Financial Report

ROHM CO., LTD. Financial Highlights for Year Ended
March 31, 2006
May 11, 2006
1. Consolidated Financial Results
(Figures are rounded down to the nearest million yen. Any fraction less than the unit are rounded off.)
Increase/decrease from the year
Year ending March 31, 2007 (Projected)
ended March 31, 2005
Year ended
March 31, 2006
Actual
Year ended
March 31, 2005
Actual
Amount
Percentage
Increase/
decrease
from the
previous year
Annual
First six months
Net sales
Millions of yen
387,790
369,023
+18,767
+5.1%
405,000
Cost of sales
Millions of yen
243,516
221,132
+22,384
+10.1%
255,900
128,200
Selling, general and administrative
expenses
Millions of yen
75,954
71,836
+4,118
+5.7%
75,600
38,800
Operating income
Millions of yen
-10.2%
73,500
(Operating income margin)
Ordinary income
Millions of yen
(Ordinary income margin)
Net income
Millions of yen
(Net income margin)
Basic net income per share
68,318
76,054
-7,736
(17.6%)
(20.6%)
(-3.0%)
78,437
79,320
-883
(20.2%)
(21.5%)
(-1.3%)
48,304
45,135
+3,169
(12.5%)
(12.2%)
(+0.3%)
+7.6%
(18.1%)
-1.1%
78,500
+7.0%
Yen
416.39
380.22
+36.17
%
6.3
6.2
+0.1
Ordinary income to total assets
%
8.6
9.3
-0.7
Total assets
Millions of yen
951,441
867,322
+84,119
+9.7%
Shareholders' equity
Millions of yen
787,214
739,329
+47,885
+6.5%
+9.5%
50,000
207,000
40,000
+7.2%
+16.4%
(19.3%)
+0.1%
(19.4%)
Return on equity
Shareholders' equity ratio
+4.4%
Increase/
decrease from the
corresponding six
months of the
previous year
42,000
+3.8%
(20.3%)
+3.5%
27,000
(12.3%)
(13.0%)
433.33
234.00
+11.4%
%
82.7
85.2
-2.5
Yen
6,821.68
6,326.64
+495.04
+7.8%
Capital expenditures
Millions of yen
80,239
85,171
-4,932
-5.8%
73,000
-9.0%
38,500
+23.2%
Depreciation (Tangible fixed assets)
Millions of yen
56,669
47,102
+9,567
+20.3%
66,000
+16.5%
29,700
+19.2%
Research and development costs
Millions of yen
33,794
32,342
+1,452
+4.5%
35,500
+5.0%
18,800
+16.5%
(Millions of yen)
(6,283)
(3,318)
(+2,965)
(+89.3%)
Millions of yen
(gain) 4,466
(gain) 332
(gain) 4,134
Yen/US$
113.09
107.28
+5.81
Shareholders' equity per share
Net financial revenue
(Interest and dividend income)
Foreign currency exchange gains/losses
Foreign exchange rate (Average yen-dollar
rate)
Number of employees
+5.4%
20,279
19,803
+476
+2.4%
(2,208)
(2,155)
(+53)
(+2.5%)
56
56
0
41
47
-6
(Domestic)
(12)
(13)
(-1)
(Overseas)
(29)
(34)
(-5)
Number of companies accounted for by
equity method
2
2
0
Number of non-consolidated subsidiaries
0
0
0
(Number of R&D employees)
Overseas production ratio
%
Number of consolidated subsidiaries
110
110
58
* The projected data are based on the information available at the time of release of this report. Therefore, a number of important factors including changes in business
conditions may cause actual results to differ materially from those projected.
Contact: Public Relations and Investor Relations Dept., ROHM CO., LTD.
21, Saiin Mizosaki-cho, Ukyoku, Kyoto 615-8585 Japan (075)315-5729 (Direct line)
Note: This report is a translation of the financial highlights of the Company prepared in accordance with the provisions set forth in the Securities and Exchange Law and its
related accounting regulations, and in conformity with accounting principles generally accepted in Japan. The original version of this report is written in Japanese. In the
event of any discrepancies in words, accounts, figures or the like between this report and the original, the original Japanese version shall govern.
-Financial Highlights 1-
1. Consolidated Financial Results (Continued from previous page)
(Figures are rounded down to the nearest million yen. Any fraction less than the unit are rounded off.)
Increase/decrease from the year
ended March 31, 2005
Year ended
March 31, 2006
Actual
Year ended
March 31, 2005
Actual
Amount
Percentage
Year ending March 31, 2007 (Projected)
Annual
Increase/decrease
from the previous
year
First six months
Increase/
decrease from the
corresponding six
months of the
previous year
Sales by product category and geographical region
Integrated circuits
170,087
159,022
+11,065
+7.0%
186,412
+9.6%
93,314
+9.2%
(Japan)
(82,977)
(81,750)
(+1,227)
(+1.5%)
(92,129)
+11.0%
(45,360)
+11.5%
(Asia)
+8.1%
Millions of yen
(79,375)
(68,391)
(+10,984)
(+16.1%)
(86,408)
+8.9%
(43,971)
(Americas)
(3,861)
(3,207)
(+654)
(+20.4%)
(3,730)
-3.4%
(2,014)
-6.5%
(Europe)
(3,872)
(5,672)
(-1,800)
(-31.7%)
(4,143)
+7.0%
(1,967)
+1.7%
150,636
141,787
+8,849
+6.2%
157,150
+4.3%
80,618
+7.7%
(Japan)
(51,840)
(53,345)
(-1,505)
(-2.8%)
(54,355)
+4.9%
(26,355)
+1.3%
(Asia)
(85,108)
(74,000)
(+11,108)
(+15.0%)
(89,386)
+5.0%
(47,283)
+12.8%
(Americas)
(6,935)
(6,811)
(+124)
(+1.8%)
(7,026)
+1.3%
(3,759)
+8.5%
(Europe)
(6,752)
(7,629)
(-877)
(-11.5%)
(6,381)
-5.5%
(3,219)
-6.3%
24,998
23,610
+1,388
+5.9%
24,842
-0.6%
12,865
+6.1%
Discrete semiconductor devices
Passive components
(Japan)
(7,558)
(8,446)
(-888)
(-10.5%)
(7,246)
-4.1%
(3,650)
-1.8%
(12,716)
(10,510)
(+2,206)
(+21.0%)
(13,061)
+2.7%
(6,894)
+14.3%
(Americas)
(1,915)
(1,612)
(+303)
(+18.8%)
(1,537)
-19.7%
(820)
-14.9%
(Europe)
(2,807)
(3,040)
(-233)
(-7.7%)
(2,997)
+6.7%
(1,500)
+6.0%
42,068
44,603
-2,535
-5.7%
36,595
-13.0%
20,201
-1.9%
(Japan)
(13,891)
(18,308)
(-4,417)
(-24.1%)
(10,121)
-27.1%
(6,009)
-9.8%
(Asia)
(22,899)
(21,257)
(+1,642)
(+7.7%)
(20,816)
-9.1%
(11,367)
-0.6%
(Americas)
(2,426)
(2,359)
(+67)
(+2.9%)
(2,608)
+7.5%
(1,267)
+9.8%
(Europe)
(2,850)
(2,678)
(+172)
(+6.4%)
(3,048)
+6.9%
(1,557)
+15.6%
387,790
369,023
+18,767
+5.1%
405,000
+4.4%
207,000
+7.2%
(Japan)
(156,268)
(161,852)
(-5,584)
(-3.5%)
(163,852)
+4.9%
(81,375)
+5.5%
(Asia)
(200,100)
(174,159)
(+25,941)
(+14.9%)
(209,672)
+4.8%
(109,516)
+9.5%
(Americas)
(15,138)
(13,990)
(+1,148)
(+8.2%)
(14,902)
-1.6%
(7,862)
+1.6%
(Europe)
(16,282)
(19,021)
(-2,739)
(-14.4%)
(16,571)
+1.8%
(8,244)
+1.4%
(Asia)
Displays
Total
Sales by application
Visual
7.4
7.2
+0.2
11.1
12.4
-1.3
Home appliance
2.3
2.3
0.0
Other consumer
4.7
5.3
-0.6
Computer and OA
22.1
21.8
+0.3
Telecommunications
%
Audio
18.3
16.9
+1.4
Automotive
5.2
4.9
+0.3
Other industrial
1.5
1.5
0.0
Subassemblies
13.5
13.3
+0.2
Others
13.9
14.4
-0.5
44,254
38,295
+5,959
+15.6%
44,000
-0.6%
20,500
+44.7%
20,820
22,052
-1,232
-5.6%
19,000
-8.7%
11,800
+29.4%
Passive components
1,886
1,689
+197
+11.6%
2,400
+27.2%
1,400
+70.1%
Displays
3,546
6,779
-3,233
-47.7%
2,200
-38.0%
1,600
-31.8%
Others
9,731
16,353
-6,622
-40.5%
5,400
-44.5%
3,200
-33.4%
80,239
85,171
-4,932
-5.8%
73,000
-9.0%
38,500
+23.2%
Capital expenditures by product category
Integrated circuits
Discrete semiconductor devices
Total
Millions of yen
-Financial Highlights 2-
2. Non-consolidated Financial Results
(Figures are rounded down to the nearest million yen. Any fraction less than the unit are rounded off.)
Increase/decrease from the year ended
Year ending March 31, 2007 (Projected)
March 31, 2005
Year ended
March 31, 2006
Actual
Net sales
Operating income
Percentage
378,000
+4.7%
192,000
+7.5%
Millions of yen
24,129
23,050
+1,079
+4.7%
39,000
+61.6%
18,000
+73.8%
(6.7%)
(6.7%)
(0.0%)
38,035
51,257
-13,222
(10.5%)
(15.0%)
(-4.5%)
(10.3%)
-25.8%
47,000
(9.4%)
+23.6%
(12.4%)
27,238
39,872
-12,634
(7.5%)
(11.6%)
(-4.1%)
Yen
234.91
336.25
-101.34
Return on equity
%
5.3
7.9
-2.6
Ordinary income to total assets
%
6.1
8.4
-2.3
Total assets
Millions of yen
630,721
610,135
+20,586
+3.4%
Shareholders' equity
Millions of yen
513,433
507,455
+5,978
+1.2%
%
81.4
83.2
-1.8
Yen
4,449.39
4,342.71
+106.68
Annual cash dividends
Increase/
decrease from the
corresponding six
months of the
previous year
+5.4%
Millions of yen
Shareholders' equity per share
First six months
+18,420
(Net income margin)
Shareholders' equity ratio
Increase/
decrease from
the previous
year
342,450
Millions of yen
Basic net income per share
Annual
360,870
(Ordinary income margin)
Net income
Amount
Millions of yen
(Operating income margin)
Ordinary income
Year ended
March 31, 2005
Actual
-31.7%
-30.1%
34,000
24,000
+11.2%
(12.5%)
+24.8%
19,000
(9.0%)
(9.9%)
294.67
164.67
90.0
45.0
+19.8%
+2.5%
Yen
90.0
85.0
+5.0
(Yen)
(45.0)
(42.5)
(2.5)
Capital expenditures
Millions of yen
9,401
20,699
-11,298
-54.6%
6,300
-33.0%
3,400
-30.9%
Depreciation (Tangible fixed assets)
Millions of yen
7,620
9,642
-2,022
-21.0%
8,100
+6.3%
3,500
+2.9%
(Interest income)
(Millions of yen)
(2,109)
(1,616)
(+493)
(+30.5%)
(Dividend income)
(Year-end cash dividends)
Net financial revenue
(Millions of yen)
(6,859)
(23,909)
(-17,050)
(-71.3%)
Total
Millions of yen
8,969
25,525
-16,556
-64.9%
Foreign currency exchange
gains/losses
Millions of yen
(gain) 3,919
(gain) 1,101
(gain) 2,818
Number of employees
Number of shareholders
3,315
3,293
+22
+0.7%
27,099
26,773
+326
+1.2%
Financial institution
shareholding ratio
%
24.84
30.24
-5.40
Foreign shareholding ratio
%
51.65
48.71
+2.94
-Financial Highlights 3-
Consolidated Financial Report for Fiscal Year Ended March 31, 2006
Listed Company Name
ROHM CO., LTD.
May 11, 2006
Stock Exchange Listings Tokyo, Osaka
Code No.: 6963
(URL http://www.rohm.co.jp)
Company representative Title: President
Name: Ken Sato
Contact person
Title: Group General Manager
Name: Eiichi Sasayama
Head Office Location
Kyoto Prefecture
TEL (075) 311 - 2121
Date of Board of Directors meeting for approval of financial statements: May 11, 2006
Adoption of the GAAP in the U.S. : None
1. Consolidated Business Results for Year Ended March 31, 2006 (From April 1, 2005 to March 31, 2006)
(1) Consolidated Results of Operations
(Figures are rounded down to the nearest million yen)
Net sales
Operating income
Ordinary income
Millions of yen
%
Millions of yen
%
Millions of yen
%
Year ended March 31, 2006
387,790
5.1
68,318
-10.2
78,437
-1.1
Year ended March 31, 2005
369,023
3.8
76,054
-19.5
79,320
-13.9
Millions of yen
%
Yen
48,304
7.0
416.39
Year ended March 31, 2006
Diluted net
Ordinary
Ordinary
income per Return on equity income to income to net
share
total assets
sales
Yen
%
%
%
Basic net income per
share
Net income
-
6.3
8.6
20.2
Year ended March 31, 2005
45,135
-29.2
380.22
6.2
9.3
21.5
(Notes) (i) Equity in income (losses) Year ended Mar. 31, 2006: 0 million yen Year ended Mar. 31, 2005: 1 million yen
(ii) Average number of shares outstanding (consolidated)
Year ended Mar. 31, 2006: 115,768,014 shares
Year ended Mar. 31, 2005: 118,561,981 shares
(iii) Change in accounting policies: Included
(iv) Percentage (%) shown for Net sales, Operating income, Ordinary income and Net income represents change from the data of the
previous year.
(2) Consolidated Financial Position
Total assets
Shareholders' equity
Shareholders' equity ratio
Shareholders' equity
per share
Millions of yen
Millions of yen
951,441
787,214
82.7
6,821.68
739,329
85.2
6,326.64
Year ended March 31, 2006
Year ended March 31, 2005
867,322
(Note) Number of shares outstanding (consolidated) at end of year
%
Yen
Year ended Mar. 31, 2006: 115,384,269 shares
Year ended Mar. 31, 2005: 116,850,835 shares
(3) Consolidated Cash Flows
Cash flows from
Cash flows from
Cash flows from
Cash and cash
operating activities
investing activities
financing activities
equivalents at end of year
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Year ended March 31, 2006
94,548
-95,332
-25,310
280,465
Year ended March 31, 2005
91,919
-87,429
-30,037
288,974
(4) Scope of consolidation and application of equity method
Number of consolidated subsidiaries: 41
Number of non-consolidated subsidiaries accounted for by equity method: None
Number of associated companies accounted for by equity method: 2
(5) Changes in scope of consolidation and application of equity method
Companies newly consolidated: 1 Companies excluded from consolidation: 7
Companies newly accounted for by equity method: None Companies no longer accounted for by equity method: None
2. Consolidated Business Results Forecast for Fiscal 2007 (From April 1, 2006 to March 31, 2007)
Net sales
Ordinary income
Millions of yen
Net income
Millions of yen
Millions of yen
Interim
207,000
42,000
27,000
Fiscal 2007
405,000
78,500
50,000
(Note) Projected net income per share for the year ending Mar. 31, 2007: 433.33 yen
* The forecast data are based on the information available at the time of release of this report. Therefore, a number of important factors including changes
in business conditions may cause actual results to differ materially from those discussed in the prospective statements.
Refer to page 8-9 of the attached documents for reasons for the forecast and other relevant information.
-1-
ROHM CO., LTD.
Status of the ROHM Group
The ROHM Group consists of ROHM CO., LTD., 41 consolidated subsidiaries (12 in Japan and 29 outside Japan) and 2
associated companies (1 in Japan and 1 outside Japan). We are a comprehensive electronic component manufacturer,
whose principal business is the manufacture and sales of electronic components.
The Group diagram and information on our consolidated subsidiaries are given below.
Users
Overseas
Domestic
Finished products
Administrative Responsibility for Subsidiaries in
Asia and Sales
ROHM ELECTRONICS ASIA PTE. LTD.
Finished products
Sales
ROHM ELECTRONICS U.S.A., LLC *1
ROHM ELECTRONICS GMBH *2
ROHM ELECTRONICS (H.K.) CO., LTD.
ROHM ELECTRONICS (SHANGHAI) CO., LTD.
ROHM ELECTRONICS TRADING DALIAN CO., LTD.
ROHM ELECTRONICS TAIWAN CO., LTD.
ROHM ELECTRONICS KOREA CORPORATION
ROHM ELECTRONICS (MALAYSIA) SDN. BHD.
ROHM ELECTRONICS (PHILIPPINES) SALES
CORPORATION
ROHM ELECTRONICS (THAILAND) CO., LTD.
Distribution
ROHM LOGISTEC
CO., LTD.
Distribution operation by contract
Finished products
ROHM CO., LTD.
Raw materials
Semi-finished products
Administrative
Responsibility for
Subsidiaries in North
and South America
ROHM U.S.A., INC.
Administrative
Responsibility for
Subsidiaries in
Europe
ROHM ELECTRONICS
EUROPE LIMITED
*1.
*2.
*3.
*4.
*5.
Raw materials
Semi-finished products
Finished products
Manufacture
(Domestic)
(Overseas)
ROHM HAMAMATSU CO., LTD.
ROHM KOREA CORPORATION
ROHM WAKO DEVICE CO., LTD.
ROHM APOLLO DEVICE CO., LTD.
ROHM SEMICONDUCTOR (CHINA) CO., LTD.*3
ROHM ELECTRONICS DALIAN CO., LTD.
ROHM TSUKUBA CO., LTD.
ROHM ELECTRONICS PHILIPPINES, INC.*4
ROHM WAKO CO., LTD.
ROHM APOLLO SEMICONDUCTOR PHILIPPINES, INC.*4
ROHM APOLLO CO., LTD.
ROHM INTEGRATED SYSTEMS (THAILAND) CO., LTD.*5
ROHM FUKUOKA CO., LTD.
ROHM-WAKO ELECTRONICS (MALAYSIA) SDN. BHD.
ROHM AMAGI CO., LTD.
ROHM MECHATECH PHILIPPINES, INC.
ROHM MECHATECH CO., LTD.
ROHM MECHATECH THAILAND CO., LTD.
ROHM LSI SYSTEMS U.S.A., LLC merged with ROHM ELECTRONICS U.S.A., LLC in April 2005.
ROHM LSI SYSTEMS (FRANCE) S.A.S. merged with ROHM ELECTRONICS GMBH in December
2005.
ROHM ELECTRONICS WAKO (TIANJIN) CO., LTD. and ROHM ELECTRONICS COMPONENTS
(TIANJIN) CO., LTD. merged with ROHM IC DESIGN (TIANJIN) CO., LTD. in April 2005 to establish
ROHM SEMICONDUCTOR (CHINA) CO., LTD.
ROHM APOLLO SEMICONDUCTOR PHILIPPINES, INC. merged with ROHM ELECTRONICS PHILIPPINES, INC. in April 2006.
ROHM APOLLO ELECTRONICS (THAILAND) CO., LTD. and ROHM INTEGRATED SEMICONDUCTOR (THAILAND) CO., LTD. merged in March 2006 to establish the new ROHM INTEGRATED SYSTEMS (THAILAND) CO., LTD.
-2-
ROHM CO., LTD.
Management Policies
Basic Management Policy
ROHM considers that it must allocate the added values produced by the Company, in appropriate proportions,
to all its stakeholders, including shareholders, employees and local communities, as well as to the retained earnings for business investment for making the Company more competitive. Thus ROHM regards it essential to
obtain the understanding and cooperation of all its stakeholders, to create everlasting, extensive corporate value
under continuous improvement. ROHM thereby intends to make its shares more attractive to investors, and this is
one of the Company’s highest priorities in management.
Accordingly, ROHM is committed to developing the world’s market-leading products, including high-valueadded system LSI devices for digital information appliances, mobile electronic equipment, and automotive
components, which are expected to continue rapid growth, along with optical devices, which are also an area
with great potential for growth. ROHM also seeks as a basic policy the enhancement of cost competitiveness
through the best use of its distinctive production technologies, and will thereby continue to lead the world electronic component market.
Basic Policy on Distribution of Profits
Regarding profit distribution to shareholders, ROHM will press ahead with measures and policies to live up to
their expectations, in thorough consideration of various factors, including the Company’s business performance,
financial conditions, and estimated fund demands for business investment to improve its corporate value.
More specifically, the Company intends to improve the total return ratio, by keeping the dividend rate consecutive in consideration of the consolidated dividend payout ratio, while implementing flexible return-improvement
measures such as treasury-stock purchasing in light of cash-flow conditions.
For ROHM to sustain its growth and improve its performance in the semiconductor industry, the market for which is
expected to grow in the medium to long term, it is indispensable to have product development capabilities outstripping other manufacturers and to enhance cost competitiveness. With the accelerated sophistication of development
and manufacturing technologies, which serve as core factors in such competition, funds needed for investment in
R&D and production facilities in the Company’s core business areas, that is, semiconductors and optical devices are
increasing each year. ROHM considers that, to make appropriate and prompt investment aimed at maintaining and
strengthening its international competitiveness and growth potential in a semiconductor industry that is undergoing
drastic changes, it is vital, in terms of management, to maintain in reserve, ample funds. Specifically, the Company
considers that it will be increasingly necessary to make large-scale investment in construction of production lines for
large-diameter 300 mm wafers, 90 nm or smaller ultra-fine processes, and optical devices. ROHM intends to use retained earnings effectively, to improve the Company’s corporate value over the medium to long term, as well as to tie
up with or acquire Japanese and overseas companies, expecting synergy effects in our business.
Currently the Company has no plan to change the frequency of dividend payment under the new Japanese Corporation Law, which came into effect recently.
Policy on Changes in Minimum Trading Lot Size
ROHM reduced the minimum trading lot size of its shares from 1,000 to 100. We consider that the change has produced positive results in that the number of shareholders has increased rapidly since then.
Regarding a further reduction in the minimum trading lot size, we intend to make a decision after carefully examining
the factors concerned, including cost–benefit performance and the liquidity of shares.
Referenced Corporate Performance Indexes
ROHM intends to make efforts to ensure its earning power by taking various actions, including the development
of new products and the reinforcement of sales operations. We attach importance to indexes representing the rate
of return, such as EBITDA*, as well as asset turnover ratio, and business investment efficiency.
*
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
An index obtained by adding interest expenses and depreciation to income before income taxes and
minority interests. This index is commonly used to compare corporate earnings internationally.
Medium- to Long-term Corporate Strategies
While expansion of the electronics market is anticipated over the medium to long term in parallel with the advancement of the highly sophisticated information society, international competition is becoming increasingly
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ROHM CO., LTD.
To ensure stable growth and a strong and well-balanced financial position under these circumstances, a range of
measures should be taken, including development of creative, high-value-added products utilizing world leading advanced technologies, enhancement of cost competitiveness, establishment of a global production and distribution
network that enables high customer satisfaction in both domestic and overseas markets, and strengthening of service
and technical support systems for customers. ROHM intends to attach overriding importance to the integrated development–production system, development of custom-designed products, and quality, as well as to make persistent
efforts to formulate and implement measures in these respects.
Specifically, ROHM intends to increase R&D personnel continuously while reinforcing the corporate operations
handling digital technologies and digital–analog integration technologies. ROHM also intends to satisfy various needs from customers, especially from those in the digital home appliance market and information and
communications equipment market, with larger-scale LSI devices, more sophisticated LSI devices, and leadtime reduction, realized by making good use of our original REAL SOCKET design system, which enables the
development of complicated system LSI devices, as well as our REAL PLATFORM, which slashes design leadtime and speeds up the development of system LSI devices. We are also committed to the development of
next-generation optical devices, including LEDs that use zinc oxide as the main material, and silicon-carbidesubstrate power devices, which are expected to be far better than conventional silicon-substrate semiconductors
in terms of voltage resistance and high-current characteristics. In addition, we intend to upgrade our highquality, high-reliability product lines to satisfy needs from automotive industries that are becoming increasingly
electronic.
As the corporate bases for these technological-reinforcement efforts, ROHM runs the Yokohama Technology
Center, Optical Device Research Center and LSI Test Technology Center, leveraging customer-support operations and reinforcing its corporate R&D system for further growth in the future.
To contribute to the development of future technologies, ROHM is actively involved in a wide range of joint
R&D projects, including comprehensive industrial–academic collaboration alliances with Kyoto University and
other major institutions; joint efforts with the Semiconductor Industry Research Institute Japan, which is a
think-tank for the Japanese semiconductor industry; and participation in leading-edge R&D projects, which integrate the wisdom of academic, industrial, and governmental circles. Moreover, ROHM promotes partnerships with other companies wherever necessary to complement our technologies, thus improving the efficiency
of its R&D activities.
Regarding the organization of its corporate production system, ROHM is aggressively committed to improving
cost competitiveness and reinforcing the corporate supply system for sales to the worldwide market. Specifically, concerning the front-end process of semiconductor production, the Company is pressing ahead with the
adoption of larger-diameter wafer process, such as 300 mm wafer process, and microfabrication process. For
the back-end process, ROHM intends to powerfully shift production to overseas plants, including those in Thailand, the Philippines and China, while upgrading them. Our existing domestic plants are intended to continue
to accumulate the Company’s production technologies as the mother plants of the production network of the entire ROHM Group. The production technologies established by those mother plants will then be introduced to
the overseas plants, to enable the manufacture and supply of ROHM’s high-quality products worldwide.
Concerning product quality, ROHM intends to continue company-wide efforts to further enhance the reliability
of its products, implementing quality-improving actions in its manufacturing divisions as well as thoroughly instilling the quality-first policy in technological divisions, including LSI circuit design and manufacturingtechnology development. ROHM also intends to proactively commit itself to internally producing materials
such as wafers, photomasks and lead frames, thereby developing products that will overwhelm the products of
competitors in quality and reliability, while reducing lead-time, thus improving our international competitiveness.
To expand market shares in the growing global markets, ROHM intends to reinforce its corporate customer relations systems including sales and technical support in various locations worldwide, by newly establishing networked quality assurance centers along with sales bases and design centers. At the same time, the Company
intends to make continued efforts to achieve more efficient corporate management and swifter decision-making
by proceeding with the restructure and integration of corporate organizations in and outside Japan.
To contribute to environmental conservation, the ROHM Group is making across-the-board efforts to establish
an environmental management system based on ISO 14001 standards and develop new low-power-consumption,
energy-saving products. All the production bases of ROHM in and outside Japan intend to commit themselves
continuously to realizing zero emissions through the promotion of waste recycling and to pressing ahead with
green procurement and supply. In addition, ROHM intends to proceed with its tree-planting project as part of
the fight against global warming. Leading the industry, ROHM has already completed the actions necessary to
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ROHM CO., LTD.
satisfy the RoHS Directive, which is the environment conservation regulations that will take effect in July 2006
in Europe, as a corporate citizen who performs business in consideration of environmental conservation.
Priority Issues
While the electronics industry is expected to grow in the medium to long term thanks to the increasing demand for
digital home information appliances and more sophisticated automobile electronic control systems, technological
competition and price wars are also expected to intensify continuously on a global scale. Therefore, it is becoming
increasingly necessary to supply internationally competitive products constantly to the market, through sustained efforts toward innovative, high-quality products and technologies and through thorough cost-reduction efforts.
Under these circumstances, the ROHM Group intends to commit itself deeply to improving its business performance,
through the development of high-value-added products and technologies in anticipation of future customer needs,
improvement of quality and reliability, reinforcement of production and marketing systems, and thorough streamlining and cost-reduction efforts in the entire Group.
Matters Related to the Parent Company
There are no matters to be noted here as appropriate.
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ROHM CO., LTD.
Operating Results and Financial Status
1. Operating Results
(1) Review for the Year Ended March 31, 2006
Overall review of results of operations
In the fiscal year ended March 31, 2006, the world economy stayed firm by and large, principally because
consumer spending was buoyant year-round in major countries including the U.S., though soaring crude-oil
prices and natural disasters had a negative impact. The Japanese economy showed continued recovery,
owing mainly to brisk plant and equipment spending and firm consumer spending pulled up by improvement in employment and family-income conditions.
Excluding a part of digital audio/visual equipment, the electronic component market as a whole was sluggish from spring to summer in contrast to the market in the previous year, when it was favorably influenced
by the Athens Olympic Games. From summer onwards, market demand was more favorable compared
with the recent years, due chiefly to production expansion in the mobile-phone market and personalcomputer market and to the brisk expansion of digital audio/visual equipment market including thin TVs.
Regarding markets in different regions, in Japan, production relocation to other countries continued and intense price competition occurred. However, the thin-TV market stayed brisk and third-generation mobile
phones became more common, increasing demand.
In other Asian countries, the markets of conventional audio/visual equipment, such as portable CD players,
was extremely slow, but the production of personal computers, mobile phones and digital audio/visual
equipment expanded, so that the electronic component market as a whole remained favorable.
Concerning North America and Europe, the markets related to telecommunication equipment were weak
and a part of automakers experienced slow sales, which adversely influenced the electronic component
market. In Europe, the market remained stagnated, influenced by production shift to other countries,
though the mobile-phone market was relatively firm.
Under these circumstances, the ROHM Group made proactive efforts to streamline manufacturing process
lines, to invest capital more efficiently, to research for and develop new products, as well as to reinforce
customer relations systems including sales and technical support.
Concerning manufacturing process lines, we pressed ahead with the establishment of an integrated production system and made efforts to expand the 300 mm wafer process. We proceeded with the transfer of the
production of module-related products to a new plant in Dalian. We also continued to shift production
from Japan to our Thailand and Philippines plants and to streamline production systems in the plants in
these countries. Furthermore, to be prepared for demand expansion in the future, we started to construct a
new plant in each of our production bases in Tianjin, Thailand, and Philippines.
Concerning the development of new products, we proceeded with the development of various system LSI
devices to satisfy customer needs for use in mobile phones and digital audio/visual equipment, whose markets are expected to grow further. The other efforts we made include the reinforcement of the product
lines of compact-, thin-package power MOS FET*1 products.
For customer relations including sales and technical support, we opened new sales bases in and outside Japan, and established a design center outside Japan, to reinforce a customer-centered sales system and technical support system. We also opened a QA center near Detroit, U.S., reinforcing our corporate quality
assurance network.
As a result of these efforts, ROHM’s net sales for the fiscal year ended March 31, 2006, increased 5.1% to
¥387.79 billion over previous year, ordinary income decreased 1.1% to ¥78.437 billion, and net income increased 7.0% to ¥48.304 billion.
*1. MOS FET
Metal-oxide semiconductor field-effect transistor, featuring low power dissipation.
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ROHM CO., LTD.
Divisional review of results of operations
<Integrated circuits>
ROHM’s sales of integrated circuits for the fiscal year ended March 31, 2006 increased 7.0% to ¥170.087
billion.
In the home-appliance market, the use of backlight inverters*2 and overdrive processors*3 increased for
panel displays such as thin TVs. In addition, the sales of new products for digital audio/visual equipment
expanded, such as audio LSI devices for mobile music players using a hard disk or flash memory and system drivers for digital still cameras and digital video cameras. On the other hand, the market of conventional audio/visual equipment, such as portable CD players, stayed sluggish.
In the mobile-phone market, the employment of integrated application power LSI devices, audio LSI devices, analog front-end LSI devices*4 became increasingly common and their sales increased rapidly.
Sales of Liquid-crystal display driver LSI devices stayed firm.
Concerning production operations, we continued to switch the production of materials including wafers,
photomasks*5, and lead frames*6 to in-house production. Concerning the front-end process, we reinforced
the production system of 300 mm wafer process, and continuously committed ourselves to the development
of microfabrication technologies aiming at realizing the industry’s most advanced process. To be prepared
for demand expansion in the future, we started to build a new plant that will be compatible with the 300
mm wafer process at ROHM HAMAMATSU CO., LTD., a ROHM Group company. Regarding the backend process, we strengthened our production systems outside Japan, and made efforts to enrich the lines of
compact, thin-package products and increase production capacity.
For module products, the sales of IrDA*7 communication modules used in mobile phones stayed firm. We
made cost-reduction efforts in the production of these products, transferring production to China continuously.
*2. Backlight inverters
LSI devices that power the back light of liquid-crystal displays.
*3. Overdrive processors
LSI devices that speed up the response speed of halftones (medium color tones) on liquid-crystal
displays. They improve motion-picture display performance and realize beautiful images.
*4. Analog front-end LSI chips
LSI chips that convert radio waves (analog signals) received by a mobile phone into digital signal
data that can be processed.
*5. Photomask
A glass plate used to transfer LSI circuit patterns onto silicon wafers.
*6. Lead frame
Frame components, such as pins, for connection between the silicon chips sealed in a package and
the board.
*7. IrDA
An infrared data communications standard commonly used in laptop computers, mobile phones and
similar devices.
<Discrete semiconductor devices>
ROHM’s sales of discrete semiconductor devices for the fiscal year ended March 31, 2006 increased
6.2% to ¥150.636 billion.
Concerning transistors and diodes, the sales of small-signal transistors were extremely severe, primarily
because of price reduction. However, the sales of power MOS FETs and power diodes increased considerably for use in digital audio/visual equipment such as thin TVs and mobile phones.
For laser diodes, our market share of dual-wavelength laser diodes increased tremendously for use in personal-computer combo drives. However, the sales of single-wavelength laser diodes for reading CDs
and DVDs lowered, influenced by the stagnant market and intensified price competition.
For LEDs, the sales of blue and white LEDs grew outside Japan, for use in mobile phones.
Regarding production systems, we committed ourselves to improving the production capacity of power
devices*8 such as MOS FETs, which are expected to further increase in demand. We also reinforced our
compact package production lines because the demand for compact packages is on the increase for use in
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ROHM CO., LTD.
mobile phones. In addition, to improve cost competitiveness, we made efforts to reduce material cost
and streamline manufacturing processes, and continued to shift production to overseas plants.
*8. Power devices
Semiconductor devices that control high current and high power.
energy-efficient and low in heat generation.
Sophisticated power devices are
<Passive components>
ROHM’s sales of passive components for the fiscal year ended March 31, 2006 increased 5.9% to
¥24.998 billion.
While competition continued to be severe in international markets, the sales of low ohmic resistors stayed
firm, and the sales of new products such as size 0603 chip resistors and multiple-chip compound products
increased.
For capacitors, the sales of ceramic capacitors stayed severe mainly because of price competition, while
the sales of compact, large-capacity tantalum capacitors of our original construction increased drastically
for increased employment in mobile phones.
Regarding production systems, we proceeded with the shift of production to outside Japan; as an example,
we built a tantalum capacitor production system in Thailand. We made continued efforts for cost reduction, improving the efficiency of production and supply systems.
<Displays>
ROHM’s sales of displays for the fiscal year ended March 31, 2006 decreased 5.7% to ¥42.068 billion.
Concerning printheads, the sales of image sensor heads for multifunction printers*9 and printheads for
miniaturized printers for POS (Point-of-Sale) systems stayed brisk.
However, concerning LED displays, the sales of dot-matrix displays such as those for large displays were
stagnant.
In addition, the sales of LCD modules for overseas markets such as China were stagnant.
The sales of camera modules also stayed slow, influenced by price competition.
Concerning production systems, we proactively shifted production to the new plant completed in Dalian,
China, making continued cost-reduction effort.
*
9
Multifunction printer
A printer capable of performing multiple functions besides printing, such as copying, faxing, scanning etc.
Distribution of profits for fiscal year ended March 31, 2006
The Company plans to pay annual dividends of ¥90.00 per share, up ¥5.00 over ¥85.00 of the previous year,
as an effort to increase returns to shareholders, in consideration of business performance of the fiscal year
ended March 31, 2006 and the demand for funds and other related factors for the future.
Excluding the purchase of odd stock, we purchased treasury stock of 1,463,000 shares, which amounted to
¥15,090 million in total, during the fiscal year ended March 31, 2006. The breakdown of the purchase is
as follows. Before April 22, 2005, we purchased 963,000 shares, which amounted to ¥10,093 million
based on the decision made at the board of directors’ meeting held on February 4, 2005. In addition, based
on the approval given at the ordinary general meeting of shareholders held on June 29, 2005, we purchased
treasury stock of 500,000 shares, which amounted to ¥4,996 million before March 31, 2006.
(2) Forecast for Fiscal Year Ending March 31, 2007
Overall Business Result Outlook for Fiscal 2007
The global economy is expected to stay firm for the time being, although there are signs of economic uncertainty such as inflation triggered by soaring crude-oil prices and an economic slowdown in the U.S. and
China. The Japanese economy is certain to be on the recovery track, as indicated by expanding corporate
incomes, and is expected to continue to recover. In the electronic component industry, the demand for
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ROHM CO., LTD.
products for home appliances such as thin TVs is expected to grow before the World Cup soccer games in
June, while the status of the industry after the summer is uncertain, because it may enter the adjustment
phase and may be influenced by the slowdown of the personal computer market and mobile phone market.
Under these circumstances, ROHM intends to continuously commit itself to the development of high-valueadded products, including high-function, high-performance LSI devices and compact, high-reliability
power discrete products, mainly for use in mobile phones, digital audio/visual equipment and automotive
industries. We intend to commit ourselves totally to improving product quality and reliability, reinforcing
sales and technical-support systems in and outside Japan, and reducing cost, thus improving corporate performance to the highest possible degree. For manufacturing processes, we continue to increase production
capacity and expand the 300 mm wafer process, in preparation for the expected demand increase.
ROHM also intends to continuously make environment conservation efforts, performing environment-friendly
business activities.
Consolidated forecast for the fiscal year 2007 is as follows:
Net sales: 405,000 million yen (4.4% up from previous year)
Ordinary income: 78,500 million yen (0.1% up from previous year)
Net income: 50,000 million yen (3.5% up from previous year)
Consolidated divisional sales forecast is given below.
Integrated circuits
Discrete semiconductor devices
Passive components
Displays
186,400 million yen
157,100 million yen
24,800 million yen
36,500 million yen
(9.6% up from previous year)
(4.3% up from previous year)
(0.6% down from previous year)
(13.0% down from previous year)
The forecasts are based on the exchange rate of ¥110.00 to US$1.
Distribution of profits for fiscal 2007
In consideration of business performance of the fiscal 2007 ending March 31, 2007, expected demand for
funds, and other factors, the Company plans to pay an interim dividend of ¥45.00 per share and a year-end dividend of ¥45.00 per share to bring the total annual cash dividend to ¥90.00 for the fiscal year 2007. We also
implement agile return-to-shareholder measures at the same time, such as the acquisition of treasury stock,
when agreed at the board meeting in consideration of cash flow conditions.
2. Analysis of Financial Status and Operating Results
(1) Business Performance Report
The sales for the fiscal year ended on March 31, 2006 were ¥387,790 million yen, up 5.1% over the previous
year. However, because the sales price per product lowered and the expenses and operational cost related to
the new introduction of manufacturing processes and the relocation of production increased, the ratio of gross
profit to sales deteriorated 2.9 points. Because of increase in R&D cost, patent royalties payable, commission fees payable such as license application fees, and labor cost, selling, general and administrative expenses
rose ¥4,118 million over previous year, resulting in the operating income of ¥68,318 million, down 10.2%
from previous year.
Concerning the non-operating income and expenses, the income increased to ¥10,118 million over previous year,
when the gain was ¥3,265 million. This increase is attributed mainly to an increased exchange profit due to
exchange fluctuations of ¥4,134 million.
As a result of these conditions, the ordinary income amounted to ¥78,437 million, down 1.1% from previous year.
For the extraordinary gain and loss, a loss of ¥4,579 million occurred, a reduction from previous year when the loss
was ¥8,478 million yen. This reduction is attributed mainly to the reduction of losses associated with early retirements, which was a factor of increase in the income before income taxes and minority interest.
As a result of these conditions, the current net income increased 7.0% over previous year to ¥48,304 million.
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ROHM CO., LTD.
(2) Financial Position
As of March 31, 2006, total assets amounted to ¥951.441 billion, up ¥84.119 billion over March 31, 2005.
The major increase factors of this result are that cash and bank deposits increased ¥40.571 billion, inventories
increased ¥18.688 billion, and tangible fixed assets increased ¥29.504 billion because mainly of investment in
300 mm wafer process facilities.
The liabilities increased ¥36.271 billion from March 31, 2005 to ¥163.923 billion. The major increase factors of this result are that the reserved profits of subsidiaries located outside Japan expanded, increasing the
deferred tax liability (fixed) ¥16.145 billion, that accrued income taxes increased ¥7.139 billion, and that
notes and accounts payable increased ¥5.469 billion.
The shareholders’ equity increased ¥47.885 billion over previous year to ¥787.214 billion. The increase factors of this result are that the retained earnings increased ¥38.071 billion and that equity adjustment from foreign currency translation increased ¥20.987 billion. A decrease factor of this result is an increase in treasury
stock of ¥15.128 billion.
The status of cash flow for the fiscal year ended March 31, 2006 is as follows:
The cash flows from operating activities increased ¥2.629 billion over the previous year. The major factors
of this result are that the allowance for depreciation increased ¥9.59 billion and that inventories increased
¥9.022 billion.
The cash flows from investing activities decreased ¥7.903 billion from the previous year, because mainly of a decrease in the amount of ¥43.473 billion due to fluctuations in the increase and decrease of the time deposits, and of
an increase in the amount of ¥32.595 billion resulting from the acquisition and sale of securities and investment securities.
The cash flows from financing activities increased ¥4.727 billion over previous year mainly because expenses concerned with the acquisition of treasury stocks decreased ¥4.812 billion.
As a result, total cash and cash equivalents decreased ¥8.509 billion, so that the balance for the current year
amounted to ¥280.465 billion.
As the events expected to have a considerable impact on the cash flows for the upcoming year, we plan to spend
¥73.0 billion on capital investment and ¥66.0 billion on depreciation (tangible fixed assets).
Shareholders’ equity ratio, shareholders’ equity ratio on the market value basis and interest coverage ratio for each
of the recent four fiscal years on the consolidated basis are as follows:
Year ended March
31, 2003
Year ended March
31, 2004
Year ended March
31, 2005
Year ended March
31, 2006
Shareholders’ equity ratio
84.0%
84.5%
85.2%
82.7%
Shareholders’ equity ratio
on market value basis
189.5%
188.9%
139.4%
151.0%
Interest coverage ratio
(Computation)
136,959.4
-
-
-
Shareholders’ equity ratio = shareholders’ equity/total assets
Shareholders’ equity ratio on market value basis = aggregate market value of shares/total assets
Interest coverage ratio = cash flows from operating activities/interest expenses
3. Risks Concerning the Company’s Businesses
The following are the risks that may have a great impact on the ROHM Group’s financial status and operating
results:
(1) Risks Associated with Market Changes
The semiconductor industry and electronics component industry are subject to sudden, abrupt changes in market conditions, as set makers may adjust production according to the sales conditions of electronic products and
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ROHM CO., LTD.
competition in prices and technology development with rival companies. Prices are especially susceptible to a
sudden drop according to supply–demand relationship and the pricing strategies of Southeast Asian companies,
which are rapidly growing. Such price changes compose an uncertainty factor in maintaining or increasing
sales and in ensuring profits.
(2) Exchange Risks
The ROHM Group has development bases, manufacturing bases and sales bases around the world. The financial statements prepared in local currencies are translated into Japanese yen to prepare the consolidated financial
statement. Therefore, the gains and losses on the consolidated financial statement may change because of the
exchange rates at the time of translation, even if values are unchanged in local currencies.
The Group produces products in Japan and other Asian countries and sells them in Japan, other Asian countries,
the Americas and Europe. Because different currencies are used between production bases and sales bases, we
are constantly influenced by exchange rate fluctuation. Generally, a strong Japanese yen adversely influences
our business performance, while a weak yen has a favorable influence.
(3) Risks of Product Defects
The Group places the top priority on quality persistently, as stated in the Company Mission, and we produce
products under severe quality control. However, this does not guarantee that we never produce defective
products or that we will never be liable to pay for product losses by a buyer. If a buyer makes a claim for
losses with regard to our products, our business performance may be adversely influenced.
(4) Legal Risks
To manufacture products distinguished by the products of other companies, we develop various new technologies and know-how, and produce and sell products worldwide based on such original technologies. We have a
specializing division that strictly supervises in-house activities to ensure that the technologies and know-how
the Group uses do not infringe the intellectual property rights of other companies, such as patent rights. In addition, to conserve the environment, protect health and ensure safety, we comply with all the relevant laws and
regulations in all the fields we do business in, monitoring gas emissions, drainage, harmful-material utilization
and handling, waste treatment, and soil/underground water pollution. However, we may shoulder legal responsibilities in this respect, because of a difference in views among those concerned or unexpected events, possibly
having an adverse influence on our business performance.
(5) Natural Disasters and Geopolitical Risks
The Group performs development and manufacture activities in Japan and in other countries. As a measure
against natural disasters and geopolitical risks, the Group locates production lines at different bases. However,
our business bases may suffer damage due to earthquakes, typhoons, flooding and other natural disasters, or political uncertainty or international conflict. If these events prevent us supplying products to customers, our
business performance may be influenced.
(6) Other Risks and Corporate Risk Management System
In addition to the above-mentioned risks, there are various risks that may influence our financial status and operating results as we perform business activities, such as logistics risks, material procurement risks, and information system risks. The ROHM Group has an in-house Risk Control Committee to preclude these risks or
minimize their influence, reinforcing the in-house risk management system.
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ROHM CO., LTD.
Consolidated Balance Sheets
Period
Accounts
Fiscal year 2006
Fiscal year 2005
(As of March 31, 2006)
(As of March 31, 2005)
Amount
Amount
Ratio
Millions of yen
%
Millions of yen
Increase/decrease (-)
from the year ended
March 31, 2005
Ratio
Amount
%
Millions of yen
(Assets)
Current assets
Cash and time deposits
310,908
270,337
40,571
Notes and accounts
receivable - trade
102,048
93,078
8,970
Securities
39,174
58,175
Inventories
86,725
68,037
18,688
3,894
3,676
218
17,787
12,138
5,649
Refundable income taxes
1,032
1,645
Other
7,257
6,494
Prepaid pension cost
Deferred tax assets
Allowance for doubtful notes
and accounts
-
Total current assets
717
568,111
59.7
-
-
613
763
594
512,990
19,001
59.1
123
55,121
Fixed assets
Property, plant and equipment
Buildings and structures
173,011
156,327
16,684
Machinery, equipment and
vehicles
431,447
364,086
67,361
Tools and furniture
35,661
31,391
4,270
Land
67,541
64,582
Construction in progress
21,909
33,181
-
11,272
395,610
-
50,499
Accumulated depreciation
-
Total tangible fixed assets
Intangible fixed assets
446,109
-
2,959
283,462
29.8
253,958
29.3
29,504
2,546
0.3
1,803
0.2
743
Investments and other assets
Investment securities
87,519
89,781
Deferred tax assets
8,056
7,253
803
Other
2,154
1,785
369
Allowance for doubtful
accounts
Total investments and
other assets
-
410
-
-
250
2,262
-
160
-
1,250
97,320
10.2
98,570
11.4
Total fixed assets
383,329
40.3
354,332
40.9
28,997
Total assets
951,441
100.0
867,322
100.0
84,119
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ROHM CO., LTD.
Period
Accounts
Fiscal year 2006
Fiscal year 2005
(As of March 31, 2006)
(As of March 31, 2005)
Amount
Amount
Ratio
Millions of yen
%
Increase/decrease (-)
from the year ended
March 31, 2005
Ratio
Millions of yen
Amount
%
Millions of yen
(Liabilities)
Current liabilities
Notes and accounts
payable - trade
27,622
22,153
5,469
Other accounts payable
47,109
42,260
4,849
Accrued income taxes
16,012
8,873
7,139
Deferred tax liabilities
Other
Total current liabilities
538
477
61
14,495
12,199
2,296
105,778
11.2
85,964
10.0
19,814
Long-term liabilities
Deferred tax liabilities
55,041
38,896
16,145
Liability for retirement
benefits
989
805
184
2,069
1,986
83
44
-
44
Allowance for directors'
retirement benefits
Other
Total long-term liabilities
Total liabilities
58,144
6.1
41,688
4.8
16,456
163,923
17.3
127,652
14.8
36,271
303
0.0
340
0.0
(Minority interests)
Minority interests
-
37
(Shareholders' equity)
Common stock
86,969
9.1
86,969
10.0
-
Capital surplus
102,403
10.8
102,403
11.8
-
Retained earnings
639,760
67.2
601,689
69.4
38,071
6,524
0.7
2,569
0.3
3,955
3.9
20,987
Net unrealized gain on
available-for-sale securities
Foreign currency
translation adjustments
-
Treasury stock - at cost
-
13,074
-
35,369
-
1.4
-
3.7
-
34,061
-
20,241
-
2.4
-
15,128
Total shareholders' equity
787,214
82.7
739,329
85.2
47,885
Total liabilities, minority
interests and shareholders' equity
951,441
100.0
867,322
100.0
84,119
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ROHM CO., LTD.
Consolidated Statements of Income
Period
Fiscal year 2006
Fiscal year 2005
From April 1, 2005
From April 1, 2004
To March 31, 2006
Accounts
Amount
Increase/decrease (-)
from the year ended
March 31, 2005
To March 31, 2005
Percentage
Millions of yen
%
Amount
Percentage
Millions of yen
Amount
%
Millions of yen
Net sales
387,790
100.0
369,023
100.0
18,767
Cost of sales
243,516
62.8
221,132
59.9
22,384
Gross profit
144,273
37.2
147,891
40.1
Selling, general and
administrative expenses
75,954
19.6
71,836
19.5
Operating income
68,318
17.6
76,054
20.6
Non-operating income
12,157
3.1
4,767
1.3
7,390
2,039
0.5
1,501
0.4
538
78,437
20.2
79,320
21.5
Extraordinary gains
248
0.0
21
0.0
Extraordinary losses
4,827
1.2
8,500
2.3
Income before income taxes
and minority interests
73,857
19.0
70,841
19.2
3,016
Income taxes - current
25,297
6.5
20,975
5.7
4,322
192
0.0
4,691
1.3
63
0.0
40
0.0
23
48,304
12.5
45,135
12.2
3,169
Non-operating expenses
Ordinary income
Income taxes - deferred
Minority interests
Net income
- 14-
-
3,618
4,118
-
-
7,736
883
227
-
-
3,673
4,499
ROHM CO., LTD.
Consolidated Statements of Retained Earnings
Period
Accounts
Fiscal year 2006
Fiscal year 2005
From April 1, 2005
From April 1, 2004
To March 31, 2006
To March 31, 2005
Amount
Amount
Increase/decrease (-)
from the year ended
March 31, 2005
Amount
Millions of yen
Millions of yen
Millions of yen
Capital surplus at beginning of year
102,403
102,403
-
Capital surplus at end of year
102,403
102,403
-
601,689
566,749
34,940
48,304
45,135
3,169
10,181
10,096
51
91
-
40
0
7
-
7
639,760
601,689
(Capital surplus)
(Retained earnings)
Retained earnings at beginning of year
Increase in retained earnings
Net income
Decrease in retained earnings
Cash dividends
Bonuses to directors
Reserve for employees' welfare fund
Retained earnings at end of year
- 15 -
85
38,071
ROHM CO., LTD.
Consolidated Statements of Cash Flows
Period
Accounts
I
Fiscal year 2006
Fiscal year 2005
From April 1, 2005
To March 31, 2006
Amount
From April 1, 2004
To March 31, 2005
Amount
Amount
Millions of yen
Millions of yen
Millions of yen
Operating Activities
1. Income before income taxes and minority interests
73,857
70,841
3,016
2. Depreciation and amortization
57,032
47,442
668
-
708
9,590
3. Amortization of goodwill - net
-
40
4. Interest and dividends income
-
6,283
-
3,318
-
2,965
-
8,996
-
1,320
-
7,676
-
106
-
6,003
5. Foreign currency exchange losses (- gains) - net
6. Increase (- decrease) in net liability for retirement
benefits
7. Write-down of investment securities
8. Decrease (- increase) in notes and accounts
receivables - trade
9. Decrease (- increase) in inventories
10. Increase (- decrease) in notes and accounts
payables - trade
11. Other - net
283
-
275
-
5,421
716
-
6,137
-
14,274
-
5,252
-
9,022
5,072
-
1,630
12. Interest and dividends - received
-
Net cash provided by operating activities
Investing Activities
1. Decrease (- increase) in time deposits
2. Purchases of securities and investment securities
3. Proceeds from sales and repayments of securities
and investment securities
4. Purchases of property, plant and equipment
4,494
5,039
-
545
107,465
-
2,123
6,652
3,510
-
1,383
Net cash used in investing activities
III Financing Activities
1. Purchases of treasury stock
17,447
-
94,548
-
27,564
-
36,093
-
3,142
-
1,383
20,440
2,993
91,919
2,629
15,909
-
44,123
5. Other - net
6,702
105,342
13. Compensation for expropriation - received
14. Income taxes - refunded (- paid)
5,897
8
Sub-total
II
Increase/decrease (-)
from the year ended
March 31,2005
-
43,473
56,497
20,404
31,932
12,191
2,686
76,067
-
78,753
269
-
19
95,332
-
87,429
288
-
7,903
-
15,128
-
19,940
2. Dividends paid
-
10,181
-
10,096
-
3. Other - net
-
1
-
1
-
-
25,310
-
30,037
4,727
3,944
13,641
21,603
13,094
Net cash used in financing activities
IV Effect of Exchange Rate Changes on Cash and
Cash Equivalents
V Net Increase (-decrease) in Cash and Cash
Equivalents
17,585
-
8,509
-
4,812
85
0
VI Cash and Cash Equivalents at Beginning of Year
288,974
310,578
-
21,604
VII Cash and Cash Equivalents at End of Year
280,465
288,974
-
8,509
(Note) Breakdown of “Cash and cash equivalents at end of year” is as follows:
Cash and time deposits
Securities
Total cash and cash equivalents
(Fiscal 2006)
277,293 million yen
3,171
280,465
- 16 -
(Fiscal 2005)
267,934 million yen
21,040
288,974
(Increase/decrease)
9,359 million yen
- 17,869
- 8,509
ROHM CO., LTD.
[Basis of Presenting Consolidated Financial Statements]
1. Scope of consolidation
(1) Number of consolidated subsidiaries: 41
(2) Names of consolidated subsidiaries
Consolidated subsidiaries are listed in “Status of the ROHM GROUP.”
2. Application of equity method
(1) Number of unconsolidated subsidiaries accounted for by equity method: 0
(2) Number of associated companies accounted for by equity method: 2
3. Fiscal periods of consolidated subsidiaries
The accounting date of ROHM SEMICONDUCTOR (CHINA) CO., LTD. and four other consolidated subsidiaries is December 31, which differs from that of ROHM CO., LTD. on March 31.
Changes in accounting policies
Concerning the subsidiaries whose fiscal year dates are different from the date of the Group’s consolidated accounting date, the consolidated statement was produced based on the financial results of those
subsidiaries as of their own fiscal year dates in the year ended March 31, 2005 and previous years.
However, from this year, we adopt the method of settling consolidated accounts using the accounts of
these subsidiaries settled provisionally on the consolidated accounting date, to produce a more accurate consolidated financial statement, as their importance has grown.
4. Accounting standards
(1) Valuation basis and method for significant assets
(i) Securities
Marketable securities classified as available-for-sale securities are reported at fair value (based on market
prices on the accounting date, or the like), with unrealized gains and losses directly included in shareholders’ equity. The cost of available-for-sale securities sold is principally determined based on the moving average method. Non-marketable securities are stated at cost determined by the moving average method.
(ii) Inventories
Inventories of ROHM Co., Ltd. are stated principally at cost determined by the average method.
(2) Depreciation of significant tangible fixed assets
Depreciation of tangible fixed assets is computed principally by the declining-balance method, while the
straight-line method is applied to buildings (excluding building improvements) acquired by ROHM Co., Ltd. or
its domestic consolidated subsidiaries after April 1, 1998.
(3) Accounting for significant allowances
(i) The allowance for doubtful accounts is provided at an estimated amount of the past actual ratio of losses on
bad debts. Certain allowance is provided for estimated uncollectible receivables.
(ii) Liability for retirement benefits is stated at the amount calculated based on the retirement benefit obligation
and the fair value of the plan assets at the end of the current fiscal year.
(iii) For ROHM Co., Ltd. and certain domestic consolidated subsidiaries, retirement benefits to directors and
corporate auditors are provided at the amount that would be required if all directors and corporate auditors
retired at the accounting date based on the internal rules.
(4) Basis for translation of significant foreign currency assets and liabilities
Monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the
current exchange rates at the accounting date. The foreign exchange gains and losses from translation are recognized in the income statement to the extent that they are not hedged by forward exchange contracts.
The balance sheet accounts of the overseas consolidated subsidiaries and the like are translated into Japanese
yen at the current exchange rates as of the accounting dates of such subsidiaries and the like. Revenue and expense accounts of the overseas subsidiaries and the like are translated into Japanese yen at the average annual
exchange rates. Differences arising from such translation are included in “Minority Interests,” as well as “Foreign currency translation adjustments” in a separate component of shareholders’ equity.
(5) Significant lease transactions
Finance lease transactions, other than those that are deemed to transfer ownership of the leased property to the
lessee, are accounted for as operating lease transactions.
(6) Significant hedge accounting
Foreign exchange forward contracts are used for hedge accounting.
(7) Others
Consumption tax
All transactions are recorded net of consumption taxes.
- 17 -
ROHM CO., LTD.
5. Evaluation of assets and liabilities of consolidated subsidiaries
The market value method is adopted.
6. Amortization of goodwill
Goodwill is amortized over a period of five years, unless deemed immaterial.
7. Appropriation of retained earnings
The Company has prepared the Consolidated Statements of Retained Earnings based on the appropriations of retained earnings determined during the year under review.
8. Cash and cash equivalents in consolidated statements of cash flows
Cash and cash equivalents consist of cash on hand, cash in banks that can be withdrawn at any time, and shortterm investments with a maturity of three months or less when purchased, which can easily be converted to cash
and are subject to little risk of change in value.
[Notes]
(Notes to Consolidated Statements of Income)
Year ended
Mar. 31, 2006
Year ended
Mar. 31, 2005
1. Non-operating income
Interest income
Foreign currency exchange gains
6,229 million yen
4,466
3,275 million yen
332
2. Extraordinary loss
Loss on sale/disposal of fixed assets
Loss on early retirement
2,896
1,931
565
7,934
- 18 -
ROHM CO., LTD.
[Segment information]
1. Industry segments
The Group’s main operations are the manufacturing and sales of electronic components. As net sales, operating
income and total assets of the Group’s main industry segment constituted more than 90% of the consolidated totals
for the years ended March 31, 2005 and 2006, consequently the disclosure of industry segment information has
been omitted.
2. Geographical segments
Fiscal 2006 (From April 1, 2005 to March 31, 2006)
I Sales and operating income/loss
Sales
(1) Sales to customers
(2) Inter-area transfer
Total sales
Operating expenses
Operating income (- loss)
II Assets
Japan
Asia
Americas
156,654
55,502
212,156
198,189
13,967
450,558
199,217
136,862
336,080
275,928
60,151
315,025
13,525
386
13,911
15,062
− 1,151
14,782
Europe
Total
18,393
302
18,695
19,162
−
467
16,042
387,790
193,053
580,843
508,343
72,500
796,408
Fiscal 2005 (From April 1, 2004 to March 31, 2005)
Japan
Asia
Americas
Europe
Total
(Millions of yen)
EliminaConsolitions/
dated
Corporate
−
( 193,053)
( 193,053)
( 188,872)
( 4,181)
155,032
387,790
−
387,790
319,471
68,318
951,441
(Millions of yen)
EliminaConsolitions/
dated
Corporate
I Sales and operating income/loss
Sales
(1) Sales to customers
162,816
172,729
13,111
20,366
369,023
369,023
−
(2) Inter-area transfer
58,288
115,210
219
874
174,592 ( 174,592)
−
Total sales
221,104
287,939
13,331
21,240
543,615 ( 174,592)
369,023
Operating expenses
188,002
243,004
14,343
21,164
466,515 ( 173,545)
292,969
Operating income (- loss)
33,102
44,935 − 1,012
75
77,100 ( 1,046)
76,054
II Assets
364,147
293,782
30,346
16,789
705,066
162,256
867,322
(Notes) 1. Countries and areas are segmented based on their geographical proximity.
2. Major countries and areas that belong to segments other than Japan are as follows:
Asia
: China, Singapore, Taiwan
Americas : The United States
Europe : Germany
3. Unallocable operating expenses included in “Eliminations (Corporate)” are shown below. Unallocable operating expenses consist primarily of expenses relating to the administrative division of the headquarters of the Company.
Fiscal 2006
5,896
million yen
Fiscal 2005
3,766
4. Total Group assets included in “Eliminations (Corporate)” are shown below. Total Group assets consist primarily of
surplus funds for investment (cash, deposits and securities), long-term investment funds (investment securities), and assets relating to the administrative division of the headquarters of the Company.
Fiscal 2006
230,956
million yen
Fiscal 2005
243,425
3. Sales to foreign customers
Fiscal 2006 (From April 1, 2005 to March 31, 2006)
Asia
I
Sales to foreign customers
200,100
Americas
Europe
15,138
16,282
II Net sales
III Sales to foreign customers as a percentage of net sales
(Millions of yen)
Total
231,521
387,790
51.6%
3.9 %
- 19 -
4.2 %
59.7 %
ROHM CO., LTD.
Fiscal 2005 (From April 1, 2004 to March 31, 2005)
Asia
I
Sales to foreign customers
174,159
Americas
Europe
13,990
19,021
II Net sales
(Millions of yen)
Total
207,171
369,023
III Sales to foreign customers as a per47.2%
3.8 %
5.1 %
56.1 %
centage of net sales
(Notes) 1. Countries and areas are segmented based on their geographical proximity.
2. Major countries and areas which belong to segments other than Japan are as follows:
Asia
: China, Singapore, Taiwan
Americas : The United States
Europe : Germany
3. Sales to foreign customers consist of export sales of the Company and its domestic consolidated subsidiaries and sales
(other than exports to Japan) of the overseas consolidated subsidiaries.
[Leases]
Finance leases that do not transfer ownership of the leased property to the lessee
1. Pro forma information of the acquisition cost, accumulated depreciation and net book value of the leased property
Year ended
Mar. 31, 2006
Machinery,
equipment and
vehicles
43 million yen
25
18
Acquisition cost
Accumulated depreciation
Net leased property
Year ended
Mar. 31, 2005
Machinery,
equipment and
vehicles
52 million yen
25
27
2. Pro forma obligations under finance leases
Due within 1 year
Due after 1 year
Total
12
6
18
14
13
27
17
17
19
19
3. Lease payments and depreciation of the leased property
Lease payments
Depreciation
4. Depreciation of leased property is calculated by the straight-line method over the respective lease terms regarded
as being the useful life, with the residual value of zero.
5. Acquisition cost and the pro forma obligations under finance leases presented above are calculated prior to the deduction of portions attributable to interest expense, as the year-end balance of the obligations accounts for only a
small percentage of the year-end tangible fixed assets.
[Related party transactions]
Fiscal 2006 (From April 1, 2005 to March 31, 2006)
Directors and major individual shareholders
Category
Directors and
their close
relatives
Name
Ken Sato
Relationship
Concurrent
Business
relations
post
−
−
Capital/
equity
Address
million yen
−
−
Amount of
transactions
Transactions
Donation to the ROHM
Music Foundation
- 20 -
million yen
100
Business/occupation
yPresident, ROHM
CO., LTD.
yChairman, ROHM
Music Foundation
Percentage
of voting
right held
2.1%
(directly)
Account
Year-end
balance
−
million yen
−
ROHM CO., LTD.
Fiscal 2005 (From April 1, 2004 to March 31, 2005)
Directors and major individual shareholders
Category
Directors and
their close
relatives
Name
Relationship
Concurrent
Business
post
relations
−
million yen
−
−
Ken Sato
−
Capital/
equity
Address
yPresident, ROHM
CO., LTD.
yChairman, ROHM
Music Foundation
Amount of
transactions
Transactions
Donation to the ROHM
Music Foundation
Percentage
of voting
right held
Business/occupation
million yen
100
2.1%
(directly)
Account
Year-end
balance
−
million yen
−
[Tax effect accounting]
1. Deferred tax assets and deferred tax liabilities by main source
Deferred tax assets
Securities
Inventories
Depreciation
Accrued enterprise tax
Accrued expenses
Liability for retirement benefits
Foreign tax credit
Other
Deferred tax assets subtotal
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Undistributed earnings of
foreign subsidiaries
Prepaid pension cost
Other
Total deferred tax liabilities
Net deferred tax assets (- liabilities)
−
Year ended
Mar. 31, 2006
Year ended
Mar. 31, 2005
467 million yen
8,685
11,563
350
1,997
14
6,525
7,068
36,674
1,469
35,204
428 million yen
7,645
11,526
935
1,553
22
1,277
7,508
30,898
1,053
29,844
−
−
58,689
−
46,069
−
−
−
1,511
4,739
64,941
−
−
−
1,492
2,264
49,825
−
29,736
−
19,981
(Note) Net deferred tax assets (-liabilities) as of March 31, 2005 and 2006 are included in the following accounts in the consolidated balance sheets:
Year ended
Year ended
Mar. 31, 2006
Mar. 31, 2005
Current assets - Deferred tax assets
17,787 million yen
12,138 million yen
Fixed assets - Deferred tax assets
8,056
7,253
Current liabilities - Deferred tax liabilities
−
538
−
477
Long-term liabilities - Deferred tax liabilities
− 55,041
− 38,896
2. A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statements of income
Year ended
Year ended
Mar. 31, 2006
Mar. 31, 2005
Normal effective statutory tax rate
40.6 %
40.6 %
(Adjustments)
Lower income tax rates applicable to income in certain foreign countries
−
3.0
−
3.0
Tax credit for research and development
expenses
−
2.7
−
2.5
−
0.4
34.5%
Other - net
Actual effective tax rates
- 21 -
1.1
36.2%
ROHM CO., LTD.
[Debt and equity securities]
Fiscal 2006 (From April 1, 2005 to March 31, 2006)
1. Marketable available-for-sale securities
Classification
(Millions of yen)
Differences
Acquisition costs
Carrying values
7,912
19,627
11,714
11,820
19,733
11,828
31,456
8
11,722
1,000
955
−
44
17,472
16,961
−
511
72,479
90,951
110,685
72,231
90,148
121,604
−
−
247
803
10,919
Securities whose carrying value exceeds their
acquisition cost
(1) Equity securities
(2) Government and corporate bonds
Corporate bonds
Sub-total
Securities whose carrying value does not exceed their acquisition cost
(1) Equity securities
(2) Government and corporate bonds
Government bonds, local government bonds
etc.
Corporate bonds
Sub-total
Total
2. Available-for-sale securities sold in the year ended March 31, 2006
Proceeds from sales
22,892
Gross realized gains
36
(Millions of yen)
Gross realized losses
150
3. Major securities whose fair value is not readily determinable, and their carrying values
Available-for-sale securities
Classification
(1) Unlisted equity securities
(2) Unlisted foreign corporate bonds
(3) Overseas negotiable certificates of deposit
(Millions of yen)
Carrying values
1,053
856
3,171
5,082
Total
4. Carrying values of debt securities by contractual maturities for securities classified as available-for-sale
Classification
(1) Government and corporate bonds
Government bonds, local government
bonds etc.
Corporate bonds
(2) Other
Total
(Millions of yen)
Due after 5 year
through 10 years
Due in 1 year or less
Due after 1 year
through 5 years
3,862
12,409
1,176
32,100
3,171
39,134
51,800
64,209
856
2,032
- 22 -
ROHM CO., LTD.
Fiscal 2005 (From April 1, 2004 to March 31, 2005)
1. Marketable available-for-sale securities
Classification
(Millions of yen)
Differences
Acquisition costs
Carrying values
2,840
8,079
5,238
2,477
2,497
20
53,863
21,005
80,186
53,959
21,040
85,577
96
34
5,390
5,069
4,379
−
689
13,189
12,957
−
231
43,662
61,921
142,108
43,613
60,950
146,528
−
−
48
970
4,420
Securities whose carrying value exceeds their
acquisition cost
(1) Equity securities
(2) Government and corporate bonds
Government bonds, local government bonds
etc.
Corporate bonds
(3) Other
Sub-total
Securities whose carrying value does not exceed their acquisition cost
(1) Equity securities
(2) Government and corporate bonds
Government bonds, local government bonds
etc.
Corporate bonds
Sub-total
Total
2. Available-for-sale securities sold in the year ended March 31, 2005
Proceeds from sales
204
Gross realized gains
149
(Millions of yen)
Gross realized losses
-
3. Major securities whose fair value is not readily determinable, and their carrying values
Available-for-sale securities
Classification
(1) Unlisted equity securities
(2) Unlisted foreign corporate bonds
Total
(Millions of yen)
Carrying values
1,006
416
1,422
4. Carrying values of debt securities by contractual maturities for securities classified as available-for-sale
Classification
Government and corporate bonds
Government bonds, local government
bonds etc.
Corporate bonds
Total
Due in 1 year or less
Due after 1 year
through 5 years
(Millions of yen)
Due after 5 year
through 10 years
5,133
9,506
1,074
31,900
37,033
65,600
75,106
1,074
- 23 -
ROHM CO., LTD.
[Derivatives]
Fiscal 2006 (From April 1, 2005 to March 31, 2006)
Currency derivatives
Not disclosed because hedge accounting is adopted.
Fiscal 2005 (From April 1, 2004 to March 31, 2005)
Currency derivatives
Not disclosed because hedge accounting is adopted.
[Retirement benefits]
1. Outline of retirement benefits scheme adopted
ROHM Co., Ltd. and some of its domestic consolidated subsidiaries have defined benefit pension plans, i.e.,
approved retirement annuity plans and lump-sum payment plans, as well as defined contribution pension
plans.
Some consolidated subsidiaries of the Company overseas have defined contribution pension plans in
addition to defined benefit pension plans.
The Company shifted from lump-sum payment plans to approved retirement annuity plans in September
1967. The same shift is under way among its domestic consolidated subsidiaries.
The Company and domestic consolidated subsidiaries replaced corporate defined benefit pension plans with
defined contribution pension plans in March 2005.
2. Liability for employees’ retirement benefits (As of March 31, 2006)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
−
Projected benefit obligation
Fair value of plan assets
Unfunded retirement benefit obligation ((1)+(2))
Unrecognized actuarial loss
Net Liability ((3)+(4))
Prepaid pension cost
Liability for retirement benefits ((5)-(6))
−
−
Year ended
March 31, 2006
17,130 million yen
22,398
5,267
2,362
2,905
3,894
989
−
−
Year ended
March 31, 2005
15,966 million yen
17,004
1,038
1,833
2,871
3,676
805
3. Net periodic benefit cost (From April 1, 2005 to March 31, 2006)
(1)
(2)
(3)
(4)
(5)
(6)
Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Other
Net periodic benefit cost ((1)+(2)+(3)+(4)+(5))
−
Year ended
March 31, 2006
1,641 million yen
346
371
316
427
2,360
−
Year ended
March 31, 2005
1,973 million yen
545
429
756
89
2,935
(Notes) 1.“(5) Other” includes premiums paid for defined contribution pension plans.
2. “Loss on early retirement” is not included in the list above but is accounted for as an extraordinary loss.
Year ended
March 31, 2006
1,931 million yen
Loss on early retirement
Year ended
March 31, 2005
7,934 million yen
4. Assumptions used for calculation
(1) Allocation method of the retirement benefits expected to be paid at the retirement date
(2) Discount rate
(3) Expected rate of return on plan assets
(4) Amortization period of prior service credit
(Amortization from the accrual year by straightline method)
(5) Recognition period of actuarial gain/loss
(Amortization from the year following the accrual year by straight-line method)
- 24 -
Year ended
March 31, 2006
Straight-line method based
on years of service
2.0%
2.0%
Year ended
March 31, 2005
Straight-line method
based on years of service
2.0%
2.0%
10 years
10 years
10 years
10 years
ROHM CO., LTD.
Production, Orders Received and Sales
1. Actual production
(Millions of yen)
Period
Fiscal 2006
Fiscal 2005
From April 1, 2005
To March 31, 2006
From April 1, 2004
To March 31, 2005
Increase/Decrease (−)
Integrated circuits
175,534
158,675
16,859
Discrete semiconductor devices
154,555
145,218
9,337
Passive components
25,695
23,365
2,330
Displays
44,929
43,811
1,118
400,715
371,070
29,645
Electronic
Components
Product category
Total
Electronic
Components
(Notes) 1. The amounts above are calculated based on the average sales prices for each accounting period and are exclusive of
consumption tax and the like.
2. Major products included in each category are as follows:
Product category
Major products
Integrated circuits
Monolithic ICs, Power Modules, Photo Link Modules
Discrete semiconductor devices
Transistors, Diodes, Light Emitting Diodes, Laser Diodes
Passive components
Resistors, Capacitors
Liquid Crystal Displays, Thermal Heads, Image Sensor Heads, LED Displays, Camera
Modules, Others
Displays
- 25 -
ROHM CO., LTD.
2. Orders
(Millions of yen)
Period
Fiscal 2005
From April 1, 2005
To March 31, 2006
From April 1, 2004
To March 31, 2005
Increase/Decrease (−)
Orders
received
Order
backlog
Orders
received
Order
backlog
Orders
received
Order
backlog
Integrated circuits
174,956
27,500
156,647
22,631
18,309
4,869
Discrete semiconductor devices
155,785
25,201
140,853
20,053
14,932
5,148
Passive components
25,866
3,862
23,087
2,993
2,779
869
Displays
42,296
8,334
44,648
8,106
− 2,352
228
398,905
64,900
366,326
53,784
33,669
11,116
Product category
Electronic
Components
Fiscal 2006
Total
3. Actual sales
Actual sales by product category (domestic)
Period
Electronic
Components
Fiscal 2005
From April 1, 2005
To March 31, 2006
From April 1, 2004
To March 31, 2005
Sales
Product category
Domestic
ratio
Sales
Increase/Decrease (−)
Domestic
ratio
Sales
Increase/
Decrease
ratio
Integrated circuits
82,977
48.8%
81,750
51.4%
Discrete semiconductor devices
51,840
34.4
53,345
37.6
− 1,505
−
7,558
30.2
8,446
35.8
−
888
− 10.5
13,891
33.0
18,308
41.0
− 4,417
− 24.1
156,268
40.3
161,852
43.9
− 5,584
−
Passive components
Displays
Total
Actual sales by product category (overseas)
Period
1,227
1.5%
2.8
3.5
(Millions of yen)
Fiscal 2006
Fiscal 2005
From April 1, 2005
To March 31, 2006
From April 1, 2004
To March 31, 2005
Sales
Product category
Electronic
Components
(Millions of yen)
Fiscal 2006
Overseas
ratio
Sales
Overseas
ratio
Increase/Decrease (−)
Sales
Integrated circuits
87,109
51.2%
77,271
48.6%
Discrete semiconductor devices
98,795
65.6
88,441
62.4
10,354
11.7
Passive components
17,439
69.8
15,163
64.2
2,276
15.0
Displays
28,176
67.0
26,294
59.0
1,882
7.2
231,521
59.7
207,171
56.1
24,350
11.8
Total
- 26 -
9,838
Increase/
Decrease
ratio
12.7%
ROHM CO., LTD.
Actual sales by product category (total)
Period
Fiscal 2005
From April 1, 2005
To March 31, 2006
Sales as a
Sales
percentage
of net sales
From April 1, 2004
To March 31, 2005
Sales as a
Sales
percentage
of net sales
Increase/Decrease (−)
Integrated circuits
170,087
43.9%
159,022
43.1%
11,065
7.0%
Discrete semiconductor devices
150,636
38.8
141,787
38.4
8,849
6.2
Passive components
24,998
6.4
23,610
6.4
1,388
5.9
Displays
42,068
10.9
44,603
12.1
− 2,535
387,790
100.0
369,023
100.0
18,767
Product category
Electronic
Components
(Millions of yen)
Fiscal 2006
Total
- 27 -
Sales
Increase/
Decrease
ratio
−
5.7
5.1
Summarized Non-consolidated Financial Statements for Year Ended March 31, 2006
May 11, 2006
Listed Company Name
ROHM CO., LTD.
Stock Exchange Listings Tokyo, Osaka
Code No.: 6963
(URL http://www.rohm.co.jp)
Company representative Title: President
Name: Ken Sato
Contact person
Title: Group General Manager
Name: Eiichi Sasayama
Head Office Location
Kyoto Prefecture
TEL (075) 311 - 2121
Date of Board of Directors meeting for approval of financial statements: May 11, 2006
Scheduled date of commencement of dividend payment: June 30, 2006
Adoption of trading unit system: Yes (1 unit: 100 shares)
Existence of interim dividend system: Yes
Date of general shareholders' meeting: June 29, 2006
1. Business Results for the Year Ended March 31, 2006 (From April 1, 2005 to March 31, 2006)
(1) Results of Operations
(Figures are rounded down to the nearest million yen)
Net sales
Operating income
Ordinary income
Millions of yen
%
Millions of yen
%
Millions of yen
%
Year ended March 31, 2006
360,870
5.4
24,129
4.7
38,035
-25.8
Year ended March 31, 2005
342,450
3.4
23,050
-30.6
51,257
34.1
Basic net income per
share
Net income
Diluted net
income per Return on equity
share
Yen
%
Ordinary
Ordinary income
income to
to net sales
total assets
%
%
Millions of yen
%
Yen
Year ended March 31, 2006
27,238
-31.7
234.91
-
5.3
6.1
10.5
Year ended March 31, 2005
39,872
35.9
336.25
-
7.9
8.4
15.0
(Notes) (i)
Average number of shares outstanding
Year ended Mar. 31, 2006: 115,768,014 shares
Year ended Mar. 31, 2005: 118,561,981 shares
(ii) Change in accounting policies: None
(iii) Percentage (%) shown for Net sales, Operating income, Ordinary income and Net income represents change from the data of the
previous year.
(2) Dividends Information
Total
Ratio of
dividends
Dividends payout dividends to
shareholders’
paid for the
ratio
Year-end
equity
year
Yen Millions of yen
%
%
Annual dividends per share
Interim
Yen
Yen
Year ended March 31, 2006
90.00
45.00
45.00
10,407
38.3
2.0
Year ended March 31, 2005
85.00
42.50
42.50
10,014
25.3
2.0
(3) Financial Position
Total assets
Year ended March 31, 2006
Shareholders' equity ratio
Shareholders' equity
Millions of yen
Millions of yen
630,721
513,433
Year ended March 31, 2005
610,135
507,455
(Notes) (i) Number of shares outstanding at end of year Year ended Mar. 31, 2006: 115,384,269 shares
Year ended Mar. 31, 2005: 116,850,835 shares
(ii) Number of treasury stock at end of year
Year ended Mar. 31, 2006: 3,417,119 shares
Year ended Mar. 31, 2005: 1,950,553 shares
Shareholders' equity per
share
%
Yen
81.4
4,449.39
83.2
4,342.71
2. Business Results Forecast for Fiscal 2007 (From April 1, 2006 to March 31, 2007)
Net sales
Ordinary
income
Millions of yen Millions of yen
Annual dividends per share
Net income
Interim
Millions of yen
Yen
45.00
Interim
192,000
24,000
19,000
Fiscal 2007
378,000
47,000
34,000
-
Year-end
Yen
-
Yen
-
45.00
90.00
(Note) Projected net income per share for the year ending March 31, 2007: 294.67 yen
* The forecast data are based on the information available at the time of release of this report. Therefore, a number of important factors including
changes in business conditions may cause actual results to differ materially from those discussed in the prospective statements.
Refer to page 8-9 of the attached documents for reasons for the forecast and other relevant information.
- 28 -
ROHM CO., LTD.
Non-consolidated Balance Sheets
Period
Accounts
Fiscal year 2006
Fiscal year 2005
(As of March 31, 2006)
(As of March 31, 2005)
Amount
Amount
Ratio
Millions of yen
%
Increase/decrease (-)
from the year ended
March 31, 2005
Ratio
Millions of yen
Amount
%
Millions of yen
(Assets)
Current assets
Cash and time deposits
120,174
106,396
Notes receivable - trade
13,778
1,501
2,031
Accounts receivable - trade
95,323
85,741
Securities
32,190
53,052
Inventories
29,122
22,455
6,667
464
312
152
Deferred tax assets
12,466
7,725
4,741
Sundry receivables
38,599
40,361
-
1,762
9,916
19,244
-
9,328
29
-
29
Prepaid pension cost
Other
Allowance for doubtful
notes and accounts
-
Total current assets
58
339,703
53.9
337,291
-
530
-
20,862
9,582
55.3
2,412
Fixed assets
Property, plant and equipment
Buildings
20,553
21,592
-
1,039
7,959
8,785
-
826
Land
46,093
44,528
1,565
Other
10,136
9,273
863
Total tangible fixed assets
84,742
13.4
84,180
13.8
562
1,635
0.3
893
0.1
742
Machinery and equipment
Intangible fixed assets
Investments and other assets
Investment securities
74,290
79,370
Investment in subsidiaries
and associated companies
59,050
58,955
95
Long-term loans receivable
68,515
43,718
24,797
1,944
5,238
949
746
203
257
146
Deferred tax assets
Other
Allowance for doubtful
accounts
Total investments and
other assets
-
111
-
-
-
5,080
3,294
204,640
32.4
187,771
30.8
16,869
Total fixed assets
291,018
46.1
272,844
44.7
18,174
Total assets
630,721
100.0
610,135
100.0
20,586
- 29 -
ROHM CO., LTD.
Period
Accounts
Fiscal year 2006
Fiscal year 2005
(As of March 31, 2006)
(As of March 31, 2005)
Amount
Millions of yen
Ratio
Amount
Millions of yen
%
Ratio
%
Increase/decrease (-)
from the year ended
March 31, 2005
Amount
Millions of yen
(Liabilities)
Current liabilities
Accounts payable - trade
68,642
63,317
5,325
Other accounts payable
29,540
26,439
3,101
Accrued income taxes
10,445
5,013
5,432
7,098
6,426
672
Other
Total current liabilities
115,727
18.4
101,196
16.6
14,531
Long-term liabilities
Allowance for directors'
retirement benefits
Others
Total long-term liabilities
Total liabilities
1,536
1,483
53
23
-
23
1,560
0.2
1,483
0.2
77
117,287
18.6
102,680
16.8
14,607
86,969
13.8
86,969
14.3
-
(Shareholders' equity)
Common stock
Capital surplus
Capital surplus
97,253
Total Capital surplus
97,253
97,253
15.4
-
97,253
15.9
-
Retained earnings
Legal reserve
2,464
2,464
-
323,227
283,121
40,106
Unappropriated retained
earnings
32,058
55,112
Total retained earnings
357,750
56.7
340,698
55.8
17,052
6,830
1.1
2,775
0.5
4,055
General reserve
Net unrealized gain on
available-for-sale securities
Treasury stock - at cost
-
35,369
-
5.6
-
20,241
-
-
3.3
-
23,054
15,128
Total shareholders' equity
513,433
81.4
507,455
83.2
5,978
Total liabilities and
shareholders' equity
630,721
100.0
610,135
100.0
20,586
- 30 -
ROHM CO., LTD.
Non-consolidated Statements of Income
Period
Accounts
Fiscal year 2006
Fiscal year 2005
From April 1, 2005
From April 1, 2004
To March 31, 2006
To March 31, 2005
Amount
Percentage
Millions of yen
%
Amount
Increase/decrease (-)
from the year ended
March 31, 2005
Percentage
Millions of yen
Amount
%
Millions of yen
Net sales
360,870
100.0
342,450
100.0
18,420
Cost of sales
277,506
76.9
263,875
77.1
13,631
Gross profit
83,363
23.1
78,575
22.9
4,788
Selling, general and
administrative expenses
59,234
16.4
55,524
16.2
3,710
Operating income
24,129
6.7
23,050
6.7
1,079
Non-operating income
15,601
4.3
29,409
8.6
1,695
0.5
1,202
0.3
38,035
10.5
51,257
15.0
-
13,222
Extraordinary gains
479
0.1
743
0.2
-
264
Extraordinary losses
537
0.1
278
0.1
37,977
10.5
51,723
15.1
Non-operating expenses
Ordinary income
Income before income taxes
Income taxes - current
14,956
Income taxes - deferred
-
4,218
-
493
259
-
13,746
4.2
11,218
3.3
632
0.2
-
4,850
7.5
39,872
11.6
-
12,634
-
10,254
27,238
Unappropriated retained
earnings brought forward from
the previous year
10,034
20,288
5,214
5,048
32,058
55,112
Unappropriated retained earnings
13,808
1.2
Net income
Interim dividends
-
3,738
166
-
23,054
Statements of Appropriation of Retained Earnings
Period
Accounts
Fiscal year 2006
Fiscal year 2005
From April 1, 2005
From April 1, 2004
To March 31, 2006
To March 31, 2005
Millions of yen
Unappropriated retained earnings
Increase/decrease (-)
Millions of yen
Millions of yen
32,058
55,112
5,192
4,966
226
43
5
38
7
6
1
16,800
40,100
-
23,300
10,014
10,034
-
20
-
23,054
Appropriation of retained earnings
Cash dividends
Bonuses to directors
Voluntary reserve
Reserve for overseas
investment loss
General reserve
Balance to be carried forward
- 31 -
ROHM CO., LTD.
[Significant Accounting Policies]
1. Valuation basis and method for securities
Investment securities in subsidiaries and associated companies are stated at cost determined by the moving average method. Marketable securities classified as available-for-sale securities are reported at fair value (based on
market prices on the accounting date, or the like), with unrealized gains and losses directly included in shareholders’ equity. The cost of available-for-sale securities sold is principally determined based on the moving average
method. Non-marketable securities are stated at cost determined by the moving average method.
2. Valuation basis and method for inventories
Finished products, semi-finished products, raw materials and work in process are stated at cost determined by the
average method. Supplies are stated at cost determined by the last purchase method.
3. Depreciation of fixed assets
(1) Depreciation of tangible fixed assets is computed by the declining-balance method, while the straight-line
method is applied to buildings (excluding building improvements) acquired after April 1, 1998.
(2) Depreciation of intangible fixed assets is computed by the straight-line method.
4. Basis for translation of foreign currency assets and liabilities
Monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the current exchange rates at the accounting date. The foreign exchange gains and losses from translation are recognized in the income statement to the extent that they are not hedged by forward exchange contracts.
5. Accounting for allowances
(1) The allowance for doubtful accounts is provided at an estimated amount of the past actual ratio of losses on bad
debts. Certain allowance is provided for estimated uncollectible receivables.
(2) Liability for retirement benefits is stated at the amount calculated based on the retirement benefit obligation and
the fair value of the plan assets at the end of the current fiscal year.
However, because the fair value of the plan assets exceeded the projected benefit obligation as of the end of the
current fiscal year, the excess is accounted for as “Prepaid pension cost,” resulting in the balance of “Liability
for retirement benefits” being zero.
(3) Retirement benefits to directors and corporate auditors are provided at the amount that would be required if all
directors and corporate auditors retired at the accounting date based on the internal rules.
6. Lease transactions
Finance lease transactions, other than those that are deemed to transfer ownership of the leased property to the lessee, are accounted for as operating lease transactions.
7. Hedge accounting
Foreign exchange forward contracts are used for hedge accounting.
8. Others
Consumption tax
All transactions are recorded net of consumption taxes.
- 32 -
ROHM CO., LTD.
[Notes]
(Notes to non-consolidated balance sheets)
Accumulated depreciation of tangible fixed assets
Year ended
Mar. 31, 2006
110,921 million yen
Year ended
Mar. 31, 2005
106,791 million yen
(Notes to non-consolidated statements of income)
1. Non-operating income
Interest income (including interest on securities)
Dividend income
Foreign currency exchange gains
Year ended
Mar. 31, 2006
Year ended
Mar. 31, 2005
2,109 million yen
1,616 million yen
6,859
3,919
23,909
1,101
2. Extraordinary gain
Gain on sale of fixed assets
479
743
3. Extraordinary loss
Loss on sale/disposal of fixed assets
537
278
[Leases]
Finance leases that do not transfer ownership of the leased property to the lessee
1. Pro forma information of the acquisition cost, accumulated depreciation and net book value of the leased property
Acquisition cost
Accumulated depreciation
Net leased property
Year ended
Mar. 31, 2006
Other in tangible fixed
assets
40 million yen
22
17
Year ended
Mar. 31, 2005
Other in tangible fixed
assets
48 million yen
23
24
2. Pro forma obligations under finance leases
Due within 1 year
Due after 1 year
Total
11
6
17
12
12
24
16
16
16
16
3. Lease payments and depreciation of the leased property
Lease payments
Depreciation
4. Depreciation of leased property is calculated by the straight-line method over the respective lease terms regarded
as being the useful life, with the residual value of zero.
5. Acquisition cost and the pro forma obligations under finance leases presented above are calculated prior to the deduction of portions attributable to interest expense, as the year-end balance of the obligation accounts for only a
small percentage of the year-end tangible fixed assets.
- 33 -
ROHM CO., LTD.
[Tax effect accounting]
1. Deferred tax assets and deferred tax liabilities by main source
Deferred tax assets
Securities
Inventories
Depreciation
Accrued enterprise tax
Accrued expenses
Other
Total
Deferred tax liabilities
Prepaid pension cost
Net unrealized gain on availablefor-sale securities
Other
Total
−
Year ended
Mar. 31, 2006
Year ended
Mar. 31, 2005
462 million yen
5,791
5,305
99
1,515
6,113
19,287
497 million yen
4,657
5,725
857
1,044
2,221
15,003
−
188
127
− 4,668
− 1,896
−
19
− 4,876
−
15
− 2,039
14,411
12,964
Net deferred tax assets
2. A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the
statement of Income
Normal effective statutory tax rate
(Adjustments)
Income not taxable for income tax purposes
Foreign tax credit
Tax credit for research and development
expenses
Other
Actual effective tax rate after application
of tax effect accounting
Year ended
Mar. 31, 2006
40.6%
Year ended
Mar. 31, 2005
40.6%
−
5.9
−
10.0
−
0.8
−
4.6
−
5.2
−
−
3.4
0.4
0.3
28.3%
22.9%
- 34 -
ROHM CO., LTD.
Changes in Directors
(Effective June 29, 2006)
1. Changes in Representative Directors
None
2. Changes in Other Directors
New director candidate
Osamu Hattori, Director, General Manager of Asia Sales Headquarters and Euro-American Sales Headquarters
(currently General Manager of Asia Sales Headquarters and Euro-American Sales Headquarters)
- 35 -