Business Report for FY 2006 - Pacific Ind · Business Report for FY 2006 From April 1, 2006 March...
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Business Report for FY 2006 From April 1, 2006 March 31, 2007 Financial Highlights Growth in both sales and income results in an increase in the annual dividend. Interview with the President Shinya Ogawa, President and Chief Executive Officer We have revised our Medium-Term Management Plan upward. We are aiming at sales of 100 billion yen. Special Feature Expanding TPMS Demand Securities code: 7250
Transcript of Business Report for FY 2006 - Pacific Ind · Business Report for FY 2006 From April 1, 2006 March...
Business Report for FY 2006From April 1, 2006 March 31, 2007
Financial Highlights
Growth in both sales and income results in an increase in the annual dividend.
Interview with the President
Shinya Ogawa, President and Chief Executive Officer
We have revised our Medium-Term Management Plan upward.
We are aiming at sales of100 billion yen.
Special Feature
Expanding TPMS Demand
Securities code: 7250
1
Financial Highlights
We achieved growth in both sales and income, thanks to our strong business performance.
Net sales
82.6 billion yen( 21.0% year-on-year)
Net income
3.14 billion yen( 174.0% year-on-year)
Dividends per share
10 yen( 2 yen year-on-year)
0
20,000
40,000
60,000
80,000
100,000
2002 2003 2004 2005 2006(Fiscal year)
46,12950,255
57,135
68,277
82,641
63,090
51,810
41,21843,773
39,789
(Million yen)
0
1,000
2,000
3,000
4,000
5,000
(Fiscal year)
(Million yen)
2002 2003 2004 2005 2006
1,473 1,436
1,8461,656
2,882
3,439
3,104
2,410
4,475
3,733
(Yen)
0
10.0
20.0
30.0
40.0
50.0
60.0
2002 2003 2004 2005 2006(Fiscal year)
24.127.1
6.8
33.2
20.6
13.6
58.7
41.5
14.5
26.3
0
20,000
40,000
60,000
80,000
100,000
2002 2003 2004 2005 2006(Fiscal year)
(Million yen)
63,22967,680
59,947
71,660
90,287
78,516
61,739
54,914
97,476
87,249
Net sales Ordinary income
Net income per share Total assets
2
Financial Highlights
We are pleased to present you our business
report for FY 2006 (the period from April 1,
2006 to March 31, 2007).
June 2007
To Our Shareholders
Shinya OgawaPresident and Chief Executive Officer
PACIFIC INDUSTRIAL CO., LTD.
0
1,000
2,000
3,000
4,000
5,000
2002 2003 2004 2005 2006
1,320
393
1,811
1,147
780
3,144
2,240
812
1,4541,498
(Fiscal year)
(Million yen)
0
10,000
20,000
30,000
40,000
50,000
2002 2003 2004 2005 2006
29,679
28,522
31,38433,211
39,42337,739
45,644
40,097
31,60133,052
(Fiscal year)
(Million yen)
Net income
Net assets
Consolidated figures
Nonconsolidated figures
3
Let me say that I’m partially satisfied. The numerical resultswe achieved were fine, but in my own opinion, I don’t believewe responded adequately to the demand for substantial produc-tion expansion. For example, we outsourced some productionsand used temporary workers from manpower agencies to offsetfacility and personnel shortages. As a result, we fell short of thedesirable level of thoroughness with regard to our manufacturing,and this was manifest in our activities for quality improvement,cost reduction and rationalization. As baby boomers continue toleave our workforce, developing core personnel has become anurgent issue that we must address. We are bearing this in mind aswe seek to achieve new heights in manufacturing capabilities.
During the term under review, the valve business and thestamping and resin products business, the two main segmentsfor the PACIFIC INDUSTRIAL Group, made roughly equalcontributions to our consolidated operating income. Our aim isto sustain balanced business growth by improving areas suchas our product development capabilities, product quality, pro-duction capacity and productivity in these two segments.
I’m delighted to report here that, in the fiscal year thatended in March 2007, we achieved solid results in all businesssegments. Thanks to this performance, we were able toachieve substantial gains in both consolidated net sales andincome. Currency exchange rates remained stable, but we con-fronted a serious challenge in the rising prices of our rawmaterials. Increased orders from Toyota Motor Corporationand other customers, as well as sharp growth in demand fortire pressure monitoring systems known as TPMS in theUnited States acted as key drivers of our business perfor-mance. Expanding production was the major challenge for usin this fiscal year. We took steps to expand our existing pro-duction facilities and build new ones. As a result, consolidatednet sales grew 21% year on year, to 82.6 billion yen, whileconsolidated ordinary income rose 30%, to 4.47 billion yen.Consolidated net income was up 174%, to 3.14 billion yen,reflecting an asset impairment loss at a subsidiary in the previ-ous year.
How do you summarize the business results for FY 2006?
We achieved steady results, with both salesand ordinary income rising to new recordhighs.
Q1 Are you satisfied with the results for this term?
We achieved positive outcomes from our initiativesin R&D and rationalization, but room for improve-ment remained in manufacturing capabilities.
Q2
Interview with the President
Revising the Medium-Term Management Plan upwardAiming at 100 billion yen in sales
2007), expanded the stamping plant operated by our subsidiaryin the United States (expanded operation started in October2006), and built new facilities for the resin business at the sub-sidiary.
So we have constructed a number of new plants. Key issuesfor us now are ensuring that they all make a smooth start ofoperations, while ensuring that they maintain quality.
Continuing the trend from this fiscal year, we expect capitalspending to be significant in the fiscal year ending March2008. Depreciation will also grow in fiscal 2007, followingchanges to the taxation system. Given these conditions, weexpect earnings growth to slow temporarily. However, we areconfident that we will be able to achieve rapid gains in incomeonce our new plants and facilities begin to make contributions.
Since establishing the first overseas base for our tire valvebusiness in Taiwan in 1984, we have set up and expanded ourproduction bases for the tire valve business as well as for ourstamping and resin product businesses in Taiwan, the UnitedStates and China, responding to the globalizing operations ofJapanese automakers. Parts for automotive presses are particu-larly costly. Particularly, as automotive stamping parts arebulky, local production offers great advantages in transporta-tion costs. To date, we have used our plant in Taiwan to meetdemands in China, but a new stamping plant in Tianjin, Chinawill be starting full operation this year.
In the United States, we merged two subsidiaries we estab-lished in 1999; one for stamping and resin business and theother for tire valve business. As these two operations are locat-ed next to each other, we expect the merger to produce posi-tive effects in indirect sections.
We are resolved to continue improving our global produc-tion and supply structure, raising the quality of our products,and undertaking activities of cost reductions.
4
Our Group is making investments to increase manufacturingequipment in order to realize appropriate machine loads. Weare endeavoring to improve our production structure inresponse to increasing numbers of vehicles manufactured byour major customers, their expansion in Kyushu and theiroverseas developments. It is also inevitable for us to continueto expand our production capacities for TPMS (Tire PressureMonitoring System).
Major capital investments in Japan during this fiscal yearinclude the construction of a new stamping plant on the premis-es of Higashi Ogaki Plant (The new stamping plant began oper-ation in November 2006) and construction of Kyushu Plant inFukuoka Prefecture, our first domestic plant outside GifuPrefecture (which started production in January 2007). We havestarted stamping and resin product operations respectively atthese two plans. We expect Kyushu Plant to make recruitmenteasier and enable us to hire good employees at reasonable wagerates, while at the same time lowering transportation expenses.
For TPMS, we added a fourth assembly line to our KitaOgaki Plant (operations commenced in August 2006) torespond to rapidly expanding demand.
Outside Japan, we constructed a stamping and welding plantin Tianjin, China (scheduled to commence operation in May
I understand that PACIFIC INDUSTRIAL has anaggressive program of capital investment.
We are making significant strategicinvestments in Japan and overseas inresponse to expanding demand, which isputting pressure on existing capacity.
Q3
Interview with the President
0
40
80
120
160
(Fiscal year)
Consolidated capital investment
Breakdown of consolidated capital investment in FY2007 (forecast)
14.2billion yen
2005 2006 2007 Forecast
(100 million yen)
94
134142
Japan71%
NorthAmerica12%
Asia17%
Can you tell us about your overseas businesses?
A new stamping plant in Tianjin, China willbegin full operation, and we reorganized oursubsidiaries in the United States.
Q4
5
Interview with the President
As a milestone towards our 100th anniversary in 2030, wehave established the “Pacific Glocal Vision 2015,” a long-termvision for the period up to 2015. “Glocal” is our coinage. Itembodies our ambition to become a leading parts manufactur-er both globally and locally. Our “OCEAN-10” is a specificplan created under this vision that covers the five-year periodto the fiscal year ending March 2011. With “technologies andoverseas” and “manufacturing is to cultivate human resources”as our key words, we adopted such targets as a 7% ratio ofordinary income to net sales and a 40% overseas sales ratio.We will surpass 86 billion yen in net sales, one of our finalnumerical targets of the 5 year plan, already in the fiscal yearending March 2008. We have received commitments for ourmanufacturing of oil pans for gasoline engines from ToyotaMotor Corporation, and we have started building continuousoperation lines for oil pans at Higashi Ogaki Plant in April2007 in response to the commitments. Those lines are slated to
start full operation by theend of 2008. Taking thesedevelopments into consid-eration, we revised oursales target of the 5 yearplan upward to 100 billionyen in May 2007.
We increased dividends for the fiscal year ended in March2007 from the 8 yen per share we paid in the previous year to10 yen per share, as a way of Return to Shareholders, reflect-ing our business expansion. Meanwhile, as our businesseshave growth potential, we believe that sustaining strategic cap-ital investments are extremely important to increase our earn-ings per share in the future. To enable the investments, weneed to increase retained earnings. We would like to ask forthe understanding of our shareholders on this point.
We are also planning to strengthen and improve our investorrelations (IR) activities. In addition to disclosing informationfully and promptly, we will improve our website and take partin IR fairs. Last year, I attended an IR fair myself, and had thechance to talk directly with our shareholders. It was an excel-lent opportunity.
Compliance and corporate social responsibility (CSR) arealso critical issues for companies. The most important thing ofall is, of course, legal observance. I’m always telling ouremployees that proper job execution is the basis for every-thing. I’m confident that public trust in our company will natu-rally rise if each and every employee makes a commitment tofulfilling their responsibilities in such areas as environmentalconcerns, manufacturing exactly to engineering drawings,achieving the agreed quality, and delivering products on time.
We hope that we can continue to count on the guidance andsupport of our shareholders in the years to come.
What message would you like to communicate toshareholders?
We seek to provide better Return toShareholders by improving earnings andpaying dividends.
Q6How much progress have you made on theMedium-Term Management Plan?
After only one year, we have already revisedour sales target in the Five-yearManagement Plan upward.
Q5
6
2002 2003 2004 2005 2006
(100 million yen)
(Fiscal year)
0
30
60
90
120
150
2007Forecast 2002 2003 2004 2005 2006 2007 2008
(10,000 units)
(Fiscal year)
0
2,000
4,000
6,000
8,000
10,000Japan and other regionsEuropeNorth America
Special Feature
Tire pressure monitoring systems (TPMS) are apparatuses that pre-vent problems that may arise by measuring air pressure and temperaturewithin tires and communicating abnormal conditions to the person in the driver’sseat. TPMS are composite products that incorporate not only tire valve technologiesbut also electronics and resin processing technologies. As a manufacturer that specializes invalves, we have studied and developed TPMS for run-flat tires for more than ten years. In theUnited States, the Transportation Recall Enhancement, Accountability and Documentation Act (TREAD Act), which regulatesautomobile and tire safety, was enacted in 2000. As a result, TPMS installation will become mandatory for all new cars sold inthe United States starting September 2007. At present, the United States accounts for a major part of TPMS demand worldwide.In Japan and Europe, TPMS is positioned as equipment for high-end automobiles.
Fueled by rapidly expanding demand in the United States, our TPMS sales increased from 4.6 billion yen in the fiscal yearended March 2006, to 9.2 billion yen in the fiscal year under review. We predict that TPMS sales will rise to 14 billion yen inthe fiscal year ending March 2008. In August 2006 we expanded our facilities, increasing TPMS annual production capacityfrom 8 million to 10 million units. When two additional lines currently under construction commence operation, our productioncapacity will rise to 16 million units.
We are currently supplying approximately 15% of the global demand for TPMS. As in the tire valve market, we aim to raiseour share of the global TPMS market to 25%. To this end, we plan to continue expanding our production. At the same time, weare focusing on developing next-generation technologies.
Kita Ogaki Plant,the manufacturingbase for TPMS
A TPMS transmitter
Demand for TPMS continues to grow. We aim to supply 25% of the global TPMS market.
A TPMS assembly line (in a clean room)
■Net sales for TPMS ■Forecast TPMS market size
73%
PrPress andess andresin presin productoduct
business segmentbusiness segment
Press andresin product
business segment
73%73%26%
Valve product Valve product business business segmentsegment
Valve product business segment
7
Business Results by Segment
Net sales in Japan exceeded the level of the previous fiscal year, on factors such as increased num-bers of automobiles manufactured by our major customers and changes in the types of cars they pro-duced. Despite the repercussions of a decline in auto production in Taiwan, net sales in overseasmarkets also surpassed the level achieved in the previous fiscal year, thanks to the resin businesslaunch by a U.S. subsidiary and expansion of the stamping business.
For this coming fiscal year, although we expect a slightly smaller number of consolidated sub-sidiaries to affect results, we predict that net sales to rival the level reported in the fiscal year underreview, supported by production increases in our existing facilities and the start of production at a sub-sidiary in China.
Stamping and resin product business segment
Net sales: 60.3 billion yen
( 17.3% year-on-year)
Operating income: 1.9 billion yen
( 15.5% year-on-year)
(Million yen)
(Million yen)
784
1,727 1,660
37,130
43,185
51,392
60,308
1,918
0
15,000
30,000
45,000
75,000
0
500
1,000
1,500
60,000
2,000
2003 2004 2005 2006(Fiscal year)
Net salesOperating income
■ Net sales and operating income■ Net sales by segment
Net sales for tire valves and valve cores exceeded the level recorded in the previous fiscal year. Netsales for direct tire pressure monitoring systems (TPMS) also posted a substantial year-on-yearincrease, the result of capital investment in response to growth in the number of models beingequipped with TPMS.
In the fiscal year ending March 2008, we anticipate that tire valves, valve cores and valve-relatedproducts will achieve net sales roughly on a par with the level recorded in the fiscal year under review.However, we expect a substantial increase in net sales for TPMS, a reflection of rising demand.Consequently, net sales for this segment should increase from the level of the fiscal year under review.
Valve product business segment
Net sales: 21.6 billion yen
( 33.1% year-on-year)
Operating income: 1.9 billion yen
( 37.1% year-on-year)
■ Net sales and operating income■ Net sales by segment
0
5,000
10,000
15,000
25,000
0
500
1,000
1,500
20,000
2,000
358560
1,390
12,51513,314
16,246
21,629
1,906
2003 2004 2005 2006
(Million yen)
(Million yen)
(Fiscal year)
Net salesOperating income
8
Regional Results
In Thailand and China, net sales of tire valves and valve-related products increased from the previous fiscal year. However, net sales of thesame products were down on a year-on-year basis in South Korea, attributable to growing competition with tire valves made in China. InTaiwan, auto production declined, and consequently net sales for stamping products were down from the previous year. Consolidated salesin Asia totaled 6.722 billion yen (a 4.7% decrease from the previous year). Consolidated operating income in Asia stood at 0.201 billion yen(declining 68.5%), on increased production preparation costs for the stamping business in Tianjin, China.
In addition to the resin business launch by a U.S. subsidiary and expansion of stamping operations, expansion in the type of cars equippedwith TPMS contributed to a substantial year-on-year rise in net sales. Consolidated net sales in North America reached 19.885 billion yen (ris-ing 45.0% from the previous year), and consolidated operating income in North America was 0.799 billion yen. The marked a return to theblack from a loss of 0.114 billion yen reported in the previous fiscal year.
Net sales for stamping and resin products and TPMS, that account for a significant percentage of our consolidated net sales in Japan,achieved a substantial increase from the previous fiscal year. Consolidated net sales in Japan totaled 56.033 billion yen (a 17.9% increasefrom the previous year), and consolidated operating income in Japan amounted to 2.956 billion yen (up 18.0%).
Japan
NorthAmerica
Asia
*Amounts by segment and amounts by region exclude inter-segment and inter-region transactions.
Tianjin Pacific Auto Parts Co., Ltd. [China]
Qingdao Pacific Hongfeng Industrial Co., Ltd. [China]
Pacific Industries (Thailand) Co., Ltd. [Thailand]
Pacific Valve Industrial Co., Ltd. [South Korea]Pacific Air Control Co., Ltd. [South Korea]
Pacific Engineering Corp.Pacific Development Co., Ltd.Taiyo Kosan Co., Ltd.Taiheiyo Sangyo Co., Ltd.PI System Co., Ltd.
Pacific Industries USA Inc. [United States]Pacific Manufacturing Ohio, Inc. [United States]
Takumi Stamping Inc. [United States]
Takumi Stamping Texas Inc. [United States]
Pacific Valve (Taiwan) Co., Ltd. [Taiwan]
Stamping and resin product businessValve product businessInformation and service business
PACIFIC INDUSTRIAL Group members
■ Net sales by region■ Net sales by region
■ Operating income by region
North AmericaJapan Asia
2003 2004 2005 20060
15,000
30,000
45,000
60,000(Million yen)
(Fiscal year)
56,033
19,885
6,722
39,010
6,3744,870
41,073
10,0266,035
47,508
13,711
7,057
2003 2004 2005 2006
(Million yen)
-1,000
0
1,000
2,000
3,000
(Fiscal year)
2,956
799
201
-781
1,671
324
1,996
479
-304-114
2,505
637
North AmericaJapan Asia
Net sales
82,641million yen
NorthAmerica
68%Japan
8%Asia
24%
9
The growth in capital investment for building new plants and increasing production inresponse to demand exceeded the growth in depreciation and amortization expenses.
Investments in securities increased with rises in the market values of shareholdings and the con-version of TAKUMI STAMPING INC. from a consolidated subsidiary to an equity method affiliate.
Deposits for admission decreased as a subsidiary golf courses converted them into sharesand made partial refunds in cash.
The statement method (for net assets) changed as a result of changes in accounting standards.
Notes for FY2006 (as indicated in Consolidated Balance Sheets)
Consolidated Financial Statements (summary)
Consolidated Balance Sheets(Unit: million yen, amounts of less than one million yen are discarded) (Unit: million yen, amounts of less than one million yen are discarded)
At the end of FY2005
Item At the end of FY2006
LiabilitiesCurrent liabilities
Notes and accounts payableShort-term loans payableAccrued expensesOthers
Long-term liabilitiesConvertible bonds payableLong-term loans payableDeferred tax liabilitiesDeposits for admissionOthers
Total liabilitiesMinority interestsMinority interestsShareholders’ equityCapital stockCapital surplusRetained earningsOther unrealized gains on marketable securitiesForeign currency translation adjustmentsTreasury stockTotal shareholders’ equityTotal liabilities, minority interests and shareholders’ equityNet assetsShareholders’ equity
Capital stockCapital surplusRetained earningsTreasury stock
Valuation and translation adjustments, etc.Other unrealized gains on marketable securitiesForeign currency translation adjustments
Minority interestsTotal net assetsTotal liabilities and net assets
27,8139,9515,7816,6375,442
24,0186,0008,2708,583
182982
51,831
－
－－－－－－－－
31,7934,3204,579
23,220△326
11,36411,986△6212,486
45,64497,476
22,3277,7456,1765,0143,390
27,9766,0009,5147,8903,623
94850,304
559
4,3204,578
20,65911,285△1,098△323
39,42390,287
－－－－－－－－－－－
At the end of FY2005
Item At the end of FY2006
Assets
Current assets
Cash and bank balance
Notes and accounts receivable
Inventories
Others
Allowance for doubtful receivables
Fixed assets
Tangible fixed assets
Buildings and structures
Machinery and vehicles
Tools, equipment and fixtures
Land
Construction in progress
Intangible fixed assets
Investments and other assets
Investments in securities
Prepaid pension expenses
Others
Allowance for doubtful receivables
Total assets
27,471
4,557
13,037
5,199
4,707
△30
70,004
40,175
10,069
14,157
5,640
5,779
4,529
530
29,298
26,857
1,864
607
△32
97,476
29,318
8,753
12,227
5,086
3,299
△47
60,968
33,897
7,414
11,381
5,867
5,332
3,902
680
26,390
24,678
1,332
407
△28
90,287
Point 1
Point 2
Point 3
Point 4
Point 1 Point 3
Point 4Point 2
10
Consolidated Financial Statements
(Unit: million yen, amounts of less than one million yen are discarded) (Unit: million yen, amounts of less than one million yen are discarded)
Consolidated Statements of Income
FY2005Item FY2006
82,641
70,648
11,993
8,090
3,902
988
415
4,475
104
172
4,407
1,309
△72
26
3,144
Net sales
Cost of sales
Gross margin
Selling, general and administrative expenses
Operating income
Non-operating income
Non-operating expenses
Ordinary income
Extraordinary income
Extraordinary loss
Net income before income tax, etc.
Income tax, inhabitant tax and enterprise tax
Income tax adjustments
Minority interests (△: negative)
Net income
68,277
58,397
9,880
6,783
3,096
730
387
3,439
57
1,927
1,570
1,217
△14
△779
1,147
Consolidated Statements of Cash Flows
FY2005Item FY2006
Cash flows from operating activitiesCash flows from investing activitiesCash flows from financing activitiesTranslation adjustments for cash and cashequivalentsChanges in cash and cash equivalentsBalance of cash and cash equivalents at thebeginning of the fiscal yearDecrease in cash and cash equivalents dueto exclusion from the scope of consolidationBalance of cash and cash equivalents at theend of the fiscal year
7,564△11,035△414
106△3,779
8,780
△596
4,404
6,087△9,160
5,657
2162,802
5,978
－
8,780
Net sales reached the record-high level, due to higher auto production volumes bymajor customers and expansion in the types of cars equipped with TPMS.
Ordinary income rose to a new record high, thanks to substantial contributions madethrough sales growth and measures to improve costs.
Notes for FY2006 (as indicated in the Consolidated Statements of Income)
Point 1
Point 2
Point 1
Point 2
4,320
－4,320
4,578
0
0
4,579
20,659
△269
△269
△45
3,144
2,560
23,220
△323
△3
0
△2
△326
29,235
△269
△269
△45
3,144
△3
0
2,558
31,793
11,285
700
700
11,986
△1,098
476
476
△621
10,187
1,176
1,176
11,364
559
1,926
1,926
2,486
39,983
△269
△269
△45
3,144
△3
0
3,102
5,661
45,644
Balance as of March 31, 2006
Changes during the consolidated fiscal year under review
Cash dividends (Note)
Cash dividends
Bonuses to Directors and Corporate Auditors (Note)
Net income
Acquisition of treasury stock
Disposition of treasury stock
Net changes in items other than shareholders’ equity during the consolidated fiscal year under review
Total changes during the consolidated fiscal year under review
Balance as of March 31, 2007
Consolidated Statements of Changes in Equity (for FY2006)(Unit: million yen, amounts of less than one million yen are discarded)
Item Capital stock
Capital surplus
Retained earnings
Treasury stock
Foreign currencytranslation
adjustments
Shareholders’ equity Valuation and translation adjustments, etc.
Other unrealized gainson marketable
securities
Total share-holders’ equity
Minorityinterests
Total netassetsTotal valuation
and translationadjustments, etc.
(Note) These are income disposition items resolved at the ordinary general meeting of shareholders in June 2006.
11
Nonconsolidated Financial Statements (summary)
Nonconsolidated Balance Sheets(Unit: million yen, amounts of less than one million yen are discarded)
At the end of FY2005
Item At the end of FY2006
21,95365,29526,474
59738,22487,249
25,26921,88247,151
－－－－－－－
28,1324,3204,576
19,456△220
11,96440,09787,249
AssetsCurrent assetsFixed assets
Tangible fixed assetsIntangible fixed assetsInvestments and other assets
Total assetsLiabilitiesCurrent liabilitiesLong-term liabilitiesTotal liabilitiesShareholders’ equityCapital stockCapital surplusRetained earningsOther unrealized gains on marketable securitiesTreasury stockTotal shareholders’ equityTotal liabilities and shareholders’ equityNet assetsShareholders’ equity
Capital stockCapital surplusRetained earningsTreasury stock
Valuation and translation adjustments, etc.Total net assetsTotal liabilities and net assets
21,23357,28221,682
71634,88378,516
18,58122,19540,776
4,3204,575
17,79911,260△217
37,73978,516
－－－－－－－－
Nonconsolidated Statements of Income(Unit: million yen, amounts of less than one million yen are discarded)
FY2005Item FY2006
63,090
53,916
9,174
6,290
2,883
1,061
211
3,733
－
125
3,608
1,131
236
2,240
－
－
－
Net sales
Cost of sales
Gross margin
Selling, general and administrative expenses
Operating income
Non-operating income
Non-operating expenses
Ordinary income
Extraordinary income
Extraordinary loss
Net income before income tax
Income tax, inhabitant tax and enterprise tax
Adjustments for income tax, etc.
Net income
Balance brought forward
Interim dividends
Unappropriated retained earnings
51,810
44,068
7,742
5,276
2,465
875
235
3,104
12
1,259
1,857
1,042
34
780
4,258
161
4,877
Nonconsolidated Statements of Changes in Equity (for FY2006) (Unit: million yen, amounts of less than one million yen are discarded)
Balance as of March 31, 2006Changes during the fiscal year under review
Reversal of reserve for advanced depreciation of replacement assetsReversal of reserve for special depreciationCash dividendsBonuses to Directors and Corporate AuditorsNet incomeAcquisition of treasury stockDisposition of treasury stockNet changes in items other than shareholders’ equity during the fiscal year under review
Total changes during the fiscal year under reviewBalance as of March 31, 2007
ItemCapital stock
Capital surplus
Capital reserve
Other capital surplus
Earned reserve
Treasury stock
Other unrealized gains on marketable
securities
Otherretainedearnings
Retained earnings
Shareholders’ equity Valuation and translation adjustments, etc.
Total netassets
Total valuation and translationadjustments,
etc.
Total share-holders’ equity
4,320
－4,320
4,575
－4,575
－
0
00
1,080
－1,080
16,719
－－
△538△45
2,240
1,65618,375
△217
△30
△2△220
26,479
－－
△538△45
2,240△3
0
1,65328,132
11,260
704704
11,964
11,260
704704
11,964
37,739
－－
△538△45
2,240△3
0
7042,357
40,097
12
The Dakar Rally is the toughest race in theworld. Competitors cover approximately10,000 kilometers, from Lisbon to Dakar inthree weeks. Mounted on an assistant car forthe Land Cruiser HDJ100 used by Team LandCruiser TOYOTA AUTO BODY, a Lisbon-Dakarparticipant in the non-converted stock car cat-egory, our TPMS played a supporting role forthe team.
PACIFIC INDUSTRIAL has developedthe world’s lightest engine cover,offering excellent sound and vibrationinsulation, by developing a low-den-sity nylon resin material with the aidof nanotechnology and using thematerial in combination with a newmanufacturing method. Mounted onthe Lexus LS460, the engine coverreceived Toyota Motor Corporation’s2006 “Special Award for WeightReduction.” This was a result of thehigh marks given to our ability todevelop technologies in response toenvironmental concerns. We intendto continue contributing to globalenvironmental conservation byestablishing technologies, productsand manufacturing methods that areenvironmentally friendly.
February 2007 September 2006
December 2006
January 2007
In September 2006, weachieved aggregate pro-duction of 10 million TPMStransmitters. When westarted TPMS productionin December 2000, ourlines were capable of pro-ducing only 200,000 unitsa year. We plan to boostour TPMS production
capacity to 16,000,000 units a year in fiscal 2007. As thechange in volume indicates, our TPMS business is contin-uing to expand steadily.
The book charts our history from our founding in 1930 tothe present, with text and photos from our past. In additionto the book, the supplement CD-ROM contains the con-tents of the book and a separate title “50 Years at PACIFICINDUSTRIAL,” both of which are available for browsing atthe following Web page.
July 2006
At the PACIFIC IN-DUSTRIAL booth atthe Nagoya StockExchange IR Expo2006 held at theNagoya Fukiage Hallin July 2006, ourPresident ShinyaOgawa introducedthe company and
explained our business forecasts and other points inperson, helping individual investors deepen theirunderstanding of our operations. We are resolved tocontinue to be proactive in our IR activities.
Topics for Fiscal 2006
PACIFIC INDUSTRIAL Receives Special Award for WeightReduction
Aggregate TPMS Transmitter ProductionVolume Reaches 10 Million Units
PACIFIC INDUSTRIAL Publishes “75 Years at PACIFICINDUSTRIAL – Heading for the Ocean”
PACIFIC INDUSTRIAL Participates in an IRFair for Individual Investors
PACIFIC INDUSTRIAL Enters the Dakar Rally through TPMS
http://www.pacific-ind.co.jp/jpn/company/unabara75.html
13
■ Corporate Directors, Auditors and Officers (as of June 23, 2007)
Moritaka Yoshida Chairman, Member of the Board ofDirectors
Shinya Ogawa President and Chief Executive Officer,Member of the Board of Directors
Itsuo Yoshikawa Senior Managing Officer, Member ofthe Board of Directors
Yasunori Hata Senior Managing Officer, Member ofthe Board of Directors
Masaharu Oba Senior Managing Officer, Member ofthe Board of Directors (promoted)
Yoshiaki Hayashi Managing Officer, Member of theBoard of Directors
Katsuhiro Nobuta Fulltime Corporate Auditor
Takafumi Shimizu Fulltime Corporate Auditor(newly appointed)
Toshio Kinjo Corporate Auditor
Yukio Manita Corporate Auditor
Masami Mori Managing Officer
Chikashi Suzuki Managing Officer (promoted)
Takayuki Ishizuka Managing Officer (promoted)
Junzo Matsumoto Managing Officer (promoted)
Tetsuo Taniguchi Officer
Kenji Mizobe Officer
Toshiteru Ando Officer
Ikuo Kataoka Officer
Hiroshi Nagata Officer
Tsunenaga Moshino Officer (newly appointed)
Masao Shibata, Fulltime Corporate Auditor, and Tsugumichi Tanaka,Managing Officer, retired from their respective offices.
Company Profile
Introducing Our Website
www.pacific-ind.co.jp
■ Company Profile
Name: PACIFIC INDUSTRIAL CO., LTD.
Head Office location: 100 Kyutoku-Cho, Ogaki City, GifuPrefecture, 503- 8603 Japan
Tel: 0584-91-1111 (main switchboard)
Established: August 8, 1930
Capital stock: 4,320 million yen
Number of employees: 1,500 persons
Businesses: Manufacturing and sales ofautomotive parts, electricappliance components, electronicdevices and other products
■ Operations in Japan
Manufacturing plants and branch offices:Nishi Ogaki Plant, Higashi Ogaki Plant, Yoro Plant, KyushuPlant, Kita Ogaki Plant, Mino Plant, Tokyo Branch Office,PACIFIC TERA HOUSE and PACIFIC TOYOTA CITY OFFICE
14
■ State of Shares
Number of shares the Company is authorized to issue: 90,000,000 shares
Number of shares already issued: 54,646,347 shares
Number of shareholders: 3,982 parties
Notes for Shareholders
■ Principal Shareholders (top 10 shareholders)
■ Share Distribution byOwner
■ Changes in Dividends/Dividend Payout Ratio
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Ogaki Kyoritsu Bank, Ltd.
The Juroku Bank, Ltd.
Nippon Life Insurance Company
The Dai-ichi Mutual Life Insurance Company
Pacific Engineering Corp.
The Master Trust Bank of Japan, Ltd. (trust account)
Giken K. K.
Japan Trustee Services Bank, Ltd. (trust account)
Nipponkoa Insurance Co., Ltd.
2,6792,6712,6192,4572,3491,987
1,8681,860
1,7471,737
4.97 4.964.864.564.363.69
3.473.45
3.243.22
Shareholdingratio(%)
Shareholder nameNumber ofshares held
(thousands of shares)
Foreign corporations 10.4%
Treasurystock1.4%
Securitiescompanies 0.8%
Financial institutions 43.0%
Other Japanese corporations 13.0%
Individualsand others
31.4%
(Yen/share) (%)
2003 2004 2005 20060
3
6
9
12
0
15
30
45
60
(Fiscal year)
Year-end dividendsInterim dividends
Dividend payout ratio
2.5
3.56 yen
8 yen 8 yen
3
5
3
5
5
510 yen
41.4%
30.4%
58.7%
24.1%24.1%
Share Information (as of March 31, 2007)
(Note) Shareholding ratios exclude treasury stock.
Business year:
Annual general meeting of shareholders:
Record date for year-end dividends:
Record date for interimdividends:
Transfer agent:
Agency administrationoffice:
Agency mailing address:
Intermediary offices:
Trading unit:
Offices for requestingthe purchase of sharesof less than 1 tradingunit or the sale ofenough shares to makethe total as 1 tradingunit:
Method of public notice:
Stock exchange listings:
Securities code:
From April 1 to March 31 of the following year
June
March 31 of each year
September 30 of each year
Mitsubishi UFJ Trust and BankingCorporation1-4-5 Marunouchi, Chiyoda-ku, Tokyo
Corporate Agency DivisionMitsubishi UFJ Trust and BankingCorporation1-4-5 Marunouchi, Chiyoda-ku, Tokyo
Corporate Agency DivisionMitsubishi UFJ Trust and BankingCorporation7-10-11 Higashi-Suna, Koto-ku, Tokyo137-8081Phone: 0120-232-711
Branch offices of Mitsubishi UFJ Trust andBanking Corporation across Japan Head office and branch offices of NomuraSecurities Co., Ltd. across Japan
1,000 shares
Agency administration office orIntermediary offices above mentionedPlease contact your securities company ifyou have deposited share certificates withthe securities company under the CentralSecurities Custody & Book-Entry TransferSystem.
Electronic public notices will be posted onour website (http://www.pacific-ind.co.jp).
Tokyo Stock Exchange and Nagoya StockExchange
7250
As a Global Manufacturer of Technology Components,
We will endeavor to develop and enhance technologies and to supply high quality products in response to the needs of customers;
We value our employees as our essential family members and pledge to provide a place where they enjoy working and creating; and
We will continue to contribute to society, confirming our role in the world as an excellent company as well as an environmentally conscious company.
Corporatemission
Managementphilosophy
Management with creativity and openness
Realization of an e-company
The letter “e”
of an e-company
symbolizes:
engineering
ecology
e-business
emotion
eff ic iency
enrichment
enjoyment
(technologies as a selling point);
(consideration for the environment);
(e-business);
(overflowing energy);
(efficient operations);
(securing of revenues); and
(the joy of fruitful life).
100 Kyutoku-Cho, Ogaki City, Gifu Prefecture, Japan Tel: 0584-91-1111 (main) Fax: 0584-92-1804
Website: http://www.pacific-ind.co.jp
Corporate logo
