(TDK LOGO)
TDK Corporation
1-13-1, Nihonbashi
Chuo-ku, Tokyo
103-8272 Japan
Contacts;
TDK Corporation(Tokyo) Corporate Communications
Department
Michinori Katayama +81(3)5201-7102
TDK U.S.A. Corporation Francis J. Sweeney +1(516)535-2600
TDK Marketing Europe GmbH Marco Donadoni +49(2102)4870
FOR IMMEDIATE RELEASE
TOKYO - July 28, 2005 TDK Corporation today announced its Consolidated business
results prepared in conformity with U.S. generally accepted accounting
principles (the "U.S. GAAP") for the 1st quarter ("Qtr.") of fiscal year ("FY")
2006 and 2005, the three months ended June 30, 2005 and 2004 are as follows;
1) Summary
Consolidated results (April 1, 2005 - June 30, 2005)
The 1st Qtr. of FY2006 The 1st Qtr. of Change
FY2005
(April 1, 2005 - June 30,
2005) (April 1, 2004 -
June 30, 2004)
Item /Term (Yen % (U.S.$ (Yen % (Yen Change
millions) thousands) millions) millions) (%)
Net sales 167,422 100.0 1,508,306 157,227 100.0 10,195 6.5
Operating 12,889 7.7 116,117 14,362 9.1 (1,473) -10.3
income
Income from 14,275 8.5 128,604 15,292 9.7 (1,017) -6.7
continuing
operations
before income
taxes
Income from 10,687 6.4 96,279 10,505 6.7 182 1.7
continuing
operations
Net income 10,874 6.5 97,964 10,163 6.5 711 7.0
Per common
share :
Net income / Yen 82.22 U.S.$0.74 Yen 76.75
Basic
Net income / Yen 82.18 U.S.$0.74 Yen 76.69
Diluted
____________
Note:
As a result of the sale of a subsidiary in Electronic components & others
product, the operating results of the discontinued operation is presented as a
separate line item in the consolidated statements of income in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets. Correspondence figures for the
previous fiscal year have been reclassed to conform to the presentation used
for the year ended March 31, 2005.
(Sales breakdown)
The 1st Qtr. of FY2006 The 1st Qtr. of Change
FY2005
(April 1, 2005 - June 30,
2005) (April 1, 2004
- June 30,
2004)
Product/ Term (Yen % (U.S.$ (Yen % (Yen Change
millions) thousands) millions) millions) (%)
Electronic materials and 143,328 85.6 1,291,243 129,804 82.6 13,524 10.4
components
Electronic materials 41,047 24.5 369,793 44,763 28.5 (3,716) -8.3
Electronic devices 28,687 17.1 258,441 28,248 18.0 439 1.6
Recording devices 68,464 40.9 616,793 52,163 33.2 16,301 31.3
Electronic components & 5,130 3.1 46,216 4,630 2.9 500 10.8
others
Recording media 24,094 14.4 217,063 27,423 17.4 (3,329) -12.1
Total sales 167,422 100.0 1,508,306 157,227 100.0 10,195 6.5
Overseas sales 123,309 73.7 1,110,892 114,460 72.8 8,849 7.7
____________
Notes:
1. Consolidated results for the 1st quarter of FY2006 and FY2005 are unaudited
by independent accountant.
2. U.S.$1 = Yen 111
3. "Semiconductors & others" and "Recording media & systems" were renamed
"Electronic components & others" and "Recording media" from FY 2006
respectively. There were no changes in segment classifications.
2) Business Results and Financial Position
1. Summary
Consolidated results for the first quarter of fiscal 2006, the three-month
period from April 1, 2005 through June 30, 2005, were as follows:
Consolidated net sales were �167,422 million (U.S.$1,508,306 thousand), 6.5%
higher than the �157,227 million recorded in the corresponding period of the
previous fiscal year. Operating income declined 10.3% from �14,362 million to �
12,889 million (U.S.$116,117 thousand). Income from continuing operations
before income taxes decreased 6.7% from �15,292 million to �14,275 million
(U.S.$128,604 thousand). Net income rose 7.0% from �10,163 million to �10,874
million (U.S.$97,964 thousand), and basic net income per common share was �
82.22 (U.S.$0.74), up from �76.75.
Average first-quarter yen exchange rates for the U.S. dollar and euro were �
107.73 and �135.47, respectively, as the yen appreciated 1.7% from �109.63
versus the U.S. dollar and depreciated 2.5% from �132.15 against the euro,
compared with the first quarter of the previous fiscal year. This lowered net
sales by approximately �1.3 billion and operating income by approximately �0.6
billion.
(Sales by Segment)
TDK's businesses are broadly classified into two business segments: electronic
materials and components segment and recording media segment. The following is
an explanation of sales by segment.
Effective from the current fiscal year, there have been changes in segment
names. However, this resulted in no reclassifications of sales. Specifically,
"Semiconductors & others" has been renamed "Electronic components & others,"
while "Recording media & systems segment" is now called the "Recording media
segment."
(1) Electronic materials and components segment
This segment is made up of four product sectors: (1-1) electronic materials,
(1-2) electronic devices, (1-3) recording devices, and (1-4) electronic
components & others.
Segment net sales rose 10.4% to �143,328 million (U.S.$1,291,243 thousand),
from �129,804 million, while segment operating income edged up 0.8% to �15,397
million (U.S.$138,712 thousand), from �15,268 million. Looking at the
electronics market, in the first quarter of fiscal 2005, strong demand driven
by the Athens Summer Olympic Games was short-lived. By comparison, in the first
quarter of fiscal 2006, demand for finished products was generally sluggish.
However, amid this softness, growth in demand for PCs, HDDs and flat-screen TVs
was steady, making market conditions a bit easier. Sector sales of TDK's
electronic components framed against this market backdrop were as follows.
(1-1) Electronic materials
This sector is broken down into two product categories: capacitors and ferrite
cores and & magnets.
Sales in the electronic materials sector declined 8.3% from �44,763 million to
�41,047 million (U.S.$369,793 thousand).
[Capacitors] Sales declined year on year. Sales of multilayer ceramic chip
capacitors, the main product in the capacitors sector, were hurt by stiffer
competition and falling prices in markets other than car electronics, where
sales were up.
[Ferrite cores and magnets] Sales of ferrite cores and magnets rose slightly
year on year. In ferrite cores, sales were down due to lower sales of ferrite
cores for power choke coils used in digital home appliances. However, magnet
sales increased as rising HDD demand spurred higher sales of metal magnets.
(1-2) Electronic devices
This sector has three product categories: inductive devices, high-frequency
components and other products.
Sales in the electronic devices sector rose 1.6% from �28,248 million to �
28,687 million (U.S.$258,441 thousand).
[Inductive devices] Sales increased year on year. Sales rose of power line
coils for mobile phones and HDDs.
[High-frequency components] Sales decreased year on year, due to continuing
declines in sales prices of components for mobile phones and lower shipment
volumes of some products.
[Other products] Sales of other products rose year on year, mainly because of
higher sales of sensors and actuators and DC-AC inverters for amusement
equipment.
(1-3) Recording devices
This sector has two product categories: HDD heads and other heads.
Sector sales rose 31.3% from �52,163 million to �68,464 million (U.S.$616,793
thousand).
[HDD heads] Sales increased year on year. Amid rising demand for HDDs, HDD head
shipments increased, absorbing lower sales caused by falling prices.
[Other heads] Sales of other heads declined year on year, due to sluggish sales
of optical pickups.
(1-4) Electronic components & others
Sector sales rose 10.8% from �4,630 million to �5,130 million (U.S.$46,216
thousand), as higher sales of other electronic components outweighed lower
sales of semiconductor manufacturing equipment.
(2) Recording media segment
This segment is made up of three product categories: audiotapes and videotapes,
optical media and other products.
Segment sales declined 12.1% from �27,423 million to �24,094 million
(U.S.$217,063 thousand). The segment recorded an operating loss of �2,508
million (U.S.$22,595 thousand), an increase of 176.8% from last year's
operating loss of �906 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 year on year, with higher DVD
sales volumes driven by increasing demand offsetting lower CD-R sales.
[Other products] Sales of other products decreased year on year, mainly because
of ongoing actions to realign the lineup of recording equipment & accessory
products. Sales of LTO-standard* (Linear Tape-Open) tape-based data storage
media for computers continued to increase.
*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 Region)
Detailed geographic segment information can be found in the segment information
on page 11 of the consolidated results.
[Japan] Sales were down in all product sectors, except recording devices.
[Americas] Sales were down in all product sectors, except electronic devices.
[Europe] Sales were down in all product sectors.
[Asia (excluding Japan) and other areas] Sales in the electronic devices,
recording devices and electronic components & others sectors were up as
customers continued to shift manufacturing bases to this region.
2. Financial Position
(2-1) The following table summarizes TDK's balance sheet at June 30, 2005,
compared with March 31, 2005.
Total assets �823,097 million 1.9%
increase
Total stockholders' equity �650,730 million 1.8%
increase
Equity ratio 79.1%
At the end of the first quarter of fiscal 2006, net trade receivables were �
4,345 million higher, inventories were �8,813 million higher and net property,
plant and equipment was �3,294 million higher than March 31, 2005. As a result
of these and other changes, total assets increased �15,096 million compared
with March 31, 2005.
Total liabilities increased �3,257 million due mainly to a �3,370 million
increase in trade payables.
Total stockholders' equity increased �11,663 million due to a �5,417 million
increase in retained earnings and a �5,938 million decrease in accumulated
other comprehensive loss.
(2-2) Cash Flows
(� millions)
FY 2006 FY 2005 Change
1Q 1Q
Net cash provided by operating activities 10,026 18,951 (8,925)
Net cash used in investing activities (21,905) (13,993) (7,912)
Net cash used in financing activities (5,168) (3,856) (1,312)
Net cash provided by (used in) discontinued 405 (193) 598
operations
Effect of exchange rate changes on cash and cash 2,936 2,553 383
equivalents
Net (decrease) increase in cash and cash (13,706) 3,462 (17,168)
equivalents
Cash and cash equivalents at beginning of period 251,508 227,155 24,353
Cash and cash equivalents at end of period 237,802 230,617 7,185
Operating activities provided net cash of �10,026 million (U.S.$90,324
thousand), a year-on-year decrease of �8,925 million. Income from continuing
operations increased �182 million to �10,687 million (U.S.$96,279 thousand) and
depreciation and amortization increased �825 million to �13,036 million
(U.S.$117,441 thousand). In changes in assets and liabilities, inventories rose
�3,514 million and income taxes payables, net decreased �6,547 million.
Investing activities used net cash of �21,905 million (U.S.$197,342 thousand),
�7,912 million more than a year earlier. Capital expenditures decreased �1,705
million to �12,573 million (U.S.$113,270 thousand). Outflows of �10,571 million
for the purchase of a subsidiary was the main reason for the increase in cash
used in investing activities.
Financing activities used net cash of �5,168 million (U.S.$46,559 thousand), �
1,312 million more than a year earlier. Dividends paid increased �1,318 million
due to a �10 per share increase in the dividend.
3. Business Risks
With development, production and sales bases in countries around the world, the
TDK Group is engaged in global business activities. Furthermore, the
electronics industry, the main field of operations of the TDK Group, is seeing
dramatic technological innovation and changes in market prices, resulting in
intense competition in new product development and efforts to win customers.
Because of these and other factors, the TDK Group is subject to various
business risks that include, but are not limited to, changes in demand and
foreign exchange rates caused by world economic trends; unpredictable events in
conducting business overseas; more intense competition in the development of
new products in line with rapid technological innovation; the ability to
respond to intense price competition and diversifying demands from customers;
product quality; the recruitment and training of employees; government
regulation; the ability to acquire intellectual property rights; the ability to
procure raw materials and other products; increasingly stringent environmental
regulations internationally; and unavoidable natural disasters.
4. Fiscal 2006 Projections
TDK's consolidated and non-consolidated projections for fiscal 2006, the year
ending March 31, 2006, are as follows:
[Consolidated Projections for Fiscal 2006]
FY 2006 % change Projections
from as of
April 2005
(� FY2005 (�
millions) millions)
Net sales 690,000 4.9 690,000
Operating income 67,000 12.0 67,000
Income before income taxes 69,000 13.6 69,000
Net income 50,000 50.2 50,000
____________
Notes:
1. The above projections for fiscal 2006 are the same as those announced on
April 27, 2005.
2. The projections are based principally on the following assumptions:
# An average exchange rate of �100=US$1 for fiscal 2006 from the second quarter
onward.
# Market conditions for electronic components (electronic materials and
electronic devices) are expected to remain a little weak in the second quarter.
However, projections are predicated on increasing demand for electronic
components beginning in about September this year because of higher demand for
finished products in the second half of fiscal 2006.
# In recording devices, strong demand for HDD heads that continued through the
first quarter of fiscal 2006 is expected to taper off in the second quarter.
However, projections are predicated on rebound in demand in the second half due
to seasonal factors. At present, it is difficult to procure some key components
for HDDs. Consequently, while there is a risk that unexpected restrictions on
the procurement of materials may hamper growth of TDK's recording devices, this
is not expected to develop into a significant risk for the business as a whole.
# The forecast for the recording media segment is largely unchanged because of
no changes in the premises for this forecast. TDK expects sales of audiotapes
and videotapes to fall. On the other hand, sales of optical media products are
expected to increase on higher volumes. However, because this increase is
unlikely to fully offset lower sales in other products, the recording media
segment is forecast to post lower sales year on year.
# On July 19, TDK announced the acquisition of the Lambda Power Division. At
present, because it is uncertain when this division will be consolidated, TDK
has not added the sales and earnings of this division to its current
projections of operating results.
[Non-Consolidated Projections]
FY 2006 % change Projections
from as of
April 2005
(� FY2005 (�
millions) millions)
Net sales 334,900 2.0 334,900
Operating income 17,300 99.9 17,300
Current income 28,500 -6.7 39,800
Net income 30,700 -22.3 27,000
____________
(Note)
In the first quarter of fiscal 2006, TDK received correction notices based on
transfer pricing taxation regulations from the Tokyo Regional Taxation Bureau
(Nihonbashi Tax Office). This resulted in tax expenses of approximately �10.3
billion and non-operating expenses of approximately �1.3 billion more than
projected when TDK announced its previous forecasts in April this year, having
a detrimental effect on earnings. An amount, which is similar to the
incremental income as a result of the correction by the authorities, will be
transferred from the subsidiaries overseas, involved in the transfer price
taxation, and thus, it is to be booked as earnings from the overseas businesses
concerned. On the other hand, because these companies will lack funds as a
result of having to pay additional sums, TDK will cease to receive dividends
that TDK had planned from these businesses. These consequences are reflected in
the above projections.
The tax and other expenses resulting from the correction notices have been
included in revisions to prior-year consolidated business results and therefore
have no effect on projections for fiscal 2006 consolidated business results.
Cautionary Statement About Projections
This earnings release contains forward-looking statements, including
projections, plans, policies, management strategies, targets, schedules,
understandings and evaluations, about TDK and its group companies that are not
historical facts. These forward-looking statements are based on current
forecasts, estimates, assumptions, plans, beliefs and evaluations in light of
information available to management on the date of this earnings release.
In preparing forecasts and estimates, TDK and its group companies have used, as
their bases, certain assumptions as necessary, in addition to confirmed
historical facts. However, due to their nature, there is no guarantee that
these statements and assumptions will prove to be accurate in the future. TDK
therefore wishes to caution readers that these statements, facts and certain
assumptions contained in this earnings release are subject to a number of risks
and uncertainties and may prove to be inaccurate.
The electronics markets in which TDK and its group companies operate are highly
susceptible to rapid changes. Furthermore, TDK and its group companies operate
not only in Japan, but in many other countries. As such, factors that can have
significant effects on its results include, but are not limited to, shifts in
technology, demand, prices, competition, economic environments and foreign
exchange rates.
The premises and assumptions used in computing the projections in this earnings
release include, but are not limited to, those explained above.
Consolidated
3) Statements of income
The 1st Qtr. of FY2006 The 1st Qtr. of Change
FY2005
(April 1, 2005 - June 30,
2005) (April 1, 2004 -
June 30, 2004)
Item/Term (Yen % (U.S.$ (Yen % (Yen Change
millions) thousands) millions) millions) (%)
Net sales 167,422 100.0 1,508,306 157,227 100.0 10,195 6.5
Cost of sales 124,002 74.1 1,117,135 113,163 72.0 10,839 9.6
Gross profit 43,420 25.9 391,171 44,064 28.0 (644) -1.5
Selling, general and 30,531 18.2 275,054 29,702 18.9 829 2.8
administrative
expenses
Operating income 12,889 7.7 116,117 14,362 9.1 (1,473) -10.3
Other income
(deductions):
Interest and 685 6,171 267 418
dividend income
Interest expense (33) (297) (51) 18
Foreign exchange 31 279 119 (88)
gain (loss)
Other-net 703 6,334 595 108
Total other income 1,386 0.8 12,487 930 0.6 456 49.0
(deductions)
Income from 14,275 8.5 128,604 15,292 9.7 (1,017) -6.7
continuing
operations before
income taxes
Income taxes 3,486 2.1 31,406 4,647 2.9 (1,161) -25.0
Income from 10,789 6.4 97,198 10,645 6.8 144 1.4
continuing
operations before
minority interests
Minority interests 102 0.0 919 140 0.1 (38) -27.1
Income from 10,687 6.4 96,279 10,505 6.7 182 1.7
continuing
operations
Loss from (187) (0.1) (1,685) 342 0.2 (529) -
discontinued
operations
Net income 10,874 6.5 97,964 10,163 6.5 711 7.0
____________
Notes:
1. Above statements of income for FY2006 and FY2005 are unaudited by
independent accountant.
2. In accordance with SFAS No. 144, "Accounting for the impairment or Disposal
of Long-Lived Assets", the figures for the 1st Qtr. of FY2005 relating to
discontinued operations have been reclassified accordingly.
3. U.S.$1 = Yen 111
Consolidate
4) Balance sheets
ASSETS
As of June 30, 2005 As of Mar. 31, Change As of June 30,
2005 2004
Item/Term (Yen % (U.S.$ (Yen % (Yen (Yen %
millions) thousands) millions) millions) millions)
Current assets 515,321 62.6 4,642,531 510,603 63.2 4,718 491,546 62.0
Cash and cash 237,802 2,142,360 251,508 (13,706) 230,617
equivalents
Marketable securities 894 8,054 1,609 (715) 403
Net trade receivables 152,344 1,372,469 147,999 4,345 141,068
Inventories 83,737 754,387 74,924 8,813 82,143
Other current assets 40,544 365,261 34,563 5,981 37,315
Noncurrent assets 307,776 37.4 2,772,757 297,398 36.8 10,378 300,633 38.0
Investments in 21,796 196,360 22,698 (902) 18,284
securities
Net property, plant 220,263 1,984,352 216,969 3,294 213,515
and equipment
Other assets 65,717 592,045 57,731 7,986 68,834
TOTAL 823,097 100.0 7,415,288 808,001 100.0 15,096 792,179 100.0
LIABILITIES AND STOCKHOLDERS' EQUITY
As of June 30, 2005 As of Mar. 31, Change As of June 30,
2005 2004
Item/Term (Yen % (U.S.$ (Yen % (Yen (Yen %
millions) thousands) millions) millions) millions)
Current liabilities 131,712 16.0 1,186,595 130,857 16.2 855 124,594 15.7
Short-term debt 104 937 103 1 440
Trade payables 65,462 589,748 62,092 3,370 59,917
Accrued expenses 44,621 401,991 43,980 641 46,250
Income taxes 14,129 127,288 19,283 (5,154) 5,415
payables
Other current 7,396 66,631 5,399 1,997 12,572
liabilities
Noncurrent 35,317 4.3 318,171 32,915 4.1 2,402 71,069 9.0
liabilities
Long-term 74 667 81 (7) 68
debt,excluding
current
installments
Retirement and 28,445 256,261 28,839 (394) 66,073
severance benefits
Deferred income 2,714 24,450 751 1,963 3,074
taxes
Other noncurrent 4,084 36,793 3,244 840 1,854
liabilities
Total liabilities 167,029 20.3 1,504,766 163,772 20.3 3,257 195,663 24.7
Minority interests 5,338 0.6 48,090 5,162 0.6 176 3,430 0.4
Common stock 32,641 294,063 32,641 - 32,641
Additional paid-in 63,051 568,027 63,051 - 63,051
capital
Legal reserve 17,038 153,495 16,918 120 16,817
Retained earnings 590,974 5,324,090 585,557 5,417 566,605
Accumulated other (45,719) (411,883) (51,657) 5,938 (79,771)
comprehensive
income (loss)
Treasury stock (7,255) (65,360) (7,443) 188 (6,257)
Total 650,730 79.1 5,862,432 639,067 79.1 11,663 593,086 74.9
stockholders'equity
TOTAL 823,097 100.0 7,415,288 808,001 100.0 15,096 792,179 100.0
____________
Notes:
1. Balance sheets as of June 30, 2005 and 2004 are unaudited by independent
accountant.
2. U.S.$1 = Yen 111
Consolidated
5) Statements of cash flows
The 1st Qtr. of The 1st
FY2006 Qtr.
(April 1, 2005 - of FY2005
June 30, 2005)
(April 1,
2004 -
June 30,
2004)
Item/Term (Yen (U.S.$ (Yen
millions) thousands) millions)
Cash flows from operating activities:
Net income 10,874 97,964 10,163
Loss from discontinued operations (187) (1,685) 342
Income from continuing operations 10,687 96,279 10,505
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,036 117,441 12,211
Loss on disposal of property and equipment 240 2,162 207
Deferred income taxes (555) (5,000) (276)
Loss (gain) on securities, net (443) (3,991) (95)
Changes in assets and liabilities:
Increase in trade receivables (59) (532) (411)
Increase in inventories (7,219) (65,036) (3,705)
Increase (decrease) in trade payables 166 1,496 (1,465)
Decrease in accrued expenses (300) (2,703) -
Increase (decrease) in income taxes payables, net (5,268) (47,459) 1,279
Increase (decrease) in retirement and severance (600) (5,405) 2,009
benefits, net
Other-net 341 3,072 (1,308)
Net cash provided by operating activities 10,026 90,324 18,951
Cash flows from investing activities:
Capital expenditures (12,573) (113,270) (14,278)
Proceeds from sale and maturities of investments in 774 6,973 190
securities
Payment for purchase of investments in securities - - (196)
Payment for purchase of a subsidiary (10,571) (95,234) -
Payment for purchase of other investments (72) (649) 1
Proceeds from sales of property, plant and 537 4,838 291
equipment
Other-net - - (1)
Net cash used in investing activities (21,905) (197,342) (13,993)
Cash flows from financing activities:
Proceeds from long-term debt 4 36 132
Repayment of long-term debt (23) (207) (25)
Increase (decrease) in short-term debt, net - - (51)
Sale (purchase) of treasury stock, net 141 1,270 60
Dividends paid (5,290) (47,658) (3,972)
Net cash used in financing activities (5,168) (46,559) (3,856)
Net cash provided by (used in) discontinued 405 3,649 (193)
operations
Effect of exchange rate changes on cash and cash 2,936 26,450 2,553
equivalents
Net increase (decrease) in cash and cash (13,706) (123,478) 3,462
equivalents
Cash and cash equivalents at beginning of period 251,508 2,265,838 227,155
Cash and cash equivalents at end of period 237,802 2,142,360 230,617
____________
Notes:
1. Above statements of cash flows for the 1st quarter of FY2006 and FY2005 are
unaudited by independent accountant.
2. In accordance with SFAS No. 144, "Accounting for the impairment or Disposal
of Long-Lived Assets", the figures for the 1st Qtr. of FY2005 relating to
discontinued operations have been reclassified accordingly.
3. U.S.$1=Yen 111
Consolidated
6) Segment Information
The following industry and geographic segment information are required by the
Japanese Securities Exchange Law.
1. Industry segment information
The 1st Qtr. of FY2006 The 1st Qtr. of Change
FY2005
(April 1, 2005 - June 30,
2005) (April 1, 2004
- June 30,
2004)
Product/Term (Yen % (U.S.$ (Yen % (Yen Change
millions) thousands) millions) millions) (%)
Electronic materials and
components
Net sales 143,328 100.0 1,291,243 129,804 100.0 13,524 10.4
Unaffiliated customers 143,328 1,291,243 129,804 13,524 10.4
Intersegment - - - - -
Operating expenses 127,931 89.3 1,152,531 114,536 88.2 13,395 11.7
Operating income 15,397 10.7 138,712 15,268 11.8 129 0.8
Recording media
Net sales 24,094 100.0 217,063 27,423 100.0 (3,329) -12.1
Unaffiliated customers 24,094 217,063 27,423 (3,329) -12.1
Intersegment - - - - -
Operating expenses 26,602 110.4 239,658 28,329 103.3 (1,727) -6.1
Operating income (loss) (2,508) -10.4 (22,595) (906) -3.3 (1,602) 176.8
TOTAL
Net sales 167,422 100.0 1,508,306 157,227 100.0 10,195 6.5
Unaffiliated customers 167,422 1,508,306 157,227 10,195 6.5
Intersegment - - - - -
Operating expenses 154,533 92.3 1,392,189 142,865 90.9 11,668 8.2
Operating income 12,889 7.7 116,117 14,362 9.1 (1,473) -10.3
Note: U.S.$1=Yen 111
2. Geographic segment information
The 1st Qtr. of FY2006 The 1st Qtr. of Change
FY2005
(April 1, 2005 - June 30,
2005) (April 1, 2004 -
June 30, 2004)
Region/Term (Yen % (U.S.$ (Yen % (Yen Change
millions) thousands) millions) millions) (%)
Japan Net sales 80,794 100.0 727,874 86,661 100.0 (5,867) -6.8
Operating 4,236 5.2 38,162 5,783 6.7 (1,547) -26.8
income
Americas Net sales 22,936 100.0 206,630 21,853 100.0 1,083 5.0
Operating 2,657 11.6 23,937 631 2.9 2,026 321.1
income
Europe Net sales 15,723 100.0 141,649 17,266 100.0 (1,543) -8.9
Operating (1,737) -11.0 (15,649) (269) -1.6 (1,468) -545.7
income
(loss)
Asia and others Net sales 110,121 100.0 992,081 93,440 100.0 16,681 17.9
Operating 8,221 7.5 74,063 8,955 9.6 (734) -8.2
income
Intersegment Net sales 62,152 559,928 61,993 159
eliminations
Operating 488 4,396 738 (250)
income
Total Net sales 167,422 100.0 1,508,306 157,227 100.0 10,195 6.5
Operating 12,889 7.7 116,117 14,362 9.1 (1,473) -10.3
income
____________
Notes:
1. Net sales in each geographic area are based on the location of TDK entities
where the sales are generated.
2. U.S.$1=Yen 111
3. Sales by region
The 1st Qtr. of FY2006 The 1st Qtr. of Change
FY2005
(April 1, 2005 - June 30,
2005) (April 1, 2004
- June 30,
2004)
Region/Term (Yen % (U.S.$ (Yen % (Yen Change
millions) thousands) millions) millions) (%)
Americas 18,579 11.1 167,378 20,267 12.9 (1,688) -8.3
Europe 15,746 9.4 141,856 17,224 11.0 (1,478) -8.6
Asia and others 88,984 53.2 801,658 76,969 48.9 12,015 15.6
Overseas sales total 123,309 73.7 1,110,892 114,460 72.8 8,849 7.7
Japan 44,113 26.3 397,414 42,767 27.2 1,346 3.1
Net sales 167,422 100.0 1,508,306 157,227 100.0 10,195 6.5
____________
Notes:
1. Overseas sales are based on the location of the customers.
2. U.S.$1=Yen 111
Consolidated
(Notes)
1. The consolidated financial statements are prepared in conformity with the
U.S. GAAP.
2. During this consolidated accounting period, TDK had 70 subsidiaries (18 in
Japan and 52 overseas). TDK also had 6 affiliates (4 in Japan and 2 overseas)
whose financial statements are accounted for by the equity method.
3. Comprehensive income comprises net income and other comprehensive income.
Other comprehensive income includes changes in foreign currency translation
adjustments, minimum pension liability adjustments and net unrealized gains
(losses) on securities. The net income, other comprehensive income (loss), net
of tax and total comprehensive income for the three months ended June 30, 2005
and 2004 were as follows;
The 1st Qtr. of The 1st Qtr. of
FY2006 FY2005
(April 1, 2005 - June (April 1, 2004
30, 2005) - June 30,
2004)
Item/Term (Yen (U.S.$ (Yen millions)
millions) thousands)
Net income 10,874 97,964 10,163
Other comprehensive income (loss), net of
tax:
Foreign currency translation adjustments 6,295 56,712 5,464
Minimum pension liability adjustments 318 2,865 5,518
Net unrealized gains (losses) on (675) (6,081) (366)
securities
Total comprehensive income 16,812 151,460 20,779
____________
Note: U.S.$1=Yen 111
Contact in Japan :
Nobuyuki Koike
TDK Corporation
Tel: 81-3-5201-7102
E-mail: nkoike@mb1.tdk.co.jp
Notice Regarding the Allotment of Stock Options
- Stock Acquisition Rights -
TOKYO, JAPAN, July 28, 2005 - TDK Corporation (the "Company") announced that
the Board of Directors today decided the details of stock acquisition rights to
be issued as stock options (the "Stock Acquisition Right(s)") pursuant to
Article 280-20, -21 of the Commercial Code of Japan and the resolution at the
109th ordinary annual general meeting of shareholders on June 29, 2005.
1. Class and number of shares to be issued upon exercise of Stock Acquisition
Rights: 90,600 shares of common stock of the Company
2. Total number of Stock Acquisition Rights:
906
The number of shares to be allotted to each Stock Acquisition Right
(hereinafter referred to as the "Number of shares to be allotted") shall be 100
shares. In the case that the Company splits or consolidates outstanding shares,
the number of shares to be allotted shall be adjusted in accordance with the
following formula with any amount less than one share arising out of such
adjustment to be discarded.
Number of shares = Number of shares � Percentage of stock split
after adjustment before adjustment or consolidation
Furthermore, in cases where the "number of shares granted" needs to be
adjusted, such as in the event that the Company merges with another company or
performs a division, the "number of shares granted" shall be adjusted
appropriately based on the conditions of the merger or division.
3. Issue price and issue date of Stock Acquisition Rights:
Free of charge
On August 11, 2005
- more -
4. Amount to be paid upon the exercise of each Stock Acquisition Right: To be
determined on August 11, 2005
The amount to be paid upon the exercise of each Stock Acquisition Right shall
be the amount to be paid per share, which is issued or transferred upon the
exercise of the Stock Acquisition Rights (hereinafter referred to as the
"Exercise Price") multiplied by the number of shares to be allotted.
The Exercise Price shall be an amount which is the average of the closing
prices of the Company's shares of common stock on the Tokyo Stock Exchange on
each day (other than any day on which no sale is reported) of the month
immediately preceding the month in which the date of the issue of the Stock
Acquisition Rights falls, multiplied by 1.05 with any amount less than one
Japanese Yen arising out of such calculation to be rounded upward to the
nearest Yen; provided, however, that if such price is less than the closing
price reported on the date of the issue of the Stock Acquisition Rights, then
the closing price reported on the day of the issue of the Stock Acquisition
Rights shall be the Exercise Price.
5. Adjustment of Exercise Price:
In case that any of the events stated in the following clause (1) or (2)
arises, the Exercise Price shall be adjusted in accordance with the following
formula (hereinafter referred to as the "adjustment formula for the Exercise
Price") with any amount less than one Japanese Yen arising out of such
calculation to be rounded upward to the nearest Yen.
(1) In case the Company issues new shares or disposes of its own shares at a
price less than the current market price (except in the case of the conversion
of convertible stock or stock with mandatory conversion terms, or in the case
of a request by a stockholder for the sale of shares constituting less than one
unit or the exercise of stock acquisition rights), the exercise price shall be
adjusted in accordance with the following formula:
No. of + No. of � Amount paid
shares shares per share
issued newly
issued
Exercise = Exercise price � Current market price
price after before adjustment
adjustment
No. of shares + No. of shares
issued increased after
new issue
In the above formula, the "number of shares issued" shall be defined as the
number of shares of common stock issued and outstanding less the number of
treasury stock. In the event that the Company disposes of treasury stock, the
"number of shares newly issued" shall be read as "number of treasury stock
disposed of."
- more -
(2) In case that the Company shall make a stock split or stock consolidation of
its outstanding shares.
1
Exercise Price after = Exercise Price � Percentage of stock
adjustment before adjustment split or consolidation
Furthermore, in cases where the "exercise price" needs to be adjusted, such as
in the event that the Company merges with another company or performs a
division, the "exercise price" shall be adjusted appropriately based on the
conditions of the merger or division.
6. Exercise Period of the Stock Acquisition Rights: From August 1, 2007 to July
31, 2011
7. Conditions for exercise of Stock Acquisition Rights: Partial exercise of
each of the Stock Acquisition Rights is not exercisable.
8. Events and conditions of cancellation of Stock Acquisition Rights
(1) The Company may cancel these stock acquisition rights without compensation,
if a proposal for approval of a merger agreement under which the Company is to
be dissolved, 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 that makes the Company a wholly owned subsidiary is approved at a
meeting of stockholders of the Company.
(2) In the event that the Company acquires unexercised stock acquisition
rights, it may cancel these stock acquisition rights without compensation at
any time.
- more -
9. Transfer restrictions on Stock Acquisition Rights:
Any transfer of the Stock Acquisition Rights shall be subject to approval of
the Board of Directors of the Company.
10. Issuance of certificates of Stock Acquisition Rights:
Certificates of Stock Acquisition Rights shall be issued only upon the request
from the holders of the Stock Acquisition Rights.
11. Total paid-in value of the shares of the common stock of the Company to be
issued or transferred upon exercise of all the stock Acquisition Rights: To be
determined on August 11, 2005
12. Amount that is not transferred into paid-in capital from the issue price of
shares, in case new shares of common stock of the Company are issued upon
exercise of Stock Acquisition Rights:
This shall be an amount obtained by deducting an amount transferred to paid-in
capital from the Exercise Price. The amount transferred to paid-in capital
shall be the Exercise Price, multiplied by 0.5, and any amount less than one
Japanese Yen arising out of such calculation shall be rounded upward to the
nearest Yen.
13. Individuals who will be allotted the Stock Acquisition Rights:
The directors and employees of the Company and its affiliates, totally 172
persons.
*1. Date of resolution of the Board of Directors that decided the proposal at
the 109th ordinary annual general meeting of shareholders: May 9, 2005
2. Date of resolution of the 109th ordinary annual general meeting of
shareholders: June 29, 2005
# # #
END
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