ANNUAL REPORT 2012

NORITAKE CO., LIMITEDYear Ended March 31, 2012

INDUSTRIAL PRODUCTS

C E R A M I C S & M AT E R I A L S

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ProfileC O R P O R AT E D ATA

H I S T O R Y O F N O R I TA K E(As of June 28, 2012)(As of June 28, 2012)

HEAD OFFICE1876 Ichizaemon Morimura established

Noritake Co., Limited has developed technologies
acquired from ceramics manufacturing expertise andhas expanded its business into such fields as grinding and polishing tools,
electronic component materials and manufacturing equipment.
With a focus on developing new products and3-1-36, Noritake-Shinmachi

Morimura-kumi in Tokyo, and Toyo

Nishi-ku, Nagoya, Aichi

Morimura and others established451-8501, Japan

the Hinode Shokai (Morimura Brothers)

Tel: +81-52-561-7112

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

DATE OF ESTABLISHMENT

technologies for energy-related industries—

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

1914 Succeeded in production of the firstJanuary 1904

dinner set in Japan

including solar cells, an area of promising growth—

NUMBER OF EMPLOYEESNoritake seeks to create new value for customers and society.

4,023 (Consolidated)

1917 Sanitary ware division spun off tobecome 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

Medium-Term Business Plan

ADMINISTRATOR OF SHAREHOLDERREGISTRY

1939 Began full-scale production of industrial

Since the worldwide economic recession, the business environment has enormously changed.

Mitsubishi UFJ Trust and Banking

1943 Tableware production stopped on

Demand is shifting to emerging countries and environmental problems are seriously worsening.

Corporationaccount of World War II, changed to full

4-5, Marunouchi 1-chome,

production of grinding wheels

Chiyoda-ku, Tokyo(only bone china production continued

100-8212, Japanto preserve technique)in Japan

Confronted with this situation, Noritake formulated a new Medium-Term Business Plan, which started in April 2010.
The fundamental points of these strategies are:1. Selecting and concentrating businesses

ANNUAL MEETING OF
SHAREHOLDERS

2. Strengthening new products and technological development

The annual meeting of shareholders of the

3. Penetrating overseas markets

Company is normally held in June each year
in Nagoya, Japan.

4. Expanding overseas production

hold an extraordinary meeting of shareholders
whenever necessary by giving at least two

Through the above actions, the Noritake Group is taking steps to secure greater corporate value.

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

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

In addition, the Company may

5. Upgrading management infrastructure

grinding wheels

weeks’ advance notice to shareholders.

INDEPENDENT AUDITORS

1960 Began production of resinoid grinding
wheels at the Kamori Plant

1961 Began production of crystal glassware
Began production of melamine ware

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

KPMG AZSA LLC

1968 Established Noritake Canada Ltd.
in Canada

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

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

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

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

1981 Changed the Company name to
Noritake Co., Limited

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

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

1998 Established Noritake Dental Supply
Co., Limited.

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

2002 Established Noritake Bonded
Abrasive Co., Ltd.

2005 Established Noritake Shanghai Trading
Co., Ltd.

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

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

2011 Abosorbed Noritake Bonded Abrasive

Began production of fine ceramicCo., Ltd. and Noritake Super Abrasiveindustrial products

Co., Ltd.

Contents
Caution with respect to forward-looking statements
1 Six-Year Financial Summary
12 Corporate Governance

2 Message from the Management

14 Consolidated Financial Review

5 Review of Operations

9 Topics

10 Research & Development

17 Consolidated Balance Sheets

18 Consolidated Statements of Income / Consolidated Statements of Comprehensive Income

19 Consolidated Statements of Changes in Net Assets

20 Consolidated Statements of Cash Flows

37 Report of Independent Auditors

21 Notes to Consolidated Financial Statements

38 Overseas Network / Directors, Corporate Auditors and Executive Officers

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

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

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

Millions of yen

Thousands of
U.S. dollars

2012

2011

2010

2009

2008

2007

2012

¥102,152¥105,378¥ 87,596¥112,984¥133,368¥129,240$1,245,756

Operating income (loss)

1,880

4,326

(1,665)808

10,4889,463

22,927

Income (loss) before income
taxes and minority interests

5,972

3,703

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

10,39872,829Net income (loss)

4,468

1,858

(4,501)(6,861)

5,669

5,796

54,488

13.16¥ (31.32)¥ (46.82)¥¥117,735¥116,126¥109,595¥113,077¥141,644¥148,827$1,435,793

Total net assets

68,89665,42966,711

69,19285,908

87,108840,195

Capital ratio (%)

51.5

49.5

54.2

55.0

55.1

53.3

For the year:
Net sales

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

¥

31.99

¥

38.36

¥

39.20

$

0.39

At year-end:
Total assets

Note: The U.S. dollar amounts above have been translated at the rate of ¥82 to US$1.

Net Sales

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

(Millions of yen)

(Millions of yen)

(Yen)

112,984

31.99

4,468

4,326

105,378
102,152
87,596

1,858

1,880

(6,861) (4,501)

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13.16

(46.82) (31.32)

808(1,665)

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NORITAKE CO., LIMITED’12

Annual Report 2012

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MESSAGE FROM THE MANAGEMENT

Hitoshi Tanemura
President and Representative Director

The management of Noritake Co., Limited wishes to thank all stakeholders
for their support over the past fiscal year. In addition, we would like totake this opportunity to comment on the Group’s results for fiscal 2012,
ended March 31, 2012.

Performance Overview for Fiscal 2012
A significant number of people were affected by the Great East Japan Earthquake in March
2011, the subsequent nuclear accident as well as last year’s severe flooding in Thailand.
We would again like to extend our deepest sympathies to the victims of these disasters andour sincerest wish for the earliest possible recovery of affected areas.
The damage inflicted by these disasters seriously impacted the Japanese economy.
Furthermore, countries worldwide curbed fiscal expenditure in the aftermath of the 2008
financial crisis, leading to a major decrease in demand in the television, electronics andsemiconductor industries. Such factors as financial instability in Europe, the strong yen, andhigher natural resource and fuel prices placed additional drag on global economic growth.
Noritake’s performance was severely affected by these worsening economic conditions. Despite achieving a year-on-year net sales increase in the first half of fiscal 2012,full-year net sales decreased 3.1% to ¥102,152 million as orders fell off during the second
half in Noritake’s mainstay Industrial Products Group and Ceramics & Materials Group.
Looking at earnings, operating income fell 56.6% year on year to ¥1,880 million
despite our efforts to reduce costs. This decrease reflected deteriorating export profitability

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NORITAKE CO., LIMITED

Annual Report 2012

accompanying strong yen rates as well as the inability of cost reductions to cover pricehikes for such items as raw materials, petroleum and gas. Nevertheless, net income jumped
140.4% to ¥4,468 million primarily owing to gains from the sale of land in Atsugi, Japan.
Amid these operating conditions, Noritake is currently implementing its three-year
medium-term business plan, which commenced in April 2010.
The following five key initiatives form the core strategies of this plan, which we havedone our utmost to achieve:
1. Selecting and concentrating businesses
2. Strengthening new products and technological development
3. Penetrating overseas markets
4. Expanding overseas production
5. Upgrading management infrastructure“Selecting and concentrating businesses” involved forming a partnership with Kuraray Co.,
Ltd. with regard to its dental business, streamlining the tableware and electronic display
businesses, and promoting the development of solar cells and other new energy fields. In
terms of “Strengthening new products and technological development,” we developed andimproved products in promising fields, including electronic paste used as electrodes on
solar cells, diamond wire used for slicing silicon ingots for solar cells or sapphire ingots forLEDs, and kilns and dry furnaces used to manufacture lithium-ion batteries.
“Penetrating overseas markets” focused on strengthening our sales capacity, mainly
in such rapidly growing Asian markets as China and Thailand. In China, we established ashowroom to display our luxury tableware in Shanghai as well as an industrial products
sales base in Guangzhou. For “Expanding overseas production,” we have decided to construct a new resinoid grinding wheel plant in China; build a new diamond tool plant andexpand an existing gypsum plant in Thailand; and promote integrated production at our
cubic boron nitride (CBN) grinding wheel plant in the United States.
Finally, “Upgrading management infrastructure” entailed completing the scheduled
merger and reorganization of Group companies through Noritake Co., Limited’s absorptionof two subsidiaries; one for grinding wheel and the other for diamond tool manufacturing.
Along with streamlining the Company’s administrative departments, we bolstered andimproved the efficiency of our management structure in such fields as compliance, labor
health and safety, and environmental management.

NORITAKE CO., LIMITED

Annual Report 20123

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

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

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

Hitoshi Tanemura
President and Representative Director

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Annual Report 2012

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

INDUSTRIAL PRODUCTS“Gear Ace”: Vitrifiedbonded Wheel for Gear
Grinding

Breakdown of Sales

Business Status

Business Strategy

In Japan, demand from major customers in the

The relocation of Noritake’s grinding wheel

automobile, steel and bearings industries wasplant from the headquarters to the Miyoshi Site

relatively steady despite the impact of the disas-

will improve product quality and productivity.

ter in the first half of fiscal 2012. Upon entering
the second half, orders became sluggish due to

36.4

%

In addition, we are working to enhance priceand service competitiveness by expanding

flooding in Thailand. Accordingly, sales for theoverseas production. To this end, we areentire fiscal year remained virtually unchanged

expediting the construction of new plants inyear on year. Overseas, sales dipped slightly
due mainly to a slowdown of the electronics andChina and Thailand as well as an integrated
Sales(Millions of yen)semiconductor industries, a decrease in pricecompetitiveness accompanying the strong yen,

cubic boron nitride (CBN) grinding wheel plantin the United States.

37,422

37,190’11’12

and flooding in Thailand. As a result, consolidated net sales of the Industrial Products Groupdeclined 0.6% year on year to ¥37,190 million.

NORITAKE CO., LIMITED

Annual Report 2012

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C E R A M I C S & M AT E R I A L S“Maxsunny”: Paste for
Solar Cells

Business Status

Breakdown of Sales

Business Strategy

Sales of electronic pastes rose on the back of

In regard to electronic pastes, we will work to

price hikes for the key material, silver, which

establish differentiated technologies for use inpushed up sales prices. This increase occurred

solar cells while promoting the development

despite significant production adjustments undertaken by solar cell manufacturers in the second

34.7

%

of applications in numerous fields. In addition,
Noritake will take steps to improve sales ofhalf of fiscal 2012. Thick film circuit substrates

gypsum in Asia through the early completion

enjoyed slightly higher sales in line with a reboundof construction to expand production facilities

in automobile-related demand. At the same time,sales of gypsum with strong demand in China andoperated by its Thailand-based subsidiary.
Sales(Millions of yen)ceramic cores for generator turbines increased.
However, sales of vacuum fluorescent displays

Regarding such products as thick film circuit
substrates and ceramic cores, we will reduce

39,92535,480(VFDs) decreased, reflecting the elimination of

costs while promoting increases in sales
and earnings.

unprofitable products and strong yen rates.
Despite steady sales of ceramic materials, domestic and export-related sales of electronic ceramicmaterials dropped significantly because of aslump in the electronics industry. As a result, consolidated net sales for the Ceramics & Materials
Group fell 11.1% year on year to ¥35,480 million.
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Annual Report 2012

ENGINEERING“Thin Cut Master”: Carbide Tipped Circular
Sawing Machine

Breakdown of Sales

Business Status

Business Strategy

In the mainstay heat technology business,

Noritake will promote new product develop-

favorable sales related to lithium-ion battery

ment in the field of kilns and dry furnaces forelectrode materials led to higher overall sales,

use in the highly promising new energy field.

in spite of the slump in the electronics industry.
The fluid technology business experienced

21.0

%

In addition, we will take steps to reduce
costs and improve price competitiveness byhigher sales of coolant filtration equipment

expanding overseas procurement including

used in the bearing and machine tool indus-

filtration equipment and grinding machines.

tries as well as inline-mixing equipment for thechemical and food industries. Despite weak

Sales
(Millions of yen)sales of grinding machines in the steel industry, the machinery business enjoyed a21,467
19,546

rebound in sales mainly on the back of overseas demand for carbide tipped circular sawing machines. As a result, consolidated net
sales for the Engineering Group increased
9.8% year on year to ¥21,467 million.

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NORITAKE CO., LIMITED

Annual Report 2012

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TABLETOP“ISLAY”: Noritake Bone China

Business Status

Breakdown of Sales

Business Strategy

In Japan, sales fell due to persistently harsh

Noritake will work to expand sales of its luxury

conditions in relation to mainstay department

and casual tableware brand “Cher Blanc”,

stores, hotels and restaurants, while sales towhich was released at the end of the previous

airlines rose. Announcing the launch of highend items in October 2011 as well as new

7.8%

fiscal year. At the same time, we will focus on
improving brand power and increasing orders

luxury and casual tableware in December

by developing and releasing high-end items.

2011, Noritake began making renewed efforts

Overseas, we will begin building distribution

to develop domestic markets. Although sales
in Asia were favorable, overseas sales werechannels in emerging markets in Asia,
Sales(Millions of yen)weak overall due to sluggish consumption in
Europe and the strong yen. As a result, theparticularly China, while reducing costs
and improving profits mainly by boosting

8,485
8,015

production yields.

Tabletop Group posted a year-on-year decline
in consolidated net sales of 5.5% to ¥8,015
million.

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NORITAKE CO., LIMITED

Annual Report 2012

TOPICS

1.

“Masterpiece Collection”

Noritake launched the “Masterpiece Collection” with an event at the Imperial HotelTokyo on October 13, 2011. The “Masterpiece Collection” signifies our lineup of
high-end tableware created using advanced technologies and techniques,accumulated in Noritake’s history of more than 100 years.
During this event, we showcased two different types of tea sets “Queen’s
Garden” bone china and “Kingin Sai Hoo Mon” white porcelain (featuring phoenix
decoration in gold and silver). Through these two new products, we aim to make the“Masterpiece Collection” a globally unrivaled western-style
tableware brand.

“Queen’s Garden”

True to its name, “Queen’s Garden” is characterized byhighly sophisticated forms and elegant designs. In addition,“Kingin Sai Hoo Mon”, features gold and silver phoenix
designs embossed on our newly developed white porcelain,expressing the essence of Japan through our uniquely“Kingin Sai Hoo Mon”

2.

creative worldview.

Expansion of Gypsum Facility in Thailand

Noritake has expanded its Thailand gypsum facility operated by The Siam Moulding
Plaster Co., Ltd. (SMP). The increasing production in recent years of sanitary wareand ceramic ware throughout Southeast Asia has led to a drastic increase in the
demand for gypsum moulding plaster. Moreover, the current building boom in Thailand
is also expected to create high demand for building materials in which gypsum isused. The purpose of our facility expansion, therefore, is to accommodate thisincreasing demand for gypsum.
Overview of facility expansion
Facility space
Employees
Production capacity
Investment amount3.

After expansion
16,900m2
Approx. 180
81,000t/year¥1 billion

Before expansion
9,850m2
Approx. 150
54,000t/year

Expanded Gypsum Facility at SMP

Construction of a Grinding Wheel Plant in Suzhou, China

China boasts over 40% of the global share of crude steel production. This has generated significant demand for resinoid grinding wheels, especially snagging wheels usedin steel milling. This high demand for these specialized grinding wheels is covered byimporting in China. To address this need and enhance competitiveness, Noritake will
promote local production of grinding wheels. This represents a shift away from theprevious business model of exporting grinding wheels from Japan to cover Chinese
market demand with local production. Through these efforts, we aim to expand
grinding wheel business operations that target China’s burgeoning steel industry.
1) Company name

Noritake Abrasives (Suzhou) Co., Ltd.

2) Location

Suzhou City, Jiangsu Province, China

3) Capital

US$13.7 million (approx. ¥1.1 billion)
Noritake: 70%

4) Investment ratio

Carbo Tzujan Industrial Co., Ltd.: 30%

5) Investment plan

US$14.8 million (approx. ¥1.2 billion)
Initial year: approx. ¥200 million

6) Sales projections

NORITAKE CO., LIMITED

Noritake Abrasives (Suzhou) Co., Ltd.

Fiscal 2017: approx. ¥1 billion

Annual Report 20129

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

INDUSTRIAL PRODUCTS

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 tothe business divisions. Noritake carries out product development for new
technologies and new fields in collaboration with each business division
and Group company.
The R&D expenditures of the Noritake Group amounted to ¥3,041
million in the fiscal year under review.
R&D activities by business segment were as follows.
“Gear Ace”: Vitrified-bonded Wheel for
Gear Grinding

To respond to expanding sectors andmarket changes, Noritake has been
focusing its efforts on strengthening its
development capabilities by relying on
basic technologies and developing differentiated products. Noritake is augmenting the development of ecologically
R&D Expenditure(Millions of yen)friendly processing tools in such growthareas as solar cells and LEDs. In the

3,041
2,887

2,853

transportation equipment field (which
includes automobiles, railways and aircraft), and also in the medical field, weare promoting the development of higherperformance, lower-cost products withthe aim of addressing market changes.
The R&D expenditures in the Industrial
Products segment totaled ¥790 million in
the fiscal year under review.

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R&D for New Products and Technologies
Noritake focuses on developing new products by utilizing its materials,
calcination and fabrication technologies, while augmenting and expanding
the applications of such technologies. Noritake actively promotes joint R&D
and technological exchanges with outside companies, universities andresearch institutions. At the same time, we participate in government
projects and other related activities. Through these initiatives, each Noritake
business segment works in unison to undertake strategic R&D with along-term perspective.
Core basic R&D expenditures totaled ¥496 million.

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NORITAKE CO., LIMITED

Annual Report 2012

C E R A M I C S & M AT E R I A L S

ENGINEERINGTABLETOP“Maxsunny”: Paste for Solar Cells“Thin Cut Master”: Carbide Tipped Circular“ISLAY”: Noritake Bone China

Sawing Machine

In the electronic paste business, theThe Engineering segment conducts

The Tabletop segment continues to

Ceramic and Materials segment focuses on

research into products and equipment

work to develop new decorating

the development and commercialization of

for future growth fields that include

technology and enhance the quality

electrode paste for solar cells that featurebatteries and other energy relatedof porcelain.

high-generation efficiency. In addition, we

products.

are developing pastes for insulating and

The R&D expenditures in thiselectrode-layered LEDs as well as small

segment amounted to ¥244 million.

The R&D expenditures in thissegment totaled ¥66 million
in fiscal 2012.

electronic components installed in smartphones and tablet PCs.
In the ceramics business, we promoted
the ongoing development of highperformance ceramic carriers for chemicalplants and thick-film, multi-layer substrates
for automobiles. We also developed“˚C Monarc”, a ceramic core used inprecision casting that features superior
heat resistance.
KCM Corporation is advancing thedevelopment of particulate material compounds for use in the growth field of multilayer ceramic capacitors, zirconium
materials, high-purity silica and materials
used in fuel cells.
Moreover, Noritake Itron Corporation—a leading manufacturer of VFD tubes and
VFD module products—is currently developing a VFD message display, mainly usedin stores, information and reception displays in public places, and disaster-related
wireless systems.
The R&D expenditures in this segment
were ¥1,443 million.

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Annual Report 201211

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

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

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

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

advances the documentation of adherence to rules and operational

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

the law. Noritake has also introduced an executive officer system toto financial reporting. Furthermore, with regard to the stipulation of inter-clarify executive responsibilities and to delegate authority with the objective

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

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

a month to ensure uniformity of understanding across the entire Group.

Through the Compliance Committee and the activities of persons

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

Article 459-1 of the Corporation Law are addressed as matters for res-authority, the Company is working to bolster its internal controls systemolution by the Board of Directors, unless otherwise stipulated by law,from the compliance standpoint.

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

lished a structure to perform accurate and quick decisions after careful

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

whole, Noritake works to maintain risk management systems to pre-Directors are elected at the Company’s Annual General Meeting ofvent the Group from entering into a crisis situation due to misconduct

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

associated with the violation of the law.
Should the Group be faced with any risk that might damage its

rights is obtained, although not by cumulative voting. Noritake limits thecorporate value, such as a case of misconduct, an accident or disaster,number of directors to 18. The tenure of directors at Noritake and the“Risk Management Regulations” have been formulated to minimize

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

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

to today’s turbulent business environment and to clarify management

immediate response.

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

be able to exempt directors and auditors (including former directors

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

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

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

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

Board of Directors and auditors.

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

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

Noritake aims to affect smooth operations by reducing the quorum
necessary for extraordinary resolutions at the General Meeting of

the Executive Council.
The Board of Auditors is composed of two full-time corporate audi-

Shareholders. Resolutions proposed for approval at the Company’s

tors and two outside auditors. Besides stipulating such matters as

Annual General Meeting of Shareholders, in accordance with the provi-

audit guidelines and the division of duties, the Board of Auditors

sions of Article 309-2 of the Corporation Law, must be ratified by areceives reports from each auditor providing the actual audit status andtwo-thirds majority vote of shareholders in attendance whose total vot-

results and expedites the flow of information between the Board ofing rights account for one-third or more of all exercisable voting rights.

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

Although the establishment of a “company with committees” isdepartment. In addition to working to gather information, auditors

recognized, Noritake decided to use a corporate auditor system.

attend meetings of the Board of Directors and Executive Council aswell as other important meetings, where they receive status reports on(ii) Reasons for applying corporate governance system

the execution of executives’ duties and ask for explanations when theWith the advancing globalization of business, the effects of corporateneed arises. Furthermore, Noritake’s accounting auditors maintain theiractivities are being held to increasingly strict standards of corporate

independence and confirm the implementation of appropriate audits.

social responsibility. Each Group executive and employee is heir to the

The Board of Auditors receives status reports from the accounting

spirit of Noritake’s founder, on which basis the Noritake Groupauditors on the execution of duties and requests explanations when theStatement of Corporate Ethics was formulated. In observing and put-need arises.

ting that statement into practice, they apply this corporate governanceIn the Audit Office, auditors and accounting auditors work in close

structure to realize a Noritake Group with even higher standards of cor-collaboration to maintain the effectiveness of internal audit implementation.

porate ethics.

12

NORITAKE CO., LIMITED

Annual Report 2012

Noritake’s independent auditor is KPMG AZSA LLC as establishedby contractual ties, which assigns managing partners to Noritake toimplement audits from an independent perspective.
In the fiscal year under review, the managing partners assigned to
Noritake by KPMG AZSA LLC were as follows:(4) COMPENSATION TO DIRECTORS AND AUDITORS(i) Total executive compensation by executive officer category,
total compensation by type, and number of officers eligible
Executive
Officer
Category

Compensation
Amount(Millions of yen)

Basic
Stock
Compensation Options(Specified employees and managing partners)
CPA Kanemaru Yasui
CPA Chika Matsumoto
CPA Hideki Saito(Assistants)

Total Compensation by Type(Millions of yen)

No. ofOfficers
Eligible

Contribution Retirement
Benefits

Director

360

284

—

—

76

11

Auditor (excl. outside auditors)

40

32

—

—

8

3

Outside auditor

21

16

—

—

4

2

13 CPAs and 10 others(ii) Policy details and decision-making process with regard to(3) OUTSIDE DIRECTORS AND AUDITORS
Noritake has two outside auditors.
No personal, capital or business relationships or other conflicts ofexecutive compensation and its methods of calculation
At the 109th Annual General Meeting of Shareholders, which was heldon June 28, 1990, the decision was taken to limit Noritake’s total exec-

interest exist between Noritake and its outside auditors Yasumasa

utive compensation to ¥40 million or less per month for directors andGomi and Kazutoyo Shinohara, who were in office for the fiscal year

¥6 million or less per month for auditors.

under review.
Furthermore, they reflect their wealth of experience and broad
insight as business managers in Noritake audits.
Together with the two full-time corporate auditors, the outside
auditors are mandated to audit the Board of Directors in the execution(5) DETAILS OF COMPENSATION PAID TO INDEPENDENTAUDITOR, ETC.
(i) Details of independent auditor compensation, etc.
Categoryof its duties and the operations and assets of Noritake and its subsid-

Previous Consolidated
Accounting Year

Consolidated Accounting
Year under Review

Compensation
Compensation
Compensation
Compensation
Based on Audit
Based on Non- Based on Audit
Based on NonCertification Services Auditing Services Certification Services Auditing Services(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)iaries. In addition, the outside auditors conduct audits based on reports
received from the independent accounting auditors regarding theCompany’s consolidated financial statements. In addition, working
closely with the Audit Office, the outside auditors contribute to efficient

Parent company

57

8

55

2

internal audits.

Consolidated
subsidiary

21

—

21

—

Total

78

8

76

2

The Company appoints outside corporate auditors with the expectation that they will perform audits in an appropriate and objective manner based on their specialized knowledge. Although the Company’s
rules and regulations do not stipulate the independence of outside(ii) Other significant details regarding compensation

auditors, we appoint them in line with our basic philosophy that they

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

have no conflict of interest with ordinary shareholders.

audit certification services of ¥18 million to KPMG LLP, which belongs

The Company concludes limitation of liability contracts with eachto the same corporate network as the Company’s independent auditor,

outside auditor in accordance with the provisions of Article 423-1 of thein the consolidated accounting year under review. In the previous con-

Corporation Law. As such, the maximum amount of liability stipulated

solidated accounting year, the amount for such services had totaledby the aforementioned contracts is the minimum amount determined¥20 million.

by law.
With regard to management and decision-making functions as wellas its Board of Directors, which fulfills the management oversight func-(iii) Details of non-auditing services provided to the Company by
the independent auditor

tion in terms of the business execution of its directors, Noritake

In the year ended March 31, 2012, the Company paid compensation tostrengthens management oversight by having two of four auditors fromits CPA for such non-auditing services as advisory services in connec-

outside the Company. In corporate governance, Noritake places thetion with the introduction of International Financial Reporting Standards

utmost importance on external, objective and neutral management(IFRS) and the drawing up of papers, such as letters of comfort on theoversight functions. On the grounds that audits are implemented byissuance of corporate bonds.

two outside auditors, Noritake has not elected any outside directors as
the external management oversight function is adequately performed(iv) Policy for determining compensation to independent auditors

by the system that is in place.

The Company calculates compensation to be paid to its CPAs, etc.
taking into account such factors as the number of days of the audit
and the special characteristics of Noritake’s size and operational
characteristics.

NORITAKE CO., LIMITED

Annual Report 201213

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

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

102,152

87,59636.0

SCOPE OF CONSOLIDATION
Composed of 28 subsidiaries and 8 associates, the Noritake Group is engaged in the
manufacture and sale of products in fourbusiness segments—Industrial Products,
Ceramics & Materials, Engineering, andTabletop—as well as the provision of services
related to these segments.

35.0

31.2

10

11

12

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

4.1
1,880

1.8

(1.9)

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

(1,665)

10

11

12

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

4.4
1,858

1.8

(5.1)
(4,501)

10

14

11

CERAMICS & MATERIALS SEGMENT
In the Ceramics & Materials Group, manufacturing of electronic paste and ceramics is conducted by the Company. Such activities are bolsteredby P.T. Noritake Indonesia along with one subsidiary and two associates. VFD tubes are produced and supplied to the Company by
Noritake Itron Corporation. In addition, the subsidiary KCM Corporation and its subsidiaries
produce ceramic materials, a portion of which
are supplied to the Company.
In the area of the Company’s domestic andoverseas sales activities, actual sales are
conducted by the integrated manufacturing
and sales subsidiary Noritake Itron Corporation.
U.S.-based Noritake Co., Inc. and three othersubsidiaries conduct sales for the Ceramics &Materials Group in overseas markets. KCM
Corporation undertakes direct sales of most ofthese products both in Japan and overseas.
Moreover, the Company’s associate, Kuraray
Noritake Dental Holdings Co., Limited, which has
its own subsidiaries, Kuraray Medical Inc. and
Noritake Dental Supply Co., Limited, engages
in the manufacture and sale of dental-related
products.
ENGINEERING SEGMENT
In the Engineering Segment, the Company manufactures segment products. Various types ofindustrial furnaces are produced and supplied to
the Company by the subsidiary Noritake TCF
Co., Ltd. The Company’s Taiwanese subsidiary
Noritake Taipei Co., Ltd. manufactures and supplies to the Company static mixers. Noritake
engages in sales activities in Japan and overseas.
In addition to the Company’s sales activities
in Japan and overseas, the U.S.-based Noritake
Co., Inc. conducts sales for the Engineering
Segment in overseas markets.
TABLETOP SEGMENT
In the Tabletop Segment, in addition to theCompany’s production activities, porcelain tableware is manufactured by Noritake Lanka
Porcelain (Private) Limited located in Sri Lanka
and one associate, which is supplied to
the Company.
The Company conducts sales for the
Tabletop Segment in the domestic and overseas
markets. In addition, a Noritake subsidiaryengages in sales in Japan, while the U.S.-based
Noritake Co., Inc. and four other subsidiaries
undertake sales in overseas markets.
Service operations in other areas are handled
by Noritake Garden Co., Ltd, two subsidiaries
and one associate. Philippines-based Noritake
Porcelana Mfg., Inc., which is currently in theprocess of liquidation, also engages in these
operations.
PERFORMANCE ANALYSIS
Consolidated net sales declined 3.1% year on
year to ¥102,152 million. The cost of goods sold

12

NORITAKE CO., LIMITED

Annual Report 2012rose 2.1% year on year to ¥77,983 million due
to rising material costs. Selling, general andadministrative expenses decreased 9.6% year
on year to ¥22,289 million. As a result, operating
income declined to ¥1,880 million from ¥4,326
million in the previous fiscal year.
Other income climbed to ¥4,092 million, a¥4,715 million turnaround from other expenses
totaling ¥623 million in the previous fiscal year.
Major contributing factors included gain on sales
or disposals of property and equipment andgain on changes in equity of associate.
As a result of the aforementioned, income
before income taxes and minority interests
amounted to ¥5,972 million. After accounting forincome taxes and minority interests, net income
totaled ¥4,468 million, and net income per sharerose to ¥31.99.
FINANCIAL POSITION ANALYSIS
Total assets stood at ¥117,735 million, up 1.4%,
or ¥1,609 million, from the previous fiscal yearend. Current assets totaled ¥63,848 million,
down ¥1,495 million, while non-current assets
amounted to ¥53,887 million, up ¥3,104 million.
Major factors contributing to the increase in total
assets included an increase in investments inunconsolidated subsidiaries and associates thatexceeded decreases in cash and cash equivalents and inventories.
Total liabilities as of March 31, 2012 stood at¥48,839 million, a decrease of 3.7% year on
year, or ¥1,858 million. This change was primarily attributable to decreases in notes andaccounts payable and deferred tax liabilities.
Total net assets at March 31, 2012 amounted to ¥68,896 million, up 5.3% year on year, or¥3,467 million. Major factors for the rise wereincreases in retained earnings and minority interests, which offset a decrease in accumulated
other comprehensive income. As a result, shareholders’ equity per share totaled ¥434.14, up¥22.85 compared with the previous consolidated fiscal year-end. The capital ratio improved to51.5% from 49.5% at the previous fiscal year-end.

NORITAKE CO., LIMITED

Annual Report 2012

CASH FLOW ANALYSISAs of March 31, 2012, cash and cash equivalents stood at ¥13,813 million, a year on year
decrease of ¥1,952 million.
Net cash provided by operating activities
decreased ¥3,956 million year on year to ¥3,338
million. Contributing factors included a gain on
sales or disposals of property and equipment of¥2,401 million and a decrease in trade payablesof ¥1,472 million, both of which offset a year-onyear increase in income before income taxes
and minority interests of ¥2,269 million.
Net cash used in investing activities
increased ¥290 million year on year to ¥4,127
million. Despite a decrease in property and longterm investments totaling ¥3,727 million, major
contributors to this rise were payments forinvestments in unconsolidated subsidiaries of¥1,256 million and increase in short-term investments amounting to ¥1,412 million.
Net cash used in financing activities amounted to ¥1,033 million compared with ¥700 million
provided by financing activities in the previous
fiscal year. Major contributors were the absences of proceeds from issuance of bonds andincrease in long-term debt. In the previous fiscal
year, proceeds from issuance of bonds andincrease in long-term debt totaled ¥9,949 millionand ¥4,000 million, respectively. The negative
turnaround occurred without the repayment oflong-term debt (which amounted to ¥2,200 million in the previous fiscal year), with a ¥1,088
million decline year on year in outflows for thepurchase of treasury stock and fractional
shares, and with a reduction of ¥9,446 million in
the net decrease in short-term borrowings compared with the previous fiscal year.

Net Income (Loss)
per Share
(Yen)

31.99

13.16

(31.32)

10

11

12

116,126

117,735

11

12

Total Assets(Millions of yen)

109,595

10

Total Shareholders’ Equity(Millions of yen)

63,64660,07060,110

10

11

12

15

Capital Ratio
(%)

54.2
49.5

10

11

51.5

12

Return on Equity
(%)

7.6

3.2

(7.4)

10

11

12

FINANCIAL POLICIESThe Noritake Group, in principle, funds general
operations and capital expenditures throughinternal reserves and borrowings or the issue ofcorporate bonds. In particular, working capitalfor general operations is provided by short-termborrowings with a maturity of one year or less. In
Japan, Noritake has adopted a cash management system under which the Company centrally procures funds and then allocates the
procured funds to consolidated subsidiaries inneed of operating funds. Overseas, individual
consolidated subsidiaries adhere to a basic policy of procuring operating funds themselves intheir respective local currencies.
As of March 31, 2012, the balance of shortterm borrowings totaled ¥1,634 million, most ofwhich is denominated in yen, with the remainder
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,
2012, the balance of long-term debt amounted
to ¥20,290 million.
BUSINESS AND OTHER RISKS
Raw Material and Fuel Price Risk
The Noritake Group conducts operations
centered on ceramic engineering. Like otherindustries, 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 the
Ceramics & Materials Group are high in comparison to Noritake’s other business segments.
Accordingly, unfavorable trends in currency
exchange rates—more specifically, the yen’s
rapid appreciation—may negatively impact theperformance of these business segments, and,
consequently, the entire Company’s performanceand 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 earthquake, fire orother disaster, their operations may have to besuspended for a certain period of time, and thiswould adversely affect Noritake’s businessperformance and financial position.
Overseas Affairs Risk
The Noritake Group is actively promoting overseas operations. Deteriorations in public safety
and security, coupled with changes in politicalconditions, in one of the countries where
Noritake operates may restrict the Company’s
operations. In particular, in the case of war,
civil disturbance, terrorist attack and the like,the Company’s operations may have to besuspended for a certain period of time. Should
this be the case, the Noritake Group’s businessperformance and financial position may be
negatively impacted.
Technology-Related Risk
The Noritake Group is increasingly concentrating
its management resources in such growth fields
as the electronics, semiconductor and energy
industries. These industries are characterized by
the rapid pace of their technological innovationand dynamic demand fluctuations, which cause
participants to experience technology and product obsolescence at shorter intervals than otherindustries. Accordingly, in the event that Noritake
fails to launch new products in a timely manner,
its business performance and financial position
may be negatively affected.
Risks and factors that could have adverse
effects on the Noritake Group’s business performance and financial position are not limited tothose described above. The analysis of risks isbased on information available to the Company’s
management as of March 31, 2012.

NORITAKE CO., LIMITED

Annual Report 2012C O N S O L I D AT E D B A L A N C E S H E E T S
NORITAKE CO., LIMITED and Consolidated Subsidiaries
March 31, 2012 and 2011

Assets:Current assets:
Cash and cash equivalents (Note 3)
Short-term investments (Notes 3 and 6)
Notes and accounts receivable, net of allowance for doubtful accounts (Notes 3 and 4)
Inventories (Note 5)
Deferred tax assets (Note 14)
Other current assets
Total current assets
Investments and other assets:
Investment securities (Notes 3 and 6)
Investments in unconsolidated subsidiaries and associates (Note 3)
Deferred tax assets (Note 14)
Other
Total investments and other assets
Property, plant and equipment:
Land
Buildings and structures
Machinery and equipment
Construction in progress
Total property, plant and equipment
Less accumulated depreciation
Net property, plant and equipment
Total assets
Liabilities:
Current liabilities:
Short-term borrowings (Notes 3 and 8)
Current portion of long-term debt (Notes 3 and 8)
Notes and accounts payable (Notes 3 and 7)
Accrued expenses (Note 3)
Income taxes payable (Note 3)
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 3 and 8)
Employee retirement benefit liability (Note 9)
Accrued severance indemnities for directors and corporate auditors
Deferred tax liabilities (Note 14)
Other noncurrent liabilities
Total long-term liabilities
Total liabilities
Net assets (Note 13):
Shareholders’ equity:
Common stock: 397,500,000 shares authorized
and 158,428,497 shares issued
Capital surplus
Retained earnings
Less treasury stock, at cost: 18,827,051 sharesin 2012 and 18,728,054 shares in 2011
Total shareholders’ equity
Accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥ 13,813
2,655
30,36914,848315
1,848
63,848¥ 15,765
1,284
29,97915,551445
2,319
65,343$ 168,451
32,378370,354
181,073
3,841
22,537
778,634

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

15,822
1,569
341
2,919
20,651

193,671
67,4391,659
26,902289,671

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

12,011
32,74340,180807
85,741(55,609)30,132¥116,126

141,317394,110
485,085
23,342
1,043,854(676,366)
367,488$1,435,793

¥

¥

$

1,634
44
18,232
3,237
537
871
24,5551,616
44
19,005
2,624
857
1,495
25,641

19,927536
222,341
39,476
6,549
10,622
299,451

20,290
1,193
807
1,817
177
24,284
48,83920,328
1,477
737
2,326
188
25,056
50,697

247,439
14,5499,841
22,1592,159
296,147
595,598

15,632

15,632

190,634

18,83336,815

18,83333,257

229,671448,963(7,634)
63,646(3,039)8,289
68,896¥117,735(7,612)60,110(2,652)
7,971
65,429¥116,126(93,097)776,171(37,061)
101,085
840,195$1,435,793

See accompanying Notes to Consolidated Financial Statements.

NORITAKE CO., LIMITED

Annual Report 201217

C O N S O L I D AT E D S TAT E M E N T S O F I N C O M ENORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2012 and 2011

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

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥102,152¥105,378$1,245,756

77,98322,289100,272
1,880

76,38824,664
101,052
4,326

951,012271,817
1,222,829
22,927

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

333
(157)
(92)
(371)
242
—
(200)
(378)
(623)
3,703

4,707
(1,890)(1,537)29,2804,134
12,073—3,135
49,902
72,829

924
73
997

1,095
126
1,221

11,268890
12,158

4,975

2,482

60,671Other income (expenses):
Interest and dividend income
Interest expense
Impairment loss on fixed assets
Gain (loss) on sales or disposals of property and equipment
Equity in net earnings of associates
Gain on changes in equity of associate (Note 2(a))
Loss on financial support to subsidiaries and associates
Other, net
Income before income taxes and minority interests
Income taxes (Note 14):
Current
Deferred
Total income taxes
Income before minority interests
Less minority interests in net income of consolidated subsidiaries
Net income

¥

507
4,468

¥

624
1,858

$

Yen

Per share:
Net income
Cash dividends

¥

31.99
8.00

¥

13.16
5.00

6,183
54,488
U.S. dollars

$

0.39
0.10

See accompanying Notes to Consolidated Financial Statements.

C O N S O L I D AT E D S TAT E M E N T S O F C O M P R E H E N S I V E I N C O M ENORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2012 and 2011

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥4,975¥2,482$60,67160(506)(1,103)(961)

732(6,171)

(47)

(1)

(573)

(493)

(2,065)(6,012)Comprehensive income:¥4,482¥ 417$54,659

Comprehensive income attributable to:
Owners of the parent
Minority interests
Total comprehensive income:¥4,080402¥4,482¥ (122)539¥ 417$49,756
4,903$54,659

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

See accompanying Notes to Consolidated Financial Statements.
18

NORITAKE CO., LIMITED

Annual Report 2012C O N S O L I D AT E D S TAT E M E N T S O F C H A N G E S I N N E T A S S E T S
NORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2012 and 2011

Shareholders’ equity
Total
shareholders’equityNumber ofshares ofcommon stock
issuedCommonstock

CapitalsurplusRetainedearnings

Treasurystock

Balance at April 1, 2010
Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Net changes in items other thanshareholders’ equity
Balance at March 31, 2011

158,428,497——¥15,632——¥18,833——¥32,109
1,858
(708)

¥(6,504)——¥60,070
1,858
(708)

—

—

—

(2)

(1,108)(1,110)—158,428,497—
15,632—
18,833—33,257—(7,612)—60,110Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Net changes in items other thanshareholders’ equity
Balance at March 31, 2012

—
—

—
—

—
—

4,468
(908)

—
—

4,468
(908)

—

—

—

(2)

(22)

(24)

—
158,428,497—¥15,632—¥18,833—¥36,815—¥(7,634)—¥63,646$190,634——$229,671——$405,573
54,488(11,073)$(92,829)——$733,049
54,488(11,073)

—

—

(25)

(268)

(293)

—
$190,634—$229,671—$448,963—$(93,097)—$776,171

Total
net assets

Millions of yen

Thousands of U.S. dollars (Note 1)

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

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

Foreigncurrencytranslation
adjustments

Total accumulated
othercomprehensive
incomeMinority
interests

Balance at April 1, 2010
Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Net changes in items other thanshareholders’ equity
Balance at March 31, 2011
Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Net changes in items other thanshareholders’ equity
Balance at March 31, 2012

¥3,819——¥(4,491)——¥ (672)——¥7,313——¥66,711
1,858
(708)

—

—

—

—

(1,110)(1,034)
2,785
—
—

(946)
(5,437)——(1,980)(2,652)
—
—

658
7,971
—
—

(1,322)65,429
4,468
(908)

—

—

—

—

105
¥2,890(492)¥(5,929)(387)¥(3,039)318¥8,289Balance at March 31, 2011
Net income for the year
Cash dividends
Purchases of treasury stockand fractional shares, net
Net changes in items other thanshareholders’ equity
Balance at March 31, 2012$33,964——$(66,305)——$(32,341)——$ 97,207——$797,915
54,488(11,073)

—

—

—

—

(293)

1,280
$35,244(6,000)$(72,305)(4,720)$(37,061)

3,878$101,085(842)$840,195

Millions of yen

(24)
(69)
¥68,896

Thousands of U.S. dollars (Note 1)

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

Annual Report 201219

C O N S O L I D AT E D S TAT E M E N T S O F C A S H F L O W SNORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2012 and 2011

Millions of yen

Thousands of
U.S. dollars(Note 1)

2012

2011

2012

¥ 5,972¥ 3,703$ 72,829

3,460

3,677

42,195

Impairment loss on fixed assets

126

92

1,537

Gain on changes in equity of associate

(990)

—

(12,073)(2,401)

371(29,280)

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Depreciation(Gain) loss on sales or disposals of property and equipment
Decrease in employee retirement benefit liability
Increase in trade receivables
Decrease (increase) in inventories(Decrease) increase in trade payables
Other, net
Subtotal

(258)

(265)

(3,147)(1,118)(2,640)(13,634)

417(3,367)

5,085(1,472)

5,418(17,951)

468

755

5,707

4,204

7,744

51,268Interest and dividends received

404

400

4,927

Interest paid

(151)

(153)

(1,842)(1,119)(697)(13,646)

3,338

7,294

40,707(3,993)(3,321)(48,695)

Increase in long-term investments and loans receivable

(327)

(356)

(3,988)Purchase of investment in subsidiaries

(700)

(57)

(8,537)

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

Payments for investments in unconsolidated subsidiaries(1,256)—(15,317)

Decrease in property and long-term investments

3,727

142

45,451

Increase in short-term investments(1,412)(163)(17,219)

(166)

(82)

(2,024)(4,127)(3,837)(50,329)

Increase in long-term debt

—

4,000

—

Repayment of long-term debt—

(2,200)—

Other, net
Net cash used in investing activities
Cash flows from financing activities:

Proceeds from issuance of bonds

—

9,949

—

Net decrease in short-term borrowings(19)(9,465)(232)

Dividends paid

(908)

(708)

(11,073)

Purchase of treasury stock and fractional shares(25)(1,114)(305)

Proceeds from contributions from minority interests

—

309

—

Other, net

(81)

(71)

(988)

(1,033)

700(12,598)

(130)

(226)

(1,585)

Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents(1,952)

3,931(23,805)

Cash and cash equivalents at beginning of year

15,765

11,834

192,256

Cash and cash equivalents at end of year

¥13,813¥15,765$168,451

See accompanying Notes to Consolidated Financial Statements.

20

NORITAKE CO., LIMITED

Annual Report 2012

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

1. BASIS OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of NORITAKE CO., LIMITED (the “Company”) and its consolidated subsidiaries(together with the Company, the “Noritake Group”) have been prepared in accordance with the provisions set forth in the Financial
Instrument and Exchange Law of Japan and its related accounting regulations and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements fromInternational Financial Reporting Standards (“IFRS”). The accompanying consolidated financial statements have been reformatted and translated into English, with some expanded descriptions, from the consolidated financial statements of the Company prepared in accordancewith Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instrumentand Exchange Law of Japan. Certain supplementary information included in the statutory Japanese language consolidated financial statements is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts has been included solely for the convenience of readers outside
Japan, using the prevailing approximate exchange rate at March 31, 2012, which was ¥82 to U.S. $1.00. The translation should not be
construed as a representation that the Japanese yen amounts have been, could have been or could in the future be converted into U.S.
dollars at this or any other rate of exchange.
Certain comparative figures have been reclassified to conform to the current year’s presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its significant subsidiaries. Investments insignificant unconsolidated subsidiaries and associates are accounted for by the equity method. Investments in unconsolidated subsidiaries
and associates not accounted for by the equity method are stated at cost. The differences between the acquisition cost of investments in
subsidiaries and the underlying equity in the net assets adjusted based on the fair value at the time of acquisition are principally deferred as
goodwill. Goodwill is amortized over five years on a straight-line basis. All intercompany accounts and transactions have been eliminated on
consolidation.
The number of consolidated subsidiaries, unconsolidated subsidiaries and associates for the years ended March 31, 2012 and 2011 was
as follows:
2012

2011

Domestic

912

Overseas11

11

Associates accounted for by the equity method

43

Unconsolidated subsidiaries stated at cost

8

6

Associates stated at cost

4

5

Consolidated subsidiaries:

During the years ended March 31, 2012 and 2011, respectively, two domestic wholly-owned consolidated subsidiaries were merged into
the Company in order to concentrate management resources and make the structure of the Noritake Group more efficient. These transactions were accounted for using accounting treatment for business combinations under the common control in accordance with “AccountingStandard for Business Combinations” (originally issued by the Business Accounting Council of Japan (“BAC”) and revised by AccountingStandards Board of Japan (“ASBJ”) as ASBJ Statement No. 21) and “Revised Guidance on Accounting Standard for Business
Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10). During the year ended March 31, 2011, one
domestic consolidated subsidiary was merged into another domestic consolidated subsidiary, and two overseas consolidated subsidiaries
were liquidated.
In addition, on April 13, 2011, the Company and Kuraray Co., Ltd. established a joint holding company, Kuraray Noritake Dental Holdings
Co., Ltd. (“KNDH”), which owns the entire shares of Kuraray Medical Inc. (“Kuraray Medical”) and Noritake Dental Supply Co., Limited(“Noritake Dental Supply”). After the establishment and as the Company owned 33.3% of the issued shares of KNDH, KNDH became an
associate of the Company and was accounted for by the equity method. Effective April 1, 2012, KNDH, Kuraray Medical, and Noritake
Dental Supply were integrated into one company, Kuraray Noritake Dental Co., Ltd. As a result, Noritake Dental Supply was excluded fromconsolidation for the year ended March 31, 2012. As this transaction was accounted for using ASBJ Statement No. 7, “AccountingStandard for Business Divestitures,” and ASBJ Guidance No. 10, goodwill of ¥845 million ($10,305 thousand) resulting from the differenceof the Company’s investment amount over a total net asset value of KNDH was recognized and a gain on changes in equity in the
Company’s ownership’s interest of ¥990 million ($12,073 thousand) was recorded as other income in the accompanying consolidated statements of income for the year ended March 31, 2012.
The Company’s overseas consolidated subsidiaries close their books on December 31, three months earlier than the Company and thedomestic consolidated subsidiaries. The Company has consolidated these subsidiaries’ financial statements as of their December 31 yearend because the difference between their fiscal year-end and that of the Company and the domestic consolidated subsidiaries was not
more than three months. Significant transactions during the period between these subsidiaries’ year-end and the Company’s year-end are
adjusted for on consolidation.
NORITAKE CO., LIMITED

Annual Report 201221

(Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements)
The Company has adopted ASBJ Practical Issues Task Force (“PITF”) No. 18, “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements.” PITF No. 18 requires that the accounting policies and procedures
applied by a parent company and its subsidiaries to similar transactions and events under similar circumstances should, in principle, be unified for the preparation of the consolidated financial statements. PITF No. 18, however, as a tentative measure, allows a parent company toprepare consolidated financial statements using its foreign subsidiaries’ financial statements prepared in accordance with either IFRS or
U.S. generally accepted accounting principles (“U.S. GAAP”). In this case, adjustments for the following five items are required in the consolidation process so that the impact on net income is accounted for in accordance with Japanese GAAP, unless the impact is not material.
(a) Goodwill not subject to amortization(b) Actuarial gains and losses of defined-benefit retirement plans recognized outside profit or loss(c) Capitalized expenditures for research and development activities(d) Fair value measurement of investment properties and revaluation of property, plant and equipment and intangible assets(e) Accounting for net income attributable to minority interests(Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method)
The Company has also adopted ASBJ PITF No. 24, “Practical Solution on Unification of Accounting Policies Applied to Associates
Accounted for Using the Equity Method.” Under PITF No. 24, a Japanese investment company is not allowed to apply the equity method to
its investments in associates using their financial information prepared in accordance with the local GAAP. The financial information of associates outside Japan is required to be prepared in accordance with Japanese GAAP, IFRS or U.S. GAAP. IFRS or U.S. GAAP is allowed only
if the five specific adjustments are made for significant differences between Japanese GAAP and IFRS or U.S. GAAP.
(b) Cash equivalents
The Noritake Group considers cash equivalents to be highly liquid debt instruments purchased with an original maturity of three months or
less.
(c) Investments and marketable securities
The Noritake Group classifies certain investments in debt and equity securities as “held-to-maturity,” “trading” or “available-for-sale.” Theclassification determines the respective accounting method, as stipulated by the accounting standards for financial instruments. According
to the investment policy of the Noritake Group, its securities portfolio consists of available-for-sale securities other than trading or held-tomaturity. The accounting standard requires that available-for-sale securities for which fair value is available be stated at fair value and thatnet unrealized gains and losses on such securities be recorded as a component of accumulated other comprehensive income, net of applicable income taxes. Gains and losses on the disposition of available-for-sale securities are computed by the moving average method.
Available-for-sale securities without available fair values are carried at cost determined by the moving average method. Adjustments in the
carrying values of individual investment securities are charged to income through write-downs when a decline in value is deemed other than
temporary.
(d) Accounting for derivatives
The Noritake Group is a party to derivative instruments such as foreign currency forward exchange contracts and interest rate swap contracts in the ordinary course of business for hedging purposes to reduce its exposure to fluctuations in exchange rates and interest rates.
Foreign currency forward exchange contracts are accounted for by translating foreign currency denominated assets and liabilities at thecontract rate as an interim measure if certain hedging criteria are met. According to the special treatment permitted by the accounting standard for financial instruments, hedging interest rate swap contracts are accounted for on an accrual basis and recorded net of interest
expense generated from borrowings for the hedged items if certain conditions are met. In addition, during the years ended March 31, 2012
and 2011, the Company had a derivative contract outstanding to hedge the risks associated with the occurrence of an earthquake. As thefair value of the contract was not considered determinable, that derivative contract was not accounted for at fair value.
(e) Inventories
In accordance with the accounting standard for measurement of inventories, inventories held for sale in the ordinary course of business arestated at the lower of cost or net realizable value. If the net realizable value falls below the cost at the end of the period, the cost basis is
reduced to net realizable value and regarded as decreased profitability of inventories. The cost of inventories is determined principally by the
first-in, first-out method.
(f) Allowance for doubtful accounts
The allowance for doubtful accounts has been provided for in the aggregate amount of estimated credit loss based on an individual financial
review approach for certain doubtful or troubled receivables and a general reserve for other receivables based on the historical loss experience for a certain past period.
(g) Property, plant and equipment and depreciation
Property, plant and equipment, including significant renewals and additions, are stated at cost and depreciated principally by the straightline method for overseas consolidated subsidiaries and by the declining balance method for the Company and its domestic consolidated
subsidiaries at rates based on the estimated useful life of the asset. Buildings of the Company and its domestic consolidated subsidiaries
acquired on and after April 1, 1998, however, are depreciated by the straight-line method.
Repair and maintenance expenses are charged to current operations as incurred.

22

NORITAKE CO., LIMITED

Annual Report 2012

(h) Leases
The Company and its domestic consolidated subsidiaries capitalize the assets used under finance leases as lessee that commenced on
and after April 1, 2008, except for certain immaterial or short-term finance leases accounted for as operating leases in accordance with thecurrent accounting standard. Depreciation of leased assets capitalized in finance lease transactions is computed by the straight-line method
over the lease term with the assumption of no residual value. As permitted by the current accounting standard for lease transactions,finance leases as lessee which commenced prior to April 1, 2008 and have been accounted for with accounting treatment similar to thatused for operating leases, continue to be accounted for with accounting treatment similar to that used for operating leases with the disclosure of certain “as if capitalized” information. (See also Note 10.)(i) Impairment of fixed assets
The Company and its domestic consolidated subsidiaries have adopted “Accounting Standard for Impairment of Fixed Assets,” issued by
BAC and the 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 berecognized in the income statement by reducing the carrying amount of the impaired asset or group of assets to the recoverable amount,measured as the higher of the asset’s net selling price or value in use. Fixed assets include intangible assets, as well as land, plants, buildings and other forms of property, and are to be grouped at the lowest level for which there are identifiable cash flows separate from those ofother groups of assets. For the purpose of recognition and measurement of an impairment loss, fixed assets of the Company and its
domestic consolidated subsidiaries are grouped principally into cash-generating units based on the business division under managerial
accounting classifications. The Noritake Group determines if assets are impaired by comparing their undiscounted expected cash flows to
the carrying amounts in the accounting records. An impairment loss is recognized if the undiscounted expected cash flows are less than the
carrying amount of the asset. Recoverable amounts are measured based on net selling prices primarily from appraisal valuations.
The Noritake Group recognized impairment loss for the years ended March 31, 2012 and 2011 as follows:
Millions of yen

Buildings
Land

Thousands of
U.S. dollars

2012

2011

2012

¥126

¥17

$1,537

—

75

—

¥126

¥92

$1,537(j) Employee retirement benefits
Employees who terminate their service with the Noritake Group are entitled to retirement benefits determined generally by reference to basic
rates of pay at the time of retirement, length of service and the conditions under which the termination occurred. The Noritake Group recognizes retirement benefits, including pension cost and related liability, based principally on the actuarial present value of the projected benefit
obligation using the actuarial appraisal approach and the fair value of pension plan assets available for benefits at the fiscal year-end.
Unrecognized actuarial differences from changes in the projected benefit obligation or value of pension plan assets resulting from actual
amounts being different from projected amounts and from changes in assumptions upon which the projected amounts were based areamortized principally on a straight-line basis over ten years, a period within the average remaining service years of employees, from the year
following the year in which they arise. Past service cost is recognized in a single year as incurred.
(k) Accrued severance indemnities for directors and corporate auditors
The Noritake Group may pay severance indemnities to directors and corporate auditors, subject to the approval of the shareholders. The
Noritake Group has provided for this liability at the amount which would have been payable assuming all directors and corporate auditors
had terminated their service at the respective balance sheet date.
(l) Translation of foreign currency accounts
Receivables, payables and securities, other than stocks of subsidiaries and certain other securities, are translated into Japanese yen at theexchange rate effective at the fiscal year-end. Transactions in foreign currencies are recorded based on the prevailing exchange rate on thetransaction date. Resulting translation gains and losses are included in current earnings.
In respect to financial statement items of overseas consolidated subsidiaries, all asset and liability accounts are translated into yen by applying the exchange rate in effect at the respective fiscal year-end. All income and expense accounts are translated at the average rate ofexchange for the fiscal year. Translation differences, after allocating portions attributable to minority interests, are reported as foreign currency translation adjustments in a component of accumulated other comprehensive income in the accompanying consolidated balance sheets.
(m) Research and development expenses
Expenses related to research and development activities are charged to income as incurred. Such research and development expenses
were included in cost of goods sold and selling, general and administrative expenses in the accompanying consolidated statements ofincome and amounted to ¥3,041 million ($37,085 thousand) and ¥2,853 million for the years ended March 31, 2012 and 2011, respectively.
(n) Enterprise taxes
When levied as size-based corporate taxes for local government enterprise taxes, the enterprise taxes are calculated based on “added
value” and “capital” amounts and are recorded in selling, general and administrative expenses.

NORITAKE CO., LIMITED

Annual Report 201223

(o) Income taxes
Income taxes are accounted for by the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income inthe years in which the temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax
assets and liabilities is recognized in the period that includes the promulgation date.
(p) Directors’ bonuses
The Noritake Group has adopted ASBJ Statement No. 4, “Accounting Standard for Directors’ Bonuses.” 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 accrue.
(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 income per share is computed by dividing income available to common shareholders by the weighted average number of shares ofcommon stock outstanding during the respective year. Diluted net income per share is not disclosed as the Noritake Group had no diluted
common shares for the years ended March 31, 2012 or 2011.
Cash dividends per share shown for each fiscal year in the accompanying consolidated statements of income represent dividends declared
as applicable to the respective year.
(s) Consolidated statements of comprehensive income
Effective March 31, 2011, the Noritake Group has adopted the “Accounting Standard for Presentation of Comprehensive Income” (ASBJ
Statement No. 25). As a result of the adoption of this standard, the Noritake Group presented the consolidated statement of comprehensive
income in the consolidated financial statements for the years ended March 31, 2012 and 2011.

(t) New accounting standards adopted in the year ended March 31, 2011
Effective from the year ended March 31, 2011, the Company and its domestic consolidated subsidiaries have adopted the “AccountingStandard for Asset Retirement Obligations” (ASBJ Statement No. 18, issued on March 31, 2008) and “Guidance on Accounting Standard
for Asset Retirement Obligations” (ASBJ Guidance No. 21, issued on March 31, 2008). This Standard requires the Noritake Group to recognize a liability for the asset retirement obligation, which is defined as a statutory or similar obligation with regard to the removal of tangible
fixed assets and incurred when tangible fixed assets are acquired, constructed, developed or used in an ordinary way together with theremoval of hazardous substances, etc., contained in tangible fixed assets, using a method stipulated by law, etc., upon the removal of thetangible fixed assets, even though there may not be any obligation concerning the removal of the tangible fixed assets themselves. As aresult, operating income decreased by ¥3 million and income before income taxes and minority interests decreased by ¥161 million for theyear ended March 31, 2011 from the amounts that would have been recorded with the previous accounting method.
Effective from the year ended March 31, 2011, the Noritake Group has adopted “Accounting Standard for Business Combination” (ASBJ
Statement No. 21) and the related guidance, “Revised Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No.
22), “Revised Accounting Standard for Research and Development Costs” (ASBJ Statement No. 23), “Revised Accounting Standard forBusiness Divestitures” (ASBJ Statement No. 7), “Revised Accounting Standard for Equity Methods of Accounting for Investments” (ASBJ
Statement No. 16) and “Revised Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures” (ASBJ Guidance No. 10).
(u) New accounting standards adopted in the year ended March 31, 2012
The Noritake Group has adopted the “Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Statement No. 24,
issued on December 4, 2009) and the “Guidance on Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance
No. 24, issued on December 4, 2009) for accounting changes and corrections of prior period errors made from the fiscal year beginning on
April 1, 2011.
3. FINANCIAL INSTRUMENTS(a) Qualitative information on financial instruments
The Noritake Group does not permit the investment of surplus funds in transactions other than short-term bank deposits and uses financing
from corresponding banks and from the issuance of bonds to satisfy short-term and long-term funding requirements.
The Noritake Group is exposed to credit risk primarily with respect to trade receivables. In order to reduce the credit risk of these receivables, the Noritake Group performs credit management on a customer by customer basis, including the monitoring of credit balances ofmajor customers on a semi-annual basis and reviewing the credit capacity of customers on a regular basis. The Noritake Group holds
investments in equity securities which have market risk. However, the fair values of such equity securities, whose issuers principally have abusiness relationship with the Company, are monitored on a quarterly basis. Although trade payables and bank borrowings have liquidity
risk, the Noritake Group performs effective cash flow management.

24

NORITAKE CO., LIMITED

Annual Report 2012

The Noritake Group is a party to derivative instruments such as foreign currency forward exchange contracts and interest rate swap agreements in the normal course of business principally for hedging purposes in order to reduce its own exposure to fluctuations in exchange
rates and interest rates. These transactions include certain anticipated export sales and import purchases for which foreign exchange forward contracts are used and bank borrowings for which interest rate swap contracts are used. The Noritake Group does not hold or issue
derivative financial instruments for trading purposes. Pursuant to the Noritake Group’s financial management policies, contract balances ofcurrency derivatives are limited to certain anticipated export sales or import purchases and interest rate swap transactions are matched withthe cash flows of the related bank borrowings. The Noritake Group is also exposed to credit risk in the event of nonperformance by counterparties. However, the Noritake Group does not expect nonperformance by counterparties because the counterparties to the derivativetransactions are limited to major banks with relatively high credit ratings.
(b) Fair values of financial instruments
The following table is a summary of the carrying values and fair values at March 31, 2012 and 2011 of financial instruments other thanunlisted equity securities for which the fair value was extremely difficult to determine.
Carrying values

Fair values

As of March 31, 2012:

Differences
Millions of yen

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

30,41130,411—

15,35015,350

—

1,031

733

(298)

¥63,239¥62,941¥(298)

Short-term borrowings¥ 1,634¥ 1,634¥ —Trade payables

17,481

17,481—

Payables included in accrued expenses

1,751

1,751

—

537

537

—

10,00010,07474

Investment securities:
Available-for-sale securities
Investments in associates
Total
Financial liabilities:

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

10,200

10,201

1¥41,603¥41,678

¥ 75

—

—

—

Carrying values

Fair values

As of March 31, 2011

Differences
Millions of yen

Financial assets:
Cash and time deposits¥17,029¥17,029¥ —Trade receivables

29,91529,915—

15,25915,259—Investment securities:
Available-for-sale securities
Investments in associates

992

727

(265)

¥63,195¥62,930¥(265)

Short-term borrowings¥ 1,616¥ 1,616¥ —Trade payables

18,37818,378—

Payables included in accrued expenses

1,360

1,360

—

857

857

—

10,000

9,871

(129)

Total
Financial liabilities:

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

NORITAKE CO., LIMITED

Annual Report 2012

10,200

10,152(48)¥42,411¥42,234¥(177)

—

—

—

25

Carrying values
As of March 31, 2012:

Fair values

Differences

Thousands of U.S. dollars

Financial assets:
Cash and time deposits$200,573$200,573

Trade receivables

370,866

370,866$—

187,195

187,195—

12,573

8,939(3,634)$771,207$767,573$(3,634)

Short-term borrowings$ 19,927$ 19,927$

Trade payables

213,183

213,183—

Payables included in accrued expenses

21,354

21,354——

Investment securities:
Available-for-sale securities
Investments in associates
Total
Financial liabilities:

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

—

6,549

6,549

—

121,951

122,853902

124,390

124,402$507,354$508,268

—

—

12
$

914
—

Notes: 1. Details of the methods and assumptions used to estimate fair value of financial instruments are summarized below.
The fair values of financial instruments include the values based on quoted market prices or values based on reasonable estimates and assumptions
if quoted market prices are not available. Actual results could differ from these estimates.
(i) The fair value of cash and time deposits, trade receivables, trade payables, short-term borrowings, payables included in accrued expenses andincome taxes payable are approximately equal to their carrying value due to their short-term maturities.
(ii) The fair value of equity securities is based on quoted market prices in active markets.
(iii) The fair value of bonds payable is determined by the price presented by the corresponding financial institutions.
(iv) The fair value of long-term interest-bearing bank loans is estimated based on a discounted cash flow analysis using current interest rates considered to be applicable to similar loans.
(v) See Note 12 for the calculation method for the fair value of derivative instruments such as interest rate swaps or foreign currency forward
exchange contracts.
2. Unlisted equity securities of ¥3,667 million ($44,720 thousand) and ¥1,031 million at March 31, 2012 and 2011, respectively, were not included in
the table above because they had no quoted market price on securities exchanges and their fair values were considered extremely difficult to determine.
3. Contractual maturities of financial instruments
The following table presents the contractual maturities of the Noritake Group’s financial instruments at March 31, 2012:
Due in 1 year or lessDue after 1 year
through 5 years

Due after 5 years
through 10 years

Due after 10 years
Millions of yen

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

Trade receivables

30,411———¥46,858

¥—

¥—

¥—

Total

¥—

Thousands of U.S. dollars

Financial assets:
Cash and time deposits$200,573$—$—

Trade receivables

370,866———$571,439

$—

$—

$—

Millions of yen

Thousands of
U.S. dollars

Total

$—

4. NOTES AND ACCOUNTS RECEIVABLE
As of March 31, 2012 and 2011, notes and accounts receivable consisted of the following:

2012

2011

2012

Trade notes receivable¥ 5,782¥ 5,326$ 70,512

Trade accounts receivable

300,354

24,62924,590

Other

194

208

2,366

Less allowance for doubtful accounts

(236)

(145)

(2,878)¥30,369¥29,979$370,354

26

NORITAKE CO., LIMITED

Annual Report 2012

5. INVENTORIESAs of March 31, 2012 and 2011, inventories consisted of the following:
Millions of yen

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

Thousands of
U.S. dollars

2012

2011

2012

¥ 5,988
4,657
4,203

¥ 5,768
5,982
3,801

$ 73,024
56,793
51,256¥14,848¥15,551$181,073

A write-down of ¥54 million ($659 thousand) was recognized as costs of goods sold for the year ended March 31, 2012, while a reversal ofwrite-down of ¥244 million was recorded as a reduction of the costs of goods sold for the year ended March 31, 2011.
6. INVESTMENTS
As of March 31, 2012 and 2011, short-term investments consisted of time deposits with an original maturity of more than three months.
At March 31, 2012 and 2011, investment securities consisted of the following:
Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

¥15,350¥15,259$187,195

531

563

6,476

¥15,881¥15,822$193,671

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

Available-for-sale securities with fair values are stated at fair value with unrealized gains and losses, which are excluded from current earnings, reported as a net amount within the accumulated other comprehensive income account until realized. As of March 31, 2012 and2011, gross unrealized gains and losses for available-for-sale securities with fair value were summarized as follows:
Cost

Gross
unrealized gains

Grossunrealized losses

Fair andcarrying value
Millions of yen

Available-for-sale equity securities:
As of March 31, 2012
As of March 31, 2011¥11,215¥4,656¥(521)¥15,350

10,908

4,746

(395)

15,259Thousands of U.S. dollars

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

$136,768$56,781$(6,354)$187,195

The Noritake Group recorded a loss on the write-down of available-for-sale securities due to other-than-temporary impairment in theamount of ¥19 million ($232 thousand) and ¥3 million for the years ended March 31, 2012 and 2011, respectively.
7. NOTES AND ACCOUNTS PAYABLE
As of March 31, 2012 and 2011, notes and accounts payable consisted of the following:
Millions of yen

Trade notes payable
Trade accounts payable
Other

NORITAKE CO., LIMITED

Annual Report 2012

Thousands of
U.S. dollars

2012

2011

2012

¥12,003¥10,283$146,378

5,478

8,095

66,805

751

627

9,158

¥18,232¥19,005$222,341

27

8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings consisted principally of unsecured bank overdrafts and bank loans with interest at average rates of 0.85% and0.76% per annum for the years ended March 31, 2012 and 2011, respectively.
As of March 31, 2012 and 2011, long-term debt consisted of the following:
Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

Unsecured bonds through December 2015 at a rate of 0.658% per annum¥10,000¥10,000$121,951

Unsecured loans from banks and insurance companies due through July 2015
with interest at an average rate of 0.72% per annum at March 31, 2012

10,200

10,200124,390

Capitalized lease obligations
Less current portion

134

172

1,634

20,334

20,372247,975

(44)

(44)

(536)

¥20,290¥20,328$247,439

Millions of yen

Thousands of
U.S. dollars

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

2013

¥

2014

44
5,141

$

536
62,695

2015

4,125

50,3052016

11,019134,378

2017

4

49

Thereafter

1

12¥20,334$247,975

As is customary in Japan, substantially all bank borrowings are subject to general agreements which provide, among other things, that thebanks may under certain circumstances request additional security for these loans and may treat any security so furnished, as well as cash
deposited with them, as security for all present and future indebtedness. The banks have never requested the Company or its subsidiaries
to submit such additional security. Also, as is customary in Japan, the Company and certain of its subsidiaries may have time deposits withthe banks from which they have short-term and long-term borrowings. However, there are no agreements with any banks which would
require maintaining such deposits.
9. EMPLOYEE RETIREMENT BENEFITSThe Noritake Group has defined benefit pension plans and lump-sum retirement benefit plans which substantially cover all employees. Eightdomestic consolidated subsidiaries have joined the Company’s defined benefit pension plans. A consolidated subsidiary located in the US
has a similar defined benefit plan. For the years ended March 31, 2012 and 2011, respectively, one and three domestic consolidated subsidiaries also participated in a certain corporate pension plan under a multi-employer pension program (see note below).
The following table reconciles the benefit liability and net periodic retirement benefit expense as of and for the years ended March 31, 2012
and 2011:
Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

Projected benefit obligation¥18,679¥19,137$227,793

Less fair value of pension plan assets at end of year

(14,119)(14,267)(172,183)

4,560

4,870

55,610(4,094)(4,268)(49,927)

466

602

5,683

727

875

8,866

¥ 1,193¥ 1,477$ 14,549

Reconciliation of benefit liability:

Projected benefit obligation in excess of pension plan assets
Unrecognized actuarial differences
Prepaid pension cost
Balance of employee retirement benefit liability recognizedon the consolidated balance sheets

Notes: 1. The projected benefit obligation of certain consolidated subsidiaries with less than 300 employees was calculated using the simplified calculation method permitted by the accounting standard for employee retirement benefits..
2. Some of the Company’s domestic consolidated subsidiaries participate in a certain corporate pension plan under a multi-employer pension program established by the subsidiaries together with other employers. As information that would allow a determination of whether the value of the pension plan assets has
been reasonably calculated in proportion to the contributions made by the subsidiaries is not available, the Noritake Group records the required contributions
as net periodic retirement benefit expense for the period, in accordance with the amended accounting standard for employee retirement benefits, ASBJ
Statement No. 14. The above table excluded the portion of the pension plan assets under the multi-employer pension program.
28

NORITAKE CO., LIMITED

Annual Report 2012

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

Thousands of
U.S. dollars

2012

2012

2011

March 31, 2011:

March 31, 2010:

Pension plan assets¥105,046¥108,492

Related benefit obligation under program(132,730)(136,168)(1,618,659)¥ (27,684)¥ (27,676)$ (337,610)

0.3%

0.7%

Latest calculation period-end

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

$1,281,049

Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

¥ 808

¥1,081$ 9,854

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

353

367

4,305

Expected return on pension plan assets

(190)

(183)

(2,317)

Amortization of actuarial differences
Net periodic retirement benefit expense

868

949

10,585¥1,839¥2,214$22,427

Major assumptions used in the calculation of the above information for the years ended March 31, 2012 and 2011 were as follows:
2012

2011

Straight-line
methodStraight-line
methodDiscount rate

2.0%

2.0%

Expected rate of return on pension plan assets

2.0%

2.0%

10 years

10 years

Method attributing the projected benefits to periods of service

Amortization of actuarial differences

10. LEASE COMMITMENTS
As lessee, the Noritake Group has entered into various rental and lease agreements principally for office space that are non-cancelable orcancelable with a few months advance notice. A lessee, the Noritake Group also leases machinery, office equipment and vehicles underleases which are not usually cancelable. As disclosed in Note 2(h), finance leases that do not transfer ownership of the leased assets to thelessee and which commenced prior to April 1, 2008 and have been accounted for with accounting treatment similar to that used for operating leases continue to be accounted for with accounting treatment similar to that used for operating leases, with disclosure of certain “as if
capitalized” information, and are not capitalized. The aggregate future minimum payments under such finance leases, including imputed
interest, and operating leases as of March 31, 2012 and 2011 were as follows:
Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

Due within one year

¥ 10

¥ 46

$ 122

Due after one year

3

14

37

¥ 13

¥ 60

$ 159

Due within one year

¥ 85

¥ 70

$1,037

Due after one year

133

91

1,622

¥218

¥161

$2,659Finance leases:

Operating leases:

NORITAKE CO., LIMITED

Annual Report 201229

11. CONTINGENT LIABILITIESThere were no contingent liabilities at March 31, 2012 and 2011.
12. DERIVATIVE INSTRUMENTS
At March 31, 2012 and 2011, all derivative instruments, except for one, were accounted for by hedge accounting. The one exception wasa derivative contract of the Company to hedge the risks associated with the occurrence of an earthquake that was outstanding at March 31,
2012 and 2011. That derivative contract was not accounted for at fair value because the fair value of the contract was not considered determinable. Derivative financial instruments to which hedge accounting was applied as of March 31, 2012 and 2011 are summarized as follows:
Notional principal or contract amounts
Total

Over 1 year

Fair value
Millions of yen

At March 31, 2012:
Foreign currency exchange contracts (*1):
Forward - selling¥ 529

Forward - buying

¥

—

*

135

—

*

Fixed rate receipt, floating rate payment

3,000

3,000

*

Floating rate receipt, fixed rate payment

1,200

1,200

*

Interest rate swap contracts (*2):

Notional principal or contract amounts
Total

Over 1 year

Fair value
Millions of yen

At March 31, 2011:
Foreign currency exchange contracts (*1):
Forward - selling

¥ 657

¥

—

*

Interest rate swap contracts :(*2)

Fixed rate receipt, floating rate payment

3,000

3,000

*

Floating rate receipt, fixed rate payment

1,200

1,200

*

Notional principal or contract amounts
Total

Over 1 year

Fair value

Thousands of U.S. dollars

At March 31, 2012:
Foreign currency exchange contracts (*1):
Forward - selling$ 6,451—*

Forward - buying

1,646

$

—

*

Fixed rate receipt, floating rate payment

36,58536,585*

Floating rate receipt, fixed rate payment

14,634

14,634*

Interest rate swap contracts :(*2)

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

30

NORITAKE CO., LIMITED

Annual Report 2012

13. NET ASSETS
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, acompany may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the issue price of the new sharesas additional paid-in capital, which is included in capital surplus.
Under the 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 reducea 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 both March 31, 2012 and 2011, capital surplus principally consisted of additional paid-in
capital, and retained earnings included legal earnings reserve of the Company in the amount of ¥3,480 million ($42,439 thousand).
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of
the Company in accordance with Japanese laws and regulations.
During the year ended March 31, 2012, the Company paid interim dividends of ¥4.00 per share, amounting to ¥559 million ($6,817 thousand.) In addition, on May 10, 2012, the Board of Directors of the Company resolved to pay cash dividends as an appropriation of retained
earnings in the amount of ¥558 million ($6,805 thousand, ¥4.00 per share) to the shareholders as of March 31, 2012. The appropriation
was not accrued in the consolidated financial statements as of March 31, 2012.
14. INCOME TAXESThe tax effects of temporary differences that gave rise to a significant portion of deferred tax assets and liabilities as of March 31, 2012 and2011 were as follows:
Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

Deferred tax assets:
Intercompany unrealized gains on property
Accrued bonuses to employees
Employee retirement benefit liability

¥

56

¥ 142

564

513

$

6,878

683

3,909

4,458

47,671

Accrued severance indemnities for directors and corporate auditors

289

308

3,524

Inventories

450

492

5,488

Net operating loss carryforwards

3,375

5,555

41,159

Other

1,976

2,163

24,097Less valuation allowance(6,398)(8,937)(78,025)

4,221

4,694

51,475Gain on transfer of investment securities to trusts for retirement benefit plans

2,866

3,289

34,951

Unrealized gains on available-for-sale securities

1,742

2,089

21,244979

856

11,939Total deferred tax assets
Deferred tax liabilities:

Other
Total deferred tax liabilities

5,587

6,234

68,134

Net deferred tax liabilities¥1,366¥1,540$16,659NORITAKE CO., LIMITED

Annual Report 201231

As of March 31, 2012 and 2011, deferred tax assets and liabilities were recorded as follows:
Millions of yen

Thousands of
U.S. dollars

2012

2011

2012

¥ 315

¥ 445

$ 3,841

136

341

1,659

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

—

—

—

1,817

2,326

22,159In assessing the realizability of deferred tax assets, management of the Noritake Group considers whether some portion or all of thedeferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which the temporary differences become deductible. At March 31, 2012 and 2011, a valuation allowance wasprovided to reduce deferred tax assets to the amount the management believed was realizable.
Reconciliation of the difference between the Japanese statutory tax rate and the effective income tax rate on pretax income reflected in theaccompanying consolidated statements of income for the years ended March 31, 2012 and 2011 were as follows:
Percentage of pretax income

Japanese statutory tax rate

2012

2011

40.6%

40.6%

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

1.4

1.7

Tax exempt income

(1.9)

(4.5)

Local minimum taxes per capita levy

1.2

2.1

Differences between Japanese and foreign tax rates

(0.5)

(2.5)

Changes in valuation allowances(13.8)(4.3)

Tax credit for research and development expenses

0.4

1.3

Equity in net earnings of associates

(2.2)

(1.9)

Gain on change in equity of associate

(6.8)

—

Effect on income tax rate changes

(0.2)

—

Other

(1.5)

0.5

16.7%

33.0%

Effective income tax rate

On December 2, 2011, the “Act for Partial Amendment of the Income Tax Act, etc., for the Purpose of Creating a Taxation System
Responding to Changes in Economic and Social Structures” (Act No. 114, 2011) and the “Act on Special Measures for Securing Financial
Resources Necessary to Implement Measures for Reconstruction Following the Great East Japan Earthquake” (Act No. 117, 2011) were
promulgated. Accordingly, the corporate income tax rate will be lowered and a special restoration surtax will be imposed from the fiscal
years beginning on or after April 1, 2012. Therefore, the effective statutory tax rates to calculate deferred tax assets and liabilities arechanged from 40.6% to 37.7% for temporary differences which are expected to be reversed during the period from the fiscal year beginningon April 1, 2012 to the fiscal year beginning on April 1, 2014, and to 35.3% for temporary differences which are expected to be reverse fromthe fiscal years beginning on or after April 1, 2015. As a result of these changes, at March 31, 2012, deferred tax liabilities and net unrealized gains on available-for-sale securities decreased by ¥265 million ($3,232 thousand) and ¥188 million ($2,293 thousand), respectively.
For the year ended March 31, 2012, deferred income taxes decreased by ¥77 million ($939 thousand).
15. SEGMENT INFORMATION(a) General information about reportable segments:
The Noritake Group defines a reportable segment as a constituent business unit of the Noritake Group for which discrete financial information is available and reviewed regularly by the Board of Directors to determine the best allocation of managerial resources and evaluate business performance. The Noritake Group’s reportable segments are determined by products and classified into “Industrial Products,”“Ceramics & Materials,” “Engineering,” and “Tabletop.”(b) Basis of measurement about reportable segments:
The accounting methods used for the reportable segments are consistent with the accounting methods described in Note 2, “Summary of
Significant Accounting Policies.” Total amount of segment income for each reportable segment is presented on an operating income basis,
and intersegment profit is accounted for based on prices of ordinary transactions with independent third parties. Operating expenses notbelonging to reportable segments directly are allocated to each reportable segment.

32

NORITAKE CO., LIMITED

Annual Report 2012

(c) Information about reported segments:
Information about reported segment income, segment assets and other items for the years ended March 31, 2012 and 2011 was as follows:
Reported segments
Industrial
Products

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated

Millions of yen

For the year 2012:
Net sales:
External customers
Segment income (loss)¥37,190¥35,480¥21,467¥8,015¥102,152¥—¥102,152

902

1,911

(267)

(666)

1,880

—

1,880

31,74035,76910,6697,332

85,51032,225

117,735

34

258

204

222

718

(718)

—

Depreciation

1,564

1,204

292

400

3,460

—

3,460

Investments in equity-method
associates

1,239

2,012

—

168

3,419

—

3,419

¥ 1,522¥ 1,191

¥

334

¥ 341

¥

3,388

¥ 1,493¥¥¥105,378

Segment assets
Other items:
Intersegment sales and transfers

Increases in tangible andintangible fixed assets

4,881

For the year 2011:
Net sales:
External customers¥37,422¥39,925¥19,546¥8,485¥105,378

Segment income (loss)

1,326

3,914

(182)

(732)

4,326

—

—

4,326

Segment assets

28,99235,943

10,594

7,739

83,26832,858116,126

Other items:
Intersegment sales and transfers

43

231

521

275

1,070

(1,070)—Depreciation

1,558

1,391

330

398

3,677

—

3,677

Investments in equity-method
associates

1,229

—

—

181

1,410

—

1,410

¥ 1,446¥ 1,009

Industrial
Products

Ceramics &Materials

Increases in tangible andintangible fixed assets

¥

140

¥

280

¥

2,875

¥

597

¥

3,472

Reported segments
Engineering

Tabletop

Total

Adjustments

Consolidated

Thousands of U.S. dollars

For the year 2012:
Net sales:
External customers$453,536$432,683$261,793$97,744$1,245,756

Segment income (loss)

11,00023,305(3,256)(8,122)

22,927$——$1,245,756
22,927

Segment assets

387,073436,207130,11089,415

1,042,805

392,988

1,435,793

Other items:
415

3,146

2,488

2,707

8,756

(8,756)—

Depreciation

19,073

14,683

3,561

4,878

42,195—42,195Investments to equity-method
associates

15,11024,536—

2,049

41,695—

41,695$ 18,561$ 14,524

4,073$ 4,159

41,317$ 18,207$ 59,524

Intersegment sales and transfers

Increases in tangible andintangible fixed assets$$

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

NORITAKE CO., LIMITED

Annual Report 201233

(d) Enterprise-wide information:(1) Information about products and services:
Information for each product and service is not disclosed because similar information is disclosed in the segment information above.
(2) Information about geographic areas:
As of and for the years ended March 31, 2012 and 2011, net sales and tangible fixed assets about geographic areas were summarized asfollows:
Japan

North
America

Europe

Asia

Other

Total
Millions of yen

Net sales:
For the year 2012

¥66,361¥8,622¥2,332¥24,222¥615¥102,152

For the year 2011

67,433

8,515

2,360

26,439631

105,378

At March 31, 2012

¥27,843¥ 620

10¥ 1,441¥220¥ 30,134

At March 31, 2011

28,049

710

16

1,122

235

30,132

Japan

North
America

Europe

Asia

Other

Total

Tangible fixed assets:¥

Thousands of U.S. dollars

Net sales for the year 2012

$809,281$105,146$28,439$295,390$7,500$ 1,245,756

Tangible fixed assets at March 31, 2012

339,549

7,561

122

17,573

2,683

367,488(3) Information about major customers:
The Noritake Group had no single external customer which accounted for more than 10% of net sales for the year ended March 31, 2012
and 2011.
(e) Information about impairment loss on fixed assets in reportable segments:
For the years ended March 31, 2012 and 2011, impairment loss on fixed assets was summarized as follows:
Reported segments
Industrial
Products

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated

Millions of yen

Impairment loss on fixed assets:
For the year 2012

¥—

¥—

¥—

¥—

¥—

¥126

¥126

For the year 2011

46

—

—

—

46

46

92

Industrial
Products

Ceramics &Materials

Adjustments

Consolidated

Reported segments
Engineering

Tabletop

Total

Thousands of U.S. dollars

Impairment loss on fixed assets:
For the year 2012

$—

$—

$—

$—

$—

$1,537$1,537

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

34

NORITAKE CO., LIMITED

Annual Report 2012

(f) Information about goodwill in reportable segments:
For the years ended March 31, 2012 and 2011, amortization of goodwill, the unamortized balance and gains arising from negative goodwill
were summarized as follows:
Reported segments
Industrial
Products

Ceramics &Materials

Engineering

Tabletop

Total

Adjustments

Consolidated

Millions of yen

As at or for the year 2012:
Amortization of goodwill or
negative goodwill

¥—

¥—

¥6

¥—

¥ 6

¥—

¥ 6

Unamortized balance

—

—

—

—

—

—

—

Gains arising from negative goodwill

—

—

—

—

—

—

—

Amortization of goodwill or
negative goodwill

¥—

¥—

¥ 6

¥—

¥ 6

¥—

¥ 6

Unamortized balance

—

—

6

—

6

—

6

Gains arising from negative goodwill*

—

59

—

—

59

—

59

Industrial
Products

Ceramics &Materials

Adjustments

Consolidated

As at or for the year 2011:

Reported segments
Engineering

Tabletop

Total

Thousands of U.S. dollars

As at or for the year 2012:
Amortization of goodwill or
negative goodwill

$—

$—

$73

$—

$73

$—

$73

Unamortized balance

—

—

—

—

—

—

—

Gains arising from negative goodwill

—

—

—

—

—

—

—

Note: * For the year ended March 31, 2011, the Company recorded gains from negative goodwill arising from the Company’s acquisition of additional equity
securities of a certain consolidated subsidiary from the minority shareholder, in accordance with the revised accounting standard for business combination (ASBJ Statement No. 21).

16 RELATED PARTY TRANSACTIONS INFORMATION(a) Related party transactions
There were no significant transactions with related parties for the years ended March 31, 2012 or 2011.
(b) Financial summary of a significant associate of the Company
A financial summary of Kuraray Noritake Dental Holdings Co., Ltd., which is a significant associate of the Company, as of or for the year
ended March 31, 2012 is as follows:
Millions of yen

Thousands of
U.S. dollars

2012

2012

At March 31, 2012:
Total current assets¥5,162$ 62,951

Total noncurrent assets

7,551

92,085

Total current liabilities

3,842

46,853

Total noncurrent liabilities

3,378

41,195

Total net assets

5,493

66,988Operating revenue¥8,222$100,268

Income before income taxes

2,128

25,951

Net income

1,275

15,549For the year ended March 31, 2012:

NORITAKE CO., LIMITED

Annual Report 201235

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

Thousands of
U.S. dollars

2012

2012

Decrease during the year¥(233)$(2,841)

Reclassification adjustments

17

207

Subtotal, before tax(216)(2,634)

Tax effect(276)(3,366)

60

732

(506)

(6,171)

(48)

(585)

Unrealized gains on available-for-sale securities

Subtotal, net of tax
Foreign currency translation adjustments
Decease during the year
Share of other comprehensive income of associates accounted for using equity method
Decrease during the year
Reclassification adjustments
Subtotal
Total other comprehensive income

1

12

(47)

(573)

¥(493)$(6,012)

18. SUBSEQUENT EVENT
Wholly-owned subsidiary by the share exchange
On May 21, 2012, the Company and its consolidated subsidiary KCM Corporation (“KCM”) entered into a stock-for-stock exchange agreement based on a resolution of the respective Boards of Directors of the Company and KCM that will make KCM into a wholly-owned subsidiary of the Company. The stock-for-stock exchange transaction is to be effective August 1, 2012 after obtaining the approval of theannual shareholders meeting of KCM held on June 28, 2012, as it is acceptable without obtaining approval at the Company’s shareholders
meeting in accordance with the simplified share exchange procedures set forth in Article 796, Paragraph 3, of the Law. In advance of thistransaction, the common stock of KCM is scheduled to be delisted from the Nagoya Stock Exchange (the final trading is scheduled forJuly 26, 2012).
KCM is engaged in mining, refining, manufacture, stocking and sale of ceramic industrial materials, and manufacture and sale of ceramicmaterials for electric components, as a consolidated subsidiary in the “Ceramic and materials “ segment of the Noritake Group. This transaction is planned in order to establish a more stable capital relationship, expand operations and create further synergy in the ceramic andmaterials business of the Noritake Group. In addition, it is expected to make possible the elimination of potential conflicts of interest concerning the publicly listed parent and make a more efficient business structure through reducing the expense of listing a stock.
In accordance with the stock-for-stock exchange agreement, on August 1, 2012, the Company will issue 16,080,799 shares of theCompany’s common stock at the exchange rate of 1.75 shares of the Company’s common stock for one share of common stock of theminority shareholders of KCM based on the stock exchange ratio calculation results determined by independent appraisers of both companies. This transaction will be accounted for using accounting treatment for business combinations under common control in accordancewith ASBJ Statement No. 21 and ASBJ Guidance No. 10.

36

NORITAKE CO., LIMITED

Annual Report 2012REPORT OF INDEPENDENT AUDITORSNORITAKE CO., LIMITED

Annual Report 2012

37

OVERSEAS NETWORKD I R E C T O R S , C O R P O R AT E
AUDITORS ANDEXECUTIVE OFFICERS(As of June 28, 2012)(As of June 28, 2012)

INDUSTRIAL PRODUCTS GROUPCERAMICS & MATERIALS GROUPNORITAKE CO., INC.

NORITAKE CO., INC.

4990 ALLIANCE DR., MASON, OH 45040, U.S.A.
Tel: 1-513-234-0770 Fax: 1-513-234-0743

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

NORITAKE EUROPA GmbHKURHESSENSTRASSE 3, D-64546
MÖRFELDEN-WALLDORF, GERMANY
Tel: 49-61-05-2092-44 Fax: 49-61-05-2092-99
NORITAKE SHANGHAI TRADING CO., LTD.
ROOM 701 AETNA TOWER NO.107,
ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
Tel: 86-21-6237-5667 Fax: 86-21-6237-5790
NORITAKE SHANGHAI TRADING CO., LTD.
GUANGZHOU BRANCH
2510 GOLDLION DIGITAL NETWORK CENTER,
138 TIYU ROAD EAST,GUANGZHOU 510620 CHINA
Tel: 86-20-3877-2253 Fax: 86-20-3877-2252
SIAM COATED ABRASIVE CO., LTD.
AMATA CITY INDUSTRIAL ESTATE 7-126
MOO 4, T. MABYANGPORN, A. PLUAKDAENG,RAYONG 21140, THAILAND
Tel: 66-3-865-0150 Fax: 66-3-865-0158
NORITAKE SA (THAILAND) CO., LTD.
56 MOO 7, NONGPLAKRADI RD., NONGPLING,NONGKHAE, SARABURI, 18140 THAILAND
Tel: 66-36-373-085-7 Fax: 66-36-373-088-9
TABLETOP GROUPNORITAKE CO., INC.
15-22 FAIR LAWN AVENUE,
FAIR LAWN, NJ 07410, U.S.A.
Tel: 1-201-796-2222 Fax: 1-201-796-9155
NORITAKE CANADA LIMITED
90 NUGGET AVENUE, AGINCOURT,ONTARIO, M1S 3A7, CANADA
Tel: 1-416-291-2946 Fax: 1-416-292-0239
NORITAKE (AUSTRALIA) PTY. LIMITEDUNIT 4, 153 BEAUCHAMP ROAD,
MATRAVILLE, N.S.W. 2036, AUSTRALIA
Tel: 61-2-9316-7123 Fax: 61-2-9316-7085
NORITAKE EUROPA GmbHKURHESSENSTRASSE. 3, D-64546
MÖRFELDEN-WALLDORF, GERMANY
Tel: 49-61-05-2092-18 Fax: 49-61-05-2092-99
NORITAKE LANKA PORCELAIN (PRIVATE)LIMITEDCOLOMBO OFFICE/SHOWROOM
NO.580, NEGOMBO ROAD, MABOLE, WATTALA,SRI LANKA
Tel: 94-11-2946149 Fax: 94-11-2946144

ITRON (U.K.) LIMITEDVANTAGE HOUSE, HARFREY’S ROAD,
HARFREY’S INDUSTRIAL ESTATE,GREAT YARMOUTH, NORFOLK, NR31 0LS,
UNITED KINGDOM
Tel: 44-1493-601144 Fax: 44-1493-600343
NORITAKE EUROPA GmbHKURHESSENSTRASSE. 3, D-64546
MÖRFELDEN-WALLDORF, GERMANY
Tel: 49-6105-2092-20 Fax: 49-6105-2092-99
THE SIAM MOULDING PLASTER CO., LTD.
NO. 32 MOO7 NONGPLAKRADI ROAD,NONGPLING, NONGKHAE, SARABURI, 18140,
THAILAND
Tel: 66-36-373578 Fax: 66-36-373577
PT. NORITAKE INDONESIABLOK A-II NO. 9A, KAWASAN BERIKAT,
KOTA BUKIT INDAH, PURWAKARTA, 41181,
JAWA BARAT, INDONESIA
Tel: 62-264-351311 Fax: 62-264-351314

PRESIDENT
Hitoshi Tanemura*
VICE PRESIDENT
Tadashi Ogura*
DIRECTORS
Kouichi Saburi*
Kazutaka Nakayama
Satoru Shimazaki
Masahiro Nakagawa
Hisaya Ogura
Yoshitaka Mabuchi
Hiroshi Kato
*Representative Director

CORPORATE AUDITORS
Masatoshi Fujii

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

Yasuyuki Mitsukawa

NORITAKE CO., LIMITEDTAIPEI OFFICE
7F-2, NO.46, SEC.2, CHUNG SHAN N. RD.,TAIPEI, 104 TAIWAN R.O.C.
Tel: 886-2-2531-9906 Fax: 886-2-2531-9906

Hitoshi Tanemura

ENGINEERING GROUPNORITAKE TAIPEI CO., LTD.
NO.37 ALLEY 105, LANE 514, ZHONGZHENG RD.,XINZHUANG DIST., XINBEI CITY 242, TAIWAN,
R.O.C.
Tel: 886-2-2907-1221 Fax: 886-2-2905-1529
NORITAKE CO., LIMITEDSHANGHAI OFFICEROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
Tel: 86-21-6237-5789 Fax: 86-21-6237-5790
NORITAKE CO., INC.
2635 S. CLEARBROOK DRIVE,
ARLINGTON HEIGHTS, IL 60005, U.S.A.
Tel: 1-847-439-9020 Fax: 1-847-593-2285

Yasumasa Gomi
Kazutoyo Shinohara
EXECUTIVE OFFICERS
Tadashi Ogura
Kouichi Saburi
Takashi Horiguchi
Kazutaka Nakayama
Satoru Shimazaki
Masahiro Nakagawa
Hisaya Ogura
Kohei Katoh
Kiichi Hirano
Yoshitaka Mabuchi
Hiroshi Kato
Kenji Hayasaka
Satoshi Aoki
Kozo Kato
Kenji Ito

NORITAKE CO., LIMITEDSHANGHAI OFFICEROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
Tel: 86-21-6237-5789 Fax: 86-21-6237-5790
38

NORITAKE CO., LIMITED

Annual Report 2012

ProfileC O R P O R AT E D ATA

H I S T O R Y O F N O R I TA K E(As of June 28, 2012)(As of June 28, 2012)

HEAD OFFICE1876 Ichizaemon Morimura established

Noritake Co., Limited has developed technologies
acquired from ceramics manufacturing expertise andhas expanded its business into such fields as grinding and polishing tools,
electronic component materials and manufacturing equipment.
With a focus on developing new products and3-1-36, Noritake-Shinmachi

Morimura-kumi in Tokyo, and Toyo

Nishi-ku, Nagoya, Aichi

Morimura and others established451-8501, Japan

the Hinode Shokai (Morimura Brothers)

Tel: +81-52-561-7112

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

DATE OF ESTABLISHMENT

technologies for energy-related industries—

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

1914 Succeeded in production of the firstJanuary 1904

dinner set in Japan

including solar cells, an area of promising growth—

NUMBER OF EMPLOYEESNoritake seeks to create new value for customers and society.

4,023 (Consolidated)

1917 Sanitary ware division spun off tobecome 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

Medium-Term Business Plan

ADMINISTRATOR OF SHAREHOLDERREGISTRY

1939 Began full-scale production of industrial

Since the worldwide economic recession, the business environment has enormously changed.

Mitsubishi UFJ Trust and Banking

1943 Tableware production stopped on

Demand is shifting to emerging countries and environmental problems are seriously worsening.

Corporationaccount of World War II, changed to full

4-5, Marunouchi 1-chome,

production of grinding wheels

Chiyoda-ku, Tokyo(only bone china production continued

100-8212, Japanto preserve technique)in Japan

Confronted with this situation, Noritake formulated a new Medium-Term Business Plan, which started in April 2010.
The fundamental points of these strategies are:1. Selecting and concentrating businesses

ANNUAL MEETING OF
SHAREHOLDERS

2. Strengthening new products and technological development

The annual meeting of shareholders of the

3. Penetrating overseas markets

Company is normally held in June each year
in Nagoya, Japan.

4. Expanding overseas production

hold an extraordinary meeting of shareholders
whenever necessary by giving at least two

Through the above actions, the Noritake Group is taking steps to secure greater corporate value.

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

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

In addition, the Company may

5. Upgrading management infrastructure

grinding wheels

weeks’ advance notice to shareholders.

INDEPENDENT AUDITORS

1960 Began production of resinoid grinding
wheels at the Kamori Plant

1961 Began production of crystal glassware
Began production of melamine ware

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

KPMG AZSA LLC

1968 Established Noritake Canada Ltd.
in Canada

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

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

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

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

1981 Changed the Company name to
Noritake Co., Limited

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

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

1998 Established Noritake Dental Supply
Co., Limited.

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

2002 Established Noritake Bonded
Abrasive Co., Ltd.

2005 Established Noritake Shanghai Trading
Co., Ltd.

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

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

2011 Abosorbed Noritake Bonded Abrasive

Began production of fine ceramicCo., Ltd. and Noritake Super Abrasiveindustrial products

Co., Ltd.

Contents
Caution with respect to forward-looking statements
1 Six-Year Financial Summary
12 Corporate Governance

2 Message from the Management

14 Consolidated Financial Review

5 Review of Operations

9 Topics

10 Research & Development

17 Consolidated Balance Sheets

18 Consolidated Statements of Income / Consolidated Statements of Comprehensive Income

19 Consolidated Statements of Changes in Net Assets

20 Consolidated Statements of Cash Flows

37 Report of Independent Auditors

21 Notes to Consolidated Financial Statements

38 Overseas Network / Directors, Corporate Auditors and Executive Officers

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

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

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Annual Report 201239

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ANNUAL REPORT 2012

NORITAKE CO., LIMITEDYear Ended March 31, 2012

INDUSTRIAL PRODUCTS

C E R A M I C S & M AT E R I A L S

ENGINEERINGTABLETOPPRINTED IN JAPANノリタケAR12表紙̲0920.indd c4-c1

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