Consolidated Financial Statements
Toho Zinc Co., Ltd.
and Consolidated Subsidiaries
For the year ended March 31, 2014
with Independent Auditor’s ReportToho Zinc Co., Ltd. and Consolidated Subsidiaries
Contents to Consolidated Financial Statements

Independent Auditor’s Report------------------------------------------------------------- 1

Consolidated Balance Sheet--------------------------------------------------------------- 2

Consolidated Statement of Operations--------------------------------------------------- 4

Consolidated Statement of Comprehensive Income------------------------------------ 5

Consolidated Statement of Changes in Net Assets ------------------------------------- 6
Consolidated Statement of Cash Flows -------------------------------------------------- 8
Notes to Consolidated Financial Statements -------------------------------------------- 9

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, 2014, and the consolidated statements of operations,comprehensive income, changes in net assets, and cash flows for the year then ended and a summary 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 in accordancewith 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 the consolidated financial statements that are freefrom 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 require that we plan and performthe 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 the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due to fraud or error. The purpose of an audit of theconsolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal control, but inmaking these risk assessments the auditor considers internal controls relevant to the entity’s preparation and fair presentationof the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates madeby management, 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, the consolidated
financial position of Toho Zinc Co., Ltd. and its consolidated subsidiaries as at March 31, 2014, and their consolidated
financial performance and cash flows for the year then ended in conformity with accounting principles generally accepted inJapan.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented for the convenienceof readers, and, in our opinion, the accompanying consolidated financial statements have been properly translated on thebasis described in Note 2.

Ernst & Young ShinNihon LLC
June 27, 2014
Tokyo, Japan1

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31,2014
2013
(Millions of yen)

AssetsCurrent assets:
Cash and time deposits (Notes 14 and 16)
Notes and accounts receivable, trade (Note 14)
Inventories (Note 3)
Deferred tax assets (Note 11)
Other current assets
Less: Allowance for doubtful accounts
Total current assets¥

Property, plant and equipment:
Buildings and structures (Notes 5 and 7)
Machinery and equipment (Notes 5 and 7)
Land (Notes 4 and 7)
Leased assets
Construction in progress
Less: Accumulated depreciation
Net property, plant and equipment

Investments and other assets:
Investment securities (Notes 7, 14 and 15)
Investments in unconsolidated subsidiaries and associates(Note 6)
Deferred tax assets (Note 11)
Goodwill
Mining right (Note 5)
Other assets (Note 5)
Less: Allowance for doubtful accounts
Total investments and other assets

Total assets¥

2014(Thousands of
U.S. dollars)(Note 2)

11,493 ¥13,59734,864
568
1,966
(0)
62,48911,414
14,667
31,295
430
3,576
(0)
61,38425,78979,667
16,961
183
740
123,342(71,338)
52,00425,24977,622
16,961
183
630
120,646(66,324)
54,322

250,573774,067
164,797
1,778
7,190
1,198,425(693,140)
505,285

3,685

4,232

35,804475
330
527
23,8082,448(754)
30,521

478
544
548
23,166
1,891(756)
30,106

4,615
3,206
5,120
231,325
23,785(7,326)
296,550

145,814$ 1,408,997

145,014¥$111,669
132,112
338,748
5,518
19,102(0)607,1602

March 31,
2013
2014
(Millions of yen)

Liabilities and net assets
Current liabilities:
Notes and accounts payable, trade (Note 14)
Short-term borrowings (Notes 7 and 14)
Current portion of long-term debt (Notes 7 and 14)
Commercial papers (Note 7)
Lease obligations (Note 7)
Accrued income taxes
Accrued expenses
Other current liabilities
Total current liabilities¥

Long-term liabilities:
Long-term debt (Notes 7 and 14)
Lease obligations (Note 7)
Deferred tax liabilities related to land revaluation (Notes 4
and 11)
Accrued employees’ pension and severance costs (Note 8)
Net defined benefit liability (Note 8)
Accrued directors’ and audit & supervisory board members’
retirement benefits
Accrued environmental measures
Asset retirement obligations (Note 9)
Other long-term liabilities
Total long-term liabilities
Total liabilities
Net assets (Note 10):
Shareholders’ equity:
Common shares:
Authorized – 264,000,000 shares
Issued– 135,855,217 shares in 2014 and 2013
Capital surplus
Retained earnings
Less: Treasury shares, at cost – 57,206 shares in 2014 and56,226 shares in 2013
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on other securities
Gains on deferred hedges
Surplus from land revaluation (Note 4)
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

¥

7,050
22,478
11,225
–
45
1,311
2,275
2,595
46,981¥

6,158
22,478
2,897
6,000
18
2,308
2,452
3,639
45,951

2014(Thousands of
U.S. dollars)(Note 2)$

68,499218,402
109,065–437
12,738
22,10425,213
456,480

27,196172

31,560113

264,244
1,671

5,061
–
1,838

5,061
2,191
–

49,174–
17,858

30
112
1,359
2,487
38,257
85,239

30
151
1,368
2,793
43,26989,220291
1,088
13,204
24,164
371,715
828,206

14,6309,876
22,687

14,6309,876
21,696142,149
95,958220,433(24)
47,171(23)
46,179(233)
458,326

823
73
8,290
3,368
47
12,60359,774145,014

781
482
8,290
859
–
10,41356,593
145,814

7,996
709
80,54732,724456
122,454580,781$ 1,408,997¥

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

3

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Operations
Year ended March 31,
2014
2013
2014
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Net sales
Cost of sales
Gross profit¥ 118,619
103,358
15,261¥ 103,654
94,465
9,189$ 1,152,535
1,004,255
148,280

5,340
1,637
44
0
242
178
2,067
9,511
5,749

5,032
1,477
43
(16)
135
183
1,798
8,654
534

51,884
15,905
427
1
2,351
1,729
20,08392,41155,858

124
(443)
621
(1,980)
(201)
(2)
271
–
364
(1,246)
4,503

100
(514)
–
2,214
(278)
(4,930)80(80)
305(3,103)(2,568)1,204(4,304)
6,033(19,238)(1,952)
(19)
2,633
–
3,536
(12,106)
43,752

2,576
255
2,832
1,670
1,670

2,741
(153)
2,588
(5,156)¥ (5,156)

25,0292,477
27,516
16,226
16,226

Selling, general and administrative expenses:
Transportation expense
Salaries and wages
Pension and severance costs
Provision of allowance for doubtful accounts
Depreciation
Research and development costs
Other
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Royalty income
Foreign exchange (losses) gains, net
Loss on retirement of property, plant and equipment
Impairment loss on fixed assets (Note 5)
Gain on sales of investment securities, net
Write-down of investment securities (Note 15)
Other, net
Income (loss) before income taxes and minority interests
Income taxes (Note 11):
Current
DeferredIncome (loss) before minority interests
Net income (loss)¥$(U.S. dollars)(Note 2)(Yen)
Per share:
Net (loss) income – basic

¥

12.30

¥ (37.97)$

0.11

Cash dividends

¥

5.00

¥

$

0.04

5.00

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

4

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year ended March 31,
2014
2013
2014
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Income (loss) before minority interests

¥

1,670

Comprehensive income (loss)

¥

42
(408)
2,509
2,142
3,813

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

Other comprehensive income (Note 18):
Net unrealized gains on other securities(Losses) gains on deferred hedges
Foreign currency translation adjustment
Total other comprehensive income

3,813
–

¥

(5,156) $16,226

¥

100
719
998
1,818
(3,337) $408(3,964)
24,37820,81237,048(3,337) $–37,048–¥The accompanying notes are an integral part of these financial statements.

5

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Changes in Net Assets
Shareholders’ equity
Number ofshares ofcommonshares issued(Thousands)
Balance as of April 1, 2012
Dividends of surplus
Net loss
Acquisition of treasury shares
Disposal of treasury shares
Net changes in items other than those inshareholders’ equity
Balance as of March 31, 2013
Dividends of surplus
Net income
Acquisition of treasury shares
Net changes in items other than those inshareholders’ equity
Balance as of March 31, 2014

135,855––––

Commonshares¥–135,855––––
135,855

14,630––––Capitalsurplus¥–14,630–––¥–14,630

9,876
–
–
–
(0)

Retained
Treasury
earnings
shares (*)(Millions of yen)
¥

–
9,876
–
–
–

¥

–
9,876

27,803(950)(5,156)––¥–
21,696
(678)
1,670
–

¥

–
22,687

(23)
–
–
(0)
0

Total
shareholders’equity
¥

–
(23)
–
–
(0)

¥

–
(24)

52,287(950)(5,156)(0)0–46,179
(678)
1,670
(0)

¥

–
47,171

Shareholders’ equity
CommonsharesBalance as of March 31, 2013
Dividends of surplus
Net income
Acquisition of treasury shares
Net changes in items other than those inshareholders’ equity
Balance as of March 31, 2014

$ 142,149––––$ 142,149

CapitalRetained
Treasury
surplusearnings
shares (*)(Thousands of U.S. dollars )(Note 2)$$

95,958–––$ 210,804(6,587)
16,226––
95,958–$ 220,433

$

$

Total
shareholders’equity

(223)
–
–
(0)

$ 448,688(6,587)
16,226
(0)

–
(233)

–
$ 458,326

6

Accumulated other comprehensive incomeNet
unrealized
gains onothersecurities

Gains(losses) on
deferredhedgesTotal
accumulated
Foreign
Remeasureothercurrency
ments of
Surpluscomprehensive
translation
definedfrom land
incomeadjustment benefit plansrevaluation(Millions of yen)

Balance as of April 1, 2012
Dividends of surplus
Net loss
Acquisition of treasury shares
Disposal of treasury shares
Net changes in items other than those inshareholders’ equity
Balance as of March 31, 2013
Dividends of surplus
Net income
Acquisition of treasury shares
Net changes in items other than those inshareholders’ equity

¥

¥

¥

Balance as of March 31, 2014

¥

680
–
–
–
–

(237)
–
–
–
–
719
482
–
–
–

100
781
–
–
–
42
823

¥

(408)
73

8,290
–
–
–
–

¥

(139)
–
–
–
–

–
8,290
–
–
–

¥

–
8,290

¥

998
859
–
–
–

¥

2,509
3,368

–
–
–
–
–

¥

8,594
–
–
–
–

–
–
–
–
–

¥

47
47

¥

Total
net assets¥

60,882(950)(5,156)
(0)
0

1,818
10,413–––

1,818
56,593
(678)
1,670
(0)

2,190
12,6032,190¥ 59,774

Accumulated other comprehensive incomeNet
unrealized
gains onothersecurities

Gains ondeferredhedgesBalance as of March 31, 2013
Dividends of surplus
Net income
Acquisition of treasury shares
Net changes in items other than those inshareholders’ equity

$

7,588
–
–
–

$

Balance as of March 31, 2014

$

7,996

408
$

4,683
–
–
–

Total
Foreign
Remeasure- accumulatedothercurrency
ments of
Surpluscomprehensive
translation
definedfrom land
incomeadjustment benefit plansrevaluation(Thousands of U.S. dollars )(Note 2)Total
net assets$ 80,547–––$ 549,873(6,587)
16,226
(0)

$

8,346
–
–
–

(3,964)–

24,378709$ 80,547$ 32,724

$

$

–
–
–
–

$ 101,175
–
–
–

456

21,27821,278456$ 122,454$ 580,781(*) There were 57,206 shares and 56,226 shares of treasury shares as of March 31, 2014 and 2013,
respectively

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

7

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year ended March 31,
2014
2013
2014
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Cash flows from operating activities:
Income (loss) before income taxes and minority interests
Depreciation
Impairment loss on fixed assets
Amortization of goodwill
Write-down of investments securities
Decrease in allowance for doubtful accounts
Decrease in accrued directors’ bonus
Decrease in accrued employees’ pension and severance costs
Decrease in net defined benefit liability
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Net loss on sales and retirement of property, plant and equipment
Decrease in notes and accounts receivable, trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable, trade
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) received
Net cash provided by operating activities

4,503
8,342
2
42
–
(0)
–
–
(278)
(124)
443
1,945
191
1,172
(3,476)
1,909(2,320)12,352111(500)(3,562)8,401¥ (2,568)
7,490
4,930
37
80
(12)
(25)
(253)
–
(100)
514
(2,456)
265
1,282
478
(2,435)
(905)
6,322
100
(467)
328
6,283

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
Payments for purchases of investment securities
Other, net
Net cash used in investing activities(3,406)10(2,163)(4)811(4,753)(7,137)87(4,519)(5)
292(11,282)(33,093)
97(21,016)(38)
7,879(46,181)

Cash flows from financing activities:
Proceeds from long-term debt
Repayments of long-term debt
(Decrease) increase in commercial papers
Cash dividends paid
Other, net
Net cash used in financing activities

6,000(2,897)(6,000)(678)(18)(3,594)–(3,320)
4,000
(950)
(112)
(383)

58,297(28,148)(58,297)(6,587)(174)(34,920)24
78
11,414¥ 11,493

251(5,130)
16,545¥ 11,414

233
757
110,901
111,669

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 16)

¥

$

$

43,752
81,053
19
408
–
(9)
–
–
(2,701)(1,204)
4,304
18,898
1,855
11,387(33,773)
18,548(22,541)
120,015
1,078(4,858)(34,609)81,626

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

8

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2014

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(collectively, the “Companies”) are prepared on the basis of accounting principles generally acceptedin Japan, which are different in certain respects as to application and disclosure requirements of IFRS,
and are compiled 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 year’s 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.
Certain items presented in the consolidated financial statements submitted to the Director of Kanto
Local 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.

9(2) Foreign currency financial statements
Assets and liabilities of the foreign consolidated subsidiaries are translated into Japanese yen at
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 adjustment 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 maturities 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 foreignexchange contracts, interest rate swaps and commodity futures, in order to manage certain risks
arising from adverse fluctuations in foreign currency exchange rates, interest rates andcommodity prices, respectively.
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 commodity futures and interest rate
swaps. The related hedged items are receivables and payables in connection with raw materials
and 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 price and interest rate fluctuations.

10

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 mainly depreciated by
the straight-line method over the estimated useful lives of the 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 equipment(structures) in Smelting business and depreciated over the lease terms of the respective assets by thestraight-line method with no residual value.

(j)

Allowance for doubtful accounts
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) Retirement benefits(1) Method for attribution of expected retirement benefits to periods
In the calculation of retirement benefit obligations, the expected retirement benefits are
attributed to the period up to the end of the current fiscal year based on the straight-line method.
(2) Accounting method for actuarial gains and losses and past service costs
Actuarial gains and losses are amortized by the straight-line method over a certain period (10years) which is within the average remaining years of service of the eligible employees when
the gains or losses arise, from the year following the year in which the gains and losses arise.
Past service costs are amortized as incurred by the straight-line method over a certain period (10years) which is within the average remaining years of service of the eligible employees when
the gains or losses arise.
Some of its consolidated subsidiaries apply the simplified method in the calculation of their net
defined benefit liability and retirement benefit expenses. Under the simplified method, thebenefits payable assuming the voluntary retirement of all eligible employees at the year-end are
deemed as retirement benefit obligations.

11

(l)

Accrued directors’ and audit & supervisory board members’ retirement benefits
In order to prepare for the disbursements of the directors’ and audit & supervisory board members’
retirement benefits, the Companies record an amount required to be paid out at the end of the fiscal
year which is calculated based on internal rules.
Note that the Company discontinued the system for directors’ and audit & supervisory board members’
retirement benefits in accordance with a resolution by the board of directors held on May 22, 2007,
and hence the balance at the fiscal year-end is the amount based on the periods in which the directors
and audit & supervisory board members served prior to June 2007.

(m) Accrued environmental measures
Accrued environmental measures are estimated and recorded to provide for future potential costs
related to disposal of polychlorinated biphenyl waste.
(n) 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.
(o) 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 to contracts for which the percentage of completion cannot be reliably estimated.
(p) 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.
(q) Net income (loss) per share
Net income (loss) per share is computed based on the net income (loss) available for distribution toshareholders of common shares and the weighted average number of common shares outstanding
during the year.
(r)

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 the discount rate of
1% for the years ended March 31, 2014 and 2013. The amount presents mainly the obligations of
CBH Resources Ltd. (“CBH”) to restore its mine sites at Endeavor Mine and Rasp Mine to originalstates upon closure.

12(s) Change in accounting policy(Application of the Accounting Standard for Retirement Benefits and related Guidance)
The “Accounting Standard for Retirement Benefits” (Accounting Standards Board of Japan (“ASBJ”)
Statement No. 26, issued on May 17, 2012) and the “Guidance on Accounting Standard for Retirement
Benefits” (ASBJ Guidance No. 25, issued on May 17, 2012) were applied from March 31, 2014;provided, however, that they were applied except for the provisions specified in the main clause of
Section 35 of the Accounting Standard for Retirement Benefits and the main clause of Section 67 of
the Guidance on Accounting Standard for Retirement Benefits. Under the new accounting policy, theamount of retirement benefit obligations minus plan assets is recorded as net defined benefit liability.
The unrecognized actuarial gains and losses and unrecognized past service costs were recognized in
net defined benefit liability.
The application of the Accounting Standard for Retirement Benefits and related Guidance by theCompany is subject to the tentative treatment provided for in Section 37 of the Accounting Standard
for Retirement Benefits. Consequently, the effects of the changes in accounting policies wererecognized in remeasurements of defined benefit plans under accumulated other comprehensive
income as of March 31, 2014.
As a result, as of March 31, 2014, net defined benefit liability of ¥1,838 million ($17,858 thousand)was recognized. Also, accumulated other comprehensive income increased by ¥47 million ($456
thousand).
In line with these, net assets per share increased by ¥0.35 ($0.003).
(t)

Accounting standards issued but not yet adopted
The “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26, issued on May 17,2012) and the “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25,
issued on May 17, 2012)(1) Overview
The ASBJ issued an amendment to the accounting treatment for unrecognized actuarial gains
and losses and unrecognized past service costs, the calculation of retirement benefit obligations
and current service costs, and additional disclosure requirements.
(2) Date of application
An amendment to the calculation for retirement benefit obligations and current service costs is
effective from the beginning of the year ending March 31, 2015. Retrospective application to
all prior periods presented in the consolidated financial statements is not required for thisamendment due to the tentative treatment specified in applicable accounting standards.
(3) Effect of application
Under an amendment to the calculation of retirement benefit obligations and current service
costs, the change in the method of attributing expected retirement benefits to periods from thestraight line basis to the benefit formula basis is expected to increase the beginning balance ofretained earnings by ¥ 474 million ($4,605 thousand). Additionally, the change in thecalculation for current service costs is expected to reduce operating income by ¥ 50 million yen($485 thousand).

13

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 ¥102.92 to
U.S.$1 on March 31, 2014. 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.

Inventories

Inventories as of March 31, 2014 and 2013 consisted of the following:
March 31,2013
2014
(Millions of yen)

4.

2014
(Thousands of
U.S. dollars)

Merchandise and finished goods
Work in process
Raw materials and supplies¥

11,045
7,752
16,066

¥

6,993
8,207
16,094$

107,316
75,320156,101

Total¥

34,864¥

31,295$

338,748

Land Revaluation

In accordance with the Act on Revaluation of Land, the Company’s land used for its business operations
was revalued as follows:
Date of revaluation: March 31, 2000
The differences between total fair value of land and the total book value after revaluation of land as ofMarch 31, 2014 and 2013 were ¥7,219 million ($70,141 thousand) and ¥6,911 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.

14

5.

Impairment Loss on Fixed Assets

The Companies recognized impairment losses on the assets group for the years ended March 31, 2014 and2013 as follows:Year ended March 31, 2014
Location
Use
Category
Annaka City, Gunma Idle assets
Machinery and equipment
Other
Total

Location
The State of New
South Wales,
Australia

Year ended March 31, 2013
Use
Category
Asset for Mineral Mining right
Resource business(Endeavor Mine)

Annaka City, Gunma

Idle assets(Millions ofyen)(Thousands of
U.S. dollars)

¥

$

¥

2
0
2

$

19
0
19

(Millions ofyen)¥

Buildings and structures
Machinery and equipment
Other
Intangible assets

4,852
42
28
0
4
75

Fujioka City, Gunma

Idle assets

Machinery and equipment

2
¥

4,930

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.
For the year ended March 31, 2014, 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 readilysalable either.
For the year ended March 31, 2013, the Company recognized impairment losses for the decreased amountof book value of an asset for Mineral Resource business (Endeavor Mine) to its recoverable amount on the
ground that the book value of the assets exceeds the sum of future cash flows expected to result from thecontinued use due to decreasing recoverable reserves and changes in market environments. The
recoverable amount was measured at value in use and calculated by discounting the future cash flows at
8%.
Furthermore, the Company decided to discontinue the use of certain production equipment in Annaka Cityand Fujioka City, Gunma due to changes in market environments and recognized impairment losses for thedecreased amount of book value of the assets to its recoverable amount. The recoverable amount wasmeasured at value in use. However, a discount rate is not disclosed since the future cash flows were
negative.

15

6.

Investments in Unconsolidated Subsidiaries and Associates

Investments in unconsolidated subsidiaries and associates as of March 31, 2014 and 2013 are summarized
as follows:
March 31,2013
2014
(Millions of yen)

Unconsolidated subsidiaries
Associates

7.

2014
(Thousands of
U.S. dollars)

¥

381
94

¥

384
94

$

3,701
913

¥

475

¥

478

$

4,615

Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt as of March 31, 2014 and 2013 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

¥

¥

2014
Weighted
averageinterest rate

22,478–0.7%–

11,2250.6

45
27,196
172

–
0.8
–

61,118Due in2013

2014

Amount(Millions ofyen)Amount(Thousands of
U.S. dollars)¥$2015.4 – 2023.10
2015.4 – 2025.3¥

22,4786,000

218,402–

2,897

109,065

18
31,560113

437
264,244
1,671

63,066$593,839

Average interest rates are calculated by using weighted-average interest rates as of March 31, 2014.
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.

16

The maturities of long-term debt and lease obligations outstanding as of March 31, 2014 were as follows:

2015
2016
2017
2018
2019
ThereafterLong-term
Lease
debt
obligations(Millions of yen)¥
11,225
¥
45
6,982
39
7,209
39
1,002
24
7,000
9
5,001
58

Long-term
Lease
debt
obligations(Thousands of U.S. dollars)$
109,065 $
437
67,839378
70,044
378
9,735
233
68,01387
48,591
563

Total

¥

$

Year ending March 31,

38,422¥

217

373,319$

2,108

Assets pledged as collateral for the long-term debt, including the current portion, as of March 31, 2014 and2013 were as follows:
March 31,
Pledged assets
2013
2014
2014
(Millions of yen)(Thousands of
U.S. dollars)
Land (*1)
Buildings and structures (*1)
Machinery and equipment (*1)
Investment securities (*2)¥

13,792
4,768
6,883
79

¥

13,792
4,884
7,483
200

$

134,006
46,327
66,877
767

Total

¥

25,524¥26,361$

247,998(*1) For the above assets, a revolving mortgage is set at the maximum amount of ¥1 million($9 thousand) with one bank as of March 31, 2014 and 2013.
(*2) These assets are pledged for the long-term debt, including the current portion, of ¥29 million($281 thousand) and ¥38 million as of March 31, 2014 and 2013, respectively.

8.

Retirement Benefit Plans

The Company and its domestic consolidated subsidiaries have defined benefit plans, i.e., defined benefit
corporate pension plans (contract-type) and lump-sum payment plans.
For the year ended March 31, 2014
Information regarding the Company’s defined benefit plans for the year ended March 31, 2014 was asfollows:

17

(a) Reconciliation between retirement benefit obligations at beginning of year and end of year
Year ended March 31,
2014
2014
(Millions of (Thousands ofyen)
U.S. dollars)
Retirement benefit obligation at beginning of year
Current service costs
Interest costs
Actuarial gains and losses arising during year

¥

4,262
225
46
(38)
(168)

$

41,410
2,186
446
(369)
(1,632)

¥

4,327

$

42,042Retirement benefits paid
Retirement benefit obligation at end of year(b) Reconciliation between plan assets at beginning of year and end of year
Year ended March 31,
2014
2014
(Millions of (Thousands ofyen)
U.S. dollars)
Plan assets at beginning of year
Expected return on plan assets
Actuarial gains and losses arising during year
Contributions from employer

¥

1,913
38
211
471
(146)

$

18,587
369
2,050
4,576
(1,418)

¥

2,488

$

24,174Retirement benefits paid
Plan assets at end of year(c) Reconciliation between retirement benefit obligation and plan assets at end of year and defined benefit
liability and defined benefit asset for retirement recognized on the consolidated balance sheet
March 31,Retirement benefit obligation for funded plans
Plan assets

2014(Millions of
yen)

2014
(Thousands of
U.S. dollars)¥$

Retirement benefit obligation for unfunded plans
Net balance of liability and asset recognized on the
consolidated balance sheet
Net defined benefit liability
Net balance of liability and asset recognized on the
consolidated balance sheet

¥

4,137
(2,488)
1,648

40,196(24,174)
16,012

190

1,846

1,838

17,858

1,838

17,858

1,838$

17,85818

(d) Retirement benefit expenses and their breakdown
Year ended March 31,
2014
2014
(Millions of (Thousands ofyen)
U.S. dollars)
Current service costs
Interest costs
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service costs¥

Retirement benefit expenses under defined benefit plans

¥

225
46
(38)
19
(38)
214

$

$

2,186
446
(369)
184
(369)
2,079

(e) Remeasurements of defined benefit plans
The breakdown of the amount recognized in remeasurements of defined benefit plans (before tax) is asfollows:
Year ended March 31,
2014
2014
(Millions of (Thousands ofyen)
U.S. dollars)
Unrecognized actuarial gains and losses

¥

(82)
155

$

(796)
1,506

¥

73

$

709

Unrecognized past service costs
Total
(f)

Plan assets(1) Breakdown of plan assets
Percentage of each main category to total plan assets is as follows:Year ended
March 31,2014
Debt securities
Equity securities
General account
Other

26%
57
14
3

Total

100%

(2) Determination of expected long-term rate of return on plan assets
In determining the expected long-term rate of return on plan assets, the Company takes into
consideration the current and future plan asset allocation as well as the current and expectedlong-term rate of return on various asset categories comprising plan assets.

19

(g) Actuarial assumptions
Year ended
March 31,2014
Weighted-average actuarial assumptions at end of year:
Discount rate
Expected long-term rate of return

1.1%
2.0%

For the year ended March 31, 2013(a) Funded status of projected benefit obligations
Year ended
March 31,2013
(Millions ofyen)
Projected benefit obligations

¥

4,262
(1,913)
2,348
(352)
194

¥

2,191

Plan assets at fair value
Unfunded status
Unrecognized actuarial losses
Unrecognized prior service costs
Accrued employees’ pension and severance costs(b) Compositions of employees’ pension and severance costs

Year ended
March 31,2013
(Millions ofyen)Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial losses
Amortization of prior service costs

¥

179
74
(31)
38
(38)

Total

¥

221

(c) Assumptions used in accounting for the defined benefit pension plans
Year ended
March 31,
2013
Discount rate
Expected rate of return on plan assets

1.1%
2.0%

20

9.

Asset Retirement Obligations

The changes in asset retirement obligations for the years ended March 31, 2014 and 2013 were as follows:Year ended March 31,
2013
2014
2014
(Millions of yen)(Thousands of
U.S. dollars)
Balance at beginning of year
Additional provisions associated with the purchasesof property, plant and equipment
Adjustment associated with the passage of time

¥

1,368

¥

1,359

1,144

$

13,291

55
12
156

–
13
(22)

Other
Balance at end of year

¥

¥

1,368

–
126
(213)
$

13,204

10. Net Assets
Information regarding changes in net assets for the years ended March 31, 2014 and 2013 is as follows:(a) Shares issued and outstanding / Treasury shares
For the year ended March 31, 2014

Types of shares
Shares issued and outstanding:Common shares
Treasury shares:
Common shares (Note)

Number ofshares as ofApril 1, 2013

Increase
Decrease(Thousands of shares)

Number ofshares as ofMarch 31, 2014

135,855––

135,855

56

0

–

57

Note: The increase of 0 thousand shares is due to purchase of shares of less than standard unit.
For the year ended March 31, 2013

Types of shares
Shares issued and outstanding:Common shares
Treasury shares:
Common shares (Notes 1 and 2)

Number ofshares as ofApril 1, 2012

Increase
Decrease(Thousands of shares)

Number ofshares as ofMarch 31, 2013

135,855––

135,855

55

0

0

56

Notes 1. The increase of 0 thousand shares is due to purchase of shares of less than standard unit.
2. The decrease of 0 thousand shares is due to sale of shares of less than standard unit.

21

(b) Dividends(1) Dividends paid
For the year ended March 31, 2014
Resolution

Type ofsharesAnnual general meeting of theshareholders on June 27, 2013

CommonsharesTotal dividends(Millions of yen)

Dividends per
share
(Yen)

¥

¥

678

5

Cut-off
date

Effective
date

March 31,2013

June 28,2013

Cut-off
date

Effective
date

March 31,2012

June 29,2012

Cut-off
date

Effective
date

March 31,2013

June 28,2013

For the year ended March 31, 2013
Resolution

Type ofsharesAnnual general meeting of theshareholders on June 28, 2012

CommonsharesDividends per
share
(Yen)

Total dividends(Millions of yen)
¥

950

¥

7

For the year ended March 31, 2014
Resolution

Type ofsharesAnnual general meeting of theshareholders on June 27, 2013

CommonsharesTotal dividends(Thousands of U.S.
dollars)$

6,587

Dividends per
share(U.S. dollars)

$

0.04

(2) Dividends with the cut-off date in the year ended March 31, 2014 and the effective date in theyear ending March 31, 2015

Resolution

Type ofsharesTotal
dividends

Source ofdividends

Dividends
per share(Millions of

Cut-off
date

Effective
date

June 30,
2014

(Yen)

yen)

Annual general meeting of theshareholders on June 27, 2014

Commonshares

678

Retainedearnings¥

5

March 31,2014¥

Resolution

Type ofsharesTotal
dividends

Source ofdividends

Dividends
per share

Cut-off
date

Effective
date

March 31,2014

June 30,
2014(Thousands of(U.S. dollars)

U.S. dollars)

Annual general meeting of theshareholders on June 27, 2014

Commonshares$6,587

Retainedearnings$

0.04

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 shares. Such distributions can be made at any
time by resolution of the shareholders, or by the board of directors if certain conditions are met.

22

11.

Income Taxes

As of March 31, 2014 and 2013, significant components of deferred tax assets and liabilities were as
follows:
March 31,2013
2014
(Millions of yen)
Deferred tax assets:
Accrued employees’ pension and severance costs¥

Net defined benefit liability
Asset retirement obligations
Inventories write-off
Property, plant and equipment
Accrued employees’ bonus
Accrued enterprise tax
Elimination of intercompany profits
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gains on other securities
Mining rightGain on deferred hedges
Special tax-purpose reserve for reduction entry of tangible
assetsAsset retirement obligations
Other
Total deferred tax liabilities

–

¥

2014
(Thousands of
U.S. dollars)

683

804
–

$

–

398
284

401
332

3,867
2,759

458
181

227
193

4,450
1,758

101
39
1,629

181
82
984

981
378
15,827

3,776(1,335)
2,441

3,208
(794)
2,414

36,688(12,971)
23,717

(454)
(421)

(404)
(302)

(4,411)(4,090)

(40)

(295)

(388)

(13)

(15)

(126)

(6)
(606)
(1,543)(6)(413)(1,439)(58)(5,888)(14,992)

6,636

Net deferred tax assets

¥

898

¥

974

$

8,725

Deferred tax liabilities:
Deferred tax liabilities related to land revaluation

¥

5,061

¥

5,061

$

49,17423

The reconciliation between the statutory tax rate and the effective tax rate for the year ended March 31,
2014 was as follows:Year ended
March 31,2014
Statutory tax rate
Increase (decrease) due to:Loss of foreign consolidated subsidiaries
Reduction of deferred tax assets due to change in income tax rate
Other

38.0%

Effective tax rate

62.9%

23.4
1.2
0.2

For the year ended March 31, 2013, reconciliation between the statutory tax rate and the effective tax rate is
not shown as loss before income taxes and minority interests were recorded.
Following the promulgation on March 31, 2014 of the “Act for Partial Amendment of the Income Tax Act,etc.” (Act No. 10 of 2014), the Company is no longer subject to the special reconstruction corporation tax
from the fiscal year beginning on or after April 1, 2014. Accordingly, the statutory tax rate used tomeasure deferred tax assets and liabilities was changed from 38.01% to 35.64% for temporary differences
expected to be reversed in the fiscal year beginning on April 1, 2014. As a result, deferred tax assets
decreased by ¥ 51 million ($495 thousand) and income taxes - deferred increased by ¥ 54 million ($524
thousand).

12.

LeasesAs lessee:
Pro forma information on an “as if capitalized” basis of finance lease contracts commencing prior to April 1,
2008, which are accounted for in the same manner as operating leases, is not shown as they are immaterial.
There were no impairment losses allocated to leased assets for the years ended March 31, 2014 and 2013.

13.

Commitments and Contingent Liabilities

The Companies were contingently liable as guarantors for loans of an unconsolidated subsidiary and an
associate in the aggregate amount of ¥228 million ($2,215 thousand) and ¥277 million as of March 31,
2014 and 2013, respectively.
The Company has entered into loan commitment agreements amounting to ¥5,600 million($54,411 thousand) and ¥5,600 million with two financial institutions as of March 31, 2014 and 2013,
respectively. The loans payable outstanding was zero, and therefore, the unused balance was ¥5,600
million ($54,411 thousand) and ¥5,600 million under the credit facilities as of March 31, 2014 and 2013,
respectively.
The Company has repurchase obligations of ¥552 million ($5,363 thousand) and ¥538 million inconnection with securitization of receivables as of March 31, 2014 and 2013, respectively.

24

14.

Financial Instruments(a) 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
relationships and exposed to market risk.
Trade payables––notes and accounts payable, trade––are mostly due within two months or less.
Certain trade payables denominated in foreign currencies are exposed to foreign currency risk, andsuch risk is hedged by forward foreign exchange contracts.
Trade receivables and payables in connection with the Smelting business are exposed to commodity
price fluctuation 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 9 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 the forward foreign exchange contracts to hedge
the foreign currency risk arising from the trade receivables and payables denominated in foreign
currencies, metal futures contracts to hedge the commodity price fluctuation risk of LME arising fromthe trade receivables and payables on the Smelting business and interest rate swaps to hedge thefluctuation risk deriving from interest payment of long-term debt. See Note 1. (f) (3) Hedge
accounting for information about the method of hedge accounting, hedging instruments and hedged
items, hedging policy, and assessment of hedge effectiveness.
(3) Risk management for financial instruments(i)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.

25

(ii)

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 the commodity price fluctuation risks of LME for
trade receivables and payables on the Smelting business, the Company has entered into the metal
futures contracts. 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.

(iii) Management of liquidity risk on funding (risk of default at due dates)
Based on the report from each department, subsidiaries and associates, the department in chargeof the Company prepares and updates its cash flow plan on a timely basis and manages liquidity
risk by maintaining liquid funds.
(4) Supplementary explanation of the fair value of financial instruments
Fair values of financial instruments are based on their respective market prices if available. When
there is no market price available, fair value is reasonably calculated. Since various assumptions andfactors are reflected in the calculation of the fair value, different assumptions and factors could resultin different fair value. In addition, the notional amounts of derivatives in Note 17. Derivative
Transactions are not indicative of the market risk involved in derivative transactions.

26

(b) Fair Values of Financial Instruments
Carrying values of financial instruments on the consolidated balance sheets as of March 31, 2014 and 2013
and their fair values 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).

Carrying value

March 31, 2014
Fair value(Millions of yen)

(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets¥

11,493
13,597
3,072
28,162¥(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities

¥

¥

¥

7,050
22,47838,422
67,950¥116

Derivatives (*2)¥

11,493
13,597
3,072
28,162

¥

¥

¥

7,050
22,47838,94368,471

¥

–
–
521
521

¥

116

¥

–

¥

Carrying value

March 31, 2013
Fair value(Millions of yen)

(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets¥

11,414
14,667
3,619
29,702¥(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities

¥

¥

¥

6,158
22,47834,45763,093¥777

Derivatives (*2)¥

Difference

¥

–
–
–
–

Difference

11,414
14,667
3,619
29,702

¥

¥

¥

6,158
22,47834,90563,541

¥

–
–
448
448

¥

777

¥

–

¥

¥

–
–
–
–

March 31, 2014
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)

111,669
132,11229,848273,630$$$

68,499218,402373,319660,221

$

1,127

$

$

111,669
132,11229,848273,630

$

$

–
–
–
–

$

$

68,499218,402378,381665,283

$

–
–
5,062
5,062

$

1,127

$

–

(*1) Current portion of long-term debt is included in long-term debt as of March 31, 2014 and 2013.
(*2) The value of assets and liabilities arising from derivatives is shown at net value, and the net liability
position is shown in parentheses.

27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 a quoted market price. For information on securities
classified by holding purpose, please refer to Note 15. 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 condition 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 17. Derivative Transactions.

2.

Financial instruments whose fair value is extremely difficult to determine

2014

Unlisted equity securities¥

March 31,2013
(Millions of yen)

696

¥

699

2014
(Thousands of
U.S. dollars)
$

6,762

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.

28

3.

Redemption schedule for monetary receivables as of March 31, 2014

Due in one
year or less

Cash and time deposits
Notes and accounts receivable, trade
Total

¥
¥

11,483
13,59725,080Due in one
year or less

Cash and time deposits
Notes and accounts receivable, trade$111,572
132,112$ 243,684

Total

March 31, 2014
Due after
Due after
one yearfive years
through fivethrough ten
years
years
(Millions of yen)
¥

–
–
–

¥

¥

–
–
–

¥

Due after
ten years¥¥

March 31, 2014
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 7. Short-Term Borrowings andLong-Term Debt.

15.

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 asof March 31, 2014 and 2013 were as follows:

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

¥

1,463

¥

324
1,787

March 31, 2014
Fair value(carrying value)(Millions of yen)

Unrealized gains(losses)

¥

2,861

¥

1,397

¥

210
3,072

¥

(113)
1,284

29

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

¥

1,853

¥

572
2,426

Cost

March 31, 2013
Fair value(carrying value)(Millions of yen)

Unrealized gains(losses)

¥

3,226

¥

1,373

¥

393
3,619

¥

(179)
1,193

March 31, 2014
Fair value
Unrealized gains(carrying value)(losses)(Thousands of U.S. dollars)

Securities whose fair value exceeds theircost:
Equity securities$

14,214$

27,798$

13,573

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

$

3,148
17,363$2,040
29,848$(1,097)
12,475

As of March 31, 2014 and 2013, unlisted equity securities amounting to ¥612 million ($5,946 thousand)and ¥612 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, 2013, the Companies recognized ¥80 million of impairment losses forinvestment securities. In the case that the market value at the end of the year declines by 50% or morefrom its cost, the Companies recognize the difference between the market value and the cost as an
impairment loss, and in the case that the decline ranges between 30% and 50%, 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, 2014 and2013 was as follows:Year ended March 31,
2014
2013
2014
(Millions of yen)(Thousands of
U.S. dollars)
Sales proceeds
Aggregate gains
Aggregate losses

¥

915
417
146

¥

158
80
–

$

8,890
4,051
1,418

30

16. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2014 and 2013 were composed of the followings:
March 31,2013
2014
(Millions of yen)

Cash and time deposits
Less: Time deposits with maturities in excess of
three months
Cash and cash equivalents

17.

¥

11,493¥

11,414

11,493$

111,669

–

–
¥

2014
(Thousands of
U.S. dollars)¥

11,414–$

111,669

Derivative Transactions(a) Summarized below are the notional amounts and the fair value of derivative instruments outstanding
as of March 31, 2014 and 2013, for which hedge accounting has not been applied.
(1) Currency-related transactions
March 31, 2014
Notional amount
Maturing afterContract
one yearamountFair value(Millions of yen)

Unrealized
gains (losses)

OTC transactions:
Forward foreign exchange
contracts
Sell:
USD
Total

¥
¥

70
70

¥
¥

–
–

¥
¥

(0)
(0)

March 31, 2013
Notional amountContract
Maturing after
amountone year
Fair value(Millions of yen)

¥
¥

(0)
(0)

Unrealized
gains (losses)

OTC transactions:
Forward foreign exchange
contracts
Sell:
USD
Total

¥
¥

3
3

¥
¥

–
–

¥
¥

0
0

¥
¥

0
0

31

March 31, 2014
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)

Unrealized
gains (losses)

OTC transactions:
Forward foreign exchange
contracts
Sell:
USD
Total

$
$

680
680

$
$

–
–

$
$

(0)
(0)

$
$

(0)
(0)

Note: The calculation of fair value is based on prices obtained from counterparty financial
institutions and others.
(2) Commodity-related transactions
March 31, 2014
Notional amountContract
Maturing after
one yearamountFair value(Millions of yen)

Unrealized
gains (losses)

OTC transactions:
Commodity futures contracts
Sell:
Metals
Total

¥
¥

117
117

¥
¥

–
–

¥
¥

1
1

¥
¥

1
1

March 31, 2014
Notional amount
Maturing afterContract
one year
Fair value
amount(Thousands of U.S. dollars)

Unrealized
gains (losses)

OTC transactions:
Commodity futures contracts
Sell:
Metals
Total

$
$

1,136
1,136

$
$

–
–

$
$

9
9

$
$

9
9

Note: The calculation of fair value is based on prices obtained from counterparties and others.
There were no commodity-related transactions as of March 31, 2013.

32

(b) Summarized below are the notional amounts and the fair value of derivative instruments outstanding
as of March 31, 2014 and 2013, for which hedge accounting has been applied.
(1) Interest-related transactions
March 31, 2014
Notional amount
Maturing afterContract
one yearamount(Millions of yen)Interest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

¥
¥

7,065
7,065

¥
¥

4,705
4,705

March 31, 2013
Notional amountContract
Maturing after
amountone year(Millions of yen)Interest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

¥
¥

7,925
7,925

¥
¥

7,065
7,065

Fair value(Note)

Fair value(Note)March 31, 2014
Notional amountContract
Maturing after
one yearamountFair value(Thousands of U.S. dollars)Interest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

$
$

68,64568,645$$45,71545,715(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.

33

(2) Commodity-related transactions
March 31, 2014
Notional amount
Maturing afterContract
one yearamount(Millions of yen)
Commodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

¥
¥

11,278
11,278¥¥––Fair value¥¥

March 31, 2013
Notional amountContract
Maturing after
amountone year(Millions of yen)
Commodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

¥
¥

13,577
13,577

¥
¥

–
–

114
114

Fair value

¥
¥

777
777

March 31, 2014
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

$
$

109,580
109,580

$
$

–
–

$
$

1,107
1,107

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

34

18.

Other Comprehensive Income

Reclassification adjustments and tax effects allocated to each component of other comprehensive income
for the years ended March 31, 2014 and 2013 were as follows:
Years ended March 31,
2013
2014
2014
(Millions of yen)(Thousands of
U.S. dollars)
Net unrealized gains on other securities:
Gains arising during the year
Reclassification adjustments
Amount before tax effectTax effect¥(Losses) gains on deferred hedges:
Gains arising during the year
Reclassification adjustments
Amount before tax effectTax effectForeign currency translation adjustment:
Adjustments arising during the year
Total other comprehensive income

19.

¥

362
(271)
91
(49)
42

¥

148
(4)
143
(43)
100

$

3,517
(2,633)
884
(476)
408

2,429
(3,092)
(663)
254
(408)

340
819
1,160
(441)
719

23,600(30,042)(6,441)
2,467(3,964)

2,509
2,509

998
998

24,37824,378

2,142

¥

1,818

$

20,812

Segment Information(a) 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, the consolidated subsidiary.
 Smelting segment engages in sales and production of zinc and lead products, electric silver andsulfuric acid.
 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.

35

(b)
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.
(c) Information about net sales, profit or loss, assets and other items
Year ended March 31, 2014
Reportable segment
Electronic
Compon- Environents and ment andMineralSmelting Resource Materials Recycling

Other(Note 1)

Total

Total

Reconciliation(Note 2)

Amounts on
consolidated
financialstatements(Note 3)¥¥

(Millions of yen)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill¥ 80,078
3,006¥ 83,085¥ 4,341¥ 60,736¥ 14,085 ¥ 6,803
6,203
115
¥ 20,288 ¥ 6,919¥ (1,664) ¥999¥ 43,888 ¥ 11,012¥ 2,766 ¥ 4,795 ¥300¥ 4,9099¥ 4,918¥959¥ 5,189¥105,876
9,334¥115,211¥ 4,635¥120,826¥ 12,742
4,877¥ 17,619¥ 1,076¥ 5,724¥314¥ 8,176¥¥ 118,619
14,211¥ 132,831¥ 5,711¥ 126,551

96 ¥

8,273

–
(14,211)¥ (14,211)¥
38¥ 18,462¥¥¥

118,619–
118,619
5,749
145,014

¥

¥

8,342

69

1,126

3,154

187

219

4,687

433

5,120

39

5,160

–

–

–

–

–

–

–

2

2

–

42

–

–

42

–

42

–

42

–

527

–

–

527

–

527

–

527

Reconciliation(Note 2)

Amounts on
consolidated
financialstatements(Note 3)¥–
(11,081)¥ (11,081)¥(144)¥ 19,064¥¥¥¥

103,654–
103,654534
145,814

¥

¥

7,490

Year ended March 31, 2013
Reportable segment
Electronic
Compon- Environents and ment andMineralSmelting Resource Materials Recycling

Total

Other
(Note 1)

Total

(Millions of yen)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill¥ 71,018
2,621¥ 73,639¥ 1,521¥ 65,332¥ 11,034 ¥ 6,463
3,558
119
¥ 14,592 ¥ 6,582¥ (3,375) ¥773¥ 41,078 ¥ 10,919¥ 2,840 ¥ 3,832 ¥300¥ 4,3416¥ 4,347¥650¥ 4,372¥¥ 92,857 ¥ 10,797
6,305
4,775
¥ 99,163 ¥ 15,572¥(430) ¥ 1,109¥ 121,703 ¥ 5,046

339 ¥

7,313

¥

¥ 103,654
11,081¥ 114,735¥
679¥ 126,749

104 ¥

7,418

72

1,710

8,351

210

236

10,50859

10,56729

10,597

–

4,852

–

–

4,852

–

4,852

78

4,930

–

37

–

–

37

–

37

–

37

–

548

–

–

548

–

548

–

548

36

Year ended March 31, 2014
Reportable segment

Smelting

MineralResource

Electronic
Compon- Environents andment andMaterials Recycling

Other(Note 1)

Total

Amounts on
consolidated
financialstatements(Note 3)

Reconciliation(Note 2)

Total

(Thousands of U.S. dollars)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill$ 778,060 $ 136,853
29,20760,270$ 807,277 $ 197,123$ 42,178 $ (16,167)$ 590,128 $ 426,428$ 66,099
1,117$ 67,226$ 9,706$ 106,995$ 26,875 $ 46,589 $2,914$ 47,69787$ 47,784$ 9,317$ 50,417$ 1,028,721
90,691$ 1,119,422$ 45,034$1,173,979

$

$

3,050

$ 123,804 $ 1,152,535
47,386
138,078$ 171,191 $ 1,290,623$ 10,454 $ 55,489$ 55,616 $ 1,229,605

79,440 $

932 $

$

–
(138,078)$ (138,078)$
369$ 179,382

80,382 $670$ 1,152,535–$ 1,152,535$
55,858$ 1,408,997$

81,053

10,94030,645

1,816

2,127

45,5404,207

49,747378

50,136

–

–

–

–

–

–

–

19

19

–

408

–

–

408

–

408

–

408

–

5,120

–

–

5,120

–

5,120

–

5,120

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,
2013
2014
2014
(Millions of yen)(Thousands of
U.S. dollars)

Segment profit (loss):
Intersegment elimination

¥

162
(124)

¥

(69)
(74)

$

1,574
(1,204)

¥

38

¥

(144)

$

369

Corporate expenses (*)Total(*) “Corporate expenses” represents mainly general and administrative expenses that are notallocated to reportable segments.
Year ended March 31,
2013
2014
2014
(Millions of yen)(Thousands of
U.S. dollars)

Segment assets:
Corporate assets (*)¥

18,462¥

19,064$

179,382(*) “Corporate assets” represents mainly the Company’s investments of surplus funds
including cash and investment securities and assets relating to administrative divisions.

37Year ended March 31,
2013
2014
2014
(Millions of yen)(Thousands of
U.S. dollars)

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

¥

69

¥

72

$

29

39

670
378

(*) “Increase in property, plant and equipment and intangible assets” represents mainly
capital expenditures that do not belong to reportable segments.
3. Segment profit or loss is reconciled to operating income on the consolidated statements ofoperations.
(d) Related information(1) Information by product and service
Information by product and service has been omitted since similar information is disclosed insegment information described above.
(2) Information by geographical area
Net sales information by geographical area for the year ended March 31, 2014 was as follows:Year ended March 31, 2014
(Millions of(Thousands ofyen)
U.S. dollars)
Japan
Asia
Oceania¥ 103,108
9,192
6,318

$ 1,001,826
89,312
61,387

Total¥ 118,619$ 1,152,535

Net sales information by geographical area for the year ended March 31, 2013 has been omitted
since net sales to external customers in Japan exceed 90% of the consolidated sales.
Property, plant and equipment information by geographical area as of March 31, 2014 and 2013
was as follows:
March 31,
2013
2014
2014
(Millions of yen)(Thousands of
U.S. dollars)
Japan
Australia¥

36,024
15,979¥37,61016,712$350,019
155,256

Total¥

52,004¥54,322$505,28538

(3) Information by major customer
Information by major customer has been omitted since there were no sales to single externalcustomer accounting for 10% or more of the consolidated sales.

39