EIZO NANAO CORPORATION

Financial Highlights
Eizo Nanao Corporation and Subsidiaries
Thousands of
U.S. Dollars

Millions of Yen

2006

2007

2008

2008

¥ 85,058¥ 95,611¥ 89,308$ 893,080

Operating income

11,87911,656

8,475

84,750Net income

7,257

7,713

4,433

44,330Total assets

74,59083,56374,540745,400

Total equity

49,62356,34055,487554,870¥ 314.79¥ 339.35¥ 195.03

55.00

70.00

80.00

Years ended March 31:
Net sales

As of March 31:

Per share data: (Yen and U.S. Dollars)
Basic net income
Cash dividends applicable to the year

$

0.80

Note : U.S. dollar amounts are provided solely for convenience at the rate of ¥100 to US$1, the approximate exchange rate at March 31, 2008.

FlexScan®

ColorEdge®

1

RadiForce®

FORIS.TV®

1.95

FORIS.HDTM

Net Sales

Operating Income

Net Income

Net Sales by Products

Millions of Yen

Millions of Yen

Millions of Yen

Millions of Yen

89,30885,058

Monitor for Computer use
Amusement Monitor
Other
5,144
51,1325,276
5,209
38,44243,6007,713

95,611

11,8807,257

11,656

8,475
4,433
45,59036,249

2006

2007

2008

Total Equity

2007

2008

Basic Net Income per
ShareMillions of Yen
56,3402006

55,48749,623

Yen

2006

2008

2006

2007

2008

Total Equity per ShareYen

339.35314.792007

39,3352,478.62

2,441.13

2007

2008

2,178.63

195.03

2006

2007

2008

2006

2007

2008

2006

2

Consolidated Balance Sheets
Eizo Nanao Corporation and Subsidiaries

Thousands of
U.S. Dollars(Note 1)Millions of Yen
March 31, 2008 and 2007

2008

2008

2007

ASSETS
CURRENT ASSETS:
15,731$ 131,080

1,597

3,393

15,970Trade notes

577

584

5,770

Trade accounts

11,506

20,438115,060

Other

263

169

2,630

Allowance for doubtful receivables

(63)

(358)

(630)

Inventories (Note 6)

15,684

10,189156,840

Deferred tax assets (Note 10)

2,184

3,068

21,840

710

955

7,100

45,56654,169455,660

Land

3,131

3,080

31,310

Buildings and structures

11,732

10,783

117,320

Machinery and equipment

3,402

2,873

34,020Furniture and fixtures

4,211

3,791

42,110Cash and cash equivalents
Short-term investments (Note 5)¥ 13,108¥Notes and accounts receivables:

Prepaid expenses and other current assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT (Note 7):155Construction in progress
22,476

20,682

224,760(11,033)(9,982)(110,330)

11,443

10,700114,430

Investment securities (Note 5)

11,26017,413112,600

Goodwill

4,407

Total
Accumulated depreciation
Net property, plant and equipment
INVESTMENTS AND OTHER ASSETS:

218

60

2,180

Other assets

2,077

1,652

20,770Allowance for doubtful receivables

(431)

(431)

(4,310)17,531

18,694

175,310

83,563$ 745,400

Deferred tax assets (Note 10)

Total investments and other assets
TOTAL

See notes to consolidated financial statements.

3

44,070¥ 74,540¥Thousands of
U.S. Dollars(Note 1)Millions of Yen

2008

2008

2007

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Accounts payable:
10,275$ 73,780

1,799

3,050

17,990

Income taxes payable

2,266

3,805

22,660Accrued expenses

3,342

3,624

33,420

538

804

5,380

15,323

21,558153,230

1,989

1,801

19,890

Deferred tax liabilities (Note 10)

941

3,236

9,410

Other long-term liabilities

800

628

8,000

3,730

5,665

37,300

4,426

4,426

44,260Capital surplus

4,314

4,314

43,140Retained earnings

43,60441,016

436,040

Unrealized gain on available-for-sale securities

3,362

6,629

33,620Foreign currency translation adjustments

(217)

(43)

(2,170)

(2)

(2)

(20)

55,48756,340554,870

83,563$ 745,400

Trade accounts
Other

Other current liabilities
Total current liabilities

¥

7,378

¥

LONG-TERM LIABILITIES:
Liability for retirement benefits (Note 8)

Total long-term liabilities
COMMITMENTS AND CONTINGENT LIABILITIES(Notes 13 and 14)
EQUITY (Notes 9 and 15):
Common stock—authorized, 65,000,000 shares;
issued, 22,731,160 shares in 2008 and 2007

Treasury stock—at cost, 1,011 shares in 2008 and798 shares in 2007
Total equity
TOTAL¥ 74,540¥

4

Consolidated Statements of Income
Eizo Nanao Corporation and Subsidiaries

Thousands of
U.S. Dollars(Note 1)Millions of Yen

2008

Years Ended March 31, 2008 and 2007

NET SALES

2008

2007

¥ 89,308¥

95,611$ 893,080

COST OF SALES (Note 11)65,53070,600655,300

Gross profit

23,77825,011

237,780

15,303

13,355

153,030

8,475

11,65684,750Interest and dividend income

307

207

3,070

Interest expense(39)

Loss on disposal of property, plant and equipment—net(57)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 11)
Operating income
OTHER INCOME (EXPENSES):

(390)
(570)

(55)
(12)

Loss on impairment of long-lived assets (Note 7)
(106)

(2)

(1,060)

33

369

330

Other income—net

138

507

1,380

INCOME BEFORE INCOME TAXES

8,613

12,16386,130Current

3,485

5,670

34,850

Deferred695(1,220)

6,950

4,180

4,450

41,8007,713$ 44,330

Foreign exchange loss—net
Other—net

INCOME TAXES (Note 10):

Total income taxes
NET INCOME

¥

4,433

¥

Yen
Years Ended March 31, 2008 and 2007

U.S. Dollars

2008

2008

2007

PER SHARE OF COMMON STOCK (Note 2.p):
Basic net income
Cash dividends applicable to the year

See notes to consolidated financial statements.

5¥ 195.03
80.00

¥

339.35
70.00

$

1.95
0.80

Consolidated Statements of Changes in Equity
Eizo Nanao Corporation and Subsidiaries

Years Ended March 31, 2008 and 2007

BALANCE, APRIL 1, 2006
Net income
Cash dividends, ¥60 per share
Bonuses to directors
Net increase in unrealized gain on
available-for-sale securities
Net change in foreign currencytranslation adjustments
Purchase of treasury stock
BALANCE, MARCH 31, 2007
Net income
Cash dividends, ¥80 per share

Thousands

Millions of Yen

IssuedNumber of
Shares ofCommon Stock

Unrealized
Foreign
Gain onCurrency
Retained Available-for-sale Translation
Securities Adjustments
Earnings

CommonStockCapitalSurplus22,731 ¥ 4,426 ¥ 4,314 ¥ 34,769 ¥ 6,266 ¥
7,713(1,364)
(102)

363
108

22,731

4,426

4,314

41,016
4,433(1,818)

6,629

Total
Equity(1) ¥ 49,623
7,713(1,364)(102)

363

Decrease in retained earnings resulting fromadoption of a new accounting standard
on unification of accounting policies
applied to foreign subsidiaries for the
consolidated financial statements (Note 3)
Net decrease in unrealized gain on
available-for-sale securities
Net change in foreign currencytranslation adjustments
BALANCE, MARCH 31, 2008(151) ¥

Treasury
Stock

(43)

(1)
(2)

(27)

108
(1)
56,3404,433(1,818)(27)(3,267)22,731 ¥ 4,426 ¥ 4,314 ¥ 43,604 ¥ 3,362 ¥

(3,267)(174)(217) ¥(174)(2) ¥ 55,487

Thousands of U.S. Dollars (Note 1)

Years Ended March 31, 2008 and 2007

BALANCE, MARCH 31, 2007
Net income
Cash dividends, $0.8 per share
Decrease in retained earnings resulting fromadoption of a new accounting standard
on unification of accounting policies
applied to foreign subsidiaries for the
consolidated financial statements (Note 3)
Net decrease in unrealized gain on
available-for-sale securities
Net change in foreign currencytranslation adjustments
BALANCE, MARCH 31, 2008

CommonStockCapitalSurplus

Unrealized
Foreign
Gain onCurrency
Retained Available-for-sale Translation
Securities Adjustments
Earnings$ 44,260 $ 43,140 $ 410,160 $ 66,290 $
44,330(18,180)(430) $(270)

Treasury
Stock

Total
Equity(20) $ 563,400
44,330(18,180)(270)(32,670)(1,740)$ 44,260 $ 43,140 $436,040 $ 33,620 $ (2,170) $

(32,670)(1,740)(20) $554,870

See notes to consolidated financial statements.

6

Consolidated Statements of Cash Flows
Eizo Nanao Corporation and Subsidiaries

Thousands of
U.S. Dollars(Note 1)Millions of Yen

2008

Years Ended March 31, 2008 and 2007

OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Income taxes—paidDepreciation and amortization
Amortization of goodwill(Reversal) provision of doubtful receivables
Loss on disposal of property, plant and equipment
Bonuses to directors
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable(Increase) decrease in inventories
Decrease in accounts payable(Decrease) increase in accrued expenses
Increase in liability for retirement benefits
Other—net
Total adjustments
Net cash provided by operating activities
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Proceeds from sales of short-term investments and investment securities
Purchases of short-term investments and investment securities
Payment for purchase of newly consolidated subsidiary, net of cash acquired
Payment for acquisition of business (Note 12)
Increase in other assets
Net cash used in investing activities
FINANCING ACTIVITIES:
Increase (decrease) in short-term bank loans
Dividends paid
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENT
ON CASH AND CASH EQUIVALENTS
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
DECREASE IN CASH AND CASH EQUIVALENTS RESULTINGFROM EXCLUSION FROM CONSOLIDATIONCASH AND CASH EQUIVALENTS, END OF YEAR

See notes to consolidated financial statements.

7

¥

¥

8,613

2007

2008

12,163$ 86,130(5,003)
1,871
195
(292)
57

(3,967)
1,288
180
195
55
(102)

(50,030)
18,7101,950(2,920)570

9,697(4,357)(3,142)
(246)
73
114
(1,033)7,580(8,339)3,508(2,047)494
82
151(8,502)
3,661

96,970(43,570)(31,420)(2,460)730
1,140(10,330)
75,800(3,303)
15,240(13,088)(3,141)
9,303(11,532)(168)(33,030)
152,400(130,880)¥

(6,858)(359)(8,368)(436)(5,974)(68,580)(3,590)(83,680)

43(1,817)(1,774)(79)(1,362)(1,441)

430(18,170)(17,740)

48(3,706)
19,506(610)$ (26,230)
157,310(69)
15,731$ 131,080(61)(2,623)
15,731¥ 13,108¥¥Notes to Consolidated Financial Statements
Eizo Nanao Corporation and Subsidiaries

1. BASIS OF PRESENTING CONSOLIDATEDFINANCIAL STATEMENTS

The accompanying consolidated financial statements have been preparedin accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Law (formerly, the Japanese Securities andExchange Law) and its related accounting regulations, and in conformity
with accounting principles generally accepted in Japan ("Japanese GAAP"),
which are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to the consolidated
financial statements issued domestically in order to present them in aform which is more familiar to readers outside Japan. In addition, certain
reclassifications have been made in the 2007 consolidated financial
statements to conform to the classifications used in 2008.
The consolidated financial statements are stated in Japanese yen,
the currency of the country in which EIZO NANAO CORPORATION (the"Company") is incorporated and operates. The translations of Japanese yenamounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan and have been made at the rate of ¥100 to $1, theapproximate rate of exchange at March 31, 2008. Such translations should
not be construed as representations that the Japanese yen amounts could be
converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements as of March 31,
2008 and 2007 include the accounts of the Company and its 12 (11 in 2007)
subsidiaries (together, the "Group").
Under the control concept, those companies in which the Company,
directly or indirectly, is able to exercise control over operations are fully
consolidated.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profit included in assets
resulting from transactions within the Group is eliminated.
During the year ended March 31, 2008, EIZO GmbH has been included in
the consolidation as a result of its establishment.
b. Business Combination—In October 2003, the Business Accounting
Council issued a Statement of Opinion, "Accounting for Business
Combinations," and on December 27, 2005, the Accounting Standards Boardof Japan (the "ASBJ") issued ASBJ Statement No. 7, "Accounting Standard
for Business Divestitures" and ASBJ Guidance No. 10, "Guidance for
Accounting Standard for Business Combinations and Business Divestitures."
These new accounting pronouncements were effective for fiscal years
beginning on or after April 1, 2006.
The accounting standard for business combinations allows companies
to apply the pooling of interests method of accounting only when certain
specific criteria are met such that the business combination is essentiallyregarded as a uniting-of-interests.
For business combinations that do not meet the uniting-of-interests
criteria, the business combination is considered to be an acquisition and thepurchase method of accounting is required. This standard also prescribes theaccounting for combinations of entities under common control and for joint
ventures.
EIZO GmbH and Eizo Nanao Technologies Inc. acquired 100% of the
net assets of the medical monitor division of Siemens Automation andDrives on October 31, 2007 and accounted for it by the purchase method of
accounting. The related goodwill is systematically amortized over ten years.
c. Cash Equivalents—Cash equivalents are short-term investments thatare readily convertible into cash and that are exposed to insignificant risk ofchanges in value.
Cash equivalents include time deposits, certificate of deposit andcommercial paper, all of which mature or become due within three monthsof the date of acquisition.
d. Inventories—Inventories are stated at cost substantially determined by
the average method for finished products and work in process, and by themoving-average method for raw materials.
e. Short-term Investments and Investment Securities—Shortterm investments and investment securities are classified and accounted
for depending on management's intent. Available-for-sale securities, which
represent securities not classified as either trading securities or held-tomaturity debt securities, are reported at fair value, with unrealized gains andlosses, net of applicable taxes, reported as a separate component of equity.
The cost of available-for-sale securities sold is determined based on themoving-average method.
Non-marketable available-for-sale securities are stated at cost determinedby the moving-average method.
For other than temporary declines in fair value, investment securities are
reduced to net realizable value by a charge to income.
f. Property, Plant and Equipment—Property, plant and equipment
are stated at cost. Depreciation of property, plant and equipment of theCompany and its domestic subsidiaries is computed substantially by the
declining-balance method at rates based on the estimated useful lives of theassets, while the straight-line method is applied to buildings acquired after
April 1, 1998 of the Company and its domestic subsidiaries, and all property,
plant and equipment of foreign subsidiaries. The range of useful lives isprincipally from 15 to 50 years for buildings and structures, 10 years formachinery and equipment, and from 2 to 6 years for furniture and fixtures.
g. Long-lived Assets—The Group reviews its long-lived assets for
impairment whenever events or changes in circumstance indicate thecarrying amount of an asset or asset group may not be recoverable. An
impairment loss would be recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future cash flows expected
to result from the continued use and eventual disposition of the asset or
asset group. The impairment loss would be measured as the amount bywhich the carrying amount of the asset exceeds its recoverable amount,which is the higher of the discounted cash flows from the continued use andeventual disposition of the asset or the net selling price at disposition.
h. Retirement and Pension Plans—The Company and certain
subsidiaries have a defined contribution pension plan, non-contributory
funded pension plan and unfunded retirement benefit plans which coversubstantially all of their employees.
The Group accounted for the liability for retirement benefits based on the
projected benefit obligations and plan assets at the balance sheet date.
Retirement benefits to directors and corporate auditors are previously
provided at the amount which would be required if all directors andcorporate auditors retired at the balance sheet date.
In June 2004, the retirement benefit system was abolished, and theamount required to be paid at the time of the abolishment will be paid to
directors and corporate auditors upon their retirement.
i. Research and Development Costs—Research and development
costs are charged to income as incurred.
j. Leases—Under Japanese accounting standards for leases, finance leases
that deem to transfer ownership of the leased property to the lessee are to
be capitalized, while other finance leases are permitted to be accounted for
as operating lease transactions if certain "as if capitalized" information isdisclosed in the notes to the lessee's financial statements. All other leases
are accounted for as operating leases.
k. Bonuses to Directors—Bonuses to directors and corporate auditors
are accrued at the year end to which such bonuses are attributable.
l. Income Taxes—The provision for income taxes is computed based on
the pretax income included in the consolidated statements of income. The
asset and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities.

8Deferred taxes are measured by applying currently enacted tax laws to thetemporary differences.
m. Foreign Currency Transactions—All short-term and long-termmonetary receivables and payables denominated in foreign currencies aretranslated into Japanese yen at the exchange rates at the balance sheet
date. The foreign exchange gains and losses from translation are recognizedin the consolidated statements of income.
n. Foreign Currency Financial Statements—The balance sheet
accounts of the foreign subsidiaries are translated into Japanese yen at thecurrent exchange rate as of the balance sheet date except for equity, which
is translated at the historical rate.
Differences arising from such translation were shown as "Foreign
currency translation adjustments" in a separate component of equity.
Revenue and expense accounts of foreign subsidiaries are translated into
yen at the average exchange rate.
o. Derivatives and Hedging Activities—The Group uses derivative
financial instruments to manage its exposures to fluctuations in foreignexchange. Foreign exchange forward contracts and currency options
contracts are utilized by the Group to reduce foreign currency exchangerisks. The Group does not enter into derivatives for trading or speculative
purposes.
Derivative financial instruments and foreign currency transactions areclassified and accounted for as follows: (a) all derivatives are recognized
as either assets or liabilities and measured at fair value, and gains or losses
on derivative transactions are recognized in the consolidated statements
of income and (b) for derivatives used for hedging purposes, if derivatives
qualify for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items, gains or losses onderivatives are deferred until maturity of the hedged transactions.
The foreign currency forward contracts and currency options contracts
employed to hedge foreign exchange exposures for export sales and importpurchases are measured at the fair value and the unrealized gains/losses arerecognized in income.
p. Per Share Information—Basic net income per share is computed by
dividing net income available to common shareholders by the weightedaverage number of common shares outstanding for the period.
Cash dividends per share shown in the consolidated statements ofincome are presented on an accrual basis and include interim dividends paid
and year-end dividends to be approved after balance sheet date.
Diluted net income per share of common stock is not disclosed hereinbecause the Company has not issued any securities that are potentiallydilutive for the years ended March 31, 2008 and 2007.
q. New Accounting Pronouncements
Measurement of Inventories—Under Japanese GAAP, inventories are
currently measured either by the cost method, or at the lower of cost or
market. On July 5, 2006, the ASBJ issued ASBJ Statement No. 9, "AccountingStandard for Measurement of Inventories," which is effective for fiscal
years beginning on or after April 1, 2008 with early adoption permitted.
This standard requires that inventories held for sale in the ordinary courseof business be measured at the lower of cost or net selling value, which isdefined as the selling price less additional estimated manufacturing costs
and estimated direct selling expenses. The replacement cost may be used inplace of the net selling value, if appropriate. The standard also requires thatinventories held for trading purposes be measured at the market price.
Lease Accounting—On March 30, 2007, the ASBJ issued ASBJ Statement
No. 13, "Accounting Standard for Lease Transactions," which revised theexisting accounting standard for lease transactions issued on June 17, 1993.
The revised accounting standard for lease transactions is effective for fiscal
years beginning on or after April 1, 2008 with early adoption permitted forfiscal years beginning on or after April 1, 2007.
LesseeUnder the existing accounting standard, finance leases that deem totransfer ownership of the leased property to the lessee are to be capitalized,
however, other finance leases are permitted to be accounted for as operating

9lease transactions if certain "as if capitalized" information is disclosed in thenote to the lessee's financial statements. The revised accounting standard
requires that all finance lease transactions shall be capitalized recognizing
lease assets and lease obligations in the balance sheet.

3. ACCOUNTING CHANGE

Under Japanese GAAP, a company currently can use the financial statementsof its foreign subsidiaries which have been prepared in accordance withgenerally accepted accounting principles in their respective jurisdictions
for its consolidation process unless they are clearly unreasonable. On May
17, 2006, the ASBJ issued ASBJ Practical Issues Task Force (PITF) No. 18,"Practical Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements." The new standard
prescribes: (1) the accounting policies and procedures applied to a parent
company and its subsidiaries for similar transactions and events undersimilar circumstances should in principle be unified for the preparation of
the consolidated financial statements, (2) financial statements preparedby foreign subsidiaries in accordance with either International Financial
Reporting Standards or the generally accepted accounting principles in the
United States tentatively may be used for the consolidation process, (3)however, the following items should be adjusted in the consolidation process
so that net income is accounted for in accordance with Japanese GAAP
unless they are not material;(1) Amortization of goodwill(2)	Actuarial gains and losses of defined benefit plans recognized outside
profit or loss
(3) Capitalization of intangible assets arising from development phases(4)	Fair value measurement of investment properties, and the revaluation
model for property, plant and equipment, and intangible assets(5) Retrospective application when accounting policies are changed(6) Accounting for net income attributable to a minority interest
Effective April 1, 2007, the Company and its foreign subsidiaries haveadopted "Practical Solution on Unification of Accounting Policies Applied toForeign Subsidiaries for the Consolidated Financial Statements." As a resultof the adoption of this accounting standard, operating income and income
before income taxes decreased by ¥1,438 million ($14,380 thousand) for
the year ended March 31, 2008 from the amounts which would have beenrecorded under the method applied in the previous year. The cumulative
effect of the change as of the beginning of this fiscal year is ¥27 million($270 thousand), which is presented in retained earnings in the 2008
consolidated statement of changes in equity.

4. BUSINESS COMBINATION

A business combination for the year ended March 31, 2008 was as follows:a. Description of Business Combination(1) Name of Company (Transferor): Siemens Automation and Drives(2)	Contents of Acquired Business: Developing, manufacturing and sellingof monitors for medical business around modality and PACS (Picture
Archiving and Communication Systems) applications(3)	Reason and Purpose of Acquisition: To have an excellent reputation inthis industry sector and now offers, with the Siemens medical monitor
portfolio, excellent joint growth opportunities under one roof, which
could create the strong basis for boosting Eizo's medical monitor
business(4) Date of Business Combination: October 31, 2007
(5) Legal Form of Business Combination: Business transfer(6)	Name of Company (Transferee): EIZO GmbH, Eizo Nanao Technologies
Inc.
b. Period for Acquired Business Included in the Consolidated
Financial Statements
From November 1, 2007 to March 31, 2008

c. Description of Acquisition Costs
Thousands of Euro€

Purchase priceDirect costs
Total acquisition costs€

Unrealized
Gains

Cost

Goodwill:€27,796 thousand€1,400 thousand

Nature of goodwill:

Acquired products are expected to generatehigh profitability.

Equity securities

Goodwill are amortized over ten years by thestraight-line method.

e.	Assets Received and Liabilities Assumed on the Date ofBusiness Transfer
Name of company (transferee)

Eizo Nanao

EIZO GmbH

Current assets
Non-current assets:
Goodwill
Intangible assets (other)
Research and development costs
Other
Total

€

Current liabilities
Non-current liabilities
Total
Total acquisition costs€Technologies Inc.

€

14,182Others
Total

€

1,121
1,400

Equity securities
Debt securities
Total

€

2,521

€

2,521

€

2,521

¥ 3,619 ¥ 11,200 ¥
1
4,095

62 ¥ 14,757

1
1,852¥ 9,566 ¥ 11,202 ¥

10
1,843
78 ¥ 20,690

Unrealized
Gains

2007

2008

¥

1,597 ¥

3,196 $ 15,970¥

1,597 ¥3,393 $ 15,970

Equity securities

Total

18,97030

18,95014,757 $ 100,450

2008
Available-for-sale—
Equity securities

¥

2008

2007
16 ¥

116 $

160

The carrying values of debt securities and others by contractual maturities forsecurities classified as available-for-sale at March 31, 2008 are as follows:¥Millions of Yen

Thousands of U.S. Dollars

Available-for-sale

Available-for-sale

1,714

$

17,140Due after one year throughfive years

527

5,270

86

860

16

116

160

Debt securities

298

894

2,980

Due after five years throughten years

1,646

9,010

Due over ten years

17,413 $ 112,600

Thousands of
U.S. Dollars

Millions of Yen

Non-marketable equity securities

901

10

9,020
40
50
9,010
$ 71,990 $ 58,910 $ 2,490 $128,410

Available-for-sale securities whose fair values are not readily determinable asof March 31, 2008 and 2007 were as follows:

Due in one year or less¥ 11,260 ¥

Fair
Value

$ 44,000 $ 58,860 $ 2,410 $100,450

197¥ 10,045 ¥

Unrealized
LossesCarrying AmountThousands of
U.S. Dollars

Millions of Yen

Investment securities:
Marketable equity securities

4,090

Securities classified asavailable-for-sale:

Short-term investments and investment securities as of March 31, 2008 and2007 consisted of the following:

Others6

March 31, 2008

5. SHORT-TERM INVESTMENTS AND INVESTMENT
SECURITIES

Total

1,895

5
901
249 ¥ 12,841

Debt securities

Research and development costs are charged to income for the year ended
March 31, 2008.
Amortization of goodwill is ¥195 million ($1,950 thousand) for the year
ended March 31, 2008.

Short-term investments:
Debt securities

3

902
4
¥ 7,199 ¥ 5,891 ¥

Cost

Others2008

241 ¥ 10,045

1

Thousands of U.S. Dollars

2,874
506
3,380
51,172

€
€

1,897

Securities classified asavailable-for-sale:

Others27,796
2,800
8,300
1,474
54,552¥ 4,400 ¥ 5,886 ¥Debt securities

March 31, 2007

Thousands of Euro

OthersFair
Value

Securities classified asavailable-for-sale:

Eizo Nanao
Technologies Inc.

Total

Unrealized
LossesMarch 31, 2008

EIZO GmbH

Method and useful
lives of amortization:

Millions of Yen

50,385787
51,172d. Goodwill
Name of company (transferee):

The carrying amounts and aggregate fair values of the securities classified asavailable-for-sale at March 31, 2008 and 2007 were as follows:

Total

380
¥

2,707

3,800
$

27,07010

6. INVENTORIESInventories at March 31, 2008 and 2007 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2008
4,788 ¥3,905 $ 47,880

Work in process

2,005

1,314

20,050Raw materials and supplies

8,891

4,970

88,910Finished products

Total

¥

2008

2007

¥ 15,684 ¥

10,189 $ 156,840

7. LONG-LIVED ASSETS

The total loss on impairment of long-lived assets at March 31, 2007
amounted to ¥12 million. The contents of impairment were mainly land of¥11 million.
The recoverable amount of the assets is measured by net realizable value
based on reasonable estimates, either real estate appraised value by a third
party or the assessed value for property tax purposes. No impairment loss
was recognized in 2008.

8. RETIREMENT AND PENSION PLANS

The Company and its certain subsidiaries have severance payment plans for
employees, directors and corporate auditors.
Under most circumstances, employees terminating their employment
are entitled to retirement benefits determined based on the rate of pay at
the time of termination, years of service and certain other factors. Suchretirement benefits are made in the form of a lump-sum severance payment
from the Company or from certain subsidiaries and annuity payments froma trustee. Employees are entitled to larger payments if the termination
is involuntary, by retirement at the mandatory retirement age, by death,or by voluntary retirement at certain specific ages prior to the mandatory
retirement age.
The liability for employees' retirement benefits at March 31, 2008 and2007 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2008
Projected benefit obligation¥

Fair value of plan assets
Unrecognized actuarial (loss) gain
Net liability

¥

2008

2007

3,179 ¥2,233 $ 31,790(1,274)(615)(12,740)

(22)

60

(220)

1,883 ¥

1,678 $

18,830The components of net periodic benefit costs for the years ended March 31,
2008 and 2007 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2008
420 ¥

337 $

Interest cost

49

41

490

Expected return on plan assets

(32)

(7)

(320)

Service cost

¥

2008

2007

Recognized actuarial loss
Net periodic benefit costs

¥

4,200

2

6

20

439 ¥

377 $

4,390

Assumptions used for the years ended March 31, 2008 and 2007 are set forth
as follows:
2008

2007

Discount rate

2.00%–5.65%

Expected rate of return on plan assets

3.00%–4.40%

1.25%

5 years

5 years

Recognition period of actuarial gain/loss

11

2.00%

Certain foreign consolidated subsidiaries have adopted the corridor approachfor the amortization of actuarial gain and loss.
The liability for retirement benefits at March 31, 2008 and 2007 fordirectors and corporate auditors is ¥106 million ($1,060 thousand) and ¥123
million, respectively.

9. EQUITY
Since May 1, 2006, Japanese companies have been subject to the Corporate
Law of Japan (the "Corporate Law"), which reformed and replaced theCommercial Code of Japan. The significant provisions in the Corporate Law
that affect financial and accounting matters are summarized below:
a. Dividends	Under the Corporate Law, companies can pay dividends at any time
during the fiscal year in addition to the year-end dividend upon resolution
at the shareholders meeting. For companies that meet certain criteriasuch as; (1) having the Board of Directors, (2) having independent
auditors, (3) having the Board of Corporate Auditors, and (4) the term ofservice of the directors is prescribed as one year rather than two years
of normal term by its articles of incorporation, the Board of Directors
may declare dividends (except for dividends in kind) at any time
during the fiscal year if the company has prescribed so in its articles ofincorporation. The Company meets all the above criteria.
The Corporate Law permits companies to distribute dividends-inkind (non-cash assets) to shareholders subject to a certain limitation andadditional requirements.
Semiannual interim dividends may also be paid once a year upon
resolution by the Board of Directors if the articles of incorporation of thecompany so stipulate. The Corporate Law provides certain limitations on
the amounts available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for distribution to
the shareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.
b.	Increases/Decreases and Transfer of Common Stock, Reserveand Surplus
	The Corporate Law requires that an amount equal to 10% of dividends
must be appropriated as a legal reserve (a component of retained
earnings) or as additional paid-in capital (a component of capitalsurplus) depending on the equity account charged upon the payment ofsuch dividends until the total of aggregate amount of legal reserve andadditional paid-in capital equals 25% of the common stock. Under the
Corporate Law, the total amount of additional paid-in capital and legal
reserve may be reversed without limitation. The Corporate Law also
provides that common stock, legal reserve, additional paid-in capital,
other capital surplus and retained earnings can be transferred among theaccounts under certain conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
	The Corporate Law also provides for companies to purchase treasury
stock and dispose of such treasury stock by resolution of the Board of
Directors. The amount of treasury stock purchased cannot exceed theamount available for distribution to the shareholders which is determinedby specific formula.
Under the Corporate Law, stock acquisition rights, which werepreviously presented as a liability, are now presented as a separate
component of equity.
The Corporate Law also provides that companies can purchase bothtreasury stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.

10. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national
and local income taxes which, in the aggregate, resulted in a normal
effective statutory tax rate of approximately 40.4% for the years ended
March 31, 2008 and 2007.
The tax effects of significant temporary differences and tax loss
carryforwards which resulted in deferred tax assets and liabilities at March
31, 2008 and 2007 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2008

2008

2007

Deferred tax assets:
Inventories¥

1,034 ¥

1,078 $ 10,340

2008

2007

Normal effective statutory tax rate

40.4%

40.4%

Tax credit for research expenses

(3.2)

(2.4)

Increase (decrease) in less valuation allowance

9.0

(1.6)

Other—net

2.3

0.2

Actual effective tax rate

48.5%

36.6%

At March 31, 2008, certain subsidiaries have tax loss carryforwards
aggregating approximately ¥1,576 million ($15,760 thousand) which areavailable to be offset against taxable income of such subsidiaries in futureyears. These tax loss carryforwards, if not utilized, will expire as follows:
Thousands of
U.S. Dollars

Pension and severance costs

729

671

7,290

Year Ending March 31

Millions of Yen

Tax loss carryforwards

609

530

6,090

2009

¥

9,060

2010

2

20

36

360

Accrued expenses

906

1,150

2 $

20

Other

2,466

2,232

24,6602011

Less valuation allowance(1,960)(1,219)(19,600)

2012

126

1,260

37,8402013 and thereafter

1,410

14,1001,576 $

15,760			 Total

3,784

4,442

Total
Deferred tax liabilities:¥

11. RESEARCH AND DEVELOPMENT COSTS

Unrealized gain on		 available-for-sale securities(2,282)(22,820)(4,497)

Research and development costs charged to income were ¥6,244 million($62,440 thousand) and ¥4,176 million for the years ended March 31, 2008
and 2007, respectively.

Other

(80)

(83)

(800)

			 Total(2,362)(4,580)(23,620)

12. CASH FLOWS INFORMATION

14,220Assets and liabilities which were increased by business transfer and thepayment for business transfer for the year ended March 31, 2008 were as
follows:

Net deferred tax assets (liabilities)¥

1,422 ¥(138) $

Deferred tax assets (liabilities) were included in the consolidated balance
sheets as follows:
Thousands of
U.S. Dollars

Millions of Yen

2008
Current assets—Deferred tax assets¥

2,184 ¥

2008

2007

3,068 $ 21,840

Investments and other assets—
Deferred tax assets

218

60

2,180

(39)

(30)

(390)

(941)

(3,236)(9,410)1,422 ¥(138) $ 14,220

Current liabilities—
Other current liabilities
Long-term liabilities—

Current assets¥¥Thousands of
U.S. Dollars

2,042 $

20,420Non-current assets

2,012

20,120Goodwill

4,678

46,780		 Total¥

8,732 $

87,320Current liabilities¥

465 $

4,650

81

810

Non-current liabilities
		 Total¥546 $

5,460

Total acquisition costs¥

8,186 $

81,8601,328

13,2806,858 $

68,580Research and development costs

Deferred tax liabilities
Net deferred tax assets (liabilities)

Millions of Yen

Payment for acquisition of business¥

A reconciliation between the normal effective statutory tax rate andthe actual effective tax rate reflected in the accompanying consolidated
statements of income for the years ended March 31, 2008 and 2007 is asfollows:

1213. LEASESThe Group leases certain machinery, equipment and other assets. Totallease payments under financing leases arrangements that do not transfer
ownership of the leased property to the Company and its domestic
subsidiaries were ¥5 million ($50 thousand) and ¥7 million for the years
ended March 31, 2008 and 2007, respectively.
Pro forma information of leased property carried by finance leases that
do not transfer ownership of the leased property to the lessee on an "as if
capitalized" basis as of and for the years ended March 31, 2008 and 2007
was as follows:
Millions of Yen

2008

2007

MachineryandEquipment

Acquisition cost¥Accumulated depreciation
			 Net leased property¥All derivative transactions are entered into to hedge foreign currency
exposures incorporated within its business. Accordingly, market risk in thesederivatives is basically offset by opposite movements in the value of hedged
assets or liabilities.
Because the counterparties to these derivatives are limited to majorinternational financial institutions, the Group does not anticipate any losses
arising from credit risk.
Derivative transactions entered into by the Group have been made inaccordance with internal policies which regulate the authorization and credit
limit amount.
The Group had the following derivatives contracts outstanding at March
31, 2008 and 2007:

MachineryandEquipment

Total

Millions of Yen

2008

Total

22 ¥

22 ¥

31 ¥

31

12

12

16

16

10 ¥

10 ¥

15 ¥

15

Contract
AmountAccumulated depreciation
			 Net leased property$

220 $

220

120

120

100 $

100

Contract
Amount2008¥Thousands of
U.S. Dollars

2008

2007
6 $
9
15 $

40
60
100

The amount of obligations under finance leases includes the imputed interest
expense portion.
Depreciation expense, which is not reflected in the accompanying
consolidated statements of income, computed by the straight-line method,was ¥5 million ($50 thousand) and ¥7 million for the years ended March 31,
2008 and 2007, respectively.
The minimum rental commitments under noncancelable operating leases
at March 31, 2008 and 2007 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2008
77 ¥
156
233 ¥

2007
107 $
235
342 $

2008
770
1,560
2,330

14. DERIVATIVESThe Group enters into derivative contracts, including foreign currency
forward contracts and currency options contracts to hedge foreign exchange
risk associated with certain assets and liabilities denominated in foreign
currencies.

13(5) ¥ 590 ¥

2 ¥

2

Fair
Value

Unrealized
Lossforward contracts—

4 ¥
6
10 ¥

¥

¥

(5) ¥

Foreign currency
Buying Japanese ¥¥Unrealized
Gain

2008

Millions of Yen

Due within one year
Due after one year
			 Total¥ 473 ¥

Total

Obligations under finance leases:

Due within one year
Due after one year
			 Total

Fair
Value

Thousands of U.S. Dollars

MachineryandEquipment$Contract
Amountforward contracts—

2008

Acquisition cost

Unrealized
Loss

Foreign currency
Buying Japanese ¥Thousands of U.S. Dollars

Fair
Value

2007

$4,730 $ (50) $ (50)

The contract or notional amounts of derivatives which are shown in theabove table do not represent the amounts exchanged by the parties and do
not measure the Group's exposure to credit or market risk.

15. SUBSEQUENT EVENTS
a. Acquisition of Treasury Stock	From May 15 to June 4, 2008, the Company acquired 409 thousand
shares of treasury stock at an aggregate cost of ¥997 million ($9,970
thousand) with resolution of the Company's Board of Directors meeting
held on May 9, 2008.
b. Appropriations of Retained Earnings
	The following appropriation of retained earnings at March 31, 2008 wasapproved at the Board of Directors meeting held on May 23, 2008:
Millions of Yen

Year-end cash dividends, ¥40 ($0.4) per share¥

Thousands of
U.S. Dollars

909 $

9,090

16. SEGMENT INFORMATION
Information about industry segments, geographical segments and sales toforeign customers of the Group for the years ended March 31, 2008 and2007 is as follows:(1) Industry Segments
The Group is primarily engaged in the manufacture, development andsales of products in the visual display system and related products. Under
Japanese accounting regulations, the Group is not required to discloseindustry segment information because its main industry segment represented
more than 90% of its operations.

(2) Geographical Segments
The geographical segments of the Group for the years ended March 31, 2008
and 2007 are summarized as follows:
Millions of Yen
2008
North
AmericaJapan¥ 78,808
4,822
83,63071,189¥ 12,441¥ 44,442

Sales to customers
Interarea transfer
			 Total sales
Operating expenses
Operating income (loss)
			 Total assets

¥

¥
¥

Eliminations/
Corporate

Europe

3,772
16
3,788
3,633
155
1,460

Consolidated

¥

6,728
¥ 89,308
638 ¥ (5,476)
7,366(5,476)89,308
8,883(2,872)80,833¥ (1,517) ¥ (2,604) ¥ 8,475¥ 10,584 ¥ 18,054 ¥ 74,540

Thousands of U.S. Dollars
2008

Sales to customers
Interarea transfer
			 Total sales
Operating expenses
Operating income (loss)
			 Total assets

Japan

North
America$ 788,080
48,220836,300
711,890$ 124,410$ 444,420$ 37,720
160
37,88036,330$ 1,550$ 14,600

EuropeEliminations/
Corporate

Consolidated$ 67,280$ 893,080
6,380 $ (54,760)
73,660(54,760)
893,080
88,830(28,720)
808,330$ (15,170) $ (26,040) $ 84,750$ 105,840 $ 180,540 $ 745,400
Millions of Yen
2007

North
AmericaJapan

Sales to customers
Interarea transfer
			 Total sales
Operating expenses
Operating income (loss)
			 Total assets¥ 89,280
5,154
94,43479,781¥ 14,653¥ 52,732

¥

2,421

Europe¥

Eliminations/
Corporate

3,910
¥

¥
¥

2,421
2,653
(232) ¥
1,272 ¥

3,910
3,791
119
2,263

¥
¥

Consolidated¥95,611(5,154)(5,154)(2,270)(2,884) ¥27,296 ¥

95,611
83,955
11,656
83,563

Note: As discussed in Note 3 effective April 1, 2007, the Company adopted
the "Practical Solution on Unification of Accounting Policies Applied
to Foreign Subsidiaries for the Consolidated Financial Statements."
The effect of this change was to decrease operating income of North
America by ¥9 million ($90 thousand) and Europe by ¥1,428 million($14,280 thousand) for the year ended March 31, 2008.
(3) Sales to Foreign Customers
Sales to foreign customers for the years ended March 31, 2008 and 2007
consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2008

2,511

$ 35,240

24,25619,001

242,560

Other

2,516

1,905

25,16023,417$ 302,960

			 Total

3,524

2008

EuropeNorth America

¥

2007

¥ 30,296

¥

¥

14

Independent Auditors’ Report
Eizo Nanao Corporation

15

Group Network(As of September, 2008)

Eizo Europe AB
EIZO GmbH
Eizo Europe AB

Eizo Nanao AG

Eizo Nanao
Technologies Inc.
Headquarters

Eizo Nanao Corporation
Headquarters

Tech Source, Inc.
Eizo Nanao Technologies Inc.

East Coast
OfficeEast Coast Office

Eizo Nanao Corporation Headquarters
Overseas Group Companies
Overseas Distribution

Overseas Network
Eizo Nanao Technologies Inc.
Headquarters
5710 Warland Drive Cypress, CA 90630, U.S.A.
Phone: +1-562-431-5011 Fax: +1-562-431-4811
East Coast Office
One Center Court, Unit D Totowa, NJ 07512, U.S.A.
Phone: +1-973-785-8838 Fax: +1-973-785-8839
Eizo Europe AB
Lövängsvägen 14 194 61 Upplands Väsby, Sweden
Phone: +46-8-594 105 00 Fax: +46-8-590 91 575
Eizo Nanao AG
Moosacherstrasse 6, Au, CH-8804 Wädenswil, Switzerland
Phone: +41-0-44-782 24 40 Fax: +41-0-44-782 24 50

Eizo Nanao Corporation
Domestic Network
Domestic Support Network

EIZO GmbH
Siemensallee 84, 76187 Karlsruhe, Germany
Phone: +49-721-595-2614 Fax: +49-721-595-4558
Tech Source, Inc.
442 Northlake Blvd Altamonte Springs, FL 32701, U.S.A.
Phone: +1-407-262-7100 Fax: +1-407-339-2554
Domestic Network
Eizo Nanao MS Corporation
37-9 Re, Jike, Hakui, Ishikawa 925-8566, Japan
Phone: +81 767 22-7121 Fax: +81 767 22-6601

Nanao Agency Corporation
153 Shimokashiwano, Hakusan, Ishikawa 924-8566, Japan
Phone: +81 76 274-0035 Fax: +81 76 274-2416

Irem Software Engineering Inc.
655 Fukudome, Hakusan, Ishikawa 924-8533, Japan
Phone: +81 76 277-3800 Fax: +81 76 277-3622

EIZO Engineering Corporation
153 Shimokashiwano, Hakusan, Ishikawa 924-8566, Japan
Phone: +81 76 274-2448 Fax: +81 76 274-0041

Eizo Support Network Corporation
153 Shimokashiwano, Hakusan, Ishikawa 924-8566, Japan
Phone: +81 76 274-2424 Fax: +81 76 274-2416
16

Corporate Data
(As of March 31, 2008)

Board of Directors andStatutory Auditors(As of August 1, 2008)

Company Name
Eizo Nanao Corporation

Board of Directors

EstablishedMarch 1968

President and CEO
Yoshitaka Jitsumori

Capital¥4,425,745,500

Executive Vice President and CFO
Tsutomu Tanabe

Address
153 Shimokashiwano, Hakusan,
Ishikawa, 924-8566, Japan
Phone: +81-76-275-4121
Fax: +81-76-275-4125

Directors
Kazuya Maeda
Eiji Tsurumi
Masaki Ono
Yuichi Murai
Hidetsune Iseki

Employees on a Consolidated Basis
1,389
Business Activities
Development, design, manufacturing
and sale of display monitors andperipherals, amusement products, andimaging system software.

Statutory Auditors
Standing Corporate Auditor
Katsuhiro Hori
Corporate Auditors
Shuji Taniho
Masakatsu Atarashi
Masafumi Kubo

Managing Officer
Executive Managing Officer
Kazuya Maeda
Managing Officer
Eiji Tsurumi
Masaki Ono
Yuichi Murai
Shigekazu Matsumoto
Kazuhide Shimura
Muneharu Yamamoto
Toshimine Hiraki
Kazuhiko Deminami
Shuichi Arima
Hidenori Kojima

17

Shareholders‘ Information(As of March 31, 2008)

Total Number of Shares Authorized
65,000,000
Number of Shares Issued
22,731,160
Shares Listed On
The first section of the Tokyo Stock Exchange
Number of Shareholders
14,560Major Shareholders

The Master Trust Bank of Japan, Ltd.
(Investment Trust Account)
Yasutaka Murata
Tsuneo Murata
Naoki Murata
Tetsu Takashima
Japan Trustee Service Bank, Ltd.
(Investment Trust Account)
Hiroshi Murata
The Hokkoku Bank, Ltd.
Masayuki Murata
Northern Trust Company (AVFC)
Sub-account American Client.

Distribution of Shares
by Type of Shareholders

Number of Shares Held(Thousands)

Percentage of
Voting Rights (%)

1,567

6.90

1,135
1,135
1,135
1,083

4.99
4.99
4.99
4.77

963

4.24

902
500
495

3.97
2.20
2.18

397

1.75

Distribution of Sharesby Number of Shares

Financial Institutions
5,386,676 shares
Securities Firms
420,772 shares

500,000 or more
2,365,640 shares

100,000 or more
5,811,046 shares
50,000 or more
2,067,264 shares

1,000,000 or more
6,057,060 shares

10,000 or more
1,635,163 shares
Other Firms
812,100 shares
Foreign Companies
4,345,184 shares
Individuals and others
11,765,417 shares

Treasury Stock
1,011 shares

5,000 or more
466,400 shares

under 100
1,216 shares
100 or more
1,762,846 shares

500 or more
662,214 shares

1,000 or more
1,902,311 shares

18

EIZO NANAO CORPORATION
153 Shimokashiwano‚ Hakusan, Ishikawa 924-8566, Japan
Tel: +81-76-275-4121, Fax: +81-76-275-4125
http://www.eizo.com/