ARRK CORPORATION. Supplementary Material of Interim Financial Results From April 1st, 2008 to September 30, 2008

Transcription

1 ARRK CORPORATION Supplementary Material of Interim Financial Results From April 1st, 2008 to September 30, Consolidated operating results Highlights of Consolidated Results Summary of Results Accumulated Quarterly Summary of Quarterly Results Comparison Highlights of Results by Region Highlights of Results by Product Consolidated Results by Region and Product Changes in Major Financial Ratios Number of Employees Information of Shareholders Distribution Top Ten Shareholders Quote & Chart Price Percent Standard on 9/18/1996, Listing Date on OTC Market 1 page

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3 Consolidated operating results The Japanese economy for the first half of the fiscal year ending March 2009 further rose the specter of recession, because corporate profits were on a downward trend due to financial market turmoil stemming from subprime loan crisis, and rise in price of oil and raw materials. Flagging U.S. economy caused downturn in European economy which had been enjoying strong growth. In Asia, China continued high growth, but other countries such as South Korea and Taiwan showed downturn in economy. As economic circumstances surrounding us, worldwide downturn in economy, plastic materials and steel products hovering at a high level, and rise in personnel cost in Asian countries continued to be serious cause for concern. Under such an environment, we have been endeavoring to restructure organization, technology and human resources of our group companies at home and abroad to streamline operations, rationalize and further strengthen management. As part of business portfolio restructuring and concentration of management resources toward core business, we made Sanyo Chemical Co.,Ltd., consolidated subsidiary who has a high processing technology in injection molding/painting/sub-assembly of a wide variety of plastic products such as cell phone casings, equity method affiliate at the end of the previous fiscal year, and also made Munekata Co.,Ltd., consolidated subsidiary who has integrated production system from design/development to assembling products utilizing leading-edge 3D technology, and Mutual- Tek Industries Co.,Ltd., consolidated subsidiary who manufactures high-value added printed circuit board, equity method affiliate for the first half of the fiscal year. As a result, the consolidated sales volume for the first half of the fiscal year decreased to 169,237 million yen, by 8.5 % compared to the previous fiscal year. The consolidated operating income increased to 4,097millin yen by 19.3% compared to the previous year. The consolidated ordinary income increased to 3,592 million yen by 37.6% compared to the previous year, because exchange loss in the first quarter substantially decreased due to an adjustment of YEN appreciation in the second quarter and equity method investment gain was posted. In extraordinary gain or loss, we posted extraordinary gain for 1,520 million yen such as gain on sale of affiliated companies stocks for 1,004 million yen and fixed assets for 342 million yen, and on the other hand, we posted extraordinary loss for 1,952 million yen such as improvement cost for business structure for 972 million yen, impairment loss on fixed assets for 338 million yen and evaluation loss on inventory assets for 293 million yen. As a result, profit before tax amounted to 3,161 million yen, and profit after tax and reduction of minority interest share of subsidiary s loss amounted to 759 million yen. Segmental information by area is as follows. (Japan) In Japan, demands for development of consumer digital products such as flat TV set kept strong, but order volume decreased in the auto related tooling area because demands for development of auto related market took a round. As for cell phone and game machine, demands for development slowed down because it was in a period of change. As a result, sales volume and operating income were 63,460 million yen and 2,777 million yen, respectively. (North America) In North America, Canadian subsidiaries making Detroit s Big Three major clients suffered from poor business results due to escalating oil prices and a prolonged slump in auto sales stemming from subprime loan crisis. In tooling area, we have started in earnest, business evolution focusing on reinforcement of the cooperation with group companies. As a result, sales volume and operating income were 8,792 million yen and 132 million yen, respectively. (Europe) In Europe, the car market mainly for big cars suffered from poor business results due to turmoil in the U.S. financial markets and escalating oil prices. The car market for newly developing countries which offset a drop in sales in U.S. market began to decline. We have tried to decrease unprofitable transactions, although business performance in our transport machine related department of which major clients are European major car makers was affected. As a result, sales volume and operating income were 20,805 million yen and 86 million yen, respectively. (Asia) In Asia, demands for development of consumer digital products and transport machine related products continued strong in Thailand and India, but in other Asian countries, our business performances remained flat due to negative factors such as escalating oil prices and rise in personnel cost. As a result, sales volume and operating income were 76,178 million yen and 1,355 million yen, respectively

4 million yen 400, , , ,000 Highlights of Consolidated Results ( Accumulated Quarterly ) Mar.31,2009 Q1 Q3 Q1 1 Sales / Cost of Goods Sold / Operating Income 383, , , , , , , ,166 90,413 87,362 76,955 73,423 Sales Cost of Goods Sold Operating Income 40,000 30,000 20,000 10, ,889 3,434 6,842 6,792 2,865 4, Ordinary Income / Net Income / Minority Interests million yen 10, ,000 4,802 2,023 2, ,610 1,453 2, ,137 4,375 4,354 Ordinary Income Net Income Minority Interest 3, ,000 30,000 26,073 ( Comparison of Quarterly Results ) Mar.31,2009 Q1 Q3 Q1 1 Sales / Cost of Goods Sold / Operating Income million yen 120, ,000 80,000 60,000 90,413 94,478 97, ,943 82,709 88,467 76,955 82,098 87,362 81,875 73,423 69,742 Sales Cost of Goods Sold Operating Income 10,000 8,000 6,000 4,000 40,000 20, , , ,865 1,199 2, ,000 2 Ordinary Income / Net Income / Minority Interests million yen 10,000 5, ,000 10,000 Ordinary Income Net Income Minority Interest 2,743 2, , ,416 2, ,160 15,000 20,000 25, ,719

5 Summary of Results Accumulated Quarterly (unit: million yen) March 31, 2008 March 31, 2009 Q1 Q3 Q1 Compared to the Prior 2nd Quarter Yearly Prospects Main Reasons of Changes (Compared to the Prior 2nd Quarter) Ratio of Change Sales 90, % 184, % 282, % 383, % 87, % 169, % 15, % 350, % As part of reorganization of group companies, divested consolidated subsidiary/made consolidated subsidiary equity method affiliate Cost of Goods Sold 76, % 159, % 241, % 330, % 73, % 143, % 15, % Gross Profit 13, % 25, % 40, % 53, % 13, % 26, % % - - C.G.S/Sales ratio improved. Selling, General & Admin. Exp. 10, % 22, % 33, % 46, % 11, % 21, % % S.G.A Exp./Sales ratio deteriorated. Operating Income 2, % 3, % 6, % 6, % 2, % 4, % % 8, % Other Gain 1, % 2, % 2, % 3, % 1, % 2, % % Other Loss 1, % 3, % 5, % 7, % 3, % 3, % % - - Ordinary Income 2, % 2, % 4, % 2, % % 3, % % 6, % Extraordinary Gain % % % 1, % 1, % 1, % 1, % Extraordinary Loss % 4, % 4, % 27, % % 1, % 2, % Net Income Before Income Taxes 1, % 1, % % 23, % 1, % 3, % 4,396 - Tax Expense 1, % 1, % 3, % 4, % 1, % 2, % 1, % Minority Interests % 1, % 2, % 1, % % % 1, Gain on sale of affiliated companies stocks(1,004) and fixed assets (342) Improvement cost for business structure (972), impairment loss on fixed assets(338) and evaluation loss on inventory assets (293) Net Income % 4, % 4, % 26, % % % 5,134-1, % Depreciation Expense - - 7, ,678-3,177-6,271-1, % Capital Investment , ,485-5,962-12, % Goodwill , ,290-13,281-12,568-4, % - - Amortization of Goodwill , % Yearly prospects are disclosed on May. 21, 2008.

6 Summary of Quarterly Results Comparison (unit: million yen) March 31, 2008 March 31, 2009 Q1 Q3 Q1 Compared to 1st Q Main Reasons of Change (Compared to 1st Quarter, FY2008) Ratio of Change As part of reorganization of group companies, divested consolidated Sales 90, % 94, % 97, % 100, % 87, % 81, % 5, % subsidiary/made consolidated subsidiary equity method affiliate CGS/Sales deteriorated.(material cost/sales decreased, but Cost of Goods Sold 76, % 82, % 82, % 88, % 73, % 69, % 3, % subcontract processing cost and labor cost/sales increased) Gross Profit 13, % 12, % 14, % 12, % 13, % 12, % 1, % Selling, General & Admin. Exp. 10, % 11, % 11, % 12, % 11, % 10, % % Operating Income 2, % % 3, % % 2, % 1, % 1, % CGS and SGA Exp./Sales deteriorated. Other Gain 1, % 1, % % % 1, % 3, % 2, % Exchange gain (1,141), equity method investment gain(596) Other Loss 1, % 1, % 1, % 2, % 3, % 1, % 1, % Ordinary Income 2, % % 2, % 2, % % 2, % 1, % Exchange loss(1,141) decreased. Fee(230) paid for syndicated loan booked in Q1. Extraordinary Gain % % % 1, % 1, % % 1, % Gain on sale of fixed assets (152) Extraordinary Loss % 3, % % 22, % % 1, % 1, % Net Income Before Income Taxes 1, % 3, % 2, % 23, % 1, % 1, % % Improvement cost for business structure (956), impairment loss on fixed assets(338) Tax Expense 1, % % 1, % % 1, % 1, % % Minority Interests % % % 3, % % % 1,676 - Net Income % 4, % % 21, % % % 1,119 - Depreciation Expense - - 7, ,678-3,177-6,271-3, % Capital Investment , ,485-5,962-12,316-6, % Goodwill , ,290-13,281-12, % Amortization of Goodwill , % - 4 -

7 Highlights of Results by Region 1 Sales Japan N. America Europe Asia 76,297 75, ,891 Mar.31, ,460 76, ,237 unit: million yen 18,585 14,735 20,805 8,792 2 Operating Income Japan N. America Europe Asia 1,048 1,355 unit: million yen 1, ,738 3, ,351 2,777 before canceling internal Highlights of Results by Product 1 Sales Design Prototype Tooling Molding PCB Others 12,900 15,378 11,310 9, ,891 37,064 22,739 15,199 10, ,237 35,868 unit: million yen 98,266 85,264 2 Balance of Orders Design Prototype Tooling Molding Others 10,856 13,415 7,511 13,586 70,828 2,978 15,089 1,812 63,093 unit: million yen 24,086 19,491 25,

8 Consolidated Results by Region and Product March 31, Number of Subsidiaries and Equity Method Affiliates March 31, 2009 Design Prototype Tooling Molding PCB Others Total Design Prototype Tooling Molding PCB Others Total Japan Japan N. America N. America Europe Europe Asia (excl. Asia (excl. Japan) Japan) Total Total Consolidated subsidiary Equity method affiliate Munekata Co.,Ltd., Munekata America Co.,Ltd.,Mutual-Tek Industries Co.,Ltd. Consolidated subsidiary Nonconsolidated subsidiary New System Holdings March 31, 2008 March 31, Sales (by Product) (unit: million yen) (unit: million yen) Design Prototype Tooling Molding Others Total Design Prototype Tooling Molding Others Japan 6,654 6,430 17,806 28,165 16,215 75,273 Japan 7,029 6,880 16,452 18,704 14,392 N. America ,359 7, ,735 N. America ,166 3, Europe 7,530 2,073 6,835 2, ,585 Europe 7,441 1,952 7,917 3, Asia (excl. Asia (excl. Japan) ,062 60,577 7,096 76,297 Japan) ,331 59,834 7,543 Total 15,378 9,970 37,064 98,266 24, ,891 Total 15,199 10,165 35,868 85,264 22,739 Total 63,460 8,792 20,805 76, ,237 March 31, 2008 March 31, Balance of Orders (by Product) (unit: million yen) (unit: million yen) Design Prototype Tooling Molding Others Total Design Prototype Tooling Molding Others Japan 5,032 1,951 7,260 4,306 8,756 27,307 Japan 4,774 1,466 6,919 3,527 5,680 N. America ,319 3,705-8,238 N. America , Europe 7, ,785 1, ,743 Europe 7, ,274 3, Asia (excl. Asia (excl. Japan) ,125 14,473 2,070 22,539 Japan) ,614 7,910 1,678 Total 13,415 2,978 19,491 24,086 10,856 70,828 Total 13,586 1,812 25,093 15,089 7,511 Total 22,367 4,877 19,703 16,144 63,093 March 31, 2008 March 31, Sales (by Application) (unit: million yen) (unit: million yen) Consumer Industrial Precision Automotive Medical Housing Others Japan 38,233 5,483 2,610 21,947 1,373 1,963 3,661 Japan 26,187 5,975 2,283 22,297 1,035 1,652 4,028 N. America 5, , N. America 2,541 1, , Europe 823 2, , Europe 801 2, , Asia (excl. Asia (excl. Japan) 25,721 1, ,151 1,079 1,858 2,044 Japan) 26,883 2, ,185 1,047 1,988 2,442 Total 70,705 9,759 2,965 87,962 2,829 4,396 6,271 Total 56,413 12,613 2,434 84,272 2,489 4,130 6,884 Consumer Industrial Precision Automotive Medical Housing Others - 6 -

9 Changes in Major Financial Ratios (time) 2.00 Total Market Value (million yen) PBR Price Book Value Ratio (million yen) 400, , ,625 96, , , ,577 Mar.31, , ,000 0 Debt Redemption Period (year) Interest Coverage Ratio Debt Redemption Period = Interest-bearing Debt / Cashflow from Operating Activities Interest Coverage Ratio = Cashflow from Operating Activities / Interest Paid Mar.31,2009 Mar.31,2009 Operating Margin (%) Ordinary Margin (%) Ratio of Ordinary Income to Total Capital (%) EPS Earnings per Share (yen) PER Price Earnings Ratio BPS Book Value per Share (%) 1, , , PBR Price Book Value Ratio ROE Return on Equity (%) Current Ratio (%) Fixed Ratio (%) Equity to Asset Ratio (%) Debt Redemption Period (year) Interest Coverage Ratio Number of Shares Issued 68,101,592 68,101,592 68,101,592 68,101,592 68,101,592 Total Market Value (million yen) 105,625 96,908 52,370 21,520 11,

10 1 Arrk Corporation Independent Contractors Regular Employees Part-time Employees (Unit: people) Mar.31, Production Sales Administration Total Number of Employees (As of September 30, 2008) ,036 2 Consolidated (Exclusive of Temporary Contractors ) Japan North America Europe Asia All Subsidiaries & Affiliates Total (incl. Arrk Corp.) Mar.31,2009 4,528 5,046 5,098 5,263 5,915 2,045 1,980 2,621 2, ,205 2,340 2,246 2,382 2,760 10,133 11,292 11,474 11,460 9,933 18,911 20,658 21,439 21,140 19,476 19,470 21,218 22,024 21,739 20, Shareholders Financial Institution (As of September 30, 2008) Mar.31,2009 Commercial Bank ,000 Trust Bank ,006,271 Life Insurance ,300 Non-Life Insurance ,000 Others ,289,900 Securities Broker Other Domestic Corp. Foreign Corp. Individual and Others Treasury Stock Total Information of Shareholders Ratio of Shareholding (%) Number of Shareholders Number of Shares Held ,627, ,261, ,629, ,884 32,135, , ,316 68,101,

11 2. Distribution Share Distribution (%) Floating Stock By Overseas Investors By Investment Trust Funds By Pension Trust Funds Mar.31,2009 Ratio of Holding (%) Mar.31,2009 By Overseas Investors ,629,883 By Investment Trust Funds ,653,800 By Pension Trust Funds ,196,200 By Directors ,439,200 1 By Special Shareholders ,111,460 2 Floating Stock ,908 17,321,137 1 Shares held by top ten shareholders or directors, plus treasury stock 2 Aggregated # of Shares held by shareholders each of who holds no more than 50 units Number of Shareholders Number of Shares Held 3. Top Ten Shareholders (As of September 30, 2008) Rank Shareholder Name Number of Shares Held Ratio of Holding 1 The Nomura Trust and Banking Co., Ltd. 9,433, % 2 Japan Trustee Services Bank, Ltd. 3,108, % 3 The Master Trust Bank of Japan, Ltd. 2,778, % 4 Sajap 1,551, % 5 The Bank of New York Europe Limited ,328, % 6 Japan Securities Finance Co., Ltd. 1,124, % 7 UBS, A.G, London Account IPB Segregated Client Account 1,116, % 8 Northern Trust Company AVFC Subaccount British Client 1,100, % 9 State Street Bank and Trust Company 734, % 10 Nikko Citi trust Bank 706, % - 9 -

12 Quote & Chart 7873 Arrk Corporation (Monthly) Price 6 months 12 months Turnover Turnover (Share) (Weekly) Price 13 weeks 26 weeks Turnover Turnover (Share)

13 Price Percent standard on 9/18/1996, listing date on OTC Market ARRK Nikkei 225 Average Nikkei OTC Average year month

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16 ARRK CORPORATION Inquires regarding this material may be made to Mr. Onishi or Mr. Kunikata, IR Dept. (Tel: )