INTERIM BUSINESS REPORT
2013
December 1, 2012 to May 31, 2013

NACHI-FUJIKOSHI CORP.
Securities Code: 6474

TO OUR SHAREHOLDERS
I trust that all is well for our valued shareholders.
We repor t the interim results for the
NACHI-FUJIKOSHI Group for the period
from December 1, 2012 to May 31, 2013.

Business Environment
The business environment surrounding theNACHI-FUJIKOSHI Group during the interim period under review was overall difficult,with the continuous adjustment in emerging
economies and the prolonged financial anddebt crises that were originally started inEurope, even though there were sign ofrecovery in export thanks to the depreciating yen.

Business Progress and Results
Given this environment, the NACHI-FUJIKOSHI Group worked to expand its businessby playing to the strengths of the Group as acomprehensive machinery manufacturer
encompassing the machining, robotics,
functional parts, and materials businesses,
and by providing a wide range of solutions
for our customers.
However, due to the major impact fromthe weakening demand in industrial machinery / retail sector, sales for the interim period
under review totaled only 82.8 billion yen,down 2.7% from the same interim period of
the previous fiscal year. Of this, sales in theJapanese market reached 50.4 billion yen,down 6.3% from the same interim period of
the previous fiscal year, while overseas sales
totaled 32.3 billion yen, up 3.4%.
In terms of profitabilit y, despite ourefforts to improve productivity by promoting
continuous cost cutting, the decrease in therate of operation due to drop in sales / production and falling sales prices had a major
impact, and as a result, operating profits

decreased to 5.2 billion yen, down 11.7%
from the same interim period of the previous fiscal year. Meanwhile ordinary profits
were at 5.3 billion yen, up 5.0%, and interim net income at 2.2 billion yen, down
14.3%.
We wish to forego the payment of interim
dividends for this interim period.

Future Initiatives
As for the outlook moving forward, in addition to the recovery in production in theautomobile sector and fixed investments, apartial recovery was seen in the industrial
machiner y / retail sector. However, it isexpected that the trend in emerging economies, led by China, will continue to remainuncertain.
The NACHI-FUJIKOSHI Group will endeavor to promote further internal reform in sales,
ser vices, manufacturing, procurement,
research and development, as well as
expanding our product lineup, creating new
business opportunities, and undertaking thoroughgoing cost reduction, while anchoring
our business in the developing economies,
where mid- to long-term growth in demandcan be expected.
By these means, the company will work
to improve business results and secure astable profit structure with the purpose offulfilling our Long-term Vision.
In December 2012, our company andtwo employees were convicted in the Tokyo
District Court on suspicion of violation of theAntimonopoly Act concerning bearings
transactions. In March 2013, the Fair Trade
Commission issued a cease and desisto r d e r, a n d a n o r d e r f o r p a y m e n t o fsurcharge against us based on the Antimonopoly Act.
Our Group has taken this turn of events

seriously, and has been conducting thethorough indoctrination of compliance, education, and instruction for all our Group
employees including overseas personnel.
The Group shall work on improvement ofthe management style focused towards therealization of the long-term vision, andendeavor to ensure thorough legal compliance as well as improving credibility.
I would like to express my sincerest
appreciation to all of our shareholders fortheir continued support and understanding.

Outline of our Long-term Vision2020 Consolidated sales¥400 Billion
Operating profit margin
15%

President andRepresentative Director

August 2013

RESULTS OF OPERATIONS (Consolidated Operating Result for Second Quarter of Fiscal 2013)
Sales by Market

Sales by Business Segment
Special Steels/
Industrial Furnaces
and Others Cutting Tools
7%16%
Hydraulic
Machine Tools/
Equipment
Precision Machinery
19%
¥82.8
13%
BillionRobots8%

Bearings
37%

Overseas Sales

Energy/Infrastructure18%

Machinery/
Retail29%

Net Sales (¥ billions)¥82.8
BillionAutomotive
53%

Asia, Oceania,
andthe Middle East
57%

America30%¥32.3
BillionEurope13%

Operating Income (¥ billions)■Interim■Full-year■Interim■Full-year

172.2

166.0

14.6

134.8

10.6
78.9

85.1

82.8

8.2

61.5

7.1
5.9

5.2

3.0

FY2010

2011

2012

2013

FY2010201120122013

TOPICS
Hub for Business in China Started Full-scale Operations
Our Group is undertaking the expansion of our business in the Chinese market, where sustained economic
growth is expected over the medium- and long-term, by expanding local production and improving oursales and services framework.

Robot SRA series

NACHI (JIANGSU) INDUSTRIES CO., LTD. (NJI)

Hydraulic equipment forconstruction machines

Our Group has newly established our largest manufacturing baseabroad in Zhang jiagang, Jiangsu. Local production of robots,
hydraulic equipments, car control valves, and high precision tools
started in full-scale in February 2013.

Established the Adjacent Technical Center
Our showroom and R&D Center have been opened torespond to the local needs for improving performance.

Car control valvesForming racks

Ceremony to Mark Opening of NJI
Was Held on May 15, 2013

Showroom

R&D Center

More than 300 participants attended this grand ceremony, including officials of the government bodies inZhangjiagang City, our major customers and suppliers.

Enhancing Production Capacity in the Area of Demand
Based on the production in the area of demand, our production capacity in bearings and tools has been
expanding globally.
The India marketThe ASEAN market

NACHI TECHNOLOGY(THAILAND) CO., LTD.
NACHI KG TECHNOLOGY INDIA PTE. LTD.
In July 2013, our Groupstarted local production ofb e arings in the Indianmarket, where automobiles and industrial
machinery sector is rapidly growing.

The North America market

NACHI TECHNOLOGY INC.

NACHI SINGAPORE PTE. LTD.
The China market

NACHI (SHANGHAI) CO., LTD.

Our Group has expanded the production capacity of bearings for automobiles and cutting tools, for which demand is increasing in theASEAN, North America, and China markets.

Enhancing our Cemented Carbide Drill Lineup
The machining area of Aqua Drill EX series, which is highly acclaimed in the market, hasbeen significantly expanded to achieve high precision and high efficiency in difficult
machining operations such as large-diameter / deep-hole drilling.

AQUA Drill EX VF(Indexable Type)The combination of high rigid body andcemented carbide chip realizes both highaccuracy and performance for large-diameter
drilling.

AQUA Drill EX
Oil-Hole Long
The significant improvem e n t i n t h e ab i l i t y t oremove chip s enable s
highly efficient deep-holedrilling.

FINANCIAL STATEMENTS
Consolidated Balance Sheets
Item(¥ millions)Interim 2013

Previous(as of May 31, 2013)(as of November 30, 2012)(¥ millions)

Item

ASSETS:LIABILITIES:Current assets

Current liabilities

Interim 2013

Previous(as of May 31, 2013)(as of November 30, 2012)

Notes and accounts payable

Cash and cash equivalents

Bonds and short-term bank loans
Other

Notes and accounts receivable

Long-term liabilities
Inventories

Bonds and long-term debt
Allowance for retirement benefits

Other

Other

Fixed assets

Total liabilities

NET ASSETS:Property, plant and equipment

Shareholders’ equity

Buildings and structures

Common stock
Machinery and equipment

Additional paid-in capital
Retained earnings

OtherTreasury stock

Revaluations and translation adjustments

Intangible fixed assets

Minority interests

Investments and advances

Total net assets

Total assets

Total liabilities and net assets

Consolidated Statements of Income
Item

Interim 2013

December 1, 2012
to May 31,2013(¥ millions)Interim 2012

December 1, 2011
to May 31,2012

Consolidated Statements of Cash Flows
ItemNet sales

Cash flows from operating activities

Operating income

Cash flows from investing activities

Ordinary income

Cash flows from financing activities
Net increase in cash
and cash equivalents
Cash and cash equivalents
at beginning of the year
Cash and cash equivalents
at end of interim of the year

Extraordinary income
Extraordinary losses
Income before income taxes
and minority interests
Net income

Interim 2013

December 1, 2012
to May 31,2013(¥ millions)Interim 2012

December 1, 2011
to May 31,2012

SHAREHOLDER INFORMATION (As of May 31, 2013)
Number of Shares Issued: 249,193,436
27,722
Number of Shareholders:Major shareholders (top five):

Breakdown of Shareholders
ForeignInvestors
18,593,000
shares
(7.5%)

Number of shares Shareholding ratio
held (thousand)(%)

Shareholders

NACHI WANEI Stockholding
Employees’ Stock Ownership Plan
Toyota Motor Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Japan Trustee Services Bank, Ltd. (holder of trust units)

18,634
13,461
13,182
11,888
9,114

7.50
5.41
5.30
4.78
3.67

Individuals
54,782,000
shares
(22.0%)

Securities
Companies
1,306,000
shares
(0.5%)

StockOwnership
Associations
38,819,000
shares(15.6%)
FinancialInstitutions
83,425,000
shares(35.6%)
Other JapaneseCorporations
46,680,000
shares (18.8%)

DIRECTORS AND AUDITORS (As of August, 2013)

CORPORATE OFFICERS

President andRepresentative Director

Corporate Officer

Hiroo Honma

Managing Director

Yukihiko Tanaka
Managing Director

Managing DirectorDirector(As of August, 2013)

Naoshi Katayama

Masayuki Kobayashi

Nobuo Okada

DirectorDirector

Standing Corporate Auditor

Toshio Sugiura

Hideo Oba*

Kazuhito Yoshida

Atsushi Saguchi*

Director

DirectorStanding Corporate Auditor

Kiyoshi Meguro
Shinichi Urata

Kenji Susukida

Katsumi Nishijima

Hiroshi Yamada

DirectorDirector

Corporate Auditor

Noriyasu Shiba

Nishiki SetoIsao HoriManaging Director

DirectorDirector

Makoto Sasaki

Standing Corporate Auditor

Sachio Tanaka

Hidenori Hayashi

Eiichi Fukushima**Outside director or outside
corporate auditor.

Corporate Officer
Corporate Officer
Corporate Officer

Fumio Honda

Corporate Officer

Atsushi Umezawa
Corporate Officer

Tetsu Furusawa
Corporate Officer

Shigemi Tochitani
Corporate Officer

Hideaki Hara

Corporate Officer

CORPORATE INFORMATION (As of May 31, 2013)
Foundation:
Capital:Number of Employees:
Major Products:
Machining business
RobotsComponents
Materials & Heat Treatment
Major Domestic Offices and Plants:
Toyama Head Office
Tokyo Head Office

Toru Inoue

December 21, 1928
¥16 billion
2,723 (Group employees 6,010)
Cutting Tools, Forming Tools, Cutting Saws, Machine Tools, Precision Machinery, Machining Systems
Robots, Robot Systems, Electronic Equipment
Bearings, Hydraulic Equipment, Automotive Hydraulics, Seismic Isolation Systems, Filtration Systems
Special Steels, Coating, Industrial Furnaces
1-1-1, Fujikoshi-Honmachi, Toyama 930-8511, Japan
Shiodome Sumitomo Bldg. 17F, 1-9-2, Higashi-Shinbashi, Minato-ku, Tokyo 105-0021, Japan

Eastern Japan Main BranchCentral Japan Main BranchWestern Japan Main Branch

Shiodome Sumitomo Bldg. 17F, 1-9-2, Higashi-Shinbashi, Minato-ku, Tokyo 105-0021, Japan
Nachi Nagoya Bldg., 2-120-3, Takayashiro, Meitou-ku, Nagoya 465-0095, Japan
Sumitomo Nakanoshima Bldg. 5F, 3-2-18, Nakanoshima Kita-ku, Osaka 530-0005, Japan

Toyama Plant

1-1-1, Fujikoshi-Honmachi, Toyama 930-8511, Japan[Cutting Tools / Machine Tools / Bearings / Robots]
3-1-1, Yoneda-machi, Toyama 931-8511, Japan [Special Steels]
3-2-1, Nakada, Toyama 931-8453, Japan [Hydraulic Equipment]
176, Ogake, Namerikawa 936-0802, Japan [Hydraulic Equipment / Automotive Hydraulics /Precision Machinery / Coating / Industrial Furnaces]
NACHI AMERICA INC. NACHI EUROPE GmbH (Germany) NACHI SINGAPORE PTE. LTD.
NACHI (SHANGHAI) CO., LTD.

Higashi-Toyama Plant
Namerikawa Plant
Major Overseas Offices and Plants:

Tel:+81-76-423-5111+81-3-5568-5111

INVESTOR INFORMATION
Securities Code:Fiscal Year:

6474
From Dec. 1 of each year to Nov. 30 of
the following year

Ordinary General Meeting ofFebruary
Shareholders:Voting rights at General
Record Date:
Meeting of Shareholders November 30
Year-end dividend
November 30
Interim dividend
May 311,000 shares
Unit:
Shareholders’ Register Custodian/ 1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan
Administrator for Special Accounts: Sumitomo Mitsui Trust Bank, Limited
2-8-4, Izumi, Suginami-ku, Tokyo 168-0063, Japan
Administrative Office/
Sumitomo Mitsui Trust Bank, Limited
Mailing Address:
Stock Transfer Agency Department
Toll-free: 0120-782-031 (Toll-free in Japan)
Inquiries:
Transactions are handled by Sumitomo Mitsui Trust Bank,(Any question may be
forwarded to the competent Limited and its branches nationwide and the head office ofJapan Securities Agents, Ltd. and its branches nationwide.
department.)
http://www.nachi-fujikoshi.co.jp/eng/
URL:

Notice regarding the Transfer of Dividends to the Shareholder’s AccountWe recommend transfer to the shareholder’s account as a safe, foolproof, andconvenient way to receive dividends.
Please choose from the following three methods for receiving dividends throughtransfer to the shareholder’s account.
Designation by Specific Stock: Assigning an account that the shareholder has withbanks, etc. for each category of stock and receiving dividends through suchaccounts.
Registration of a Single Account for Receiving Dividends: Receiving dividends for
all categories of stock that the shareholder owns through a single account thatthe shareholder has with banks, etc. (An account with the Japan Post Bank may
not be designated for this purpose.)
Allocation by Proportion of Shares: Receiving dividends through accounts that theshareholder has with securities firms. (A shareholder who does not have an
account at a securities firm may not use this method.)

Procedures regarding Shares
1. Notification regarding Designation of the Method for Receiving Dividends; thePurchase of Additional Shares or Buyback of Holdings Less Than the Minimum
Trading Unit; Change of Address, Name, etc.; and Request for Stock Transfers
between Accounts
Please notify the securities company with which you have your account. For thoseshareholders who do not have an account with a securities company and who have
set up a special account instead, please notify Sumitomo Mitsui Trust Bank,
Limited which is the account administrator for special accounts.

2. Questions regarding Payments of Accrued Dividends and Other General Administrative Matters regarding Shares

Please contact Sumitomo Mitsui Trust Bank, Limited which administers theshareholders registry.

The Cover Photograph
The cover photograph captures an image of abearing built into a major part of an automobile.
It dramatically reduces rolling resistance andcontributes to improve fuel efficiency of cars.