BUSINESS REPORT
2012
December 1, 2011 to November 30, 2012NACHI-FUJIKOSHI CORP.
Securities Code: 6474

TO OUR SHAREHOLDERS
I trust that all is well for our valued shareholders.
I am pleased to report that the NACHI-FUJIKOSHI Group’s business overview for the
fiscal year ended November 2012 (fromDecember 1, 2011 to November 30, 2012).

Business Environment

The NACHI-FUJIKOSHI Group faced a challenging business environment overall during
the fiscal year. This was due to such factors
as the economic adjustment in emerging
countries and fixing the appreciation of theyen, in addition to the financial and debt
crisis in Europe.

Business Progress and Results

Within such an environment, the NACHI-FUJIKOSHI Group has made an effort to expand
its business by proposing a wide range ofsolutions to its customers, making full use of
its strengths as a comprehensive machinery
manufacturer combining machining, robotics,
functional parts, and material businesses.
As a result, sales for the fiscal year totaled
172.2 billion yen, up 3.8% over the previous
fiscal year. Of this, sales in the Japanesemarket reached 110.2 billion yen, up 8.2%
over the previous fiscal year, while overseas
sales totaled 61.9 billion yen, down 3.3%.
Looking at each business sector in themachinery tool business, the automotive
area continued to remain steady, and theenergy/infrastructure area including aircraft
and power generation related products grew,leading to sales reaching 62.3 billion yen, up
12.6% over the previous period. In the parts
business, the automotive area remained
strong while its sales were 95.5 billion yen,down 0.1% in comparison with the previous
fiscal year. This was due to the influence
from the stagnation of the industrial machinery/commercial area, and the construction
machinery market in China. The sales inother sectors were 14.3 billion yen, which
was down 4.4% from the previous fiscal
year. This was due to decreased sales in thespecial steel area and for other reasons.
In terms of profitability, we made efforts
towards continuous cost cutting such as theenhancement of operational levels throughan increase in sales and production, as wellas the promotion of overseas procurement.
However, factors such as deteriorating
export margins due to the appreciation of
the yen, an increase in the fixed costs associated with the expansion of overseas business, and a decline in sales price seriously
affected the business. This resulted in 10.6
billion yen in operating income (27.3%
decrease from the previous fiscal year), 9.1
billion yen in ordinar y income (2 9.4%
decrease), and 4.5 billion yen in net income
for this period (54.2% decrease).

Cash Dividends

With regard to the fiscal year-end dividend,
taking into account the earning situation andfuture business development, it has been
decided that 6 yen in dividends would be
paid per share, which is the same amount as
the previous fiscal year.

Future Initiatives

As for the future outlook, production and capital investment in the automotive area and theenergy/infrastructure area including aircraft
and power generation related production are
expected to remain strong. However, the overall situation will continue to be tough due tofinancial and debt insecurity in Europe, andthe uncertain condition of the economic trendin emerging countries as well as in China.
The Group will continue to advancereforms in each section such as sales andservices, production and procurement, andresearch and development, while having ourbase in emerging markets where growth forthe mid- and long-term is expected. By
doing this, we will work on the expansion ofm e r ch an di s e an d p r o du c t r an g e t h ecreation of new business opportunities, andfundamental cost reform. We shall strive tofurther improve our performance and estab-lish a stable foundation for income in orderto realize the long-term vision of the Group.
On December 28, 2012, the NACHI -FUJIKOSHI Group and two employees wereconvicted in the Tokyo District Court forviolation of the Antimonopoly Law regarding
bearing transactions.
Taking this state of affairs solemnly andseriously, the Group has established the“Compliance Committee” for formulating
policies regarding compliance issues for theentire Group to further strengthen the compliance system. The Committee is comprehensively informing all employees in theentire Group including its overseas officesof the Group’ s policy, as well as carrying out
education and awareness building activities.
The Group shall work on improvement of
the management style focused towards therealization of the long-term vision, andendeavor to ensure thorough legal compliance as well as improving credibility.
I sincerely apologize to all our shareholders for the great deal of worry caused by thissituation. At the same time, I would like toexpress my gratitude for your continued
support.

President andRepresentative Director

February 2013

RESULTS OF OPERATIONS (Consolidated)

Sales by Market

Sales by Business Segment
Special Steels/
Industrial Furnaces
and Others Cutting Tools
8%16%
Hydraulic
Machine Tools/
Equipment
Precision Machinery
19%¥172.2
14%
BillionBearings
37%

166.0

Energy/Infrastructure18%

Machinery/
Retail32%

Robots6%

Net Sales (¥ billions)

Overseas Sales¥172.2
BillionAutomotive
50%

Operating Income (¥ billions)172.2

Asia, Oceania,
andthe Middle East
59%

America28%¥61.9
BillionEurope13%

Net Income for Fiscal Year (¥ billions)

14.6

10.0

134.8
10.6
5.5

8.2

4.5

FY

2010

2011

2012

FY

2010

2011

2012

FY

2010

2011

2012

TOPICS
Expanding the business in emerging economies
The Group works on the expansion of the business by promoting an increase in the local production items
and enhancement of the sales/service system in Chinese and Indian markets, which are expected toachieve long-term growth.
The China market

NACHI (JIANGSU) INDUSTRIES CO., LTD.

NACHI (SHANGHAI) CO., LTD.

The Group has founded a core base of Chinese production in
Zhangjiagang City in Jiangsu Province and begun local production ofrobots, hydraulic equipment, automotive hydraulics, and precision-tools since February 2013. We aim to obtain the demand inareas including automobiles, construction machineries, industrial
machineries, and general industry.

Due to the rising labor cost and shortage of manpower,
the needs for robotization have grown. Therefore, theGroup launched a service base in Changchun and Guangzhou in addition to Shanghai, Beijing, Shenyang andTianjin in order to enhance its sales structure.

Establishment of a technical centerWe will advance the development of new products matching themarket needs by launching the technical center, which accommodates the R&D function and a showroom.

-

The India market

LONG TERM CORPORATE VISION 2020
Accepting the challenges to grow theenterprise that achieve the aspiration of ourcustomers, associates and society.

MID TERM POLICY
1. Focus on emerging countries
Expand in all existing markets and develop
business in emerging markets in China, India,
ASEAN, Central and South America.

2. Creation of new products and new business
Create new products by cultivating seedtechnologies that will generate new businessfor future growth.

NACHI KG TECHNOLOGY INDIA PTE. LTD.
In the Indian market, where the demand for automotive and industrial
machinery sectors has been increasing, we will start local productionof bearings from July 2013.

3. Enhance and train associates
Provide an environment to invigorate associate
development and growth.
Develop international skills and utilize them.

Introducing new products to expand the markets
The Group makes efforts to develop new products and enhance merchandise, as well as work on the
expansion of the automotive, industrial machinery, and energy/infrastructure areas.

Integrated process type gear machining equipment “Gear Shape Machining”
Three essential processes for gear cutting - namely lathe turning, drilling, andgear cutting –are gathered together in one machine.
Reduction of the initial cost for installing the equipment and space-saving has
been realized.
This machine achieves high-mix, low-volume production by a medium-large gear
cutter used for construction machinery and power generators.

MQL Power Cell “DH314”
The MQL power cell series, which is ahighly efficient and space-saving typecrankshaft specializing in deep-hole
drilling, welcomed “DH314,” which was
created with the pursuit of miniaturization as a new line-up. It responds to thedownsizing in the automobile production line.

Duty Handling Robots “MC350”
While light-weight and high rigidity solutions have been
advanced, the Group has introduced the latest control
technology to develop the fastest robot within the same class.
It significantly shortens the transportation time in automobile production lines, and contributes to an improvement inoverall productivity.

High-performance Drill “SG-ESR Drill”
Using the high alloy powder metallurgy HSS and SG
coating, which is excellent against heat and wear
resistance, longer life has been achieved.
With the enhanced chip evacuation quality, high-precision
machining was made possible.
This drill is ideal for machining a variety of materials
including carbon steel and alloy steel, as well as structuralsteel, stainless steel, and titanium alloy.

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

2011

Item

(as of November 30, 2012) (as of November 30, 2011)ASSETS:

2012

2011

(as of November 30, 2012) (as of November 30, 2011)

LIABILITIES:Current assets

92,70489,443Current liabilities

66,15475,377

Notes and accounts payable

33,97936,758

Short-term bank loans

18,59525,216

Other

13,57813,403Long-term liabilities

55,80243,456

Bonds and long-term debt

42,18930,556

5,342

Allowance for retirement benefits

6,463

6,553

Other

7,149

6,346

121,956

118,834

Cash and cash equivalents

15,901

13,118Notes and accounts receivable

38,612

38,192Inventories

33,61132,790

4,578

Other

Fixed assets

94,476

90,347

Property, plant and equipment

78,29576,235

Buildings and structures

27,01827,939

Shareholders’ equity

70,756

67,664

Machinery and equipment

35,77434,550Common stock

16,074

16,074

7,022

Additional paid-in capital

11,561

11,560Retained earnings

43,312

40,218

7,103

Land

8.399

Other

6,722

448

391

Investments and advances

15,732

13,720Total assets

187,181

179,791

Intangible fixed assets

Consolidated Statements of Income
Item(¥ millions)

2012

2011

(as of November 30, 2012) (as of November 30, 2011)

Total liabilities

NET ASSETS:

△ 191

△ 189

△ 8,855△ 9,465

Minority interests

3,324

2,758

Total net assets

65,22460,957

Total liabilities and net assets

187,181

179,791

Treasury stock

Revaluations and translation adjustments

Consolidated Statements of Cash Flows
Item

2012

(¥ millions)2011(as of November 30, 2012) (as of November 30, 2011)

Net sales

172,259

166,023

Cash flows from operating activities

Operating income

10,63914,643

Cash flows from investing activities△ 11,916△ 8,383

Ordinary income

9,111

12,913

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

2,725

△ 9,742

2,683△ 5,677

13,07818,756

15,761

13,078Extraordinary income

3645

Extraordinary losses
Income before income taxes
and minority interests
Net income

365

734

8,782

12,223

4,585

10,016

11,81912,825SHAREHOLDER INFORMATION (As of November 30, 2012)
Number of Shares Issued: 249,193,436
30,052
Number of Shareholders:Major shareholders (top five):

Note: Shareholding ratio is calculated after
subtracting treasury stock (580,000 shares).

Breakdown of Shareholders
ForeignInvestors
13,810,000
shares
(5.6%)

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.
THE HOKURIKU BANK, LTD.

18,071
13,435
13,182
11,888
8,659

7.27
5.40
5.30
4.78
3.48

Securities
Companies
2,443,000
shares
(1.0%)DIRECTORS AND AUDITORS (As of February 20, 2013)
President andRepresentative Director

Hiroo Honma

Managing Director

Yukihiko Tanaka
Managing Director

Managing Director

DirectorStanding Corporate Auditor(As of February 20, 2013)
Corporate Officer

Masayuki Kobayashi

Nobuo Okada

Director

DirectorStanding Corporate Auditor

Toshio Sugiura

Hideo Oba*

Kazuhito Yoshida

Atsushi Saguchi*

Director

DirectorStanding Corporate Auditor

Kiyoshi Meguro
Shinichi Urata

Kenji Susukida

Katsumi Nishijima

Hiroshi Yamada

Director

Director

Corporate Auditor

Nishiki Seto

Isao HoriManaging Director

Director

Director

Sachio Tanaka

Hidenori Hayashi

Eiichi Fukushima**Outside director or outside
corporate auditor.

Financial
Institutions
83,476,000
shares(33.6%)
Other JapaneseCorporations
47,067,000
shares (18.9%)

CORPORATE OFFICERS

Naoshi Katayama

Noriyasu Shiba
Makoto Sasaki

Individuals
63,804,000
shares(25.6%)

Stock
Ownership
Associations
38,010,000
shares(15.3%)

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 November 30, 2012)
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
2,675 (Group employees 5,845)
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 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.

The Cover Photograph
The photo shows a hydraulic component mounted
on a small construction machine.
It produces a large amount of power from its
compact body and is used globally as one of
the key parts for moving construction machinery.