InterimBusiness
Reportfor the 127th Term2011.4.1−2011.9.30

To Our Shareholders
Thank you very much for your continuing support and patronage. I am pleased to present aninterim report of our business achievements for the 127th accounting period, that is, 1st April to 30thSeptember, 2011.
During this period, the sovereign risk became more apparent in Europe, exacerbating uncertainty
in the financial markets and leading to concerns of an economic slowdown not only in the Euro zone
but on a global scale. At the same time, in the Japanese economy, gradual progress was made inrecovering from the damage of the Great East Japan earthquake, however, the uncertainty in theEuropean and U.S. economy as well as the extended period of yen appreciation adversely affectedexports, and the income and employment environment failed to improve, blunting the speed ofrecovery.
Regarding the business environment of the metal surface modification the Parker Group faced, ourmain customers, who are in the automotive industry, were forced to reduce manufacturing due toparts supply problems after the Great East Japan Earthquake however, they made rapid progress inrecovering their manufacturing systems, leading to an uptake in domestic automotive manufacture.
However, uncertainty over the future has led to concerns for this sustainability, and the worsened
flood damage in Thailand, a major overseas manufacturing base, has led to a string of shutdowns ofoperations among our customers, which will inevitably lead to a shrinkage of business activities.
Against such a harsh business environment, the Parker Group has sought to create new highly
competitive technologies and strengthen our market commercialization of these products, as well as
continuous cost reduction. As a result, we have achieved the following consolidated results for thisperiod.
Net sales were 37,999 million yen (down 1.8% on the same period of the previous year), andoperating income was 5,064 million yen (down 13.5% on the same period of the previous year).
Ordinary profit was 5,879 million yen (down 9.1% on the same period of the previous year) andinterim net profit was 3,176 million yen (down 9.1% on the same period of the previous year).
Progress and achievements for each business segment are as follows.
(Chemicals Business)
Net sales were 17,537 million yen (down 4.9% on the same period of the previous year) andoperating income was 4,149 million yen (down 14.6% on the same period of the previous year). The
effects of the great earthquake in Japan were also felt by Japanese transplants throughout Asia and in
addition to the temporary fall in business results both within Japan and overseas, overall raw
material costs remained high, resulting in a reduction in our income and profits.

1(Equipment Business)
Nets sales were 4,527 million yen (up 36.4% on the same period of the previous year) andoperating income was 74 million yen (compared with 171 million yen in the red in the same period
in the previous year). Demand from customers in the automotive industry in Indonesia and China
increased, indicating that the business had taken off from the bottom and was on the rise, however,domestic equipment investment remained stagnant and the environment continued to be harsh.
(Jobbing Business)
Net sales were 14,746 million yen (down 4.8% on the same period of the previous year) andoperating income was 2,735 million yen (down 14.6% on the same period of the previous year). In
the first half of this period, directly after the great earthquake, domestic demand for surface
modification treatments decreased and profitability went down, with income and profits dropping,
however in the latter half of the period these recovered to the same level of the previous year.
(Other Business)
Net sales were 1,187 million yen (down 17.6% on the same period of the previous year) andoperating income was 106 million yen (down 43.3% on the same period of the previous year).
Profitability in the transportation business did not improve and income and profits fell down.
The interim dividend for this period was decided in a resolution of the Board of Directors held on
7th November which granted a dividend of ten yen per share, to be paid from 9th December, 2011.
As to the outlook for the latter half fiscal year, the Japanese economy is exhibiting signs ofrecovery however the slowdown in the European and U.S. economies, which are plagued by thefinancial crisis, and the appreciation of the yen which reached unprecedented highs, have both
impacted exports which are the pillar of our economic recovery. Furthermore, there has been no
fundamental resolution of the accident at the Fukushima nuclear power plant and power shortage andit is possible that the economy may return to a downward trend at any time. Moreover, there is theconcern that prices of raw materials may rise again due to competition for resources, rendering it
difficult to foresee our future business performance.
Against such a harsh economic environment, the Parker Group will be endeavoring to develop
surface modification technology which is unsurpassed in its innovation and originality, under its
slogan of “Back to the Basics”. We will actively promote investment at our overseas affiliates tostrengthen our business development in expanding overseas markets and do our utmost to strengthen
our corporate structure and profitability.
We look forward to your continuing cooperation and support.
President and C.O.O.

Kazuichi SATOMI
2Consolidated Balance Sheet
September 30

March 312011

2011(JPY Million)
AssetsCurrent assets

63,752

61,590Cash and deposits

24,64925,683

Notes and accounts receivable-trade25,34725,035Merchandise and finished goods

1,771

1,687

Work in process

4,128

1,715

Raw materials and supplies

3,514

3,323

Others

4,466

4,253

Allowance for doubtful accounts△125△108

Fixed assets

64,243

63,335

Tangible assets

36,07835,304

Buildings and fixtures, net

11,848

11,904Land

14,63914,545

Others, net

9,589

8,854

Intangible assets

1,850

1,866

Investments and other assets

26,314

26,164

Investment in securities

17,64918,231Others

8,845

8,112

Allowance for doubtful accounts

△180

△180

127,995

124,925

Total assets

3LiabilitiesCurrent liabilities

28,964

28,821

Notes and accounts payable-trade

12,161

11,992

Short-term loans payable

3,128

3,268

473

556

Corporate Income taxes payable

1,864

2,981

Provision for bonuses

2,118

2,316

Others

9,217

7,706

Current portion of long-term loans payable

15,326

Fixed liabilities
Long-term loans payable

3,522

3,138

Provision for retirement benefits

9,702

9,538

Others

2,101

2,124

Total liabilities

44,291

43,622

Shareholders' equity

72,93070,362Paid-in capital

4,560

4,560

Capital surplus

3,913

3,913Retained earnings

68,07865,508Treasury stock△3,621△3,619

Accumulated other comprehensive profit△2,654△1,929

1,580

2,163

Net assets

Valuation difference on available-for-sale securities△64

Deferred gains or losses on hedges
Foreign currency translation adjustment△4,171△4,041

Minority interests

13,42812,869Total net assets

83,70381,303

Total liabilities and net assets

127,995

124,925

4

Consolidated Statements of income
Six months ended September 302011

2010(JPY Million)

Net sales

37,99938,703

Cost of sales

23,38923,414Gross profit

14,60915,288Selling, general and administrative expenses

9,545

9,433

Operating income

5,064

5,855

Non-operating profit

1,002

942

Interest income

53

33

Dividends income

164

137

Rent income

153

163

Equity in earnings of affiliates

386

364

Other

244

242

Non-operating expenses

187

327

Interest expenses

46

71

Foreign exchange losses

54

164

Loss on valuation of derivatives

44

42

Other

41

Ordinary profit

5,879

6,470

Extraordinary profit

22

9

Extraordinary loss

112

47

Income before income taxes and minority interests

5,789

6,432

Income taxes

2,056

2,198

Income before minority interests

3,732

4,234

Minority interests in income

556

738

Net profit for the period

3,176

3,495

5