RNS Number:5994N
TDK Corporation
15 June 2005
To: Stockholders
June 15, 2005
TDK Corporation (the "Company")
13-1, Nihonbashi 1-chome
Chuo-ku, Tokyo
Hajime Sawabe
President and CEO
Amendments to Notice of the Convocation of
the 109th Ordinary General Meeting of Stockholders
Dear Sirs:
The Company, with apologies, announces that the Notice of the Convocation
of the 109th Ordinary General Meeting of Stockholders sent to you on
June 2, 2005 contains certain errors in its Supplementary Information. The
amendments are explained below.
In addition, the amended version of the Notice of the Convocation of the
109th Ordinary General Meeting of Stockholders reflecting the amendments
set forth below, is enclosed herewith for your reference. We kindly
request you to refer to the amended version.
Particulars
Reasons for Amendments:
In accordance with the Statement of Financial Accounting Standards No. 87
"Employers' Accounting for Pensions", the presentation of minimum pension
liability adjustments has been changed from the net amount to the gross amount
in the consolidated balance sheet. Accordingly the consolidated balance sheet
of the Notice of the Convocation of the 109th Ordinary General Meeting of
Stockholders is changed as follows:
There are no effects arising from this change on the consolidated statement of
income of the Company.
(Amendments)
Supplementary Information (1), Page 7 in English translation:
(4) Operating Results and Financial Position of TDK Group and the Company
(Consolidated Results)
Correction Original
Total assets 109th Total assets 109th
(Apr. 1, 2004 (Apr. 1, 2004
to Mar. 31, to Mar. 31,
2005) 2005)
807,689 790,020
Supplementary Information (2), Page 19 in English translation:
Consolidated Balance Sheet (prepared in accordance with the U.S. GAAP)
Correction Original
(ASSETS) (ASSETS)
Noncurrent assets 297,398 Noncurrent assets 279,729
Other assets 35,274 Other assets 17,605
Total assets 807,689 Total assets 790,020
(Liabilities) (Liabilities)
Noncurrent 32,915 Noncurrent 15,246
liabilities liabilities
Retirement and 28,839 Retirement and 11,170
severance severance benefits
benefits
(Total 151,812 (Total 134,143
liabilities) liabilities)
Total liabilities 807,689 Total liabilities 790,020
and stockholders' and stockholders'
equity equity
Supplementary Information (4), Page 24 in English translation:
Issue Date of Certified Copy of Public Accountants' Report for Consolidated
Statutory Reports
Correction Original
June 15, 2005 May 23, 2005
Supplementary Information (5), Page 25 in English translation:
Issue Date of Certified Copy of Report of Board of Corporate Auditors for
Consolidated Statutory Reports
Correction Original
June 15, 2005 May 24, 2005
- End -
June 2, 2005
To: Our Overseas Stockholders
TDK Corporation
13-1, Nihonbashi 1-chome,
Chuo-ku, Tokyo
TDK Corporation (the "Company")
Notice of the Convocation of the 109th Ordinary General Meeting of Stockholders
Dear Sirs:
Enclosed please find the notice of the convocation of the 109th ordinary
general meeting of stockholders of the Company together with the reference
documents.
Please study the reference documents with respect to each item of the
agenda of the meeting and exercise your voting rights through your standing
proxy in Japan. Please be aware that the voting right exercise form should
arrive at us through your standing proxy in Japan on or prior to June 29,
2005.
Very truly yours,
TDK Corporation
BY:/s/ Noboru Hara
Noboru Hara
General Manager
General Affairs Department
Administration Group
(Translation)
NOTICE OF THE CONVOCATION
OF
THE 109TH ORDINARY GENERAL MEETING OF STOCKHOLDERS
Notice: This is a translation from Japanese language of a notice distributed
to stockholders in Japan. The translation is prepared solely for the
convenience of foreign shareholders. In the case of any discrepancy
between the translation and the Japanese original, the latter shall
prevail.
TDK Corporation
Tokyo, Japan
(Translation)
To: Stockholders
Local Code 6762
June 2, 2005
TDK Corporation (the "Company")
13-1, Nihonbashi 1-chome
Chuo-ku, Tokyo
Hajime Sawabe
President and CEO
NOTICE OF CONVOCATION OF
THE 109TH ORDINARY GENERAL MEETING OF STOCKHOLDERS
(Amended Version)
Dear Sirs:
You are hereby notified that the 109th Ordinary General Meeting of
Stockholders will be held as stated below. You are respectfully requested
to attend the meeting.
When you attend the meeting in person, please submit the enclosed voting
right exercise form to the receptionist at the place of the meeting. In
the event that you are unable to attend the meeting, please study the
reference documents below and indicate on the enclosed voting right
exercise form your approval or disapproval of the items on the agenda,
since you may exercise your voting right by written form by returning the
form to the Company after affixing your seal impression.
Particulars
1. Date and Time: 10:00 a.m. on June 29, 2005 (Wednesday)
2. Place of the Meeting: Technical Center of the Company, 9th Floor
15-7, Higashi-Ohwada 2-chome, Ichikawa-shi,
Chiba Prefecture
3. Purposes of the Meeting:
Matters to be Reported:
1. Report on the Business Report, Non-Consolidated
Balance Sheet and Non-consolidated Statement
of Income for the 109th Fiscal Year (from April
1, 2004 to March 31, 2005).
2. Report on the Consolidated Balance Sheet and
Consolidated Statement of Income, and Report on
the Results of Audit for Consolidated statutory
reports for the 109th Fiscal Year by Certified
Public Accountants and Board of Corporate
Auditors (from April 1, 2004 to March 31, 2005).
Matters to be Resolved:
First Item: Approval of Proposal for Appropriation of
Retained Earnings for the 109th Fiscal Year
Second Item: Issuance of Stock Acquisition Rights as Stock
Option Scheme for Stock-Linked Compensation Plan
The substances of this item are contained in the
"Reference Documents Concerning Exercise of
Voting Rights"
(from Page 37 to page 39)
Third Item: Issuance of Stock Acquisition Rights as Stock
Option Scheme
The substances of this item are contained in the
"Reference Documents Concerning Exercise of
Voting Rights"
(from Page 39 to page 41)
Fourth Item: Acquisition of Own Shares of the Company
The substances of this item are contained in the
"Reference Documents Concerning Exercise of
Voting Rights"
(Page 41)
Fifth Item: Election of seven (7) Directors
- End -
(Documents Attached to the Notice of Convocation
of the Ordinary General Meeting of Stockholders)
Supplementary Information (1)
Business Report
From: April 1, 2004
To: March 31, 2005
1. Business Conditions
(1) Business Conditions and Results of TDK Group
Looking at economies in Japan and overseas, despite rising crude oil prices and
other factors that restricted growth, the U.S. economy generally expanded
steadily due in part to an upturn in capital expenditures and improvements in
employment statistics and household incomes. European economies, while resilient
in the first half of fiscal 2005, suffered a slowdown in the second half due to
the effects of a strengthening euro, rising crude oil prices and other negative
factors. China, meanwhile, maintained a high economic growth rate. In
comparison, the Japanese economy slowed due to a drop-off in exports, the result
of second-half production cutbacks by manufacturers of digital products, despite
strength in capital expenditures that was supported by strong corporate
earnings.
In the electronics industry in the first half of fiscal 2005, demand for digital
home appliances, such as LCD and plasma flat-screen TVs and DVD recorders, was
boosted by the Summer Olympic Games in Athens, and other events. This resulted
in strong demand for the TDK Group's electronic components in the first half.
However, demand for these components began to cool in the second half in line
with production cutbacks of finished products that use them.
In this business environment, TDK continued to implement profit structure
reforms. TDK also actively made investments to drive growth, such as by ramping
up production capacity of multiplayer chip capacitors and forging a strategic
alliance regarding HDD heads.
As a result, TDK posted consolidated net sales of Yen 657,853 million, up 0.3%
from Yen 655,792 million. Operating income rose 5.9%, from Yen 56,510 million to
Yen 59,830 million. Income from continuing operations before income taxes
increased 11.4%, from Yen 55,712 million to Yen 62,072 million. Net income rose
6.8%, from Yen 42,101 million to Yen 44,948 million. Basic net income per common
share was Yen 339.76, up from Yen 317.80.
On a parent-company basis, net sales increased 3.9%, from Yen 316,050 million to
Yen 328,452 million. Operating income increased 392.8%, from Yen 1,756 million
to Yen 8,653 million. Current income rose 197.3%, from Yen 10,277 million to
Yen 30,550 million. Net income increased 786.3%, from Yen 4,458 million to Yen
39,513 million. Net income per common share was Yen 297.93, compared with Yen
32.87 a year earlier.
Regarding discontinued operations, figures for the year ended March 31, 2004
relating to discontinued operations have been reclassified and restated, in
accordance with Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," for
comparative purposes.
(2) Segment Information of TDK Group
TDK's businesses are broadly classified into two business segments: the
electronic materials and components segment and the recording media & systems
segment.
(Electronic Materials and Components Segment)
This segment is made up of four product sectors: (1)electronic materials, (2)
electronic devices, (3)recording devices, and (4)semiconductors & others.
Segment net sales increased 4.9%, from Yen 519,792 million to Yen 545,214
million.
Looking at electronic materials and electronic devices, demand for components
was strong in the fiscal year's first half on the back of higher demand for
digital home appliances driven by the Athens Summer Olympic Games. However, the
second half saw sales prices of components drop as demand cooled due to
inventory cutbacks of digital home appliances. The overall result, however, was
a year-on-year increase in sales of both electronic materials and electronic
devices.
In recording devices, in the first half of fiscal 2005 there were inventory
cutbacks by customers following strong HDD demand in the second half of the
previous fiscal year. However, demand for HDD heads picked up in the second half
of fiscal 2005 once this adjustment phase ended. The result was a year-on-year
increase in sales of recording devices.
Sector results were as follows.
(1)Electronic Materials
This sector is broken down into two product categories: capacitors, and ferrite
cores and magnets. Sales in the electronic materials sector rose 4.8%, from Yen
166,818 million to Yen 174,800 million.
(Capacitors) Sales rose year on year. Sales of multilayer chip capacitors, the
main product in the capacitors sector, were strong in the first half, as
previously mentioned. In the second half, amid lackluster demand, TDK was able
to absorb sales price declines and the effect of forex movements by improving
the sales mix. These factors led to higher year-on-year sales.
(Ferrite cores and magnets) Sales of ferrite cores and magnets increased year on
year. In ferrite cores, sales declined from the previous fiscal year despite
higher demand for general-purpose power supply cores for digital home appliances
and cores for communications equipment. This decrease was due to a reduction in
output of deflection yoke cores and flyback transformers cores used in CRT TVs.
However, sales of magnets increased year on year, the result of steadily rising
demand for use in automotive and HDD applications.
(2)Electronic Devices
This sector has three product categories: inductive devices, high-frequency
components and other products. Sales in the electronic devices sector rose 7.8%,
from Yen 107,999 million to Yen 116,387 million.
(Inductive devices) Sales increased year on year. Inductive devices, the main
product category in the electronic devices sector, posted higher sales despite
lower sales prices and the negative effect of forex movements. The increase was
attributable to higher demand spurred by acceleration in the pace at which
automobiles are incorporating electronics and the increasing sophistication of
mobile phones, as well as new product launches.
(High-frequency components) Sales of high-frequency components declined
marginally year on year because higher sales volume and an improved product mix
failed to completely offset persistently strong discounting pressure from mobile
phone handset manufacturers, the main customer for these components.
(Other products) Sales of other products rose year on year. In power systems,
sales of DC-DC converters and DC-AC inverters were healthy. Sensors and
actuators recorded higher sales due to growth in demand for use in PCs and
peripherals and communications equipment. As a result of this, overall sales of
other products were higher than in the previous fiscal year.
(3)Recording Devices
This sector has two product categories: HDD heads and other heads.
Sector sales increased 1.9%, from Yen 230,105 million to Yen 234,578 million.
(HDD heads) Sales increased year on year. In HDD heads, the main product in this
sector, TDK had to overcome the loss of business from a major customer that
started producing heads in house in 2004, as well as the impact of falling sales
prices and unfavorable forex movements. Cutbacks in HDD inventories at customers
in the first half of the year also shaped the market. However, demand for HDD
heads rose in the second half of the fiscal year following the end of these
cutbacks, leading to higher year-on-year sales.
(Other heads) Sales of other heads declined year on year, due to sluggish sales
of optical pickups.
(4)Semiconductors & Others
Sector sales climbed 30.8%, from Yen 14,870 million to Yen 19,449 million. TDK
recorded slightly higher sales of anechoic chambers for electronmagnetic noise
control and growth in external sales of manufacturing equipment due to higher
investments in semiconductor facilities and equipment by customers.
(Recording Media & Systems Segment)
This segment is made up of four product categories: audiotapes, videotapes,
optical media and other products. Segment sales declined 17.2%, from Yen 136,000
million to Yen 112,639 million.
(Audiotapes and videotapes) Sales of audiotapes and videotapes declined year on
year. While TDK maintained a high market share, demand is declining for these
products as a whole.
(Optical media) Sales of optical media increased, with higher DVD sales volumes
offsetting a sharp fall in prices of DVDs and lower CD-R sales.
(Other products) Sales of other products decreased year on year. There was an
increase in sales of LTO-standard* (Linear Tape-Open) tape-based data storage
media for computers. However, a decline in sales caused by the sale in the
previous fiscal year of a U.S. software development subsidiary and lower sales
of recording equipment brought overall sales of other products down year on
year.
*Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks of HP,
IBM and Certance LLC in the U.S., other countries or both.
Sales by main product sector were as follows:
(Consolidated)
(Yen millions)
Division Main Applications Amount Share of YoY
Sales Change
Electronic 545,214 82.9% 4.9%
materials and
components
Electronic AV, office, communications 174,800 26.6 4.8
materials and other types of
equipment; automobiles,
etc.
Electronic AV, office, communications 116,387 17.7 7.8
devices and other types of
equipment; automobiles,
etc.
Recording PCs and PC peripherals 234,578 35.7 1.9
devices
Semiconductors Office equipment, 19,449 2.9 30.8
& others communications equipment,
etc.
Recording media & Entertainment, education, 112,639 17.1 -17.2
systems professional broadcasting,
etc.
Total 657,853 100.0 0.3
Incl. export 473,828 72.0 -2.7
sales
(Note) Amounts less than Yen 0.5 million have been rounded downward and amounts
not less than Yen 0.5 million have been rounded upward.
(Non-Consolidated)
(Yen millions)
Division Main Applications Amount Share of YoY
Sales Change
Electronic 284,799 86.7% 5.1%
materials and
components
Electronic AV, office, communications 139,326 42.4 6.4
materials and other types of
equipment; automobiles,
etc.
Electronic AV, office, communications 87,736 26.7 8.2
devices and other types of
equipment; automobiles,
etc.
Recording PCs and PC peripherals 35,828 10.9 -10.9
devices
Semiconductors Office equipment, 21,909 6.7 16.6
& others communications equipment,
etc.
Recording media & Entertainment, education, 43,652 13.3 -3.0
systems professional broadcasting,
etc.
Total 328,452 100.0 3.9
Incl. export 193,241 58.8 5.6
sales
(Note) Amounts less than Yen 1 million have been rounded downward.
(3) Capital Expenditures and Fund Procurement of TDK Group
Consolidated capital expenditures were Yen 61,005 million, the result of active
investments in fields TDK regards as strategically important for growth.
In the electronic materials and components segment, capital expenditures totaled
Yen 57,192 million. The bulk of the capital expenditures were for facilities to
develop and produce HDD heads with higher areal density and for facilities to
increase production and rationalize operations for multilayer chip capacitors.
In the recording media & systems segment, capital expenditures totaled Yen 3,813
million, mainly for facilities to increase DVD production.
Funds for these capital expenditures were provided by cash on hand.
(4) Operating Results and Financial Position of TDK Group and the Company
(Consolidated Results)
(Yen millions)
+--------------+--------------+--------------+--------------+--------------+
|Term |106th |107th |108th |109th |
+--------------+--------------+--------------+--------------+--------------+
|Item |(Apr. 1, 2001 |(Apr. 1, 2002 |(Apr. 1, 2003 |(Apr. 1, 2004 |
| |to Mar. 31, |to Mar. 31, |to Mar. 31, |to Mar. 31, |
| |2002) |2003) |2004) |2005) |
+--------------+--------------+--------------+--------------+--------------+
|Net sales |564,286 |604,865 |655,792 |657,853 |
+--------------+--------------+--------------+--------------+--------------+
|Net income |(25,771) |12,019 |42,101 |44,948 |
|(loss) | | | | |
+--------------+--------------+--------------+--------------+--------------+
|Basic net |(193.91) |90.56 |317.80 |339.76 |
|income (loss) | | | | |
|per common | | | | |
|share (Yen ) | | | | |
+--------------+--------------+--------------+--------------+--------------+
|Stockholders' |583,927 |553,885 |576,219 |650,715 |
|equity | | | | |
+--------------+--------------+--------------+--------------+--------------+
|Total assets |749,910 |747,337 |770,319 |807,689 |
+--------------+--------------+--------------+--------------+--------------+
(Non-Consolidated Results)
(Yen millions)
+--------------+--------------+--------------+--------------+--------------+
|Term |106th |107th |108th |109th |
+--------------+--------------+--------------+--------------+--------------+
|Item |(Apr. 1, 2001 |(Apr. 1, 2002 |(Apr. 1, 2003 |(Apr. 1, 2004 |
| |to Mar. 31, |to Mar. 31, |to Mar. 31, |to Mar. 31, |
| |2002) |2003) |2004) |2005) |
+--------------+--------------+--------------+--------------+--------------+
|Net sales |317,811 |320,697 |316,050 |328,452 |
+--------------+--------------+--------------+--------------+--------------+
|Net income |(3,794) |133 |4,458 |39,513 |
|(loss) | | | | |
+--------------+--------------+--------------+--------------+--------------+
|Net income |(28.55) |0.53 |32.87 |297.93 |
|(loss) per | | | | |
|common share | | | | |
|(Yen ) | | | | |
+--------------+--------------+--------------+--------------+--------------+
|Stockholders' |426,439 |419,241 |415,878 |447,480 |
|equity | | | | |
+--------------+--------------+--------------+--------------+--------------+
|Total assets |522,140 |509,561 |526,143 |538,877 |
+--------------+--------------+--------------+--------------+--------------+
(Notes) 1. Consolidated amounts less than Yen 0.5 million have been rounded
downward and amounts not less than Yen 0.5 million have been
rounded upward.
2. Non-consolidated amounts less than Yen 1 million have been
rounded downward.
3. Consolidated net sales for the 106th, 107th and 108th terms have
been restated in relation to operations that were classified as
discontinued operations in the 109th term in accordance with
Statement of Financial Accounting Standards No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets."
4. TDK adopted the Emerging Issues Task Force Issue 01-9
("EITF 01-9"), "Accounting for Consideration Given by a Vendor to
a Customer (Including a Reseller of the Vendor's Products)"
effective from the 107th term. Accordingly, consolidated net
sales for the 106th term have been restated to conform to the
subsequent presentation.
5. Consolidated basic net income (loss) per common share and
non-consolidated net income (loss) per common share are computed
based on the weighted average number of shares of common stock
outstanding during the period.
6. Net income (loss) per common share is computed after deducting
treasury stock.
7. Non-consolidated net income per common share is based on
"Accounting Standard for Earnings Per Share" (Financial
Accounting Standard No. 2) and "Implementation Guidance for
Accounting Standard for Earnings Per Share" (Financial Accounting
Standards Implementation Guidance No. 4) beginning with the 107th
term.
In the 106th term, sales and earnings declined on both a consolidated and
non-consolidated basis. Results in the 106th term partly reflect the inclusion
of restructuring costs for reforms to the profit structure.
In the 107th term, sales and earnings increased on both a consolidated and
non-consolidated basis due to higher demand for electronic components and a
higher return on assets.
In the 108th term, sales and earnings increased on a consolidated basis due to
strong performances in the recording devices sector and other areas. However,
sales fell while earnings increased on a non-consolidated basis due to a change
in the form of transactions with business partners and other factors.
For results for the 109th term, please refer to the foregoing "(1) Business
Conditions and Results" and "(3) Capital Expenditures and Fund Procurement."
(5) Key Issues for TDK Group
The world economy is grappling with a host of risk factors such as surging crude
oil prices and raw materials costs, and fluctuations in the foreign exchange
rates of major currencies. It is also being influenced by the effects of
developments in the U.S., which is burdened with current-account and budget
deficits, and in China, which continues to achieve a high rate of growth. With
2005 also the trough of the current semiconductor cycle, there is a persistent
sense of uncertainty about the economic outlook.
Against this economic backdrop, from a medium-term perspective, the electronics
industry is expected to see the growth of digital home appliances, the
convergence of information and communications, as typified by the increasingly
diverse functions offered by mobile phones, and the greater use of electronics
in motor vehicles. These trends are expected to result in continued expansion in
demand for the electronic components that the TDK Group develops, manufactures
and sells.
At the same time, however, in the dynamically changing electronics industry, a
faster response than ever before will be required by the company's electronic
components business. The TDK Group has continuously reformed and improved the
structure of its businesses, but it believes that responding to the changes in
the electronics industry requires making this process of reform and improvement
an ongoing drive. Furthermore, in the digital era of the electronics industry,
falling prices due to stiffer competition with new products, greater inventory
risk and other challenges are unavoidable. Nevertheless, the TDK Group is
determined to be a company that can surmount these challenges and grow. And, to
remain an attractive and exciting company, TDK aims to grow by creating greater
value. In this vein, the TDK Group will refine its core technologies (materials,
process and evaluation & simulation technologies) while concentrating on three
fast-growing key fields: IT home electronics; high-speed, large-capacity
networks; and car electronics. Increasing TDK's ability to generate earnings by
supplying products and technologies imbuing value that these markets demand on a
timely basis is a key issue. Moreover, TDK will take on the challenge of
advancing along a growth trajectory while making investments that are prudent
yet aggressive.
TDK will unite as a company to take up the challenge of executing the following
initiatives in the year ending March 31, 2006.
* Make aggressive investments through a process of selection and
concentration TDK aims to quickly commercialize products by prioritizing
investments, focusing on fields where it can set itself apart in the
marketplace with its ability to develop materials and the process
technologies that use these materials.
* Bolster manufacturing capabilities matched to the market
TDK will strengthen integration between the development and manufacturing
groups to upgrade technological capabilities and add value to products.
Furthermore, TDK intends to proceed with efforts to pinpoint unprofitable
businesses to reform or exit.
* Expedite development
TDK will focus on speeding up development by raising efficiency through
measures such as a more robust technology strategy and improvements to
processes.
* Expand the Chinese market
TDK views China as a very important market for the group. While paying
attention to the various risks in this market, TDK will endeavor to expand
its business by strengthening its competitiveness in terms of cost, quality
and delivery time.
* Strengthen human resources
TDK regards the development of employees as the starting point for creating
new products with value, making businesses more competitive and taking on
other challenges that will drive the growth of the company. Based on this
thinking, the TDK Group will strengthen human resources such as through
education, respecting each and every employee.
Besides strengthening its business in this way, TDK also recognizes corporate
social responsibility and corporate governance as important management themes.
TDK is therefore reaffirming the importance of coexisting with society as a
responsible corporate citizen by conducting its own social activities based on
two key corporate philosophies: "Creativity" and "Culture." Furthermore, TDK
will comply with the U.S. Sarbanes-Oxley Act of 2002 and all other applicable
laws and regulations as it strengthens corporate governance.
TDK believes that enhancing corporate governance is vital to improving
management fairness, impartiality and transparency. TDK employs the corporate
auditor system within the meaning of the Commercial Code of Japan. But there are
also various systems and organizations for promoting corporate governance. TDK
has elected one outside director to the seven-member Board of Directors and
three of the company's five corporate auditors are from outside the company. In
addition, it has appointed corporate officers and has established various
committees, namely the Compensation Advisory Committee, the Corporate Ethics
Committee and the Disclosure Committee. TDK is determined to enhance each of
these systems and organizations to manage the company in a way that earns the
trust of stockholders and other stakeholders.
As always, TDK requests the continued support and guidance of stockholders
2. Outline of TDK Group and the Company
(The following sets forth the conditions of TDK Group and the Company as of
March 31, 2005 unless otherwise specifically indicated.)
(1) Principal Business of TDK Group
TDK Group is principally engaged in the manufacture and sale of products of
electronic materials and components, as well as recording media and
systems. Major products by division are as follows:
Division Major Products
Electronic materials and
components
Electronic materials ferrite cores, ferrite and rare-earth
magnets, multilayer chip capacitors
Electronic devices high-frequency components, EMC components,
piezoelectric products, sensors, inductors,
transformers, switching power supplies,
DC-DC converters
Recording devices HDD heads, thermal heads, optical pickups
Semiconductors & others organic electroluminescent (EL), anechoic
chambers
Recording media & systems audiotapes, videotapes, CD-Rs, MDs, DVDs,
"BS"/"CS" antenna, PC software, tape-based
date storage media for computers
(2) Major Business Offices and Plants of TDK Group
(1) The Company:
Types of offices Location
Head Office 13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo
Business Offices Sendai, Tokyo, Yokohama, Nagoya, Matsumoto, Osaka,
Hiroshima, Matsuyama, Fukuoka
Plants Chokai Plant (Akita Pref.), Akita Plant (Akita
Pref.),
Kisakata Plant (Akita Pref.), Inakura Plant (Akita
Pref.),
Narita Plant (Chiba Pref.), Shizuoka Plant (Shizuoka
Pref.),
Kofu Plant (Yamanashi Pref.),
Chikumagawa Plant (Nagano Pref.)
Chikumagawa 2nd Technical Center (Nagano Pref.)
Mikumagawa Plant (Oita Pref.)
Research &Development Advanced Process Technology Center (Chiba Pref.)
Facilities Chikumagawa 1st Technical Center (Nagano Pref.)
(Note) Chikumagawa 2nd Technical Center changed its name to Asama
Techno Factory as of April 1, 2005.
(2) Consolidated Subsidiaries:
Classification Name of Company (Location of Headquarters)
Administration and TDK U.S.A. Corporation(The State of New York,
Superintended U.S.A.)
TDK Europe S.A.(Bascharage, Luxembourg)
TDK China Company Limited.(Shanghai, China)
Sales TDK Electronics Corporation
(The State of New York, U.S.A.)
TDK Corporation of America(The State of Illinois,
U.S.A.)
TDK Electronics Europe GmbH(Dusseldorf, Germany)
TDK Marketing Europe GmbH(Rattingen, Germany)
TDK Hong Kong Company Limited(Hong Kong, China)
TDK Marketing Corporation(Chiyoda-ku, Tokyo)
Production Headway Technologies, Inc.(The State of California
, U.S.A.)
TDK Recording Media Europe S.A. (Bascharage,
Luxembourg)
TDK (Malaysia) Sdn. Bhd.
(The State of Negri Sembilan, Malaysia)
TDK Xiamen Company Limited.(Xiamen, China)
SAE Magnetics (Hong Kong) Limited(Hong Kong, China)
TDK Taiwan Corporation(Taipei, Taiwan)
TDK-MCC Corporation(Yuri-gun, Akita Pref.)
(3) Matters Concerning Shares
(1) Total Number of Shares:
Number of Shares Authorized
to be Issued by the Company: 480,000,000 shares
Number of Shares Issued: 133,189,659 shares
(2) Number of Stockholders: 23,295 stockholders
(a decrease of 2,655 from the end of the preceding fiscal year)
(3) State of Stock Acquisition Rights:
Stock acquisition rights already issued:
Number of stock Types and number of Issue price
acquisition shares issued upon
rights exercise of stock
acquisition rights
1st stock acquisition 1,716 Common Stock Free of charge
rights
(Pursuant to resolution 171,600
adopted at the Ordinary
General Meeting of
Stockholders held on
June 27, 2002)
2nd stock acquisition 2,537 Common Stock Free of charge
rights
(Pursuant to resolution 253,700
adopted at the Ordinary
General Meeting of
Stockholders held on
June 27, 2003)
3rd stock acquisition 2,343 Common Stock Free of charge
rights
(Pursuant to resolution 234,300
adopted at the Ordinary
General Meeting of
Stockholders held on
June 29, 2004)
(4) Principal Stockholders (ten largest stockholders):
Investment to the Investment to the
Company Principal Stockholders
of the Company
Name of stockholder Number of Percentage Number of Percentage
shares held of shares shares held of shares
held held
(thousands (%) (thousands (%)
of shares) of shares)
The Master Trust Bank of 17,271 12.96 -- --
Japan, Ltd.
(Trust account)
Japan Trustee Services Bank, 13,869 10.41 -- --
Ltd.
(Trust account)
Matsushita Electric Industrial 6,249 4.69 999 0.04
Co., Ltd.
Barclays Bank PLC Barclays 2,849 2.14 -- --
Capital Securities
-- --
The Chase Manhattan Bank, NA 2,730 2.05 -- --
London
BNP Paribas Securities (Japan) 2,506 1.88 -- --
Ltd.
State Street Bank and Trust 2,481 1.86 -- --
Company
Nippon Life Insurance Company 2,415 1.81 -- --
Societe Generale (Paris OBE 2,359 1.77 -- --
Diept)
Calyon DMA OTC 2,260 1.69 -- --
(Notes) 1. With respect to the number of shares held and the percentage
of shares above, any number of shares less than one thousand
has been disregarded.
2. With respect to the investment in Matsushita Electric
Industrial Co., Ltd., the Company holds the shares through
Mitsui Asset Trust & Banking Co., Ltd., to which the Company
has entrusted trust assets. Mitsui Asset Trust & Banking
Co., Ltd. is acting as a trustee of the Company, who is a
transfer agent of the Company.
The Company reserves the right to instruct the exercise of
voting rights of the shares held by the Company under the
trust deeds.
(4) Acquisition, Disposal and Holding of the Company's Own Shares
(1) Shares acquired:
Shares of common stock: 237,887 shares
Aggregate amount of acquisition cost: Yen 1,682,902,724
(2) Shares disposed:
Shares of common stock: 73,022 shares
Aggregate amount of disposal cost: Yen 578,365,235
(3) Number of shares held for the fiscal year under review:
945,072 shares of common stock
(5) Matters Concerning Employees of TDK Group and the Company
(1) Employees of TDK Group:
Business Division Number of Changes from
Employees preceding fiscal
year
Electronic materials and components 33,050 699 (increased)
Recording media & systems 2,593 314 (decreased)
Other companies (all segment) 1,472 74 (decreased)
TOTAL 37,115 311 (increased)
(2) Employees of the Company:
Number of Changes from Average Age Average Working
Employees preceding fiscal Years
year
5,190 133 (decreased) 39.9 17.9 years
(Notes) 1. The number of employees represents the personnel in office.
2. Temporary or part-time employees are not included in the list
above.
3. Any portion of the average age or average working years is
presented by rounding down the two places of decimals.
(6) Matters Concerning Principal Business Combination of TDK Group
(1) Matters Concerning Principal Consolidated Subsidiaries:
Name of companies Common Stock Percentage of Outline of Principal
shares held Business
by the Company
TDK U.S.A. US$283,550 thousand 100.0% Management and
Corporation supervision of U.S.
(U.S.A.) subsidiaries
TDK Electronics US$62,849 thousand 100.0% Sale of recording
Corporation media & systems
(U.S.A.) products
TDK Corporation of US$3,800 thousand 100.0% Sale of electronic
America (U.S.A.) materials &
components
TDK Taiwan NT$424,125 thousand 83.8% Manufacture and sale
Corporation of electronic
(Taiwan) materials &
components
SAE Magnetics HK$50 thousand 100.0% Manufacture and sale
(Hong Kong) of electronic
Limited materials &
(Hong Kong) components
TDK Hong Kong HK$25,500 thousand 100.0% Manufacture and sale
Company Limited. of electronic
(Hong Kong) materials &
components
TDK Xiamen Company RMB319,771 thousand 100.0% Manufacture and sale
Limited. (China) of electronic
materials &
components
TDK Recording Euro 82,846 thousand 100.0% Manufacture of
Media Europe S.A. recording media &
(Luxembourg) systems products
TDK Electronics Euro 46,544 thousand 100.0% Sale of electronic
Europe GmbH materials &
(Germany) components
TDK Marketing Euro 20,025 thousand 100.0% Sale of recording
Europe GmbH media & systems
(Germany) products
TDK-MCC Yen 1,000 million 100.0% Manufacture of
Corporation electronic materials
(Japan) & components
TDK Marketing Yen 1,050 million 100.0% Sale of recording
Corporation (Japan) media & systems
products
(Notes) 1. Any portion less than one-tenth of one percent of the percentage
of shares held by the Company is disregarded.
2. Out of companies stated above, the Company indirectly owns
100% of:
TDK Electronics Corporation
TDK Corporation of America
SAE Magnetics (Hong Kong) Limited
TDK Recording Media Europe S.A.
TDK Electronics Europe GmbH
TDK Marketing Europe GmbH
3. The Company owns indirectly 85.5% shares of TDK Xiamen Co., Ltd.
(2) Condition of Business Combination:
The total number of consolidated subsidiaries for the previous fiscal year
totaled 72 (domestic 20, overseas 52). During the fiscal year under
review, six companies decreased. This was attributable to the fact that
three sales subsidiaries of the recording media & system products in Europe
were change to the branch under the subsidiary for the said products in
Germany, one manufacturing subsidiary in Japan and one manufacturing
subsidiary in Asia were liquidated, respectively, as well as one logistics
subsidiary in Japan was liquidated upon merger. On the other hand, the
Company incorporated one research and development subsidiary in each of the
U.S. and Asia, respectively, and one manufacturing subsidiary, one sales
subsidiary and one regional superintended subsidiary were respectively
established in the Asian area. As a result, a total of five companies were
included in consolidation. The number of consolidated subsidiaries is 71
(domestic 18, overseas 53). While affiliates as to investment in which the
equity method of accounting has been carried out was previously 8 (domestic
5, overseas 3), they are 6 (domestic 4, overseas 2) for the fiscal year
under review.
(3) Results of Business Combination:
The number of consolidated subsidiaries including the twelve principal
subsidiaries stated above is 71 and that of affiliates as to investment in
which the equity method of accounting has been carried out is six.
Consolidated net sales for the fiscal year under review amounted to Yen
657,853 million (an increase of 0.3% compared with the preceding fiscal
year) and consolidated net income amounted to Yen 44,948 million (an
increase of 0.3% compared with the preceding fiscal year).
(7) Major Lenders, Amount of Loans and Number of the Shares of the Company
Owned
Not applicable.
(8) Name, Position and Duty, or Major Occupation of Each Director and Corporate
Auditor
Position Name Duty and Major Occupation
Representative Director Hajime Sawabe
Director Jiro Iwasaki General Manager of
Administration Group, in charge
of Safety & Environment
Director Shinji Yoko General Manager of Electronic
Components Sales & Marketing
Group
Director Takeshi Nomura General Manager of Ferrite &
Magnet Products Business Group
Director Mitsuaki Konno General Manager of Management
Review and Support Department
Director Yasuhiro Hagihara Attorney-at-Law, Partner of the
Law Firm of Squire Sanders &
Dempsey L.L.P. (Gaikokuhou Jimu
Bengoshi Jimusho)
Director Takehiro Kamigama General Manager of Head
Business Group
Corporate Auditor Masaaki Miyoshi Full-time
Corporate Auditor Takuma Otsuka Full-time
Corporate Auditor Kazutaka Kubota
Corporate Auditor Kaoru Matsumoto C.P.A., Accounting Firm of
Kaoru Matsumoto
Corporate Auditor Ryoichi Ohno Senior Vice President and Chief
Financial Officer of The
Gibraltar Life Insurance Co.,
Ltd.
(Notes) 1. Mr. Yasuhiro Hagihara is an outside Director prescribed in
Paragraph 7-2, Section 2, Article 188 of the Commercial Code.
2. Messrs. Kazutaka Kubota, Kaoru Matsumoto and Ryoichi Ohno are
outside Corporate Auditors prescribed in Section 1, Article 18 of
the "Law Concerning Special Exceptions to the Commercial Code
Concerning Audit, etc. of KabushikiKaisha".
3. The name of the law firm "Squire Sanders & Dempsey L.L.P.
(Gaikokuhou Jimu Bengoshi Jimusho)" where Mr. Yasuhiro Hagihara,
Director of the Company, serves as Partner, changed its name to
"Squire Sanders (Gaikokuho Kyodo Jigyo Horitsu Jimusho)" as of
April 1, 2005.
4. Changes in Directors and Corporate Auditors during the fiscal
year under review are as follows:
(Assumption of office of Director and Corporate Auditor)
Position Name Remarks
Director Takehiro Kamigama Assumed on June 29, 2004
Corporate Auditor Ryoichi Ohno Assumed on June 29, 2004
(Retirement of Director and Corporate Auditor)
Position Name Remarks
Director Hirokazu Nakanishi Retired on June 29, 2004
Corporate Auditor Osamu Nakamoto Retired on June 29, 2004
(9) Remunerations for Independent Certified Public Accountants
(Yen millions)
Item Amounts payable
1. The aggregate amount of remunerations payable 170
to independent certified public accountants by the
Company and its subsidiaries:
2. Out of the aggregate amount stated in 1 143
above, the amount of remunerations payable to
independent certified public accountants by the Company
and its subsidiaries in consideration of the duties
specified in Article 2, Section 1 of the Certified
Public Accountants Law of Japan (duties of audit
certification):
3. Out of the aggregate amount stated in 2 94
above, the amount of remunerations payable to
independent certified public accountants by the Company:
(Note) The amount of remunerations for auditing pursuant to the Law
Concerning Special Exceptions to the Commercial Code concerning Audit,
etc. of Joint-Stock Corporations (Kabushiki Kaisha) and the amount of
remunerations pursuant to the Securities and Exchange Law are not
divided in the Auditing Agreement, which was concluded between the
Company and the independent public accountants. Therefore, the amount
stated in 3 above represents the total amount of the remunerations
paid by the Company.
(10) Stock Acquisition Rights with Specially Favorable Terms and Conditions
Issued to Persons other than Stockholders During the Fiscal Year Under
Review
On August 6, 2004, the stock acquisition rights were issued as stock option
scheme pursuant to the resolution of the Ordinary General Meeting of
Stockholders held on June 29, 2004 and the approval of the meeting of the
Board of Directors held on July 29, 2004.
(1) Total number of stock acquisition rights issued:
2,343 shares (100 shares per one stock acquisition right)
(2) Class and number of shares to be granted for stock acquisition rights:
234,300 shares of common stock
(3) Issue price of stock acquisition rights:
Free of charge
(4) Amounts to be paid upon the exercise of each stock acquisition right:
Yen 814,700 (Yen 8,147 per share)
(5) Exercise period of stock acquisition rights:
From August 1, 2006 to July 31, 2010
(6) Conditions of exercise of stock acquisition rights:
Partial exercise of stock acquisition rights may not be
permitted.
(7) Events and conditions of cancellation of stock acquisition rights:
(a) If a proposal for approval of a merger agreement, where the
Company is the dissolving company, is approved at a meeting of
stockholders of the Company, or if a proposal for approval of a
stock exchange agreement or a proposal for share transfer under
which the Company becomes a wholly owned subsidiary of another
company, is approved at a meeting of stockholders of the Company,
stock acquisition rights may be cancelled without any charge.
(b) In the event that the Company acquires and holds stock
acquisition rights, it may, at any time, cancel without any
charge any and all of such stock acquisition rights.
(8) Restriction on transfer of stock acquisition rights:
The transfer of stock acquisition rights requires the approval of
the Board of Directors.
(9) Contents of specially favorable terms and conditions:
Stock acquisition rights have been issued free of charge to
Directors, Corporate Officers and key employees of the Company
and directors, officers and key employees of associated
companies.
(10) Name and number of stock acquisition rights allotted:
(Directors of the Company)
Name Number of stock acquisition
rights
Hajime Sawabe 187
Jiro Iwasaki 99
Shinji Yoko 92
Takeshi Nomura 92
Mitsuaki Konno 52
Yasuhiro Hagihara 10
Takehiro Kamigama 137
Total 7 Directors 669
(Corporate Officers of the Company)
Name Number of stock acquisition
rights
Kiyoshi Ito 129
Hirokazu Nakanishi 92
Katsuhiro Fujino 52
Takeshi Ohwada 52
Kunihiro Fukushima 45
Yukio Hirokawa 45
Masatoshi Shikanai 45
Yukio Harada 45
Michinori Katayama 52
Kenryo Namba 45
Takaya Ishigaki 59
Minoru Takahashi 52
Seiji Enami 45
Raymond Leung 10
Total 14 Officers 768
(Key employees of the Company, Directors and key employees of
associated companies (Top 10))
Name Number of stock Note
acquisition
rights
Hiroshi Ikejima 10 Key employee of the Company
NG. Wai. Hong 10 Director of associated company
Koichi Nakano 8 Key employee of the Company
Masao Ishihara 8 Key employee of the Company
Ryohei Tatsuta 8 Key employee of the Company
Shiro Nomi 8 Key employee of the Company
Noboru Hara 8 Key employee of the Company
Kenichi Hiruma 8 Key employee of the Company
Toshinobu Shiokawa 8 Key employee of the Company
Shinya Yoshihara 8 Key employee of the Company
(Breakdown of total number of stock acquisition rights, which were granted to
Corporate Officers, key employees of the Company, Directors and key employees of
associated companies)
Classification Number of stock Type and number of Total number
acquisition shares issued upon of Grantees
rights exercise of stock
acquisition rights
Corporate Officers 768 Common stock 14
of the Company 76,800
Key employee 878 Common stock 162
87,800
Directors of 23 Common stock 3
associated
companies 2,300
Key employee of 5 Common stock 1
associated
companies 500
(11) Any events materially affecting the conditions of TDK Group occurred after
the settlement of accounts.
None.
Supplementary Information (2)
Consolidated BALANCE SHEET
(prepared in accordance with the U.S. GAAP)
(As of March 31, 2005)
Item Amount Item Amount
(ASSETS) (Millions of (LIABILITIES) (Millions of
yen) yen)
Current assets 510,291 Current liabilities 118,897
Cash and cash 251,508 Short-term debt 103
equivalents
Marketable securities 1,609 Trade payables 62,092
Net trade receivables 147,999 Accrued expenses 42,636
Inventories Income taxes payables 8,667
Other current assets 74,924 Other current 5,399
liabilities
Noncurrent assets Noncurrent liabilities 32,915
Investments in 34,251 Long-term debt, 81
securities excluding current
installments
Net property, plant and297,398 Retirement and 28,839
equipment severance benefits
Goodwill and other 22,698 Deferred income taxes 751
intangible assets
Other assets Other noncurrent 3,244
liabilities
216,969 (Total liabilities) 151,812
Minority interests 5,162
22,457 (STOCKHOLDERS' EQUITY) 32,641
35,274 Common stock 63,051
Additional paid-in 16,918
capital
Legal reserve 597,205
Retained earnings - 51,657
Accumulated other - 7,443
comprehensive income
(loss)
Treasury stock 650,715
(Total stockholders'
equity)
Total assets: 807,689 Total liabilities and 807,689
stockholders' equity:
(Notes) 1. Amounts less than Yen 0.5 million have been rounded downward and
amounts not less than Yen 0.5 million have been rounded upward.
2. Principal Accounting Principles, etc. are stated separately.
Supplementary Information (3)
Consolidated STATEMENT OF INCOME
(prepared in accordance with the U.S. GAAP)
From: April l, 2004
To: March 31, 2005
Item Amount
Net sales (Millions of yen)
Cost of sales 657,853
Gross profit 484,323
Selling, general and administrative expenses 173,530
Transfer to the government of substitute potion of 119,886
the Employees' Pension Fund
Subsidy from the government
Loss on settlement - 33,533
Operating income 27,347
Other income (deductions) 59,830
Interest and dividend income
Interest expense 1,692
Foreign exchange gain (loss) - 324
Other - net - 856
Total other income (deductions) 1,730
Income from continuing operations before income 2,242
taxes
Income taxes 62,072
Income before minority interests 12,980
Minority interests 49,092
Income from continuing operations 479
Loss from discontinued operations, net of taxes 48,613
Income from continuing operations 3,665
Net income 44,948
(Notes) 1. Any amount arising from the discontinued business during the
109th fiscal year in accordance with the Statement of Financial
Accounting Standards ("SFAS") No.144, "Accounting for the
Impairment of Long-Lived Assets" is stated above.
2. Amounts less than Yen 0.5 million have been rounded downward and
amounts not less than Yen 0.5 million have been rounded upward.
3. Principal Accounting Principles, etc. are stated separately.
(Separate Note)
(Basic Matters for Preparation of Consolidated statutory reports)
1. Significant Accounting
(1) Standards for preparation of consolidated statutory reports:
The consolidated statutory report including consolidated balance
sheets and consolidated statements of income has been prepared on the
basis of accounting principles generally accepted in the United States
of America ("U.S. GAAP"), in compliance with Article 179, Section 1 of
the Commercial Code Enforcement Regulations. However, in compliance
with the article, certain disclosure that is required on the basis of
U.S. GAAP is omitted.
(2) Valuation standards and methods of inventories are as follows:
Products and work in progress are valued at the lower of cost using a
periodic average method, and raw materials and supplies are value at
the lower of cost using a monthly moving average cost method.
(3) Valuation standards and methods of securities are as follows:
Statement of Financial Accounting Standards ("SFAS") No.115,
"Accounting for Certain Investments in Debt and Equity Securities" is
adopted.
Held-to-maturity securities:
They are carried at amortized cost.
Securities for sale:
They are carried at fair value as of the balance sheet date with
changes in unrealized holding gain or loss, net of the applicable
income taxes, included directly in shareholders' equity. The
cost of securities sold is primarily calculated by the moving
average method.
(4) Method of depreciation of cost of fixed assets is as follows:
Property, plant and equipment:
Depreciation of property, plant and equipment of the Company, its
domestic consolidated subsidiaries and certain overseas
consolidated subsidiaries is principally computed by the
declining-balance method, and by the straight-line method for
assets of other foreign subsidiaries.
Intangible fixed assets:
Depreciation of intangible fixed assets is carried at the
straight-line method. (Provided, however, that, in respect of
some intangible assets, useful lives of which cannot be specified
under SFAS No.142 "Goodwill and Other Intangible Assets", they
are no longer amortized but instead is tested for impairment at
least annually.)
(5) Accounting basis of principal allowances:
Allowance for doubtful receivables:
In order to prepare for losses from bad debts, it is stated an
estimated incollectible amount, in consideration of the past
experience for bad debt ratio with respect to doubtful
receivables in general, and the individual estimate on
possibility of collection with respect to doubtful receivables.
Retirement and severance benefits:
It is stated an amount calculated by the fair value of benefit
obligations and plan assets as of March 31, 2005 for the future
payment of retirement and severance benefits payable to
employees, in accordance with SFAS No. 87, "Employers' Accounting
for Pensions". If the aggregate benefit obligations (that is,
the obligations calculated by retirement and severance benefits
after deducted the future rise in salaries) are lower than the
fair value of the plan assets, it is additionally stated the
minimum pension liability adjustments, taking into account the
amounts due to the tax effect.
Unrealized prior service costs of employees are amortized in the
year in which such costs occurred using the straight-line method
over certain periods within the estimated average remaining
service years of employees.
With respect to unrealized actuarial net losses, the certain part
(equivalent to 10% of the fair value of retirement and severance
benefits or plan assets whichever is the higher basis) are
amortized using the straight-line method over certain periods
within the estimated average remaining service years of
employees.
(6) Method of accounting consumption tax, etc.:
No consumption tax, etc. is included in the statutory reports.
(7) Goodwill:
Under SFAS No.142, "Goodwill and Other Intangible Assets"
goodwill is no longer amortized but instead is tested for
impairment at least annually.
(Notes with respect to Balance Sheet)
1. Allowance for doubtful receivables: Yen 2,560 million
2. Accumulated amount of depreciation of property,
plant and equipment: Yen 445,551 million
3. Other comprehensive income includes changes in
foreign currency translation adjustments, minimum
pension liability adjustments and net unrealized
gains (losses) on securities.
4. Assets pledged or collateral:
Securities Yen 699 million
Investment securities Yen 994 million
5. Contingent liabilities including guaranteed
liabilities:
Outstanding guaranteed liabilities Yen 6,296 million
6. Other matter:
The Company has been subject to the tax audit by the Tokyo Regional Taxation
Bureau with respect to transfer pricing between the Company and its overseas
subsidiaries during the five year periods between the 103rd fiscal year (from
April 1, 1998 to March 31, 1999) and the 107th fiscal year (from April 1, 2002
to March 31, 2003). At the present stage, the Company has not yet received any
final and conclusive results. Therefore, any income tax payable that may be
arising therefrom is not stated in the accompanying the consolidated statutory
report.
(Notes with respect to Statement of Income)
Net income per share: Yen 339.76
Diluted net income per share: Yen 339.55
(Important subsequent events)
Not applicable.
(Scope of consolidation)
Consolidated subsidiaries, associated companies accounted for by the equity
method:
1. Number of consolidated subsidiaries: 71
Name of major consolidated subsidiaries:
TDK U.S.A. Corporation
TDK Europe S.A.
SAE Magnetics (Hong Kong) Limited
TDK-MCC Corporation
2. Number of associated companies accounted
for by the equity method: 6
Name of major associated companies accounted
for by the equity method:
BT Magnet Technologie GmbH
Semiconductor Energy Laboratory
Co., Ltd.
Tokyo Magnetic Printing Co., Ltd.
Supplementary Information (4)
CERTIFIED COPY OF PUBLIC ACCOUNTANTS' REPORT
for Consolidated statutory reports
(English Translation of the Auditors' Report Originally Issued in Japanese
Language)
Independent Auditors' Report
June 15,
2005
To: The Board of Directors of TDK Corporation
KPMG AZSA & CO.,
Seiichi Sasa (Seal)
Designated and Engagement Partner
Certified Public Accountant
Hideaki Koyama (Seal)
Designated and Engagement Partner
Certified Public Accountant
We have audited the consolidated statutory report, that is the consolidated
balance sheet and the consolidated statement of income, of TDK Corporation for
the 109th business year from April 1, 2004 to March 31, 2005 in accordance
with Article 19-2(3) of the "Law for Special Exceptions to the Commercial Code
Concerning Audit, etc. of Kabushiki Kaisha". The consolidated statutory report
is the responsibility of the Company's management. Our responsibility is to
express an opinion on the consolidated statutory report based on our audit as
independent auditors.
We conducted our audit in accordance with auditing standards generally accepted
in Japan. Those auditing standards require us to obtain reasonable assurance
about whether the consolidated statutory report is free of material
misstatement. An audit is performed on a test basis, and includes assessing the
accounting principles used, the method of their application and estimates made
by management, as well as evaluating the overall presentation of the
consolidated statutory report. We believe that our audit provides a reasonable
basis for our opinion. Our audit procedures also include those considered
necessary for the Company's consolidated subsidiaries .
As a result of the audit, in our opinion, the consolidated statutory report
referred to above presents fairy the consolidated financial position of TDK
Corporation and Company's consolidated subsidiaries , and the consolidated
results of their operations in conformity with related laws and regulations and
the Articles of Incorporation of the Company.
Our firm and engagement partners have no interest in the Company which should be
disclosed pursuant to the provisions of the Certified Public Accountants Law of
Japan.
- End -
Supplementary Information (5)
CERTIFIED COPY OF REPORT OF BOARD OF CORPORATE AUDITORS
For Consolidated statutory reports
AUDIT REPORT for Consolidated statutory reports
This Board of Corporate Auditors prepared and report the following audit
report of the consolidated statutory reports (the consolidated balance
sheet and the consolidated statement of income) during the 109th fiscal
year from April 1, 2004 to March 31, 2005, upon deliberation, based on the
reports from each Corporate Auditor regarding the method and the result of
audit.
1. Summary of method of audit:
Each Corporate Auditor, subject to, inter alia, the audit policy and
the business assignment, etc. set up by the Board of Corporate Auditors and
the duties assigned to each Corporate Auditor, audited the consolidated
statutory reports upon receipt of reports and explanations from Directors
and the Certified Public Accountants regarding the consolidated statutory
reports
2. Result of audit:
We confirm that the method and results of the audit carried out by KPMG
AZSA & CO., Independent Public Accountants, are appropriate.
June 15, 2005
Board of Corporate Auditors of
TDK Corporation
Corporate Auditor (full-time)
Masaaki Miyoshi (Seal)
Corporate Auditor (full-time)
Takuma Otsuka (Seal)
Corporate Auditor
Kazutaka Kubota (Seal)
Corporate Auditor
Kaoru Matsumoto (Seal)
Corporate Auditor
Ryoichi Ohno (Seal)
(Note) Messrs. Kazutaka Kubota, Kaoru Matsumoto and Ryoichi Ohno are outside
Corporate Auditors prescribed in Section 1, Article 18 of the Law
Concerning Special Exceptions to the Commercial Code Concerning Audit,
etc. of Kabushiki Kaisha.
Supplementary Information (6)
Non-Consolidated BALANCE SHEET
(As of March 31, 2005)
Item Amount Item Amount
(ASSETS) (Millions of (LIABILITIES) (Millions of
yen) yen)
Current Assets 272,300 Current Liabilities 76,436
Cash and deposits with 64,882 Trade payables accounts 37,458
banks
Trade receivables - 3,591 Accounts payable 5,553
notes
Trade receivables - 78,498 Accrued income taxes 8,166
accounts
Marketable securities 25,697 Accrued expenses 11,032
Products and merchandise 9,038 Deposits received 13,474
Raw materials and 4,883 Other current 751
supplies liabilities
Work in process 8,840 Noncurrent Liabilities 14,959
Advance payments 6,871 Retirement and severance 14,706
benefits
Deferred tax assets 4,025 Directors' and 253
Corporate Auditors'
retirement allowance
Short-term loans 55,982 (Total Liabilities) 91,396
receivables
Other current assets 10,161 (STOCKHOLDERS' EQUITY) 32,641
Allowance for doubtful - 171 Common Stock 59,256
receivables
Noncurrent Assets 266,576 Capital Surplus 59,256
Net property, plant and 121,248 Additional paid-in 361,166
equipment capital
Buildings 37,362 Legal Surplus 8,160
Structures 1,805 Legal reserve 307,345
Machinery and equipment 56,731 Voluntary reserve 807
Vehicles, tools, 3,566 Special depreciation 306,053
furniture and fixtures reserve
Land 13,777 General reserve 484
Construction in progress 8,004 Reserve for deferred 45,660
income taxes
Intangible fixed assets 9,233 Unappropriated retained 1,858
earnings for the year
Patent rights 6,510 Unrealized holding gains - 7,443
(losses) on investments
in shares
Software 2,462 Treasury stock 447,480
Other intangible fixed 260 Total Stockholders'
assets Equity
Investments and advances 136,094
Investments in 12,944
securities
Shares of subsidiaries 94,883
Investment in 8,888
subsidiaries
Long-term loans 151
receivable
Long-term prepaid 3,171
expenses
Advance payment of 3,644
pension expenses
Long-term deferred tax 10,851
assets
Other investments 2,149
Allowance for doubtful - 589
receivables
Total Assets: 538,877 Total Liabilities and 538,877
Stockholders' Equity:
(Notes) 1. Amounts less than Yen 1 million have been rounded downward.
2. Principal Accounting Principles, etc. are stated separately.
Supplementary Information (7)
Non-Consolidated STATEMENT OF INCOME
From: April l, 2004
To: March 31, 2005
Item Amount
CURRENT INCOME AND LOSS (Millions of yen)
Operating Income and Loss 328,452
Operating income 328,452
Net sales 319,798
Operating expenses 258,007
Cost of sales 61,791
Selling, general and administrative expenses 8,653
Operating income 31,436
Non-operating Income and Loss 12,898
Non-operating income 8,706
Interest and dividend income 8,431
Technology commission 1,399
Rental received 9,539
Other non-operating income 42
Non-operating expenses 655
Interest paid 7,605
Exchange loss 1,236
Depreciation of leased assets 30,550
Other non-operating expenses
Current Income 30,628
EXTRAORDINARY PROFIT AND LOSS 53
Extraordinary Profit 30,225
Gain on sales of fixed assets 349
Gain on transfer to the government of the 1,334
substituted portion of Employees' Pension Plan
Other profit 1,309
Extraordinary Loss 24
Loss on disposal of fixed assets
Loss on devaluation of investment securities 59,843
Income before income taxes 10,942
Income taxes current 9,388
Income taxes - deferred 39,513
Net income 10,252
Retained earnings brought forward from the preceding 139
year
Loss on disposition of treasury stock 3,966
Interim dividends 45,660
Unappropriated retained earnings for the year
(Notes) 1. Amounts less than Yen 1 million have been rounded downward.
2. Principal Accounting Principles, etc. are stated separately.
(Separate notes)
Principal Accounting Principles
The principal accounting principles, procedures and methods of
representation adopted for the preparation of the Balance Sheet and the
Statement of Income are as follows:
1. Valuation standards and methods of securities are as follows:
(1) Shares of subsidiaries and affiliates:
They are valued at cost using a moving average cost method.
(2) Other securities:
Marketable securities:
Market price method on the fair market price as of the end
of fiscal year (any balance resulting from valuation of
securities shall directly be entered into stockholders'
equity, while any cost of sales of marketable securities
shall be calculated using a moving average cost method.)
Non-marketable securities:
They are valued at cost using a moving average cost method.
2. Valuation standards and methods of derivatives are as follows:
They are valued at market price.
3. Valuation standards and methods of inventories are as follows:
(1) Products and work in progress:
They are valued at the lower of cost using a periodic average
method.
(2) Raw materials and supplies:
They are value at the lower of cost using a monthly moving
average cost method.
4. Method of depreciation of cost of fixed assets:
(1) Property, plant and equipment:
Depreciation of buildings (other than facilities attaching to the
buildings) is principally computed using the straight-line
method, and property other than buildings is principally computed
using the declining balance method.
The estimated useful lives of assets are as follows:
Buildings: 3 to 50 years
Machine and equipment 4 to 22 years
(2) Intangible fixed assets:
Depreciation of intangible fixed assets is computed using the
straight-line method.
Software for the in-house use is computed using the straight-line
method based on the utilizable period (5 years) within the
Company.
5. Accounting basis of principal allowances:
(1) Allowance for doubtful receivables:
In order to prepare for losses from bad debts, it is stated an
estimated incollectible amount, in consideration of the past
experience for bad debt ratio with respect to doubtful
receivables in general, and the individual estimate on
possibility of collection with respect to doubtful receivables.
(2) Retirement and severance benefits (Prepaid pension costs):
It is stated estimated amounts of benefit obligations and plan
assets as of March 31, 2005 for the future payment of retirement
and severance benefits payable to employees (or prepaid pension
costs).
Actuarial gains and losses are amortized from the next year
following the year in which such gains and losses occurred using
the straight-line method over certain periods within the
estimated average remaining service years of employees. Prior
service costs of employees are amortized in the year in which
such costs occurred using the straight-line method over certain
periods within the estimated average remaining service years of
employees.
(Additional information)
Due to the enforcement of the Defined Benefit Corporate Pension
Law, the Company was authorized by the Minister of Health, Labor
and Welfare on October 1, 2004 to transfer to the government of
the substitutional portion of the benefit obligation, and paid
the minimum pension liability on January 31, 2005. Accordingly,
a gain of Yen 30,225 million arising from the substitutional
portion of the benefit obligation that transferred to the
government during the fiscal year under review is stated as an
extra ordinary profit.
(3) Directors' and Corporate Auditors' retirement allowance:
In order to prepare for future payment of retirement grants for
Directors and Corporate Auditors to resign, it is stated an
amount to be required at the end of the fiscal year concerned in
accordance with the internal regulations of the Company.
Provided, however, that the reserve for Directors' retirement
allowance to be accrued following the date after the date of the
106th Ordinary General Meeting of Stockholders has been suspended
upon resolutions of the meeting of the Board of Directors.
Directors' prior retirement grants shall be paid when a Director
resigns upon resolution of the General Meeting of Stockholders.
This is the allowance as prescribed in Article 43 of the
Commercial Code Enforcement Regulations.
6. Method of accounting for lease transactions:
Finance leases, except for those in which ownership is deemed to be
transferred to the lessee, are accounted for as operating leases, that
is, the rental of property.
7. Method of accounting consumption tax, etc.:
No consumption tax, etc. is included in the statutory reports.
(Notes with respect to Balance Sheet)
1. Pecuniary credits and debts to subsidiaries:
(1) Short-term credits Yen 67,768 million
(2) Long-term credits Yen 110 million
(3) Short-term debts Yen 25,644 million
2. In addition to the fixed assets stated in the balance sheet, there are
computers and other related machinery and equipment as principal assets
used pursuant to lease contracts.
3. There is no pecuniary credit or debt to Directors or Corporate Auditors of
the Company.
4. Assets pledged or collateral:
Securities Yen 699 million
Investment securities Yen 994 million
5. Contingent liabilities including guaranteed liabilities:
Outstanding guaranteed liabilities Yen 6,235 million
6. Accumulated amount of depreciation
of property, plant and equipment: Yen 270,819 million
7. Net assets pursuant to Article 124, paragraph 3 of
the Commercial Code Enforcement Regulations: Yen 1,415 million
(Notes with respect to Statement of Income)
1. Net sales to subsidiaries: Yen 195,950 million
2. Purchases from subsidiaries: Yen 144,949 million
3. Non-operating transactions with subsidiaries: Yen 31,192 million
4. Net income per share Yen 297.93
(While net income stated in the accompanying statement of income is Yen
39,513 million, net income concerned with common stock which was used for
the calculation basis of the net income per share for the fiscal year
under review is Yen 39,413 million.
The difference arises from the proposed payment of directors' bonuses.
The average number of shares of common stock issued during the fiscal year
under review, which was used for the calculation basis of the net income
per share, totals 132,292 thousand shares.
(Notes with respect to Retirement and Severance Benefits)
1. Components of retirement and severance benefits:
109th Business year
(As of March 31, 2005)
(1) Retirement and severance benefit (Yen million)
obligation: - 164,031
(2) Plan assets: 137,241
(3) Unfunded obligations for benefit - 26,789
obligation (1) + (2):
(4) Unrecognized actuarial loss 38,543
(gain)
(5) Unrecognized prior service costs - 22,816
(6) Prepaid pension costs 3,644
(7) Accrued retirement and severance - 14,706
benefits
(3) + (4) + (5) (6):
2. Components of retirement benefit costs:
109th Business year
(April 1, 2004 -
March 31, 2005)
Retirement benefit costs (Yen million)
8,940
(1) Service cost 5,823
(2) Interest cost 3,758
(3) Expected return on plan assets - 2,591
(4) Amortization of prior service - 2,070
costs
(5) Amortization of actuarial loss 3,573
(gain)
(6) Extra benefits paid: 446
3. Calculation basis of for retirement and severance benefits obligations:
109th Business year
(As of March 31, 2005)
(1) Discount rates: 2.00%
(2) Expected rates of return on 2.00%
investment:
(3) Distribution method of estimated Period fixed amount standard
amount of retirement and severance
benefits during the period:
(4) Amortization of prior service Average remaining years of service
obligations of the employees when it occurs
(5) Years to amortize actuarial gain Average remaining years of
/loss: service of the employees when
it occurs
Supplementary Information (8)
PROPOSAL FOR APPROPRIATION OF Retained EARNINGS
Appropriation of Unappropriated Retained Earnings for the Fiscal Year ended
March 31, 2005
Unappropriated retained earnings for the year (yen)
45,660,555,459
Reversal of general reserve
Reversal of special depreciation reserve 284,026,401
Total 45,944,581,860
We propose that the above income will be disposed as follows:
Appropriated retained earnings
Dividends 5,289,783,480
(Yen 40 per share)
Directors' bonuses 99,590,000
General reserve
Special depreciation reserve 160,393,000
Total 5,549,766,480
Balance Carried Forward 40,394,815,380
(Notes) 1. Dividends are calculated excluding treasury stock of 945,072
shares.
2. Interim dividends (Yen 30 per share) in the aggregate amount
of Yen 3,966,092,700 were paid on December 6, 2004.
3. A special depreciation reserve and advanced depreciation reserve
are reversed or set up in accordance with the Special Taxation
Measurement Law.
Supplementary Information (9)
CERTIFIED COPY OF PUBLIC ACCOUNTANTS' REPORT
(English Translation of the Auditors' Report Originally Issued in Japanese
Language)
Independent Auditors' Report
May 2, 2005
To: The Board of Directors of TDK Corporation
KPMG AZSA & Co.,
Seiichi Sasa (Seal)
Designated and Engagement Partner
Certified Public Accountant
Hideaki Koyama (Seal)
Designated and Engagement Partner
Certified Public Accountant
We have audited the statutory report, that is the balance sheet, the
statement of income, the business report (limited to accounting matters) and the
proposal for appropriation of unappropriated retained earnings , and its
supporting schedules (limited to accounting matters) of TDK Corporation for the
109th business year from April 1, 2004 to March 31, 2005 in accordance with
Article 2(1) of the "Law for Special Exceptions to the Commercial Code
Concerning Audit, etc. of Kabushiki Kaisha". With respect to the aforementioned
business report and supporting schedules, our audit was limited to those matters
derived from the accounting books and records. The statutory report and
supporting schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on the statutory report and supporting
schedules based on our audit as independent auditors.
We conducted our audit in accordance with auditing standards generally accepted
in Japan. Those auditing standards require us to obtain reasonable assurance
about whether the statutory report and supporting schedules are free of material
misstatement. An audit is performed on a test basis, and includes assessing the
accounting principles used, the method of their application and estimates made
by management, as well as evaluating the overall presentation of the statutory
report and supporting schedules. We believe that our audit provides a
reasonable basis for our opinion. Our audit procedures also include those
considered necessary for the Company's subsidiaries.
As a result of the audit, our opinion is as follows:
(1) The balance sheet and the statement of income present fairly the financial
position and the results of operations of the Company in conformity with
related laws and regulations and the Articles of Incorporation of the
Company.
(2) The business report (limited to accounting matters) presents fairly the
status of the Company in conformity with related laws and regulations and
the Articles of Incorporation of the Company.
(3) The proposal for appropriation of unappropriated retained earnings has
been prepared in conformity with related laws and regulations and the
Articles of Incorporation of the Company.
(4) With respect to the supporting schedules (limited to accounting matters)
there are no items to be noted that are not in conformity with the
provisions of the Commercial Code.
Our firm and engagement partners have no interest in the Company which should be
disclosed pursuant to the provisions of the Certified Public Accountants Law of
Japan.
- End -
Supplementary Information (10)
CERTIFIED COPY OF REPORT OF BOARD OF CORPORATE AUDITORS
AUDIT REPORT
This Board of Corporate Auditors prepared and report upon the following
audit report regarding the performance of duties of the Directors of the Company
during the 109th fiscal year from April 1, 2004 to March 31, 2005, upon
deliberation, based on the reports from each Corporate Auditor regarding the
method and the result of audit.
1. Summary of method of audit:
Each Corporate Auditor, subject to, inter alia, the audit policy and
the business assignment, etc. set up by the Board of Corporate Auditors and the
duties assigned to each Corporate Auditor, has attended meetings of the Board of
Directors and other meetings as deemed important, heard the performance of the
duties, perused the documents whereby the important decisions were made, and
examined business and financial conditions at the head office and the principal
offices. In addition, we requested reports on business from the Company's
subsidiaries. We received from the Independent Accountants reports on audit and
examined the accounting statements and attached schedules.
As for the transactions between Directors acting on their own behaves
and the companies which businesses are competitive to the Company, transactions
between Directors and the Company in which interests in both parties are
contradictory, the provision, free of charge, of profits conducted by the
Company, transactions not in the ordinary course of business between its
subsidiaries and the Company or between its stockholders and the Company and
acquisition and disposal of its own shares and the like, we each examined such
transactions in detail by receiving reports from the Directors, as necessary, in
addition to the method of audit mentioned above.
2. Result of audit:
(1) The method and results of auditing carried out by KPMG AZSA & Co.,
Independent Public Accountants, are appropriate.
(2) The Business Report fairly sets forth the situation of the Company in
accordance with laws and ordinances and the Articles of Incorporation.
(3) With respect to the item concerning the proposal for appropriation of
retained earnings, nothing unusual is to be pointed out in accordance
with the financial condition of the Company and other circumstances.
(4) The attached schedules fairly set forth the matters to be stated and
nothing unusual is to be pointed out.
(5) With respect to the performance of their duties by the Directors
including the duties regarding subsidiaries, no illegal act nor any
fact which is in violation of the laws and ordinances and the Articles
of Incorporation is ascertainable.
We confirm that there are no violations of obligation by Directors,
such as transactions competitive to the Company's business as
prescribed in Article 133, paragraph 1 of the Commercial Code
Enforcement Regulations.
May 6, 2005
Board of Corporate Auditors of
TDK Corporation
Corporate Auditor (full-time)
Masaaki Miyoshi (Seal)
Corporate Auditor (full-time)
Takuma Otsuka (Seal)
Corporate Auditor
Kazutaka Kubota (Seal)
Corporate Auditor
Kaoru Matsumoto (Seal)
Corporate Auditor
Ryoichi Ohno (Seal)
(Note) Messrs. Kazutaka Kubota, Kaoru Matsumoto and Ryoichi Ohno are outside
Corporate Auditors prescribed in Section 1, Article 18 of the Law
Concerning Special Exceptions to the Commercial Code Concerning Audit,
etc. of Kabushiki Kaisha.
- End -
(Reference)
Tax Office Investigation on Transfer Price System
The Company has been subject to the tax audit by the Tokyo Regional Taxation
Bureau with respect to transfer pricing between the Company and its overseas
subsidiaries during the five year periods between the 103rd fiscal year (from
April 1, 1998 to March 31, 1999) and the 107th fiscal year (from April 1, 2002
to March 31, 2003). At the present stage, the Company has not yet received any
final and conclusive results and is not in a position to estimate the contingent
income tax payable that the Company may incur as a result of the tax audit.
Therefore, it was not possible to state any income tax payable in the
accompanying the consolidated statutory report and the non-consolidated
statutory report for the 109th fiscal year (from April 1, 2004 to March 31,
2005).
There is a statement that the Company has been subject to the tax audit for
transfer pricing as the additional information of the consolidated statutory
reports in the Public Accountants' Report. This is due to the fact that the
tax audit for transfer pricing is likely to conclude in the near future,
immediately after the Company received the audit reports for the
non-consolidated statutory reports up to the present. On the other hand, there
is no statement concerning the tax audit in the Public Accountants' Report for
the non-consolidated statutory reports.
Reference Documents Concerning the Exercise of Voting Rights
1. Aggregate number of voting rights owned by all stockholders:
1,321,727 voting rights
2. Matters to be Resolved and Matters for Reference:
First Item: Approval of Proposal for Appropriation of Retained Earnings
for the 109th Fiscal Year
The appropriation of retained earnings for the fiscal year under review
is proposed as stated in Supplementary Information (8) (in the page 32).
The Company gives a priority to returning income to its stockholders as
an important management issue. The Company's fundamental dividend policy is to
steadily increase the dividend taking into consideration the level of
consolidated return on equity, dividends on equity and business results, among
other factors. Consequently, with respect to the proposed appropriation of
retained earnings as at the end of the fiscal year under review, it is proposed
that the year-end dividend during the fiscal year under review be Yen 40.00 per
share. Together with the interim dividends of Yen 30.00 per share, which were
paid
in December 6, 2004, the total dividends for the fiscal year under review will
be Yen 70.00 per share, a Yen 15.0 increase per share over the previous fiscal
year.
Second Item: Issuance of Stock Acquisition Rights as Stock Option Scheme
for Stock-Linked Compensation Plan
You are requested to approve the issuance of stock acquisition rights
in accordance with the following terms and conditions, pursuant to Article
280-20 and Article 280-21 of the Commercial Code of Japan, in order to allow the
Company to implement a stock option scheme for stock-linked compensation plan
for Directors and Corporate Officers of the Company.
1. Reason for the issuance of stock acquisition rights with specially
favorable terms and conditions to persons other than stockholders:
The Company intends to issue stock acquisition rights without any charge to
Directors and Corporate Officers as a stock option scheme for stock-linked
compensation plan in accordance with the conditions of the issuance as
stated in 2 below. The aim of the plan is to further raise motivation and
enhance morale to improve the business results and the rise of stock price
of the Company, by formulating a system that the Directors and Corporate
Officers will share benefits and risks arising from the rise and fall of
stock price with its stockholders.
2. Summary of the issuance of stock acquisition rights:
(1) Class and number of shares to be issued upon exercise of stock
acquisition rights:
The maximum number shall be 41,000 shares of common stock of the
Company.
In case of adjustment of the number of shares attached to each
stock acquisition rights (defined as below) in accordance with (2)
below, the number of shares to be issued upon exercise of stock
acquisition rights shall be adjusted to a number obtained by
multiplying the number of shares attached to each stock acquisition
right after adjustment by the aggregate number of stock acquisition
rights.
(2) Aggregate number of stock acquisition rights to be issued:
The maximum number shall be 410.
The number of shares attached to one stock acquisition right
(hereinafter referred to as the "number of shares attached") shall
be 100 shares. Provided, however, that on or after the date on
which stock acquisition rights are issued (hereinafter referred to
as the "issue date"), in case the Company makes a stock split or
stock consolidation of shares of common stock, the number of shares
attached shall be adjusted proportional to the percentages of such
stock split or stock consolidation of shares.
In addition, in the case of any unavoidable event, such as the
Company's merger or corporate partition that requires adjustments to
be effected to the number of shares attached, the number of shares
shall be adjusted to the reasonable extent, taking into account the
terms and conditions of the merger or corporate partition or the
like, and any number of share less than one share arising out of
such adjustment shall be disregarded.
(3) Issue price of stock acquisition rights:
Free of charge
(4) Amounts to be paid for the exercise of each stock acquisition right:
Amounts to be paid for the exercise of each stock acquisition right
shall be 1 yen per share, multiplied by the number of shares
attached.
(5) Exercise period of stock acquisition rights:
The exercise period shall be determined by the Board of Directors
and shall be within a period from July 1, 2005 to June 30, 2025.
(6) Conditions of exercise of stock acquisition rights:
(1) A holder of stock acquisition rights may not exercise the stock
acquisition rights during July 1, 2005 to June 2008, except for
the case stated in (2) below, such holder may exercise the
stock acquisition rights on or after July 1, 2008.
(2) The holder of stock acquisition rights may only exercise such
rights within the specified period set out in (a) or (b) below,
in case of any event set out in (a) or (b), respectively.
a) In case the holder of stock acquisition rights loses the
position as both Corporate Officer and employee (including
full-time advisor and full-time counselor, but excluding
part-time adviser and part-time counselor; the same shall be
applicable hereinafter);
For three years from the date immediately following the date
that such holder loses the position as both Corporate
Officer and employee of the Company
b) In case a proposal for a merger agreement where the Company
will be dissolved, or a proposal for a stock exchange
agreement or stock transfer agreement where the Company will
become a wholly owned subsidiary is approved at the general
meeting of shareholders of the Company;
During a 15 day-period commencing from the date immediately
following the date when the proposal is approved
(3) In case that the holder of stock acquisition rights loses the
position as both Corporate Officer and employee of the Company on
or after July 1, 2008, the holder may only exercise the rights
for three years on or after the date immediately following the
date when such holder loses the position as Corporate Officer and
Director, but not beyond the exercise period of stock acquisition
rights.
(4) Each stock acquisition right shall not be partially exercised.
(7) Events and conditions of cancellation of stock acquisition rights:
If the holder of stock acquisition rights is unable to exercise the
stock acquisition rights, stock acquisition rights may be cancelled
without any charge.
(8) Restrictions on transfer of stock acquisition rights:
Any transfer of stock acquisition rights shall be subject to
approval of the Board of Directors of the Company.
3. Summary of the allotment of stock acquisition rights:
When granting stock acquisition rights to each grantee (the "Grantee"),
the Company shall enter into the "Granting of Stock Acquisition Right
Agreement" with each of the Grantees, which shall provide for the
additional conditions deemed reasonable by the Board of Directors for the
purpose of the issuance of stock acquisition rights.
Third Item: Issuance of Stock Acquisition Rights as Stock Option Scheme
You are requested to approve the issuance by the Company of stock acquisition
rights in accordance with the following terms and conditions, pursuant to
Article 280-20 and Article 280-21 of the Commercial Code of Japan, in order to
grant such rights as a stock option to key employees of the Company and
Directors and key employees of each of the associated companies.
1. Reason for the issuance of stock acquisition rights with specially
favorable terms and conditions to persons other than stockholders:
In order to further raise motivation and enhance morale for contributing to
the improvement of consolidated business results of the Company, improve
business results of the Company and associated companies and stockholder
values, stock acquisition rights shall be issued without any charge to key
employees of the Company and Directors and key employees of each of the
associated companies in accordance with the conditions of the issuance as
stated in 2. below.
2. Summary of the issuance of stock acquisition rights:
(1) Class and number of shares to be issued upon exercise of stock
acquisition rights:
The maximum number shall be 119,000 shares of common stock of the
Company.
In case of adjustment of the number of shares attached to each
stock acquisition rights (defined as below) in accordance with (2)
below, the number of shares to be issued upon exercise of stock
acquisition rights shall be adjusted to a number obtained by
multiplying the number of shares attached to each stock acquisition
right after adjustment by the aggregate number of stock acquisition
rights.
(2) Aggregate number of stock acquisition rights to be issued:
The maximum number shall be 1,190.
The number of shares attached to one stock acquisition right
(hereinafter referred to as the "number of shares attached") shall
be 100 shares. Provided, however, that on or after the date on
which stock acquisition rights are issued (hereinafter referred to
as the "issue date"), in case the Company makes a stock split or
stock consolidation of shares of common stock, the number of shares
attached shall be adjusted proportional to the percentages of such
stock split or stock consolidation of shares.
In addition, in the case of any unavoidable event, such as the
Company's merger or corporate partition that requires adjustments to
be effected to the number of shares attached, the number of shares
shall be adjusted to the reasonable extent, taking into account the
terms and conditions of the merger or corporate partition or the
like, and any number of share less than one share arising out of
such adjustment shall be disregarded.
(3) Issue price of stock acquisition rights:
Free of charge
(4) Amounts to be paid for the exercise of each stock acquisition right:
Amounts to be paid for the exercise of each stock acquisition right
shall be the amount to be paid per share (hereinafter referred to as
the "Exercise Price") of shares to be issued or transferred upon
exercise of the stock acquisition right, multiplied by the number of
shares attached.
The exercise price shall be an amount which is the average of the
closing prices (regular way) of the Company's shares of common stock
on the Tokyo Stock Exchange, Ltd. on each day (other than any day on
which no sale is reported) of the month immediately preceding the
issue date, multiplied by 1.05. Any amount less than one yen
arising out of such adjustment shall be rounded upward to the
nearest yen. Provided, however, that if such price is less than the
closing price as of the issue date, then such closing price reported
on the issue date shall instead be the Exercise Price (if no closing
price is reported on such day, then the closing price reported on
the day immediately preceding that day).
On or after the issue date, in case the Company issues new shares
of its common stock or disposes of its treasury stock at a price
less than the current market price (except for issue or transfer
upon exercise of stock acquisition rights or transfer of its
treasury stock pursuant to the provisions of Section 2, Article 5 of
the Supplement of the "Law regarding the Partial Amendments, etc. to
the Commercial Code, etc. of Japan (Law No. 79, 2001)), the Exercise
Price shall be adjusted in accordance with the following formula and
any amount less than one yen arising out of such adjustment shall be
rounded upward to the nearest yen:
Number of shares Amount paid
Number of + newly issued x per share
shares issued _______________________________
Market price
________________________________________________
Exercise Exercise Price Number of Number of shares
Price after = before x Shares issued + newly issued
adjustment adjustment
"Number of shares issued" in the above formula means the number of
shares obtained by deducting the number of treasury stock held by
the Company from the number of outstanding shares. In case of
disposal of treasury stock, "Number of shares newly issued" shall
instead read as "Number of treasury stock to be disposed of". On or
after the issue date, in case of a stock split or stock
consolidation of the Company's shares of common stock, the Exercise
Price shall be adjusted proportional to the percentages of stock
split or stock consolidation of shares.
In addition, in the case of any unavoidable event, such as the
Company's merger or corporate partition that requires adjustments to
be effected to the number of shares attached, the number of shares
shall be adjusted to the reasonable extent, taking into account the
terms and conditions of the merger or corporate partition or the
like, and any number of share less than one share arising out of
such adjustment shall be disregarded.
(5) Exercise period of stock acquisition rights:
From August 1, 2007 to July 31, 2011
(6) Conditions of exercise of stock acquisition rights:
Each stock acquisition right shall not be partially exercised.
(7) Events and conditions of cancellation of stock acquisition rights:
(1) If a proposal for approval of a merger agreement, where the
Company is dissolved, is approved at a general meeting of
stockholders of the Company, or if a proposal for approval of a
stock exchange agreement or a proposal for share transfer is
approved at a general meeting of stockholders of the Company, the
Company may cancel stock acquisition rights without any charge.
(2) The Company may, at any time, cancel without any charge such
outstanding and unexercised stock acquisition rights as is
acquired and owned by itself.
(8) Restrictions on transfer of stock acquisition rights:
Any transfer of stock acquisition rights shall be subject to
approval of the Board of Directors of the Company.
3. Summary of the allotment of stock acquisition rights:
In addition, when granting stock acquisition rights to each grantee, the
Company shall enter into the "Granting of Stock Acquisition Right
Agreement" with each of the grantees, which shall provide for the
additional conditions deemed reasonable by the Board of Directors for the
purpose of the issuance of stock acquisition rights.
Fourth Item: Acquisition of own shares of the Company
You are requested to approve that the Company will acquire up to 160,000 shares
of common stock of the Company, with a maximum aggregate acquisition cost of Yen
1.6 billion, pursuant to Article 210 of the Commercial Code of Japan during the
period from the closing of this Ordinary General Meeting of Stockholders to the
closing of next Ordinary General Meeting of Stockholders in 2006, in order to
enable the Company to implement the stock option plan described in the Second
Item and the Third Item of the proposal.
Fifth Item: Election of seven (7) Directors
The terms of offices of all seven (7) Directors will expire at the
closing of this Ordinary General Meeting of Stockholders. You are requested to
elect seven (7) Directors.
Candidates for Directors are as follows:
Candidate Name Resume and Status as Other Number of
No. (Date of Birth) Company's Representative, if any Shares of the
Company Owned
1. Hajime Sawabe April 1964: entered into the Company 8,000 shares
(Jan. 9, 1942) May 1991: General Manager of
European Div. of Recording
Media Business Group of
the Company
June 1996: Director & General Manager
of Data Storage Components
Business Group of the Company
June 1998: President & Representative
Director of the Company
(present post)
2. Jiro Iwasaki April 1974: entered into the Company 2,000 shares
(Dec. 6, 1945) June 1992: General Manager of
Corporate Planning Office
of the Company
June 1996: Director and General Manager
of Human Resources Dept.
of the Company
June 1998: Managing Director of the
Company
General Manager of Recording
Media & Systems Business
Group of the Company
June 2002: Director & Senior Vice
President of the Company
(present post)
General Manager of
Administration Group of the
Company (present post)
in charge of Safety and
Environment (present post)
3. Shinji Yoko April 1970: entered into the Company 1,000 shares
(Jan. 2, 1948) Jan. 1994: General Manager of
European Sales Headquarters
of Electronic Materials
Sales & Marketing Dept. of
the Company
June 1998: Director of the Company
Jan. 1999: Director, Deputy General
Manager of Electronic
Components Sales & Marketing
Division of the Company
General Manager of Europe
Sales Office of the Company
and General Manager of Europe
Sales Division of the Company
June 2002: Director & Senior Vice
President of the Company
(present post)
General Manager of Electronic
Components Sales & Marketing
Business Group of the Company
(present post)
4. Takeshi Nomura April 1980: entered into the Company 1,000 shares
(Mar. 8, 1952) June 1996: General Manager of Material
Research Center of the Company
June 1998: Director of the Company
June 2002: Director & Senior Vice
President of the Company
(present post)
July 2002: General Manager of
Intellectual Properties Center
Jan. 2004: in charge of Technology
General Manager of Technology
Group of the Company
April 2005: General Manager of Ferrite &
Magnet Products Business Group
(present post)
5. Yasuhiro Hagihara April 1971: registered as lawyer in 0 share
Washington D.C. in the U.S.
(Oct. 19, 1937) Aug. 1976: joined Graham and James LLP
in the U.S.
Jan. 1979: Partner of the said law firm
July 2000: Partner of Squire Sanders &
Dempsey L.L.P. (Gaikokuhou
Jimu Bengoshi Jimusho)
(Currently Squire Sanders
(Gaikokuho Kyodo Jigyo Horitsu
Jimusho)) (present post)
June 2002: Director of the Company
(present post)
6. Takehiro Kamigama April 1981: entered into the Company 800 shares
(Jan. 12, 1958) April 2001: General Manager in charge
of strategic technology of
Recording Device Business
Div. of the Company
Oct. 2001: General Manager of Head
Business Group of the Company
(present post)
June 2002: Corporate Officer of the
Company
June 2003: Senior Vice President of
the Company
June 2004: Director and Executive Vice
President of the Company
(present post)
7. * Seiji Enami April 1974: entered into the Company 1,100 shares
(Sep. 14, 1947) April 1997: General Manager of
Corporate Planning Dept.
of Recording Media
Business Div. of the Company
April 2000: General Manager of Sales &
Marketing Div. of Recording
Media & Systems Business
Group of the Company
April 2001: General Manager of Finance
& Accounting Dept. of
Administration Group of
the Company (present post)
June 2004: Corporate Officer of the
Company (present post)
(Notes) 1. None of the above seven (7) candidates has any special interests
in the Company.
2. The person with "*" mark is a new candidate for Director.
3. Mr. Yasuhiro Hagihara is a candidate for an outside Director to
comply with the requirement of outside director provided under
Paragraph 7-2, Section 2, Article 188 of the Commercial Code of
Japan.
- End -
Map to Technical Center of TDK Corporation
(Translation omitted)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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