Performance Briefings 3Q of Fiscal Year March, 2012 TDK Corporation January. 31, 2012 1 ◆Consolidated 3Q Results of FY March, 2012 Takakazu Momozuka Corporate Officer, General Manager of Finance & Accounting Department ◆Recording Device Business Atsuo Kobayashi Senior Vice President, General Manager of Data Storage & Thin Film Technology Components Business Group ◆Q&A 2 Consolidated 3Q Results of FY March, 2012 Takakazu Momozuka Corporate Officer, General Manager of Finance & Accounting Department 3 Consolidated 3Q Results of FY March, 2012 3Q results of FY 2011 3Q results of FY 2012 (Yen billions） (2010.10.1-2010.12.31) (2011.10.1-2011.12.31) Change Yen billions ratio 219.9 191.8 (28.2) -12.8% 17.2 7.0 (10.2) -59.2% 7.8% 3.7% -4.1pt Income before Income Taxes 16.6 3.2 (13.3) -80.5% Net Income 12.6 -11.6 (24.2) - Earning Per Share (JPY) 97.64 -90.24 Net Sales Operating Income Operating Income Margin Ex-rate US$ Yen 82.65 Yen 77.35 EURO Yen 112.20 Yen 104.30 - - Appreciation by 6.4% Appreciation by 7.0% Ex-rate impact to Net sales & Operating Income Net sales：Lowered about 10.6 billion Yen Operating income：Lowered about 2.6 billion Yen Impact by flooding in Thailand to Net sales & Operating Income Net sales：Lowered about 11.3 billion Yen Operating income：Lowered about 3.9 billion Yen TDK booked income taxes of approximately ¥12.0 billion, due to the impact of a corporate tax reduction and the special corporation tax for reconstruction, as well as to the reassessment of the recoverability of deferred tax assets. 4 Breakdown of Operating Income Changes Operating Income : - 10.2 billion yen SG&A expenses decrease （including sale of land of 4.0 billion yen) +3.6 billion yen 17.2 billion yen Rationalization, Cost reduction, Purchased materials savings +3.3 billion yen Sales price reduction （-4.0%) -7.4 billion yen Changes in sales and Products mix -3.2 billion yen Exchange fluctuation （US$=Yen 77.35) -2.6 billion yen Impact by flooding in Thailand -3.9 billion yen 3Q of FY 2011 7.0 billion yen 3Q of FY 2012 5 Segment Information Yen billions Yen billions % 34.2 31.4 34.4 30.6 28.6 30.4 (4.6) -13.1% (3.6) -10.5% (4.0) -12.3% (2.8) (8.9) -22.6% (4.0) -11.6% 107.1 99.9 89.5 (17.6) -16.4% (10.4) -10.4% 63.0 27.7 53.3 31.2 42.0 29.8 (21.0) -33.3% (11.3) -21.2% 84.5 26.0 71.8 30.5 (19.0) -20.9% Other 90.8 22.0 Total 219.9 210.4 191.8 (28.1) -12.8% (18.6) 6.2 11.5 2.0 19.7 1.3 8.8 1.7 11.8 1.5 6.4 2.5 10.4 (4.7) -75.8% 0.2 -2.5 -3.7 -3.4 17.2 8.1 7.0 7.8% 3.9% 3.7% Inductive Device Other Passive Comp Net Sales Passive Components Recording Divices Other Magnetic Application Products Magnetic Application Products Operating Income Passive Components Magnetic Application Products other Sub total Corporate and Eliminations Total Operating Income margin EURO QoQ Change (C)-(B) 35.2 32.6 39.3 Capacitor Ex- US$ rate YoY Change 3Q results of 2Q results of 3Q results of (C)-(A) FY March 2011 FY March 2012 FY March 2012 Oct 1- Dec 31, 2010 Jul 1- Sep 30, 2011 Oct 1- Dec 31, 2011 Yen billions % (A) (B) (C) Yen 82.65 Yen 112.20 Yen 77.96 Yen 110.42 Yen 77.35 Yen 104.30 2.1 8.5 7.6% 38.6% (5.1) -44.3% 0.5 25.0% (9.3) -47.2% (0.9) (10.2) -59.3% （4.1pt) (1.4) -8.9% -4.5% (12.7) -15.0% 4.5 17.3% -8.8% 15.4% (2.4) -27.3% 0.8 47.1% (1.4) -11.9% 0.3 (1.1) -13.6% (0.2pt) 6 Consolidated Results through 3Q of FY March, 2012 (Yen billions） FY March 2011 Results through 3Q FY March 2012 Results through 3Q (2010.4.1-2010.12.31) (2011.4.1-2011.12.31) Change Yen billions Ratio 662.2 608.9 (53.2) -8.0% 54.4 20.8 (33.6) -61.7% 8.2% 3.4% -4.8pt Income before Income Taxes 51.2 13.9 (37.3) -72.8% Net Income 38.7 -4.9 (43.6) - 300.10 -38.15 Net Sales Operating Income Operating Income Margin Earning Per Share (JPY) Ex-rate US$ Yen 86.84 EURO Yen 113.27 Ex-rate impact to Net sales & Operating Income Yen 79.01 Yen 110.76 - - - Appreciation by 9.0% Aepreciation by 2.2% Net sales：Lowered about 43.8 billion Yen Operating income：Lowered about 13.6 billion Yen ●A one-off charge of approximately ¥3.1 billion at the operating income level associated with the change of the pension plan is incurred in the first quarter. ●The Great East Japan Earthquake, the subsequent aftershocks and blackouts resulted in a decline of approximately ¥5.7 billion in net sales and a ¥3.6 billion decline in operating income by the end of the first-half of fiscal 2012. ●TDK booked income taxes of approximately ¥12.0 billion, due to the impact of a corporate tax reduction and the special corporation tax for reconstruction, as well as to the reassessment of the recoverability of deferred tax assets. 7 Full Year Projection for FY March 2012 Term Item Net Sales Operating Income Income before income taxes Net income attributable to TDK Capital expenditures Depreciation and amortization Research and development FY2012 FY2012 FY2011 (April 1, 2011 March 31, 2012) (April 1, 2011 March 31, 2012) (April 1, 2010 March 31, 2011) Forecast in January'12 (Yen billions) Forecast in October'11 (Yen billions) Actual vs. FY2011 Changes (Yen billions) (Yen billions) +/-(%) 800.0 10.0 3.0 820.0 35.0 30.0 875.7 63.8 60.1 (75.7) (53.8) (57.1) -8.6 -84.3 -95.0 (11.0) 80.0 80.0 52.0 20.0 80.0 80.0 52.0 45.3 78.6 77.6 53.0 (56.3) 1.4 2.4 (1.0) -124.3 1.8 3.1 -1.9 Average Ex-rate projections from 4Q of FY March 2012 onward US$=76 yen (Same as previous assumption) EURO=100 yen (Previous assumption : 105 yen) ＜Reason for the revision＞ ・Sales of main finished products and demand for electronic components to be softer than anticipated ・TDK’s orders and capacity utilization rate are expected to remain below the level assumed in TDK’s previous forecast ・TDK has decided to implement additional structural reforms due to changes in the company’s business environment. ・As a result of these additional reforms, TDK expects to book higher structural reform expenses than previously assumed ・TDK booked income taxes of approximately ¥12.0 billion, due to the impact of a corporate tax reduction and the special corporation tax for reconstruction, as well as to the reassessment of the recoverability of deferred tax assets. 8 Dividends Forecast of FY March 2012 （Yen） Interim dividend Year-end dividend Annual dividend FY March 2011 Results FY March 2012 40 40 80 40 (Result) 40 (Forecast) 80 (Forecast) 9 Current status of restructuring measures Each restructuring measure proceeding as planned Item Production site Jobs Unprofitable business or products Fixed cost Unemployed assets Current status Announced reorganization of 4 plants out of total 19 plants located in Tohoku region Announced additional reorganization of 3 plants on January 31 Changes in number of employees in TDK worldwide End of September in 2011: 88,449 jobs End of December in 2011 : 82,912 jobs decreased by 5,537 employees Sale of Organic EL display business (to be completed by the end of March in 2012) Implementing initiatives as planned In 3Q：Already sold overseas unemployed assets (Sales gain:About 4.0 billion yen) In 4Q：To sell unemployed assets in Japan (Expected sales gain:about 2.5 billion yen） 10 Restructuring cost and projected effect Accelerate restructuring activities and decided to implement additional initiatives Yen billions Restructuring cost (Projection) Announced on October 31 in 2011 The latest plan FY March 2012 (Second-half) : 3.0 FY March 2012 (Second-half) : 12.3 FY March 2013 (Full year) : 5.0 FY March 2013 (Full year) : 5.0 FY March 2012 (Second-half) FY March 2012 (Second-half) (gain on sale of land) Effect (Projection) 6.0 7.0 Total： 13.0 FY March 2013 (Full year) (7.0) (gain on sale of land) 6.5 7.0 Total：13.5 FY March 2013 (Full year) 18.0 Total : (25.0) 18.0 18.0 (Projected effect by additional initiatives) Total 4.0 : 22.0 Expect to use additional restructuring cost due to changes in the company’s business environment. 11 Recording Device Business Atsuo Kobayashi Senior Vice President General Manager of Data Storage & Thin Film Technology Components Business Group 12 Recording Device Business HDD head shipment volume in 3Q decreased significantly due to flooding in Thailand, but it is expected to recover in 4Q drastically Recording Device Sales (Left, including HDD Head (HGA) and HDD Suspention) HDD Head Shipment Index (Right) Index transition based on shipment volume in 1Q of FY March 2011 as 100 Shipment Index Projections Yen billions 110 80.0 100 60.0 71.7 40.0 100 65.3 102 63.0 95 57.9 95 55.2 106 99 80 53.3 20.0 100 90 55.0 42.0 80 70 60 50 0.0 Ex-rate $/¥ 1Q 92.01 2Q 85.88 3Q 82.65 FY March 2011 4Q 82.31 1Q 81.74 2Q 77.96 3Q 77.00 4Q 76.00 FY March 2012 ●HDD market projections for FY March 2012：about 600 million units 13 Supplementary Data 14 Current status and future outlook of manufacturing sites in Thailand Company name City Current status and future outlook Rare-earth magnets, recording media, and sensors Drainage of flood water in the premises as well as cleaning and disinfection has been completed, and repair work has now been started. ＜Future outlook＞ ・Production of magnets is expected to resume in April 2012. ・The timing to resume production of sensors is yet to be adjusted. ・Others are yet to be adjusted. TDK Thailand Co., Ltd Rojana Plant TDK Thailand Co., Ltd Wangnoi Plant Rare-earth magnets applied products Production facilities have been set up and normal production resumed on December 16 last year. Magnecomp Precision Technology Public Co.,Ltd (Main plant) Wangnoi Plant HDD suspensions Operation resumed partially on November 7 last year, and now normal production has been resumed. HDD suspensions Drainage of flood water in the premises as well as cleaning and disinfection has been completed. ＜Future outlook＞ ・Production line is being set up on the 2nd floor of the Plant, and production will resume at the end of January 2012. ・Shipment starts from end of January 2012. Magnecomp Precision Technology Public Co.,Ltd (Branch plant) Rojana Plant 15 Quarterly Sales and Operating Income by Segment FY March 2011 Yen billions Net Sales Capacitors 38.0 37.7 35.2 34.5 145.4 36.1 34.2 3Q 30.6 Inductive Devices 32.1 33.6 32.6 31.9 130.2 32.9 31.4 28.6 Other Passive Components 34.6 37.5 39.3 38.6 150.0 32.8 34.4 30.4 104.7 108.7 107.1 105.5 425.6 101.7 99.9 89.5 Recording Devices 71.7 65.3 63.0 57.5 257.5 55.2 53.3 42.0 Other Magnetic Application Products 28.6 26.9 27.7 27.7 111.0 27.4 31.2 29.8 Magnetic Application Products 100.3 92.2 90.8 85.2 368.5 82.7 84.5 71.8 Other 17.0 19.3 22.0 23.4 81.7 22.4 26.0 30.5 221.9 220.3 219.9 213.6 875.7 206.8 210.4 191.8 Passive Components 6.3 7.3 6.2 4.8 24.5 3.8 1.3 1.5 Magnetic Application Products 16.1 12.5 11.5 6.8 46.9 7.6 8.8 6.4 Other 1.0 1.7 2.0 1.0 5.7 1.5 1.7 2.5 Sub-total 23.3 21.5 19.7 12.6 77.1 12.8 11.8 10.4 Corporate and Eliminations (3.1) (4.5) (2.6) (3.2) (13.3) (7.2) (3.7) (3.4) 17.2 9.4 63.8 5.6 8.1 7.1 Passive Components Total Operating Income Total Ex-rate ￥/USD ￥/EURO 1Q 2Q 20.2 3Q FY March 2012 17.0 4Q Total 1Q 2Q 92.01 85.88 82.65 82.31 85.73 81.74 77.96 77.35 117.03 110.67 112.20 112.66 113.12 117.62 110.42 104.30 4Q Total 16 Sales transition by market Quarterly results in FY March 2011 and in FY March 2012 23.1% 24.0% 25.2% 27.8% 26.7% 25.6% 24.8% 12.7% 12.0% 12.5% 15.4% 12.7% 16.9% 17.0% 13.3% 14.1% Industrial Equipment and others Car Electronics 17.6% 16.9% 16.0% 16.8% 19.6% Communications 48.7% 47.0% 44.6% 42.0% 44.6% 43.6% 38.7% 1Q of FY2011 2Q of FY 2011 3Q of FY2011 4Q of FY 2011 1Q of FY2012 2Q of FY2012 3Q of FY2012 Home Information Appliances Quarterly results in FY March 2011 and in FY March 2012 Yen billions Results through 3Q in FY March 2012 155.8 , 26% 258.5 , 42% 88.4 , 15% 108.1 Home Information Appliances 103.6 98.1 89.7 92.2 Communications 74.6 1Q of FY2011 2Q of FY 3Q of 2011 FY2011 4Q of FY 2011 1Q of FY2012 2Q of FY2012 3Q of FY2012 1Q of FY2011 27.6 2Q of FY2011 3Q of FY2011 4Q of FY2011 1Q of FY2012 2Q of FY2012 3Q of FY2012 Industrial Equipment and others 59 .4 Yen billions 28.4 26.4 35.2 33.0 29.7 Yen billions 28.2 37.9 36.1 Yen billions 34.3 32.6 Car Electronics 106.2 , 17% 37.4 91.6 38.7 51 .4 26.2 55 .5 55 .3 52 .9 53 .9 48 .0 Home Information Appliances Communications Car Electronics Industrial Equipment and others 1Q of FY2011 2Q of FY2011 3Q of FY2011 4Q of FY2011 1Q of FY2012 2Q of FY2012 3Q of FY2012 1Q of FY2011 2Q of FY2011 3Q of FY2011 4Q of FY2011 1Q of FY2012 2Q of FY2012 3Q of FY2012 17 Financial Position （JPY billion） Mar End, 2011 Sep End, 2011 Dec End, 2011 Q on Q Change 1,060.9 1,049.8 1,045.9 -3.9 Total Liability 521.1 537.5 544.3 6.8 Interest-bearing Debt 245.0 268.0 281.9 13.9 Stockholders's Equity 534.3 499.2 488.1 -11.1 (comprehensive income) -218.0 -258.2 -252.1 6.2 Stockholders' Equity ratio 50.4% 47.6% 46.7% -0.9pt Total Asset 18 Expenses ＜Results through 3Q＞ (Yen billions） FY March 2011 Results through 3Q FY March 2012 Results through 3Q (2010.4.1-2010.12.31) (2011.4.1-2011.12.31) Change Yen billions % Capital expenditures 54.1 76.3 22.3 41.2% Depreciation and amortization 57.5 56.2 (1.3) -2.3% Research and development 38.9 39.4 0.5 1.2% ＜3Q Results＞ 3Q results of FY March 2011 (Yen billions） (2010.10.1-2010.12.31) 3Q results of FY March 2012 (2011.10.1-2011.12.31) Change Yen billions % Capital expenditures 20.3 22.8 2.5 12.5% Depreciation and amortization 19.7 18.8 (0.9) -4.6% Research and development 12.5 12.9 0.4 3.4% 19 20 21 Cautionary Statements with Respect to Forward-Looking Statements This material contains forward-looking statements, including projections, plans, policies, management strategies, targets, schedules, understandings and evaluations, about TDK or its group companies (TDK Group). These forward-looking statements are based on the current forecasts, estimates, assumptions, plans, beliefs and evaluations of TDK Group in light of information currently available to it, and contain known and unknown risks, uncertainties and other factors. TDK Group therefore wishes to caution readers that, being subject to risks, uncertainties and other factors, TDK Group’s actual results, performance, achievements or financial position could be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements, and TDK Group undertakes no obligation to publicly update or revise any forward-looking statements after the issue of this material except as provided for in laws and ordinances. The electronics markets in which TDK Group operates are highly susceptible to rapid changes. Risks, uncertainties and other factors that can have significant effects on TDK Group include, but are not limited to, shifts in technology, fluctuations in demand, prices, interest and foreign exchange rates, and changes in economic environments, conditions of competition, laws and regulations. Also, since the purpose of these materials is only to give readers a general outline of business performance, many numerical values are shown in units of a billion yen. Because original values, which are managed in units of a million yen, are rounded off, the totals, differences, etc. shown in these materials may appear inaccurate. If detailed figures are necessary, please refer to our financial statements and supplementary materials. 22