TDK Corporation
1-13-1, Nihonbashi
Chuo-ku, Tokyo
103-8272 Japan
Contacts;
TDK Corporation(Tokyo)
Corporate Communications Department
+81(3)5201-7102
Michinori Katayama
TDK U.S.A. Corporation
Francis J. Sweeney
+1(516)535-2600
TDK Marketing Europe GmbH
Marco Donadoni
+49(2102)4870
FOR IMMEDIATE RELEASE
TOKYO - January 30, 2006 TDK Corporation today announced its Consolidated business results
prepared in conformity with U.S. generally accepted accounting principles (the "U.S. GAAP")
for the 3rd quarter ("Qtr.") of fiscal year ("FY") 2006, the three months ended December 31, 2005,
and for the nine-month-period from April 1, 2005 through December 31, 2005.
1) Summary
Consolidated results (October 1, 2005 - December 31, 2005)
Term
Item
Net sales
Operating income
Income from
continuing operations
before income taxes
Income from
continuing operations
Net income
Per common share :
Net income / Basic
Net income / Diluted
The 3rd Qtr. of FY2005
The 3rd Qtr. of FY2006
Change
(October 1, 2005 - December 31, 2005) (Oct. 1, 2004 - Dec. 31, 2004)
(Yen millions)
% (U.S.$ thousands) (Yen millions)
% (Yen millions) Change(%)
222,654
21,291
100.0
9.6
1,886,898
180,432
174,218
17,262
100.0
9.9
48,436
4,029
27.8
23.3
22,011
9.9
186,534
17,257
9.9
4,754
27.5
16,568
7.4
140,407
12,748
7.3
3,820
30.0
16,568
7.4
140,407
12,209
7.0
4,359
35.7
Yen 125.31
Yen 125.16
U.S.$ 1.06
U.S.$ 1.06
Yen 92.35
Yen 92.29
Note: As a result of the sale of a subsidiary in "Other electronic components", the operating results of the discontinued
operation is presented as a separate line item in the consolidated statements of income in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". Correspondence figures for the previous period have been reclassified to conform to the
presentation used for the year ended March 31, 2005.
(Sales breakdown)
Term
Product
Electronic materials
and components
Electronic materials
Electronic devices
Recording devices
Other electronic
components
Recording media
Total sales
Overseas sales
The 3rd Qtr. of FY2005
The 3rd Qtr. of FY2006
Change
(October 1, 2005 - December 31, 2005) (Oct. 1, 2004 - Dec. 31, 2004)
(Yen millions)
% (U.S.$ thousands) (Yen millions)
% (Yen millions) Change(%)
192,091
86.3
1,627,890
143,746
82.5
48,345
33.6
47,613
46,979
85,736
21.4
21.1
38.5
403,500
398,127
726,576
43,002
30,571
65,351
24.7
17.5
37.5
4,611
16,408
20,385
10.7
53.7
31.2
11,763
5.3
99,687
4,822
2.8
6,941
143.9
30,563
222,654
179,139
13.7
100.0
80.5
259,008
1,886,898
1,518,127
30,472
174,218
124,932
17.5
100.0
71.7
91
48,436
54,207
0.3
27.8
43.4
Notes:
1. Consolidated results for the 3rd quarter of FY2006 and FY2005 are unaudited by independent accountants.
2. U.S.$1 = Yen 118
3. "Semiconductors & others" and "Recording media & systems" were renamed "Other electronic components"
and "Recording media" from FY 2006 respectively. There were no changes in segment classifications.
1 / 16
Consolidated
9 months Consolidated results
Consolidated results (April 1, 2005 - December 31, 2005)
Term
Item
Net sales
Operating income
Income from
continuing operations
before income taxes
Income from
continuing operations
Net income
Per common share :
Net income / Basic
Net income / Diluted
The nine-month-period of FY2006
(April 1, 2005 - December 31, 2005)
(Yen millions)
%
(U.S.$ thousands)
The nine-monthperiod of FY2005
Change
(Apr. 1, 2004 - Dec. 31, 2004)
(Yen millions)
% (Yen millions) Change(%)
100.0
16.5
81,331
9.2
4,339
9.6
573,041
49,341
100.0
8.6
4,856,280
418,144
491,710
45,002
53,609
9.4
454,314
46,916
9.5
6,693
14.3
38,218
6.7
323,881
33,472
6.8
4,746
14.2
38,234
6.7
324,017
32,078
6.5
6,156
19.2
Yen 289.14
Yen 288.88
U.S.$ 2.45
U.S.$ 2.45
Yen 242.44
Yen 242.28
Note: As a result of the sale of a subsidiary in "Other electronic components", the operating results of the discontinued
operation is presented as a separate line item in the consolidated statements of income in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". Correspondence figures for the previous period have been reclassified to conform to the
presentation used for the year ended March 31, 2005.
(Sales breakdown)
Term
Product
Electronic materials
and components
Electronic materials
Electronic devices
Recording devices
Other electronic
components
Recording media
Total sales
Overseas sales
The nine-month-period of FY2006
(April 1, 2005 - December 31, 2005)
(Yen millions)
%
492,811
86.0
133,702
107,931
226,024
The nine-monthperiod of FY2005
Change
(Apr. 1, 2004 - Dec. 31, 2004)
(Yen millions) Change(%)
(Yen millions)
%
4,176,365
404,832
82.3
87,979
21.7
23.3
18.8
39.5
1,133,068
914,669
1,915,458
134,038
88,082
168,684
27.3
17.9
34.3
(336)
19,849
57,340
-0.3
22.5
34.0
25,154
4.4
213,170
14,028
2.8
11,126
79.3
80,230
573,041
443,444
14.0
100.0
77.4
679,915
4,856,280
3,758,000
86,878
491,710
354,802
17.7
100.0
72.2
(6,648)
81,331
88,642
-7.7
16.5
25.0
(U.S.$ thousands)
Notes:
1. Consolidated results for the nine-month-period of FY2006 and FY2005 are unaudited by independent accountants.
2. U.S.$1 = Yen 118
3. "Semiconductors & others" and "Recording media & systems" were renamed "Other electronic components"
and "Recording media" from FY 2006 respectively. There were no changes in segment classifications.
2 / 16
2) Business Results and Financial Position
1. Summary
Consolidated results for the third quarter of fiscal 2006, the three-month-period from
October 1, 2005 to December 31, 2005, were as follows:
TDK posted net sales of ¥222,654 million (U.S.$1,886,898 thousand), up 27.8% year
on year from ¥174,218 million. Operating income increased 23.3% from ¥17,262
million to ¥21,291 million (U.S.$180,432 thousand). Income from continuing
operations before income taxes increased 27.5% from ¥17,257 million to ¥22,011
million (U.S.$186,534 thousand). Net income increased 35.7% from ¥12,209 million to
¥16,568 million (U.S.$140,407 thousand). Basic net income per common share was
¥125.31 (U.S.$1.06), compared with ¥92.35 for the corresponding period of fiscal
2005.
Average third-quarter yen exchange rates for the U.S. dollar and euro were ¥117.37
(previous year ¥105.92) and ¥139.46 (previous year ¥137.19) as the yen depreciated
10.8% and 1.7% against the dollar and euro, respectively. This had the effect of
raising net sales by approximately ¥15.9 billion and operating income by
approximately ¥5.4 billion.
On October 1, 2005, TDK purchased shares of the Lambda Power Division (power
supply business) owned by U.K.-based Invensys plc. Consequently, the Lambda
Power Division’s operating results have been included in the TDK Group’s
consolidated operating results from the third quarter of fiscal 2006. In addition, TDK
now holds an approximate 58% equity interest in Densei-Lambda KK (Stock code:
6917; First Section, Tokyo stock exchange and Osaka securities exchange), which is
a member of the Lambda Power Division.
(Sales by Segment)
TDK’s businesses are broadly classified into two business segments: the electronic
materials and components segment and the recording media segment. The following
is a summary of sales by segment.
"Semiconductors & others" and "Recording media & systems" were renamed "Other
electronic components" and "Recording media" from fiscal 2006, respectively. There
were no changes in segment classifications.
(1)Electronic materials and components segment
This segment is made up of four product sectors: (1-1) electronic materials, (1-2)
electronic devices, (1-3) recording devices, and (1-4) other electronic components.
Segment net sales climbed 33.6% to ¥192,091 million (U.S.$1,627,890 thousand),
from ¥143,746 million, while segment operating income rose 13.4% to ¥22,199 million
(U.S.$188,127 thousand), from ¥19,579 million. In the electronics market in the third
quarter of fiscal 2006, in comparison with the same period of a year earlier, demand
increased for notebook PCs, HDDs, flat-screen TVs and mobile phones. There was a
particularly noticeable surge in demand for MP3 digital audio players, which store
music using semiconductors or HDDs. Demand for electronic components also
increased, supported by higher sales of popular consumer electronics products. There
was also steady growth in demand for electronic components for car electronics.
3/16
Sector sales of TDK’s electronic materials and components framed against this
market backdrop were as follows.
(1-1) Electronic materials
This sector is broken down into two product categories: capacitors and ferrite cores
and magnets.
Sales in the electronic materials sector increased 10.7% from ¥43,002 million to
¥47,613 million (U.S.$403,500 thousand).
[Capacitors] Sales increased year on year, as higher shipments of products used
mainly in IT home electronics and car electronics absorbed the negative effect on
sales of lower prices. A weaker yen also contributed to sales growth.
[Ferrite cores and magnets] Sales of ferrite cores and magnets rose year on year.
Sales of ferrite cores climbed, with higher sales from increasing demand for cores for
coils and power supplies more than offsetting the negative effect of inventory cutbacks
of CRT TVs. Ferrite magnet sales were flat, with the positive effect of foreign
exchange rates countering lower demand stemming from customers’ inventory
cutbacks. Sales of rare-earth magnets rose on increasing HDD demand.
(1-2) Electronic devices
This sector has three product categories: inductive devices, high-frequency
components and other products.
Sales in the electronic devices sector leapt 53.7% to ¥46,979 million (U.S.$398,127
thousand), from ¥30,571 million.
This growth was mainly due to the inclusion for the first time of the operating results of
the Lambda Power Division. However, even excluding these sales, existing business
in this sector posted year-on-year sales growth.
[Inductive devices] Sales of inductive devices increased year on year. The main
reason was growth in sales of power line coils for use in mobile phones, HDDs, MP3
digital audio players and car electronics.
[High-frequency components] Sales of high-frequency components were down year
on year. While orders for wireless LAN components remained strong, sales were
brought down slightly by further declines in sales prices of some components for
mobile phones.
[Other products] Sales of other products rose year on year. The main factors behind
the higher sales were growth in sales of DC-DC converters and DC-AC inverters for
use in amusement equipment and higher sales of sensors and actuators for HDDs
and mobile phones.
(1-3) Recording devices
This sector has two product categories: HDD heads and other heads.
Sector sales rose 31.2% from ¥65,351 million to ¥85,736 million (U.S.$726,576
thousand).
[HDD heads] Sales increased year on year. Amid rising demand for HDDs used in
PCs and consumer electronics, HDD head shipments increased. This higher volume
outweighed a drop in sales prices, resulting in higher overall sales.
[Other heads] Sales of other heads declined year on year due to inventory reductions
of optical pickups.
4/16
(1-4) Other electronic components
Sector sales rose 143.9% from ¥4,822 million to ¥11,763 million (U.S.$99,687
thousand). This was due to higher sales of anechoic chambers* and new businesses.
*These chambers are designed to block electromagnetic waves emanating from
outside so as to measure electromagnetic noise.
(2)Recording media segment
This segment has three product categories: audiotapes and videotapes, optical media,
and other products.
Segment sales edged up 0.3% from ¥30,472 million to ¥30,563 million (U.S.$259,008
thousand). The segment recorded an operating loss of ¥908 million (U.S.$7,695
thousand), 60.8% less than the operating loss of ¥2,317 million in the previous fiscal
year.
[Audiotapes and videotapes] Sales of audiotapes and videotapes declined year on
year. While TDK maintained a high market share, demand is declining for these
products as a whole.
[Optical media] Sales of optical media increased year on year. CD-R demand has
peaked out and is declining slowly. However, lower CD-R sales caused by the
downturn in demand and discounting pressure were offset by higher sales of DVDs
driven by increasing demand.
[Other products] Sales of other products increased year on year. Sales of
LTO-standard* (Linear Tape-Open) tape-based data storage media for computers
rose on higher demand. However, sales of recording equipment & accessory products
declined as TDK made progress with efforts to create a more tightly focused product
lineup.
*Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks of HP, IBM and Certance
LLC in the U.S., other countries or both.
(Sales by Region)
Detailed geographic segment information can be found in the segment information on
page 14.
[Japan] Sales were down in the recording devices sector and recording media
segment.
[Americas] Sales were up in all product sectors.
[Europe] Sales were up in all product sectors, except recording devices.
[Asia (excluding Japan) and other areas] Sales increased in all product sectors,
except the recording media segment.
The overall result was a 43.4% increase in overseas sales year on year from
¥124,932 million to ¥179,139 million (U.S.$1,518,127 thousand). Overseas sales
accounted for 80.5% of consolidated net sales, an 8.8 percentage point increase from
71.7% one year earlier.
5/16
2. Financial Position
(2-1) The following table summarizes TDK’s balance sheets at December 31, 2005,
compared with September 30, 2005.
Total assets
Total stockholders’ equity
Equity ratio
¥903,130 million
¥695,837 million
77.0%
7.6% increase
4.1% increase
2.7 point decrease
At December 31, 2005, net trade receivables were ¥35,686 million higher than at
September 30, 2005, inventories were ¥10,748 million higher and net property, plant
and equipment was ¥19,226 million higher. As a result of these and other changes,
total assets increased ¥63,788 million from September 30, 2005.
Total liabilities increased ¥26,660 million, with trade payables increasing ¥11,343
million and accrued expenses increasing ¥8,530 million.
Total stockholders’ equity increased ¥27,155 million, reflecting a ¥11,050 million
increase in retained earnings and a ¥15,526 million decrease in accumulated other
comprehensive loss.
(2-2) Cash Flows
(¥ millions)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Net cash used in discontinued operations
Effect of exchange rate changes on cash and cash
equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
FY 2006
3Q
20,105
(44,634)
(4,265)
4,978
FY 2005
3Q
20,825
(12,140)
(3,864)
(261)
(5,262)
Change
(23,816)
224,645
200,829
(702)
235,969
235,267
(23,114)
(11,324)
(34,438)
(720)
(32,494)
(401)
261
10,240
Operating activities provided net cash of ¥20,105 million (U.S.$170,381 thousand), a
year-on-year decrease of ¥720 million. Income from continuing operations increased
¥3,820 million to ¥16,568 million (U.S.$140,407 thousand) and depreciation and
amortization increased ¥1,585 million to ¥15,138 million (U.S.$128,288 thousand). In
changes in assets and liabilities, there were increases of ¥7,400 million in trade
receivables, ¥5,672 million in inventories and ¥7,050 million in accrued expenses.
Investing activities used net cash of ¥44,634 million (U.S.$378,254 thousand), a
year-on-year increase of ¥32,494 million. Capital expenditures increased ¥8,383
million to ¥21,353 million (U.S.$180,958 thousand). Outflows of ¥24,294 million for
payment for purchase of subsidiaries, net of cash acquired was the other main
component.
Financing activities used net cash of ¥4,265 million (U.S.$36,144 thousand), ¥401
million more than a year earlier. While dividends paid increased ¥1,322 million, there
was a ¥605 million net increase in short-term debt.
6/16
3. Business Risks
With development, production and sales bases in countries around the world, the TDK
Group is engaged in global business activities. Furthermore, the electronics industry,
the main field of operations of the TDK Group, is seeing dramatic technological
innovation and changes in market prices, resulting in intense competition in new
product and technology development and efforts to win customers. Because of these
and other factors, the TDK Group is subject to various business risks that include, but
are not limited to, changes in demand and foreign exchange rates caused by world
economic trends; unpredictable events in conducting business overseas; more
intense competition in the development of new products in line with rapid
technological innovation; the ability to respond to intense price competition and
diversifying demands from customers; product quality; the recruitment and training of
employees; government regulation; the ability to acquire intellectual property rights;
the ability to procure raw materials and other products; increasingly stringent
environmental regulations internationally; and unavoidable natural disasters.
4. Fiscal 2006 Projections
TDK’s consolidated projections for fiscal 2006, the year ending March 31, 2006, are
as follows:
[Consolidated Projections for Fiscal 2006]
Net sales
Operating
income
Income
before
income taxes
Net income
FY 2006
(¥ millions)
FY 2005
(¥ millions)
Change from
FY2005
(¥ millions)
% change
from FY2005
765,000
68,000
Projections as
of October
2005
(¥ millions)
725,000
68,000
657,853
59,830
107,147
8,170
16.3
13.7
72,500
60,728
11,772
19.4
72,500
51,000
33,300
17,700
53.2
51,000
Note:
The projections are based principally on the following assumptions:
* An average yen-dollar exchange rate of ¥110 for the fourth quarter of fiscal 2006.
* In electronic materials and electronic devices, TDK is projecting lower sales in the
fourth quarter compared with the third quarter due to a slight correction resulting
from seasonal factors. However, on an annual basis, sales in both of these
electronic component sectors are expected to increase year on year, supported by
robust demand for components used in digital home appliances, mobile phones and
other products.
* Sales of HDD heads, the major product in the recording devices sector, are
expected to drop slightly in the fourth quarter from the third quarter due to seasonal
factors. However, recording device sales for the nine months to December 31, 2005
were almost on a par with sales for all of fiscal 2005, thanks to expanding demand
for heads used in HDDs for consumer electronics and PCs. Accordingly, TDK is
projecting a marked increase in sales in this product sector for the full year
compared with fiscal 2005.
7/16
* Structural reforms planned for fiscal 2006 for the recording media segment are
proceeding according to the plan that was revised in the interim period. Structural
reforms are expected to be implemented as planned in the fourth quarter.
Furthermore, TDK is forecasting a decrease in fourth-quarter sales from the
previous quarter due to lower demand after higher demand in the third quarter and
revisions to the product portfolio to create a more tightly focused product lineup.
For the full year, TDK is forecasting a year-on-year decrease in sales in the
recording media segment due to lower sales on falling demand for audiotapes and
videotapes, and lower sales of other products.
Cautionary Statement About Projections
This earnings release contains forward-looking statements, including projections, plans, policies, management
strategies, targets, schedules, understandings and evaluations, about TDK and its group companies that are not
historical facts. These forward-looking statements are based on current forecasts, estimates, assumptions, plans,
beliefs and evaluations in light of information available to management on the date of this earnings release.
In preparing forecasts and estimates, TDK and its group companies have used, as their bases, certain
assumptions as necessary, in addition to confirmed historical facts. However, due to their nature, there is no
guarantee that these statements and assumptions will prove to be accurate in the future. TDK therefore wishes to
caution readers that these statements, facts and certain assumptions contained in this earnings release are
subject to a number of risks and uncertainties and may prove to be inaccurate.
The electronics markets in which TDK Group operates are highly susceptible to rapid changes. Furthermore, TDK
and its group companies operate not only in Japan, but in many other countries. As such, factors that can have
significant effects on its results include, but are not limited to, shifts in technology, demand, prices, competition,
economic environments and foreign exchange rates.
The premises and assumptions used in computing the projections in this earnings release include, but are not
limited to, those explained above.
8/16
Consolidated
3) Statements of income
[ 3rd Qtr. results ]
Term
Item
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income (deductions):
Interest and dividend income
Interest expense
Foreign exchange gain (loss)
Other-net
Total other income (deductions)
Income from continuing operations
before income taxes
Income taxes
Income from continuing operations
before minority interests
Minority interests
Income from continuing operations
Loss from discontinued operations, net of tax
Net income
The 3rd Qtr. of FY2006
The 3rd Qtr. of FY2005
(October 1, 2005 - December 31, 2005) (Oct. 1,2004 - Dec. 31,2004)
(Yen
(U.S.$
(Yen
%
%
millions)
thousands)
millions)
222,654
164,387
58,267
36,976
21,291
100.0 1,886,898
73.8 1,393,110
493,788
26.2
313,356
16.6
9.6
180,432
1,065
(41)
741
(1,045)
720
0.3
22,011
9.9
5,082
9,025
(347)
6,280
(8,856)
6,102
174,218
128,760
45,458
28,196
17,262
100.0
73.9
26.1
16.2
9.9
Change
(Yen
millions)
Change(%)
48,436
35,627
12,809
8,780
4,029
27.8
27.7
28.2
31.1
23.3
441
(71)
(1,147)
772
(5)
(0.0)
624
30
1,888
(1,817)
725
186,534
17,257
9.9
4,754
27.5
2.3
43,068
4,446
2.6
636
14.3
16,929
7.6
143,466
12,811
7.3
4,118
32.1
361
16,568
16,568
0.2
7.4
7.4
3,059
140,407
140,407
63
12,748
539
12,209
0.0
7.3
0.3
7.0
298 473.0
3,820
30.0
(539)
35.7
4,359
-
[ 9 months period results ]
Term
The nine-month-period of FY2006
(April 1, 2005 - December 31, 2005)
Item
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income (deductions):
Interest and dividend income
Interest expense
Foreign exchange gain (loss)
Other-net
Total other income (deductions)
Income from continuing operations
before income taxes
Income taxes
Income from continuing operations
before minority interests
Minority interests
Income from continuing operations
Loss (income) from discontinued operations, net of tax
Net income
(Yen
millions)
573,041
425,986
147,055
97,714
49,341
%
(U.S.$
thousands)
100.0 4,856,280
74.3 3,610,051
25.7 1,246,229
17.1
828,085
8.6
418,144
2,581
(92)
1,339
440
4,268
0.8
21,873
(780)
11,348
3,729
36,170
The nine-monthperiod of FY2005
Change
(Apr. 1,2004 - Dec. 31,2004)
(Yen
millions)
491,710
358,729
132,981
87,979
45,002
1,084
(228)
(555)
1,613
1,914
%
100.0
72.9
27.1
17.9
9.2
0.3
(Yen
millions)
81,331
67,257
14,074
9,735
4,339
Change(%)
16.5
18.7
10.6
11.1
9.6
1,497
136
1,894
(1,173)
2,354 123.0
53,609
9.4
454,314
46,916
9.5
6,693
14.3
14,902
2.6
126,289
13,298
2.7
1,604
12.1
38,707
6.8
328,025
33,618
6.8
5,089
15.1
489
38,218
(16)
38,234
0.1
6.7
(0.0)
6.7
4,144
323,881
(136)
324,017
146
33,472
1,394
32,078
0.0
6.8
0.3
6.5
343 234.9
4,746
14.2
(1,410)
6,156
19.2
Notes:
1. Above statements of income for FY 2006 and FY 2005 are unaudited by independent accountants.
2. In accordance with SFAS No. 144, "Accounting for the impairment or Disposal of Long-Lived Assets", the figures
of FY2005 relating to discontinued operations have been reclassified accordingly.
3. U.S.$1=Yen 118
9 / 16
Consolidated
4) Balance sheets
ASSETS
Term
As of December 31, 2005
(Yen
millions)
Item
%
(U.S.$
thousands)
As of Sep. 30, 2005
(Yen
millions)
%
Change
(Yen
millions)
As of Mar. 31, 2005
(Yen
millions)
%
Current assets
Cash and cash equivalents
Marketable securities
Net trade receivables
Inventories
Other current assets
540,973
200,829
4
197,318
97,123
45,699
59.9 4,584,517
1,701,941
34
1,672,186
823,076
387,280
516,270
224,645
604
161,632
86,375
43,014
61.5
24,703
(23,816)
(600)
35,686
10,748
2,685
510,603
251,508
1,609
147,999
74,924
34,563
63.2
Noncurrent assets
Investments in securities
Net property, plant and equipment
Other assets
TOTAL
362,157
28,018
249,118
85,021
903,130
40.1 3,069,127
237,441
2,111,169
720,517
100.0 7,653,644
323,072
26,179
229,892
67,001
839,342
38.5
39,085
1,839
19,226
18,020
63,788
297,398
22,698
216,969
57,731
808,001
36.8
100.0
100.0
LIABILITIES AND STOCKHOLDERS' EQUITY
Term
As of December 31, 2005
(Yen
millions)
Item
Current liabilities
Short-term debt
Trade payables
Accrued expenses
Income taxes payables
Other current liabilities
Noncurrent liabilities
Long-term debt,
excluding current installments
Retirement and severance benefits
Deferred income taxes
Other noncurrent liabilities
Total liabilities
Minority interests
Common stock
Additional paid-in capital
Legal reserve
Retained earnings
Accumulated
other comprehensive income (loss)
Treasury stock
Total stockholders' equity
TOTAL
%
(U.S.$
thousands)
As of Sep. 30, 2005
(Yen
millions)
%
Change
(Yen
millions)
As of Mar. 31, 2005
(Yen
millions)
%
132,656
134
73,980
48,750
4,239
5,553
15.8
22,797
1,981
11,343
8,530
(959)
1,902
130,857
103
62,092
43,980
19,283
5,399
16.2
319,983
33,895
4.0
3,863
32,915
4.1
1,691
14,331
110
1,581
81
27,534
4,048
4,485
233,339
34,305
38,008
27,945
1,581
4,259
193,211
21.4 1,637,381
166,551
19.8
26,660
163,772
20.3
119,339
4,109
0.5
9,973
5,162
0.6
276,619
535,907
148,067
5,190,390
32,641
63,237
17,322
601,416
150
11,050
32,641
63,051
16,918
585,557
(191,178)
(38,085)
15,526
(51,657)
(7,420)
(62,881)
695,837
77.0 5,896,924
903,130 100.0 7,653,644
(7,849)
668,682
839,342
429
27,155
63,788
(7,443)
639,067
808,001
155,453
2,115
85,323
57,280
3,280
7,455
37,758
14,082
32,641
63,237
17,472
612,466
(22,559)
17.2 1,317,398
17,924
723,076
485,424
27,796
63,178
4.2
1.6
(411)
2,467
226
79.7
100.0
Notes:
1. Balance sheets as of December 31, 2005 is unaudited by independent accountants.
2. U.S.$1 = Yen 118
10 / 16
28,839
751
3,244
79.1
100.0
Consolidated
5) Statements of cash flows
[3rd Qtr. results]
Term
(October 1, 2005 - December 31, 2005)
Item
The 3rd Qtr.
of FY2005
The 3rd Qtr. of FY2006
(Yen millions)
Cash flows from operating activities:
Net income
(U.S.$ thousands)
(Oct. 1, 2004 Dec. 31, 2004)
(Yen millions)
16,568
16,568
140,407
140,407
12,209
539
12,748
15,138
640
(178)
-
128,288
5,424
(1,508)
-
13,553
349
89
(53)
Increase (decrease) in retirement and severance benefits,net
Other-net
Net cash provided by operating activities
(17,050)
763
(1,123)
(157)
4,553
(623)
267
1,307
20,105
(144,492)
6,466
(9,517)
(1,331)
38,585
(5,280)
2,263
11,076
170,381
(9,650)
6,435
(1,762)
55
(2,497)
703
597
258
20,825
Cash flows from investing activities:
Capital expenditures
(21,353)
(180,958)
(12,970)
Loss from discontinued operations, net of tax
Income from continuing operations
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
Loss on disposal of property and equipment
Deferred income taxes
Loss (gain) on securities, net
Changes in assets and liabilities:
Increase in trade receivables
Decrease in inventories
Increase in other current assets
Increase (decrease) in trade payables
Increase (decrease) in accrued expenses
Increase (decrease) in income taxes payables, net
Proceeds from sales and maturities of
investments in securities
Payment for purchase of subsidiaries, net of cash acquired
Payment for purchase of other investments
Proceeds from sales of property, plant and equipment
Acquisition of minority interests
Net cash used in investing activities
600
652
(24,294)
177
300
(64)
(44,634)
(205,881)
1,500
2,542
(542)
(378,254)
(66)
244
(12,140)
107
(38)
605
349
(5,288)
(4,265)
-
907
(322)
5,127
2,958
(44,814)
(36,144)
-
34
(30)
98
(3,966)
(3,864)
(261)
4,978
42,186
(5,262)
Cash flows from financing activities:
Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term debt, net
Sale (purchase) of treasury stock, net
Dividends paid
Net cash used in financing activities
Net cash used in discontinued operations
Effect of exchange rate changes
on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
5,085
(23,816)
224,645
200,829
(201,831)
1,903,772
1,701,941
(702)
235,969
235,267
Notes:
1. Above statements of cash flows for the 3rd quarter of FY2006 and FY2005 are unaudited by independent accountants.
2. In accordance with SFAS No. 144, "Accounting for the impairment or Disposal of Long-Lived Assets", the figures
for the 3rd quarter of FY2005 relating to discontinued operations have been reclassified accordingly.
3. U.S.$1=Yen 118
11 / 16
Consolidated
9 months period results
Term
The nine-month-period of FY2006
The nine-monthperiod of FY2005
(April 1, 2005 - December 31, 2005)
Item
Cash flows from operating activities:
Net income
(Yen millions)
(U.S.$ thousands)
(Apr. 1, 2004 Dec. 31, 2004)
(Yen millions)
38,234
(16)
38,218
324,017
(136)
323,881
32,078
1,394
33,472
41,675
1,606
1,138
(414)
353,178
13,610
9,644
(3,509)
38,728
582
(3,222)
(148)
Increase (decrease) in retirement and severance benefits,net
Other-net
Net cash provided by operating activities
(26,871)
(8,454)
(8,445)
8,660
7,985
(16,529)
640
(542)
38,667
(227,720)
(71,644)
(71,568)
73,390
67,669
(140,076)
5,424
(4,593)
327,686
(10,723)
(1,110)
(8,617)
(2,194)
730
7,286
3,791
1,282
59,857
Cash flows from investing activities:
Capital expenditures
(55,641)
(471,534)
(42,725)
2,656
22,509
Acquisition of minority interests
Proceeds from sales of discontinued operations
Net cash used in investing activities
(3,517)
(32,995)
(120)
928
(2,587)
1,538
(89,738)
(29,805)
(279,619)
(1,017)
7,865
(21,924)
13,034
(760,491)
(200)
(194)
1,111
(41,146)
Cash flows from financing activities:
Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term debt, net
Sale (purchase) of treasury stock, net
Dividends paid
Net cash used in financing activities
Net cash used in discontinued operations
211
(96)
605
(170)
(10,578)
(10,028)
(88)
1,788
(813)
5,127
(1,441)
(89,644)
(84,983)
(746)
171
(83)
(325)
(1,390)
(7,938)
(9,565)
(979)
10,508
89,051
Loss (income) from discontinued operations, net of tax
Income from continuing operations
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
Loss on disposal of property and equipment
Deferred income taxes
Loss (gain) on securities, net
Changes in assets and liabilities:
Increase in trade receivables
Increase in inventories
Increase in other current assets
Increase (decrease) in trade payables
Increase in accrued expenses
Increase (decrease) in income taxes payables, net
Proceeds from sales and maturities of
investments in securities
Payment for purchase of investments in securities
Payment for purchase of subsidiaries, net of cash acquired
Payment for purchase of other investments
Proceeds from sales of property, plant and equipment
Effect of exchange rate changes
on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
(50,679)
251,508
200,829
(429,483)
2,131,424
1,701,941
862
(55)
8,112
227,155
235,267
Notes:
1. Above statements of cash flows for the nine-month-period of FY2006 and FY2005 are unaudited
by independent accountants.
2. In accordance with SFAS No. 144, "Accounting for the impairment or Disposal of Long-Lived Assets", the figures
for the nine-month-period of FY2005 relating to discontinued operations have been reclassified accordingly.
3. U.S.$1=Yen 118
12 / 16
Consolidated
(Notes)
1.
The consolidated financial statements are prepared in conformity with the U.S. GAAP.
2.
As of December 31, 2005, TDK had 90 subsidiaries (20 in Japan and 70 overseas). TDK also had 6 affiliates (4
in Japan and 2 overseas) whose financial statements are accounted for by the equity method.
3.
Comprehensive income comprises net income and other comprehensive income. Other comprehensive income
includes changes in foreign currency translation adjustments, minimum pension liability adjustments and net
unrealized gains (losses) on securities. The net income, other comprehensive income, net of tax and total
comprehensive income (loss) for the three months ended December 31, 2005 and 2004, and for the nine-monthperiod from April 1 through December 31, 2005 and 2004 were as follows;
Term
Item
Net income
Other comprehensive income, net of tax:
Foreign currency translation adjustments
Minimum pension liability adjustments
Net unrealized gains (losses) on securities
Total comprehensive income (loss)
The 3rd Qtr. of FY2006
The 3rd Qtr. of
FY2005
(Oct. 1,2004 - Dec. 31,2004)
(Oct. 1, 2005 - Dec. 31, 2005)
(Yen millions) (U.S.$ thousands)
(Yen millions)
140,407
16,568
12,209
13,594
1,589
343
115,203
13,466
2,907
(12,284)
(2,141)
(71)
32,094
271,983
(2,287)
Note: U.S.$1=Yen 118
Term
Item
Net income
Other comprehensive income, net of tax:
Foreign currency translation adjustments
Minimum pension liability adjustments
Net unrealized gains (losses) on securities
Total comprehensive income
The nine-month-period of FY2006
The nine-monthperiod of FY2005
(Apr. 1,2004 - Dec. 31,2004)
(Apr. 1, 2005 - Dec. 31, 2005)
(Yen millions)
(Yen millions) (U.S.$ thousands)
38,234
324,017
32,078
26,961
2,112
25
228,483
17,898
212
67,332
570,610
Note: U.S.$1=Yen 118
13 / 16
(485)
6,043
(506)
37,130
Consolidated
6) Segment Information
[3rd Qtr. results]
The following industry and geographic segment information are required by the Japanese Securities Exchange Law.
1. Industry segment information
Term
Product
Electronic materials and components
Net sales
External sales
Intersegment
Operating expenses
Operating income
Recording media
Net sales
External sales
Intersegment
Operating expenses
Operating income (loss)
TOTAL
Net sales
External sales
Intersegment
Operating expenses
Operating income
Note: U.S.$1=Yen 118
2. Geographic segment information
Term
Region
Japan
Americas
Europe
Asia and
others
Intersegment
eliminations
Total
Net sales
Operating income
Net sales
Operating income
Net sales
Operating income (loss)
Net sales
Operating income
Net sales
Operating income (loss)
Net sales
Operating income
The 3rd Qtr. of
FY2005
The 3rd Qtr. of FY2006
(Oct. 1, 2004 - Dec. 31, 2004)
(Oct. 1, 2005 - Dec. 31, 2005)
(Yen millions)
% (U.S.$ thousands) (Yen millions)
%
192,091
192,091
169,892
22,199
100.0
88.4
11.6
1,627,890
1,627,890
1,439,763
188,127
30,563 100.0
30,563
31,471 103.0
-3.0
(908)
259,008
259,008
266,703
(7,695)
100.0
1,886,898
1,886,898
1,706,466
180,432
222,654
222,654
201,363
21,291
90.4
9.6
The 3rd Qtr. of FY2006
Change
(Yen millions) Change(%)
86.4
13.6
48,345
48,345
45,725
2,620
33.6
33.6
36.8
13.4
30,472 100.0
30,472
32,789 107.6
(2,317)
-7.6
91
91
(1,318)
1,409
0.3
0.3
-4.0
60.8
48,436
48,436
44,407
4,029
27.8
27.8
28.3
23.3
143,746
143,746
124,167
19,579
174,218
174,218
156,956
17,262
100.0
100.0
90.1
9.9
The 3rd Qtr. of
FY2005
(Oct. 1, 2005 - Dec. 31, 2005) (Oct. 1, 2004 - Dec. 31, 2004)
(Yen millions)
% (U.S.$ thousands) (Yen millions)
%
99,593 100.0
844,008
87,342 100.0
7.6
7.8
7,546
63,949
6,793
22,010 100.0
27,109 100.0
229,737
8.7
6.7
15,390
1,816
1,911
22,579 100.0
191,347
18,527 100.0
0.1
16
135
(1,367)
-7.4
107,922 100.0
148,968 100.0
1,262,441
8.3
104,212
9,494
12,297
8.8
61,583
640,635
75,595
3,254
(431)
384
174,218 100.0
222,654 100.0
1,886,898
21,291
9.6
180,432
9.9
17,262
Change
(Yen millions) Change(%)
14.0
11.1
23.2
-5.0
21.9
38.0
29.5
12,251
753
5,099
(95)
4,052
1,383
41,046
2,803
14,012
815
48,436
4,029
27.8
23.3
Notes:
1. Net sales in each geographic area are based on the location of TDK entities where the sales are generated.
2. U.S.$1=Yen 118
3. Sales by region
Term
The 3rd Qtr. of FY2006
(Oct. 1, 2005 - Dec. 31, 2005)
(Yen millions)
% (U.S.$ thousands)
25,332
214,678
11.4
22,578
191,339
10.2
131,229
58.9
1,112,110
179,139
1,518,127
80.5
43,515
368,771
19.5
222,654 100.0
1,886,898
Region
Americas
Europe
Asia and others
Overseas sales total
Japan
Net sales
Notes:
1. Overseas sales are based on the location of the customers.
2. U.S.$1=Yen 118
14 / 16
The 3rd Qtr. of
FY2005
Change
(Oct. 1, 2004 - Dec. 31, 2004)
(Yen millions)
19,724
18,581
86,627
124,932
49,286
174,218
%
11.3
10.7
49.7
71.7
28.3
100.0
(Yen millions)
5,608
3,997
44,602
54,207
(5,771)
48,436
Change(%)
28.4
21.5
51.5
43.4
-11.7
27.8
Consolidated
9 months period results
The following industry and geographic segment information are required by the Japanese Securities Exchange Law.
1. Industry segment information
Term
Product
Electronic materials and components
Net sales
External sales
Intersegment
Operating expenses
Operating income
Recording media
Net sales
External sales
Intersegment
Operating expenses
Operating income (loss)
TOTAL
Net sales
External sales
Intersegment
Operating expenses
Operating income
Note: U.S.$1=Yen 118
2. Geographic segment information
Term
Region
Japan
Americas
Europe
Asia and
others
Intersegment
eliminations
Total
The nine-monthperiod of FY2005
The nine-month-period of FY2006
Change
(Apr. 1, 2004 - Dec. 31, 2004)
(Apr. 1, 2005 - Dec. 31, 2005)
(Yen millions)
% (U.S.$ thousands) (Yen millions)
%
492,811
492,811
438,343
54,468
88.9
11.1
4,176,365
4,176,365
3,714,772
461,593
80,230 100.0
80,230
85,357 106.4
(5,127)
-6.4
679,915
679,915
723,364
(43,449)
573,041
573,041
523,700
49,341
100.0
100.0
91.4
8.6
87.6
12.4
87,979
87,979
83,849
4,130
21.7
21.7
23.7
8.2
86,878 100.0
86,878
92,214 106.1
(5,336)
-6.1
(6,648)
(6,648)
(6,857)
209
-7.7
-7.7
-7.4
3.9
81,331
81,331
76,992
4,339
16.5
16.5
17.2
9.6
404,832
404,832
354,494
50,338
4,856,280
4,856,280
4,438,136
418,144
491,710
491,710
446,708
45,002
The nine-month-period of FY2006
(Yen millions) Change(%)
100.0
100.0
90.8
9.2
The nine-monthperiod of FY2005
(Apr. 1, 2005 - Dec. 31, 2005) (Apr. 1, 2004 - Dec. 31, 2004)
(Yen millions)
% (U.S.$ thousands) (Yen millions)
%
266,440 100.0
2,257,966
Net sales
260,438 100.0
17,924
151,898
6.7
17,756
Operating income
6.8
73,935 100.0
626,568
Net sales
66,150 100.0
6,716
56,915
4,250
6.4
Operating income
9.1
466,797
Net sales
54,435 100.0
55,082 100.0
(22,974)
-4.9
Operating income (loss)
(2,750)
-5.1
(2,711)
3,242,627
Net sales
295,987 100.0
382,630 100.0
242,644
9.1
Operating income
26,828
28,632
7.5
1,737,678
185,300
Net sales
205,046
Operating income
10,339
1,082
1,220
573,041 100.0
Net sales
4,856,280
491,710 100.0
8.6
Operating income
45,002
49,341
418,144
9.2
Change
(Yen millions) Change(%)
6,002
168
7,785
2,466
647
39
86,643
1,804
19,746
138
81,331
4,339
2.3
0.9
11.8
58.0
1.2
1.4
29.3
6.7
16.5
9.6
Notes:
1. Net sales in each geographic area are based on the location of TDK entities where the sales are generated.
2. U.S.$1=Yen 118
3. Sales by region
Term
The nine-month-period of FY2006
(Apr. 1, 2005 - Dec. 31, 2005)
(Yen millions)
% (U.S.$ thousands)
64,798
549,136
11.3
55,247
468,195
9.7
323,399
56.4
2,740,669
443,444
3,758,000
77.4
129,597
1,098,280
22.6
573,041 100.0
4,856,280
Region
Americas
Europe
Asia and others
Overseas sales total
Japan
Net sales
Notes:
1. Overseas sales are based on the location of the customers.
2. U.S.$1=Yen 118
15 / 16
The nine-monthperiod of FY2005
Change
(Apr. 1, 2004 - Dec. 31, 2004)
(Yen millions)
59,525
54,554
240,723
354,802
136,908
491,710
%
12.1
11.1
49.0
72.2
27.8
100.0
(Yen millions)
5,273
693
82,676
88,642
(7,311)
81,331
Change(%)
8.9
1.3
34.3
25.0
-5.3
16.5
Consolidated
7) Supplementary Information (Consolidated)
Exchange rates used for conversion
Oct. 1, 2005 Oct. 1, 2004 Dec. 31, 2005
Dec. 31, 2004
Item
US$=Yen Euro=Yen US$=Yen Euro=Yen
105.92
137.19
117.37
139.46
Average rate for the period
139.83
141.61
118.07
104.21
The end of the period
Term
Consolidated
Term
Item
Capital expenditures
Depreciation and amortization
Research and development
Result of financial income
Number of employees
(as at the end of the period)
Ratio of overseas production
Oct. 1, 2005 Dec. 31, 2005
Ratio to
Amount
(Yen millions) sales (%)
21,353
15,138
6.8
11,788
5.3
1,024
Oct. 1, 2004 Dec. 31, 2004
Ratio to
Amount
(Yen millions) sales (%)
12,970
13,553
7.8
9,123
5.2
370
52,330
Change
(%)
64.6
11.7
29.2
176.8
37,115
36,211
61.5 %
58.4 %
Oct. 1, 2005 Dec. 31, 2005
Ratio to
Amount
(Yen millions) sales (%)
156,246
70.2
35,161
15.8
29,511
13.3
83,146
37.3
8,428
3.8
22,893
10.3
179,139
80.5
Oct. 1, 2004 Dec. 31, 2004
Ratio to
Amount
(Yen millions) sales (%)
103,537
59.4
31,364
18.0
18,512
10.6
51,760
29.7
1,901
1.1
21,395
12.3
124,932
71.7
April 1, 2004 March 31, 2005
Ratio to
Amount
(Yen millions) sales (%)
61,005
52,806
8.0
36,348
5.5
725
59.0 %
Overseas sales by division
Term
Product
Electronic materials and components
Electronic materials
Electronic devices
Recording devices
Other electronic components
Recording media
Overseas sales
Change
(%)
50.9
12.1
59.4
60.6
343.3
7.0
43.4
9 months period results
Consolidated
Term
Item
Capital expenditures
Depreciation and amortization
Research and development
Result of financial income
Ratio of overseas production
April 1, 2005 Dec. 31, 2005
Ratio to
Amount
(Yen millions) sales (%)
55,641
41,675
7.3
30,203
5.3
2,489
62.7 %
April 1, 2004 Dec. 31, 2004
Ratio to
Amount
(Yen millions) sales (%)
42,725
38,728
7.9
26,581
5.4
856
58.7 %
April 1, 2005 Dec. 31, 2005
Ratio to
Amount
(Yen millions) sales (%)
383,219
66.9
98,362
17.2
68,251
11.9
200,021
34.9
16,585
2.9
60,225
10.5
443,444
77.4
April 1, 2004 Dec. 31, 2004
Ratio to
Amount
(Yen millions) sales (%)
291,960
59.4
97,548
19.8
53,379
10.9
135,209
27.5
5,824
1.2
62,842
12.8
354,802
72.2
Change
(%)
30.2
7.6
13.6
190.8
Overseas sales by division
Term
Product
Electronic materials and components
Electronic materials
Electronic devices
Recording devices
Other electronic components
Recording media
Overseas sales
16 / 16
Change
(%)
31.3
0.8
27.9
47.9
184.8
-4.2
25.0
April 1, 2004 March 31, 2005
Ratio to
Amount
(Yen millions) sales (%)
391,949
59.6
126,644
19.2
70,199
10.7
186,768
28.4
8,338
1.3
81,879
12.4
473,828
72.0