Toho Titanium Co., Ltd. Annual Report 2008

3-3-5 Chigasaki, Chigasaki City
Kanagawa 253-8510, Japan
www.toho-titanium.co.jp

Printed in JapanTHE POTENTIAL OF TITANIUM
Annual Report 2008
Year ended March 31, 2008

Corporate Data and Stock Information
As of March 31, 2008

Corporate Data
Company Name

Toho Titanium Company, Limited

Number of Consolidated Subsidiaries

4

Founded

September, 1948

Paid-in Capital¥4,813 million

Affiliates Not Accounted forby the Equity Method

13-3-5, Chigasaki, Chigasaki City

Number of Employees (Consolidated)

799

Headquarters

Kanagawa 253-8510, Japan

Management Philosophy and Mission

Telephone+81-467-82-2915

Fiscal Year-End

March 31

The Toho Titanium Group pursues titanium’s unlimited potential as an earth-friendly
material, and contributes to the world by developing, manufacturing, and supplying
products based on titanium.

Web Address
http://www.toho-titanium.co.jp (Japanese)
http://www.toho-titanium.co.jp/en/ (English)

We build harmonious, mutually beneficial relationships with our customers and partners
by respecting their positions with sincerity.
We nurture the talents of our employees as each employee aims for self-actualization while
sharing common goals.
We contribute to the global environment and local communities with sincerity and humility.

Stock Information
Stock Registry

Composition of Issued Shares by Type of Shareholder

First Section of the Tokyo Stock Exchange

We will enhance Toho Titanium’s corporate value by realizing the above.



Number of Shares

Environmental Policy
We will manufacture and supply environment-friendly products based on titanium,
while striving to minimize the environmental impact of our operations.
We will reduce CO2 emissions and waste materials by improving manufacturing efficiency.
We will strictly observe applicable environmental laws, regulations, and standards.
We will maintain and pursue continual improvement in our Environmental Management System.

Authorized'PSFJHO*OTUJUVUJPOTBOE*OEJWJEVBMT'JOBODJBM*OTUJUVUJPOT

51,687  
TIBSFT

Major Shareholders


		
		
Name

Number ofshares held
(thousands)

Percentage of
total shares issued

NIPPON MINING HOLDINGS, INC.

25,80142.46%

Nippon Steel Corporation

3,000

4.94

MITSUI & CO., LTD.

2,016

3.32

Quality Policy

Japan Trustee Services Bank, Ltd. (Trust Account)

600

0.99

We will provide our customers the best satisfaction by promoting technical innovation,

The Master Trust Bank of Japan, Ltd. (Trust Account)

466

0.77

Goldman Sachs and Company Regular Account

419

0.69

Bank of New York GCM Client Account

354

0.58

and by stably manufacturing and supplying attractive products based on titanium.

'JOBODJBM*OTUSVNFOU'JSNT

60,770,910 shares

Number of Shareholders

We will identify customer needs and provide products that meet those needs.

Japan Trustee Services Bank, Ltd. (Trust Account 4)

339

0.56

We will strictly observe applicable laws, regulations, and standards concerning our products.

Morgan Stanley Japan Securities Co., Ltd.

262

0.43

We will pursue continual improvement in our Quality Management System.

Mitsubishi UFJ Trust and Banking Corporation(Trust Account)

247

0.41



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Composition of Shareholders
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49

THE POTENTIAL OF TITANIUM
THE POTENTIAL OF TOHO TITANIUM
Titanium contains an unlimited amount of potential, boasting an incredible array of
excellent properties—it is strong, light and does not corrode or rust. Not only that, but
deposits of titanium ore in the earth’s crust are said to be inexhaustible.
Titanium’s applications are extremely diverse. It is used in the cutting-edge aerospaceindustry, in chemical engineering equipment, electrical power generation plants, in construction materials and in sports equipment, such as golf clubs. Recently, titanium has
also begun to be used in the manufacture of artificial bones, having been recognized asa material that is ideal for use in medical-related products thanks to its compatibility
with the human body. Despite its present status, titanium has a relatively brief history
in terms of human use. It was discovered only around 200 years ago, and commercial
production commenced just 60 years ago. As a material, the history of titanium has
only just reached the end of its opening chapter—its evolution has only just begun.
Toho Titanium is one of the world’s leading comprehensive manufacturers of titanium.
We are a pioneer in pursuing the potential of titanium and are committed to opening
up new, unlimited possibilities for the future as a leader in the titanium world.

Contents
A Message to our Shareholders

4

Consolidated Financial Highlights

8

The New World of Titanium

10

At a Glance

16

Segment Review

18

Merger of Subsidiary and Organizational Change/Research and Development (R&D) 22
Corporate Governance23

Corporate Social Responsibility (CSR)

24

Board of Directors/Auditors/Executive Officers

25Management’s Discussion and Analysis

26

Risk Factors

28

Financial and Corporate Data

29

FORWARD-LOOKING STATEMENTS• This material includes Toho Titanium’s future plans, strategies, earning forecast, and outlook.
• Information in this material includes not only facts that have occurred, but also forecasts and assumptions basedon available information as of the date this material was prepared.
• This also includes unlimited risks and uncertainties related to the economic condition, fierce competition in theindustry, market demand, foreign exchange rate, tax system and other regulations.
• Hence please note that actual results may differ from our forecasts described in this material.

TITANIUM SPONGE
Toho Titanium manufactures titanium sponge from titanium tetrachloride basedon the magnesium reduction method—or Kroll process—while also utilizing its
own proprietary technologies. These processes enable the Company to produce
very high-quality titanium sponge. Despite its status as the metal ore with theworld’s fourth-highest amount of reserves, titanium is recognized as a rare
metal owing to the value of this smelting technology.

TITANIUM INGOTS
Titanium ingot produced by Toho Titanium is used by a wide range of customers,
particularly centering on domestic manufacturers of titanium mill products.
Titanium ingots are usually categorized into two kinds, commercially pure (CP)titanium and titanium alloys, such as Ti-6Al-4V. This dream material opens
the door to a world of endless possibilities and is used across a broad array offields, including in the manufacture of jet engines.

A Message to our Shareholders

ChairmanKazuharu NogamiRepresentative Director and President

Takeshi Kurushima

From this year, Toho Titanium will be publishingan annual report. We hope that this report willserve as an effective and candid means of informing our shareholders and other stakeholders of
the Company’s current position and future goals.
In the year ended March 31, 2008, net sales

increased 17.9% compared with the previous
fiscal year, to ¥44.9 billion. Operating income
grew 25.7%, to ¥13.8 billion, and net income
increased 24.8%, to ¥7.8 billion. This marks fiveconsecutive fiscal years in which both net sales
and net income have exceeded the previous
year’s levels. Net sales and net income in theyear ended March 31, 2008 are both also thehighest such figures in the Company’s history.
These results are primarily due to the fact that
there were no serious accidents, and nearly all
divisions operated at their full capacities. We
would like to thank everyone, including our
employees, whose efforts contributed to thesesolid results.
Annual global titanium sponge shipment for“The new facilities have room for the addition of extra
capability in the future, which provides a solid platform
which to meet new demand growth in response tomarket conditions.”

mill products was estimated to have fallen to
62,000 tons in 2002, the year following the
September 11, 2001 terrorist attacks. However, it began growing

Each of the new facilities has room for the addition of extra capac-

steadily again from the second half of 2003, and in 2007 it reached

ity in the future, which provides a solid platform from which to135,000 tons. Over that five-year period, the compound annual

meet new demand growth in response to market conditions.

growth rate (CAGR) for titanium mill product shipments was

We have installed a large-scale electron beam (EB) furnace atapproximately 17%. In the year ended March 31, 2003, the Compa-

the new titanium ingot plant, which is suitable for the melting

ny’s production volume of titanium sponge was 9,258 tons, but byof titanium scrap. Using this plant, we are confident that we canthe year ended March 31, 2008 that figure had risen to 14,176 tons.

greatly enhance the system for titanium recycling in Japan.

During the period, with incremental expansions in production
capacity, the Company’s Chigasaki Plant has added a total of 4,000

Titanium’s history as a metal used by human society is very shorttons per year, bringing current annual capacity to 16,000 tons.

indeed, just 60 years. Titanium possesses many excellent proper-

However, we recognized that to enable us to respond to further

ties—it is strong, light and does not corrode or rust. For these

medium-term growth in demand, we would need to build a new

characteristics, demand for titanium from the aircraft industry andplant. Based on this judgment, we embarked on the construction ofgeneral industrial applications is expected to grow substantially.

two new plants, one each for titanium sponge and titanium ingot.

At present, one of the most pressing issues facing the aircraft

Both new plants are located in Kitakyushu, Fukuoka Prefecture.

manufacturing industry is how to increase fuel efficiency by making

The new titanium ingot plant was the first of the two projects to belighter aircraft. To meet this objective, a materials revolution iscommissioned, with construction commencing in July 2006, andcurrently under way, with a remarkable transformation taking placecommercial operations launched in April 2008. We started on thewhereby aluminum alloys are being replaced by titanium alloys andnew titanium sponge plant in November 2007, and construction

carbon fiber composite materials. Titanium alloys have low thermal

is currently progressing smoothly, with operations scheduled to

expansion coefficients and extremely high corrosion resistance,

begin in December 2009. When both plants are fully operational,

giving them excellent compatibility with carbon fiber. For these

the Company’s annual production capacity for titanium sponge willreasons, titanium alloys are used in large quantities in the mostbe 28,000 tons and titanium ingot capacity will be 19,000 tons.

advanced aircraft designs.
Even when exposed to seawater, titanium is
resistant to rust or corrosion. This unique characteristic means that titanium is often chosen as amaterial for desalination plants, liquefied naturalgas (LNG) plants, nuclear power plants, and a wide
range of other applications. As the earth’s environment becomes harsher, the construction of suchplants is likely to become more common aroundthe world. The environmental lifecycle cost oftitanium tends to be very favorable compared withother materials owing to titanium’s high durability
and long lifespan. Hence, titanium is seen as ametal that can contribute to environmental
sustainability.
The Company’s increase in titanium sponge

capacity is in line with expectation from prominenttitanium users to satisfy the growing demand. It“We aim to build our position to become the world’s

will also help reinforce long-term relationship withleading titanium producer.”customers seeking a reliable and stable supplier oftitanium sponge, especially the quality of whichshould meet strict specification for aircraft industries. We are alsohigh level of functions from our products. To respond to such needs,

strengthening our relationship with domestic manufacturers of

it is crucial that we work strenuously to provide highly functional

titanium mill products. Through these strategies, we aim to solidify

products in a timely manner. By doing so, we will win the trust andour business base and achieve enhanced earnings stability.

confidence of our customers. Through the organizational integra-

In the area of high-purity titanium, the principal application istion implemented on this occasion, we aim to further enhance thesputtering targets for semiconductors. We anticipate increasing

unique technologies held by the catalyst and electronic materials

demand driven by the personal computer (PC) and digital consumer

businesses, and realize technical and marketing synergies that will

electronics sectors. In response, we are implementing measures toenable us to expand the business as a whole.

increase our production of high-purity titanium.

The Company and its partners have been conducting a joint

Toho Technical Service Co., Ltd. (Toho Tech), is a consolidated

project to study the feasibility of mass-production technology for

subsidiary of the Company, which manufactures and markets

the manufacture of polysilicon used in photovoltaic (PV) cells. Ourfabricated titanium products. Toho Tech fulfills an important role inpartners in this venture are Chisso Corporation and Nippon Mining

the Group by developing new titanium product applications, and its

Holdings, Inc.—Toho Titanium’s parent company. Based on thework involves not only commercially pure titanium but also aggres-results achieved so far, we have decided to establish a new joint

sive development in the area of titanium alloys.

venture company to manufacture and market polysilicon. For thisThe chemical and electrical properties of titanium are also

mass-production technology base, we are applying the titanium

extremely impressive. This gives titanium very high utility as ametal manufacturing technologies that we have accumulated overcatalyst and as an electronic material. In April 2008, we merged

the many years. Through this mass-production technology, we willconsolidated subsidiary Toho Catalyst Co., Ltd., back into the

strive to realize an efficient production system for polysilicon. We

Company. Toho Catalyst had been responsible for the operation ofhope that this will enable us to contribute to the rapidly expanding

the catalyst business segment, which we have integrated with the

PV market.

electronic materials business segment to form the Catalysts &Chemicals Division. Both catalysts and electronic materials areWith regard to the outlook for the year ending March 31, 2009, webusinesses that provide customers with specific functions. By

anticipate increasing downward pressure on operating margins asutilizing Toho Titanium’s products, its customers are striving to

the Japanese yen appreciates against other currencies and theenhance their own competitiveness and successfully grow theircosts of many raw materials rise. In addition, the Company mustbusinesses. Consequently, these customers demand an extremely

absorb expenses associated with the construction of its new5JUBOJVN4QPOHF1SPEVDUJPO$BQBDJUZ&YQBOTJPO1MBO':

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manufacturing plants in Kitakyushu. As a result, we are forecasting
net sales amounting to ¥48.2 billion, operating income totaling¥10.5 billion and net income amounting to ¥6.4 billion. This is anincrease in net sales but a fall in net income. We project a fullJuly 2008

contribution from the new titanium sponge plant in the year ending
March 31, 2012, after it reaches full-scale operations. We hope that
our shareholders will recognize the intervening period as a time inwhich we are building a solid platform for significant future growth.
Although we are continuing our large-scale investments in theconstruction of new manufacturing facilities, we will maintain adividend payout ratio of at least 20.0% during this time.
Toho Titanium is committed to making a contribution to society

ChairmanKazuharu Nogami

as a company specializing in the titanium field. To do this, we willcontinue to provide the market with titanium metal, catalysts,
electronic materials, and other related products. We are also very
enthusiastic about nurturing titanium to become one of the world’s
most sought-after materials. While a large base resource oftitanium ore exists, and it is still regarded as a rare metal, andRepresentative Director and President

Takeshi Kurushima

as such a special smelting process is required. By completing theconstruction of the world’s most efficient titanium production
facilities, we aim to build our position to become the world’s
leading titanium producer.
Consolidated Financial Highlights
Toho Titanium Company, Limited and Subsidiaries		% Increase(Decrease)

Millions of yen unless stated otherwise

Years ended March 31
For the fiscal year:
Net sales		
By segment
			Titanium metal
			Catalyst
			Electronic materials
			Diamond tools*2
			
Other
Gross profit		
Selling, general administrative expenses
Operating income
By segment
			Titanium metal
			Catalyst
			Electronic materials
			Diamond tools*2
			
Other
			
Corporate (Elimination)
Ordinary income
Net income		
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Cash and cash equivalents at end of year
Capital expenditures
Depreciation
R&D expenses

Thousands of
U.S. dollars*1

fy20032004

fy20042005

fy20052006

fy20062007

fy2007
2008¥22,125¥26,066¥31,706¥38,099¥44,90517.9%$448,196

10,591
15,114
4,055
4,255
2,893
2,387	
3,272
3,269
1,311
1,038
6,415	7,150
4,149
4,522
2,265
2,628

23,311
4,747	
2,372
—
1,275
12,966
3,986
8,980

28,565
5,462
2,562
—
1,508
15,672
4,729
10,943

34,480
5,744
3,041
—
1,637	
19,376
5,624

20.7	
5.2
18.7	
—
8.5
23.6
18.9
25.7	

344,146
57,33130,352—
16,339193,394
56,131
137,263

1,019
1,802
1,116
985
463
271
441
340
100	79
(876)
(851)
1,813
2,480
974
1,876
3,827	
6,147	
(1,340)868(2,616)(5,470)
645
2,186
913
2,051
2,158
2,034
1,084
1,184

8,404
1,494
149
—
104
(1,173)
8,948
5,124
8,696
(2,848)(5,425)2,610
2,907	
1,976
1,207	

10,16913,793
1,625
1,923
354
86
—
—
177	
106
(1,383)(2,157)
10,831
13,3126,235	7,783
5,961
9,335
(4,984)(15,624)(1,523)
4,560
2,063
334
5,880
15,393
1,984
2,607	
1,334
1,811

35.6
137,668
18.4
19,197(75.6)
859——(40.0)
1,064—(21,529)22.9
132,868
24.8	77,687
56.6
93,171—(155,948)—
45,516(83.8)
3,335
161.7	
137,263
31.4
26,02135.8
18,085

13,752fy2007 / fy2006 fy2007
2008 / 2007
2008

At fiscal year-end:
Total assets		
Net assets		

¥34,974
18,003¥31,868
19,603¥35,616
24,525¥41,076
29,980¥54,517	
35,241

32.7%
17.5$544,141351,741

Per share*3:
Net income (yen/U.S. dollars)
Net assets (yen/U.S. dollars)
Cash dividends (yen/U.S. dollars)¥ 31.5592.5
7.5¥ 60.9645.2
10.0¥ 83.3403.1
15.0¥102.7	
493.0
25.0¥128.3
579.6
28.0

24.8%
17.6
12.0

$1.3
5.8
0.3

8.2
9.5
5.1	7.4
5.5
10.0
23.8
16.4

28.2
26.5
23.2
18.0

28.4
28.2
22.9
24.3

9,285
13,125
6,135	7,655

14,042
8,843

Other data:
ROS (%)		
ROA (%)		
ROE (%)		
Dividends payout ratio (%)
Titanium sponge production (tons)
Titanium ingot production (tons)

7,135
4,427	

29.6		
27.9		
23.9		
21.8
14,176
9,264

1.0%
4.8

*1 Yen amounts have been translated into U.S. dollars solely for convenience at the rate of ¥100.19 = US$1, the approximate exchange rate at March 31, 2008.
*2 As of March 31, 2005, all of the issued shares of the consolidated subsidiary handling diamond tools had been transferred.
*3 In the fiscal year ended March 31, 2006, the Company implemented 2-for-1 stock split.

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The New World of Titanium
In the Aircraft Industry

The aircraft industry accounts for approximately half of global

in titanium usage is that light carbon fiber composite materials aretitanium demand

utilized extensively in fuselage and wing structural components.

Commercial and military aircraft comprise approximately half ofTitanium’s excellent compatibility with carbon fiber composite

global titanium demand. Owing to its high strength-to-weight ratio,materials offers significant advantages. For example, when tita-

since the 1960s titanium has been used in large quantities mainly

nium and carbon fiber composite materials are used together,as a material for the manufacture of jet engines. It is also used incorrosion due to difference in electrical potential is unlikely toaircraft bodies, in such applications as landing gear, leading-edge

occur, and the risk of distortion is eliminated since the materials

components and bolts.

have very similar coefficients of thermal expansion.

Importance of titanium in the most advanced aircraft designs

Demand for titanium underpinned by greater use in new

To increase fuel efficiency, aircraft bodies are being made lighter.

aircraft models

In particular, the latest commercial airliner models, such as theIndustry forecasts show that deliveries of new commercial airliners

Boeing 787 and the Airbus 380, use approximately four times theare set to increase significantly over the medium term. Based onamount of titanium per aircraft compared with such conventional

the factors outlined above, demand for titanium in the aircraftairliners as the Boeing 747. The main reason for this large increaseindustry is anticipated to grow over the medium- to long-term.

10Space Shuttle

Airbus A380

Jet Engine

Amount of Titanium Used by Aircraft Model

Jet Engine

Number of Airplanes Needed for the Next 20 Years

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Source: Boeing

11The New World of Titanium
In General Industries

New industrial applications opened up by titanium

Titanium—an environment-friendly material

In general industries also, many applications take advantage ofIn an era where products with environmental advantages aretitanium’s characteristics of strength and corrosion resistance. For

attracting increasing attention, titanium is being utilized in a grow-example, titanium is used widely in industrial plants, including

ing range of fields thanks to its superior functional characteristics.

seawater desalination plants and nuclear power plants, and is alsoThis trend is evident in many general industries across various

used in many offshore and marine applications.

types of plants. Titanium plays a key role in such applications as
desalination plants, LNG plants, bridges and other coastal struc-

Forecast increase in the number of nuclear power plants
In particular, in the nuclear power field the number of plants oper-tures thanks to its superior corrosion resistance.
In addition, owing to the semi-permanent nature of titanium’s life-

ating globally is forecast to nearly double over the long term, fromcycle, we believe that it will move further into favor as an environ-the current level of 440 to approximately 800 plants.

ment-friendly material.

12Desalination Plant

Trans-Tokyo Bay Highway
Support Beam

Heat Exchanger

General Industry

Nuclear Power Plants

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OPX GVUVSFVOEFSDPOTUSVDUJPO QMBOVOEFSDPOUFNQMBUJPO

Source: World Nuclear Association (WNA)

13

The New World of Titanium
In Consumer Product Fields

A growing base of titanium products

compatibility with the human body and the very low incidence ofIn recent years, the number of consumer product applications ofmetal allergy caused by titanium.

titanium has grown considerably. In addition to sports goods andfashion and leisure products, titanium applications are being

Construction materials (Roof materials)

increasingly developed in such fields as medicine and construction.

Titanium’s lightness and corrosion resistance mean it has a long
lifecycle, while its unique aesthetic properties make it particularlySports goods

suited as a roof material for Japanese-style architecture. Titanium is

The lightweight strength of titanium is leading to a revolution inalso used as an exterior material in many large buildings and has

sports equipment. Golf clubs and tennis rackets are two areas thatgained a superior reputation as a new construction material.

have seen significant advances driven by titanium, and this is now
being applied to many other sports.

Achieving product differentiation through the use of titanium
Such attributes as lightness and biocompatibility make titanium a highly

Medical and dental applications

prized material. Eyeglasses, watches, jewelry and camera bodies are

Titanium is used extensively in artificial bones and joints as well as

just a few of the products in which it is used. Many new applications aredental implants. This reflects the significant advantages titanium

being developed for titanium all the time, and for many of these, titanium

possesses compared with other metals, including excellent bio-is a key means of achieving product differentiation in the marketplace.

14

Hotel Marques de Riscal (Spain)

Kyushu National Museum

Hozomon of Sensoji Temple

Lightweight
Titanium’s specific gravity (4.5) is 60% of steel’s andhalf that of copper’s.
Water
Aluminum
Titanium
Ordinary Steel
Copper

1.0
2.7
4.5
7.9
8.9

Watch

Golf ClubHigh Specific Strength
Titanium is roughly 6 times as strong as aluminum, andtwice as strong as steel (per weight).
High Corrosion ResistanceIn sea water, titanium’s high corrosion resistance is on a parwith that of platinum and superior to that of other metals.

Artificial Joint

Digital Camera15

At a Glance
Toho Titanium’s business comprises the

5*5"/*6.03&

following segments. Each business segment is

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classified according to the products pro­duced
and technologies used, which are derived fromthe titanium manufacturing process.
An overview of the operational flow fromtitanium ore through to end products, alongwith the basis of our business segmentclassification, is presented in the chart on theright. Titanium ore is initially refined intotitanium tetrachloride, which is then manufactured into titanium sponge, high-purity
titanium and catalysts used in producing
polypropylene. Toho Titanium is making
significant progress in unlocking the unlimited
potential of titanium based on technologies it
has nurtured and developed through thetitanium refining process and the manufactureof titanium products.

Titanium Metal Business Segment

Catalyst Business Segment$PNQPTJUJPOPGOFUTBMFT$PNQPTJUJPOPGOFUTBMFT

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titanium sponge and titanium ingot.

This segment supplies our branded THC® catalyst used in the productionof polypropylene. The Group holds a global market share of approximately
13% for propylene polymerization catalysts.

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CJMMJPOCJMMJPOThis segment handles such products as high-purity titanium dioxide andultra-fine nickel powder, which are used in such leading-edge fields asadvanced electronic components. Toho Titanium’s fine-powder manufacturing technology has built a strong reputation within the electronics industry.

Utilizing the technical capabilities we have cultivated in the analysis andevaluation of titanium products, we undertake environmental analysis insuch areas as wastewater, waste gas and soil.

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17

Segment Review
Titanium Metal Business Segment
The titanium metal business segment comprises the manufactureof titanium sponge, titanium ingot, high-purity titanium, fabricatedTitanium Oretitanium products, and related products.
Demand for titanium metal has been driven in recent years by
rapid expansion in demand for titanium used in aircraft. In addition
to this, demand has also been robust from such general industrial
fields as chemical plants, desalination plants, and in the consumer
product area. Sales by the titanium metal business segment grew
20.7% compared with the previous fiscal year, to ¥34.5 billion, andoperating income increased 35.6%, to ¥13.8 billion.
Titanium sponge
The Company strove to ensure a stable supply of titanium sponge
by increasing annual production capacity at its Chigasaki Plant
from 15,000 tons to 16,000 tons. The volume of titanium sponge
produced during the fiscal year under review was 14,176 tons,
which was slightly higher compared with the previous fiscal year.
Titanium sponge may be classified into two categories—that
used for titanium mill products and that used as an additive in the
manufacture of steel products. Compared with the previous fiscal
period, the volume of titanium sponge sold for titanium mill prod­
ucts decreased, but the price increased. In contrast, the volume ofti­tanium sponge sold for use as an additive in steel products was flat,but the price fell. As a result, overall titanium sponge sales declined.
The volume of titanium sponge sold during the fiscal year underreview was 5,407 tons, a decrease of 8.1% compared with theprevious fiscal period. Sales of titanium sponge declined 13.0%,
to ¥8.3 billion.
Titanium ingot

Titanium Sponge

Sales of titanium ingot increased 36.3%, to ¥16.8 billion. Demand
from such general industries as chemical plants and desalination
plants remained robust, as did demand relating to consumer
products. The main driver for sales growth was increased volume
demand from domestic manufacturers of titanium mill products.
An improvement in price also contributed to sales growth.
The volume of titanium ingot sold during the fiscal year underreview was 9,132 tons, an increase of 7.0% compared with theprevious fiscal period. This total included 363 tons that usedrecycled materials.
Other
Sales of high-purity titanium jumped 54.9%, to ¥3.0 billion,
primarily due to sales expansion of high-purity titanium for use
in semiconductor sputtering targets. Sales of fabricated titanium
products also reflected strong domestic demand, increasing 34.8%,
to ¥5.4 billion. Other sales, including titanium tetrachloride, grew
32.8%, to ¥921 million.

18

Titanium Ingots

Increase in titanium production capacity
Toho Titanium forecasts annual growth in the titanium market of 5%–10% in the foreseeable
future. To cater to future increases in demand for titanium, the Company has embarked on
projects to greatly expand its production capacity and enhance production efficiency, including the construction of new manufacturing plants for titanium sponge and titanium ingot.
Current Construction at the
Wakamatsu Plant Site

Yahata Plant

XBLBNBUTVQMBOUXBLBNBUTVQMBOUZBIBUBQMBOU

Wakamatsu Plant: Titanium sponge

Yahata Plant: Titanium ingot

Construction of the Wakamatsu Plant in Fukuoka Prefecture

The Yahata Plant in Fukuoka Prefecture began construction incommenced in November 2007 and is expected to be completed inJuly 2006, was completed and started commercial operations inAugust 2009. Commercial operations are scheduled to begin at theZBIBUBQMBOU
new plant in December 2009. In bringing on line the Wakamatsu

April 2008. The new plant greatly bolsters the Company’s annual

Plant, the Company’s annual production capacity for titanium

tons. We are also considering future expansion plans for an

sponge will grow substantially, from 16,000 tons to 28,000 tons.

additional 10,000 tons of titanium ingot annual production capacity.

Our future expansion plans call for an additional 12,000 tons oftitanium sponge annual production capacity.
At the Wakamatsu Plant, we will be utilizing facilities and equipment that have high productivity and achieve significant energy

production capacity for titanium ingot from 9,000 tons to 19,000

The Yahata Plant is equipped with a large electron beam (EB)furnace, making it one of the world’s largest titanium ingot manufacturing facilities. This furnace will also be a crucial asset inbolstering the titanium recycling system.

savings. The plant will also feature a layout optimized for efficiency
among each of the manufacturing processes.

19

Catalyst Business Segment
The main product of the catalyst business segment is Toho
High-efficiency Catalyst (THC)®, a catalyst used for propylene

THC propylene polymerization catalyst

polymerization.

The THC catalyst is a magnesium–titanium type of high-­performance

In the fiscal year under review, sales by the catalyst businesscatalyst used in the manufacture of polypropylene. Polypropylene

segment increased 5.2% compared with the previous fiscal year,

is used in a wide range of everyday products, including householdto ¥5.7 billion. This reflected strong growth in the polypropylene

products, auto­mobile interior and exterior components, electricalmarket as the Company’s aggressive marketing efforts led to anincrease in the volume of THCs sold. Within these activities, weappliances and packaging materials.

continued to provide technical services to meet the needs ofeach customer and strove to enhance customer satisfaction by
responding rapidly to requests. Operating income for the segment
increased 18.4%, to ¥1.9 billion.
The No. 2 Plant at the Company’s Kurobe Plant, which was addedin the previous fiscal year, commenced commercial operations in
April 2007.

Electronic Materials Business Segment
The electronic materials business segment mainly comprises
the manufacture of high-purity titanium dioxide, ultra-fine nickel
powder and other materials used in electronic components.
In the fiscal year under review, robust demand for electronic
components—the main application for products from this segment—contributed to an 18.7% increase in sales, to ¥3.0 billion.
However, the operating environment remained harsh, as the priceof nickel, a key base material, continued to rise. Consequently, wewere unable to pass on the full cost increase from raw materials
through higher product prices, leading to a 75.6% decline inoperating income, to ¥86 million.
Ultra-fine nickel powder
Ultra-fine nickel powder is a spherical powder produced using a
gas-phase reaction. As electronic components become increasingly compact, ultra-fine nickel powder is being used in such applications as the internal electrodes of multi-layer ceramic capacitors(MLCC), reflecting an increase in the number of layers used.

Other Business Segment
The other business segment includes environmental analysis andother products. Sales by this segment account for 3.6% of net sales
and 0.7% of total operating income.

20

High-purity Titanium Dioxide

Sales by Segment/ProductTitanium Metal Business (Millions of yen)				

fy2007

Share of total

fy2006

Increase/decrease

Titanium sponge		Titanium ingot		High-purity titanium
Fabricated titanium products
Others			
Subtotal			¥ 8,34418.6 %
16,845
37.5
3,009
6.7	
5,359
11.9
921
2.1
¥ 34,480	76.8 %¥ 9,592
12,359
1,942
3,976
693
¥ 28,565(13.0)%
36.3
54.9
34.8
32.8
20.7 %

Increase/decrease

Catalyst Business (Millions of yen)				

fy2007

Share of total

fy2006

THC (propylene polymerization catalyst), etc.

¥ 5,74412.8 %¥ 5,462				

fy2007

Share of total

High-purity titanium dioxide
Ultra-fine nickel powder
Others			
Subtotal			

¥

5.2 %

Electronic Materials Business (Millions of yen)
886
1,558
597	
¥ 3,041

2.0 %
3.5
1.3
6.8 %

fy2006

Increase/decrease¥932(4.9)%
1,286
21.1
342	74.3¥ 2,56218.7 %

Other Business (Millions of yen)				

fy2007

Environmental analysis, etc.

¥ 1,637	

Share of total

fy2006

3.6 %¥ 1,508

Increase/decrease

8.5 %Total (Millions of yen)				

fy2007

Share of total

fy2006

Increase/decrease

Total				¥ 44,905

100.0 %

¥ 38,099

17.9 %

				fy2007

Share of total

fy2006

Increase/decrease

Titanium Metal Business
Catalyst BusinessElectronic Materials Business
Other Business		Total				Corporate (Elimination)
Consolidated		¥ 13,793
86.7 %
1,923
12.1
86
0.5
106
0.7	
15,909100.0 %
(2,157)		
¥ 13,752		

¥ 10,169
1,625
354
177	
12,326(1,383)¥ 10,943

35.6 %
18.4(75.6)(40.0)
29.1 %—
25.7 %

Operating Income by Business Segment (Millions of yen)21

Merger of Subsidiary and Organizational Change
On April 1, 2008, the Company merged and absorbed its fully

integration is to increase marketing synergies between the catalyst

owned subsidiary, Toho Catalyst Co., Ltd., which was involved inbusiness, which has built a successful track record of technology-

the development, manufacturing, and marketing of catalysts fordriven sales activities, and the electronic materials business, which

propylene polymerization. The main reasons for this merger wereneeds to increase its focus on technology-based marketing.

to: (1) integrate the technologies held by the Company and Toho

Accompanying this organizational change, we have created a

Catalyst, and (2) increase operational efficiency by unifying

different business segment classification from the year ending

administrative functions.

March 31, 2009. The catalyst and the electronic materials businessTo coincide with this merger, the Company also integrated twosegments, which were classified separately until the year ended

business segments—the catalyst business segment, which was

March 31, 2008, will be classified together within the catalysts &operated by Toho Catalyst, and the electronic materials businesschemicals business segment.

segment, which was operated by the Company. The operations of

Please refer to page 48 of this report for the Group’s updated

both these business segments were combined into the newly

organization chart.

formed Catalysts & Chemicals Division. The main reason for thisResearch and Development (R&D)
Combining a range of internal Group synergies and sound technical

Catalysts Business Segment and Electronic Materials

capabilities, the Toho Titanium Group’s R&D activities are targetedBusiness Segment

at expanding the scope of its businesses as well as developing new

In the catalyst and the electronic materials business segments,

businesses.

the Group carried out R&D to strengthen these businesses through

During the year ended March 31, 2008, the Group’s R&D expenses

quality improvements, reinforcing technical capabilities andtotaled ¥1,811 million. This figure includes expenditures on basic

developing new products. In the year under review, R&D expenses

research, which cannot be allocated to a particular businessamounted to ¥452 million in the catalyst business segment andsegment, amounting to ¥743 million.

¥290 million in the electronic materials business segment.

A summary of R&D activities undertaken by each business seg­ment along with R&D expenditures for each segment is as follows.

Other Business Segment
Leveraging our core technologies, we conducted R&D activities

Titanium Metal Business Segment

aimed at further expanding the scope of the Group’s businesses

In the titanium metal business segment, we pursued enhancements

and developing new businesses. This included such areas asin production technology for titanium sponge and titanium ingot

the development of visible light reactive photocatalysts andwhile also striving to bolster production capacity and quality. The

potassium titanate.

technologies we have developed will be applied at all of ourWe also pursued a joint project with Chisso Corporation andexisting plants to improve processes as well as at the new Waka-

Nippon Mining Holdings, Inc. to study the feasibility of mass-

matsu and Yahata plants. In doing so, we are aiming to bolster our

production technology for the manufacture of polysilicon usedcompetitiveness in this field. Furthermore, as part of our efforts toin PV cells. Based on the results of this study, in June 2008 Toho

broaden the range of applications titanium can be used for by

Titanium and its two partners established a joint venture company

substantially reducing its cost, we are conducting ongoing R&D of

to manufacture and market polysilicon.

new titanium smelting methods.
In the year under review, R&D expenses in the titanium metalbusiness segment amounted to ¥325 million.

22

Corporate GovernanceFundamental Corporate Governance Philosophy

receives opinions from an outside point of view, helping to enhance

To succeed in the face of increasingly fierce intercompany competi-

management transparency. This system is designed to ensure thattion, it is essential for Toho Titanium to develop a corporate

decision making and the execution of business operations aregovernance system that enables rapid and precise decision making

carried out flexibly and in accordance with the Company’s situationin response to the operating environment. The corporate gover-

and operating environment.

nance system should also establish clear accountability in theexecution of management decisions. In addition, the Company

2. Corporate auditors

should establish a system to prevent the occurrence of fraud or

The Company has adopted the corporate auditor system. Two of theunexpected losses in the execution of its business operations.

three corporate auditors are appointed from outside the Company.

Current Status of the Corporate Governance System

Directors and the Management Committee, the corporate auditors

1. Directors and executive officers

conduct audits of the overall business operations from a broad

To establish clear accountability in its management organization

perspective.

By attending important meetings, including those of the Board ofand to expedite the execution of business operations, the Company
3. Measures to enhance the corporate governance system

has adopted an executive officer system. The Board of Directors
makes decisions on matters of particular importance to the Com-• Establishment of an Internal Control Promotion Departmentpany and the Group and is responsible for formulating management

To reinforce the internal control and auditing systems, the Com-

policies, strategies and plans.

pany has established the Internal Control Promotion Department.

The Board of Directors delegates responsibility for business

Through this organizational structure, the Company aims to ensure

operations to the executive officers, who are responsible for theoperations are carried out appropriately and is striving to build a

execution of operations within the authority delegated by thefair and competitive business management structure.

Board of Directors.

• Measures to enhance disclosure

There are seven directors, reflecting the Company’s basic policy

The Company is striving to ensure prompt and fair corporateof appointing a small Board of Directors. There are 12 executive

disclosure, including business results information, and a high level

officers, of whom five serve concurrently as directors. To facilitateof management transparency. From this perspective, the Company

close communications among management, in principle theis working to expedite the announcement of its business results byManagement Committee convenes weekly to make important

improving, and increasing the efficiency of, its accounting opera-

decisions, receive reports regarding business operations, liaise andtions and by enhancing its information systems. The Company

coordinate activities. The Management Committee comprises all

is also working to strengthen its investor relations (IR) activities

full-time directors, full-time corporate auditors, and executive

to provide an improved level of disclosure to shareholders

officers. By appointing one outside director, the Board of Directors

and investors.

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23

Corporate Social Responsibility (CSR)
Toho Titanium’s mission as a corporate citizen is to utilize the earth’s precious natural resources
effectively for the benefit of society. Titanium is a metal possessing many superior characteristics. It
is strong, light, corrosion resistant and safe for the human body, and its long lifecycle makes it a very
environment-friendly material. The Company sees its role as a bridge linking society with the many
benefits titanium has to offer. Toho Titanium’s primary contribution to society is through the provisionof high-quality products.
Environmental Protection Activities
To maintain and develop our business, we believe that it is absolutely vital to care for the local
environments in which we operate while also actively working toward environmental sustainability on
a global scale. We see protection of the environment as a key issue affecting the long-term viability ofour business, and take all possible measures to ensure the maintenance of safe operations and toprevent environmental contamination. We are implementing a range of measures to increase our levelof manufacturing output per unit of energy input, including through raising our capacity utilization
ratio and installing energy-efficient equipment. We are also working to reduce our volume of waste
and utilize resources effectively through recycling activities.

Chigasaki Seashore Cleanup

Developing Environment-Friendly Businesses
The opening of the new Yahata Plant in April 2008, which features a large-scale EB furnace, significantly bolsters our capabilities in the area of titanium recycling. We are also applying our uniqueexperience and technologies gained in the production of titanium to the development of clean-energy
technologies. Our first major project in this area is a joint venture to manufacture and market polysilicon for use in solar PV systems.
Contribution to Local Communities
Toho Titanium has a long history of close cooperation with local communities. As part of our efforts
to contribute to local areas in which we operate, we provide plant visits to school groups and support
other education-related activities. We also support local youth sports clubs. Another way in which
we contribute to the community is through cooperation with nearby companies and governmentorganizations in programs to beautify coastal areas and rivers. In addition, we promote the uniquecharacteristics of titanium to local citizens.
ComplianceAs part of its responsibilities as a good corporate citizen, the Company strives to maintain a stringent
level of compliance with all laws and regulations as well as adhere to the highest corporate ethicalstandards. We have formulated the Toho Titanium Group Corporate Code of Ethics, which comprises
our fundamental charter, the Basic Conduct Policy, and a specific set of rules governing corporate
behavior, the Standards of Conduct. To ensure that these standards are fully understood and thoroughly adopted, we run an ongoing education program for all members of the Group. Furthermore,
the Corporate Ethics Promotion Committee has been established to oversee Groupwide compliancerelated policy formulation and monitor the effective functioning of compliance systems. To ensure
rapid detection of any compliance violations and prevent compliance breaches before they occur, wehave established a compliance consultation office to facilitate reporting of compliance issues and toundertake compliance counseling separate from the normal line-management structure.

24

Youth Soccer Workshop
Sponsored by the Company

Board of Directors/Auditors/Executive Officers

AuditorDirector andDirector (outside)

Auditor (outside)

Auditor (outside)

Executive Officer

Hiroshi Murakami

Ryouichi Kanai

Yuzuru Ohno

Rentaro Tonoike

Tomoyuki Urabe

Director and Senior Executive

Representative Director

Chairman

Representative Director

Director and Senior Executive

Managing Officer

and President

and Vice-presidentManaging Officer

Shin-ichi Watanabe

Takeshi Kurushima

Kenji Toyoshima

Kyoji Yano

Kazuharu Nogami

Executive Managing Officer

Executive Managing Officer

Executive Managing Officer

Executive Managing Officer

Toshihiko Saiki

Wataru Kagohashi

Takashi Fujita

Yukihiro Kako

Executive Officer

Executive Officer

Executive Officer

Susumu Kosemura

Yoshihiro Hatta

Kenji Goto
25

Management’s Discussion and Analysis
Overview of Operating Environment

Net Income

In the year ended March 31, 2008, although the Japanese economy

Income before income taxes and minority interests grew 21.8%

saw a continuation in moderate export growth, in the second half

compared with the previous fiscal year, to ¥12.9 billion. Incomeof the period the impact from the subprime loan crisis in the Unitedtaxes amounted to ¥5.2 billion, and minority interests in net

States led to sharp fluctuations in the stock market and on foreign

income of consolidated subsidiaries totaled ¥37 million. Net

exchange markets. International prices for crude oil, raw materials

income for the fiscal year under review amounted to ¥7.8 billion,

and food commodities rose, while capital investment and private

a 24.8% increase compared with the previous fiscal year. The net

consumption were flat. Economic growth stalled among growing

income margin rose 0.9 percentage point, to 17.3%.

uncertainty about the economic outlook.
The titanium metal business segment remained robust, as a rapid

Cash Flows

recovery in the global aircraft industry and an increase in general

Net cash provided by operating activities amounted to ¥9.3 billion.

industries due to economic growth in the BRIC countries contrib-

Within this, significant items included income taxes paid amounting

uted to an increase in demand for titanium metal. The catalyst

to ¥4.2 billion, income before income taxes amounting to ¥12.9

business segment recorded strong growth driven by increasing

billion, and depreciation and amortization amounting to ¥2.6 billion.

demand for polypropylene, although, in the electronic materials

Net cash used in investing activities totaled ¥15.6 billion. A major

business segment, profit margins shrank owing to a large increase

item within this was payments for purchases of property, plant andin raw materials costs.

equipment amounting to ¥15.6 billion.

As a result, net sales and net income increased for the fifth
consecutive fiscal year. Net sales and net income set new records
for the third year running.

Net cash provided by financing activities amounted to ¥4.6 billion.
Within this, significant items included proceeds from long-term
debt amounting to ¥7.0 billion and cash dividends paid totaling¥2.3 billion.

Nets Sales

As a result, cash and cash equivalents at end of year amounted

Net sales increased 17.9% compared with the previous fiscal year,to ¥334 million, a ¥1.7 billion decrease compared with the previous

to ¥44.9 billion. Centering on the titanium metal business segment,

fiscal year-end.

all business segments recorded higher sales compared with theprevious period. In particular, growth in the titanium metal busi-

Financial Position

ness segment contributed to the increase in net sales.

AssetsTotal current assets increased 5.4% compared with the previous

Cost of Sales and Selling, General and Administrative (SG&A)

fiscal yearend, to ¥21.1 billion. Although cash on hand and in banks

Expensesdeclined, trade receivables increased in line with higher titanium

Cost of sales rose 13.8%, to ¥25.5 billion, and SG&A expenses grew

metal sales, and inventories also grew.

18.9%, to ¥5.6 billion. The growth in SG&A expenses was mainly

Property, plant and equipment, net increased 62.8%, to ¥32.6

attributable to such factors as an increase in research and develop-

billion, stemming from the construction of new manufacturing

ment (R&D) expenses and higher expenses accompanying anplants for titanium ingot and titanium sponge.

expansion of the production capacity for titanium metal.

As a result, total assets increased 32.7%, to ¥54.5 billion.

Operating Income

Liabilities

Operating income climbed 25.7%, to ¥13.8 billion. The operating

Total current liabilities grew 13.4%, to ¥11.8 billion. This increase

income margin was 30.6%, an increase of 1.9 percentage points

was mainly attributable to such factors as increases in tradecompared with the previous term.

payables and income taxes payable. Although long-term debt
was 10 times the level at the previous fiscal year-end, this jump
was primarily due to an increase in long-term borrowings relating
to the production capacity increase in the titanium metal businesssegment previously mentioned.
As a result, total liabilities increased 73.7% to ¥19.3 billion.

26

Net Assets

Management Indicators

Total net assets amounted to ¥35.2 billion, an increase of 17.5%.

Based on a focus on profitability, we are working to ensure that

This change primarily reflects an increase in retained earnings

operating performance surpasses a minimum benchmark levelstemming from net income amounting to ¥7.8 billion and cash

regardless of fluctuations in the operating environment. From this

dividends paid totaling ¥2.3 billion.

perspective, we aim to maintain over the medium- to long-term

As a result, the equity ratio was 64.5%, compared with 72.8%

return on assets (ROA) and an ordinary income margin above 15%.

at the previous fiscal year-end. This decrease in the equity ratio

Although ROA for the fiscal year under review declined 0.3

mainly reflects an increase in long-term debt relating to capital

percentage point, to 27.9%, ordinary income margin climbed 1.2

investment.

percentage points, to 29.6%.

Dividend Policy

result, the debt-to-equity ratio rose from 0.07 times at the end of

Based on a dividend policy of “shareholder returns in line withthe previous fiscal year to 0.25 times.

Interest-bearing liabilities increased 326.2%, to ¥9.0 billion. As aoperating performance,” the distribution of profit is determinedwhile taking into consideration the need for sufficient internal

Capital Expenditures

reserves to strengthen the Company’s financial base and theIn the fiscal year under review, capital expenditures amounted

maintenance of a stable level of dividends. Therefore, the Company

to ¥15.6 billion, compared with ¥5.0 billion in the previous fiscal

decides dividends while taking into account capital investment andyear. This large increase mainly reflected investments relating

its financial position and strives to maintain a payout ratio of at

to an increase in production capacity for titanium ingot andleast 20% of consolidated net income. Internal reserves are usedtitanium sponge.

for capital investments, which are needed to maintain future
growth and strengthen competitiveness. In this way, we are striving

Construction of a new plant for titanium ingot commenced in July
2006 and was completed in April 2008. Capital expenditure on thisto enhance operating performance and maintain and bolster our

project amounted to ¥5.1 billion, with the project fully funded fromfinancial base.

internal sources. The machinery and equipment installed in thisBased on this policy, the year-end dividend for the fiscal year

project is scheduled to be depreciated over a seven-year period,

under review was set at ¥15.5 per share. Combined with the interim

beginning in the year ending March 31, 2009.

dividend of ¥12.5 per share paid in December 2007, the total

Construction of a new titanium sponge manufacturing plant

dividend applicable to the year ended March 31, 2008 is ¥28.0 per

began in November 2007 and the scheduled completion date isshare. As a result, the consolidated payout ratio is 21.8%.

August 2009. The estimated total investment amount for thisThe Company’s Articles of Incorporation stipulate that dividends

project is ¥43.2 billion. We plan to provide core funding for thismay be implemented through a resolution of the Board of Directors.

project from internal sources, and fund the shortfall throughIn the foreseeable future, the Company plans to implement anlong-term borrowings from banks. The machinery and equipment

interim and a year-end dividend each fiscal year.

installed in this project is scheduled to be depreciated over aseven-year period, from the start of operations in the year ending
March 31, 2010.
In the fiscal year under review, depreciation and amortization
increased from ¥2.0 billion to ¥2.6 billion.

27

Risk Factors
As of March 31, 2008, the Company recognized the following risks

Environmental and safety risk

as having a potentially significant affect on its business. These

As a Company directly involved in manufacturing, the Company

risks should be considered when making investment decisions

places the highest priority on ensuring safety and protecting therelating to the Company. Should contingencies involving such risks

environment. Through improvements to facilities and technologies,

materialize, this may have a negative impact on the Company’s

and by reinforcing management systems, the Company strives tobusiness performance and financial position.

maintain safe operations and to protect the environment. However,
if an accident or incident were to occur, the Company may be

Demand fluctuation risk

required to suspend its operations or have restrictions placed on

Demand relating to highly specialized applications accounts for

its operations. The Company may also incur costs related to safety

a high proportion of the Company’s business. Such applications

or environmental countermeasures.

include titanium sponge for use in aircraft manufacture, Toho
High-efficiency Catalyst (THC) for use in propylene polymerization,

Product quality risk

high-purity titanium dioxide, and ultra-fine nickel powder for use

As a materials manufacturer, a key part of the Group’s corporate

in multi-layer ceramic capacitors (MLCC). If a downturn occurs insocial responsibility lies in providing a stable supply of products

one or more of the industries in which these applications areand services to satisfy its customers. The Company has establishedused, it may cause a significant fluctuation in the sales volumes

a quality assurance system based on the ISO 9001 internationalof the Company’s products.

quality management standard and strives to maintain the highest
possible level of quality management. However, if a product defectPrice fluctuation riskor quality-related incident were to occur, the Company may incur

The prices of titanium metal and other products sold by the Com-

costs relating to countermeasures and the reputation of thepany may fluctuate significantly owing to supply and demandCompany’s products may be adversely affected.

conditions. In particular, the prices of titanium sponge and titanium
ingot are currently in an upward trend owing to growth in demand

Risk relating to the Company’s relationship withfrom the aircraft industry as well as general industry. However, a

its parent company

change in the supply and demand balance may lead to a fall in

The Company maintains a close relationship with its parent com-these prices.

pany, Nippon Mining Holdings, Inc., and the Nippon Mining Holdings Group. This relationship includes the sale of the Company’s

Foreign exchange risk

products to the Nippon Mining Holdings Group and personnel from

Exports account for a high proportion of the sales of titanium

the Nippon Mining Holdings Group serving as directors, auditors,

sponge, THC, ultra-fine nickel powder and certain other products.

or other personnel. With a fundamental premise of the Company

In the year ended March 31, 2008, exports accounted for 24.7% ofretaining its independence and autonomy, this relationship is

the Company’s net sales. Since most of these exports are denomi-

based on the principles of cooperation and partnership. The

nated in U.S. dollars, the Company uses forward exchange con-conditions upon which transactions and other interactions between

tracts and other means to hedge foreign exchange risk andthe Company and the Nippon Mining Holdings Group are conduct-

minimize its exposure to foreign exchange fluctuations. However, in

ed and determined through discussions and negotiations carriedsome cases the Company’s business may be affected by exchange

out in good faith. However, it is possible that changes may occur inrate movements.

the basic policies pursued by the Company’s parent company.

Natural disaster risk
The Company manufactures almost all of the products it sells andhas implemented a range of measures to prepare for natural
disaster-­related contingencies. Such measures include strengthening the earthquake resistance of its facilities, installing fire­prevention systems, reinforcing its disaster prevention systems,
and conducting disaster training drills. Although the Company has
worked to reduce its exposure to disaster risk by establishing
operations in several locations, manufacturing or marketing
operations may be hindered in the case of a natural disaster.

28

Financial and Corporate Data
Consolidated Financial Statements

30

Organization/Corporate History

48

Corporate Data and Stock Information

49

29

Consolidated Balance Sheets
Toho Titanium Company, Limited and Subsidiaries
March 31, 2007 and 2008

				
Millions of yen

ASSETS
Current assets:
Cash on hand and in banks

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

¥ 2,063¥    334$    3,335

Trade receivables:	  Notes and accounts receivable	  Allowance for doubtful accounts
Inventories (Note 2)
Deferred tax assets (Note 8)
Other current assets
Total current assets

8,384
(36)
8,638
571
441
20,0619,249(46)
10,641809
160
21,14892,311(455)
106,206
8,079
1,600
211,075

Property, plant and equipment (Notes 5 and 6):
Land
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixture
Construction in progress			Less accumulated depreciation
Property, plant and equipment, net

1,767
11,811
34,714
1,636
5,166
55,094(35,096)
19,998

1,705
13,66537,9301,617
14,132
69,049(36,492)
32,557

17,021
136,393378,578
16,138141,048
689,179(364,230)
324,949

Investments and other assets:
Investments in securities (Note 3)
Deferred tax assets (Note 8)
Other non-current assets
Allowance for doubtful accounts
Total investments and other assets
Total assets

505
228
309
(24)
1,018
¥ 41,076

172
280
393
(31)
813
¥ 54,517

1,714
2,794
3,918
(310)
8,116
$ 544,141

30

		
		
Millions of yen

Thousands of
U.S. dollars(Note 1 (1))

LIABILITIES AND NET ASSETS

2007

2008

2008

Current liabilities:
Short-term debt (Note 6)¥ 1,250450¥ 1,550200$ 15,471
1,996

2,855
2,468
760
98
2,516
10,397

3,462
3,297
860
141
2,278
11,78934,55732,906
8,588
1,411
22,736
117,666

400
85
214
699
11,096

7,200
91
197
7,488
19,277

71,863907
1,963
74,734
192,400

4,813

4,813

48,034

5,872
19,012

5,872
24,52058,613244,739(69)—
29,628—(72)
35,133—(722)
350,664

215
71
286

65
(30)
34

645
(301)
344

66
29,980¥41,07673
35,241¥54,517733
351,741$544,141

Long-term debt due within one year (Note 6)
Trade payables:	  Notes and accounts
Income taxes payable
Accrued bonuses
Accrued bonuses for directors and corporate auditors
Other current liabilities
Total current liabilities
Noncurrent liabilities:
Long-term debt (Note 6)
Allowance for retirement benefits for employees (Note 7)
Other noncurrent liabilities (Note 1 (11))
Total noncurrent liabilities
Total liabilities
Net assets (Note 9):
Shareholders’ equity:
	  Common stock	   Authorized—160,000,000 shares	   Issued—60,770,910 shares in 2007 and 2008
	  Capital surplus
	  Retained earnings
	  Treasury stock, at cost	   2007—93,380 shares	   2008—94,208 shares	  Total shareholders’ equity
Valuation and translation adjustments:
	  Net unrealized holding gains on securities (Note 3)
	  Deferred hedge transactions
	  Total valuation and translation adjustments
Minority interests
Total net assets
			
The accompanying notes are an integral part of the consolidated financial statements.

31

Consolidated Statements of Income
Toho Titanium Company, Limited and Subsidiaries
Years ended March 31, 2007 and 2008

				
Millions of yen

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

Net sales¥38,099

Cost of sales
Gross profit
Selling, general and administrative expenses (Note 10)
Operating income
Other income (expenses):
Interest and dividends income
Interest expense
Foreign exchange loss
Equity in loss of affiliated companies, net
Gain (loss) on sales of property, plant and equipment, net
Loss on disposal of property, plant and equipment
Indemnification for loss on stock transfer contract
Impairment loss
Other, net
Income before income taxes and minority interests

22,427
15,672
4,729
10,943¥44,905
25,52919,376
5,624
13,752$448,196
254,801
193,394
56,131
137,263

Income taxes (Note 8):
Current
DeferredIncome before minority interests
Minority interests in net income of consolidated subsidiaries
Net income

15
(40)
(22)
(51)
(9)
(172)
—
(81)
(10)
10,573

4
(85)
(245)
(4)
16
(342)
(123)
—
(90)

45
(848)
(2,450)(43)
157(3,414)(1,230)—(901)

12,882

128,580

4,209
95
6,270
(35)
¥ 6,235

5,180
(118)
7,821
(37)
¥ 7,783

51,703(1,182)
78,059(372)$ 77,687

		YenAmounts per share of common stock:
Net income
Cash dividends applicable to the year
The accompanying notes are an integral part of the consolidated financial statements.

32

U.S. dollars(Note 1 (1))

2007

2008

2008

¥102.75¥128.28
28.00

$1.28
0.28

25.00

Consolidated Statements of Changes in Net Assets
Toho Titanium Company, Limited and Subsidiaries
Years ended March 31, 2007 and 2008

		Millions of yen						
CommonCapitalRetained
Treasury		
stock
surplusearnings
stock		Net unrealized		
holding gains

Deferred hedge

Minority

Total

on securities

transaction

interests

net assets

Balance at March 31, 2006		
Cash dividends paid 		
Bonuses to directors
	  and corporate auditors		
Net income		
Acquisition of treasury stock		Change in unrealized holdings
	  gain on securities		
Change in deferred	  hedge transaction		
Change in minority interests		
Net changes during the year		Balance at March 31, 2007		

¥4,813—¥5,872—¥13,754
(910)

¥(60)
—

¥ 145
—

¥   —
—

¥36
—

¥24,561
(910)

—
—
—

—
—
—

(67)
6,235
—

—
—
(7)

—
—
—

—
—
—

—
—
—

(67)
6,235
(7)

—

—

—

—

69

—

—

69

—
—
—
4,813

—
—
—

—
—
5,257

—
—
(7)

—
—
69

71
—
71

—
30
30

71
30
5,419

Cash dividends paid 		
Bonuses to directors and	  corporate auditors		
Net income		
Acquisition of treasury stock		Change in unrealized	  holdings gain on securities		
Change in deferred	  hedge transaction		
Change in minority interests		
Net changes during the year		Balance at March 31, 2008		

—

5,872
—

19,012(2,275)

(69)
—

215
—

71
—

66
—

29,980(2,275)

—
—
—

—
—
—

—
7,783
—

—
—
(3)

—
—
—

—
—
—

—
—
—

—
7,783
(3)

—

—

—

—

(150)

—

—

(150)

—
—
—
¥4,813———¥5,872——
5,508¥24,520

—
—
(3)
¥(72)

—
—
(150)
¥ 65

(101)
—
(101)
¥ (30)

—
7
7
¥73

(101)
7
5,261
¥35,241		Thousands of U.S. dollars (Note 1 (1))

						
CommonCapitalRetained
Treasury		
stock
surplusearnings
stock		Net unrealized		Balance at March 31, 2007		Cash dividends paid 		
Bonuses to directors and	  corporate auditors		
Net income		
Acquisition of treasury stock		Change in unrealized	  holdings gain on securities		
Change in deferred	  hedge transaction		
Change in minority interests		
Net changes during the year		Balance at March 31, 2008		

holding gains

Deferred hedge

Minority

Total

on securities

transaction

interests

net assets$48,034—$58,613—$189,763(22,711)$(688)—$ 2,146—$   704—$663—$299,235(22,711)

—
—
—

—
—
—

—
77,687
—

—
—
(34)

—
—
—

—
—
—

—
—
—

—
77,687
(34)

—

—

—

—

(1,502)——(1,502)———$48,034———$58,613——54,976$244,739——(34)$(722)——(1,502)$   645(1,005)—(1,005)$   (301)

—
70
70
$733

(1,005)70
52,506$351,741

The accompanying notes are an integral part of the consolidated financial statements.

33

Consolidated Statements of Cash Flows
Toho Titanium Company, Limited and Subsidiaries
Years ended March 31, 2007 and 2008

				
Millions of yen

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

¥ 10,573¥12,882$ 128,580

1,984
(88)
61
98
(23)
(23)
(15)
51
40
81
172
(1,693)
(640)
514
260
(71)
(67)
92
11,30465(35)(5,373)
5,961

2,607
16
100
43
6
—
(4)
4
85
—
342
(872)
(2,016)
608
195
(225)
—
(176)
13,59654(71)(4,244)
9,335

26,021
162
1,003
430
61
—
(45)
43
848
—
3,414
(8,700)(20,122)
6,066
1,942
(2,245)—(1,759)135,698
541(704)(42,364)
93,171

Cash flows from investing activities:
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of investment securities
Proceeds from sales of investment securities
Proceed from liquidation of equity-method affiliate
Payments of long-term loans receivable
Other, net
	  Net cash used in investing activities(5,029)
—
(2)
32
—
(4)
18
(4,984)(15,560)
79
(19)
—
25
—
(149)
(15,624)(155,304)
784
(193)
—
252
—
(1,487)(155,948)

Cash flows from financing activities:
Proceeds from short-term debt
Repayments of short-term debt
Proceeds from long-term debt
Repayments of long-term debt
Purchases of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
	  Net cash provided by (used in) financing activities

12,100(12,000)
—
(700)
(8)
(910)
(4)
(1,523)

17,350(17,050)
7,000
(450)
(3)
(2,275)(11)
4,560

173,171(170,177)
69,867(4,491)(34)(22,711)(109)
45,516

Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

0
(546)
2,609
¥ 2,0630(1,729)2,063¥    334

3(17,258)
20,593$    3,335

Cash flows from operating activities:
Income before income taxes
Adjustments to reconcile income before income taxes to net cash provided by operating activities:
	  Depreciation and amortization
	  Increase (decrease) in allowance for doubtful accounts
	  Increase in accrued for bonuses
	  Increase in accrued bonuses for directors and corporate auditors
	  Increase (decrease) in allowance for retirement benefits	  Decrease in allowance for retirement benefits for directors and corporate auditors
	  Interest and dividends income	  Equity in loss of affiliated companies
	  Interest expense	  Impairment loss
	  Loss on disposal of property, plant and equipment
	  Increase in notes and accounts receivable-trade	  Increase in inventories
	  Increase in notes and accounts payable-trade	  Increase in accounts payable-other	  Decrease in consumption taxes payable	  Payments of bonuses for directors and corporate auditors	  Other, net
	  Subtotal
Interest and dividends received
Interest paid
Income taxes paid	  Net cash provided by operating activities

The accompanying notes are an integral part of the consolidated financial statements.

34

Notes to Consolidated Financial Statements
Toho Titanium Company, Limited and Subsidiaries
March 31, 2007 and 2008

1. Summary of significant accounting policies(1) Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of Toho
­T itanium Co., Ltd. (the “Company”) and consolidated subsidiaries(collectively, the “Companies”) are prepared on the basis of­accounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial
Instruments and Exchange Law of Japan.
Certain terms presented in the accompanying consolidated financial statements have been reclassified from the consolidated
financial statements of the Company prepared in accordancewith Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law, and the notes to the consolidated­f inancial statements include information that is not required underJapanese GAAP, but is provided herein as additional information
for the convenience of readers outside Japan. None of such reclassifications nor rearrangements have a material effect on the financial statements.
The translations of the Japanese yen amounts into U.S. dollars
are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2008, which was¥100.19 to U.S. $1. The convenience translations should not be
construed as representations that the Japanese yen amounts havebeen, could have been, or could in the future be, converted into
U.S. dollars at this or any other rate of exchange.
(2) Basis of consolidation
The accompanying consolidated financial statements comprisethe accounts of the Company and all of its four subsidiaries. All­significant intercompany accounts and transactions have been
eliminated in the consolidation. All companies are required to­consolidate all significant investees which are controlled throughsubstantial ownership of majority voting rights or existence of­certain conditions.
The consolidated subsidiaries are listed below:
	  Toho Technical Service Co., Ltd.
	  TESCO Co., Ltd.
	  Toho Catalyst Co., Ltd.
	  Toho Justem Co., Ltd.

(3) Translation of foreign currencies
Foreign currency transactions are translated using foreign exchange
rates prevailing at the respective transaction dates. Receivables
and payables in foreign currencies are translated at the foreign exchange rates prevailing at the respective balance sheet dates andthe resulting transaction gains or losses are taken into income.
(4) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on
hand, readily-available deposits and short-term highly liquid investments with maturities of not exceeding three months at thetime of purchase are considered to be cash and cash equivalents.
(5) Investments in securities
The Companies categorize their ­existing investments in securities
as available-for-sale securities. The securities with market priceare carried at fair values prevailing at the balance sheet date withnet unrealized gains and losses, net of ­related tax, reported separately in net assets. The cost of ­securities sold is mainly calculatedusing the moving average method. If fair value is not available,
securities are carried at cost, which is determined mainly by themoving average method.
(6) Inventories
Finished products, work in process and raw materials are statedat cost, which is determined by the first-in, first-out method.
Supplies are stated at cost, which is determined by the movingaverage method.
Effective for the fiscal year ended March 31, 2007, a consolidated subsidiary, Toho Catalyst Co., Ltd., changed its valuation method for inventories other than supplies from the last-in, first-out
method to the first-in, first-out method to record the carrying valueof such inventories in the financial statement, more accurately reflecting the unit manufacturing cost in the current manufacturing
processes where efficiency in use of manufacturing facility andmanufacturing cost reduction have been successfully accomplished in the recent years.
As a result of this change, the gross profit, operating income,and income before income taxes for the fiscal year ended March
31, 2007 decreased by ¥111 million, respectively. The impact of thischange on segment information is indicated in the corresponding
section.

Nihon Whisker Co., Ltd. was excluded from the scope of equity
method in the year ended March 31, 2008, due to liquidation ofthis company on March 3, 2008. As a result, there is no equity
method affiliate as of March 31, 2008.

35

(7) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation iscomputed by the straight-line method.
The principal useful lives are summarized as follows:
7 to 50 years
Buildings and structures
Machinery and equipment
2 to 10 years
Upon the revision of the Corporate Tax Law effective for the year
beginning on April 1, 2007, the Company and domestic consolidated subsidiaries changed the depreciation method to that provided
in the revised Corporate Tax Law for the property and equipment
purchased on or after April 1, 2007. The effect on the consolidated
financial statements was immaterial.
For property and equipment purchased before April 1, 2007, depreciation is computed by the former depreciation method, underwhich property and equipment is depreciated for the depreciable
limit. Upon the revision of the Corporate Tax Law effective for theyear beginning on April 1, 2007, however, after the accumulated
depreciation for such assets has reached the depreciable limit under the previous Corporate Tax Law, the remaining value is amortized over five years on a straight-line basis from the following
fiscal year. This change resulted in a ¥148 million ($1,477 thousands) decrease in gross profit, a ¥167 million ($1,667 thousands)
decrease in operating income and a ¥168 million ($1,677 thousands) decrease in ­income before income taxes for the fiscal year
ended March 31, 2008. The impact of this change on segment information is indicated in the corresponding section.
(8) Allowance for doubtful accounts
The Companies provide allowance for doubtful accounts for probable collection losses by applying the actual rate of bad debt losses
experienced in the past reference period for normal receivables
and by individual assessment of collectibility for other receivables.
(9) Bonuses
The Companies provide accrued bonuses for employees based on
the estimated bonuses to be paid for the current fiscal year. The
Company and its domestic consolidated subsidiaries also provide
accrued bonuses for director and corporate auditors based on theestimated bonuses to be paid for the current fiscal year.

36(10) Allowance for retirement benefits for employees
The Companies have a tax qualified pension plan and an unfunded
retirement lump sum payment plan as defined benefit plans. In July
2003, the Company shifted part of the tax qualified pension plan
to a defined contribution plan.
The liabilities and expenses for severance and retirement benefits are determined based on the amounts actuarially calculatedusing certain assumptions. The Companies provide allowance forretirement benefits based on the estimated amounts of projected
benefit obligation and the fair value of the plan assets. Prior service costs are amortized by the straight-line method over the average of the estimated remaining service lives (5 years) of theemployees. Actuarial gains or losses are amortized by the straightline method over the average of the estimated remaining service
lives (5 years) of the employees from the fiscal year following theyear in which such gains or ­losses incur.
(11) Allowance for retirement benefits for directors
and corporate auditors
The Companies provide retirement allowances for directors andcorporate auditors at the estimated amount to be paid based on
their internal corporate policy if all directors and corporate auditors retired at the balance sheet date.
It was decided to abolish the retirement allowance plan for directors and corporate auditors at the Ordinary General Meetingof Shareholders to be held on June 2007.
Allowance for retirement benefits for directors and corporate­auditors is included in “other noncurrent liabilities” on the con­solidated balance sheets.
(12) Research and development expenses
Research and development expenses including basic research andfundamental development costs which are for the improvement ofexisting products or development of new products are charged toincome when incurred.

(13) Income taxes
The Companies recognize tax effects of temporary differences between the carrying amounts in ­financial reporting and the tax basisof assets and liabilities. The provision for income taxes is computed
based on income before ­income taxes in consolidated statements
of income. The asset and liability approach is used to recognize­deferred tax assets and liabilities for the expected future tax­consequences of temporary differences.
(14) Amounts per share of common stock
Net income per share of common stock is computed based upon theweighted-average number of shares outstanding during the year.
Cash dividends per share are presented on an accrual ­basis andinclude dividends to be approved after the balance sheet date, but
applicable to the previous fiscal year.
(15) Leases
Finance leases which do not transfer the ownership of the leased
assets to the lessee are accounted for in the same manner as operating leases.

(16) Derivatives and hedge accounting
The Companies use forward foreign exchange contracts and interest rate swap contracts to avoid or mitigate market risk.
A gain or loss on derivatives designated as hedging instrument
is deferred until the loss or gain on the underlying hedged item isrecognized. Interest rate swaps which meet certain conditions areaccounted for as if the interest rates applied to the interest rate
swaps had originally applied to the underlying debt. Receivables
and payables hedged by forward foreign exchange contracts whichmeet certain conditions are translated at the corresponding forward contract rates.
The Companies evaluate the ­effectiveness of hedging relationship, except for interest rate swaps that meet certain specified
conditions, by analyzing the ratio of cumulative cash flows among
the hedging financial instruments and hedged items.
The derivative transactions are managed by the Corporate
Planning ­& Accounting Department in accordance with the established policies and ­reported to the management committee.
The following summarizes hedging derivative financial instruments used by the Company and items hedged.
Hedged items:
Hedging instruments:
Long-term debt
Interest rate swap contracts
Forward foreign
Foreign currency
	  exchange contracts	  trade receivables
Import bill for equipments						  (forecasted transactions)

2. Inventories
Inventories at March 31, 2007 and 2008 consisted of the following:				Millions of yen

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

Finished products¥2,879Work-in-process
Raw materials and supplies

3,248
2,511
¥8,638¥ 3,115
4,319
3,206¥10,641$ 31,092
43,111
32,003$106,20637

3. Investments in securities(1) The following tables summarize acquisition costs, book values (fair values) and differences of securities with fair values available asof March 31, 2007 and 2008:
Available-for-sale securities:
	  Securities with book values exceeding acquisition costs				Millions of yen

Acquisition cost:
Equity securities   Total
Book value (fair value):
Equity securities   Total
Gross unrealized holding gain:
Equity securities   TotalThousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

¥ 51
51

¥ 51
51

$ 509
509

413
413

159
159

1,587
1,587

361
¥361

108
¥108

1,078
$1,078(2) T he following table summarizes book value of securities with no fair values available as of March 31, 2007 and 2008:
Available-for-sale securities:				Millions of yen

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

Book value:
Non-listed equity securities

10   Total

¥10

10
¥10

100
$100

(3) The following table summarizes the total sales amount of available-for-sale securities sold and the related gains and losses for theyears ended March 31, 2007 and 2008:
Available-for-sale securities:				Millions of yen

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

Equity securities¥ 0

Debt securities
Amounts of the related gains

32
5

¥—
—
—

$—
—
—

4. Derivative financial instruments and hedging transactions
Because all derivative instruments held by the Companies at March 31, 2007 and 2008 were accounted for using the hedge accounting,information on their fair value has been omitted.

38

5. Leases
The pro forma information on leased properties other than finance leases that transfer ownership of the leased property to the lessee forthe years ended March 31, 2007 and 2008 are as follows.
The pro forma depreciation expense is calculated by the straight-line method over a lease term assuming no residual value.
Millions of yen

2007

Acquisition costs, accumulated depreciation and net value:
Machinery, equipment and vehicles
Tools, furniture and fixture
Software   Total

Acquisition
costs

Accumulated
depreciation

Net¥    102,077
15¥2,103

¥   2
771
5
¥778

¥    71,306
10¥1,324

Millions of yen

2008

Acquisition costs, accumulated depreciation and net value:
Machinery, equipment and vehicles
Tools, furniture and fixture
Software   Total

Acquisition
costs

Accumulated
depreciation

Net

¥ 101
2,662
44
¥2,807

¥ 16
929
10
¥956

¥    84
1,732
34¥1,851Thousands of U.S. dollars (Note 1 (1))

2008

Acquisition costs, accumulated depreciation and net value:
Machinery, equipment and vehicles
Tools, furniture and fixture
Software   Total

Acquisition
costs

Accumulated
depreciationNet$ 1,008
26,570439$28,017

$ 161
9,279
102
$9,542$   840
17,296339$18,475

Obligations under finance leases as of March 31, 2007 and 2008 are as follows:				Millions of yen

Future minimum lease payments:
Within one year
Over one year   TotalThousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

¥ 467
856
¥1,324¥ 648
1,202¥1,851$ 6,471
12,004$18,475

				Millions of yen

Rental expenses and depreciation expenses:
Rental expenses
Depreciation expenses

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

¥426

¥633
633

$6,318
6,318

426

39

The pro forma information above does not exclude the imputed interest portion because the remaining finance lease obligations are
not material compared with the book values of property, plant and equipment.
6. Short-term and long-term debt
Short-term debt mainly consisting of bank borrowings at March 31, 2007 and 2008 is ¥1,250 million and ¥1,550 million ($15,471 thousand),
respectively. The weighted average interest rate on short-term debt outstanding at March 31, 2007 and 2008 are 1.09% and 1.23%,­respectively.
Long-term debt at March 31, 2007 and 2008 consisted of the following:				Millions of yen

Long-term bank loans principally at
weighted average annual interest of 1.24% , due through 2014
Less amount due within one year

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

¥ 850

¥7,4007,400(200)¥7,200$73,860
73,860(1,996)$71,863

850
(450)
¥ 400

The aggregated annual maturities of long-term debt at March 31, 2008 are as follows:				Millions of yen

Thousands of
U.S. dollars(Note 1 (1))

2009
2010
2011
2012
2013
2014 and thereafter$ 1,996
8,733
13,474
13,474
13,47422,707$73,860

¥ 200
875
1,350
1,350
1,350
2,275
¥7,400Assets pledged as collateral as of March 31, 2008 are as follows:				Millions of yen

Land
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixture

Thousands of
U.S. dollars(Note 1 (1))

2008

2008

¥   151
4,285
6,152
234
¥10,823$   1,507
42,76961,403
2,336$108,025

The Company has entered into overdraft and loan commitment agreements amounting to ¥18,000 million ($179,659 thousand), in theaggregate, with banks in order to source funds for its operations as demanded. However, no loans payable were outstanding at March 31,
2008, under those overdraft and loan commitment agreements.

40

7. Allowance for retirement benefits for employees
Allowance for retirement benefits for employees included in the consolidated balance sheets as of March 31, 2007 and 2008 consist of
the following:				Millions of yen

Projected benefit obligation
Unrecognized prior service costs
Unrecognized actuarial (gains) losses
Less fair value of pension assets
Allowance for retirement benefits

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

¥ 2,21352
61(2,242)¥     85

¥ 2,18431(251)(1,873)¥    91$ 21,798
309(2,505)(18,695)$   907

Included in the consolidated statements of income for the years ended March 31, 2007 and 2008 are the periodic retirement benefit ­expenses consisting of the following:				Millions of yen

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

Service cost

¥112

Interest cost
Expected return on plan assets
Amortization of actuarial losses
Retirement benefit expenses
Amortization of prior service cost
Other
Total

50
(46)
16
¥134
(20)
243
¥357

¥117
43
(49)
11
¥122
(20)
109
¥212

$1,168
429
(490)
110
$1,217(198)
1,097$2,116

The assumptions used in accounting for the defined benefit plans for the years ended March 31, 2007 and 2008 were as follows:
2007
Period allocation method for estimatedretirement benefits
Discount rate
Expected rate of return on plan assets
Amortization period for prior service cost
Amortization period for actuarial loss

Fixed amount per period
2.0%
2.5%
5 years
5 years

2008
Fixed amount per period
2.0%
2.5%
5 years
5 years

8. Income taxes
The aggregate statutory income tax rate used for calculation of deferred income tax assets and liabilities was 40.6% for the years ended
March 31, 2007 and 2008.
Disclosures of reconciliation between statutory and effective tax rate for the years ended March 31, 2007 and 2008 have been omitted
as such differences were less than 5 points.

41

Significant components of the deferred tax assets and liabilities as of March 31, 2007 and 2008 are as follows:				Millions of yen

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

Deferred tax assets:
Allowance for retirement benefits for directors and corporate auditors¥   86

Accrued enterprise taxes
Accrued bonuses
Depreciation
Deferred hedge transactions
Loss on revaluation of golf club memberships
Accrued social insurance premiums
Allowance for retirement benefits
Loss on disposal of property, plant and equipment
Unrealized gains
Impairment loss
Other
Sub-total deferred tax assets
Valuation allowance
Total deferred tax assets

199
314
8
—
58
43
213
38
55
33
31
1,079
(69)
¥1,010¥   79
254
349
—
20
60
46
223
27
132
—
28
1,222
(71)
¥1,151$    790
2,535
3,483
—
200
599
459
2,236
269
1,323
—
279
12,197(709)$11,488

Deferred tax liabilities:
Reserve for advanced depreciation
Net unrealized holding gains on securities
Deferred hedge assets
Total deferred tax liabilities
Net deferred tax assets¥   (15)
(146)
(48)
(211)
¥ 799

¥   (17)
(44)
—
(61)
¥1,089$   (169)
(439)
—
(609)
$10,873

9. Net assets
The Japanese Corporation Law (the “Law”) became effective
on May 1, 2006, replacing the Japanese Commercial Code. The Law
is generally applicable to events and transactions occurring after
April 30, 2006.
Under Japanese laws and regulations, the entire amount paid
for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors,
designate an amount not exceeding one-half of the price of the
new shares as additional paid-in capital, which is included in­capital surplus.

42

Under the Law, in cases where a dividend distribution of surplus
is made, the smaller of an amount equal to 10% of the dividendor the excess, if any, of 25% of common stock over the total of­additional paid-in-capital and legal earnings reserve must be set
aside as additional paid-in-capital or legal earnings reserve. Legalearnings reserve is included in retained earnings in the accompanying consolidated balance sheets.
The maximum amount that the Company can distribute as­dividends is calculated based on the non-consolidated financial
statements of the Company prepared in accordance with the Japanese laws and regulations and Japanese GAAP.

10. Research and development
Research and development expenses, which are included in selling, general and administrative expenses, totaled ¥1,334 millionand ¥1,811 million ($18,085 thousand) for the years ended March

31, 2007 and 2008, respectively. There are no research and development expenses included in manufacturing expenses for theyears ended March 31, 2007 and 2008.

11. Segment information(a) Information on business segment
The business operations of the Companies are classified into four business segments: “Titanium Metal”, “Catalyst”, “Electronic Materials”
and “Other”.
Millions of yen

2007
Net sales and operating income:Sales to third parties
Intergroup sales and transfer
Total net sales
Operating expenses
Operating income

Titanium Metal

Catalyst

Electronic Materials

Other

Total

Corporate (Elimination)

Consolidated¥28,565750
29,31619,146¥10,169¥5,462
0
5,463
3,838
¥1,625¥2,562
10
2,572
2,217
¥   354¥1,508
33
1,542
1,365
¥   177¥38,099
795
38,89426,568¥12,326¥     —
(795)
(795)
588
¥(1,383)¥38,099—
38,09927,156¥10,943

Millions of yen

2007
Titanium Metal

Assets, depreciation, impairment
loss and capital expenditures:
Total assets¥25,243
Depreciation and amortization
1,206
Impairment loss—
Capital expenditures
2,916

Catalyst

Electronic Materials

Other

Total

Corporate (Elimination)

Consolidated¥9,780318—
1,822¥3,286327—
117¥1,0361—
0¥39,346
1,853
—
4,857

¥1,730
130
81
1,023

¥41,076
1,984
81
5,880

1.	Operating expenses of ¥1,383 million that are included in the “eliminations and corporate” column consist of fundamental research and development­expenses, as well as expenses of the general affairs, accounting and other administrative divisions.
2.	Assets of ¥1,730 million that are included in the “eliminations and corporate” column principally include cash and cash equivalents, investments in securities and assets related to administrative and fundamental research divisions held by the Company.
3.	As stated in “(6) Inventories” in “1. Summary of significant accounting policies”, effective for the fiscal year ended March 31, 2007, one of the consolidated
subsidiaries changed its valuation method for inventories in the Catalyst Business Segment. As a result, in the Catalyst Business Segment, operating income decreased by ¥114 million, and “eliminations and corporate” increased by ¥2 million.

43

Millions of yen

2008
Net sales andoperating income:Sales to third parties
Intergroup sales and transfer
Total net sales
Operating expenses
Operating income

Titanium Metal

Catalyst

Electronic Materials

Other

Total

Corporate (Elimination)

Consolidated¥34,480960
35,441
21,648¥13,793¥5,744
1
5,745
3,822
¥1,923¥3,041
8
3,050
2,963
¥    86¥1,637
33
1,671
1,564
¥ 106

¥44,905
1,004
45,90829,998¥15,909¥    —(1,004)(1,004)
1,153¥(2,157)¥44,905—
44,90531,152¥13,752

Millions of yen

2008
Assets, depreciation,
impairment loss andcapital expenditures:
Total assets
Depreciation
Capital expenditures

Titanium Metal

Catalyst

Electronic Materials

Other

Total

Corporate (Elimination)

Consolidated¥39,848
1,543
13,804¥7,606541
880¥2,857354
203¥1,254
1—¥51,666
2,440
14,889¥2,950166
504¥54,517
2,607
15,393Thousands of U.S. dollars (Note 1 (1))

2008
Net sales andoperating income:Sales to third parties
Intergroup sales and transfer
Total net sales
Operating expenses
Operating income

Titanium Metal

Catalyst

Electronic Materials

Other

Total

Corporate (Elimination)

Consolidated$344,146
9,592
353,738
216,069$137,668$57,331
10
57,344
38,148$19,197$30,35280
30,43329,574$    859$16,339332
16,674
15,610$ 1,064$448,196
10,021
458,217
299,411$158,788$     —
(10,021)(10,021)
11,508$(21,529)$448,196—
448,196
310,929$137,263

Thousands of U.S. dollars (Note 1 (1))

2008
Assets, depreciation,
impairment loss andcapital expenditures:
Total assets
Depreciation
Capital expenditures

Titanium Metal

Catalyst

Electronic Materials

Other

Total

Corporate (Elimination)

Consolidated$397,724
15,401
137,778$75,916
5,400
8,783

$28,516
3,533
2,026

$12,51610—$515,680
24,354
148,608$29,444
1,657
5,030

$544,141
26,021
153,638

1.	Operating expenses of ¥2,157 million ($21,529 thousand) that are included in the “eliminations and corporate” column consist of fundamental ­researchand development expenses, as well as expenses of the general affairs, accounting and other administrative divisions.
2.	Assets of ¥3,393 million ($33,866 thousand) that are included in the “eliminations and corporate” column principally include cash and cash equivalents,­investments in securities and assets related to administrative and fundamental research ­divisions held by the Company.
3.	As stated in “(7) Property, plant and equipment” in “1. Summary of significant accounting policies”, commencing in the fiscal year ended March 31, 2008,
after the accumulated depreciation for property, plant and equipment purchased before April 1, 2007, has reached the depreciable limit under the prerevision Corporate Tax Law, the remaining value is amortized over five years on a straight-line basis, from the following fiscal year. The effect of this change
for the fiscal year ended March 31, 2008 reduce operating income by ¥115 million ($1,148 thousand) in the Titanium Metal Business Segment, ¥29 million($289 thousand) in the Catalyst Business Segment, ¥12 million ($120 thousand) in the Electronic Materials Business Segment, ¥0 million ($0 thousand) in
the Other Business Segment and ¥10 million ($100 thousand) in “Eliminations and Corporate”.

44(b) Information on geographic segment
Geographic segment information was not disclosed since the aggregated sales in overseas were less than 10% of the consolidated net
sales for the years ended March 31, 2007 and 2008, and assets in overseas were less than 10% of the consolidated assets at March 31,
2007 and 2008.
(c) Information on oversea sales
Overseas sales, which include export sales of the Company and its consolidated domestic subsidiaries and sales (excluding export sales
to ­Japan) of the consolidated foreign subsidiaries for the years ended March 31, 2007 and 2008 are summarized as follows:
Millions of yen

2007
Overseas sales
Consolidated net sales
Overseas sales as a percentage of consolidated net sales

America

Europe¥4,968—13.0%¥3,097
—
8.1%

Asia

¥4,156
—
10.9%

Total

¥12,222
38,09932.1%

Millions of yen

2008
Overseas sales
Consolidated net sales

America

Europe

Asia

Total

¥5,298—¥2,970—¥2,844—¥11,11244,905

Thousands of U.S. dollars (Note 1 (1))

2008
Overseas sales
Consolidated net sales
Overseas sales as a percentage of consolidated net sales

America

Europe

Asia

Total

$52,879—
11.8%$29,644—
6.6%$28,386—
6.3%$110,909
448,196
24.7%

Classification of overseas sales is determined by geographical location.
Each classification of overseas’ sales principally covers the following countries and regions:
America:

USA and Canada

Europe:UK, France and Germany

Asia:

Taiwan, People’s Republic of China and Korea

12. Balances and transactions with related parties
The Company’s balances with significant affiliates as of March 31, 2007 and 2008, and related transactions for the years ended March 31,
2007 and 2008 are summarized as follows:				Millions of yen

Mitsui & Co., Ltd.
Balances:   Accounts Receivable   Accounts Payable
Transactions:   Sales of titanium products   Purchases of raw materials
Mitsui Bussan Metals Sales Co., Ltd.
Balances:   Accounts Receivable
Transactions:   Sales of titanium products

Thousands of
U.S. dollars(Note 1 (1))

2007

2008

2008

¥    80300¥     ——

$      —
—

363
3,061

—
—

—
—

2,384

2,682

26,76916,21917,454

174,20945

(Transaction Terms and Method of Establishing Transaction Terms)
Regarding the sales of titanium products, the transaction terms are
determined, by taking market prices and overall cost of sales into
consideration, based on the negotiations by each end-user at the pricenegotiations using the Company’s price proposals.
Regarding the procurements of raw materials, the transaction terms
are determined, by taking market prices into consideration, based on thenegotiations by each vendor.

Due to the change in major shareholders on March 5, 2008, Mitsui
Bussan Metals Sales Co., Ltd., was no longer a subsidiary of Mitsui Co.,
Ltd. The above-stated transaction amount indicates the amount oftransactions up until the date of change. The balance as of March 31,
2008 in the above table represents the balance as of the date of change.

13. Subsequent events(1) Based on the meeting of the management committee to be held on August 8, 2007, the following debt finances were executed to acquire
plant and equipment.
1
Amount¥ 1,300 million ($12,975 thousands)Bank

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Date of finance

April 30, 2008

Method for repayment

Semiannual equal repayment

Repayment date

April 30, 2015

Amount¥ 1,300 million ($12,975 thousands)

Bank

Mitsubishi UFJ Trust and Banking Corporation

Date of finance

April 30, 2008

Method for repayment

Semiannual equal repayment

Repayment date

April 30, 2015

2(2) The following appropriations of retained earnings at March 31, 2008 were approved at the meeting of the board of directors to be heldon May 21, 2008:
				
Millions of yen

Year-end cash dividends, ¥15.5 ($0.15) per share

46

¥940

Thousands of
U.S. dollars(Note 1 (1))$9,382

Report of Independent Auditors

The Board of Directors
Toho Titanium Co., Ltd.

We have audited the accompanying consolidated balance sheets of Toho Titanium Co., Ltd. and consolidated subsidiaries as of March 31,
2007 and 2008, and the related consolidated statements of operations, changes in net assets, and cash flows for the years then ended, allexpressed in yen. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Toho
Titanium Co., Ltd. and consolidated subsidiaries at March 31, 2007 and 2008, and the consolidated results of their operations and their cash
flows for the years then ended in conformity with accounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2008 are presented
solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made on the basis described in Note 1 (1).

June 19, 200847

Organization
Internal Control Promotion Dept.

Chairman, President
and Vice-president

President’s officeInternal Control Gr.
Internal Auditing Gr.

Intellectual Property Dept.
Accounting Dept.

Corporate Management Division

General Administration & Human Resources Dept.
Quality Control Dept.

Technical Management Division

Safety & Environmental Control Dept.
Purchasing & Traffic Dept.
Information System Dept.

Business Support Division

TPM Division Secretariat

Performance Management Gr.
Accounting Gr.
Quality Assurance Gr.
Inspection Gr.
Plant Design Gr.
Electrical Engineering Gr.
Mechanical Engineering Gr.

Plant Engineering Dept.
Titanium Division

Titanium Sales Dept.
Titanium Sponge Production Dept.
Titanium Ingot Production Unit

Chigasaki Plant
Hitachi Plant
Yahata Plant
Wakamatsu Plant Construction Dept.
Titanium Technology Dept.

Catalysts & Chemicals Division

Catalysts & Chemicals Sales Dept.
Catalysts & Chemicals Production Dept.
Catalysts & Chemicals Development Dept.

Research & Development Division

R&D Dept.

Titanium Tetrachloride
Production Gr.
Electrolysis Gr.
Reduction & Distillation Gr.
Crushing Gr.
High Purity Titanium Gr.
Chemical Gr.
Production Control Gr.
Chigasaki Catalyst Gr.
Kurobe Catalyst Gr.
Plant Construction Gr.
Catalyst Gr.
Chemical Gr.
Development Gr.
Ecology Gr.

Corporate History
1948

Predecessor of Toho Titanium Co., Ltd. founded

1953

Name of company changed to Toho Titanium Co., Ltd.

1998

Business purpose changed to the manufacture and sale oftitanium metals
1954

ISO 14001 received for head office and Chigasaki Plant

Production facility constructed in Chigasaki, Kanagawa Prefecture

Production facility for titanium ingot (Hitachi Plant) completed in
Hitachi, Ibaraki Prefecture, with electron-beam (EB) furnace, withinitial capacity of 2,640 metric tons per annum

Titanium sponge production began with initial capacity of 240
metric tons per annum, with increments thereafter
Company began exports to the United States
1955

Initial public offering (IPO) of stock through listing of the Company’s shares on the over-the-counter (OTC) section of the Tokyo
Stock Exchange

1960

Titanium ingot production began with initial capacity of 120 metrictons per annum, with increments thereafter

1961

Shares listed on the Second Section of the Tokyo Stock Exchange

1963

Production facility for high-purity titanium dioxide completed

Consolidated subsidiary Toho Catalyst Kurobe Co., Ltd. established
1999

Company entered the catalyst business

48

1970

Company began commercial production of high-purity titanium
dioxide1980

Production capacity of titanium sponge raised to 12,000 metrictons per annum

ISO 9001 certification received manufacture and sale of nickel
powderName of Toho Catalyst Kurobe Co., Ltd. changed to Toho Catalyst
Co., Ltd. and Toho Titanium’s catalyst business transferred to
Toho Catalyst

Production facility for titanium trichloride catalyst completed
Production of titanium trichloride catalyst began with initial
capacity of 36 metric tons per annum, with increments thereafterISO 9001 certification received manufacture and sale of catalysts
for propylene polymerization, titanium tetrachloride, titanium
sponge, high purity titanium, titanium and titanium alloy ingot,
high purity titanium dioxide, titanium-based powders andformulated powder
Production facility for Toho Catalyst Kurobe Co., Ltd. completed

2000

Company entered the electronic materials business1965

ISO 9002 certification received manufacture and sale of titanium
tetrachloride, titanium sponge, titanium and titanium alloy ingot,
high- purity titanium dioxide, titanium-based powders andformulated powder

2003

Production capacity of titanium sponge raised to 13,000 metrictons per annum

2005

Production capacity of titanium sponge raised to 15,000 metrictons per annum
Shares held of Sankyo Diamond Industrial Group sold2006

Shares listed on the First Section of the Tokyo Stock Exchange

2007

Production capacity of titanium sponge raised to 16,000 metrictons per annum

2008

Company merged with and absorbed Toho Catalyst Co., Ltd.

1985

Production capacity of titanium ingot raised to 7,800 metric tons
per annum

1986

Production facility for Toho High-efficiency Catalyst (THC) completed

1987

Consolidated subsidiary Toho Technical Service Co., Ltd. established through spin off of the fabrication division

1990

Acquisition of Sankyo Diamond Industrial Group completed

Production facility for titanium ingot (Yahata Plant) completed in
Kitakyushu, Fukuoka Prefecture, with EB furnace, with initial
capacity of 10,000 metric tons per annum

1996

ISO 9002 certification received for manufacture and sale ofcatalysts for propylene polymerization

Total production capacity of titanium ingot raised to 19,000 metrictons per annumCorporate Data and Stock Information
As of March 31, 2008

Corporate Data
Company Name

Toho Titanium Company, Limited

Number of Consolidated Subsidiaries

4

Founded

September, 1948

Paid-in Capital¥4,813 million

Affiliates Not Accounted forby the Equity Method

13-3-5, Chigasaki, Chigasaki City

Number of Employees (Consolidated)

799

Headquarters

Kanagawa 253-8510, Japan

Management Philosophy and Mission

Telephone+81-467-82-2915

Fiscal Year-End

March 31

The Toho Titanium Group pursues titanium’s unlimited potential as an earth-friendly
material, and contributes to the world by developing, manufacturing, and supplying
products based on titanium.

Web Address
http://www.toho-titanium.co.jp (Japanese)
http://www.toho-titanium.co.jp/en/ (English)

We build harmonious, mutually beneficial relationships with our customers and partners
by respecting their positions with sincerity.
We nurture the talents of our employees as each employee aims for self-actualization while
sharing common goals.
We contribute to the global environment and local communities with sincerity and humility.

Stock Information
Stock Registry

Composition of Issued Shares by Type of Shareholder

First Section of the Tokyo Stock Exchange

We will enhance Toho Titanium’s corporate value by realizing the above.



Number of Shares

Environmental Policy
We will manufacture and supply environment-friendly products based on titanium,
while striving to minimize the environmental impact of our operations.
We will reduce CO2 emissions and waste materials by improving manufacturing efficiency.
We will strictly observe applicable environmental laws, regulations, and standards.
We will maintain and pursue continual improvement in our Environmental Management System.

Authorized'PSFJHO*OTUJUVUJPOTBOE*OEJWJEVBMT'JOBODJBM*OTUJUVUJPOT

51,687  
TIBSFT

Major Shareholders


		
		
Name

Number ofshares held
(thousands)

Percentage of
total shares issued

NIPPON MINING HOLDINGS, INC.

25,80142.46%

Nippon Steel Corporation

3,000

4.94

MITSUI & CO., LTD.

2,016

3.32

Quality Policy

Japan Trustee Services Bank, Ltd. (Trust Account)

600

0.99

We will provide our customers the best satisfaction by promoting technical innovation,

The Master Trust Bank of Japan, Ltd. (Trust Account)

466

0.77

Goldman Sachs and Company Regular Account

419

0.69

Bank of New York GCM Client Account

354

0.58

and by stably manufacturing and supplying attractive products based on titanium.

'JOBODJBM*OTUSVNFOU'JSNT

60,770,910 shares

Number of Shareholders

We will identify customer needs and provide products that meet those needs.

Japan Trustee Services Bank, Ltd. (Trust Account 4)

339

0.56

We will strictly observe applicable laws, regulations, and standards concerning our products.

Morgan Stanley Japan Securities Co., Ltd.

262

0.43

We will pursue continual improvement in our Quality Management System.

Mitsubishi UFJ Trust and Banking Corporation(Trust Account)

247

0.41



*OEJWJEVBMTBOE0UIFST%PNFTUJD$PNQBOJFT

Composition of Shareholders
'PSFJHO*OTUJUVUJPOTBOE*OEJWJEVBMT'JOBODJBM*OTUSVNFOU'JSNT





%PNFTUJD$PNQBOJFT'JOBODJBM*OTUJUVUJPOT *OEJWJEVBMTBOE0UIFST

49

Toho Titanium Co., Ltd. Annual Report 2008

3-3-5 Chigasaki, Chigasaki City
Kanagawa 253-8510, Japan
www.toho-titanium.co.jp

Printed in JapanTHE POTENTIAL OF TITANIUM
Annual Report 2008
Year ended March 31, 2008