YAMAZEN CORPORATION AND ITS CONSOLIDATED SUBSIDIARIESCONSOLIDATED BALANCE SHEETSMarch 31, 2007 and 2006

Thousands of
U.S. Dollars(Note 1)
2007

Millions of Yen
2007
ASSETS
Current assets:
Cash and bank deposits (Note 14)
Short-term securities (Notes 5 and 14)
Notes and accounts receivable - (Notes 9 and 13)
Trade
Unconsolidated subsidiaries and affiliates

2006

Thousands of
U.S. Dollars(Note 1)
2007

Millions of Yen
2007

2006

LIABILITIES AND NET ASSETS
28,943
8,104\Allowance for doubtful accounts(Inventories (Note 4)
Deferred income taxes (Note 11)
Other
Total current assets

Investments and long-term accounts receivable:
Investments in securities (Note 5 and 9)
Investments in and advances toUnconsolidated subsidiaries and affiliates (Note 6)
Other
Long-term accounts receivable
Allowance for doubtful accounts(Property and equipment: (Note 9)
Buildings and structures
Machinery and equipment
Accumulated depreciation(Land
Deferred income taxes (Note 11)
Prepaid pension expenses (Note 10)
Other assets

103,616907
104,523881 )
103,642
12,834
1,215
2,162
156,900($96,505
1,505
98,010765 )
97,245
11,2491,079
2,024
148,658

245,176
68,649(11,132

88,827

1,05821823964 )
11,4242,143
26
1,4102,302 )
12,409

8,962
178
6,972
8,166 )
96,773(

11,924
1,830
13,754
8,142 )
5,612
10,911
16,523(

190,159(12,930
1,868
14,7988,600 )
6,198
11,004
17,202(122,2562,820\183,357

Current liabilities:
Short-term bank loans (Note 9)
Current portion of long-term debt (Note 9)
Notes and accounts payableTrade
Unconsolidated subsidiaries and affiliates

877,730
7,683
885,413
7,463 )
877,950
108,717
10,292
18,314
1,329,098

10,486

30
2,381
2,901
\28,108
8,953\

Accrued employees' bonus
Accrued expenses
Accrued income taxes (Note 11)
Other
Total current liabilities
Long-term liabilities:
Long-term debt (Note 9)
Accrued retirement benefits for
directors and corporate auditors
Accrued retirement benefits for employees (Note 10)
Deferred income taxes (Note 11)
Other
Total long‐term liabilities

6,600
5,995\$52,147
92,562

122,62412
122,636
1,911
2,037
3,634
2,094
149,395

117,2778
117,285
1,809
1,900
3,606
2,210
139,405

1,038,746
102
1,038,848
16,18817,25530,784
17,7381,265,522

2,027

11,621

17,171

313
53
2,909
651
5,953

590
112
2,935
604
15,862

2,651
449
24,642
5,515
50,428

7,909
6,082
17,961

7,909
6,082
11,15866,99751,521
152,147

Commitments and contingent liabilities (Notes 8 and 12)

Net assets (Note 3):
Shareholders' equity−
Common stock−93,840,310 shares at March 31, 2007 and 2006
Additional paid-in capital
Retained earnings
Less : Treasury common stock, at cost
− 41,497 shares at March 31, 2007
and 38,104 shares at March 31, 2006
Total shareholders' equity

101,008
15,502
116,510
68,971 )
47,53992,427
139,966(

Net unrealized gains and translation adjustments−
Net unrealized holding gains on securities
Net unrealized holding gains on hedges
Foreign currency translation adjustments
Total net unrealized gains and translation adjustments
Total net assets

254
20,16924,574$

6,156
10,927\1,610,834(\n integral part of these statements.

115 )
31,9373,38965580 )
2,874
34,811
190,159((\13 )
25,136

3,799−845 )
2,954
28,090183,357(($127 )
270,538

28,7085514,913 )
24,346294,884
1,610,834

YAMAZEN CORPORATION AND ITS CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
For the years ended March 31, 2007 and 2006

2007
Net sales (Notes 15 and 17)
Cost of sales (Note 15)
Gross profit
Selling, general and administrative expenses (Notes 8,10 and 15)
Operating income

377,611
334,923
42,68830,370
12,318\Other income (expenses):
Interest and dividends income
Interest expense
Compensation received relating to transfer of a bussiness rightGain on sale of property and equipment
Loss on sale and disposal of property and equipment
Gain on sales of investments in securities
Gain on return of the substitutional
portion of pension plan
Amortization of consolidated adjustment accountPrior service benefit from the changes ofemployees' retirement benefit plan
Loss on devaluation of investments inan unconsolidated subsidiariy
Loss on sale of investment ina former consolidated subsidiary
Other, net
Income before income taxes and minority interests

Millions of Yen(((1,5311,530 )−1323 )
19((\Net income per share (basic) (Note 2(18))
Cash dividends per share (Note 2(18))
Weighted average number of shares outstanding
during the current fiscal year (unit: thousands shares)

\

1,267
1,444 )
328
841 )
10

(
(12,969
12,961 )−110195 )161−−−

1,336−

66 )

−
7,507

80.03
12.50
93,801\Yen\(470 )(544 )
356
11,830−
5,007
108,878

3,629
1,1384,767

44,1591,127
45,286(559 )

97,054

$

75.19
7.50

U.S. Dollars(Note 1)$0.6780.106

93,807

The accompanying notes are an integral part of these statements.

2

3,198,738
2,837,129
361,609257,263
104,346

1,694
110

5,213
133
5,346

Minority interests in earnings of consolidated subsidiaries
Net income

$−
−

−
591
12,853

Income taxes (Note 11)
Current
Deferred2006
341,785
303,505
38,28029,0609,220\Thousands ofU.S. Dollars(Note 1)
2007−
63,592

YAMAZEN CORPORATION AND ITS CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSFor the years ended March 31, 2007 and 2006

Millions of Yen

Shareholders' equity

Balance as of March 31, 2005
Increase of net unrealized holding gains on other securities
Increase of net unrealized holding gains on ｈｅｄｇｅｓ
Increase of foreign currency translation adjustments, net
Net lncome
Cash dividends
Directors' and corporate auditors' bonuses
Increase in treasury common stock
Balance as of March 31, 2006
Decrease of net unrealized holding gains on other securities
Increase of net unrealized holding gains on ｈｅｄｇｅｓ
Increase of foreign currency translation adjustments, net
Net income
Cash dividends
Increase in treasury common stock
Balance as of March 31, 2007

Number ofcommon shares(Thousands)
93,840−−−−−−−93,840−−−−−−93,840\\\Common
stock
7,909
−
−
−−−−
−
7,909
−
−−−−−7,909\\\Additional
paid-in
capital
6,082−−−−−−−
6,082
−
−
−−−−
6,082

Retainedearnings\4,767−−−7,054(563 )(100 )−\
11,158−−−7,507(704 )−\17,961

Treasurycommonstock\ (7 )−−−−−−(6 )\ (13 )−−−−−(2 )
\ (15 )

Total
Shareholders'Equity\18,751−−−7,054(563 )(100 )(6 )\25,136−−−7,507(704 )(2 )\31,937

Net unrealized
holding gains
on securities\1,143
2,656
−
−−−−−
\3,799(410 )−−−−−\3,389Net unrealized gains and translation adjustments
Net unrealized
Foreign currency
holding gains
translation
on ｈｅｄｇｅｓ
adjustments\−\ (1,244 )−−−−−399−−−−−−−−\−\ (845 )
−
−
65
−
−
265
−−−−−−\65\ (580 )Net unrealized
holding gains
on securities$32,181
3,473
−
−−−
−
$
28,708Net unrealized gains and translation adjustments
Net unrealized
Foreign currency
Total net unrealized
holding gains
translation
gains and translation
on ｈｅｄｇｅｓ
adjustments
adjustments$−$ (7,158 )$25,023−−(3,473 )
551
−
551
−
2,245
2,245−−−−−−−−−$551$ (4,913 )$24,346

Total net unrealized
gains and translation
adjustments\ (101 )2,656−
399−−−−\2,954(410 )
65
265−−−\2,874

Total net assets
18,6502,656\(((\((\3997,054563 )
100 )
6 )
28,09041065
265
7,507704 )2 )34,811Thousands of U.S. Dollars (Note 1)
Shareholders' equity

Balance as of March 31, 2006
Decrease of net unrealized holding gains on other securities
Increase of net unrealized holding gains on ｈｅｄｇｅｓ
Increase of foreign currency translation adjustments, net
Net income
Cash dividends
Increase in treasury common stock
Balance as of March 31, 2007$$

Commonstock
66,997−−−−−−66,997$$

Additional
paid-in
capital51,521−−−−−−
51,521Retainedearnings$
94,519−−−63,592(5,964 )−$
152,147

Treasurycommonstock$ (110 )
−−−−−
(17 )
$ (127 )Total
Shareholders'Equity$212,927−−−63,592(5,964 )(17 )$ ( 270,538 )The accompanying notes are an integral part of these statements.

3Total net assets
237,950(3,473 )551
2,245
63,592(5,964 )(17 )$294,884$

YAMAZEN CORPORATION AND ITS CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the years ended March 31, 2007 and 2006

Millions of Yen
2007
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation and amortization
Decrease in allowance for doubtful accounts
Decrease in accrued bonus and retirement benefits

12,853￥((((Increase in prepaid pension expenses
Dividends and interest incomeInterest expense
Foreign currency loss
Gain on sales of investments in securities
Loss on devaluation of investments in unconsolidated subsidiaries
Loss on sales of investment in a former consolidated subsidiary
Loss on disposal of property and equipment
Gain on sales of property and equipment
Changes in assets and liabilities:
Increase in trade receivables
Increase in inventories
Increase in trade payables
Directors' and statutory auditors' bonuses
Other, net
Sub total
Income taxes paid
Net cash provided by operating activities(((((Cash flows from investing activities:
Payments for time deposits
Proceeds from withdrawal of time deposits
Payments for acquisition of investments in securities
Proceeds from sales of investments in securities
Payments for acquisition of property and equipment
Proceeds from sales of property and equipment
Dividends and interest income received
Net decrease caused by sales of shares of a former consolidated subsidiary
Other, net
Net cash provided by (used in) investing activities(((Cash flows from financing activities:
Decrease in short-term bank loans, net
Proceeds from issuance of long-term debtPayments of long-term debt
Cash dividends paid
Interest expense paid
Other, net
Net cash used in financing activities((((((Effect of exchange rate change 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 14)(￥11,830￥

676
1,223 )
335 )124 )1,531 )
1,530
4019 )
66−
189 )((((((6,276 )
1,485 )
5,196
−
2,089
11,466
5,421 )
6,045((35 )45200 )
97809 )435
1,538−
140
1,211

(

((((((445 )
1,400
6,062 )
703 )
1,524 )
3 )7,337 )
765 )
36,82636,821

The accompanying notes are an integral part of these statements.

4

2006

((((((￥

Thousands ofU.S. Dollars(Note 1)
2007
108,878＄690
1,873 )
310 )2,256 )
1,267 )
1,444
2610 )
470
544
36
3 )

((((((4,093 )
450 )
3,952
100 )
1,584
10,214313 )
9,901((252 )
110
1,160 )
332
521 )
18
1,252128 )2347 )(686 ）
3,450
8,302 )
563 )
1,440 )
6 )
7,547 )

(154
2,161
34,66436,825(((((((((＄

5,72610,360 )2,838 )
1,050 )
12,969 )12,961
339
161 )
559
−
15276 )
53,164 )12,580 )44,015−
17,696
97,12845,921 )51,207296 )
381
1,694 )
821
6,853 )
3,685
13,028−
1,186
10,2583,770 )
11,85951,351 )5,955 )
12,910 )25 )62,152 )645
42 )311,952
311,910