Annual Report 2011

AnnualReport2011
for the year ended
March 31, 2011

The Japan Steel Works, Ltd.

Printed in Japan 2011.10

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JSW AR11表1-4

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Offices & Plants

Japan Steel Works America, Inc.

★ Düsseldorf Office
Beijing Office★ Teheran Office★

★
★

★ ★ New York Office (Head Office)Detroit Office★ Head Office

Japan Steel Works India Private Limited Shanghai Office

Singapore Office ★

ProfileDomestic
Head Office
Gate City Ohsaki-West Tower, 11-1, Osaki
1-chome, Shinagawa-ku, Tokyo 100-8456
Phone: +81-3-5745-2001
Facsimile: +81-3-5745-2025

Founded in 1907 in Muroran, Hokkaido — the centerof steel production in Japan — The Japan SteelWorks, Ltd. began as a joint venture with Britain’s Sir
W.G. Armstrong, Whitworth & Co., Ltd., and Vickers
Sons and Maxim, Ltd. with the goal of domestic
weapons production in Japan.
After World War II, the Company turned its sophisticated technologies and considerable experienceto the task of meeting peacetime needs. From steel
manufacturing and machinery development, to
new business fields such as automobiles, electricalequipment, information equipment, as well as heavy
industries such as electricity, steel, shipbuilding, andpetrochemicals, the Company widened its businesshorizons, and began to earn a worldwide reputation
as an integrated producer of steel materials andmanufacturer of machinery.
At present, meeting the needs of IT-relatedindustries, such as information and communication,
JSW’s global activities stretch beyond its existing
fields to encompass the development of such cuttingedge technologies as new energy, natural energy,
new materials, optics, and electronics. The Company
is also active in new fields such as environmental
businesses as a comprehensive material provider
and manufacturer of mechatronic products. Always
ahead of trends in society and industry, JSW is
preparing for sustained and vigorous growth in a wide
number of emerging areas to satisfy the demands of
its customers, shareholders and employees. In thisway JSW aims to enhance its enterprise value.

Osaka Office
Shinanobashi Mitsui Bldg., 11-7,
Utsubohonmachi 1-chome, Nishi-ku,
Osaka-shi, Osaka 550-0004
Phone: +81-6-6446-2480
Facsimile: +81-6-6446-2488
Fukuoka Office23-2, Sakuragaoka 1-chome, Kasuga-shi,
Fukuoka 816-0872
Phone: +81-92-582-8111
Facsimile: +81-92-582-8124

Nagoya Office
Mitsui Sumitomo Kaijo Nagoya Shirakawa
Bldg., 9-15, Sakae 2-chome, Naka-ku,
Nagoya-shi, Aichi 460-0008
Phone: +81-52-222-1271
Facsimile: +81-52-222-1275
Hiroshima Office6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602
Phone: +81-82-822-0991
Facsimile: +81-82-822-0997
Sapporo OfficeKitaichijo Mitsui Bldg., 2-9,
Nishi 5-chome, Kita-ichijo, Chuo-ku,
Sapporo-shi, Hokkaido 060-0001
Phone: +81-11-241-2271
Facsimile: +81-11-241-2275

Muroran Plant
4, Chatsumachi, Muroran-shi,
Hokkaido 051-8505
Phone: +81-143-22-0143
Facsimile: +81-143-24-3440
Hiroshima Plant
6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602
Phone: +81-82-822-3181
Facsimile: +81-82-285-2038
Yokohama Plant
2-1, Fukuura 2-chome, Kanazawa-ku,
Yokohama-shi, Kanagawa 236-0004
Phone: +81-45-781-1111
Facsimile: +81-45-787-7200

Overseas
Contents
1
Financial Highlights (Consolidated)
2
Message from the President
5
Topics6
Our Business Domains
8
Review of Operations
11
Research and Development
12
Corporate Governance
16
The Environment
18	Board of Directors, Corporate Auditorsand Executive Officers
19
Financial Section
20
Financial Performance (Consolidated)
46
Corporate Directory
47
Offices & Plants

Forward-Looking Statements
The forward-looking statements in this annual
report reflect judgments based on information
available at the present time. Actual results
may differ widely due to various factors.

Düsseldorf OfficeFriedrichstr. 19, 40217 Düsseldorf,
F.R.Germany
Phone: +49-211-3116660
Facsimile: +49-211-31166640
Teheran Office
Argentine SQ., ZAGROS St.,ZAGROS Bldg. No.25, Apt. No.21, 2F,
1516663111, Teheran, I.R. of IranPhone: +98-21-8774636
Facsimile: +98-21-8774636
Singapore Office
16 Raffles Quay, #27-01C,
Hong Leong Bldg., Singapore 048581,
Republic of Singapore
Phone: +65-62206227
Facsimile: +65-62240726
Shanghai Office
24-G, Huamin Empire Plaza,No.726, Yanan Rd. (W), Shanghai 200050,
People’s Republic of China
Phone: +86-21-5239-1438+86-21-5239-4335
Facsimile: +86-21-5239-3450

Beijing Office
Room No. 1007, Beijng Fortune Bldg.,
5 Dong Sanhuan Bei-lu,
Chaoyang District, Beijing,
People’s Republic of China
Phone: +86-10-6590-8966
Facsimile: +86-10-6590-8968
Japan Steel Works America, Inc.
New York Office (Head Office)1211 Ave. of the Americas, Suite 4302,
New York, NY 10036, U.S.A.
Phone: +1-212-490-2630
Facsimile: +1-212-490-2575
Detroit Office41135 Vincenti Court Novi, MI 48375 U.S.A.
Phone: +1-248-536-0288
Facsimile: +1-248-536-5615
Japan Steel Works India Private Limited
611, Time Tower, MG Road, Sector 28,
Gurgaon, Haryana, 122001, India
Phone: +91-124-469-4444
Facsimile: +91-124-469-4433

JSW Plastics Machinery, Inc.
555 South Promenade Ave., Unit 104
Corona, California 92879, U.S.A.
Phone: +1-951-898-0934
Facsimile: +1-951-898-0944
JSW Plastics Machinery (S) Pte Ltd.
17 Gul Lane, Jurong Town,
Singapore 629413, Republic of Singapore
Phone: +65-68614511
Facsimile: +65-68623166
JSW Plastics Machinery (H.K.) Co., Ltd.
Room 907, Corporation Park, 11 On Lai
St., Shatin, N. T., Hong Kong
Phone: +852-2648-0720
Facsimile: +852-2686-8204
JSW Plastics Machinery (M) SDN. BHD.
D6-5-G Block D6, Pusat Perdagangan Dana, 1
Jalan PJU 1A/46, 47301 Petaling Jaya,
Selangor Malaysia
Phone: +60-3-7842-6076/6077
Facsimile: +60-3-7842-6078
JSW Plastics Machinery (T) Co., Ltd.
368/4 Soi Soonvijai 4,(Soi Japanese School Rama IX),
Bangkapi, Huaykwang, Bangkok 10310,
Kingdom of Thailand
Phone: +66-2-369-4007
Facsimile: +66-2-369-4035

47

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表

Financial Highlights (Consolidated)
The Japan Steel Works, Ltd. And consolidated Subsidiaries

Years ended March 31, 2011, 2010 and 2009

Thousands of
U.S. Dollars

Millions of Yen

2011

2010

2009

2011

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

¥212,929¥201,680¥227,113$2,560,782

Operating income............................................

28,49532,18536,633

342,694

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

16,532

17,52816,034

198,821

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

339,263

322,986

296,9094,080,132

Total net assets................................................

120,820

111,149

90,125

1,453,037

For the year:

At year-end:¥ million
4,000

$0.54

12.00

12.00

60,00012.00

0.14¥ million
20,000

50.00

44.54

47.22

25.00

43.19

47.10

37.50

33.71

0

0

2007 2008 2009 2010 2011

50.00

44.54

47.22

43.19

47.10

37.50

3

Net Income pe

16,532

17,5281

1,1

16,034

17,48415,000Net Income

Operating Inco

12,000¥12.50

2005 2004 2007
2007 2008
2008 20092009 2010 2011¥

12,51502007 2008 2009 2010 2011

Net Income per Share

0

5,000

XXX

0

2011 2009 2010 20112005 2006 2007 20102008 20072009 2008

689

4,000

868
12,51560,000¥ million
20,00010,000746

1,000¥ million
16,000

1,130

8,000

16,532

15,00017,52812,00016,034¥ million
20,00017,484¥ million
16,000Net Income

2,402
119,347

93,84899,363120,000

Operating Income

Net Sales

212,9292,000

201,680

100,000

227,113

180,000

220,851

3,000

2,349

150,000

144,461
207,138¥ million
240,000

124,118¥ million
4,000

Sales

Operating Income¥ million
200,000

2,349

2,402

2,354
XXX

26.8

2010 2007 20082011 2009 2010 201116,5320

10,00017,5280

15,00016,03402006 2007 2008 20102009 2010 2011

17,4840

Net Income

5,000

212,929

60,000201,680

1,000

227,1131,000

220,851

120,000

207,138

2,000

Net Sales

2,000

Sales

180,000

2,412
35.5

0

2007 2008 2009 2010 2011

3,000

46.6

35.8

Orders Received

Sales

15

0

2011

3,000

45

212,929¥43.19¥ million
240,000¥ million
4,000

201,680

120,000¥47.22¥ million
4,000¥ billion
60

227,113

180,000

30.3%¥44.542010

2006 2007 2008 2009 2010

0

34.0%

18.3%

Note: Amounts in U.S. dollars are presented solely for convenience and based on the rate of ¥83.15 = US$1.00,
0 of the Company’s most recent balance sheet.
the rate of exchange on March 31, 2011, the date050,000

35.3%

1,000
Cash dividends applicable to the year............

15

30

17.6%

2,354

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

2,412

Amounts per share (yen and U.S. dollars):2,000

14.4%

220,851XXX

45.5

Equity ratio.......................................................
44.4

42.9

30

3,000

¥ million
240,000

207,138

ROE..................................................................
45

Net Sales

Orders Received

Ratios:38.5

Orders Received¥ billion
60

1Message from the President

Shifting from a performancerecovery and expansion
phase to a period of profit
structure reconstruction

Ikuo Sato
Representative Director &President

Business performance
In fiscal 2010, the fiscal year ended March 31, 2011, Asia and particularly China as well
as developing countries experienced high rates of economic growth. Together with thisdriving force, the overall global economy entered a recovery trajectory. Meanwhile, turning
to conditions in Japan, the domestic economy showed signs of a partial favorable upswing
due to such factors as an increase in export activity to developing countries. However, amid
the sharp appreciation in the value of the yen and the rapid and prolonged increase in
crude oil prices, conditions in Japan were greatly impacted by the massive damage causedby the Great East Japan Earthquake that struck the nation in March 2011. Despite delays incertain shipments and other minor interruptions to its business activities, the JSW Group’s
employees, operating bases and facilities were unaffected by the disaster. In this regard,
the impact on performance for the fiscal year under review was minimal. Looking ahead,
however, at the future of the electric and nuclear power sectors, mainstay areas for theGroup’s operations, there is little room for complacency.
	Under these circumstances, the JSW Group embarked upon its medium-term
management plan, “JGP2012,” that covers the three-year period from fiscal 2010 in May
2010. Under this plan, JSW’s business vision is to become a “company that creates change”

2with creative technology, and that contributes to the development of society. At the sametime, the Company has identified the goal of becoming the number one global monozukuri
company. In specific terms, JSW accordingly engaged in strategic development in each of its
business fields while promoting measures aimed at strengthening its financial position. In
addition to actively pursuing increased efficiency in the balance between inventory turnoverand notes and accounts receivable, JSW undertook cost-cutting measures including the
reduction of variable costs and further rationalization of fixed costs in an effort to lower the
break-even point. Despite these endeavors, the Company was buffeted by a drop in productprices in line with the strong yen and intensifying competition as well as such factors as theincrease in depreciation and amortization.
Taking into account each of the aforementioned factors, consolidated net sales infiscal 2010 increased 5.6% compared with the previous fiscal year to ¥212,929 million(US$2,560 million) on the back of growth in the Industrial Machinery Products Business.
From a profit perspective, orders and sales of industrial machinery increased. This was,however, more than offset by the upswing in depreciation and amortization relating to the
Steel and Energy Products Business. As a result, operating income declined 11.5% year on
year to ¥28,495 million (US$342 million). In similar fashion, ordinary income slipped
6.7% to ¥29,168 million (US$350 million) and net income fell 5.7% compared with theprevious fiscal year to ¥16,532 million (US$198 million).
While orders received for the Steel and Energy Products Business were soft, results wereup in the Industrial Machinery Products Business. As a result, orders received in fiscal 2010
totaled ¥216,883 million (US$ 2,608 million), an increase of 3.4% compared with theprevious fiscal year.
With respect to the appropriation of profits, the Company remains committed tobolstering its internal reserves in order to fund the capital expenditure required to ensure
long-term and stable business as well as technology development and to strengthen its
financial position. At the same time, JSW will continue to promote the payment of stable
and sustained dividends to its shareholders. Taking these factors into consideration, theCompany has decided to pay an annual dividend at the previous fiscal year’s level of ¥12
per share for the fiscal year under review.

Forecasts for fiscal 2011
Looking ahead, Japan’s economy is projected to pick up on the back of the positive shift
in the global economy. Despite these favorable conditions, the future outlook remains
shrouded in uncertainty due to the inherent downside risks associated with the impacts of3

Message from the President
damage from the Great East Japan Earthquake. The JSW Group has positioned efforts tominimize the negative impact of a global-scale review of nuclear power policies as a key
management priority in fiscal 2011. In this context, plans are in place to revise its current
medium-term management plan and to formulate a new plan beginning the fiscal year
ending March 31, 2013.
	On an individual business segment basis, orders received for power plant components
are expected to decrease. Orders received for plastics manufacturing and processing
machinery, on the other hand, are forecast to increase. Sales of pressure vessels for oil
refinery use are anticipated to decline. In addition to a projected upswing in sales of power
plant components and clad steel pipes for natural gas field pipeline use, results fromplastics manufacturing and processing machinery and from plastic injection molding
machines are expected to improve. Accounting for each of the aforementioned factors, net
sales, operating income, ordinary income and net income are forecast to total ¥225,000
million, ¥19,500 million, ¥20,000 million and ¥11,500 million, respectively, in fiscal
2011. However, as previously identified, JSW’s performance is susceptible to the impact
of fluctuations in global nuclear power generation plans. These plans are anticipated tochange with time, and accordingly the Company will continuously reassess and review its
numerical targets as and when required based on an analysis of conditions.
	Despite substantial fluctuations in its operating environment, the JSW Group willcontinue to expand its growth platform by further upgrading and enhancing its proprietary
technologies while actively reconstructing its profit structure. As we work towardachieving our established goals, I ask for the continued understanding and support of allshareholders.
June 2011

Ikuo Sato
Representative Director & President

4Topics

C ommenced the Manufacture and Sale of Finished Injection
Molding Machines in China

JSW established JSW Machinery (Ningbo) Co., Ltd., asubsidiary in Ningbo, Zhejiang Province, for the purpose of
manufacturing finished machinery in December 2010. The
company began manufacturing small and medium-scale standard machinery in January 2011 and made its first shipment toa local customer in spring.
Against the backdrop of burgeoning demand for highquality plastic molded products in China, calls from the market
for injection molding machines that combine quality withreliability continue to grow. In undertaking local production in
China, JSW aims to steadily capture this demand and is working toward a monthly output of 60 units.
Moreover, JSW began procuring components in collaboration with Toyo Machinery & Metal Co., Ltd. in China from April
2011. This initiative is designed to ensure the smooth start-upof local production while at the same time driving down costs.
In addition to this production strategy, the Company has
adopted a sales and marketing strategy that entails cultivating
relationships with leading local sales agents and expanding
sales channels by engaging in local currency transactions.

JSW Machinery (Ningbo) Co., Ltd.
Company Profile
Location:
Ningbo, Zhejiang Province, China
Representative:T atsuyuki Arakami, President and Chief
Executive Officer
Business Activities:M anufacture of small and medium-scale
electric injection molding machines
Date of Establishment:
December 7, 2010
Capital:US$2,100,000 (100% equity interest)

A small-scale electric injection molding machine
manufactured in China

Growing Demand for Excimer Laser Annealing Systems for
Small and Medium-Scale Liquid Crystal Panels

Orders for excimer laser annealing systems are expanding
steadily on the back of demand growth in recent years fordevices equipped with small and medium-scale, high-definition
panels including smart phones and tablet terminals.
Excimer laser annealing systems are used in the manufacture of high-definition liquid crystal and organic EL displays.
JSW is a leading manufacturer of excimer laser annealing
systems with a global market share exceeding 70%. Looking
ahead, demand for small and medium-scale, high-definition
panels is projected to continue increasing in the future. Offeringhigh system productivity, a wealth of experience and comprehensive services, JSW will continue to address the needs of its
customers. Moving forward, the Company will work to further
expand the market by responding the requirements in theorganic EL television and semiconductor fields.

Examples of highdefinition panels
manufactured using theCompany’s systems

An excimer laser annealing system

5Our Business Domains
JSW and the JSW Group carry out a wide range of business activities in a variety of fields. In the Steel and Energy
Products Business, these activities include the production and sale of steel castings and forgings, steel plates andstructures, as well as wind turbine system equipment, which is a business area developed in recent years. In the
Industrial Machinery Products Business, these activities include the production and sale of plastics machinery and othermachinery, magnesium alloy injection molding machines and molded products, and IT equipment. In addition, as part ofour program of business diversification, we are active in regional development, information systems and other areas in
the Real Estate and Other Businesses.

Steel and Energy Products Business
Sales Composition

53.0%

6

Steel Products

Steel Plates and Structures

Wind Turbines

Making steel in electric furnaces, we produce a broad range of cast products andsteel ingots for forged products. In ingots
for forgings, we have one of the world’s
largest production capacities, of 650 tons.
Our range of presses and hammers of various types and sizes, including two 14,000ton hydraulic presses, ensures that we candeliver forgings in any needed shape. After
undergoing heat treatment, machining andfinishing, the forged products are used in
the electric power generation industry (fossil fuel, hydroelectric and nuclear), and thesteel-making, oil refinery and industrial
machinery sectors. In addition to being aleading global supplier of extra large forgedproducts, our plant produce a wide range ofhigh-quality small- and medium-sized steel
cast and forged products.

With one of Japan’s largest 4-thick plate
reversing rolling mills, we can roll highquality, extremely thick, wide, and longsteel plates (maximum thickness: 350 millimeters, maximum width: 4.8 meters, maximum length: 20 meters). Using advanced
manufacturing technology we now mainly
produce high-quality clad steel plates andclad steel pipes using clad steel plates. In
addition, by integrating various forged steel
products and leveraging our state-of-theart welding technologies and facilities, we
produce a range of pressure vessels for verylarge welded structures such as oil refineries
and petrochemical plants, in an integrated
process from raw materials to finishedproducts. All of our products are used ina wide range of industrial applications inJapan and overseas, giving this business aunique profile.

This sector deals with the entire windturbine power generation system business, designing its own towers, blades andequipment for power generators used inlarge windmills (200kW). Higher power
generation efficiency and ease of maintenance have been achieved for power
generators through the use of permanent
magnet synchronous generators and theelimination of step-up gears. This sector
provides windmills of superior reliability,
which are needed for Japan’s unstable windconditions.

Main Business Lines

Main Business Lines

Main Business Lines

Production and sale of products for power
generation, steel-making, chemical machinery, nuclear power-related machinery andequipment, die materials, and other areas

Production and sale of products for oil
refining, petrochemical, general chemical,
and power generation industries, as well asa wide range of pressure vessels, clad steel
plates, clad steel pipes, extra-thick steel
plates, and other areas

Production, sale and maintenance of windturbine system equipment

Industrial Machinery Products
Business
Sales Composition

Real Estate andOther Businesses
Sales Composition

1.1%
45.9%

Plastics Machinery

Other Machinery

Regional Development

Having established a microcellular foam processing
technology for greater weight reduction and heatretention, we lead the competition in developing
products that address the growing sophisticationand diversity of plastics materials. We have built
up a solid position as a comprehensive plastics
machinery manufacturer involved in everythingfrom pelletizers to processing machinery.
	In injection molding machines, we are meetingcurrent market demand for greater molding precision, productivity and environment-friendliness by
upgrading basic performance of existing injection
molding systems and developing energy-saving,
electrically-driven injection molding machines.
To respond to diversifying needs in theseproduct markets, we have established a Technology
Development Center and engage in wide-ranging
consultation with product users, enabling us to put
in place an integrated development system to copewith changing demand, from manufacturing toprocessing machinery.

Supported by a proprietary technologies
and facilities, JSW produces industrial
machinery for a wide range of demand,
including defense equipment, power plant
equipment, magnesium alloy injection
molding machines, aluminum die-castingmachines, laser annealing systems, rollingstock parts, and environmental facilities.

Centered on the construction of officebuildings, commercial facilities, and rental
condominiums on Company-owned land,
we engage in regional development operations with the objective of ensuring stableearnings through the utilization of idle
assets. Our goal is to raise our earnings
and revitalize local communities througha more effective application of our assets,based on the reserves of expertise we haveaccumulated in our business operations.

Main Business Lines

Main Business Lines

Main Business Lines

Production and sale of plastic injection
molding machines, plastics production andprocessing machinery (including pelletizers, compound extruders, films and sheet
manufacturing equipment, and others) andblow-molding machines

Production, sale, and maintenance of fluid
machinery, hydraulic machines, machinery
for the production of electronic components and displays (laser annealing systems, rubbing machines, etc.), magnesium
alloy injection molding machines, aluminum
die-casting machine, JSW-type automatic
tightlock couplers/W-type vehicle shock
absorbers, and defense equipment

Rental of property, and development/subdivision for sale7

Review of Operations

Steel and Energy Products Business
Steel Products Sector/Steel Plates and Structures Sector/
Wind Turbines Sector

Shell Flange Used for Pressure Chamber for
Nuclear Power Plant

J82 Wind Turbine System

Orders Received

58.6

61.7

Orders Received¥ million
160,000

Orders came to ¥98,829 million (US$1,188 million), a year-on-year
45

49.4

123,271

120,000

115,699

XXX

70,00045.5

decrease of 20%. Despite a significant increase in sales of clad steel
98,829Orders Received¥ billion
Performancein fiscal 201060

¥ million
140,000

105,000

Clad Steel Plate

pipes for30natural gas pipelines, total orders declined due80,000
to project can84,159

cellations of wind turbine system equipment and project delays of some15
nuclear power
plants in North America.

35,00040,000

Sales came to ¥112,915 million (US$1,357 million), a decrease of
0

0

0

2010

7%. Despite 2006
brisk2007sales
pressure
vessels for oil refineries, the decrease
2010
2008 of
2009
2010

2011

2011

was attributable to a substantial decline in sales of wind turbine system¥ million

Sales

Sales

45

XXX

57.0

in power plants and of some clad steel pipes for overseas customers to

112,915

90,000next year due to the effects of the Great East Japan Earthquake.
46.3

97,66490,000¥ billion

120,000
60 and the postponement of shipments of components
equipment
used

121,921

Sales¥ million
120,000

33.2

77,356

	Operating
income came to ¥25,059 million (US$301
million), a
60,00030

60,00029.3

decline of 17%. This was due to intensifying price competition and an
15 depreciation expenses resulting from capital 30,000
increase ininvestments in

30,000JSW’s Muroran Plant, as well as the effects of sharply rising raw material
0

2010

2010

2006 2007 2008 2009 2010

¥ million
160,000

7,521

40,000XXX

80,00013,263

15,429120,000

9,791

124,118

93,848

13,97150,000

119,347

100,000

XXX

150,000

Operating Income¥ million
200,000

2011

7,617

4,259

0

0

0

99,36314,000Operating Income

21,000XXX

25,185

Operating Income¥ million
28,0007,000

8prices.

2011

2005 2006 2007 2008 200900

2005 2006 2007 2008 20092005 2006 2007 2008 2009

Industrial Machinery Products Business
Plastics Machinery Sector/
Other Machinery Sector

Polyolefin Extruder/Pelletizer

Large-Size All-Electric Injection Molding
Machine (24600kN)

Magnesium Alloy Injection Molding Machine(280t)

Orders Received

Orders Received¥ million
4,000

Orders climbed 37%, to ¥115,699 million (US$1,391 million). This
120,000

3,000

XXX

45.5

44.4

42.9

2,354

84,1592,412

molding 30machines due to growing demand in emerging
countries, espe2,000
38.5

80,00045

was attributable to a substantial increase in orders for plastic injection

115,699

Orders Received¥ billion
Performancein fiscal 201060

¥ million
160,000

cially Asia, as well as for plastics manufacturing and processing machin15
ery, and laser
annealing systems.

40,000

1,000

Sales rose 26%, to ¥97,664 million (US$1,174 million). The
0

0

0

2010

increase was 2006
due 2007
to briskorders
2010
2011
2008 20092010 for plastic injection molding machines

2011

and for plastics manufacturing and processing machinery.
¥ billion¥ million

Sales

4,000
60
	Operating
income jumped 149%, to ¥3,253 million(US$39 mil-

Sales

Sales

¥ million
120,000lion), owing to higher sales and successful cost-cutting activities.
46.6

2011

0

12,000

XXX

689

4,000

868

8,000

746

2005 2006 2007 2008 2009

¥ million
16,000

0

0

0

2011

1,130

124,118

93,848

7,521

50,000

119,347

100,000

144,461

150,000

Operating Income¥ million
200,000

99,363Operating Income

XXX

13,263

15,42980,0009,791

Operating Income

120,000

2010

2006 2007 2008 2009 2010

¥ million
160,000

2,349

2010

2,402

XXX

1,000

0

0

40,00026.8

1530,000

2,000

35.5

30

35.8

77,35660,0003,000

4597,66490,0002005 2006 2007 2008 20092005 2004 2007 2008 20099

Review of Operations

Real Estate and Other Businesses
Regional Development

2010

Net Income

16,532

17,52816,034

12,515

10,000amounted to ¥715 million (US$8
million).

5,000

0

20072011
2008 2009 2010 2011

¥

50.00

44.54

33.71

25.00

47.22

37.50

43.19

47.10

16,532

17,52816,034

17,48415,0002007 2008 2009 2010 2011

XXX

689

746

Net Income per Share¥ million
20,00010,00017,484

212,929

201,680

227,113220,851

15,000

million), sales came to ¥2,349 million

12,515
868

2,349

8,000

Orders totaled ¥2,354 million (US$28(US$28 million) and operating income

2,349

12,000Net Income 1,130

144,461

124,118
2,402

119,347

Operating Income¥ million
16,000207,138

2,402

120,000

2010

Capital Expenditures
93,84850,0002,000

99,363100,000

Net Sales

Sales

2,354

Sales

Operating Income

3,000

150,000

180,000

0

2011¥ million
4,000¥ million
Performancein fiscal 2010
20,000¥ million
240,000

02006 2007 2008 20092010
2010

2007 2008 2009 2010 2011

60,000

1,000

0

0

¥ million
200,000

2,000

XXX

2,412 26.8

35.5

2,000

1,000

15

3,000

2011

46.6

Orders Received35.8

Sales

30

3,000

212,929

JSW Apartment Building Development(Fuchu, Tokyo)
00¥ million
4,000

201,680

60,0002006 2007 2008 2009 2010

¥ million
4,000

227,113

Business Office Development(Fuchu Intelligent Park)0

45120,000

1,000

15¥ billion
60

2,354

2,000

180,000

220,851

3,000¥ million
240,000

207,138Net Sales

XXX

45.5

44.4

42.9

30

¥ million
4,000

2,412

Orders Received

45

38.5

Orders Received¥ billion
60

Capital¥26,722 million (US$321 million),12.50
with the majority spent on
5,000
1,000 expenditures for the reporting period totaled
4,000
installation, improvement and maintenance work on a variety of production facilities.

0

0
0
0
	Detailsof capital expenditure
by individual
businesssegment are as follows.
2011
2007 2008 2009 2010 201120102005 2006 2007 2008 200902005 2004 2007 2008 20092007 2008 2009 2010 2011

	In the Steel and Energy Products Business, capital expenditures totaled ¥25,217 million (US$303 million). ThisNet Income per Share

Operating Income¥¥ million
expenditureconsisted largely of investments to construct
new buildings and equipment for the forging and heat
50.00
16,000

44.54

47.22

43.19

47.10

treatment facilities at Muroran Plant, as well as upgrade equipment at steel-making plants.
37.50
12,000the Industrial Machinery Products Business, capital	In
expenditures came to ¥1,309 million (US$15 million) as

1,130

8,000

25.00

33.71

a result of investments to raise machine processing efficiency at our Hiroshima Plant.
868

XXX

689

746

	In the Real Estate and Other Businesses, capital expenditure consisted primarily of the upgrading of facilities onreal estate
for rental purposes, totaling ¥73 million 12.50(US$0.8 million).
4,000
	Capital expenditures unallocable to individual segments came to ¥121 million (US$1 million).
0

0

10

2005 2004 2007 2008 20092007 2008 2009 2010 2011

Research and Development

Muroran Research Laboratory

Research and development activities were almost entirely
funded by the Company (The Japan Steel Works, Ltd.).
Combined spending on research and development for
the Steel and Energy Products Business and the Industrial
Machinery Products Business amounted to ¥4,487 million(US$53 million).
	As a materials and mechatronics company, we strive
to develop new products and production techniques using
our own technology, while also actively promoting widespread technical alliances and joint development in aneffort to put new products and technologies into effect as
quickly as possible.
	In terms of the direction of research and development,
our Research and Development Headquarters continues topromote cooperation with individual business divisions
in order to: (1) improve the capabilities, performance andreliability of our core products and (2) develop products
in new business fields based on our core and differentiatedtechnologies.
	Our Research and Development Headquarters
encompasses our headquarters (located at Head Office),
the Muroran Research Laboratory (situated on the premises of the Muroran Plant), and the Hiroshima ResearchLaboratory (located at the Hiroshima Plant).
Our basic research and development policy is as follows.
1. Promoting the development of new products and businesses by focusing on the technological fields of newenergy & energy savings, information & telecommunications, nanotechnology & materials, and new production
technologies, which are directly related to our current
business activities. We aim to develop our existing business by focusing on increasing and upgrading our coretechnologies while pursuing increased collaboration
between the Research and Development Headquarters
and our business divisions.
2. Promoting not only basic research aimed at future technologies and the needs of 21st century society but also
research on component technologies used in existingproducts, we will develop these into research and development projects that will translate into new products
and businesses in the future as well as into innovations
and new possibilities for existing products.
3. In product development for Steel Products, we arefocusing on energy fields and on further expanding thenumber of our many number one products while at thesame time commercializing products in new fields.

Hiroshima Research Laboratory

	In Machinery Products, we are aggressively promoting the expansion and upgrade of industrial machinery
including plastics machinery and IT equipment. We willprioritize investments in business resources by defining
a framework for commercialization with an eye toward
mergers and acquisitions and the forging of alliances.

Overview of R&D activities by businesssegment
GGG Steel and Energy Products BusinessIn terms of the development of steel products centered onmaterials, we have been carrying out materials development in such areas as clad steel pipes for natural gas transportation, large steel castings and forgings and high alloymaterials for high-efficiency thermal power generation,
forged steel products for next-generation nuclear power
plants, and high-performance nonferrous alloys, as well as
manufacturing process technology development. We havealso been pursuing technological development to create
more advanced materials and component technologies forexisting products. In the field of new energy, we have set
out to design wind turbine blades for use at wind power
generation plants, establish various reliability-related analytical technologies and develop more advanced component technologies for power generators.
For fiscal 2010, spending on steel and energy products’ research and development totaled ¥1,641 million(US$19 million).
GGG Industrial Machinery Products BusinessIn the field of machinery-related products, we have beendeveloping low-cost production technologies for high performance magnesium alloy injection molding machines,
the commercialization of aluminum die-casting devices,and high-precision molding technology for plastic extruder
and injection molding machinery. We have also beendeveloping higher performance compressors and equipment for making film, as well as laser applications, including systems for cutting-edge laser annealing equipmentused in the production of TFT (thin-film transistor) liquid
crystal displays, and other applications for laser devices.
Spending on industrial machinery products’ researchand development totaled ¥2,845 million (US$34 million)
for fiscal 2010.

11

Corporate Governance
Basic Stance on Corporate Governance
At JSW, we believe we must earn the trust of all our stakeholders, including our shareholders and employees,
not merely to raise our enterprise value, which comprises both the Company’s economic value and its value
to society in the broader sense, but to make possible our very existence.
We have, therefore, designed a set of management structures to ensure an effective system of corporate
governance, and have taken all necessary measures to facilitate the appropriate disclosure of corporate
information so as to achieve the level of management transparency demanded by investors today.

An Outline of Our Corporate
Governance System
The Company employs the traditional statutory auditor
system, comprising seven directors and four statutory
auditors (hereafter, “corporate auditors”), one of whom
is an outside director. Beginning from April 1, 2011,
the Company reviewed its management system in orderto speed up management decision-making, strengthen
oversight functions and improve management of dayto-day operations and reduced the number of Board
members and their term of office from two years to one
year. It also introduced a corporate officer system tokeep the decision-making and supervisory functions of
top management separate from the day-to-day businessexecution functions of corporate officers. In principle,
the Board of Directors’ meeting is convened once amonth. At the meeting, decisions and reports are madeon matters of importance to the management of theCompany, including basic management policies andmatters stipulated by legal statute. The Board is also
responsible for overseeing the day-to-day execution ofbusiness by directors. Meetings are also held by the
Executive Board, composed of the Company’s
president, executive vice president, and any otherperson as shall be designated by the president. The
Executive Board convenes once a week to deliberate on
important matters and is augmented by the heads ofoperating divisions, plant general managers andmanagers at corporate headquarters to form theManagement Council, which convenes once a month,
as a general rule. The Management Council analyzes
the business environment, monitors the progress of

12business plans, and ensures that knowledge is widely
shared among the Company’s management and isreflected in their decisions and that risk management
and compliance are rigorously observed.
The Board of Corporate Auditors consists of four
corporate auditors, of which two are outside corporate
auditors with one serving full-time. The Company’s
corporate auditors attend meetings of the Board of
Directors, the Executive Board, the Management
Council and other important meetings. They also pay
regular inspection visits to all the Company’s plants
and offices and to Group subsidiaries once during eachhalf of the fiscal year, as a general rule. They exercise
strict oversight with regard to the execution ofCompany directors’ duties, such as by receiving
important reports when needed from theaforementioned divisions and exchanging views withdirectors and key employees. Based on this, theyexpress their views to management from an objective
and neutral point of view.

Our Internal Control
and Risk Management System
JSW regards it as a management issue of crucial
importance to have an effective internal control system
in place to ensure the correct performance of business
operations. We are, therefore, working to improve oursystem of internal control in line with our Basic Policy
on Internal Control Systems resolved at the meetings ofthe Board of Directors as well as detailed measures
decided each year for dealing with specific internalcontrol issues. In addition, we will respond to socialchanges and work to achieve a more appropriate andefficient system by properly reviewing internal control
issues and responses. The points below delineate thefundamental stance adopted by the management of
JSW toward the issue of internal control, and theprogress achieved thus far in strengthening theCompany’s internal control system.
1. Improving the internal control system
In addition to setting up a specialist unit dedicated tosupervising the Company’s internal control system,
the Internal Control Committee holds meetings both
regularly and ad hoc as deemed necessary.
2. Observance of legal regulations and theCompany’s Articles of Incorporation
JSW does not limit compliance to the prevention ofillegal acts and the observance of legal regulations
and the Company’s Articles of Incorporation. It
views compliance in the broader context of generalsocial responsibilities and the upholding of a wide
variety of rules and regulations. The key to successfor compliance activities lies in having directors andcorporate officers take the initiative in setting an
example and practicing truthfulness, while raising
employee awareness on compliance issues througheducation and training and promoting this in an
integrated manner with risk management.
JSW has established a department responsiblefor internal audits to ensure that the Company’s
overall operations observe all laws and regulations,as well as in-house rules. In addition to periodic
audits, this department conducts spot audits, as
deemed necessary. The results of these audits arereported to the president and relevant parties
including, as appropriate, the Board of Directors, theExecutive Board, the Management Council and theBoard of Corporate Auditors.
We have also created a system of internal andexternal routes for reporting and discussing
compliance violations when discovered. The person
filing the report is guaranteed anonymity. Violators,
regardless of whether they are directors, corporate
officers or staff, will be punished accordingly, andmeasures will be taken swiftly to prevent any
recurrence.
The Company has clarified in its Corporate Codeof Conduct its policy of strict opposition to theactivities of criminal organizations or individuals
and it takes firm action to eliminate these anti-social
forces through the establishment of a single
dedicated office for the communication of relevant
information and the management ofcountermeasures.
3. Safeguarding and management of information
The Company appoints a director or corporate
officer to be the chief information security officer(CISO) to ensure the safeguarding and managementof information. In accordance with rules andregulations governing the management of
documents and information, the Company storesand manages important information related to the
execution of directors’ and corporate officers’ duties
including the minutes of important meetings andwritten requests for management decision approval(ringisho), and other important documents as written
documents or as electronic records held in
safekeeping. Further, directors and corporate
auditors are able to access and view or copy thisinformation as needed.
The Company also discloses financial andimportant management information in a timely andappropriate manner.
4. Risk management
At JSW, directors, who concurrently serve as the
managers at corporate headquarters, corporate
officers, and employees understand and evaluate therisks involved in carrying out their duties in theirdivisions, and within the scope of their authority, as
stipulated by regulations and the system for
management decision approval (ringisho), they
ensure that they execute their duties efficiently andrespond to risks in an integrated manner. Importantmatters pertaining to risk management are discussed
at meetings of the Board of Directors or of the
Executive Board.

13

Corporate Governance
The Company has established regulations forrisk management and defined a Companywide risk
management system. With respect to risk based onfunctions such as safety and hygiene, environmental
management, information security, and security
export controls, the relevant division in charge of
those risks sets up committees or creates regulations
for managing each of those risks across divisionboundaries and then appropriately manages them. A
director or corporate officer of the Company has
been placed in charge of CSR and risk management
who monitors these risk management conditions incollaboration with the department responsible forinternal audits and reports to the Board of Directors
or the Executive Board.
	Risk managers are assigned within each divisionat the headquarters, within each business unit, andat each plant. These risk managers ascertain theappropriateness of existing measures and work toeliminate everyday risks. In the case of critical risk
situations, a crisis management headquarters isestablished to provide the appropriate response. In
this way, we are responding to risks under bothordinary and extraordinary circumstances.
5. Ensuring efficient performance of duties
To ensure rapid decision-making and the flexible
and efficient performance of management duties, thepresident has been made the chief executive officer,
and directors have been put in charge of theperformance of duties in key departments within
headquarters and business units. Under theirleadership and supervision, the corporate officers
appointed by the Board of Directors perform theduties delegated to them. Moreover, the directors
and corporate officers perform their duties integrated
with risk management and also discuss, decide andreport on important matters at the Board of
Directors’ meeting and the Executive Board.
	At JSW, Companywide goals that are to beshared by directors, corporate officers and employees
are established at the Board of Directors’ meeting,which are incorporated in the Company’s MediumTerm Management Plan and the business plans foreach business unit. Each director and corporate

14

officer develops specific measures for achieving thesegoals. A division of duties is undertaken in line within-house regulations, and the specific measures areplanned and implemented. Each director andcorporate officer conducts a review of the results andprovides periodic progress reports, as well as
impromptu reports at meetings of the Board of
Directors, the Executive Board and the Management
Council. All members of the JSW management are
working to ensure impartial personnel evaluations.
6. Ensuring appropriate management conduct at
Group companies
The Company encourages its subsidiaries to follow
its Vision, Management Philosophy and Corporate
Code of Conduct, and also create their own systems
of internal controls. In addition, the Company
supports the autonomy of their management.
The Company has drafted regulations
concerning the operation and management of its
subsidiaries and has clarified the system ofmanagement responsibility and leadership for them.
At the same time, the Company is creating a system
whereby reports and notifications can be maderegarding subsidiaries’ decisions on important issues
and other matters of concern, and data can becollected. However, as listed subsidiaries, theCompany is careful to ensure a certain amount ofmanagement independence.
	At JSW, directors and corporate auditors are
assigned to JSW subsidiaries. Also, to ensure oursubsidiaries’ strict adherence to all laws andregulations, as well as in-house company
regulations, we request that these companies
conduct in-house audits, both periodic and spot
audits, through the departments in charge of eachsubsidiary, and also by a department responsible forthe internal auditing of subsidiaries. We will also
directly audit operations and provide guidance for
improving internal controls of subsidiaries.
7. A
 ppointing staff to assist corporate auditors, andensuring the independence thereof
The Company appoints staff from among its
employees to assist the corporate auditors in theperformance of their duties, upon request. The
opinions of the auditors themselves are sought withrespect to the appointment and dismissal of the said
staff and all other personnel-related measures such as
performance evaluation and bonuses, and no action
is taken without the auditors’ agreement, so as toensure the independence of the auditors’ assistantsfrom the influence of the directors of the Company.
8. System for submission of reports to the auditors by
the directors and employees of the Company
At JSW, corporate auditors attend the Board of
Directors, the Executive Board, the Management
Council, and other managerial meetings whereimportant matters are discussed, decided and reported.
Corporate auditors are guaranteed these opportunities.
	In keeping with the ringi system, corporate
auditors are also shown the records of management
decision approval (ringisho) for their perusal.
Moreover, the auditors may request reports fromdirectors, corporate officers or employees at any timeas they deem this necessary. The timing of thesereports and the method to be used are agreed
beforehand through discussions between the auditors
and the directors, corporate officers or employees.
9. Ensuring effective performance of audits by the
corporate auditors
We provide an environment in which directors,
corporate officers and employees of the Company canrecognize the importance and benefits of audits
performed by corporate auditors, and can give thehighest priority to cooperating with auditors in theirduties as far as possible. The corporate auditors canrequest the collaboration and cooperation of theCompany’s Internal Audit Division, other head officedivisions, and all other divisions of the Company inthe performance of audits.
We provide an environment that ensures
corporate auditors collaborate closely with accounting
auditors and the Internal Audit Division.
We also provide an environment that allows
corporate auditors to employ the services of legal
advisors and other outside experts at their own
discretion.

10. System for ensuring the reliability of financial
reports
The Company follows basic internal control policies
for financial reports and evaluates the effectiveness ofinternal controls for financial reports. The Board of
Directors and the Executive Board discuss and reporton the results of those evaluations.

Policy Regarding Large-Scale
Purchases of Company Shares
By resolution of a meeting of the Board of Directors of
The Japan Steel Works, Ltd. held on September 10,
2007, the Company instituted a set of rules to beobeyed and procedures to be followed by any party
seeking to make a tender offer for the purchase of theshares issued and outstanding of the Company. These
rules and procedures were adopted under the name of
Measures against Large-Scale Share Acquisitions(Measures to Prevent Takeover). Subsequent to thisresolution, a partial amendment of these measures waspresented at the Company’s 82nd Regular General
Meeting of Shareholders held on June 27, 2008, and theagenda item was approved and updated. After that,necessary amendments were made and then approvedby shareholders at the Company’s 85th Regular General
Meeting of Shareholders held on June 24, 2011.

15

The Environment
Environmental Policy
JSW recognizes that as a responsible member of society it has an important duty to operate in harmony
with the environment. We also engage in business with the aim of contributing to the sustainable development of society in harmony with the ecosystem through production activities that respect environmental
integrity, and by developing environmental preservation technologies.
Action plan
1. We aim to carry out environmental tasks in an
organized way, and to implement environmental
preservation activities continuously.
2. We will set appropriate objectives and targets for
reducing the burden our activities impose on theenvironment with conserving biodiversity.
3. We aim to provide society with products andservices that contribute to the preservation of theenvironment.
(1) We endeavor to increase our product’s social
value to in terms of environmental protection,
safety and hygiene.
(2) We provide products and services to reduce
environmental loads by obtaining a clear grasp ofenvironmental needs and technical development.
Common policy for business facilities
Taking into consideration its business activities, thelocal community and the surrounding environment,each plant operates by setting out its own environmental policy, objectives and targets using methods
compliant with international standards.

1. R espect laws and regulations and agreements wehave concluded with external parties.
2. P revent pollution and reduce and appropriately treat
waste, to conserve the ecosystem.
3. I mprove “resource productivity” through implementation of energy efficiency, resource efficiency, andrecycling.
4. I nform employees and other companies residing
within our facilities of our policies and require theircooperation.
Environmental Management System
The Environmental Management Committee,
headed by the Director in charge of Environmental
Management, determines matters such as annual environmental management policies and programs of environmental activities for the whole company. Each plant
has its own Environmental Supervisory Committee,
which promotes environmental management activities
and works hand in hand with other Group companies
including affiliates to reduce the environmental impactof the Company’s activities.
President

Environmental
Management Committee

Environmental
Supervisory Committees

Chief Environmental
Management Supervisor/
Environmental Management
Committee Chairman(Director in charge ofEnvironmental Management)

Environmental Management
Plant Supervisors(General Plant Managers)

Special Committees• Energy Saving Committees• Product Committees

Departments

16

Environmental Management
Supervisors

Affiliated companies

Medium-Term Plan for Environmental Management Activities (Fiscal 2009–2012)
We are promoting environmental management activities at our Muroran, Hiroshima and Yokohama plants. Social
awareness has changed greatly regarding the need to deal with such issues as the mitigation of global warming,saving energy, and processing waste.
We are working to attain the targets in our medium-term plan for environmental management activities covering the four years from fiscal 2009–2012. In fiscal 2009, the opening year of the plan, measures were taken ateach plant to meet these targets.
With regard to the observance of laws and regulations, we implement environmental patrols at environmentalrelated facilities, plants, and other sites in the vicinity. We confirm that all environmental preservation-related laws
and regulations are being observed, and that the environmental management system is functioning properly. To
effectively communicate the results of the environmental patrols, we carry out employee training programs foraffiliates and collaborating companies, as well as at our headquarter.

Environmental Preservation Activities
The following section introduces some of JSW’s wide range of environmental preservation activities.
Reducing atmospheric emission of nickel compounds
At the Muroran Plant, we are working to ensure that atmospheric emission ofnickel compounds are within prescribed standards by making the necessary
revisions to operations, processes, and equipment, and through the introduction of new equipment.
Working together with the local municipal government since fiscal 2005,
we have created our own voluntary controls, and have been undertaking
various activities. In fiscal 2010, we started operation of a large scrap cutting
facility in order to efficiently collect dust that is generated during cutting.
Safety and disaster prevention activities
We regularly implement environmental patrols at each plant to verify management status and audit data relating to specific air- and water-related facilities,
pretreatment facilities, oil-water separation tanks and other facilities.

Community contributions
As part of our social contribution activities, we conduct a cleanup campaign
along the main streets in the vicinity of our Yokohama Plant in April each year.
The cleanup campaign is conducted along roads between a nearest Stationand our Yokohama Plant’s main gate. Employees collect empty cans and pickup plastic bottles and cigarette butts. The trash is then separated and disposedof. We intend this to be an ongoing activity.

17

Board of Directors, Corporate Auditors and Executive Officers(as of June 24, 2011)

Board of Directors and Corporate Auditors

Executive Officers

Representative Director & PresidentManaging Executive Officers

Ikuo Sato

Takao Ishido
Tamotsu Hayakawa
Yutaka Mizutani

Representative Director & Executive Vice President
Hisao Iwashita

Representative Director & Senior Managing
Executive Officer

Senior Executive Officers

Atsushi Igarashi

Akira Kadota
Hiroshi Hamao

Director, Senior Managing Executive Officers

Executive Officers

Nobuyuki Toda
Yoshitomo Tanaka
Etsuo Murai

Nobuhisa Kobayashi
Iku Kurihara
Nobuaki Shimizu

Director

Hiroyuki Tokushige

Hiroo Suto (Outside)

Shin-ichi Ono

Corporate Auditors

Yasuaki Nishiyama

Seiichi Uehara
Yasunori Tanita
Yasuhisa Naka (Outside)
Akira Sato (Outside)

Hirohisa Matsuo

Organization

Kazuo Kitamura

Corporate Planning Office
Technology Management Center

General Meeting of Shareholders
Personnel Dept.
Secretary Office
General Affairs Dept.
Board of Directors

Finance & Accounting Dept.
Domestic Offices
Business Administration Dept.

Executive Board

President

Muroran ResearchLaboratory
Hiroshima ResearchLaboratory

Internal
Auditors Office
Board of Corporate
Auditors

18

Overseas Offices

Research & Development
Headquarters

Laser & Plasma System Office

Steel Business Division

Muroran Plant

Machinery Business Division

Hiroshima Plant

Ordnance Business Headquarters

Yokohama Plant

Financial Section
The Japan Steel Works, Ltd.

Six-Year SummaryYears ended March 31

Millions of Yen

Consolidated

2011

2010

2009

2008

2007

2006

Net sales ....................................
Net income . ...............................
Total assets ................................

¥212,929¥201,680¥227,113¥220,851¥207,138¥173,353

16,532

17,52816,034

17,484

12,515

6,586

339,263

322,986

296,909262,453

232,444

196,656

Total net assets ..........................

120,820

111,149

90,12585,23175,621

66,039Amounts per share (yen):
Net income .............................

¥44.54¥47.22¥43.19¥47.10¥33.71¥17.57

Non-Consolidated

2011

2010

2009

2008

2007

2006

Net sales ....................................
Net income . ...............................
Total assets ................................

¥179,325¥175,333¥196,030¥189,318¥177,493¥145,555

14,527

16,665

15,44915,878

12,233

6,026

316,176

298,783

277,301

243,433

215,693

180,734

Total net assets ..........................

109,734

101,615

82,44977,95869,90760,602¥39.14¥44.90¥41.62¥42.77¥32.95¥16.07¥12.00¥12.00¥12.00¥12.00

¥9.00

¥5.00

Millions of Yen

Amounts per share (yen):
Net income .............................
	Cash dividends applicable tothe year.................................

Contents
19 Six-Year Summary
20 Financial Performance (Consolidated)
22 Consolidated Balance Sheets
24 Consolidated Statements of Income
25 Consolidated Statements of Comprehensive Income
26 Consolidated Statements of Changes in Net Assets
27 Consolidated Statements of Cash Flows
28 Notes to Consolidated Financial Statements
45 Report of Independent Auditors

19

Financial Performance (Consolidated)
Operating Results
Net Sales
Net sales increased ¥11,249 million, or 5.6%, year on
year, to ¥212,929 million (US$2,560 million) in thereporting period. This was due to an increase in the
Industrial Machinery Products Business.

price as a result of intensified competition, as well as
increased depreciation and amortization.
Net Income
Net income decreased ¥996 million, or 5.7%, to¥16,532 million (US$198 million).

Operating Income
Operating income declined ¥3,690 million, or 11.5%,
to ¥28,495 million (US$342 million). This decrease wasmainly attributable to a more efficient balance between
inventory turnover and notes and accounts receivable asa measure to strengthen our financial position, as wellas to aggressive cost-cutting including improved variable
costs and further reductions in fixed costs as efforts tolower the break-even point, both of which were morethan offset by the appreciation of the yen, lower product28,49532,18536,63332,47521,00024,678Operating Income

Geographical Information
Sales in Japan came to ¥99,070 million (US$1,191
million), and sales in China and South Korea were¥29,836 million (US$358 million) and ¥21,810
millionmillion (US$262 million) ¥respectively.
Sales in North
42,000America were ¥10,248 million (US$123 million), whilesales in other regions were ¥51,963 million (US$624
31,500
million).

10,500Cash Flows0

150,000

58,440113,858
53,38893,903

119,853

28,592

32,076

0120,8200

21,77430,00090,125

11,50085,23160,00026,31975,621

23,000111,149

45,66890,000% of total sales

42,04034,50002007 2008 20072009 20082010 20092011 2010 2011

Equity Ratio

120,820

90,1

85

35,6

111,149

45,66890,00014% of total sales¥ million
120,000

42,04034,500103,9370¥ million
120,000

35,63014¥ million
46,000Net Assets

28

Net Cash Provided by Operating Activities

65,68558,44053,388113,858

28,592

32,076

93,903¥ million
46,000Net Assets

Net Cash Provid

42

113,

119,85

41.5

%
56

46.6

47.1
112,500

10

Geographical I

20

53.5

52.8

%
56

2007 20102008 20112009 2010 20112007 2008 2009
Oversea sales

280Oversea sales

42

0

0

2007 2008 2009 2010 2011

¥ million
150,000

119,853

103,9370

18,000422007 2008 20072009 20082010 20092011 2010 2011

46.6

36,00018,00037,500

53.5

52.8

47.1

41.5 54,000

85,921

10,50075,000¥ million
72,000Interest-Bearing Debt

Geographical Information

28,49532,18536,63332,47524,678Operating Income

21,000112,500

85,921

28,49532,18536,63332,47537,5002007 2008 2009 2010 2011

31,500

46.6

47.1

0

0

¥ million
150,000

56

53.5

52.8

Cash Flow from Operating Activities
112,500 41.554,000
Net cash provided by operating activities
amountedto ¥21,774 million (US$261 million), compared with
75,00036,000¥45,668 million in the previous term.
This was mainly

10,500¥ million
42,00072,00065,685Interest-Bearing Debt

Geographical Information

with ¥29,603 million for the previous
term,
in 2010
addition
2007 20082009
2011
to depreciation and amortization, which is a noncash
item, as well as proceeds fromdebt.
%
¥ millionlong-term¥ million

24,678Operating Income

Cash and cash equivalents stood at ¥41,116 million(US$494 million) at the reporting term-end, down
¥4,486 million year on year after adjusting noncash¥ million
42,000items. This was attributable to increases in capital
investments for the enhancement of production effi31,500
ciency as well as in working capital, which outweighed
the posting of income before income taxes and minority
21,000interests in the amount of ¥27,923 million, compared

%
36.0

27.0

32.4 32.4

34.0
30.3

35.3

58,440

53,388120,820

111,149

46.6¥ million
120,000

120,820

90,12514.4

2007 2008 2009 2010 2011

2008

2009

0

2010

21.8
17.7

2011

2007

Equity Ratio

45,66842,04035,63026

23,00017.6

0% of total sales

%
24.0

18.0

18.3

6.0

¥ million
46,00034,5002011

30,000

0

ROE

30.3

35.3

17.7

60,00014

2007

Net Cash Provided by

Equity Ratio

27.0

34.0

21.8

90,000
18.0

28

2010

12.0

37,5002007 2008 20092007 20102008 20112009 2010 201132.4 32.4

65,685%24.0

85,23130.3

2009

111,149

35.3

2008

¥ million
120,000

75,621

93,90385,921

113,858

34.0

18.0

0
Oversea sales%
36.0

28,5924232.4 32.4

Net Assets
ROE

46.6
119,853

103,937

27.0

53.5

52.8

%
56

2007 2008 2009 2010 2011

1

2007 2008 2009 2010 2011
2007

9.0

es

32,076

21,774

%
47.1
36.0

41.5

75,000058,44053,388Interest-Bearing
Equity Ratio Debt

120,820

111,149

90,12528,49575,621
26,31945,66832,185 85,231

36,633

0
0

0

0
0

90,12575,621

28,592

32,0769.0

2007 2008 2009 2010 2011

¥ million
150,000

112,500

85,231

65,68558,44053,388113,858

93,903

119,853

18,00000Equity Ratio

Geographical Information

120,820

21,77430,00090,12585,23160,000111,149

45,668

11,50090,00075,621
26,31923,00042,04034,50042,04032,47530,0002007 2008 20092007 20102008 20112009 2010 2011

% of total sales¥ million
120,000

35,6300

Net Assets

14

Net Cash Provided by Operating Activities

28¥ million
46,000103,937

Oversea sales

35,63024,6780

Net Assets

0

10,50011,5002007 2008 20092007 20102008 20112009 2010 2011

42

%
56

53.5

52.8

47.1

85,921

28,592

32,07614

Operating
Net CashIncome
Provided by Operating Activities

65,68558,44053,388113,858

93,903

119,853

103,937

18,00028,49532,18536,63332,47585,921

Interest-Bearing Debt

Geographical Information

37,5000%56¥ million
72,000Net Assets

Interest-Bearing Debt

Geographical Information¥ million
150,000

2007 2008 2009 2010 2011

Total assets as of the end of March 2011 112,500
stood 41.5
at ¥339,263¥120,820
million (US$1,453
million), for an increase of42
90,00031,50054,000
million (US$4,080 million), up ¥16,277 million, or 5.0%,¥9,671 million, or 8.7%, over the previous term-end.
from the previous term-end. This was due75,000
to an increase28
60,00021,00036,000in noncurrent assets from the acquisition of such property,
plant and equipment as buildings and structures
as well as
14
37,50030,00010,50018,000machinery and transport equipment as a result of capital
expenditures, mainly in the Steel and Energy0 Products00002007 2008 20092007 2008 2009 2010 2011
Business,
additionto 2011an increase in current assets
2007in2008
2009 20102007 20102008 20112009 2010 2011
Oversea sales% of total sales
million¥ million
owing to an increase in work in process. ¥Liabilities
at the42,00072,000¥
million%reportingterm-end stood at ¥218,443
million (US$2,627%¥ million¥ million¥ million
46,00036.0
56
150,000
120,000
53.5
72,00052.8
million), up ¥6,606 million, or 3.1%, over the previous
35.3
31,50054,000
34.0
46.6
47.1
32.4 32.4
term-end.
Thiswaslargely
attributabletoanincreasein
30.3
34,50027.0
42
112,500 41.5 54,000
90,000long-term debt. Interest-bearing debt stood at ¥65,685 mil21,000
36,000lion (US$789 million), up ¥7,244 million from the previ23,000
18.0
2875,00060,00036,000ous fiscal year. Net assets at the reporting term-end totaled
24,678Operating Income¥ million

28,592

32,0762007 2008 2009 2010 2011

42,000Financial
Position

65,685Interest-Bearing Debt

Cash Flow from Financing
Activities
54,000Net cash provided by financing activities amounted to¥2,116 million (US$25 million)
compared with a net cash
36,000outflow of ¥2,687 million for the previous term. This net
cash inflow resulted from18,000
an inflow of ¥10,420 million
from long-term debt, which exceeded an outflow of ¥4,454
million in cash dividend paid.
028,49532,18536,63332,475

Cash Flow from Investing Activities
Net cash used in investing activities amounted
to ¥28,238
10,500
million (US$339 million), compared with ¥37,287 million
for the previous term. This was due mainly to0 an investment

1.5

21,000of ¥27,626 million in increase in tangible and intangible¥ million
assets for the purpose of raisingproduction efficiency.
72,00024,678Operating Income

due to the posting of ¥27,923 million in income before¥ millionas depreciation
income taxes and minority interests, as well
42,000and amortization in the amount of ¥20,003 million, which
was not a physical cash outflow, and an increase
in work31,500
ing capital and other factors.

18.3

2008

2009

2010

2011

%
36.0

27.0

32.4 32.4

34.0

35.3

30.3

21

17.6
18.0

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets
March 31, 2011 and 2010

Thousands of
U.S. Dollars (Note 3)

Millions of Yen

Assets

2011

2010

2011

¥ 41,187¥ 45,646$  495,334

1,251
43,9981,608(208)
82,241
6,852
8,535
185,467708
41,734
1,228(281)
69,627
4,206
8,648
171,518

15,045529,140
19,339(2,502)
989,068
82,405
102,646
2,230,511

Less accumulated depreciation ...........................................................
			 Property, plant and equipment, net..............................................

11,381
96,665
139,4178,339
2,631
258,434(140,893)
117,540

11,44884,634
119,904
8,551
11,564
236,102(124,936)
111,166

136,873
1,162,538
1,676,693
100,289
31,642
3,108,046(1,694,444)
1,413,590

Intangible assets....................................................................................

1,005

1,236

12,087

Investments, long-term loans and other assets:
Investments in unconsolidated subsidiaries and affiliates......................
Investment securities (Notes 17 and 18)...............................................
Other long-term loans receivable..........................................................
Deferred tax assets (Note 21) ..............................................................
Other assets.........................................................................................
Less allowance for doubtful accounts .................................................
			Total investments, long-term loans and other assets.............
			Total assets ..............................................................................

875
27,613
111
2,075
4,772
(198)
35,249¥339,263

737
31,710
61
1,934
5,036
(415)
39,064¥322,986

10,523332,087
1,335
24,95557,390(2,381)
423,921$4,080,132

Current assets:
Cash on hand and in banks (Notes 8, 15 and 17) . ..............................
Notes and accounts receivable:
		 Unconsolidated subsidiaries and affiliates .......................................
		 Trade (Notes 8 and 17) ...................................................................
		 Other ..............................................................................................
		 Less allowance for doubtful accounts .............................................
Inventories (Note 4) .............................................................................
Deferred tax assets (Note 21) ..............................................................
Other current assets . ..........................................................................
			 Total current assets ....................................................................

Property, plant and equipment, at cost (Notes 5, 6 and 8):
Land ...................................................................................................
Buildings and structures.......................................................................
Machinery and equipment ...................................................................
Leased assets .....................................................................................
Construction in progress .....................................................................

The accompanying notes are an integral part of these statements.

22

Thousands of
U.S. Dollars (Note 3)

Millions of Yen

Liabilities AND NET ASSETS
Current liabilities:
Short-term borrowings (Notes 8 and 17) ...............................................
Current portion of long-term debt (Notes 8 and 17) ..............................
Notes and accounts payable:
		 Unconsolidated subsidiaries and affiliates . ..........................................
		 Trade (Note 17) ...................................................................................
		 Other ..................................................................................................
Advances received for products . ..........................................................
Accrued income taxes (Note 21) ...........................................................
Other current liabilities (Note 8) .............................................................
			 Total current liabilities.......................................................................
Long-term liabilities:
Long-term debt (Notes 8 and 17)...........................................................
Accrued retirement benefits (Note 20):
		 For employees.....................................................................................
		 For directors and corporate auditors....................................................
Deferred tax liabilities (Note 21) .............................................................
Other long-term liabilities (Note 8) .........................................................
			 Total long-term liabilities...................................................................

2011

2010

2011

¥ 13,120
2,435¥ 13,722
12,694$  157,787
29,28481
44,932
6,384
31,024
7,979
27,600133,558

34
36,197
7,556
42,131
6,436
23,965
142,738974
540,373
76,777373,109
95,959331,930
1,606,230

50,13032,025602,886

9,339
199
1,720
23,49484,884

8,520
161
2,661
25,73069,098112,315
2,393
20,686
282,550
1,020,854

Net assets:
	Shareholders’ equity (Note 14)
Common stock:		 Authorized — 1,000,000,000 shares
		 Issued — 371,463,036 shares.............................................................
Capital surplus ......................................................................................
Retained earnings..................................................................................
	Treasury stock, at cost (299,234 shares in 2011 and
287,708 shares in 2010) .....................................................................
			 Total shareholders’ equity ...............................................................

19,694
5,426
94,77919,694
5,425
82,701

236,849
65,256
1,139,856(224)
119,676(213)
107,607(2,694)
1,439,278

Accumulated other comprehensive income:		 Unrealized holding gain (loss) on securities...........................................
		 Unrealized gain (loss) from hedging instruments...................................
		 Translation adjustments.......................................................................
			 Total accumulated other comprehensive income.............................

687
102
(586)
203

2,949
(213)
(425)
2,310

8,262
1,227
(7,048)2,441

Minority interests ................................................................................
		Total net assets . ...............................................................................
			Total liabilities and net assets.......................................................

940
120,820¥339,263

1,231
111,149¥322,986

11,305
1,453,037$4,080,132

23

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Income
For the years ended March 31, 2011 and 2010

Millions of Yen

2011

2010

2011

Net sales.................................................................................................
Cost of sales (Note 10)............................................................................
		 Gross profit . ...................................................................................
Selling, general and administrative expenses (Note 10) ......................
		 Operating income............................................................................
Other income (expenses):
Interest and dividend income................................................................
Interest expense . ................................................................................
Other, net (Note 11) ............................................................................

¥212,929
155,433
57,49629,00028,495¥201,680
143,708
57,97125,78632,185$2,560,782
1,869,308
691,473
348,767
342,694

484
(739)
(316)
(571)

445
(694)
(2,333)(2,582)

5,821(8,888)(3,800)(6,867)

Income before income taxes and minority interests............................
Income taxes (Note 21):
Current.................................................................................................
Deferred ..............................................................................................
Income before minority interests . .......................................................
Minority interests in net income (loss) of consolidated subsidiaries....
Net income (Note 26) .............................................................................

27,92329,603335,815

14,075(2,396)
16,244(287)¥ 16,532

12,142(89)—
22¥ 17,528

169,272(28,815)
195,358(3,452)$  198,821

The accompanying notes are an integral part of these statements.

24

Thousands of
U.S. Dollars (Note 3)

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Comprehensive Income
For the years ended March 31, 2011 and 2010

Thousands of
U.S. Dollars (Note 3)

Millions of Yen

2011

Income before minority interests...........................................................
Other comprehensive income:Unrealized holding gain (loss) on securities...........................................
Unrealized gain (loss) from hedging instruments...................................
Translation adjustments.......................................................................
Total other comprehensive income (Note 13)........................................
Comprehensive income.........................................................................
Total comprehensive income attributable to:Shareholders of The Japan Steel Works, Ltd. . ....................................
Minority interests..................................................................................

2010

2011

¥16,244¥—$195,358(2,261)315(161)(2,107)¥14,137

—
—
—
—
¥—

(27,192)
3,788(1,936)(25,340)$170,018¥14,426¥   (288)—¥—$173,494$ (3,464)

The accompanying notes are an integral part of these statements.

25

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2011 and 2010

Thousands of
U.S. Dollars(Note 3)

Millions of Yen

2011

2011

Common stock:
Balance at beginning of year......

¥ 19,694 ¥ 19,694$  236,849

Balance at end of year...............

¥ 19,694 ¥ 19,694$  236,849

Capital surplus:
Balance at beginning of year......

¥   5,425 ¥   5,424

Disposal of treasury stock..........

0

1

0

$    65,244

Balance at end of year...............

¥   5,426 ¥   5,425$    65,256¥ 82,701 ¥ 69,627$  994,600

Retained earnings:
Balance at beginning of year......
Cash dividends paid...................

(4,454)(4,454)(53,566)

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

16,532

17,528

198,821¥ 94,779 ¥ 82,701$1,139,856

Balance at end of year...............

Purchases of treasury stock.......
Disposal of treasury stock..........
Balance at end of year...............

¥    (213) ¥    (182) $    (2,562)
(12)
2

(32)
1

	Net changes in items other thanthose in shareholders’ equity....

¥107,607 ¥ 94,563$1,294,131(53,566)

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

16,532

17,528

198,821

Purchases of treasury stock.......

(12)

(32)

(144)

Disposal of treasury stock..........

3

3

36

Balance at end of year...............

¥119,676 ¥107,607$1,439,278

Unrealized holding gain (loss) on
securities:¥   2,949 ¥ (3,868) $    35,466(2,261)

6,818¥    687 ¥   2,949

315

3,788

165

¥    102 ¥    (213) $     1,227

Balance at end of year...............

¥    (425) ¥    (435) $    (5,111)(160)(1,924)9¥    (586) ¥    (425) $    (7,048)

Total accumulated othercomprehensive income:¥   2,310 ¥ (4,683) $    27,781
6,994(25,328)¥    203 ¥   2,310(2,106)$     2,441¥   1,231 ¥    246

$    14,805

Minority interests:
Balance at beginning of year......

(4,454)

Balance at end of year...............

Balance at beginning of year......

24(4,454)

	Net changes in items other thanthose in shareholders’ equity....

Balance at end of year...............

¥    (213) ¥    (379) $    (2,562)

Translation adjustments:

Balance at end of year...............

Cash dividends paid...................

Balance at beginning of year......

	Net changes in items other thanthose in shareholders’ equity....

	Net changes in items other thanthose in shareholders’ equity....

Total shareholders’ equity:
Balance at beginning of year......

Balance at beginning of year......

(144)¥    (224) ¥    (213) $    (2,694)

2011

2010

Unrealized gain (loss) fromhedging instruments:

Balance at beginning of year......

Treasury stock, at cost:
Balance at beginning of year......

Millions of Yen

2011

2010

Thousands of
U.S. Dollars(Note 3)

	Net changes in items other thanthose in shareholders’ equity....
Balance at end of year...............

984(3,488)¥    940 ¥   1,231(290)$    11,305¥111,149 ¥ 90,125$1,336,729

Total net assets:
Balance at beginning of year......
Cash dividends paid...................

(4,454)(4,454)(53,566)

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

16,532

17,528

198,821

Purchases of treasury stock.......

(12)

(32)

(144)

Disposal of treasury stock..........

3

3

36

(2,397)

7,979(28,827)¥120,820 ¥111,149$1,453,037(27,192)	Net changes in items other thanthose in shareholders’ equity....

$     8,262

Balance at end of year...............

The accompanying notes are an integral part of these statements.

26

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
For the years ended March 31, 2011 and 2010

Thousands of
U.S. Dollars (Note 3)

Millions of Yen

Operating activities:
Income before income taxes and minority interests..............................
Depreciation and amortization..............................................................
Impairment loss....................................................................................
Interest and dividend income................................................................
Interest expense...................................................................................
Bond issuance expenses.....................................................................
Equity in (earnings) losses of affiliates...................................................
Loss on abandonment of investments..................................................
Loss on write-downs of investment securities.......................................
Amortization of net retirement benefit obligation at transition................
Loss on disposal of tangible and intangible assets...............................
Gain and loss on sales of property, plant and equipment.....................
	Loss on adjustment for change in accounting principal for
asset retirement obligations................................................................
Changes in operating assets and liabilities:
		 Trade assets (Note 20).....................................................................
		 Trade liabilities.................................................................................
		 Inventories (Note 4)..........................................................................
		 Other...............................................................................................
			 Subtotal.......................................................................................
Interest and dividends received............................................................
Interest paid.........................................................................................
Income taxes paid . .............................................................................
			 Net cash provided by operating activities ..............................
Investing activities:
Increase in tangible and intangible assets.............................................
Decrease in tangible and intangible assets...........................................
Purchases of investment securities.......................................................
Proceeds from sales of investment securities.......................................
Reimbursement of long-term deposits on contracts.............................
(Increase) decrease in short-term loans receivable................................
Long-term loans receivable made........................................................
Purchase of investment of unconsolidated subsidiaries........................
	Purchase of investments in subsidiaries resulting inchange in scope of consolidation.......................................................
Purchases of common stock of affiliates...............................................
Other....................................................................................................
			 Net cash used in investing activities .......................................
Financing activities (Notes 8 and 17):
Net increase (decrease) in short-term borrowings.................................
Increase in long-term debt ..................................................................
Decrease in long-term debt .................................................................
Proceeds from issuance of bonds........................................................
Redemption of bonds...........................................................................
Cash dividend paid..............................................................................
Acquisition of treasury stock.................................................................
Proceeds from sales of treasury stock..................................................
Repayments of finance lease obligations..............................................
Other....................................................................................................
			 Net cash provided by (used in) financing activities.................
Effect of exchange rate changes on cash and cash equivalents........
(Decrease) increase in cash and cash equivalents...............................
Cash and cash equivalents at beginning of the year............................
Cash and cash equivalents at end of the year (Notes 15 and 17).........

2011

2010

2011

¥27,923
20,021
197
(484)
739
50
0
—
340
—
481
(15)

¥29,603
14,512
—
(445)
693
—
(1)
680
105
765
847
(11)

$335,815
240,782
2,369(5,821)
8,888
601
0
—
4,089
—
5,785
(180)

236

—

2,838

(16,489)
11,255(12,614)
2,897
34,539487(725)(12,527)
21,774

8,672(7,708)
4,957
3,012
55,683447(698)(9,763)45,668(198,304)
135,358(151,702)
34,841
415,382
5,857(8,719)(150,655)
261,864(27,626)
157
(41)
0
(487)
2
(56)
(174)

(35,892)
20(1,673)
19
(436)
(1)
—
(35)

(332,243)
1,888
(493)
0
(5,857)24(673)(2,093)——(12)(28,238)

754
(3)
(38)
(37,287)——(144)(339,603)(602)
10,420(1,087)
9,949(10,000)(4,454)(12)
3(2,097)
(2)
2,116
(138)
(4,486)45,603¥41,116

5,467
900(2,322)——(4,454)(32)
3(2,241)(6)(2,687)
5
5,698
39,904¥45,603(7,240)125,316(13,073)
119,651(120,265)(53,566)(144)
36(25,219)(24)
25,448(1,660)(53,951)
548,443$494,480

The accompanying notes are an integral part of these statements.

27

The Japan Steel Works, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
1. Basis of Presentation
The Japan Steel Works, Ltd. (the “Company”) and its domestic subsidiaries maintain their books of account in conformity with the financial
accounting standards of Japan, and its foreign subsidiaries maintaintheir books of account in conformity with those of their respective
countries of domicile.
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles generally acceptedin Japan, which are different in certain respects as to the applicationand disclosure requirements of IFRS, and have been compiled from theconsolidated financial statements prepared by the Company as requiredby the Financial Instruments and Exchange Law of Japan.
As permitted by the Financial Instruments and Exchange Law ofJapan, amounts of less than one million yen have been omitted. As
a result, the totals shown in the accompanying consolidated financial
statements (both in yen and in U.S. dollars) do not necessarily agreewith the sums of the individual amounts.
Certain amounts in the prior year’s consolidated financial statements have been reclassified to conform to the current year’s
presentation.
2. Summary of Significant Accounting Policies(a) P rinciples of consolidation and accounting for investments inunconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include theaccounts of the Company and any significant companies (collectively,
the “Companies”) controlled directly or indirectly by the Company.
Companies over which the Company exercises significant influencein terms of their operating and financial policies have been accounted
for by the equity method. All significant intercompany balances andtransactions have been eliminated in consolidation.
As of March 31, 2011, the numbers of consolidated subsidiaries,and subsidiaries and affiliates accounted for by the equity method were
37 and 1 (37 and 1 in 2010), respectively. Effective March 31, 2010,
Meiki Co., Ltd. was included in the scope of consolidation because theCompany’s ownership increased to 50.96%.
Certain foreign subsidiaries are consolidated on the basis of fiscal
periods ended December 31, and one domestic subsidiary’s year end
is January 31, both of which differ from that of the Company. However,the necessary adjustments have been made if the effect of the difference is material.
Investments in subsidiaries and affiliates which are neither
consolidated nor accounted for by the equity method are carried at costor less. Where there has been a permanent decline in the value of suchinvestments, the Company has written them down.
Differences between the cost and the underlying net equity at fairvalue of investments in consolidated subsidiaries and in companies
accounted for by the equity method have been amortized by thestraight-line method over five years after acquisition and are included inselling, general and administrative expenses.
(b) Foreign currency translation
The balance sheet accounts of the foreign consolidated subsidiaries
are translated into yen at the rates of exchange in effect at the balance
sheet date, except for the components of net assets excluding minority
interests which are translated at their historical exchange rates.
Revenue and expense accounts are translated at the average rates of
exchange in effect during the year. Differences arising from the translation are presented as translation adjustments and minority interests inthe consolidated financial statements.
Revenue and expense items arising from transactions denominated28

in foreign currencies are generally translated into yen at the rates of
exchange in effect at the respective transaction dates.
All monetary assets and liabilities denominated in foreign currencies
are translated into yen at the rates of exchange in effect at the balance
sheet date and differences arising from the translation are included in
the consolidated statements of income.
(c) Cash equivalents
Short-term investments with a maturity of three months or less whenpurchased which can easily be converted to cash and are subject tolittle risk of change in value are considered to be cash equivalents.
(d) Inventories
Real estate held for sale, finished products and work in process arestated the lower of or net realizable value at cost determined principallyby the specific identification method. Raw materials are stated at thelower of cost or replacement cost determined principally by the moving
average method.
(e) Short-term investments and investment securities
Securities other than equity securities issued by subsidiaries andaffiliates are classified into two categories: held-to-maturity or othersecurities.
Held-to-maturity securities are carried at amortized cost. Marketablesecurities classified as other securities are carried at fair value withchanges in unrealized holding gain or loss, net of the applicable income
taxes, included directly in net assets. Non-marketable securities classified as other securities are carried at cost. Cost of securities sold isdetermined by the moving average method.
(f) Allowance for doubtful accounts
The allowance for doubtful accounts is provided for possible bad debts
at an amount estimated based on the historical experience with bad
debts on normal receivables plus an additional allowance for specificuncollectible amounts determined by reference to the collectability of
individual doubtful accounts.
(g) Provision for warranties for completed construction
The Company provides a provision for warranties for completed
construction by estimating losses on future possible claims.
(h) Provision for loss on construction contracts
The Company provides a provision for loss on construction contracts,
which has not been delivered by the fiscal year end, by estimating
the amount of total losses anticipated in the following fiscal year andthereafter to be incurred, when the amounts that can be reasonably
estimated.
(i) Property, plant and equipment and depreciation
Property, plant and equipment is stated on the basis of cost.
Depreciation of property, plant and equipment is determined by the
declining-balance method over the estimated useful lives of the respective assets, except that the straight-line method is applied to buildings.
Significant renewals and additions are capitalized at cost.
Maintenance and repairs are charged to income as incurred.
(j) Bond issuance expenses
Bond issuance expenses are charged to income as incurred.
(k) Leases and depreciation
Finance lease transactions which do not stipulate the transfer ofownership of the leased assets to the lessee are accounted for as sales
and purchase transactions.
With regard to the depreciation method of leased assets, thestraight-line method is applied using the lease period as the estimateduseful life and a residual value of zero.
(l) Retirement benefits
An employee whose employment is terminated is entitled, in mostcases, to a lump-sum severance payment determined by reference tothe current basic rate of pay, length of service and the conditions underwhich the termination occurs.
Accrued retirement benefits for employees at March 31, 2011 and2010 have been provided primarily at an amount calculated based on
the retirement benefit obligation and the fair value of the pension plan
assets at the balance sheet dates, as adjusted for the unrecognized
net retirement benefit obligation at transition, prior service cost andunrecognized actuarial gain or loss. The retirement benefit obligation is
attributed to each period by the straight-line method over the estimatedyears of service of the eligible employees. The net retirement benefit
obligation at transition is being amortized principally over a period of ten
years by the straight-line method.
Prior service cost is being amortized as incurred by the straight-line
method over ten years, which is shorter than the average remaining
years of service of the eligible employees.
Actuarial gain or loss is amortized in the year following the year inwhich the gain or loss is recognized by the straight-line method over ten
years, which is shorter than the average remaining years of service ofthe employees participating in the plans.
Effective the year ended March 31, 2010, the Company and its
domestic subsidiaries adopted the “Partial Amendments to AccountingStandard for Retirement Benefits (Part 3)” (ASBJ Statement No. 19, July
31, 2008).
The effects of this change on operating income, income before
income taxes and minority interests were not material for the year ended
March 31, 2010.
(m) Income taxes
Deferred tax assets and liabilities have been recognized in the consolidated balance sheets at March 31, 2011 and 2010 with respect to thedifferences between financial reporting and the tax bases of the assets
and liabilities, and are measured using the enacted tax rates and laws
which will be in effect when the differences are expected to reverse.
(n) Research and development expenses
Research and development expenses are charged to income whenincurred.
(o) Revenue and cost recognition
Revenues are generally recognized on sales of products at the time of
shipment.
Effective April 1, 2009, revenues and costs, of which the percentage of completion can be reliably estimated, are recognized by thepercentage-of-completion method. The percentage of completion is
calculated at the cost incurred as a percentage of the estimated total
cost. The completed-contract method continues to be applied tocontracts for which the percentage of completion cannot be reliably
estimated.
For construction contracts effective from the year ended March
31, 2010, the Company and its domestic subsidiaries apply the“Accounting Standard for Construction Contracts” (ASBJ Statement
No. 15, December 27, 2007) and the “Implementation Guidance of

Accounting Standard for Construction Contracts” (ASBJ GuidanceNo. 18, December 27, 2007). Construction for which the percentage ofcompletion can be reliably estimated is recognized by the percentageof-completion method, and all other construction is recognized by thecompleted-contract method.
The effects of this change on operating income, income before
income taxes and minority interests were not material for the year ended
March 31, 2010.
(p) Derivative financial instruments
Derivative financial instruments are carried at fair value. Gain or loss onderivatives designated as hedging instruments is deferred as a component of net assets until the loss or gain on the underlying hedged items
is recognized. Foreign currency receivables and payables are translated
at the applicable forward foreign exchange rates if certain conditions are
met. In addition, the related interest differential paid or received underinterest-rate swaps utilized as hedging instruments is recognized over
the terms of the swap agreements as an adjustment to the interest
expense of the underlying hedged items if certain conditions are met.
(q) Consumption tax
Accounting treatment of consumption tax is the tax exclusion method.
(r) Provision for directors’ bonuses
Provision for directors’ bonuses is provided based on estimatedamounts to be paid in the subsequent period applicable to the current
period.
(s) Provision for directors’ retirement benefits
Provision for directors’ retirement benefits is provided based on
estimated amounts determined by internal rules.
(t) Adoption of accounting standard for asset retirement
obligations
Effective the year ended March 31, 2011, the Company and its
domestic consolidated subsidiaries adopted the “Accounting Standard
for Asset Retirement Obligations” (ASBJ Statement No. 18, March
31, 2008) and the “Implementation Guidance of Accounting Standard
for Asset Retirement Obligations” (ASBJ Guidance No. 21, March 31,2008).
Operating income decreased by ¥33 million ($397 thousand) andincome before income taxes and minority interests decreased by ¥269
million ($3,235 thousand) as a result of the adoption of this standard.
(u) Changes in presentation
Effective from fiscal year 2011, “Accounting Standard for Consolidated
Financial Statements” (ASBJ Statement No. 22 issued on December
26, 2008) and “Cabinet Office Ordinance for Partial Amendment of theRegulation for Terminology, Forms and Preparation of Consolidated
Financial Statements” (Cabinet Office Ordinance No. 5 issued on March24, 2009) have been applied. As a consequence, a new line item has
been presented on the consolidated statements of income as “income
before minority interests.”
3. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollars is included solely forconvenience, as a matter of arithmetic computation only, at ¥83.15 =U.S.$1.00, the approximate rate of exchange prevailing on March 31,
2011. This translation should not be construed as a representation that
all amounts shown could be converted into U.S. dollars at such rate.

29

4. Inventories
Inventories at March 31, 2011 and 2010 consisted of the following:
Millions of Yen
2011
2010

Real estate held for sale ...........
Finished products . ...................
Work in process .......................
Raw materials and supplies ......
Total....................................

¥     211,161
75,0086,050¥82,241¥     33
1,370
62,187
6,036¥69,627

Thousands of
U.S. Dollars
2011$    253
13,963902,081
72,760$989,068

Work in process related to construction contracts of which a loss
is anticipated to be incurred was offset with a provision for loss on
construction contracts of ¥1,257 million ($15,117 thousand) at March
31, 2011 and ¥353 million at March 31, 2010.
5. Depreciation
Depreciation expense on property, plant and equipment for the years
ended March 31, 2011 and 2010 was as follows:
Millions of Yen
2011
2010

Depreciation expense ...............

¥20,003¥14,422

Thousands of
U.S. Dollars
2011$240,565

6. Advanced Depreciation
Accumulated advanced depreciation related to government grants
received has been deducted directly from the acquisition costs ofcertain tangible fixed assets (plant, machinery and equipment). Suchaccumulated depreciation at March 31, 2011 and 2010 is summarized
as follows:
Millions of Yen
2011
2010

Accumulated advanced
depreciation expense..............

¥1,301¥951

Thousands of
U.S. Dollars
2011$15,646

7. Contingent Liabilities
Contingent liabilities at March 31, 2011 and 2010 consisted of thefollowing:
Millions of Yen
2011
2010

As endorsers of trade notes receivable:
Endorsed to other..................
As guarantors of loans:	Muroran Environmental Plant
Service Co., Ltd. .................
Gotsu Wind Power Co., Ltd. ....
Meiko Co., Ltd.......................
	Uncollected receivables inleasing companies................
Medical Corporation Bokoi.....
Employees and other.............
		 Total....................................

¥    78¥    72

Thousands of
U.S. Dollars
2011

8. Short-Term Borrowings and Long-Term Debt
All short-term borrowings, with interest at annual rates ranging from
0.64% to 1.975% at March 31, 2011 and 0.63% to 4.625% at March
31, 2010, were unsecured.
Long-term debt at March 31, 2011 and 2010 was as follows:

Loans from banks andinsurance companies withinterest at annual rates ranging
from 0.22% to 2.26%..............
Less those maturing within
one year..................................
Lease obligations.......................
Less those maturing within
one year..................................
0.92% straight bonds,
due 2010.................................
Less those maturing within
one year..................................
0.48% straight bonds,
due 2015.................................
Long-term indebtedness
reflected in the consolidatedbalance sheets........................

591
1,881
4

7,072
21,13012

32—
498¥2,956

64
1,500
633
¥4,746385—
5,989$35,550¥28,837$459,050

(635)
4,396

(667)
5,882

(7,637)52,868(1,800)(2,026)(21,648)—

10,000——(10,000)—

10,000—120,265¥50,130¥32,025$602,886

Long-term debt

Lease obligations

Year ending March 31,

Millions of Thousands of
Yen
U.S. Dollars

Millions of Thousands of
Yen
U.S. Dollars

2012....................................
2013....................................
2014....................................
2015....................................
2016....................................
2017 and thereafter..............

¥   635 $   7,637
13,670 164,402
10,370 124,714
2,550
30,667
10,830 130,247
115
1,383

¥1,800 $21,648
1,384 16,645
645
7,757
345
4,149
145
1,744
74
890

The assets pledged as collateral for long-term debt at March 31, 2011
and 2010 were as follows:
Millions of Yen
2011
2010

Cash on hand and in banks.......
Notes receivable-trade..............
Property, plant and equipment,
at net book value.....................

Thousands of
U.S. Dollars
2011¥    28—¥  206102$    337
—

2,563

4,533

30,824

9. Liquidation of Accounts Receivable
Accounts receivable transferred to others for liquidation at March 31,
2011 and 2010 are summarized as follows:
Millions of Yen
2011
2010

Accounts receivable..................

30¥38,170

The aggregate annual maturities of long-term debt and lease obligations
subsequent to March 31, 2011 are summarized as follows:$   938

588
1,757
1

Thousands of
U.S. Dollars
2011

Millions of Yen
2011
2010

¥6,017¥5,933Thousands of
U.S. Dollars
2011$72,36310. Research and Development Expenses
Research and development expenses included in manufacturing costs,
and selling, general and administrative expenses for the years ended
March 31, 2011 and 2010 were as follows:
Thousands of
U.S. Dollars
2011

Millions of Yen
2011
2010

Research and development
expenses.................................

¥4,487$53,963¥4,141

11. Other Income (Expenses) — Other, Net
The details of “Other, net” in “Other income (expenses)” for the years
ended March 31, 2011 and 2010 were as follows:
Thousands of
U.S. Dollars
2011

Millions of Yen
2011
2010

Gain on sales of raw
materials and supplies.............
Gain on contract cancellation....
Amortization of negative
goodwill...................................
Bond issuance expenses...........
Amortization of net
retirement benefit obligation attransition.................................
Foreign exchange losses...........
Provision for warranties forcompleted construction...........
Gain on sales of property,
plant and equipment................
Loss on sales or disposal ofproperty, plant andequipment...............................
Loss on write-downs ofinvestment securities...............
Impairment loss.........................
Loss on abandonment ofinvestments.............................
Loss on adjustment for changein accounting principal for
asset retirement obligations.....
Other, net..................................
Total....................................

¥  3081,073¥   214—$ 3,704
12,904

71
(50)

—
—

854
(601)

—
(308)

(693)
—

—
(3,704)

(620)

(338)

(7,456)

16

12

192

(482)

(847)

(5,797)

(340)
(197)

(105)
—

(4,089)(2,369)

—

(680)

—

(236)
448
¥ (316)—105¥(2,333)(2,838)5,388$ (3,800)

12. Loss on Impairment of Fixed Assets
Loss on impairment of fixed assets recognized by the Company and acertain consolidated subsidiary for the year ended March 31, 2011 was
as follows:
Location

Chofu-shi, Tokyo prefecture
and other
Yokohama-shi, Kanagawa
prefecture and other(a subsidiary engaged in the
Industrial Machinery Products)

Use

Classification

Idle Assets

Buildings, Structures,Land and other

OperatingAssetsBuildings and Land

The Company and its consolidated subsidiaries group their assets byclassifying them into the smallest independent cash flow generating
units possible on the basis of managerial accounting, whereas idle
assets are grouped on an individual basis.
Regarding the above assets, the Companies marked down thebook value of asset groups where there had been a significant decline inprofitability and market price to the recoverable amount.
The resulting impairment loss for the year ended March 31, 2011 was
as follows:
Classification

Buildings...................................
Structures..................................
Equipment.................................
Land..........................................
Total....................................

Millions of Yen

Thousands of
U.S. Dollars

¥146
0
0
50
¥197

$1,75600601$2,369With respect to operating assets, the Companies principally use value
in use for calculating the recoverable amount, whereas idle assets arerecorded at net realizable value. The discount rate used for computing
the value in use was mainly 6.6% for the year ended March 31, 2011.
13. Other Comprehensive Income
The following table presents components of other comprehensive
income for the year ended March 31, 2010:
Year ended March 31, 2010

Unrealized holding gain (loss)
on securities............................
Unrealized gain (loss) fromhedging instruments................
Translation adjustments.............
Total other comprehensive
income....................................
Total comprehensive income
attributable to:	Shareholders of The Japan
Steel Works, Ltd. .............
Minority interests.................

Millions of Yen

Thousands of
U.S. Dollars¥ 6,818$ 81,996

165
11

1,984
132

¥ 6,995$ 84,125¥24,52223$294,913
277(Additional Information)
Effective the year ended March 31, 2011, the Company and its
domestic consolidated subsidiaries adopted the “Accounting Standard
for Presentation of Comprehensive Income” (ASBJ Statement No. 25,
June 30, 2010).
However, the amounts of accumulated other comprehensive
income and total accumulated other comprehensive income in theaccompanying balance sheet at March 31, 2010 correspond to theamounts for valuation and translation adjustments and total valuationand translation adjustments, respectively.

31

14. S upplementary Information for Consolidated Statements of
Changes in Net Assets
Year ended March 31, 2011(a) Information regarding the number and type of shares issued andtreasury stock:

Year ended March 31, 2010(a) Information regarding the number and type of shares issued andtreasury stock:
Number of shares

Number of shares

Shares issued:
Common stock.......
Treasury stock:	Common stock(Notes 1 and 2)......

Year ended
March 31,2010

Increaseduringthe year

371,463,036—

287,708

15,277

Decreaseduringthe year—

3,751

Year ended
March 31,2011

371,463,036

299,234

Notes 1: T he increase in treasury stock — common stock of 15,277
was due to the acquisition of fractional shares of less than one
unit.
2: T
 he decrease in treasury stock — common stock of 3,751
was due to sales of fractional shares of less than one unit.
(b) Dividends(1) Dividends paid to shareholders
		 (i) Resolution:Annual general meeting ofshareholders held on June 25, 2010
		 Type of shares:
Common stock		Total amount ofdividends:¥2,227 million ($26,783 thousand)		 Dividends per share:¥6 ($0.072)
		 Cut-off date:
March 31, 2010
		 Effective date:June 28, 2010		(ii) Resolution:

		 Type of shares:		Total amount ofdividends:
		 Dividends per share:
		 Cut-off date:		 Effective date:Meeting of Board of Directors held on
November 8, 2010
Common stock¥2,227 million ($26,783 thousand)¥6 ($0.072)
September 30, 2010
December 6, 2010(2)	Dividends of which the cut-off date was in the year ended March
31, 2011, but the effective date is in the following fiscal year
Resolution:Annual general meeting ofshareholders held on June 24, 2011
Type of shares:
Common stockTotal amount ofdividends:¥2,226 million ($26,771 thousand)
Dividends per share:¥6 ($0.072)
Cut-off date:
March 31, 2011
Effective date:June 27, 2011	Source of dividends:
Retained earnings

32

Shares issued:
Common stock.......
Treasury stock:	Common stock(Notes 1 and 2)......

Decreaseduringthe yearYear ended
March 31,2010

Year ended
March 31,
2009

Increaseduringthe year

371,463,036——

371,463,036

261,340

28,8682,500

287,708

Notes 1: The increase in treasury stock — common stock of 28,868
was due to the acquisition of fractional shares of less than oneunit.
2: The decrease in treasury stock — common stock of 2,500
was due to sales of fractional shares of less than one unit.
(b) Dividends(1) Dividends paid to shareholders
		 (i) Resolution:Annual general meeting ofshareholders held on June 29, 2009
		 Type of shares:
Common stock		Total amount ofdividends:¥2,227 million
		 Dividends per share:¥6
		 Cut-off date:
March 31, 2009
		 Effective date:June 30, 2009		(ii) Resolution:

		 Type of shares:		Total amount ofdividends:
		 Dividends per share:
		 Cut-off date:		 Effective date:Meeting of Board of Directors held on
November 2, 2009
Common stock¥2,227 million¥6
September 30, 2009
December 7, 2009(2)	Dividends of which the cut-off date was in the year ended March
31, 2010, but the effective date was in the following fiscal year
Resolution:Annual general meeting ofshareholders held on June 25, 2010
Type of shares:
Common stockTotal amount ofdividends:¥2,227 million
Dividends per share:¥6
Cut-off date:
March 31, 2010
Effective date:June 28, 2010
	Source of dividends:
Retained earnings

15. Cash Flow Information(a) Cash and cash equivalents
The reconciliation between cash and cash equivalents in the accompanying consolidated statements of cash flows and cash on hand and inbanks in the accompanying consolidated balance sheets at March 31,
2011 and 2010 are summarized as follows:
Millions of Yen
2011
2010

Cash on hand and in banks
in the consolidatedbalance sheets........................
Investment with a maturity of
three months or less from thedate of acquisition...................
Time deposits with maturities ofmore than three months..........
Cash and cash equivalents inthe consolidated statements ofcash flow.................................

Thousands of
U.S. Dollars
2011¥41,187¥45,646$495,334

44

50

529

(116)

(93)

(1,395)¥41,116¥45,603$494,480

Year ending March 31,

2012.........................................
2013 and thereafter...................
Total....................................

Millions of Yen
2011
2010

Thousands of
U.S. Dollars
2011

Lease assets.............................

¥  590¥1,088$ 7,096

Lease obligations.......................

621

1,145

7,468

Buildings and structures............

863—

10,379Machinery and equipment.........

14

—

168

Asset retirement obligations.......

1,132

—

13,614(c) Summary of assets acquired and liabilities assumed through theacquisition of shares of Meiki Co., Ltd. for the year ended March 31,
2010, acquisition costs and net disbursement
Millions of Yen¥4,364
2,175(3,223)(1,340)
(358)
(968)
(122)
527
(1,281)¥  754

Millions of Yen

Thousands of
U.S. Dollars¥2,403
7,145¥9,548$ 28,900
85,929$114,829

Year ended March 31, 2010
Future minimum lease payments subsequent to March 31, 2010 under
non-cancelable operating leases are summarized as follows:Year ending March 31,(b) Significant transactions without cash flows
Assets and liabilities regarding finance lease transactions and asset
retirement obligations that have been recorded by the Company and its
domestic consolidated subsidiaries at March 31, 2011 and 2010 wereas follows:

Current assets...........................
Noncurrent assets.....................
Current liabilities........................
Noncurrent liabilities...................
Negative goodwill......................
Minority interests.......................
Company’s interest prior to
the date of acquisition.............
Acquisition costs of
Meiki Co., Ltd..........................
Cash and cash equivalents(Meiki Co., Ltd.).......................
Net proceeds from acquisitionof Meiki Co., Ltd......................

16. Leases
Year ended March 31, 2011
Future minimum lease payments subsequent to March 31, 2011 under
non-cancelable operating leases are summarized as follows:

2011.........................................
2012 and thereafter...................
Total....................................

Millions of Yen¥1,0272,138¥3,166

17. Financial Instruments
Overview
Year ended March 31, 2011(a) Policy for financial instruments
In consideration of plans for capital investment, the Company andits consolidated subsidiaries (collectively, the “Group”) invest funds
provided by operating cash flows. The Group uses bond issuancesand bank borrowings in order to raise additional funds, if needed. The
Company manages temporary cash surpluses through low-risk financial
assets. The Company uses derivatives for the purpose of reducing risks
and does not enter into derivatives for speculative or trading purposes.
(b) Types of financial instruments and related risk
Trade receivables — trade notes and accounts receivable — areexposed to credit risk in relation to customers. In addition, the Company
is exposed to foreign currency exchange risk arising from receivables
denominated in foreign currencies. The foreign currency exchange risks
deriving from the trade receivables denominated in foreign currencies
are hedged by forward foreign exchange contracts, if needed.
Investment securities are exposed to market risk. Those securities
are composed of mainly the shares of common stock of companies
with which the Company has business relationships.
Trade payables — trade notes and accounts payable — havepayment due dates within one year. Although the Company is exposed
to foreign currency exchange risk arising from those payables denominated in foreign currencies, forward foreign exchange contracts arearranged to reduce the risk, if needed.
Loans payables and bonds are used to raise funds mainly in connection with capital investments. The repayment dates of the long-term
debts extend up to six years from the balance sheet date. Long-term
debt with variable interest rates is exposed to interest rate fluctuation
risk. However, to reduce such risk and fix interest expense for long-term
debt with variable rates, the Company utilizes interest rate swap
transactions as a hedging instrument.
Regarding derivatives, the Company enters into forward foreignexchange contracts to reduce the foreign currency exchange risk arisingfrom the receivables and payables denominated in foreign currencies.
The Company also enters into interest rate swap transactions to reduce
the fluctuation risk of interest payable for long-term debt with variable
rates.
Information regarding the method of hedge accounting, hedging
instruments and hedged items, hedging policy, and the assessment of
the effectiveness of hedging activities is found in Note 2 (p).

33

(c) Risk management for financial instruments(i)	Monitoring of credit risk (the risk that customers or counterparties
may default)
In accordance with the internal policies of the Company for
managing credit risk arising from receivables, each related divisionmonitors credit worthiness of their main customers periodically,
and monitors due dates and outstanding balances by individual
customer. In addition, the Company is making efforts to identify
and mitigate risks of bad debts from customers who are having
financial difficulties. The consolidated subsidiaries also manage
credit risk using the Company’s internal policies and methods.
The Company also believes that the credit risk of derivatives
is insignificant as it enters into derivative transactions only withfinancial institutions which have a high credit-rating.
(ii)	Monitoring of market risk (the risk arising from fluctuations inforeign exchange rates, interest rates and others)
For trade receivables and payables denominated in foreign
currencies, the Company identifies the foreign currency exchange
risk for each currency on a monthly basis and enters into forward
foreign exchange contracts to hedge such risk. In order tomitigate the interest rate risk for loans payable bearing interest at
variable rates, the Company may also enter into interest rate swap
transactions.
For investment securities, the Company periodically reviews
the fair values of such financial instruments and the financial
position of the issuers. In addition, the Company continuously
evaluates whether securities other than those classified as
held-to-maturity should be maintained taking into account their fairvalues and relationships with the issuers.
In conducting derivative transactions, the division in chargeof each derivative transaction follows the internal policies, which
set forth delegation of authority. Monthly reports including actual
transaction data are submitted to top management for theirreview. The consolidated subsidiaries also conduct derivativetransactions using the Company’s internal policies.
(iii)	Monitoring of liquidity risk (the risk that the Company may not beable to meet its obligations on scheduled due dates)
Based on the report from each division, the Company preparesand updates its cash flow plans in a timely basis to manage liquidity risk. The consolidated subsidiaries manage the liquidity risk
using cash flow plans and report to the Company periodically.
(d) Supplementary explanation of the estimated fair value of financial
instruments
The fair value of financial instruments is based on their quoted market
price, if available. When there is no available quoted market price available, fair value is reasonably estimated. Since various assumptions andfactors are reflected in estimating the fair value, different assumptions
and factors could result in different fair value. In addition, the notionalamounts of derivatives in Note 19 Derivative Transactions-Supplemental
Explanation on Quantitative Information are not necessarily indicative of
the actual market risk involved in derivative transactions.
Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance
sheet as of March 31, 2011 and estimated fair value are shown in thefollowing table. The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Pleaserefer to Note (ii) below).

34

Year ended March 31, 2011
Millions of Yen

AssetsCash on hand and in banks......
	Trade notes and accounts
receivable...............................
Securities:		Other securities withmaturity...............................
		 Other securities.....................
Total assets.................................
Liabilities	Trade notes and accounts
payable..................................
Short-term borrowings.............
	Current portion of long-term
debt . .....................................
	Bonds......................................
Long-term debt........................
Total liabilities..............................
Derivatives (*)...............................

Carrying
amountEstimated
fair value

Difference¥ 41,187¥ 41,187¥   —

45,19745,189(8)

4425,977¥112,407

44
25,977¥112,399——¥   (8)¥ 45,013
13,120¥ 45,013
13,120

¥   —
—

635
636
10,0009,865
37,53537,515¥106,303 ¥106,151¥    (171) ¥    (171)

1
(134)
(19)
¥(151)¥   —

Thousands of U.S. Dollars
Carrying
amountAssetsCash on hand and in banks......
	Trade notes and accounts
receivable...............................
Securities:		Other securities withmaturity...............................
		 Other securities.....................
Total assets.................................
Liabilities	Trade notes and accounts
payable..................................
Short-term borrowings.............
	Current portion of long-term
debt . .....................................
	Bonds......................................
Long-term debt........................
Total liabilities..............................
Derivatives (*)...............................

Estimated
fair value

Difference$  495,334 $  495,334$    —

543,560

543,464

(96)

529
529
312,411
312,411$1,351,858 $1,351,762——$    (96)$  541,347 $  541,347
157,787
157,787$    —
—

7,637
7,649
120,265
118,641
451,413451,173$1,278,449 $1,276,621$     (2,057) $     (2,057)

12(1,612)(229)$(1,816)$    —(*) The value of assets and liabilities arising from derivatives is shownat net value, and with the amount in parentheses representing net
liability position.
(i) Method to determine the estimated fair value of financial instruments
and other matters related to securities and derivative transactions.
AssetsCash on hand and in banks
The carrying amount is used for bank deposits without maturities,
because the fair value approximates the carrying value. The fair value

of time deposits in banks with maturities is calculated based on thepresent value of the total principal and interest discounted at a rate
supposing a newly made deposit.
Trade notes and accounts receivables
These fair values are calculated by categories of the remaining
periods of the receivables based on the present value using discountrates determined by the period to maturity and credit risk.
Securities
The carrying amount is used for other securities with maturities,
because the fair value approximates the carrying amount.
		 Quoted market price is used for other securities.
Liabilities
Trade notes and accounts payable and short-term borrowings
The carrying amount is used for these items because the fair value
approximates the carrying amount.
Current portion of long-term debt, bonds and long-term debt
These fair values are calculated by applying a discount rate, based on
the assumed interest rate if similar new debt is issued, to the total of
the principal and interest. The current portion of long-term debt andlong-term debt with variable interest rates are subject to the special
treatment of interest rate swaps and is calculated by applying a
discount rate, based on the assumed interest rate if similar new debt
is issued, to the total of the principal and interest including that of theinterest rate swap.
Derivative Transactions
Please refer to Note 19, Derivative Transactions, of these notes to theconsolidated financial statements.

Thousands of U.S. Dollars
Due after
one year
Due in one through five
years
year or less

Cash on hand and in banks......... $  495,334 $      —Trade notes and accounts
receivable..................................
533,470 10,090
Securities:
	Other securities withmaturities...............................
529—
Total............................................ $1,029,345 $10,090

Unlisted stocks..........................

¥2,257$27,144

Because the fair values of these financial instruments are extremely
difficult to determine, given that they do not have quoted market prices
and future cash flows cannot be estimated, they are not included in“Securities” in the preceding table.
(iii) Redemption schedule for receivables and securities with maturities at
March 31, 2011.
Year ended March 31, 2011
Millions of Yen
Due after
one year
Due in one through five
years
year or less

Cash on hand and in banks.........
Trade notes and accounts
receivable..................................
Securities:
	Other securities withmaturities...............................
Total............................................

Due after
five years¥41,187¥ —¥—44,358839—

44¥85,590

—
¥839

—
¥—

—

—
$—

Millions of Yen

Due in 1 year or less....................
Due after 1 year through2 years......................................
Due after 2 years through3 years......................................
Due after 3 years through4 years......................................
Due after 4 years through5 years......................................
Due after 5 years.........................

Bonds

Long-term
loans

Lease
obligations¥      —¥   635¥1,800—13,6701,384—

10,370

645

—

2,550

345

10,000—10,830115

14574

Thousands of U.S. Dollars

2011
Thousands of U.S.
Dollars$—(iv) The redemption schedule for long-term debt
Year ended March 31, 2011(ii) Financial instruments for which it is extremely difficult to determine
the fair value

Millions of Yen

Due after
five years

Due in 1 year or less....................
Due after 1 year through2 years......................................
Due after 2 years through3 years......................................
Due after 3 years through4 years......................................
Due after 4 years through5 years......................................
Due after 5 years.........................

Bonds

Long-term
loans

Lease
obligations$      —$   7,637$21,648—

164,402

16,645—

124,714

7,757—

30,667

4,149

120,265—

130,247
1,383

1,744
890

Overview
Year ended March 31, 2010(a) Policy for financial instruments
In consideration of plans for capital investment, the Company and its
consolidated subsidiaries invests funds provided by operating cash
flows. The Group uses bond issuances and bank borrowings in order
to raise additional funds, if needed. The Company manages temporary
cash surpluses through low-risk financial assets. The Company uses
derivatives for the purpose of reducing risk and does not enter into
derivatives for speculative or trading purposes.
(b) Types of financial instruments and related risk
Trade receivables — trade notes and accounts receivable — areexposed to credit risk in relation to customers. In addition, the Company
is exposed to foreign currency exchange risk arising from receivables
denominated in foreign currencies. The foreign currency exchange risks
deriving from the trade receivables denominated in foreign currencies
are hedged by forward foreign exchange contracts, if needed.
35

Investment securities are exposed to market risk. Those securities
are composed of mainly the shares of common stock of companies
with which the Company has business relationships.
Trade payables — trade notes and accounts payable — havepayment due dates within one year. Although the Company is exposed
to foreign currency exchange risk arising from those payables denominated in foreign currencies, forward foreign exchange contracts arearranged to reduce the risk, if needed.
Loans payables and bonds are used to raise funs mainly in connection with capital investments. The repayment dates of the long-term
debt extend up to five years from the balance sheet date. Long-term
debt with variable interest rates is exposed to interest rate fluctuation
risk. However, to reduce such risk and fix interest expense for long-term
debt with variable rates, the Company utilizes interest rate swap
transactions as a hedging instrument.
Regarding derivatives, the Company enters into forward foreignexchange contracts to reduce the foreign currency exchange risk arisingfrom the receivables and payables denominated in foreign currencies.
The Company also enters into interest rate swap transactions to reduce
the fluctuation risk of interest payable for long-term debt with variable
rates.
Information regarding the method of hedge accounting, hedging
instruments and hedged items, hedging policy, and the assessment of
the effectiveness of hedging activities is found in Note 2 (p).

(iii)	Monitoring of liquidity risk (the risk that the Company may not beable to meet its obligations on scheduled due dates)
Based on the report from each division, the Company preparesand updates its cash flow plans in a timely basis to manage liquidity risk. The consolidated subsidiaries manage the liquidity risk
using cash flow plans and report to the Company periodically.
(d) Supplementary explanation of the estimated fair value of financial
instruments
The fair value of financial instruments is based on their quoted market
price, if available. When there is no available quoted market price available, fair value is reasonably estimated. Since various assumptions andfactors are reflected in estimating the fair value, different assumptions
and factors could result in different fair value. In addition, the notionalamounts of derivatives in Note 19 Derivative Transactions-Supplemental
Explanation on Quantitative Information are not necessarily indicative of
the actual market risk involved in derivative transactions.
Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance
sheet as of March 31, 2010 and estimated fair value are shown in thefollowing table. The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Pleaserefer to Note (ii) below).
Year ended March 31, 2010(c) Risk management for financial instruments(i)	Monitoring of credit risk (the risk that customers or counterparties
may default)
In accordance with the internal policies of the Company for
managing credit risk arising from receivables, each related divisionmonitors credit worthiness of their main customers periodically,
and monitors due dates and outstanding balances by individual
customer. In addition, the Company is making efforts to identify
and mitigate risks of bad debts from customers who are having
financial difficulties. The consolidated subsidiaries also manage
credit risk using the Company’s internal policies and methods.
The Company also believes that the credit risk of derivatives
is insignificant as it enters into derivative transactions only withfinancial institutions which have a high credit-rating.
(ii)	Monitoring of market risk (the risk arising from fluctuations inforeign exchange rates, interest rates and others)
For trade receivables and payables denominated in foreign
currencies, the Company identifies the foreign currency exchange
risk for each currency on a monthly basis and enters into forward
foreign exchange contracts to hedge such risk. In order tomitigate the interest rate risk for loans payable bearing interest at
variable rates, the Company may also enter into interest rate swap
transactions.
For investment securities, the Company periodically reviews
the fair values of such financial instruments and the financial
position of the issuers. In addition, the Company continuously
evaluates whether securities other than those classified as
held-to-maturity should be maintained taking into account their fairvalues and relationships with the issuers.
In conducting derivative transactions, the division in chargeof each derivative transaction follows the internal policies, which
set forth delegation of authority. Monthly reports including actual
transaction data are submitted to top management for theirreview. The consolidated subsidiaries also conduct derivativetransactions using the Company’s internal policies.

36

Millions of Yen

AssetsCash on hand and in banks......
	Trade notes and accounts
receivable...............................
Securities:		Other securities withmaturity...............................
		 Other securities.....................
Total assets.................................
Liabilities	Trade notes and accounts
payable..................................
Short-term borrowings.............
	Current portion of long-term
debt . .....................................
	Bonds with maturity within
one year.................................
Long-term debt........................
Total liabilities..............................
Derivatives (*)...............................

Carrying
amountEstimated
fair value

Difference¥ 45,646¥ 45,646¥ —42,43142,424(6)

50
30,148¥118,27650
30,148¥118,269——¥   (6)¥ 36,232
13,722¥ 36,232
13,722

¥ —
—

667

669

1

10,00010,012
28,17028,609¥ 88,792 ¥ 89,246¥    (358) ¥    (358)

12
439
¥453
¥ —

(*) The value of assets and liabilities arising from derivatives is shownat net value, and with the amount in parentheses representing net
liability position.
(i) Method to determine the estimated fair value of financial instruments
and other matters related to securities and derivative transactions
AssetsCash on hand and in banks
The carrying amount is used for bank deposits without maturities,
because the fair value approximates the carrying value. The fair valueof time deposits in banks with maturities is calculated based on thepresent value of the total principal and interest discounted at a rate

supposing a newly made deposit.
Trade notes and accounts receivables
These fair values are calculated by categories of the remaining
periods of the receivables based on the present value using discountrates determined by the period to maturity and credit risk.
Securities
The carrying amount is used for other securities with maturities,
because the fair value approximates the carrying amount.
Quoted market price is used for other securities.
Liabilities
Trade notes and accounts payable and short-term borrowings
The carrying amount is used for these items because the fair value
approximates the carrying amount.
Current portion of long-term debt, bonds with maturity within
one year and long-term debt
These fair values are calculated by applying a discount rate, based on
the assumed interest rate if similar new debt is issued, to the total of
the principal and interest. The current portion of long-term debt andlong-term debt with variable interest rates are subject to the special
treatment of interest rate swaps and is calculated by applying a
discount rate, based on the assumed interest rate if similar new debt
is issued, to the total of the principal and interest including that of theinterest rate swap.
Derivative Transactions
Please refer to Note 19, Derivative Transactions, of these notes to theconsolidated financial statements.
(ii) Financial instruments for which it is extremely difficult to determine
the fair value(iv) The redemption schedule for long-term debt
Year ended March 31, 2010
Millions of Yen

Due in 1 year or less....................
Due after 1 year through2 years......................................
Due after 2 years through3 years......................................
Due after 3 years through4 years......................................
Due after 4 years through5 years......................................
Due after 5 years.........................

Bonds

Long-term
loans

Lease
obligations¥10,000¥   667¥2,026

—

635

1,674

—

13,6701,258—

10,370

525

—
—

2,550
945

247
149

Effective the year ended March 31, 2010, the Company and its domestic consolidated subsidiaries adopted the “Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10, March 10, 2008) andthe “Implementation Guidance on Accounting Standard for Financial
Instruments” (ASBJ Guidance, No. 19, March 10, 2008).
18. Securities
When their fair values have declined by 50% or more, impairment losses
are recorded on those securities. When their fair values have declined
by 30% up to 50%, impairment losses are recorded on those securities
on individual basis to the values are considered to be recoverable
individually.
March 31, 2011(a) Held-to-maturity securities:
Millions of Yen

Millions of Yen
2010

Unlisted stocks..........................

¥2,217

Because the fair values of these financial instruments are extremely
difficult to determine, given that they do not have quoted market prices
and future cash flows cannot be estimated, they are not included in“Securities” in the preceding table.

Fair value does not exceed
carrying amount:
Other........................................
		
Total...............................

Fair value

Carrying
amountUnrealized
gain (loss)

¥44
¥44

¥44
¥44

¥—
¥—

Thousands of U.S. Dollars(iii) Redemption schedule for receivables and securities with maturities at
March 31, 2010.
Year ended March 31, 2010
Millions of Yen
Due after
one year
Due in one through five
years
year or less

Cash on hand and in banks.........
Trade notes and accounts
receivable..................................
Securities:
	Other securities withmaturities...............................
Total............................................

¥45,646¥ —Due after
five years¥—

41,849582—

50¥87,546

—
¥582

—
¥—

Fair value does not exceed
carrying amount:
Other........................................
		
Total...............................

Fair value

Carrying
amountUnrealized
gain (loss)

$529
$529

$529
$529

$—
$—

(b) Other securities:
Millions of Yen

Carrying amount exceeds
acquisition cost:
Stocks......................................
Carrying amount does notexceed acquisition cost:
Stocks......................................
		
Total...............................

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥10,043¥14,629¥4,58614,156¥24,199

10,726¥25,356(3,430)¥1,15637

Thousands of U.S. Dollars

Carrying amount exceeds
acquisition cost:
Stocks......................................
Carrying amount does notexceed acquisition cost:
Stocks......................................
		
Total...............................

Acquisition
cost

Carrying
amountUnrealized
gain (loss)$120,782$175,935$55,153

170,247$291,028

128,996$304,943(41,251)$13,903(b) Other securities:
Millions of Yen

Carrying amount exceeds
acquisition cost:
Stocks......................................
Carrying amount does notexceed acquisition cost:
Stocks......................................
		
Total...............................

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥15,699¥21,910¥6,211

8,832¥24,532

7,582¥29,492(1,250)¥4,960March 31, 2010(a) Held-to-maturity securities:
Millions of Yen

Fair value does not exceed
carrying amount:
Other........................................
		
Total...............................

Fair value

Carrying
amountUnrealized
gain (loss)

¥50
¥50

¥50
¥50

¥—
¥—

19. Derivative Transactions
Year ended March 31, 2011(a) Derivatives not subject to hedge accounting
None applicable(b) Derivatives subject to hedge accounting
The contract amounts or the amount corresponding to principal as specified by the contract as of the date of the closing of the consolidated
accounts is shown below by type of hedge accounting method.
(i) Currency-related transactions
Hedge accounting method

Allocation method

Hedge accounting method

Allocation method

Type of derivative

Foreign exchange forward contracts Notes and accounts receivable
Sell:
U.S. dollars........................................................................................
Euros................................................................................................
Foreign exchange forward contracts Notes and accounts payable
Buy:
U.S. dollars........................................................................................
Euros................................................................................................
Sterling pound...................................................................................

Type of derivative

Principal items hedged

Foreign exchange forward contracts Notes and accounts receivable
Sell:
U.S. dollars........................................................................................
Euros................................................................................................
Foreign exchange forward contracts Notes and accounts payable
Buy:
U.S. dollars........................................................................................
Euros................................................................................................
Sterling pound...................................................................................

Note: Calculation of fair value is based on the forward exchange rate.

38

Principal items hedged

Millions of Yen
Contract amount

Fair valueOver one year
¥ 3,641
341

¥197
29

¥151
(14)

¥10,163
1,045
283

¥ 49
—
—

¥  (2)
29
7

Thousands of U.S. Dollars
Contract amount
Fair valueOver one year
$ 43,788
4,101$2,369349$1,816(168)$122,225
12,5683,403$  589——$   (24)
349(84)

(ii) Interest-related transactions
Hedge accounting method

Special treatment forinterest rate swaps

Type of derivative

Principal items hedged

Receive/floating and pay/fixed

Hedge accounting method

Fair valueOver one year
Current portion of long-termborrowings
Long-term borrowings................

Special treatment forinterest rate swaps

Millions of Yen
Contract amountType of derivative

Principal items hedged¥23,180¥23,000(*)

Thousands of U.S. Dollars
Contract amount
Fair value

Receive/floating and pay/fixedOver one year
Current portion of long-termborrowings
Long-term borrowings................

$278,773$276,609(*)(*) Since interest rate swap contracts accounted for by the special treatment for interest rate swaps are treated together with the long-term borrowings subject to hedging, the estimated fair value of such interest rate swap contract is included in the estimated fair value of the corresponding long-term borrowings.
Note: C alculation of fair value is based on the stated price by financial institutions.
Year ended March 31, 2010(a) Derivatives not subject to hedge accounting
None applicable(b) Derivatives subject to hedge accounting
The contract amounts or the amount corresponding to principal as specified by the contract as of the date of the closing of the consolidated
accounts is shown below by type of hedge accounting method.
(i) Currency-related transactions
Hedge accounting method

Allocation method

Type of derivative

Principal items hedged

Foreign exchange forward contracts Notes and accounts receivable
Sell:
U.S. dollars........................................................................................
Euros................................................................................................
Foreign exchange forward contracts Notes and accounts payable
Buy:
U.S. dollars........................................................................................
Euros................................................................................................
Sterling pound...................................................................................

Millions of Yen
Contract amount

Fair valueOver one year
¥6,087129¥1,396—¥ (41)
5¥  1174,042
139¥    —
1
—

¥   0
(315)
(7)

Note: Calculation of fair value is based on the forward exchange rate.
(ii) Interest-related transactions
Hedge accounting method

Special treatment forinterest rate swaps

Type of derivative

Principal items hedged

Millions of Yen
Contract amount

Receive/floating and pay/fixed

Fair valueOver one year
Current portion of long-termborrowings
Long-term borrowings................

¥23,540¥23,360(*)(*) Since interest rate swap contracts accounted for by the special treatment for interest rate swaps are treated together with the long-term borrowings subject to hedging, the estimated fair value of such interest rate swap contract is included in the estimated fair value of the corresponding long-term borrowings.
Note: Calculation of fair value is based on the stated price by financial institutions.

39

20. Employees’ Retirement Benefit Plans
The following table sets forth the funded and accrued status of theplans, and the amounts recognized in the accompanying consolidatedbalance sheets at March 31, 2011 and 2010 for the Company’s and theconsolidated subsidiaries’ defined benefit pension plans:

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

Millions of Yen
2011
2010

Thousands of
U.S. Dollars
2011¥(28,507) ¥(28,685)
14,902
15,332$(342,838)
179,218(13,604)(13,352)(163,608)

—
5,980

—
6,219

—
71,918

554

694

6,663

(7,069)(6,438)(9,339)(8,520)¥ 2,270 ¥ 2,082(85,015)(112,315)$ 27,300

The components of retirement benefit expenses for the years ended
March 31, 2011 and 2010 are outlined as follows:
Millions of Yen
2011
2010

Service cost...............................
Interest cost..............................
Expected return onplan assets.............................
Amortization of net retirement
benefit obligation
at transition..............................
Amortization of actuarial loss.....
Amortization ofprior service cost.....................
Retirement benefit expenses.....

Thousands of
U.S. Dollars
2011¥1,759324¥1,653319$21,155
3,897

(213)

(190)

(2,562)

—
1,425

765
1,479

—
17,138140¥3,436140¥4,166

1,684$41,323

The assumptions used in accounting for the above plans were as
follows:
Discount rate...........................................
Expected rate of return on plan assets....

2011

2010

1.50%
1.50%

1.50%
1.50%

21. Income Taxes
The Company has omitted the reconciliation between the statutory tax
rate and the effective tax rates for financial statement purposes for theyears ended March 31, 2011 and 2010 because the difference between
these rates was less than 5%.
The significant components of the Company’s deferred tax assets
and liabilities at March 31, 2011 and 2010 were as follows:
Millions of Yen
2011
2010

Deferred tax assets:
Accrued enterprise taxes........
Accrued bonuses...................
	Unrealized gain on
intercompany transactions....
	Accrued retirement benefits
for employees.......................
	Accrued retirement benefits
for directors and corporate
auditors................................
	Loss on revaluation of
inventory items.....................
	Loss on revaluation offinancial instruments.............
Impairment loss......................
Depreciation...........................
	Amortization of deferredassets..................................
	Provision for warranties forcompleted construction........
	Provision for loss on
construction contracts..........
Asset retirement obligations....
	The percentage-ofcompletion method..............
PCB disposal expenses..........
Tax loss carry forwards..........
Deferred loss on hedges........
	Unrealized loss on
investment securities............
Other......................................
Gross deferred tax assets..........
Valuation allowance................
Total deferred tax assets...........
Deferred tax liabilities:	Reserve for advanced
depreciation.........................
	Reserve for special
depreciation.........................
Prepaid pension cost..............
	Disposal cost with asset
retirement obligations...........
	Unrealized gain on
investment securities............
Deferred gain on hedges........
	Reversal of allowance for
doubtful accounts................
Other......................................
Total deferred tax liabilities.........
Net deferred tax assets.............

40

Thousands of
U.S. Dollars
2011¥   6101,410¥   506
1,402$   7,336
16,957

816

677

9,814

4,994

4,032

60,060

131

128

1,575

748

501

8,996

282
138
1,158

289
—
1,144

3,391
1,660
13,927

151

211

1,816

693

502

8,334

2,076
555

737
—

24,967
6,675

727
—
2,640
21

—
162
2,306
199

8,743
—
31,750
253

1,386
298
18,843(3,747)
15,095505
319
13,626(3,363)
10,262

16,6693,584
226,615(45,063)
181,539

2,299

2,411

27,649

2,360
919

1,480
246

28,382
11,052

349

—

4,197

1,855
91

2,514
54

22,309
1,094

—
13
7,887
¥ 7,207

48
29
6,784
¥ 3,478—
156
94,853$ 86,675

23. Investment and Rental Properties
Effective the year ended March 31, 2010, the Company and its
domestic consolidated subsidiaries adopted the “Accounting Standard
for Investment and Rental Properties” (ASBJ Statement No. 20,
November 28, 2008) and the “Implementation Guidance on AccountingStandard for Investment and Rental Properties” (ASBJ Guidance, No.
23, November 28, 2008).
The Company has omitted the disclosure of Investment and Rental
Properties due to immateriality for the years ended March 31, 2011 and2010.

22. Asset Retirement Obligations
Year ended March 31, 2011
The following table presents the changes in asset retirement obligations
for the year ended March 31, 2011:

Balance at April 1, 2010............
Liabilities incurred due to theacquisition of property, plantand equipment........................
Accretion expense.....................
Balance at March 31, 2011.......

Millions of Yen

Thousands of
U.S. Dollars¥1,338$16,091

14
18¥1,371

168
216$16,488

24. Segment Information
Effective the fiscal year ended March 31, 2011, the Company has adopted the new accounting standards for disclosures about segments of anenterprise and related information. Segment information for the year ended March 31, 2010 has been restated in accordance with such accounting
standards for comparative purposes.
The reportable segments of the Group are components for which discrete financial information is available and whose operating results are
regularly reviewed by the Executive Committee to make decisions about resource allocation and to assess performance.
The Steel and Energy Products segment includes steel castings and forgings, steel plates, pressure vessels and steel structures. The Industrial
Machinery Products segment includes injection molding machines, film and sheet machinery, blow molding machines, magnesium injection molding
machines, waste treatment equipment and manufacturing equipment for electronic products. The Real Estate and Other Businesses segment
includes regional development.
Millions of Yen
Reportable segments

Year ended March 31, 2011

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales and operating income:Sales to third parties .....................................................
Intra-segment sales and transfers .................................
Total sales..........................................................................
Operating income ..............................................................

¥112,915
2,853
115,769¥ 25,059¥ 97,664
5,331
102,996¥   3,253¥ 2,349
3,075
5,425¥   715¥212,929
11,260224,190¥ 29,027¥      —
(11,260)(11,260)¥   (532)¥212,929—
212,929¥ 28,495

Assets, depreciation, and capital expenditures:
Total assets ..................................................................
Depreciation and amortization.......................................
Capital expenditures .....................................................

¥167,573
16,492
25,217¥ 89,477
3,042
1,309

¥13,610301
73¥270,661
19,837
26,600¥68,602165
121¥339,263
20,003
26,722Adjustments
andeliminations Consolidated

Thousands of U.S. Dollars
Reportable segments

Year ended March 31, 2011

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales and operating income:Sales to third parties .....................................................
Intra-segment sales and transfers .................................
Total sales..........................................................................
Operating income ..............................................................

$1,357,968
34,311
1,392,291$  301,371$1,174,552
64,1131,238,677$    39,122$ 28,250
36,981
65,244$   8,599$2,560,782
135,418
2,696,212$  349,092$       —(135,418)(135,418)$  (6,398)$2,560,782—
2,560,782$  342,694

Assets, depreciation, and capital expenditures:
Total assets ..................................................................
Depreciation and amortization.......................................
Capital expenditures .....................................................

$2,015,310
198,340
303,271$1,076,091
36,584
15,743$163,680
3,620
878$3,255,093
238,569
319,904$825,039
1,984
1,455

$4,080,132
240,565
321,371

Adjustments
andeliminations Consolidated

Notes 1: A djustments and eliminations for segment profit of ¥532 million ($6,398 thousand) include elimination of inter-segment profit on inventories
and corporate general administration expense which are not allocable to a reportable segment.
2: A djustments and eliminations for segment assets of ¥68,602 million ($825,039 thousand) include offset of inter-segment debt and credit,
and corporate assets which are not allocable to a reportable segment.
3: Adjustments and eliminations for depreciation and amortization of ¥165 million ($1,984 thousand) include depreciation and amortization forcorporate assets.
		 Adjustments and eliminations for capital expenditures of ¥121 million ($1,455 thousand) include capital expenditures for corporate
assets.
41

Millions of Yen
Reportable segments

Year ended March 31, 2010

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales and operating income:Sales to third parties .....................................................
Intra-segment sales and transfers .................................
Total sales..........................................................................
Operating income ..............................................................

¥121,921
3,170
125,091¥ 30,187¥77,356
4,496
81,852¥ 1,308¥ 2,4022,826
5,229¥   740¥201,680
10,493
212,174¥ 32,235¥      —
(10,493)(10,493)¥    (50)¥201,680—
201,680¥ 32,185

Assets, depreciation, and capital expenditures:
Total assets ..................................................................
Depreciation and amortization.......................................
Capital expenditures .....................................................

¥148,024
10,77230,256¥84,571
3,107
1,169

¥13,640324
47¥246,237
14,20331,472¥764,748
218
391¥322,986
14,422
31,864

Adjustments
andeliminations Consolidated

Notes 1: Adjustments and eliminations for segment profit of ¥50 million include elimination of inter-segment profit on inventories and corporate general administration expense, which are not allocable to a reportable segment.
2: A djustments and eliminations for segment assets of ¥76,748 million include offset of inter-segment debt and credit, and corporate assets
which are not allocable to a reportable segment.
3: Adjustments and eliminations for depreciation and amortization of ¥218 million include depreciation and amortization for corporate assets.
		 Adjustments and eliminations for capital expenditures of ¥391 million include capital expenditures for corporate assets.
(Additional Information)
Effective the year ended March 31, 2011, the Company adopted the “Accounting Standard for Disclosures about Segments of an Enterprise andRelated Information” (ASBJ Statement No. 17, March 27, 2009) and the “Implementation Guidance on Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information” (ASBJ Guidance, No. 20, March 21, 2008).
(a) Product and service information
Year ended March 31, 2011(c) Significant customer information
The Company has omitted the disclosure of significant customer
information for the year ended March 31, 2011 because no individual
customer accounted for more than 10% of net sales in the Consolidated
Statement of Income.

Millions of Yen

Sales to third parties....

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total¥112,915¥97,664¥2,349¥212,929

Thousands of U.S. Dollars
Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total$1,357,968 $1,174,552$28,250$2,560,782

Steel andEnergyProducts

Sales to third parties....

(d) Information on loss on impairment of fixed assets
Year ended March 31, 2011
Impairment loss on fixed assets by reportable segment for the year
ended March 31, 2011 is summarized as follows:
Millions of Yen
Steel andEnergyProducts

Impairment loss..........

(b) Geographical information(i) Sales

Steel andEnergyProducts

Millions of Yen
Japan

China

Korea

North
America

Other

Total

¥99,070¥29,836¥21,810¥10,248¥51,963¥212,929

Thousands of U.S. Dollars$1,191,461 $358,821

Korea

North
America$262,297$123,247

Other

Total

Impairment loss..........

¥95

$0

Industrial Real Estate Adjustments
andMachinery and Other
Products Businesses eliminations$1,215—$1,143

Total$2,369Year ended March 31, 2011
Millions of Yen$624,931 $2,560,782(ii)	Tangible assets
The Company has omitted the disclosure of tangible assets bycountry or region as of March 31, 2011 because the amount oftangible assets in Japan accounted for more than 90% of thecarrying amount in the Consolidated Balance Sheet.

42

¥197

—

(e) Amortization and balance of goodwill
The following table presents the amortization and balance of goodwill asof and for the year ended March 31, 2011 by reportable segment:

Year ended March 31, 2011

China

Total

¥101

Thousands of U.S. Dollars

Year ended March 31, 2011

Japan

¥0

Industrial Real Estate Adjustments
andMachinery and Other
Products Businesses eliminations

Steel andEnergyProducts

Amortization...............
Balance as ofMarch 31..................

Industrial Real Estate Adjustments
andMachinery and Other
Products Businesses eliminations

Total

¥—

¥90

¥—

¥—

¥90

—

64

—

—

64

Thousands of U.S. Dollars
Steel andEnergyProducts

Amortization...............
Balance as ofMarch 31..................

Industrial Real Estate Adjustments
andMachinery and Other
Products Businesses eliminations

Thousands of U.S. Dollars
Steel andEnergyProducts

Total

$—

$1,082$—$—$1,082

—

770

—

—

770

The following table presents the amortization and balance of negative
goodwill arising from business combinations on or prior to March
31, 2010 as of and for the year ended March 31, 2011 by reportablesegment:

Amortization...............
Balance as ofMarch 31..................

Industrial Real Estate Adjustments
andMachinery and Other
Products Businesses eliminations

Total

$—

$  854$—$—$  854

—

3,440

—

—

3,440

(f) Information on gain on negative goodwill
None applicable

Millions of Yen
Steel andEnergyProducts

Amortization...............
Balance as ofMarch 31..................

Industrial Real Estate Adjustments
andMachinery and Other
Products Businesses eliminations

Total

¥—

¥ 71

¥—

¥—

¥ 71

—

286

—

—

286

Year ended March 31, 2010(a) Business segment information
The Company and its consolidated subsidiaries operate in the following three business segments:• Operations in the steel products segment include steel castings and forgings, steel plates, pressure vessels and steel structures.
• Operations in the machinery products segment include injection molding machines, film and sheet machinery, blow molding machines, magnesium injection molding machines, waste treatment equipment and manufacturing equipment for electronic products.
• Operations in the regional development segment include the Fuchu Intelligent Park Project and the leasing of real estate.
Millions of Yen
Year ended March 31, 2010

Sales and operating income:Sales to third parties .....................................................
Intra-segment sales and transfers .................................
Net sales ......................................................................
Operating expenses . ....................................................
Operating income .........................................................
Total assets, depreciation expense, loss on impairment of
goodwill and capital expenditures:
Total assets ..................................................................
Depreciation expense ...................................................
Loss on impairment of goodwill ....................................
Capital expenditures .....................................................

Steel
Products

Machinery
Products

Regional
Development

Total¥101,736
1,653
103,390
71,749¥ 31,640¥98,164
1,210
99,37592,839¥ 6,535¥ 1,779
6
1,785
1,052
¥   733¥201,680
2,870
204,551
165,641¥ 38,909¥      —
(2,870)(2,870)3,853¥ (6,723)¥201,680—
201,680
169,494¥ 32,185¥145,635
10,564—30,251¥85,943
3,329
—
1,178

¥12,711305—
42¥244,290
14,199—31,472¥78,696
223—
391¥322,986
14,422—
31,864(b) Geographical segment information
The Company has omitted the disclosure of geographical segment
information for the year ended March 31, 2010 because net sales
and total assets in Japan accounted for more than 90% of those of all
segments.

Eliminations
and corporate Consolidated(c) Overseas sales information
Overseas sales, which include export sales of the Company and its
domestic consolidated subsidiaries, and sales (other than exports toJapan) of its overseas consolidated subsidiaries, for the year ended
March 31, 2010 is summarized as follows:
Millions of Yen
East Asia

Overseas sales...................
Consolidated net sales.......
Overseas sales as apercentage of consolidated
net sales (%)......................

North
America

Other

Total

¥45,013 ¥20,256 ¥28,633 ¥ 93,903¥201,680

22.3

10.0

14.2

46.6

43

25. Shareholders’ Equity
The Corporation Law of Japan provides that an amount equal to 10%of the amount to be disbursed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve and the legal reserve
equals 25% of the capital stock account. Such distributions can bemade at any time by resolution of the meeting of shareholders, or by the
Board of Directors if certain conditions are met.

26. Amounts per Share
Net income per share is calculated based on the net income available
for distribution to shareholders of common stock and the weightedaverage number of shares of common stock outstanding during theyear. Net assets per share are calculated based on the number ofshares of common stock outstanding at year end. Amounts per shareat March 31, 2011 and 2010 and for the years then ended were as
follows:Yen

Net income................................
Net assets.................................

44

2011

2010

U.S. Dollars
2011¥ 44.54322.98¥ 47.22296.13$0.54
3.88

Report of Independent Auditors

45

Corporate Directory
Stock Information

Corporate Data

Authorized Shares

Trade Name

1,000,000,000 shares

The Japan Steel Works, Ltd.

Issued and Outstanding Shares

Head Office371,463,036 shares
41,423Gate City Ohsaki-West Tower,
11-1, Osaki 1-chome,
Shinagawa-ku, Tokyo, Japan

Stock Listings

Foundation

Shareholders

Tokyo, Osaka, Nagoya, Fukuoka and Sapporo

November 1, 1907

Transfer Agent and Registrar

Paid-in Capital

The Chuo Mitsui Trust and Banking Co., Ltd.
33-1, Shiba 3-chome, Minato-ku,
Tokyo, Japan¥19,694 million

Employees

Major Shareholders (holding %)Auditor

2,062 (Consolidated 4,880)

Japan Trustee Services Bank, Ltd.
(Trust Account). .................................................... 5.11%
The Master Trust Bank of Japan, Ltd.
(Trust Account). .................................................... 4.73%
Sumitomo Mitsui Banking Corp.............................. 3.38%
The Chuo Mitsui Trust & Banking Co., Ltd.. ........... 2.96%
Mitsui Sumitomo Insurance Co., Ltd.. .................... 2.38%
Mitsui Life Insurance Co., Ltd................................. 2.27%
STATE STREET BANK AND TRUST COMPANY..... 1.36%
Hitachi, Ltd.............................................................. 1.36%
Mitsubishi Heavy Industries, Ltd............................. 1.36%
BNP-PARIBAS SECURITIES SERVICESPARIS/JASDEC FRENCH RESIDENTS................. 1.35%

Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.,
2-3, Uchisaiwai-cho 2-chome,
Chiyoda-ku, Tokyo, Japan(as of March 31, 2011)

JSW’s Stock Prices
2,000

Stock prices (¥)

Tokyo stock price index (TOPIX) (Points)

1,500

1,000

1,000

500

500

0

100,000

Trading volumes (Thousands of shares)

50,00002010/4

46

1,500

5

6

7

8

9

10

11

12

2011/1

2

3

Offices & Plants★ Düsseldorf Office

Japan Steel Works America, Inc.
Beijing Office★ Teheran Office★

★
★

★ ★ New York Office (Head Office)Detroit Office★ Head Office

Japan Steel Works India Private Limited Shanghai Office
Singapore Office ★

ProfileDomestic
Head Office
Gate City Ohsaki-West Tower, 11-1, Osaki
1-chome, Shinagawa-ku, Tokyo 141-0032
Phone: +81-3-5745-2001
Facsimile: +81-3-5745-2025

Founded in 1907 in Muroran, Hokkaido — the center
off steell productiond i ini JapanJ— The
Th Japan
J
Steel
S l
Works, Ltd. began as a joint venture with Britain’s Sir
W.G. Armstrong, Whitworth & Co., Ltd., and Vickers
Sons and Maxim, Ltd. with the goal of domestic
weapons production in Japan.
After World War II, the Company turned its sophisticated technologies and considerable experienceto the task of meeting peacetime needs. From steel
manufacturing and machinery development, to
new business fields such as automobiles, electricalequipment, information equipment, as well as heavy
industries such as electricity, steel, shipbuilding, andpetrochemicals, the Company widened its businesshorizons, and began to earn a worldwide reputation
as an integrated producer of steel materials andmanufacturer of machinery.
At present, meeting the needs of IT-relatedindustries, such as information and communication,
JSW’s global activities stretch beyond its existing
fields to encompass the development of such cuttingedge technologies as new energy, natural energy,
new materials, optics, and electronics. The Company
is also active in new fields such as environmental
businesses as a comprehensive material provider
and manufacturer of mechatronic products. Always
ahead of trends in society and industry, JSW is
preparing for sustained and vigorous growth in a wide
number of emerging areas to satisfy the demands of
its customers, shareholders and employees. In thisway JSW aims to enhance its enterprise value.

Osaka Office
Shinanobashi Mitsui Bldg., 11-7,
Utsubohonmachi 1-chome, Nishi-ku,
Osaka-shi, Osaka 550-0004
Phone: +81-6-6446-2480
Facsimile: +81-6-6446-2488
Fukuoka Office23-2, Sakuragaoka 1-chome, Kasuga-shi,
Fukuoka 816-0872
Phone: +81-92-582-8111
Facsimile: +81-92-582-8124

Nagoya Office
Mitsui Sumitomo Kaijo Nagoya Shirakawa
Bldg., 9-15, Sakae 2-chome, Naka-ku,
Nagoya-shi, Aichi 460-0008
Phone: +81-52-222-1271
Facsimile: +81-52-222-1275
Hiroshima Office6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602
Phone: +81-82-822-0991
Facsimile: +81-82-822-0997
Sapporo OfficeKitaichijo Mitsui Bldg., 2-9,
Nishi 5-chome, Kita-ichijo, Chuo-ku,
Sapporo-shi, Hokkaido 060-0001
Phone: +81-11-241-2271
Facsimile: +81-11-241-2275

Muroran Plant
4, Chatsumachi, Muroran-shi,
Hokkaido 051-8505
Phone: +81-143-22-0143
Facsimile: +81-143-24-3440
Hiroshima Plant
6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602
Phone: +81-82-822-3181
Facsimile: +81-82-285-2038
Yokohama Plant
2-1, Fukuura 2-chome, Kanazawa-ku,
Yokohama-shi, Kanagawa 236-0004
Phone: +81-45-781-1111
Facsimile: +81-45-787-7200

Overseas
Contents
1
2
5
6
8
11
12
16
18
19
20
46
47

Financial Highlights (Consolidated)
Message from the President
TopicsOur Business Domains
Review of Operations
Research and Development
Corporate Governance
The Environment
Board of Directors, Corporate Auditorsand Executive Officers
Financial Section
Financial Performance (Consolidated)
Corporate Directory
Offices & Plants

Forward-Looking Statements
The forward-looking statements in this annual
report reflect judgments based on information
available at the present time. Actual results
may differ widely due to various factors.

Düsseldorf OfficeFriedrichstr. 19, 40217 Düsseldorf,
F.R.Germany
Phone: +49-211-3116660
Facsimile: +49-211-31166640
Teheran Office
Argentine SQ., ZAGROS St.,ZAGROS Bldg. No.25, Apt. No.21, 2F,
1516663111, Teheran, I.R. of IranPhone: +98-21-8774636
Facsimile: +98-21-8774636
Singapore Office
16 Raffles Quay, #27-01C,
Hong Leong Bldg., Singapore 048581,
Republic of Singapore
Phone: +65-62206227
Facsimile: +65-62240726
Shanghai Office
24-G, Huamin Empire Plaza,No.726, Yanan Rd. (W), Shanghai 200050,
People’s Republic of China
Phone: +86-21-5239-1438+86-21-5239-4335
Facsimile: +86-21-5239-3450

Beijing Office
Room No. 1007, Beijng Fortune Bldg.,
5 Dong Sanhuan Bei-lu,
Chaoyang District, Beijing,
People’s Republic of China
Phone: +86-10-6590-8966
Facsimile: +86-10-6590-8968
Japan Steel Works America, Inc.
New York Office (Head Office)1211 Ave. of the Americas, Suite 4302,
New York, NY 10036, U.S.A.
Phone: +1-212-490-2630
Facsimile: +1-212-490-2575
Detroit Office41135 Vincenti Court Novi, MI 48375 U.S.A.
Phone: +1-248-536-0288
Facsimile: +1-248-536-5615
Japan Steel Works India Private Limited
611, Time Tower, MG Road, Sector 28,
Gurgaon, Haryana, 122001, India
Phone: +91-124-469-4444
Facsimile: +91-124-469-4433

JSW Plastics Machinery, Inc.
555 South Promenade Ave., Unit 104
Corona, California 92879, U.S.A.
Phone: +1-951-898-0934
Facsimile: +1-951-898-0944
JSW Plastics Machinery (S) Pte Ltd.
17 Gul Lane, Jurong Town,
Singapore 629413, Republic of Singapore
Phone: +65-68614511
Facsimile: +65-68623166
JSW Plastics Machinery (H.K.) Co., Ltd.
Room 907, Corporation Park, 11 On Lai
St., Shatin, N. T., Hong Kong
Phone: +852-2648-0720
Facsimile: +852-2686-8204
JSW Plastics Machinery (M) SDN. BHD.
D6-5-G Block D6, Pusat Perdagangan Dana, 1
Jalan PJU 1A/46, 47301 Petaling Jaya,
Selangor Malaysia
Phone: +60-3-7842-6076/6077
Facsimile: +60-3-7842-6078
JSW Plastics Machinery (T) Co., Ltd.
368/4 Soi Soonvijai 4,(Soi Japanese School Rama IX),
Bangkapi, Huaykwang, Bangkok 10310,
Kingdom of Thailand
Phone: +66-2-369-4007
Facsimile: +66-2-369-4035

47

表2
JSW AR11表2-3

DIC 176

Y

M

C

B

表

Annual Report 2011

AnnualReport2011
for the year ended
March 31, 2011

The Japan Steel Works, Ltd.

Printed in Japan 2011.10

表4

表
JSW AR11表1-4

DIC 176

Y

M

C

B