Consolidated Financial Statements
for the year ended March 31, 2012
SWCC Showa Holdings Co., Ltd.
and Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETSSWCC SHOWA HOLDINGS CO., LTD. and Consolidated Subsidiaries
At March 31, 2011 and 2012
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)(Note 4)ASSETS
Current assets:
Cash and time deposits (Notes 5 and 19)¥11,025¥7,44747,21750,724

617,155

Inventories (Note 6)

19,461

18,984230,977

Deferred tax assets (Note 18)
Other

1,062
2,844

929
3,333

11,30340,553

Trade notes and accounts receivable(Notes 12 and 19)

Allowance for doubtful accounts
Total current assets$90,607

(341)

(242)

(2,944)

81,26881,175

987,651

Property, plant and equipment:
Buildings and structures (Note 8 and 16)

41,817

41,736

507,799

Machinery, equipment and tools (Note 8 and 16)

74,174

71,182866,066

Land (Notes 8, 13 and 16)
Other24,583614

24,482624

297,871
7,592

Accumulated depreciation(93,833)(91,700)(1,115,707)

47,35546,324

563,621

Total property, plant and equipment
Intangible assets
Goodwill

250

163

1,983

1,936
2,186

2, 266
2,429

27,57029,553

7,170

6,440

78,355

17

11

134

Other (Note 8)

4,798

7,623

92,748

Allowance for doubtful accounts
Total investments and other assets(423)
11,562(503)
13,571(6,120)165,117¥142,371¥143,499$1,745,942

Other (Note 8 and 16)
Total intangible assets
Investments and other assets:
Investment securities (Notes 7, 8 and 19)
Deferred tax assets (Note 18)

Total assets
See Accompanying Notes to Consolidated Financial Statements.

1

2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)(Note 4)

LIABILITIES AND NET ASSETS
Current liabilities:
Short-term debt (Notes 8 and 19)¥ 50,825¥43,862$533,666

23,883322

24,352409

296,289
4,976

Reserve for construction loss

20

3

37

Reserve for disaster loss

97

2

24

9,047

10,582

128,750

84,194

79,210963,742

13,486

14,592

177,540

709
90

686
96

8,347
1,168

1,852

1,596

19,418Trade notes and accounts payable (Notes 12 and 19)
Accrued income taxes

Other
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 8 and 19)
Accrued retirement benefits for employees (Note 10)
Accrued retirement benefits for directors and statutory auditors
Deferred tax liabilities (Note 18)
Deferred tax liabilities related
to land revaluation (Notes 13 and 18)
Other (Note 8)
Total long-term liabilities
Total liabilities

5,410

4,739

57,6591,112
22,659801
22,5109,746
273,878

106,853

101,720

1,237,620

Contingent liabilities (Note 11)
Net assets:
Shareholders’ equity:
Common stock:
Authorized - 700,000,000 shares
Issued- 308,268,611 shares in 2012 (Note 14)- 251,126,611 shares in 2011 (Note 14)

Capital surplus (Note 14)

21,222

24,222294,707

8,035

11,035

134,262

Retained earnings (Note 14)

442

604

7,349

Treasury stock (Note 14)
Total shareholders’ equity(13)
29,686(13)
35,848(158)
436,160

1,243

557

6,778

(0)

-

-

4,352
(693)

5,023
(735)

61,114(8,943)

4,902

4,845

58,949930

1,086

13,213

Total net assets

35,51841,779508,322

Total liabilities and net assets¥142,371¥143,499$1,745,942

Accumulated other comprehensive income:Unrealized holding gains on other securities
Deferred gains (losses) on hedges
Variance of land revaluation (Note 13)
Foreign currency translation adjustments
Total accumulated other comprehensive income
Minority interests

See Accompanying Notes to Consolidated Financial Statements.

2

CONSOLIDATED STATEMENTS OF INCOME
SWCC SHOWA HOLDINGS CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2011 and 2012
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)(Note 4)

Net sales¥165,512¥171,781$2,090,047

Cost of sales (Note 6 and 15)
Gross profit

145,993
19,519152,519
19,262

1,855,688
234,359

Selling, general and administrative expenses (Note 15)
Operating income

16,986
2,533

17,316
1,946

210,683
23,676

Other income (expenses):
Interest income

8

20

243

Dividend income

201

415

5,049

Interest expense(13,420)(1,121)(1,103)Equity in losses of unconsolidated subsidiaries and affiliates

(86)

(63)

(766)

Foreign currency exchange loss

(614)

(220)

(2,677)

Gain on contribution of securities to retirement benefit trust

-

1,557

18,944Gain on negative goodwill

-

128

1,557

Gain on sales of fixed assets

-

61

742

Gain on sales of investment securities

15

19

231

Gain on compensation for moving

175

-

-

Compensation expenses for products-(1,099)(13,371)(6,205)

Settlement

-

(510)

Loss on disaster (Note 17)

(495)

(85)

(1,034)

Loss on impairment of fixed assets (Note 16)
Loss on sales of investment shares in an affiliate

(50)
(97)

(89)
-

(1,083)-

Allowance for doubtful accounts

(87)

-

Loss on devaluation of investment securities

(1)

-

-

Loss on adoption of accounting standard for assets retirement obligation

(60)

-

-

Other, net
Income before income taxes and minority interests
Income taxes (Note 18)
Current
Deferred
Loss before minority interests
Minority interests
Net income
See Accompanying Notes to Consolidated Financial Statements.

3

(172)

(305)

(3,710)(2,384)(1,274)(15,500)

149

672

8,176

311

436

5,304

(147)

376

4,575

164

812

9,879

(15)

(140)

(1,703)

297

302

3,674

¥ 282

¥162

$1,971CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SWCC SHOWA HOLDINGS CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2011 and 2012
2011

2012

(Millions of yen)

2012

Loss before minority interests

(15)

(140)

(Thousands of
U.S. dollars)(Note 4)
(1,703)

Other comprehensive income(Note 22)
Unrealized holding losses on other securities(8,346)

(162)

(686)

Deferred gains on hedges

4

0

0

Variance of land revaluation

-

671

8,164

Foreign currency translation adjustments

(413)

(55)

(669)

Share of other comprehensive income of affiliates in equity method

(51)

8

97

(622)

(62)

(754)

Comprehensive income

(637)

(202)

(2,457)

Comprehensive income attributable to
Owners of the Company

(277)

105

1,278

(360)

(307)

(3,735)

Total other comprehensive income

Minority interests
See Accompanying Notes to Consolidated Financial Statements.

4

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSSWCC SHOWA HOLDINGS CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2011 and 2012
(Millions of yen)
Shareholders’ equity

Balance at April 1, 2010
Transfer from capitalsurplus to retained
earnings

Commonstock

CapitalsurplusRetainedearnings(losses)¥21,222¥10,699¥(2,490)(2,664)

2,664

Accumulated other comprehensive income

DeferredForeign
Total
Unrealized
gains
Variance
currency
Treasury shareholder’s holding gains (losses)of landtranslation
stock
equityon securities on hedges evaluation adjustments¥(12)¥29,419¥1,405¥(3)¥4,338¥(294)

Total
accumulated
othercomprehensive
income¥5,446

Minority
interests¥1,290Total
net assets¥36,155

Net income for the year

282

282

282

Transfer from variance ofland evaluation

(14)

(14)

(14)

(1)

(1)

(1)

0

0

0

Purchase of treasury stock
Disposal of treasury stock
Changes other thanshareholder’s equity
Balance at March 31, 2011

(0)

¥21,222¥8,035

¥442

¥(13)

¥29,686

(162)

3

14

(399)

(544)

(360)

(904)

¥1,243¥(0)¥4,352¥(693)¥4,902¥930¥35,518(Millions of yen)
Shareholders’ equity

Commonstock

CapitalsurplusRetainedearnings

Balance at April 1, 2011¥21,222¥8,035¥442

Issue of new shares

3,000

3,000

Net income for the year

Balance at March 31, 2012

DeferredForeign
Total
Unrealized
gains
Variance
currency
Treasury shareholder’s holding gains (losses)of landtranslation
stock
equityon securities on hedges evaluation adjustments
¥(13)

162

Purchase of treasury stock
Changes other thanshareholder’s equity(0)¥24,222¥11,035¥604

Accumulated other comprehensive income¥(13)¥29,686¥1,243¥(0)¥4,352¥(693)

Total
accumulated
othercomprehensive
income¥4,902

Minority
interests
¥930

Total
net assets¥35,518

6,000

6,000

162

162

(0)

(0)

¥35,848

(686)

0

671

(42)

(57)

156

99

¥557

¥-

¥5,023¥(735)¥4,845¥1,086¥41,779(Thousands of U.S. dollars) (Note 4)

Shareholders’ equity

Commonstock

CapitalsurplusRetainedearnings

Balance at April 1, 2011

$258,206$97,761$5,378Issue of new shares

36,50136,501

Net income for the year

Balance at March 31, 2012

DeferredForeign
Total
Unrealized
gains
Variance
currency
Treasury shareholder’s holding gains (losses)of landtranslation
stock
equityon securities on hedges evaluation adjustments$(158)

1,971

Purchase of treasury stock
Changes other thanshareholder’s equity(0)$294,707 $134,262$7,349

Accumulated other comprehensive income$(158)$361,187$15,124$(0)$52,950$(8,432)

Total
accumulated
othercomprehensive
income$59,642

Minority
interests$11,315

Total
net assets$432,144

73,00273,002

1,971

1,971

(0)

(0)

$436,160

See Accompanying Notes to Consolidated Financial Statements.

5(8,346)

0

8,164

(511)

(693)

1,898

1,205

$6,778$-$61,114$(8,943)$58,949$13,213$508,322

CONSOLIDATED STATEMENTS OF CASH FLOWSSWCC SHOWA HOLDINGS CO., LTD. and Consolidated Subsidiaries
For the years ended March 31, 2011 and 2012
2011
2012
(Millions of yen)

2012
(Thousands of
U.S. dollars)(Note 4)

Cash flows from operating activities:
Income before income taxes and minority interests

¥149

¥672

$8,176

Depreciation and amortization

4,216

3,279

39,895

Loss on impairment of fixed assets

50

89

1,083

Gain on sales of investment securities

(15)

(19)

(231)

Loss on sales of shares in subsidiaries and affiliates

97

-

-

Gain on sales of property, plant and equipment

(16)

(74)

(900)

Loss on disposal of property, plant and equipment

25

49

596

Loss on devaluation in investment securities

1

4

49

110

(19)

(231)
(195)

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in reserve for construction loss

20

(16)

Decrease in accrued retirement benefits for employees

(88)

(23)

(280)

Interest and dividend income

(209)

(435)

(5,292)

Interest expenses

1,121

1,103

13,420-(1,557)(18,944)

Compensation expenses for products

-

1,099

13,371

Settlement

-

510

6,205

Loss on adoption of accounting standard for assets retirement obligation

60

-

-

Increase (decrease) in reserve for disaster loss

97

(95)

(1,156)

Increase in trade notes and accounts receivable

Gain on contribution of securities to retirement benefit trust(3,294)(3,875)(47,147)

Increase in inventories

(215)

(95)

(1,156)

Increase in trade notes and accounts payable

1,484

498

6,059

(Increase) decrease in other current assets

81

(372)

(4,526)

Increase (decrease) in other current liabilities(1,350)

1,045

12,715Other
Sub-total

525
2,849

(53)
1,715

(645)
20,866

211

176

2,142

Interest paid

(1,084)(1,151)(14,004)

Surcharge paid

(450)

-

-

Settlement paid

-

(271)

(3,297)

Interest and dividends received

Income taxes paid

(319)

(357)

(4,344)

1,207

112

1,363

Purchases of investment securities

(8)

(8)

(97)

Proceeds from sales of investment securities

17

30

365

Purchases of property, plant and equipment(1,674)(2,284)(27,789)

Proceeds from sales of property, plant and equipment

188

177

2,153

Expenditures for acquisition of investments in an affiliate(356)(1,411)(17,168)

Net cash provided by operating activities

Cash flows from investing activities:

Proceeds from sales of investments

137

0

0

Increase in short-term loans receivable

(80)

(85)

(1,034)Other
Net cash used in investing activities

6

(548)

(719)

(8,748)(2,324)(4,300)(52,318)

2011
2012
(Millions of yen)

2012
(Thousands of
U.S. dollars)(Note 4)

Cash flows from financing activities:
Increase (decrease) in short-term bank borrowings

2,225(5,762)

Proceeds from long-term debt

8,466

8,600

(70,106)
104,636

Repayment of long-term debt

(7,691)(8,733)(106,254)

Repayment of corporate bonds

(20)

(20)

(243)

Proceeds from new shares issued to a third party

-

6,000

73,002

Proceeds from payment by minority shareholder

-

596

7,251

Dividend payment
Other

-

(5)

(61)

(76)

(119)

(1,448)

2,904

557

6,777

Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents

(300)

(37)

(450)

Net increase (decrease) in cash and cash equivalents

1,487(3,668)(44,628)

9,387

10, 874

132,303¥10,874¥7,206$87,675

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 5)

See Accompanying Notes to Consolidated Financial Statements.

7

NOTES TO CONSOLIDATED FINANCIALSTATEMENTS
SWCC SHOWA HOLDINGS CO., LTD. and Consolidated Subsidiaries

1. Basis of Presentation
The accompanying consolidated financial statements of SWCC SHOWA HOLDINGS CO., LTD. (the“Company”) and its consolidated subsidiaries (collectively the “Companies”) have been prepared on the basisof accounting principles generally accepted in Japan, which are different in certain respects as to the applicationand disclosure requirements of International Financial Reporting Standards, and have been compiled from theconsolidated financial statements prepared by the Company as required by the Financial Instruments andExchange Law of Japan.
In addition, the notes to the consolidated financial statements include information which is not required underaccounting principles generally accepted in Japan. Certain reclassifications have been made to present theaccompanying consolidated financial statements in a format which is familiar to readers outside Japan.

2. Summary of Significant Accounting Policies(a) Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. In
preparing the consolidated financial statements, all significant intercompany transactions, account balances andunrealized profits or losses among the Companies have been eliminated. In the elimination of investments inconsolidated subsidiaries, the assets and liabilities of the consolidated subsidiaries, including the portion
attributable to minority shareholders, are recorded based on the fair value at the time the Company acquired
control of the respective subsidiaries.
Differences between the cost of the investments in consolidated subsidiaries and the underlying equity at fairvalue of dates of acquisition have been amortized by the straight-line method over a period of five years.
The equity method of accounting has been adopted for investments in the major affiliated companies overwhich the Company exercises significant influence in terms of their operating and financial policies.
The total assets, retained earnings, net sales and net income (loss) of the unconsolidated subsidiaries andaffiliated companies which are not accounted for by the equity method in the aggregate were not significant inrelation to the corresponding consolidated balances of the Companies.
The number of the consolidated subsidiaries at March 31, 2012 is 24 listed as follows:
Name

Percentage ofPaid-inequity ownership

capital(Millions)

SWCC Showa Cable Systems Co., Ltd.

100.0 %

¥10,000

SWCC Showa Device Technology Co., Ltd.

100.0

3,500

EXSYM Corporation

85.1

4,497

Unimac Ltd.

55.0

480

Fuji Electric Cable Co., Ltd.

100.0

318

Daiji Co., Ltd.

100.0

480

AXIO Corporation

100.0

310

Miyazaki Electric Wire & Cable Co., Ltd.

100.0

100

SWCC Showa Business Solutions Co., Ltd.

100.0

100

SDS Corporation

100.0

100

Logis-Works Co., Ltd.

100.0

95

Aomori Showa Electric Cable Co., Ltd.

100.0

80

Tamagawa Magnet Wire Co., Ltd.

100.0

46

Showa Recycle Co., Ltd.

100.0

20

STEC (Showa Technical Corporation)

100.0

20

Shoukou Equipment Industry Co., Ltd.

100.0

80

Tianjin Showa Enamelled Wire Co., Ltd.

54.8

US$17.0

HangZhou FuTong Showa Wire & Devices Co., Ltd.

75.0

US$12.2

Fuqing Showa Seiko Electric Co., Ltd.

100.0

US$3.4SWCC Showa (VIETNAM) Co., Ltd.

100.0

US$7.0

SWCC Showa (ShangHai) Co., Ltd.

100.0

US$5.2

Jiaxing Showa Interconnect Products Co., Ltd.

95.2

US$3.2SWCC Showa (H.K.) Co., Ltd.

100.0

HK$84.3

8

Dongguan Showa Interconnect Products Co., Ltd.

100.0

US$1.9The number of affiliates, in which investments are accounted for by the equity method, is 7 listed as follows:
Percentage ofequity ownership

Paid-in
capital(Millions)Showa Science Co., Ltd.

50.0 %¥40

Hua Ho Engineering Co., Ltd.

50.0

NT$35

Showa-TBEA (Shan Dong) Cable Accessories Co., Ltd

49.0

US$14

HangZhou FuTong Showa Copper Co., Ltd

50.0

CNY¥100

HangZhou FuTong-Showa Electric Wire Cable Material R&D Co., Ltd

50.0

CNY¥10

FuTong-Showa Electric Wire & Cable (HangZhou) Co., Ltd

50.0

CNY¥50

FuTong-Showa Electric Wire & Cable (TianJin) Co., Ltd

50.0

CNY¥100

Effective the year ended March 31, 2012, the equity method of accounting has been applied to HangZhou
FuTong-Showa Electric Wire Cable Material R&D Co., Ltd, FuTong-Showa Electric Wire & Cable(HangZhou) Co., Ltd and FuTong-Showa Electric Wire & Cable (TianJin) Co., Ltd.
(b) Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at applicable exchange
rates at the balance sheet date, and differences resulting from the translation are included in other income orother expenses in the consolidated statements of income.
The assets and liabilities of foreign consolidated subsidiaries and affiliates that operate in local currency aretranslated into Japanese yen at the applicable exchange rates at the balance sheet date, except for thecomponents of net assets excluding minority interests which are translated at their historical exchange rates.
Income and expense accounts are also translated at the applicable exchange rates at the balance sheet date.
Differences arising from the translation are presented as translation adjustments and minority interests inaccumulated other comprehensive income of its consolidated financial statements.
(c) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, cash in banks which is readily available and short-term
investments with maturities of three months or less when purchased which can easily be converted to cash andare subject to little risk of change in value.
(d) Inventories
Inventories are primarily stated at the lower of cost determined by the average method or net realizable value.
Inventories of certain consolidated subsidiaries are stated at the lower of cost determined by the moving averagemethod or by the specific identification method or net realizable value. When the costs exceed the net realizablevalues, inventories are written down to the net realizable value.
(e) Investment Securities
Marketable securities classified as “other securities” are carried at fair value with changes in unrealized holding
gains or losses, net of the applicable income taxes, included directly in net assets. Non-marketable securities
classified as “other securities,” which have no fair values, are carried at cost determined by the moving averagemethod. Cost of securities sold is determined by the moving average method.
(f) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is calculated by the straight-line method over theestimated useful lives. The main estimated useful lives of property, plant and equipment are as follows:
Buildings and structures
Machinery and vehicles
Equipment and tools

31 years (3 - 50 years)
10 years (2 - 14 years)
5 years (2 - 15 years)(g) Intangible Assets
Intangible assets are amortized by the straight-line method over each of their estimated useful lives. Especially,
computer software for internal use is amortized by the straight-line method over its estimated useful lives of 5
years.
(h) Leases
Finance leases, the agreements of which do not include the transfer of ownership, are accounted for in the same9

manner as ordinary purchase transactions of fixed assets and are depreciated by straight-line method over therespective lease terms with a zero residential value. While, finance leases, the agreements of which do notinclude the transfer of ownership and started on or before March 31, 2008, are accounted for as operatingleases.
(i) Allowance for Doubtful Accounts Receivable
The allowance for doubtful accounts receivable is provided based on historical default rates and additional
estimated uncollectible amounts to cover specific doubtful accounts receivable.
(j) Provision for Retirement Benefits for Employees
Accrued retirement benefits for employees have been provided based on the projected benefit obligation, thefair value of securities to retirement benefit trust and plan assets. Prior service costs are amortized as incurredby the straight-line method over the average remaining service period of employees expected to receive benefits.
Unrecognized actuarial gains and losses are amortized in the year following the year in which the gains orlosses are recognized by the straight-line method over the average remaining service period of employees.
(k) Provision for Retirement Benefits for Directors and Statutory Auditors
To provide for the future benefit payment for directors and statutory auditors, the Companies have provided
accrued retirement benefits based on their internal regulations.
(l) Reserve for Construction Loss
Reserve for construction loss is provided at the estimated amount for anticipated losses on the construction
contracts in progress.
(m)Reserve for Disaster Loss
Reserve for disaster loss is provided for restoration expenses to recover the damage as a result of the Great East
Japan Earthquake.
(n)Revenue and Cost of Construction Contracts
The Company recognized revenue and cost of construction contracts under the percentage-of-completion
method if the outcome of the construction activity is deemed certain during the course of the activity. Otherwise,
the Company recognized revenue and cost upon completed-contract method. The percentage of completion is
calculated at the cost incurred as a percentage of the estimated total cost.
(o) Derivative
The Companies use foreign currency forward exchange contracts and interest rate swap agreements to hedge therisk of fluctuations in foreign currency exchange rates and interest rates, respectively. Gain or loss on changes
in the fair market values of the derivative financial instruments which meet certain criteria as hedges is deferredon the balance sheet until gain or loss on the hedged items are recognized.
However, foreign currency forward exchange contracts, which meet certain conditions, are accounted for as apart of translating foreign currency monetary assets and liabilities in the consolidated balance sheets.
In case where interest rate swap agreements are used as hedges and meet certain hedging criteria, the net
amount to be paid or received under the contract is added to or deduced from the interest on the assets or
liabilities for which the swap contract is executed.
Since commencement of hedge contracts, the Companies have assessed the effectiveness of each hedge
contract by comparing the total cash flow fluctuation or market fluctuation of hedging instruments and hedged
items.
(p) Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
(q) Income Taxes
Deferred tax assets and liabilities are determined based on the differences between financial reporting and thetax bases of the assets and liabilities and are measured using the enacted tax rates and laws which will be ineffect when the differences are expected to reverse. The companies in Japan file the consolidated tax return.
Overseas consolidated subsidiaries are subject to income taxes in the countries in which they operate.

10

3. Accounting Change
Effective the year ended March 31, 2012, the following change in accounting policy and new accounting
standard were adopted.
(a) Change in Accounting Policy
Until the year ended March 31, 2011, property, plant and equipment (except for buildings and structures) had
primarily been depreciated by the declining-balance method. Effective the year ended March 31, 2012, thestraight-line method was adopted by the Companies for all property, plant and equipment.
The Companies aim to promote business in China, South-east Asia, and other emerging nations whose
economic growth is expected to continue in the future. On May 13, 2011, the Company signed a business andcapital cooperation agreement with its Chinese partner with whom a good relationship has been built over longyears through various joint businesses.
Future equipment investment is expected to increase for overseas businesses in order to satisfy overseas
infrastructure needs. On the other hand, new domestic investment demand for high value-added merchandise
has reached maturity, and it will shift to periodic maintenance and upgrading based on current domestic market
needs.
In line with the above shift in equipment investment trends, the depreciation method was reconsidered.
Manufacturing equipment, which is the main component of the property, plant and equipment of the Companies,
can satisfy the existing steady domestic infrastructure needs in the medium to long term. The risk of economic
obsolescence for manufacturing equipment is considered insignificant, and the return on investment will be
generated evenly over the estimated useful lives of the equipment with regular maintenance. Therefore, thestraight-line method is considered to be an appropriate method for measuring depreciation expenses.
As a result of the above change, operating income and income before income taxes and minority interests
increased by ¥669 million (US$8,140 thousand), respectively, for the year ended March 31, 2012.
(b) Adoption of New Accounting Standard
Effective the year ended March 31, 2012, the “Accounting Standard for Accounting Changes and Error
Corrections” (“ASBJ Statement No. 24” issued by the Accounting Standards Board of Japan on December 4,2009) and the “Guidance on Accounting Standard for Accounting Changes and Error Corrections” (“ASBJ
Guidance No. 24” issued on December 4, 2009) were adopted.
4. U.S. Dollar Amounts
For the convenience of the readers outside Japan, the accompanying consolidated financial statements arepresented in U.S. dollars by translating all Japanese yen amounts at the exchange rate of ¥82.19 = US$1.00
prevailing on March 31, 2012. This translation should not be construed as a representation that the Japanese yenamounts actually represent, or have been or could be converted into U.S. dollar amounts at the above or any
other rate.
5. Cash and Time Deposits
Information regarding cash and time deposits at March 31, 2011 and 2012 was as follows:
2011

2012
(Millions of yen)

Cash and time deposits due within 3 months
Time deposits due over 3 months
Total

2012
(Thousands of U.S. dollars)¥10,874¥7,206

151

241

2,932

¥11,025¥7,447$90,607$87,675

6. Inventories
The breakdown of Inventories at March 31, 2011 and 2012 was as follows:
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)

Merchandise and finished goods¥7,763¥7,540$91,739

Work in process

6,828

6,670

81,153

Raw materials and supplies

4,870

4,774

58,085¥19,461¥18,984$230,977

Inventories were revalued at the lower of cost or net realizable value with devaluation losses, which were
included in Cost of Sales, for the years ended March 31, 2011 and 2012 in the amounts of ¥152 million and ¥76
11

million (US$925 thousand), respectively.
7. Investment Securities(a) Information regarding marketable other securities at March 31, 2011 and 2012 was as follows:
Acquisition
cost

2011
Carrying Unrealized
value gain (loss)

2012
2012
Acquisition Carrying Unrealized Acquisition Carrying Unrealized
cost
value gain (loss)
cost
value
gain (loss)(Millions of yen)(Thousands of U.S. dollars)

Securities whose carrying value exceeds
their acquisition cost:
Stocks¥2,471¥4,737¥2,266¥1,133¥2,294¥1,161$13,785$27,911$14,126

Securities whose acquisition cost exceeds
their carrying value:
Stocks

1,149

910

(239)

1,592

1,278

(314)

19,37015,549(3,821)

Total¥3,620¥5,647¥2,027¥2,725¥3,572¥847$33,155$43,460$10,305(b) Sales of securities classified as other securities amounted to ¥2 million with an aggregate gain of ¥0 million
for the years ended March 31, 2011. There were no sales of other securities for the year ended March 31,
2012.
8. Short-term and Long-term Debts
Short-term debt composes short-term borrowings and current portion of long-term borrowings, corporate bonds
and finance lease obligations. The weighted average interest rates for short-term borrowings and current portionof long-term borrowings at March 31, 2012 were 1.48% and 2.23%, respectively.
Short-term borrowings and long-term borrowings at March 31, 2011 and 2012 consisted of the following:
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)

Short-term borrowings
Unsecured

21,34017,422211,972

Secured21,482

19,638238,934¥42,822¥37,060$450,906

Long-term borrowings
Unsecured

8,980

9,040

109,989

Secured12,081

11,888144,641¥21,061¥20,928$254,630

Long-term debt at March 31, 2011 and 2012 consisted of the following:
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)

0.54% yen unsecured straight bonds due 2012

90

70

852

with a weighted average interest of 2.24%
Finance lease obligations due 2018

21,061
338

20,928396

254,630
4,818

Less: portion due within one year

(8,003)(6,802)(82,759)¥13,486¥14,592$177,541

Loans principally from banks and insurance companies due
serially to 2017 and predominantly collateralized,

The aggregate annual maturities of long-term debt subsequent to March 31, 2012 were as follows:Year ending March 31,(Millions of yen)(Thousands of
U.S. dollars)

2014¥6,050$73,610

2015

4,286

52,148

2016

2,961

36,0262017 and thereafter

1,295

15,75712

¥14,592$177,541

At March 31, 2011 and 2012, the following assets were pledged as collateral for certain of the above debts:
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)

Investment securities¥3,534¥1,791$21,791

9,045

8,492

103,322

698

546

6,643

Land

18,157

17,883

217,581

Other

193

11

134

¥31,627¥28,723$349,471

Property, plant and equipment, at net book value:
Buildings and structures
Machinery, equipment and tools

9. Leases
As lessee
The following pro forma amounts represent the acquisition costs, accumulated depreciation and net book valueof finance leases, the agreements of which do not include the transfer of ownership and started on or before
March 31, 2008, as of March 31, 2011 and 2012, which would have been reflected in the consolidated balance
sheets if the leases had been accounted for in the same manner as ordinary purchase transactions of fixed assets:
2011

2012

(Millions of yen)

Acquisition costs
Accumulated depreciation
Net book value

2012(Thousands of
U.S. dollars)¥2,737
1,856¥2,095
1,642$25,490
19,978¥881¥453$5,512

Note: Assumed acquisition costs include the capitalized interest thereon, as the proportion of future minimum lease payments to total
property, plant and equipment at fiscal year-end is immaterial.

Future minimum lease payments subsequent to March 31, 2011 and 2012, for finance leases, the agreementsof which do not include the transfer of ownership and started on or before March 31, 2008, are summarized asfollows:
2011

2012

(Millions of yen)

Within one year
Over one year
Total

2012
(Thousands of
U.S. dollars)

¥425
456

¥265
188

$3,224
2,288

¥881

¥453

$5,512

Note: Assumed future minimum lease payments for finance leases include the capitalized interest thereon, as the proportion of future minimum lease payments
to total property, plant and equipment at fiscal year-end is immaterial.

Lease payments under such leases for the years ended March 31, 2011 and 2012, were ¥575 million and ¥425
million (US$5,171thousand), respectively. These lease payments were equal to the depreciation of leased assets
computed by the straight-line method over the respective lease terms with a zero residential value.
In addition, the future minimum payment for operating leases subsequent to March 31, 2011 and 2012 aresummarized as follows:
2011

2012

(Millions of yen)

Within one year
Over one year
Total

13

2012
(Thousands of
U.S. dollars)

¥363
406

¥154
266

$1,874
3,236

¥769

¥420

$5,11010. Retirement Benefits for Employees
The Companies have principally defined benefit plans such as employee’s pension fund and defined benefit
corporate pension plans, lump-sum retirement benefit plans and defined contribution pension plans. The
company and certain consolidated subsidiaries also have securities contributed to retirement benefit trust.
Certain consolidated overseas subsidiaries have defined benefit plans.
(a) Retirement benefit obligation:
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)

Retirement benefits obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Prepaid pension cost
Unrecognized prior service cost
Unrecognized actuarial loss
Retirement benefit obligation for employees¥ (11,966)¥ (12,541)$ (152,585)

9,446

11,853

144,214(2,520)(688)(8,371)(3,245)(5,328)(64,825)

6

4

48

5,050

5,326

64,801¥ (709)¥ (686)$ (8,347)

Note: Securities contributed to retirement benefit trust are included in “Plan assets at fair value.”(b) The components of retirement benefit expenses:
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)Service cost

¥753

¥778

Interest cost

210

210

2,555

Expected return on plan assets for the year

(316)

(302)

(3,674)

Amortization of prior service cost
Amortization of actuarial loss

$9,466

2

2

24

598

653

7,945

Total
¥1,247¥1,341$16,316
1. Retirement benefit expenses for consolidated subsidiaries adopting the simplified method are included in “Service cost.”
2. The Companies’ contribution to defined contribution pension plans is included in “Service cost.”(c) The actuarial assumptions used in the above computations for the years ended March 31, 2011:
a. Methods of attributing the projected benefit obligations to periods of service: straight-line basis
b. Discount rate:

2.0%

c. Expected rate of return on plan assets:

3.5%

d. The actuarial gain or loss and prior service cost are amortized by the straight-line method over 13 years, which are the estimatedaverage remaining years of service of the eligible employees.

The actuarial assumptions used in the above computations for the years ended March 31, 2012:
a. Methods of attributing the projected benefit obligations to periods of service: straight-line basis
b. Discount rate:

1.5%

c. Expected rate of return on plan assets:

3.5%

d. The actuarial gain or loss and prior service cost are amortized by the straight-line method over 13 years, which are the estimatedaverage remaining years of service of the eligible employees.

11. Contingent Liabilities
At March 31, 2011 and 2012, the Companies were contingently liable for the following items:
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)Discounted and endorsed trade notes receivable¥1,120

Guarantees of indebtedness of employees¥1,072$13,043

27

20

243

¥1,147¥1,092$13,286

12. Notes Receivable and Payable
Although March 31, 2012 was a bank holiday, the Company accounted for the notes whose maturity date was
14

March 31, 2012 as if they had been collected on the day.
The amounts of these notes receivable and payable are shown as follows:
2011

2012

2012

(Millions of yen)(Thousands of
U.S. dollars)

Notes receivable¥-

Notes payable¥528$6,424-

1,622

19,735¥-¥2,150$26,159

13. Land Revaluation
In accordance with the Law Concerning Revaluation of Land enacted on March 31, 1998 and the Law whichrevises a part of Law Concerning Revaluation of Land enacted on March 31, 2001, land owned by the Company
used for business was revalued, and the unrealized gain on the revaluation of land, net of deferred tax, wasreported as “Variance of land revaluation” within net assets, and the relevant deferred tax was included inliabilities as “Deferred taxes related to land revaluation” at March 31, 2002.
The fair value of the land at March 31, 2011 and 2012 was lower than its carrying amount by ¥8,520 millionand ¥8,811 million (US$107,203 thousand), respectively.

14. Net Assets
The Japanese Corporate Law (the “Law”) provides that amounts from capital surplus and retained earnings may
be distributed to the shareholders at any time by resolution of the shareholders or by the Board of Directors if
certain provisions are met subject to the extent of applicable sources of such distributions.
The Law further provides that amounts equal to 10% of such distributions be transferred to the capital reserve
included in capital surplus or the legal reserve included in retained earnings based on the applicable sources ofsuch distributions until the sum of the capital reserve and the legal reserve equals 25% of common stock.
Information regarding changes in net assets for the years ended March 31, 2011 and 2012 were as follows:(a) Shares issued and treasury stock
For the year ended March 31, 2011
Types of shares

Number of sharesat April 1, 2010

Increase

Number of shares

Decrease

at March 31, 2011

Thousands of shares
Share issued:
Common stock

251,127--

251,127

93

5

0

98

Treasury stock:
Common stock

Note: Increase of 5 thousand shares of treasury stock is due to purchases of shares less than standard unit.
Decrease of 0 thousand shares of treasury stock is due to sales of shares less than standard unit.

For the year ended March 31, 2012
Types of shares

Number of sharesat April 1, 2011

Increase

Number of shares

Decrease

at March 31, 2012

Thousands of shares
Share issued:
Common stock

251,127

57,142-308,269-

102

Treasury stock:
Common stock
98
4
Note: Increase of 57,142 thousand shares is due to issue of new shares attributable to a third-party.
Increase of 4 thousand shares in treasury stock is due to purchases of shares less than standard unit.

15

(b) Dividends
There were no dividends paid for the years ended March 31, 2011 and 2012.
The dividends whose cut-off date is included in the year ended March 31, 2012, however paid in the year
ending March 31, 2013, are shown as follows:
Total
Resolution

Type of shares

dividends

Origin of(millions ofdividends

Dividends
per share

Cut-off date

(yen)

yen)

Effective
date

Annual general
meeting of theCommonshareholders on

stock

308

Retained

March 31,

1.00

earnings

2012

June 28, 2012

June 27, 201215. Selling, General and Administrative Expenses
The breakdown of “Selling, General and Administrative Expenses” for the years ended March 31, 2011 and2012 was as follows:
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)

Shipping charges¥1,730¥1,204$14,649

Other selling expenses

1,329

1,068

12,995

Salaries and other allowances for employees

5,955

6,555

79,754Retirement benefits expenses for employees

893

830

10,099Retirement benefits expenses for directors and statutory auditors

19

31

377

Allowance for doubtful accounts

47

132

1,606

Depreciation and amortization cost
Other

667

683

8,310

6,346

6,813

82,893¥16,986¥17,316$210,683

Research and development expensed included in “Selling, general and administrative expenses” andmanufacture costs for the year ended March 31, 2011 and 2012 amounted to ¥822 million and ¥157 million,¥1,019 million (US$12,398 thousand) and ¥229 million (US$2,786 thousand), respectively.
16. Impairment of Fixed Assets
For the years ended March 31, 2011 and 2012, the Companies recognized loss on impairment of fixed assets of¥50 million and ¥ 89 million (US$1,083 thousand).
For assessment of impairment of fixed assets, the Companies group idle assets and assets for lease based on
an individual asset, and other assets based on the categories used in the company’s managerial accounting,where gain or loss periodically monitored.
For the year ended March 31, 2011, as for idle assets located in Fukushima, their market value hasremarkably fallen against their carrying amount and the book value of the assets was reduced to recoverable
amount. The amount written down was ¥50 million.
For the year ended March 31, 2012, as for idle assets and lease assets located in Miyagi and Oita, their market
value has remarkably fallen against their carrying amount and the book value of the assets was reduced torecoverable amount. The amount written down was ¥35 million (US$426 thousand) and ¥44 million (US$535
thousand), respectively. As for facilities related to roller manufacture located in Fukushima, their profitability
had remarkably declined due to business reform and the book value of the assets was reduced to recoverable
amount. The amount written down was ¥10 million (US$122 thousand).
The recoverable amounts are their net selling prices based on estimated selling prices and the published land
price. Roller facilities and leased assets are revalued based on value in use, and the future cash flow is
calculated with the discounted rate of 2.76%.
The amount written down was recorded as loss on impairment of fixed assets. The breakdown of loss on
impairment of fixed assets was as follows:

16

2011

2012

(Millions of yen)

Land

2012
(Thousands of
U.S. dollars)

¥50

¥64

$779

Buildings and structures

0

20

243

Other

0

5

61

¥50

¥89

$1,083

17. Loss on Disaster
Details of loss on disaster caused by the Great East Japan Earthquake are shown as follows:
2011

2012

(Millions of yen)Fixed expenses due to non-operating

2012(Thousands of
U.S. dollars)

¥224

¥35

Loss on disposal of property, plant and equipment

39

3

$426
36

Loss on disposal of inventories

52

1

12

Restoration expenses and others
Total

180

46

560

¥495

¥85

$1,034

18. Income Taxes
Significant components of the Companies’ deferred taxes at March 31, 2011 and 2012 were as follows:
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)

Deferred tax assets:
Loss carry-forwards¥7,294¥6,488$78,939

Unrealized gain on real estates

621

621

7,556

Accrued bonuses

587

587

7,142

-

316

3,845

303

283

3,443

341
1,937

179
1,721

2,178
20,939Other accounts payable
Land devaluation
Depreciation
Other
Subtotal deferred tax assets

11,083

10,195

124,042(9,454)(8,735)(106,278)

1,629

1,460

17,764(1,260)(1,128)(13,724)-(403)(4,903)

Unrealized holding gains on securities

(784)

(290)

(3,529)

Other

(359)

(296)

(3,602)

Total deferred tax liabilities(2,403)(2,117)(25,758)

Net deferred tax assets (liabilities):¥(774)¥(657)$(7,994)

Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Prepaid pension cost
Securities contributed to retirement benefit trust

Deferred tax assets related to land revaluation:

1,554

1,361

16,559Valuation allowance
Total deferred tax assets related to land revaluation(1,554)-(1,361)-(16,559)-

Deferred tax liabilities related to land revaluation:(5,410)(4,739)(57,659)(5,410)(4,739)(57,659)¥ (5,410)¥(4,739)$(57,659)

Total deferred tax assets (liabilities) related to land revaluation
Net deferred tax liabilities related to land revaluation:

17

The significant differences between the statutory tax rate and the effective tax rate for the years ended March 31,
2011 and 2012 are summarized as follows:
2011

2012

Statutory tax rate

39.5％

Change in valuation allowance

39.5%(258.2)0.7

Inhabitant tax per capita

50.8

10.3

Expenses not deductible for tax purposes

227.1

68.0

Equity in earnings of affiliates

22.8

3.7

Foreign taxes

22.5

11.3

Adjustment on deferred tax assets (liabilities) due to tax rate change-(14.5)

Other

5.3

1.8

109.9％

120.9%

Effective tax rate

On December 2, 2011, the “Act for Partial Revision of the Income Tax Act etc. for the Purpose of Creating
Taxation System Responding to Changes in Economic and Social Structures” (Act No. 114 of 2011) and the“Act on Special Measures for Securing Financial Resources Necessary to Implement Measures for
Reconstruction following the Great East Japan Earthquake” (Act No. 117 of 2011) were enacted. For fiscal
years beginning on or after April 1, 2012, the corporate tax rate will be reduced and a special reconstruction
corporate income tax will be imposed. Accordingly, the statutory tax rate used to calculate deferred tax assets
and liabilities will be reduced from the current rate of 39.5% to 37.4% for temporary differences expected to berealized from the fiscal year beginning on January 1, 2013 to the fiscal year beginning on January 1, 2015, andto 34.6% for temporary differences expected to be realized in fiscal years beginning January 1, 2016. As a resultof the above changes, net deferred tax liabilities (offset by deferred tax assets) and deferred tax expenses
decreased by ¥225 million (US$2,738 thousand) and ¥184 million (US$2,239 thousand), respectively, and net
unrealized holding gains on securities increased by ¥41 million (US$499 thousand). Deferred tax liabilities
related to land revaluation decreased by ¥671 million (US$8,164 thousand), and variance of land revaluation
increased by ¥671 million (US$8,164 thousand) as of and for the year ended March 31, 2012.
In addition, for fiscal years beginning on or after April 1, 2012, the net loss will be deducted up to 80 percentof the future taxable income in each fiscal year. As a result of this revision, deferred tax assets decreased by ¥87
million (US$1,059 thousand), and deferred tax expenses increased by ¥87 million (US$1,059 thousand).
19. Financial Instruments(a) Policy for financial instruments
According to the fund management policy of the Company, temporary surplus funds will be invested into thehighly secured financial assets, and necessary funds for finance investment are primarily borrowed throughbank loans. Derivative transactions are only used for hedging risk of the significant fluctuations in interest rates
and foreign currency exchange rates, not for speculative purpose.
(b) Financial instruments and accompanying risks
Trade notes and accounts receivable are exposed to customer credit risk. Trade receivables in foreign currencies
and foreign-currency loans among the Companies are exposed to exchange rate fluctuation risk, which ishedged through foreign currency forward exchange contracts. Investment securities are composed primarily ofequity securities of customers and exposed to the market value fluctuation risk.
Trade notes and accounts payable normally have payment terms of less than one year. Although part of theabove trade payables and foreign-currency borrowings are exposed to the risk of exchange rate fluctuation, they
are constantly controlled within the amount of foreign-currency trade receivables. Corporate bonds andlong-term debts, which have maturity dates within five years, are primarily utilized to secure financing forequipment. Certain bonds and borrowings which are based on variable interest rates are exposed to interest rate
fluctuation risk. However, they are hedged through derivative transactions, i.e. interest rate swap agreements. It
is possible that long-term debts under syndicated loan contracts which are decided by the financial regulatory
conditions will lose term benefit if any contradictions occurred.
Derivative transactions consist mainly of foreign currency forward exchange contracts which are used forhedging the risk of exchange rate fluctuations in trade receivables and payables denominated in foreign
currency, and interest rate swap contracts which are used for hedging the risk of interest rate fluctuations incorporate bonds and borrowings. As hedging policy, appropriate hedge instruments shall be selected per risk
category. Evaluation of hedge effectiveness is performed through comparing market value of hedge items or theamounts of cash flows with market value of hedge instruments or the amounts of cash flows.
(c) Risks management system associated with financial instruments
1) Credit risk management (Risk of default on payment by counterparts, etc.)
The Companies manage payment term and payment balance per trade transaction in order to control andmitigate credit risks due to financial situation difficulties in accordance with the Companies’ credit
management policy.
18

When dealing with the derivative transactions, the Companies only trade with highly rated financial
institutions to minimize the counterparty’s credit risks.
2) Market risk management (Risk of exchange rate and interest rate fluctuation, etc.)
The Company utilizes foreign currency forward exchange contracts to hedge the risk of exchange rate
fluctuation. Depending on the situation of foreign currency exchange market, the Companies use foreignforward exchange contracts for trade receivables in foreign currency. On the other hand, interest rate
swap agreements are utilized to hedge the interest rate fluctuation risk associated with corporate bonds
and borrowings.
The Company periodically reviews the fair values of financial instruments, such as marketable securities
and investment securities, and the financial position of the issuers. Based on this information andrelationship with the issuers, the Company evaluates whether the securities should be maintained or not.
Derivative transactions are performed and managed in accordance with the Companies’ credit
management policy.
3) Liquidity risk management on financing activities (Risk of inability to repay on due date)
The Company, as parent company, manages fund of the group companies. The finance department
prepares and updates financing plans periodically based on the group companies’ necessaries and keeps acertain amount of cash in hand for the purpose of liquidity risk management.
(d) Other supplementary in the fair value of financial instruments
The fair values of financial instruments are based on the markets prices or reasonable estimated fair values
when the fair values are not available. The estimated fair values will fluctuate due to variety of factors andassumptions.
Information regarding non-marketable other securities, for which it is extremely difficult to determine the fairvalue at March 31, 2011 and 2012 is shown as follows:
2011

2012

2012

Carrying amounts(Millions of yen)(Thousands of
U.S. dollars)

Other securities
Stocks and investments in unlisted companies¥1,523¥2,868$34,895¥1,523¥2,868$34,895

The carrying amounts and fair values of the financial instruments on the consolidated balance sheet as of March
31, 2011 and 2012 are summarized as follows:
2011
Carrying
amounts(1) Cash and time deposits

2012

Fair

Differences

Carrying

Values(Millions of yen)amounts

2012

Fair

Differences

Carrying

Values(Millions of yen)

Fair

Differences

amounts
Values(Thousands of U.S.dollars)¥11,025¥ 11,025¥-¥7,447¥ 7,447¥-$90,607$90,607$-accounts receivable

47,217--50,724--

617,155--

Allowance for doubtful

(307)

-

-

(196)

-

-

(2,384)--

46,91046,849(61)

50,52850,505(23)614,771

614,491

(280)

5,647

5,647

-

3,572

3,572

-

43,46043,460(328)(2) Trade notes andaccounts(3) Investment securities
and other securities(4) Trade notes andaccounts payable(23,883)(23,855)(28)(24,352)(24,325)(27)(296,289)(295,961)(5) Short-term borrowings(42,822)(42,822)-(37,060)(37,060)-(450,906)(450,906)

-

(90)

(88)

(2)

(70)

(70)

(0)

(852)

(852)

(0)

(21,061)(21,129)68(20,928)(21,031)103(254,630)(255,883)

1,253

(15)

(15)

-

(251)

(251)

-

(3,054)(3,054)

-

(0)

(0)

-

-

-

-

-

-

-

(6) Corporate bonds(7) Long-term borrowings(8) Derivative transactions(i) Hedge accounting notapplicable(ii) Hedge accounting
applicable
Notes:(1)

Cash and time deposits
The carrying amount approximates fair value due to the short maturity of these instruments.

(2)

Trade notes and accounts receivable
The fair value of trade notes and accounts receivable is based on the present value using appropriate current discount rate19

decided upon the recovery term and the credit risk.
(3)

Investment securities and other securities(4)

Trade notes and accounts payable

The fair value of investment securities is based on quoted market price.
The fair value of trade notes and accounts payable is estimated based on the present value of future cash flows using appropriate
current discount rate which is decided upon recovery term and credit risk too.
(5)

Short-term debts
The carrying amount approximates fair value due to the short maturity of these instruments. Long-term debts within one year arerecorded in long-term debts.

(6)

Corporate bonds and (7) Long-term debts
The fair value of corporate bonds and long-term debts are based on the current discounted interest rates which are borrowed withthe same conditions. Corporate bonds and long-term debts with the maturity term within one year are involved.

Redemption schedules for cash and trade receivables after March 31, 2011 and 2012 are summarized as follows:
Within 1 year

Over 1 year

Over 5 years

Within 1

Over 1 year

Over 5 years

and within 5

and within

year

and within 5

and within 10years

10 years

years

years

(Millions of yen)(Thousands of U.S.dollars)

2011
Cash and time deposits¥11,025¥-¥-

Trade notes andaccounts receivable

39,7907,427-

Total of the amounts¥50,815¥7,427¥-¥7,447

¥-

¥-

2012
Cash and time deposits$90,607$-$-

Trade notes andaccounts receivable

46,2694,455-

562,951

54,204-

Total of the amounts¥53,716¥4,455¥-$653,558$54,204$-

Redemption schedules for trade payables, corporate bonds and long-term borrowings after March 31, 2011
and 2012 are summarized as follows:
Within 1 year

Over 1 year

Over 5 years

Within 1

Over 1 year

Over 5 years

and within 5

and within 10

year

and within 5

and within 10

years

years

years

years

(Millions of yen)(Thousands of U.S.dollars)

2011
Trade notes and¥23,321¥562¥-

accounts payable
Corporate bonds

20

70

-

Long-term borrowings

7,878

12,883300

Total of the amounts¥31,219¥13,515¥300¥23,882

¥470

¥-

2012
Trade notes and$290,571$5,718$-accounts payable
Corporate bonds

70

-

-

852

-

Long-term borrowings

6,595

14,333-80,241

174,389-

Total of the amounts¥30,547¥14,803¥-$371,664$180,107$-

20. Derivatives
The following is a summary of the derivative contracts which do not meet the criteria for hedge accounting:(a) Currency-related Transactions
2012

2011

2012

Contracted

Fair

RecognizedContracted

Fair

RecognizedContracted

Fair

Recognizedamountvalue

gain (loss)

amountvalue

gain (loss)

amountvalue

gain (loss)

20

(Millions of yen)

(Millions of yen)(Thousands of U.S. dollars)

Forward foreignexchange contracts(Sell-USD)¥4,226¥ (14)¥ (14)¥5,308¥(209)¥(209)$64,582$ (2,543)$(2,543)(Sell-QAR)

1,410

(0)

(0)

351

(19)

(19)

4,271

(231)

(231)

(Sell-KWD)

-

-

-

9

(1)

(1)

110

(12)

(12)

¥-

¥-

¥-

¥3,957

¥(24)

¥(24)

$48,145$(292)$(292)

Forward foreignexchange contracts(Buy-USD)

Note: Fair value is based on the quoted market values provided by financial institutions.

The following is a summary of the derivative contracts which meet the criteria for hedge accounting:(a) Currency-related Transactions
2011

2012

2012

Contracted

Fair

Contracted

Fair

Contracted

Fair

amountvalue

amountvalue

amountValue(Millions of yen)

(Millions of yen)(Thousands of U.S. dollars)

Forward foreign exchange contracts
under hedge exposure (Sell)
QAR

¥354

¥-

¥-

¥-

$-

$-

SGD

4

-

-

-

-

-

¥8

¥(0)

¥-

¥-

$-

$-

Forward foreign exchange contracts
under deferral hedge (Sell)
EUR

Total
¥366
¥(0)
¥¥$$Note: Fair value of the forward foreign exchange contracts is included in the fair value of the accounts receivable which are hedged..

(b)Interest-related Transactions
2011

2012

2012

Contracted

Contracted

Fair

Contracted

Contracted

Fair

Contracted

Contracted

Fair

amountamount overvalue

amountamount overvalue

amountamount overvalue

1 year

1 year(Millions of yen)

1 year(Millions of yen)(Thousands of U.S. dollars)Interest rate swaps
Pay/fixed andReceive/floating
Long-term debt

¥9,998¥4,452¥¥7,903¥5,093¥$96,155
Note: Fair value of the interest rate swaps transaction is included in the fair value of the long-term debts.

$61,966$-

21. Per Share Information
Net income and net assets per share for the years ended March 31, 2011 and 2012 were as follows:
2011

2012
(Yen)

2012
(U.S. dollars)

Net income per share¥ 1.12¥ 0.57$0.007

Net assets per share¥137.79¥ 132.05$1.607

Net income per share is calculated based on the net income and the weighted average number of shares
outstanding during each year. Net assets per share are calculated based on the net assets excluding the minority
interests and the number of shares outstanding at the year end.

21

The basis for calculation of basic net income per share was as follows:
2011

2012

(Millions of yen)

2012
(Thousands of
U.S. dollars)

Net income

¥282

¥162

$1,971

Net income attributable to shares of common stock

¥282

¥162

$1,971(Thousands of shares)

Weighted average number of shares for basic net income

251,031

283,189

22. Other Comprehensive Income
Reclassification adjustments and tax benefit included in other comprehensive income are shown as follows:
2012

2012

(Millions of yen)(Thousands of
U.S. dollars)

Net unrealized holding gains (losses) on other securities
Increase during the year¥373

$4,538

Reclassification adjustments(1,553)(18,895)

Subtotal before tax(1,180)(14,357)

Tax effect

494

6,011

Net unrealized holding losses on other securities(686)(8,346)

0

0

671

8,164

(55)

(669)

Deferred gains on hedges
Decrease during the year
Variance of land revaluation
Tax effectForeign currency translation adjustments
Decrease during the year
Share of other comprehensive income of affiliates in equity method
Increase during the year
Total other comprehensive income

8

97

(62)

(754)

23. Segment Information
Business Segments
The businesses of the Company are divided based on the similarity in products and service categories into fiveclassifications whose financial information are separately available for the management to make decisions
regarding management resources allocation and evaluate each business segments result regularly.
The Companies primarily operate in the following five reportable business segments:(1) Electric Wire operations:
Bare conductors, insulated wires(2) Power System operations:Electric power cables, aluminum wires, power cable construction and power accessories(3) Magnet Wire operations:
Magnet wires(4) Communication System operations:
Optical fiber cables, communication cables, communication cable construction, network solution
and fiber photonics products(5) Device operations:
Precision devices, vibration controlling devices and wire harnesses

22

The business segment “Others” which is not stated as reportable business segment, includes the businesses ofselling superconducting wires, logistics and other operations.
Reportable segment performance is evaluated based on operating income or loss. The intersegment sales andtransfers between segments are made at arm’s length prices.
The business segment information for the Companies for the year ended March 31, 2011 is summarized asfollows:
2011
Segment Information

Reportable Business Segments
Electric

Power

MagnetCommunication

Wire

SystemWire

SystemOthersDevice

Total

Adjustments

Consolidated(Millions of yen)
Net sales
Outside customers¥56,075¥43,384¥21,041¥26,064¥16,320¥2,628¥165,512-Inter segment

20,721

982

897

1,975

976

8,266

33,817(33,817)-

Total¥76,796¥44,366¥21,938¥28,039¥17,296¥10,894¥199,329¥(33,817)¥165,512¥165,512

Segment income orloss
Segment assets¥974¥(196)¥369¥1,238¥568¥(185)¥2,768¥(235)¥2,533¥37,140¥44,218¥14,275¥20,744¥12,059¥8,559¥136,995¥5,376¥142,371

835

1,272

518

696

448

510

4,279

(63)

4,216

Depreciation
Investments in equity
method affiliates

183

573

-

-

85

-

841

-

841

Increase in fix assets

259

290

492

313

254

752

2,360

(153)

2,207

Notes:(1) Segment income or loss included in Adjustments of ¥235 million, mainly consisted of unrealized profits of ¥119 million andamortization of goodwill of ¥88 million.
(2) Segment assets included in Adjustments amounted to ¥5,376million, mainly consisted of the common assets not allocated to any
segment of ¥17,515 million, elimination of inter-segment transactions of ¥10,186 million and unrealized gain of ¥2,153 million.
The common assets not allocated to any segment mainly consisted of cash, time deposits and investment securities.
(3) Depreciation in Adjustments corresponds to unrealized gain.
(4) Increase in fixed assets in Adjustments corresponds to unrealized gain.
(5) Segment income or loss corresponds to consolidated operating income.

The business segment information for the Companies for the year ended March 31, 2012 is summarized asfollows:
2012
Segment Information

Reportable Business Segments
Electric

Power

MagnetCommunication

Wire

SystemWire

SystemOthersDevice

Total

Adjustments

Consolidated(Millions of yen)
Net sales
Outside customers¥64,508¥42,287¥22,186¥22,269¥18,005¥2,526¥171,781-

Inter segment

19,663

1,027

1,078

2,176

372

9,683

33,999(33,999)¥171,781-

Total¥84,171¥43,314¥23,264¥24,445¥18,377¥12,209¥205,780¥(33,999)¥171,781

Segment income orloss¥2,425¥(446)¥270¥(176)¥741¥(704)¥2,110¥(164)¥1,946

Segment assets¥40,181¥45,760¥14,701¥19,603¥13,664¥10,014¥143,923¥(424)¥143,499

536

1,069

363

513

361

509

3,351

(72)

3,279

1,526

538

-

-

70

62

2,196

-

2,196

367

398

313

332

853

782

3,045

(162)

2,883

Depreciation
Investments in equity
method affiliates
Increase in fix assets

23

Reportable Business Segments

2012
Segment Information

Electric

Power

MagnetCommunication

Wire

SystemWire

SystemOthersDevice

Total

Adjustments

Consolidated(Thousands of U.S. dollars)

Net sales
Outside customers$784,864$514,503$269,935$270,945$219,066$30,734$2,090,047-$2,090,047

239,238

12,495

13,116

26,475

4,526

117,814413,664(413,664)-$1,024,102$526,998$283,051$297,420$223,592$148,548$2,503,711$(413,664)$2,090,047

loss$29,505$(5,426)$3,285$(2,141)$9,016$(8,567)$25,672$(1,996)$23,676

Segment assets$488,879$556,759$178,866$238,508$166,249$121,840$1,751,101$(5,159)$1,745,942

6,521

13,006

4,417

6,242

4,392

6,193

40,771(876)

39,895method affiliates

18,567

6,546

-

-

852

754

26,719-26,719

Increase in fix assets

4,465

4,843

3,808

4,039

10,3789,515

37,048(1,971)35,077

Inter segment
Total
Segment income or

Depreciation
Investments in equity

Notes:(1) Segment income or loss included in Adjustments of ¥164 million (US$1,996 thousand), mainly consisted of unrealized
profits of ¥58 million (US$706 thousand) and amortization of goodwill of ¥88 million (US$1,071 thousand).
(2) Segment assets included in Adjustments amounted to ¥424 million (US$5,159 thousand), mainly consisted of the common
assets not allocated to any segment of ¥11,549 million (US$140,516 thousand), elimination of inter-segment
transactions of ¥9,898 million (US$120,428 thousand) and unrealized gain of ¥2,076 million (US$25,259 thousand).
The common assets not allocated to any segment mainly consisted of cash, time deposits and investment securities.
(3) Depreciation in Adjustments corresponds to unrealized gain.
(4) Increase in fixed assets in Adjustments corresponds to unrealized gain.
(5) Segment income or loss corresponds to consolidated operating income.
(6) Change in accounting policy
Until the year ended March 31, 2011, property, plant and equipment (except for buildings and structures) had primarily
been depreciated by the declining-balance method. Effective the year ended March 31, 2012, the straight-line method was
adopted by the Companies for all property, plant and equipment. As a result of this change, segment income of electric wire
segment, magnet wire segment and device segment increased by ¥158 million (US$1,922 thousand), ¥102 million (US$1,241
thousand), and ¥68 million (US$827 thousand), respectively. Segment loss of power system segment, communication systemsegment and other segment decreased by ¥106 million (US$1,290 thousand), ¥140 (US$1,703thousand), and ¥98 million(US$1,192 thousand), respectively.

Geographical Segments
Geographical segment sales for the years ended March 31, 2011and 2012 are summarized as follows:Year ended March 31, 2011

Japan

Asia

Other

Total

¥143,603¥21,543¥366¥165,512

Japan

Asia

Other

Total

¥152,557¥18,984¥240¥171,781

Japan

Asia

Other

Total

(Millions of yen)

Sales

Year ended March 31, 2012

(Millions of yen)

Sales

Year ended March 31, 2012

(Thousands of U.S. dollars)

Sales$1,856,150$230,977

Note: Countries and area are segmented based on the customers’ geographical locations.

24$2,920$2,090,047

Segment information on impairment losses on fixed assets for the years ended March 31, 2011 and 2012 aresummarized as follows:
Reportable Business Segments
Year ended March

Electric

Power

MagnetCommunication

31, 2011

Wire

SystemWire

SystemDeviceOthersEliminations

Total

36

14

-

50

DeviceOthersEliminations

Total

10

55

-

89

DeviceOthersEliminations

Total

122

669

(Millions of yen)
Impairment losses of

-

-

-

-

fixed assets

Reportable Business Segments
Year ended March

Electric

Power

MagnetCommunication

31, 2012

Wire

SystemWire

System(Millions of yen)

Impairment losses of

24

-

-

-

Year ended March

Electric

Power

MagnetCommunication

31, 2012

Wire

SystemWire

Systemfixed assets
Reportable Business Segments(Thousands of U.S. dollars)

Impairment losses of

292

-

-

-

-

1,083

fixed assets
Note: Impairment losses of fixed assets in other segment is related to the idled assets which are owned by the company engaged in administrative managementbusiness.

The Company additionally acquired shares of consolidated subsidiary of EXSYM Corporation which is under
the segment of Power System Operations for the year ended March 31, 2012. As a result of this acquisition,
gain on negative goodwill of ¥128 million (US$1,557 thousand) was recognized.

25