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Transcript of Information Meeting Information Meeting Information Meeting
1
October 26, 2004
Information MeetingInformation MeetingInformation Meeting
October 26, 2004October 26, 2004
11stst Half FY2004Half FY2004
Financial Results for 1H/FY2004 Financial Results for 1H/FY2004 and Forecast for FY2004and Forecast for FY2004
2. Review of Operations and Outlook2. Review of Operations and Outlook
NOTE
•Prepared in accordance with US GAAP•Values in charts are rounded down and may not equal totals
1.1.
2
October 26, 2004
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Cautionary Statement Cautionary Statement with Respect to Forwardwith Respect to Forward--Looking StatementsLooking Statements
This presentation contains “forward-looking statements” that are based on Advantest's current expectations, estimates and projections. These statements include, among other things, a discussion of Advantest’s business strategy, outlook and expectations as to market and business developments, production and capacity plans. These forward-looking statements can be identified by use of forward-looking terminology are subject to known and unknown risks, uncertainties and other factors that may cause Advantest’s actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. These factors include: (i) changes in demand for the products and services produced and offered by Advantest’s customers, including semiconductors, communications services and electronic goods; (ii) circumstances relating to Advantest’s investment in technology, including its ability to develop in a timely fashion products that meet the changing needs of semiconductor manufacturers and communications network equipment and component makers and service providers; (iii) significant changes in the competitive environment in the major markets where Advantest purchases materials, components and supplies for the production of its products or where its products are produced, distributed or sold; and (iv) changes in economic conditions, currency exchange rates or political stability in the major markets where Advantest procures materials, components and supplies for the production of its principal products or where its products are produced, distributed or sold. A discussion of these and other factors which may affect Advantest’s actual results, levels of activity, performance or achievements is contained in the “Operating and Financial Review and Prospects”, “Key Information - Risk Factors”and “Information on the Company” sections and elsewhere in Advantest’s annual report on Form 20-F, which is on file with the United States Securities and Exchange Commission.
Financial Results for 1H/FY2004 Financial Results for 1H/FY2004 and Forecast for FY2004and Forecast for FY20041.1.
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October 26, 2004
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
1st Half 1st Half Year On Year("X"=times)
(Forecast)
Net Sales 62.2 174.2 146.5 2.4 X 250.0
Gross Profit 30.4 88.7 78.3 2.6 X 134.0
OperatingIncome
4.4 30.9 45.4 10.2 X 70.0
Income BeforeTax
3.7 28.8 46.8 12.6 X 71.0
Net Income 2.4 17.3 28.5 11.6 X 43.0
FY2003 FY2004
Achievement and ForecastAchievement and ForecastIn Billions of Yen
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Orders, Sales, and BacklogOrders, Sales, and Backlog
1st Half FY 1st HalfYear On Year("X"=times) (Forecast)
Orders 80.2 208.9 125.2 1.6 X 230.0Semiconductor and
Component Test Sy stem 56.3 154.0 96.1 1.7 X 175.0
Mechatronics Sy stem 16.2 39.4 24.6 1.5 X 44.0Serv ices, Support, and
Other 9.6 20.1 10.0 +3.6% 19.0
Sales 62.2 174.2 146.5 2.4 X 250.0Semiconductor and
Component Test Sy stem 40.9 123.4 113.1 2.8 X 190.0
Mechatronics Sy stem 13.2 34.2 28.1 2.1 X 48.0Serv ices, Support, and
Other 9.9 20.4 10.8 +9.3% 20.0
Backlog 34.7 51.4 30.1 -13.2% 31.4
FY2003 FY2004In billions of yen
Note:Total includes Elimination of Intersegment Sales
4
October 26, 2004
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
QuarterlyQuarterly Order TrendsOrder Trends
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY2003FY2002FY2001FY2000FY1999 FY2004
100
80
60
40
20
0
47.5
77.6
68.260.4
48.3
31.8
In billions of yen
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
9.616.2
56.3
20.1
39.4
154.0
10.024.6
96.1
19.0
44.0
175.0
2003 中間 2003通期 2004 中間 2004通期
OrdersOrders by Business Segmentby Business Segment
FY2003 FY20041H 1HFY FY(Forecast)
300
250
200
150
100
50
0
Mechatronics System Business
Semiconductor and Component Test System Business
Services, Support and Others230.0
80.2
208.9
125.2
Services and Other① + 0.3 bil. Yen (+ 4%)② - 1.1 bil. Yen ( - 6%)
Mechatronics① + 8.4 bil. Yen (1.5 X)② + 4.5 bil. Yen (1.1 X)
Semiconductor and Component① +39.8 bil. Yen (1.7 X)② +20.9 bil. Yen (1.1 X)
FY2004
① 1H YoY Change② FY Forecast YoY Change
In billions of yen
Notice:Total includes Elimination of Intersegment Sales
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October 26, 2004
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QuarterlyQuarterly Sales TrendsSales Trends
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Fy2003FY2002FY2001FY2000FY1999 FY2004
100
80
60
40
20
0
74.572.0
68.2
35.143.6
27.1
In billions of yen
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
9.913.2
40.9
20.4
34.2
123.4
10.828.1
113.1
20.0
48.0
190.0
SalesSales by Business Segmentby Business Segment
FY2003 FY20041H 1HFY FY(Forecast)
300
250
200
150
100
50
0
250.0
146.5174.2
62.2
Mechatronics System Business
Semiconductor and Component Test System Business
Services, Support and Others
Services and Other① +0.9 bil. Yen (+ 9%)② - 0.4 bil. Yen ( - 2%)
Mechatronics① +14.8 bil. Yen (2.1 X)② +13.7 bil. Yen (1.4 X)
Semiconductor and Component① +72.2 bil. Yen (2.8 X)② +66.5 bil. Yen (1.5 X)
FY2004
① 1H YoY Change② FY Forecast YoY Change
In billions of yen
Notice:Total includes Elimination of Intersegment Sales
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2.412.7
25.8
5.7
30.0
87.7
3.6
31.9
77.5
6.0
52.0
132.0
Sales
FY2003 FY20041H 1HFY FY(Forecast)
Other① +1.2 bil. Yen (1.5 X)② +0.2 bil. Yen (+ 5%)
SoC① +19.2 bil. Yen (2.5 X)② +21.9 bil. Yen (1.7 X)
Memory① +51.6 bil. Yen (3.0 X)② +44.2 bil. Yen (1.5 X)
FY2004
① 1H YoY Change② FY Forecast YoY Change
200
150
100
50
0
SoC
Memory
Other
190.0
113.1123.4
40.9
Semiconductor and Component Semiconductor and Component Test System BusinessTest System Business
In billions of yen
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
12.37.8 8.84.53.8
24.8
29.1
31.8
28.6
10.4
16.2
57.9
37.0
34.6
16.27.513.4
37.6
60.0
53.0
34.0
13.023.0
67.0
60.2
74.3 73.266.7
Sales Sales by Regionby Region
FYFY2003
1H FY(Forecast)1HFY2004
①+26.7 bil. Yen (4.4 X)②+21.1 bil. Yen (1.7 X)
Taiwan
Rest of Asia
SouthKorea
Europe
Americas
Japan
FY2004
①+24.7 bil. Yen (3.0 X)②+30.8 bil. Yen (2.1 X)
① +7.3 bil. Yen (1.8 X)② +5.3 bil. Yen (1.2 X)
① +3.0 bil. Yen (1.7 X)② +2.5 bil. Yen (1.2 X)
① +9.6 bil. Yen (3.5 X)② +6.7 bil. Yen (1.4 X)
①+12.8 bil. Yen (1.5 X)② +9.0 bil. Yen (1.2 X)
① 1H YoY Change② FY Forecast YoY
Change
%70
60
80
300
250
200
150
100
50
0
250.0
146.5174.2
62.2
AmericasJapan
EuropeSouth KoreaTaiwanRest of Asia
Overseas Sales RatioIn billions of yen
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Operating Income Operating Income andand Net IncomeNet Income
FYFY2003
1H FY(Forecast)1HFY2004
Net Income①+26.1 bil. Yen (11.6 X)②+25.6 bil. Yen ( 2.5 X)
Operating Income①+40.9 bil. Yen (10.2 X)②+39.0 bil. Yen ( 2.3 X)
FY2004
①1H YoY Change②FY Forecast YoY
Change
80
70
60
50
30
40
0
20
10
43.0
70.0
28.5
45.4
17.3
30.9
2.44.4
Net Income
Operating Income
In billions of yen
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
億円
03年度(予想)
Operating Profit and LossOperating Profit and Lossby Business Segmentby Business Segment
FY2004
① 1H YoY Change② FY Forecast YoY
Change
Services and Others① +0.1 bil. Yen ( 1.3 X)② +4.5 bil. Yen ( - )
Mechatronics① +6.7 bil. Yen ( 3.1 X)② +3.7 bil. Yen ( 1.3 X)
Semiconductor and Component① +34.1 bil. Yen (10.5 X)② +28.3 bil. Yen ( 2.0 X)
60
50
40
20
30
0
15.09.9
57.0
2.0
37.7
11.2
28.6
Semiconductor and Component Test System BusinessMechatronics System Business
Services, Support and Others
10
-2.50.5
3.13.6
0.7
FYFY2003
1H FY(Forecast)1HFY2004
In billions of yen
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In billions of yen
Current Assets
Accounts Receivable
Fixed & Other Assets
Current Liabilities
Fixed & Other Liabilities
Shareholders’ Equity
% of total assets
Inventories
Total AssetsTotal Assets
Mar. 2003
Cash & Cash Equivalent
Sep. 2004
86.2
71.4%
32.6
139.9
273.7
76.2
349.957.4
42.5
249.9
Liabilities & EquityLiabilities & Equity 349.9
Mar. 2004
42.9
74.9%
34.9
87.3
182.0
99.2
281.228.3
42.1
210.6
281.2
Balance SheetBalance Sheet
76.1
67.0%
49.4
101.1
255.7
75.0
330.866.6
42.4
221.7
330.8
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Cash FlowCash Flow
1HFY2003 FY2004
FY 1H FY (Forecast)
Free CF① +28.1 bil. Yen (3.5 X)② +45.7 bil. Yen (3.0 X)
Investment CF① -3.0 bil. Yen (-2.3 X)② -4.9 bil. Yen (-2.0 X)
Business CF① +31.1 bil. Yen (3.3 X)② +50.6 bil. Yen (2.8 X)
FY2004
①1H YoY Change②FY Forecast YoY Change
80
70
60
50
30
40
0
20
10
△100
Investment CF
Business CF
Free CF
68.9
78.9
11.0
44.5
23.128.2
39.2
13.3
-5.3-5.0-2.2 -10.0
In billions of yen
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CAPEX CAPEX andand DepreciationDepreciation
FY2002 FY2003 FY2004(Forecast)
9.010.0
9.3
5.6
10.9
7.5
Depreciation
CAPEX
1H(Result)
6
4
2
8
0
10
12
5.1
4.0
In billions of yen
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
12.0
02年度 03年度 04年度
R&D ExpenseR&D Expense%
20
10
30% of Net Sales
30
20
10
0
FY2004(Forecast)FY2003FY2002
25.021.6
23.6
24.1 12.4 10.0
1H(Result)5
15
25
In billions of yen
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2. 2. Review of Operations and OutlookReview of Operations and Outlook
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Factors Behind Sales Expansion in 1H/FY2004Factors Behind Sales Expansion in 1H/FY2004
Japan
Taiwan
Rest of Asia
Americas
South Korea
SoC Tester
Memory Tester
(Digital Consumer Products )
(DRAM, Flash Memory)LCD Driver Tester (LCD Panel Drivers)
Memory Tester (Flash Memory)SoC Tester (PC-Related)
Memory Tester (Flash Memory)
LCD Driver Tester (LCD Panel Drivers)
SoC TesterMemory Tester (DRAM, Flash Memory)
(PC-Related)
12
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2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Orders
Sales
Operating Income
Net Income
230 billion yen
250 billion yen
70 billion yen
43 billion yen
Performance Forecast for FY2004
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Order Trends in 2H/FY2004 (Forecast)Order Trends in 2H/FY2004 (Forecast)
Stable Weak
Japan
Taiwan
Americas
SouthKorea
Memory Tester
Memory Tester
SoC Tester
Memory Tester
DRAMFlash-Memory
(PC-Related)
DRAMFlash-Memory
DRAMFlash-Memory
Memory Tester (DRAM)
LCD Driver Tester
LCD Panel Drivers
SoC Tester Digital ConsumerProducts
LCD Panel Drivers
LCD Driver Tester
13
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2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Investment moves to DDR2
CAPEX for 300mm plants
Increasing range of applications
CAPEX in Taiwan
Positive FactorsPositive Factors
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Potential Risk FactorsPotential Risk Factors
The conditions of American economy
Trends of Semiconductor prices
Demand for PCs
Rising Oil prices
14
October 26, 2004
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Semiconductors Shipment and Growth Rate
98 99 00 01 02 03 04 year
0
50
-50
%
20
10
0
In billions of US dollar
Growth Rate(6months moving average)
Shipment Value
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Factors of Increasing ProfitFactors of Increasing Profit
Expanding Expanding Sales and Sales and
Market ShareMarket Share
Restructuring Restructuring of of
ManufacturingManufacturingOperationsOperations
Continuous Continuous R&DR&D
Timely Release of
New Products
Further Increasein Share
of Memory Marketand
Target Share of SoC Market: 20%
Reduced Lead Times
and Inventories
Increasing ProfitIncreasing Profit
15
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Restructuring of Manufacturing OperationsRestructuring of Manufacturing Operations
Introduction of the Store Production System
Lead Time Reduction
Reorganization of Manufacturing Operations
Inventory Reduction
(From 3 Months to 1 Month)
(From 49.4 billion yen to 32.6 billion yen)
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Products Slated for Release in FY2004
Digital Consumer ProductsDigital Consumer Products
LCD Driver ICLCD Driver ICMixed SignalMixed Signal
Image SensorsImage Sensors
DRAM Front EndDRAM Front End DRAM Back EndDRAM Back End
SoC Handlers SoC Handlers EB LithographyEB Lithography
T2000 ModulesT2000 Modules
R F Test SystemsR F Test Systems
SoC/AS
Memory Tester
Other
Optical Test SystemsOptical Test Systems
FY2003FY2003 FY2004(Forecast)FY2004(Forecast)
26%26% 27%27%
Number of New Products 1515 2525
Memory TesterMemory Tester 44 44
SoC / ASSoC / AS 1111 1414
OtherOther -- 77
New Product Ratio
16
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61% 11%
$1.1billion $2.3billionSize of Market, Year 2003
Memory Tester SoC Tester
Expanding Sales and Market Share Expanding Sales and Market Share
(Estimated by Advantest)
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
2002 2003 2004 2005 2006 2007 2008
500
1000
1500
2000
2500
DDR SDRAM
600/1200
2500/50005000
[Mbps]
AZUSA
T5593200/400
166/333200/400
266/533
333/667400/800
400/800 533/1066
667/1333
DDRII SDRAM
DDRIII SDRAM
T5593+Option
700/1400
800/1600
1000/2000
1250/2500
Graphic DRAM
RLDRAM
300/600400/800
500/1000
600/1200
750/1500800/1600
1000/2000?
SSRAM
500/1000
600/1200750/1500
1000/2000SGRAM
250/500
1000/2000
450/900
500/1000
year
DRAM Trends and TestersDRAM Trends and Testers
(Estimated by Advantest)
17
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98 99 00 01 02 03 04 05
98 99 00 01 02 03 04 05
2468
10121416
NAND
NOR
NAND
NOR1234567
0
0year
FlashFlash--Memory MarketMemory MarketIn billions of dollars
In billions of bits
<Sales Trends>
<Bit Count Trends>
(Source: Nikkei Business Publications, Inc)
year
(projected)
(projected)
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
The T2000 TodayThe T2000 Today<<Expanded LineupExpanded Lineup>>
Development of Development of
Modules for a Modules for a
Wide Variety of Wide Variety of
ApplicationsApplications
Reduced Reduced FootprintFootprint
Low Cost Low Cost MainframeMainframe
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300mm Equipment Investment
<EU>2 Lines(3 Lines)
<Asia>8 Lines(10 Lines)
<Japan>9 Lines(3 Lines)
<North America>2 Lines(6 Lines)
<Predicted for Coming Years>
Upper Level:scheduledLower Level:operating
(Projected figures: Advantest)
2004-1-272004.10.262004.10.26 Information MeetingInformation Meeting
Uses of Semiconductors Breakdown
0%
5%
10%
15%
20%
25%
30%
35%
1995 2000 2004 2007
PC
CellularPhonesAutomobiles
Servers
Video Games
HDD, ODD
Digital STB
DVD Recorder
DVD Player
Digital StillCamerasDigital TV
PC
Cellular Phones
Automobiles
(Projected figures: Advantest)
Servers
19
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