Moving ahead
Annual Report 2012
For the year ended March 31, 2012

Over 120 years have passed since the founding of the Company by Fusajiro Kanematsu in 1889
as one of the first enterprises to engage in trading between Japan and Australia.
Our founder always anticipated the needs of his time and took on the challenge of establishing new businesses.
The Kanematsu Group has taken his dynamic pioneering spirit and creative ingenuity as its guiding principles,and has expanded its fields of operation to meet the needs of each succeeding generation,
to become the global company it is today. From here on, too, we aim to become a “Value Creator” by continuing
to build new businesses together with our customers while constantly adapting to social and economic changes.

Corporate Principle“Let us sow and nurture the seeds of prosperity for Japan”“If we sow a seed, we can expect it to develop into a seedling that generates content andprosperity for Japan. Let us sow that seed now.” So spoke our founder Fusajiro Kanematsu at
the establishment of the Company. Furthering the “public interest” of Japan was the guiding
mission of all leading Japanese of the late nineteenth century (Meiji period) in developing thenational economy. Today, our founder’s ideal underlies all our Company’s public benefit andcommunity activities and our contributions to nations and peoples generally.
On the occasion of the merger in 1967 with The Gosho Company, the Company enshrined
its founder’s ideals in a document titled Our Beliefs: Kanematsu’s Guiding Principles.
(Translated from Japanese)

OUR BELIEFS
Kanematsu’s Guiding Principles
1. We believe that we should achieve prosperity of our business through justand fair earnings in the pioneering spirit as fostered by our predecessors withthe wisest use of our creative imagination and ingenuity.
2. We believe that our Company should justify its existence by promoting asound and flourishing business which fulfils its responsibilities toward thewelfare of society and also contributes to the security and well-being of us all.
3. We believe that each one of us should attend to business not as an individual
but as a member of the organization abiding by company rules, carrying out
duties with a sense of loyalty to the Company and a spirit of cooperation andunderstanding toward all other members of the organization.

KANEMATSU CORPORATIONElectronics
Electronic Components and Materials /Semiconductors and LCD Manufacturing Equipment /OEM and ODM Solutions / Retail Business /Mobile Solutions / ICT Solutions / Aerospace / Devices

Foods & Foodstuff
Foods / Meat and Marine Products /Grains / Feedstuff and Fertilizers /Pet Products

Iron & SteelBusinesses Domains
By leveraging of our business networks in Japanand overseas as well as our years of experience inIron and Steel Trading / Specialty
Steel Trading / Cast and Forged
Steel Products / Domestic Tradeand Raw Materials Supply

general trading, and by integrating various functions
including information-gathering, market cultivation,business incubation and “project-forming,” risk
management and logistics, we are expanding ourbusiness globally.
We are committed to growth and making acontribution to society, by winning ever deeper
customer trust and becoming a “Value Creator” inMachinery & Plant
Plant Infrastructure Projects /Transportation Machinery / Machine
Tools and Industrial Machinery

partnership with them, through supply of varied
products and services in a wide range of businesses(Electronics, Foods & Foodstuff, Iron & Steel,
Machinery & Plant and Environment & Materials).

Environment & Materials
Crude Oil, Petroleum Products / LPG /Development of Environment-related Materials
and New Technologies / Functional Chemicals /Healthcare / Life Science

Annual Report 20121

Financial Highlights
Kanematsu Corporation and Consolidated Subsidiaries
Years ended March 31

2003

2004

2005

2006

2007

2008

838,975
67,207
15,716

818,473
62,20813,554

886,876
68,142
15,762

1,096,409
81,732
17,982

1,281,331
103,71121,713

1,244,020
90,32722,605

4,995

5,057

4,836

(16,728)

14,61528,975

2,233

3,247

2,469

(21,686)

7,507

19,016

10,762
527,340—319,284

23,283507,991—
287,245

38,029520,118—
261,560

26,004
556,046—
246,317

48,767563,176
32,959204,900

62,239503,456
45,587
148,944

Per share (yen):
Net income (loss)
Net assets
Cash dividends

7.56
36.38
—

10.13
68.77
—

6.52
93.74
—

(52.43)
62.12
—

17.94
78.75
—

45.44
108.95—

Financial indicators:
Return on equity (ROE) (%)
Equity ratio (%)
Net debt-equity ratio (times)

16.86
2.0
29.7

19.08
4.6
12.3

8.06
7.3
6.9

(67.73)
4.7
9.5

25.46
5.9
6.2

48.42
9.1
3.3

For the year:
Net sales
Gross profit
Operating income
Income (loss) before income taxes
and minority interests
Net income (loss)
At year-end:
Net assets
Total assets
Shareholders’ equity
Net interest-bearing debt

Notes 1. Figures are rounded down to the nearest million yen. Percentages have been rounded off.
2. The amount of net assets until the year ended March 31, 2006, is the amount presented under shareholders’ equity, which has conventionally been presented.
3. The U.S. dollar amounts represent the arithmetical results of translating yen to dollars at the rate of ¥82.19 to U.S.$1.00, the exchange rate prevailing on March 31, 2012.

Net sales and operating income
Net sales

Operating income(¥ billion)
1,500(¥ billion)30(¥ billion)
20

(¥)
100

1,000

20

10

50

500

10

0

0

0

(30)

0

2

Net income (loss) and net income (loss) per share

03

04

05

KANEMATSU CORPORATION

06

07

08

09

10

11

12

Net income (loss)

03

Net income (loss) per share

04

05

06

07

08

09

10

11

12

(100)

2009

2010

2012

2011

Thousands of
U.S. dollars

Millions of yen

1,138,755
86,292
19,027861,277
74,104
12,186

936,891
76,90518,0291,006,365
80,90021,426

12,244,373
984,305
260,697

77

8,407

13,03013,529164,614(12,787)

3,528

9,175

6,110

74,34642,035414,928
24,936
134,582

45,804
398,629
28,916109,350

49,576388,676
33,101
104,61255,992399,753
39,00890,012681,258
4,863,768
474,611
1,095,180(30.56)
59.61
—

8.44
69.15
—

21.93
79.07
—

14.60
93.16
—

0.18
1.13
—

(36.26)
6.0
5.4

13.10
7.3
3.8

Equity ratio(¥ billion)
50

(%)
10

40

8

30

6

20

4

10

2

04

05

06

07

08

09

* Shareholders’ equity = net assets – minority interests* Equity ratio = shareholders’ equity / total assets

Per share (yen):
Net income (loss)
Net assets
Cash dividends
Financial indicators:
Return on equity (ROE) (%)
Equity ratio (%)
Net debt-equity ratio (times)

Net interest-bearing debt and net debt-equity ratio

Shareholders’ equity

03

At year-end:
Net assets
Total assets
Shareholders’ equity
Net interest-bearing debt

16.95
9.8
2.3

29.59
8.5
3.2

Shareholders’ equity and equity ratio0

For the year:
Net sales
Gross profit
Operating income
Income (loss) before income taxes
and minority interests
Net income (loss)

10

11

12

0

Net interest-bearing debt

Net debt-equity ratio(¥ billion)
400(times)
40

300

30

200

20

100

10

0

03

04

05

06

07

08

09

10

11

12

0

* Net interest-bearing debt = interest-bearing debt – cash and bank deposits* Net debt-equity ratio = net interest-bearing debt / shareholders’ equity

Annual Report 20123

To Our Stakeholders

Kanematsu Corporation was founded on August 15, 1889 as one of the first Japanese companies to take part in direct trade
between Japan and Australia. Since this milestone, our business has continued to expand in response to evolving market needs
over the years, and today we have grown into an enterprise with a global network.
Current business activities span the sectors of Electronics, Foods & Foodstuff, Iron & Steel, Machinery & Plant, and Environment& Materials. While ensuring we can supply quality products and services to our customers through our domestic and overseas
business networks, we remain constantly committed to discovering new business opportunities.
During fiscal 2012, the second year under our “S-Project” medium-term business plan, we worked to establish a system thatwill enable us to continue developing new businesses. Amid an operating environment characterized by rapidly changing economic conditions both in Japan and overseas, we sought new business opportunities while working to hold down costs. Thanks
to these efforts, we were able to smoothly expand the Company’s earnings, and retained earnings on a non-consolidated basis
at long last turned upward.
The business environment is expected to remain unsettled during fiscal 2013, the final year of the “S-Project,” but we nonetheless view it as a vitally important year, constituting the run-up to the Company’s projected major growth surge under our next
medium-term business plan, and a period in which we will make a turnaround to an aggressive stance. We aim to focus ourenergies on fields where we excel and that are projected to grow in the near future. We will speed up our efforts to construct
new earnings drivers, and pave the way for new growth.
From here onward, too, while ensuring that the Kanematsu Group is a “Value Creator,” we will seek to grow and develop
together with our customers by providing the products and services needed not only by our customers themselves but also bysociety as a whole, and will work constantly to further enhance the Group’s enterprise value.
We look forward to the continued understanding and support of all our stakeholders.
August 2012
Toshihiro Kashizawa, Chairman

Masayuki Shimojima, President

ChairmanToshihiro Kashizawa

4

KANEMATSU CORPORATION

President
Masayuki Shimojima

Contents
6

Interview with the President
Continuing to create value, and to reward all our stakeholders.

	Fiscal 2012, ended March 31, 2012, was a year that saw the fruits of our “S-Project” medium-termbusiness plan, whose main objectives were to strengthen the Group’s earnings and management bases,in terms of business creation and performance.
	In this section, we interview President Masayuki Shimojima regarding the factors lying behind
the Group’s business performance for fiscal 2012, as well as his plans for the current business term.

12 K anematsu – supporting your lifestyle— Main topics in fiscal 2012 —	Kanematsu’s products and services make a difference in every facet of your daily life.

14 Overview by Business Segment
15 Electronics 16 Foods & Foodstuff 17 Iron & Steel 18 Machinery & Plant 19 Environment & Materials

20

CSR

23

Corporate Governance26

Directors and Corporate Auditors

27

Financial Section
28
30
32
34
35

71

Management’s Discussion and Analysis
Business Risks
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income

36
38
39
70

Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

78
79
80

Organization Chart
History
Investor Information

Corporate Data
72

Global Network

74

Network

76

Major Consolidated Subsidiaries and Affiliates

Forward-Looking Statements
This annual report contains statements regarding Kanematsu Group’s plans, strategies, and expectations for future performance. Such statements are inherently
subject to risk and uncertainty. Actual results could diverge materially from the Group’s projections due to changes in the economic and market environment
surrounding the Group’s business areas, such as exchange rate fluctuation.

Annual Report 20125

Interview with the President

Masayuki Shimojima, President

Continuing to create value,
and to reward all our stakeholders.
Toward the attainment of our targets under the “S-Project” medium-term business plan
(April 2010 – March 2013)

6

KANEMATSU CORPORATION

“S-Project” Medium-Term Business Plan (April 2010 – March 2013)
Speedy × Stronger = Satisfaction
With speed

VisionBuilding a stronger baseSatisfying all stakeholders

Within the upheaval of the global economy,
grow as a “Value Creator” and contribute to society.

Basic Concepts• Advance the constant refining of business focus
and swiftly take business chances in Japanand abroad to strengthen the revenue base.

Continuing to refine
our business focus
Strengthening
the revenuebase• Bolster efficiency and soundness
to strengthen the foothold and management base.
• Deepen mutual confidence with business partners
and jointly pursue the creation of businesses.

Q. 01
A.01

Improving the financial position

Promotinggrowth strategies

Bolstering
the businessbase

Pursuing management efficiency
Deepening the consolidated
management system
Cultivating human resources

Firstly, could you tell the readers something about the Group’s business performance for fiscal 2012?
Looking back at the global economy in fiscal 2012, in
the United States there was a gradual recovery trend,with an upturn in both consumer spending and capital
investment, but in Europe all the economies posted weak
performances due to the negative impact of the sovereign
debt crisis. In China and the Asian emerging nations,
meanwhile, exports were sluggish due to the weakness of
the European economies, and this slowed down overall
economic growth somewhat. In Japan, the economy at
first staged a recovery from the blow dealt by the earthquake and tsunami of March 11, 2011 but then stalledagain due to slack exports caused by the yen’s sharp
appreciation as well as the disruption of supply chains dueto the floods in Thailand. The nation’s economic prospects
thus remained uncertain at the year-end.
Amid this operating environment, the KanematsuGroup posted increases in both net sales and grossprofit, which came to ¥1,006.4 billion and ¥80.9 billion,
respectively. This was mainly thanks to an increased trading volume, as well as higher market prices, in our Foods &Foodstuff and Environment & Materials segments.
In addition to the favorable business performancesby the Foods & Foodstuff and Environment & Materials
segments, where we were able to take advantage of firm
demand in the domestic market, continued cost control
efforts enabled us to hold down further increases in SG&A
expenses. As a result, operating income rose by 19% year
on year, to ¥21.4 billion, and ordinary income rose 25% to¥17.8 billion.
In extraordinary items, we registered extraordinary
losses on sales of investments in securities, as well as
losses on the valuation of investments in securities, on
the liquidation of affiliated companies, and on withdrawal
from employees’ pension funds at subsidiaries, totaling net
losses of ¥4.2 billion. The losses on liquidation of affiliatedcompanies involved the Group’s withdrawal from the business of processing silicon wafers for use in photovoltaic
power generation systems, owing to a recent deteriorationin the operating environment. As a result of these factors,
in addition to higher tax expenses due to a reduction indeferred tax assets in line with a revision of the tax system,
net income came to ¥6.1 billion, for a decline of ¥3.1 billion
from the previous fiscal year.

Annual Report 20127

Interview with the President

Q. 02
A.02

Your business performance forecasts for fiscal 2013 are on the conservative side. Could you tell us why?
I can certainly see why our projections for fiscal 2013
would appear somewhat conservative in the light ofour performance for fiscal 2012. However, against thebackground of the European sovereign debt crisis and theeconomic slowdown in China and the Asian emerging
nations, we believe fiscal 2013 may well be a year in which
the global economy could take all sorts of unforeseeable
turns. For this reason, we have been rather cautious in our
forecasts.
At the same time, fiscal 2013 will be the final year of
our current “S-Project” medium-term business plan, i.e.,
the period during which we will put the final touches toour achievements under the plan. The Kanematsu Grouphas fully recovered from the business slump it suffered in
the global business downturn sparked by the collapse of
Lehman Brothers, and this coming year will be of crucial
importance in preparing for the business growth we
project under our next medium-term business plan.

While working to increase our top line (net sales andgross profit), we have also taken steps to restrain costs,
and as a result, we have posted a steady improvement inearnings. As of the end of March 2012, retained earnings
on a non-consolidated basis have turned upward on a
year-on-year comparison, and despite the current difficult
operating environment, in the coming year or two wehope to make a turnaround to an aggressive management
stance while taking all due precautions. For this reason, we
have factored the investments we need to realize future
operational expansion into our plans for fiscal 2013. This
is why our forecasts for operating income and ordinary
income are down slightly on a year-on-year comparison.
Nevertheless, our current forecasts are still in excessof the figures originally projected for the final year of the“S-Project” plan. The entire Kanematsu Group will beworking together to attain our numerical targets for thecurrent business year.

● “S-Project” medium-term business plan – targets, results and forecasts

(¥ billion)

Targets under “S-Project”

8

Results and forecasts

FY2011FY2012FY2013

FY2011 Results

FY2012 Results

FY2013 forecasts

Net sales

850.0

950.0

1,050.0

963.9

1,006.4

1,050.0

Gross profit

75.0

77.5

80.0

76.9

80.9

82.0

Operating income

15.0

17.0

19.0

18.0

21.4

20.0

Ordinary income

10.0

12.0

14.0

14.3

17.8

16.0

Net income

4.5

5.5

6.5

9.2

6.1

8.0

KANEMATSU CORPORATIONQ. 03
A.03

Q. 04
A.04

In what sort of fields do you plan to make investments?
We have divided the roughly 140 individual operational
units in the Company into four categories based on market growth potential and the Company’s strengths in eachparticular area. At the moment, we are selecting for priority
allocation of management resources those businesses thatpromise to realize synergy from a Companywide viewpoint (we call these “Companywide Businesses”). There aremany different types of Companywide Businesses, but aparticularly large number are concentrated in our principal
cash cow segments – Electronics and Foods & Foodstuff.

Our main investment focus is on strengthening our operations in Asian nations, where market growth is projected.
For example, in our Food & Foodstuff segment we arereinforcing our marketing network in Asia, where improvements in diet and eating habits are forecast over the next
few years. In business fields where the Company has anadvantage over its competitors, we plan to strengthen
our networks further upstream in the supply chain. It is
in areas such as these that we will be making advance
expenditures and investments.

What sort of progress have you made in strengthening the Company’s revenue base as part of the“S-Project” medium-term business plan?
The twin pillars of the “S-Project” have been strengthening our revenue base and bolstering our business base,and the reporting term was the second year of thisthree-year plan.
Regarding the strengthening of our revenue base,from the first year under the plan we aimed to enhance
our capabilities in new business creation and improve
our business portfolio. To this end, we reorganized ourbusiness units and undertook a process of continuous
selection of fields for priority focus. In the reporting term(the second year under the plan), we saw notable successin the field of new business creation, as our new system forallocation of management resources from a Companywide
viewpoint began operating, and we were able to improve
the operating environment for the start-up of new
businesses.
To give several examples, in the food business, major
convenience store chains and mass-merchandise storessuch as food supermarkets began selling our ready-cooked
foods – an area where we have strength – and adopting
our product proposals. In addition, as both Japaneseconvenience store operators and mass-merchandisers
are increasingly expanding their overseas operations, wehave been concluding tie-ups with local food processing

companies to make proposals and market products (seeP. 13 for details).
Regarding trading in automotive components, during
the reporting term we focused on support for Japanese
automotive component makers’ moves to set up or
expand operations overseas, and we established a joint
venture in Indonesia, where market growth is projected.
The Group will not only procure parts and materials, butalso provide marketing support. We are targeting thisbusiness field as a potential future earnings driver (seeP. 12 for details).

Annual Report 20129

Interview with the President

Q. 05
A.05

What success have you achieved in bolstering your business base?
We repaid borrowings so as to reduce our interest-bearing
debt burden. We succeeded in reducing gross interestbearing debt to ¥160.8 billion and net interest-bearing
debt to ¥90.0 billion. Net assets came to ¥56.0 billion as aresult of an increase in retained earnings from net income
and shareholders’ equity after deduction of minority
interests came to ¥39.0 billion.

As a result, the equity ratio improved to 9.8%, and thenet debt-equity ratio also improved, to 2.3. Our financial
figures are thus very close to the targets set for the final
year under the current medium-term business plan, andI believe we can claim to have steadily enhanced ourfinancial position.

● “S-Project” Medium-Term Business Plan (April 2010 – March 2013), Targets and Results
Targets under “S-Project”
FY2011

Net assets

A.06

10

FY2013

FY2011FY2012

388.7

399.8

45.0

33.1

39.0

84.0

104.6

90.0

9.5%

Above 10.0%

8.5%

9.8%

2.4 times

2.0 times

3.2 times

2.3 times

400.0

404.0

410.0

Shareholders’ equity

33.0

38.5

Net interest-bearing debt

100.0

92.0

Equity ratio

8.3%
3.0 times

Net debt-equity ratio

Q. 06

FY2012(¥ billion)

Results

What sort of overseas strategy are you pursuing, particularly with respect to Asian countries where strong economic
growth is expected over the next few years?
At the moment we are focusing our efforts on emerging
markets that are posting rapid growth, particularly thenations of Southeast Asia as well as the BRICs. Specifically,
we are constructing a stronger marketing network forfoods and foodstuff in China and other Asian countries
by expanding our workforce. We are also expanding our
trading activities aimed at Asian markets, notably China, infields where we have traditionally relied heavily on overseas sales, such as electronic devices, IT equipment, iron &steel, and machinery & plant. Moreover, our Asian Strategy
Team, established in fiscal 2011, is examining possibilities
for the creation of new businesses from a Companywide
perspective, with the aim of expanding commercial rights
in Asian markets.
We have also been enhancing the functions of ouroverseas business bases. In November 2011 we converted
our Singapore office into a locally incorporated subsidiary,

KANEMATSU CORPORATION

and in May this year we similarly converted our representative office in India into a local subsidiary. From here
onward, we will be aggressively developing our overseas
operations via these bases. We also view Myanmar as apromising new market, and plan to open a representative
office there on September 1 this year.

India (local subsidiary establishedin New Delhi in May 2012)

MyanmarSingapore (local subsidiaryestablished in Nov. 2011)

Q. 07
A.07

Q. 08
A.08

Could you give us your thoughts on the drastic industrial restructuring now taking place?
I am sure that most people will have clearly realized thatthe industrial community is undergoing a rapid andaccelerating process of reorganization. Major Japanesemanufacturers of electric appliances and electronic products, which had long been industry leaders, have recently
taken steps that would have been unthinkable just a while
ago, such as forming capital and business alliances withmajor overseas manufacturers. Such events have been
occurring in many different industries, and this structural
reorganization is taking place worldwide. Because of the
global nature of this process, it represents a major business
opportunity for all trading companies.
The Kanematsu Group’s history stretches back morethan 120 years, and through that period the Group has
built up an irreplaceable store of assets, namely, its trusted
customers and its excellent commercial rights. Our role

is to fully understand and meet our customers’ needs. In
this way, we are able to create new businesses together
with our customers and offer them added value. This is theraison d’être of the Kanematsu Group, and it is from thisthat we derive our earnings.
Meanwhile, the commercial rights that we hold all
have their own life cycle: each one eventually deteriorates
and disappears. If these are not replaced by other newcommercial rights, the Company’s earning power will
decline, and growth as a trading company will be wellnigh impossible.
While placing our main focus on the Group’s strengths
and on business areas where it has traditionally beenhighly competitive, we will continue to seek promising
new proposals and to discover and acquire new commercial rights.

In closing, do you have a message for the Group’s stakeholders?
As I have said repeatedly, my aim is to make theKanematsu Group into an enterprise that is attractive toall its stakeholders — investors, our business partners, ourcorrespondent financial institutions, and our employees.
We will reassure all our stakeholders by raising our earning
power and building a strong financial position. Our
ultimate goal is to become a “Value Creator” that takes on
the challenge of creating new businesses, a group withthe ability to continually develop, and with tremendous
future potential.
But first things first. During the current business
term, we will focus on achieving our targets under the
medium-term business plan as the first step in rewarding
our stakeholders for their steadfast support.

Annual Report 201211

Kanematsu — supporting your lifestyle— Main topics in fiscal 2012 —Construction of grain silo at the port of Moji,
Kitakyushu, for animal feed-use cereals
Direct unloading from large oceangoing vessels achieves
greater logistics efficiency and enables stable supply of raw
materials for animal feed
Kanematsu has established Mojiko Silo Co., Ltd. (offices in Moji-ku,
Kitakyushu) as a joint venture with Moji Koun Kaisha, Ltd. and Kyodo
Shiryo Co., Ltd., and has constructed a grain silo, which commenced
operations in March this year. The silo is fitted with fumigation andgrinding facilities, and can handle 16,000 tons of animal feed raw
materials. Due to inadequate cargo unloading capacity and storage
capacity, we had hitherto been unable to utilize the port of Mojiko
effectively, but with the completion of the new silo we have assured
ourselves of a stable supply of raw materials for animal feed, andhave greatly enhanced the efficiency of our logistical operations. At
Kanematsu, we will continue working to ensure a stable supply of raw
materials for animal feed,such as corn (maize) andsoymeal, so that we canmeet the needs of ourusers in Kyushu.

Automotive components joint venture
established in Indonesia
Supporting overseas moves by Japanese vehicle parts makers

Silo for imported grain
products at Kanmon,
the first in the area

Kanematsu has established a joint venture in Indonesia with Yachiyo
Industry Co., Ltd. and P.T. Prospect Motor for the manufacture andsale of plastic fuel tanks. Japanese makers of automotive components
have recently begun to set up business operations overseas at a
growing pace, in response to the stepping-up of production overseas
by the Japanese automakers. In addition, the Indonesian automotive
market is expanding steadily, and further growth is projected over the
next few years. This latest move by Kanematsu is therefore targeted atcreating a production network in Indonesia. The joint venture is capitalized at roughly ¥1.9 billion, and a plant is currently under construction in the suburbs of Jakarta, which is scheduled to start operations
in August 2013 with an annual capacity of 240,000 tanks. Kanematsu
will supply the equipment for the new plant, and will procure thenecessary raw materials
and components, as wellas handling the marketingand sale of the plastic fueltanks on the Indonesianmarket.
Signing the agreement toestablish the joint-venturecompany

12

KANEMATSU CORPORATION

Image sensor developed and marketed
Development work continues at
Japan-China joint venture, aiming at
market launch in FY2013
Image sensors are used in the subminiature cameras fitted in mobile phones, incameras fitted to PCs, in security cameras,
and in car back monitors. Kanematsu ispursuing development of such products
as we expect this market to expand
strongly from here on.
A CMOS image sensor
This development project is madepossible by combining the superior
technology development expertise of Japanese companies with thecost-competitiveness of Chinese companies. Kanematsu itself plays
the vital role of bringing these two elements together, leveraging its
unique strong points and total coordination. The development projectis being pursued through a joint venture among two Japanese companies and one Chinese company that was arranged by Kanematsu, andproduct sales are scheduled to start in the second half of fiscal 2013.

Convenience stores and mass-merchandisers
expand sales of Kanematsu’s ready-cooked foods
Kanematsu products being widely adopted by Japanese retailers
Ready-cooked food products and processed foods are areas in which
Kanematsu excels, and recently major convenience stores and massmerchandisers have begun using food ingredients developed andproposed by us, and selling our products.
We have made use of our unique development expertise andfood-processing channels to propose solutions that boast not
only superior taste but also efficiency at the production stage andease of handling at the final-product stage. We offer our customers
something extra in terms of both service and product quality. We arefocusing our efforts on providing products and services with a difference to distance ourselves from the competition.
Among the products handled are those for which we hold amanufacturing process patent, as well as special-function productsthat have received a Silver Quality Award from Monde Selection.
From here onward, we plan to focus efforts on developing ouroperations in the fields of restaurants, convenience stores, supermarkets and so on in overseas markets, while also concluding tie-ups withlocal food processing companies and constructing product development systems and supply
chains.

Rice balls sold at convenience
stores made from
Kanematsu’s sekihan(rice steamed together with
red beans)

Annual Report 201213

Overview by Business Segment
The Kanematsu Group is developing global businesses as a “Value Creator” that provides diverse products and services
based on industries in a wide range of fields. The Group’s focus is on Electronics, Foods & Foodstuff, Iron & Steel,
Machinery & Plant, and the Environment & Materials, and it is building strong relationships as it works to create businesses
together with customers.
Foods &
Foodstuff

Electronics

25.2%

29.0%
Sales bysegment(FY2012)Iron & Steel

9.9%

27.2%

Machinery & Plant

7.0%

Environment &Materials

Other

1.7%
* “Other” segment: Includes the non-reportable segments encompassing
textile business, insurance agent/intermediary business,real estate management and leasing business,
construction materials business and other operations.

As part of our organizational overhaul starting in the year ending March 31,
2013, the Group has changed the name of the reportable segment Electronics
and IT to Electronics. Accordingly, the Electronics and IT segment is renamed
Electronics in all documents published by the Company including the financial
results in the Annual Report for the year ended March 31, 2012.

Environment &Materials

P19

Machinery & Plant

P18

Iron & Steel

P17

Foods & Foodstuff

P16

Electronics

P15
14

KANEMATSU CORPORATIONElectronics

This segment offers a broad array of products, ranging fromelectronics-related materials, parts and equipment to aircraft.
It also operates mobile solution and ICT solution businesses.
The segment also focuses on OEM and ODM businesses andprovides added value such as design and manufacturing.
Hirokazu Tamura Director, Chief Officer, Electronics & IT Division, Devices Division (left)
Yoshiya Miyabe Director, Vice Chief Officer, Electronics & IT Division (right)

Kanematsu’s Strengths● Customization and provision of products and services with valueadded functionality tailored to customer needs● Development of products that meet customer needs throughcollaboration with manufacturers from the development stage● Wide-ranging technology and expertise in the electronics field

Results for Fiscal 2012(¥ billion)

2011 Results2012 Results2013 Plan

Net sales

253.9

253.1

265.0

Gross profit

41.1

41.3

42.5

Operating income

9.5

9.0

9.0

● Global business development through our world wide network

Main BusinessElectronic Components Semiconductors, LCD panels,
and Materials
Telecommunications equipment parts
Semiconductors and
LCD Manufacturing
Equipment

Semiconductor manufacturing and testing
equipment, LCD manufacturing and testing
equipment

OEM and ODM Solutions Motorcycle and automobile parts, Control
modules for lithium-ion batteries, Printers
and Printer heads
Retail business

Sales of batteries, LEDs and other overseas
products in Japan’s retail market

Mobile Solutions

Mobile phones, Mobile Internet services

ICT Solutions

IT and communications equipment andservices

Aerospace

Aircraft (Fixed Wing, Rotary Wing), Satellites,
and Satellite Components and Parts

Devices

Semiconductor and mechanical parts,
Telecommunications equipment parts,
System boards, Photovoltaic parts, LED partsand materials, Others

Kanematsu’s ICT and mobile solutions businesses have been enjoying
continued favorable sales thanks to growth in the markets for smartphones
and tablet computers. On the other hand, our semiconductor business isfacing difficult conditions due to a slump in demand for both semiconductor components and semiconductor manufacturing equipment.
As a result, sales of the Electronics Division posted a slight year-on-year
decrease of ¥0.8 billion, to ¥253.1 billion, while operating income came to¥9.0 billion, down ¥0.5 billion.

Plans for Fiscal 2013
In the semiconductor equipment and electronic components businesses,
strong demand growth is expected in the Asian emerging nations, and wewill work to expand our transaction volume by providing support services
for Japanese customers’ overseas operations, constructing efficient supply
chain management systems, and bolstering our product lineups. In components for two- and four-wheeled vehicles, and in the printer business, weare making efforts to develop markets in Asia to complement our traditional
markets in Europe and the US, and will continue to focus on expanding ourmarketing channels.
In the ICT solutions business, we aim to secure adequate earnings byfocusing on high value-added services such as infrastructure-building
and cloud computing services to meet our customers’ diversifying needs,
including server virtualization and business continuity plan services. In themobile services business, we will meet the needs of the expanding market
for smartphones and tablet computers, will further develop the corporate
business, and will focus on overseas operations, centered on the Asian andNorth American markets.

Annual Report 201215

Foods & Foodstuff

To supply a safe and secure food supply,
we ensure the stable acquisition of grains, feedstuff,
as well as meat and marine products,
and also provide a broad array of food products,
including high value-added items.
Morihiro Toida Director, Chief Officer, Foods Division, Foodstuff Division

Kanematsu’s Strengths

Results for Fiscal 2012

● Supply of distinctive, high value-added products(¥ billion)

2011 Results2012 Results2013 Plan● Stable sourcing ensures reliability of supplies

Net sales

271.9

292.1

310.0

Gross profit

11.5

13.7

14.0

Operating income

2.8

5.2

5.0

● Traceability and rigorous hygiene and quality management

Main Business
Foods

Canned, frozen & dried fruits, Concentrated
juices, Wine, Coffee, Cocoa, Sugar, Sesame
seed, Peanuts, Miscellaneous beans, Others

Meat and Marine
Products

Meat products, Marine products, Others

GrainsWheat, Barley, Rice, Soybean, Processed
foods, Others

Feedstuff and Fertilizers Feedstuff, Fertilizer, Others
Pet Products

Pet food, Pet products

Sales of imported animal products held firm, while in the foods business,where demand was comparatively stable, we enjoyed favorable sales ofready-cooked and processed food products. In the foodstuff business, thedomestic livestock and dairy farming industries operated in a very difficult
environment due to the aftereffects of the March 11 earthquake andtsunami, but we succeeded in strengthening our relationships with transaction partners in the sale of animal feed, and also expanded our marketing
channels. These efforts helped to bolster overall earnings in this segment.
As a result, sales of the Foods & Foodstuff Division rose ¥20.2 billion year on
year, to ¥292.1 billion, and operating income rose ¥2.4 billion to ¥5.2 billion.

Plans for Fiscal 2013
In the Foods & Foodstuff Division, we have positioned Asia as a key market, in view ofthe prospective improvements there in diet and eating habits, and will be reinforcing
our marketing system, including dispatching more personnel from Japan.
In the foods business, we have been enjoying a steady growth in transactions
with mass-merchandising stores, takeout meals suppliers (such as convenience stores)
and restaurant chains, which are customer segments we have focused on up to now.
We will continue to strengthen our cooperative relationships with our business partners in this field and reinforce our food product supply and selling systems so as toexpand transaction volume. On July 1, 2012 we merged our wholly owned subsidiary
Kanematsu Food Corporation with Shintoa Corporation’s foods business, and the newcompany began operations under the name Kanematsu Shintoa Foods Corporation.
By combining Kanematsu Food Corporation’s expertise in proposal-based foodprocessing with Shintoa’s extensive customer base, the new company will be able tooffer an enhanced solutions proposal service and acquire increased orders.
In the foodstuff business, in areas where Kanematsu has particular strengths suchas raw materials for animal feed and non-genetically engineered soybeans, we intend
to focus our energies on bolstering our organization in the upstream direction of the
supply chain to help realize a stable supply of animal feed and cereals and expand ourmarketing channels both in Japan and overseas.

16

KANEMATSU CORPORATION

Iron & SteelIn the Iron & Steel Division, we leverage our advanced specialist expertise towork with our users in the development of products with high added value.
In addition to transactions in the Japanese market for a wide variety of steel
products — including steel sheets, specialty products such as stainless steel,and steel for automobiles — we also engage in overseas tradingwith Europe, the United States, and Asian countries.
Takashi Gunji Director, Chief Officer, Iron & Steel Division

Kanematsu’s Strengths

Results for Fiscal 2012

● Supplier of oil country tubular goods and other high-strength,
corrosion-resistant products that perform under the toughest
conditions(¥ billion)

2011 Results2012 Results2013 Plan

Net sales

98.8

99.1

105.0

● Supplier of specialty steel, and cast and forged products, for the
automotive industry

Gross profit

7.0

7.4

7.5

Operating income

3.4

3.6

3.5

Main Business
Overseas Trading of Iron Export of various kinds of steel sheets,
and Steelplates, bar products and pipe and tubing
products
Overseas Trading ofSpecialty Steel

Export of stainless steel sheets and plates,
Export of alloy steel wire and bar productsCast and Forged Steel
Products

Import and export of cast and forged steel
products for automotive parts (hot/coldforged), Export of porcelain enamel steel
sheetsDomestic and Overseas Import and tripartite trade of ferrous raw
Trading of Full Range of materials, Export and import of steel scrap
Steel Products
and sub-materials

Transactions in specialty steel product exports for automakers in Europe andthe US, as well as for exports of specialty steel and stainless steel to otherusers in the US and Asia, held firm during the reporting term, pushing up
overall earnings.
As a result, sales for the Iron & Steel Division rose ¥0.3 billion year on year,to ¥99.1 billion, while operating income rose ¥0.2 billion to ¥3.6 billion.

Plans for Fiscal 2013
In the iron and steel business, we aim to expand sales with a focus on highvalue-added products such as high-strength, corrosion-resistant steel for use
in areas like energy and environmental preservation, which are projected
to post continued growth. In the specialty steel business, which centers on
automotive-use products, we will be putting efforts into further opening up
Asian markets to complement our existing mainstay markets in Europe andNorth America.

Annual Report 201217

Machinery & Plant

In the Machinery & Plant Division, we will direct our efforts principally
into project-forming businesses that contribute to regional development,
notably in the field of infrastructure, including chemical plants,
papermaking plants, and ODA projects. We are also conducting transactions
involving ships, and both four-wheeled and two-wheeled vehicles.
Takashi Gunji Director, Chief Officer, Machinery & Plant Division

Kanematsu’s Strengths● “ Project-forming” businesses that contribute to regional economic
development, and offshore investment programs that support
globalized production by Japanese manufacturers(¥ billion)

2011 Results2012 Results2013 Plan

Net sales

67.3

70.4

70.0

● E ngaged not only in exporting from Japan, but also in marketingfrom overseas local bases, linked into our worldwide networks

Gross profit

6.5

7.0

7.0

Operating income

1.1

1.4

1.0

●M
 eeting diverse customer needs by marketing the lineups of major
machine-tool manufacturers in Japan

Main Business18

Results for Fiscal 2012

Plant Infrastructure
Projects

Chemical and petrochemical plants,
Industrial plants, Utility and process systems
for oil and gas plants, Infrastructure facilities,
Scrap-processing facilities, Environmental
facilities, ODA projects, Electric power andcommunication cable projects, Powergeneration plants

Transportation
Machinery

Shipbuilding, Used ships, Equipment
package deals for new ships, Automobiles
and components, Forklifts, Construction
machinery, General-purpose machinery

Machine Tools andIndustrial Machinery

Machine tools, Industrial machinery andperipheral equipment

KANEMATSU CORPORATIONIn automotive-related transactions, from the second quarter of fiscal 2012
onward our business began to recover from the impact of the March 2011
disaster, which severed our supply chains, and business performance
maintained the previous year’s level. In plant-related transactions, there wasan increase in ODA-related projects. Transactions involving machine tools
held firm thanks to a recovery in demand for machine tools in Japan.
As a result, net sales of the Machinery & Plant Division posted year-onyear growth of ¥3.1 billion, to ¥70.4 billion, while operating income rose ¥0.3
billion to ¥1.4 billion.

Plans for Fiscal 2013
Transaction volume is expected to remain firm in the machine tools andindustrial machinery businesses, and we plan to focus efforts on other Asianmarkets in addition to Japan. In the plant business, we will continue toaggressively seek orders related to projects involving Japan’s ODA.

Environment & Materials

With the environment, healthcare and medicine as keywords,
we are strengthening our product development and production
capabilities. We are also working on new energy-related businessin addition to the import of crude oil, and the import, export anddomestic trade of petroleum products.
Takashi Gunji Director, Chief Officer, Environment & Materials Division

Kanematsu’s Strengths● Supply of a wide range of environmental products and services
including fabless manufacturing● Supply of total energy solutions (upstream to downstream)

Main Business
Crude Oil, Petroleum
Products

Crude oil, Gasoline, Jet fuel, Kerosene, Diesel
oil, Fuel oil, Lubricant oil

LPG

LPG (Propane, Butane, Autogas)

Development ofEnvironment-relatedMaterials and New
Technologies

Heat reflective paint, New plant-derived
materials for automotive tires, Carbon credit
tradingFunctional Chemicals

Photovoltaic modules and materials,
Materials for lithium batteries, Materials for
fertilizers, Synthetic rubber, Petrochemical
products

Healthcare

Functional food materials, Healthsupplements

Life Science

Pharmaceuticals and pharmaceuticalintermediates

Results for Fiscal 2012(¥ billion)

2011 Results2012 Results2013 Plan

Net sales

227.5

273.7

285.0

Gross profit

8.4

9.2

9.0

Operating income

1.0

2.0

1.5

In the chemicals business, transaction volume held firm in both exports of
raw materials for automotive batteries and imports of bulk pharmaceuticals.
In the energy business, sales of heavy oil to electric power utilities increased,
contributing to overall earnings.
As a result, net sales of the Environment & Materials Division increased by¥46.2 billion year on year, to ¥273.7 billion, while operating income doubled
from ¥1.0 billion to ¥2.0 billion.

Plans for Fiscal 2013
In the chemicals business, we plan steps to strengthen our transaction
volumes in environment-related areas such as raw materials for lithium-ion
batteries, as well as in the life sciences business, including the import of bulk
pharmaceuticals.
In the energy business, we aim to enhance our earnings from transactions in petroleum products on the domestic market, notably heavy oil forthe electric power utilities, while also aggressively engaging in emissions
trading.

Annual Report 2012

19

CSR (Corporate Social Responsibility)

In addition to conducting business activities in the pioneering spirit as fostered by our predecessors and through the wisest use of
our creative imagination and ingenuity, the Company is committed to fulfilling its corporate social responsibility (CSR) by helping
to preserve the global environment and biological diversity, with the goal of working toward the creation of a sustainable society.
We have set up the CSR Committee, whose members are drawn from across the whole Company, and the CSR Promotion
Section, a unit dedicated to CSR activities within the Personnel & General Affairs Department. Through these bodies, and guided
by Kanematsu’s Code of Conduct, we address the various issues involved in CSR, including the Company’s social contributions,crisis management, compliance, and environmental preservation.

Kanematsu’s Code of Conduct
1. Origin of
corporate activities

We become involved in corporate activities to serve our various stakeholders by providing socially valuable goods
and services in accordance with the aim of our founder to realize a sustainable society.

2. Fair transactions

Our corporate activities are conducted in compliance with laws and ordinances in Japan and abroad, internationalrules and practices, and internal rules, as well as with social common sense.

3. Information management & Information is properly managed to protect personal information, customer information and intellectual property,
and is disclosed in a timely and proper manner to establish mutual trust between Kanematsu and the community
disclosureand maintain a high level of transparency.

4. Respect for human rights

We respect human rights and do not discriminate.
Employee career development and capability development are actively supported.
Diversity, personality and character are respected so as to create a dynamic corporate culture.

5. Consideration of
the global environment

We exercise sufficient consideration in our corporate activities to maintain a sound global environment forsustainable growth.

6. Social contribution

We are aware of the importance of our social responsibility as good corporate citizens, and proactively undertakesocial contribution activities.
Employee activities to contribute to community development and to comfortable and safe living are supported.
(Translated from Japanese)

Advocate Social Contribution Activities
Commemoration Projects
Among the main commemorative projects we have carried out
in accordance with the will of our founder Fusajiro Kanematsu
are the Research Institute for Economic & Business Administration(Kanematsu Memorial Hall), a commerce research institutegranted by Kanematsu to Kobe University, the endowment of
the Kanematsu Auditorium of Hitotsubashi University, and theendowment of the Kanematsu Memorial Institute of Pathology

The Kanematsu Auditorium of Hitotsubashi University

20

KANEMATSU CORPORATION

to Sydney Hospital in Australia, which was partially endowed byKanematsu with joint funding from the Australian Government. At
Kobe University, we engage in non-profit-making activities such as
establishing the Kanematsu Foundation for the Research of Foreign
Trade, offering the Kanematsu Fellowship to graduate students
who win our essay prize, and conducting the Kanematsu Seminar, a
study group on international economics and management.

Kanematsu Memorial Institute of Pathology,
Sydney Hospital

Kanematsu Memorial Hall of Kobe University

Social Contributions
Following the Great East Japan Earthquake of March 2011, theKanematsu Group provided support for the devastated region
through the donation of funds for recovery and reconstruction, andthe direct supply of goods to the region. In addition to a system
introduced in April 2011 allowing employees to take time off work
to engage in volunteer activities, we also disburse transportation
and accommodation costs and so on when employees participate
in volunteering programs approved or planned by the Company.
Up to May 2012, we had participated in five volunteer
programs, including the Nippon Keidanren’s One Percent Club, anda total of 70 personnel from the Kanematsu Group took part.
According to the organizers of volunteer centers throughout
the tsunami-hit region, even now, well over a year after the disaster,much work remains to be done in clearing farmers’ fields of debris,
restoring fishing facilities to operational status, and providing support for displaced persons living in temporary housing.

A group of volunteers

Clearing debris from farming land

At the Kanematsu Group, we believe it is important to ensurethat such volunteer activities are not short-lived, and that the needsof the disaster-hit communities are addressed through activities
pursued over a long period. We will continue to plan and promote
volunteering in the disaster-hit region, and to assist the region’s
recovery.
In August 2011, we invited 34 elementary school children
who were members of the Elite Kids program organized by the
Fukushima Football Association, and held the “Fukushima-Chiba
Kids’ Soccer Tournament” at a Company-owned sports ground in
Chiba Prefecture. This event was a chance for children, who had
had little opportunity to exercise out of doors (owing to the healthrestrictions imposed in the wake of the Fukushima Daiichi nuclear
power plant accident), to enjoy playing soccer in the open air.
We have also opened up this sports ground for use by local
high schools for baseball, soccer, tennis and other sports, as part ofour emphasis on good relations with local communities.

Salmon hatchery

The Fukushima-Chiba Kids’ Soccer
Tournament

Work-Life Balance
The Company has restricted the length of employees’ working hours with the vision of creating a society where there exists a comfortablework-life balance. We have been improving the working environment so that employees can treasure the time they spend with their families,
as well as the time spent on hobbies and participating in social activities.
● Child Care Support
In addition to the conventional maternity leave and childcare leavesystem, the Company has revised its working regulations so that the
number of the days and the scope of the application of childcare
leave can be expanded in accordance with the revisions of theLabor Standards Act and the Child Care and Family Care Leave Act.
●A cquisition of “Kurumin” certification of support
for nurturing of the next generation
In December 2010, Kanematsu received the“Kurumin” certification from the Ministry of
Health, Labour and Welfare. This is awarded
to companies that are deemed by the
Ministry to be making valuable contributions

to supporting the nurturing of the next generation through suchmeasures as helping employees achieve a good work-life balanceso that they can bring up children while remaining active in thework force.
● Family Care Support
In addition to the conventional family care leave system, theCompany has recently expanded special paid holidays for family
care.
● Refreshment Day
Wednesday is prescribed as refreshment day, and all employees
are encouraged to leave the office as soon as possible after work toincrease work efficiency and improve work-life balance.

Annual Report 2012

21

CSR

Environmental Initiatives
Ever since the Company obtained ISO 14001 certification in March 2004, it has constantly improved its environment management system.
By operating this system effectively, we have sought to contribute to the reduction of CO2 emissions and fighting global warming bylowering the consumption of electricity and paper and comprehensively reducing and sorting waste. Our goal is to help create a low-carbon
and recycling-oriented society.
We have also helped to protect the global environment through our business activities in Japan and overseas. We have moved into numerous
environment-related businesses, mainly in the Environment & Materials Division and the Business Innovation Department.

Supporting the REDD+ program
The UN-REDD program is a United Nations initiative
on “Reducing Emissions from Deforestation and Forest
Degradation.” The REDD+ program goes beyond this to include
the role of conservation, the sustainable management offorests, and enhancement of forest carbon stocks. It aims tominimize the degradation of land through industrialization or
housing development while reducing CO2 emissions. As the
economic benefits of absorption and fixation of CO2 are converted into credits, this program is coming under the spotlight
as a new framework for regulating CO2 emissions, and it is also
expected to help preserve biodiversity and improve the living
environment of forest-dependent indigenous peoples.

Subsistence farming in Gorontalo Province(Indonesia)

At the Company, we are taking the lead worldwide inpromoting specific initiatives under REDD+ in Brazil andIndonesia, where tropical rainforests are particularly threatened. The project we are undertaking in the Brazilian stateof Mato Grosso, which we estimate will reduce CO2 annual
emissions by 400,000 tons, was selected by METI as a “FY2010
Global Warming Mitigation Technology Promotion Project.”
We are also conducting an investigation into the possibilities
of combining forest preservation with the production of
biofuel in Gorontalo Province, Indonesia, as a “New Mechanism
Feasibility Study Project in FY2011” on behalf of the Ministry of
the Environment.

Swidden land on a hillside used for crops (Indonesia)

The Amazon flows through conservation areas(Brazil)

CSR Procurement
CSR procurement means that a company procuring necessary materials, parts and products requires its suppliers not only to swiftly provide
products of consistently high quality but also to make a CSR commitment. CSR procurement efforts are also growing in importance year by
year as companies and the general public start to take notice of CSR.
The Company has established systems to promote CSR activities, including a CSR Action Guidelines for Supply Chains, to meet the CSR
procurement requirements of its business partners.

22

KANEMATSU CORPORATIONCorporate Governance

Our Basic Stance on Corporate Governance
The Company has strengthened corporate governance to increase the transparency of management and to create a more
equitable, efficient and sound company. We will improve corporate governance with the aim of winning the support of all
our stakeholders, including shareholders, customers and employees, and increasing our enterprise value.
Board of Directors

Board of Corporate Auditors

In principle, the Company’s Board of Directors meets once a month,with extraordinary meetings held as necessary.
The Board of Directors decides on matters set out in laws andordinances as well as the Company’s Articles of Incorporation,
determines basic business policies, and draws up long-term andshort-term plans for the entire Company, in addition to reviewing
business results. The Board of Directors also takes decisions on thedivision of responsibilities among the directors, and on whether
or not to allow directors to serve concurrently as representative
directors of other companies.
To facilitate rapid decision-making and flexible management,
the Company holds an Executive Directors Council meeting every
week, in principle. The council consists of all directors and establishes basic policies for Company-wide general business execution inaccordance with basic policies determined by the Board of Directors
and provides instruction and guidance on the execution of business.
To discuss important projects to be proposed to the Executive
Directors Council, a Project Deliberation Committee meeting is held
every week. The Company introduced an executive officer system
in July 2008. To respond appropriately to changes in the businessenvironment, the term of office of directors is one year.

The Company has a Board of Corporate Auditors. Corporate
auditors and the Board of Corporate Auditors, as an independent
organ, audit the directors’ performance of their duties. Four
auditors receive reports from directors and employees on theperformance of their duties as required, attend meetings of theBoard of Directors, Executive Directors Council, Project Deliberation
Committee, Crisis Management and Compliance Committee,
Internal Control Committee, and other important meetings andcommittee meetings, and audit the performance of duties bydirectors.
The Company also conducts audits by outside auditors
provided for in Article 2-16 of Companies Act of Japan. Three outof the Company’s four Corporate Auditors are outside auditors. The
Company has adopted the current system because, based on thesuggestions and advice of the outside auditors founded on theirexpertise and experience, the system is sufficiently monitored byoutside management and is properly supervised.

● Corporate Governance Structure

General Meeting of Shareholders
Appointment/
Dismissal

Board of Directors

Appointment/
Dismissal
Audit

Appointment/
Dismissal

Board of Corporate Auditors(internal and outside corporate auditors)

Audit

Supervision

Management Committee
Internal Auditing
Department

Project Deliberation Committee
Crisis Management and Compliance Committee
Internal Control Committee

Accounting audit

Accounting Auditor

CSR Committee
Business Divisions/Administrative Departments, Domestic and Overseas Offices(As of June 22, 2012)

Annual Report 201223

Corporate GovernanceInternal Auditing

Internal Control (Financial Reporting)

The Internal Auditing Department (seven staff members as of June22, 2012) conducts internal audits of the Company and consolidated subsidiaries to ensure that proper accounting records are
kept, to evaluate and monitor improvements and control activities,
and help improve operational effectiveness and efficiency.
The Internal Auditing Department and corporate auditors holdregular meetings and work in close cooperation with one anotherby explaining audit plans, reporting the results of audits, and ensuring the effectiveness of internal audits. They also exchange opinionswith the accounting auditor through internal control assessments
and other related activities.

We have established an Internal Control Committee to build aninternal control system for the Group for effective and efficientfinancial reporting. In consideration of the internal control reporting
system stipulated in the Financial Instruments and Exchange Law,
we are developing, operating, assessing, and improving internal
controls relating to financial reporting.
The Company-wide internal controls and business processes at
key facilities are assessed by the Internal Auditing Department, an
independent department in charge of assessment.

Action Items for the Corporate Group

Information Management System

In the Kanematsu Group, the senior management of Group
companies meets twice each year and at other additional meetings
as required, and shares information about the management of theGroup to facilitate a mutual understanding and common awarenessof corporate governance.

With regard to information management, we have establishedcriteria and standards for the custody, retention and disposal of
accounting records, balance sheets, agreements and contracts
concerning the basic rights and obligations of the Company, certificates related to properties and other similar documents. We havealso tightened rules on information security management, with theaim of preserving and managing information as an important assetof the Company, including the protection of personal data andother information security compliance requirements.
To tighten the security of information systems for risk management, we have established information security management regulations with a view to preventing leaks and outflows of important
information and we have defined uniform standards on the use ofcomputers, networks, e-mails and other means of communication
to protect corporate information and personal data. We are also
constantly reviewing our system infrastructure to increase the levelof security and carry out maintenance operations to ensure thenecessary and appropriate level of security.

Risk Management
The Company has established policies, systems and procedures forthe management of various types of risk associated with the execution of business, including foreign currency risk, credit risk, market
risk and business investment risk.
With respect to business risks, the department that is in chargeof each risk based on specific remits has established internal
regulations and detailed enforcement regulations, and prepared
operational guidelines that have been thoroughly instilled in all
employees through training sessions and seminars. We have alsoestablished cross-functional committees to control risks as necessary.
We have established a system to make judgments and decisions
about business risks based on those remits. The Project Deliberation
Committee considers whether to make important investments, andwhether to continue or withdraw from those investments and loans
by comprehensively examining relevant risks.
Regarding the risks posed by the occurrence of serious events
such as major natural disasters, we have drawn up plans anda manual of countermeasures, and have put in place a system
to ensure appropriate management of the Company in such acontingency.
* For more information about the main risks that could affect the Group’s businessresults and financial status, see pages 30 and 31.

24

KANEMATSU CORPORATION

Compliance
In light of the importance of complying with laws and ordinances,
we have set up a Crisis Management and Compliance Committee,
and have strengthened our internal compliance system.
We have compiled a Compliance Handbook detailing countermeasures with specific examples, which has been distributed to all
employees and also published on the intranet to raise awareness ofcompliance among directors and all employees. We also introduced
a hotline system for reporting directly to or consulting with the
Crisis Management and Compliance Committee or an outside lawyer. In addition to legal compliance, we conduct training courses tofoster sound judgment on ethical matters among our staff.

Compliance Handbook

Compliance Hotline Card

● Diagram of the Kanematsu Group Compliance System
Board of Corporate
Auditors

Investigate, Audit

Internal Auditing Department

Corporate Planning Department
Management
Committee

Board of Directors

Crisis Management
and Compliance
Committee
Chairperson: Chairman
Vice-chairperson: President

Department Chief Officers

Instructions, Feedback
Reports, Consultation

Superior

Departmental
Compliance Officers

Promotion Office:
CSR Promotion Section[Hotline][For reporting/consultation]

Presidents of the Group Companies
Compliance Officers

Credit Control and Legal Department

Employees of
the Company
Employeesof the Group
Companies

Hotline(Crisis Management and Compliance Committee line)

Hotline (Outside Lawyer Line)IR Activities
We intend to promote equitable and transparent management bydisclosing important management information to shareholders
and all other stakeholders, institutional investors, analysts, and the
media in a prompt and appropriate manner.
We disclose information to shareholders and investors throughour website, hold briefings twice a year for institutional investors
and analysts, and disclose information on a timely basis to stock
exchanges. We also hold briefings when necessary to explain
business strategies such as our medium-term business plan. In
addition, we are eager to participate in meetings with institutional
investors and road shows held by securities companies to provide
explanations and answer questions.

Our website includes an Investor Relations section featuring
financial results, securities reports, briefing materials used by briefing
analysts and investors, and annual reports. We also publish financial
disclosure documents and press releases in a timely manner. The
website also features financial highlights for the last five years, an
IR calendar and stock price information, as well as notices about
general meetings of shareholders and notices and contact details
regarding share handling procedures.
Departments responsible for IR:
We appointed Investor Relations Officers to the Public Relations Section of the
Corporate Planning Department, who are responsible for conducting IR activities
in collaboration with the Accounting Department, Finance Department and otherrelevant departments.

Annual Report 201225

Directors and Corporate Auditors (As of June 22, 2012)

Toshihiro Kashizawa

Masayuki Shimojima

ChairmanPresident

Chief Officer, Internal Auditing

Tetsuro Murao

Hirokazu Tamura

Takashi Gunji

Morihiro Toida

Managing Director

Director

Director

Director

Assistant of President, Chief Officer, Personnel &General Affairs, General Manager for Osaka Branch

Chief Officer, Electronics & IT Division,
Devices Division

Chief Officer, Iron & Steel Division, Machinery &Plant Division, Environment & Materials Division

Chief Officer, Foods Division, Foodstuff Division

Hideo Kazusa

Tetsuya Kaneko

Yoshiya Miyabe

Nobuyoshi Sakuyama

Director

Director

Director

Director

Chief Officer, Corporate Planning,
System Planning, Textiles, Realty

Chief Officer, Credit Control & Legal,
Traffic & Insurance

Vice Chief Officer, Electronics & IT Division

Chief Officer, Finance, Accounting,Business Accounting, General Manager ofFinance Dept. & Accounting Dept.

Tsukasa Okamoto

Fumihiko Nashimoto

Yonosuke Yamada

Yutaka Hirai

Corporate Auditor

Corporate Auditor

Corporate Auditor

Corporate Auditor* Messrs. Tsukasa Okamoto, Yonosuke Yamada and Yutaka Hirai are external corporate auditors.
* Messrs. Yonosuke Yamada and Yutaka Hirai are independent auditors as defined in the Securities Listing Regulations of the Tokyo Stock Exchange.

26

KANEMATSU CORPORATION

Financial Section

Contents
28

Management’s Discussion and Analysis

30

Business Risks

32

Consolidated Balance Sheets

34

Consolidated Statements of Income

35

Consolidated Statements of Comprehensive Income

36

Consolidated Statements of Changes in Net Assets

38

Consolidated Statements of Cash Flows

39

Notes to Consolidated Financial Statements

70

Independent Auditor’s Report

Presentation of fiscal year and amount (Japanese yen and U.S. dollars) on p.32–70- “Fiscal 2012” refers to the Company’s consolidated fiscal year ended March 31, 2012 and other fiscal years are referred to in the corresponding manner.
- “JPY” means millions of yen and “USD” means thousands of U.S. dollars.

Annual Report 201227

Management’s Discussion and Analysis

Business Results

slump in demand for semiconductor components and semiconductor
manufacturing equipment.
As a result, net sales in the Electronics & IT Segment decreased by¥710 million to ¥253,144 million, while operating income declined by¥462 million to ¥9,026 million.

For the fiscal year ended March 31, 2012, consolidated net sales
increased by ¥69,474 million year on year, to ¥1,006,365 million. This
performance came against the background of an increased volume oftrade by our Foods & Foodstuff and Environment & Materials segments,
as well as higher commodity unit selling prices. Meanwhile, gross profit
rose ¥3,995 million to ¥80,900 million. Thanks in part to this, as well as
our continued efforts to hold down selling, general and administrative
expenses, operating income posted a year-on-year gain of ¥3,397
million to ¥21,426 million. In non-operating items, despite a decline individend income and an increase in losses on foreign currency translations, we posted an improvement of ¥98 million in non-operating loss
thanks to increased interest income and reduced losses on equitymethod investments.
As a result, ordinary income increased by ¥3,495 million to ¥17,752
million. In extraordinary items, we recorded a loss of ¥4,223 million
as a result of losses on sale of investments in securities, losses on thevaluation of investments in securities, losses on liquidation of affiliates,
and losses on withdrawal from welfare pension funds at subsidiaries.
Income before income taxes and minority interests came to ¥13,529
million, up ¥499 million over the previous fiscal year.
The Company posted net income of ¥6,110 million, a decreaseof ¥3,065 million from the previous fiscal year, owing to increased tax
expenses stemming from a reduction in the amount of deferred tax
assets in line with reforms to the taxation system implemented in fiscal
2011.

Foods & Foodstuff
Sales of imported livestock products showed a firm undertone, while
our foods business, where supply and demand was comparatively
stable, enjoyed favorable results, centered on ready-to-eat meals andprocessed food products. In the foodstuff business, Japan’s livestockraising and dairy farming sectors have been badly damaged by the
March 2011 disaster, as well as other adverse factors. However, we succeeded in strengthening our relationships with our business partners
and expanding our marketing channels in the field of animal feed sales,
thereby contributing to earnings.
As a result, net sales in the Foods & Foodstuff Segment posted anincrease of ¥20,252 million, to ¥292,112 million, while operating income
rose by ¥2,351 million to ¥5,186 million.

Iron & Steel
Exports to Europe and the United States of special steel products forautomotive use, and of special and stainless steel products for otheruses in the United States and Asia held firm, helping push up earnings.
As a result, net sales in the Iron & Steel Segment rose by ¥299
million to ¥99,131 million, while operating income increased by ¥202
million to ¥3,612 million.

Segment Information
Electronics

Machinery & Plant

Steady sales growth was once again enjoyed by the ICT solutions
and mobile solutions businesses, thanks to the expanding market
for smart phones and tablet computers. On the other hand, oursemiconductor operations faced difficult business conditions due to a

In automotive components, our supply chains were severed by the
March 11 disaster, but we were able to recover from this impact fromthe second quarter onward, posting a performance on a par with theprevious year. In industrial plant transactions there was an increase in

Net sales

1,244,020

Operating income andoperating income to net sales
22,605

21,426
19,027

1,138,755
861,277

936,891

18,0291,006,365
1.8

Net income (loss) andnet income (loss) per share

1.7

12,186

1.9

19,016
45.44
9,175

2.1

3,528
21.93
8.44

1.4

2008

2009

2010

■ Net sales (¥ million)

28

KANEMATSU CORPORATION

2011

2012

2008

2009

2010

2011

■ Operating income (¥ million)
Operating income to net sales (%)

2012

2008

(30.56)(12,787)
2009
2010■ Net income (loss) (¥ million)
Net income (loss) per share (¥)

2011

6,110
14.60

2012

Fundraising and interest-bearing debt

ODA-related projects. Machine tools transactions recorded firm results,
thanks to a resurgence in demand for machine tools in Japan.
As a result, net sales in the Machinery & Plant Segment were up¥3,095 million at ¥70,395 million, while operating income rose ¥385
million to ¥1,447 million.

The Group raises funds primarily through indirect finance based ongood relations with our main banks, regional banks, life and non-life
insurers and other financial institutions. Also, to respond flexibly tofunding requirements for business expansion and to guard against
unforeseen deterioration in our financial situation and upheavals inmajor financial markets, we also maintain sufficient levels of cash andbank deposits, and conduct flexible investment operations in highly
secure short-term financial products in response to our funding needs
and the financial situation.
Interest-bearing debt on a consolidated accounts basis at the endof the reporting fiscal year amounted to ¥160,848 million, down ¥12,779
million from the end of the previous fiscal year. The balance of cash andcash equivalents was up ¥1,821 million from the end of the previous
fiscal year, at ¥70,835 million, and net interest-bearing debt came to¥90,012 million, for a decrease of ¥14,600 million from the end of theprevious fiscal year.
Long-term debt (which includes long-term loans falling due
within one year) as a percentage of interest-bearing debt was 76%
on a consolidated basis (87% on a nonconsolidated basis) at the endof the reporting fiscal year, indicating the high level of stability of ourfundraising.

Environment & Materials
In chemicals, we recorded firm transactions for exports of materials forvehicle batteries and imports of bulk powder pharmaceuticals. In theenergy business, sales of heavy oil to electric power utilities increased,
helping push up overall earnings.
As a result, net sales in the Environment & Materials Segment
increased by ¥46,216 million to ¥273,682 million, while operating
income rose ¥995 million to ¥1,972 million.

Other
Net sales in other businesses increased by ¥321 million to ¥17,898
million, while operating income posted a decrease of ¥75 million, to¥160 million.

Financial Status
Cash flows
Net cash provided by operating activities came to ¥15,822 million as aresult of increased operating income. Net cash provided by investing
activities came to ¥1,291 million due to income from the sale ofinvestment securities and the refund of time deposits. Net cash used infinancing activities amounted to ¥13,411 million, reflecting the repayment of long-term debt.
As a result, the balance of cash and cash equivalents at the endof fiscal 2012, adjusted for the effect of exchange rate changes, cameto ¥70,594 million, for an increase of ¥3,168 million over the previous
term-end.

Net interest-bearing debt andnet debt-equity ratio

Net assets
Net assets increased by ¥6,416 million over the end of the previous fiscal year, to ¥55,992 million. This is attributable to an increase in retained
earnings due to increased net income for the reporting term, whichmore than offset losses on foreign currency translation adjustments
resulting from fluctuations in the yen’s exchange rate.
As a result, the equity ratio improved by 1.3 percentage points
compared with the end of the previous fiscal year, to 9.8%.

Net assets and net assets per share

Equity ratio

62,239148,944

55,992

134,582
5.4

109,350 104,612

42,03545,804

8.5

49,576

7.3

90,0123.8

3.3

108.95

9.8

9.1

59.61

3.2

69.15

79.07

6.0

93.16

2.3
2008

2009

2010

2011

2012

■ Net interest-bearing debt (¥ million)
Net debt-equity ratio (times)* Net interest-bearing debt = Interest-bearing debt – Cash and bank deposits* Net debt-equity ratio = Net interest-bearing debt / Shareholders’ equity

2008

2009

2010

■ Net assets (¥ million)

2011

2012

Net assets per share (¥)

2008

2009

2010

2011

2012

Equity ratio (%)* Equity ratio = Shareholders’ equity / Total assets* Shareholders’ equity = Net assets – Minority interests

Annual Report 201229

Business Risks

Below are details of the risks that could affect the business performance and financial position of the Group.
The forward-looking statements below are based on information available as of June 22, 2012.
The Group takes all risk that it faces on a daily basis in the course of its business very seriously. Risk control isundertaken through management mechanisms and methods tailored to the nature of each category of risk.

Market risk related to supply and demand andprices of goods traded
In its mainstay commodity trading business in Japan and overseas, theGroup deals with grains and petroleum products as well as electronicparts and Information and Communication Technology (ICT) products.
Grains and petroleum products will be influenced by market conditions,while electronic parts and ICT products are exposed to the risk of frequent price erosion caused by competition and obsolescence resulting
from technological innovation. If our positions with these commodities
increase, we could suffer an unexpected loss from fluctuations in commodities prices and reduced from purchasers, etc.

Foreign currency risk
The Group is engaged in foreign currency transactions in a number ofcurrencies and terms incidental to its export and import trading. The
Group not only transfers the risk of currency fluctuations to business
partners in accordance with transaction terms but also participates inderivatives transactions such as forward contracts to reduce the risk.
The Company also has local subsidiaries and business corporations
overseas. Account balances at these companies are converted into
yen at the exchange rates prevailing at the time of account closing, forthe purposes of preparing consolidated financial statements. For thisreason, net assets may change through translation adjustments associated with exchange rate fluctuations.

Interest rate risk
The Group raises most funds needed for operating and financing
activities in the form of borrowings from financial institutions, some ofwhich are at variable interest rates. Since these borrowings and fundmanagement are exposed to an interest rate risk, interest paid by theGroup may increase with a rise in interest rates.
Also, since certain companies in the Group adopt a defined benefit
pension plan, the retirement benefit obligation could increase in theestimation of the Group if the discount rate used for the calculation of
the retirement benefit obligation falls.

Price fluctuation risk of marketable securities, etc.
The Group may hold shares in trade partners as a means of strengthening
its relationship with them. There is a risk of price fluctuation inherent inthese shares, which could have an effect on the financial position of theGroup resulting from the total of valuation differences in other securities.

30

KANEMATSU CORPORATION

Since stocks and other securities are included in the portfolio of thepension assets of the Group for the purpose of making medium- andlong-term investments, differences from the required investment yield
could have an effect on the financial position of the Group, given thatthe investment yield will fall if the prices of the stocks, etc. fall.

Default risk and credit risk
The Group extends credit in a number of forms, including accounts
receivable, advance payments, loans and guarantees in diverse business
transactions with its trading partners in Japan and abroad. For thisreason, late repayments and defaults may occur with developments
such as a deterioration in the financial strength of its trading partners.
The Group could also be forced to perform obligations that could beaccompanied by a monetary loss in association with the conclusion andperformance of a commodity supply agreement, a contract agreement,
and subcontract agreement, or other agreements, irrespective of
reasons, if the trade partner defaults on its obligation or contract.
Although we have set aside an allowance for these losses in our
accounting procedures using certain estimates, an additional loss could
arise if the loss exceeds the scope of the allowance.

Business investment risk
The Group makes business investments to achieve objectives, including
deep mining of existing businesses and expansion of business areas.
The Group decides whether to make such investments through procedures established according to their details and amounts. When making
investment decisions, the Group evaluates and analyzes risk factors andthe profitability of the business based on cash flows, taking the criteria
for business withdrawal into account. After making an investment, theGroup regularly reevaluates and reviews business potential and investment value to minimize any potential loss. The value of the business
investments may fluctuate according to the financial conditions ofinvestment targets and their business success or failure.
The range of market changes tends to be particularly wide inoverseas businesses. Local laws and relationships with partners may
also prevent the Group from executing its policy for operating orwithdrawing from a business.

Country risk
The Group engages in transactions, loans and investments in othercountries. The collection of receivables may be delayed or impossible

as a result of political or economic developments in each of thesecountries. To minimize losses that could arise should these country risks
become reality, the Group regularly sets a limit based on ratings given
to each country and region according to the scale of their respective
country risk, and operates its businesses in such a way that prevents
overexposure to certain countries and regions. The Group takes steps
such as enrolling in trade insurance programs, according to the ratingsand project details in an attempt to minimize recovery risks. However,continuing transactions may become difficult if these risks actualize
in certain countries and regions, and this development may affect the
future business results of the Group.

Legal risk related to changes in laws
The business activities undertaken by the Group in Japan and overseas
are subject to a wide range of legal regulations in Japan and othercountries. The Group may become unable to continue certain transactions because of factors such as unexpected changes in laws, changes
in export and import regulations, including a punitive tariff that could
be introduced unilaterally following changes in the international
political environment, and changes in regulations such as permits andlicenses related to the sales and handling of products. An unexpected
expense for the Group may also arise from a lawsuit or from an orderissued by authorities. This risk also includes the risk that a tax rate ortax arrangements imposed by authorities or between countries underinternational taxation arrangements may change. Changes in these
legal systems could influence the financial position and operating
results of the Group.

Legal risk related to lawsuits and disputes

destruction of information system facilities attributable to accidents
and other causes, and communication line troubles. Inoperability may
reduce the efficiency of operations that depend on the systems, andseriously affect the future financial position and business results of theGroup, depending on the scale of damages.

Product and facility deterioration risk and business interruption
risk due to natural disasters and accidents
The Group owns facilities, including business offices, warehouses andmanufacturing plants, in Japan and overseas. Cargo movements takeplace not only in Japan but also between foreign countries when theGroup engages in transactions. For these reasons, assets held by theGroup may be damaged or deteriorate as a result of disasters, accidents
and other developments in the course of transportation. In addition, thebusinesses of the Group may be suspended due to developments suchas earthquakes, fire, floods and riots.

Compliance and fraud risk
The Group operates businesses to buy, sell and provide a broad arrayof products and services in Japan and overseas and carefully monitors
laws and regulations, including those related to exports and importsthat are established and enforced for these products and services
in Japan and other countries. However, it is difficult to execute allprocedures at all times across all of the trading operations we conduct
with the involvement of multiple parties. Although we take a numberof actions to prevent violations, there is a risk that we may overlook
a violation of a law or an instance of fraud. If the violation or fraud ismaterial, the financial position and operating results of the Group could
be affected.

Business operations by the Group, and its assets and liabilities
associated with the business operations may become subject tolegal proceedings, including lawsuits, and other disputes, in various
ways through the course of the business activities undertaken by theGroup in Japan and overseas. These lawsuits and disputes are difficult
to foresee. In addition, resolving disputes and lawsuits often takes aconsiderable time. Predicting outcomes involves uncertainties. Lawsuits
and disputes may affect the financial position and business results of
the Group when they emerge and produce unexpected results.

Security risk related to information systems andinformation security
The Group builds and operates information systems for sharing
information and streamlining its operations. The Group has adopted
information security control rules, and is taking steps to ensure that all
members of the Group are familiar with crisis control responses, to meetthe safety requirements for operating its information systems. However,information systems cannot be made entirely invulnerable to theunauthorized disclosure of business-sensitive information or personal
information through unauthorized access, computer viruses and othermeans, as well as inoperability due to factors such as natural disasters,

Annual Report 201231

Consolidated Balance Sheets
March 31, 2012 and 2011

Kanematsu Corporation and Consolidated Subsidiaries

Fiscal 2012
JPY

Fiscal 2011
JPY

Fiscal 2012
USD (Note 3)

1. Cash and bank deposits (Note 5-3)

70,83569,014

861,851

2. Notes and accounts receivable (Notes 5-3, 5-8)

163,782

146,546

1,992,733

3. Lease investment assets

666

606

8,108

4. Inventories (Note 5-1)

57,11357,089694,897

5. Short-term loans receivable

974

1,740

11,858

6. Deferred tax assets

3,322

3,581

40,422

7. Other

22,18021,058269,865

(294)

(355)

(3,580)318,581299,283

3,876,154

1) Leased properties, net (Note 5-3)

1,989

2,563

24,212

2) Buildings and structures, net (Note 5-3)

4,987

5,149

60,6833) Machinery, equipment, vehicle, tools and fixtures, net

4,537

4,781

55,211

4) Land (Note 5-3)

14,192

14,291

172,6815) Lease assets, net

1,310

1,092

15,94010

5125Total tangible fixed assets (Note 5-2)

27,02827,884

328,851

2. Intangible fixed assets

1,905

1,859

23,186

1) Investments in securities (Notes 5-3, 5-4)

29,867

31,977363,397

2) Long-term loans receivable

5,790

12,67970,4503) Doubtful accounts

1,886

14,006

22,9554) Deferred tax assets

10,842

13,325

131,9205) Other

7,585

9,894

92,291(3,734)(22,236)(45,436)

Total investments and other assets

52,23859,648635,577

Total long-term assets

81,17289,392

987,614399,753

388,676

4,863,768

AssetsI. Current assets

Allowance for doubtful accounts
Total current assets

II. Long-term assets
1. Tangible fixed assets

6) Construction in progress

3. Investments and other assets

Allowance for doubtful accounts

Total assets
The accompanying notes are an integral part of these financial statements.

32

KANEMATSU CORPORATIONFiscal 2012
JPY

Fiscal 2011
JPY

Fiscal 2012
USD (Note 3)

Liabilities
I. Current liabilities
1. Notes and accounts payable (Note 5-8)

108,956

96,137

1,325,671

2. Import bills payable

29,67027,119361,004

3. Short-term borrowings (Note 5-3)

78,444100,488954,428

4. Lease obligations

726

572

8,842

5. Accrued income taxes

1,863

1,562

22,669

6. Deferred tax liabilities

1

1

15

7. Asset retirement obligations

35

6

435

8. Other

27,13826,231

330,192

Total current liabilities

246,837

252,120

3,003,255

1. Long-term borrowings (Note 5-3)

82,40373,1381,002,603

II. Non-current liabilities
2. Lease obligations

1,394

1,248

16,9693. Deferred tax liabilities

160

364

1,951

4. Provision for employees’ retirement and severance benefits

2,736

2,516

33,294

5. Provision for loss on lawsuits

910—

11,072

6. Provision for retirement benefits for directors and statutory auditors

537

617

6,540

7. Asset retirement obligations

821

847

9,994

8. Other (Note 5-3)

7,958

8,245

96,834

Total non-current liabilities

96,922

86,9781,179,255

343,760

339,099

4,182,510

1. Common stock

27,781

27,781

338,011

2. Capital surplus

27,597

27,606

335,774

3. Retained earnings (Deficit)

15,003

8,914

182,544

Total liabilities
Net assets
I. Shareholders’ equity

4. Treasury stock

(550)

(569)

(6,703)

69,83063,732

849,627

1. Net unrealized gains (losses) on securities, net of tax

137

(166)

1,677

2. Net gains (losses) on deferred hedges, net of tax

492

(143)

5,994

3. Revaluation reserves for land (Note 5-5)

66

58

807

4. Foreign currency translation adjustments(31,519)(30,379)(383,496)

Total accumulated other comprehensive income(30,822)(30,631)(375,017)

III. Minority interests in consolidated subsidiaries

16,984

16,475

206,647

Total shareholders’ equity
II. Accumulated other comprehensive income

Total net assets

55,992

49,576681,258

Total liabilities and net assets

399,753

388,676

4,863,768

Annual Report 201233

Consolidated Statements of Income
For the years ended March 31, 2012 and 2011

Kanematsu Corporation and Consolidated Subsidiaries

Fiscal 2012
JPY

I. Net sales
II. Cost of sales (Note 6-1)
Gross profit
III. Selling, general and administrative expenses (Note 6-2)
1. Salaries and bonuses
2. Retirement benefit expenses
3. Outsourcing service charges
4. Provision of allowance for doubtful accounts
5. OtherOperating income
IV. Non-operating income
1. Interest income
2. Dividend income
3. Equity in earnings of affiliates
4. OtherV. Non-operating expenses
1. Interest expenses
2. Equity in losses of affiliates
3. Foreign exchange losses
4. OtherOrdinary income
VI. Extraordinary gains
1. Gain on sale of tangible fixed assets (Note 6-3)
2. Gain on sale of investments in securities
3. Gain on liquidation of subsidiaries and affiliates
4. Gain on negative goodwill
5. Gain on reversal of allowance for doubtful accounts
VII. Extraordinary losses
1. Loss on disposal of fixed assets (Note 6-4)
2. Impairment loss on fixed assets (Note 6-6)
3. Loss on sale of investments in securities
4. Impairment loss on investments in securities
5. Loss on closure of business (Note 6-5)
6. Provision for loss on lawsuits (Note 6-8)
7. L oss on adjustment for changes of accounting standard
for asset retirement obligations
8. Loss on withdrawing from employees’ pension fund
9. Loss on disaster (Note 6-7)
Income before income taxes and minority interests
Income taxes – current
Income taxes – deferred
Income before minority interests
Minority interests in consolidated subsidiaries
Net income
The accompanying notes are an integral part of these financial statements.

34

KANEMATSU CORPORATION

Fiscal 2011
JPY

1,006,365
925,464
80,90023,352
1,765
7,494
112
26,748

472
780
266
951
4,093
—
562
1,488

38
264
10
—
—

59,473
21,426

2,470

6,144
17,752

314

Fiscal 2012
USD (Note 3)

936,891
859,986
76,905
23,104
1,573
7,659
88
26,449

574
1,188
—
1,331
4,346
374
415
1,728

52
495
4
103
487

58,87518,029

3,093

6,864
14,257

1,143

12,244,373
11,260,068
984,305
284,128
21,482
91,188
1,367
325,442

5,747
9,500
3,244
11,57149,810—
6,843
18,108

470
3,219
131
—
—

100
440
545
660
1,185
910

92
252
464
560
—
—

1,228
5,364
6,640
8,038
14,424
11,072

—
693
—

436
—
563

—
8,438
—

3,907
2,115

4,537
13,529
6,023
7,506
1,395
6,110

3,244
(800)

2,370
13,0302,443
10,587
1,412
9,175

47,54425,739723,608
260,697

30,061

74,761
215,997

3,821

55,204
164,61473,282
91,331
16,98574,346

Consolidated Statements of Comprehensive Income
For the years ended March 31, 2012 and 2011

Kanematsu Corporation and Consolidated Subsidiaries

Fiscal 2012
JPY

Fiscal 2011
JPY

Fiscal 2012
USD (Note 3)

I. Income before minority interests
II. Other comprehensive income
1. Net unrealized losses on securities, net of tax
2. Net losses on deferred hedges, net of tax
3. Foreign currency translation adjustments
4. Share of other comprehensive income of associates accounted for equity method
Total other comprehensive income (Note 7-1)
Comprehensive income

7,506

10,587

91,331303
597(1,221)
(12)
(332)
7,173

(272)
(390)
(4,703)(79)(5,445)
5,141

3,698
7,272
(14,862)(158)(4,050)87,282Comprehensive income attributable to the shareholders of the Company
Comprehensive income attributable to minority interests

5,918
1,254

4,152
989

72,016
15,266

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

Annual Report 201235

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2012 and 2011

Kanematsu Corporation and Consolidated Subsidiaries

I. Shareholders’ equity
1. Common stock
Balance at the beginning of the fiscal year
Changes during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
2. Capital surplus
Balance at the beginning of the fiscal year
Changes during the fiscal year
Disposition of treasury stock
Total changes during the fiscal year
Balance at the end of the fiscal year
3. Retained earnings (Deficit)
Balance at the beginning of the fiscal year
Changes during the fiscal year
Net income
Changes of scope of equity-method
Total changes during the fiscal year
Balance at the end of the fiscal year
4. Treasury stock
Balance at the beginning of the fiscal year
Changes during the fiscal year
Acquisition of treasury stock
Disposition of treasury stock
Effect of changes in the shares of equity-method affiliates
Total changes during the fiscal year
Balance at the end of the fiscal year
5. Total shareholders’ equity
Balance at the beginning of the fiscal year
Changes during the fiscal year
Net income
Acquisition of treasury stock
Disposition of treasury stock
Effect of changes in the shares of equity-method affiliates
Changes of scope of equity-method
Total changes during the fiscal year
Balance at the end of the fiscal year

36

KANEMATSU CORPORATION

Fiscal 2012
JPY

Fiscal 2011
JPY

Fiscal 2012
USD (Note 3)

27,781

27,781

338,011—27,781—
27,781—
338,01127,606

27,644

335,882(8)(8)
27,597(38)(38)
27,606(108)(108)
335,774

8,914

(261)

108,460

6,110
(21)
6,089
15,003

9,175
—
9,175
8,914

74,346(262)
74,085
182,544

(569)

(639)

(6,924)

(6)
24
—
18
(550)

(11)
81
(0)
70
(569)

(74)
295
—
222
(6,703)63,73254,524775,429

6,110
(6)
15
—
(21)
6,098
69,830

9,175
(11)
43
(0)
—
9,207
63,732

74,346
(74)
187
—
(262)
74,198
849,627

Fiscal 2012
JPY

II. Accumulated other comprehensive income
1. Net unrealized gains (losses) on securities, net of tax
Balance at the beginning of the fiscal year
Changes during the fiscal year
Net changes of items other than shareholders’ equity during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
2. Net gains (losses) on deferred hedges, net of tax
Balance at the beginning of the year
Changes during the fiscal year
Net changes of items other than shareholders’ equity during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
3. Revaluation reserves for land
Balance at the beginning of the fiscal year
Changes during the fiscal year
Net changes of items other than shareholders’ equity during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
4. Foreign currency translation adjustments
Balance at the beginning of the fiscal year
Changes during the fiscal year
Net changes of items other than shareholders’ equity during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
5. Total accumulated other comprehensive income
Balance at the beginning of the fiscal year
Changes during the fiscal year
Net changes of items other than shareholders’ equity during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
III. Minority interests in consolidated subsidiaries
Balance at the beginning of the fiscal year
Changes during the fiscal year
Net changes of items other than shareholders’ equity during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year
IV. Total net assets
Balance at the beginning of the fiscal year
Changes during the fiscal year
Net income
Acquisition of treasury stock
Disposition of treasury stock
Effect of changes in the shares of equity-method affiliates
Changes of scope of equity-method
Net changes of items other than shareholders’ equity during the fiscal year
Total changes during the fiscal year
Balance at the end of the fiscal year

Fiscal 2011
JPY

Fiscal 2012
USD (Note 3)

(166)

57

(2,026)

304
304
137

(224)
(224)
(166)

3,703
3,703
1,677

(143)

262

(1,745)

636
636
492

(405)
(405)
(143)

7,739
7,739
5,994

58

58

706

8
8
66

—
—
58

102
102
807

(30,379)(25,986)(369,621)(1,140)(1,140)(31,519)(4,393)(4,393)(30,379)(13,875)(13,875)(383,496)(30,631)(25,608)(372,686)

(191)
(191)
(30,822)(5,022)(5,022)(30,631)(2,331)(2,331)(375,017)

16,475

16,887200,457

508
508
16,984(412)(412)
16,475

6,191
6,191
206,647

49,57645,804603,200

6,110
(6)
15
—
(21)
317
6,415
55,992

9,175
(11)
43
(0)
—
(5,435)
3,772
49,57674,346
(74)
187
—
(262)
3,860
78,058681,258

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

Annual Report 201237

Consolidated Statements of Cash Flows
For the years ended March 31, 2012 and 2011

Kanematsu Corporation and Consolidated Subsidiaries

Fiscal 2012
JPY

Fiscal 2011
JPY

Fiscal 2012
USD (Note 3)

I. Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Increase (Decrease) in allowance for doubtful accounts
Increase (Decrease) in provision for employees’ retirement and severance benefits
Interest and dividends income
Interest expenses
Equity in (gains) losses of affiliates
Loss on disposal of fixed assets
Impairment loss on fixed assets(Gain) Loss on sale of investments in securities, net
Impairment loss on investments in securities
Gain on reversal of allowance for doubtful accounts
Loss on closure of business
Provision for loss on lawsuits
Loss on adjustment for changes of accounting standard for asset retirement obligations
Loss on withdrawing from employees’ pension fund
Loss on disaster
Increase in notes and accounts receivable
Increase in inventories
Increase in notes and accounts payableOther
Sub totalInterest and dividends received
Interest paid
Income taxes paid
Payments for cancellation of leases
Payments for withdrawing from employees’ pension fund
Payments for loss on disasterNet cash provided by operating activities

13,529
2,561
(247)
233
(1,253)
4,093
(266)
62
440
281
660
—
1,185
910
—
693
—
(16,251)(646)
19,843(1,699)24,132
1,141(4,105)(3,818)
(833)
(693)
—
15,822

13,030
2,555
60
(119)
(1,762)
4,346
374
40
252
(30)
560
(487)
—
—
436
—
563
(21,167)(3,103)
13,9503,424
12,924
1,698(4,390)(2,339)
—
—
(64)
7,827

164,614
31,171(3,011)
2,846(15,247)
49,810(3,244)
758
5,364
3,421
8,038
—
14,424
11,072—8,438—(197,733)(7,860)241,429(20,676)
293,614
13,883(49,946)(46,465)(10,138)(8,438)—
192,512

II. Cash flows from investing activities
Decrease in time deposits, net
Payments for tangible fixed assets
Proceeds from sales of tangible fixed assets
Payments for intangible fixed assets
Payments for investments in securities
Proceeds from sales of investments in securities
Payments for purchase of investments in subsidiaries
Increase in loans receivable
Proceeds from collection of loans receivable
Other
Net cash used in investing activities

1,340(2,175)
658
(579)
(121)
1,331
(0)
(1,979)
2,605
212
1,291

17,652(1,210)
419
(670)
(450)
1,274
(217)
(2,786)
3,496(184)
17,322

16,304(26,469)8,010(7,056)(1,484)
16,206(2)(24,086)
31,702
2,591
15,715

III. Cash flows from financing activities
Increase (Decrease) in short-term borrowings, net
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds on issuance of common stock
Other
Net cash used in financing activities

788
49,968(63,296)38(909)(13,411)(9,192)
48,531(58,680)—(1,323)(20,664)

9,592
607,957(770,128)465(11,064)(163,178)

IV. Effect of exchange rate changes on cash and cash equivalents
V. Net increase in cash and cash equivalents
VI. Cash and cash equivalents at beginning of year
VII. Effect of the change in scope of consolidated subsidiaries
VIII. Cash and cash equivalents at end of year (Note 9-1)

(533)
3,168
67,426—70,594(1,677)2,808
64,479137
67,426(6,497)38,552820,369—
858,921

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

38

KANEMATSU CORPORATION

Notes to Consolidated Financial Statements
For the years ended March 31, 2012 and 2011

Kanematsu Corporation and Consolidated Subsidiaries

1. Basis of Preparing Consolidated Financial Statements
1. The method of producing the consolidated financial statements
The consolidated financial statements of Kanematsu Corporation (the “Company”) are prepared in accordance with the “Regulations Concerning Terminology,
Forms and Preparation Methods of Consolidated Financial Statements” (Ministry of Finance Ordinance No.28, 1976; hereinafter, the “Regulations”).
The Company and its domestic consolidated subsidiaries maintain their accounts and records in accordance with the provisions set forth in the Companies
Act of Japan and the Financial Instruments and Exchange Law of Japan, and in conformity with accounting principles generally accepted in Japan, which are
different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.

2. Japanese yen amountAmounts less than one million yen have been omitted, since the Regulations require such amounts to be rounded down for presentation. As a result, the totals
shown in the consolidated financial statements and notes thereto do not necessarily agree with the sum of the individual account balances or breakdowns.

2. Summary of Significant Accounting Policies(a) Scope of Consolidation
Fiscal 2012

(1) Number of consolidated subsidiaries: 78
In the current fiscal year, 3 companies were added to the scope of consolidation due to new establishment, while 4 companies were excluded from the scopeof consolidation due to merger or liquidation.

(2) Unconsolidated subsidiaries:
5 companies are not included in the scope of consolidation.

(3) Reason that certain subsidiaries are excluded from the scope of consolidation:
5 unconsolidated subsidiaries are excluded from consolidation as they are immaterial to the Company in terms of their total assets, net sales, net income andretained earnings, individually and in the aggregate.
(b) Application of Equity Method
Fiscal 2012

(1) Number of unconsolidated subsidiaries to which the equity method is applied: 44 subsidiaries out of 5 unconsolidated subsidiaries are accounted for by the equity method.

(2) Number of affiliated companies to which the equity method is applied: 25
Among 30 affiliated companies, the equity method is applied to investments in 25 companies.
In the current fiscal year, 1 company was added to the scope of consolidation due to acquisition and 4 companies were excluded from accounting via theequity method due to sale of shares and decline in influence.

(3) Reason that the equity method is not applied to certain affiliated companies:
The 1 unconsolidated subsidiary and 5 affiliated companies to which the equity method is not applied are immaterial to the Company’s consolidated net
income and retained earnings, individually and in the aggregate.
(c) Fiscal Year-ends of Consolidated Subsidiaries
Fiscal 2012
Consolidated subsidiaries that have different fiscal year-end dates from the consolidated balance sheet date are as follows:
Name of consolidated subsidiary
Kanematsu USA
Kanematsu GmbH
Kanematsu Australia
Kanematsu Europe
KG Aircraft Leasing
29 other companies

Year-end date
December 31
December 31
December 31
December 31
December 31

In preparing the consolidated financial statements, the financial statements of 34 companies with fiscal year-end dates within three months of the consolidated balance sheet date of March 31, are used. However, material differences in transactions and accounts arising from the use of these fiscal year-end dates
are appropriately adjusted for in consolidation.

Annual Report 201239

Notes to Consolidated Financial Statements(d) Short-term Investments and Investments in Securities
Fiscal 2012

(1) Held-to-maturity bonds:
Debt securities are stated at cost less the amortization of any premium or discounts, which are amortized over the period to maturities.

(2) Other securities (Non-trading purpose):* Marketable securities
Marketable securities are stated at fair value.
Net unrealized gains or losses on securities recorded in “Net assets” are net of tax amounts. The cost for marketable securities that have been sold isdetermined using the moving average method.
The fair value is determined primary based on the average of daily market price for one-month prior to the fiscal year-end.
* Non-marketable securities
The non-marketable securities are stated at cost using the moving average method.
(e) Derivatives
Fiscal 2012
Derivatives are stated at fair value method.
(f) Inventories
Fiscal 2012
Inventories are stated at cost method principally determined by the moving average method (carried at the lower of cost or market value on the balance sheet).
(g) Property and Equipment
Fiscal 2012

(1) Tangible fixed assets (excluding lease assets):
The declining balance method is used for tangible fixed assets other than buildings (excluding auxiliary equipment) and leased property.
The straight-line method is used for buildings (excluding auxiliary equipment) and for leased property.
The ranges of principal estimated useful lives are as follows.
Buildings and structures
3 – 50 years
Machinery, equipment, vehicle, tools and fixtures 2 – 25 years(2) Lease assets:
Depreciation on lease assets is recorded using the straight-line method over the lease term, assuming a residual value of zero.
Finance lease transactions that commenced on or before March 31, 2008 are accounted for as operating leases.
(h) Allowance for Doubtful Accounts
Fiscal 2012
The Company and its consolidated subsidiaries (The “Companies”) provide an allowance for doubtful accounts to cover credit losses, based on estimates ofcollectibility of individual accounts and past bad debt loss experiences.
(i) Provision for Employees’ Retirement and Severance Benefits
Fiscal 2012
The Company and certain of its subsidiaries provide for retirement provisions based on the present value of projected benefit obligations and the fair value ofthe plan assets at year-end.
Except for certain domestic consolidated subsidiaries who recognize service costs as expenses upon their occurrence, prior service costs are amortized
as expenses using the straight-line method over five years, a predetermined number of years, within the average expected remaining service period of theemployees.
Actuarial gains and losses are amortized by the straight-line method over five to ten years, within the average expected remaining service period of theemployees, and are recorded as expenses in the subsequent years in which the gains or losses are recognized.
(j) Provision for Loss on Lawsuits
Fiscal 2012
The Companies provide a provision for potential losses on lawsuits.

40

KANEMATSU CORPORATION

(k) Provision for Retirement Benefits for Directors and Statutory Auditors
Fiscal 2012
The Company and certain of its subsidiaries provide a provision for retirement benefits for directors and statutory auditors, which is calculated by estimating
the required payable as of the balance sheet date in accordance with the internal rules.
(l) Translation of Foreign Currencies
Fiscal 2012
All monetary assets and liabilities denominated in foreign currencies are translated into yen at spot exchange rates prevailing at the balance sheet date.
Resulting translation gains and losses are included in determination of net income for the period.
The financial statements of overseas subsidiaries are translated at current exchange rates on the closing date except for shareholders’ equity which istranslated at historical acquisition date exchange rates. Differences in yen amounts arising from this translation are shown as “Foreign currency translation
adjustments” and “Minority interests in consolidated subsidiaries” recorded in “Net assets.”(m) Hedge Accounting
Fiscal 2012

(1) Hedge accounting method:
The Company and certain of its consolidated subsidiaries apply hedge accounting whereby gains and losses on hedged transactions are deferred andrecognized over future periods. For certain interest rate swaps designated as hedging instruments that meet specific matching criteria, the amounts received
or paid under such interest rate swap agreements are added to or deducted from the interest on the hedged assets or liabilities when paid. For certain forward
exchange contracts designated as hedging instruments that meet specific matching criteria, the hedged assets or liabilities are measured by contract rate.

(2) Hedging instruments and hedged items:(Hedging instruments)* Commodity-related
Commodity futures contracts / Commodity forward contracts* Foreign exchange-related
Forward exchange contracts / Foreign currency swaps / Foreign currency options* Interest rate-relatedInterest rate swaps / Interest rate options(Hedged items)* Commodity-related
Forecasted transactions on commodity trading* Foreign exchange-related
Foreign currency-denominated monetary assets and liabilities
Forecasted foreign currency transactions* Interest-related
Borrowings(3) Hedging policy:
The Company and certain of its consolidated subsidiaries have internal policies to utilize the above hedging instruments for the purpose of reducing their
exposures to the risk of fluctuations in commodity prices, foreign currencies and interest rates for their operating and financing activities.

(4) Method of evaluating the effectiveness of hedging activities:
The Company and certain of its consolidated subsidiaries evaluate the effectiveness of their hedging activities by comparing accumulated fluctuations inprices or cash flows of the hedged items with those of the hedging instruments and examined the degree of their correlation.

(5) Other:
Risk management is performed by the management division, which is independent of the trading section. Also, reporting to management is performed inaccordance with the internal rules of the Company on a regular basis.
(n) Amortization of Goodwill and Negative Goodwill
Fiscal 2012
Goodwill whose amortization period can be reasonably estimated is amortized over the estimated period. Otherwise goodwill is amortized over 5 years using
the straight-line method.
Negative goodwill which was recognized by business combinations before April 1, 2010 and whose amortization period can be reasonably estimated isamortized over the estimated period. Otherwise negative goodwill is amortized over 5 years using the straight-line method.

Annual Report 201241

Notes to Consolidated Financial Statements(o) Scope of Cash and Cash Equivalents in the Consolidated Statements of Cash Flows
Fiscal 2012
Cash and cash equivalents in the consolidated statements of cash flows are comprised of cash on hand, bank deposits on demand, and highly liquid short-term
investments, generally with original maturities of three months or less, that are readily convertible to cash for which the risk of changes in value is insignificant.
(p) Consumption Taxes
Fiscal 2012
Consumption tax and local consumption tax on goods and services are not included in the revenue and expense amounts subject to such taxes in theaccompanying consolidated statements of income.
(q) Consolidated Tax ReturnFiscal 2012
The Company and its wholly owned domestic subsidiaries have adopted the consolidated tax regime, and as such file a consolidated corporate-tax return.

3. United States Dollar Amounts
The U.S. dollar amounts appearing in the consolidated financial statements and notes thereto represent the arithmetical results of translating yen to dollars at
the rate of ¥82.19 to U.S.$1.00, the exchange rate prevailing on March 31, 2012. The translation of such dollar amounts is solely for convenience of the readers
outside Japan and does not imply those yen amounts have been or could be readily converted, realized or settled in dollars at the above, or any other rate.

4. Supplementary Information
Fiscal 2012
Effective from the current fiscal year, the Company applied the “Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Statement No.24
dated on December 4, 2009) and the “Guidance on Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance No.24 dated on
December 4, 2009).

42

KANEMATSU CORPORATION

5. Notes to Consolidated Balance Sheets
Fiscal 2012

Fiscal 2011

1. Details of inventories are as follows
Merchandise and finished goods
Real estate for sale
Raw materials and supplies
Work in progress
Total

1. Details of inventories are as follows
JPY
54,626
714
1,034
738
57,113USD
664,634
8,693
12,585
8,984
694,897

Merchandise and finished goods
Real estate for sale
Raw materials and supplies
Work in progress
Total

JPY
54,597
921
1,043
527
57,089

2. The amount of accumulated depreciation of tangible fixed assets is ¥32,077 million($390,286 thousand).

2. The amount of accumulated depreciation of tangible fixed assets is ¥31,115 million.

3. Pledged assets and associated secured obligations
Details of pledged assets are as follows:
JPY
Cash and bank deposits
16
Notes and accounts receivable
1,490
Leased properties
1,786
Buildings and structures
39
Land
84
Investments in securities
139
Total
3,555

USD
195
18,131
21,741
478
1,024
1,697
43,265

3. Pledged assets and associated secured obligations
Details of pledged assets are as follows:
JPY
Cash and bank deposits
16
Notes and accounts receivable
1,867
Leased properties
2,338
Buildings and structures
42
Land
84
Investments in securities
139
Total
4,488

Details of associated secured obligations are as follows:
JPY
Short-term borrowings
4,468Long-term borrowings
200
Non-current liabilities and others
1,172
Guaranteed obligations
4

USD
54,3662,433
14,26149

Details of associated secured obligations are as follows:
JPY
Short-term borrowings
3,774
Long-term borrowings
1,603
Non-current liabilities and others
1,289
Guaranteed obligations
4

In addition to the foregoing pledged assets, the following items are tendered as security
deposit or substitution for trading.
JPY
USD
Cash and bank deposits
337
Investments in securities
1,640
19,965
Total
1,643
20,001

In addition to the foregoing pledged assets, the following items are tendered as security
deposit or substitution for trading.
JPY
Cash and bank deposits
3
Investments in securities
1,827
Total
1,830

4. Investments in securities included the following accounts of unconsolidated subsidiaries and affiliated companies.
JPY
USD
Investments in securities
6,070
73,858(Share stocks)(5,554)(67,583)(Equity investments)(515)(6,274)

4. Investments in securities included the following accounts of unconsolidated subsidiaries and affiliated companies.
JPY
Investments in securities
6,077(Share stocks)(5,634)(Equity investments)(442)

5. Revaluation reserves for land
5. Revaluation reserves for land
Hokushin Co., Ltd. and KANEYO Co., Ltd., equity-method affiliates of the Company,
Same as fiscal 2012.
revalued land held for business in accordance with the “Law Concerning Revaluation ofLand” (Law No.34 enacted on March 31, 1998) and the “Law to Partially Modify the Law
Concerning Revaluation of Land” (Law No.24 enacted on March 31, 1999 and Law No.19
enacted on March 31, 2001). These equity-method affiliates recorded unrealized gains
on revaluation, net of tax, as valuation and translation adjustment under the Laws. The
Company’s investments in these affiliates increased by an amount equal to the unrealized
gains on revaluation of land.

Annual Report 201243

Notes to Consolidated Financial Statements

Fiscal 2012

Fiscal 2011

6. Liability for guarantee
Guarantees are provided to unconsolidated subsidiaries on their borrowings from thirdparty financial institutions as follows:
Name of obligor
JPY
USD
Century Textile Industry
759
9,237
True Corporation Public
407
4,961
Mojiko Silo
200
2,433
Others
1,540
18,737
Total
2,906
35,368

6. Liability for guarantee
Guarantees are provided to unconsolidated subsidiaries on their borrowings from thirdparty financial institutions as follows:
Name of obligor
JPY
Century Textile Industry
877
True Corporation Public
407Japan Logistics
118
Others
1,957
Total
3,361

Keep-well or agreements similar to guarantees are included in the above accounts.

Keep-well or agreements similar to guarantees are included in the above accounts.

7. T he amount of discounted notes receivable is ¥5,722 million ($69,624 thousand), of
which ¥5,177 million ($62,997 thousand) is for discounted export bills, and the amountof endorsed notes receivable is ¥109 million ($1,327 thousand).

7. T he amount of discounted notes receivable is ¥11,736 million, of which ¥11,138 million
is for discounted export bills, and the amount of endorsed notes receivable is ¥92
million.

8. T he company and its domestic consolidated subsidiaries record actual cash settlement 8. Not applicable.
of the notes on the date of clearance. Since the closing date on March 31, 2012 was
not a business day of financial institutions, the following notes due on closing date areincluded in the year-end balances.
JPY
USD
Notes receivable
2,167
26,368Notes payable
1,454
17,696

6. Notes to Consolidated Statements of Income
Fiscal 2012

Fiscal 2011

1. Loss on devaluation of inventories
Inventories are carried at the lower of cost or market value in the balance sheet. A loss ondevaluation of inventories of ¥515 million ($6,273 thousand) is included in cost of sales.

1. Loss on devaluation of inventories
Inventories are carried at the lower of cost or market value in the balance sheet. A loss ondevaluation of inventories of ¥217 million is included in cost of sales.

2. Research and development expenses
Research and development expenses are charged to income when incurred andincluded in general and administrative expenses: ¥445 million ($5,420 thousand).

2. Research and development expenses
Research and development expenses are charged to income when incurred andincluded in general and administrative expenses: ¥397 million.

3. Gain on sale of tangible fixed assets
Details of gain on sale of tangible fixed assets are as follows:
JPY
Machinery, equipment, vehicle,
tools and fixtures
35
Others2
Total
38

3. Gain on sale of tangible fixed assets
Details of gain on sale of tangible fixed assets are as follows:
JPY
Machinery, equipment, vehicle,
tools and fixtures
25
Land
18
Others7Total
52

4. Loss on disposal of fixed assets
Details of loss on disposal of fixed assets are as follows:
JPY
Buildings and structures
42
Machinery, equipment, vehicle,
tools and fixtures
27
Intangible fixed assets
20
Others
10
Total
100

44

KANEMATSU CORPORATION

USD
437
32
470

USD
512
339
247
130
1,228

4. Loss on disposal of fixed assets
Details of loss on disposal of fixed assets are as follows:
JPY
Buildings and structures
25
Machinery, equipment, vehicle,
tools and fixtures
21
Land
19
Intangible fixed assets
11
Others15
Total
92

Fiscal 2012

Fiscal 2011

5. Loss on closure of business
Loss on closure of business is recorded in a consolidated subsidiary on silicon wafer
processing business for photovoltaic power generation system. Details of the loss are as
follows:
JPY
USD
Loss on cancellation of lease contract833
10,138
Impairment loss on fixed assets
345
4,203
Loss on disposal of inventories
6
83
Total
1,185
14,424

5. Not applicable.

6. Impairment loss on fixed assets
The Companies recorded impairment loss on fixed assets in the current fiscal year, which
are summarized in the following table.
Use
Location
Type
JPY
USD
Leased properties Shiga, Japan
Leased properties
416
5,067
Idle assets
Fukuoka, Japan
Land
24
298
Idle assets
Shiga, Japan
Machinery, etc.
345
4,203
Total
786
9,568

6. Impairment loss on fixed assets
The Companies recorded impairment loss on fixed assets in the current fiscal year, which
are summarized in the following table.
Use
LocationType
JPY
Business assets
Fukuoka, Japan
Buildings, etc.
9Idle assets
Hyogo, Japan
Buildings, land, etc.
185
Idle assets
Tokyo, Japan
Telephone57
subscription rights
Total
252

The Company assesses impairment losses for leased properties and idle assets
individually.
For the leased properties to be sold and idle assets which the Company has no plan touse in the future, their carrying amounts were reduced to their recoverable amounts.
¥440 million ($5,364 thousand) out of ¥786 million ($9,568 thousand) of the impairment losses were recorded in extraordinary loss as impairment loss on fixed assets. Out of¥440 million ($5,364 thousand) of the impairment losses, ¥416 million ($5,067 thousand)and ¥24 million ($298 thousand) were for leased property and land, respectively.
¥345 million ($4,203 thousand) out of ¥786 million ($9,568 thousand) of the impairment losses were recorded in extraordinary loss as loss on closure of business. Out of¥345 million ($4,203 thousand), ¥339 million ($4,127 thousand) was for machinery,equipment, vehicle, tools and fixtures, ¥6 million ($76 thousand) was for buildings andstructures, and ¥0 million ($1 thousand) was for software.
The recoverable amount is the net selling value. The net selling value is estimatedmainly based on the amounts agreed in contracts.

The Company assesses impairment losses for business assets by grouping the assets
for each business operating unit, on the managerial accounting basis. For idle assets,
impairment is assessed individually.
For the business assets with lower profitability, impairment losses of ¥9 million wererecorded as an extraordinary loss by reducing their carrying amounts to their recoverable
amounts. Out of ¥9 million of the impairment losses, ¥8 million was for buildings andstructures and ¥1 million was for others.
For the idle assets which the Company has no plan to use in the future, ¥243 millionof impairment losses were recorded as an extraordinary loss by reducing their carrying
amounts to memorandum value. Out of ¥243 million of the impairment losses, ¥33
million was for buildings and structures, ¥0 million was for machinery, equipment,
vehicle, tools and fixtures, ¥151 million was for land and ¥57 million was for telephone
subscription rights.
The recoverable value is whichever greater, net selling value or value in use. Net selling
value is estimated based on the appraisal of professional real estate appraisers, and value
in use is calculated using discounted future cash flows with the discount rate of 2.89 %.

7. Not applicable.

7. Loss on disaster was recorded in connection with the Great East Japan Earthquake ofMarch 11, 2011. The detail of loss on disaster is as follows:
JPY
Loss on damage of inventories
454
Relief and recovery support money
57
Cost of restoration of fixed assets
40
Loss on damage of fixed assets
6
Others4
Total
563

8. Provision for loss on lawsuits
Provision for loss on lawsuits is mainly based on the settlement amount proposed by
the court for the lawsuit the Company has been filed for compensation based upon
representations and warranties.

8. Not applicable.

Annual Report 201245

Notes to Consolidated Financial Statements

7. Notes to Consolidated Statements of Comprehensive Income
Fiscal 2012
1. Reclassification adjustments and deferred tax related to other comprehensive income
Net unrealized gains (losses) on securities, net of tax
Net unrealized gains (losses) during the year
Reclassification adjustments
Total before deferred tax
Deferred tax
Total net unrealized gains (losses) on securities, net of tax
Net gains (losses) on deferred hedges, net of tax
Net unrealized gains (losses) during the year
Reclassification adjustments
Total before deferred tax
Deferred tax
Total net gains (losses) on deferred hedges, net of tax
Foreign currency translation adjustments
Translation adjustments during the year
Reclassification adjustments
Total foreign currency translation adjustments
Share of other comprehensive income of investments accounted
for using the equity method
Net unrealized gains (losses) during the year
Reclassification adjustments
Total share of other comprehensive income of investments accounted
for using the equity method
Total

46

KANEMATSU CORPORATION

JPY

USD

(591)
832
241
62
303

(7,191)
10,126
2,935
763
3,698

847
(140)
707
(109)
597

10,315(1,710)8,605(1,333)
7,272(1,299)78(1,221)(15,813)951(14,862)

0
(12)

(1)
(157)

(12)
(332)

(158)
(4,050)8. Notes to Consolidated Statements of Changes in Net Assets
Fiscal 2012
Class and number of shares issued and treasury stock
Number of shares at the
beginning of the fiscal year
(thousand shares)

Increase in shares
during the fiscal year
(thousand shares)

Decrease in shares
during the fiscal year
(thousand shares)

Number of sharesat the end of the fiscal year
(thousand shares)

422,501
422,501————

422,501
422,501

3,878
3,878

78
78

160
160

3,796
3,796

Shares issued
Common shares
Total
Treasury stock
Common shares (Notes 1, 2)
Total(Notes) 1. The breakdown of the increase of 78 thousand common shares during the term is as follows:
Increase as a result of fractional share repurchases: 78 thousand shares
2. The breakdown of the decrease of 160 thousand common shares during the term is as follows:
Decrease as a result of the disposition of fractional shares: 5 thousand shares
The Company’s portion of treasury stock (the Company’s stock) disposed by a company applied equity method that attributes to the Company: 154 thousand sharesFiscal 2011
Class and number of shares issued and treasury stock
Number of shares at the
beginning of the fiscal year
(thousand shares)

Increase in shares
during the fiscal year
(thousand shares)

Decrease in shares
during the fiscal year
(thousand shares)

Number of sharesat the end of the fiscal year
(thousand shares)

422,501
422,501————

422,501
422,501

4,303
4,303

145
145

570
570

3,878
3,878

Shares issued
Common shares
Total
Treasury stock
Common shares (Notes 1, 2)
Total(Notes) 1. The breakdown of the increase of 145 thousand common shares during the term is as follows:
Increase as a result of fractional share repurchases: 145 thousand shares
The Company’s portion of treasury stock (the Company’s stock) added due to changes in shares to companies applied equity method that attributes to the Company:
0 thousand shares
2. The breakdown of the decrease of 570 thousand common shares during the term is as follows:
Decrease as a result of the disposition of fractional shares: 570 thousand shares

9. Notes to Consolidated Statements of Cash Flows
Fiscal 2012
1. Cash and cash equivalents as of March 31, 2012, consist of the following:
JPY
USD
Cash and bank deposits
70,835
861,851
Time deposits which deposit terms
exceed three months(240)(2,930)Cash and cash equivalents
70,594
858,921

Fiscal 2011
1. Cash and cash equivalents as of March 31, 2011, consist of the following:
JPY
Cash and bank deposits
69,014
Time deposits which deposit terms
exceed three months(1,588)Cash and cash equivalents
67,426

Annual Report 201247

Notes to Consolidated Financial Statements

10. Lease Transactions
Fiscal 2012

Fiscal 2011

<Leases as Lessee><Leases as Lessee>
1. Finance leases
1. Finance leases
Finance leases are leases for which the ownership of the leased property is not transferred Same as fiscal 2012.
to the lessees.
[1] Detail of lease assets
Tangible fixed assets
Principally the machinery for food business (Machinery, equipment, vehicle, tools andfixtures).

[1] Detail of lease assets
Tangible fixed assets
Same as fiscal 2012.

[2] Depreciation method of lease assets
Described in Note 2. Summary of Significant Accounting Policies, (g) Property andEquipment.
The finance lease transactions commenced on or before March 31, 2008 which areaccounted for as operating leases, are as follows:[2] Depreciation method of lease assets
Same as fiscal 2012.

(1) Acquisition cost, accumulated depreciation and balance at the end of the fiscal yearof leased properties:(1) Acquisition cost, accumulated depreciation and balance at the end of the fiscal yearof leased properties:

Acquisition
cost
JPY
USD
Machinery, equipment,
vehicle, tools
and fixtures
Others
Total

687
4
691

8,360
52
8,412

Accumulated
depreciation
JPY
USD
489
3
493

5,957
48
6,005

Same as fiscal 2012.

Balance at end of
the fiscal year
JPY
USD
197
0
197

2,403
4
2,407

Machinery, equipment,
vehicle, tools
and fixtures
Others
Total

Acquisition
cost
JPY

Accumulated
depreciation
JPY

Balance at end of
the fiscal year
JPY

1,068
4
1,072

776
3
780

291
1
292

(2) Future minimum lease payments outstanding at the balance sheet date are as follows: (2) Future minimum lease payments outstanding at the balance sheet date are as follows:
JPY
USD
JPY
Due within one year85
1,039
Due within one year236
Due after one year
199
2,429
Due after one year
254
Total
285
3,469
Total
491

48

(3) Payments to lessors, depreciation and interest expenses are as follows:
JPY
USD
Payments to lessors
155
1,890
Depreciation
143
1,750
Interest expenses
8105(3) Payments to lessors, depreciation and interest expenses are as follows:
JPY
Payments to lessors
284
Depreciation
266
Interest expenses
15(4) Computation of depreciation
Depreciation is computed using the straight-line method over the lease term assuming a
residual value of zero.

(4) Computation of depreciation
Same as fiscal 2012.

(5) Computation of interest expenses
The excess amount of the sum of minimum lease payment over the acquisition cost isregarded as accumulated interest expenses, and is allocated to each period based on theinterest method.

(5) Computation of interest expenses
Same as fiscal 2012.

(Impairment Loss)
No impairment loss is recorded nor allocated to leased assets.

(Impairment Loss)
Same as fiscal 2012.

2. Operating leases
Future lease payments outstanding at the balance sheet date are as follows:
JPY
USD
Due within one year
19233
Due after one year
35
437
Total
55
670

2. Operating leases
Future lease payments outstanding at the balance sheet date are as follows:
JPY
Due within one year394
Due after one year
880
Total
1,274

KANEMATSU CORPORATIONFiscal 2012

Fiscal 2011
<Leases as Lessor>
1. Finance leases[1] Detail of the lease investment assets
Current assets<Leases as Lessor>
1. Finance leases[1] Detail of the lease investment assets
Current assets
JPY
680
(13)
666

Lease payments received
Interest income
Lease investment assets

USD
8,277
(169)
8,108

Lease payments received
Interest income
Lease investment assets

JPY
618
(12)
606

[2] Future lease receivables outstanding at the balance sheet date are as follows:
Current assets
JPY
USD
Due within one year
362
4,410
Over one year and within two years
229
2,791
Over two years and within three years
82
1,008
Over three years and within four years
561Over four years and within five years
07Over five years——[2] Future lease receivables outstanding at the balance sheet date are as follows:
Current assets
JPY
Due within one year
305
Over one year and within two years
220
Over two years and within three years
76
Over three years and within four years
11Over four years and within five years
3
Over five years—

The finance lease transactions for which the lease commenced on or before March 31,
2008, which are accounted for as operating leases are as follows.

Same as fiscal 2012.

(1) Acquisition cost, accumulated depreciation and balance at the end of the fiscal yearof leased properties:(1) A cquisition cost, accumulated depreciation and balance at the end of the fiscal yearof leased properties:

Acquisition
cost
JPY
USD
Machinery, equipment,
vehicle, tools
and fixtures
Total

11
11

142
142

Accumulated
depreciation
JPY
USD
11
11

136
136

Balance at the endof the fiscal year
JPY
USD
0
0

6
6

Machinery, equipment,
vehicle, tools
and fixtures
Total

Acquisition
cost
JPY

Accumulated
depreciation
JPY

Balance at the endof the fiscal year
JPY

18
18

17
17

1
1

(2) Future minimum lease payments receivable outstanding at the balance sheet dateare as follows:
JPY
USD
Due within one year39479
Due after one year
44
544
Total
84
1,023

(2) Future minimum lease payments receivable outstanding at the balance sheet dateare as follows:
JPY
Due within one year120
Due after one year
84
Total
204

(Note) Related sub-lease payments against the above receivable are ¥78 million ($950
thousand) (including ¥33 million ($406 thousand) for due within one year).
			 The sub-lease payments against the above receivables approximate thefuture minimum lease payments as the sub-lease transactions arranged by thecompanies are intended to pass-through these costs in almost identical terms.

(Note) R elated sub-lease payments against the above receivable are ¥204 million (including ¥119 million for due within one year).
			 The sub-lease payments against the above receivables approximate thefuture minimum lease payments as the sub-lease transactions arranged by thecompanies are intended to pass-through these costs in almost identical terms.

(3) Lease payments received, depreciation and interest income are as follows:
JPY
USD
Lease payments received
88
1,083
Depreciation
3
41
Interest income
00(3) Lease payments received, depreciation and interest income are as follows:
JPY
Lease payments received
4
Depreciation
1
Interest income0(4) Computation of interest
The accumulated interest income is allocated to each period based on the interest
method.

(4) Computation of interest
Same as fiscal 2012.

Annual Report 201249

Notes to Consolidated Financial Statements

Fiscal 2012

Fiscal 2011

2. Operating leases
Future lease payments receivable outstanding at the balance sheet date are as follows:
JPY
USD
Due within one year
158
1,930
Due after one year
528
6,432
Total
687
8,362

2. Operating leases
Future lease payments receivable outstanding at the balance sheet date are as follows:
JPY
Due within one year167
Due after one year
552
Total
720

3. Balance of sub-lease in the consolidated balance sheets without deducting theinterest(1) Lease investments
JPY
USD
Current assets
75
913

3. B
 alance of sub-lease in the consolidated balance sheets without deducting theinterest(1) Lease investments
JPY
Current assets
118(2) Lease obligations(2) Lease obligations

Current liabilities
Non-Current liabilities

JPY
39
35

USD
477
436

Current liabilities
Non-Current liabilities

JPY
49
68

11. Financial Instruments
Fiscal 2012
1. Summary of financial instruments(1) Policies of financial instruments
The Companies design cash-flow plans to carry out operations, which are buying and selling of merchandise, investment and lending. The Companies’ fundraising activities are mainly borrowings from banks and insurance companies. The Companies manage temporary surplus funds by funding highly secured
financial assets and also use derivative transactions for minimizing financial risks.
(2) Nature and risks of financial instruments
Notes and accounts receivable are exposed to credit risks of customers. In addition, receivables denominated in foreign currency are also exposed to risk of
exchange rate fluctuation due to the global business operations.
The Companies have investments in securities in order to maintain relationships with their customers and suppliers. Investments in securities are exposed toprice risks. The Companies also issue loans to certain customers and suppliers.
Maturity dates of notes and accounts payable and import bills payable are mainly within one year. Foreign currency liabilities are exposed to risk of exchange
rate fluctuation.
The longest maturity date of borrowings from banks and insurance companies is within five years from the fiscal year-end. Certain borrowings are exposed
to interest rate risk.
The Companies utilize derivative transactions such as foreign exchange contracts to avert currency risk, interest rate swaps to avert interest rate risk, commodity future contracts to avert commodity price risk.
Hedging instruments, hedged items, hedging policy and method of evaluating the effectiveness of hedging activities are described in Note 2. Summary of
Significant Accounting Policies, (m) Hedge Accounting.
(3) Financial risk management policies[1] Credit risk management
The Company employs its own credit scoring model based on customers’ financial statements and other information. The Company determines the credit limit
for customers based on their credit scoring and control credit risk by managing customer’s balances against these limits. To reduce credit risks, the Company
regularly monitors the collectibility of and age of receivables to take preservation measures.
Since derivative transactions are executed with highly rated banks, the Company reviews the limit of volume of derivative transactions according to theinternal rule.
[2] Market risk management
The Companies utilize foreign exchange contracts for foreign currency assets and liabilities or forecasted foreign currency transactions to avert currency risk. The
Companies also utilize interest rate swaps to avert interest rate risk.
For investments in securities, the Companies periodically examine fair values and the financial conditions of the issuers and regularly revise the portfolio.
With respect to derivative transactions, each business division undertakes transactions in accordance with internal rules determined in the management
meeting at the beginning of the fiscal year based on rule and operating policy for authorization of transaction and limitation. Derivative transactions arerecorded and the balances are managed by the Finance Department, Accounting Department and Business Accounting Department and actual results oftransactions are reported monthly to management. Certain of the Company’s consolidated subsidiaries utilize derivative transactions in accordance with theirown internal rules, which are prepared based on the Company’s risk management policies.

50

KANEMATSU CORPORATION

[3] Liquidity risk management
The Finance Department performs cash management and maintains the level of cash and bank deposits balance by preparing and revising cash-flow-plan tosuit current financial situation.
(4) Additional information on fair value measurements
Fair value measurements are based on market prices or on rational assumptions when market prices are not available. The fair values which are measured
based on rational assumptions are affected by variable factors and might be changed when different assumption is applied. The notional amount of contracts
described in Note 13. Derivatives does not directly indicate the market risks.

2. Fair value of financial instruments
A summary of book value and fair value of financial instruments, and difference between them as of March 31, 2012 is disclosed in the following table. The
financial instruments for which the Company had difficulty in estimating fair value are not included in the following table (See Note 2).
In this table below,• Liability accounts are shown with “(  ).”• Notes and accounts receivable, long-term loans receivable and doubtful accounts are offset by each allowance for doubtful accounts.
• Derivative assets and liabilities are disclosed on a net basis.

(1) Cash and bank deposits(2) Notes and accounts receivable
Allowance for doubtful accounts(3) Short-term loans receivable(4) Investments in securities(5) Long-term loans receivable
Allowance for doubtful accounts(6) Doubtful accounts
Allowance for doubtful accounts
Total assets(7) Notes and accounts payable(8) Import bills payable(9) Short-term borrowings(10) Accrued income taxes(11) Long-term borrowings
Total liabilities
Derivatives

Book value
JPY
USD
70,835
861,851
163,782
1,992,733(294)(3,580)163,488
1,989,152
974
11,858
9,983
121,466
5,790
70,450(1,842)(22,418)
3,947
48,033
1,886
22,955(1,672)(20,352)
213
2,603
249,4433,034,964(108,956)(1,325,671)(29,670)(361,004)(78,444)(954,428)(1,863)(22,669)(82,403)(1,002,603)(301,339)(3,666,375)
1,592
19,379Fair value

DifferenceJPY
70,835

USD
861,851

JPY
—

USD
—

163,488974
12,474

1,989,152
11,858
151,779

—
—
2,491

—
—
30,313

3,957

48,1479115

213
251,944(108,956)(29,670)(78,444)(1,863)(82,697)(301,633)
1,592

2,603
3,065,391(1,325,671)(361,004)(954,428)(22,669)(1,006,179)(3,669,950)
19,379

—
2,500
—
—
—
—
(293)
(293)
—

—
30,428————(3,575)(3,575)—(Notes)1. Fair value measurements of financial instruments and investment securities and derivative transaction
Assets(1) Cash and bank deposits, (2) Notes and accounts receivable and (3) Short-term loans receivable
Fair value of these instruments approximates the book value because of their short-term maturities.
(4) Investments in securities
Fair value of marketable shares is estimated using quoted market price. Fair value of bonds is estimated using quoted market price or quoted price byfinancial institutions. Further information about investments in securities is described in Note 12. Short-term Investments and Investments in Securities.
(5) Long-term loans receivable
Fair value of long-term loans receivable is estimated based on discounted cash flow analysis, using assumed rates currently available for similar types of loans
with similar term and remaining maturity.
(6) Doubtful accounts
Fair value of net doubtful accounts (offsetting doubtful accounts against allowance) approximates the book value because the Companies provide an allowance for doubtful accounts based on estimates of collectibility by utilizing securities, guarantees and insurance or discounted cash flow analysis.

Annual Report 201251

Notes to Consolidated Financial Statements

Liabilities(7) Notes and accounts payable, (8) Import bills payable, (9) Short-term borrowings and (10) Accrued income taxes
Fair value of these instruments approximates the book value because of their short-term maturities.
(11) Long-term borrowings
Fair value of long-term borrowings is estimated based on discounted cash flow analysis, using assumed rates currently available for similar types of borrowings with similar term and remaining maturity. Hedge accounting is applied to certain long-term borrowings with variable interest rates. The amounts
received or paid under the interest rate swap agreements are added to or deducted from the interest on the hedged long-term borrowings when paid. Fairvalue of long-term borrowings in which these interest rate swaps are embedded is also estimated based on discounted cash flow analysis, using assumed
rates currently available for similar types of borrowings with similar term and remaining maturity.
Derivatives
Described in Note 13. Derivatives.
2. Financial instruments with difficulty in estimating fair value
Book value
Classification
JPY
USD
Unlisted investments in securities
17,939218,264
Equity investments
1,945
23,667
The above financial instruments are not included in “(4) Investments in securities” because it is not practicable to estimate the fair value due to difficulty inestimating fair value as market price is not available.
3. Maturity schedule of monetary assets and investments in securities having maturity
Over one year
Within one year
and within five years
JPY
USD
JPY
USD
Cash and bank deposits
70,835
861,851——
Notes and accounts receivable (Note 3-1)
163,488
1,989,152——
Short-term loans receivable974
11,858——Investments in securities
Held-to-maturity bonds
—
—
14
180
Long-term loans receivable (Note 3-2)
—
—
3,538
43,055
Doubtful accounts (Note 3-3)
—
—
213
2,603
Total
235,298
2,862,862
3,767
45,838Over five years
and within ten years
JPY
USD
—
—
—
—
—
—

Over ten years
JPY
USD
—
—
—
—
—
—

—
402
—
402

—
6
—
6

(Notes) 3-1. Allowance for doubtful accounts of ¥294 million ($3,580 thousand) is not included in notes and accounts receivable.
3-2. Allowance for doubtful accounts of ¥1,842 million ($22,418 thousand) is not included in long-term loans receivable.
3-3. Allowance for doubtful accounts of ¥1,672 million ($20,352 thousand) is not included in doubtful accounts.

4. Long-term borrowings repayment schedule
Described in Note 23. Consolidated Supplementary Schedules, (2) Schedule of borrowings.

52

KANEMATSU CORPORATION

—
4,900
—
4,900

—
78
—
78

Fiscal 2011
1. Summary of financial instruments(1) Policies of financial instruments
The Companies design cash-flow plans to carry out operations, which are buying and selling of merchandise, investment and lending. The Companies’ fundraising activities are mainly borrowings from banks and insurance companies. The Companies manage temporary surplus funds by funding highly secured
financial assets and also use derivative transactions for minimizing financial risks.
(2) Nature and risks of financial instruments
Notes and accounts receivable are exposed to credit risks of customers. In addition, receivables denominated in foreign currency are also exposed to risk of
exchange rate fluctuation due to the global business operations.
The Companies have investments in securities in order to maintain relationships with their customers and suppliers. Investments in securities are exposed toprice risks. The Companies also issue loans to certain customers and suppliers.
Maturity dates of notes and accounts payable and import bills payable are mainly within one year. Foreign currency liabilities are exposed to risk of exchange
rate fluctuation.
The longest maturity date of borrowings from banks and insurance companies is within five years from the fiscal year-end. Certain borrowings are exposed
to interest rate risk.
The Companies utilize derivative transactions such as foreign exchange contracts to avert currency risk, interest rate swaps to avert interest rate risk, commodity future contracts to avert commodity price risk.
Hedging instruments, hedged items, hedging policy and method of evaluating the effectiveness of hedging activities are described in Note 2. Summary of
Significant Accounting Policies, (m) Hedge Accounting.
(3) Financial risk management policies[1] Credit risk management
The Company employs its own credit scoring model based on customers’ financial statements and other information. The Company determines the credit limit
for customers based on their credit scoring and control credit risk by managing customer’s balances against these limits. To reduce credit risks, the Company
regularly monitors the collectibility of and age of receivables to take preservation measures.
Since derivative transactions are executed with highly rated banks, the Company reviews the limit of volume of derivative transactions according to theinternal rule.
[2] Market risk management
The Companies utilize foreign exchange contracts for foreign currency assets and liabilities or forecasted foreign currency transactions to avert currency risk. The
Companies also utilize interest rate swaps to avert interest rate risk.
For investments in securities, the Companies periodically examine fair values and the financial conditions of the issuers and regularly revise the portfolio.
With respect to derivative transactions, each business division undertakes transactions in accordance with internal rules determined in the management
meeting at the beginning of the fiscal year based on rule and operating policy for authorization of transaction and limitation. Derivative transactions arerecorded and the balances are managed by the Finance Department, Accounting Department and Business Accounting Department and actual results oftransactions are reported monthly to management. Certain of the Company’s consolidated subsidiaries utilize derivative transactions in accordance with theirown internal rules, which are prepared based on the Company’s risk management policies.
[3] Liquidity risk management
The Finance Department performs cash management and maintains the level of cash and bank deposits balance by preparing and revising cash-flow-plan tosuit current financial situation.
(4) Additional information on fair value measurements
Fair value measurements are based on market prices or on rational assumptions when market prices are not available. The fair values which are measured
based on rational assumptions are affected by variable factors and might be changed when different assumption is applied. The notional amount of contracts
described in Note 13. Derivatives does not directly indicate the market risks.

2. Fair value of financial instruments
A summary of book value and fair value of financial instruments, and difference between them as of March 31, 2011 is disclosed in the following table. The
financial instruments for which the Company had difficulty in estimating fair value are not included in the following table (See Note 2).
In this table below,• Liability accounts are shown with “(  ).”• Notes and accounts receivable, long-term loans receivable and doubtful accounts are offset by each allowance for doubtful accounts.
• Derivative assets and liabilities are disclosed on a net basis.

Annual Report 201253

Notes to Consolidated Financial Statements(1) Cash and bank deposits(2) Notes and accounts receivable
Allowance for doubtful accounts(3) Short-term loans receivable(4) Investments in securities(5) Long-term loans receivable
Allowance for doubtful accounts(6) Doubtful accounts
Allowance for doubtful accounts
Total assets(7) Notes and accounts payable(8) Import bills payable(9) Short-term borrowings(10) Accrued income taxes(11) Long-term borrowings
Total liabilities
Derivatives

Book value
JPY
69,014
146,546(355)
146,190
1,740
10,432
12,679(8,633)
4,046
14,006(13,343)663
232,088(96,137)(27,119)(100,488)(1,562)(73,138)(298,447)
313

Fair value
JPY
69,014

Difference
JPY—

146,190
1,740
12,808

—
—
2,375

4,055

9

663
234,473(96,137)(27,119)(100,488)(1,562)(73,361)(298,669)
313

—
2,385
—
—
—
—
(222)
(222)
—

(Notes)1. Fair value measurements of financial instruments and investment securities and derivative transaction
Assets(1) Cash and bank deposits, (2) Notes and accounts receivable and (3) Short-term loans receivable
Fair value of these instruments approximates the book value because of their short-term maturities.
(4) Investments in securities
Fair value of marketable shares is estimated using quoted market price. Fair value of bonds is estimated using quoted market price or quoted price byfinancial institutions. Further information about investments in securities is described in Note 12. Short-term Investments and Investments in Securities.
(5) Long-term loans receivable
Fair value of long-term loans receivable is estimated based on discounted cash flow analysis, using assumed rates currently available for similar types of loans
with similar term and remaining maturity.
(6) Doubtful accounts
Fair value of net doubtful accounts (offsetting doubtful accounts against allowance) approximates the book value because the Companies provide an allowance for doubtful accounts based on estimates of collectibility by utilizing securities, guarantees and insurance or discounted cash flow analysis.
Liabilities(7) Notes and accounts payable, (8) Import bills payable, (9) Short-term borrowings and (10) Accrued income taxes
Fair value of these instruments approximates the book value because of their short-term maturities.
(11) Long-term borrowings
Fair value of long-term borrowings is estimated based on discounted cash flow analysis, using assumed rates currently available for similar types of borrowings with similar term and remaining maturity. Hedge accounting is applied to certain long-term borrowings with variable interest rates. The amounts
received or paid under the interest rate swap agreements are added to or deducted from the interest on the hedged long-term borrowings when paid. Fairvalue of long-term borrowings in which these interest rate swaps are embedded is also estimated based on discounted cash flow analysis, using assumed
rates currently available for similar types of borrowings with similar term and remaining maturity.
Derivatives
Described in Note 13. Derivatives.
2. Financial instruments with difficulty in estimating fair value
Book value
Classification
JPY
Unlisted investments in securities
19,689Equity investments
1,855
The above financial instruments are not included in “(4) Investments in securities” because it is not practicable to estimate the fair value due to difficulty inestimating fair value as market price is not available.

54

KANEMATSU CORPORATION

3. Maturity schedule of monetary assets and investments in securities having maturity
Over one year
Within one year
and within five years
JPY
JPY
Cash and bank deposits
69,014—
Notes and accounts receivable (Note 3-1)
146,190—
Short-term loans receivable
1,740—
Investments in securities
Held-to-maturity bonds—
14Long-term loans receivable (Note 3-2)—
3,574
Doubtful accounts (Note 3-3)
—
663
Total
216,9464,252Over five years
and within ten years
JPY
—
—
—

Over ten years
JPY
—
—
—

—
440
—
440

—
30
—
30

(Notes) 3-1. Allowance for doubtful accounts of ¥355 million is not included in notes and accounts receivable.
3-2. Allowance for doubtful accounts of ¥8,633 million is not included in long-term loans receivable.
3-3. Allowance for doubtful accounts of ¥13,343 million is not included in doubtful accounts.

4. Long-term borrowings repayment schedule
Described in Note 23. Consolidated Supplementary Schedules, (2) Schedule of borrowings.

12. Short-term Investments and Investments in Securities
Fiscal 2012
1. “Held to maturity debt securities” with fair value (as of March 31, 2012)

Securities with market value
exceeding their book value

Category
Japanese government bonds

Balance sheet amount
JPY
USD

JPY

USD

JPY

Difference
USD

14

182

0

2

Balance sheet amount
JPY
USD

Acquisition cost
JPY
USD

JPY

Difference
USD

3,625

44,1072,383

28,994

1,242

15,113

3,568
7,193

43,41887,525

4,326
6,709

52,635
81,629(757)
484(9,216)
5,896

14

180

Fair value

2. “Other securities” with fair value (as of March 31, 2012)

Securities with book value
exceeding their acquisition cost
Securities with book value
not exceeding their acquisition cost
Total

Category
Equity securities
Equity securities(Note) Unlisted investments in securities (book value of ¥15,159 million ($184,442 thousand)) and equity investments (book value of ¥1,429 million ($17,392 thousand)) are notincluded in “Other securities” above because they are not practicable to estimate the fair value due to difficulty in estimating fair value as market price is not available.

3. “Other securities” sold during the current fiscal year (April 1, 2011 to March 31, 2012)
Category
Equity securities

Sales proceeds
JPY
USD
1,036
12,608

JPY
229

Gains on sales
USD
2,798

Losses on sales
JPY
USD
335
4,086

4. Securities recognized impairment loss
The total impairment loss amount recognized of investments in securities is ¥656 million ($7,987 thousand) (including “Other securities” of ¥656 million ($7,987
thousand)) in the current fiscal year.
For recognition of impairment loss, securities which fair value declines 50% or more against their carrying book value are subject to devaluation. For securities that decline 30% or more in fair value, devaluation losses are recognized after considering likelihood of future price recovery or financial position. For thosedeterminations, fair value is primarily based on average of daily market price for one-month before the balance sheet date.

Annual Report 201255

Notes to Consolidated Financial Statements

Fiscal 2011
1. “Held to maturity debt securities” with fair value not exceeding their book value (as of March 31, 2011)
Category
Japanese government bonds

Securities with market value notexceeding their book value

Balance sheet amount
JPY

Fair value
JPY

Difference
JPY

14

14

0

Balance sheet amount
JPY

Acquisition cost
JPY

Difference
JPY

5,657
2,199
3
2,203
7,861

4,424
2,723
7
2,730
7,155

1,233
(524)
(3)
(527)
705

2. “Other securities” with fair value (as of March 31, 2011)

Securities with book value
exceeding their acquisition cost
Securities with book value
not exceeding their acquisition cost

Category(1) Equity securities(1) Equity securities(2) Others
Subtotal

Total(Note) Unlisted investments in securities (book value of ¥16,611 million) and equity investment (book value of ¥1,412 million) are not included in “Other securities” above because they
are not practicable to estimate the fair value due to difficulty in estimating fair value as market price is not available.

3. “Other securities” sold during the current fiscal year (April 1, 2010 to March 31, 2011)
Category
Equity securities

Sales proceeds
JPY
1,109

Gains on sales
JPY
404

Losses on sales
JPY427

4. Securities recognized impairment loss
The total impairment amount of investments in securities is ¥555 million (including “Other securities” of ¥534 million and shares of affiliates of ¥20 million in thecurrent fiscal year).
For the recognition of impairment, securities whose fair value declined 50% or more against their carrying book value were subject to revaluation. For
securities that declined 30% or more in fair value, revaluation losses were recorded after considering the likelihood of future price recovery or financial position.
For those determinations, fair value is primarily based on average of daily market price for one-month before balance sheet date.

56

KANEMATSU CORPORATION

13. Derivatives
Fiscal 2012
1. Derivative transactions to which hedge accounting is not applied(1) Currencies

Classification

Transaction type
Foreign exchange contracts
Selling
U.S. dollar (USD)
Euro (EUR)
Australian dollar (AUD)
Canadian dollar (CAD)
Other currencies
Subtotal
Off market
transactions
BuyingU.S. dollar (USD)
Euro (EUR)
Australian dollar (AUD)
Canadian dollar (CAD)
Pound sterling (GBP)
Other currencies
Subtotal
Total

Notional amount ofcontracts
JPY
USD

Amount of over-one-year
contracts
JPY
USD

Fair value
JPY

USD

Unrealized gain or (loss)
JPY
USD

7,447
463
69
4
54
8,040

90,612
5,645
843
56
669
97,825

—
—
—
—
—
—

—
—
—
—
—
—

(225)
(5)
0
0
5
(224)

(2,750)
(62)
11
1
71
(2,729)

(225)
(5)
0
0
5
(224)

(2,750)
(62)
11
1
71
(2,729)21,939
316
30
21
1
17
22,326—

266,933
3,856
366
259
21
211
271,647
—

—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—

1,105
20
3
(0)
0
0
1,129
—

13,447
245
47
(3)
1
2
13,739
—

1,105
20
3
(0)
0
0
1,129
904

13,447
245
47
(3)
1
2
13,73911,010(Note) Basis of fair value calculation
Fair value is calculated based on the quoted price by financial institutions.

(2) Interest rate
Not applicable.
(3) Commodities

Classification

Transaction type
Commodity future contracts
Foods & Foodstuff
Selling
MarketBuyingtransactions
EnergySelling
Buying
Total

Notional amount ofcontracts
JPY
USD

Amount of over-one-year
contracts
JPY
USD

Fair value
JPY

USD

Unrealized gain or (loss)
JPY
USD

2,503
3,105

30,45937,788

—
757

—
9,217

(11)
(2)

(143)
(36)

(11)
(2)

(142)
(36)

3,703
2,795
—

45,05834,017
—

—
—
—

—
—
—

(10)
(1)
—

(127)
(14)
—

(10)
(1)
(26)

(127)
(14)
(320)

(Note) Basis of fair value calculation
Fair value is calculated based on market closing price at end of the fiscal year.

Annual Report 201257

Notes to Consolidated Financial Statements

2. Derivative transactions to which hedge accounting is applied(1) Currencies
Hedge
accounting
methodPrinciple
hedge
accounting

Specific
matching
criteria

Transaction type
Foreign exchange contracts
Selling
U.S. dollar (USD)
Euro (EUR)
Australian dollar (AUD)
Pound sterling (GBP)
Subtotal
BuyingU.S. dollar (USD)
Euro (EUR)
Pound sterling (GBP)
Australian dollar (AUD)
Other currencies
Subtotal
Selling
U.S. dollar (USD)
Euro (EUR)
Subtotal
BuyingU.S. dollar (USD)
Euro (EUR)
Other currencies
Subtotal

Main hedged items

Forecasted foreign
currency transactions

Forecasted foreign
currency transactions

Accounts receivable

Accounts payable

Notional amount ofcontracts
JPY
USD

Amount of over-one-year
contracts
JPY
USD

Fair value
JPY

USD

1,647
108
42
19
1,817

20,043
1,321
512
240
22,116

218
—
—
—
218

2,652
—
—
—
2,652

(36)
(0)
(3)
0
(39)

(444)
(1)
(37)
0
(481)

16,112
1,705
127
79
38
18,063

196,040
20,749
1,551
973
468
219,780

121
230
—
—
—
351

1,479
2,799
—
—
—
4,277

595
73
6
9
(0)
684

7,244
892
73
115
(1)
8,323

1
0
2

22
11
33

—
—
—

—
—
—

—
—
—

—
—
—

39
39
84
163

485
479
1,024
1,988

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(Note) Basis of fair value calculation
Fair value is calculated based on quoted price by financial institutions for principle hedge accounting. For certain contracts designated as hedging instruments that meet
specific matching criteria, hedged assets or liabilities are measured by contract rate. Fair value of these contracts is included in fair value of the corresponding assets or liabilities.

(2) Interest rate
Hedge
accounting
methodTransaction typeInterest rate swap contracts
Specific
matching
Pay-fixed, receive-variable
criteria
interest rate swap

Main hedged items
Long-term borrowings

Notional amount ofcontracts
JPY
USD

48,640591,799

Amount of over-one-year
contracts
JPY
USD

43,100524,395

Fair value
JPY

USD

—

—

(Note) Basis of fair value calculation
For certain interest rate contracts designated as hedging instruments that meet specific matching criteria, amounts received or paid under the interest rate swap agreements
are added to or deducted from the interest on the hedged borrowings when paid. Fair value of these contracts is included in fair value of the corresponding borrowings.

(3) Commodities
Hedge
accounting
methodPrinciple
hedge
accounting

Transaction type
Commodity future contracts
Foods & Foodstuff
Selling
BuyingMain hedged items

Forecasted transactions
on commodity trading(Note) Basis of fair value calculation
Fair value is calculated based on market closing price at end of the fiscal year.

58

KANEMATSU CORPORATION

Notional amount ofcontracts
JPY
USD

741
1,257

9,026
15,296

Amount of over-one-year
contracts
JPY
USD

—
—

—
—

Fair value
JPY

USD

18
50

230
613

Fiscal 2011
1. Derivative transactions to which hedge accounting is not applied(1) Currencies

Classification

Transaction type
Foreign exchange contracts
Selling
U.S. dollar (USD)
Euro (EUR)
Canadian dollar (CAD)
Australian dollar (AUD)
Other currencies
Off market
Subtotaltransactions
BuyingU.S. dollar (USD)
Euro (EUR)
Australian dollar (AUD)
Pound sterling (GBP)
Other currencies
Subtotal
Total

Notional amount ofcontracts
JPY

Amount of over-one-year
contracts
JPY

Fair value
JPY

Unrealized gain or (loss)
JPY

6,040
353
11
7
51
6,465

—
—
—
—
—
—

(45)
(7)
(0)
(0)
1
(52)

(45)
(7)
(0)
(0)
1
(52)

24,512451
5
2
112
25,084
—

—
—
—
—
—
—
—

60
24
0
(0)
0
85
—

60
24
0
(0)
0
85
33

Notional amount ofcontracts
JPY

Amount of over-one-year
contracts
JPY

Fair value
JPY

Unrealized gain or (loss)
JPY

4,539
7,095

23
368

(86)
253

(86)
253

337
129
—

—
—
—

(7)
4
—

(7)
4
162

(Note) Basis of fair value calculation
Fair value is calculated based on the quoted price by financial institutions.

(2) Interest rate
Not applicable.
(3) Commodities

Classification

Transaction type
Commodity future contracts
Foods & Foodstuff
Selling
MarketBuyingtransactions
EnergySelling
Buying
Total(Note) Basis of fair value calculation
Fair value is calculated based on market closing price at end of the fiscal year.

Annual Report 201259

Notes to Consolidated Financial Statements

2. Derivative transactions to which hedge accounting is applied(1) Currencies
Hedge
accounting
methodPrinciple
hedge
accounting

Specific
matching
criteria

Transaction type
Foreign exchange contracts
Selling
U.S. dollar (USD)
Euro (EUR)
Australian dollar (AUD)
Canadian dollar (CAD)
Other currencies
Subtotal
BuyingU.S. dollar (USD)
Euro (EUR)
Canadian dollar (CAD)
Australian dollar (AUD)
Pound sterling (GBP)
Other currencies
Subtotal
Selling
U.S. dollar (USD)
Subtotal
BuyingU.S. dollar (USD)
Euro (EUR)
Other currencies
Subtotal

Main hedged items

Forecasted foreign
currency transactions

Forecasted foreign
currency transactions

Accounts receivable

Accounts payable

Notional amount ofcontracts
JPY

Amount of over-one-year
contracts
JPY

Fair value
JPY

5,369
267
122
40
130
5,931

—
3
—
—
—
3

(15)
4
(8)
(2)
0
(20)

20,043
1,035
355
149
26
246
21,857

119
43
—
—
—
—
162

254
51
18
12
0
4
341

95
95

—
—

—
—

131
161
104
397

—
—
—
—

—
—
—
—

(Note) Basis of fair value calculation
Fair value is calculated based on quoted price by financial institutions for principle hedge accounting. For certain contracts designated as hedging instruments that meet
specific matching criteria, hedged assets or liabilities are measured by contract rate. Fair value of these contracts is included in fair value of the corresponding assets or liabilities.

(2) Interest rate
Hedge
accounting
methodTransaction typeInterest rate swap contracts
Specific
matching
Pay-fixed, receive-variable
criteria
interest rate swap

Main hedged items
Long-term borrowings

Notional amount ofcontracts
JPY

Amount of over-one-year
contracts
JPY

Fair value
JPY

61,75021,290—(Note) Basis of fair value calculation
For certain interest rate contracts designated as hedging instruments that meet specific matching criteria, amounts received or paid under the interest rate swap agreements
are added to or deducted from the interest on the hedged borrowings when paid. Fair value of these contracts is included in fair value of the corresponding borrowings.

(3) Commodities
Hedge
accounting
methodPrinciple
hedge
accounting

Transaction type
Commodity future contracts
Foods & Foodstuff
Selling
BuyingMain hedged items

Notional amount ofcontracts
JPY

Amount of over-one-year
contracts
JPY

Fair value
JPY

Forecasted transactions
on commodity trading

3,588
619

—
—

(201)
(1)

(Note) Basis of fair value calculation
Fair value is calculated based on market closing price at end of the fiscal year.

60

KANEMATSU CORPORATION

14. Retirement Benefits
1. Summary of pension plans
The Company and its certain consolidated subsidiaries have established defined-benefit employees’ pension plans, retirement lump sum plans, and other pension plans. Certain consolidated subsidiaries have defined contribution pension plans. In addition, some additional retirements benefits are paid under certain
conditions when employees retire.

2. Schedule of retirement benefits

a. Projected benefit obligation at end of year
b. Fair value of plan assets at end of yearc. Projected benefit obligation in excess of plan assets (a + b)
d. Unrecognized actuarial loss
e. Unrecognized prior service costf. Accrued retirement benefit obligation recognized in the consolidated balance sheets (c + d + e)g. Prepaid pension costh. Provision for employees’ retirement and severance benefits (f – g)

Fiscal 2012
JPY
USD
(15,566)(189,393)
11,515140,109(4,050)(49,284)
1,314
15,990——(2,736)(33,294)——(2,736)(33,294)

Fiscal 2011
JPY
(15,042)
11,195(3,846)
1,257
73(2,516)—(2,516)

Fiscal 2012

Fiscal 2011

(Note)	Certain subsidiaries adopt simplified method for calculating accrued retirement
benefits for their employees.

(Notes) 1. A substitutional portion of employees’ pension fund, which is the government’s social security pension program contracted out to employer, isincorporated in the table above.
2. Certain subsidiaries adopt simplified method for calculating accrued retirement benefits for their employees.
3. Unrecognized prior service cost was incurred for the year ended March 31,
2008, since the Company converted a tax qualified retirement pension plan
into a cash balance pension plan on April 1, 2007.

3. Schedule of retirement benefits expenses
Fiscal 2012
JPY
1,235
229
(199)
435
73
77
1,851

a. Service costb. Interest costc. Expected return on plan assets
d. Amortization of actuarial loss
e. Amortization of prior service cost
f. Otherg. Net periodic retirement benefit expenses (a + b + c + d + e + f )Fiscal 2012
(Notes) 1. Employees’ contributions to the employees’ pension fund are not included in
the retirement benefit expenses.
2. The retirement benefit expenses of consolidated subsidiaries which adopt
simplified method are included in “service cost” in the table above.
3. “Other” represents contributions to the defined contribution pension plans.

USD
15,0362,797(2,433)
5,302
893
938
22,533Fiscal 2011
JPY
1,323
225
(173)
318
73
(114)
1,653

Fiscal 2011
(Notes) 1. Same as fiscal 2012.
2. Same as fiscal 2012.
3. “ Other” represents losses (gains) due to changes to the defined-benefit
pension plans in consolidated subsidiaries and contributions to the defined
contribution pension plans.

4. Schedule of assumptions used in accounting for accrued retirement benefit
a. Method of attributing projected benefits to period of service
b. Discount rates
c. Expected long-term rates of return on plan assets
d. Amortization period for actuarial loss or gaine. Amortization period for unrecognized prior service cost

Fiscal 2012
Straight-line basis
1.1% – 2.0%
1.5% – 2.1%
Principally 5 years
5 – 10 years

Fiscal 2011
Straight-line basis
1.5% – 2.0%
1.5% – 2.0%
Principally 5 years
5 – 10 years

Annual Report 201261

Notes to Consolidated Financial Statements

15. Stock Options
Fiscal 2012
Not applicable.

Fiscal 2011
Not applicable.

16. Deferred Taxes
Fiscal 2012

Fiscal 2011

1. Major components of deferred tax assets and deferred tax liabilities are as follows.
JPY
USD
Deferred tax assets
Provision for employees’ retirement
and severance benefits
912
11,103
Allowance for doubtful accounts
5,929
72,147
Inventories
2,797
34,035
Impairment loss on fixed assets
1,123
13,667
Investments in securities
3,034
36,918Golf club memberships
505
6,153
Tax loss carried forward
17,636
214,585
Other
4,493
54,677
Deferred tax assets subtotal
36,433443,284
Valuation allowance(21,305)(259,218)
Total deferred tax assets
15,128184,067
Deferred tax liabilities
Retained earnings in subsidiaries(200)(2,439)Net gains (losses) on deferred hedges(299)(3,648)Net unrealized losses on securities(93)(1,138)
Other(531)(6,465)
Total deferred tax liabilities(1,125)(13,690)
Net deferred tax assets
14,003
170,377

1. Major components of deferred tax assets and deferred tax liabilities are as follows.
JPY
Deferred tax assets
Provision for employees’ retirement
and severance benefits
918
Allowance for doubtful accounts
14,017
Inventories
3,718
Impairment loss on fixed assets
1,261
Investments in securities
3,329
Golf club memberships
628
Tax loss carried forward
14,863
Net gains (losses) on deferred hedges
94
Other
4,062
Deferred tax assets subtotal
42,892
Valuation allowance(25,203)
Total deferred tax assets
17,689Deferred tax liabilities
Retained earnings in subsidiaries(209)
Net unrealized losses on securities
(68)
Other
(868)
Total deferred tax liabilities(1,147)
Net deferred tax assets
16,541(Note) Net deferred tax assets recorded in the consolidated balance sheets are as follows:(Note) Net deferred tax assets recorded in the consolidated balance sheets are as follows:

Current assets – deferred tax assets
Long-term assets – deferred tax assets
Current liabilities – deferred tax liabilities
Non-current liabilities – deferred tax liabilities
Net deferred tax assets

JPY
3,322
10,842(1)(160)
14,003USD
40,422
131,920(15)(1,951)
170,377

2. Major reconciliation items between the statutory effective tax rate and the effective
income tax rate after the application of deferred tax accounting.
(%)
Statutory effective tax rate
40.7
(Reconciliation)
Permanent differences – additions such as entertainment expenses
4.2
Change in valuation allowance(16.0)
Effect of tax rate differences(1.0)
Tax reform
18.7
Others(2.2)
Effective income tax rate
44.5

62

KANEMATSU CORPORATION

Current assets – deferred tax assets
Long-term assets – deferred tax assets
Current liabilities – deferred tax liabilities
Non-current liabilities – deferred tax liabilities
Net deferred tax assets

JPY
3,581
13,325(1)(364)
16,541

2. Major reconciliation items between the statutory effective tax rate and the effective
income tax rate after the application of deferred tax accounting.
(%)
Statutory effective tax rate
40.7
(Reconciliation)
Permanent differences – additions such as entertainment expenses
6.2
Change in valuation allowance(24.9)
Effect of tax rate differences(1.5)
Others(1.8)
Effective income tax rate
18.8

3. Adjustment of deferred tax assets and liabilities in connection with changes in the
3. Not applicable.
rates of corporate income tax:
On December 2, 2011, “Act for Partial Revision of the Income Tax Act, etc. for the
Purpose of Creating a Taxation System Responding to Changes in Economic and Social
Structure” (Act No.114 of 2011) and “Special Measures to Secure the Financial Resources
to Implement the Restoration from the Tohoku Earthquake” (Act No.117 of 2011)were promulgated, and in these Acts, the reduction of corporate tax rate and Special
Corporate Tax for Reconstruction were applied from the current fiscal year. Due to thesechanges, the statutory effective tax rate being applied for deferred tax calculation is
reduced from 40.7% to 38.0% and 35.6% for the temporary differences which will be
deducted during the fiscal years beginning from April 1, 2012 to April 1, 2014, and thefiscal years beginning on and after April 1, 2015, respectively. Accordingly, deferred tax
assets (net of deferred tax liabilities) decreased by ¥1,538 million ($18,722 thousand), anddeferred income tax, net unrealized gains on securities, and net gains on deferred hedges
increased by ¥1,583 million ($19,265 thousand), ¥23 million ($284 thousand), and ¥21
million ($260 thousand), respectively.
In addition, the utilization of tax loss carried forward is limited up to 80% of taxable
income from the fiscal year beginning on April 1, 2012. Due to this limitation, deferred tax
assets decreased by ¥952 million ($11,583 thousand), and deferred income tax increasedby ¥952 million ($11,583 thousand).

17. Asset Retirement Obligations
Asset retirement obligations in consolidated financial statements

1. Overview of asset retirement obligations
Asset retirement obligations are the obligations of restoring offices and shops based on the contracts of rental estate.

2. Method of calculating asset retirement obligations
Asset retirement obligations are calculated using the estimated useful lives of 5 – 50 years and the discount rates of 0.370 – 2.302%.

3. Changes in asset retirement obligation
Fiscal 2012
Balance at the beginning of the fiscal year (Note)
Acquisition of tangible fixed assets
Adjustment due to passage of time
Fulfillment of asset retirement obligations
OthersBalance at the end of the fiscal year

JPY
854
28
17
(43)
—
857

USD
10,396
347
218
(532)
—
10,429Fiscal 2011
JPY
811
41
17
(18)
2
854

(Note) The balance of asset retirement obligation was initially recognized at the beginning of the fiscal year ended March 31, 2011 due to the application of the “Accounting Standard
for Asset Retirement Obligations” (ASBJ Statement No.18 dated on March 31, 2008) and the “Guidance on Accounting Standard for Asset Retirement Obligations” (ASBJ
Guidance No.21 dated on March 31, 2008) from April 1, 2010.

18. Investment and Rental Properties
Fiscal 2012
As the amount of investment and rental properties is immaterial, the description is not disclosed.

Fiscal 2011
As the amount of investment and rental properties is immaterial, the description is not disclosed.

Annual Report 201263

Notes to Consolidated Financial Statements

19. Segment Information
Segment information
1. Overview of reportable segments
Reportable segments of the Company are components of an entity about which separate financial information is available and such information is evaluatedregularly by the managements in deciding how to allocate resources and in assessing performance.
The Company expands its business of providing the products and services in Japan and overseas by integrating domestic and global networks, specialties
cultivated in each business segments, and various functions including general trading, information-gathering, market cultivation, business incubation and“project-forming,” risk management and logistics in each business segment.
Accordingly, the Company’s segments are separated based on the products and services provided by business units, and five segments “Electronic & IT,”
”Foods & Foodstuff,” ”Iron & Steel,” ”Machinery & Plant,” and ”Environment & Materials,” are treated as reportable segments.
The main products and services of each reportable segment are as follows.
(Electronics & IT)
This segment offers a broad array of products such as electronic components and materials, semiconductor and LCD equipment, mechanical parts, electronicsrelated materials and sub-materials, aircraft and aircraft parts with services including development and proposals. The segment also expands its business ofproviding products and services such as batteries or LED etc. for retail sale, mobile phones, mobile systems and communication equipment.
(Foods & Foodstuff)
This segment ensures the stable acquisition of materials and provides a broad array of food products including high value-added items such as cooked foods,
processed fruits, processed agricultural products, beverage materials, meat and marine products, wheat, rice, soybeans, feedstuff and pet food.
(Iron & Steel)This segment is involved in the foreign trade of various iron and steel products such as various steel sheets, bar products, wire, pipes, stainless products, cast andforged products, and also offers the general steel products in Japan and raw materials supply overseas.
(Machinery & Plant)This segment works on projects of various plants and infrastructure facilities overseas, trades ships, marine equipment, automobiles, automobile parts, industrial
automobiles, construction machinery, and sells machine tools and industrial machinery.
(Environment & Materials)
This segment trades overseas and in Japan such as raw materials for photovoltaic modules and lithium batteries, functional chemicals such as raw materials
for fertilizer, functional food materials, health supplements, pharmaceuticals and pharmaceutical intermediates, crude oil, petroleum products and gas. The
segment also works on the development of environment-related materials and new technologies such as heat reflective paint and expands business such ascarbon credit trading.

2. Method of calculating net sales, segment income or loss, segment assets and other amounts of reportable segments
The Company’s accounting policies for its reportable business segments are almost the same as described in “Summary of Significant Accounting Policies.”
Segment income for reportable segments is based on operating income for the segments.
The amounts for inter-segment transactions are based on market prices or third-party transaction prices.

3. Information on net sales, profits or losses, assets and other amounts of reportable segments
Fiscal 2012 (JPY)Net sales
Customers
Inter-segment
Total
Segment income
Segment assets
Other
Depreciation and amortization
Investments in equity method
affiliates
Increases in tangible fixed assets
and intangible fixed assets

64

KANEMATSU CORPORATIONElectronics
&
IT

Foods
&
Foodstuff

Reportable segments
Iron
Machinery
&
&
Steel
Plant

Environment&
Materials

Subtotal

Other(Note 1)

Total

253,14460
253,205
9,026
118,698

292,1126
292,118
5,186
87,61899,131
96
99,227
3,612
33,06570,39520
70,415
1,447
27,098273,68234
273,716
1,972
53,257

988,466
217
988,684
21,246
319,737

17,89855
17,954160
22,744

1,006,365
273
1,006,638
21,406342,482

—
(273)
(273)
20
57,2701,006,365—
1,006,365
21,426
399,753

1,231

406

155

124

341

2,259

303

2,563

(1)

2,561

2,333

396

2

—

115

2,847

3,215

6,062

34

6,097

1,915

114

110

476

149

2,766

70

2,836

678

3,514

Amount inconsolidated
Adjustment statements(Note 2)
(Note 3)

Fiscal 2012 (USD)
Electronics&
IT
Net sales
Customers
3,079,993
Inter-segment
742
Total
3,080,735
Segment income
109,828
Segment assets
1,444,192
Other
Depreciation and amortization
14,987
Investments in equity method
affiliates
28,386
Increases in tangible fixed assets
and intangible fixed assets
23,302

Foods&
Foodstuff

Reportable segments
Iron
Machinery
&
&
Steel
Plant

Environment&
Materials

Subtotal

Other(Note 1)

Total

3,554,110
74
3,554,184
63,0991,066,044

1,206,127
1,172
1,207,300
43,958402,301

856,500
245
856,744
17,610329,7033,329,870 12,026,600
418
2,652
3,330,288 12,029,252
24,004258,499
647,982 3,890,222

217,773678
218,451
1,952
276,736

12,244,373
3,329
12,247,702
260,450
4,166,958—(3,329)(3,329)247
696,810

12,244,373—
12,244,373
260,697
4,863,768

4,946

1,887

1,517

4,154

27,491

3,693

31,184(13)

31,171

4,829

31

—

1,402

34,648

39,11773,765417

74,182

1,395

1,348

5,798

1,815

33,658855

34,5138,252

42,764

Amount inconsolidated
Adjustment statements(Note 2)
(Note 3)(Notes) 1. “Other” is a business segment that is not included in the reportable segments and includes the aluminum recycling business and the logistics and insurance service
business, etc.
2. Adjustments are as follows.
(1) Adjustment for segment income of ¥20 million ($247 thousand) includes inter-segment elimination of ¥20 million ($247 thousand).
(2) Adjustment for segment assets of ¥57,270 million ($696,810 thousand) includes inter-segment elimination of (¥4,707) million (($57,279) thousand) and corporate assetsof ¥61,978 million ($754,089 thousand) that is not allocated to any reportable segment. The corporate assets consist mainly of cash and bank deposits and investments insecurities related to financing activities.
(3) Adjustment for depreciation and amortization of (¥1) million (($13) thousand) includes inter-segment elimination of (¥1) million (($13) thousand).
(4) Adjustment for investments in equity method affiliates of ¥34 million ($417 thousand) includes inter-segment elimination of ¥6 million ($78 thousand) and corporate
assets of ¥27 million ($339 thousand) that are not allocated to any reportable segment.
(5) Adjustment for increases in tangible fixed assets and intangible fixed assets of ¥678 million ($8,252 thousand) includes corporate assets of ¥678 million ($8,252 thousand)that is not allocated to any reportable segment.
3. Segment income is adjusted for operating income in the consolidated statements of income.

Fiscal 2011 (JPY)Net sales
Customers
Inter-segment
Total
Segment income
Segment assets
Other
Depreciation and amortization
Investments in equity method
affiliates
Increases in tangible fixed assets
and intangible fixed assets

Electronics
&
IT

Foods
&
Foodstuff

Reportable segments
Iron
Machinery
&
&
Steel
Plant

Environment&
Materials

Subtotal

Other(Note 1)

Total

253,85425
253,879
9,488
115,953

271,8607
271,867
2,835
81,226

98,832
460
99,2933,410
34,80567,30016
67,316
1,062
27,627

227,466
46
227,512977
44,532

919,314556
919,870
17,775304,146

17,57741
17,619235
24,042936,891598
937,490
18,010328,188

—
(598)
(598)
18
60,487

936,891—
936,891
18,029388,676

1,260

387

142

118

341

2,251

304

2,556

(0)

2,555

2,346

649

2

—

102

3,100

2,972

6,073

34

6,108

1,587

196

126

76

113

2,100

144

2,244

1,291

3,536

Amount inconsolidated
Adjustment statements(Note 2)
(Note 3)(Notes) 1. “Other” is a business segment that is not included in the reportable segments and includes the aluminum recycling business and the logistics and insurance service
business, etc.
2. Adjustments are as follows.
(1) Adjustment for segment income of ¥18 million includes inter-segment elimination of ¥18 million .
(2) Adjustment for segment assets of ¥60,487 million includes inter-segment elimination of (¥5,869) million and corporate assets of ¥66,357 million that is not allocated to
any reportable segment. The corporate assets consist mainly of cash and bank deposits and investments in securities related to financing activities.
(3) Adjustment for depreciation and amortization of (¥0) million includes inter-segment elimination of (¥0) million thousand).
(4) Adjustment for investments in equity method affiliates of ¥34 million includes inter-segment elimination of ¥6 million and corporate assets of ¥28 million are allocated to
any reportable segment.
(5) Adjustment for increases in tangible fixed assets and intangible fixed assets of ¥1,291 million includes corporate assets of ¥1,291 million that is not allocated to any
reportable segment.
3. Segment income is adjusted for operating income in the consolidated statements of income.

Annual Report 201265

Notes to Consolidated Financial Statements

Related information
Fiscal 2012

1. Information by product and service
The classification of product and service is abbreviated because it is same as the classification of reportable segments.

2. Information by geographical area
(1) Net sales
Japan
JPY
USD
839,476
10,213,847

Asia
JPY
91,989USD
1,119,234

North America
JPY
USD
37,759459,422

EuropeJPY
USD
13,818168,134

Other Areas
JPY
USD
23,320283,737

Total
JPY
USD
1,006,365 12,244,373

EuropeOther Areas
JPY
USD
18
231

JPY
27,028(Note) Net sales are classified into countries and areas based on locations of customers.

(2) Tangible fixed assets
Japan
JPY
USD
23,710288,482

Asia
JPY
911

USD
11,096

North America
JPY
USD
105
1,287

JPY
2,281

USD
27,755

Total
USD
328,851

3. Information by major customer
Not applicable.
Fiscal 2011

1. Information by product and service
The classification of product and service is abbreviated because it is same as the classification of reportable segments.

2. Information by geographical area
(1) Net sales
Japan
JPY
765,900

Asia
JPY
96,269North America
JPY30,381

EuropeJPY
15,468Other Areas
JPY
28,871

Total
JPY
936,891

EuropeJPY
2,264

Other Areas
JPY
10

Total
JPY
27,884(Note) Net sales are classified into countries and areas based on locations of customers.

(2) Tangible fixed assets
Japan
JPY
24,607

Asia
JPY
877

North America
JPY125

3. Information by major customer
Not applicable.

Information of impairment loss on fixed assets of reportable segments
Fiscal 2012 (JPY)

Impairment loss

Electronics
&
IT
—

Foods
&
Foodstuff—

Reportable segments
Machinery
Iron
&
&
Plant
Steel
(Note 3)—345

Environment&
Materials
24

Foods
&
Foodstuff—

Reportable segments
Machinery
Iron
&
&
Plant
Steel
(Note 3)—
4,203

Environment&
Materials
298

Subtotal369

Other(Note 1)
(Note 2)
416

Total
786

Adjustment—

Total(Note 3)786

Subtotal
4,501

Other
(Note 1)
(Note 2)
5,067

Total
9,568

Adjustment—

Total(Note 3)
9,568

Fiscal 2012 (USD)

Impairment loss

Electronics&
IT—(Notes) 1. “Other” is a business segment that is not included in the reportable segments and includes the aluminum recycling business and the logistics and insurance service
business, etc.
2. Amount of “Other” is a loss on rental property business.
3. The amount of ¥345 million ($4,203 thousand) out of total amount of ¥786 million ($9,568 thousand) is included in loss on closure of business in the consolidated statements
of income.

66

KANEMATSU CORPORATIONFiscal 2011 (JPY)

Impairment loss

Electronics
&
IT
16

Foods
&
Foodstuff
10

Reportable segments
Iron
Machinery
&
&
Steel
Plant
3
12

Environment&
Materials
189

Subtotal
231

Other(Note 1)
2

Total
234

Adjustment(Note 2)
17

Total
252

(Notes) 1. “Other” is a business segment that is not included in the reportable segments and includes the aluminum recycling business and the logistics and insurance service
business, etc.
2. Adjustment for impairment loss of ¥17 million is corporate loss that is not allocated to any reportable segment.

Information of amortization of goodwill and balance of goodwill of reportable segments
Fiscal 2012 (JPY)

Amortization of goodwill
for fiscal year
Balance of goodwill
at end of fiscal year
Amortization ofnegative goodwill for fiscal year
Balance of negative goodwill
at end of fiscal year

Reportable segments
Iron
Machinery
&
&
Steel
Plant

Electronics
&
IT

Foods
&
Foodstuff

Environment&
Materials

Subtotal

Other(Note 1)

Total

Adjustment(Note 2)

Total

47

16

—

—

12

76

2

78

(78)

—

261

53

—

—

5

320

2

323

(233)

89

—

—

—

0

0

0

4

5

0

6

—

—

—

0

0

0

12

13

(13)

—

Electronics
&
IT

Foods
&
Foodstuff

Environment&
Materials

Subtotal

Other(Note 1)

Total

Adjustment(Note 2)

Total

575

200

—

—

154

929

27

957

(957)

—

3,185

652

—

—

67

3,905

32

3,937

(2,842)

1,095

—

—

—

0

6

6

56

63

11

74

—

—

—

0

11

11

155

166

(166)

—

Fiscal 2012 (USD)

Amortization of goodwill
for fiscal year
Balance of goodwill
at end of fiscal year
Amortization ofnegative goodwill for fiscal year
Balance of negative goodwill
at end of fiscal year

Reportable segments
Iron
Machinery
&
&
Steel
Plant

(Notes) 1. “Other” is a business segment that is not included in the reportable segments and includes aluminum recycling business and logistics and insurance service business, etc.
2. Negative goodwill recognized due to the combinations before April 1, 2010. The amounts of amortization and balance of goodwill and negative goodwill are offset inconsolidated financial statements.
In addition, adjustments are as follows.
(1) A djustment for amortization of goodwill for fiscal year of (¥78) million (($957) thousand) includes inter-segment elimination of (¥2) million (($27) thousand) and offset
amount of (¥76) million (($929) thousand).
(2) A djustment for balance of goodwill at end of fiscal year of (¥233) million (($2,842) thousand) includes inter-segment elimination of (¥2) million (($32) thousand), corporate
assets of ¥0 million ($1 thousand) that are not allocated to any reportable segment and offset amount of (¥231) million (($2,812) thousand).
(3) A djustment for amortization of negative goodwill for fiscal year of ¥0 million ($11 thousand) includes corporate assets of ¥77 million ($941 thousand) that are notallocated to any reportable segment and offset amount of (¥76) million (($929) thousand).
(4) A djustment for balance of negative goodwill at end of fiscal year of (¥13) million (($166) thousand) includes corporate liabilities of ¥217 million ($2,646 thousand) that are
not allocated to any reportable segment and offset amount of (¥231) million (($2,812) thousand).

Annual Report 201267

Notes to Consolidated Financial Statements

Fiscal 2011 (JPY)
Reportable segments
Iron
Machinery
&
&
Steel
Plant

Electronics
&
IT

Foods
&
Foodstuff

174

12

—

283

70

—
—

Amortization of goodwill
for fiscal year
Balance of goodwill
at end of fiscal year
Amortization ofnegative goodwill for fiscal year
Balance of negative goodwill
at end of fiscal year

Environment&
Materials

Subtotal

Other(Note 1)

Total

Adjustment(Note 2)

Total

—

21

208

2

211

(211)

—

—

—

31

384

4

389

(318)

71

—

—

0

0

0

4

5

123

128

—

—

0

1

1

17

18

(18)

—

(Notes) 1. “Other” is a business segment that is not included in the reportable segments and includes aluminum recycling business and logistics and insurance service business, etc.
2. Negative goodwill recognized due to the combinations before April 1, 2010. The amounts of amortization and balance of goodwill and negative goodwill are offset inconsolidated financial statements.
In addition, adjustments are as follows.
(1) A djustment for amortization of goodwill for fiscal year of (¥211) million includes inter-segment elimination of (¥2) million and offset amount of (¥208) million.
(2) A djustment for balance of goodwill at end of fiscal year of (¥318) million includes inter-segment elimination of (¥4) million, corporate assets of ¥0 million that are notallocated to any reportable segment and offset amount of (¥313) million.
(3) A djustment for amortization of negative goodwill for fiscal year of ¥123 million includes corporate assets of ¥331 million that are not allocated to any reportable segment
and offset amount of (¥208) million.
(4) A djustment for balance of negative goodwill at end of fiscal year of (¥18) million includes corporate liabilities of ¥294 million that are not allocated to any reportablesegment and offset amount of (¥313) million.

Information of gain on negative goodwill by reportable segments
Fiscal 2012
Not applicable.
Fiscal 2011
Not applicable.

20. Disclosure of Related Party Transactions
Fiscal 2012
Related party transactions
Not applicable.

Fiscal 2011
Related party transactions
Not applicable.

21. Information per Share68

Fiscal 2012

Fiscal 2011

Net assets per share¥93.16$1.13
Net income per share¥14.60$0.18
Diluted net income per share for the term is not reported since there is no outstanding
security with dilutive effect.

Net assets per share¥79.07
Net income per share¥21.93
Diluted net income per share for the term is not reported since there is no outstanding
security with dilutive effect.

KANEMATSU CORPORATIONSupplemental information for per share computation(1) Net assets per share

Total net assets
Amount deducted from total net assets(minority interest in consolidated subsidiaries)
Net assets corresponding to common stock at the end of the fiscal year
Number of common stock issued (thousand shares)
Number of treasury stock (thousand shares)
Number of common stock used for the calculation of net assets per share (thousand shares)

Fiscal 2012
JPY
55,992
16,984(16,984)
39,008422,501
3,796
418,704

Fiscal 2011
JPY
49,576
16,475(16,475)
33,101
422,501
3,878
418,622

Fiscal 2012
USD
681,258
206,647(206,647)
474,610

Fiscal 2012
JPY
6,110
—
6,110
418,616

Fiscal 2011
JPY
9,175
—
9,175
418,393

Fiscal 2012
USD
74,346—74,346(2) Net income per share

Net income
Amount that does not belong to common shareholders
Net income corresponding to common stock
Average number of common stock for the term (thousand shares)

22. Subsequent Events
Fiscal 2012
Not applicable.

Fiscal 2011
Not applicable.

23. Consolidated Supplementary Schedules(1) Schedule of bonds payableNot applicable.

(2) Schedule of borrowings
Classification
Short-term borrowings
Current portion of long-term borrowings
Current portion of Lease obligations
Long-term borrowings(excluding current portion)
Lease obligations (excluding current portion)
Total

Balance at the beginning of
the fiscal year
JPY
USD
38,173459,094
62,314749,427572
6,888
73,138
1,248
175,448879,601
15,013
2,110,023

Balance at the end of
the fiscal year
JPY
USD
38,723471,148
39,720483,281726
8,842
82,403
1,394
162,969

1,002,603
16,9691,982,842

Composite
interest rate
%
1.5
1.9
—

Due
Month, year
—
—
—

2.1
—
—

April 2013 – March 2017
June 2013 – March 2019—

(Notes) 1. The composite interest rate is a weighted average interest rate for those outstanding at end of the year.
2. The composite interest rate of lease obligations is not presented as lease obligations of the Company and certain of its subsidiaries comprise interest expenses portion of
total lease payments.
3. The long-term borrowings and lease obligations repayment schedule for next five years (excluding current portion) is as follows:

Long-term borrowings
Lease obligations

Over one year
and within two years
JPY
USD
37,356454,511580
7,060

Over two years
and within three years
JPY
USD
31,773
386,588406
4,941Over three years
and within four years
JPY
USD
6,024
73,294287
3,497

Over four years
and within five years
JPY
USD
7,250
88,21097
1,183(3) Schedule of asset retirement obligations:
According to the Article 92-2 of the “Regulations for Consolidated Financial Statements,” schedule of asset retirement obligations are abbreviated, as theamount of “asset retirement obligations” is less than the 1 percent of total amount of liabilities and net assets.

Annual Report 2012

69

70

KANEMATSU CORPORATIONCorporate Data

Contents
72

Global Network

74

Network

76

Major Consolidated Subsidiaries and Affiliates

78

Organization Chart

79

History80

Investor Information

Annual Report 201271

Global Network (As of July 1, 2012)
The Company supplies products and services
from a large network of business basesin Japan and overseas.
83 subsidiaries and 30 affiliates
ensure global reach into
the markets of all regions.

2.
1.

Moscow
Munchen
Milano5.

3.

Duesseldorf

n

4.

6.

Budapest

1. ASIA & THE MIDDLE EAST

Overseas subsidiaries
and their branches
Representative offices
Branches

TehranDalianBeijing
Seoul
Tianjin

DalianBeijing
Seoul
Tianjin

TehranWuxi
ShanghaiSuzhouWuxi New Dehli
ShanghaiSuzhouNew Dehli
Hanoi

Hanoi

Shenzhen Taipei

Hong Kong
Haiphong

Shenzhen Taipei

Hong Kong
Haiphong

ManilaBangkok
Hochiminh City

ManilaBangkok
Hochiminh City

Singapore
Singapore

JakartaJakarta

2. EUROPE

3. OCEANIA
Moscow
Duesseldorf

LondonMunchen
MilanoBudapest
SydneySydneyAucklandDalia
Beijing
Tianjin

TehranLas Palmas

Wuxi
Sh
SuzhouNew Dehli
Hanoi

Shenzhen Tai

Hong Kong
Haiphong
72

KANEMATSU
DakarCORPORATION

BangkokMa4. NORTH AMERICA

5. SOUTH AMERICA

VancouverPortland
Silicon Valley
San Diego

New York

ChicagoSomerset

Sao Paulo

Houston

6. JAPAN
Hokkaido

Nagoya

Sao Paulo

TohokuKyushuTsukiji Office
Tokyo Head Office
Osaka
Midosuji Office

Segment information:
Number of employees and number of group companies (As of March 31, 2012)
Electronics
Foods & Foodstuff
Iron & Steel
Machinery & Plant
Environment & Materials
OthersCompany-wide (common)
Total

Number of employees(consolidated basis)
2,584
488
433
330
339
235
361
4,770

Number of affiliated companies
31 (Japan: 15, Overseas: 16)
17 (Japan: 11, Overseas: 6)
10 (Japan: 5, Overseas: 5)
13 (Japan: 4, Overseas: 9)
8 (Japan: 8)
19 (Japan: 13, Overseas: 6)
Overseas subsidiaries 15
113

Notes: 1. N umber of employees on a non-consolidated basis is 795 (including employees seconded from Kanematsu, excluding
employees seconded from companies other than Kanematsu).
2. Of affiliated companies, 78 are consolidated subsidiaries and 29 are equity-method affiliates.
Annual Report 201273

Global Network

Network
JAPAN

ASIA & THE MIDDLE EASTTokyo Head Office

KOREA
Kanematsu Devices Korea Corporation
Koreana Bldg., 6F, 61-1-Ka Tae Pyung Ro,
Chung-Ku, Seoul, Republic of Korea
TEL: 82-2-737-5795
FAX: 82-2-737-5799

2-1, Shibaura 1-chome, Minato-ku,
Tokyo 105-8005, Japan
TEL: 81-3-5440-8111
FAX: 81-3-5440-6500

Tsukiji Office
Tsukiji Daiichi Nagaoka Building, 3-4, Tsukiji
2-chome, Chuo-ku, Tokyo 104-0045, Japan
TEL: 81-3-3544-6531
FAX: 81-3-5565-0080

Osaka
Awaji-machi Dai Building, 1-9, Awaji-machi
3-chome, Chuo-ku, Osaka 541-8560, Japan
TEL: 81-6-6205-3111
FAX: 81-6-6205-3322

Midosuji Office
Midosuji Daiwa Building, 6-8, Kyutaro-machi
3-chome, Chuo-ku, Osaka 541-0056, Japan
TEL: 81-6-6251-7700
FAX: 81-6-6251-7770

Nagoya9-3, Sakae 2-chome, Naka-ku,
Nagoya 460-0008, Japan
TEL: 81-52-202-5111

Hokkaido
Sapporo-Kokusai Building, 4-1, Kitashijou-nishi,
Chuo-ku, Sapporo 060-0004, Japan
TEL: 81-11-261-5631
FAX: 81-11-261-5630

KyushuTenjin Twin Building, 6-8, Tenjin 1-chome,
Chuo-ku, Fukuoka 810-0001, Japan
TEL: 81-92-715-7820
FAX: 81-92-715-7830

Tohoku163 Shibue, Wakuya-cho, Tohda-gun,
Miyagi 987-0113, Japan
TEL: 81-229-43-2195
FAX: 81-229-43-5650

74

KANEMATSU CORPORATION

CHINA
Kanematsu (China) Co., Ltd.
Shanghai Head Office
Shanghai Branch
39th Floor Raffles City (Office Tower) 268 Xi Zang
Middle Road, Shanghai 200001, P.R.China
TEL: 86-21-6340-3456
FAX: 86-21-6840-4290
Suzhou Office
12F09, Gold River Tower, No. 35 Shishan Road,
Suzhou New District, Jiansu Province, P.R.China
TEL: 86-512-6809-7379
FAX: 86-512-6803-2295
Wuxi Office
Room 608 Bai Shi Da Building, Chagjiag North Rd.,
Wuxi New District, Wuxi 214110, Jiansu Province,
P.R.China
TEL: 86-510-8522-6426
FAX: 86-510-8522-6430
Beijing Branch
Beijing Lufthansa Center C315, 50 Liangma Qiao
Road, Chaoyang District, Beijing 100125, P.R.China
TEL: 86-10-8591-1031
FAX: 86-10-8591-1535
Dalian BranchRooms 602, Furama Hotel, 60 Renmin Road,
Dalian 116001, P.R.China
TEL: 86-411-8263-9105, 7481
FAX: 86-411-8280-5534
Tianjin Branch
29F-A, Kai Xuan Men Building A, 66 Nanjing Road,
Hexi-Qu, Tianjin, 300042, P.R.China
TEL: 86-22-2331-2405, 2330-5886
FAX: 86-22-2331-6873
Kanematsu (Guangdong) Trading Co., Ltd.
Room13-15, 15/F, Office Tower, Shun Hing Square
Di Wang Commercial Centre, 5002 Shen Nan
Dong Road, Shenzhen 518008, P.R.China
TEL: 86-755-8235-4891
FAX: 86-755-8223-8980
Kanematsu Industrial and Trading(Dalian Free Trade Zone) Co., Ltd.
Aulan Industrial Land, ID-32 Free Trade Zone
Dalian, P.R.China
TEL: 86-411-8732-3090, 3091, 3092
FAX: 86-411-8732-3093
Kanematsu (Hong Kong) Ltd.
Rooms 5609-5610, 56th Floor, Hopewell Centre,
183 Queen’s Road East, Hong Kong
TEL: 852-2821-6200
FAX: 852-2527-0465, 2865-6649

TAIWAN
Kanematsu Taiwan Corporation
11th Floor, No. 61 Chung Shan N.Rd., Sec. 2,
Taipei 104, Taiwan, R.O.C.
TEL: 886-2-2511-7007
FAX: 886-2-2511-2947, 2951, 3554
Kanematsu Semiconductor Taiwan Ltd.
11th Floor, No. 61, Chung Shan N.Rd., Sec. 2,
Taipei 104, Taiwan, R.O.C.
TEL: 886-2-2562-2025
FAX: 886-2-2562-2026
VIETNAMThe Representative of Kanematsu Corporation
Hanoi
Room No. 1205-1206-1207, 12th floor, Daeha
Business Centre, 360 Kim Ma St., Ba Dinh Dist.,
Hanoi, S.R.Vietnam
TEL: 84-4-3771-5642
FAX: 84-4-3771-5641, 3771-5648
Haiphong
H-Tower 3rd Floor, 195 Van Cao Street, Haiphong,
S.R.Vietnam
TEL: 84-31-368-6371
FAX: 84-31-368-6373
Hochiminh City
Unit 1809, 18th Floor, Saigon Trade Center, 37
Ton Duc Thang Street, District 1, Hochiminh City,
S.R.Vietnam
TEL: 84-8-910-5532
FAX: 84-8-910-5538
THAILAND
Kanematsu (Thailand) Ltd.
Watana Inter-Trade Co., Ltd.
25F Thaniya Plaza Building, 52 Silom Road,
Bangkok 10500, Thailand
TEL: 66-2-632-8060
FAX: 66-2-632-8083, 8084
SINGAPORE
Kanematsu (Singapore) Pte. Ltd.
100 Tras Street, #12-01 Amara Corporate Tower,
Singapore 079027
TEL: 65-6320-6000
FAX: 65-6320-6071
Kanematsu Semiconductor Singapore Pte., Ltd.
100 Tras Street, #12-03 Amara Corporate Tower,
Singapore 079027
TEL: 65-6438-4440
FAX: 65-6438-4441
PHILIPPINES
Kanematsu Corporation Manila Branch
17th Floor Tower 2, The Enterprise Center 6766,
Ayala Avenue, Makati City, Metro Manila,
Phillipines
TEL: 63-2-889-1701, 845-2017
FAX: 63-2-887-0030

INDONESIA
PT. Kanematsu Trading Indonesia
ANZ Tower 15th Floor, Jalan Jend. Sudirman Kav.
33A Jakarta 10220, Indonesia
TEL: 62-21-572-1220, 1225, 1228, 1230, 1238
FAX: 62-21-572-1188, 1237

HUNGARY
Kanematsu G.m.b.H.
Budapest Office
H-1034 Budapest Becsi ut 126-128.I.103. Hungary
TEL: 36-1-329-3412, 320-4952
FAX: 36-1-320-4953

INDIA
Kanematsu India Private Limited
1610-1611-1612, Narain Manzil 23, Barakhamba
Road, New Delhi 110001, India
TEL: 91-11-4362-3050, 3051, 3052
FAX: 91-11-4362-3053

RUSSIAN FEDERATIONThe Representative of Kanematsu Corporation
Tverskaya 16/2, Building 1, Business Centre,
125009, Moscow, Russian Federation
TEL: 7-495-935-89-40, 42, 43
FAX: 7-495-935-8948

IRAN
Kanematsu Iran Ltd.
Elahiyeh Commercial Complex, Unit 1201,
12th Floor, No. 244, Africa Ave., Tehran, Iran
TEL: 98-21-2621-2812
FAX: 98-21-2621-3106

SPAIN
The Representative of Kanematsu Corporation
Calle Eduardo Benot 51, Edificio Atlansea, 4-izqda,
35008 Las Palmas de Gran Canaria, Spain
TEL: 34-928-275634, 275680
FAX: 34-928-275632

EUROPE

OCEANIA

UNITED KINGDOM
Kanematsu Europe PLC.
London Head Office
Ground Floor Genesis House, 17 Godliman Street,
London, EC4V 5BD, United Kingdom
TEL: 44-20-7246-2900
FAX: 44-20-7248-8986

AUSTRALIA
Kanematsu Australia Ltd.
Sydney Head Office
Level 20 St Martins Tower, 31 Market Street,
Sydney NSW 2000, Australia
TEL: 61-2-9283-3347
FAX: 61-2-9283-3095

GERMANY
Kanematsu G.m.b.H.
Duesseldorf Head Office
Oststrasse 34, D-40211 Duesseldorf, Germany
TEL: 49-211-36890
FAX: 49-211-3689-111
Munich OfficeFrankfurter Ring 193a, 2.OG. Raum 203 80807
Muenchen, Germany
TEL: 49-89-3074-817-13
FAX: 49-89-3074-817-29

NEW ZEALAND
Kanematsu New Zealand Ltd.
9th Floor, Ballantyne House, 101 Customs Street,
East Auckland, New Zealand
TEL: 64-9-302-5660
FAX: 64-9-309-3877

ITALY
Kanematsu G.m.b.H.
Milano Liaison Office
Piazza Duca d’Aosta 8, Milano, Italy
TEL: 39-02-6749-3538
FAX: 39-02-6707-7364

NORTH AMERICA

U.S.A.
Kanematsu USA Inc.
New York Head Office
75 Rockefeller Plaza, 22nd Floor, New York,
NY10019, U.S.A.
TEL: 1-212-704-9400
FAX: 1-212-704-9483
Somerset Office
100 Randolph Road, Somerset,
New Jersey 08873, U.S.A.
TEL: 1-732-271-7300
FAX: 1-732-271-7370
Chicago Branch
543 West Algonquin Road, Arlington Heights,
Illinois 60005, U.S.A.
TEL: 1-847-981-5600
FAX: 1-847-981-6760
San Diego Office
900 Lane Avenue, Suite 150, Chula Vista,
California 91914, U.S.A.
TEL: 1-619-656-2385
FAX: 1-619-656-2386
Houston Branch1800 Augusta, Suite 390, Houston,
Texas 77057, U.S.A.
TEL: 1-713-975-7200
FAX: 1-713-975-7966
Silicon Valley Branch
1615 Wyatt Drive, Santa Clara
California 95054, U.S.A.
TEL: 1-408-501-1400
FAX: 1-408-501-1499
Portland Branch4380 SW Macadam Avenue, Suite 170, Portland,
Oregon 97239, U.S.A.
TEL: 1-503-224-7755
FAX: 1-503-228-5067
CANADAThe Representative of Kanematsu Corporation
205-8988 Fraserton Court Burnaby, B.C.
V5J 5H8, Canada
TEL: 1-604-689-0550
FAX: 1-604-689-0655

SOUTH AMERICABRAZIL
Kanematsu America do sul Representacao
Comercial de Produtos Automotivos Ltda.
Alameda Campinas No. 728, Cjto 34 Jardim
Paulista, Sao Paulo, S.P. CEP 01404-001 Brasil
TEL: 55-11-3285-3311
FAX: 55-11-3285-3318

Annual Report 201275

Global Network

Major Consolidated Subsidiaries and Affiliates* Companies with shares listed on a stock exchangeElectronics
Japan

Kanematsu Electronics Ltd.*Sales of computers, peripheral equipment, communications equipment, etc.

Nippon Office Systems Ltd.*Sales and maintenance of computers, communications equipment, etc.

Kanematsu Communications Ltd.

Sales of mobile communications, related equipment and services,
ASP services for mobile phones

Kanematsu Granks, Corp.

Mobile content provider service business, mobile commerce business,
mobile media representative business, mobile solutions business

Kanematsu Aerospace Corp.

Sales of aircraft, defense and aerospace-related products

Kantatsu Co., Ltd.

Manufacture of lens units, camera modules
and other optical equipment and parts

China

Kanekoh Electronics (Shanghai) Co., Ltd.

Development and manufacture of battery modules

Ireland

KG Aircraft Rotables Co., Ltd.

Replacement and maintenance of aircraft components, leasing

Foods & Foodstuff
Japan

China

Thailand

U.S.A.

Kanematsu Shintoa Foods Corp.

Food wholesaling and cold storage

Kanematsu Agritec Co., Ltd.

Manufacture and sales of feed and fertilizer

Kanematsu Soytech Corp.

Sales of soybean and grains, and development
and marketing of products for food processors

Heisei Feed Manufacturing Co.

Manufacture and processing of mixed feeds

Dalian Tiantianli Food Co., Ltd.

Manufacture of dim sum and deli products

Shangdong Lu Feng Foods Co., Ltd.

Production of processed vegetables and fruits

Summit Food Industries Co., Ltd.

Production and sales of rice crackers

Siam Aloe Vera (2005) Co., Ltd.

Processing and sales of Aloe Vera

Kai Enterprises, Inc.

Sales of dried feed

Iron & SteelJapan

Kanematsu Trading Corp.

Sales of steel and construction materials

Kyowa Steel Co., Ltd.

Cutting and processing of steel sheet and sales of construction materials

Eiwa Metal Co., Ltd.

Processing and sales of stainless steel, titanium and high-alloy steels

China

Kanematsu Hoplee Co., Ltd.

Processing and marketing of steel products

U.S.A.

Steel Service Oilfield Tubular, Inc.

Sales of premium tubing for oil excavation

Machinery & Plant
Japan

76

Kanematsu KGK Corp.

Sales of machine tools and industrial machinery

KGK Engineering Corp.

Repair and sales of machine tools, sales of paper-manufacturing machinery

Aasted Mikroverk Japan Ltd.

Import and marketing in Japan of industrial machinery

KANEMATSU CORPORATION

ChinaKanematsu KGK (Shanghai) Co., Ltd.

Sales of machine tools and industrial machinery

Kanematsu KGK Trade & Sales (Shanghai) Co., Ltd. Sales of machine tools and industrial machinery
ThailandKGK Engineering (Thai) Co., Ltd.

Sales of machine tools and industrial machinery

Czech Republic KGK Czech s.r.o.

Sales of machine tools and industrial machinery

PolandAries Motor Sp. z o.o.

Sales of automobiles

Aries Power Equipment Sp. z o.o.

Sales of engines, generators, water pumps
and other general-purpose machinery

KGK International Corp.

Sales of machine tools

U.S.A.

Environment & Materials
Japan

Kanematsu Petroleum Corp.

Sales of petroleum products and LPG

Kanematsu Yuso Co., Ltd.

Delivery and storage of petroleum products

Kanematsu Chemicals Corp.

Sales of petrochemicals, automobile-related chemicals,
health food ingredients and pharmaceuticals

Kanematsu Wellness Corp.

Sales of health food and provision of medical information

Miracool Co., Ltd.

Sales of heat reflective paint

Kaneyo Co., Ltd.*Sales of bedding materials and products,
general merchandise and interior goods

Kanematsu-NNK Corp.*

Manufacture and sales of home-construction materials;
ground inspection services and improvement works

Hokushin Co., Ltd.*

Manufacture and sales of medium-density fiberboard

Aso Kanko Kaihatsu Co., Ltd.

Golf course management

Higashi Kibi Kanko Kaihatsu Co., Ltd.

Golf course management

Shintoa Corp.

Beverage-vending machine operations, imports, exports
and sales of aircraft engines

Kanematsu Logistics & Insurance Ltd.

Insurance agency and logistics businessJapan Logistics Co., Ltd.

Warehouse and trunk room operation

Vietnam-Japan International Transport Co., Ltd.

Total logistics services

OthersJapan

VietnamIndonesia PT. Century Textile Industry
PT. Dunia Express Transindo

Manufacture of polyester blend fabric
Total logistics services

Annual Report 201277

Organization Chart (As of April 1, 2012)

Marketing Area

Electronics & IT Division
General Meeting of
Shareholders

Board ofCorporate Auditors

Board of Directors

Devices Division

Information & Electronics Department
Aerospace Department
Semiconductor Equipment Department
Industrial Electronics Department
Electronics Administration OfficeComponents & Material Department No.1
Components & Material Department No.2
Semiconductor Department No.1
Semiconductor Department No.2
Semiconductor Marketing Department
System & Module Department
Electronics Administration Office

Foods Division

Produce Department No. 1
Produce Department No. 2
Produce Department No. 3
Meat Department
Foods Administration Office
Food Safety Management System Office

Foodstuff Division

Grain Department
Feedstuff Department
Agricultural Products and Oilseeds Department
Domestic Sections
Foodstuff Administration Office
Food Safety Management System Office

Iron & Steel Division

Iron & Steel Foreign Trade Department
Specialty Steel Foreign Trade Department
Automotive Materials Department
Iron & Steel Administration Office

Machinery & Plant Division

Plant & Infrastructure Projects Department
Transportation Machinery Department
Machinery & Plant Administration OfficeEnvironment & Materials
Division

Functional Chemicals Department
Energy Department
LNG Business Department
Environment & Materials Administration Office
Food Safety Management System Office

Management
Committee

Supporting Area
Personnel & General Affairs Department
Finance Department
Accounting Department
Business Accounting Department
Credit Control and Legal Department
Traffic & Insurance Department
System Planning Department
Internal Auditing Department
Corporate Planning Department

78

KANEMATSU CORPORATIONHistory

1889• Fusajiro Kanematsu founds Fusajiro Kanematsu Shoten of Australian Trading in Kobe

1890

• Sets up a branch in Sydney, and begins direct import of Australian wool

1891

• Yohei Kitagawa founds Kitagawa Shoten, which is a predecessor of The Gosho Company

1900• Starts import of Australian wheat

1913• Fusajiro Kanematsu passes away

1918

• Reorganizes into Kanematsu Shoten Company. Stated capital ¥2 million

1922• Reorganizes Sydney branch into an affiliate company incorporated abroad

1934• Establishment of Kanematsu Wool Research Institute (the current Kaneyo Co., Ltd.)1936• Sets up branches in New York and Seattle

1937• Establishes overseas affiliated company in New Zealand1943• Changes trade name to Kanematsu and Company

1949• Resumption of foreign tours for employees. The first group departs for America• Diversification of business begins, moving toward an integrated general trading company

1951• Establishes an overseas affiliated company in New York, as the first Japanese trading company in postwar era• Establishes an overseas affiliated company in Brazil

1957• Establishes an overseas affiliated company in West Germany

1961• Abolishes the system in which workers hold all the stock, and goes public on the Second Section of the Osaka
Securities Exchange• Establishes an overseas affiliated company in Iran

1963

• Lists stock on the First Section of the Osaka Securities Exchange

1966• Establishes an overseas affiliated company in Thailand

1967• Merges with The Gosho Company to form Kanematsu-Gosho, Ltd.

1969

• Establishes the Nagoya Branch Office1970• Establishes its Head Office at the Tokyo Branch Office1972• Establishes an overseas affiliated company in Canada

1973• Lists stock on the First Sections of the Tokyo and Nagoya Stock Exchanges• Establishes an overseas affiliated company in France

1975• Establishes an overseas affiliated company in Hong Kong

1979

• Establishes a representative office in Beijing, China following restoration of diplomatic relations

1981• Establishes an overseas affiliated company in Mexico

1989• 100th anniversary of the founding of the Company• Establishes an overseas affiliated company in the United Kingdom

1990• Trade name is changed to Kanematsu Corporation• Establishes an overseas affiliated company in Spain

1991• Moves Tokyo headquarters from Kyobashi to Shibaura• Establishes Kanematsu (Europe) Corporation in the United Kingdom having general control over Europe• Establishes an overseas affiliated company in Italy2008• Trade name of Kanematsu (Shanghai) Co., Ltd. is changed to Kanematsu (China) Co., Ltd. establishes Beijing,
Dalian and Tianjin branches

2012• Establishes an overseas affiliated company in India

Annual Report 201279

Investor Information

Composition of Shareholders (As of March 31, 2012)(As of April 1, 2012)

Stock Exchange Listings Tokyo* The Company’s stocks were delisted from the
Osaka Securities Exchange with effect July 1, 2010.

■ Individuals and others(including treasury shares)�����46.98%

Stock Code8020
Transfer Agentfor Common Stock
Sumitomo Mitsui Trust Bank, Limited
Shares Authorized
1,016,653,604
Shares Outstanding	422,501,010(including 926,450 treasury shares)
Minimum Trading Unit 1,000
Number of Shareholders 35,051■ Financial institutions������������������28.72%■ Other corporations����������������������� 9.37%■ F oreign institutions
and individuals������������������������������12.78%■ Securities firms�������������������������������� 2.15%

Principal Shareholders (As of March 31, 2012)

Shareholder Distribution by Number of Shares Held

Number of shares
held (thousands)

Percentage ofvoting rights (%)

13,29812,46011,613

3.15
2.95
2.75

■ More than 1 million shares����41.90%

11,6122.75■ 5 0,000 shares and more(including treasury shares)�����25.48%

10,941

2.59

9,173
4,510
4,239
3,500

2.17
1.06
1.00
0.83

3,455

0.81

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Norinchukin Bank
Mitsui Sumitomo Insurance Co., Ltd.
Tokio Marine & Nichido Fire InsuranceCo., Ltd.
The Master Trust Bank of Japan, Ltd.
(trust account)
Japan Trustee Services Bank, Ltd.
(trust account)
Daio Paper Corporation
Kanematsu-NNK Corp.
Mizuho Corporate Bank, Ltd.
Japan Trustee Services Bank, Ltd.
(trust account 1)(As of March 31, 2012)■ 10,000 shares and more�����������18.72%■ 1,000 shares and more�������������13.40%■ Less than 1,000 shares���������������� 0.50%

Note: Calculated after deduction of treasury shares (926,450 shares)

Stock Price
Stock price (left axis)(¥)

TOPIX (right axis)

TOPIX

600

1,800

500

1,500

400

1,200

300

900

200

600

100

300

0

Apr. 2001

Apr. 2002

Apr. 2003

Apr. 2004

Apr. 2005

Apr. 2006

Apr. 2007

Apr. 2008

Apr. 2009

Apr. 2010

Apr. 2011

Apr. 2002

Apr. 2003

Apr. 2004

Apr. 2005

Apr. 2006

Apr. 2007

Apr. 2008

Apr. 2009

Apr. 2010

Apr. 2011

Trading Volume(thousand shares)

600,000
500,000
400,000
300,000
200,000
100,000
080

Apr. 2001

KANEMATSU CORPORATION

0Tokyo Head Office

Corporate Profile
Company Name

KANEMATSU CORPORATION

Established

August 15, 1889

Foundation

March 18, 1918

President

Masayuki Shimojima

Head Office2-1, Shibaura 1-chome, Minato-ku,
Tokyo 105-8005, Japan

Paid-in Capital¥27,781 million

Fiscal Year

April 1 to March 31

General Meeting of
Shareholders

June

Number of Offices

Domestic: Head office 1 and branches 5
Overseas: 37

Number of Employees 795 (Consolidated: 4,770)(As of March 31, 2012)

For more information on this Annual Report, or to obtain
additional copies, please contact:
Public Relations Section, Corporate Planning Department,
Kanematsu Corporation
2-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8005, Japan
Tel: 81-3-5440-8000
Fax: 81-3-5440-6505
URL: http://www.kanematsu.co.jp

http://www.kanematsu.co.jp

Printed in Japan