SHINKAWA LTD. (URL

Transcription

1 Consolidated Financial Results for the Fiscal Year Ended SHINKAWA LTD. (URL May 15, 2014 Listing First Section of Tokyo Stock Exchange Security code 6274 Representative Hiroshi Nishimura, President and CEO, Representative Director Contact Person Takuya Mori, General Manager, Corporate Planning Dept. Phone Number Scheduled date of general shareholders' meeting June 27, 2014 Scheduled date to commence dividend payments Scheduled date to file financial statements June 27, 2014 Consolidated Financial Results Supplemental Materials Yes Consolidated Financial Results Presentation Meeting Yes 1. Consolidated Financial Results for the Fiscal Year ended (from April 1, 2013 to ) (Amounts are rounded off to nearest million yen.) (1) Consolidated Operating Results (% changes as compared with the corresponding period of the previous fiscal year) Net sales Operating income (loss) Ordinary income (loss) Net income (loss) Millions of yen % Millions of yen % Millions of yen % Millions of yen % 7,481 (34.1) (4,113) (3,909) (4,312) 11,350 (15.3) (2,558) (2,051) (2,120) (Note) Comprehensive income : (4,396) million yen : (1,308) million yen Net income (loss) per share Yen (237.27) (116.65) (Reference) Equity in earnings of affiliates: : million yen (2) Consolidated Financial Position Diluted net income per share Yen Return on equity Ordinary income Operating income to total assets to net sales % % % (16.2) (13.7) (55.0) (7.1) (6.4) (22.5) : million yen Total assets Net assets Equity ratio Net assets per share As of Millions of yen Millions of yen % Yen 26,059 24, , As of 31,004 (Reference) Equity: As of : 24,402 million yen (3) Consolidated Situation of Cash Flows 28, As of : 28,967 million yen 1, Cash and cash Cash flows from Cash flows from Cash flows from equivalents operating activities investing activities financing activities at end of period Millions of yen Millions of yen Millions of yen Millions of yen (2,774) 1,799 (91) 8,492 2,225 (1,794) (91) 9, Dividends Cash dividends per share Total amount Dividends Ratio of total End of 1Q End of 2Q End of 3Q Yearend Full year of payout ratio amount Yen Yen Yen Yen Yen Millions of yen % % Fiscal year ending March 31, 2015(Forecast) 0.00 (Note) The dividend forecast for the fiscal year ending March 31, 2015 is undecided. 3. Forecast of Consolidated Financial Results for the Three Months of Fiscal Year Ending March 31, 2015 (from April 1, 2014 to June 30, 2014) Three months ending June 30, 2015 (% changes as compared with the corresponding period of the previous fiscal year) Net sales Operating income (loss) Ordinary income (loss) Net income (loss) Net income (loss) per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen 2, (690) (700) (700) (38.51) 1

2 Notes (1) Changes in significant subsidiaries during the fiscal year ended (Changes in specified subsidiaries that caused change in scope of consolidation): Yes Included : 1 company (Shinkawa Manufacturing Asia Co., Ltd.) Excluded : () (Note) Shinkawa Manufacturing Asia Co., Ltd. conducted a capital increase during the consolidated fiscal year ended, thereby increasing its capital to more than 10% of the Company, which makes Shinkawa Manufacturing Asia Co., Ltd. a specified subsidiary of the Company. (2) Changes in accounting policies, accounting estimates and restatement of the consolidated financial statements 1) Changes in accounting policies due to revision of accounting standards: Yes 2) Changes in matters other than 1) above: None 3) Changes in accounting estimates: None 4) Restatement: None (3) Number of common shares issued 1) Number of shares issued at the end of periods (including treasury stock): As of 20,047,500 shares As of 20,047,500 shares 2) Number of treasury shares at the end of periods: As of 1,872,675 shares As of 1,872,189 shares 3) Average number of shares during periods: 18,175,067 shares 18,175,563 shares (Reference) Summary of Nonconsolidated Financial Results (Amounts are rounded down to nearest million yen) 1. Nonconsolidated Financial Results for the Fiscal Year ended (from April 1, 2013 to ) (1) Nonconsolidated Operating Results (% change compared with the corresponding period of the previous fiscal year) Net sales Operating income (loss) Ordinary income (loss) Net income (loss) Millions of yen % Millions of yen % Millions of yen % Millions of yen % 6,767 (36.2) (3,808) (3,299) (3,690) 10,610 (16.5) (2,584) (2,002) (2,016) Net income (loss) per share Diluted net income per share Yen Yen (203.02) (110.92) (2) Nonconsolidated Financial Position Total assets Net assets Equity ratio Net assets per share Millions of yen Millions of yen % Yen As of 24,649 23, , As of 29,145 27, , (Reference) Equity: As of : 23,064 million yen As of : 27,281 million yen *Notice regarding audit procedures for the financial results This financial results statement is exempt from the audit procedures based upon the Financial Instruments and Exchange Act. At the time of disclosure of this financial results statement, the audit procedure based upon the Financial Instruments and Exchange Act has not been completed. *Explanation regarding the appropriate use of projections and other special notes (Notes for the forwardlooking statements) The forward looking statements, including business results forecast, contained in this document are based on information available to the SHINKAWA Group and certain assumptions deemed reasonable as of the date of this document and the Company does not guarantee that such forecast will be achieved. Actual results may differ substantially from those statements due to various factors. For precautions on use of the assumptions for the forecast and the forecast business results, please refer to (1) Analysis of Operating Results under 1. Operating Results and Financial Position on page 4 of the Appendix. (Supplemental materials for consolidated financial results) The supplemental materials for consolidated financial results are disclosed on the Company s Web site. 2

3 Contents of Appendix 1. Operating Results and Financial Position 4 (1) Analysis of Operating Results 4 (2) Analysis of Financial Position 5 (3) Fundamental Dividend Policy Regarding Appropriation of Profits and Dividends for the Fiscal Year Ended, and the Fiscal Year Ending March 31, (4) Notes on Important Events Related to Going Concern Assumption 7 2. Management Policies 7 (1) Basic Management Guideline 7 (2) Our Tasks Ahead and Medium and LongTerm Management Strategies 7 3. Consolidated Financial Statements 9 (1) Consolidated Balance Sheets 9 (2) Consolidated Statements of Income and Comprehensive Income 11 (3) Consolidated Statements of Changes in Net Assets 13 (4) Consolidated Statements of Cash Flows 14 (5) Notes on Consolidated Financial Statements 15 (Notes on Going Concern Assumption) 15 (Note on Significant Accounting Policies for Preparation of Consolidated Financial Statements) 15 (Changes in Accounting Policies) 15 (Consolidated Statements of Income) 15 (Segment Information) 16 (Per Share Information) 18 (Subsequent Events) Others 19 (1) Change in Corporate Directors 19 (2) Quarterly Consolidated Performance 20 (3) Production, Orders Received and Sales 21 3

4 1. Operating Results and Financial Position (1) Analysis of Operating Results 1) Results of operations for the year The global economy in the fiscal year ended, saw continued recovery of U.S. and the Japanese economies backed by robust consumer spending in the U.S. and high expectations for the economic policies of the Japanese government. On the other hand, the growth of the economies of emerging countries such as China continued to decelerate for such reasons as financial outflow due to reduced easing of the money supply in the U.S. In the semiconductor industry, some memory makers increased their capital investment in frontend equipment to mass produce cuttingedge devices with the favorable growth of the mobilerelated market. In the backend equipment market, aggressive capital investment did not occur against the background of sluggish demand for PCs and other products that resulted in excess capacity among semiconductor makers. In such a business climate, the SHINKAWA Group released two models of flip chip bonders for the TCB (Thermal Compression Bonding) process (LFB2301 for wafers and LFB1102 Super for substrates), two models of wire bonders (UTC5000NeoCu for copper wire and UTC5100 for transistors and LEDs) and one model of die bonder (STC800 for discrete), thereby promoting the development of cuttingedge devices and preparation for mass production, and proceeded with evaluations towards improvement of productivity of the lowend products. Although these efforts helped steadily increase the market penetration of our new products, because product evaluations require time, these efforts have yet to come to fruition in terms of sales. Due to adverse factors such as the fact that some of our memory maker customers did not implement their planned capital investment, our net sales were significantly lower than our initial projection. To reform the Group s earning structure, we started the production of wire bonders at our Thai factory in April However, because the new products such as the UTC5000 series are still in the process of evaluation, expansion of production at the Thai factory has yet to be achieved, and so the effect of overseas production on our cost reduction is limited. As part of the measures that we launched from the second half of the year under review in order to Improve Company Structure, we solicited voluntary retirement and sold some land and investment securities. On the other hand, we also conducted aggressive R&D investment in order to release a number of new products, as mentioned above, in an attempt to increase our market competitiveness. We also posted an impairment loss on fixed assets based on our revised future plans. All these factors left the Group in a severe situation in terms of profits. As for the consolidated performance of the Group for the fiscal year ended, net sales decreased 34.1% year on year to 7,481 million yen, an operating loss of 4,113 million yen was recorded compared with an operating loss of 2,558 million yen for the previous fiscal year and an ordinary loss of 3,909 million yen was posted compared with an ordinary loss of 2,051 million yen a year earlier. As a result, a net loss of 4,312 million yen was recorded for the fiscal year under review compared with a net loss of 2,120 million yen a year earlier. In addition, the Group posted gain on sales of investment securities of 1,464 million yen as extraordinary income, and posted impairment loss of 1,503 million yen accompanying impairment of fixed assets, premium allowance of retirement of 269 million yen by soliciting voluntary retirement, and loss on sales on noncurrent assets of 66 million yen through the sale of some land as extraordinary loss. 2) Perspectives on the next fiscal year The economies of industrialized countries such as Japan and the U.S. are expected to be on track toward a gradual recovery supported by robust consumer spending and improvement in business confidence. On the other hand, there are several factors that exert downward pressure on the global economy, such as the concerns 4

5 of the economies in emerging countries, the financial problems of China, and unrest in Eastern European countries. In the semiconductor industry, demand for semiconductors (lowend and middleend models in particular) used for mobile devices is expected to continue growing, and new demand is also expected for cloud computing, wearable devices, and next generation automobiles. Regarding the backend equipment market, although capital investment in the items required for mobile devicerelated mass production has been active in some areas, there are still areas where production capability is in excess. Further, the capital investment in plant and equipment required to respond to new demand for semiconductors mentioned above will take some time, according to the trend of development of final products including semiconductors. As one of the measures to Improve Company Structure, we reorganized our sales, engineering and production structures that were previously centered on production at the head office factory to a structure centered on production at the Thai factory. Under the global operation implemented by the new structure, we will make efforts to expand sales of our new products and improve profitability. Regarding the outlook for the fiscal year ending March 31, 2015, the business performance projections for the first quarter are disclosed based on the information available to the Group at this time, such as the most recent orders received. The performance projections for the three months ending June 30, 2014 are as follow: net sales of 2,900 million yen (a 67.8% increase year on year from the corresponding period a year earlier), an operating loss of 690 million yen (compared with an operating loss of 885 million yen a year earlier), and an ordinary loss of 700 million yen (compared with an ordinary loss of 801 million yen a year earlier). A net loss of 700 million yen is expected (compared with a net loss of 804 million yen a year earlier). The expected foreign exchange rate is 100 yen per U.S. dollar. (2) Analysis of Financial Position 1) Assets, liabilities and net assets Total assets at the end of the fiscal year ended, decreased by 4,945 million yen from the end of the previous fiscal year to 26,059 million yen. Major increases were 860 million yen in buildings and structures (including the increases due to the consolidation of the production subsidiary in Thailand), whereas major decreases were 2,072 million yen in investment securities, 1,389 million yen in land, and 1,368 million yen in other current assets (including the elimination of shortterm loans receivable from a production subsidiary in Thailand along with the consolidation of the company). Total liabilities at the end of the fiscal year under review decreased by 381 million yen from the end of the previous fiscal year, to 1,657 million yen. A major increase was 212 million yen in net defined benefit liability (it was a provision for retirement benefits in the previous term), whereas major decreases were 224 million yen in deferred tax liabilities of noncurrent liabilities and 190 million yen in accounts payabletrade. Total net assets at the end of the fiscal year under review decreased by 4,565 million yen from the end of the previous fiscal year, to 24,402 million yen. A major increase was 352 million yen in foreign currency translation adjustment. Major decreases were 4,480 million yen in retained earnings due to the posting of a net loss and cash dividends paid and 436 million yen in the valuation difference on availableforsale securities. As a result, net assets per share decreased yen to 1, yen, and the equity ratio increased from 93.4% in the previous fiscal year to 93.6%. 2) Cash flows Cash and cash equivalents at the end of the period decreased by 995 million yen from the end of the previous fiscal year to 8,492 million yen, including an increase in cash and cash equivalents of 234 million yen due to consolidation of the production subsidiary in Thailand. The cash flow situation for the fiscal year ended was as follows. 5

6 Net cash used in operating activities totaled 2,774 million yen for the fiscal year under review (compared with the net cash provided by operating activities of 2,225 million yen for the previous fiscal year). This was primarily attributable to 4,302 million yen (including 1,503 million yen in impairment loss and 894 million yen in depreciation) loss before income taxes and minority interests. Net cash provided by investing activities totaled 1,799 million yen (compared with the net cash used in investing activities of 1,794 million yen for the previous fiscal year). This is mainly due to proceeds from sales of investment securities of 2,263 million yen and proceeds from withdrawal of time deposits of 968 million yen, despite payments into time deposits of 981 million yen and the purchase of property, plant, and equipment of 642 million yen. Net cash used in financial activities totaled 91 million yen (compared with net cash used in financing activities of 91 million yen for the previous fiscal year), mainly due to the cash dividends paid. (Reference) Changes in cash flow related indicators Fiscal year ended March 31, 2010 Fiscal year ended March 31, 2011 Fiscal year ended March 31, 2012 Fiscal year ended March 31, 2013 Fiscal year ended March 31, 2014 Equity ratio (%) Equity ratio (market basis) (%) Cash flows/interestbearing debt ratio (%) Interest coverage ratio (times) Equity ratio: Equity/total assets Equity ratio (market basis): Aggregate market value of shares/total assets Cash flows/interestbearing debt ratio: Interestbearing debt/net cash from operating activities Interest coverage ratio: Net cash from operating activities/interest payment (Note 1) All indicators are calculated based on the relevant financial figures on a consolidated basis. (Note 2) The aggregate market value of shares is calculated based on the number of shares outstanding after subtracting shares of treasury stock. (Note 3) The figure for Cash flows used in the above calculations is equivalent to the figure for Net cash provided by (used in) operating activities in the Consolidated Statements of Cash Flows. (Note 4) Interestbearing debt indicates the liabilities for which interest is paid on all the liabilities posted in the Consolidated Balance Sheets. (3) Fundamental Dividend Policy Regarding Appropriation of Profits and Dividends for the Fiscal Year Ended, and the Fiscal Year Ending March 31, 2015 The Company considers returning its profits to its shareholders to be an important part of management policy. The Company therefore abides by a fundamental policy of ensuring stable dividends on a continuing basis and determines the amount of dividends with due consideration to operating performance. Based on the above basic policy, the Company has continued to pay dividends even in periods when a net loss was reported. However, we regrettably determined that we will not distribute dividends for the fiscal year ended upon comprehensive consideration of the business performance and financial situation of the year as well as initiatives taken for future improvement, in accordance with the revised dividends publicly announced on February 6, Because the business climate surrounding the SHINKAWA Group is uncertain, the Company plans not to provide an interim dividend for the fiscal year ending March 31, A yearend dividend has not yet been 6

7 determined and will be decided upon with consideration for the business performance during the remaining period. The forecast concerning a yearend dividend will be disclosed as soon as it becomes available. (4) Notes on Important Events Related to Going Concern Assumption The Group has reported operating loss, ordinary loss, and net loss since the previous fiscal years. In the fiscal year ended, the Group reviewed its future plans based on the initiative named Improve Company Structure, and as a result, judged that recovery of business performance cannot be expected in the short term and posted an impairment loss of the fixed assets. Under such circumstances, the Company experienced important events relating to the going concern assumption. In an attempt to resolve this situation, the Group reduced fixed expenses by soliciting voluntary retirement in the fiscal year ended, and has been involved in the following initiatives: 1) Improvement of operational efficiency and 2) Enhancement of technological capabilities in order to capture business opportunities, explained in (2) Our Tasks Ahead and Mediumand LongTerm Management Strategies under 2. Management Policies below. 2. Management Policies (1) Basic Management Guideline The SHINKAWA Group s corporate philosophy is Contributing to realize a society where people can dream and hope while exercising creativity, and also realize an environment where people can challenge their limits. To this end, the Group has established a basic management guideline: Providing all stakeholders with satisfaction, safety and happiness by maximizing corporate value through the cultivation of its robot technology and the suggestion cuttingedge technology with the potential to make human society more affluent. (2) Our Tasks Ahead and Medium and LongTerm Management Strategies To respond to the changes in the trend of semiconductor assembly markets mainly in the emerging countries in Asia, the Group released new costcompetitive high valueadded products into the market and made efforts to find new customers such as major OSAT (outsourced semiconductor assembly and test services) providers that lead the markets. Further, in an attempt to pursue additional reform of our earning structure which the Group has promoted in the past few years, we started production at our Thai factory. However, mainly due to the prolonged evaluation period of new products, growth of sales and production has yet to be achieved, which has left the Group in an unfavorable position in terms of business performance. Faced with such an environment, the Group is working on the following tasks in order to improve its business performance. 1) Improvement of operational efficiency In order to respond to changes in global market trends in a timely and speedy manner, the Group launched activities to Improve Company Structure in October 2013 in its effort to reorganize its sales, engineering, and production structures. With regard to sales activities, the Group has changed its previous sales structure which was centered on the head office to one mainly operated by the sales base in each country where the Group is operating. As to engineering, the Group is enhancing its product planning capabilities in order to develop competitive products and is also promoting a project to optimize the development process to reduce the length of the development period. With regard to production, in order to achieve cost reduction by performing production in the most suitable location, the Group decided to produce high valueadded products in the head office factory while focusing its Thai factory on wire bonders that are produced in high volume. In order to reduce lead time and optimize factory inventories of wire bonders, the group introduced common core units. 7

8 The Group will make efforts to implement the new global operation structure early and continue its groupwide initiatives to expedite and optimize its decisionmaking process and operational performance as well as to improve their efficiency, thereby improving the profitability of its business and increasing the market shares of its products. 2) Enhancement of technological capabilities in order to capture business opportunities Concerning the flip chip bonder business, the Group s LFB series has earned a high reputation in the market. The Group provides the products to the prototype and development teams of its customers through device evaluations of the products. Although mass production of the flip chip bonders for the TCB process was postponed, the Group will continue its efforts in expanding alliances with external partners to prepare for its customers future investments in mass production as well as to improve its competitive advantage in cuttingedge technologies such as 3D packages. In the wire bonder business, the Group advanced its multiwire bonding technologies and developed its unique technology that allows capillary bonding of aluminum wire. With these developments, we will make efforts to capture demand for alternative wire types in various fields such as that for aluminum bonding in the automotive application devices market. We will also develop the operatorsupporting functions of standalone equipment so that we are able to provide comprehensive recommendations for system solutions, including effective management of equipment operation status and production status. With this, we will endeavor to promote sales to emerging OSAT providers. 8

9 3. Consolidated Financial Statements (1) Consolidated Balance Sheets As of Millions of yen As of Assets Current assets Cash and deposits 9,845 9,212 Notes and accounts receivabletrade 2,231 2,110 Merchandise and finished goods 3,603 2,953 Work in process 1,315 1,624 Raw materials and supplies Deferred tax assets Other 1, Allowance for doubtful accounts (1) (1) Total current assets 19,105 16,645 Noncurrent assets Property, plant and equipment Buildings and structures 11,722 12,856 Accumulated depreciation (10,366) (10,639) Buildings and structures, net 1,357 2,217 Machinery, equipment and vehicles 2,686 2,790 Accumulated depreciation (2,217) (2,221) Machinery, equipment and vehicles, net Land 4,929 3,540 Construction in progress 8 13 Other 1,769 1,792 Accumulated depreciation (1,676) (1,695) Other, net Total property, plant and equipment 6,857 6,435 Intangible assets Other Total intangible assets Investments and other assets Investment securities 4,597 2,526 Longterm loans receivable Deferred tax assets Other Allowance for doubtful accounts (0) Total investments and other assets 4,984 2,898 Total noncurrent assets 11,899 9,414 Total assets 31,004 26,059 9

10 As of Millions of yen As of Liabilities Current liabilities Accounts payabletrade Income taxes payable Provision for product warranties Other Total current liabilities Noncurrent liabilities Provision for retirement benefits 515 Net defined benefit liability 727 Deferred tax liabilities Other Total noncurrent liabilities 1,084 1,072 Total liabilities 2,037 1,657 Net assets Shareholders' equity Capital stock 8,360 8,360 Capital surplus 8,907 8,907 Retained earnings 13,768 9,287 Treasury stock (3,149) (3,149) Total shareholders' equity 27,886 23,405 Accumulated other comprehensive income Valuation difference on availableforsale securities 1, Foreign currency translation adjustment (226) 127 Remeasurements of defined benefit plans (1) Total accumulated other comprehensive income 1, Total net assets 28,967 24,402 Total liabilities and net assets 31,004 26,059 10

11 (2) Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income Fiscal Years ended and 2014 Millions of yen Net sales 11,350 7,481 Cost of sales 8,633 5,346 Gross profit 2,716 2,135 Selling, general and administrative expenses Sales and service cost Employees' salaries and bonuses 954 1,077 Retirement benefit expenses Experiment and research expenses 2,033 2,589 Provision of allowance for doubtful accounts 0 Provision for product warranties Other 1,783 2,033 Total selling, general and administrative expenses 5,274 6,248 Operating loss (2,558) (4,113) Nonoperating income Interest income Dividend income Rent income 9 19 Insurance income 8 Subsidy income Foreign exchange gains Other Total nonoperating income Nonoperating expenses Cost of lease revenue 2 5 Other 0 1 Total nonoperating expenses 3 6 Ordinary loss (2,051) (3,909) Extraordinary income Gain on sales of noncurrent assets 10 Gain on sales of investment securities 1,464 Gain on sales of golf memberships 3 Total extraordinary income 10 1,467 Extraordinary losses Loss on sales of noncurrent assets 66 Impairment loss 1,503 Loss on retirement of noncurrent assets 5 21 Compensation for damage 11 Premium allowance of retirement 269 Total extraordinary losses 16 1,859 Loss before income taxes and minority interests (2,057) (4,302) Income taxescurrent 40 9 Refund of income taxes (16) Income taxesdeferred Total income taxes Loss before minority interests (2,120) (4,312) Net loss (2,120) (4,312) 11

12 Consolidated Statements of Comprehensive Income Fiscal Years ended and 2014 Millions of yen Loss before minority interests (2,120) (4,312) Other comprehensive income Valuation difference on availableforsale securities 576 (436) Foreign currency translation adjustment Total other comprehensive income 812 (83) Comprehensive income (1,308) (4,396) Comprehensive income attributable to Comprehensive income attributable to owners of the parent (1,308) (4,396) Comprehensive income attributable to minority interests 12

13 (3) Consolidated Statements of Changes in Net Assets Fiscal Years ended Shareholders' equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders' equity Balance at the beginning of current period 8,360 8,907 15,979 (3,149) 30,097 Changes of items during period Dividends of surplus (91) (91) Net income (loss) (2,120) (2,120) Purchase of treasury shares (0) (0) Net changes of items other than shareholders' equity Total changes of items during period (2,211) (0) (2,211) Balance at the end of current period 8,360 8,907 13,768 (3,149) 27,886 Valuation difference on availableforsale securities Accumulated other comprehensive income Foreign currency translation adjustment Total accumulated other comprehensive income Total net assets Balance at the beginning of current period 730 (461) ,366 Changes of items during period Dividends of surplus (91) Net income (loss) (2,120) Purchase of treasury shares (0) Net changes of items other than shareholders' equity Total changes of items during period (1,399) Balance at the end of current period 1,306 (226) 1,081 28,967 Fiscal Years ended Shareholders' equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders' equity Balance at the beginning of current period 8,360 8,907 13,768 (3,149) 27,886 Changes of items during period Dividends of surplus (91) (91) Net income (loss) (4,312) (4,312) Change of scope of consolidation (77) (77) Purchase of treasury shares (0) (0) Net changes of items other than shareholders' equity Total changes of items during period (4,480) (0) (4,481) Balance at the end of current period 8,360 8,907 9,287 (3,149) 23,405 Valuation difference on availableforsale securities Accumulated other comprehensive income Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Total net assets Balance at the beginning of current period 1,306 (226) 1,081 28,967 Changes of items during period Dividends of surplus (91) Net income (loss) (4,312) Change of scope of consolidation (77) Purchase of treasury shares (0) Net changes of items other than shareholders' equity (436) 352 (1) (84) (84) Total changes of items during period (436) 352 (1) (84) (4,565) Balance at the end of current period (1) ,402 13

14 (4) Consolidated Statements of Cash Flows Fiscal Years ended and 2014 Millions of yen Net cash provided by (used in) operating activities Loss before income taxes and minority interests (2,057) (4,302) Depreciation Impairment loss 1,503 Increase (decrease) in allowance for doubtful accounts (5) 0 Increase (decrease) in provision for retirement benefits (57) (522) Increase (decrease) in net defined benefit liability 726 Increase (decrease) in other provision (52) (68) Interest and dividend income (89) (89) Foreign exchange losses (gains) (152) 30 Loss on retirement of noncurrent assets 5 21 Loss (gain) on sales of property, plant and equipment (10) 66 Loss (gain) on sales of investment securities (1,464) Decrease (increase) in notes and accounts receivable trade 3, Decrease (increase) in inventories Increase (decrease) in notes and accounts payable trade (369) (232) Loss (gain) on sales of golf club memberships (3) Premium allowance of retirement 358 Other, net Subtotal 2,145 (2,464) Interest and dividend income received Income taxes paid (11) (43) Premium allowance of retirement paid (358) Net cash provided by (used in) operating activities 2,225 (2,774) Net cash provided by (used in) investing activities Payments into time deposits (997) (981) Proceeds from withdrawal of time deposits 1, Purchase of property, plant and equipment (712) (642) Proceeds from sales of property, plant and equipment Purchase of intangible assets (17) (34) Proceeds from sales of investment securities 2,263 Payments of loans receivable (1,084) (15) Collection of loans receivable Other payments (79) (67) Other proceeds Net cash provided by (used in) investing activities (1,794) 1,799 Net cash provided by (used in) financing activities Purchase of treasury shares (0) (0) Cash dividends paid (91) (91) Net cash provided by (used in) financing activities (91) (91) Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents 432 (995) Cash and cash equivalents at beginning of period 8,821 9,253 Increase in cash and cash equivalents from newly consolidated subsidiary 234 Cash and cash equivalents at end of period 9,253 8,492 14

15 (5) Notes on Consolidated Financial Statements (Notes on Going Concern Assumption) Not applicable (Note on Significant Accounting Policies for Preparation of Consolidated Financial Statements) Shinkawa Manufacturing Asia Co., Ltd., a subsidiary of SHINKAWA LTD., began manufacturing activities and increased in importance. As a result, the company has been included in the Company s scope of consolidation from the current fiscal year. (Changes in accounting policies) The Company applied the Accounting Standard for Retirement Benefits (ASBJ Statement No. 26 dated May 17, 2012, hereinafter referred to as the Accounting Standard for Retirement Benefits ) and the Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25 dated May 17, 2012, hereinafter Guidance on Retirement Benefits ) from the end of the fiscal year ended (except for the provisions mentioned in the main text of Section 35 of the Accounting Standard for Retirement Benefits and in the main text of Section 67 of Guidance on Retirement Benefits), thereby changing the method to calculate the net defined benefit liability. The net defined benefit liability is now calculated by subtracting the amount of pension assets from the retirement benefit obligations, and the difference in terms of unrecognized actuarial calculation is posted as the net defined benefit liability. The Accounting Standard for Retirement Benefits and other relevant standards are applied in accordance with the transitional measures prescribed in Section 37 of the Accounting Standard for Retirement Benefits and the amount caused by the abovementioned change in the calculation method is reflected in the remeasurements of defined benefit plans of the other comprehensive income at the end of the fiscal year ended. As a result of the above, a net defined benefit liability of 727 million yen was reported for the fiscal year ended, which reduced the amount of other comprehensive income by 1 million yen. The impact on per share information is stated in the relevant section. (Consolidated Statements of Income) *1. Subsidy income Previous fiscal year (from April 1, 2012 to ) and the current fiscal year (from April 1, 2013 to ) The Group accepted the subsidies for employment adjustment. *2. Gain on sales of investment securities Current fiscal year (from April 1, 2013 to ) The Group sold part of the investment securities it owned. *3. Impairment loss Current fiscal year (from April 1, 2013 to ) The Group has reported an impairment loss as follows. The Group has grouped its assets by the Company and each subsidiary. The Group reviewed its future plans based on the Improve of Company Structure that it has promoted from the current fiscal year and judged that recovery of business performance cannot be expected in the short term for the above asset groups. The Group therefore reduced the book values of the assets to the recoverable amount and posted 1,503 million yen of extraordinary loss as impairment loss. 15

16 The recoverable amount of the asset group has been measured by the true cash value of the assets, and the true cash value of the assets is calculated using such numbers as market values reasonably calculated by a third party. *4. Compensation for damage Previous fiscal year (from April 1, 2012 to ) The compensation for damage was posted by offsetting the payment of 91 million yen to bear part of the manufacturing costs of customers with insurance proceeds of 80 million yen paid in accordance with an overseas product liability insurance contract. *5. Voluntary retirementrelated expenses Current fiscal year (from April 1, 2013 to ) The Group offset the extra retirement payment of 358 million yen caused by voluntary retirement of employees and employees transfer among the Group companies against the gain on partial abolishment of the retirement benefit plan of 89 million yen due to the large number of retirees, and posted the difference. (Segment Information) (Business segment information) Previous fiscal year (from April 1, 2012 to ) and the current fiscal year (from April 1, 2013 to ) The major business of the SHINKAWA Group consists of the development, manufacturing and sales of industrial precision robots (bonders), which are used for the assembly process called bonding to automatically fix and wire IC chips into semiconductor products as part of semiconductor manufacturing (packaging), as well as the aftersales maintenance service for such bondingrelated products. Therefore, the Group develops its business activities in one type of business. Consequently, the decision making of the Group on the distribution of management resources is determined by paying due attention to overall circumstances relative to orders received, sales and production of all products used in the bonding process without depending on the market conditions of only some specific items. This approach requires us to formulate comprehensive strategies in Japan and overseas in response to the market globalization of the semiconductor industry. As described above, the decision making of the SHINKAWA Group on the distribution of management resources is carried out by taking into account a comprehensive review of our current businesses. Accordingly, segment information of the SHINKAWA Group is omitted because the Group operates in only one business segment being subject to periodical review for evaluation, thereby making such segmentation unnecessary. (Related Information) Previous fiscal year (from April 1, 2012 to ) 1. Information by product and service Net sales to external customers Wire bonders Die bonders Other equipment Spare parts Total 6,269 3, ,350 16

17 2. Information by geographical area (1) Net sales Japan South Korea Taiwan China Other in Asian Others Total 2,617 4, ,683 1, ,350 (Note) Net sales are calculated based on the destinations for deliveries, and areas are segmented by country or region. (2) Property, plant and equipment This information is omitted because the total amount of property, plant and equipment located in Japan accounts for more than 90% of the property, plant and equipment for which values are recorded in the Consolidated Balance Sheets. 3. Information by major customer Customer name Net sales SK Hynix Inc. 1,901 Current fiscal year (from April 1, 2013 to ) 1. Information by product and service Net sales to external customers Wire bonders Die bonders Other equipment Spare parts Total 4,796 1, ,167 7, Information by geographical area (1) Net sales Japan South Korea Taiwan China Other in Asian Others Total 1,516 1,901 1,159 1,653 1, ,481 (Note) Net sales are calculated based on the destinations for deliveries, and areas are segmented by country or region. (2) Property, plant and equipment Japan Thailand Others Total 4,828 1, , Information by major customer Customer name Net sales SK Hynix Inc

18 (Per Share Information) Previous fiscal year (from April 1, 2012 to ) Current fiscal year (from April 1, 2013 to ) Net assets per share 1, yen 1, yen Net loss per share (116.65) yen (237.27) yen (Notes) 1. Information on diluted net income per share is not provided because a net loss per share resulting from a net loss was reported for the previous and current fiscal years and potential stock does not exist. 2. The Company has adopted the Accounting Standard for Retirement Benefits and has followed transitional measures as prescribed in Section 37 of the Accounting Standard for Retirement Benefits. As a result of this, net assets per share for the fiscal year ended decreased by 0.04 yen. 3.The basis for calculation of the basic net loss per share is as follows. Previous fiscal year (from April 1, 2012 to ) Current fiscal year (from April 1, 2013 to ) Net loss (2,120) (4,312) Amount not belonging to common shareholders Net loss attributable to shares of common stock (2,120) (4,312) Average number of shares of common stock during the fiscal year (Thousands) 18,176 18,175 (Subsequent Events) Not applicable 18

19 4. Others (1) Change in Corporate Directors I. Change in Representative Directors 1) Changes in title and responsibilities Hiroshi Nishimura Name New title and responsibilities Current title and responsibilities Takashi Nagano Tetsuya Tanabe 2) Reason for the changes Appointment at expiry of term Chairman, Representative Director President and CEO, Representative Director General Manager, Sales Div. Retired (to be appointed to corporate adviser) President and CEO, Representative Director Senior Operating Officer, Director General Manager, Sales Div. General Manager, Global Engineering Service Dept. Executive Operating Officer, Representative Director Director in Charge of Corporate Planning Dept., Personnel & Administration Dept., and Accounting Dept. 3) Brief background of the new President and CEO, Representative Director Name : Takashi Nagano Birth date : January 24, 1958 Background : March 1981 Joined SHINKAWA April 2002 Appointed as General Manager of Sales Dept. 1 June 2004 Director June 2008 Managing Director April 2012 General Manager, Sales Div. (Current) June 2012 Senior Operating Officer, Director (Current) April 2014 General Manager, Global Engineering Service Dept. (Current) Number of the company shares owned: 15,700 shares (As of ) II. Changes in Other Corporate Directors of the Company 1) Candidate for Director Name New title and responsibilities Current title and responsibilities Takuya Mori Operating Officer, Director Director in Charge of Corporate Planning Dept., Personnel & Administration Dept., and Accounting Dept. General Manager of the Corporate Planning Dept. and Accounting Dept. General Manager of the Corporate Planning Dept. and Accounting Dept. 2) Candidate for Operating Officer Name New title and responsibilities Current title and responsibilities Hirotoshi Tashima Operating Officer Seconded to Shinkawa Taiwan Co., Ltd. (President) Seconded to Shinkawa Taiwan Co., Ltd. (President) 19

20 III. Effective date June 27, 2014 *The official decision will be made at the Annual General Meeting of Shareholders and the board meeting, held on June 27, (2) Quarterly Consolidated Performance (consolidated) 1Q ended June 30, Q ended September 30, 2012 (Millions of yen, except "Net income (loss) per share") 3Q ended December 31, Q ended March 31, 2013 FY ended March 31, 2013 Net sales 5,049 3,277 2, ,350 Gross profit 1, ,716 Operating income (loss) (56) (536) (732) (1,233) (2,558) Ordinary income (loss) (98) (551) (419) (983) (2,051) Income (loss) before income taxes and minority interests (109) (554) (418) (977) (2,057) Net income (loss) (155) (571) (417) (978) (2,120) Net income (loss) per share (Yen) (8.52) (31.42) (22.92) (53.79) (116.65) Total assets 32,930 31,588 31,524 31,004 31,004 Net assets 30,003 29,235 29,418 28,967 28,967 Orders received 5,880 2,054 1, ,139 (consolidated) 1Q ended June 30, Q ended September 30, 2013 (Millions of yen, except "Net income (loss) per share") 3Q ended December 31, Q ended March 31, 2014 FY ended March 31, 2014 Net sales 1,728 2,348 1,823 1,583 7,481 Gross profit ,135 Operating income (loss) (885) (950) (1,054) (1,224) (4,113) Ordinary income (loss) (801) (961) (889) (1,258) (3,909) Income (loss) before income taxes and minority interests (801) (958) 567 (3,109) (4,302) Net income (loss) (804) (959) 564 (3,114) (4,312) Net income (loss) per share (Yen) (44.21) (52.79) (171.33) (237.27) Total assets 30,837 30,267 29,913 26,059 26,059 Net assets 28,483 27,725 27,702 24,402 24,402 Orders received 2,906 2,168 1,488 2,166 8,728 20

21 (3) Production, Orders Received and Sales 1) Actual production Actual production by production item for the fiscal year ended was as follows: Production item Amount Yearonyear comparison (%) Wire bonders 4, Die bonders 1, Other equipment Spare parts 1, Total 7, (Note 1) The amounts above are calculated for selling prices. (Note 2) The amounts above do not include consumption taxes. 2) Orders received Orders received by production item for the fiscal year ended were as follows: Amount of orders received Yearonyear comparison (%) Backlog of orders Yearonyear comparison (%) Wire bonders 5, , Die bonders 1, Other equipment Spare parts 1, Total 8, , (Note 1) The amounts above are calculated for selling prices. (Note 2) The amounts above do not include consumption taxes. 3) Actual sales Actual sales for the fiscal year ended was as follows: Production item Amount Yearonyear comparison (%) Wire bonders 4, Die bonders 1, Other equipment Spare parts 1, Total 7, (Note) The amounts above do not include consumption taxes. 21