(3) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME < As
Originally Reported > (Thousands of yen) For the six For the six
For the months months year Account ended ended ended June June
December 30,2005 30,2006 31, 2005 Net income 8,490,156 7,996,972
18,669,954 Other comprehensive income (loss), before tax:
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during period (279,612)
465,352 1,375,136 Less reclassification adjustment for (gains)
losses included in net income (186,353) (168,404) (704,199)
(465,965) 296,948 670,937 Foreign currency translation adjustments
837,273 (28,049) 2,066,063 Total 371,308 268,899 2,737,000 Income
tax (expense) benefit related to unrealized gains (losses) on
available-for-sale securities 178,963 (127,725) (297,400) Other
comprehensive income, net of tax 550,271 141,174 2,439,600
Comprehensive income 9,040,427 8,138,146 21,109,554 < As Amended
> (Thousands of yen) For the six For the six For the months
months year Account ended ended ended June June December 30,2005
30,2006 31, 2005 Net income 8,490,156 8,384,889 18,669,954 Other
comprehensive income (loss), before tax: Unrealized gains (losses)
on available-for-sale securities: Unrealized holding gains (losses)
arising during period (279,612) 465,352 1,375,136 Less
reclassification adjustment for (gains) losses in net income
(186,353) (168,404) (704,199) (465,965) 296,948 670,937 Foreign
currency translation adjustments 837,273 (28,049) 2,066,063 Total
371,308 268,899 2,737,000 Income tax (expense) benefit related to
unrealized gains (losses) 178,963 (127,725) (297,400) on
available-for-sale securities Other comprehensive income, net of
tax 550,271 141,174 2,439,600 Comprehensive income 9,040,427
8,526,063 21,109,554 (4) CONSOLIDATED STATEMENT OF SHAREHOLDERS'
EQUITY < As Originally Reported > (Thousands of yen) For the
six For the six For the months months year Account ended ended
ended June June December 30,2005 30,2006 31, 2005 < Common stock
> Balance at beginning of period 11,426,977 12,484,849
11,426,977 Exercise of stock purchase warrants and stock
acquisition rights 376,224 809,295 1,057,872 Balance at end of
period 11,803,201 13,294,144 12,484,849 < Additional paid-in
capital > Balance at beginning of period 17,359,335 18,572,063
17,359,335 Tax benefit from exercise of non-qualified stock
warrants 300,271 125,689 155,323 Tax expense derived from gain on
elimination of stock purchase -- (59,091) -- warrants related to
stock option plan Stock option compensation expense -- 2,481,126 --
Exercise of stock purchase warrants and stock acquisition rights
376,069 809,086 1,057,405 Balance at end of period 18,035,675
21,928,873 18,572,063 < Retained earnings > Balance at
beginning of period 42,165,026 55,971,955 42,165,026 Net income
8,490,156 7,996,972 18,669,954 Stock issue costs, net of tax
(1,829) (3,178) (3,519) Cash dividends (4,794,028)(7,509,068)
(4,794,028) Loss on sales of treasury stock, net of tax (30,303)
(32,019) (65,478) Balance at end of period 45,829,022 56,424,662
55,971,955 < Net unrealized gain (loss) on available-for-sale
securities > Balance at beginning of period 284,348 657,885
284,348 Net change during the period (287,002) 169,223 373,537
Balance at end of period (2,654) 827,108 657,885 < Cumulative
foreign currency translation adjustments > Balance at beginning
of period (606,463) 1,459,600 (606,463) Aggregate foreign currency
translation adjustments for the period 837,273 (28,049) 2,066,063
Balance at end of period 230,810 1,431,551 1,459,600 < Treasury
stock, at cost > Balance at beginning of period
(7,454,463)(7,283,242) (7,454,463) Purchases of treasury stock
(42,631) (305,817) (142,062) Sales of treasury stock 149,968
147,692 313,283 Balance at end of period (7,347,126)(7,441,367)
(7,283,242) Total shareholders' equity 68,548,928 86,464,971
81,863,110 < As Amended > (Thousands of yen) For the six For
the year For the six months ended Account months ended ended
December 31, June 30,2005 June 2005 30,2006 < Common stock >
Balance at beginning of period 11,426,977 12,484,849 11,426,977
Exercise of stock purchase warrants and stock acquisition rights
376,224 809,295 1,057,872 Balance at end of period 11,803,201
13,294,144 12,484,849 < Additional paid-in capital > Balance
at beginning of period 17,359,335 18,572,063 17,359,335 Tax benefit
from exercise of non-qualified stock warrants 300,271 125,689
155,323 Tax expense derived from gain on elimination of stock
purchase warrants related to stock option plan -- (59,091) -- Stock
option compensation expense -- 2,481,126 -- Exercise of stock
purchase warrants and stock acquisition 376,069 809,086 1,057,405
rights Balance at end of period 18,035,675 21,928,873 18,572,063
< Retained earnings > Balance at beginning of period (as
previously reported) 42,165,026 55,971,955 42,165,026
Cumulative-effect of correcting prior-period errors by applying SAB
No.108 -- (2,251,639) -- Balance at beginning of period (as
corrected) 42,165,026 53,720,316 42,165,026 Net income 8,490,156
8,384,889 18,669,954 Stock issue costs, net of tax (1,829) (3,178)
(3,519) Cash dividends (4,794,028)(7,509,068) (4,794,028) Loss on
sales of treasury stock, net of tax (30,303) (32,019) (65,478)
Balance at end of period 45,829,022 54,560,940 55,971,955 < Net
unrealized gain (loss) on available-for-sale securities >
Balance at beginning of period 284,348 657,885 284,348 Net change
during the period (287,002) 169,223 373,537 Balance at end of
period (2,654) 827,108 657,885 < Cumulative foreign currency
translation adjustments > Balance at beginning of period
(606,463) 1,459,600 (606,463) Aggregate foreign currency
translation adjustments for the period 837,273 (28,049) 2,066,063
Balance at end of period 230,810 1,431,551 1,459,600 < Treasury
stock, at cost > Balance at beginning of period
(7,454,463)(7,283,242) (7,454,463) Purchases of treasury stock
(42,631) (305,817) (142,062) Sales of treasury stock 149,968
147,692 313,283 Balance at end of period (7,347,126)(7,441,367)
(7,283,242) Total shareholders' equity 68,548,928 84,601,249
81,863,110 (5) CONSOLIDATED STATEMENT OF CASHFLOWS < As
Originally Reported > (Thousands of yen) For the For the For the
six six year Account months months ended ended ended December June
June 31, 30,2005 30,2006 2005 Cash flows from operating activities:
Net income 8,490,156 7,996,972 18,669,954 Adjustments to reconcile
net income to net cash provided by operating activities -
Depreciation and amortization 942,777 1,551,957 1,878,050 Pension
and severance costs, less payments 91,650 45,400 207,109 Deferred
income taxes 158,283 (2,119,648)(1,358,568) (Gain) loss on sales of
marketable securities (20,534) (73,829)(370,326) Equity in earnings
of affiliated companies (31,663) (10,942) (66,551) (Gain) loss on
sale and disposal of fixed assets -- 3,362 11,585 Stock option
compensation expense -- 2,478,850 -- Dividends received from
affiliate company -- 28,000 -- Minority interest 420 574 338
Changes in assets and liabilities: Increase (decrease) in deferred
revenue 1,424,155 4,174,075 6,209,680 (Increase) decrease in
accounts receivable, net of allowances 1,552,014
3,505,934(3,567,924) (Increase) decrease in inventories (53,076)
(137,610) (124,971) Increase (decrease) in notes and accounts
payable, trade (510,190) 33,513 (526,321) Increase (decrease) in
accrued income and other taxes (3,219,572) 3,221,541(1,826,959)
(Increase) decrease in other current assets 133,075 (75,518)
(34,426) Increase (decrease) in accounts payable, other 250,129
143,381 381,414 Increase (decrease) in other current liabilities
321,916 98,858 1,336,703 (Increase) decrease in other assets 5,754
(599,325) (207,984) Other 113,694 (287,900) 34,809 Net cash
provided by operating activities 9,648,988 19,977,645 20,645,612
Cash flows from investing activities: Payments for purchases of
property and equipment, net (507,160) (883,241)(1,153,193) Software
development cost (475,129) (598,687)(1,446,248) Payments for
purchases of other intangibles (83,946) (677,992) (216,107)
Proceeds from sales and maturities of 8,545,586 8,974,014
22,079,575 marketable securities (Payments for) proceeds from
marketable securities maturing within three months, net 784,865
426,035 (189,708) Payments for purchases of marketable securities
and investment securities (8,241,925)(10,730,312)(28,043,534)
Payments for acquisition of business (2,716,702) -- (2,716,702)
(Payments for) proceeds from time deposits, net (523,121) 396,422
(1,052,017) Net cash used in investing activities (3,217,532)
(3,093,761)(12,737,934) (Thousands of yen) For the For the For the
six six year Account months months ended ended ended December June
June 31, 30,2005 30,2006 2005 Cash flows from financing activities:
Issuance of common stock pursuant to exercise of stock purchase
warrants and stock acquisition rights 750,464 1,615,203 2,111,758
Proceeds from sales of treasury stock 119,665 115,672 247,805
Payments for purchase of treasury stock (42,631) (305,816)
(142,062) Tax benefit from exercise of non-qualified stock warrants
300,271 125,689 155,322 Tax expense derived from gain on
elimination stock purchase warrants related to stock option plan --
(59,091) -- Capital contributions from minority shareholders 4,193
-- 4,193 Dividends paid (4,766,610) (7,489,966) (4,782,764) Net
cash used in financing activities (3,634,648) (5,998,309)
(2,405,748) Effect of exchange rate changes on cash and cash
equivalents 92,689 620,204 1,202,290 Net increase in cash and cash
equivalents 2,889,497 11,505,779 6,704,220 Cash and cash
equivalents at beginning of period 52,908,357 59,612,577 52,908,357
Cash and cash equivalents at end of period 55,797,854 71,118,356
59,612,577 Supplementary information of cash flows: Payments for
interest 2,241 7,995 3,709 Payments for income taxes 7,350,227
3,603,882 13,109,985 < As Amended > (Thousands of yen) For
the For the For the six six year Account months months ended ended
ended December June June 31, 30,2005 30,2006 2005 Cash flows from
operating activities: Net income 8,490,156 8,384,889 18,669,954
Adjustments to reconcile net income to net cash provided by
operating activities - Depreciation and amortization 942,777
1,633,532 1,878,050 Pension and severance costs, less payments
91,650 45,400 207,109 Deferred income taxes 158,283 (1,965,640)
(1,358,568) (Gain) loss on sales of marketable securities (20,534)
(73,829) (370,326) Equity in earnings of affiliated companies
(31,663) (10,942) (66,551) (Gain) loss on sale and disposal of
fixed assets -- 3,362 11,585 Stock option compensation expense --
2,478,850 -- Dividends received from affiliate company -- 28,000 --
Minority interest 420 574 338 Changes in assets and liabilities:
Increase (decrease) in deferred revenue 1,424,155 3,621,987
6,209,680 (Increase) decrease in accounts receivable, net of
allowances 1,552,014 3,505,934 (3,567,924) (Increase) decrease in
inventories (53,076) (137,610) (124,971) Increase (decrease) in
notes and accounts payable, trade (510,190) 33,513 (526,321)
Increase (decrease) in accrued income and other taxes (3,219,572)
3,221,541 (1,826,959) (Increase) decrease in other current assets
133,075 (75,518) (34,426) Increase (decrease) in accounts payable,
other 250,129 143,381 381,414 Increase (decrease) in other current
liabilities 321,916 98,858 1,336,703 (Increase) decrease in other
assets 5,754 (599,325) (207,984) Other 113,694 (285,339) 34,809 Net
cash provided by operating activities 9,648,988 20,051,618
20,645,612 Cash flows from investing activities: Payments for
purchases of property and equipment, net (507,160) (957,214)
(1,153,193) Software development cost (475,129) (598,687)
(1,446,248) Payments for purchases of other intangibles (83,946)
(677,992) (216,107) Proceeds from sales and maturities of
marketable securities 8,545,586 8,974,014 22,079,575 (Payments for)
proceeds from marketable securities maturing within three months,
net 784,865 426,035 (189,708) Payments for purchases of marketable
securities and securities (8,241,925)(10,730,312)(28,043,534)
Payments for acquisition of business (2,716,702) -- (2,716,702)
(Payments for) proceeds from time deposits, net (523,121) 396,422
(1,052,017) Net cash used in investing activities (3,217,532)
(3,167,734)(12,737,934) (Thousands of yen) For the For the For the
six six year Account months months ended ended ended December June
June 31, 30,2005 30,2006 2005 Cash flows from financing activities:
Issuance of common stock pursuant to exercise of stock purchase
warrants and stock acquisition rights 750,464 1,615,203 2,111,758
Proceeds from sales of treasury stock 119,665 115,672 247,805
Payments for purchase of treasury stock (42,631) (305,816)
(142,062) Tax benefit from exercise of non-qualified stock warrants
300,271 125,689 155,322 Tax expense derived from gain on
elimination stock purchase warrants related to stock option plan --
(59,091) -- Capital contributions from minority shareholders 4,193
-- 4,193 Dividends paid (4,766,610)(7,489,966)(4,782,764)
(3,634,648)(5,998,309)(2,405,748) Net cash used in financing
activities Effect of exchange rate changes on cash and cash
equivalents 92,689 620,204 1,202,290 Net increase in cash and cash
equivalents 2,889,497 11,505,779 6,704,220 Cash and cash
equivalents at beginning of period 52,908,357 59,612,577 52,908,357
Cash and cash equivalents at end of period 55,797,854 71,118,356
59,612,577 Supplementary information of cash flows: Payments for
interest 2,241 7,995 3,709 Payments for income taxes 7,350,227
3,603,882 13,109,985 NOTES TO INTERIM CONSOLIDATED FINANCIAL
INFORMATION 2. Summary of significant accounting policies
(Following accounting policies are newly added) < As Amended
> Asset retirement obligations The Company accounts for its
asset retirement obligations in accordance with SFAS No.143
'Accounting for Asset Retirement Obligation' and FASB
Interpretation No.47 'Accounting for Conditional Asset Retirement
Obligation - an interpretation of FASB Statement No.143,' which
require that a company to recognize the fair value of a legal
obligation associated with the retirement of long-lived assets as a
liability in the period in which it is incurred and
period-to-period changes in the asset retirement liability
resulting from the passage of time and revisions to either the
timing or the amount of the original estimate of undiscounted cash
flows in the subsequent periods. The associated asset retirement
costs are capitalized and amortized to expense over an economic
useful life of the related assets. Quantifying financial statement
misstatements In September 2006, the Securities and Exchange
Commission issued Staff Accounting Bulletin ('SAB') No.108,
'Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements.'
SAB No. 108 requires the Company to quantify misstatements using
both the balance-sheet and income-statement approach and to
evaluate whether either approach results in quantifying an error
that is material in light of relevant quantitative and qualitative
factors. When the effect of initial adoption is determined to be
material, SAB No. 108 allows the Company to record that effect as a
transitional cumulative-effect adjustment to beginning-of-year
retained earnings. SAB No. 108 is effective from the first annual
period ending after November 16, 2006, however, as permitted, the
Company has elected to adopt the provisions early from the first
half period of this fiscal year. Upon adoption of SAB No. 108, the
Company corrected prior year misstatements through a
cumulative-effect adjustment to the beginning of the year retained
earnings in the amount of (Yen) 2,251,639 thousand, which had
previously been considered immaterial to the prior year
consolidated financial statements. A breakdown of the
cumulative-effect adjustment is as follows: (Thousands of Yen)
Fiscal year Increase Contents and reasons of the that (decrease) in
the misstatements misstatements beginning of year occurred retained
earnings (1)Post-contract customer support service revenue should
be deferred and recognized ratably over the service period. The
Company corrected certain inconsistencies between the revenue
recognition period and the actual service period that had occurred
due to an operational limitation of tracking individual customer
contract terms. FY 1999 - (1,189,469) (2)In Japan, revenue for
certain multi-year support service contracts was being recognized
in a one-year period due to a system bug. FY 1999 - (12,288)
(3)Revenue of our North America operation had been dominated by the
sales for the large corporate market and the deferral method used
for sales in the large corporate market was also applied to the
sales in the consumer market. However, the sales in the North
America consumer market have increased in recent years. Therefore,
the Company changed its deferral method in the consumer market to
reflect a more accurate fair value. FY 1999 - (143,845) (4)The fair
value of post-contract customer support service in the Japanese
consumer market had been determined in reference to the retail list
price (the price for end-users) of each product component. To
calculate more accurate fair value, the Company changed its
deferral amounts to the ones which were based on the wholesale
price (the price for distributors). FY 1999 - (725,585) (5)The fair
value of the legal obligation associated with the retirement of
long-lived assets should be recognized as a liability as prescribed
in SFAS No.143. However, the Company had not recorded certain such
obligations that were considered immaterial. Therefore, the Company
had provided an appropriate amount for all of its asset retirement
obligations. FY 2005 - (84,019) (6)In our North America operation,
a subsidiary had applied the same deferral method for the major
product line to the revenue from Intermute products and the
products with a seat number of 50,001 or more, as well as the
products bundled with a premium support program. However, the
Company changed its method so that the entire sales amounts are
deferred and recognized ratably over the service period since the
fair value of the PCS component for those products could not be
determined. FY 2005 - (253,742) (7)In our North America operation,
the start date and end date information for certain post-contract
customer service arrangements was incorrectly entered into the
system due to human processing errors. Accordingly, the Company
corrected amortization of the related deferred revenue. FY 2005
23,212 (8)In our North America operation, a subsidiary corrected
its tax calculation with regard to the transfer of intellectual
property which took place in 2005. FY 2005 284,830 (9)In our North
America operation, a subsidiary immediately expensed certain fixed
assets with an acquisition cost of less than USD 3,000 or a useful
life of less than 2 years. The Company has capitalized such fixed
assets and recorded appropriate depreciation expense. FY 2003 -
133,594 (10)In our European operation, the Company corrected
certain inconsistencies between the revenue recognition period and
the actual service period. FY 1999 - (284,327) Total (2,251,639) 3.
Reconciliation of the difference between basic and diluted net
income per share ('EPS') < As Originally Reported > A
reconciliation of the differences between basic and diluted EPS for
the six months ended June 30, 2005 and 2006 and for the year ended
December 31, 2005, is as follows: For the six For the six For the
year months ended months ended ended June 30, 2005 June 30, 2006
December 31, 2005 Thousands of Yen Net income available to common
shareholders 8,490,156 7,996,972 18,669,954 Thousands of Shares
Weighted-average number of common shares 133,341 134,323 133,498
Effect of dilutive securities: Stock options 2,045 621 1,958
Weighted-average number of common shares for diluted EPS
computation 135,386 134,944 135,456 Yen Basic EPS: 63.67 59.54
139.85 Diluted EPS: 62.71 59.26 137.83 Shareholders' equity per
share as of June 30, 2005 and 2006 and December 31, 2005, was as
follows: (Yen) June 30, June 30, December 31, 2005 2006 2005
Shareholders' equity per share 513.45 642.18 610.51 < As Amended
> A reconciliation of the differences between basic and diluted
EPS for the six months ended June 30, 2005 and 2006 and for the
year ended December 31, 2005, is as follows: For the six For the
six For the year months ended months ended ended June 30, 2005 June
30, 2006 December 31, 2005 Thousands of Yen Net income available to
common shareholders 8,490,156 8,384,889 18,669,954 Thousands of
Shares Weighted-average number of common shares 133,341 134,323
133,498 Effect of dilutive securities: Stock options 2,045 621
1,958 Weighted-average number of common shares for EPS computation
135,386 134,944 135,456 Yen Basic EPS: 63.67 62.42 139.85 Diluted
EPS: 62.71 62.14 137.83 Shareholders' equity per share as of June
30, 2005 and 2006 and December 31, 2005, was as follows: (Yen) June
30, June 30, December 31, 2005 2006 2005 Shareholders' equity per
share 513.45 628.34 610.51 11. Asset retirement obligation
(Following footnote below is newly added after 'Employee benefit
plans' ) < As Amended > The Company has legal obligations
associated with the retirement of long- lived assets in connection
with restoration activities to be carried out at the time the
Company vacates certain leased premises, and records such legal
obligation as the asset retirement obligations included in other
non-current liabilities. Information regarding the activities for
the asset retirement obligation for the six months ended June 30,
2006 is as follows: (Thousands of Yen) For the six months ended
June 30, 2006 Beginning balance (as adjusted) 200,161 Accretion
expense 2,562 Newly incurred in the period 15,960 Ending balance
218,683 < As Originally Reported > 13. Segment information
��SNIP�� (Thousands of yen) For the six For the six For the year
Net sales to external months months ended customers ended ended
December 31, June 30, 2005 June 30, 2006 2005 Japan 14,247,671
16,072,588 29,416,077 North America 6,884,623 8,835,759 15,416,991
Europe 8,828,580 10,021,048 18,379,304 Asia Pacific 3,765,821
4,435,824 7,909,753 Latin America 763,045 1,308,208 1,907,776
Corporate -- -- -- Consolidated Total 34,489,740 40,673,427
73,029,901 (Thousands of yen) For the six For the six For the year
Operating income months months ended ended ended December 31, June
30, 2005 June 30, 2006 2005 Japan 9,005,153 13,258,245 18,636,462
North America 4,587,286 4,660,912 10,483,801 Europe 4,899,005
4,503,754 10,330,980 Asia Pacific 1,516,628 596,537 2,836,044 Latin
America 319,536 808,327 1,092,793 Corporate (7,556,468)
(10,110,414) (15,808,305) Consolidated Total 12,771,140 13,717,361
27,571,775 From the fiscal year ending December 31, 2006, the
Company reports sales information by customer size in addition to
the sales information by five regional segments for the chief
operating decision maker to assess the Company's performance. The
three operating segment by customer size are enterprise, small and
mid size business, and consumer. Below is summarized segment
information of sales by customer size. These figures comply with
the accounting policies disclosed in the notes to consolidated
financial statements. (Thousands of yen) For the six months Net
sales to external customers ended June 30, 2006 Enterprise
11,140,592 Small and mid size business 19,543,364 Consumer
9,989,471 Consolidated Total 40,673,427 Significant customer
(Thousands of yen) For the six months For the six months For the
year ended ended ended Customer June 30, 2005 June 30, 2006
December 31, 2005 Net sales Ratio Net sales Ratio Net sales Ratio
SOFTBANK BB 5,145,269 14.9% 5,878,167 14.5% 10,604,947 14.5% <
As Amended > 14. Segment information ��SNIP�� (Thousands of yen)
For the six For the six For the year Net sales to external months
months ended customers ended ended December 31, June 30, 2005 June
30, 2006 2005 Japan 14,247,671 16,155,904 29,416,077 North America
6,884,623 9,068,187 15,416,991 Europe 8,828,580 10,257,392
18,379,304 Asia Pacific 3,765,821 4,435,824 7,909,753 Latin America
763,045 1,308,208 1,907,776 Corporate - -- -- Consolidated Total
34,489,740 41,225,515 73,029,901 (Thousands of yen) For the six For
the six For the year Operating income months months ended ended
ended December 31, June 30, 2005 June 30, 2006 2005 Japan 9,005,153
13,333,738 18,636,462 North America 4,587,286 4,898,296 10,483,801
Europe 4,899,005 4,738,533 10,330,980 Asia Pacific 1,516,628
590,806 2,836,044 Latin America 319,536 808,327 1,092,793 Corporate
(7,556,468) (10,110,414) (15,808,305) Consolidated Total 12,771,140
14,259,286 27,571,775 From the fiscal year ending December 31,
2006, the Company reports sales information by customer size in
addition to the sales information by five regional segments for the
chief operating decision maker to assess the Company's performance.
The three operating segment by customer size are enterprise, small
and mid size business, and consumer. Below is summarized segment
information of sales by customer size. These figures comply with
the accounting policies disclosed in the notes to consolidated
financial statements. (Thousands of yen) For the six months Net
sales to external customers ended June 30, 2006 Enterprise
11,176,958 Small and mid size business 19,614,539 Consumer
10,434,018 Consolidated Total 41,225,515 Significant customer
(Thousands of yen) For the six months For the six months For the
year ended ended ended Customer June 30, 2005 June 30, 2006
December 31, 2005 Net sales Ratio Net sales Ratio Net sales Ratio
SOFTBANK BB 5,145,269 14.9% 5,909,763 14.3% 10,604,947 14.5% <
As Originally Reported > 14. Deferred revenue by region
(Thousands of yen ) As of June 30, 2005 As of June 30, 2006 As of
December 31, 2005 Current Non-current Current Non-current Current
Non-current Japan 11,163,970 1,450,931 14,237,796 1,441,820
12,429,867 1,542,109 North America 5,815,242 723,391 8,050,075
2,004,911 7,529,743 856,903 Europe 6,352,090 1,109,933 8,210,938
1,402,109 7,779,059 1,289,305 Asia Pacific 2,115,572 140,846
2,630,861 432,408 2,579,002 186,619 Latin America 793,645 --
1,295,430 -- 1,188,644 -- Total 26,240,519 3,425,101 34,425,100
5,281,248 31,506,315 3,874,936 < As Amended > 15. Deferred
revenue by region (Thousands of yen ) As of June 30, 2005 As of
June 30, 2006 As of December 31, 2005 Current Non-current Current
Non-current Current Non-current Japan 11,163,970 1,450,931
16,887,664 1,724,440 12,429,867 1,542,109 North America 5,815,242
723,391 8,521,399 2,011,773 7,529,743 856,903 Europe 6,352,090
1,109,933 8,387,598 1,412,691 7,779,059 1,289,305 Asia Pacific
2,115,572 140,846 2,630,861 432,408 2,579,002 186,619 Latin America
793,645 -- 1,295,430 -- 1,188,644 -- Total 26,240,519 3,425,101
37,722,952 5,581,312 31,506,315 3,874,936 < As Originally
Reported > 15. Subsequent events (1) Trend Micro adopted, at the
meeting of the Board of Directors on June 30, 2006, the following
resolutions regarding stock acquisition rights to be issued to the
directors, employees and staff seconded to, of the Company and its
affiliates in order to introduce the 17th stock option plan. Date
of issuance July 10, 2006 Number of stock acquisition The total
number of stock acquisition rights to be issued rights is 2,902.
(One stock acquisition right represents the acquisition right of
five hundred shares.) Class of shares subject to Common shares for
the Company the exercise of stock acquisition rights Issue price of
stock acquisition (Yen) 0 rights Exercise period of stock The
exercise period of stock acquisition acquisition rights rights
shall be from July 10, 2007 to July 9, 2011. Exercise price per
share (Yen)3,995 Individuals who were be granted The directors and
employees of and staff the stock acquisition seconded to the
Company rights: and its affiliates (1,372 people) (2) Trend Micro
adopted, at the meeting of the Board of Directors on August 21,
2006, the following share repurchase program in order to gain
flexibility in implementing its capital policy in response to any
changes in the business environment: (+1) Resolution Class of
capital stock to be Common Shares of the Company purchased Number
of shares to be Up to 2 million shares (1.49% of the repurchased
total outstanding shares) Total purchase price Up to 7 billion yen
Purchase period From August 22, 2006 to September 30, 2006 Purchase
method Transactions through the Tokyo Stock Exchange (+2) Others As
a result of the transactions through a stock market, the Company
repurchased 2,000,000 shares of its common stock for a total cost
of (Yen) 6,809,730 thousand and completed the share repurchase
program on September 20, 2006. < As Amended > 16. Subsequent
events (1) Trend Micro adopted, at the meeting of the Board of
Directors on June 30, 2006, the following resolutions regarding
stock acquisition rights to be issued to the directors, employees
and staff seconded to, of the Company and its affiliates in order
to introduce the 17th stock option plan. Date of issuance July 10,
2006 Number of stock acquisition The total number of stock
acquisition rights to be issued rights is 2,902. (One stock
acquisition right represents the acquisition right of five hundred
shares.) Class of shares subject to Common shares for the Company
the exercise of stock acquisition rights Issue price of stock
acquisition (Yen) 0 rights Exercise period of stock The exercise
period of stock acquisition acquisition rights rights shall be from
July 10, 2007 to July 9, 2011. Exercise price per share (Yen)3,995
Individuals who were be granted The directors and employees of and
staff the stock acquisition seconded to the Company rights: and its
affiliates (1,372 people) (2) Trend Micro adopted, at the meeting
of the Board of Directors on August 21, 2006, the following share
repurchase program in order to gain flexibility in implementing its
capital policy in response to any changes in the business
environment: (+1) Resolution Class of capital stock to be Common
Shares of the Company purchased Number of shares to be Up to 2
million shares (1.49% of the repurchased total outstanding shares)
Total purchase price Up to 7 billion yen Purchase period From
August 22, 2006 to September 30, 2006 Purchase method Transactions
through the Tokyo Stock Exchange (+2) Others As a result of the
transactions through a stock market, the Company repurchased
2,000,000 shares of its common stock for a total cost of (Yen)
6,809,730 thousand and completed the share repurchase program on
September 20, 2006. (3) Trend Micro adopted, at the meeting of the
Board of Directors on October 31, 2006, the following resolutions
regarding stock acquisition rights to be issued to the directors,
employees and staff seconded to, of the Company and its affiliates
in order to introduce the 18th stock option plan. Date of issuance
November 8, 2006 Number of stock acquisition The total number of
stock acquisition rights to be issued rights is 2,906. (One stock
acquisition right represents the acquisition right of five hundred
shares.) Class of shares subject to Common shares for the Company
the exercise of stock acquisition rights Issue price of stock
acquisition (Yen) 0 rights Exercise period of stock The exercise
period of stock acquisition acquisition rights rights shall be from
November 8, 2007 to November 7, 2011. Exercise price per share
(Yen)3,610 Individuals who were be granted The directors and
employees of and staff the stock acquisition seconded to the
Company rights: and its affiliates (1,173 people) < As
Originally Reported > 16. Status of manufacturing and actual
sales (2) Sales results (Thousands of Yen) For the six For the six
For the year Period months months ended ended ended December
31,2005 Product June 30,2005 June 30,2006 PC client 9,503,106
11,141,074 19,714,453 LAN server 1,571,812 1,407,760 3,278,568
Internet server 8,809,325 9,105,326 18,373,789 All Suite products
11,479,519 15,045,681 24,484,969 Other products 1,545,459 1,803,183
3,494,862 Sub-total 32,909,221 38,503,024 69,346,641 Other service
1,580,519 2,170,403 3,683,260 Total 34,489,740 40,673,427
73,029,901 < As Amended > 17. Status of manufacturing and
actual sales (2) Sales results (Thousands of Yen) For the six For
the six For the year Period months months ended ended ended
December 31,2005 Product June 30,2005 June 30,2006 PC client
9,503,106 11,469,141 19,714,453 LAN server 1,571,812 1,405,604
3,278,568 Internet server 8,809,325 9,153,598 18,373,789 All Suite
products 11,479,519 15,204,927 24,484,969 Other products 1,545,459
1,817,106 3,494,862 Sub-total 32,909,221 39,050,376 69,346,641
Other service 1,580,519 2,175,139 3,683,260 Total 34,489,740
41,225,515 73,029,901 A part of report of First-Half Results
(Non-consolidated) For Fiscal Year Ending December 31, 2006 <
Original > 1. Financial Highlights for the first half of FY 2006
(January 1, 2006 through June 30, 2006) (1) Results of operations
(All figures except for per share information are rounded down to
millions of yen) Growth Operating Growth Ordinary Growth Net sales
rate income rate income rate Millions of % Millions % Millions %
yen of yen of yen The first half of FY 2006 26,438 17.9 11,917 15.0
12,315 18.6 The first half of FY 2005 22,421 21.8 10,359 15.4
10,383 17.4 FY 2005 (annual) 48,228 21,823 22,423 Net Net income
Growth rate income per share Millions % Yen of yen The first half
of FY 2006 8,740 48.5 65.07 The first half of FY 2005 5,884 5.9
44.13 FY 2005 (annual) 13,122 98.30 (Note) 1. Weighted average
number of shares 134,323,039 shares (for the first outstanding:
half of FY 2006) 133,341,012 shares (for the first half of FY 2005)
133,498,438 shares (for FY 2005) 2. Change in accounting policies:
None 3. The percentage of net sales, operating income, ordinary
income and net income are comparison to the first half of previous
fiscal year. (2) Financial Position Shareholders' Shareholders'
Shareholders' Total assets equity equity ratio equity per share As
of Millions of yen Millions of yen % Yen June 30, 2006 91,238
61,482 67.4 456.64 June 30, 2005 70,949 49,188 69.3 368.44 December
31, 2005 83,692 58,515 69.9 436.39 (Note) 1. Number of shares
issued at the 134,642,555 shares as of June 30, 2006 end of period:
136,051,155 shares as of June 30, 2005 134,090,494 shares as of
December 31, 2005 2. Number of treasury stocks at 2,536,949 shares
as of June 30,2006 the end of period: 2,545,688 shares as of June
30,2005 2,513,231 shares as of December 31, 2005 < Amended >
1. Financial Highlights for the first half of FY 2006 (January 1,
2006 through June 30, 2006) (1) Results of operations (All figures
except for per share information are rounded down to millions of
yen) Growth Operating Growth Ordinary Growth Net sales rate income
rate income rate Millions of % Millions % Millions % yen of yen of
yen The first half of FY 2006 26,522 18.3 12,000 15.8 12,398 19.4
The first half of FY 2005 22,421 21.8 10,359 15.4 10,383 17.4 FY
2005 (annual) 48,228 21,823 22,423 Net Net income Growth rate
income per share Millions % Yen of yen The first half of FY 2006
7,000 19.0 52.12 The first half of FY 2005 5,884 5.9 44.13 FY 2005
(annual) 13,122 98.30 (Note) 1. Weighted average number of shares
134,323,039 shares (for the first outstanding: half of FY 2006)
133,341,012 shares (for the first half of FY 2005) 133,498,438
shares (for FY 2005) 2. Change in accounting policies: None 3. The
percentage of net sales, operating income, ordinary income and net
income are comparison to the first half of previous fiscal year (2)
Financial Position Shareholders' Shareholders' Shareholders' Total
assets equity equity ratio equity per share As of Millions of yen
Millions of yen % Yen June 30, 2006 92,431 59,743 64.6 443.72 June
30, 2005 70,949 49,188 69.3 368.44 December 31, 2005 83,692 58,515
69.9 436.39 (Note) 1. Number of shares issued at the 134,642,555
shares as of June 30, 2006 end of period: 136,051,155 shares as of
June 30, 2005 134,090,494 shares as of December 31, 2005 2. Number
of treasury stocks at 2,536,949 shares as of June 30,2006 the end
of period: 2,545,688 shares as of June 30,2005 2,513,231 shares as
of December 31, 2005 DATASOURCE: Trend Micro Inc.
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