NORITAKE CO., LIMITEDANNUAL REPORT 2014
Year Ended March 31, 2014

Industrial Products

Ceramics & Materials

Engineering

Tabletop

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Profile

Noritake Co., Limited, including its subsidiaries and associates(Hereinafter “The Noritake Group”, “The Group” or simply “Noritake”)

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, 2014)(As of June 27, 2014)

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

Morimura-kumi in Tokyo, and Toyo
Morimura and others establishedthe Hinode Shokai (Morimura Brothers)
in New York1904 Established Nippon Toki Gomei Kaisha
1907 Began production of grinding wheels
for in-house use
1914 Succeeded in production of the firstdinner set in Japan
1917 Sanitary ware division spun off tobecome TOTO Ltd.
Established Nippon Toki Co., Ltd.
1919 Electric insulator division spun off tobecome NGK Insulators Ltd.
1932 Began production of first bone china
in Japan1939 Began full-scale production of industrial
grinding wheels
1943 Tableware production stopped on
account of World War II, changed to fullproduction of grinding wheels(only bone china production continued
to preserve technique)

Nishi-ku, Nagoya, Aichi

has developed technologies acquired from ceramics manufacturing451-8501, Japan

expertise and has expanded its business into such fields as grinding and polishing tools,

Tel: +81-52-561-7112
Fax: +81-52-561-9721

electronic component materials and manufacturing equipment.
With a focus on developing new products and technologies for energy-related industries—

DATE OF ESTABLISHMENT
January 1904

including solar cells, an area of promising growth—
NUMBER OF EMPLOYEESNoritake seeks to create new value for customers and society.

4,086 (Consolidated)

STOCK EXCHANGE LISTINGS
New Mid-term Business Plan

Tokyo Stock ExchangeWith the government’s recent economic policies, there were some positive signs in the Japanese economy.

Nagoya Stock Exchange

Nevertheless, the business environment is predicted to remain severe due to such concerns as slowing growth inChina and other emerging countries, as well as uncertainty in Europe.
Amid these circumstances, the Group launched its 9th Mid-term Business Plan in April 2013. The Plan identifies

ADMINISTRATOR OF SHAREHOLDERREGISTRY
Mitsubishi UFJ Trust and Banking

major business challenges as being able to respond swiftly to market changes, and constructing a business andCorporation

management structure capable of achieving stable growth amid increasingly intense global competition. We will make

4-5, Marunouchi 1-chome,every effort to achieve full recovery and improve our business performance.

Chiyoda-ku, Tokyo

The basic strategies of the 9th Mid-term Business Plan are as follows:(1) Boosting sales by competitively pricing new technologies and products(2) Penetrating overseas markets and upgrading overseas manufacturing bases(3) Promoting an efficient management structure and upgrading infrastructure1973 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

100-8212, Japan

1945 Production of tableware resumed
1947 Established Noritake Co., Inc. in2002 Established Noritake Bonded

ANNUAL MEETING OF
SHAREHOLDERS

the United States
1956 Began production of cutleryware
1958 Established Noritake (Australia) Pty.
Ltd. in Australia
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
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

2005 Established Noritake Shanghai Trading

The annual meeting of shareholders of theCompany is normally held in June each year
in Nagoya, Japan.
In addition, the Company may hold anextraordinary meeting of shareholders
whenever necessary by giving at least two
weeks’ advance notice to shareholders.

INDEPENDENT AUDITORSKPMG AZSA LLC

Abrasive Co., Ltd.
Co., Ltd.

2009 Made Nippon Resibon Corporation its
associate by acquiring additional
shares of the stock of 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.
Established Noritake SA (Thailand)Co., Ltd. in Thailand
2012 Made KCM Corporation its wholly-owned
subsidiary via a stock swap
Established Noritake Abrasives(Suzhou) Co., Ltd. in China

Contents
Caution with respect to forward-looking statements
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

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.

39 Corporate Data / History of Noritake
NORITAKE CO., LIMITED

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Annual Report 201439

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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

2014

2013

2012

2011

2010

2009

2014

¥ 88,687¥ 90,236¥102,152¥105,378¥ 87,596¥112,984$ 869,480

785

64

1,880

4,326

(1,665)

808

7,696

Income (loss) before income
taxes and minority interests

2,485

2,693

5,972

3,703

(3,354)(3,059)24,363

Net income (loss)

1,313

1,644

4,468

1,858

(4,501)(6,861)

12,87313.16¥ (31.32)¥ (46.82)$

For the year:
Net sales
Operating income (loss)

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

¥

8.91

¥

11.02

¥

31.99

¥

0.09

At year-end:
Total assets¥118,774¥114,419¥117,735¥116,126¥109,595¥113,077$1,164,451

Total net assets

69,217

66,58068,89665,42966,711

69,192

678,598

Capital ratio (%)

57.8

57.7

51.5

49.5

54.2

55.0

57.8

Note: The U.S. dollar amounts above have been translated at the rate of ¥102 to US$1.

Net Sales(Millions of yen)

105,378
102,152
90,236 88,687

Operating Income(Millions of yen)

Net Income per Share
(Yen)
4,326

31.99

Net Income(Millions of yen)

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1,880
4,468

13.16

785

11.02
8.91
64

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1,858
1,644

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1,313

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NORITAKE CO., LIMITED

Annual Report 2014

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MESSAGE FROM THE MANAGEMENT

The management of Noritake Co., Limited wishes to express its gratitude to all stakeholders fortheir continued support. Thanks to your backing, we were able to celebrate the 110th anniversary
since our founding in 1904. In addition, we would like to take this opportunity to comment on theGroup’s results for fiscal 2014, ended March 31, 2014.

2

Hitoshi Tanemura

Tadashi Ogura

Chairman &Representative Director

President &Representative Director

NORITAKE CO., LIMITED

Annual Report 2014

Performance Overview for Fiscal 2014
In fiscal 2014, although the outlook grew brighter for the Japanese economy due in part to
the government’s economic policies, which succeeded in weakening the yen, most companies in the manufacturing industry have yet to feel the effects of recovery. In the UnitedStates, the economy gradually improved as consumer spending began to rise and housing
and capital investments recovered. The economy in Europe, which had been stagnant due tothe financial crisis, appeared to bottom out last autumn. In emerging markets, Chinese economic growth slowed and the prolonged political turmoil in Thailand cast a shadow on the
country’s economic prospects.
Amid this economic environment, the Company focused its efforts on developing new
products, upgrading overseas manufacturing bases and penetrating overseas markets. As aresult, while net sales for the first half of the fiscal year came in under the first half of the previous fiscal year, net sales in the second half began to recover with net sales for the full year
ending down 1.7% year on year to ¥88,687 million.
Looking at earnings, operating income rose to ¥785 million and ordinary income amounted to ¥1,930 million on the back of increased profitability for exports amid the weak yen,though this was partially offset by expenditures for relocating the headquarters’ plant and theincreasing cost of energy and imported raw materials.
Our new three-year mid-term business plan kicked off with the start of the fiscal year. The
plan’s core strategies revolve around the following three key initiatives:
1. Boosting sales by competitively pricing new technologies and products
2. Penetrating overseas markets and upgrading overseas manufacturing bases
3. Promoting an efficient management structure and upgrading infrastructure
During fiscal 2014, we did our utmost to advance these goals and would now like to sharesome of the progress with you.
In regards to the development of new products and the expansion of sales, both electronic pastes for solar cells and wire saws for cutting silicon won praise from customers, but thishas yet to translate into significant contributions to sales. In addition, kilns and dry furnaces
used to make lithium-ion batteries were initially affected as customers made efforts to rein in
capital investment, but signs of recovery emerged in the second half, eventually leading to a
flurry of orders.
In regards to penetrating overseas markets and upgrading overseas manufacturing bases,
we completed a grinding wheel factory in China last October. The factory has commenced
operations and for some products we have already halted imports from Japan and switched
to locally manufactured products. Moreover, a cubic boron nitride (CBN) grinding wheel production line was added to the diamond electroplated tool plant in Thailand as we continue
our efforts to further penetrate overseas markets. In addition, the gypsum plant in Thailand
has begun shipments of new products for construction materials and the operating capacityof its production facilities that were expanded year before last has been steadily increasing.

NORITAKE CO., LIMITED

Annual Report 2014

3

The relocation of the headquarters’ plant to the Miyoshi Site with the aim of constructing
an efficient production system was completed on March 31, 2014. The main departments of
the Ceramics & Materials Group, the Research and Development Center, and the main grinding wheel plants of the Industrial Products Group have all been integrated at the Miyoshi Site.
As for how we plan to use the former site of the headquarters’ plant, we have selected adeveloper with the aim of incorporating the area into the Noritake Garden to make it grander
and livelier. Preliminary operations for the plan are currently underway.
In addition, Noritake reinforced its business management structure, improving efficiency,
while pursuing stronger manufacturing; labor, health and safety; compliance; and environmental management across the entire Group.

Basic Policy Regarding Earnings Distribution
Noritake has positioned returning profit to shareholders as a key management policy. Basedon this policy, we place emphasis on stable dividend payments over the long term and the
distribution of earnings by comprehensively taking into consideration factors that include performance results, financial conditions and future business development. In addition, we makeeffective use of retained earnings for investment aimed at creating new technologies andproducts 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 ¥3.0 per share as the fiscal year-end dividend.
Combined with the interim dividend, this brought the full-year dividend to ¥6.0 per share.

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

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

Hitoshi Tanemura
Chairman & Representative Director

Tadashi Ogura
President & Representative Director

4

NORITAKE CO., LIMITED

Annual Report 2014

R E V I E W O F O P E R AT I O N S“MEGA-LIFE WHEEL”

Breakdown of Sales

Business StatusI

Wn Japan, although production began torecover in the latter half of the fiscal year forthe automobile-related, steel-making, andbearing industries, domestic sales increased
only slightly as the electronics and semiconduc-

41.4

Business Strategy%

e are working to strengthen development of tools related to LEDs,
solar cells and other green technol-ogies expected to experience growth. We arealso developing high performance tools,

tor industries remained weak. Overseas, sales

including grinding wheels for gears and turbine

rose thanks to favorable exchange rates; theblades, mainly for automobiles and aircrafts.

firm North American market, especially theautomobile industry; and expanded automobile

And with the relocation of the headquarters’Sales

plant to the Miyoshi Site, we aim to increase(Millions of yen)and steel production in China, while sales
remained the same level as the previous year in

our market share and raise our competitiveness
35,44036,738in regards to quality, cost and delivery times.

Southeast Asia due to stagnation in the hard-

Overseas, we will continue to set up a local

disk market. As a result, consolidated net sales

production system comprising the Thai plant,of the Industrial Products Group grew 3.7% year

Chinese grinding wheels plant and U.S. cubicon year to ¥36,738 million.

boron nitride (CBN) grinding wheels plant.
We will also use these plants as bases fromwhich to expand sales and penetrate overseas
markets.
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NORITAKE CO., LIMITED

Annual Report 2014

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5

Ceramics & Materials

Thick film circuit substrates
used for LEDs

Business Status

S

Breakdown of Sales

ales of electronic pastes fell sharply

expand sales worldwide of newly developed dif-in solar cells, lower silver prices,

pastes used in ceramic capacitors. InIn regards to electronic pastes, we are striving to

due to decreased shipments for use

and persistently weak orders for nickel

Business Strategy

ferentiated products for use in solar cells and

33.3

%

ceramic capacitors. As for ceramic products, we
aim to improve profitability by shifting production ofceramic products, sales of gypsum grewthick film circuit substrates from Japan to theand sales of ceramic cores remained firm,Indonesian plant and expanding sales of gypsum

but ceramic catalyst carrier orders fell in
North America. Sales of thick film circuit

used in construction. In addition, we are making
Sales

efforts to improve the performance of ceramic cata-(Millions of yen)

substrates for automobiles declined as customers made inventory adjustments. Orders

lyst carriers with the aim of recovering sales. Turning
30,58329,506

to vacuum florescent displays (VFDs), we will pro-of vacuum florescent displays (VFDs) weremote the development of new products, including

good and sales expanded. KCM

module products and touch switches, and work to

Corporation’s sales increased slightly. As aexpand their sales. KCM Corporation is focusing its

result, consolidated net sales of theefforts on expanding sales of inexpensive general-

Ceramics & Materials Group fell 3.5% year

use products and products with high crystallinity foron year to ¥29,506 million.

use in ceramic capacitors, as well as developing
products aimed at new applications, including those
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for fuel cells and piezoelectric elements.
NORITAKE CO., LIMITED

Annual Report 2014

Engineering
Creek flow type
coolant filtration system

Breakdown of Sales

Business StatusD

espite strong sales for use in manufacturing smart-phone electronic
components and films, sales of main-

stay dry-furnaces and kilns declined significantly as sluggish demand from lithium-ion

14.6

%

Business StrategyIn dry-furnaces and kilns, we aim to expand
sales for those used in making electronic
components and lithium-ion batteries, twoareas where demand is expected to recover,and develop products aimed at new applica-

batteries dragged on from the previous fiscal

tions in automobile-related fields. For filtration

year. Sales of filtration and mixing equipment

and mixing equipment as well as carbide

decreased due in part to the reining in of capital investment by customers in the bearing,tipped circular sawing machines, we aim to
Sales

improve performance and functionality and(Millions of yen)chemical and other industries. Orders of carbide tipped circular sawing machines grew in

expand sales by opening new sales channels
15,927the second half of the year thanks to strength-in Asia, North America and other markets
12,962overseas.

ened marketing activities overseas, including
in Southeast Asia and the United States. As aresult, consolidated net sales of theEngineering Group declined 18.6% year on
year to ¥12,962 million.

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NORITAKE CO., LIMITED

Annual Report 2014’14
7

Tabletop

LADY MUG “Daisie”

Business Status

I

Breakdown of Salesn Japan, we will bolster sales though cata-favorable sales to hotels, restaurants andlogs and the Internet, in addition to our

airlines, though harsh conditions continued

at department stores. Demand from international visitors to Japan grew at our directly

Business Strategy

In Japan, sales increased supported byconventional marketing at department

10.7

%

stores. We will also expand sales by developing new sales channels for special products

operated stores, especially at “Noritakefor corporate use. In addition, we will hold

Ginza”, and the surge in demand before thevarious sales events at specially set up ven-

consumption tax hike at the end of the fiscal

ues, especially department stores, with theSalesyear helped push sales higher. Sales overseas

aim of expanding sales of premium products.

(Millions of yen)rose thanks to firm sales in the United States,

Overseas, we aim to launch new products
9,481

expanding sales to airlines in Asia and thelaunch of “cher blanc” in Europe, in addition

8,286

in existing markets and expand our market
share. We also aim to expand sales by

to favorable exchange rates. As a result, con-strengthening our marketing structure forsolidated net sales in the Tabletop Group rose

the affluent of China, India and other Asian

14.4% year on year to ¥9,481 million.

countries.

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NORITAKE CO., LIMITED

Annual Report 2014

TOPICS

1.

State-of-the-Art Miyoshi Plant Commences Full-Scale Operations
The relocation of the headquarters’ grinding wheels plant to the Miyoshi Site began
in 2012 and proceeded in stages, finishing in March 2014. It has since commenced
full-scale operations under its new name—the Miyoshi Plant. Going forward, vitrifiedbonded grinding wheels and super-abrasive grinding wheels will be produced at the
Miyoshi Plant.
The plant greatly improved production efficiency by installing new types of facilities, resulting in streamlined production lines for each product. This has cut production lead times and enabled us to more quickly meet customer demands. In
addition, the Miyoshi Plant acts as the mother plant to the Industrial ProductsGroup’s manufacturing bases around the world.

The Miyoshi Plant

2.

Grinding Wheels Plant Comes on Line in Suzhou, China
After completing construction of a grinding wheels plant in the city of Suzhou in
Jiangsu Province, China on October 30, 2013, we held a ceremony to commemorate the occasion.
Steel production capacity in China has taken off in recent years and now accounts
for just under 50% of the world total. With this rapid increase, demand for grinding
wheels is also expanding from steelmakers. We currently produce heavy-duty grinding wheels in China for local steelmakers. This local production has increased our
price competitiveness.
Going forward, we aim to steadily expand our product lineup, beginning with othergrinding wheels for the steel-making industry. We seek to expand sales in China andother Asian countries.

The grinding wheels plant in Suzhou, China

3.

World Class Sealing Glass Developed for Fuel Cells
Noritake developed sealing glass with world class hermeticity for use in solid oxide
fuel cells (SOFCs). SOFCs generate electricity through the reaction of air and hydrogen, city gas or similar substances categorized as reducing gas, and are becoming
more common in households.
Noritake developed this sealing glass by applying the glazing techniques honed
through making tableware with techniques for artificial dental materials. Noritake’s
sealing glass is able to minimize fuel crossover loss in oxidizing the fuel, which is
required to generate electricity. Its high hermeticity prevents deterioration of the fuelcell even when repeatedly powered on and off.
The need for this sealing glass technology is expected to increase in the fields ofenergy and automobiles. We will grow this business in response to the demands
from these industries.

Sealing Glass

4.

Popular “cher blanc” Collection Expands with New Items
We added a 36 cm oval platter and 22 cm bowl to the “cher blanc” collection.
These new items are perfect as serving platters or salad bowls for parties at home,brunches with the family or any other gathering.
“cher blanc” is the tableware that can be used every day or for entertaining important guests. It is also microwave- and dishwasher-safe. It uses thin, light new materials and has become quite popular since its launch in 2012. Going forward, we willcontinue to fill out this lineup so that it is complete for any occasion.
“cher blanc”
NORITAKE CO., LIMITED

Annual Report 20149

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

Industrial Products

around the Research and Development Center, which is principally involved in 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 product development for new technologies
and new fields in collaboration with each business division andGroup company.
The R&D expenditures of the Noritake Group amounted to¥2,724 million in the fiscal year under review.
“MEGA-LIFE WHEEL”

T

o 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

Noritake is augmenting the development(Millions of yen)of ecologically friendly processing tools insuch growth areas as solar cells and

3,041

2,918
2,724

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 of addressing market changes.
The R&D expenditures in the Industrial

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Products segment totaled ¥702 million in
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 ¥655 million.

10

NORITAKE CO., LIMITED

Annual Report 2014

Ceramics & Materials

Engineering

Tabletop

Thick film circuit substrates
used for LEDs

Creek flow type
coolant filtration system

LADY MUG “ Daisie”

In 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 semiconduc-feature high-generation efficiency. In addi-

tors, films and electronics.

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 ¥52 million in fiscal 2014.

ment amounted to ¥21 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 catalyst carriers for chemical plants and thick-film, multi-layer
substrates for automobiles and LEDs. We
also developed “°C Monarc”, a ceramiccore used in precision 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 VFD message displays, mainly usedin stores, information and reception displays in public places, and disaster-related
wireless systems.
The R&D expenditures in this segment
were ¥1,293 million.
NORITAKE CO., LIMITED

Annual Report 201411

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 2008, the Noritake Group has been working to build andComprising its corporate governance structure, Noritake has posi-

maintain a framework in which it forms project-based structures,

tioned the Board of Directors as the body that decides on important

advances the documentation of adherence to rules and operational

matters, including those stipulated by management’s basic policy andprocesses, and addresses the systemization of internal controls related

the law. Noritake has also introduced an executive officer system toto financial reporting. Furthermore, with regard to the stipulation of inter-clarify executive responsibilities and to delegate authority with thenal control rules, and the status of their maintenance and implementa-

objective of further reinforcing the execution of business based ontion, Noritake conducts monitoring from the perspective of the risk ofdecisions made by the Board of Directors. In addition to executive offi-

material misstatements related to financial reporting, among other mea-

cers involved in business operations, the Board of Directors meets, insures, as it strives to preserve and improve its internal control system.

principle, once a month to ensure uniformity of understanding acrossThrough the Compliance Committee and the activities of persons

the entire Group. Furthermore, such matters as surplus dividends andappointed to have compliance responsibilities under the committee’s

items stipulated in Article 459-1 of the Company Law are addressed as

authority, the Company is working to bolster its internal controls systemmatters for resolution by the Board of Directors, unless otherwise stipu-

from the compliance standpoint.

lated by law, with the aim of being able to flexibly return profits to(iv) Status of risk management system upgrades

shareholders.

Strengthening the ongoing compliance structure of the Group as aWith regard to important management matters, Noritake has estab-whole, Noritake works to maintain risk management systems to pre-lished a structure to perform accurate and quick decisions after carefulvent the Group from entering into a crisis situation due to misconduct

deliberation at the Executive Council, which meets weekly, in principle.

associated with the violation of the law.

Directors are elected at the Company’s Annual General Meeting ofShould the Group be faced with any risk that might damage its cor-

Shareholders, which is attended by at least one-third of the sharehold-porate value, such as a case of misconduct, an accident or disaster,ers with exercisable voting rights, and after a majority of said voting“Risk Management Regulations” have been formulated to minimize

rights is obtained, although not by cumulative voting. Noritake limits thelosses and to enable operations to continue with minimal disruption. In

number of directors to 18. The tenure of directors at Noritake and thethe event that a crisis does arise, a task force will be established inGroup has been set at one year. The purpose of this system is to make

immediate response.

possible the active building of a management structure optimally suited
to today’s turbulent business environment and to clarify management
responsibilities anew with each fiscal year.

(2) STATUS OF INTERNAL AUDITS AND AUDITS BYCORPORATE AUDITORS AND INDEPENDENT AUDITORSIn accordance with Article 426-1 of the Company Law and by

The Audit Office serves as the Company’s internal audit department

Board of Directors’ meeting resolution, Noritake decided that it would

and implements operational and accounting audits. Audit results are

be able to exempt directors and auditors (including former directors

reported to the divisional head and the general manager in charge ofand auditors) from liabilities for damages incurred as a result of the exe-

business operations, and, in the event that any significant problems are

cution of their duties, within the limit of laws and regulations, with theidentified, the Audit Office is required to notify the Executive Council.

aim of having them fully perform the roles expected of them by the
Board of Directors and auditors.
Noritake aims to affect smooth operations by reducing the quorum

The Board of Auditors is composed of two full-time corporate auditors and two outside auditors. Besides stipulating such matters asaudit guidelines and the division of duties, the Board of Auditors

necessary for extraordinary resolutions at the General Meeting ofreceives reports from each auditor providing the actual audit status andShareholders. Resolutions proposed for approval at the Company’s

results, and expedites the flow of information between the Board ofAnnual General Meeting of Shareholders, in accordance with the provi-

Directors and the Audit Office, which serves as the internal audit

sions of Article 309-2 of the Company Law, must be ratified by a two-

department. In addition to working to gather information, auditors

thirds majority vote of shareholders in attendance whose total voting

attend meetings of the Board of Directors and Executive Council asrights account for one-third or more of all exercisable voting rights.

well as other important meetings, where they receive status reports on

Although the establishment of a “company with committees” is rec-the execution of executives’ duties and ask for explanations when theognized, Noritake decided to use a corporate auditor system.

need arises. Furthermore, The Board of Auditors, in addition to con-(ii) Reasons for applying corporate governance systemfirming that Noritake’s accounting auditors maintain their independenceWith the advancing globalization of business, the effects of corporate

and implement the appropriate audits, receives status reports from theactivities are being held to increasingly strict standards of corporate

accounting auditors on the execution of duties and requests explana-social responsibility. Each Group executive and employee is heir to thetions when the need arises.

spirit of Noritake’s founder, on which basis the Noritake GroupStatement of Corporate Ethics was formulated. In observing and putting that statement into practice, they apply this corporate governancestructure to realize a Noritake Group with even higher standards of cor-

In the Audit Office, auditors and accounting auditors work in close collaboration to maintain the effectiveness of internal audit implementation.
As established by contractual ties, Noritake’s independent auditor is
KPMG AZSA LLC, which assigns managing partners to Noritake toporate ethics.
12

NORITAKE CO., LIMITED

Annual Report 2014

implement audits from an independent perspective. In the fiscal year

strengthens management oversight by having two of four auditors fromunder review, the managing partners assigned to Noritake by KPMG

outside the Company. In corporate governance, Noritake places the

AZSA LLC were as follows:

utmost importance on external, objective and neutral management• Specified employees and managing partners

oversight functions. The external management oversight function is

CPA Yasushi Yokoi

adequately performed by the system that is in place with the two out-

CPA Chika Matsumotoside auditors. Noritake has appointed one outside director to further

CPA Satoshi Zengame

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

• Assistants
15 CPAs and 13 others(4) COMPENSATION TO DIRECTORS AND AUDITORS(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(i) Total executive compensation by executive officer category,
total compensation by type, and number of officers eligible
Executive
Officer
Category

Compensation
Amount(Millions of yen)and Kazutoyo Shinohara, who were in office for the fiscal year underreview, and its outside director Kosaku Yamada.

Total Compensation by Type(Millions of yen)
Basic
Stock
Compensation Options

No. ofOfficers
Eligible

Contribution Retirement
Benefits

Director (excl.
outside director)

308

240

—

—

68

10

regarding business management and was hired to provide thorough

Auditor (excl. outside auditors)

40

32

—

—

8

3

counsel on matters spanning the entire business to the Board of

Outside director
and auditor

24

21

—

—

2

3

The outside director has a wealth of experience and broad insight

Directors in an effort to strengthen oversight and increase transparency
in the decision-making process.
Furthermore, the outside auditors reflect their wealth of experienceand broad insight as business managers in Noritake audits.
When the outside director oversees business operations or when(ii) Policy details and decision-making process with regard to
executive compensation and its methods of calculation
At the 109th Annual General Meeting of Shareholders, which was heldon June 28, 1990, the decision was taken to limit Noritake’s total exec-

the outside auditors conduct operational audits, they may conduct

utive compensation to ¥40 million or less per month for directors andinternal and corporate audits as needed in addition to collaborating¥6 million or less per month for auditors.

with accounting auditors and the internal control department throughsuch means as the appropriate sharing of information and exchange of
opinions.
Together with the two full-time corporate auditors, the outside auditors are mandated to audit the Board of Directors in the execution of its(5) DETAILS OF COMPENSATION PAID TO INDEPENDENTAUDITOR, ETC.
(i) Details of independent auditor compensation, etc.
Category

duties and the operations and assets of Noritake and its subsidiaries. In

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)addition, the outside auditors conduct audits based on reports
received from the independent accounting auditors regarding theCompany’s consolidated financial statements. In addition, working

Parent company

56

—

59

—

closely with the Audit Office, the outside auditors contribute to efficient

Consolidated
subsidiary

17

—

8

—

Total

73

—

67

—

internal audits.
The Company appoints outside directors and auditors with the
expectation that they will perform their oversight duties and audits in an(ii) Other significant details regarding compensation

appropriate and objective manner based on their specialized knowl-

Noritake Co., Inc., a Noritake subsidiary, paid compensation based onedge. Although the Company’s rules and regulations do not stipulate

audit certification services of ¥7 million to KPMG LLP, which belongs to

the independence of outside directors and auditors, we appoint themthe same corporate network as the Company’s independent auditor, inin line with our basic philosophy that they have no conflict of interest

the consolidated accounting year under review. In the previous consolidat-

with ordinary shareholders.

ed accounting year, the amount for such services had totaled ¥6 million.

The Company concludes limitation of liability contracts with eachoutside director and auditor in accordance with the provisions of Article(iii) Details of non-auditing services provided to the Company by
the independent auditor

423-1 of the Company Law. As such, the maximum amount of liability

In the year ended March 31, 2014, there were no relevant items.

stipulated by the aforementioned contracts is the minimum amount(iv) Policy for determining compensation to independent auditors

determined by law.

The Company calculates compensation to be paid to its CPAs, etc.

With regard to management and decision-making functions as welltaking into account such factors as the number of days of the audit

as its Board of Directors, which fulfills the management oversight func-

and the special characteristics of Noritake’s size and operational char-tion in terms of the business execution of its directors, Noritake

acteristics.

NORITAKE CO., LIMITED

Annual Report 201413

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 (%)

102,15235.0’1290,236

88,687

34.5

34.7

’14

’13

Operating Income &Operating Income Ratio
Operating income (Millions of yen)
Operating income ratio (%)
1,880

1.8

785
0.9

64
0.1

’12

’13

’14

Net Income &Net Income Ratio
Net income (Millions of yen)
Net income ratio (%)
4,468
4.4

1,644
1,313
1.8
1.5

’12

14

’13

SCOPE OF CONSOLIDATION
Composed of 23 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.
INDUSTRIAL PRODUCTS SEGMENT
In the Industrial Products Segment, grinding
wheel manufacturing and fabrication are performed by three subsidiaries and two associates
in addition to the Company, while diamond tool
manufacturing is undertaken by one subsidiaryin addition to the Company. Coated abrasives
are produced by the subsidiary Noritake CoatedAbrasive Co., Ltd. and one associate; a portionof 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 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 sales of most of theseproducts both in Japan and overseas.
In addition, Noritake’s associate Nippon
Resibon Corporation engages in the manufacture and sale of grinding wheels.
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 theCompany by the subsidiary Noritake Itron
Corporation. In addition, the subsidiary KCM
Corporation and its subsidiaries produce ceramic
raw materials, a portion of which are supplied to
the Company.
In addition to the Company’s own sales
activities for electronic paste and other ceramic
products of the Ceramics & Materials Group,sales activities for VFD tubes and related products, both domestic and overseas, are mainly

conducted by the integrated manufacturing andsales 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 its own products both in Japanand overseas.
Moreover, the Company’s associate, Kuraray
Noritake Dental Inc., engages in the manufactureand 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 andsupplies to the Company static mixers.
Sales activities in Japan and overseas areundertaken by the Company and one of its subsidiaries. In addition, the U.S.-based Noritake
Co., Inc. and another subsidiary conduct sales for
the Engineering Segment in overseas markets.
TABLETOP SEGMENT
In the Tabletop Segment, in addition to theCompany’s production activities, porcelaintableware is manufactured by Noritake Lanka
Porcelain (Private) Limited located in Sri Lanka
and one associate, which is supplied to theCompany.
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., Limited, one associate,
and one subsidiary currently in the process ofliquidation.
PERFORMANCE ANALYSIS
Consolidated net sales declined ¥1,549 million,
or 1.7%, year on year to ¥88,687 million.

’14

NORITAKE CO., LIMITED

Annual Report 2014

Operating income increased ¥721 million
from the previous fiscal year to ¥785 million
mostly due to the depreciation of the yen.
In other income, gain on sales of investment
securities amounted to ¥751 million. In otherexpenses, loss on sales or disposals of property
and equipment came to ¥98 million.
As a result of the aforementioned, income
before income taxes and minority interests forthe fiscal year under review fell ¥208 million, or
7.7%, compared with the previous fiscal year to¥2,485 million. After accounting for income taxes
and minority interests, net income dropped¥331 million, or 20.1%, to ¥1,313 million.
Additionally, net income per share fell to ¥8.91
and the return on equity dropped to 2.0%.
FINANCIAL POSITION ANALYSIS
Total assets stood at ¥118,774 million, up 3.8%,
or ¥4,355 million, from the previous fiscal yearend. Current assets totaled ¥50,507 million,
down ¥2,597 million, while non-current assets
amounted to ¥68,267 million, up ¥6,952 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’ plant, which exceeded the decline in notes and accounts receivable.
Total liabilities as of March 31, 2014 stood at¥49,557 million, an increase of 3.6% year on
year, or ¥1,718 million. This change was primarily attributable to an increase in short-term borrowings despite a decrease in notes andaccounts payable.
Total net assets at March 31, 2014 amounted
to ¥69,217 million, up 4.0% year on year, or¥2,637 million. Major factors include unrealized
gains on available-for-sale securities despite adecrease in the purchase of treasury stock. As aresult, shareholders’ equity per share totaled¥477.64, up ¥36.59 compared with the previous
consolidated fiscal year-end. The capital ratio
improved to 57.8% from 57.7% at the previous
fiscal year-end.

CASH FLOW ANALYSISAs of March 31, 2014, cash and cash equivalents stood at ¥8,671 million, a year on year
decrease of ¥107 million. Free cash flows roseto ¥267 million for the year.
Net cash provided by operating activities
increased ¥643 million year on year to ¥4,878
million. The decrease in trade receivables narrowed from ¥3,897 million in the previous fiscal
year to ¥2,246 million in fiscal 2014. Despite
this, operating cash flow improved as the¥4,052 million accounting gain on bargain purchase recorded in the previous fiscal year was
not cash generating.
Net cash used in investing activities
decreased ¥2,648 million year on year to ¥4,611
million. Moderating factors included the decreasein short-term investments of ¥984 million in fiscal
2014, and the absence of purchase of investment in subsidiaries, which totaled ¥947 million
in the fiscal year ended March 31, 2013.
Net cash used in financing activities
decreased ¥1,065 million year on year to ¥1,313
million. Despite an increase of ¥5,100 million in
repayments of long-term debt, financing cash
flow improved as the increase in long-term debt
expanded by ¥2,519 million more than the fiscal
2013 increase and there was a net increase of¥3,719 million in short-term borrowings, a sharp
reversal from a net decrease of ¥52 million in theprevious fiscal year.
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 policyof procuring operating funds themselves in theirrespective local currencies.

Net Income per Share
(Yen)

31.99

11.02
8.91

’12

Annual Report 2014’14

Total Assets(Millions of yen)

117,735

114,419’12’13

118,774’14

Total Shareholders’ Equity(Millions of yen)

63,646’12

NORITAKE CO., LIMITED’13

66,28064,796

’13

’14

15

Capital Ratio
(%)

57.7

57.8

51.5

’12

’13

’14

Return on Equity
(%)

7.6

2.0

As of March 31, 2014, the balance of shortterm borrowings totaled ¥5,318 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,
2014, the balance of unsecured long-term loans
amounted to ¥8,024 million, most of which isdenominated in yen, with the remainder in one
other currency. Unsecured bonds payable stoodat ¥10,000 million.
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.

2.6

’12

16

’13

’14

Exchange Rate Fluctuation Risk
The export ratios of the Ceramics & Materials
Group and the Tabletop 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 performanceand financial position.

Disaster Risk
The Noritake Group has a number of businessbases in Japan and overseas. In the event thatthese business bases, particularly manufacturingbases, are damaged by earthquake, fire or otherdisaster, their operations may have to be suspended 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, the Company’s
operations may have to be suspended for a certain period of time. Should this be the case, theNoritake Group’s business performance andfinancial 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 any of
the Noritake’s main products becomes obsolete,or Noritake fails to launch new products in atimely manner, its business performance andfinancial 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, 2014.

NORITAKE CO., LIMITED

Annual Report 2014

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, 2014 and 2013

Millions of yen

Thousands of
U.S. dollars(Note 1)

2013

2014

2014

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)
Net defined 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: 14,800,395 sharesin 2014 and 8,769,552 shares in 2013
Total shareholders’ equity
Accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

¥

8,671
1,620
25,705
12,834391
1,286
50,507

¥

8,778
2,322
27,113
13,340342
1,209
53,104$85,01015,882
252,010
125,824
3,833
12,608495,167

24,488
5,282
133
1,093
30,996

18,636
6,328
78
2,332
27,374240,078
51,784
1,304
10,716
303,882

11,02937,07745,720523
94,349(57,078)
37,271¥118,774

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

108,127
363,500
448,236
5,127
924,990(559,588)
365,402$1,164,451

¥

¥

$

5,318
4,246
13,413
3,866
612
837
28,292

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

52,13841,627
131,500
37,902
6,000
8,206
277,373

13,869
—
1,879
847
4,483
187
21,26549,557

15,361
1,030
—
805
2,956
195
20,347
47,839135,971—
18,4228,303
43,951
1,833
208,480
485,853

15,632
18,83334,31015,632
18,83334,211

153,255
184,637
336,373(3,979)64,796
3,807
614
69,217¥118,774(2,396)
66,280(272)
572
66,580¥114,419(39,010)635,255
37,323
6,020
678,598$1,164,451

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

Annual Report 201417

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, 2014 and 2013

Operating revenue:
Net sales (Note 15)
Operating costs and expenses:
Cost of goods soldSelling, general and administrative expenses
Operating income

Millions of yen

Thousands of
U.S. dollars(Note 1)

2014

2013

2014

¥88,687¥90,236$869,480

66,151
21,75187,902785

68,856
21,31690,17264

648,539
213,245861,784
7,696

447
(158)
(24)
751
(98)
275
—
507
1,700
2,485

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

4,382
(1,549)
(235)
7,363
(961)
2,696
—
4,971
16,66724,363

898
310
1,208

744
199
943

8,804
3,039
11,843

1,277

1,750

12,520(36)¥ 1,313106¥ 1,644(353)$ 12,873

Yen

U.S. dollars

Other income (expenses):
Interest and dividend income
Interest expense
Impairment loss on fixed assets
Gain on sales of investment securities
Loss on sales or disposals of property and equipment
Equity in net earnings of associates
Gain on bargain purchase
Other, net
Income before income taxes and minority interests
Income taxes (Note 14):
Current
Deferred
Total income taxes
Income before minority interests
Less minority interests in net (losses) income of consolidated subsidiaries
Net income
Per share:
Net income
Cash dividends

¥

8.91
6.00

¥ 11.02
8.00

$

0.09
0.06

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, 2014 and 2013

Millions of yen

Thousands of
U.S. dollars(Note 1)

2014

2013

2014

¥1,277¥1,750$12,520

3,997
2,021

1,795
966

39,186
19,814

112
6,130

37
2,798

1,098
60,098Comprehensive income:¥7,407¥4,548$72,618

Comprehensive income attributable to:
Owners of the parent
Minority interests
Total comprehensive income:¥7,36542¥7,407¥4,411
137¥4,548$72,206
412$72,618

Income before minority interests:
Other comprehensive income (Note 17):
Unrealized gains on available-for-sale securities
Foreign currency translation adjustments
Share of other comprehensive income of associates accounted
for using equity method
Total other comprehensive income

See accompanying Notes to Consolidated Financial Statements.
18

NORITAKE CO., LIMITED

Annual Report 2014

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, 2014 and 2013

Shareholders’ equity
Number ofshares ofcommon stock
issuedBalance at April 1, 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
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, 2014

Total
shareholders’equityCommonstock

CapitalsurplusRetainedearnings

Treasurystock

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
1,313(1,048)—(2,396)———
66,2801,313(1,048)

—
—

—
—

—
—

—
(166)

(1,583)—(1,583)(166)—
158,428,497—¥15,632—¥18,833—¥34,310—¥(3,979)—¥64,796$153,255——$184,637——$335,402
12,873(10,275)$(23,490)——$649,804
12,873(10,275)

—
—

—
—

—
(1,627)(15,520)—(15,520)(1,627)—$153,255—$184,637—$336,373—$(39,010)—$635,255

Total accumulated
othercomprehensive
incomeMinority
interests

Total
net assets———¥(3,039)——¥8,289——¥68,896
1,644(1,181)Millions of yen

Thousands of U.S. dollars (Note 1)

Balance at March 31, 2013
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, 2014

Accumulated other comprehensive income
Unrealized
gains onavailable-for-salesecurities

Foreigncurrencytranslation
adjustments

Balance at April 1, 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
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, 2014

¥2,890——¥(5,929)
—
—

—
—

—
—

—
—

—
—

—
—

2,064
107

1,847
4,737
—
—

920
(5,009)
—
—

—
—
—
—

2,767
(272)
—
—

(7,717)572——(4,950)66,5801,313(1,048)

—

—

—

—

—

(1,583)

—

—

—

—

—

(166)

4,022
¥8,7592,029¥(2,980)(1,972)¥(1,972)

4,079¥ 3,807

42
¥ 614

4,121
¥69,217

Balance at March 31, 2013
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, 2014

$46,441——$(49,108)
—
—

$

—
—
—

$ (2,667)——$5,608——$652,745
12,873(10,275)

—
—

—
—

—
—

—
—

—
—

(15,520)(1,627)39,431$85,872

19,892$(29,216)(19,333)$(19,333)

39,990$37,323412$6,02040,402$678,598

Remeasurementsof defined benefit
plans

Millions of yen¥

Thousands of U.S. dollars (Note 1)

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

Annual Report 201419

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, 2014 and 2013

Millions of yen

Thousands of
U.S. dollars(Note 1)

2014

2013

2014

¥2,485¥ 2,693$24,363

2,905

3,429

28,480235

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation
Impairment loss on fixed assets

24

1,370

Gain on bargain purchase—(4,052)—Equity in net earnings of associates

(275)

(338)

(2,696)

Gain on sales of investment securities

(751)

—

(7,363)961

Loss on sales or disposals of property and equipment

98

905

Decrease in employee retirement benefit liability

—

(182)

—

Decrease in net defined benefit liability(1,066)—(10,451)

Decrease in trade receivables

2,246

3,897

22,020Decrease in inventories

1,164

1,847

11,412

Decrease in trade payables(1,416)(4,293)(13,882)

Other, net
Subtotal

(226)

(441)

(2,216)

5,188

4,835

50,863

Interest and dividends received

594

410

5,824

Interest paid

(160)

(151)

(1,569)

Income taxes paid
Net cash provided by operating activities

(744)

(859)

(7,294)

4,878

4,235

47,824

Cash flows from investing activities:
Increase in property, plant and equipment(6,451)(6,810)(63,245)

Increase in long-term investments and loans receivable

(38)

(256)

(373)

Purchase of investment in subsidiaries

—

(947)

—

Payments for sales of investments in subsidiaries resulting in change inscope of consolidation

—

(27)

—

Payments for investments in capital

(380)

—

(3,725)Decrease in property and long-term investments

14,127

1,441

318

Decrease in short-term investments

984

773

9,647

Other, net

(167)

(310)

(1,637)(4,611)(7,259)(45,206)

Increase in long-term debt

2,700

181

26,471

Repayments of long-term debt

(5,100)—(50,000)

Net cash used in investing activities
Cash flows from financing activities:

Net increase (decrease) in short-term borrowings

3,719

(52)

36,461Dividends paid

(1,048)(1,181)(10,275)

Purchase of treasury stock and fractional shares(1,584)(1,282)(15,530)

—

(44)

—
(12,873)

Other, net
Net cash used in financing activities(1,313)(2,378)

Effect of exchange rate changes on cash and cash equivalents

482

258

4,726

Net decrease in cash and cash equivalents(564)(5,144)(5,529)Cash and cash equivalents at beginning of year

8,778

13,81386,059

457

109

4,480

¥8,671¥ 8,778$85,010

Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at end of year
See accompanying Notes to Consolidated Financial Statements.

20

NORITAKE CO., LIMITED

Annual Report 2014

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, 2014, which was ¥102 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, 2014 and 2013 was
as follows:
Consolidated subsidiaries:
Domestic
Overseas
Associates accounted for by the equity method
Unconsolidated subsidiaries stated at cost
Associates stated at cost

2014

2013

8
11
5
4
4

8
11
5
6
4

From April 1, 2013, one overseas unconsolidated subsidiary was newly included in the scope of consolidation. During the year ended
March 31, 2014, one overseas consolidated subsidiary was liquidated.
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(“the Law”). 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.

NORITAKE CO., LIMITED

Annual Report 201421

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 and a gain on bargain
purchase of ¥3,952 million 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.
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 otherthan temporary.
(d) Accounting for derivatives
The Noritake Group is a party to derivative instruments such as foreign currency forward exchange contracts and interest rate and currency
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 atthe contract rate as an interim measure if certain hedging criteria are met. According to the special treatment as permitted by the accounting
standard for financial instruments, hedging interest rate and currency swap contracts are accounted for on an accrual basis and recorded
net of interest expense generated from the hedged borrowings if certain conditions are met. Furthermore, interest rate and currency swap
contracts are accounted for on an accrual basis through translating foreign currency denominated liabilities at such contracts rates as aninterim measure if certain hedging criteria are met. In addition, during the years ended March 31, 2014 and 2013, the Company had a derivative contract outstanding to hedge the risks associated with the occurrence of an earthquake. As the fair value of the contract was notconsidered determinable, that derivative contract was not accounted for at fair value.

22

NORITAKE CO., LIMITED

Annual Report 2014

(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 by the straight-line method
based on the estimated useful life of the asset.
(Changes in accounting policies for depreciation method of property, plant and equipment)
The Company and its domestic consolidated subsidiaries had depreciated property, plant and equipment, except for buildings, using thedeclining balance method. From the fiscal year ended March 31, 2014, the Company and its domestic consolidated subsidiaries havechanged their depreciation method for all properties to the straight-line method. The Noritake Group completed the consolidation of thegroup company, which has been carried out for the development of management infrastructure, and as a next step, made the relocation of
the headquarters plant for the establishment of an efficient production system. On this timing, the Noritake Group did a reassessment of
actual use of the properties. As a result, this change is based on the Noritake Group’s judgment that employing the straight-line method by
allocating acquisition costs of property, plant and equipment equally over the useful life would be more appropriate. In addition, unifying the
Noritake Group’s accounting policies to the straight-line method is consistent with the practices of the overseas consolidated subsidiaries,
which calculate depreciation by the straight-line method, and can contribute to accuracy improvement of business management. As aresult, for the fiscal year ended March 31, 2014, depreciation costs decreased by ¥1,229 million ($12,049 thousand), operating income
increased by ¥1,114 million ($10,922 thousand), and income before income taxes and minority interests increased by ¥1,145 million($11,225 thousand) compared with the amounts that would have been recorded without the change.
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, respectively, for the year ended March 31, 2013, from the amounts that would havebeen 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, except for certain
immaterial or short-term finance leases accounted for as operating leases in accordance with the current accounting standard. Depreciationof leased assets capitalized in finance lease transactions is computed by the straight-line method over the lease term with the assumptionof no residual value. (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 of assets
to the recoverable amount, measured as the higher of the asset’s net selling price or value in use. Fixed assets include intangible assets, aswell 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 theCompany and its domestic consolidated subsidiaries are grouped principally into cash-generating units based on the business division undermanagerial 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 lessthan the carrying amount of the asset. Recoverable amounts are measured based on net selling prices primarily from appraisal valuations.
The Noritake Group recognized impairment loss for the years ended March 31, 2014 and 2013 as follows:
Millions of yen

Buildings
Machinery and equipment
Land
Other
NORITAKE CO., LIMITED

Annual Report 2014

Thousands of
U.S. dollars

2014

2013

2014

¥—
—
—
24
¥24

¥ 727
11
632
—
¥1,370

$ —
—
—
235
$235
23

(j) Employee retirement benefits
The difference between retirement benefit obligations and plan assets has been recognized as net defined benefit liability. To calculate theretirement benefit obligations, the method of allocation of estimated retirement benefits is the straight-line basis. Actuarial gains and losses
that are yet to be recognized are amortized 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 costs is recognized in a single year as incurred. Net
defined benefit liability and retirement benefit expense of certain consolidated subsidiaries are calculated using the simplified method as permitted by the accounting standard for retirement benefits.
(Changes in accounting policies for retirement benefits)
Effective from the year ended March 31, 2014, the Noritake Group has applied the Accounting Standard for Retirement Benefits (ASBJ
Statement No. 26, May 17, 2012 (hereinafter, “Statement No. 26”)) and Guidance on Accounting Standard for Retirement Benefits (ASBJ
Guidance No. 25, May 17, 2012 (hereinafter, “Guidance No. 25”)) except the Article 35 of the Statement No. 26 and the Article 67 of the
Guidance No. 25 and actuarial gains and losses that are yet to be recognized have been recognized and the difference between retirement
benefit obligations and plan assets has been recognized as net defined benefit liability. In accordance with the Article 37 of the Statement
No. 26, the effect of the change in accounting policies arising from initial application has been recognized in remeasurements of defined
benefit plans in accumulated other comprehensive income. As a result, net defined benefit liability in the amount of ¥1,879 million ($18,422
thousand) has been recognized, accumulated other comprehensive income has decreased by ¥1,972 million ($19,333 thousand) at the endof the current fiscal year.
(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 currencytranslation 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 ¥2,724 million ($26,706 thousand) and ¥2,918 million for the years ended March 31, 2014 and 2013, 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, 2014 or 2013.
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.
(r) 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)24

NORITAKE CO., LIMITED

Annual Report 2014

(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 formulabasis as well as a straight-line basis. The method for determining discount rate has also been amended.
(2) Effective dates
Amendments relating to the determination of retirement benefit obligations and current service costs are effective from the beginning ofannual 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 and currency
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 foreignexchange forward contracts are used and bank borrowings for which interest rate and currency 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 of currency derivatives are limited to certain anticipated export sales or import purchases and interest rate andcurrency swap transactions are matched with the 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 derivative transactions are limited to major banks with relatively high credit ratings.
(b) Fair values of financial instruments
The following table is a summary of the carrying values and fair values at March 31, 2014 and 2013 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, 2014:

Financial assets:
Cash and time deposits
Trade receivables
Investment securities:
Available-for-sale securities
Investments in associates
Total
Financial liabilities:
Trade payables
Short-term borrowings
Payables included in accrued expenses
Income taxes payable
Bonds payable
Long-term bank loans, including current portion
Total
Derivative instruments

NORITAKE CO., LIMITED

Differences
Millions of yen

Annual Report 2014¥10,291
25,179¥10,291
25,179¥23,975
1,239¥60,684

23,975810¥60,255—(429)¥ (429)¥12,495
5,318
2,460
612
10,0008,024¥38,909¥—¥12,495
5,318
2,460
612
10,058
8,062¥39,005
¥
—

¥

¥
¥

—
—

—
—
—
—
58
38
96
—

25

Carrying values

Fair values

Differences

As of March 31, 2013:

Millions of yen

Financial assets:
Cash and time deposits
Trade receivables
Investment securities:
Available-for-sale securities
Investments in associates
Total
Financial liabilities:
Trade payables
Short-term borrowings
Payables included in accrued expenses
Income taxes payable
Bonds payable
Long-term bank loans, including current portion
Total
Derivative instruments¥ 11,100
26,886¥ 11,100
26,886¥18,1191,113¥ 57,218

18,119769¥ 56,874—(344)¥ (344)¥ 13,889
1,588
2,477
444
10,000
10,397¥ 38,795¥—¥ 13,889
1,588
2,477
444
10,095
10,409¥ 38,902¥—¥

Carrying values

Fair values

As of March 31, 2014:

¥
¥

—
—

—
—
—
—
95
12
107
—

Differences

Thousands of U.S. dollars

Financial assets:
Cash and time deposits
Trade receivables
Investment securities:
Available-for-sale securities
Investments in associates
Total
Financial liabilities:
Trade payables
Short-term borrowings
Payables included in accrued expenses
Income taxes payable
Bonds payable
Long-term bank loans, including current portion
Total
Derivative instruments$100,892
246,853$100,892
246,853$

235,049
12,147$594,941

235,049
7,941$590,735—(4,206)$(4,206)$122,500
52,13824,1176,000
98,03978,667$381,461$—$122,500
52,13824,1176,000
98,60879,039$382,402
$
—

$

$
$

—
—

—
—
—
—
569
372
941
—

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 and currency swaps or foreign currency
forward exchange contracts.
2. Unlisted equity securities of ¥3,331 million ($32,657 thousand) and ¥4,506 million at March 31, 2014 and 2013, 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, 2014:
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

26

¥10,291
25,179¥35,470

¥—

¥—

—

—

—

¥—

¥—

¥—

NORITAKE CO., LIMITED¥—

Annual Report 2014

Thousands of U.S. dollars

Financial assets:
Cash and time deposits
Trade receivables
Total$100,892
246,853$347,745

$—

$—

—

—

$—
—

$—

$—

$—

Millions of yen

Thousands of
U.S. dollars

4. NOTES AND ACCOUNTS RECEIVABLE
As of March 31, 2014 and 2013, notes and accounts receivable consisted of the following:

Trade notes receivable
Trade accounts receivable
Other
Less allowance for doubtful accounts

2014

2013

2014

¥ 4,658
20,521563(37)¥25,705¥ 4,845
22,041261(34)¥27,113$ 45,667
201,186
5,520(363)$252,010

Millions of yen

Thousands of
U.S. dollars

5. INVENTORIESAs of March 31, 2014 and 2013, inventories consisted of the following:

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

2014

2013

2014

¥ 6,273
3,244
3,317¥12,834¥ 5,869
3,830
3,641¥13,340$ 61,500
31,80432,520$125,824

For the year ended March 31, 2014, a reversal of write-down of ¥72 million ($706 thousand) was recognized as a reduction of costs ofgoods sold. For the year ended March 31, 2013, a write-down of ¥234 million was recorded as costs of goods sold.
6. INVESTMENTS
As of March 31, 2014 and 2013, short-term investments consisted of time deposits with an original maturity of more than three months.
At March 31, 2014 and 2013, investment securities consisted of the following:

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

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥23,975513¥24,488¥18,119517¥18,636$235,049
5,029$240,078

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, 2014 and 2013,
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, 2014
As of March 31, 2013¥10,506
11,211¥13,544
7,081¥ (75)(173)¥23,975
18,119Thousands of U.S. dollars

Available-for-sale equity securities:
As of March 31, 2014

$103,000$132,784$(735)$235,049

The Noritake Group sold available-for-sale securities and recorded net gains of ¥751 million ($7,363 thousand) for the year ended March 31,
2014. The Noritake Group recorded a loss on the write-down of available-for-sale securities due to other-than-temporary impairment in theamount of ¥5 million ($49 thousand) and ¥35 million for the years ended March 31, 2014 and 2013, respectively.

NORITAKE CO., LIMITED

Annual Report 201427

7. NOTES AND ACCOUNTS PAYABLE
As of March 31, 2014 and 2013, notes and accounts payable consisted of the following:
Millions of yen

Trade notes payable
Trade accounts payable
Other

Thousands of
U.S. dollars

2014

2013

2014

¥ 8,034
4,461
918¥13,413¥ 9,915
3,974
1,715¥15,604$ 78,765
43,7359,000$131,500

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 0.50% and 0.69%
per annum for the years ended March 31, 2014 and 2013, respectively.
As of March 31, 2014 and 2013, long-term debt consisted of the following:
Millions of yen

Unsecured bonds through December 2015 at a rate of 0.658% per annum
Unsecured loans from banks and insurance companies due through February 2019with interest at an average rate of 0.91% per annum at March 31, 2014
Capitalized lease obligations
Less current portion

Thousands of
U.S. dollars

2014

2013

2014

¥10,000¥10,000$ 98,039

8,024
91
18,115(4,246)¥13,869

10,397106
20,503(5,142)¥15,361

78,667
892
177,598(41,627)$135,971

Millions of yen

Thousands of
U.S. dollars¥ 4,246
11,141
1,515
11
1,202
—
¥18,115$ 41,627
109,226
14,853
108
11,784—$177,598

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

2015
2016
2017
2018
2019
Thereafter

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 Company and consolidated subsidiaries have adopted a defined benefit pension plans and lump-sum retirement benefit plans. The
Company has contributed certain available-for-sale securities to the employee retirement benefit trust under the defined benefit plans. Certain
overseas consolidated subsidiaries have adopted a defined contribution plans. Net defined benefit liability and retirement benefit expense ofcertain consolidated subsidiaries are calculated using the simplified method as permitted by the accounting standard for retirement benefits. In
addition, one domestic consolidated subsidiary also participated in a certain corporate pension plan under a multi-employer pension program.

28

NORITAKE CO., LIMITED

Annual Report 2014

The following table reconciles the benefit liability and net periodic retirement benefit expense as of and for the year ended March 31, 2013:
Millions of yen

2014

Reconciliation of benefit liability:
Projected benefit obligation
Less fair value of pension plan assets at end of year
Projected benefit obligation in excess of pension plan assets
Unrecognized actuarial differences

2013¥20,874(17,022)
3,852(3,930)(78)
1,108

Prepaid pension cost
Balance of employee retirement benefit liability recognizedon the consolidated balance sheets¥ 1,030

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 therequired 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.
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

2014

2013
March 31, 2012:

Latest calculation period-end

Pension plan assets¥104,458

Related benefit obligation under program(132,613)

Difference, resulting primarily from unamortized past service cost

¥ (28,155)

Ratio of subsidiaries’ contributions to total contributions to entire plan

0.3%

Millions of yen

2014

Components of net periodic retirement benefit expense:
Service cost
Interest cost
Expected return on pension plan assets
Amortization of actuarial differences
Net periodic retirement benefit expense

2013

¥ 683
349
(204)
348
¥1,176

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

Method attributing the projected benefits to periods of service
Discount rate
Expected rate of return on pension plan assets
Amortization of actuarial differences

Straight-line
method
1.2%
2.0%
10 years

Information about employee retirement benefits for the year ended March 31, 2014 was as follows:
Defined benefit plan
(1) Movement in retirement benefit obligations, except plans applying the simplified method
Millions of yen

Balance at April 1, 2013
Service cost
Interest cost
Actuarial loss
Benefits paid
Other
Balance at March 31, 2014
NORITAKE CO., LIMITED

Annual Report 2014

Thousands of
U.S. dollars

2014

2014

¥19,067723
260
69(1,186)
185¥19,118$186,931
7,088
2,549
676
(11,627)
1,814$187,431
29

(2) Movements in plan assets, except plans applying the simplified method
Millions of yen

Balance at April 1, 2013
Expected return on plan assets
Actuarial gainContributions paid by the employer
Benefits paid
Other
Balance at March 31, 2014

Thousands of
U.S. dollars

2014

2014

¥15,587
243
1,093
1,354
(798)
138
¥17,617$152,814
2,382
10,716
13,275(7,824)
1,352$172,715

Millions of yen

Thousands of
U.S. dollars(3) Movement in net defined benefit liability of defined benefit plans applying the simplified method

Balance at April 1, 2013
Retirement benefit expense
Benefits paid
Contributions paid by the employer
Other
Balance at March 31, 2014

2014

2014

¥513
70
(192)
(16)
3
¥378

$5,029686(1,882)(157)
30$3,706(4) Reconciliation from retirement benefit obligations and plan assets to net defined benefit liability (asset), including plans applied simplified
methodMillions of yen

Thousands of
U.S. dollars

2014

2014

Unfunded retirement benefit obligations
Total net defined benefit liability (asset) at March 31, 2014

¥20,922(19,212)
1,710
169
1,879

$205,118(188,353)
16,765
1,657
18,422

Net defined benefit liability
Total net defined benefit liability (asset) at March 31, 2014

1,879
¥ 1,879

18,422$ 18,422

Millions of yen

Thousands of
U.S. dollars

Funded retirement benefit obligations
Plan assets(5) Retirement benefit expense

Service cost
Interest cost
Expected return on plan assets
Net actuarial loss amortization
Retirement benefit expense based on the simplified method
Other
Total retirement benefit expense for the fiscal year ended March 31, 2014

2014

2014

¥723
260
(243)
87
70
40
¥937

$7,0882,549(2,382)853
686
392$9,186

Millions of yen

Thousands of
U.S. dollars(6) Remeasurements of defined benefit plans (before adjusting for tax effects)

Actuarial gains and losses that are yet to be recognized

2014

2014

¥2,986$29,275(7) Plan assets(i) Plan assets comprise:
2014

Bonds
Equity securities
General accounts of life insurance
Other
Total

17%
53%
23%
7%
100%

Note: 29% of plan assets are contributed to the employee retirement benefit trust under the defined benefit plans.
30

NORITAKE CO., LIMITED

Annual Report 2014

(ii) Long-term expected rate of return
Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered indetermining the long-term expected rate of return.
(8) Actuarial assumptions
The principal actuarial assumptions at March 31, 2014 are as follows:
2014

Discount rates
Long-term expected rate of return

1.2%
2.0%

Defined contribution plan
For the year ended March 31, 2014, the amount of the required contribution to defined contribution plans of the consolidated subsidiaries
was ¥62 million ($608 thousand).
Multi-employer pension program
For the year ended March 31, 2014, the amount of the required contribution to multi-employer pension program of the one domestic consolidated subsidiary was ¥24 million ($235 thousand).
Information regarding the funded status of the entire corporate pension plan available as of the latest calculation period-end was as follows:

Latest calculation period-end

Millions of yen

Thousands of
U.S. dollars

2014

2014

March 31, 2013:

Plan assets
Related benefit obligation under program
Difference, resulting primarily from unamortized past service cost
Ratio of subsidiaries’ contributions to total contributions to entire plan

¥116,171(140,708)¥ (24,537)
0.28%$1,138,931(1,379,490)$ (240,559)

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, 2014 and 2013 were as follows:

Finance leases:
Due within one year
Due after one year

Operating leases:
Due within one year
Due after one year

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥ —
—
¥ —

¥

3
—
¥ 3

$

¥ 92
144
¥236

¥ 73
99
¥172

$ 902
1,412
$2,314$———

11. CONTINGENT LIABILITIESThere were no contingent liabilities at March 31, 2014 and 2013.

NORITAKE CO., LIMITED

Annual Report 201431

12. DERIVATIVE INSTRUMENTS
At March 31, 2014 and 2013, all derivative instruments, except for one, were accounted for by hedge accounting. The one exception was aderivative contract of the Company to hedge the risks associated with the occurrence of an earthquake that was outstanding at March 31,
2014 and 2013. 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, 2014 and 2013 are summarized as follows:
Notional principal or contract amounts
Total

Over 1 year

Fair value
Millions of yen

At March 31, 2014:
Foreign currency exchange contracts (*1):
Forward - selling
Interest rate and currency swap contracts (*2):
Floating rate receipt, fixed rate payment
U.S. Dollars receipt, Japanese Yen payment

¥ 487

¥

—

*

1,200

1,200

*

Notional principal or contract amounts
Total

Over 1 year

Fair value
Millions of yen

At March 31, 2013:
Foreign currency exchange contracts (*1):
Forward - selling
Interest rate swap contracts (*2):
Fixed rate receipt, floating rate payment
Floating rate receipt, fixed rate payment

¥ 204

¥

3,000
1,200

—

*

—
—

*
*

Notional principal or contract amounts
Total

Over 1 year

Fair value

Thousands of U.S. dollars

At March 31, 2014:
Foreign currency exchange contracts (*1):
Forward - selling
Interest rate and currency swap contracts (*2):
Floating rate receipt, fixed rate payment
U.S. Dollars receipt, Japanese Yen payment$ 4,775$—*

11,765

11,765*

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 and currency swap or interest rate swap contracts are accounted for by hedge accounting such that thederivative 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 bank loan. (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, 2014 and 2013, 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 ($34,118 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.
During the year ended March 31, 2014, the Company paid interim dividends of ¥3.00 per share, amounting to ¥449 million ($4,402 thousand). In addition, on May 8, 2014, the Board of Directors of the Company resolved to pay cash dividends as an appropriation of retained
earnings in the amount of ¥431 million ($4,225 thousand, ¥3.00 per share) to the shareholders as of March 31, 2014. The appropriation
was not accrued in the consolidated financial statements as of March 31, 2014.
32

NORITAKE CO., LIMITED

Annual Report 2014

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, 2014 and2013 were as follows:
Millions of yen

Thousands of
U.S. dollars

2013

2014

2014

Deferred tax assets:
Intercompany unrealized gains on property
Accrued bonuses to employees
Employee retirement benefit liability
Net defined benefit liability
Accrued severance indemnities for directors and corporate auditors
Inventories
Net operating loss carryforwards
Other
Less valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Gain on transfer of investment securities to trusts for retirement benefit plans
Unrealized gains on available-for-sale securities
Other
Total deferred tax liabilities
Net deferred tax liabilities

¥

52
499
—
4,408
299
460
5,055
1,993
(7,862)
4,904

¥

54
523
3,737
—
287
508
4,723
1,903
(7,682)
4,053

$

510
4,892
—
43,2162,931
4,510
49,55919,539(77,079)
48,078

2,866
4,902
1,095
8,863
¥3,959

2,866
2,723
1,000
6,589
¥2,53628,09848,05910,73586,892$38,814

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥ 391
133

¥ 342
78

$ 3,833
1,304

—
4,483

—
2,956

—
43,951

As of March 31, 2014 and 2013, 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, 2014 and 2013, a valuation allowance wasprovided to reduce deferred tax assets to the amount the management believed was realizable.
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, 2014 and 2013 was as follows:
Percentage of pretax income

Japanese statutory tax rate
Increase (decrease) due to:Permanently non-deductible expenses
Tax exempt income
Local minimum taxes per capita levy
Differences between Japanese and foreign tax rates
Changes in valuation allowancesGain on bargain purchaseTax credit for research and development expenses
Equity in net earnings of associates
Effect on income tax rate changes
Other
Effective income tax rate

NORITAKE CO., LIMITED

Annual Report 2014

2014

2013

37.7%

37.7%

2.5
(6.1)
3.1
1.2
11.5
—
(1.5)
(2.0)
0.9
1.3
48.6%

2.7
(2.6)
2.7
(0.8)
55.7
(56.7)
(0.6)
(4.5)
—
1.4
35.0%

33

“Act on Partial Amendment of the Income Tax Act” (Act No. 10, 2014) was promulgated on March 31, 2014, and accordingly, Special
Corporate Tax for Reconstruction has been abolished from the fiscal year beginning on or after April 1, 2014. Due to this change, the effective statutory tax rate used for the calculation of deferred tax assets and deferred tax liabilities for the temporary differences expected to beeither deductible, taxable or expired in the fiscal year beginning on April 1, 2014 has been revised from the previous rate of 37.7% to 35.3%.
As a result of this change in tax rate, at March 31, 2014, deferred tax assets decreased by ¥23 million ($225 thousand), and deferred income
taxes increased by ¥23 million ($225 thousand).
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.
(Changes in accounting policies for depreciation method of property, plant and equipment)
As disclosed in Note 2(g), the Company and its domestic consolidated subsidiaries had depreciated property, plant and equipment, except
for buildings, using the declining balance method until the year ended March 31, 2013. From the fiscal year ended March 31, 2014, theCompany and its domestic consolidated subsidiaries have changed the depreciation method for all properties to the straight-line method.
As a result, for the year ended March 31, 2014, segment income increased by ¥686 million ($6,726 thousand) in the “Industrial Products”
segment, segment income increased by ¥254 million ($2,490 thousand) in the “Ceramics & Materials” segment, segment loss decreased by¥97 million ($951 thousand) in the “Engineering” segment, and segment loss decreased by ¥77 million ($755 thousand) in the “Tabletop”
segment, compared with the amounts that would have been recorded without the change.
(c) Information about reported segments:
Information about reported segment income, segment assets and other items for the years ended March 31, 2014 and 2013 was as follows:
Reported segments
Industrial
Products

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated
Millions of yen

For the year 2014:
Net sales:
External customers
Segment income (loss)
Segment assets
Other items:
Intersegment sales and transfers
Depreciation
Investments in equity-method
associates
Increases in tangible andintangible fixed assets
For the year 2013:
Net sales:
External customers
Segment income (loss)
Segment assets
Other items:
Intersegment sales and transfers
Depreciation
Investments in equity-method
associates
Increases in tangible andintangible fixed assets

34¥36,738
834
37,369¥29,506640
29,404¥12,962
(402)
6,594

¥9,481(287)
7,809¥88,687785
81,176

23
1,578

329
819

183
212

221
296

1,512

2,340

—

633

¥

¥

—
—
37,598¥ 88,687
785
118,774

756
2,905

(756)
—

—
2,905

158

4,010

—

4,010

130

¥ 233

¥ 4,450

¥

864

¥

—
—
37,365¥ 90,236
64
114,419¥ 3,454¥¥35,440(85)
31,744¥30,583638
29,351¥15,927(41)
9,435¥8,286(448)
6,524¥90,23664
77,054

26
1,728

309
1,070

133
274

195
357

663
3,429

(663)
—

—
3,429

1,362

2,258

—

173

3,793

—

3,793

¥ 3,242¥ 1,190

622

¥ 311

¥ 5,365¥ 2,963¥NORITAKE CO., LIMITED

¥

¥

5,314

8,328

Annual Report 2014

Reported segments
Industrial
Products

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated

Thousands of U.S. dollars

For the year 2014:
Net sales:
External customers
Segment income (loss)
Segment assets
Other items:
Intersegment sales and transfers
Depreciation
Investments in equity-method
associates
Increases in tangible andintangible fixed assets$360,176
8,176
366,363$289,275
6,275
288,274$127,078(3,941)64,647$92,951(2,814)76,559$869,480
7,696
795,843

226
15,471

3,225
8,029

1,794
2,078

2,167
2,902

14,82422,941—
1,274$ 33,863

$

6,206

$

$

—
—
368,608$ 869,480
7,696
1,164,451

7,412
28,480(7,412)——
28,4801,549

39,314—39,314$ 2,284$ 43,627

$

8,471

$

52,098Notes: 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 in tangible and intangible fixed assets” denotes capital expenditures of administrative department
which were not assigned to specific segments.

(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, 2014 and 2013, net sales and tangible fixed assets about geographic areas were summarized as follows:
Japan

North
America

Europe

Asia

Other

Total
Millions of yen

Net sales:
For the year 2014
For the year 2013
Tangible fixed assets:
At March 31, 2014
At March 31, 2013

¥ 57,955
59,125¥ 7,620
7,433¥ 1,834
1,859¥ 20,662
21,135¥ 616
684¥ 88,687
90,236¥ 32,745
30,803¥ 1,020
888

¥

¥

¥ 249
245

¥ 37,271
33,941

Japan

North
America

Other

Total

24
20

3,233
1,985

EuropeAsia

Thousands of U.S. dollars

Net sales for the year 2014
Tangible fixed assets at March 31, 2014

$568,186
321,030$74,706
10,000$17,980
235$202,569
31,696$6,0392,441$869,480
365,402(3) Information about major customers:
The Noritake Group had no single external customer which accounted for more than 10% of net sales for the years ended March 31, 2014
and 2013.
(e) Information about impairment loss on fixed assets in reportable segments:
For the years ended March 31, 2014 and 2013, impairment loss on fixed assets was summarized as follows:
Reported segments
Industrial
Products

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated
Millions of yen

Impairment loss on fixed assets:
For the year 2014
For the year 2013

¥ —
297

¥—
67

Industrial
Products

Ceramics &Materials

¥—
25

¥—
—

¥ —
389

¥ 24
981

¥

24
1,370

Reported segments
Engineering

Tabletop

Total

Adjustments

Consolidated

Thousands of U.S. dollars

Impairment loss on fixed assets:
For the year 2014

$ —

$ —

$ —

$ —

$ —

$235

$ 235

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

Annual Report 201435

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

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated
Millions of yen

As at or for the year 2013:
Amortization of goodwill
Unamortized balance

¥—
—

¥ 1
—

¥—
—

¥—
—

¥ 1
—

¥—
—

¥ 1
—

(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 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, 2014 or 2013.
(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,
2014 and 2013 is as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

Total current assets
Total noncurrent assets
Total current liabilities
Total noncurrent liabilities
Total net assets¥6,140
5,969
3,108
2,989
6,012

¥4,765
6,028
1,931
3,605
5,257

$60,196
58,52030,471
29,30458,941

Operating revenue
Income before income taxes
Net income¥9,3831,664
1,130¥8,566
1,882
1,248$91,990
16,314
11,078

17. OTHER COMPREHENSIVE INCOME
Amounts reclassified to net income (loss) in the current or previous period that were recognized in other comprehensive income in thecurrent 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

2014

2013

2014

Unrealized gains on available-for-sale securities
Increase during the year
Reclassification adjustments
Subtotal, before tax
Tax effectSubtotal, net of tax¥6,946(769)
6,177(2,180)3,997¥2,760
19
2,779
(984)
1,795

$68,098(7,539)60,559(21,373)
39,186

Foreign currency translation adjustments
Increase during the year

2,021

966

19,814

Share of other comprehensive income of associates accounted forusing equity method
Increase during the year
Reclassification adjustments
Subtotal
Total other comprehensive income

113
(1)
112
¥6,13037—37¥2,798

1,108
(10)
1,098
$60,098

36

NORITAKE CO., LIMITED

Annual Report 2014

REPORT OF INDEPENDENT AUDITORSNORITAKE CO., LIMITED

Annual Report 2014

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, 2014)(As of June 27, 2014)

INDUSTRIAL PRODUCTS GROUPNORITAKE CO., INC.
4990 ALLIANCE DR., MASON, OH 45040, U.S.A.
Tel: 1-513-234-0770
NORITAKE EUROPA GmbHKURHESSEN STRASSE. 3, D-64546
MOERFELDEN-WALLDORF, GERMANY
Tel: 49-6105-2092-44
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
NORITAKE SHANGHAI TRADING CO., LTD.
GUANGZHOU BRANCH
2510, GOLDLION DIGITAL NETWORK CENTER,
138 TIYU ROAD EAST,GUANGZHOU 510620, CHINA
Tel: 86-20-3877-2253
NORITAKE SA (THAILAND) CO., LTD.
(BANGKOK OFFICE)
222 VORAVIT BUILDING 9TH FL., UNIT B
SURAWONG ROAD, SIPRAYA, BANGRAK,BANKOK 10500, THAILAND
Tel: 66-2-235-1688
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

NORITAKE ITRON (U.K.) LIMITEDVANTAGE HOUSE, HARFREYS ROAD,
HARFREYS INDUSTRIAL ESTATE,GREAT YARMOUTH, NORFOLK, NR31 0LS,
UNITED KINGDOM
Tel: 44-1493-601144
NORITAKE EUROPA GmbHKURHESSEN STRASSE. 3, D-64546
MOERFELDEN-WALLDORF, GERMANY
Tel: 49-6105-2092-0

VICE PRESIDENTDIRECTORSNORITAKE 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
NORITAKE CO., LIMITED(SHANGHAI OFFICE)ROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051, CHINA
Tel: 86-21-6237-5789
TABLETOP GROUPNORITAKE CANADA LIMITED
90 NUGGET AVENUE, AGINCOURT,ONTARIO, M1S 3A7, CANADA
Tel: 1-416-291-2946

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

NORITAKE EUROPA GmbHKURHESSEN STRASSE. 3, D-64546
MOERFELDEN-WALLDORF, GERMANY
Tel: 49-6105-2092-18

38

Tadashi Ogura*

Kouichi Saburi*

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

NORITAKE CO., LIMITED(SHANGHAI OFFICE)ROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051, CHINA
Tel: 86-21-6237-5789

PRESIDENT

ENGINEERING GROUPCERAMICS & MATERIALS GROUPNORITAKE CO., LIMITED(KAOHSIUNG OFFICE)
NO. 8, LANE80, DUN-HUANG RD.,
SAN MIN DISTRICT, KAOHSIUNG,TAIWAN 807, R.O.C.
Tel: 886-970-819-003

Hitoshi Tanemura*

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

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

PT. NORITAKE INDONESIABLOK A-II NO. 9A, KAWASAN BERIKAT,
KOTA BUKIT INDAH, PURWAKARTA 41181,
JAWA BARAT, INDONESIA
Tel: 62-264-351311

CHAIRMANNORITAKE LANKA PORCELAIN (PRIVATE)LIMITEDWARAKAMURA, MATALE, SRI LANKA
Tel: 94-66-2244130(SHOWROOM)
77, DHARMAPALA MAWATHA,COLOMBO 7, SRI LANKA
Tel: 94-11-2301334
NORITAKE (AUSTRALIA) PTY LIMITEDUNIT 4, 153 BEAUCHAMP ROAD,
MATRAVILLE, N.S.W. 2036, AUSTRALIA
Tel: 61-2-9316-7123

Masahiro Nakagawa
Hisaya Ogura
Yoshitaka Mabuchi
Hiroshi Kato
Kozo Kato
Kosaku Yamada*Representative Director

CORPORATE AUDITORS
Yasuyuki Mitsukawa
Kiyoshi Yoshida
Yasumasa Gomi
Kazutoyo Shinohara
EXECUTIVE OFFICERS
Tadashi Ogura
Kouichi Saburi
Masahiro Nakagawa
Hisaya Ogura
Kiichi Hirano
Yoshitaka Mabuchi
Hiroshi Kato
Kozo Kato
Satoshi Aoki
Kenji Ito
Seiya Ogata
Koji Ogawa
Koji Sato
Akira Higashiyama

NORITAKE CO., LIMITED(SHANGHAI OFFICE)ROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051, CHINA
Tel: 86-21-6237-5789

NORITAKE CO., LIMITED

Annual Report 2014

Profile

Noritake Co., Limited, including its subsidiaries and associates(Hereinafter “The Noritake Group”, “The Group” or simply “Noritake”)

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, 2014)(As of June 27, 2014)

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

Morimura-kumi in Tokyo, and Toyo
Morimura and others establishedthe Hinode Shokai (Morimura Brothers)
in New York1904 Established Nippon Toki Gomei Kaisha
1907 Began production of grinding wheels
for in-house use
1914 Succeeded in production of the firstdinner set in Japan
1917 Sanitary ware division spun off tobecome TOTO Ltd.
Established Nippon Toki Co., Ltd.
1919 Electric insulator division spun off tobecome NGK Insulators Ltd.
1932 Began production of first bone china
in Japan1939 Began full-scale production of industrial
grinding wheels
1943 Tableware production stopped on
account of World War II, changed to fullproduction of grinding wheels(only bone china production continued
to preserve technique)

Nishi-ku, Nagoya, Aichi

has developed technologies acquired from ceramics manufacturing451-8501, Japan

expertise and has expanded its business into such fields as grinding and polishing tools,

Tel: +81-52-561-7112
Fax: +81-52-561-9721

electronic component materials and manufacturing equipment.
With a focus on developing new products and technologies for energy-related industries—

DATE OF ESTABLISHMENT
January 1904

including solar cells, an area of promising growth—
NUMBER OF EMPLOYEESNoritake seeks to create new value for customers and society.

4,086 (Consolidated)

STOCK EXCHANGE LISTINGS
New Mid-term Business Plan

Tokyo Stock ExchangeWith the government’s recent economic policies, there were some positive signs in the Japanese economy.

Nagoya Stock Exchange

Nevertheless, the business environment is predicted to remain severe due to such concerns as slowing growth inChina and other emerging countries, as well as uncertainty in Europe.
Amid these circumstances, the Group launched its 9th Mid-term Business Plan in April 2013. The Plan identifies

ADMINISTRATOR OF SHAREHOLDERREGISTRY
Mitsubishi UFJ Trust and Banking

major business challenges as being able to respond swiftly to market changes, and constructing a business andCorporation

management structure capable of achieving stable growth amid increasingly intense global competition. We will make

4-5, Marunouchi 1-chome,every effort to achieve full recovery and improve our business performance.

Chiyoda-ku, Tokyo

The basic strategies of the 9th Mid-term Business Plan are as follows:(1) Boosting sales by competitively pricing new technologies and products(2) Penetrating overseas markets and upgrading overseas manufacturing bases(3) Promoting an efficient management structure and upgrading infrastructure1973 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

100-8212, Japan

1945 Production of tableware resumed
1947 Established Noritake Co., Inc. in2002 Established Noritake Bonded

ANNUAL MEETING OF
SHAREHOLDERS

the United States
1956 Began production of cutleryware
1958 Established Noritake (Australia) Pty.
Ltd. in Australia
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
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

2005 Established Noritake Shanghai Trading

The annual meeting of shareholders of theCompany is normally held in June each year
in Nagoya, Japan.
In addition, the Company may hold anextraordinary meeting of shareholders
whenever necessary by giving at least two
weeks’ advance notice to shareholders.

INDEPENDENT AUDITORSKPMG AZSA LLC

Abrasive Co., Ltd.
Co., Ltd.

2009 Made Nippon Resibon Corporation its
associate by acquiring additional
shares of the stock of 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.
Established Noritake SA (Thailand)Co., Ltd. in Thailand
2012 Made KCM Corporation its wholly-owned
subsidiary via a stock swap
Established Noritake Abrasives(Suzhou) Co., Ltd. in China

Contents
Caution with respect to forward-looking statements
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

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.

39 Corporate Data / History of Noritake
NORITAKE CO., LIMITED

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Annual Report 201439

2014/10/03 10:44

NORITAKE CO., LIMITEDANNUAL REPORT 2014
Year Ended March 31, 2014

Industrial Products

Ceramics & Materials

Engineering

Tabletop

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2014/10/03 10:44