April 2001 March 2002 Financial Report | IRライブラリー | 株主・投資家の皆様へ | アマノ

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1. Basic Management Policy

Since its founding, Amano’s first priority has been to achieve maximum customer satis- faction, with all our employees, including the staff of our sales, production, and development divisions, listening to customers and placing the utmost importance on all business activities under the theme of “people and time” and “people and environment.” In accordance with this fundamental policy, Amano has been making strenuous efforts in its business activities to win the trust and faith of all who have been supporting us,

“customers, shareholders, business associates, employees, and society as a whole.” Amano has set out to do this by providing a variety of products, systems, services, and solutions relating to “people and time” and “people and environment” and meeting the needs of customers.

2. Basic Policy regarding Dividends

It is Amano’s dividend policy to offer our shareholders reasonable dividends that reflect the actual performance. This policy has been one of our highest priorities. Since 1998, as part of our policy of passing on earnings to our shareholders, Amano has redeemed and retired its own shares. We have already redeemed 9.48 million treasury stocks as of the end of March 2002, and have completed the retirement of 6.98 million stocks. Currently, dividends to shareholders are paid on the basis of a payout ratio 35 percent or more, and Amano will make every effort to realize a 2-percent dividend rate for shareholder’s equity in the medium term.

Regarding the dividend for the current term, the annual dividend will be 13 yen per share as in the previous term and, with the deduction of 6.5 yen per share in the medium-term, the dividend for the end of the term will be 6.5 yen per share.

Retained earnings will be used to strengthen our management capabilities through effective investments, such as proactive investments in new as well as growing businesses and in research and development activities, while reducing costs and rationalizing production facilities for quality improvement.

3. Medium and Long Term Management Strategy

Amano and its subsidiary companies are expanding and strengthening our business bases as solution providers, adding more values for our customers by providing high- quality hardware, software, and more souped-up services to meet the changing needs and diversification of our 21st-century information-oriented society.

Amano’s key management concept is to remain a “blue-chip, growing company” in order to be attractive to our shareholders and investors. Based on this concept, Amano’s major management strategy is to maximize business value through the expansion of

Management Policy

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existing businesses by promoting information-technology-oriented systems and aggressively developing new businesses. With IT and parking-system businesses as the core, Amano will continue to maintain its profitability and look for prospects for growth by challenging new frontiers (new businesses, new products, and new technologies), and by responding quickly to changing environments. As important management indices, we will concentrate our efforts on realizing an ROE (return on equity) of at least 6%, EPS (earnings per share) of 60 yen, and ratio of current income to sales of 13%.

4. Reduction of Stock Trade Unit

We recognize that the reduction of stock trade unit will increase liquidity in the stock market and effectively expand the base of private investors. On the other hand, a reduction in stock trade units will entail huge expenses. It requires careful considerations in terms of the cost effectiveness of this approach. Specific steps and the timing of the introduction, along with other details, are yet to be determined.

Yasuyoshi Komoto President and CEO

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Overview of the Current

Term

Affected by rapidly deteriorating corporate earnings in IT-related industries, a significant reduction in capital investments due to the sluggish economy, and weakened consumer spending caused by rising unemploy- ment, the Japanese economy during the term under review remained in a difficult condition.

In such an adverse management environment, Amano has been endeav- oring to implement aggressive marketing activities that can satisfy customer needs and strengthen and improve our service capability with ac- tive business operations in the IT and

parking-system divisions, by introduc- ing new products and software in the market. In addition, to improve profitability, each of our subsidiary companies has been striving to stream- line its management with rigorous control of profitability, and costs/ ex- penditures.

In terms of the consolidated business performance, the sales volume was 62.967 billion yen (up 3.1 percent from the same period last year), operating profits were 3.69 billion yen (down 30.4 percent), and ordinary profit was 3.999 billion yen (down 19.8 percent). For the term under review, extraordinary losses totaling 1.406 billion yen (of which 1.091 billion yen is accounted for by evalua- tion losses of investment securities)

were posted, resulting in a reduction in net income for the current term to 1.374 billion yen, down 44.2% from the previous period.

The performance by business division is as indicated below.

Sales by business division

(¥: Millions)

(Time Information System Business) Information Systems

Time Management Product Parking Systems

Sub total

(Environment System Business) Environmental Systems Clean Systems

Sub total Grand total

Division

Previous Consolidated Fiscal Year

Change

Amount

10,377 8,267 20,846 39,492

13,670 9,804 23,475 62,967

16.5 13.1 33.1 62.7

21.7 15.6 37.3 100.0

10,360 8,921 19,671 38,953

12,579 9,566 22,146 61,099

17.0 14.6 32.1 63.7

20.6 15.7 36.3 100.0

17 654 1,175 538

1,091 237 1,328 1,867

% 0.2 7.3 6.0 1.4

% 8.7 2.5 6.0 3.1 Component Ratio Amount Component Ratio Amount Ratio April 2001 to March 2002 April 2000 to March 2001

Current Consolidated Fiscal Year

(Note) Exchange-rate fluctuations resulted in a sales increase of 1.55 billion yen.

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Time Information System Busi-

ness

Information System :

Time & Attendance (T & A), Payroll, Human Resources Management, Ac- cess Control, Cafeteria System, etc. Time Management Product : Time Recorder, Time Stamp Parking Systems :

Parking Management Equipment, Management Services

Information Systems

Due to the increasingly murky economic prospects, incentives to invest were particularly weak in the manufacturing sector. Among small business firms in particular, new and renewal demands were sluggish.

Despite these circumstances, medium-sized and large businesses con- sider it indispensable to establish more strategic attendance and human resources management systems and implement more sophisticated management practices using IT and Internet technologies.

With these customer needs, orders from medium-sized and large business firms remained stable, boosted particularly by the TimePro-Get Web system, but they were not sufficient to compensate for the declining de-

“Proximity Attendance Terminal AGX-10X”

mand among small business firms. Thus, domestic sales dropped from the level of the previous term. In overseas markets, performance improved slightly due to the enhanced marketing system and the introduction of new products designed for small businesses in North America. As a result of the above activities, sales achieved by the Information Systems Division amounted to 10.377 billion yen (an increase of 0.2% over the previous term).

Time Management Products

Demand remained sluggish in this business division, particularly among small business firms, due to the general economic downturn, which has adversely affected the entire time-recorder industr y and reduced shipments.

To respond effectively to these trends, we introduced a “simple time recorder with summary features” designed for the service industry, and

“Time P@CK - Time recorder bundled with summary software for PCs” to create new markets for small and medium-sized business firms. However, negatively affected by the significant decline in orders for Intel- ligent Time recorders, sales declined from the level of the previous term. Expor ts also decreased significantly due to tough competition with Tai- wanese and Chinese manufacturers. As in the Japanese and Asian markets, our performance in Nor th America and Europe also declined due to slow demand and intensified competition.

Consequently, this business division posted sales of 8.267 billion yen (a decrease of 7.3% from the previous term).

Parking Systems

On the domestic market, we have seen continued stable demand, with more idle land being utilized for parking lots. In addition, based on this steady demand, new companies spe- cializing in parking management have contributed to the further expansion of demand.

In this market environment, we have actively offered optimal parking systems for the 21st century, such as a network system for operational management, a license-plate recognition system utilizing image-recognition technologies, and the cashless system to meet reinvigorated demands. Consequently, demand remained brisk for our significantly upgraded pay-stations with built-in computers used for entrance and exit control of a parking lot, and for low-priced pay stations for flap-type (coin-operated) parking systems used in medium-sized and small parking lots.

In addition, as the needs grow for the effective utilization of idle land, as well as for the improved and stable management of parking facilities, our tai- lored and fully supportive management and maintenance services for parking facilities have been well accepted and have grown steadily. Over seas, competition in Nor th America, Europe, and Asia is intensi- fying among local manufacturers. Sales

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in North America increased from the previous term par tly due to exchange-rate differences, but those in Europe and Asia decreased.

Under such business conditions, sales by this business division totaled 20.846 billion yen (an increase of 6.0% over the previous term).

Environment System Business

Environmental Systems:

Standard Dust Collectors, Large Dust Collectors, Pneumatic Powder Con- veyance Systems, High-Temperature Hazardous Gas Removal Systems, Deodorization Systems; and Electro- lyzed Water Generators and Garbage Reduction Devices

Cleaning Systems:

Vacuum Cleaners, Dry-Care Clean- ing Systems, and Cleanliness Manage- ment Systems

Environmental Systems

In this business division, demand for standard equipment increased steadily due to intensified industrial safety and health concerns triggered by the introduction of new dioxin- related regulations. On the other hand, orders from IT-related industries and machine-tool industries began to decline in the second quarter. Over- all, sales of standard-type equipment as a whole decreased from the previous term.

As for larger systems such as large dust collectors, pneumatic powder conveyance systems, and exhaust disposal systems, demand remained brisk from various plant facilities for improvement of facility efficiency, and

Mist collector, “Mistria”

from recycling and incineration facilities for compliance with newly enacted environmental regulations such as the Electric Appliance Recycling Law, Containers and Packaging Recy- cling Law, and intensified regulations against dioxin. Sales thus significantly increased over the level of the previous term.

As a result, this business division achieved sales of 13.67 billion yen (an increase of 8.7% over the previous term).

Cleaning Systems

In this business division, both new and renewal demand remained rather sluggish as the supermarket and con- venience-store industries reconsid- ered store network deployments (“scrap and build”) due to dwindling consumer spending, and due to reac- tions to the Large-Scale Retail Stores Location Law enacted last year. Under these circumstances, we aggressively promoted latest cleaning systems designed to increase the efficiency of cleaning work and reduce its expenses, but demand for cleaning equipment from our major customers in the building maintenance industry declined in this division. Thus, sales decreased from the previous term in this business division as a whole.

As for our management services for cleaning work, sales increased steadily, as our high-quality and low-cost services were favorably received. Although overseas revenue went up due to exchange-rate effects, our subsidiary of cleaning machines in the U.S. had difficulty maintaining order levels due to the slowdown of the U.S. economy in the second quarter and intensified competition.

Sales by this business division thus amounted to 9.804 billion yen (an increase of 2.5% over the previous term).

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Financial status

Cash and cash equivalents (hereinaf- ter referred to as “funds”) decreased by 1.381 billion yen (-6.0%), to 21.607 billion yen, in this consolidated fiscal year due to declining net income before income taxes and increased ex- penditures for the acquisition of treasury stocks, though accounts receivable and inventories decreased. (Cash flow from operating activities) Although net income before income taxes significantly decreased, the major cause of losses was the devalua- tion of securities. In addition, accounts receivable and inventories declined by 1.526 billion yen and 487 million yen, respectively. These factors increased the cash flow from operating activities by 1.419 billion yen, to 5.298 billion yen, from the previous term. (Cash flow from investment activities) Cash flow from investment activities decreased by 7.526 billion yen to 34 million yen, primarily due to decreased losses on the sale of securities and increased facility-related expenses, particularly for construction of the new office building.

(Cash flow from financial activities) Cash flow from financial activities decreased by 3.229 billion yen, to a loss of 6.679 billion yen. This was primarily due to the fact that short-term loans of 786 million yen were repaid by overseas subsidiaries and others, and because treasury stocks amount- ing to 4.918 billion yen were acquired for their retirement with profits and stock options, as in the previous term.

Prospects for the Next

Term and Management

Issues

Affected by the U.S. economic upturn, a gradual recover y of the global economy is expected; however, business environment in Japan remains murky, with subdued capital investment and dwindling consumer spending, though there are some signs of the “bottoming out” of the Japanese economy.

In this business environment, Amano and its subsidiary companies are dedi- cated to strengthening their mutual collaborative relationships, creating new markets in our respective business divisions, implementing aggressive marketing activities that meet the requirements of our customers, developing more products with highly added values using enhanced and upgraded software, and providing comprehensive solution ser vices, while making ever y effor t to strengthen our management capability and enhance profitability by reducing costs and maintaining profitable businesses.

As for issues to be addressed in our major business divisions, our information system business division will first focus on renewal demands for information systems, primarily from small business firms. To respond effectively to the rapid development of broad- band communications systems, we will further enhance the Web-com- patible features of our products. For time management products, we have launched production of time recorders in China to reduce production

costs. We also plan to gradually shift our production of major models to China, in order to enhance our global competitiveness and strategic development in the expanding Chinese market. As for parking systems, engineering centers are scheduled to be established in the Tokyo and Osaka metropolitan areas for enhanced backyard support systems, to launch next-generation products and increase the speed of our response to customer requirements.

In the environment system business division, we will expand our environmental system operations, particularly in growing new markets such as recycling and soil improvement. We are also focusing on maintenance and supply businesses targeted at existing markets and dioxin-related markets by providing added value. In the cleaning system operations, acquisition of Musashi Electric Corporation and a business tie-up with U.S. Prod- ucts have enabled us to provide a full line of products in this field and we are developing demand in the soft- floor (carpet) market, in addition to the currently offered hard-floor services.

By carrying out the above plans, we expect to achieve the following business results in the next term: sales volume of 65.5 billion yen (up 4.0% from the previous term), operating profit of 5.0 billion yen (up 35.5%), ordinary profit of 5.2 billion yen (up 30.0%), and net profit in the current term of 3.0 billion yen (up 118.2%).

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Starting production of

“BX-2000” (electronic

time recorder) in China

For more enhanced competitiveness in global environment where cut- throat competition is going on throughout the world with price cut- ting races, Amano has launched production in China of “BX-2000,” a high- quality electronic time recorder with significantly reduced manufacturing costs, with an aim to recover market shares particularly in Asian regions. Shipment of the product commenced in April 2002.

As a follow-up to the above, we will star t production of the “EX-3000 Series” (a best-selling electronic time- recorder model) in China within this year. Amano time recorders bearing an inscription of “Made in China” are expected to be ubiquitous not only in China but in other Asian countries as well with increased market shares.

Coin-operated-parking

market going strong

The “Flap-Type Automatic Pay-station,” with enhanced function and cost performance, sells quite briskly as it did in the previous term. In flap-type parking lots, when a car is parked at a designated space spot, the flap fixed to the ground surface is raised, lock- ing the rear wheels. When the parking fee displayed on the pay station is paid, the flap descends to allow the

car to leave the lot. This is an optimal system for the effective utilization of small parking lots with limited space adjacent to roads or with only a few parking spaces.

A flap-type parking pay-station that can control a maximum of 45 vehicles (TF-4800N) has already been marketed and well accepted. In addition, Amano has recently developed and marketed “NT-4500 Series” (Pay Wing), a low-cost and compact flap- type pay-station for parking systems that accommodate up to six vehicles.

Brisk sales have also been recorded for “Park Port Wing,” remote flap-type parking-lot control software, which allows the operator to control each parking equipment remotely from his office. With additional lineups, sales of more enhanced “Parking Control and Management Service” are also growing.

Expansion of the environ-

ment system business

into “new growing mar-

kets”

Many new laws and regulations, such as the “Basic Law for Establishing a Recycling-Based Society,” the “Law on Promoting Green Purchasing,” the

“Recycling Law,” and the “Law con-

cerning Special Measures against Di- oxins,” have been enacted in the past few years, drastically changing the environmental business sector. Amano is also expanding and strengthening our environment-related operations for relevant markets, in conjunction with improved regulator y frame- works, for the realization of a recycling-oriented society.

(1) Operations related to recycling and soil improvement: Introduc- tion of engineering products (2) Operations related to waste-in-

cineration facilities: Introduction of exhaust-treatment-system dust collectors, air showers, and portable dust collectors

(3) Dioxin-related market: Expansion of the rental business for standard dust collectors

Specifically, for waste-incineration facilities involving the risk of generating high-density dioxin, high-value-added services are provided in the form of the regular inspection of dust collectors and air showers installed at each facility and the replacement of filters, as well as other maintenance work, through an enhanced alliance with one of the Amano’s subsidiaries,

“Amano Maintenance Engineering Corporation (AME).”

By establishing firm ground for waste- disposal/recycling systems of filters and other similar products, we are also securing improved profitability.

Enhanced “Soft Floor”

cleaning business

For carpeted floors of hotels, inns, theaters, amusement/sports facilities (golf clubhouses, etc.), educational facilities (libraries, etc.), hospitals and

BX-2000

Flap-type parking pay- station NT-4500 Flap

TF-1450

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nursing homes and public facilities (airports, etc.), three models of cleaning machines specifically designed for carpeted floors have been simulta- neously introduced, each equipped with easy-to-use daily management and maintenance features.

•Sweeping: “Mongoose,” an upright carpet vacuum cleaner

•Removing spots: “Spotter,” a spot washer for removing spots

•Washing: “CHC-15,” a carpet washer

The soft-floor cleaning business is expected to grow fur ther with the addition of new lines of carpet-cleaning products.

Completion of “Amano

Galaxy Building,” an em-

bodiment of advanced se-

curity concepts

Near the Amano Yokohama Head Office, the “Amano Galaxy Building” has been completed. This is an advanced structure with four floors above ground and one floor below ground, equipped with earthquake- absorbing/damping mechanism. The completion ceremony was held on March 25, 2002.

Amano’s proximity attendance termi-

nal, “AGX-10FX,” is installed at the staff entrance and in the underground parking floor, as well as for access control at the entrance to each room of all floors.

In addition, the attendance-information LAN terminal, “AGX-30X-L,” is installed on each floor for attendance control of each employee using proximity IC cards (employee ID cards). When an IC card is held over the attendance-information terminal, it can automatically identify the holder and process information using Amano’s best-selling software, “TimePro Atten- dance.” Applications and approvals for overtime work, paid holidays, and the like can be processed with the application approval workflow utilizing the internal infrastructure. IC cards can also be used at the cafeteria. The computer rooms are equipped with more sophisticated security systems including “AGX-30FN,” an Amano entrance-information terminal that utilizes fingerprint identification technology for more advanced ID performance, and including control terminals for mechanical security systems (jointly developed with a major security firm) that can be accessed using proximity ID cards. As servers are properly managed as in data centers (with air conditioning, backup power, and security systems), customers can feel comfortable with providing Amano with their important data.

The staff involved in software development for information-related operations and in new-product development, and “CSJ Corporation,” which provides attendance, payroll, and human resources ASP services, have been transferred to the “Amano Galaxy Building,” which is expected

to perform a greater role as Amano’s new “Information Transmission De- pot for Growth.”

Acquisition of stock in

Musashi Electric Corpo-

ration (a new subsidiary)

On March 26, 2002, Amano acquired all stock in Musashi Electric Corpo- ration, a manufacturer of electric cleaning polishers. The company has become a new comer to Amano group companies.

Amano embarked on sales of cleaning machines in July 1982, and has since actively developed the cleaning- system operations as one of the core businesses of the environment system. Making Musashi Electric Corpo- ration a subsidiary has added electric polishers to our strong product lines of automatic floor washers and buffing machines. With this new addition, we will be capable of offering a full line of products for hard-floor cleaning, providing total solutions suitable for individual customers with hardware, software, and services, and greatly enhancing our cleaning-system business.

Carpet washer CHC-15 Carpet vacuum cleaner MONGOOSE

Spot cleaner SPOTTER

Amano Galaxy Building

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AMANO’S GLOBAL NETWORK

AMANO CORPORATION CSJ CORPORATION

ENVIRONMENTAL TECHNOLOGY CO., LTD. AMANO MANAGEMENT SERVICE CORPORATION AMANO MAINTENANCE ENGINEERRING CORPORATION AMANO ECO TECHNOLOGY CORPORATION

MUSASHI ELECTRIC CORPORATION

AMANO ELECTRONICS EUROPE, N.V

AMANO CLEANTECH MALAYSIA SDN. BHD AMANO TIME&AIR SINGAPORE PTE. LTD PT AMANO INDONESIA

AMANO KOREA CORPORATION

AMANO INTERNATIONAL TRADING(SHANGHAI) CO., LTD. AMANO SOFTWARE ENGINEERING(SHANGHAI) CO., LTD.

AMANO AUSTRALIA PTY. LTD.

ACI Time Information

Systems Expands Product

Line to Address More Di-

verse Marketplace

The face of businesses in America is changing, as employers allow more employees to work remotely and consultant and ser vice businesses continue to grow. In order to continue as the leading providing of time and attendance systems, Amano Cin- cinnati has diversified its product line to accommodate a greater number of these changing environments. Leading the way is the TruTime^® NetPunch^® Employee product, which allows employees to punch in over the Internet, eliminating the need to

have each individual install TruTime on their computer. Employees can punch in and out, add hours, view benefit time, perform labor transfers, and make hour and dollar adjustments via an Internet browser such as Internet Explorer or Netscape. Available for the remote supervisor is NetPunch Supervisor, which allows the manager to handle the majority of tasks associated with Edit Daily Data in TruTime, again without hav- ing TruTime installed on their computer. Supervisors can add punches, view exceptions, check employee hours broken down by pay code, day and week, and add, edit and delete employee punches. Further, the supervisor can remotely run the employee time card report, making daily

attendance monitoring and updating functions possible from an off-site location.

An extension of the NetPunch product is CellPunch^®, which allows users with a web-enabled phone to punch in and out via the cell phone, which calls an Internet address located on a company’s server. The user can add hours, perform labor transfers and view benefit time.

In addition to allowing access to TruTime over the Internet, ACI has integrated a third par ty phone system into TruTime, allowing employees performing remote functions, such as visiting nurses, consultants, etc., to punch in over the phone. The product, called Fone-Punch^®, consists of a pre-configured PC with tele-

Amano Cincinnati, Inc.

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ACCUTIME CORPORATION AMANO CINCINNATI,INC. AMANO USA,INC.

AMANO CINCINNATI CANADA,INC. AMANO PIONEER CREDITCORPORATION PIONEER ECLIPSE CORPORATION

phone boards and installed software, which allows for customizable phone scripts and prompts. The alternative punch device allows a mobile workforce to more easily punch in and out for work or job by allowing the employee to record employee time and activities via the telephone. Finally, in an effort to recognize the changes taking place in the market given the events in the US concern- ing security, ACI introduced TruEntry^®, a further integrated time and attendance and access control system utilizing TruTime with Secura Key^® software. Employers can control building access, track users, and lock employees that are unscheduled out of a facility, all while capturing their time and attendance data. The system can

be built as a standalone access control application, utilizing either proximity readers or HandKey^® units from Recognition Systems, or can be integrated with TruTime for complete employee monitoring from in punch to out punch.

Among the other products in the near future is an application service provider (ASP) model for Time Guardian^®, which allows employers to use time and attendance on a monthly subscription basis. As business moves more and more to the Internet to do business, ACI recog- nizes the need to follow suit. The subscription basis provides employers more flexibility in tying their time and attendance into their payroll software, as many payroll companies are al-

ready offering their systems as an Internet service rather than a client- side application. This ASP model, along with the diverse avenues ACI has provided for employees to perform labor functions, shows Amano’s willingness to grow and change with its marketplace.

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Successful New Products

Introduction

Continued Emphasis on

R & D

While 2001 was a difficult year due to a slow economy and the traumatic impact of the events of 9-11, Pioneer Eclipse nonetheless successfully introduced two important new chemical product systems while making substantial progress regarding the development of several new machine offererings.

With the introduction of the Woodstar Hardfloor system, Pioneer Eclipse utilizes a new water-based acrylic co-polymer technology that enables the user to realize superior results in far less time than conventional petroleum based formulations. More importantly, this two-product system is far more environmentally friendly than conventional formulations. The company anticipates continued and substantial growth with this product in a market segment it formerly could not compete in.

The Tru-Fil dilution control system features propor tioning hardware, which premixes any of 10 new chemical products designed for use in large facility cleaning programs. By simply pushing a button, the worker can get an exact mixture of water and product to perform the job. Accuracy, time and product savings become imme- diately obvious. With superior chemical formulations at very competitive pricing, the Tru-Fil system is already opening new doors in the institutional and retail markets. The new Tru-Fil package is a key component of a comprehensive strategy to greatly enhance the Pioneer Eclipse chemical business.

Product line expansion continues with the planned introduction of 5-7 new machine products at the industry trade show in October, 2002, including a revolutionary small scrubber / burnisher utilizing patented technology, two new machines designed specifically for hard-floor stripping operations, a new 20" narrow design bat- tery auto scrubber, as well as a new lower cost line of speed burnishers designed to enable the company to be more competitive at the low end of the market.

Additionally, the company plans to introduce a complete new “Green” floorcare system. These products will be in compliance with the world’s most stringent environmental regulations and are designed primarily for growth in European and Japanese

ACI Parking Group De-

velops New Options for

Parking Facilities

Amano Cincinnati recognized the need for a low-cost pay station for the parking market and promptly set about to provide just that. The AGP- 7800 Central Pay Station, with its sleek new look and multiple design enhancements, combines optimum flexibility with improved features and functions, all the while providing the parking facility a lower cost system to handle their revenue collection needs.

A completely configurable unit based on individual project and customer requirements, the AGP-7800’s modu- lar design can include note and coin acceptors, note and coin dispensers and a receipt printer. The central pro- cessor unit, display, uninterruptible power supply and cabinet have all been upgraded to increase functionality and lower cost, while a new Ethernet-based peripheral communication sub-system was incorporated to improve performance. As is standard, both ADA and ANSI specifica- tions for handicap patrons have been met. The new lighted patron guid- ance system provides customers with a user-friendly system to perform their parking transactions. As part of the configurable nature of the system, debit card payment and debit re- charge functionality will be supported. The second new payment option for parking patrons is the AGP-6800 Exit Pay Station, which brings most of the AGP-7000 Pay Station functions to the exit lane of a parking facility. ACI stands in a strong position versus its competition by including ticket track- ing and on-line communication com- patibility along with the existing revenue control products. Payment options allow the user to combine credit card, coin, token or note acceptance, while change dispensing is limited to

coin, token or shor t slip. Features include single throat technology read, write, print, validation, alpha-numeric display, optional coin validator and/or bill acceptor.

Amano Cincinnati, Inc.

Pioneer Eclipse Corporation

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market places.

Continued strong emphasis on R & D initiatives along with product line expansion should enable Pioneer Eclipse to more aggressively compete in existing markets and break into new markets.

Time & Attendance in

Europe after September 11.

The September 11 attacks also im- pacted the T & A behavior in Europe in areas of security and workforce. Our ASTROW-PLUS meets the requirements of those changes, with some good orders received. A good example is “Rectorat de Lille” in France, an investigation commission for qualification of new teachers in France.

We installed an ASTRO based system for Time & Attendance with the access control module GS-Door. For readers, we used the GS145 proximity reader for T & A application, and GS-GT Series (three GS-500s and twelve GT-500s) for the system. What should be underscored in this system is the use of the BIOMETRIC TWO FINGER SCAN identification system. In some areas, a combina- tion of a card reader and biometric reader is used for tighter access control. With this system, a user has to present his card to the card reader and must be identified with his two fingers. If the identification is successful, the door will be unlocked.

Access to the car park is also con- trolled by our system with two

Amano’s barriers.

This system is a trial system, and if it proves its compliance with the customer’s requirements, the customer will come to us for about seven more systems for the rest of their regional examination centres in France.

A n o t h e r e x a m p l e i s E M E RY WORLDWIDE that the customer has developed throughout Europe. For unification of their system at differ- ent locations and consolidation of work hours, the customer chose our system out of many others. Emery Belgium and Emer y France are already equipped with our Time & At- tendance and access control system. Our Astrow-plus is also used with the GS-Door access module. The most advantage of this system is to manage both blue and white colour workers with full flexibility of changing the rule of work hours. Because it allows the ASTROW to link with access control, network is easily built with the same card and same card readers. Its fully scalability to the changing requirements is another plus. Our next step will be to provide the customer with information of hours worked and absentee request (Em- ployee Self-service) through internet.

New TF equipment at

Belgian’Holiday Inn Hotel

Amano was the most suitable part- ner because we provide a variety of options for payment; PROTON, credit cards or cash. With our system in-

stalled for the first time at a Holiday INN Group in Belgium, it is proved that Amano provides most reliable and convenient system for this business environment.

The parking systems consists of one each of entry and exit lane, paystation and fee computer to control approxi- mately 200 spaces and 500 transactions a day.

This site strengthens our awareness in the Antwerp region where many businesses including supermarkets, private investors and hospitals are located.

Amano parking system

installed at Korea’s largest

medical center

Amano Korea Corporation has completed installation of a parking system at Seoul’s ASAN MEDICAL CENTER, the largest such institution in South Korea.

The parking system has 3000 spaces and incorporates parking equipment at eight entrances and nine exits. PC- based fee computers developed last year by Amano Korea Corporation are linked to the medical center’s OCS server (hospital management system). The system can check whether customers using the parking facility are patients at the center, and automatically calculate parking- fee discounts. Customers can pay with any of the major credit cards used in South Korea. All of the PC-based fee computers are connected to a LAN. Using the parking control software installed in the parking management control room, repor ts can be prepared showing occupancy, the status of each booth, and revenue.

Amano Korea Corporation Amano Electronics Europe, N.V.

Amano Electronics Europe, N.V.

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Ticketless and Handsfree

Car Parking System

Car Parking System in Singapore has moved into a new era with use of a national debit smart card (Cashcard). This ticketless system uses the cashcard inserted at the car park entrance reader to register the entry time, and the same cashcard inserted

Construction of Amano

parking system begins at

Inchon Industrial Goods

Circulating Center

Amano Korea Corporation will install a parking system at South Korea’s largest distribution center. The system will incorporate 6000 parking spaces (ground level and underground). Ticket dispensers, fee computers, and proximity card readers will be installed at 17 entrances and 17 exits. Construction of the facility began in July 2002 and is scheduled to be completed in September and begin operating in October.

Amano begins shipment

of the Chinese-made BX-

1500 time recorder

Amano has launched distribution of the Chinese-manufactured BX-1500 time recorder.

In an effort to regain its share of the Chinese time-recorder mar ket, Amano starts shipments of the BX- 1500 time recorder, aiming at more cost effectiveness. As a first step, Amano plans to open offices in Beijing and Shenzhen before the end of the year. The new Beijing office will be responsible for sales in the capital and surrounding area, including Tianjin, Dalian, and the three northeastern provinces. Sales in Hong Kong, Guangdong, Shenzhen, and the rest of southern China will be handled by the Shenzhen office. Together with the Shanghai office, which serves Shang-

Amano International Trading (Shanghai) Co., Ltd.

hai and the rest of eastern China, the new offices will work to ensure that the Amano brand becomes firmly established throughout the country.

CAD Center opens

Amano’s new CAD Center began operations in April. The company plans to gradually shift the design work to Amano Cleantech Malaysia for its environmental equipment, which until now has been conducted at the Hosoe Facility or outsourced. The aims of the shift are to reduce costs and assist in the transfer of design technology. One Japanese supervisor and four local employees currently staff the CAD Center, although up to two more staffers will be added by the end of the year. The Center receives orders for design work from the Hosoe Facility, prepares the designs using AutoCad, and then returns the completed designs via e-mail. Al- though the Center is still in its early stages, fur ther development is planned to take full advantage Malay- sia has to offer, including cheaper labor costs and good communications infrastructure.

again at the exit reader to calculate the car park fee, which will be automatically deducted from the cashcard. Amano Singapore is very proud that we launched our own cashcard system in October 2001.

Within six months after the launch, we installed more than ten systems in Singapore. Because of the advan- tages of the ticketless system, there has been an increase in the number of leads in this type of system for re- placing existing systems. We are quire positive of our sales growth this year. After use of cashcard system in Singapore, improvement on such system has become necessary.

Because all cars in Singapore have an In-Vehicle Unit (IU) attached, Amano Singapore looks at using the In-Ve- hicle Unit for the car park so that it can be a complete handsfree system. In April 2002, we successfully installed ticketless and handsfree system for the fir st time in the wor ld at Singapore Tourism Board. This system uses a concept of the ERP (Electronic Road Pricing) antenna to register the IU at the entrance and automatically calculate the tariff and deduct the fee from the cashcard through the IU. In just two months, we installed at two more locations using such antenna, and we received firm order from United Square, the HQ of United Overseas Land, one of the largest developers in Singapore. Despite higher price than normal system, the need of such handsfree system have invited tremendous increase in sales leads. We are confident that we will keep our position as the market leader in the car parking field in the years ahead.

Amano Korea Corporation

Amano Time & Air Singapore Pte. Ltd. Amano Cleantech Malaysia Sdn.Bhd.

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Encouraging development

at PT. Amano Indonesia

The year 2001 in Indonesia star ted with political instability from the beginning.

This instability continued until the congress dismissed the former president and selected the new president in July.

Under theses circumstances, PT. Amano Indonesia tried every effort to increase Time Information Systems

& Ecology businesses.

In February, we received from PT. Tiga Ikan in Jakarta the first order for an attendance & access control system which uses the CS-500.

This system using barcode cards functions as a door access control outside and inside of 4 doors with a total of 8 readers, which validate the cards swiped to open the door if the cards are valid. This epoch making system also functions as a Time & Attendance system if the cards are swiped as Time & Attendance data entry at any of the 8 readers, thus providing the customer with double functions. It is planned to integrate this system with an SAP system at their Singapore office in the near future.

Following this system, we received another order for the same type of attendance & access control system from Bank UFJ in April.

We expect more orders to come for the multi function systems like this from other customers.

For our Ecology products business, more investments have been made by leading motor cycle manufacturers as the industry started picking up lately.

Expanding Australian and

New Zealand markets

The existing business of providing Parking Systems to the Australian and New Zealand market has continued this year. Amano Australia has continued to expand its dealer base and promote the use of Amano products to service a wide range of applications.

Whilst Amano can offer solutions in Magnetic Stripe and Chip Card technology we are experiencing strong acceptance of our proven perforated hole technology. This technology is ideally suited to the local market where large shopping centres offer 2 - 3 hours free shopping to customers and very little revenue is generated from their operation. The low cost of consumables and the highly reliable nature of this technology is a driving factor in the system selection. The Time and Attendance market has seen strong consolidation by Amano Australia by the implementation of many sites with ACI’s Trutime Prod- uct. Following some modification of Trutime to meet the requirements of the local market we are gaining wide acceptance because of the ease of configuration and the flexibility of the system.

Amano Australia also promotes the various Time and Attendance terminals from ACI and have introduced the first terminal in Australia to be accessed via the mobile GSM phone network. This innovation allows the

Amano Australia Pty. Ltd.

Trutime system to be offered to customers with a transient work environment such as building sites, rural workers or any site with difficulty in obtaining landline or network cover- age.

Amano Australia is working closely with various Payroll ser vice supply organisations to provide a transaction based Time and Attendance system. The rationale behind this approach is that organisations can have access to the latest technology and software on a “pay as you” basis thus alleviat- ing organisations from significant capital expenditure.

Significant use has been made of Bio Recognition hand scanning systems integrated seamlessly to Trutime, this provides companies with high security Time & Attendance systems with no ongoing consumable costs. Along with the “PC Punch” and the “Mobile Punch” using Palm technology Amano Australia can offer a complete solution to any organisation’s Time and Attendance requirements.

The introduction of the Time Guard- ian Time and Attendance system and the new BX1500 Time recorder places Amano Australia in a strong position to attack all levels of the market. Some of these areas were previously difficult to address and service due to the low revenues histori- cally generated from them.

Amano Australia is looking forward to a year of strong growth building on a solid base of satisfied customers.

PT. Amano Indonesia

As a result, the number of our offer- ings and orders received is steadily increasing.

Although the ratio between TIS business and Ecology business is currently 4:1, we expect that it will soon become 1: 1.

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AMANO Corporation and Subsidiaries

Financial Highlights

For the years ended March 31, 2002 and 2001.

Yen in millions and U.S. dollars in thousands, except per share amounts - See Note 4 to the Consolidated Financial Statements.

2002 2001 2002

For the years ended March 31:

Net sales ... ¥62,968 ¥61,000 $473,444 Net income ... 1,375 2,465 10,338 Per share data:

Net income per share ... ¥15.28 ¥26.63 $0.115 Cash dividends per common share ... 13.00 13.00 0.098 At March 31:

Total assets ... ¥93,176 ¥99,658 $700,571 Working capital ... 36,118 35,089 271,564 Shareholders’ equity ... 71,212 76,404 535,429 Sales by product:

Time information systems ... ¥10,378 ¥10,360 $78,030 Time management equipment ... 8,268 8,922 62,166 Parking systems ... 20,847 19,671 156,744 Environmental systems ... 13,671 12,580 102,790 Cleaning systems ... 9,804 9,567 73,714 Note : U.S. dollar amounts have been translated at the rate of ¥133=US $1, the rate prevailing on March 31, 2002.

- See Note 4 to the Consolidated Financial Statements.

0 '98 '99 '00 '01 '02 '98 '99 '00 '01 '02 '98 '99 '00 '01 '02

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000

0 500

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00

1,000 1,500 2,000 2,500 3,000

Net Sales (Millions of Yen)

Net Income (Millions of Yen)

Net Income Per Share (Yen)

(17)

Consolidated Balance Sheets

As at March 31, 2002 and 2001.

Thousands of U.S. Millions of Yen dollars (Note 4)

ASSETS 2002 2001 2002

Current assets:

Cash and bank deposits ... ¥22,883 ¥22,989 $172,053 Marketable securities ... 2,627 1,701 19,752 Notes and accounts receivable:

Trade ... 21,382 22,533 160,767 Less allowance for doubtful accounts ... (131) (181) (985)

21,251 22,352 159,782

Inventories ... 5,705 5,932 42,895 Deferred tax assets ... 764 684 5,744 Other current assets ... 570 702 4,285 Total current assets ... 53,800 54,360 404,511

Investments and advances:

Investment in and advance to affiliates’ ... 667 351 5,015 Investments in securities ... 7,594 16,242 57,098 Other investments ... 6,140 4,977 46,165 Total investments and advances ... 14,401 21,570 108,278

Property, plant and equipment, at cost:

Buildings ... 23,022 21,342 173,098 Machinery and equipment ... 16,562 15,950 124,526

39,584 37,292 297,624

Less accumulated depreciation ... (24,855) (23,247) (186,880)

14,729 14,045 110,744

Land ... 5,847 5,788 43,963 Construction in progress ... 177 141 1,331 Net property, plant and equipment ... 20,753 19,974 156,038

Fixed leasehold deposits... 1,246 1,186 9,368 Deferred charges and other assets... 2,976 2,568 22,376

Total ... ¥93,176 ¥99,658 $700,571 The accompanying notes are an integral part of these statements.

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LIABILITIES AND SHAREHOLDERS’ EQUITY 2002 2001 2002

Current liabilities:

Short-term bank loans ... ¥877 ¥1,289 $6,594 Trade notes and accounts payable ... 9,569 10,554 71,947 Accrued expenses ... 3,175 3,235 23,872 Accrued income taxes ... 829 1,473 6,233 Other current liabilities ... 3,232 2,720 24,301 Total current liabilities ... 17,682 19,271 132,947

Long-term liabilities:

Accrued retirement benefits to employees ... 3,060 2,829 23,008 Accrued retirement benefits to directors and corporate auditors .. 858 891 6,451 Deferred tax liabilities ... 45 28 338 Other ... 207 194 1,556 Total long-term liabilities ... 4,170 3,942 31,353

Minority interests in consolidated subsidiaries... 112 41 842

Shareholders’ Equity:

Common stock, ¥50 ($0.38) par value: Authorized- 193,020,000 shares Issued and outstanding:

March 31, 2002 - 88, 801, 829 shares ... 18,240 – 137,143 March 31, 2001 - 92, 381, 829 shares ... – 18,240 – Additional paid-in capital ... 19,293 19,293 145,060 Retained earnings ... 38,552 41,326 289,865

76,085 78,859 572,068

Net unrealized losses on other securities ... (1,208) – (9,083) Foreign currency translation adjustments ... (687) (1,594) (5,165) Treasury stock at cost, 3,413,247 shares in 2002

and 727,444 shares in 2001 ... (2,978) (861) (22,391) Total shareholders’ equity ... 71,212 76,404 535,429 Total ... ¥93,176 ¥99,658 $700,571 The accompanying notes are an integral part of these statements.

(19)

Consolidated Statements of Income

2002 2001 2002

Net sales ... ¥62,968 ¥61,100 $473,444 Cost of sales... 35,571 33,480 267,451 Gross profit ... 27,397 27,620 205,993 Selling, general and administrative expenses ... 23,707 22,317 178,248 Operating income ... 3,690 5,303 27,745 Other income (expenses) :

Interest and dividend income ... 283 573 2,128 Equity in earnings of affiliates ... – (201) – Interest expense... (119) (146) (895) Amortization of research and development cost ... (1) (296) (8) Loss on disposal of property and equipment ... (22) (269) (165) Loss on sale of marketable securities ... (3) (124) (23) Loss on sale of investments in securities ... (271) (64) (2,038) Loss on write-down of investments in securities ... (1,092) (20) (8,210) Loss on write-down of golf club membership ... (5) (235) (38) Other, net ... 145 (114) 1,090 Income before income taxes ... 2,605 4,407 19,586 Income taxes :

Current ... 1,795 2,183 13,496 Deferred ... (595) (252) (4,474) Income before minority interests ... 1,405 2,476 10,564 Minority interests in net income of consolidated subsidiaries .. (30) (11) (226)

Net income ... ¥1,375 ¥2,465 $10,338

Yen U.S. dollars (Note 4)

Net income per share, basic... ¥15.28 ¥26.63 $0.115 Cash dividends per common share ... 13.00 13.00 0.098 The accompanying notes are an integral part of these statements.

(20)

Consolidated Statements of Cash Flows

2002 2001 2002

Cash Flows from Operating Activities:

Income before income taxes ... ¥2,605 ¥4,407 $19,586 Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization ... 2,471 2,355 18,579 Increase in provision for accrued retirement benefits ... 232 131 1,744

Increase (decrease) in allowance for doubtful accounts ... (26) 295 (195)

Interest and dividend revenue ... (283) (573) (2,128) Interest expenses ... 119 146 895 Foreign currency translation (gain) loss ... (33) 40 (248) Equity in losses of affiliates ... – 201 – Loss on sale of investments in securities ... 271 64 2,038 Loss on write-down of investments in securities ... 1,092 20 8,210 Loss on disposal of fixed assets ... 22 269 165

Loss on write-down of golf club membership ... 5 235 38

(Increase) decrease in trade notes and accounts receivable ... 1,526 (3,268) 11,474 (Increase) decrease in inventories ... 487 (1,117) 3,662 Increase (decrease) in accounts payable ... (1,164) 1,754 (8,752) Others ... 224 601 1,684 Subtotal ... 7,548 5,560 56,752 Receipts from interest and dividends ... 344 620 2,586 Interest paid ... (148) (187) (1,113) Income taxes paid ... (2,445) (2,114) (18,383) Net cash provided by operating activities ... 5,299 3,879 39,842 Cash Flows from Investing Activities:

Payment for purchase of marketable securities ... – (8,005) – Proceeds from sale of marketable securities ... 1,720 18,171 12,932 Payment for purchase of property and equipment ... (1,716) (985) (12,902)

Proceeds from sale of property and equipment ... 6 18 45

Payment for acquisition of intangible assets ... (963) (707) (7,241) Payment for acquisition of investments in securities ... (1,891) (3,066) (14,218) Proceeds from sale of investments in securities ... 3,910 3,111 29,399 Loans to third parties ... (121) (5) (910) Collection of loans ... 90 306 677 Others ... (1,000) (1,276) (7,519)

Net cash used in investing activities ... 35 7,562 263 Cash Flows from Financing Activities:

Proceeds from short-term bank loans ... 198 281 1,489 Repayment for short-term bank loans ... (786) (402) (5,910) Proceeds from long-term debt ... 14 77 105 Payment for acquisition of treasury stock ... (4,919) (2,194) (36,985) Dividends paid ... (1,187) (1,213) (8,925) Net cash used in financing activities ... (6,680) (3,451) (50,226) Effect of exchange rate changes on cash and cash equivalents ... (133) (23) (1,000) Net increase in cash and cashs equivalents ... (1,479) 7,967 (11,121) Cash and cash equivalents at beginning of year ... 22,989 15,022 172,850 Increase in cash and cash equivalents of newly consolidated subsidiaries ... 98 – 737 Cash and cash equivalents at end of year ... ¥21,608 ¥22,989 $162,466 The accompanying notes are an integral part of these statements.

(21)

Millions of Yen Additional

Common Paid-In Retained

(Number of Shares of Common Stock - Thousands) Stock Capital Earnings

Balance at March 31, 2000 (93,682)... ¥18,240 ¥19,293 ¥41,463 Net income for the year ... – – 2,465 Cash dividends ... – – (1,211)

Directors’ and corporate auditors’ bonuses ... – – (39)

Retirement of treasury stock (1,300) ... – – (1,352) Balance at March 31, 2001 (92,382) ... ¥18,240 ¥19,293 ¥41,326

Net income for the year ... – – 1,375 Cash dividends ... – – (1,183)

Decrease in retained earnings resulting from

addition of consolidated subsidiaries ... – – (118) Retirement of treasury stock (3,580)... – – (2,802) Balance at March 31, 2002 (88,802) ... ¥18,240 ¥19,293 ¥38,552

Thousands of U.S. dollars (Note 4) Additional

Common Paid-In Retained

Stock Capital Earnings

Balance at March 31, 2001 (92,382)... $137,143 $145,060 $310,722 Net income for the year ... – – 10,338 Cash dividends ... – – (8,895)

Decrease in retained earnings resulting from

addition of consolidated subsidiaries ... – – (887) Retirement of treasury stock (3,580)... – – (21,067) Balance at March 31, 2002 (88,802)... $137,143 $145,060 $289,865 The accompanying notes are an integral part of these statements.

Consolidated Statements of Shareholders’ Equity

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Notes to the Consolidated Financial Statements

1. Basis of Consolidated Financial Statements

The consolidated financial statements of AMANO Corporation (“the Com- pany”) and its subsidiaries (majority- owned companies) have been prepared in accordance with the accounting standards for consolidated financial statements in Japan. The accounts of the Company included in the consolidation are based on the accounting records maintained in accordance with the provisions of the Japa- nese Commercial Code and accounting principles generally accepted in Japan, which are diffenent in certain respects as to the application and the disclosure requirements of Interna- tional Accounting Standards. The accounts of consolidated overseas subsidiaries, as shown below, are based on audited financial statements prepared in conformity with accounting practices prevailing in the country of incorporation. In general, no adjustments to the accounts of overseas consolidated subsidiaries have been reflected in the accompanying consolidated financial statements. The accompanying consolidated financial statements of the Company and its consolidated subsidiaries are essentially the translation of statements in the Securities Annual Re- port filed with the Ministry of Fi- nance and the Tokyo and Osaka Stock Exchanges, as required by the provisions of the Securities and Exchange Law and related regulations in Japan. The information in the consolidated financial statements is derived from the original text, scope, and the na-

ture of that information, and is there- fore limited to that contained in the original text. However, certain re- classifications or summarizations of accounts have been made to present the consolidated financial statements in a form which is more familiar to the readers outside Japan.

The consolidated finacial statements are not intended to present the consolidated financial position, results of operations and the cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Japan.

2. Principles of Consolidation

(1) Scope of Consolidation The Company had 21 subsidiaries at March 31, 2002 (23 at March 31, 2001). The Company changed its consolidation policy from the application of the ownership concept to the control concept effective April 1, 1999. Under the control concept, major subsidiaries in which the Company is able to exercise control over operations are to be fully consolidated. The accounts of the overseas consolidated subsidiaries are prepared on the basis of a December 31 fiscal year-end, and are consolidated ac- cordingly with the Company at March 31, 2002 and 2001, and for the year then ended.

The consolidated subsidiaries that have been consolidated with the Company for the year ended March 31, 2002 are as follows:

Amano USA, Inc.

100% US$55,623 Amano Cincinnati Inc.

100% US$29,493 Amano Cincinnati Canada Inc.

100% C$439

Pioneer Eclipse Corp.

100% US$4,606 Amano Pioneer Credit Corp.

(d.b.a. Amano Business Credit)

84% US$135

Accutime Corp. 100% US$750

Amano Electronics

Europe NV 100% EUR18,929

Amano Asia Management Pte. Ltd.

100% S$125

ATAS E&C Services (M) Sdn. Bhd.

70% MR150

ATAS Services Pte. Ltd.

95% S$500

Amano Cleantech

Malaysia Sdn. Bhd. 60% MR200 PT. Amano

Indonesia 100% IDR1,928,000

Amano Time & Air

Singapore Pte. Ltd. 100% S$700 Amano International Trading

(Shanghai) Co., Ltd. 100% US$200 Amano Korea Corp. 100% W2,010,000 Amano Agency Corp.

43% ¥10,000

Environmental Technology Company

100% ¥10,000

Amano Management Service Corp.

74% ¥40,000

Amano Handy Aid Corp.

100% ¥10,000

Amano Maintenance Engineering Corp.

71% ¥30,000

CSJ Corp.* 82% ¥300,000

*CSJ Corp. was newly consolidated as of March 31, 2002.

Note : Amano Deutschland, GmbH, Ad- vanced Business Integration Singapore Pte. Ltd. and Amano System Solution Corp. were liquidated for the year ended March 31, 2002.

Company Name Paid In Capital (Thousands) Equity

ownership

%

(23)

(2) Investments in Affiliates The Company had three affiliates at March 31, 2000 and applied the equity method to the investments in all affiliates. For the year ended March 31, 2001, the Company sold those three affiliates, however, the Com- pany applied the equity method to the investments in all affiliates until they had been sold. For the year ended March 31, 2002, the Company has no affiliate.

(3) Consolidation and Elimination For the purpose of preparing the consolidated financial statements, all significant intercompany transactions, account balances, and unrealized profits among the Companies have been eliminated from the consolidated financial statements. Intrac- ompany profit included in the assets sold from the Company to the consolidated subsidiaries has been entirely eliminated and charged against the consolidated earnings of the Com- panies. Intracompany profit included in the assets sold from the consolidated subsidiaries to the Company has been entirely eliminated and the portion applicable to minority interests has been charged against minority interests. For the elimination of investments in a consolidated subsidiary, (Pioneer Eclipse Corp., USA), significant differences between such acquisition costs and the amounts of underlying equity in net assets of the subsidiary at the time of acquisition are amortized over a period of 40 years on a straight-line basis. Other consolidation differences are directly charged or credited to income for the year, since such differences had no

material effect on the consolidated result of operations, nor on the financial position at March 31.

3. Summary of Significant Accounting Policies

(1) Cash and Cash Equivalents Cash and cash equivalents include time deposits whose expiration dates are within three months.

(2) Inventories

Inventories are stated at cost. Cost is determined principally using the periodic average method.

(3) Property, Plant and Equipment Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed on the declining balance method, except for buildings acquired from April 1, 1998, at rates based on the esti- mated useful lives. The range of the useful lives of assets is :

Buildings 3-50 years

Machinery and equipment 3-16 years Cost of property, plant and equipment, retired or otherwise disposed of, and related accumulated depreciation, is eliminated from the respective accounts, and the resulting gain or loss is reflected in income during the applicable period. Normal re- pairs and maintenance, including minor renewals and improvements, are charged to income as incurred. (4) Deferred charges and other assets

Intangible assets are amortized us-

ing the straight-line method. Soft- ware costs for internal use are amortized by the straight-line method over their expected useful lives (five years). Goodwill arising from the acquisition of a subsidiary in the USA is amortized over a 40 year period on a straight-line basis.

(5) Accounting for Financial Instruments

Until the year ended March 31, 2000, marketable securities (current) and investments in securities (non-current) are valued at cost, which is determined by the moving average method.

Effective from the year ended March 31, 2001, the Company and its subsidiaries adopted the new Japanese accounting standard for financial instruments, which is effective for pe- riods beginning on or after April 1, 2000. As a result of adoption of the new standard, income before income taxes for the year ended March 31, 2001 has decreased by ¥9 million ($75 thousand), as compared with the amount which would have been reported if the previous standard had been applied consistently.

(a) Derivatives

Under the new standard, all derivatives are stated at fair value, with changes in fair value included in net profit or loss for the period in which they arise.

(b) Securities

Securities held by the Company and its subsidiaries are, under the new standard, classified into four categories; Trading securities, which are held for the purpose of generating profits on short-term differences in prices, are