RNS Number:4154Z
TDK Corporation
04 June 2004
May 31 2004
To: Our Overseas Stockholders
TDK Corporation
13-1, Nihonbashi 1-chome,
Chuo-ku, Tokyo
TDK Corporation (the "Company")
Notice of the Convocation of the 108th Ordinary General Meeting of Stockholders
Dear Sirs:
Enclosed please find the notice of the convocation of the 108th
ordinary general meeting of stockholders of the Company together with the
reference documents.
Please study the reference documents with respect to each item of the
agenda of the meeting and exercise your voting rights through your standing
proxy in Japan. Please be aware that the voting right exercise form should
arrive at us through your standing proxy in Japan on or prior to June 29, 2004.
Very truly yours,
TDK Corporation
BY:/s/ Noboru Hara
Noboru Hara
General Manager
General Administration Department
(Translation)
NOTICE OF THE CONVOCATION
OF
THE 108TH ORDINARY GENERAL MEETING OF STOCKHOLDERS
Notice: This is a translation from Japanese language of a notice distributed
to stockholders in Japan. The translation is prepared solely for the
convenience of foreign shareholders. In the case of any discrepancy between the
translation and the Japanese original, the latter shall prevail.
TDK Corporation
Tokyo, Japan
(Translation)
To: Stockholders
May 31, 2004
TDK Corporation (the "Company")
13-1, Nihonbashi 1-chome
Chuo-ku, Tokyo
Hajime Sawabe
President and CEO
NOTICE OF CONVOCATION OF
THE 108TH ORDINARY GENERAL MEETING OF STOCKHOLDERS
Dear Sirs:
You are hereby notified that the 108th Ordinary General Meeting of
Stockholders will be held as stated below. You are respectfully requested to
attend the meeting.
When you attend the meeting in person, please submit the voting
right exercise form enclosed herewith to the receptionist at the place of the
meeting. In the event that you are unable to attend the aforesaid meeting,
please study the reference documents below and indicate on the voting right
exercise form enclosed herewith your approval or disapproval of the items on the
agenda, since you may exercise your voting right by written form by returning
the form to the Company after affixing your seal impression.
Particulars
1. Date and Time: 10:00 a.m. on June 29, 2004 (Tuesday)
2. Place of the Meeting: Technical Center of the Company, 9th Floor
15-7, Higashi-Ohwada 2-chome, Ichikawa-shi,
Chiba Prefecture
3. Purposes of the Meeting:
Matters to be Reported: Report on the balance sheet as of March 31,
2004 and the business report and the statement
of income for the 108th fiscal year (from
April 1, 2003 to March 31, 2004)
Matters to be Resolved:
First Item: Approval of proposal for appropriation of
retained earnings for the 108th fiscal year
Second Item: Partial amendments to the Articles of
Incorporation The substances of this item
are contained in the "Reference Document
Concerning Exercise of Voting Rights"
(from Page (29) to page (30))
Third Item: Issuance of stock acquisition rights, in order
to grant such rights to Directors, Corporate
Officers and key employees of the Company and
its associated companies
The substances of this item are contained in
the "Reference Documents Concerning Exercise
of Voting Rights"
from Page (30) to page (33))
Fourth Item: Acquisition of own shares of the Company
The substances of this item are contained in
the "Reference Documents Concerning Exercise
of Voting Rights"
(Page (33))
Fifth Item: Election of seven (7) Directors
Sixth Item: Election of one (1) Corporate Auditor
Seventh Item: Presentation of retirement grants
to the retiring Director and retiring
Corporate Auditor
- End -
(Documents Attached to the Notice of Convocation
of the Ordinary General Meeting of Stockholders)
Attachment (1)
Business Report
From: April 1, 2003
To: March 31, 2004
Business Conditions
(1) Business Conditions and Results
The Japanese economy in fiscal 2004, ended March 31, 2004, tended toward
recovery, led by IT-related production and exports. However, with no upturn
evident in household incomes, consumer spending failed to rebound. The U.S.
economy, the driving force for the world economy, saw consumer spending, housing
investment and capital expenditures all rise, as the government eased fiscal and
monetary policy. The U.S. economy further expanded compared with the previous
year.
In the electronics industry, the year was characterized by the rising popularity
of LCD and plasma flat-screen TVs, digital cameras and DVD (digital versatile
discs) recorders, as well as by the increasing sophistication of mobile phones
and replacement demand for PCs, and the growing use of electronics in
automobiles. However, deflationary trends in world markets affected these
finished products, placing unrelenting pricing pressure on electronic materials
and components and recording media and systems, TDK's main products.
TDK saw orders drop in the first quarter (April-June 2003) of fiscal 2004 due to
one-off factors such as the SARS outbreak and fallout from the Iraq war.
Nevertheless, TDK remained focused on implementing profit structure reforms,
carrying on initiatives from fiscal 2003 to improve asset productivity and
concentrate resources on strategically selected businesses.
As a result, on a parent-company basis, net sales decreased 1.4% to Y316,050
million, operating income decreased 44.8% to Y1,756 million, and current income
rose 13.2% to Y10,277 million. Net income was Y4,458 million, up 3,251.9%, while
basic net income per common share rose from Y0.53 to Y32.87.
TDK posted consolidated net sales of Y658,862 million, up 8.2%; operating income
climbed 146.0% to Y54,322 million; and income before income taxes jumped 207.5%
to Y55,603 million. Net income soared 250.3% to Y42,101 million. Basic net
income per common share was Y317.80, up from Y90.56.
The following is a discussion of results by business segment, mainly on a
consolidated basis.
(2) Segment Information
Electronic materials and components segment
In the electronic materials and components segment, consolidated net sales
increased 10.7%, from Y472,529 million to Y522,862 million. Net sales in both
the electronic materials and electronic devices sectors decreased compared with
the previous fiscal year when TDK benefited from a temporary surge in demand
related to the 2002 FIFA World Cup and strong demand from manufacturers
following a period of inventory reductions. This decline occurred despite solid
demand for components that was spurred by the growing popularity of flat-screen
TVs, digital cameras, and DVD recorders, as well as by recovering sales of
mobile phones. Segment sales as a whole rose on the back of a sharp year-on-year
increase in sales of HDD heads accompanying burgeoning demand for HDDs.
Parent-company net sales decreased 2.5%, from Y278,006 million to Y271,043
million. Sales in the electronic materials and electronic devices sectors fell
for the same reason as sales on a consolidated basis. Recording devices sales
dropped due to a change in the form of transactions with business partners.
Sector results were as follows.
Electronic materials
Consolidated net sales in the electronic materials sector decreased 1.3%, from
Y168,949 million to Y166,818 million.
(Capacitors) Sales of multilayer chip capacitors, the main product in the
capacitor sector, increased. Higher orders for capacitors, which reflected
growing demand for communications products, offset falling sales prices and the
negative effect of exchange rate movements.
(Ferrite cores and magnets) In ferrite cores, deflection yoke cores and flyback
transformer cores saw sales drop due to falling demand and sales prices. The
drop in orders is a reflection of a rapid shift in consumer demand from CRT TVs
to LCD, plasma and other flat-panel models. Higher sales of small coils and
transformer cores, where demand is increasing, failed to offset this decrease,
resulting in a decline in overall sales of ferrite cores. Magnet sales declined
as the effect of falling sales prices outweighed higher sales volumes. Overall,
sales of ferrite cores and magnets were down year on year.
Parent-company net sales decreased 1.8%, from Y133,325 million to Y130,925
million for the same reasons as the decline in consolidated net sales in this
sector.
Electronic devices
In the electronic devices sector, consolidated net sales decreased 4.2%, from Y
112,729 million to Y107,999 million.
(Inductive devices) Inductive devices, the largest product category in this
sector, posted higher sales as demand for communications products increased in
line with advances in the performance of mobile phones. However, sales growth
was held back by lower sales prices and foreign currency movements.
(High-frequency components) Sales of high-frequency components decreased despite
an upswing in shipment volumes that resulted from strong demand for components
used in mobile phones, the main market for these components, and successful
activities to win new orders. The decrease reflects the continuing glut in the
supply of high-frequency components in the market as a whole, which prompted
customers to demand price reductions that were greater than in other electronic
component categories.
(Other products) Overall, sales of other products decreased. Sensors and
actuators recorded higher sales due to growth in demand for communications
products and PCs and peripherals. However, sales of power systems declined due
to lackluster demand associated with the amusement field, a sector where demand
was strong in the previous fiscal year.
Parent-company net sales declined 6.0%, from Y86,274 million to Y81,096 million
for the same reasons as the decline in consolidated net sales in this sector.
Recording devices
Recording devices consolidated net sales climbed 30.8%, from Y175,986 million to
Y230,105 million. Sales of HDD heads, the main product in this sector, were up
sharply. This was primarily because of continuing expansion in the HDD market
and the resulting robust HDD sales by major TDK customers. Sales of other heads
also increased.
Parent-company net sales decreased 13.4%, from Y46,437 million to Y40,227
million, the result of a change in the form of transactions with business
partners.
Semiconductors & Others
Consolidated net sales in the semiconductors & others sector climbed 20.7%, from
Y14,865 million to Y17,940 million, despite sluggish sales of semiconductors for
communications applications. Growth reflected higher sales of anechoic chambers
for noise control and equipment used in these chambers.
Parent-company net sales increased 57.0%, from Y11,968 million to Y18,793
million for the same reasons as the increase in consolidated net sales in this
sector.
(Recording media & systems segment)
In the recording media & systems segment, consolidated net sales edged down
0.3%, from Y136,351 million to Y136,000 million. While TDK continues to command
a high share of the audiotape and videotape markets, sales in these two
categories decreased as demand continues to shrink due to structural changes.
Optical media products posted increased sales, with higher sales volumes of
CD-Rs and DVDs in an expanding market offsetting lower sales prices. Sales of
other products decreased. Higher sales of LTO-standard* (Linear Tape-Open)
tape-based data storage media for computers failed to offset lower sales of PC
software, recording equipment and other products.
Parent-company net sales increased 5.4%, from Y42,690 million to Y45,006
million. A decline in sales caused by falling demand for audiotapes and
videotapes was outweighed by higher sales of optical media products.
* Linear Tape-Open, LTO, LTO logo, Ultrium and Ultrium logo are trademarks of
HP, IBM and Certance LLC in the U.S., other countries or both.
Sales by main product were as follows:
(Non-Consolidated)
(Y millions)
Segment and Main Applications Amount Share of YoY
Products Sales Change
Electronic
materials and
components 271,043 85.8% -2.5%
Electronic
materials AV, office, communications and other 130,925 41.5 -1.8
types of equipment; automobiles, etc.
Electronic
devices AV, office, communications and other 81,096 25.7 -6.0
types of equipment; automobiles, etc.
Recording
devices PCs and PC peripherals 40,227 12.7 -13.4
Semiconductors
& others Office equipment, communications 18,793 5.9 57.0
equipment, etc.
Recording
media &
systems Entertainment, education, professional 45,006 14.2 5.4
broadcasting, etc.
Total 316,050 100.0 -1.4
Incl. export
sales 182,928 57.9 3.7
Note: Amounts less than Y1 million have been rounded down.
(Consolidated)
(Y millions)
Segment and Main Applications Amount Share of YoY
Products Sales Change
Electronic
materials and
components 522,862 79.4% 10.7%
Electronic
materials AV, office, communications and other 166,818 25.3 -1.3
types of equipment; automobiles, etc.
Electronic
devices AV, office, communications and other 107,999 16.4 -4.2
types of equipment; automobiles, etc.
Recording
devices PCs and PC peripherals 230,105 35.0 30.8
Semiconductors
& others Office equipment, communications 17,940 2.7 20.7
equipment, etc.
Recording
media &
systems Entertainment, education, professional 136,000 20.6 -0.3
broadcasting, etc.
Total 658,862 100.0 8.2
Incl. overseas
sales 490,206 74.4 10.6
Note: Amounts less than Y0.5 million have been disregarded and amounts of 0.5
million or more have been rounded to one million.
(3) Capital Expenditures and Fund Procurement
Parent-company capital expenditures for the year ended March 31, 2004 were Y
19,627 million, mainly for ramping up capacity and rationalizing production in
capacitors and recording devices. Funds for these capital expenditures were
provided by cash on hand.
Consolidated capital expenditures for the year ended March 31, 2004 were Y44,866
million, mainly for ramping up capacity and rationalizing production in
capacitors and recording devices. Funds for these capital expenditures were
provided by cash on hand.
Cash and cash equivalents on a consolidated basis at March 31, 2004 were Y
227,155 million, Y56,604 million higher than a year ago, the result of tight
inventory management and strict selection of investments, themes continued from
the previous fiscal year.
(4) Operating Results and Financial Position
(Non-Consolidated Results)
(Y millions)
Term 105th 106th 107th 108th
Category (Apr. 1, 2000 (Apr. 1, 2001 (Apr. 1, 2002 (Apr. 1, 2003
to Mar. 31, to Mar. 31, to Mar. 31, to Mar. 31,
2001) 2002) 2003) 2004)
Net sales 457,676 317,811 320,697 316,050
Net income
(loss) 8,739 (3,794) 133 4,458
Net income
(loss) per
common share
(Y) 65.62 (28.55) 0.53 32.87
Stockholders'
equity 441,662 426,439 419,241 415,878
Total assets 568,432 522,140 509,561 526,143
(Consolidated Results)
(Y millions)
Term 105th 106th 107th 108th
Category (Apr. 1, 2000 (Apr. 1, 2001 (Apr. 1, 2002 (Apr. 1, 2003
to Mar. 31, to Mar. 31, to Mar. 31, to Mar. 31,
2001) 2002) 2003) 2004)
Net sales 679,086 570,511 608,880 658,862
Net income
(loss) 43,983 (25,771) 12,019 42,101
Net income
(loss) per
common share
(Y) 330.54 (193.91) 90.56 317.80
Stockholders'
equity 637,749 583,927 553,885 576,219
Total assets 820,177 749,910 747,337 770,319
Notes:
1. Non-consolidated amounts less than Y1 million have been rounded down.
2. Consolidated amounts less than Y0.5million have been disregarded and
consolidated amounts of 0.5 million or more have been rounded to one million.
3. Net income (loss) per common share is computed based on the weighted
average number of shares of common stock outstanding during the period.
4. Non-consolidated net income (loss) per common share is computed by
deducting treasury stock from the 106th term.
5. Non-consolidated net income per common share is based on "Accounting
Standard for Earnings per Share" (Accounting Standards Board of Japan
Statements 2) and "Implementation Guidance for Accounting Standard for Earnings
per Share" (Accounting Standards Board of Japan Implementation Guidance 4) from
the 107th term.
6. TDK adopted the Emerging Issues Task Force Issue 01-9 ("EITF 01-9"),
"Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of the Vendor's Products)" effective from the 107th term.
Accordingly, consolidated net sales for the 105th and 106th terms have been
restated to conform to the subsequent presentation.
In the 105th term, sales increased while earnings declined on both a
consolidated and non-consolidated basis. The fall in non-consolidated earnings
is partly attributable to transitional differences accompanying a change in the
accounting standard for retirement benefits.
In the 106th term, sales and earnings declined on both a consolidated and
non-consolidated basis. Results in the 106th term partly reflect the inclusion
of restructuring costs for reforms to the profit structure.
In the 107th term, sales and earnings increased on both a consolidated and
non-consolidated basis due to higher demand for electronic components and an
improved return on assets.
For results for the 108th term, please refer to the foregoing "(1) Business
Conditions and Results" and "(3) Capital Expenditures and Fund Procurement."
(5) Key Issues for TDK
Based on its founding spirit, "Contribute to culture and industry through
creativity," TDK has grown by exercising creativity and responding in an
appropriate and speedy manner to various changes.
The electronics industry, TDK's field of operations, is finding renewed vigor
on growth in the market for flat-panel TVs, DVD recorders and other digital home
appliances and the greater use of electronics in motor vehicles. There is a
prevailing view that the popularity of digital home appliances will accelerate,
driven by the start of terrestrial digital broadcasting in Japan and the Olympic
Games in Athens, Greece, this summer. But digitalization is also fueling stiffer
competition. In respect of digital home appliances, in particular, it would be
fair to say that the electronics industry has been thrust into an era of
full-blown competition as rapid advances are made in the standardization of key
devices while new products that fail to clearly set themselves apart are quickly
engulfed by price competition and driven out of the market. Competing in this
era increasingly hinges on one's ability to be different, to differentiate
one's products from others.
It is for this reason that TDK has designated the fiscal year ending March 31,
2005 as a period for focusing tightly on its core business. TDK will strengthen
its core technologies (materials, process and evaluation simulation
technologies) that will be key to businesses down the road and expand sales of
new products, responding to customer needs and differentiating itself in the
marketplace. In the electronics market, TDK is targeting three key fields, which
it believes harbor prospects for growth: IT home electronics; high-speed,
large-capacity networks; and car electronics. Developing new products that
squarely match customer demands and creating a system for supplying them on a
timely basis are important themes for TDK in these markets where rapid change is
an underlying premise. In addition, TDK aims to increase enterprise value and
bolster earnings by bringing to an end the structural reforms that have been
implemented over the past two fiscal years.
Furthermore, as a responsible corporate citizen, TDK believes that it is
important to incorporate public, ethical, environmental and other considerations
in its management processes and dealings with society. In particular, determined
to play its part in preserving the environment for future generations, TDK has
formulated a fundamental environmental plan, "TDK Environmental Action 2010,"
for contributing to the realization of a sustainable society.
TDK requests your continued support and guidance as it tackles these key issues.
II. Outline of the Company
(The following sets forth the conditions of the Company as of March 31,
2004 unless otherwise specifically indicated.)
(1) Principal Business
The Company is principally engaged in the manufacture and
sale of products of electronic materials and components, as well as recording
media and systems. Major products by division are as follows:
Division Major Products
Electronic ferrite cores, ferrite magnets, rare-earth magnets, ceramic
materials capacitors
Electronic high-frequency components, EMC components, piezoelectric
devices products, sensors, inductors, transformers, switching power
supplies, DC-DC converters
Recording GMR heads, thermal heads, optical pickups
devices
Semiconductors semiconductor ICs, organic electroluminescent (EL), anechoic
& others chambers
Recording audiotapes, videotapes, CD-Rs, MDs, DVDs, "BS"/"CS" antenna, PC
media & software, tape-based date storage media for computers
systems
(2) Major Business Offices and Plants
Head Office: 13-1, Nihonbashi 1-chome,Chuo-ku, Tokyo
Osaka Branch: 5-7, Kawara-machi 3-chome, Chuo-ku, Osaka
Business Offices: Area Number of offices
Tohoku Sendai office
Kanto-Koshinetsu 5 including Tokyo office
Tokai-Hokuriku Nagoya office
Kinki Osaka office
Chugoku-Shikoku 2 including Hiroshima office
Kyushu Kyushu office
Plants: Chokai Plant (Akita)
Akita Plant (Akita)
Kisakata Plant (Akita)
Inakura Plant (Akita)
Narita Plant (Chiba)
Shizuoka Plant (Shizuoka)
Sagara Plant (Shizuoka)
Kofu Plant (Yamanashi)
Chikumagawa Plant (Nagano)
Chikumagawa 2nd Technical Center (Nagano)
Mikumagawa Plant (Oita)
Research & Development
Facilities: Materials R&D Center (Chiba)
Devices Development Center (Chiba)
Advanced Process Technology Center (Chiba)
Materials Analysis Center (Chiba)
Production Engineering Development Center (Chiba)
HMS Research Center (Chiba)
Chikumagawa 1st Technical Center (Nagano)
Note: The research & development facilities above represents the conditions as of April 1, 2004.
(3) Matters Concerning Shares
(a) Total Number of Shares:
Number of Shares Authorized
to be Issued by the Company: 480,000,000 shares
Number of Shares Issued: 133,189,659 shares
(b) Number of Stockholders: 25,950 stockholders
(a decrease of 8,280 from the end of the preceding fiscal year)
(c) State of Stock Acquisition Rights:
Stock acquisition rights already issued:
Number of stock acquisition Types and number of shares Issue price
rights issued upon exercise of stock
acquisition rights
1st stock acquisition rights Common Stock
(Pursuant to resolution adopted
at the General Meeting of 2,208 220,800 Free of charge
Stockholders held on June 27,
2002)
2nd stock acquisition rights Common Stock
(Pursuant to resolution adopted
at the General Meeting of 2,542 254,200 Free of charge
Stockholders held on June 27,
2003)
(d) Principal Stockholders (ten largest stockholders):
Investment to the Principal Stockholders
Investment to the Company of the Company
Name of stockholder Number of shares held Percentage of Number of shares held Percentage of
voting rights held voting rights held
(thousands of shares) (%) (thousands of shares) (%)
The Master Trust Bank of
Japan, Ltd. 13,962 10.55 -- --
(Trust account)
Japan Trustee Services
Bank, Ltd. 13,147 9.93 -- --
(Trust account)
Matsushita Electric
Industrial 6,249 4.72 999 0.04
Co., Ltd.
NATSCUMCO 4,815 3.63 -- --
The Chase Manhattan Bank,
NA 3,897 2.94 -- --
London
State Street Bank and 3,520 2.66 -- --
Trust Company
Nippon Life Insurance 3,131 2.36 -- --
Company
Barclays Bank PLC Barclays -- --
Capital Securities 2,842 2.14 -- --
The Bank of 2,720 2.05 -- --
Tokyo-Mitsubishi, Ltd.
The Sansiao Trading 2,150 1.62 -- --
Company, Ltd.
Notes: 1. Any number of shares less than one thousand has been disregarded.
2. NATSCUMCO is a nominee of Citi Bank N.A., a depositary bank for
the American Depositary Receipts (the "ADRs") of the Company.
3. With respect to investments in The Bank of Tokyo-Mitsubishi, Ltd.,
the Company owns 2,877 shares of Mitsubishi Tokyo Financial Group,
Inc. (percentage of voting rights held: 0.04%), which holds
100% shares of The Bank of Tokyo-Mitsubishi, Ltd.
4. With respect to the investment in each of Matsushita
Electric Industrial Co., Ltd., and Mitsubishi Tokyo Financial
Group, Inc., the Company holds each of their shares through Mitsui
Asset Trust & Banking Co., Ltd., acting trustee holding as trust
assets, who is a transfer agent of the Company. The Company
reserves the right to instruct the exercise of voting rights of
the shares held by the Company under the trust deeds.
(4) Acquisition, Disposal and Holding of the Company's Own Shares:
a) Shares to be acquired:
Shares of common stock: 263,226 shares
Aggregate amount of acquisition cost Y1,869,785,520
(b) Shares disposed:
Shares of common stock: 47,494 shares
Aggregate amount of disposal cost: Y 384,987,939
(c) Number of shares held for
the fiscal year under review: 780,207 shares of
common stock
(5) Matters Concerning Employees
Number of Comparison with the Average Average Working
Employees preceding term Age Years
Male 5,397 70 (decreased) 40.2 18.0
Female 716 29 (decreased) 32.9 12.4
Total 6,113 99 (decreased) 39.3 17.4
Notes: 1. Temporary or part-time employees are not included in the
list above.
2. Any portion of the average age or average working
years totalling less than one tenth of one year is disregarded.
(6) Matters Concerning Principal Business Combination
1. Matters Concerning Principal Subsidiaries:
Percentage of Voting Outline of Principal
Name of companies Common Stock Rights held by the Company Business
TDK U.S.A. Corporation US$283,550 thousand 100.0% Management and supervision
(U.S.A.) of U.S. subsidiaries
TDK Electronics Corporation US$62,849 thousand 100.0% Sale of recording media &
(U.S.A.) systems products
TDK Corporation of America US$3,800 thousand 100.0% Sale of electronic
(U.S.A.) materials & components
TDK Taiwan Corporation NT$424,125 thousand 83.8% Manufacture and sale of
(Taiwan) electronic materials &
components
SAE Magnetics (Hong Kong) HK$50 thousand 100.0% Manufacture and sale of
Limited electronic materials &
(Hong Kong) components
TDK Hong Kong Company HK$25,500 thousand 100.0% Manufacture and sale of
Limited electronic materials &
(Hong Kong) components
TDK Xiamen Co., Ltd. (China) RMB253,259 thousand 100.0% Manufacture and sale of
electronic materials &
components
TDK Recording Media Europe Euro 82,846 thousand 100.0% Manufacture of recording
S.A. (Luxembourg) media & systems products
TDK Electronics Europe GmbH Euro 36,544 thousand 100.0% Sale of electronic
(Germany) materials & components
TDK Marketing Europe GmbH Euro 20,025 thousand 100.0% Sale of recording media &
(Germany) systems products
TDK-MCC Corporation (Japan) Y1,800 million 100.0% Manufacture of electronic
materials & components
TDK Marketing Corporation Y1,050 million 100.0% Sale of recording media &
(Japan) systems products
Notes: 1. Any portion less than one-tenth of one percent of the
percentage of voting rights held by the Company is disregarded.
2. Out of companies stated above, the Company indirectly owns 100% of:
TDK Electronics Corporation
TDK Corporation of America
SAE Magnetics (Hong Kong) Limited
TDK Recording Media Europe S.A.
TDK Electronics Europe GmbH
TDK Marketing Europe GmbH
3. The Company owns indirectly 85.5% shares of TDK Xiamen Co., Ltd.
2. Condition of Business Combination:
There were no changes in the total number of consolidated
subsidiaries for the fiscal year under review compared with the previous fiscal
year, totaling 72 (domestic 20, overseas 52). A software development and sale
subsidiary in the U.S. was sold, and three subsidiaries including a
manufacturing subsidiary and a sale subsidiary in the U.S. as well as a
manufacturing subsidiary in Europe were liquidated. In the meantime, the
Company incorporated a total of four subsidiaries, including one superintended
company for sales of recording media products in Europe, and two manufacturing
subsidiaries for heads for HDDs and one R&D subsidiary in Hong Kong and China.
The number of affiliates as to investment in which the equity method of
accounting had been carried out was eight (domestic 5, overseas 3) for the
fiscal year under review, as the same number as the fiscal year ended March 31,
2003.
3. Results of Business Combination:
The number of consolidated subsidiaries including the twelve
principal subsidiaries stated above is 72 and that of affiliates as to
investment in which the equity method of accounting has been carried out is
eight. Consolidated net sales for the fiscal year under review amounted to Y
658,862 million (an increase of 8.2% compared with the preceding fiscal year)
and consolidated net income amounted to Y42,101 million (an increase of 250.3%
compared with the preceding fiscal year).
(7) Major Lenders, Amount of Loans and Number of the Shares of the Company
Owned
Not applicable.
(8) Name, Position and Duty, or Major Occupation of Each Director and
Corporate Auditor
Position Name Duty and Major Occupation
Representative Hajime
Director Sawabe
Director Hirokazu General Manager of China Business Development Group
Nakanishi
Director Jiro General Manager of Administration Group, in charge of
Iwasaki Safety & Environment
Director Shinji General Manager of Electronic Components Sales &
Yoko Marketing Group
Director Takeshi General Manager of Technology Group and General Manager
Nomura of Intellectual Properties Center
In charge of Technology
Director Mitsuaki General Manager of Management Review and Support
Konno Department
Director Yasuhiro Attorney-at-Law, Partner of the Law Firm of Squire,
Hagihara Thunders and Dempcy L.L.P. (Gaikokuhou Jimu Bengoshi
Jimusho)
Corporate Takuma Full-time
Auditor Otsuka
Corporate Masaaki Full-time
Auditor Miyoshi
Corporate Osamu Attorney-at-Law, Partner of the Law Firm of Mori Hamada
Auditor Nakamoto & Matsumoto
Corporate Kazutaka
Auditor Kubota
Corporate Kaoru C.P.A., Accounting Firm of Kaoru Matsumoto
Auditor Matsumoto
Notes:
1. Mr. Yasuhiro Hagihara is an outside Director prescribed
in Paragraph 7-2, Section 2, Article 188 of the Commercial Code.
2. Messrs. Osamu Nakamoto, Kazutaka Kubota and Kaoru
Matsumoto are outside Corporate Auditors prescribed in Section 1, Article 18 of
the "Law Concerning Special Exceptions to the Commercial Code Concerning Audit,
etc. of KabushikiKaisha".
3. Changes in Corporate Auditors during the fiscal year
under review are as follows:
(i) Assumption of the office of Corporate Auditors:
Position Name Remarks
Corporate Auditor Masaaki Miyoshi Assumed on June 27, 2003
Corporate Auditor Kazutaka Kubota Assumed on June 27, 2003
Corporate Auditor Kaoru Matsumoto Assumed on June 27, 2003
(ii) Retirement of Corporate Auditors:
Position Name Remarks
Corporate Auditor Yutaka Mori Retired on June 27, 2003
Corporate Auditor Hiromi Kitagawa Retired on June 27, 2003
(9) Stock Acquisition Rights with Specially Favorable Terms and Conditions
Issued to Persons other than Stockholders During the Fiscal Year Under Review:
On August 7, 2003, the stock acquisition rights were issued as stock
option pursuant to a resolution of the meeting of the Board of Directors of the
Company held on July 30, 2003 based on a resolution of the Ordinary General
Meeting of Stockholders held on June 27, 2003.
(1) Total number of stock acquisition rights issued:
2,547 shares (100 shares per one stock acquisition right)
(2) Class and number of shares to be granted for stock acquisition
rights: 254,700 shares of common stock
(3) Issue price of stock acquisition rights:
Free of charge
(4) Amounts to be paid upon the exercise of each stock acquisition
right: Y695,400 (Y6,954 per share)
(5) Exercise period of stock acquisition rights:
From August 1, 2005 to July 31, 2009
(6) Conditions of exercise of stock acquisition rights:
Partial exercise of stock acquisition rights may be permitted, only if the
number of shares issuable upon exercise of stock acquisition rights constitute
an integral multiple of a unit of shares of the Company.
(7) Events and conditions of cancellation of stock acquisition
rights:
(a) If a proposal for approval of a merger agreement, under which the Company
is the dissolving company, is approved at a meeting of stockholders of the
Company, or if a proposal for approval of a stock exchange agreement or a
proposal for share transfer under which the Company becomes a wholly owned
subsidiary of another company, is approved at a meeting of stockholders of the
Company, stock acquisition rights may be cancelled without any charge.
(b) In the event that the Company acquires and holds stock acquisition rights,
it may, at any time, cancel without any charge any and all of such stock
acquisition rights.
(8) Contents of specially favorable terms and conditions:
Stock acquisition rights have been issued free of charge to Directors, corporate
officers and key employees of the Company and officers and key employees of
associated companies.
(9) Name and number of stock acquisition rights allotted:
Directors of the Company:
Name Number of stock acquisition rights
Hajime Sawabe 239
Hirokazu Nakanishi 127
Jiro Iwasaki 117
Shinji Yoko 117
Takeshi Nomura 117
Mitsuaki Konno 66
Yasuhiro Hagihara 13
Total 796
Corporate Officers of the Company:
Name Number of stock acquisition rights
Kiyoshi Ito 107
Takehiro Kamigama 107
Katsuhiro Fujino 66
Takeshi Ohwada 66
Kunihiro Fukushima 58
Yukio Hirokawa 58
Masatoshi Shikanai 58
Yukio Harada 58
Yoshitomo Suzuki 58
Michinori Katayama 58
Kenryo Namba 58
Takaya Ishigaki 58
Minoru Takahashi 58
Total 868
0Key employees of the Company, Directors and key employees of
associated companies (Top 10):
Name Number of stock acquisition Note
rights
Hiroshi Ikejima 10 Key employee of the Company
Masao Ishihara 8 Key employee of the Company
Seiji Enami 8 Key employee of the Company
Osamu Tazaki 8 Key employee of the Company
Ryohei Tatsuta 8 Key employee of the Company
Shiro Nomi 8 Key employee of the Company
Noboru Hara 8 Key employee of the Company
Kenichi Hiruma 8 Key employee of the Company
Akira Okamoto 8 Key employee of the Company
Toshinobu Shiokawa 8 Key employee of the Company
Breakdown of total number of stock acquisition rights, which were granted to
Corporate Officers, key employees of the Company, Directors and key employees of
associated companies:
Classification Number of stock Type and number of Total number of
acquisition shares issued upon Grantees
rights exercise of stock
acquisition rights
Corporate
Officers of
the Company 868 Common stock 13
86,800
Key employee 847 Common stock 154
84,700
Directors of
subsidiaries 31 Common stock 4
3,100
Key employee
of
subsidiaries 5 Common stock 1
500
(10) Any events materially affecting the conditions of the Company occurred
after the settlement of accounts.
None.
Attachment (2)
BALANCE SHEET (Non-Consolidated basis)
(As of March 31, 2004)
Item Amount Item Amount
(ASSETS) (Millions of (LIABILITIES) (Millions of
yen) yen)
Current Assets 261,758 Current Liabilities 72,832
Cash and
deposits with
banks 59,450 Trade payables - 38,704
accounts
Trade
receivables -
notes 3,577 Accounts payable 9,771
Trade
receivables -
accounts 78,886 Accrued income taxes 2,282
Marketable
securities 15,398 Accrued expenses 12,831
Products 9,655 Deposits received 9,232
Raw materials
and supplies 5,059 Other current 10
liabilities
Work in
process 9,859 Noncurrent Liabilities 37,432
Advance
payments 6,839 Retirement and severance 37,128
benefits
Deferred tax
assets 3,382 Directors' and Corporate 303
Auditors' retirement
allowance
Short-term
loans
receivables 59,848 (Total Liabilities) 110,264
Other current
assets 9,950 (STOCKHOLDERS' EQUITY) 32,641
Allowance for
doubtful
receivables - 150 Common Stock 59,256
Noncurrent
Assets 264,385 Capital Surplus 59,256
Net property,
plant and
equipment 114,294 Additional paid-in 329,834
capital
Buildings 39,375 Legal Surplus 8,160
Structures 1,957 Legal reserve 306,971
Machinery and
equipment 48,024 Voluntary reserve 918
Vehicles,
tools,
furniture and
fixtures 3,934 Special depreciation 306,053
reserve
Land 14,015 Other reserve 14,702
Construction
in progress 6,986 Unappropriated retained 484
earnings for the year
Intangible
fixed assets 10,504 Unrealized holding gain - 6,338
(loss) on investments in
shares
Patent rights 7,641 Treasury stock 415,878
Software 2,596 Total Stockholders'
Equity
Other
intangible
fixed assets 266
Investments
and advances 139,586
Investments in
securities 8,005
Shares of
subsidiaries 97,587
Investment in
subsidiaries 5,558
Long-term
loans
receivable 1,641
Long-term
prepaid
expenses 3,785
Long-term
deferred tax
assets 21,818
Other
investments 1,876
Allowance for
doubtful
receivables - 687
Total Assets: 526,143 Total Liabilities and 526,143
Stockholders' Equity:
(Notes)
1. Figures are stated in millions of yen by disregarding any amount less
than one million yen.
2. Principal Accounting Principles, etc. are stated separately.
Attachment (3)
STATEMENT OF INCOME (Non-Consolidated basis)
From: April l, 2003
To: March 31, 2004
Item Amount
CURRENT INCOME AND LOSS (Millions of yen)
Operating Income and Loss:
Operating income 316,050
Net sales 316,050
Operating expenses 314,294
Cost of sales 255,372
Selling, general and administrative expenses 58,921
Operating income 1,756
Non-operating Income and Loss:
Non-operating income 15,918
Interest and dividend income 3,400
Technology commission 7,784
Rental received 3,676
Other non-operating income 1,057
Non-operating expenses 7,396
Interest paid 26
Exchange loss 2,471
Depreciation of leased assets 3,190
Other non-operating expenses 1,708
Current Income 10,277
EXTRAORDINARY PROFIT AND LOSS
Extraordinary Profit 1,816
Gain on sales of fixed assets 1,359
Fire insurance received 457
Extraordinary Loss 6,410
Loss on disposal of fixed assets 1,271
Extraordinary loss on business restructuring 2,821
Loss on devaluation of investment securities 1,227
Other extraordinary loss 1,090
Income before income taxes 5,683
Income tax, resident tax and enterprise tax 3,108
Adjustments to income taxes -1,884
Net income 4,458
Retained earnings brought forward from the preceding year 13,648
Loss on disposition of treasury stock 95
Interim dividends 3,309
Unappropriated retained earnings for the year 14,702
(Notes)
1. Figures are stated in millions of yen by disregarding any amount less
than one million yen.
2. Principal Accounting Principles, etc. are stated separately.
(Separate notes)
Principal Accounting Principles
The principal accounting principles, procedures and methods of representation
adopted for the preparation of the Balance Sheet and the Statement of Income are
as follows:
1. Valuation standards and methods of securities are as follows:
(a) Shares of subsidiaries and affiliates:
They are valued at cost using a moving average cost method.
(b) Other securities:
Marketable securities:
Market price method on the fair market price as of the end of fiscal year (any
balance resulting from valuation of securities shall directly be entered into
stockholders' equity, while any cost of sales of marketable securities shall be
calculated using a moving average cost method.)
Non-marketable securities:
They are valued at cost using a moving average cost method.
2. Valuation standards and methods of derivatives are as follows:
They are valued at market price.
3. Valuation standards and methods of inventories are as follows:
(a) Products and work in progress:
They are valued at the lower of cost using a periodic average method.
(b) Raw materials and supplies:
They are value at the lower of cost using a monthly moving average cost method.
4. Method of depreciation of cost of fixed assets:
(a) Property, plant and equipment:
Depreciation of buildings (other than facilities attaching to the buildings) is
principally computed using the straight-line method, and property other than
buildings is principally computed using the declining balance method.
The estimated useful lives of assets are as follows:
Buildings: 3 to 50 years
Machine and equipment 4 to 22 years
(b) Intangible fixed assets:
Depreciation of intangible fixed assets is computed using the straight-line
method.
Software for the in-house use is computed using the straight-line method based
on the utilizable period (5 years) within the Company.
5. Accounting basis of principal allowances:
(a) Allowance for doubtful receivables:
In order to prepare for losses from bad debts, it is stated an estimated
incollectible amount, in consideration of the past experience for bad debt ratio
with respect to doubtful receivables in general, and the individual estimate on
possibility of collection with respect to doubtful receivables.
(b) Retirement and severance benefits:
It is stated estimated amounts of benefit obligations and plan assets as of
March 31, 2004 for the future payment of retirement and severance benefits
payable to employees.
Actuarial gains and losses are amortized from the next year following the year
in which such gains and losses occurred using the straight-line method over
certain periods within the estimated average remaining service years of
employees. Prior service costs of employees are amortized in the year in which
such costs occurred using the straight-line method over certain periods within
the estimated average remaining service years of employees.
(Additional information)
As a result of enforcement of the Defined Contribution Corporate Pension Law,
the Company was authorized by the Minister of Health, Labor and Welfare on
September 25, 2003 to be exempted from obligation to pay the future substituted
potion of the Welfare Pension Fund.
The amount, which should have been returned, calculated as of March 31, 2004
(minimum underwriting reserve) is 33,553 million yen. Assuming that payment of
such amount which should have been returned (minimum underwriting reserve) was
made on March 31, 2004, the estimated amount of profit or loss arising from
application of Section 44-2 of "the Practice Guide Concerning Retirement Benefit
Accounting (Interim Report)" (Report of the Accounting System Committee of the
Japanese Institute of Certified Public Accountants No. 13) is 24,114 million yen
(before income taxes).
(c) Directors' and Corporate Auditors' retirement allowance:
In order to prepare for future payment of retirement grants for Directors and
Corporate Auditors to resign, it is stated an amount to be required at the end
of the fiscal year in accordance with the internal regulations of the Company.
Provided, however, that the reserve for Directors' retirement allowance to be
accrued following the date after the date of the 106th Ordinary General Meeting
of Stockholders has been suspended upon resolutions of the meeting of the Board
of Directors. Directors' prior retirement grants shall be paid when a Director
resigns upon resolution of the General Meeting of Stockholders.
This is the allowance as prescribed in Article 43 of the Commercial Code
Enforcement Regulations.
6. Method of accounting for lease transactions:
Finance leases, except for those in which ownership is deemed to be transferred
to the lessee, are accounted for as operating leases, that is, the rental of
property.
7. Method of accounting consumption tax, etc.:
No consumption tax, etc. is included in the financial statements.
8. Application of amended Commercial Code Enforcement Regulations:
The Company has applied amended Commercial Code Enforcement Regulations
(Ministry of Justice Ordinance No. 22, March 29, 2002, the final amendment:
Ministry of Justice Ordinance No. 23, March 30, 2004) for the fiscal year under
review.
9. Changes in presentation:
The technology commission, which was included in the "other non-operating
income" of the statement of income until the previous fiscal year, is presented
by an independent item for the fiscal year under review, since the significance
of the amount increased.
Notes with respect to Balance Sheet
1. Pecuniary credits and debts to subsidiaries:
(a) Short-term credits Y71,687 million
(b) Long-term credits Y1,528 million
(c) Short-term debts Y22,723 million
2. In addition to the fixed assets stated in the balance sheet, there are
computers and other related machinery and equipment as principal assets used
pursuant to lease contracts.
3. There is no pecuniary credit or debt to Directors or Corporate Auditors of
the Company.
4. Assets pledged or collateral:
Securities Y699 million
5. Contingent liabilities including guaranteed liabilities:
Outstanding guaranteed liabilities Y6,548 million
6. Accumulated amount of depreciation
of property, plant and equipment: Y253,437 million
7. Consumption taxes are included in the "other current assets" after offsetting
the amount paid in advance against the amount received in advance.
8. Amount of stockholders' equity pursuant to Article 124, paragraph 3 of the
Commercial Code Enforcement Regulations:
Y952 million
Notes with respect to Statement of Income
1. Net sales to subsidiaries: Y183,008 million
2. Purchases from subsidiaries: Y145,545 million
3. Non-operating transactions with subsidiaries: Y13,240 million
4. Net income per share Y32.87
(While net income stated in the accompanying statement of income is Y4,458
million, net income concerned with common stock which was used for the
calculation basis of the net income per share for the fiscal year under review
is Y4,355 million. The difference arises from the proposed payment of directors'
bonuses. The average number of shares of common stock issued during the fiscal
year under review, which was used for the calculation basis of the net income
per share, totals 132,475 thousand shares.
Notes with respect to Retirement and Severance Benefits
1. Components of retirement and severance benefits:
108th Business year
(As at March 31, 2004)
(1) Retirement and severance benefit obligation: (Y million)
- 221,066
(2) Plan assets: 164,232
(3) Unfunded obligations for benefit obligation - 56,834
(1) + (2):
(4) Unrecognized actuarial loss (gain) 57,722
(5) Unrecognized prior service costs - 38,017
(6) Accrued retirement and severance benefits - 37,128
(3) + (4) + (5):
2. Components of retirement benefit costs:
108th Business year
(April 1, 2003 -
March 31, 2004)
Retirement benefit costs (Y million)
12,018
(1) Service cost 6,385
(2) Interest cost 4,673
(3) Expected return on plan assets - 2,403
(4) Amortization of prior service costs - 1,973
(5) Amortization of actuarial loss (gain) 5,328
(6) Extra retirement money, etc. specially 7
paid:
3. Calculation basis of for retirement and severance benefits obligations:
108th Business year
(As at March 31, 2004)
(1) Discount rates: 2.00%
(2) Expected rates of return on investment: 2.00%
(3) Distribution method of estimated amount of Period fixed amount standard
retirement and severance benefits during
the period:
(4) Amortization of prior service Average remaining years of
obligations service of the employees when it
occurs
(5) Years to amortize actuarial gain/loss: Average remaining years of
service of the employees when it
occurs
Attachment (4)
PROPOSAL FOR APPROPRIATION OF Retained EARNINGS
Appropriation of Unappropriated Retained Earnings for the Fiscal Year ended
March 31, 2004
(yen)
Unappropriated retained earnings for the year 14,702,266,324
Reversal of general reserve
Reversal of special depreciation reserve 273,102,916
Total 14,975,369,240
We propose that the above income will be disposed as follows:
Appropriated retained earnings
Dividends 3,972,283,560
(Y30 per share)
Directors' bonuses 103,590,000
General reserve
Special depreciation reserve 161,824,000
Advanced depreciation reserve 484,840,000
Total 4,722,537,560
Balance Carried Forward 10,252,831,680
Notes:
1. Dividends are calculated excluding treasury stock of 780,207 shares.
2. Interim dividends (Y25 per share) in the aggregate amount of Y3,309,388,925
were paid on December 5, 2003.
3. A special depreciation reserve and advanced depreciation reserve are reversed
or set up in accordance with the Special Taxation Measurement Law.
Attachment (5)
CERTIFIED COPY OF PUBLIC ACCOUNTANTS' REPORT
PUBLIC ACCOUNTANTS' REPORT
April 26, 2004
To: The Board of Directors of TDK Corporation
AZSA & Co.
Seiichi Sasa (Seal)
Representative partner and
engagement partner
Certified Public Accountant
Hideaki Koyama (Seal)
Representative partner and
engagement partner
Certified Public Accountant
We have examined the financial statements of TDK Corporation, including balance
sheet, the statement of income, the business report (limited to the part
regarding the accounts of the Company) and the Proposal for Appropriation of
Retained Earnings and attached schedules thereto (limited to the part regarding
the accounts of the Company) for the 108th fiscal year from April 1, 2003 to
March 31, 2004 pursuant to the provisions of Article 2 of the "Law Concerning
Special Exceptions to the Commercial Code Concerning Audit, Etc. of Joint-Stock
Corporations (Kabushiki Kaisha)". Further, the part regarding the accounts of
the Company of the Business Report and attached schedules are described based on
the records of accounting books of the Company and its subsidiaries. The
management of the Company is responsible for the preparation of the financial
statements and the schedules related thereto and our responsibility as certified
public accountants is to express an independent opinion regarding the financial
statements and the schedules related thereto.
Our examination was carried out in accordance with generally accepted auditing
standards in Japan. The auditing standards require us to be guaranteed to a
reasonable extent as to whether or not the financial statements and the
schedules related thereto contain any material misrepresentations. Our audit has
been carried out on the basis of trial examination and includes overall
examination of representations which are indicated in the financial statements
and schedules related thereto, including valuation of the accounting standards
adopted, and the methods thereof employed, by the management of the Company as
well as valuation of the projections made therein by the management of the
Company. Our audit corporation has judged that it has been guaranteed to a
reasonable extent that it has a basis for expressing an opinion as a result of
the audit. The audit includes the auditing procedures for the Company's
subsidiaries with respect to which we carried out as we considered it necessary.
We, after examination, hereby report as follows:
(1) The Balance Sheet and the Statement of Income fairly set forth the financial
condition and state the profit and loss of the Company in accordance with laws
and ordinances and the Articles of Incorporation.
(2) The Business Report (limited to the part regarding the accounts of the
Company) fairly sets forth the situation of the Company in accordance with laws
and ordinances and the Articles of Incorporation.
(3) The Proposal for Appropriation of Retained Earnings is in conformity with
laws and ordinances and the Articles of Incorporation.
(4) There exists no matters in the attached schedules (limited to the part
regarding the accounts of the Company) to be pointed out in accordance with the
provisions of the Commercial Code of Japan.
AZSA & Co. or engagement partners in charge have no interests with the Company
which are defined by the provisions of the Law Concerning Certified Public
Accountants.
- End -
Attachment (6)
CERTIFIED COPY OF REPORT OF BOARD OF CORPORATE AUDITORS
AUDIT REPORT
This Board of Corporate Auditors prepared and report upon the following audit
report regarding the performance of duties of the Directors of the Company
during the 108th fiscal year from April 1, 2003 to March 31, 2004, upon
deliberation, based on the reports from each Corporate Auditor regarding the
method and the result of audit.
1. Summary of method of audit:
Each Corporate Auditor, subject to, inter alia, the audit policy and the
business assignment, etc. set up by the Board of Corporate Auditors and the
duties assigned to each Corporate Auditor, has attended meetings of the Board of
Directors and other meetings as deemed important, received from Directors
reports on the business, perused the documents whereby the important decisions
were made, and examined business and financial conditions at the head office and
the principal offices. Each of Corporate Auditors has also required reports on
business from the Company's subsidiaries, has visited the principle subsidiaries
when deemed it necessary, and has examined business and financial conditions. In
addition, we received from the Independent Accountants reports on audit and
examined the accounting statements and attached schedules.
As for the transactions between Directors acting on their own behaves and the
companies which businesses are competitive to the Company, transactions between
Directors and the Company in which interests in both parties are contradictory,
the provision, free of charge, of profits conducted by the Company, transactions
not in the ordinary course of business between its subsidiaries and the Company
or between its stockholders and the Company and acquisition and disposal of its
own shares and the like, we each examined such transactions in detail by
receiving reports from the Directors, as necessary, in addition to the method of
audit mentioned above.
2. Result of audit:
(1) The method and results of auditing carried out by AZSA & Co., Independent
Public Accountants, are appropriate.
(2) The Business Report fairly sets forth the situation of the Company in
accordance with laws and ordinances and the Articles of Incorporation.
(3) With respect to the item concerning the proposal for appropriation of
retained earnings, nothing unusual is to be pointed out in accordance with the
financial condition of the Company and other circumstances.
(4) The attached schedules fairly set forth the matters to be stated and nothing
unusual is to be pointed out.
(5) With respect to the performance of their duties by the Directors including
the duties regarding subsidiaries, no illegal act nor any fact which is in
violation of the laws and ordinances and the Articles of Incorporation is
ascertainable.
We confirm that there are no violations of obligation by Directors, such as
transactions competitive to the Company's business as prescribed in Article 133,
paragraph 1 of the Commercial Code Enforcement Regulations.
April 27, 2004
Board of Corporate Auditors of
TDK Corporation
Corporate Auditor (full-time)
Takuma Otsuka (Seal)
Corporate Auditor (full-time)
Masaaki Miyoshi (Seal)
Corporate Auditor
Osamu Nakamoto (Seal)
Corporate Auditor
Kazutaka Kubota (Seal)
Corporate Auditor
Kaoru Matsumoto (Seal)
(Note) Messrs. Osamu Nakamoto, Kazutaka Kubota and Kaoru Matsumoto are outside
Corporate Auditors prescribed in Section 1, Article 18 of the Law Concerning
Special Exceptions to the Commercial Code Concerning Audit, etc. of Kabushiki
Kaisha.
- End -
(Reference/Consolidated financial statements)
The Company's consolidated financial statements are prepared in accordance with
the U.S. generally accepted accounting principles ("U.S. GAAP").
BALANCE SHEET (Consolidated basis)
(As of March 31, 2004)
Item Amount Item Amount
(ASSETS) (Millions of yen) (LIABILITIES) (Millions of yen)
Current assets 475,773 Current liabilities 115,218
Cash and cash equivalents 227,155 Short-term debt 416
Trade payables 59,917
Marketable securities 402 Accrued expenses 45,534
Income taxes payables 4,689
Net trade receivables 138,331 Other current liabilities 4,662
Inventories 77,301
Other current assets 32,584 Noncurrent liabilities 75,606
Long-term debt, excluding current 27
installments
Retirement and severance benefits 73,521
Noncurrent assets 294,546 Deferred income taxes 215
Other noncurrent liabilities 1,843
Investments in securities 18,381
(Total liabilities) 190,824
Net property, plant and equipment 208,945
Other assets 67,220 Minority interests 3,276
(STOCKHOLDERS' EQUITY)
Common stock 32,641
Additional paid-in capital 63,051
Legal reserve 16,497
Retained earnings 560,756
Accumulated other comprehensive -90,387
income (loss)
Treasury stock -6,339
(Total stockholders' equity) 576,219
Total assets: 770,319 Total liabilities and stockholders' 770,319
equity:
(Note) Any amount less than 0.5 million yen has been disregarded and any amount
not less than 0.5 million yen has been rounded upward to a full one million.
(Reference/Consolidated financial statements)
The Company's consolidated financial statements are prepared in accordance with
the U.S. generally accepted accounting principles ( "U.S. GAAP").
STATEMENT OF INCOME (Consolidated basis)
From: April l, 2003
To: March 31, 2004
Item Amount
(Millions of yen)
Net sales 658,862
Cost of sales 474,106
Gross profit 184,756
Selling, general and administrative expenses 130,434
Operating income 54,322
Other income (deductions) :
Interest and dividend income 1,189
Interest expense -323
Foreign exchange gain(loss) -3,065
Other - net 3,480
Total other income (deductions) 1,281
Income before income taxes 55,603
Income taxes 13,143
Income before minority interests 42,460
Minority interests (loss) -359
Net income 42,101
(Note) Any amount less than 0.5 million yen has been disregarded and any amount
not less than 0.5 million yen has been rounded upward to a full one million.
Reference Documents Concerning the Exercise of Voting Rights
1. Aggregate number of voting rights owned by all stockholders: 1,323,320 voting
rights
2. Matters to be Resolved and Matters for Reference:
First Item: Approval of proposal for appropriation of retained earnings for the
108th fiscal year
The appropriation of retained earnings for the fiscal year under review is
proposed as stated in Attachment (4) (in the page 23 ).
The Company considers that returning income to its stockholders is an important
management duty, and will distribute such income with comprehensive
consideration given to the level of consolidated return on equity (ROE),
dividends on equity (DOE), etc. and business results, among other factors.
Consequently, with respect to the appropriation of retained earnings as at the
end of the fiscal year under review, the year- end dividend during the fiscal
year under review will be Y30.00 per share, as a result of the Company taking
into account the level of ROE and DOE, etc. in accordance with the Company's
basic policy. Together with the interim dividends of Y25.00 per share, which
were paid in December 5, 2003, the total dividends for the fiscal year under
review will be Y55.00 per share, a Y5.0 increase per share over the previous
fiscal year.
Second Item: Partial amendments to the Articles of Incorporation
1. Reason for amendments:
In accordance with the enforcement of the "Law regarding the Partial Amendments
to the Commercial Code and the Law for Special Exceptions to the Commercial Code
concerning Audit, etc. of Joint-stock Companies (Kabushiki-Kaisha)" (Law No.
132, 2003) as of September 25, 2003, share buyback by resolution of the meeting
of the Board of Directors has been permitted under the authorization of the
Articles of Incorporation. The Company will incorporate new provisions of
Article 6 (Acquisition of the Company's Own Share) stated in the proposed
amendment below into the current Article of Incorporation, in order to take a
flexible capital policy in response to changes in operating circumstances.
Accordingly, the Articles after Article 6 of the current Articles of
Incorporation will be renumbered as a result of the incorporation of new Article
and also the supplement will be deleted.
2. Details of amendments
Details of the proposed amendments are as follows.
(Parts proposed to be amended are underlined.)
Present Articles of Incorporation Proposed amendment
(To be newly established) (Acquisition of the Company's Own
Shares)
Article 6. The Company may purchase its
own shares by resolution of the Board
of Directors, in accordance with the
provisions of Article 211-3, paragraph
1, item 2 of the Commercial Code.
Article 6. - 25. (Provisions Article 7. - 26. (Same as the current
intentionally omitted) Article 6. - 25.)
Supplement (To be deleted)
Notwithstanding the provisions of
Article 13 (Term of Office of
Directors), the term of office of
Directors who were elected at the
ordinary general meeting of shareholders
held on June 27, 2002 shall continue by
the closing of the ordinary general
meeting of shareholders to be held in
2004.
Third Item: Issuance of stock acquisition rights, in order to grant such rights
to Directors, corporate officers and key employees of the Company and its
associated companies
You are requested to approve the issuance by the Company of stock acquisition
rights in accordance with the following terms and conditions, pursuant to
Article 280-20 and Article 280-21 of the Commercial Code of Japan, in order to
grant such rights as a stock option to Directors, corporate officers and key
employees of each of the Company and associated companies.
1. Reason for the issuance of stock acquisition rights with specially favorable
terms and conditions to persons other than stockholders:
In order to further raise motivation and enhance morale for contributing to the
improvement of consolidated business results of the Company, improve business
results of the Company and associated companies and stockholder values, stock
acquisition rights will be issued to Directors, corporate officers and key
employees of the Company and associated companies in accordance with the
conditions of the issuance as stated in 2. below.
2. Summary of the issuance of stock acquisition rights:
(1) Class and number of shares to be issued upon exercise of stock acquisition
rights:
The maximum number shall be 380,000 shares of common stock of the Company.
In case of adjustment of the number of shares attached to each stock acquisition
rights (defined as below) in accordance with (2) below, the number of shares to
be issued upon exercise of stock acquisition rights shall be adjusted to a
number obtained by multiplying the number of shares attached to each stock
acquisition right after adjustment by the aggregate number of stock acquisition
rights.
(2) Aggregate number of stock acquisition rights to be issued:
The maximum number shall be 3,800.
The number of shares attached to one stock acquisition right (hereinafter
referred to as the "number of shares attached") shall be 100 shares. Provided,
however, that on or after the date on which stock acquisition rights are issued
(hereinafter referred to as the "issue date"), in case the Company makes a stock
split or stock consolidation of shares of common stock, the number of shares
granted shall be adjusted in accordance with the following formula and any
number of share less than one share arising out of such adjustment shall be
disregarded:
Number of shares = Number of shares x Percentages of stock split
or consolidation
attached attached
after adjustment before adjustment
Furthermore, on or after the issue date, in case the Company enters into a
merger, corporate division or a reduction of paid-in capital, etc., that
requires adjustments to be effected to the number of shares attached, the number
of shares attached shall be adjusted to the reasonable extent.
(3) Issue price of stock acquisition rights:
Free of charge
(4) Amounts to be paid for the exercise of each stock acquisition right:
Amounts to be paid for the exercise of each stock acquisition right shall be the
amount to be paid per share (hereinafter referred to as the "Exercise Price") of
shares to be issued or transferred upon exercise of the stock acquisition right,
multiplied by the number of shares attached.
The exercise price shall be an amount which is the average of the closing prices
(regular way) of the Company's shares of common stock on the Tokyo Stock
Exchange, Ltd. on each day (other than any day on which no sale is reported) of
the month immediately preceding the issue date, multiplied by 1.05. Any amount
less than one yen arising out of such adjustment shall be rounded upward to the
nearest yen. Provided, however, that if such price is less than the closing
price as of the issue date, then such closing price reported on the issue date
shall instead be the Exercise Price (if no closing price is reported on such
day, then the closing price reported on the day immediately preceding that day).
On or after the issue date, in case the Company issues new shares of its common
stock or disposes of its treasury stock at a price less than the current market
price (except for issue or transfer upon exercise of stock acquisition rights or
transfer of its treasury stock pursuant to the provisions of Section 2, Article
5 of the Supplement of the "Law regarding the Partial Amendments, etc. to the
Commercial Code, etc. of Japan (Law No. 79, 2001)), the Exercise Price shall be
adjusted in accordance with the following formula and any amount less than one
yen arising out of such adjustment shall be rounded upward to the nearest yen:
Number of Number of shares Amount paid
shares issued + newly issued x per share
______________________________
Market price
______________________________________________
Exercise Price Exercise Price
after = before Number of Number of shares
adjustment adjustment x Shares issued + newly issued
"Number of shares issued" in the above formula means the number of shares
obtained by deducting the number of treasury stock held by the Company from the
number of outstanding shares. In case of disposal of treasury stock, "Number of
shares newly issued" shall instead read as "Number of treasury stock to be
disposed of".
Furthermore, on or after the issue date, in case of a stock split or stock
consolidation of the Company's shares of common stock, the Exercise Price shall
be adjusted in accordance with the following formula and any amount less than
one yen arising out of such adjustment shall be rounded upward to the nearest
yen:
Exercise Price after = Exercise Price before x 1
adjustment adjustment ______________________
Percentages of stock
split or consolidation
Furthermore, on or after the issue date, in case the Company enters into a
merger, corporate division or a reduction of paid-in capital, etc. that requires
adjustments to the Exercise Price, it shall be adjusted to the reasonable
extent, in light of the conditions of merger, corporate division or the extent
of the reduction of paid-in capital, etc.
(5) Exercise period of stock acquisition rights:
From August 1, 2006 to July 31, 2010
(6) Conditions of exercise of stock acquisition rights:
Partial exercise of each stock acquisition right is only exercisable so long as
the number of shares to be issued upon exercise of stock acquisition rights is
any integral multiple of a unit of shares of the Company.
(7) Events and conditions of cancellation of stock acquisition rights:
(1) If a proposal for approval of a merger agreement, under which the
Company is the dissolving company, is approved at a general meeting of
stockholders of the Company, or if a proposal for approval of a stock
exchange agreement or a proposal for share transfer is approved at a
general meeting of stockholders of the Company, the Company may cancel
stock acquisition rights without any charge.
(2) The Company may, at any time, cancel without any charge such outstanding
and unexercised stock acquisition rights as is acquired and owned by
itself.
(8) Restrictions on transfer of stock acquisition rights:
Any transfer of stock acquisition rights shall be subject to approval from the
Board of Directors of the Company.
3. Summary of the allotment of stock acquisition rights:
The Board of Directors of the Company shall determine the number of stock
acquisition rights to be granted to each grantee (the "Grantee"), taking into
consideration the responsibilities on his/her duties and the contribution of
each of the Grantees to the consolidated business results of the Company.
In addition, when granting stock acquisition rights to each Grantee, the Company
shall enter into the "Granting of Stock Acquisition Right Agreement" with each
of the Grantees, which shall provide for the following conditions deemed
reasonable by the Board of Directors for the purpose of the issuance of stock
acquisition rights.
Summary of the "Granting of Stock Acquisition Right Agreement
(1) In the event that eligible Directors of the Company and corporate
officers of its associated companies are removed from their respective
offices, voluntarily resign, or lose their positions due to
disqualification, stock acquisition rights may not be exercised.
(2) In the event that the relevant eligible employee of the Company and its
associated companies is demoted or removed due to disciplinary
punishment, or resigns for his/her own cause, stock acquisition rights
may not be exercised.
(3) In case of the loss of position as Directors, corporate officers and
certain employees of the Company and its associated companies of the
Company due to the reason other than (1) or (2) stated above, stock
acquisition rights may be exercised within two years following such
loss of position.
(4) The Agreement shall also specify other matters that limit the exercise
of stock acquisition rights in addition to the above
Fourth Item: Acquisition of own shares of the Company
You are requested to approve that the Company will acquire 380,000 shares of
common stock of the Company, with a maximum aggregate acquisition cost of Y3.4
billion, pursuant to Article 210 of the Commercial Code of Japan during the
period from the closing of this Ordinary General Meeting of Stockholders to the
closing of next Ordinary General Meeting of Stockholders, in order to enable the
Company to implement the stock option plan described in the Third Item of the
proposal.
Fifth Item: Election of seven (7) Directors
The terms of offices of all seven (7) Directors will expire at the closing of
this Ordinary General Meeting of Stockholders. You are requested to elect seven
(7) Directors.
Candidates for Directors are as follows:
Candidate Name Resume and Status as Other Company's Number of
No. (Date of Birth) Representative, if any Shares of the
Company
Owned
1. Hajime Sawabe April 1964: entered into the 7,000
Company shares
(Jan. 9, 1942) May 1991: General Manager of
European Div. of Recording Media
Business Group of the Company
June 1996: Director & General
Manager of Data Storage Components
Business Group of the Company
June 1998: President &
Representative Director of the
Company
(present post)
2. Jiro Iwasaki April 1974: entered into the 2,000
Company shares
(Dec. 6, 1945) June 1992: General Manager of
Corporate Planning Office of the
Company
June 1996: Director and General
Manager of Human Resources Dept. of
the Company
June 1998: Managing Director of the
Company
General Manager of Recording Media &
Systems Business Group of the
Company
June 2002: Director & Senior Vice
President of the Company (present
post)
in charge of Safety and Environment
(present post), and General Manager
of Administration Group of the
Company (present post)
3. Shinji Yoko April 1970: entered into the 1,000
Company shares
(Jan. 2, 1948) Jan. 1994: General Manager of
European Sales Headquarters of
Electronic Materials Sales &
Marketing Dept. of the Company
June 1998: Director of the Company
(present post)
June 2002: Director & Senior Vice
President of the Company (present
post)
General Manager of Electronic
Components Sales & Marketing Group
of the Company
(present post)
4. Takeshi Nomura April 1980: entered into the 1,000
Company shares
(Mar. 8, 1952) June 1996: General Manager of
Material Research Center of the
Company (present post)
June 1998: Director of the Company
June 2002: Director & Senior Vice
President of the Company (present
post)
July 2002: General Manager of
Intellectual Properties Center
(present post)
Jan. 2004: in charge of Technology
General Manager of Technology Group
of the Company
(present post)
5. Mitsuaki Konno April 1969: entered into the 2,000
Company shares
(Dec. 28, 1944) June 2000: General Manager of
Finance & Accounting Dept. of the
Company
Apr. 2001: General Manager of
Management Review & Support Dept. of
the Company (present post)
June 2002: Director & Corporate
Officer of the Company (present
post)
6. Yasuhiro Hagihara April 1971: registered as lawyer in 0 share
Washington D.C. in the U.S.
(Oct. 19, 1937) Aug. 1976: joined Graham and James
LLP in the U.S.
Jan. 1979: Partner of the said law
firm
July 2000: Partner of Squire,
Sanders & Dempsey LLP (Gaikokuhou
Jimu Bengoshi Jimusho) (present
post)
June 2002: Director of the Company
(present post)
7. * Takehiro Kamigama April 1981: entered into the 0 shares
Company
(Jan. 12, 1958) April 2001: General Manager in
charge of strategic technology of
Recording Device Business Div. of
the Company
Oct. 2001: General Manager of Head
Business Group of the Company
(present post)
June 2002: Corporate Officer of the
Company
June 2003: Senior Vice President of
the Company (present post)
(Notes)
1. None of the above seven (7) candidates has any special interests in the
Company.
2. The person with "*" mark is a new candidate for Director.
3. Mr. Yasuhiro Hagihara is a candidate for an outside Director to comply with
the requirement of outside director provided under Paragraph 7-2, Section 2,
Article 188 of the Commercial Code of Japan.
Sixth Item: Election of one (1) Corporate Auditor
Mr. Osamu Nakamoto, Corporate Auditor, will resign as Corporate Auditor at the
closing of this Ordinary General Meeting of Stockholders. You are requested to
elect one (1) Corporate Auditor to fill in a vacancy. Since Mr. Ryoichi Ohno, a
candidate for Corporate Auditor, will be elected as Corporate Auditor to fill in
the vacancy of the term of office of Mr. Osamu Nakamoto, Corporate Auditor, his
term of office will be coterminous with the remainder of the term of office of
Corporate Auditor to be resigned pursuant to the provisions of Article 18 of the
Articles of Incorporation of the Company.
The Board of Corporate Auditors has already approved this proposal.
A candidate for Corporate Auditor is as follows:
Candidate Name Resume and Status as Other Number of
No. (Date of Birth) Company's Representative, if any Shares of the
Company Owned
1 Ryoichi Ohno Feb. 1983: KPMG Peat Marwick 0 share
(Nov. 3, 1958) Nov. 1988: registered as Certified
Public Accountant in the U.S.A.
Sep. 1989: Kenneth Leventhal &
Co.
Sep. 1991: PricewaterhouseCoopers
July 1994: PricewaterhouseCoopers
Audit Partner in charge of Japanese
Practice New York Office
Sep. 2001: Senior Vice President
and Chief Financial Officer of The
Gibraltar Life Insurance Co., Ltd.
(present post)
Finance Vice President of
Prudential Financial Inc.
(present post)
(Notes)
1. There are no special interests between Mr. Ryoichi Ohno and the Company.
2. Mr. Ryoichi Ohno is a candidate for outside Corporate Auditor as prescribed
in Section 1, Article 18 of the Law Concerning Special Exceptions to the
Commercial Code Concerning Audit, etc. of Kabushiki Kaisha.
Seventh Item: Presentation of retirement grants to the retiring Director and
retiring Corporate Auditor
It is proposed that retirement grants shall be presented to Director, Mr.
Hirokazu Nakanishi, who will retire as Director at the closing of this meeting
upon the completion of his term of office, and Corporate Auditor, Mr. Osamu
Nakamoto, who will resign as Corporate Auditor at the closing of this meeting,
in appreciation of their meritorious services to the Company, within a
reasonable amount based on specified standards of the Company. The amount, the
date of presentation and procedures are requested to be entrusted to the
determination among the Board of Directors in case of the resigning Director and
to Board of Corporate Auditors in case of the resigning Corporate Auditor.
Resume of the resigning Director and Corporate Auditor is as follows:
Name Resume
Hirokazu Nakanishi June 1996: Director of the Company
June 1998: Managing Director of the Company
June 2002: Director & Senior Vice President of the
Company (to present)
Osamu Nakamoto June 2000: Corporate Auditor of the Company (to present)
End
Map to Technical Center of TDK Corporation
(Translation omitted)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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