Financial Results for the Third Quarter Ended July 31, 2016
[Japan GAAP] (Consolidated)
Date:

August 31, 2016

Company Name and Code:

Tomoe Engineering Co., Ltd. and Subsidiaries - 6309
(URL: http://www.tomo-e.co.jp/index_e.html)

Stock exchange listing:

1st Section, Tokyo Stock Exchange

Head Office:5-15, Kitashinagawa 5-chome, Shinagawa-ku, Tokyo, Japan

President:

Hitoshi Yamamoto

Investor Relations Contacts:

Toshiaki Yakura, Director, General Manager of Accounting Division, Tel: (03) 3442-5127

Date to report Quarterly Consolidated Financial Statement: September 12, 2016
Date for Dividend Payment:

Not applicable to this financial quarter

Preparation of Supplementary Explanatory Materials for Quarterly Operating Results: Not prepared
Briefing Session for Quarterly Operating Results: Not planned* Any fractional sums less than one million (or one thousand) yen are disregarded
1. Consolidated Financial Data for the Third Quarter Ended July 31, 2016
(1) Results of Operation (Consolidated)

Quarter Ended July 31, 2016
Quarter Ended July 31, 2015

(Percent: Change from the same quarter of the previous year)
Net Sales
Operating Income
Ordinary Income
Millions ofMillions ofMillions of
Yen
Percent
Yen
Percent
Yen
Percent
28,373
-1.9
1,091
60.3
910
-10.5
28,923
-1.3
680
-12.0
1,016
0.8

Quarter Ended July 31, 2016
Quarter Ended July 31, 2015

Net Income Attributable to
Owners of the Parent
Millions of
Yen
Percent
441
-43.0
775
5.8

Net Income per Share

Fully Diluted Quarterly
Net Income per Share

Yen
44.29
77.75

Yen
-

(Note) Comprehensive income
Third Quarter ended July 31, 2016: 50 million yen (-95.2%)

Third Quarter ended July 31, 2015: 1,057 million yen (26.4%)(2) Financial Condition (Consolidated)

Quarter Ended July 31, 2016
Year Ended October 31, 2015

Total Assets (A)(Millions of Yen)
34,08734,341Net Assets (B)(Millions of Yen)
24,801
25,200Net Assets Ratio(B) / (A) (Percent)
72.8
73.4

(Reference) Net assets
Third Quarter ended July 31, 2016: 24,801 million yen

Year Ended October 31, 2015: 25,200 million yen

2. Dividend Status(Record Date)
Year Ended October 31, 2015
Year Ending October 31, 2016
Year Ending October 31, 2016 (Prospect)First
Quarter-Interim
Term
22.50
22.50

Annual Dividend (Yen)Third
End ofQuarter
Fiscal Year
22.50
22.50

(Note) Revisions since the most recently released dividend projection: None

Annual45.00
45.00

3. Forecast for Earnings for the Year Ending October 31, 2016 (Consolidated)(Percent change from the previous Full Business Year)Net Sales
Operating Income
Ordinary Income(Millions of Yen) (Percent) (Millions of Yen) (Percent) (Millions of Yen) (Percent)
Full Business Year41,800
6.2
1,320
-4.9
1,330
-21.9
Net Income Attributable to Net Income per ShareOwners of the Parent(Millions of Yen) (Percent)
Yen
Full Business Year
660
-35.8
66. 14(Note) Revisions since the most recently released dividend projection: None
Notes(1) Significant changes in subsidiaries during this period (changes in specific subsidiaries involving changes in thescope of consolidation): None
Number of new subsidiaries: __(Company names):
Number of eliminated subsidiaries: __(Company names):(2) Adoption of simplified accounting method and the specific accounting method: None
(3) Changes of the principles, procedures, and representation of the accounting policies
1) Change due to revision of accounting standard: Yes
2) Other changes than the above 1): None
3) Change in accounting estimates: None
4) Retrospective restatements: None
For more information, please refer to the supporting data on page 4, (3) [Changes in accounting principles,changes in accounting estimates and retrospective restatements] of 2. [Matters Concerning Summary
Information (Notes)].
(4) Number of outstanding shares (Common stock)1) Number of outstanding shares as of quarter-end and year-end (including treasury stocks)
At July 31, 2016: 10,533,200 shares

At October 31, 2015: 10,533,200 shares

2) Number of treasury stocks as of quarter-end and year-end
At July 31, 2016: 554,667 shares

At October 31, 2015: 554,667 shares

3) Number of average shares (accumulated quarterly total)
At July 31, 2016: 9,978,533 shares

At July 31, 2015: 9,978,533 shares*Disclosure concerning status of implementation of quarterly review procedure
This quarterly earnings report is exempt from the quarterly review procedure based on the Financial Instruments
and Exchange Act. At the time of disclosure of this quarterly earnings report, the Company has not completed aquarterly review procedure based on the Financial Instruments and Exchange Act.
*Explanations for appropriate use of the earnings forecast and other special instructions
The forward-looking statements such as a forecast of our financial results described herein are based on theinformation currently available to us and certain assumptions that we believe are reasonable. Actual results could
differ materially due to various factors. Please refer to the Financial Results for the Quarter (Attachments) on page 3,(3) [Analysis of Future Forecast on Consolidated Earnings Forecast] of 1. [Qualitative Information on Quarterly
Consolidated Operating Results] for the operating results forecast.

Table of Contents (Supporting Data)

1. Qualitative Information on Quarterly Consolidated Operating Results...................................................................2(1) Analysis of Operating Results................................................................................................................................2(2) Analysis of Financial Condition..............................................................................................................................3(3) Analysis of Future Forecast on Quarterly Consolidated Earnings Forecast.......................................................3
2. Matters Concerning Summary Information (Notes)...........................................................................................4(1) Changes to material subsidiaries during the consolidated cumulative third quarter..................4(2) Application of special accounting method in the preparation of quarterly consolidated financial
statements......................................................................................................................................4(3) Changes in accounting principles, changes in accounting estimates and retrospective restatements...4(4) Additional Information..............................................................................................................................4
3. Quarterly Consolidated Financial Statement...........................................................................................................5(1) Quarterly Consolidated Balance Sheet. ................................................................................................5(2) Quarterly Consolidated Statements of Income & Quarterly Consolidated Statements of Comprehensive
Income......................................................................................................................................7
Quarterly Consolidated Statements of Income.....................................................................................................7
Quarterly Consolidated Statements of Comprehensive Income.........................................................................8(3) Notes for Quarterly Consolidated Financial Statements………………………………………………..9(Note for premise of going concern)……………………………………………………………...9(Notes for significant changes in shareholder’s equity)…………………………………………...9(Segment information) ………………………………………………………………………………...9
4. Overseas Net Sales (Supplemental Information)...................................................................................................10

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1. Qualitative Information on Quarterly Consolidated Operating Results(1) Analysis of Operating Results
During the consolidated third quarter year-to-date period, Japan’s economy on the whole continued to lack vigor.
Although personal consumption rose briskly as the employment and income environments continued to improve,and housing investment and spending on public works projects pushed growth temporarily upward, economic
activity was constrained by a downturn in exports and feeble growth in capital investment. Overseas, the future of
economic conditions remained opaque, fostered by the lack of strength in the U.S. economic recovery, the delayed
recovery of newly developing countries including China, and the problem of Great Britain’s withdrawal from the EU.
Given these circumstances, net sales for the Tomoe Engineering Group for the consolidated third quarterslipped 1.9% from the same period last year to 28,373 million yen, despite higher net sales in the Machinery &Equipment Business, as net sales were lower in the Chemical Products Business. With respect to earnings
during the period, operating income was 1,091 million yen, 60.3% up from the same period one year earlier,reflecting the significant increase in the Chemical Products Business profit, despite of lower profit in the
Machinery & Equipment Business. On the other hand, ordinary income, which was reflected by foreignexchange losses, was 910 million yen, 10.5% down from the same period last year. Furthermore, net income
attributable to owners of the parent was 441 million yen, 43.0% down from the same period last year, as the result ofbooking an asset impairment write-off of consolidated subsidiary noncurrent assets as an extraordinary loss.
Operating results by segment were as follows.
(Machinery & Equipment Business)
In the Machinery & Equipment Business, consolidated net sales for the year-to-date period were 6,495 million yen,
1.5% up from the same period last year. Although net sales of machinery, components and repair services forNorth America markets decreased, net sales of machinery, equipment and works, and components and repair
services for domestic private sector demand, as well as net sales of machinery, equipment and works for domestic
public sector demand remained steady.
From an earnings aspect, because net sales in the high-margin North America markets decreased, and in addition
the value of retained inventory was partially reduced, the operating loss was 128 million yen increased by 29 million
yen.
(Chemical Products Business)
In the Chemical Products Business, net sales of ceramics products for semiconductor equipment manufacturing in
the advanced materials sector, resin raw materials and UV curing resin for inks in the chemical materials sector, andmaterials for automotive and housing and construction applications in the industrial materials sector, all remained
strong. On the other hand, net sales of wire bonding equipment and transport trays for semiconductor
manufacturing applications and resin raw materials and products at Tomoe Engineering (Hong Kong) in theelectronics materials sector, and resin raw materials for the domestic plastics sector decreased. As a result,consolidated net sales for the year-to-date period were 21,877 million yen, 2.9% down from the same period lastyear.
With respect to earnings, operating income was driven by the growth in net sales for products in the industrial materials
sector and advanced materials sector, which have comparatively high margins, and amounted to 1,219 million yen,
56.3% up from the same period one year earlier.

2(2) Analysis of Financial Condition
Total assets as of the end of the consolidated third quarter under review were 34,087 million yen, down 0.7% or 253
million yen from the end of the previous consolidated fiscal year. This mainly reflected an increase of 838 million
yen in cash and deposits, and a decrease of 1,128 million yen in notes and accounts receivable–trade.
Liabilities were 9,285 million yen, up 1.6% or 144 million yen from the end of the previous consolidated fiscal year,
mainly because of a decrease of 275 million yen in provision for bonuses, and an increase of 359 million yen inadvances received.
Net assets stood at 24,801 million yen, 398 million yen or 1.6% down from the end of the previous consolidated
fiscal year. This mainly reflected a decrease of 111 million yen in valuation difference on available-for-salesecurities, and a 290 million yen decrease in the translation adjustments account.
As a result of the above changes, the equity ratio at the end of the consolidated third quarter under review
decreased by 0.6 point compared with the end of the previous consolidated fiscal year to 72.8%.
(3) Analysis of Future Forecast on Quarterly Consolidated Earnings Forecast
There are no revisions to the consolidated earnings forecast figures for the fiscal year ending in October 31, 2016that were announced in the “Financial Results for the Fiscal Year Ended October 31, 2015 [Japan GAAP](Consolidated)” released on December 9, 2015.

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2. Matters Concerning Summary Information (Notes)(1) Changes to material subsidiaries during the consolidated cumulative second quarter:
There are no pertinent matters to report.
(2) Application of special accounting method in the preparation of quarterly consolidated financial statements:
There are no pertinent matters to report.
(3) Changes in accounting principles, changes in accounting estimates and retrospective restatements:(Application of the Accounting Standard for Business Combinations and related standards)
Beginning from the first quarter consolidated accounting period, the Company has applied the Accounting Standard forBusiness Combinations (Accounting Standards Board of Japan Statement No. 21), the Accounting Standard forConsolidated Financial Statements (Accounting Standards Board of Japan Statement No. 22) and the AccountingStandard for Business Divestitures (Accounting Standards Board of Japan Statement No. 7), and has changed thepresentation of “Net income” and the presentation from “Minority interests” to “Non-controlling interests”. To reflect thischange in reporting method, the Company has made reclassifications to its quarterly consolidated financial statements
and consolidated financial statements for the third quarter of the prior consolidated fiscal year and the priorconsolidated fiscal year.
(Application of Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016)
In conjunction with amendment of the Corporation Tax Law, the Tomoe Engineering Group will apply the Practical
Solution on a Change in Depreciation Method Due to Tax Reform 2016 (ASBJ Practical Issue Task Force (PITF) No.
32) in the third quarter consolidated accounting period, and has changed its depreciation method for buildings andattached facilities and structures acquired on and after April 1, 2016 from the declining balance depreciation method tothe straight-line depreciation method.
The effect of this change on earnings is not material.
(4) Additional information(Effect of revisions to the corporate tax rate)
The Act for Partial Revision of the Income Tax Act Etc. (Act No. 15 of 2016) and the Act for Partial Revision of the
Local Tax Act (Act No. 13 of 2016) was enacted in the Diet session on March 31, 2016, and Japan’s corporate tax
rate and business tax rate have changed in the consolidated fiscal year beginning on or after April 1, 2016.
In conjunction with this change, the statutory effective tax rate used to calculate deferred tax assets and deferred tax
liabilities will be revised from 32.26% applied in the past to 30.86% for temporary differences expected to beeliminated in the consolidated fiscal years that begin on November 1, 2016, and on November 1, 2017, and to
30.62% for temporary differences expected to be eliminated in the consolidated fiscal years that begin from
November 1, 2018.
As a result, deferred tax liabilities (the amount after deducting deferred tax assets) were reduced by 50,583,000 yen.
In addition, income taxes-deferred were reduced by 46,284,000 yen, valuation difference on available-for-salesecurities increased by 4,486,000 yen, deferred losses on hedges increased by 54,000 yen, and adjustment on net
defined benefit was reduced by 241,000 yen, all were recorded in the third quarter consolidated year-to-date period.

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3. Quarterly Consolidated Financial Statement(1) Quarterly Consolidated Balance Sheets (Third Quarter)(Thousands of Yen)
End of Previous YearEnd of Third Quarter(October. 31, 2015)(July 31, 2016)

AssetsCurrent Assets
Cash and Deposits

5,295,280

6,134,030

Notes and Accounts Receivable-Trade

14,575,274

13,447,228

Merchandise and Finished Goods

2,883,186

3,397,171

Work in Process

1,428,858

1,332,074

Raw Materials and Supplies

814,139

834,800

Deferred Tax Assets

415,636

353,239

Others170,571-5,309296,01225,577,638

25,786,998

4,414,855

4,379,436

Accumulated Depreciation-1,554,623-1,630,604

Buildings and Structures, Net

2,860,232

2,748,832

Machinery, Equipment and Vehicles

4,105,001-3,469,389

3,753,779-3,317,249

635,612436,530Land

1,934,976

1,933,868

Others

1,094,601

1,089,797-1,004,257-966,764

90,343123,033

5,521,164

5,242,265

362,505

296,455

Investment Securities

1,189,880

1,038,575

Guarantee Deposits

83,64596,255

1,506,899

1,538,590

Others122,346

112,186

Allowance for Doubtful Accounts-22,775-23,851

Total Investments and Other Assets

2,879,996

2,761,757

Total Noncurrent Assets

8,763,665

8,300,477

Total Assets

34,341,304

34,087,476

Allowance for Doubtful Accounts
Total Current Assets‐7,558

Noncurrent Assets
Property, Plant and Equipment
Buildings and Structures

Accumulated Depreciation
Machinery, Equipment and Vehicles, Net

Accumulated Depreciation
Others, Net
Total Property, Plant and Equipment
Intangible Assets
Investments and Other Assets

Net Defined Benefit Assets5

(Thousands of Yen)
Liabilities and Net Assets

End of Previous YearEnd of Third Quarter(October. 31, 2015)(July 31, 2016)

Liabilities
Current Liabilities
Notes and Accounts Payable-Trade

5,836,44

5,838,164

Accounts Payable-Others

557,504

594,107

Income Taxes Payable

182,965

151,950

Advances Received

105,602464,806

Provision for Bonuses

701,392426,293

Provision for Directors' Bonuses

42,374

26,397

Allowance for Product Warranty

122,478

111,991

Others269,841465,729

7,818,605

8,079,440

Noncurrent Liabilities
Provision for Directors' Retirement Benefits

5,460

5,460

Net Defined Benefit Liabilities

54,052

51,7601,262,702

1,148,886

Total Noncurrent Liabilities

1,322,214

1,206,106

Total Liabilities

9,140,820

9,285,547

Capital Stock

1,061,210

1,061,210

Capital Surplus

1,483,410

1,483,410

Retained Earnings

22,313,936-363,591

22,306,810

Total Shareholders’ Equity

24,494,965

24,487,839

Accumulated Other Comprehensive Income
Valuation Difference on Available-for-Sale
Securities
Deferred Gains or Losses on Hedges

330,518

219,385748-19,995

Foreign Currency Translation Adjustment

415,072

124,931

Total Adjustment on Net Defined Benefit-40,820-10,232

Total Accumulated Other Comprehensive Income

705,518

314,089

Total Net Assets

25,200,484

24,801,928

Total Liabilities and Net Assets

34,341,304

34,087,476

Total Current Liabilities

Deferred Tax Liabilities

Net Assets
Shareholders’ Equity

Treasury Stock6-363,591

(2) Quarterly Consolidated Statements of Income & Quarterly Consolidated Statements of Comprehensive
IncomeQuarterly Consolidated Statements of Income (Third Quarter)(Thousands of Yen)
Third Quarter Ended

Third Quarter Ended

July 31, 2015

July 31, 2016

Net Sales

28,923,701

28,373,250

Cost of Sales

23,372,833

22,707,208

5,550,867

5,666,042

4,870,071

4,574,857

680,796

1,091,185

Interest Income

12,031

5,375

Dividends Income

25,86023,491

Rent Income

5,224

5,123

Foreign Exchange Gains

288,946-

Others23,846

17,964355,90951,955Interest Expenses

1,065

1,892

Commission Paid

8,743

8,752

Sales Discount

4,262

4,120

-

213,796

5,672

4,350

Total Non-Operating Expenses

19,744232,912

Ordinary Income

1,016,962

910,228

Gain on Sales of Noncurrent Assets

27,420-Gain on Sales of Investment Securities

58,703-

Total Extraordinary Income

86,124--

102,082-

102,082

1,103,086

808,146

Income Taxes-Current

115,631367,777

Income Taxes-Deferred

211,672‐1,539Total Income Taxes

327,303366,237Net Income

775,782441,908

775,782441,908

Gross Profit
Selling, General and Administrative Expenses
Operating Income
Non-Operating Income

Total Non-Operating Income
Non-Operating Expenses

Foreign Exchange Losses
OthersExtraordinary Income

Extraordinary Expenses
Loss on Impairment
Total Extraordinary Expenses
Income before Income Taxes

Net Income Attributable to Owners of the Parent

7

Quarterly Consolidated Statements of Comprehensive Income (Third Quarter)(Thousands of Yen)
Third Quarter Ended

Third Quarter Ended

July 31, 2015

July 31, 2016

775,782441,908

78,231-111,132

Deferred Gains or Losses (-) on Hedges-741-20,744

Foreign Currency Translation Adjustment

204,893-290,140

Adjustment on Net Defined Benefit-168

30,587

Total Other Comprehensive Income

282,215-391,429

1,057,997

50,4781,057,997

50,478Net Income
Other Comprehensive Income
Valuation Difference on Available-for-sale Securities

Comprehensive Income(Breakdown)Comprehensive Income attributable to Owners of the
Parent8

(3) Notes on Quarterly Consolidated Financial Statements(Note for premise of going concern)
There are no pertinent matters to report.
(Notes for significant changes in shareholder’s equity)
There are no pertinent matters to report.
(Segment Information, etc.)
Third Quarter Ended July 31, 2015
1 Information Pertaining to the Amount of Net Sales or Net Loss of Each Reporting Segment(Thousands of Yen)
Reported Segment
Machinery & Equipment
Business

Chemical Products
Business

6,401,112

22,522,588

28,923,701

28,923,701

-

-

-

-

Total

6,401,112

28,923,701

28,923,701

Segment Profit or Loss (-)-99,578

22,522,588
780,375

680,796

680,796

Net Sales
Net Sales to UnaffiliatedCustomers
Internal Net Sales among
Segments or AmountTransferred

Total

Grand Total(Note) The total amount of segment profit is identical to the operating income reported on the Quarterly Consolidated Statements of Income.

Third Quarter Ended July 31, 2016
1 Information Pertaining to the Amount of Net Sales or Net Loss of Each Reporting Segment(Thousands of Yen)
Reported Segment

Net Sales
Net Sales to UnaffiliatedCustomers
Internal Net Sales among
Segments or AmountTransferred

Machinery & Equipment
Business

Chemical Products
Business

6,495,949

21,877,301

-

Total

Grand Total

28,373,250

28,373,250

-

-

-

Total

6,495,949

21,877,301

28,373,250

28,373,250

Segment Profit or Loss (-)-128,783

1,219,969

1,091,185

1,091,185(Note) The total amount of segment profit is identical to the operating income reported on the Quarterly Consolidated Statements of Income.

2 Information Concerning Impairment Loss on Noncurrent Assets, Goodwill, and Other Items by Reporting Segment(Loss on Impairment Concerning Noncurrent Assets)
The Tomoe Engineering Group booked loss on impairment concerning noncurrent assets in the Chemical Products
Business. The reported amount of the loss on impairment in the consolidated Third Quarter under review was
102,082,000 yen.

9

4. Overseas Net Sales (Supplemental Information)
Third Quarter Ended July 31, 2015

(Thousands of Yen)

I. Overseas Net Sales
II. Consolidated Net Sales
III. Ratio of Overseas Net Sales to Consolidated Net Sales (%)

Asia
3,712,590

Other Regions
1,674,467

Total
5,387,058－－

28,923,701

12.8

5.8

18.6

(Notes)1. Areas including countries or regions are determined based on their degree of geographical proximity.
2. Main countries or regions included in the areas:(1) Asia: China, Korea, Taiwan, Thailand and India(2) Other regions: America and Egypt
3. Overseas net sales are sales of our company and subsidiaries made in countries and regions other than Japan.
Third Quarter Ended July 31, 2016

(Thousands of Yen)

I. Overseas Net Sales
II. Consolidated Net Sales
III. Ratio of Overseas Net Sales to Consolidated Net Sales (%)

Asia
3,807,537

Other Regions
711,616

Total
4,519,154－－

28,373,250

13.4

2.5

15.9

(Notes)1. Areas including countries or regions are determined based on their degree of geographical proximity.
2. Main countries or regions included in the areas:(1) Asia: China, Korea, Taiwan, Thailand and Vietnam(2) Other regions: America and Egypt
3. Overseas net sales are sales of our company and subsidiaries made in countries and regions other than Japan.

10