Financial Report for the Second Quarter of the Fiscal Year Ending March 31, 2012 (Japanese GAAP) (Consolidated)

Transcription

1 Financial Report for the Second Quarter of the Fiscal Year Ending March 31, 212 (Japanese GAAP) (Consolidated) October 27, 211 Company name: MAX CO., LTD. Stock listing: First Section of the Tokyo Stock Exchange Stock code: 6454 Head office: 6-6, Hakozaki-cho, Nihonbashi, Chuo-ku, Tokyo, JAPAN URL: ( Representative director: Takashi Miida, CEO, President and Representative Director Inquiries: Hachiro Kawamura, Managing Director, General Manager Tel: Scheduled date to submit quarterly securities report: November 14, 211 Scheduled date to begin dividend payments: Supplementary materials to the quarterly financial statements have been prepared: Yes Presentation will be held to explain the quarterly financial statements: Yes (for securities analysts and fund managers) (Figures of less than 1 million have been omitted.) 1. Results for the Second Quarter of the Fiscal Year Ending March 31, 212 (April 1, 211 to September 3, 211) (1) Consolidated Operating Results September 3, 211 (Millions of yen, % denotes year-on-year change) September 3, 21 Net sales 27,73 7.3% 25, % Operating income 2, , Ordinary income 2, , Net income 1, Net income per share (yen) Net income per share after full dilution (yen) Note: Comprehensive income: 785 million (262.4%) ( September 3, 211); 216 million ( %) (Six months ended September 3, 21) (2) Consolidated Financial Position (Millions of yen) At September 3, 211 At March 31, 211 Total assets 79,827 81,486 Net assets 61,263 62,357 Shareholders equity ratio (%) 75.3% 75.1% For reference: Shareholders equity: 6,81 million (as of September 3, 211); 61,171 million (as of March 31, 211) 2. Dividends Annual Dividends End of first quarter End of second quarter End of third quarter End of fiscal year Total dividends Yen Yen Yen Yen Yen Year ended March 31, Year ending March 31, 212 Year ending March 31, 212 (Est.) Note: Revisions from recently announced dividend forecast: None

2 3. Forecast of Consolidated Operating Results for the Fiscal Year Ending March 31, 212 (April 1, 211 to March 31, 212) (Millions of yen, % denotes year-on-year change) Year ending March 31, 212 Net sales 58, 6.5% Operating income 5, 2.3 Ordinary income 5, 2. Net income 3, 83.6 Net income per share (yen) 59.5 Note: Revisions from recently announced performance forecast: Yes 4. Others (1) Changes in important subsidiaries during the period (changes in special consolidated subsidiaries attendant with change in scope of consolidation): None Included: Excluded: (2) Application of special accounting procedures in creating consolidated quarterly financial statements for the quarter under review: Yes (3) Changes in accounting principles, changes in accounting estimates, and changes in presentation due to revisions 1. Changes in accounting principles accompanying revisions in accounting standards: None 2. Changes other than those in 1. above: None 3. Changes in accounting estimates: None 4. Changes in presentation due to revisions: None (4) Number of shares outstanding (common stock) (a)period-end number of shares outstanding (including treasury stock) Second quarter of fiscal year ending March 31, 212 5,5,626 Fiscal year ended March 31, 211 5,5,626 (b)period-end number of treasury stock Second quarter of fiscal year ending March 31, ,973 Fiscal year ended March 31, ,61 (c) Average number of outstanding common shares for the Second quarter (Six months) Second quarter of fiscal year ending March 31, 212 5,412,577 Second quarter of fiscal year ended March 31, 211 5,418,814 *Status of Performance of Quarterly Review Procedures At the time when this quarterly financial report was disclosed, the quarterly review procedures based on Japan s Financial Instruments and Exchange Law had not been completed. *Explanation of the Appropriate Use of Performance Forecasts and Other Related Items Statements in these materials that refer to the outlook for performance and other forward-looking statements are based on information that the Company has available to it at present and on certain assumptions that are judged to be reasonable. Actual performance may differ substantially from this outlook due to a wide range of factors. Please note that the conditions underlying assumptions on which the outlook is based and cautionary notes on the use of the outlook may be found on page 7 of the attached materials entitled (3) Qualitative information on consolidated operating forecasts.

3 Table of Contents of Supplementary Materials Consolidated Operating Results 2 (1) Consolidated operating results for the first quarter 2 (2) Consolidated financial position 6 (3) Consolidated operating forecasts 7 Other Information 8 (1) Changes in important subsidiaries during the period 8 (2) Application of special accounting procedures in creating consolidated quarterly financial statements 8 (3) Changes in accounting principles, changes in accounting estimates, and changes in presentation due to revisions 8 Consolidated Financial Statements 9 (1) Consolidated balance sheet 9 (2) Consolidated statement of income 1 (3) Consolidated statement of comprehensive income 11 (4) Consolidated statement of cash flows 12 (5) Notes on assumptions underlying the definition of ongoing businesses 13 (6) Segment data 13 (7) Notes on significant changes to shareholders equity 14 1

4 Qualitative Information / Financial Statements 1. Consolidated Operating Results (1) Consolidated operating results through the second quarter (a) Companywide consolidated operating results (Millions of yen, %) Increase year on year September 3, 211 September 3, 21 Amount % Change Net sales 27,73 25,837 1, % Operating income 2,172 1, Ordinary income 2,59 1, Net income 1, Net income per share (yen) Operating margin 7.8% 7.4%.4pp During the first six months of the fiscal year (through the end of the second quarter), despite continued growth in the emerging economies, including China, uncertainty about future trends in the world economy increased because of debt problems in European countries and government fiscal issues in the United States, and the speed of economic recovery slowed. In Japan, the restoration of supply chains that were severed at the time of the Great East Japan Earthquake proceeded more rapidly than initially forecast. However, economic conditions continued to be challenging due to the further appreciation and settling down of the yen at a higher level, weakness in stock prices, and other factors. Amid these conditions, the Company maintained the management policy of forming deeper links with customers and, thereby, gaining increased client confidence, and worked to strengthen its customer relationship management (CRM) as it puts the three key words of real workplace, real products, and reality into action and strengthen marketing capabilities. In addition, in May 211, the Company s new development building became fully operational, and the Company moved forward with initiatives to strengthen its development capabilities, with a focus on creating new products that are based on the voices of customers and the workplace. Also, to fulfill its responsibilities to supply materials for recovery in the areas stricken by the earthquake, the Company endeavored to further upgrade its production and supply capabilities for nailers, rebar-tying tools, and consumables, such as coil nails, staples, and tie wires, and other products needed for housing and infrastructure reconstruction. As a result of these various initiatives, consolidated net sales increased 7.3% compared with the same period of the previous year, to 27,73 million, and operating income rose 14.4%, to 2,172 million, thus bringing the operating income to net sales ratio (operating margin) to 7.8%. Ordinary income increased 8.6%, to 2,59 million, because of the effects of foreign exchange losses due to the appreciation of the yen, and net income through the second quarter under review rose 69.7% over the same period of the previous year, to 1,22 million. The principal causes of the increase in net income through the second quarter were the reporting in the previous year of extraordinary losses related to the cost of product quality warranties of 1,182 million and other factors. 2

5 25 1 million yen % Year-on-year change(%) % 1 5 Net sales(1 million yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 3/21 3/211 3/ million yen Operating income(1 million ) Ordinary income(1 million yen) Quarterly net income(1 million yen) Operating Margin % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 3/21 3/211 3/

6 (b) Operating results by division Office Equipment Division September 3, 211 (Millions of yen, %) Increase year on year September 3, 21 Amount % Change Net sales 1,551 1,61 (59) (.6)% Operating income 2,263 2,762 (499) (18.1) Operating margin 21.5% 26.% (4.5)pp In the office equipment division, sales through the end of the second quarter decreased.6% compared with the same period of the previous year, to 1,551 million. Regarding operating income, although sales of autostaplers, which decreased because of the effects of the earthquake, recovered rapidly in the second quarter, operating income through the second quarter did not rise to the level during the same period of the previous year. The Company also expanded resources devoted to growth, including development of new products and improvement in sales competitiveness. As a consequence of these various factors, operating income decreased 18.1%, to 2,263 million, and the operating margin was 21.5%. In the domestic office equipment business, shipments of office supplies were stagnant because of the effects of the earthquake, but the Company promoted the sales of a new product Korokoro Keshikoro with Letter Opener, an eraser stamp to facilitate compliance with regulations regarding the protection of personal information, mainly at mass retailers, home centers, and other large-scale retail outlets. The resulting expansion in the Company s share in stores and other factors contributed a rise in sales in this business. Moreover, as a result of an increase in supplies of terminals to producers of company attendance management software, sales of time recorders increased, and owing to emphasis on CRM activities targeted at large users with multiple stores and offices, sales of label printer consumables expanded. As a result of these various initiatives, the Company was able to secure sales at the same level as in the previous year. In the overseas office equipment business, in the principal Asian markets, the Company broadened its offerings of new colors in its stapler lineup, and this, along with measures to prevent copying of its staples, contributed to an increase in sales. Also, sales of LETATWIN tube markers for electric equipment were favorable, thus resulting in an increase in sales. In the autostapler business, the Company supplies autostaplers and consumables (staples) to almost all domestic and overseas copier manufacturers. Shipments in this business declined in the first quarter, and sales through the end of the second quarter were down compared with the same period of the previous fiscal year. However, as a result of recovery among copier manufacturers that the Company supplies on an OEM basis, sales of equipment and consumables began to increase again. Office Equipment Segment Sales and Operating Margin Trend million yen Year-on-year change(%) % Net sales (1 million yen) Operating margin(%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 3/21 3/211 3/

7 Industrial Equipment Division September 3, 211 (Millions of yen, %) Increase year on year September 3, 21 Amount % Change Net sales 15,412 14,331 1,81 7.5% Operating loss (273) (975) 72 Operating margin (1.8)% (6.8)% 5.pp In the industrial equipment division, sales through the end of the second quarter rose 7.5% over the same period of the previous year, to 15,412 million, but the division reported an operating loss of 273 million. The division was not able to move back into the black during the first or second quarters because it is taking time to overcome the remaining effects of the earthquake on the housing environmental equipment business. Nevertheless, as a result of restraints on fixed costs and the recovery in the number of new housing starts, the volume of sales, especially in the domestic industrial equipment business has increased, and the operating loss showed an improvement of 72 million from the same period of the previous year. In the domestic industrial equipment business, the number of new housing starts, while still at a low level, is continuing to increase, in part because of the effects of the eco-point system that was terminated in July and other government policy measures. In addition, as a result of the steady recovery in demand, including the areas stricken by the earthquake, sales of equipment, including high-pressure nailers, compressors, and rechargeable battery-powered tools, are increasing. Also, as a result of recovery in condominium starts in the Tokyo metropolitan area, sales of tools for use in building concrete structures, including rebar-tying tools and gas nailers, are also rising. These various developments resulted in an increase in sales of this business. The housing environmental equipment business supplies products to construction companies and housing manufacturers that contribute to making living environments more pleasant. These include electric bathroom heater-dryers, ventilating systems, floor heating systems, and disposal systems. Although sales of electric bathroom heater-dryers, which are a core product for this business, were adversely affected and declined during the first quarter, they recovered in the second quarter to the same level as in the previous year, but demand for smoke detectors for the home, which was stimulated by revisions in legal regulations, ran its course and declined. As a result of these factors, sales of this business as a whole declined. In the overseas industrial equipment business, sales in Europe and the United States of rebar-tying tools recovered and rose, while sales in Europe, the United States, and China of the Company s cost-competitive nailers manufactured in Thailand also expanded. As a consequence, sales of this business increased. Industrial Equipment Segment Sales and Operating Margin Trend million yen Year-on-year change(%) % Net sales (1 million yen) Operating margin(%) Operating margin(%) Net sales (1 million yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 3/21 3/211 3/

8 Other Division September 3, 211 (Millions of yen, %) Increase (decrease) year on year September 3, 21 Amount % Change Net sales 1, % Operating income Operating margin 1.3% 12.5% (2.2)pp Kawamura Cycle Co., Ltd. became a consolidated subsidiary in June 21 and became a new business division. The previous period included only the results for the second quarter (July through September). (2) Consolidated financial position (Millions of yen, %) At September 3, 211 Change from March 31, 211 Amount % Change Total assets 79,827 (1,658) (2.)% Net assets 61,263 (1,93) (1.8) Shareholders equity ratio 75.3%.2pp Consolidated total assets at the end of the second quarter decreased 1,658 million from the end of the previous fiscal year, to 79,827 million. Current assets rose 2,586 million, despite a decrease of 3 million in cash and deposits and a decline of 71 million in notes and accounts receivable trade, as a result of an increase in short-term investment securities of 3,19 million and a rise in inventories, including merchandise and finished goods, of 698 million. Fixed assets decreased 4,244 million as a result of the net effect of a rise in tangible fixed assets of 462 million, reflecting the construction of the Company s new development building, and a decrease in investment securities of 4,922 million (due to the inclusion of bonds due in one year among current assets and other factors). Consolidated total liabilities at the end of the second quarter decreased 565 million from the end of the previous fiscal year, to 18,564 million. Current liabilities were down 723 million, despite an increase in other current liabilities of 371 million (including payables of 274 million), because of decreases in notes and accounts payable trade of 387 million, a rise in short-term loans payable of 132 million, a decline in the provision for bonuses and the provision for directors bonuses of 16 million, and a decrease in the provision for product quality warranties of 313 million. Long-term liabilities rose 158 million as a result of an increase in the provision for retirement benefits of 224 million and other factors. Consolidated net assets declined 1,93 million from the end of the previous fiscal year, to 61,263 million. The Company reported net income for the quarter of 1,22 million, but shareholders equity decreased 636 million because of the payment of cash dividends amounting to 1,814 million. Consolidated cash flows Consolidated cash and cash equivalents (hereinafter, cash) at the end of the second quarter decreased 313 million from the end of the previous fiscal year, to 6,592 million. Movements in the cash flows through the end of the second quarter under review are summarized below. Cash flows from operating activities Net cash provided by operating activities amounted to 1,864 million. Principal cash inflows were income before income taxes and minority interests of 2,51 million, depreciation and amortization of 961 million, and a decrease in notes and accounts receivable trade of 874 million. Principal cash outflows were interest and dividends income of 222 million, an increase in inventories of 59 million, and income taxes paid of 964 million. Cash flows from investing activities Net cash used in investing activities was 14 million. The principal cash inflow from investing activities was proceeds from sales and redemptions of short-term and long-term investment securities of 1,8 million. The principal cash outflow in investing activities was the purchase of short-term and long-term investment securities of 917 million and the purchase of property, plant and equipment of 986 million. Cash flows from financing activities Net cash used in financing activities was 2,79 million. The principal cash outflow in financing activities was cash dividends paid, which amounted to 1,84 million. 6

9 (3) Qualitative information on consolidated operating forecasts Forecast of Consolidated Operating Results for the Fiscal Year Ending March 31, 212 (April 1, 211 to March 31, 212) (Millions of yen, %) Fiscal year ending (Decrease) Increase Fiscal year ending March 31, 212 Fiscal year ended March 31, 212 (Previous forecast Amount % Change March 31, 211 Amount % Change issued on April 27, 211) Net sales 58, 59, (1,) (1.7)% 54,463 3, % Operating income 5, 5, 4, Ordinary income 5, 5,3 (3) (5.7) 4, Net income 3, 3, 1,633 1, Net income per share (yen) The business environment surrounding the Company s activities is showing improvement in certain areas, including the gradual recovery in the number of domestic housing starts and the emergence of demand for recovery from the earthquake disaster. On the other hand, there is concern about the effects on the real economy in Japan of the further appreciation and settling down of the yen at a higher level and the increasing seriousness of the debt crises in Europe, and, as a result, the business environment is become more challenging. Amid these conditions, in view of conditions in foreign exchange markets, the Company has changed its assumed yen exchange rate to 76 per U.S. dollar and 14 per euro. Accompanying this change in the exchange rate outlook, as shown in the table above, the Company has revised a portion of its forecast for consolidated performance for the fiscal year ending March 31, 212, which was announced originally on April 27, 211. Dividends The Company s basic dividend policy is to maintain a minimum dividend payout ratio of 4% and a target dividend to net assets ratio of 2.5%, based on consolidated accounts. The Company s profitability is expected to recover during the current year; however, following the comprehensive consideration of the financial condition of the Company and other factors, the Company is scheduled to pay an annual dividend of 36 per share, the same as in the previous fiscal year. Payout ratio and dividends to net assets ratio Dividends per share % ~ % Yen 5 Minimum payout ratio (4%) ~ Target ratio of dividends to net assets (2.5%) 3/7 3/8 3/9 3/1 3/11 3/12 (Plan) 3/7 3/8 3/9 3/1 3/11 3/12 (Plan) 7

10 2. Summary information (Others) (1) Changes in important subsidiaries during the period No related items (2) Application of special accounting procedures in creating consolidated quarterly financial statements Computation of taxes Reasonable estimates are prepared based on income before income taxes and minority interests through the second quarter and the effective tax rate after application of deferred tax accounting. The amount of income before income taxes and minority interests through the second quarter is multiplied by the said effective tax rate. Please note that the income taxes deferred is shown among income taxes. (3) Changes in accounting principles, changes in accounting estimates, and changes in presentation due to revisions No related items 8

11 3.Consolidated financial statements (1)Consolidated balance sheets (Milloins of yen) At March31,211 At September3,211 Assets Current assets Cash and deposits 7,32 6,732 Notes and accounts receivable-trade 12,584 11,873 Short-term investment securities 5,545 8,565 Merchandise and finished goods 4,15 4,454 Work in process Raw materials 2,152 2,386 Other 2,296 2,175 Allowance for doubtful accounts 3 3 Total current assets 34,487 37,73 Fixed assets Tangible fixed assets 17,733 18,195 Intangible fixed assets Investments and other assets Investment securities 23,56 18,583 Other 5,559 5,785 Allowance for doubtful accounts Total investments and other assets 29,49 24,353 Total fixed assets 46,999 42,754 Total assets 81,486 79,827 Liabilities Current liabilities Notes and accounts payable-trade 3,845 3,457 Short-term loans payable 2,98 2,776 Income taxes payable Provision for bonuses 1, Provision for directors' bonuses Provision for product quality warranties Other 2,572 2,943 Total current liabilities 12,367 11,643 Long-term liabilities Long-term loans payable Provision for retirement benefits 4,981 5,25 Provision for directors' retirement benefits Asset retirement obligations Negative goodwill 79 7 Other 1,258 1,229 Total long-term liabilities 6,762 6,92 Total liabilities 19,129 18,564 Net assets Shareholders' equity Capital stock 12,367 12,367 Capital surplus 1,517 1,517 Retained earnings 42,1 41,376 Treasury stock Total shareholders' equity 64,89 64,172 Accumulated other comprehensive income Valuation difference on available-for-sale securities Revaluation reserve for land 2,775 2,775 Foreign currency translation adjustment Total accumulated other comprehensive income 3,638 4,9 Minority interests 1,186 1,181 Total net assets 62,357 61,263 Total liabilities and net assets 81,486 79,827 9

12 (2)Consolidated statements of income (Milloins of yen) September3,21 September3,211 Net sales 25,837 27,73 Cost of sales 15,975 16,719 Gross profit 9,861 11,1 Selling, general and administrative expenses 7,962 8,838 Operating income 1,899 2,172 Non-operating income Interest income Dividends income Equity in earnings of affiliates 23 - Amortization of negative goodwill 6 8 Other Total non-operating income Non-operating expenses Interest expenses Taxes and dues 1 9 Foreign exchange losses Loss on valuation of derivatives Other Total non-operating expenses Ordinary income 1,897 2,59 Extraordinary income Gain on step acquisitions 81 - Gain on negative goodwill Total extraordinary income Extraordinary loss Loss on abandonment of noncurrent assets 3 4 Restructuring loss 65 - Cost of product quality warranties 1,182 3 Loss on adjustment for changes of accounting standard for asset retirement obligatio 23 - Total extraordinary losses 1,274 8 Income before income taxes and minority interests 981 2,51 Income taxes Income taxes for prior periods 17 - Total income taxes Income before minority interests 735 1,241 Minority interests in income Net income 719 1,22 1

13 (3)Consolidated statements of comprehensive income (Milloins of yen) September3,21 September3,211 Income before minority interests 735 1,241 Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of the parent Comprehensive income attributable to minority interests

14 (4)Consolidated statements of cash flows September3,21 (Milloins of yen) September3,211 Net cash provided by (used in) operating activities Income before income taxes and minority interests 981 2,51 Depreciation and amortization Amortization of negative goodwill 6 8 Increase (decrease) in allowance for doubtful accounts Equity in (earnings) losses of affiliates 23 - Loss (gain) on step acquisitions 81 - Gain on negative goodwill Increase (decrease) in provision for bonuses Increase (decrease) in provision for directors' bonuses Increase decrease in provision for productquality warranties 1, Increase (decrease) in provision for retirement benefits and directors' retirement benefits Interest and dividends income Interest expenses Loss (gain) on valuation of derivatives Foreign exchange losses (gains) 6 2 Loss on abandonment of noncurrent assets 3 4 Loss on business restructuring 65 - Loss on adjustment for changes of accounting standard for asset retirement obligations 23 - Decrease (increase) in notes and accounts receivable-trade Decrease (increase) in inventories 7 59 Increase (decrease) in notes and accounts payable-trade Increase (decrease) in accrued consumption taxes Decrease (increase) in other assets Increase (decrease) in other liabilities Subtotal 2,768 2,69 Interest and dividends income received Interest expenses paid Income taxes (paid) refund 1, Net cash provided by (used in) operating activities 1,868 1,864 Net cash provided by (used in) investing activities Purchase of short-term and long term investment securities Purchase of investments in subsidiaries Proceeds from sales and redemption of short-term and long term investment securities 2,7 1,8 Proceeds from purchase of investments in subsidiaries resulting in change in scope of consolida Purchase of property, plant and equipment 1, Proceeds from sales of property, plant and equipment 1 Purchase of intangible assets Payments of loans receivable 7 53 Collection of loans receivable Payments into time deposits - 59 Proceeds from withdrawal of time deposits 1, 46 Net cash provided by (used in) investing activities 1, Net cash provided by (used in) financing activities Proceeds from loans payable 3 - Repayments of loans payable Repayment of long-term loans payable Purchase of treasury stock 3 2 Cash dividends paid 1,81 1,84 Cash dividends paid to minority shareholders - 21 Repayments of lease obligations Net cash provided by (used in) financing activities 2,59 2,79 Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents 1, Cash and cash equivalents at beginning of period 6,282 6,95 Increase (decrease) in cash and cash equivalents resulting from change of scope of consolidation - 16 Cash and cash equivalents at end of period 7,598 6,592 12

15 (4) Notes on assumptions underlying the definition of ongoing businesses No related items (5) Segment data September 3, 21 (April 1, 21 to September 3, 21) 1) Sales and income (loss) by reporting segment Reporting Segment Office Equipment Industrial Equipment (Millions of yen) Total Other* Consolidated Sales to external customers 1,61 14,331 24, ,837 Intersegment sales or transfers Total sales 1,61 14,331 24, ,837 Segment income (loss) 2,762 (975) 1, ,899 * The Other classification is a business segment that is not included in other reporting segments and corresponds to the nursing care and welfare equipment business of Kawamura Cycle Co., Ltd. 2) Principal factors accounting for the difference between income (loss) by reporting segment and amounts shown in the quarterly consolidated statements of income (Matters related to the adjustment of differences) (Millions of yen) Income Amount Total of segments reported 1,787 Income of the Other classification 112 Operating income reported in the quarterly consolidated statements of income 1,899 3) Summary of reporting segments The Company has two reporting segments, office equipment and industrial equipment; however, beginning with the second quarter of this fiscal year, the Company has added an Other classification, aside from its two reporting segments, that contains the financial results of the nursing care and welfare equipment business of Kawamura Cycle Co., Ltd. This change has been implemented following the purchase of the shares of Kawamura Cycle Co., Ltd. during the first quarter of this fiscal year and its positioning by the Company as a consolidated subsidiary. Following this change, the Company will proceed with the marketing of products and the further development of nursing care related activities by working to realize synergies with Kawamura Cycle Co., Ltd. The Company will set new business management standards, and, by making the results of these business activities clear, will increase the usefulness of its segment information. Accompanying these developments, the Company reported negative goodwill of 277 million (extraordinary income) in the consolidated accounts for the first quarter in its industrial equipment business. However, since the results of the nursing care and welfare equipment business of Kawamura Cycle Co., Ltd. are now reported in the Other classification, this amount (the negative goodwill) has been reported in the Other classification. 13

16 September 3, 211 (April 1, 211 to September 3, 211) 1) Sales and income (loss) by reporting segment Reporting Segment Office Equipment Industrial Equipment Total Other* (Millions of yen) Consolidated Sales to external customers 1,551 15,412 25,963 1,766 27,73 Intersegment sales or transfers Total sales 1,551 15,412 25,963 1,766 27,73 Segment income (loss) 2,263 (273) 1, ,172 * The Other classification is a business segment that is not included in other reporting segments and corresponds to the nursing care and welfare equipment business of Kawamura Cycle Co., Ltd. 2) Principal factors accounting for the difference between income (loss) by reporting segment and amounts shown in the quarterly consolidated statements of income (Matters related to the adjustment of differences) (Millions of yen) Income Amount Total of segments reported 1,99 Income of the Other classification 181 Operating income reported in the quarterly consolidated statements of income 2,172 3) Impairment losses on fixed assets, goodwill, etc. by reporting segment No related items (6) Notes on significant changes to shareholders equity No related items 14