Consolidated Financial Statements
Yodogawa Steel Works, Ltd.
Years ended March 31, 2010 and 2011
with Report of Independent Auditors

Yodogawa Steel Works, Ltd.
Consolidated Financial Statements
Years ended March 31, 2010 and 2011

Contents
Report of Independent Auditors .......................................................................................... 1

Consolidated Financial Statements
Consolidated Balance Sheets............................................................................................... 2
Consolidated Statements of Operations .............................................................................. 4
Consolidated Statement of Comprehensive Loss ................................................................ 5
Consolidated Statements of Changes in Net Assets ............................................................ 6
Consolidated Statements of Cash Flows ............................................................................. 8
Notes to Consolidated Financial Statements ..................................................................... 10

Yodogawa Steel Works, Ltd.
Consolidated Balance Sheets
March 31, 2010 and 2011

Millions of yen
2010
2011
AssetsCurrent assets:
Cash and deposits (Notes 4, 5 and 12)
Marketable securities (Notes 5 and 6)
Notes and accounts receivable (Note 5):
Unconsolidated subsidiaries and affiliates(Note 21)
Trade
Less allowance for doubtful receivables
Inventories (Note 7)
Deferred income taxes (Note 14)
Other current assets
Total current assets

Property, plant and equipment:
Land (Notes 8, 16 and 22)
Buildings and structures (Notes 8 and 22)
Machinery, equipment and vehicles
Leased assets
Construction in progress
Less accumulated depreciation
Property, plant and equipment, net

Investments and other assets:
Investments in securities (Notes 5, 6 and 12)
Investments in unconsolidated subsidiaries andaffiliates
Deferred income taxes (Note 14)
Other assets (Note 12)
Total investments and other assets

Total assets (Note 23)2¥15,70912,003¥

14,867
15,272Thousands of
U.S. dollars(Note 3)
2011$

178,797
183,668

9,992
23,089(199)
26,3291,156
2,414
90,493

10,611
21,453(235)
27,783668
3,181
93,600127,613
258,003(2,826)334,131
8,034
38,256
1,125,676

19,00650,701
126,76258
562(145,648)
51,441

18,81750,641
126,15675
378(148,500)
47,567226,302609,032
1,517,210
902
4,546(1,785,929)
572,063

29,33325,299304,258

4,646
898
3,102
37,979

4,735
761
3,207
34,002

56,945
9,152
38,569408,924¥ 179,913¥ 175,169$ 2,106,663

Thousands of
U.S. dollars(Note 3)2011

Millions of yen
2010
2011
Liabilities and net assets
Current liabilities:
Current portion of finance lease obligations
Notes and accounts payable (Note 5):
Unconsolidated subsidiaries and affiliates
Trade
Construction
Accrued expenses
Accrued income taxes (Note 14)
Other current liabilities (Note 12)
Total current liabilities
Long-term liabilities:
Accrued retirement benefits for employees(Note 13)
Accrued retirement benefits for directors andcorporate auditors
Guarantee deposits (Note 10)
Finance lease obligations, less current portion
Negative goodwill (Note 23)
Deferred income taxes (Note 14)
Deferred income taxes on land revaluation reserve(Note 14)
Other long-term liabilities
Total long-term liabilities
Net assets:
Shareholders’ equity (Note 15):
Common stock:
Authorized: 753,814,067 shares in 2010 and2011
Issued: 184,186,153 shares in 2010 and 2011
Capital surplus
Retained earnings (Notes 20 and 24)
Treasury stock, at cost – 18,479,353 shares in2010 and 23,913,491 shares in 2011
Total shareholders’ equity
Accumulated other comprehensive income (loss):
Unrealized holding gain on securities (Note 6)
Land revaluation reserve (Note 16)
Translation adjustments
Total accumulated other comprehensive income
Stock acquisition rights
Minority interests
Total net assets
Total liabilities and net assets

¥

14

¥

17

$

204

320
16,021
891
3,095
106
1,619
22,066945
14,981
1,042
3,234
561
1,899
22,67911,365
180,168
12,531
38,894
6,747
22,839272,748

7,323

7,418

89,212

83
3,670
43
112
2,117

58
3,450
42
74
1,048

698
41,491505
890
12,6031,041
11914,508

1,041
402
13,533

12,520
4,835
162,754

23,221
23,75588,271

23,221
23,73988,288279,266
285,496
1,061,792(7,429)127,818(9,275)125,973(111,545)
1,515,009

6,019
1,321
(4,199)3,141
95
12,285
143,339¥ 179,913

3,995
1,386
(4,474)907
110
11,967
138,957¥ 175,169

48,046
16,668(53,806)
10,9081,323
143,921
1,671,161$ 2,106,663

See accompanying notes to consolidated financial statements.
3

Yodogawa Steel Works, Ltd.
Consolidated Statements of Operations
Years ended March 31, 2010 and 2011

Millions of yen
2010
2011
Net sales (Notes 21, 22 and 23)
Cost of sales (Note 22)
Gross profit
Selling, general and administrative expenses(Notes 17 and 22)
Operating income (Note 23)
Other income (expenses):
Interest and dividend income
Interest expense
Loss on impairment of investments insecurities (Note 6)
Loss on sales or disposal of property, plantand equipment, net
Equity in earnings (loss) of an affiliate
Loss on impairment of fixed assets(Notes 8, 22 and 23)
Foreign exchange gain (loss)
Gain on revaluation of derivatives
Surcharge levied in relation to violation of
the Antimonopoly Law
Loss on disaster (Note 9)
Loss on adjustment due to application of
accounting standard for asset retirement
obligations
Other, net (Notes 22 and 23)(Loss) income before income taxes andminority interests
Income taxes (Note 14):
Current
Deferred(Loss) income before minority interests
Minority interests
Net (loss) income

Thousands of
U.S. dollars(Note 3)2011

¥ 132,419
117,113
15,306¥ 144,774
126,976
17,798$ 1,741,118
1,527,071
214,047

13,305
2,001

13,574
4,224

163,247
50,800

633
(52)

618
(50)

7,432
(601)

(244)

(798)

(9,597)

(182)
75

(91)
(95)

(1,094)(1,143)

(27)
15
82

(51)
(140)
58

(613)
(1,684)697(3,765)
–

–
(608)

–
(7,312)

–
(387)

(215)
143

(2,586)
1,720(1,851)

2,995

36,019

34
1,325
1,359
(3,210)

678
468
1,146
1,849

8,154
5,628
13,782
22,237(86)¥ (3,296)

¥

(122)
1,727

$

(1,467)
20,770See accompanying notes to consolidated financial statements.
4

Yodogawa Steel Works, Ltd.
Consolidated Statement of Comprehensive LossYear ended March 31, 2011

Income before minority interests
Other comprehensive loss:
Unrealized holding loss on securities
Translation adjustments
Share of other comprehensive loss of anaffiliate accounted for by the equity method
Total other comprehensive loss
Comprehensive loss
Comprehensive loss attributable to:Shareholders of Yodogawa Steel Works, Ltd.
Minority shareholders of consolidated
subsidiaries

Millions of yen
2011

Thousands of
U.S. dollars(Note 3)2011

¥ 1,849$ 22,237(2,084)(528)(25,063)(6,350)(4)(2,616)¥ (767)(48)(31,461)$ (9,224)

¥

(572)

$ (6,879)(195)(2,345)

See accompanying notes to consolidated financial statements.
5

Yodogawa Steel Works, Ltd.
Consolidated Statements of Changes in Net Assets
Years ended March 31, 2010 and 2011
Millions of yen

Balance at
March 31,2009
Cashdividends

Number ofshares issued

Commonstock

CapitalsurplusRetainedearnings

Treasurystock, at
cost

Total
shareholders’equityUnrealized
holding gain
on securities

Land
revaluation
reserve

Translation
adjustments

Total
accumulated
othercomprehensive
income184,186,153¥ 23,221 ¥ 23,764¥ 93,061¥ (7,429)¥ 132,617¥ 2,567¥ 1,334¥ (4,547)¥ (646)Stockacquisitionrights¥Minority
interests

Total net
assets74¥ 12,564¥ 144,609–––(1,492)–(1,492)

–

–

–

–

–

–

(1,492)Net loss
Acquisition oftreasurystock
Disposition oftreasurystock
Reversal oflandrevaluation
reserve–––(3,296)–(3,296)

–

–

–

–

–

–

(3,296)

–

–

–

–

(11)

(11)

–

–

–

–

–

–

(11)

–

–

(9)

–

11

2

–

–

–

–

–

–

2

–

–

–

(2)

–

(2)

–

–

–

–

–

–

(2)

Other changes
Balance at
March 31,2010
Cashdividends

–

–

–

–

–

–

3,452

(13)

348

3,787

21

(279)

3,529

184,186,153

23,221

23,75588,271(7,429)127,818

6,019

1,321

(4,199)3,141

95

12,285

143,339–––(1,645)–(1,645)

–

–

–

–

–

–

(1,645)

Net income
Acquisition oftreasurystock
Disposition oftreasurystock
Reversal oflandrevaluation
reserve

–

–

–

1,727

–

1,727

–

–

–

–

–

–

1,727

–

–

–

–

(1,877)(1,877)

–

–

–

–

–

–

(1,877)

–

–

(16)

–

31

15

–

–

–

–

–

–

15

–

–

–

(65)

–

(65)

–

–

–

–

–

–

(65)

Other changes
Balance at
March 31,
2011

–

–

–

–

–

–

(2,024)65(275)(2,234)15(318)(2,537)¥ 23,221 ¥ 23,739¥ 88,288¥ (9,275)¥ 125,973¥ 3,995¥ 1,386¥ (4,474)

907

¥ 110

¥ 11,967¥ 138,957

184,186,153¥

6Yodogawa Steel Works, Ltd.
Consolidated Statements of Changes in Net Assets (continued)
Years ended March 31, 2010 and 2011
Thousands of U.S. dollars (Note 3)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock, at
cost

Total
shareholders’equityUnrealized
holding gain
on securities

Land
revaluation
reserve

Translation
adjustments

Total
accumulated
othercomprehensive
income$ 279,266$ 285,689$ 1,061,588$ (89,345)$ 1,537,198$ 72,387$ 15,887$ (50,499)$ 37,775$ 1,143$ 147,745$ 1,723,861

Cash dividends––(19,784)–(19,784)

–

–

–

–

–

–

(19,784)

Net income––

20,770–20,770

–

–

–

–

–

–

20,770Acquisition oftreasury stock

–

–

–

(22,573)(22,573)

–

–

–

–

–

–

(22,573)

–

(193)

–

373

180

–

–

–

–

–

–

180

–

–

(782)

–

(782)

–

–

–

–

–

–

(782)

–

–

–

–

–

(24,341)781(3,307)(26,867)

180(3,824)(30,511)$ 279,266$ 285,496$ 1,061,792$ (111,545)$ 1,515,009$ 48,046$ 16,668$ (53,806)$ 10,908$ 1,323$ 143,921$ 1,671,161

Balance at
March 31,2010

Disposition oftreasury stockReversal oflandrevaluation
reserve
Other changes
Balance at
March 31,
2011

Stock
acquisitionrightsMinority
interests

Total net
assetsSee accompanying notes to consolidated financial statements.
7

Yodogawa Steel Works, Ltd.
Consolidated Statements of Cash Flows
Years ended March 31, 2010 and 2011

Millions of yen
2010
2011
Cash flows from operating activities:(Loss) income before income taxes and minority
interests
Adjustments for:
Depreciation and amortization
Amortization of negative goodwill
Equity in (earnings) loss of an affiliate
Increase in accrued retirement benefits(Decrease) increase in accrued bonuses
Increase in allowance for doubtful receivables
Interest and dividend income
Interest expense
Loss (gain) on sales of investments in securities
Loss on impairment of investments in securities
Loss on sales or disposal of property, plant andequipment, net
Loss on impairment of fixed assets(Increase) decrease in notes and accounts
receivable
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable
Gain on revaluation of derivatives
Other
Subtotal
Insurance claim
Interest and dividends received
Interest paid
Surcharge levied in relation to violation of the
Antimonopoly Law
Income taxes paid
Net cash provided by operating activities¥ (1,851)

¥

2,995

Thousands of
U.S. dollars(Note 3)2011$

36,019

5,899
(31)
(75)
89
(27)
39
(633)
52
24
244

5,596
(38)
95
113
25
32
(618)
50
(10)
798

67,300
(457)
1,143
1,359
301
385
(7,432)
601
(120)
9,597

182
27

91
51

1,094
613

(1,861)
5,402
2,236
(82)
4,171
13,805
–
689
(51)

950
(1,528)
(378)
(58)
243
8,409
124
673
(49)

11,425(18,376)(4,546)(698)
2,922
101,130
1,492
8,094
(589)

(3,765)(1,787)¥ 8,891

–
(251)
8,906

–
(3,019)$ 107,108¥

See accompanying notes to consolidated financial statements.
8

Yodogawa Steel Works, Ltd.
Consolidated Statements of Cash Flows (continued)
Years ended March 31, 2010 and 2011

Millions of yen
2010
2011
Cash flows from investing activities:
Investments in time deposits with a maturity ofmore than three months
Proceeds from time deposits with a maturity ofmore than three months
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
Payment for investment in capital of an
unconsolidated subsidiary
Proceeds from sales of investments in securities
Payment for loans receivableCollection of loans receivable
Other
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from sales of treasury stock
Purchases of treasury stock
Cash dividends paid to the Company’s
shareholders
Cash dividends paid to minority shareholders ofconsolidated subsidiaries
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
(Note 4)

¥

(520)

¥

Thousands of
U.S. dollars(Note 3)
2011

(929)

$ (11,173)

904
210(4,584)862
800(2,019)10,367
9,621(24,281)

28
(47)
(883)

146
(33)
(823)

1,756
(397)
(9,898)

146
(586)
634
7
(4,691)

(245)
146
(462)
410
(1)
(2,148)(2,946)
1,756(5,556)4,931(13)(25,833)2(8)

14(1,874)

168(22,538)(1,502)(1,656)(19,916)

(680)
(12)
(2,200)(113)(14)(3,643)(1,359)(167)(43,812)134
2,134
24,556(55)
3,060
26,690(662)
36,801
320,986¥ 26,690¥ 29,750$ 357,787

See accompanying notes to consolidated financial statements.
9

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements
March 31, 2011

1.

Summary of Significant Accounting Policies(a) Basis of preparation
Yodogawa Steel Works, Ltd. (the “Company”) and its domestic subsidiaries maintaintheir books of account and records in accordance with accounting principles generally
accepted in Japan, and its overseas subsidiaries maintain their books of account inconformity with those of their respective countries of domicile.
The accompanying consolidated financial statements of the Company and consolidated
subsidiaries are prepared on the basis of accounting principles generally accepted inJapan, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards, and have been compiled
from the consolidated financial statements prepared by the Company as required by the
Financial Instruments and Exchange Act of Japan.
In preparing the accompanying consolidated financial statements, certain
reclassifications and rearrangements have been made to the consolidated financial
statements issued domestically in order to present them in a format which is morefamiliar to readers outside Japan.
(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.
An 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 or loss includes the Company’s equity
in the current net income or loss of this company after the elimination of unrealizedintercompany profits.

10

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
1.

Summary of Significant Accounting Policies (continued)(b) Basis of consolidation (continued)
All assets and liabilities of the consolidated subsidiaries are revalued on acquisition, if
applicable. The difference between the cost of investments in subsidiaries and theequity in their net assets at their respective dates of acquisition is amortized over a
period of 5 years on a straight-line basis. Negative goodwill arising from transactions
that occurred on or after April 1, 2010 is credited to income when incurred.
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.
(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 credited or charged to income.
The balance sheet accounts of the overseas consolidated subsidiary (except for net
assets excluding minority interests) are translated into yen at the rate of exchange in
effect at the balance sheet date. The components of net assets excluding minority
interests are translated at their respective historical rates of exchange. Revenue andexpense accounts are translated into yen at the average rate of exchange in effectduring the year.
Translation adjustments have been presented as a component of net assets in theaccompanying consolidated financial statements.
(d) Cash and 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 into cash subject
to an insignificant risk of any changes in their value and which were purchased with an
original maturity of three months or less.

11

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
1.

Summary of Significant Accounting Policies (continued)(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, iscredited or charged to income. Held-to-maturity debt securities are carried atamortized 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 net assets. Non-marketable securities
classified as other securities are carried at cost. Cost of securities sold is determinedprincipally by the moving average method.
(f) Derivatives
Derivatives are measured at fair value.
(g) Inventories
Inventories of the Company and its domestic consolidated subsidiaries are principallystated at the lower of cost or net selling value, cost being determined by the averagemethod. Inventories of the overseas consolidated subsidiary are stated at the lower ofcost or net selling value, cost being determined by the moving average method.
(h) Property, plant and equipment and depreciation (except for leased assets)
Depreciation of property, plant and equipment is calculated by the declining-balancemethod over the estimated useful lives of the respective assets, except that thestraight-line method is applied to buildings (other than structures attached to thebuildings) acquired on or 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

12Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
1.

Summary of Significant Accounting Policies (continued)(i) Intangible assets and amortization (except for leased assets)
Intangible assets are stated on the basis of cost. Amortization is calculated by thestraight-line method over the estimated useful lives of the respective assets.
(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
Leased assets under finance lease transactions which do not transfer ownership of theleased assets to the lessee are depreciated to a residual value of zero by the straight-line
method using the contract term as the useful life. Among the finance leasetransactions which do not transfer ownership of the leased assets to the lessees, thosethat started on or before March 31, 2008 are accounted for in the same manner as
operating leases.
(l) 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.
(m) 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.

13

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
1.

Summary of Significant Accounting Policies (continued)(n) 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 termination occurs.
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.
Actuarial gain or loss is amortized in the year following the year in which the gain orloss is recognized principally by the straight-line method over a period of 10 years,
which is within the estimated average remaining years of service of the eligible
employees.
Prior service cost is being amortized as incurred by the straight-line method overperiods of 15 years and 10 years for the years ended March 31, 2010 and 2011,
respectively, which are within the estimated average remaining years of service of theeligible employees.
The directors and corporate auditors of the Company’s domestic consolidated
subsidiaries have customarily been entitled to lump-sum payments under the unfunded
retirement benefit plans. The provision for retirement benefits for directors andcorporate auditors has been made at an estimated amount based on the Company’s oreach consolidated subsidiary’s internal rules.
Supplementary Information
The Company previously had a lump-sum retirement benefit plan and a tax-qualified
defined benefit pension plan. At March 31, 2011, the Company transferred thetax-qualified defined benefit pension plan to a non-qualified defined benefit pension
plan. As a result, prior service cost of ¥16 million ($192 thousand) was incurred. Prior
service cost is being amortized as incurred by the straight-line method over a period of
10 years, which is within the estimated average remaining years of service of theeligible employees.

14

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
1.

Summary of Significant Accounting Policies (continued)(o) Recognition of revenues and costs of construction contracts
Revenues and costs of construction contracts that commenced on or after April 1, 2009,of which the percentage of completion can be reliably estimated, are recognized by thepercentage-of-completion method. The percentage of completion is calculated at thecost incurred as a percentage of the estimated total cost. The completed-contract
method continues to be adopted for contracts for which the percentage of completioncannot be reliably estimated.
(p) Hedge accounting
Gain or loss on derivatives designated as hedging instruments is deferred until the loss
or gain on the underlying hedged items is recognized. Receivables hedged byforward foreign exchange contracts which meet certain conditions are translated at thecorresponding foreign exchange contract rates.

2.

Changes in Accounting Policies(a) Recognition of revenues and costs of construction contracts
Until the year ended March 31, 2009, revenues and costs of construction contracts wererecognized by the completed-contract method. Effective the year ended March 31,
2010, the Company and its consolidated subsidiaries applied “Accounting Standard forConstruction Contracts” (Accounting Standards Board of Japan (“ASBJ”) Statement
No.15 issued on December 27, 2007) and “Guidance on Accounting Standard forConstruction Contracts” (ASBJ Guidance No.18 issued on December 27, 2007).
Under the new accounting standard and guidance, revenues and costs of construction
contracts that commenced on or after April 1, 2009, of which the percentage ofcompletion can be reliably estimated, are recognized by the percentage-of-completion
method. The percentage of completion is calculated at the cost incurred as apercentage of the estimated total cost. The completed-contract method continues tobe applied for contracts for which the percentage of completion cannot be reliably
estimated. As a result, net sales increased by ¥99 million, operating income increasedby ¥15 million and loss before income taxes and minority interests decreased by ¥15
million for the year ended March 31, 2010 from the corresponding amounts which
would have been recorded under the method applied in the previous year.
(b) Retirement benefits
Effective the year ended March 31, 2010, “Partial Amendments to AccountingStandard for Retirement Benefits (Part 3)” (ASBJ Statement No.19 issued on July 31,2008) was applied. There was no effect of this change on operating income and loss
before income taxes and minority interests.
15

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
2.

Changes in Accounting Policies (continued)(c) Financial instruments

Effective the year ended March 31, 2010, “Accounting Standard for Financial
Instruments” (ASBJ Statement No.10 issued on March 10, 2008) and “Guidance on
Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued
on March 10, 2008) were applied.
(d) Investment, rental and idle properties

Effective the year ended March 31, 2010, “Accounting Standard for Disclosures about
Fair Value of Investment and Rental Property” (ASBJ Statement No. 20 issued on
November 28, 2008) and “Guidance on Accounting Standard for Disclosures about
Fair Value of Investment and Rental Property” (ASBJ Guidance No. 23 issued on
November 28, 2010) were applied.
(e) Segment information

Effective the year ended March 31, 2011, the Company has applied “AccountingStandard for Disclosures about Segments of an Enterprise and Related Information”(ASBJ Statement No.17 issued on March 27, 2009) and “Guidance on AccountingStandard for Disclosures about Segments of an Enterprise and Related Information”(ASBJ Guidance No.20 issued on March 21, 2008).
(f) Equity method of accounting for investments

Effective the year ended March 31, 2011, the Company has applied “AccountingStandard for Equity Method of Accounting for Investments” (ASBJ Statement No.16
issued on March 10, 2008) and “Practical Solution on Unification of Accounting
Policies Applied to Associates Accounted for Using the Equity Method” (ASBJ
Practical Issues Task Force (“PITF”) No.24 issued on March 10, 2008). There was noeffect of this change on operating income and income before income taxes andminority interests.
(g) Asset retirement obligations
Effective the year ended March 31, 2011, the Company and its domestic consolidated
subsidiaries have applied “Accounting Standard for Asset Retirement Obligations”(ASBJ Statement No. 18 issued on March 31, 2008) and “Implementation Guidance on
Accounting Standard for Asset Retirement Obligations” (ASBJ Guidance No. 21
issued on March 31, 2008). As a result, operating income decreased by ¥13 million($156 thousand) and income before income taxes and minority interests decreased by¥228 million ($2,742 thousand) for the year ended March 31, 2011.

16

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
2.

Changes in Accounting Policies (continued)(h) Business combinations and others

Effective the year ended March 31, 2011, the Company and its domestic consolidated
subsidiaries have applied “Accounting Standard for Business Combinations” (ASBJ
Statement No.21 issued on December 26, 2008), “Accounting Standard forConsolidated Financial Statements” (ASBJ Statement No.22 issued on December 26,2008), “Partial Amendments to Accounting Standard for Research and Development
Costs” (ASBJ Statement No.23 issued on December 26, 2008), “Accounting Standard
for Business Divestitures” (ASBJ Statement No.7 issued on December 26, 2008),“Accounting Standard for Equity Method of Accounting for Investments” (ASBJ
Statement No.16 issued on December 26, 2008) and “Guidance on AccountingStandard for Business Combinations and Accounting Standard for Business
Divestitures” (ASBJ Guidance No.10 issued on December 26, 2008).
(i) Presentation of comprehensive income
Effective the year ended March 31, 2011, the Company has applied “AccountingStandard for Presentation of Comprehensive Income” (ASBJ Statement No.25 issued
on June 30, 2010). However, “Valuation and translation adjustments” and “Total
valuation and translation adjustments” of prior years are now presented as“Accumulated other comprehensive income (loss)” and “Total accumulated othercomprehensive income,” respectively, in the accompanying consolidated balance
sheets.
Total comprehensive income attributable to shareholders of the Company and minority
shareholders of consolidated subsidiaries and other comprehensive income (loss) for
the year ended March 31, 2010 were as follows:
Millions of yen
2010
Total comprehensive income attributable to:Shareholders of Yodogawa Steel Works, Ltd.
¥ 490
Minority shareholders of consolidated subsidiaries
449
Total
¥ 939
Millions of yen
2010
Other comprehensive income (loss):
Unrealized holding gain on securities
Land revaluation reserve
Translation adjustments
Share of other comprehensive income of an affiliate
accounted for by the equity method
Total¥ 3,183
(15)
667
314
¥ 4,149
17

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
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 ¥83.15 = U.S.$1.00,
the approximate exchange rate prevailing on March 31, 2011. 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.

4.

Cash and Cash Equivalents

A reconciliation of cash and deposits shown in the accompanying consolidated balance
sheets to cash and cash equivalents shown in the accompanying consolidated statements ofcash flows at March 31, 2010 and 2011 is presented as follows:
Millions of yen
2010
2011
Cash and deposits
Investment trust funds
Beneficiary interests in trusts and other
Time deposits with a maturity of morethan three months
Cash and cash equivalents

5.

Thousands of
U.S. dollars
2011¥ 15,709
11,203500¥ 14,867
14,3021,000$ 178,797
172,002
12,027(722)¥ 26,690(419)¥ 29,750(5,039)$ 357,787

Financial Instruments

Overview(a) Policy for financial instruments
In consideration of plans for capital investment, the Company and its consolidated
subsidiaries (collectively, the “Group”) primarily utilize cash in hand. In case of alack of cash in hand, the Group raises funds by bank borrowings and bond issuances.
The Group manages temporary cash surpluses through low-risk financial assets. The
Group uses derivatives for the purpose of reducing risk and does not enter into
derivatives for speculative purposes. In addition, compound financial instrumentsthat contain embedded derivatives are utilized by the Group in order to manage surplus
funds.

18

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
5.

Financial Instruments (continued)

Overview (continued)(b) Types of financial instruments and related risk
Trade receivables, notes and accounts receivables, are exposed to credit risk in relation
to customers. In addition, the Group is exposed to foreign currency exchange risk
arising from trade receivables denominated in foreign currencies.
Investments in securities and marketable securities are exposed to market risk. The
former is composed of mainly held-to-maturity debt securities and the shares ofcommon stock of other companies with which the Group has business relationships.
The latter is composed of mainly negotiable certificates of deposits and commercial
paper.
Trade payables, notes and accounts payable, have payment due dates within six months.
The Group is exposed to foreign currency exchange risk arising from trade payables
denominated in foreign currencies. In case of financing, the interest rate for short-termborrowings is fixed.
Regarding derivatives, the Group enters into forward foreign exchange contracts to
reduce the foreign currency exchange risk arising from trade receivables denominatedin foreign currencies.
Information regarding the method of hedge accounting is found in Note 1(p).
(c) Risk management for financial instruments
Regarding trade receivables, each related division monitors the credit worthiness of
their main customers periodically, and monitors due dates and outstanding balances bycustomer. In addition, the Company and its domestic consolidated subsidiaries aremaking efforts to identify and mitigate risks of bad debts from customers who havefinancial difficulties.
The overseas consolidated subsidiary requests customers to issue non-cancelable lettersof credit to hedge credit risk.
The Group only acquires held-to-maturity debt securities and commercial paper issuedby companies with high credit ratings or sound credit profiles. Accordingly, theGroup believes that the credit risk deriving from such securities is insignificant. The
Group also believes that the credit risk of derivatives is insignificant as the Group
enters into derivative transactions only with financial institutions with high credit
ratings.

19

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
5.

Financial Instruments (continued)

Overview (continued)(c) Risk management for financial instruments (continued)
For trade receivables denominated in foreign currencies, the Group enters into forward
foreign exchange contracts to hedge the risks arising from fluctuations in foreignexchanges rates.
For marketable securities and investments in securities, the Group periodically reviews
the fair value of such financial instruments and the financial position of the issuers.
In addition, the Group continuously evaluates whether or not securities other than thoseclassified as held-to-maturity debt securities should be maintained taking into accounttheir fair value and relationships with the issuers.
The Group has established policies for approving and reporting the purpose, nature,counterparty, inherent risk, limit on loss and the level of risk of each transaction.
Under these policies governing derivatives, trading is not entered into for speculative
purposes.
Based on a report from each division, the Group prepares and updates its cash flowplans on a timely basis and maintains adequate solvency to manage liquidity risk. In
order to provide for unexpected cash requirements, the Company enters into theline-of-credit agreements with certain financial institutions and its overseas
consolidated subsidiary is able to obtain short-term borrowings by certain financial
institutions.
(d) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if
available. When there is no quoted market price available, fair value is reasonably
estimated. Since various assumptions and factors are reflected in estimating the fairvalue, different assumptions and factors could result in different fair value.

20

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
5.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheets as of March 31,
2010 and 2011 and unrealized loss are shown in the following table. The following table
does not include financial instruments for which it is extremely difficult to determine thefair value.

Assets:Cash and deposits
Notes and accounts receivable
Unconsolidated subsidiaries and affiliates
Trade
Marketable securities and investment insecurities
Total assets
Liabilities:
Notes and accounts payable
Unconsolidated subsidiaries and affiliates
Trade
Total liabilities

Carrying value

Millions of yen
2010
Estimated
fair value¥ 15,709¥ 15,709

9,992
23,0899,992
23,089––30,917¥ 79,707

30,527¥ 79,317(390)¥ (390)

¥

¥

¥

320
16,021¥ 16,341

320
16,021¥ 16,341

Unrealized loss
¥

¥

–

–
–
–

21

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
5.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)

Assets:Cash and deposits
Notes and accounts receivable
Unconsolidated subsidiaries and affiliates
Trade
Marketable securities and investments insecurities
Total assets
Liabilities:
Notes and accounts payable
Unconsolidated subsidiaries and affiliates
Trade
Total liabilities

Carrying value

Millions of yen
2011
Estimated
fair value¥ 14,867¥ 14,867

10,611
21,453

10,611
21,453––32,070¥ 79,001

31,659¥ 78,590(411)¥ (411)

¥

¥

¥

945
14,981¥ 15,926

945
14,981¥ 15,926

Unrealized loss
¥

¥

–

–
–
–

Thousands of U.S. dollars
2011
Estimated
Carrying value
fair value
Unrealized loss
Assets:Cash and deposits
Notes and accounts receivable
Unconsolidated subsidiaries and affiliates
Trade
Marketable securities and investments insecurities
Total assets
Liabilities:
Notes and accounts payable
Unconsolidated subsidiaries and affiliates
Trade
Total liabilities$–$ 178,797$ 178,797

127,613
258,003

127,613
258,003––385,689$ 950,102

380,746$ 945,159(4,943)$ (4,943)$ 11,365
180,168$ 191,533$ 11,365
180,168$ 191,533

$
$

–
–
–

22

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
5.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)
Calculation method of estimated fair value of financial instruments is as follows:
Cash, deposits, notes and accounts receivable
Since these items are settled in a short period of time, their carrying value approximates fairvalue.
Marketable securities and investments in securities
The fair value of equity securities is based on quoted market prices. The fair value of debt
securities is based on either quoted market prices or the prices provided by the financial
institutions making markets in these securities. For information on securities classified byholding purpose, please refer to Note 6.
Notes and accounts payable
Since these items are settled in a short period of time, their carrying value approximates thefair value.
The carrying value of financial instruments without determinable market value at March 31,
2010 and 2011 is presented as follows:

Unlisted stocks
Money trusts
Negotiable certificates of deposit
Investment in a limited liability
partnership
Preferred stocks
Total

Millions of yen
2010
2011
¥
728
¥
304
3,704
4,303
4,500
3,000

Thousands of
U.S. dollars
2011$ 3,656
51,75036,079387
1,100¥ 10,419

4,342
6,410
$ 102,237

361
533¥ 8,501

Because no quoted market price is available, it is extremely difficult to determine the fairvalue. Therefore, the above financial instruments are not included as part of the amounts
presented in the preceding fair value of financial instruments table.

23

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
5.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)
The redemption schedule for monetary assets and investments by maturity dates at March
31, 2010 and 2011 are as follows:
Millions of yen
2010
Due in one
year or less
Deposits
Notes and accounts receivable
Marketable securities andinvestments in securities
Held-to-maturity debt securities
National and local
government bonds
Corporate bonds
Other marketable securities withmaturities
Other
Total

¥ 15,647
33,081¥––

Due after five
years throughten years¥––

Due after ten
years
¥

–
–

0
3,800

480
200

–
500

–
3,500

8,000
¥ 60,528

–
¥ 680

–
¥ 500

–
¥ 3,500

Due in one
year or less
Deposits
Notes and accounts receivable
Marketable securities andinvestments in securities
Held-to-maturity debt securities
National and local
government bonds
Corporate bonds
Other marketable securities
with maturities
Other
Total

Due after one
year throughfive years¥ 14,798
32,064

Millions of yen
2011
Due after one Due after five
year through years throughfive years
ten years
¥

–
–

¥

–
–

Due after
ten years
¥

–
–

70
7,900

410
–

–
500

–
2,500

7,100
¥ 61,932

–
¥ 410

–
¥ 500

–
¥ 2,500

24

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
5.

Financial Instruments (continued)

Estimated Fair Value of Financial Instruments (continued)
Thousands of U.S. dollars
2011
Due in one
year or less
Deposits
Notes and accounts receivable
Marketable securities andinvestments in securities
Held-to-maturity debt securities
National and local
government bonds
Corporate bonds
Other marketable securities withmaturities
Other
Total

$ 177,968
385,616

Due after one
year throughfive years$––

Due after five
years throughten years$––

Due after ten
years
$

–
–

842
95,009

4,931
–

–
6,013

–
30,06685,388$ 744,823–$ 4,931–
6,013–$ 30,066$

25

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
6.

Securities

Marketable securities classified as held-to-maturity debt securities at March 31, 2010 and2011 are summarized as follows:

Carrying value
Securities whose estimated fair value
exceeds their carrying value:
Government bonds
Corporate bonds
Securities whose estimated fair value does
not exceed their carrying value:
Corporate bonds
Total

Securities whose estimated fair value
exceeds their carrying value:
Government bonds
Corporate bonds
Securities whose estimated fair value does
not exceed their carrying value:
Corporate bonds
Total

¥

481
2,000
2,481

Millions of yen
2010
Estimated
Unrealized gain
fair value(loss)

¥

485
2,008
2,493

5,192
5,192
¥ 7,673

4,790
4,790
¥ 7,283

Carrying value

Millions of yen
2011
Estimated
fair value

¥

480
1,829
2,309

8,827
8,827
¥ 11,136

¥

485
1,834
2,319

8,405
8,405
¥ 10,724

¥

4
8
12
(402)
(402)
(390)

¥

Unrealized gain
(loss)

¥

5
5
10

(422)
(422)
¥ (412)26

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
6.

Securities (continued)
Thousands of U.S. dollars
Carrying
value

Securities whose estimated fair value
exceeds their carrying value:
Government bonds
Corporate bonds
Securities whose estimated fair value
does not exceed their carrying value:
Corporate bonds
Total

$

5,773
21,996
27,769106,158
106,158$ 133,927

2011
Estimated
fair value

Unrealized
gain (loss)

$

$

5,833
22,05627,889101,083
101,083$ 128,972

60
60
120

(5,075)(5,075)$ (4,955)

Other securities with determinable market value at March 31, 2010 and 2011 aresummarized as follows:

Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Corporate bonds
Securities whose carrying value does notexceed their acquisition costs:
Equity securities
Other
Total

Acquisition
costs

Millions of yen
2010
Carrying
value

Unrealized
gain (loss)¥ 12,232
490
12,722¥ 21,474
493
21,967¥ 9,242
3
9,245

1,264
98
1,362
¥ 14,084

1,181
96
1,277
¥ 23,244

(83)
(2)
(85)
¥ 9,16027

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
6.

Securities (continued)
Millions of yen
2011
Carrying
value

Unrealized
gain (loss)

9,847
490
–
10,337¥ 16,406
497–
16,903¥ 6,559
7
–
6,566

3,589
500
97
4,186
¥ 14,523

3,436
500
95
4,031
¥ 20,934

(153)
–
(2)
(155)
¥ 6,411

Acquisition
costs
Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Corporate bonds
Other
Securities whose carrying value does notexceed their acquisition costs:
Equity securities
Corporate bonds
Other
Total

¥

Thousands of U.S. dollars
2011
Acquisition
Carrying
Unrealized
costs
value
gain (loss)
Securities whose carrying value exceeds
their acquisition costs:
Equity securities
Corporate bonds
Securities whose carrying value does notexceed their acquisition costs:
Equity securities
Corporate bonds
Other
Total

$ 118,424
5,893
124,317$ 197,306
5,977
203,283$ 78,882
84
78,966

43,1636,013
1,167
50,343$ 174,660

41,3236,013
1,143
48,479$ 251,762(1,840)–(24)(1,864)$ 77,102

Sales of securities classified as other securities for the years ended March 31, 2010 and2011 are summarized as follows:
Thousands ofMillions of yen
U.S. dollars
2010
2011
2011
Sales
¥–
¥ 121
$ 1,455
Aggregate gain–
54
649
Aggregate loss
–
(29)
(349)

28

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
6.

Securities (continued)

The Group recorded losses on impairment of investments in securities with determinable
market value of ¥235 million and ¥231 million ($2,778 thousand) for the years ended
March 31, 2010 and 2011, respectively.

7.

Inventories

The following is a summary of inventories at March 31, 2010 and 2011:

Finished goods
Work in process
Raw materials and supplies

8.

Millions of yen
2010
2011
¥ 11,464¥11,530
3,873
3,849
10,992
12,404¥ 26,329¥27,783

Thousands of
U.S. dollars
2011$138,665
46,290149,176$ 334,131

Loss on Impairment of Fixed Assets

The Company and its consolidated subsidiaries recognized loss on impairment of fixed
assets for the years ended March 31, 2010 and 2011 as follows:

Location
Kure City,
Hiroshima Prefecture
Hiki District,
Saitama Prefecture
Sakai City,
Fukui Prefecture
Village of Hakuba,
Nagano Prefecture
Ishioka City,
Ibaraki Prefecture
Kawaguchi City,
Saitama Prefecture
Suzaka City,
Nagano Prefecture
Total

Use
Idle assets

Classification
Land

Idle assets

Land

Idle assets

Land

Idle assets

Land

Idle assets

¥ 1

¥ 8

$ 96

–

35

421

–

7

84

0

0

0

–

1

12

16

–

–

10
¥ 27

0
¥ 51

0
$ 613

Land

Idle assets

Idle assets

Millions of yen
2010
2011

Thousands of
U.S. dollars
2011

Land, buildings
and structures
Land

29

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
8.

Loss on Impairment of Fixed Assets (continued)

The Company and its consolidated subsidiaries group fixed assets by management segment,each of which continuously records cash 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
carrying values of the idle assets owned by the Company and its consolidated subsidiaries
for the years ended March 31, 2010 and 2011, which are not expected to be utilized in the
future, to their respective net recoverable values, and have recorded a related loss on
impairment of fixed assets of ¥27 million and ¥51 million ($613 thousand) for the years
ended March 31, 2010 and 2011, respectively. This loss on impairment of fixed assets
consisted of land of ¥22 million and buildings and structures of ¥5 million for the year
ended March 31, 2010, and land of ¥51 million ($613 thousand) for the year ended March
31, 2011. The recoverable amounts of these assets are measured at estimated selling value,
at a valuation assessed for property tax purposes or at the comparable published land prices.

9.

Loss on DisasterIn connection with the Great East Japan Earthquake in March 2011, the Group recorded aloss on disaster consisting of fixed costs for manufacturing incurred during suspensions ofoperations of its plants and a provision for repair expense for property, plant andequipment.

10. Guarantee Deposits
Guarantee deposits consisted of interest-free deposits, most of which were golf-clubmembership deposits, and interest-bearing deposits, which were principally deposits from
customers at average annual interest rates of 1.00% and 0.73% at March 31, 2010 and 2011,
respectively.
Interest-free deposits and interest-bearing deposits at March 31, 2010 and 2011 were as
follows:

Interest-free deposits
Interest-bearing deposits

Millions of yen
2010
2011
¥ 2,988¥ 2,765682
685¥ 3,670¥ 3,450

Thousands of
U.S. dollars
2011$ 33,253
8,238$ 41,491

30

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
11. Line-of-credit Agreements
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, 2010 and 2011 was as follows:

Millions of yen
2010
2011
Lines of credit
Credit utilized
Available credit¥ 20,700–¥ 20,700¥ 20,200–¥ 20,200

Thousands of
U.S. dollars
2011$ 242,934–$ 242,934

12. Pledged Assets
Assets pledged as collateral for indebtedness at March 31, 2010 and 2011 are summarized
as follows:

Cash and deposits
Investments in securities
Other assets

Millions of yen
2010
2011
¥ 60
¥ 60
16
16
–
167
¥ 76
¥ 243

Thousands of
U.S. dollars
2011
$ 722
192
2,008
$ 2,922

Indebtedness secured by these assets as collateral was ¥49 million and ¥51 million ($613
thousand), a component of other current liabilities at March 31, 2010 and 2011,
respectively.

31

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
13. Retirement Benefits
The funded and accrued status of the employees’ defined benefit pension plans of theGroup, and the amounts recognized in the accompanying consolidated balance sheets at
March 31, 2010 and 2011 are summarized as follows:

Retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Unrecognized actuarial loss
Unrecognized prior service cost
Net retirement benefit obligation
Prepaid pension costAccrued retirement benefits

Millions of yen
2010
2011
¥ (13,200)¥(12,779)
4,496
3,929
(8,704)(8,850)
2,184
2,134
–
(16)
(6,520)(6,732)803
686¥ (7,323)¥ (7,418)

Thousands of
U.S. dollars
2011$ (153,686)
47,252(106,434)
25,664(192)(80,962)8,250$ (89,212)

As permitted under the accounting standards for retirement benefits, certain domestic
consolidated subsidiaries calculate accrued retirement benefits for their employees bysimplified methods.
The components of retirement benefit expenses for the years ended March 31, 2010 and2011 are outlined as follows:

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Total

Millions of yen
2010
2011
¥ 566
¥ 627
255
245
(74)
(88)
370
317
¥ 1,117¥ 1,101

Thousands of
U.S. dollars
2011$ 7,541
2,946(1,058)
3,812$ 13,241

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, 2010 and 2011 were as follows:

Discount rate
Expected rates of return on plan assets

2010

2011

Principally 2.0%
Principally 1.8%

Principally 2.0%
Principally 2.1%

32

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
14. 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, 2010 and 2011.
A reconciliation of the statutory tax rate and the effective tax rate for the year ended March
31, 2011 as a percentage of income before income taxes and minority interests is asfollows:

Statutory tax rate
Permanently non-deductible 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
Adjustments of accounting standards applied by the overseas
consolidated subsidiary
Foreign tax credit
Tax loss carryforwards of consolidated subsidiaries
Valuation allowance
Permanently non-taxable income
Tax credit for research and development costs
Reversal of land revaluation reserve
Equity in loss of an affiliate
Other
Effective tax rate

2011
40.5 %
1.0
1.8
(1.7)
0.9
1.1
0.7
3.9
(4.2)
(2.7)
(0.6)
(0.9)
(1.2)
(0.3)
38.3 %A reconciliation of the statutory tax rate and the effective tax rate for the year ended March
31, 2010 has not been provided due to the recording of a loss before income taxes andminority interests.

33

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
14. Income Taxes (continued)
The significant components of the deferred tax assets and liabilities of the Group at March
31, 2010 and 2011 are summarized as follows:

Deferred tax assets:
Accrued retirement benefits
Allowance for doubtful receivables
Accrued bonuses
Valuation loss on 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
consolidated subsidiary
Unrealized holding gain on securities
Land revaluation reserve
Reserve for deferred taxation oncontributions for acquisition of property
Other
Total deferred tax liabilities
Net deferred tax liabilities

Millions of yen
2010
2011

Thousands of
U.S. dollars
2011

2,423
78
325
135
402
1,580

2,450
98
335
170
404
783

$ 29,465
1,179
4,029
2,044
4,859
9,417

984
146
953
7,026
(2,783)
4,243

914
167
1,180
6,501
(2,768)
3,733

10,9922,008
14,191
78,184(33,289)
44,895(25)(3,287)(1,041)(36)(2,358)(1,041)(433)(28,358)(12,520)

(856)
(138)
(5,347)¥ (1,104)

(823)
(135)
(4,393)¥(660)(9,898)(1,623)(52,832)$ (7,937)

¥

¥

34

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
15. Shareholders’ Equity
The Corporation Law of Japan (the “Law”) provides that an amount equal to 10% of theamount 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 andthe legal reserve, respectively, until the sum of the capital reserve and the legal reserve
equals 25% of the capital stock account. Such distributions can be made at any time byresolution of the shareholders, or by the Board of Directors if certain conditions are met.
The Company’s legal reserve was nil at March 31, 2010 and 2011.
Stock options
Stock option expenses charged to income for the years ended March 31, 2010 and 2011
amounted to ¥25 million and ¥29 million ($349 thousand), respectively.
In accordance with the former Commercial Code of Japan (“the Code”), a stock option planfor certain directors and executive officers of the Company was approved at the annual
general meeting of the shareholders held on June 29, 2004. Under the terms of this plan,
up to 81,000 shares of common stock were granted at ¥1 ($0.01) per share. The options
became exercisable on July 13, 2004 and are scheduled 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.
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, 2006. Under the terms of this plan, up to 53,000 shares of common stock were
granted at ¥1 ($0.01) per share. The options became exercisable on August 1, 2006 andare scheduled to expire on June 29, 2026.
In accordance with the Law, a stock option plan for certain directors and executive officersof the Company was approved at a meeting of the Board of Directors held on July 17, 2007.
Under the terms of this plan, up to 43,000 shares of common stock were granted at ¥1($0.01) per share. The options became exercisable on August 2, 2007 and are scheduled
to expire on June 29, 2027.
In accordance with the Law, a stock option plan for certain directors and executive officersof the Company was approved at a meeting of the Board of Directors held on July 15, 2008.
Under the terms of this plan, up to 60,000 shares of common stock were granted at ¥1($0.01) per share. The options became exercisable on July 31, 2008 and are scheduled to
expire on June 29, 2028.

35

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
15. Shareholders’ Equity (continued)
In accordance with the Law, a stock option plan for certain directors and executive officersof the Company was approved at a meeting of the Board of Directors held on July 15, 2009.
Under the terms of this plan, up to 69,000 shares of common stock were granted at ¥1($0.01) per share. The options became exercisable on July 31, 2009 and are scheduled to
expire on June 29, 2029.
In accordance with the Law, a stock option plan for certain directors and executive officersof the Company was approved at a meeting of the Board of Directors held on July 15, 2010.
Under the terms of this plan, up to 102,000 shares of common stock were granted at ¥1($0.01) per share. The options became exercisable on July 30, 2010 and are scheduled to
expire on June 29, 2030.
Treasury stock
Movements in treasury stock during the years ended March 31, 2010 and 2011 aresummarized as follows:

Treasury stock

March 31, 2009
18,475

Treasury stock

March 31, 2010
18,479Thousands of Shares
2010
Increase
Decrease
26
22
Thousands of Shares
2011
Increase
Decrease
5,497
63March 31, 2010
18,479March 31, 2011
23,913

16. 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 under
net assets and are stated at the Company’s share of the net amount of the relevant tax effect.
The method followed for land revaluation was determined in accordance 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, 2010 and 2011:Land revalued at March 31, 2000
Land revalued at March 31, 2002

Millions of yen
2010
2011
¥ (223)¥ (255)(435)(454)¥ (658)¥ (709)Thousands of
U.S. dollars
2011$ (3,067)(5,460)$ (8,527)

36

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
16. Land Revaluation (continued)
A certain portion of land revalued at March 31, 2000 and 2002 is related to real estate forinvestment, rental and idle properties at March 31, 2010 in the amounts of ¥7 million and¥46 million, respectively.
A certain portion of a land revalued at March 31, 2000 and 2002 is related to real estate forinvestment, rental and idle properties at March 31, 2011 in the amounts of ¥14 million($168 thousand) and ¥125 million ($1,503 thousand), respectively.

17. Research and Development Costs
Research and development costs included in selling, general and administrative expenses
totaled ¥488 million and ¥456 million ($5,484 thousand) for the years ended March 31,
2010 and 2011, respectively.

18. Leases
The following pro forma amounts represent the acquisition costs, accumulated depreciationand net book value of the leased assets at March 31, 2010 and 2011, which would havebeen reflected in the accompanying consolidated balance sheets if finance leases other thanthose which transfer the ownership of the leased assets to the Group (currently accounted
for as operating leases) were capitalized:
Millions of yen

Machinery,equipment andvehiclesAcquisition
costs

2010
Accumulated
depreciation

Net bookvalue

Acquisition
costs

2011
Accumulated
depreciation

Net book
value

¥ 90

¥ 62

¥ 28

¥ 62

¥ 51

¥ 11

Thousands of U.S dollars
2011
Acquisition Accumulated Net bookcosts
depreciation
value
Machinery,equipment andvehicles

$ 745

$ 613

$ 132

The related lease payments and depreciation for the years ended March 31, 2010 and 2011were as follows:

Lease payments
Depreciation

Millions of yen
2010
2011
¥ 45
¥ 16
45
16

Thousands of
U.S. dollars
2011
$ 192
192

37

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
18. Leases (continued)
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 leased assets for the years ended March 31,
2010 and 2011.
The related future minimum lease payments (including the interest portion thereon)
subsequent to March 31, 2011 under finance leases other than those which transfer theownership of the leased assets to the Group are summarized as follows:Year ending March 31,

Millions of yen
¥ 8
3
¥ 11

2012
2013 and thereafterThousands of
U.S. dollars
$ 96
36
$ 132

19. Derivatives
The open currency-related derivatives positions designated as hedging instruments at
March 31, 2010 and 2011 are as follows:
Millions of yen
2010

Method ofhedge accounting
Allocation method
for forward foreignexchange contracts

Hedge transactions and major
hedged items
Forward foreign exchange contracts:
Selling USD, Accounts receivable
Total

Method ofhedge accounting
Allocation method
for forward foreignexchange contracts

Hedge transactions and major
hedged items
Forward foreign exchange contracts:
Selling USD, Accounts receivable
Total

Contract
value(notional
principal
amount)Contract
value over
one year

¥ 488
¥ 488

¥ –
¥ –

2011

Estimated
fair value

Contract
value(notional
principal
amount)Contract
value over
one year

Estimated
fair value

¥ –
¥ –

¥ 518
¥ 518

¥ –
¥ –

¥ –
¥ –

Thousands of U.S. dollars
2011
Contract
value(notional
Contractprincipal
value over
Estimatedamount)one yearfair value$ 6,230$ 6,230

$ –
$ –

$ –
$ –

The fair value of forward foreign exchange contracts that qualify for deferral hedge
accounting is included in the carrying value of hedged accounts receivable.

38

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
20. Amounts per Share
Amounts per share at March 31, 2010 and 2011 and for the years then ended were as
follows:
Yen
Net assets
Net (loss) income:
Basic
DilutedCash dividends

2010¥ 790.30

2011¥ 791.65

U.S. dollars
2011$ 9.52(19.89)
–
10.00

10.57
10.55
10.00

0.13
0.13
0.12

Amounts per share of net assets are computed based on the number of shares of common
stock outstanding at the year end.
Basic net (loss) income per share is computed based on the net (loss) income attributable toshareholders 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 acquisitionrights.
Diluted net income per share for the year ended March 31, 2010 has not been presented
since the Group recorded a net loss for the year, although there were potentially dilutive
shares outstanding as of March 31, 2010.
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.

39

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
21. Transactions with Related Parties
Transactions and balances with related parties for the years ended March 31, 2010 and 2011
and as of those dates are summarized as follows:
Transactions
Name ofaffiliatedcompany

Type of transaction
Sales

Millions of yen
2010
2011
¥ 25,348¥ 27,279

Thousands of
U.S. dollars
2011$ 328,070

Balances
Sadoshima
Corporation

Account nameNotes and accounts
receivable

Millions of yen
2010
2011

Thousands of
U.S. dollars
2011¥ 9,330$ 120,132¥ 9,989

The Company owns 50.0% of the voting rights of Sadoshima Corporation, a steel productwholesaler for the Company. Certain of its board members serve concurrently as board
members of the Company. Selling prices of products are determined based on pricenegotiations each fiscal year, after considering market prices, overall costs and theCompany’s proposals regarding desired prices.

40

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
22. Investment, Rental and Idle Properties
The Company and certain consolidated subsidiaries own office buildings, land, and parking
lots as rental properties and idle properties mainly in Osaka Prefecture, other domestic
areas and Taiwan.
The carrying value in the consolidated balance sheets at March 31, 2010 and 2011 and its
corresponding fair value of rental properties and idle properties are as follows:2009
Rental properties and idle
properties
Properties of which a part areused as rental properties
Total

¥

3

¥ 4,874¥ 9,082

5,089¥ 9,960(87)¥ (84)

5,002¥ 9,876

14,472¥ 23,554

Millions of yen
Carrying value
Net change
2011

Fair value
2011¥ 4,874¥ (129)¥ 4,745¥ 9,006

5,002¥ 9,876(115)¥ (244)

4,887¥ 9,632

11,796¥ 20,802

Thousands of U.S. dollars
Carrying value
Net change
2011

Fair value
2011

2010
Rental properties and idle
properties
Properties of which a part areused as rental properties
Total

Fair value
2010¥ 4,871

2010
Rental properties and idle
properties
Properties of which a part areused as rental properties
Total

Millions of yen
Carrying value
Net change
2010$ 58,617$ (1,551)$ 57,066$ 108,310

60,156$ 118,773(1,383)$ (2,934)

58,773$ 115,839

141,864$ 250,174

41

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
22. Investment, Rental and Idle Properties (continued)
The carrying value represents the acquisition cost less accumulated depreciation andcumulative impairment loss.
The components of net change in carrying value for the year ended March 31, 2010
included increases mainly due to acquisitions of land in the amount of ¥91 million andtranslation adjustments in the amount of ¥43 million and decreases mainly due toimpairment loss recognized in the amount of ¥27 million and sales in the amount of ¥14
million and depreciation of buildings in the amount of ¥173 million.
The components of net change in carrying value for the year ended March 31, 2011
included decreases mainly due to impairment loss recognized in the amount of ¥9 million($108 thousand), translation adjustments in the amount of ¥35 million ($421 thousand),disposal of buildings in the amount of ¥29 million ($349 thousand) and depreciation ofbuildings in the amount of ¥170 million ($2,044 thousand).
Fair value of domestic rental properties are principally measured based on the real-estateappraisal assessed by the external real-estate appraiser. However, unless the appraisal orindicators that are regarded to reflect the fair value of the properties appropriately change
significantly since the date of acquisition or the date of the latest appraisal, the Company
and certain domestic consolidated subsidiaries measure the fair value of the properties
based on such appraisal or indicators obtained previously and adjusted as appropriately.
Fair value of rental properties in Taiwan is measured based on the property priceannounced by the government.
Revenues, costs and expenses relevant to investment, rental and idle properties for the years
ended March 31, 2010 and 2011 are as follows:
Millions of yen
2010
Rental revenues¥ 1,144

Rental costs¥ 626

Difference¥ 518

Other gain (loss), net
on sales and others¥ (25)

Millions of yen
2011
Rental revenues¥ 1,048

Rental costs¥ 617

Difference¥ 431

Other gain (loss), net
on sales and others¥ (39)

Thousands of U.S. dollars
2011
Rental revenues$ 12,604

Rental costs$ 7,420

Difference$ 5,184

Other gain (loss), net
on sales and others$ (469)42

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
22. Investment, Rental and Idle Properties (continued)
The rental revenues and rental costs for certain properties of which only a part are used asrental properties are not included in the above table because the Company and certain
consolidated subsidiaries use a portion of these properties for the purposes of rendering
services and conducting management activities. The rental revenues are recorded under
net sales or other income and the rental costs are recorded under cost of sales, selling,
general and administrative expenses or other, net, as part of other expenses, in the
consolidated statements of operations.

23. Segment Information(a) Segment information for the year ended March 31, 2011i)

Outline of segment information
The reportable segments of the Group are components for which discrete financial
information is available, and whose operating results are regularly reviewed by the
Board of Directors of the Company in order to make decisions about resource
allocation and to assess business performance.
The Group’s business units are divided by the similarity of the products or services
sold by each business unit. Each business unit develops its own strategies andoperates its businesses independently.
Therefore, the Group consists four reportable segments based on business units: “Steel
Sheet Segment,” “Roll Segment,” “Grating Segment” and “Real Estate Segment.”
The “Steel Sheet Segment” engages in the manufacture and sale of cold rolled steel,polished hoop steel, hot dip galvanizing steel sheets, painted hot dip galvanizing steel
sheets, other construction materials, building materials and exterior products and others
and in designing and engineering of construction work. The “Roll Segment” engages
in the manufacture and sale of rolls for iron, steel and non-ferrous products and others.
The “Grating Segment” engages in the manufacture and sales of gratings. The “RealEstate Segment” engages in the sale, purchase and lease of real estate such as buildings
and car parking lots.

43

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
23. Segment Information (continued)(a) Segment information for the year ended March 31, 2011 (continued)ii) Calculation methods used for net sales, income or loss, assets, liabilities and otheritems of each reportable segment
The accounting policies of the segments are substantially the same as those describedin the summary of significant accounting policies in Note 1. In addition, segment
income (loss) is adjusted to be consistent with operating income in the consolidated
statements of operations.
iii) Information on net sales, income or loss, assets, liabilities and other items of eachreportable segment
Under the new segmentation policy applied by the Group, effective the year ended March
31, 2011, reportable segment information for the year ended March 31, 2010 would havebeen presented as follows:
Millions of yen
Year ended March 31, 2010

Net sales
Sales to third
partiesInter-segment
sales andtransfers
Total
Segment income
Segment assets
Other items
Depreciation
andamortization
Investment in an
affiliateaccounted forby the equity
methodIncrease inproperty, plantand equipment
and intangible
assetsSteel Sheet
Segment

Reportable Segments
Roll
Grating Real Estate
Segment Segment Segment

Sub-Total

Other

Total

¥ 120,195¥ 4,459¥ 3,702¥ 1,119¥ 129,475¥ 2,944¥ 132,419¥–¥ 132,419

0¥ 120,195¥ 1,458¥ 98,019–¥ 4,459¥ 298¥ 4,348–¥ 3,702¥ 140¥ 3,573493¥ 1,612¥ 949¥ 8,825493¥ 129,968¥ 2,845¥ 114,765

2,515¥ 5,459¥
17¥ 7,392

3,008¥ 135,427¥ 2,862¥ 122,157(3,008)¥ (3,008)¥ (861)¥ 57,756–¥ 132,419¥ 2,001¥ 179,913

¥

4,950

¥ 455

¥

85

¥ 104

¥

¥

¥

¥

¥

3,058

–

298

2

3,358

–

3,358

–

3,358

3,822

272

15

12

4,121

38

4,159

18

4,177

5,594

204

5,798

Adjustments
andeliminations

101

Consolidated

44

5,899

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
23. Segment Information (continued)(a) Segment information for the year ended March 31, 2011 (continued)
Information by reportable segment for the year ended March 31, 2011 is as follows:
Millions of yen
Year ended March 31, 2011

Net sales
Sales to third
partiesInter-segment
sales andtransfers
Total
Segment income(loss)
Segment assets
Other items
Depreciation
andamortization
Investment in
an affiliate
accounted forby the equity
methodIncrease inproperty, plantand equipment
and intangible
assetsReportable Segments
Steel Sheet
Roll
Grating Real Estate
Segment Segment Segment
Segment

Sub-Total

Other

Total

¥ 133,463¥ 4,147¥ 3,261¥ 1,023¥ 141,894¥ 2,880¥ 144,774¥–¥ 144,774

1¥ 133,464–¥ 4,147–¥ 3,261493¥ 1,516494¥ 142,388

2,637¥ 5,5173,131¥ 147,905(3,131)¥ (3,131)–¥ 144,774¥ 4,163¥ 95,056¥ 284¥ 4,401¥(1)¥ 3,381¥ 823¥ 8,666¥ 5,269¥ 111,504¥
49¥ 6,951¥ 5,318¥ 118,455¥ (1,094)¥ 56,714¥ 4,224¥ 175,169

¥

¥

¥

¥

¥

¥

¥

¥

¥

4,746

420

91

96

5,353

178

5,531

Adjustments
andeliminations

65

Consolidated

5,596

2,920

–

284

2

3,206

–

3,206

–

3,206

1,875

109

198

17

2,199

99

2,298

26

2,324

Adjustments
andeliminations

Consolidated

Thousands of U.S. dollars
Year ended March 31, 2011

Net sales
Sales to third
partiesInter-segment
sales andtransfers
Total
Segment income(loss)
Segment assets

Steel Sheet
Segment

Reportable Segments
Roll
Grating Real Estate
Segment Segment Segment

Sub-Total

Other

Total

$1,605,087$ 49,874 $ 39,218 $ 12,303$ 1,706,482$ 34,636$ 1,741,118$–$ 1,741,118

12$1,605,099

–
–
5,929
$ 49,874 $ 39,218 $ 18,232

5,941$ 1,712,423

31,714$ 66,350

37,655$ 1,778,773(37,655)$ (37,655)–$ 1,741,118$ 50,066$1,143,187$ 3,416 $(12) $ 9,898$ 52,929 $ 40,661 $ 104,221$
63,368$ 1,340,998$
589$ 83,596$
63,957$ 1,424,594$ (13,157)$ 682,069$
50,800$ 2,106,663$ 5,051 $ 1,094 $$

64,378$ 2,140$$$

Other items
Depreciation
andamortization$
Investment in an
affiliateaccounted forby the equity
methodIncrease inproperty, plantand equipment
and intangible
assets

57,0781,155

66,518782

67,30035,117

–

3,416

24

38,557–38,557–38,55722,550

1,311

2,381

204

26,446

1,191

27,637

312

27,94945

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
23. Segment Information (continued)(a) Segment information for the year ended March 31, 2011 (continued)
Net sales categorized by country and region based on locations of customers within theGroup for the year ended March 31, 2011 are summarized as follows:Japan¥ 88,338

Millions of yen
2011
TaiwanOther¥ 21,582¥ 34,854

Total¥ 144,774

Japan$ 1,062,393

Thousands of U.S. dollars
2011
TaiwanOther$ 259,555$419,170

Total$ 1,741,118

Property, plant and equipment, net categorized by geographical area at March 31, 2011 aresummarized as follows:
Millions of yen
2011
Japan
TaiwanTotal¥ 35,994¥ 11,573¥ 47,567
Thousands of U.S. dollars

Japan$ 432,880

2011
Taiwan$ 139,183

Total$ 572,063

Major customers for the year ended March 31, 2011 are as follows:

Customer nameSadoshima
Corporation

Thousands ofMillions of yen
U.S. dollars
Net Sales¥ 27,279$ 328,070

Related Segments“Steel Sheet Segment,”“Grating Segment,”“Real Estate Segmnet”
and “Other”

46

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
23. Segment Information (continued)(a) Segment information for the year ended March 31, 2011 (continued)
Loss on impairment of fixed assets by reportable segment for the year ended March 31,
2011 is summarized as follows:

Steel Sheet
Segment
Loss on impairment of
fixed assets¥

9

Steel Sheet
Segment
Loss on impairment of
fixed assets$ 108

Millions of yen
Year ended March 31, 2011
Reportable Segments
Roll
Grating
Real Estate
Segment Segment
Segment
Other
¥ –

¥ –

¥ –

¥ 0

$ –

$ –

$

Total

¥ 42

Thousands of U.S. dollars
Year ended March 31, 2011
Reportable Segments
Roll
Grating
Real Estate
Segment Segment
Segment
Other$ –Adjustments andeliminations

0

¥ 51

Adjustments andeliminations

Total

$ 505

$ 613

The amortization and balance of negative goodwill by reportable segment as of and for theyear ended March 31, 2011:

Amortization
Balance at the year end

Amortization
Balance at the year end

Steel Sheet
Segment¥ 13
39

Millions of yen
Year ended March 31, 2011
Reportable Segments
Roll
Grating
Real Estate
Segment Segment
Segment
Other
¥ 0
¥ 0
¥ –
¥ 21
0
1
–
24

Adjustments andeliminations
¥ 4
10

Total
¥ 38
74

Steel Sheet
Segment$ 156
469

Thousands of U.S. dollars
Year ended March 31, 2011
Reportable Segments
Roll
Grating
Real Estate
Segment Segment
Segment
Other
$ 0
$ 0
$–
$ 253
0
12
–
289

Adjustments andeliminations
$ 48
120

Total
$ 457
890

47

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
23. Segment Information (continued)(a) Segment information for the year ended March 31, 2011 (continued)
Negative goodwill credited to income by reportable segment for the year ended March 31,
2011 is summarized as follows:
Millions of yen
Year ended March 31, 2011
Reportable Segments
Steel Sheet
Roll
Grating
Real Estate
Segment Segment Segment
Segment
Other
Negative goodwill
credited to income

¥

5

¥

0

¥

0

¥

–

¥

1

Thousands of U.S. dollars
Year ended March 31, 2011
Reportable Segments
Steel Sheet
Roll
Grating
Real Estate
Segment Segment Segment
Segment
Other
Negative goodwill
credited to income

$ 60

$

0

$

0

$

–

$ 12

Adjustments andeliminations

Total

¥

¥ 8

2

Adjustments andeliminations

Total

$ 24

$ 96

Negative goodwill was credited to income for the year ended March 31, 2011 due topurchases of a subsidiary’s shares.

48

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
23. Segment Information (continued)(b) Segment information for the year ended March 31, 2010
Under the former segmentation policy applied by the Group up to the year ended March 31,
2010, segment information for the year ended March 31, 2010 was as follows:
The Group primarily engaged in the manufacture and sale of a variety of steel products
such as steel sheets, construction materials, prefabricated structures, home furnishings, andsteel rolls and gratings. The Company also engaged in other activities such as real estate
rental and engineering projects.
The business and geographical segments of the Group for the year ended March 31, 2010
were outlined as follows:Business segments
The business segment information for the Group for the year ended March 31, 2010 was asfollows:

I. Sales and operating income:Sales to third parties
Intersegment sales andtransfers
Net sales
Operating expenses
Operating income
II. Total assets, depreciation
and amortization, loss on
impairment of fixed assets
and capital expenditures:
Total assets
Depreciation andamortization
Loss on impairment of fixed
assetsCapital expenditures

Steel sheet
products

Electric
furnaceproducts

Millions of yen
Year ended March 31, 2010
Eliminations
and general
corporate
Other
Total
assets¥ 119,314¥ 8,126¥ 4,979¥ 132,419¥–¥ 132,419

0
119,314118,190¥ 1,124

–
8,126
7,693
¥ 433

2,986
7,965
6,946
¥ 1,019

2,986
135,405
132,829¥ 2,576(2,986)(2,986)(2,411)¥ (575)–
132,419
130,418¥ 2,001¥ 97,078¥ 7,897¥ 17,158¥ 122,133¥ 57,780¥ 179,913

4,938

540

320

5,798

101

5,899

17
5,075

–
340

10
52

27
5,467

0
18

27
5,485

Consolidated

As described in Note 2 (a) effective the year ended March 31, 2010, the Group applied“Accounting Standard for Construction Contracts” (ASBJ Statement No.15 issued on
December 27, 2007) and “Guidance on Accounting Standard for Construction Contracts”(ASBJ Guidance No.18 issued on December 27, 2007). As a result, sales to third parties
and operating income in the steel sheet products segment for the year ended March 31,
2010 increased by ¥99 million and ¥15 million respectively, from the corresponding
amounts which would have been recorded under the method applied in the previous year.
49

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
23. Segment Information (continued)(b) Segment information for the year ended March 31, 2010
Geographical segments

Japan
I. Sales and operating
income:Sales to third parties
Intersegment sales
and transfers
Net sales
Operating expenses
Operating income
II. Total assets

Millions of yen
Year ended March 31, 2010
Eliminations
and general
corporate
Asia
Total
assetsConsolidated¥–¥ 132,419

13
132,432
129,856
¥
2,576

¥

(13)
(13)
562
(575)

–
132,419
130,418¥
2,001¥ 132,706¥ 47,207¥ 179,913¥

93,147¥ 39,272¥ 132,419¥

13
93,16090,7162,444–
39,272
39,140¥132¥ 107,375¥ 25,331

The principal country in the Asia segment was Taiwan.
As described in Note 2 (a) effective the year ended March 31, 2010, the Group applied“Accounting Standard for Construction Contracts” (ASBJ Statement No.15 issued on
December 27, 2007) and “Guidance on Accounting Standard for Construction Contracts”(ASBJ Guidance No.18 issued on December 27, 2007). As a result, sales to third parties
and operating income in the Japan segment for the year ended March 31, 2010 increased by¥99 million and ¥15 million, respectively, from the corresponding amounts which would
have been recorded under the method applied in the previous year.

50

Yodogawa Steel Works, Ltd.
Notes to Consolidated Financial Statements (continued)
23. Segment Information (continued)(b) Segment information for the year ended March 31, 2010 (continued)
Overseas Sales
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 subsidiary,
for the year ended March 31, 2010 were summarized as follows:

Overseas sales
Consolidated net sales
Overseas sales as a percentage ofconsolidated net sales

Millions of yen
Year ended March 31, 2010
Asia
Other
Total
¥ 32,886¥ 15,752¥ 48,638
132,419
24.8%

11.9%

36.7%

24. Subsequent Event
The following distribution of retained earnings of the Company, which has not beenreflected in the accompanying consolidated financial statements for the year ended March
31, 2011, was approved at a meeting of the Board of Directors held on May 13, 2011:

Cash dividends of ¥5 ($0.06) per share

Millions of yen¥ 807

Thousands of
U.S. dollars$ 9,70551