INTERIM BUSINESS REPORT2010
December 1, 2009 to May 31, 2010

NACHI-FUJIKOSHI CORP.
Securities Code: 6474

TO OUR SHAREHOLDERS
I am pleased to report the interim results for
the NACHI-FUJIKOSHI Group for the halfyear period from December 1, 2009 to May
31, 2010.

Business Environment
The business environment surrounding theNACHI-FUJIKOSHI Group during theinterim period under review showed signs,
albeit gradual, that economic recovery has
steadily formed a solid foothold, as
evidenced by a turnaround in the auto
industry underpinned by the robust economies of emerging nations and signs of arecovery in industrial machinery and consumer markets.

Business Progress and Results
Given this environment, the NACHIFUJIKOSHI Group moved forward withinitiatives to cultivate new markets and revitalize existing ones using its proprietary
engineering business.
As a result, consolidated net sales for theinterim period under review totaled 61.5
billion yen, up 11% on a year-over-year

The colorful triangle on the lower
right of the front cover symbolizes
the notion of “Sei-Han-Go,”or“ Fusing
discrete and opposing ideas intoone,” the Group corporate philosophy
implicit in the meaning of “Fuji”
in our name.

basis. Of this, net sales in the Japan market
were 38.3 billion yen, up 4.7% over the previous interim period, while overseas net
sales totaled 23.1 billion yen, up 23.2%.
In terms of profitability, although affected byincreasing raw materials costs and lower
sales prices, improved capacity utilization,
attributed to a recovery in sales and manufacturing, as well as efforts to curb overall
costs, including a fundamental review ofcost structures, helped us recover from a
1.7 billion yen operating loss in the previous
interim period to an operating profit of 3
billion yen. In addition, we were also successful in bringing ordinary income backinto the black at 2.2 billion yen, a recovery
from the 2.9 billion yen ordinary loss seenin the same period last year. Finally, net
income for the interim period under review
totaled 1.8 billion, marking a strong turnaround from the 4.7 billion yen net loss ofthe previous interim period.

Future Initiatives
As for the outlook moving forward, webelieve emerging nations will become key

growth drivers that will gradually push
recovery forward, but soaring raw materials
prices and deteriorating profitability fromexports attributed to the appreciation of theyen remain concerns, indicating that we are
not out of the woods just yet.
In the future, the NACHI-FUJIKOSHI Groupwill endeavor to cultivate emerging markets
as well as the energy and infrastructure
segments, where long-term growth isanticipated. We will also enhance our R&D
structures and competencies and implement cost reduction initiatives focused on
manufacturing and procurement as a means
to developing a stable profit structure andimprove our business results.
I would like to express my sincerest appreciation to all of our shareholders for theircontinued support and understanding.
August 2010
President and Representative Director

RESULTS OF OPERATIONS (Consolidated)
Sales by Market

Sales by Business Segment
Special Steels/
Industrial Furnaces
and Others Cutting Tools
16%
8%
Hydraulic
Machine Tools/
Equipment
Precision Machinery
7%18%¥ 61.5
RobotsBillion6%

Bearings
45%

Overseas Sales

Energy/Infrastructure
16%¥ 61.5
BillionMachinery/
Retail34%

Net Sales (¥ billions)

Automotive
50%

Europe11%

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

204.8

193.6

16.7

92.6

¥23.1
Billion

Asia, Oceania,
andthe Middle East
60%America
29%

15.5

107.5

104.8

9.5
7.9
55.4

61.5
3.0

(1.7)
(3.2)
2007

2008

2009

2010

2007

2008

2009

2010

TOPICS
Cultivating Emerging Markets
NACHI-FUJIKOSHI has shifted its focus to emerging nations, including China, ASEAN countries, India, the Middle Eastand South America. NACHI-FUJIKOSHI is expanding its presence by augmenting production structures andexpanding its sales coverage for manufacturing equipment in these key growth markets going forward.
■ ChinaNachi (Shanghai) Co., Ltd. (Shanghai, China)
In March 2010, we established the Robot
Business Center in Nachi (Shanghai)with an aim to capture growing demand forrobots used in the automotive and industrial
machinery sectors in China.

Dongguan Nachi C.Y. Corporation (Guangzhou, China)
We augmented our production capacity for bearings
used in constant velocity joints to meet expanding
demand from the automotive market in China.

Nachi (Shanghai) Precision Tools
Co., Ltd. (Shanghai, China)
We enhanced our local productionstructure for energy efficient hydraulicequipment used in construction
machinery and machine tools tocapitalize on growing demand.

Net Sales in Emerging Nations
We will aim to increase the percentage of sales fromemerging nations from 23% in fiscal 2009 to 30%.
Net Sales(￥100million)■ ASEAN■North America■Emerging Nations■Western Europe

ActualTargeting
30%of salesfromemergingnations

800

Nachi Technology (Thailand)Co., Ltd. (Rayong, Thailand)
In addition to enhancing ourproduction structure forvehicle and motorcycle
bearings, we established a new
cutting tool production lineand launched local production.
Through these initiatives, weaim to meet growing demand
from infrastructure projects.

600ForecastEmerging
400 Nations
320
300(17%)(16%)

365(18%)

200

006

0708

251(23%)370(28%) First Half162(26%)

09

2010

New Product Releases
During the interim period under review, NACHI-FUJIKOSHI launched a series of products aimed at capitalizing on
opportunities in the energy, infrastructure, industrial machinery and electronic equipment sectors.
High Performance Zinc Oxide Coating
Machine Z-TOPS
We released a new coating machine fortransparent conductive films required inphotovoltaic power systems, organic EL
displays and touch panel screens,each of which are expected to see robust
growth going forward. The machine wasco-developed together with HEMMI Slide
Rule Co., Ltd.

Offering a Complete Lineup of Hole Drilling Solutions

7-Axis Robotic Arm [MR35 / 50]
Powerful and Compact Robotic Arm[MR35 / 50 / 70]
We expanded our product lineup for
multipurpose robots to meet the increasingneeds for the automation andstreamlining of machining processes,
assembly and transfers.

AG Starting Drills
Provides high positioning
accuracy during centering.

Aqua Drill EX Flat

Aqua Drill EX Oil Hole

Represents an optimal
solution for flat bottom
boring and counterboring.

Delivers consistenthighly efficient boringover a broad range ofwork materials.

A Look at NACHI-FUJIKOSHI's Competitively
Superior Products
Energy Efficient Variable Displacement Pump
Inverter Drive NSP
The Inverter Drive NSP, which replaces the hydraulic units
installed in machine tools and industrial machinery,
achieves a high level of energy efficiency cutting electricity
consumption by 60% compared to the previous models.*
The Inverter Drive NSP comes in a standard 20-liter typeand compact 10-liter version to meet the needs of variousmachining layouts.
*NACHI-FUJIKOSHI comparison

EX-V Series Spherical Roller Bearings
for Vibration Environments
The EX-V Series features bearings thatdeliver high reliability even in the harshestwork environments, such as mining
equipment or recycling machinery.

FINANCIAL STATEMENTS
Consolidated Balance SheetsItem(¥ millions)Interim 2010

Interim 2010

Interim 2009

Current liabilities

72,011

68,124

Notes and accounts payable

24,434

18,175

Short-term bank loans

39,466

41,473

Other8,110

8,474Long-term liabilities

53,98456,002

Bonds and long-term debt

41,103

43,465

4,175

Allowance for retirement benefits

6,674

5,091

Other

6,206

7,445

125,996

124,126

Interim 2009

Item

(As of May 31, 2010) (As of May 31, 2009)ASSETS:(As of May 31, 2010) (As of May 31, 2009)

LIABILITIES:Current assets

83,70879,662

Cash and cash equivalents

29,41922,567

Notes and accounts receivable

25,99522,882Inventories

24,34930,037

3,943

Other

Fixed assets

94,242

99,574

Property, plant and equipment

79,39884,622

Buildings and structures

30,813

31,919

Shareholders’ equity

53,87055,649Machinery and equipment

35,32038,667

Common stock

16,074

16,074

7,334

Additional paid-in capital

11,56011,562Retained earnings

26,41528,184

7,348

Land

5,916

Other

6,701

342

423

Investments and advances

14,501

14,529Total assets

177,951

179,237

Intangible fixed assets

Consolidated Statements of Income(¥ millions)Interim 2010

Interim 2009

December 1, 2009
-May 31, 2010

December 1, 2008
-May 31, 2009

Net sales

61,51355,422

Operating income

3,059(1,789)Ordinary income

2,271(2,924)Item

Extraordinary income

1913Extraordinary losses
Income before income taxes
and minority interests
Net income44372

2,246(3,283)

1,820(4,760)Total liabilities

NET ASSETS:

(180)

(172)

Revaluations and translation adjustments(4,342)(3,019)Minority interests

2,426

2,480

Total net assets

51,954

55,110Total liabilities and net assets

177,951

179,237

Treasury stock

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 the year(¥ millions)Interim 2010

Interim 2009

December 1, 2009
-May 31, 2010

December 1, 2008
-May 31, 200912,282(3,965)(7,405)(9,319)(4,991)
24,397

1,049

9,601

28,262

12,83329,311

22,435SHAREHOLDER INFORMATION (As of May 31, 2010)
Number of Shares Issued:
Number of Shareholders:Major Shareholders:

249,193,436
34,192

Shareholders

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

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

15,474
13,182
12,301
11,888
8,659

6.21
5.29
4.94
4.77
3.48

Breakdown of Shareholders
ForeignInvestors
9,455,000
shares
(3.8%)
FinancialInstitutions
80,849,000
shares(32.4%)

Individuals
77,996,000
shares(31.3%)

OtherJapaneseCorporations
44,493,000
shares (17.9%)

DIRECTORS AND AUDITORS (As of August, 2010)

Stock
Ownership
Associations
33,312,000
shares
(13.4%)

Securities Companies
3,086,000 shares(1.2%)CORPORATE OFFICERS(As of August, 2010)

President andRepresentative Director

Managing Director

DirectorStanding Corporate Auditor

Corporate Officer

Corporate Officer

Hiroo Honma

Makoto Sasaki

Zenshiro Kaneko

Atsushi Saguchi*

Kiyoshi Meguro

Sachio Tanaka

Managing Director

Managing Director

Director

Corporate Auditor

Corporate Officer

Corporate Officer

Yukihiko Tanaka

Naoshi Katayama

Keiichi Ogino

Teruo Akashi

Masayuki Kobayashi

Toshio SugiuraManaging Director

DirectorDirector

Corporate Auditor

Corporate Officer

Corporate Officer

Noriyasu Shiba

Atsushi Seki*

Kenji Susukida

Eiichi Fukushima*

Nishiki Seto

Tadashi Yamazaki*Outside director or outside
corporate auditor

Corporate Officer

Corporate Officer

Nobuo Segawa

Shigeki Miwa

Managing Director

DirectorStanding Corporate Auditor

Kiyoshi Nakagawa

Hideo Terakoshi

Naoto Nakano

CORPORATE INFORMATION (As of May 31, 2010)
Foundation:
Capital:Number of Employees:
Major Products:
Machining
RobotsComponents
Materials & Heat Treatment
Major Domestic Offices and Plants:
Toyama Head Office
Tokyo Head Office

December 21, 1928
¥16 billion
5,374 (Consolidated) 2,603 (Non-consolidated)
Cutting Tools, Forming Tools, Cutting Saws, Machine Tools, Precision Machinery, Machining Systems
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, JapanNachi 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 / 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]+81-76-423-5111+81-76-438-4411+81-76-438-8970+81-76-471-2320

Higashi-Toyama Plant
Namerikawa Plant

INVESTOR INFORMATION
Securities Code:Fiscal Year:

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

Ordinary General Meeting ofFebruary
Shareholders:Voting rights at General
Record Date:

Unit:
Shareholders’ Register
Custodian:
Mailing Address:(Contact via phone):

URL:

Notifications of Changes of Address and Requests forPurchase of Additional Shares or Buybacks of Holdings
Less Than the Minimum Trading Unit

Meeting of Shareholders November 30
Year-end dividend
November 30
Interim dividend
May 311,000 shares3-33-1, Shiba, Minato-ku, Tokyo, JapanThe Chuo Mitsui Trust and Banking Company, Ltd.
2-8-4, Izumi, Suginami-ku, Tokyo 168-0063, JapanThe Chuo Mitsui Trust and Banking Company, Ltd.
Stock Transfer Agency Department
Toll-free: 0120-78-2031 (Toll-free in Japan)
Transactions are handled by Chuo Mitsui Trust andBanking Co., Ltd. and its branches nationwide andthe head office of Japan Securities Agents, Ltd.
and its branches nationwide.
http://www.nachi-fujikoshi.co.jp/eng/

Please notify the securities company with which you haveyour account. For those shareholders who do not have anaccount with a securities company and who have set up aspecial account instead, please notify Chuo Mitsui Trustand Banking Co., Ltd., which is the account administrator
for special accounts.

Payments of Accrued Dividends
Please contact Chuo Mitsui Trust and Banking Co., Ltd.,
which administers the shareholders registry.

Wonders from NACHI, Art in NACHI
Exciting Technology—that’s Art.

The cover photograph captures an image of a NACHI-FUJIKOSHI cylinder barrel kit installed ina hydraulic pump at the heart of industrial machinery.
The pumping action of the piston ensures oil flows to every corner of the machine.
Despite its compact size, the unit is a powerful piece of technology that provides stable and precise
supplies of oil powering the machines of the manufacturing industry.
NACHI-FUJIKOSHI endeavors to create art in the world of manufacturing.