Maruwa Regulatory News (MAW)

14 Nov 2006 09:41

Maruwa Co Ld 14 November 2006 14 November 2006MARUWA CO., LTD.3-83, Minamihonjigahara-cho, Owariasahi-city, Aichi-pref., 488-0044 JAPAN Interim Results for Fiscal 2007 MARUWA CO., LTD. today announced interim consolidated business results for the fiscal year ending 31 March2007 as follows; \* The financial statements are prepared in conformity with the accounting principles generally accepted inJapan. *US dollar amounts are converted for convenience only at the rate of US$1 = 117.90yen. *Consolidated subsidiaries: 8 companies (Maruwa (Malaysia) Sdn. Bhd., Taiwan Maruwa Co., Ltd., MARUWAElectronics (Taiwan) Co., Ltd., Maruwa Europe Ltd., Maruwa America Corp., Maruwa Electronic (India) Pvt.Ltd.,MARUWA QUARTZ Co., Ltd., and Hokko Denshi Co., Ltd.) I. Summary of Consolidated Interim Results (1) Summary of consolidated statement of income JPY million JPY million USD thousand For 6-month period For 6-month Change % For year ended For 6-month period period 1 Apr. - 30 Sept. 1 Apr. - 30 Sept. 31 March 1 Apr. - 30 Sept. 2006 2005 2006 2006 Net sales 9,763 9,005 8.4% 20,278 82,807 Operating income 822 718 14.5% 1,693 6,972 Income before 972 547 77.7% 1,669 8,244income taxes Net income 631 282 123.8% 1,135 5,352 JPY USD Net income per 57.60 26.06 121.0% 103.82 0.49share *Average number of 10,960,935 10,803,643 10,880,952issued shares (2) Summary of consolidated financial condition JPY million JPY million USD thousand As of 30 Sept. As of 30 Sept. Change % As of 31 March As of 30 Sept. 2006 2005 2006 2006 Total Assets 32,496 30,538 6.4% 33,044 275,623 Shareholders' equity 27,037 25,272 7.0% 26,557 229,321 Shareholders' equity 83.2% 82.8% 80.4%ratio JPY USDShareholders' equity 2,465.43 2,315.35 6.5% 2,423.40 20.91per share *Number of issued 10,966,660 10,914,860 10,956,360shares at the year end (3) Summary of consolidated statement of cash flows JPY million JPY million USD thousand For 6-month period For 6-month Change % For year For 6-month period ended period 1 Apr. - 30 Sept. 1 Apr. - 30 Sept. 31 March 1 Apr. - 30 Sept. 2006 2005 2006 2006 Net cash provided by 788 423 86.3% 2,036 6,684operating activities Net cash used in (1,425) (181) 687.3% (1,234) (12,087)investing activities Net cash used in (185) 164 212.8% 51 (1,569)financing activities Cash and cash 7,226 7,401 -2.4% 7,899 61,289equivalents at end ofterm II. Outlook for the full fiscal 2007 ending 31 March 2007 JPY million Full year Net sales 24,530 Net income 1,690 Net income per share 154.25 *Cautionary statements: the above forecasts are forward-looking statements involving risks anduncertainties. Due to a number of factors, actual results may differ significantly from these estimates. Management Policies (1) Basic management policy Based on the basic corporate principle - The three roots of our trunk:Advancement of the company, Welfare of the workforce, and Satisfaction of theshareholders,- MARUWA group strives to differentiate us from our peers byconsistently being professional of material technology and following qualityfirst policy, and to enhance the corporate value to meet the expectations of allthe stakeholders. Based on this policy, it is MARUWA's management policy to survive among severeglobal business competition as well as to develop No.1 products in global nichemarkets by reinforcing its core business with a selection and concentrationstrategy. (2) Dividend policy As a profit allocation policy, MARUWA considers to allocate acquiredcash-flows through operations to active investment into new growing areas,consolidated results-considered dividends, and the appropriation of retainedearnings for flexible use against management environment changes. We have madeefforts to increase dividends since the previous term, focusing on profitreturns to shareholders while we hold the internal reserves for strategicinvestment required to expand our core business continuously. (3) Targeted management indices MARUWA emphasizes operating income ratio as an important index to indicateprofitability. We set a medium-to-long term target - net sales 40 billion yenand operating income ratio 20%. For this goal, we are determined to establishprofit-acquiring system of production and sales together toward solid growth inthe electronic components industry amid rapid changes and severe competition. (4) Business strategies in medium-to-long term We have enforced to build up an operational system responsive to marketchanges, learning from the management lessons of the IT bubble and its collapsein 2000 and 2001. As a result, we achieved the enhancement of financialcondition and the establishment of profitability. Now the whole MARUWA group isfocusing on the mid-term target - total sales 40 billion yen / operating incomemargin 20%. For a medium-to-long term growth strategy, in addition to the development andcreation of new products and businesses within the company, we will maintain ourM&A strategy to acquire business or products that could create a synergeticeffect with our material technology and other base technologies and productline-ups. Together with above expansion strategy, MARUWA aims for being a respectedcompany by sticking with the basis of manufacturing and contributing to localsocieties with fulfillment of social responsibility. Management issues 1. Enhance the businesses acquired through M&A The businesses acquired through M&A in the past have grown by managementefforts from deficit to the level that can contribute to revenue. We will startworking for new growth, further enhancing the business structure as well asadding synergetic effects with our core businesses. 2. Start the mass-production of new developed products We will start the mass-production of the products developed with our uniquematerial technology to earn profits aggressively. 3. Improve material technology and product development capability For more customers' satisfaction, each product will be staffed with salesengineers in charge of product planning and development in order to supplyproducts that meet the needs of customers in rapidly changing markets in thename of 'MARUWA of material technology'. 4. Strengthen the sales force in overseas To increase sales in the global manufacturing areas of our customers and themarkets of important international companies, we will strengthen and increaseoverseas sales sites, take the needs of customers in advance, expand newcustomers, and improve our market shares. Review of Operations and Financial Condition I. Operating Results Quarterly JPY million Fiscal 2006 Fiscal 2007 1Q 2Q 3Q 4Q 1Q 2Q Net sales 4,481 4,524 5,082 6,191 4,878 4,885 Operating income 398 321 522 452 420 402 Net income 51 231 399 454 357 274 Semiannually JPY million Fiscal 2006 Fiscal 2007 For 6-month period For 6-month period For 6-month period 1 April - 30 Sept 1 Oct.2005 - 31 1 Apr. - 30 Sept. 2005 Mar. 2006 2006 Net sales 9,005 11,273 9,763 Operating income 718 975 822 Net income 282 853 631 (1) Review of operations Japanese economy in the first half of this fiscal term has been favorable,supported by increases of capital expenditures among enterprises and by consumerspending. Global economy continued to expand as U.S economy showed underlyingstrength. In such circumstances, our business environment has been generally solid,influenced by an aggressive production increase trend in IT-related industries. Net sales in this first half were 9,763 million yen, an increase of 8.4% withthe first half of the previous year. As for profits, operating income increased 14.5% to 822 million yen comparedto the previous fist half due to a revenue increase in Circuit Ceramics,contribution by Machinery Ceramics, which was enhanced in profitability throughthe last year, and a decrease of loss in Lighting Equipment business in spite ofexpenses for the reorganization of manufacturing equipments. Net income increased 123.8% to 631 million yen compared to the first half oflast year. Considering operating results stated above, as for interim dividend in thisfirst half, we will pay 12 yen per share, as announced in May 2006, up 3 yencompared with the previous first half. (2) Review of operating results by segment JPY million Fiscal 2006 Fiscal 2007 For 6-month period For 6-month period For 6-month period 1 Apr. - 30 Sept. 1 Oct.05 - 31 Mar. 2006 1 Apr. - 30 Sept. 2005 2006Ceramic Components:Net sales 8,299 8,329 8,843Operating income 1,198 1,036 1,294 Lighting Equipment:Net sales 706 2,944 920Operating income (244) 217 (124) Total:Net sales 9,005 11,273 9,763Operating income 954 1,253 1,170 Elimination:Net sales -- -- --Operating income (236) (278) (348) Consolidated:Net sales 9,005 11,273 9,763Operating income 718 975 822 Quarterly sales results of Ceramic Components segment by product division JPY million Fiscal 2006 Fiscal 2007 1Q 2Q 3Q 4Q 1Q 2Q Circuit Ceramics 1,649 1,576 1,519 1,601 1,778 1,908 Machinery Ceramics 1,129 1,117 1,135 1,063 1,148 1,189 RF Products 344 364 417 464 407 354 EMC Components 1,096 1,024 1,075 1,055 1,046 1,013 Total 4,218 4,081 4,146 4,183 4,379 4,464 *RF=Radio Frequency JPY million Fiscal 2006 Fiscal 2007 For 6-month period For 6-month period For 6-month period 1 Apr. - 30 Sept. 1 Oct.05 - 31 Mar. 1 Apr. - 30 Sept. 2005 2006 2006Circuit Ceramics 3,225 3,120 3,686 Machinery Ceramics 2,246 2,198 2,337 RF Products 708 881 761 EMC Components 2,120 2,130 2,059 Total 8,299 8,329 8,843 *RF=Radio Frequency Circuit Ceramics Circuit Ceramics include ceramic substrates for chip resistors which areessential for a wide range of electronic appliances, glazed ceramic substratesfor thermal printer head (TPH) for FAX or barcode label printers, large ceramicsubstrates for hybrid ICs, and Aluminum Nitride (AlN) for power modules andautomobiles. Total sales of this division were 3,686 million yen, up 14.3% compared to thefirst half of the previous term, reflected solid orders in informationcommunication devices such as mobile phones and PCs and industrial machineriesmarkets. Ceramic substrates for chip resistors continuously enjoyed high demands,gradually showing positive effects from preparation for a production increase.Also, an increase of demand for large substrates for power modules contributedto increase in revenue. Machinery Ceramics Machinery Ceramics include quarts glass products mainly for semiconductorequipment, magnetic head-supporting blocks for PCs, and ceramic facet valves.The products in this division require high precision process techniques. In this division, quartz glass products, which had been inactive in the secondhalf of last year, saw a sales recovery; on the other hand, some products whichtend to have little demand posted sales decreases. Therefore, total interimsales were 2,337 million yen, up 4.1% compared to the interim results of lastyear. Radio Frequency Products Radio Frequency Products include device products such as band pass filters formobile phones and other wireless communication appliances, dielectric ceramicsfor filters used in mobile communications or antennas, and thin film substratesfor optical information and communications. Total sales of this division were 761 million yen, up 7.5% compared to theinterim results of last term. Device products sales increased thanks to products for base stations andwireless communications for commercial-use. Thin-film products were affectedfrom inventory adjustments by customers. EMC Components EMC Components include multi-layer ceramic capacitors of high-voltage/high-capacitance mainly for digital cameras, LCD backlights, and power supply ofelectronic devices, and components as a countermeasure against noise/surge,including EMI filters, chip varistors, chip beads, and inductors. Suchcomponents against noise/surge are expected to be more required in the futurefor various electronic appliances such as information communication toolsincluding mobile phones and PCs, digital home appliances, amusement equipment,and automotive electronics. Total sales were 2,059 million yen, down 2.9% compared to the last first half. EMI filters and chip varistors increased in sales; on the other hand, a partof lineups were influenced by inventory adjustments at customers. Lighting Equipment This segment includes lighting equipment for public works such as roads andbridges, and sales tend to be largely concentrated in the end of a fiscal term,and expenses exceed sales until then. Total sales in this first half were 920 million yen, an increase of 30.3%, andoperating loss was 124 million yen. Operating loss was significantly reduced due to a sales increase in the firsthalf and cost reduction efforts continued from the previous term. II. Financial condition JPY million JPY million As of 30 September As of 31 March As of 30 September Change to 31 Mar.2006 2005 2006 2006 Amount % Total assets 30,538 33,044 32,496 -548 -1.7% Total liabilities 5,266 6,487 5,459 -1,028 -15.8% Total shareholders' 25,272 26,557 27,037 480 1.8%equity Shareholders' equity 82.8% 80.4% 83.2% 2.8%ratio JPY million JPY million For 6-month period For 6-month For 6-month period Change period to 30 Sept. 2005 1 Apr. - 30 Sept. 1 Oct. 05 - 31 1 Apr. - 30 Sept. Amount % 2005 Mar. 2006 2006 Net cash provided by 423 1,613 788 365 86.3% operating activities Net cash used in (181) (1,053) (1,425) -1244 687.3% investing activities Net cash used in 164 (113) (185) -349 212.8% financing activities Cash and cash 7,401 7,899 7,226 -175 -2.4%equivalents at end of term Net sales 9,005 11,273 9,763 758 -8.4% Capital expenditures 746 991 1,155 409 54.8% Depreciation 756 858 805 49 6.5% Total assets at the end of at the end of this first half were 32,496 millionyen, a decrease of 548 million yen compared to the end of last term as a resultof operating activities in this half year. This was mainly due to a decrease intrade notes and accounts receivable in relation to a distinctive business trendat MARUWA SHOMEI Co., Ltd. Inventories increased 211 million yen, and netproperty, plant and equipment increased 286 million yen due to an increase ofmachineries with capital expenditures compared to last year end, respectively. Total liabilities decreased 5,459 million yen, a decrease of 1,028 million yencompared to the last year end due also to a decrease in trade notes and accountspayable at MARUWA SHOMEI. Shareholders' equity increased 480 million yen with payment of dividends andposting of net income. As a result, shareholders' equity ratio at the end of this first half end was83.2%, up 2.8 points from the previous year end. Net cash provided from operating activities was 788 million yen, up 365 millionyen compared with the previous first half due mainly to 972 million yen of netincome before taxes, 805 million yen of depreciation, and 300 million yen of adecrease in retirement benefits. Net cash used in investing activities totaled 1,425 million yen, up 1,244million yen compared to the first half of previous year, due especially tocapital expenditures to prepare for an increase in Circuit Ceramics production;1,023 million yen in payment for purchase of net property, plant and equipment;286 million yen in loan receivable mainly for a subsidiary in India. Net cash used in financing activities amounted to 185 million yen, increasing349 million yen from the last first half mostly because of 74 million yen ofloan payment and 132 million yen of dividends payment. Consequently, cash and cash equivalents at the end of this first half were7,226 million yen, down 175 million yen compared to the end of the previousfirst half since net cash used in investing and financing activities were largerthan net cash provided in operating activities. Trends of cash-flows indices are as follows; For year ended For year ended For year ended 31 March 2005 31 March 2006 31 March 2007 Interim Final Interim Final Interim Shareholders' equity ratio 84.8% 85.5% 82.8% 80.4% 83.2% Shareholders' equity ratio 64.7% 80.3% 104.7% 100.8% 97.2% at market value Debt redemption period 0.2 0.1 0.5 0.2 0.3(year) Interest coverage ratio 427.2 316.1 203.4 251.9 233.0 Note) Shareholders' equity ratio : Shareholders' equity / Total assets Shareholders' equity ratio at market value : Total market value of shares /Total assets Debt redemption period : Interest-bearing debts / Cash flows from operatingactivities Interest coverage ratio : Cash flows from operating activities / Interestpayment *Each index is calculated with consolidated financial figures. \* Total market value of shares is calculated by multiplying the share value as ofthe end of the fiscal year by the total number of issued shares after deductionof own shares at the end of the year. *For cash flows from operating activities, the figure in the consolidated cashflows statement is used. Interest-bearing debt includes all debts for whichinterests are paid among the liabilities booked in the consolidated balancesheet. For interest payment, the figure of interest expenses paid booked in theconsolidated cash flows statement is used. III. Outlook for Full Fiscal 2007 JPY million For year ended For year ending Change 31st March 2006 31st March 2007 Amount % Net sales 20,278 24,530 4,252 21.0% Operating income 1,693 2,750 1,057 62.4% Net income 1,135 1,690 555 48.9% As for Ceramic Components business, a high demand is continuously expected inthe electronic components market. In Circuit Ceramics division, new equipments were installed for productionincrease in this first half in order to further expand a market share in Aluminasubstrates, expecting its effect in the second half of this year. Machinery Ceramics division expects solid demands for quartz glass productseven though some products are coming to an end. In Radio Frequency Products division, sales of thin film products decreased,but it will recover to a certain level. Sales of device products are expectedto recover in demand from the second half of this term. EMC Components division will aggressively expand in sales as sales increasesfor component lineups including EMI filters and inductors in the second half. Considering these conditions, outlook for fiscal 2007 is not changed from thefigures announced in May 2006. Meanwhile, net income is expected to include aloss of 100 million yen from disposal of equipments. *Cautionary statements: the above forecasts are based on the present businessenvironment and currently-available information, and include forward-lookingstatements involving risks and uncertainties. The reader is cautioned not toplace reliance entirely on the above forecasts for making investment decisions.Due to a number of factors such as future economic situations and marketenvironment changes, actual results may differ significantly from theseestimates. Also, please refer to Risks for business operations. IV. Risks for business operations MARUWA considers following issues as risks which may have influence onoperating results, share price, and financial conditions of MARUWA group. Forward-looking statements contained in this document are due to discussion byMARUWA group as of the date this document was released. 1. Reliance on the electronic components market Our major customers are electronic components makers which are influenced by thesemiconductor market. The semiconductor market has been fluctuating cyclicallyby the influence of the market's distinctive "silicon cycle" due to marketprices and technological innovation progress in addition to general economicinfluence. In the past, our operations were impacted by plunge in orders when theelectronics and semiconductor markets declined. Even though we expect theelectronics market will expand in the medium-term led by smaller sized productswith multi-functions and rapidly developing automotive components, ouroperations may be adversely affected in case that the growth of the electronicsmarket slows down due to influences of general economy or cyclical slump of thesemiconductor market. 2. Response to technological innovation Amid the rapidly changing market requiring quick adjustment and sustainablegrowth, MARUWA group aims to increase our corporate values by enhancingprofitability and growth, promoting product development in new areas withintegration of our developed core technologies For this purpose, we believe itis important to recruit necessary personnel and train employees. In principle, MARUWA group conducts technological development in response tomarket needs, and will keep developing new products in the future. In case,however, we fail to catch up with development speed the market requires and toenhance production capacity, our operations may be affected along with the dropof our market shares 3. Product cycle in the electronic components market (risks of inventories atthe market) In electronics markets, new products are constantly supplied supported bycontinuous technological innovation. Especially, when demands for new productswith non-conventional functions are heightened in a full scale, orders rushtemporarily due to competition for components among set makers. However,overestimation for demands among those set makers may cause an excess ofinventories supply in the markets and saturation of the markets. In such marketenvironment, our group business operations may be affected. 4. Regulations for environmental protection Various regulations are applied to us about the usage, storage, destructionand disposal of chemical products used in manufacturing processes. We havenever been complaint regarding environmental regulations, and we believe that wecomply with currently applicable environmental law and regulations. In case,however, that we are imposed any compensation or fine regarding a delay inresponse to future tightening of regulations and forced to halt production orterminate businesses, that we are required a large amount of expenditure forequipment or other expenses, and that we are accused of failing to comply withregulations for the usage, control and disposal of hazardous materials,operating results of the group may be impacted. 5. Risks on a growth strategy through M&A MARUWA group focuses on M&A (merger, acquisition and affiliation ofbusinesses) as a part of our growth strategy. Regarding the cases which we wereinvolved, acquired businesses were improved into revenue sources relatively in ashort period with intensive investment in personnel and materials after M&A,following careful preliminary assessment. In the future, we are also planningon expanding business areas and exploring new fields, continuously carrying on M&A. Future M&A, however, may not be linked to the resources of profits unlikeour past M&A cases. In case that restructuring at acquired businesses isprolonged or operating costs are mounted, the group's operating results andfinancial condition may be impacted. 6. Reliance on material suppliers For ceramics production, we purchase low materials such as alumina fromseveral low material refining companies outside MARUWA group. Although we haveensured supply by appropriately increasing a number of trading suppliersaccording to materials price trend or our production volume, there is noguarantee that we will never have shortage of materials. The shortage ofmaterials may cause escalating of materials prices, slowdown of supply, orincrease of materials costs at our group, consequently affecting operatingresults and financial condition of the group. 7. Dependence on key persons The future growth of MARUWA group highly depends on key figures such ascompetent researchers or engineers since we mainly engage in manufacturing ofelectronic materials and components in rapid technological innovation.Therefore, it is essential for the management to ensure those core figures andto train them; otherwise, the future growth and operating results of the groupmay be impacted. On the other hand, active employment of highly capable or experiencedengineers may largely increase recruitment and labor costs, influencing ouroperating results and financial status. 8. Violations of intellectual property rights of other companies MARUWA group aggressively promotes the development of new products, andprepare against the risks of violations at research and development with fullpreliminary research about intellectual property rights held by other companies. If we become an object of a suit for the fact of violations happened beyondour control, the group's business results and financial condition may beinfluenced. 9. Exchange rate fluctuations MARUWA group trades in foreign currency including U.S. dollar, Euro orMalaysia ringgit other than in yen. Also, we hold production and sales sitesaround the world, and some items on consolidated financial statements areconverted into yen from originally traded foreign currency. Consequently, at thetime of consolidation of financial statements, conversion into yen may affectthe results of overseas companies of the group. MARUWA uses foreign exchangeforward contracts if necessary to manage exposures resulting from fluctuationsin foreign currency exchange, but it is impossible to avoid all the influencesof foreign currency exchange. Therefore, our operating results may be affectedby the fluctuations of foreign currency exchange. 10. Political and economic situations in Malaysia Maruwa (Malaysia) Sdn.Bhd., a 100% owned consolidated subsidiary of MARUWA,produces and sells products of Circuit Ceramics and Machinery Ceramicsdivisions, consisting of 19.3% of total sales for the first half ended inSeptember 2006. Since there are instability factors in Malaysian politicalsituation because of being a multiethnic state, future political conditions andfinancial instability may influence our operating results in case that there aredifficulty for the Malaysian subsidiary to continue its operations. 11. Dependence on public works The lighting equipment business largely depends on public projects. It is atrend for public works in Japan to be focused on efficient projects such as formajor/core cities, sightseeing cities matched with a national plan for promotingsightseeing, and development of central urban areas fit for an aging society,shifting from conventional pork-barrel projects. Compensating for this changeof public works, MARUWA has promoted sales expansion and product development;however, our business results may be affected in case that the proceeding ofpublic project delays due to various factors. 12. Product liability MARUWA group are making full efforts to ensure optimal quality suited forcharacteristics of products. However, in the event of unexpected qualityproblem, operating results of the group may be significantly affected. Consolidated Balance Sheet JPY million USD thousand As of 30 September As of 30 Change As of 31st Change As of 30 September March September 2006 2005 2006 2006ASSETSCurrent assets:Cash & deposits 7,247 7,403 (156) 7,899 (652) 61,467Notes and accounts 6,542 5,719 823 7,003 (461) 55,488 receivable, tradeInventories 3,080 2,723 357 2,869 211 26,124Other current assets 667 448 219 834 (167) 5,657Allowance for (9) (7) (2) (17) 8 (76)doubtful accountsTotal current assets 17,527 16,286 1,241 18,588 (1,061) 148,660 Fixed assets:(Property, plant & equipment)Land 3,454 3,246 208 3,412 42 29,296Building & 3,842 3,991 (149) 3,969 (127) 32,587structuresMachinery & 4,132 3,917 215 3,949 183 35,047equipmentsConstruction in 298 134 164 152 146 2,528progressOther 647 563 84 605 42 5,487Net property, plant 12,373 11,851 522 12,087 286 104,945&equipment (Investment & other assets)Investment 749 809 (60) 784 (35) 6,353securitiesOther 1,847 1,592 255 1,585 262 15,665Total investments & 2,596 2,401 195 2,369 227 22,018 other assets Total fixed assets 14,969 14,252 717 14,456 513 126,963 Total assets 32,496 30,538 1,958 33,044 (548) 275,623 LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Notes & accounts 1,639 1,403 236 2,590 (951) 13,902 payable, tradeAccrued bonus 344 233 111 334 10 2,918Other current 2,149 1,959 190 2,057 92 18,227liabilitiesTotal current 4,132 3,595 537 4,981 (849) 35,047liabilities Long-termliabilities:Long-term debt 114 261 (147) 187 (73) 967Accrued pension & 177 322 (145) 300 (123) 1,501 severance costsOther 1,036 1,088 (52) 1,019 17 8,787Total long-term 1,327 1,671 (344) 1,506 (179) 11,255liabilities Total liabilities 5,459 5,266 193 6,487 (1,028) 46,302 JPY million USD thousand As of 30 September As of 30 Change As of 31st Change As of 30 September March September 2006 2005 2006 2006Shareholders' equity:Common stock, no par 6,710 6,683 27 6,710 -- 56,913valueCapital surplus 9,747 9,735 12 9,747 -- 82,672Retained earnings 10,954 9,768 1,186 10,522 432 92,909Net unrealized gains 0 44 (44) 38 (38) 0(losses) onavailable-for-salesecuritiesForeign currency (143) (680) 537 (206) 63 (1,213) translationadjustmentAdvance on 1 8 (7) -- 1 8subscription of own sharesTreasury stock, at (232) (286) 54 (254) 22 (1,968)costTotal shareholders' 27,037 25,272 1,765 26,557 480 229,321equity Total liabilities & 32,496 30,538 1,958 33,044 (548) 275,623 shareholders' equity Consolidated Statements of Income JPY million USD thousand For 6-month period For 6-month Change For year ended For 6-month period period 1 Apr. - 30 Sept. 1 Apr. - 30 31st March 1 Apr. - 30 Sept. Sept. 2006 2005 2006 2006Net sales 9,763 9,005 758 20,278 82,807Cost of sales 6,919 6,342 577 14,494 58,685Gross profit 2,844 2,663 181 5,784 24,122Selling, general & 2,022 1,945 77 4,091 17,150 administrativeexpensesOperating income 822 718 104 1,693 6,972Other income(expenses):Interest & dividend 22 18 4 35 187incomeInterest expenses (3) (4) 1 (8) (25)Foreign exchange gain 41 (70) 111 (158) 348 (loss), netOther, net 90 (115) 205 107 762Other income, net 150 (171) 321 (24) 1,272Income before income 972 547 425 1,669 8,244taxes Income taxes:Current 331 97 234 299 2,807Deferred 10 168 (158) 235 85 341 265 76 534 2,892 Net income 631 282 349 1,135 5,352 Consolidated Statements of Shareholders' Equity JPY million Common Capital Retained Net unrealized Foreign Treasury Advance on Total stock surplus earnings gains(losses) on currency stock subscription shareholders' available-for-sale translation of own equity securities adjustment shares Balance at 31 6,710 9,747 10,522 38 (206) (254) -- 26,557March 2006 Net income 631 631Cash dividends (131) (131)Directors' bonus (5) (5)Decrease on new (60) (60)consolidationChange in net (38) (38)unrealized gainson available-for-sale securitiesTranslation 63 63adjustmentAdvance on 1 1subscription ofown sharesChanges in (3) 22 19treasury stockBalance at 30 6,710 9,747 10,954 0 (143) (232) 1 27,037September 2006 USD thousand Common Capital Retained Net unrealized Foreign Treasury Advance on Total stock surplus earnings gains(losses) on currency stock subscription shareholders' available-for-sale translation of own equity securities adjustment shares Balance at 31 56,913 82,672 89,245 321 (1,747) (2,154) -- 225,250March 2006 Net income 5,352 5,352Cash dividends (1,111) (1,111)Directorsf bonus (42) (42)Decrease on new (510) (510)consolidationChange in net (321) (321)unrealized gainson available-for-sale securitiesTranslation 534 534adjustmentAdvance on 8 8subscription ofown sharesChanges in (25) 186 161treasury stockBalance at 30 56,913 82,672 92,909 0 (1,213) (1,968) 8 229,321September 2006 Consolidated Statement of Cash Flows JPY million USD thousand For 6-month period For 6-month For year For 6-month period ended period 1 Apr. - 30 Sept. 1 Apr. - 30 Change 31st March 1 Apr. - 30 Sept. Sept. 2006 2005 2006 2006Operating activities:Income before income 972 547 425 1,669 8,244taxesAdjustments for:Depreciation 805 756 49 1,614 6,828Amortization of (107) (107) -- (214) (908) consolidation goodwillIncrease (decrease) in (9) (4) (5) 7 (76) allowance for doubtful accountsIncrease(decrease) in (300) (856) 556 (878) (2,545)accrued pension & severance costsLoss (gain) on sales of -- -- -- (146) -- investment securitiesLoss on disposal of 55 79 (24) 140 466 property, plant &equipmentInterest & dividends income (22) (18) (4) (39) (187)Foreign exchange (gain) (35) 56 (91) 159 (297)loss(Increase) decrease in 610 903 (293) (303) 5,174 notes & accountsreceivable(Increase) decrease in (143) 82 (225) (23) (1,213) inventoriesIncrease (decrease) in (1,081) (1,416) 335 (250) (9,169) accounts payableOther 267 458 (191) 389 2,267Sub total 1,012 480 532 2,125 8,584Interest & dividend income 21 17 4 38 178 receivedInterest expenses paid (3) (4) 1 (8) (25)Income taxes paid (242) (70) (172) (119) (2,053)Net cash provided by 788 423 365 2,036 6,684 operating activities Investment activities:Payments for purchase of (1,023) (466) (557) (1,452) (8,677) property, plant &equipmentProceeds from sales of 165 8 157 78 1,399 property, plant &equipmentPayments for disposal of -- (46) 46 (47) -- property, plant &equipmentPayments for purchase of (198) (59) (139) (309) (1,679) investment securitiesProceeds from sales of -- 5 (5) 163 -- investment securitiesProceeds from purchase of -- 358 (358) 358 -- stocks of subsidiariesPayments for purchase of (67) -- (67) (23) (568) stocks of subsidiariesLoan receivable (286) -- (286) -- (2,426)Increase in intangible fixed (4) (10) 6 (29) (34)assetsOther (12) 29 (41) 27 (102)Net cash used in (1,425) (181) (1,244) (1,234) (12,087)investing activities JPY million USD thousand For 6-month period For 6-month For year For 6-month period ended period 1 Apr. - 30 Sept. 1 Apr. - 30 Change 31st March 1 Apr. - 30 Sept. Sept. 2006 2005 2006 2006Financing activities:Payments of long-term (74) (74) -- (147) (628) debtProceeds from issue of -- -- -- 52 --new sharesCash dividends paid (132) (81) (51) (180) (1,111)Sales of treasury stock 23 311 (288) 349 195Advance on subscription 1 8 (7) -- 0 of own sharesPurchase of treasury (3) 0 (3) (23) (25)stockNet cash provided by (185) 164 (349) 51 (1,569) (used in) financingactivities Effect of exchange rate 55 60 (5) 111 466 changes on cash & cash equivalentsNet increase (decrease) (767) 466 (1,233) 964 (6,506)in cash & cashequivalentsCash and cash 7,899 6,935 964 6,935 66,997equivalents at beginning of yearIncrease in cash & cash 94 -- -- -- 798equivalents on new consolidationCash and cash 7,226 7,401 (175) 7,899 61,289equivalents at end of year Segment Information (1) Consolidated business segment information JPY million JPY million USD thousand For 6-month For 6-month For year ended For 6-month period period period 1 Apr. - 30 Sept. 1 Apr. - 30 Sept. 31 March 1 Apr. - 30 Sept. 2006 2005 2006 2006Ceramic Components:Net sales 8,843 8,299 16,628 75,004Operating expenses 7,549 7,101 14,394 64,029Operating income 1,294 1,198 2,234 10,975 Lighting Equipment:Net sales 920 706 3,650 7,803Operating expenses 1,044 950 3,677 8,855Operating income (124) (244) (27) (1,052) Total:Net sales 9,763 9,005 20,278 82,807Operating expenses 8,593 8,051 18,071 72,884Operating income 1,170 954 2,207 9,923 Elimination:Net sales -- -- -- --Operating expenses 348 236 514 2,951Operating income (348) (236) (514) (2,951) Consolidated:Net sales 9,763 9,005 20,278 82,807Operating expenses 8,941 8,287 18,585 75,835Operating income 822 718 1,693 6,972 (2) Consolidated geographic segment information JPY million JPY million USD thousand For 6-month For 6-month For year ended For 6-month period period period 1 Apr. - 30 Sept. 1 Apr. - 30 Sept. 31 March 1 Apr. - 30 Sept. 2006 2005 2006 2006JAPANNet sales:Unaffiliated customers 6,992 6,991 16,170 59,304Intersegment 904 355 830 7,668Total 7,896 7,346 17,000 66,972Operating cost 7,122 6,685 15,354 60,407Operating income 774 661 1,646 6,565(loss) ASIANet sales:Unaffiliated customers 1,994 1,767 3,528 16,913Intersegment 745 621 1,349 6,319Total 2,739 2,388 4,877 23,232Operating cost 2,309 1,987 4,206 19,585Operating income 430 401 671 3,647(loss) JPY million JPY million USD thousand For 6-month For 6-month For year ended For 6-month period period period 1 Apr. - 30 Sept. 1 Apr. - 30 Sept. 31 March 1 Apr. - 30 Sept. 2006 2005 2006 2006EUROPE and AMERICANet sales:Unaffiliated 777 247 579 6,590customersIntersegment 1 1 2 8Total 778 248 581 6,598Operating cost 743 284 617 6,301Operating income 35 (36) (36) 297(loss) TOTALNet sales:Unaffiliated 9,763 9,005 20,278 82,807customersIntersegment 1,650 977 2,181 13,995Total 11,413 9,982 22,459 96,802Operating cost 10,174 8,956 20,177 86,293Operating income 1,239 1,026 2,282 10,509(loss) ELIMINATIONNet sales:Total (1,650) (977) (2,181) (13,995)Operating cost (1,233) (669) (1,592) (10,458)Operating income (417) (308) (589) (3,537)(loss) CONSOLIDATEDNet sales:Total 9,763 9,005 20,278 82,807Operating cost 8,941 8,287 18,585 75,835Operating income 822 718 1,693 6,972(loss) (3) Net overseas sales by customer's geographic location JPY million JPY million USD thousand For 6-month For 6-month For year ended For 6-month period period period 1 Apr. - 30 Sept. 1 Apr. - 30 Sept. 31st March 1 Apr. - 30 Sept. 2006 2005 2006 2006Overseas sales:Asia 3,240 3,055 6,376 27,481Europe 320 200 375 2,714Others 316 217 495 2,680Total 3,876 3,472 7,246 32,875Consolidated net 9,763 9,005 20,278 82,807sales % of consolidated net sales:Asia 33.2% 33.9% 65.3%Europe 3.3% 2.2% 3.8%Others 3.2% 2.5% 5.1%Total 39.7% 38.6% 74.2% *Countries are divided in geographicalvicinity. *Main countries included in each are as indicated below;Asia - Malaysia, Taiwan, Korea, Hong KongEurope - Germany, EnglandOthers - United States *Overseas sales indicate net sales of the Company and its subsidiaries to customers outside Japan. This information is provided by RNS The company news service from the London Stock Exchange