Results for the year ended March 2009 1 Contents Ⅰ．Preface Ⅰ．Preface Ⅱ． Ⅱ． FY08 FY08 result result Ⅲ．Be Ⅲ．Beprepared preparedfor forthe theexpansion expansionafter afterFY10 FY10 １．Macro １．Macroenvironment environmentreview review ２．Break-even ２．Break-evenpoint pointreduction reduction ３．Sales ３．Salesorder orderexpansion expansion ４．New ４．Newtechnologies technologies&&new newproducts productsdevelopments developments 2 Ⅰ．Preface Financial crisis accelerates and the world becomes flat in a distorted way The society becomes flat Main player in the markets changes ＜Japan, USA, Europe ⇒ Newly Emerging countries＞ Flattening world is accelerating these markets Highly networked system Component demand with high accuracy & advanced function Inexpensive consumer terminal Price destruction at mass components 3 Ⅰ．Preface Highly networked system Product development with high accuracy & advanced function Inexpensive consumer terminal Development of ultra inexpensive mass production NDK will maintain continuous R&D expense ＆ Hugh impairment loss makes NDK adaptable to price destruction NDK will be the leader of crystal device in the next 30 years 4 Ⅱ．FY08 result ➢ The heavy loss could be attributed to the following reasons ; １．Decrease in sales volume at the main applications ２．Decrease in sales price and material cost hovering at a high level ３．22 billion yen of extraordinary loss and unrealized loss incurred mainly by machinery & equipment impairment and ending inventory evaluation Sales (Million yen) Net Sales Operating Income Ordinary Income Net Income 100,000 78,098 73,307 80,000 63,642 60,696 59,170 60,000 40,000 20,000 0 05/3 Net Sales Operating Income Ordinary Income Net Income Operating Income Ratio 06/3 07/3 08/3 Profit (Million yen) 15,000 10,000 5,000 0 ▲ 5,000 ▲ 10,000 ▲ 15,000 ▲ 20,000 ▲ 25,000 ▲ 30,000 ▲ 35,000 09/3 60,696 4,504 4,108 2,615 63,642 5,270 5,183 3,257 73,307 9,427 8,552 4,716 78,098 9,644 9,734 6,504 59,170 ▲ 6,908 ▲ 7,144 ▲ 28,873 7.4% 8.3% 12.9% 12.3% -11.7% 5 Ⅱ．FY08 result Decrease in sales at the main applications Sales (FY06 to FY08) (Unit:Million Yen) 15,000 （Mobile Communications） （Audiovisual/Office Automation） （Fixed Radio Communications） 10,000 （Automotive Electronics） （Others） 5,000 0 FY06 1H FY06 2H FY07 1H FY07 2H FY08 1H FY08 2H Steep decrease in sales at the main applications, i.e. “Mobile Communications”, “Audiovisual/Office Automation” & “Automotive Electronics” in the 2nd half of FY08. Sales in “Fixed Radio Communications” continued to rise. 6 Ⅱ．FY08 result Impairment loss, unrealized loss and loss due to reduction of tax deferred asset were registered in the 4Q of FY08 when the sales also declined significantly. 25,000 19,167 20,829 17,719 17,621 5,000 0 18,004 ▲ 5,000 13,752 15,000 ▲ 10,000 9,793 10,000 ▲ 15,000 5,000 ▲ 20,000 0 Net Sales Operating Income Ordinary Income Net Income Operating Income Ratio Income(Milion Yen) Sales(Million Yen) 20,000 20,383 Net Sales Operating Income Ordinary Income Net Income ▲ 25,000 2007 1Q 19,167 2,801 2,768 1,781 2Q 20,383 2,895 2,896 2,181 3Q 20,829 2,953 2,956 1,920 4Q 17,719 995 1,114 622 2008 1Q 17,621 776 693 378 2Q 18,004 161 332 320 3Q 13,752 ▲ 972 ▲ 638 ▲ 8,761 4Q 9,793 ▲ 6,873 ▲ 7,531 ▲ 20,810 14.6% 14.2% 14.2% 5.6% 4.4% 0.9% -7.1% -70.2% 7 Ⅲ．Be prepared for the expansion after FY10 １．Macro environment review ２．Break-even point reduction ３. Sales order expansion ４．New technologies & new products development 8 Ⅲ.１．Macro environment review（Exchange rate） 主要国為替レート推移 Trend of Trend exchange rate in main of exchange ratecountries 180 170 yen/€ yen/€ 160 Trend of policy rate in main countries 7% 6% UK 5% 150 yen/US$ 140 4% USA 130 3% 120 Euro 110 2% 100 Japan 1% 90 80 0% -- --- -- --- -- -- --- -- --- -- -- --- -- --- -- -- --- -- --- -- -- --- -- --- -2004 2005 2006 Cheap yen was maintained by lowinterest rate policy 2007 2008 ----- ----- ----- ---- ----- ----- ----- ----- ----- ---- ----- ----- ----2004 2005 2006 2007 2008 2009 Current yen/US$ is at a reasonable level in the light of purchasing power parity. Interest gap among main countries are also diminishing . NDK will change its structure to generate certain profit at the 1$=90 yen level NDK will accelerate production shift to Suzhou/Malaysia where the currencies are linked to US$. 9 Ⅲ.１．Macro environment review（GDP growth rate） GDP growth rate（ IMF forecast） 15% China 10% India ASEAN-5 5% World United States 0% Euro area Japan ▲5% 2006 2007 2008 2009 2010 2011 *2011 was the forecast at Oct 08 GDP growths in Asian countries are relatively steady according to IMF forecast Source：”World economic outlook : Revised Outlook” 16 April,2009 Year 2011forecast is from the World Economic Outlook Database October 2008. 10 Ⅲ.１．Macro environment review（Growing markets） Design-in Growing customers Growing markets (production) (consumption) World Map Russia Eastern Europe Chipset makers, etc Korea Japan China Africa Taiwan India Suzhou Factory Chipset makers, etc High end products ⇒Japan Malaysia Factory Brazil NDK will penetrate into “growing customers” and “growing markets” by actively utilizing Suzhou/Malaysian factories 11 Ⅲ.２．Break-even point reduction（Production restructuring) Mass Products The producion volume ratio between Domestic & Overseas （FY04～FY09） 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 43% 49% 50% 52% 50% NDK will take advantage of strong yen and cheap labors by shifting productions to overseas 45% Domestic Overseas 57% 51% 50% 48% 50% 55% 05/3 06/3 07/3 08/3 09/3 10/3 The labor cost between Suzhou and Malaysia tends to diminish Plan High end products NDK will take advantage o f the technology of domestic factories 12 Ⅲ.２．Break-even point reduction（Cost reduction) （１）Reduction of labor cost Director’s remuneration has been reduced and bonus will be fully unpaid. The employees’ salary has been cut, but the employments will be maintained. （２）Reduction of depreciation More than 5 billion yen has been reduced. （３）Reduction of materials Components and design will be reviewed. （４）Reduction of general expenses 13 Ⅲ.２．Break-even point reduction (Million yen) 80,000 Net Sales Break-even point Fixed cost ratio Variable cost ratio 70% 70,000 65% 60,000 56.1% 50,000 40,000 53.6% 51.9% 52.0% 30,000 20,000 41.9% 40.5% 50.9% 48.8% 45% 40.8% 36.7% 36.7% 0 40% 35% 30% '04/3 Net Sales Variable cost ratio Fixed cost Fixed cost ratio Break-even point Break-even point ratio 55% 50% 50.4% 39.8% 10,000 60% 54.1% '05/3 55,899 60,695 53.6% 52.0% 23,444 24,610 41.9% 40.5% 50,563 51,305 90.5% 84.5% （※）Exclude unrealized loss '10/3 '09/3 (forecast) （※） 63,642 73,307 78,098 59,171 50,000 51.9% 50.4% 50.9% 56.1% 54.1% 25,309 26,896 28,679 28,863 20,405 39.8% 36.7% 36.7% 48.8% 40.8% 52,672 54,280 58,445 65,689 44,418 82.8% 74.0% 74.8% 111.0% 88.8% on ending inventories 4,280 million yen as of March 09 '06/3 '07/3 '08/3 14 Ⅲ.３．Sales order expansion（Trend of production volume) Trend of the production volume of crystal products Slight recovery was expected in 2009 from the lowest 2008 2H as of March 09. At present, much stronger production volume is expected in 2009. （100 Millions of units） 48 50 Simply Divided QIAJ FY09 forecast into half 49 43 40 34 31 合計 39 37 36 36 32 Optical product Crystal filter 30 Clock oscillator Industrial oscillator 20 Consumer crystal unit Crystal unit for auto Tuning fork will grow 10 Quartz crystal tuning fork Industrial crystal unit 0 1H 2H 2005 1H 2H 2006 1H 2H 2007 1H 2H 2008 1H 2H 2009 ( as of March 2009) **“We consider the QIAJ data do not reflect the overall SAW device trend since QIAJ only includes SAW devices whose board material is quartz crystal (In fact, the major material is Lithium niobate). Thus we excluded “SAW devices” . * SAW and OUT-OUT are not included (QIAJ: Quartz Crystal Industry Association of Japan) 15 Ⅲ.３．Sales order expansion（Trend of production value) Trend of the production value of crystal devices & unit price (index) As of March, production value was expected to level off in 2009. At present, higher production value is expected in 2009. 200 100 101 99 （Index） 97 ※Unit index is 100 at 1H 2005 91 83 77 billion yen 150 114 121 126 131 133 76 100 80 79 79 Optical product Crystal filter 65 Simply Divided QIAJ FY09 forecast into half 104 合計 80 65 126 100 Clock oscillator 60 40 50 20 Industrial oscillator Consumer crystal unit Crystal unit for auto Quartz crystal tuning fork Industrial crystal unit Unit price index 0 0 1H 2H 2005 1H 2H 2006 1H 2H 2007 1H 2H 2008 1H 2H (as of March 2009) 2009 **“We consider the QIAJ data do not reflect the overall SAW device trend since QIAJ only includes SAW devices whose board material is quartz crystal (In fact, the major material is Lithium niobate). Thus we excluded “SAW devices” . * SAW and OUT-OUT are not included (QIAJ: Quartz Crystal Industry Association of Japan) 16 Ⅲ.３．Sales order expansion（Mobile communications） ➢Production volume of mobile phone in FY09 is expected to be 1.06 billion (Approx. ▲10%, compared to previous year). Production volume of mobile phone (NDK estimate) (Million Units ) (Million Units ) 2,000 116% 105% 105% 106% 120% 1,200 100% 1,000 Crystal devices used for mobile phone additional functions (NDK estimate) 163% 140% 91% 150% 115% 1,500 1,115 1,170 1,060 1,115 1,180 80% 60% 40% 626 0 0% 2007 2008 2009 2010 2011 MobileTV Year on year 400 100% 533 600 500 20% 117% 800 Total 1,000 125% 371 others WiFi GPS 427 265 50% Bluetooth 200 0 0% 2007 2008 2009 2010 2011 Year on year Reference：Navian 17 Ⅲ.３．Sales order expansion（Audio visual/office automation） ➢ Growth in applications such as PC associated equipment and LCD TV are expected in the mid-term. Production volume of audio visual/office automation (NDK estimate) Crystal devices used for audio visual/office automation in volume (NDK estimate) (Million Units ) (Million Units ) 3,500 117% 112% 111% 100% 3,000 111% 120% 2,807 100% 2,537 2,500 2,285 2,283 80% 2,040 2,000 Total 60% 1,500 40% 1,000 Year on year Year on year 20% 500 0 0% 2007 2008 2009 2010 2011 18 Ⅲ.３．Sales order expansion（Automotive） ➢ Automotive sales volume is expected to decrease by 13% in FY09 compared to previous year. Demands for crystal devices per car are assumed to decrease due to increase in inexpensive cars. However, demands for crystal devices are expected to increase from hybrid cars. Sales volume (10 thousand units) 10,000 Sales volume of automotives & demand for crystal products (NDK estimate) 1,083 1,018 963 809 865 6,400 6,150 6,000 5,380 5,750 400 200 0 0 2008 2009 2010 2011 Battery module 800 4,000 2,000 Key ＥＣＵ 1,000 600 2007 Motor control ECU 1,200 8,000 6,500 Crystal demand (million units) Increased crystal demands in hybrid cars are expected in the functions as below Auto sales Crystal demand Battery control ECU Battery monitoring ＥＣＵ Inverter ＤＣＤＣ converter ＥＣＵ for electric driving parts Reference : CSM Worldwidet 19 Ⅲ.３．Sales order expansion（Fixed radio communication） ➢ Outlook for base station demand in FY09 is flat. Demand from optical communications in FY09 is expected to decrease but slightly increase in FY10. Market trend of mobile phone base station Market trend of optical communications devices （shipment volume) Unit：thousand 1,600 （shipment value) Unit： $Bil 14 1,400 12 1,200 LTE 1,000 TD-SCDMA 8 WDM CDMA 6 SONET/SDH GSM 4 800 W-CDMA 600 400 10 2 200 0 0 2007 2008 2009 2010 2011 Reference： EJL Wireless Research 2007 2008 2009 2010 2011 Reference： RHK、Dell`Oro、Infonetics 20 Ⅲ.4．New technologies/products (R&D expenses） (Unit：million yen） 3,000 2,500 R&D expenses R&D expenses ratio against Sales Average of listed manufacturer 6.0% 2,336 2,531 2,310 2,189 2,500 5.0% 2,000 4.0% 1,500 3.0% 1,000 2.0% 500 1.0% 0 0.0% 2,336 2,189 2,310 2,531 10/3 plan 2,500 3.7% 3.0% 3.0% 4.3% 5.0% 3.7% 3.6% 3.6% 3.6% 06/3 R&D expenses R&D expenses ratio against Sales Average of listed manufacturer 07/3 08/3 09/3 NDK will maintain certain R&D expenses for product developments in FY09 to prepare for market recovery after FY10. 21 Ⅲ.４．New technologies/products （Recent achievements） ➢ Achievements of market-leading new products August 2008 Developed an ultra small ( the world’s smallest) low-loss SAW filter for one-segment broadcasting September 2008 Developed a high precision 8-output reference signal source with built-in-OCXO September 2008 Developed a high-performance low phase noise synthesizer January 2009 Developed 2520 size VCXO (the world’s smallest) February 2009 Developed TCXO for GPS equipped with Enable/Disable function 22 Ⅲ.４．New technologies/products （Micro wave synthesizer） 100% share in synthesizer Sales priority in FY09 Relay Relaystations stationsfor fordigital digital terrestrial broadcasting terrestrial broadcasting High functional synthesizer and OCXO allotment unit for terrestrial digital Delivering to major broadcast equipment manufacturers Under develop -ment Develop high freq -ency products Measuring Measuringinstrument instrumentmarket market ・・Standard Standard signal signalgenerator generator ・・Synthesizer Synthesizer for measuring for measuring instruments instruments BBase ase station stationfor fornext next generation PHS generation PHS Synthesizer module for mobile phone base station Delivering to communication device manufacturers Signal generator Synthesizer for measuring instruments For Forbroadcasting broadcastingand andfixed fixed radio communications radio communications Synthesizer for micro wave relay equipment 4～16GHz synthesizer、 complex module, etc 23 Ⅲ.４．New technologies/products (Biosensor） ➢ Immune sensor system using crystal oscillators （product name：NAPiCOS） ➢ Various applications such as immune reaction, biochemistry, molecular biology, clinic, food, & environment will be covered. NAPｉCOS is sold to universities & research institutes QCM Twin sensor Food Foodinspection inspection Simplified immunologic measurement equipment ・Antibacterial agent detection ・Allergy source detection Analysis/clinical Analysis/clinical inspection inspection Medical biosensor Environmental Environmental inspection inspection Heavy metal (in soil) analyzer Bio-sensing measurement system 24 Ⅲ.４．New technologies/products（Wireless transceiver） ➢Crystal technology + Digital signal processing High sensitive interference free weak wireless application ➢ Products that utilize the feature at its maximum Wireless sensor network / Car solution Valve position Alarm value report router Data server M2M center 20mm Car solution Wireless sensor network Internet/intranet web 23mm Mobile web Car alarm for mischief Communication carrier Co-developing with a major firm Various data Factory monitoring system Intelligent keyless In-car monitoring Immobilizer Proposing an interactive key system 25 Ⅲ.４．New technologies/products（Laboratory ATOM） ➢A new building named “Laboratory ATOM” was completed in the site of Sayama factory and started its operation from 8th May 09. ➢ Highly skilled engineers are engaged in the leading R&D regarding next generation frequency control and device selection at this laboratory. 《Laboratory ATOM》 26 Cash flow （Unit：Million yen） 08/3 Income before taxes Depreciation Impairment loss Others Operating cash flows ① Investing cash flows② Free cash flows（①＋②） Financing cash flows Ending balance 9,117 7,786 178 ▲ 3,039 14,042 ▲ 12,435 1,607 ▲ 5,064 11,333 09/3 ▲ 25,423 9,015 16,441 ※ 6,346 6,379 ▲ 11,802 ▲ 5,423 10,063 15,617 10/3 (Forecast) 2,500 3,700 0 2,000 8,200 ▲ 2,850 5,350 ▲ 8,400 12,567 ※Include 4,280 mill yen ending inventory unrealized loss 27 NDK will be well prepared for the expansion from FY10 80,000 70,000 15,000 Net Sales 60,000 10,000 59,170 50,000 50,000 40,000 30,000 +2,000 800 0 Unit : million yen 4.9% （Ratio against Net Sales) 18.0% 600 5.0% 16.7% ▲ 10,000 10,000 30,000 ▲ 15,000 ▲28,873 0 Net Sales Operating Income Ordinary Income Net Income 5,000 ▲ 5,000 Net Income 20,000 (Million yen) others Automobile AV/OA Fixed Radio Communication Mobile Communication 20,000 78,098 400 78,098 9,644 9,734 6,504 09/3 59,170 ▲ 6,908 ▲ 7,144 ▲ 28,873 10/3 (Forecast) 50,000 3,500 2,500 2,000 29.9% 9.4% ▲ 20,000 08/3 33.0% 14.6% 200 6.0% 16.0% 30.0% 18.0% 34.7% 33.8% 30.0% '08/3 ’09/3 10/3 0 Forecast Amid shrinking market size, NDK will realize the cost structure that would secure certain amount of profit and maintain certain market share in FY09. Also with the contribution from newly developed products, NDK will be able to increase profits at the time of sales recovery from FY10. 28 Thank you for your attention. We are grateful for your continuous support. 【Note】 Statements made in this presentation with respect to our current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about our future performance. These statements are based on management’s assumptions and beliefs in light of information currently available to it. We caution that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not rely on the belief that it is our obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Risks and uncertainties that might affect us include, but are not limited to; fluctuation of currency exchange rates, overall supply and customer demand in the industry, product development and production capacities, performance of affiliated companies, and other risks and uncertainties. 29