Consolidated Financial Statements
Yodogawa Steel Works, Ltd.
Years ended March 31, 2005 and 2006
with Report of Independent Auditors

Yodogawa Steel Works, Ltd.
Consolidated Financial Statements
Years ended March 31, 2005 and 2006

Contents
Consolidated Financial Statements
Report of Independent Auditors .......................................................................................... 1
Consolidated Balance Sheets............................................................................................... 2
Consolidated Statements of Income .................................................................................... 4
Consolidated Statements of Shareholders’ Equity .............................................................. 5
Consolidated Statements of Cash Flows ............................................................................. 6
Notes to Consolidated Financial Statements ....................................................................... 8

Report of Independent Auditors

The Board of Directors
Yodogawa Steel Works, Ltd.

We have audited the accompanying consolidated balance sheets of Yodogawa Steel Works,
Ltd. and consolidated subsidiaries as of March 31, 2005 and 2006, and the related
consolidated statements of income, shareholders’ equity, and cash flows for the years thenended, all expressed in yen. These financial statements are the responsibility of theCompany's management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Yodogawa Steel Works, Ltd. andconsolidated subsidiaries at March 31, 2005 and 2006, and the consolidated results of theiroperations and their cash flows for the years then ended in conformity with accounting
principles generally accepted in Japan.
Supplemental Information
As described in Note 2, effective April 1, 2005, the Company and consolidated subsidiaries
have adopted a new accounting standard for the impairment of fixed assets.
The U.S. dollar amounts in the accompanying consolidated financial statements withrespect to the year ended March 31, 2006 are presented solely for convenience. Our audit
also included the translation of yen amounts into U.S. dollar amounts and, in our opinion,such translation has been made on the basis described in Note 3.

Osaka, Japan
June 29, 2006

1

Yodogawa Steel Works, Ltd.
Consolidated Balance Sheets
March 31, 2005 and 2006

Millions of yen
2005
2006
AssetsCurrent assets:
Cash and time deposits (Note 4)
Marketable securities (Note 5)
Notes and accounts receivable:
Unconsolidated subsidiaries and affiliates
Trade
Less allowance for doubtful receivables
Inventories
Deferred income taxes (Note 9)
Other current assets
Total current assets
Property, plant and equipment:
Land (Notes 6 and 11)
Buildings and structures (Note 6)
Machinery, equipment and vehicles
Construction in progress
Less accumulated depreciation
Property, plant and equipment, net
Investments and other assets:
Investments in securities (Notes 5 and 7)
Investments in and advances tounconsolidated subsidiaries and affiliates
Deferred income taxes (Note 9)
Other assets
Total investments and other assets

Total assets

2

Thousands of
U.S. dollars(Note 3)2006

¥ 16,577
5,093¥ 13,093
1,264$

111,458
10,76014,22730,789(347)
23,7401,338
7,163
98,58011,333
26,675(227)
31,196
1,339
5,887
90,56096,476
227,079(1,932)
265,566
11,39950,114
770,920

23,03752,634
123,476457(133,694)
65,91020,90854,171
126,128
2,048(139,015)
64,240177,986
461,148
1,073,704
17,434(1,183,409)
546,863

30,86347,870407,508

3,191
387
2,108
36,549

3,490
471
2,286
54,117

29,7104,010
19,460460,688¥ 201,039¥ 208,917$ 1,778,471

Thousands of
U.S. dollars(Note 3)
2006

Millions of yen
2005
2006
Liabilities, minority interests andshareholders’ equity
Current liabilities:
Short-term bank loans (Note 7)
Notes and accounts payable:
Unconsolidated subsidiaries and affiliates
Trade
Construction
Accrued expenses
Accrued income taxes (Note 9)
Other current liabilities (Note 7)
Total current liabilities

¥

4,600

¥

–

$

–

897
16,091
1,681
4,690
5,624
2,584
36,167786
14,617
1,466
4,200
2,684
2,200
25,953

6,691
124,432
12,48035,754
22,84818,728220,933

7,382

7,517

63,991Long-term liabilities:
Accrued retirement benefits to employees(Note 8)
Accrued retirement benefits to directors andstatutory auditors (Note 1(m))
Guarantee deposits (Note 7)
Deferred income taxes (Note 9)
Deferred income taxes on land revaluation
reserve (Note 9)
Other long-term liabilities
Total long-term liabilities

90
4,044
3,410

107
4,007
8,877

911
34,11175,568675
773
16,3742,368
537
23,413

20,158
4,571
199,310

Minority interests

13,922

14,607

124,347

23,221
23,222871
86,3008,335(2,686)23,221
23,740303
86,843
17,744(1,315)

197,676
202,094
2,579
739,278
151,051(11,194)(4,687)
134,576(5,592)
144,944(47,603)
1,233,881¥ 201,039¥ 208,917$ 1,778,471

Contingent liabilities (Note 14)
Shareholders’ equity (Note 10):
Common stock:
Authorized: 753,814,067 shares in 2005 and2006
Issued: 184,186,153 shares in 2005 and2006
Capital surplus
Land revaluation reserve (Note 11)
Retained earnings (Note 18)
Unrealized holding gain on securities (Note 5)
Translation adjustments
Treasury stock, at cost – 13,188,866 shares in2005 and 14,748,753 shares in 2006
Total shareholders’ equity
Total liabilities, minority interests andshareholders’ equity

See accompanying notes to consolidated financial statements.
3

Yodogawa Steel Works, Ltd.
Consolidated Statements of Income
Years ended March 31, 2005 and 2006
Thousands of
U.S. dollars(Note 3)
2006

Millions of yen
2005
2006
Net sales
Cost of sales
Gross profit¥ 176,682
140,507
36,175¥ 180,036
150,478
29,558$ 1,532,613
1,280,991
251,622

16,863
19,312

16,21013,348137,993
113,629

426
(143)
44

754
(71)
8

6,419
(604)
68

(23)

–

–

(209)
(86)
(1,461)
(456)

(216)
484
–
–

(1,839)
4,120
–
–

–
(315)

(3,381)
541(28,782)
4,605

17,08911,467

97,616

6,955
(478)
6,477
10,612

5,813
(522)
5,291
6,176

49,485(4,444)45,041
52,575

Selling, general and administrative expenses(Note 12)
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Gain on sales of investments in securities
Loss on impairment of investments insecurities (Note 5)
Loss on sales or disposal of property, plantand equipment, net
Equity in (loss) earnings of an affiliate
Loss on liquidation of a subsidiary
Loss on devaluation of real estate held for sale
Loss on impairment of fixed assets(Notes 3 and 6)
Other, net
Income before income taxes and minority
interests
Income taxes (Note 9):
Current
DeferredIncome before minority interests
Minority interests in earnings of consolidated
subsidiaries
Net income¥(3,094)
7,518¥(1,584)
4,592$(13,484)
39,091

See accompanying notes to consolidated financial statements.
4

Yodogawa Steel Works, Ltd.
Consolidated Statements of Shareholders’ Equity
Years ended March 31, 2005 and 2006

Millions of yen
2005
2006

Thousands of
U.S. dollars(Note 3)2006

¥ 23,221¥ 23,221$ 197,676¥ 23,611¥ 23,222$ 197,685

1
–
–

0
390
128

0
3,320
1,089

(390)
¥ 23,222–¥ 23,740–$ 202,094

¥

¥

871
(568)
¥ 303

$

¥ 80,175¥ 86,300$ 734,656

7,518
1
390

4,592
–
–

39,091––(1,701)
(57)
(26)
–
–
¥ 86,300(2,699)
(77)
(38)
(845)
(390)
¥ 86,843(22,976)
(656)
(324)
(7,193)(3,320)$ 739,278

Unrealized holding gain on securities (Note 5)
Balance at beginning of the year
Net change during the year
Balance at end of the year

¥ 7,136
1,199¥ 8,335¥ 8,335
9,409¥ 17,744$ 70,954
80,097$ 151,051

Translation adjustments
Balance at beginning of the year
Net change during the year
Balance at end of the year

¥ (3,081)395¥ (2,686)¥ (2,686)
1,371¥ (1,315)$ (22,865)
11,671$ (11,194)

Common stock
Balance at beginning and end of the year
Capital surplus
Balance at beginning of the year
Add:
Gain on disposition of treasury stock
Transfer from retained earnings
Other increase
Deduct:Transfer to retained earnings
Balance at end of the year
Land revaluation reserve (Note 11)
Balance at beginning of the year
Net change during the year
Balance at end of the year
Retained earnings
Balance at beginning of the year
Add:
Net income
Reversal of land revaluation reserve
Transfer from capital surplus
Deduct:Cash dividends paid
Bonuses to directors and statutory auditors
Bonuses to employees of an overseas subsidiary
Reversal of land revaluation reserve
Transfer to capital surplus
Balance at end of the year

¥

874
(3)
871

$

7,415
(4,836)2,579

See accompanying notes to consolidated financial statements.
5

Yodogawa Steel Works, Ltd.
Consolidated Statements of Cash Flows
Years ended March 31, 2005 and 2006
Thousands of
U.S. dollars(Note 3)
2006

Millions of yen
2005
2006
Cash flows from operating activities:
Income before income taxes and minority
interests
Adjustments for:
Depreciation and amortization
Equity in loss (earnings) of an affiliate
Loss on impairment of investments insecurities
Decrease in accrued retirement benefits
Increase (decrease) in accrued bonuses
Decrease in allowance for doubtfulreceivables
Interest and dividend income
Interest expense
Gain on sales of investments in securities
Loss on sales or disposal of property, plantand equipment, net
Loss on impairment of fixed assets(Increase) decrease in notes and accounts
receivable
Increase in inventories
Increase (decrease) in notes and accounts
payableBonus payments to directors, statutory
auditors and employees of an overseas
subsidiary
Loss on liquidation of a subsidiary
Loss on devaluation of real estate held for sale
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities¥ 17,089¥ 11,467$ 97,616

5,758
86

5,361
(484)

45,637(4,120)

23
(135)
127

–
(2)
(1)

–
(17)
(9)

(157)
(426)
143
(44)

(297)
(754)
71
(8)

(2,528)(6,419)
604
(68)

209
–

216
3,381

1,839
28,782(9,356)(1,631)

7,310(6,706)62,229(57,087)

2,280(1,713)(14,582)

(83)
1,461
456
1,843
17,643451(144)(2,977)¥ 14,973

(115)
–
–
147
17,873781(73)(8,868)¥ 9,713

(979)
–
–
1,251
152,149
6,649(621)(75,492)$ 82,685

6

Yodogawa Steel Works, Ltd.
Consolidated Statements of Cash Flows (continued)
Years ended March 31, 2005 and 2006

Cash flows from investing activities:
Increase in time deposits with a maturity ofmore than three months
Proceeds from time deposits with a maturity ofmore than three months
Purchases of marketable securities
Proceeds from sales of marketable securities
Purchases of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchases of intangible fixed assets
Purchases of investments in securities
Proceeds from sales of investments in securities
Increase in loans receivableCollection of loans receivable
Other
Net cash used in investing activities
Cash flows from financing activities:
Decrease in short-term bank loans
Purchases of treasury stock
Cash dividends paid to the Company’s
shareholders
Cash dividends paid to shareholders of minority
interests
Other
Net cash used in financing activities
Effect of exchange rate changes on cash andcash equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of theyear
Cash and cash equivalents at end of the year

Millions of yen
2006
2005

Thousands of
U.S. dollars(Note 3)
2006

¥

(675)

¥ (2,675)$ (22,772)

175
–
500
(2,765)

3,075(1,231)
1,518(5,018)26,177(10,479)
12,922(42,717)59(211)(6,707)2,459(3,746)1,312
35(9,564)81(35)(3,725)
4,095
(927)
1,210
60
(3,572)690(298)(31,710)
34,860(7,891)
10,300510(30,408)(1,229)(590)(4,600)(903)(39,159)(7,687)(1,711)(2,716)(23,121)(1,496)3(5,023)(2,275)
1(10,493)(19,367)9(89,325)

90

176

1,498

476

(4,176)(35,550)

19,887¥ 20,363

20,363¥ 16,187

173,347$ 137,797

See accompanying notes to consolidated financial statements.
7

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements
March 31, 2006

1.

Summary of Significant Accounting Policies(a) Basis of preparation
The accompanying consolidated financial statements of Yodogawa Steel Works, Ltd.
(the “Company”) and consolidated subsidiaries are prepared on the basis of accounting
principles generally accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements of International Financial Reporting Standards,
and have been compiled from the consolidated financial statements prepared by theCompany as required by the Securities and Exchange Law of Japan.
Certain reclassifications of previously reported amounts have been made to conformthe consolidated financial statements for the year ended March 31, 2005 to the 2006
presentation. Such reclassifications had no effect on consolidated net income orshareholders’ equity.
(b) Basis of consolidation
The accompanying consolidated financial statements include the accounts of theCompany and all subsidiaries over which substantial control is exerted through either
majority ownership of voting stock and/or by other means. All significant
intercompany balances and transactions have been eliminated in consolidation.
Investment in one affiliate (a company over which the Company has the ability to
exercise significant influence) is stated at cost plus equity in its undistributed earnings
or undisposed loss. Consolidated net income includes the Company’s equity in thecurrent net income or loss of this company after the elimination of unrealizedintercompany profits.
All assets and liabilities of the consolidated subsidiaries are revalued on acquisition, if
applicable.
The difference, not significant in amount, between the cost ofinvestments in subsidiaries and the equity in their net assets at their respective dates ofacquisition is charged to income as incurred or amortized over a period of 5 years on astraight-line basis.
The financial statements of one consolidated subsidiary whose fiscal year end is
December 31 have been included in consolidation on the basis of a full fiscal year after
making the appropriate adjustments for significant transactions during the period fromits fiscal year end to the Company’s balance sheet date.

8

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

1.

Summary of Significant Accounting Policies (continued)(c) Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into
yen at the rates of exchange in effect at the balance sheet date. Other assets andliabilities denominated in foreign currencies are translated at their historical rates. Allrevenues and expenses associated with foreign currencies are translated at the rates of
exchange prevailing when such transactions were made. The resulting exchange gainor loss is charged or credited to income.
The balance sheet accounts of the overseas consolidated subsidiary (except forshareholders’ equity) are translated into yen at the rate of exchange in effect at thebalance sheet date. The components of shareholders’ equity are translated at theirrespective historical rates of exchange. Revenue and expense accounts are translated
into yen at the average rate of exchange in effect during the year.
Translation adjustments have been presented as a component of shareholders’ equity
and minority interests in consolidated subsidiaries in the accompanying consolidated
financial statements.
(d) Cash equivalents
Cash and cash equivalents consist of cash on hand, deposits with banks withdrawable
on demand, and short-term investments which are readily convertible to cash subject toan insignificant risk of any changes in their value and which were purchased with an
original maturity of three months or less.
(e) Securities
The accounting standard for financial instruments requires that securities other thanthose of subsidiaries and affiliates be classified into three categories: trading securities,
held-to-maturity debt securities or other securities. Under this standard, trading
securities are carried at fair value and gain or loss, both realized and unrealized, arecredited or charged to income. Held-to-maturity debt securities are carried at theiramortized cost. Marketable securities classified as other securities are carried at fairvalue with any changes in unrealized holding gain or loss, net of the applicable income
taxes, reported as a separate component of shareholders’ equity. Non-marketablesecurities classified as other securities are carried at cost. Cost of securities sold isdetermined principally by the moving average method.

9

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

1.

Summary of Significant Accounting Policies (continued)(f) Inventories
Inventories are stated at cost determined principally by the average method.
Inventories at the Company’s overseas consolidated subsidiary are stated at the lowerof cost or market, cost being determined by the moving average method.
(g) Property, plant and equipment and depreciation
Depreciation of property, plant and equipment is calculated by the declining-balancemethod over the useful lives of the respective assets, except that the straight-line
method is applied to buildings (other than structures attached to the buildings) acquired
on and after April 1, 1998.
Depreciation of property, plant and equipment at the overseas consolidated subsidiaryis calculated by the straight-line method.
The useful lives adopted for calculating depreciation are principally as follows:
Buildings and structures
Machinery, equipment and vehicles

3 to 60 years
3 to 36 years

Significant renewals and additions are capitalized at cost.
are charged to income as incurred.

Maintenance and repairs(h) Intangible assets
Intangible assets are stated on the basis of cost. Amortization is calculated by thestraight-line method over the useful lives of the respective assets.
(i) Allowance for doubtful receivables
The Company and its consolidated subsidiaries provide an allowance for doubtfulreceivables at an amount calculated based on their historical experience of bad debts
on ordinary receivables plus an additional estimate of probable specific bad debts from
customers experiencing financial difficulties.

10Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

1.

Summary of Significant Accounting Policies (continued)(j) Research and development costs and computer software
Research and development costs are charged to income as incurred.
Expenditures relating to the development of computer software intended for internal
use are charged to income when incurred, unless these are deemed to contribute to thegeneration of future income or cost savings. Such expenditures are capitalized asassets and amortized by the straight-line method over their estimated useful life of 5
years.
(k) Leases
The Company and its consolidated subsidiaries lease certain equipment under
noncancelable leases referred to as finance leases. Finance leases other than thosewhich transfer the ownership of the leased property to the lessee are accounted for as
operating leases.
(l) Income taxes
Deferred income taxes are provided for temporary differences between the balances ofassets and liabilities for financial reporting purposes and the corresponding balances
for tax reporting purposes.
(m) Retirement benefits
Employees of the Company and its consolidated subsidiaries are covered by
employees’ retirement benefit and employees’ pension plans. The employees’
retirement benefit plans provide for a lump-sum payment determined by reference totheir basic salary, length of service and conditions under which the termination occurs.
The employees’ pension plans, which are funded non-contributory plans, partiallycover the benefits under the employees’ retirement benefit plans to employees who
retire after 15 or more years of service.
Accrued retirement benefits for employees are provided principally at an amountcalculated based on the retirement benefit obligation less the fair value of the pension
plan assets as adjusted for unrecognized actuarial gain or loss and unrecognized priorservice cost. The retirement benefit obligation is attributed to each period by thestraight-line method over the estimated remaining years of service of the eligible
employees.

11Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

1.

Summary of Significant Accounting Policies (continued)(m) Retirement benefits (continued)
Actuarial gain and loss are amortized in the years following the year in which the gainor loss is recognized principally by the straight-line method over 10 years, which iswithin the estimated average remaining years of service of the eligible employees.
Prior service cost is being amortized as incurred by the straight-line method over 15
years, which is within the estimated average remaining years of service of the eligible
employees.
The directors and statutory auditors of the Company and its domestic consolidated
subsidiaries have customarily been entitled to lump-sum payments under the unfunded
retirement benefit plans. The provision for retirement benefits for directors andstatutory auditors has been made at an estimated amount based on the Company’s oreach consolidated subsidiary’s internal rules.
The Company reconsidered the remuneration paid to its directors and statutory auditors
as part of its management revival plan. Accordingly, the retirement benefit plan for
directors and statutory auditors of the Company, pursuant to a resolution approved at
the annual general meeting of the shareholders held on June 29, 2004, wasdiscontinued effective this date.
(n) Hedge accounting
Gain or loss on derivatives designated as hedging instruments is deferred until the gainor loss on the underlying hedged item is recognized. Receivables and payables
hedged by forward foreign exchange contracts which meet certain conditions aretranslated at the corresponding foreign exchange contract rates.
(o) Appropriation of retained earnings
Under the Commercial Code of Japan, the appropriation of retained earnings withrespect to a given financial period is made by resolution of the shareholders at a
general meeting held subsequent to the close of the financial period and the accounts
for that period do not, therefore, reflect such appropriations. Refer to Note 18.

12

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

2.

Adoption of a New Accounting Standard

Effective the year ended March 31, 2006, the Company and its consolidated subsidiaries
have adopted a new accounting standard for the impairment of fixed assets which requiresthat tangible and intangible fixed assets be carried at cost less depreciation, and bereviewed for impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. The Company and its consolidated
subsidiaries are required to recognize an impairment loss in their statements of income if
certain indicators of asset impairment exist and if the book value of an asset exceeds theundiscounted sum of its future cash flows. The standard states that an impairment loss is
to be measured as the excess of the book value over the higher of (1) the fair market valueof the asset, net of disposition costs, or (2) the present value of future cash flows arisingfrom ongoing utilization of the asset and from its disposal after use. The standard covers
land, factories, buildings and other forms of property, plant and equipment as well as
intangible assets. Fixed assets are to be grouped at the lowest level for which there are
identifiable cash flows which are independent of the cash flows from other groups ofassets.
As a result of the adoption of this new accounting standard, a loss on impairment of fixed
assets in the aggregate amount of ¥3,381 million ($28,782 thousand) was recognized.
Income before income taxes and minority interests decreased by the same amount for theyear ended March 31, 2006 from the corresponding amount which would have beenrecorded under the previous method.

3.

U.S. Dollar Amounts

The translation of yen amounts into U.S. dollar amounts is included solely for theconvenience of readers outside Japan and has been made at the rate of ¥117.47 = U.S.$1.00,
the approximate exchange rate prevailing on March 31, 2006. The translation should not
be construed as a representation that yen have been, could have been, or could in the future
be, converted into U.S. dollars at the above or any other rate.

13

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

4.

Cash and Cash Equivalents

A reconciliation of cash and time deposits shown in the consolidated balance sheets to cash
and cash equivalents shown in the consolidated statements of cash flows at March 31, 2005
and 2006 is presented as follows:

Millions of yen
2006
2005
Cash and time deposits
Investment trust funds
Beneficiary interests in trusts and others
Time deposits with original maturities ofmore than three months
Cash and cash equivalents

5.

Thousands of
U.S. dollars
2006¥ 16,577
2,522
1,840

¥ 13,093
470
2,700$ 111,458
4,001
22,985(576)¥ 20,363(76)¥ 16,187(647)$ 137,797

Securities

Marketable securities classified as held-to-maturity debt securities at March 31, 2005 and2006 are summarized as follows:

Carrying
value
Securities whose fair value exceeds
their carrying value:
Government bonds
Other
Securities whose fair value does notexceed their carrying value:
Government bonds
Other
Total

¥

70
211
281

10
1,597
1,607
¥ 1,888

2005
Millions of yen
Estimated fair
value

¥

72
213
285

10
1,526
1,536
¥1,821

Unrealized
gain (loss)

¥

2
2
4

(0)
(71)
(71)
¥ (67)

14

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

5.

Securities (continued)

Carrying
value
Securities whose fair value exceeds
their carrying value:
Government bonds
Other
Securities whose fair value does notexceed their carrying value:
Government bonds
Corporate bonds
Other
Total

¥

10
500
510

70
1,597
200
1,867
¥ 2,377

2006
Millions of yen
Estimated fair
value

¥

10
501
511

70
1,383
198
1,651
¥ 2,162

Unrealized
gain (loss)

¥

0
1
1

（0）
(214)
(2)
(216)
¥ (215)

2006
Thousands of U.S. dollars
Carrying
Estimated fair Unrealized
value
value
gain (loss)
Securities whose fair value exceeds
their carrying value:
Government bonds
Other
Securities whose fair value does notexceed their carrying value:
Government bonds
Corporate bonds
Other
Total

$

85
4,257
4,342

596
13,595
1,702
15,893$ 20,235

$

85
4,265
4,350

596
11,773
1,686
14,055$ 18,405

$

0
8
8

(0)
(1,822)(16)(1,838)$ (1,830)

15

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

5.

Securities (continued)

Other securities with determinable market value at March 31, 2005 and 2006 aresummarized as follows:

Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Other
Securities whose carrying value does
not exceed their acquisition costs:
Equity securities
Other
Total

Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Other
Securities whose carrying value does
not exceed their acquisition costs:
Equity securities
Government bonds
Total

Acquisition
costs

2005
Millions of yen
Carrying
value

Unrealized
gain (loss)¥ 10,151
599
10,750¥ 24,263600
24,863¥ 14,112
1
14,113

1,279
1,662
2,941
¥ 13,691

1,253
1,662
2,915
¥ 27,778

(26)
(0)
(26)
¥ 14,087

Acquisition
costs

2006
Millions of yen
Carrying
value

Unrealized
gain (loss)¥ 12,315
98
12,413¥ 42,339
108
42,447¥ 30,024
10
30,034

163
600
713
1,476
¥ 13,889

137
579
693
1,409
¥ 43,856

(26)
(21)
(20)
(67)
¥ 29,967

16

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

5.

Securities (continued)
2006
Thousands of U.S. dollars
Acquisition
Carrying
Unrealized
costs
value
gain (loss)

Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Other
Securities whose carrying value does
not exceed their acquisition costs:
Equity securities
Government bonds
Total$ 104,835
834
105,669$ 360,424
919
361,343$ 255,589
85
255,674

1,387
5,108
6,070
12,565$ 118,234

1,166
4,929
5,899
11,994$ 373,337

(221)
(179)
(171)
(571)
$ 255,103

Sales of securities classified as other securities for the years ended March 31, 2005 and2006 are summarized as follows:

Millions of yen
2005
2006
Sales
Aggregate gain
Aggregate loss

¥593
21
35

Thousands of
U.S. dollars
2006

¥13
8

$111
68

–

–

17

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

5.

Securities (continued)

The carrying value of securities without determinable market value at March 31, 2005 and2006 were as follows:

Millions of yen
2006
2005
Held-to-maturity debt securities:
Interest-bearing financial bonds¥

Other securities:
Non-marketable equity securities
Money management funds
Free financial funds
Investment in limited liability
partnership
Preferred stock
Preferred subscription certificatesThousands of
U.S. dollars
2005

50

¥ 550

$ 4,682

619
2,021
1,000

594
470

5,057
4,001

–

–

–
1,100
1,500

187

1,592

–

–

1,100

9,364

The Company and its consolidated subsidiaries recorded a loss on impairment of securitiesof ¥23 million for the year ended March 31, 2005.
The redemption schedule for other securities with maturities and held-to-maturity debt
securities at March 31, 2006 is summarized as follows:

Due in one
year or lessGovernment bonds
Corporate bonds
Other
Total

¥ 10
101
–
¥111

Due in one
year or lessGovernment bonds
Corporate bonds
Other
Total

Millions of yen
Due after one Due after five
year through years throughfive years
ten years

$ 85
860
–
$945

¥ 10
–
250
¥260

¥60
–
–
¥60

Thousands of U.S. dollars
Due after one Due after five
year through years throughfive years
ten years
$

85
–
2,128
$2,213

$511
–
–
$511

Due after ten
years
¥

–
2,597
500
¥ 3,097

Due after ten
years
$

–
22,1084,256$ 26,364
18

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

6.

Loss on Impairment of Fixed Assets

The Company and its consolidated subsidiaries recognized a loss on impairment of fixed
assets for the year ended March 31, 2006 as follows:

Location

Use

Classification

Nishiwaki City,
Hyogo Prefecture

Golf courses

Miyazaki City,
Miyazaki Prefecture

HotelLand, buildings andstructures, andotherLand, buildings andstructures, andotherLand, buildings andstructures, andother

Takarazuka City,
Hyogo Prefecture,and other
Total

Idle assets

Millions of yen

Thousands of
U.S. dollars¥ 2,175$ 18,515

1,154

9,824

52
¥ 3,381443$ 28,782

The Company and its consolidated subsidiaries group fixed assets by management segment,each of which continuously record receipts and payments. They group idle assets which
are not utilized in their operations on an individual asset basis.
Consequently, the Company and its consolidated subsidiaries have written down the golfcourse group and hotel group to their net recoverable value due to significant declines intheir fair value, and have recorded the related loss on impairment of fixed assets of ¥3,329
million ($28,339 thousand) in the consolidated statement of income for the year ended
March 31, 2006. Loss on impairment of fixed assets consisted of land of ¥2,289 million($19,485 thousand), buildings and structures of ¥1,016 million ($8,649 thousand),machinery, equipment and vehicles of ¥5 million ($43 thousand), and others of ¥19 million($162 thousand). The recoverable amounts of these assets are measured at their estimatedselling value or measured at net realizable value based on appraisals conducted by realestate appraisers.
The Company and its consolidated subsidiaries have written down the idle assets owned by
one consolidated domestic subsidiary which are not expected to be utilized in the future to
their net recoverable value, and have recorded the related loss on impairment of fixed
assets. Loss on impairment of fixed assets consisted of land of ¥40 million ($341
thousand), and buildings and structures of ¥12 million ($102 thousand). The recoverable
amounts of these assets are measured at their estimated selling value or at a valuationassessed for property tax purposes or at the comparable published land prices if they are notmaterial.

19

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

7.

Short-Term Bank Loans and Guarantee Deposits

Short-term bank loans represented overdrafts at an average annual interest rate of
approximately 0.568% at March 31, 2005. No short-term bank loans were outstanding at
March 31, 2006.
At March 31, 2006, investments in securities of ¥66 million ($562 thousand) were pledged
as collateral for internal deposits held for employees of ¥44 million ($375 thousand), a
component of other current liabilities.
Guarantee deposits consisted of interest-free deposits, most of which were golf
membership deposits, and interest-bearing deposits, which were principally deposits from
customers at average annual interest rates of 0.59% and 0.66% at March 31, 2005 and 2006,
respectively.
Interest-free deposits and interest-bearing deposits at March 31, 2005, and 2006 were as
follows:

Millions of yen
2005
2006
Interest-free deposits
Interest-bearing deposits¥ 3,486558¥ 4,044¥ 3,396611¥ 4,007

Thousands of
U.S. dollars
2006$ 28,910
5,201$ 34,111

All guarantee deposits are scheduled to mature during the year ending March 31, 2012 andthereafter.

20

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

7.

Short-Term Bank Loans and Guarantee Deposits (continued)

In order to achieve more efficient and flexible financing, the Company has concluded
line-of-credit agreements with certain financial institutions. The status of these lines ofcredit at March 31, 2006 was as follows:

Lines of credit
Credit utilized
Available credit

8.

Millions of yen
2006

Thousands of
U.S. dollars
2006¥ 22,300–¥ 22,300$ 189,836–$ 189,836

Retirement Benefits

The funded and accrued status of the employees’ defined benefit plans of the Company andits consolidated subsidiaries, and the amounts recognized in the consolidated balance sheetsat March 31, 2005 and 2006 are summarized as follows:

Millions of yen
2005
2006
Retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Unrecognized actuarial loss (gain)
Unrecognized prior service cost
Net retirement benefit obligation
Prepaid pension costAccrued retirement benefits¥ (14,114)
5,809(8,305)1,303
20(6,982)400¥ (7,382)¥ (14,530)
7,960(6,570)(575)
15(7,130)387¥ (7,517)

Thousands of
U.S. dollars
2006$(123,691)
67,762(55,929)(4,896)
128(60,697)
3,294$ (63,991)

As allowed under the accounting standard for retirement benefits, certain domestic
consolidated subsidiaries calculate accrued retirement benefits for their employees bysimplified methods.

21

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

8.

Retirement Benefits (continued)

The components of retirement benefit expenses for the years ended March 31, 2005 and2006 are outlined as follows:
Thousands of
U.S. dollars
2006

Millions of yen
2006
2005
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service cost

¥

795
340
(63)
178
7
¥ 1,257

¥

579
330
(65)
151
7
¥ 1,002

$

$

4,929
2,809
(553)
1,285
60
8,530

The retirement benefit expenses of certain domestic consolidated subsidiaries which were
calculated by simplified methods have been included in service cost in the above table.
The assumptions used in accounting for the above benefit plans for the years ended March
31, 2005 and 2006 were as follows:

Discount rate
Expected rate of return on plan assets

2005

2006

Principally 2.5%
Principally 1.5%

Principally 2.5%
Principally 1.5%

22

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

9.

Income Taxes

Income taxes applicable to the Company and its domestic consolidated subsidiaries
comprise corporation, enterprise and inhabitants’ taxes which, in the aggregate, resulted ina statutory tax rate of approximately 40.5% for the years ended March 31, 2005 and 2006.
A reconciliation of the statutory tax rate and the effective tax rates for the years ended
March 31, 2005 and 2006 as a percentage of income before income taxes and minority
interests is as follows:

Statutory tax rate
Investment tax credits
Nondeductible expenses
Per capita portion of inhabitants’ taxes
Difference in tax rates applicable to the overseas
consolidated subsidiary
Cash dividends received from the overseas
consolidated subsidiary
Equity in earnings (loss) of an affiliate
Tax loss carryforward of a consolidated subsidiary
Loss on impairment of revalued land
Other
Effective tax rates

2005

2006

40.5%
(0.5)
2.4
0.4

40.5%
(0.7)
0.4
0.5

(7.5)

(5.5)

1.5
0.2
–
–
0.9
37.9%

4.1
(1.7)
4.6
4.1
(0.2)
46.1%

23

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

9.

Income Taxes (continued)

The significant components of the deferred tax assets and liabilities of the Company and its
consolidated subsidiaries at March 31, 2005 and 2006 are summarized as follows:

Millions of yen
2005
2006
Deferred tax assets:
Accrued retirement benefits
Allowance for doubtful receivables
Accrued bonuses
Inventories
Foreign tax credits
Tax loss carryforwards
Loss on impairment of investments insecurities and golf club memberships
Loss on impairment of fixed assets
Other
Gross deferred tax assets
Less valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Dividends from an overseas subsidiary
Unrealized holding gain on securities
Land revaluation reserve
Reserve for deferred taxation oncontributions for acquisition of property
Total deferred tax liabilities
Net deferred tax liabilities

Thousands of
U.S. dollars
2006¥ 2,639
87
491
385
366
348

¥ 2,806
68
497
186
328
412

$ 23,887
579
4,231
1,583
2,792
3,507

916
−
814
6,046
(775)
5,271

859
1,328
935
7,419
(1,212)
6,207

7,313
11,305
7,960
63,157(10,317)
52,840(164)(5,706)(675)(86)(12,158)(2,368)(732)(103,499)(20,158)(1,086)(7,631)¥ (2,360)(1,030)(15,642)¥ (9,435)(8,768)(133,157)$ (80,317)

24

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

10. Shareholders’ Equity
The Commercial Code of Japan (the “Code”) provides that an amount equivalent to at least
10% of cash dividends paid and bonuses to directors and statutory auditors, and exactly
10% of interim cash dividends paid be appropriated to the legal reserve until the sum ofadditional paid-in capital and the legal reserve equals 25% of stated capital. The Codealso provides that neither additional paid-in capital nor the legal reserve is available fordividends but both may be used to reduce or eliminate a deficit by resolution of theshareholders or may be transferred to stated capital by resolution of the Board of Directors.
The Code also stipulates that, to the extent that the sum of the additional paid-in capital
account and the legal reserve exceeds 25% of the common stock account, the amount of
any such excess is available for appropriation by resolution of the shareholders.
Additional paid-in capital and the legal reserve are included in capital surplus and retained
earnings, respectively, in the accompanying consolidated balance sheets and statements ofshareholders’ equity. The Company’s legal reserve amounted to nil at March 31, 2005
and 2006.
In accordance with the Code, a stock option plan for certain directors and executive officersof the Company was approved at the annual general meeting of the shareholders held on
June 29, 2004. Under the terms of this plan, 81,000 shares of common stock were granted
at ¥1 ($0.01) per share. The options became exercisable on July 13, 2004 and arescheduled to expire on June 29, 2024.
In accordance with the Code, a stock option plan for certain directors and executive officersof the Company was approved at the annual general meeting of the shareholders held on
June 29, 2005. Under the terms of this plan, up to 62,000 shares of common stock were
granted at ¥1 ($0.01) per share. The options became exercisable on July 15, 2005 and arescheduled to expire on June 29, 2025.
The new Corporation Law of Japan (the “Law”), which superseded most of the provisionsof the Commercial Code of Japan, went into effect on May 1, 2006. The Law stipulates
requirements on distributions of earnings which are similar to those of the Code. Under
the Law, however, such distributions can be made at any time by resolution of theshareholders, or by the Board of Directors if certain conditions are met.

25

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

11. Land Revaluation
At March 31, 2000 and 2002, certain consolidated subsidiaries and an affiliate revalued
their land held for business use in accordance with the “Law on Land Revaluation.”
Differences on land revaluation have been accounted for as land revaluation reserve undershareholders’ equity and are stated at the Company’s share of the net amount of therelevant tax effect. The method followed for land revaluation was determined inaccordance with the “Enforcement Act Concerning Land Revaluation.”
The fair value of the land revalued at March 31, 2000 and 2002 was less than thecorresponding carrying value by the following amounts at March 31, 2005 and 2006:

Millions of yen
2005
2006
Land revalued at March 31, 2000
Land revalued at March 31, 2002

¥ (146)(2,203)¥ (2,349)¥ (167)(2,289)¥ (2,456)

Thousands of
U.S. dollars
2006$ (1,422)(19,486)$ (20,908)

12. Research and Development Costs
Research and development costs included in selling, general and administrative expenses
totaled ¥503 million and ¥483 million ($4,112 thousand) for the years ended March 31,
2005 and 2006, respectively.

26

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

13. Leases
The following pro forma amounts present the acquisition costs, accumulated depreciationand net book value of the leased property at March 31, 2005 and 2006, which would havebeen reflected in the balance sheets if finance leases other than those which transfer theownership of the leased property of the Company and its consolidated subsidiaries (which
are currently accounted for as operating leases) were capitalized:
Millions of yen
2005
Acquisition Accumulated
depreciation
costs
Machinery,equipment andvehicles

¥476

¥257

Net book
value

¥219

2006
Acquisition Accumulated
costs
depreciation¥362

Net book
value

¥136

¥226

Thousands of U.S dollars
2006
Acquisition Accumulated Net bookdepreciation
costs
value
Machinery,equipment andvehicles$3,082$1,158$1,924

The related lease payments and depreciation for the years ended March 31, 2005 and 2006
were as follows:
Millions of yen
2005
2006
Lease payments
Depreciation

¥80
80

¥82
82

Thousands of
U.S. dollars
2006
$698
698

Depreciation is calculated by the straight-line method over the respective lease terms
assuming a nil residual value.
No loss on impairment has been recorded on finance leases.

27

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

13. Leases (continued)
The related future minimum payments (including the interest portion thereon) subsequent
to March 31, 2006 under finance leases other than those which transfer the ownership ofthe leased property to the Company and its consolidated subsidiaries are summarized asfollows:
Year ending March 31,
20072008 and thereafter

Millions of yen
¥ 73
153
¥226

Thousands of
U.S. dollars
$ 621
1,303
$1,924

14. Contingent Liabilities
At March 31, 2006, the Company and its consolidated subsidiaries had the following
contingent liabilities:

Guarantees of housing loans of employees andindebtedness of an unconsolidated subsidiaryand other

Millions of yen

Thousands of
U.S. dollars¥426$3,623

15. Derivatives
The Company and its consolidated subsidiaries enter into various transactions involving
derivatives in order to manage risk arising from adverse fluctuation in foreign currency
exchange rates. Forward foreign exchange contracts entail the market risk of fluctuation
in foreign currency exchange rates. Derivatives positions involve the credit risk that thecounterparties may default on their obligations. The Company and its consolidated
subsidiaries select only financial institutions with high credit ratings as counterparties inorder to minimize their credit risk. The Company and its consolidated subsidiaries do notenter into derivatives transactions whose fluctuation in fair value is material and which
could thus impact their operations significantly.
The Company and its consolidated subsidiaries have established policies for approving andreporting the purpose, nature, counterparties, inherent risk, limit on loss and the level ofrisk of each transaction. Under these policies governing derivatives, trading is not enteredinto for speculative purposes.
At March 31, 2005 and 2006, all derivatives positions qualified for the application of hedge
accounting and, thus, disclosure of fair value information has been omitted.
28

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

16. Amounts per Share
Amounts per share at March 31, 2005 and 2006 and for the years then ended were as
follows:
Yen
Net assets
Net income:
Basic
DilutedCash dividends applicable to the
year

2005

2006

U.S. dollars
2006¥785.36¥854.83

$7.28

43.06
43.04

26.44
26.42

0.23
0.23

14.00

16.00

0.14

The amount per share of net assets is computed based on the net assets available for
distribution to the shareholders and the number of shares of common stock outstanding at
the year end.
Basic net income per share is computed based on the net income available for distribution
to shareholders of common stock and the weighted-average number of shares of common
stock outstanding during the year. Diluted net income per share is computed based on the
net income available for distribution to the shareholders and the weighted-average numberof shares of common stock outstanding during each year after giving effect to the dilutive
potential of shares of common stock to be issued upon the exercise of stock options.
Cash dividends per share represent the cash dividends proposed by the Board of Directors
as applicable to the respective years together with the interim cash dividends paid.

29

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

17. Segment Information
The Company and its consolidated subsidiaries are primarily engaged in the manufactureand sale of a variety of steel products such as steel sheets, construction materials,
prefabricated structures, home furnishings, and steel rolls and gratings. The Company also
engages in other activities such as real estate rental and engineering projects.
The business and geographical segments of the Company and its consolidated subsidiaries
for the years ended March 31, 2005 and 2006 are outlined as follows:Business Segments
Millions of yen
Year ended March 31, 2005

I. Sales and operating income(loss)
Sales to third parties
Intergroup sales andtransfers
Total sales
Operating expenses
Operating income (loss)
II. Assets, depreciation andcapital expenditures
Total assets
Depreciation
Capital expenditures

Steel sheet
products

Electric
furnaceproducts

Other

Total

Eliminations andgeneralcorporate
assets¥ 161,235¥ 7,444¥ 8,003¥176,682¥–¥ 176,682–
161,235
141,666¥ 19,569

–
7,444
7,558
¥ (114)

4,461
12,464
11,672¥ 792

4,461
181,143
160,896¥ 20,247(4,461)(4,461)(3,526)¥ (935)–
176,682
157,370¥ 19,312¥ 112,279
4,967
2,726

¥ 8,823327
338¥ 22,707
393
235¥143,809
5,687
3,299

¥ 57,230
92
22¥ 201,039
5,779
3,321

Consolidated30

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

17. Segment Information (continued)
Business Segments (continued)
Millions of yen
Year ended March 31, 2006

I. Sales and operating income(loss)
Sales to third parties
Intergroup sales andtransfers
Total sales
Operating expenses
Operating income (loss)
II. Assets, depreciation, loss on
impairment of fixed assets
and capital expenditures
Total assets
Depreciation
Loss on impairment of
fixed assets
Capital expenditures

Eliminations andgeneralcorporate
assetsConsolidated

Steel sheet
products

Electric
furnaceproducts

Other

Total

¥ 163,439¥ 8,843¥ 7,754¥ 180,036¥–¥ 180,036–
163,439
150,154¥ 13,285

–
8,843
8,965
¥ (122)

4,395
12,14911,016¥ 1,133

4,395
184,431
170,135¥ 14,296(4,395)(4,395)(3,447)¥ (948)–180,036
166,688¥ 13,348¥ 112,504
4,186¥10,251316¥ 18,272321¥ 141,027
4,823¥ 67,890
557¥ 208,917
5,380

–
2,670

–
272

3,381
197

3,381
3,139

–
1,174

3,381
4,313

Eliminations andgeneralcorporate
assetsConsolidated

Thousands of U.S. dollars
Year ended March 31, 2006

I. Sales and operating income(loss)
Sales to third parties
Intergroup sales andtransfers
Total sales
Operating expenses
Operating income (loss)
II. Assets, depreciation, loss on
impairment of fixed assets
and capital expenditures
Total assets
Depreciation
Loss on impairment of
fixed assets
Capital expenditures

Steel sheet
products

Electric
furnaceproducts

Other$ 1,391,326$ 75,279$ 66,008$ 1,532,613 $–
1,391,326
1,278,233$ 113,093–
75,27976,318$ (1,039)

37,414103,422
93,777$ 9,645

37,414(37,414)–
1,570,027(37,414)
1,532,613
1,448,328(29,344)
1,418,984$ 121,699 $ (8,070) $ 113,629$ 957,725
35,634$ 87,265
2,690$ 155,546
2,733$ 1,200,536 $ 577,935
41,057
4,742–
22,729–2,316

28,782
1,677

Total

28,782
26,722––
9,994$ 1,532,613$ 1,778,471
45,79928,782
36,71631

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

17. Segment Information (continued)
Geographical Segments
Millions of yen
Year ended March 31, 2005
Eliminations
and general
Southeast
corporate
Asia
assets
Total

Consolidated¥ 115,283¥ 61,399¥ 176,682¥–¥176,682

16
115,299
106,067¥ 9,232–
61,39951,439¥ 9,960

16
176,698
157,506¥ 19,192

(16)
(16)
(136)
¥ 120

–
176,682
157,370¥ 19,312¥ 117,610¥ 31,823¥ 149,433¥ 51,606¥201,039

Japan
I. Sales and operating
incomeSales to third parties
Interarea sales andtransfers
Total sales
Operating expenses
Operating income
II. Assets

Millions of yen
Year ended March 31, 2006
Eliminations
and general
Southeast
corporate
Asia
Total
assetsConsolidated¥ 118,625¥ 61,411¥ 180,036

17
118,642
108,988¥ 9,654279
61,69058,071¥ 3,619¥ 115,483¥ 31,210

Japan
I. Sales and operating
incomeSales to third parties
Interarea sales andtransfers
Total sales
Operating expenses
Operating income
II. Assets¥–¥ 180,036

296
180,332
167,059¥ 13,273

¥

(296)
(296)
(371)
75

–
180,036
166,688¥ 13,348¥ 146,693¥ 62,224¥ 208,917

Thousands of U.S. dollars
Year ended March 31, 2006
Eliminations
and general
Southeast
corporate
Asia
Total
assetsConsolidated$ 1,009,833$ 522,780$ 1,532,613$–$ 1,532,613

145
1,009,978927,795$ 82,183

2,375
525,155494,347$ 30,808

2,520
1,535,133
1,422,142$ 112,991(2,520)(2,520)(3,158)$638–
1,532,613
1,418,984$ 113,629$ 983,085$ 265,685$ 1,248,770$ 529,701$ 1,778,471

Japan
I. Sales and operating
incomeSales to third parties
Interarea sales andtransfers
Total sales
Operating expenses
Operating income
II. Assets

32

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)

17. Segment Information (continued)
Geographical Segments (continued)
Overseas sales which include export sales of the Company and its domestic consolidated
subsidiaries and sales (other than exports to Japan) of the overseas consolidated subsidiaryfor the years ended March 31, 2005 and 2006 are summarized as follows:
Millions of yen
Year ended March 31, 2005
Asia
Other
Total
Overseas sales
Consolidated net sales
Overseas sales as a percentage ofconsolidated net sales¥ 44,661–¥23,207–¥ 67,868
176,682

25.3%

13.1%

38.4%

Millions of yen
Year ended March 31, 2006
Asia
Other
Total
Overseas sales
Consolidated net sales
Overseas sales as a percentage ofconsolidated net sales¥ 51,989–¥ 15,087–¥ 67,076
180,036

28.9%

8.4%

37.3%

Thousands of U.S. dollars
Year ended March 31, 2006
Asia
Other
Total
Overseas sales
Consolidated net sales$442,573–$128,432–$ 571,005
1,532,613

18. Subsequent Event
The following appropriations of retained earnings of the Company, which have not beenreflected in the accompanying consolidated financial statements for the year ended March
31, 2006, were approved at a meeting of the shareholders held on June 29, 2006:

Cash dividends of ¥9 (U.S.$0.08) per share
Bonuses to directors and statutory auditors

Millions of yen

Thousands of
U.S. dollars¥1,565
59$13,323502

33