THK Company Limited
27 November 2003
FY2003 Interim Consolidated Results November 19, 2003
(Six months ended September 30,2003)
This is summarized and translated financial information that the Company posted to the Tokyo Stock Exchange in
accordance with their rules that governs the disclosure of financial information.
The Company maintains an internet website at www.thk.co.jp. The Company makes available free of charge on the website
its financial information in Japanese language. Those information translated in English language will be disclosed as
soon as reasonably practicable after disclosing materials in Japanese language.
Company Name: THK Co., Ltd. (TSE:6481) URL: http://www.thk.co.jp/
Head Office: Tokyo, Japan (Tel:+81-03-5434-0300)
President and CEO: Akihiro Teramachi
Director/General Manager of Corporate Strategy Department: Kotaro Yoshihara
Date of the board meeting: November 19,2003
Adoption of U.S. GAAP : No
Consolidated Financial Highlights (Unaudited)
(Millions of yen, except earnings per share date)
Six months ended September 30 Fiscal 2002,
ended
2002 2003
March 31, 2003
Yen Changes Yen Changes Yen
Net sales 45,308 (11.8)% 55,924 23.4% 94,599
Operating income 1,754 (55.2)% 6,447 267.5% 4,893
Ordinary income 1,508 (63.5)% 6,088 303.6% 4,827
Net income 253 (86.3)% 2,977 1,074.3% 1,891
Total assets 181,289 177,956 193,197
Total shareholders' equity 101,210 105,299 102,478
Total shareholders' equity/total assets 55.8% 59.2% 53.0%
Earnings per share (yen)
Net income-basic 2.13 25.19 15.65
Net income-diluted - 21.98 15.12
Shareholders' equity 850.60 892.26 860.80
Net cash provided by operating activities 9,679 5,995 16,012
Net cash provided by (used in) investing (1,941) (2,651) (3,909)
activities
Net cash provided by (used in) financing (2,335) (25,911) 5,423
activities
Cash and cash equivalents at the end of the 60,191 50,129 72,533
period
Notes to the Financial Information:
1. Change of accounting policy: None
2. Equity in earnings of affiliates:
FY2003 first half: 40 million yen, FY2002 first half: (56) million yen, FY2002: (12) million yen
3. Net average number of shares issued and outstanding during the term (consolidated)
FY2003 first half: 118,223,451 shares, FY2002 first half: 118,987,560 shares, FY2002: 118,990,147shares
4. Regarding net sales, operating income, ordinary income and net income, percent indications show percentage
changes from the same period of the previous year.
5. Net number of shares issued and outstanding at the end of the fiscal year (consolidated)
FY2003 first half: 118,013,568 shares, FY2002 first half: 118,986,110 shares, FY2002: 119,015,253 shares.
6. Scope of consolidation and equity method
The number of consolidated subsidiaries: 14
The number of unconsolidated subsidiaries accounted for by equity method: 0
The number of affiliates accounted for by equity method: 2
7. Changes in scope of consolidation and equity method of accounting
The number of newly consolidated subsidiaries: 1
The number of consolidated subsidiaries excluded from consolidation: 0
The number of affiliates newly accounted for by equity method: 1
The number of affiliates excluded from the equity method of accounting: 0
8. The Financial statements are unaudited.
Projections of Consolidated Results for the Fiscal Year ending March 31, 2004
(Millions of yen, except earnings per share date)
Year ending March 31, 2004
Net sales 116,000
Operating income 14,400
Ordinary income 13,700
Net income 7,100
Net income per share (yen) 59.85
*Forward-Looking Statements:
This release contains forward-looking statements that are based on management's estimates, assumptions and projections
at the time of release. Some factors, which include, but are not limited to, the risks and uncertainty associated with
the worldwide economy, competitive activity and currency fluctuation, could cause actual results to differ materially
from expectations.
Interim Consolidated Balance Sheets
As of September 30, 2003 and 2002, and March 31, 2003
(Unit / Millions of yen, %)
September 30, September 30, March 31,
2002 2003 2003
Assets
Current assets:
Cash on hand and in banks 54,414 50,082 66,459
Notes and accounts receivable-trade 31,261 40,389 35,063
Short-term investment in securities 6,844 77 7,003
Inventories 25,029 23,415 23,747
Deferred tax assets 1,936 2,578 2,248
Short-term loans 234 205 260
Other 1,781 1,734 1,213
Less: Allowance for doubtful accounts (440) (362) (383)
Total current assets 121,063 66.8 118,119 66.4 135,613 70.2
Fixed assets:
Tangible fixed assets: 43,185 23.8 43,113 24.2 42,390 21.9
Buildings and structures 14,546 15,388 14,152
Machinery, equipment and vehicles 16,265 14,660 15,292
Land 10,240 10,218 10,258
Construction in process 688 1,350 1,303
Other 1,444 1,496 1,384
Intangible fixed assets 2,217 1.2 1,715 1.0 1,925 1.0
Investments and others: 14,814 8.2 15,008 8.4 13,266 6.9
Investment in securities 9,682 8,379 8,511
Deferred tax assets 2,379 1,666 2,134
Other 3,420 5,402 3,097
Less: Allowance for doubtful accounts (667) (440) (476)
Total fixed assets 60,217 33.2 59,837 33.6 57,583 29.8
Deferred assets:
Bond discounts and premiums 8 - 0
Total deferred assets 8 0.0 - 0.0 0 0.0
Total assets 181,289 100.0 177,956 100.0 193,197 100.0
Interim Consolidated Balance Sheets
As of September 30, 2003 and 2002, and March 31, 2003
(Unit / Millions of yen, %)
September 30, September 30, March 31,
2002 2003 2003
Liabilities
Current liabilities:
Notes and Accounts payable-trade 16,011 20,206 16,960
Short-term debt 7,694 99 3,305
Current portion of long-term debt 2,870 243 2,406
Current portion of bonds 11,000 - 3,443
Current portion of convertible bonds 13,905 - 13,905
Corporate income taxes payable and other 839 3,074 1,668
Accrued bonus 1,147 1,298 1,243
Other 5,034 6,251 5,216
Total current liabilities 58,502 32.3 31,174 17.5 48,149 24.9
Long-term liabilities:
Bonds 15,441 15,000 15,000
Bonds with stock acquisition rights - 23,000 23,000
Long-term debt 2,911 - 1,192
Allowance for retirement and 1,408 1,507 1,483
severance benefits
Allowance for directors' and auditors' 1,163 1,254 1,193
retirement benefits
Other 317 395 389
Total long-term liabilities 21,242 11.7 41,158 23.1 42,259 21.9
Total liabilities 79,745 44.0 72,333 40.6 90,409 46.8
Minority interest 333 0.2 324 0.2 309 0.2
Shareholders' equity
Common stock 23,106 12.7 23,106 12.9 23,106 12.0
Capital surplus 30,962 17.0 30,962 17.4 30,962 16.0
Earned surplus 47,943 26.4 51,118 28.7 48,686 25.2
Unrealized gains/losses on other securities (121) (0.0) 333 0.2 (355) (0.2)
Foreign currency translation adjustments (111) (0.0) 1,550 0.9 481 0.2
Treasury stock (568) (0.3) (1,771) (0.9) (403) (0.2)
Total shareholders' equity 101,210 55.8 105,299 59.2 102,478 53.0
Total liabilities, minority interest & 181,289 100.0 177,956 100.0 193,197 100.0
shareholders'
equity
Interim Consolidated Statements of Income
For Six Months to September 30, 2003 and 2002, and Years Ended March 31, 2003
(Unit/ Millions of yen, %)
September 30, September 30, March 31,
2002 2003 2003
Net sales 45,308 100.0 55,924 100.0 94,599 100.0
Cost of sales 31,814 70.2 37,443 67.0 66,646 70.5
Gross profit 13,493 29.8 18,481 33.0 27,953 29.5
Selling, general and administrative expenses 11,739 25.9 12,033 21.5 23,060 24.3
Operating income 1,754 3.9 6,447 11.5 4,893 5.2
Non-operating income 520 1.1 424 0.7 1,226 1.3
Interest income 64 61 169
Dividend income 34 14 49
Foreign exchange gain - - 351
Equity earnings of unconsolidated subsidiaries - 40 -
and affiliates
Rental income 72 78 148
Other 349 229 507
Non-operating expenses 766 1.7 783 1.4 1,291 1.4
Interest expenses 474 283 888
Bond expense - - 95
Foreign exchange loss 45 294 -
Equity fluctuation loss 56 - 12
Other 190 206 295
Ordinary income 1,508 3.3 6,088 10.8 4,827 5.1
Extraordinary profit 6 0.0 45 0.1 56 0.0
Gain on sales of property and equipment 6 4 56
Gain on sales of investment in securities - 35 -
Reversal of allowance for doubtful accounts - 5 -
Extraordinary loss 97 0.2 254 0.4 1,287 1.3
Loss on sales/disposal of property and 13 137 459
equipment
Loss on write-down of investment in securities 83 99 510
Equity in losses of affiliated companies - - 318
Other - 17 -
Income before income taxes and minority 1,417 3.1 5,879 10.5 3,596 3.8
interest
Income taxes-current 674 3,132 1,179
Adjustment of corporate income taxes and other 520 (244) 593
Minority interests in income(loss) of (30) (0.0) 14 0.0 (68) (0.0)
consolidated subsidiaries
Net income 253 0.5 2,977 5.3 1,891 2.0
Interim Consolidated Statements of Retained Earnings
For Six Months to September 30, 2003 and 2002, and Year Ended March 31, 2003
(Unit/ Millions of yen)
September 30, September 30, March 31,
2002 2003 2003
Capital surplus :
Balance at beginning of period 30,962 30,962 30,962
Balance at end of the interim period (end of period) 30,962 30,962 30,962
Retained earnings :
Balance at beginning of period 48,585 48,686 48,585
Increase in retained earnings 253 3,356 1,891
Net income 253 2,977 1,891
Increase due to recognition of goodwill amortization - 378 -
arising on applying equity method to an investment in
affiliate
Decrease in retained earnings 895 925 1,790
Cash dividends paid 895 895 1,790
Bonuses paid to directors and corporate auditors - 30 -
Balance at end of interim period (end of period) 47,943 51,118 48,686
Interim Consolidated Statements of Cash Flows
For Six Months to September 30, 2003 and 2002, and Year Ended March 31, 2003
(Unit/ Millions of yen)
September 30, September 30, March 31,
2002 2003 2003
1.Cash Flows from operating activities:
Income before income taxes and minority interests 1,417 5,879 3,596
Depreciation and amortization expenses 2,997 2,646 6,163
Loss on sales or disposals of property,plant assets and 7 132 402
equipment,net
(Increase)/Decrease in allowance for doubtful accounts (331) 66 (390)
Interest and dividend income (98) (75) (218)
Interest expenses 474 283 888
Foreign exchange gain (loss) (55) 21 (140)
Equity earnings of unconsolidated subsidiaries and affiliates 56 (40) 12
(Increase)/Decrease in accounts and notes receivables (6,596) (5,058) (10,253)
(Increase)/Decrease in inventories 886 710 2,502
Increase/(Decrease) in accounts and notes payable 5,530 2,920 5,220
Other 478 455 3,388
Subtotal 4,766 7,942 11,170
Interest income and dividend income received 113 118 220
Interest expenses paid (459) (337) (902)
Income taxes paid 5,258 (1,727) 5,524
Net cash provided by operating activities 9,679 5,995 16,012
2.Cash Flows from investing activities:
Increase in time deposits due over three months 328 - 468
Payments for purchases of short-term investments in securities (1,199) - (1,199)
Proceeds from sales of short-term investments in securities 1,301 919 1,328
Payments for purchases of property, plants and equipment (2,578) (2,500) (4,759)
Proceeds from sales of property, plants and equipment 160 61 148
Payments for purchases of investment in securities (4) (293) (9)
Proceeds from sales of investment in securities 5 244 103
Increase in short-term loans - (1,180) (335)
Collection of short-term loans receivable 45 98 345
Net cash provided by (used in) investing activities (1,941) (2,651) (3,909)
3.Cash Flows from financing activities:
Increase/(Decrease) in short-term debt 1,169 (3,210) (2,887)
Repayment of long-term debt (2,603) (3,354) (4,786)
Proceeds from issuance of bonds - - 22,904
Redemption of bonds - (17,344) (8,000)
Cash dividends paid (895) (895) (1,790)
Other (6) (1,106) (17)
Net cash provided by (used in) financing activities (2,335) (25,911) 5,423
4.Effect of exchange-rate change on cash and cash equivalents (218) 162 0
5.Net increase in cash and cash equivalents 5,184 (22,404) 17,526
6.Cash and cash equivalents at the beginning of the period 55,007 72,533 55,007
7.Cash and cash equivalents at the end of the period 60,191 50,129 72,533
Basis for Consolidated Financial Statements
1. Scope of Consolidation
(1) The consolidated subsidiaries: 14
Talk System Co., Ltd., Beldex Corporation, THK Yasuda Co., Ltd., THK Holdings of America, L.L.C., THK America, Inc., THK
Manufacturing of America, Inc., THK Neturen America, L.L.C., THK Europe B.V., THK GmbH, THK Manufacturing of Europe
S.A.S.,
THK FRANCE S.A.S., PGM Ballscrews Ltd., PGM Ballscrews Ireland Ltd., and THK TAIWAN CO., LTD.(THK and these consolidated
subsidiaries as the 'Companies')
Note: THK FRANCE S.A.S. has been consolidated with the Companies since this interim
reporting period ended September 30, 2003.
(2) The main non-consolidated subsidiary: Nihon Slide Kogyo Co., Ltd.
(3) The reason excluding from consolidation:
The non-consolidated subsidiaries are small in size, meaning that these accounts have not been consolidated with the
Company since the consolidated assets, net sales, net income / loss ( amount reflecting equity ) and retained earnings (
amount reflecting equity ) of these companies, in the aggregate, are not significant in relation to those of the
Companies.
2. Scope of Equity Method
(1) The affiliates applied by the equity method: 2
Daito Seiki Co., Ltd.,
SAMICK LMS CO., LTD.
The investment in SAMICK LMS CO.,LTD. has been accounted for under the equity method effective this interim reporting
period ended September 30, 2003.
(2) The major investments in non-consolidated subsidiaries and affiliates excluded from applying the equity method
The major non-consolidated subsidiary: Nihon Slide Kogyo Co., Ltd.
(3) The reason excluding from the equity method
The accounts of the company listed above and remaining affiliates and subsidiaries are not accounted for equity method
in the consolidated financial statements since the accounts of these companies do not have material effects in the
consolidated financial statements.
3. Information about the balance sheet date of consolidated subsidiaries
The balance sheet date for the following subsidiaries is as of June 30,2003.
THK Holdings of America, L.L.C., THK America, Inc.,
THK Manufacturing of America, Inc., THK Neturen America, L.L.C.,
THK Europe B.V., THK GmbH, THK Manufacturing of Europe S.A.S.,
THK FRANCE S.A.S., PGM Ballscrews Ltd., PGM Ballscrews Ireland Ltd.
and THK TAIWAN CO., LTD.
All significant inter-company transactions, account balances and others conducted between the balance sheet dates
June30, 2003 and September 30, 2003, have been properly eliminated and adjusted in order to prepare consolidated
financial statements.
4. Summary of Significant Accounting Policies
(1) Evaluation of significant assets
1. Investment in securities
Other securities with market prices available:
Other securities, for which market prices are available, are stated at fair value.Net unrealized gains/losses on these
securities are reported as a separate item in the shareholders' equity. Cost of securities is computed using the moving
average.
Other securities with market prices unavailable:
Other securities, for which market prices are unavailable, are stated at cost
by using the moving average.
2. Inventories
Company Name Evaluation of inventories Stated at
THK Co.,Ltd. Weighted average cost Cost basis
Talk System Co., Ltd. Weighted average cost Cost basis
Beldex Corporation Actual cost Cost basis
THK Yasuda Co., Ltd. Weighted average cost Cost basis
THK America, Inc. First-in first-out Lower of cost or market
THK Manufacturing of America, Inc. First-in first-out Lower of cost or market
THK Neturen America L.L.C. First-in first-out Lower of cost or market
THK Europe B.V. Moving average Lower of cost or market
THK Manufacturing of Europe S.A.S. Weighted average cost Cost basis
THK FRANCE S.A.S. Moving average Lower of cost or market
THK GmbH Moving average Lower of cost or market
PGM Ballscrews Ltd. First-in first-out Lower of cost or market
PGM Ballscrews Ireland Ltd. First-in first-out Lower of cost or market
THK TAIWAN CO., LTD Moving average Lower of cost or market
(2) Depreciation and amortization of significant assets
1. Tangible fixed assets
For the Company and its domestic subsidiaries in the scope of consolidation, depreciation is computed using the
declining-balance method at the rate based on the estimated useful lives of assets. For its overseas subsidiaries,
depreciation is computed using the straight-line and accelerated methods in accordance with their local accounting
standards
and regulations.
The Company and its domestic subsidiaries utilize the straight-line method to compute depreciation for buildings,
excluding
fixtures to buildings, acquired on and after April 1,1998.
The useful lives of major properties are as follows:
Buildings and structures 5-50 years
Machinery, equipment and vehicles 4-10 years
2. Intangible fixed assets
The amortization of intangible assets is computed using the straight-line method.
Software costs for internal use are amortized over their estimated useful lives, less than 5 years, on a straight-line
basis.
For its overseas subsidiaries, depreciation is computed with respective accounting standards and regulations.
(3) Deferred charges
Bond discounts and premiums are amortized over the outstanding period using straight-line method.
(4) Leases
Leases that transfer substantially all the risks and rewards of ownership of the assets are accounted for as capital
leases
except that the leases that do not transfer ownership of assets at the end of term are accounted for operating leases.
(5) Basis for recognizing significant allowances
1. Allowance for doubtful accounts:
The Company and its domestic subsidiaries recognize allowance for doubtful accounts for general accounts and notes
receivables, in amounts considered to be appropriate, based primarily upon the Companies' past credit losses in each
receivable outstanding. For receivables which are deemed to be uncollectible with a high possibility, estimated amount
will be
recognized after considering the collectivity of receivables respectively.
2. Accrual for bonus:
The Company recognized an allowance (accrual) for bonus payment for employees. For the interim period, the company
recognizes the potion that is allocated to reporting period upon the estimates provided by the Company.
3. Allowance for retirement and severance benefits:
The Company (and certain overseas subsidiaries) recognize an allowance for employees retirement benefits, the portion
that is allocated to this interim reporting period based upon the projected future benefit obligations and fair value of
pension assets as at the end of this interim reporting period. The unrecognized actuarial differences are amortized
using straight-line method over the period of 10 years from the next year in which they arise.
4. Allowance for directors' and auditors' retirement benefits:
The Company record a allowance for directors' and statutory auditors' retirement benefits equivalent to the liability
the Company would have to pay (if all eligible directors and statutory auditors resigned at the end of the interim
reporting period) in accordance with internal rules that governs the operation of this retirement benefits plans.
(6) Hedge accounting
1. Method of hedge accounting:
Fair value presentation for interest-rate-swap needed at the end of this interim period has been omitted since the swap
agreements qualitied the condition for hedge accounting in accordance with the related Japanese accounting standards.
Currency-swap transactions qualified the conditions for hedge accounting, and
those are treated as assignment treatment.
2. Means of hedging and hedged items
Interest-rate-swap: hedging interest fluctuating on borrowing.
Currency swap: Money claims denominated in foreign currency.
3. Policy for hedge transactions:
The company utilizes these instruments in order to reduce interest rate and foreign exchange rate risks.
4. Method of evaluating hedge effectiveness:
In terms of interest, the evaluation of hedge effectiveness is omitted, since hedge
accounting applies only to those interest-rate-swaps agreements that meet the conditions for exceptional treatment.
In terms of currency, the evaluation of hedge effectiveness is omitted, since hedge
accounting applies only to those currency-swaps that are the same in significant conditions regarding the transaction
and the assets covered by hedge, and assume in advance to offset market price fluctuations and cash-flow changes during
hedge
transactions.
(7) Other significant items
The consumption tax withheld upon sales and paid upon purchase of goods or services are not included in either of net
sales, expenses or costs.
5. Scope of Funds on Statements of Interim Consolidated Cash Flows
Cash and cash equivalents in the consolidated cash flow statements are composed of cash on hand, bank deposits that can
be with drawn on demand and short-term investments with original maturity of three months or less and which represent a
minor risk of fluctuations in value.
Notes
(Consolidated Balance Sheets) (Millions of yen)
FY2002 FY2003 FY2002
interim interim
1.Depreciation and amortization of 63,678 66,136 64,012
Tangible fixed assets
2.Discounts on notes receivable 13 - -
3.Liabilities for guarantee 375 300 302
(Consolidated Statements of Cash Flows)
1. The connection between cash and cash equivalents at end of the period and accounts of
consolidated balance sheets
(Millions of yen)
FY 2002 FY2003 FY2002
interim interim
Cash on hand and in banks 54,414 50,082 66,459
Short-term investments in 6,844 77 7,003
securities
Total 61,259 50,159 73,463
Time deposits (due over (168) (30) (30)
three months)
Short-term investments in (899) - (899)
securities, except MMF
Cash and cash equivalents 60,191 50,129 72,533
(Lease Transactions)
1. Finance lease transaction that do not transfer ownership of the leased property to the lessee
on an 'as if capitalized' basis is as follows:
(1) Acquisition costs, accumulated depreciation and net leased property at interim of period ( fiscal year )
(Millions of yen)
FY 2002 FY2003 FY2002
interim interim
Machinery and Machinery and Machinery and
equipment equipment equipment
Acquisition costs 62 54 54
Accumulated depreciation 45 46 42
Net leased property 16 7 11
Other Other Other
(Tangible assets) (Tangible assets) (Tangible assets)
Acquisition costs 3,016 2,936 2,901
Accumulated depreciation 1,614 1,159 932
Net leased property 1,402 1,776 1,969
Intangible Intangible Intangible
fix assets Fix assets fix assets
Acquisition costs 71 71 71
Accumulated amortization 26 40 33
Net leased property 45 30 38
Total Total Total
Acquisition costs 3,150 3,062 3,027
Accumulated depreciation 1,686 1,246 1,009
Net leased property 1,463 1,815 2,018
Note: The amounts of acquisition cost are computed by interest payment method since the balance of future
minimum lease payment is small portion of tangible fixed assets .
(2) Future minimum lease payments under finance leases
(Millions of yen)
FY 2002 FY2003 FY2002
interim interim
Due within one year 586 605 607
Due after one year 876 1,210 1,411
Total 1,463 1,815 2,018
Note: The amounts equivalent to future minimum lease payments under finance leases are computed by interest
payment method since the balance of future minimum lease payment is small portion of tangible fixed assets.
(3) Lease payments and implied depreciation
(Millions of yen)
FY 2002 FY2003 FY2002
Interim interim
Lease payments 341 310 666
Depreciation 341 310 666
(4) Depreciation
Depreciation is computed by using straight-line method.
2.Transactions of operating leases
Future minimum lease payments under operating leases
(Millions of yen)
FY 2002 FY2003 FY2002
interim interim
Due within one year 580 759 710
Due after one year 1,915 1,756 1,839
Total 2,495 2,516 2,549
(Segmented Information)
(1) Segmented Information by Operating Segments
As the net sales and operating income of the machinery parts segment are over 90% of total sales and total
operating
income of the Companies, general information about its operating segments information is not required to be disclosed.
(2) Segmented Information by Geographical Areas
Net sales, operating expenses, and operating income of the Companies for the six months ended September 30, 2002 and
September
30, 2003 were summarized as follows:
Six months ended September 30, 2002 Six months ended September 30, 2002
Japan Americas Europe Asia Total Elimination Consolidated
and other
Net sales:
Customers 33,805 5,176 5,490 835 45,308 - 45,308
Inter-segment 5,476 98 29 - 5,604 (5,604) -
Total 39,281 5,275 5,520 835 50,912 (5,604) 45,308
Operating expenses 36,543 5,906 6,323 801 49,575 (6,021) 43,554
Operating income/(loss) 2,737 (630) (803) 33 1,337 417 1,754
Six months ended September 30, 2003 (Millions of yen)
Japan Americas Europe Asia Total Elimination Consolidated
and other
Net sales:
Customers 43,107 5,021 6,632 1,163 55,924 - 55,924
Inter-segment 5,976 31 63 - 6,071 (6,071) -
Total 49,084 5,052 6,695 1,163 61,996 (6,071) 55,924
Operating expenses 42,124 5,129 7,081 1,128 55,463 (5,986) 49,476
Operating income/(loss) 6,959 (76) (385) 34 6,532 (85) 6,447
Year ended March 31, 2003 (Millions of yen)
Japan Americas Europe Asia Total Elimination Consolidated
and other
Net sales:
Customers 71,059 10,732 10,981 1,825 94,599 - 94,599
Inter-segment 12,193 147 97 - 12,439 (12,439) -
Total 83,253 10,880 11,079 1,825 107,039 (12,439) 94,599
Operating expenses 76,434 11,502 12,848 1,758 102,543 (12,836) 89,706
Operating income 6,819 (622) (1,768) 67 4,495 397 4,893
Note:
1. Classification of countries and areas determined in accordance with the degree of geographical proximity.
2. Major countries and areas in each category are summarizes as follows:
(1) Americas---------United States
(2) Europe------------Germany, United Kingdom, the Netherlands
(3) Asia and other---Taiwan
(3) Export Sales and Sales by Overseas Subsidiaries
Overseas sales of the Companies, meaning that the amounts of exports made by the Company and the sales made by the
overseas consolidated subsidiaries, for the 6 months ended September 30, 2002 and September 30, 2003 are summarized in
the
following tables:
Millions of yen
The half-year ended September 30, 2002 (FY2002)
America Europe Asia and Other Total
Overseas sales 5,191 5,485 3,725 14,401
Consolidated net 45,308
sales
Overseas sales
as a percentage
of consolidated 11.5 % 12.1 % 8.2 % 31.8 %
net sales
Millions of yen
The half-year ended September 30, 2003 (FY2003)
Asia and Other
America Europe Total
Overseas sales 5,073 6,630 4,857 16,562
Consolidated net 55,924
sales
Overseas sales 9.1 % 11.8 % 8.7 % 29.6 %
as a percentage
of consolidated
net sales
Millions of yen
The year ended March 31, 2003 (FY2002)
America Europe Asia and Other Total
Overseas sales 10,775 10,780 7,764 29,319
Consolidated net sales 94,599
Overseas sales as a percentage of
consolidated net sales
11.4 % 11.4 % 8.2 % 31.0 %
Note:
1. Classification of countries and areas are determined in accordance with the degree
of geographical proximity.
2. Major countries and areas in each category are summarizes as follows:
(1) Americas----------------United States
(2) Europe-------------------Germany, United Kingdom, the Netherlands
(3) Asia and other----------South Korea, Taiwan
(Investments in securities)
1. As of September 30, 2002 and 2003, and March 31, 2003 market value available in other investment securities is as
follows:
Millions of yen
As of September 30, 2002
Acquisition cost Carried amount gain (loss)
Other securities
Equities 3,026 2,757 (269)
Others 15 20 4
Total 3,041 2,777 (264)
Millions of yen
As of September 30, 2003
Acquisition cost Carried amount gain (loss)
Other securities
Equities 2,399 2,750 351
Others 15 18 2
Total 2,414 2,769 354
Millions of yen
As of March 31, 2003
Acquisition cost Carried amount gain (loss)
Other securities
Equities 2,604 2,148 (456)
Others 15 20 4
Total 2,620 2,169 (451)
Note:
Beside the above listed securities, the Company recognizes unrealized gains/(losses) on investments in fund portfolio
(toshi-jigyo kumiai) as follows: 1H/2002 (34) million yen, FY2002 (24) million yen and 26 million yen in this interim
period.
These figures are reported as a separate item in shareholders' equity and net of tax effect.
In case where the fair value of equity securities has declined 50% or greater of the acquisition cost and the impairment
deemed to be not temporary, these securities are written down to the fair value and the resulting losses are included in
income statements.
In the case where the fair value of equity securities has declined to 30-50% of the acquisition cost, the Company will
conduct an 'impairment test' that factors each investment comparing acquisition costs with the recent financial
condition and performance over the last two years and the market average price at the end of the month over last 24
months.
The Company recorded charges of unrealized losses on other securities of 83 million yen in 1H/2002, and 510 million yen
in FY2002.
2. Market value not available in investment securities is as follows:
(Millions of yen)
As of September 30, As of September 30, As of March 31,
2002 2003 2003
Carried amount Carried amount Carried amount
Other investment in securities
Money management funds
2,507 - 2,507
Free financial funds
3,309 - 3,309
Discount financial bonds
899 - 899
Unlisted equities (ex.OTC equities)
175 175 175
Unlisted foreign bonds
1,500 1,500 1,500
Unlisted foreign equities
131 77 286
(Contingency Events)
None
FY2003 Interim Non-Consolidated Results November 19, 2003
(Six months ended September 30,2003)
This is summarized and translated financial information that the Company posted to the Tokyo Stock Exchange in
accordance with
their rules that governs the disclosure of financial information.
The Company maintains an internet website at www.thk.co.jp. The Company makes available free of charge on the website
its
financial information in Japanese language. Those information translated in English language will be disclosed as soon
as
reasonably practicable after disclosing materials in Japanese language.
Company Name: THK Co., Ltd. (TSE:6481) URL: http://www.thk.co.jp/
Head Office: Tokyo, Japan (Tel:+81-03-5434-0300)
President and CEO: Akihiro Teramachi
Director/General Manager of Corporate Strategy Department: Kotaro Yoshihara
Date of the board meeting: November 19,2003
Date of interim dividend: conducted on December 8,2003 Number of trading lot: 100 shares
Non-Consolidated Financial Highlights (Unaudited)
(Millions of yen, except earnings per share date)
Six months ended September 30 Fiscal 2002, ended
2002 2003 March 31, 2003
Yen Changes Yen Changes Yen
Net sales 35,724 (7.7)% 44,895 25.7% 75,921
Operating income 2,716 (10.7)% 6,938 155.5% 6,757
Ordinary income 2,796 (7.3)% 6,833 144.4% 7,291
Net income 1,522 16.1% 3,801 149.7% 4,277
Total assets 169,636 167,630 183,196
Total shareholders' equity 97,151 101,127 98,894
Shareholders' equity/total assets 57.3% 60.3% 54.0%
Earnings per share (yen)
Net income-basic 12.75 32.06 35.59
Cash dividends 7.50 7.50 15.00
Shareholder's equity 813.95 854.48 828.36
Notes to the Financial Information:
1. Change of accounting policy: None
2. Net average number of shares issued and outstanding during the term (non-consolidated)
FY2003 first half: 118,558,752 shares, FY2002 first half: 119,359,860 shares, FY2002: 119,356,771shares
3. Regarding net sales, operating income, ordinary income and net income, percent indications show percentage
changes
from the same period of the previous year.
4. Net number of shares issued and outstanding at the end of fiscal year (non-consolidated)
FY2003 first half: 118,348,869 shares, FY2002 first half: 119,358,410 shares, FY2002: 119,350,553 shares
5. The number of treasury stock at the end of the fiscal year
FY2003 first half: 1,014,149 shares, FY2002 first half: 4,608 shares, FY2002: 12,465 shares
6. The Financial statements are unaudited.
Projections of Non-Consolidated Results for Fiscal Year ending March 31, 2004
(Millions of yen, except earnings per share date)
Year ending March 31, 2004
Net sales 95,000
Operating income 15,500
Ordinary income 15,000
Net income 8,300
Net income per share (yen) 69.81
*Forward-Looking Statements
This release contains forward-looking statements that are based on management's estimates, assumptions and projections
at the time of release. Some factors, which include, but are not limited to, the risks and uncertainty associated with
the worldwide economy, competitive activity and currency fluctuation, could cause actual results to differ materially
from expectations.
Interim Non- Consolidated Balance Sheets
As of September 30, 2003 and 2002, and March 31, 2003
(Unit / Millions of yen, %)
September 30, September 30, March 31,
2002 2003 2003
Assets
Current assets:
Cash on hand and in banks 47,305 43,386 58,726
Notes receivable-trade 12,263 15,297 13,698
Accounts receivable-trade 16,639 21,613 20,043
Short-term investment in securities 6,716 - 6,716
Inventories 15,988 13,749 14,204
Deferred tax assets 715 1,327 1,092
Short-term loans 2,567 6,840 4,279
Other 721 1,104 435
Less: Allowance for doubtful accounts (209) (131) (157)
Total current assets 102,708 60.6 103,188 61.6 119,040 65.0
Fixed assets:
Tangible fixed assets: 32,207 19.0 30,652 18.2 30,969 16.9
Buildings and structures 9,459 8,836 9,081
Machinery and equipment 12,046 10,834 11,156
Land 9,169 9,104 9,169
Other 1,531 1,876 1,562
Intangible fixed assets 2,118 1.2 1,603 1.0 1,826 1.0
Investments and others: 32,593 19.2 32,186 19.2 31,359 17.1
Investment in securities 4,402 4,389 3,807
Investment in share of subsidiaries 12,401 12,058 13,061
Investment in subsidiaries 5,506 6,720 5,506
Deferred tax assets 2,258 1,626 2,028
Other 8,610 7,789 7,351
Less: Allowance for doubtful accounts (586) (397) (397)
Total fixed assets 66,919 39.4 64,442 38.4 64,155 35.0
Deferred assets:
Bond discounts and premiums 8 - 0
Total deferred assets 8 0.0 - 0.0 0 0.0
Total assets 169,636 100.0 167,630 100.0 183,196 100.0
Interim Non- Consolidated Balance Sheets
As of September 30, 2003 and 2002, and March 31, 2003
(Unit / Millions of yen, %)
September 30, September 30, March 31,
2002 2003 2003
Liabilities
Current liabilities:
Notes payable-trade 4,135 4,205 3,922
Accounts payable-trade 9,934 12,490 11,202
Short-term debt 5,000 - 1,605
Current portion of long-term debt 2,826 - 2,163
Current portion of bonds 11,000 - 3,000
Current portion of convertible bonds 13,905 - 13,905
Accounts payable-other 559 1,035 639
Accrued expenses 2,709 3,149 2,808
Corporate income taxes payable and 786 3,006 1,591
other
Accrued bonus 1,070 1,219 1,125
Accounts payable-equipment and other 258 376 461
Other 246 405 225
Total current liabilities 52,432 30.9 25,888 15.5 42,649 23.3
Long-term liabilities:
Bonds 15,000 15,000 15,000
Bonds with stock acquisition rights - 23,000 23,000
Long-term 2,667 - 1,170
Allowance for retirement and 1,208 1,355 1,279
severance benefits
Allowance for directors' and 1,163 1,254 1,193
auditors'
retirement benefits
Other 12 4 8
Total long-term liabilities 20,052 11.8 40,615 24.2 41,651 22.7
Total liabilities 72,484 42.7 66,503 39.7 84,301 46.0
Shareholders' equity
Common stock 23,106 13.6 23,106 13.8 23,106 12.6
Capital surplus 30,962 18.3 30,962 18.5 30,962 16.9
Additional paid-in capital 30,962 30,962 30,962
Earned surplus 43,226 25.5 47,963 28.6 45,086 24.6
Earned reserve 1,958 1,958 1,958
Voluntary reserve 37,426 40,523 37,426
Unappropriate retained earnings 3,841 5,480 5,701
Valuation adjustment for marketable (133) (0.1) 223 0.1 (239) (0.1)
securities
Treasury stock (10) (0.0) (1,127) (0.7) (20) (0.0)
Total shareholders' equity 97,151 57.3 101,127 60.3 98,894 54.0
Total liabilities and shareholders' 169,636 100.0 167,630 100.0 183,196 100.0
equity
Interim Non-Consolidated Statements of Income
For Six Months to September 30, 2003 and 2002, and Years Ended March 31, 2003
(Unit/ Millions of yen, %)
September 30, September 30, March 31,
2002 2003 2003
Net sales 35,724 100.0 44,895 100.0 75,921 100.0
Cost of sales 25,888 72.5 30,606 68.2 55,304 72.8
Gross profit 9,836 27.5 14,288 31.8 20,617 27.2
Selling, general and administrative expenses 7,120 19.9 7,349 16.4 13,859 18.3
Operating income 2,716 7.6 6,938 15.4 6,757 8.9
Non-operating income 497 1.4 433 1.0 1,415 1.9
Interest income 63 81 138
Dividend income 47 56 62
Foreign exchange gain 14 - 448
Other 372 294 765
Non-operating expenses 417 1.2 538 1.2 881 1.2
Interest expenses 86 9 138
Bond interest 215 118 421
Foreign exchange loss - 246 -
Other 115 163 322
Ordinary income 2,796 7.8 6,833 15.2 7,291 9.6
Extraordinary profit 3 0.0 61 0.2 76 0.1
Gain on sales of property and equipment 3 0 32
Reversal of allowance for doubtful accounts - 25 43
Other - 35 -
Extraordinary loss 96 0.2 229 0.6 1,173 1.5
Loss on sales/disposal of property and equipment 12 112 453
Loss on write-down of investment in securities 83 - 510
Loss on write-down of investment in share of - 99 165
subsidiaries
Other - 17 44
Income before income taxes and other 2,703 7.6 6,665 14.8 6,194 8.2
Income taxes-current 870 3,023 1,677
Adjustment of corporate income taxes and other 309 (159) 239
Net income 1,522 4.3 3,801 8.5 4,277 5.6
Unappropriated retained earnings carried over 2,318 1,679 2,318
from previous year
Interim cash dividends - - 895
Unappropriated retained earnings at the period 3,841 5,480 5,701
Basis for Non-Consolidated Financial Statements
1. Evaluation of significant assets
(1) Investments in securities
Subsidiaries and Affiliates:
Subsidiaries and Affiliates are stated at cost by using the moving average.
Other securities with market prices available:
Other securities, for which market prices are available, are stated at fair value.Net unrealized gains/losses on these
securities are reported as a separate item in the shareholders' equity. Cost of securities is computed using the moving
average.
Other securities with market prices unavailable:
Other securities, for which market prices are unavailable, are stated at cost
by using the moving average.
(2) Inventories
Company Name Evaluation of inventories Stated at
Finished goods Weighted average Cost basis
Purchase First-in first-out Cost basis
Raw material Weighted average Cost basis
Work in process Weighted average Cost basis
Supplies Last purchase Cost basis
2. Depreciation and amortization of the fixed assets
(1) Tangible fixed assets
For the Company depreciation is computed using the declining-balance method at the rate based on the estimated useful
lives of
assets.
The Company utilize the straight-line method to compute depreciation for buildings, excluding fixtures to buildings,
acquired
on and after April 1, 1998.
The useful lives of major properties are as follows:
Buildings and structures 5-50 years
Machinery and equipment 10 years
Vehicles 4-6 years
Implements and tools 2-10 years
(2) Intangible fixed assets
The amortization of intangible assets is computed using the straight-line method.
Software costs for internal use are amortized over their estimated useful lives, less than 5 years, on a straight-line
basis.
(3) Long-term prepaid expenses
Straight-line method
3. Deferred charges
Bond discount and premiums are amortized over the outstanding period by straight-line method.
4. Basis for recording allowances
(1) Allowance for doubtful accounts:
The Company recognizes allowance for doubtful accounts for general accounts and notes receivables, in amounts considered
to be appropriate, based primarily upon the Company's past credit losses in each receivable outstanding. For receivables
which are deemed to be uncollectible with a high possibility, estimated amount will be recognized after considering the
collectivity of receivables respectively.
(2) Accrual for bonus:
The Company recognized an allowance (accrual) for bonus payment for employees. For the interim period, the company
recognizes the potion that is allocated to reporting period upon the estimates provided by the Company.
(3) Allowance for retirement and severance benefits:
The Company recognizes an allowance for employees' retirement benefits, the portion that is allocated to this interim
reporting period based upon the projected future benefit obligations and fair value of pension assets as at the end of
this interim reporting period. The unrecognized actuarial differences are amortized using straight-line method over the
period of 10 years from the next year in which they arise.
(4) Allowance for directors' and auditors' retirement benefits:
The Company record a allowance for directors' and statutory auditors' retirement benefits equivalent to the liability
the Company would have to pay (if all eligible directors and statutory auditors resigned at the end of the interim
reporting period) in accordance with internal rules that governs the operation of this retirement benefits plans.
5. Leases
The operating-lease accounting method, except lease agreements that stipulate the transfer of ownership of leased
property to the lessee, is accounted for finance leases.
6. Hedge accounting
(1) Method of hedge accounting:
Fair value presentation for interest-rate-swap needed at the end of this interim period has been omitted since the swap
agreements qualitied the condition for hedge accounting in accordance with the related Japanese accounting standards.
Currency-swap transactions qualified the conditions for hedge accounting, and
those are treated as assignment treatment.
(2) Means of hedging and hedged items
Interest-rate-swap: hedging interest fluctuating on borrowing.
Currency swap: Money claims denominated in foreign currency.
(3) Policy for hedge transactions:
The company utilizes these instruments in order to reduce interest rate and foreign exchange rate risks.
(4) Method of evaluating hedge effectiveness:
In terms of interest, the evaluation of hedge effectiveness is omitted, since hedge
accounting applies only to those interest-rate-swaps agreements that meet the conditions for exceptional treatment.
In terms of currency, the evaluation of hedge effectiveness is omitted, since hedge
accounting applies only to those currency-swaps that are the same in significant conditions regarding the transaction
and the assets covered by hedge, and assume in advance to offset market price fluctuations and cash-flow changes during
hedge transactions.
7. Other significant items
(1) Treatment of national and local consumption taxes:
Tax-exclusion accounting method is applied. Temporary payments of purchases and
temporary receipts of sales are offset and included in other section of current liabilities.
(2) Treatment of reserve fund:
Tax payments and adjustment amounts of corporate taxes in the interim period are computed by the amount related with the
interim period on the assumption that accumulation and reversal for special depreciation reserve through appropriation
of earnings.
Notes
(Non-Consolidated Balance Sheets)
(Millions of yen)
FY 2002 FY2003 FY2002
interim Interim
1. Discounts on notes receivable 13 - -
2.Accumulated depreciation of 59,005 60,067 58,565
tangible fixed assets
3.Advanced depreciation by 150 150 150
national subsidy
4. Security-presented assets
Investments in securities 899 - 899
Tangible fixed assets 15,471 - 14,723
Long-term investments 847 - 377
in securities
5.Liabilities for guarantee, etc.
Liabilities for guarantee 2,951 1,911 1,891
Guarantee engagement, etc. 600 200 500
(Lease Transactions)
1. Finance lease transaction that do not transfer ownership of the leased property to the lessee
on an 'as if capitalized' basis is as follows:
(1) Acquisition costs, accumulated depreciation and net leased property at interim period ( fiscal year )
(Millions of yen)
FY 2002 FY2003 FY2002
interim interim
Machinery and Machinery and Machinery and
equipment equipment equipment
Acquisition costs 54 54 54
Accumulated depreciation 38 46 42
Net leased property 15 7 11
Other Other Other
(Tangible fixed (Tangible fixed (Tangible fixed
assets) assets) assets)
Acquisition costs 2,859 2,814 2,784
Accumulated depreciation 1,515 1,075 860
Net leased property 1,344 1,738 1,923
Intangible Intangible Intangible
Fixed Assets Fixed Assets Fixed Assets
Acquisition costs 37 37 37
Accumulated depreciation 12 19 16
Net leased property 25 17 21
Total Total Total
Acquisition costs 2,951 2,906 2,876
Accumulated depreciation 1,566 1,142 919
Net leased property 1,385 1,764 1,957
Note: The amounts of acquisition costs and future minimum lease payments under finance leases include the portion of
imputed interest expense.
(2) Future minimum lease payments under finance leases
(Millions of yen)
FY 2002 FY2003 FY2002
interim interim
Due within one year 555 574 576
Due after one year 830 1,189 1,380
Total 1,385 1,764 1,957
Note: The amounts equivalent to acquisition costs and future minimum lease payments under finance leases include the
portion
of imputed interest expense.
(3) Lease payments and implied depreciation
(Millions of yen)
FY 2002 FY2003 FY2002
interim interim
Lease payments 320 295 629
Depreciation 320 295 629
(4) Depreciation
Depreciation is computed using the straight-line method.
2. Operating lease transactions
Future minimum lease payments under operating lease
(Millions of yen)
FY 2002 FY2003 FY2002
interim interim
Due within one year 2 2 2
Due after one year 5 3 4
Total 8 5 6
(Investments in securities)
Market value of stocks in subsidiaries and affiliates are as follows:
1. At September 30, 2002
Classification Millions of yen
As of September 30, 2002
Carried amount Market value Net unrealized
gain (loss)
Stocks of affiliates 1,229 1,066 (162)
2. At September 30, 2003
Classification Millions of yen
As of September 30,2003
Carried amount Market value Net unrealized
gain (loss)
Stocks of affiliates 1,374 2,284 909
3. At March 31, 2003
Classification Millions of yen
As of March 31,2003
Carried amount Market value Net unrealized
gain (loss)
Stocks of affiliates 1,085 822 (263)
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