TERAOKA SEISAKUSHO CO., LTD.

INTERIM REPORTThe six-month period ended September 30, 2012

Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets
September 30, 2012 and March 31, 2012

Thousands ofU.S. dollars

Millions of yen

September 30

March 31

September 30

ASSETS
Current Assets:¥7,758¥6,081$99,968

5,620

5,955

72,419Less:Allowance for doubtful accounts

(10)

(10)

(129)

Inventories

3,075

3,200

39,627

Deferred tax assets

213

213

2,744

Other current assets

331651

4,250

16,987

16,090218,879

Land3,980

3,959

51,287

Buildings

8,530

8,524

109,906

Machinery and equipment

21,374

21,515

275,407

Construction in progress

3,821

2,355

49,22737,70536,353

485,827

Less: Accumulated depreciation(24,812)(24,537)(319,701)

Property, plant and equipment, net

12,893

11,816

166,126

4454

562

2,249

2,157

28,983

Deferred tax assets

119

108

1,535

Other

267

212

3,444

Less:Allowance for doubtful accounts

(3)

(3)

(43)

2,632

2,474

33,918¥32,556¥30,434$419,485

Cash and time deposits
Notes and accounts receivable:
TradeTotal 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-

Millions of yen

September 30
LIABILITIES AND SHAREHOLDERS' EQUITYCurrent Liabilities:
Notes and accounts payable:
Trade
Short-term borrowings
Current portion of long-term borrowings
Accrued income taxes
Accrued expenses
Other current liabilities
Total current liabilities

March 31Thousands of
U.S. dollars

September 30¥3,236
3500
33
547
1,120
5,439

¥3,111
3500
20
534
859
5,027

$41,691
40
6,442
423
7,046
14,44070,082Long-term Liabilities:
Long-term borrowings
Provision for retirement benefits:
Employees
Deferred tax liabilities
Asset retirement obligations
Negative Goodwill
Other
Total long-term liabilities
Total liabilities

625

875

8,053

401
8
169
13
125
1,341
6,780

404
8
169
25
87
1,568
6,595

5,164
106
2,175
164
1,617
17,27987,361

NET ASSETS
Shareholders' Equity:
Common stock:
Authorized: 80,000,000 shares
Issued: 26,687,955 shares as of September 30, 2012
and 20,081,955 shares as of March 31, 2012, respectively
Additional paid-in capital
Retained earnings
Less: Treasury stock, at cost
Total shareholders' equity

5,057
4,644
16,116(137)
25,681

3,904
3,491
16,405(137)
23,664

65,161
59,838207,658(1,761)
330,895

Accumulated other comprehensive income
Unrealized gains on securities
Foreign currency translation adjustments
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

448(353)
95
25,776¥32,556

403
(229)
174
23,838¥30,434

5,772(4,543)
1,229
332,124$419,485-2-Teraoka Seisakusho Co., Ltd. and Consolidated Subsidiaries

Consolidated Statements of Income
For the six-month period ended September 30, 2012 and 2011

Thousands ofU.S. dollars

Millions of yen

2012

2011

2012

Net Sales¥9,849¥10,404$126,909

Cost of Sales

7,830

8,241

100,890

2,019

2,163

26,019

2,105

2,041

27,129(86)

122(1,110)

Interest and dividend income

3535456

Interest expenses

(13)

(17)

(163)Foreign exchange gains(losses), net

(186)

(69)

(2,400)Disaster loss

―

(70)

―

Loss on valuation of marketable securities

―

(100)

―

Other, net

1835230

(146)

(186)

(1,877)

(232)

(64)

(2,987)

(42)

22

(537)

(190)
(¥190)(86)(¥86)(2,450)($2,450)

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

Loss before income taxes
Income taxes
Net loss before minority interests
Net loss

Per Share of Common Stock:
YenNet loss
Cash dividends paidYen(¥7.22)(¥4.37)($0.09)5.00

5.000.06

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, 2012 and 2011

Thousands ofU.S. dollars

Millions of yen

2012
Net loss before minority interests

2012

2011

(¥190)(¥86)($2,450)

45

67

580

Foreign currency translation adjustments

(124)

(168)

(1,598)

Total other comprehensive income
Comprehensive Income(79)(¥269)(101)(¥187)(1,018)($3,468)(¥269)(¥187)($3,468)―――

Other Comprehensive Income
Unrealized gains on securities

Total comprehensive income 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, 2012 and March 31, 2012

Millions of yen

September 30

March 31

Thousands ofU.S. dollars

September 30

Shareholdeds' Equity
Common Stock:
Balance at beginning of periodIssuance during the period
Balance at end of period¥3,904
1,153
5,057¥3,904―
3,904$50,308
14,85365,161

Additional Paid in Capital:
Balance at beginning of period
Issuance during the period
Balance at end of period

3,491
1,153
4,644

3,491
―
3,491

44,985
14,853
59,838Retained Earnings:
Balance at beginning of period
Net income(loss)
Cash dividends paid
Balance at end of period

16,405(190)(99)
16,116

16,741(138)(197)
16,405211,379(2,450)(1,271)
207,658

Treasury Stock, at Cost:
Balance at beginning of periodPurchase of treasury stock
Balance at end of period

(137)
(0)
(137)

(137)
(0)
(137)

(1,760)(1)(1,761)¥25,681¥23,664$330,895

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

403
45
448

252
151
403

5,191
580
5,772

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

(229)
(124)
(353)

(217)
(12)
(229)

(2,945)(1,598)(4,543)

Total Accumulated Other Comprehensive Income
Balance at end of period

¥95

¥174

$1,229¥25,776¥23,838$332,124

Total Shareholders' Equity
Balance at end of period

Total Net Assets
Balance at end of period

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, 2012 and 2011

Thousands ofU.S. dollars

Millions of yen2012
Operating Activities:Net loss
Adjustments to reconcile net income to net cash provided byoperating activities:
Depreciation and amortization
Allowance for doubtful accounts
Provision for retirement benefits
Loss on disposal of property, plant and equipment
Loss on valuation of marketable securities
Changes in assets and liabilities:(Increase) Decrease in notes and accounts receivable(Increase) Decrease in inventories
Increase (Decrease) in notes and accounts payable
Increase (Decrease) in accrued income taxes payable
Other, net
Total adjustment
Net cash provided by operating activities

20112012(¥190)(¥86)($2,450)533
0(3)――715(21)
(6)
3100

6,871
1(45)
――

334
123
124
108
189
1,408
1,218

442
(823)
287
(355)
(205)
137
51

4,305
1,588
1,601
1,387
2,440
18,14815,698Investing Activities:
Payment for purchases of property, plant and equipment
Payment for purchases of intangible assets
Payment for purchases of investment in securities
Net cash used in investing activities(1,378)(4)(1)(1,383)(1,077)―(2)(1,079)(17,759)(46)(15)(17,820)

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

(99)
―
(250)
2,291
(0)
1,942

(99)
1(250)―(0)(348)(1,271)―(3,221)
29,521(2)
25,027

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

(100)
1,677
6,081
¥7,758(100)(1,476)
10,021¥8,545(1,292)
21,61378,355$99,968

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, 2012, which was ¥77.61 toU.S.$1.
2. Consolidated subsidiaries
Shin-ei Shoji Co., Ltd
Teraoka Seisakusho (Hong Kong) Co., Ltd.
Teraoka Seisakusho (Shanghai) Co., Ltd.
Teraoka Seisakusho (Shenzhen) Co., Ltd.
PT. Teraoka Seisakusho Indonesia
3. Contingent liabilities in respect of trade notes and export bills discounted with banks withrecourse in the ordinary course of business at September 30, 2012 and 2011, amounted to¥19million (US$ 243 thousand) and ¥2 million respectively.

Corporate Information(as of September 30, 2012)

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

Shareholders

2,597

Stock ListingTokyo Stock Exchange, 2nd Section

Transfer Agent

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

Employees

549（Consolidated:616）

Branch Offices
R&D CenterTokyo, Osaka, Nagoya, Sendai
Tokyo

Factories

Ibaraki, Sano, Kannami

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