1
April 10, 2009
Financial Summaries for the First Nine Months of the Fiscal Year Ending May 31, 2009
(June 1, 2008 – February 28, 2009)
Company name:
INTER ACTION Corporation
Stock exchange listing: TSE Mothers Market
Stock code:
7725
URL: http://www.inter-action.co.jp
Representative: Hideo
Kiji,
President

Contact:
Akio Nakataki, Managing Director
Tel: +81-45-788-8373
Scheduled date of filing of Quarterly Report:
April 13, 2009
Starting date of dividend payment:
-
(All amounts are rounded down to the nearest million yen)
1. Consolidated Financial Results for the Nine Months Ended February 28, 2009 (Jun. 1, 2008 – Feb. 28, 2009) (1) Consolidated results of operations
(Percentages represent year-on-year changes)
Sales
Operating income
Ordinary income
Net income

Million yen
%
Million yen
%
Million yen
%
Million yen
%
Nine months ended Feb. 2009
657
-
(240)
-
(278)
-
(189)
-
Nine months ended Feb. 2008
1,189 (10.4)
(211)
-
(262)
-
(197)
-
Net income per share
Net income per share
(diluted)
Yen
Yen
Nine months ended Feb. 2009
(3,137.07)
-
Nine months ended Feb. 2008
(3,249.20)
-
(2) Consolidated financial position


Total assets
Net assets
Equity ratio
Net assets per share

Million yen
Million yen
%
Yen
As of Feb. 28, 2009
3,271
1,831
56.0
30,478.99
As of May 31, 2008
4,091
2,033
49.7
33,423.43
Reference: Shareholders’ equity
Feb. 2009:
1,831 million yen
May 2008:
2,033 million yen

2. Dividends

Dividend per share
Record
date
1Q-end 2Q-end 3Q-end Year-end Annual

Yen Yen Yen Yen Yen
Fiscal year ended May 2008
-
0.00
-
0.00
0.00
Fiscal year ending May 2009
-
0.00
-

Fiscal year ending May 2009 (forecast)
0.00 0.00
Note: Revision of dividend forecast during the period: None
3. Consolidated Forecast for the Fiscal Year Ending May 31, 2009 (Jun. 1, 2008 – May 31, 2009)
(Percentages represent year-on-year changes)

Sales
Operating income
Ordinary income
Net income
Net income per share

Million yen
%
Million yen
%
Million yen
%
Million yen
%
Yen
Full year
802 (53.5)
(301)
-
(389)
-
(256)
-
(4,260.63)
Note: Revision of consolidated forecast during the period: None

INTER ACTION Corporation (7725) 3Q FY5/09 Financial Summaries
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4. Others
(1) Changes in consolidated subsidiaries during the period (changes in scope of consolidation): None
Newly added: -
Excluded: -

(2) Application of simplified accounting methods and special accounting methods in the preparation of quarterly
consolidated financial statements: None
(3) Changes in accounting principles, procedures and presentation methods for preparation of quarterly consolidated
financial statements
1) Changes caused by revision of accounting standards: Yes 2) Other changes: None
Note: Please refer to “Qualitative Information and Financial Statements, 4. Others” on page 5 for further information.

(4) Number of shares outstanding (common stock)
1) Number of shares outstanding at the end of period (including treasury stock)

Feb. 2009:
63,841 shares
May 2008:
63,841 shares
2) Number of treasury stock at the end of period

Feb. 2009:
3,756 shares
May 2008:
3,000 shares
3) Average number of shares outstanding during the period

Nine months ended Feb. 2009:
60,503 shares
Nine months ended Feb. 2008:
60,841 shares

* Cautionary statement with respect to forward-looking statements
1. The aforementioned forecasts are based on assumptions regarding economic and market trends at the time this presentation was
prepared. Actual results may differ from these forecasts for a number of factors.
2. Application of accounting policies in the preparation of quarterly consolidated financial statements
Effective from the current fiscal year, the Company has adopted “Accounting Standards for Quarterly Financial Statements” (ASBJ Statement No. 12) and “Guidance on Accounting Standards for Quarterly Financial Statements” (ASBJ Guidance No. 14). In addition, the quarterly consolidated financial statements are prepared in accordance with “Regulations for Quarterly Consolidated Financial Statements.”

INTER ACTION Corporation (7725) 3Q FY5/09 Financial Summaries
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Qualitative Information and Financial Statements

1. Qualitative information regarding consolidated operational results
In the first three quarters of the fiscal year, Japan’s economy declined sharply as global financial instability that started in the second half of 2008 had an impact on the real economy. Prospects for an economic recovery are uncertain. As a result, an increasing number of semiconductor manufacturers are reducing or canceling capital expenditures. This is creating an even more challenging environment for sales of illuminators for testing CCD/C-MOS imagers, which is the Group’s core product.
In the first quarter, sales of CCD/C-MOS imager illuminators were strong due to the resumption of purchases of these devices by companies in Korea. However, a global economic downturn began in the second quarter due to the U.S. subprime mortgage crisis. The resulting decline in demand has held down sales since the second quarter.
To succeed in this extremely difficult operating environment, the Group has started taking aggressive actions to expand operations. The Group is targeting opportunities in the solar cell industry, which is growing rapidly worldwide. In February 2009, the decision was made to start operations in Xi’an, China. The purpose is to extend to other countries the Group’s solar cell manufacturing and inspection technology operations, a business where INTER ACTION already has a competitive edge in Japan. Furthermore, plans call for starting a maintenance services business that targets the installed base of INTER ACTION illuminators, which is larger than at any other supplier of illuminators.
To overcome the challenges posed by this difficult operating environment, the Group took further actions to streamline operations. The Group reduced remuneration for directors, lowered salaries for employees with annual compensation agreements, eliminated the Special Product Department, closed the Kumamoto site and Kyoto sales offices, decided to reduce the number of employees, and took other actions to lower fixed expenses.
In the first three quarters, consolidated sales totaled 657 million yen, a decrease of 532 million yen from sales of 1,189 million yen one year earlier. Gross profit was down 234 million yen from 464 million yen to 229 million yen. After selling, general and administrative expenses of 470 million yen, down 205 million yen from 675 million yen one year earlier, there was an operating loss of 240 million yen, 28 million yen more than the 211 million yen loss one year earlier. There was an ordinary loss of 278 million yen, 15 million yen more than the 262 million yen loss one year earlier, and a net loss of 189 million yen, 7 million yen less than the 197 million yen loss one year earlier. Sales by product category were as follows.

(Electronics testing equipment business)
The operating environment in this business is challenging because semiconductor manufacturing companies have been holding down capital expenditures as many of these companies report lower sales and earnings because of the sharp global economic downturn. In response, the Group has been working on launching new businesses. Although sales of inspection equipment to manufacturers of solar panels reached the initial target, total sales in this business were impacted by sluggish demand for the Group’s major products, chiefly illuminators. Sales were brisk in the first quarter as Korean companies resumed purchases of illuminators. However, demand decreased afterward along with global economic weakness originating with the U.S. subprime mortgage problem.
Due to these factors, segment sales to external customers totaled 610 million yen. (Security systems business)
In the security systems business, the Company has performed research for other companies and sold security products that incorporate image processing technology. Segment sales to external customers totaled 47 million yen.

INTER ACTION Corporation (7725) 3Q FY5/09 Financial Summaries
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2. Qualitative information regarding consolidated financial position
Total assets decreased 819 million yen over the end of the previous fiscal year to 3,271 million yen at the end of the third quarter of the current fiscal year. Current assets decreased 979 million yen to 2,117 million yen mainly because of a decline in cash and deposits in banks. Fixed assets increased 159 million yen to 1,154 million yen.
Total liabilities decreased 617 million yen to 1,440 million yen. Current liabilities increased 22 million yen to 886 million yen. Long-term liabilities decreased 640 million yen to 554 million yen mainly because of a decline in corporate bonds.
Net assets decreased 202 million yen to 1,831 million yen.
Cash flow position
Cash and cash equivalents totaled 799 million yen at the end of the third quarter of the current fiscal year, 1,089 million yen less than at the end of the previous fiscal year.
A summary of cash flows is as follows.
Operating activities Net cash used in operating activities was 258 million yen. This was the net result of a depreciation and amortization of 83 million yen, a net loss before income taxes of 266 million yen, and a decline of 87 million yen in trade payables.
Investing activities Net cash used in investing activities was 440 million yen. There were the payment of 301 million yen for term deposits and the payment of 114 million yen for acquisition of investment securities.
Financing activities Net cash used in financing activities was 394 million yen. There were payments of 329 million yen from long-term borrowings, and 80 million yen for redemption of corporate bonds.
3. Qualitative information regarding consolidated forecast
The Group’s operating environment is expected to remain challenging due to the global recession mainly because of a decline in capital expenditures in the semiconductor industry, the primary source of demand for the Group’s products. Based on this outlook, the Group revised its forecast on January 9, 2009.
Since this forecast revision, the Group has taken further actions to streamline operations in order to overcome the challenges created by the difficult market conditions. In January 2009, the Group reduced remuneration for directors, lowered salaries for employees with annual compensation agreements, eliminated the Special Product Department, closed the Kumamoto site and Kyoto sales offices, decided to reduce the number of employees in conjunction with these measures, and took other actions to lower fixed expenses.
Even at this challenging time, the Group is targeting opportunities in the solar cell industry, which is growing rapidly worldwide. In February 2009, the Group decided to start operations in Xi’an, China. The purpose is to extend to other countries its solar cell manufacturing and inspection technology operations, a business where the Group already has a competitive edge in Japan. Furthermore, the Group has started aggressive measures to expand operations associated with illuminators for testing CCD/C-MOS imagers. In particular, plans call for starting a maintenance services business that targets the installed base of INTER ACTION illuminators, which is larger than at any other supplier of illuminators. The Group plans to take even more aggressive actions in order to achieve an improvement in its performance.
At this time, there is no need to revise the current forecast because sales and earnings are generally as planned. Consequently, there are no changes to the forecast for the current fiscal year that was announced on January 9, 2009: consolidated sales of 802 million yen, operating loss of 301 million yen, ordinary loss of 389 million yen, and net loss of 256 million yen.

INTER ACTION Corporation (7725) 3Q FY5/09 Financial Summaries
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4. Others
(1) Changes in consolidated subsidiaries during the period (changes in scope of consolidation)
No reportable information.
(2) Application of simplified accounting methods and special accounting methods in the preparation of quarterly
consolidated financial statements
No reportable information.
(3) Changes in accounting principles, procedures and presentation methods for preparation of quarterly consolidated
financial statements
(Changes in accounting policies)
1) Application of accounting policies in the preparation of quarterly consolidated financial statements
Effective from the current fiscal year, the Company has adopted “Accounting Standards for Quarterly Financial Statements” (ASBJ Statement No. 12) and “Guidance on Accounting Standards for Quarterly Financial Statements” (ASBJ Guidance No. 14). In addition, the quarterly consolidated financial statements are prepared in accordance with “Regulations for Quarterly Consolidated Financial Statements.”
2) Changes in valuation criteria and methods for principal assets
Inventories In prior years, inventories for regular sales purposes was computed primarily by the specific-identification cost method for manufactured goods and work in process, and the monthly-period-average cost method for raw materials. With the adoption of “Accounting Standards for Measurement of Inventories” (ASBJ Statement No. 9: July 5, 2006) from the first quarter of the current fiscal year, manufactured goods and work in process are valued primarily by the specific-identification cost method (the carrying value on the balance sheet is written down to reflect the effect of lower profit margins) and raw materials are valued by the monthly-period-average cost method (the carrying value on the balance sheet is written down to reflect the effect of lower profit margins). The effect of this change was to decrease operating income and ordinary income by 4,177 thousand yen each and net income before income taxes by 13,010 thousand yen.
(Supplementary information)
INTER ACTION has used the fiscal 2008 revision of Corporation Tax Law to revise the useful life of tangible fixed assets for accounting purposes. Effective from the first quarter of the current fiscal year, the useful life of some machinery and equipment has been changed.
The effect of this change on profit or loss is insignificant.