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President's Message
Management Policy
June 2010 We are pleased to report as follows the status of MegaChips Corporation based on results for the fiscal year ended March 31, 2010 (from April 1, 2009 to March 31, 2010).
We take this opportunity to express our sincere gratitude toward all our shareholders for their continued understanding and support.
Performance overview for the fiscal year ended March 31, 2010
During the fiscal year ended March 31,2010, net sales for the fiscal year under review were 38,495 million yen on a consolidated basis (down 27.1% from the previous fiscal year ended March 31, 2009). Operating income stood at 3,034 million yen(down 36.9%), and net income was 2,140 million yen(down 19.9%).
These disappointing results were attributable to the severe business environment in both the LSI business and the systems business. In the LSI business, although demand for LSIs for digital camera image processing and LSIs for high-definition AV recording remained strong, the market for LSIs for storing game software (custom memories), our main product, contracted, and mass production and shipments of new LSI products for amusement areas were delayed. In the systems business, given continued weakness in capital spending in the face of the ongoing economic slowdown, demand for customer-specific, digital image monitoring systems declined. As described above, both business segments faced very severe market conditions for the fiscal year ended March 31, 2010.
However, we have made steady progress with initiatives to develop a resilient corporate structure by developing products for new business areas, carrying out restructuring that includes a review of existing business models, operational streamlining, and cost cutting. We believe that the fiscal year ended March 31, 2010 was a year in which we took positive steps for our future development.
| Consolidated basis | Year-on-year change | |
|---|---|---|
| Net sales | 38,495 | - 27.1% |
| Operating income | 3,034 | - 36.9% |
| Net income | 2,140 | *- 19.9% |
* The lower rate of decline in current net income compared to the previous fiscal year was attributable to a fall in the extraordinary loss, and the reversal of income taxes, as a result of the revision to the applicable scope of the tax credit for research and development expenses.
Dividends
We regard the appropriate profit allocation to shareholders as an important management issue. The amount of dividends is determined by payout ratio of about 30% or about 2% of the consolidated dividends on equity (DOE), whichever is greater, with consideration given to factors such as consolidated financial results, financial conditions, and investment plans.
(For more details, HOME > Investor Relations > Stock Information > Dividends)
In accordance with the above policy, we paid an annual dividend of 27 yen per share as an ordinary dividend to shareholders as of March 31, 2010. Meanwhile, we did not acquire treasury stock in the fiscal year ended March 31, 2010, but we canceled 313,417 shares of our treasury stock on November 30, 2009.
We aim to improve the value of our shares and capital efficiency, taking a comprehensive view of the market and business environment, and will strive to meet the expectations of our shareholders.
Results forecast for the fiscal year ending March 31, 2011
The electronic industry in general is likely to continue to face an uncertain business outlook in the fiscal year ending March 31, 2011. Given this business environment, we expect that net sales will be about 35 billion yen(down 9.1% year-on-year) on a consolidated basis.
As previously mentioned, we have made steady progress on the development of a resilient corporate structure through our efficiency drive and cost savings, and we expect 3.1 billion yen in operating income (a rise of 2.1% from a year earlier) and 2.15 billion yen in net income (rise of 0.4%), the same level as the previous period.
We regard the current fiscal year as a critical period for us to achieve medium- to long-term growth. We will carry out aggressive business activities, including investment in research and development for new businesses, and the marketing to a larger customer base. Through these initiatives, we will aim to achieve net sales of 48 billion yen and an operating income of 5.5 billion yen for the fiscal year ending March 31, 2013.
| Consolidated basis | Year-on-year change | |
|---|---|---|
| Net sales | 15.2 | - 31.9% |
| Operating income | 1.1 | - 53.6% |
| Net income | 0.7 | - 52.0% |
| Consolidated basis | Year-on-year change | |
|---|---|---|
| Net sales | 35.0 | - 9.1% |
| Operating income | 3.1 | + 2.1% |
| Net income | 2.15 | + 0.4% |
On April 4, 2010, we marked our 20th anniversary. Taking this opportunity, we added the concept of "global environment" to our corporate mission and adopted a new vision: Help people achieve safety, security, and fulfilling lives, while protecting the global environment, based on sophisticated technological capabilities. In accordance with this mission, we will flexibly respond to the ever changing needs of society and the market, including global environmental issues, and actively contribute to the world through our unique technologies.
We regard this year as our "second start-up" and will build a competitive advantage in the world market, refusing to remain just the leading fabless LSI manufacturer in Japan, through a comprehensive business review by each employee and the establishment of an optimal business model from a medium-to long-term standpoint.
We greatly appreciate your continued support and cooperation.
