Consolidated Financial Statements
Toho Zinc Co., Ltd.
and Consolidated Subsidiaries
For the years ended March 31, 2012 and 2011
with Report of Independent Auditors

Independent Auditor’s Report
The Board of Directors
Toho Zinc Co., Ltd.
We have audited the accompanying consolidated financial statements of Toho Zinc Co., Ltd. and its consolidated
subsidiaries, which comprise the consolidated balance sheet as at March 31, 2012, and the consolidated
statements of income, comprehensive income, changes in net assets, and cash flows for the year then ended and asummary of significant accounting policies and other explanatory information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for designing and operating such internal
control as management determines is necessary to enable the preparation and fair presentation of theconsolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. The purpose of an audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal
controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in orderto design audit procedures that are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Toho Zinc Co., Ltd. and its consolidated subsidiaries as at March 31, 2012, andtheir consolidated financial performance and cash flows for the year then ended in conformity with accounting
principles generally accepted in Japan.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented for theconvenience of readers, and, in our opinion, the accompanying consolidated financial statements have been
properly translated on the basis described in Note 2.
Ernst & Young ShinNihon LLC
June 28, 2012
Tokyo, Japan

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Balance Sheets
March 31,2012
2011
(Millions of yen)

AssetsCurrent assets:
Cash and time deposits (Note 15)
Notes and accounts receivable, trade (Notes 3 and 15)
Inventories (Note 4)
Advance payment
Deferred tax assets (Note 12)
Other current assets
Less: Allowance for doubtful accounts
Total current assets

2012(Thousands of
U.S. dollars)(Note 2)

16,550 ¥15,997
31,534
1,179
492
1,752
(12)
67,492

12,73916,74627,867
1,674
2,317
734
(24)
62,055

Less: Accumulated depreciation
Net property, plant and equipment

23,73572,503
16,959183
830
114,211(62,351)
51,86021,40058,39016,959175
7,954
104,881(58,982)
45,898288,782
882,138
206,3382,226
10,098
1,389,597(758,620)
630,977

Investments and other assets:
Investment securities (Notes 8, 15 and 16)
Investments in non-consolidated subsidiaries (Note 7)
Deferred tax assets (Note 12)
Goodwill
Mining right (Note 6)
Other assets (Note 7)
Less: Allowance for doubtful accounts
Total investments and other assets

4,542
389
804
501
23,2381,756(782)
30,450

4,982
389
789
571
24,433
2,669(781)
33,05355,262
4,732
9,782
6,095
282,735
21,365(9,514)
370,483

141,007$ 1,822,642

Property, plant and equipment:
Buildings and structures (Note 8)
Machinery and equipment (Note 8)
Land (Notes 5 and 8)
Leased assets
Construction in progress

Total assets¥¥ 149,803¥$

201,362
194,634
383,671
14,344
5,986
21,316(146)
821,1702

March 31,
2012
2011
(Millions of yen)

Liabilities and net assets
Current liabilities:
Notes and accounts payable, trade (Notes 3 and 15)
Short-term borrowings (Notes 8 and 15)
Current portion of long-term debt (Note 8)
Commercial papers (Note 8)
Lease obligations (Note 8)
Accrued income taxes
Accrued expenses
Accrued directors’ bonus
Reserve for loss on disaster
Other current liabilities (Notes 3)
Total current liabilities¥

Long-term liabilities:
Long-term debt (Notes 8 and 15)
Lease obligations (Note 8)
Deferred tax liabilities related to land revaluation (Note 5)
Accrued employees’ pension and severance costs (Note 9)
Accrued directors’ and statutory auditors’ retirement benefits
Accrued environmental measures
Asset retirement obligations (Note 10)
Other long-term liabilities
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity:
Common stock:
Authorized – 264,000,000 shares
Issued– 135,855,217 shares in 2012 and 135,855,217
shares in 2011
Capital surplus
Retained earnings
Less: Treasury stock, at cost – 55,951 shares in 2012 and55,228 shares in 2011
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on other securities
Loss on deferred hedges
Surplus from land revaluation (Note 5)
Foreign currency translation adjustments
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

¥

7,589
22,478
3,317
2,000
104
240
2,220
25
0
6,012
43,987¥

7,321
22,509
2,760
2,000
209
1,906
3,246
30
368
10,70451,056

2012(Thousands of
U.S. dollars)(Note 2)$

92,334273,488
40,357
24,3331,265
2,920
27,010304
073,147535,186

33,307
131
5,061
2,444
52
151
1,144
2,640
44,93488,921

17,086
232
5,779
2,669
52
168
763
3,101
29,85480,911

405,243
1,593
61,57629,735632
1,837
13,91832,120546,708
1,081,895

14,6309,876
27,803

14,6309,876
27,748178,002120,160
338,277(23)
52,287(23)
52,232(279)
636,172

680
(237)
8,290
(139)
8,594
60,882
149,803 ¥

899
8,273
(2,371)(2,883)
7,572
100,863
1,763(1,691)
7,864
104,562
60,096
740,747
141,007 $ 1,822,642

The accompanying notes are an integral part of these financial statements.

3

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statements of Income
Year ended March 31,
2012
2011
2012
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Net sales
Cost of sales
Gross profit¥ 105,914
95,428
10,486¥ 103,628
87,62016,007$ 1,288,648
1,161,065
127,582

4,222
1,394
52
25
(7)
77
237
1,682
7,683
2,802

3,801
1,143
61
30
7
102
249
2,113
7,510
8,497

51,368
16,960
632
304
(85)
936
2,883
20,464
93,47834,091

229
(486)
123
–
106
(269)
(11)
29
(4)
–
–
1,008
(763)

293
(682)
939
(153)
(224)
(303)
(130)
35
–
2,266
3,213
–
(1,379)2,786(5,913)
1,496
–
1,289
(3,272)
(133)
352
(48)
–
–
12,264(9,283)

–
248
212
3,014

(6)
110
3,978
12,476

–
3,017
2,579
36,671

795
1,214
2,009
1,005
1,005

3,107
1,823
4,930
7,545
7,545

9,672
14,77024,443
12,227
12,227

Selling, general and administrative expenses:
Transportation expense
Salaries and wages
Pension and severance costs
Directors’ bonus
Provision of allowance for doubtful accounts
Depreciation
Research and development costs
Other
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Foreign exchange gains, net
Investment losses on equity method
Gain (loss) on valuation of derivatives, net
Loss on disposal of property, plant and equipment
Impairment loss on fixed assets (Note 6)
Gain on sales of investment securities, net
Write-down of investment securities
Gain on step acquisitions
Gain on redemption of investment securities
Gain on sales of mining right
Loss on disaster (Note 6)
Loss on adjustment for changes of accounting standard for asset
retirement obligations
Other, net
Income before income taxes and minority interests
Income taxes:
Current
DeferredIncome before minority interests
Net income

¥

¥

$

(U.S. dollars)(Note 2)(Yen)
Per share:
7.40

¥

55.57

$

0.09

¥
7.00
Cash dividends
The accompanying notes are an integral part of these financial statements.

¥

7.00

$

0.08

Net income – basic¥

4

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income

Income before minority interests¥

Other comprehensive income (Note 20):
Net unrealized losses on other securities
Gain (loss) on deferred hedges
Surplus from land revaluation
Foreign currency translation adjustments
Share of other comprehensive income of associates accounted
for using equity method
Total other comprehensive income
Comprehensive income¥

Comprehensive income attributable to:
Owners of the parent
Minority interests¥

Year ended March 31,
2012
2011
2012
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
1,005 ¥
7,545 $
12,227
(219)
2,133
718
(1,902)(1,754)(2,194)–
1,763(2,664)25,952
8,735(23,141)

–
730
1,736

640
(1,544)6,001 $–
8,881
21,121

6,001–

21,121
–

1,736
–

¥

¥

$

The accompanying notes are an integral part of these financial statements.

5

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statements of Changes in Net Assets
Shareholders’ equity

Number ofshares ofcommon stock
issuedCommonstock

Capitalsurplus

Accumulated other comprehensive income

Retainedearnings

Treasurystock (*)

(Thousands)Net
unrealized
gains(losses) on
othersecurities

Surplusfrom land
revaluation

Foreigncurrencytranslation
adjustments

Total
net assets(Millions of yen)

Balance at April 1, 2010
Dividends from surplus
Net income
Acquisition of treasury stock
Other
Net changes in items otherthan those in shareholders’equityBalance at March 31, 2011
Dividends from surplus
Net income
Acquisition of treasury stock
Other
Net changes in items otherthan those in shareholders’equity135,855
–
–
–
–

–

–

–

–

Balance at March 31, 2012

135,855¥ 14,630¥ 9,876¥ 27,803¥ 14,630––––¥ 9,876–––
0¥ 21,153 ¥
(950)
7,545
–
–

(23)
–
–
(0)
0

¥ 2,663
–
–
–
–

¥

(176)
–
–
–
–

¥ 7,572
–
–
–
–

¥

(649)
–
–
–
–

¥ 55,046
(950)
7,545
(0)
0

–

–

–

–

–

(1,763)(2,194)–2,413(1,544)

135,855––––

14,630
–
–
–
–

9,876
–
–
–
–

27,748
(950)
1,005
–
–

(23)
–
–
(0)
–

899
–
–
–
–

(2,371)
–
–
–
–

7,572
–
–
–
–

1,763
–
–
–
–

60,096
(950)
1,005
(0)
–

–
¥

(219)

(23)

¥

Shareholders’ equity

Commonstock

Balance at March 31, 2011
Dividends from surplus
Net income
Acquisition of treasury stock
Other
Net changes in items otherthan those in shareholders’equityBalance at March 31, 2012

Gain (loss)
on deferredhedgesCapitalsurplus

¥

2,133

718

(237)

¥ 8,290(1,902)

730

(139)

¥ 60,882

Foreigncurrencytranslation
adjustments

Total
net assets¥

Accumulated other comprehensive income

Retainedearnings$ 178,002 $ 120,160 $ 337,607––(11,558)––
12,227
–
–
–
–
–
–

–

680

–

–

$ 178,002 $ 120,160$ 338,277

Gain (loss)
on deferredhedgesSurplusfrom land
revaluation(Thousands of U.S. dollars )(Note 2)(279) $ 10,938$ (28,847)
–
–
–
–
–
–
(0)
–
–
–
–
–

$ 92,127––––

Treasurystock (*)$

Net
unrealized
gains(losses) on
othersecurities

–
$

(279)

(2,664)
$

8,273

$

25,9528,735(2,883)$ 100,863$$

21,450––––$ 731,183(11,558)
12,227(0)–(23,141)

8,881(1,691)$ 740,747(*) There were 55,951 shares and 55,228 shares of treasury stock as of March 31, 2012 and 2011,
respectively.

The accompanying notes are an integral part of these financial statements.

6

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
Year ended March 31,
2012
2011
2012
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss on fixed assets
Amortization of goodwill
Write-down of investments securities
Gain on redemption of investment securities
Decrease in allowance for doubtful accounts
Decrease in accrued directors’ bonus
Decrease in accrued employees’ pension and severance costs(Decrease) increase in reserve for loss on disaster
Interest and dividend income
Interest expenses
Investment losses on equity method
Gain on step acquisitions
Loss on disaster
Gain on sales of mining right
Net loss on sales and disposal of property, plant and equipment
Decrease in notes and accounts receivable, trade(Increase) decrease in inventories
Increase in notes and accounts payable, trade
Other, net
SubtotalInterest and dividend income received
Interest expense paid
Income taxes paid
Net cash (used in) provided by operating activities
Cash flows from investing activities:
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of intangible assets
Proceeds from sales of mining right
Payments for purchases of investment securities
Payments for purchases of investments in subsidiaries resulting inchange in scope of consolidation
Other, net
Net cash used in investing activities
Cash flows from financing activities:(Decrease) increase in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Redemption of convertible bonds
Cash dividends paid
Other, net
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 17)

¥

3,014
6,075
11
36
4
–
(11)
(5)
(224)
(368)
(229)
486
–
–
–
(1,008)253
734(3,721)795(2,318)
3,524
235
(474)
(3,478)(193)¥ 12,476
4,160
130
17
–
(3,213)
(2)
(9)
(226)
368
(293)
682
153
(2,266)
382
–
263
537
2,719
1,024
1,579
18,484469(575)(3,422)
14,954$(10,643)
29(3,133)2,091(32)(7,540)51(848)–(3,604)(129,492)
352(38,118)
25,441(389)–
648(11,039)(11,993)(121)(24,057)–
7,884(134,310)(31)
19,193(2,760)
–
(950)
(226)
15,22525
16,950(6,031)
(507)
(950)
(131)
9,354

(377)
233,519(33,580)–(11,558)(2,749)185,241

(180)
3,810
12,734¥ 16,545

280
532
12,201¥ 12,734(2,190)46,356
154,933
201,301$

36,67173,914
133
438
48
–
(133)
(60)
(2,725)(4,477)(2,786)
5,913–––(12,264)
3,078
8,930
(45,273)
9,672(28,202)42,876
2,859(5,767)(42,316)(2,348)The accompanying notes are an integral part of these financial statements.

7

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2012

1.

Summary of Significant Accounting Policies(a) Basis of presentation
Toho Zinc Co., Ltd. (the “Company”) and its domestic subsidiaries maintain their books of account inconformity with accounting principles generally accepted in Japan, and its foreign subsidiaries
maintain their books of account in conformity with International Financial Reporting Standards(“IFRS”) or those of their countries of domicile.
The accompanying consolidated financial statements of the Company and its consolidated subsidiaries(the “Companies”) are prepared on the basis of accounting principles generally accepted in Japan,
which are different in certain respects as to application and disclosure requirements of IFRS, and arecompiled from the consolidated financial statements prepared by the Company as required by the
Financial Instruments and Exchange Act of Japan.
Certain amounts in the prior years’ financial statements have been reclassified to conform to thecurrent year’s presentation.
As permitted under the Financial Instruments and Exchange Act, amounts of less than one million yen
have been omitted. As a result, the totals shown in the accompanying consolidated financial
statements (both in yen and in U.S. dollars) do not necessarily agree with the sums of the individual
amounts as of and for the years ended March 31, 2012 and 2011.
Certain items presented in the consolidated financial statements submitted to the Director of Kanto
Finance Bureau in Japan have been reclassified in the accompanying consolidated financial statements
for the convenience of readers outside Japan.
(b) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
significant subsidiaries that are controlled by the Company. Under the effective control approach, allsignificant majority-owned companies are to be consolidated. Additionally, companies in whichshare ownership equals 50% or less may be required to be consolidated in cases where suchcompanies are effectively controlled by other companies through the interests held by a party who has
a close relationship with the parent. All significant intercompany transactions and accounts are
eliminated in consolidation.
(c) Foreign currency translation(1) Foreign currency transaction
All receivables and payables denominated in foreign currencies are translated into Japanese yenat the exchange rate prevailing at the balance sheet date.

8

(2) Foreign currency financial statements
The assets and liabilities of the foreign consolidated subsidiaries are translated into Japanese yenat the current exchange rate prevailing at the balance sheet date. Revenue and expense
accounts are translated at the current exchange rate prevailing at the balance sheet date.
Foreign currency translation adjustments are included in net assets.
(d) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows are composed of cash on hands,bank deposits withdrawable on demand and short-term investments with original maturity of threemonths or less and minor risk for the fair value fluctuation.
(e) Inventories
Merchandise, finished goods, semi-finished goods, work in process and raw materials are stated at thelower of cost or net selling value, for which cost is primarily determined by the first-in first-out
method. Supplies are stated at the lower of cost or net selling value, for which cost is determined by
the moving average method.
(f)Financial instruments(1) Investment securities
Marketable securities classified as other securities are carried at fair value based on the averageof market price during the last month of the fiscal year with any changes in unrealized gains orlosses, net of income taxes, included directly in net assets. Cost of securities sold is determinedby the moving average method. Non-marketable securities classified as other securities arecarried at cost determined by the moving average method.
(2) Derivatives
The Company has entered into various derivative transactions, including forward exchange
contracts, interest rate swaps and commodity futures, in order to manage certain risks arisingfrom adverse fluctuations in foreign currency exchange rates, interest rates and commodity
prices.
All derivatives are recognized in the balance sheet at fair value, with changes in fair value
included in net income for the period in which they arise, except for derivatives that aredesignated as “hedging instruments” (see Note 1. (f) (3) Hedge accounting below).
(3) Hedge accounting
Gains or losses arising from changes in fair value of the derivatives designated as “hedging
instruments” are deferred as an asset or liability and included in net income in the period during
which the gains and losses on the hedged items or transactions are recognized.
Hedging instruments are derivative transactions including forward exchange contracts,
commodity futures and interest rate swaps. The related hedged items are receivables andpayables denominated in foreign currency in connection with raw materials and finished goods,
finished goods and long-term debt, respectively.
The Company has a policy to utilize the above hedging instruments in order to reduce theCompany’s exposure to the risks of the currency, price and interest rate fluctuations.

9The Company evaluates effectiveness of its hedging activities by reference to the accumulated
gains or losses on the hedging instruments and the related hedged items from the commencementof the hedging transactions. The Company omits to assess hedge effectiveness of interest rate
swaps which qualify for hedge accounting and meet specific criteria.
(g) Property, plant and equipment and depreciation
Property, plant and equipment, except for leased assets, are stated at cost and have been mainly
depreciated by the straight-line method over the estimated useful lives of respective assets.
(h) Intangible assets and amortization
Mining right is mainly amortized by using the unit-of-production method. Goodwill, software forinternal use and other assets are amortized by using the straight-line method. Amortization period of
goodwill is determined on a reasonable basis within 20 years. Software for internal use is amortizedover estimated useful lives (5 years).
(i)

LeasesLeased assets which are under finance leases and capitalized are primarily the storage equipments(structures) in Smelting business and depreciated over the lease terms of the respective assets by thestraight-line method with no residual value.
Finance leases which commenced prior to April 1, 2008 and do not transfer ownership of the leased
assets to the lessee continue to be accounted for as operating leases.

(j)

Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount sufficient to cover possible losses oncollection. The allowance consists of the estimated uncollectible amounts with respect to specificreceivables plus an amount based on historical experience of bad debt with respect to otherreceivables.

(k) Accrued directors’ bonus
Accrued directors’ bonus at the balance sheet date is based on an estimate of the amount to be paid asbonuses for services rendered by that date.
(l)

Accrued employees’ pension and severance costs
Accrued employees’ retirement benefits are provided mainly at an amount calculated based on theretirement benefit obligation and the fair value of the pension plan assets as of the balance sheet date,as adjusted for unrecognized actuarial gain or loss and unrecognized prior service cost. The expected
retirement benefit is attributed to each period by the straight-line method over the estimated years ofservice of the employees.
Actuarial gain and loss are amortized by the straight-line method over a certain period (10 years),
which is within the average remaining years of service of the employees at the time when the gain orloss arises, from the year following the year in which it arises.
Prior service cost is amortized as incurred by the straight-line method over a certain period (10 years)
which is within the average remaining years of service of the employees at the time when it arises.

10(m) Accrued directors’ and statutory auditors’ retirement benefits
In order to prepare for the disbursements of the directors’ and statutory auditors’ retirement benefits,
the Companies record an amount required to be paid out as at the end of the fiscal year which is
calculated based on internal rules.
Note that the Company discontinued the system for directors’ and statutory auditors’ retirement
benefits in accordance with a resolution by the board of directors held on May 22, 2007, and hence thebalance as at the end of this consolidated fiscal year is the amount based on the periods in which thedirectors and statutory auditors served prior to June 2007.
(n) Accrued environmental measures
Accrued environmental measures are estimated and recorded to provide for future potential costs
related to disposal of polychlorinated biphenyl waste.
(o) Reserve for loss on disasterIn order to prepare for future payments of restoration costs on disaster, the Companies provide areserve at an amount which is reasonably estimated to be incurred in subsequent periods.
(p) Income taxes
Deferred tax assets and liabilities are determined based on the differences between the financial
reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates
and laws which will be in effect when the differences are expected to reverse.
(q) Recognition of revenues
Revenues and costs of construction contracts of which the percentage of completion can be reliably
estimated are recognized by the percentage-of-completion method. The percentage of completion is
calculated as the cost incurred to the estimated total cost. The completed-contract method continues tobe applied for contracts for which the percentage of completion cannot be reliably estimated.
(r) Appropriation of retained earnings
Cash dividends and transfers to legal reserve are recorded in the fiscal year in which the proposed
appropriation of retained earnings is approved at the shareholders’ meeting.
(s) Net income per share
Net income per share is computed based on the net income available for distribution to shareholders ofcommon stock and the weighted average number of shares of common stock outstanding during the
year.
(t)

Asset retirement obligations
Asset retirement obligations are calculated based on the estimated exploration period fromcommencement of operation, which is deemed as estimated usable period, using discount rate of 3%
and 5% for the years ended March 31, 2012 and 2011, respectively. The amount presents mainly the
obligations of CBH Resources Ltd. (“CBH”) to restore its mine sites at Endeavor Mine and Rasp Mineto original states upon closure.

11

(u) Accounting changes
Effective April 1, 2011, the Company adopted the “Accounting Standard for Accounting Changes andError Corrections” (ASBJ Statement No. 24 issued 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).

2.

U.S. Dollar Amounts

U.S. dollar amounts presented in the accompanying consolidated financial statements and notes areincluded solely for the convenience of readers outside Japan, at the prevailing exchange rate of ¥82.19 to
U.S.$1 on March 30, 2012. These translations should not be construed as representations that the yenamounts actually represent, or have been or could be converted into U.S. dollars at that or any other rate.

3.

Notes Receivable and Notes Payable Maturing at Fiscal Year-End

March 31, 2012 was a bank holiday, however notes maturing on that day were accounted for as if they weresettled on their maturity date. The settled amounts of notes receivable and notes payable maturing on
March 31, 2012 were as follows:
March 31,2012
2011
(Millions of yen)

Notes receivable
Notes payable
Notes payable - equipment

4.

¥

169
249
110

¥

–
–
–

2012
(Thousands of
U.S. dollars)
$

2,056
3,029
1,338

Inventories

Inventories at March 31, 2012 and 2011 consisted of the following:
March 31,2011
2012
(Millions of yen)
Merchandise and finished goods
Work in process
Raw materials and supplies
Total

¥

¥

9,001
8,219
14,31331,534¥¥

4,548
10,541
12,77627,867

2012(Thousands of
U.S. dollars)$$

109,514100,000
174,145
383,67112

5.

Land Revaluation

In accordance with the Land Revaluation Law, the Company’s land used for its business operations wasrevalued as follows:
Date of revaluation: March 31, 2000
The difference between total fair value of land and the total book value after revaluation of land at
March 31, 2012 and 2011 were ¥6,496 million ($79,036 thousand) and ¥6,116 million, respectively.
The tax effect of the excess on revaluation is recorded as deferred tax liabilities related to land revaluation
which is included in liabilities, and the remainder, net of income taxes portion of the excess on revaluation,is presented as surplus from land revaluation which is included in net assets.

6.

Impairment Loss on Fixed Assets

The Companies have recognized impairment losses on the assets group for the years ended March 31, 2012
and 2011 as follows:

Location
Fujioka City, Gunma

Year ended March 31, 2012
Use
Category
Idle assets

Machinery and equipment
Other(Millions ofyen)(Thousands of
U.S. dollars)

¥

$

¥

10
0
11

Year ended March 31, 2011
Use
Category(Millions ofyen)Annaka City, Gunma(Note*)

Idle assets

Buildings and structures
Machinery and equipment
Other

¥

Iwaki City,
Fukushima

Idle assets

Buildings and structures
Machinery and equipment
Other

Western Australia,
Australia

Resource
assetsMining right

Location

$

121
0
133

217
163
0
382
10
4
0
15

¥

114
512

Business assets of the Company are grouped based on the categories used for its managerial accounting.
With respect to idle assets, each asset is treated as an individual unit to apply the accounting for the
impairment.

13

The Company recognized impairment losses for entire book value of idle assets on the ground that they
were projected to generate no future cash inflows and were not readily salable either.
Note*

Impairment loss on idle assets at Annaka City, Gunma, amounting to ¥382 million was included
in loss on disaster for the year ended March 31, 2011.

The Company recognized loss on disaster for the years ended March 31, 2012 and 2011 as follows:Year ended March 31,
2011
2012
2012
(Millions of yen)(Thousands of
U.S. dollars)
Disaster restoration costs
Provision for loss on disaster
Impairment loss on fixed assets and loss oninventories
Fixed costs during idle period and other expenses
Loss on disaster, total

7.

¥

118
–

¥

–
645
¥

763

¥

–
368
722
288
1,379

$

1,435
–
–
7,847

$

9,283

Investments in Non-Consolidated Subsidiaries and Affiliates

Investments in non-consolidated subsidiaries and affiliates as of March 31, 2012 and 2011 are summarized
as follows:
March 31,2011
2012
(Millions of yen)
Subsidiaries
Affiliates

¥
¥

389
94
484

¥
¥

389
94
484

2012
(Thousands of
U.S. dollars)
$
$

4,732
1,143
5,888

14

8.

Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt at March 31, 2012 and 2011 consisted of the following:
March 31,

Amount(Millions ofyen)
Short-term borrowings
Commercial papers
Current portion of
long-term debt
Current portion of leaseobligations
Long-term debt
Lease obligations
Total

¥

¥

2012
Weighted
averageinterest rate

Last due on

2011

2012

Amount(Millions ofyen)Amount(Thousands of
U.S. dollars)¥$

22,5092,000

22,478
2,000

0.8%
0.1

3,317

1.0

2,760

40,357104
33,307
131
61,338

–
0.8
–

209
17,086232

1,265
405,243
1,593
746,295

2013.4 – 2023.10
2013.4 – 2025.3¥

44,798$273,488
24,333

Average interest rates are calculated by using weighted-average interest rates as at March 31, 2012.
Average interest rates on lease obligations are not provided because interest equivalents included in the
total lease payments are allocated to each applicable fiscal year on a straight-line basis.
The maturities of long-term debt and lease obligations outstanding as at March 31, 2012 were as follows:Year ending March 31,
2013
2014
2015
2016
2017
Thereafter
Total

Long-term
Lease
debt
obligations(Millions of yen)¥
3,317 ¥
104
2,897
18
11,024
14
7,331
10
6,458
9
5,596
78
¥
36,625 ¥235

Long-term
Lease
debt
obligations(Thousands of U.S. dollars)$
40,357 $1,265
35,247219
134,128
170
89,195
121
78,574
109
68,086949$ 445,613 $2,859

Assets pledged as collateral for the long-term debt, including the current portion, at March 31, 2012 and2011 were as follows:

15

March 31,
2011
2012
(Millions of yen)

Pledged assets

2012(Thousands of
U.S. dollars)

Land (*1)
Buildings and structures (*1)
Machinery and equipment (*1)
Investment securities(*2)¥

13,792
4,924
7,900
160

¥

13,792
4,752
8,605
155

$

167,806
59,90996,118
1,946

Total

¥

26,778¥27,305$

325,806(*1) For the above assets, a revolving mortgage is set at the maximum amount of ¥1 million ($12thousand) with one bank at March 31, 2012 and 2011.
(*2) This assets are pledged for the long-term debt, including the current portion, of ¥56 million($681 thousand) and ¥47 million at March 31, 2012 and 2011, respectively.

9.

Employees’ Pension and Severance Costs

The Company and its domestic consolidated subsidiaries have defined benefit plans, i.e., defined benefit
corporate pension plans and lump-sum payment plans, covering substantially all employees who areentitled to lump-sum or annuity payments, the amounts of which are determined by reference to their basic
rates of pay, length of service, and conditions under which termination occurs.
The funded status of retirement benefit obligations at March 31, 2012 and 2011 were as follows:
March 31,2011
2012
(Millions of yen)
Projected benefit obligations¥

Plan assets at fair value
Unfunded status
Unrecognized actuarial loss
Unrecognized prior service costs
Accrued employees’ pension and severance costs

¥

3,911
(1,575)
2,335
(125)
233
2,444

¥

¥

4,182
(1,675)
2,506
(110)
272
2,669

2012
(Thousands of
U.S. dollars)$$

47,584(19,162)
28,409(1,520)2,834
29,735The compositions of employees’ pension and severance costs for the years ended March 31, 2012 and 2011were as follows:Year ended March 31,
2011
2012
2012
(Millions of yen)(Thousands of
U.S. dollars)Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service costs

¥

Total

¥

191
79
(33)
75
(38)
274

¥

¥

193
85
(34)
93
(38)
298

$

$

2,323
961
(401)
912
(462)
3,333

16

The assumptions used in accounting for the defined benefit pension plans for the years ended March 31,
2012 and 2011 were as follows:Year ended March 31,
2011
2012
Discount rate
Expected rate of return on plan assets

10.

2.0%
2.0%

2.0%
2.0%

Asset Retirement Obligations

The changes in asset retirement obligations for the years ended March 31, 2012 and 2011 were as follows:Year ended March 31,
2011
2012
2012
(Millions of yen)(Thousands of
U.S. dollars)
Balance at beginning of year
Additional provisions associated with the purchasesof property, plant and equipment
Reconciliation associated with the passage of time
Increase due to newly consolidated subsidiary
Foreign currency translation adjustments¥

763

Balance at end of year

¥

412
21
–
(52)
1,144

11.

¥

28

$

105
15
549
64
¥

763

9,283
5,012
255
–
(632)

$

13,918Net Assets

The Companies Act of Japan provides that an amount equal to 10% of the amount to be disbursed as
distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the common stock. Such distributions can be made at any
time by resolution of the stockholders, or by the Board of Directors if certain conditions are met.

17

12.

Income Taxes

At March 31, 2012 and 2011, significant components of deferred tax assets and liabilities were as follows:
March 31,
2011

2012
(Millions of yen)
Deferred tax assets:
Accrued employees’ pension and severance costs
Asset retirement obligations

¥

905
334

¥

1,086
220

2012
(Thousands of
U.S. dollars)$

11,011
4,063

Property, plant and equipment

230

252

2,798

Accrued employees’ bonus
Net loss carried forward

194
183

277
741

2,360
2,226

Inventories write-off

170

80

2,068

Loss on deferred hedges
Elimination of intercompany profits

145
101

1,627
122

1,764
1,228

–
–
1,012

163
149
1,245

–
–
12,312

3,279
(516)
2,763

5,965
(682)
5,283

39,895(6,278)33,617

(833)
(361)

(1,262)(606)(10,135)(4,392)

(17)
(7)
(247)

$

(206)
(85)
(3,005)(17,848)
15,768$61,576

Accrued enterprise tax
Reserve for loss on disaster
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Mining right
Unrealized gains on other securities
Special tax-purpose reserve for reduction entry of tangible
assetsAsset retirement obligations
Other
Total deferred tax liabilities
Net deferred tax assets¥(1,467)
1,296

Deferred tax liabilities:
Deferred tax liabilities related to land revaluation

¥

5,061

¥

(19)
(8)
(278)
(2,176)
3,106

¥

5,779

18

Reconciliation between the statutory tax rate and the effective tax rate for the year ended March 31, 2012
was as follows:

Statutory tax rate
Increase (decrease) due to:Entertainment and other non-deductible expenses
Dividend income and other non-taxable income
Effect on elimination of the dividend income fromconsolidated subsidiaries
Inhabitants’ per capita taxes
Reversal of deferred tax assets of foreign consolidated
subsidiaries
Elimination of the intercompany profits
Reduction of deferred tax assets due to change in income
tax rate
Change in valuation allowance
Other
Effective tax rate

Year ended
March 31, 2012
40.7%
0.6
(5.0)
4.4
0.9
21.4
3.4
1.7
(3.2)
1.8
66.7%

The reconciliation between the statutory tax rate and the effective tax rate for the year ended March 31,
2011 is not shown because the difference was less than 5% of the statutory tax rate.

Following the promulgation on December 2, 2011 of the “Act for Partial Revision of the Income Tax Act,etc. for the Purpose of Creating a Taxation System Responding to Changes in Economic and Social
Structures” (Act No. 114 of 2011) and the “Act for Special Measures for Securing Financial Resources
Necessary to Implement Measures for Reconstruction following the Great East Japan Earthquake” (Act No.
117 of 2011), the corporate income tax rate will be reduced and the special reconstruction corporation tax, asurtax for reconstruction funding after the Great East Japan Earthquake, will be imposed for the fiscal years
beginning on or after April 1, 2012. In line with these changes, the statutory tax rate to calculate deferred
tax assets and liabilities was changed from 40.7% to 38.0% for temporary differences expected to reverse
during the periods from the fiscal year beginning on April 1, 2012 to the fiscal year beginning on April 1,
2014, and to 35.6% for temporary differences expected to reverse from the fiscal years beginning on orafter April 1, 2015, respectively.
As a result of this change, the net amount of deferred tax assets decreased by ¥85 million ($1,034 thousand)and income taxes – deferred, net unrealized gains (losses) on other securities and gain (loss) on deferredhedges increased by ¥127 million ($1,545 thousand), ¥51 million ($620 thousand) and ¥10 million ($121
thousand), respectively. Deferred tax liabilities related to land revaluation decreased by ¥718 million($8,735 thousand), and surplus from land revaluation increased by the same amount accordingly.

19

13.

LeasesAs lessees:
As described in Note 1 (i), the Company and domestic consolidated subsidiaries accounted for financeleases which commenced prior to April 1, 2008 and do not transfer ownership of the leased assets to thelessee as operating leases.
The following pro forma amounts represent the acquisition cost (including the interest portion thereon),accumulated depreciation and net book value of the leased assets at March 31, 2012 and 2011 which would
be reflected in the consolidated balance sheets if these lease transactions were accounted for as financeleases:March 31,
2011

2012
(Millions of yen)
Acquisition cost of machinery and equipment
Accumulated depreciation of machineryand equipment
Net book value

¥

106

¥

(86)
20

Acquisition cost of furniture and fixtures
Accumulated depreciation of furniture and fixtures
Net book value

¥
¥

6
(4)
2

¥

125

2012
(Thousands of
U.S. dollars)
$

(88)

1,289
(1,046)

¥

37

$

243

¥

46
(40)
5

$

73
(48)
24

¥

$

Future minimum lease payments (including the interest portion thereon) subsequent to March 31, 2012 forfinance leases accounted for as operating leases are summarized as follows:Year ending March 31,
20132014 and thereafter
Total(Millions ofyen)(Thousands of
U.S. dollars)

¥

$

¥

14
8
22

$

170
97
267

Lease payments relating to finance leases accounted for as operating leases in the accompanying
consolidated financial statements for the years ended March 31, 2012 and 2011 totaled ¥20 million ($243
thousand) and ¥28 million, respectively. The pro forma depreciation of the assets leased under financeleases accounted for as operating leases for the years ended March 31, 2012 and 2011 amounted to ¥20
million ($243 thousand) and ¥28 million, respectively. The pro forma depreciation is computed by thestraight-line method over the lease term with no residual value.
There were no impairment losses allocated to leased assets for the years ended March 31, 2012 and 2011.

20

14.

Commitments and Contingent Liabilities

The Companies were contingently liable as guarantors for loans of other companies in the aggregate
amount of ¥365 million ($4,440 thousand) and ¥463 million at March 31, 2012 and 2011, respectively.
The Company has entered into loan commitment agreements amounting to ¥5,600 million ($68,134
thousand) and ¥5,600 million with two financial institutions at March 31, 2012 and 2011, respectively.
The loans payable outstanding was zero, and therefore, the unused balance was ¥5,600 million ($68,134
thousand) and ¥5,600 million under the credit facilities as of March 31, 2012 and 2011, respectively.
The Company has repurchase obligations of ¥559 million ($6,801 thousand) and ¥688 million inconnection with securitization as of March 31, 2012 and 2011, respectively.

15.

Financial Instruments

Overview(1) Policy for financial instruments
The Companies raise funds mainly through bank borrowings in consideration of their business plans.
The Companies invest their temporary surplus funds in highly liquid financial assets and raise
short-term operating capital through bank borrowings and issuances of commercial papers. The
Companies use derivatives to avoid after-mentioned risks and do not enter into derivatives for
speculative or trading purposes.
(2) Descriptions of financial instruments and related risks
Trade receivables––notes and accounts receivable, trade––are exposed to customer credit risk. Trade
receivables denominated in foreign currencies which are derived from foreign operations are exposed
to foreign currency risk, and such risk is hedged by forward foreign exchange contracts.
Investment securities are mainly composed of equity securities of companies with business
relationship and exposed to market risk.
Trade payables––notes and accounts payable, trade––are mostly due within two months or less.
Trade payables denominated in foreign currencies are exposed to foreign currency risk, and such risk
is hedged by forward foreign exchange contracts.
Trade receivables and payables in connection with Smelting business are exposed to commodity pricefluctuation risk of London Metal Exchange (“LME”), and such risk is hedged by metal futurescontracts.
Long-term debt is principally for the purpose of making capital investments, and due up to 11 years
from the consolidated balance sheet date. Certain long-term debt is exposed to interest rate
fluctuation risk, and such risk is hedged by derivatives (interest rate swaps).
As for derivatives, the Companies have entered into forward foreign exchange contracts to hedge theforeign currency risk arising from the trade receivables and payables denominated in foreign
currencies, metal futures contracts to hedge commodity price fluctuation risk of LME arising from thetrade receivables and payables on Smelting business and interest rate swaps to hedge fluctuation risk
deriving from interest payment of long-term debt. See Note 1. (f) (3) for information about themethod of hedge accounting, hedging instruments and hedged items, hedging policy, and assessment21

of hedge effectiveness.
(3) Risk management for financial instruments(a) Management of credit risk (risk of default by customers or counterparties)
In accordance with the internal rules of the Company, sales departments of each division of theCompanies periodically monitor creditworthiness of their main customers and manage due dates
and outstanding balances by customer. In addition, the Companies are making efforts to
identify uncollectibility in the earlier stage and mitigate risks of bad debts, due to customers withfinancial difficulties.
The Companies believe that the credit risk of derivatives is insignificant as they enter into
derivative transactions only with financial institutions with high credit ratings.
(b) Management of market risks (risks of fluctuations in foreign exchange rates, commodity prices,interest rates and others)
For trade receivables and payables denominated in foreign currencies, the foreign currency riskof the Company identified by currency on a monthly basis is hedged by forward foreignexchange contracts. In order to mitigate commodity price fluctuation risks of LME for tradereceivables and payables on Smelting business, the Company has entered into metal futurescontracts. In addition, the Company has entered into interest rate swap transactions to mitigate
the interest rate fluctuation risk for interest payment of long-term debt.
For investment securities, the Companies periodically monitor the fair values and financial
position of the issuers and continuously review the holding status taking into account market
conditions and relationships with the issuers.
Derivative transactions are conducted and managed by treasury personnel including directors
and each division, and risk management is sufficiently conducted by making reports tomanagement every time transactions are executed as well as on a periodical basis.
(c) Management of liquidity risk on funding (risk of default at due dates)
Based on the report from each department and affiliates, the department in charge of theCompany prepares and updates its cash flow plan on a timely basis and manages liquidity risk by
maintaining liquid funds.
(d) Supplementary explanation of the fair value of financial instruments
The fair value of financial instruments is based on market price if available. When there is nomarket price available, fair value is reasonably calculated. Since various assumptions andfactors are reflected in the calculation of fair value, different assumptions and factors could
result in different fair value. In addition, the notional amounts of derivatives in Note 18
Derivative Transactions are not indicative of the market risk involved in derivative transactions.

22Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheets as of March 31, 2012 and 2011
and fair value are shown in the following table. Financial instruments whose fair value is extremely
difficult to determine are not included in the following table (Please refer to Note 2 below).

(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities
Derivatives (*2)

(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities
Derivatives (*2)

Carrying value

March 31, 2012
Fair value(Millions of yen)

¥

¥

¥

16,55015,997
3,629
36,177
7,589
22,47836,62566,692(383)¥

16,55015,997
3,629
36,177
7,589
22,47836,714
66,781(383)

Carrying value

March 31, 2011
Fair value(Millions of yen)

¥

¥

¥

12,73916,746
4,068
33,555
7,321
22,50919,84649,677(4,106)¥

12,73916,746
4,068
33,555
7,321
22,50919,84349,674(4,106)

Difference

¥

¥

–
–
–
–
–
–
89
89
–

Difference

¥

¥

–
–
–
–
–
–
(2)
(2)
–

March 31, 2012
Carrying value
Fair value
Difference(Thousands of U.S. dollars)(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets$(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities
Derivatives (*2)$

201,362
194,634
44,153440,163
92,334273,488445,613
811,436(4,659)$$201,362
194,634
44,153440,163
92,334273,488446,696
812,519(4,659)

$

$

–
–
–
–
–
–
1,082
1,082
–

23

(*1) Current portion of long-term debt is included in long-term debt at March 31, 2012 and 2011.
(*2) The value of assets and liabilities arising from derivatives is shown at net value, and the net liability
position is shown in parenthesis.
Notes:
1.

Methods to calculate the fair value of financial instruments and other matters related to securities andderivative transactions
Assets(1) Cash and time deposits and (2) Notes and accounts receivable, trade
Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Investment securities
The fair value of equity securities is based on quoted market prices. For information on securities
classified by holding purpose, please refer to Note 16 Investment Securities.
Liabilities(1) Notes and accounts payable, trade and (2) Short-term borrowings
Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Long-term debt
For long-term debt with floating interest rates, its carrying value approximates fair value since thedebt reflects the market interest rates in a short period of time and the credit conditions of theCompany does not change significantly after the debt is executed. For long-term debt with fixedinterest rates, the fair value is based upon the present value of the total of principal and interest
discounted by the interest rate to be applied if similar new borrowings were entered into.
Derivative transactions
Please refer to Note 18 Derivative Transactions.

2.

Financial instruments whose fair value is extremely difficult to determine
March 31,2012
2011
(Millions of yen)

Unlisted equity securities

¥

1,004

¥

1,005

2012
(Thousands of
U.S. dollars)$

12,215

These are not included in (3) Investment securities in the above table because there were no market
prices available and it was extremely difficult to determine the fair value.

24

3.

Redemption schedule for monetary receivables at March 31, 2012

Due in one
year or less

Cash and time deposits
Notes and accounts receivable, trade
Total

¥
¥

16,542
15,99732,540Due in one
year or less

Cash and time deposits
Notes and accounts receivable, trade$ 201,265
194,634$ 395,911

Total

March 31, 2012
Due after
Due after
one yearfive years
through fivethrough ten
years
years
(Millions of yen)
¥

–
–
–

¥

¥

–
–
–

¥

Due after
ten years¥¥

March 31, 2012
Due after
Due after
one yearfive years
through fivethrough ten
years
years
(Thousands of U.S. dollars)
$

–
–
–

$

$

–
–
–

$

–
–
–

Due after
ten years

$
$

–
–
–

4.

The redemption schedule for long-term debt is disclosed in Note 8 Short-Term Borrowings andLong-Term Debt.

16.

Investment Securities

Investment securities held by the Companies are all classified as other securities.
The aggregate cost and fair value (carrying value) of marketable securities classified as other securities at
March 31, 2012 and 2011 were as follows:

Cost
Securities whose fair value exceeds theircost:
Equity securities
Securities whose fair value does notexceed their cost:
Equity securities
Total

¥

1,567

¥

982
2,549

March 31, 2012
Fair value(carrying value)(Millions of yen)

Unrealized gains(losses)

¥

2,805

¥

1,237

¥

824
3,629

¥

(158)
1,079

25

Cost
Securities whose fair value exceeds theircost:
Equity securities
Securities whose fair value does notexceed their cost:
Equity securities
Total

¥

1,690

¥

857
2,548

March 31, 2011
Fair value(carrying value)(Millions of yen)

Unrealized gains(losses)

¥

3,353

¥

1,662

¥

714
4,068

¥

(143)
1,519

March 31, 2012
Fair value
Unrealized gains(carrying value)(losses)(Thousands of U.S. dollars)

Cost
Securities whose fair value exceeds theircost:
Equity securities$

19,065$34,128$15,050

Securities whose fair value does notexceed their cost:
Equity securities
Total

$

11,94731,013$

10,025
44,153$(1,922)
13,128As at March 31, 2012 and 2011, unlisted equity securities amounting to ¥912 million ($11,096 thousand)and ¥913 million, respectively, are not included in the above table because there were no market prices
available and it was extremely difficult to determine the fair value.
For the year ended March 31, 2012, the Companies recognized ¥3 million ($36 thousand) of impairment
losses for marketable securities classified as other securities. In the case that the market value at the endof the year declines by 50% or more from its cost, the Companies recognize the difference between themarket value and the cost as an impairment loss, and in the case that the decline ranges between 30% and50%, the Companies recognize an impairment loss for the necessary amount after taking into consideration
factors such as the materiality and recoverability of the amount.
Information about sales of securities classified as other securities for the years ended March 31, 2012 and2011 was as follows:Year ended March 31,
2012
2011
2012
(Millions of yen)(Thousands of
U.S. dollars)
Sales proceeds
Aggregate gain
Aggregate loss

¥

38
29
–

¥

69
41
5

$

462
352
–

26

17. Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2012 and 2011 were composed of the followings:
March 31,
2011

2012
(Millions of yen)
Cash and time deposits
Less:Time deposits with maturities in excess of threemonthsCash and cash equivalents

18.

¥

16,550¥12,73916,545$201,362

(5)

(5)
¥

2012
(Thousands of
U.S. dollars)¥

12,734(60)$

201,301

Derivative Transactions(1) Summarized below are the notional amounts and the fair value of derivative instruments outstandingat March 31, 2012 and 2011, for which hedge accounting has not been applied.
(a) Currency-related transactions
March 31, 2012
Notional amountContract
amountMaturing after
Fair value
one year(Millions of yen)

Unrealized
gains (losses)

¥
¥

¥
¥

OTC transactions:
Forward foreign exchange
contracts
Sell:
USD
Total

¥
¥

5
5

–
–

¥
¥

(0)
(0)

(0)
(0)

March 31, 2011
Notional amountContract
amountMaturing after
Fair value
one year(Millions of yen)

Unrealized
gains (losses)

¥
¥

¥
¥

OTC transactions:
Forward foreign exchange
contracts
Sell:
USD
Total

¥
¥

13
13

–
–

¥
¥

(0)
(0)

(0)
(0)

Note: The calculation of fair value is based on prices obtained from financial institutions and others.

27

March 31, 2012
Notional amountContract
amountMaturing after
one year
Fair value(Thousands of U.S. dollars)

Unrealized
gains (losses)

$
$

$
$

OTC transactions:
Forward foreign exchange
contracts
Sell:
USD
Total

$
$

60
60

–
–

$
$

(0)
(0)

(0)
(0)

(b) Commodity-related transactions
There were no commodity-related transactions as of March 31, 2012.
March 31, 2011
Notional amountContract
amountMaturing after
one year
Fair value(Millions of yen)

Unrealized
gains (losses)

¥
¥

¥
¥

OTC transactions:
Commodity futurescontracts
Sell:
Metals
Total

¥
¥

691
691

–
–

¥
¥

(107)
(107)

(107)
(107)

Note: The calculation of fair value is based on prices obtained from counterparties and others.

(2) Summarized below are the notional amounts and the fair value of derivative instruments outstandingat March 31, 2012 and 2011, for which hedge accounting has been applied.
(a) Interest-related transactions
March 31, 2012
Notional amountContract
amountInterest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

¥
¥

8,865
8,865

Maturing after
one year(Millions of yen)

¥
¥

7,925
7,925

Fair value(Note)

28

March 31, 2011
Notional amountContract
amountInterest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

¥
¥

6,992
6,992

Maturing after
one year(Millions of yen)¥¥

Fair value

6,541
6,541

(Note)

Note: Interest rate swaps to which exceptional treatment is applied are accounted for together withlong-term debt designated as a hedged item. Therefore, their fair values are included in thefair value of long-term debt.
March 31, 2012
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)Interest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

$
$

107,859
107,859$$

96,42296,422(Note)(b) Commodity-related transactions
March 31, 2012
Notional amountContract
amountCommodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

¥
¥

10,867
10,867

Maturing after
one year(Millions of yen)

¥
¥

–
–

Fair value

¥
¥

(382)
(382)

29

March 31, 2011
Notional amountContract
amountCommodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

¥
¥

Maturing after
one year(Millions of yen)

10,91010,910¥¥––Fair value¥¥(3,998)(3,998)

Note: The calculation of fair value is based on prices obtained from counterparties and others.
March 31, 2012
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)Commodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

19.

$
$

132,218
132,218

$
$

–
–

$
$

(4,647)(4,647)

Related Party Transactions

There were no related party transactions for the year ended March 31, 2012.
The Company owned 25.9% of outstanding shares of CBH which operates mining business for the year
ended March 31, 2011.
The transactions and account balances with CBH were as follows:•

Transactions
Year ended March
31, 2011(Millions of yen)
Redemption of bonds
Redemption proceeds
Gain on redemption
Interests

•

¥

7,517
3,213
66

Account balances
There were no account balances as of March 31, 2011.
Notes 1. CBH, which was an affiliate accounted for using the equity method for the year ended
March 31, 2010, became a consolidated subsidiary due to the Company’s acquisition of
additional shares during the year ended March 31, 2011. Therefore, the above table
only includes the information for the period when CBH was an affiliate.

30

2.

20.

Convertible bonds to CBH were redeemed before their maturities during the year ended
March 31, 2011. Interest rate of such convertible bonds to CBH whose repayment
period was 5 years was determined in consideration of market interest rate.

Comprehensive Income

Reclassification adjustments and tax effects allocated to each component of other comprehensive income
for the year ended March 31, 2012 were as follows:Year ended March 31, 2012
(Millions of yen)(Thousands of
U.S. dollars)
Net unrealized losses on other securities:
Losses arising during the year
Reclassification adjustments
Amount before tax effectTax effect¥Gain on deferred hedges:
Gains arising during the year
Reclassification adjustments
Amount before tax effectTax effectSurplus from land revaluation:
Tax effectForeign currency translation adjustments:
Adjustments arising during the year
Total other comprehensive income

¥

(435)
(25)
(461)
242
(219)

$

(5,292)(304)(5,608)2,944(2,664)

1,785
1,830
3,615
(1,481)
2,133

21,71722,26543,983(18,019)
25,952

718
718

8,735
8,735

(1,902)(1,902)
730(23,141)(23,141)
8,881

$

31

21. Segment Information(1) Overview of reportable segments
The Company defines reportable segments as components of the Company for which separate
financial information is available and whose operating results are regularly evaluated by the board of
directors to make decisions about how resources are allocated and assess its performance.
Operating departments of the Company are organized according to products and services, and eachdepartment plans comprehensive domestic and overseas strategies for its products and services anddevelops business activities through the Company and its consolidated subsidiaries. Thus, reportablesegments of the Company are determined based on such operating departments; namely, “Smelting,”“Electronic Components and Materials” and “Environment and Recycling,” and “Mineral Resource”
organized based on CBH, a consolidated subsidiary.
The Company previously had three reportable segments: Smelting, Electronic Components andMaterials, and Environment and Recycling. Effective October 1, 2010, a new reportable segment ofMineral Resource has been added to by the acquisition of full ownership of CBH.
· Smelting segment engages in sales and production of zinc and lead products, electric silver andsulfuric.
· Mineral Resource segment engages in exploration, development and production of non-ferrous
metal resources and sales of their output.
· Electronic Components and Materials segment engages in sales and production of electronic parts,
electrolytic iron, plating and machine parts.
· Environment and Recycling segment engages in sales and production of zinc oxide and recyclingof waste materials.
(2) Basis of measurement for the amounts of net sales, profit or loss, assets and other items for eachreportable segment
The accounting policies of each reportable segment are generally consistent to those described in Note
1. Summary of Significant Accounting Policies. The segment profit is based on operating income, andintersegment sales and transfers are based on actual market prices.

32

(3) Information about net sales, profit or loss, assets and other items
Year ended March 31, 2012
Reportable segment
Electronic
Compon- EnvironMineralents andment andSmelting Resource Materials Recycling

Other(Note 1)

Total

Reconciliation(Note 2)

Total

Amounts on
consolidated
financialstatements(Note 3)

(Millions of yen)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill¥ 76,137 ¥ 6,138 ¥ 7,075
2,972
3,413
114
79,109
9,551
7,189
1,059
(826)
864
63,27936,99010,872¥ 2,989
2
2,992
299
6,153

¥ 92,340
6,502
98,843
1,396
117,295¥ 13,573 ¥ 105,914
5,297
11,79918,871
117,714
1,492
2,889
7,255
124,551¥- ¥(11,799)(11,799)(86)
25,251

105,914105,9142,802
149,803¥ 2,809 ¥ 2,334 ¥¥341¥ 5,838

¥

¥

104

6,075

352

132 ¥

5,970

¥

3,095

10,270279

206

13,851

61

13,912

31

13,944

–

–

–

–

–

–

–

11

11

–

36

–

–

–

–

–

–

36

–

501

–

–

–

–

–

–

501

Reconciliation(Note 2,4)

Amounts on
consolidated
financialstatements(Note 3)

Year ended March 31, 2011
Reportable segment

Smelting

Electronic
Compon- EnvironMineralents andment andResource Materials Recycling

Other(Note 1)

Total

Total

(Millions of yen)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill¥ 72,921 ¥ 3,709 ¥ 8,129
3,872
1,644
211
76,793
5,354
8,341
5,720
(295)
1,050
61,124 32,893
10,407¥ 4,848
2
4,851
995
5,249

¥ 89,609
5,731
95,3407,470
109,676¥ 14,019 ¥ 103,628
6,217
11,94920,236
115,577
1,450
8,921
6,941
116,617¥– ¥(11,949)(11,949)(423)
24,390103,628–
103,6288,497
141,007¥ 2,180 ¥

981

¥

¥

¥

¥

108

4,160

7,100

1,363

165

248

–

114

–

–

17

–

571

¥

394

359

3,916

135 ¥

4,052

¥

8,879

72

8,952

52

9,004

–

–

–

–

397

512

–

–

–

–

–

–

17

–

–

–

–

–

–

571

33

Year ended March 31, 2012
Reportable segment
Electronic
Compon- Environment andMineralents andResource Materials Recycling

Smelting

Other(Note 1)

Total

Reconciliation(Note 2)

Total

Amounts on
consolidated
financialstatements(Note 3)(Thousands of U.S. dollars)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill$ 926,353 $ 74,680 $ 86,081
36,16041,525
1,387
962,513 116,206
87,46812,884 (10,049)
10,512769,911 450,054 132,278$$ 36,366
24
36,403
3,637
74,863$ 1,123,494 $ 165,141 $ 1,288,648 $- $ 1,288,648
79,10964,448
143,557(143,557)
1,202,615
229,602 1,432,218(143,557)
1,288,648
16,985
18,15335,150(1,046)34,091
1,427,120
88,271 1,515,403
307,227
1,822,642$$

34,176 $ 28,397 $

4,282

4,148

71,030 $1,606 $

72,636 $

1,265$

73,91437,656

124,954

3,394

2,506

168,524742

169,266377

169,655

–

–

–

–

–

–

–

133

133

–

438

–

–

–

–

–

–

438

–

6,095

–

–

–

–

–

–

6,095

Notes 1. “Other” represents business segments not belonging to reportable segments and includes
sound insulation building materials, civil engineering, construction and plant engineering,transportation, environmental analysis and others.
2. “Reconciliation” included the followings:
Year ended March 31,
2011
2012
2012
(Millions of yen)(Thousands of
U.S. dollars)

Segment profit (loss):
Intersegment elimination
Corporate expense (*)

¥

Total

¥

11
(97)
(86)

¥
¥

43
(467)
(423)

$
$

133
(1,180)(1,046)(*) “Corporate expense” presents mainly general and administrative expenses that are notallocated to reportable segments.
Year ended March 31,
2011
2012
2012
(Millions of yen)(Thousands of
U.S. dollars)

Segment assets:
Corporate assets (*)¥

25,251¥

24,390$307,227(*) “Corporate assets” presents mainly the Company’s investments of surplus funds including
cash and investment securities and assets relating to administrative divisions.

34

Year ended March 31,
2011
2012
2012
(Millions of yen)(Thousands of
U.S. dollars)

Other items:
Depreciation and amortization
Increase in property, plant and equipment andintangible assets (*)

¥

104

¥

108

$

52

31

1,265
377

(*) “Increase in property, plant and equipment and intangible assets” presents mainly capital
expenditures that do not belong to reportable segments.
3. Segment profit or loss is reconciled to operating income on the consolidated statements ofincome.
4. “Reconciliation” of impairment losses on fixed assets amounting to ¥397 million, of which¥382 million was included in loss on disaster, presents impairment losses on idle assets that
do not belong to reportable segments for the year ended March 31, 2011.
(4) Related information(a) Information by product and service
Information by product and service has been omitted since similar information is disclosed insegment information described above.
(b) Information by geographical area
Net sales information by geographical area has been omitted since net sales to external customer
in Japan exceed 90% of the consolidated sales.
Property, plant and equipment information by geographical area as of March 31, 2012 and 2011
was as follows:Year ended March 31,
2011
2012
2012
(Millions of yen)(Thousands of
U.S. dollars)
Japan
Australia

¥

Total

¥

39,13012,72951,860¥¥39,2476,650
45,898$$476,091
154,872
630,977(c) Information by major customers
Information by major customers has been omitted since there were no sales to single externalcustomer accounting for 10% or more of the consolidated sales.

35