Financial Results for the Fiscal Year Ended October 31, 2012
[Japan GAAP] (Consolidated)
Date:

December 12, 2012

Company:

Tomoe Engineering Co., Ltd. and Subsidiaries(Web Site: http://www.tomo-e.co.jp/index_e.html)

Stock exchange listing:

1st Section, Tokyo Stock Exchange

Head Office:2-2, Osaki 1-chome, Shinagawa-ku, Tokyo, Japan

President:

Noboru Shiono

Investor Relations Contacts: Natsuhiko Maeda, Director, General Manager of Accounting Division, Tel: (03) 5435-6512
Date of Annual Shareholders Meeting: January 30, 2013
Date of Dividend Payment:

January 31, 2013

Date of Financial Statement: January 30, 2013
Preparation of Supplementary Explanatory Materials for Annual Operating Results: Yes
Briefing Session for Annual Operating Results: Yes (for institutional investors)* Any fractional sums less than one million (or one thousand) yen are disregarded
1. Consolidated Financial Results for the Year Ended October 31, 2012
(1) Results of Operation (Consolidated)(Percent: change from the previous year)
Operating Income
Ordinary Income

Sales(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)

Year Ended
41,575
-1.9
2,447
1.1
October 31, 2012
Year Ended
42,375
9.2
2,421
11.4
October 31, 2011
(Note) Comprehensive income
Fiscal year ended October 31, 2012: 1,572 million yen (-44.4%)
Fiscal year ended October 31, 2011: 2,826 million yen (128.5%)
Net Income
Net Income
Diluted Net Return on
per Share
Income per
EquityShare(Millions of Yen)

(Percent)

(Yen)

(Yen)

(Millions of Yen)

(Percent)

2,605

0.4

2,595

19.1

Return on
AssetsReturn on
Sales(Percent)(Percent)(Percent)

7.4

7.8

5.9

14.7

8.3

5.7

Year Ended
1,616
-44.6
161.98October 31, 2012
Year Ended
2,915
115.2
292.17
October 31, 2011
(Reference) Equity in earnings (loss) of unconsolidated subsidiaries and affiliates
Fiscal year ended October 31, 2012: None
Fiscal year ended October 31, 2011: None
(2) Financial Condition (Consolidated)
Total Assets (A)Net Assets (B)Net Assets Ratio (B / A)

Net Assets per Share(Millions of Yen)

(Millions of Yen)

(Percent)

(Yen)

66.0

2,235.59

64.5

2,113.56

Year Ended
33,822
22,534
October 31, 2012
Year Ended
32,702
21,329October 31, 2011
(Reference) Net assets
Fiscal year ended October 31, 2012: 22,308 million yen
Fiscal year ended October 31, 2011: 21,090 million yen

1(3) Cash Flows (Consolidated)
Net Cash Provided(Used) by Operating
Activities
Year Ended
1,005
October 31, 2012
Year Ended
1,874
October 31, 2011

Net Cash Provided(Used) by Investing
Activities

Net Cash Provided(Used) by Financing
Activities(Millions of Yen)
Consolidated Cashand Cash Equivalent
as of Year-end

(612)

(244)

7,463

(239)

(373)

7,296

2. Dividend Status
Dividend per Share (Yen)
SecondThird QuarterEnd ofQuarter
Fiscal Year
0.00
40.00
0.00
40.00
0.00
45.00

First Quarter-

Year Ending October 31, 2011
Year Ending October 31, 2012
Year Ending October 31, 2013 (Prospect)

Total
40.00
40.00
45.00

Total Dividend

Dividend Payout Ratio(Consolidated)

Dividend on Equity Ratio(Consolidated)(Millions of Yen)

(Percent)(Percent)

399
399
-

13.7
24.7
27.7

2.0
1.8
-

Year Ending October 31, 2011
Year Ending October 31, 2012
Year Ending October 31, 2013 (Prospect)

3. Forecast for the Year Ending October 31, 2013 (Consolidated)(Percent: Change from the previous year for the full business year and 6-month period)
Sales

Operating Income

Ordinary Income(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)

Six-month Period

22,040

4.2

1,420

0.0

1,420

-6.0

Full Business Year

44,300

6.6

2,770

13.2

2,800

7.5

Net Income

Net Income per Share(Millions of Yen)

(Percent)(Yen)

Six-month Period

800

-21.1

80.17

Full Business Year

1,620

-0.2

162.35Notes(1) Significant changes in subsidiaries during this period (changes in specific subsidiaries involving changes in thescope of consolidation): None
(2) Changes of the principles, procedures, and representation of the accounting policies
1) Change due to revision of accounting standard: None
2) Other changes: None
3) Change in accounting estimate: None
4) Retrospective restatement: None
(3) Number of outstanding shares (Common stock)1) Number of outstanding shares at year-end (including treasury stocks)
At October 31, 2012: 10,533,200 shares

At October 31, 2011: 10,533,200 shares

2) Number of treasury stocks at year-end
At October 31, 2012:

554,547 shares

At October 31, 2011:

2554,501 shares

3) Number of average shares
At October 31, 2012:

9,978,668 shares

At October 31, 2011:

9,978,725 shares(Reference)
1. Outline of Non-Consolidated Results of Operations for the Year Ended October 31, 2012
(1) Results of Operation (Non-consolidated)(Percent: Change from the previous year)

Sales

Operating Income

Ordinary Income(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)

38,754

-2.7

2,223

2.7

2,488

3.4

39,822

10.6

2,166

19.4

2,407

26.3

Year Ended
October 31, 2012
Year Ended
October 31, 2011

Net Income

Net Income per Share

Diluted Net Income per Share(Millions of Yen)

(Percent)

(Yen)

(Yen)

1,571

-44.5

157.44

-

2,830

140.4

283.62-

Year Ended
October 31, 2012
Year Ended
October 31, 2011

(2) Financial Condition (Non-consolidated)
Total Assets (A)Net Assets (B)Net Assets Ratio (B) / (A)Net Assets per Share(Millions of Yen)

(Millions of Yen)

(Percent)(Yen)

30,22621,01269.5

2,105.70

29,36819,86867.7

1,991.07

Year Ended
October 31, 2012
Year Ended
October 31, 2011
(Reference) Net assets
Fiscal year ended October 31, 2012: 21,012 million yen
Fiscal year ended October 31, 2011: 19,868 million yen*Presentation Concerning Implementation of Audit ProceduresThis financial report is exempt from audit procedures based on the Financial Instruments and Exchange Act. At the timeof disclosure of this financial report, the Company has not completed the audit procedures for financial statements based on
the Financial Instruments and Exchange Act.
*Explanations for appropriate use of the earnings forecast and other special instructions
The forward-looking statements such as a forecast of our financial results described herein are based on the information
currently available to us and certain assumptions that we believe are reasonable. Actual results could differ materially due tovarious factors. For assumptions of the forecasts and necessary precautions, refer to (1) [Analysis of Results of Operation]of 1. [Operating Results and Financial Condition], on page 5.

3

Table of Contents
1. Operating Results and Financial Condition………………………………………………………………………………..5(1) Analysis of Results of Operation…………………………………………………………………………………………...5(2) Analysis of Financial Condition……………………………………………………………..……………………………...7(3) Basic Policy for Profit Sharing and Dividends for Fiscal 2011 and 2012…………………..………………………......8(4) Risk Factors in Business………………………………….…………………………………..…………………………….8
2. Tomoe Engineering and Companies………………………………………………………..…………………………….10
3. Management Policy………………………..……………….…………………………………..……………………………12(1) Basic Management Philosophy………..…………..…….…………………………………..……………………………12(2) Target Management Indices………..…………..…….………..……………………………..……………………………12(3) Mid- and Long-term Management Strategy…..…….………..……………………………..……………………………12(4) Challenges to be Addressed…..…….………………….……..……………………………..……………………………12
4. Consolidated Financial Statements…………………………………..…………………………………………………....14(1) Balance Sheets……………………………………………………………………………………………………………...14(2) Statements of Consolidated Income and Statement of Comprehensive Income……………………………… ….16

(3) Consolidated Statements of Changes in Shareholders' Equity………..………………..……………………………19(4) Consolidated Statements of Cash Flows………………………………………………………………………………...22(5) Notes for Premise of Going Concern………………………………………..…………………………………………...24(6) Changes of Important Items to be Basis for Making Consolidated Financial Statements………………………....24(7) Notes for Consolidated Financial Statements…………………………………………………………………………..25(Segment Information) ………………………………………………………………………………………………………...25(Per Share Information) ………………………………………………………………….……………………………………28(Significant subsequent events) ……………………………………………………………………………………………..28
5. Non-Consolidated Financial Statements……………………..…………………………………………………………...29(1) Balance Sheets……………………………………………………………………………………………………………...29(2) Statements of Income……………………………………………………………………………………………………....33(3) Statements of Changes in Shareholders' Equity………………………………………………………………………..35(4) Notes for Premise of Going Concern…………………………..………………………………………………………...38(5) Notes for Non-Consolidated Financial Statements……………………………………………………………………..38(Per Share Information) ……………………………………………………………….……………………………………....38
6. Other Notes…………………………………………………………………………………………………………………..39(1) Appointment of Officers……………………………………………….…………………………………………………..394

1. Operating Results and Financial Condition(1) Analysis of Results of Operation[1] General condition of the current consolidated fiscal year
General operating results
During the consolidated fiscal year, the Japanese economy’s shift toward recovery was sustained throughout thefirst half by factors such as the gradual broadening of restoration demand related to the Great East Japan
Earthquake and a recovery in personal consumption. As the second half unfolded, however, the economy shifted
course, and moved gradually away from fundamentally flat performance in the direction of weakness, under the
impact of economic slowdowns in Europe and newly developing countries, an inability to boost exports because of
the stubborn appreciation of the yen and unavoidable adjustments in production levels.
Under such circumstances, full-year consolidated net sales for the Tomoe Engineering Group were 41,575 million
yen, 1.9% down from the previous consolidated fiscal year. This reflected lower sales of equipment and systems for
China and a decrease in sales of works for domestic public sector demand in the Machinery & Equipment Business,
and a drop in sales in the domestic advanced materials sector and plastics sector in the Chemical Products
Business.
With regard to earnings, consolidated operating income for the Tomoe Engineering Group was 1.1% up from theprevious consolidated fiscal year, to 2,447 million yen. Although profits were squeezed in the Chemical Products
Business because of a decline in domestic sales and a loss reported for the resin plastic compounding business inShenzhen, China, earnings were higher in the Machinery & Equipment Business despite the decrease in sales,
thanks to contributions from the lower cost of centrifuge equipment for North America and reduced selling expenses.
In addition, although the Group did not benefit from a gain on valuation of derivatives related to the Chemical
Products Business as it did in the previous year, ordinary income was boosted by foreign exchange gains andedged higher to 2,605 million yen, 0.4% up from the prior consolidated fiscal year. Because of a reactionary drop
reflecting the gain on conversion of property rights to the Company’s former Tokyo factory (2,444 million yen)reported in extraordinary income in the previous consolidated fiscal year, however, net income for the current
consolidated fiscal year was 1,616 million yen, 44.6% down compared with the previous consolidated fiscal year.
Incidentally, because the effective tax rates for the corporation tax and other taxes were reduced by the enactmentof tax reforms in December 2011, the adjustment for corporate and other taxes was lowered as the result of arevaluation of deferred tax assets and liabilities, and this was a factor that lifted consolidated net income for the
consolidated fiscal year period by the same amount.
[Summary by business segment](Machinery & Equipment Business)
In the Machinery & Equipment Business, sales of centrifuge equipment for oil well drilling in North America andlow-power, energy-saving centrifuge equipment for domestic public sector demand remained strong. Overseas
sales of components expanded as well. Because sales of equipment and systems for China and sales of works fordomestic public sector demand were both sharply lower, however, consolidated net sales ended at 12,330 million
yen, 1.2% down compared with the previous fiscal year. The lower sales of equipment and systems for China
mainly reflected sales of centrifuge equipment for vinyl chloride plants and abrasive grain slurry recycling equipment
for use in manufacturing photovoltaic cells, while the weakness in sales of works for domestic public sector demandoriginated in a reactionary drop from a large-scale sewage treatment equipment restructuring project in the previous
fiscal year. Against the backdrop of lower costs for centrifuge equipment for oil well drilling in North America andreduced personnel expenses and selling expenses, on the other hand, operating income was 1,289 million yen,
15.7% up from the previous fiscal year despite the reduced level of sales.

5(Chemical Products Business)
In the Chemical Products Business, sales in other countries including the high performance resins and molding
machines sales business in Hong Kong rose slightly, but because sales in Japan were lower, particularly in theadvanced materials sector and plastics sector, consolidated net sales were 29,244 million yen, 2.2% down from theprevious fiscal year. In the advanced materials sector, sales of metal materials and desiccants for electrolytic
solutions for semiconductor fabrication were lower, while in the plastics sector the main declines in sales affectedcommodity plastics materials and copolymerization resins. The domestic electronics materials sector, which
languished during the first half of the fiscal year in particular, saw sales of consumables for use in semiconductor
manufacturing and related equipment begin to grow, and together with the fine chemicals sector became a factor
that mitigated the breadth of the sales decline in domestic operations. Despite the role that higher revenue andearnings in the electronics materials sector and improved gross margins in the fine chemicals sector played inproviding some support, earnings overall were lower and selling expenses were higher, and the compounding
business in Shenzhen, China, particularly for commodity plastics, found itself selling below cost, and from anearnings perspective, operating income totaled 1,158 million yen, 11.3% down from the previous fiscal year.
[2] Outlook for the next fiscal year (November 1, 2012- October 31, 2013)
In looking at the consolidated fiscal year ending in October 2013, with Europe’s economy continuing to slow andlittle hope for accelerating growth in newly developing country economies, and external demand entangled indeteriorating relations with China and projected to be lackluster, Japan’s economy is expected to remain in straits
that will make it difficult to see the start of new recovery.
Given such circumstances, in the Tomoe Engineering Group’s Machinery & Equipment Business we plan tocontinue expanding sale of overseas equipment and systems, including centrifuge equipment for oil well drilling inNorth America and chemical plants in Southeast Asia, and we project fiscal year consolidated net sales of 13,500
million yen (9.5% up compared with the previous year) and operating income of 1,580 million yen (22.5% up
compared with the previous year) as a result of efforts to lower our cost of goods manufactured, respectively. In theChemical Products Business as well, we will work to expand domestic sales in the industrial materials and finechemicals sectors, where we currently possess product lines that boast relatively strong market competitiveness,and plan to leverage our plastic compounding business in China by incorporating demand in new sectors. In thisbusiness we project fiscal year net sales of 30,800 million yen (5.3% up compared with the previous year) andoperating income of 1,190 million yen (2.7% up compared with the previous year).
As a result of these efforts, for the entire Tomoe Engineering Group in the consolidated fiscal year ending October
2013 we project net sales to grow by 6.6% to 44,300 million yen and operating income to increase 13.2% to 2,770
million yen. In conjunction with this growth, we project ordinary income for the fiscal year to increase by 7.5% to2,800 million yen, which also partially reflects the fact we have reported a one-time loss on foreign exchange gains
in the current consolidated fiscal year. For the fiscal year we project net income of 1,620 million yen, 0.2% up
compared with the previous year, a result tempered for the fact there will be a reactionary drop in the effect from thereduction of income tax adjustments prior to the effective tax rate reduction in income taxes paid.
The operating results forecasts for the next period described above are based on information available to theCompany at the time the forecasts were prepared and assumptions judged to be reasonable. Actual operating
results might differ from these forecasts depending upon domestic and international financial and economic
conditions, the supply and demand situation of our goods and products, and various other unpredictable, abruptchanges in circumstances.

6

(2) Analysis of Financial Condition[1] Total Assets, Liabilities, and Net Assets
Total assets at the end of the current consolidated fiscal year were 33,822 million yen, up 1,119 million or 3.4% fromthe balance at the end of the previous consolidated fiscal year (October 31, 2011). This was the result of an increasein current assets against the backdrop of higher notes and accounts receivable-trade in the Machinery andEquipment Business, which were related to centrifuges for oil well drilling in North America, as well as an increase in
fixed assets as a result of investments in production facilities and software investments.
Total liabilities, on the other hand, fell 0.8% compared with the end of the previous consolidated fiscal year to 11,287
million yen. Although current liabilities were slightly higher because of an increase in notes and accounts
payable-trade that were mainly related to the Machinery & Equipment Business, noncurrent liabilities decreased inconjunction with the reduction in deferred tax liabilities prior to the effective tax rate reduction for income taxes paid.
The total balance for net assets increased 1,205 million yen or 5.6% compared with the end of the previous
consolidated fiscal year to 22,534 million yen, despite dividend payments of 399 million yen, as net income ended at
1,616 million yen.
Because net assets increased and liabilities decreased as discussed above, the equity ratio at the end of the current
consolidated fiscal year rose by 1.5 points compared with the end of the previous consolidated fiscal year to 66.0%.
[2] Cash Flow Status
Balance of cash and cash equivalent as of the end of the current consolidated fiscal year increased by 166 million
yen to 7,463 million yen from the previous consolidated fiscal year. Status of each cash flow and their factors during
the current consolidated fiscal year are as follows:(Net Cash Provided by (Used in) Operating Activities)
Net cash provided by operating activities was 1,005 million yen. Income taxes paid totaled 1,096 million yen, notes
and accounts receivable-trade increased by 806 million yen and advances received decreased by 388 million yen,respectively, income before income taxes and minority interests was 2,639 million yen and depreciation andamortization expense was 382 million yen.
(Net Cash Provided by (Used in) Investing Activities)
Because proceeds from sales of investment securities were only 52 million yen, while purchases of plant, property
and equipment and intangible fixed assets totaled 445 million yen and 185 million yen, respectively, the net amountof cash used in investing activities was 612 million yen.
(Net Cash Provided by (Used in) Financing Activities)
Net cash used in financing activities was 244 million yen, despite a net increase in long-term and short-term loans
payable of 130 million yen, as 399 million yen was used for cash dividends paid.
Trends in cash flow indices are as follows:Year Ended
October 31,
2008
Equity Ratio (Percent)Year Ended
October 31,
2009

Year Ended
October 31,
2010

Year Ended
October 31,
2011

Year Ended
October 31,
2012

58.8

66.8

62.4

64.5

66.0

30.9

51.8

38.6

42.5

39.7

0.3

0.2

0.3

0.3

0.8

Equity Ratio Based on
Market Value (Percent)Debt-repayment to Cash
Flow Ratio (Years)

7Interest Coverage Ratio(Percent)

86.9

88.8

151.7

258.7

115.8

Equity ratio: Net assets / Total assets
Equity ratio based on market value: Market capitalization of shares / Total assets
Debt-repayment to cash flow ratio: Interest-bearing debt / Cash flow
Interest coverage ratio: Cash flow / Interest payment(Note)
1. All indices are calculated on the basis of consolidated financial figures.
2. Market capitalization is calculated based on the number of outstanding shares excluding treasury stock.
3. Cash flow refers to net cash provided by (used in) operating activities.
4. Interest-bearing debt refers to all debt reported on the consolidated balance sheet for which interest is being
paid.
(3) Basic Policy for Profit Sharing and Dividends for Fiscal 2012 and 2013
Our company’s approach to the return of profits to our important shareholders is based on our stated policy to “maintainstability in dividends payment with a target consolidated payout ratio of 25% or more, by considering earnings,
reinforcement of our corporate base and other factors in a comprehensive manner.”
Based on the Company’s operating results, financial position and other considerations, for the fiscal year ended on
October 31, 2012 we plan to pay a total dividend of 40 yen per share, identical to the prior fiscal year, by maintaining theincrease in the ordinary dividend of 5 yen per share approved in the prior fiscal year as a commemorative dividend inrecognition of the 70th anniversary of the Company’s founding.
Dividends for the fiscal year ending on October 31, 2013 will be 45 yen per share. This will be an increase of 5 yen per
share compared with the ordinary dividend per share for the fiscal year ended on October 31, 2012, considering thebusiness outlook for the entire fiscal year and factors such as the projected change in our financial position.
(4) Risk Factors in Business
The key areas of business risks of our group that might have significant influence on investors’ decision are as follows.
The following judgments are made based on the business information at the end of the current consolidated fiscal year,
although some forward-looking statements are contained.
[1] Seasonal Fluctuation of Operating Results
Currently there is a seasonal bias in sales and profits of our group toward the second quarter. This is because thatpublic sector sales account for relatively a high percentage in the sales of Machinery & Equipment Business andtend to be concentrated in the second quarter due to public sector's budget implementation.
[2] Influence of Foreign Exchange Fluctuation
Businesses of our group include exports and import in foreign currencies, and exchange rate fluctuations may affectthe values after translation into yen. Operating results and financial condition of our group might be affected by therange of foreign exchange fluctuation although we make efforts to minimize exchange fluctuation risks by entering
into forward exchange contracts. Since our group has overseas subsidiaries, we prepare financial statements inforeign currencies. In preparing consolidated financial statements, there is a risk associated with exchange
fluctuation when converting into yen equivalent.

8[3] Potential Risk of Overseas Activities
Our group is engaged in marketing and manufacturing overseas, focusing on China and other Southeast Asian
countries. Our group will monitor the local situations with the greatest care and take appropriate actions on a timely
basis. However, our group’s operating results and financial condition might be affected by unforeseen circumstances
arising from local political conditions, governments, legal restrictions, taxation systems, customs, etc.
[4] Risk Associated with Quality of Goods and Products
The products of our group are manufactured by paying due attention based on systematic quality control. The
products that require technical development might cause risk of having cost of repair and replacement. Also, since
our group is not directly involved in manufacturing of many of imported raw materials, defects that our group is notdirectly associated with may occur and we might be obligated to cease sales and collect such materials. Although
we are prepared to take prompt and appropriate actions to cope with the risks involved in quality of manufactured
products and commercial goods, it may affect our group’s operating results and financial condition to the extent of
the problem.
[5] Risks of New Investment
Our group is in a quest to pursue high-value-added business all the time. To do this, we must take measures suchas aggressive investment in some situations; however, these measures may involve higher potential risks thanconventional business risks. Even though we take such sufficient preparations and measures, some unexpected
events may result in affecting operating results and financial condition of our group.
[6] Risks when a Natural Disaster Occurs
Our group is implementing various risk measures, including seismic performance improvements to buildings andstructures (including rental properties), preparation of emergency response procedures, data backup enhancements
and the introduction of a system to confirm executive and employee safety, and working to prepare a business
contingency plan (BCP). Although we are implementing such measures, however, there is a possibility our
production capacity or sales capabilities might be substantially reduced by the occurrence of a large-scale natural
disaster to which we cannot respond, and business opportunities could be lost and our operating results andfinancial position might be affected as a result.

92. Tomoe Engineering and Companies
Tomoe Group consists of Tomoe Engineering and its nine subsidiaries. The group is mainly engaged in manufacture anddistribution of centrifuges and trading of chemical products. Business activities of the group are divided into the following
three main categories. “Business Segments,” which will be discussed in a later section, are based on the following businessactivity segments. Since “other businesses” involve no consolidated subsidiary, “Business Segments” do not include figures
related to them.
Machinery & Equipment Business:
Tomoe Engineering manufactures and distributes centrifuges. Its subsidiary Tomoe Machinery Service provides
centrifuge users with after-sales services as well as parts. Its subsidiary Tomoe Machinery undertakes machining andsheet-metal processing of centrifuge. Tomoe Engineering consigns manufacture of the centrifuges and the after-sales
service to its subsidiary Tomoe Engineering (Shanghai).
Chemical Products Business:
Interstella Plastics (Shenzhen) and Stella Tech Engineering Plastics (Shenzhen) are engaged in coloring andcompounding of plastic materials. Our affiliate, Interstella is an investing company of Stella Tech Engineering Plastics(Shenzhen) and also serves as a contact for purchasing and sales. Tomoe (Hong Kong) is functioning as central corefor sales activity in China in Tomoe Group. Tomoe Wine & Spirits distributes wines and spirits imported by Tomoe
Engineering.
Other Businesses:
Tomoe Butsuryu subcontracts with our company for products’ transportation and warehousing.
Schematic diagram of Tomoe’s operation is on the next page.

10

(◎: Consolidated subsidiaries)

Products sale

Tomoe Butsuryu(Subsidiary)
Logistics & warehousingof our products

materials

Products sale◎Interstella Plastics(Shenzhen)(Subsidiary)
Plastic coloring and compounding

Chemical Products BusinessTomoe Engineering Co., Ltd.

Subcontracting

Purchase of

Machinery & Equipment Business

11

Logistics & warehousing

Products sale

Purchase of products◎Interstella (Subsidiary)
Purchase of plastic materials & sale

Products sale

Purchase of products

Tomoe Wine &Spirits(Subsidiary)
Sale of imported wines

Products sale

Products sale
Products sale

Purchase of parts

Purchase of materials◎Tomoe (Hong Kong)(Subsidiary)
Purchase & sale of chemical industry products

Products sale

Manufacturingconsignment & parts sale

Products sale

Purchase of products◎ Stella-Tech Engineering Plastics(Shenzhen)(Subsidiary)
Plastic coloring & compounding◎Tomoe Machinery(Subsidiary)
Sheet metal processing &machining◎Tomoe Engineering(Shanghai) (Subsidiary)
Manufacturing, sale &after-sale services of our
products
Maintenance of delivered
products

Parts sale

Maintenance of delivered products◎Tomoe Machinery
Service(Subsidiary)
After-sale services &parts sale of our products

After-sale services& products sale

After-sale services& parts sale

Customers

3. Management Policy(1) Basic Management Philosophy
Our basic management philosophy is to contribute to society and provide a good quality of life to people involved
through growth and development of our company with spirit of creation and entrepreneurship and to provide ourcustomers with high level of technologies and excellent products. Guided by this policy, we shall be engaged in
the manufacture and sale of machinery based primarily on solid-liquid separation techniques and importation ofunique and specialty raw materials for chemical industry.
(2) Target Management Indices
Rather than just aiming for a volume growth, in our Machinery & Equipment Business we always try to develop
and sell products that require specialized technology, while in our Chemical Products Business we seek to handle
unique, high value-added products that demand expertise, even if their market is not so large. To pursue thesegoals, we regard improvement of profitability as our primary management goal. As a management indicator formeeting these goals, we give highest priority to ordinary income, which directly expresses the nature and changeof profitability.
(3) Mid- and Long-term Management Strategy
The long-term management strategy of Machinery & Equipment Business is to develop new products, reduce
manufacturing cost, and develop overseas markets, and that of Chemical Products Business is to discover unique
new commercial products to expand business in China.
To achieve continuous progress on our basic strategy, in September 2010 we formulated the Ninth Mid-termManagement Plan “Tomoe 525” (from November 1, 2010 to October 31, 2013). The plan is devoted mainly
to implementing measures based on the following policies after newly identifying the ideal approach toallocating management resources and capturing market share. In the Machinery & Equipment Business, wewill expand foreign sales centered on China and the United States, while increasing domestic sales of our
low-power, energy-saving centrifuge models. In the Chemical Products Business we will launch attractive newcommercial products in cooperation with new, leading suppliers and strengthen our domestic and overseas plastic
business, including our compounds business in Shenzhen, China. As our objective when pursuing these goals,
we will seek to achieve consolidated net sales of 50,000 million yen and ordinary income of 2,500 million yen in thefiscal year ending October 2013, the final year of our mid-term management planning period. Following the closeof the second year of the plan, we will pursue management with a focus on achieving operating results thatexceed our consolidated ordinary income target in particular.
(4) Challenges to be addressed
Given factors such as the escalation of competition between countries and region as the newly developing
countries that are driving the global economy are transformed into advanced countries, eliminating the
supply-demand gap in Japan is expected to require an even longer time. Moreover, as industry-related conditions
we cannot afford to ignore the further spread of the open bidding system pertaining to public demand in the
Machinery & Equipment Business, or the ongoing overseas shift of end users in our Chemical Products Business.
Therefore we consider an appropriate response to changes in the business environment to be a priority issue, andwe have formulated our Ninth Mid-term Management Plan aimed at further strengthening our market
competitiveness domestically and developing new markets in other countries. Our policy in the future willremained focused on implementing management measures based on this plan, and achieving sustained growth12and increasing stable earning capacity in both of our businesses.
To enhance and strengthen corporate governance and compliance we have established a Corporate Ethics
Committee, and in the future this committee will take the lead in efforts to ensure management in full compliancewith the letter and spirit of the law and improve corporate ethics. Moreover, from the view point of corporate
governance, we plan to maintain our efforts to firmly establish wide-ranging risk management centered on our
Risk Management Committee, and to pursue the consolidation of our management environment from an IT
perspective by undertaking construction of our next-generation mission-critical systems.

13

4. Consolidated Financial Statements(1) Balance Sheets(Thousands of Yen)
Year Ended October 31, 2011

Year Ended October 31, 2012

Cash and Deposits

7,296,554

7,463,174

Notes and Accounts Receivable-Trade12,478,424

13,303,606

Merchandise and Finished Goods

3,506,696

3,392,880

Work in Process

1,029,443

866,726

Raw Materials and Supplies

630,324

943,399

Deferred Tax Assets

634,782

567,855

Others236,706

243,152-21,322
25,791,609-11,236
26,769,560

2,328,168

2,350,890

Accumulated Depreciation-1,344,589-1,421,955

Buildings and Structures, Net

983,579

928,934

Machinery, Equipment and Vehicles

3,395,764

3,578,358-2,662,256-2,801,629

733,508

776,729Land

922,024

922,024

Lease Assets

71,70240,902

Accumulated Depreciation-52,851-34,864

Lease Assets, Net

18,8506,038

2,545,240

2,622,040

990,168

1,025,652-924,338-949,624

65,83076,027

5,269,032

5,331,794

65,585225,021

Investment Securities

665,846

606,190

Guarantee Deposits

364,657

384,158

Deferred Tax Assets

33,14329,578Others591,086

522,582

Allowance for Doubtful Accounts-78,405-46,779

Total Investments and Other Assets

1,576,328

1,495,730

Total Noncurrent Assets

6,910,947

7,052,546

Total Assets

32,702,557

33,822,106

AssetsCurrent Assets

Allowance for Doubtful Accounts
Total Current Assets
Noncurrent Assets
Property, Plant and Equipment
Buildings and Structures

Accumulated Depreciation
Machinery, Equipment and Vehicles, Net

Construction in progress
Others
Accumulated Depreciation
Others, Net
Total Property, Plant and Equipment
Intangible Assets
Investments and Other Assets

14

(Thousands of Yen)
Year Ended October 31, 2011

Year Ended October 31, 2012

6,485,604

6,956,704

Short-Term Loans Payable

534,045

630,376

Lease Obligations

14,556

7,216

Accounts Payable-Others

577,728

527,111

Income Taxes Payable

555,402590,898

Advances Received

461,243

73,789Provision for Bonuses

1,084,618

1,074,756

Provision for Directors' Bonuses

61,77670,431

Allowance for Product Warranty

281,546

194,363

Others

270,113234,504

10,326,636

10,360,153

Liabilities and Net Assets
Liabilities
Current Liabilities
Notes and Accounts Payable-Trade

Total Current Liabilities
Noncurrent Liabilities
Long-Term Loans Payable

041,750

Lease Obligations

7,992

775

Provision for Retirement Benefits

36,74538,942

Provision for Directors' Retirement Benefits

31,76029,600

Deferred Tax Liabilities

969,595

815,962

Total Noncurrent Liabilities

1,046,093

927,031

Total Liabilities

11,372,730

11,287,185

1,061,210

1,061,210

Net Assets
Shareholders’ Equity
Capital Stock
Capital Surplus

1,483,410

1,483,410

Retained Earnings

19,179,264

20,396,505-363,319-363,393

21,360,564

22,577,731

Valuation and Translation Adjustments
Valuation Difference on Available-for-Sale
Securities
Deferred Gains or Losses on Hedges

51,62623,172230

525

Foreign Currency Translation Adjustment-321,821-293,239

Total Valuation and Translation Adjustments-269,965-269,541

239,227

226,731

Total Net Assets

21,329,827

22,534,921

Total Liabilities and Net Assets

32,702,557

33,822,106

Treasury Stock
Total Shareholders’ Equity

Minority Interests15(2) Statements of Consolidated Income(Thousands of Yen)
Year Ended October 31, 2011

Year Ended October 31, 2012

Net Sales

42,375,003

41,575,659

Cost of Sales

33,593,611

32,855,392

Gross Profit

8,781,392

8,720,267

Selling, General and Administrative Expenses

6,360,127

6,272,275

Operating Income

2,421,264

2,447,991

Interest income

11,131

14,960

Dividends Income

22,012

18,503

Rent Income

12,08911,760092,396

Gain on Valuation of Derivatives

137,398

0

Others35,20454,424

217,836

192,044

7,244

9,776

71

69

Commission Paid

9,975

9,508

Sales Discount

3,953

4,771

Foreign Exchange Loss

12,0840

Others

10,384

10,369Total Non-Operating Expenses

43,71434,495

Ordinary Income

2,595,386

2,605,539

8,294

11,389Gain on conversion of fixed asset rights

2,444,1030Gain on Sales of Investment Securities

14,19028,5410

6,780

Reversal of Allowance for Doubtful Accounts

17,5030Total Extraordinary Income

2,484,092

46,711

Non-Operating Income

Foreign Exchange Gains

Total Non-Operating Income
Non-Operating Expenses
Interest Expenses
Loss on Sales of Notes Payable

Extraordinary Income
Gain on Sales of Noncurrent Assets

Gain on Change in Equity Interest

16

(Thousands of Yen)
Year Ended October 31, 2011

Year Ended October 31, 2012

Loss on Retirement of Noncurrent Assets

8,327

6,092

Loss on Valuation of Investment Securities

33,546

4,906

0

1,400

1,650

0

28,7150Total Extraordinary Losses

72,23912,399

Income before Income Taxes and Minority Interests

5,007,239

2,639,851

Income Taxes-Current

1,108,742

1,132,475

Income Taxes-Deferred

1,005,822-64,273

2,114,565

1,068,202

2,892,673

1,571,648-22,780-44,739

2,915,454

1,616,388

Extraordinary Losses

Loss on Valuation of Memberships
Provision of Allowance for Doubtful Accounts
Loss on adjustment for changes of accounting
standard for asset retirement obligations

Total Income Taxes
Income before Minority Interests
Minority Interests Income
Net Income

17Consolidated Statements of Comprehensive Income(Thousands of Yen)

Income before Minority Interests

Year Ended October 31,

Year Ended October 31,

2011

2012
2,892,673

1,571,648

Valuation Difference on Available-for-sale Securities-1,958-28,453

Deferred Gains or Losses on Hedges

7,641

295

Foreign Currency Translation Adjustment-71,72128,711

Total Other Comprehensive Income-66,038553

2,826,635

1,572,202

2,856,506

1,616,812-29,871-44,610

Other Comprehensive Income

Comprehensive Income(Breakdown)Comprehensive Income attributable to Owners of the
ParentComprehensive Income attributable to Minority
Interests18

(3) Consolidated Statements of Changes in Shareholders' Equity(Thousands of Yen)
Year Ended October 31, 2011

Year Ended October 31, 2012

1,061,210

1,061,210

001,061,210

1,061,210

1,483,410

1,483,410

001,483,410

1,483,410

16,613,067

19,179,264

Cash Dividend Paid

-349,257-399,147

Net Income

2,915,454

1,616,388

Total Amount Changed

2,566,197

1,217,240

Surplus during This Fiscal Year19,179,264

20,396,505-363,194-363,319

Issued Shares Reacquired

-125

-73

Total Amount Changed

-125

-73

-363,319-363,393

18,794,492

21,360,564

Cash Dividend Paid

-349,257-399,147

Net Income

2,915,454

1,616,388

-125

-73

Total Amount Changed

2,566,071

1,217,166

Surplus during This Fiscal Year

21,360,564

22,577,731

Shareholders' Equity
Common Stock
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Capital Surplus
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Retained Earnings
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Issued Shares Reacquired
Surplus During Previous Fiscal Year
Changes During This Fiscal Year

Surplus during This Fiscal Year
Total Shareholders’ Equity
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Issued Shares Reacquired19

(Thousands of Yen)
Year Ended October 31, 2011

Year Ended October 31, 2012

53,58551,626(Except Shareholders' Equity)-1,958-28,453

Changes during This Fiscal Year

-1,958-28,453

51,62623,172-7,411

230(Except Shareholders' Equity)

7,641

295

Changes during This Fiscal Year

7,641

295

230

525

-257,190-321,821(Except Shareholders' Equity)-64,631

28,581

Changes during This Fiscal Year-64,631

28,581-321,821-293,239-211,016-269,965(Except Shareholders' Equity)-58,948

423

Changes during This Fiscal Year-58,948423-269,965-269,541

269,098239,227(Except Shareholders' Equity)-29,871-12,496

Changes during This Fiscal Year

-29,871-12,496239,227

226,731

Revaluation and Translation Adjustments
Valuation Difference on Available-for-sale
Securities
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Deferred Gains or Losses on Hedges
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Foreign Currency Translation Adjustment
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Total Revaluation and Translation Adjustments
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Minority Interests
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year20

(Thousands of Yen)
Year Ended October 31, 2011

Year Ended October 31, 2012

18,852,575

21,329,827

Cash Dividend Paid

-349,257-399,147

Net Income

2,915,454

1,616,388

-125

-73

-88,819-12,072

Total Amount Changed

2,477,252

1,205,094

Surplus during This Fiscal Year

21,329,827

22,534,921

Total Net Assets
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Issued Shares Reacquired
Total (Net) Amount Changed(Except Shareholders' Equity)21

(4) Consolidated Statements of Cash Flows(Thousands of Yen)
Year EndedYear Ended

October 31, 2011

October 31, 2012

Net Cash Provided by (Used in) Operating Activities
Income before Income Taxes and Minority Interests

5,007,239

2,639,851

Depreciation and Amortization

379,736

382,304

Increase (Decrease) in Provision for Bonuses(25,056)(10,283)

Increase (Decrease) in Provision for Directors' Bonuses(23,778)

8,654

Increase (Decrease) in Allowance for Product Warranty
Increase (Decrease) in Provision for Retirement Benefits

95,104
4,416(87,182)2,141(111,000)(2,160)

Increase (Decrease) in Allowance for Doubtful Accounts(9,655)(41,712)Interests and Dividends Income(33,144)(33,463)Interest Expenses

7,244

9,776

Foreign Exchange Losses (Gains)

11,203(2,313)

Loss (Gain) on Valuation of Investment Securities

33,546

4,906(137,398)

0

0

1,400

(14,190)(28,541)

0(6,780)Loss (Gain) on Sales of Noncurrent Assets(8,294)(11,389)

Loss on Retirement of Noncurrent Assets

8,327

6,092

(2,444,103)

028,7150Receivable-Trade781,796(806,209)

Decrease (Increase) in Inventories(337,740)(22,010)

Increase (Decrease) in Notes and Accounts Payable-Trade

58,628449,811

Increase (Decrease) in Accounts Payable-Others

9,773(21,161)

Increase (Decrease) in Advances Received

46,535(388,828)

Increase (Decrease) in Accrued Consumption Taxes

19,820(65,364)

Others, Net

15,00898,8033,362,734

2,076,340

Interests and Dividends Income Received

30,04733,906

Interest Expenses Paid

(7,244)(8,685)(1,511,506)(1,096,045)

1,874,031

1,005,516

Increase (Decrease) in Provision for Directors' Retirement Benefits

Loss (Gain) on Valuation of Derivatives
Loss on Valuation of Memberships
Loss (Gain) on Sales of Investment Securities
Loss (Gain) on Change in Equity Interest

Gain on conversion of fixed asset rights
Loss on adjustment for changes of accounting standard for
asset retirement obligations
Decrease (Increase) in Notes and Accounts

Sub total

Income Taxes Paid
Net Cash Provided by (Used in) Operating Activities

22

(Thousands of Yen)
Year EndedYear Ended

October 31, 2011

October 31, 2012

Net Cash Provided by (Used in) Investment Activities
Disbursement to Time Deposits(2,520,110)(6,700,000)

Proceeds from Withdrawal of Time Deposits

2,520,110

6,700,000

Purchase of Property, Plant and Equipment(275,337)(445,937)

Proceeds from Sales of Property, Plant and Equipment

23,231

14,787Purchase of Intangible Fixed Assets(6,842)(185,421)

Purchase of Investment Securities(17,869)(16,966)

Proceeds from Sales of Investment Securities

23,42552,832

Payments of Loans Receivable(1,720)(5,190)

Collection of Loans Receivable

4,800

2,719

Guarantee Deposits (Increase)

11,002(27,524)

Others, Net(553)(1,563)(239,863)(612,265)

Net Increase (Decrease) in Short-Term Loans Payable

079,061

Proceeds from Long-Term Loans

051,518

Repayments of Lease Obligations(24,137)(14,556)

(125)

(73)

0

38,893(349,257)(399,147)(373,520)(244,304)

Equivalents(73,192)

17,672Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period

1,187,454

166,619

6,109,100

7,296,554

Cash and Cash Equivalents at End of This Fiscal Year7,296,554

7,463,174

Net Cash Provided by (Used in) Investment Activities
Net Cash Provided by (Used in) Financing Activities

Purchase of Treasury StockFunds Provided by Payment from Minority Shareholders
Cash Dividends Paid
Net Cash Provided by (Used in) Financing Activities
Cash and Cash Equivalents
Effect of Exchange Rate Change on Cash and Cash23

(5) Notes for Premise of Going Concern
None(6) Changes of Important Items to be Basis for Making Consolidated Financial Statements[Changes in reporting methods](Change related to the Consolidated Statements of Income)The “sales discounts” included in the “Others” category of non-operating expenses in the previous consolidated fiscal
year has been stated as a separate item from the current consolidated fiscal year because the amount of the item has
increased in importance. To reflect this change in reporting method, the amount of 14,338,000 yen reported for “Others” in
the Consolidated Statement of Income in the previous consolidated fiscal year has been reclassified as “Sales discounts”
of 3,953,000 yen and “Others” of 10,384,000 yen.
[Additional Information](Application of the Accounting Standard for Accounting Changes and Error Corrections)
Beginning from accounting changes and corrections of past errors that were implemented from the beginning of theconsolidated fiscal year under review, the Company will apply the Accounting Standard for Accounting Changes andError Corrections (Accounting Standards Board of Japan Statement No. 24) and the Guidance on the AccountingStandard for Accounting Changes and Error Corrections (Accounting Standards Board of Japan Guidance No. 24).

24

(7) Notes for Consolidated Financial Statements(Segment Information)
1. Summary of Reporting Segments
TOMOE Engineering Co., Ltd. has established two operational headquarters. These operational headquarters aredeveloping their business activities by planning comprehensive domestic and overseas strategies for the respective
manufactured and commercial products they handle.
We therefore have assumed these two businesses, referred to as the “Machinery & Equipment Business” and the“Chemical Products Business”, as our company reporting segments. The Machinery & Equipment Business mainly
manufactures and sells centrifuge decanters, and the Chemical Products Business mainly manufactures, stocks
and sells chemical industry products.
The Company’s reporting segments are those units of the Company’s for which discrete financial information isavailable and for which the Board of Directors regularly conducts a review for the purpose of making decisions about
resources to be allocated to the segments and assess the segments' performance.
2. Method for calculating amounts of net sales, income or loss, assets, liabilities and other items for each reporting
segment
The accounting methods for reporting segments are identical to the accounting methods adopted for preparation of
the consolidated financial statements.

3. Information concerning the amount of net sales, income or loss, assets, liabilities and other items for each reporting
segment
Previous Consolidated Fiscal Year (Year Ended October 31, 2011)
Reporting segment
Machinery &Equipment
Business

Chemical
Products
Business

Total(Thousands of Yen)
Amount ofConsolidated
Adjustment
Financial
Note 1
Statements
Reported
AmountNote 2

Sales
Sales to Unaffiliated Customers
Internal Sales Among
Segments or AmountTransferred
Total
Segment Income
Segment Assets
Other Items

12,480,061

29,894,942

42,375,003

0

42,375,003

0
12,480,061
1,114,855
7,057,453

029,894,942
1,306,409
15,168,764

0
42,375,003
2,421,264
22,226,217

000
10,476,339

0
42,375,003
2,421,264
32,702,557

Depreciation & Amortization
Increase in Property, Plant &Equipment and Intangible
Assets269,309110,427

379,7360379,736

193,337

94,380287,717

2,513,938

2,801,656(Notes)1. The adjustment amount is as follows.
(1) The adjustment amount for segment assets is the assets of the entire company that cannot be allocated to each25

reporting segment, and is mainly idle operating funds (cash on hand and in banks), long-term investments(investment securities) and assets acquired in relation to a district redevelopment project.
(2) The adjustment amount for the increase in tangible fixed assets and intangible fixed assets is assets acquired inrelation to a district redevelopment project.
2. The total amount for segment income agrees with the operating income reported on the Consolidated Statement of
Income.
Current Consolidated Fiscal Year (Year Ended October 31, 2012)
Reporting segment
Machinery &Equipment
Business(Thousands of Yen)
Amount ofConsolidated
Adjustment
Financial
Note 1
Statements
Reported
AmountNote 2

Chemical
Products
Business

Total

12,330,809

29,244,850

41,575,659

0

41,575,659

0
12,330,809
1,289,600
8,331,961

029,244,850
1,158,390
14,906,841

0
41,575,659
2,447,991
23,238,802

000
10,583,303

041,575,659
2,447,991
33,822,106

251,760

130,543

382,304

0382,304

449,684

151,012600,6970600,697

Sales
Sales to Unaffiliated Customers
Internal Sales Among
Segments or AmountTransferred
Total
Segment Income
Segment Assets
Other Items
Depreciation & Amortization
Increase in Property, Plant &Equipment and Intangible
Assets(Notes)1. The adjustment amount for segment assets is the assets of the entire company that cannot be allocated to eachreporting segment, and is mainly idle operating funds (cash on hand and in banks), long-term investments(investment securities) and assets acquired in relation to a district redevelopment project.
2. The total amount for segment income agrees with the operating income reported on the Consolidated Statement of
Income.
(Related information)

Previous Consolidated Fiscal Year (Year Ended October 31, 2011)
1. Information by product and service
The Company has omitted a description of information by product and service because this same information isdisclosed in segment information.
2. Regional Information
1. Net Sales(Thousands of Yen)

Japan

Asia

OthersTotal

32,592,409

7,376,545

2,406,048

42,375,003(Note) Net sales are classified by country or region based on the customer’s location.

26

2. Property, Plant and Equipment
Japan(Thousands of Yen)Asia

4,969,342

Total
299,689

5,269,032

3. Main Customer Information
The Company has omitted a description of sales to outside customers because there are no customers to which sales
account for more than 10% of the net sales reported in the Consolidated Statements of Income.
Current Consolidated Fiscal Year (Year Ended October 31, 2012)
1. Information by product and service
The Company has omitted a description of information by product and service because this same information isdisclosed in segment information.
2. Regional Information
1. Net Sales(Thousands of Yen)

Japan

Asia

OthersTotal

31,860,194

6,544,120

3,171,343

41,575,659(Note) Net sales are classified by country or region based on the customer’s location.
2. Property, Plant and Equipment
Japan(Thousands of Yen)Asia

4,987,397

Total
344,397

5,331,794

3. Main Customer Information
The Company has omitted a description of sales to outside customers because there are no customers to which sales
account for more than 10% of the net sales reported in the Consolidated Statements of Income.
(Information concerning impairment losses on fixed assets by reporting segment)
There are no pertinent matters to report.
(Information concerning amortization of goodwill and unamortized balances by reporting segment)
There are no pertinent matters to report.
(Information concerning gain on negative goodwill by reporting segment)
There are no pertinent matters to report.

27

(Per Share Information)
Year EndedYear Ended

October 31, 2011

October 31, 2012

Net Asset per Share

56¥2,113.

¥2,235.59

Net Income per Share¥292.17¥161.98(Note 1) Income per share for this fiscal year after adjustment of the residual securities is not presented as there are noresidual securities.
(Note 2) Calculation basis for net income per share are as follows:Year EndedYear Ended

October 31, 2011

October 31, 2012

Net Income for this Fiscal Year (thousands of yen)

2,915,454

1,616,388

Net Income for Common Stock (thousands of yen)

2,915,454

1,616,388

Average number of Common Stock during the Fiscal Year9,978,725

9,978,668(Note 3) Calculation basis for net asset per share are as follows:

Total for Net Asset in Consolidated Balance SheetYear Ended October 31,

Year Ended October 31,

2011

2012

21,329,827

22,534,921

yen)

239,227

226,731(Minority Interests) (thousands of yen)

(239,227)(226,731)

Net Asset for Common Stock (thousands of yen)

21,090,599

22,308,190

9,978,699

9,978,653(thousands of yen)Amount deducted from the total for Net Assets (thousands ofNumber of Common Stock used for calculation of Net Assets
per Share (share)(Significant subsequent events)
None
.

28

5. Non-Consolidated Financial Statements(1) Balance Sheets(Thousands of Yen)ndAssets82 Period

83rd Period(October 31, 2011)(October 31, 2012)

Current Assets
Cash and Deposits

5,977,638

5,835,545

Notes Receivable-Trade

3,012,122

2,926,364

Accounts Receivable-Trade

8,517,995

9,549,871

Merchandise and Finished Goods

2,455,679

2,315,299

Work in Process

898,642

740,522

Raw Materials and Supplies

573,146

869,108

Advance Payment

34,2605,730

Prepaid Expense

80,83897,255

Accrued Revenue

20,87365,078

Short-Term Loans Receivable

51,70953,361

Deferred Tax Assets

592,910521,654

Others27,9696,445

Allowance for Doubtful Accounts-21,428-11,306

Total Current Assets

22,222,359

22,974,931

1,872,337

1,893,593-1,008,035-1,068,497

864,302825,096

142,515

142,515-121,969-125,983

Structures, Net

20,546

16,531

Machinery and Equipment

2,245,184

2,265,612-1,905,177-1,935,577

340,006

330,034

39,43739,437-39,042-39,437394

0Tools, Instrument and Equipment

875,548

908,497

Accumulated Depreciation-827,229-848,042

48,31960,454

Land

877,653877,653

Lease Assets

68,71440,902

Accumulated Depreciation-50,162-34,864

Lease Assets, Net

18,551

6,038

Construction in Progress

2,543,938

2,618,535

4,713,712

4,734,344

Noncurrent Assets
Property, Plant and Equipment
Buildings
Accumulated Depreciation
Buildings, Net
Structures
Accumulated Depreciation

Accumulated Depreciation
Machinery and Equipment, Net
VehiclesAccumulated Depreciation
Vehicles, Net

Tools, Instrument and Equipment, Net

Total Property, Plant and Equipment

29

(Thousands of Yen)nd

82 Period

83rd Period(October 31, 2011)(October 31, 2012)

Intangible Assets
Software53,925

123,625

Lease Asset

2,788

1,513

0

91,042

Telephone Rights

8,165

8,165

Total Intangible Assets

64,880224,346

Investment Securities

614,346

572,190

Stocks of Affiliated Companies

483,765

466,265

Investments – Affiliated Companies

371,395

371,395

Employees

2,862

4,897

Claims in Bankruptcy

32,023

1,395

Prepaid Pension Expense

520,777

483,147

Guarantee Deposits

347,100

368,971

Others73,78971,644

Allowance for Doubtful Accounts-78,405-46,779

Total Investments and Other Assets

2,367,655

2,293,127

Total Noncurrent Assets

7,146,247

7,251,818

Total Assets

29,368,607

30,226,750

Software Suspense AccountInvestments and Other Assets

Long-Term Loans Receivable to30

(Thousands of Yen)nd

Liabilities and Net Assets

82 Period

83rd Period(October 31, 2011)(October 31, 2012)

Liabilities
Current Liabilities
Notes Payable-Trade719,619822,060

Accounts Payable-Trade

4,768,583

5,025,308

Lease Obligations

14,257

7,216

Accounts Payable-Others

512,207482,777

Income Taxes Payable

491,053522,219

Accrued Business Tax

8,471

7,001

Accrued Consumption Tax

29,0020

Provision for Bonuses

990,165

971,425

Provision for Directors' Bonuses

56,30363,609Allowance for Product Warranty

281,546

194,363

Accrued Expenses

15

15

Advances Received

395,10962,856

Deposit Payable

138,205

121,138

Guarantee Deposit

80,565

81,275

8,485,106

8,361,267

Lease Obligations

7,992

775

Provision for Retirement Benefits

5,835

7,134

Provision for Directors' Retirement Benefits

31,76029,600

Deferred Tax Liabilities

969,595

815,962

Total Noncurrent Liabilities

1,015,184

853,472

Total Liabilities

9,500,290

9,214,740

Total Current Liabilities
Noncurrent Liabilities

31

(Thousands of Yen)nd

82 Period

83rd Period(October 31, 2011)(October 31, 2012)

Net Assets
Shareholders’ Equity
Capital Stock

1,061,210

1,061,210

1,483,410

1,483,410

1,483,410

1,483,410

230,000

230,000

Provision for Dividend Reserve

250,000

250,000

Reserve for Deferred Gains on Fixed Assets

24,071

24,572Other Reserve

13,900,000

16,330,000

Earned Surplus Carried Forward

3,231,089

1,972,512

17,635,160

18,807,085-363,319-363,393

19,816,460

20,988,311

51,62623,172230

525

51,856

23,698

Total Net Assets

19,868,317

21,012,009

Total Liabilities and Net Assets

29,368,607

30,226,750

Capital Surplus
Capital Reserve
Total Capital Surplus
Retained Earnings
Legal Reserve of Retained Earnings
Other Retained Surplus

Total Retained Earnings
Treasury Stock
Total Shareholders’ Equity
Valuation and Translation Adjustments
Valuation Difference on Available-for-Sale
Securities
Deferred Gains or Losses on Hedges
Total Valuation and Translation Adjustments32

(2) Statements of Income(Thousands of Yen)nd

82 Period

83rd Period(October 31, 2011)(October 31, 2012)

Net Sales
Sales of Finished Goods

11,842,600

11,735,989

Merchandise Sale

27,979,757

27,018,606

39,822,357

38,754,595

Beginning Inventory

253,755

61,193

Cost of Manufacture

8,215,695

8,346,009

8,469,450

8,407,203

61,193

69,845

8,408,257

8,337,357

Beginning Inventory

1,884,881

2,394,485

Purchase Amount

23,898,582

22,287,814

25,783,464

24,682,300

Ending Inventory

2,394,485

2,245,453

Cost of Sales

23,388,978

22,436,846

Total Cost of Sales

31,797,235

30,774,204

Gross Profit

8,025,121

7,980,391

5,859,011

5,756,441

2,166,109

2,223,949

Interest income

3,780

5,099

Dividends Income

91,59096,577

Rent Income

65,00564,6760

97,014Gain on Valuation of Derivatives

137,398

0

Others27,812

49,051

325,586

312,418

1,172

875

71

69

Rental Cost

23,89822,357

Commission Paid

9,975

9,508

Foreign Exchange Loss

36,3920

Others12,887

15,545

Total Non-Operating Expenses

84,39848,356

Ordinary Income

2,407,298

2,488,011

Total Cost of Sales
Cost of Sales
Cost of Finished Goods Sold

Total
Ending Inventory
Cost of Sales
Cost of Merchandise Sold

Total

Selling, General and Administrative Expenses
Operating Income
Non-Operating Income

Foreign Exchange Gains

Total Non-Operating Income
Non-Operating Expenses
Interest Expenses
Loss on Sales of Notes Payable33

(Thousands of Yen)
82nd Period

83rd Period(October 31, 2011)(October 31, 2012)

Extraordinary Income
Gain on Sales of Property, Plant and Equipment

10,41010,960Gain on Conversion of Fixed Asset Rights

2,444,1030Gain on Sales of Investment Securities

14,1906,141

022,40017,18502,485,889

39,501

Loss on Retirement of Noncurrent Assets

6,421

0

Loss on Valuation of Investment Securities

33,546

4,906

0

1,400

1,650

0

standard for asset retirement obligations

28,7150Total Extraordinary Losses

70,333

6,306

Income before Income Taxes and Minority Interests

4,822,853

2,521,206

Income Taxes-Current

1,005,906

1,013,704

Income Taxes-Deferred

986,794-63,571

Total Income Taxes

1,992,700

950,133

Net Income

2,830,153

1,571,072

Gain on Sale of Affiliated Company Stock
Reversal of Allowance for Doubtful Accounts
Total Extraordinary Income
Extraordinary Losses

Loss on Valuation of Memberships
Transfer to Allowance for Doubtful Accounts
Loss on adjustment for changes of accounting

34

(3) Statements of Changes in Shareholders' Equity(Thousands of Yen)
Year Ended October 31, 2011

Year Ended October 31, 2012

Shareholders' Equity
Capital Stock
Surplus during Previous Fiscal Year

1,061,210

1,061,210

001,061,210

1,061,210

1,483,410

1,483,410

001,483,410

1,483,410

230,000

230,00000

230,000

230,000

250,000

250,00000

250,000

250,000

25,426

24,071-1,355-1,2980

1,799

Total Amount Changed-1,355501

Surplus during This Fiscal Year

24,071

24,572

13,150,000

13,900,000

Accumulation of Other Reserve

750,000

2,430,000

Total Amount Changed

750,000

2,430,000

Surplus during This Fiscal Year

13,900,000

16,330,000

Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Capital Surplus
Capital Reserve
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Retained Earnings
Earned Reserve
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Other Retained Earnings
Reserve for dividend allowance
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Reserve for Deferred Gains on Fixed Assets
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Reversal of Reserve for Deferred Gains
on Fixed Assets
Increase in Reserve for Advanced
Depreciation of Fixed Assets due tochange of effective tax rate

Other Reserve
Surplus during Previous Fiscal Year
Changes during This Fiscal Year35

(Thousands of Yen)
Year Ended October 31, 2011

Year Ended October 31, 2012

Earned Surplus Carried Forward
Surplus during Previous Fiscal Year

1,498,838

3,231,089

1,355

1,298

0

-1,799

Accumulation of Other Reserve-750,000-2,430,000

Cash Dividend Paid

-349,257-399,147

Net Income

2,830,153

1,571,072

Total Amount Changed

1,732,251-1,258,576

Surplus during This Fiscal Year3,231,089

1,972,512

15,154,264

17,635,160

0

0

0

0

0

0

Cash Dividend Paid

-349,257-399,147

Net Income

2,830,153

1,571,072

Total Amount Changed

2,480,896

1,171,924

Surplus during This Fiscal Year

17,635,160

18,807,085-363,194-363,319

Issued Shares Reacquired

-125

-73

Total Amount Changed

-125

-73

-363,319-363,393

17,335,690

19,816,460

Cash Dividend Paid

-349,257-399,147

Net Income

2,830,153

1,571,072

-125

-73

Total Amount Changed

2,480,770

1,171,851

Surplus during This Fiscal Year19,816,460

20,988,311

Changes during This Fiscal Year
Reversal of Reserve for Deferred
Gains on Fixed Assets
Increase in Reserve for Advanced
Depreciation of Fixed Assets due tochange of effective tax rate

Total Retained Earnings
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Reversal of Reserve for Deferred
Gains on Fixed Asset
Increase in Reserve for Advanced
Depreciation of Fixed Assets due tochange of effective tax rate
Accumulation of Other Reserve

Treasury Stock
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Surplus during This Fiscal Year
Total Shareholders’ Equity
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Issued Shares Reacquired36

(Thousands of Yen)
Year Ended October 31, 2011

Year Ended October 31, 2012

Valuation and Translation Adjustments
Valuation Difference on Available-for-sale
Securities
Surplus During Previous Fiscal Year53,58551,626-1,958-28,453-1,958-28,453

51,62623,172-4,731

230(Except Shareholders' Equity)

4,962

295

Changes during This Fiscal Year

4,962

295

230

525

48,85351,856(Except Shareholders' Equity)

3,003-28,158

Changes during This Fiscal Year

3,003

-28,158

51,856

23,69817,384,543

19,868,317

Cash Dividend Paid

-349,257-399,147

Net Income

2,830,153

1,571,072

-125

-73

3,003

-28,158

Total Amount Changed

2,483,773

1,143,692

Surplus during This Fiscal Year

19,868,317

21,012,009

Changes During This Fiscal Year
Total (Net) Amount Changed(Except Shareholders' Equity)
Changes during This Fiscal Year
Surplus during This Fiscal Year
Deferred Gains or Losses on Hedges
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Total Valuation and Translation Adjustments
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Total Net Assets
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Issued Shares Reacquired
Total (Net) Amount Changed(Except Shareholders' Equity)37

(4) Notes for Premise of Going Concern
None.

(5) Notes for Non-Consolidated Financial Statements(Per Share Information)
82nd Period

83rd Period(Year Ended October 31, 2011)(Year Ended October 31, 2012)

Net Asset per Share07¥1,991.

¥2,105.70

Net Income per Share¥283.62¥157.44(Note 1) Income per share for this fiscal year after adjustment of the residual securities is not presented as there are noresidual securities.
(Note 2) Calculation basis for net income per share are as follows:
82nd Period

83rd Period(Year Ended October 31, 2011)(Year Ended October 31, 2012)

Net Income for this Fiscal Year2,830,153

1,571,072

2,830,153

1,571,072

9,978,725

9,978,668(thousands of yen)
Net Income for Common Stock(thousands of yen)
Average number of Common Stock during
the Fiscal Year (shares)(Note 3) Calculation basis for net asset per share are as follows:
82nd Period

83rd Period(Year Ended(Year Ended

October 31, 2011)

October 31, 2012)

Total for Net Assets (thousands of yen)

19,868,317

21,012,009

Net Assets for Common Stock (thousands of yen)

19,868,317

21,012,009

Number of Common Stock as of the end of the Current Consolidated

9,978,699

9,978,653

Fiscal Year used for calculation of Net Assets per Share (shares)38

6. Other Notes(1) Appointment of Officers
1) Representative Director: No change2) Other Directors (scheduled as at January 30, 2013)
1. New candidates for Director
Director (in charge of Accounting Div. and Management Planning Dept.):
Mitsuo Matsumoto (currently General Manager, Accounting Div.)
Director and Deputy General Manager, Machinery & Equipment Div. (in charge of production), serving concurrently
as Manager, Sagami Factory:
Jun Ohashi (currently Manager, Sagami Factory, serving concurrently as Manager, Production Control Dept.)
Director and Deputy General Manager, Machinery & Equipment Div. (in charge of Industrial Machinery Sales Dept.
and Overseas Sales Dept.), serving concurrently as Manager, Overseas Sales Dept.
Kimihiko Murakami (currently Manager, Industrial Machinery Sales Dept.)
2. Directors scheduled to retire
Managing Director: Hitoshi Shiraishi (planned appointment to Advisor)
Director: Natsuhiko Maeda (planned appointment to Advisor)
Director: Hiroshi Konagai (planned appointment to President and CEO, Tomoe Machinery Co., Ltd.)
3. Corporate Auditors scheduled to retire
Head Auditor: Koichi Karita (planned appointment to Advisor)
4. Planned promotions to Director
Senior Managing Director and General Manager, Chemical Products Div.:
Hitoshi Yamamoto (currently Managing Director and General Manager, Machinery & Equipment Div.)Managing Director and General Manager, Machinery & Equipment Div.:
Yoshito Honma (currently Director and President and CEO, Tomoe Machinery Service Co., Ltd.)
5. Planned promotions to Corporate Auditor
Senior Head Auditor: Kenichi Ito (currently Head Auditor)
Head Auditor: Toshiharu Murase (currently Auditor)

39