Maruwa Co Ld 09 February 2006 9 February 2006 MARUWA CO., LTD. 3-83, Minamihonjigahara-cho, Owariasahi-city, Aichi-pref., 488-0044 JAPAN FOR IMMEDIATE RELEASE Consolidated financial results for the third quarter of fiscal 2006 Note1) The third quarter results for fiscal 2005 and 2006 are unaudited. Note2) Two consolidated subsidiaries merged on 1 January 2006. MARUWA QUARTZ Co., Ltd. absorbed MARUWA TFG Co., Ltd. 1. Summary of operating results JPY million Current 3rd Qt Previous 3rd Qt (Reference) from 1 April 2005 from 1 April 2004 For fiscal 2005 to 31 Dec. 2005 to 31 Dec. 2004 ended 31 Mar. 2005 Change% Change% Net sales 14,087 18.2% 11,914 35.7% 15,529 Operating income 1,241 16.4% 1,066 195.2% 1,357 Net income 681 -38.5% 1,107 204.1% 1,225 Net income per share : JPY (Basic) 62.67 102.29 112.40 (Diluted) 62.31 102.12 112.18 Note) Change figures indicate increases (decreases) percentages compared to the 3rd quarter results in the previous fiscal year, respectively. 2. Summary of consolidated financial conditions JPY million Current 3rd Qt Previous 3rd Qt (Reference) As of 31 Dec. 2005 As of 31 Dec. 2004 As of 31 Mar. 2005 Total Assets 31,740 28,523 28,465 Shareholders' equity 26,015 23,995 24,328 Shareholders' equity 82.0% 84.1% 85.5% ratio JPY Shareholders' equity 2,373.03 2,226.47 2,256.48 per share 3. Outlook for fiscal 2006 ending 31 March 2006 As for the forecast of consolidated operating results for the fiscal 2006, the forecast figures announced on 5 August 2005 are unchanged. * The forecasts stated above are based on currently available information as of the date of announcement of this document. Actual results may differ from these forecasts due to various factors. Review of operations Net sales in this third quarter increased 18.2% to 14,087 million yen compared to the third quarter of the previous fiscal year. For the Ceramic Components segment, total sales increased 4.5% compared to the previous third quarter results due to a recovery of demand in the electronic components market except for some semiconductor-related markets. For the Lighting Equipment segment, total sales were 1,642 million yen since this business characteristically sells intensively in the end of a fiscal year. As for profits, operating income in the Ceramic Components segment increased 73.6% to 1,851 million yen compared to the previous third quarter thanks to the contribution to income by new developed products and other new product lineups, and the enhancement efforts for the acquired businesses and products. The Lighting Equipment segment posted a loss of 228 million yen. As a result, consolidated operating income was 1,241 million yen, 16.4 % increase compared to the previous third quarter results. Net income in this third quarter decreased 38.5% to 681 million yen compared to the third quarter of the previous fiscal term because of the loss of 261 million yen due to the payment of allowances in terminating the retirement benefits system for directors, and 101 million yen loss on the disposal of fixed assets. Meanwhile, net income for the previous third quarter includes 498 million yen of a positive tax effect. Sales by segment JPY million Previous 3rd Qt Current 3rd Qt from 1 Apr. 2004 from 1 Apr. 2005 to 31 Dec. 2004 to 31 Dec. 2005 Ceramic Components: Net sales 11,914 12,445 Operating income 1,066 1,851 Lighting Equipment: Net sales - 1,642 Operating income - (228) Total: Net sales 11,914 14,087 Operating income 1,066 1,623 Elimination: Net sales - - Operating income - (382) Consolidated: Net sales 11,914 14,087 Operating income 1,066 1,241 Quarterly consolidated sales results of Ceramic Components segment by product division Quarterly: JPY million For year ended 31st March 2005 2006 1st Qt 2nd Qt 3rd Qt 4th Qt 1st Qt 2nd Qt 3rd Qt Circuit Ceramics 1,746 1,566 1,479 1,421 1,649 1,576 1,519 Machinery Ceramics 1,363 1,376 1,257 1,256 1,129 1,117 1,135 Radio Frequency 259 270 302 265 344 364 417 Products EMC Components 808 768 720 673 1,096 1,024 1,075 Total 4,176 3,980 3,758 3,615 4,218 4,081 4,146 9-month period from 1st quarter to 3rd quarter: JPY million Previous 3rd Qt Current 3rd Qt from 1 Apr. 2004 from 1 Apr. 2005 to 31 Dec. 2004 to 31 Dec. 2005 Circuit Ceramics 4,791 4,744 Machinery Ceramics 3,996 3,381 Radio Frequency Products 831 1,125 EMC Components 2,296 3,195 Total 11,914 12,445 Circuit Ceramics Total sales of Circuit Ceramics division decreased 1.0% to 4,744 million yen compared to the third quarter of the previous year. Sales of the substrates for chip resistors amounted to the same level as the previous third quarter result due to stable demands in Asia. On the other hand, sales of large substrates were adversely affected by the decrease of demand due to inventory adjustments by our customers. Aluminum Nitride substrates continuously acquired favorable orders related to power modules. Machinery Ceramics Total sales of Machinery Ceramics division were 3,381 million yen, a decrease of 15.4% compared to the third quarter of the last year. For the quartz glass products, sales largely decreased without a sign of recovery from order drops yet. We are determined to strengthen the foundation by quickening the development of materials and certain products suited for larger wafers in addition to securing profits through the improvement of manufacturing processes. Radio Frequency Products Total sales of Radio Frequency Products were 1,125 million yen, increasing 35.4% compared to the previous third quarter results. The products for base stations and radars showed steady sales due to the favorable markets of communication devices for Asia. The thin-film substrates have been growing in DVD-related fields, continuously contributing to increasing revenues. EMC Components Total sales of EMC Components increased 39.2% to 3,195 million yen compared to the previous third quarter. This increase was due to increasing demands for the noise-absorbing components in the markets led by PCs and digital home appliances such as thin screen TVs, and sales contribution of new products such as inductors. We are focusing on the enhancement of the structure for next year as our efforts to expand sales for Asian major manufacturers are getting on the track. Lighting Equipment segment Total sales for this segment were 1,623 million yen, reflecting the characteristic that sales of lighting equipment for public works including roads and bridges are delivered intensively in March. Annual sales are expected to exceed the forecast. Also, the effects of cost reduction efforts from the beginning of the year will be seen. Consolidated financial conditions for the third quarter of fiscal 2006 Total assets at the end of this third quarter were 31,740 million yen as a result of business operation in the 9-month period, an increase of 3,275 million yen compared to the end of the previous fiscal year. This is mainly due to an increase of current assets including accounts receivable by MARUWA SHOMEI Co., Ltd., a new consolidated subsidiary since April. As well as assets, total liabilities increased 1,588 million yen due to an increase of accounts payable by MARUWA SHOMEI. Total shareholdersf equity increased 1,687 million yen to 26,015 million yen. Capital investment in this 9-month period amounted to 1,296 million yen, and depreciation was 1,169 million yen. 1. Consolidated Balance Sheet (summary) JPY million JPY million Current 3rd Qt Previous 3rd Qt Fiscal 2005 (Reference) As of 31 Dec. 2005 As of 31 Dec. 2004 As of 31 Mar. 2005 ASSETS Change Change Current assets Cash & deposits 7,340 6,804 536 6,935 405 Notes and accounts receivable, 6,242 4,993 1,249 4,712 1,530 trade Inventories 2,959 2,680 279 2,554 405 Other current assets 411 307 104 629 (218) Total current assets 16,952 14,784 2,168 14,830 2,122 Property, plant & equipment 12,107 11,029 1,078 11,308 799 Investments & other assets 2,681 2,710 (29) 2,327 354 Total assets 31,740 28,523 3,217 28,465 3,275 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes & accounts payable, trade 1,983 904 1,079 797 1,186 Other current liabilities 2,188 1,778 410 1,614 574 Total current liabilities 4,171 2,682 1,489 2,411 1,760 Long-term liabilities: Long-term debt 224 375 (151) 335 (111) Accrued pension & severance 320 859 (539) 858 (538) costs Other 1,010 612 398 533 477 Total long-term liabilities 1,554 1,846 (292) 1,726 (172) Shareholders' equity: Common stock, authorized: 26,000,000 shares issued: 11,050,000 shares in Dec. 2004 and Mar. 2005, and 11,072,000 in Dec. 2005 6,710 6,683 27 6,683 27 Additional paid-in capital 9,747 9,710 37 9,710 37 Retained earnings 10,068 9,459 609 9,577 491 Net unrealized gains (losses) on other securities 85 10 75 16 69 Foreign currency translation (361) (1,286) 925 (1,077) 716 adjustment Advance on subscription of own 1 - 1 - 1 shares Treasury stock (235) (581) 346 (581) 346 Total shareholders' equity 26,015 23,995 2,020 24,328 1,687 Total liabilities & 31,740 28,523 3,217 28,465 3,275 shareholders' equity 2. Consolidated statement of income (summary) JPY million Current 3rd Qt Previous 3rd Qt (Reference) from 1 Apr. 2005 from 1 Apr. 2004 Change For fiscal 2005 to 31 Dec. 2005 to 31 Dec. 2004 amount % ended 31 Mar. 2005 to net to net to net sales sales sales Net sales 14,087 11,913 2,174 18.2% 15,529 Cost of sales 9,927 70.5% 8,602 72.2% 1,325 15.4% 11,187 72.0% Gross profit 4,160 29.5% 3,311 27.8% 849 25.6% 4,342 28.0% Selling, general & administrative 2,919 20.7% 2,245 18.8% 674 30.0% 2,985 19.2% expenses Operating income 1,241 8.8% 1,066 8.9% 175 16.4% 1,357 8.7% Other income (119) -0.8% (50) -0.4% (69) - (177) -1.1% (expenses) Income before income 1,122 8.0% 1,016 8.5% 106 10.4% 1,180 7.6% taxes Income tax expenses 441 3.1% (91) -0.8% 532 - (45) -0.3% Net income 681 4.8% 1,107 9.3% (426) -38.5% 1,225 7.9% END This information is provided by RNS The company news service from the London Stock Exchange