Consolidated Financial Results for the Three Months Ended June 30, 2012 [JGAAP] August 7, 2012 Company Name: DAINICHISEIKA COLOR & CHEMICALS MFG. CO., LTD. Stock Code: 4116 (URL: http://www.daicolor.co.jp/) Stock Exchange Listing: Tokyo Representative: Koji Takahashi, Representative Director and President Contact: Yoshihiko Takeichi, Director responsible for Finance & Accounting Department Phone: +81-3-3662-7111 Scheduled date to submit the Quarterly Securities Report: August 10, 2012 Scheduled date to commence dividend payments: Availability of supplementary briefing material on quarterly results: None Scheduled date of Quarterly Results Briefing Session: Not scheduled (Figures are rounded down to the nearest million yen) 1. Consolidated Financial Results for the Three Months Ended June 30, 2012 (From April 1, 2012 to June 30, 2012) (1) Consolidated Results of Operations (cumulative) (% indicates changes from the previous corresponding term) Net sales Operating income Ordinary income Net income Millions of yen % Millions of yen % Millions of yen % Millions of yen % Three months ended June 30, 2012 38,600 (2.7) 2,991 15.8 3,109 16.8 1,820 38.0 Three months ended June 30, 2011 39,661 (0.7) 2,583 (4.6) 2,662 4.9 1,319 (32.8) (Note) Comprehensive income: Three months ended June 30, 2012: 2,192 million (12.6 %) Three months ended June 30, 2011: 1,947 million (40.7 %) Three months ended June 30, 2012 Three months ended June 30, 2011 Net income per share Fully diluted net income per share Yen Yen 19.60 14.21 (2) Consolidated Financial Position Three months ended June 30, 2012 Year ended March 31, 2012 (Reference) Equity: 2. Dividends Total assets Net assets Equity ratio Net assets per share Millions of yen Millions of yen % Yen 156,057 52,309 32.5 546.88 152,405 50,684 32.3 530.51 Three months ended June 30, 2012: 50,780 million Year ended March 31, 2012: 49,260 million Annual cash dividends per share End of 1Q End of 2Q End of 3Q Year-end Annual Yen Yen Yen Yen Yen Year ended March 31, 2012 6.00 6.00 12.00 Year ending March 31, 2013 Year ending March 31, 2013 6.00 6.00 12.00 (Forecast) (Note) Revision of dividend forecasts from recently announced figures: Not applicable
3. Forecast of Consolidated Financial Results for Fiscal Year Ending March 31, 2013 (From April 1, 2012 to March 31, 2013) (% indicates changes from the previous corresponding term) Net sales Operating income Ordinary income Net income Net income per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen First half 78,000 (0.9) 4,300 (7.2) 4,400 (1.3) 2,300 (2.7) 24.77 Full year 160,000 2.5 9,100 6.8 9,100 6.7 5,400 25.2 58.15 (Note) Revision of forecast of financial results from recently announced figures: Not applicable * Notes (1) Significant changes of subsidiaries during the three months ended June 30, 2012 (changes in specific subsidiaries involving changes in the scope of consolidation): Not applicable (2) Adoption of specific accounting treatments to the preparation of quarterly consolidated financial statements: Not applicable (3) Changes in accounting policies, changes in accounting estimates and corrections of errors 1) Changes in accounting policies due to the revision of accounting standards, etc.: Applicable 2) Any changes in accounting policies other than 1) above: Not applicable 3) Changes in accounting estimates: Applicable 4) Corrections of errors: Not applicable (Note) It corresponds to Article 10-5 of Ordinance on Terminology, Forms and Preparation Methods of Quarterly Consolidated Financial Statements. For details, please refer to 2. Matters Related to Summary Information (Notes) (1) Changes in accounting policies, changes in accounting estimates and corrections of errors on page 4 of the appendix to this report. (4) Total number of issued shares (common stock) 1) Total number of issued shares at the end of the period (including treasury stock): Three months ended June 30, 2012 93,065,554 shares Year ended March 31, 2012 93,065,554 shares 2) Total number of treasury stock at the end of the period: Three months ended June 30, 2012 210,200 shares Year ended March 31, 2012 209,430 shares 3) Average number of shares during the period (cumulative): Three months ended June 30, 2012 92,855,657 shares Three months ended June 30, 2011 92,859,381 shares * Presentation regarding the implementation status of the quarterly review: These consolidated financial results for the three months ended June 30, 2012 are not covered by the quarterly review procedure stipulated in the Financial Instruments and Exchange Act. At the time of the publication of these financial results, the quarterly review procedure for consolidated quarterly financial statements stipulated in the Financial Instruments and Exchange Act is being implemented. * Explanation for the appropriate use of performance forecasts and other special notes: The statements regarding forecast of financial results in this report are based on the information that is available, as well as estimates, assumptions and projections that are believed to be reasonable at the time of publication. Therefore, there might be cases in which actual results differ from forecast values. For the forecast of financial results, please refer to 1. Qualitative Information on Quarterly Financial Results (3) Qualitative Information on Forecast of Consolidated Financial Results on page 3 of the appendix to this report.
Table of Contents of Appendix 1. Qualitative Information on Quarterly Financial Results 2 (1) Qualitative Information on Consolidated Results of Operations 2 (2) Qualitative Information on Consolidated Financial Position 3 (3) Qualitative Information on Forecast of Consolidated Financial Results 3 2. Matters Related to Summary Information (Notes) 4 (1) Changes in accounting policies, changes in accounting estimates and corrections of errors 4 3. Consolidated Quarterly Financial Statements 5 (1) Consolidated Quarterly Balance Sheets 5 (2) Consolidated Quarterly Statements of Income and Comprehensive Income 7 Consolidated Quarterly Statements of Income 7 Consolidated Quarterly Statements of Comprehensive Income 8 (3) Notes to Going Concern Assumption 9 (4) Notes to Significant Changes in the Amount of Shareholders Equity 9 (5) Segment Information, etc. 10 1
1. Qualitative Information on Quarterly Financial Results (1) Qualitative Information on Consolidated Results of Operations During the three months ending June 30, 2012, the Japanese economy underwent a moderate recovery which was led by domestic demand including an increase in personal consumption due to the demands for post-earthquake reconstruction and the effects of policies such as the subsidy for diffusion of eco-friendly vehicles (the Eco-car Subsidy ). However, since there were still such concerns as the prolonged appreciation of the yen and a world economic slowdown due to the European sovereign debt issue, the future of the economy remained uncertain. Looking overseas, in Asia, while China s domestic demand remained steady, a decrease in exports resulted from the sluggish European economy. Overall, economic growth was slow. The U.S. economy continued a moderate recovery, while in Europe, the economic environment was in a slump due to the sovereign debt issue. In such an economic environment, net sales for the three months ended June 30, 2012 decreased to 38,600 million, down by 2.7% compared with the same period of the previous fiscal year, in part because of the drop in net sales of a subsidiary in Thailand which suffered from flood damage and was being restored. In terms of profit, operating income increased to 2,991 million, up by 15.8% compared with the same period of the previous fiscal year, as a result of improvement in the cost of sales, cuts in selling, general and administrative expenses, and others. Ordinary income increased to 3,109 million, up by 16.8%. Net income increased to 1,820 million, up by 38.0%, mainly due to the large decrease in the losses on valuation of investment securities included in the extraordinary loss. Operating results by segment are as follows: The stated amount of operating income is before the reduction of corporate allocation. (Pigments ) In the Pigments, the Group manufactures and sells various inorganic-organic pigments, various colorants, and information-recording materials. Although sales of general-use pigments mainly for the printing ink industry were on the decrease, sales for building materials and IT-related industries remained strong, partly because of inventory buildup programs by the industries. As a result, net sales in the segment stood at 6,125 million, down by 6.3% compared with the same period of the previous fiscal year, while operating income was 1,149 million, up by 4.4% compared with the same period of the previous fiscal year. (Prepared colors and Chemicals ) In the Prepared colors and Chemicals, the Group manufactures and sells various colorants used in synthetic resins, various compounds and various coating materials. Sales of compounds intended for the automobile industry were steady, as a result of the effects of economic policies such as the Eco-car Subsidy in addition to the continuing recovery in domestic automobile production. On the other hand, orders received for colorants for synthetic resins for lifestyle-related industries remained solid overall. However, the as a whole was below the level of the previous year because of the drop in net sales of a subsidiary in Thailand which suffered from flood damage and was being restored. As a result, net sales in the segment stood at 20,488 million, down by 1.3% compared with the same period of the previous fiscal year, while operating income was 1,611 million, down by 3.0% compared with the same period of the previous fiscal year. (Polymers ) In the Polymers, the Group manufactures and sells polymer products and natural polymer products. Sales of various urethane resins, mainly for the automobile industry, performed steadily, which was buoyed by economic policies such as the Eco-car Subsidy. Meanwhile, sales of urethane resins to the textile industries continued to be strong. As a result, net sales in the segment stood at 4,207 million, up by 1.3% compared with the same period of the 2
previous fiscal year, while operating income was 775 million, up by 25.3% compared with the same period of the previous fiscal year. (Printing Inks ) In the Printing Inks, the Group manufactures and sells various printing inks and also offers merchandise and services associated with the. Sales of gravure printing ink for beverages and foods -related packaging industry were strong. Sales of offset printing ink, particularly for commercial printed matters, performed strongly, mainly reflecting the demands related to distribution. Profits significantly increased due to revisions of sales prices and improvements in the cost of sales. As a result, net sales in the segment stood at 7,276 million, down by 5.7% compared with the same period of the previous fiscal year, while operating income was 631 million, up by 51.7% compared with the same period of the previous fiscal year. (Other ) In the Other, the Group engages in resale of raw materials, leasing of real estate properties and financial es for group companies, and others. Net sales in this segment stood at 503 million, up by 0.9% compared with the same period of the previous fiscal year, while operating loss was 43 million due to the posting of real estate lease-related income as non-operating income, not as net sales. (2) Qualitative Information on Consolidated Financial Position (Assets) Total assets as at the end of the first quarter ended June 30, 2012 increased by 3,651 million compared with the end of the previous fiscal year to 156,057 million. This is largely because of a 3,183 million increase in current assets due primarily to inventory preparations, and a 847 million increase in property, plant and equipment due to the construction of a new plant. (Liabilities) Total liabilities as at the end of the first quarter ended June 30, 2012 increased by 2,026 million compared with the end of the previous fiscal year to 103,747 million. This is largely because of increases in notes and accounts payable-trade and provision for bonuses. (Net assets) Net assets as at the end of the first quarter ended June 30, 2012 increased by 1,624 million compared with the end of the previous fiscal year to 52,309 million. This is largely because of an increase in retained earnings as a result of posting net income and dividend payments, and an increase in foreign currency translation adjustment due to a depreciation of the yen over the previous fiscal year. (3) Qualitative Information on Forecast of Consolidated Financial Results With regard to the forecasts of financial results, there is no change to the following forecasts announced on May 11, 2012. Net sales Operating income Ordinary income Net income First half 78,000 4,300 4,400 2,300 Full year 160,000 9,100 9,100 5,400 3
2. Matters Related to Summary Information (Notes) (1) Changes in accounting policies, changes in accounting estimates and corrections of errors (Changes of method for depreciation) The Company and its domestic consolidated subsidiaries have changed the depreciation method for property, plant and equipment acquired on or after April 1, 2012 due to the revision of Japanese Corporation Tax Act from the first quarter ended June 30, 2012. The effect of this change on the income (loss) for the three months ended June 30, 2012 was immaterial. 4
3. Consolidated Quarterly Financial Statements (1) Consolidated Quarterly Balance Sheets As of March 31, 2012 As of June 30, 2012 Assets Current assets Cash and deposits 23,458 22,842 Notes and accounts receivable-trade 45,731 47,227 Short-term investment securities 125 129 Inventories 22,246 24,417 Other 3,537 3,597 Allowance for doubtful accounts (141) (71) Total current assets 94,958 98,141 Noncurrent assets Property, plant and equipment Land 19,943 19,956 Other, net 21,486 22,321 Total property, plant and equipment 41,430 42,278 Intangible assets Other 981 998 Total intangible assets 981 998 Investments and other assets Investment securities 10,057 9,495 Other 5,342 5,371 Allowance for doubtful accounts (364) (228) Total investments and other assets 15,035 14,638 Total noncurrent assets 57,447 57,915 Total assets 152,405 156,057 Liabilities Current liabilities Notes and accounts payable-trade 30,266 31,929 Short-term loans payable 25,042 25,749 Current portion of long-term loans payable 9,110 8,123 Income taxes payable 1,245 1,647 Provision for bonuses 2,024 3,048 Provision for environmental measures 209 181 Other 5,937 5,799 Total current liabilities 73,836 76,478 Noncurrent liabilities Long-term loans payable 17,501 17,039 Provision for retirement benefits 7,631 7,432 Provision for directors' retirement benefits 417 421 Provision for environmental measures 759 733 Other 1,573 1,641 Total noncurrent liabilities 27,883 27,268 Total liabilities 101,720 103,747 5
As of March 31, 2012 As of June 30, 2012 Net assets Shareholders' equity Capital stock 10,039 10,039 Capital surplus 9,193 9,193 Retained earnings 34,642 35,905 Treasury stock (89) (89) Total shareholders' equity 53,786 55,049 Accumulated other comprehensive income Valuation difference on available-for-sale securities 629 245 Deferred gains or losses on hedges (17) (14) Foreign currency translation adjustment (5,138) (4,499) Total accumulated other comprehensive income (4,525) (4,268) Minority interests 1,424 1,529 Total net assets 50,684 52,309 Total liabilities and net assets 152,405 156,057 6
(2) Consolidated Quarterly Statements of Income and Comprehensive Income (Consolidated Quarterly Statements of Income) Three months ended June 30, 2011 (From April 1, 2011 to June 30, 2011) Three months ended June 30, 2012 (From April 1, 2012 to June 30, 2012) Net sales 39,661 38,600 Cost of sales 32,933 31,653 Gross profit 6,728 6,947 Selling, general and administrative expenses 4,145 3,955 Operating income 2,583 2,991 Non-operating income Interest income 6 10 Dividends income 99 86 Equity in earnings of affiliates 13 14 Foreign exchange gains 41 59 Amortization of negative goodwill 22 - Other 128 179 Total non-operating income 311 350 Non-operating expenses Interest expenses 204 182 Other 28 49 Total non-operating expenses 232 232 Ordinary income 2,662 3,109 Extraordinary income Insurance income - 37 Other 0 3 Total extraordinary income 0 41 Extraordinary loss Loss on valuation of investment securities 390 43 Loss on disaster - 44 Other 18 17 Total extraordinary loss 409 105 Income before income taxes and minority interests 2,253 3,045 Income taxes-current 437 1,585 Income taxes-deferred 454 (407) Total income taxes 892 1,178 Income before minority interests 1,361 1,866 Minority interests in income 42 46 Net income 1,319 1,820 7
(Consolidated Quarterly Statements of Comprehensive Income) Three months ended June 30, 2011 (From April 1, 2011 to June 30, 2011) Three months ended June 30, 2012 (From April 1, 2012 to June 30, 2012) Income before minority interests 1,361 1,866 Other comprehensive income Valuation difference on available-for-sale securities 245 (390) Deferred gains or losses on hedges 7 2 Foreign currency translation adjustment 279 609 Share of other comprehensive income of associates accounted for using equity method 52 103 Total other comprehensive income 585 325 Comprehensive income 1,947 2,192 Comprehensive income attributable to Comprehensive income attributable to owners of the parent Comprehensive income attributable to minority interests 1,889 2,077 58 114 8
(3) Notes to Going Concern Assumption Not applicable. (4) Notes to Significant Changes in the Amount of Shareholders Equity Not applicable. 9
(5) Segment Information, etc. I. For the three months ended June 30, 2011 (From April 1, 2011 to June 30, 2011) Information regarding net sales and operating income or loss by the reportable segments Net sales Pigments Prepared colors and Chemicals Reportable segments Polymers Printing Inks Other (Note 1) Total Adjusted amount (Note 2) Posted amount to the consolidated quarterly statements of income (Note 3) (1) Net sales to external customers (2) Intersegment net sales and transfer 6,536 20,756 4,153 7,715 498 39,661-39,661 101 6 17-4,350 4,476 (4,476) - Total 6,638 20,762 4,170 7,715 4,849 44,137 (4,476) 39,661 Segment income [Operating income] (loss) 1,101 1,662 619 416 (48) 3,749 (1,166) 2,583 Notes: 1. Operating loss is reported in Other, as it includes the loss from the company which provides services such as property management and financial es for the Group in the other. The revenue associated with Other is reported as non-operating income, and operating expenses are not allocated to each reportable segment. 2. The adjusted amount of segment income includes corporate expenses of 1,166 million not allocated to each reportable segment. Corporate expenses refer to the expenses at the head office organizations, such as general affairs and accounting divisions that do not belong to those reportable segments, as well as research and development expenses. 3. Segment income is consistent with operating income as reported in the consolidated quarterly statements of income. 10
II. For the three months ended June 30, 2012 (From April 1, 2012 to June 30, 2012) Information regarding net sales and operating income or loss by the reportable segments Net sales Pigments Prepared colors and Chemicals Reportable segments Polymers Printing Inks Other (Note 1) Total Adjusted amount (Note 2) Posted amount to the consolidated quarterly statements of income (Note 3) (1) Net sales to external customers (2) Intersegment net sales and transfer 6,125 20,488 4,207 7,276 503 38,600-38,600 67 4 23 0 4,192 4,287 (4,287) - Total 6,193 20,493 4,230 7,276 4,695 42,888 (4,287) 38,600 Segment income [Operating income] (loss) 1,149 1,611 775 631 (43) 4,125 (1,133) 2,991 Notes: 1. Operating loss is reported in Other, as it includes the loss from the company which provides services such as property management and financial es for the Group in the other. The revenue associated with Other is reported as non-operating income, and operating expenses are not allocated to each reportable segment. 2. The adjusted amount of segment income includes corporate expenses of 1,133 million not allocated to each reportable segment. Corporate expenses refer to the expenses at the head office organizations, such as general affairs and accounting divisions that do not belong to those reportable segments, as well as research and development expenses. 3. Segment income is consistent with operating income as reported in the consolidated quarterly statements of income. 11