Annual Report 2009

NORITAKE CO., LIMITED

I nd u s trial P rod u ct s

Ta b letop

Group

Group

E lectronic sGroupC eramic s & M aterial sGroup

E n v ironmental E n g ineerin g

GroupYear Ended March 31, 2009

Profile

Noritake Co., Limited has developed technologies acquired from ceramics manufacturing expertise and has expanded its business into such fields as grinding
and polishing tools, electronic component materials and manufacturing equipment. With a focus on developing new products and technologies for energyrelated industries—including solar cells, an area of promising growth—Noritake
seeks to create new value for customers and society.

5 Industrial Products Group 6 Tabletop Group 7 Electronics Group 8 Ceramics & Materials Group 9 Environmental Engineering Group

Contents
1 Six-Year Financial Summary 2 Message from the Management 5 Review of Operations 10 Research & Development 12 Corporate GovernanceDirectors, Statutory Auditors and Executive Officers 14 Consolidated Financial Review 17 Consolidated Balance Sheets
18 Consolidated Statements of Income 19 Consolidated Statements of Changes in Net Assets 20 Consolidated Statements of Cash Flows
21 Notes to Consolidated Financial Statements 31 Report of Independent Auditors 32 Overseas Network 33 Corporate Data / History of Noritake

13

Noritake Co., Limited

Annual Report 2009

Six-Year Financial Summary

Millions of yen

Thousands of
U.S. dollars

2009

2008

2007

2006

2005

2004

2009

¥112,984¥133,368¥129,240¥123,207¥118,315¥112,927$1,152,898

808

10,488

9,463

8,361

6,927

4,832

8,245

(Loss) income before income
taxes and minority interests(3,059)10,171

10,398

9,009

6,729

6,145

(31,214)

Net (loss) income(6,861)

5,669

5,796

5,031

4,002

3,035

(70.010)For the year:
Net sales
Operating income

Net (loss) income per share(yen/U.S. dollars)¥ (46.82)

¥

38.36

¥

39.20

¥

33.50

¥

26.43

¥

19.65

$

Capital expenditures

¥

¥

5,084

¥

4,080

¥

3,413

¥

3,494

¥

3,072

$ 501,956

5,122(0.48)At year-end:
Total assets
Total shareholders’ equity¥113,077¥141,644¥148,827¥143,433¥128,288¥128,719$1,153,847

62,16378,083

79,27076,02566,28464,776634,316

55.0

55.1

53.3

53.0

51.7

50.3

Total shareholders’ equity ratio (%)

Note: The U.S. dollar amounts above have been translated at the rate of ¥98 to US$1.

Net Sales

Operating Income

Net (Loss) Income

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

(Millions of yen)

(Millions of yen)

(Millions of yen)

129,240

133,368

10,488112,984

5,796

39.20

5,669

38.36

9,463

(6,861)(46.82)

808
07

08

09

07

08

09

07

08

09

07

08

09



Message from the management

The management wishes to sincerely thank all stakeholders of Noritake Co., Limited for their continuous support. We would like to take this opportunity to comment on the Group’s results for fiscal 2009, ended March 31,
2009.

Per formance Overview for Fiscal 2009Engineering groups saw significant and unavoidable declines in sales

The business environment during the first half of fiscal 2009 was

as a result of major cutbacks in production in their customers’ indus-

characterized by the continued appreciation of the yen and a sharptries. Consequently, Noritake implemented restructuring as a neces-increase in raw material and fuel costs. During the second half, thesary response to these abrupt and severe changes in the economic

collapse of a major U.S.-based securities company triggered theenvironment. Principal measures taken to restructure are as follows.

spread of the global financial crisis. This crisis had an adverse impact• In the Tabletop Group, in tandem with the closure of our plant in theon the market economy as a whole, and from autumn, automobile,

Philippines, we concentrated the overseas production of tableware in

consumer electronics and other product sales in the United States,

Sri Lanka and cut back production at the Imari Plant in Saga

Western Europe and Japan spiraled downward.

Prefecture, Japan.

Noritake was no exception in terms of the impact that these dete-• In the Electronics Group, we reorganized underperforming sales items

riorating market conditions exerted. In addition to falling profit mar-and concentrated efforts on high-value-added products. In addition, we

gins in the Tabletop and Electronics business groups, each of thesuspended production at the Yasu Plant in Fukuoka Prefecture andIndustrial Products, Ceramics & Materials and Environmental

integrated those operations with production at the Omiya plant in Mie
Prefecture.
• In the Industrial Products Group, we discontinued production at aplant that specialized in general-purpose grinding wheels and decided
to work toward consolidation of production bases. We also suspended

Noboru Akahane, Chairman and Representative Director (left)and Hitoshi Tanemura, President and Representative Director (right)

Noritake Co., Limited

Annual Report 2009

production in addition to an existing holiday and set up a production

return by focusing on the development of products with high added

system compatible with order volume.

value—products that hold a top position within the industry.

In addition, anticipatory investments were made to proactively move
forward on business expansion.

2. Development of New Products• In the Industrial Products Group, to save on labor costs and reduce

Noritake makes concerted efforts to develop its technology while

delivery times, we initiated a new comprehensive production line in

striving to develop and expand sales of new products in fields ofMiyoshi, Aichi Prefecture.

anticipated future growth. This is particularly true in the energy-• Noritake also focused on the development of diamond wire, electronic

related field, where solar cells are the focus of projects that harness

paste and the Carbonless Polycrystalline Si Fusion Furnace, among thethe concentrated technology and know-how available across

new products intended for the solar cell manufacturing field.

Noritake’s business groups to develop new products. This capability

As a result of the aforementioned factors, in the period under review

is represented by the Industrial Products Group, which has developed

the Noritake Group posted a decline of 15.3% in consolidated net

diamond wire to slice silicon ingot, the Ceramic & Materials Group,sales, to ¥112,984 million, operating income that plummeted

where electronic paste was developed for solar cells, and the

92.3%, to ¥808 million, and a net loss of ¥6,861 million.

Environmental Engineering Group, where the carbonless polycrystalline Si fusion furnace and other developments continue to be made.

Issues to Be Addressed
Given the impact of the major contraction in the global economy,

3. Compliancethe harsh economic climate that surrounds us is expected to contin-

Based on the Noritake Group’s “Code of Ethics”, the Complianceue. In confronting these conditions, we at the Noritake Group are

Committee takes the lead in working to strengthen the Group’s man-working to bolster our management foundation and surmount theseagement structure for compliance.

economically difficult times, while at the same time aiming to create
a foundation that achieves development into the next generation.

Business Outlook
Industrial Products Group

1. Efforts to Strengthen Noritake’s Management
Foundation

With the aim of forming a robust business structure that will prevail(I) Improvement of Financial Structure

manufacturer, Noritake will make every effort to tackle various chal-Business development requires ongoing investments that will support

lenges, including the development of new, superior products andthe growth of future operations. Also to this end, Noritake is work-

technologies, the restructuring of its production system and theing to improve cash flows through activities such as shrinking current

improvement of marketing efficiency. We will promote productassets so as to enable the flexibility to make effective investments.

development that places emphasis on products such as the diamond(II) Structural Reforms

wire used in the solar cell manufacturing process. Furthermore, we

Noritake will review its Group structure, and together with actions

will move forward on the construction of new plants in Southeast

taken to develop an organization with enhanced efficiency, it will

Asia to expand our overseas business operations.

in global competition, and as a leading grinding and polishing tool

develop a structure for manufacturing and marketing commensuratewith market scale. In addition, it will strive to expand sales that pro-

Tabletop Group

mote the construction of new production bases in the Asian region

Noritake’s major markets of Japan and the United States are expectedso as to strengthen its business in overseas markets.

to shrink further. Given this situation, we will further promote the(III) Improvements to Profit Capabilities

creation of a manufacturing and marketing structure that suitably

Even though we are faced with dire economic conditions, we arematches market scale. In Noritake’s main overseas plant in Sri Lanka,

reviewing production processes so as to enable profits to be secured,in addition to reviewing production processes with the objective ofand we are working determinedly to curtail costs. Moreover, we are

improving on already high quality and lowering costs, we will work

striving to raise the level of our technology and heighten the rate of

to boost competitiveness by further raising technical capabilities.

Furthermore, we will strive to differentiate ourselves from competi-

productivity of each business group. Each of these organizations will

tors and reinforce our brand power by launching higher-value-added

utilize proprietary Noritake technology to further promote development.

products that make use of our sophisticated technological capabilities.

Basic Policy Regarding Earnings Distribution

Electronics Group

Noritake positions profit return to shareholders as a key management

Noritake will advance its development and marketing activities bypolicy. Based on this policy, we place emphasis on stable dividendconcentrating on high-intensity, high-performance, high-value-added

payments over the long term and the distribution of earnings by

products that use the unique character of vacuum fluorescent dis-

comprehensively taking into consideration factors that include per-plays. At the same time, the Company will build a business structureformance results, financial conditions and future business develop-

commensurate with market scale. Having promoted rationalization

ment. In addition, we make effective use of retained earnings forby reducing the scale of production, Noritake will also work todevelopment investment to create new technologies and products

streamline its sales operations by further reviewing marketing bases.

that can become a foundation for the Noritake Group’s future
strength, as well as for capital investment for sustainable business

Ceramics & Materials Groupdevelopment in growth fields. For dividend payments, Noritake dis-

For the development of advanced electronic pastes and electronic

tributed ¥2.5 per share for the fiscal year end, which, when added tomaterials, Noritake will engage in formulating novel technologies tothe interim dividend already paid, made for a full-year dividend ofmeet the growing demand of highly integrated electronic devices,¥7.0 per share. Dividend payments for the fiscal year, ending Marchand it will also continue its efforts to expand the product develop-

31, 2010, are at present undecided.

ment technologies and sales to attain the high-level market growth ofadvanced devices such as solar cells. Furthermore, we will advance

We sincerely regret the concern caused by the worsening businessoverseas development with the creation of overseas production bases

results. In order to overcome these difficult times, all employees andfor electronic paste, as well as strive to expand overseas sales, mainly

officers of the Noritake Group will work in unison, making all-out

of dental-related products.

efforts to improve corporate performance. We ask for your continued
understanding and steadfast support.

Environmental Engineering GroupIn the heating business, with its mainstay drying furnaces and kilns,
Noritake will work to expand market share by concentrating development in the battery material and solar cell fields. We will strengthen sales of grinding machines for the iron and steel industry to
BRICs countries and other emerging markets. In addition to this, we
aim to increase sales by releasing new filtration equipment products.

R&D
Noritake’s R&D efforts are segmented into a three-part organization
comprising the Strategic Development Projects Center, the Researchand Development Center and the Production Engineering Center.
The Strategic Development Projects Center conducts the development of new products that are directly related to business. The
Research and Development Center promotes the development of
new technologies from a medium- to long-term perspective. The
Production Engineering Center supports activities that raise the

Chairman and Representative Director

President and Representative Director

Noboru Akahane

Hitoshi Tanemura

Noritake Co., Limited

Annual Report 2009

Review of Operations

Industrial ProductsGroupof net sales

In the first half of fiscal 2009, sales of grinding wheels and cubic boron nitride

Sales(Millions of yen)

45,324%3.
34(CBN) tools to the steel-making and bearing industries were brisk. In the second
half, however, because production for many customers declined, including those in

46,52838,717the automobile industry, sales decreased. Sales of diamond tools declined sharply
owing to a downward trend in sales in the first half following production adjustments in the electronics and semiconductor industries and a further decrease in
the second half. Sales of abrasive cloth and paper dropped due to an onslaught of
low-cost products from China and a sluggish economy.
	As a result, consolidated net sales of the Industrial Products Group tumbled
16.8% year on year to ¥38,717 million.

07

08

09



Tabletop Group

%
6
.
11

of net sales

Sales(Millions of yen)

In Japan, sales decreased due to sluggish performance for hotels, restaurants, specialty stores and department stores. Overseas, sales also declined on the back of

19,343
17,723slumping demand at department stores and large specialty stores in North America
13,113and the effects of the foreign currency exchange rate in Europe. In addition, salesof tableware to airline companies, which had been relatively strong, declined.
	As a result, consolidated net sales for the Tabletop Group decreased 26.0%
from the previous fiscal year to ¥13,113 million.

07



08

09

Noritake Co., Limited

Electronics Group

Annual Report 2009

%
2
.
9

of net sales

Sales(Millions of yen)In the domestic market, sales of vacuum fluorescent display (VFD) for hot-watersupply systems (boilers) were down. Overseas, VFD sales for consumer electronics

12,430and medical equipment increased but declined for audio and automobiles.

12,677
10,411

Although VFDs for industrial cooking devices (ovens) in Europe and some specific
VFD & VFD modules for Asia also fared well, overseas sales generally decreased.
	As a result, consolidated net sales for the Electronics Group dropped 17.9%
year on year to ¥10,411 million.

07

08

09



Ceramics & Materials
Group

%
1
.
26

of net sales

Sales(Millions of yen)

While sales of electronic pastes were strong in the first half, they plunged in thesecond half and declined overall. Sales were down due to a fall in shipments of

33,19229,51028,926

ceramic materials and electronic components destined for the electronic components industry. Sales of thick-film printed circuit boards also dropped in the wake ofproduction reductions in the automobile industry. Sales of dental-related products
and ceramic components increased thanks to effective expansion efforts.
	As a result, consolidated net sales for the Ceramics & Materials Groupdecreased 11.1% to ¥29,510 million.

07



08

09

Noritake Co., Limited

Environmental
EngineeringGroup

Annual Report 2009

%
8
.
18

of net sales

Sales(Millions of yen)

23,217

While sales of mainstay far-infrared heaters and high-efficiency kilns remained highin the first half for TV and battery material use, they declined in the second half and23,24821,233

were nearly flat for the full fiscal year. Sales of grinding machines for the steel
industry remained strong, buoyed by renewed demand for these machines.
Filtration equipment for machine tool oil use decreased on the back of reduced
capital investments due to the flagging economy.
	As a result, consolidated net sales for the Environmental Engineering Groupfell 8.7% year on year to ¥21,233 million.

07

08

09



Research & Development

Industrial Products

Tabletop

Electronics

Group

Group

Group

Diamond wire

“Hana Gin-sai Yuri” high-gradebone china

Dot character VFD module with brightness gradation

To increase market competitiveness,

The Tabletop Group continues to work to

Noritake Itron Corporation has developed

Noritake has focused its efforts ondevelop new decorating technology andhigh-precision vacuum fluorescent displays

strengthening its development capabilities

enhance the quality of porcelain.

(VFDs) featuring superior brightness andby relying on basic technologies and devel- The R&D expenditures in this groupgray scale functions, and VFDs with a new

oping differentiated products. Particularly

totaled ¥60 million in fiscal 2009.

structure. The development of high-value-in the area of solar cells, a promising

added assembly products based on VFD

growth field, Noritake is vigorously pushing

modules resulted in the commercialization

the development of eco-friendly, high-quali-of a message display for factory automa-ty, high-performance products. In the key

tion equipment, disaster prevention andautomobile and bearing fields, we haveother applications. We continue to develop

developed products that respond very pre-eco-friendly products, including new fluo-

cisely to customer needs with high-quality

rescent materials, and to incorporate themprocessing and lower cost.

in products while making improvements by The R&D expenditures in this groupadding more features. The Company has

amounted to ¥467 million in the fiscal year

developed lead-free glass materials that

under review.

are nearly at the stage of commercial viability.
 The R&D expenditures in this group
totaled ¥430 million.

10

Annual Report 2009

Noritake Co., Limited

Ceramics & Materials
Group

Environmental
EngineeringGroup

The R&D activities of the Noritake
Group primarily revolve 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 theElectronic paste

Carbonless polycrystalline Si fusion furnacebusiness divisions. Noritake carries out

Noritake stepped up its efforts and develop-

Noritake focuses on R&D activities in thement activities in ceramic technology-related

display, electronic and semiconductor

gies and new fields in collaboration

fields with the development of electronic

industries as well as energy-related fields.

paste to meet the high-tech needs of the

The R&D expenditures in this group

electronics and environment-related indus-

amounted ¥265 million.

tries, and it also worked on advances in elec-

product development for new technolowith Group companies.
 The R&D expenditures of the
Noritake Group amounted to ¥2,828
million in the fiscal year under review.

tronic components.
 Noritake Kizai Co., Ltd. is developing various electronics materials, including superthin-layer electronic paste to meet the needsof next-generation electronic components, Noritake is engaged in basic
research that involves gas separation
membranes and fuel cell materials. The

along with platinum paste and paste for solar

R&D expenditures in this groupcells.

amounted ¥361 million.

 Noritake Ceramics Co., Ltd. is engaged in
the development of high-density, thick-film,
multi-layer substrates for automobiles andhigh-performance ceramic carriers for chemical plants, while Noritake Dental Supply Co.,
Ltd. is developing CAD/CAM system products
for manufacturing ceramic frames for use as

R&D Expenditure(Millions of yen)dental plaster, investment material and toothcrown material.
Noritake’s consolidated subsidiary, KCM

2,925

2,828

08

09

2,734

Corporation, is developing high-quality raw
materials including material microparticulation for multilayer ceramic capacitors, compounding electronic components withhigh-level crystallization characteristics, lowalkali ceramics for use as electrode bases
and high-purity silica.
 The R&D expenditures in this group totaled¥1,241 million.
07

11

Corporate Governance

Our Fundamental Approach to Corporate GovernanceWith the advancing globalization of business, the effects of corporate
activities are being held to increasingly strict standards of corporatesocial responsibility. Each executive and employee of the Noritake
Group is heir to the spirit of Noritake’s founder, and it is on this basisthat we formulated the Noritake Group’s”Code of Ethics.” In observing
these standards and putting them into practice, each member of the
Noritake Group personifies the high standards ofcorporate ethics that bind the Noritake Group. The Group strives toincrease candor, honesty, and transparency through measures such as
the disclosure of financial data on the Noritake web site.

provisions of Article 309-2 of the Corporation Law, must be ratified
by a two-thirds majority vote of shareholders in attendance whose
total voting rights account for one-third or more of all exercisable voting rights.
• In accordance with Article 426-1 of the Corporation Law, Noritake, by
a resolution at the Board of Directors’ meeting, shall exempt directors and auditors (including former directors and auditors) from liabilities for damage that may caused by their job execution, within thelimit of laws and regulations, with the aim of having them fully perform their expected roles.
• While the “company with committees” system is recognized,
Noritake has decided to use the corporate auditor system.

Status of the Implementation of Corporate
Governance Measures
1. Status of the Company’s decision-making, executive, and oversight structures, and other corporate governance systems:(1) Functions within the Company• The Board of Directors sets basic management policies and makes
decisions with regard to legal requirements imposed on the
Company and other important matters. The Board of Directors meetsat least once a month. In addition, when there is a need to ensure
uniformity of understanding across the entire Group, an extraordinary conference of directors that includes executive officers who execute duties in attendance.
• Decisions regarding appropriation of retained earnings and otheritems stipulated in Article 459-1 of the Corporation Law are
addressed as matters for resolution by the Board of Directors, unlessotherwise stipulated by law, with the aim of being able to flexibly
return profits to shareholders.
• The Executive Council meets weekly to make appropriate and prompt
business decisions regarding important issues, following prudent
deliberation.
• The tenure of directors at Noritake and the Noritake Group has been
set at one year. The purpose of this system is to make possible theactive building of management systems optimally suited to today’s
turbulent business environment and to clarify management responsibilities anew with each fiscal year.
• Noritake limits the number of directors to 18.
• Noritake adopts an executive officer system to delegate business
operation authority and clarify responsibilities with the aim of further
reinforcing business execution based on decisions made by the
Board of Directors.
• Directors are elected at the Company’s Annual General Meeting of
Shareholders, which must be attended by shareholders with exercisable voting rights and whose total voting rights account for one-thirdor more of all exercisable voting rights. Furthermore, directors canonly be elected by a majority vote and not by cumulative voting.
• With the aim of effecting smooth operations by reducing the quorum
necessary for extraordinary resolutions at the General Meeting of
Shareholders, resolutions proposed for approval at the Company’s
Annual General Meeting of Shareholders, in accordance with the12(2) Status of internal-control and risk-management system implementation
Noritake is working to bolster internal controls through the establishment of a Compliance Committee and other activities, with the goal of
ensuring strict observance of laws and regulations. In addition, theCompany is deploying risk management systems to prevent the outbreak of a crisis due to misconduct associated with the violation oflaws or regulations.
(3) Status of internal audits and audits by corporate and independent auditors
The Audit Office (comprising three personnel) serves as the Company’s
internal audit department and implements operational and accounting
audits. Audit results are reported to the General Manager in charge ofbusiness operations, and, in the event that any significant problems
are identified, the Audit Office is required to notify the Executive
Council.
The Audit Office, auditors and accounting auditors work in close collaboration to maintain the effectiveness of audit implementation. The
Board of Auditors is composed of two full-time corporate auditors andtwo outside auditors. This board has a mandate to supervise auditors’
execution of their duties and the operations and assets of Noritakeand its subsidiaries. In addition, the Board of Auditors conducts audits
based on information received from the independent auditors regarding the Company’s consolidated financial statements and financial
statements.
 The Company concludes limitation of liability contracts with eachoutside auditor in accordance with the provisions of Article 423-1 of
the Corporation Law. As such, the maximum amount of liability stipulated by the aforementioned contracts is the minimum amount determined by law.
 Noritake’s independent auditor is KPMG AZSA & Co., as establishedby contractual ties. For the fiscal year under review, the Company’s
consolidated and non-consolidated financial statements are audited by
CPAs of KPMG AZSA & Co.
Managing partners assigned to Noritake by KPMG AZSA & Co. in fiscal 2009 are as follows.
(Specified employees and managing partners)

Noritake Co., Limited

Annual Report 2009

DIRECTORS, STATUTORY AUDITORSAND EXECUTIVE OFFICERS(As of June 26, 2009)(Specified employees and managing partners)
CPA Kazunori Tajima
CPA Kanemaru Yasui
CPA Hideki Saito(Assistants)
Six CPAs and 13 others

CHAIRMAN

Noboru Akahane*

2. Possible conflicts of interest or improper relationships between
Noritake and its outside directors and outside auditors:
Noritake has elected no outside directors.

PRESIDENT

Hitoshi Tanemura*

No improper relationships exist between Noritake and its outside
auditors.

DIRECTORS

3. Status of Company efforts to improve corporate governanceover the past year:
Based on the Noritake Group Statement of Corporate Ethics that stipulates the basic approach to fulfilling corporate social responsibility, theKouichi Saburi
Minoru Murata
Kazutaka Nakayama
Tadashi Ogura

Noritake Group continued to strengthen its compliance structure

Kouzo Yamada

through its social education initiatives. Along with these efforts, theSatoru ShimazakiCompany increased its focus on further ensuring the effectiveness ofinternal controls and risk management based on legal compliancethrough the Compliance Committee’s activities.
Compliance officers have been appointed with the objective of more
precisely understanding the status of compliance at the department
and Group company level and to streamline response capabilities.

*Representative Director
STATUTORY AUDITORSKazunari Ando
Masatoshi Fujii

Compensation to Directors

Kazuya Okamoto

Compensation paid to directors and auditors:

Yasuji Moriyama

Directors

13 ¥397 million (No outside director appointments exist)

Auditors

4¥48 million (Including ¥10 million to two outside auditors)

EXECUTIVE OFFICERS

Hitoshi Tanemura
Kouichi Saburi
Compensation to Auditors
Compensation to CPAs
Compensation for audit certification services: ¥78 million

Minoru Murata
Takashi Horiguchi
Kazutaka Nakayama(Company supplying CPAs: ¥57 million; Consolidated subsidiaries: ¥21

Tadashi Ogura

million)Tamio Marubayashi
Kouzo Yamada

Other Important Compensation
Noritake Co., Inc., a consolidated subsidiary of Noritake, paid ¥24 million in compensation for audit certification services to KPMG LLP,
which belongs to the same network as the CPAs of Noritake.

Satoru Shimazaki
Kyouji Saeki
Hisaya Ogura
Kouhei Kato

Non-auditing services to the company supplying the CPAs: None

Kenji Hayasaka

Auditor Compensation Policy

Yoshitaka Mabuchi

Masahiro Nakagawa

Compensation to the CPAs of Noritake is determined taking into
account such factors as the number of days of the audit and Noritake’s
size and operational characteristics.

13

Consolidated Financial Review

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

129,240

133,368
112,984

30.1

07

29.0

08

29.8

09

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

10,488
9,463

7.3

7.9

808

0.7
07

08

09

Net (Loss) Income &Net (Loss) Income Ratio
Net (loss) income (Millions of yen)
Net (loss) income ratio (%)
5,796

5,669

4.5

4.3

(6,861)

07

08

09

(6.1)

SCOPE OF CONSOLIDATION
Composed of 42 subsidiaries and seven affiliates, the Noritake Group is engaged in the manufacture and sale of products in five businessgroups—Industrial Products, Tabletop, Electronics,
Ceramics & Materials and Environmental
Engineering—as well as the provision of services
related to these groups.
A brief description of the operations of each of
the five business groups follows, and these group
descriptions correspond to the five business segments used elsewhere in this report to describe
performance.
Industrial Products GroupIn the Industrial Products Group, grinding wheel
manufacturing is performed by Noritake Bonded
Abrasive Co., Ltd., four other subsidiaries, and one
affiliate, while diamond tool manufacturing is
the province of Noritake Super Abrasive Co., Ltd.
and another subsidiary. They then supply theseproducts to the Company. Abrasive cloth andpapers are produced by subsidiary Noritake
Coated Abrasive Co., Ltd. and one affiliate, and a
portion of their output comes to the Company.
The Industrial Products Group’s domestic andoverseas sales are primarily handled by the integrated manufacturing and sales subsidiaries
Noritake Bonded Abrasive Co., Ltd. and Noritake
Super Abrasive Co., Ltd., with Noritake as the distributor. In addition, Zen Noritake Co., Ltd. conducts sales in the domestic market, and Noritake
Co., Inc. of the United States and four other subsidiaries carry out sales in overseas markets.
Noritake Coated Abrasive Co., Ltd. conducts
direct sales of most of these products both inJapan and overseas.
Tabletop GroupIn the Tabletop Group, porcelain tableware are
manufactured by Noritake China Mfg. Co., Ltd.,
two other subsidiaries, and two affiliates, who
supply these products to the Company.
Noritake Tableware Co., Ltd. and another subsidiary conduct sales for the Tabletop Group in
the domestic market. Noritake Co., Inc. of theUnited States and three other subsidiaries conduct sales in overseas markets, as does integrated manufacturing and sales subsidiary Noritake
China Mfg. Co., Ltd., with the Company as the distributor.

Electronics GroupIn the Electronics Group, Noritake Itron
Corporation manufactures vacuum fluorescentdisplay tubes and other products, which it supplies to
the Company and its sales subsidiaries.
Sales in Japan and overseas markets are handled by the integrated manufacturing and sales
subsidiary, Noritake Itron Corporation, with theCompany as the distributor. Noritake Co., Inc. of
the United States and five other subsidiaries also
undertake sales for the Electronics Group in overseas markets.
Ceramics & Materials Group
Manufacturing in the Ceramics & Materials
Group is conducted by Noritake Kizai Co., Ltd.,
which, together with three other subsidiaries andtwo affiliates, produces electronics pastes andceramic materials and supplies them to theCompany. In addition, subsidiary KCM Corporationand its subsidiaries produce ceramic materials, a
portion of which is supplied to the Company.
Domestic sales are handled by subsidiary
Noritake Dental Supply Co., Ltd., together with
the integrated manufacturing and sales subsidiary Noritake Kizai Co., Ltd. and one other subsidiary, with the Company as the distributor. Noritake
Co., Inc. of the United States and another subsidiary conduct sales for the Ceramics & Materials
Group in overseas markets. Noritake Kizai Co., Ltd.
and another subsidiary also conduct overseas
sales, with the Company as the distributor. KCM
Corporation conducts direct sales of most ofthese products both in Japan and overseas.
Environmental Engineering GroupIn the Environmental Engineering Group, Noritake
Engineering Co., Ltd. and two other subsidiaries
manufacture filtration equipment and supply it to
the Company.
The integrated manufacturing and sales subsidiary, Noritake Engineering Co., Ltd., conducts
domestic and overseas sales, with the Company
as the distributor. Noritake Co., Inc. of the UnitedStates conducts sales for the Environmental
Engineering Group in
overseas markets.
Service operations for the above are handled by
Noritake Information Systems Co., Ltd. andanother subsidiary. Two affiliates are also activein this area.
Performance Analysis

14

Annual Report 2009

Noritake Co., Limited

Consolidated net sales fell 15.3% year on year to¥112,984 million, mainly due to the impact ofdeteriorating economic conditions which worsened the performance of the Tabletop andElectronics business groups. In addition, theIndustrial Products, Ceramics & Materials andEnvironmental Engineering business groups—
each of which had previously recorded healthy
results—also witnessed a significant decline insales due to dramatic cutbacks in production in
their customers’ industries.
The cost of goods sold declined 10.8% year
on year to ¥84,076 million in line with the reduction in net sales. Selling, general and administrative expenses fell 2.0% year on year to ¥28,100
million.
Accordingly, operating income plummeted
92.3% to ¥808 million, year on year.
In other income, Noritake posted a loss of¥3,867 million compared with ¥317 million inother expenses recorded in the previous fiscal
year. Contributing factors included the posting ofbusiness structure improvement expenses.
As a result of the aforementioned, the loss
before income taxes and minority interests
amounted to ¥3,059 million. After income andother taxes and minority interests, net loss
totaled ¥6,861 million. Net loss per shareamounted to ¥46.82, for a return on equity thatfell from 7.2% in the previous fiscal year to negative 9.8%.
Financial Position Analysis
Total assets stood at ¥113,077 million, down
20.2%, or ¥28,566 million, from the previous fiscal year-end. Current assets totaled ¥59,479 million, down ¥17,663 million, while non-current
assets amounted to ¥53,598 million, down
¥10,902 million. A major factor for the decrease incurrent assets was a decrease in trade receivables and a decrease in inventories. The
decrease in non-current assets was caused primarily by the deteriorated market value of investment securities in line with downgrades in theprices of publicly traded shares.
Total liabilities stood at ¥43,885 million, down
21.3% year on year, or ¥11,850 million. Major
factors for the decline included a decline in notes
and accounts payable and a decrease in deferred
tax liabilities in line with a drop in unrealized
gains on available-for-sale securities.
Net assets totaled ¥69,192 million, down
19.5% year on year, or ¥16,715 million. Major
factors for the decrease were declines in retained

earnings and in unrealized gains on available-forsale securities.
As a result, shareholders’ equity per sharestood at ¥432.49, a decline of ¥95.91 comparedwith the previous fiscal year-end. The shareholders’ equity ratio edged down to 55.0% from the
55.1% of the previous fiscal year-end.
Cash Flow Analysis
Cash and cash equivalents on a consolidated
basis at the end of the fiscal year under review
saw a decrease of ¥598 million to ¥11,569 million. Contributing factors included a decrease intrade payables and the purchase of property,
plant and equipment and intangible assets.
Free cash flows as of the end of the fiscal year
under review totaled ¥311 million.
Cash flows and factors that affected them are
discussed below.
Net cash provided by operating activities
decreased ¥92 million year on year to ¥5,688
million. Contributing factors included a decline of¥13,230 million in income before income taxes
and minority interests compared to the previous
fiscal year, which was in addition to the amountof decrease in trade payables, which grew by¥4,963 million. On the other hand, there was adecrease in trade receivables of ¥12,871 million
compared to the increase of ¥210 million in theprevious fiscal year and a decrease in inventories
of 3,351 million compared to the increase of¥2,024 million in the previous fiscal year.
Net cash used in investing activities increased¥220 million year on year to ¥5,376 million.
Contributing factors included an increase of¥453 million for the purchase of property, plantand equipment and intangible assets, which wasin addition to an increase of ¥583 million in payment for loans receivable, although proceedsfrom sales of property, plant and equipment andintangible assets amounted to an increase of¥1,070 million.
Net cash provided by financing activities
amounted to ¥9.0 million, against the ¥1,452
million in net cash used in the previous fiscal
year. Contributing factors included a net increasein short-term borrowings of ¥1,972 million, whichmore than offset an increase of ¥1,305 million
used in the purchase oftreasury stock and fractional shares.

Net (Loss) Income
per Share
(Yen)

39.20

38.36

07

08

(46.82)09

Total Assets(Millions of yen)

148,827

141,644
113,077

07

08

09

Total Shareholders’Equity(Millions of yen)

79,27078,08362,163

07

08

09

15

Total Shareholders’Equity Ratio
(%)

53.3

07

55.1

08

55.0

09

Return on Equity
(%)

7.5

7.2

(9.8)
07

08

09

FINANCIAL POLICIESThe Noritake Group, in principle, funds general
operations and capital expenditures by using its
internal reserves and through borrowings. In particular, working capital for general operations isfunded through short-term borrowings with amaturity of one year or less. In Japan, Noritake
has adopted a cash management system underwhich the Company centrally procures funds andthen allocates the procured funds to consolidated subsidiaries in need of operating funds.
Overseas, individual consolidated subsidiaries
adhere to the basic policy of procuring operating
funds by themselves in respective local currencies.
As of March 31, 2009, the balance of shortterm borrowings totaled ¥11,104 million, most ofwhich has been denominated in yen, with therest in five 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, 2009,
the balance of long-term debt amounted to¥8,400 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.
Exchange Rate Fluctuation Risk
The export ratios of the Tabletop Group and theElectronics Group are high in comparison to
Noritake’s other business groups. Accordingly,
unfavorable trends in currency exchange rates—
more specifically, the yen’s rapid appreciation—
may negatively impact the performance of thesebusiness groups, and consequently the entire
Company’s performance and financial position.

16

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 earthquakes, fires andother disasters, their operations may have to besuspended for a certain period of time, and thiswould adversely affect Noritake’s business performance and financial position.
Overseas Affairs Risk
The Noritake Group is actively promoting overseas operations. Deteriorations in public safety
and security, coupled with changes in politicalconditions, in each of the countries where
Noritake operates may restrict the Company’s
operations. In particular, in case of wars, civil disturbances, terrorist attacks and the like, theCompany’s operations may have to be suspended for a certain period of time. Should this be thecase, the Noritake Group’s business performanceand financial position may be negatively impacted.
Technology-Related Risk
The Noritake Group is increasingly concentrating
its management resources in such growth fields
as the electronics, semiconductors and energy
industries. These industries are characterized by
the rapid pace of their technological innovationand dynamic demand fluctuations, which cause
participants in these industries to experience
technology and product obsolescence at shorter
intervals than other industries. Accordingly, in theevent that Noritake fails to launch new products
in a timely 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
to those described above. The analysis of risks isbased on information available to the Company’s
management as of March 31, 2009.

Noritake Co., Limited

Annual Report 2009

Consolidated Balance Sheets
NORITAKE CO., LIMITED and Consolidated Subsidiaries
March 31, 2009 and 2008

Assets:Current assets:
Cash and cash equivalents
Short-term investments (Note 5)
Notes and accounts receivable, net of allowance for doubtful accounts (Note 3)Inventories (Note 4)
Deferred tax assets (Note 12)
Other current assets
			 Total current assets
Investments and other assets:
Investment securities (Note 5)
Investments in unconsolidated subsidiaries and affiliates
Deferred tax assets (Note 12)
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 (Note 7)
Current portion of long-term debt (Note 7)
Notes and accounts payable (Note 6)
Accrued expenses
Income taxes payable
Deferred tax liabilities (Note 12)
Other current liabilities
			 Total current liabilities
Long-term liabilities:
Long-term debt (Note 7)
Employee retirement benefit liability (Note 8)
Accrued severance indemnities for directors and corporate auditors
Deferred tax liabilities (Note 12)
Other noncurrent liabilities
			 Total long-term liabilities
			 Total liabilities
Net assets (Note 11):
Shareholders’ equity:
		 Common stock: 397,500,000 shares authorized		  and 158,428,497 shares issued
		 Capital surplus
		 Retained earnings
		 Less treasury stock, at cost: 14,696,939 shares		  in 2009 and 10,656,361 shares in 2008
			 Total shareholders’ equity
Accumulated (losses) gains from valuation and translation adjustments
Minority interests
			 Total net assets
			 Total liabilities and net assets

Millions of yen

Thousands of
U.S. dollars(Note 1)

2009

2008

2009

¥ 11,569
		884
		 25,713
		 15,893
		
511
		 4,909
		 59,479¥ 12,168		 1,136
		 39,409
		 20,176
		 1,539
		 2,714
		 77,142$ 118,051
		
9,021
		 262,378
		 162,173
		
5,214
		 50,092
		 606,929

		 13,999
		
561
		 1,272
		 4,058
		 19,890

		 22,653
		623
		 1,813
		 4,090
		 29,179

		 142,847
		
5,724
		 12,980
		 41,408
		 202,959

		 12,199
		 33,451
		 39,064
		 1,318
		 86,032
		(52,324)
		 33,708¥ 113,077

		 13,182
		 35,728
		 51,661
		838
		101,409
		 (66,086)
		 35,323¥ 141,644

		 124,480
		 341,337
		 398,612
		 13,449
		 877,878
		 (533,919)
		 343,959$ 1,153,847¥ 11,104		 1,134
		 13,279
		 2,455
		
323
		
33
		 1,258
		 29,586¥ 9,117
		
900
		 21,693
		 2,818
		 2,367		—		 1,584
		 38,479$ 113,306
		 11,571
		 135,500
		 25,051
		
3,296
		
337
		 12,837
		 301,898

		 7,448
		 3,491
		
827
		 2,324
		
209
		 14,299
		 43,885

		 6,700
		 4,217
		
877
		 5,282
		
181
		 17,257
		 55,736

		 76,000
		 35,622
		
8,439
		 23,714
		
2,133
		 145,908
		 447,806

		 15,632
		 18,833
		 37,329

		 15,632
		 18,835
		 45,521

		 159,510
		 192,174
		 380,908

		 (6,497)
		 65,297
		 (3,134)
		 7,029
		 69,192¥ 113,077

		 (5,170)
		 74,818
		 3,265		 7,825
		 85,908¥ 141,644

		 (66,296)
		 666,296
		 (31,980)
		 71,725
		 706,041$ 1,153,847

See accompanying Notes to Consolidated Financial Statements.

17

Consolidated Statements of Operations
NORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2009 and 2008

Millions of yen

Thousands of
U.S. dollars(Note 1)

2009

2008

2009

¥ 112,984¥ 133,368$ 1,152,898

Cost of goods sold		 84,076

		 94,214

		 857,918

Selling, general and administrative expenses

		 28,100

		 28,666

		 286,735

		112,176

		122,880

		1,144,653

		

808

		 10,488

		

8,245

Interest and dividend income

		

488

		

522

		

4,980

Interest expense

		

(200)

		

(183)

		

(2,041)Gain on sales of marketable securities

		

216

		

28

		

2,204

Impairment loss on fixed assets

		

(955)

		

(336)

		

(9,745)

Loss on sales and disposals of property and equipment

		

(131)

		

(177)

		

(1,337)Extraordinary severance pay to employees under early retirement plan		 (1,458)

		

(156)

		 (14,877)

Loss relating to foreign currency translation adjustments		 (1,436)		—		 (14,653)

Other, net

		Operating revenue:
Net sales (Note 13)
Operating costs and expenses (Note 13):

			

Operating income

Other income (expenses):

(391)

		

(15)

		

		 (3,867)

		

(317)

		 (39,459)

		 (3,059)

		 10,171

		 (31,214)

Current

		 1,390

		

3,811

		

14,184

Deferred		 2,198

		

70

		

22,428

		 3,588

		

3,881

		

36,612

		

214

		

621

		

2,184

¥ (6,861)

¥

5,669

$

(70,010)			(Loss) income before income taxes and minority interests(3,990)

Income taxes:			

Total income taxes

Less minority interests in net income of consolidated subsidiaries
Net (loss) income

U.S. dollars(Note 1)Yen

Per share:
Net (loss) income
Cash dividends
See accompanying Notes to Consolidated Financial Statements.

18¥ (46.82)
		

7.00

¥

38.36

$

(0.48)

		

9.00

		

0.07

Annual Report 2009

Noritake Co., Limited

Consolidated Statements of Changes in Net Assets
NORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2009 and 2008
Shareholders’ equity

Balance at March 31, 2007
Net income for the year
Cash dividends
Fractional shares acquired, net
Net changes other than
	  shareholders’ equity
Balance at March 31, 2008
Net loss for the year
Cash dividends
Purchases of treasury stock	  and fractional shares, net
Net changes other than
	  shareholders’ equity
Balance at March 31, 2009

Total
shareholders’equityNumber ofshares ofcommon stock
issuedCommonstock

Capitalsurplus158,428,497———¥ 15,632
		
—
		
—
		
—

¥ 18,835
		
—
		
—
		
—

¥ 41,182¥ (5,142)¥ 70,507
		 5,669 		— 		 5,669
		 (1,330) 		
— 		 (1,330)		— 		 (28) 		
(28)—
158,428,497

		—		15,632		—		18,835		—		45,521

—
—

		
		

—
—

		
		

—
—

		(6,861) 		
		(1,330) 		

—

		

—

		

(2) 		—
158,428,497

Retainedearnings

TreasurystockMillions of yen

		
— 		
—
		(5,170) 		 74,818——

		(6,861)
		(1,330)(1) 		(1,327) 		(1,330)

		—¥ 15,632		—¥ 18,833

		—¥ 37,329$ 159,510$ 192,194$ 464,500

		
— 		
—
¥(6,497)¥ 65,297
Thousands of U.S. dollars (Note 1)

Balance at March 31, 2008
Net loss for the year
Cash dividends
Purchases of treasury stock	  and fractional shares, net
Net changes other than
	  shareholders’ equity
Balance at March 31, 2009

		
		

—
—

		
		

—
—

		

—

		

(20) 		

		—$ 159,510$ (52,755)

		(70,010) 		
		(13,572) 		

——$ 763,449
		(70,010)
		(13,572)(10) 		(13,541) 		(13,571)

		—$ 192,174		—$ 380,908

		
— 		
—
$(66,296)$ 666,296

Net unrealized
gains onavailable-for-salesecurities

Accumulated (losses) gains from valuationand translation adjustments
Total accumulated
Foreign(losses) gains
currencyfrom valuationtranslationand translation
adjustments
adjustments

Minority
interests¥ 12,345
		
—
		
—
		
—

¥ (3,582)¥ 8,763
		
— 		
—
		
— 		
—
		
— 		
—

¥ 7,838
		
—
		
—
		
—

		 (5,429)
		 6,916

		 (69) 		(5,498) 		 (13) 		 (5,511)
		(3,651) 		 3,265 		7,825 		85,908

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		(6,861)
		(1,330)

		

—

		

—

		

—

		

—

		(1,330)

Total
net assets
Millions of yen

Balance at March 31, 2007
Net income for the year
Cash dividends
Fractional shares acquired, net
Net changes other than
	  shareholders’ equity
Balance at March 31, 2008
Net loss for the year
Cash dividends
Purchases of treasury stock	  and fractional shares, net
Net changes other than
	  shareholders’ equity
Balance at March 31, 2009

		(5,024)¥ 1,892¥ 87,108
		 5,669
		 (1,330)		
(28)

		(1,375) 		(6,399) 		 (796) 		(7,195)¥(5,026)¥(3,134)¥ 7,029¥ 69,192
Thousands of U.S. dollars (Note 1)

Balance at March 31, 2008
Net loss for the year
Cash dividends
Purchases of treasury stock	  and fractional shares, net
Net changes other than
	  shareholders’ equity
Balance at March 31, 2009

$ 70,571$ (37,255)$ 33,316$ 79,847$ 876,612

		
		

—
—

		
		

—
—

		
		

—
—

		
		

—
—

		(70,010)
		(13,572)

		

—

		

—

		

—

		

—

		(13,571)

		(51,265)$ 19,306

		(14,031) 		(65,296) 		(8,122) 		(73,418)$(51,286)$(31,980)$ 71,725$ 706,041

See accompanying Notes to Consolidated Financial Statements.

19

Consolidated Statements of Cash FlowsNORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2009 and 2008

Millions of yen

Thousands of
U.S. dollars(Note 1)

2008

2009

2009

Cash flows from operating activities:(Loss) income before income taxes and minority interests¥ (3,059)¥ 10,171$ (31,214)

Adjustments for:		

Depreciation

		 4,215

		 3,971

		 43,010

		Impairment loss on fixed assets

		

955

		

336

		 9,745		Loss relating to foreign currency translation adjustments

		 1,436

		—		 14,653

		Gain on sales of marketable securities

		 (216)		

28

		 (2,204)

		

Loss on sales and disposals of property and equipment

		

131

		

177

		 1,337		Decrease in employee retirement benefit liability		 (654)		

(9)

		 (6,673)

		Decrease (increase) in trade receivables

		12,871

		

(210)

		131,337

		Decrease (increase) in inventories

		 3,351

		 (2,024)

		 34,194		Decrease in trade payables		(7,779)

		 (2,815)

		(79,378)

		Other, net		(1,300)

		

(626)

		(13,266)					 9,951

		 8,999

		101,541

		Interest and dividends received

		

490

		

524

		 5,000		Interest paid		 (197)

		

(181)

		 (2,010)

		

Income taxes paid		(4,556)

		 (3,561)

		(46,490)

		 5,688

		 5,781

		 58,041

Increase in property, plant and equipment		(5,438)

		 (4,985)

		(55,490)

Increase in long-term investments and loans receivable		 (837)

		

(507)

		 (8,541)

Purchase of additional shares of consolidated subsidiaries

		 (503)

		

(306)

		 (5,133)

Decrease in property and long-term investments

		 1,370

		

80

		 13,980

Decrease in short-term investments

		

116

		

37

		 1,184

Other, net

		

(84)

		

84

		

			

Subtotal

Net cash provided by operating activities

Cash flows from investing activities:			Net cash used in investing activities(857)

		(5,376)

		 (5,597)

		(54,857)

Increase in long-term debt

		 2,000		—		 20,408

Repayment of long-term debt

		(1,200)		—		(12,245)

Net increase in short-term borrowings

		 1,978		6

		 20,184

Dividends paid		(1,330)		 (1,330)

		(13,572)

Purchase of treasury stock and fractional shares		(1,338)

		

(33)

		(13,653)

Other, net

		 (101)		

(95)

		 (1,030)

Cash flows from financing activities:			Net cash provided by (used in) financing activities				 (1,452)

		

			

Effect of exchange rate changes on cash and cash equivalents		 (920)		

(4)

		 (9,388)

			Net decrease in cash and cash equivalents		 (599)

		 (1,272)

		 (6,112)

			Cash and cash equivalents at beginning of year		12,168

		13,440

		124,163

			Cash and cash equivalents at end of year

¥ 11,569¥ 12,168$ 118,051

See accompanying Notes to Consolidated Financial Statements.

20

9

92

Noritake Co., Limited

Annual Report 2009

Notes to Consolidated Financial Statements
NORITAKE 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 andExchange 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 from International Financial
Reporting Standards.
The accompanying consolidated financial statements have been reformatted and translated into English, with some expanded descriptions, fromthe consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local
Finance Bureau of the Ministry of Finance as required by the Financial Instrument and 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, 2009, which was ¥98 to U.S. $1. The translation should not be construed as arepresentation 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 presentations.
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 in significant unconsolidated subsidiaries and affiliates are accounted for by the equity method. Investments in unconsolidated subsidiaries and affiliates 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 or negative goodwill and amortized over five years on a straight-line basis. All intercompany accounts and transactions have been eliminated on consolidation.
The numbers of consolidated subsidiaries, unconsolidated subsidiaries and affiliates for the years ended March 31, 2009 and 2008 were as
follows:
2009

Consolidated subsidiaries:
Domestic

2008

22

24

14

14

Affiliates accounted for by the equity method22

Unconsolidated subsidiaries stated at cost

6
5

4

Overseas

Affiliates stated at cost

5

The Company’s overseas consolidated subsidiaries close their books on December 31 every year, three months earlier than that of theCompany and the domestic consolidated subsidiaries. The Company has consolidated these subsidiaries’ financial statements as of theirDecember 31 year-end, 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 yearend are adjusted for on consolidation.
(Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements)
Until the year ended March 31, 2008, the overseas consolidated subsidiaries adopted accounting principles generally accepted in theirrespective countries, and no adjustments to conform to accounting principles generally accepted in Japan were made to their financial statements on consolidation, as allowed under previous accounting principles and practices generally accepted in Japan. On March 17, 2006, the
Accounting Standards Board of Japan (“ASBJ”) issued Practical Issues Task Force No. 18 “Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (“PITF No. 18”). 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 to prepare consolidated financial statements using its foreign subsidiaries’ financial statements prepared in accordance with either
International Financial Reporting Standards or U.S. generally accepted accounting principles. In this case, adjustments for the following six
items are required in the consolidation process so that the impact on net income is accounted for in accordance with Japanese GAAP unlessthe 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) Retrospective treatment of a change in accounting policies(f) Accounting for net income attributable to minority interests

21

The Noritake Group has adopted PITF No. 18 from the year ended March 31, 2009. The adoption of PITF No. 18, however, had no material
effects on the consolidated financial statements for the year ended March 31, 2009.
(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,” whoseclassification determines the respective accounting method as stipulated by the accounting standard for financial instruments. According to
the investment policy of the Noritake Group, its securities portfolio is classified as available-for-sale securities other than trading or held-tomaturity. The accounting standard requires that available-for-sale securities for which market quotations are available at fair value be stated
and that net unrealized gains and losses on such securities be recorded as a component of net assets, net of applicable income taxes. Gains
and losses on the disposition of marketable securities are computed by the moving average method. Available-for-sale securities that are nonmarketable and without available market quotations are carried at cost determined by the moving average method. Adjustments in the carrying
values of individual investment securities are charged to income through write-downs, when a decline in value is deemed other than temporary.
(d) Accounting for derivatives
The Noritake Group is a party to derivative instruments such as foreign exchange forward contracts and interest rate swap contracts in theordinary course of business to reduce its exposure to fluctuations in exchange rates and interest rates for hedging purposes. These transactions include certain anticipated export sales and import purchases for which foreign exchange forward contracts are used and which bankborrowings for interest rate swap contracts are used. The Noritake Group is also exposed to credit loss in the event of nonperformance by
the other parties. However, the Noritake Group does not expect such nonperformance by the counterparties, because the Noritake Group
enters into derivative transactions only with major banks with relatively high credit ratings.
Foreign exchange forward contracts are accounted for by translating foreign currency denominated assets and liabilities at such contract rates
as an interim measure, if certain hedging criteria are met. According to the special treatment permitted by the accounting standard for financial instruments, hedging interest rate swap contracts are accounted for on an accrual basis and recorded net of interest expense generated
from borrowings, hedged items, if certain conditions are met. In addition, during the year ended March 31, 2009 and 2008, the Company hada derivative contract outstanding to hedge risk associated with the occurrence of an earthquake. As the fair value of such a contract is notconsidered determinable, that derivative contract has not been accounted for at fair value.
(e) Inventories
Effective April 1, 2008, the Company and its domestic consolidated subsidiaries adopted ASBJ Statement No. 9, “Accounting Standard for
Measurement of Inventories” issued by the ASBJ on July 5, 2006. As permitted under the previous accounting standard and practices, until
March 31, 2008, the Noritake Group stated inventories at cost determined principally by the first-in, first-out method, unless the market valueof inventories declined significantly and were deemed not recoverable. In such cases, costs were reduced to recoverable amounts. The new
accounting standard requires that inventories held for sale in the ordinary course of business be measured at the lower of cost or net realizable value. If the net realizable value falls below cost at the end of the period, the cost basis is reduced to net realizable value and is regarded
as decreased profitability of inventories. As a result of the adoption of this new accounting standard, operating income decreased by ¥140 million ($1,429 thousand) and loss before income taxes and minority interests increased by ¥140 million ($1,429 thousand) for the year ended
March 31, 2009, from the amounts that would have been recorded with the previous accounting 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 the individual financial
review approach for doubtful or troubled receivables and a general reserve for other receivables based on the historical loss experience for acertain past period.
(g) Property, plant and equipment and depreciation
Property, plant and equipment, including significant renewals and additions, are stated at cost and depreciated principally by the straight-line method for overseas consolidated subsidiaries and by the declining-balance method for the Company and its domestic consolidated subsidiaries
at rates based on the estimated useful life of the assets. Buildings of the Company and its domestic consolidated subsidiaries acquired on andafter April 1, 1998, however, are depreciated by the straight-line method.
In accordance with the amendment of the Corporation Tax Law of Japan, effective from the year ended March 31, 2008, the Company and its
domestic consolidated subsidiaries changed the depreciation method for property, plant and equipment acquired on and after April 1, 2007,
to the method provided by the amended Corporation Tax Law of Japan. As a result, operating income and income before income taxes andminority interests decreased by ¥156 million, respectively, for the year ended March 31, 2008, from the amounts that would have been recorded with the previous accounting method.
In accordance with the Corporation Tax Law of Japan, the Company and its domestic consolidated subsidiaries previously depreciated property,
plant and equipment acquired before April 1, 2007 up to the depreciable limit of 5% of the acquisition cost. Pursuant to the amended
Corporation Tax Law of Japan, effective from the year ended March 31, 2008, the residual value is depreciated over five years using thestraight-line method from the fiscal year following the year in which the depreciable limit is reached. As a result, operating income and income
before income taxes and minority interests decreased by ¥178 million, respectively, for the year ended March 31, 2008, from the amounts
that would have been recorded with the previous accounting method.
22

Noritake Co., Limited

Annual Report 2009

Effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries also have reassessed and changed theestimated useful lives of equipment in accordance with the amended Corporation Tax Law of Japan. As a result, for the year ended March 31,
2009, operating income decreased by ¥104 million ($1,061 thousand) and loss before income taxes and minority interests increased by ¥104
million ($1,061 thousand), from the amounts that would have been recorded with the previous accounting method.
Repairs and maintenance expenses are charged to current operations as incurred.
(h) Leases
Effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries adopted “Accounting Standard forLease Transactions” (ASBJ Statement No. 13) and “Guidance on Accounting Standard for Lease Transactions” (Guidance No. 16), originallyissued by the Business Accounting Counsel of Japan on June 17, 1993 and by the Japanese Institute of Certified Public Accountants on
January 18, 1994, respectively, and both revised by the ASBJ on March 30, 2007. The new accounting standards require that all finance leasetransactions be accounted for in a manner similar to that used for ordinary sale or purchase transactions. Prior to April 1, 2008, finance leases
which did not transfer ownership of the leased assets to the lessee were accounted for by the accounting treatment similar to that used for
operating leases, as permitted by the previous accounting standard. From the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries capitalize the assets used under finance leases commenced on or after April 1, 2008 as lessee at amounts equivalent
to total lease payments, except for the certain immaterial or short-term finance leases which are accounted for as operating leases in accordance with the revised standard. Depreciation of the leased assets is calculated using the straight-line method over the lease term with theassumption of no residual value. As permitted by the new standard, finance leases as lessee which commenced prior to April 1, 2008 andhave been accounted for with the accounting treatment similar to that used for operating leases, continue to be accounted for with theaccounting treatment similar to that used for operating leases with disclosure of certain “as if capitalized” information. (See also Note 9.) The
adoption of the new standard had no material effects for the year ended March 31, 2009.
(i) Impairment of fixed assets
The Company and its domestic consolidated subsidiaries have adopted “Accounting Standard for Impairment of Fixed Assets” issued by theBusiness Accounting Council of Japan and related practical guidance issued by ASBJ. The standard requires that fixed assets be reviewed 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 a 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 land, plants, buildings and otherforms of property, as well as intangible assets, and are to be grouped at the lowest level for which there are identifiable cash flows from othergroups of assets. For the purpose of recognition and measurement of an impairment loss, fixed assets of the Company and its domestic consolidated subsidiaries are grouped principally into cash-generating units based on the business division under managerial accounting classification.
The Noritake Group determines if assets are impaired by comparing their undiscounted expected cash flows to the carrying amounts in theaccounting records. An impairment loss is recognized if the undiscounted expected cash flows are less than the carrying amount of the asset.
Recoverable amounts are measured based on net selling prices primarily from appraisal valuations.
The Noritake Group recognized impairment loss for the year ended March 31, 2009 and 2008 as follows:
Millions of yen

Thousands of
U.S. dollars

2009

2008

2009

Buildings
Machinery and equipment

¥ 240
		434

¥ 201
		 27

$ 2,449
		4,429

Land
Other

		 —
		281

		 56
		 52

		 —
		2,867

¥ 955

¥ 336

$ 9,745(j) Employee retirement benefits
Employees who terminate their service with the Noritake Group are entitled to retirement benefits generally determined by reference to basic
rates of pay at the time of retirement, lengths of service and the conditions under which termination occurs. The Company has a lump-sum
retirement benefit plan and has also established a defined benefit pension plan, which covers approximately 68% of the retirement benefits
for employees of the Company who retire at the compulsory retirement age after five or more years of service. Some of the Company’s principal consolidated subsidiaries have similar retirement benefit plans.
The Noritake Group principally recognizes retirement benefits, including pension cost and related liability, based on the actuarial present valueof the projected benefit obligation using the actuarial appraisal approach and the fair value of pension plan assets available for benefits at the
fiscal year-end. Unrecognized actuarial differences as changes in the projected benefit obligation or value of pension plan assets resulting fromthe experience different from that assumed and from changes in assumptions are amortized on a straight-line basis over ten years, a period
within the average remaining service years of employees, from the year following the year in which they arise. Past service cost is recognized ina single year as incurred.
(k) Accrued severance indemnities for directors and corporate auditors
The Noritake Group may pay severance indemnities to directors and corporate auditors, subject to the approval of the shareholders. The
Noritake Group has provided for this liability at the amount which would be payable assuming all directors and corporate auditors terminatedtheir service at the respective balance sheet dates.
(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 the23exchange 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 or 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 fiscal year-end. All income and expense accounts are translated at the average rate of exchange for the fiscal
year. Translation differences, after allocating portions attributable to minority interests, are reported as foreign currency translation adjustments in a component of net assets 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 of operations andamounted to ¥2,828 million ($28,857 thousand) and ¥2,925 million for the years ended March 31, 2009 and 2008, respectively.
(n) Enterprise taxes
When levied as size-based corporate taxes for local government enterprise taxes, the enterprise taxes are calculated based on the “added
value” and “capital” amounts and are recorded in selling, general and administrative expenses.
(o) Income taxes
Income taxes are accounted for under 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 enactment date.
(p) Directors’ bonuses
The Noritake Group has adopted the “Accounting Standard for Directors’ Bonuses (ASBJ Statement No. 4)”. Under the standard, the directors’
bonuses, including those for corporate auditors, are accounted for as an expense of the accounting period in which the bonuses accrued.
(q) 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.
(r) Per share data
Net (loss) income per share is computed by dividing (loss) income available to common shareholders by the weighted average number ofshares of common stock outstanding during the respective year. Diluted net income per share was not disclosed, as the Noritake Group had
no diluted common shares for the years ended March 31, 2009 or 2008. Cash dividends per share shown for each fiscal year in the accompanying consolidated statements of operations represent dividends declared as applicable to the respective year.
3. Notes and Accounts Receivable
As of March 31, 2009 and 2008, notes and accounts receivable consisted of the following:
Millions of yen

2009

2008

2009

Trade notes receivable
Trade accounts receivable¥ 6,640
		18,986¥ 8,955
		30,150$ 67,755
		193,735

OtherLess allowance for doubtful accounts

		 202
		 (115)

		
		

490
(186)

		 2,061
		 (1,173)¥ 39,409$ 262,378

Millions of yen

Thousands of
U.S. dollars¥ 25,713
4. Inventories
As of March 31, 2009 and 2008, inventories consisted of the following:

Merchandise and finished goods
Work in process
Raw materials and supplies

24

Thousands of
U.S. dollars

2009

2008

2009

¥ 8,198
		 4,618
		 3,077¥ 9,135
		 7,307		 3,734$ 83,653
		 47,122
		 31,398¥ 15,893¥ 20,176$ 162,173

Annual Report 2009

Noritake Co., Limited

5. Investments
As of March 31, 2009 and 2008, short-term investments consisted of time deposits with an original maturity of more than three months.
At March 31, 2009 and 2008, investment securities consisted of the following:

Marketable securities:
Equity securities
Other nonmarketable securities

Millions of yen

Thousands of
U.S. dollars

2009

2008

2009

¥ 13,463
		 536¥ 22,113
		 540$ 137,378
		 5,469¥ 13,999¥ 22,653$ 142,847

Marketable securities classified as available for sale are stated at fair value with unrealized gains and losses, which are excluded from current
earnings and reported as a net amount within the net assets account until realized. As of March 31, 2009 and 2008, gross unrealized gains
and losses for available-for-sale marketable securities were summarized as follows:Grossunrealized gains

Cost

Gross
unrealized losses

Fair andcarrying value
Millions of yen

Available-for-sale equity securities:
As of March 31, 2009
As of March 31, 2008

¥ 10,686¥ 4,669

		10,463

		11,718¥(1,892)
		

(68)¥ 13,463
		22,113

Thousands of U.S. dollars

Available-for-sale equity securities:
As of March 31, 2009

$ 109,041$ 47,643$(19,306)$ 137,378

The Noritake Group sold available-for-sale securities and recorded net gains of ¥216 million ($2,204 thousand) and ¥28 million for the years
ended March 31, 2009 and 2008, respectively. For the years ended March 31, 2009 and 2008, the Noritake Group recorded a loss on thewrite-down of available-for-sale securities due to other-than-temporary impairment in value amounting to ¥25 million ($255 thousand) and¥37 million, respectively.
6. Notes and Accounts Payable
As of March 31, 2009 and 2008, notes and accounts payable consisted of the following:
Millions of yen

Trade notes payable
Trade accounts payable
Other

Thousands of
U.S. dollars

2009

2008

2009

¥ 7,290
		 4,892
		 1,097¥ 11,599
		 8,849
		 1,245$ 74,388
		 49,918
		 11,194¥ 13,279¥ 21,693$ 135,500

7. Short-term Borrowings and Long-term Debt
As of March 31, 2009 and 2008, short-term borrowings consisted principally of unsecured bank overdrafts and bank loans with interest at
rates ranging from 1.16% to 18.40% per annum.
As of March 31, 2009 and 2008, long-term debt consisted of the following:
2009

Unsecured loans from banks and insurance companies due through March 2014
with interest at rates ranging from 0.74% to 1.65% per annum at March 31, 2009
Capitalized lease obligations
Less current portion

Millions of yen

Thousands of
U.S. dollars

2008

2009

¥ 8,400
		 182
		(1,134)¥ 7,600		—		 (900)$ 85,714
		 1,857
		(11,571)¥ 7,448¥ 6,700$ 76,000

25

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

2010
2011
2012
2013
2014
Thereafter

Millions of yen

Thousands of
U.S. dollars¥ 1,134
		1,434
		 31
		 30
		5,928
		 25¥ 8,582$ 11,571
		14,633
		 316
		 306
		60,490
		 255$ 87,571

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 tosubmit such additional security. Also, as is customary in Japan, the Company and certain of its subsidiaries may have time deposits with thebanks from which they have short-term and long-term borrowings. However, there are no agreements with any banks which would require
maintaining such deposits.
8. Employee Retirement Benefits
The Noritake Group has defined benefit pension plans and lump-sum retirement benefit plans which substantially cover all employees. The following table reconciles the benefit liability and net periodic retirement benefit expense as of and for the years ended March 31, 2009 and2008:
Millions of yen

Thousands of
U.S. dollars

2008

2009

2009

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
Prepaid pension cost		 Balance of employee retirement benefit liability recognized		  on the consolidated balance sheets¥ 19,627
		(12,392)
		 7,235		 (6,842)
		393
		 3,098¥ 3,491¥ 22,001
		(17,600)
		 4,401
		 (2,937)
		 1,464
		 2,753¥

4,217$ 200,275
		(126,449)
		 73,826
		 (69,816)
		 4,010
		 31,612$ 35,622

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 consolidated subsidiaries participate in a certain corporate pension plan under a multi-employer pension program established by other employers, together with the subsidiaries. As information that would allow a determination of whether the value of the pension plan
assets has been reasonably calculated in the 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-ends was as follows:

Latest calculation period-end

Pension plan assets
Related benefit obligation under the program		

Difference, resulting primarily from unamortized past service cost

Ratio of subsidiaries’ contributions to the total contributions to the entire plan

Millions of yen

Thousands of
U.S. dollars

2009

2008

2009

March 31, 2008:

March 31, 2007:¥ 116,373¥ 132,459$ 1,187,479

		(147,188)

		 (139,971)

		(1,501,918)¥ (30,815)
		

2.9%

2009

Components of net periodic retirement benefit expense:
Service cost
Interest cost
Expected return on pension plan assets
Amortization of actuarial differences
Amortization of past service cost		 Net periodic retirement benefit expense26¥ 1,415
		 387
		 (205)
		 730		 (39)¥ 2,288¥(7,512)		

2.8%$ (314,439)

Millions of yen

Thousands of
U.S. dollars

2008

2009

¥ 1,108
		 406
		 (232)
		 98		
—¥ 1,380$ 14,439
		 3,949
		(2,092)
		 7,449
		 (398)$ 23,347

Noritake Co., Limited

Annual Report 2009

Major assumptions used in the calculation of the above information for the years ended March 31, 2009 and 2008 were as follows:
Method attributing the projected benefits to periods of services
Discount rate
Expected rate of return on pension plan assets
Amortization of actuarial differences
Amortization of past service cost

2009

2008

Straight-line
method2.0%

Straight-line
method
2.0%

2.0%

2.0%

10 years
1 year10 Years—

9. Lease Commitments
As lessee, the Noritake Group has entered into various rental and lease agreements, principally for office spaces, that are noncancelable or cancelable with a few months’ advance notice. A lessee, the Noritake Group also leases machinery, office equipment, and vehicles under leases
which are not usually cancelable. As disclosed in Note 2(h), finance leases that do not transfer ownership of the leased assets to the lessee
which commenced prior to April 1, 2008 and have been accounted for with the accounting treatment similar to that used for operating leases
continue to be accounted for with the 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, 2009 and 2008 were as follows:

Finance leases:
Due within one year
Due after one year

Millions of yen

Thousands of
U.S. dollars

2009

2008

2009

¥ 130
		131
¥ 261

¥ 223
		264
¥ 487

$ 1,327
		1,337$ 2,664

¥ 105
		167

¥ 147
		135

$ 1,071
		1,704

¥ 272

¥ 282

$ 2,775

Operating leases:
Due within one year
Due after one year

10. Contingent Liabilities
There were no contingent liabilities at March 31, 2009 and 2008.
11. Net Assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the issue price of the new shares as additional paid-in capital, which is included in capital surplus.
Under the Japanese Corporate Law (“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 the excess, 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 potentially available for dividends.
At March 31, 2009 and 2008, capital surplus principally consisted of additional paid-in capital. In addition, retained earnings included legal earnings reserve of the Company in the amount of ¥3,480 million ($35,510 thousand) as of March 31, 2009 and 2008, respectively.
The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated financial statements of theCompany in accordance with Japanese laws and regulations.
During the year ended March 31, 2009, the Company paid interim dividends of ¥4.50 per share, amounting to ¥665 million ($6,786 thousand.) In addition, on May 11, 2009, the Board of Directors of the Company resolved to pay cash dividends from an appropriation of retained
earnings amounting to ¥359 million ($3,663 thousand, ¥2.50 per share) to the shareholders as of March 31, 2009. The appropriation was
not accrued in the consolidated financial statements as of March 31, 2009.

27

12. Income Taxes
The tax effects of temporary differences that gave rise to a significant portion of deferred tax assets and liabilities as of March 31, 2009 and2008 were as follows:
Millions of yen

Thousands of
U.S. dollars

2008

2009

2009

Deferred tax assets:
Intercompany profits on sales

17

¥

257

Intercompany unrealized gains on property

		 420		

420

		 4,286

Enterprise tax accruals

		

21

		

206

		

Accrued bonuses to employees

		 485

		

501

		 4,949

Employee retirement benefit liability

		4,275

		 4,471

		43,622

Accrued severance indemnities for directors and corporate auditors		 333		363

		 3,398

Inventories

		 366

		

173

		 3,735

Net operating loss carryforwards

		2,662		476

		27,163

Other
Less valuation allowance		2,354		(5,889)

		 1,986
		(1,541)

		24,020
		(60,092)

		 Total deferred tax assets
Deferred tax liabilities:

		5,044

		 7,312

		51,469

Gain on transfer of investment securities to trusts for retirement benefit plans		3,289

		 3,289

		33,561

Unrealized gains on available-for-sale securities
Other		 755
		1,574

		 4,372
		 1,581

		 7,704
		16,061

		5,618¥ 574

		 9,242¥ 1,930

		57,326$ 5,857

Millions of yen

Thousands of
U.S. dollars

2008

2009

¥ 511

¥ 1,539$ 5,214

		1,272

		1,813

		12,980

		 33
		2,324

				 337
		23,714		Total deferred tax liabilities		

Net deferred tax liabilities¥

As of March 31, 2009 and 2008, deferred tax assets and liabilities were recorded as follows:
2009

Deferred tax assets:
Current
Noncurrent

$

174
214

Deferred tax liabilities:
Current
Noncurrent—

		5,282

In assessing the realizability of deferred tax assets, management of the Noritake Group considers whether some portion or all of the deferred
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, 2009 and 2008, a valuation allowance was provided toreduce deferred tax assets to the amount the management believed was realizable.
For the year ended March 31, 2009, the reconciliation of the differences between the Japanese statutory effective tax rate and the actual effective income tax rate on pretax income was not disclosed as recording a loss before income taxes and minority interests. For the year ended
March 31, 2008, the reconciliation was as follows:
Percentage ofpretax income

Japanese statutory effective tax rate
Increase (decrease) due to:Permanently nondeductible expenses

0.8

Tax exempt income(0.8)

Local minimum taxes per capita levy

0.5

Differences between Japanese and foreign tax rates(0.6)

Changes in valuation allowances

0.6

Tax credit for research and development expenses
Other
Actual effective income tax rate

28

40.6%

(2.4)
(0.5)
38.2%

Noritake Co., Limited

Annual Report 200913. Segment Information
A summary of information classified by the lines of business of the Noritake Group for the years ended March 31, 2009 and 2008 is as follows:
Industrial
Products

Tabletop

Electronics

Ceramics & Environmental
Materials
Engineering

Total

Elimination

Consolidated
Millions of yen

For the year 2009:
Operating revenue—net sales:
		 External customers
		 Intersegment sales/transfers
Operating costs and expenses
			 Operating income (loss)¥ 38,717 ¥ 13,113 ¥ 10,411 ¥ 29,510 ¥ 21,233 ¥ 112,984 ¥— ¥ 112,984
		
36 		
39 		
0 		 759 		 1,066 		 1,900 		(1,900) 		
—		38,753 		13,152 		10,411 		30,269 		22,299 		114,884 		(1,900) 		112,984
		36,941 		14,739 		 9,958 		27,017 		20,469 		109,124 		 3,052 		112,176¥ 1,812 ¥ (1,587) ¥453 ¥ 3,252 ¥ 1,830 ¥ 5,760 ¥ (4,952) ¥808

Identifiable assets
Depreciation
Impairment loss on fixed assets
Capital expenditures¥ 28,326 ¥ 11,898 ¥ 6,168 ¥ 26,325 ¥ 13,361 ¥ 86,078 ¥ 26,999 ¥ 113,077
		 1,491 		 593 		 400 		 1,152 		 272 		 3,908 		 307 		 4,215
		 139 		 338 		 473 		
— 		
5 		
955 		
— 		955
		 2,240 		 343 		 167 		 1,375 		 434 		 4,559 		 564 		 5,123

For the year 2008:
Operating revenue—net sales:
		 External customers
		 Intersegment sales/transfers
Operating costs and expenses
			 Operating income¥ 46,528 ¥ 17,723 ¥ 12,677 ¥ 33,192 ¥ 23,248 ¥ 133,368 ¥— ¥ 133,368
		
32 		
57 		
0 		 1,033 		 586 		 1,708 		 (1,708) 		
—		46,560 		17,780 		12,677 		34,225 		23,834 		 135,076 		 (1,708) 		133,368
		40,033 		17,251 		11,885 		29,739 		21,379 		120,287 		 2,593 		122,880¥ 6,527 ¥529 ¥792 ¥ 4,486 ¥ 2,455 ¥ 14,789 ¥ (4,301) ¥ 10,488

Identifiable assets
Depreciation
Impairment loss on fixed assets
Capital expenditures¥ 34,572 ¥ 15,489 ¥ 9,550 ¥ 30,714 ¥ 16,273 ¥ 106,598 ¥ 35,046 ¥ 141,644
		 1,257 		 691 		 567 		 971 		 213 		 3,699 		 272 		 3,971
		— 		 280 		
— 		
— 		
— 		
280 		
56 		336
		 1,503 		 710 		 393 		 1,793 		 194 		 4,593 		 492 		 5,085
Thousands of U.S. dollars

For the year 2009:
Operating revenue—net sales:
		 External customers
		 Intersegment sales/transfers
Operating costs and expenses
			 Operating income (loss)$395,072 $133,806 $106,235 $301,122 $216,663 $ 1,152,898 $— $ 1,152,898
		367 		
398 		
0 		 7,745 		 10,878 		 19,388 		(19,388) 		
—		395,439 		134,204 		106,235 		308,867 		227,541 		1,172,286 		(19,388) 		1,152,898
		376,949 		150,398 		101,612 		275,684 		208,867 		1,113,510 		 31,143 		1,144,653$ 18,490 $ (16,194) $ 4,623 $ 33,183 $ 18,674 $
58,776 $ (50,531) $8,245

Identifiable assets
Depreciation
Impairment loss on fixed assets
Capital expenditures$289,041 $121,408 $ 62,939 $268,622 $136,337 $ 878,347 $275,500 $ 1,153,847
		 15,214 		 6,051 		 4,082 		 11,755 		 2,775 		 39,877 		 3,133 		 43,010
		 1,418 		 3,449 		 4,827 		
— 		
51 		
9,745 		— 		9,745		 22,857 		 3,500 		 1,704 		 14,031 		 4,429 		 46,521 		 5,755 		 52,276

Notes: 1.	Operating costs and expenses in the elimination column represent unallocated corporate operating expenses such as general and administrative
expenses of the Company, net of intersegment transactions.
2.	Identifiable assets in the elimination column represent unallocated general corporate items such as cash and short-term and long-term investments insecurities and general managed property, net of inter-segment balances.
3. Changes of accounting method or estimates:
		 (The adoption of Accounting Standard for Measurement of Inventories)		As described in Note 2(e), the Company and its domestic consolidated subsidiaries adopted “Accounting Standard for Measurement of Inventories” fromthe year ended March 31, 2009. As a result, for the year ended March 31, 2009, operating income in the “industrial products” segment, “electronics”
segment, “ceramics & materials” segment and “environmental engineering” segment decreased by ¥49 million ($500 thousand), ¥20 million ($204
thousand), ¥14 million ($143 thousand) and ¥34 million ($347 thousand), respectively, and operating loss in the “tabletop” segment increased by ¥23
million ($235 thousand), from the amounts that would have been recorded with the previous accounting method.
		 (Change of useful lives of equipment for depreciation)
		As disclosed in Note 2(g), effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries reassessed andchanged the estimated useful lives of equipment in accordance with the amended Corporation Tax Law of Japan. As a result, operating income in the“industrial products” segment and “ceramics & materials” segment decreased by ¥62 million ($632 thousand) and ¥42 million ($429 thousand), respectively, for the year ended March 31, 2009, from the amounts that would have been recorded with the previous accounting method.

29

Information summarized by the geographic segments of the Noritake Group for the years ended March 31, 2009 and 2008 is as follows:
Japan

North
America

Europe

Asia

Other

Total

Elimination

Consolidated
Millions of yen

For the year 2009:
Operating revenue—net sales:
		 External customers
		 Intersegment sales/transfers
Operating costs and expenses
			 Operating income (loss)
Identifiable assets
For the year 2008:
Operating revenue—net sales:
		 External customers
		 Intersegment sales/transfers
Operating costs and expenses
			 Operating income
Identifiable assets¥ 97,630 ¥ 9,657 ¥ 2,550 ¥ 2,729¥ 418 ¥ 112,984 ¥— ¥ 112,984
		 9,195 		
57 		 121 		2,492 		 11 		 11,876 		(11,876) 		
—		106,825 		 9,714 		2,671 		5,221 		429 		124,860 		(11,876) 		112,984
		105,712 		 9,759 		2,639 		5,733 		417 		124,260 		(12,084) 		112,176¥ 1,113 ¥(45) ¥
32 ¥ (512) ¥ 12 ¥
600 ¥
208 ¥
808
¥ 84,957 ¥ 4,651¥ 1,090¥ 2,496¥ 390¥ 93,584¥ 19,493¥ 113,077¥ 113,599 ¥ 13,143 ¥ 3,109 ¥ 2,846¥ 671 ¥ 133,368 ¥— ¥ 133,368
		 12,964 		
47 		 139 		2,700 		 5 		 15,855 		(15,855) 		
—		126,563 		13,190 		3,248 		5,546 		676 		149,223 		(15,855) 		133,368
		116,613 		13,006 		3,033 		5,530 		655 		138,837 		(15,957) 		122,880¥ 9,950 ¥184 ¥ 215 ¥16¥ 21 ¥ 10,386 ¥102 ¥ 10,488¥ 104,124 ¥ 6,263¥ 1,927¥ 4,286¥ 600¥ 117,200¥ 24,444¥ 141,644

Thousands of U.S. dollars

For the year 2009:
Operating revenue—net sales:
		 External customers
		 Intersegment sales/transfers
Operating costs and expenses
			 Operating income (loss)
Identifiable assets$ 996,224 $ 98,541 $ 26,020 $ 27,847 $ 4,266 $ 1,152,898 $— $ 1,152,898
		 93,827 		 581 		 1,235 		25,429 		 112 		 121,184 		(121,184) 		
—		1,090,051 		99,122 		27,255 		53,276 		4,378 		1,274,082 		(121,184) 		1,152,898
		1,078,694 		99,581 		26,928 		58,500 		4,256 		1,267,959 		(123,306) 		1,144,653$
11,357 $ (459) $327 $ (5,224) $ 122 $
6,123 $
2,122 $
8,245
$ 866,908 $ 47,459 $ 11,123 $ 25,469 $ 3,980 $ 954,939 $ 198,908 $ 1,153,847

Note: 1.	Identifiable assets in the elimination column represent unallocated general corporate items such as cash and short-term and long-term investments insecurities, net of intersegment balances.
2. Changes of accounting method or estimates:
		 (The adoption of Accounting Standard for Measurement of Inventories)		As described in Note 2(e), the Company and its domestic consolidated subsidiaries adopted “Accounting Standard for Measurement of Inventories” fromthe year ended March 31, 2009. As a result, operating income of the “Japan” segment decreased by ¥140 million ($1,429 thousand) for the year
ended March 31, 2009, from the amounts that would have been recorded with the previous accounting method.
		 (Change of useful lives of equipment for depreciation)
		As disclosed in Note 2(g), effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries reassessed andchanged the estimated useful lives of equipment in accordance with the amended Corporation Tax Law of Japan. As a result, operating income in the“Japan” segment decreased by ¥104 million ($1,061 thousand) for the year ended March 31, 2009, from the amount that would have been recordedwith the previous accounting method.

For the years ended March 31, 2009 and 2008, overseas sales, which included export sales from Japan and net sales of overseas consolidated subsidiaries other than Japan, were summarized as follows:
Millions of yen

30

Thousands of
U.S. dollars

2009

2008

2009

North America
EuropeAsia
Other¥ 10,840
		 3,399
		18,667
		 790¥ 33,696¥ 14,226
		 4,173
		19,117
		 1,108¥ 38,624$ 110,612
		 34,684
		190,480
		 8,061$ 343,837

Percentage of overseas sales to total consolidated net sales		 29.8%

		 29.0%

Noritake Co., Limited

Annual Report 200931

Overseas Net work
(As of June 26, 2009)

Industrial Products GroupNORITAKE CO., INC.
11411 WILLIAMSON ROAD,CINCINNATI, OH 45241, U.S.A.
Tel: 1-513-605-3600
1-800-688-8234 (TOLL FREE)
Fax: 1-513-605-3618
1-800-321-2062 (TOLL FREE)NORITAKE (AUSTRALIA) PTY. LIMITEDTHE SIAM MOULDING PLASTER CO., LTD.

UNIT 4, 153 BEAUCHAMP ROAD,

NO. 32 MOO7 NONGPLAKRADI ROAD,

MATRAVILLE, N.S.W. 2036, AUSTRALIANONGPLING, NONGKHAE, SARABURi, 18140,

Tel: 61-2-9316-7123 Fax: 61-2-9316-7085

THAILANDNORITAKE EUROPA GmbH.
KURHESSENSTRASSE. 3, D-64546

PT. NORITAKE INDONESIAMÖRFELDEN-WALLDORF, GERMANYBLOK A-II NO. 9A, KAWASAN BERIKAT,

Tel: 49-61-05-2092-20 Fax: 49-61-05-2092-99

KOTA BUKIT INDAH, PURWAKARTA, 41181,

NORITAKE EUROPA GmbHNORITAKE LANKA PORCELAIN (PRIVATE) LIMITEDKURHESSENSTRASSE 3, D-64546

COLOMBO OFFICE/SHOW ROOMMÖRFELDEN-WALLDORF, GERMANY

No.580, NEGOMBO ROAD, MABOLE, WATTALA,

Tel: 49-61-05-2092-40/41
Fax: 49-61-05-2092-99

SRI LANKA
Tel: 94-11-2946149 Fax: 94-11-2946144

NORITAKE SHANGHAI TRADING CO., LTD.
ROOM 701A AETNA TOWER NO.107,

Electronics GroupZUN YI ROAD, CHANG NING DISTRICT,NORITAKE CO., INC.

SHANGHAI, 200051 CHINA

2635 CLEARBROOK DRIVE,

Tel: 86-21-6237-5667 Fax: 86-21-6237-5790

ARLINGTON HEIGHTS, IL 60005, U.S.A.

JAWA BARAT, INDONESIA
Tel: 62-264-351311 Fax: 62-264-351314
Environmental Engineering GroupNORITAKE TAIPEI CO., LTD.
NO. 37, ALLEY 105, LANE 514, JUNGJENG RD.,SHINJUNG CITY, TAIPEI, TAIWAN 242, R.O.C.
Tel: 886-02-2907-1221 Fax: 886-02-2905-1529
NORITAKE CO., LIMITEDSHANGHAI OFFICENORITAKE (Thailand) CO., LTD.

Tel: 1-847-439-9020 Fax: 1-847-593-2285

ROOM 701A AETNA TOWER NO. 107,1096 NEW ROAD, KWAENG BANGRAK,ITRON (U.K.) LIMITEDKHET BANGRAK, BANGKOK 10500, THAILAND

VANTAGE HOUSE, HARFREY’S ROAD,

SHANGHAI, 200051 CHINA

Tel: 66-2-235-1688, 236-2364
Fax: 66-2-236-2365

HARFREY’S INDUSTRIAL ESTATE,GREAT YARMOUTH, NR31 0LS,

SIAM COATED ABRASIVE CO., LTD.

UNITED KINGDOMAMATA CITY INDUSTRIAL ESTATE 7-126

Tel: 44-1493-601144 Fax: 44-1493-600343

MOO 4, T. MABYANGPORN, A. PLUAKDAENG, RAYONGNORITAKE EUROPA GmbH

21140, THAILAND

KURHESSENSTRasse. 3, D-64546

Tel: 66-3-865-0150 Fax: 66-3-865-0158

MÖRFELDEN-WALLDORF, GERMANY
Tel: 49-61-05-2092-20 Fax: 49-61-05-2092-99

Tabletop GroupNORITAKE CO., INC.

Ceramics & Materials Group

15-22 FAIR LAWN AVENUE,NORITAKE CO., INC.

FAIR LAWN, NJ 07410, U.S.A.

2635 CLEARBROOK DRIVE,

Tel: 1-201-796-2222 Fax: 1-201-796-9155

ARLINGTON HEIGHTS, IL 60005, U.S.A.

NORITAKE CANADA LIMITED

Tel: 1-847-439-9020 Fax: 1-847-593-2285

90 NUGGET AVENUE, AGINCOURT,NORITAKE (Thailand) CO., LTD.

ONTARIO, M1S 3A7, CANADA

1096 NEW ROAD, KWAENG BANGRAK,

Tel: 1-416-291-2946 Fax: 1-416-292-0239

KHET BANGRAK, BANGKOK 10500,

NORITAKE CO., LIMITEDTHAILANDDUBAI REPRESENTATIVE OFFICE

Tel: 66-2-236-2364, 66-2-235-1688

P.O. BOX 18013, DUBAI, U.A.E.

Fax: 66-2-236-2365

Tel: 971-4-8811491 Fax: 971-4-8871443

32

Tel: 66-36-373578 Fax: 66-36-373577

ZUN YI ROAD, CHANG NING DISTRICT,
Tel: 86-21-6237-5789 Fax: 86-21-6237-5790

Corporate Data

History of NORITAKE(As of June 26, 2009)(As of June 26, 2009)

Head Office

1876	Ichizaemon Morimura established1-36, Noritake-Shinmachi

Morimura-kumi in Tokyo, and Toyo

3-chome, Nishi-ku, Nagoya

Morimura and others established451-8501, Japan

the Hinode Shokai (Morimura Brothers)

Tel: +81-52-561-7112

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

1904	Established Nippon Toki Gomei Kaisha
1907	Began production of grinding wheels for

Date of Establishment

in-house use

January 1904

1914	Succeeded in production of the first din-Number of Employees

1917	Sanitary ware division spun off toner set in Japan
4,454 (Consolidated)become TOTO Ltd.
	Established Nippon Toki Co., Ltd.

Stock Exchange Listings

1919	Electric insulator division spun off toTokyo Stock Exchange

become NGK Insulators Ltd.

Nagoya Stock Exchange

1932	Began production of first bone china
in Japan

Transfer Agent and Registrar

1939	Began full-scale production of industrial

Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome,

grinding wheels

1943	Tableware production stopped on

Chiyoda-ku, Tokyoaccount of World War II, changed to full

100-8212, Japanproduction of grinding wheels(only bone china production continued

Annual Meeting of Shareholders
The annual meeting of shareholders of theCompany is normally held in June each year in

to preserve technique)1945	Production of tableware resumed
1947	Established Noritake Co., Inc. in

Nagoya, Japan.
In addition, the Company may
hold an extraordinary meeting of shareholders

the United States

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

whenever necessary by giving at least two

in Australia

1970	Established Noritake (U.K.) Ltd. in the
United Kingdom
	Began production of fine ceramic industrial products

1971	Began production of filtration equipment
1972	Established Noritake Lanka Porcelain(Pvt.) Ltd. in Sri Lanka

1973 Began production of diamond tools
1974	Established 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.,Ltd.

2001	Established Noritake Gypsum Co., Ltd.

weeks’ advance notice to shareholders.

1960	Began production of resinoid grinding

	Opened the Noritake Garden

wheels at the Kamori Plant

2002	Established Noritake Bonded

independent Auditors

1961	Began production of crystal glassware

	Abrasive Co., Ltd.

KPMG AZSA & Co.

	Began production of melamine ware2005	Established Noritake Shanghai Trading

1962	Began production of grinding machines1963	Began production of belt andCo., Ltd.

fabric abrasives

1968	Established Noritake Canada Ltd.
in Canada

1969	Began production of electronic products

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

33

Printed in Japan