2010 annual reports · open-rack type lng vaporizers (orvs) has been increased, targeting the...

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2010 ANNUAL REPORTS

SUMITOMO PRECISION PRODUCTS CO.,LTD

1Copyright (C) SUMITOMO PRECISION PRODUCTS Co., Ltd. All rights reserved. 1

CONTENTS

Consolidated Financial Highlights･･･････････････････2

A Message from the President･･････････････････････3

Topics･･････････････････････････････････････････････4

Board of Directors and Auditors････････････････････10

Campany Outline･･････････････････････････････････12

2

Consolidated Financial Highlights

Copyright (C) SUMITOMO PRECISION PRODUCTS Co., Ltd. All rights reserved. 2

Sumitomo Precision Products Co., Ltd.

For the years ended March 31, 2010 and 2009

0.056.005.00Cash dividends($0.57)(¥19.00)(¥53.18)Net income (loss)

Per share

U.S. DollarsYen

257,00226,57323,914Total shareholders’ equity

873,54177,67481,283Total assets

(30,296)(1,008)(2,819)Net income (loss)

(32,585)(1,673)(3,032)Income (Loss) before income taxes$459,613¥48,805¥42,767Net sales

201020092010

Thousands ofU.S. DollarsMillions of Yen

Notes: 1. Yen amounts have been exchanged, for convenience only, at the rated of ¥93.05 to $1,the approximate rate of exchange at march 31, 2010

2. See notes to consolidated financial statements.

Net Sales Net Income（Loss） Shareholders’ Equity

million ¥ million ¥ million ¥

’08 ’09 ’10

49,903 48,805

42,767

-356

-1,008

-2,819

28,78026,573

23,914

’08 ’09 ’10 ’08 ’09 ’10

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A Message from the President

Financial Report(April 1, 2009 to March 31, 2010)

Business Overview for the Corporate Group

(1) Status and ResultsThe current fiscal year sees the Japanese economy still experiencing difficult conditions with the yen continuing to strengthen and deflation persisting, although the economic stagnation caused by the global financial crisis is showing signs of bottoming out.

The weakened economy led to a slowdown in orders, which resulted in our consolidated sales for the current fiscal year decreasing by 12.4% from the previous year to ¥42.76 billion, despite the concerted efforts of all group members, under such a difficult economic climate, to secure more orders and expand sales in their respective fields, as well as to develop and promote new products.

The aerospace and hydraulic equipment business segment recorded sales of ¥19.12 billion for the current year, representing a 7.4% drop on the previous year due to decreased sales of landing gear and other aircraft-related equipment. Sales in the heat exchanger and other industrial equipment business segments also declined to ¥23.64 billion, representing a 16.0% decrease in comparison with the previous year. This was mainly attributable to lower sales of heat exchanger.

In terms of profit and loss, all our group members tried to improve productivity, streamline procurement and achieve cost reductions in order to offset cost increases that were caused by a fixed cost increase associated with enhancement of production capacity. However, the reduced sales and continued upward trend in the value of the Japanese yen reduced our consolidated operating profit and loss by ¥0.33 billion from the previous year, leading to a consolidated operating loss of ¥0.79 billion and a consolidated ordinary loss of ¥1.66 billion. Since acquiring a UK-based manufacturer of plasma processing devices in October 2009,we have intensified our efforts to promote business integration and structural reform in the new subsidiary company. This resulted in a loss on disposal of property, plant and equipment of ¥0.49 billion and an impairment loss of ¥0.7 billion, which were posted as extraordinary losses and led to a consolidated net loss of ¥2.81 billion for the current year.

In comparison with the previous year, our non-consolidated sales decreased by ¥6.2 billion to ¥38.24 billion. Our non-consolidated operating profit and loss resulted in a loss of ¥0.2 billion yen, showing an improvement of ¥1.05 billion over the previous year. Our non-consolidated ordinary loss amounted to ¥0.81 billion and our non-consolidated net loss was ¥0.64 billion for the current year.


(2) Capital Investment and Fund-raising StatusCapital investment amounted to ¥7.0 billion for the current fiscal year. This was invested mainly in the introduction of equipment designed to enhance the production capacity for heat exchangers and partial acquisition of a Micro Electro-Mechanical Systems (MEMS) and semiconductors manufacturing equipment business.

These capital investments were financed by loans. As of the end of the current fiscal year, the balance of interest-bearing liabilities, including corporate bonds and loans outstanding amounted to ¥40.19 billion.

(3) Management ChallengesThe Japanese economic environment is likely to remain extremely harsh in future, which suggests that the overall business climate surrounding our group does not allow for undue optimism.

Even under these conditions, our group is determined to accelerate its plans to secure more orders and successfully develop new products and business. We will also strive to rationalize production and reduce fixed costs, and increase profitability and competitiveness. Specifically, in the aerospace and hydraulic equipment business segment, we will boost our efforts to develop landing gear for domestically produced jet-engine passenger aircraft and a heat management system to be incorporated into the Rolls-Royce engine for the Airbus A350XWB, while continuing our ongoing efforts to expand our repair business.

In the heat exchanger and other industrial equipment business segments, we will precisely identify current needs, using the keywords “energy” and “environment”, and will continue to identify every opportunity to promote sales of existing products, including LNG vaporizers and ozone generators. We will also continue our R&D on small distribution energy systems with the objective of introducing mass production of related products in the near future. In addition, in the micro machining field, we will strive to pull out effects of the business acquisition in the shortest time possible, in order to strengthen more the Company’s global base for MEMS devices manufacturing equipment, while continuing our efforts toward development and volume production of a new-generation gyro sensor and other related new products and devices.

As detailed above, we are committed to strengthening our performance through existing businesses together with expansion into new business fields with high growth potential. We are also committed to reducing total assets, including inventories, in order to further improve our capital efficiency. All the members of our group will continue working together to create a stronger management foundation and ensure the continuous growth of our businesses in the future.

Susumu KAMINAGApredident

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Topics

Aerospace Products■Delivered to Rolls-Royce Group plc: Heat Exchanger Designed for Next Generation Engine Trent XWBWe have been engaged in designing and manufacturing a heat exchanger for the Trent XWB, which is Rolls-Royce's next generation engine, and recently delivered the first product for use in ground testing. The Trent XWB will power the next generation medium-sized passenger aircraft A350XWB (seating: 270–350) which Airbus has been developing with a view to putting it into service in 2013.

This fiscal year, we will be making preparations for commercial production while assisting Rolls-Royce with its ground testing of the engine.


Surface Air Cooled Oil Cooler Surface Air Oil Heat Exchanger

Fuel Oil Heat Exchanger

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Heat Control Products

We have expanded the Wakayama Plant in April 2009. Production capacity for open-rack type LNG vaporizers (ORVs) has been increased, targeting the ongoing increase in projects for building LNG receiving terminals amid growing worldwide demand for LNG as a clean and green fuel.

We have also expanded the No. 6 Plant and built the new No. 7 Plant on the Head Office site in Amagasaki, in June.

While demand for energy is expected to increase worldwide on a medium-to long-term basis, environmental issues such as global warming are attracting serious attention. This situation has turned the spotlight on new technologies such as ‘Gas to Liquid (GTL)’, ‘Coal to Liquid (CTL)’, which are both methods for producing fuels that substitute for oil, and ‘Oxy-Combustion’ which is expected to work as an effective method for recovering CO2. As a great amount of oxygen is required in the processes involved in the application of these technologies, demand is anticipated to rise further for cryogenic heat exchangers to be used in large-scale oxygen plants.

In response to this situation, we built another large-scale vacuum brazing furnace in the No. 7 Plant, thereby increasing the total number of such furnaces to three. And, in December, we augmented the production facilities for pre- and post-brazing operations.

We will continue to play a role in addressing issues concerning energy and global environmental protection by supplying LNG vaporizers and cryogenic heat exchangers.

Large-scale vacuum brazing furnace

■Manufacturing Facilities Expansion for LNG Vaporizers and Cryogenic Heat Exchangers

No. 6 Plant

Wakayama Plant


Topics

6

Environmental Systems■Water Technology Center Opened in Shanghai

Water treatment markets in China and Southeast Asia are experiencing explosive growth due to water environment pollution and water resource shortages that continue to be exacerbated as a result of ongoing economic development in those areas. There are high hopes in those markets for Japanese advanced water treatment technologies which enable decomposition of low degradability organic substances. In response to this development, we have established in Shanghai, China, a laboratory for water treatment experimentation (Shanghai Laboratory).

It is critically important to design advanced water treatment facilities, including those for ozone treatment, in accordance with the properties and condition of the waste water, etc. to be treated. Experiments using the actual water to be treated, therefore, are becoming increasingly important. In 1996, as a pioneering manufacturer of ozone generators, we built a full-scale water treatment experimentation laboratory (Water Technology Center) on the Head Office and Main Plant site in Amagasaki. Since then, we have achieved excellent results for advanced water treatment approaches that best match the different types of waste water. The new laboratory in Shanghai will enable us to conduct proposal-based water treatment business in China and Southeast Asia, along the same lines as our activities in Japan.

In addition, a study on water treatment is currently being conducted in the new laboratory, in collaboration with Shanghai Municipal Engineering Design General Institute (SMEDI), one of the leading research and development institutes in China. Advanced water treatment technologies are being developed through the association between SMEDI in Shanghai and the Water Technology Center in Japan.

This development work will lead to marketing the advanced water treatment technology based on ozone/AOP treatment technologies, not only in Japan but throughout China and Southeast Asian countries, under the name “SPP Hybrid AOP System.”


Topics

7

Micro-Technology■New Amagasaki Plant Now in OperationThe new plant in Amagasaki (No. 8 Plant) began operating in April 2009. This facility is shared by two divisions, Micro-Technology and Aerospace Products. Its 3rd floor houses office space while the 4th floor is Micro-Technology's production and demo labs. On the rooftop, where power and auxiliary production equipment is placed, we have planted a garden. Compared with our former home on the 3rd floor of No. 2 Plant, there is almost twice as much space, resulting in a substantial 2.5-fold increase in our production capacity. Furthermore, the cleanroom can now accommodate more than double the number of demonstration machines, which, coupled with the nearby sample measurement equipment, has enabled us to become more efficient in evaluation of demonstration samples. Thanks to these improvements, we are well placed to respond to future growth of the MEMS and semiconductor markets resulting from expansion of mass production, and we will endeavor to realize enhanced customer satisfaction alongside increased sales.

New Amagasaki plant (No. 8 Plant)

SPTS plant in the UK


In October 2009, we acquired certain assets of Aviza Technology, Inc., in the U.S.A. Through this acquisition, we now possess the technologies that Aviza has developed over many years in the capital equipment segment, for semiconductor manufacturing processes and Micro Electro Mechanical Systems (MEMS) devices. The purchase includes Aviza's wide range of products incorporating those technologies, and its global sales and service network. As a result of adding Aviza's products to our existing product mix, we have become more versatile in providing proposals to our customers choosing our products.

Along with this acquisition, we established SPP Process Technology Systems, Limited (SPTS) in the UK and consolidated the Aviza business and the conventional business carried out by Surface Technology Systems. We will further strengthen our global operational infrastructure for MEMS-related business through this move, and will aim to further develop our business in a strategic manner.

As we continue to respond to a wide variety of customer needs, we are committed to promoting sales to a greater extent, not only in the MEMS market but also in such fields as semiconductors.

■Acquisition of Aviza Technology Assets

Topics

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Sensors■Surface-mountable Micro GyrosOur current lineup of MEMS gyros comprises 18 types. Some 20 million units have been sold to date.

We have commenced mass production of a gyro sensor (angular rate sensor) integrating the silicon MEMS ring structure, which has a reputation for its vibration-resistant characteristics, targeting not only the high-volume commercial equipment market but also potential new markets.

In order to meet all needs, we make this gyro available in two package options with different sensing axis directions: CRM100 (5.7 x 4.8 mm) in a ‘in-plane’ sensing package and CRM200 (6.3 x 5.5 mm) in a ‘orthogonal’ sensing package. Other features include low-voltage drive, low current consumption, user-selectable dynamic ranges, user-selectable analogue and digital output modes, and user-adjustable bandwidth.

We plan to offer a series of products which incorporate new features, such as inclined packages, operability in a high-temperature environment, and a self-diagnosis function.

■EcoWizard – A System that Visualizes EnergyThe need to reduce emission of greenhouse gases which cause global warming has become an international issue and has heightened demand for a product that can easily detect energy waste.

We have been working on wireless sensor networks business in collaboration with MEMSIC, Inc. (U.S.A.) and Crossbow Technology, Inc. (U.S.A.) Using wireless sensor networking technology, we have developed an energy sensing and monitoring system named ‘EcoWizard’. With wiring requirements having been substantially reduced, it is a low-cost system which will realize ‘visualization of energy’.

EcoWizard closely monitors energy consumption and energy saving effects, using sensors for electric power consumption and pulse outputs from gas and water gauges. It also monitors electrical current, temperature, humidity, light, etc. Anyone can simply ascertain the energy consumption status with the aid of software which displays the collected data in an easy-to-understand format. This system will help to facilitate energy conservation.

We have a proven and extensive track record and a reputation for being highly reliable in the field of wireless sensor networking technology. We will continue to contribute to realization of an environmentally friendly society through active utilization of this technology.


CRM200

CRM100

Topics

9

New Business & Research■Development and Commercialization of Solid Oxide Fuel Cell (SOFC) UnderwayWe are pressing ahead with development of SOFC in response to rising expectations for fuel cell systems as means of generating clean electricity while reducing emissions of CO2, which is a greenhouse gas. The advantages of SOFC over other types of fuel cells include elimination of precious metal catalyst materials, high electrical efficiency (45–60%) and high overall efficiency (80%) achieved through utilization of high-temperature waste heat.

Two types of SOFC are being developed concurrently. SOFC using city gas as raw fuel is being developed jointly with Nippon Telegraph and Telephone Corporation and Toho Gas Co., Ltd. SOFC using commercial kerosene as raw fuel is being developed in collaboration with Japan Energy Corporation and NGK Insulators, Ltd.

A 3kW-class SOFC power generation module that uses city gas as raw fuel, developed in April 2009, achieved world-record electricity efficiency of 59%. In November of the same year, we also developed a prototype of a 3kW-class SOFC system that uses commercial kerosene as raw fuel, and a test run of this unit is currently being carried out. Our compact high-performance heat exchanger technology and heat management technology are being used in these developmental projects.

Our plans for FY2010 include production of a few industrial-application units of SOFC systems in the sub-10 kilowatt range, which we will place in real environments in order to conduct power generation demonstration tests. We will accumulate practical know-how on operation of these units and optimize the systems throughthese power generation demonstration tests so as to achieve early commercialization.

Prototype of kerosene type 3kW-class SOFC system


Topics

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Board of Directors and AuditorsAs of June 29,2010

Susumu KAMINAGAPresident

Toshiro AMANOSenior Managing Director

In charge of Industrial Hydraulic Division, Environmental Systems Division, Microelectronics Technology Division, Micro Technology Division, SPP Process Technology Systems Ltd., China & Asia Business Development

Yoshihisa NAKAMURAManaging Director

In charge of Sale & Marketing-Aerospace, Sales & Marketing-Heat Exchangers, Advanced Thermal Products, China & Asia Business Development

Kenji HIKOSOManaging Director

In charge of General Administration, Factory Innovation Center, Purchasing & Transportation, Strategic Procurement-Aerospace, Corporate Environmental Control & Facilities Engineering

Masahiro MURAKAMIManaging Director

In charge of Thermal Control Systems-Aerospace, Procurement･Production･Quality Assurance -Heat Exchangers, Thermal Energy Systems Engineering

Ryozo YAGIDirector

In charge of MEMS & Sensor Systems, Wireless Sensor Networks & Systems, Business Initiative & Research

Kazuo SADAManaging Director

In charge of Controlling & Treasury, Information Systems

Yoshio TAOKAManaging Director

In charge of Production･Engineering & Development･Quality Assurance –Aerospace, MEMS & Sensor Systems, Wireless Sensor Networks & Systems, Business Initiative & Research

Directors

Eizo YASUIManaging Director

In charge of Micro Technology Division, SPP Process Technology Systems Ltd.


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Koichiro KASANOSenior Corporate Auditor

Masato MORISenior Corporate Auditor

Yasumasa NAKANISHICorporate Auditor

Eiichi MORICorporate Auditor

Auditors


Board of Directors and AuditorsAs of June 29,2010

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Established January 1961Paid-in capital ¥10,311 million (as of Mar. 31, 2010)Total plant site area 129,842 square meters

(1,398,398 square feet)


Company Outline

COMPANY OUTLINE BUSINESS LOCATIONS

2209, United Plaza, 1468 Nanjing Road West, JingAnDistrict, 200040 Shanghai ChinaPhone 86-21-6288-4747 Fax 86-21-6288-9829

Shanghai Office

500 Fifth Avenue Suite 1850, New York, NY 10110 U.S.A.Phone 1-212-354-5558 Fax 1-212-354-5666

New York Office

Hishita Bldg.9F, 1-3-7 Higashi Sakura, Higashi-ku, Nagoya, 461-0005 JapanPhone 81-(0)52-951-4991 Fax 81-(0)52-951-4993

Nagoya Sales Office

1850 Minato, Wakayama City, Wakayama, 640-8404 JapanPhone 81-(0)73-457-2557 Fax 81-(0)73-454-2869

Wakayama Plant

1000-15 Okamoto-cho, Kusatsu City, Shiga, 525-0044 JapanPhone 81-(0)77-564-3811 Fax 81-(0)77-564-3014

Shiga Plant

8th Floor, Office Tower-Y, 1-8-11, Harumi, Chuo-ku, Tokyo, 104-6108 JapanPhone 81-(0)3-6220-0720 Fax 81-(0)3-6220-0730

Tokyo Head Office

1-10 Fuso-cho, Amagasaki City, Hyogo, 660-0891 JapanPhone 81-(0)6-6482-8811 Fax 81-(0)6-6489-5801

Head Office [Main Plant]

13Copyright (C) SUMITOMO PRECISION PRODUCTS Co., Ltd. All rights reserved. 13

Company Outline

($)1,000Sumitomo Precision USA, Inc.

1639 Falcon Drive, DeSoto, Texas 75115, U.S.A. Phone 1-972-228-9300 Fax 1-972-228-4900[Production and sales of heat exchangers for aerospace]

(£000’S) 14,000

SPP Process Technology Systems Ltd.Imperial Park, Newport, NP10 8UJ, U.K. Phone 44-1633-652-400 Fax 44-1633-652-405[Production and sales of MEMS/semiconductor device related process tool]

10SPP Process Technology Systems K.K.8th Floor, Office Tower-Y, 1-8-11, Harumi, Chuo-ku, Tokyo, 104-6108 JapanPhone 81-(0)3-6220-0729 Fax 81-(0)3-6220-0739[Sales and support of MEMS/semiconductor related process tools]

30Sumisei Hydraulic Systems Co., Ltd.2-2-27 Tsujidokandai, Fujisawa City, Kanagawa, 251-0041 JapanPhone 81-(0)466-35-1520 Fax 81-(0)466-35-1521[Production, maintenance and sales of aerospace and hydraulic equipment]

10Sumisei Sangyo Co., Ltd.1-10 Fuso-cho, Amagasaki City, Hyogo, 660-0891 JapanPhone 81-(0)6-6482-3444 Fax 81-(0)6-6482-3354[Sales of all types of materials and machinery parts]

20Sumisei Techno Service Co., Ltd.1-10 Fuso-cho, Amagasaki City, Hyogo, 660-0891 JapanPhone 81-(0)6-6489-5896 Fax 81-(0)6-6489-5877[Maintenance services for all types of industrial machinery]

12Sumisei Engineering Co., Ltd.1-10 Fuso-cho, Amagasaki City, Hyogo, 660-0891 JapanPhone 81-(0)6-6489-5893 Fax 81-(0)6-6489-5895[Design, drawing and engineering services]

250MET Co., Ltd.8th Floor, Office Tower-Y, 1-8-11, Harumi, Chuo-ku, Tokyo, 104-6108 JapanPhone 81-(0)3-6220-0726 Fax 81-(0)3-6220-0736[Manufacture of semiconductor and LCD related equipment]

($000’S)23,163

Primaxx, Inc.7377 William Avenue, #800 Allentown. PA 18106. U.S.A. Phone 1-610-336-0314 Fax 1-610-336-0455[Production and sales of MEMS etch release equipment]

(NT$000's)13,000

Aviocast, Inc.178, Lane 20, Jhong-Jhen Road, Shalu Taichung County 433, Taiwan Phone 886-4-2615-2215 Fax 886-4-2615-2015[Production and sales of casting products]

(mil lions of yen)30

Crossbow Japan, Ltd.1-10 Fuso-cho, Amagasaki City, Hyogo, 660-0891 Japan Phone 81-(0)6-6489-5922 Fax 81-(0)6-6489-5902[Sales of wireless sensor networks and inertial units]

(YUAN)8,038,796

NINGBO SPP HYDRAULICS Co., Ltd.No.507, Long jiao shan RD Beilun Ningbo China Phone 86-574-8618-2701 Fax 86-574-8618-2703[Production and sales of QT pump ]

(£000’S)10,500

Silicon Sensing Systems Ltd.No.3635234, Clittaford Road, Southway, Plymouth, Devon PL6 6DE U.K. Phone 44-1752-723-330 Fax 44-1752-723-331[Production and sales of motion sensors]

MAIN CONSOLIDATED COMPANIES paid-in capital

(mil lions of yen) MAIN ASSOCIATED COMPANIES paid-in capital

14

Offices

Head Office [Main Plant]1-10 Fuso-cho, Amagasaki City, Hyogo, 660-0891 Japan

Phone 81-(0)6-6482-8811 Fax 81-(0)6-6489-5801

Tokyo Head Office8th Floor, Office Tower-Y, 1-8-11, Harumi, Chuo-ku, Tokyo, 104-6108 Japan

Phone 81-(0)3-6220-0720 Fax 81-(0)3-6220-0730

New York Office500 Fifth Avenue Suite 1850, New York, NY 10110 U.S.A.

Phone 1-212-354-5558 Fax 1-212-354-5666

Shanghai OfficeRoom 2209, United Plaza, 1468 Nanjing Road West, JingAn District,200040 Shanghai China

Phone 86-21-6288-4747 Fax 86-21-6288-9829

http://www.spp.co.jp


2010 annual reports · open-rack type lng vaporizers (orvs) has been increased, targeting the...

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