Annual Report 2016
Year Ended March 31, 2016

Industrial Products

Ceramics & Materials

Engineering

Tabletop
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Profile

Noritake Co., Limited, including its subsidiaries and associates

C O R P O R AT E D ATA

H I S T O R Y O F N O R I TA K E(As of June 29, 2016)(As of June 29, 2016)

HEAD OFFICE1876 Ichizaemon Morimura established3-1-36, Noritake-Shinmachi(Hereinafter “The Noritake Group”, “The Group” or simply “Noritake”)

Nishi-ku, Nagoya, Aichi

has developed technologies acquired from ceramics manufacturing451-8501, Japan

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

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

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

DATE OF ESTABLISHMENT
January 1904

including solar cells, an area of promising growth—Morimura-kumi in Tokyo, and Toyo
Morimura and others establishedthe Hinode Shokai (Morimura Brothers)
in New York1904 Established Nippon Toki Gomei Kaisha
1907 Began production of grinding wheels forin-house use

1914 Succeeded in production of the firstdinner set in Japan

1917 Sanitary ware division spun off to

Noritake seeks to create new value for customers and society.

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.

5,054 (Consolidated)

Established Nippon Toki Co., Ltd.

1992 Established Noritake Singapore Pte. Ltd.

STOCK EXCHANGE LISTINGS

Slowing growth in China and other emerging economies has become more pronounced since 2015. Many developed economies,

Tokyo Stock Exchange

become NGK Insulators Ltd.

1932 Began production of first bone china

Nagoya Stock Exchange

in Japan1939 Began full-scale production of industrial

Management Issues:

ADMINISTRATOR OF SHAREHOLDERREGISTRY

In the rapidly changing and increasingly competitive global market, we aim to establish a business and management infrastructure

Mitsubishi UFJ Trust and Banking

that will safeguard stable earnings and growth.

Corporation

Management Goals:

4-5, Marunouchi 1-chome,

Over the long term, we aim to maintain sales growth of 5% per year; operating margin of 5%; overseas sales ratio of 50%; ROE of at

Chiyoda-ku, Tokyo

least 5%; and a capital ratio of at least 50%.

100-8212, Japan

Basic Strategies:(1) Expand market share and break into new markets by promoting sales activities thatunite manufacturing, sales and technology.

ANNUAL MEETING OF
SHAREHOLDERS

grinding wheels

1943 Tableware production stopped on
account of World War II, changed to fullproduction of grinding wheels(only bone china production continued
to preserve technique)1945 Production of tableware resumed
1947 Established Noritake Co., Inc. in
the United States(2) Enhance competitiveness and expand sales by developing new products and technologies.

Began production of materials andequipment for the ceramics industry

become TOTO Ltd.

New Mid-term Business Plan

Group launched its 10th Mid-term Business Plan and will continue working diligently to ensure its successful implementation.

Inc. in the Philippines

1979 Began operation of the Craft Center

NUMBER OF EMPLOYEES

1919 Electric insulator division spun off toincluding Japan, are trending downward, and the business environment is forecast to remain severe. Amid these circumstances, the1974 Established Noritake Porcelana Mfg.,

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

(3) Penetrate overseas markets and upgrade overseas manufacturing bases to expand business.

in Nagoya, Japan.

(4) Promote an efficient management structure and upgrade infrastructure.

In addition, the Company may hold an1956 Began production of cutleryware
1958 Established Noritake (Australia) Pty. Ltd.
in Australia

1960 Began production of resinoid grinding
wheels at the Kamori Plant

extraordinary meeting of shareholders

1961 Began production of crystal glassware
Began production of melamine ware

whenever necessary by giving at least two

1962 Began production of grinding machines

weeks’ advance notice to shareholders.

1963 Began production of belt andfabric abrasives

INDEPENDENT AUDITORSKPMG AZSA LLC

1968 Established Noritake Canada Ltd.
in Canada

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

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

1973 Began production of diamond tools

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 Resibon Corporation its
associate by acquiring additional sharesof the stock of the company.
Absorbed Noritake Engineering Co.,
Ltd., Noritake China Mfg. Co., Limited,
Noritake Tableware Co., Ltd. and Tokyo
Toishi Co., Ltd.

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

2011 Absorbed Noritake Bonded Abrasive
Co., Ltd. and Noritake Super Abrasive
Co., Ltd.
Established Noritake SA (Thailand) Co.,
Ltd. in Thailand

2012 Made KCM Corporation its wholly-owned
subsidiary via a stock swap
Established Noritake Abrasives (Suzhou)Co., Ltd. in China

2014 Made Nippon Resibon Corporation its
consolidated subsidiary by acquiring
additional shares through a tender offer

Contents
1 Six-Year Financial Summary
12 Corporate Governance

2 Message from the Management

14 Consolidated Financial Review

5 Review of Operations

20 Consolidated Statements of Income / Consolidated Statements of Comprehensive Income
24 Consolidated Statements of Cash Flows

9 Topics

17 Report of Independent Auditors

10 Research & Development

18 Consolidated Balance Sheets

22 Consolidated Statements of Changes in Net Assets

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

26 Notes to Consolidated Financial Statements

58 Overseas Network / Members of the Board, Audit & Supervisory Board Members and Executive Officers

Caution with respect to forward-looking statements

depending on changes in those factors.
59 Corporate Data / History of Noritake
NORITAKE CO., LIMITED

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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

2016

2016

2015

2014

2013

2012

2011

¥109,631¥ 99,038¥ 88,687¥ 90,235¥102,152¥105,378

Operating income

3,449

2,191

785

64

1,880

4,326

30,795

Income before income
taxes and minority interests

5,684

3,100

2,485

2,693

5,972

3,703

50,750

Profit attributable to ownersof the parent

4,413

2,060

1,313

1,644

4,468

1,858

39,402For the year:
Net sales

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

¥

30.73

¥

14.34

¥

8.91

¥

11.02

¥

31.99

¥

$

13.16

978,848$

0.27

At year-end:¥135,932¥145,837¥118,774¥114,419¥117,735¥116,126$ 1,213,679

Total net assets

79,76682,817

69,217

66,58068,89665,429712,196

Capital ratio (%)

56.5

54.1

57.8

57.7

51.5

49.5

56.5

Total assets

Note: The U.S. dollar amounts above have been translated at the rate of ¥112 to US$1.

Net Sales

Operating Income(Millions of yen)

(Millions of yen)

Net Income per ShareProfit Attributable to
Owners of the Parent(Yen)(Millions of yen)

109,631

30.73

4,413

3,449

99,03890,236 88,687

2,191

14.34

2,060
1,644

11.02
1,313

8.91

785

64

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Annual Report 2016

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ESSAGE FROM THE MANAGEMENT

The management of Noritake Co., Limited wishes to express its gratitude
to all stakeholders for their continued support. We would like to take thisopportunity to comment on the Group’s results for fiscal 2016, ended
March 31, 2016.

2

Hitoshi Tanemura

Tadashi Ogura

Chairman &Representative Director

President &Representative Director

NORITAKE CO., LIMITED

Annual Report 2016

Performance Overview for Fiscal 2016
In fiscal 2016, the Japanese economy became a bit weaker. Although non-manufacturingindustries remained strong due to an increase in foreign visitors, manufacturing industries were
impacted by the slowdown in the Chinese economy.
Overseas, the U.S. economy stayed firm as sales of automobiles increased, but the global
economy overall faced sluggish economic growth and stagnation with Europe’s economy stalling and China and other emerging economies growing at a slower pace.
Amid this economic environment, the Noritake Group as a whole continued to focus its
efforts on the key initiatives outlined in the 9th Mid-term Business Plan during its final year:
developing new technologies and products, penetrating overseas markets and upgrading overseas manufacturing bases, and promoting an efficient management structure and upgrading
infrastructure.
As a result, net sales rose 10.7% year on year to ¥109,631 million thanks in part to the contribution of Nippon Resibon Corporation, which was made a consolidated subsidiary in thesecond half of fiscal 2015. Looking at earnings, operating income rose to ¥3,449 million andordinary income amounted to ¥4,780 million on the back of brisk sales of general-purpose
grinding wheels and products related to electronic ceramic materials.
In regards to penetrating overseas markets and upgrading overseas manufacturing bases,
the cubic boron nitride (CBN) grinding wheel plant in North America is still raising its competitiveness and steadily boosting net sales thanks to its shift to integrated production. Achieving
further localized production readiness, the grinding wheel plant in China had steadily raised its
utilization rate, but production did not increase due to the recent downturn in the Chinese steel
industry, and we expect it to take over another year for the plant to go in the black. In Thailand,sales of electroplated tools were weak due to market conditions, but we were able to continue
moving production of CBN grinding wheels from Japan to the plant in Thailand according toplan. Conditions at the gypsum plant remained favorable: the utilization rate has stabilized,
exports of gypsum for hygienic porcelain were strong, and sales of new products for construction materials gradually increased.
In regards to enhancing management infrastructure, we worked to strengthen manufacturing
at production sites and began efforts to improve operational quality at back-office sections. We
also pursued activities related to labor health and safety; compliance; and environmental management across the entire Group. In regard to using and redeveloping the former site of theheadquarters’ plant, on February 29, 2016, we submitted a city planning proposal to the cityof Nagoya with the concept of creating a city with a superbly pleasant atmosphere springing
outward from Noritake Garden. We are currently making steady progress on this redevelopment plan.

NORITAKE CO., LIMITED

Annual Report 20163

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 makeeffective 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 forinvestment for sustainable business development in growth fields. With regard to dividend payments, Noritake distributed ¥3.0 per share as the fiscal year-end dividend. Combined with theinterim dividend, this brought the full-year dividend to ¥6.0 per share.
With regard to dividend payments for the next fiscal year, in light of the performance outlook
and the planned 1-for-10 reverse stock split with an effective date of October 1, 2016, Noritake
plans to distribute ¥3.0 per share as the interim dividend and ¥30.0 per share as the fiscal
year-end dividend. If the reverse stock split were not taken into consideration, the fiscal yearend dividend would be ¥3.0.
Through the concerted and unified efforts of the Noritake Group to swiftly implement the 10th
Mid-term Business Plan’s core strategies, Noritake aims to establish a growth trajectory
responsive to changing times.

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

Hitoshi Tanemura
Chairman & Representative Director

Tadashi Ogura
President & Representative Director

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

Vitrified bonded wheel for gear
grinding “Gear Ace”

Breakdown of Sales

Business Statusn the domestic market, sales were slightly

IW

down. While there were signs of recovery inautomobile production—one of our major cli-

ent industries—recovery was delayed for steel,bearing, electronics and semiconductor indus-

52.2

Business Strategy%

e aim to increase our market sharein each application, field and region
by quickly advancing developmentof new products for automobiles, energy,
information devices, and medical equipment

tries. Overseas in China, where economic

while strengthening our services framework ingrowth has clearly been slowing, demand fromJapan and overseas. In addition, we will

steel stalled due to production adjustments. The
Thai market also remained weak. In the United

Sales(Millions of yen)

States and Mexico, automobile production

57,193

establish a global business promotion structure by upgrading our manufacturing andsales bases in each region.

remained strong and, with a boost from thedepreciation of the yen, sales increased. As for

47,204

Nippon Resibon Corporation, demand fromIndonesia recovered and demand mainly fromoverseas remained firm.
As a result, consolidated net sales of theIndustrial Products Group grew 21.2% year on
year to ¥57,193 million.
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E V I E W O F O P E R AT I O N S

Ceramics & Materials

GLASS CAPACITIVE TOUCHSWITCH MODULE

Business Status

S

Breakdown of Sales

demand in the field of electronics, including

in Japan for use in multilayer ceramic

shipments to Southeast Asia while sales ofI

ing to develop new products and foster new

cells declined sharply but remained firm

capacitors. Sales of gypsum remained strong in

Business Strategy

n regard to electronic pastes, we are work-

ales of electronic pastes for use in solar

26.3%

multilayer ceramic capacitors for automobiles
and inductors. As for ceramic products, we will

thick film circuit substrates fell significantly due

work to expand sales of gypsum used in con-to waning demand from our mainstay field ofstruction materials in Southeast Asia, develop

automobiles. Sales of vacuum fluorescent dis-Sales

next-generation catalyst supports, and develop

plays (VFDs) remained on par with the previous(Millions of yen)

new products and markets for touch panels

year as orders declined in Japan and Asia but

30,422and other electronic display products. KCM
28,846grew slightly in the United States and Europe,

Corporation is working hard to expand its mar-buoyed by the weak yen. KCM Corporation’s

ket-share of materials for use in multilayer

sales increased with healthy exports of elec-

ceramic capacitors and to develop products

tronic ceramic materials and the same level of

aimed at new applications, including those forsales for ceramic materials as the previous year.

fuel cells.

As a result, consolidated net sales of the
Ceramics & Materials Group declined 5.2%
year on year to ¥28,846 million.
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Engineering

High Concentration Carbonation
SystemBreakdown of Sales

Business Status

S

ales of mainstay dry-furnaces andkilns increased due to strong sales foruse in electronic components anda rise in some customers’ capital investment
for lithium-ion batteries. While sales of filtration

12.3

%

Business Strategy

We are working to develop new
products and cultivate new applications in fields related to auto-

mobiles and electronic materials while
striving to expand sales. In addition, we aim

equipment for use in machine tools andto establish an overseas sales system andChinese bearings fell, sales of mixing equip-

expand business.

ment increased due to concerted market
development efforts, including winning over

Sales
(Millions of yen)customers in new fields. Sales of carbide
tipped circular sawing machines fell sharply

13,491
11,847due to weak demand in Japan. As a result,consolidated net sales of the Engineering Grouprose 13.9% year on year to ¥13,491 million.

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Tabletop

THE HOMAGE COLLECTION

Business Status

Breakdown of Salesn Japan and the United States, we willn Japan, sales increased due to strongI

I

expand our lineup of high-quality, elegant

sales to foreign visitors to Japan, hotels

products and strive to expand sales andand restaurants despite continued stagna-

tion at department stores. Turning overseas to
the United States, sales were weak due to theBusiness Strategy

9.2%

enhance our ability to make optimal proposals. In Asia and the Middle East, we will

inventory adjustments of our main customers.

enhance our sales structure and promote

In Europe, sales also declined considerably. In

market development. We are working toAsia, sales rose on firm orders from general
consumers and airlines. As a result, consoli-

Sales(Millions of yen)

dated net sales of the Tabletop Group rose
5.6% year on year to ¥10,101 million.

10,101ment and raise the efficiency of our production system.

9,565

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NORITAKE CO., LIMITED

Annual Report 2016

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OPICS

1.

Began Sales of a Glass Capacitive Touch Switch Module

We began sales of a new product featuring capacitive touch switch module,
using thin film technology, on to vacuum florescent displays (VFDs), which
are bright, easy to view and resistant to temperature changes.
Standard touch switches do not respond unless the user’s bare hand makes contact. And standard switches may not work properly if there are water droplets on it.
Using its proprietary, highly sensitive touch technology, Noritake has now developed
a touch switch that can be operated while wearing gloves and even if there arewater droplets on the surface. Leveraging these characteristics, we are currently
promoting applications for these revolutionary switches in industrial equipment,
kitchen instruments and other products as we work to expand sales.

2.

Began Sales of the Homage Collection

The essential quality of beauty does not change. Elegant, gorgeous, refined. No
matter the era, there is always a reason something stimulates people’s hearts.
European coloring and design was paired with Japan’s unique elegance andsense of beauty to give rise to Old Noritake. In the design for the Homage
Collection, we added an interpretation of modernity and refined it to create a coffee
cup that naturally fits in modern interiors. We used a three dimensional technique toincorporate depth into the design. These cups are not just for decoration or to lookat; the more you use them, the fonder you’ll grow of them.

3.

THE HOMAGE COLLECTION

Developed a Thermosetting Electronic Paste Suited toLines 20 Micrometers Wide

We developed a thermosetting electronic paste capable of forming lines just 20
micrometers (0.02 millimeters) wide for use in smartphones, electronic components
and other products.
Electronic pastes are mainly used in electronic components to form electrodes.
They are comprised of a mixture of metallic powder and resin solvents, which canbe printed or spread onto circuit boards then thermoset or calcined to create circuits.
Before the development of the current paste, Noritake had only sold calcinable
electronic pastes. The new paste can be shaped into electrodes at temperatures of
as low as 110 to 130 degrees Celsius enabling lines 20 micrometers wide. In an
industry that seeks ever smaller devices and ever thinner electrodes, this paste provides a breakthrough in miniaturization.

4.

Glass Capacitive Touch Switch Module DSC06745

Thermosetting electronic paste

Began Sales of Spread Blade, a Diamond Blade forRoad Construction

We began sales of a new diamond blade to cut concrete for use in cutting into
roads, structural renovation and building demolition.
To lower construction costs and improve operational efficiency, customers arelooking for higher performance diamond blades. To meet this demand, we began
development of a blade to cut concrete. By improving the wear mode of the diamond chips that make contact with the concrete, the blade became 40% sharperand vastly improved in operational efficiency. Furthermore, by reducing wear on the
diamond chip side, the blade lasts 80% longer and stably cuts until the end of the
product’s life.
NORITAKE CO., LIMITED

Annual Report 2016

Diamond Blade for Cutting Concrete

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ESEARCH & DEVELOPMENTThe R&D activities of the Noritake Group primarily revolve around the Research and Development Center, which isprincipally involved in basic research, and the Products Development Center, which promotes the commercializationof projects that are directly connected to the business divisions. Noritake carries out product development for new
technologies and new fields in collaboration with each business division and Group company.
The R&D expenditures of the Noritake Group amounted to ¥2,797 million in the fiscal year under review.
R&D Expenditure(Millions of yen)

R&D for
New Products andTechnologies

2,971
2,797

2,724

Noritake focuses on developing new products by utilizing its powder
synthesis, formation, calcination and fabrication technologies, while

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augmenting and expanding the applications of such technologies.
Noritake actively promotes joint R&D and technological exchanges
with outside companies, universities and research institutions. At thesame 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 a long-term perspective.
Core basic R&D expenditures totaled ¥690 million.

Industrial
Productso respond to expanding sectors and market 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 friendly processing tools in such growth areas as solar cells and LEDs.
In the transportation equipment field (which includes automobiles, railways and aircraft), and also in the medical field, we are promoting thedevelopment of higher performance, lower-cost products with the aim ofaddressing market changes.
The R&D expenditures in the Industrial Products segment totaled ¥626
million in the fiscal year under review.

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NORITAKE CO., LIMITED

Annual Report 2016

Ceramics &Materials
n electronic materials, the Ceramics & Materials segment is developing insulating and electrode pastes
mainly for ceramic substrates used in LEDs, electrodepastes for touch panels, and electrode pastes for electronic components installed in smartphones and tablet PCs.
In ceramics, we developed and promoted the ongoing
marketing of high performance ceramic catalyst carriers
for chemical plants and thick-film, multi-layer substrates
for automobiles and LEDs. We also developed“°C Monarc”, a ceramic core used in precision castingthat features superior heat resistance.

I

KCM Corporation is advancing the development ofparticulate material compounds for use in the growth fieldof multilayer ceramic capacitors, zirconium materials andmaterials used in fuel cells. Moreover, in VFD tubes and
VFD module products, we are currently developing VFD
message displays, mainly used in stores, information andreception displays in public places, and disaster-related
wireless systems.
The R&D expenditures in this segment were ¥1,341
million.

Engineering
he Engineering segment conducts research into products
and equipment for future growth fields that include semiconductors, electronics and automotive products.
The R&D expenditures in this segment amounted to ¥63 million.

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TabletopT

he Tabletop segment continues to work to develop new decorating technology and porcelain materials.
The R&D expenditures in this segment totaled ¥74 million.

NORITAKE CO., LIMITED

Annual Report 201611C

O R P O R AT E G O V E R N A N C E(1) CORPORATE GOVERNANCE STRUCTURE(i) Overview of corporate governance structure
Comprising its corporate governance structure, Noritake has positioned the Board of Directors as the body that decides on importantmatters, including those stipulated by management’s basic policy andthe law. Noritake has also introduced an executive officer system toclarify executive responsibilities and to delegate authority with theobjective of further reinforcing the execution of business based on
decisions made by the Board of Directors. In addition to executive officers involved in business operations, the Board of Directors meets, inprinciple, once a month to ensure uniformity of understanding acrossthe entire Group. Furthermore, such matters as surplus dividends anditems stipulated in Article 459-1 of the Company Law are addressed as
matters for resolution by the Board of Directors, unless otherwise stipulated by law, with the aim of being able to flexibly return profits toshareholders.
With regard to important management matters, Noritake has established a structure to perform accurate and quick decisions after careful
deliberation at the Executive Council, which meets weekly, in principle.
Directors are elected at the Company’s Annual General Meeting of
Shareholders, which is attended by at least one-third of the shareholders with exercisable voting rights, and after a majority of said voting
rights is obtained, although not by cumulative voting. Noritake limits thenumber of directors to 18. The tenure of directors at Noritake and theGroup has been set at one year. The purpose of this system is to makepossible the active building of a management structure optimally suited
to today’s turbulent business environment and to clarify management
responsibilities anew with each fiscal year.
In accordance with Article 426-1 of the Company Law, Noritake
decided that it would be able to exempt directors and Audit &Supervisory Board Members (including former directors and Audit &Supervisory Board Members) by Board of Directors’ meeting resolution,from liabilities for damages incurred as a result of the execution of theirduties, within the limit of laws and regulations, with the aim of having
them fully perform the roles expected of them.
Noritake aims to affect smooth operations by reducing the quorum
necessary for extraordinary resolutions at the General Meeting of
Shareholders. Resolutions proposed for approval at the Company’s
Annual General Meeting of Shareholders, in accordance with the provisions of Article 309-2 of the Company Law, must be ratified by a twothirds majority vote of shareholders in attendance whose total voting
rights account for one-third or more of all exercisable voting rights.
Although the establishment of other governance structures (e.g.
“company with committees” and “company with a Supervisory & Audit
Committee”) is recognized, Noritake decided to use Audit &Supervisory Board system.
(ii) Reasons for applying corporate governance system
With the advancing globalization of business, the effects of corporate
activities are being held to increasingly strict standards of corporatesocial responsibility. Each Group executive and employee is heir to thespirit of Noritake’s founder, on which basis the Noritake GroupStatement of Corporate Ethics was formulated. In observing and putting that statement into practice, they apply this corporate governancestructure to realize a Noritake Group with even higher standards of corporate ethics.

12(iii) Status of internal control system upgrades
Since fiscal 2008, the Noritake Group has been working to build andmaintain a framework in which it forms project-based structures,
advances the documentation of adherence to rules and operational
processes, and addresses the systemization of internal controls related
to financial reporting. Furthermore, with regard to the stipulation ofinternal control rules, and the status of their maintenance and implementation, Noritake conducts monitoring from the perspective of therisk of material misstatements related to financial reporting, among
other measures, as it strives to preserve and improve its internal control
system.
Through the Compliance Committee and the activities of persons
appointed to have compliance responsibilities under the committee’s
authority, the Company is working to bolster its internal controls systemfrom the compliance standpoint.
Furthermore, at the Board of Directors’ meeting held on May 12,2015, Noritake resolved to revise its basic policy on establishing aninternal controls system. The main revisions were to adopt clear, concrete terms in describing the system to ensure the appropriateness of
the Group’s operations and audit system, in line with a reassessment of
the Group’s current needs, as well as revisions to laws and regulations.
(iv) Status of risk management system upgrades
Strengthening the ongoing compliance structure of the Group as awhole, Noritake works to maintain risk management systems to prevent the Group from entering into a crisis situation due to misconduct
associated with the violation of the law.
Should the Group be faced with any risk that might damage its corporate value, such as a case of misconduct, an accident or disaster,“Risk Management Regulations” have been formulated to minimize
losses and to enable operations to continue with minimal disruption. In
the event that a crisis does arise, a task force will be established in
immediate response.

(2) STATUS OF INTERNAL AUDITS AND AUDITS BY
AUDIT & SUPERVISORY BOARD MEMBERS AND
INDEPENDENT AUDITORSThe Audit Office serves as the Company’s internal audit department
and implements operational and accounting audits. Audit results arereported to the divisional head and the general manager in charge ofbusiness operations, and, in the event that any significant problems are
identified, the Audit Office is required to notify the Executive Council.
The Audit & Supervisory Board is composed of two full-time Audit &Supervisory Board Members and two outside Audit & Supervisory
Board Members. Besides stipulating such matters as audit guidelines
and the division of duties, the Audit & Supervisory Board receives
reports from each Audit & Supervisory Board Member providing theactual audit status and results, and expedites the flow of information
between the Board of Directors and the Audit Office. In addition to
working to gather information, Audit & Supervisory Board Members
attend meetings of the Board of Directors and Executive Council aswell as other important meetings, where they receive status reports on
the execution of executives’ duties and ask for explanations when theneed arises. Furthermore, the Audit & Supervisory Board, in addition toconfirming that Noritake’s accounting auditors maintain their independence and implement the appropriate audits, receives status reports
from the accounting auditors on the execution of duties and requests
explanations when the need arises.
NORITAKE CO., LIMITED

Annual Report 2016

The Audit Office works in close collaboration with Audit &Supervisory Board Members and accounting auditors to maintain theeffectiveness of internal audit implementation. As established by contractual ties, Noritake’s independent auditor is KPMG AZSA LLC, whichassigns managing partners to Noritake to implement audits from an
independent perspective. In the fiscal year under review, the managing
partners assigned to Noritake by KPMG AZSA LLC were as follows:• Specified employees and managing partners
CPA Yasushi Yokoi
CPA Chika Matsumoto
CPA Satoshi Zengame• Assistants
15 CPAs and 13 others(3) OUTSIDE DIRECTORS AND
AUDIT & SUPERVISORY BOARD MEMBERS
Noritake has two outside directors and two outside Audit & Supervisory
Board Members.
No personal, capital or business relationships or other conflicts ofinterest exist between the Company and its outside Audit &Supervisory Board Members Ryuichi Murata and Tatsuhiko Saruwatari,
and its outside directors Kosaku Yamada and Tetsuo Komori, respectively.
The outside directors bring a wealth of experience and broad insight
regarding business management. They were hired to provide thoroughcounsel on matters spanning the entire business to the Board of
Directors in an effort to strengthen oversight and increase transparency
in the decision-making process.
Furthermore, the outside Audit & Supervisory Board Members
reflect their wealth of experience and broad insight as business managers in Noritake audits.
When outside directors oversee business operations or when theoutside Audit & Supervisory Board Members conduct operational
audits, they may conduct internal and corporate audits as needed inaddition to collaborating with accounting auditors and the internal control department through such means as the appropriate sharing of
information and exchange of opinions.
Together with the two full-time Audit & Supervisory Board Members,
the outside Audit & Supervisory Board Members are mandated to audit
the directors in the execution of their duties and the operations andassets of Noritake and its subsidiaries. In addition, the outside Audit &Supervisory Board Members conduct audits based on reports received
from the independent accounting auditors regarding the Company’s
consolidated financial statements. In addition, working closely with the
Audit Office, the outside Audit & Supervisory Board Members contribute to efficient internal audits.
The Company appoints outside directors and Audit & Supervisory
Board Members with the expectation that they will perform their oversight duties and audits in an appropriate and objective manner basedon their specialized knowledge. Although the Company’s rules and regulations do not stipulate the independence of outside directors andAudit & Supervisory Board Members, we appoint them in line with ourbasic philosophy that they have no conflict of interest with ordinary
shareholders.
The Company concludes limitation of liability contracts with eachoutside director and Audit & Supervisory Board Members in accordance with the provisions of Article 423-1 of the Company Law. As
such, the maximum amount of liability stipulated by the aforementioned
contracts is the minimum amount determined by law.

NORITAKE CO., LIMITED

Annual Report 2016

With regard to management and decision-making functions as wellas its Board of Directors, which fulfills the management oversight function in terms of the business execution of its directors, Noritake
strengthens management oversight by having two of four Audit &Supervisory Board Members from outside the Company. In corporate
governance, Noritake places the utmost importance on external, objective and neutral management oversight functions. The external management oversight function is adequately performed by the system thatis in place with the two outside Audit & Supervisory Board Members.
Noritake has appointed two outside directors to further secure theoversight function of the Board of Directors as well as ensure transparency in the decision-making process.

(4) COMPENSATION TO DIRECTORS AND
AUDIT & SUPERVISORY BOARD MEMBERS(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)

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

No. ofOfficers
Eligible

Contribution Retirement
Benefits

Director (excl.
outside director)

336

313

—

—

23

8

Audit & Supervisory
Board Members(excl. outside Audit& Supervisory
Board Members)

40

38

—

—

2

3

Outside directorand Audit &Supervisory Board
Members

33

33

—

—

0

4

(ii) Policy details and decision-making process with regard to
executive compensation and its methods of calculation
At the 109th Annual General Meeting of Shareholders, which was heldon June 28, 1990, the decision was taken to limit Noritake’s total executive compensation to ¥40 million or less per month for directors and¥6 million or less per month for Audit & Supervisory Board Members.

(5) DETAILS OF COMPENSATION PAID TO INDEPENDENTAUDITOR, ETC.
(i) Details of independent auditor compensation, etc.
Category

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)
Parent company

59

—

70

—

Consolidated
subsidiary

23

—

17

—

Total

82

—

87

—

(ii) Other significant details regarding compensation
Noritake Co., Inc., a Noritake subsidiary, paid compensation based on
audit certification services of ¥9 million to KPMG LLP, which belongs to
the same corporate network as the Company’s independent auditor, inthe consolidated accounting year under review. In the previous consolidated accounting year, the amount for such services had totaled¥8 million.
(iii) Details of non-auditing services provided to the Company by
the independent auditor
In the year ended March 31, 2016, there were no relevant items.
(iv) Policy for determining compensation to independent auditors
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 thespecial characteristics of Noritake’s size and operational characteristics.
13

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 (%)

109,631
99,03888,687

34.7

’14

37.0

’15

37.8

’16

Ordinary Income

Ordinary income (Millions of yen)

4,780

3,389

1,930

’14

’15

’16

Profit Attributable to
Owners of the Parent &Net Income Ratio
Profit Attributable to Ownersof the Parent (Millions of yen)
Net income ratio (%)
4,413

4.0
2,059
1,313

2.1

SCOPE OF CONSOLIDATION
Composed of 25 subsidiaries and 7 associates,
the Noritake Group is engaged in the manufactureand sale of products in four business segments—
Industrial Products, Ceramics & Materials,
Engineering, and Tabletop—as well as the provision of services related to these segments.
INDUSTRIAL PRODUCTS SEGMENT
In the Industrial Products Segment, grinding
wheel manufacturing and fabrication are performed by five subsidiaries and two associates
in addition to the Company, while diamond tool
manufacturing is undertaken by one subsidiaryin addition to the Company. Coated abrasives
are produced by the subsidiary Noritake CoatedAbrasive Co., Ltd. and one associate; a portionof these items are supplied to the Company.
In addition to the sales activities of theCompany and one subsidiary in Japan andoverseas, the Industrial Products Segment’s
domestic sales are handled by Zen Noritake
Co., Ltd. and one other subsidiary. The U.S.based Noritake Co., Inc. and three other subsidiaries undertake sales in overseas markets.
Noritake Coated Abrasive Co., Ltd. conducts
direct sales of most of these products both inJapan and overseas.
CERAMICS & MATERIALS SEGMENT
In the Ceramics & Materials Group, manufacturing of electronic paste and thick film circuit substrates is conducted by the Company. Such
activities are bolstered by P.T. Noritake
Indonesia along with one subsidiary and one
associate. VFD tubes are produced and supplied to the Company by the subsidiary Noritake
Itron Corporation. In addition, the subsidiary
KCM Corporation and its subsidiaries produce
ceramic raw materials, a portion of which aresupplied to the Company.
In addition to the Company’s own sales
activities for electronic paste and other ceramic
products of the Ceramics & Materials Group,sales activities for VFD tubes and related products, both domestic and overseas, are mainly

conducted by the integrated manufacturing andsales subsidiary Noritake Itron Corporation.
In addition, the U.S.-based Noritake Co., Inc.
and three other subsidiaries conduct sales for
the Ceramics & Materials Group in overseas
markets. KCM Corporation undertakes direct
sales of most of its own products both in Japanand overseas.
Moreover, the Company’s associate, Kuraray
Noritake Dental Inc., engages in the 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.
Sales activities in Japan and overseas areundertaken by the Company and one of its subsidiaries. In addition, the U.S.-based Noritake
Co., Inc. and another subsidiary conduct sales
for the Engineering Segment in overseas markets.
TABLETOP SEGMENT
In the Tabletop Segment, in addition to theCompany’s production activities, porcelain tableware is manufactured by Noritake Lanka
Porcelain (Private) Limited located in Sri Lanka
and one associate, which is supplied to theCompany.
The Company conducts sales for the
Tabletop Segment in the domestic and overseas
markets. In addition, the U.S.-based Noritake
Co., Inc. and four other subsidiaries undertake
sales in overseas markets.
Service operations in other areas are handled
by Noritake Garden Co., Limited and one
associate.
PERFORMANCE ANALYSIS
Consolidated net sales grew ¥10,592 million, or
10.7%, year on year to ¥109,631 million.

1.5

’14

14

’15

’16

NORITAKE CO., LIMITED

Annual Report 2016

Ordinary income increased ¥1,390 million
from the previous fiscal year to ¥4,780 million
mostly due to the depreciation of the yen.
Other income totaled ¥1,493 million, withgain on sales of property and equipment
amounting to ¥1,470 million. Other expenses
came to ¥589 million, with an impairment loss
totaling ¥357 million.
As a result of the aforementioned, income
before income taxes and minority interests forthe fiscal year under review amounted to ¥5,684
million. After accounting for income taxes andprofit attributable to non-controlling interests,
profit attributable to owners of the parent totaled¥4,413 million.
Additionally, net income per share increasedto ¥30.73 and the return on equity rose from 2.8%
in the previous consolidated fiscal year to 5.7%.
FINANCIAL POSITION ANALYSISIn regard to working capital and capital investment, the Group currently procures funding
through loans from financial institutions and theissuance of bonds. The Group currently procures some of its working capital through shortterm loans. In Japan, Noritake procures all
funding through its cash management systemand distributes necessary funds to each of its
consolidated subsidiaries. Overseas, in principle
each consolidated subsidiary procures funding
in the local currency for use as working capital.
As of March 31, 2016, the balance of shortterm borrowings totaled ¥12,731 million, mostof which is denominated in yen, with the remainder in three other currencies. Noritake, in principle, uses its internal reserves for capital
expenditures and other long-term investmentswith a portion covered by long-term debt. As of
March 31, 2016, the balance of unsecured longterm loans amounted to ¥15,486 million, mostof which is denominated in yen, with the remainder in two other currencies.
CASH FLOW ANALYSISAs of March 31, 2016, cash and cash equivalents stood at ¥8,584 million, a year on year
decrease of ¥2,002 million, mainly due to the

NORITAKE CO., LIMITED

Annual Report 2016

repayment of bonds. For the year, negative free
cash flows amounted to ¥2,085 million.
Net cash provided by operating activities
increased ¥1,047 million year on year to ¥6,114
million. Notes and accounts receivable marked
an increase of ¥1,720 million in fiscal 2016.
Despite this, operating cash flow improved as
we recorded ¥5,684 million in income before
income taxes and minority interests and ¥4,147
million in depreciation.
Net cash used in investing activities
decreased ¥2,252 million year on year to ¥4,029
million. Factors included ¥4,714 million in purchase of property, plant and equipment andintangible assets despite ¥1,547 million inproceeds from sales of property, plant andequipment and intangible assets.
While net cash provided by financing activities totaled ¥2,720 million in the previous fiscal
year, net cash used in financing activities cameto ¥3,908 million in fiscal 2016. Cash flows provided by financing worsened due to bondredemptions totaling ¥10,000 million and expenditures of ¥1,345 million for the acquisition ofshares of subsidiaries that did not result in achange in the scope of consolidation. This camedespite a net increase in short-term borrowingsof ¥9,383 million.
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, 2016, the balance of shortterm borrowings totaled ¥12,731 million, mostof which is denominated in yen, with the remainder

Net Income per Share
(Yen)

30.73

14.34
8.91

’14

’15

’16

Total Assets(Millions of yen)

145,836
135,932
118,774

’14

’15

’16

15

Capital Ratio
(%)

57.8
54.1

’14

’15

56.5

’16

Return on Equity
(%)

5.7

2.8
2.0

’14

’15

’16

in three other currencies. Noritake, in principle,
uses its internal reserves for capital expendituresand other long-term investments with a portion
covered by long-term debt. As of March 31,
2016, the balance of unsecured long-term loans
amounted to ¥15,486 million, most of which isdenominated in yen, with the remainder in twoother currencies.
BUSINESS AND OTHER RISKS
Raw Material and Fuel Price Risk
The Noritake Group conducts operations centered on the ceramic manufacturing industry.
Like other industries, the ceramics industry is
subject to manufacturing cost increases attributable to the rise 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 the event that the Company cannot
carry out effective measures to deal with sudden
cost increases, its business performance andfinancial position may be adversely affected.
Exchange Rate Fluctuation Risk
The export ratios of the Ceramics & Materials
Group and the Tabletop Group are high in comparison to Noritake’s other business segments.
Accordingly, unfavorable trends in currency
exchange rates—more specifically, the yen’s
rapid appreciation—may negatively impact theperformance of these business segments, and,
consequently, the entire Company’s performance and financial position.

Overseas Risk
The Noritake Group is actively promoting overseas operations. Deteriorations in public safety
and security, coupled with changes in politicalconditions, in one of the countries where
Noritake operates may restrict the Company’s
operations. In particular, in the case of war, civil
disturbance, terrorist attack and the like, theCompany’s operations may have to be suspended for a certain period of time. Should thisbe the case, the Noritake Group’s business performance and financial position may be negatively impacted.
Technology-Related Risk
The Noritake Group is increasingly concentrating
its management resources in such growth fields
as the electronics, semiconductor and energy
industries. These industries are characterized by
the rapid pace of their technological innovationand dynamic demand fluctuations, which cause
participants to experience technology and product obsolescence at shorter intervals than otherindustries. Accordingly, in the event that any of
the Noritake’s main products becomes obsolete,or Noritake fails to launch new products in atimely manner, its business performance andfinancial position may be negatively affected.
Risks and factors that could have adverse
effects on the Noritake Group’s business performance and financial position are not limited tothose described above. The analysis of risks isbased on information available to theCompany’s management as of March 31, 2016.

Disaster Risk
The Noritake Group has a number of businessbases in Japan and overseas. In the event thatthese business bases, particularly manufacturing bases, are damaged by earthquake, fire orother disaster, their operations may have to besuspended for a certain period of time, and thiswould adversely affect Noritake’s business performance and financial position.

16

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OVERSEAS NETWORKMEMBERS OF THE BOARD,
AUDIT & SUPERVISORY
BOARD MEMBERS ANDEXECUTIVE OFFICERS(As of June 29, 2016)(As of June 29, 2016)

INDUSTRIAL PRODUCTS GROUPNORITAKE CO., INC.
4990 ALLIANCE DR., MASON, OH 45040, U.S.A.
Tel: 1-513-234-0770(ATLANTA BRANCH)
490 Sun Valley Drive, Suite #102, Roswell,
GA 30076 U.S.A.
Tel: 1-770-518-8233
NORITAKE EUROPA GmbHKURHESSENSTRASSE 3, D-64546
MOERFELDEN-WALLDORF, GERMANY
Tel: 49-6105-2092-44
NORITAKE SHANGHAI TRADING CO., LTD.
ROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051, CHINA
Tel: 86-21-6237-5667(GUANGZHOU BRANCH)
2510, GOLDLION DIGITAL NETWORK CENTER,
138 TIYU ROAD EAST,GUANGZHOU 510620, CHINA
Tel: 86-20-3877-2253(DALIAN BRANCH)
22K, INTERNATIONAL FINANCE BUILDING, No.15
RENMIN ROAD ZHONGSHAN DIST. DALIAN
116001, CHINA
Tel: 86-411-825-06065
NORITAKE SA (THAILAND) CO., LTD.
(BANGKOK OFFICE)
222 VORAVIT BUILDING 9TH FL., UNIT B
SURAWONG ROAD, SIPRAYA, BANGRAK,BANKOK 10500, THAILAND
Tel: 66-2-235-1688
DIA RESIBON (THAILAND) CO., LTD.
1/1 Moo 5, Rojana Industrial Park, Zone E,
Tambol U-Thai Amphur U-Thai,
Ayutthaya 13210, THAILAND
Tel: 66-35-741-660-5
SIAM COATED ABRASIVE CO., LTD.
AMATA CITY INDUSTRIAL ESTATE 7-126 MOO4,
T. MABYANGPORN, A. PLUAKDAENG,RAYONG 21140, THAILAND
Tel: 66-3-865-0150
CERAMICS & MATERIALS GROUPNORITAKE CO., INC.
2635 CLEARBROOK DRIVE,
ARLINGTON HEIGHTS, IL 60005, U.S.A.
Tel: 1-847-439-9020(NEW JERSEY BRANCH)
15-22 FAIR LAWN AVENUE, FAIR LAWN,
NJ 07410, U.S.A.
Tel: 1-201-475-5200(LOS ANGELES BRANCH)
21081 SOUTH WESTERN AVE.,SUITE 180 TORRANCE, CA 90501, U.S.A.
Tel: 1-310-320-1700
NORITAKE SCG PLASTER CO., LTD.
NO. 32 MOO7 NONGPLAKRADI ROAD,NONGPLING, NONGKHAE,SARABURI, 18140, THAILAND
Tel: 66-36-373578
PT. NORITAKE INDONESIABLOK A-II NO. 9A, KAWASAN BERIKAT,
KOTA BUKIT INDAH, PURWAKARTA 41181,
JAWA BARAT, INDONESIA
Tel: 62-264-351311
58

NORITAKE CO., LIMITED(TAIPEI OFFICE)
7F-2, NO.46, SEC-2,
CHUNG SHAN N. RD., TAIPEI 104,
TAIWAN, R.O.C
Tel: 886-2-2531-9906
NORITAKE CO., LIMITED(SHANGHAI OFFICE)ROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051, CHINA
Tel: 86-21-6237-5789
ITRON (U.K.) LIMITEDVANTAGE HOUSE, HARFREYS ROAD,
HARFREYS INDUSTRIAL ESTATE,GREAT YARMOUTH, NORFOLK, NR31 0LS,
UNITED KINGDOM
Tel: 44-1493-601144

MEMBERS OF THE BOARDCHAIRMAN &REPRESENTATIVE DIRECTOR
Hitoshi Tanemura
PRESIDENT &REPRESENTATIVE DIRECTOR
Tadashi Ogura
DIRECTORS
Masahiro Nakagawa

NORITAKE EUROPA GmbHKURHESSENSTRASSE 3, D-64546
MOERFELDEN-WALLDORF, GERMANY
Tel: 49-6105-2092-0

Hisaya Ogura

ENGINEERING GROUP

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

Kosaku Yamada

NORITAKE TAIPEI CO., LTD.
NO. 37 ALLEY 105, LANE 514,
ZHONGZHENG RD., XINZHUANG DIST.,XINBEI CITY 242, TAIWAN, R.O.C.
Tel: 886-2-2907-1221
NORITAKE CO., LIMITED(SHANGHAI OFFICE)ROOM 701 AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051, CHINA
Tel: 86-21-6237-5789

Yoshitaka Mabuchi
Hiroshi Kato

Tetsuo Komori
AUDIT & SUPERVISORY
BOARD MEMBERS
Kiyoshi Yoshida
Satoshi Aoki
Ryuichi Murata
Tatsuhiko Saruwatari
EXECUTIVE OFFICERSTABLETOP GROUPNORITAKE CO., INC.
15-22 FAIR LAWN AVENUE,
FAIR LAWN, NJ 07410, U.S.A.
Tel: 1-201-796-2222
NORITAKE EUROPA GmbHKURHESSEN STRASSE 3, D-64546
MOERFELDEN-WALLDORF, GERMANY
Tel: 49-6105-2092-18
NORITAKE LANKA PORCELAIN (PRIVATE)LIMITEDWARAKAMURA, MATALE, SRI LANKA
Tel: 94-66-2244130

Tadashi Ogura*
Masahiro Nakagawa*
Hisaya Ogura*
Kiichi Hirano
Yoshitaka Mabuchi*
Hiroshi Kato*
Kozo Kato*
Kenichi Horaguchi
Kenji Ito

(SHOWROOM)
77, DHARMAPALA MAWATHA,COLOMBO 7, SRI LANKA
Tel: 94-11-2301334

Seiya Ogata

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

Akira Higashiyama

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

Masahiko Horie

Koji Ogawa
Koji Sato
Seiji Ishida
Akira Nagata* Also hold the position of director

NORITAKE CO., LIMITED

Annual Report 2016

Profile

Noritake Co., Limited, including its subsidiaries and associates

C O R P O R AT E D ATA

H I S T O R Y O F N O R I TA K E(As of June 29, 2016)(As of June 29, 2016)

HEAD OFFICE1876 Ichizaemon Morimura established3-1-36, Noritake-Shinmachi(Hereinafter “The Noritake Group”, “The Group” or simply “Noritake”)

Nishi-ku, Nagoya, Aichi

has developed technologies acquired from ceramics manufacturing451-8501, Japan

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

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

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

DATE OF ESTABLISHMENT
January 1904

including solar cells, an area of promising growth—Morimura-kumi in Tokyo, and Toyo
Morimura and others establishedthe Hinode Shokai (Morimura Brothers)
in New York1904 Established Nippon Toki Gomei Kaisha
1907 Began production of grinding wheels forin-house use

1914 Succeeded in production of the firstdinner set in Japan

1917 Sanitary ware division spun off to

Noritake seeks to create new value for customers and society.

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.

5,054 (Consolidated)

Established Nippon Toki Co., Ltd.

1992 Established Noritake Singapore Pte. Ltd.

STOCK EXCHANGE LISTINGS

Slowing growth in China and other emerging economies has become more pronounced since 2015. Many developed economies,

Tokyo Stock Exchange

become NGK Insulators Ltd.

1932 Began production of first bone china

Nagoya Stock Exchange

in Japan1939 Began full-scale production of industrial

Management Issues:

ADMINISTRATOR OF SHAREHOLDERREGISTRY

In the rapidly changing and increasingly competitive global market, we aim to establish a business and management infrastructure

Mitsubishi UFJ Trust and Banking

that will safeguard stable earnings and growth.

Corporation

Management Goals:

4-5, Marunouchi 1-chome,

Over the long term, we aim to maintain sales growth of 5% per year; operating margin of 5%; overseas sales ratio of 50%; ROE of at

Chiyoda-ku, Tokyo

least 5%; and a capital ratio of at least 50%.

100-8212, Japan

Basic Strategies:(1) Expand market share and break into new markets by promoting sales activities thatunite manufacturing, sales and technology.

ANNUAL MEETING OF
SHAREHOLDERS

grinding wheels

1943 Tableware production stopped on
account of World War II, changed to fullproduction of grinding wheels(only bone china production continued
to preserve technique)1945 Production of tableware resumed
1947 Established Noritake Co., Inc. in
the United States(2) Enhance competitiveness and expand sales by developing new products and technologies.

Began production of materials andequipment for the ceramics industry

become TOTO Ltd.

New Mid-term Business Plan

Group launched its 10th Mid-term Business Plan and will continue working diligently to ensure its successful implementation.

Inc. in the Philippines

1979 Began operation of the Craft Center

NUMBER OF EMPLOYEES

1919 Electric insulator division spun off toincluding Japan, are trending downward, and the business environment is forecast to remain severe. Amid these circumstances, the1974 Established Noritake Porcelana Mfg.,

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

(3) Penetrate overseas markets and upgrade overseas manufacturing bases to expand business.

in Nagoya, Japan.

(4) Promote an efficient management structure and upgrade infrastructure.

In addition, the Company may hold an1956 Began production of cutleryware
1958 Established Noritake (Australia) Pty. Ltd.
in Australia

1960 Began production of resinoid grinding
wheels at the Kamori Plant

extraordinary meeting of shareholders

1961 Began production of crystal glassware
Began production of melamine ware

whenever necessary by giving at least two

1962 Began production of grinding machines

weeks’ advance notice to shareholders.

1963 Began production of belt andfabric abrasives

INDEPENDENT AUDITORSKPMG AZSA LLC

1968 Established Noritake Canada Ltd.
in Canada

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

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

1973 Began production of diamond tools

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 Resibon Corporation its
associate by acquiring additional sharesof the stock of the company.
Absorbed Noritake Engineering Co.,
Ltd., Noritake China Mfg. Co., Limited,
Noritake Tableware Co., Ltd. and Tokyo
Toishi Co., Ltd.

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

2011 Absorbed Noritake Bonded Abrasive
Co., Ltd. and Noritake Super Abrasive
Co., Ltd.
Established Noritake SA (Thailand) Co.,
Ltd. in Thailand

2012 Made KCM Corporation its wholly-owned
subsidiary via a stock swap
Established Noritake Abrasives (Suzhou)Co., Ltd. in China

2014 Made Nippon Resibon Corporation its
consolidated subsidiary by acquiring
additional shares through a tender offer

Contents
1 Six-Year Financial Summary
12 Corporate Governance

2 Message from the Management

14 Consolidated Financial Review

5 Review of Operations

20 Consolidated Statements of Income / Consolidated Statements of Comprehensive Income
24 Consolidated Statements of Cash Flows

9 Topics

17 Report of Independent Auditors

10 Research & Development

18 Consolidated Balance Sheets

22 Consolidated Statements of Changes in Net Assets

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

26 Notes to Consolidated Financial Statements

58 Overseas Network / Members of the Board, Audit & Supervisory Board Members and Executive Officers

Caution with respect to forward-looking statements

depending on changes in those factors.
59 Corporate Data / History of Noritake
NORITAKE CO., LIMITED

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Annual Report 201659

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Annual Report 2016
Year Ended March 31, 2016

Industrial Products

Ceramics & Materials

Engineering

Tabletop
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2016/09/05 16:54