TERAOKA SEISAKUSHO CO., LTD.

INTERIM REPORTThe six-month period ended September 30, 2013

Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets
September 30, 2013 and March 31, 2013

Thousands ofU.S. dollars

Millions of yen

September 30

March 31

September 30

ASSETS
Current Assets:¥6,387¥7,004$65,341

5,505

5,803

56,316

Less:Allowance for doubtful accounts

(10)

(10)

(101)

Inventories

3,445

3,424

35,238Deferred tax assets

300

310

3,064

Other current assets

482

484

4,942

16,10917,015

164,800

Land4,0454,033

41,378

Buildings and structures

11,136

11,036113,921

Machinery and equipment

24,23624,093247,949

89

57

910

39,506

39,219404,158

Less: Accumulated depreciation(25,983)(25,457)(265,815)

Property, plant and equipment, net

13,523

13,762

138,343

108

70

1,102

2,875

2,489

29,415

9989

Other

278

304

2,843

Less:Allowance for doubtful accounts

(2)

(2)

(17)

Total investments and other assets

3,160

2,800

32,330¥32,900¥33,647$336,575

Cash and time deposits
Notes and accounts receivable:
Trade

Total current assets
Property, Plant and Equipment:

Construction in progress

Intangible Assets
Investments and Other Assets:
Investments in securities
Deferred tax assets

Total assets

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

-1-

Thousands ofU.S. dollars

Millions of yen

September 30

March 31

September 30

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent Liabilities:
Notes and accounts payable:Trade¥3,244¥3,645$33,192

4441

Current portion of long-term borrowings

500

500

5,115

Accrued income taxes

1823291,864

Accrued expenses

495

566

5,069

Other current liabilities

584

690

5,960

5,009

5,734

51,241

125

375

1,279

Employees

340

405

3,476

Deferred tax liabilities

284

160

2,904

Asset retirement obligations

171

171

1,753

Other

128

132

1,311

Total long-term liabilities

1,048

1,243

10,723

Total liabilities

6,057

6,977

61,964and March 31,2013, respectively

5,057

5,057

51,735Additional paid-in capital

4,644

4,644

47,509Retained earnings

16,262

16,438166,366

Less: Treasury stock, at cost(136)(136)(1,399)Total shareholders' equity

25,82726,003

264,211

Unrealized gains on securities

903

641

9,238

Foreign currency translation adjustments

113

26

1,162

1,016

667

10,40026,843¥32,900

26,670¥33,647

274,611$336,575

Short-term borrowings

Total current liabilities
Long-term Liabilities:
Long-term borrowings
Provision for retirement benefits:

NET ASSETS
Shareholders' Equity:
Common stock:
Authorized: 80,000,000 shares
Issued: 26,687,955 shares as of September 30, 2013

Accumulated other comprehensive income

Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets-2-Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Income
For the six-month period ended September 30, 2013 and 2012

Thousands ofU.S. dollars

Millions of yen

2013

2012

2013

Net Sales¥9,765¥9,849$99,893

Cost of Sales

7,770

7,830

79,483

1,995

2,019

20,410

2,165

2,105

22,145

(170)

(86)

(1,735)Interest and dividend income

3835393

Interest expenses

(8)

(13)

(82)

Foreign exchange gains(losses), net275

(186)

2,813

Other, net(0)

18(4)

305

(146)

3,120

135(232)

1,385

179(42)

1,834

Net loss before minority interests

(44)

(190)

(449)

Net loss(¥44)(¥190)($449)

Gross profit
Selling, General and Administrative Expenses
Operating loss
Other Income and Expenses:

Income(Loss) before income taxes
Income taxes

Per Share of Common Stock:
Yen
Net loss
Cash dividends paidYen(¥1.67)(¥7.22)($0.02)

5.00

5.00

0.05

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

-3-US Dollars

Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Comprehensive Income
For the six-month period ended September 30, 2013 and 2012

Thousands of
U.S. dollars

Millions of yen

2013
Net loss before minority interests

20122013(¥44)(¥190)($449)

Unrealized gains on securities

262

45

2,676

Foreign currency translation adjustments

87(124)898

Total other comprehensive income (loss)

349

(79)

3,574

Comprehensive Income (Loss)¥305(¥269)$3,125¥305(¥269)$3,125―――

Other Comprehensive Income

Total comprehensive income (loss) attributable to:Owners of the parent
Minority interests

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

-4-

Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Shareholders' Equity
September 30, 2013 and March 31, 2013

Thousands ofU.S. dollars

Millions of yen

September 30

March 31

September 30

Shareholdeds' Equity
Common Stock:
Balance at beginning of period
Issuance of new shares
Balance at end of period¥5,057―
5,057¥3,904
1,153
5,057$51,735―
51,735Additional Paid in Capital:
Balance at beginning of period
Issuance of new shares
Balance at end of period

4,644
―
4,644

3,491
1,153
4,644

47,509―47,509Retained Earnings:
Balance at beginning of period
Net income(loss)
Cash dividends paid
Balance at end of period

16,438(44)(132)
16,262

16,405263(230)
16,438168,163(449)(1,348)166,366

Treasury Stock, at Cost:
Balance at beginning of period
Purchase of treasury stock
Balance at end of period(136)
0(136)(136)
0(136)(1,398)(1)(1,399)Total Shareholders' Equity
Balance at end of period¥25,827¥26,003$264,211

Accumulated Other Comprehensive Income(Loss)
Unrealized Gains on Securities:
Balance at beginning of period
Net change during the period
Balance at end of period

641
262
903

403
238
641

6,562
2,676
9,238

Foreign Currency Translation Adjustments:
Balance at beginning of period
Net change during the period
Balance at end of period

2687113

(229)
254
26264
898
1,162

Total Accumulated Other Comprehensive Income
Balance at end of period¥1,016¥667$10,400

Total Net Assets
Balance at end of period¥26,843¥26,670$274,611

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

-5-Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
For the six-month period ended September 30, 2013 and 2012

Thousands ofU.S. dollars

Millions of yen

2013

20122013¥135(¥232)$1,385

Operating Activities:
Income（Loss）before income taxes
Adjustments for:
Depreciation and amortization
Provision for retirement benefits
Interest and dividends income
Interest expenses
Foreign exchange (gains) losses, net
Changes in assets and liabilities:(Increase) Decrease in notes and accounts receivable(Increase) Decrease in inventories
Increase (Decrease) in notes and accounts payable
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes (paid) refund
Net cash provided by operating activities

576
(65)
(38)
8
(216)

533
(3)
(35)
13
―

5,901
(666)
(393)
82
(2,209)

297
(10)
(406)
(94)
187
38
(8)
(335)
(118)

334
123
124
189
1,046
35
(13)
150
1,218

3,044
(107)
(4,151)
(976)
1,910
393
(82)
(3,433)(1,212)

Investing Activities:
Payment for purchases of property, plant and equipment
Payment for purchases of intangible assets
Payment for purchases of investment in securities
Decrease (Increase) in time deposits
Net cash used in investing activities

(131)
(54)
(1)
(126)
(312)

(1,378)(4)(1)―(1,383)(1,338)(550)(13)(1,290)(3,191)

Financing Activities:
Dividends paid
Increase(Decrease) in short-term borrowings
Proceeds from issuance of common stock
Otner, net
Net cash used in financing activities

(132)
(250)
―(0)
(382)

(99)
(250)2,291(0)1,942(1,347)(2,558)―(0)(3,905)

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 Period
Cash and Cash Equivalents at End of Period

69(743)
7,004¥6,261

(100)
1,677
6,081
¥7,758709(7,599)71,650$64,051

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

-6-Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
1. The translation of Yen amounts into U.S. dollars is included solely for the convenience of readers
outside Japan, using the prevailing exchange rate at September 30, 2013, which was ¥97.75 toU.S.$1.
2. Consolidated subsidiaries
Shin-ei Shoji Co., Ltd.
Teraoka Seisakusho (Hong Kong) Co., Ltd.
Teraoka Seisakusho (Shanghai) Co., Ltd.
Teraoka Seisakusho (Shenzhen) Co., Ltd.
PT. Teraoka Seisakusho Indonesia
3. Contingent liabilities in respect of trade notes and export bills discounted with banks withrecourse in the ordinary course of business at September 30, 2013 and 2012, amounted to¥4million (US$ 40 thousand) and ¥19 million respectively.

Corporate Information(as of September 30, 2013)

Head Office

4-22, Hiromachi 1-chome
Shinagawa-ku, Tokyo 140-8711, Japan
Tel: 81-3-3491-1141
Fax: 81-3-3491-5316

FoundedFebruary 11, 1921

Paid-in Capital¥5,057 million

Stockholders

2,400

Stock Listing

Tokyo Stock Exchange, 2nd Section

Transfer Agency

Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome
Chiyoda-ku, Tokyo 100-8212, Japan

Employees

543（Consolidated:590）

Branch Offices
Sales Office

Tokyo, Osaka, Nagoya, Seoul and Taipei
SendaiR&D CenterTokyo

Factories

Ibaraki, Sano, Kannami

Websitehttp://www.teraokatape.co.jp-7-