FY2006 Financial Results and FY2007 Forecast

Transcription

1 FY2006 Financial Results and FY2007 Forecast DISCO Corporation May 11 th, 2007 FY2006 indicates the period from April 1, 2006 to March 31, DISCO at the page title indicates information of Disco individual company

2 Disclaimer 2/35 Statements on this PowerPoint with respect to DISCO's current strategies, plans, estimates, and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of DISCO. These statements are based on management's assumptions and beliefs in light of the information currently available to it and therefore you should not place undue reliance on them. DISCO cautions you that a number of important factors could cause actual results to differ materially from those discussed in the forward-looking statements, and you should not make decision on your investment thoroughly based on these statements. Such factors include, but not limited to, (i) general economic conditions and levels of demand in DISCO's markets; (ii) developments in technology and resulting changes in semiconductor and/or electronic component manufacturing process; (iii) levels of capital investment for manufacturing semiconductors and/or electronic components; (iv) expansions of the area for products and technologies using semiconductors and/or electronic components and its expanding speed; (v) DISCO's ability to continue to offer products and services corresponding to developments of new semiconductors and/or electronic components and new technologies for manufacturing them; (vi) exchange rates, particularly between the yen, the U.S. dollar, and the euro, and other currencies.

3 3/35 FY2006 Financial Results FY2007 Forecast Technology Trend Management Policy

4 4/35 FY2006 Financial Results FY2007 Forecast Technology Trend Management Policy

5 Consolidated Sales/Orders/Order backlog 5/35 Billions of Yen Order backlog Sales Orders

6 Consolidated Sales/Income 6/35 Sales Billions of yen Income Sales(left axis) Ordinary Income(right axis) Net Income(right axis) (10) FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 (5)

7 Consolidated Cash Flows 7/35 Billions of yen Operating CF Investing CF Free CF (1.0) Financing Cash Flow (Billions of Yen) Billions of yen Cash balance FY2002 FY2003 FY2004 FY2005 FY2006

8 Consolidated Sales by Division Electronics Industry-related Products 8/35 Sales/Profit Billions of yen 100 OPM 50% % 97% % % 20 10% 0 FY2002 FY2003 FY2004 FY2005 FY2006 Sales Operating profit OPM 0%

9 Consolidated Sales by Division Industrial Products 9/35 Sales/Profit Billions of yen 4 OPM 40% 3% % 2 20% 1 10% 0 FY2002 FY2003 FY2004 FY2005 FY2006 Sales Operating profit OPM 0%

10 Consolidated Breakdown of Sales by Region 10/35 FY2004 FY2005 FY2006 North Europe America 10% 9% Japan 40% Europe North America 11% 7% Japan 34% North Europe America 9% 8% Japan 35% Asia 41% Asia 48% Asia 48% Europe Asia Japan North America Billions of yen FY2004 FY2005 FY FY2004 FY2005 FY FY2004 FY2005 FY FY2004 FY2005 FY2006

11 Consolidated Breakdown of Sales by Product FY /35 Others FY2005 Processing of components Industrial diamond Dicing Saw Processing of components Others Components FY2004 Industrial diamond Components Dicing Saw Precision processing tool Grinder Processing of components Industrial diamond Components Others Dicing Saw Precision processing tool Grinder Precision processing tool Grinder

12 DISCO Dicing Saw Sales by Application 12/ Electronics components Semiconductors IndexFY2002= FY2002 FY2003 FY2004 FY2005 FY2006

13 DISCO Grinder Sales by Application 13/ Wafer Electronics components Semiconductors IndexFY2002= FY2002 FY2003 FY2004 FY2005 FY2006

14 DISCO 300mm Equipment as a proportion of machinery sales Index FY /35 48% 49% 32%

15 DISCO Precision Processing Tool Sales Trend 15/35

16 Consolidated Proportion of Top 10 Customers 16/35

17 17/35 FY2006 Financial Results FY2007 Forecast Technology Trend Management Policy

18 Earning Forecast for FY Sales (Billions of yen) FY2003 FY2004 FY2005 FY2006 FY2007(F) Consolidated net income Consolidated ordinary income Consolidated net income Income (Billions of yen) ReferenceDISCO Individual 10 0 Billions of yen Sales Operating Profit Ordinary Income Net Income Billions of yen Sales Operating Profit Ordinary Income Net Income FY06 Actual FY06 Actual FY07/1H Forecast FY07/1H Forecast 18/35 FY07 Forecast FY07 Forecast

19 Consolidated R&D Expense, Capital Expenditure Forecast R&D Expenses (Forecast) Billions of yen Capex/Depreciation (Forecast) Billions of yen 11.8 Capex Depreciation / FY2003 FY2004 FY2005 FY2006 FY2007(F) 0.0 FY2003 FY2004 FY2005 FY2006 FY2007(F) Billions of yen R&D Expenses Capex Depreciation FY06 (Actual) FY07 (Forecast)

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21 Laser Saw (DFL7160) 21/35

22 Wafer thinning/stress relief equipment 22/35

23 Water Jet Saw (DAW /35

24 Surface Planer (DFS /35

25 TAIKO Process 25/35

26 Edge Profile Grinding 26/35

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28 DISCO VALUES developing activities 28/35 DISCO VALUES is a core of Disco s corporate culture Develop activities to anchor good corporate culture Approx. 9,600 man hour per a year is spent for this activities Sherpa gathering Leader class include mangers of oversea subsidiaries Purpose Study the way to foster good corporate culture Annual # of participants 325 (gross) ID Camp Selected employee from each generation Strengthen the unity and solidarity as a good member of 170 (gross) Disco Who am I All employee Study DISCO VALUES and the meaning of working at DISCO 700 Welcome to DISCO New graduate and midcareer employment Understand and share the values and mission of DISCO 450 Gray Institute of Management

29 DISCO VISION: Business Vision 29/35 Social valuation vision Business vision Economic vision Organization vision Human resource vision Corporate culture vision The high-tech industry recognizes DISCO as the most reliable corporation, and says, If it s about Kiru, Kezuru, Migaku first call DISCO We are developing new pillars besides abrasive technology Our consumables business is large enough to cover most of our fixed costs

30 DISCO VISION : Business Vision 30/35

31 DISCO VISION : Business Vision 31/35

32 DISCO VISION: Economic Vision 32/35 Social valuation vision Business vision Economic vision Organization vision Human resource vision Corporate culture vision DISCO has sufficient economic competence and structure to realize growth as a corporation DISCO maintains a non-consolidated ordinary income margin of 20% or more, averaged over 4 years

33 Milestone 33/ Billions of yen New technology and business development have been contributing to improve profitability Plan to invest more in human resource development because the human resource is the main driver for future growth Sales Ordinary Profit OPM OPM(aggregation) Target milestone 80% 70% 60% 50% 40% % 16% 27% 21% 24% 24% 30% 20% 10 14% 16% 18% 20% 20% 20% 10% 10% 0 0% %

34 Mission 34/35

35 Dividend 35/35 Interim Year-end For a year FY (Forecast) (*1) 75 (Forecast) FY2007 (Forecast) (Reference) FY2005(Actual) (*1)Planned 10 yen 70 th anniversary commemorative dividend Dividend policy Dividend payment linked with the consolidated operating performance (Payout ratio: 20) Maintain an annual dividend payment of not less than 20 yen per share, excluding when a consolidated net loss is recorded in three consecutive fiscal year With the exception of fiscal years in which a net loss is recorded, in fiscal years where the Company s cash balance, after the payment of dividends and income taxes, exceeds the amount necessary*, approximately one-third of the excess cash will be allocated as additional dividends. *2 The amount necessary as of the end of FY2006: 30 billion yen No additional dividend payment for FY2006 because there is no exceeding cash in fund

36 36/35 FY 2007 Financial Statements

37 Comparison with previous earning forecast Consolidated Balance Sheets 37/35 1/5 (1)Comparison of FY2006 actual with the previous earning forecast Millions of yen 2006 Forecast as of Nov. 13, Actual Change % of change Total Sales 85,000 86,160 1, % Operating Income 19,800 19, % Operating Income Margin 23.3% 22.7% 0.6% 2.7% Ordinary Income 19,700 19, % Ordinary Income Margin 23.2% 22.8% 0.4% 1.5% Net Income 10,800 10, % (2)Consolidated Balance Sheet Millions of yen Change % of change Total Assets 99, ,791 14, % Net Worth Equity 70,276 81,823 11, % Net Worth Ratio 70.8% 71.5% 0.7% 1.0% Book-value Per Share 2,092 2, %

38 Consolidated Income Statement Millions of yen Change Net Sales 68,885 86,160 17,275 Cost of Sales 36,150 44,054 7,903 Gross profit margin 52.5% 51.1% -1.4% Selling, General and Adminitrative Expenses 22,201 24,529 2,328 Operating Income 13,949 19,524 4,080 Oprating income margin 20.2% 22.7% 2.5% Other Income Other Expenses Ordinary income 14,410 19,667 5,257 Ordinary income margin 20.9% 22.8% 1.9% Extraordinary Income Extraordinary Expense 1,041 2,261 1,219 Income before Income Taxes 13,385 17,715 4,330 Income Taxes 5,077 7,450 2,373 Adjustment of Income Taxes Minority Interests Net Income 8,230 10,936 2,705 38/35 2/5 Decline in GP margin by 1.4 point Increase sales of buying-in products that are comparatively low GP margin Deterioration in sales price of some of the equipment Increase in SGA expense by 2.3 billion yen Increase of variable cost by 0.8 billion yen according to sales increase 0.7 billion yen increase in labor cost 0.1 billion yen increase of depreciation Others Extraordinary Income:0.3 billion yen Gain on sales of securities Extraordinary Expenses:2.2 billion yen Asset valuation loss, etc. (1.1 billion yen) Restructuring cost of abrasive business (0.6 billion yen) Valuation loss of marketable securities (0.3 billion yen) Executive bonus 0.2 billion yen Effective tax rate: Approx. 38

39 Consolidate Balance Sheets (Assets) 39/35 3/5 Millions of yen Change Current Assets 64,279 75,799 11,520 Cash and cash equivalents 22,003 27,045 5,042 Notes and accounts receivable 24,424 27,797 3,373 Inventories 15,749 17,283 1,534 Others 2,101 3,673 1,572 Property, Plant and Equipment 35,039 37,991 2,951 Tangible fixed assets 29,057 33,603 4,546 Buildings and structures 11,419 11, Machinery and equipment 4,360 4, Land 12,206 12, Others 1,071 5,210 4,139 Non-tangible fixed assets Other fixed assets 5,223 3,462 1,761 Total Assets 99, ,791 14,472 5 billion yen increase in cash and cash equivalents The Company does not perceive that current cash balance is excessively abundant since current amount necessary is 30 billion yen as of the end of FY billion yen increase in notes and accounts receivable Increase according to sales increase 4.5 billion yen for construction in progress Aggregation of mobilization fee for expansion of Head Office/R&D Center, Kure and Kuwabata plant 1.4 billion decrease in marketable securities Sellout and devaluation loss of marketable securities

40 Consolidate Balance Sheets (Liabilities and Net Worth Equity) 40/35 4/5 Millions of yen Change Current Liabilities 25,493 28,819 3,325 Notes and account payable 11,825 12,894 1,069 Short-term bank loan Current portion of long-term debt 1, ,985 Accrued income taxes 3,795 4, Other current liabilities 7,282 10,944 3,662 Long-term Liabilities 3,123 3, Long-term debt Others 2,422 2, Minority Interests Shareholders'Equity 70, Capital amount 13, Capital surplus 14, Earned surplus 41, Other securities valuation difference Translation adjustment Treasury stocke Total Liabilities and Shareholders' Equity 99, Shareholders'Equity - 80,551 - Total Liabilities and Shareholders' Equity - 14,485 - Capital surplus - 15,567 - Retained earnings - 50,553 - Treasury stock Total translation adjustments Other securities valuation difference Translation adjustments Share warrant Minority Interests Liabilities and Net Worth Equity - 113,791-2 billion yen decrease in advanced redemption of corporate bond Completed the redemption in April billion yen increase in accrued expense Accrued expense of capital expenditure

41 Consolidated Earning Forecast Interim forecast (1H) Millions of yen FY2007 Yearly forecast Sales 45,900 93,500 41/35 5/5 Sales Increase by 7.4 billion from the previous year (+8.6% growth On the assumption of: 1. Growth in grinder and consumable business 2. The same level of order with sales Operating Income 9,700 20,000 Operating Income Margin 21.1% 21.4% Ordinary Profit 9,700 20,000 Ordinary Profit Margin 21.1% 21.4% Net Income 5,900 11,700 SGA Expense Assumed 10% increase from the previous year Increase in R&D expense Increase in labor cost by increased recruitment Increase variable cost by the sales increase Extraordinary Loss Expect 0.3 billion yen due to abandonment loss US$ EUR SGP$ Exchange rate 115 yen 145 yen 70 yen Income Tax Expect 40% (approx.) of effective tax rate Product pricing for oversea sales is, in principle, yen-based, with some adjustment made in consideration of currency exchange environment No significant influence on sales on a yen basis, however, the foreign currency held may be appreciated/devaluated.

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