Annual Report 2004 For the Year Ended March 31, 2004 Exquisite Geometry © MIZUNO KATSUHIKO 5th group consisting of 2 stones 4th group consisting of 2 stones 2nd group consisting of 3 stones 1st group consisting of 5 stones 3rd group consisting of 3 stones ROHM CO.,LTD., was established in Kyoto, Japan, in 1958, designs and manufactures integrated circuits (ICs) and other electronic components. ROHM’s product lineup includes monolithic ICs, power modules, photo link modules, transistors, diodes, light emitting diodes (LEDs), laser diodes, resistors, capacitors, liquid crystal displays (LCDs), thermalheads, image sensor heads, and LED displays. ROHM’s corporate objective is “Quality First,” and a key component of that objective is the Company’s policy of securing a reasonable margin. ROHM is also working to make continued progress in environmental protection. C O N T E N T S Financial Highlights To Our Shareholders and Friends ROHM at a Glance Divisional Review New Products Financial Section Principal Subsidiaries <Domestic> Principal Subsidiaries <Overseas> Board of Directors Corporate Data 1 2 8 10 12 13 41 42 46 46 Daiunzan Ryoanji In the grounds of a country villa, once owned by a noble family, at the foot of Kinugasayama Mountain in the northern part of Kyoto City lies Ryoanji, a Zen sect temple constructed in 1450 by Katsumoto Hosokawa, a governor-general of the Muromachi shogunate. The temple was destroyed by fire in 1467 during the Onin War. Masamoto Hosokawa, a son of Katsumoto, then rebuilt it in 1488 and one theory holds that the stone garden was laid out during the rebuilding. Consisting of a flat surface of white sand with rocks exquisitely positioned, the stone garden offers beauty of ultimate simplicity, transcending time and creating a profound impression on all that view it. We at ROHM have also continued to integrate our knowledge into small “stones” so as to achieve a combination of increased sophistication and miniaturization of ICs and other semiconductor products. Beauty in a simply, or even ultimately, condensed form - with this condensed simplicity serving as a background theme, we selected Ryoanji Temple in Kyoto as the motif for ROHM’s Annual Report 2004. (Photo by: Katsuhiko Mizuno) © MIZUNO KATSUHIKO Financial Highlights ROHM CO., LTD. and Subsidiaries Years ended March 31, 2004, 2003 and 2002 Millions of yen 2004 For the Year: Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income before income taxes and minority interests . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization . . . . . . . . . . . . . . . . . . 2003 Thousands of U.S. dollars 2002 % change 2004 ¥ 355,630 194,857 ¥ 350,281 185,795 ¥ 321,265 198,631 $ 3,355,000 1,838,274 +1.5 +4.9 66,266 94,507 68,363 96,123 56,176 66,458 625,151 891,575 –3.1 –1.7 101,070 37,268 63,717 51,958 45,869 90,476 37,479 53,003 40,548 52,424 68,129 28,829 39,274 43,326 52,377 953,491 351,585 601,104 490,170 432,726 +11.7 –0.6 +20.2 +28.1 –12.5 ¥ 535.62 ¥ 328.24 327.89 19.00 $ 5.05 +20.2 55.00 ¥ 445.51 445.30 22.00 0.52 +150.0 At Year-End: Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 715,938 846,800 ¥ 676,577 805,693 ¥ 639,210 740,627 $ 6,754,132 7,988,679 +5.8 +5.1 Number of employees . . . . . . . . . . . . . . . . . . . . . . . . . 18,591 16,841 15,174 Per Share Information (in yen and U.S. dollars): Basic net income . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted net income . . . . . . . . . . . . . . . . . . . . . . . . . . Cash dividends applicable to the year . . . . . . . . . . . Notes: +10.4 1. U.S. dollar amounts are provided solely for convenience at the rate of ¥106 to US$1, the approximate exchange rate at March 31, 2004. 2. Certain reclassifications of previously reported amounts have been made to conform with current classifications. 3. Certain retroactive adjustments of previously reported per share information have been made to conform with current method (see Note 2(m) to consolidated financial statements). Diluted net income per share for 2004 is not disclosed because there is no outstanding potentially dilutive securities. Sales by Product Category Sales by Geographic Region 409.3 360.1 350.3 355.6 321.3 Displays Passive Components Americas Europe 4.1% 5.8% 10.3% 6.9% 43.7% Integrated Circuits 44.1% Japan 46.0% 39.1% Asia '00 '01 '02 '03 '04 Discrete Semiconductor Devices 1 To Our Shareholders and Friends n the fiscal year ended March 31, 2004, the semiconductor I replacing conventional cameras and VCRs. In the area of market as a whole remained sluggish in the first half of the cellular phones, third-generation phones are gaining rapid year due to the effects of international conflicts and SARS, acceptance in the marketplace. In addition to conventional except the markets for some electronic components for digital phone-call functions, these third-generation products include audio/video equipment such as flash memories. However, in sophisticated multimedia capabilities, such as camera functions the second half, with the U.S. consumer spending showing and reproduction and delivery of music and images. The electronics market is expected to grow due to improvement, as well as with the economic recovery in Asia following the SARS scare, market demand rebounded steadily. technological advances in digital audio/video equipment, cellular phones, automobile-related equipment, and information Driving recovery in this demand is the increasing sophistication of cellular phones and digital audio/video and communications equipment. In anticipation of this, ROHM equipment, such as digital still cameras and DVD recorders. is enhancing its overall technological capabilities in a number of key areas, including circuit design and fine-process technologies The ever-increasing demand for digitization and broadband transmission has opened up new markets. Digital still cameras for system LSIs, and optical device and next generation device and DVD recorders have experienced rapid widespread use, technologies. Exquisite Geometry © MIZUNO KATSUHIKO 2 © MIZUNO KATSUHIKO New Technologies and Products continues to make steady progress towards commercial production. ROHM is proceeding with the development of a R OHM’s bases for technological enhancement include the 0.13 µm fine process, the leading-edge technology for system VLSI Research Center, Optical Device Research Center, LSIs, and plans to open commercial production in 2004, starting and the LSI Test Technology Center, which are located at the with image processors for cellular phones. headquarters premises, as well as the Yokohama Technology In the field of optical devices, ROHM commenced mass Center and the Kyoto Technology Center. At these production of a new laser diode for DVD recorders in the spring technological bases, approximately 2,000 engineers are engaged of 2004. This new laser diode delivers the highest power in the in research and development. industry and is rapidly expanding its market share. Sales of As a custom LSI manufacturer, ROHM continues to deliver leading-edge solutions that meet customer application requirements and exceed customer expectations, by optimizing ROHM’s blue-and-white LEDs are also increasing as this market continues to grow. Regarding R&D in next-generation essential technologies, digital, analog, and mixed digital/analog technologies. ROHM has organized a dedicated Research and Development Responding to the growing need for higher performance and Headquarters. This facility consists of six R&D centers for next increased LSI miniaturization, ROHM’s proprietary and generation semiconductor integrated circuits, multi-functional innovative LSI design system, REAL SOCKET, allows a quick integrated circuits, nanobionics, new material devices, displays, response to customer requests for system LSIs. By employing and optical devices. The Company is also involved in a wide new technologies and enhancing our customer support system, range of joint R&D projects, including industrial-academic and by ultimately delivering value-added LSIs, we maintain our collaboration, establishment of a cross-industrial collaboration leadership in the industry. alliance, and participation in Japanese national projects, ASCA ROHM also focuses on the development of fine process (Advanced Semiconductors through Collaborative technology and larger-diameter wafers. With the completion of Achievement) and MIRAI (Millennium Research for Advanced a prototype production line for 300-mm wafers at ROHM Information Technology). HAMAMATSU CO., LTD. in the spring of 2004, the Company The Ryoanji Garden © MIZUNO KATSUHIKO Kyoyo-chi pond occupies almost half of the garden landscape of Ryoanji. An ancient text says that far back in the Heian period (794 - 1185), noblemen enjoyed music and dance on dragon-headed boats on the pond, and admired the landscape while walking along the path around the pond. Immediately on the left upon entering the Sanmon (front gate) is the expanse of the pond, always full of water. Adorning the bank of the pond are seasonal beauties such as cherry blossoms, irises, water lilies, scarlet-tinted autumnal leaves and thunberg spireas. Walking alongside the pond, where ancient texts say mandarin ducks were playing and persons of refined taste were promenading, we go up a gentle flight of stone steps lined with fences known as “Ryoanji-gaki” (Ryoanji fencing) made of split bamboo woven in a simple manner, to reach the Kuri (monks’ living quarters) and the Hojo (the main temple building). (Photo by: Katsuhiko Mizuno) 3 consistent and reliable supply to customers, ROHM secures Production Technology and Systems more than one mass production facility for each product W hile the electronics market is expected to grow over the category. With the enhanced production capacities in China, medium and long term, global competition is combined with our current production bases in Thailand, the intensifying, particularly in Asia. To address this issue, ROHM Philippines, and other countries, our supply system is has been reorganizing its domestic and overseas production continually updated to ensure a stable product supply to methodology, establishing a system that enables the Company customers worldwide, while avoiding potential supply risks to ensure stable product supply in response to market needs. caused by events such as natural disasters and international ROHM is continuing its effort to enhance two plants in Tianjin, China, as a core production base of the ROHM group, conflicts. The majority of ROHM’s manufacturing equipment is following those in Thailand and the Philippines. At the two developed in-house. Technologies relating to our manufacturing plants where transistors, diodes, resistors, LEDs, and LED equipment have formed the foundation for the high quality and displays are manufactured, the Company will continue reliability of our products. ROHM’s unique production production-capacity enhancement, along with plans to start technologies are developed by our domestic competence centers production of laser diodes. ROHM also has a plant in Dalian, and then shared with the overseas plants of the ROHM group China, which will begin production of CMOS camera modules, throughout the world. With these production technologies and in addition to printheads, LCDs and other module products. plants, ROHM can manufacture and supply high-quality Placing the highest priority on establishing and ensuring a products worldwide. © SHIBATA AKIRA © SHIBATA AKIRA 4 © SHIBATA AKIRA Social Responsibility We have also been proceeding with the faithful and effective implementation of our environmental management system based B elieving that social responsibility is paramount, ROHM is on ISO 14001 standards. This implementation is an integrated spearheading efforts toward establishing a fair and environmental management system for the ROHM group as a transparent management system in areas such as corporate whole and not just an activity conducted by each of the group governance, corporate ethics, and observance of statutes. The companies independently. For the first time in the industry, a Company is also expanding its environmental-conservation third-party certification organization has awarded ROHM a activities and philanthropy projects. To enlighten and educate single ISO 14001 certification covering all domestic and employees, the Company has formulated the Rules of Conduct overseas group companies. This achievement is a testimony to for Employees and has developed a follow-up policy to ensure ROHM's group-wide commitment to environmental that the Rules are fully understood and observed by employees. conservation. The Company is also committed to disclosure of information, to fulfill its corporate and social responsibilities. Examples of our environmental conservation activities include the development of environmentally friendly, energy and resource-saving products, zero-emission of waste, complete elimination of environmentally controlled substances, and green The Environment procurement. N ot satisfied with merely reducing waste, ROHM is committed to preserving the environment by eliminating Besides CO2 emission-reduction efforts, forestation activities to achieve natural absorption of CO2 have proven extremely waste. To that end, the Company has established an effective in preventing global warming. ROHM is an active Environmental Conservation Committee to discuss significant participant in the "ROHM Forest," an extensive project policies and measures for environmental conservation. The dedicated to planting eucalyptus trees in Southern Australia. Committee consists of six subcommittees responsible for The objective of the forestation effort is to cover an area of 10 greenhouse gasses, energy conservation, environmental burden million m2 by 2008. This effort has already achieved reduction, waste and recycling, environmentally controlled tremendous success by reforesting 4.93 million m2 as of 2003. substances, and packaging materials. Through their activities By extending reforestation over the states of Victoria and shared at all the business levels of the ROHM group, the South Australia, ROHM is the first Japanese semiconductor Company continues to lead the industry in environmental manufacturer to undertake such a large-scale project. conservation. The Hojo (the main temple building) In 1797, a dis as trous fire des troyed mos t of the buildings of R yoanji, after whic h the Hojo of S eigen-in Temple, whic h is one of the Tac c hu (s ubtemple) of R yoanji, was reloc ated to R yoanji to be us ed as its Hojo. Originally c ons truc ted in 1606, the reloc ated and rebuilt Hojo is an example of the grand arc hitec tural heritage of the Azuc hi-Momoyama period and is des ignated as an important national c ultural property. In the Hojo is a fus umae (painting on papered s liding doors ) c alled "Nobori-ryu K udari-ryu-zu" by K akuo S ats uki, a great mas ter of the Nanga S c hool of Painting, whic h s hows two dragons , one as c ending and one des c ending, in breathtakingly bold and dramatic images drawn with exquis ite brus hs trokes . The fus umae provides a c ris p tens ion to the tranquil inner s pac e. On the north-eas t c orner of the Hojo, there is a ts ukubai, or c hozubac hi (s tone was hbas in), whic h is believed to have been c ontributed to the temple by Mits ukuni Tokugawa (1628 - 1700), a member of the Tokugawa s hogunate family, in token of his gratitude for the books he borrowed from the temple when c ompiling his "Dai-Nippon-S hi", the G reat His tory of J apan. The ts ukubai has a unique ins c ription. There are four c harac ters c his eled around its s ide, whic h are read as " " and if the s quare hole that holds the water in the middle of the ts ukubai is inc luded as the radic al (i.e. a c omponent of the c harac ter), this ins c ription is pronounc ed, "Ware tada taru o s hiru." Trans lated, it reads "I learn only to be c ontented." This s tates a doc trine taught by B uddha, whic h is the es s enc e of B uddhis m and is als o s aid to be reflec ted in the tea c eremony. (Photo by: Akira S hibata ) © SHIBATA AKIRA 5 features performances by students selected from prominent Occupational Health and Safety music schools around the world. R OHM is also making continued group-wide efforts in the area of occupational health and safety. A health and safety Individuals who received scholarships and/or participated in seminars continue to play an active role in the world of music, committee has been organized at each individual ROHM including performances on the professional concert stage. Many Company to ensure the well being of employees. This have become prizewinners in famous international competitions, commitment has brought successful results. The Company has with 66 participants having won first, second, or third prizes to obtained a Type-V Zero Accident Certificate from the Ministry date. of Health, Labor and Welfare of Japan, which is considered the In the year under review, ROHM provided continued support highest-ranking certification showing that the Company has one for a number of musical events. These events include the of the longest records of zero-accident operation. ROHM has ROHM Lyric Selection concert series, as well as the Seiji also achieved ten consecutive years of zero accidents of the type Ozawa Ongaku-juku Opera Project series, which was created to that would normally cause absence from work. assist aspiring musicians. Other events held with the support of ROHM include the Autumn Kyoto Music Festival Opening Concert, the Opera Educational Program for High School Corporate Philanthropy Students, and other concert events. I n addition to the benefits that our business brings to society, ROHM acknowledges its role as a good corporate citizen by actively supporting cultural and sporting activities. The ROHM Music Foundation was established in 1991 with We also provided support for major sporting events, including the Lake Biwa Mainichi Marathon, one of the races that determines Japan’s representatives in the 2004 Athens Olympics (first-place winner: Jose Rios); the Kyoto City Half Marathon, the objective of contributing to the progress of music as a Japan’s largest half marathon (first-place winner for men, cultural activity. The Foundation provides continuous support Takashi Maeda; first-plane winner for women: Rie Ueno); and for musical events, international exchanges, and music studies, the Inter Prefectural Men’s Ekiden Hiroshima 2004 (First place: and offers scholarships for musicians. The Foundation also Nagano Prefecture). makes substantial contributions to the development and nurturing of musicians by sponsoring music seminars. One such ROHM will continue to support cultural and sporting activities in the years ahead. event, the annual Kyoto International Music Students Festival, © MIZUNO KATSUHIKO 6 Distribution of Profits to Shareholders R egarding profit distribution to shareholders, ROHM will press ahead with its current measures and policies to live up to shareholders’ expectations, in light of comprehensive consideration given to various factors, including business performance, financial position, and expected demand for funds for business investment aimed at improving corporate value. To be concrete, with consolidated dividend payout ratio also taken into account, the Company will continue to direct its efforts toward satisfactory direct profit distribution based on corporate performance. Accordingly, for the fiscal year ended March 31, 2004, the Company has decided to pay annual dividends of ¥55.00 per share, a large increase from the previous year. ROHM will also continue to develop and implement policies and measures for enhancing corporate value for shareholders, including amendment to the Articles of Incorporation regarding purchase of treasury stock, so as to ensure expeditious profit distribution in response to changes in the business environment. Ken Sato President © MIZUNO KATSUHIKO Rock Garden © MIZUNO KATSUHIKO The rock garden creates its own distinctive atmosphere in a limited oblong space of 75 tsubo (approx. 250 m2). The karesansui garden, consisting simply of a flat surface of white sand with fifteen rocks arranged in an abstract composition that indicates some sense of deliberateness, provides a dignified beauty. Exquisitely and skillfully arranged, the rocks protruding above the raked white sand seem to represent the ocean with islands protruding above its surface, or mountain peaks soaring above a sea of clouds. The garden’s overall simplicity allows viewers free imagination and interpretation. Bounded by tsuijibei (a type of earthen wall), the rock garden is now a completely enclosed space that generates its own unique atmosphere as if it were clipped out of the surrounding landscape. However, records suggest that when originally laid out, the garden used as “shakkei” (borrowed scenery) the view of the distant Nishiyama hills. The fifteen rocks are inexplicably arranged in such a manner that visitors can see only thirteen or fourteen of them at one time, no matter what angle the garden is viewed from. This, combined with the fact that there is no record when and by whom the garden was laid out, it remains full of mystery. (Photo by: Katsuhiko Mizuno) 7 ROHM at a Glance Integrated Circuits Photo Link Modules Light Emitting Diodes Monolithic ICs Transistors Laser Diodes Power Modules Diodes Resistors Monolithic ICs Power Modules Photo Link Modules Discrete Semiconductor Devices Transistors Diodes Light Emitting Diodes Laser Diodes Passive Components Resistors Capacitors Displays Liquid Crystal Displays Thermal Heads / Image Sensor Heads LED Displays Others 8 Capacitors Liquid Crystal Displays LED Displays Integrated Circuits % change from previous year -2.5 2004 155,447 43.7 2003 159,424 45.5 9.7 2002 145,349 45.2 -17.2 2001 175,455 42.9 18.3 2000 148,339 41.2 12.0 % of net sales % change from previous year 2.0 Discrete Semiconductor Devices Thermal Heads / Image Sensor Heads % of net sales 2004 139,009 39.1 2003 136,252 38.9 11.5 2002 122,173 38.0 -22.3 2001 157,237 38.4 9.9 2000 143,114 39.7 10.2 % of net sales % change from previous year Passive Components 2004 24,601 6.9 -0.4 2003 24,688 7.1 -2.5 2002 25,313 7.9 -40.7 2001 42,691 10.4 17.3 2000 36,401 10.1 -1.3 % of net sales % change from previous year Displays 2004 36,573 10.3 22.3 2003 29,917 8.5 5.2 2002 28,430 8.9 -16.3 2001 33,952 8.3 5.4 2000 32,226 9.0 9.4 9 Divisional Review INTEGRATED CIRCUITS DISCRETE SEMICONDUCTOR DEVICES Monolithic ICs Transistors Mastering the art of design in the system LSI New energy-efficient solutions With the growing demand for multifunctional IT-related equipment and the widespread use of digital audio/video equipment, customer requirements for system LSIs are becoming increasingly complex as time-to-market windows turn smaller. ROHM system LSIs are based on the Company’s expertise, its proven success at manufacturing custom-designed LSIs, and the advanced planning and circuit design capabilities of its forwardthinking engineers. At ROHM, we exceed the system LSI requirements of our customers by delivering complete design solutions from product planning through wafer manufacturing, mass production, and packaging, to comprehensive support. Our unparalleled expertise and proven track record uniquely qualifies us as the industry leader in advanced linear circuit design. Our successful track record for delivering proven, leading-edge analog and digital interface modules, digital cores, and proprietary low-power, low-noise circuit technologies speaks for itself. All design tools at our design centers are automated, enabling us to deliver custom-designed system LSI products while meeting the most aggressive production times and delivery cycles. A recent example of our innovative approach to today’s real-world challenges is our REAL SOCKET design system. Developed as an innovative solution to system LSI design challenges, REAL SOCKET is now being used to mass-produce system LSI products. REAL SOCKET is just one example of how our innovative approach to the challenges facing us today, will empower us tomorrow to meet customer needs for larger-scale integration with greater speed and reliability than the competition. ROHM is the largest producer of discrete transistors in the world. By responding promptly to the needs of our customers and the industry, ROHM maintains its leading position in the market. One reason for securing our first rank position in the industry is our response to the increasing demand for resource and energy-saving products. To address this worldwide concern, ROHM has expanded its environmental-protection products with low-on-resistance MOSFETs and low-saturation small signal bipolar transistors. These products are available in microminiature VMT3 packages (1.2 mm by 0.8 mm) as well as in EMT5/EMT6 packages (1.6 mm by 1.2 mm) for dual transistors. ROHM also leads the industry in developing and marketing new energy and space-saving transistors that deliver unparalleled reliability and exceptional longevity. Meeting diverse market needs, ROHM transistors are available in thin, high-power packages and a variety of configurations. Power Modules Our tremendous contribution to energy conservation ROHM power modules, including AC/DC and DC/DC converters, contribute to energy conservation and the prevention of global warming. In recent years, the trend toward low-voltage, large-current power supplies has accelerated in tandem with the speed of microcomputers. This trend has led to the growing demand for extremely efficient power supply solutions. ROHM AC/DC converters meet this high-efficiency requirement. These miniaturized, lightweight power modules were developed using high-breakdown-voltage and high-speed switching circuit technology. Their ability to reduce standby current significantly compared to transformer-type products have made ROHM’s AC/DC converters the standard power-supply IC for home appliances. ROHM DC/DC converters are also reaching new levels of efficiency, miniaturization, and safety. With a dedicated LSI that incorporates a speed-up circuit as well as a wedge-shaped protection circuit, ROHM DC/DC converters deliver reference voltage precision of ±1%. Diodes Utilizing original component technology to develop advanced diodes Diodes are the most basic discrete semiconductor components. ROHM develops and markets diode products that command the top share of the world market. This success is attributed to our commitment to developing solutions that solve today’s problems with an eye to addressing tomorrow’s challenges. One example of this forward-thinking approach is our proprietary device technology. This technology, unique to ROHM, allows our Schottky diodes to combine low forward voltage (VF) and low reverse current (IR) in the same diode. This marriage of VF and IR was impossible to achieve just a few years ago. By focusing on technological breakthroughs instead of barriers, ROHM can deliver innovative solutions that have earned strong customer support in a myriad of markets. Another example of how ROHM has moved ahead of the competition is by producing and marketing PIN diodes housed in the world’s smallest package, the VMN2 (1.0 mm by 0.6 mm). These PIN diodes are ideally suited for the expanding cellular phone market. In addition, the Company has completed the development of power Schottky diodes and fastrecovery diodes (FRDs), which have received positive customer feedback for operating characteristics and reliability. ROHM continues to serve market demands by meeting technological challenges as they evolve, developing highly reliable solutions, and offering a stable source for supplying products. Light Emitting Diodes Photo Link Modules Constant innovations in product miniaturization By combining optical semiconductors (infrared LEDs and PIN photodiodes) developed in-house, dedicated LSI circuit-design technologies and micro-miniature assembly technologies, ROHM supplies IrDA and photoreceptor modules that continue to lead the industry in electronic product miniaturization and energy efficiency. Today, these modules have a wide range of applications. Examples include: * IrDA modules used with networking devices for infrared wireless data communications between cellular phones, notebook computers, and personal digital assistants (PDAs). * Photoreceptor modules used with infrared receivers in remote-control units for household appliances such as air-conditioners and DVD players. 10 Bright sources in energy efficiency ROHM is one of the world’s leading producers of both surfacemount LEDs and conventional LED lamps. With our advanced compound semiconductor technology, we can design and develop packages suited to the needs of the times and the requirements of our customers. ROHM’s LED product family includes the bright LED series (from red to blue) that incorporates our original four-element (AlGaInP) compound. Our LED lamps are available in super-thin (1.6 mm by 0.8 mm; 0.4 mm in thickness), top-view, side-view, and reverse-mount packages. Our LED lamp products include a one-of-a-kind 3-mm diameter model, with a pressure release structure that can be directly mounted on a board using a pick and place machine. While our LED product offerings may be diverse, they share the same high reliability and advanced energy-saving features that our customers have come to expect. DISPLAYS Laser Diodes Liquid Crystal Display Setting the worldwide standard in the optical disc market Combining semiconductor, panel, and mounting technologies in one module By offering a product line of highly reliable solutions developed with advanced device technology, ROHM has become the world leader in producing laser diodes for the growing optical disc market. The optical disc-drive market is undergoing a number of changes. One major shift is seen in the transition from playback-only to recordable models. Another shift is occurring in the laser-printer arena, where faster speeds and higher resolutions are always in demand. Despite these transitions, ROHM laser diodes are finding widespread applications in the optical disc-drive market. One reason for this success is ROHM’s active efforts to develop higher laser-output power products in anticipation of future market trends. We have already surpassed the competition by delivering a 240 mW laser diode for 16-speed recording, the highest available speed for DVD recording. We have also enhanced our package lineup by adding a new thin-frame type product. As these examples demonstrate, our innovative solutions enable us to respond quickly to the increasingly diverse needs and the continuously shrinking time-to-market windows. ROHM’s STN color LCD modules with proprietary LCD driver ICs are widely used for cellular phone main and subdisplays. Equipped with super-thin panel and thin, high-intensity backlight, these modules enable customers to develop more compact, more lightweight electronic equipment than ever before. ROHM is also developing LCDs that deliver a large number of colors and higher resolutions to meet the requirements of next-generation cellular phones. For monochrome LCDs, ROHM has developed COG (Chip On Glass) modules with a distinctive panel structure. These COG modules eliminate the need for external components, and have earned a favorable reputation in today’s market. For facsimiles, printers and audio equipment, ROHM has developed large-scale graphics display units with our COG modules that require fewer components and consume minimal power. As cutting-edge components that deliver unparalleled features for electronic equipment, ROHM LCD modules have been adopted by a broad range of markets. PASSIVE COMPONENTS Resistors Flexibility in production, the key to market leadership Ultra-compact rectangular chip resistors and chip resistor networks, first developed by ROHM, are essential components for mobile phone handsets, PDAs, and other informationtechnology equipment. To meet growing demand, ROHM is increasing production of its recently released MCR006 resistor (0.6 mm by 0.3 mm), a powerful new addition to the conventional MCR series of chip resistors. The Company has also supplemented its resistor product line by adding the PMR series of chip resistors for battery detection (1 mΩ and over) and the MHR series of high-precision chip resistors (±0.1%). ROHM continues to meet the challenges of the new millennium by delivering a stable supply of high-quality products within shorter delivery cycles. Capacitors Higher capacity for smaller products ROHM multi-layer ceramic chip capacitors and tantalum capacitors boast the highest degree of reliability, thanks to our exclusive cutting-edge automated production system. However, supply and delivery management are key elements in securing market leadership. To that end, we have established production bases overseas, enabling us to supply capacitors to markets around the world. In response to the growing demand for surface mount components, ROHM offers an extensive lineup of multi-layer ceramic chip capacitors from ultra-compact (0402-size) to large (5750-size) products. The Company is also making tremendous strides in developing miniaturized, larger capacity tantalum capacitor products. Orders are increasing for ROHM M-case (1608-size) capacitors, designed for cellular phones and digital cameras. These 1608-size products are offered in ROHM’s original chip-size packages, which combine bottom and side electrodes to provide an ultra-low height of 0.8 mm. To meet a wider range of requirements, ROHM has also expanded its capacitor products to include new compact models of ultra-low ESR, functional polymer capacitors. Thermal Heads / Image-sensor heads Integrated innovations for industry-leading performance Using its leading-edge LSI technology, thin/thick-film hybrid technology and proprietary optical components, ROHM has developed thermal printheads and image-sensor heads for barcode printers, point-of-sale (POS) printers, and multifunctional imaging and printing devices. Made with a ceramic substrate to ensure stable operation under high temperature conditions, while producing only minimal dust, our thermal printheads and image-sensor heads offer exceptional reliability. For these reasons, our thermal printheads and image-sensor heads are extremely popular in the market. To meet the rising demand for higher speed mobile printers, ROHM has developed the GT series of thermal printheads designed for POS, Electronic Cash Register (ECR), and other handheld applications. We have also released the NE thermal head product series designed for color photo printers. The output from the NE series is comparable in quality to true photographs. Targeting the wide-ranging needs of the growing multifunction printer market, we have expanded our lineup of image-sensor heads to include the following image-sensor heads: * High-density 600 dpi contact image-sensor heads, with high-speed scanning capabilities for flatbed scanners. * Low-voltage 1200 dpi contact image-sensor heads. LED Displays Excellent visibility while maintaining energy efficiency ROHM has developed three-color displays, along with fullcolor dot-matrix LED modules that utilize RGB emitters. Providing a 1,024-level grayscale driver for each of the three colors (red, green, and blue), these modules can generate up to a billion colors. The modules are ideally suited for use in traditional message boards (such as those at airports, train stations, or any public arena), factory-automation equipment, and applications that involve large displays of video images and other graphics. Custom LED backlight modules from ROHM are widely used in mobile phones in Europe and other regions. By taking advantage of our proprietary CAE system, which allows a flexible development approach, ROHM can respond quickly to the increasing demand for thin, lightweight, low-power backlight modules. ROHM also offers high-intensity LEDs, which significantly reduce power consumption. 11 NEW Products New Products DVI Receiver LSI Ideal for Digital Displays With the increasing popularity of digital audio/video equipment such as DVD players, the flat-panel display market is witnessing a transition from conventional video input and Sterminal input systems to highresolution interfaces that enable viewing of high-resolution, highdefinition transmitted images. This transition, coupled with the ongoing shift from analog to all-digital interfaces, is providing the driving force for adopting Digital Visual Interface (DVI) as the industry specification for defining rich video content. In response to these industry trends, ROHM has developed the DVI receiver, BU6853EKV. On a single chip, the BU6853EKV incorporates the high-speed data transmission DVI core, the digital content protection specification core, ROHM’s proprietary encryption key protection circuit, and a color-space conversion circuit. Taking advantage of its expertise with linear CMOS and image signal processing technologies, the ROHM BU6853EKV delivers blistering data transmission speeds up to 3.24 Gbps while supporting flat-panel display specifications up to 1280 x 1024 SXGA resolution. When used with an external EEPROM, the BU6853EKV allows users to rewrite programs, improving usability for electronic-equipment manufacturers. The BU6853EKV incorporates ROHM’s proprietary encryption key protection circuit, making the LSI ideal for embedded applications that require data protection for their sensitive information. High-power Red Laser Diode for DVD Recording with Industry-leading 240-mW Optical Output Power 12 The market for recordable DVD drives is growing at exponential rates. As the need for faster recordable DVD drives grows, the demand for increased laser power that will enable DVD drives to record more information faster is also increasing. To address these needs, ROHM has focused its expertise toward high-power laser diodes, the essential components for highspeed DVD drives. To that end, ROHM has successfully developed the industry-leading 240-mW optical technology for x16 speed recordings. This breakthrough technology delivers significantly faster speeds than today’s 100mW power for x4 speed recording and completely bypasses the 160-mW power used for x8 speed recording. The 240-mW optical power technology has been incorporated into ROHM’s new RLD65PZB5 high-power laser diode. With its sizzling x16 recording speed, the RLD65PZB5 slashes disc writing times. And while electric current consumption usually increases with output power, the RLD65PZB5 incorporates ROHM’s proprietary device structure to deliver unprecedented low current consumption. The RLD65PZB5 delivers this breakthrough technology in the industry-standard 5.6-mm diameter package. Not satisfied to rest on its accomplishments, ROHM continues to develop and supply laser diodes that drive the optical-disc industry and exceed the expectations of its customers. New Fast Recovery Diodes Available in Two Types: Ultra High Speed and Ultra Low VF Demand is increasing for high-speed, low-VF (forward voltage) diodes in power-supply blocks of plasma TVs and other electronic equipment that require high-voltage actuation to improve the efficiency of power supply circuits, minimize power supply circuit-switching losses, and suppress heat generation. In response to this trend, ROHM has developed two series of fast-recovery diodes the ultra-high-speed series and the ultra-low-VF series: * The ultra-high-speed series delivers the industry’s fastest switching speed with a breakdown voltage of 200 V. * The ultra-low-VF series delivers a nearly 10% reduction in VF over previous models. Higher speed diodes require improved trr (reverse recovery time). However, there is a trade-off between trr and VF in that trying to improve trr usually causes the efficiency, or VF, to deteriorate. ROHM has overcome this trade-off by adopting new processes and optimizing materials. The result is a line of high-performance diodes that offer the industry’s fastest speed, based on tests conducted by ROHM. To take advantage of this technological breakthrough, the Company has expanded its diode lineup in the 3- to 10-ampere range to include the RFxx3 series, which deliver the fastest speed in the industry. To gain additional market share, ROHM also offers the RFxx1 series, which delivers the lowest-ever level of VF in the industry. Newly Developed AC/DC Converters with Global Compatibility Electrical outlet shapes and commercial power-supply voltages vary in different countries. The voltage used in Japan is 100 VAC, for example, while the neighboring country of China uses 220 VAC. These differences require electronic-equipment designers to spend huge amounts of time and money to design power-supply circuits for individual countries. ROHM’s new BP5045A is a compact, transformer-free AC/DC converter power-supply module that delivers global compatibility. The BP5045A accepts a wide input range from 100 to 240 VAC and delivers a fixed output voltage. The BP5045A’s breakthrough technology eliminates the time, costs, and complications associated with designing power-supply circuits. Now customers can create compact, economical, and highly efficient universal power supplies with fewer external components and accelerate their time-to-market by reducing engineering time. The BP5045A is ideally suited as a backup power supply for home-electronic equipment and applications that can benefit from reduced standby power. Financial Section CONTENTS Financial Review 14 Eleven-Year Summary 20 Consolidated Balance Sheets 22 Consolidated Statements of Income 24 Consolidated Statements of Shareholders’ Equity 25 Consolidated Statements of Cash Flows 26 Notes to Consolidated Financial Statements 27 Independent Auditors’ Report 40 Financial Review In the fiscal year ended March 31, 2004, the world economy as a whole remained sluggish in the first half of the year due to the effects of international conflicts and SARS, as well as continuous employment uncertainty mainly in the U.S. However, in the second half, with the U.S. housing investment and consumer spending showing improvement, as well as with signs of economic recovery in Asia following the SARS scare, the world economy took an upturn. The Japanese economy also remained slow in the first half of the year, but some signs of recovery finally appeared after the summer, including a stock market upturn and various economic indicators showing continuing improvement. In the electronic components industry, in the first half of the year the market recovery resulting from certain seasonal factors remained slow and the demand for electronic components was weak, except those for some components for digital audio/video equipment such as flash memories. Following the autumn lull, however, supported by steady consumer spending and increasing prevalence of digital still cameras and other digital audio/video equipment, the electronic component market remained steady and did not show the decline seen in previous years. In Japan, the demand for electronic components remained strong, especially in the second half of the year, due to a steady growth in production of digital audio/video equipment such as DVD recorders and digital still cameras, as well as the increasing sophistication of cellular phones. The Asian electronics market, despite its slowdown in spring due to the effects of SARS, remained brisk as a whole due to the continued production shift from the U.S., Europe, Japan and other parts of the world, as well as a strong growth not only in export but also in consumer spending in China and other Asian countries. In the U.S., while consumer spending was strong, the electronics market remained slow, affected by the continued production shift to Asia and the communications equipment market failing to attain fullfledged recovery. The European market, supported by an increase in demand for electronic components resulting from increasing sophistication of cellular phones, remained stable despite the continued production shift to Asia just as in the U.S. Under these circumstances, ROHM concentrated its efforts, as in the previous year, on capital investment efficiency improvement and streamlining of the manufacturing process, so as to ensure profits. The Company also continued the shift of domestic production lines to overseas plants in Thailand, the Philippines, China and some other countries. Moreover, in an effort to establish a system to respond to future market growth from the medium- to long-term viewpoints, ROHM purchased a semiconductor manufacturing plant in Tsukuba, Ibaraki Prefecture, of LSI Logic Japan Semiconductor Inc., the Japanese subsidiary of the U.S. company, LSI Logic Corporation, so as to secure sufficient production capacity in anticipation of a growth in demand for semiconductor products. In addition, ROHM took a progressive approach to the development of innovative products ahead of the market needs, enhancing its product line intended for cellular phones and digital audio/video equipment, as well as the operation of the Optical Device Research Center, which serves as an R&D and production base for optical devices, the market for which is expected to undergo rapid growth. ROHM has also strengthened its marketing system through the establishment of a customer-focused marketing organization. As a result of these aggressive efforts, ROHM’s net sales for the fiscal year ended March 31, 2004, increased 1.5% to ¥355.63 billion from the previous year, and net income was up 20.2% to ¥63.717 billion although operating income was down 1.7% to ¥94.507 billion. Results of operations 1. Results of operations 2. Income margin (¥ Million) 500,000 Operating Income Net Income (%) 40 Operating Income Margin Net Income Margin 9, 33 5 Net Sales 0 5, 35 30 27.4 32 35 1, 26 33.7 63 1 0, 28 5 0, 08 0 40 34.0 36 400,000 300,000 21.0 20 17.9 15.1 7, 74 7 ,7 17 ,5 0 10 63 53 ,0 74 94 ,1 96 8 39 .2 66 ,4 5 ,7 2 66 86 7 ,1 65 23 13 12.2 03 2 2, 34 12 100,000 0 0 '00/3 '01/3 '02/3 '03/3 '04/3 In the year ended March 31, 2004, despite the business downturn in the first half of the year due to the effects of international conflicts and SARS, the Company's business took an upturn in the second half, supported by economic recovery following the SARS scare and increasing prevalence of digital audio/video equipment. 14 20.7 18.5 3 200,000 26.6 '00/3 '01/3 '02/3 '03/3 '04/3 Operating income margin declined slightly due to the appreciation of the yen, while net income margin improved because a gain of 10.9 billion yen was accounted for as extraordinary gains as a result of the transfer of the substitutional portion of the governmental pension program. Sales 1. Sales by product category (¥ Million) 500,000 Integrated Circuits 2. Sales by geographical region and overseas production ratio Discrete Semiconductor Devices Passive Components (¥ Million) 500,000 Displays 409,335 400,000 350,281 175,455 Asia Americas 350,281 321,265 196,293 300,000 148,339 159,424 145,349 52.7 170,484 155,447 54.6 52.0 156,763 42.0 50.0 48.0 46.0 143,114 0 36,401 42,691 32,226 33,952 '00/3 '01/3 122,173 136,252 25,313 28,430 24,688 29,917 '02/3 '03/3 139,009 24,601 0 '04/3 28,577 18,382 21,039 34,206 29,522 '00/3 20 151,371 135,892 29,937 36,573 163,457 150,259 130,137 100,000 52.0 40 157,237 100,000 60 55,9 53.9 161,457 200,000 355,630 321,265 145,952 200,000 Overseas Sales Ratio (%) 80 360,080 355,630 Overseas Production Ratio Europe 409,335 400,000 360,080 300,000 Japan '01/3 '02/3 18,111 19,342 '03/3 14,812 20,598 0 '04/3 Despite the slow recovery of the market as a whole, sales of LCD modules for cellular phones, image sensor heads and printheads increased in the display category. In the area of discrete semiconductor devices, blue and white LEDs sold favorably. Sales increased in Asia due to an accelerated shift of electronics equipment production to Asia from other parts of the world. Overseas production ratio was 52.0%, up from 50.0% in the previous year as a result of the Company's enhanced production systems at production bases in Asia. 3. Integrated circuits sales by geographical region 4. Discrete semiconductor devices sales by geographical region (¥ Million) 200,000 Japan Asia Americas Europe 175,455 159,424 160,000 148,339 99,121 (%) 80 160,000 60 120,000 Japan 83,847 75,443 48.1 78,902 49.2 47.4 80,000 51,987 63,133 61,982 4,995 5,043 5,889 7,312 3,811 4,113 67,363 67,146 20 40,000 3,935 4,279 3,551 5,848 0 0 '02/3 '03/3 5. Passive components sales by geographical region (¥ Million) 200,000 Japan Asia Americas Europe 120,000 67.6 67.7 65.1 63.3 36,401 0 '00/3 60 54,592 55,126 66,019 69,020 63,677 56,687 20 14,787 12,420 9,716 7,977 13,555 '01/3 '02/3 9,881 7,568 '03/3 7,501 7,896 0 '04/3 160,000 60 120,000 65.1 Japan Asia Americas Europe Overseas Sales Ratio (%) 80 60 59.9 42,691 11,804 15,663 10,788 6,301 7,508 12,010 5,695 9,323 '01/3 60.7 47,793 (¥ Million) 200,000 (%) 80 80,000 40,000 59.5 6. Displays sales by geographical region Overseas Sales Ratio 160,000 139,009 40 '00/3 '04/3 136,252 122,173 60.9 60.0 15,697 '01/3 Overseas Sales Ratio (%) 80 62,876 61.5 40 Europe 157,237 59,964 40,000 '00/3 Americas 143,114 43.5 0 Asia 55,033 86,314 41.8 155,447 145,349 120,000 80,000 (¥ Million) 200,000 Overseas Sales Ratio 25,313 '02/3 8,822 8,392 3,106 4,993 24,688 '03/3 7,974 9,890 2,557 4,267 40 80,000 20 40,000 24,601 8,593 10,369 1,993 3,646 '04/3 0 51.5 51.1 46.2 32,226 33,952 17,332 7,399 2,944 4,551 0 '00/3 40 45.1 28,430 18,634 9,097 2,205 4,016 '01/3 29,917 13,894 8,831 1,749 3,956 '02/3 36,573 '03/3 20 14,676 14,510 10,441 1,738 3,228 16,922 1,767 3,208 0 '04/3 15 Financial Review 7. Sales by application Audio 14.6% Subassemblies 14.4% Other Industrial 1.3% Automotive 5.3% Home Appliance 2.5% Other Consumer 6.6% '03/3 Computer and OA 21.1% Telecommunications 13.8% Visual 7.6% Others 13.6% Visual 8.2% Others 12.2% Audio 13.4% Home Appliance 2.2% Subassemblies 14.7% Other Industrial 1.3% Automotive 4.9% Telecommunications 15.3% '04/3 Other Consumer 5.9% Computer and OA 21.1% Note : Data on this page include guess to some extent. Please use these data for your reference. Cost of sales, selling, general and administrative expenses, and operating income 1. Cost of sales, selling, general and administrative expenses, and operating income (¥ Million) 500,000 Cost of Sales S.G. & A. Expenses Operating Income 2. Cost of sales and selling, general and administrative expenses to net sales (%) 80 Cost of Sales Ratio 409,335 400,000 360,080 350,281 321,265 49.8 300,000 179,380 215,366 198,631 61,8 60 355,630 185,795 194,857 68,363 66,266 S.G. & A. Expenses Ratio 52.6 53.0 54.8 19.5 18.6 '03/3 '04/3 40 200,000 56,226 58,358 100,000 20 16.2 56,176 122,342 137,743 94,507 96,123 66,458 0 '00/3 '01/3 '02/3 17.5 13.7 0 '03/3 '00/3 '04/3 '01/3 '02/3 While sales remained at almost the same level for the year, rises in manufacturing expenses and labor costs contributed to the growth in the cost of sales. Selling, general and administrative expenses showed a slight decline. Capital expenditures and research and development costs 1. Capital expenditures (¥ Million) 150,000 Integrated Circuits 2. Research and development costs Discrete Semiconductor Devices Passive Components Displays Others (¥ Million) 35,000 R&D Costs 31,827 as % of Net Sales 31,381 30,000 125,020 120,000 (%) 10 25,000 22,735 60,000 20,832 60,876 90,000 20,000 15,000 57,997 32,137 24,197 43,326 0 '00/3 13,737 3,634 1,895 14,104 2,491 14,534 15,412 '01/3 '02/3 40,548 15,801 19,273 13,289 4,839 1,637 7,760 13,814 1,485 3,498 2,478 '03/3 8.8 8 6.7 6.3 6 5.1 51,958 30,000 21,443 9.1 10,000 4 5,000 2 23,129 16,028 1,666 4,466 6,669 '04/3 0 0 '00/3 '01/3 '02/3 '03/3 '04/3 To respond quickly to the increasing digitalization and strengthen cost competitiveness, ROHM made active investment, including that in the development of a miniature and thin package product line and a 0.13 µm fine process, as well as in the establishment of a prototype production line for 300 mm wafers. Moreover, in an effort to enhance its production system for discrete semiconductor devices, the Company purchased a semiconductor manufacturing plant in Tsukuba, Ibaraki Prefecture, of LSI Logic Japan Semiconductor Inc. As part of R&D efforts, besides improving R&D efficiency, ROHM is actively proceeding with the development of future technologies in a wide range of fields. 16 Financial position 1. Current ratio 2. Shareholders’ equity and total assets (Times) 8 (¥ Million) 1000,000 7.6 Shareholders' Equity 7 6.2 6 6.0 78.6 648,336 5 4 800,000 Shareholders' Equity (%) to Total Assets 100 86.3 84.0 740,627 805,693 764,495 639,210 676,577 84.5 846,800 715,938 591,409 600,000 4.1 77.4 Total Assets 80 60 509,718 3.3 3 400,000 40 200,000 20 2 1 0 0 '00/3 '01/3 '02/3 '03/3 0 '00/3 '04/3 '01/3 '02/3 '03/3 '04/3 Current ratio remained at almost the same levels as the previous year, with no major changes in current assets and liabilities. With the increase in the Company's profits, shareholders' equity and total assets are on the rise each year. 3. Return on equity (ROE) and return on total assets (ROA) 4. Inventory turnover (%) 20 Return on Equity (ROE) Return on Total Assets (ROA) (Month) 3 15.7 15 13.9 2.1 2 12.2 11.1 1.9 1.6 10 1.7 1.7 9.2 8,1 6.4 6.9 5 7.7 1 5.2 0 0 '00/3 '01/3 '02/3 '03/3 '04/3 Return on equity (ROE) and return on total assets (ROA) improved due to profit increase. '00/3 '01/3 '02/3 '03/3 '04/3 Inventory turnover period lengthened to 1.9 months due to an increase in inventories resulting from an increase in backlog of orders as of the end of the year under review. Per share information 1. Net income per share 2. Shareholders’ equity per share (¥) 800 (¥) 7,000 722.68 6,026.56 6,000 600 5,694.92 5,382.93 562.97 535.62 4,982.19 5,000 4,321.52 445.51 4,000 400 328.24 3,000 2,000 200 1,000 0 0 '00/3 '01/3 '02/3 '03/3 '04/3 Net income per share increased by ¥90 to ¥535.62 as the Company's net income improved. '00/3 '01/3 '02/3 '03/3 '04/3 Shareholders' equity per share increased to ¥6,026.56 due to the Company showing steady profits each year. 17 Financial Review Net income, Depreciation, and Capital expenditure (¥ Million) 160,000 Net Income Depreciation and Amortization Capital Expeditures (¥ Million) 70,000 64,879 120,000 60,000 57,628 86,165 80,000 39,274 53,003 63,717 50,000 52,377 52,424 45,869 40,000 – 43,326 – 40,548 – 51,958 66,727 48,325 47,489 40,000 – 40,000 53,082 38,759 0 – 57,997 20,000 – 125,020 – 80,000 30,000 10,000 – 120,000 – 160,000 14,227 0 '00/3 '01/3 '02/3 '03/3 '04/3 '00/3 '01/3 '02/3 '03/3 '04/3 Net balance (net income + depreciation and amortization - capital expenditure) Net financial revenue (¥ Million) 6,000 (¥ Million) 6,000 Interest and Dividend Income Interest 5,321 5,315 4,798 4,739 4,000 3,596 2,786 4,000 2,370 2,000 3,592 2,785 2,370 0 2,000 – 59 –6 –4 –1 0 '00/3 '01/3 '02/3 '03/3 '04/3 – 2,000 – 4,000 0 '00/3 '01/3 '02/3 '03/3 '04/3 In fund management, ROHM places top priority on safety. The Company recorded a ¥2.3 billion surplus in net financial revenue under the prolonged low interest rate condition in Japan. Number of employees Overseas Subsidiaries (Number) 20,000 Domestic Subsidiaries Exchange rate and foreign currency exchange gains or losses ROHM Nonconsolidated Number of R&D Employees 5,102 4,000 16,841 16,000 15,316 13,659 12,900 10,000 8,901 7,218 Average for Fiscal Year(US$) 122.3 100 2,000 50 0 0 – 2,000 6,000 – 4,000 4,000 2,000 1,221 '00/3 3,863 3,813 2,919 2,673 2,578 2,602 2,680 2,873 1,247 '01/3 1,331 '02/3 2,706 – 6,000 1,720 1,943 '03/3 '04/3 – 5,529 – 5,807 2,985 With the shift to overseas production, the number of employees is increasing at overseas production bases. The Company has also been augmenting personnel for research and development, chiefly in Japan. (¥) 150 114.0 125.1 109.7 11,295 9,575 8,000 18 4,452 111.9 15,174 12,000 0 Foreign Currency Exchange Gains or Losses 18,591 18,000 14,000 (¥ Million) 6,000 – 8,000 '00/3 '01/3 '02/3 – 7,241 '03/3 '04/3 The average yen-dollar exchange rate during this year was ¥114.0. The Company made a loss of ¥5.5 billion from exchange losses resulting from the appreciation of the yen. Stock data 1. Stock prices; Quarterly highs and lows in each year (Osaka Securities Exchange) (¥) 45,000 44,000 42,700 40,000 37,950 35,000 33,150 30,400 30,000 29,000 25,800 25,000 28,100 24,400 25,420 25,200 22,300 20,200 20,000 18,500 15,000 19,480 20,300 19,950 16,980 19,180 18,050 20,360 18,080 16,020 13,690 10,000 11,270 10,930 2Q 3Q 17,590 16,010 16,200 12,850 12,720 12,030 16,560 14,380 12,830 10,560 15,560 14,090 11,360 11,630 3Q 4Q 5,000 0 1Q 2Q 3Q 4Q 1Q 2Q '00/3 3Q 4Q 1Q '01/3 2. Cash dividends per share and payout ratio (¥) 70.0 Year-end First six months 4Q 1Q '02/3 2Q 3Q 4Q 1Q 2Q '03/3 '04/3 3. Price-earnings ratio (PER) Payout Ratio (Times) 80 (%) 12.0 60.0 63.4 55.0 50.0 10.0 59.6 60 10.3 40.0 8.0 30.0 42.50 6.0 5.7 40 4.9 20.0 10.0 19.0 19.0 3.4 9.50 2.6 '00/3 '01/3 29.1 20 12.50 28.8 25.1 2.0 9.50 '02/3 4.0 22.0 9.50 9.50 9.50 0.0 19.0 9.50 12.50 9.50 '03/3 0.0 0 '04/3 '00/3 '01/3 '02/3 '03/3 '04/3 2.3 2.2 '03/3 '04/3 The Company has decided to pay annual dividends of ¥55.00 per share in light of business performance of the fiscal year ended March 31, 2004, expected demand for funds, and other factors. 4. Price cash flow ratio (PCFR) 5. Price book-value ratio (PBR) (Times) 10 (Times) 50 40 8.3 39.9 8 30 6 25.3 20 4.2 4 17.9 14.5 3.6 14.6 10 2 0 0 '00/3 '01/3 '02/3 '03/3 '04/3 '00/3 '01/3 '02/3 Notes (Computation) • Price-earnings ratio (PER) =stock price (year-end closing price at Osaka Securities Exchange)/net income per share • Price cash flow ratio (PCFR) = stock price (year-end closing price at Osaka Securities Exchange)/cash flow per share* *Cash flow per share = (net income + depreciation and amortization)/number of outstanding shares • Price book-value ratio (PBR) = stock price (year-end closing price at Osaka Securities Exchange)/net assets per share The computation of net income per share and cash flow per share is based on the average number of shares of common stock outstanding during each year. The average number of common shares outstanding (consolidated) used in the computation for the fiscal year 2004, 2003, 2002, 2001, and 2000 was 118,784 thousand, 118,743 thousand, 118,671 thousand, 118,599 thousand and 117,777 thousand, respectively. 19 Eleven-Year Summary ROHM CO., LTD. and Subsidiaries Years ended March 31 1994 1995 1996 1997 Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥199,988 ¥241,493 ¥ 292,280 ¥ 297,790 Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,063 153,792 169,365 165,436 Selling, general and administrative expenses . . . . . . . . . . . . . . . . . 36,134 40,757 43,031 46,834 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,791 46,944 79,884 85,520 Income before income taxes and minority interests . . . . . . . . . . . . 23,046 45,030 78,303 89,962 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,899 23,589 38,055 42,888 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,512 22,685 38,199 45,540 Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,131 37,895 57,676 38,014 Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,590 36,074 31,881 37,563 Basic net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 123.79 ¥ 214.10 ¥ 343.63 ¥ 393.56 Diluted net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118.77 198.98 332.22 386.15 Cash dividends applicable to the year . . . . . . . . . . . . . . . . . . . . . 14.50 19.00 25.00 19.00 Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 208,575 ¥ 243,194 ¥ 282,750 ¥ 299,795 Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,147 88,193 114,207 103,520 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,081 58,308 33,127 12,259 Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201,618 236,609 292,249 338,541 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363,324 401,265 459,344 479,063 Number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,240 13,566 13,739 12,614 For the Year: Per Share Information (in yen and U.S. dollars): At Year-End: Notes: 20 1. U.S. dollar amounts are provided solely for convenience at the rate of ¥106 to US$1, the approximate exchange rate at March 31, 2004. 2. Certain reclassifications of previously reported amounts have been made to conform with current classifications. 3. Certain retroactive adjustments of previously reported per share information have been made to conform with current method (see Note 2(m) to consolidated financial statements). Diluted net income per share for 2004 is not disclosed because there is no outstanding potentially dilutive securities. 4. Effective April 1, 1994, the main foreign subsidiaries changed the method of depreciation for property, plant and equipment from the straight-line method to the declining-balance method. The effect of this change was to decrease “Income before income taxes and minority interests” for the year ended March 31, 1995, by ¥2,412 million. 5. Effective April 1, 1997, the Company and certain domestic subsidiaries changed their accounting policy for retirement benefits for directors and corporate auditors from the cash basis to the accrual basis (see Note 2(f) to consolidated financial statements). 6. Effective April 1, 1999, the Company and its domestic subsidiaries changed their accounting method or adopted a new accounting standard as follows: (1) changed their accounting method for employees’ retirement plans. The annual provision for retirement benefits was calculated to state the liability for retirement benefits at the amount of the expected benefits at the retirement date, less the fair value of the plan assets. The cumulative effect of this change, amounting to ¥5,076 million, was charged to income and “Income before income taxes and minority interests” was decreased by ¥2,277 million for the year ended March 31, 2000. (2) adopted a new accounting standard for research and development cost. The cumulative effect of this adoption, amounting to ¥2,146 million, was charged to income and “Operating Income” and “Income before income taxes and minority interests” were decreased by ¥2,193 million and ¥4,339 million, respectively for the year ended March 31, 2000. (3) changed their accounting method for interperiod allocation of income taxes in accordance with new accounting standards which are based on the asset and liability method. The cumulative effect of the change on interperiod tax allocation in prior years in the amount of ¥8,136 million is included as an adjustment to retained earnings as of April 1, 1999. The effect of this change was to decrease “Net Income” by ¥3,021 million for the year ended March 31, 2000. 7. Effective April 1, 2000, the Company and its domestic subsidiaries adopted (1) a new accounting standard for financial instruments, (2) a new accounting standard for employees’ retirement benefits, and (3) a revised accounting standard for foreign currency transactions. The effect of these adoptions to the consolidated statement of income was immaterial for the year ended March 31, 2001. Millions of yen Thousands of U.S. dollars 1998 1999 2000 2001 2002 2003 2004 2004 ¥ 335,923 ¥ 328,631 ¥ 360,080 ¥ 409,335 ¥ 321,265 ¥ 350,281 ¥ 355,630 $ 3,355,000 163,060 185,175 179,380 215,366 198,631 185,795 194,857 1,838,274 56,260 53,365 58,358 56,226 56,176 68,363 66,266 625,151 116,603 90,091 122,342 137,743 66,458 96,123 94,507 891,575 119,486 93,340 114,902 147,059 68,129 90,476 101,070 953,491 56,453 39,706 46,469 60,581 28,829 37,479 37,268 351,585 60,990 52,235 66,727 86,165 39,274 53,003 63,717 601,104 51,607 49,202 57,997 125,020 43,326 40,548 51,958 490,170 35,088 41,242 38,759 53,082 52,377 52,424 45,869 432,726 ¥ 521.71 ¥ 443.14 ¥ 562.97 ¥ 722.68 ¥ 328.24 ¥ 445.51 ¥ 535.62 $ 5.05 517.34 441.15 561.63 721.47 327.89 445.30 19.00 19.00 19.00 19.00 19.00 22.00 55.00 0.52 ¥ 345,045 ¥ 341,076 ¥ 407,524 ¥ 449,684 ¥ 445,094 ¥ 519,996 ¥ 530,121 $ 5,001,142 107,399 80,140 98,477 136,765 58,579 83,681 88,321 833,217 5,064 1,172 678 579 401,861 452,961 509,718 591,409 639,210 676,577 715,938 6,754,132 533,825 550,432 648,336 764,495 740,627 805,693 846,800 7,988,679 12,633 12,675 13,659 15,316 15,174 16,841 18,591 21 Consolidated Balance Sheets ROHM CO., LTD. and Subsidiaries March 31, 2004 and 2003 ASSETS Current Assets: Cash and cash equivalents (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . Short-term investments (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes and accounts receivable: Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Allowance for doubtful notes and accounts . . . . . . . . . . . . . . . . Inventories (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid pension cost (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Refundable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2004 2003 ¥ 310,578 35,423 ¥ 322,550 35,466 84,351 2,964 (591) 52,488 14,160 4,753 2004 $ 2,929,981 334,179 92,508 5,851 (503) 61,494 12,425 4,356 3,560 4,429 530,121 3,855 519,996 872,717 55,198 (4,745) 580,132 117,217 41,094 33,585 41,784 5,001,142 Property, Plant and Equipment: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Machinery and equipment (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net property, plant and equipment . . . . . . . . . . . . . . . . . . . . 53,968 150,282 355,761 23,592 583,603 (365,976) 217,627 52,537 146,665 340,014 17,779 556,995 (340,793) 216,202 509,132 1,417,755 3,356,236 222,566 5,505,689 (3,452,604) 2,053,085 Investments and Other Assets: Investment securities (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other (Note 2(a)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total investments and other assets . . . . . . . . . . . . . . . . . . . . 89,085 5,794 4,173 99,052 57,366 6,966 5,163 69,495 840,424 54,660 39,368 934,452 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 846,800 ¥ 805,693 $ 7,988,679 See notes to consolidated financial statements. 22 Thousands of U.S. dollars (Note 1) Millions of yen LIABILITIES AND SHAREHOLDERS' EQUITY Thousands of U.S. dollars (Note 1) Millions of yen 2004 2003 Current Liabilities: Notes and accounts payable: Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Construction and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 23,432 42,539 10,400 381 11,569 88,321 ¥ 17,866 24,228 28,733 747 12,107 83,681 Long-term Liabilities: Liability for retirement benefits (Note 5) . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,388 32,858 42,246 18,937 26,253 45,190 88,566 309,981 398,547 Minority Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 245 2,783 Shareholders' Equity (Notes 6 and 12): Common stock - authorized, 300,000,000 shares; issued, 118,801,388 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net unrealized gain on available-for-sale securities (Note 3) . . . . . Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treasury stock-at cost 19,751 shares in 2004 and 15,498 shares in 2003 . . . . . . . . . . . Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2004 $ 221,057 401,311 98,113 3,594 109,142 833,217 86,969 102,404 566,750 2,673 (42,557) 716,239 86,969 102,404 506,101 709 (19,363) 676,820 820,462 966,075 5,346,698 25,217 (401,480) 6,756,972 (301) 715,938 (243) 676,577 (2,840) 6,754,132 ¥ 846,800 ¥ 805,693 $ 7,988,679 23 Consolidated Statements of Income ROHM CO., LTD. and Subsidiaries Years ended March 31, 2004, 2003 and 2002 Thousands of U.S. dollars (Note 1) Millions of yen 2004 2003 2002 Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 355,630 ¥ 350,281 ¥ 321,265 $ 3,355,000 Operating Cost and Expenses : Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling, general and administrative expenses (Note 7) . . Total operating cost and expenses . . . . . . . . . . . . 194,857 66,266 261,123 185,795 68,363 254,158 198,631 56,176 254,807 1,838,274 625,151 2,463,425 Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,507 96,123 66,458 891,575 2,370 2,786 (1) (7,241) Other Income (Expenses): Interest and dividend income . . . . . . . . . . . . . . . . . . . . . Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange gains (losses) - net . . . . . . . . Gain on transfer of the substitutional portion of the governmental pension program (Note 5) . . . . . Loss on transfer to a defined contribution pension plan (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . Special retirement expense (Note 5) . . . . . . . . . . . . . . . . Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total other income (expenses) - net . . . . . . . . . . 10,900 Income before Income Taxes and Minority Interests . . . . . . . . . Income Taxes (Note 8): Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total income taxes . . . . . . . . . . . . . . . . . . . . . . . . Minority Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Per Share Information (Notes 2(m) and 11): Basic net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash dividends applicable to the year . . . . . . . . . . . . . . . See notes to consolidated financial statements. 24 (5,529) 2004 3,596 (4) 5,102 22,358 (52,160) 102,830 (20,802) (2,205) (1,191) (5,647) (5,436) (1,587) 1,671 9,690 61,916 101,070 90,476 68,129 953,491 26,731 10,537 37,268 35,281 2,198 37,479 22,621 6,208 28,829 252,179 99,406 351,585 1,027 6,563 6 (85) ¥ 63,717 ¥ 53,003 (26) ¥ 39,274 55.00 ¥ 445.51 445.30 22.00 $ 601,104 U.S. dollars Yen ¥ 535.62 (802) ¥ 328.24 327.89 19.00 $ 5.05 0.52 Consolidated Statements of Shareholders’ Equity ROHM CO., LTD. and Subsidiaries Years ended March 31, 2004, 2003 and 2002 Outstanding number of shares of common stock Balance at April 1, 2001 . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conversion of convertible debt . . . . . . . . . . . . . . . . Cash dividends, ¥19.00 per share . . . . . . . . . . . . . Bonuses to directors . . . . . . . . . . . . . . . . . . . . . . Net unrealized gain on available-for-sale securities . . . Foreign currency translation adjustments . . . . . . . . . Purchase of treasury stock . . . . . . . . . . . . . . . . . . . Balance at March 31, 2002 . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conversion of convertible debt . . . . . . . . . . . . . . . . Conversion of convertible debt by issuance of treasury stock . . . . . . . . . . . . . . . . Cash dividends, ¥19.00 per share . . . . . . . . . . . . . Bonuses to directors . . . . . . . . . . . . . . . . . . . . . . Net unrealized gain on available-for-sale securities . . . Foreign currency translation adjustments . . . . . . . . . Purchase of treasury stock . . . . . . . . . . . . . . . . . . . Balance at March 31, 2003 . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease in retained earnings due to decrease in ownership of an associated company . . . . . . . . . . . Cash dividends, ¥25.00 per share . . . . . . . . . . . . . . Bonuses to directors . . . . . . . . . . . . . . . . . . . . . . Net unrealized gain on available-for-sale securities . . . Foreign currency translation adjustments . . . . . . . . . Purchase of treasury stock . . . . . . . . . . . . . . . . . . . Balance at March 31, 2004 . . . . . . . . . . . . . Millions of yen Common stock Capital surplus Retained earnings ¥ 419,179 39,274 118,613,291 ¥ 86,687 ¥ 102,122 76,305 115 115 Net unrealized gain on availablefor-sale securities ¥ 788 Foreign currency translation adjustments ¥ (17,348) Total shareholders' equity Treasury stock ¥ (19) (2,254) (456) 209 10,820 (1,606) 118,687,990 86,802 102,237 111,061 167 167 997 455,743 53,003 (22) (41) (6,528) 83 (69) (2,255) (321) 4,716 (288) (12,835) (17,877) 118,785,890 86,969 102,404 506,101 63,717 (19,363) 709 (285) (243) (5) (2,970) (93) 1,964 (23,194) (4,253) 118,781,637 ¥ 86,969 ¥ 102,404 ¥ 566,750 ¥ 2,673 ¥ (42,557) (58) ¥ (301) ¥ 591,409 39,274 230 (2,254) (456) 209 10,820 (22) 639,210 53,003 334 14 (2,255) (321) (288) (12,835) (285) 676,577 63,717 (5) (2,970) (93) 1,964 (23,194) (58) ¥ 715,938 Thousands of U.S. dollars (Note 1) Common stock Balance at March 31, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease in retained earnings due to decrease in ownership of an associated company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash dividends, $0.24 per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bonuses to directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net unrealized gain on available-for-sale securities . . . . . . . . . . . . . . . . Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance at March 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 820,462 Capital surplus Retained earnings Net unrealized gain on availablefor-sale securities $ 966,075 $ 4,774,538 601,104 $ 6,689 Foreign currency translation adjustments $ (182,670) (47) (28,019) (878) 18,528 (218,810) $ 820,462 $ 966,075 $ 5,346,698 $ 25,217 $ (401,480) Treasury stock Total shareholders' equity $ (2,292) $ 6,382,802 601,104 (47) (28,019) (878) 18,528 (218,810) (548) (548) $ (2,840) $ 6,754,132 See notes to consolidated financial statements. 25 Consolidated Statements of Cash Flows ROHM CO., LTD. and Subsidiaries Years ended March 31, 2004, 2003 and 2002 Thousands of U.S. dollars (Note 1) Millions of yen 2004 Operating Activities: Income before income taxes and minority interests . . . . . . . . . . . . . . . . Adjustments for: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amortization of goodwill - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest and dividends income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency exchange losses (gains) - net . . . . . . . . . . . . . . . . . Increase (decrease) in net liability for retirement benefits . . . . . . . . Write-down of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . Changes in assets and liabilities: Decrease (increase) in notes and accounts receivables - trade . . Decrease (increase) in inventories . . . . . . . . . . . . . . . . . . . . . . . . Increase (decrease) in notes and accounts payables - trade . . . . . Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest and dividends - received . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest - paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes - paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash provided by operating activities . . . . . . . . . . . . . . . ¥ 90,476 2002 ¥ 68,129 2004 $ 953,491 45,869 17 (2,370) 2,016 (8,978) 9 52,424 (261) (2,786) 4,983 1,529 803 52,377 (83) (3,596) (4,066) 493 1,992 432,726 160 (22,358) 19,019 (84,698) 85 (10,822) (12,143) 6,605 2,601 123,874 2,569 15,203 19,427 (5,470) 1,001 145,407 3,753 (4) (64,431) 84,725 (102,094) (114,557) 62,311 24,538 1,168,623 24,236 (48,077) 78,366 (901) (7,655) 570 (420) 138,762 3,037 (1) (867) 140,931 Investing Activities: Decrease (increase) in short-term investments and investment securities - net . . Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash used in investing activities . . . . . . . . . . . . . . . . . . . (28,097) (45,221) 1,181 (72,137) (3,664) (35,828) 1,110 (38,382) 12,857 (79,440) (1,120) (67,703) (265,066) (426,613) 11,141 (680,538) Financing Activities: Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net cash used in financing activities . . . . . . . . . . . . . . . . . . . (2,970) (59) (3,029) (2,255) (290) (2,545) (2,254) 52 (2,202) (28,019) (556) (28,575) Effect of Exchange Rate Changes on Cash and Cash Equivalents . . . . . . . . (15,172) (7,794) 5,973 (143,133) Net Increase (Decrease) in Cash and Cash Equivalents . . . . . . . . . . . . . . . . . (11,972) 92,210 20,793 (112,944) Cash and Cash Equivalents at Beginning of Year . . . . . . . . . . . . . . . . . . . . . 322,550 230,340 209,547 3,042,925 Cash and Cash Equivalents at End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 310,578 ¥ 322,550 ¥ 230,340 $ 2,929,981 ¥ 320 14 ¥ 230 Noncash Financing Activities: Stock issued on conversion of convertible debt . . . . . . . . . . . . . . . . . . . Conversion of convertible debt by issuance of treasury stock . . . . . . . . . See notes to consolidated financial statements. 26 ¥ 101,070 2003 (453,557) 739,302 Notes to Consolidated Financial Statements ROHM CO., LTD. and Subsidiaries 1. Basis of Presenting Consolidated Financial Statements The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Securities and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. Certain reclassifications of previously reported amounts have been made to conform with current classifications. The consolidated financial statements are stated in Japanese yen, the currency of the country in which ROHM CO., LTD. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥106 to $1, the approximate rate of exchange at March 31, 2004. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate. 2. Summary of Significant Accounting Policies (a) Consolidation The consolidated financial statements include the accounts of the Company and all of its subsidiaries (together, the “Group”). Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influence are accounted for by the equity method. The significant difference between the equity in net assets acquired at the respective dates of acquisition and the cost of the Company’s investments in subsidiaries and associated companies, is being amortized over a period of five years. Pursuant to agreements on October 21,1999 between the Company and ROHM WAKO CO., LTD. and ROHM APOLLO CO., LTD., the two subsidiaries became wholly-owned subsidiaries of the Company on April 1, 2000, by utilizing the share exchange procedures under the Japanese Commercial Code (the “Code”). The excess of the acquisition costs over the Company’s equity in the fair value of the subsidiaries’ consolidated net assets is recorded as “Goodwill” in “Investments and Other Assets”. resulting from transactions within the Group is eliminated. (b) Cash equivalents Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits, certificate of deposits, and mutual funds investing in bonds, all of which mature or become due within three months of the date of acquisition. (c) Debt and equity securities Debt and equity securities are classified and accounted for depending on management’s intent. Available-for-sale securities, which represent securities not classified as either trading securities or held-to-maturity debt securities, are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported as a separate component of shareholders’ equity. The cost of available-forsale securities sold is determined based on the moving average method. The Group classified all debt and equity securities as available-for-sale securities. (d) Inventories Inventories are stated principally at cost determined by the moving average method. All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in assets 27 Notes to Consolidated Financial Statements ROHM CO., LTD. and Subsidiaries (e) Property, plant and equipment Property, plant and equipment are stated at cost. Depreciation is computed principally by the declining-balance method over the estimated useful lives of the assets. Estimated useful lives of the assets are principally as follows: Buildings .................................... 3 to 50 years Machinery and equipment.......... 2 to 10 years (f) Liability for retirement benefits The Company and certain domestic subsidiaries have two types of pension plans for employees; non-contributory and contributory funded defined benefit pension plans and accounted for the liability for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. Certain foreign subsidiaries also have local employees’ defined contribution pension plans. The contributory funded defined benefit pension plan, which is established under the Japanese Welfare Pension Insurance Law, covers a substitutional portion of the governmental pension program managed by the Company on behalf of the government and a corporate portion established at the discretion of the Company. In accordance with the Defined Benefit Pension Plan Law enacted in April 2002, the Company applied for an exemption from obligation to pay benefits for future employee services related to the substitutional portion which would result in the transfer of the pension obligations and related assets to the government upon approval. The Company obtained approval of exemption from the future obligation by the Ministry of Health, Labor and Welfare on December 16, 2002. In the current year, the Company applied for transfer of the substitutional portion of past pension obligations to the government and obtained approval by the Ministry of Health, Labor and Welfare on December 1, 2003. The Company transferred the substitutional portion of the pension obligations and related assets to the government on March 26, 2004 and recognized ¥10,900 million ($102,830 thousand) as “Gain on transfer of the substitutional portion of the governmental pension program” in other income for the difference between the balance of the retirement benefit liabilities brought forward and the amount actually transferred for the year ended March 31, 2004 . According to the enactment of the Defined Contribution Pension Plan Law in October 2001, the Company and certain domestic subsidiaries will 28 implement a defined contribution pension plan in the next fiscal year by which the former qualified defined benefit pension plan will be terminated. The Company and certain domestic subsidiaries applied accounting treatment specified in a guidance issued by the Accounting Standards Board of Japan (the “ASBJ”). The effect of this transfer was to decrease income before income taxes and minority interests by ¥2,205 million ($20,802 thousand) and was recorded as “Loss on transfer to a defined contribution pension plan” in the income statement for the year ended March 31, 2004. Effective April 1, 1997, the Company and certain domestic subsidiaries changed their accounting policy for retirement benefits for directors and corporate auditors from the cash basis to the accrual basis. The cumulative effect on prior years of this change, amounting to ¥1,843 million, was amortized over a period of five years beginning with fiscal 1998. Amounts payable to directors and corporate auditors upon retirement are subject to the approval of shareholders. (g) Research and development costs Research and development costs are charged to “Selling, general and administrative expenses” as incurred. (h) Leases All leases of the Company and its domestic subsidiaries are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that deemed to transfer ownership of the leased property to the lessee are to be capitalized, while other finance leases are permitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the notes to the lessee’s financial statements. (i) Income taxes The provision for income taxes is computed based on the pretax income included in the consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences. (j) Foreign currency transactions All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet 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. (k) Foreign currency financial statements The balance sheet accounts of foreign subsidiaries are translated into Japanese yen at the current exchange rates as of the balance sheet date except for shareholders’ equity, which is translated at the historical rates. Differences arising from such translation were shown as “Foreign currency translation adjustments” in a separate component of shareholders’ equity. Revenue and expense accounts of foreign subsidiaries and an associated company are translated into Japanese yen at the average exchange rates. (l) Derivatives and hedging activities The Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange and interest rates. Foreign exchange forward contracts and interest rate swaps are utilized by the Group to reduce foreign currency exchange and interest rate risks. The Group does not enter into derivatives for trading or speculative purpose. Monetary receivables and payables denominated in foreign currencies, for which foreign exchange forward contracts are used to hedge the foreign currency fluctuations, are translated at the contracted rate if the forward contracts qualify for hedge accounting. Interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at market value but the differential paid or received under the swap agreements are recognized and included in interest expenses or income when paid or received. (m) Per share information Effective April 1, 2002, the Company adopted a new accounting standard for earnings per share of common stock issued by the ASBJ. Under the new standard, basic net income per share is computed by dividing net income available to common shareholders, which is more precisely computed than under previous practices, by the weighted-average number of common shares outstanding in each period, retroactively adjusted for stock splits. Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into common stock. Diluted net income per share of common stock assumes full conversion of the outstanding convertible debt at the beginning of the year (or at the time of issuance) with an applicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants. Basic net income and diluted net income per share for the years ended March 31, 2004, 2003 and 2002 are computed in accordance with the new standard. However, diluted net income per share for 2004 is not disclosed because there is no outstanding potentially dilutive securities. Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year. (n) New Accounting Pronouncements In August 2002, the Business Accounting Council issued a Statement of Opinion, “Accounting for Impairment of Fixed Assets”, and in October 2003 the ASBJ issued Guidance No.6, “Guidance for Accounting Standard for Impairment of Fixed Assets”. These new pronouncements are effective for fiscal years beginning on or after April 1, 2005 with early adoption permitted for fiscal years ending on or after March 31, 2004. The new accounting standard requires an entity to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition. The Group is currently in the process of adopting these pronouncements, and is not able to determine the effect of adoption. 29 Notes to Consolidated Financial Statements ROHM CO., LTD. and Subsidiaries 3. Debt and equity securities Debt and equity securities held by the Group as of March 31, 2004 and 2003 were classified and included in the following accounts: Millions of yen Securities classified as: Available-for-sale: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2004 Thousands of U.S. dollars 2003 ¥ 21,032 17,650 89,080 ¥ 127,762 2004 ¥ 26,136 21,825 57,339 ¥ 105,300 $ 198,415 166,510 840,377 $ 1,205,302 Information regarding each category of the marketable securities included in “Cash and cash equivalents”, “Short-term investments” and “Investment securities” and classified as available-for-sale at March 31, 2004 and 2003 were as follows: Millions of yen 2004 Securities classified as: Available-for-sale: Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . Government and corporate bonds . . . . . . . . . . . . . Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost ¥ 2,976 98,464 21,006 ¥ 122,446 Unrealized Gains Unrealized Losses ¥ 4,378 239 69 ¥ 4,686 ¥ Fair Value 6 182 ¥ 7,348 98,521 21,075 ¥ 126,944 ¥ 188 Millions of yen 2003 Securities classified as: Available-for-sale: Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . Government and corporate bonds . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost ¥ 2,853 74,236 21,006 ¥ 98,095 Unrealized Gains Unrealized Losses Fair Value ¥ 308 102 ¥ 1,315 263 16 ¥ 1,594 ¥ 3,860 74,397 21,022 ¥ 99,279 ¥ 410 Thousands of U.S. dollars 2004 Securities classified as: Cost Available-for-sale: 28,075 Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . $ 928,906 Government and corporate bonds . . . . . . . . . . . . . 198,170 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,155,151 30 Unrealized Gains $ 41,302 2,255 651 $ 44,208 Unrealized Losses $ 57 1,717 $ 1,774 Fair Value $ 69,320 929,444 198,821 $ 1,197,585 Available-for-sale securities included in “Cash and cash equivalents”, “Short-term investments” and “Investment securities” whose fair value is not readily determinable as of March 31, 2004 and 2003 were as follows: Carrying values Millions of yen 2004 Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mutual funds investing in bonds (included in “Cash and cash equivalents”) . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thousands of U.S. dollars 2003 2004 ¥ 818 ¥ 907 $ 7,717 ¥ 818 5,114 ¥ 6,021 $ 7,717 Proceeds from sales of available-for-sale securities were ¥1,811 million ($17,085 thousand) and ¥7 million for the years ended March 31, 2004 and 2003, respectively. Gross realized gains and losses on these sales, computed on the moving average basis, were ¥3 million ($28 thousand) and ¥8 million ($75 thousand), respectively, for the year ended March 31, 2004 and ¥2 million and ¥0 million, respectively, for the year ended March 31, 2003. The carrying values of debt securities by contractual maturities for securities classified as available-forsale at March 31, 2004 and 2003 were as follows: Thousands of U.S. dollars Millions of yen 2004 Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due in one to five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due in five to ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2003 ¥ 17,550 78,321 2,056 ¥ 97,927 ¥ 21,769 51,890 ¥ 73,659 2004 $ 165,566 738,878 19,396 $ 923,840 4. Inventories Inventories at March 31, 2004 and 2003 consisted of the following: Millions of yen 2004 Finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Semi-finished products and work in process . . . . . . . . . . . . . Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 18,062 20,679 22,753 ¥ 61,494 Thousands of U.S. dollars 2003 ¥ 14,648 17,697 20,143 ¥ 52,488 2004 $ 170,396 195,085 214,651 $ 580,132 31 Notes to Consolidated Financial Statements ROHM CO., LTD. and Subsidiaries 5. Retirement Plans The Company and certain subsidiaries have retirement plans for employees, directors and corporate auditors. Under these retirement plans, employees terminating their employment are entitled to lumpsum and annuity payments based on their rate of pay at the time of termination, length of service and certain other factors. If the termination is involuntary, caused by retirement at the mandatory retirement age or caused by death, the employee is entitled to a greater payment than in the case of voluntary termination. “Liability for retirement benefits” includes retirement benefits for directors and corporate auditors of ¥1,983 million ($18,708 thousand) and ¥2,135 million at March 31, 2004 and 2003, respectively. The net liability for employees’ retirement benefits at March 31, 2004 and 2003 consisted of the following: Millions of yen 2004 Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognized prior service credit . . . . . . . . . . . . . . . . . . . . . . Net liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liability for retirement benefits . . . . . . . . . . . . . . . . . . . . . ¥ 28,947 (21,887) (4,011) 3,049 4,356 ¥ 7,405 Thousands of U.S. dollars 2003 ¥ 52,381 (28,566) (20,069) 8,303 12,049 4,753 ¥ 16,802 2004 $ 273,085 (206,481) (37,840) 28,764 41,094 $ 69,858 As of March 31, 2002, unrecognized prior service credit arose due to amendments made by the Company and certain subsidiaries to the articles of the pension plans to increase the eligibility age of participants for pension benefits. The components of net periodic pension costs for the years ended March 31, 2004, 2003 and 2002 were as follows: Millions of yen 2004 Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . . . . . Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . Amortization of prior service credit . . . . . . . . . . . . . . . Gain on transfer of the substitutional portion of the governmental pension program . . . . . . . . . . . Loss on transfer to a defined contribution pension plan. . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net periodic benefit costs . . . . . . . . . . . . . . . . . . . . . ¥ 1,536 866 (501) 1,765 (593) (10,900) 2,205 93 ¥ (5,529) Thousands of U.S. dollars 2003 2002 ¥ 2,111 1,233 (822) 1,264 (580) ¥ 2,670 1,412 (1,026) 577 (70) $ 14,490 8,170 (4,726) 16,651 (5,594) ¥ 3,563 (102,830) 20,802 877 $ (52,160) 207 ¥ 3,413 2004 Besides the above costs, the Group paid a special retirement allowance amounting to ¥5,436 million during the year ended March 31, 2002 and charged it to income. 32 Assumptions used for the years ended March 31, 2004, 2003 and 2002 were as follows: Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of return on plan assets . . . . . . . Allocation method of the retirement benefits expected to be paid at the retirement date . . 2004 2003 2002 2.0% 2.0% 2.0% 2.5% 2.5% 3.0% Straight-line method based on years of service 10 years 10 years Straight-line method based on years of service 10 years 10 years Straight-line method based on years of service Amortization period of prior service credit . . . 10 years Recognition period of actuarial gain / loss . . . . 10 years 6. Shareholders’ Equity Japanese companies are subject to the Code to which various amendments have become effective since October 1, 2001. The Code was revised whereby common stock par value was eliminated resulting in all shares being recorded with no par value and at least 50% of the issue price of new shares is required to be recorded as common stock and the remaining net proceeds as additional paid-in capital, which is included in capital surplus. The Code permits Japanese companies, upon approval of the Board of Directors, to issue shares to existing shareholders without consideration as a stock split. Such issuance of shares generally does not give rise to changes within the shareholders’ accounts. The revised Code also provides that an amount at least equal to 10% of the aggregate amount of cash dividends and certain other appropriations of retained earnings associated with cash outlays applicable to each period shall be appropriated as a legal reserve (a component of retained earnings) until such reserve and additional paid-in capital equals 25% of common stock. The amount of total additional paid-in capital and legal reserve that exceeds 25% of common stock may be available for dividends by resolution of the shareholders. In addition, the Code permits the transfer of a portion of additional paid-in capital and legal reserve to the common stock by resolution of the Board of Directors. The revised Code eliminated restrictions on the repurchase and use of treasury stock allowing Japanese companies to repurchase treasury stock by a resolution of the shareholders at the general shareholders meeting and dispose of such treasury stock by resolution of the Board of Directors. The repurchased amount of treasury stock cannot exceed the amount available for future dividend plus amount of common stock, additional paid-in capital or legal reserve to be reduced in the case where such reduction was resolved at the general shareholders meeting. The amount of retained earnings available for dividends under the Code was ¥308,202 million ($2,907,566 thousand) as of March 31, 2004, based on the amount recorded in the Company’s general books of account. In addition to the provision that requires an appropriation for a legal reserve in connection with the cash payment, the Code imposes certain limitations on the amount of retained earnings available for dividends. Dividends are approved by the shareholders at a meeting held subsequent to the fiscal year to which the dividends are applicable. Semiannual interim dividends may also be paid upon resolution of the Board of Directors, subject to certain limitations imposed by the Code. 7. Research and Development Costs Research and development costs charged to income were ¥31,381 million ($296,047 thousand), ¥31,827 million and ¥21,443 million for the years ended March 31, 2004, 2003 and 2002, respectively. 33 Notes to Consolidated Financial Statements ROHM CO., LTD. and Subsidiaries 8. Income Taxes The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in normal effective statutory tax rates of approximately 41.9% for fiscal 2004, 2003 and 2002. Foreign subsidiaries are subject to income taxes of the countries in which they operate. On March 31, 2003, a tax reform law concerning enterprise tax was enacted in Japan which changed the normal effective statutory tax rate from approximately 41.9% to 40.6%, effective for years beginning on or after April 1, 2004. The effect of this change on deferred taxes in the consolidated statements of income for the year ended March 31, 2003 was immaterial. The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities at March 31, 2004 and 2003 were as follows: Millions of yen 2004 Deferred tax assets: Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liability for retirement benefits . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ Thousands of U.S. dollars 2003 ¥ 7,748 11,253 1,667 7,458 8,015 36,141 8,248 11,761 1,636 3,559 5,738 30,942 2004 $ 77,811 110,953 15,434 33,576 54,132 291,906 Deferred tax liabilities: Undistributed earnings of foreign subsidiaries . . . . . . . . Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . Refundable enterprise tax . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41,752) (1,769) (284) (2,157) (45,962) (38,623) (1,991) (1,401) (42,015) (393,887) (16,689) (2,679) (20,349) (433,604) Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ (15,020) ¥ (5,874) $ (141,698) Deferred tax assets (liabilities) were included in the consolidated balance sheets as follows: Millions of yen 2004 Current Assets - Deferred tax assets . . . . . . . . . . . . . . . . . . . . Investments and Other Assets - Deferred tax assets . . . . . . . . Current Liabilities - Deferred tax liabilities . . . . . . . . . . . . . . Long-term Liabilities - Deferred tax liabilities . . . . . . . . . . . Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . 34 ¥ 12,425 5,794 (381) (32,858) ¥ (15,020) Thousands of U.S. dollars 2003 ¥ 14,160 6,966 (747) (26,253) ¥ (5,874) 2004 $ 117,217 54,660 (3,594) (309,981) $ (141,698) A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statements of income for the year ended March 31, 2004 was as follows: 2004 Normal effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lower income tax rates applicable to income in certain foreign countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax credit for research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actual effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.9% (4.4) (1.4) 0.8 36.9% Above information for 2003 and 2002 is not shown because the difference between the statutory tax rate and the actual effective tax rate was immaterial. 9. Derivatives The Group enters into foreign exchange forward contracts to hedge foreign exchange risk associated with certain assets and liabilities denominated in foreign currencies. All derivative transactions are entered into to hedge foreign currency exposures incorporated within its business. Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged assets or liabilities. The Group does not hold or issue derivatives for trading purposes. Because the counterparties to these derivatives are limited to major international financial institutions, the Group does not anticipate any losses arising from credit risk. Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate the authorization and credit limit amounts. Derivative contracts outstanding at March 31, 2004 and 2003 were immaterial. The Company and certain subsidiaries lease certain machinery, computer equipment and other assets. Total lease payments under finance leases for the years ended March 31, 2004, 2003 and 2002 were ¥27 million ($255 thousand), ¥44 million and ¥104 million, respectively. 10. Leases Pro forma information at March 31, 2004 and 2003, on an “as if capitalized” basis for finance leases that do not transfer ownership of the leased property to the lessee were as follows: Millions of yen Thousands of U.S. dollars Machinery and equipment Machinery and equipment 2004 Acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . Net leased property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 172 145 ¥ 27 2003 ¥ 215 171 ¥ 44 2004 $ 1,623 1,368 $ 255 35 Notes to Consolidated Financial Statements ROHM CO., LTD. and Subsidiaries Pro forma obligations under finance leases on an “as if capitalized” basis at March 31, 2004 and 2003 were as follows: Millions of yen 2004 Due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Due after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thousands of U.S. dollars 2003 ¥ 17 10 ¥ 27 2004 ¥ 30 14 ¥ 44 $ 161 94 $ 255 The imputed interest expense portion is included in the above obligations under finance leases. Depreciation expenses which are not reflected in the accompanying consolidated statements of income, computed by the straight-line method were ¥27 million ($255 thousand), ¥44 million and ¥104 million for the years ended March 31, 2004, 2003 and 2002, respectively. 11. Net Income Per Share The average number of shares used to compute basic net income per share for the year ended March 31, 2004 was 118,784 thousand shares. Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31, 2003 and 2002, were as follows: For the year ended March 31, 2003 Basic EPS Net income available to common shareholders . . . . . . . . . . Effect of Dilutive Securities Convertible debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted EPS Net income for computation . . . . . . . . . . . . . . . . . . . . . . . . . For the year ended March 31, 2002 Basic EPS Net income available to common shareholders . . . . . . . . . . Effect of Dilutive Securities Convertible debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted EPS Net income for computation . . . . . . . . . . . . . . . . . . . . . . . . . 36 Millions of yen Thousands of shares Yen Net income Weighted average shares EPS ¥ 52,902 118,743 ¥ 445.51 1 57 ¥ 52,903 118,800 ¥ 445.30 ¥ 38,953 118,671 ¥ 328.24 2 134 ¥ 38,955 118,805 ¥ 327.89 12. Subsequent Events Appropriations of retained earnings The following appropriations of retained earnings as of March 31, 2004 were approved at the Company’s shareholders' meeting held on June 29, 2004. Millions of yen Year-end cash dividends, ¥42.50 ($0.40) per share . . . . . . . . . . . . . . . . Bonuses to directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 5,048 45 Thousands of U.S. dollars $ 47,623 425 13. Segment Information Information about industry segments, geographical segments and sales to foreign customers of the Group for the years ended March 31, 2004, 2003 and 2002 was as follows: (a) Industry segments The Group’s main operations are manufacturing and distributing electronic components. Under Japanese accounting regulations, the Group is not required to disclose industry segment information because its main industry segment represented more than 90% of its total operations. (b) Geographical segments The geographical segments of the Group for the years ended March 31, 2004, 2003 and 2002 were summarized as follows: Millions of yen 2004 Japan Asia Americas Europe Eliminations/ Corporate Consolidated Sales to customers . . . . . Interarea transfer . . . . . . Total sales . . . . . . . . . . . Operating expenses . . . . . Operating income (loss). . ¥ 158,766 53,200 211,966 172,892 ¥ 39,074 ¥ 161,086 107,034 268,120 212,321 ¥ 55,799 ¥ 14,088 235 14,323 14,906 ¥ (583) ¥ 21,690 407 22,097 21,141 ¥ 956 ¥ (160,876) (160,876) (160,137) ¥ (739) 355,630 261,123 ¥ 94,507 Total assets . . . . . . . . . . . ¥ 372,752 ¥ 252,675 ¥ 32,248 ¥ 16,495 ¥ 172,630 ¥ 846,800 ¥ 355,630 37 Notes to Consolidated Financial Statements ROHM CO., LTD. and Subsidiaries Millions of yen 2003 Japan Asia Americas Europe Eliminations/ Corporate Consolidated Sales to customers . . . . Interarea transfer . . . . . Total sales . . . . . . . . . . Operating expenses . . . Operating income . . . . ¥ 164,399 55,369 219,768 174,163 ¥ 45,605 ¥ 148,016 103,305 251,321 202,028 ¥ 49,293 ¥ 17,420 296 17,716 17,524 ¥ 192 ¥ 20,446 366 20,812 19,674 ¥ 1,138 ¥ (159,336) (159,336) (159,231) ¥ (105) ¥ 350,281 350,281 254,158 ¥ 96,123 Total assets . . . . . . . . . . ¥ 359,655 ¥ 242,582 ¥ 35,177 ¥ 15,062 ¥ 153,217 ¥ 805,693 Millions of yen 2002 Japan 38 Asia Americas Europe Eliminations/ Corporate Consolidated Sales to customers . . . . Interarea transfer . . . . . Total sales . . . . . . . . . . Operating expenses . . . Operating income . . . . ¥ 148,777 68,844 217,621 189,806 ¥ 27,815 ¥ 132,617 81,368 213,985 176,375 ¥ 37,610 ¥ 17,084 4,745 21,829 21,642 ¥ 187 ¥ 22,787 1,567 24,354 23,483 ¥ 871 ¥ (156,524) (156,524) (156,499) ¥ (25) 321,265 254,807 ¥ 66,458 Total assets . . . . . . . . . . ¥ 365,422 ¥ 230,459 ¥ 38,943 ¥ 13,441 ¥ ¥ 740,627 ¥ 321,265 92,362 Thousands of U.S. dollars 2004 Japan Asia Americas Europe Eliminations/ Corporate Consolidated Sales to customers . . . . . Interarea transfer . . . . . . Total sales . . . . . . . . . . . Operating expenses . . . . . Operating income (loss). . $ 1,497,792 $ 1,519,679 501,887 1,009,755 1,999,679 2,529,434 1,631,057 2,003,028 $ 368,622 $ 526,406 $ 132,906 2,217 135,123 140,623 $ (5,500) $ 204,623 $ 3,355,000 3,839 $(1,517,698) 208,462 (1,517,698) 3,355,000 199,443 (1,510,726) 2,463,425 $ 9,019 $ (6,972) $ 891,575 Total assets . . . . . . . . . . . $ 3,516,528 $ 2,383,727 $ 304,226 $ 155,613 $ 1,628,585 $ 7,988,679 Sales and assets are summarized by geographic area based on the countries where subsidiaries are located. (c) Sales to foreign customers Sales to foreign customers for the years ended March 31, 2004, 2003 and 2002 consisted of the following: Millions of yen Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total sales to foreign customers . . . . . . . . . . . Thousands of U.S. dollars 2004 2003 2002 ¥ 163,457 14,812 20,598 ¥ 198,867 ¥ 151,371 18,111 19,342 ¥ 188,824 ¥ 135,892 18,382 21,039 ¥ 175,313 2004 $ 1,542,047 139,736 194,321 $ 1,876,104 39 Independent Auditors’ Report 40 Principal Subsidiaries <Domestic> Capital % owned by ROHM CO., LTD. Established Corporate name Location Principal business ROHM HAMAMATSU CO., LTD. Shizuoka Manufacture of ROHM products (monolithic ICs) ¥400 million 95.0% July. 1999 ROHM WAKO DEVICE CO., LTD. Okayama Manufacture of ROHM products (monolithic ICs and diodes) ¥450 million 75.0% (100.0%) Oct. 1996 ROHM APOLLO DEVICE CO., LTD. Fukuoka Manufacture of ROHM products (monolithic ICs and transistors) ¥492 million 75.0% (100.0%) Mar. 1990 ROHM TSUKUBA CO., LTD. Ibaragi Manufacture of ROHM products (transistors and diodes) ¥450 million 100.0% Oct. 2003 ROHM WAKO CO., LTD. Okayama Manufacture of ROHM products (diodes, LEDs, laser diodes and LED displays) ¥450 million 100.0% Aug. 1966 ROHM APOLLO CO., LTD. Fukuoka Manufacture of ROHM products (transistors, diodes and tantalum capacitors) ¥450 million 100.0% Nov. 1969 ROHM FUKUOKA CO., LTD. Fukuoka Manufacture of ROHM products (monolithic ICs, resistors and capacitors) ¥385 million 100.0% June. 1981 ROHM AMAGI CO., LTD. Fukuoka Manufacture of ROHM products (power modules, photo link modules, LCDs, thermal heads, image sensor heads and CMOS camera modules) ¥300 million 100.0% June. 1984 ROHM MECHATECH CO., LTD. Kyoto Manufacture of lead frames and molding dies ¥ 98 million 100.0% Aug. 1988 ROHM LOGISTEC CO., LTD. Okayama Distribution of ROHM products ¥20 million 100.0% Feb. 1970 NARITA GIKEN CO., LTD. Hyogo Development and design of electronic circuitry ¥80 million 93.7% Aug. 1988 IDD CO., LTD. Tokyo Development and design of electronic circuitry ¥96 million 100.0% Aug. 1990 Note: The percentages in parentheses indicate indirect equity ownership by ROHM CO., LTD. (As of March 31, 2004) 41 Principal Subsidiaries <Overseas> Corporate name Location Principal business Capital % owned by ROHM CO., LTD. ROHM KOREA CORPORATION Seoul, Korea Manufacture of ROHM products (monolithic ICs, transistors, diodes, LEDs, sensors, resistors and LED displays) Won 9,654 million 0% (100.0%) Jul. 1972 ROHM-WAKO ELECTRONICS (MALAYSIA) SDN. BHD Kelantan, Malaysia Manufacture of ROHM products (diodes and LEDs) M$ 53,400 thousand 0% (100.0%) Mar. 1989 ROHM APOLLO ELECTRONICS (THAILAND) CO., LTD. Pathumthani, Thailand Manufacture of ROHM products (transistors and diodes) B 448,000 thousand 0% (100.0%) Nov. 1987 ROHM APOLLO SEMICONDUCTOR PHILIPPINES, INC. Cavite, Philippines Manufacture of ROHM products (transistors) P 406,580 thousand 0% (100.0%) Apr. 2000 ROHM ELECTRONICS PHILIPPINES, INC. Cavite, Philippines Manufacture of ROHM products (monolithic ICs, resistors and capacitors) P 1,005,000 thousand 0% (100.0%) Sep. 1989 ROHM INTEGRATED SEMICONDUCTOR (THAILAND) CO., LTD. Pathumthani, Thailand Manufacture of ROHM products (monolithic ICs, resistors and capacitors) B 667,500 thousand 0% (100.0%) Jan.1997 ROHM ELECTRONICS DALIAN CO., LTD. Dalian, China Manufacture of ROHM products (power modules, LCDs, thermal heads and image sensor heads) ¥ 5,135 million 0% (100.0%) Dec. 1993 ROHM ELECTRONICS WAKO (TIANJIN) CO., LTD. Tianjin, China Manufacture of ROHM products (diodes, LEDs, laser diodes, LED displays and sensors) ¥ 3,600 million 0% (100.0%) Nov. 2000 ROHM ELECTRONICS COMPONENTS (TIANJIN) CO., LTD. Tianjin, China Manufacture of ROHM products (transistors, diodes, LEDs, resistors, capacitors and LED displays) US$ 28,200 thousand 0% (100.0%) Sep.1993 ROHM MECHATECH PHILIPPINES, INC. Cavite, Philippines Manufacture of lead frames and molding dies P 776,000 thousand 25.0% (100.0%) Nov. 1993 ROHM MECHATECH (THAILAND) CO., LTD. Pathumthani, Thailand Manufacture of lead frames and molding dies B 100,000 thousand 0% (100.0%) Nov. 2001 ROHM ELECTRONICS U.S.A., LLC California, U. S. A. Sales of ROHM products US$ 26,298 thousand 0% (100.0%) Nov. 1997 (EASTERN SALES DIVISION) Georgia, U. S. A. Sales of ROHM products (CENTRAL SALES DIVISION) Texas, U. S. A. Sales of ROHM products (WESTERN SALES DIVISION) California, U. S. A. Sales of ROHM products Established Note: The percentages in parentheses indicate indirect equity ownership by ROHM CO., LTD. (As of March 31, 2004) 42 Corporate name Location Principal business ROHM ELECTRONICS GMBH Willich-Munchheide, Germany Sales of ROHM products Capital % owned by ROHM CO., LTD. Jan. 1989 Established EURO 511 thousand 0% (100.0%) Feb.1971 (GERMANY SALES DIVISION) Willich-Munchheide, Germany Sales of ROHM products (UK SALES DIVISION) Milton Keynes, United Kingdom Sales of ROHM products (FRANCE SALES DIVISION) ISSY-LES-MOULINEAUX CEDEX, France Sales of ROHM products ROHM ELECTRONICS (H.K.) CO., LTD. Kowloon, Hong Kong Sales of ROHM products HK$ 27,000 thousand 0% (100.0%) May. 1974 ROHM ELECTRONICS (SHANGHAI) CO., LTD. Shanghai, China Sales of ROHM products US$ 200 thousand 0% (100.0%) Aug. 1999 ROHM ELECTRONICS TRADING (DALIAN) CO., LTD. Dalian, China Sales of ROHM products US$ 200 thousand 0% (100.0%) Jan. 2003 ROHM ELECTRONICS TAIWAN CO., LTD. Taiwan Sales of ROHM products NT$ 140,500 thousand 0% (100.0%) May. 1987 ROHM ELECTRONICS KOREA CORPORATION Seoul, Korea Sales of ROHM products Won 1,000 million 0% (100.0%) Jan. 1996 ROHM ELECTRONICS ASIA PTE. LTD. Investment Division (RES / REI) S$ 90,630 thousand 100.0% Apr. 1995 Administrative responsibility for subsidiaries in Asia Sales of ROHM products Singapore ROHM ELECTRONICS (MALAYSIA) SDN. BHD. Selangor, Malaysia Sales of ROHM products M$ 700 thousand 0% (49.0%) Nov. 1993 ROHM ELECTRONICS (PHILIPPINES) SALES CORPORATION Muntinlupa City, Philippines Sales of ROHM products P 13,250 thousand 0% (100.0%) Feb. 1996 ROHM ELECTRONICS (THAILAND) CO., LTD. Bangkok, Thailand Sales of ROHM products B 104,000 thousand 0% (100.0%) Sep. 1996 ROHM LSI SYSTEMS U.S.A., LLC California, U. S. A. Design, Research and development of ROHM products US$ 1,608 thousand 0% (100.0%) Dec. 1997 ROHM LSI SYSTEMS (FRANCE) S.A.S. Rennes, France Design, Research and development of ROHM products EURO 800 thousand 0% (100.0%) Mar. 2000 ROHM U.S.A., INC. California, U. S. A. Administrative responsibility for subsidiaries in North and South America US$ 133,642 thousand 100.0% Feb. 1997 Note: The percentages in parentheses indicate indirect equity ownership by ROHM CO., LTD. (As of March 31, 2004) 43 The ROHM Group Overseas Branches ROHM ELECTRONICS UK SALES DIVISION ROHM LSI SYSTEMS (FRANCE) S.A.S. ROHM ELECTRONICS FRANCE SALES DIVISION ROHM ELECTRONICS GMBH ROHM ELECTRONICS GERMANY SALES DIVISION ROHM ELECTRONICS DALIAN CO., LTD. ROHM ELECTRONICS TRADING (DALIAN) CO., LTD. ROHM ELECTRONICS WAKO(TIANJIN) CO.,LTD. ROHM ELECTRONICS COMPONENTS (TIANJIN) CO.,LTD. ROHM ELECTRONICS (SHANGHAI) CO.,LTD. ROHM TECHNOLOGY CENTER (SHANGHAI) ROHM ELECTRONICS (H.K.) CO.,LTD. ROHM TECHNOLOGY CENTER (H.K.) ROHM ELECTRONICS TAIWAN CO.,LTD. ROHM TECHNOLOGY CENTER (TAIWAN) ROHM APOLLO ELECTRONICS (THAILAND) CO., LTD. ROHM INTEGRATED SEMICONDUCTOR (THAILAND) CO., LTD. ROHM MECHATECH (THAILAND) CO., LTD. ROHM ELECTRONICS (THAILAND) CO., LTD. ROHM-WAKO ELECTRONICS (MALAYSIA) SDN.BHD. ROHM ELECTRONICS (MALAYSIA) SDN.BHD. ROHM ELECTRONICS ASIA PTE.LTD.(RES/REI) ROHM APOLLO SEMICONDUCTOR PHILIPPINES, INC. ROHM ELECTRONICS PHILIPPINES, INC. ROHM MECHATECH PHILIPPINES, INC. ROHM ELECTRONICS (PHILIPPINES) SALES CORPORATION 44 ROHM LSI SYSTEMS U.S.A., LLC ROHM ELECTRONICS U.S.A., LLC ROHM ELECTRONICS WESTERN SALES DIVISION ROHM ELECTRONICS CENTRAL SALES DIVISION ROHM ELECTRONICS EASTERN SALES DIVISION ROHM CO., LTD. Head Office LSI Development Center Kyoto Technology Center ROHM TSUKUBA CO., LTD. IDD CO., LTD. ROHM CO., LTD. (Yokohama (Yokohama)Office) Yokohama Technology Center ROHM HAMAMATSU CO., LTD ROHM MECHATECH CO., LTD. NARITA GIKEN CO., LTD. ROHM WAKO DEVICE CO., LTD. ROHM WAKO CO., LTD. ROHM LOGISTEC CO., LTD. ROHM APOLLO DEVICE CO., LTD. ROHM APOLLO CO., LTD. ROHM FUKUOKA CO., LTD. ROHM AMAGI CO., LTD. ROHM KOREA CORPORATION ROHM ELECTRONICS KOREA CORPORATION 45 Board of Directors President Directors Corporate Auditors Ken Sato Akitaka Idei Yoshiaki Shibata Managing Director Nobuo Hatta Yasuhito Tamaki Junichi Hikita Hidemi Takasu Shinya Murao Toru Okada Toshiki Shimozono Haruo Kitamura (As of June 29, 2004) Corporate Data ROHM CO., LTD. Date of Establishment Number of Employees September 17, 1958 18,591 Shareholders’ Equity Stock Listings ¥715,938 million (US$6,754 million) Tokyo Stock Exchange Osaka Securities Exchange Common Stock Transfer Agent Authorized: 300,000,000 Issued: 118,801,388 UFJ Trust Bank Limited 4-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan Head Office 21, Saiin Mizosaki-cho, Ukyo-ku, Kyoto 615-8585, Japan TEL: (075) 311-2121 FAX: (075) 315-0172 (As of March 31, 2004) 46 PN.13 '04.07 ROHM © 3,500 TSU Printed in Japan