand balance (which is an issue unique to the
semiconductor market), increased prices of raw materials, currency risk and
strengthened downward pressure on prices as a result of the above factors. As a
result of the above, Advantest's current business outlook for the upcoming
fiscal year are described below.
Net sales is expected to increase by 8.5% to (Y)255.0 billion, income
before income tax for this fiscal year is expected to increase by 1.5% to
(Y)62.0 billion; and net income is expected to increase by 12.5% to (Y)40.0
billion.
(2) Financial Condition
<1> Assets, Liabilities and Net Assets
Total assets at the fiscal year end is (Y)366.4 billion, an increase of
(Y)15.6 billion compared to the previous fiscal year, due primarily to an
increase of (Y)38.5 billion in cash and cash equivalents and a decrease of
(Y)15.3 billion in account receivable compared to the previous fiscal year.
Total liabilities are (Y)71.6 billion, a decrease of (Y)21.3 billion compared to
the previous fiscal year, due primarily to a decrease in income taxes payable
(by (Y)10.6 billion) and a decrease in accounts payable (by (Y)3.5 billion).
Shareholders' equity is (Y)294.8 billion. Equity to Assets ratio is 80.5%, an
increase by 7.0 point.
<2> Cash Flow Condition
Cash and cash equivalents held at March 31, 2007 were (Y)196.4 billion, an
increase of (Y) 38.5 billion from March 31, 2006.
- 5 -
Advantest Corporation (FY2006)
Significant cash flows during this fiscal year and their causes are
described below.
Net cash provided by operating activities was (Y)49.0 billion. This amount
was primarily attributable to a net income of (Y)35.6 billion and decrease of
(Y)15.6 in accounts receivable.
Net cash used in investment activities was an outflow of (Y)8.0 billion.
This amount was primarily attributable to capital expenditures of (Y)7.5
billion, including capital expenditures related to equipment for leasing.
Net cash used in financing activities was an outflow of (Y)3.7 billion.
This amount was primarily attributable to dividend payments in the amount of
(Y)7.5 billion offset by proceeds from sale of treasury stock in the amount of
(Y)3.9 billion.
The following table illustrates the historical movements of certain cash flow
indexes:
- ------------------------------------- ------------ -------------- -------------- -------------- -------------
FY2002 FY2003 FY2004 FY2005 FY2006
- ------------------------------------- ------------ -------------- -------------- -------------- -------------
Stockholders' equity ratio (%) 74.9 67.0 69.7 73.5 80.5
- ------------------------------------- ------------ -------------- -------------- -------------- -------------
Stockholders' equity ratio based on
market prices (%) 147.4 253.4 256.0 373.3 267.9
- ------------------------------------- ------------ -------------- -------------- -------------- -------------
Debt to annual cash flow ratio (%) 543.6 87.4 22.2 0.1 0.1
- ------------------------------------- ------------ -------------- -------------- -------------- -------------
Interest coverage ratio (times) 10.1 59.7 202.1 148.5 3,094.7
- ------------------------------------- ------------ -------------- -------------- -------------- -------------
Stockholders' equity ratio: stockholders' equity / total assets
Stockholders' equity ratio based on market prices: market capitalization / total
assets
Debt to annual cash flow ratio: interest-bearing liabilities / operating cash
flows
Interest coverage ratio: operating cash flows / interest payments
(Notes) 1. These indexes are calculated using U.S. GAAP figures.
2. Market capitalization is calculated based on issued and outstanding
shares excluding treasury stock.
3. Operating cash flows are the cash flows provided by operating
activities on the consolidated statements of cash flows.
4. Interest-bearing liabilities include all liabilities on the
consolidated balance sheets that incur interest.
(3) Distribution of Profits, Distribution for FY2006 and Distribution Forecast
for FY2007
Based on the premise that long-term and continued growth in corporate value
is fundamental to the creation of shareholder value, Advantest deems the
consistent distribution of profits to be the most important management priority.
Accordingly, Advantest engages in active distribution of profits based on
business performance.
With respect to the distribution of the surplus, Advantest makes payout
decisions after taking into consideration business performance, financial
conditions, as well as the need for strategic investment for mid- to long-term
business development. While aiming to make consistent distributions, because of
the fluctuation of the market in which it operates, Advantest makes dividend
payouts following a target payout ratio of 20% or more.
Retained earnings are devoted to research and development, streamlining
efforts, overseas expansion, investments in new businesses and resources for M&A
activities, with an aim to strengthen the Company's business position and
enhance its corporate value.
In order to maintain capital strategies responsive to changes in the
operating environment, Advantest plans to decide obtaining more treasury shares
by taking into account factors such as stock price trend, capital efficiency and
cash flow.
- 6 -
Advantest Corporation (FY2006)
In this fiscal year, Advantest decided, pursuant to the above profit
distribution policy, to distribute a year end dividend of (Y)32.50, an increase
of (Y)15 from its previous forecast of (Y)17.50 per share. Since Advantest has
paid an interim dividend of (Y)35 on December 1, 2006, the total dividend per
share for the fiscal year is expected to be (Y)67.50.
On October 1, 2006, pursuant to the July 26, 2006 board resolution, a one
to two stock split was made to shares of the common stock owned as of September
30, 2006. Accordingly, the year end dividend per share prior to the stock split
is valued at (Y)65, and the aggregate amount of the dividend per share is valued
at (Y)100, and increase in dividend payment of (Y)30 as compared to the previous
fiscal year.
Advantest plans to submit a proposal with respect to the above respective
amount of dividends for shareholders' approval at its Sixty-Fifth Ordinary
General Meeting of Shareholders to be held in late June 2007.
In the fiscal year 2007, Advantest plans to distribute an annual dividend
of (Y)50 per share ((Y)25 per share as an interim dividend).
2. Corporate Structure
There are no material changes from the information in "Business structure
(Description of business)" and "Organizational Structure" of the Annual
Securities Report filed with the Director of the Kanto Local Finance Bureau on
June 28, 2006.
3. Management Policy
(1) Advantest's Basic Management Policy
Fiscal Period Results
- -----------------------------
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.
(2) 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% or more with an aim to increase corporate value
and shareholder value.
*(1)"EVA(R)" is a registered trademark of Stern Stewart & Co.
(3) Mid-and-long term Business Strategy and Issues to be addressed
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 by aiming to
increase market share by introducing fine products that will inspire the market
demands of the next generation. To achieve these objectives, Advantest promotes
to further strengthen its product development operations and improve production
efficiency by focusing on certain businesses, while strengthening its overseas
operations and support system in the U.S., Europe and Asia.
- 7 -
Advantest Corporation (FY2006)
Furthermore, Advantest seeks to increase the level of customer satisfaction
by maximizing the functions of our test systems and by providing them with a
solution to improve business efficiency for all types of businesses.
In October 2005, Advantest launched a company-wide initiative called
"Activate 21" to promote reforms that emphasize cost and efficiency from a
global perspective, which will continue until the end of FY2008.
- 8 -
Advantest Corporation (FY2006)
4. Consolidated Financial Statements and other information
(1) Consolidated Balance Sheets
=================================================================================================================================
as compared to
FY2005 FY2006 the previous
(As of March 31, 2006) (As of March 31, 2007) fiscal year
- ---------------------------------------------------------------------------------------------------------------------------------
Increase
Amount percentage Amount percentage (decrease)
(in million yen) (%) (in million yen) (%) (in million yen)
=================================================================================================================================
(Assets)
Cash and cash equivalents 157,925 196,395
Trade accounts receivable, less
allowance for doubtful accounts 69,567 54,264
Inventories 29,911 31,976
Deferred tax assets 13,708 9,215
Other current assets 4,522 2,958
---------- ---------- ---------
Total current assets 275,633 78.6 294,808 80.5 19,175
Investment securities 12,273 3.5 11,370 3.1
Property, plant and equipment, net 50,793 14.5 49,650 13.6
Deferred tax assets 7,378 2.1 2,690 0.7
Intangible assets, at cost, less
accumulated amortization 2,858 0.8 3,101 0.8
Other assets 1,841 0.5 4,755 1.3
---------- ---------- ---------
Total assets 350,776 100.0 366,374 100.0 15,598
---------- ---------- ---------
=================================================================================================================================
- 9 -
Advantest Corporation (FY2006)
=================================================================================================================================
as compared to
FY2005 FY2006 the previous
(As of March 31, 2006) (As of March 31, 2007) fiscal year
- ---------------------------------------------------------------------------------------------------------------------------------
Increase
Amount percentage Amount percentage (decrease)
(in million yen) (%) (in million yen) (%) (in million yen)
=================================================================================================================================
(Liabilities)
Current portion of long-term debt 30 10
Trade accounts payable 32,584 29,095
Income taxes payable 19,970 9,370
Accrued expenses 12,781 13,637
Accrued warranty expenses 4,776 4,135
Other current liabilities 6,604 4,405
---------- ---------- ---------
Total current liabilities 76,745 21.9 60,652 16.6 (16,093)
Long-term debt, excluding current portion 10 0.0 - -
Accrued pension and severance cost 12,292 3.5 8,267 2.2
Other liabilities 3,802 1.1 2,658 0.7
---------- ---------- ---------
Total liabilities 92,849 26.5 71,577 19.5 (21,272)
---------- ---------- ---------
(Stockholders' equity)
Common stock 32,363 9.2 32,363 8.8 -
Capital surplus 37,147 10.6 39,256 10.7 2,109
Retained earnings 245,090 69.9 273,082 74.6 27,992
Accumulated other comprehensive income (loss) 1,344 0.3 3,652 1.0 2,308
Treasury stock (58,017) (16.5) (53,556) (14.6) 4,461
---------- ---------- ---------
Total stockholders' equity 257,927 73.5 294,797 80.5 36,870
---------- ---------- ---------
Total liabilities and stockholders' equity 350,776 100.0 366,374 100.0 15,598
---------- ---------- ---------
=================================================================================================================================
- 10 -
Advantest Corporation (FY2006)
(2) Consolidated Statements of Income
=================================================================================================================================
FY2005 FY2006 as compared to
(April 1, 2005 through (April 1, 2006 through the previous
March 31, 2006) March 31, 2007) fiscal year
- ---------------------------------------------------------------------------------------------------------------------------------
Increase
Amount percentage Amount percentage (decrease)
(in million yen) (%) (in million yen) (%) (in million yen)
=================================================================================================================================
Net sales 253,922 100.0 235,012 100.0 (18,910)
Cost of sales 121,429 47.8 108,718 46.3 (12,711)
-------- --------- ---------
Gross profit 132,493 52.2 126,294 53.7 (6,199)
Research and development expenses 26,927 10.6 29,509 12.6 2,582
Selling, general and administrative
expenses 41,108 16.2 39,993 16.9 (1,115)
-------- --------- ---------
Operating income (loss) 64,458 25.4 56,792 24.2 (7,666)
Other income (expense):
Interest and dividend income 1,760 3,026
Interest expense (290) (16)
Other 1,526 2,996 1.2 1,288 4,298 1.8 1,302
--------- -------- ------- --------- ---------
Income (loss) before income taxes 67,454 26.6 61,090 26.0 (6,364)
Income taxes 26,080 10.3 25,520 10.9 (560)
Equity in earnings (loss) of equity
method affiliates - - (14) (0.0) (14)
-------- --------- ---------
Net income (loss) 41,374 16.3 35,556 15.1 (5,818)
-------- --------- ---------
=================================================================================================================================
=================================================================================================================================
FY2005 FY2006 as compared to
(April 1, 2005 through (April 1, 2006 through the previous
March 31, 2006) March 31, 2007) fiscal year
- ----------------------------------------------------------------------------------------------------------------------------------
Increase
Amount Amount (decrease)
(in yen) (in yen) (in yen)
=================================================================================================================================
Net income per share (Net loss per share)
Basic 223.17 190.01 (33.16)
Diluted 221.98 188.85 (33.13)
=================================================================================================================================
- 11 -
Advantest Corporation (FY2006)
(3) Consolidated Statements of Stockholders' Equity
FY2005 (April 1, 2005 through March 31, 2006)
=================================================================================================================================
Accumulated
other Total
Common Capital Retained comprehensive Treasury stockholders'
stock surplus earnings income (loss) stock equity
(in million yen) (in million yen) (in million yen) (in million yen) (in million yen) (in million yen)
===================================================================================================================================
Balance of March 31, 2005 32,363 35,263 210,121 (4,878) (66,120) 206,749
- -----------------------------------------------------------------------------------------------------------------------------------
Comprehensive income
Net income (loss) 41,374 41,374
Other comprehensive
income (loss)
Foreign currency
translation adjustments 5,074 5,074
Net unrealized gains
and losses on securities 1,148 1,148
------------
Total comprehensive
income (loss) 47,596
------------
Cash dividends (4,625) (4,625)
Stock option compensation
expense 1,884 1,884
Exercise of stock option 8,157 8,157
Treasury stock purchased (55) (55)
Treasury stock sold (1,780) 1 (1,779)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance of March 31, 2006 32,363 37,147 245,090 1,344 (58,017) 257,927
=================================================================================================================================
FY2006 (April 1, 2006 through March 31, 2007)
=================================================================================================================================
Accumulated
other Total
Common Capital Retained comprehensive Treasury stockholders'
stock surplus earnings income (loss) stock equity
(in million yen) (in million yen) (in million yen) (in million yen) (in million yen) (in million yen)
===================================================================================================================================
Balance of March 31, 2006 32,363 37,147 245,090 1,344 (58,017) 257,927
- -----------------------------------------------------------------------------------------------------------------------------------
Comprehensive income
Net income (loss) 35,556 35,556
Other comprehensive
income (loss)
Foreign currency
translation adjustments 1,123 1,123
Net unrealized gains and
losses on securities (362) (362)
------------
Total comprehensive
income for FY2006 36,317
------------
Adjustment to initially
apply SFAS 158 1,547 1,547
------------
Total comprehensive
income 37,864
------------
Cash dividends (7,474) (7,474)
Stock option compensation
expense 2,566 2,566
Exercise of stock option (457) 4,520 4,063
Treasury stock purchased (68) (68)
Treasury stock sold (90) 9 (81)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance of March 31, 2007 32,363 39,256 273,082 3,652 (53,556) 294,797
- -----------------------------------------------------------------------------------------------------------------------------------
- 12 -
Advantest Corporation (FY2006)
(4) Consolidated Statements of Cash Flows
=================================================================================================================================
FY2005 FY2006 as compared to
(April 1, 2005 through (April 1, 2006 through the previous
March 31, 2006) March 31, 2007) fiscal year
- ------------------------------------------------------------------------------------------------------------------------------
Increase
Amount Amount (decrease)
(in million yen) (in million yen) (in million yen)
=================================================================================================================================
I Cash flows from operating activities:
Net income (loss) 41,374 35,556
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 8,275 8,214
Deferred income taxes 1,005 7,381
Stock option compensation expense 1,884 2,566
Changes in assets and liabilities:
Trade accounts receivable (11,072) 15,563
Inventories 108 (2,054)
Trade accounts payable 7,627 (3,318)
Income taxes payable 12,506 (10,586)
Accrued expenses (1,261) 815
Accrued warranty expenses 610 (641)
Accrued pension and severance cost (329) (1,437)
Other (1,247) (3,108)
------------- ---------------- ----------------
Net cash provided by operating activities 59,480 48,951 (10,529)
------------- ---------------- ----------------
II Cash flows from investing activities:
Proceeds from sale of available-for-sale
marketable securities 2,977 0
Proceeds from sale of non-marketable
securities - 20
Purchases of marketable securities (2,256) -
Purchases of non-marketable securities (1,900) -
Proceeds from sale of property,
plant and equipment 258 541
Purchases of intangible assets (523) (897)
Purchases of property, plant and equipment (7,071) (7,511)
Other (27) (166)
------------- --------------- ---------------
Net cash used in investing activities (8,542) (8,013) 529
------------- --------------- ---------------
==============================================================================================================================
- 13 -
Advantest Corporation (FY2006)
=================================================================================================================================
FY2005 FY2006 as compared to
(April 1, 2005 through (April 1, 2006 through the previous
March 31, 2006) March 31, 2007) fiscal year
- ------------------------------------------------------------------------------------------------------------------------------
Amount Amount Increase
Amount Amount en) (decrease)
(in million yen) (in million yen) (in million yen)
=================================================================================================================================
III Cash flows from financing activities:
Principal payments on long-term debt (20,043) (30)
Proceeds from sale of treasury stock 6,378 3,913
Payments to acquire treasury stock (57) (68)
Dividends paid (4,622) (7,468)
Other 8 (9)
------------- -------------- ---------------
Net cash used in financing activities (18,336) (3,662) 14,674
------------- -------------- ---------------
IV Net effect of exchange rate changes on cash
and cash equivalents 4,337 1,194 (3,143)
------------- -------------- ---------------
V Net change in cash and cash equivalents 36,939 38,470 1,531
VI Cash and cash equivalents at beginning
of period 120,986 157,925 36,939
------------- -------------- ---------------
VII Cash and cash equivalents at end of period 157,925 196,395 38,470
------------- -------------- ---------------
=================================================================================================================================
- 14 -
Advantest Corporation (FY2006)
Notes to the Consolidated Financial Statements
(Note 1) Accounting Principles, Procedures and the Presentation of the
Consolidated Financial Statements
(a) Terminology, Form and Method of Preparation of the Consolidated Financial
Statements
Advantest prepares these consolidated financial statements in
accordance with the accounting principles, procedures, terminology, form
and mode of preparation required in the United States of America 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 United States of America.
(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 consolidated financial statements include financial
statements of Advantest Corporation and its majority-owned subsidiaries.
Advantest does not have any variable interest entities as provided in the
U.S. Financial Accounting Standards Board's Interpretation No. 46 (Revised
December 2003) - "Consolidation of Variable Interest Entities". Thus,
Advantest does not include any such entity in its consolidated financial
statements. 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:
- -------------------------- ------------------------ ------------------------ -------------------
FY2005 FY2006 Increase
(As of March 31, 2006) (As of March 31, 2007) (decrease)
- -------------------------- ------------------------ ------------------------ -------------------
Domestic 23 23 0
- -------------------------- ------------------------ ------------------------ -------------------
Overseas 17 17 0
------------ ------------------------ ------------------------ -------------------
Consolidated subsidiaries 40 40 0
- -------------------------- ------------------------ ------------------------ -------------------
Equity method affiliates - 1 1
- -------------------------- ------------------------ ------------------------ -------------------
Total 40 41 1
- -------------------------- ------------------------ ------------------------ -------------------
Organizational Changes to Subsidiaries:
One new equity method affiliate: e-Shuttle, Inc.*
* e-Shuttle, Inc. was established on November 1, 2006 as a joint venture with
Fujitsu Limited to provide leading-edge LSI prototype services.
- 15 -
Advantest Corporation (FY2006)
(Note 2) Significant Accounting Policies
(Changes to Accounting Policies)
On March 31, 2007, Advantest adopted the recognition and disclosure
provisions of SFAS 158. SFAS 158 requires Advantest to recognize the funded
status (i.e., the difference between the fair value of plan assets and the
projected benefit obligations) of its pension plans in the consolidated balance
sheet, with a corresponding adjustment to accumulated other comprehensive income
(loss). The adjustment to other accumulated comprehensive income (loss) at
adoption represents the unrecognized actuarial loss and unrecognized prior
service cost, which were previously netted against the plans' funded status in
the consolidated balance sheet pursuant to the provisions of SFAS 87.
There are no changes pertaining to accounting policies other than the one
mentioned above. For more information on accounting policies, please see the
Notes to the consolidated financial statement, "Descriptions of Business and
Summary of Significant Accounting Policies and Practices", in the fiscal year
2005 Annual Report.
- 16 -
Advantest Corporation (FY2006)
(Note 3) Segment Information
1. Business Segment Information
====================================================================================================================================
FY2005 FY2006
(April 1, 2005 through (April 1, 2006 through
March 31, 2006) March 31, 2007
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Percentage Amount Percentage
(million) (%) (million) (%)
====================================================================================================================================
Semi-conductor
and Component
Test System
Net sales to unaffiliated customers 187,136 97.8 164,899 98.3
Intersegment sales 4,279 2.2 2,916 1.7
------------------------------------------------------------------------------------------------------------------
Net sales 191,415 100.0 167,815 100.0
----------------------------------------------------------------------------------------------------------------------
Operating expenses 133,898 70.0 119,207 71.0
----------------------------------------------------------------------------------------------------------------------
Operating income (loss) 57,517 30.0 48,608 29.0
----------------------------------------------------------------------------------------------------------------------
Expenditures for additions to long-lived assets 2,649 3,173
----------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 2,993 2,812
----------------------------------------------------------------------------------------------------------------------
Total assets 94,745 84,962
====================================================================================================================================
====================================================================================================================================
Mechatronics Net sales to unaffiliated customers 47,724 98.9 51,801 99.6
System
Intersegment sales 536 1.1 224 0.4
------------------------------------------------------------------------------------------------------------------
Net sales 48,260 100.0 52,025 100.0
----------------------------------------------------------------------------------------------------------------------
Operating expenses 36,294 75.2 38,378 73.8
----------------------------------------------------------------------------------------------------------------------
Operating income (loss) 11,966 24.8 13,647 26.2
----------------------------------------------------------------------------------------------------------------------
Expenditures for additions to long-lived assets 1,177 1,145
----------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 1,058 1,241
----------------------------------------------------------------------------------------------------------------------
Total assets 27,444 24,256
====================================================================================================================================
====================================================================================================================================
Services, Net sales to unaffiliated customers 19,062 100.0 18,312 100.0
Support
and Others Intersegment sales - - - -
------------------------------------------------------------------------------------------------------------------
Net sales 19,062 100.0 18,312 100.0
----------------------------------------------------------------------------------------------------------------------
Operating expenses 15,209 79.8 15,442 84.3
----------------------------------------------------------------------------------------------------------------------
Operating income (loss) 3,853 20.2 2,870 15.7
----------------------------------------------------------------------------------------------------------------------
Expenditures for additions to long-lived assets 4,203 3,533
----------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 3,680 3,710
----------------------------------------------------------------------------------------------------------------------
Total assets 16,722 15,163
====================================================================================================================================
====================================================================================================================================
Elimination Net sales to unaffiliated customers - - - -
and Corporate
Intersegment sales (4,815) 100.0 (3,140) 100.0
------------------------------------------------------------------------------------------------------------------
Net sales (4,815) 100.0 (3,140) 100.0
----------------------------------------------------------------------------------------------------------------------
Operating expenses 2,179 - 2,627 -
----------------------------------------------------------------------------------------------------------------------
Operating income (loss) (6,994) - (5,767) -
----------------------------------------------------------------------------------------------------------------------
Expenditures for additions to long-lived assets 294 485
----------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 544 451
----------------------------------------------------------------------------------------------------------------------
Total assets 211,865 241,993
====================================================================================================================================
====================================================================================================================================
Consolidated Net sales to unaffiliated customers 253,922 100.0 235,012 100.0
Intersegment sales - - - -
------------------------------------------------------------------------------------------------------------------
Net sales 253,922 100.0 235,012 100.0
----------------------------------------------------------------------------------------------------------------------
Operating expenses 187,580 73.9 175,654 74.7
----------------------------------------------------------------------------------------------------------------------
Operating income (loss) 66,342 26.1 59,358 25.3
======================================================================================================================
Expenditures for additions to long-lived assets 8,323 8,336
----------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 8,275 8,214
----------------------------------------------------------------------------------------------------------------------
Total assets 350,776 366,374
====================================================================================================================================
(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)1,884 million, and (Y)2,566 million in FY 2005 and FY 2006, respectively
are not included in operating income in the business segment information. Therefore, these operating income do
not match with the operating income in the consolidated statements of income. Such exclusion was made since such
items are not included in the performance review of each business segment by management.
3. Total assets included in Corporate primarily consist of the parent company's cash and cash equivalents, assets
for general corporate use and assets used for fundamental research activities.
- 17 -
Advantest Corporation (FY2006)
2. Geographic Segment Information
====================================================================================================================================
FY2005 FY2006
(April 1, 2005 through (April 1, 2006 through
March 31, 2006) March 31, 2007)
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Percentage Amount Percentage
Net sales to unaffiliated customers (million) (%) (million) (%)
====================================================================================================================================
Americas 25,516 10.0 10,158 4.3
-----------------------------------------------------------------------------------------------------------------------------
Europe 14,558 5.7 11,238 4.8
-----------------------------------------------------------------------------------------------------------------------------
Asia 132,708 52.3 140,782 59.9
-----------------------------------------------------------------------------------------------------------------------------
Total Overseas 172,782 68.0 162,178 69.0
-----------------------------------------------------------------------------------------------------------------------------
Japan 81,140 32.0 72,834 31.0
-----------------------------------------------------------------------------------------------------------------------------
Consolidated 253,922 100.0 235,012 100.0
====================================================================================================================================
- 18 -
Advantest Corporation (FY2006)
3. Segment information by geographic area (Rounded to the nearest million yen)
===================================================================================================================================
FY2005 FY2006
(April 1, 2005 through Percentage (April 1, 2006 through Percentage
March 31, 2006) (%) March 31, 2007) (%)
- -----------------------------------------------------------------------------------------------------------------------------------
Japan Net sales to unaffiliated customers 119,996 - 132,035 -
Intersegment sales 111,958 - 80,289 -
-----------------------------------------------------------------------------------------------------------------------
Net sales 231,954 100.0 212,324 100.0
-----------------------------------------------------------------------------------------------------------------------
Operating expenses 169,426 73.0 159,782 75.3
-----------------------------------------------------------------------------------------------------------------------
Operating income (loss) 62,528 27.0 52,542 24.7
-----------------------------------------------------------------------------------------------------------------------
Total assets 180,431 160,386
===================================================================================================================================
===================================================================================================================================
Americas Net sales to unaffiliated customers 53,834 - 16,266 -
Intersegment sales 3,605 - 4,660 -
-----------------------------------------------------------------------------------------------------------------------
Net sales 57,439 100.0 20,926 100.0
-----------------------------------------------------------------------------------------------------------------------
Operating expenses 54,399 94.7 19,049 91.0
-----------------------------------------------------------------------------------------------------------------------
Operating income (loss) 3,040 5.3 1,877 9.0
-----------------------------------------------------------------------------------------------------------------------
Total assets 31,353 26,313
===================================================================================================================================
===================================================================================================================================
Europe Net sales to unaffiliated customers 18,505 - 17,841 -
Intersegment sales 1,312 - 1,271 -
-----------------------------------------------------------------------------------------------------------------------
Net sales 19,817 100.0 19,112 100.0
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Operating expenses 17,810 89.9 17,426 91.2
-----------------------------------------------------------------------------------------------------------------------
Operating income (loss) 2,007 10.1 1,686 8.8
-----------------------------------------------------------------------------------------------------------------------
Total assets 14,990 17,670
===================================================================================================================================
===================================================================================================================================
Asia Net sales to unaffiliated customers 61,587 - 68,870 -
Intersegment sales 7,000 - 6,852 -
-----------------------------------------------------------------------------------------------------------------------
Net sales 68,587 100.0 75,722 100.0
-----------------------------------------------------------------------------------------------------------------------
Operating expenses 62,691 91.4 67,073 88.6
-----------------------------------------------------------------------------------------------------------------------
Operating income (loss) 5,896 8.6 8,649 11.4
-----------------------------------------------------------------------------------------------------------------------
Total assets 65,372 75,948
===================================================================================================================================
===================================================================================================================================
Elimination Net sales to unaffiliated customers - - - -
and Corporate
Intersegment sales (123,875) - (93,072) -
-----------------------------------------------------------------------------------------------------------------------
Net sales (123,875) - (93,072) -
-----------------------------------------------------------------------------------------------------------------------
Operating expenses (114,862) - (85,110) -
-----------------------------------------------------------------------------------------------------------------------
Operating income (loss) (9,013) - (7,962) -
-----------------------------------------------------------------------------------------------------------------------
Total assets 58,630 86,057
===================================================================================================================================
===================================================================================================================================
Consolidated Net sales to unaffiliated customers 253,922 - 235,012 -
Intersegment sales - - - -
-----------------------------------------------------------------------------------------------------------------------
Net sales 253,922 100.0 235,012 100.0
-----------------------------------------------------------------------------------------------------------------------
Operating expenses 189,464 74.6 178,220 75.8
-----------------------------------------------------------------------------------------------------------------------
Operating income (loss) 64,458 25.4 56,792 24.2
-----------------------------------------------------------------------------------------------------------------------
Total assets 350,776 366,374
====================================================================================================================================
(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 expense
and segment by geographic area. Stock option expenses of (Y) 1,884 million and (Y) 2,566 million for the fiscal
year 2005 and 2006, respectively, are included in Corporate operating expenses.
2. Total assets included in Corporate primarily consist of the parent company's cash and cash equivalents, assets
for general corporate use and assets used for fundamental research activities.
- 19 -
Advantest Corporation (FY2006)
(Note 4) Income Taxes
The breakdown of "Income before income taxes" and "Income taxes" is as
follows:
(in million yen)
----------------------------
FY2005 FY2006
--------- -----------
Income before income taxes
Advantest and its domestic
subsidiaries 54,877 45,229
Foreign subsidiaries 12,577 15,861
------- ------
67,454 61,090
------- ------
(in million yen)
----------------------------
FY2005 FY2006
--------- -----------
Provision (benefit) for
income taxes
current
Advantest and its domestic
subsidiaries 19,831 14,227
Foreign subsidiaries 5,244 3,911
Deferred
Advantest and its domestic
subsidiaries 747 8,665
Foreign subsidiaries 258 (1,283)
--------- -----------
26,080 25,520
--------- -----------
Advantest and its domestic consolidated subsidiaries are subject to a 30.0%
income tax, inhabitant tax ranging from 18.1% to 20.7% and enterprise tax
ranging from 7.2% to 10.1%. The applicable statutory tax rate in both FY2005 and
FY2006 was approximately 40.3%.
A reconciliation of the Japanese statutory income tax rate and the
effective income tax rate as a percentage of income before income taxes is as
follows:
FY2005 FY2006
--------- -----------
Statutory tax rate 40.3% 40.3%
Increase (reduction) income taxes
resulting from:
Earnings of foreign subsidiaries
taxed at different rate from
the statutory rate in Japan (1.8) (2.8)
Tax credits earned (3.8) (5.0)
Expenses not deductable for
tax purposes 1.3 0.7
Tax on undistributed
earnings 2.2 11.0
Change in valuation
allowance (0.0) (2.1)
Other, net 0.5 (0.3)
--------- -----------
38.7% 41.8%
--------- -----------
In this fiscal year, due to the revision of dividend policies of foreign
subsidiaries, deferred tax liabilities pertaining to the undistributed earnings
of certain foreign subsidiaries are recognized.
- 20 -
Advantest Corporation (FY2006)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March 31,
2006 and 2007 are presented below.
(in million yen)
----------------
March 31, 2006 March 31,2007
-------------- --------------
Deferred tax assets
Inventories 4,379 3,343
Accrued warranty expenses 1,696 1,532
Accrued pension and severance cost 4,970 3,303
Accrued expenses 4,891 4,502
Research and development expenses
capitalized for tax purposes 1,361 1,701
Operating loss carried forward 330 421
Property, plant and equipment and
intangible assets 1,528 2,506
Tax credits 18 330
Other 5,184 3,690
------------- ------------
Total gross deferred tax assets 24,357 21,328
Less valuation allowance 1,263 -
------------- ------------
Net deferred tax assets 23,094 21,328
------------- ------------
Deferred tax liabilities
Net unrealized gains on
marketable securities 1,807 1,563
Tax on undistributed
earnings 1,467 8,160
Other 46 36
------------- ------------
Total gross deferred
tax liabilities 3,320 9,759
------------- ------------
Net deferred tax assets 19,774 11,569
------------- ------------
Included in other current liabilities and other liabilities are deferred
tax liabilities of (Y) 1,312 million and (Y) 336 million at March 31, 2006 and
2007, respectively.
The net changes in the valuation allowance for the years ended March 31,
2006 and 2007 were decreases of (Y) 1,762 million and (Y) 1,263 million,
respectively.
Net operating loss carryforwards utilized during the years ended March 31,
2006 and 2007 were (Y) 777 million and (Y) 486 million, respectively.
At March 31, 2007, Advantest had net operating loss carried forwards for
income tax purposes of approximately (Y) 1,046 million which are available to
reduce future income taxes, if any. These operating losses will expire starting
from the year ending March 31, 2013 through the year ending March 31, 2014.
Management of Advantest intends to reinvest certain undistributed earnings
of the Company's foreign subsidiaries for an indefinite period of time. As a
result, no deferred tax liabilities has been recognized on undistributed
earnings of these subsidiaries not expected to be remitted in the foreseeable
future, aggregating (Y) 25,639 million at March 31, 2007. The related deferred
tax liability would have been (Y) 1,111 million at March 31, 2007.
- 21 -
Advantest Corporation (FY2006)
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. At March 31, 2007, Advantest has recorded
on its consolidated balance sheet, net deferred tax assets of (Y) 11,569
million. Based upon projections for future taxable income over the periods in
which the deferred tax assets are deductible including management's expectations
of future semiconductor market and semiconductor and component test systems
market prospects and other factors, management believes it is more likely than
not that Advantest will realize the benefits of these deductible differences,
net of the existing valuation allowance, at March 31, 2007. The amount of the
deferred tax assets considered realizable, however, could be reduced in the near
term if estimates of future taxable income are reduced and the effect on
Advantest's consolidated financial position and results of operations could be
significant.
(Note 5) Per Share Information
On October 1, 2006, a one to two stock split was made to shares of the
common stock. Basic and diluted net income per share is calculated based on the
number of issued and outstanding shares after such stock split.
Basic and diluted net income per share were computed as follows:
FY2005 FY2006
------ ------
Numerator
Net income (million yen) 41,374 35,556
----------- -----------
Denominator
Basic weighted average shares 185,389,026 187,128,842
Dilutive effect of exercise of
stock option and warrants 994,054 1,141,846
----------- -----------
Diluted weighted average shares 186,383,080 188,270,688
----------- -----------
Basic net income per share 223.17 yen 190.01 yen
Diluted net income per share 221.98 yen 188.85 yen
----------- -----------
As of March 31, 2006 and March 31, 2007, stock options and warrants
representing, upon exercise, 3,980 shares and 11,980 shares respectively, were
outstanding but were not included in the computation for net income per share
(diluted) because the foregoing did not have any dilutive effect.
- 22 -
(All non-consolidated financial information has
been prepared in accordance with accounting principles generally accepted in Japan.)
Advantest Corporation (FY2006)
5. Non-Consolidated Financial Statements
(1) Balance Sheets
- ------------------------------------------------------------------------------------------------------------------------------------
FY2005 FY2006 as compared to
the previous
(As of March 31, 2006) (As of March 31, 2007) fiscal year
- ------------------------------------------------------------------------------------------------------------------------------------
Increase
Amount Percentage Amount Percentage (decrease)
(in million yen) (%) (in million yen) (%) (in million yen)
- ---------------------------------------------------------------------------------------------------------------------------------
(Assets)
I Current Assets
1. Cash and deposits 86,669 112,558
2. Trade notes receivables 1,001 4,505
3. Accounts receivable 71,892 56,313
4. Finished goods 3,571 5,156
5. Raw materials 4,774 2,954
6. Work in process 13,085 15,997
7. Supplies 177 165
8. Short-term loans receivable 5,917 6,095
9. Other receivable 1,962 952
10. Deferred tax assets 9,514 9,017
11. Other 1,307 449
12. Allowance for doubtful accounts - (983)
---------- ---------- ---------
Total current assets 199,872 72.8 213,182 73.6 13,309
---------- ---------- ---------
II Noncurrent assets
(1) Property, plant and equipment
1. Buildings 42,922 42,735
Accumulated depreciation 28,758 14,163 29,274 13,461
--------- ---------
2. Structures 3,994 3,981
Accumulated depreciation 3,162 831 3,211 770
--------- ---------
3. Machinery and equipment 18,387 17,566
Accumulated depreciation 14,746 3,640 14,114 3,452
--------- ---------
4. Vehicles and delivery equipment 40 40
Accumulated depreciation 16 24 24 16
--------- ---------
5. Tools and furniture 12,861 13,019
Accumulated depreciation 10,689 2,171 10,855 2,164
--------- ---------
6. Land 17,915 17,622
7. Construction in progress 33 297
---------- ---------- ---------
Total property, plant and equipment 38,781 14.1 37,784 13.0 (996)
---------- ---------- ---------
(2) Intangible fixed assets
1. Patent rights 136 139
2. Leasehold rights 173 173
3. Telephone rights 39 39
4. Utility rights 55 23
5. Software 816 940
6. Other 12 149
---------- ---------- ---------
Total intangible fixed assets 1,233 0.5 1,467 0.5 233
---------- ---------- ---------
- ---------------------------------------------------------------------------------------------------------------------------------
(Note) Accumulated depreciation includes the accumulated impairment losses.
- 23 -
(All non-consolidated financial information has
been prepared in accordance with accounting principles generally accepted in Japan.)
Advantest Corporation (FY2006)
- ---------------------------------------------------------------------------------------------------------------------------------
FY2005 FY2006 as compared to
the previous
(As of March 31, 2006) (As of March 31, 2007) fiscal year
- ----------------------------------------------------------------------------------------------------------------------------------
Increase
Amount Percentage Amount Percentage (decrease)
(in million yen) (%) (in million yen) (%) (in million yen)
- ----------------------------------------------------------------------------------------------------------------------------------
(3)Investments and other assets
1. Investment securities 12,228 11,336
2. Investment in affiliated companies 16,470 16,480
3. Long-term loans receivable 28 34
4. Long-term loans to affiliated
companies 1,050 1,050
5. Long-term prepaid expenses 426 2,582
6. Deferred tax assets 3,482 4,791
7. Other 965 988
---------- ---------- ---------
Total investment and other assets 34,650 12.6 37,263 12.9 2,612
---------- ---------- ---------
Total noncurrent assets 74,665 27.2 76,515 26.4 1,849
---------- ---------- ---------
Total assets 274,538 100.0 289,697 100.0 15,159
---------- ---------- ---------
(Liabilities)
I Current liabilities
1. Trade accounts payable 30,476 26,407
2. Other accounts payable 2,419 2,030
3. Accrued expenses 9,054 9,992
4. Income tax payable 16,315 8,082
5. Advance received 122 204
6. Deposits received 4,677 5,108
7. Allowance for product warranty 4,877 4,192
8. Bonus accrual for directors - 203
9. Other 177 138
- ---------- ---------- ---------
Total current liabilities 68,120 24.8 56,358 19.5 (11,762)
- ---------- ---------- ---------
II Noncurrent liabilities
1. Long-term borrowings 10 -
2. Allowance for retirement benefits 6,970 6,255
3. Allowance for officers' retirement
benefits 1,681 -
4. Other 529 2,277
- ---------- ---------- ---------
Total noncurrent liabilities 9,191 3.4 8,533 2.9 (657)
- ---------- ---------- ---------
Total liabilities 77,311 28.2 64,891 22.4 (12,420)
- ---------- ---------- ---------
- ---------------------------------------------------------------------------------------------------------------------------------
- 24 -
(All non-consolidated financial information has
been prepared in accordance with accounting principles generally accepted in Japan.)
Advantest Corporation (FY2006)
- ---------------------------------------------------------------------------------------------------------------------------------
FY2005 FY2006 as compared to
the previous
(As of March 31, 2006) (As of March 31, 2007) fiscal year
- ---------------------------------------------------------------------------------------------------------------------------------
Increase
Amount Percentage Amount Percentage (decrease)
(in million yen) (%) (in million yen) (%) (in million yen)
- ---------------------------------------------------------------------------------------------------------------------------------
(Stockholders' equity)
I Common stock 32,362 11.8 - - (32,362)
II Capital surplus
1. Additional paid-in capital 32,973 32,973 - -
--------- -------- -------- -------
Total capital surplus 32,973 12.0 - - (32,973)
III Retained earnings
1. Legal reserve 3,083 -
2. Voluntary reserve
(1) Reserve for losses in foreign
investments 27,062 -
(2) General reserve 121,880 148,942 - -
--------- --------
3. Unappropriated earnings at end of year 35,204 -
-------- --------
Total retained earnings 187,229 68.2 - - (187,229)
IV Net unrealized holding gains on other
securities 2,677 0.9 - - (2,677)
V Treasury stock (58,017) (21.1) - - 58,017
--------- -------- ---------
Total stockholders' equity 197,226 71.8 - - (197,226)
--------- -------- ---------
Total liabilities and stockholders'
equity 274,538 100.0 - - (274,538)
--------- -------- ---------
(Net assets)
I. Stockholders' equity
1. Common stock - - 32,362 11.2 32,362
2. Capital surplus
(1)Additional paid-in capital - 32,973
--------- -------
Total capital surplus - - 32,973 11.4 32,973
3. Retained earnings
(1)Legal reserve - 3,083
(2)Other retained earnings
Reserve for losses in foreign
investments - 27,062
General reserve - 146,880
Retained earnings brought forward - 31,347
-------- -------
Total retained earnings - - 208,372 71.9 208,372
4. Treasury stock - - (53,555) (18.5) (53,555)
--------- --------- ---------
Total stockholders' equity - - 220,152 76.0 220,152
II Difference of appreciation and conversion
1. Net unrealized gains on securities - 2,315
-------- -------
Total difference of appreciation and
conversion - - 2,315 0.8 2,315
III Stock Acquisition Rights - - 2,337 0.8 2,337
--------- --------- ---------
Total net assets - - 224,805 77.6 224,805
--------- --------- ---------
Total liabilities and net assets - - 289,697 100.0 289,697
--------- --------- ---------
- ---------------------------------------------------------------------------------------------------------------------------------
- 25 -
(All non-consolidated financial information has been prepared in accordance with
accounting principles generally accepted in Japan.)
Advantest Corporation (FY2006)
(Statement of Income)
- ---------------------------------------------------------------------------------------------------------------------------------
FY2005 FY2006 as compared to
(April 1, 2005 through (April 1, 2006 through the previous
March 31, 2006) March 31, 2007) fiscal year
- ---------------------------------------------------------------------------------------------------------------------------------
Increase
Amount Percentage Amount Percentage (decrease)
(in million yen) (%) (in million yen) (%) (in million yen)
- ---------------------------------------------------------------------------------------------------------------------------------
I Net sales
1. Net product sales 217,688 217,688 100.0 197,753 197,753 100.0 (19,934)
-------- --------
II Cost of sales
1. Inventory of finished goods
at beginning of year 4,371 3,571
2. Cost of manufactured goods 113,665 100,563
-------- --------
Total 118,037 104,134
3. Transfers to other accounts 859 782
4. Inventory of finished goods
at end of year 3,571 5,156
-------- ---------
Balance of cost of sales 113,606 113,606 52.2 98,195 98,195 49.7 (15,411)
-------- -------- --------- -------- ---------
Gross profit 104,082 47.8 99,558 50.3 (4,523)
III Selling, general and
administrative expenses 54,335 25.0 58,054 29.3 3,719
-------- -------- ---------
Operating income (loss) 49,746 22.8 41,503 21.0 (8,242)
IV Non-operating income
1. Interest income 139 420
2. Dividends income 2,465 2,543
3. Lease income 2,085 2,119
4. Miscellaneous income 1,743 6,433 3.0 356 5,440 2.8 (992)
--------- --------- ---------
V Non-operating expenses
1. Interest expenses 23 22
2. Bond interests 265 -
3. Transfer of allowance for
doubtful account - 983
4. Expenses related to leased equipment 1,598 1,628
5. Miscellaneous expenses 414 2,301 1.0 671 3,306 1.7 1,004
--------- -------- --------- -------- ---------
Ordinary income (loss) 53,878 24.8 43,638 22.1 (10,240)
-------- -------- ---------
Income (loss) before income taxes 53,878 24.8 43,638 22.1 (10,240)
Income taxes 18,364 14,769
Income taxes - deferred 239 18,604 8.6 (567) 14,201 7.2 (4,403)
--------- -------- --------- -------- ---------
Net income (loss) 35,273 16.2 29,436 14.9 (5,836)
Retained earnings brought forward 4,024 -
Loss from disposition of
treasury stock 1,780 -
Interim dividend 2,313 -
-------- -------- ---------
Unappropriated earnings at end of year 35,204 -
-------- -------- ---------
- ---------------------------------------------------------------------------------------------------------------------------------
- 26 -
(All non-consolidated financial information has been prepared in accordance
with accounting principles generally accepted in Japan.)
Advantest Corporation (FY2006)
(3) Statement of Appropriation of Retained Earnings and Statements of Changes in
Stockholders' Equity
Statement of Appropriation of Retained Earnings
FY2005
(April 1, 2005 through
March 31, 2006)
- ---------------------------------------------------------
Amount
(in million yen)
- ---------------------------------------------------------
I Unappropriated earnings
at end of year 35,204
II Appropriation of earnings
1. Dividends 4,199
2. Director's bonus 180
3. Corporate auditor's bonus 23
4. Voluntary reserve
General reserve 25,000 29,402
--------- ---------
III Unappropriated earnings
carried forward 5,801
---------
- ---------------------------------------------------------
- 27 -
(All non-consolidated financial information has been prepared in accordance
with accounting principles generally accepted in Japan.)
Advantest Corporation (FY2006)
(Statement of Changes in Stockholders' Equity)
FY2006 (April 1, 2006 through March 31, 2007)
Stockholders' Equity
----------------------------------------------------------------------------------------------------------------
Capital Difference of
Surplus Retained earnings appreciation
---------- ------------------------------------ and
Other retained earnings conversion
---------------------------- ------------
Reserve for Retained Net
Additional losses in earnings Total unrealized Stock Total
Common paid-in Legal foreign General brought Treasury stockholders' gains on acquisition net
Stock capital reserve investments reserve forward stock equity securities rights assets
- -----------------------------------------------------------------------------------------------------------------------------------
Balance of
March 31, 2006
(Millions of yen) 32,362 32,973 3,083 27,062 121,880 35,204 (58,017) 194,548 2,677 - 197,226
- -----------------------------------------------------------------------------------------------------------------------------------
Changes in
the term
- -----------------------------------------------------------------------------------------------------------------------------------
Transfer
to
voluntary
reserve
(Note 1) 25,000 (25,000) - -
- ------------------------------------------------------------------------------------------------------------------------------------
Bonus of
directors
and
corporate
auditors
(Note 2) (203) (203) (203)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends
from
surplus
(Note 3) (7,473) (7,473) (7,473)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 29,436 29,436 29,436
- -----------------------------------------------------------------------------------------------------------------------------------
Purchase
of treasury
stock (67) (67) (67)
- -----------------------------------------------------------------------------------------------------------------------------------
Disposal
of treasury
stock (617) 4,529 3,912 3,912
- -----------------------------------------------------------------------------------------------------------------------------------
Net changes
of items
other than
stockholders'
equity - (362) 2,337 1,975
- -----------------------------------------------------------------------------------------------------------------------------------
Total changes
in the term
(Millions of yen) - - - - 25,000 (3,857) 4,461 25,604 (362) 2,337 27,579
- -----------------------------------------------------------------------------------------------------------------------------------
Balance of
March 31, 2007 32,362 32,973 3,083 27,062 146,880 31,347 (53,555) 220,152 2,315 2,337 224,805
(Millions of yen)
- -----------------------------------------------------------------------------------------------------------------------------------
Note 1: Transfer to voluntary reserve was an appropriated earnings item for the general shareholders' meeting held in June, 2006.
Note 2: Bonus of directors and corporate auditors was an appropriated earnings item for the general shareholders' meeting held in
June, 2006.
Note 3: (Y)4,199 million out of Dividends from surplus was an appropriated earnings item for the general shareholders' meeting
held in June, 2006.
- 28 -
Advantest Corporation (FY2006)
Supplemental Information to the FY2006 Earnings Digest
*All consolidated figures were prepared in accordance with U.S. GAAP.
1. Summary of FY2006 Results (April 1, 2006 through March 31, 2007)
(Consolidated) (Rounded to the nearest million yen)
===================================================================================================================================
FY2005 FY2006 Increase/ Percentage
Decrease change (%)
===================================================================================================================================
Net sales 253,922 235,012 (18,910) (7.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 64,458 56,792 (7,666) (11.9)
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 67,454 61,090 (6,364) (9.4)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 41,374 35,556 (5,818) (14.1)
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets 350,776 366,374 15,598 4.4
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets 257,927 294,797 36,870 14.3
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share (basic) (in yen) (note) 223.17 190.01 (33.16) (14.9)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share (diluted) (in yen) (note) 221.98 188.85 (33.13) (14.9)
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets per share (in yen) (note) 1,381.85 1,570.99 189.14 13.7
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends per share (in yen) 70.00 67.5 (2.5) (3.6)
- -----------------------------------------------------------------------------------------------------------------------------------
Net interest expense 1,470 3,010 1,540 104.9
- -----------------------------------------------------------------------------------------------------------------------------------
ROE(%) 17.8 12.9 (4.9) (27.5)
===================================================================================================================================
(Note) On October 1, 2006, a one to two stock split was made to shares of the common stock. Per share information
for each period is calculated based on the assumption that the stock split was made at the beginning of the
previous fiscal year.
(Non-Consolidated) (Parent Company only, Japanese GAAP) (Truncated after the million yen)
===================================================================================================================================
FY2005 FY2006 Increase/ Percentage
Decrease change (%)
===================================================================================================================================
Net sales 217,688 197,753 (19,934) (9.2)
- ----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 49,746 41,503 (8,242) (16.6)
- ----------------------------------------------------------------------------------------------------------------------------------
Ordinary income (loss) 53,878 43,638 (10,240) (19.0)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 35,273 29,436 (5,836) (16.5)
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets 274,538 289,697 15,159 5.5
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets 197,226 224,805 27,579 14.0
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share (in yen) (note) 378.34 157.31 (221.03) (58.4)
- ----------------------------------------------------------------------------------------------------------------------------------
Fully diluted net income per share (in yen) (note) 376.33 156.34 (219.99) (58.5)
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets per share (in yen) (note) 2,111.11 1,185.55 (925.56) (43.8)
===================================================================================================================================
(Note) On October 1, 2006, a one to two stock split was made to shares of the common stock. Per share information
for the fiscal year ended March 31, 2007 is calculated based on the number of issued and outstanding shares
after such stock split. Per share information for the fiscal year ended March 31, 2006 is calculated based on
the number of issued and outstanding shares before the stock split.
2. Consolidated Net Sales by Business and Geographic Segment (Rounded to the nearest million yen)
===================================================================================================================================
By Business Segment FY2005 FY2006 Increase/ Percentage
Decrease change (%)
===================================================================================================================================
Semiconductor and Component 191,415 167,815 (23,600) (12.3)
Test System
--------------------------------------------------------------------------------------------------------------
Mechatronics System 48,260 52,025 3,765 7.8
--------------------------------------------------------------------------------------------------------------
Services, Support and Others 19,062 18,312 (750) (3.9)
--------------------------------------------------------------------------------------------------------------
Intercompany transactions elimination (4,815) (3,140) 1,675 -
- ----------------------------------------------------------------------------------------------------------------------------------
Total net sales 253,922 235,012 (18,910) (7.4)
===================================================================================================================================
===================================================================================================================================
By Geographic Segment FY2005 FY2006 Increase/ Percentage
Decrease change (%)
--------------------------------------------------------------------------------------------------------------
Japan 81,140 72,834 (8,306) (10.2)
--------------------------------------------------------------------------------------------------------------
Americas 25,516 10,158 (15,358) (60.2)
--------------------------------------------------------------------------------------------------------------
Europe 14,558 11,238 (3,320) (22.8)
--------------------------------------------------------------------------------------------------------------
Asia 132,708 140,782 8,074 6.1
- ----------------------------------------------------------------------------------------------------------------------------------
Total overseas 172,782 162,178 (10,604) (6.1)
===================================================================================================================================
- 29 -
Advantest Corporation (FY2006)
3. Consolidated Orders input received and Orders backlog by Business Segment (Rounded to the nearest million yen)
===================================================================================================================================
Orders input received FY2005 FY2006 Increase/ Percentage
Decrease change (%)
===================================================================================================================================
Semiconductor and Component 195,585 175,126 (20,459) (10.5)
Test System
--------------------------------------------------------------------------------------------------------------
Mechatronics System 49,491 54,861 5,370 10.8
--------------------------------------------------------------------------------------------------------------
Services, Support and Others 19,251 18,013 (1,238) (6.4)
--------------------------------------------------------------------------------------------------------------
Intercompany transactions elimination (4,892) (5,131) (239) -
- ----------------------------------------------------------------------------------------------------------------------------------
Total orders input received 259,435 242,869 (16,566) (6.4)
===================================================================================================================================
===================================================================================================================================
Orders backlog FY2005 FY2006 Increase/ Percentage
Decrease change (%)
===================================================================================================================================
Semiconductor and Component 36,215 43,526 7,311 20.2
Test System
--------------------------------------------------------------------------------------------------------------
Mechatronics System 7,891 10,727 2,836 35.9
--------------------------------------------------------------------------------------------------------------
Services, Support and Others 1,038 739 (299) (28.8)
--------------------------------------------------------------------------------------------------------------
Intercompany transactions elimination (93) (2,084) (1,991) -
- ----------------------------------------------------------------------------------------------------------------------------------
Total orders backlog 45,051 52,908 7,857 17.4
===================================================================================================================================
(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 orders backlog at the end of such period less the orders 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)
===================================================================================================================================
FY2005 FY2006 Increase/ Percentage
Decrease change (%)
===================================================================================================================================
Operating activities 59,480 48,951 (10,529) (17.7)
--------------------------------------------------------------------------------------------------------------
Investing activities (8,542) (8,013) 529 -
--------------------------------------------------------------------------------------------------------------
(Free cash flows) 50,938 40,938 (10,000) (19.6)
--------------------------------------------------------------------------------------------------------------
Financing activities (18,336) (3,662) 14,674 -
- ----------------------------------------------------------------------------------------------------------------------------------
Total cash flows 32,602 37,276 4,674 14.3
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period 157,925 196,395 38,470 24.4
===================================================================================================================================
5. Consolidated Outstanding Interest-bearing liabilities (Rounded to the nearest million yen)
===================================================================================================================================
FY2005 FY2006 Increase/ Percentage
Decrease change (%)
===================================================================================================================================
Loans and lease obligations 64 25 (39) (60.2)
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 64 25 (39) (60.2)
===================================================================================================================================
6. Consolidated Capital Expenditure, Depreciation and Amortization and Research and Development Expenses
(Rounded to the nearest million yen)
===================================================================================================================================
FY2005 FY2006 Increase/ Percentage
Decrease change (%)
===================================================================================================================================
Capital expenditures 8,323 8,336 13 0.1
- ----------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 8,275 8,214 (61) (0.7)
- ----------------------------------------------------------------------------------------------------------------------------------
Research and development expenses 26,927 29,509 2,582 9.6
===================================================================================================================================
7. Number of Employees (Advantest Corporation and Consolidated Subsidiaries) (Persons)
===================================================================================================================================
FY2005 FY2006 Increase/ Percentage
Decrease change (%)
===================================================================================================================================
Non-Consolidated (Parent Company only) 1,445 1,454 9 0.6
- ----------------------------------------------------------------------------------------------------------------------------------
Domestic 1,355 1,378 23 1.7
- ----------------------------------------------------------------------------------------------------------------------------------
Overseas 795 805 10 1.3
- ----------------------------------------------------------------------------------------------------------------------------------
Consolidated Subsidiaries total 2,150 2,183 33 1.5
- ----------------------------------------------------------------------------------------------------------------------------------
Consolidated full-time employee total 3,595 3,637 42 1.2
===================================================================================================================================
- 30 -
Changes in Board Directors, Corporate Auditors and Executive Officers
(To be effective on June 27, 2007)
1. Nominees for Board Directors
Chairman of the Board Shimpei Takeshita
Representative Board Director Toshio Maruyama
Board Director Naoyuki Akikusa
Board Director Yasushige Hagio
Board Director Junji Nishiura
Board Director Hiroji Agata
Board Director Takashi Tokuno
Board Director Hiroshi Tsukahara (to be newly elected)
Managing Executive Officer
Board Director Yuichi Kurita (to be newly elected)
Executive Officer
2. Nominees for Corporate Auditors
Corporate Standing Auditor Takashi Takaya
Corporate Auditor
Corporate Standing Auditor Hitoshi Owada (to be newly elected)
Board Director and Managing Executive
Officer
Corporate Auditor Jiro Haneda (to be newly elected)
Former Corporate Standing Auditor,
Nippon Office Systems Ltd.
3. Nominees for Executive Officers
President and CEO Toshio Maruyama
Senior Executive Officer Junji Nishiura
Senior Executive Officer Hiroji Agata
Senior Executive Officer Takashi Tokuno
Managing Executive Officer Hiroshi Tsukahara
Managing Executive Officer Yuichi Kurita (to be promoted)
Managing Executive Officer Yuri Morita
Managing Executive Officer Jiro Katoh
Managing Executive Officer Takao Tadokoro
Managing Executive Officer Hiroyasu Sawai
Managing Executive Officer Yoshiro Yagi (to be promoted)
Executive Officer Masao Shimizu
Executive Officer Masao Araki
Executive Officer Hideaki Imada
Executive Officer Akira Hatakeyama
Executive Officer Yasuhiro Kawata
Executive Officer Takashi Sugiura
Executive Officer Shinichiro Kuroe
Executive Officer Takashi Sekino
Executive Officer Hiroshi Nakamura
Executive Officer Yoshiaki Yoshida
Executive Officer Minoru Morishita (to be newly elected)
4. Resignation from Board Directors, Corporate Auditors and Executive Officers
Hiroshi Oura, Board Director and Senior Executive Adviser
--- to be elected as Senior Executive Adviser
Hitoshi Owada, Board Director and Managing Executive Officer
--- to be elected as Corporate Standing Auditor
Noboru Yamaguchi, Corporate Standing Auditor --- to be elected as Adviser
Tadahiko Hirano, Corporate Standing Auditor --- to be elected as Adviser
Shinichiro Umeda, Executive Officer --- to be elected as Adviser
Nominees for New Board Directors (Biography)
Hiroshi Tsukahara (Date of Birth: August 26, 1950)
Mar. 1974 Graduated from Faculty of Technology, Seikei University
Apr. 1974 Joined Advantest Corporation
Jun. 2001 Board Director, Advantest Corporation
Jun. 2003 Executive Officer, Advantest Corporation
Jun. 2005 Managing Executive Officer (Current Position)
Jun. 2006 Senior Vice President, 1st Test System Business Group
(Current Position)
Yuichi Kurita (Date of Birth: July 28, 1949)
Mar. 1973 Graduated from Faculty of Foreign Studies, Tokyo University
of Foreign Studies
Apr. 1973 Joined Fujitsu Limited
Mar. 2001 Joined Advantest Corporation
Jun. 2003 Executive Officer, Advantest Corporation (Current Position)
Jun. 2005 Senior Vice President, Corporate Planning Group
(Current Position)
Nominees for New Corporate Auditors (Biography)
Hitoshi Owada (Date of Birth: March 26, 1946)
Mar. 1964 Graduated from Fukaya Commercial High School
Feb. 1970 Joined Advantest Corporation
Jun. 1997 Board Director, Advantest Corporation
Jun. 2000 Managing Director, Advantest Corporation
Jun. 2003 Board Director and Managing Executive Officer, Advantest
Corporation (Current Position)
Jiro Haneda (Date of Birth: October 3, 1943)
Mar. 1966 Graduated from Faculty of Economics, University of Tokyo
Apr. 1966 Joined Nippon Kangyo Bank, Ltd.
Oct. 1998 Executive Director, Kanematsu Corporation
Mar. 2004 Corporate Standing Auditor, Nippon Office Systems Ltd.
Nominee for New Executive Officer (Biography)
Minoru Morishita (Date of Birth: January 12, 1949)
Mar. 1972 Graduated from School of Social Sciences, Waseda University
Jun. 1973 Joined Advantest Corporation
Jun. 2002 General Manager, Nanotechnology 2nd Business Division
(Current Position)