BUSINESS REPORT 2008
December 1, 2007 to November 30, 2008

NACHI-FUJIKOSHI CORP.
Securities Code: 6474

TO OUR SHAREHOLDERS
I am delighted to report to you about NACHIFUJIKOSHI’s business performance for the
fiscal year ended November 30, 2008.
Business Environment
The operating environment of the NACHIFUJIKOSHI Group during the period underreview saw the slowdown of the world economy grow increasingly severe. In addition torising crude oil and raw material prices andthe ongoing dramatic appreciation of the yen,
the turmoil in the financial markets spread tothe real economies. From the second half ofthe fiscal year, capital expenditure was curbed
in Japan and overseas in such major industries as automobiles, electric appliances andindustrial machinery, and the trend to reduce
production levels strengthened.
Business Progress and Results
In this environment, the NACHI-FUJIKOSHI
Group worked to vigorously promote the“NACHI Business,” which offers total support
for our customers’ manufacturing activities.
The NACHI business enabled us to provide
linked products, technologies and services
based on our unique engineering business.
Net sales for the year under review
amounted to ¥204.8 billion, up 5.8% fromthe previous fiscal year. Sales to the Japanesemarket accounted for ¥139.3 billion (up 7.5%
year on year), while overseas sales rose 2.2%
to ¥65.5 billion.

About the Cover Design
The triangle symbolizes the notion of “SeiHan-Go,” or “Fusing discrete and opposing
ideas into one,” the Group corporate philosophy implicit in the meaning of “Fuji” inour name.

1

Turning to earnings, operating income
decreased ¥1.2 billion to ¥15.5 billion, down
7.4% year on year, with ordinary income down
8.7% to ¥13.9 billion. With a gain on sales of
fixed assets and a loss on valuation of investment securities as extraordinary income andlosses, net income for the year under review
improved 6.2% to ¥8.3 billion. This downturn
in operating income was caused by rising raw
material and component prices, higher fixed
expenses due to expansion of the production
system and the ongoing sharp appreciation of
the yen during the year. These concerns outweighed improved capacity utilization stemming from increased sales and production, as
well as enhanced productivity and other total
cost reduction efforts.
Cash Dividends
In recognition of business performance during
the year and of projected business management in the future, the Company paid a cash
dividend of ¥8 per share, the same amount as
in the previous fiscal year.
Future Action
Looking ahead, markets are further shrink­ing due to the deepening slowdowns andrecessions of the global economy. Major customers of the NACHI-FUJIKOSHI Group,
especially those in the automobile and industrial machinery sectors, are likely to continue
to experience an unprecedented level ofseverity in their business environments.
The NACHI-FUJIKOSHI Group is building
a strong business framework that can withstand changes in demand. To this end, weare identifying new markets, particularly in
newly emerging countries, and improving awide range of operating activities, including
manufacturing, procurement, logistics, R&D,
and personnel and organizational matters.
Given these circumstances, the NACHIFUJIKOSHI Group will strive to establish astable earnings base by reinforcing the linkage between every aspect of our operations.
Moreover, we will strive to boost corporate
value by upholding the NACHI brand, aname trusted across the globe in the manufacturing field.
I thank all of our shareholders for your continued support and understanding.
February 2009

Kensuke Imura Chairman and CEO, Representative Director (Left)
Hiroo Honma President and COO, Representative Director (Right)

RESULTS OF OPERATIONS (Consolidated)
Sales by Business Segments

Overseas Sales

Special Steels/
Industrial Furnaces
and Others

Cutting Tools

9%
HydraulicEquipment

Asia, Oceania, andthe Middle East

15%

18%
¥204.8billion16%

Machine Tools/
Precision Machinery

37%

¥65.5
billion46%

America

8%
34%

17%

RobotsBearings
EuropeNet Sales

Operating Income

Overseas Sales(¥ billions)(¥ billions)(¥ billions)

204.8
186.7

2006

193.6

2007

16.7
15.5

15.5

2008

2006

2007

2008

64.1

65.5

2007

2008

58.2

2006

2

THE NACHI BUSINESS NETWORK—Contributing to the Progress of theAutomobiles Products for a safe and comfortable ride withhigh fuel efficiency

Aircraft Achieving high productivity and high-precision
processing for jet engine components

Steering

Turbine discs
and blades

Bullet Trains

Utility (Small Shovels)

Ensuring high speed,
safety and comfort

Massive power in an energy
efficient, compact package

Engines

Transmissions

Constant-velocity(CV) joints

Undercarriages

Products used in everything from automobiles, aircraft, bullet trains, small— Technologies that create, handle and drive everything. And there’s
Machining & Robots

Components

Supporting production line automation with the required highperformance and high precision

In pursuit of energy-saving and greater safety

Precision
tools

Machine tools
Ultra-precise processing
machinery with nanolevel precision3

High-performance bearings
Space-saving
new platform robots

Hydraulic equipment for
construction and industrial
machines

World of Product Manufacturing
Industrial Machinery Realizing outstanding energy-saving,precision and efficiency

Electrical & Electronic Devices
From home appliances to IT

Injection molding
machines

Machinetools

Homes & Lifestyle Familiar parts of everyday life

DIY products
Aspheric lenses usedin digital equipment
Seismic isolator

Moveable roof domes

shovels, and machine tools to mobile phones, digital cameras and LCD TVs
always something new on the horizon. “Wonders from NACHI, Art in NACHI”
Materials & Heat Treatment

Engineering

Supporting high performance and superb quality

Cost-effective and environmentally friendlySpecial steels

Coating, carburizing and other surface
modification technologies

Regrinding and Recoating of
cutting tools

Maintenance, Overhaul ofrobots and machine tools

Energy and Resource-saving
systems

Thermotech and Coating services

4FINANCIAL STATEMENTS
Consolidated Balance Sheets
Item(¥ millions)2008(As of November
30, 2008)

2007(As of November
30, 2007)ASSETS:
Current assets

2007(As of November
30, 2007)

Current liabilities

91,892

100,815

LIABILITIES:
90,617

99,833

Cash and cash equivalents

13,001

20,996

Notes and accounts payable

40,09338,830Notes and accounts receivable

38,507

41,149

Short-term bank loans

36,68733,789Inventories

32,78731,326

Other accounts payable

5,406

10,982

Deferred tax assets

2,705

3,660

Other

9,705

17,211

Other

3,843

2,979

37,02039,523

Allowance for doubtful accounts

(228)

(279)
Bonds and long-term debt

27,73028,201

Fixed assets

101,827

101,946
Allowance for retirement benefits

6,081

7,226

Property, plant and equipment

87,39582,024
Other

3,208

4,096

Buildings and structures

31,85828,643

Machinery and equipment

45,922

43,229128,913140,338

Land

7,376

7,659

741

1,018

Shareholders’ equity

62,43956,223

1,496

1,473

Common stock

16,074

16,074

Intangible fixed assets

403

402

Additional paid-in capital

11,567

11,571

Software333

335

Retained earnings

34,972

28,760

Other

70

66

Treasury stock

(175)

(183)

Investments and advances

14,027

19,519

Revaluations and translation adjustments(1,681)

2,854

Investment securities

9,801

16,255108

149

Unrealized gains onavailable-for-sale securities

2,029

6,067

Deferred tax assets

1,901

837

Translation adjustments(3,710)(3,212)

Other

2,216

2,305

Minority interests

2,772

2,362

(0)

(28)

Total net assets

63,53061,440

192,444

201,779

Total liabilities and net assets

192,444

201,779

Construction in progress
Other

Long-term loans receivable

Allowance for doubtful accounts
Total assets

5

Item

2008
(As of November
30, 2008)

Long-term liabilities

Total liabilities
NET ASSETS:

Consolidated Statements of Income(¥ millions)
2008
2007
(For the year ended (For the year ended
November 30, 2008) November 30, 2007)

Item

Net sales
Operating income
Ordinary income
Extraordinary income
Extraordinary losses

204,844
15,532
13,953955
978193,670
16,774
15,2861,045
2,765

Income before income taxes andminority interests

13,931

13,567

Net income

8,347

7,858

Consolidated Statements of Cash Flows(¥ millions)
2008
2007
(For the year ended (For the year ended
November 30, 2008) November 30, 2007)

Item

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

14,730(23,647)
1,126

20,769(11,060)(1,469)Net increase (decrease) in cash andcash equivalents(8,131)

8,322

Cash and cash equivalents at beginningof the year

20,965

12,643

Cash and cash equivalents at end of the year

12,833

20,965

Consolidated Statement of Changes in Shareholders’ Equity (For the year ended November 30, 2008)
Shareholders’ equity
Item

Commonstock

Additional
paid-in
capitalRetainedearnings

Balance as of November 30, 2007
Changes during the fiscal year
Dividends from retained earnings
Net income
Acquisition of treasury stock
Disposal of treasury stock
Net decrease due to consolidationof equity method affiliates
Minimum pension liability adjustmentsof overseas subsidiary
Other
Net changes in items other thanshareholders’ equity
Total changes during the fiscal year
Balance as of November 30, 2008

16,074

11,571

28,760Treasurystock

61,440

(33)
41
(1)

(1)

(1)

(123)
(19)

(123)
(19)

(123)
(19)

6,216
62,439(4,037)(4,037)
2,029

(498)
(498)
(3,710)

2,854

2,362

(1,989)
8,347
(33)
37

7
(175)

(3,212)Total
net assets(1,989)
8,347
(33)
37

6,212
34,972

6,067

Minority
interests

56,223(4)(4)
11,567

Total
Unrealized gains Translation Total revaluations
shareholders’ on available-for- adjustments
and translation
equitysale securities
adjustments(183)(1,989)8,347–
16,074(¥ millions)

Revaluations and translation adjustments(4,535)(4,535)(1,681)

409
409
2,772

(4,125)2,090
63,5306

TOPICS
1. Expansion of Engineering Business
We respond actively to a wide range of engineering-related needs in ourfour major technical fields of the regrinding and recoating of cutting
tools, the maintenance, overhaul of robots and machine tools, energy
and resource-saving systems, and thermotech and coating services.

(Filtration system for cutting
and grinding coolant)(Metal sludge recycling system)

Regrinding and Recoating of cutting tools/
Tool engineering service
Toyama, Kanagawa (Japan), China, America, etc.
GPA Engineering Co., Ltd.

Energy and Resource-saving systems
NACHI Industrial Service Co., Ltd.

Maintenance, Overhaul of robots and machine tools
NACHI Robot Engineering Co., Ltd.
NACHI Machinery Engineering Co., Ltd.

Thermotech and Coating services
NACHI Thermotech Co., Ltd.

(Established August 2008)(Established August 2008)

2. Contributing to the Environment, Energy and Resource-saving
Cutting tools boothInverter drive variable displacement pumphydraulic unit
Compared with hydraulic units of standard
machine tools, automated control of inverters
yields energy savings of about 60%.
Awarded the Chairman’s Commendation at the28th Commendations for Superior Energy-saving
Machines held by the Japan Machinery Federation.
(February 2008)

7

Machine tools booth

We presented eco-machining and environmentally friendly manufacturing applications of our products and technology at the24th Japan International Machine Tool Fair.
In particular, we showcased the appeal of
our automation technology using spacesaving robots, the hybrid broaching machine“Mi5010PA” with our built-in energy-saving
hydraulic system “POWER Meister” thathalves conventional power consumption,and the filtration system. (November 2008)

Broachingmachine“Mi5010PA”

7-axismultipurpose robot

Energy-saving hydraulicsystem “POWER Meister”

3. Identifying Newly Emerging Markets(Engineering Center)

Southeast Asia: Thailand
NACHI TECHNOLOGY (THAILAND) CO., LTD.
Expanded engineering service functions as
ASEAN Business Center

MexicoNACHI MEXICANA ENGINEERING CENTER
Opened an engineering base for resharpening of precision tools and maintenance of robots(April 2008)(September 2008)

China: Shanghai
SHANGHAI NACHI BEARINGS CO., LTD.
NACHI (SHANGHAI) PRECISION TOOLS CO., LTD.
Started production of hydraulic equipment
as well as bearings and cutting tools

BrazilNACHI BRASIL LTDA.
Expanded production capabilities for bearings in response to increased demand forautomobiles and motorcycles(April 2008)

4. Activating Human Resource Development and Exchange
Established “Nachi-Fujikoshi Selva,” a composite multi-functional
training and recreation center
The center gives our dealers and customers around the world
opportunities to get together and participate in workshops orother events.
It also supports the career development of our group associates.
(Toyama Plant, March 2008)
Selva: The name indicates the Amazon Basin and other tropical rainforests, namely
environments where a variety of life forms coexist. We hope the center nurtures thecoexistence of a variety of participants.

8

SHAREHOLDER INFORMATION (As of November 30, 2008)
Number of Shares Issued:
Number of Shareholders:Major Shareholders:

249,193,436
35,642

Shareholders

Toyota Motor Corporation
NACHI WANEI Stockholding
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Employees’ Stock Ownership Plan
THE HOKURIKU BANK, LTD.

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

13,182
12,335
11,888
11,684
8,659

5.29
4.95
4.77
4.69
3.48

Breakdown of Shareholders
ForeignInvestors
15,621,000
shares
(6.3%)

Individuals
78,663,000
shares(31.6%)

Financial
Institutions
80,819,000
shares(32.4%)

Other
Japanese
Corporations
43,353,000
shares
(17.4%)

Stock Ownership
Associations
27,949,000
shares(11.2%)
Securities
Companies
2,785,000 shares(1.1%)DIRECTORS AND AUDITORS (As of February 20, 2009)
Chairman and CEO,
Representative Director

Managing Director

Director

Director

Corporate Auditor

Yukihiko Tanaka

Atsushi Seki*

Keiichi Ogino

Teruo Akashi

Managing Director

DirectorStanding Corporate Auditor

Corporate Auditor

President and COO,
Representative Director

Makoto Sasaki

Zenshiro Kaneko

Naoto Nakano

Eiichi Fukushima*

Hiroo Honma

Managing Director

DirectorStanding Corporate Auditor

Kiyoshi Nakagawa

Naoshi Katayama

Atsushi Saguchi*

Managing Director

Director* Outside director or outside
corporate auditor

Noriyasu Shiba

Hideo Terakoshi

Kensuke Imura

Executive Vice President

Kenji Ishiguro

CORPORATE OFFICERS (As of February 20, 2009)
Corporate Officer

Corporate Officer

Corporate Officer

Corporate Officer

Corporate Officer

Kiyoshi Meguro

Nishiki Seto

Sachio Tanaka

Tadashi Yamazaki

Shigeki Miwa

Corporate Officer

Corporate Officer

Corporate Officer

Corporate Officer

Masayuki Kobayashi

Nobuo Segawa

Toshio Sugiura

Hirokazu Kubota

Origin of the Corporate Name “FUJIKOSHI”
NACHI-FUJIKOSHI CORP. was founded in the city of Toyama in 1928.
Kohki Imura, the founder, named the company FUJIKOSHI in order togive concrete expression to his creed that self sufficiency in machine
tool supply is indispensable to Japan’s economic prosperity.
The first two characters “不二” which read “Fuji” were pickedfrom the Buddhist scriptures. A passage in the scriptures says
“Justice and injustice appear to be different things. The truth is thatthey are “Fuji” (not two). They are one and the same.” In otherwords, the true comprehension of objects is attainable only throughpenetrating observation from high above, ignoring the superficial
appearances of such objects.
The third Chinese character “越” which reads “koshi,” has the samepronunciation as “高志” which means the general area along the Japan
Sea since old days, and leads to the “Art” at which we are aiming.
With these words, we are also aiming to improve technologies
and to enhance corporate value.

9

Origin of the Trademark “NACHI”
The NACHI brand name comes from “KUMANO-NACHI-TAISHA,”
the Grand Shrine, that is the origin of Japan. It expresses strong
entrepreneurial will.
In 1929, the Emperor Showa made a tour of the Kansai district toinspect industries as part of the encouragement of domestic production, and personally inspected a FUJIKOSHI hacksaw bladethat was on display as an example of an outstanding domestic
product at the Osaka Prefectural Office.
Overjoyed at the honor of entertaining the Emperor’s special
attention, Kohki Imura decided to name his product “NACHI” after
the name of the latest naval cruiser to be made in Japan, the verysame vessel that the Emperor was sailing on for his tour.
Fujikoshi, in the early days of Showa, was still a fledging machine
tool supplier. For Imura, “NACHI” was the word that best identified
FUJIKOSHI products with the dignity of the Emperor.

CORPORATE INFORMATION (As of November 30, 2008)
Foundation:
December 21, 1928
Capital:¥16 billion
Number of Employees:
5,853 (Consolidated) 2,729 (Non-consolidated)
Major Products:
Machining
Cutting Tools, Forming Tools, Cutting Saws, Machine Tools, Precision Machinery, Machining Systems
RobotsRobot Systems, Electronic Equipment
Components
Bearings, Hydraulic Equipment, Automotive Parts, Seismic Isolation Systems, Filtration Systems
Materials & Heat Treatment
Special Steels, Coating, Industrial Furnaces
Major Domestic Offices and Plants:
Toyama Head Office
1-1-1, Fujikoshi-Honmachi, Toyama 930-8511, Japan
Tel: +81-76-423-5111
Tokyo Head Office
Shiodome Sumitomo Bldg. 17F, 1-9-2, Higashi-Shinbashi, Minato-ku, Tokyo 105-0021, Japan+81-3-5568-5111
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
Nachi Osaka Bldg., 2-3-7, Honjo-nishi, Higashi-Osaka 578-8522, Japan+81-3-5568-5280+81-52-769-6811+81-6-6748-2510

Toyama Plant

1-1-1, Fujikoshi-Honmachi, Toyama 930-8511, Japan[Cutting Tools / Machine Tools / Robots / Bearings]
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 [Precision Machinery / Hydraulic Equipment /Automotive Hydraulics / Coating / Industrial Furnaces / Precision Forming]+81-76-423-5111+81-76-438-4411+81-76-438-8970+81-76-471-2101

Higashi-Toyama Plant
Namerikawa Plant

Major Overseas Subsidiaries:
NACHI AMERICA INC.
17500 Twenty-Three Mile Road, Macomb, Michigan, 48044, U.S.A.
NACHI EUROPE GmbH
Bischofstrasse 99, 47809, Krefeld, GERMANY
NACHI TECHNOLOGY (THAILAND) CO., LTD.
3/16 M, 2, Rojana Industrial Estate Nongbua, Ban Khai, Rayong, 21120, THAILAND
NACHI (SHANGHAI) CO., LTD.
Yitong Industry Zone 258, Fengmao Rd. Malu Town, Jiading, Shanghai 201801, CHINA

Tel: +1-586-226-5151+49-(0)2151-65046-0+66-38-961-682+86-(0)21-6915-2200

OVERSEAS OFFICESCZECH/Bearings
SHANGHAI/Tools, Bearings,
Hydraulic Equipment, Engineering
DONGGUAN/Bearings
INDIA/Tools

AMERICA/Tools
KOREA/
Hydraulic Equipment

AMERICA/Bearings

AMERICA/
Robotic Systems
NORTH CAROLINA/
Engineering

TAIWAN/Bearings
MEXICO/Engineering

THAILAND/
Bearings, Engineering
SINGAPORE/Tools
BRAZIL/Bearings and Tools

10

INVESTOR INFORMATION
Securities Code:6474

Record Date:

Voting rights at General
Meeting of Shareholders
Year-end dividendInterim dividend

Ordinary General Meetingof Shareholders:February

Unit:

1,000 shares

To Request Purchase of Additional Shares or Buybackfor Holdings Less Than the Minimum Trading Unit
November 30
November 30
May 31

Shareholders’ Register Custodian: The Chuo Mitsui Trust and Banking Company, Ltd.
3-33-1, Shiba, Minato-ku, Tokyo 105-8574, Japan
Shareholders’ Register Custodian Head office of The Chuo Mitsui Trust andAdministrative Office:Banking Company, Ltd.
3-33-1, Shiba, Minato-ku, Tokyo 105-8574, Japan
Toll-free: 0120-78-2031 (Toll-free in Japan)
URL:

http://www.nachi-fujikoshi.co.jp/

NACHI-FUJIKOSHI has introduced a system that allows
the purchase of additional shares for holdings less than thenormal trading unit. This system enables shareholders withholdings under a trading unit (1,000 shares) to purchasethe shares needed to meet this minimum requirement.
Also, shareholders wishing to sell holdings of less than a
trading unit can follow procedures for the buyback of shares.
If your shares are held in an ordinary account at a securities company or similar, please inquire to your company
to request purchase of additional shares or buyback forholdings less than the minimum trading unit.
If your shares are held in a special account, pleaseinquire to The Chuo Mitsui Trust and Banking Company,
Ltd. using the contact information on the left to request
purchase of additional shares or buyback for holdings
less than the minimum trading unit.