Advantest Corporation (Kabushiki Kaisha Advantest): Fy2013 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 111,878 (15.8) (36,286) - (35,418) - (35,475) -   FY2012 132,903 (5.8) 80 (90.5) (1,293) - (3,821) -

  Net income (loss) per share - basic Net income (loss) per  share - diluted Net income (loss) to equity ratio Ratio of income (loss) before tax es to total assets Ratio of operating income (loss) to net sales     Yen   Yen % % %   FY2013  (203.72)     (203.72)   (27.5) (15.6) (32.4)   FY2012  (22.03)     (22.03)   (2.8) (0.6) 0.1

  Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of year     Million yen   Million yen   Million yen Million yen   FY2013 (3,588)   (4,899)   27,202   68,997     FY2012 (2,215)   (11,498)   (2,914)   45,668  

  Dividend per share Total dividend paid (annual) Payout ratio (consolidated) Ratio of total amount of dividends to net assets (consolidated) (Record Date) First quarter end Second quarter end Third quarter end Year end Annual total   yen yen yen yen yen Million yen % %   FY2012 - 10.00 - 10.00 20.00 3,473 - 2.5   FY2013 - 10.00 - 5.00 15.00 2,613 - 2.0   FY2014  (forecast) - 5.00 - 5.00 10.00 N/A 23.2 N/A

  Net sales Operating income Income before income taxes and equity in earnings of affiliated company Net income Net income per share   Million yen % Million yen % Million yen % Million yen % Yen FY2014 Q2 (Cumulative term) - - - - - - - - - FY2014 145,000 29.6 10,000 - 10,000 - 7,500 - 43.05

This consolidated financial results report is not subject to audit procedures by independent auditors under Japan’s Financial Instruments and Exchange Law. At the time of release of this report, audit procedures under the Financial Instruments and Exchange Law have not been completed.

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.

1.  Business Results  (1) Analysis of Business Results  1) Consolidated Financial Results of FY2013 (April 1, 2013 through March 31, 2014)  (in billion yen)   FY2012 FY2013 As compared to  the previous fiscal year increase (decrease) Orders received 125.7 127.4 1.3%  Net sales 132.9 111.9 (15.8%) Operating income (loss) 0.1 (36.3) -   Income (loss) before income taxes and equity in earnings (loss) of affiliated company (1.3) (35.4) -   Net income (loss) (3.8) (35.5) -   The world economy during Advantest’s FY2013 settled into a path of gradual recovery despite lacking robustness.  In Japan, Abenomics continued to catalyze economic rebound, while in the U.S., consumer spending and private-sector investments supported ongoing recovery. European economies continued to stagnate overall, but showed signs of future recovery.  The growth rates of emerging economies, led by China, slowed compared to prior years, but they continued to provide vital underpinning for global economic performance. The semiconductor industry saw robust investment flows into advanced technologies, but a lack of strong demand for key end-products, such as PCs and smartphones, that drives semiconductor production volumes led manufacturers to continue to hold off on investing to expand their production capacities. In Advantest’s core line of semiconductor test equipment, difficult business climate prevailed as a result of significant constraints in investments since last summer, particularly in the non-memory sector. Amid these challenging conditions, Advantest strove to improve profitability, resulting in expansion of orders received to (Y) 127.4 billion (a 1.3% increase in comparison to the previous fiscal year). However, net sales decreased to (Y) 111.9 billion (a 15.8% decrease in comparison to the previous fiscal year). From an earnings perspective, in addition to the decline in net sales, the increase in costs denominated in foreign currency due to continuing depreciation of the yen, and recording inventory valuation losses of (Y) 4.0 billion and impairment losses for long-lived assets of (Y) 13.5 billion in the third quarter, both  due to changes in the business environment, resulted in an operating loss of (Y) 36.3 billion, a loss before income taxes and equity in earnings of affiliated company of (Y) 35.4 billion, and a net loss of (Y) 35.5 billion. The percentage of net sales from overseas customers was 89.1%, compared to 89.4% in the previous fiscal year. Conditions of business segments are described below.   4                           Advantest Corporation (FY2013) (in billion yen)   FY2012            FY2013                 As compared to  the previous fiscal year increase (decrease) Orders received 92.8 82.2 (11.4%) Net sales 101.1 73.0 (27.8%) Operating income (loss) 11.0 (26.7) -   In the Semiconductor and Component Test System segment, as demand for DRAM and NAND flash memory devices continued to firm up, memory test systems benefited from customers’ continuing appetite for capacity expansion, which drove increased demand for new test systems. However, non-memory test systems continued to face adverse conditions due to prolonged production volume corrections and inventory adjustments by suppliers of logic semiconductors for PCs and high-end smartphones—the key demand drivers in this sector. As a result of the above, orders received was (Y) 82.2 billion (an 11.4% decrease in comparison to the previous fiscal year) and net sales were (Y) 73.0 billion (a 27.8% decrease in comparison to the previous fiscal year). In addition to decreased net 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) 26.7 billion. < Mechatronics System Segment> (in billion yen)   FY2012            FY2013                 As compared to  the previous fiscal year increase (decrease) Orders received 13.0 19.2 47.3% Net sales 13.7 15.0 9.7% Operating income (loss) (4.6) (5.1) -   In the Mechatronics System segment, strong customer interest in the new nanotechnology products, and successful cultivation of new customers for device interfaces, helped to grow net sales and orders despite an overall deterioration of conditions in the semiconductor test equipment market. As a result of the above, orders received was (Y) 19.2 billion (a 47.3% increase in comparison to the previous fiscal year) and net sales were (Y) 15.0 billion (a 9.7% increase in comparison to the previous fiscal year). However, 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 resulted in an operating loss of (Y) 5.1 billion. (in billion yen)   FY2012            FY2013                 As compared to  the previous fiscal year increase (decrease) Orders received 20.7 26.3 27.0% Net sales 20.1 24.2 20.3% Operating income 0.8 3.0 288.7%         5             Advantest Corporation (FY2013)   In the Services, Support and Others segment, ongoing efforts to improve the profitability of the segment led to successes such as an increased number of annual maintenance contracts. Some of the new businesses also contributed to net sales. As a result of the above, orders received was (Y) 26.3 billion (a 27.0% increase in comparison to the previous fiscal year), net sales were (Y) 24.2 billion (a 20.3% increase in comparison to the previous fiscal year), and operating income was (Y) 3.0 billion (a 288.7% increase in comparison to the previous fiscal year). 2) Prospects for the Upcoming Fiscal Year The semiconductor test equipment market, where Advantest’s business is rooted, was plagued by sharp decrease in demand from mid-2013 through the end of the calendar year, but it saw a recovery in demand towards the end of FY2013.  Advantest expects its business environment in FY2014 to improve due to  an accelerating trend by manufacturers to expand their fleets of test systems stimulated by the spread of smartphones in China and plans by several large semiconductor manufacturers to produce microscopic or three-dimensional semiconductors. Furthermore, this favorable business environment is expected to provide opportunities to improve net sales in the semiconductor test peripherals business and new businesses, each of which Advantest has bolstered over the last several years. Based on this outlook, Advantest will seek higher earnings by capitalizing on growing demand and continuing to reduce costs. For FY2014, Advantest forecasts net sales of (Y) 145.0 billion, operating income of (Y) 10.0 billion and net income of (Y) 7.5 billion. These forecasts are based on foreign exchange rates of 105 Yen to the US dollar and 140 Yen to the Euro. (2) Analysis of Financial Condition Total assets at the end of FY2013 amounted to (Y) 229.9 billion, an increase of (Y) 4.4 billion compared to the previous fiscal year, primarily due to an increase of (Y) 23.3 billion in cash and cash equivalents and a decrease of (Y) 12.3 billion and (Y) 6.5 billion in intangible assets and trade accounts receivable, respectively. The amount of total liabilities was (Y) 113.6 billion, an increase of (Y) 29.3 billion compared to the previous fiscal year, due to an increase of (Y) 30.1 billion in convertible bonds. Stockholders’ equity was (Y) 116.3 billion. Equity to assets ratio was 50.6%, a decrease of 12.0 percentage points from the previous fiscal year. (Cash Flow Condition) Cash and cash equivalents at the end of FY2013 were (Y) 69.0 billion, an increase of (Y) 23.3 billion from the previous fiscal year. Significant cash flows during this fiscal year and their causes are described below. Net cash used in operating activities was (Y) 3.6 billion (net cash outflow of (Y) 2.2 billion in FY2012). This amount was primarily attributable to the net loss of (Y) 35.5 billion offset by a decrease of (Y) 7.9 billion and (Y) 2.8 billion in trade accounts receivable and inventories and adjustments of non cash items such as depreciation, amortization and impairment charge. Net cash used in investing activities was (Y) 4.9 billion (net cash outflow of (Y) 11.5 billion in FY2012). This amount was primarily attributable to payments for acquisition of tangible fixed assets in the amount of (Y) 5.7 billion, acquisition of a subsidiary of (Y) 1.3 billion and offset by proceeds from sale of available-for-sale securities of (Y) 2.4 billion. Net cash provided by financing activities was (Y) 27.2 billion (net cash outflow of (Y) 2.9 billion in FY2012). This amount was primarily attributable to proceeds from issuance of convertible bonds in the amount of (Y) 30.2 billion and offset by dividends paid of (Y) 3.5 billion.     6                             Advantest Corporation (FY2013) The following table illustrates the historical movements of certain cash flow indexes:   FY2009 FY2010 FY2011 FY2012 FY2013 Stockholders’ equity ratio (%) 79.6 76.6 60.0 62.6 50.6 Stockholders’ equity ratio based on market prices (%) 221.5 144.0 103.1 103.7 84.6 Debt to annual cash flow ratio (%) - - 203.2 - - Interest coverage ratio (times) - - 80.6 - - Stockholders’ equity ratio: stockholders’ equity / total assets Stockholders’ equity ratio based on market prices: market capitalization / total assets Debt to annual cash flow ratio: interest-bearing liabilities / operating cash flows Interest coverage ratio: operating cash flows / interest payments (Notes) 1. These indexes are calculated using U.S. GAAP figures.   2. Market capitalization is calculated based on quoted market price as of fiscal year end, and issued and outstanding shares excluding treasury stock.   3. Operating cash flows are the cash flows provided by operating activities on the consolidated statements of cash flows.   4. Interest-bearing liabilities include all liabilities on the consolidated balance sheets that incur interest.   5. Debt to annual cash flow ratio and interest coverage ratio of FY2012 and FY2013 are not presented because of the net cash outflow incurred for these years. (3) Basic Policy on Distribution of Profits and Distribution for FY2013 and Distribution Forecast for FY2014 Based on the premise that long-term and continued growth in corporate value is fundamental to the creation of shareholder value, Advantest deems the consistent distribution of profits to be the most important management priority.  Accordingly, Advantest engages in active distribution of profits based on consolidated business performance. With respect to the distribution of retained earnings, Advantest makes payout decisions after taking into consideration consolidated business performance, financial conditions, as well as the need for strategic investment for mid-to-long-term business development.  While aiming to make consistent distributions, because of the fluctuation of the market in which it operates, Advantest makes dividend payouts following a target payout ratio of 20% or more. Retained earnings are devoted to research and development, streamlining efforts, overseas expansion, investments in new businesses and resources for M&A activities, with an aim to strengthen Advantest’s business position and enhance its corporate value. In order to maintain capital strategies responsive to changes in the operating environment, Advantest plans to repurchase its own shares from time to time through taking into account factors such as trends in stock price, capital efficiency and cash flow. In this fiscal year, Advantest decided to distribute a year-end dividend of (Y) 5 consistent with the revised dividends forecast which was announced on January 28, 2014 based on the above-mentioned basic policy on distribution of profits, with a payment date of June 3, 2014. Since Advantest paid an interim dividend of (Y) 10 on December 2, 2013, the total dividend per share for the fiscal year will be (Y) 15. Advantest plans to distribute an interim dividend of (Y) 5 per share, a year-end dividend of (Y) 5 per share and annual total dividend of (Y) 10 per share.   7                        Advantest Corporation (FY2013) 2. Management Policy (1) Advantest’s Basic Management Policy Advantest has established a corporate vision of “Technology Support on the Leading Edge”, and its corporate mission of “Quest for the Essence”.  Guided by these principles, Advantest respects each of its stakeholders, strives to maintain harmony with society, and aims for the sustained development of the Company and the improvement of corporate value while contributing to the goal of a sustainable society.                (2) Target Financial Index Advantest applies the “AVA” (Advantest Value Added), a financial index incorporating the concept of EVA® (Economic Value Added) *, as a significant management indicator, along with profit margin, ROE and cash flows.  Specifically, Advantest will set the minimum return-on-investment ratio (“hurdle rate”) for evaluating AVA at 8% and a mid-term target at 12% or more with an aim to further enhance corporate value and shareholder value. *“EVA®” is a registered trademark of Stern Stewart & Co. (3) Mid-to-Long-Term Business Strategy and Issues to be Addressed While maintaining the core competence in measurement technologies cultivated through decades of research and development, Advantest will strive to enhance its corporate value through two structural reforms that take into account its levels of profitability and losses over the last few years. The first reform aims to reduce risks associated with market decline by improving its cost structure. Specifically, Advantest expects to improve its ability to generate profit even during market downturns by optimizing payroll costs by streamlining the workforce, globally integrating basic information systems, consolidating offices to improve work efficiency and improving the cost ratio to lower the break-even point. The second reform aims to develop a business structure that can achieve consistent growth by aggressively expanding the business in other growing markets. While maintaining and improving its competitiveness in the semiconductor test equipment market to secure stable profits, Advantest aims to strengthen its profit base by enhancing its presence in the semiconductor test peripherals market, such as device interfaces and services, and developing new businesses such as nanotechnology products. In order to accelerate these structural reforms, Advantest expects to further the swift reallocation of human resources dedicated to the above-mentioned other growing markets while taking into consideration its financial condition and efficiency.       8                           Advantest Corporation (FY2013)     3. Consolidated Financial Statements and Other Information                           (1) Consolidated Balance Sheets (Unaudited)                                             Yen (Millions)   Assets   March 31, 2013     March 31, 2014                               Current assets:             Cash and cash equivalents   ¥ 45,668       68,997   Trade receivables, net     26,953       20,404   Inventories     31,849       30,200   Other current assets     8,319       5,095                     Total current assets     112,789       124,696                                       Investment securities     5,923       3,741   Property, plant and equipment, net     41,368       40,113   Intangible assets, net     15,833       3,545   Goodwill     41,670       46,846   Other assets     7,932       10,980                     Total assets   ¥ 225,515       229,921                       9  

Advantest Corporation (FY2013)         Yen (Millions)   Liabilities and Stockholders’ Equity   March 31, 2013     March 31, 2014                               Current liabilities:             Trade accounts payable   ¥ 10,380       12,353   Accrued expenses     7,910       6,775   Income taxes payable     1,436       1,089   Accrued warranty expenses     1,889       1,589   Customer prepayments     3,198       2,488   Other current liabilities     3,087       2,313                     Total current liabilities     27,900       26,607                     Corporate bonds     25,000       25,000   Convertible bonds     —       30,149   Accrued pension and severance costs     26,785       28,641   Other liabilities     4,589       3,207                     Total liabilities     84,274       113,604                     Commitments and contingent liabilities                                   Stockholders’ equity:                 Common stock     32,363       32,363   Capital surplus     42,801       43,906   Retained earnings     170,626       130,805   Accumulated other comprehensive income (loss)     (6,929 )     5,326   Treasury stock     (97,620 )     (96,083 )                   Total stockholders’ equity     141,241       116,317                     Total liabilities and stockholders’ equity   ¥ 225,515       229,921                    

Advantest Corporation (FY2013)   (2) Consolidated Statements of Operations (Unaudited)     Yen (Millions)       Year ended     Year ended       March 31, 2013     March 31, 2014                 Net sales   ¥ 132,903       111,878   Cost of sales     63,983       62,545                     Gross profit     68,920       49,333                     Research and development expenses     33,062       32,670   Selling, general and administrative expenses     35,778       39,881   Impairment charge     —       13,068                     Operating income (loss)     80       (36,286 )                   Other income (expense):                 Interest and dividend income     213       199   Interest expense     (132 )     (140 ) Gain on sale of investment securities     388       1,396   Impairment losses on investment securities     (400 )     —   Other, net     (1,442 )     (587 )                   Total other income (expense)     (1,373 )     868                     Income (loss) before income taxes and equity in earnings (loss) of affiliated company     (1,293 )     (35,418 )                   Income taxes (benefit)     2,493       79   Equity in earnings (loss) of affiliated company     (35 )     22                     Net income (loss)   ¥ (3,821 )     (35,475 )                                         Yen       Year ended     Year ended       March 31, 2013     March 31, 2014                     Net income (loss) per share:                 Basic   ¥ (22.03 )     (203.72 ) Diluted     (22.03 )     (203.72 )     11  

Advantest Corporation (FY2013)     (3) Consolidated Statements of Comprehensive Income (Loss) (Unaudited)                                                 Yen (Millions)       Year ended     Year ended       March 31, 2013     March 31, 2014                 Comprehensive income (loss)             Net income (loss)   ¥ (3,821 )     (35,475 ) Other comprehensive income (loss), net of tax                 Foreign currency translation adjustments     17,250       12,555   Net unrealized gains (losses) on investment securities     174       (642 ) Pension related adjustments     (1,779 )     342                     Total other comprehensive income     15,645       12,255                     Total comprehensive income (loss)   ¥ 11,824       (23,220 )                  

Advantest Corporation (FY2013)     (4) Consolidated Statements of Stockholders’ Equity (Unaudited)                     Yen (Millions)       Year ended     Year ended       March 31, 2013     March 31, 2014   Common stock             Balance at beginning of year   ¥ 32,363       32,363   Changes in the year     —       —   Balance at end of year     32,363       32,363   Capital surplus                 Balance at beginning of year     42,280       42,801   Changes in the year                 Stock option compensation expense     861       1,283   Exercise of stock options     (340 )     (178 ) Total changes in the year     521       1,105   Balance at end of year     42,801       43,906   Retained earnings                 Balance at beginning of year     179,081       170,626   Changes in the year                 Net income (loss)     (3,821 )     (35,475 ) Cash dividends     (3,468 )     (3,480 ) Reissuance of treasury stock     (1,166 )     (866 ) Total changes in the year     (8,455 )     (39,821 ) Balance at end of year     170,626       130,805   Accumulated other comprehensive income (loss)                 Balance at beginning of year     (22,574 )     (6,929 ) Changes in the year                 Other comprehensive income, net of tax     15,645       12,255   Balance at end of year     (6,929 )     5,326   Treasury stock                 Balance at beginning of year     (99,598 )     (97,620 ) Changes in the year                 Purchases of treasury stock     (1 )     (2 ) Reissuance of treasury stock     1,979       1,539   Total changes in the year     1,978       1,537   Balance at end of year     (97,620 )     (96,083 ) Total stockholders’ equity                 Balance at beginning of year     131,552       141,241   Changes in the year                 Net income (loss)     (3,821 )     (35,475 ) Other comprehensive income, net of tax     15,645       12,255   Cash dividends     (3,468 )     (3,480 ) Stock option compensation expense     861       1,283   Exercise of stock options     (340 )     (178 ) Purchases of treasury stock     (1 )     (2 ) Reissuance of treasury stock     813       673   Total changes in the year     9,689       (24,924 ) Balance at end of year   ¥ 141,241       116,317                           13  

Advantest Corporation (FY2013)     (5) Consolidated Statements of Cash Flows (Unaudited)                         Yen (Millions)       Year ended     Year ended       March 31, 2013     March 31, 2014                 Cash flows from operating activities:              Net income (loss)   ¥ (3,821 )     (35,475 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                 Depreciation and amortization     8,063       8,268   Deferred income taxes     693       (1,879 ) Stock option compensation expense     861       1,283   Impairment losses on investment securities     400       -   Gain on sale of investment securities     (388 )     (1,396 ) Impairment charge     -       13,495   Changes in assets and liabilities:                 Trade receivables     (1,004 )     7,891   Inventories     (566 )     2,806   Trade accounts payable     (6,475 )     1,114   Accrued expenses     (4,529 )     (1,376 ) Income taxes payable     677       (424 ) Accrued warranty expenses     (302 )     (348 ) Customer prepayments     611       (966 ) Accrued pension and severance costs     841       998   Other     2,724       2,421                     Net cash provided by (used in) operating activities     (2,215 )     (3,588 )                   Cash flows from investing activities:                 Proceeds from sale of available-for-sale securities     287       2,354   Acquisition of subsidiary, net of cash acquired     -       (1,273 ) Proceeds from distribution of equity method investee     -       135   Proceeds from sale of property, plant and equipment     32       379   Purchases of property, plant and equipment     (11,386 )     (5,699 ) Purchases of intangible assets     (443 )     (830 ) Other     12       35                     Net cash provided by (used in) investing activities      (11,498 )     (4,899 )                   Cash flows from financing activities:                  Increase (decrease) in short term debt     (25,000 )     -   Proceeds from issuance of corporate bonds     25,000       -   Proceeds from issuance of convertible bonds     -       30,150   Dividends paid     (3,460 )     (3,474 ) Other     546       526                     Net cash provided by (used in) financing activities     (2,914 )     27,202                     Net effect of exchange rate changes on cash and cash equivalents     4,077       4,614                     Net change in cash and cash equivalents     (12,550 )     23,329                     Cash and cash equivalents at beginning of year     58,218       45,668                     Cash and cash equivalents at end of year   ¥ 45,668       68,997       14  

Advantest Corporation (FY2013)   (6) Notes to the Consolidated Financial Statements (Note 1) Accounting Principles, Procedures and the Presentation of the Consolidated Financial Statements (a) Terminology, Form and Method of Preparation of the Consolidated Financial Statements Advantest Corporation (or the “Company”) and its consolidated subsidiaries (collectively “Advantest”) prepare the consolidated financial statements in accordance with generally accepted accounting principle in the United States of America (“U.S. GAAP”).  U.S. GAAP is codified in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities.  Advantest Corporation and its consolidated subsidiaries prepare their unconsolidated financial statements in accordance with accounting principles generally accepted in the country of their domicile.  Certain adjustments and reclassifications have been incorporated in the consolidated financial statements to present them in conformity with U.S.GAAP. (b) Preparation of Consolidated Financial Statements and Registration with the U.S. Securities and Exchange Commission Advantest Corporation became listed on the New York Stock Exchange on September 17, 2001 (local time) by means of an issuance of American Depository Shares, and has been filing a Form 20-F (equivalent to the Annual Securities Report in Japan) with the U.S. Securities and Exchange Commission since FY2001.  Advantest prepares the consolidated financial statements in its Form 20-F in accordance with U.S. GAAP. (c) Principles of Consolidation Advantest’s consolidated financial statements include financial statements of the Company and its subsidiaries, all of which are wholly-owned.  Investment in an affiliated company over which Advantest has the ability to exercise significant influence, but does not hold a controlling financial interest, is accounted for by the equity method.  All significant intercompany balances and transactions have been eliminated in consolidation. (Note 2) Notes on Going Concern: None (Note 3) Significant Accounting Policies (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.   (Note 4) Reclassifications Certain reclassifications have been made to the prior years’ consolidated financial statements to conform with the presentation used for the year ended March 31, 2014.       15  

Advantest Corporation (FY2013)   (Note 5) Segment Information 1. Business Segment Information     Yen (Millions)       Year ended March 31, 2013       Semiconductor and Component Test System Business     Mechatronics System Business     Services, Support and Others     Elimination and Corporate     Total     Net sales to unaffiliated customers   ¥ 99,719       13,107       20,077     -       132,903   Inter-segment sales     1,400       546     -       (1,946 )   -   Net sales     101,119       13,653       20,077       (1,946 )     132,903   Depreciation and amortization     3,423       486       3,690       464       8,063   Operating income (loss) before stock option compensation expense     10,956       (4,614 )     775       (6,176 )     941   Adjustment:                                         Stock option compensation expense                                     861   Operating income (loss)                                   ¥ 80   Expenditures for additions to long-lived assets     3,530       4,565       4,356       141       12,592   Total assets     99,168       18,242       36,065       72,040       225,515       Yen (Millions)       Year ended March 31, 2014       Semiconductor and Component Test System Business     Mechatronics System Business     Services, Support and Others     Elimination and Corporate     Total     Net sales to unaffiliated customers   ¥ 72,760       14,967       24,151     -       111,878   Inter-segment sales     257       17     -       (274 )   -   Net sales     73,017       14,984       24,151       (274 )     111,878   Impairment charge     12,770       725     -     -       13,495   Depreciation and amortization     3,711       411       3,716       430       8,268   Operating income (loss) before stock option compensation expense     (26,724 )     (5,063 )     3,012       (6,228 )     (35,003 ) Adjustment:                                         Stock option compensation expense                                     1,283   Operating income (loss)                                   ¥ (36,286 ) Expenditures for additions to long-lived assets     2,099       1,562       1,826       327       5,814   Total assets     80,564       19,423       38,046       91,888       229,921   (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. 3. Additions to long-lived assets included in Corporate consist of purchases of software and fixed assets for general corporate use. 4. Total assets included in Corporate consist of cash and cash equivalents, assets for general corporate use and assets used for fundamental research activities, which are not allocated to reportable segments.     16                   Advantest Corporation (FY2013) 2. Consolidated Net Sales by Geographical Areas     Yen (Millions)       Year ended March 31, 2013     Year ended March 31, 2014                 Japan   ¥ 14,045       12,221   Americas     20,583       10,720   Europe     9,061       7,276   Asia     89,214       81,661                     Total   ¥ 132,903       111,878             (Notes)   1. Net sales to unaffiliated customers are based on the customer’s location.   2. Each of the segments includes primarily the following countries or regions:   (1) Americas U.S.A., Republic of Costa Rica   (2) Europe Israel, Germany   (3) Asia Taiwan, South Korea, China, Singapore            (Note 6) Per Share Information The following table sets forth the computation of basic and diluted net income (loss) per share for the years ended March 31:         Yen (millions) except per share data       Year ended March 31, 2013     Year ended March 31, 2014   Numerator:             Net income (loss)     (3,821 )     (35,475 )                   Denominator                 Basic weighted average shares of common stock outstanding     173,478,054       174,134,457   Dilutive effect of exercise of stock options     -       -                     Diluted weighted average shares of common stock outstanding     173,478,054       174,134,457                     Basic net income (loss) per share     (22.03 )     (203.72 ) Diluted net income (loss) per share     (22.03 )     (203.72 )               At March 31, 2013 and 2014, Advantest had outstanding stock options into 5,704,699 and 7,094,339 shares of common stock, respectively, which were anti-dilutive and excluded from the calculation of diluted net income (loss)  per share but could potentially dilute net income (loss) per share in future periods. (Note 7) Significant Subsequent Events: None   17                   Changes in Directors and Executive Officers (To be effective on June 25, 2014) 1. Nominees for Directors   Director Toshio Maruyama   Director Haruo Matsuno   Director Yasushige Hagio   Director Osamu Karatsu   Director Seiichi Yoshikawa   Director Shinichiro Kuroe   Director Sae Bum Myung   Director Hiroshi Nakamura   Director Yoshiaki Yoshida           Mr. Maruyama is to be elected as Chairman of the Board and Representative Director and Mr. Matsuno is to be elected as Representative Director at the special meeting of the board of directors to be held on June 25, 2014 after the 72nd ordinary general meeting of shareholders of Advantest Corporation. 2. Nominees for Executive Officers   President and CEO Haruo Matsuno     Vice President Shinichiro Kuroe     Managing Executive Officer Sae Bum Myung     Managing Executive Officer Hiroshi Nakamura     Managing Executive Officer Yoshiaki Yoshida     Managing Executive Officer Hideaki Imada     Managing Executive Officer Hans-JuergenWagner     Executive Officer Takashi Sugiura     Executive Officer Takashi Sekino     Executive Officer Soichi Tsukakoshi     Executive Officer Josef Schraetzenstaller     Executive Officer R. Keith Lee     Executive Officer Makoto Nakahara     Executive Officer Toshiyuki Okayasu     Executive Officer CH Wu     Executive Officer Kazuhiro Yamashita     Executive Officer Kenji Sato     Executive Officer Takayuki Nakamura     Executive Officer Wilhelm Radermacher     Executive Officer Masuhiro Yamada     Executive Officer Satoru Nagumo     Executive Officer Isao Sasaki (to be newly elected)   Executive Officer Koichi Tsukui (to be newly elected)   Executive Officer Keith Hardwick (to be newly elected)   18                      Nominees for New Executive Officers (Biography)   Isao Sasaki (Date of Birth: April 27, 1962)   Mar. 1981 Graduated from Sakaiminato Industrial High School   Apr. 1981 Joined Advantest Corporation   Jun. 2013 Senior Vice President, Field Service Group (present position) Koichi Tsukui (Date of Birth: December 11, 1964)   Mar. 1987 Graduated from Faculty of Engineering, Gunma University   Apr. 1987 Joined Advantest Corporation   Jun. 2011 Division manager, Sales Division 2   Jun. 2013 Leader, New Business Enabling Division (present position) Keith Hardwick (Date of Birth: May 6, 1970)   Mar. 1993 Graduated from Ohio State University, Bachelor of Science in Business Administration   Jun. 1993 Joined Advantest America Inc.   Jun. 2006 Advantest America Inc. Chief Financial Officer (present position)   Jan. 2012 Advantest America Inc. Vice President, Global HR (present position)                 19

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

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Other recent filings from the company include the following:

Report of foreign issuer [Rules 13a-16 and 15d-16] - Nov. 14, 2014
Advantest Corporation (Kabushiki Kaisha Advantest): Fy2014 Second Quarter Consolidated Financial Results - Oct. 28, 2014

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