ANNUAL REPORT 2013

NORITAKE CO., LIMITEDYear Ended March 31, 2013

Industrial Products

Ceramics & Materials

Engineering

TabletopProfile

Noritake Co., Limited, including its subsidiaries and associates(Hereinafter “The Noritake Group,” “The Group” or simply “Noritake”)
has developed technologies acquired from ceramics manufacturingexpertise and has expanded its business into such fields as grinding and polishing tools,
electronic component materials and manufacturing equipment.
With a focus on developing new products and technologies for energy-related industries—
including solar cells, an area of promising growth—
Noritake seeks to create new value for customers and society.
New Mid-term Business Plan
With the government’s recent economic policies, there are positive expectations for the Japanese economy, including a recovery
in consumption, a correction in the overvaluation of the yen and an end to deflation. Nevertheless, the business environment ispredicted to remain severe due to such concerns as slowing growth in China and other emerging countries, as well as the lingering
European debt crisis.
In light of these circumstances, the Group drew up its 9th Mid-term Business Plan, identifying
the major business challenges as being able to respond swiftly to market changes, andconstructing a business and management structure capable of achieving stable growth amid
increasingly intense global competition. We will make every effort to achieve full recovery andimprove our business performance.
The basic strategies of the 9th Mid-term Business Plan are as follows:(1) To develop new products and new technology offering price competitiveness,and boost market competitiveness to increase sales.
(2) To proceed with upgrades to overseas production bases, and improve thedevelopment and profitability of overseas markets.
(3) To promote an effective, efficient management structure and upgrades
to infrastructure.

Contents
1 Six-Year Financial Summary
12 Corporate Governance

2 Message from the Management

14 Consolidated Financial Review

5 Review of Operations

9 Topics

10 Research & Development

17 Consolidated Balance Sheets

18 Consolidated Statements of Income / Consolidated Statements of Comprehensive Income

19 Consolidated Statements of Changes in Net Assets

20 Consolidated Statements of Cash Flows

37 Report of Independent Auditors

21 Notes to Consolidated Financial Statements

38 Overseas Network / Directors, Corporate Auditors and Executive Officers

39 Corporate Data / History of Noritake

S I X - Y E A R F I N A N C I A L S U M M A RY

Millions of yen

Thousands of
U.S. dollars

2013

2012

2011

2010

2009

2008

2013

¥ 90,236¥102,152¥105,378¥ 87,596¥112,984¥133,368$ 959,957

64

1,880

4,326

(1,665)808

10,488681

Income (loss) before income
taxes and minority interests

2,693

5,972

3,703

(3,354)(3,059)10,171

28,649Net income (loss)

1,644

4,468

1,858

(4,501)(6,861)

5,669

17,48913.16¥ (31.32)¥ (46.82)¥

For the year:
Net sales
Operating income (loss)

Net income (loss) per share(yen/U.S. dollars)

¥

11.02

¥

31.99

¥

38.36

$

0.12

At year-end:
Total assets¥114,419¥117,735¥116,126¥109,595¥113,077¥141,644$1,217,223

Total net assets

66,58068,89665,42966,711

69,19285,908708,298

Capital ratio (%)

57.7

51.5

49.5

54.2

55.0

55.1

57.7

Note: The U.S. dollar amounts above have been translated at the rate of ¥94 to US$1.

Net Sales

Operating Income (Loss)Net Income (Loss)Net Income (Loss) per Share(Millions of yen)

(Millions of yen)

(Millions of yen)

(Yen)

105,378
102,152

31.99

4,468

4,326

90,23687,596

1,858

13.16

1,644

11.02

1,880
(4,501)64(1,665)

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NORITAKE CO., LIMITED’ 13

Annual Report 2013’10

(31.32)

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1

MESSAGE FROM THE MANAGEMENT

The management of Noritake Co., Limited wishes to thank all stakeholders
for their support over the past fiscal year. In addition, we would like totake this opportunity to comment on the Group’s results for fiscal 2013,
ended March 31, 2013.

Hitoshi Tanemura

Tadashi Ogura

Chairman &Representative Director

President &Representative Director

2Performance Overview for Fiscal 2013
In fiscal 2013, the European economy remained stagnant due to the debt crisis andthe U.S. economic recovery stalled, leading to the slowing of economic growth inemerging countries as well. Growing tension between Japan and China over a territorial dispute negatively impacted the economic activities of Japanese companies. In
Japan, the slump persisted in exports, as well as in the electronics and semi-conductor industries while manufacturers shifted production overseas at an increasing pace.
Although some positives signs, such as the weakening of the yen, emerged after thestart of the new government, the effect on this year’s operational results was minor.
Despite Noritake’s aggressive efforts under these difficult circumstances to develop
new products, expand sales and penetrate overseas markets, net sales in the first halfof fiscal 2013 were lower than the previous year. A rapid decrease in orders during thesecond half caused full-year net sales to decrease 11.7% to ¥90,236 million.
Looking at earnings, operating income dropped 96.6% to ¥64 million. This disappointing result was due to the decreased profitability of exports amid the strong yen,increasing energy and raw material costs, in addition to mounting expenditures that
included construction of overseas plants and relocating the headquarters’ plant. Net
income fell 63.2% to ¥1,644 million. This includes gains on bargain purchase frommaking KCM Corporation a wholly-owned subsidiary.
Amid these operating conditions, Noritake has made every effort to implement its
three-year mid–term business plan, which commenced in April 2010.
The following five key initiatives form the core strategies of this plan, which we havedone our utmost to achieve:
1. Selecting and concentrating businesses
2. Strengthening new products and technological development
3. Penetrating overseas markets
4. Expanding overseas production
5. Upgrading management infrastructure
In regards to the development of new products and the expansion of sales, the prices
of solar cells are collapsing amid overinvestment in the market, raising concerns that
manufacturers in advanced nations will pull out of the market and those in emerging
nations will fail. These factors seriously hampered sales expansion of electronic paste
used as electrodes and wires used in slicing silicon wafers. Additionally, the delay inthe proliferation of electric vehicles was a factor in the sluggish sales of kilns and dry
furnaces used to manufacture lithium-ion batteries.
In regards to penetrating overseas markets, the strong yen was a major obstacle
and the construction of overseas manufacturing bases was slightly delayed for a variety of reasons. In Thailand, the new diamond tool plant and expanded production

NORITAKE CO., LIMITED

Annual Report 20133

facilities at the gypsum plant began operations and, in China, the grinding wheel plantis nearing completion. We have decided to invest capital in a Chinese abrasive clothand paper manufacturer with the aim of seriously developing the abrasive cloth andpaper industry in China. And we are currently reorganizing our overseas production
framework as production of thick film circuit substrates is shifted to the Indonesianplant and an integrated production system is established for cubic boron nitride (CBN)
grinding wheels in the U.S.
In addition, Noritake bolstered and improved the efficiency of its management structure while pursuing across the entire Group stronger manufacturing, compliance, labor
health and safety, and environmental management.

Basic Policy Regarding Earnings Distribution
Noritake has positioned returning profit to shareholders as a key management policy.
Based on this policy, we place emphasis on stable dividend payments over the longterm and the distribution of earnings by comprehensively taking into consideration factors that include performance results, financial conditions and future business development. In addition, we make effective use of retained earnings for investment aimed atcreating new technologies and products that can become a foundation for the
Noritake Group’s future strength, as well as for capital investment for sustainable business development in growth fields. With regard to dividend payments, Noritake distributed ¥4.0 per share as the fiscal year-end dividend. Combined with the interim
dividend, this brought the full-year dividend to ¥8.0 per share.

Through the concerted and unified efforts of all executive officers and employees of
the Noritake Group to steadily implement the mid-term business plan’s core strategies,
Noritake aims to establish a growth trajectory responsive to changing times.

We ask for the continued understanding and steadfast support of our shareholders.

Hitoshi Tanemura
Chairman & Representative Director

Tadashi Ogura
President & Representative Director

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NORITAKE CO., LIMITED

Annual Report 2013

R E V I E W O F O P E R AT I O N S

Industrial Products

Chamfering Wheel for
LCD Glass Panels

Business Status

Breakdown of Sales

I

automobile and steel-making industries
remained steady in the first half of the fiscal

year. However, sales fell sharply in the second
half in line with decreased automobile produc-

39.3

%

tion due to tension with China and the termination of eco-car subsidies, as production
adjustments began in bearings and other relatedindustries. Overseas, sales increased only slight-

Sales(Millions of yen)ly due to the strong yen, despite continued highlevels of steel production in China and steady

37,19035,440automobile production in the Americas andSouth East Asian regions. As a result, consolidated net sales of the Industrial Products Groupdeclined 4.7% year on year to ¥35,440 million
and the segment recorded an operating loss of¥85 million.

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NORITAKE CO., LIMITED

Annual Report 2013

Business Strategy
n the production side, the relocation of
Noritake’s grinding wheel plant fromthe headquarters to the Miyoshi Site
will raise our competitiveness in regards to
product quality, cost and delivery. We will also
put production on track as soon as possible atour overseas plants, including those in Thailand
and China, in order for us to use them as supply bases for penetrating overseas markets.
On the development side, we are continuing
to improve both the performance and cost of
diamond wire. We will also endeavor to develop
new applications for diamond wire, including
those for semiconductor wafers and sapphireglass. By raising the competitiveness of diamond wire, we aim to expand it as one of ourcore products.
On the sales side, we will strive to further
increase our marketing efficiency in Japan andto strengthen and develop overseas channels,
especially in Asia.

On Japan, sales from major customers in the’135

Ceramics & Materials“Touch Switch”

Business Status

S

Breakdown of Sales

ales of electronic pastes decreased, as

oping differentiated products for use inmarket instability and lower silver prices,(MLCCs) were affected by the trend towardsIn regard to electronic pastes, we are devel-

those used in solar cells were affected bywhile those used in multi-layer ceramic capacitors

Business Strategy

solar cells, as well as lower-priced products

33.9

%

for use in multi-layer ceramic capacitors(MLCCs) and products with new applications.

smaller sizes. Thick film circuit substrates enjoyed

We will try to improve price competitivenesshigher sales from automobile-related demand,and profitability for thick film circuit substrates

while sales of gypsum, ceramic carriers, coresand other ceramic products decreased amid

as we raise our overseas production ratio. As
Sales(Millions of yen)market stagnation. Sales of vacuum florescentdisplays (VFDs) decreased as we discontinued

for gypsum, we will strengthen sales in the
Asian region, as the expanded Thai factory

35,480looks to begin full operations. In regards to
30,583glass-only items sales to focus on modules.

ceramic carriers, ceramic cores and vacuum

At KCM Corporation, sales of glass materials forfluorescent displays, we are promoting

LCD TVs and materials for MLCCs decreased

technological improvements and new productdue to worsening market conditions. As a result,development. Turning to KCM Corporation, it

consolidated net sales for the Ceramics &is engaged in the development of products

Materials Group fell 13.8% year on year to

aimed at new applications including those for¥30,583 million and operating income decreased

fuel cells, decorations and dental products in

66.6% year on year to ¥638 million.
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addition to electronic components.
NORITAKE CO., LIMITED

Annual Report 2013

E n g i n e e r i n g

Mixing Equipment
for Powder & Liquid

Business Status

Breakdown of Sales

S

ales of mainstay dry-furnaces andkilns decreased significantly as capital
investment in lithium-ion battery man-ufacturing dried up. Sales of filtration and mixing equipment edged down as demand in

17.7

%

Business StrategyIn regard to dry-furnaces and kilns used in
making lithium-ion batteries, we will reinforce our price competitiveness throughoverseas procurement and the developmentof new applications as we proceed withJapan decreased, even as Japanese compa-

development of differentiated technologies.

nies increased overseas capital investment

For filtration and mixing equipment as well as

and demand rose for individual filtrationequipment to be attached to machine tools.

carbide tipped circular sawing machines,
Sales(Millions of yen)

Grinding machine sales decreased due tocutbacks in investment in the steel industry.

we will endeavor to enhance the functions
and performance of our existing products as

21,467well as to expand our sales channels in

Sales of carbide tipped circular sawing

Asian markets.
15,927

machines increased in emerging countries,
but decreased in developed countries. As aresult, consolidated net sales for theEngineering Group decreased 25.8% year on
year to ¥15,927 million and the segment
recorded an operating loss of ¥41 million.
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NORITAKE CO., LIMITED

Annual Report 2013’13
7

T a b l e t o p“Acanthus”: Noritake Bone China

Business Status

I

Breakdown of Salesn Japan, we are developing new items forditions prevailing at department stores inthe “cher blanc” series and other premium

Japan, sales increased slightly due to arebound in hotel and restaurant demand andstrong demand for the high-quality casual

Business Strategy

In Japan, despite the continued harsh con-products. We’re aiming to strengthen our

9.2%

brand power and increase orders utilizing ourflagship shop Noritake Ginza, which opened

tableware series “cher blanc” launched last

last year. Overseas, we will endeavor tospring. Overseas, rising sales at American

upgrade our marketing structure and sales

department stores helped buoy sales despite
reduced sales to Asian airlines. As a result,

networks for the affluent of China, India, theSales(Millions of yen)

the Tabletop Group posted a year-on-yearincrease in consolidated net sales of 3.4% toMiddle East and elsewhere. On the production side, we are engaged in improving the

8,015

8,286

¥8,286 million and the segment recorded anyield rate and productivity of our factories inJapan and overseas.

operating loss of ¥448 million.

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NORITAKE CO., LIMITED

Annual Report 2013

TOPICS

1.

Noritake Ginza Opens!

On October 11, 2012, Noritake Ginza opened in Tokyo’s exclusive Ginza
district. The store offers an extensive range of Noritake and Okura Art
China products, including fine craftwork, gifts in addition to dinnerware.
The Ginza area is replete with famous brand-name stores, and this shop
was established to raise brand awareness of Noritake tableware among alarger number of customers.
The inside of the store radiates elegance with its monotone color
scheme, displaying our “Masterpiece Collection” and expensive bone china
centerpieces. In addition, a corner of the store has been dedicated to the

Noritake Ginza“cher blanc” series, which began sales last February, offering customers new
ideas for place settings.
With this new store, we hope to extend the appeal of the Noritake brandand please customers seeking to enrich and enjoy their daily lives. Please be
sure to stop by if you visit the Ginza district.

2.

Operations Start at the Engineering Group’s Test Center

After moving from headquarters to the Komaki Factory, the Engineering Group’s test
center for heating furnaces, mixers and filtration systems began operations in March
2013. The test center is a facility that conducts verification tests that customers use
to determine whether to purchase equipment. The existing building has been renovated and with the addition of a newly constructed building, total floor space now
extends to 4,500 square meters.

Engineering Group’s Test Center

Going forward, we will continue to meet our customers’ expectations by more
fully enhancing this facility.

3.

Expanded Sales of “Gear Ace” Vitrified-bonded Wheels forGear Grinding

Sales have been steadily increasing for “Gear Ace” grinding wheels developed tofinely grind gears used as mechanical components in automobiles, wind-turbinesand other machines.
A higher level of precision is being demanded in the processing of component
gears as customers seek reduced noise and vibration, along with improved energy
efficiency in applications ranging from wind-turbines to automobiles and motorcycles.

“Gear Ace”

Noritake’s Gear Ace series is available in three types of grinding materials; eachone designed to meet individual user needs and create very fine gears.

4.

Ceramic Cores for Precision Casting “˚C Monarc” Begins Sales

Noritake has developed new ceramic cores used in forming precision casting
components. “ ˚C Monarc” is able to reduce the number of defects that occur during
casting, contributing to improved product quality for the user. As demand is expected to continue growing in fields that use ceramic cores, we will strive to aggressively
expand sales of “ ˚C Monarc” with the aim of gaining a larger share of the market.
“˚C Monarc”

NORITAKE CO., LIMITED

Annual Report 20139

RESEARCH & DEVELOPMENTThe R&D activities of the Noritake Group primarily revolve aroundIndustrial Products

the Research and Development Center, which is principally involvedin basic research, and the Strategic Development Projects Center,
which promotes the commercialization of projects that are directly
connected to the business divisions. Noritake carries out productdevelopment for new technologies and new fields in collaboration
with each business division and Group company.
The R&D expenditures of the Noritake Group amounted to ¥2,918
million in the fiscal year under review.
R&D activities by business segment were as follows.
Chamfering Wheel for LCD Glass PanelsTo respond to expanding sectors
and market changes, Noritake
has been focusing its efforts onstrengthening its development capabilities
by relying on basic technologies anddeveloping differentiated products.
R&D Expenditure(Millions of yen)

Noritake is augmenting the developmentof ecologically friendly processing tools insuch growth areas as solar cells and

3,041
2,853

2,918

LEDs. In the transportation equipment
field (which includes automobiles,
railways and aircraft), and also in the
medical field, we are promoting thedevelopment of higher performance,
lower-cost products with the aim ofaddressing market changes.
The R&D expenditures in the Industrial
Products segment totaled ¥739 million in

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the fiscal year under review.

R&D for New Products and Technologies
Noritake focuses on developing new products by utilizing its materials, calcination and fabrication technologies, while augmenting and expanding the applications of such technologies. Noritake actively promotes joint R&D andtechnological exchanges with outside companies, universities and research
institutions. At the same time, we participate in government projects and otherrelated activities. Through these initiatives, each Noritake business segment
works in unison to undertake strategic R&D with a long-term perspective.
Core basic R&D expenditures totaled ¥602 million.

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NORITAKE CO., LIMITED

Annual Report 2013

Ceramics & Materials

Engineering

Tabletop“Touch Switch”

Mixing Equipment for Powder & Liquid“Acanthus”: Noritake Bone ChinaIn the Electronic Materials Division, theCeramics & Materials segment focuseson the development and commercializa-

T

he Engineering segment conducts research into products
and equipment for futuretion of electrode paste for solar cells thatgrowth fields that include batteries andfeature high-generation efficiency. In addi-

other energy related products.

tion, we are developing insulating and electrode pastes for ceramic substrates used

The R&D expenditures in this seg-T

he Tabletop segment continues
to work to develop new decorating technology and porce-lain materials.
The R&D expenditures in this segment totaled ¥72 million in fiscal 2013.

ment amounted to ¥23 million.

in LEDs as well as electrode pastes forelectronic components installed in smartphones and tablet PCs.
In the Ceramics Division, we promoted
the ongoing development of high performance ceramic carriers for chemical plants
and thick-film, multi-layer substrates
for automobiles. We also developed“°C Monarc”, a ceramic core used inprecision casting that features superior
heat resistance.
KCM Corporation is advancing thedevelopment of particulate material
compounds for use in the growth field of
multilayer ceramic capacitors, zirconium
materials, high-purity silica and materials
used in fuel cells.
Moreover, Noritake Itron Corporation—aleading manufacturer of VFD tubes and
VFD module products—is currently developing a VFD message display, mainly usedin stores, information and reception displays in public places, and disaster-related
wireless systems.
The R&D expenditures in this segment
were ¥1,479 million.

NORITAKE CO., LIMITED

Annual Report 201311

C O R P O R AT E G O V E R N A N C E(1) CORPORATE GOVERNANCE STRUCTURE(iii) Status of internal control system upgrades(i) Overview of corporate governance structure

Since fiscal 2007, the Noritake Group has been working to build andComprising its corporate governance structure, Noritake has positioned

maintain a framework in which it forms project-based structures,the Board of Directors as the body that decides on important matters,

advances the documentation of adherence to rules and operational

including those stipulated by management’s basic policy and the law.

processes, and addresses the systemization of internal controls related

Noritake has also introduced an executive officer system to clarify

to financial reporting. Furthermore, with regard to the stipulation of inter-

executive responsibilities and to delegate authority with the objective ofnal control rules, and the status of their maintenance and implementa-

further reinforcing the execution of business based on decisions madetion, Noritake conducts monitoring from the perspective of the risk ofby the Board of Directors. In addition to executive officers involved inmaterial misstatements related to financial reporting, among other mea-

business operations, the Board of Directors meets, in principle, once asures, as it strives to preserve and improve its internal control system.

month to ensure uniformity of understanding across the entire Group.

Through the Compliance Committee and the activities of persons

Furthermore, such matters as surplus dividends and items stipulated inappointed to have compliance responsibilities under the committee’s

Article 459-1 of the Company Law are addressed as matters for resolu-

authority, the Company is working to bolster its internal controls systemtion by the Board of Directors, unless otherwise stipulated by law, withfrom the compliance standpoint.

the aim of being able to flexibly return profits to shareholders.
With regard to important management matters, Noritake has estab-(iv) Status of risk management system upgrades

lished a structure to perform accurate and quick decisions after careful

Strengthening the ongoing compliance structure of the Group as adeliberation at the Executive Council, which meets weekly, in principle.

whole, Noritake works to maintain risk management systems to prevent

Directors are elected at the Company’s Annual General Meeting of

the Group from entering into a crisis situation due to misconduct asso-

Shareholders, which is attended by at least one-third of the shareholders with exercisable voting rights, and after a majority of said voting

ciated with the violation of the law.
Should the Group be faced with any risk that might damage its cor-rights is obtained, although not by cumulative voting. Noritake limits theporate value, such as a case of misconduct, an accident or disaster,number of directors to 18. The tenure of directors at Noritake and the“Risk Management Regulations” have been formulated to minimize

Group has been set at one year. The purpose of this system is to makelosses and to enable operations to continue with minimal disruption. In

possible the active building of a management structure optimally suitedthe event that a crisis does arise, a task force will be established in

to today’s turbulent business environment and to clarify management

immediate response.

responsibilities anew with each fiscal year.
Board of Directors’ meeting resolution, Noritake decided that it would(2) STATUS OF INTERNAL AUDITS AND AUDITS BYCORPORATE AUDITORS AND INDEPENDENT AUDITORS

be able to exempt directors and auditors (including former directors

The Audit Office (comprising four personnel) serves as the Company’s

and auditors) from liabilities for damages incurred as a result of the exe-internal audit department and implements operational and accounting

cution of their duties, within the limit of laws and regulations, with theaudits. Audit results are reported to the divisional head and the generalaim of having them fully perform the roles expected of them by the

manager in charge of business operations, and, in the event that any

Board of Directors and auditors.

significant problems are identified, the Audit Office is required to notify

In accordance with Article 426-1 of the Company Law and by

Noritake aims to affect smooth operations by reducing the quorum

the Executive Council.

necessary for extraordinary resolutions at the General Meeting of

The Board of Auditors is composed of two full-time corporate audi-

Shareholders. Resolutions proposed for approval at the Company’s

tors and two outside auditors. Besides stipulating such matters as audit

Annual General Meeting of Shareholders, in accordance with theguidelines and the division of duties, the Board of Auditors receives

provisions of Article 309-2 of the Company Law, must be ratified by areports from each auditor providing the actual audit status and results,

two-thirds majority vote of shareholders in attendance whose total vot-and expedites the flow of information between the Board of Directors

ing rights account for one-third or more of all exercisable voting rights.

and the Audit Office, which serves as the internal audit department. In

Although the establishment of a “company with committees” is rec-addition to working to gather information, auditors attend meetings ofognized, Noritake decided to use a corporate auditor system.

the Board of Directors and Executive Council as well as other important
meetings, where they receive status reports on the execution of execu-(ii) Reasons for applying corporate governance systemtives’ duties and ask for explanations when the need arises. Furthermore,

With the advancing globalization of business, the effects of corporate

Noritake’s accounting auditors maintain their independence and confirm

activities are being held to increasingly strict standards of corporate

the implementation of appropriate audits. The Board of Auditorssocial responsibility. Each Group executive and employee is heir to thereceives status reports from the accounting auditors on the execution

spirit of Noritake’s founder, on which basis the Noritake Groupof duties and requests explanations when the need arises.

Statement of Corporate Ethics was formulated. In observing and put-In the Audit Office, auditors and accounting auditors work in close col-ting that statement into practice, they apply this corporate governancelaboration to maintain the effectiveness of internal audit implementation.

structure to realize a Noritake Group with even higher standards of corporate ethics.

As established by contractual ties, Noritake’s independent auditor is
KPMG AZSA LLC, which assigns managing partners to Noritake toimplement audits from an independent perspective. In the fiscal year

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NORITAKE CO., LIMITED

Annual Report 2013

under review, the managing partners assigned to Noritake by KPMG

outside auditors. Noritake has appointed one outside director to further

AZSA LLC were as follows:

secure the oversight function of the Board of Directors as well as
ensure transparency in the decision-making process.

(Specified employees and managing partners)
CPA Kanemaru Yasui(4) COMPENSATION TO DIRECTORS AND AUDITORSCPA Chika Matsumoto(i) Total executive compensation by executive officer category,

CPA Satoshi Zengame

total compensation by type, and number of officers eligible(Assistants)
16 CPAs and 8 others

Executive
Officer
Category

Compensation
Amount(Millions of yen)

Basic
Stock
Compensation Options(3) OUTSIDE DIRECTORS AND AUDITORS
Noritake has one outside director and two outside auditors.
No personal, capital or business relationships or other conflicts ofinterest exist between Noritake, its outside auditors Yasumasa Gomi
and Kazutoyo Shinohara, who were in office for the fiscal year under

Total Compensation by Type(Millions of yen)

No. ofOfficers
Eligible

Contribution Retirement
Benefits

Director

364

255

—

—

108

10

Auditor (excl. outside auditors)

40

32

—

—

8

2

Outside auditor

18

15

—

—

2

3

review, and its outside director Kosaku Yamada.
The outside director has a wealth of experience and broad insight
regarding business management and was hired to provide thorough(ii) Policy details and decision-making process with regard to
executive compensation and its methods of calculation

counsel on matters spanning the entire business to the Board of

At the 109th Annual General Meeting of Shareholders, which was held

Directors in an effort to strengthen oversight and increase transparency

on June 28, 1990, the decision was taken to limit Noritake’s total exec-in the decision-making process.

utive compensation to ¥40 million or less per month for directors andFurthermore, the outside auditors reflect their wealth of experience¥6 million or less per month for auditors.

and broad insight as business managers in Noritake audits.
outside auditors conduct operational audits, they may conduct internal(5) DETAILS OF COMPENSATION PAID TO INDEPENDENTAUDITOR, ETC.

and corporate audits as needed in addition to collaborating with account-(i) Details of independent auditor compensation, etc.

ing auditors and the internal control department through such means

Category

When the outside director oversees business operations or when theas the appropriate sharing of information and exchange of opinions.

Previous Consolidated
Accounting Year

Consolidated Accounting
Year under Review

Compensation
Compensation
Compensation
Compensation
Based on Audit
Based on Non- Based on Audit
Based on NonCertification Services Auditing Services Certification Services Auditing Services(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)

Together with the two full-time corporate auditors, the outside auditors are mandated to audit the Board of Directors in the execution of its
duties and the operations and assets of Noritake and its subsidiaries. In
addition, the outside auditors conduct audits based on reports received
from the independent accounting auditors regarding the Company’s
consolidated financial statements. In addition, working closely with the

Parent company

55

2

56

—

Consolidated
subsidiary

21

—

17

—

Total

76

2

73

—

Audit Office, the outside auditors contribute to efficient internal audits.
The Company appoints outside directors and auditors with the expec-(ii) Other significant details regarding compensation

tation that they will perform their oversight duties and audits in an appropri-

Noritake Co., Inc., a Noritake subsidiary, paid compensation based on

ate and objective manner based on their specialized knowledge. Although

audit certification services of ¥6 million to KPMG LLP, which belongs to

the Company’s rules and regulations do not stipulate the independence ofthe same corporate network as the Company’s independent auditor, in theoutside directors and auditors, we appoint them in line with our basic phi-

consolidated accounting year under review. In the previous consolidated

losophy that they have no conflict of interest with ordinary shareholders.

accounting year, the amount for such services had totaled ¥18 million.

The Company concludes limitation of liability contracts with eachoutside director and auditor in accordance with the provisions of Article
423-1 of the Company Law. As such, the maximum amount of liability(iii) Details of non-auditing services provided to the Company by
the independent auditor

stipulated by the aforementioned contracts is the minimum amountIn the year ended March 31, 2013, the Company paid compensation todetermined by law.

its CPA for such non-auditing services as advisory services in connec-

With regard to management and decision-making functions as welltion with the introduction of International Financial Reporting Standards

as its Board of Directors, which fulfills the management oversight func-(IFRS) and the drawing up of papers, such as letters of comfort on thetion in terms of the business execution of its directors, Noritake

issuance of corporate bonds.

strengthens management oversight by having two of four auditors fromoutside the Company. In corporate governance, Noritake places the(iv) Policy for determining compensation to independent auditors

utmost importance on external, objective and neutral management

The Company calculates compensation to be paid to its CPAs, etc. tak-oversight functions. The external management oversight function is

ing into account such factors as the number of days of the audit and theadequately performed by the system that is in place with the two

special characteristics of Noritake’s size and operational characteristics.

NORITAKE CO., LIMITED

Annual Report 201313

C O N S O L I D AT E D F I N A N C I A L R E V I E W

Net Sales &Overseas Sales Ratio
Net sales (Millions of yen)Overseas sales ratio (%)
105,378

102,152
90,236

36.0

11

35.0

34.5

12

13

Operating Income &Operating Income Ratio
Operating income (Millions of yen)
Operating income ratio (%)
4,326
4.1

1,880
1.8

0.1

11

12

13

Net income (Millions of yen)
Net income ratio (%)
4,468

4.4

1,644

1.8

11

14

1.8

12

INDUSTRIAL PRODUCTS SEGMENT
In the Industrial Products Segment, grinding
wheel manufacturing and fabrication are performed externally by three subsidiaries and two
associates, while diamond tool manufacturing isundertaken externally by one subsidiary. Coatedabrasives are produced by the subsidiary
Noritake Coated Abrasive Co., Ltd. and one
associate; a portion of these items are supplied
to the Company.
In addition to the Company’s sales activities
in Japan and overseas, the Industrial Products
Segment’s domestic sales are primarily handled
by Zen Noritake Co., Ltd. The U.S.-based
Noritake Co., Inc. and three other subsidiaries
undertake sales in overseas markets. Noritake
Coated Abrasive Co., Ltd. conducts direct salesof most of these products both in Japan andoverseas.
In addition, the Noritake associate Nippon
Resibon Corporation engages in the manufacture and sale of grinding wheels.

64

Net Income &Net Income Ratio

1,858

SCOPE OF CONSOLIDATION
Composed of 25 subsidiaries and 9 associates,
the Noritake Group is engaged in the manufactureand sale of products in four business segments—
Industrial Products, Ceramics & Materials,
Engineering, and Tabletop—as well as the provision of services related to these segments.

CERAMICS & MATERIALS SEGMENT
In the Ceramics & Materials Group, manufacturing of electronic paste and thick film circuit substrates is conducted by the Company. Such
activities are bolstered by P.T. Noritake
Indonesia along with one subsidiary and two
associates. VFD tubes are produced and supplied to the Company by Noritake Itron
Corporation. In addition, the subsidiary KCM
Corporation and its subsidiaries produce ceramic materials, a portion of which are supplied to
the Company.
The Company’s sales activities for VFD tubes
and the related products, both domestic andoverseas, are mainly conducted by the integrated manufacturing and sales subsidiary Noritake
Itron Corporation.

In addition, the U.S.-based Noritake Co., Inc.
and three other subsidiaries conduct sales for
the Ceramics & Materials Group in overseas
markets. KCM Corporation undertakes direct
sales of most of these products both in Japanand overseas.
Moreover, the Company’s associate, Kuraray
Noritake Dental Inc., engages in the manufacture and sale of dental-related products.
ENGINEERING SEGMENT
In the Engineering Segment, the Company manufactures segment products. Various types ofindustrial furnaces are produced and supplied to
the Company by the subsidiary Noritake TCF
Co., Ltd. The Company’s Taiwanese subsidiary
Noritake Taipei Co., Ltd. manufactures and supplies to the Company static mixers. Noritake
engages in sales activities in Japan and overseas.
In addition to the Company’s sales activities
in Japan and overseas, the U.S.-based Noritake
Co., Inc. conducts sales for the Engineering
Segment in overseas markets.
TABLETOP SEGMENT
In the Tabletop Segment, in addition to theCompany’s production activities, porcelain tableware is manufactured by Noritake Lanka Porcelain(Private) Limited located in Sri Lanka and one associate, which is supplied to the Company.
The Company conducts sales for the
Tabletop Segment in the domestic and overseas
markets. In addition, the U.S.-based Noritake
Co., Inc. and four other subsidiaries undertake
sales in overseas markets.
Service operations in other areas are handled
by Noritake Garden Co., Ltd and one associate.
Thailand-based Noritake (Thailand) Co., Ltd. andtwo other subsidiaries, which are currently in theprocess of liquidation, also engage in these
operations.
PERFORMANCE ANALYSIS
Consolidated net sales declined ¥11,916 million,or 11.7%, year on year to ¥90,236 million.
Operating income declined ¥1,816 million
from the previous fiscal year to ¥64 million due

13

NORITAKE CO., LIMITED

Annual Report 2013

to a decrease in net sales, despite lower selling,
general and administrative expenses as well as
positive effects from streamlining and improving
operations.
In other income, gain on bargain purchaseamounted to ¥4,052 million after making KCM
Corporation a wholly-owned subsidiary. In otherexpenses, impairment loss on fixed assets stoodat ¥1,370 million and loss on sales or disposals
of property and equipment came to ¥905 million.
As a result of the aforementioned, income
before income taxes and minority interests forthe fiscal year under review fell ¥3,279 million, or
54.9%, compared with the previous fiscal yearto ¥2,693 million. After accounting for income
taxes and minority interests, net income dropped¥2,824 million, or 63.2%, to ¥1,644 million.
Additionally, net income per share fell to¥11.02 and the return on equity dropped to 2.6%.
FINANCIAL POSITION ANALYSIS
Total assets stood at ¥114,419 million, down
2.8%, or ¥3,316 million, from the previous fiscal
yearend. Current assets totaled ¥53,104 million,
down ¥10,744 million, while non-current assets
amounted to ¥61,315 million, up ¥7,428 million.
Major factors contributing to the growth of total
assets included an increase in property, plantand equipment; the increased value of investment securities due to rising market prices; andincreased capital investment, including the relocation of the headquarters’ factory, which
exceeded both the decrease in cash and cash
equivalents and the decline in notes andaccounts receivable.
Total liabilities as of March 31, 2013 stood at¥47,839 million, a decrease of 2.0% year on
year, or ¥1,000 million. This change was primarily attributable to a decrease in notes andaccounts payable, as well as an increase indeferred tax liabilities due to unrealized gains onavailable-for-sale securities.
Total net assets at March 31, 2013 amounted
to ¥66,580 million, down 3.4% year on year, or¥2,316 million. Major factors include the reduction
in treasury stock and minority interests after
KCM Corporation was made a wholly-owned
subsidiary, in addition to the payment of cash

dividends and the purchase of treasury stock.
As a result, shareholders’ equity per sharetotaled ¥441.05, up ¥6.91 compared with theprevious consolidated fiscal year-end. The capital ratio improved to 57.7% from 51.5% at theprevious fiscal year-end.
CASH FLOW ANALYSISAs of March 31, 2013, cash and cash equivalents stood at ¥8,778 million, a year on year
decrease of ¥5,035 million. Free cash flows fell
to ¥3,024 for the year.
Net cash provided by operating activities
increased ¥897 million year on year to ¥4,235
million. Despite a decrease in income before
income taxes and minority interests of ¥3,279
million, operating cash flow improved due in partto a decrease in trade receivables of ¥3,897 million, which was a sharp reversal of the ¥1,118
million increase last year.
Net cash used in investing activities
increased ¥3,132 million year on year to ¥7,259
million. Moderating factors included proceedsfrom the withdrawal of time deposits, which
increased by ¥2,318 million year on year, andthe absence of payments for investments inunconsolidated subsidiaries, which totaled¥1,256 million in the fiscal year ended March 31,
2012. Contributing factors included an increasein the purchase of tangible and intangible fixed
assets of ¥2,817 million and a decrease in thesale of tangible and intangible fixed assets of¥3,679 million.
Net cash used in financing activities
increased ¥1,345 million year on year to ¥2,378
million. The major contributor was a ¥1,257 million increase in the purchase of treasury stock.

Net Income per Share
(Yen)

31.99

13.16
11.02

11

Annual Report 201313

Total Assets(Millions of yen)

116,126

117,735

11

12

114,419

13

Total Shareholders’ Equity(Millions of yen)

63,646

66,28060,11011

NORITAKE CO., LIMITED

12

12

13

15

Capital Ratio
(%)

57.7
49.5

11

51.5

12

13

Return on Equity
(%)

7.6

FINANCIAL POLICIESThe Noritake Group, in principle, funds general
operations and capital expenditures throughinternal reserves and borrowings or the issue ofcorporate bonds. In particular, working capitalfor general operations is provided by short-termborrowings with a maturity of one year or less. In
Japan, Noritake has adopted a cash management system under which the Company centrally procures funds and then allocates the
procured funds to consolidated subsidiaries inneed of operating funds. Overseas, individual
consolidated subsidiaries adhere to a basic policy of procuring operating funds themselves intheir respective local currencies.
As of March 31, 2013, the balance of shortterm borrowings totaled ¥1,588 million, most ofwhich is denominated in yen, with the remainder
in three other currencies. Noritake, in principle,
uses its internal reserves for capital expendituresand other long-term investments with a portion
covered by long-term debt. As of March 31,
2013, the balance of long-term debt amounted
to ¥10,397 million, most of which is denominated in yen, with the remainder in one other currency. Bonds payable stood at ¥10,000 million.

3.2

2.6

11

12

13

BUSINESS AND OTHER RISKS
Raw Material and Fuel Price Risk
The Noritake Group conducts operations centered on ceramic engineering. Like other industries, the ceramics industry is subject tomanufacturing cost increases attributable to therise in raw material and fuel prices. While continually working to improve productivity and reduce
costs, Noritake is strategically implementing
upward revisions of its product prices to compensate for such cost increases. However, in theevent that the Company cannot carry out effective measures to deal with sudden cost increases, its business performance and financial
position may be adversely affected.

Disaster Risk
The Noritake Group has a number of businessbases in Japan and overseas. In the event thatthese business bases, particularly manufacturing bases, are damaged by earthquake, fire orother disaster, their operations may have to besuspended for a certain period of time, and thiswould adversely affect Noritake’s business performance and financial position.
Overseas Affairs Risk
The Noritake Group is actively promoting overseas operations. Deteriorations in public safety
and security, coupled with changes in politicalconditions, in one of the countries where
Noritake operates may restrict the Company’s
operations. In particular, in the case of war, civil
disturbance, terrorist attack and the like, theCompany’s operations may have to be suspended for a certain period of time. Should thisbe the case, the Noritake Group’s business performance and financial position may be negatively impacted.
Technology-Related Risk
The Noritake Group is increasingly concentrating
its management resources in such growth fields
as the electronics, semiconductor and energy
industries. These industries are characterized by
the rapid pace of their technological innovationand dynamic demand fluctuations, which cause
participants to experience technology and product obsolescence at shorter intervals than otherindustries. Accordingly, in the event that
Noritake fails to launch new products in a timely
manner, its business performance and financial
position may be negatively affected.
Risks and factors that could have adverse
effects on the Noritake Group’s business performance and financial position are not limited tothose described above. The analysis of risks isbased on information available to the Company’s
management as of March 31, 2013.

Exchange Rate Fluctuation Risk
The export ratios of the Tabletop Group and the
Ceramics & Materials Group are high in comparison to Noritake’s other business segments.
Accordingly, unfavorable trends in currency
exchange rates—more specifically, the yen’s
rapid appreciation—may negatively impact theperformance of these business segments, and,
consequently, the entire Company’s performance and financial position.

16

NORITAKE CO., LIMITED

Annual Report 2013

C O N S O L I D AT E D B A L A N C E S H E E T S
NORITAKE CO., LIMITED and Consolidated Subsidiaries
March 31, 2013 and 2012

Assets:Current assets:
Cash and cash equivalents (Note 3)
Short-term investments (Notes 3 and 6)
Notes and accounts receivable, net of allowance for doubtful accounts (Notes 3 and 4)
Inventories (Note 5)
Deferred tax assets (Note 14)
Other current assets
Total current assets
Investments and other assets:
Investment securities (Notes 3 and 6)
Investments in unconsolidated subsidiaries and associates (Note 3)
Deferred tax assets (Note 14)
Other
Total investments and other assets
Property, plant and equipment:
Land
Buildings and structures
Machinery and equipment
Construction in progress
Total property, plant and equipment
Less accumulated depreciation
Net property, plant and equipment
Total assets
Liabilities:
Current liabilities:
Short-term borrowings (Notes 3 and 8)
Current portion of long-term debt (Notes 3 and 8)
Notes and accounts payable (Notes 3 and 7)
Accrued expenses (Note 3)
Income taxes payable (Note 3)
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 3 and 8)
Employee retirement benefit liability (Note 9)
Accrued severance indemnities for directors and corporate auditors
Deferred tax liabilities (Note 14)
Other noncurrent liabilities
Total long-term liabilities
Total liabilities
Net assets (Note 13):
Shareholders’ equity:
Common stock: 397,500,000 shares authorized
and 158,428,497 shares issued
Capital surplus
Retained earnings
Less treasury stock, at cost: 8,769,552 sharesin 2013 and 18,827,051 shares in 2012
Total shareholders’ equity
Accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2012

2013

8,778
2,322
27,113
13,340342
1,209
53,104¥ 13,813
2,655
30,36914,848315
1,848
63,84818,636
6,328
78
2,332
27,374

15,881
5,530
136
2,206
23,753

198,255
67,319830
24,809291,213

10,971
34,60743,154
1,999
90,731(56,790)
33,941¥114,419

11,58832,317
39,777
1,914
85,596(55,462)
30,134¥117,735

116,713368,159
459,085
21,266965,223(604,149)
361,074$1,217,223

¥

¥

$

¥

1,588
5,142
15,604
3,854
444
860
27,492

1,634
44
18,232
3,237
537
871
24,555$93,38324,702
288,436
141,915
3,638
12,862564,936

16,89454,702
166,000
41,0004,723
9,149
292,468

15,361
1,030
805
2,956
195
20,347
47,83920,290
1,193
807
1,817
177
24,284
48,839163,415
10,957
8,564
31,447
2,074
216,457
508,925

15,632
18,83334,211

15,632
18,83336,815

166,298
200,351
363,947(2,396)
66,280(272)
572
66,580¥114,419(7,634)
63,646(3,039)8,289
68,896¥117,735(25,490)
705,106(2,893)
6,085
708,298$1,217,223

See accompanying Notes to Consolidated Financial Statements.

NORITAKE CO., LIMITED

Annual Report 201317

C O N S O L I D AT E D S TAT E M E N T S O F I N C O M ENORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2013 and 2012

Operating revenue:
Net sales (Note 15)
Operating costs and expenses:
Cost of goods soldSelling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Impairment loss on fixed assets(Loss) gain on sales or disposals of property and equipment
Equity in net earnings of associates
Gain on changes in equity of associate (Note 2(a))
Gain on bargain purchase
Other, net
Income before income taxes and minority interests

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2012

2013

¥90,236¥102,152$959,957

68,856
21,31690,17264

77,98322,289100,2721,880

732,510
226,766
959,276
681

390
(150)
(1,370)
(905)
338
—
4,052
274
2,629
2,693

386
(155)
(126)
2,401
339
990
—
257
4,092
5,972

4,149
(1,596)(14,574)(9,628)
3,596—
43,106
2,915
27,96828,649

744
199
943

924
73
997

7,915
2,117
10,032

1,750

4,975

18,617

507
4,468

1,128
$ 17,489

Yen

U.S. dollars

Income taxes (Note 14):
Current
Deferred
Total income taxes
Income before minority interests
Less minority interests in net income of consolidated subsidiaries
Net income
Per share:
Net income
Cash dividends

106¥ 1,644¥ 11.02
8.00

¥

¥

31.99
8.00

$

0.12
0.09

See accompanying Notes to Consolidated Financial Statements.

C O N S O L I D AT E D S TAT E M E N T S O F C O M P R E H E N S I V E I N C O M ENORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2013 and 2012

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2012

2013

¥1,750¥4,975$18,617

1,795
966

60
(506)

19,096
10,276

37

(47)

394

2,798

(493)

29,766Comprehensive income:¥4,548¥4,482$48,383

Comprehensive income attributable to:
Owners of the parent
Minority interests
Total comprehensive income:¥4,411
137¥4,548¥4,080402¥4,482$46,926
1,457$48,383

Income before minority interests:
Other comprehensive income (Note 17):
Net changes in unrealized gains on available-for-sale securities
Net changes in foreign currency translation adjustments
Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive income

See accompanying Notes to Consolidated Financial Statements.
18

NORITAKE CO., LIMITED

Annual Report 2013

C O N S O L I D AT E D S TAT E M E N T S O F C H A N G E S I N N E T A S S E T S
NORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2013 and 2012

Shareholders’ equity
Number ofshares ofcommon stock
issuedBalance at April 1, 2011
Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Net changes in items other thanshareholders’ equity
Balance at March 31, 2012
Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Change in scope of consolidation
Net changes in items other thanshareholders’ equity
Balance at March 31, 2013

Total
shareholders’equityCommonstock

CapitalsurplusRetainedearnings

Treasurystock

158,428,497——¥15,632——¥18,833——¥33,257
4,468
(908)

¥(7,612)——¥60,110
4,468
(908)

—

—

—

(2)

(22)

(24)

—
158,428,497———
15,632———
18,833———36,815
1,644(1,181)—(7,634)———
63,646
1,644(1,181)

—
—

—
—

—
—

(3,174)
107

5,238
—

2,064
107

—
158,428,497—¥15,632—¥18,833—¥34,211—¥(2,396)—¥66,280$166,298——$200,351——$391,649
17,489(12,564)$(81,213)——$677,085
17,489(12,564)————(33,765)
1,138

55,723—

21,958
1,138—$166,298—$200,351—$363,947—$(25,490)—$705,106

Total
net assets

Millions of yen

Thousands of U.S. dollars (Note 1)

Balance at March 31, 2012
Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Change in scope of consolidation
Net changes in items other thanshareholders’ equity
Balance at March 31, 2013

Accumulated other comprehensive income
Net unrealized
gains onavailable-for-salesecurities

Foreigncurrencytranslation
adjustments

Total accumulated
othercomprehensive
incomeMinority
interests

Balance at April 1, 2011
Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Net changes in items other thanshareholders’ equity
Balance at March 31, 2012
Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Change in scope of consolidation
Net changes in items other thanshareholders’ equity
Balance at March 31, 2013

¥2,785——¥(5,437)——¥(2,652)——¥7,971——¥65,429
4,468
(908)

—

—

—

—

(24)

105
2,890
—
—

(492)
(5,929)——(387)(3,039)
—
—

318
8,289
—
—

(69)
68,896
1,644(1,181)

—
—

—
—

—
—

—
—

2,064
107

1,847
¥4,737920¥(5,009)2,767¥ (272)(7,717)¥ 572(4,950)¥66,580

Balance at March 31, 2012
Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Change in scope of consolidation
Net changes in items other thanshareholders’ equity
Balance at March 31, 2013

$30,745——$(63,075)——$(32,330)——$88,181——$732,936
17,489(12,564)

—
—

—
—

—
—

—
—

21,9581,138

19,649$50,394

9,788$(53,287)

29,437$ (2,893)(82,096)$ 6,085(52,659)$708,298

Millions of yen

Thousands of U.S. dollars (Note 1)

See accompanying Notes to Consolidated Financial Statements.
NORITAKE CO., LIMITED

Annual Report 201319

C O N S O L I D AT E D S TAT E M E N T S O F C A S H F L O W SNORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2013 and 2012

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2012

2013

¥ 2,693¥ 5,972$ 28,649

3,429

3,460

36,479Impairment loss on fixed assets

1,370

126

14,574Gain on bargain purchase(4,052)—(43,106)

—

(990)

—

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation

Gain on changes in equity of associate
Equity in net earnings of associates

(338)

(339)

(3,596)

Loss (gain) on sales or disposals of property and equipment905(2,401)

9,628

Decrease in employee retirement benefit liability

(182)

(258)

(1,936)

Decrease (increase) in trade receivables

3,897(1,118)41,457

Decrease in inventories

1,847

417

19,649Decrease in trade payables(4,293)(1,472)(45,670)

Other, net
Subtotal

(441)

807

(4,692)

4,835

4,204

51,436

Interest and dividends received

410

404

4,362

Interest paid

(151)

(151)

(1,607)

Income taxes paid

(859)

(1,119)(9,138)

4,235

3,338

45,053(6,810)(3,993)(72,447)

Increase in long-term investments and loans receivable

(256)

(327)

(2,723)Purchase of investment in subsidiaries

(947)

(700)

(10,074)—(1,256)

—

(27)

—

(287)

Net cash provided by operating activities
Cash flows from investing activities:
Increase in property, plant and equipment

Payments for investments in unconsolidated subsidiaries
Payments for sales of investments in subsidiaries resulting in change inscope of consolidation
Decrease in property and long-term investments

318

3,727

3,383

Decrease (increase) in short-term investments

773(1,412)

8,223

Other, net
Net cash used in investing activities

(310)

(166)

(3,298)(7,259)(4,127)(77,223)

Cash flows from financing activities:
Increase in long-term debt

181

—

1,926

Net decrease in short-term borrowings

(52)

(19)

(553)

Dividends paid

(1,181)(908)(12,564)

Purchase of treasury stock and fractional shares(1,282)(25)(13,638)

(44)

(81)

(469)

(2,378)(1,033)(25,298)

258

(130)

2,745

Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents(5,144)(1,952)(54,723)

Cash and cash equivalents at beginning of year

13,813

15,765

146,947

Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at end of year

109

—

1,159

¥ 8,778¥13,813$ 93,383

See accompanying Notes to Consolidated Financial Statements.
20

NORITAKE CO., LIMITED

Annual Report 2013

N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T SNORITAKE CO., LIMITED and Consolidated Subsidiaries

1. BASIS OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of NORITAKE CO., LIMITED (the “Company”) and its consolidated subsidiaries(together with the Company, the “Noritake Group”) have been prepared in accordance with the provisions set forth in the Financial
Instrument and Exchange Law of Japan 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 fromInternational Financial Reporting Standards (“IFRS”). The accompanying consolidated financial statements have been reformatted and translated into English, with some expanded descriptions, from the consolidated financial statements of the Company prepared in accordancewith Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instrumentand Exchange Law of Japan. Certain supplementary information included in the statutory Japanese language consolidated financial statements is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts has been included solely for the convenience of readers outside
Japan, using the prevailing approximate exchange rate at March 31, 2013, which was ¥94 to U.S. $1.00. The translation should not be
construed as a representation that the Japanese yen amounts have been, could have been or could in the future be converted into U.S.
dollars at this or any other rate of exchange.
Certain comparative figures have been reclassified to conform to the current year’s presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its significant subsidiaries. Investments insignificant unconsolidated subsidiaries and associates are accounted for by the equity method. Investments in unconsolidated subsidiaries
and associates not accounted for by the equity method are stated at cost. The differences between the acquisition cost of investments in
subsidiaries and the underlying equity in the net assets adjusted based on the fair value at the time of acquisition are principally deferred as
goodwill. Goodwill is amortized over five years on a straight-line basis. All intercompany accounts and transactions have been eliminated on
consolidation.
The number of consolidated subsidiaries, unconsolidated subsidiaries and associates for the years ended March 31, 2013 and 2012 was
as follows:
2013

2012

Consolidated subsidiaries:
Domestic

89Overseas11

11

Associates accounted for by the equity method

5

4

Unconsolidated subsidiaries stated at cost

6

8

Associates stated at cost

4

4

From April 1, 2012, one overseas unconsolidated subsidiary was newly included in the scope of consolidation. During the year ended
March 31, 2013, one overseas consolidated subsidiary was liquidated. On March 31, 2013, one domestic subsidiary, which had been included in the scope of consolidation, was accounted for by the equity method as the Company’s ownership decreased due to sales of stocks.
On May 21, 2012, the Company and its consolidated subsidiary KCM Corporation (“KCM”) entered into a stock-for-stock exchange agreement based on a resolution of the respective Boards of Directors of the Company and KCM that made KCM into a wholly-owned subsidiaryof the Company. The stock-for-stock exchange transaction became effective August 1, 2012 after obtaining the approval of the annual
shareholders meeting of KCM held on June 28, 2012, as it became valid without obtaining approval at the Company’s shareholders meeting in accordance with the simplified share exchange procedures set forth in Article 796, Paragraph 3, of the Japanese Corporate Law (“theLaw”). In advance of this transaction, the common stock of KCM was delisted from the Nagoya Stock Exchange (the final trading day was
July 26, 2012).
KCM is engaged in mining, refining, manufacture, stocking and sale of ceramic industrial materials, and manufacture and sale of ceramicmaterials for electric components, as a consolidated subsidiary in the “Ceramic and materials” segment of the Noritake Group. This transaction was planned in order to establish a more stable capital relationship, expand operations and create further synergy in the ceramic andmaterials business of the Noritake Group. In addition, it is expected to make possible the elimination of potential conflicts of interest concerning the publicly listed parent and make a more efficient business structure through reducing the expense of listing a stock.
In accordance with the stock-for-stock exchange agreement, on August 1, 2012, the Company allotted 16,078,296 shares of the Company’scommon stock at the exchange rate of 1.75 shares of the Company’s common stock for one share of common stock of the minority shareholders of KCM based on the stock exchange ratio calculation results determined by independent appraisers of both companies.
This transaction was accounted for using accounting treatment for business combinations under common control in accordance with
“Accounting Standard for Business Combinations” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 21) and “Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10). As a resultof this transaction, the Company recorded a cost of additional acquisition of shares in subsidiaries of ¥3,364 million ($35,787 thousand) andNORITAKE CO., LIMITED

Annual Report 201321

a gain on bargain purchase of ¥3,952 million ($42,043 thousand) for the year ended March 31, 2013. Gain on bargain purchase was recognized as
the amount of minority interests decrease exceeded the amount of the acquisition cost of the common stock of KCM in the stock-for-stock
exchange.
During the year ended March 31, 2012, two domestic wholly-owned consolidated subsidiaries were merged into the Company in order to concentrate management resources and make the structure of the Noritake Group more efficient. This transaction was accounted for using accounting
treatment for business combinations under common control in accordance with ASBJ Statement No. 21 and ASBJ Guidance No. 10.
On April 13, 2011, the Company and Kuraray Co., Ltd. established a joint holding company, Kuraray Noritake Dental Holdings Co., Ltd.
(“KNDH”), which owns the entire shares of Kuraray Medical Inc. (“Kuraray Medical”) and Noritake Dental Supply Co., Limited (“Noritake
Dental Supply”). After the establishment and as the Company owned 33.3% of the issued shares of KNDH, KNDH became an associate of
the Company and was accounted for by the equity method. Effective April 1, 2012, KNDH, Kuraray Medical, and Noritake Dental Supply
were integrated into one company, Kuraray Noritake Dental Co., Ltd. As a result, Noritake Dental Supply was excluded from consolidation
for the year ended March 31, 2012. As this transaction was accounted for using ASBJ Statement No. 7, “Accounting Standard for Business
Divestitures,” and ASBJ Guidance No. 10, goodwill of ¥845 million resulting from the difference of the Company’s investment amount overa total net asset value of KNDH was recognized and a gain on changes in equity in the Company’s ownership’s interest of ¥990 million wasrecorded as other income in the accompanying consolidated statements of income for the year ended March 31, 2012.
In addition, during the year ended March 31, 2013, The Siam Moulding Plaster Co., Ltd., which was included in the scope of consolidation,changed its name to Noritake SCG Plaster Co., Ltd., and Kuraray Noritake Dental Holdings Co., Ltd., which was accounted for by the equity method, changed its name to Kuraray Noritake Dental Inc.
The Company’s overseas consolidated subsidiaries close their books on December 31, three months earlier than the Company and thedomestic consolidated subsidiaries. The Company has consolidated these subsidiaries’ financial statements as of their December 31 yearend because the difference between their fiscal year-end and that of the Company and the domestic consolidated subsidiaries was not
more than three months. Significant transactions during the period between these subsidiaries’ year-end and the Company’s year-end are
adjusted for on consolidation.
(Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements)
The Company has adopted ASBJ Practical Issues Task Force (“PITF”) No. 18, “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements.” PITF No. 18 requires that the accounting policies and procedures
applied by a parent company and its subsidiaries to similar transactions and events under similar circumstances should, in principle, be unified for the preparation of the consolidated financial statements. PITF No. 18, however, as a tentative measure, allows a parent company toprepare consolidated financial statements using its foreign subsidiaries’ financial statements prepared in accordance with either IFRS or
U.S. generally accepted accounting principles (“U.S. GAAP”). In this case, adjustments for the following five items are required in the consolidation process so that the impact on net income is accounted for in accordance with Japanese GAAP, unless the impact is not material.
(a) Goodwill not subject to amortization(b) Actuarial gains and losses of defined-benefit retirement plans recognized outside profit or loss(c) Capitalized expenditures for research and development activities(d) Fair value measurement of investment properties and revaluation of property, plant and equipment and intangible assets(e) Accounting for net income attributable to minority interests(Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method)
The Company has also adopted ASBJ PITF No. 24, “Practical Solution on Unification of Accounting Policies Applied to Associates
Accounted for Using the Equity Method.” Under PITF No. 24, a Japanese investment company is not allowed to apply the equity method to
its investments in associates using their financial information prepared in accordance with the local GAAP. The financial information of associates outside Japan is required to be prepared in accordance with Japanese GAAP, IFRS or U.S. GAAP. IFRS or U.S. GAAP is allowed only
if the five specific adjustments are made for significant differences between Japanese GAAP and IFRS or U.S. GAAP.
(b) Cash equivalents
The Noritake Group considers cash equivalents to be highly liquid debt instruments purchased with an original maturity of three months or less.
(c) Investments and marketable securities
The Noritake Group classifies certain investments in debt and equity securities as “held-to-maturity,” “trading” or “available-for-sale.” Theclassification determines the respective accounting method, as stipulated by the accounting standards for financial instruments. According
to the investment policy of the Noritake Group, its securities portfolio consists of available-for-sale securities other than trading or held-tomaturity. The accounting standard requires that available-for-sale securities for which fair value is available be stated at fair value and thatnet unrealized gains and losses on such securities be recorded as a component of accumulated other comprehensive income, net of applicable income taxes. Gains and losses on the disposition of available-for-sale securities are computed by the moving average method.
Available-for-sale securities without available fair values are carried at cost determined by the moving average method. Adjustments in the
carrying values of individual investment securities are charged to income through write-downs when a decline in value is deemed other than
temporary.

22

NORITAKE CO., LIMITED

Annual Report 2013

(d) Accounting for derivatives
The Noritake Group is a party to derivative instruments such as foreign currency forward exchange contracts and interest rate swap contracts in the ordinary course of business for hedging purposes to reduce its exposure to fluctuations in exchange rates and interest rates.
Foreign currency forward exchange contracts are accounted for by translating foreign currency denominated assets and liabilities at thecontract rate as an interim measure if certain hedging criteria are met. According to the special treatment permitted by the accounting standard for financial instruments, hedging interest rate swap contracts are accounted for on an accrual basis and recorded net of interest
expense generated from borrowings for the hedged items if certain conditions are met. In addition, during the years ended March 31, 2013
and 2012, the Company had a derivative contract outstanding to hedge the risks associated with the occurrence of an earthquake. As thefair value of the contract was not considered determinable, that derivative contract was not accounted for at fair value.
(e) Inventories
In accordance with the accounting standard for measurement of inventories, inventories held for sale in the ordinary course of business arestated at the lower of cost or net realizable value. If the net realizable value falls below the cost at the end of the period, the cost basis is
reduced to net realizable value and regarded as decreased profitability of inventories. The cost of inventories is determined principally by
the first-in, first-out method.
(f) Allowance for doubtful accounts
The allowance for doubtful accounts has been provided for in the aggregate amount of estimated credit loss based on an individual financial
review approach for certain doubtful or troubled receivables and a general reserve for other receivables based on the historical loss experience for a certain past period.
(g) Property, plant and equipment and depreciation
Property, plant and equipment, including significant renewals and additions, are stated at cost and depreciated principally by the straightline method for overseas consolidated subsidiaries and by the declining balance method for the Company and its domestic consolidated
subsidiaries at rates based on the estimated useful life of the asset. Buildings of the Company and its domestic consolidated subsidiaries
acquired on and after April 1, 1998, however, are depreciated by the straight-line method.
In accordance with the amendment of the Corporation Tax Law of Japan, effective from the year ended March 31, 2013, the Company andits domestic consolidated subsidiaries changed the depreciation method for property, plant and equipment acquired on and after April 1,
2012, to the method provided by the amended Corporation Tax Law of Japan. As a result, operating income and income before income
taxes and minority interests increased by ¥129 million ($1,372 thousand), respectively, for the year ended March 31, 2013, from theamounts that would have been recorded with the previous accounting method.
Repair and maintenance expenses are charged to current operations as incurred.
(h) Leases
The Company and its domestic consolidated subsidiaries capitalize the assets used under finance leases as lessee that commenced on
and after April 1, 2008, except for certain immaterial or short-term finance leases accounted for as operating leases in accordance with thecurrent accounting standard. Depreciation of leased assets capitalized in finance lease transactions is computed by the straight-line method
over the lease term with the assumption of no residual value. As permitted by the current accounting standard for lease transactions,finance leases as lessee which commenced prior to April 1, 2008 and have been accounted for with accounting treatment similar to thatused for operating leases, continue to be accounted for with accounting treatment similar to that used for operating leases with the disclosure of certain “as if capitalized” information. (See also Note 10.)(i) Impairment of fixed assets
The Company and its domestic consolidated subsidiaries have adopted “Accounting Standard for Impairment of Fixed Assets,” issued by
the Business Accounting Council of Japan and the related practical guidance issued by ASBJ. The standard requires that fixed assets bereviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss should be recognized in the income statement by reducing the carrying amount of the impaired asset or group ofassets to the recoverable amount, measured as the higher of the asset’s net selling price or value in use. Fixed assets include intangible
assets, as well as land, plants, buildings and other forms of property, and are to be grouped at the lowest level for which there are identifiable cash flows separate from those of other groups of assets. For the purpose of recognition and measurement of an impairment loss,
fixed assets of the Company and its domestic consolidated subsidiaries are grouped principally into cash-generating units based on thebusiness division under managerial accounting classifications. The Noritake Group determines if assets are impaired by comparing their
undiscounted expected cash flows to the carrying amounts in the accounting records. An impairment loss is recognized if the undiscounted
expected cash flows are less than the carrying amount of the asset. Recoverable amounts are measured based on net selling prices primarily from appraisal valuations.

NORITAKE CO., LIMITED

Annual Report 2013

23

The Noritake Group recognized impairment loss for the years ended March 31, 2013 and 2012 as follows:
Millions of yen

Buildings
Machinery and equipment
Land

Thousands of
U.S. dollars

2013

2012

2013

¥ 727

¥126

$ 7,734

11

—

117

632

—

6,723

¥1,370¥126$14,574(j) Employee retirement benefits
Employees who terminate their service with the Noritake Group are entitled to retirement benefits determined generally by reference to basic
rates of pay at the time of retirement, length of service and the conditions under which the termination occurred. The Noritake Group recognizes retirement benefits, including pension cost and related liability, based principally on the actuarial present value of the projected benefit
obligation using the actuarial appraisal approach and the fair value of pension plan assets available for benefits at the fiscal year-end.
Unrecognized actuarial differences from changes in the projected benefit obligation or value of pension plan assets resulting from actual
amounts being different from projected amounts and from changes in assumptions upon which the projected amounts were based areamortized principally on a straight-line basis over ten years, a period within the average remaining service years of employees, from the year
following the year in which they arise. Past service cost is recognized in a single year as incurred.
(k) Accrued severance indemnities for directors and corporate auditors
The Noritake Group may pay severance indemnities to directors and corporate auditors, subject to the approval of the shareholders. The
Noritake Group has provided for this liability at the amount which would have been payable assuming all directors and corporate auditors
had terminated their service at the respective balance sheet date.
(l) Translation of foreign currency accounts
Receivables, payables and securities, other than stocks of subsidiaries and certain other securities, are translated into Japanese yen at theexchange rate effective at the fiscal year-end. Transactions in foreign currencies are recorded based on the prevailing exchange rate on thetransaction date. Resulting translation gains and losses are included in current earnings.
In respect to financial statement items of overseas consolidated subsidiaries, all asset and liability accounts are translated into yen by applying the exchange rate in effect at the respective fiscal year-end. All income and expense accounts are translated at the average rate ofexchange for the fiscal year. Translation differences, after allocating portions attributable to minority interests, are reported as foreign currency translation adjustments in a component of accumulated other comprehensive income in the accompanying consolidated balance sheets.
(m) Research and development expenses
Expenses related to research and development activities are charged to income as incurred. Such research and development expenses
were included in cost of goods sold and selling, general and administrative expenses in the accompanying consolidated statements ofincome and amounted to ¥2,918 million ($31,043 thousand) and ¥3,041 million for the years ended March 31, 2013 and 2012, respectively.
(n) Enterprise taxes
When levied as size-based corporate taxes for local government enterprise taxes, the enterprise taxes are calculated based on “added
value” and “capital” amounts and are recorded in selling, general and administrative expenses.
(o) Income taxes
Income taxes are accounted for by the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income inthe years in which the temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax
assets and liabilities is recognized in the period that includes the promulgation date.
(p) Appropriation of retained earnings
Cash dividends are recorded in the fiscal year when a proposed appropriation of retained earnings is approved by the Board of Directors.
(q) Per share data
Net income per share is computed by dividing income available to common shareholders by the weighted average number of shares ofcommon stock outstanding during the respective year. Diluted net income per share is not disclosed as the Noritake Group had no diluted
common shares for the years ended March 31, 2013 or 2012.
Cash dividends per share shown for each fiscal year in the accompanying consolidated statements of income represent dividends declared
as applicable to the respective year.

24

NORITAKE CO., LIMITED

Annual Report 2013

(r) New accounting standards adopted in the year ended March 31, 2012
Effective from the year ended March 31, 2012, The Noritake Group has adopted the “Accounting Standard for Accounting Changes andError Corrections” (ASBJ Statement No. 24, issued on December 4, 2009) and the “Guidance on Accounting Standard for Accounting
Changes and Error Corrections” (ASBJ Guidance No. 24, issued on December 4, 2009) for accounting changes and corrections of priorperiod errors made from the fiscal year beginning on April 1, 2011.
(s) Accounting standards issued but not yet adopted
In May 2012, ASBJ issued the following revised pronouncements:—Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012)—Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012)(1) Summary
Under the amended rule, actuarial gains and losses and past service costs that are yet to be recognized in profit or loss would be recognized within the net asset section, after adjusting for tax effects, and the deficit or surplus would be recognized as a liability or asset without
any adjustments. For determining the method of attributing expected benefit to periods, the standard now allows the use of a benefit formula basis as well as a straight-line basis. The method for determining discount rate has also been amended.
(2) Effective dates
Amendments other than those relating to the determination of retirement benefit obligations and current service costs are effective for theend of annual periods ending on or after March 31, 2014. Amendments relating to the determination of retirement benefit obligations andcurrent service costs are effective from the beginning of annual periods ending on or after March 31, 2015.
(3) Effect of application of the standard
The Company and its domestic consolidated subsidiaries are currently in the process of determining the effects of this new standard on the
consolidated financial statements.
3. FINANCIAL INSTRUMENTS(a) Qualitative information on financial instruments
The Noritake Group does not permit the investment of surplus funds in transactions other than short-term bank deposits and uses financing
from corresponding banks and from the issuance of bonds to satisfy short-term and long-term funding requirements.
The Noritake Group is exposed to credit risk primarily with respect to trade receivables. In order to reduce the credit risk of these receivables, the Noritake Group performs credit management on a customer by customer basis, including the monitoring of credit balances ofmajor customers on a semi-annual basis and reviewing the credit capacity of customers on a regular basis. The Noritake Group holds
investments in equity securities which have market risk. However, the fair values of such equity securities, whose issuers principally have abusiness relationship with the Company, are monitored on a quarterly basis. Although trade payables and bank borrowings have liquidity
risk, the Noritake Group performs effective cash flow management.
The Noritake Group is a party to derivative instruments such as foreign currency forward exchange contracts and interest rate swap agreements in the normal course of business principally for hedging purposes in order to reduce its own exposure to fluctuations in exchange
rates and interest rates. These transactions include certain anticipated export sales and import purchases for which foreign exchange forward contracts are used and bank borrowings for which interest rate swap contracts are used. The Noritake Group does not hold or issue
derivative financial instruments for trading purposes. Pursuant to the Noritake Group’s financial management policies, contract balances ofcurrency derivatives are limited to certain anticipated export sales or import purchases and interest rate swap transactions are matched withthe cash flows of the related bank borrowings. The Noritake Group is also exposed to credit risk in the event of nonperformance by counterparties. However, the Noritake Group does not expect nonperformance by counterparties because the counterparties to the derivativetransactions are limited to major banks with relatively high credit ratings.

NORITAKE CO., LIMITED

Annual Report 201325

(b) Fair values of financial instruments
The following table is a summary of the carrying values and fair values at March 31, 2013 and 2012 of financial instruments other thanunlisted equity securities for which the fair value was extremely difficult to determine.
Carrying values

Fair values

As of March 31, 2013

Differences
Millions of yen

Financial assets:
Cash and time deposits¥11,100¥11,100¥ —Trade receivables

26,886

26,886—18,11918,119

—

1,113

769

(344)

¥57,218¥56,874¥(344)

Investment securities:
Available-for-sale securities
Investments in associates
Total
Financial liabilities:
Trade payables¥13,889¥13,889¥ —Short-term borrowings

1,588

1,588

—

Payables included in accrued expenses

2,477

2,477

—

Income taxes payable
Bonds payable
Long-term bank loans, including current portion
Total
Derivative instruments

444

444

—

10,00010,09595

10,397

10,40912¥38,795¥38,902

¥ 107

¥

¥

¥ —

—

Carrying values—

Fair values

As of March 31, 2012

Differences
Millions of yen

Financial assets:
Cash and time deposits¥16,447¥16,447¥ —Trade receivables

30,41130,411—

15,35015,350

—

1,031

733

(298)

¥63,239¥62,941¥(298)

Investment securities:
Available-for-sale securities
Investments in associates
Total
Financial liabilities:
Trade payables¥17,481¥17,481¥ —Short-term borrowings

1,634

1,634

—

Payables included in accrued expenses

1,751

1,751

—

537

537

—

Bonds payable

10,00010,07474

Long-term bank loans, including current portion

10,200

10,201

1

Income taxes payable

Total
Derivative instruments

26¥41,603¥41,678

¥ 75

¥

¥

¥ —

—

—

NORITAKE CO., LIMITED

Annual Report 2013

Carrying values

Fair values

As of March 31, 2013:

Differences

Thousands of U.S. dollars

Financial assets:
Cash and time deposits$118,085$118,085

Trade receivables

286,021286,021$—

192,755

192,755—

11,841

8,181(3,660)$608,702$605,042$(3,660)$—

Investment securities:
Available-for-sale securities
Investments in associates
Total
Financial liabilities:
Trade payables$147,755$147,755

Short-term borrowings

16,894

16,894—

Payables included in accrued expenses

26,352

26,352—

Income taxes payable
Bonds payable
Long-term bank loans, including current portion
Total
Derivative instruments

—

4,723

4,723

—

106,383

107,393

1,010

110,606

110,734

128$412,713$413,851$ 1,138

$

$

$

—

—

—

Notes: 1. Details of the methods and assumptions used to estimate fair value of financial instruments are summarized below.
The fair values of financial instruments include the values based on quoted market prices or values based on reasonable estimates and assumptions
if quoted market prices are not available. Actual results could differ from these estimates.
(i) The fair value of cash and time deposits, trade receivables, trade payables, short-term borrowings, payables included in accrued expenses andincome taxes payable are approximately equal to their carrying value due to their short-term maturities.
(ii) The fair value of equity securities is based on quoted market prices in active markets.
(iii) The fair value of bonds payable is determined by the price presented by the corresponding financial institutions.
(iv) The fair value of long-term interest-bearing bank loans is estimated based on a discounted cash flow analysis using current interest rates considered to be applicable to similar loans.
(v) See Note 12 for the calculation method for the fair value of derivative instruments such as interest rate swaps or foreign currency forward
exchange contracts.
2. Unlisted equity securities of ¥4,506 million ($47,936 thousand) and ¥3,667 million at March 31, 2013 and 2012, respectively, were not included in thetable above because they had no quoted market price on securities exchanges and their fair values were considered extremely difficult to determine.
3. Contractual maturities of financial instruments
The following table presents the contractual maturities of the Noritake Group’s financial instruments at March 31, 2013:
Due in 1 year or lessDue after 1 year
through 5 years

Due after 5 years
through 10 years

Due after 10 years
Millions of yen

Financial assets:
Cash and time deposits
Trade receivables
Total¥11,100

¥—

¥—

¥—

26,886———¥37,986

¥—

¥—

¥—

Thousands of U.S. dollars

Financial assets:
Cash and time deposits
Trade receivables
Total$118,085
286,021$404,106

$—

$—

—

—

$—
—

$—

$—

$—

Millions of yen

Thousands of
U.S. dollars

4. NOTES AND ACCOUNTS RECEIVABLE
As of March 31, 2013 and 2012, notes and accounts receivable consisted of the following:

2013

2012

2013

Trade notes receivable¥ 4,845¥ 5,782$ 51,542

Trade accounts receivable

22,041

24,629234,479

261

194

2,777

Other
Less allowance for doubtful accounts

NORITAKE CO., LIMITED

Annual Report 2013

(34)

(236)

(362)

¥27,113¥30,369$288,43627

5. INVENTORIESAs of March 31, 2013 and 2012, inventories consisted of the following:
Millions of yen

Merchandise and finished goods
Work-in-process
Raw materials and supplies

Thousands of
U.S. dollars

2013

2012

2013

¥ 5,869
3,830
3,641

¥ 5,988
4,657
4,203

$ 62,436
40,74538,734¥13,340¥14,848$141,915

A write-down of ¥234 million ($2,489 thousand) and ¥54 million was recognized as costs of goods sold for the year ended March 31, 2013
and 2012, respectively.
6. INVESTMENTS
As of March 31, 2013 and 2012, short-term investments consisted of time deposits with an original maturity of more than three months.
At March 31, 2013 and 2012, investment securities consisted of the following:
Millions of yen

Thousands of
U.S. dollars

2013

2012

2013

¥18,119¥15,350$192,755

517

531

5,500

¥18,636¥15,881$198,255

Available-for-sale securities with fair values:
Equity securities
Other securities without fair values

Available-for-sale securities with fair values are stated at fair value with unrealized gains and losses, which are excluded from current earnings, reported as a net amount within the accumulated other comprehensive income account until realized. As of March 31, 2013 and2012, gross unrealized gains and losses for available-for-sale securities with fair value were summarized as follows:
Cost

Gross
unrealized gains

Grossunrealized losses

Fair andcarrying value
Millions of yen

Available-for-sale equity securities:
As of March 31, 2013
As of March 31, 2012

¥11,211¥7,081¥(173)¥18,119

11,215

4,656

(521)

15,350Thousands of U.S. dollars

Available-for-sale equity securities:
As of March 31, 2013

$119,266$75,330$(1,841)$192,755

The Noritake Group recorded a loss on the write-down of available-for-sale securities due to other-than-temporary impairment in theamount of ¥35 million ($372 thousand) and ¥19 million for the years ended March 31, 2013 and 2012, respectively.
7. NOTES AND ACCOUNTS PAYABLE
As of March 31, 2013 and 2012, notes and accounts payable consisted of the following:
Millions of yen

Thousands of
U.S. dollars

2013

2012

2013

¥ 9,915¥12,003$105,479

Trade accounts payable

3,974

5,478

42,276

Other

1,715

751

18,245¥15,604¥18,232$166,000

Trade notes payable

8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings consisted principally of unsecured bank overdrafts and bank loans with interest at average rates of 0.69% and0.85% per annum for the years ended March 31, 2013 and 2012, respectively.

28

NORITAKE CO., LIMITED

Annual Report 2013

As of March 31, 2013 and 2012, long-term debt consisted of the following:
Millions of yen

Thousands of
U.S. dollars

2013

2012

2013

Unsecured bonds through December 2015 at a rate of 0.658% per annum¥10,000¥10,000$106,383

Unsecured loans from banks and insurance companies due through July 2015
with interest at an average rate of 0.73% per annum at March 31, 2013

10,397

Capitalized lease obligations
Less current portion

10,200110,606

106

134

1,128

20,503

20,334

218,117(5,142)(44)(54,702)¥15,361¥20,290$163,415

Millions of yen

Thousands of
U.S. dollars¥ 5,142$ 54,702

The aggregate annual maturities of long-term debt are summarized as follows:Year ending March 31,

2014
2015

4,226

44,957

2016

11,122

118,319

2017

8

85

2018

4

43

Thereafter

1

11¥20,503$218,117

As is customary in Japan, substantially all bank borrowings are subject to general agreements which provide, among other things, that thebanks may under certain circumstances request additional security for these loans and may treat any security so furnished, as well as cash
deposited with them, as security for all present and future indebtedness. The banks have never requested the Company or its subsidiaries
to submit such additional security. Also, as is customary in Japan, the Company and certain of its subsidiaries may have time deposits withthe banks from which they have short-term and long-term borrowings. However, there are no agreements with any banks which would
require maintaining such deposits.
9. EMPLOYEE RETIREMENT BENEFITSThe Noritake Group has defined benefit pension plans and lump-sum retirement benefit plans which substantially cover all employees. Eightdomestic consolidated subsidiaries have joined the Company’s defined benefit pension plans. A consolidated subsidiary located in the US
has a similar defined benefit plan. In addition, one domestic consolidated subsidiary also participated in a certain corporate pension planunder a multi-employer pension program (see note below).
The following table reconciles the benefit liability and net periodic retirement benefit expense as of and for the years ended March 31, 2013
and 2012:
Millions of yen

Thousands of
U.S. dollars

2013

2012

2013

Projected benefit obligation¥20,874¥18,679$222,064

Less fair value of pension plan assets at end of year

(17,022)(14,119)(181,085)

Reconciliation of benefit liability:

3,852

4,560

40,979Unrecognized actuarial differences

Projected benefit obligation in excess of pension plan assets(3,930)(4,094)(41,809)

(78)

466

(830)

Prepaid pension cost

1,108

727

11,787¥ 1,030¥ 1,193$ 10,957

Balance of employee retirement benefit liability recognizedon the consolidated balance sheets

Notes: 1. The projected benefit obligation of certain consolidated subsidiaries with less than 300 employees was calculated using the simplified calculation method permitted by the accounting standard for employee retirement benefits..
2. Some of the Company’s domestic consolidated subsidiaries participate in a certain corporate pension plan under a multi-employer pension program established by the subsidiaries together with other employers. As information that would allow a determination of whether the value of the pension plan assets has
been reasonably calculated in proportion to the contributions made by the subsidiaries is not available, the Noritake Group records the required contributions
as net periodic retirement benefit expense for the period, in accordance with the amended accounting standard for employee retirement benefits, ASBJ
Statement No. 14. The above table excluded the portion of the pension plan assets under the multi-employer pension program.

NORITAKE CO., LIMITED

Annual Report 201329

Information regarding the funded status of the entire corporate pension plan available as of the latest calculation period-end was as follows:
Millions of yen

Thousands of
U.S. dollars

2013

2013

2012

March 31, 2012:

March 31, 2011:

Pension plan assets¥104,458¥105,046

Related benefit obligation under program(132,613)(132,730)(1,410,776)¥ (28,155)¥ (27,684)$ (299,521)

0.3%

0.3%

Latest calculation period-end

Difference, resulting primarily from unamortized past service cost
Ratio of subsidiaries’ contributions to total contributions to entire plan

$1,111,255

Millions of yen

Thousands of
U.S. dollars

2013

2012

2013

¥ 683

¥ 808

$ 7,266

Components of net periodic retirement benefit expense:
Service cost
Interest cost

349

353

3,713

Expected return on pension plan assets

(204)

(190)

(2,170)

Amortization of actuarial differences
Net periodic retirement benefit expense

348

868

3,702

¥1,176¥1,839$12,511

Major assumptions used in the calculation of the above information for the years ended March 31, 2013 and 2012 were as follows:
2013

2012

Straight-line
methodStraight-line
methodDiscount rate

1.2%

2.0%

Expected rate of return on pension plan assets

2.0%

2.0%

10 years

10 years

Method attributing the projected benefits to periods of service

Amortization of actuarial differences

10. LEASE COMMITMENTS
As lessee, the Noritake Group has entered into various rental and lease agreements principally for office space that are non-cancelable orcancelable with a few months advance notice. A lessee, the Noritake Group also leases machinery, office equipment and vehicles underleases which are not usually cancelable. As disclosed in Note 2(h), finance leases that do not transfer ownership of the leased assets to thelessee and which commenced prior to April 1, 2008 and have been accounted for with accounting treatment similar to that used for operating leases continue to be accounted for with accounting treatment similar to that used for operating leases, with disclosure of certain “as if
capitalized” information, and are not capitalized. The aggregate future minimum payments under such finance leases, including imputed
interest, and operating leases as of March 31, 2013 and 2012 were as follows:
Millions of yen

Thousands of
U.S. dollars

2013

2012

2013

¥

Finance leases:
3

¥ 10

—

3

3

Due within one year
Due after one year

Due within one year

$

32

¥ 13

$

32

¥ 73

¥ 85

$ 777

99

133

1,053

¥172

¥218

$1,830Due after one year¥—

Operating leases:

11. CONTINGENT LIABILITIESThere were no contingent liabilities at March 31, 2013 and 2012.

30

NORITAKE CO., LIMITED

Annual Report 2013

12. DERIVATIVE INSTRUMENTS
At March 31, 2013 and 2012, all derivative instruments, except for one, were accounted for by hedge accounting. The one exception wasa derivative contract of the Company to hedge the risks associated with the occurrence of an earthquake that was outstanding at March 31,
2013 and 2012. That derivative contract was not accounted for at fair value because the fair value of the contract was not considered determinable. Derivative financial instruments to which hedge accounting was applied as of March 31, 2013 and 2012 are summarized as follows:
Notional principal or contract amounts
Total

Over 1 year

Fair value
Millions of yen

At March 31, 2013:
Foreign currency exchange contracts (*1):
¥ 204

¥—

*

Fixed rate receipt, floating rate payment

3,000

—

*

Floating rate receipt, fixed rate payment

1,200

—

*

Forward - selling
Interest rate swap contracts (*2):

Notional principal or contract amounts
Total

Over 1 year

Fair value
Millions of yen

At March 31, 2012:
Foreign currency exchange contracts (*1):
Forward - selling

¥ 529

—

*

Forward - buying

135

¥

—

*

Fixed rate receipt, floating rate payment

3,000

3,000

*

Floating rate receipt, fixed rate payment

1,200

1,200

*

Interest rate swap contracts :(*2)

Notional principal or contract amounts
Total

Over 1 year

Fair value

Thousands of U.S. dollars

At March 31, 2013:
Foreign currency exchange contracts (*1):
Forward - selling$ 2,170$—*

Fixed rate receipt, floating rate payment

31,915—*

Floating rate receipt, fixed rate payment

12,766—*

Interest rate swap contracts (*2):

Note: (*1) As derivative instruments, foreign currency forward exchange contracts are accounted for by hedge accounting such that the derivative instruments are not separated from the hedged receivables or payables. Therefore, the fair value of such derivative instruments is reflected in the calculation of the fair value of the related account. (See Note 3.)(*2) As derivative instruments, interest rate swap contracts are accounted for by hedge accounting such that the derivative instruments are not separated from the hedged bank loans. Therefore, the fair value of such derivative instruments is reflected in the calculation of the fair value of related bankloan. (See Note 3.)(3) The contracts amounts of derivatives which are shown in the table above do not represent the amounts exchanged by the parties and do not measure the Company’s exposure to credit and market risk.

13. NET ASSETS
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, acompany may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the issue price of the new sharesas additional paid-in capital, which is included in capital surplus.
Under the Law, in cases in which a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or theexcess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional
paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance
sheets. Under the Law, legal earnings reserve and additional paid-in capital can be used to eliminate or reduce a deficit by a resolution of
the shareholders’ meeting. Additional paid-in capital and legal earnings reserve may not be distributed as dividends. All additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentiallyavailable for dividends. At both March 31, 2013 and 2012, capital surplus principally consisted of additional paid-in capital, and retained
earnings included legal earnings reserve of the Company in the amount of ¥3,480 million ($37,021 thousand).
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of
the Company in accordance with Japanese laws and regulations.
NORITAKE CO., LIMITED

Annual Report 201331

During the year ended March 31, 2013, the Company paid interim dividends of ¥4.00 per share, amounting to ¥623 million ($6,628 thousand). In addition, on May 9, 2013, the Board of Directors of the Company resolved to pay cash dividends as an appropriation of retained
earnings in the amount of ¥599 million ($6,372 thousand, ¥4.00 per share) to the shareholders as of March 31, 2013. The appropriation
was not accrued in the consolidated financial statements as of March 31, 2013.
14. INCOME TAXESThe tax effects of temporary differences that gave rise to a significant portion of deferred tax assets and liabilities as of March 31, 2013 and2012 were as follows:
Millions of yen

Thousands of
U.S. dollars

2012

2013

2013

Deferred tax assets:
Intercompany unrealized gains on property
Accrued bonuses to employees
Employee retirement benefit liability
Accrued severance indemnities for directors and corporate auditors
Inventories
Net operating loss carryforwards

¥

54

¥

56

$

574

523

564

5,564

3,737

3,909

39,755

287

289

3,053

508

450

5,404

4,723

3,375

50,245

Other

1,903

1,976

20,245Less valuation allowance(7,682)(6,398)(81,723)

4,053

4,221

43,117

Gain on transfer of investment securities to trusts for retirement benefit plans

2,866

2,866

30,489Unrealized gains on available-for-sale securities

2,723

1,742

28,968Other

10,639Total deferred tax assets
Deferred tax liabilities:

1,000

979

Total deferred tax liabilities

6,589

5,587

70,096

Net deferred tax liabilities¥2,536¥1,366$26,979

Millions of yen

Thousands of
U.S. dollars

2013

2012

2013

¥ 342

¥ 315

$ 3,638

78

136

830

—

—

—

2,956

1,817

31,447

As of March 31, 2013 and 2012, deferred tax assets and liabilities were recorded as follows:

Deferred tax assets:
Current
Noncurrent
Deferred tax liabilities:
Current
Noncurrent

In assessing the realizability of deferred tax assets, management of the Noritake Group considers whether some portion or all of thedeferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which the temporary differences become deductible. At March 31, 2013 and 2012, a valuation allowance wasprovided to reduce deferred tax assets to the amount the management believed was realizable.

32

NORITAKE CO., LIMITED

Annual Report 2013

Reconciliation of the difference between the Japanese statutory tax rate and the effective income tax rate on pretax income reflected in theaccompanying consolidated statements of income for the years ended March 31, 2013 and 2012 was as follows:
Percentage of pretax income

Japanese statutory tax rate

2013

2012

37.7%

40.6%

Increase (decrease) due to:Permanently non-deductible expenses

2.7

1.4

Tax exempt income

(2.6)

(1.9)

Local minimum taxes per capita levy

2.7

1.2

Differences between Japanese and foreign tax rates

(0.8)

(0.5)

Changes in valuation allowances

55.7(13.8)

Gain on bargain purchase(56.7)—Tax credit for research and development expenses

0.6

0.4

Equity in net earnings of associates

(4.5)

(2.2)

Gain on change in equity of associate

—

(6.8)

Effect on income tax rate changes

—

(0.2)

Other

0.2

(1.5)

35.0%

16.7%

Effective income tax rate

On December 2, 2011, the “Act for Partial Amendment of the Income Tax Act, etc., for the Purpose of Creating a Taxation System
Responding to Changes in Economic and Social Structures” (Act No. 114, 2011) and the “Act on Special Measures for Securing Financial
Resources Necessary to Implement Measures for Reconstruction Following the Great East Japan Earthquake” (Act No. 117, 2011) were
promulgated. Accordingly, the corporate income tax rate has been lowered and a special restoration surtax has been imposed from the fiscal years beginning on or after April 1, 2012. Therefore, the effective statutory tax rates to calculate deferred tax assets and liabilities havebeen changed from 40.6% to 37.7% for temporary differences which are expected to be reversed during the period from the fiscal year
beginning on April 1, 2012 to the fiscal year beginning on April 1, 2014, and to 35.3% for temporary differences which are expected to bereversed from the fiscal years beginning on or after April 1, 2015. As a result of these changes, at March 31, 2012, deferred tax liabilities
and net unrealized gains on available-for-sale securities decreased by ¥265 million and ¥188 million, respectively. For the year ended March 31,
2012, deferred income taxes decreased by ¥77 million.
15. SEGMENT INFORMATION(a) General information about reportable segments:
The Noritake Group defines a reportable segment as a constituent business unit of the Noritake Group for which discrete financial information is available and reviewed regularly by the Board of Directors to determine the best allocation of managerial resources and evaluate business performance. The Noritake Group’s reportable segments are determined by products and classified into “Industrial Products,”“Ceramics & Materials,” “Engineering” and “Tabletop.”(b) Basis of measurement about reportable segments:
The accounting methods used for the reportable segments are consistent with the accounting methods described in Note 2, “Summary of
Significant Accounting Policies.” The total amount of segment income for each reportable segment is presented on an operating income
basis, and intersegment profit is accounted for based on prices of ordinary transactions with independent third parties. Operating expenses
not belonging to reportable segments are directly allocated to each reportable segment.

NORITAKE CO., LIMITED

Annual Report 201333

(c) Information about reportable segments:
Information about reportable segment income, segment assets and other items for the years
ended March 31, 2013 and 2012 was as follows:
Reportable segments
Industrial
Products

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated
Millions of yen

For the year 2013:
Net sales:
External customers¥35,440¥30,583¥15,927¥8,286¥ 90,236

Segment income (loss)

(85)

638

(41)

(448)

64

—

64

31,74429,351

9,435

6,524

77,05437,365

114,419

Segment assets¥—¥ 90,236

Other items:
26

309

133

195

663

(663)

—

Depreciation

1,728

1,070

274

357

3,429

—

3,429

Investments in equity-method
associates

1,362

2,258

—

173

3,793

—

3,793

¥ 3,242¥ 1,190

¥

622

¥ 311

¥

5,365

¥ 2,963¥¥37,190¥35,480¥21,467¥8,015¥102,152¥¥102,152

Intersegment sales and transfers

Increases in tangible andintangible fixed assets

8,328

For the year 2012:
Net sales:
External customers
Segment income (loss)
Segment assets

—

902

1,911

(267)

(666)

1,880

—

1,880

31,74035,76910,6697,332

85,51032,225

117,735

Other items:
Intersegment sales and transfers

34

258

204

222

718

(718)

—

Depreciation

1,564

1,204

292

400

3,460

—

3,460

Investments in equity-method
associates

1,239

2,012

—

168

3,419

—

3,419

¥ 1,522¥ 1,191

334

¥ 341

3,388

¥ 1,493¥

Industrial
Products

Ceramics &Materials

Adjustments

Consolidated

Increases in tangible andintangible fixed assets

¥

¥

4,881

Reportable segments
Engineering

Tabletop

Total

Thousands of U.S. dollars

For the year 2013:
Net sales:
External customers$377,021$325,351$169,436$88,149$959,957

Segment income (loss)

(904)

6,787

(436)

(4,766)

681

—

681

337,702312,245

100,372

69,404

819,723

397,500

1,217,223

277

3,287

1,415

2,074

7,053

(7,053)—

Depreciation

18,383

11,383

2,915

3,798

36,479—36,479Investments in equity-method
associates

14,48924,021—

1,841

40,351—40,351$ 34,489$ 12,659

6,617$ 3,309$ 57,074$ 31,522

Segment assets$—$ 959,957

Other items:
Intersegment sales and transfers

Increases in tangible andintangible fixed assets$$

88,596

Notes: 1. Adjustments column in “Segment assets” denotes unallocated general corporate items which were not assigned to specific segments such as cash,
short-term and long-term investments in securities and general managed property.
2. Adjustments column in “Other items: Intersegment sales and transfers” denotes eliminations of intersegment transactions.
3. Adjustments column in “Other items: Increases of tangible fixed assets and intangible fixed assets” denotes capital expenditures of administrative
department which were not assigned to specific segments.

34

NORITAKE CO., LIMITED

Annual Report 2013

(d) Enterprise-wide information:(1) Information about products and services:
Information for each product and service is not disclosed because similar information is disclosed in the segment information above.
(2) Information about geographic areas:
As of and for the years ended March 31, 2013 and 2012, net sales and tangible fixed assets about geographic areas were summarized asfollows:
Japan

North
America

Europe

Asia

Other

Total
Millions of yen

Net sales:
For the year 2013

¥59,125¥7,433¥1,859¥21,135¥684¥ 90,236

For the year 2012

66,361

8,622

2,332

24,222

615

102,152

At March 31, 2013

¥30,803¥ 888

20¥ 1,985¥245¥ 33,941

At March 31, 2012

27,843

620

10

1,441

220

30,134

Japan

North
America

Europe

Asia

Other

Total

Tangible fixed assets:¥

Thousands of U.S. dollars

Net sales for the year 2013

$628,989$79,074$19,777$224,840$7,277$959,957

Tangible fixed assets at March 31, 2013

327,691

9,447

213

21,1172,606

361,074(3) Information about major customers:
The Noritake Group had no single external customer which accounted for more than 10% of net sales for the year ended March 31, 2013
and 2012.
(e) Information about impairment loss on fixed assets in reportable segments:
For the years ended March 31, 2013 and 2012, impairment loss on fixed assets was summarized as follows:
Reportable segments
Industrial
Products

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated
Millions of yen

Impairment loss on fixed assets:
For the year 2013

¥297

¥67

¥25

¥—

¥389

¥981

¥1,370For the year 2012

—

—

—

—

—

126

126

Industrial
Products

Ceramics &Materials

Adjustments

Consolidated

Reportable segments
Engineering

Tabletop

Total

Thousands of U.S. dollars

Impairment loss on fixed assets:
For the year 2013

$3,159

$713

$266

$—

$4,138$10,436$14.574

Note: “Adjustments” column denotes impairment losses on fixed assets in the Company’s administrative department.

(f) Information about goodwill in reportable segments:
For the years ended March 31, 2013 and 2012, amortization of goodwill and unamortized balance were summarized as follows:
Reportable segments
Industrial
Products

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated
Millions of yen

As at or for the year 2013:
Amortization of goodwill

¥—

¥ 1

¥—

¥—

¥ 1

¥—

¥ 1

Unamortized balance

—

—

—

—

—

—

—

Amortization of goodwill

¥—

¥—

¥ 6

¥—

¥ 6

¥—

¥ 6

Unamortized balance

—

—

—

—

—

—

—

As at or for the year 2012:

NORITAKE CO., LIMITED

Annual Report 201335

Reportable segments
Industrial
Products

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated

Thousands of U.S. dollars

As at or for the year 2013:
Amortization of goodwill

$—

$11

$—

$—

$11

$—

$11

Unamortized balance

—

—

—

—

—

—

—

(g) Information about gain on bargain purchase in reportable segments:
In the “Ceramics & Materials” segment, KCM became a wholly-owned subsidiary through a stock-for-stock exchange on August 1, 2012. Due to the transaction, the Company recorded a gain on bargain purchase of ¥3,952 million ($42,043 thousand) for the year ended March 31, 2013.

16 RELATED PARTY TRANSACTIONS INFORMATION(a) Related party transactions
There were no significant transactions with related parties for the years ended March 31, 2013 or 2012.
(b) Financial summary of a significant associate of the Company
A financial summary of Kuraray Noritake Dental Inc., which is a significant associate of the Company, as of or for the years ended March 31,
2013 and 2012 is as follows:
Millions of yen

Thousands of
U.S. dollars

2013

2012

2013

Total current assets¥4,765¥5,162$50,691

Total noncurrent assets

6,028

7,551

64,128

Total current liabilities

1,931

3,842

20,542

Total noncurrent liabilities

3,605

3,378

38,351

Total net assets

5,257

5,493

55,926

Operating revenue¥8,566¥8,222$91,128

Income before income taxes

1,882

2,128

20,021

Net income

1,248

1,275

13,277

Notes: Kuraray Noritake Dental Holdings Co., Ltd., which was accounted for by the equity method, changed its name to Kuraray Noritake Dental Inc.

17. OTHER COMPREHENSIVE INCOME
Amounts reclassified to net income (loss) in the current or previous period that were recognized in other comprehensive income in the current or previous periods and the tax effects for each component of other comprehensive income were as follows:
Millions of yen

Thousands of
U.S. dollars

2013

2012

2013

¥2,760¥(233)$29,362

19

17

202

Subtotal, before tax

2,779

(216)

29,564

Tax effect

(984)

276

(10,468)

Subtotal, net of tax

1,795

60

19,096966(506)

10,276

Increase (decrease) during the year

37

(48)

394

Reclassification adjustments

—

1

—

37

(47)

394

¥2,798¥(493)$29,766

Unrealized gains on available-for-sale securities
Increase (decrease) during the year
Reclassification adjustments

Foreign currency translation adjustments
Increase (decrease) during the year
Share of other comprehensive income of associates accounted for using equity
methodSubtotal
Total other comprehensive income

36

NORITAKE CO., LIMITED

Annual Report 2013

REPORT OF INDEPENDENT AUDITORSNORITAKE CO., LIMITED

Annual Report 2013

37

OVERSEAS NETWORKD I R E C T O R S , C O R P O R AT E
AUDITORS ANDEXECUTIVE OFFICERS(As of June 27, 2013)(As of June 27, 2013)

INDUSTRIAL PRODUCTS GROUPNORITAKE CO., INC.
4990 ALLIANCE DR., MASON, OH 45040, U.S.A.
Tel: 1-513-234-0770 Fax: 1-513-234-0743
NORITAKE EUROPA GmbHKURHESSENSTRASSE 3, 64546
MÖRFELDEN-WALLDORF, GERMANY
TEL: 49-6105-2092-44 FAX: 49-6105-2092-99
NORITAKE SHANGHAI TRADING CO., LTD.
ROOM 701 AETNA TOWER NO.107,
ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
Tel: 86-21-6237-5667 Fax: 86-21-6237-5790
NORITAKE SHANGHAI TRADING CO., LTD.
GUANGZHOU BRANCH
2510 GOLDLION DIGITAL NETWORK CENTER,
138 TIYU ROAD EAST,GUANGZHOU 510620 CHINA
Tel: 86-20-3877-2253 Fax: 86-20-3877-2252
SIAM COATED ABRASIVE CO., LTD.
AMATA CITY INDUSTRIAL ESTATE 7-126
MOO 4, T. MABYANGPORN, A. PLUAKDAENG,RAYONG 21140, THAILAND
Tel: 66-3-865-0150 Fax: 66-3-865-0158
NORITAKE SA (THAILAND) CO., LTD.
56 MOO 7, NONGPLAKRADI RD., NONGPLING,NONGKHAE, SARABURI, 18140 THAILAND
Tel: 66-36-373-085-7 Fax: 66-36-373-088-9

PT. NORITAKE INDONESIABLOK A-II NO. 9A, KAWASAN BERIKAT,
KOTA BUKIT INDAH, PURWAKARTA, 41181,
JAWA BARAT, INDONESIA
Tel: 62-264-351311 Fax: 62-264-351314
NORITAKE CO., LIMITEDSHANGHAI OFFICEROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
Tel: 86-21-6237-5789 Fax: 86-21-6237-5790
NORITAKE CO., LIMITEDTAIPEI OFFICE
7F-2, NO.46, SEC.2, CHUNG SHAN N. RD.,TAIPEI, 104 TAIWAN R.O.C.
Tel: 886-2-2531-9906 Fax: 886-2-2531-9906

NORITAKE SCG PLASTER CO., LTD.
NO. 32 MOO7 NONGPLAKRADI ROAD,NONGPLING, NONGKHAE, SARABURI, 18140,
THAILAND
Tel: 66-36-373578 Fax: 66-36-373577

38

DIRECTORS
Kouichi Saburi*
Kazutaka Nakayama
Masahiro Nakagawa
Hisaya Ogura
Hiroshi Kato
Kozo KatoNORITAKE CO., LIMITEDSHANGHAI OFFICEROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
Tel: 86-21-6237-5789 Fax: 86-21-6237-5790

NORITAKE CO., INC.
15-22 FAIR LAWN AVENUE,
FAIR LAWN, NJ 07410, U.S.A.
Tel: 1-201-796-2222 Fax: 1-201-796-9155

NORITAKE EUROPA GmbHKURHESSENSTRASSE 3, 64546
MÖRFELDEN-WALLDORF, GERMANY
Tel: 49-6105-2092-20 Fax: 49-6105-2092-99

Tadashi Ogura*

NORITAKE TAIPEI CO., LTD.
NO.37 ALLEY 105, LANE 514, ZHONGZHENG RD.,XINZHUANG DIST., XINBEI CITY 242, TAIWAN,
R.O.C.
Tel: 886-2-2907-1221 Fax: 886-2-2905-1529

NORITAKE ABRASIVE (SUZHOU) CO., LTD.
688 TAISHAN RD., NEW AREA OF SUZHOUSUZHOU 215129, CHINA
TEL: 86-512-6672-6682 FAX: 86-512-6672-2050

ITRON (U.K.) LIMITEDVANTAGE HOUSE, HARFREY’S ROAD,
HARFREY’S INDUSTRIAL ESTATE,GREAT YARMOUTH, NORFOLK, NR31 0LS,
UNITED KINGDOM
Tel: 44-1493-601144 Fax: 44-1493-600343

PRESIDENT

Yoshitaka Mabuchi

NORITAKE CO., INC.
2635 CLEARBROOK DRIVE,
ARLINGTON HEIGHTS, IL 60005, U.S.A.
Tel: 1-847-439-9020 Fax: 1-847-593-2285

NORITAKE CO., INC.
2635 CLEARBROOK DRIVE,
ARLINGTON HEIGHTS, IL 60005, U.S.A.
Tel: 1-847-439-9020 Fax: 1-847-593-2285

Hitoshi Tanemura*

ENGINEERING GROUPNORITAKE SA (THAILAND) CO., LTD.
BANGKOK OFFICE
222 VRAVIT BUILDING 9TH FL., UNIT B,
SURAWONG ROAD, SIPRAYA, BANGRAKBANGKOK 10500 THAILAND
TEL: 66-2-235-1688 FAX: 66-2-236-2365

CERAMICS & MATERIALS GROUPCHAIRMANTABLETOP GROUPNORITAKE CANADA LIMITED
90 NUGGET AVENUE, AGINCOURT,ONTARIO, M1S 3A7, CANADA
Tel: 1-416-291-2946 Fax: 1-416-292-0239

Kosaku Yamada*Representative Director

CORPORATE AUDITORS
Yasuyuki Mitsukawa
Kiyoshi Yoshida
Yasumasa Gomi
Kazutoyo Shinohara
EXECUTIVE OFFICERS
Tadashi Ogura
Kouichi Saburi
Kazutaka Nakayama
Masahiro Nakagawa
Hisaya Ogura
Kohei Katoh
Kiichi Hirano

NORITAKE (AUSTRALIA) PTY LIMITEDUNIT 4, 153 BEAUCHAMP ROAD,
MATRAVILLE, N.S.W. 2036, AUSTRALIA
Tel: 61-2-9316-7123 Fax: 61-2-9316-7085

Yoshitaka Mabuchi

NORITAKE EUROPA GmbHKURHESSENSTRASSE 3, 64546
MÖRFELDEN-WALLDORF, GERMANY
Tel: 49-6105-2092-18 Fax: 49-6105-2092-99

Kenji Hayasaka

NORITAKE LANKA PORCELAIN (PRIVATE)LIMITEDWARAKAMURA, MATALE SRI LANKA
TEL: 94-66-2244432 FAX: 94-66-2244132

Hiroshi Kato
Kozo Kato
Satoshi Aoki
Kenji Ito
Seiya Ogata
Koji Ogawa

NORITAKE CO., LIMITEDSHANGHAI OFFICEROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
Tel: 86-21-6237-5789 Fax: 86-21-6237-5790
NORITAKE CO., LIMITED

Annual Report 2013

C O R P O R AT E D ATA

H I S T O R Y O F N O R I TA K E(As of June 27, 2013)(As of June 27, 2013)

HEAD OFFICE1876 Ichizaemon Morimura established3-1-36, Noritake-Shinmachi

Morimura-kumi in Tokyo, and Toyo

Nishi-ku, Nagoya, Aichi

Morimura and others established451-8501, Japan

the Hinode Shokai (Morimura Brothers)

Tel: +81-52-561-7112

in New YorkFax: +81-52-561-9721

DATE OF ESTABLISHMENT

1904 Established Nippon Toki Gomei Kaisha
1907 Began production of grinding wheels
for in-house use

January 1904

1914 Succeeded in production of the first

NUMBER OF EMPLOYEES

1917 Sanitary ware division spun off todinner set in Japan
4,004 (Consolidated)become TOTO Ltd.
Established Nippon Toki Co., Ltd.

STOCK EXCHANGE LISTINGS

1919 Electric insulator division spun off toTokyo Stock Exchange

become NGK Insulators Ltd.

Nagoya Stock Exchange

1932 Began production of first bone china

ADMINISTRATOR OF SHAREHOLDERREGISTRY

1939 Began full-scale production of industrial

Mitsubishi UFJ Trust and Banking

1943 Tableware production stopped on

in Japan
grinding wheels

Corporationaccount of World War II, changed to full

4-5, Marunouchi 1-chome,

production of grinding wheels

Chiyoda-ku, Tokyo(only bone china production continued

100-8212, Japanto preserve technique)

ANNUAL MEETING OF
SHAREHOLDERS
The annual meeting of shareholders of theCompany is normally held in June each year
in Nagoya, Japan.

1945 Production of tableware resumed
1947 Established Noritake Co., Inc. in
the United States

1956 Began production of cutlery
1958 Established Noritake (Australia) Pty.
Ltd. in Australia

In addition, the Company may
hold an extraordinary meeting of shareholders
whenever necessary by giving at least two
weeks’ advance notice to shareholders.

INDEPENDENT AUDITORS

1960 Began production of resinoid grinding
wheels at the Kamori Plant

1961 Began production of crystal glassware
Began production of melamine ware

1962 Began production of grinding machines1963 Began production of belt andfabric abrasives

KPMG AZSA LLC

1968 Established Noritake Canada Ltd.
in Canada

1969 Began production of electronic products
1970 Established Noritake (U.K.) Ltd. in the
United Kingdom
Began production of fine ceramicindustrial products

1971 Began production of filtration equipment

1972 Established Noritake Lanka Porcelain(Pvt.) Ltd. in Sri Lanka

1973 Began production of diamond tools
1974 Established Noritake Porcelana Mfg.,
Inc. in the Philippines

1979 Began operation of the Craft Center
Began production of materials andequipment for the ceramics industry

1981 Changed the Company name to
Noritake Co., Limited

1987 Established Noritake Europa G.m.b.H.
in Germany

1988 Established Noritake Taipei Co., Ltd. in
Taiwan1991 Established Noritake Hong Kong Ltd.
1992 Established Noritake Singapore Pte. Ltd.
1993 Opened the Noritake Gallery
1995 Established Pt. Noritake Indonesia
1996 Established Noritake (Siam) Co., Ltd. in
Thailand1997 Established Itron (U.K.) Ltd. in
the United Kingdom

1998 Established Noritake Dental Supply
Co., Limited.

2001 Established Noritake Gypsum Co., Ltd.
Opened the Noritake Garden

2002 Established Noritake Bonded
Abrasive Co., Ltd.

2005 Established Noritake Shanghai Trading
Co., Ltd.

2009 Made NIPPON RESIBONCORPORATION its associate byacquiring additional shares of the stockof the company.
Absorbed Noritake Engineering Co.,
Ltd., Noritake China Mfg. Co., Limited,
Noritake Tableware Co., Ltd. and Tokyo
Toishi Co., Ltd.

2010 Absorbed Noritake Kizai Co., Ltd. and
Noritake Ceramics Co., Ltd.

2011 Absorbed Noritake Bonded Abrasive
Co., Ltd. and Noritake Super Abrasive
Co., Ltd.

2012 Made KCM Corporation its wholly-owned
subsidiary via a stock swap

Caution with respect to forward-looking statements
This annual report includes forward-looking statements pertaining to expectations, plans, strategies, management goals, future performance,
expenses, revenues, income and other forecasts formulated on past experiences. Forward-looking statements necessarily entail some degree of
uncertainty, and the content conveyed in the results as well as underlying factors identified in the report may differ materially from actual results
depending on changes in those factors.

NORITAKE CO., LIMITED

Annual Report 201339

PRINTED IN JAPAN