Annual Report 2011
For the Year Ended 31st March 2011

PROFILE
Since its establishment in 1958, Marudai Food Co., Ltd. has been dedicated tooffering delicious, high-quality meat products. In order to understand the latest
consumer trends and to meet the needs of modern lifestyles, we have continuously
strengthened our research, sales and production operations. Intending tobecome Japan’s leading food company, we successfully listed our stock on theFirst Section of both the Tokyo and Osaka Stock Exchanges in 1972.
Starting as a ham and sausage producer, Marudai Food has steadily expanded
its range of products to include heat-processed, vacuum-packed food, cheeseand fresh meats. Ham and sausage, however, remain an integral part of our product line
and continue to account for almost half of our sales.
While pursuing a leading position in the ham and sausage market, Marudai
Food was eager to explore new avenues by developing precooked and processed foods,
which went on sale in 1973. This long shelf-life food was developed to meet the specific needfor fast meal preparation. Containing absolutely no preservatives and requiring only
several minutes to prepare, Marudai precooked and processed foods have established a strong
foothold in the market. Building on this success, we will make even greater efforts to create
new products that satisfy the increasingly discriminating tastes of consumers.

CONTENTSFINANCIAL HIGHLIGHTS ������������������������������������������������������������������������������ 1
TO OUR SHAREHOLDERS ����������������������������������������������������������������������������� 2
PRODUCTS �������������������������������������������������������������������������������������������������������� 4
CONSOLIDATED BALANCE SHEETS ����������������������������������������������������������� 6
CONSOLIDATED STATEMENTS OF INCOME ��������������������������������������������� 8
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ����������� 9
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS ����������� 10
CONSOLIDATED STATEMENTS OF CASH FLOWS ���������������������������������� 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ������������������������ 12
INDEPENDENT AUDITORS’ REPORT ��������������������������������������������������������� 31
DIRECTORS AND STATUTORY AUDITORS ����������������������������������������������� 32
OUTLINE OF THE COMPANY ���������������������������������������������������������������������� 33

Marudai Food Co., Ltd.

FINANCIAL HIGHLIGHTS
For the Years Ended 31st March 2010 and 2011
(Consolidated basis)Thousands of
U.S. dollars, except
per share amounts

Millions of yen,
except per share amounts(Note)
2010

2011

2011

Net sales ...................................................................................................

¥196,667¥198,753$2,390,295

Net income ...............................................................................................

3,211

3,855

46,362

Net income (yen and dollars) .............................................................

24.28

29.18

0.35

Net income, diluted (yen and dollars) ................................................

–

–

–

Cash dividends (yen and dollars) .......................................................

7.00

8.00

0.10

Total assets ...............................................................................................

¥115,294¥117,105$1,408,358

Per share:

Note: U.S. dollar amounts are translated from yen for convenience only at the rate of ¥83.15=U.S.$1.00

1Marudai Food Co., Ltd.

TO OUR SHAREHOLDERS

With the issurance of our company’s 63rd annual
report, we hope that our shareholders are enjoying health

The operating environment in our industry was

and prosperity. We would also like to take thischallenging, with mounting deflationary pressure

opportunity to express our deep appreciation for yourexemplified by further belt-tightening and increased thrift

continued support.

among consumers struggling to maintain their standard ofliving due in part to limited improvements in employment

During the fiscal year ended 31st March 2011, theJapanese economy was on track towards a gradualand income, and the fall in prices from intensified sales
competition.

recovery in the first half, and despite stalling in autumn asa result of a slowdown in exports due to factors such as

In this environment, the Marudai Food Group engaged

the further appreciation of the yen and the fading of thein activities to strengthen product development

effects of economic stimulus measures in the latter half,

capabilities, reinforce Group management and enhance

it showed signs of picking up after the start of the newcost competitiveness. At the same time, we worked tocalendar year. However, economic activity fell off

reinforce our quality control structure with the aim ofsignificantly towards the fiscal year end due to the impact

providing safer and more reliable foods that earnof the Great East Japan Earthquake that struck on 11th

consumer confidence.

March 2011.

2

As a result, consolidated net sales for the fiscal year
ended 31st March 2011 edged up 1.1% from the previous
year to 198,753 million yen. Operating income rose 11.0%
year-on-year to 5,724 million yen, and net income soared
20.0% to 3,855 million yen.
Once again we would like to thank you, ourshareholders, for your support and trust that we can rely
on your continued confidence.
June 2011

Tokuo Kudara
President3

Marudai Food Co., Ltd.

PRODUCTS

The following table shows an analysis of the consolidated sales of Marudai Food Co., Ltd. and its consolidated subsidiaries(together, the “Companies”) by product categories for the years ended 31st March 2010 and 2011:

Millions of yen(percentage of total net sales)

Processed food products ..........................................................................

Meat products ...........................................................................................

Other ........................................................................................................

Total ....................................................................................................

2010

2011

¥141,630¥145,261(72.0%)(73.1%)

54,62353,056(27.8%)(26.7%)

414

436(0.2%)(0.2%)¥196,667¥198,753

2011

Note: U.S. dollar amounts are translated from yen for convenience only at the rate of ¥83.15=U.S.$1.00

4Thousands of
U.S. dollars (Note)$1,746,975

638,076

5,244$2,390,295

Processed food products
In the Processed food products business, the Companies’ Ham and Sausage Products operations sought to increase sales
through a sales promotion campaign for the Companies’ mainstay products, including “Kunseiya Jyukusei Vienna Sausage”-which won the Monde Selection Grand Gold Quality Award in the food products category for the third consecutive year-and“Itsumo Shinsen Roast Ham”. Efforts to increase sales of midsummer and year-end gift products, focussing on “Roast Beef” andthe two mainstay gift brands, “Ouha” and “Kosai”were successful, and sales of these products steadily increased. However, salesof the segment as a whole decreased 1.3% from the corresponding period in the previous fiscal year due to factors such as
intensified price competition.
In the Precooked & Processed foods operations, we implemented sales initiatives for retort-pouch foods, including the
Korean-style soup “Sundubu”. Sales of desserts increased due to the introduction of new products, including “Sweet Cafe Coffee
Jelly”. Sales of “Black Tapioca Milk Tea” and other beverage products were also brisk owing to the unusually hot summer, leading
to an increase in sales in the Precooked & Processed foods operations by 8.9% from the previous year. As a result, sales of theProcessed food products segment rose 2.6% year-on-year to 145,261 million yen. Operating income, however, decreased 3.0% to
5,195 million yen, reflecting the persisting severe operating environment characterised by consumers’ increasing preference forlow-priced goods and declining sales prices amid intensifying competition.
Meat products
In the Meat products business, demand for high-priced beef was weak due to consumers’ strong preference for low-priced
goods. The environment surrounding the Meat business continued to be extremely harsh, as reflected in the decrease in supply ofJapanese pork and chicken due to such factors as the outbreak of foot-and-mouth disease and avian influenza. As a result, sales ofthe Meat products segment decreased 2.9% year-on-year to 53,056 million yen. However, the segment recorded an operating
income of 345 million yen partly due to a recovery in the profitability of imported meat sales and improvements in pork prices.
Other
Sales of the Other products business increased 5.1% from the previous year to 436 million yen, and operating income rose
44.8% to 184 million yen.

5

Marudai Food Co., Ltd.

CONSOLIDATED BALANCE SHEETS
31st March 2010 and 2011

Millions of yen

Thousands of
U.S. dollars (Note 1)
2011

2010

2011

¥ 10,616¥ 13,582$ 163,343

19,852371(49)
14,569797
263

19,921452(62)
14,597
1,895
248

239,579
5,436(745)
175,550
22,7902,983

Total current assets .......................................................................

46,41950,633608,936

Investments and other assets:
Investment securities (Note 4) ............................................................
Deferred tax assets (Note 10)..............................................................
Other ...................................................................................................
Allowance for doubtful accounts .......................................................

9,281
67
5,818
(340)

8,759
55
6,804
(354)

105,340661
81,828(4,257)

Total investments and other assets ................................................

14,826

15,264

183,572

Less accumulated depreciation ..........................................................
Net property, plant and equipment...............................................
Intangible assets .....................................................................................

19,64145,84948,054
58
7,586
121,188(68,245)
52,943
1,106

19,09845,51047,475
131
8,693
120,907(70,525)
50,382826

229,681
547,324
570,956
1,575
104,546
1,454,082(848,166)
605,916
9,934

Total assets..........................................................................................

¥115,294¥117,105$1,408,358

ASSETS
Current assets:
Cash and cash equivalents ..................................................................
Receivables:
Trade notes and accounts ..............................................................
Other .............................................................................................
Allowance for doubtful accounts ..................................................
Inventories (Note 6) ............................................................................
Deferred tax assets (Note 10) .............................................................
Advances and other current assets .....................................................

Property, plant and equipment, at cost:
Land (Note 8) .....................................................................................
Buildings and structures (Note 8) ......................................................
Machinery and equipment (Note 8) ...................................................
Construction in progress ....................................................................
Lease assets ........................................................................................

See accompanying Notes to Consolidated Financial Statements.

6

LIABILITIES AND NET ASSETS
Current liabilities:
Short-term borrowings (Notes 7 and 8) ���������������������������������������������
Long-term debt due within one year (Notes 7 and 8) �����������������������
Trade notes and accounts payable �����������������������������������������������������
Short-term lease obligations ��������������������������������������������������������������
Accrued expenses ������������������������������������������������������������������������������
Accrued income taxes �����������������������������������������������������������������������
Other current liabilities ���������������������������������������������������������������������
Total current liabilities �����������������������������������������������������������������
Long-term liabilities:
Long-term debt due after one year (Notes 7 and 8) ��������������������������
Deferred tax liabilities (Note 10) ������������������������������������������������������
Long-term lease obligations ��������������������������������������������������������������
Employees’ severance and retirement benefits (Note 9) �������������������
Other long-term liabilities �����������������������������������������������������������������
Total long-term liabilities ������������������������������������������������������������

Millions of yen
2010
2011

¥

987
8,245
18,411
1,348
2,211
491
5,761
37,454

¥

4,534
7,950
18,178
1,346
2,203
707
5,781
40,699Thousands of
U.S. dollars (Note 1)
2011$

54,52895,610218,617
16,18826,494
8,503
69,525
489,465

9,424
1,271
3,921
516
476
15,608

5,154
1,542
3,966
548
486
11,696

61,984
18,54547,6976,590
5,845
140,661

NET ASSETS (Note 12)
Shareholders’ equity:
Common stock
Authorised — 200,000,000 shares
Issued — 132,527,909 shares in 2011 (132,527,909 shares in 2010) �����
Capital surplus �����������������������������������������������������������������������������������
Retained earnings ������������������������������������������������������������������������������
Less treasury stock at cost �����������������������������������������������������������������
Total shareholders’ equity �����������������������������������������������������������

6,716
21,686
31,349(57)
59,694

6,716
21,68634,277(697)
61,98280,769260,806
412,231(8,382)745,424

Accumulated other comprehensive income:Unrealised gains on securities �����������������������������������������������������������
Deferred gains on hedges ������������������������������������������������������������������
Foreign currency translation adjustments �����������������������������������������
Total accumulated other comprehensive income �������������������������

1,685
4
(88)
1,601

1,505
1
(92)
1,414

18,09912(1,106)17,005

Minority interests ����������������������������������������������������������������������������������
Total net assets ����������������������������������������������������������������������������������
Total liabilities and net assets ������������������������������������������������������������

937
62,232¥115,294

1,314
64,710¥117,105

15,803
778,232$1,408,358

Contingent liabilities (Note 11)7

Marudai Food Co., Ltd.

CONSOLIDATED STATEMENTS OF INCOME
Years Ended 31st March 2010 and 2011

Net sales �������������������������������������������������������������������������������������������������
Cost of sales �������������������������������������������������������������������������������������������

Millions of yen
2010
2011
¥196,667¥198,753
145,635
146,683

Thousands of
U.S. dollars (Note 1)
2011$2,390,295
1,764,077

Gross profit ����������������������������������������������������������������������������������������
Selling, general and administrative expenses (Note 13) ���������������������

51,03245,87552,07046,346626,218
557,379

Operating income ������������������������������������������������������������������������������

5,157

5,724

68,839

194
(533)
(599)
(144)
(198)
(18)
(286)
220

274
(493)
(183)
(173)
(291)
(37)
(573)
63

3,295
(5,929)(2,201)(2,081)(3,500)(445)(6,891)759(1,364)(1,413)(16,993)

Income before income taxes and minority interests ���������������������������

3,793

4,311

51,846

Income taxes (Note 10):
Current �����������������������������������������������������������������������������������������������
Deferred ���������������������������������������������������������������������������������������������
Income before minority interests ����������������������������������������������������������
Minority interests ����������������������������������������������������������������������������������

515
(15)
3,293
(82)

811
(737)
4,237
(382)

9,753
(8,863)50,956(4,594)

Other income (expenses):
Interest and dividend income ������������������������������������������������������������
Interest expense ���������������������������������������������������������������������������������
Loss on disposal of property, plant and equipment, net ��������������������
Loss on early retirement benefits ������������������������������������������������������
Write-down of investment in securities ���������������������������������������������
Loss on foreign exchange ������������������������������������������������������������������
Loss on impairment of assets (Note 14) ��������������������������������������������
Other, net �������������������������������������������������������������������������������������������

Net income ���������������������������������������������������������������������������������������������

¥

3,211

¥

3,855

$

46,362

U.S. dollars (Note 1)

Yen
Net income per share (Note 2) ��������������������������������������������������������������

¥24.28¥29.18$0.35

Net income, diluted per share (Note 2)�������������������������������������������������

–

–

–

Dividends per share ������������������������������������������������������������������������������

¥ 7.00¥ 8.00$0.10

See accompanying Notes to Consolidated Financial Statements.

8

Marudai Food Co., Ltd.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended 31st March 2010 and 2011

Income before minority interests
Other comprehensive income:Unrealised gains (losses) on securities ����������������������������������������������
Deferred gains (losses) on hedges �����������������������������������������������������
Foreign currency translation adjustments �����������������������������������������
Total other comprehensive income ����������������������������������������������
Comprehensive income �������������������������������������������������������������������������
Comprehensive income attributable to:
Owners of the parent �������������������������������������������������������������������������
Minority interests ������������������������������������������������������������������������������

Millions of yen
2010
2011
¥3,293¥4,237

Thousands of
U.S. dollars (Note 1)
2011$50,956

876
3
(22)
857
¥4,150

(180)
(3)
(4)
(187)
¥4,050(2,165)(36)(48)(2,249)$48,707¥4,068¥ 82¥3,668¥ 382$44,113$ 4,594

See accompanying Notes to Consolidated Financial Statements.

9Marudai Food Co., Ltd.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years Ended 31st March 2010 and 2011

Millions of yen
Number ofshares of Common
common stock stock
Balance at 31st March, 2009 ��������������������� 132,527,909¥6,716
Net income ��������������������������������������������––Cash dividends paid - ¥5 per share ��������
––Increase in unrealised gains on securities ����
––Foreign currency translation adjustments ����
––Increase in deferred gains on hedges ����
––––Purchase of treasury stock ���������������������
Balance at 31st March, 2010 ��������������������� 132,527,909
6,716
Net income ��������������������������������������������––Cash dividends paid - ¥7 per share ��������
––Decrease in unrealised gains on securities ���––Foreign currency translation adjustments ����
––Decrease in deferred gains on hedges ���––––Purchase of treasury stock ���������������������
Balance at 31st March, 2011 ��������������������� 132,527,909¥6,716

Capital Retained
surplus earnings¥21,686 ¥28,799
–
3,211
–
(661)
–
–
–
–
–
–
–
–
21,686
31,349
–
3,855
–
(927)
–
–
–
–
–
–
–
–
¥21,686 ¥34,277

Foreign
Unrealised Deferred currency
Treasury
gains
gains
translation Minority
stock on securities on hedges adjustments interests¥ (56)
¥ 809
¥1
¥(67)
¥ 383
–
–
–
–
–
–
–
–
–
–
–
876
–
–
–
–
–
–
(21)
554
–
–
3
–
–
(1)
–
–
–
–
(57)
1,685
4
(88)
937
–
–
–
–
–
–
–
–
–
–
–
(180)
–
–
–
–
–
–
(4)
377
–
–
(3)
–
–
(640)
–
–
–
–
¥(697)¥1,505¥1¥(92)¥1,314

Thousands of U.S. dollars (Note 1)
Common Capital Retained
stock
surplus earnings
Balance at 31st March, 2010 ���������������������������������������� $80,769 $260,806 $377,017
Net income ���������������������������������������������������������������
––46,362
Cash dividends paid - ¥7 per share ���������������������������
––(11,148)
Decrease in unrealised gains on securities ���������������
–––Foreign currency translation adjustments ����������������
–––Decrease in deferred gains on hedges ����������������������
–
–
–
–
–
–
Purchase of treasury stock ����������������������������������������
Balance at 31st March, 2011 ���������������������������������������� $80,769 $260,806 $412,231

See accompanying Notes to Consolidated Financial Statements.

10

Foreign
Unrealised Deferred currency
Treasury
gains
gains
translation Minority
stock on securities on hedges adjustments interests$ (686) $20,265$48$(1,058) $11,269
–
–
–
–
–
–
–
–
–
–
–
(2,166)
–
–
–
–
–
–
(48)
4,534
–
–
(36)
–
–
(7,696)––––$(8,382) $18,099$12$(1,106) $15,803

Marudai Food Co., Ltd.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended 31st March 2010 and 2011

Millions of yen
2010
2011

Thousands of
U.S. dollars (Note 1)
2011

Cash flows from operating activities:
Income before income taxes and minority interests ��������������������������
Depreciation and amortisation ����������������������������������������������������������
Increase (decrease) in allowance for doubtful accounts ��������������������
Decrease in severance and retirement benefits ����������������������������������
Interest and dividend income ������������������������������������������������������������
Interest expense ���������������������������������������������������������������������������������
Gain on sale of securities, net �����������������������������������������������������������
Write-down of investment in securities ���������������������������������������������
Loss on disposal of property, plant and equipment, net ��������������������
Loss on impairment of assets ������������������������������������������������������������
Decrease (increase) in receivables ����������������������������������������������������
Decrease (increase) in inventories �����������������������������������������������������
Decrease in trade notes and accounts payable ����������������������������������
Interest and dividends received ���������������������������������������������������������
Interest paid ���������������������������������������������������������������������������������������
Increase (decrease) in consumption tax payable �������������������������������
Income taxes paid ������������������������������������������������������������������������������
Other, net �������������������������������������������������������������������������������������������
Net cash provided by operating activities ������������������������������������

¥ 3,793
6,261
(30)
(452)
(194)
533
0
198
599
286
735
2,999
(119)
201
(535)
108
(452)
617
14,548¥ 4,311
6,206
27
(830)
(274)
493
0
291
183
573
(76)
(31)
(233)
250
(491)
(106)
(555)
87
9,825

$ 51,846
74,636325(9,982)(3,295)
5,929
0
3,500
2,201
6,891
(914)
(373)
(2,802)
3,007(5,905)(1,275)(6,675)
1,046
118,160

Cash flows from investing activities:
Purchase of property, plant and equipment ���������������������������������������
Proceeds from sale of property, plant and equipment �����������������������
Purchase of short-term investments and investment securities ���������
Proceeds from sale of short-term investments and investment securities ��
Other, net �������������������������������������������������������������������������������������������
Net cash used in investing activities ��������������������������������������������

(5,233)
698
(525)
625
(831)
(5,266)(3,128)
690
(28)
2
(421)
(2,885)(37,619)
8,298
(337)
24
(5,063)(34,697)

(74)
8,541
(8,462)(661)(1,493)475(1,674)

3,574
4,569
(9,133)(926)(1,406)(645)(3,967)42,98354,949(109,838)(11,137)(16,909)(7,757)(47,709)

(1)
7,607
3,009
¥10,616(7)
2,966
10,616¥13,582(84)
35,670127,673$163,343

Cash flows from financing activities:
Net increase (decrease) in short-term borrowings �����������������������������
Proceeds from long-term debt �����������������������������������������������������������
Repayment of long-term debt ������������������������������������������������������������Cash dividends paid ��������������������������������������������������������������������������
Repayment of lease obligations ��������������������������������������������������������
Other, net �������������������������������������������������������������������������������������������
Net cash used in financing activities ��������������������������������������������
Effect of exchange rate changes oncash and cash equivalents ��������������������������������������������������������������
Net increase in cash and cash equivalents ������������������������������������������Cash and cash equivalents at beginning of year ���������������������������������Cash and cash equivalents at end of year �������������������������������������������

See accompanying Notes to Consolidated Financial Statements.

11

Marudai Food Co., Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For years Ended 31st March 2010 and 2011

1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of Marudai Food Co., Ltd. (the “Company”) and its consolidated
subsidiaries (together, the “Companies”) have been prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Law and its related accounting regulations and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements fromInternational Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English from the consolidated
financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Japanese Finance Instruments and Exchange Act. Certain supplementary
information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is
not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at 31st March 2011, which was ¥83.15 to U.S. $1.00. These translations should not be
construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into
U.S. dollars at this or any other rate of exchange.
2. Significant accounting policies
Consolidation - The consolidated financial statements include the accounts of the Company and its 34 significant subsidiaries.
Thirty-three of the Company’s subsidiaries have the same fiscal year end as the Company, 31st March. One of the Company’s
subsidiaries is consolidated using a fiscal year ending 31st December. Significant transactions occurring from 1st January to 31st
March are adjusted for in the consolidated financial statements. All significant into company balances, transactions and profits
have been eliminated. In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the
portion attributable to minority shareholders, are evaluated using the fair value at the time the Company acquired control of therespective subsidiary. The difference between the cost of an investment and the equity in the assets at the date of acquisition is,with minor exceptions, amortized over five years.
Cash and cash equivalents - Cash on hand, readily available deposits and short-term highly liquid investments with maturities
not exceeding three months at the time of purchase are considered cash and cash equivalents.
Securities - Available-for-sale securities with available fair market value are stated at fair market value. Unrealized gains andlosses on these securities are reported, net of applicable income taxes, as a separate component of shareholder’s equity. Realized
gains and losses on the sale of such securities are computed using moving average cost. Debt securities with no available fairmarket value are stated at amortized cost, net of the amount considered not collectible. Other securities with no available fairmarket value are stated at moving average cost.
If the market value of equity securities or available-for-sale securities declines significantly, the difference between fair market
value and the carrying amount is recognized as loss in the period of the decline. If the fair market value of equity securities issued
by unconsolidated subsidiaries or affiliated companies that are not accounted for using the equity method is not readily available,
such securities are written down to net asset value with a corresponding charge in the consolidated statement of income in the12event net asset value declines significantly. In this case, the fair market value or the net asset value will be the carrying amount of
the securities at the beginning of the next year.
Derivatives and hedge accounting - The Companies state derivative financial instruments at fair value and recognize changes
in the fair value as gain or loss unless the derivative financial instrument is used for hedging purposes. If derivative financial
instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gain or loss resulting fromchanges in the fair value of the derivative financial instrument until the related loss or gain on the hedged item is recognized.
However, foreign monetary obligations denominated in foreign currencies for which foreign exchange forward contracts are used
to hedge the foreign currency fluctuation are translated at the contracted rate if the forward contracts qualify for hedge accounting(“the alternative method”). Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, the net
amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on the assets or
liabilities for which the swap contract was executed (“the special treatment”).
Allowance for doubtful accounts - An allowance for doubtful receivables is provided to cover possible losses on collection.
With respect to normal trade accounts receivable, it is stated at an amount based on the actual rate of historical bad debts. For
certain doubtful receivables, the uncollectible amounts are individually estimated.
Inventories - The Company and its domestic consolidated subsidiaries state inventories at the lower of average cost or net
realizable value.
Property, plant and equipment - Property, plant and equipment are stated at cost. Depreciation is computed primarily using thedeclining balance method. Buildings acquired after 31st March 1998, however, are depreciated using the straight-line method.
The useful life of buildings and structures ranges from 12 to 50 years. The useful life of machinery and equipment ranges from 4
to 10 years.
Software - The Company and its consolidated domestic subsidiaries include software in intangible assets and amortize it using
the straight-line method over the estimated useful life of five years.
Goodwill - Goodwill is amortized over a period of 5 years by the straight-line method.
Lease assets - Assets under finance leases that do not transfer ownership of the lease assets are amortized using the straightline method over the lease term with the assumption that the useful life coincides with the lease term and residual value is zero.
Research and development expenses - Research and development expenses for the improvement of existing products and thedevelopment of new products, including basic research and fundamental development costs, are charged to expenses as incurred.
Bonuses - The Company and its consolidated domestic subsidiaries follow the general Japanese practice of paying bonuses to
employees in July and December. Accrued bonus liabilities are determined based upon the estimated amounts to be paid in thesubsequent period and are included in accrued expenses.

13

Translation of foreign currencies - Short-term and long-term receivables and payables denominated in foreign currencies aretranslated into Japanese yen at year-end rates. Financial statements of consolidated overseas subsidiaries are also translated into
Japanese yen at year-end rates, except for shareholder’s equity accounts, which are translated at historical rates, and statements ofincome items resulting from transactions with the Company, which are translated at the rates used by the Company.
Employees’ severance and retirement benefits - The Companies have established defined contribution pension plans, defined
benefits pension plans and unfunded lump-sum payments plans. To prepare for payment of employees’ retirement benefits, areserve for retirement benefits is provided based on the projected benefit obligation and the value of pension fund assets at the endof the fiscal year. If the projected value of pension fund assets falls below the combined amount of the projected benefit obligation
and unrecognized actuarial gains and losses, the shortfall is recorded as reserve for retirement benefits. In the opposite case, theexcess is recorded as prepaid pension cost. As a result of the calculation, the reserve for retirement benefits of the Company andsome consolidated subsidiaries has become a debit balance in the fiscal year ended 31st March 2011 and is included in “Other”
under investments and other assets. Projected benefit obligations are allocated using the straight-line method. Actuarial gains andlosses are amortized by the straight-line method over a period of time (10 years) that is within the average remaining service
period of the eligible employees beginning in the fiscal year following the year in which the gains or losses are recognized.
Income taxes - The asset - liability approach is used to recognize deferred tax assets and liabilities for tax loss carryforwards
and the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax purposes.
Amounts per share - The computations of net income per share of common stock shown on the consolidated statements ofincome are based on the weighted average number of shares outstanding during each financial period. Cash dividends per share
shown in the consolidated statements of income are the amounts applicable to the respective years. Diluted net income is notdisclosed because the Company had nothing which might have diluted the per share amounts for the years ended 31st March 2011
and 2010.
Change in accounting policy
Effective from the fiscal year ended 31st March 2010, the Company and its consolidated domestic subsidiaries have adopted
the “Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)” (Accounting Standards Board of Japan(“ASBJ”) Statement No. 19 issued on 31st July 2008). This change had no material impact on the consolidated financial
statements for the year ended 31st March 2010.
Effective from the fiscal year ended 31st March 2011, the Company and its consolidated domestic subsidiaries have adopted
the “Accounting Standard for Asset Retirement Obligations” (ASBJ Statement No. 18, issued on 31st March 2008) and “Guidanceon Accounting Standard for Asset Retirement Obligations” (ASBJ Guidance No. 21, issued on 31st March 2008). The effect of
this change was to decrease operating income by 7 million yen and income before income taxes and minority interests by 45
million yen for the year ended 31st March 2011.

14

Additional information
Effective from 31st March 2011, the Company has adopted the “Cabinet Office Ordinance Partially Revising Regulation on
Terminology, Forms, and Preparation of Financial Statements” (Cabinet Office Ordinance No. 5, revised on 24th March 2009),
corresponding to “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22, issued on 26th
December 2008) and presented using an account of income before minority interests.
Effective from 31st March 2011, the Company has adopted the “Accounting Standard for Presentation of Comprehensive
Income” (ASBJ Statement No. 25, issued on 30th June 2010). However, the amounts for “accumulated other comprehensive
income” and “total accumulated other comprehensive income” in the previous fiscal year were reported in terms of “unrealized
gains and adjustments” or “total unrealized gains and adjustments”.
The consolidated balance sheet and the consolidated statement of changes in net assets as of and for the fiscal year ended
31st March 2010 were modified to conform with the new presentation rules of 2011. In addition, the Company has presented aconsolidated statement of comprehensive income for the fiscal year ended 31st March 2010 as well as for the fiscal year ended
31st March 2011.
3. Financial instruments
Additional information
Effective from the fiscal year ended 31st March 2010, the Company has adopted the revised Accounting Standard,“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 revised on 10th March 2008) and the “Guidance on
Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, revised on 10th March 2008). Information on
financial instruments for the year ended 31st March 2010 required pursuant to the revised accounting standards is as follows.
(1) Current status of financial instruments① Policy concerning financial instruments
In principle, the Marudai Food Group (the “Group”) invests its surplus funds only in principal guaranteed deposits andrelies on bank loans to raise funds. The Group uses derivatives to reduce foreign exchange and interest rate fluctuation risks,
but is not engaged in any speculative transactions.
② Details of financial instruments and their risks, and the Group’s risk management system
The Group is exposed to credit risk arising from operating receivables such as trade notes and accounts receivable. To
limit the risk, the Company conducts due date and outstanding receivable management by customer in accordance with its
credit exposure management guidelines and has a grading system to evaluate the credit condition of its major customers
every six months. The consolidated subsidiaries conduct risk management similarly, following the Company’s credit
exposure management guidelines.
The Group is exposed to market price risk arising from the investment securities it holds. These securities constituteshares of companies with which companies in the Group have business relationships. The fair values of such shares are
periodically assessed and the assessment reported to the Boards of Directors’ meeting.

15

Most operating payables, such as trade notes and accounts payable, are payable within one year. Some arise inconnection with the import of raw materials and goods that are denominated in foreign currencies. The Company uses
foreign currency forward contracts to reduce foreign currency fluctuation risk that arises from operating payables in foreign
currencies that are deemed certain to occur.
The Group primarily uses loans to procure operating funds and mainly uses lease receivables from finance leases to raise
funds for capital expenditure. The Company is exposed to interest rate fluctuation risk arising from loans with floatinginterest rates. For most long-term loans with floating interest rates, the Company uses derivatives (interest rate swaps) for
each individual loan as a hedge instrument to fix interest payments. Since the requirements for special treatment for interest
rate swaps are satisfied, the Company uses the special treatment for the assessment of hedge effectiveness. To minimize
counterparty risk, the Company follows its derivative transaction rules and enters such transactions only with highly rated
financial institutions.
The Company is exposed to liquidity risk arising from its operating obligations and loan payables. To minimize this risk,
the Accounting Department prepares statements of cash flows based on other divisions’ reports and timely updates thestatements. The consolidated subsidiaries also manage liquidity risk in accordance with the methods used by the Company.
③ Supplementary explanation on fair values of financial instruments
The fair values of financial instruments include values based on market prices or reasonably calculated values whenmarket prices are not available. Because a variety of factors, some of which are variable, are taken into account whencalculating the values, the adoption of different assumptions may result in different values.
The contract amounts of the derivative transactions stated in “(2) Fair value of financial instruments” do not reflect themarket risk involved in the derivative transactions themselves.

16

(2) Fair value of financial instruments
The following table shows consolidated balance sheet amounts, fair values and any difference between book value and fairvalue as of 31st March 2010. However, financial instruments whose fair values were deemed extremely difficult to determine
are not included in the table (Please refer to (※2)).
Millions of yen① Cash and cash equivalents② Trade notes and accounts receivable③ Investment securities
Available-for-sale securities④ Trade notes and accounts payable⑤ Short-term borrowings⑥ Long-term debt
⑦ Lease obligations⑧ Derivative transactions (*2)

Consolidated Fair value
Difference
balance sheet (*1)
amounts (*1)
¥10,616¥10,616¥ –19,852
19,852–
9,198(18,411)(987)(17,668)(5,269)6

9,198(18,411)(987)(17,587)(5,434)
6

–
–
–
(80)
164
–

(*1) Figures in parenthesis show amounts recorded as liabilities.
(*2) Derivative assets and liabilities are presented on a net basis.
(※1) Determination of fair value for financial instruments and matters concerning securities and derivative transactions① Cash and cash equivalents and ② Trade notes and accounts receivable
The fair values of these items are stated at their book values. Because these instruments are settled in a short periodof time, their fair value approximates the book value.
③ Investment securities
The fair values of these securities are based on the prices on securities exchanges.
For information on securities classified by the purpose for which they are held, refer to Note 4, “Securities”.
④ Trade notes and accounts payable and ⑤ Short-term borrowings
The fair values of these items are stated at their book values. Because these instruments are settled in a short periodof time, their fair value approximates the book value.
⑥ Long-term debt and ⑦ Lease obligations
To calculate the fair value of these items, the combined amount of principal and interest is discounted by theinterest rate considered applicable to similar new loans or lease transactions. For the fair values of long-term debt withfloating interest rates subject to special treatment for interest rate swaps (refer to ⑧), the combined amount ofprincipal and interest processed as a single item with the interest swap is discounted by the price provided by thefinancial institutions.
⑧ Derivative transactions
Refer to Note 5, “Derivative financial instruments and hedging transactions”.
(※2) Financial instruments whose fair values were deemed extremely difficult to determine
Category
Unlisted bonds
Unlisted stocks

Millions of yen
Consolidated balance sheet amounts
¥ 6
77

17

Since no market prices were available for the above financial instruments and it was deemed extremely difficult to determine
their fair values by the estimation of the future cash flows, these items were not included in “③ Investment securities
Available-for-sale securities”.
(※3) Estimated redemption amounts of monetary assets and available-for-sale securities with maturity dates after the consol­
idated balance sheet dateMillions of yen
Over one year Over five
but within
years
five years

Within one
year
Cash and cash equivalents¥10,616¥––

Trade notes and accounts receivable

19,852

–

–

–

6

–

¥30,468¥6–

Investment securities
Available-for-sale securities with maturity
dates (bonds)
Total(※4) For estimated repayment amounts of long-term debt, lease obligations and other interest-bearing debts,
refer to Note 7, “Short-term borrowings, long-term debt and lease obligations”.

18The following table shows consolidated balance sheet amounts, fair values and any difference between book value and fairvalue as of 31st March 2011. However, financial instruments whose fair values were deemed extremely difficult to determine
are not included in the table (Please refer to (※2)).
Millions of yen
Thousands of U.S. dollars (Note1)① Cash and cash equivalents② Trade notes and accounts receivable③ Investment securities
Available-for-sale securities④ Trade notes and accounts payable⑤ Short-term borrowings⑥ Long-term debt
⑦ Lease obligations⑧ Derivative transactions (*2)

Consolidated Fair value
Difference
balance sheet (*1)
amounts (*1)
¥13,582¥13,582¥ –19,921
19,921–
8,675(18,178)(4,534)(13,104)(5,311)
1

8,675(18,178)(4,534)(13,067)(5,476)
1

–
–
–
(37)
165
–

Consolidated Fair value
Difference
balance sheet (*1)
amounts (*1)
$163,343$163,343$–
239,579
239,579–
104,330(218,617)(54,528)(157,594)(63,873)12

104,330(218,617)(54,528)(157,150)(65,857)
12

–
–
–
(444)
1,984
–

(*1) Figures in parenthesis show amounts recorded as liabilities.
(*2) Derivative assets and liabilities are presented on a net basis.
(※1) Determination of fair value for financial instruments and matters concerning securities and derivative transactions① Cash and cash equivalents and ② Trade notes and accounts receivable
The fair values of these items are stated at their book values. Because these instruments are settled in a short periodof time, their fair value approximates the book value.
③ Investment securities
The fair values of these securities are based on the prices on securities exchanges.
For information on securities classified by the purpose for which they are held, refer to Note 4, “Securities”.
④ Trade notes and accounts payable and ⑤ Short-term borrowings
The fair values of these items are stated at their book values. Because these instruments are settled in a short periodof time, their fair value approximates the book value.
⑥ Long-term debt and ⑦ Lease obligations
To calculate the fair value of these items, the combined amount of principal and interest is discounted by theinterest rate considered applicable to similar new loans or lease transactions. For the fair values of long-term debt withfloating interest rates subject to special treatment for interest rate swaps (refer to ⑧), the combined amount ofprincipal and interest processed as a single item with the interest swap is discounted by the price provided by thefinancial institutions.
⑧ Derivative transactions
Refer to Note 5, “Derivative financial instruments and hedging transactions”.
(※2) Financial instruments whose fair values are deemed extremely difficult to determine
Category
Unlisted bonds
Unlisted stocks

Millions of yen
Consolidated balance sheet amounts¥ 6
77

Thousands of U.S. dollars (Note1)
Consolidated balance sheet amounts
$ 72
926

19

Since no market prices were available for the above financial instruments and it was deemed extremely difficult to determine
their fair values by the estimation of the future cash flows, these items were not included in “③ Investment securities Availablefor-sale securities”.
(※3) Estimated redemption amounts of monetary assets and available-for-sale securities with maturity dates after the
consolidated balance sheet dateMillions of yen
Thousands of U.S. dollars (Note1)
Over one year Over five
Within one Over one year Over five
but within
years
year
but within
years
five years
five years

Within one
year
Cash and cash equivalents¥13,582¥––$163,343$ ––Trade notes and accounts receivable

19,921––

239,579

–

–

–

6

–

–

72

–

¥33,503¥6–$402,922$72–

Investment securities
Available-for-sale securities with maturity
dates (bonds)
Total(※4) For estimated repayment amounts of long-term debt, lease obligations and other interest-bearing debts,
refer to Note 7, “Short-term borrowings, long-term debt and lease obligations”.
4. Securities
The following tables summarize historical costs and book values (fair values) of available-for-sale securities with available
fair market values as of 31st March 2010 and 2011.

20

Securities with book values
exceeding historical cost:

Millions of yen
2010

Thousands of U.S. dollars (Note1)
2011

2011

Type

Historical
cost

Book
value

Gain

Historical
cost

Book
value

Gain

Historical
cost

Book
value

Gain

Equity securities �������������������
Bonds �����������������������������������
Others �����������������������������������
Total �������������������������������������

¥4,427––¥4,427¥7,691––¥7,691¥3,264––¥3,264¥3,959––¥3,959¥6,958––¥6,958¥2,999––¥2,999$47,613––$47,613$83,680––$83,680$36,067––$36,067

Securities with book values
not exceeding historical cost:

2010

2011

2011

Type

Historical
cost

Book
value

Loss

Historical
cost

Book
value

Loss

Historical
cost

Book
value

Gain

Equity securities �������������������
Bonds �����������������������������������
Others �����������������������������������
Total �������������������������������������

¥1,960––¥1,960¥1,507––¥1,507¥(453)––¥(453)¥2,161––¥2,161¥1,716––¥1,716¥(445)––¥(445)$25,989––$25,989$20,637––$20,637$(5,252)––$(5,252)

Available-for-sale securities sold during the year:
Millions of yen
2010

Thousands of U.S. dollars (Note1)
2011

2011

Proceeds

Gains
on salesLosseson salesProceeds

Gains
on salesLosseson salesProceeds

Gains
on salesLosseson sales

¥625

–

¥0

¥1

–

¥0

$12

–

$0

The Group recognized impairment loss on investment securities categorised as other securities with market value in theamount of ¥291 million ($3,500 thousand) for the year ended 31st March 2011.
In cases of impairment of stocks whose values depreciated from 30% to 50%, the Company determined impairment loss byanalyzing the operational performance of the issuing entities based on prevailing financial data and market value information suchas discrepancies between the book value and the highest or lowest market value during the year.

21

5. Derivative financial instruments and hedging transactions
Derivative financial instruments and hedging transactions at 31st March 2010 were as follows:(1) Currency related
Millions of yen
Hedge accounting
methodProcessing method
in principle

Transaction type

Major hedged Contract
items
amounts

Foreign exchange trading
Accounts
On purchased
payableU.S. dollar
Total

Due over Fair
one year value¥155– (※1) ¥6

¥155

–

¥6

※1 Fair value is based on information provided by financial institutions at the end of the fiscal year.
(2) Interest related
Millions of yen
Hedge accounting
methodTransaction typeSpecial treatment

Interest rate swaps
Pay fixed,
receive floating
Total

Major hedged Contract
items
amounts
Long-termdebt

Due over Fair
one year value¥6,995¥3,563(※2) –¥6,995¥3,563–※2	According to the special treatment for interest rate swaps as applied to integrated and long-term debt, the fair value of thederivative financial instrument is included in the fair value of the long-term debt.
Derivative financial instruments and hedging transactions at 31st March 2011 were as follows:(1) Currency related
Millions of yen
Hedge accounting
methodAlternative method

Transactions types

Major hedged Contract
items
amounts

Foreign exchange trading
Accounts
On purchased
payableU.S. dollar
Total

Due over Fair
one year value

Thousands of U.S. dollars (Note1)
Contract
amounts¥109–(※1) ¥1$1,311

–

$12

¥109

–

¥1

$1,311–$12※1 Fair value is based on information provided by financial institutions at the end of the fiscal year.

22

Due over Fair
one year value(2) Interest related
Millions of yen
Hedge accounting
methodTransactions types

Special treatment

Interest rate swaps
Pay fixed,
receive floating
Total

Major hedged Contract
items
amounts
Long-termdebt

Due over Fair
one year value

Thousands of U.S. dollars (Note1)
Contract
amounts

Due over Fair
one year value¥5,809¥4,838(※2) –$69,862$58,184–¥5,809¥4,838–$69,862$58,184–※2	According to the special treatment for interest rate swaps as applied to integrated and long-term debt, the fair value of thederivative financial instrument is included in the fair value of the long-term debt.
6. Inventories
Inventories at 31st March 2010 and 2011 consisted of the following:Thousands of
U.S. dollars (Note 1)

Millions of yen
2010

2011

2011

Finished goods and merchandise ������������������������������������������������������������

¥ 5,918¥ 6,085$ 73,181

Work in progress �������������������������������������������������������������������������������������

631

654

7,865

Raw materials and supplies ���������������������������������������������������������������������

8,020

7,858

94,504¥14,569¥14,597$175,550

7. Short-term borrowings, long-term debt and lease obligations
Short-term borrowing at 31st March 2010 and 2011 consisted of short-term notes, generally for 365 days, with averageinterest rates of 1.55% and 0.82%, respectively.
Long-term debt at 31st March 2010 and 2011 consisted of the following:
Millions of yen
2010
2011
Loans from banks, insurance companies and otherfinancial institution, 1.10% to 2.31% maturing through 2017
Secured ����������������������������������������������������������������������������������������������������
Unsecured �����������������������������������������������������������������������������������������������
Less current portion ��������������������������������������������������������������������������������

¥162
17,507
17,669(8,245)¥ 9,424¥96
13,008
13,104(7,950)¥ 5,154

Thousands of
U.S. dollars (Note 1)
2011

$

1,155
156,439
157,594(95,610)$ 61,984

23

The aggregate annual maturities of long-term debt were as follows:
Millions of yen
Years ending 31st March,2011 ������������������������������������������������������������������������������������������������
2012 ������������������������������������������������������������������������������������������������
2013 ������������������������������������������������������������������������������������������������
2014 ������������������������������������������������������������������������������������������������
2015 ������������������������������������������������������������������������������������������������
2016 and thereafter �������������������������������������������������������������������������

Years ending 31st March,2012 ������������������������������������������������������������������������������������������������
2013 ������������������������������������������������������������������������������������������������
2014 ������������������������������������������������������������������������������������������������
2015 ������������������������������������������������������������������������������������������������
2016 ������������������������������������������������������������������������������������������������
2017 and thereafter �������������������������������������������������������������������������

2010¥ 8,245
6,638
2,328
175
128
155
¥17,669
Millions of yen

Thousands of U.S. dollars (Note 1)

2011

2011
¥ 7,950
3,817
1,054
128
143
12
¥13,104$ 95,610
45,905
12,676
1,539
1,720
144
$157,594

The aggregate annual maturities of lease obligations were as follows:
Millions of yen
Years ending 31st March,2011 ������������������������������������������������������������������������������������������������
2012 ������������������������������������������������������������������������������������������������
2013 ������������������������������������������������������������������������������������������������
2014 ������������������������������������������������������������������������������������������������
2015 ������������������������������������������������������������������������������������������������
2016 and thereafter �������������������������������������������������������������������������

Years ending 31st March,2012 ������������������������������������������������������������������������������������������������
2013 ������������������������������������������������������������������������������������������������
2014 ������������������������������������������������������������������������������������������������
2015 ������������������������������������������������������������������������������������������������
2016 ������������������������������������������������������������������������������������������������
2017 and thereafter �������������������������������������������������������������������������

24

2010
¥1,348
1,196
863
546
399
917
¥5,269Millions of yen

Thousands of U.S. dollars (Note 1)

2011

2011
¥1,346
1,019
704
560
484
1,198
¥5,311$16,188
12,255
8,467
6,735
5,821
14,407$63,873

8. Pledged assets
At 31st March, 2011 assets pledged as collateral for short-term bank loans of ¥350 million ($4,209 thousand) and the current
portion of long-term debt of ¥53 million ($637 thousand) and long-term debt of ¥43 million ($517 thousand) were as follows:
Thousands ofMillions of yen
U.S. dollars (Note 1)
2010
2011
2011
Land ��������������������������������������������������������������������������������������������������������
¥185
¥185
$2,225
Building and structures ���������������������������������������������������������������������������
393
361
4,342
25
18
216
Machinery and equipment �����������������������������������������������������������������������
¥603
¥564
$6,783

9. Employees’ severance and retirement benefits
The liability for severance and retirement benefits included in the liability section of the consolidated balance sheets as of 31st
March 2010 and 2011 consisted of the following:

Projected benefit obligation ��������������������������������������������������������������������
Unrecognised actuarial differences ���������������������������������������������������������
Fair value of pension assets ��������������������������������������������������������������������
Prepaid pension cost �������������������������������������������������������������������������������

Millions of yen
2010
2011
¥21,676¥21,832(3,289)(3,625)(17,988)(18,638)
117
979
¥ 516
¥ 548

Thousands of
U.S. dollars (Note 1)
2011$262,561(43,596)(224,149)
11,774$ 6,590

Included in the consolidated statements of operations for the years ended 31st March 2010 and 2011 were severance andretirement benefit expenses comprising the following:Thousands ofMillions of yen
U.S. dollars (Note 1)
2010
2011
2011
Service costs―benefits earned during the year ��������������������������������������
¥ 922
¥ 906
$10,896
Interest cost on projected benefit obligation �������������������������������������������
420
423
5,087
Expected return on plan assets ����������������������������������������������������������������
(611)
(719)
(8,647)
Amortisation of actuarial differences ������������������������������������������������������
586
454
5,460
–
–
–
Amortisation of prior service costs ���������������������������������������������������������
¥1,317¥1,064$12,796
The discount rate used by the Companies was 2.0% for the years ended 31st March 2010 and 2011. The rate of expected
return on plan assets used by the Companies was 4.0% for the years ended 31st March 2010 and 2011.
The losses on early retirement benefits shown separately in the consolidated statements of income were not included above.

25

10. Income taxes
The Company and its consolidated domestic subsidiaries are subject to a number of taxes based on income, which in theaggregate, indicated a statutory income tax rate in Japan of approximately 40.7% for the years ended 31st March 2010 and 2011.
The following table summarises the significant differences between the statutory income tax rate and the Companies’ effective
tax rate for financial statement purposes for the years ended 31st March 2010 and 2011.
Statutory tax rate
Changes in valuation allowanceNon-deductible expenses, including entertainment expenses
Non-taxable income, including dividends receivedPer capita inhabitants tax
Effect of adopting consolidated tax return system for consolidated subsidiaries
Other
Effective tax rate

2010
40.7%
(12.7)
1.5
(5.2)
3.3
(23.5)
9.1
13.2%

2011
40.7%
(36.6)
1.3
(6.4)
2.9
(2.1)
1.9
1.7%

Significant components of the Companies’ deferred tax assets and liabilities as of 31st March 2010 and 2011 were as follows:

Deferred tax assets:
Excess allowance for doubtful accounts �������������������������������������������
Accrued bonuses �������������������������������������������������������������������������������
Employees’ severance and retirement benefits ���������������������������������
Loss on impairment of assets ������������������������������������������������������������
Loss carryforwards ����������������������������������������������������������������������������
Other ��������������������������������������������������������������������������������������������������
Total deferred tax assets ��������������������������������������������������������������������������
Valuation allowance ��������������������������������������������������������������������������
Net deferred tax assets ����������������������������������������������������������������������������
Deferred tax liabilities:
Unrealised gains on securities �����������������������������������������������������������
Deferred gains on real properties ������������������������������������������������������
Prepaid pension cost ��������������������������������������������������������������������������
Other ��������������������������������������������������������������������������������������������������
Total deferred tax liabilities ��������������������������������������������������������������������
Net deferred tax assets ����������������������������������������������������������������������������

26

Millions of yen
2010
2011
¥ 185
¥ 127
433
449
202
218
1,297
1,591
4,040
3,099
2,061
2,206
¥8,218¥7,690(7,354)(5,740)864
1,950(1,127)
(45)
(45)
(54)
(1,271)¥ (407)(1,050)
(45)
(395)
(52)
(1,542)¥ 408

Thousands of
U.S. dollars (Note 1)2011$ 1,527
5,400
2,622
19,13437,27026,531$92,484(69,032)
23,452(12,628)(541)(4,750)(626)(18,545)$ 4,90711. Contingent liabilities
The Company was contingently liable as a guarantor of loan obligations of a customer in the amount of ¥65 million at 31st
March 2010 and ¥40 million ($481 thousand) at 31st March 2011.
12. Net assets
Under the Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price ofthe new shares as additional paid-in capital which is included in capital surplus. Under the Japanese Corporate Law (“the Law”),
in cases where a dividend distribution of surplus in made, the smaller of an amount equal to 10% of the dividend or the excess, ifany, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional
paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidatedbalance sheets. Under the Law, both of these appropriations generally require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which arepotentially available for dividends. The maximum amount that the Company can distribute as dividends is calculated based on thenonconsolidated financial statements of the Company in accordance with Japanese laws and regulations.
13. Research and development expenses
Research and development expenses included in selling, general and administrative expenses for the years ended 31st March2010 and 2011 were ¥678 million and ¥619 million ($7,444 thousand), respectively.
14. Loss on impairment of assets
The companies recorded impairment loss on the following asset groups for the year ended 31st March 2011.
Classifying fixed assets into the three categories of business assets, rental assets and idle assets, the Companies group theirbusiness assets by cash generating units that are defined as the smallest identifiable groups of assets generating cash inflows andgroup the rental assets and idle assets by each individual asset.
The business assets whose recoverable amounts measured by estimated future cash flows have fallen short of their carrying
values and rental assets and idle assets whose market values have decreased significantly from their original carrying values are
subject to reduction to their respective recoverable amounts. The total impairment loss for the year consisted of ¥320 million($3,848 thousand) for land and ¥253 million ($3,043 thousand) for buildings and other.
The recoverable amounts measured based on values in use for business assets, values in use or net selling price at disposition
for rental assets and net selling price at disposition for idle assets. Net selling prices at disposition are determined using
professional appraisals. Values in use are calculated based on estimated future cash flows and were discounted at the rate of 3.8%.
15. Segment information(1) Overview of the reportable segments
a. Method for determining reportable segments
The Group’s reportable segments are determined based on the availability of separate financial information for suchsegments that is examined periodically by the Board of Directors to make decisions regarding the allocation of management
resources and to assess the business performances of the segments. The Group has divided its business operations into two

27

reportable segments and other segment. Its reportable segments are “the processed food products business” and “the meatproducts business”.
b. Descriptions of the businesses that constitute each reportable segment
In the processed food products business, the Company purchases, manufactures and sells ham, sausage and cooked andprocessed foods. In the meat products business, the Company purchases, manufactures, and sells meat products.
(2) Methods of measurement for sales, profit (loss), assets, liabilities and other items for each reportable segment
Accounting policies adopted by the reportable segments is identical to those described in Note 2, “Significant Accounting
Policies”.
(3) Segment information for the years ended 31st March 2010 and 2011
Segment information as of and for the fiscal year ended 31st March 2010, restated to confirm with the current presentation
standards is as follow:
2010
Millions of yen
Reporting segments
Processed
Meatfood products
products

Sales:
Sales to third parties ���������������������
Intersegment sales and transfers ��
Net sales ���������������������������������������
Segment income (loss) �����������������
Segment assets �����������������������������
Other items:
Depreciation and amortization �����
Increase in property, plant andequipment and intangible fixed
assets �������������������������������������������

Total

Other
(*1)

Total

¥141,630–
141,630
5,357
75,606¥54,623–
54,623(327)
12,233¥196,253–
196,253
5,030
87,839

¥ 414
898
1,312
127
444

¥196,667
898
197,565
5,157
88,283

5,736

504

6,240

21

6,648

229

6,877

22

Adjustments(*2)¥

Consolidated
(*3)

–
(898)
(898)
–
27,011¥196,667–
196,667
5,157
115,294

6,261

–

6,261

6,899

9

6,908

(*1)	The other segment is business segments other than the reporting segments and includes the insurance agency business.
(*2)	Adjustments for total assets of ¥27,011 million indicate assets not attributed to any other segments and are composed mainly of cash
and deposits, investments in securities and rental properties.
(*3)	Total segment income of the reporting segments and “Other” is equal to the operating income of consolidated statement of operations.

28Segment information as of and for the fiscal year ended 31st March 2011 is as follows:
2011
Millions of yen
Reporting segments
Processed
Meatfood products
products

Sales:
Sales to third parties ���������������������
Intersegment sales and transfers ��
Net sales ���������������������������������������
Segment income (loss) �����������������
Segment assets �����������������������������
Other items:
Depreciation and amortization �����
Increase in property, plant andequipment and intangible fixed
assets �������������������������������������������

Total

Other
(*1)

Total

¥145,261–
145,261
5,195
74,200¥53,056–
53,056345
12,026¥198,317–
198,317
5,540
86,226

¥ 436
894
1,330
184
484

¥198,753
894
199,647
5,724
86,710

5,727

453

6,180

26

4,339

229

4,568

33

Adjustments(*2)¥

Consolidated
(*3)

–
(894)
(894)
–
30,395¥198,753–
198,753
5,724
117,105

6,206

–

6,206

4,601

5

4,606

Adjustments(*2)

Consolidated
(*3)

$

–
(10,752)(10,752)–
365,544$2,390,295–
2,390,295
68,8391,408,358

2011
Thousands of U.S. dollars (Note 1)
Reporting segments
Processed
Meatfood products
products

Sales:
Sales to third parties ��������������������� $1,746,975–
Intersegment sales and transfers ��
Net sales ��������������������������������������� 1,746,975
62,477
Segment income (loss) �����������������
892,363
Segment assets �����������������������������
Other items:
68,876
Depreciation and amortization �����
Increase in property, plant andequipment and intangible fixed
assets �������������������������������������������
52,183

Total

Other
(*1)

Total

$638,076–
638,076
4,150
144,630$2,385,051–
2,385,051
66,627
1,036,993$ 5,244
10,752
15,9962,212
5,821$2,390,295
10,7522,401,047
68,8391,042,814

5,448

74,324

312

74,636–

74,6362,754

54,937397

55,33460

55,394(*1) The other segment is business segments other than the reporting segments and includes the insurance agency business.
(*2)	Adjustments for total assets of ¥30,395 million ($365,544 thousand) indicate assets not attributed to any other segments and arecomposed mainly of cash and deposits, investments in securities and rental properties.
(*3)	Total segment income of the reporting segments and “Other” is equal to the operating income of consolidated statement of operations.

29

Information about loss on impairment of assets by reportable segments
2011
Millions of yen
Reporting segments
Processed
Meatfood products
products¥134–
Loss on impairment of assets �������

Total

Other
(Note)

¥134

Total
–

¥134

Adjustments

Consolidated

¥439

¥573

Adjustments

Consolidated$5,279$6,891

2011
Thousands of U.S. dollars (Note 1)
Reporting segments
Processed
Meatfood products
products$1,612–
Loss on impairment of assets �������

Total$1,612

Other(Note)

Total–$1,612(Additional information)
Effective from the fiscal year ended 31st March 2011, the Company has adopted the “Accounting Standard for Disclosures about
Segment of an Enterprise and Related information” (ASBJ Statement No. 17, issued on 27th March 2009) and “Guidance on AccountingStandard for Disclosures about Segment of an Enterprise and Related Information” (ASBJ Guidance No. 20, issued on 21st March 2008).

16. Investment and rental property
Additional information
Effective from the fiscal year ended 31st March 2010, the Company has adopted the “Accounting Standard for Disclosuresabout Fair Value of Investment and Rental Property” (ASBJ Statement No. 20, issued on 28th November 2008) and “Guidance on
Accounting Standard for Disclosures about Fair Value of Investment and Rental Property” (ASBJ Guidance No. 23, issued on
28th November 2008) for the year ended 31st March 2010. The fair value information of investment and rental property has been
omitted from the note due to its immateriality.
17. Subsequent events
At the annual shareholders' meeting held on 29th June 2011, the shareholders approved cash dividends amounting to ¥1,039
million. The appropriations have not been accrued in the consolidated financial statements as of 31st March 2011. Suchappropriations are recognized in the period in which they are approved by the shareholders. On 30th June 2011, the shareholdersof the Company authorised the payment of cash dividends to shareholders of record as of 31st March 2011 on the shares of stock
then outstanding at the rate of ¥8.0 ($0.10) per share, or a total of ¥1,039 million ($12,495 thousand).

30

Independent Auditors' Report
To the Board of Directors of Marudai Food Co., Ltd.:We have audited the accompanying consolidated balance sheets of Marudai Food Co., Ltd. and its
consolidated subsidiaries as of 31st March 2010 and 2011, and the related consolidated statements of income,comprehensive income, changes in net assets and cash flows for the years then ended expressed in Japaneseyen. These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to independently express an opinion on these consolidated 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 the financial statements. An audit also includes assessing theaccounting principles used and significant 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 consolidated financial statements referred to above present fairly, in all material respects,
the financial position of Marudai Food Co., Ltd. and its consolidated subsidiaries as of 31st March 2010 and2011 and the results of their operations and their cash flows for the years then ended, in conformity withaccounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended
31st March 2011 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 1
to the consolidated financial statements.

Osaka, Japan
29th June 201131

DIRECTORS AND STATUTORY AUDITORS
President andRepresentative Director:

Tokuo Kudara

Directors:

Tomoyuki Tanabe
Masaaki Sugiyama
Jiro Tsuge

Senior Executive andKeiichi KatoManaging Director:

Toshiharu Inoue

Statutory Auditors:

Naoki Iwamoto
Yasumi Shukuri

Managing Directors:

Yoshikazu Sawanaka

Hiroshi Kitabayashi

Yasushi Sawada
Masahiro Oshima(As of 29th June 2011)32

OUTLINE OF THE COMPANY
Established:

10th June 1958

Major subsidiaries:
Hokkaido Marudai Food Co., Ltd.

Stated Capital:¥6,716,252,022

Tohoku Marudai Food Co., Ltd.
Shin-etsu Marudai Food Co., Ltd.

Number of Employees: 2,339

Kanto Marudai Food Co., Ltd.
Chubu Marudai Food Co., Ltd.

Head Office:21-3 Midori-cho, Takatsuki-shi,

Kansai Marudai Food Co., Ltd.

Osaka, Japan

Chu-Shikoku Marudai Food Co., Ltd.
Kyushu Marudai Food Co., Ltd.

Branch Office:4-7-5 Tsukiji, Chuou-ku, Tokyo,

Marudai Meat Co., Ltd.

Japan

Hornmeier Co., Ltd.
Marudai Service Co., Ltd.

Sales Offices:

The sales headquarters at the

Makoto Giken Co., Ltd.

Company’s head office in Osaka

Pioneer Foods Co., Ltd.

controls 13 distribution centers and21 Other subsidiaries

6 regional sales departments which(As of 31st March 2011)service 64 local outlets.

Plants:Hokkaido, Iwate,
Niigata, Kanto, Soka,
Ibaraki, Yokosuka, Shounan,
Shizuoka, Matsusaka,
Takatsuki, Hyogo,
Okayama, Hiroshima,
Karatsu

Overseas Office;

Chicago, U.S.A.

33

Head Office: 21-3 Midori-cho, Takatsuki-shi, Osaka, Japan
Telephone: 81-726-61-2518 Fax: 81-726-61-5006