Consolidated Financial Statements (Unaudited) SUMIDA CORPORATION and Consolidated Subsidiaries. First Half Years ended June 30, 2006 and 2007

Transcription

1 Consolidated Financial Statements (Unaudited) SUMIDA CORPORATION and Consolidated Subsidiaries First Half Years ended June 30, 2006 and 2007

2 SUMIDA CORPORATION and its Subsidiaries Consolidated Financial Statements (Unaudited) First Half Years ended June 30, 2006 and 2007 Contents Consolidated Balance Sheets... 1 Consolidated Statements of Income... 3 Consolidated Statements of Changes in Net Assets...4 Consolidated Statements of Cash Flows... 6 Notes to Consolidated Financial Statements... 7

3 Consolidated Balance Sheets (Unaudited) As of June 30, 2006 and 2007 June 30, (Thousands of U.S.dollars) (Note 2) Assets Current assets: Cash and time deposits 7,335 5,815 $47,276 Trade receivables: Notes ,504 Accounts 13,453 16, ,480 Allowance for doubtful accounts (39) (57) (463) 14,398 16, ,521 Inventories (Note 3 ) 8,443 10,547 85,748 Deferred income taxes 1, ,252 Prepaid expenses and other current assets 2,458 4,684 38,081 Total current assets 33,727 38, ,878 Property, plant and equipment: (Note 4 ) Land 2,520 2,717 22,089 Buildings 11,322 13, ,797 Machinery and equipment 27,142 25, ,081 Furniture and fixtures 11,175 8,035 65,325 Construction in progress 1,795 2,515 20,447 53,954 51, ,739 Accumulated depreciation (34,087) (28,287) (229,976) Property, plant and equipment, net 19,867 23, ,763 Investment and other assets: Goodwill 2,762 5,886 47,854 Intangible assets 665 1,393 11,325 Investment in securities (Note 8 ) ,293 Investment in affiliate 1, ,472 Deferred income taxes 3,446 3,333 27,098 Other assets ,569 Investment and other assets 8,942 12,006 97,611 Total assets 62,536 74,323 $604,252 1

4 Consolidated Balance Sheets (Unaudited) As of June 30, 2006 and 2007 June 30, (Thousands of U.S.dollars) (Note 2) Liabilities, shareholders' equity and net assets Current liabilities: Short-term bank borrowings (Note 4 ) 7,023 11,230 $91,301 Current portion of long-term debt (Note 4 ) 1,306 2,726 22,163 Trade payables: Notes Accounts 4,746 6,182 50,260 4,767 6,186 50,293 Income taxes payable ,943 Deferred income taxes ,479 Accrued expenses and other current liabilities 5,098 5,187 42,170 Total current liabilities 19,133 26, ,349 Long-term liabilities: Long-term debt (Note 4 ) 13,650 12, ,187 Deferred income taxes 649 1,943 15,797 Others 2,541 3,987 32,414 Total long term liabilities 16,840 18, ,398 Total liabilities 35,973 44, ,747 Net assets: Common stock: Authorized-70,000,000 shares; Issued-19,601,887 shares in 2006 and 19,643,027 shares in ,929 6,964 56,618 Capital surplus 6,743 6,777 55,098 Earned surplus 13,360 14, ,602 Treasury stock, at cost; 29,671 shares in 2006 and 730,663 shares in 2007 (72) (1,523) (12,382) Total shareholders' equity 26,960 26, ,936 Unrealized holding gain on securities Unrealized gain from hedging instruments Translation adjustments (1,121) 1,747 14,203 Total valuation and translation adjustments (1,070) 1,913 15,553 Minority interests ,016 Total net assets 26,563 29, ,505 Total liabilities and net assets 62,536 74,323 $604,252 2

5 Consolidated Statements of Income (Unaudited) For first half years ended June 30, 2006 and 2007 First half years ended June 30, (Thousands of U.S.dollars) (Note 2) Net sales 29,759 35,290 $286,910 Cost of sales 21,573 26, ,308 Gross profit 8,186 8,315 67,602 Selling, general and administrative expenses (Note 5 ) 5,979 6,357 51,684 Operating income 2,207 1,958 15,918 Other income (expense): Interest and dividend income Interest expense (67) (191) (1,553) Foreign currency exchange gain (loss) ,179 Others, net 76 (745) (6,057) Income before income taxes and minority interests 2,726 1,595 12,967 Income taxes: Current ,959 Deferred 660 (86) (699) 1, ,260 Income before minority interests 1,340 1,071 8,707 Minority interests Net income 1,313 1,034 $8,406 See accompanying notes to consolidated financial statements. 3

6 Consolidated Statements of Changes in Net Assets (Unaudited) For first half years ended June 30, 2006 and 2007 Shareholders' equity Common stock Capital surplus Earned surplus Treasury stock Total shareholders' equity Balance as of December 31, ,771 6,585 12,532 (65) 25,823 Changes of items during the period Issuance of new shares Dividends from surplus (485) (485) Interim net income 1,313 1,313 Purchase of treasury stock (8) (8) Disposal of treasury stock (0) 1 1 Net changes of items other than shareholders' equity - Total changes of items during the period (7) 1,137 Balance as of June 30, ,929 6,743 13,360 (72) 26,960 Unrealized holding gain or loss on securities Valuation and translation adjustments Unrealized holding gain or Translation loss from hedging adjustments instruments Total valuation and translation adjustments Minority interests Total net assets Balance as of December 31, (955) (903) 55 24,975 Changes of items during the period Issuance of new shares 316 Dividends from surplus (485) Interim net income 1,313 Purchase of treasury stock (8) Disposal of treasury stock 1 Net changes of items other than shareholders' equity (20) 19 (166) (167) Total changes of items during the period (20) 19 (166) (167) 618 1,588 Balance as of June 30, (1,121) (1,070) ,563 Shareholders' equity Common stock Capital surplus Earned surplus Treasury stock Total shareholders' equity Balance as of December 31, ,961 6,775 13,642 (1,522) 25,856 Changes of items during the period Issuance of new shares Dividends from surplus (429) (429) Interim net income 1,034 1,034 Purchase of treasury stock (1) (1) Disposal of treasury stock Changes in application of equity method Net changes of items other than shareholders' equity - Total changes of items during the period (1) 827 Balance as of June 30, ,964 6,777 14,465 (1,523) 26,683 Unrealized holding gain or loss on securities Valuation and translation adjustments Unrealized holding gain or Translation loss from hedging adjustments instruments Total valuation and translation adjustments Minority interests Total net assets Balance as of December 31, ,151 Changes of items during the period Issuance of new shares 5 Dividends from surplus (429) Interim net income 1,034 Purchase of treasury stock (1) Disposal of treasury stock Changes in application of equity method 218 Net changes of items other than shareholders' equity ,561 1, ,604 Total changes of items during the period ,561 1, ,431 4

7 Shareholders' equity Common stock Capital surplus Earned surplus Treasury stock Total shareholders' equity (Thousands of U.S.dollars) Balance as of December 31, 2006 $56,594 $55,082 $110,910 $(12,374) $210,213 Changes of items during the period Issuance of new shares Dividends from surplus (3,488) (3,488) Interim net income 8,406 8,406 Purchase of treasury stock (8) (8) Disposal of treasury stock Changes in application of equity method 1,772 1,772 Net changes of items other than shareholders' equity - Total changes of items during the period ,690 (8) 6,722 Balance as of June 30, 2007 $56,618 $55,098 $117,602 $(12,382) $216,936 Unrealized holding gain or loss on securities Valuation and translation adjustments Unrealized holding gain or Translation loss from hedging adjustments instruments Total valuation and translation adjustments Minority interests Total net assets (Thousands of U.S.dollars) Balance as of December 31, 2006 $236 $781 $1,512 $2,529 $8,000 $220,743 Changes of items during the period Issuance of new shares 40 Dividends from surplus (3,488) Interim net income 8,406 Purchase of treasury stock (8) Disposal of treasury stock Changes in application of equity method 1,772 Net changes of items other than shareholders' equity ,691 13, ,040 Total changes of items during the period ,691 13, ,762 Balance as of June 30, 2007 $423 $927 $14,203 $15,553 $8,016 $240,505 See accompanying notes to consolidated financial statements. 5

8 Consolidated Statements of Cash Flows (Unaudited) For first half years ended June 30, 2006 and 2007 First half years ended June 30, (Thousands of U.S.dollars) (Note 2) Cash flows from operating activities Income before income taxes and minority interests 2,726 1,595 $12,967 Depreciation and amortization 1,350 1,870 15,203 Interest and dividend income (61) (59) (480) Interest expense ,553 Loss on devaluation of investment in securities ,690 Gain on sales of property, plant and equipment (2) (995) (8,089) Others, net (729) (979) (7,960) Changes in operating assets and liabilities: Trade receivables 666 (160) (1,301) Inventories (615) (720) (5,854) Trade payables (963) 598 4,862 Subtotal 2,439 2,287 18,591 Interests and dividend income Interest paid (74) (191) (1,553) Income taxes paid (687) (311) (2,528) Net cash provided by operating activities 1,739 1,844 14,990 Cash flows from investing activities Purchases of property, plant and equipment (1,628) (2,213) (17,992) Proceeds from sales of property, plant and equipment Proceeds from sales of securities ,049 Purchases of securities (93) (10) (81) Investment in subsidiary (1,777) (378) (3,073) Investment in affiliated company (658) - - Others, net (1,862) (51) (414) Net cash used in investing activities (6,003) (2,143) (17,422) Cash flows from financing activities Decrease in short-term bank borrowings (7,342) 699 5,683 Increases in long-term borrowings 6, Repayment of long-term debt (5,454) (762) (6,195) Proceeds from issuance of common stock Cash dividends paid (484) (428) (3,480) Others, net (7) (1) (8) Net cash used by financing activities (6,971) (487) (3,959) Effect of exchange rate changes on cash and cash equivalents ,748 Net (decrease) in cash and cash equivalents (11,089) (571) (4,643) Cash and cash equivalents at beginning of year 18,225 6,537 53,146 Cash and cash equivalents at end of the period (Note 6): 7,136 5,966 $48,503 See accompanying notes to consolidated financial statements. 6

9 Notes to Consolidated Financial Statements (Unaudited) June 30, 2006 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation SUMIDA CORPORATION (the Company ) and its domestic consolidated subsidiaries maintain their accounting records and prepare their financial statements in accordance with accounting principles generally accepted in Japan, and its overseas consolidated subsidiaries maintain their books of account in conformity with those of their countries of domicile. The accompanying consolidated financial statements have been prepared from the accounts prepared by the Company in accordance with the provisions set forth in the Securities and Exchange Law of Japan and in conformity with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards ( IFRS ). In addition, the notes to the consolidated financial statements include information which is not required under accounting principles generally accepted in Japan but is presented herein as additional information. (b) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates The accompanying consolidated financial statements include the accounts of the Company and all of the significant companies controlled directly or indirectly by the Company. Companies over which the Company exercises significant influence in terms of their operating and financial policies have been included in the consolidated financial statements on an equity basis. All significant intercompany accounts and transactions have been eliminated in consolidation. (c) Investment in securities Securities other than equity securities issued by subsidiaries and affiliates are classified into three categories: trading, held-to-maturity or other securities. Marketable securities classified as other securities are stated at fair value with any changes in unrealized holding gain or loss, net of the applicable income taxes, included directly in shareholders equity. Non-marketable securities classified as other securities are stated at cost. Cost of securities sold is determined by the average cost method. (d) Inventories Inventories are stated principally at cost determined by weighted average method. (e) Property, plant and equipment Property, plant and equipment are stated at cost. Depreciation of buildings (except for structures attached to the buildings) acquired subsequent to April 1, 1998 is calculated principally by the straight-line method over the estimated useful lives of the respective assets. Depreciation of other property, plant and equipment is computed by the declining-balance method for domestic companies and for the straight-line method for overseas subsidiaries over the useful lives of the respective assets. The useful lives of property, plant and equipment are summarized as follows Buildings and structures Machinery and equipment Furniture and fixtures 3 to 65 years 2 to 40 years 2 to 45 years Significant renewals and additions are capitalized at cost. Maintenance and repairs are charged to income as incurred. 7

10 (f) Research and development costs and computer software Research and development costs are charged to income when incurred. Expenditures relating to computer software developed for internal use are charged to income as incurred unless these are deemed to contribute to the generation of future income or cost savings. Such expenditures are capitalized as assets and amortized by the straight-line method over their useful lives, generally a period of 5 years. (g) Goodwill Goodwill which was recorded when overseas subsidiary acquired its subsidiary is not amortized according to IFRS No.3 Business Combination. Goodwill recognized by purchase price allocation for an acquisition of Panta GmbH ( Panta ) in the 1 st half year ended June 30, 2007 was the provisional amount. (h) Deferred assets Bond issuing expenses were charged to income when incurred. (i) Foreign currency translation All monetary assets and liabilities denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance sheet date and the gain or loss on each translation is credited or charged to income. Revenue and expense items arising from transactions denominated in foreign currencies are generally translated into yen at the average rates of exchange in effect during the year. Gain or loss on foreign exchange is credited or charged to income in the period in which such gain or loss is recognized for reporting purposes. The financial statements of the overseas subsidiaries are translated into yen at the rates of exchange in effect at the balance sheet date except that the components of net assets excluding minority interests are translated at their historical exchange rates. Adjustments resulting from translating the foreign currency financial statements are not included in the determination of net income and have been reported as translation adjustments and minority interests in net assets in the consolidated balance sheets. (j) Allowance for doubtful accounts The allowance for doubtful accounts is determined based on the Company s and its consolidated subsidiaries historical experience of losses on bad debts and write off as a percentage of the balance of total receivables plus an additional amount deemed necessary to cover estimated future losses on specific doubtful accounts. (k) Accrued employees pension and severance costs Certain overseas subsidiaries accrue employees retirement benefits at an estimated amount calculated based on the retirement benefit obligation. Actuarial gain or loss is amortized in the year following the year in which the gain or loss is recognized by the straight-line method over certain years from next fiscal year, which are the average remaining years of service of the employees. (l) Leases Non-cancelable leases related to the Company and the domestic consolidated subsidiaries are accounted for as operating leases (whether such leases are classified as an operating or finance lease) except those lease which stipulate the transfer of ownership of the leased assets to the lessee which are accounted for as finance leases. 8

11 (m) Derivative financial instruments The Company and certain consolidated subsidiaries have entered into various derivative transactions in order to manage certain risks arising from adverse fluctuations in foreign currency exchange rates. Derivative financial instruments are stated at fair value with any changes in unrealized gain or loss charged or credited to income, except for those which meet the criteria for deferral hedge accounting under which unrealized gain or loss is deferred as an asset or a liability. Receivables and payables hedged by qualified forward foreign exchange contracts are translated at the corresponding foreign exchange contract rates. (n) Income taxes Income taxes in Japan applicable to the Company and its domestic consolidated subsidiaries consist of corporate tax, inhabitants taxes and enterprise tax. Income taxes are calculated based on taxable income and charged to income on an accrual basis. Certain temporary differences exist between taxable income and income reported for financial statement purposes which enter into the determination of taxable income in a different period. The Company has recognized the tax effect of such temporary differences in the accompanying consolidated financial statements. (o) Appropriation of retained earnings Under the Commercial Code of Japan, the appropriation of retained earnings with respect to a given financial year is made by resolution of the Board of Directors held subsequent to the close of such financial year. The accounts for that year do not, therefore, reflect such appropriations. (p) Cash and cash equivalents Cash and cash equivalents include cash on hand and in banks and other highly liquid investments with maturity of three months or less when purchased. (q)change in Accounting Policies Changes in the method of depreciation for Property, Plant and Equipment The Company and domestic consolidated subsidiaries changed the method of depreciation for the property, plant and equipment acquired after April 1, 2007 which are carried out according to the revised corporation tax law, issued on March 30, The effect of this change on the consolidated statement of income was immaterial. 2. U.S. DOLLAR AMOUNTS Solely for the convenience of the reader and as a matter of arithmetic computation only, the amounts in the consolidated financial statements have been translated from Japanese yen into U.S. dollars, at the rate of 123 = U.S.$1, the approximate rate prevailing on June 30, The translation should not be construed as a representation that Japanese yen could be converted into U.S. dollars at this or any other rate. 9

12 3. INVENTORIES Inventories as of June 30, 2006 and 2007 were summarized as follows: June 30, (Thousands of U.S. dollars) Finished products 3,238 4,428 $36,000 Work in process 1,445 1,570 12,764 Raw materials and supplies 3,882 4,738 38,520 Reserve for obsolete inventories (122) (189) (1,536) 8,443 10,547 $85, SHORT-TERM BANK BORROWINGS AND LONG-TERM DEBT Short-term bank borrowings bore interest at rates ranging, from 0.495% to 0.670% and from 0.870% to 1.150% per annum as of June 30, 2006 and 2007, respectively. Long-term debt consisted of the followings: June 30, (Thousands of U.S. dollars) Bank borrowings 5,756 5,849 $47,553 Unsecured bonds 1,200 1,200 9,756 Convertible bonds 8,000 8,000 65,041 14,956 15, ,350 Less : current portion (1,306) (2,726) (22,163) 13,650 12,323 $100,187 Bank borrowings are due in installments through 2007 and their interest rates range from 0.460% to % and from 1.260% to 1.935% per annum as of June 30, 2006 and 2007, respectively. The details of the bonds were as follows: Unsecured bond, due September 27, 2007 at interest rate % per annum Convertible bonds with stock acquisition rights, due January 26, 2009 at interest rate 0% per annum June 30, (Thousands of U.S. dollars) 1,200 1,200 $9,756 8,000 8,000 65,041 9,200 9,200 $74,797 10

13 The aggregate annual maturities of long-term debt at June 30, 2007 are summarized as follows: Half year ending June 30, Millions of yen Thousands of U.S. dollars ,726 $22, ,523 77, ,500 12, ,150 9, ,219 15,049 $122,350 Property, plant and equipment with a carrying value amounting to 2,109million ($17,146 thousand), was pledged as collateral for bank borrowings of 2,000 million ($16,260 thousand) as of June 30, RESEARCH AND DEVELOPMENT COSTS Research and development costs included in selling, general and administrative expenses for the half years ended June 30, 2006 and 2007 amounted to 690 million and 674 million ($5,480 thousand), respectively. 6. CASH AND CASH EQUIVALENTS Cash and cash equivalents at June 30, 2006 and 2007 consisted of the following, respectively. June 30, (Thousands of U.S. dollars) Cash and time deposits 7,335 MMF Fund - Time deposits with a maturity of more than three months when purchased (199) Cash and cash equivalents 7,136 5,815 $47, ,267 (5) (40) 5,966 $48, LEASES The following pro forma amounts represent the acquisition costs, accumulated depreciation and net book value of the leased assets as of June 30, 2007: Acquisition costs Accumulated depreciation Net book value June 30, 2007 Acquisition costs Accumulated depreciation (Thousands of U.S. dollars) Net book value Machinary and equipment $407 $252 $155 Lease payments relating to finance leases accounted for as operating leases in the accompanying consolidated financial statements amounted to 5 million and 5 million ($41 thousands) for the half years ended June 30, 2006 and 2007, respectively. Depreciation of the leased assets computed by the straight-line method over the respective lease terms and the interest portion included in lease payments amounted to 5 million and 5 million ($41 thousands) for the half years ended June 30, 2006 and 2007, 11

14 respectively. Future minimum lease payments subsequent to June 30, 2007 on finance lease accounted for as operating leases are summarized as follows: Half Years ending June 30, Millions of yen Thousands of U.S. dollars $ and thereafter Total 19 $154 Future minimum lease payments subsequent to June 30, 2007 for non-cancelable operating leases are as follows: Half Years ending June 30, Millions of yen Thousands of U.S. dollars $2, and thereafter 530 4,309 Total 786 $6, SECURITIES Securities classified as other securities at June 30, 2006 and 2007 are as follows: a) Marketable securities Cost June 30, 2006 Estimated fair value Gross unrealized gains Equity securities Other Total Cost Estimated fair value June 30, 2007 Gross unrealized Cost gains Estimated fair value (Thousands of U.S. dollars) Gross unrealized gains Equity securities $2,236 $2,707 $471 Other Total $2,252 $2,740 $488 12

15 b) Non-marketable securities June 30, (Thousands of U.S. dollars) Other securities: Unlisted equity securities $3, CONTINGENT LIABILITIES 1) On June 29, 2005, the Company received a notice of tax assessment from the Tokyo Regional Tax Bureau. The Tokyo Regional Tax Bureau stated that Hong Kong, where the Company has a subsidiary, was judged a tax haven under Japanese tax rule. Based on this judgment, the Bureau has decided to impose a unitary tax to the internal reserve of Sumida s Hong Kong subsidiary for the fiscal years 2002 to The notice indicated that the taxable income would be adjusted upward to 1.8 billion. However, since the amount of loss carried forward for the Company at the time was able to cover this, the Company did not have to pay any taxes in deed. However, the Company did not agree with this decision of the Tax Bureau and did the claim for examination to the Tokyo National Tax Tribunal on August 29, 2005 and the examination is currently in process. At the same time, for the open fiscal years after 2004, in consideration of additional tax due to understatement (about 10-15% p.a.), the Company re-calculated the tax amount on the basis that the decision of the Tax Bureau had been accepted and filed the tax returns. The resulting difference between the taxes actually paid in 2005 and 2006 and the amount without such re-calculation was included in the other current assets as the Company assessed it was more likely than not the difference would be refunded. When the Company s claim is not accepted by the Tokyo National Tax Tribunal, the Company will make a claim to the court. In case of a lost lawsuit for the Company, the total amount of 628 million yen included in the other current assets and 69 million which would have been incurred during the first half year 2007 will be charged to the tax expense. 2)In November, 2005, a jury verdict was delivered at the U.S. Federal District Court, Eastern Division of Texas, to find that a certain U.S. patent of O2 Micro International Ltd., an Inverter Controller manufacturer ( O2 Micro ), was willfully infringed by Taiwan Sumida Electronics, Ltd., a Taiwanese subsidiary of the Company ( Taiwan Sumida ). Afterwards, in April, 2006, a final judgment was entered by the same court together with award on damages to order injunction not to sell inverter modules containing certain Inverter Controllers made by Monolithic Power Systems, Inc, another IC manufacturer rival to O2 Micro ( MPS ). The damages awarded to O2 Micro were such as the actual damages US$2 million being doubled to make US$4 million as penalty damages due to willful infringement, and, further, for attorney s fees amounts not exceeding US$3 million were awarded to O2 Micro. Taiwan Sumida, not at all content with the judgment, took an action to file an appeal to the U.S. Court of Appeals for the Federal Circuit ( CAFC ) in May, Taiwan Sumida has not added up any potential losses up to present, because between MPS and Taiwan Sumida an indemnification agreement was made to compensate all the expenses or losses suffered by Taiwan Sumida due to the dispute against O2 Micro. 13

16 10. SEGMENT INFORMATION a) Business segments Coil business VOGT business Components Half year ended June 30, 2006 VOGT business Total Elimination Consolidated EMS Sales and operating income (loss) (1)Sales to third parties 19,418 9,152 1,189 29,759-29,759 (2)Inter-segment sales or transfers (8) - Total sales 19,426 9,152 1,189 29,767 (8) 29,759 Operating expenses 16,419 8,564 1,057 26,040 1,512 27,552 Operating income (loss) 3, ,727 (1,520) 2,207 Half year ended June 30, 2007 Coil business VOGT business Components VOGT business EMS Total Elimination Consolidated Sales and operating income (loss) (1)Sales to third parties 22,555 11,435 1,300 35,290-35,290 (2)Inter-segment sales or transfers (319) - Total sales 22,793 11,516 1,300 35,609 (319) 35,290 Operating expenses 19,981 11,058 1,262 32,301 1,031 33,332 Operating income (loss) 2, ,308 (1,350) 1,958 Coil business VOGT business Components Half year ended June 30, 2007 VOGT business Total Elimination Consolidated EMS (Thousands of U.S. dollars) Sales and operating income (loss) (1)Sales to third parties $183,374 $92,967 $10,569 $286,910 - $286,910 (2)Inter-segment sales or transfers 1, ,593 $(2,593) - Total sales 185,309 93,626 10, ,503 (2,593) 286,910 Operating expenses 162,447 89,902 10, ,610 8, ,992 Operating income (loss) $22,862 $3,724 $309 $26,893 $(10,975) $15,918 14

17 b) Geographical areas The geographical segment information for the Company and consolidated subsidiaries for years ended June 30, 2006 and 2007 are as follows: Japan Hong Kong /China Half year ended June 30, 2006 Taiwan/Korea ASEAN NAFTA Europe Total Elimination Consolidated Sales and operating (loss) income (1)Sales to third parties 4,642 7,304 3,685 1,380 2,730 10,018 29,759-29,759 (2)Inter-segment sales and transfers 577 6, ,259 (8,259) - Total sales 5,219 13,761 3,822 1,380 3,423 10,413 38,018 (8,259) 29,759 Operating expenses 5,146 10,929 3,580 1,363 3,636 9,632 34,286 (6,734) 27,552 Operating (loss) income 73 2, (213) 781 3,732 (1,525) 2,207 Half year ended June 30, 2007 Japan Hong Kong /China Taiwan/Korea ASEAN NAFTA Europe Total Elimination Consolidated Sales and operating (loss) income (1)Sales to third parties 4,702 9,563 3,207 1,484 3,562 12,772 35,290-35,290 (2)Inter-segment sales and transfers 701 7, ,946 (8,946) - Total sales 5,403 16,997 3,299 1,484 4,195 12,858 44,236 (8,946) 35,290 Operating expenses 5,101 14,789 3,234 1,471 4,297 11,900 40,792 (7,460) 33,332 Operating (loss) income 302 2, (102) 958 3,444 (1,486) 1,958 Half year ended June 30, 2007 Japan Hong Kong /China Taiwan/Korea ASEAN NAFTA Europe Total Elimination Consolidated Sales and operating (loss) income (Thousands of U.S. dollars) (1)Sales to third parties $38,228 $77,748 $26,073 $12,065 $28,959 $103,837 $286,910 - $286,910 (2)Inter-segment sales and transfers 5,699 60, , ,731 $(72,731) - Total sales 43, ,187 26,821 12,065 34, , ,641 (72,731) 286,910 Operating expenses 41, ,236 26,293 11,959 34,935 96, ,643 (60,651) 270,992 Operating (loss) income $2,455 $17,951 $528 $106 $(830) $7,788 $27,998 $(12,080) $15,918 15

18 c) Overseas sales Overseas sales, which include export sales of the Company and domestic consolidated subsidiaries and sales (other than exports to Japan) of the foreign consolidated subsidiaries, for the years ended June 30, 2006 and 2007 are summarized as follows: Overseas sales Consolidated net sales Hong Kong /China Half year ended June 30, 2006 ASEAN Taiwan/Korea NAFTA EU Total 4,546 1,380 2,932 2,730 13,529 25,117 29,759 Overseas sales as a percentage of consolidated net sales 15.3% 4.6% 9.8% 9.2% 45.5% 84.4% Hong Kong /China Half year ended June 30, 2007 ASEAN Taiwan/Korea NAFTA EU Other Total Overseas sales Consolidated net sales 6,551 1,536 2,317 3,601 16, ,588 35,290 Overseas sales as a percentage of consolidated net sales 18.6% 4.3% 6.6% 10.2% 46.9% 0.1% 86.7% Overseas sales Consolidated net sales Hong Kong /China Half year ended June 30, 2007 ASEAN Taiwan/Korea NAFTA EU Other Total (Thousands of U.S. dollars) $53,260 $12,488 $18,837 $29,276 $134,488 $333 $248, ,910 Overseas sales as a percentage of consolidated net sales 18.6% 4.3% 6.6% 10.2% 46.9% 0.1% 86.7% 16

19 11. AMOUNTS PER SHARE Half year ended June 30, (Yen) (U.S. dollars) Net income : Basic $0.44 Diluted Interim cash dividends applicable to the period $0.16 (Yen) June 30, (U.S. dollars) Net assets 1, , $12.29 Basic net income per share was computed based on the net income available for distribution to shareholders of common stock and the weighted average number of shares of common stock outstanding during the year and, diluted net income per share was computed based on the net income available for distribution to the shareholders and the weighted average number of shares of common stock outstanding during each year after giving effect to the dilutive potential of shares of common stock to be issued upon the exercise of warrants and stock options for the year ended December 31, 2006 and 2007, respectively. Amounts per share of net assets were computed based on the net assets available for distribution to the shareholders and the number of shares of common stock outstanding at the year-end. Cash dividends per share represent the cash dividends proposed by the Board of Directors as applicable to the respective years together with the interim cash dividends paid. 17