Advantest Corporation (Kabushiki Kaisha Advantest): Fy2013 Third Quarter Consolidated Financial Results

The following excerpt is from the company's SEC filing.

  Net sales Operating income (loss) Income (loss) before income taxes and equity in earnings (loss) of affiliated company Net income (loss)   Million yen % increase (decrease) Million yen % increase (decrease) Million yen % increase (decrease) Million yen % increase (decrease)   FY2013 Q3 79,251 (18.5) (34,404) - (34,321) - (34,148) -   FY2012 Q3 97,186 2.1 824 - 108 - (1,917) -

  Net income (loss) per share - basic Net income (loss) per share- diluted       Yen   Yen     FY2013 Q3 (196.12)    (196.12)        FY2012 Q3 (11.05)    (11.05)     

3. Projected Results for FY2013 (April 1, 2013 through March 31, 2014) (% changes as compared with the corresponding period of the previous fiscal year)   Net sales Operating income (loss) Income (loss) before income taxes and equity in earnings (loss) of affiliated company Net income (loss) Net income (loss) per share FY2013 Million yen % Million yen % Million yen % Million yen % Yen 110,000 (17.2) (36,000) - (35,900) - (35,900) - (206.19) (Note) Revision of projected results  for this period: Yes   4. Others (1) Material changes in subsidiaries during this period (changes in scope of consolidation resulting from changes in subsidiaries): No (2) Use of simplified accounting method and special accounting policy for quarterly consolidated financial statements: Yes (Note) Please see “Business Results” 2. Others on page 7 for details. (3) Accounting changes:   1) Changes based on revisions of accounting standard: Yes   2) Changes other than 1) above: No (Note) Please see “Business Results” 2. Others on page 7 for details. (4) Number of issued and outstanding stock (common stock):   1) Number of issued and outstanding stock at the end of each fiscal period (including treasury stock):  FY2013 Q3  199,566,770 shares; FY2012  199,566,770 shares.   2) Number of treasury stock at the end of each fiscal period:  FY2013 Q3  25,368,364 shares; FY2012  25,773,688 shares.   3) Average number of outstanding stock for each period (cumulative term):  FY2013 Q3  174,113,609 shares; FY2012 Q3  173,382,196 shares. Status of Quarterly Review Procedures This quarterly financial results report is not subject to quarterly review procedures by independent auditors under Japan’s Financial Instruments and Exchange Law. At the time of release of this report, such quarterly review procedures under the Financial Instruments and Exchange Law have not been completed. Explanation on the Appropriate Use of Future Earnings Projections and Other Special Instructions This document contains “forward-looking statements” that are based on Advantest’s current expectations, estimates and projections.  These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause Advantest’s actual results, levels of activities, performance or achievements to be materially different from those expressed or implied by such forward-looking statements.  These factors include: (i) changes in demand for the products and services produced and offered by Advantest’s customers, including semiconductors, communications services and electronic goods; (ii) circumstances relating to Advantest’s investment in technology, including its ability to timely develop products that meet the changing needs of semiconductor manufacturers, communications network equipment and components makers and service providers; (iii) significant changes in the competitive environment in the major markets where Advantest purchases materials, components and supplies for the production of its products or where its products are produced, distributed or sold; and (iv) changes in economic conditions, currency exchange rates or political stability in the major markets where Advantest procures materials, components and supplies for the production of its principal products or where its products are produced, distributed or sold.  A discussion of these and other factors which may affect Advantest’s actual results, levels of activities, performance or achievements is contained in the “Operating and Financial Review and Prospects”, “Key Information - Risk Factors” and “Information on the Company” sections and elsewhere in Advantest’s annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission.

Advantest Corporation (FY2013 Q3)   1.  Business Results (1) Analysis of Business Results Consolidated Financial Results of FY2013 Q3 (April 1, 2013 through December 31, 2013)     (in billion yen)   Nine months ended December 31, 2012 Nine months ended December 31, 2013 As compared to the corresponding period of the previous fiscal year increase (decrease) Orders received 95.9 88.3 (7.8%) Net sales 97.2 79.3 (18.5%) Operating income (loss) 0.8 (34.4) - Income (loss) before income taxes and equity in earnings (loss) of affiliated company 0.1 (34.3) - Net income (loss) (1.9) (34.1) - During the nine-month period ended December 31, 2013, the Japanese economic climate continued to improve, and the US economy likewise continued its gradual recovery supported by solid domestic demand. However, with few exceptions, the countries of Europe remained economically stagnant, and signs of decelerating growth were seen in China and other emerging economies as well, resulting in lower overall global growth than had been anticipated. The semiconductor industry saw moves towards renewed capital investment in the memory sector, where demand continued to strengthen. Several major chipmakers also moved ahead with plans to manufacture next-generation logic semiconductors, contributing to an overall positive trend in semiconductor production equipment investment, especially in leading-edge technologies. However, the overall environment in end-user product trends reveals a lack of strength in key demand areas, with the PC market estimated to be in its second consecutive year of contraction, and no sign of the vigorous growth previously seen in high-end smartphones. Semiconductor makers, principally in the non-memory sector, have reacted by continuing to limit their investments in new capacity, as they have since last summer. In this environment, Advantest endeavored to grow profits chiefly in the memory test business, but could not compensate for overall weakness, resulting in orders received of (Y) 88.3 billion (a 7.8% decrease in comparison to the corresponding period of the previous fiscal year) and net sales of (Y) 79.3 billion (an 18.5% decrease in comparison to the corresponding period of the previous fiscal year). In addition to decreased sales, changes in the business environment weighed on profits. Inventory valuation losses of (Y) 4.0 billion and impairment losses for long-lived assets of (Y) 13.5 billion recorded in the third quarter were factors that caused an operating loss of (Y) 34.4 billion, net loss before income taxes and equity in earnings of affiliated company of (Y) 34.3 billion, and net loss of (Y) 34.1 billion. The percentage of net sales to overseas customers was 90.4% (89.8% in the corresponding period of the previous fiscal year). Conditions of business segments are described below.   4   Advantest Corporation (FY2013 Q3) (in billion yen)   Nine months ended December 31, 2012 Nine months ended December 31, 2013 As compared to the corresponding period of the previous fiscal year increase (decrease) Orders received 72.4 56.2 (22.3%) Net sales 73.8 51.5 (30.3%) Operating income (loss) 9.0 (27.0) - The Semiconductor and Component Test System Segment benefited from demand for memory test systems, as customers pursued investments in DRAM and NAND flash production capacity expansion. However, non-memory test systems faced headwinds, as chipmakers adjusted their production and inventories of the advanced semiconductors used in PCs and high-end smartphones, the key demand driver in this sector. As a result of the above, orders received were (Y) 56.2 billion (a 22.3% decrease in comparison to the corresponding period of the previous fiscal year) and net sales were (Y) 51.5 billion (a 30.3% decrease in comparison to the corresponding period of the previous fiscal year). In addition to decreased sales, inventory valuation losses of (Y) 3.7 billion and impairment losses for long-lived assets of (Y) 12.8 billion recorded in the third quarter were factors that caused an operating loss of (Y) 27.0 billion. < Mechatronics System segment>   (in billion yen)   Nine months ended December 31, 2012 Nine months ended December 31, 2013 As compared to the corresponding period of the previous fiscal year increase (decrease) Orders received 10.1 12.8 27.3% Net sales 10.7 10.0 (5.9%) Operating income (loss) (3.1) (4.5) - The Mechatronics Segment posted higher orders due to robust customer interest in new nanotechnology products. Sales declined slightly from the previous period due to the timing of customer orders. As a result of the above, orders received were (Y) 12.8 billion (a 27.3% increase in comparison to the corresponding period of the previous fiscal year) and net sales were (Y) 10.0 billion (a 5.9% decrease in comparison to the corresponding period of the previous fiscal year). In addition to decreased sales, inventory valuation losses of (Y) 0.1 billion and impairment losses for long-lived assets of (Y) 0.7 billion recorded in the third quarter were factors that caused an operating loss of (Y) 4.5 billion.   (in billion yen)   Nine months ended December 31, 2012 Nine months ended December 31, 2013 As compared to the corresponding period of the previous fiscal year increase (decrease) Orders received 14.0 19.5 38.6% Net sales 14.6 17.9 23.1% Operating income 0.5 2.1 329.2% The Services, Support and Others Segment posted year-over-year growth in sales and earnings, driven by the solid improvement in service business sales and margins due to the action taken by Advantest since the beginning of FY2013 to improve profits.       5     Advantest Corporation (FY2013 Q3)   As a result of the above, orders received were (Y) 19.5 billion (a 38.6% increase in comparison to the corresponding period of the previous fiscal year), net sales were (Y) 17.9 billion (a 23.1% increase in comparison to the corresponding period of the previous fiscal year), and operating income was (Y) 2.1 billion (a 329.2% increase in comparison to the corresponding period of the previous fiscal year). (2) Analysis of Financial Condition Total assets at December 31, 2013 amounted to (Y) 203.3 billion, a decrease of (Y) 22.2 billion compared to March 31, 2013, primarily due to a decrease of (Y) 14.4 billion and (Y) 12.5 billion in trade accounts receivable and intangible assets, respectively. The amount of total liabilities was (Y) 83.1 billion, a decrease of (Y) 1.2 billion compared to March 31, 2013. Stockholders’ equity was (Y) 120.2 billion. Equity to assets ratio was 59.1 %, a decrease of 3.5 percentage points from March 31, 2013. (Cash Flow Condition) Cash and cash equivalents held at December 31, 2013 were (Y) 42.1 billion, a decrease of (Y) 3.5 billion from March 31, 2013. Significant cash flows during the nine-month period of this fiscal year and their causes are described below. Net cash used in operating activities was (Y) 0.2 billion (net cash outflow of (Y) 3.3 billion in the corresponding period of the previous fiscal year). This amount was primarily attributable to a decrease of (Y) 15.7 billion in trade accounts receivable and adjustments of non cash items such as depreciation and amortization, despite the net loss being (Y) 34.1 billion. Net cash used in investing activities was (Y) 4.9 billion (net cash outflow of (Y) 9.6 billion in the corresponding period of the previous fiscal year). This amount was primarily attributable to payments for acquisition of tangible fixed assets in the amount of (Y) 5.1 billion, acquisition of a subsidiary of (Y) 1.3 billion and offset by proceeds from sale of available-for-sale securities of (Y) 1.4 billion. Net cash used in financing activities was (Y) 2.9 billion (net cash outflow of (Y) 3.0 billion in the corresponding period of the previous fiscal year). This amount was primarily attributable to dividends paid of (Y) 3.4 billion. (3) Prospects for the Current Fiscal Year Owing to a larger-than-expected contraction in the semiconductor test equipment market, chiefly in the smartphone semiconductor test space, and related inventory valuation losses and impairment losses for long-lived assets recorded in the third quarter, Advantest has revised its consolidated earnings forecast for FY2013 to net sales of (Y) 110 billion, operating loss of (Y) 36 billion, and net loss of (Y) 35.9 billion. Addressing the profit/loss record, Advantest has also launched a shift to a business structure capable of reliably generating profits. Specifically, the workforce is being pared through hiring restrictions. Other measures include the global integration of information systems for greater efficiency, consolidation of business premises and improvement of the cost of goods to sales ratio. These cost-cutting steps aim to lower Advantest’s break-even point.  In parallel, Advantest is actively shifting resources from underperforming areas to key sectors and growth markets, reinforcing profit base in semiconductor test equipment, semiconductor test peripherals, and new businesses. The semiconductor test equipment market in 2014 is expected to resume growth after a two-year pause due to an increase in investments as a result of renewed memory production capacity expansion as well as increased production of leading-edge semiconductors expected to commence this spring. Based on these trends and on the progress in cutting costs across the entire group, Advantest expects at the present time to see growth in sales and profits in FY2014.     6     Advantest Corporation (FY2013 Q3)     2.  Others (1) Use of Simplified Accounting Method and Special Accounting Policy for Quarterly Consolidated Financial Statements Tax expense is measured using an estimated annual effective tax rate. Advantest makes, at the end of the cumulative third quarter, its best estimate of the annual effective tax rate for the full fiscal year and uses that rate to provide for income taxes on a current year-to-date basis. The estimated effective tax rate includes the deferred tax effects of expected year-end temporary differences and carryforwards, and the effects of valuation allowances for deferred tax assets. (2) Accounting Changes In July 2012, the FASB amended the accounting guidance to simplify how entities test indefinite-lived intangible assets for impairment which improve consistency in impairment testing requirements among long-lived asset categories.  The guidance permits an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value.  For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, the guidance eliminates the requirement to perform quantitative impairment testing as outlined in the previously issued standards. The guidance was adopted by Advantest in the first quarter beginning April 1, 2013.  The adoption of the guidance did not have a significant impact on its consolidated results of operations and financial condition. In February 2013, the FASB finalized the accounting guidance for reporting of amounts reclassified out of accumulated other comprehensive income. This new guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. The guidance was adopted by Advantest in the first quarter beginning April 1, 2013. The adoption of the guidance did not have a significant impact on its consolidated results of operations and financial condition.             7     Advantest Corporation (FY2013 Q3)     3. Consolidated Financial Statements and Other Information   (1) Consolidated Balance Sheets (Unaudited)         Yen (Millions)   Assets   March 31, 2013     December 31, 2013                               Current assets:             Cash and cash equivalents   ¥ 45,668       42,121   Trade receivables, net     26,953       12,504   Inventories     31,849       32,914   Other current assets     8,319       8,321                     Total current assets     112,789       95,860                                       Investment securities     5,923       5,040   Property, plant and equipment, net     41,368       40,938   Intangible assets, net     15,833       3,344   Goodwill     41,670       47,800   Other assets     7,932       10,316                     Total assets   ¥ 225,515       203,298  

    Yen (Millions)   Liabilities and Stockholders’ Equity   March 31, 2013     December 31, 2013                               Current liabilities:             Trade accounts payable   ¥ 10,380       11,300   Accrued expenses     7,910       6,893   Income taxes payable     1,436       909   Accrued warranty expenses     1,889       1,675   Customer prepayments     3,198       3,110   Other current liabilities     3,087       2,664                     Total current liabilities     27,900       26,551                     Corporate bonds     25,000       25,000   Accrued pension and severance costs     26,785       28,243   Other liabilities     4,589       3,273                     Total liabilities     84,274       83,067                     Commitments and contingent liabilities                                   Stockholders’ equity:                 Common stock     32,363       32,363   Capital surplus     42,801       43,492   Retained earnings     170,626       132,133   Accumulated other comprehensive income (loss)     (6,929 )     8,326   Treasury stock     (97,620 )     (96,083 )                   Total stockholders’ equity     141,241       120,231                     Total liabilities and stockholders’ equity   ¥ 225,515       203,298  

    Yen (Millions)       Nine months ended     Nine months ended       December 31, 2012     December 31, 2013                 Net sales   ¥ 97,186       79,251   Cost of sales     46,049       45,913                     Gross profit     51,137       33,338                     Research and development expenses     24,200       25,294   Selling, general and administrative expenses     26,113       29,380   Impairment charge     —       13,068                     Operating income (loss)     824       (34,404 )                   Other income (expense):                 Interest and dividend income     159       169   Interest expense     (97 )     (104 ) Gain on sale of investment securities     —       778   Other, net     (778 )     (760 )                   Total other income (expense)     (716 )     83                     Income (loss) before income taxes and equity in earnings (loss) of affiliated company     108       (34,321 )                   Income taxes (benefit)     2,059       (171 ) Equity in earnings (loss) of affiliated company     34       2                     Net income (loss)   ¥ (1,917 )     (34,148 )                                         Yen       Nine months ended     Nine months ended       December 31, 2012     December 31, 2013                     Net income (loss) per share:                 Basic   ¥ (11.05 )     (196.12 ) Diluted     (11.05 )     (196.12 )

    Yen (Millions)       Three months ended     Three months ended       December 31, 2012     December 31, 2013                 Net sales   ¥ 24,628       19,613   Cost of sales     11,551       15,120                     Gross profit     13,077       4,493                     Research and development expenses     7,526       7,886   Selling, general and administrative expenses     8,096       9,949   Impairment charge     —       13,068                     Operating income (loss)     (2,545 )     (26,410 )                   Other income (expense):                 Interest and dividend income     68       69   Interest expense     (37 )     (34 ) Gain on sale of investment securities     —       202   Other, net     (495 )     (761 )                   Total other income (expense)     (464 )     (524 )                   Income (loss) before income taxes and equity in earnings (loss) of affiliated company     (3,009 )     (26,934 )                   Income taxes (benefit)     431       (2,125 ) Equity in earnings (loss) of affiliated company     4       0                     Net income (loss)   ¥ (3,436 )     (24,809 )                                         Yen       Three months ended     Three months ended       December 31, 2012     December 31, 2013                     Net income (loss) per share:                 Basic   ¥ (19.80 )     (142.42 ) Diluted     (19.80 )     (142.42 )

Advantest Corporation (FY2013 Q3)       (3) Consolidated Statements of Comprehensive Income (Loss) (Unaudited)         Yen (Millions)       Nine months ended     Nine months ended       December 31, 2012     December 31, 2013                 Comprehensive income (loss)             Net income (loss)   ¥ (1,917 )     (34,148 ) Other comprehensive income (loss), net of tax                 Foreign currency translation adjustments     7,345       15,147   Net unrealized gains (losses) on investment securities:           Net unrealized gains (losses) arising during the period     (605 )     209   Less reclassification adjustments for net gains (losses) realized in earnings     251       (503 ) Net unrealized gains (losses)     (354 )     (294 )                   Pension related adjustments     384       402                     Total other comprehensive income (loss)     7,375       15,255                     Total comprehensive income (loss)   ¥ 5,458       (18,893 )                         Yen (Millions)       Three months ended   Three months ended       December 31, 2012     December 31, 2013                     Comprehensive income (loss)                 Net income (loss)   ¥ (3,436 )     (24,809 ) Other comprehensive income (loss), net of tax                 Foreign currency translation adjustments     13,201       9,428   Net unrealized gains (losses) on investment securities:           Net unrealized gains (losses) arising during the period     208       133   Less reclassification adjustments for net gains (losses) realized in earnings     -       (131 ) Net unrealized gains (losses)     208       2                     Pension related adjustments     (23 )     31                     Total other comprehensive income (loss)     13,386       9,461                     Total comprehensive income (loss)   ¥ 9,950       (15,348 )

    Yen (Millions)       Nine months ended     Nine months ended       December 31, 2012     December 31, 2013                 Cash flows from operating activities:              Net income (loss)   ¥ (1,917 )     (34,148 ) Adjustments to reconcile net income (loss) to net cash                 provided by (used in) operating activities:                 Depreciation and amortization     5,828       6,831   Deferred income taxes     (449 )     (2,048 ) Stock option compensation expense     581       870   Impairment charge     —       13,495   Changes in assets and liabilities:                 Trade receivables     2,201       15,651   Inventories     (3,980 )     311   Trade accounts payable     (4,624 )     (79 ) Accrued expenses     (5,296 )     (1,310 ) Income taxes payable     1,639       (631 ) Accrued warranty expenses     (224 )     (269 ) Customer prepayments     76       (662 ) Accrued pension and severance costs     952       1,207   Other     1,877       615                     Net cash provided by (used in) operating activities     (3,336 )     (167 )                   Cash flows from investing activities:                 Proceeds from sale of available-for-sale securities     -       1,418   Acquisition of subsidiary, net of cash acquired     -       (1,272 ) Proceeds from sale of property, plant and equipment     30       370   Purchases of property, plant and equipment     (9,527 )     (5,096 ) Purchases of intangible assets     (323 )     (648 ) Other     201       280                     Net cash provided by (used in) investing activities      (9,619 )     (4,948 )                   Cash flows from financing activities:                  Increase (decrease) in short term debt     (25,000 )     -   Proceeds from issuance of corporate bonds     25,000       -   Dividends paid     (3,356 )     (3,369 ) Other     334       501                     Net cash provided by (used in) financing activities     (3,022 )     (2,868 )                   Net effect of exchange rate changes on cash and cash equivalents     1,369       4,436                     Net change in cash and cash equivalents     (14,608 )     (3,547 )                   Cash and cash equivalents at beginning of period     58,218       45,668                     Cash and cash equivalents at end of period   ¥ 43,610       42,121  

Advantest Corporation (FY2013 Q3) (5) Notes to Consolidated Financial Statements (Notes on Going Concern): None (Notes on Significant Changes to Stockholders’ Equity): None (Segment Information)       Yen (Millions)       Nine months ended December 31, 2012       Semiconductor and Component Test System Business     Mechatronics System Business     Services, Support and Others     Elimination and Corporate     Total   Net sales to unaffiliated customers   ¥ 72,505       10,122       14,559     -       97,186   Inter-segment sales     1,283       543     -       (1,826 )   -   Net sales     73,788       10,665       14,559       (1,826 )     97,186   Operating income (loss) before stock option compensation expense     9,027       (3,135 )     488       (4,975 )     1,405   Adjustment:                                         Stock option compensation expense                                     581   Operating income (loss)                                   ¥ 824       Yen (Millions)       Nine months ended December 31, 2013       Semiconductor and Component Test System Business     Mechatronics System Business     Services, Support and Others     Elimination and Corporate     Total   Net sales to unaffiliated customers   ¥ 51,299       10,031       17,921     -       79,251   Inter-segment sales     161       8     -       (169 )   -   Net sales     51,460       10,039       17,921       (169 )     79,251   Operating income (loss) before stock option compensation expense     (26,960 )     (4,530 )     2,095       (4,139 )     (33,534 ) Adjustment:                                         Stock option compensation expense                                     870   Operating income (loss)                                   ¥ (34,404 )         14     Advantest Corporation (FY2013 Q3)     Yen (Millions)       Three months ended December 31, 2012       Semiconductor and Component Test System Business     Mechatronics System Business     Services, Support and Others     Elimination and Corporate     Total   Net sales to unaffiliated customers   ¥ 17,229       2,491       4,908     -       24,628   Inter-segment sales     121     -     -       (121 )   -   Net sales     17,350       2,491       4,908       (121 )     24,628   Operating income (loss) before stock option compensation expense     17       (1,179 )     234       (1,327 )     (2,255 ) Adjustment:                                         Stock option compensation expense                                     290   Operating income (loss)                                   ¥ (2,545 )     Yen (Millions)       Three months ended December 31, 2013       Semiconductor and Component Test System Business     Mechatronics System Business     Services, Support and Others     Elimination and Corporate     Total   Net sales to unaffiliated customers   ¥ 10,086       3,244       6,283     -       19,613   Inter-segment sales     70       8     -       (78 )   -   Net sales     10,156       3,252       6,283       (78 )     19,613   Operating income (loss) before stock option compensation expense     (23,175 )     (2,042 )     923       (1,684 )     (25,978 ) Adjustment:                                         Stock option compensation expense                                     432   Operating income (loss)                                   ¥ (26,410 )   (Notes)   1. Adjustments to operating income (loss) in Corporate principally represent corporate general and administrative expenses and research and development expenses related to fundamental research activities that are not allocated to operating segments.   2. Advantest uses the operating income (loss) before stock option compensation expense for management’s analysis of business segment results.       15    

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.

To receive a free e-mail notification whenever Advantest Corporation (Kabushiki Kaisha Advantest) ADS makes a similar move, sign up!

   Auto Refresh

Feedback