3 2003 Consolidated Financial Results for the 3rd Quarter ended 30 September 2003 SUMIDA CORPORATION 3-3-6 Nihonbashi Ningyocho Chuo-ku, Tokyo 103-8589 Japan 1 Consolidated Financial Highlights for the 3rd Quarter ended 30 September 2003 1. Consolidated Results of Operations (Million yen, %) Period 9-month period (January - September) 3rd Quarter Category 2003 Net sales % Of Total 2002 % Of Total % Change % Of Total 2003 8,033 100.0 8,474 100.0 (5.2) 22,397 Operating profit 709 8.8 641 7.6 10.5 1,581 7.1 Ordinary income 607 7.6 614 7.3 (1.1) 1,401 Income before income taxes 472 5.9 571 6.7 (17.4) Net income 402 5.0 428 5.0 27.21 --- 31.95 26.55 --- 31.64 % Of Total 2002 100.0 26,778 % Change 100.0 (16.4) 1,737 6.5 (9.0) 6.3 1,717 6.4 (18.4) (22) (0.1) 1,646 6.1 --- (6.2) (59) (0.3) 1,312 4.9 --- --- --- (3.99) --- 98.34 --- --- --- --- --- --- 97.20 --- --- Amounts per common share (yen) Net income: (Basic) Net income: (Fully diluted) 2. Consolidated Financial Position (Million yen) Period Category 3rd Quarter 2003 Total assets 2002 29,503 31,665 (2,162) 5,599 5,525 74 17,787 19,477 (1,690) 14,832 13,423 1,409 1,199.24 1,451.01 (251.77) 60.3 61.5 --- Capital stock Total shareholders’ equity Total number of (thousand shares) stocks issued Shareholders’ equity per share (yen) Shareholders’ equity ratio Change (%) 2 3. Conditions of Consolidated Cash Flow (Million yen) Period 3rd Quarter Category 2003 9-month period (January - September) Change 2003 2002 Change 2002 Cash flows from operating activities 403 1,346 (943) 604 1,989 (1,385) Cash flows from investing activities (354) (360) 6 (1,319) (1,187) (132) Cash flows from financing activities 416 (235) 651 401 (658) 1,059 4,242 5,081 (839) 4,242 5,081 Cash and cash equivalents , end of period (839) Consolidated Earnings Forecasts (4th Quarter 2003: Three months ending December 31, 2003) Period Category 4th Quarter 2002 2003(Estimate) %Change 8,000 8,018 (0.2) Operating profit (million yen) 700 434 61.3 Ordinary income (million yen) 667 398 67.6 Net income (million yen) 440 (194) --- 29.80 (14.49) --- Net sales (million yen) Net income per share (yen) Consolidated Quarterly Business Results (Million yen) 2003 Period Category 2002 2001 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 8,033 7,162 7,202 8,018 8,474 9,349 8,955 7,582 7,636 8,114 8,226 Operating profit 709 571 301 434 641 592 504 541 156 81 333 Ordinary income 607 488 306 398 614 589 514 356 (44) (277) 47 472 440 (934) 7 571 566 509 (14) (1,405) (219) (141) 402 481 (942) (194) 428 502 382 839 (1,651) (131) (94) Net sales Income taxes before Net income income 3 Consolidated Yearly Business Results (Million yen) 2003 (E) 2002 2001 2000 1999 30,397 34,796 31,558 33,575 24,574 Operating profit 2,281 2,171 1,112 3,318 2,687 Ordinary income 2,068 2,116 82 2,967 2,439 Income before income taxes 540 1,653 (1,779) 2,632 1,580 Net income 381 1,118 (1,037) 1,973 1,003 Shareholders’ equity 18,227 18,910 19,534 18,581 15,083 Total assets 29,943 30,666 32,340 32,000 26,220 25.80 83.64 (78.11) 163.43 101.56 1,228.93 1,408.72 1,471.29 1,539.48 1,374.60 Net sales Per share(yen) EPS Shareholders’ equity *Foreign exchange adjustments are included in shareholders’ equity 4 CEO's Message for the 3rd Quarter of 2003 “CEATEC Japan 2003" was held in October 2003 at Makuhari Messe in Chiba Prefecture. 667 firms from 17 countries participated and some 200,000 visitors attended the exhibition. Among the displays were new generation TVs, including liquid crystal TVs with evidence of ground-wave digital broadcasting near at hand and environmentally friendly automobiles such as hybrid cars and fuel cell-powered cars. At a number of booths, those in the electronic parts industry in particular, many automobile-related electronic products were on display. Sumida Group participated in this exhibition by putting emphasis on our three major growth groups of business comprising (1) legacy coils cultivated over Sumida’s 50-year history, (2) new generation TV-related coils with flat panel-related ones as the axis and (3) automotive-related coils. Our booth attracted a large number of visitors. The 2003 business year is the first year of Sumida Group's Mid-Term Vision aiming at achieving our sales target of ¥100 billion with the ratio of operating profit to net sales at 10% in the 2007 business year. This business year is also the year of large restructuring, with pains to cut off our unprofitable business segments including SRC in North America business and Opto businesses drastically from Sumida Group, while giving prominence to our three major growth groups of business. However, withdrawal from our unprofitable operations is producing visible results in terms of numerical value, with the ratio of operating profit to net sales recovering sharply to nearly 9% in the 3rd quarter of 2003. Meanwhile, our global meeting was held for the second time this year in the middle of October and 66 key members from all over the world gathered to discuss achievement of the Mid-Term Vision in Tokyo. At this meeting, discussions were focused for one full week on the theme of radically reviewing our present organizational setup in order to achieve the Mid-Term Vision. Our automotive group was set up in July this year prior to the major restructuring in an attempts to test the effectiveness of creating a product focused group. In view of the positive results of this trial being actually felt in a short period, we are planning to restructure our organizational setup in 2004 focused on Product management groups. Each of our product group will be composed of resources from sales, manufacturing, research and development, quality and service. The chief of such product management groups will be selected by attaching much importance not on capabilities as a conventional “business administrator” but on capabilities as an entrepreneur. The difference being that “entrepreneurs do the correct things” and “business administrators do things correctly”. With as the restructuring Sumida will motivate leaders of our product groups to focus on achievement of commitments with each commitment clearly defined. Shigeyuki Yawata CEO of the Sumida Group 5 Sales by Product Category (Million yen, %) Period 3rd Quarter 9-month period (January - September) 2003 Category % Of 2002 total % Of % total Change 2003 % Of 2002 total % Of % total Change 8.6 579 6.8 20.2 1,641 7.3 1,521 5.7 7.9 4,077 50.8 3,509 41.4 16.2 10,745 48.0 10,930 40.8 (1.7) Other Coils 579 7.2 366 4.3 58.2 1,596 7.1 1,337 5.0 19.4 Automotive 1,650 20.5 1,539 18.2 7.2 5,272 23.5 4,977 18.6 5.9 TOTAL 7,002 87.1 5,993 70.7 16.8 19,254 85.9 18,765 70.1 2.6 Optoelectronics 656 8.2 1,094 12.9 (40.0) 2,007 9.0 3,861 14.4 (48.0) Magnetics 375 4.7 1,387 16.4 (73.0) 1,136 5.1 4,152 15.5 (72.6) 8,033 100.0 8,474 100.0 (5.2) 22,397 100.0 26,778 100.0 (16.4) Coil Business 696 AV Coils IT Communications Coils TOTAL Sales by Region Period Region (Million yen, %) 9-month period (January - September) 3rd Quarter 2003 % Of 2002 Total % Of % Total Change 2003 % Of 2002 Total % Of % Total Change Japan 2,220 27.6 2,293 27.1 (3.2) 6,426 28.7 6,679 24.9 (3.8) HK/China 1,779 22.1 1,354 16.0 31.4 4,232 18.9 4,805 17.9 (11.9) 651 8.1 626 7.4 4.0 1,689 7.5 1,808 6.8 (6.6) 1,635 20.4 1,589 18.7 2.9 4,479 20.0 5,252 19.6 (14.7) NAFTA 859 10.7 1,353 16.0 (36.5) 2,481 11.1 3,871 14.5 (35.9) EU 889 11.1 1,259 14.8 (29.4) 3,090 13.8 4,363 16.3 (29.2) 8,033 100.0 8,474 100.0 (5.2) 22,397 100.0 26,778 100.0 (16.4) ASEAN Taiwan/Korea TOTAL 6 Product Segment Information (Million yen, %) 2002 2003 1Q 2Q 3Q 4Q YTD 1Q 2Q 3Q YTD Net sales Coil Business Optoelectronics Magnetics Elimination Total 6,291 1,315 1,349 --8,955 6,481 1,452 1,416 --9,349 5,993 1,094 1,387 --8,474 5,949 904 1,165 --8,018 24,714 4,765 5,317 --34,796 5,966 820 416 --7,202 6,286 531 345 --7,162 7,002 656 375 --8,033 19,254 2,007 1,136 --22,397 Operating expense Coil Business Optoelectronics Magnetics Elimination Total 5,006 1,232 1,682 531 8,451 5,115 1,364 1,703 575 8,757 4,732 988 1,539 574 7,833 4,870 893 1,303 518 7,584 19,723 4,477 6,227 2,198 32,625 5,032 805 543 521 6,901 5,130 547 417 497 6,591 5,652 668 474 530 7,324 15,814 2,020 1,434 1,548 20,816 Operating profit Coil Business Optoelectronics Magnetics Elimination Total 1,285 83 (333) 1,366 88 (287) 1,261 106 (152) 1,079 11 (138) 4,991 288 (910) 934 15 (127) 1,156 (16) (72) 1,350 (12) (99) 3,440 (13) (298) (531) 504 (575) 592 (574) 641 (518) 434 (2,198) 2,171 (521) 301 (497) 571 (530) 709 (1,548) 1,581 Operating profit ratio Coil Business Optoelectronics Magnetics Elimination Total 20.4 6.3 (24.7) --5.6 21.1 6.1 (20.3) --6.3 21.0 9.7 (11.0) --7.6 18.1 1.2 (11.8) --5.4 20.2 6.0 (17.1) --6.2 15.7 1.8 (30.5) --4.2 18.4 (3.0) (20.9) --8.0 19.3 (1.8) (26.4) --8.8 17.9 (0.6) (26.2) --7.1 7 Consolidated Balance Sheet (Unit: thousand yen) 3Q 2003 % ASSETS Ⅰ Current assets 1.Cash & cash equivalents 2.Trade receivables 3.Inventories 4.Others 5.Allowance for doubtful accounts Ⅱ Total current assets Non-current assets (1) Tangible fixed assets 1.Buildings 2.Machinery & equipment 3.Furniture & fixture 4.Land 5.Construction in progress 6.Accumulated depreciation Total tangible fixed assets (2) Intangible fixed assets 1.Leasehold rights 2.Software 3.Others Total intangible fixed assets 4,242,157 6,778,396 2,913,514 1,851,004 (18,427) 15,766,644 Year End 2002 3Q 2002 53.4 % 5,080,704 6,776,584 3,954,877 1,023,713 (65,343) 16,770,535 53.0 % 4,789,274 6,440,099 3,645,101 1,239,564 (41,238) 16,072,800 52.4 6,094,023 9,150,411 2,761,728 1,254,190 6,392,276 10,566,007 3,206,591 1,256,032 6,302,920 10,413,262 3,144,559 1,255,183 155,539 (9,657,532) 9,758,359 33.1 311,299 (10,143,889) 11,588,316 36.6 335,307 (10,307,893) 11,143,338 36.3 2.3 598,568 --196,290 794,858 2.5 582,306 173,188 8,152 763,646 2.5 544,652 138,962 3,991 687,605 (3) Investments & other assets 1.Investments in securities 2.Others Total investments & other assets Total fixed assets TOTAL ASSETS 318,140 2,972,668 3,290,808 11.2 13,736,772 46.6 29,503,416 100.0 Next page continues 8 175,628 2,335,606 2,511,234 7.9 14,894,408 47.0 31,664,943 100.0 143,770 2,542,925 2,686,695 8.8 14,593,679 47.6 30,666,479 100.0 Consolidated Balance Sheet (Continued) LIABILITIES Current liabilities Ⅰ 1.Trade payables 2.Short-term loans 3.Other current liabilities Ⅱ Total current liabilities Non-current liabilities 1.Long-term loans 2.Straight bond 3.Deferred tax liabilities 4.Other non-current liabilities Total non-current liabilities TOTAL LIABILITIES (Minority interest) Minority interest SHAREHOLDERS ’ EQUITY Ⅰ Capital Stock Ⅱ Legal reserves Ⅲ Consolidated retained earnings Ⅳ Unrealized gains/losses on securities at market valuation Ⅴ Cumulative translation adjustments Ⅵ Treasury stock TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES & SHAREHOLDERS ’ EQUITY 2,333,554 4,523,002 1,976,231 8,832,787 29.9 2.823,786 5,248,661 2,282,590 10,355,037 195,331 2,883,960 11,716,747 9.8 39.7 1,583,318 --211,509 26,202 1,821,029 12,176,066 5.8 38.5 1,324,616 --204,001 261,477 1,790,094 11,752,602 --- --- 11,907 0.0 3,726 0.0 5,598,570 5,396,835 8,857,622 19.0 18.3 30.0 5,524,631 5,322,646 9,392,878 17.4 16.8 29.7 5,527,181 5,325,272 9,198,400 18.0 17.4 30.0 60,318 (2,108,264) (18,412) 17,786,669 0.2 (7.1) (0.1) 60.3 44,186 0.1 (2.5) (803,912) (3,459) (0.0) 19,476,970 61.5 28,360 0.1 (3.8) (1,164,091) (4,971) (0.0) 18,910,151 61.7 29,503,416 100.0 31,664,943 100.0 30,666,479 100.0 1,284,510 1,200,000 204,119 9 32.7 2,365,892 5,129,741 2,466,875 9,962,508 32.5 5.8 38.3 Consolidated Income Statement ( unit : thousand yen) 3Q 2003 2002 % of Sales Amount 9-month Period (January - September) 2003 2002 Amount % of Sales Amount % of Sales % of Sales Amount Ⅰ Net sales 8,033,482 100.0 8,473,664 100.0 22,397,117 100.0 26,777,769 100.0 Ⅱ Cost of sales 5,850,611 72.8 6,274,727 74.0 16,365,381 73.1 20,236,005 75.6 2,182,871 27.2 2,198,937 26.0 6,031,736 26.9 6,541,764 24.4 1,474,197 18.4 1,557,485 18.4 4,450,942 19.8 4,804,297 17.9 708,674 8.8 641,452 7.6 1,580,794 7.1 1,737,467 6.5 Gross income Ⅲ Selling, general & administrative Operating profit Ⅳ Non-operating income (expenses) Interest & dividends received 9,092 11,369 25,967 43,285 17,515 21,564 54,727 65,528 Exchange gain (loss) (70,759) (38,481) (105,433) (6,576) Investment loss on equity method 22,518 --- 74,493 --- 21,628 29,049 8,759 Interest cost & discount expense Other non-operating (expenses) income Non-operating income (expenses) Ordinary income 515 (101,185) (1.2) (27,048) (0.3) (179,637) (0.8) (20,060) (0.1) 607,489 7.6 614,404 7.3 1,401,157 6.3 1,717,407 6.4 Ⅴ Extraordinary income (losses) Gain on sales of fixed assets Loss on disposal of fixed assets Directors’ retirement bonus Unrealized loss on investment 1,512 (77) 142,232 156 14,880 12,625 27,516 41,339 --- --- 50,000 --- 57,209 --- 166,251 --- --- --- 1,203,941 --- 64,914 30,535 117,353 (30,535) securities Loss on sales of subsidiary Structural reorganization expenses Extraordinary income (losses) Income before income taxes Income taxes Income on minority shareholders Net income (135,491) (1.7) (43,237) (0.6) (1,422,829) (6.4) (71,718) (0.3) 471,998 5.9 571,167 6.7 (21,672) (0.1) 1,645,689 6.1 70,151 0.9 142,792 1.7 40,540 0.2 333,645 1.2 --- --- --- --- 3,336 0.0 --- --- 401,847 5.0 428,375 5.0 (58,876) (0.3) 1,312,044 4.9 10 Consolidated Cash Flow Statement (Unit: thousand yen) 9-month Period (Jan. - Sep.) 3Q Period Account 2003 2002 2003 2002 I. Cash Flows from Operating Activities Net income 401,847 428,375 (58,876) 1,312,044 Depreciation & Amortization 388,867 521,252 1,123,390 1,563,712 14,880 12,625 27,516 41,339 (601,367) 677,778 (978,788) (737,692) 48,852 219,764 8,988 (394,542) 321,169 (73,691) 455,671 690,128 (170,837) (440,493) 26,122 (485,544) 403,411 1,345,610 604,023 1,989,445 (305,803) (357,510) (979,093) (1,149,371) 2,646 2,983 190,848 2,989 (50,638) (5,789) (530,416) (40,776) (353,795) (360,316) (1,318,661) (1,187,158) (1,081,763) 108,796 (606,670) 104,880 313,298 (264,702) (40,106) (794,106) Cash dividends paid (147,664) (133,949) (281,901) (266,716) Proceeds from bond issuance 1,200,000 --- 1,200,000 --- 132,569 55,080 142,769 297,840 Loss on disposal of fixed assets Decrease (Increase) in Accounts Receivable Decrease (Increase) in inventories Increase (Decrease) in Accounts Payable Others Cash Flows from Operating Activities II. Cash Flows from Investing Activities Acquisition of tangible fixed assets Proceeds from sale of tangible fixed assets Others Cash Flows from Investing Activities Ⅲ. Cash Flows from Financing Activities Net borrowings (repayments) of short -term loans Repayments of long-term debt Revenue from issuance of stocks Others Cash Flows from Financing Activities Ⅳ. Effect of exchange rate changes on cash and cash equivalents Ⅴ. Net increase (decrease) in cash and cash equivalents Ⅵ. Cash and cash equivalents at beginning of year Ⅶ. Decrease in cash and cash equivalents on exception from (696) --- (13,440) --- 415,744 (234,775) 400,652 (658,102) (266,766) 34,775 (231,837) (412,749) 198,594 785,294 (545,823) (268,564) 4,043,563 4,295,410 4,789,274 5,349,268 --- --- (1,294) --- 4,242,157 5,080,704 4,242,157 5,080,704 consolidation Ⅷ. Cash and cash equivalents at end of interim period (year) The explanatory notes given in English are for reference only. For any doubts or uncertainties regarding the English translation, refer to the original text in Japanese. 11