Final Results
Maruwa Co Ld
10 May 2002
10 May 2002
Contact:
Management and Planning Office
MARUWA CO., LTD.
3-83 Minamihonjigahara-cho,
Owariasahi-city, Aichi Prefecture,
Japan 488-0044
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS OF MARUWA CO., LTD. FOR THE FISCAL YEAR
ENDED 31 MARCH 2002
*The Company's fiscal year end is 31 March. Beginning from this material, reference to a fiscal year will follow
the style commonly seen in the overseas disclosure documents. Specifically, 'fiscal 2001' and 'fiscal 2002'
refer to the Company's fiscal year ended 31 March 2001, and other fiscal years are referred to in a corresponding
manner.
Fiscal 2001: 1 April 2000 - 31 March 2001
Fiscal 2002: 1 April 2001 - 31 March 2002
*The consolidated financial statements of MARUWA CO., LTD. are prepared in conformity with the accounting
principles generally accepted in Japan.
*US dollar amounts are translated from yen, for convenience only, at the rate of US$=133.25
* Consolidated Subsidiaries: 4 Companies
1. Summary of Consolidated Results
(1) Summary of Consolidated Statement of Income
U.S. dollars
Yen (Millions) (Thousands)
FY2002 FY2001 Change FY2002
Net Sales 9,933 16,000 -38.3% 74,547
Operating Income (1,200) 3,633 -133.0% (9,008)
Income Before Income Taxes (1,288) 3,572 -136.1% (9,668)
Net Income (1,239) 2,632 -147.1% (9,298)
Net Income (Loss) Per Share of Common Stock (112.7) yen 262.1 yen -- (1.97) dollars
(2) Summary of Consolidated Financial Condition
U.S. dollars
Yen (Millions) (Thousands)
FY2002 FY2001 Change FY2002
Total Assets 26,730 30,943 -13.6% 200,598
Shareholder's Equity 24,247 24,797 -2.2% 181,963
Shareholder's Equity Ratio 90.7% 80.1% -- --
Shareholder's Equity Per Share 2,206 yen 2,256 yen -2.3% 16,555
(3) Summary of Consolidated Statements of Cash Flows
U.S. dollars
Yen (Millions) (Thousands)
FY2002 FY2001 Change FY2002
Cash Flows from Operating activities 231 2,543 -90.9% 1,734
Cash Flows from Investing activities (3,786) (3,882) -2.5% (28,412)
Cash Flows from Financing activities (180) 2,612 -- (1,351)
Cash and Cash Equivalents at year end 5,492 9,254 -40.7% 41,216
2. Management Policies
(1) Basic Management Policy
'MARUWA OF CERAMIC MATERIAL TECHNOLOGY' is the corporate vision of MARUWA CO., LTD. and its
subsidiaries (together with the Company, 'MARUWA.') For this vision, we strive to enhance the corporate value by
following consistently 'quality first' policy, which entails constant technological innovation, and to met the
expectations of all the stakeholders including shareholders, customers, and employees.
Under this corporate vision, the Company has set the management policy that the Company will continue to remain as
a winning company under business competition by reinforcing its core businesses through selection and concentration,
constructing highly profitable structure, and developing products with No.1 share in the niche market at global
level.
(2) Dividend Policy
The basic principle in MARUWA 's dividend policy is to maintain stable dividend payments to the shareholders.
We will determine dividend ratio based on comprehensive assessment of the Company's financial conditions and
operation results, while conducting aggressive capital expenditures on R&D and production equipment for technological
innovation.
and meeting customers' demand as stated in the Management Policy.
(3) Business Strategy and Management Issues
In the midst of IT era, in which immediate changes and continuous growth are expected in response to rapidly
changing market, MARUWA aims to increase corporate value by bolstering profitability and growth potential. In order to
achieve this goal, basic technologies such as of ceramic material, of electronic circuit design, and of multi
layering, which were acquired in the past, are utilized in the area of telecommunication.
For enhancement of the corporate governance, the new organizational system will be introduced from next term, by
condensing conventional internal hierarchy into more flexible structure.
3. Summary of the Business Environment
The US market, which was the growth momentum in the recovery of the economy, showed rapid slowdown during this
term, forcing the world market to decelerate. The stagnation in the global IT industry accelerated, and excess
inventory of cellular phone- and computer-related parts remained over a long period of time, leading the market to an
extensive setback. In this difficult situation, MARUWA endeavored to strengthen its technological expertise as a
'material' manufacturer positioned in the up-stream of the electronic component industry as continually providing
internationally competitive products out into the market, and promoted the construction of a management structure that
could respond with resilient even under a harsh business environment. However, the Company was directly affected by
lagging sales and severe inventory adjustments in the IT-related sector.
As result, net sales for this term was 9,933 million yen (-38.3% from the previous term.) Despite the Company's
aggressive engagement in cutting fixed costs and other costs, the effect of inventory adjustments to depression of
sales was severer than expected, disallowing us to absorb completely a loss of sales. Also, as a result of disposal of
long-term stay inventory, especially products returned during this term, and a large-amount loss from valuation of
precious metal, which a consolidated subsidiary possesses as material, operating loss was 1,200 million yen (operating
income of 3,632 million yen in the end of the previous term,) loss before income taxes was 1,239 million yen (income
before income taxes of 3,572 million yen in the end of the previous term,) and net loss was 1,238 million yen (net
income of 2,631 million yen.)
As to dividend, the allocation of year-end-dividend will be 7 yen per share as well as the interim dividend, and
the allocation of annual dividend will be increased by 2 yen to 14 yen per share, from MARUWA's perspective of sharing
profit with shareholders first, although the business operation of this term resulted in a loss, as indicated
above.
An overview of the business results in each business field is as follows.
Circuit Ceramic Products
Circuit ceramic products include one of MARUWA's core products, ceramic substrates for chip resistors, and glazed
ceramic substrates for thermal printer head (TPH,) large ceramic substrates for hybrid ICs, Aluminium Nitride mainly
for power module.
Net sales of this section was 3,753 million yen (-51.1% from the previous term.) It is because that the effect of
inventory adjustments by resistor manufacturers especially in Taiwan and Europe, and that the accumulated long-term
stay stocks were disposed of in large substrate for TPH production, which was transferred to MARUWA in year before
last.
Machinery Ceramic Products
Machinery ceramic products include magnetic-head supporting blocks for personal computers and ceramic water valves.
Supporting blocks showed stable sales throughout the term. Although ceramic valves experienced a large plunge in
European and Taiwanese markets, net sales was 1,281 million yen (-19.3% from the previous term) because of success of
our sales expanding activities.
High Frequency Products
High frequency products include dielectric ceramic filters, which are used for cellular phones, base stations, and
GPS (Global Positioning System,) and VCO (Voltage Controlled Oscillators) for cellular phones and radio-communication.
This section is in a temporal stagnation in the second half under the influence of change in models, even though
there was recovery of orders from European cellular phone manufacturers, who have completed inventory adjustments
promptly.
From the second half of this term, components related to wireless LAN or cellular phones of GSM (Global System for
Mobile Communication) are showing some increase in demand. Influenced by this, the resulting net sales was 1,109
million yen (-6.8% from the previous term.)
Capacitor Products
Capacitor products include noise/surge protection components such as EMI filters and chip varistors, and ceramic
capacitors of high voltage/high capacitance types.
Although sales of ceramic capacitors for strobe of digital cameras showed favorable, order decrease in the battery
industry continued, and also price cut-down decelerated under the severe pressure from Taiwanese market. As a result,
net sales was 3,788 million yen (-32.9% from the previous term.)
4. Cash Flow Position
The amount of cash acquired from operating activities in this term was 231 million yen (decreased by 2,612 million
yen from the previous term.)
Loss before income taxes was 1,288 million yen; however, cash flow of this term resulted in a substantial increase.
It is because that the depreciation cost was 1,540 million yen due to the large-scaled capital expenditures conducted
in the previous term, that a cash increase due to a decrease of account receivable was 1,610 million yen, and that a
cash decrease due to a decrease of account payable was 915 million yen.
The amount of cash used in investing activities in this term was 3,785 million yen (-96 million yen from the
previous term.)
Although the substantial amount of capital expenditure cost was 2,318 million yen, the outstanding balance of bill
payable at the end of the previous term was paid during this term.
The amount of cash flow financial activities in this term was (180) million yen (decreased by 2,792 million yen
from the previous term.)
In the previous term, there occurred a cash increase due to public stock offering; meanwhile, cash flow in
financial activities in this term was a decrease mainly due to the payment of long-term debt.
From these results indicated above, cash and cash equivalents at the end of this term was decreased by 3,762
million yen compared with the end of the previous term, and resulted in 5,492 million yen.
5. Outlook of the Full Fiscal Year 2003
Entering 2002, IT-related industry shows the sign of completion of production control and inventory adjustments;
the market of electronic components seems to restore positive impression. Under these circumstances, MARUWA will
promote further structural reforms to create a cross-sectional and comprehensive production structure, and also push
forward the development of new higher value-added products. Each production section will focus on construction of
expeditious production system, which is able to respond promptly to customers' demand, as aiming for thorough
reduction of lead time. As for new products, basic development will be completed in multi-layer ceramic varistors,
which have high performance to protect circuit of electronics including cellular phones, and thin film products used
for optical information and communication. These products are expected to contribute to an increase of net sales from
net term.
The forecasts of the consolidated annual business results for the fiscal year 2003 are as follows
Net Sales 11,500 million yen
Ordinary Income 710 million yen
Net Income 360 million yen
Cautionary Statement: The above forecasts are forward-looking statements involving risks and uncertainties;
therefore, please refrain from investing activities based fully and only on these forecasts. Actual results may
differ significantly from these estimates due to a number of factors including economic conditions, changes in market
circumstances.
6. Consolidated balance Sheet
U.S. dollars
Yen (Millions) (Thousands)
FY2002 FY2001 Change FY2002
ASSETS
Current assets:
Cash and deposits 5,492 1,567 250.4% 41,213
Marketable securities 0 7,687 -100.0% 0
Trade debtors 2,473 3,946 -37.3% 18,559
Allowance for doubtful notes and accounts (26) (58) -- (197)
Inventories 3,502 3,850 -9.0% 26,285
Deferred income taxes 139 69 101.3% 1,039
Other current assets 560 503 11.4% 4,209
Total current assets 12,140 17,564 -30.9% 91,108
Property, plant, and equipment
Land 2,473 2,409 2.7% 18,557
Building and structures 5,348 4,392 21.8% 40,138
Machinery and equipment 11,699 9,796 19.4% 87,802
Construction in progress 79 399 -80.3% 590
Total 19,599 16,996 15.3% 147,087
Less-accumulated depreciation (7,151) (5,615) -- (53,670)
Net property, plant, and equipment 12,448 11,381 9.4% 93,417
Investments and other assets:
Investments securities 558 503 10.8% 4,184
Deferred income taxes 0 9 -100.0% 0
Property and equipment for investments 1,067 1,094 -2.5% 8,004
Other 517 392 32.4% 3,885
Total investment and other assets 2,142 1,998 7.2% 16,073
Total assets 26,730 30,943 -13.6% 200,598
Current liabilities:
Current portion of long-term debt 204 199 2.4% 1,530
Notes and accounts payable, trade 508 1,357 -62.5% 3,815
Accrued income taxes 7 67 -99.0% 51
Other current liabilities 793 2,911 -72.8% 5,950
Total current liabilities 1,512 5,134 -70.5% 11,347
Long-term liabilities: 6,168
Long-term debt 822 863 -4.8% 0
Deferred tax liabilities -- --
Accrued pension and severance costs 17 25 -29.4% 131
Other 132 124 6.1% 990
Total long-term liabilities 971 1,012 -4.0% 7,288
Shareholders' equity:
Common stock, /50 per value, authorized :26,000,000 6,683 6,683 0.0% 50,157
shares; issued and outstanding: 11,050,000 shares
Additional paid-in capital 9,710 9,710 0.0% 72,823
Retained earnings 7,797 9186 -15.1% 58,515
Translation adjustments 87 79 77.6% 645
Cumulative translation adjustments 171 (659) -- 1,285
Treasury stock, at cost (201) (202) -- (1,512)
Total shareholders' equity 24,247 24,797 -2.2% 181,963
Total liabilities and shareholders' equity 26,730 30,943 -15.4% 200,598
7. Consolidated Statement of Income
U.S. dollars
Yen (Millions) (Thousands)
FY2002 FY2001 Change FY2002
Net sales 9,933 16,100 -38.3% 74,547
Cost of sales 8,946 10,481 -14.6% 67,138
Gross profit 987 5,619 -82.4% 7.409
Selling, general and administrative 2,187 1,986 10.1% 16,417
Operating income (loss) (1,200) 3,633 -- 9,008
Other income (expenses):
Interest and dividend income 114 45 150.4% 852
Interest expense (17) (12) 44.1% (128)
Foreign exchange gain 50 127 -60.9% 372
Other, net (235) (221) -- (1,756)
Other income, net (88) (61) -- (660)
Income (loss) before income taxes (1,288) 3,572 -- (9,668)
Income taxes:
Current 16 985 -98.4% 119
Deferred (65) (45) -- (489)
Net income (loss) (1,239) 2,632 -- (9,298)
8. Consolidated Statement of Cash Flows
U.S. dollars
Yen (Millions) (Thousands)
FY2002 FY2001 Change FY2002
Operating activities:
Income before income taxes (1,288) 3,572 -- (9,666)
Adjustments for:
Depreciation 1,540 1,133 35.9% 11,557
Provision for allowance for doubtful accounts (31) 11 -- (233)
Decrease in accrued pension and severance cost (7) (22) -- (53)
Gains on disposal of securities to establish to -- (72) -- --
retirement benefit trust
Retirement benefit trust -- 101 -100.0% --
Loss on disposal of property, plant and equipment 47 136 -65.4% 353
Interest and dividend income (114) (45) -- (856)
Foreign exchange loss (59) 5 -- (443)
Increase in notes and account receivable 1,611 (347) -- 12,082
(Increase) decrease in inventories 470 (1,611) -- 3,527
Decrease in accounts payable (916) 433 -- (6,874)
Other (255) 7 -- (1,914)
Sub total 998 3,301 -69.8% (7,490)
Interest and dividend income received 114 45 153.0% 856
Interest expenses paid (21) (13) -- (158)
Income taxes paid (860) (790) -- (6,454)
Net cash provided by operating activities 231 2,543 -90.9% 1,734
U.S. dollars
Yen (Millions) (Thousands)
FY2002 FY2001 Change FY2002
Investing activities:
Payment for purchase of property, plant and (3,729) (3,820) -- (27,984)
equipment
Proceeds from sales of property, plant and 84 122 -31.1% 630
equipment
Payments for purchase of investment securities (172) (25) -- (1,291)
Proceeds from sales of investment securities 118 -- -- 886
Loan (60) (2) -- (450)
Collection from loan receivables 62 1 -- 465
Increase in intangible fixed assets (89) (158) -- (668)
Net cash used in investing activities (3,786) (3,882) -- (28,412)
Financing activities:
Issuance of long-term debt 164 1,000 -83.6% 1,231
Payment of long-term debt (200) (152) -- (1,501)
Proceeds from issuance of new shares -- 2054 -- --
Sales of treasury stock 0 25 0
Purchase of treasury stock 0 (195) -- 0
Cash dividends paid (144) (120) -- (1,081)
Net cash provided by (used in) financing activities (180) 2,612 -- (1,351)
Effect of exchange rate on cash and cash (27) (28) -- (203)
equivalents
Net increase (decrease) in cash and cash (3,762) 1,245 -- 28,232
equivalents
Cash and cash equivalents at beginning of year 9,254 8,009 15.5% 69,448
Cash and cash equivalents at end of year 5,492 9,254 -40.7% 41,216
9. Segment Information
(1) Consolidated Business Segment Information
MARUWA's business is comprised of one segment. Therefore, segment breakdown is not applicable.
(2) Consolidated Geographic Segment Information
U.S. dollars
Yen (Millions) (Thousands)
FY2002 FY2001 Change FY2002
Japan:
Net sales:
Unaffiliated customers 7,151 10,791 -33.7% 53,666
Intersegment 429 881 -51.3% 3,220
Total 7,580 11,672 -35.0% 56,886
Operating cost 7,680 8,950 -14.2% 57,636
Operating income (loss) (100) 2,722 -- (750)
Assets 22,718 19,478 16.6% 170,492
Asia:
Net sales:
Unaffiliated customers 2,608 4,420 -41.0% 19,572
Intersegment 723 1,214 -40.4% 5,426
Total 3,331 5,634 -40.9% 24,998
Operating cost 3,762 4,248 -11.4% 28,233
Operating income (loss) (431) 1,386 -- -3,235
Assets 7,092 7,531 -5.8% 53,223
Europe:
Net sales:
Unaffiliated customers 174 889 -80.4% 1,305
Intersegment 3 7 -57.1% 23
Total 177 896 -80.2% 1,328
Operating cost 228 883 -74.2% 1,711
Operating income (loss) (51) 13 -- (383)
Assets 715 633 13.0% 5,366
Total:
Net sales:
Unaffiliated customers 9,934 16,100 -38.3% 74,552
Intersegment 1,154 2,102 -45.1% 8,660
Total 11,088 18,202 -39.1% 83,212
Operating cost 11,669 14,081 -17.1% 87,572
Operating income (loss) (581) 4,121 -- (4,360)
Assets 30,525 27,643 10.4% 229,081
Elimination:
Net sales:
Unaffiliated customers -- -- -- --
Intersegment 1,154 2,102 -45.1% 8,660
Total 1,154 2,102 -45.1% 8,660
Operating cost 535 1,613 -66.8% 4,015
Operating income (loss) 619 489 26.6% 4,645
Assets 3,795 3,300 15.0% 28,480
Consolidated total:
Net sales:
Unaffiliated customers 9,933 16,100 -38.3% 74,544
Intersegment -- -- -- --
Total 9,933 16,100 -38.3% 74,544
Operating cost 11,133 12,467 -10.7% 83,550
Operating income (loss) (1,200) 3,633 -- (9,006)
Assets 26,730 30,943 -13.6% 200,598
(3) Net Overseas Sales by Customer's Geographic Location
U.S. dollars
Yen (Millions) (Thousands)
FY2002 FY2001 Change FY2002
Overseas sales:
Asia 4,743 7,385 -35.7% 35,595
Europe 228 972 23.5% 1,711
Others 166 350 -52.6% 1,246
Total 5,137 8,707 -41.0% 38,552
Consolidated net sales 9,933 16,100 -38.3% 74,544
% of Consolidated net sales:
Asia 47.8% 45.9% -- --
Europe 2.3% 6.0% -- --
Others 1.7% 2.2% -- --
Total 51.7% 54.1% -- --
* Countries are divided in geographical vicinity.
* Main countries included in each area are as indicated below:
Asia - Malaysia, Taiwan
Europe - England
* Overseas Sales indicate net sales of MARUWA CO., LTD. and its subsidiaries to customers outside Japan.
End
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