Commission File No. 1-08346
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May 2003
TDK CORPORATION
(Translation of registrant's name into English)
13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-8272, Japan
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2 (b) under the Securities Exchange Act
of 1934.
Yes No x
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2 (b). 82-____________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly Caused this to be signed on its behalf by the undersigned
thereunto duly authorized.
TDK Corporation
(Registrant)
May 7, 2003
BY: /s/ Seiji Enami
Seiji Enami
General Manager
Finance and Accounting Department
Administration Group
TDK Corporation
1-13-1, Nihonbashi
Chuo-ku, Tokyo
103-8272 Japan
Contacts;
TDK Corporation Corporate Communications Department
(Tokyo) Michinori Katayama +81(3)5201-7102
TDK U.S.A. Francis J. Sweeney +1(516)535-2600
Corporation
TDK UK Limited Ron Matier +44(1737)773773
FOR IMMEDIATE RELEASE
TOKYO - May 7, 2003 TDK Corporation today announced its Consolidated business
results prepared in conformity with accounting principles generally accepted in
the United States of America (the "U.S. GAAP") for fiscal year ("FY") 2003 and
NON-Consolidated business results for FY 2003.
1) Summary
Consolidated results (April 1, 2002 - March 31, 2003)
FY2003 FY2002
Term (April 1, 2002 - March 31, 2003) (April 1, 2001 - Mar. 31, 2002) Change
Item (Yen millions) % (U.S.$ thousands) (Yen millions) % (Yen millions) %
Net sales 608,880 100.0 5,074,000 570,511 100.0 38,369 6.7
Operating
income
(loss) 22,080 3.6 184,000 (43,722) -7.7 65,802 -
Income
(loss)
before
income
taxes 18,081 3.0 150,675 (43,697) -7.7 61,778 -
Net
income
(loss) 12,019 2.0 100,158 (25,771) -4.5 37,790 -
Net income (loss)
per common share Yen 90.56 U.S.$0.75 Yen (193.91)
(Sales breakdown)
FY2003 FY2002
Term (April 1, 2002 - March 31, 2003) (April 1, 2001 - Mar. 31, 2002) Change
Product (Yen millions) % (U.S.$ thousands) (Yen millions) % (Yen millions) %
Electronic
materials
and
components 472,529 77.6 3,937,742 432,886 75.9 39,643 9.2
Electronic
materials 168,949 27.8 1,407,909 161,846 28.4 7,103 4.4
Electronic
devices 112,729 18.5 939,408 105,937 18.6 6,792 6.4
Recording
devices 175,986 28.9 1,466,550 147,004 25.7 28,982 19.7
Semiconductors &
others 14,865 2.4 123,875 18,099 3.2 (3,234) -17.9
Recording media
& systems 136,351 22.4 1,136,258 137,625 24.1 (1,274) -0.9
Total sales 608,880 100.0 5,074,000 570,511 100.0 38,369 6.7
Overseas
sales 443,377 72.8 3,694,808 405,707 71.1 37,670 9.3
Notes:
1. The figures for net income (loss) per common share are calculated based
upon the weighted average number of shares of common stock (the total
outstanding number).
2. TDK adopted the Emerging Issues Task Force Issue 01-9 ("EITF 01-9"),
"Accounting for Consideration Given by a Vendor to a Customer (Including
a Reseller of the Vendor's Products)" from the fiscal year beginning
April 1, 2002 and the prior year's consolidated financial statements have
been restated for the change, accordingly.
3. U.S.$1=Yen 120
NON-consolidated
NON-Consolidated results (April 1, 2002 - March 31, 2003)
FY2003 FY2002
Term (April 1, 2002 - Mar. 31, 2003) (April 1, 2001 - Mar. 31, 2002) Change
Item (Yen millions) % (U.S.$ thousands) (Yen millions) % (Yen millions) %
Net sales 320,697 100.0 2,672,475 317,811 100.0 2,886 0.9
Operating income
(loss) 3,182 1.0 26,516 (8,507) -2.7 11,689 -
Current income 9,078 2.8 75,650 7,580 2.4 1,498 19.8
Net income (loss) 133 0.0 1,108 (3,794) -1.2 3,927 -
Net income (loss) per common share Yen 0.53 U.S.$0.00 Yen (28.55)
Dividends per share Yen 25.00 U.S.$0.20 Yen 20.00
Notes:
1. Any portion less than Yen one million is disregarded, the same being
applicable hereinafter. U.S.$1=Yen 120 (U.S. dollar translation is added
herein solely for convenience of readers outside Japan.)
2. The figures for net income (loss) per common share are calculated based
upon the weighted average number of shares of common stock (the total
outstanding number).
(Sales breakdown)
FY2003 FY2002
Term (April 1, 2002 - Mar. 31, 2003) (April 1, 2001 - Mar. 31, 2002) Change
Product (Yen millions) % (U.S.$ thousands) (Yen millions) % (Yen millions) %
Electronic
materials
and
components 278,006 86.7 2,316,716 271,775 85.5 6,231 2.3
Electronic
materials 133,325 41.6 1,111,041 125,456 39.5 7,869 6.3
Electronic
devices 86,274 26.9 718,950 78,623 24.7 7,651 9.7
Recording
devices 46,437 14.5 386,975 51,749 16.3 (5,312) -10.3
Semiconductors
& others 11,968 3.7 99,733 15,946 5.0 (3,978) -24.9
Recording
media &
systems 42,690 13.3 355,750 46,036 14.5 (3,346) -7.3
Total
sales 320,697 100.0 2,672,475 317,811 100.0 2,886 0.9
Overseas
sales 176,461 55.0 1,470,508 163,839 51.6 12,622 7.7
Note: U.S.$1=Yen 120
2) Management Policies
(1) Fundamental Management Policy
TDK was established in 1935 as the world's first company to commercialize a
magnetic material called ferrite. In the ensuing years, TDK has also conducted
research and development programs in respect of electronic materials,
components and devices, as well as recording media. This drive was based on the
company's founding spirit: "Contributes to culture and industry through
creativity."
To preserve its identity as a dynamic company, TDK is dedicated to creating
value for all stakeholders by drawing on innovative thinking and a willingness
to tackle new challenges. TDK firmly believes that it must remain an
organization that is a constant source of exciting ideas in good quality.
(2) Fundamental Policy for Distribution of Earnings
Returning earnings to shareholders is one of TDK's highest management
priorities. As such, TDK allocates earnings based on a broad range of factors
including the return on equity (ROE), dividends as a percentage of equity (DOE)
and the company's results of operation. Retained earnings are used in many ways
to make TDK more competitive. Funds are required to support research and
development programs for new technologies and products to respond precisely to
the rapid technological advances in the electronics industry. TDK must create
new technologies and products in such fields as optical and magnetic recording
media, mobile communications, large-capacity recording devices,
semiconductor-related products and data communications. At the same time, TDK
works to advance its operations on the international stage.
(3) Medium- and Long-Term Management Strategy
Information technology, notably the Internet, is bringing about dramatic
increases in the speed at which companies must act. At the same time, market
participants are now able to quickly distinguish between products of value and
those offering no value. We are now in an age when only companies able to
provide genuine value will survive. TDK is taking a fresh look at its unique
attributes and strengths. By further refining its core competencies, TDK
intends to become a company capable of increasing its value in the 21st
century.
To meet the challenges of this operating environment, TDK launched its Exciting
108 medium-term management plan in April 2000. Scheduled to end in March 2004,
the plan is structured to transform TDK into an exciting company and increase
TDK's value. There are three fundamental elements:
I. Become an e-material solution provider
TDK must be a speedy and dynamic company able to anticipate the needs of its
customers. By drawing on its core expertise in electronic materials, TDK will
then quickly formulate the value-added products required to solve customers'
problems. This process is the essence of providing e-material solutions.
II. Build a world-class management system
Management systems just as businesses themselves are becoming increasingly
borderless. Personnel management practices are also on the verge of dramatic
change. TDK needs to move swiftly to implement the necessary management
systems.
III. Aim for zero emissions
TDK's goal is to operate "eco-factories" with zero emissions. Doing so mandates
that factories generate less waste, use more recycled materials and expand
their own recycling. Eventually, TDK intends to reach the point where its
plants rely completely on recycled materials and generate no emissions at all.
By accomplishing these three objectives, TDK intends to maximize its corporate
value, bring its activities in closer step with the environment and make
greater contributions to society.
(4) Corporate Ethics
TDK has formulated a corporate code of ethics to guide the activities of all
members of TDK in their efforts to create an even better company. The corporate
code of ethics, which is based on TDK's corporate motto and principles,
specifies the rules that the company, management and employees must observe in
the conduct of business. The corporate code of ethics demonstrates TDK's
commitment to constantly upholding corporate ethical standards and improving
risk management.
(5) Strategy to Improve Corporate Governance
Companies must conduct their activities and manage their operations in a fair,
impartial and transparent manner, abiding by laws and regulations, and with the
recognition that their existence is supported by shareholders, customers,
society and employees. TDK put in place internal controls with this fundamental
recognition in mind. It has also implemented a number of other measures in the
same vein, such as appointing external directors, involving people outside the
company in setting directors' remuneration, and ensuring that corporate ethics
are strictly observed.
(5-1) Management structure and other corporate governance systems concerning
decision-making, strategy execution and supervision
One of TDK's 7 directors is an outside director, who also serves as the
chairperson of the Remuneration Committee, which was set up to ensure the
fairness of directors' remuneration. Another committee, the Corporate Ethics
Committee, was established to ensure that TDK upholds corporate ethical
standards. Independent of this committee, TDK has a "hotline" that encourages
employees to report matters and offer suggestions relating to corporate ethics.
Moreover, having introduced the post of corporate officer, TDK has clearly
demarcated responsibilities: directors are responsible for decision-making and
oversight, while corporate officers have responsibility for executing
day-to-day operations. Corporate officers execute policies set by the Board of
Directors in their respective areas of responsibility.
While TDK applies the Corporate Auditor System in accordance with the
Commercial Code of Japan, 2 of its 4 corporate auditors come from outside the
company. The role of corporate auditor is not restricted to the supervision of
directors' activities. As required, they also audit business activities, as
does the Management Review & Support Department.
Another defining aspect of TDK's corporate governance system is that it
receives advice and warnings from outside legal counsel and independent
auditors regarding risks associated with TDK's corporate activities.
(5-2) Personal, financial and trading relationships between the company and
the outside director and outside corporate auditors, and other
beneficial relationships
There are no personal or financial relationships between TDK and the outside
director or the two outside corporate auditors.
(5-3) Measures taken to enhance corporate governance in fiscal 2003
TDK established the Remuneration Committee, which is chaired by the outside
director, with the aim of establishing a new remuneration structure for
directors and to ensure that TDK's remuneration policy is fairly managed. The
committee held 5 meetings during fiscal 2003 that were also attended by
specialists from outside the company. As a result of the committee's
activities, TDK has ceased providing for retirement allowances for directors,
but has introduced stock options and established a new bonus system linked to
business results for directors. Another governance development was the
establishment of the Corporate Ethics Committee to create a framework for
corporate ethics and to ensure that ethical standards are being upheld at TDK.
A framework has been completed and a corporate ethics system established that
encompasses overseas subsidiaries. The chairperson of the Corporate Ethics
Committee himself has educated staff at all bases and subsidiaries throughout
Japan on TDK's corporate ethics framework.
(6) Policy Regarding Reduction of TDK's Share Trading Unit
On August 1, 2000, TDK reduced the trading unit of its common shares from 1,000
to 100 shares to broaden the shareholder base and increase the liquidity of the
company's shares. TDK now considers that its shares have sufficient liquidity.
TDK will consider a further reduction of the trading unit based on its stock
price and market needs as well as on cost-benefit analysis.
3) Business Results and Financial Position
(1) Summary
Consolidated results for fiscal 2003, the year ended March 31, 2003, are as
follows:
TDK's operating environment in fiscal 2003 remained as very severe as it was
the previous year. The U.S. economy, key to world economic fortunes, seemed to
gradually move back onto a recovery footing after taking a step backwards at
the start of 2002. But Japanese and European economies, which are highly
reliant on external demand, were sluggish. They began to languish in the
closing months of 2002 as consumer and corporate sentiment nosedived due to
stagnant demand, tumbling share prices and reverberations from the soft U.S.
economy. Asia, including China, fared relatively well, but this region is
nowhere near becoming a leading force in the world economy just yet.
In this difficult operating environment, TDK recorded higher sales on the back
of a recovery in the company's share of the HDD-head market and an upturn in
demand for electronic components, which is being fueled by the digitalization
of audio and visual equipment and the increasing use of electronics in
automotive applications. The benefits of structural reforms implemented over
the past two years also contributed to TDK's overall performance. TDK's
consolidated net sales rose 6.7% year on year to �608,880 million (US$5,074,000
thousand) and the company recorded operating income of �22,080 million
(US$184,000 thousand), reversing an earlier-year loss of �43,722 million.
Income before income taxes was also positive at �18,081 million (US$150,675
thousand), after TDK posted a loss before income taxes of �43,697 million a
year earlier. On the bottom line, net income was �12,019 million (US$100,158
thousand), a turnaround from the loss of �25,771 million in fiscal 2002.
Consequently, net income per common share was �90.56 (US$0.75), compared with a
net loss per common share of �193.91 a year earlier.
During the year, the average exchange rate was �122 for the U.S. dollar and �
121 for the euro, representing a 2.4% appreciation in the yen's value against
the dollar and a 9.5% depreciation against the euro. Overall, exchange rate
movements had the effect of decreasing net sales by approximately �2.8 billion
and operating income by approximately �3.0 billion. Due to an operating loss in
Europe, which was caused by actions associated with the structural reforms
(refer to "Geographic segment information" on page 18), foreign exchange
movements reduced operating income more than sales as the stronger euro
increased the loss when translated into yen.
(Sales by Segment)
The following is an explanation of sales by segment.
Electronic materials and components segment
In the electronic materials and components segment, net sales increased 9.2% to
�472,529 million (US$3,937,742 thousand). This reflected higher sales in
recording devices, where growth was spurred by a recovery in the market share
of TDK's HDD heads, and higher demand for capacitors and inductive devices,
which is being fueled by the digitalization of audio and visual equipment and
the increasing use of electronics in automotive applications.
Electronic materials
Sales in the electronic materials sector rose 4.4% to �168,949 million
(US$1,407,909 thousand).
(Capacitors) Sales of multilayer chip capacitors, which account for the
majority of capacitor sector sales, increased on the strength of the
digitalization of audio and visual equipment and increasing use of electronics
in automotive applications mentioned above. Hampering further growth were calls
for discounts from customers.
(Ferrite cores and magnets) In ferrite cores and magnets, overall sales of
ferrite cores slipped year on year, despite strong demand for cores used in LCD
backlights and power supplies for audio and visual products. The drop in sales
was the result of the failure of demand to recover for cores used in IT-related
information and communications applications, and lower sales of deflection yoke
cores, a key component of TVs and computer monitors, as well as other products
due to stiff competition. Magnet sales increased as firm demand from the
automobile and parts fields carried over from the previous fiscal year.
Overall, sales of ferrite cores and magnets edged down slightly year on year.
Electronic devices
In the electronic devices sector, sales increased 6.4% to �112,729 million
(US$939,408 thousand).
(Inductive devices) Inductive devices, the largest product category in this
sector, recorded higher sales, reflecting the growing use of automotive
electronics as well as growth in demand for digital audio and visual products
such as DVD players and digital still cameras. These are the same factors that
are driving growth in the capacitor sector. This allowed TDK to absorb the
effects of price discounts and production cutbacks, mainly by manufacturers of
audio and visual products, in the fourth quarter.
(High-frequency components) Sales of high-frequency components, a large
proportion of which are used in communications applications, particularly
mobile phones, were hamstrung by a soft mobile phone market. While sales
volumes have been trending upward since the summer of 2002, following a period
of parts inventory reductions by customers, demands for price reductions from
customers have been more severe than in other electronic components sectors due
to the continuing supply glut. Overall, sales increased, but they did not
increase to the same extent as volumes.
(Other products) Overall, sales in this sector increased. Sales of DC-DC
converters for video game systems were higher for the year despite cutbacks to
production levels beginning in the latter half of the third quarter. Power
supplies for LCD projectors and other PCs and peripherals also benefited from
strong demand. The sector was further boosted by brisk sales of actuators and
chip varistors used in PCs and peripherals and in communications products.
Recording devices
Recording devices sales climbed 19.7% to �175,986 million (US$1,466,550
thousand). One factor was a recovery in TDK's share of the HDD head market as
40 gigabyte/disk HDD heads won back customers. Additionally, the average number
of heads used per HDD did not decline as rapidly as had been expected. Total
demand remained high as a result, and sales climbed. Sales of other heads fell
due to a drop-off in demand and other factors.
Semiconductors & others
Sales in the semiconductors & others sector declined 17.9% to �14,865 million
(US$123,875 thousand), reflecting a sharp drop in sales of semiconductors for
LAN/WAN applications and set-top box modems due to the continuing low levels of
investment in communications infrastructure equipment. Another factor was lower
sales of anechoic chambers for noise control due to a string of project
cancellations and postponements prompted by the global economic downturn and
uncertain economic outlook.
Recording media & systems segment
In the recording media & systems segment, sales edged down slightly by 0.9% to
�136,351 million (US$1,136,258 thousand). There were several reasons. Audiotape
sales shrank further from the previous fiscal year as the long-term decline in
demand continued due to the market shift to optical media. While there is a
similar long-term decline in demand for videotapes due to the rising popularity
of optical media and DVD software, sales rose slightly during the year, boosted
by demand stemming from the 2002 FIFA World Cup(tm). In optical media, demand for
CD-Rs and DVDs was buoyant, but this strength was negated by falling MD demand
and lower sales prices of CD-Rs, resulting in largely flat sales overall.
Tape-based data storage media for computers, which obtained new-standard LTO
(Linear Tape-Open) verification in the previous fiscal year, and software also
recorded sales gains. This segment moved back into the black for the first time
in three fiscal years as the results of major structural reforms began to show
through. Looking ahead, TDK will build on this momentum by gaining
certification for new tape-based data storage media standards and working on
the commercialization of Blu-ray discs, which are widely expected to be the
next generation in optical discs.
Linear Tape-Open, LTO, the LTO logo, Ultrium and the Ultrium logo are
registered trademarks of Hewlett-Packard Company, IBM Corporation and Seagate
Removable Storage Solutions in the United States and other countries.
(Sales by Region)
By region, sales in Japan increased 0.4% to �165,503 million (US$1,379,192
thousand). While robust demand was recorded for capacitors and DC-DC converters
for video game systems, sales in Japan were largely unchanged due to lower
sales in the recording media & systems segment as audiotape demand declined. In
the Americas, sales decreased 3.1% to �106,060 million (US$883,833 thousand).
This reflects lower sales in the electronic materials and components segment,
which outweighed higher sales in other areas, particularly for tape-based data
storage media for computers. In Europe, sales declined 1.1% to �78,740 million
(US$656,167 thousand). Sales were strong of automotive components in the
electronics materials and components segment. However, total sales in this
region were brought down by waning demand for high-frequency components for
mobile phones, particularly GSM-format phones, and falling demand for
audiotapes and MDs in the recording media & systems segment. In Asia (excluding
Japan) and Others, sales jumped 19.4% to �258,577 million (US$2,154,808
thousand) thanks to higher sales in recording devices, as TDK regained market
share, and higher sales in electronic materials and electronic devices.
The overall result was a 9.3% increase in overseas sales year on year to �
443,377 million (US$3,694,808 thousand). Overseas sales accounted for 72.8% of
consolidated net sales, a 1.7 percentage point increase from 71.1% in fiscal
2002.
On a parent-company basis, net sales increased 0.9% to �320,697 million
(US$2,672,475 thousand) and current income rose 19.8% to �9,078 million
(US$75,650 thousand). Net income was �133 million (US$1,108 thousand), compared
with a net loss of �3,794 million in fiscal 2002. Net income per share was �
0.53 (US$0.00).
Sales in the electronic materials and components segment increased 2.3% to �
278,006 million (US$2,316,716 thousand) mainly on higher sales of capacitors
and inductive devices, product areas that are benefiting from rising demand
fueled by the digitalization of audio and visual product and the increasing use
of electronics in automotive applications. In the recording media & systems
segment, sales declined 7.3% to �42,690 million (US$355,750 thousand), owing to
falling demand for audiotapes and MDs and other factors.
In line with its Fundamental Policy for Distribution of Earnings, TDK plans to
pay a year-end dividend of �25 per common share. Together with the interim
dividend of �25 per common share paid in December 2002, the dividend per common
share applicable to the year is �50. On a parent-company basis, fiscal 2003 ROE
was 0.0% and DOE was 1.6%. On a consolidated basis, ROE was 2.1% and DOE was
1.0%.
(2) Financial Position
(2-1) The following table shows key
items from TDK's balance sheet
at March 31, 2003:
Total assets � 0.3% decrease
747,337 million
Total stockholders' � 5.1% decrease
equity 553,885 million
Equity ratio 74.1% 3.8 percentage point
decrease
At the end of the year, cash and cash equivalents were �44,790 million higher
than on March 31, 2002, net trade receivables were down �2,804 million and
inventories decreased �17,232 million. Furthermore, net property, plant and
equipment decreased �39,683 million due to a review of capital expenditures. As
a result of the above items and other changes, total assets decreased �2,573
million from March 31, 2002.
Total liabilities increased �28,702 million from the previous fiscal year-end.
Other current liabilities decreased �9,891 million due to the payment during
the year of retirement allowances to employees who applied for a special
voluntary retirement package offered as part of profit structure reforms
implemented in fiscal 2002. Meanwhile, trade payables increased �4,351 million
and retirement and severance benefits increased �34,979 million.
Total stockholders' equity decreased �30,042 million in comparison with the end
of fiscal 2002. This partly reflected an increase of �34,825 million in
accumulated other comprehensive loss due to foreign currency translation
adjustments of �18,747 million and minimum pension liability adjustments of �
15,809 million. Offsetting this to some extent was a �5,776 million increase in
retained earnings.
(2-2) Cash Flows
(� millions)
Fiscal 2003 Fiscal 2002 Change
Net cash
provided by
operating
activities 104,358 41,504 62,854
Net cash used in
investing
activities (46,645) (57,903) 11,258
Net cash used in
financing
activities (7,925) (13,202) 5,277
Effect of
exchange rate
changes on cash
and cash
equivalents (4,998) 4,445 (9,443)
Net increase
(decrease) in
cash and cash
equivalents 44,790 (25,156) 69,946
Cash and cash
equivalents at
beginning of
period 125,761 150,917 (25,156)
Cash and cash
equivalents at
end of period 170,551 125,761 44,790
Operating activities provided net cash of �104,358 million (US$869,650
thousand), a year-on-year increase of �62,854 million. This reflected a �37,790
million increase in net income to �12,019 million (US$100,158 thousand); a
decrease of �4,131 million in depreciation and amortization to �57,789 million
(US$481,575 thousand); a decrease in inventories of �14,277 million (US$118,975
thousand); and an increase in trade payables of �6,691 million (US$55,758
thousand).
Investing activities used net cash of �46,645 million (US$388,708 thousand), a
decrease of �11,258 million. A �17,326 million decrease in capital expenditures
to �41,451 million (US$345,425 thousand) was the main reason.
Financing activities used net cash of �7,925 million (US$66,042 thousand), �
5,277 million less year on year. Repayments of short-term debt decreased �
3,314 million and dividends paid were down �2,004 million year on year.
(2-3) Trends in Cash Flow Indicators
Fiscal 1999 Fiscal 2000 Fiscal 2001 Fiscal 2002 Fiscal 2003
Capital
adequacy
ratio on a
market value
basis (%) 171.8 239.9 133.8 121.7 80.4
Interest
coverage
ratio 107.3 165.3 138.0 32.8 180.9
No. of years
to redeem
debt 0.04 0.02 0.10 0.07 0.02
Stockholders'
equity ratio
(%) 72.0 73.6 77.8 77.9 74.1
[Notes]
Capital adequacy ratio on a market value basis = Market capitalization* / Total
assets
*Market capitalization = Closing price of TDK's common shares on the Tokyo
Stock Exchange on March 31, 2003 x
Shares issued and outstanding at year-end after deducting treasury stock.
Interest coverage ratio = Cash flows from operating activities / Interest
payments
No. of years to redeem debt = Interest-bearing liabilities / Cash flows from
operating activities
Stockholders' equity ratio = Total stockholders' equity / Total assets
(3) Fiscal 2004 Projections
TDK's consolidated and non-consolidated projections for fiscal 2004, the year
ending March 31, 2004, are as follows. The projections are based principally on
the following assumptions:
* An average exchange rate of �120=US$1 for the fiscal 2004.
* Demand for electronic components for DVD players, digital still cameras and
products in electronic materials and components for the automotive field
due to the growing use of electronics in automobiles, is expected to remain
firm in fiscal 2004. However, with the exception of these fields, TDK does
not expect to see sharp growth in demand for electronic components
generally.
* In HDD heads, the mainstay product in the recording devices sector, TDK
expects to see a continuation of brisk sales on steady demand in fiscal
2004, with demand appearing to have bottomed out and its products having
won high marks from customers.
* In the recording media & systems segment, TDK is forecasting sales largely
on a par with fiscal 2003. This forecast is premised on lower sales of
audiotapes and videotapes due to falling demand, which should be offset by
higher demand for optical discs, including CD-Rs and DVDs, and increased
sales of tape-based data storage media for computers, a field on which TDK
is placing special emphasis at present.
Consolidated Projections for Fiscal 2004
Year ending % change Year ended
March 2004 from FY03 March 2003
� millions � millions
Net sales �635,000 4.3% �608,880
Operating income 41,000 85.7 22,080
Income before income taxes 42,000 132.3 18,081
Net income 30,000 149.6 12,019
Non-Consolidated Projections for Fiscal 2004
Year ending % change Year ended
March 2004 from FY03 March 2003
� millions � millions
Net sales �321,000 0.1% �320,697
Operating income 8,000 151.4 3,182
Current income 13,000 43.2 9,078
Net income 7,000 - 133
Cautionary Statement About Projections
This earnings release contains forward-looking statements, including
projections, plans, policies, management strategies, targets, schedules,
understandings and evaluations, about TDK and its group companies that are not
historical facts. These forward-looking statements are based on current
forecasts, estimates, assumptions, plans, beliefs and evaluations in light of
information available to management on the date of this earnings release.
In preparing forecasts and estimates, TDK and its group companies have used as
their basis, certain assumptions as necessary, in addition to confirmed
historical facts. However, due to their nature, there is no guarantee that
these statements and assumptions will prove to be accurate in the future. TDK
therefore wishes to caution readers that these statements, facts and certain
assumptions contained in this earnings release are subject to a number of risks
and uncertainties and may prove to be inaccurate.
The electronics markets in which TDK and its group companies operate are highly
susceptible to rapid changes. Furthermore, TDK and its group companies operate
not only in Japan, but in many other countries. As such, factors that can have
significant effects on its results include, but are not limited to, shifts in
technology, demand, prices, competition, economic environments and foreign
exchange rates.
The premises and assumptions used in computing the projections in this earnings
release include, but are not limited to, those explained above.
Consolidated
4) Statements of income
FY2003 FY2002
Term (April 1, 2002 - March 31, 2003) (April 1, 2001 - Mar. 31, 2002) Change
Item (Yen millions) % (U.S.$ thousands) (Yen millions) % (Yen millions) %
Net sales 608,880 100.0 5,074,000 570,511 100.0 38,369 6.7
Cost of
sales 459,616 75.5 3,830,133 464,620 81.4 (5,004) -1.1
Gross profit 149,264 24.5 1,243,867 105,891 18.6 43,373 41.0
Selling,
general and
administrative
expenses 121,839 20.0 1,015,325 123,741 21.7 (1,902) -1.5
Restructuring
cost 5,345 0.9 44,542 25,872 4.6 (20,527) -79.3
Operating
income
(loss) 22,080 3.6 184,000 (43,722) -7.7 65,802 -
Other income
(deductions):
Interest and
dividend
income 1,379 11,491 2,033 (654)
Interest
expense (577) (4,808) (1,264) 687
Foreign
exchange
gain (loss) (1,482) (12,350) 618 (2,100)
Other-net (3,319) (27,658) (1,362) (1,957)
Total other
income
(deductions) (3,999) -0.6 (33,325) 25 0.0 (4,024) -
Income
(loss)
before
income taxes 18,081 3.0 150,675 (43,697) -7.7 61,778 -
Income taxes 5,296 0.9 44,133 (16,994) -3.0 22,290 -
Income
(loss)
before
minority
interests 12,785 2.1 106,542 (26,703) -4.7 39,488 -
Minority
interests (766) -0.1 (6,384) 932 0.2 (1,698) -
Net income
(loss) 12,019 2.0 100,158 (25,771) -4.5 37,790 -
Net income (loss) per Yen Yen
common share 90.56 U.S.$0.75 (193.91)
Average common shares 132,716
outstanding thousands 132,900 thousands
Notes:
1. The figures for net income (loss) per common share are calculated based
upon the weighted average number of shares of common stock (the total
outstanding number).
2. TDK adopted the Emerging Issues Task Force Issue 01-9 ("EITF 01-9"),
"Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of the Vendor's Products)" from the fiscal year beginning
April 1, 2002 and the prior year's consolidated financial statements have
been restated for the change, accordingly.
3. U.S.$1=Yen 120
U.S.$1=Yen 120
Consolidated
5) Balance sheets
ASSETS
Term As of March 31, 2003 As of Mar. 31, 2002 Change
Item (Yen millions) % (U.S.$ thousands) (Yen millions) % (Yen millions)
Current
assets 420,962 56.3 3,508,017 399,206 53.2 21,756
Cash and
cash
equivalents 170,551 1,421,258 125,761 44,790
Net trade
receivables 140,023 1,166,859 142,827 (2,804)
Inventories 73,917 615,975 91,149 (17,232)
Other
current
assets 36,471 303,925 39,469 (2,998)
Noncurrent
assets 326,375 43.7 2,719,791 350,704 46.8 (24,329)
Investments
and
advances 22,578 188,150 24,265 (1,687)
Net
property,
plant and
equipment 225,907 1,882,558 265,590 (39,683)
Other
assets 77,890 649,083 60,849 17,041
TOTAL 747,337 100.0 6,227,808 749,910 100.0 (2,573)
LIABILITIES AND STOCKHOLDERS' EQUITY
Term As of March 31, 2003 As of Mar. 31, 2002 Change
Item (Yen millions) % (U.S.$ thousands) (Yen millions) % (Yen millions)
Current
liabilities 105,014 14.0 875,117 110,341 14.7 (5,327)
Short-term
debt 1,919 15,992 2,312 (393)
Trade
payables 56,960 474,667 52,609 4,351
Accrued
expenses 25,852 215,433 23,757 2,095
Income taxes 1,057 8,808 2,546 (1,489)
Other current
liabilities 19,226 160,217 29,117 (9,891)
Noncurrent
liabilities 85,078 11.4 708,983 51,049 6.8 34,029
Long-term
debt,
excluding
current
installments 94 783 459 (365)
Retirement
and severance
benefits 84,971 708,092 49,992 34,979
Deferred
income taxes 13 108 598 (585)
Total
liabilities 190,092 25.4 1,584,100 161,390 21.5 28,702
Minority
interests 3,360 0.5 28,000 4,593 0.6 (1,233)
Common stock 32,641 272,008 32,641 -
Additional
paid-in
capital 63,051 525,425 63,051 -
Legal reserve 15,953 132,942 15,683 270
Retained
earnings 525,919 4,382,658 520,143 5,776
Accumulated
other
comprehensive
income (loss) (78,824) (656,867) (43,999) (34,825)
Treasury
stock (4,855) (40,458) (3,592) (1,263)
Total
stockholders'
equity 553,885 74.1 4,615,708 583,927 77.9 (30,042)
TOTAL 747,337 100.0 6,227,808 749,910 100.0 (2,573)
Total common shares 132,625 132,860
outstanding thousands thousands
Note: U.S.$1 = Yen 120
Consolidated
6) Statements of stockholders' equity
FY2003 FY2002
Term (April 1, 2002 - Mar. 31, 2003) (April 1, 2001 - Mar. 31, 2002)
Item (Yen millions) (U.S.$ thousands) (Yen millions)
Common stock:
Balance at beginning of period 32,641 272,008 32,641
Balance at end of period 32,641 272,008 32,641
Additional paid-in capital:
Balance at beginning of period 63,051 525,425 63,051
Balance at end of period 63,051 525,425 63,051
Legal reserve:
Balance at beginning of period 15,683 130,692 13,409
Transferred from retained earnings 270 2,250 2,274
Balance at end of period 15,953 132,942 15,683
Retained earnings:
Balance at beginning of period 520,143 4,334,525 556,165
Net income (loss) 12,019 100,158 (25,771)
Cash dividends (5,973) (49,775) (7,977)
Transferred to legal reserve (270) (2,250) (2,274)
Balance at end of period 525,919 4,382,658 520,143
Accumulated other comprehensive
income (loss):
Balance at beginning of period (43,999) (366,659) (24,851)
Other comprehensive income (loss)
for the period, net of tax (34,825) (290,208) (19,148)
Balance at end of period (78,824) (656,867) (43,999)
Treasury stock:
Balance at beginning of period (3,592) (29,933) (2,666)
Acquisition of treasury stock (1,263) (10,525) (926)
Balance at end of period (4,855) (40,458) (3,592)
Total stockholders' equity 553,885 4,615,708 583,927
Disclosure of comprehensive income
(loss):
Net income (loss) for the period 12,019 100,158 (25,771)
Other comprehensive income (loss)
for the period, net of tax (34,825) (290,208) (19,148)
Total comprehensive income (loss)
for the period (22,806) (190,050) (44,919)
Note: U.S.$1 = Yen 120
Consolidated
7) Statements of cash flows
FY2003 FY2002
Term (April 1, 2002 - March 31, 2003) (April 1, 2001 - Mar. 31, 2002)
(Yen millions)
Item (U.S.$ thousands) (Yen millions)
Cash flows from operating activities:
Net income (loss) 12,019 100,158 (25,771)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 57,789 481,575 61,920
Loss on disposal of property and
equipment 4,845 40,375 6,436
Deferred income taxes 2,435 20,292 (13,797)
Loss on securities 3,298 27,483 207
Changes in assets and liabilities:
Decrease (increase) in trade
receivables (2,256) (18,800) 18,517
Decrease in inventories 14,277 118,975 28,776
Increase (decrease) in trade payables 6,691 55,758 (14,806)
Decrease in income taxes (1,393) (11,608) (17,181)
Other-net 6,653 55,442 (2,797)
Net cash provided by operating activities 104,358 869,650 41,504
Cash flows from investing activities:
Capital expenditures (41,451) (345,425) (58,777)
Proceeds from sale of investments 1,511 12,592 323
Payment for purchase of investments (7,306) (60,883) (3,116)
Other-net 601 5,008 3,667
Net cash used in investing activities (46,645) (388,708) (57,903)
Cash flows from financing activities:
Proceeds from long-term debt 211 1,758 46
Repayment of long-term debt (646) (5,383) (777)
Decrease in short-term debt (254) (2,117) (3,568)
Payment to acquire treasury stock (1,263) (10,525) (926)
Dividends paid (5,973) (49,775) (7,977)
Net cash used in financing activities (7,925) (66,042) (13,202)
Effect of exchange rate changes on cash and
cash equivalents (4,998) (41,650) 4,445
Net increase (decrease) in cash and cash
equivalents 44,790 373,250 (25,156)
Cash and cash equivalents at beginning of
period 125,761 1,048,008 150,917
Cash and cash equivalents at end of period 170,551 1,421,258 125,761
Note: U.S.$1 = Yen 120
Consolidated
8) Summary of Significant Accounting Policies
1. The consolidated financial statements are prepared in conformity with
U.S. GAAP.
(1) Marketable Securities
Statement of Financial Accounting Standards ("SFAS") No.115,
"Accounting for Certain Investments in Debt and Equity Securities" is
adopted.
(2) Inventories
Inventories are stated at the lower of cost or market. Cost is
determined principally by the average method.
(3) Depreciation
Depreciation of property, plant and equipment is principally
computed by the declining-balance method for assets located in Japan and
of certain foreign subsidiaries, and by the straight-line method for
assets of other foreign subsidiaries based on estimated useful lives.
(4) Income Taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax base and operating loss and tax
credit carryforwards.
(5) Derivatives Financial Instruments
SFAS No.133, "Accounting for Derivative Instruments and Hedging
Activities" and SFAS No.138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an amendment of FASB
Statement No.133" are adopted.
(6) Goodwill and Other Intangible Assets
SFAS No.141, "Business Combinations" and SFAS No.142, "Goodwill and
Other Intangible Assets" are adopted.
2. During this consolidated accounting period, TDK had 72 subsidiaries (20
in Japan and 52 overseas). TDK also had 8 affiliates (5 in Japan and 3
overseas) whose financial statements are accounted for by the equity method.
The principal alterations were coordination and dissolution of certain
subsidiaries in Japan, an acquisition of a communication equipment power switch
manufacturing and marketing company in the United States and establishment of a
subsidiary in Shanghai, China.
3. Comprehensive income comprises net income and other comprehensive
income. Other comprehensive income includes changes in foreign currency
translation adjustments, minimum pension liability adjustments and net
unrealized gains (losses) on securities. The net income (loss), other
comprehensive income (loss) and total comprehensive income (loss) for the
fiscal year ended Mar. 31, 2003 and 2002 were as follows;
FY2003 FY2002
Term (April 1, 2002 - March 31, 2003) (April 1, 2001 - Mar. 31, 2002)
Item (Yen millions) (U.S.$ thousands) (Yen millions)
Net income
(loss) 12,019 100,158 (25,771)
Other
comprehensive
income
(loss), net
of tax:
Foreign
currency
translation
adjustments (18,747) (156,225) 16,025
Minimum
pension
liability
adjustments (15,809) (131,741) (35,881)
Net
unrealized
gains
(losses) on
securities (269) (2,242) 708
Total
comprehensive
income (loss) (22,806) (190,050) (44,919)
Note: U.S.$1 = Yen 120
Consolidated
4. Adoption of new accounting standards
(1) Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of the Vendor's Products)
In May 2000, the Emerging Issues Task Force reached a final
consensus on Issue 00-14 ("EITF 00-14"), "Accounting for Certain Sales
Incentives". EITF 00-14 addresses accounting and reporting standards for
sales incentives such as coupons or rebates that are provided by vendors
or manufacturers and are exercisable by customers at the point of sale.
In April 2001, the Emerging Issues Task Force also reached a final
consensus on a portion of Issue 00-25 ("EITF 00-25"), "Vendor Income
Statement Characterization of Consideration to a Purchaser of the
Vendor's Products or Services". EITF 00-25 addresses the income statement
characterization of consideration, other than that directly addressed in
EITF 00-14, from a vendor (typically a manufacturer or distributor) to a
customer (typically a retailer or wholesaler) in connection with the sale
to the customer of the vendor's products or promotion of sales of the
vendor's products by the customer.
In November 2001, EITF 00-14 and EITF 00-25 were subsequently
codified in and superseded by Issue 01-9 ("EITF 01-9"), "Accounting for
Consideration Given by a Vendor to a Customer (Including a Reseller of
the Vendor's Products)" on which the Emerging Issues Task Force reached a
final consensus. TDK adopted EITF 01-9 on April 1, 2002. The adoption of
EITF 01-9 did not have a material effect on TDK's consolidated financial
position or results of operations.
(2) Accounting for the Impairment or Disposal of Long-Lived Assets
In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144 ("SFAS 144"),
"Accounting for the Impairment or Disposal of Long-Lived Assets" which
supersedes both Statement of Financial Accounting Standards No. 121
("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" and the accounting and reporting
provisions of APB Opinion No. 30 ("Opinion 30"), "Reporting the Results
of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events
and Transactions", for the disposal of a segment of a business (as
previously defined in that Opinion).
SFAS 144 retains the fundamental provisions in SFAS 121 for
recognizing and measuring impairment losses on long-lived assets held for
use and long-lived assets to be disposed of by sale, while also resolving
significant implementation issues associated with SFAS 121. TDK adopted
SFAS 144 on April 1, 2002. The adoption of SFAS 144 did not have a
material effect on TDK's consolidated financial position or results of
operations.
(3) Accounting for Costs Associated with Exit or Disposal Activities
In June 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 146 ("SFAS 146"),
"Accounting for Costs Associated with Exit or Disposal Activities". SFAS
146 addresses financial accounting and reporting for costs associated
with exit or disposal activities and nullifies Emerging Issues Task Force
Issue 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs
Incurred in a Restructuring)." The provisions of SFAS 146 are effective
for exit or disposal activities that are initiated after December 31,
2002. The adoption of SFAS 146 did not have a material effect on TDK's
consolidated financial position and results of operations.
(4) Guarantor's Accounting and Disclosure Requirements for Guarantees
In November 2002, the Financial Accounting Standards Board issued
FASB Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". FIN 45 requires that a liability be recorded in
the guarantor's balance sheet upon issuance of a guarantee. In addition,
FIN 45 requires disclosures about the guarantees that an entity has
issued, including a rollforward of the entity's product warranty
liabilities. TDK adopted the recognition provisions of FIN 45
prospectively to guarantees issued after December 31, 2002. The
disclosure provisions of FIN 45 are effective for consolidated financial
statements as of March 31, 2003. The adoption of FIN 45 did not have a
material effect on TDK's consolidated financial position and results of
operations.
(5) Accounting for Stock-Based Compensation - Transition and Disclosure
In December 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 148 ("SFAS 148"),
"Accounting for Stock-Based Compensation - Transition and Disclosure",
which amends FASB Statement No. 123 ("SFAS 123"), "Accounting for
Stock-Based Compensation". SFAS 148 provides alternative methods of
transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS 148
amends the disclosure requirements of SFAS 123 to require more prominent
and more frequent disclosures in financial statements about the effects
of stock-based compensation. The transition guidance and annual
disclosure provisions of SFAS 148 are effective for fiscal years ending
after December 15, 2002. The adoption of SFAS 148 did not have a material
effect on TDK's consolidated financial position and results of
operations.
Consolidated
9) Segment Information
The following industry and geographic segment information are required by
the Japanese Securities Exchange Law. Segment information is unaudited.
TDK adopted the Emerging Issues Task Force Issue 01-9 ("EITF 01-9"),
"Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of the Vendor's Products)" from the fiscal year beginning April 1,
2002 and the prior year's consolidated financial statements have been restated
for the change, accordingly.
1. Industry segment information
FY2003 FY2002
Term (April 1, 2002 - March 31, 2003) (April 1, 2001 - Mar. 31, 2002) Change
%
Item (Yen millions) (U.S.$ thousands) (Yen millions) % (Yen millions) %
Electronic
materials and
components
Net sales 472,529 100.0 3,937,742 432,886 100.0 39,643 9.2
Unaffiliated
customers 472,529 3,937,742 432,886 39,643 9.2
Intersegment - - - - -
Operating
expenses 451,993 95.7 3,766,608 469,232 108.4 (17,239) -3.7
Operating
income (loss) 20,536 4.3 171,134 (36,346) -8.4 56,882 -
Recording media
& systems
Net sales 136,351 100.0 1,136,258 137,625 100.0 (1,274) -0.9
Unaffiliated
customers 136,351 1,136,258 137,625 (1,274) -0.9
Intersegment - - - - -
Operating
expenses 134,807 98.9 1,123,392 145,001 105.4 (10,194) -7.0
Operating
income (loss) 1,544 1.1 12,866 (7,376) -5.4 8,920 -
TOTAL
Net sales 608,880 100.0 5,074,000 570,511 100.0 38,369 6.7
Unaffiliated
customers 608,880 5,074,000 570,511 38,369 6.7
Intersegment - - - - -
Operating
expenses 586,800 96.4 4,890,000 614,233 107.7 (27,433) -4.5
Operating
income (loss) 22,080 3.6 184,000 (43,722) -7.7 65,802 -
Note: U.S.$1 = Yen 120
2. Geographic segment information
FY2003 FY2002
Term (April 1, 2002 - March 31, 2003) (April 1, 2001 - Mar. 31, 2002) Change
Region (Yen millions) % (U.S.$ thousands) (Yen millions) % (Yen millions) %
Japan Net sales 334,882 100.0 2,790,683 328,214 100.0 6,668 2.0
Operating income
(loss) 5,193 1.6 43,275 (33,252) -10.1 38,445 -
Americas Net sales 101,784 100.0 848,200 101,910 100.0 (126) -0.1
Operating income
(loss) (1,082) -1.1 (9,017) (12,712) -12.5 11,630 91.5
Europe Net sales 78,462 100.0 653,850 78,941 100.0 (479) -0.6
Operating income
(loss) (3,547) -4.5 (29,558) (3,184) -4.0 (363) -11.4
Asia and
others Net sales 314,918 100.0 2,624,317 268,364 100.0 46,554 17.3
Operating income 20,640 6.6 172,000 1,700 0.6 18,940 -
Intersegment
eliminations Net sales 221,166 1,843,050 206,918 14,248
Operating income
(loss) (876) (7,300) (3,726) 2,850
Total Net sales 608,880 100.0 5,074,000 570,511 100.0 38,369 6.7
Operating income
(loss) 22,080 3.6 184,000 (43,722) -7.7 65,802 -
Notes:
1. The sales are classified by geographic areas of the seller and include
transfers between geographic areas.
2. U.S.$1 = Yen 120
3. Sales by region
FY2003 FY2002
Term (April 1, 2002 - March 31, 2003) (April 1, 2001 - Mar. 31, 2002) Change
%
Region (Yen millions) % (U.S.$ thousands) (Yen millions) (Yen millions) %
Americas 106,060 17.4 883,833 109,452 19.2 (3,392) -3.1
Europe 78,740 12.9 656,167 79,639 13.9 (899) -1.1
Asia and
others 258,577 42.5 2,154,808 216,616 38.0 41,961 19.4
Overseas
sales total 443,377 72.8 3,694,808 405,707 71.1 37,670 9.3
Japan 165,503 27.2 1,379,192 164,804 28.9 699 0.4
Net sales 608,880 100.0 5,074,000 570,511 100.0 38,369 6.7
Notes:
1. Sales by region are classified by geographic areas of the buyer.
2. U.S.$1 = Yen 120
Consolidated
10) Fair Value of Securities
Gross Gross
Unrealized Unrealized Fair
(Yen millions) Cost Holding Gains Holding Losses Value
As of March 31, 2003
Equity securities 3,455 122 11 3,566
Debt securities 2,495 3 - 2,498
Total 5,950 125 11 6,064
As of March 31, 2002
Equity securities 4,389 596 - 4,985
Debt securities 3,274 24 - 3,298
Total 7,663 620 - 8,283
Gross Gross
U.S.$1=Yen 120 Unrealized Unrealized Fair
(U.S.$ thousands) Cost Holding Gains Holding Losses Value
As of March 31, 2003
Equity
securities 28,791 1,017 92 29,716
Debt securities 20,792 25 - 20,817
Total 49,583 1,042 92 50,533
11) Fair Value of Derivatives
Contract Carrying Estimated Fair
(Yen millions) Amount Amount Value
As of March 31, 2003
Forward foreign exchange
contracts 19,016 39 39
Currency swap agreements and
interest rate and currency swap
agreements for loans to its
subsidiaries 13,794 (287) (287)
As of March 31, 2002
Forward foreign exchange
contracts 7,576 (59) (59)
Currency swap agreements and
interest rate and currency swap
agreements for loans to its
subsidiaries 13,268 (315) (315)
Contract Carrying Estimated Fair
(U.S.$ thousands) U.S.$1=Yen 120 Amount Amount Value
As of March 31, 2003
Forward foreign exchange
contracts 158,467 325 325
Currency swap agreements and
interest rate and currency
swap agreements for loans to
its subsidiaries 114,950 (2,392) (2,392)
NON-Consolidated
12) Statements of income
FY2003 FY2002
Term (April 1, 2002 - Mar. 31, 2003) (April 1, 2001 - Mar. 31, 2002) Change
% %
(Yen
Item (Yen millions) (U.S.$ thousands) millions) (Yen millions) %
Income
Sales 320,697 100.0 2,672,475 317,811 100.0 2,886 0.9
Other income 9,473 78,941 17,897
330,171 2,751,425 335,709
Costs and expenses
Cost of sales 262,053 2,183,775 267,053
S.G.A. expenses 55,461 462,175 59,265
Interest expenses 18 150 104
Other expenses 3,559 29,658 1,705
321,092 2,675,766 328,128
Current income 9,078 2.8 75,650 7,580 2.4 1,498 19.8
Extraordinary
profit 351 2,925 365
Extraordinary
loss 7,806 65,050 16,718
Income (loss)
before income
taxes 1,623 0.5 13,525 (8,772) -2.8 10,395 -
Income taxes
Current (987) (8,225) (939)
Deferred 2,477 20,641 (4,039)
Net income (loss) 133 0.0 1,108 (3,794) -1.2 3,927 -
Note: U.S.$1=Yen 120
NON-Consolidated
13) Balance sheets
ASSETS
Term As of Mar. 31, 2003 As of Mar. 31, 2002 Change
%
Item (Yen millions) (U.S.$ thousands) (Yen millions) % (Yen millions)
Current assets
Cash 55,240 460,333 50,673 4,567
Marketable
securities 11,399 94,991 - 11,399
Trade
receivables
Notes 4,429 36,908 5,179 (750)
Accounts 70,136 584,466 74,825 (4,689)
Allowance
for
doubtful
receivables (112) (933) (270) 158
Net trade
receivables 74,454 620,450 79,734 (5,280)
Inventories 26,136 217,800 29,459 (3,323)
Prepaid
expenses and
other current
assets 57,686 480,716 48,986 8,700
Total current
assets 224,917 44.1 1,874,308 208,854 40.0 16,063
Investments and
advances
Investments
in securities 8,885 74,041 8,267 618
Share of
subsidiaries 103,085 859,041 106,472 (3,387)
Other 37,469 312,241 56,491 (19,022)
Allowance for
doubtful
receivables (632) (5,266) (741) 109
Total
investments and
advances 148,807 29.2 1,240,058 170,489 32.7 (21,682)
Property, plant
and equipment
Land 14,929 124,408 16,511 (1,582)
Buildings 43,811 365,091 46,899 (3,088)
Machinery and
equipment 57,451 478,758 65,887 (8,436)
Construction
in progress 7,545 62,875 9,811 (2,266)
Total property,
plant and
equipment 123,737 24.3 1,031,141 139,109 26.6 (15,372)
Other assets 12,097 2.4 100,808 3,687 0.7 8,410
TOTAL 509,561 100.0 4,246,341 522,140 100.0 (12,579)
Note:U.S.$1=Yen 120
NON-Consolidated
LIABILITIES AND STOCKHOLDERS' EQUITY
Term As of Mar. 31, 2003 As of Mar. 31, 2002 Change
%
Item (Yen millions) (U.S.$ thousands) (Yen millions) % (Yen millions)
Current liabilities
Trade payables
accounts 32,843 273,691 35,999 (3,156)
Accrued expenses 8,387 69,891 8,985 (598)
Accrued income
taxes 52 433 - 52
Other current
liabilities 19,389 161,575 28,322 (8,933)
Total current
liabilities 60,672 11.9 505,600 73,308 14.0 (12,636)
Retirement and
severance benefits 29,337 244,475 21,803 7,534
Directors' retirement
allowance 309 2,575 589 (280)
Total liabilities 90,319 17.7 752,658 95,701 18.3 (5,382)
Stockholders' equity
Common stock 32,641 6.4 272,008 32,641 6.3 -
Additional paid-in
capital 59,256 493,800 59,256 -
Legal reserve 8,160 68,000 8,160 -
Retained earnings 323,999 63.6 2,699,991 329,838 63.2 (5,839)
Unrealized holding
gain (loss) on
other securities 37 308 133 (96)
Treasury stock (4,854) (40,450) (3,592) (1,262)
Total stockholders'
equity 419,241 82.3 3,493,675 426,439 81.7 (7,198)
TOTAL 509,561 100.0 4,246,341 522,140 100.0 (12,579)
Note:U.S.$1=Yen 120
14) Management Changes
1. Candidates for election to the board of corporate auditors
Masaaki Miyoshi (President, Korea TDK Co., Ltd.)
Kazutaka Kubota* (President, ASAHIGIN SYSTEMS Co., LTD.)
Kaoru Matsumoto* (CERTIFIED PUBLIC ACCOUNTANT, MATSUMOTO & Co.)
* External Corporate Auditor
2. Retiring corporate auditors
Yutaka Mori
Hiromi Kitagawa*
* External Corporate Auditor
Supplementary Information
Ratio of results on a Consolidated basis to results on a NON-Consolidated
basis
Ratio of the previous
Ratio of the FY2003 fiscal year
Net sales 1.9 1.8
Operating income 6.9 -
Income before income taxes 11.1 -
Net income 90.4 -
Exchange rates used for conversion
Term April 1, 2002 - March 31, 2003 April 1, 2001 - March 31, 2002
Item US$=Yen Euro=Yen US$=Yen Euro=Yen
Sales 121.98 120.88 124.98 110.44
The end of the
period 120.20 129.83 133.25 116.14
NON-Consolidated
Term April 1, 2002 - March 31, 2003 April 1, 2001 - March 31, 2002
Amount Ratio to sales Amount Ratio to sales Change
Item (Yen millions) (%) (Yen millions) (%) (%)
Investment in
facilities 24,959 - 34,563 - -27.8
Depreciation
expenses 26,529 8.3 25,272 8.0 5.0
Research and
development
expenses 22,530 7.0 26,776 8.4 -15.9
Result of
financial
operation 2,829 13,108 -78.4
Number of
employees 6,212 7,168
(as at the end
of the period)
Consolidated
Term April 1, 2002 - March 31, 2003 April 1, 2001 - March 31, 2002
Amount Ratio to sales Amount Ratio to sales Change
Item (Yen millions) (%) (Yen millions) (%) (%)
Investment in
facilities 41,451 - 58,777 - -29.5
Depreciation
expenses 57,789 9.5 61,920 10.9 -6.7
Research and
development
expenses 31,862 5.2 38,630 6.8 -17.5
Result of
financial
operation 802 769 4.3
Number of
employees 31,705 32,249
(as at the end
of the period)
Ratio of
overseas
production 56.0% 53.8%
Note: TDK adopted the Emerging Issues Task Force Issue 01-9 ("EITF 01-9"),
"Accounting for Consideration Given by a Vendor to a Customer
(Including A Reseller of the Vendor's Products)" from the fiscal year
beginning April 1, 2002. Ratio to sales has been calculated based on
sales which has been restated retroactively.
OVERSEAS SALES BY DIVISION
Term April 1, 2002 - March 31, 2003 April 1, 2001 - March 31, 2002
Amount Ratio to sales Amount Ratio to sales Change
Product (Yen millions) (%) (Yen millions) (%) (%)
Electronic
materials and
components 341,615 56.1 305,775 53.6 11.7
Electronic
materials 122,761 20.2 116,275 20.4 5.6
Electronic
devices 58,671 9.6 55,234 9.7 6.2
Recording
devices 152,476 25.0 124,298 21.8 22.7
Semiconductors
& others 7,707 1.3 9,968 1.7 -22.7
Recording media &
systems 101,762 16.7 99,932 17.5 1.8
Overseas sales 443,377 72.8 405,707 71.1 9.3
Note: TDK adopted the Emerging Issues Task Force Issue 01-9 ("EITF 01-9"),
"Accounting for Consideration Given by a Vendor to a Customer
(Including a Reseller of the Vendor's Products)" from the fiscal year
beginning April 1, 2002 and the prior year's consolidated financial
statements have been restated for the change, accordingly.
END