8th Fiscal Year （From April 1, 2013
to March 31, 2014）

Consolidated Financial Statements

Consolidated Subsidiaries:
Covalent Materials Tokuyama Corporation
Covalent Materials Nagasaki Corporation
Covalent Materials USA Inc.
Covalent Machinery Corporation
Denko Co., Ltd.

Consolidated Balance Sheet(as of March 31, 2014)(Thousands of Yen)
AssetsLiabilities

Current Assets
Cash and deposits
Notes and accounts receivable-trade
Inventories
Advance payments-trade
Accounts receivable-otherPrepaid expenses
Deferred tax assets
Other
Allowance for doubtful accounts

22,318,722
5,907,107
6,046,152
7,702,327
29,926364,752
380,054
1,671,312
224,577△ 7,490

Noncurrent Assets
Property, plant and equipment
Buildings and structures
Machinery,equipment and vehicles
Tools, furniture and fixtures
Land
Lease assets
Construction in progress
Intangible assets
Goodwill
OtherInvestments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts

34,605,004
24,753,289
10,262,221
4,553,221
147,1618,394,731
707,949
688,0038,727,705
8,658,265
69,439
1,124,009
175,100
76,553
341,569
616,104△ 85,318

Current Liabilities
Notes and accounts payables-trade
Current portion of long-term loans payable
Lease obligations
Accounts payable-facilities
Accounts payable-other
Income taxes payable
Accrued expenses
Provision for directors' bonuses
Other
Noncurrent Liabilities
Bonds payable
Lease obligations
Long-term accounts payable-other
Net defined benefit liability
Provision for directors' retirement benefits
Asset retirement obligations
Deferred tax liabilities

7,634,515
2,832,633
1,488,000
151,002
235,717588,151
437,142
1,285,994
18,724597,149
34,265,449
25,300,000
591,513
1,574,097
3,807,632
539
238,2392,753,426

Total Liabilities

41,899,965
Net Assets

Shareholders Equity
Capital stock
Capital surplus
Retained earnings
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Minority Interests

Total Assets

56,923,727

14,766,083
34,942,693
40,271,024△ 60,447,634△ 567,373
71137,963△ 705,408
825,051

Net Assets

15,023,762

Total liabilities and net assets

56,923,727

Consolidated Statement of Income(from April 1, 2013 to March 31, 2014)(Thousands of Yen)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Amortization of negative goodwill
Other
Non-operating expenses
Interest expenses
Other
Ordinary income
Extraordinary income and loss
Income before income taxes
Income taxes-current
Income taxes-deferred
Income before minority interests
Minority interests in income
Net income

31,463,610
21,670,077
9,793,533
6,981,501
2,812,032
3,163
100,435
168,2161,844,459
430,936

452,197△ 324,716

271,8142,275,395
808,451864,516
1,672,966
127,481
1,545,485
6
1,545,478

Consolidated Statement of Cash Flows(from April 1, 2013 to March 31, 2014)

CategoryⅠⅡ

Net cash provided by operating activities
Income before income taxes
Depreciation and amortization
Amortization of goodwill
Interest expenses
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Other,net
Subtotal

1,672,966
2,553,122
730,441
1,844,530(1,500,909)(191,434)
940,023
51,803
6,100,545

Interest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

12,041(1,199,011)(140,009)
4,773,565

Net cash provided by investing activities
Proceeds from sales of property, plant and equipment
Other,net
Net cash provided by investing activities

Ⅲ(Thousands of Yen)
Amount

1,762,620
197,850
1,960,470

Net cash provided by financing activities
Repayment of long-term loans payable
Repayments of lease obligations
Other,net
Net cash provided by financing activities(6,258,000)(178,268)(234,831)(6,671,099)

ⅣⅤ

Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents

ⅥⅦ

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

5,639,062
5,805,507※

Difference in cash and cash equivalents from balance sheet
Cash and deposits at end of period (balance sheet)
Time deposits with terms extending over 3 months
Cash and cash equivalents at end of period (cash flow statement)

5,907,107
101,600
5,805,507

103,508
166,445