INTERIM BUSINESS REPORT
2012
December 1, 2011 to May 31, 2012NACHI-FUJIKOSHI CORP.
Securities Code: 6474

TO OUR SHAREHOLDERS
We wish to express our happiness overthe ever greater fortune that has been bestowed
on our shareholders.
We repor t the interim results for the
NACHI-FUJIKOSHI Group for the period from
December 1, 2011 to May 31, 2012.

Business Environment

The business environment surrounding the
NACHI-FUJIKOSHI Group during the interim
period under review was difficult overall,with the emerging economies undergoing
adjustment and the Japanese yen appreciatedto historical high in addition to the financial
and debt crises in Europe.

Business Progress and Results

Given this environment, the NACHI-FUJIKOSHI
Group worked to expand its business by playing
to the strengths of the Group as a comprehensive
machinery manufacturer encompassing themachining, robotics, functional parts andmaterials businesses and capable of providing
a wide range of solutions for our customers.
As a result, sales for the interim period
under review totaled 85.1 billion yen, up 7.9%
over the same interim period of the previous
fiscal year. Of this, sales in the Japanese market
reached 53.8 billion yen, up 13.2% over thesame interim period of the previous fiscal year,
while overseas sales totaled 31.3 billion yen,down 0.1%.
In terms of profitability, although we improved
rate of operation increasing sales and production,and continued to promote cost cutting throughsuch means as overseas sourcing, deteriorating
export margins due to the strong yen, growing
overhead costs due to the expansion of ouroverseas operations, falling sales prices andother factors had a major impact, and operating profits decreased to 5.9 billion yen, down
17.1% from the same interim period of theprevious fiscal year, while ordinary profits wereat 5.0 billion yen, down 19.8%, and interim net
income at 2.6 billion yen, down 48.5%.
We wish to forego the payment of interim
dividends for this interim period.

Future Initiatives

As for the outlook moving forward, an uncertain
future awaits us with regard to currency exchange
rates and the situation in the developing economies in addition to the financial and debt crises
in Europe, but we do expect production and
fixed investments in aeronautics and power
generation and other energy infrastructure
sectors to continue on a robust trajectory.
The NACHI-FUJIKOSHI Group will endeavor
to promote the expansion of our product lineup,
create new business opportunities, and undertake
thoroughgoing cost reduction in sales, services,manufacturing, procurement, research anddevelopment, while anchoring our business inthe developing economies, where mid- tolong-term growth in demand can be expected.
By these means, the company will work to
improve business results and secure a stableprofit structure with the purpose of fulfilling ourLong-term Vision and Mid-term Business Plan.
Our company was subjected to an on-site
inspection on July 26, 2012 by the Fair
Trade Commission under the suspicion ofviolating the Antimonopoly Act concerningball bearings transactions. In addition, EUROPE
GmbH, one of our subsidiaries, was subjected
to an investigation on November 8, 2011 (localtime) by the European Commission under thesuspicion of violating the competition law of
the European Union concerning ball bearings
transactions.
In addition, our company and former directorsof our company and other people were accusedby the Fair Trade Commission and were charged
by the Tokyo District Public Prosecutor’s Officeon June 14, 2012 of violating the Antimonopoly
Act concerning ball bearings transactions.
Our company and Our Group have fully
cooperated with the investigation, etc. by therelevant authorities in Japan and overseas.
We offer our heartfelt apologies for having
caused a great amount of distress for ourshareholders, customers and all relevant
parties with regard to this series of events.

Our company has taken this turn of
events seriously and sincerely to heart andhas newly established the “Compliance
Committee” on June 4, 2012 with the aim offurther reinforcing our compliance system.
The Committee is chaired by the president ofour company and includes in its membership alawyer from the outside. It formulates policies
concerning compliance for the whole Groupand conducts planning and promotion ofvarious measures and supervision andinstruction regarding the state of activities.
Also, the Compliance Promotion Department
has been newly established as the implementation organization of the policies andmeasures that the Compliance Committee
formulates, and a Compliance Promotion Grouphas been newly established under each of
the sales, manufacturing and management
departments. They shall conduct the thoroughgoing indoctrination of the policies to andeducation and instruction of all our Group
employees including overseas personnel.
Our Group shall strive to achieve thoroughgoing compliance with laws and regulations,and the recovery of public trust through thecurrent reinforcement and reconstruction of
its compliance system.
I would like to express my sincerest
appreciation to all of our shareholders for theircontinued support and understanding.

President andRepresentative Director

August 2012

RESULTS OF OPERATIONS (Consolidated Operating Result for Second Quarter of Fiscal 2012)
Sales by Market

Sales by Business Segment
Special Steels/
Industrial Furnaces
and Others Cutting Tools
16%
9%
Hydraulic
Machine Tools/
Equipment
Precision Machinery
19%
¥85.1
12%
BillionRobots6%
Bearings
38%

Overseas Sales

Energy/Infrastructure
17%

Machinery/
Retail32%

Net Sales (¥ billions)

America26%¥85.1
BillionAutomotive
51%

Asia, Oceania,
andthe Middle East
61%

¥31.3
BillionEurope13%

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

166.0
14.6

134.8
107.5
78.9
55.4

85.1

8.2

61.5

7.1
5.9

3.0

(1.7)
(3.2)
FY

2009

2010

2011

2012

FY

2009

2010

2011

2012

TOPICS
Expanding Our Presence in the Chinese Market
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 establishing new manufacturing bases and expanding
our sales and services framework.
NACHI (JIANGSU) INDUSTRIES CO., LTD.
<Production Items>

Hydraulic equipment
for automobiles
Hydraulic equipment for
construction machines

Scheduled for completion in January 2013

NACHI (SHANGHAI) CO., LTD.

Our Group is establishing a manufacturing base in Zhangjiagang,
Jiangsu, that will serve as the core of our Chinese business andmoving forward with local production of hydraulic equipment, car
control valves and high precision tools.
Through this, Our Group is further reinforcing its supply system in
China and expanding demand for its products among the customer
base in the automobile, construction equipment and machine tools
sectors, which continue to grow.

Our Group has moved its
Shanghai sales base from
Jiading to Putou (near Hongqiao
Airport) in view of the reinforcement of the local staff
and of transport access.
It is promoting the developmentof local Chinese customers.

Developing the Indian Market
NACHI KG TECHNOLOGY INDIA PTE. LTD.
Embarking on local production of bearings for automobiles
and industrial machinery to meet rapidly growing
demand in the Indian market, which is seeing theconspicuous rise of market entries by Japanese andother global corporations and the development oflocal firms.
Scheduled for completion in March 2013

Deep groove radial bearings

Increasing Products and Expanding Markets
Our Group is developing innovative new products and working to increase our share in the automotive
market the energy and infrastructure markets.
◆ World Class Speed Robot SRA

Our Group has developed the world’s fastest spot welding robot by simultaneously reducing theweight and increasing the rigidity of the robot body and combing that with new control technology.
The robot responds to the need to enhance productivity by speeding up the welding process forautomotive bodies, and has been well received since it went on sale worldwide in November 2011.

■ Beefing Up Our Product Lineup

SRA100 for lightweight spot welding guns
Our Group has developed a 100kg payload
robot highly suitable for light (up to 100 kg)
spot welding guns.
It offers a significant reduction of automobile
body welding process cycle time compared
to previous models and contributes tothe enhancement of productivity.

Shelf-mounted Type SRA166T/210T
Long Arm Type SRA166L
Shelf-mounted Long Arm Type SRA166TL

Our Group has expanded our series of products that meet therequirements of a wide variety of situations on the production
line, including shelf-mounted types for welding by approachingfrom above and long arm types for avoiding obstacles.

◆ Flat Drills

A newly shaped drill with a 180° flat edge.
The flat edge eliminates the necessity for pre-stage machining of inclined and curved surfaces,
and makes single-procedure processing of back facing holes and blind holes possible.
The drill has been introduced successively since 2010.

■ Expanding Our Flat Drill Lineup

Aqua Drill EX FlatLong service life has been achieved by employing
ultrafine particle high-strength cemented carbides
and Aqua EX Coating, which has superior heat
and wear and abrasion resistance qualities.
This drill series are the most appropriate for highprecision, high efficiency processing of highvolume products.
Small diameter versions have been newly added
to the lineup in order to meet the processing
needs of high precision electronic parts.

SG Flat Drills
Large diameter types have been
added to our flat drill line.
They secure high rigidity in thelarge diameter domain.
This contributes to the improvementof productivity for large parts thatare used in construction machineryand power generators.

FINANCIAL STATEMENTS
Consolidated Balance Sheets
Item(¥ millions)Interim 2012(¥ millions)

PreviousItem(as of May 31, 2012) (as of November 30, 2011)ASSETS:Interim 2012

Previous(as of May 31, 2012) (as of November 30, 2011)

LIABILITIES:Current assets

104,805

89,443Current liabilities

70,88775,377

Notes and accounts payable

33,81936,758

Short-term bank loans

23,95325,216Other

13,114

13,403Long-term liabilities

62,01143,456

Bonds and long-term debt

49,62930,556

5,342

Allowance for retirement benefits

6,172

6,553

Other

6,209

6,346

132,898

118,834

Cash and cash equivalents

27,25913,118Notes and accounts receivable

36,85538,192Inventories

35,70632,790

4,984

Other

Fixed assets

92,391

90,347

Property, plant and equipment

77,724

76,235

Buildings and structures

27,49527,939

Shareholders’ equity

68,814

67,664

Machinery and equipment

35,77934,550Common stock

16,074

16,074

7,022

Additional paid-in capital

11,561

11,560Retained earnings

41,36940,218

7,173

Land

7,276

Other

6,722

366

391

Investments and advances

14,30013,720Total assets

197,197

179,791

Intangible fixed assets

Consolidated Statements of Income
Item(¥ millions)Interim 2012

Interim 2011

December 1, 2011
to May 31, 2012

December 1, 2010
to May 31, 2011

Net sales

85,17378,918Operating income

5,950

7,175

Ordinary income

5,091

6,348

Extraordinary income

1853

Extraordinary losses
Income before income taxes
and minority interests
Net income

39

144

5,070

6,256

2,643

5,129

Total liabilities

NET ASSETS:

△ 191

△ 189

△ 7,585△ 9,465

Minority interests

3,070

2,758

Total net assets

64,29860,957

Total liabilities and net assets

197,197

179,791

Treasury stock

Accumulated other comprehensive income

Consolidated Statements of Cash Flows
Item

Cash flows from operating activities
Cash flows from investing activities
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

Interim 2012(¥ millions)Interim 2011

December 1, 2011
to May 31, 2012

December 1, 2010
to May 31, 2011

4,095

7,394

△ 6,119△ 4,143

15,801△ 211

14,1403,135

13,07818,75627,21921,891SHAREHOLDER INFORMATION (As of May 31, 2012)
Number of Shares Issued: 249,193,436
29,298
Number of Shareholders:Major shareholders (top five):(Note) Shareholding ratio has been calculated after
deducting treasury shares (576 thousand shares).

Breakdown of Shareholders
ForeignInvestors
18,188,000
shares
(7.3%)

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

Shareholders

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

17,44813,182
12,91012,575
11,888

7.02
5.30
5.19
5.06
4.78

Securities
Companies
2,125,000
shares
(0.9%)DIRECTORS AND AUDITORS (As of August 2012)
President andRepresentative Director

Hiroo Honma

Managing Director

Yukihiko Tanaka
Managing Director

Noriyasu Shiba
Managing Director

Makoto Sasaki

Individuals
58,594,000
shares(23.6%)

Stock
Ownership
Associations
36,721,000
shares
(14.8%)
Financial
Institutions
86,405,000
shares(34.7%)

Other JapaneseCorporations
46,581,000
shares (18.7%)

CORPORATE OFFICERS(As of August 2012)Managing Director

Naoshi Katayama
Managing Director

Hideo Terakoshi
Director

Hideo Oba*
Director

Kenji Susukida

Director

Nobuo Segawa
Director

Nishiki Seto
Director

Sachio Tanaka
Director

Masayuki Kobayashi

Standing Corporate Auditor

Naoto Nakano

Standing Corporate Auditor

Atsushi Saguchi*Standing Corporate Auditor

Hiroshi Yamada
Corporate Auditor

Eiichi Fukushima**Outside director or outside corporate auditor.

CORPORATE INFORMATION (As of May 31, 2012)
Foundation:
Capital:Number of Employees:
Major Products:
Machining business
RobotsComponents
Materials business
Major Domestic Offices and Plants:
Toyama Head Office
Tokyo Head Office

Corporate Officer

Toshio Sugiura
Corporate Officer

Kiyoshi Meguro
Corporate Officer

Kazuhito Yoshida
Corporate Officer

Katsumi Nishijima
Corporate Officer

Shinichi Urata

Corporate Officer

Yasuo Hatakeyama
Corporate Officer

Isao Hori

Corporate Officer

Yusaburo Nomura
Corporate Officer

Satoshi Hamamoto
Corporate Officer

Hidenori Hayashi

December 21, 1928
¥16 billion
5,834 (Consolidated) 2,735 (Non-consolidated)
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

Tel:+81-76-423-5111+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
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 PRIVATE LIMITEDNACHI (SHANGHAI) CO., LTD.

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

INVESTOR INFORMATION
Securities Code:Fiscal Year:

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

Ordinary General Meeting of
February
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: 0120-78-2031 (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.

Cover photograph
The cover photograph captures an image ofa NACHI-FUJIKOSHI flat drill.
By adopting a new design with a 180°flat angle
for the drill edge,
a dramatic reduction in burr is achievedto the great delight of our customers.