consolidated financial report for the first half of the ... · 2 (2) consolidated financial...

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NIPPON THOMPSON CO., LTD.

Corporate Headquarters: Tokyo Lis ted Code : 6480

Listed Stock Exchange: Tokyo (URL: http://www.ikont.co.jp/eg/)

November 12, 2007

Consolidated Financial Report for the First Half of the Fiscal Year Ending March 31, 2008

Representative: Akira Yamashita, President and Representative Director For further information contact: Toshio Kondo, General Manager of Management Planning Department and Director

Telephone: +81-3-3448-5831

Scheduled date to present Semiannual Securities Report: December 21, 2007 Scheduled date to begin Dividend payments: December 6, 2007 Figures have been rounded off to eliminate amounts less than one million yen. 1. Consolidated Operating Performance for the First Half of the Fiscal Year Ending March 31, 2008

(From April 1, 2007 to September 30, 2007) (1) Results of Consolidated Operations (Millions of yen)

Net sales Percentage change

Operating income

Percentage change

Ordinary income

Percentage change

September 30, 2007 25,997 0.9 4,226 (18.9) 4,254 (18.3) September 30, 2006 25,769 16.9 5,210 45.5 5,206 47.7 Fiscal year ended March 31, 2007 50,414 10.0 9,853 25.2 9,989 27.6 Note: Percentage change for net sales, operating income, ordinary income, and net income indicate percentage

increase/decrease compared to the same period in the previous year.

Net income Percentage change

Net income per share

(yen)

Diluted net income per

share (yen)

September 30, 2007 2,515 (19.3) 34.00 30.69 September 30, 2006 3,117 48.5 41.89 37.83 Fiscal year ended March 31, 2007 6,333 34.4 85.07 76.85 Reference: Equity in earnings of affiliates

Six-month period ended September 30, 2007: －million yen Six-month period ended September 30, 2006: －million yen Fiscal year ended March 31, 2007: －million yen

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(2) Consolidated Financial Position (Millions of yen)

Total assets Net assets Equity ratio (%)

Net assets per share

(yen) September 30, 2007 86,223 59,423 68.9 808.78 September 30, 2006 82,502 55,951 67.8 751.15 Fiscal year ended March 31, 2007 86,003 58,893 68.5 790.68 Reference: shareholders’ equity

As of September 30, 2007: 59,423 million yen As of September 30, 2006: 55,951 million yen As of March 31, 2006: 58,893 million yen

(3) Results of consolidated cash flows (Millions of yen)

Operating activities

Investing activities

Financing activities

Cash and cash equivalents

September 30, 2007 3,818 (4,871) (2,147) 14,758 September 30, 2006 3,698 (1,511) (365) 16,632 Fiscal year ended March 31, 2007 7,059 (2,749) (1,343) 17,858 2. Dividends

Dividends per share

Base date September 30 March 31 Full fiscal Year

(Yen) (Yen) (Yen) 2008

(Forecast) － 8.00 2008 8.00 －

16.00

2007 6.00 8.00 14.00 3. Forecast of Consolidated Operating Performance for the Fiscal Year Ending March 31, 2008

(From April 1, 2007 to March 31, 2008) (Millions of yen)


Operating income

Percentage change

Ordinary income

Percentage change

Year ending March 31, 2008 52,000 3.1 9,900 0.5 10,000 0.1


Net income per share (yen)

Year ending March 31, 2008 6,000 (5.3) 80.55

Note: Percentage change for net sales, operating income, ordinary income, and net income indicate percentage increase/decrease compared to the same period in the previous year.

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4. Others (1) Changes in the state of significant subsidiaries during the period (Changes regarding specific companies accompanying

changes in the scope of consolidation): None (2) Changes in principles, procedures, methods of presentation, etc. related to the first half of the consolidated financial

statements (Changes in significant items that form the basis for the preparation and presentation of the first half of the consolidated financial statements)

Changes related to revisions in accounting principles: Yes Changes other than those in above: None

Note: For further details, please refer to “Basis for the Preparation and Presentation of the First Half of the Consolidated Financial Statements” on page 18.

(3) Number of shares issued (Common stock) Number of shares outstanding at period-end (Including treasury stock) Six-month period ended September 30, 2007: 74,599,875 shares Six-month period ended September 30, 2006: 74,595,675 shares Fiscal year ended March 31, 2007: 74,599,875 shares

Number of treasury stock Six-month period ended September 30, 2007: 1,126,515 shares Six-month period ended September 30, 2006: 108,196 shares Fiscal year ended March 31, 2007: 115,121 shares

Note: For an explanation of the number of shares used for calculating consolidated net income per share, please refer to "Per Share Information” on page 21.

5. Non-consolidated Operating Performance for the First Half of the Fiscal Year Ending March 31, 2008 (From April 1, 2007 to September 30, 2007)

(1) Results of Non-consolidated Operations (Millions of yen)


Operating income

Percentage change

Ordinary income

Percentage change

September 30, 2007 22,837 (0.3) 3,687 (17.7) 3,691 (17.3) September 30, 2006 22,903 18.5 4,479 49.6 4,462 50.6 Fiscal year ended March 31, 2007 44,915 10.8 8,754 28.9 8,817 29.4 Note: Percentage change for net sales, operating income, ordinary income, and net income indicate percentage

increase/decrease compared to the same period in the previous year.


Net income per share

(yen) September 30, 2007 2,179 (18.1) 29.46 September 30, 2006 2,662 51.1 35.78 Fiscal year ended March 31, 2007 5,355 28.4 71.93

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(2) Non-consolidated Financial Position (Millions of yen)

Total assets Net assets Equity ratio (%)

Net assets per share

(yen) September 30, 2007 76,861 53,057 69.0 722.13 September 30, 2006 74,929 51,099 68.2 686.02 Fiscal year ended March 31, 2007 77,497 53,136 68.6 713.38 Reference: shareholders’ equity

As of September 30, 2007: 53,057 million yen As of September 30, 2006: 51,099 million yen As of March 31, 2007: 53,136 million yen

6. Forecast of Non-consolidated Operating Performance for the Fiscal Year Ending March 31, 2008

(From April 1, 2007 to March 31, 2008) (Millions of yen)


Operating income

Percentage change

Ordinary income

Percentage change

Year ending March 31, 2008 46,000 2.4 8,840 1.0 8,840 0.3


Net income per share (yen)

Year ending March 31, 2008 5,290 (1.2) 71.02

Note: Percentage change for net sales, operating income, ordinary income, and net income indicate percentage increase/decrease compared to the same period in the previous year.

Note: Explanation of Proper Use of Performance Forecasts and Other Special Instructions

As of the present time, results are primarily in line with expectations and Nippon Thompson Group (the “Group”) has madeno changes to its full-year performance forecasts announced on May 14, 2007. However, for a wide variety of reasons, there remains the possibility that actual performance results may differ.

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Operating Results and Financial Position

(1) Analysis of Operating Results

Result of the First Half of the Fiscal Year Ending March 31, 2008 (April 1, 2007 to September 30, 2007)

In the six-month period ended September 30, 2007, Japan’s domestic business conditions continued to show modest growth

overall. This situation was attributable to two factors: an ongoing increase in private capital investment that reflected strong

corporate performance and personal consumption that displayed a firm upward trend amid recovering and improving

employment and income environments. Overseas, despite the U.S. economy being on a downward trend caused by

deterioration in the housing market, the European and Asian economies expanded steadily thanks to healthy exports and high

internal demand. On the other hand, price rises for crude oil and raw materials continued to be steep and uncertainty over the

U.S. economy fueled mounting concerns of a slowdown in the global economy.

Under these circumstances, the Group net sales increased 0.9% compared with the corresponding period in the

previous fiscal year, to ¥25,997 million. On the earnings front, the ongoing focus was on maintaining cost reductions and

streamlining administrative operations. Ordinary income fell 18.3% to ¥4,254 million, and net income decreased 19.3% to

¥2,515 million, owing to such factors as a heavier depreciation and amortization burden brought about by increased capital

investment geared to business expansion, tax revisions and the steep price rises for raw materials.

Business Segment Information

Because the Group manufactures and sells Needle Roller Bearings, Linear Motion Rolling Guides and Machine Components

on an integrated basis, business segment information is not provided.

Business Segment Information September 30,

2006 September 30,

2007 Change

Millions of yen

Component percentages

Millions of yen

Component percentages

Millions of yen

Percentage change

Needle Roller Bearings, Linear Motion Rolling Guides 22,266 86.4 22,422 86.3 156 0.7 Machine Components 3,503 13.6 3,574 13.7 71 2.0

Total net sales 25,769 100.0 25,997 100.0 228 0.9

With regard to sales, the Group continued to pursue user-centered sales activities in a wide range of industrial fields, focusing on

existing markets and the creation of new market demand. Notably, to improve demand generation, the Group staged private

fairs at Osaka and Nagoya and engaged in other activities aimed at increasing sales opportunities.

In addition to striving to meet increased demand in Europe and Asia, the Group moved forward with overseas market

development through such activities as the supply of products and pursuit of operating activities that target the overseas

production bases of Japanese manufacturers.

In product development, which is essential to augmenting business performance, Nippon Thompson Co., Ltd. (the

“Company”) brought to market 13 new products during the first half of the current fiscal year. In its “Maintenance-Free Series”

lineup ―which is designed to reduce both environmental impact and the number of maintenance work hours needed for

lubrication in the course of normal machine operation ―the Group made particular efforts to expand the number of

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“Cylindrical Roller-type Linear Motion Rolling Guide” models, which are its strongpoint, and endeavored to enhance its high

value-added products. To improve quality and accelerate new product development, a new R&D center was established in

September and a product development system put into place.

From the production standpoint, the previous fiscal period’s far-reaching capital investment was continued in

response to increased demand for Needle Roller Bearings. To enhance international competitiveness in response to fluctuations

in demand for Linear Motion Rolling Guides, steady progress was made with the creation and reinforcement of a global

production system through the overseas production base and Group subsidiary IKO THOMPSON VIETNAM CO., LTD.

As a result, sales in Needle Roller Bearings and Linear Motion Rolling Guides totaled ¥22,422 million, a 0.7%

increase compared to the same period in the previous year. Sales in machine components climbed 2.0% to ¥3,574 million.

Geographic Segment Information

Japan

In the domestic market, the export-driven recovery strengthened even as it underwent a transition. Exports remained robust on

the back of increased demand for machine tools in Europe and Asia. In digital-related demand, manufacturers made progressed

with inventory adjustments and business from semiconductor equipment rallied, but the LCD panels business faltered as

manufacturers postponed capital investment. In addition to Asia’s ongoing export boom, there was significant expansion

resulting from the rise of newly industrialized nations. However, sales agency business continued to present difficulties brought

about by such factors as stagnation in capital investment in the automotive industry and wide economic disparities between

major companies and small to medium enterprises. As a result, net sales declined by 2.3% compared with the same the period

in the previous fiscal year to ¥20,468 million and operating income falling 18.0% to ¥4,091 million.

North America

In North America, amid the recovery in demand that was witnessed from the beginning of the fiscal period under review, sales

of medical equipment and machine tools were robust due to comprehensive efforts to create demand. However, because of the

decline in the once buoyant housing market, the overall sense of deceleration in the U.S. market intensified. Consequently,

results fell short of those achieved in the corresponding period in the previous fiscal year, with net sales edging down 1.4% to

¥2,634 million and operating income falling 24.2% to ¥242 million.

Europe

In Europe, regional demand and exports were strong, showing a sustained trend toward economic expansion. Sales grew

widely in the machine tools, transportation equipment and general industrial machinery industries, including medical instrument

and semiconductor equipment manufacturers, the Group’s main areas of demand. As a result, net sales jumped 34.6% to ¥2,893

million and operating income 41.1% to ¥292 million.

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Outlook

Seen against a backdrop of steep price rises for crude oil and raw materials, concerns about deceleration in the U.S. economy

and changes in the export environment due to fluctuating foreign currency exchange rates, the outlook for the Japanese

economy remains uncertain. However, in addition to robust economic growth in Europe and Asia, the overall global economy

is expected to continue to prosper due to the economic development of the newly industrialized nations.

Under these circumstances, the Group will collect detailed information on the demands of industry and overseas

markets, rapidly taking appropriate measures to bolster its revenue base while carefully monitoring the situation.

Based on the above conditions, consolidated performance forecasts for the fiscal year ending March 31, 2008 are net

sales of ¥52.0 billion, ordinary income of ¥10.0 billion and net income of ¥6.0 billion, assuming an exchange rate of

¥115=US$1 and ¥150=€1.

(2) Analysis of Financial Position

Total assets as of September 30, 2007, totaled ¥86,223 million, an increase of ¥220 million compared with the end of the

previous fiscal year. Under current assets, cash and deposits fell to ¥15,558 million, a decrease of ¥2,500 million, and notes and

accounts receivable-trade amounted to ¥13,784 million, an increase of ¥744 million. Fix assets rose ¥2,307 million to ¥28,908

million, primarily due to acquire of plant and equipment and investment securities.

Under liabilities, total amounts of its decreased ¥311 million to ¥26,799 million compared with the end of the

previous fiscal year, due to the loans, including corporate bonds, fell ¥340 million.

Thanks to the Group’s favorable performance, net assets amounted to ¥59,423 million, an increase of ¥530 million.

The main components were an increase in retained earnings of ¥1,919 due to report interim net income, and treasury stock

acquired of ¥1,164 million. As a result, the shareholders’ equity ratio was 68.9%, and net assets per share were ¥808.78.

Cash Flows

Cash and cash equivalents at September 30, 2007 totaled ¥14,758 million, a decrease of ¥3,099 million from the end of the

previous consolidated fiscal year.

Cash Flows from Operating Activities

Net cash provided by operating activities was ¥3,818 million. This was mainly due to income before income taxes of ¥4,232

million, depreciation and amortization of ¥1,520 million, increase in notes and accounts payable-trade of ¥632 million, payment

of income taxes of ¥2,406 million, and increase in notes and accounts receivable-trade of ¥665 million.

Cash Flows from Investing Activities

Net cash used in investing activities totaled ¥4,871 million, the principal components being ¥2,426 million for the payment for

purchase of property, plant and equipment and ¥1,837 million for the acquisition of investment securities.

Cash Flows from Financing Activities

Net cash used in financing activities amounted to ¥2,147 million. This was mainly due to the acquisition of ¥1,164 million of

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treasury stock and cash dividends paid of ¥595 million.

The trend of cash flow indices is as follows: For the periods ended March 31,

2005 March 31,

2006 March 31,

2007 September 30,

2007 Equity ratio (%) 57.7 67.7 68.5 68.9 Equity ratio on market value basis (%) 66.2 130.2 94.5 87.1 Debt repayment period (years) 1.6 0.3 0.2 － Interest coverage ratio (times) 34.8 37.1 110.1 96.2 Notes: Equity ratio: total shareholders’ equity / total assets Equity ratio on market value basis: aggregate market value of common stock / total assets Debt repayment period: interest-bearing liabilities / cash flows from operating activities

(Not reported on interim reports.) Interest coverage ratio: cash flows from operating activities / interest payments 1. All indices based on consolidated financial figures. 2. Aggregate market value of common stock was based on the market price at the period-end times the number of shares

outstanding at the period-end (excluding treasury stock) 3. Cash flow from operating activities corresponds to the cash flow from operating activities in the consolidated statement of

cash flows. Interest-bearing liabilities include all liabilities reported on the consolidated balance sheet for which the Group is paying interest. Interest payments correspond to the interest paid in the consolidated statement of cash flows.

(3) Fundamental Earnings Distribution Policy and Dividends for the Current and Next Fiscal Periods

Shareholder returns are one of the most important management issues the Company. The Company’s fundamental policy is to

maintain stable dividends with due consideration given to earnings and overall business performance. While paying close heed

to such factors as the business environment, the Company uses internal reserves to maximize corporate value, increase earning

power and strengthen its business base, as well as to invest in manufacturing facility expansion or renovation to develop new

products in response to rapid technological innovation and changes in demand.

Having thoroughly considered business performance and internal reserves based on its fundamental earnings

distribution policy, the Company set the interim dividend payment at ¥8 per share, an increase of ¥2 compared with that for the

previous fiscal year. For the fiscal year ending March 31, 2008, the Company is forecasting a dividend of ¥16 per share

(including the interim dividend of ¥8), a year-on-year increase of ¥2 per share.

Status of the Group

As there were no significant changes to the diagram “Business Flows within the Group” and the text “Overview of Related

Companies” in the latest annual securities report (produced on June 28, 2007), these have been omitted.

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Management Policies

1. Fundamental Management Policies

Based on the corporate philosophy of “contributing to society as an R&D-oriented company,” the Group —a trusted

international enterprise—is committed to serving domestic and overseas markets through the manufacture and sale of Needle

Roller Bearings and Linear Motion Rolling Guides. Our emphasis is on quality rather than scale, as we see our mission as

developing high-value-added products that meet customer needs. The entire Company is engaged in an effort to associate the

Nippon Thompson brand with the acronym IKO—“ I ” for Innovation, because the Company’s products are always

innovative; “K” for Know-how, because they incorporate a high level of technological expertise; and “O” for Originality,

because they are highly creative.

The Group believes that contributing to the development of society is one of its most important management

policies. While thoroughly instilling corporate ethics, we make every effort to ensure compliance in management and contribute

to the preservation of the global environment as a good corporate citizen. Our corporate activities take into account this social

mission.

2. Management Targets and Performance Indicators

Raising shareholder return on equity (ROE), in an effort to maximize shareholder value, is the principal indicator for the Group.

Management also focuses on improving cash flows to enhance stability and to strengthen the Group’s financial position.

3. Medium-Term Management Strategies

To remain a creative and competitive corporate group in this era of economic globalization, the Group is strengthening

ties among domestic and overseas Group companies, and concentrating management resources into Linear Motion

Rolling Guides and other high-growth strategic businesses. Strengthening the Group’s ability to meet demand in this

way will allow improved earning power and strengthen the Group’s financial position.

4. Issues to Be Resolved

The Group is engaged in a number of corporate activities intended to allow it to accurately grasp rapidly changing

demand trends in domestic and overseas markets, and to nimbly respond to these changes amid rapid advances in

technology around the world. The Group’s concrete measures are as follows.

Through the user-centered, proposal-based sales activities that are the linchpin of our marketing strategy, we

are working to develop new markets and to increase our market share. As a foundation for this, we are building a rational

and efficient sales system that is adaptable to the changes in domestic and overseas markets.

In Japan’s domestic markets, the Group’s strategies do not only concentrate on emerging industries in

principal markets, but also recognize the necessity to applying proposal-based sales activities for niche markets. The

cornerstone of proposal-based sales activities will include directly visiting users where small-scale exhibitions can be held

and actively hosting technology-training sessions and workshops. Through the cultivation of a broad-range

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manufacturing industry, the Group is striving for the formation of a well-balanced sales structure that will not be easily

influenced by the economic trends of one specific industry.

Strengthening overseas sales is vital if the Group is to advance the market penetration of its products and further

expand its business capacity. Therefore, the Group—taking the global perspective and working to enhance its sales

network—will tap into the needs of the various markets and pursue further sales expansion. Deep inroads will be made in the

European and U.S. regions, which will be treated as major markets, and sales systems set up and strengthened in Asia, including

the still burgeoning Chinese market, and newly industrialized nations.

The Group recognizes that improving new product development capabilities is essential if the Group is to contribute

to society through its products and increase its corporate value. The Group is employing its user-oriented product development

system, which was established as an internal structure, to develop proprietary high-value-added products that provide customer

satisfaction. The Group is also working to accelerate more widespread customer demand for IKO brand products by further

differentiating these products and accentuating the various advantages that they offer.

In the first half of this fiscal year ending March 31, 2008, the Company launched 13 new products to stimulate that

demand. We will continue to focus on the development of products that are optimally suited to the needs of the market. In its manufacturing operations, the entire Group will strive to improve its market competitiveness. Specifically, it

will respond flexibly to changes in demand, allow close coordination between domestic manufactures and overseas subsidiaries

to optimize production and strengthen lucrative production systems in the increasingly competitive world market.

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Consolidated Financial Statements Consolidated Balance Sheets As of September 30, 2006 and 2007, and March 31, 2007

Millions of yen ASSETS September 30,

2006 September 30,

2007 March 31,

2007 Current Assets:

Cash and deposits 16,832 15,558 18,058 Notes and accounts receivable－trade 13,177 13,784 13,040 Inventories 24,054 25,458 25,353 Deferred tax assets 1,785 1,861 1,789 Others 798 687 1,196 Less: Allowance for doubtful accounts (42) (34) (35) Total current assets 56,606 57,315 59,401 Fixed Assets: Tangible fixed assets: Buildings and structures 5,021 5,773 5,368 Machinery and vehicles 6,741 8,028 7,956 Others 3,241 3,213 3,238 Net property, plant and equipment 15,005 17,015 16,563 Intangible fixed assets 314 342 334 Investments and other assets: Investment securities 6,878 8,357 6,540 Deferred tax assets － 13 13 Others 3,744 3,229 3,210 Less: Allowance for doubtful accounts (45) (49) (60)

Total investments and other assets 10,577 11,550 9,703

Total fixed assets 25,896 28,908 26,601

TOTAL ASSETS 82,502 86,223 86,003

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Millions of yen LIABILITIES September 30,

2006 September 30,

2007 March 31,

2007 Current Liabilities: Notes and accounts payable－trade 9,362 9,697 9,009 Short-term bank loans 1,452 851 1,191 Current portion of convertible bond － 7,586 －

Current portion of long-term bank loans 200 －－

Income taxes payable 2,107 2,000 2,606 Allowance for directors’ and corporate auditors’

bonuses 35 40

70 Others 3,584 5,158 4,680 Total current liabilities 16,741 25,334 17,558 Long-Term Liabilities: Convertible bond 7,590 － 7,586 Deferred tax liabilities 976 517 897 Accrued retirement benefits 956 601 743 Liability for retirement benefits for directors and

corporate auditors 258 318

298 Others 27 27 27 Total long-term liabilities 9,809 1,465 9,551

TOTAL LIABILITIES 26,551 26,799

27,110 NET ASSETS Shareholders’ Equity: Common stock 9,530 9,532 9,532 Capital surplus 12,884 12,887 12,887 Retained earnings 31,426 36,115 34,196 Treasury stock (69) (1,242) (77) Total shareholders’ equity 53,772 57,293 56,538 Revaluation and Conversions: Net unrealized holding gains on available-for-sale

securities 2,356 1,638

2,190 Foreign currency translation adjustments (177) 491 164 Total revaluation and conversions 2,178 2,129 2,354 Minority Interests in Consolidated Subsidiaries: －－－

TOTAL NET ASSETS 55,951 59,423

58,893

TOTAL LIABILITIES AND NET ASSETS 82,502 86,223 86,003

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Consolidated Statements of Income For the six-month periods ended September 30, 2006 and 2007, and the year ended March 31, 2007 Millions of yen

September 30,2006

September 30, 2007

March 31, 2007

Net sales 25,769 25,997 50,414Cost of sales 15,751 16,629 30,926 Gross profit 10,017 9,367 19,488Selling, general and administrative expenses 4,807 5,141 9,634 Operating income 5,210 4,226 9,853 Non-operating income: 176 195 419Non-operating expenses: 181 167 282 Ordinary income 5,206 4,254 9,989 Extraordinary income: －－ 548Extraordinary losses: － 21 －

Income before income taxes 5,206 4,232 10,538Income taxes: Current 2,089 1,716 4,215 Deferred －－ (10) Net income 3,117 2,515 6,333

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Statement of Changes in Consolidated Shareholders’ Equity For the six-month periods ended September 30, 2006 (Millions of yen)

Shareholders’ Equity

Common stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders’

equity As of March 31, 2006 9,341 12,695 28,802 (59) 50,780 Changes during the period

Conversion of convertible bond 188 188 －－ 377 Cash dividends (Note) －－ (407) － (407)Directors’ bonus (Note) －－ (85) － (85)Net income －－ 3,117 － 3,117 Acquisition of treasury stock －－－ (10) (10)Sales of treasury stock － 0 － 0 0 Net changes in items other than shareholders’ capital －－－－－

Total changes during the period 188 189 2,623 (9) 2,992 As of September 30, 2006 9,530 12,884 31,426 (69) 53,772

Revaluation and Translation difference

Net unrealized holding gains on available-for-sale

securities

Foreign currency

translation adjustments

Total revaluation

and translation difference

Minority interests in

consolidated subsidiaries

Total net assets

As of March 31, 2006 3,049 (154) 2,894 － 53,675 Changes during the period

Conversion of convertible bond －－－－ 377 Cash dividends (Note) －－－－ (407)Directors’ bonus (Note) －－－－ (85)Net income －－－－ 3,117 Acquisition of treasury stock －－－－ (10)Sales of treasury stock －－－－ 0 Net changes in items other than shareholders’ capital (692) (23) (715) － (715)

Total changes during the period (692) (23) (715) － 2,276 As of September 30, 2006 2,356 (177) 2,178 － 55,951

Note: These items were approved at the ordinary general meeting of shareholders in June 2006

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For the six-month periods ended September 30, 2007 (Millions of yen)


Common stock

Capital surplus

Retained earnings

Treasury stock



Cash dividends －－ (595) － (595)Net income －－ 2,515 － 2,515 Acquisition of treasury stock －－－ (1,164) (1,164)Net changes in items other than shareholders’ capital －－－－－

Total changes during the period －－ 1,919 (1,164) 754 As of September 30, 2007 9,532 12,887 36,115 (1,242) 57,293



securities

Foreign currency


Total revaluation




Total net assets

As of March 31, 2007 2,190 164 2,354 － 58,893 Changes during the period

Cash dividends －－－－ (595)Net income －－－－ 2,515 Acquisition of treasury stock －－－－ (1,164)Net changes in items other than shareholders’ capital (552) 327 (224) － (224)

Total changes during the period (552) 327 (224) － 530 As of September 30, 2007 1,638 491 2,129 － 59,423

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For the fiscal year ended March 31, 2007 (Millions of yen)


Common stock

Capital surplus

Retained earnings

Treasury stock



Conversion of convertible bond 190 190 －－ 381 Cash dividends (Note) －－ (407) － (407)Cash dividends －－ (446) － (446)Directors’ bonus (Note) －－ (85) － (85)Net income －－ 6,333 － 6,333 Acquisition of treasury stock －－－ (18) (18)Sales of treasury stock － 0 － 1 1 Net changes in items other than shareholders’ capital －－－－－

Total changes during the period 190 191 5,393 (17) 5,758 As of March 31, 2007 9,532 12,887 34,196 (77) 56,538



securities

Foreign currency


Total revaluation




Total net assets

As of March 31, 2006 3,049 (154) 2,894 － 53,675 Changes during the period

Conversion of convertible bond －－－－ 381 Cash dividends (Note) －－－－ (407)Cash dividends －－－－ (446)Directors’ bonus (Note) －－－－ (85)Net income －－－－ 6,333 Acquisition of treasury stock －－－－ (18)Sales of treasury stock －－－－ 1 Net changes in items other than shareholders’ capital (858) 318 (540) － (540)

Total changes during the period (858) 318 (540) － 5,218 As of March 31, 2007 2,190 164 2,354 － 58,893

Note: These items were approved at the ordinary general meeting of shareholders in June 2006

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Consolidated Statements of Cash Flows For the six-month periods ended September 30, 2006 and 2007, and the year ended March 31, 2007 Millions of yen September 30,

2006 September 30,

2007 March 31, 2007

Cash Flows from Operating Activities: Income before income taxes 5,206 4,232 10,538 Depreciation and amortization 1,161 1,520 2,466 Interest and dividend income (82) (117) (252) Interest expenses 5 0 11 Increase in notes and accounts

receivable－trade (991) (665) (803) Decrease (Increase) in inventories (900) 132 (1,930) Increase in notes and accounts

payable－trade 1,371 632 975 Others－net (304) 413 (691) Subtotal 5,466 6,148 10,312 Interest and dividend income received 82 117 252 Interest paid (30) (39) (64) Income taxes paid (1,819) (2,406) (3,441) Net cash provided by operating activities 3,698 3,818 7,059 Cash Flows from Investing Activities: Payments into time deposits (200) (800) (200) Proceeds from time deposits － 200 － Payments for purchase of property, plant

and equipment (1,305) (2,426) (3,221) Payments for purchase of investment

securities － (1,837) (31) Others－net (5) (7) 704 Net cash used in investing activities (1,511) (4,871) (2,749) Cash Flows from Financing Activities: Net increase (decrease) in short-term bank

loans 111 (386) (211) Repayments of long-term bank loans (60) － (260) Payments for purchase of treasury stock － (1,164) － Cash dividends paid (407) (595) (854) Others－net (9) 0 (17) Net cash used in financing activities (365) (2,147) (1,343) Foreign currency translation adjustments on cash and

cash equivalents (47)

100 34 Net increase (decrease) in cash and cash equivalents 1,775 (3,099) 3,001

Cash and cash equivalents at beginning of year 14,857 17,858 14,857

Cash and cash equivalents at end of period 16,632 14,758 17,858

18

Basis for the Preparation and Presentation of the First Half of the Consolidated Financial Statements

Changes in Accounting Policy

In accordance with revisions to the Japanese Corporate Tax Law (Ordinance 6, issued March 30, 2007, partially revising the Japanese Income Tax Law and other laws, and Ordinance 83, issued March 30, 2007, partially revising the Japanese Corporate Tax Law Enforcement Ordinance), for the interim consolidated accounting period under review, amounts recorded on and after April 1, 2007 primarily reflect said revisions.

Were the same method used to calculate the previous fiscal year’s interim period results with regard to operating income, ordinary income and consolidated income before income taxes, each would show a decrease of ¥13 million.

Additional Information

From the current first half of fiscal year, tangible fixed assets acquired prior to March 31, 2007, is depreciated evenly over a five-year period starting from the consolidated accounting period subsequent to the period during which the asset depreciated.

Were the same method used to calculate the previous fiscal year’s interim period results with regard to for operating income, ordinary income, and consolidated income before income taxes, each would show a decrease of ¥52 million.

Changes in Presentation Methods

Interim Consolidated Cash Flow Statement From the current first half of fiscal year, “Payments for purchase of treasury stock”, included as “Other” under cash flows from financing activities in the previous interim consolidated cash flow statements, are now recorded separately because of their increased importance.

In the previous interim consolidated fiscal period, “Payments for purchase of treasury stock” amounted to ¥10 million.

As there have been no significant changes apart from “Significant Accounting Policy” above since they were mentioned in the latest semiannual securities report (published on December 22, 2006), these have been omitted.

Concerning of the First Half of the Consolidated Financial Statements

Omissions of Disclosure

As there is thought to be little need to disclose notes concerning interim consolidated balance sheets, consolidated statements of income, statement of changes in consolidated shareholders’ equity, and consolidated statements of cash flows, these have been omitted.

1. Significant Accounting Policy Depreciation method of significant depreciable assets

Tangible fixed assets:

Intangible fixed assets:

Mainly declining-balance method

Straight-line method

The software used in the Group is depreciated using the straight-line method with an effective life of five years of mainly internal usability.

19

Segment Information 1. Segment Information by Geographic Areas (Millions of yen) Six-month period ended September 30, 2006 Japan North

America Europe Total Corporate or Eliminations Consolidated

(1) Net sales to customers 20,949 2,671 2,149 25,769 － 25,769 (2) Inter-segment sales 3,109 0 10 3,120 (3,120) －

Total net sales 24,058 2,671 2,160 28,890 (3,120) 25,769 Operating expenditure 19,068 2,352 1,953 23,373 (2,814) 20,559 Operating income 4,990 319 207 5,516 (306) 5,210

(Millions of yen) Six-month period ended September 30, 2007 Japan North




(Millions of yen) Fiscal year ended March 31, 2007 Japan North




Notes: 1. Categorization of countries and area is based on geographical adjacency. 2. Main countries or areas other than Japan: (1) North America: United States (2) Europe: The Netherlands, Germany, United Kingdom, and Spain

3. Indistributable operating expenditure (¥238 million as of September 30, 2006, ¥212 million as of September 30, 2007,

and ¥353 million as of March 31, 2007) included in “Corporate or Eliminations” are mainly concerned with administrative sectors such as personnel and general affairs of the head offices of data-offering units.

20

2. Overseas Sales Information (Millions of yen)

Six-month period ended September 30, 2006 Americas Europe Asia and

Other areas Total

(1) Overseas sales 3,018 2,187 2,906 8,112(2) Consolidated sales 25,769(3) Ratio of overseas sales to consolidated sales 11.7% 8.5% 11.3% 31.5%

(Millions of yen)

Six-month period ended September 30, 2007 Americas Europe Asia and

Other areas Total

(1) Overseas sales 3,061 2,949 3,172 9,183(2) Consolidated sales 25,997(3) Ratio of overseas sales to consolidated sales 11.8% 11.3% 12.2% 35.3%

(Millions of yen) Fiscal year ended March 31, 2007 Americas Europe Asia and

Other areas Total

(1) Overseas sales 5,762 4,399 5,562 15,724(2) Consolidated sales 50,414(3) Ratio of overseas sales to consolidated sales 11.4% 8.7% 11.1% 31.2%Notes: 1. Categorization of countries and areas is based on geographical adjacency.

2. Major countries or areas that belong to a category: (1) Americas: United States, Canada, and Latin America (2) Europe: The Netherlands, Germany, United Kingdom, and Spain (3) Asia and Other areas: Singapore, China, Taiwan, and Middle and near east

3. Overseas sales indicate the amount of sales made by the Group in foreign countries and areas except Japan.

21

Per Share Information Yen September 30,

2006 September 30,

2007 March 31,

2007 Net assets per share 751.15 808.78 790.68 Net income per share 41.89 34.00 85.07 Diluted net income per share 37.83 30.69 76.85 Note: Basis for calculations of net income per share and diluted net income per share is as follows. Millions of Yen September 30,

2006 September 30,

2007 March 31,

2007 Net income 3,117 2,515 6,333 Net income belonging to common stock 3,117 2,515 6,333 Amount which is not appropriated to shareholder of common stock －－－ Average number of shares outstanding during period 74,417,553 share 73,977,083 share 74,451,714 shareNet income adjustment value for calculations of diluted net income per share －－－ Increase in number of shares outstanding for calculations of diluted net income per share

Convertible bond 7,972,689 share 7,968,487 share 7,968,487 shareIncrease in number of shares outstanding 7,972,689 share 7,968,487 share 7,968,487 share

Residual shares not included in the calculation of diluted net income per share because they have no dilutive effect －－

－ Subsequent Events

There are no applicable articles.

Omissions of Disclosure

As there is thought to be little need to disclose notes concerning lease transactions, securities, derivative transactions, stock option, etc, these have been omitted.

consolidated financial report for the first half of the ... · 2 (2) consolidated financial...

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