Impact on sales from the termination of distribution agreements with Analog Devices and Linear Technology

「During the cumulative second quarter period, there were no occurrences of major risks that management recognizes as potentially having a material impact on the consolidated companies' financial condition, operating results, or cash flows, among matters related to the business and financial conditions described in the quarterly report, nor were there any material changes to the business and other risks described in the annual securities report for the preceding fiscal year.」

「During the cumulative first quarter period, there were no occurrences of major risks that management recognizes as potentially having a material impact on the consolidated companies' financial condition, operating results, or cash flows, among matters related to the business and financial conditions described in the quarterly report, nor were there any material changes to the business and other risks described in the annual securities report for the preceding fiscal year.」

「During the cumulative second quarter period, there were no occurrences of major risks that management recognizes as potentially having a material impact on the consolidated companies' financial condition, operating results, or cash flows, among matters related to the business and financial conditions described in the quarterly report, nor were there any material changes to the business and other risks described in the annual securities report for the preceding fiscal year.」

「For the fiscal year, revenue in the computer systems-related business declined slightly from the previous consolidated fiscal year due to the termination of distribution agreements, the application of the Accounting Standard for Revenue Recognition and other standards, longer delivery times and other factors. Meanwhile, although the semiconductor and electronic device businesses faced supply problems for semiconductors and other products, demand remained high, and expanded customer business opportunities also contributed, resulting in substantial increases in both revenue and profit compared with the previous consolidated fiscal year.」

「Although companies’ willingness to invest in IT platforms continued to increase, the termination of product sales in April 2020 following the end of the sales agency agreement with a major business partner, together with the application of the Accounting Standard for Revenue Recognition and related standards, resulted in revenue from external customers of ¥15,479 million, down 0.1% year on year, for the first three quarters of the consolidated cumulative period. Segment profit (ordinary profit) declined 19.7% to ¥1,239 million due in part to higher personnel expenses associated with hiring IT engineers.」

「However, due to the impact of ending product sales in April 2020 following the termination of the distribution agreements with major business partners, as well as the application of the Accounting Standard for Revenue Recognition and other standards, sales to external customers for the six months ended [the second quarter] were ¥10,002 million, down 4.1% year on year, and segment profit (ordinary profit) was ¥918 million, down 11.7%.」

「Although demand for storage and security products increased as remote work became more widespread during the COVID-19 pandemic, sales of products were discontinued in April 2020 following the termination of the distribution agreements with major business partners. As a result, sales to external customers for the three months ended [the first quarter] were ¥4,455 million, down 12.7% year on year, and segment profit (ordinary profit) was ¥386 million, down 34.8%.」

「Partly due to the impact of terminating the distribution agreements with major business partners in March 2020, sales to external customers for the fiscal year were ¥23,933 million, down 5.2% year on year. However, segment profit (ordinary profit) increased 4.9% to ¥2,834 million, owing mainly to strong operating and maintenance services accompanying sales of networking and storage-related products.」

「Demand for storage and security products increased as remote work expanded during the COVID-19 pandemic. However, the termination of the sales agency agreement with a major business partner announced on 21 February 2020 also affected results, resulting in revenue from external customers of ¥15,492 million, down 3.1% year on year, for the first three quarters of the consolidated cumulative period. Segment profit (ordinary profit) nevertheless increased 28.3% to ¥1,544 million, supported by strong operations and maintenance services accompanying sales of network and storage-related equipment.」

「Meanwhile, because the products handled declined following the termination of the distribution agreements with major business partners announced on 21 February 2020, net sales for the six months ended [the second quarter] fell to ¥10,426 million, down 4.6% year on year. However, segment profit (ordinary profit) increased 16.2% to ¥1,040 million, owing mainly to strong operating and maintenance services accompanying sales of networking and storage equipment.」

「Although the products handled declined following the termination of the distribution agreements with major business partners announced on 21 February 2020, sales of networking equipment and related maintenance services to data center operators remained firm as demand increased to strengthen network environments. As a result, net sales for the three months ended [the first quarter] were ¥5,102 million, up 0.0% year on year, and segment profit (ordinary profit) was ¥592 million, up 37.7%.」

「The Company's net sales for the fiscal year were ¥119,660 million, down 15.8% year on year, and segment profit (ordinary profit) was ¥1,319 million, down 18.5%, as the products handled for smartphones, industrial equipment and other applications declined following the termination of the distribution agreements with the aforementioned major business partners.」

「Although net sales fell to ¥10,395 million, down 12.9% year on year, due to the termination of the distribution agreements with major business partners and other factors, operating profit increased 23.7% year on year to ¥2,603 million, owing to the results of アバール長崎株式会社, which became a consolidated subsidiary in July 2017, being included from the beginning of the period, as well as strong performance in the computer systems-related business.」

「Although net sales for the six months ended [the second quarter] fell to ¥59,653 million, down 12.9% year on year, due to the reduction in products handled and other effects of the termination of the distribution agreements with major business partners announced on 1 November 2017, sales of relatively high-margin products for industrial equipment and automotive applications remained firm, and segment profit (ordinary profit) increased 27.7% year on year to ¥882 million.」

「Although demand for semiconductors used in industrial equipment such as robots and vehicles continued to expand, the semiconductor business reported net sales of ¥29,407 million, down 8.5% year on year, and segment profit (ordinary profit) of ¥372 million, down 4.1%, for the cumulative first quarter, due mainly to a decline in products handled following the termination of the distributor agreement with a major customer announced on 1 November 2017.」

「The distribution agreements with the Company's major business partners Analog Devices International and リニアテクノロジー株式会社 were terminated effective 31 January 2018 by mutual agreement, as differences had arisen between their policies on distribution in Japan and the Company's sales strategy.」

「The distribution agreements with the Company's major business partners Analog Devices International and リニアテクノロジー株式会社 were terminated effective 31 January 2018 by mutual agreement, as differences had arisen between their policies on distribution in Japan and the Company's sales strategy.」

「The Company decided to terminate its distribution agreements with its major business partners Analog Devices International (hereinafter, “Analog Devices”) and リニアテクノロジー株式会社 (hereinafter, “Linear Technology”). Linear Technology Corporation was acquired by Analog Devices, Inc. in March 2017, and the termination of these agreements therefore represents the end of transactions with an integrated business. The Company had sold various semiconductor products as a distributor for Analog Devices and Linear Technology, but differences arose between the companies' policies on distribution in Japan and the Company's sales strategy. Accordingly, by mutual agreement, the Company decided to terminate both distribution agreements effective 31 January 2018. Sales of products manufactured by Analog Devices and Linear Technology totaled ¥14,126 million in the previous fiscal year, from 1 April 2016 to 31 March 2017, representing 10.7% of the Company's consolidated net sales.」