Annual Report
Year Ended March 31, 2012

HARIMA CHEMICALS, INC.

Overview of the Business
The world economy as a whole kept glowing, although it was slow, during the fiscal year ended
March 31, 2012, driven by the economy of emerging countries, mainly China. The European economy
became severe due to factors, such as fiscal retrenchment and high unemployment rate caused by theserious economic and financial crisis. The U.S. economy continued to recover supported by the
improvement tendency in corporate earnings and the increase in consumer spending led by the easy
monetary policy despite the influence by the financial crisis in Europe. The Chinese economy, mainly thedomestic demand, remained solid by the increase in consumer spending supported by rising income levels,
while the economic growth tended to slow down due to the decrease of export to Europe, etc.
With respect to Japanese economy, the reorganization of the supply chain management made steadyprogress in areas, such as the automotive industry in which the production activity was reduced due to the
influence of the Great East Japan Earthquake, and the recovery trend was observed in the economy;
however, Japanese economy continued to be under the serious situation with the deterioration of the export
environment caused by the rapid appreciation of the yen and the slowdown of the overseas economy.
With regard to the business environment surrounding our group, the profitability deteriorated due to thefluctuation of the price of rosin, which is our main raw material. Up until April last year, the Chinese gum
rosin price kept jumping up, and suddenly started to decline sharply thereafter. This caused the pricereduction pressure against our inventory rosin value.
Under these environments, consolidated net sales of the group for the current fiscal year increased by
30,041 million yen (up 72.4%) year on year to 71,536 million yen due to the fact that overseas sales
increased by Lawter B.V., which was added to one of our consolidated subsidiaries. The overseas sales
amount ratio was increased from 22.7% (the previous fiscal year) to 54.2%.
Operating income increased by 206 million yen (up 7.1%) year on year to 3,114 million yen. Ordinary
income decreased by 606 million yen (down 21.9%) year on year to 2,159 million yen with foreignexchange loss due to the impact of exchange rate fluctuation. Net income decreased by 325 million yen(down 24.3%) year on year to 1,012 million yen.
Status of the Business Segment(Resin & Tall Oil Products Business Products)
Regarding the demand of resins for printing inks, in the overseas market, after July, Lawter B.V., whichassumes a European market, the main force reduced sales volume under the influence of the financial crisis
in Europe and the performance was sluggish under the influence of inventory value of raw material rosin.
In the domestic market, the dull situation continued due to the shortage of main materials caused by the
influence of the Great East Japan Earthquake and the decrease in newspapers and publications. With
regard to paint resins, paint resins for marine applications were under dull situation because of the decreasein quantity of domestic shipbuilding, while with regard to general-purpose and building paints, the demand
for repaint remained solid. Synthetic rubber emulsifiers remained strong accompanied by increase ofexport of tires. Overseas sales increased by Lawter B.V., which was added to one of our consolidated
subsidiaries.
Net sales of this segment increased by 30,256 million yen (up 153.8%) year on year to 49,929 million
yen, while segment ordinary profit decreased by 417 million yen (down 20.5%) year on year to 1,622
million yen.
.
(Paper Chemicals)
During the current fiscal year, the domestic cardboard production volume remained strong; however,paper production was significantly reduced due to the factors, such as decrease of demand due to economic
downturn, increase of import by appreciation of the yen, and the influence of the Great East Japan
Earthquake. This segment promoted rationalization of the production process and further cost reductions.
On the one hand, the overseas paper and cardboard paper production tends to increase continuously
while the production growth slows in China and the competition among the paper manufacturers and also
paper chemicals has intensified. Under such circumstance, net sales of this segment increased with the fulloperation at the subsidiary in Dongguan city, Guang Dong Province, China and the brisk performance ofsubsidiary companies in the United States. Net sales increased by 262 million yen (up 2.0%) year on year
to 13,234 million yen, while segment ordinary profit increased by 222 million yen (up 30.6%) year on year
to 949 million yen.

-1-

(Electronics Materials)
The electronics device industry, where this segment is related to, was under very serious situation due
to the factors, such as the Great East Japan Earthquake, a deluge in Thailand, and further rapid
appreciation of the yen. Moreover, a steep rise in raw material prices could not be spilled over to productprices and it weighed on profit. Under such circumstances, the domestic volume of shipment of consumer
electronics device largely decreased due to the sluggishness of demand of flat-panel TV after the shift toterrestrial digital broadcasting. As a result, sales of solder paste of this segment were sluggish. With regard
to products associated with automobile production, sales of solder materials increased, while overseas salesof the subsidiary companies in the United States and the Czech Republic increased steadily.
Net sales of this segment decreased by 116 million yen (down 2.4%) year on year to 4,739 million yen,while segment ordinary profit decreased by 20 million yen (down 6.6%) year on year to 288 million yen.
The amounts of adjustments, such as the foreign exchange loss, are not included in the ordinary profit ofeach segment.
Consolidated Business Performance Trends(Millions of yen unless otherwise stated)
Category

Net sales

67th Fiscal Year68th Fiscal Year69th Fiscal Year70th Fiscal Year

(Fiscal year ended
March 2009)(Fiscal year ended
March 2010)(Fiscal year ended
March 2011)(Fiscal year ended
March 2012)

35,32833,49541,49571,536

Ordinary income

385

1,597

2,766

2,159

Net (loss) income

(414)

952

1,337

1,012

Net (loss) income pershare (yen)(15.94)

36.66

51.53

38.99

Total assets

44,81845,94063,98363,429Net assets

27,18028,31729,31329,581(Notes) 1. Net (loss) income per share is calculated based on the weighted-average number of issued shares
during the fiscal year after deducting treasury stocks.
2. Net loss for the 67th fiscal year is caused by the factors such as a loss accompanied by avaluation loss of investment securities.

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Harima Chemicals, Inc. and Subsidiaries
Consolidated Balance Sheet
March 31, 2012

Millions of Yen
2012
2011

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 15)
Notes and accounts receivable (Note 15):
Trade notes
Trade accounts
Associated companies
Allowance for doubtful notes and accounts
Inventories (Note 4)
Deferred tax assets (Note 12)
Other current assets
Total current assets

¥

5,218

¥

5,958

Thousands of
U.S. Dollars(Note 1)
2012
$

2,038
14,920156(38 )10,433410
2,441

25,636
199,246
2,032(1,533 )
121,523
4,344
22,84935,96536,318437,584

PROPERTY, PLANT AND EQUIPMENT (Note 5):
Land (Note 6)
Buildings and structures (Notes 6 and 7)
Machinery and equipment
Furniture and fixtures
Lease assets (Note 14)
Construction in progress
Total
Accumulated depreciation

10,46017,512
20,694
3,593
617
816
53,692(32,144 )

10,60917,134
20,166
3,307
601
487
52,304(31,072 )

127,266
213,067
251,782
43,716
7,507
9,928
653,266(391,094 )Net property, plant and equipment

21,54821,232

262,172

2,747
824
178
229
382
1,571
(15 )

3,314
817
126
365
302
1,522
(13 )

33,423
10,026
2,166
2,786
4,648
19,115(183 )

5,916

6,433

71,981INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 3 and 15)
Investments in and advances to associated companies
Goodwill
Other intangible assets
Deferred tax assets (Note 12)
Other assets (Note 7)
Allowance for doubtful accounts
Total investments and other assets

CURRENT LIABILITIES:
Short-term bank loans (Notes 7 and 15)
Current portion of long-term debt (Notes 7 and 15)
Notes and accounts payable (Note 15):
Trade notes
Trade accounts
Associated companies
Construction and other
Income taxes payable
Deferred tax liabilities (Note 12)
Other current liabilities

63,487

2,107
16,376167(126 )
9,988
357
1,878

9,083
1,685

¥ 17,255
652$ 110,512
20,501

384
8,049
95
737
657
2
2,019

490
9,739
65
448
411
48
1,542

4,672
97,932
1,156
8,967
7,994
24
24,565

Total current liabilities

22,71130,650276,323

LONG-TERM LIABILITIES:Long-term debt (Notes 7 and 15)
Deferred tax liabilities (Note 12)Long-term deposits received (Note 15)
Liability for retirement benefits (Note 8)
Asset retirement obligations (Note 9)
Other long-term liabilities

8,064
435
1,065
1,322
45
206

1,168
229
1,129
1,191
45
258

98,114
5,293
12,95816,085548
2,506

Total long-term liabilities

11,1374,020

135,504

10,0139,744
9,890

10,013
9,744
9,267

121,827
118,555
120,331

(62 )

(62 )

(754 )

221(1,561 )28,2451,336

182(1,165 )27,9791,334

2,689(18,993 )343,655
16,25529,581

29,313359,910¥ 63,429¥ 63,983¥ 63,429¥ 63,983$ 771,737¥

COMMITMENTS AND CONTINGENT LIABILITIES(Notes 7, 14 and 16)
EQUITY (Note 10):
Common stock, authorized 59,500,000 shares; issued,
26,080,396 shares in 2012 and 2011
Capital surplus
Retained earnings
Treasury stock - at cost: 131,120 shares in 2012 and
130,808 shares in 2011
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Total
Minority interests
Total equity

TOTAL

Millions of Yen
2012
2011

LIABILITIES AND EQUITY

Thousands of
U.S. Dollars(Note 1)
2012

TOTAL

$ 771,737

See notes to consolidated financial statements.

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Harima Chemicals, Inc. and Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2012

Millions of Yen
2012
2011
NET SALES

Thousands of
U.S. Dollars(Note 1)
2012

¥ 71,536¥ 41,495$ 870,374

57,37031,385

698,017

14,166

10,110172,357

11,052

7,202

134,469

3,114

2,908

37,888

102
(460)
133
(614)
24
332
(146)

99
(230 )
132
(6 )
13
514
(360 )(470 )

1,241(5,597)
1,618(7,470)292
4,039(1,776)

Other expenses - net(629)(308 )(7,653)

INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS

2,485

2,600

30,235

INCOME TAXES (Note 12):Current
Deferred

1,194
172

496
610

14,527
2,093

1,366

1,106

16,620

1,119

1,494

13,615

107

157

1,302

COST OF SALES
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 11 and 13)
Operating income
OTHER INCOME (EXPENSES) (Notes 3 and 5):
Interest and dividend income
Interest expense
Rental income
Foreign exchange loss
Equity in earnings of associated companies
Fire insurance proceeds
Losses from fire disaster
Other - net

Total income taxes
NET INCOME BEFORE MINORITY INTERESTSMINORITY INTERESTS IN NET INCOME
NET INCOME

¥

1,012

¥

1,337

Yen
PER SHARE OF COMMON STOCK (Notes 2.r and 18):
Net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

-4-¥38.9914.00$

12,313

U.S. Dollars¥51.53
14.00

$0.47
0.17

Harima Chemicals, Inc. and Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2012

Millions of Yen
2012
2011
NET INCOME BEFORE MINORITY INTERESTS¥ 1,119¥ 1,494$ 13,615

38
(384)
0
(346)

104
(512 )
0(408 )

462(4,672)
0(4,210)773¥ 1,086¥656
117¥1,00482

OTHER COMPREHENSIVE INCOME (Note 17):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Share of other comprehensive income in associates
Total other comprehensive income
COMPREHENSIVE INCOME (Note 17)¥

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO (Note17):
Owners of the parent
Minority interests
See notes to consolidated financial statements.

-5-

Thousands of
U.S. Dollars(Note 1)
2012

$

9,405

$7,982
1,423

Harima Chemicals, Inc. and Subsidiaries
Consolidated Statement of Change in Equity
Year Ended March 31, 2012
Thousands

BALANCE, APRIL 1, 2010
Net income
Cash dividends, ¥12.00 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2011
Net income
Cash dividends, ¥15.00 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2012

BALANCE, MARCH 31, 2011

Number of Sharesof Common Stock
Outstanding

CommonStockCapitalSurplusRetained
Earnings

TreasuryStock25,953¥ 10,013¥ 9,744¥ 8,241¥ (60 )

Total

Minority
Interests

Total Equity(728 )¥ 27,288¥ 1,029¥ 28,317

104(437 )

1,337(311 )(2 )(333 )

305

1,337(311 )
(2 )
(28 )

182

(1,165 )27,9791,334

29,31339(396 )

1,012(389 )(0 )(357 )

2

1,012(389 )(0 )(355 )¥ 221¥ (1,561 )¥ 28,245¥ 1,336¥ 29,581

Total

Minority
Interests

Total Equity$ (14,174 )$ 340,419$ 16,231$ 356,650

475(4,819 )12,313(4,733 )(0 )(4,344 )24

12,313(4,733 )(0 )(4,320 )$ 2,689$ (18,993 )$ 343,655$ 16,255$ 359,910

¥ 78

¥

1,337
(311 )(3 )25,950(2 )10,013

9,744

9,267

(62 )

1,012
(389 )(1 )25,949(0 )¥ 10,013¥ 9,744¥ 9,890¥ (62 )

CommonStockCapitalSurplusRetained
Earnings

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive
IncomeUnrealized
Foreign
Gain onCurrency
Treasury
Available-for-saleTranslation
Stock
Securities
Adjustments$ 121,827$ 118,555$ 112,751$ (754 )Net income
Cash dividends, $0.18 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2012

Millions of Yen
Accumulated Other Comprehensive
IncomeUnrealized
Foreign
Gain onCurrency
Available-for-saleTranslation
Securities
Adjustments$ 2,214

12,313(4,733 )(0 )$ 121,827$ 118,555$ 120,331$ (754 )See notes to consolidated financial statements-6-

Harima Chemicals, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2012

Millions of Yen
2012
2011
OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes - paid
Depreciation and amortization
Loss on impairment of long-lived assets
Foreign exchange loss (gain)
Gain on sales of property, plant and equipment
Changes in assets and liabilities:
Increase in trade notes and accounts receivable
Decrease (increase) in inventories(Decrease) increase in trade notes and account payable
Other - net
Total adjustments
Net cash provided by operating activities¥ 2,485¥

2,600

Thousands of
U.S. Dollars(Note 1)
2012$

30,235

(925)
2,014
14
596
(5 )

(170 )
1,621
54
(95 )
(1 )

(11,254 )
24,504
170
7,251
(61)

(1,803)148(1,182)
305
(838)
1,647

(359 )(663 )
1,400(174 )
1,613
4,213(21,937 )
1,801(14,381 )
3,711(10,196 )20,039(1,967)
10
(169)
(86)
699

(1,559 )3(28 )(515 )
1,174(23,932 )122(2,056)(1,046)
8,505

(200)
(1,713)(10,380 )(51 )(11,356 )(2,434)(20,841 )FINANCING ACTIVITIES:Net change in short-term bank loans
Proceeds from long-term debt
Payments from long-term debt
Dividends paid
Other - net
Net cash (used in) provided by financing activities(7,684)
9,973(2,186)
(389)
(189)
(475)

10,763132(670 )(311 )
75
9,989(93,491 )
121,341(26,597 )(4,733)(2,300)(5,780)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH
AND CASH EQUIVALENTS(199)(190 )(2,421)

NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS

(740)

2,656

(9,003)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

5,958

3,302

72,490INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Purchases of investment securities
Proceeds from sales and redemption of investment securities
Payment for purchase of consolidated subsidiaries, net of cash andcash equivalents acquired
Other - net
Net cash used in investing activities

CASH AND CASH EQUIVALENTS, END OF YEAR
See notes to consolidated financial statements.

-7-¥ 5,218

¥

5,958

$

63,487

Harima Chemicals, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2012
1.

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations and in
conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different incertain respects as to the application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been
made to the consolidated financial statements issued domestically in order to present them in a form which ismore familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2011
consolidated financial statements to conform to the classifications used in 2012.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Harima
Chemicals, Inc. (the "Company") is incorporated and operates. The translations of Japanese yen amounts into
U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at therate of ¥82.19 to $1, the approximate rate of exchange at March 31, 2012. Such translations should not be
construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any
other rate.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation - The consolidated financial statements include the accounts of the Company and all its
subsidiaries (together, the "Group").
Under the control or influence concept, those companies in which the Company directly is able to exercise
control over operations are fully consolidated.
Investments in associated companies are accounted for by the equity method.
The excess of the cost of acquisition over the fair value of the net assets of an acquired subsidiary at the dateof acquisition is being amortized over a period not exceeding 20 years.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is also eliminated.

-8-

b.

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

c.

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

d.

Inventories - Inventories are principally stated at the lower of cost, determined by the moving-averagemethod, or net selling value.
Certain consolidated foreign subsidiaries are stated at the lower of cost, determined by the first-in, first-out
method, or net selling value.

e.

Investment Securities - Investment securities are classified and accounted for, as follows: Marketableavailable-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicabletaxes, reported in a separate component of equity.
Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by
a charge to income.

f.

Property, Plant and Equipment - Property, plant and equipment are stated at cost. Depreciation ofproperty, plant and equipment of the Company and its consolidated domestic subsidiaries is principally
computed by the declining-balance method, while the straight-line method is applied to buildings acquired
after April 1, 1998, and certain domestic subsidiaries and foreign subsidiaries apply the straight-line
method, using rates based on the estimated useful lives of the assets. The range of useful lives is from 5 to
50 years for buildings, from 4 to 17 years for machinery and equipment.

g.

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

h.

Other Assets - Amortization of capitalized software costs is computed using the straight-line method over 5
years, the estimated useful life of the assets. Amortization of customer lists costs is computed using thestraight-line method over 5 years, the estimated economic life of the assets.

-9-

i.

Retirement Benefits - The Company and certain consolidated subsidiaries have a funded defined benefit
pension plan, defined contribution pension plan and severance lump-sum payment plan covering
substantially all of its employees.
The Company and certain domestic subsidiaries have adopted an accounting standard for employees'
retirement benefits and accounted for the asset for retirement benefits based on the projected benefit
obligations and plan assets at the balance sheet date.
Retirement allowances for directors and corporate auditors are recorded to state the liability at the amountthat would be required if all directors and corporate auditors retired at each balance sheet date.

j.

Asset Retirement Obligations - In March 2008, the ASBJ published the accounting standard for asset
retirement obligations, ASBJ Statement No. 18 "Accounting Standard for Asset Retirement Obligations"and ASBJ Guidance No. 21 "Guidance on Accounting Standard for Asset Retirement Obligations". Under
this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by
law or contract that results from the acquisition, construction, development and the normal operation of atangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset retirement
obligation is recognized as the sum of the discounted cash flows required for the future asset retirement andis recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If areasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement
obligation is incurred, the liability should be recognized when a reasonable estimate of asset retirement
obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset
retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of
the liability. The asset retirement cost is subsequently allocated to expense through depreciation over theremaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any
subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows arereflected as an increase or a decrease in the carrying amount of the liability and the capitalized amount of
the related asset retirement cost.

k.

Research and Development Costs - Research and development costs are charged to income as incurred.

l.

Leases - In March 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease
Transactions," which revised the previous accounting standard for lease transactions issued in June 1993.
The revised accounting standard for lease transactions was effective for fiscal years beginning on or after
April 1, 2008.
Under the previous accounting standard, finance leases that were deemed to transfer ownership of theleased property to the lessee were capitalized. However, other finance leases were permitted to beaccounted for as operating lease transactions if certain "as if capitalized" information was disclosed in thenote to the lessee's financial statements. The revised accounting standard requires that all finance leasetransactions be capitalized by recognizing lease assets and lease obligations in the balance sheet.
The Company applied the revised accounting standard effective April 1, 2008. In addition, the Company
accounted for leases which existed at the transition date and do not transfer ownership of the leased
property to the lessee as acquisition cost of lease assets measured at the obligations under finance leases lessinterest expense at the transition date.
All other leases are accounted for as operating leases.

m. Bonuses to Directors and Corporate Auditors - Bonuses to directors and corporate auditors are accrued at
the year-end to which such bonuses are attributable.

- 10 -

n.

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

o.

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

p.

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

q.

Derivative Financial Instruments - The Group uses derivative financial instruments to manage its
exposures to fluctuations in foreign exchange and interest rates. Foreign exchange forward contracts andinterest rate swaps are utilized by the Group to reduce foreign currency exchange and interest rate risks.
The Group does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as
follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains
or losses on derivative transactions are recognized in the consolidated statement of income and (2) for
derivatives used for hedging purposes, if such derivatives qualify for hedge accounting because of highcorrelation and effectiveness between the hedging instruments and the hedged items, gains or losses onderivatives are deferred until maturity of the hedged transactions.
Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are notremeasured at market value but the differential paid or received under the swap agreements is recognized
and included in interest expenses or income.

r.

Per Share Information - Basic net income per share is computed by dividing net income available tocommon shareholders by the weighted-average number of common shares outstanding for the period.
Diluted net income per share is not disclosed because there are no outstanding potentially dilutive
securities.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends
applicable to the respective years including dividends to be paid after the end of the year.

- 11 -

s.

Accounting Changes and Error Corrections - In December 2009, the ASBJ issued ASBJ Statement No.
24, "Accounting Standard for Accounting Changes and Error Corrections" and ASBJ Guidance No. 24,"Guidance on Accounting Standard for Accounting Changes and Error Corrections." Accounting
treatments under this standard and guidance are as follows: (1) Changes in Accounting Policies - When a
new accounting policy is applied with revision of accounting standards, the new policy is applied
retrospectively unless the revised accounting standards include specific transitional provisions. When therevised accounting standards include specific transitional provisions, an entity shall comply with thespecific transitional provisions. (2) Changes in Presentations - When the presentation of financial
statements is changed, prior-period financial statements are reclassified in accordance with the newpresentation. (3) Changes in Accounting Estimates - A change in an accounting estimate is accounted for in
the period of the change if the change affects that period only, and is accounted for prospectively if thechange affects both the period of the change and future periods. (4) Corrections of Prior-Period Errors When an error in prior-period financial statements is discovered, those statements are restated. Thisaccounting standard and the guidance are applicable to accounting changes and corrections of prior-period
errors which are made from the beginning of the fiscal year that begins on or after April 1, 2011.

t.

New Accounting Pronouncements
Accounting Standard for Retirement Benefits - On May 17, 2012, the ASBJ issued ASBJ Statement No.
26, "Accounting Standard for Retirement Benefits" and ASBJ Guidance No. 25, "Guidance on AccountingStandard for Retirement Benefits," which replaced the Accounting Standard for Retirement Benefits that
had been issued by the Business Accounting Council in 1998 with effective date of April 1, 2000 and theother related practical guidances, being followed by partial amendments from time to time through 2009.
Major changes are as follows:(a) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses and past service costs that are yet to berecognized in profit or loss are not recognized in the balance sheet, and the difference between
retirement benefit obligations and plan assets (hereinafter, "deficit or surplus"), adjusted by suchunrecognized amounts, are recognized as a liability or asset.
Under the revised accounting standard, actuarial gains and losses and past service costs that are yet tobe recognized in profit or loss shall be recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects, and the deficit or surplus shall be recognized as a liability(liability for retirement benefits) or asset (asset for retirement benefits).
(b) Treatment in the statement of income and the statement of comprehensive income (or the statement ofincome and comprehensive income)The revised accounting standard would not change how to recognize actuarial gains and losses andpast service costs in profit or loss. Those amounts would be recognized in profit or loss over a certain
period no longer than the expected average remaining working lives of the employees. However,actuarial gains and losses and past service costs that arose in the current period and yet to berecognized in profit or loss shall be included in other comprehensive income and actuarial gains andlosses and past service costs that were recognized in other comprehensive income in prior periods andthen recognized in profit or loss in the current period shall be treated as reclassification adjustments.

- 12 -

This accounting standard and the guidance are effective for the end of annual periods beginning on or after
April 1, 2013 with earlier application being permitted from the beginning of annual periods beginning on orafter April 1, 2013. However, no retrospective application of this accounting standard to consolidated
financial statements in prior periods is required.
The Company expects to apply the revised accounting standard from the end of the annual period beginningon April 1, 2013 and is in the process of measuring the effects of applying the revised accounting standard
for the year ending March 31, 2014.
3.

INVESTMENT SECURITIESInvestment securities as of March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

Millions of Yen
2011
2012
Non-current:
Equity securities
Trust fund investments and other¥ 2,063684¥ 2,0811,233$ 25,100
8,323

Total

¥ 2,747¥ 3,314$ 33,423

The costs and aggregate fair values of investment securities at March 31, 2012 and 2011 were as follows:

Cost

March 31, 2012
Securities classified as:
Available-for-sale:
Equity securities
Debt securities

Millions of Yen
Unrealized
Unrealized
Gains
LossesFair
Value¥ 1,671
703

¥ 584
4

¥ 226
23

¥ 2,029684¥ 1,688
1,292

¥ 579
0

¥ 220
59

¥ 2,047
1,233

March 31, 2011
Securities classified as:
Available-for-sale:
Equity securities
Debt securities

Cost

March 31, 2012
Securities classified as:
Available-for-sale:
Equity securities
Debt securities$ 20,331
8,553- 13 -

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
LossesFair
Value$ 7,10550$ 24,686
8,323$ 2,750280

Carrying amounts of available-for-sale securities whose fair value is not readily determinable as of March 31,
2012 and 2011 were as follows:
Millions of Yen
2011
2012
Available-for-sale:
Equity securities
Other

¥ 34
0

Thousands of
U.S. Dollars
2012

¥ 34
0

$ 414
0

The information for available-for-sale securities which were sold during the years ended March 31, 2012 and2011 was as follows:

March 31, 2012

Proceeds

Millions of Yen
Realized
Gains

Available-for-sale:
Equity securities
Debt securities

¥ 29
670

¥ 9
1

¥ 1

Total

¥ 699

¥ 10

¥ 1

¥

164
1,003

¥ 52
13

¥ 6
19

¥ 1,167

¥ 65

¥ 25

Realized
LossesMarch 31, 2011
Available-for-sale:
Equity securities
Debt securities
Total

Thousands of U.S. Dollars
Realized
Realized
Proceeds
Gains
LossesMarch 31, 2012
Available-for-sale:
Equity securities
Debt securities

$

Total

353
8,152

$ 110
12

$ 12

$ 8,505

$ 122

$ 12

The impairment losses on available-for-sale equity securities for the years ended March 31, 2012 and 2011 were
¥1 million ($12 thousand) and ¥182 million, respectively are included in other expenses other - net in the
consolidated statements of income.
4.

INVENTORIESInventories at March 31, 2012 and 2011 consisted of the following:
Millions of Yen
2011
2012
Finished products
Work in process
Raw materials and supplies¥ 4,128
393
5,467

¥

Total

¥ 9,988¥ 10,433- 14 -

4,372
222
5,839

Thousands of
U.S. Dollars
2012$

50,225
4,781
66,517$ 121,523

5.

LONG-LIVED ASSETSThe Group recognized an impairment loss of ¥14 million ($170 thousand), which is included in OTHER
EXPENSE other - net in the consolidated statement of income, for the year ended March 31, 2012. The
impairment loss is mainly recognized for the machinery and equipment in Kakogawa plant in Japan, due torecoverable amounts of the assets were lower than the carrying amounts of the assets.
The Group recognized an impairment loss of ¥54 million, which is included in OTHER EXPENSE other - net in
the consolidated statement of income, for the year ended March 31, 2011. The impairment loss is mainly
recognized for the buildings and structures and machinery and equipment of plant in China due to recoverable
amount of the assets were lower than the carrying amounts of the assets. The recoverable amount of the assets
was measured at its market value. Also the Group recognized the impairment loss for the machinery andequipment not in use in the plant in Czech Republic to the net selling price at disposition.

6.

INVESTMENT PROPERTYIn November, 2008, the ASBJ issued ASBJ Statement No. 20 "Accounting Standard for Investment Property
and Related Disclosures" and issued ASBJ Guidance No. 23 "Guidance on Accounting Standard for Investment
Property and Related Disclosures."
The Group owns certain rental properties such as office buildings and land. The net of rental income andoperating expenses for those rental properties for the fiscal years ended March 31, 2012 and 2011 were ¥132
million ($1,606 thousand) and ¥129 million, respectively.
In addition, the carrying amounts, changes in such balances and market prices of such properties are as follows.
Millions of Yen
Carrying AmountMarch 31,
April 1, 2011
Decrease2012¥3,466¥16¥3,450Millions of Yen
Carrying AmountMarch 31,
April 1, 2010
Increase
2011¥3,453¥13¥3,466

Thousands of U.S. Dollars
Carrying AmountMarch 31,
April 1, 2011
Decrease
2012$42,171$195$41,976- 15 -

Fair Value
March 31,
2012
¥4,380Fair Value
March 31,
2011
¥4,422
Fair Value
March 31,2012
$53,291

Notes:7.

1)

Carrying amount recognized in the consolidated balance sheets is net of accumulated depreciation andaccumulated impairment losses, if any.

2)

Increase during the fiscal year ended March 31, 2012 primarily represents the acquisition of certain
properties of ¥30 million ($365 thousand), and decrease primarily represents the depreciation andamortization of ¥46 million ($560 thousand). Increase during the fiscal year ended March 31, 2011
primarily represents the acquisition of certain properties of ¥65 million, and decrease primarily
represents the depreciation and amortization of ¥52 million.

3)

Fair value of properties is measured by the Group in accordance with its Real-Estate Appraisal
Standard.

SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2012 and 2011 consisted of notes to banks and bank overdrafts. The averageinterest rates applicable to the short-term bank loans as of March 31, 2012 and 2011 were 2.4 % and 1.4%,
respectively.
Long-term debt at March 31, 2012 and 2011 consisted of the following:Thousands of
U.S. Dollars
2012

Millions of Yen
2011
2012
Loans from banks and other financial institutions, due
serially to 2016 with interest rates ranging from
1.7% to 6.7% (0.9% to 6.7% in 2011):
Collateralized
Unsecured
Obligations under finance leases
Total
Less current portionLong-term debt, less current portion

¥

9,116
633
9,749
(1,685)¥ 8,064

¥

8
1,163
649
1,820
(652 )$

110,9147,701
118,615(20,501 )¥ 1,168$

98,114

Annual maturities of long-term debt, at March 31, 2012, for the next five years and thereafter were as follows:Year Ending March 31

Millions ofYen

Thousands of
U.S. Dollars

2013
2014
2015
2016
2017
2018 and thereafter¥ 1,685
1,744
1,540
1,500
2,843
437

$

Total

¥ 9,749$ 118,615

20,501
21,21918,737
18,25034,591
5,317

Certain loans from banks are subject to the following financial covenants:
1)

Total equity shall be more than ¥22,000 million ($267,672 thousand) for the first half of the fiscal year
ending March 31, 2012 and for the fiscal year ended March 31, 2012, on a consolidated basis.

- 16 -

2)

Total equity shall be more than ¥19,900 million ($242,122 thousand) for the first half of the fiscal year
ending March 31, 2012 and for the fiscal year ended March 31, 2012, on a non-consolidated basis.

3)

Ordinary income shall not be a loss for the fiscal years ended March 31, 2012 and 2011, both on aconsolidated and non-consolidated basis.

The carrying amounts of assets pledged as collateral for short-term bank loans of ¥148 million ($1,801 thousand)at March 31, 2012 were as follows:
Millions ofYen

Thousands of
U.S. Dollars

Buildings and structures
Other assets

¥ 78
33

$

949
402

Total

¥ 111

$ 1,351

As is customary in Japan, the Company maintains substantial deposit balances with banks with which it hasborrowings. Such deposit balances are not legally or contractually restricted as to withdrawal.
General agreements with respective banks provide, as is customary in Japan, that additional collateral must be
provided under certain circumstances if requested by such banks and that certain banks have the right to offset
cash deposited with them against any long-term or short-term debt or obligation that becomes due and, in case ofdefault and certain other specified events, against all other debt payable to the banks. The Company has neverbeen requested to provide any additional collateral.
The outstanding balance of the commitment as of March 31, 2012 was as follows:
Millions ofYen

Thousands of
U.S. Dollars

Total committed line of credit
Executed amount¥ 10,000
3,207$ 121,669
39,019Unexecuted amount

¥

$

6,793

82,650

The above agreements are subject to the following financial covenants:
1)

Total equity shall be more than ¥22,000 million ($267,672 thousand) for the first half of the fiscal year
ending March 31, 2012 and for the fiscal year ended March 31, 2012, on a consolidated basis.

2)

Total equity shall be more than ¥19,900 million ($242,122 thousand) for the first half of the fiscal year
ending March 31, 2012 and for the fiscal year ended March 31, 2012, on a non-consolidated basis.

3)

Ordinary income shall not be a loss for the fiscal years ended March 31, 2012 and 2011, both on aconsolidated and non-consolidated basis.

- 17 -

8.

RETIREMENT AND PENSION PLANS
The Company has severance payment plans for employees, directors and corporate auditors.
Under most circumstances, employees terminating their employment are entitled to retirement benefits
determined based on the rate of pay at the time of termination, years of service and certain other factors. Suchretirement benefits are made in the form of a lump-sum severance payment or annuity payments from a trustee.
Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory
retirement age, by death.
The liability for retirement benefits at March 31, 2012 and 2011 for directors and corporate auditors is ¥435
million ($5,293 thousand) and ¥418 million, respectively, and is included in liability for retirement benefits inthe consolidated balance sheets. The retirement benefits for directors and corporate auditors are paid subject tothe approval of the shareholders in accordance with the Companies Act of Japan (the "Companies Act").
The liability for employees' retirement benefits at March 31, 2012 and 2011 consisted of the following:
Millions of Yen
2011
2012

Thousands of
U.S. Dollars
2012

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss

¥ 2,495(1,255)(353)¥ 2,465(1,276 )(416 )$ 30,356(15,269 )(4,295)Net liability¥¥$ 10,792

887

773

The components of net periodic retirement benefit costs for the years ended March 31, 2012 and 2011 were as
follows:
Millions of Yen
2011
2012

Thousands of
U.S. Dollars
2012

Service cost
Interest cost
Recognized actuarial loss
Net periodic retirement benefit costs
Premium payments to defined contribution pension planand other

¥ 234
47
63
344

¥ 229
47
72
348

$ 2,847
572
767
4,186

107

87

1,302

Total

¥ 451

¥ 435

$ 5,488

Assumptions used for the years ended March 31, 2012 and 2011 are set forth as follows:
2012
Discount rate
Expected rate of return on plan assets
Allocation method of the retirement benefits
expected to be paid at the retirement date
Amortization period of prior service cost
Recognition period of actuarial gain or loss

- 18 -

2.0%
0.0%
Straight-line method
based on years ofservice1 year14 years

2011
2.0%
0.0%
Straight-line method
based on years ofservice1 year14 years

9.

ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2012 and 2011 were as follows:
Millions of Yen
2011
2012
Balance at beginning of year
Reconciliation associated with passage of time
Balance at end of year

10.

¥ 45
0
45

¥ 44
1
45

Thousands of
U.S. Dollars
2012
$ 548
0
548

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

Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteriasuch as (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of
Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two
years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except
for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles ofincorporation. The Company meets all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to shareholders
subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on
the amounts available for dividends or the purchase of treasury stock. The limitation is defined as theamount available for distribution to the shareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.

b.

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

- 19 -

c.

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

11.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the years ended March 31, 2012 and 2011 principally consistedof the following:
Millions of Yen
2011
2012
Employees' salaries and bonuses
Net periodic retirement benefit
Transport
Depreciation
Research and development
Amortization of goodwill

12.

¥ 2,480
175
2,217
437
1,764
80

¥ 1,554
164
1,361
363
1,447
3

Thousands of
U.S. Dollars
2012$ 30,174
2,129
26,974
5,317
21,462
973

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 40.6% for the years ended March 31,
2012 and 2011.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax
assets and liabilities at March 31, 2012 and 2011 are as follows:
Millions of Yen
2011
2012
Deferred tax assets:
Tax loss carryforwards
Impairment loss on long-lived assets
Loss on revaluation of investment securities
Retirement benefits to directors and corporate
auditors
Property, plant and equipment
Unrealized loss on available-for-sale securities
Other
Less valuation allowance
Total
Deferred tax liabilities:
Reserve for deferred gains on sales of property, plantand equipment
Unrealized gain on available-for-sale securities
Other
Total
Net deferred tax assets- 20 -

Thousands of
U.S. Dollars
2012¥ 1,211248
1,359¥ 1,2221,570
293$ 14,734
3,017
16,535

158
97
89
392
(2,965)
¥
589

170
97
112
538
(3,274 )
¥
728

1,922
1,180
1,083
4,769
(36,075 )$ 7,165

¥

¥

$

¥

82
108
97
287

¥

302

¥

98
108
87
293

$

998
1,314
1,180
3,492

¥

435

$

3,673

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in theaccompanying consolidated statement of income for the year ended March 31, 2012 was as follows:
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Inhabitants' per capita levy
Difference of income tax rates applicable to income in certain foreign countries
Adjustment of deferred tax assets and liabilities at end of period due to change intax rates
Other - net

40.6 %
10.6
1.4(1.1 )

Actual effective tax rate

55.0 %

3.0
0.5

As the difference between the normal effective statutory tax rate and the actual effective tax rate reflected in theaccompanying consolidated statement of income for the year ended March 31, 2011 was not more than 5% of thenormal effective statutory tax rate, a reconciliation has not been disclosed as permitted under Japanese GAAP.
On December 2, 2011, new tax reform laws were enacted in Japan, which changed the normal effective statutory
tax rate from approximately 40.6% to 38.0% effective for the fiscal years beginning on or after April 1, 2012
through March 31, 2015, and to 35.6% afterwards. The effect of this change was to decrease deferred taxes in
the consolidated balance sheet as of March 31, 2012 by ¥60 million ($730 thousand) and to increase income
taxes - deferred in the consolidated statement of income for the year then ended by ¥75 million ($913 thousand)and to increase unrealized gain on available-for-sale securities in the consolidated balance sheet then by ¥15
million ($183 thousand).
13.

RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥1,764 million ($21,462 thousand) and ¥1,447 million
for the years ended March 31, 2012 and 2011, respectively.

14.

LEASESThe Group leases certain structures, machinery and equipment and other assets.
Total rental expenses including lease payments for the years ended March 31, 2012 and 2011 were ¥128 million($1,557 thousand) and ¥146 million, respectively.

15.

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments, mainly bank loans based on its capital financing plan. Short-termbank loans are used to fund its ongoing operations. Derivatives are used, not for speculative purposes, but
to manage exposure to financial risks as described in (2) below.

- 21 -

(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Payment terms of
payables, such as trade notes and trade accounts, are primarily less than one year. Payment in foreign
currencies is exposed to the market risk of fluctuation in foreign currency exchange rates. Investment
securities are exposed to the risk of market price fluctuations. Short-term bank loans and long-term debt are
related to ongoing operations and working capital. Although a part of such bank loans are exposed tomarket risks from changes in variable interest rates, those risks are mitigated by using derivatives of interest
rate swaps. Long-term deposits received are mainly related to entry deposits of golf course and are exposed
to liquidity risk.
(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty's failure to repay or service debt
according to the contractual terms. The Group manages its credit risk from receivables on the basis ofinternal guidelines, which include monitoring of payment term and balances of major customers by eachbusiness administration department to identify the default risk of customers at an early stage.
The counterparties to the Group's derivative contracts are limited to major international financial institution
to reduce credit risk.
The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31,
2012.
Market risk management (foreign exchange risk and interest rate risk)
Foreign currency trade payables are exposed to market risk resulting from fluctuations in foreign currency
exchange rates. Such foreign exchange risk is hedged principally by forward foreign currency contracts. In
addition, when foreign currency trade payables are expected to arise from forecasted transaction, forward
foreign currency contract may be used with a contract term not exceeding one year.
Interest rate swaps are used to manage exposure to market risks from changes in interest rates of loans
payable.
Investment securities are managed by monitoring market values and financial position of issuers on aregular basis.
Derivative transactions entered into by the group have been made in accordance with internal policies that
regulate the authorization and credit limit amount.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on theirmaturity dates. The Group manages its liquidity risk by holding adequate volumes of liquid assets at thelevel of one month's sales volume, along with adequate financial planning by the corporate treasury
department.

- 22 -

(4) Fair Value of Financial Instruments
Fair values of financial instruments are based on quoted price in active markets. If quoted price is notavailable, another rational valuation technique is used instead.
Fair Value of Financial Instruments
Carrying amounts, fair values and the differences between carrying mounts and fair values as of March 31,
2012 and 2011 are as follows. The accounts deemed to be extremely difficult to calculate the fair values are
not included in the following:
Millions of Yen
Carrying
AmountFair Value

Cash and cash equivalents
Notes and accounts receivable
Investment securities

¥

¥

Total

March 31, 2012

5,218
18,650
2,713

Unrealized
Gain/(Loss)

5,218
18,6502,713¥-¥ 26,581¥ 26,581¥-

Notes and accounts payable
Short-term bank loans
Current portion of long-term debt (excluding
obligations under finance leases)
Long-term debt (excluding obligations underfinance leases)
Long-term deposits received

¥

¥

¥

-

9,265
9,083

9,265
9,083

1,634

1,634

-

7,482
1,065

7,489
864

(7 )
201

Total

¥ 28,529¥ 28,335¥ 194

March 31, 2011

Carrying
AmountFair Value

Cash and cash equivalents
Notes and accounts receivable
Investment securities

¥

¥

Total

Millions of Yen

5,958
17,1143,280¥-¥ 26,352¥ 26,352¥-

Notes and accounts payable
Short-term bank loans
Current portion of long-term debt (excluding
obligations under finance leases)
Long-term debt (excluding obligations underfinance leases)
Long-term deposits received¥ 10,742
17,255¥ 10,742
17,255

¥

-

615

615

-

555
1,129

567
927

(12)
202

Total

¥ 30,296¥ 30,106¥ 190- 23 -

5,958
17,114
3,280

Unrealized
Gain/(Loss)Thousands of U.S. Dollars
Carrying
Unrealized
AmountFair Value
Gain/(Loss)

March 31, 2012
Cash and cash equivalents
Notes and accounts receivable
Investment securities

$

Total

63,487226,91433,009$63,487226,91433,009$-$ 323,410$ 323,410$-

Notes and accounts payable
Short-term bank loans
Current portion of long-term debt (excluding
obligations under finance leases)
Long-term debt (excluding obligations underfinance leases)
Long-term deposits received$ 112,727
110,512$ 112,727
110,512$-

19,881

19,881-

91,033
12,958

91,11810,512

(85)
2,446

Total

$ 347,111$ 334,750$ 2,361

Cash and Cash Equivalents and Notes and Accounts Receivable
The carrying values of cash and cash equivalents and notes and accounts receivable approximate fair value
because of their short maturities.
Investment Securities
The fair values of marketable and investment securities are measured at the quoted market price of the stock
exchange for the equity instruments, and at the quoted price obtained from the financial institution forcertain debt instruments. The information of the fair value for the investment securities by classification is
included in Note 3.
Notes and Accounts Payable, Short-Term Bank Loans and Current Portion of Long-Term Debt
The carrying values of notes and accounts payable, short-term bank loans and current portion of long-term
debt approximate fair value because of their short maturities.
Long-Term Debt
The fair values of long-term debt are determined by discounting the cash flows related to the debt at theGroup's assumed corporate borrowing rate for the fiscal year ended March 31, 2012.
The fair values of floating rate debt that apply interest rate swaps which qualify for hedge accounting andmeet specific matching criteria as means for hedging are determined by discounting the cash flows related
to the debt that include interest rate swaps as a unit at the Group's assumed corporate borrowing rate for the
fiscal year ended March 31, 2011.
Long-Term Deposits Received
The fair values of long-term deposits received are determined by discounting the future cash flows
estimable from the past refund experience and by the estimated interest rate reflecting assumed refund
period and credit risk.
Derivatives
The information of the fair value for derivatives is included in Note 16.

- 24 -

(5) Maturity Analysis for Financial Assets with Contractual Maturities

Due in One
Year or LessMarch 31, 2012
Cash and cash equivalents
Notes and accounts receivable
Investment securities
Available-for-sale securities with
contractual maturities
Total

Cash and cash equivalents
Notes and accounts receivable
Investment securities
Available-for-sale securities with
contractual maturities

¥ -

-

-

106

578

¥ 23,868

¥ -

¥ 106

¥ 578

Total

¥

Cash and cash equivalents
Notes and accounts receivable
Investment securities
Available-for-sale securities with
contractual maturities
Total

-

¥

Millions of Yen
Due after
Due after
One Year
Five Years
through Five through Ten
Years
Years
-

Due after
Ten Years

¥ -

-

-

287

945

¥ 23,072

¥ -

¥ 287

¥ 945

$

¥

-

5,958
17,114Due in One
Year or LessMarch 31, 2012¥

Due after
Ten Years

5,218
18,650Due in One
Year or LessMarch 31, 201116.

¥

Millions of Yen
Due after
Due after
One Year
Five Years
through Five through Ten
Years
Years

¥

Thousands of U.S. Dollars
Due after
Due after
One Year
Five Years
through Five through Ten
Years
Years
$

-

-

Due after
Ten Years

63,487226,914

$ -

$

-

-

-

1,290

7,032

$ 290,401$ -$ 1,290$ 7,032

DERIVATIVESThe Group also enters into interest rate swap contracts to manage its interest rate exposures on certain liabilities.
All derivative transactions are entered into to hedge interest exposures incorporated within the Group's business.
Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged
liabilities.
Because the counterparties to these derivatives are limited to major international financial institutions, the Group
does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which
regulate the authorization and credit limit amount.

- 25 -

Derivative Transactions to Which Hedge Accounting Is Not Applied

Hedged ItemAt March 31, 2012

Interest rate swaps:
Current portion of(fixed rate payment, floating rate receipt) long-term debt
Short-term bankloans

Hedged ItemAt March 31, 2011

Interest rate swaps:
Current portion of(fixed rate payment, floating rate receipt) long-term debt
Short-term bankloansMillions of Yen
Contract
AmountContract
due after
AmountOne Year
¥

-

¥ -

¥ -

400

-

-

Millions of Yen
Contract
AmountContract
due after
AmountOne Year

Fair
Value

¥ 2,100

¥ -

¥ -

400

-

-

Thousands of U.S. Dollars
Contract
AmountContract
due after
Hedged Item
AmountOne Year

At March 31, 2012

Interest rate swaps:
Current portion of(fixed rate payment, floating rate receipt) long-term debt
Short-term bank
loans

Fair
Value

$

Fair
Value

-

$ -

$ -

4,867

-

-

The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.
The contract amounts of derivatives which are shown in the above table do not represent the amounts exchangedby the parties and do not measure the Group's exposure to credit or market risk.
The above interest rate swaps which qualify for hedge accounting and meet specific matching criteria are notremeasured at market value, but the differential paid or received under the swap agreements are recognized andincluded in interest expense or income. In addition, the fair value of such interest rate swaps is included in thatof hedged items (short-term bank loans).

- 26 -

17.

COMPREHENSIVE INCOME
The components of other comprehensive income for the year ended March 31, 2012 were as follows:
Millions of
Yen
Unrealized gain on available-for-sale securities:
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of other comprehensive income in associates Gains arising during the year
Total
Total other comprehensive income

Thousands of
U.S. Dollars

¥

46
(8 )
38
0

$

560
(98 )
462
0

¥

38

$

462

¥ (384 )(384 )-$ (4,672 )(4,672 )-¥ (384 )$ (4,672 )

¥

0

$

0

¥

0

$

0

¥ (346 )$ (4,210 )The corresponding information for the year ended March 31, 2011 was not required under the accounting
standard for presentation of comprehensive income as an exemption for the first year of adopting that standard
and not disclosed herein.
18.

NET INCOME PER SHARE
Details of the basic net income per share ("EPS") for the years ended March 31, 2012 and 2011 were as follows:
Millionsof YenNet Income

Thousandsof Shares
WeightedAverage Shares¥ 1,01225,949¥ 38.99¥ 1,337

25,950¥ 51.53

Yen

Dollars
EPS

For the year ended March 31, 2012:
Basic EPS
Net income available to commonshareholders$ 0.47For the year ended March 31, 2011:
Basic EPS
Net income available to commonshareholders

Diluted net income per share is not disclosed because there are no outstanding potentially dilutive securities.

- 27 -

19.

RELATED PARTY DISCLOSURESThe transactions between the Company and related parties
Transactions of the Company and related parties for the years ended March 31, 2012 and 2011 were as follows:
Fiscal year ended March 31, 2012
Millions ofYenType of Related Parties

Name

Address

Owned by certain directors of the Company
and their relatives.

Hasegawa Kosan Co.,Ltd.

Kakogawa-shi, Hyogo,
Japan

Millions of
Yen

CapitalAmountDescription of Business¥40

Insurance agent

Percentage of Equity
Ownership in the
Company(Owned)Direct 17.64

Nature of Transactions
Payment of insurance
Other current assets, end ofyear
Other assets, end of year

Harima Food, Inc.

Kakogawa-shi, Hyogo,
Japan

30

Food manufacturing-

Sales of foodAmount
¥ 13

$ 158

25

304

25

304

11

134

Note: Hasegawa Kosan Co., Ltd. is wholly held by Yoshihiro Hasegawa, who is the representative director of the Company, and his close relatives.
Harima Food, Inc. is wholly owned subsidiary of Hasegawa Kosan Co., Ltd.
Fiscal year ended March 31, 2011
Millions ofYenType of Related Parties

Name

Address

Owned by certain directors of the Company
and their relatives.

Hasegawa Kosan Co.,Ltd.

Kakogawa-shi, Hyogo,
Japan

Millions of
Yen

CapitalAmountDescription of Business¥40

Insurance agent

Percentage of Equity
Ownership in the
Company(Owned)Direct 17.64

Nature of Transactions
Payment of insurance
Other current assets, end ofyear
Other assets, end of year

Amount¥ 85
26
48

Note: Hasegawa Kosan Co., Ltd. is wholly held by Yoshihiro Hasegawa, who is the representative director of the Company, and his close relatives.
20.

SUBSEQUENT EVENTSAppropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2012 was approved at the Company's Board of Directors' meeting held on May 21, 2012:

Year-end cash dividends, ¥7 ($0.09) per share

Millionsof YenThousands of
U.S. Dollars¥182$2,214- 28 -

Thousands of
U.S. Dollars

Company split for the transition to a holding company structure
At the Company's Board of Directors' meeting held on May 21, 2012, the Company decided the plan to spin off all of the Company's businesses into a new wholly owned subsidiary andto effect a transition to a holding company structure at October 1, 2012. The Company will change its name to "HARIMA CHEMICALS GROUP, INC.", and maintain the listing as
holding company. The plan was approved at the Company's shareholders meeting held on June 27, 2012.
21.

SEGMENT INFORMATION
Under ASBJ Statement No. 17, "Accounting Standard for Segment Information Disclosures" and ASBJ Guidance No. 20, "Guidance on Accounting Standard for Segment Information
Disclosures". Under the standard and guidance, an entity is required to report financial and descriptive information about its reportable segments. Reportable segments are operating
segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available andsuch information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment information isrequired to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.
(1) Description of Reportable Segments
The Group's reportable segments are those for which separately financial information is available and regular evaluation by the Company's management is being performed in orderto decide how resources are allocated among the Group. Therefore, the Group's reportable segments consist of "Resin & Tall Oil Products", "Paper Chemicals" and "Electronics
Materials". "Resin & Tall Oil Products" manufactures and sells paint resin, resins for print inks, tall oil products and synthetic rubber emulsifiers. "Paper Chemicals" manufacturesand sells paper strengthening agents, sizing agents and surface coating agents. "Electronics Materials" manufactures and sells electronics materials.
(2) Methods of Measurement for the Amounts of Sales, Profit, Assets, Liabilities and Other Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, "Summary of Significant Accounting Policies."(3) Information about Sales, Profit and Other Items is as follows.
Millions of Yen
2012
Reportable Segment

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (loss)
Other:
Depreciation
Net result of interest income andinterest expense
Notes:

Resin &
Tall Oil
Products

Paper
ChemicalsElectronics
Materials

Total

Other

Total

Reconciliations

Consolidated¥ 49,929
278
50,207
1,622¥ 13,234
555
13,789949¥ 4,739
4,739
288¥ 67,902
833
68,735
2,859¥ 3,64654
3,700(482 )¥ 71,548
887
72,4352,377¥ (12 )
(887 )(899 )(218 )¥ 71,536
71,536
2,159

952

594

205

1,751

186

1,937

(4 )

1,933

(117 )¥ (295 )

¥

(76 )

¥

(27 )

¥

(14 )

¥

¥

(412 )¥-¥(412 )"Other" division is business segment not attributable to reportable segment and includes mainly real estate management, etc.
Reconciliations of segment profit include reconciliations of inventories of ¥55 million ($669 thousand), company-wide income and expenses of ¥384 million ($4,672
thousand) and foreign exchange loss of ¥194 million ($2,360 thousand) which are not attributable to reportable segment, etc.
Segment profits are adjusted to certain other income and expenses from operating income in consolidated statement of income.
Assets are not allocated into reportable segments as they are not used for determination of the allocation of management resources and how to assess performance of theCompany.

- 29 -

Millions of Yen
2011
Reportable Segment

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit
Other:
Depreciation
Net result of interest income andinterest expense
Notes:

Resin &
Tall Oil
Products

Paper
ChemicalsElectronics
Materials

Total

Other

Total

Reconciliations

Consolidated¥ 19,673
207
19,8802,040¥ 12,972
12,972727¥ 4,855
4,855
308¥ 37,500
207
37,707
3,075¥ 4,02138
4,059
5¥ 41,521
245
41,7663,080¥ (26 )
(245 )(271 )(314 )¥ 41,495
41,495
2,766

663

565

246

1,474

156

1,630

(13 )

1,617

¥

(71 )

¥

(15 )

¥

(15 )

¥

(101 )

¥

(84 )

¥

(185 )¥-¥(185 )"Other" division is business segment not attributable to reportable segment and includes mainly real estate management, etc.
Reconciliations of segment profit include reconciliations of inventories of ¥36 million and company-wide income and expenses that are not attributable to reportablesegment of ¥309 million, etc.
Segment profits are adjusted to certain other income and expenses from operating income in consolidated statement of income.
Assets are not allocated into reportable segments as they are not used for determination of the allocation of management resources and how to assess performance of theCompany.
Thousands of U.S. Dollars
2012
Reportable Segment

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (loss)
Other:
Depreciation
Net result of interest income andinterest expense

Resin &
Tall Oil
Products

Paper
ChemicalsElectronics
Materials

Total

Other

Total

$ 607,483
3,382
610,865
19,735$ 161,017
6,753
167,770
11,546$ 57,659
57,6593,504$ 826,159
10,135836,294
34,785$ 44,361
657
45,018(5,864 )$ 870,520
10,792
881,31228,921

11,583

7,227

2,494

21,304

2,263

23,567(1,425 )$ (3,589 )$(925 )$(329 )$(171 )- 30 -$$(5,014 )Reconciliations$$

Consolidated(146 )(10,792 )(10,938 )(2,652 )$ 870,374
870,374
26,269(49 )

23,518-$(5,014 )[Related information]
1.

Information about geographical areas
Net sales to customers and property, plant and equipment by regions for the years ended March 31,
2012 and 2011 were as follows:(1) Net sales
Millions of Yen
2012
Japan

South andNorth
America

Asia

Europe

Other

Total

¥32,791¥14,528¥8,011¥13,593¥2,613¥71,536

Millions of Yen
2011
Japan

South andNorth
America

Asia

Other

Total

¥32,079¥4,797¥4,346¥273¥41,495

Thousands of U.S. Dollars
2012
Japan

South andNorth
America

Asia

Europe

Other

Total

$398,966$176,761$97,470$165,385$31,792$870,374

Note: Sales are classified into countries or regions based on customer's locations.
(2) Net property, plant and equipment
Millions of Yen
2012
Japan

South andNorth
America

Asia

Europe

Other

Total

¥15,031¥1,911¥1,768¥2,120¥718¥21,548

Millions of Yen
2011
Japan

South andNorth
America

Asia

Europe

Other

Total

¥14,883¥1,697¥1,780¥2,158¥714¥21,232

Japan

South andNorth
America

Asia

Europe

Other

Total

$182,881$23,251$21,511$25,794$8,735$262,172

Thousands of U.S. Dollars- 31 -

2.

Information by principle customers
There are no indication because within the net sales from external customers, there are no customers who cover more than 10% of whole consolidated net sales.

[Loss on impairment of long-lived assets by reportable segment]
Loss on impairment of long-lived assets by reportable segment for the years ended March 31, 2012 and 2011 was as follows:
Millions of Yen
2012
Resin & Tall
Oil Products
Long-lived assets¥-

Reportable Segment
Paper
Electronics
Chemicals
Materials
¥-

¥14

Total

Other

Eliminations/
Corporate

Consolidated

¥14

¥-

¥-

¥14

Total

Other

Eliminations/
Corporate

Consolidated

¥54

¥-

¥-

¥54

Millions of Yen
2011
Resin & Tall
Oil Products
Long-lived assets¥-

Reportable Segment
Paper
Electronics
Chemicals
Materials¥-¥54

Thousands of U.S. Dollars
2012
Resin & Tall
Oil Products
Long-lived assets$-

Reportable Segment
Paper
Electronics
Chemicals
Materials
$-

$170

Total

Other

Eliminations/
Corporate

Consolidated

$170

$-

$-

$170

[Amortization of goodwill and amount of goodwill by reportable segment]
The amortization of goodwill and amount of goodwill by reportable segment for the years ended March 31, 2012 and 2011 were as follows:
Millions of Yen
2012
Resin & Tall
Oil Products
Amortization of goodwill
Amount of goodwill

¥ 81
178

Reportable Segment
Paper
Electronics
Chemicals
Materials
¥-

¥-

Total

Other

Eliminations/
Corporate

Consolidated

¥ 81
178

¥-

¥-

¥ 81
178

Total

Other

Eliminations/
Corporate

Consolidated

¥

¥-

¥4
-

¥ 4
126

Millions of Yen
2011
Resin & Tall
Oil Products
Amortization of goodwill
Amount of goodwill¥

126

Reportable Segment
Paper
Electronics
Chemicals
Materials¥-¥-- 32 -

126

Resin & Tall
Oil Products
Amortization of goodwill
Amount of goodwill

$ 986
2,166

Thousands of U.S. Dollars
Reportable Segment
Paper
Electronics
Chemicals
Materials
Total
Other
$-

$-

$ 986
2,166

******- 33 -$-

Eliminations/
Corporate

Consolidated

$-

$ 986
2,166

34 --- 34

Corporate Overview (as of March 31, 2012)
FoundedNovember 18, 1947

Capital Stock

10,012.95 million yen

Head Office671-4, Mizuashi, Noguchi-cho, Kakogawa-shi, Hyogo, Japan

Osaka Head Office

4-4-7 Imabashi, Chuo-ku, Osaka

Tokyo Head Office

3-8-4 Nihonbashi, Chuo-ku, Tokyo

Laboratories

Central Research Laboratory, Tsukuba Research Laboratory

PlantsKakogawa Plant, Tokyo Plant, Fuji Plant, Ibaraki Plant, Hokkaido Plant, Sendai
Plant, and Shikoku Plant

Sales Offices

Tokyo Sales Office, Osaka Sales Office, Nagoya Sales Office, Kyushu Sales
Office, Fuji Sales Office, Hokkaido Sales Office, Sendai Sales Office, andShikoku Sales Office

Number of Employees

419 (Consolidated: 1,637)

Number of Group Companies

37

Business Activities

Manufacture and sale of Resin & Tall Oil Products, Paper Chemicals ,Electronics Materials, etc.

Websitehttp://www.harima.co.jp/en/index.html- 35 -

Principal Subsidiaries
Company name
Harima Trading, Inc.

48,000 thousand yen

Percentage ofequityparticipation (%)
100

Seven Rivers, Inc.

14,000 thousand yen

100

Harima M.I.D., Inc.

300,000 thousand yen

75

Harima Kasei Polymer Co., Ltd.

10,000 thousand yen

100

Nippon Filler Metals, Ltd.

45,000 thousand yen

100

HARIMA USA, Inc.

3,350 thousand U.S.
dollars
8,356 thousand Brasil
real

100

Harima do Brasil Industria Quimica
Ltda.

Capital stock

99.39

Harimatec Hangzhou Co., Ltd.

8,690 thousand Chinese
yuan

85

Harimatec Malaysia Sdn. Bhd.

1,356 thousand
Malaysian ringgit

85

Hangzhou Hanghua-Harima Paper
Chemicals Co., Ltd.

52,296 thousand
Chinese yuan

56.07

Nanning Harima Chemicals Co., Ltd.

48,234 thousand
Chinese yuan

95

Harimatec Czech, s.r.o.

7,000 Czech koruna

100

Xinyi Rihong Plastic Chemical Co.,Ltd.

27,390 thousand
Chinese yuan

80

Xinyi Zhonglin Rosin Co., Ltd.

12,000 thousand yuan81

Lawter B.V.

17,600 thousand euro90

- 36 -

Main business
Real estate
management, etc.
Manufacture andsale of industrial
detergents, etc.
Manufacture andsale of tall oil
products
Manufacture andsale of resins forprinting inks, etc.
Manufacture andsale of electronicmaterials
Control of U.S.
operations
Manufacture andsale of rosin andits derivatives
Manufacture andsale of electronicmaterials
Manufacture andsale of electronicmaterials
Manufacture andsale ofpapermaking
chemicals
Manufacture andsale of rosin andits derivatives
Manufacture andsale of electronicmaterials
Manufacture andsale of rosin andits derivatives
Manufacture andsale of rosin andits derivatives
Control of Lawter
Group’soperations

Directors and Corporate Auditors (as of June 28, 2012)
President
Senior Executive Director
Executive Director
Executive Director
Executive Director
Director
Director
Director
Director
Director
Director
DirectorStanding Corporate Auditor
Corporate Auditor*
Corporate Auditor*

Yoshihiro Hasegawa
Nobuo Makino
Masanao Kono
Teruo Kaneshiro
Masashi Inaba
Satoru Iwasa
Yorishige Matsuba
Yasuhiro Mizutani
Yoshinobu Matsuda
Mitsunori Kiyono
Fumiaki Tsuchida
Ichiro Taninaka
Jyoichiro Tanaka
Tatsuya Michigami
Hidenori Hiramatsu* denotes Outside Corporate Auditors.
Status of Shares (as of March 31, 2012)(1) Total number of shares authorised to be issued 59,500,000(2) Total number of shares outstanding
26,080,396(including 131,120 shares of treasury stocks)(3) Number of shareholders
3,035(4) Major shareholders
Status of shareholding
Number of shares held
Ratio of number of shares held(Thousands of shares)
against total number of shares
outstanding (%)
Hasegawakosan Co., Ltd.
4,558
17.56
Yoshihiro Hasegawa
1,334
5.14
Sumitomo Mitsui Banking
1,094
4.21
Corporation
Japan Trustee Services Bank,
1,064
4.10
Ltd. (Account in trust)
Harima Chemicals Mutual842
3.24
Prosperity Association
Shorai Foundation for Science805
3.10
and Technology
THE MINATO BANK, LTD.
692
2.66
Shorai, Ltd.
687
2.64
Keihansin Kougyou
672
2.58
Corporation
Hyogo Prefectual Credit
521
2.01
Federation of Agricultural
Cooperatives(Notes) 1. In “Number of shares held,” figures less than one thousand are rounded down.
2. Ratio of number of shares held against total number of shares outstanding is determined basedon the total number of shares outstanding minus the number of treasury stocks (131,120
shares), which amounts to 25,949,276 shares. The numbers shown are rounded down to two
decimal places.

- 37 -