TERAOKA SEISAKUSHO CO., LTD.

INTERIM REPORTThe six-month period ended September 30, 2016

Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets
September 30, 2016 and March 31, 2016

Thousands ofU.S. dollars

Millions of yen

September 30

March 31

September 30

ASSETS
Current Assets:
Cash and time deposits¥7,160¥6,856$70,806

5,862

5,668

57,970

(7)

(7)

(65)

3,860

4,347

38,175

Deferred income taxes

316

341

3,121

Other current assets

184

550

1,823

17,37517,755

171,830

Land

4,015

4,052

39,708Buildings and structures

11,31911,614

111,936

Machinery and equipment

24,352

24,658240,816

Construction in progress

60

69

597

39,74640,393393,057

Less: Accumulated depreciation(29,307)(29,124)(289,825)

Property, plant and equipment, net

10,43911,269103,232

426

477

4,214

3,799

3,735

37,570

Deferred income taxes

7773

Net defined benefit asset

61

26

601

Other

180

226

1,775

Less:Allowance for doubtful accounts

(0)

(0)

(0)

4,047

3,994

40,019¥32,287¥33,495$319,295

Notes and accounts receivable:
TradeLess:Allowance for doubtful accounts
Inventories

Total current assets
Property, Plant and Equipment:

Intangible Assets
Investments and Other Assets:
Investments in securities

Total investments and other 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 STOCKHOLDERS' EQUITYCurrent Liabilities:
Notes and accounts payable:
TradeShort-term borrowings
Accrued income taxes
Accrued expenses
Other current liabilities
Total current liabilities¥3,027
4
19
450
588
4,088

¥3,267
4
16
457
750
4,494

$29,934
37
188
4,454
5,818
40,431Long-term Liabilities:
Net defined benefit liability
Deferred liabilities taxes
Asset retirement obligations
Other
Total long-term liabilities
Total liabilities

26620
294
113
1,053
5,141

29
597
294
118
1,038
5,532

258
6,127
2,909
1,115
10,40950,840

NET ASSETSStockholders' Equity:
Common stock:
Authorized: 80,000,000 shares
Issued: 26,687,955 shares as of September 30, 2016 and26,687,955 shares as of March 31, 2016, respectively
Additional paid-in capital
Retained earnings
Less: Treasury stock, at cost
Total stockholders' equity

5,057

5,057

50,011

4,644
16,312(462)25,551

4,644
16,410(137)
25,97445,926
161,316(4,572)
252,681

Accumulated other comprehensive income
Unrealized gains on securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

1,693(59)
(39)
1,595
27,146¥32,287

1,653
384
(48)
1,989
27,963¥33,495

16,743(580)(389)
15,774
268,455$319,2952

Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Income
For the six-month period ended September 30, 2016 and 2015

Thousands ofU.S. dollars

Millions of yen

2016

2015

2016

¥10,254¥11,000$101,404

7,433

7,904

73,511

2,821

3,096

27,893

2,310

2,389

22,842

511

707

5,051

Interest and dividend income

4643

454

Interest expenses

(0)

(1)

(1)

Foreign exchange gains (losses), net(564)24(5,574)

Gain on sales of investment securities－139－

Other, net

80(22)

790(438)

183(4,331)

73890

720

39
¥34252
¥638

384
$336

Profit attributable to non-controlling interests－－－

Profit attributable to owners of parent

34

638

336

Yen
¥1.30

Yen
¥24.26US Dollars

5.00

6.00

0.05

Net Sales
Cost of Sales
Gross profit
Selling, General and Administrative Expenses
Operating income
Other Income and Expenses:

Income before income taxes
Income taxes
Net income

Per Share of Common Stock:
Net income
Cash dividends

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

3$0.01

Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Comprehensive Income
For the six-month period ended September 30, 2016 and 2015

Thousands ofU.S. dollars

Millions of yen

2016
Net income

2016

2015
¥34

¥638

$336

40(130)394(443)(29)(4,376)9(67)87(394)(¥360)(226)¥412(3,895)($3,559)(¥360)¥412($3,559)―――

Other Comprehensive Income
Unrealized gains on securities
Foreign currency translation adjustmentsRemeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive Income
Total comprehensive income attributable to:Comprehensive income attributable to owner of parent
Comprehensive income attributable to non-controlling 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 Changes in Net Assets
For the six-month period ended September 30, 2016 and 2015
Millions of Yen
Accumulated Other Comprehensive Income

Stockholders' EquityForeign
Unrealized Currency
Treasury Total
Translation
Stock,
Stockholders' Gains onat Cost
EquitySecurities Adjustments

Additional
Common Paid in
Retained
CapitalStockEarnings

Remeasurements ofDefined
Benefit Plans

Total Accumulated Other
ComprehenTotal Net
sive Income
Assets¥5,057¥4,644¥15,973(¥137)¥25,537¥1,682¥688¥361¥2,731¥28,268

Cash dividends paid――(132)―(132)

――――

(132)

Net income

――

638

―

638

―

―――

638

Purchase of treasury stock
Net changes of items otherthan Stockholders' equity
Total changes of items during
the period
Balance at September 30, 2015―――(0)

(0)

――――

(0)

―――――

(130)

(29)

(67)

(226)

(226)

――506

(0)

506

(130)

(29)

(67)

(226)

280

¥5,057¥4,644¥16,479(¥137)¥26,043¥1,552¥659¥294¥2,505¥28,548

Balance at April 1, 2015

Millions of Yen
Accumulated Other Comprehensive Income

Stockholders' Equity

Foreign
Unrealized Currency
Treasury Total
Stockholders' Gains on
Translation
Stock,Equity
Securities Adjustments
at CostAdditional
Common Paid in
Retained
CapitalStockEarningsRemeasurements ofDefined
Benefit Plans

Total Accumulated Other
ComprehenTotal Net
sive Income
Assets¥5,057¥4,644¥16,410(¥137)¥25,974¥1,653¥384(¥48)¥1,989¥27,963

Cash dividends paid

―

―

(132)

―

(132)

―

―

――

(132)

Net income

―

―

34

―

34

―

―

―

―

34

Purchase of treasury stock
Net changes of items otherthan Stockholders' equity
Total changes of items during
the period
Balance at September 30, 2016

―

―

―

(325)

(325)

―

―

―

―

(325)

―

―

―

―

―

40

(443)

9(394)

(394)

――

(98)

(325)

(423)

40(443)9(394)(817)¥5,057¥4,644¥16,312(¥462)¥25,551¥1,693

(¥59)

(¥39)

¥1,595¥27,146

Balance at April 1, 2016

Thousands of U.S. dollars
Stockholders' Equity

Accumulated Other Comprehensive Income

Additional
Common Paid in
Retained
Stock
Earnings
CapitalForeign
Unrealized Currency
Treasury Total
Stock,
Stockholders' Gains on
Translation
at CostEquitySecurities Adjustments$50,011$45,926$162,282($1,358)$256,861$16,349$3,796($476)$19,669$276,530――(1,302)―(1,302)――――(1,302)

Net income

―

―

336

―

336

―

―

―

―

336

Purchase of treasury stock
Net changes of items otherthan Stockholders' equity
Total changes of items during
the period
Balance at September 30, 2016

―

―

―

(3,214)(3,214)

―

―

―

―

(3,214)

―

―

―

―

―

394

(4,376)87(3,895)(3,895)――(966)(3,214)(4,180)394(4,376)87(3,895)(8,075)$50,011$45,926$161,316($4,572)$252,681$16,743($580)($389)$15,774$268,455

Balance at April 1, 2016
Cash dividends paid

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

5Remeasurements ofDefined
Benefit Plans

Total Accumulated Other
ComprehenTotal Net
sive IncomeAssetsTeraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
For the six-month period ended September 30, 2016 and 2015

Millions of yen2016
Operating Activities:
Income before income taxes
Adjustments to reconcile net income to net cash provided byoperating activities:
Depreciation and amortization
Gain on sales of investment securities
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in net defined benefit liability
Interest and dividends income
Interest expenses
Foreign exchange losses (gains)
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

2015

Thousandsof2016

¥73

¥890

$720

426
－(0)
(3)
(46)
0434476(139)
(1)
(65)
(43)
1
14

4,212－
(0)
(31)
(454)
1
4,291

(232)
420
(209)
34
897
46(0)
210
1,153(219)
(55)
(484)
156
531
43
(1)
(435)
138

(2,290)4,152(2,068)
337
8,870
454
(1)
2,072
11,395Investing Activities:
Payment for purchases of property, plant and equipment
Payment for purchases of intangible assets
Payment for purchases of investment in securities
Proceeds from sales of investment securities
Decrease (increase) in time deposits
Net cash used in investing activities

(140)
(15)
(1)
－－
(156)(163)
(124)
(1)
214
63
(11)

(1,384)
(144)
(14)
－－
(1,542)Financing Activities:
Dividends paid
Purchase of treasury shares
Net cash used in financing activities

(132)
(325)
(457)

(132)
(0)
(132)

(1,302)(3,214)(4,516)

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

(203)
337
6,536
¥6,873

(25)
(30)
6,035
¥6,005(2,007)3,330
64,639$67,969

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, 2016, which was ¥101.12 to U.S.$1.
2. Consolidated subsidiaries
Shin-ei Shoji Co., Ltd.
Teraoka Seisakusho (Hong Kong) Co., Ltd.
Teraoka Seisakusho (Shanghai) Co., Ltd.
Teraoka Seisakusho (Shenzhen) Co., Ltd.
PT. Teraoka Seisakusho Indonesia
3. Contingent liabilities in respect of trade notes and export bills discounted with banks with recourse in theordinary course of business at September 30, 2016 and 2015, amounted to ¥13million (US$ 129 thousand) and¥17 million respectively.

Corporate Information(as of September 30, 2016)

Head Office

4-22, Hiromachi 1-chome
Shinagawa-ku, Tokyo 140-8711, Japan
Tel: 81-3-3491-1141
Fax: 81-3-3491-1286

FoundedFebruary 11, 1921

Paid-in Capital¥5,057 million

Stockholders

3,079

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

476（Consolidated:657）

Branch Offices

Tokyo, Osaka, Nagoya, and Seoul

Representative Office

TaipeiR&D CenterTokyo

Factories

Ibaraki, Sano, Kannami

Websitehttp://www.teraokatape.co.jp

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