Annual Report 2007 - Komatsu

FINANCIAL REVIEW
wholly owned subsidiary engaging in the production and sale
of temperature-control equipment for semiconductor manufacturing,
increased profits of the electronic segment, the sale of
polycrystalline silicon business reduced segment profits to
¥2,137 million (US$18 million) by ¥908 million over the previous
year. Consequently overall consolidated segment profit improved
further by ¥85,245 million from the previous year to
¥249,746 million (US$2,116 million).
(6) Impairment Loss on Long-lived Assets Held for Use
Impairment loss on long-lived assets held for use for the fiscal
year ended March 31, 2007 decreased by ¥4,710 million, to
¥81 million (US$0.69 million) as compared to ¥4,791 million
for the fiscal year ended March 31, 2006.
(7) Impairment Loss on Goodwill
While impairment loss on goodwill for the fiscal year ended
March 31, 2006 was ¥3,041 million, it didn’t occur for the
fiscal year ended March 31, 2007.
(8) Other Operating Income (Expenses)
Other operating expenses of ¥4,924 million(US$42 million) for
the fiscal year ended March 31, 2007 decreased by ¥11,683
million as compared to income of ¥6,759 million for the fiscal
year ended March 31, 2006. This decrease was primarily due to
the gain recognized on the sale of the Company’s ownership
interest in the polycrystalline silicon business in the fiscal year
ended March 31, 2006.
(9) Operating Income
As a result, operating income rose by ¥81,313 million to
¥244,741 million (US$2,074 million) in the current year from
the ¥163,428 million recorded during the previous year.
(10) Other Income (Expense)
Interest and dividend income of ¥8,532 million (US$72 million)
was up ¥1,708 million compared with ¥6,824 million in the
previous year. Due to an increase in interest rates, interest
expense of ¥15,485 million (US$131 million) was up ¥3,277
million compared with ¥12,208 million in the previous year.
(11) Income from Continuing Operations before Income
Taxes, Minority Interests and Equity in Earnings of
Affiliated Companies
Income from continuing operations before income taxes rose
by ¥80,712 million to ¥236,491 million (US$2,004 million) in
the current year from the ¥155,779 million recorded during the
previous year.
(12) Income Taxes
Corporate income taxes increased by ¥35,775 million to
¥79,745 million (US$ 676 million) from an income tax expense
of ¥43,970 million for the previous year. The actual effective
tax rate was 33.7% from 28.2% for the previous year. The difference
between the combined statutory tax rate of 40.8% and
the actual effective tax rate of 33.7% was caused by a realization
of tax benefits on operating losses of subsidiaries, income
of foreign subsidiaries taxed at a rate lower than the Japanese
statutory rate offset in part by non deductible expenses.
(13) Minority Interests in Income of Subsidiaries
Komatsu Australia Pty Ltd., Komatsu Shantui Construction
Machinery Co., Ltd. and other subsidiaries increased earnings
as a result of their favorable business performances.
Consequently, minority interests in income of subsidiaries increased
to ¥6,580 million (US$56 million) from ¥5,335 million
in the last year.
(14) Equity in Earnings of Affiliated Companies
Thanks to the improvement in earnings of affiliated companies
held under the equity accounting method, their contributions
improved from ¥2,667 million in profit in the previous year to
¥3,098 million (US$26 million) profit in the current year.
(15) Income from Continuing Operations
Income from continuing operations rose by ¥44,123 million to
¥153,264 million (US$1,299 million) in the current year from
the ¥109,141 million recorded during the last year.
(16) Income from Discontinued Operations, less
applicable income taxes, minority interests and
equity in earnings of affiliated companies
Income from discontinued operations less applicable income
taxes, minority interests and equity in earnings of affiliated
companies for the fiscal year ended March 31, 2007 increased
by 120.9%, or ¥6,225 million, to ¥11,374 million (US$96 million)
as compared to ¥5,149 million for the fiscal year ended
March 31, 2006. Income from discontinued operations less applicable
income taxes, minority interests and equity in earnings
of affiliated companies for the fiscal year ended March 31,
2007 includes gain on sale of KEM’s shares, approximately
¥7.5 billion (US$64 million).
(17) Net Income
Net income for the year, the sum of income from continuing
operations and discontinued operations, grew by 44.1% to
¥164,638 million (US$1,395 million) from the previous year’s
level of ¥114,290 million. Similarly net income per share rose
to ¥165.70 from ¥115.13 in the previous year. (The earnings
per share diluted is ¥165.40 and ¥114.93 respectively for the
year and previous year.)
41 Annual Report 2007