Foreign Exchange Risk from U.S. Dollar-Denominated Purchases and Translation of Overseas Subsidiaries

「Sales to external customers in the United States decreased by US$2,812 thousand, or 15.0%, year on year, to US$15,925 thousand. In yen terms, sales decreased by ¥164 million, or 6.0%, to ¥2,556 million, despite the impact of the weaker yen. The exchange rate used to translate U.S. sales was ¥145.21 per US dollar in the same quarter of the previous fiscal year and ¥160.54 in the first quarter under review.」

「Sales to external customers in the United States decreased US$3,699 thousand, or 4.9%, from the previous consolidated fiscal year to US$71,579 thousand. After translation into yen, sales decreased ¥672 million, or 5.9%, to ¥10,807 million due to the stronger yen. (The conversion rate for US sales was ¥152.50 per US$1 in the previous consolidated fiscal year and ¥150.98 in the consolidated fiscal year under review.)」

「Sales to external customers in the United States decreased US$145 thousand, or 0.4%, year on year to US$35,802 thousand. After translation into yen, sales decreased ¥228 million, or 4.2%, to ¥5,247 million due to the stronger yen. (The conversion rate for US sales was ¥152.34 per US$1 in the same period of the previous year and ¥146.58 in the interim period under review.)」

「Sales to external customers in the United States increased US$1,815 thousand, or 5.3%, year on year to US$35,947 thousand. After translation into yen, sales increased ¥653 million, or 13.5%, to ¥5,476 million due to the weaker yen. (The conversion rate for US sales was ¥141.31 per US$1 in the same period of the previous year and ¥152.34 in the interim period under review.)」

「Ordinary income was ¥1,842 million, down 9.8% from the previous consolidated fiscal year, after recording ¥213 million in non-operating income, including ¥190 million in foreign exchange gains, and ¥116 million in non-operating expenses, including a ¥65 million loss on investments accounted for under the equity method and ¥31 million in interest expense.」

「In the United States, new customers developed in the previous year contributed to growth, and the number of cases won for knee replacement products increased. As a result, sales to external customers in the United States rose to US$52,205 thousand, an increase of US$3,138 thousand, or 6.4%, year on year. After translation into yen, sales were ¥7,452 million, an increase of ¥808 million, or 12.2%, due to the weaker yen. (For reference, the conversion rate for US sales was ¥135.41 per US$1 in the same quarter of the previous year and ¥142.76 in the third quarter under review.)」

「The cost of sales ratio was 35.9% (33.7% in the same quarter of the previous year) due to the expanded use of external vendors to avoid supply-chain problems, higher procurement costs resulting from inflation, the weaker yen, lower reimbursement prices in Japan and other factors. Selling, general and administrative expenses increased as commissions and royalties accompanying the increase in U.S. sales, research and development expenses, personnel expenses following wage increases, and sales promotion expenses including customer seminars held every other year by the U.S. subsidiary all rose. Total selling, general and administrative expenses increased 12.5% year on year to ¥6,405 million, partly because U.S. expenses after translation into yen increased due to the weaker yen. The SG&A-to-sales ratio was 58.5% (57.0% in the same quarter of the previous year).」

「The cost of sales ratio was 35.4% (33.4% in the same quarter of the previous year) due to the weaker yen, lower reimbursement prices in Japan and other factors. Total selling, general and administrative expenses increased 10.3% year on year to ¥3,142 million as commissions and royalties accompanying the increase in U.S. sales, personnel expenses associated with strengthening the business structure, research and development expenses for new products, and sales promotion expenses including customer seminars held every other year by the U.S. subsidiary all increased. U.S. expenses after translation into yen also increased due to the weaker yen. The SG&A-to-sales ratio was 58.2% (56.7% in the same quarter of the previous year).」

「The cost of sales ratio was 34.1% (32.1% in the same quarter of the previous year) due to the weaker yen, lower reimbursement prices in Japan and other factors. Total selling, general and administrative expenses increased 17.0% year on year to ¥8,784 million as personnel expenses and other costs rose with the strengthening of the business structure in Japan, commissions and royalties increased with the rise in U.S. sales, and U.S. expenses after translation into yen increased due to the weaker yen. The SG&A-to-sales ratio was 56.2% (53.7% in the same quarter of the previous year).」

「In the United States, the number of cases acquired increased year on year due to the contribution of the customer base, which had continued to expand from the previous year. As a result, sales to external customers increased 1.9% year on year in U.S. dollar terms and 23.3% after translation into yen due to the weaker yen, to ¥4,184 million.」

「Ordinary income was ¥483 million, down 10.7% year on year, after recording ¥35 million in non-operating income, including ¥13 million in insurance proceeds, and ¥49 million in non-operating expenses, including ¥30 million in foreign exchange losses.」

「The cost of sales ratio was 32.1%, compared with 31.9% in the same quarter of the previous year, due in part to the impact of foreign exchange movements.」

「Proprietary products accounted for 79.6% of sales due to the recovery in US sales and other factors, while the cost of sales ratio was 32.2%, compared with 32.0% in the same quarter of the previous year, due to exchange-rate fluctuations and other factors.」

「Ordinary income was ¥806 million, down 34.1% year on year, after recording ¥14 million in non-operating income, including ¥6 million in foreign exchange gains and ¥5 million in fees received, and ¥32 million in non-operating expenses, including ¥22 million in interest expense.」

「Ordinary income was ¥238 million, down 62.2% year on year, after recording ¥14 million in non-operating income, including ¥9 million in foreign exchange gains and ¥2 million in fees received, and ¥17 million in non-operating expenses, including ¥11 million in interest expense.」

「We enter into foreign exchange forward contracts to reduce the foreign exchange risk associated with US dollar-denominated imports.」

「Sales in the joint replacement field remained solid in the United States. Sales to external customers increased 17.1% year on year in US dollars and, after translation into yen, rose 15.3% to ¥5,449 million.」

「In the United States, sales in the orthopaedic joint field remained firm. Sales to external customers increased 20.3% year on year in U.S. dollar terms and 19.2% after translation into yen, to ¥3,531 million.」

「Ordinary income was ¥630 million, up 43.1% year on year, after recording ¥8 million in non-operating income, including ¥4 million in foreign exchange gains, and ¥24 million in non-operating expenses, including ¥21 million in interest expense.」

「Sales in the joint replacement field remained solid in the United States. Sales to external customers increased 25.7% year on year in US dollars and, after translation into yen, rose 24.6% to ¥4,727 million. Ordinary income was ¥1,605 million, up 9.3% year on year, after recording ¥89 million in non-operating income, including ¥75 million in foreign exchange gains, and ¥96 million in non-operating expenses, including ¥80 million in interest expense.」

「Sales of joint replacement products remained solid in the United States. Sales to external customers increased 29.0% year on year in US dollars and, after translation into yen, rose 27.4% to ¥2,963 million. Ordinary income was ¥831 million, up 6.3% year on year, after recording ¥39 million in non-operating income, including ¥30 million in foreign exchange gains, and ¥66 million in non-operating expenses, including ¥55 million in interest expense.」

「In the United States, sales of orthopaedic joint products performed steadily. Sales to external customers increased 25.0% year on year in U.S. dollar terms and 21.8% after translation into yen, to ¥1,455 million.」

「Sales of joint replacement products remained solid in the United States. Sales to external customers rose 8.9% year on year in US dollars and, reflecting the impact of the weaker yen, rose 12.7% after translation into yen to ¥3,795 million.」

「The cost of sales ratio improved to 27.5%, compared with 27.9% in the same quarter of the previous year, despite the impact of the weaker yen and lower reimbursement prices, due to the effect of lower manufacturing costs and the increase in the ratio of sales of proprietary products to 89.4%, from 87.3% in the same quarter of the previous year. Ordinary income was ¥782 million, up 3.3% year on year, after recording ¥42 million in non-operating income, including ¥35 million in foreign exchange gains, and ¥74 million in non-operating expenses, including ¥64 million in interest expense.」

「Ordinary income was ¥452 million, up 38.0% year on year, after recording ¥32 million in non-operating income, including ¥28 million in foreign exchange gains, and ¥39 million in non-operating expenses, including ¥33 million in interest expense.」

「In the United States, sales of orthopaedic joint products, including the Alpine Hip System, remained firm. Sales to external customers increased 17.0% year on year in U.S. dollar terms, but due to the stronger yen, increased 6.4% year on year to ¥4,566 million after translation into yen.」

「In the United States, sales of orthopaedic joint products, including the Alpine Hip System, remained firm. Sales to external customers increased 18.2% year on year in U.S. dollar terms, but due to the stronger yen, increased 5.2% year on year to ¥3,367 million after translation into yen.」

「In the United States, sales of orthopaedic joint products, including the new Alpine Hip System, remained firm. Sales to external customers increased 15.5% year on year in U.S. dollar terms, but due to the stronger yen, increased 1.4% year on year to ¥2,179 million after translation into yen.」

「Because we import goods from ODEV in US dollars and translate ODEV’s revenue and assets into yen in the consolidated financial statements, fluctuations in foreign exchange rates may affect our group’s profit or loss and financial position.」