Fiscal Year 213 (ending March 31, 214) Third Quarter Results (ended December 31, 213) Brother Industries, Ltd. February 4, 214 Information on this report, other than historical facts, refers to future prospects and performance, and has been prepared by our Management on the basis of information available at the time of the announcement. This covers various risks, including, but not limited to, economic conditions, customer demand, foreign currency exchange rates, tax rules, regulation and other factors. As a result, actual future performance may differ from any forecasts contained on this report.
Consolidated Results for FY213 (ending March 31,214) < Q3( 9-month Results ) > Nine months ended Dec.31, 213 3/214 3/213 Rate of [Actual] [Actual] (w/o forex impact) 19.8% 4,518 3,773 746 (+2.6%) 37 257 5 19.4% Ratio 6.8% 6.8% -.% Non-operating Income (Loss) -66-36 -3 Current Profits 241 222 2 9.% Extraordinary Income (Loss) Income Taxes Net Income 1-1 2 124 98 26 118 122-4 -3.6% (Yen) Exchange USD 99.23 8.43 18.8 Rates EUR 132.13 13.24 28.89 Net sales increased due to the positive effect of forex and a steady sales increase of communications & printing equipment. Despite an increase in SGA, Operating income increased due to the positive effect of forex. Net income slightly decreased due to increased corporate taxes caused by tax effect accounting. 214 Brother Industries, Ltd. All Rights Reserved. 2
Consolidated Results for FY213 Q3 (9-month Results) Sales and by Business Segment 4,518 37 3,773 124 379 363 128 249 27 115 118 342 256 19 318 343 257 14 21 45 18 13 8 31 29 2,26 2,837 159 231 3/213 (9-month Results) 3/214 (9-month Results) 3/213 (9-month Results) -5 3/214 (9-month Results) Communications & Printing equipment Electronic stationery Home sewing machines Industrial sewing machines Machine tools Online karaoke, Contents distribution services Industrial Part Others 214 Brother Industries, Ltd. All Rights Reserved. Printing & Solutions Personal & Home Machinery & Solution Network & Contents Industrial Part Others
Main Factors for s in < FY213Q3 ( 9-month Results ) > 1 Millions of Yen 55 5 45 +5(+19.4%) +149 4 35 3 25 +21-87 -18 2-12 -3 15 1 257 37 5 212 Q3 Diff. in sales Price change Cost change Forex impact SG&A R&D expense 213 Q3 214 Brother Industries, Ltd. All Rights Reserved. 4
Printing & Solutions Sales & < FY213Q3( 9-month Results ) > 4, 3 15.% 3,18 Ratio 231 3, 2,53 (w/o forex impact) 2 159 1.% 2, 1, 2,26 2,837 Communications & Printing equipment +25.5% ( +4.6% ) Electronic stationery +27.1% ( +4.9% ) 1 6.3% 7.3% 5.% Total 27 343 3/213 Q3 3/214 Q3 +25.7% ( +4.6% ) 3/213 Q3 3/214 Q3.% Communications & Printing equipment Geographical Sales 3/213 Q3 3/214 Q3 Americas 859 1,126 +31.% (+7.3%) Europe 756 95 +25.5% (-1.2%) Asia & Others 296 386 +3.4% (+8.%) Japan 348 376 +7.8% (+7.8%) Electronic stationery Geographical Sales 3/213 Q3 3/214 Q3 Americas 13 162 +24.7% (+1.8%) Europe 8 14 +29.6% (+1.8%) Asia & Others 32 43 +37.1% (+12.3%) Japan 28 34 +19.5% (+19.5%) Sales increased in each region due to the positive effect of forex. After several periods of slow demand, sales in Europe were beginning to show signs of recovery. Operating income significantly increased due to the positive effect of forex, despite negative factors, such as investments for future growth of new business and a one-time expense recorded in the first half. 214 Brother Industries, Ltd. All Rights Reserved. 5
Personal & Home Sales & < FY213 Q3(9-month Results ) > 4 4 2.% 3 249 318 3 Ratio 29 2 2 18 1.% 9.1% 1 (w/o forex impact) 1 7.3% Home sew ing machines 3/213 Q3 3/214 Q3 +27.7% ( +6.2% ) 3/213 Q3 3/214 Q3.% Home sewing machines Geographical Sales 3/213 Q3 3/214 Q3 Americas 132 175 +32.9% (+8.6%) Europe 56 76 +35.8% (+5.6%) Asia & Others 21 27 +28.8% (+7.6%) Japan 4 39-1.5% (-1.5%) Sales grew due to steadily increased sales in Europe and the Americas. Operating income significantly increased mainly due to the positive effect of forex. 214 Brother Industries, Ltd. All Rights Reserved. 6
Machinery & Solution Sales & < FY213 Q3(9-month Results ) > 6 491 446 8 Ratio 4.% 4 128 19 (w/o forex impact) 6 45 3.% 2 363 256 3/213 Q3 3/214 Q3 Industrial sewing machines +48.2% ( +19.1% ) Machine tools -29.3% ( -35.% ) Total -9.% ( -2.8% ) 4 2 9.2% 31 6.9% 3/213 Q3 3/214 Q3 2.% 1.%.% Industrial sewing machines Geographical Sales 3/213 Q3 3/214 Q3 Machine tools Geographical Sales 3/213 Q3 3/214 Q3 Sales of industrial sewing machines increased due to a recovery in demand in the sewing industry and the contribution of new products. Americas 26 35 +33.% (+7.8%) Europe 21 27 +28.2% (-.2%) Asia & Others 77 124 +6.3% (+28.2%) Japan 4 5 +18.4% (+18.4%) Americas 14 16 Europe 9 12 Asia & Others 32 2 Japan 38 28 +13.4% +33.5% -33.6% -25.6% Sales of machine tools decreased due to a reactionary drop from large demand in the IT-related industry in the previous year. Operating income fell due to decreased sales. *As machine tools are mostly exported to customers abroad directly from Japan, sales are reported in Japan segment regardless of destination of exports. Therefore, for the purpose of this material, the regional breakdown ratios of exports from Japan multiplied by total consolidated sales is shown here. 214 Brother Industries, Ltd. All Rights Reserved. 7
Network & Contents Sales & < FY213 Q3(9-month Results ) > 5 3 3.% 4 379 342 2 Ratio 21 2.% 3 2 1 5.4% 1.% -1.6% 1.% 3/213 Q3 3/214 Q3-9.8% -1-5 3/213 Q3 3/214 Q3-1.% Sales decreased due to a reactionary decline from the launch of new karaoke machines in the previous year. Operating income fell into the red due to a sales decrease and an increase in SGA including service improvement and remodeling costs for directly-managed karaoke shops. * Regional sales breakdown for Network & Contents is not referred here because the major part of sales are made in Japan. 214 Brother Industries, Ltd. All Rights Reserved. 8
Revised for FY 213 ( ending March 31, 214) 3/214 3/213 Rate of 3/214 [] [Actual] [Previous ] (w/o forex impact) (A) (B) (A - B) (A/B - 1) (C) (A - C) 19.2% 6,15 5,161 989 6, 15 (+4.2%) Ratio Non-operating Income (Loss) Current Profits Extraordinary Income (Loss) Income Taxes Net Income s from the previous forecast 38 298 82 27.6% 35 3 6.2% 5.8%.4% 5.8%.3% -75-66 -9-55 -2 35 231 74 31.8% 295 1-5 48-53 -5 145 11 44 125 2 155 178-23 -13.1% 165-1 (Yen) Exchange USD 99.74 83.23 96.77 Rates EUR 133.45 17.57 127.45 Sales, Operating income and Current profits have been revised by factoring in changes of the assumed exchange rates in light of the yen s depreciation, a recovery in demand of machine tools and a decrease in sales forecast for karaoke machines. Net income has been revised downward by incorporating increased corporate taxes caused by tax effect accounting due to changes to the assumed exchange rates. 214 Brother Industries, Ltd. All Rights Reserved. 9
Consolidated for FY213 (ending March 31,214) Sales and by Business Segment 5,161 199 51 425 189 338 373 6,15 6, 149 146 16 16 489 55 351 298 26 262 417 425 454 465 298 21 23 4 25 35 14 11 14 24 34 38 15 11 7 37 32 3,135 3,76 3,849 188 253 273 3/213 [Actual] 3/214 [Previous ] 3/214 [] 3/213 [Actual] 3/214 [Previous ] 3/214 [] Communications & Printing equipment Electronic stationery Home sewing machines Industrial sewing machines Machine tools Online karaoke, Contents distribution services Industrial Part Others Printing & Solutions Personal & Home Machinery & Solution Network & Contents Industrial Part Others 214 Brother Industries, Ltd. All Rights Reserved. 1
Printing & Solutions Sales & < for FY213( ending March 31,214 ) > 5, 4,214 4,314 4 Ratio 2.% 4, 3,58 3 253 273 15.% 3, 2, 3,135 3,76 3,849 (w/o forex impact) Communications & Printing equipment +22.8% ( +4.9% ) 2 188 1.% 1, 373 454 465 3/213 Actual 3/214 Previous Communications &Printing equipment Geographical Sales 3/213 Actual 3/214 Prev ious 3/214 3/214 Americas 1,193 1,56 1,515 +27.% (+7.%) Europe 1,81 1,251 1,321 +22.1% (-1.%) Asia & Others 46 56 513 +26.4% (+8.7%) Electronic stationery +24.5% ( +5.4% ) Total +23.% ( +5.% ) Electronic stationery 1 Geographical Sales 3/213 Actual 3/214 Prev ious 5.4% 6.% 6.3% 3/213 Actual 3/214 3/214 Previous 3/214 Americas 176 212 216 +23.1% (+3.1%) Europe 114 139 145 +27.6% (+3.%) Asia & Others 43 55 56 +3.3% (+1.4%) 5.%.% Japan 454 497 5 +1.1% (+1.1%) Japan 41 48 48 +16.5% (+16.5%) 214 Brother Industries, Ltd. All Rights Reserved. 11
Personal & Home Sales & < for FY213( ending March 31,214 ) > 5 4 338 417 425 5 4 Ratio 34 37 2.% 3 3 25 2 2 1.% 1 (w/o forex impact) 1 7.4% 8.2% 8.7% Home sew ing machines 3/213 Actual 3/214 3/214 Previous +25.7% ( +7.4% ) 3/213 Actual 3/214 Previous 3/214.% Home sewing machines Geographical Sales 3/213 Actual 3/214 Prev ious 3/214 Americas 174 222 225 +29.4% (+8.4%) Europe 78 96 13 +32.5% (+6.%) Asia & Others 28 36 36 +29.9% (+11.8%) Japan 59 63 61 +4.% (+4.%) 214 Brother Industries, Ltd. All Rights Reserved. 12
Machinery & Solution Sales & < for FY213( ending March 31,214 ) > 1, 1 2.% 8 6 4 2 614 189 425 558 26 298 Industrial sewing machines Geographical Sales 613 262 351 3/213 Actual 3/214 3/214 Previous 3/213 Actual 3/214 Prev ious 3/214 Americas 36 43 44 +21.5% (+1.5%) (w/o forex impact) Industrial sewing machines +38.6% ( +14.9% ) Machine tools Total -17.4% ( -23.9% ) -.2% ( -11.9% ) Machine tools 5 Geographical Sales 3/213 Actual 3/214 Prev ious 4 6.5% Ratio 24 4.3% 37 6.% 3/213 Actual 3/214 3/214 Previous 3/214 Americas 2 2 21 +6.3% 1.%.% Europe 3 38 37 +23.7% (-.3%) Asia & Others 117 174 175 +49.% (+23.2%) Europe 11 13 14 +25.8% Asia & Others 348 228 274-21.1% Japan 5 5 6 +9.1% (+9.1%) Japan 46 37 41-1.6% *As machine tools are mostly exported to customers abroad directly from Japan, sales are reported in Japan segment regardless of destination of exports. Therefore, for the purpose of this material, the regional breakdown ratios of exports from Japan multiplied by total consolidated sales is shown here. 214 Brother Industries, Ltd. All Rights Reserved. 13
Network & Contents Sales & < for FY213( ending March 31,214 ) > 8 4 Ratio 2.% 6 51 55 489 3 23 15.% 4 2 1.% 14 2 1 4.6% 7 5.% 3/213 Actual 3/214 Previous 3/214-2.4% 2.8% 3/213 Actual 3/214 Previous 1.4% 3/214.% * Regional sales breakdown for Network & Contents is not referred here because the major part of sales are made in Japan. 214 Brother Industries, Ltd. All Rights Reserved. 14
Consolidated Results for FY213(ending March 31,214) < FY213 Q3(3-month Results ) > Ratio Non-operating Income (Loss) Current Profits Extraordinary Income (Loss) Income Taxes Net Income Three months ended Dec.31, 213 Q3 3/213 Q3 3/212 Rate of [Actual] [Actual] (w/o forex impact) 23.2% 1,635 1,327 37 (+4.9%) 114 61 53 85.8% 7.% 4.6% 2.3% -26-4 15 88 21 67 318.% 4 7-3 38 54-15 53-26 8 - (Yen) Exchange USD 11.2 81.49 19.53 Rates EUR 137.91 16.2 31.71 Overall sales steadily increased due to the positive effect of forex and a recovery in demand of machine tools. Operating income, despite a sales decrease in the N&C business, significantly increased due to the positive effect of forex. Net income turned into the black because the tax impact incurred by applying tax effect accounting was much smaller than the amount recorded in the third quarter of the prior year. 214 Brother Industries, Ltd. All Rights Reserved. 15
Main Factors for s in < FY213 Q3 ( 3-month Results ) > 1 Millions of Yen 2 +53(+85.8%) +67 15 1 +21 +11-36 -1-1 5 114 61 212 Q3 Diff. in sales Price change Cost change Forex impact SG&A R&D expense 213 Q3 214 Brother Industries, Ltd. All Rights Reserved. 16
Printing & Solutions Sales & < FY213 Q3(3-month Results ) > 1,5 15 15.% 1,154 Ratio 1, 936 (w/o forex impact) 1 84 1.% 5 84 1,36 Communications & Printing equipment +23.3% ( +2.4% ) Electronic stationery 5 36 7.3% 5.% +23.5% ( +1.2% ) 3.8% Total 96 119 Q3 3/213 (3-month Results) Q3 3/214 (3-month Results) +23.3% ( +2.3% ) Q3 3/213 (3-month Results) Q3 3/214 (3-month Results).% Communications & Printing equipment Geographical Sales Q3 3/213 (3-month Results) Q3 3/214 (3-month Results) Americas 319 388 +21.5% (-.5%) Europe 292 38 3.2% (+1.4%) Asia & Others 98 128 +31.6% (+9.8%) Japan 131 139 +6.1% (+6.1%) Electronic stationery Geographical Sales Q3 3/213 (3-month Results) Q3 3/214 (3-month Results) Americas 47 55 +16.5% (-4.8%) Europe 29 39 +35.1% (+4.9%) Asia & Others 11 15 +35.3% (+11.2%) Japan 9 1 +7.9% (+7.9%) Sales in the Americas were at the same level as the previous year due to a reactionary drop from the launch of new products and intense competition in a certain region. Operating income significantly increased due to the positive effect of forex, despite negative factors such as an increase in SGA. 214 Brother Industries, Ltd. All Rights Reserved. 17
Personal & Home Sales & < FY213 Q3(3-month Results ) > 2 2 Ratio 2.% 15 13 15 13 1 1 1 8 9.8% 1.% 5 (w/o forex impact) 5 8.3% Home sew ing machines Q3 3/213 (3 -month Results) Q3 3/214 (3 -month Results) +3.8% ( +8.1% ) Q3 3/213 (3 -month Results) Q3 3/214 (3 -month Results).% Home sewing machines Geographical Sales Q3 3/213 (3-month Results) Q3 3/214 (3-month Results) Americas 59 77 +3.3% (+6.4%) Europe 21 3 +45.6% (+12.1%) Asia & Others 8 1 +36.6% (+16.2%) Japan 12 13 +4.3% (+4.3%) Sales grew due to steadily increased sales in Europe and the Americas. Operating income significantly increased mainly due to the positive effect of forex. 214 Brother Industries, Ltd. All Rights Reserved. 18
Machinery & Solution Sales & < FY213 Q3(3-month Results ) > 3 2 Ratio 2.% 2 1 112 45 146 65 (w/o forex impact) Industrial sewing machines +45.3% ( +16.4% ) Machine tools +2.6% ( +8.7% ) 1 1 7.1% 1.% 67 Q3 3/213 (3 -month Results) 81 Q3 3/214 (3 -month Results) Total +3.5% ( +11.8% ) 1 1.3% Q3 3/213 (3-month Results) Q3 3/214 (3-month Results).% Industrial sewing machines Geographical Sales Q3 3/213 (3-month Results) Q3 3/214 (3-month Results) Americas 1 12 +27.2% (+3.1%) Europe 8 9 +19.% (-8.3%) Machine tools Geographical Sales Q3 3/213 (3-month Results) Q3 3/214 (3-month Results) Americas 5 6 +33.1% Europe 3 6 +111.1% Sales of industrial sewing machines increased due to a recovery in demand in the sewing industry and the contribution of new products. Sales of machine tools increased due to a recovery in demand in the IT-related industry. Asia & Others 26 42 +61.1% (+28.5%) Japan 1 2 +22.9% (+22.9%) Asia & Others 48 59 +21.3% Japan 11 1-9.6% Operating income rose due to increased sales. *As machine tools are mostly exported to customers abroad directly from Japan, sales are reported in Japan segment regardless of destination of exports. Therefore, for the purpose of this material, the regional breakdown ratios of exports from Japan multiplied by total consolidated sales is shown here. 214 Brother Industries, Ltd. All Rights Reserved. 19
Network & Contents Sales & < FY213 Q3(3-month Results ) > 2 2 Ratio 2.% 15 15.% 15 125 119 1 8 1.% 1 5 6.8% 5.% 5-2.1%.% Q3 3/213 (3-month Results) Q3 3/214 (3-month Results) -5.% -5 Q3 3/213 (3 -month Results) -3 Q3 3/214 (3 -month Results) -5.% Sales decreased due to a reactionary drop from the launch of new karaoke machines and slow sales in the content business, although sales in the directlymanaged karaoke shop business exceeded those in the same period last year. Operating income fell into the red due to a sales decrease and an increase in SGA. Regional sales breakdown for Network & Contents is not referred here because majority of sales are made in Japan. 214 Brother Industries, Ltd. All Rights Reserved. 2
R&D expenses, Capital expenditure, Depreciation and amortization and Inventories R&D expenses Capital expenditure and Depreciation and amortization 4 2 27 288 375 47 4 2 Capital expenditure Depreciation and amortization 239 191 171 198 32 245 364 278 Q3 3/213 Actual Q3 3/214 Actual 3/213 Actual 3/214 Q3 3/213 Actual Q3 3/214 Actual 3/213 Actual 3/214 Inventories Inventories Inventories / Cost of sales 1, 5 977 851 891 877 912 779 765 788 1,63 3.2 3.5 3.6 3.1 3.4 3.2 3.4 3.5 3.5 (Number of months) 6. 5. 4. 3. 2. 1.. Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 214 Brother Industries, Ltd. All Rights Reserved. 21