April 30, 2015

Summary of Fiscal 2014
(The Fiscal Year ended March 31, 2015)
Tokuyama Corporation
1. Consolidation
Classification
The number of consolidated
subsidiaries
The number of subsidiaries andaffiliates by the equity method

Fiscal 2014

Fiscal 2013

Changes

54

53

+1

10

9

+1

2. Summary of performance and other corporate data (consolidated)(Unit: Billions of yen, except number of employees)
Fiscal 2014
Fiscal 2013
Changes
302.0
287.3
+14.7
19.5
20.2
-0.7
12.9
14.9
-2.0
-65.3
10.2
-75.5
-187.8529.37-217.22
25.3
61.0
-35.7
18.8
16.7
+2.1
10.1
8.7
+1.4
-4.0
-2.1
-1.8

Net sales
Operating income
Ordinary income
Net income/loss
Net income/loss per share (Unit: yen)
Capital expenditures
Depreciation and amortization
R&D expenses
Financial income and expenses

As of March 31,
2015
283.1
5,852

Interest-bearing debt
Number of employees

As of March 31,
2014
240.7
5,756

Changes+42.4+96

3. Net sales and operating income by business segment (year on year)(Unit: Billions of yen)

FY2014FY2013

Changes

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeChemicals

91.9

5.0

86.4

2.2

+5.4

+2.8

Specialty Products

55.4

4.1

52.4

6.0

+2.9

-1.9

Cement

81.2

4.4

78.9

6.6

+2.2

-2.2

Life & Amenity

58.4

5.1

57.0

4.8

+1.3

+0.2

Others

51.4

6.0

47.2

4.1

+4.1

+1.8

Total

338.5

24.8

322.2

24.0

+16.2

+0.7

Inter-segment
eliminations andcorporate-wide expenses

-36.4

-5.2

‐34.9

‐3.7

-1.5

-1.5

Consolidated results

302.0

19.5

287.3

20.2

+14.7

-0.7

○ In the Chemicals segment, sales and operating income increased during the fiscal year underreview. This was largely attributable to successful efforts to revise selling prices, a decrease inraw material and fuel prices and contributions from the commencement of operations at
TOKUYAMA & CENTRAL SODA Inc.
○ In the Specialty Products segment, sales increased in the fiscal year ended March 31, 2015.
Operating income, on the other hand, declined year on year. This mainly reflected the upswing
in sales volumes of semiconductor-related products and higher depreciation expenses in linewith the commencement of operations at Tokuyama Malaysia Sdn. Bhd.
○ In the Cement segment, the Tokuyama Group reported lower operating income on higher sales.
While operations were launched at a newly added consolidated subsidiary, sales volumes inJapan declined. The drop in operating income was also due to such factors as the increase in
distribution costs on the back of the construction of new cement tankers.
○ I n the Life & Amenity segment, both sales and operating income increased owing primarily tothe upswing in sales volumes of such products as active pharmaceutical ingredients, plastic
lens-related materials, and gas sensors.

4. Net sales and operating income by business segment (forecasts)(1) Net sales and operating income by business segment (full year comparison)(Unit: Billions of yen)

FY2015 Forecast

FY2014 Results

Changes

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeChemicals

87.0

6.0

91.9

5.0

-4.9

+0.9

Specialty Products

66.0

1.0

55.4

4.1

+10.5

-3.1

Cement

86.0

7.0

81.2

4.4

+4.7

+2.5

Life & Amenity

58.0

5.5

58.4

5.1

-0.4

+0.3

Others

56.0

4.0

51.4

6.0

+4.5

-2.0

Total

353.0

23.5

338.5

24.8

+14.4

-1.3

Inter-segment
eliminations andcorporate-wide expenses

-41.0

-2.5

-36.4

-5.2

-4.5

+2.7

Consolidated results

312.0

21.0

302.0

19.5

+9.9

+1.4

(2) Assumptions of performance forecasts for fiscal 2015

Domestic Naphtha
Price (¥/kl)
Exchange Rate (¥/$)

Fiscal 2015

Oct 2014-Mar
2015

Apr-Sep
2014

46,00056,50070,400

115

117

103

Despite an increase in sales volumes as well as an upswing in depreciation expenses at Tokuyama
Malaysia Sdn. Bhd. and other factors, the Tokuyama Group is projecting higher sales and operating
income on the back of efforts aimed at steadfastly carrying out its Profit Improvement Plan and further
reductions in expenses.

○ In the Chemicals segment, we have factored in a drop in domestic naphtha prices as well as asoftening in the selling prices of caustic soda and vinyl chloride resin.
○ In the Specialty Products segment, an increase in sales volumes as well as an upswing in
depreciation expenses at Tokuyama Malaysia Sdn. Bhd. has been taken into account.
○ In the Cement segment, the Tokuyama Group has factored in a recovery in domestic sales
volumes.
○ In the Life & Amenity segment, we have taken into account an increase in sales in overseas
markets.

Summary of Consolidated Financial Statements for Fiscal 2014 (JP GAAP)(The Fiscal Year ended March 31, 2015)
April 30, 2015
Tokuyama Corporation
Stock exchange listings:
Tokyo(URL http://www.tokuyama.co.jp/)
Code number:
4043
Representative:
Kazuhisa Kogo
Chairman and Representative Director
Contact:
Taro Kobayashi
General Manager, Corporate Communications & Investor Relations Dept.
+81-3-6205-4832
June 24, 2015
Scheduled date for the Ordinary General Meeting of Shareholders:
Scheduled date of year-end dividends payout:
Scheduled date for the filing of the consolidated financial statements: June 25, 2015
Preparation of supplementary explanatory materials: Yes
Business results IR briefing to be held:
Yes (for institutional investors and analysts)

1. Consolidated results for fiscal year ended March 31, 2015 (April 1, 2014 – March 31, 2015)
Note: All amounts are rounded down to the nearest million yen.
% indicates year-on-year changes.

(1) Performance

Net sales

Operating income(millions of yen)

Fiscal 2014
Fiscal 2013

302,085
287,330[%](millions of yen)

Ordinary income[%]

Net income(millions of yen)[%](millions of yen)

5.1
11.1

19,530(3.7)
12,920 (13.7)
20,270199.3
14,965363.0(Note) Comprehensive income: FY14: (64,536) million yen [－%] FY13: 13,754 million yen [－%]Net income per
share

Diluted net income Net income to Ordinary income to Operating income
per shareshareholders’ equity
total assets
to net sales(yen)

Fiscal 2014
Fiscal 2013

[%]

－
－

(65,349)
10,218

(yen)

[%]

－
－

(187.85)
29.37

[%]

(33.3)
4.6

[%]

2.3
2.7

(Reference) Equity in earnings of unconsolidated subsidiaries and affiliates: FY14: 684 million yen

6.5
7.1

FY13: 519 million yen(2) Financial position

Total assets
Mar 31, 2015
Mar 31, 2014
(Reference)

Shareholders’ equity
ratio

Net assets(millions of yen)(millions of yen)

554,527
576,315

169,445
236,453

Shareholders' equity:

FY14:

Net assets per share

[%]

(yen)

467.36660.18

29.3
39.9
162,577 million yen

FY13:229,667 million yen(3) Cash flows

Cash flows fromoperating activities
Fiscal 2014
Fiscal 2013

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at the end of
the year(millions of yen)(millions of yen)(millions of yen)(millions of yen)

30,772
34,105(25,519)(64,402)40,50245,939116,12269,973

2. Dividends（Period）
Fiscal 2013
Fiscal 2014
Fiscal 2015
（Forecast）

1st
quarter
(yen)

----

Annual dividens
2nd
3rd
Yearendquarter quarter

Total

Total dividends
paid(Total)

(yen)

(yen)

(yen)

(yen)

(millions of yen)

3.00
0.00
0.00

----

3.00
0.00
0.00

6.00
0.00
0.00

2,087
--

Dividend
payout ratio(Consolidated)
[%]

20.4
-－

Dividend on net
assets ratio(Consolidated)
[%]

0.9
--

3. Consolidated performance forecast for fiscal 2015 (April 1, 2015 – March 31, 2016)(% indicates the rate of change over the corresponding previous periods respectively)

Net salesFirst Half
Fiscal 2015
Fiscal 2015

(millions of
yen)

[%]

151,000

4.9

312,000

3.3

Operating income

attributable to Net income per
Ordinary income Profit
share
owners of parent(millions ofyen)(millions of
yen)

[%]

(millions of
yen)

[%]

8,500 (19.7)

6,000 (27.6)

3,000

－

8.62

21,00014,000

8,000

－

23.00

[%]

7.5

8.4

(yen)

* Cautions pertaining to the appropriate use of performance forecasts and other particular items
The performance forecast and other forward-looking statements contained in this material have been prepared on
the basis of information available at this point and certain assumptions which are judged to be rational, and may besubstantially different from the actual performance etc. because of various factors that may arise from now on.

*Notes(1) Changes of significant subsidiaries in the scope of consolidation during this period: No
Addition to the scope of consolidation: Reduction from the scope of consolidation: (2) Changes of accounting policies, changes in accounting estimates, and retrospective restatements
i. Changes of accounting policies by revision of accounting standards: Yes
ii. Changes of accounting policies other than the above:Noiii. Changes in accounting estimates:No
No
iv. Retrospective restatements:(3) Number of shares issued (in common stock)
Number of shares issued at end of periodi.
(including treasury stock):ii. Number of treasury stock at end of period:iii. Average number of shares over period:

FY14:349,671,876

FY13:

349,671,876

FY14:
FY14:

1,805,814
347,876,356

FY13:
FY13:

1,782,644
347,909,049(Reference) Summary of Non-Consolidated Operating Results
1. Non-consolidated results for fiscal year ended March 31, 2015 (April 1, 2014 – March 31, 2015)
Note: All amounts are rounded down to the nearest million yen.
% indicates year-on-year changes.

(1) Performance

Net sales

Operating income(millions of yen)[%](millions of yen)

184,043
177,863

3.5
8.3

19,247
16,316

Fiscal 2014
Fiscal 2013

Net income pershare

Net income(millions of yen)

[%]

18.0
235.8

18,665
10,30981.1－(millions of yen)

[%]

－
－

(62,950)
10,461

Diluted net income
per share(yen)

Fiscal 2014
Fiscal 2013

Ordinary income[%](180.96)
30.07

(yen)

－
－

(2) Financial position

Total assets
Mar 31, 2015
Mar 31, 2014
(Reference)

Shareholders’ equity
ratio

Net assets(millions of yen)(millions of yen)

462,042
490,778

133,993
202,865

Shareholders' equity:

FY14:

[%]

(yen)

385.19583.1329.0
41.3
133,993 million yen

Net assets per share

FY13:

202,865 million yen

2. Non-consolidated performance forecast for fiscal 2015 (April 1, 2015 – March 31, 2016)(% indicates the rate of change over the corresponding previous periods respectively)

Net salesFirst Half
Fiscal 2015
Fiscal 2015

Ordinary income(millions of
yen)

[%]

91,000
189,000(millions ofyen)

Net income pershare

Net income[%](millions of
yen)

[%]

1.9

4,000 (58.7)

3,000

－

8.62

2.7

8,000 (57.1)

5,000

－

14.37

(yen)

(Note) Notice on the implementation of audit proceduresThis Summary of Consolidated Financial Statements is not subject to audit procedures of the consolidated financial statements inline with the Financial Instruments and Exchange Act. At the point of disclosure of this Summary of Consolidated Financial
Statements, audit procedures of the consolidated financial statements in line with the Financial Instruments and Exchange Act areunderway.

* Cautions pertaining to the appropriate use of performance forecasts and other particular items
The performance forecast and other forward-looking statements contained in this material have been prepared on
the basis of information available at this point and certain assumptions which are judged to be rational, and may besubstantially different from the actual performance etc. because of various factors that may arise from now on.

Contents for Accompanying Materials
1. Analysis of Operating Results and Financial Position(1) Analysis of Operating Results

……………

P. 2

(2) Analysis of Financial Position

……………

P. 12

(3) Basic Policy for Profit Distribution and Dividends for Fiscal 2014 and 2015

……………

P. 13

……………

P. 15

(1) Basic Management Policy

……………

P. 15

(2) Medium- to Long-Term Management Strategies and Performance Targets

……………

P. 15

(3) Pending Issues

……………

P. 16

……………

P. 19

(1) Consolidated Balance Sheets

……………

P. 19

(2) Consolidated Statements of Income

……………

P. 21

(3) Consolidated Statements of Comprehensive Income

……………

P. 22

(4) Consolidated Satetements of Cash Flows

……………

P. 23

(5) Segment Information

……………

P. 25

2. Management Policy

3. Consolidated Quarterly Financial Statements-1-1. Analysis of Operating Results and Financial Position(1) Analysis of Operating Results<1> Operating results for the fiscal year under review[1] Overview of performance for the fiscal year under review
Throughout fiscal 2014 (April 1, 2014 to March 31, 2015), uncertainty clouded the futureof the global economy as a whole. Despite firm trends in the United States on the back ofhigh levels of personal consumption and a recovery in employment conditions, thisuncertainty was largely attributable to a slowdown in the rate of economic growth inChina and a growing sense of stagnation in Europe. Moreover, feelings of instability
toward economic activity were exacerbated by the sudden drop in crude oil prices in thesecond half of the fiscal year under review.
Turning to the Japanese economy, conditions were supported by expectations toward theeconomic policy measures of the government and the Bank of Japan. Despite these
expectations, however, the overall economy remained sluggish due mainly to the impact of
the consumption tax rate hike on personal consumption.
Under these circumstances, the Tokuyama Group continued to reconstruct thepolycrystalline silicon business, improve profits in existing and new businesses, andimprove Companywide profitability. As a result, while net sales increased, the Company
reported a decline in operating income and ordinary income due to such factors as theincrease in depreciation expenses in line with the commencement of operations at
consolidated subsidiary Tokuyama Malaysia Sdn. Bhd. Moreover, net income deteriorated
substantially owing to the extraordinary loss of ¥85.7 billion recorded by Tokuyama
Malaysia Sdn. Bhd.

(Unit: Millions of yen)
Net sales

Operating income

Ordinary income

Net income (loss)

Fiscal 2014

302,085

19,53012,920(65,349)

Fiscal 2013

287,330

20,27014,965

10,218

5.1(3.7)(13.7)-

Rate of change (%)-2-

Net sales
Consolidated net sales increased 5.1%, or ¥14.7 billion compared with the previous fiscal
year, to ¥302.0 billion. In addition to increased sales volumes of polycrystalline silicon andhigh-purity chemicals for electronics manufacturing and selling price revisions of caustic
soda, this was largely attributable to strong sales mainly of active pharmaceuticalingredients and the commencement of the operation of the newly added consolidated
subsidiaries.
Cost of sales
Despite a downturn in manufacturing costs as a result of the drop in the prices of such
raw materials and fuel as coal and domestic naphtha, an increase in sales volumes ofpolycrystalline silicon attributable to the commencement of operations at Tokuyama
Malaysia Sdn. Bhd. and other factors served to boost the cost of sales 5.8%, or ¥11.9
billion compared with the previous fiscal year, to ¥218.9 billion.
SG&A expenses
SG&A expenses increased 5.9%, or ¥3.5 billion compared with the previous fiscal year, to¥63.6 billion, due mainly to higher distribution costs resulting from increased sales
volumes and increases in R&D expenses and amortization of goodwill.
Operating income
Operating income decreased 3.7%, or ¥0.7 billion compared with the previous fiscal yearto ¥19.5 billion. Despite such positive factors as improvement in the profitability of
petrochemicals, this decrease was mainly due to the increase in depreciation expenses inline with the commencement of operations at Tokuyama Malaysia Sdn. Bhd.
Non-operating income/expenses, Ordinary income
Non-operating imcome/expenses deteriorated by ¥1.3 billion year on year. While
non-operating activities benefited from a decrease in cost of idle operations and theabsence of borrowing-related costs which arose from the procurement of funds througha subordinated loan recorded in the previous fiscal year, this deterioration was mainly due
to the increase in interest expenses and the posting of trial production expenses at-3-

Tokuyama Malaysia Sdn. Bhd.
As a result, ordinary income decreased 13.7%, or ¥2.0 billion compared with the previous
fiscal year, to ¥12.9 billion.
Extraordinary income/losses, Income/loss before income taxes, Income/loss
before minority interests, Net income/loss
In extraordinary income and losses, the Company recorded a gain on sales of investment
securities. However, this was more than offset by such factors as the impairment loss on
the polycrystalline silicon manufacturing facilities of Tokuyama Malaysia Sdn. Bhd. As aresult, extraordinary imcome/losses deteriorated by ¥75.8 billion compared with theprevious fiscal year.
As a result of the above, income/loss before income taxes and minority interests
deteriorated by ¥77.9 billion compared with the previous fiscal year, to a loss of ¥64.9
billion.
Income/loss before minority interests deteriorated by ¥75.8 billion compared with theprevious fiscal year, to a loss of ¥65.3 billion. After deducting minority interests, theCompany recorded a net loss of ¥65.3 billion. Consequently, net income/loss deterioratedby ¥75.5 billion compared with the previous fiscal year

[2] Operating performance by business segment(Operating results by segment)
Sales(Unit: Millions of yen)
Reportable segment
Others

Total

Adjustment

58,45751,468338,523(36,438)

302,085

78,98157,05747,281

322,262(34,931)

287,330

2.8

2.5

8.9

5.0

-

5.1

Chemicals

Specialty
Products

CementFiscal 2014

91,92755,45081,219Fiscal 2013

86,45752,483

6.3

5.7

Rate of change (%)

Figures in
consolidated
incomestatement-4-Life &
AmenityOperating income(Unit: Millions of yen)
Reportable segment
Adjustment

Figures in
consolidated
incomestatement

Others

Total

5,159

6,023

24,808(5,278)19,530

6,682

4,863

4,168

24,041(3,770)20,270(33.5)

6.1

44.5

3.2

-

(3.7)

Chemicals

Specialty
Products

Fiscal 2014

5,056

4,122

4,446

Fiscal 2013

2,235

6,090

Rate of change (%)

126.1(32.3)

CementLife &
Amenity(Note) Sales and operating income in each segment include inter-segment transactions.

ChemicalsWith regard to caustic soda, sales increased compared with the previous fiscal year. In
addition to steady domestic sales, this was attributable to our efforts to revise selling
prices in order to absorb a rise in raw materials prices.
Vinyl chloride monomers (VCM) sales were essentially unchanged from the previous
fiscal year. While domestic sales volumes declined, this was offset by an increase in thevolume of exports where selling prices continued to hover at a high level due mainly tothe impact of the weak yen.
Sales of vinyl chloride resin declined. Despite efforts to revise selling prices to accountfor the rise in raw material prices, this decline was largely attributable to market
corrections following the rush in demand in the lead up to the consumption tax rate
hike and the downturn in sales volume resulting from such factors as the slump in
housing starts.
With regard to soda ash and calcium chloride, sales increased compared with theprevious fiscal year. This was attributable to the commencement of the operation of
TOKUYAMA & CENTRAL SODA Inc.
As a result of the above, segment net sales increased 6.3% compared with the previous
fiscal year, to ¥91.9 billion and operating income increased 126.1% to ¥5.0 billion. The
segment reported higher earnings on higher sales.
-5-Specialty Products
With regard to semiconductor-grade polycrystalline silicon, sales volume increased
owing mainly to strong demand for mobile terminals including smartphones. On theother hand, with regard to solar cell-grade polycrystalline silicon, the Company’s
consolidated subsidiary Tokuyama Malaysia Sdn. Bhd. commenced shipments of solar
cell-grade polycrystalline silicon under circumstances where demand for solar panels
continued to expand. As a result of the above, sales of polycrystalline silicon increased
compared with the the previous fiscal year.
With regard to fumed silica, sales were steady, mainly of its application as a polishingmaterial for semiconductors. As a result of this, sales increased compared with theprevious fiscal year.
With regard to aluminum nitride, sales increased compared with the previous fiscal year.
This was attributable to an increase in sales volumes of such applications as heatdissipation materials used for power devices for industrial machinery and LEDs.
With regard to high-purity chemicals for electronics manufacturing, sales increased
compared with the previous fiscal year, owing to strong sales of such applications as
semiconductor and liquid crystal production.
As a result of the above, segment net sales increased 5.7% compared with the previous
fiscal year, to ¥55.4 billion, while operating income decreased 32.3% to ¥4.1 billion.
The segment reported lower earnings on higher sales.

CementIn the cement business, total sales volumes declined slightly year on year. Despite anincrease in exports mainly to Asia, which is exhibiting firm demand, this downturn was
primarily due to labor shortages in the construction industry in Japan and delays inconstruction work caused by unseasonably bad weather. On the cost front, distribution
costs increased due largely to the construction of new cement tankers.
-6-

In the recycling and environment-related business, the Company accepted a lower
volume of waste owing mainly to a drop in the volume of clinker ash production.
With regard to consolidated subsidiaries, sales increased compared with the previous
fiscal year, mainly because Hiroshima Tokuyama Ready Mixed Concrete Co., Ltd.
launched its operations.
As a result of the above, segment net sales increased 2.8% compared with the previous
fiscal year, to ¥81.2 billion, while operating income decreased 33.5% to ¥4.4 billion.
The segment reported lower earnings on higher sales.

Life & Amenity
Sales of active pharmaceutical ingredients grew owing to increased sales volumes ofgeneric drugs and other applications. As a result of this, sales increased compared withthe previous fiscal year.
Wit regard to plastic lens-related materials, sales volumes of photochromic dye materials
increased. As a result of this, sales increased compared with the previous fiscal year.
With regard to microporous film, the manufacturing facilities of Tianjin Tokuyama
Plastics Co., Ltd. commenced operations, and due to this, sales volumes of suchapplications as sanitary articles including disposable diapers increased. As a result of this,sales increased compared with the previous fiscal year.
With regard to polyolefin film, in addition to steady sales mainly of its application as
packaging material for everyday items at convenience stores, we revised selling prices toabsorb a rise in raw material prices. As a result of the above, sales increased comparedwith the previous fiscal year.
With regard to gas sensors, sales increased compared with the previous fiscal year. This
was attributable to strong overseas sales of such applications as gas alarm devices andair cleaners.
With regard to medical diagnosis systems, profitability rose compared with the previous
fiscal year. In addition to steady sales of products for blood testing, this was attributable-7-to our cost reduction efforts including in-house production.
With regard to plastic window sashes, sales decreased compared with the previous fiscal
year. This was attributable to a decrease in sales volume arising from reaction to the rush
demand before the consumption tax increase.
As a result of the above, segment net sales increased 2.5% compared with the previous
fiscal year, to ¥58.4 billion and operating income increased 6.1% to ¥5.1 billion. The
segment reported higher earnings on higher sales.

-8-<2> Outlook for fiscal 2015[1] Outlook for operating results
In fiscal 2015, the future of the global economy is expected to remain mired in a cloud of
uncertainty. Despite ongoing expectations that the U.S. economy will remain firm, thisuncertainty reflects the slowing pace of economic growth in China and delays in a positive
turnaround in Europe due to sluggish economic conditions.
In Japan, the impact of the consumption tax rate hike is anticipated to wane. Personal
consumption is expected to recover on the back of an increase in real income owing
mainly to the increase in wages. Looking at the corporate sector, trends are forecast to
improve thanks largely to corrections to the strong yen.
Against this backdrop, the Tokuyama Group will continue to steadfastly carry out its Profit
Improvement Plan while rebuilding and strengthening its profitable platform..
Based on the current information, we forecast net sales of ¥312.0 billion, an increase of
3.3% (¥9.9 billion) compared with the fiscal year under review, operating income of ¥21.0
billion, an increase of 7.5% (¥1.4 billion), ordinary income of ¥14.0 billion, up 8.4%(¥1.0 billion) and net income of ¥8.0 billion, up ¥73.3 billion.
(Unit: Millions of yen)
Net sales

Operating income

Ordinary income

Net income

Fiscal 2015

312,000

21,00014,0008,000

Fiscal 2014

302,085

19,53012,920(65,349)

3.3

7.5

8.4

-

Rate of change (%)

These forecasts are calculated based on an exchange rate of ¥115/$ and a domestic
naphtha price of ¥46,000/kl.

[2] Outlook for segment results for fiscal 2015
Chemicals
Conditions throughout the Chemicals segment are expected to remain uncertain withlittle room for complacency. This is largely attributable to sudden and dramatic changes
in raw material and fuel prices including crude oil and coal as well as the impact on sales
prices. Under these circumstances, we will work to secure earnings by rebuilding our-9-business portfolio and adhering strictly to a policy of cost reduction.

Specialty Products
Although each of the semiconductor and solar cell markets are projected to experiencefirm global demand, the polycrystalline silicon business is forecast to confront apersistently harsh operating environment due to the unresolved glut in supply. Against
this backdrop, the Tokuyama Group will endeavor to secure earnings by expanding
production and sales of solar-grade polycrystalline silicon at Tokuyama Malaysia Sdn.
Bhd. and accelerating the pace of efforts to establish a production structure forsemiconductor-grade polycrystalline silicon at Tokuyama Factory attuned to demand as
well as calls for higher quality. With regard to such products as fumed silica andaluminum nitride, where demand is strong, we will work toward increasing earnings byboosting production and expanding sales of high-value-added products.

CementWe anticipate that more time will be required to resolve delays in construction work inJapan attributable to labor shortages throughout the construction industry. Against thisbackdrop, trends in domestic demand are forecast to remain essentially unchanged.
While we are also projecting an increase in costs as a result of efforts to boost productshipping facilities and transportation capabilities, we will strive to secure earnings bythoroughly reducing overhead and other expenses.

Life & Amenity
In the domestic market, the effects of the consumption tax rate hike have begun towane. As the recovery of economic conditions spread to wider areas of the economy,
we are also anticipating growth in consumption. In contrast, there are concerns
surrounding downside economic risks overseas and especially in newly emerging
countries. Under these circumstances, we will focus on developing products that-10-

address customer needs as well as changes in market conditions. Through these means
and efforts to strengthen relationships with customers, we will endeavor to secure an
increase in earnings.

OthersThe “Others” segment includes businesses which are responsible for the Group’s
overseas sales, logistics and other functions. The segment will work to increase
Group-wide earnings by continuing to reduce costs.

-11-

(2) Analysis of Financial Position<1> Analysis of assets, liabilities and net assets
As of March 31, 2015, total assets amounted to ¥554.5 billion, a decrease of ¥21.7 billion
compared with those as of March 31, 2014. This was largely attributable to a decrease inproperty, plant and equipment resulting from the posting of a loss on the impairment ofpolycrystalline silicon manufacturing facilities of Tokuyama Malaysia Sdn. Bhd.
Total liabilities amounted to ¥385.0 billion, an increase of ¥45.2 billion compared withthose as of March 31, 2014. This was largely attributable to an increase in long-term loans
payable.
Net assets totaled ¥169.4 billion, a decrease of ¥67.0 billion compared with those as ofMarch 31, 2014. This was largely attributable to a decrease in retained earnings resulting
from the posting of the impairment loss.

<2> Analysis of cash flows(Unit: Millions of yen)
Fiscal 2013

Fiscal 2014

Cash flows from operating activities

34,10530,772

Cash flows from investing activities(64,402)(25,519)

Cash flows from financing activities

45,93940,502

Effect of exchange rate changes on cash and cash equivalents

1,485

392

Net increase (decrease) in cash and cash equivalents

17,127

46,147

Increase (decrease) in cash and cash equivalents due to changes of scope of
consolidation

414

10

Increase (decrease) in cash and cash equivalents resulting from change infiscal period of consolidated subsidiaries-(8)

Cash and cash equivalents at end of year

69,973

116,122[Cash and cash equivalents at end of previous year ][52,431][69,973]

As of March 31, 2015, cash and cash equivalents were ¥116.1 billion, an increase of ¥46.1
billion compared with those as of April 1, 2014.

-12-

(Cash flows from operating activities)
Net cash provided by operating activities totaled ¥30.7 billion, a decrease of ¥3.3 billion
compared with the previous fiscal year. Principal items included depreciation expenses of¥18.8 billion.

(Cash flows from investing activities)
Net cash used in investing activities totaled ¥25.5 billion, an inccrease of ¥38.8 billion
compared with the previous fiscal year. Major contributory factors were payments forpurchases of property, plant and equipment of ¥32.4 billion, including construction ofpolycrystalline silicon manufacturing facilities at Tokuyama Malaysia Sdn. Bhd, andproceeds from sales of investment securities of ¥16.7 billion.

(Cash flows from financing activities)
Net cash provided by financing activities amounted to ¥40.5 billion, a decrease of ¥5.4
billion compared with the previous fiscal year. This was primarily attributed to proceeds oflong-term debt of ¥84.3 billion and repayments of long-term debt of ¥41.2 billion.

(3) Basic Policy for Profit Distribution and Dividends for Fiscal 2014 and 2015
Tokuyama maintains the basic policy for profit distribution of providing continuous,
stable dividends to its shareholders while taking into consideration its performance trends
and medium- and long-term business plans.
On October 31, 2014, Tokuyama issued a press release titled “Notice concerning the
Posting of Extraordinary Loss, Revision of Performance Forecasts, Distribution of
Surplus, and the Return of Executive Compensation.” After taking into consideration thenegative impact on net assets after posting a net loss and the decision to prioritize efforts
aimed at restoring the Company’s sound financial position, after accounting for businessrisks, Tokuyama deeply regrets that it has decided to forego the payment of an interim andperiod-end dividend for the fiscal year under review. For the same reasons, Tokuyama is-13-

expecting that it will forego the payment of an interim and period-end dividend for the
fiscal year ending March 31, 2016.
Moving forward, we will do everything within our power to quickly restore our financial
platform and to secure stable profitability in a bid to resume the payment of dividends toshareholders at the earliest possible opportunity.

-14-

2. Management Policy(1) Basic Management Policy
The Tokuyama Group works diligently to increase its corporate value by adhering to astrict code of corporate ethics and ensuring thoroughgoing compliance. At the same time,
the Group has identified the basic management policy of remaining the preferred choiceof customers, while attracting wide-ranging acclaim from all stakeholders including
shareholders, customers, employees, and local communities. To this end, the TokuyamaGroup engages in corporate management that is responsive to society, and makes every
effort to fulfill its corporate social responsibility (CSR). We also acknowledge the criticalimportance of carrying out business activities that take into consideration environmental
concerns. In pursuing environmental management, we recognize that by aggressively
tackling such environmental issues as global warming and helping to solve them, we are
better positioned to promote sustainable growth and development while bolstering ourcompetitive advantage.
In particular, we have positioned our long-standing ties of trust with customers, together
with our comprehensive manufacturing capabilities as the cornerstones of efforts toincrease our corporate value. Fully aware that changes in our business environment offer
the opportunity to create new businesses, we are committed to proactive business
innovation.

(2) Medium- to Long-Term Management Strategies and Performance Targets
February 16, 2008 marked Tokuyama’s 90th founding anniversary. Toward the centennial
anniversary of its founding, which will be celebrated in February 2018, the TokuyamaGroup set out its Centennial Vision. It defines the optimum form of the Group as “aprominent manufacturer that is responsive to society and creates a better future throughthe vitality of its human resources and the creativity of chemistry.”
As a second step toward achieving its Centennial Vision, Tokuyama embarked on athree-year management plan from April 2012. Despite this endeavor, the polycrystalline-15-

silicon business, a core earnings pillar, witnessed a rapid deterioration in market conditions.
As a result, the Company put in place its Profit Improvement Plan in February 2013.
Regrettably, Tokuyama was unable to achieve the initially projected quality and stableproduction of polycrystalline silicon at the PS-1 plant of its consolidated subsidiary,
Tokuyama Malaysia Sdn. Bhd. With little chance of generating future cash flow, theCompany decided to post a substantial impairment loss, which has had a major negative
impact on net assets.
In order to break free from this negative spiral and rebuild a profitable platform, we areworking to improve the profitability of not only business divisions, but also back-office
and functional divisions. We will also push forward drastic structural reforms in a bid tostrengthen our financial position by increasing productivity. In this manner, we will work
well beyond the scope of emergency measures and endeavor to secure enduing profits as
a part of efforts to regain the trust of stakeholders. Moving forward, the TokuyamaGroup is in the process of formulating a new medium-term management plan in order torealize its Centennial Vision.

(3) Pending Issues
As economic globalization increasingly takes hold, movements in international productprices and foreign currency exchange rate markets together with economic conditions aswell as the monetary and fiscal policies of major nations are having a major impact on theeconomic activities of other countries and regions.
In Japan, a wide range of risks including market contraction attributable to the hollowing
out of industry and decline in the pool of labor, energy issues, and delays in carrying out
fiscal reform due to the decision to postpone a further increase in the consumption tax
rate are making it difficult to cast aside the growing sense of uncertainty with respect tothe future.
Under these circumstances, we have positioned efforts aimed at rebuilding our financial
platform as our utmost priority in order to reinforce the net assets damaged by-16-

Polycrystalline silicon business. On this basis, we are committed to pursuing management
reform. In order to become a robust corporate entity that boasts high profitability fromthe standpoint of its customers, we will review the way we go about our business as wellas our organizational structure and work to expand businesses that are capable ofenhancing productivity and efficiency.

<1> Management Reform Policies[1] Rebuild the financial platform
In addition to reducing corporate-wide expenses, an initiative that the Company has
continued to advance under its Profit Improvement Plan since 2013, Tokuyama will work
to thoroughly curtail fixed expenses through structural reforms across the Company as awhole.
In specific terms, we will review back-office and functional division, relocation of theTokyo head office and Osaka branch, and pursue the optimal allocation of humanresources. Energies will be directed toward streamlining the organization and reducing
costs.
In addition to cutting back personnel expenses by controlling hiring activities and reducing
executive remuneration and lump sum payments, the Company will substantially revise
overhead expenses as well as maintenance and repair costs. Steps will also be made tolower the unit prices of purchasing and distribution costs.
Building on these initiatives, the Company will adopt a more selective approach toward
research and development themes while reducing expenses through the reallocation of
personnel. Moreover, we will adhere strictly to a policy of inventory management andselective capital expenditure in a bid to increase the efficiency of assets. We willconcentrate on improving cash flow by liquidating non-business assets.
[2] Rebuild the polycrystalline silicon businessIn the manufacture of polycrystalline silicon as solar cell materials, the Tokuyama Group
continues to fall short of its initially projected levels of stable production at consolidated-17-

subsidiary Tokuyama Malaysia. Plans are in place to make the necessary facility
improvements at the time of regular plant maintenance scheduled for the second half offiscal 2015. Our goal is to lift production to full capacity and to secure a profit in fiscal
2017.
In the market for semiconductor-grade polycrystalline silicon, where demand is expected
to grow for use in mobile terminals including smartphones, we will secure production
volumes by concentrating resources in Tokuyama Factory. In addition to maximizing
profits, we will address the needs of customers.
[3] Increase profits in existing and new businesses
In the Chemicals segment, we are nurturing the liquid hydrogen business that we first set
up in June 2013. We are also working to rebuild the business through a soda ash andcalcium chloride business sales company which commenced its operations in October
2014. Tokuyama made the decision to consolidate production bases in the vinyl chloridebusiness in September 2014. Drastic measures will be taken to rebuild the production andshipping structure.
In the Cement segment, energies will be directed toward reinforcing the business forrecycling waste gypsum board while at the same time strengthening overseas businessdevelopment.
In the Specialty Products segment, in September 2014 we took steps to boost
manufacturing facilities for high purity aluminum nitride, which is enjoying a sudden
increase in demand. We are working to reduce the level of lost sales opportunities.
In the Life & Amenity segment, we are making every effort to provide solutions from ourcustomers’ perspectives. We are working to accelerate the pace of growth by developing
and proposing products that help resolve customers’ issues.

-18-

3. Consolidated Financial Statements(1) Consolidated Balance Sheets
Millions of yen
3/31/2014
3/31/2015
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Lease receivables
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Leased assets
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Net defined benefit asset
Other
Allowance for investment loss
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets-19-

27,60567,495－43,05014,131
9,896
17,878
1,068
10,635(138)
191,623

61,364
69,37130
55,053
15,456
11,60618,026
4,772
8,396
(103)
243,975

102,709(71,685)
31,024
441,874(392,062)
49,812
23,002(21,360)
1,642
32,667
2,156
(895)
1,261
206,692
323,100

137,347(74,090)
63,257546,388(401,461)
144,927
23,261(20,974)
2,286
33,149
2,135
(936)
1,199
8,511
253,331

3,608
29
6,493
10,131

5,097
44
4,641
9,784

33,334
3,473
839
7,804
6,264
(21)
(233)
51,460384,692
576,315

31,062
3,248
669
8,765
4,015
(22)
(303)
47,436
310,552
554,527

Millions of yen
3/31/2014
3/31/2015
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Commercial papers
Current portion of long-term loans payable
Current portion of bonds
Lease obligations
Income taxes payable
Deferred tax liabilities
Provision for bonuses
Provision for repairs
Provision for product warranties
Provision for loss on compensation for damage
Provision for restructuring
Provision for loss on purchase contract
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for directors' retirement benefits
Provision for repairs
Allowance for loss on compensation for building materials
Provision for environmental measures
Provision for loss on purchase contract
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets-20-

40,08912,347
4,000
8,811
－
376
1,865
1
2,056
1,429
132
－
13
－
28,17399,29740,567
12,212
3,000
25,110
5,000
340
1,318
－
1,911
1,284
132
50
－
3,183
23,186117,298

50,000164,278
953
7,338
207
2,747
842
131
－
1,112
5
12,946
240,565
339,862

45,000191,552
981
6,409
226
3,458
574
91
6,250
1,162
5
12,071
267,783
385,082

53,45857,670107,155(1,428)
216,856

53,45857,67039,286(1,434)
148,981

8,369
749
2,710
982
12,811
6,785
236,453
576,315

5,829
330
4,196
3,239
13,596
6,868
169,445554,527

(2) Consolidated Statements of Income
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Technical support fee
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Trial production expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on bargain purchase
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
State subsidy
Other
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Impairment loss
Loss on disaster
Loss on reduction of non-current assets
Loss on disposal of non-current assets
Loss on sales of investment securities
Loss on sales of shares of subsidiaries and associates
Provision for loss on purchase contract
Loss on purchase contract
Cost of compensation for building materials
Other
Total extraordinary losses
Income (loss) before income taxes and minority interests
Income taxes - current
Income taxes - deferred
Total income taxes
Income (loss) before minority interests
Minority interests in income
Net income (loss)-21-

Millions of yen
FY2013
FY2014
287,330
302,085
206,989
218,91780,34083,16735,275
24,79460,06920,27036,566
27,07063,636
19,530

45
552
519
373
432
1,143
3,067

110
629
684
312
－
1,153
2,889

2,755
－
5,617
8,372
14,965

4,756
1,577
3,165
9,499
12,920

212
－
379
－
3
96
692

73
5
10,44220
24－
10,566

84
374
120
1
1,671
1
78
－
－
336
49
2,717
12,939
2,870
(423)
2,446
10,493274
10,218876,010
383
27
420
－
8
9,433
1,489
－
692
88,473(64,986)
3,747(3,405)341(65,327)
21(65,349)

(3) Consolidated Statements of Comprehensive Income

Income (loss) before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to minority interests-22-

Millions of yen
FY2013
FY2014
10,493(65,327)816(1,488)
3,540
－
392
3,261
13,754(2,535)
(419)
1,299
2,257
189
791
(64,536)

13,265488(64,564)28

(4) Consolidated Statements of Cash Flows

Millions of yen
FY2013
FY2014

Cash flows from operating activities
Income (loss) before income taxes and minority interests
Depreciation
Increase(decrease) in allowance for loss on compensation for building
Increase (decrease) in provision for loss on purchase contract
Increase (decrease) in other provision
Increase (decrease) in net defined benefit liability
Increase(decrease) in net defined benefit asset
Interest and dividend income
Foreign exchange losses (gains)
Gain on bargain purchase
Loss (gain) on sales of property, plant and equipment
Loss (gain) on sales of investment securities
Loss (gain) on sales of shares of subsidiaries and associates
Share of (profit) loss of entities accounted for using equity method
Subsidy income
Interest expenses
Loss on reduction of non-current assets
Impairment loss
Loss (gain) on disposal of non-current assets
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries resulting in change in scope ofPayments for sales of shares of subsidiaries resulting in change in scope of
consolidation
Additional purchase of investments in consolidated subsidiaries
Payments of long-term loans receivableCollection of long-term loans receivable
Purchase of money held in trust
Proceeds from cancellation of money held in trust
Proceeds from subsidy income
Payments for transfer of business
Other, net
Net cash provided by (used in) investing activities-23-

12,93916,642
(433)
－
(260)
118
629
(598)
(78)
－
(128)
(378)
78
(519)
(3)
2,755
1
374
1,671
(484)
9,485
(1,619)710(1,290)(1,510)38,100498(2,153)(2,340)34,105(64,986)
18,845
(268)
9,433
450
79
442
(739)
1,070
(5)
(64)
(10,442)
(12)
(684)
(24)
4,756
27
76,010420(2,520)
1,136
681
1,443
808
2,689
38,546
1,189(4,732)(4,232)
30,772(37)
211(29,907)
520
(812)
984
(4,115)(34)429(32,470)
109(7,967)
16,746
－

－

(633)

－
(15)
257
(34,300)
3,492
3
－
(682)
(64,402)

(23)
(20)
244
－
－
2,659
(3,750)(810)(25,519)

Millions of yen
FY2013
FY2014
Cash flows from financing activities
Increase (decrease) in short-term loans payable
Increase (decrease) in commercial papers
Proceeds from long-term loans payable
Repayments of long-term loans payable
Cash dividends paid
Cash dividends paid to minority shareholders
Decrease (increase) in treasury shares
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting from change ofscope of consolidation
Increase (decrease) in cash and cash equivalents resulting from change infiscal period of consolidated subsidiaries
Cash and cash equivalents at end of period

-24-

2,668
－
68,829(22,623)(2,080)
(397)
(97)
(359)
45,9391,485
17,12752,431(5)(1,000)84,311(41,286)(1,043)
(437)
(75)
40
40,502392
46,147
69,973

414

10

－

(8)

69,973

116,122

(5)Segment information
1. Summary of reportable segments
The reportable segments of the Touyama Group are defined as individual units, where separate financial information
is available and which are subject to regular review by the Board of Directors of the Company to evaluate theirresults and decide the allocation of management resources.
The Company has business divisions by product group, and the Tokuyama Group conducts business operations
through each business division devising its comprehensive product strategy for domestic and overseas markets.
The Tokuyama Group is, therefore, composed of segments by product group based on business divisions, and has
four reportable segments, “Chemicals,” “Specialty Products,” “Cement,” and “Life & Amenity.”
Main products and services of each reportable segment are as follows:

Reportable segment
Chemicals

Main products and services
Caustic soda, soda ash, calcium chloride, sodium silicate, vinyl chloride monomer,
polyvinyl chloride resin, propylene oxide, isopropyl alcohol and methylene chloride

Specialty Products

Polycrystalline silicon, fumed silica, aluminum nitride, metal washing solvent, high-purity
chemicals for electronics manufacturing, and environment-related equipment

CementOrdinary Portland cement, high early-strength Portland cement, Portland blast-furnace slag
cement, ready-mixed concrete, cement-type stabilizer and waste treatment

Life & Amenity

Polyolefin film, plastic window sashes, medical diagnosis systems, dental materials andequipment, gas sensors, ion exchange membranes, pharmaceutical ingredients andintermediates, plastic lens-related materials for glasses, and microporous film-25-

2. Information on sales, income (loss), assets and other items by reportable segment
Fiscal 2013 (April 1, 2013 – March 31, 2014)(Millions of yen)
Reportable segments

Sales
Sales to customers
Inter-segment sales/transfer
Total
Segment income
Segment assets
Other items
Depreciation expenses
Increase in tangible and intangible
fixed assets

Chemicals

Specialty
Products

85,385
1,071
86,4572,235
55,421

41,89010,59352,483
6,090
256,736

78,814
166
78,981
6,682
58,058

2,967
1,142

1,676
53,871

2,776
2,824

CementAdjustment*2

Figures in
consolidated
financialstatements*3

287,330
34,931
322,262
24,041
449,724(34,931)(34,931)(3,770)126,590

287,330
287,330
20,270576,315

10,774
61,386

5,868
117

16,642
61,503

Others*1

Total55,552
1,505
57,057
4,863
51,13325,687
21,59447,281
4,168
28,374

2,005
2,309

1,349
1,239

Life &
Amenity*1 “Others” segment comprises businesses other than those of the reportable segments. Concretely, the segment includes
overseas sales companies, a distribution company, a real estate business, etc.
*2 Adjustment is as follows:(1) The segment income adjustment amount consists mainly of basic R&D expenses that are not related to specificreportable segments.
(2) Included in the segment assets adjustment amount are corporate assets that are not allocated to specific reportablesegments (¥145,249 million).
*3 With regard to segment income, operating income in the consolidated financial statements has been calculated byadjusting the sum total of the reportable segments’ income and the “Others” segment’s income.

Fiscal 2014 (April 1, 2014 – March 31, 2015)(Millions of yen)
Reportable segments

Sales
Sales to customers
Inter-segment sales/transfer
Total
Segment income
Segment assets
Other items
Depreciation expenses*4
Increase in tangible and intangible
fixed assets*4

Chemicals

Specialty
Products

91,122805
91,927
5,056
55,78543,787
11,66355,4504,122
194,868

81,100118
81,2194,446
60,770

2,706
2,054

4,314
17,456

2,841
3,734

CementAdjustment*2

Figures in
consolidated
financialstatements*3

Others*1

Total

56,683
1,774
58,457
5,159
51,35229,391
22,076
51,4686,023
28,260302,085
36,438338,523
24,808391,037(36,438)(36,438)(5,278)
163,490

302,085
302,085
19,530554,527

2,341
1,693

1,447
1,085

13,65026,023

5,194
239

18,84526,262

Life &
Amenity*1 “Others” segment comprises businesses other than those of the reportable segments. Concretely, the segment includes
overseas sales companies, a distribution company, a real estate business, etc.
*2 Adjustment is as follows:(1) The segment income adjustment amount consists mainly of basic R&D expenses that are not related to specificreportable segments.
(2) Included in the segment assets adjustment amount are corporate assets that are not allocated to specific reportablesegments (¥190,190 million).
*3 With regard to segment income, operating income in the consolidated financial statements has been calculated byadjusting the sum total of the reportable segments’ income and the “Others” segment’s income.
*4 Long-term preaid expenses are included.

-26-