Kaga Electronics Co., Ltd.
and Subsidiaries
Consolidated Financial Statements for theYears Ended March 31, 2011 and 2010,
and Independent Auditors' ReportINDEPENDENT AUDITORS' REPORTTo the Board of Directors of
Kaga Electronics Co., Ltd.:We have audited the accompanying consolidated balance sheets of Kaga Electronics Co., Ltd. and subsidiaries as ofMarch 31, 2011 and 2010, and the related consolidated statement of income and comprehensive income for the year
ended March 31, 2011, the consolidated statement of operations for the year ended March 31, 2010, and the related
consolidated statements of changes in equity, and cash flows for the years then ended, all expressed in Japaneseyen. These consolidated financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 and perform the audit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant 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 consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Kaga Electronics Co., Ltd. and subsidiaries as of March 31, 2011 and 2010, andthe consolidated results of their operations and their cash flows for the years then ended in conformity withaccounting principles generally accepted in Japan.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made in conformity with the basis stated in Note 1. Such U.S. dollar amounts arepresented solely for the convenience of readers outside Japan.

June 29, 2011

Kaga Electronics Co., Ltd. and Subsidiaries
Consolidated Balance Sheets
March 31, 2011 and 2010

Millions of Yen
2011
2010

ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Marketable securities (Note 3)
Notes and accounts receivables:
Trade
Other
Allowance for doubtful receivables
Inventories (Note 4)
Deferred tax assets (Note 10)
Other current assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT (Note 2.g):Land
Buildings and structures
Machinery, equipment and vehicles
Molding dies and furniture
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 3)
Guarantee deposits
Refundable insurance premium
Deferred tax assets (Note 10)
Other assets
Total investments and other assets¥

11,79671¥

11,79770

Thousands of
U.S. Dollars(Note 1)2011$

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short-term bank loans (Notes 6 and 13)
Current portion of long-term debt (Notes 7 and 13)
Notes and accounts payables:
Trade
Other
Income taxes payables (Note 10)
Other current liabilities (Note 10)142,120855

47,4236,751(182)
19,520975
6,522

51,978
7,236(184)
18,141
867
6,934

571,361
81,337(2,193)
235,181
11,74778,58092,876

96,8391,118,988

4,100
4,132
3,788
3,889
512
16,421(6,697)

1,298
3,720
3,491
3,272
120
11,901(5,466)49,39849,783
45,63946,855
6,168
197,843(80,686)

9,724

6,435

117,157

4,493
2,360
1,129
620
3,484

4,607
2,149
1,056
249
2,627

54,13328,434
13,602
7,470
41,97512,086

10,688145,614

Total current liabilities
LONG-TERM LIABILITIES:Long-term debt (Notes 7 and 13)
Liability for employees' retirement benefits (Note 8)
Retirement benefits for directors and corporate
auditors (Note 8)
Deferred tax liabilities (Note 10)
Asset retirement obligations
Other long-term liabilities
Total long-term liabilities¥ 114,686¥ 113,962

¥

6,677
1,893

¥

7,816
1,135

$

80,44622,80740,791
1,142
1,512
4,972

43,536
891
1,050
4,351

491,458
13,75918,21759,90356,987

58,779686,590

4,966
1,556

2,556
1,433

59,831
18,747

1,295
351
227
705

1,222
593
826

15,602
4,229
2,735
8,495

9,100

6,630

109,639

12,134
13,913

12,134
13,913

146,193
167,627

25,03924,012

301,675(1,333)(1,332)(16,060)(247)(2,976)(2,571)
46,935
1,664

(196)
9
(1,698)46,842
1,711(30,976)565,483
20,047

48,59948,553585,530¥ 114,686¥ 113,962$ 1,381,759

CONTINGENT LIABILITIES (Note 17)
EQUITY (Note 9):
Common stock—authorized, 80,000,000 shares;
issued, 28,702,118 shares in 2011 and 2010
Capital surplus
Stock acquisition rights
Retained earnings
Treasury stock—at cost, 1,104,656 shares in 2011 and
1,103,943 shares in 2010
Accumulated other comprehensive income (loss):
Unrealized loss on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Total
Minority interests
Total equity

TOTAL

Millions of Yen
2011
2010

Thousands of
U.S. Dollars(Note 1)
2011

TOTAL

$ 1,381,759

See notes to consolidated financial statements.

-2-

Kaga Electronics Co., Ltd. and Subsidiaries
Consolidated Statement of Income and Comprehensive Income
Year Ended March 31, 2011 and Consolidated Statement of OperationsYear Ended March 31, 2010

Millions of Yen
2011
2010
NET SALES (Note 21)

Thousands of
U.S. Dollars(Note 1)2011

¥ 237,952¥ 239,391$ 2,866,892

207,299

211,153

2,497,579

30,653

28,238369,313SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Notes 11, 12 and 20)

27,08926,655326,373

Operating income

3,564

1,583

42,940

138
(114)
13
(383)
(489)
209
115
140

152
(131)
481
(219)
(574)
138
56

1,663
(1,373)
157(4,614)(5,892)
2,518
1,386
1,687

COST OF SALES (Notes 11 and 12)Gross profit

OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Gain on sales of investment securities
Devaluation loss on investment securities
Exchange loss
Commission received
Rent income
Compensation income
Gain on of foreign currencytranslation adjustment by liquidation of subsidiaries
Loss on foreign currency translation adjustment
Impairment loss
Others—net

101
(149)
(1)
220

(147)
58

1,217
(1,795)
(12)
2,648

(200)

(186)

(2,410)

INCOME BEFORE INCOME TAXES AND
MINORITY INTERESTS

3,364

1,397

40,530

INCOME TAXES (Note 10):
Current
Deferred

2,027
(510)

1,412
348

24,422(6,145)

1,517

1,760

18,277

1,847

(363)

22,253

(8)

(44)

(96)

(319)

22,349Other expenses—net

Total income taxes
NET INCOME (LOSS) BEFORE MINORITY INTERESTSMINORITY INTERESTS IN NET LOSSNET INCOME (LOSS)

1,855

MINORITY INTERESTS IN NET LOSS¥

(8)

NET INCOME BEFORE MINORITY INTERESTS—(Forward)

¥

-3-

1,847

(96)

$

22,253(Continued)

Kaga Electronics Co., Ltd. and Subsidiaries
Consolidated Statement of Income and Comprehensive Income
Year Ended March 31, 2011 and Consolidated Statement of Operations Year Ended March 31 2010

Millions of Yen
2011
2010
NET INCOME BEFORE MINORITY INTERESTS—(Forward)

Thousands of
U.S. Dollars(Note 1)2011

¥ 1,847$ 22,253

(55)
(9)
(875)

(663)
(108)
(10,542)(939)(11,313)

OTHER COMPREHENSIVE LOSS:
Unrealized loss on available-for-sale securities
Deferred loss on derivatives under hedge accounting
Foreign currency translation adjustments
Total other comprehensive loss
COMPREHENSIVE INCOME¥

908$ 10,940

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Minority interests

¥

922
(14)

$ 11,108(168)

Yen
PER SHARE OF COMMON STOCK (Note 2.t):
Basic net income (loss)
Cash dividends applicable to the year (Note 9)¥ 67.20
30.00

U.S. Dollars¥ (11.55 )30.00$ 0.810.36

See notes to consolidated financial statements.

-4-(Concluded)

Kaga Electronics Co., Ltd. and Subsidiaries
Consolidated Statements of Changes in Equity
Years Ended March 31, 2011 and 2010
Thousands

Millions of Yen

Number of
Shares ofCommonStock
Outstanding

CommonStockCapitalSurplus

Stock
Acquisition
RightsRetained
Earnings

TreasuryStock

Accumulated Other
Comprehensive Income
Unrealized
Deferred
Gain
Gain(Loss) on(Loss) on
Foreign
AvailableDerivatives
Currency
for-Sale
under Hedge
Translation
Securities
Accounting
Adjustments

27,597¥ 12,134¥ 13,913¥¥ 25,159¥ (1,332)¥ (364)BALANCE, APRIL 1, 2009
Net loss
Cash dividends, ¥30 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2010
Net income
Cash dividends, ¥30 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2011

BALANCE, MARCH 31, 2010

Minority
Interests

Total
Equity¥ (1,738)¥ 47,772¥ 1,789¥ 49,561

(78)

(319)
(828)
(1)
1
139

1,711

48,553

(319)
(828)
(1)
2

27,598

168

¥9

40

(319)
(828)
(1)
1
217

(196)

9

(1,698)46,842

(873)

1,855
(828)
(1)
(933)

(47)

1,855
(828)
(1)
(980)

¥ (2,571)¥ 46,935¥ 1,664¥ 48,599

Total

Minority
Interests

Total
Equity$ (20,458)$ 564,362$ 20,614$ 584,976(10,518)

22,349(9,975)(12)(11,241)(567)

22,349(9,975)(12)(11,808)$ (30,976)$ 565,483$ 20,047$ 585,530(1)
112,134

13,91324,012(1,332)

1,855
(828)
(1)

(1)
(51)

27,597¥ 12,134¥ 13,913¥¥ 25,039¥ (1,333)(9)¥ (247)

CommonStockCapitalSurplus

Stock
Acquisition
RightsRetained
Earnings

Thousands of U.S. Dollars (Note 1)
Accumulated Other
Comprehensive Income
Unrealized
Deferred
Gain
Gain(Loss) on(Loss) on
Foreign
AvailableDerivatives
Currency
Treasury
for-Sale
under Hedge
Translation
Stock
Securities
Accounting
Adjustments$146,193$167,627$$ 289,301$ (16,048)

Net income
Cash dividends, $0.36 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2011

Total

$ (2,361)$ 108

22,349(9,975)(12)(615)$ 146,193$ 167,627$$ 301,675

See notes to consolidated financial statements.

-5-$ (16,060)$ (2,976)(108)

Kaga Electronics Co., Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2011 and 2010

Millions of Yen
2011
2010
OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes—paidDepreciation and amortization
Impairment loss
Loss on retirement of fixed assets
Provision for directors' and corporate
auditors' bonuses
Gain (loss) on sales of investment securities
Devaluation loss on investment securities
Gain on sales of property, plant and equipment
Provision for employees' retirement benefits
Provision for directors' and corporate auditors'
retirement benefits
Provision for doubtful accounts
Changes in assets and liabilities:
Decrease in notes and accounts receivable(Increase) decrease in inventories
Decrease (increase) in advances paid
Decrease in interest and dividend receivable
Decrease in prepaid expenses and other current assets
Decrease in trade notes and accounts payable
Increase in accrued expenses and other current liabilities
Decrease in interest payable
Other—net
Total adjustments

Thousands of
U.S. Dollars(Note 1)2011

¥ 3,364¥ 1,397$ 40,530(1,592)2,434
1
15(1,344)
2,274
147
10

(19,181)
29,325
12
181

121
3
383
(14)
99

11
(464)
219
(17)
67

1,458
36
4,614
(169)
1,193

72
259

93
269

867
3,120

4,763
(1,379)88
151
273(2,684)
623
(122)
(537)
2,957

2,304
102
(344)
147
1,058
(1,270)
855
(131)
345
4,331

57,386(16,614)
1,060
1,819
3,289
(32,337)
7,506(1,470)(6,468)35,627

Net cash provided by operating activities

6,321

5,728

76,157INVESTING ACTIVITIES:Payments for time deposits
Purchase of property, plant and equipment
Purchase of investment securities
Purchase of intangible assets
Proceeds from sale of property, plant and equipment
Proceeds from sale of investment securities
Payment for acquisition of securities of subsidiaries
Proceeds from acquisition of securities of subsidiaries
Increase in short-term loan receivable—net
Payments of long-term loans receivable
Purchase of insurance funds
Proceeds from cancellation of insurance funds
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Others—net(112)(4,876)(647)(1,014)
72
281
(228)
64
(18)
(6)
(107)
35
(23)
150
60

(120)
(2,499)
(889)
(723)
104
1,550
164
(290)
(18)
(124)
2
(858)
699
(39)

(1,349)(58,747)(7,795)(12,217)867
3,386(2,747)
771
(217)
(72)
(1,289)
422
(277)
1,807
722

(6,369)(3,041)(76,735)(48)¥ 2,687

Net cash used in investing activities
FORWARD

¥

-6-

$

(578)

(Continued)

Kaga Electronics Co., Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended March 31, 2011 and 2010

Millions of Yen
2011
2010
FORWARD¥

FINANCING ACTIVITIES:(Decrease) increase in short-term bank loans—net
Proceeds from long-term debt
Repayment of long-term debt
Dividends paid
Purchase of treasury stock—net
Others—net
Net cash provided by (used in) financing
activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEARADDITIONAL CASH FLOW INFORMATION:
Purchase of newly consolidated subsidiaries:
Assets acquired
Liabilities assumed
Stock owned by the Company
Payment for acquisition of securities of subsidiaries
Proceeds from acquisition of securities of subsidiaries
Goodwill

(48)

¥

2,687

$

(578)

(1,154)4,012(1,463)
(866)
(1)
(50)

(1,905)(869)(17)(13,904)
48,337(17,627)(10,434)
(12)
(601)

478

(2,308)

5,759

(431)

49

(5,194)

(1)

428

(13)

11,797

11,369142,133¥ 11,796¥ 11,797$ 142,120¥1,962
1,967
57
163

¥224
399

$23,639
23,699
687
1,964

225

483

Thousands of
U.S. Dollars(Note 1)
2011

164
11

2,711

See notes to consolidated financial statements.

-7-(Concluded)

Kaga Electronics Co., Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended March 31, 2011 and 2010

1.

BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations, and in
conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different incertain respects as to application and disclosure requirements of International Financial Reporting Standards.
Under Japanese GAAP, a consolidated statement of income and comprehensive income is required from thefiscal year ended March 31, 2011 and has been presented herein. Accordingly, accumulated othercomprehensive income is presented in the consolidated balance sheet and the consolidated statement of changes
in equity. Information with respect to other comprehensive income for the year ended March 31, 2010 isdisclosed in Note 19. In addition, "net income before minority interests" is disclosed in the consolidated
statement of income from the year ended March 31, 2011.
In preparing these consolidated financial statements, certain reclassifications have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar
to readers outside Japan. In addition, certain reclassifications have been made in the 2010 financial statements
to conform to the classifications used in 2011.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Kaga
Electronics Co., Ltd. (the "Company") is incorporated and operates. The translations of Japanese yen amounts
into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at
the rate of ¥83 to $1, the approximate rate of exchange at March 31, 2011. Such translations should not be
construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any
other rate.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation—The consolidated financial statements include the accounts of the Company and all of its
subsidiaries (50 in 2011 and 48 in 2010) (together, the "Group").
Under the control and influence concept, those companies in which the Company, directly or indirectly, isable to exercise control over operations are fully consolidated, and those companies over which the Group
has the ability to exercise significant influence are accounted for by the equity method.
Investments in 0 (5 in 2010) associated company are accounted for by the equity method. CYBERFRONTCorporation and 4 companies that were owned by CYBERFRONT Corporation became subsidiaries of thecompany. As a result, these companies are no longer equity-method affiliates.
The excess of the cost of an acquisition over the fair value of the net assets of the acquired subsidiary at thedate of acquisition is being amortized over a period of five years.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is eliminated.

-8-

b.

Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial
Statements—In May 2006, the Accounting Standards Board of Japan (the "ASBJ") issued ASBJ Practical
Issues Task Force ("PITF") No. 18, "Practical Solution on Unification of Accounting Policies Applied toForeign Subsidiaries for the Consolidated Financial Statements." PITF No. 18 prescribes (1) the
accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions
and events under similar circumstances should in principle be unified for the preparation of theconsolidated financial statements, (2) financial statements prepared by foreign subsidiaries in accordancewith either International Financial Reporting Standards or the generally accepted accounting principles in
the United States of America tentatively may be used for the consolidation process, (3) however, thefollowing items should be adjusted in the consolidation process so that net income is accounted for inaccordance with Japanese GAAP unless they are not material: (a) amortization of goodwill; (b) scheduled
amortization of actuarial gain or loss of pensions that has been directly recorded in the equity;(c) expensing capitalized development costs of R&D; (d) cancellation of the fair value model accounting
for property, plant and equipment and investment properties and incorporation of the cost model ofaccounting; (e) recording the prior years' effects of changes in accounting policies in the income statement
where retrospective adjustments to financial statements have been incorporated; and (f) exclusion ofminority interests from net income, if applicable.

c.

Business Combination—In October 2003, the Business Accounting Council issued a Statement of
Opinion, "Accounting for Business Combinations," and in December 2005, the ASBJ issued ASBJ
Statement No. 7, "Accounting Standard for Business Divestitures" and ASBJ Guidance No. 10, "Guidance
for Accounting Standard for Business Combinations and Business Divestitures." The accounting standard
for business combinations allows companies to apply the pooling of interests method of accounting only
when certain specific criteria are met such that the business combination is essentially regarded as auniting-of-interests. For business combinations that do not meet the uniting-of-interests criteria, thebusiness combination is considered to be an acquisition and the purchase method of accounting is required.
This standard also prescribes the accounting for combinations of entities under common control and forjoint ventures.
In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ
Statement No. 21, "Accounting Standard for Business Combinations." Major accounting changes under therevised accounting standard are as follows: (1) The revised standard requires accounting for businesscombinations only by the purchase method. As a result, the pooling of interests method of accounting is nolonger allowed. (2) The current accounting standard accounts for the research and development costs to be
charged to income as incurred. Under the revised standard, in-process research and development (IPR&D)
acquired in the business combination is capitalized as an intangible asset. (3) The previous accounting
standard provided for a bargain purchase gain (negative goodwill) to be systematically amortized over a
period not exceeding 20 years. Under the revised standard, the acquirer recognizes the bargain purchasegain in profit or loss immediately on the acquisition date after reassessing and confirming that all of theassets acquired and all of the liabilities assumed have been identified after a review of the procedures usedin the purchase allocation. This standard was applicable to business combinations undertaken on or after
April 1, 2010 with early adoption permitted for fiscal years beginning on or after April 1, 2009.

d.

Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash andthat are exposed to insignificant risk of changes in value. Cash equivalents include time deposits andshort-term investments, all of which mature or become due within three months of the date of acquisition.

e.

Inventories—The Company and domestic subsidiaries state specific merchandise inventories ordered bycustomers should be at the lower of cost, determined by the specific identification method, or market andthat other merchandise inventories should be at the lower of cost, determined principally by themoving-average method, or market.

-9-The overseas subsidiaries state inventories at the lower of cost, determined principally by the first-in,
first-out method, or market.
f.

Marketable and Investment Securities—Marketable and investment securities are classified andaccounted for, depending on management's intent, as follows: (1) trading securities, which are held for the
purpose of earning capital gains in the near term are reported at fair value, and the related unrealized gains
and losses are included in earnings, and (2) available-for-sale securities, which are reported at fair value,with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity.
Non-marketable available-for-sale securities are stated at cost as determined by the moving-averagemethod. For other than temporary declines in fair value, investment securities are reduced to net realizablevalue by a charge to income.

g.

Property, Plant and Equipment—Property, plant and equipment are stated at cost. Significant
replacements and additions are capitalized; maintenance and repairs, and minor replacements andimprovements are charged to income as incurred.
Depreciation of property, plant and equipment of the Company and its consolidated domestic subsidiaries
is computed substantially by the declining-balance method at rates based on the estimated useful lives of
the assets, while the straight-line method is applied to buildings acquired after April 1, 1998, lease assets of
the Company and its consolidated domestic subsidiaries, and all property, plant and equipment of foreignsubsidiaries.
Buildings and structures
Machinery, equipment and vehicles
Molding dies and furniture

4 to 50 years
8 to 12 years
2 to 20 years

The Company signed a real estate purchase contract on June 30, 2010 for the purpose of acquiring land forthe construction of a new head office. As a result, in the first quarter of the fiscal year, the Company
reexamined the useful lives of property, plant and equipment that were expected to be disposed of becauseof a transfer of ownership. This reexamination resulted in a change from 15 years to 4 years starting in thefirst quarter of the fiscal year in the useful life of the building, structures, tools, furniture and fixtures usedat the head office. Compared with the previous accounting method, this change had the effect of reducing
operating income, ordinary income and income before income taxes and minority interests by ¥130 million($1,566 thousand) each in 2011.
h.

Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes
in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An
impairment loss would be recognized if the carrying amount of an asset or asset group exceeds the sum of
the undiscounted future cash flows expected to result from the continued use and eventual disposition of
the asset or asset group. The impairment loss would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows fromthe continued use and eventual disposition of the asset or the net selling price at disposition.

i.

Goodwill—Purchased goodwill is amortized on a straight-line basis over five years.

j.

Software—Software is recorded in other assets and is amortized over five years.

k.

Retirement and Pension Plans—The Company and certain consolidated subsidiaries have defined
contribution pension plans. While other consolidated subsidiaries have unfunded retirement benefit plans.
Retirement allowances for directors and corporate auditors are recorded to state the liability at the amountthat would be required if all directors and corporate auditors retired at each balance sheet date.

- 10 -

l.

Asset Retirement Obligations—In March 2008, the ASBJ published the accounting standard for asset
retirement obligations, ASBJ Statement No. 18, "Accounting Standard for Asset Retirement Obligations"and ASBJ Guidance No. 21, "Guidance on Accounting Standard for Asset Retirement Obligations." Under
this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by
law or contract that results from the acquisition, construction, development and the normal operation of atangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset retirement
obligation is recognized as the sum of the discounted cash flows required for the future asset retirement
and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If areasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement
obligation is incurred, the liability should be recognized when a reasonable estimate of asset retirement
obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset
retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of
the liability. The asset retirement cost is subsequently allocated to expense through depreciation over theremaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any
subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows arereflected as an increase or a decrease in the carrying amount of the liability and the capitalized amount of
the related asset retirement cost. This standard was effective for fiscal years beginning on or after April 1,
2010.
The Company applied this accounting standard effective April 1, 2010. The effect of this change was todecrease operating income by ¥43 million ($518 thousand) and income before income taxes and minority
interests by ¥81 million ($976 thousand).

m. Leases—In March 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease
Transactions," which revised the previous accounting standard for lease transactions issued in June 1993.
The revised accounting standard for lease transactions is effective for fiscal years beginning on or after
April 1, 2008 with early adoption permitted for fiscal years beginning on or after April 1, 2007.
Under the previous accounting standard, finance leases that deem to transfer ownership of the leased
property to the lessee were capitalized. However, other finance leases were permitted to be accounted for
as operating lease transactions if certain "as if capitalized" information is disclosed in the notes to thelessee's financial statements. The revised accounting standard requires that all finance lease transactions
should be capitalized to recognize lease assets and lease obligations in the balance sheet. In addition, theaccounting standard permits leases which existed at the transition date, and do not transfer ownership ofthe leased property to the lessee, to be accounted for as operating lease transactions.
The Company applied the revised accounting standard effective April 1, 2008. In addition, the Company
accounted for its leases which existed at the transition date, and do not transfer ownership of the leased
property to the lessee, as operating lease transactions. All other leases are accounted for as operatingleases.
n.

Bonuses to Directors and Corporate Auditors—Bonuses to directors and corporate auditors are accrued
during the year in which such bonuses are attributable.

o.

Income Taxes—The provision for income taxes is computed based on the pretax income included in the
consolidated statements of operations. The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying
currently enacted tax laws to the temporary differences.

p.

Appropriations of Retained Earnings—Appropriations of retained earnings are reflected in the financial
statements in the year of shareholders' approval.

- 11 -

q.

Foreign Currency Transactions—All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance
sheet date. The foreign exchange gains and losses from translation are recognized in the income statement
to the extent that they are not hedged by forward exchange contracts.

r.

Foreign Currency Financial Statements—The balance sheet accounts of the foreign subsidiaries aretranslated into Japanese yen at the current exchange rate as of the balance sheet date of the subsidiaries
except for equity, which is translated at the historical rate.
Differences arising from such translation were shown as "Foreign currency translation adjustments" in a
separate component of equity.
Revenue and expense accounts of foreign subsidiaries are translated into yen at the average exchange rate.

s.

Derivatives and Hedging Activities—The Group uses derivative financial instruments to manage its
exposures to fluctuations in foreign exchange and interest rates. Foreign exchange forward contracts are
utilized by the Group to reduce foreign currency exchange risk. The Group does not enter into derivatives
for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as
follows: (a) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains
or losses on derivative transactions are recognized in the income statement and (b) for derivatives used forhedging purposes, if derivatives qualify for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items, gains or losses on derivatives are deferred until
maturity of the hedged transactions.
Foreign currency forward contracts are utilized to hedge foreign exchange exposure of export sales andprocurement of inventories from overseas suppliers. Trade receivables and payables denominated inforeign currencies are translated at the forward contract rates if the forward contracts qualify for hedge
accounting. Forward contracts that hedge forecasted transactions are measured and recorded at fair value
but unrealized gains/losses are deferred until the underlying transactions are completed.

t.

Per Share Information—Basic net income per share is computed by dividing net income available tocommon shareholders by the weighted-average number of common shares outstanding for the period.
Diluted net income per share is not disclosed if it is anti-dilutive. Cash dividends per share presented in theaccompanying consolidated statements of operations are dividends applicable to the respective years
including dividends accrued in the current year but paid after the end of the year.

u.

New Accounting Pronouncements
Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement
No. 24, "Accounting Standard for Accounting Changes and Error Corrections" and ASBJ Guidance No. 24,"Guidance on Accounting Standard for Accounting Changes and Error Corrections." Accounting
treatments under this standard and guidance are as follows: (1) Changes in Accounting Policies—When a
new accounting policy is applied following a revision of accounting standards, the new policy is applied
retrospectively unless the revised accounting standards include specific transitional provisions. When therevised accounting standards include specific transitional provisions, an entity shall comply with thespecific transitional provisions. (2) Changes in Presentations—When the presentation of financial
statements is changed, prior period financial statements are reclassified in accordance with the newpresentation. (3) Changes in Accounting Estimates—A change in an accounting estimate is accounted forin the period of the change if the change affects that period only, and is accounted for prospectively if thechange- 12 -

affects both the period of the change and future periods. (4) Corrections of Prior Period Errors—When anerror in prior period financial statements is discovered, those statements are restated. This accounting
standard and the guidance are applicable to accounting changes and corrections of prior period errors
which are made from the beginning of the fiscal year that begins on or after April 1, 2011.
3.

MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2011 and 2010 consisted of the following:

Millions of Yen
2011
2010
71

¥

70

Thousands of
U.S. Dollars
2011

Current—Marketable equity securities

¥

$

855

Non-current:
Marketable equity securities
Non-marketable equity securities
Government and corporate bonds
Investments in associated companies
Others¥ 2,870
707
572
54
290

¥ 2,871
767
450
161
358

$ 34,578
8,518
6,892
651
3,494

Total

¥ 4,493¥ 4,607$ 54,133

The costs and aggregate fair values of marketable and investment securities at March 31, 2011 and 2010 were as
follows:
Millions of Yen
Unrealized
Unrealized
Gains
LossesMarch 31, 2011

Cost

Securities classified as:
Trading
Available-for-sale—equity securities
Government and corporate bonds¥ 3,112
801

¥ 291
2

¥ (533)(231)¥ 2,976
624

¥ 341
7

¥ (446)
(181)

Fair
Value

¥

71
2,870
572

¥

70
2,871
450

March 31, 2010
Securities classified as:
Trading
Available-for-sale—equity securities
Government and corporate bonds

March 31, 2011
Securities classified as:
Trading
Available-for-sale—equity securities
Government and corporate bonds

Cost

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
Losses

Fair
Value

$
$ 37,494
9,650$ 3,50624$ (6,422)(2,782)855
34,578
6,892

Available-for-sale securities whose fair value are not readily determinable as of March 31, 2010 were as
follows. The similar information for 2011 is disclosed in Note 14.

- 13 -

Carrying AmountMillions of Yen

March 31, 2010
Available-for-sale—equity securities
Others

¥

767
358

Total

¥ 1,125

Proceeds from sales of available-for-sale securities were ¥93 million ($1,120 thousand) in 2011 and¥1,525 million in 2010. Gross realized gains and losses on these sales, computed on the moving average costbasis, were ¥13 million ($157 thousand) and ¥16 million ($193 thousand) in 2011, respectively, and¥481 million and ¥17 million in 2010, respectively.
The carrying values of debt securities with contractual maturities for securities classified as available-for-sale atMarch 31, 2011 are as follows:

Millions of Yen
Available-for-SaleThousands of
U.S. Dollars
Available-for-Sale¥ 283$ 3,410Due after ten years
4.

INVENTORIESInventories at March 31, 2011 and 2010 consisted of the following:

Millions of Yen
2011
2010

5.

Thousands of
U.S. Dollars
2011

Merchandise
Finished products
Work in process
Semi-processed products
Raw materials
Supplies¥ 15,082
641
555
53
3,147
42

¥ 13,757
725
647
2
3,000
10

$ 181,710
7,723
6,687
639
37,916506

Total¥ 19,520¥ 18,141$ 235,181

LONG-LIVED ASSETSThe Group reviewed its long-lived assets for impairment as of March 31, 2011 and 2010. As a result, the Group
recognized an impairment loss of ¥1 million ($12 thousand) for certain molding dies and furniture for the year
ended March 31, 2011. And the Group recognized an impairment loss of ¥147 million for certain buildings andstructures, molding dies and furniture, goodwill for the year ended March 31, 2010. The carrying amount of therelevant buildings and structures, molding dies and furniture, goodwill was written down to its recoverable
amount. The recoverable amount of the project's group was measured at its net selling price.

6.

SHORT-TERM BANK LOANS
The annual average interest rates applicable to bank loans were 0.5% and 0.6% for the years ended March 31,
2011 and 2010, respectively.
As is customary in Japan, the Company maintains deposit balances with banks with which it has bank loans.
Such deposit balances are not legally or contractually restricted as to withdrawal.

- 14 -

Under certain basic agreements with banks, collateral must be provided if requested by the lending banks andcertain banks have the right to offset cash deposited with them against any bank loan or obligation that becomesdue, in the event of default and certain other specified events. The Company has never received any such
request.
7.

LONG-TERM DEBT
Long-term debt at March 31, 2011 and 2010 consisted of the following:

Millions of Yen
2011
2010

Thousands of
U.S. Dollars
2011

Loans from the banks and other financial
institutions partially collateralizedLong-term bondObligations under finance leases
Less current portion¥ 6,465
114
280(1,893)¥ 3,62071(1,135)$ 77,892
1,373
3,373
(22,807)

Total long-term debt, less current portion¥ 4,966¥ 2,556$ 59,831

Annual maturities of long-term debt, excluding obligations under finance leases (see Note 13) at March 31,
2011, were as follows:

8.

Year Ending
March 31

Millions of Yen

Thousands of
U.S. Dollars

2012
2013
2014
2015
2016

¥ 1,857
1,833
1,240
464
1,184

$ 22,373
22,084
14,9405,590
14,266Total¥ 6,578$ 79,253

RETIREMENT AND PENSION PLANS
Under the pension plan, employees terminating their employment are, in most circumstances, entitled topension payments based on their average pay during their employment, length of service and certain otherfactors.
The retirement benefits for directors and corporate auditors are paid subject to the approval of the shareholders.
The liability for employees' retirement benefits at March 31, 2011 and 2010 consisted of the following:

Millions of Yen
2011
2010

Thousands of
U.S. Dollars
2011

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Unrecognized prior service cost

¥ 4,000(1,894)
(112)
(438)

¥ 3,710(1,610)
(164)
(503)

$ 48,193(22,819)(1,349)(5,278)Net liability¥ 1,556¥ 1,433$ 18,747- 15 -

The components of net periodic benefit costs for the years ended March 31, 2011 and 2010 are as follows:

Millions of Yen
2011
2010

Thousands of
U.S. Dollars
2011

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial loss
Amortization of prior service cost

¥ 561
54
(30)
35
83

¥ 552
49
(24)
41
71

$ 6,759
651
(361)
422
999

Net periodic benefit costs

¥ 703

¥ 689

$ 8,470

Assumptions used for the years ended March 31, 2011 and 2010 are set forth as follows:

Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss
Amortization period of prior service cost
9.

2011

2010

2.07%
2.0%
10 years
10 years

2.07%
2.0%
10 years
10 years

EQUITYJapanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant
provisions in the Companies Act that affect financial and accounting matters are summarized below:a.

Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to
the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteriasuch as; (1) having a Board of Directors, (2) having independent auditors, (3) having a Board of Corporate
Auditors, and (4) having the term of service of the directors prescribed as one year rather than two years ofnormal term by its articles of incorporation, the Board of Directors may declare dividends (except for
dividends in kind) if the company has prescribed so in its articles of incorporation. However, the Company
cannot do so if it does not meet all the above criteria.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if
the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations
on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as theamount available for distribution to the shareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.

b.

Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal
reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus)
depending on the equity account charged upon the payment of such dividends until the total of aggregate
amount of legal reserves and additional paid-in capital equals 25% of the common stock. Under theCompanies Act, the total amount of additional paid-in capital and legal reserves may be reversed without
limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital,
other capital surplus and retained earnings can be transferred among the accounts under certain conditions
upon resolution of the shareholders.

- 16 -

c.

Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act provides for companies to purchase treasury stock and dispose of such treasury stockby resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amountavailable for distribution to the shareholders which is determined by a specific formula. Under theCompanies Act, stock acquisition rights are presented as a separate component of equity. The Companies
Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock.
Such treasury stock acquisition rights are presented as a separate component of equity or deducted directlyfrom stock acquisition rights.

10.

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, inthe aggregate, resulted in a normal effective statutory tax rate of approximately 41% for the years ended March
31, 2011 and 2010.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax
assets and liabilities at March 31, 2011 and 2010 are as follows:

Millions of Yen
2011
2010
Deferred tax assets:
Retirement benefits for directors and corporate
auditors
Allowance for doubtful accounts
Accrued bonuses
Retirement benefit for employees
Tax loss carryforwards
Operating losses of subsidiaries
Unrealized loss on available-for-sale securities
Devaluation of inventories
Impairment loss
Loss from revaluation of investment securities
Excess depreciation
Other
Sub-total
Less valuation allowance

¥

527
573
413
624
3,556
451
148
152
243
240
318
906
8,151
(5,667)

¥

498
601
273
580
3,642
166
136
295
289
143
186
787
7,596
(5,782)Thousands of
U.S. Dollars
2011

$

6,349
6,904
4,976
7,518
42,843
5,434
1,783
1,831
2,928
2,892
3,831
10,916
98,205(68,277)

Deferred tax assets—total

2,484

1,814

29,928Deferred tax liabilities:
Undistributed earnings of overseas subsidiaries
Unrealized gain on property and equipment
Unrealized gain on available-for-sale securities
Advanced depreciation on fixed assets
Other

(576)
(202)
(8)
(325)
(130)

(636)
(202)
(17)
(348)
(100)

(6,940)(2,434)(96)(3,916)(1,566)

Deferred tax liabilities—total(1,241)(1,303)(1,4952)

Net deferred tax assets¥ 1,243511$ 14,976- 17 -¥

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in theaccompanying consolidated statements of operations for the years ended March 31, 2011 and 2010 is asfollows:
2011

2010

Normal effective statutory tax rate
Expenses not deductible for income tax purposesTax benefits not recognized on operating losses of subsidiaries
Difference in tax rates of foreign subsidiaries
Dividends from overseas subsidiaries and deferred income taxes
on retained profits of overseas subsidiaries
Effect of amortization of goodwill(Decrease) increase in valuation allowance
Provision for directors' and corporate auditors' bonuses, currently
not deductible
Other—net

41 %
4
(1)
(3)

41 %
9
31
(9)

3
2
(2)

13
8
13

1

1
19

Actual effective tax rate

45 %

126 %

At March 31, 2011, the Company and certain subsidiaries have tax loss carryforwards aggregating
approximately ¥8,615 million ($103,795 thousand) which are available to be offset against future taxable
income of the Company and such subsidiaries in future years. These loss carryforwards, if not utilized, will
expire as follows:Year Ending
March 31

11.

Millions of Yen

2012
2013
2014
2015
2016
2017 and thereafter

¥

1
38
1,154
2,979
2,688
1,755

Total

¥ 8,615

Thousands of
U.S. Dollars
$

12
458
13,90435,89232,38621,143$ 103,795

DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
Depreciation of property, plant and equipment was ¥1,555 million ($18,735 thousand) and ¥1,296 million forthe years ended March 31, 2011 and 2010, respectively.

12.

RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥1,172 million ($14,120 thousand) and ¥1,236 million
for the years ended March 31, 2011 and 2010, respectively.

13.

LEASESThe Group leases buildings, machinery, equipment and vehicles and other assets. Total lease payments underfinance leases for the years ended March 31, 2011 and 2010 were ¥83 million ($1,000 thousand) and¥129 million, respectively.
Impairment losses recorded for the years ended March 31, 2011 and 2010 were ¥25 million ($301 thousand)and ¥57 million, respectively, and related to certain leased property held under finance leases that do nottransfer ownership.

- 18 -

As discussed in Note 2.m, ASBJ Statement No. 13, "Accounting Standard for Lease Transactions" requires that
all finance lease transactions should be capitalized to recognize lease assets and lease obligations in the balance
sheet. However, the ASBJ Statement No. 13 permits leases without ownership transfer of the leased property to
the lessee and whose lease inception was before March 31, 2008 to continue to be accounted for as operatinglease transactions if certain "as if capitalized" information is disclosed in the note to the financial statements.
The Company applied ASBJ Statement No. 13 effective April 1, 2008 and accounted for such leases as
operating lease transactions.
Pro forma information of leased property whose lease inception was before March 31, 2008 was as follows:
Millions of Yen
2011

2010

Machinery,
Equipment
andVehicles

Total

Machinery,
Equipment
andVehiclesMolding
Dies andFurniture

Molding
Dies andFurniture

Total

Acquisition cost
Accumulated
depreciation
Accumulated
impairment loss

¥ 93

¥ 311

¥ 404

¥ 93

¥ 518

¥ 611

(51)

(232)

(283)

(42)

(317)

(359)

(25)

(25)

(57)

(57)

Net leased property

¥ 42

¥ 54

¥ 96

¥ 144

¥ 195

¥ 51

Thousands of U.S. Dollars
2011
Machinery,
Equipment
MoldingandDies and
VehiclesFurniture
Total
Acquisition cost
Accumulated
depreciation
Accumulated
impairment loss

$ 1,120$ 3,747$ 4,867(614)(2,795)(3,409)

(301)

(301)

Net leased property$

651$ 1,157

506$

Obligations under finance leases:

Millions of Yen
2011
2010

Thousands of
U.S. Dollars
2011

Due within one year
Due after one year

¥ 56
65

¥ 96
155

$

Total

¥ 121

¥ 251

$ 1,458- 19 -

675
783

Allowance for impairment loss on leased property of ¥25 million ($301 thousand) as of March 31, 2011 and¥57 million as of March 31, 2010 is not included in the obligations under finance leases.
Depreciation expense, interest expense and other information under finance leases:

Millions of Yen
2011
2010

Thousands of
U.S. Dollars
2011

Depreciation expense
Interest expense

¥ 76
5

¥ 118
10

$

916
60

Total

¥ 81

¥ 128

$

976

Lease payments
Reversal of allowance for impairment loss
on leased property

¥ 83

¥ 129

$ 1,000

32

18

386

Depreciation expense and interest expense, which are not reflected in the accompanying consolidated
statements of operations, are computed by the straight-line method and the interest method, respectively.
The imputed interest expense portion, which is computed using the interest method, is excluded from the above
obligations under finance leases.
The minimum rental commitments under noncancelable operating leases at March 31, 2011 and 2010 were as
follows:

Millions of Yen
2011
2010

14.

Thousands of
U.S. Dollars
2011

Due within one year
Due after one year

¥ 1,009
1,992¥ 1,0213,250$ 12,157
24,000Total¥ 3,001¥ 4,271$ 36,157

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURESOn March 10, 2008, the ASBJ revised ASBJ Statement No. 10, "Accounting Standard for Financial
Instruments" and issued ASBJ Guidance No. 19, "Guidance on Accounting Standard for Financial Instruments
and Related Disclosures." This accounting standard and guidance are applicable to financial instruments andrelated disclosures at the end of the fiscal years ending on or after March 31, 2010 with early adoption permitted
from the beginning of the fiscal years ending before March 31, 2010. The Group applied the revised accounting
standard and the guidance effective March 31, 2010.
(1) Group Policy for Financial Instruments
The Group has financial instruments, mainly debt from financial institution, consistent with its capitalfinancing plan. Cash surpluses, if any, are invested in low risk financial assets. Derivatives are not used for
speculative purposes, but rather to manage exposure to foreign exchange risks.

- 20 -

(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although
receivables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange
rates, the position, net of payables in foreign currencies, is hedged by using forward foreign currency
contracts. Marketable and investment securities, mainly held-to-maturity securities and equity instrumentsof customers and suppliers of the Company, are exposed to the risk of market price fluctuations.
(3) Risk Management for Financial Instruments
Credit risk management
The Company manages its credit risk from receivables on the basis of internal guidelines, which include
monitoring the payment term and balances of major customers by each business administration department
to identify the default risk of customers in an early stage.
Market risk management (foreign exchange risk and interest rate risk)
Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations inforeign currency exchange rates. Such foreign exchange risk is hedged principally by forward foreign
currency contracts.
Marketable and investment securities are managed by monitoring market values and financial position ofissuers on a regular basis.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If quoted prices are notavailable, other rational valuation techniques are used. Please see Note 16 for the detail of fair value forderivatives.
Cash and cash equivalents, receivables and payables, short-term bank loans, accrued expenses, income
taxes payables
The carrying value of cash and cash equivalents approximates fair value because of their short maturities.
Guarantee deposits
The fair value of guaranteed deposits is calculated by the contract amount supplier presented or calculated
from past experience and discounted by a risk free rate.
Marketable and investment securities
The fair values of marketable and investment securities are measured at the quoted market price for theequity instruments, and at the quoted price obtained from the financial institution for certain debt
instruments. The information of the fair value for the marketable and investment securities by classification
is included in Note 3.
Long-term debt
The fair value of long-term debt is determined by discounting the cash flows related to the debt at theGroup's assumed corporate borrowing rate.
Derivatives
The information of the fair value for derivatives is included in Note 16.

- 21 -

(a) Fair Value of Financial Instruments

March 31, 2011

Carrying
AmountMillions of Yen
Fair
Value

Unrealized
Loss

Cash and cash equivalents
Marketable securities
Notes and accounts receivables
Investment securities
Guarantee deposits¥ 11,796
71
54,173
3,442
1,165¥ 11,796
71
54,1733,442
908¥ (257)

Total¥ 70,647¥ 70,390¥ (257)

Short-term bank loans
Current portion of long-term debt
Notes and accounts payables
Accrued expenses
Income taxes payables
Long-term debt
Derivatives

¥

¥

Total

¥ 58,403

March 31, 2011

Carrying
AmountCash and cash equivalents
Marketable securities
Notes and accounts receivables
Investment securities
Guarantee deposits$ 142,120
855
652,687
41,47014,037$ 142,120
855
652,687
41,47010,940$ (3,097)

Total$ 851,169$ 848,072$ (3,097)

Short-term bank loans
Current portion of long-term debt
Notes and accounts payables
Accrued expenses
Income taxes payables
Long-term debt
Derivatives

$

$

Total

$ 703,651

6,677
1,893
40,791
2,547
1,512
4,966
17

80,44622,807
491,458
30,687
18,217
59,831
205

6,677
1,893
40,791
2,547
1,512
4,998
17

¥ 58,435¥ (32)¥ (32)

Thousands of U.S. Dollars
Fair
Unrealized
Value
Loss

80,44622,807
491,458
30,687
18,21760,216205$ 704,036

$

(385)

$

(385)

(b) Financial Instruments Whose Fair Value Cannot Be Reliably Determined
Carrying AmountThousands ofMillions of Yen
U.S. Dollars

March 31, 2011
Investments in equity instruments that
do not have a quoted market price inan active market
Guarantee deposits that do not have aquoted market price in an active market- 22 -¥ 1,051$ 12,663

1,195

14,398

15.

ASSETS PLEDGED AS COLLATERALAt March 31, 2011, time deposits of ¥16 million ($193 thousand), investment securities of ¥2 million($24 thousand) were deposited with vendors as collateral for trade payables of ¥27 million ($325 thousand) andland of ¥2,803 million ($33,771 thousand) was pledged as collateral for long-term debt of ¥2,893 million($34,855 thousand).

16.

DERIVATIVESThe Group enters into foreign exchange forward contracts to hedge foreign exchange risk associated with assets
and liabilities denominated in foreign currencies.
It is the Group's policy to use derivatives for the purpose of reducing market risks associated with assets andliabilities. The Group does not enter into derivative contracts for trading or speculative purposes.
Derivatives are subject to market and credit risk. The Group, however, does not anticipate any credit risk,
because the counterparties to those derivatives are limited to major financial institutions.
Each business department executes foreign exchange forward contracts, which are limited to the normal courseof business. The administrative department controls the position of derivative transactions. The manager of theaccounting department periodically provides detailed reports of derivative transactions to management.
As noted in Note 14, the Group applied ASBJ Statement No. 10, "Accounting Standard for Financial
Instruments" and ASBJ Guidance No. 19, "Guidance on Accounting Standard for Financial Instruments andRelated Disclosures." The accounting standard and the guidance are applicable to financial instruments andrelated disclosures at the end of the fiscal years ending on or after March 31, 2011; therefore, the required
information is disclosed only for 2011.
Derivative Transactions to Which Hedge Accounting Is Applied at March 31, 2011

March 31, 2011

Hedged Item

Millions of Yen
Contract
AmountContract
Due after
AmountOne Year

Foreign currency forward contracts:
Buying U.S.$
Buying Euro
Buying THB
Selling U.S.$

PayablesPayablesPayablesReceivables¥ 1,927
4
812
2,252

March 31, 2011

Hedged Item

Thousands of U.S. Dollars
Contract
AmountContract
Due after
Fair
AmountOne Year
Value

Foreign currency forward contracts:
Buying U.S.$
Buying Euro
Buying THB
Selling U.S.$

PayablesPayablesPayablesReceivables$ 23,217
48
9,783
27,133- 23 -

Fair
Value¥ 1,941
4
809
2,278

$ 23,386
48
9,747
27,446

The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.
The contract or notional amounts of derivatives which are shown in the above table do not represent the amounts exchanged by the parties and do not measure the Group's exposure tocredit or market risk.
Interest related transactions as of March 31, 2011:

Hedge Accounting Method
Special treatment for interest swaps

Type of Transaction
Interest rate and currency swaps
U.S. dollars Receipt, yen Payment
Floating Receipt, Fixed Payment

Hedge Accounting Method
Special treatment for interest swaps

Type of Transaction

Hedged Item

Contract
AmountMillions of Yen
Contract
AmountDue after
One YearLong-term debt

¥ 917

¥ 584

Hedged Item

Interest rate and currency swaps
U.S. dollars Receipt, yen Payment
Floating Receipt, Fixed Payment

Long-term debt

Fair
Value
(Note)

Thousands of U.S. dollars
Contract
AmountContract
Due after
AmountOne Year

Fair
Value

$ 11,048(Note)$ 7,036

Note: The above interest rate and currency swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value but the differential paidor received under the swap agreements are recognized and included in interest expense. In addition, the fair value of such interest rate and currency swap is included in that ofhedged items.
17.

CONTINGENT LIABILITIESContingent liabilities at March 31, 2011 for employees' loans guaranteed, amounted to ¥78 million ($940 thousand) and for bank loans guaranteed of ELATEC VERTRIEBS GMBH,
which is affiliate, amounted to ¥29 million ($349 thousand).

18.

CONTINGENT LOSS
Regarding a software development project entrusted to the domestic subsidiary, Kaga Solution Network Co., LTD. ("KAGA SOLNET"), the delivery was delayed, and a contract
cancellation was required by a certain customer on May 7, 2008. The entrusted amount of the project was ¥475 million ($5,723 thousand). KAGA SOLNET was sued in the Tokyo
District Court on January 29, 2009 and is required to pay for the compensation loss of ¥513 million ($6,181 thousand). Although it is impossible to estimate the reasonable impact at thispoint, there is a possibility that it will affect the results of the Company's operation depending on the result of the trial.

19.

COMPREHENSIVE INCOME
For the Year Ended March 31, 2010
Total comprehensive income for the year ended March 31, 2010 was the following:
Millions of Yen
2010
Total comprehensive loss attributable to:
Owners of the parent
Minority interests¥ (100)(39)

Total comprehensive loss

¥ (139)- 24 -

Other comprehensive income for the year ended March 31, 2010 consisted of the following:
Millions of Yen
2010

20.

Other comprehensive income:Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Share of other comprehensive income in an associate

¥ 172
11
33
7

Total other comprehensive income¥ 223

SUBSEQUENT EVENT
The following appropriation of retained earnings at March 31, 2011 was approved at the Company's
shareholders meeting held on June 29, 2011:

Year-end cash dividends, ¥15.00 ($0.18) per share
21.

Millions of Yen

Thousands of
U.S. Dollars¥ 414$ 4,988

SEGMENT INFORMATION
For the Years Ended March 31, 2011 and 2010
In March 2008, the ASBJ revised ASBJ Statement No. 17, "Accounting Standard for Segment Information
Disclosures" and issued ASBJ Guidance No. 20, "Guidance on Accounting Standard for Segment Information
Disclosures." Under the standard and guidance, an entity is required to report financial and descriptive
information about its reportable segments. Reportable segments are operating segments or aggregations ofoperating segments that meet specified criteria. Operating segments are components of an entity about which
separate financial information is available and such information is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is used internally for evaluating operating segment
performance and deciding how to allocate resources to operating segments. This accounting standard and theguidance are applicable to segment information disclosures for the fiscal years beginning on or after April 1,
2010.
The segment information for the year ended March 31, 2010 under the revised accounting standard is also
disclosed hereunder as required.
(1) Description of reportable segments
The Group's reportable segments are those for which separately financial information is available andregular evaluation by the Company's management is being performed in order to decide how resources areallocated among the Group. The Group has three reporting segments that are made up of different
categories of products and services: electronic components, information equipment and software. The
electronic components segment includes the development, manufacture and sale of semiconductors,
general electronic components and other products, the electronics manufacturing service (EMS), and otheractivities. The information equipment segment includes sales of PCs, PC peripherals, photograph andimaging products, original brand products, and other products. The software segment includes the
production of computer graphics, planning and development of amusement products, and other activities.

- 25 -

(2) Methods of measurement for the amounts of sales, profit (loss), assets, liabilities and other items for each reportable segment
The accounting policies of each reportable segment are consistent to those disclosed in Note 2, "Summary of Significant Accounting Policies."(3) Information about sales, profit (loss), assets and other items is as follows:
Millions of Yen
2011
Reportable Segment
Electric
Components

Information
Equipment

Software

Total

Sales:
Sales to external customers
Inter segment sales or transfers¥ 171,577
1,343¥ 50,886
778¥ 5,687
2,418¥ 228,150
4,539¥

Total sales¥ 172,920¥ 51,664¥ 8,105

Segment profit
Segment assets
Other:
Depreciation
Increase in-property, plant and equipment and intangible assets

¥

¥

¥

2,902
97,21073
15,755

971
4,336

487
6,044

142
193

Other

Total

Reconciliations

9,802
3,159

¥ 237,952
7,698¥ (7,698)¥ 232,689¥ 12,961¥ 245,650¥ (7,698)¥ 237,952

¥

¥

¥

¥

¥

3,462
119,009

408
637

230
5,390

1,521
5,166

43
724

3,692
124,399

Consolidated¥ 237,952

1,564
5,890

(128)
(9,713)(9)

3,564
114,686
1,555
5,890

Millions of Yen
2010
Reportable Segment
Electric
Components

Information
Equipment

Software

Total

Other

Total

Reconciliations

Sales:
Sales to external customers
Inter segment sales or transfers¥ 157,795
1,127¥ 68,311
1,458¥ 2,705
1,617¥ 228,811
4,202¥ 10,580
3,047¥ 239,391
7,249¥ (7,249)

Total sales¥ 158,922¥ 69,769¥ 4,322¥ 233,013¥ 13,627¥ 246,640¥ (7,249)¥ 239,391

Segment profit
Segment assets
Other:
Depreciation
Increase in-property, plant and equipment and intangible assets

¥

¥

¥

¥

¥

¥

¥

¥

895
93,781

93
21,067

920
1,553

181
324

467
3,989

1,455
118,837

164
538

312
5,786

1,265
2,415

43
807

1,767
124,623

Consolidated¥ 239,391

1,308
3,222

(184)
(10,661)
(10)

1,583
113,962
1,298
3,222

Thousands of U.S. Dollars
2011
Reportable Segment
Electric
Components

Information
Equipment

Software

Total

Other

Total

Reconciliations

Sales:
Sales to external customers
Inter segment sales or transfers$ 2,067,193
16,180$ 613,084
9,374$ 68,518
29,133$ 2,748,795
54,687$ 118,097
38,060$ 2,866,892
92,747$ (92,747)

Total sales$ 2,083,373$ 622,458$ 97,651$ 2,803,482$ 156,157$ 2,959,639$ (92,747)$ 2,866,892

Segment profit
Segment assets
Other:
Depreciation
Increase in-property, plant and equipment and intangible assets

$

$

$

$

$

$

$

$

34,964
1,171,205
11,69952,241880
189,819
1,711
2,325

- 26 -

5,867
72,8194,915
7,675

41,711
1,433,843
18,32562,241

2,771
64,940518
8,723

44,482
1,498,783
18,84370,964

Consolidated$ 2,866,892

1,542)(117,024)(108)

42,9401,381,759
18,73570,964

Notes:1. Other is a business segment but is not included in the reporting segments, which consists ofsales of sporting goods and etc.
2. For assets, eliminations or corporate in the fiscal year that ended in March 2010 include
corporate assets of ¥2,654 million that consist primarily of short-term investments (cash andsecurities, etc.) at the Company. In addition, eliminations or corporate in the fiscal year that
ended in March 2011 include corporate assets of ¥2,407 million that consist primarily of
short-term investments (cash and securities, etc.) at the Company.
3. The adjustment for segment operating income is as follows:(1) Segment income
Millions of Yen
2011
2010
Elimination of inter-segment trade
Amortization of goodwill

¥

13
(141)

Total

¥ (128)

¥

3
(187)

¥ (184)(2) Segment assets
Millions of Yen
2011
2010
Elimination of inter-segment trade
Reconciliations¥ (12,120)
2,407¥ (13,314)
2,653

Total

¥

¥ (10,661)(9,713)(3) Depreciation and amortization
Millions of Yen
2011
2010
Elimination of inter-segment trade¥ (9)¥ (10)

Total

¥ (9)

¥ (10)

Associated Information
For the current fiscal year ended March 31, 2011(1) Information about individual products and services
This information is not presented because the Group prepares reports in accordance with a management
approach based on individual products and services.

- 27 -

(2) Geographic information(a) Sales

Japan

North America

Millions of Yen
2011
Europe¥ 171,139¥ 2,183¥ 5,293

Thousands of U.S. Dollars
2011North America
EuropeJapan$ 2,061,916$ 26,301$ 63,771

East Asia

Total¥ 59,337¥ 237,952

East Asia

Total$ 714,904$ 2,866,892

Note: Sales are classified in countries or regions based on location of customers.
(b) Property, plant and equipment

Japan

North America

Millions of Yen
2011
Europe¥ 7,534

¥ 37

¥ 84

¥ 2,069¥ 9,724

Japan

North America

Thousands of U.S. Dollars
2011
EuropeEast Asia

Total$ 90,771$ 446$ 1,012$ 24,928$ 117,157

Notes:

East Asia

Total

1. Countries and regions are classified according to geographical proximity.
2. Countries and regions outside Japan are broken down into the following geographicalareas:(1) North America:(2) Europe:(3) East Asia:

United States
United Kingdom, Czech Republic, and Russia
Hong Kong, Singapore, Taiwan, Korea, China, Malaysia, andThailand3. Information about major customers
This information is not presented because sales to each external customers were not morethan 10% of consolidated sales.
For the Year Ended March 31, 2010a.

Operations in Different Industries
The Company and subsidiaries operate within one business segment, which is the electronic component
trading business.

- 28 -

b.

Operations by Geographic Area
The following table shows segment information by geographic area for the year ended March 31, 2010:
Millions of Yen
2010
Japan

North
America

EuropeEast Asia

Eliminations
or Corporate

Sales:
Outside customers
Interarea¥ 194,586
16,240¥ 263
113¥ 3,04237¥ 41,500
7,690¥ (24,080)

Total sales

210,826

376

3,079

49,190(24,080)

239,391

Operating expenses

210,175

498

3,157

48,663(24,685)

237,808¥651¥ (122)¥¥

94,429¥ 225¥ 1,423

Consolidated(1) Sales and operating income

Operating income (loss)(2) Total assets
c.

(78)

¥

527

¥

605

¥ 23,994¥(6,109)

Sales to Foreign Customers
Sales to foreign customers for the year ended March 31, 2010 are as follows:
Millions of Yen
2010
Sales to:
North America
EuropeEast Asia

¥

Total

2,456
3,486
52,283¥ 58,225******- 29 -¥ 239,391

¥

1,583

¥ 113,962

Form 2215S-J (4-10)

7. Distribution of Report Document Copies (U.S. DPM 3610B)
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