Operations Review for the March 2010 Term

The Japanese economy during the current consolidated fiscal year (April 1, 2009 to March 31, 2010) demonstrated a steady recovery from the global economic crisis that began the year before last due to improving foreign economies and the effect of emergency economic stimulus measures. Consumer spending is increasing lead by automobiles and AV and home electronics products buoyed by various economic stimulus measures, and corporate incomes are improving, but there are also many counter factors, such as layoffs and shifting of production overseas, that are causing domestic capital investment to remain stagnant resulting in a continued difficult employment and personal income situation, so the market environment remains unstable. In addition, there are disparities between regions in the overall global economy. In Asia, the Chinese economy is recovering and growing led by domestic consumption spurred by economic stimulus policies and this is pulling the economies of other Asia countries into recovery. The economies of Europe and America, however, remain in poor shape, but the actions of various national governments are beginning to bear fruit and there are signs of a mild recovery.

The environment facing the TAMURA Group is also steadily shifting to recovery for electronic component and electro chemical material related products as inventories are adjusted and production increased. Capital investment, however, remains weak, so sales of equipment related products, such as information and soldering equipment related products, remain down. As for profitability, restructuring and other activities begun during the second half of last fiscal year are producing results, such as improved fundamentals, lower labor costs and expenses, and consolidation and elimination of facilities, but rising raw materials prices, such as for copper and steel, have pushed costs up higher than expected and sales of equipment related products were slow, so the large improvement in profitability during the second half has not enough to compensate for the losses during the first half.

Under these circumstances, the results for the consolidated fiscal year for the TAMURA Group were sales of ¥63,581 million (down 18.0% from the same term last year). Looking at profitability separately for the first and second halves shows an operating loss of ¥887 million for the first half, but a major improvement resulting in an operating income of ¥1,116 million for the second half, which put the company in the black for the year with an operating income of ¥229 million (compared to a ¥1,309 million operating loss the previous year). Looking at ordinary profit and loss, the Company posted a ¥1,170 million ordinary loss during the first half but returned to positive territory in the second half with an ordinary income of ¥866 million, however, this was not enough to cover for the first half loss resulting in an ordinary loss for the year of ¥303 million (compared to an ordinary loss of ¥2,719 million the previous year). In addition, extraordinary losses of ¥295 million was recorded to account for the depletion loss, inventory assets disposal loss, special discharge allowances, and other costs associated with the dissolution of subsidiary Op-Seed Tsunan Co., Ltd. during the 2nd quarter, ¥306 million for an allowance for bad debt set for stagnant receivables, etc. during the 4th quarter, approximately ¥1,130 million reduction resulting from an investigation of the recoverability of deferred income tax assets, and an increase in the adjustment amounts for corporate taxes, etc., resulting in a net loss for the year of ¥2,332 million (compared to a net loss of ¥7,506 million the previous year).