Consolidated Financial Statements
Toho Zinc Co., Ltd.
and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012
with Report of Independent Auditors

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Contents to Consolidated Financial Statements

Independent Auditor’s Report------------------------------------------------------------- 1

Consolidated Balance Sheets -------------------------------------------------------------- 2
Consolidated Statements of Operations -------------------------------------------------- 4
Consolidated Statements of Comprehensive Income ---------------------------------- 5
Consolidated Statements of Changes in Net Assets ------------------------------------ 6
Consolidated Statements of Cash Flows ------------------------------------------------- 7
Notes to Consolidated Financial Statements -------------------------------------------- 81

Independent Auditor’s Report
The Board of Directors
Toho Zinc Co., Ltd.
We have audited the accompanying consolidated financial statements of Toho Zinc Co., Ltd. and its consolidated subsidiaries,
which comprise the consolidated balance sheet as at March 31, 2013, and the consolidated statements of operations,comprehensive income, changes in net assets, and cash flows for the year then ended and a summary of significant
accounting policies and other explanatory information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordancewith accounting principles generally accepted in Japan, and for designing and operating such internal control as management
determines is necessary to enable the preparation and fair presentation of the consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due to fraud or error. The purpose of an audit of theconsolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal control, but inmaking these risk assessments the auditor considers internal controls relevant to the entity’s preparation and fair presentationof the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates madeby management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Toho Zinc Co., Ltd. and its consolidated subsidiaries as at March 31, 2013, and their consolidated
financial performance and cash flows for the year then ended in conformity with accounting principles generally accepted inJapan.
Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented for the convenienceof readers, and, in our opinion, the accompanying consolidated financial statements have been properly translated on thebasis described in Note 2.

Ernst & Young ShinNihon LLC
June 27, 2013
Tokyo, Japan1

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Balance Sheets
March 31,2013
2012
(Millions of yen)

AssetsCurrent assets:
Cash and time deposits (Notes 15 and 17)
Notes and accounts receivable, trade (Notes 3 and 15)
Inventories (Note 4)
Other current assets
Less: Allowance for doubtful accounts
Total current assets

2013(Thousands of
U.S. dollars)(Note 2)

11,414 ¥14,667
31,2954,007(0)61,384

16,55015,997
31,5343,423(12)
67,492

Less: Accumulated depreciation
Net property, plant and equipment

25,24977,622
16,961
183
630
120,646(66,324)
54,322

23,73572,503
16,959183
830
114,211(62,351)
51,8601,282,785(705,199)
577,586

Investments and other assets:
Investment securities (Notes 8, 15 and 16)
Investments in unconsolidated subsidiaries (Note 7)
Goodwill
Mining right (Note 6)
Other assets (Notes 6 and 7)
Less: Allowance for doubtful accounts
Total investments and other assets

4,232
384
548
23,1662,530(756)
30,106

4,542
389
501
23,2382,560(782)
30,45044,997
4,082
5,826
246,315
26,900(8,038)320,106

149,803$ 1,550,388¥

Property, plant and equipment:
Buildings and structures (Notes 6 and 8)
Machinery and equipment (Notes 6 and 8)
Land (Notes 5 and 8)
Leased assets
Construction in progress

Total assets¥

145,814¥$

121,360
155,948
332,748
42,604(0)652,674

268,463825,326
180,340
1,945
6,698

2

March 31,
2013
2012
(Millions of yen)

Liabilities and net assets
Current liabilities:
Notes and accounts payable, trade (Notes 3 and 15)
Short-term borrowings (Notes 8 and 15)
Current portion of long-term debt (Notes 8 and 15)
Commercial papers (Note 8)
Lease obligations (Note 8)
Accrued income taxes
Accrued expenses
Accrued directors’ bonus
Other current liabilities (Note 3)
Total current liabilities¥

Long-term liabilities:
Long-term debt (Notes 8 and 15)
Lease obligations (Note 8)
Deferred tax liabilities related to land revaluation (Notes 5 and12)Accrued employees’ pension and severance costs (Note 9)
Accrued directors’ and audit & supervisory board members’
retirement benefits
Accrued environmental measures
Asset retirement obligations (Note 10)
Other long-term liabilities
Total long-term liabilities
Total liabilities
Net assets (Note 11):
Shareholders’ equity:
Common stock:
Authorized – 264,000,000 shares
Issued– 135,855,217 shares in 2013 and 2012
Capital surplus
Retained earnings
Less: Treasury stock, at cost – 56,226 shares in 2013 and55,951 shares in 2012
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on other securities
Gain (loss) on deferred hedges
Surplus from land revaluation (Note 5)
Foreign currency translation adjustments
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

¥

6,158
22,478
2,897
6,000
18
2,308
2,452
–
3,639
45,951¥

7,589
22,478
3,317
2,000
104
240
2,220
25
6,012
43,987

2013(Thousands of
U.S. dollars)(Note 2)$65,475
239,000
30,802
63,795
191
24,54026,071–
38,692
488,580

31,560113

33,307
131335,566
1,201

5,061
2,191

5,061
2,444

53,811
23,296

30
151
1,368
2,793
43,26989,220

52
151
1,144
2,640
44,93488,921318
1,605
14,54529,696460,063
948,644

14,6309,876
21,696

14,6309,876
27,803

155,555
105,007
230,685(23)
46,179(23)
52,287(244)
491,004

781
482
8,290
859
10,41356,593
145,814

680
8,304
(237)
5,124
8,290
88,144
(139)
9,133
8,594
110,71760,882
601,733
149,803 $ 1,550,388¥

The accompanying notes are an integral part of these financial statements.

3

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statements of Operations
Year ended March 31,
2013
2012
2013
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Net sales
Cost of sales
Gross profit¥ 103,654
94,4659,189¥ 105,914
95,428
10,486$ 1,102,115
1,004,412
97,703

5,032
1,477
43
(16)
135
183
1,798
8,654
534

4,222
1,394
52
(7)
77
237
1,707
7,683
2,802

53,50315,704
457
(170)
1,435
1,945
19,11792,014
5,677

100
(514)
2,214
–
(278)
(4,930)
80
(80)
–
–
305
(3,103)(2,568)

229
(486)
123
106
(269)
(11)
29
(4)
1,008
(763)
248
212
3,014

1,063
(5,465)23,540–(2,955)(52,418)
850
(850)
–
–
3,242
(32,993)(27,304)

2,741
(153)
2,588
(5,156)(5,156)

795
1,214
2,009
1,005
1,005

29,144(1,626)
27,517(54,821)(54,821)

Selling, general and administrative expenses:
Transportation expense
Salaries and wages
Pension and severance costs
Provision of allowance for doubtful accounts
Depreciation
Research and development costs
Other
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Foreign exchange gains, net
Gain on valuation of derivatives, net
Loss on retirement of property, plant and equipment
Impairment loss on fixed assets (Note 6)
Gain on sales of investment securities, net
Write-down of investment securities (Note 16)
Gain on sales of mining right
Loss on disaster
Other, net(Loss) income before income taxes and minority interests
Income taxes (Note 12):Current
Deferred(Loss) income before minority interests
Net (loss) income

¥

¥

$

(U.S. dollars)(Note 2)(Yen)
Per share:
Net (loss) income – basic¥ (37.97)

¥

7.40

$

(0.40)Cash dividends

¥

¥

7.00

$

0.05

5.00

The accompanying notes are an integral part of these financial statements.

4

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income¥

Year ended March 31,
2013
2012
2013
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
(5,156) ¥1,005 $ (54,821)

Comprehensive (loss) income

¥

100
719
–
998
1,818
(3,337)

Comprehensive (loss) income attributable to:
Owners of the parent
Minority interests¥(Loss) income before minority interests
Other comprehensive income (Note 19):
Net unrealized gains (losses) on other securities
Gain on deferred hedges
Surplus from land revaluation
Foreign currency translation adjustments
Total other comprehensive income(3,337)
–

(219)
2,133
718
(1,902)
730
¥

1,736

$

¥

1,736
–

$

1,063
7,644
–
10,611
19,330(35,481)(35,481)–

The accompanying notes are an integral part of these financial statements.

5

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statements of Changes in Net Assets
Shareholders’ equity

Number ofshares ofcommon stock
issuedCommonstock

Capitalsurplus

Accumulated other comprehensive income

Retainedearnings

Treasurystock (*)

(Thousands)Net
unrealized
gains(losses) on
othersecurities

Surplusfrom land
revaluation

Foreigncurrencytranslation
adjustments

Total
net assets¥ 7,572–––¥ 1,763–––¥ 60,096
(950)
1,005
(0)

(Millions of yen)

Balance as of April 1, 2011
Dividends from surplus
Net income
Acquisition of treasury stock
Net changes in items otherthan those in shareholders’equityBalance as of March 31, 2012
Dividends from surplus
Net loss
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items otherthan those in shareholders’equity135,855
–
–
–

–

–

–

–

Balance as of March 31, 2013

135,855¥ 14,630¥ 9,876¥ 21,696¥ 14,630–––¥ 9,876–––¥ 27,748 ¥
(950)
1,005
–

(23)
–
–
(0)

¥

899
–
–
–

¥ (2,371)
–
–
–

–

–

–

–

–

(219)

2,133

718

(1,902)730

135,855––––

14,630
–
–
–
–

9,876
–
–
–
(0)

27,803(950)(5,156)
–
–

(23)
–
–
(0)
0

680
–
–
–
–

(237)
–
–
–
–

8,290
–
–
–
–

(139)
–
–
–
–

60,882(950)(5,156)
(0)
0

–
¥

100

(23)

¥

Shareholders’ equity

Commonstock

Balance as of March 31, 2012
Dividends from surplus
Net loss
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items otherthan those in shareholders’equityBalance as of March 31, 2013

Gain (loss)
on deferredhedgesCapitalsurplusRetainedearnings

–

¥

719

–

482

¥ 8,290

998

1,818

859

¥ 56,593

Foreigncurrencytranslation
adjustments

Total
net assets¥

Accumulated other comprehensive income$ 155,555 $ 105,007 $ 295,619––(10,101)–(54,821)
–
–
–
–
–
(0)
–

–

781

–

$ 155,555 $ 105,007 $ 230,685

Gain (loss)
on deferredhedgesSurplusfrom land
revaluation(Thousands of U.S. dollars )(Note 2)(244) $ 7,230$ (2,519)
–
–
–
–
–
–
(0)
–
–
0
–
–

$ 88,144––––

Treasurystock (*)$

Net
unrealized
gains(losses) on
othersecurities

–
$

(244)

1,063
$

8,304

$

7,644

–

5,124

$ 88,144$$(1,477)––––$ 647,336(10,101)(54,821)(0)010,611

19,3309,133$ 601,733(*) There were 56,226 shares and 55,951 shares of treasury stock as of March 31, 2013 and 2012,
respectively.

The accompanying notes are an integral part of these financial statements.

6

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
Year ended March 31,
2013
2012
2013
(Millions of yen)(Thousands of
U.S. dollars)(Note 2)
Cash flows from operating activities:(Loss) income before income taxes and minority interests
Depreciation and amortization
Impairment loss on fixed assets
Amortization of goodwill
Write-down of investments securities
Decrease in allowance for doubtful accounts
Decrease in accrued directors’ bonus
Decrease in accrued employees’ pension and severance costs
Decrease in reserve for loss on disaster
Interest and dividend income
Interest expenses
Foreign exchange (gains) losses
Gain on sales of mining right
Net loss on sales and retirement of property, plant and equipment
Decrease in notes and accounts receivable, trade
Decrease (increase) in inventories(Decrease) increase in notes and accounts payable, trade
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes received (paid)
Net cash provided by (used in) operating activities¥ (2,568)
7,490
4,930
37
80
(12)
(25)
(253)
–
(100)
514
(2,456)
–
265
1,282
478
(2,435)
(905)
6,322
100
(467)
328
6,283

¥ 3,014
6,075
11
36
4
(11)
(5)
(224)
(368)
(229)
486
220
(1,008)253
734(3,721)795(2,538)
3,524
235
(474)
(3,478)(193)

Cash flows from investing activities:
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of intangible assets
Proceeds from sales of mining right
Payments for purchases of investment securities
Other, net
Net cash used in investing activities(7,137)87(4,519)–(5)
292(11,282)(10,643)
29(3,133)
2,091
(32)
648
(11,039)(75,885)925(48,048)
–
(53)
3,104
(119,957)

Cash flows from financing activities:
Decrease in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Increase in commercial papers
Cash dividends paid
Other, net
Net cash (used in) provided by financing activities––(3,320)
4,000
(950)
(112)
(383)

(31)
19,193(2,760)
–
(950)
(226)
15,225––(35,300)
42,530(10,101)(1,190)(4,072)

251(5,130)
16,545¥ 11,414

(180)
3,810
12,734¥ 16,545

2,668(54,545)
175,917
121,360

Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 17)$$(27,304)
79,63852,418
393
850
(127)
(265)
(2,690)–(1,063)
5,465(26,113)–
2,817
13,631
5,082(25,890)(9,622)
67,2191,063(4,965)
3,487
66,804

The accompanying notes are an integral part of these financial statements.

7

Toho Zinc Co., Ltd. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2013

1.

Summary of Significant Accounting Policies(a) Basis of presentation
Toho Zinc Co., Ltd. (the “Company”) and its domestic subsidiaries maintain their books of account inconformity with accounting principles generally accepted in Japan, and its foreign subsidiaries
maintain their books of account in conformity with International Financial Reporting Standards(“IFRS”) or those of their countries of domicile.
The accompanying consolidated financial statements of the Company and its consolidated subsidiaries(collectively, the “Companies”) are prepared on the basis of accounting principles generally acceptedin Japan, which are different in certain respects as to application and disclosure requirements of IFRS,
and are compiled from the consolidated financial statements prepared by the Company as required by
the Financial Instruments and Exchange Act of Japan.
Certain amounts in the prior year’s financial statements have been reclassified to conform to thecurrent year’s presentation.
As permitted under the Financial Instruments and Exchange Act, amounts of less than one million yen
have been omitted. As a result, the totals shown in the accompanying consolidated financial
statements (both in yen and in U.S. dollars) do not necessarily agree with the sums of the individual
amounts.
Certain items presented in the consolidated financial statements submitted to the Director of Kanto
Local Finance Bureau in Japan have been reclassified in the accompanying consolidated financial
statements for the convenience of readers outside Japan.
(b) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
significant subsidiaries that are controlled by the Company. Under the effective control approach, allsignificant majority-owned companies are to be consolidated. Additionally, companies in whichshare ownership equals 50% or less may be required to be consolidated in cases where suchcompanies are effectively controlled by other companies through the interests held by a party who has
a close relationship with the parent. All significant intercompany transactions and accounts are
eliminated in consolidation.
(c) Foreign currency translation(1) Foreign currency transaction
All receivables and payables denominated in foreign currencies are translated into Japanese yenat the exchange rate prevailing at the balance sheet date.

8

(2) Foreign currency financial statements
Assets and liabilities of the foreign consolidated subsidiaries are translated into Japanese yen at
the current exchange rate prevailing at the balance sheet date. Revenue and expense accounts
are translated at the current exchange rate prevailing at the balance sheet date. Foreign
currency translation adjustments are included in net assets.
(d) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows are composed of cash on hands,bank deposits withdrawable on demand and short-term investments with original maturities of threemonths or less and minor risk for the fair value fluctuation.
(e) Inventories
Merchandise, finished goods, semi-finished goods, work in process and raw materials are stated at thelower of cost or net selling value, for which cost is primarily determined by the first-in first-out
method. Supplies are stated at the lower of cost or net selling value, for which cost is determined by
the moving average method.
(f)Financial instruments(1) Investment securities
Marketable securities classified as other securities are carried at fair value based on the averageof market price during the last month of the fiscal year with any changes in unrealized gains orlosses, net of income taxes, included directly in net assets. Cost of securities sold is determinedby the moving average method. Non-marketable securities classified as other securities arecarried at cost determined by the moving average method.
(2) Derivatives
The Company has entered into various derivative transactions, including forward foreignexchange contracts, interest rate swaps and commodity futures, in order to manage certain risks
arising from adverse fluctuations in foreign currency exchange rates, interest rates andcommodity prices, respectively.
All derivatives are recognized in the balance sheet at fair value, with changes in fair value
included in net income for the period in which they arise, except for derivatives that aredesignated as “hedging instruments” (see Note 1. (f) (3) Hedge accounting below).
(3) Hedge accounting
Gains or losses arising from changes in fair value of the derivatives designated as “hedging
instruments” are deferred as an asset or liability and included in net income in the period during
which the gains and losses on the hedged items or transactions are recognized.
Hedging instruments are derivative transactions including commodity futures and interest rate
swaps. The related hedged items are receivables and payables in connection with raw materials
and finished goods and long-term debt, respectively.
The Company has a policy to utilize the above hedging instruments in order to reduce theCompany’s exposure to the risks of the price and interest rate fluctuations.

9The Company evaluates effectiveness of its hedging activities by reference to the accumulated
gains or losses on the hedging instruments and the related hedged items from the commencementof the hedging transactions. The Company omits to assess hedge effectiveness of interest rate
swaps which qualify for hedge accounting and meet specific criteria.
(g) Property, plant and equipment and depreciation
Property, plant and equipment, except for leased assets, are stated at cost and mainly depreciated by
the straight-line method over the estimated useful lives of the respective assets.
(h) Intangible assets and amortization
Mining right is mainly amortized by using the unit-of-production method. Goodwill, software forinternal use and other assets are amortized by using the straight-line method. Amortization period of
goodwill is determined on a reasonable basis within 20 years. Software for internal use is amortizedover estimated useful lives (5 years).
(i)

LeasesLeased assets which are under finance leases and capitalized are primarily the storage equipment(structures) in Smelting business and depreciated over the lease terms of the respective assets by thestraight-line method with no residual value.

(j)

Allowance for doubtful accounts
Allowance for doubtful accounts is provided at an amount sufficient to cover possible losses oncollection. The allowance consists of the estimated uncollectible amounts with respect to specificreceivables plus an amount based on historical experience of bad debt with respect to otherreceivables.

(k) Accrued directors’ bonus
Accrued directors’ bonus at the balance sheet date is based on an estimate of the amount to be paid asbonuses for services rendered by that date.
(l)

Accrued employees’ pension and severance costs
Accrued employees’ retirement benefits are provided at an amount calculated based on the projected
benefit obligations and the fair value of the pension plan assets as of the balance sheet date, as
adjusted for unrecognized actuarial gain or loss and unrecognized prior service costs. The projected
benefit obligations are attributed to each period by the straight-line method over the estimated years ofservice of the employees.
Actuarial gain and loss are amortized by the straight-line method over a certain period (10 years),
which is within the average remaining years of service of the employees at the time when the gain orloss arises, from the year following the year in which it arises.
Prior service cost is amortized as incurred by the straight-line method over a certain period (10 years)
which is within the average remaining years of service of the employees at the time when it arises.

10(m) Accrued directors’ and audit & supervisory board members’ retirement benefits
In order to prepare for the disbursements of the directors’ and audit & supervisory board members’
retirement benefits, the Companies record an amount required to be paid out at the end of the fiscal
year which is calculated based on internal rules.
Note that the Company discontinued the system for directors’ and audit & supervisory board members’
retirement benefits in accordance with a resolution by the board of directors held on May 22, 2007,
and hence the balance at the end of this consolidated fiscal year is the amount based on the periods inwhich the directors and audit & supervisory board members served prior to June 2007.
(n) Accrued environmental measures
Accrued environmental measures are estimated and recorded to provide for future potential costs
related to disposal of polychlorinated biphenyl waste.
(o) Income taxes
Deferred tax assets and liabilities are determined based on the differences between the financial
reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates
and laws which will be in effect when the differences are expected to reverse.
(p) Recognition of revenues
Revenues and costs of construction contracts of which the percentage of completion can be reliably
estimated are recognized by the percentage-of-completion method. The percentage of completion is
calculated as the cost incurred to the estimated total cost. The completed-contract method continues tobe applied to contracts for which the percentage of completion cannot be reliably estimated.
(q) Appropriation of retained earnings
Cash dividends and transfers to legal reserve are recorded in the fiscal year in which the proposed
appropriation of retained earnings is approved at the shareholders’ meeting.
(r) Net income (loss) per share
Net income (loss) per share is computed based on the net income (loss) available for distribution toshareholders of common stock and the weighted average number of shares of common stock
outstanding during the year.
(s) Asset retirement obligations
Asset retirement obligations are calculated based on the estimated exploration period fromcommencement of operation, which is deemed as estimated usable period, using the discount rate of
1% and 3% for the years ended March 31, 2013 and 2012, respectively. The amount presents mainly
the obligations of CBH Resources Ltd. (“CBH”) to restore its mine sites at Endeavor Mine and Rasp
Mine to original states upon closure.

11

(t)

Change in accounting policy(Change in depreciation method)
Effective for the year ended March 31, 2013, due to the revision of the Corporation Tax Act, theCompany and its domestic consolidated subsidiaries changed their depreciation method to the methodin accordance with the revised Corporation Tax Act for the property, plant and equipment acquired on
or after April 1, 2012. This change has little effect on operating income and loss before income taxes
and minority interests for the year ended March 31, 2013.

(u) Accounting standards issued but not yet adopted“Accounting Standard for Retirement Benefits” (Accounting Standards Board of Japan (“ASBJ”)
Statement No. 26, issued on May 17, 2012) (the “Accounting Standard”) and “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, issued on May 17, 2012) (the“Guidance”)(1) Overviewa)Treatment in the consolidated balance sheets
Under the Accounting Standard, unrecognized actuarial gains and losses and unrecognizedprior service costs shall be recognized within the net asset section (accumulated othercomprehensive income), after adjusting for tax effects, and the deficit or surplus shall berecognized as a liability or an asset.

b)Treatment in the consolidated statements of operations and the consolidated statements ofcomprehensive income
Under the Accounting Standard, actuarial gains and losses and prior service costs that arosein the current period and yet to be recognized in profit or loss shall be included in othercomprehensive income, and unrecognized actuarial gains and losses and unrecognizedprior service costs that were recognized in accumulated other comprehensive income inprior periods and then recognized in profit or loss in the current period shall be treated asreclassification adjustments.

(2) Date of application
The Companies will adopt the Accounting Standard and Guidance from the end of the fiscal
year beginning on April 1, 2013.
(3) Effect of application
The effects of applying the Accounting Standard and Guidance on the consolidated financial
statements are currently under evaluation.

2.

U.S. Dollar Amounts

U.S. dollar amounts presented in the accompanying consolidated financial statements and notes areincluded solely for the convenience of readers outside Japan, at the prevailing exchange rate of ¥94.05 to
U.S.$1 on March 29, 2013. These translations should not be construed as representations that the yenamounts actually represent, or have been or could be converted into U.S. dollars at that or any other rate.

12

3.

Notes Receivable and Notes Payable Maturing at Fiscal Year-End

March 31, 2013 and 2012 were bank holidays; however, notes maturing on those dates were accounted for
as if they were settled on their maturity dates. The settled amounts of notes receivable and notes payablematuring on March 31, 2013 and 2012 were as follows:
March 31,2013
2012
(Millions of yen)

Notes receivable
Notes payable
Notes payable - equipment

4.

¥

103
229
91

¥

169
249
110

2013
(Thousands of
U.S. dollars)
$

1,095
2,434
967

Inventories

Inventories as of March 31, 2013 and 2012 consisted of the following:
March 31,
2012
2013
(Millions of yen)
Merchandise and finished goods
Work in process
Raw materials and supplies
Total

5.

¥

¥

6,993
8,207
16,094
31,295

¥

¥

9,001
8,219
14,31331,534

2013(Thousands of
U.S. dollars)$$

74,35487,262
171,121332,748

Land Revaluation

In accordance with the Act on Revaluation of Land, the Company’s land used for its business operations
was revalued as follows:
Date of revaluation: March 31, 2000
The differences between total fair value of land and the total book value after revaluation of land as ofMarch 31, 2013 and 2012 were ¥6,911 million ($73,482 thousand) and ¥6,496 million, respectively.
The tax effect of the excess on revaluation is recorded as deferred tax liabilities related to land revaluation
which is included in liabilities, and the remainder, net of income taxes portion of the excess on revaluation,is presented as surplus from land revaluation which is included in net assets.

13

6.

Impairment Loss on Fixed Assets

The Companies recognized impairment losses on the assets group for the years ended March 31, 2013 and2012 as follows:

Location
The State of New
South Wales,
Australia

Annaka City, Gunma

Fujioka City, Gunma

Year ended March 31, 2013
Use

Category

Asset for
MineralResourcebusiness(Endeavor Mine)

Mining right

Idle assets

Buildings and structures
Machinery and equipment
Other
Intangible assets

Idle assets(Millions ofyen)(Thousands of
U.S. dollars)¥$

Machinery and equipment¥

Location
Fujioka City, Gunma

Year ended March 31, 2012
Use
Idle assets

Category

Machinery and equipment
Other

4,852

51,589

42
28
0
4

446
297
0
42

75

797

2
4,930

21
52,418$(Millions of
yen)
¥
¥

10
0
11

Business assets of the Company are grouped based on the categories used for its managerial accounting.
With respect to idle assets, each asset is treated as an individual unit to apply the accounting for the
impairment.
For the year ended March 31, 2013, the Company recognized impairment losses for the decreased amountof book value of an asset for Mineral Resource business (Endeavor Mine) to its recoverable amount on the
ground that the book value of the assets exceeds the sum of future cash flows expected to result from thecontinued use due to decreasing recoverable reserves and changes in market environments. The
recoverable amount was measured at value in use and calculated by discounting the future cash flows at
8%.
Furthermore, the Company decided to discontinue the use of certain production equipment in Annaka Cityand Fujioka City, Gunma due to changes in market environments and recognized impairment losses for thedecreased amount of book value of the assets to its recoverable amount. The recoverable amount wasmeasured at value in use. However, a discount rate is not disclosed since the future cash flows were
negative.
For the year ended March 31, 2012, the Company recognized impairment losses for entire book value of
idle assets on the ground that they were projected to generate no future cash inflows and were not readilysalable either.

14

7.

Investments in Unconsolidated Subsidiaries and Affiliates

Investments in unconsolidated subsidiaries and affiliates as of March 31, 2013 and 2012 are summarized asfollows:
March 31,
2012
2013
(Millions of yen)
Subsidiaries
Affiliates

8.

2013
(Thousands of
U.S. dollars)

¥

384
94

¥

389
94

$

4,082
999

¥

478

¥

484

$

5,082

Short-Term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt as of March 31, 2013 and 2012 consisted of the following:
March 31,

Amount(Millions ofyen)
Short-term borrowings
Commercial papers
Current portion of
long-term debt
Current portion of leaseobligations
Long-term debt
Lease obligations
Total

¥

¥

2013
Weighted
averageinterest rate

22,478
6,000

0.8%
0.1

2,897

1.0

18
31,560113
63,066–0.8–

Due in2012

2013

Amount(Millions ofyen)Amount(Thousands of
U.S. dollars)¥$

2014.4 – 2023.10
2014.4 – 2025.3¥

22,4782,000

239,000
63,7953,317

30,802104
33,307
131
61,338

191
335,566
1,201
670,558$

Average interest rates are calculated by using weighted-average interest rates as of March 31, 2013.
Average interest rates on lease obligations are not provided because interest equivalents included in the
total lease payments are allocated to each applicable fiscal year on a straight-line basis.
The maturities of long-term debt and lease obligations outstanding as of March 31, 2013 were as follows:

15

2014
2015
2016
2017
2018
ThereafterLong-term
Lease
debt
obligations(Millions of yen)¥
2,897 ¥
18
11,139
14
7,246
10
6,773
9
916
9
5,484
68

Long-term
Lease
debt
obligations(Thousands of U.S. dollars)$
30,802 $191
118,437
148
77,044106
72,014
95
9,739
95
58,309
723

Total

¥

$

Year ending March 31,

34,457¥131366,368$

1,392

Assets pledged as collateral for the long-term debt, including the current portion, as of March 31, 2013 and2012 were as follows:
March 31,
Pledged assets
2012
2013
2013
(Millions of yen)(Thousands of
U.S. dollars)
Land (*1)
Buildings and structures (*1)
Machinery and equipment (*1)
Investment securities (*2)
Total

¥

¥

13,792
4,884
7,483
200
26,361¥¥

13,792
4,924
7,900
160
26,778$$

146,645
51,92979,5642,126
280,287(*1) For the above assets, a revolving mortgage is set at the maximum amount of ¥1 million($10 thousand) with one bank as of March 31, 2013 and 2012.
(*2) These assets are pledged for the long-term debt, including the current portion, of ¥38 million($404 thousand) and ¥47 million as of March 31, 2013 and 2012, respectively.

9.

Employees’ Pension and Severance Costs

The Company and its domestic consolidated subsidiaries have defined benefit plans, i.e., defined benefit
corporate pension plans and lump-sum payment plans, covering substantially all employees who areentitled to lump-sum or annuity payments, the amounts of which are determined by reference to their basic
rates of pay, length of service, and conditions under which termination occurs.
The funded status of projected benefit obligations as of March 31, 2013 and 2012 were as follows:
March 31,
2012
2013
(Millions of yen)
Projected benefit obligations
Plan assets at fair value
Unfunded status
Unrecognized actuarial loss
Unrecognized prior service costs¥

Accrued employees’ pension and severance costs

¥

4,262
(1,913)
2,348
(352)
194
2,191

¥

¥

3,911
(1,575)
2,335
(125)
233
2,444

2013
(Thousands of
U.S. dollars)$$

45,316(20,340)
24,965(3,742)
2,062
23,296

16

The compositions of employees’ pension and severance costs for the years ended March 31, 2013 and 2012were as follows:Year ended March 31,
2012
2013
2013
(Millions of yen)(Thousands of
U.S. dollars)Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss¥

Amortization of prior service costs
¥

Total

179
74
(31)
38
(38)
221

¥

¥

191
79
(33)
75
(38)
274

$

$

1,903
786
(329)
404
(404)
2,349

The assumptions used in accounting for the defined benefit pension plans for the years ended March 31,
2013 and 2012 were as follows:Year ended March 31,
2012
2013
Discount rate
Expected rate of return on plan assets

10.

2.0%
2.0%

1.1%
2.0%

Asset Retirement Obligations

The changes in asset retirement obligations for the years ended March 31, 2013 and 2012 were as follows:Year ended March 31,
2012
2013
2013
(Millions of yen)(Thousands of
U.S. dollars)
Balance at beginning of year
Additional provisions associated with the purchasesof property, plant and equipment
Adjustment associated with the passage of time
Foreign currency translation adjustments

¥

1,144

Balance at end of year

¥

55
12
156
1,368

¥

763

¥

412
21
(52)
1,144

$

12,163

$

584
127
1,658
14,545

17

11.

Net Assets

Information regarding changes in net assets for the years ended March 31, 2013 and 2012 is as follows:(a) Shares issued and outstanding / Treasury stock
For the year ended March 31, 2013
Number ofshares as ofApril 1, 2012

Types of shares

Increase

Decrease

Number ofshares as ofMarch 31, 2013

(Thousands of shares)
Shares issued:
Common stock
Treasury stock:
Common stock (Note 1 and 2)

135,855––

135,855

55

0

0

56

Notes 1. The increase of 0 thousand shares is due to purchase of shares of less than standard unit.
2. The decrease of 0 thousand shares is due to sale of shares of less than standard unit.
For the year ended March 31, 2012
Number ofshares as ofApril 1, 2011

Types of shares
Shares issued:
Common stock
Treasury stock:
Common stock (Note 1)

Increase
Decrease(Thousands of shares)

Number ofshares as ofMarch 31, 2012

135,855––

135,855

55

0

–

55

Notes 1. The increase of 0 thousand shares is due to purchase of shares of less than standard unit.
(b) Dividends(1) Dividends paid
For the year ended March 31, 2013
Resolution

Type ofsharesAnnual general meeting of theshareholders on June 28, 2012

Commonstock

Total dividends(Millions of yen)¥

950

Dividends per
share
(Yen)
¥

7

Cut-off
date

Effectivedate

31 March,
2012

29 June,2012

Cut-off
date

Effectivedate

31 March,
2011

30 June,2011

For the year ended March 31, 2012
Resolution

Type ofsharesAnnual general meeting of theshareholders on June 29, 2011

Commonstock

Total dividends(Millions of yen)¥

950

Dividends per
share
(Yen)
¥

7

18

For the year ended March 31, 2013
Resolution

Type ofsharesTotal dividends(Thousands of U.S.
dollars)

Annual general meeting of theshareholders on June 28, 2012

Commonstock$

10,101Dividends per
share

Cut-off
date

Effectivedate

31 March,
2012

29 June,2012(U.S. dollars)

$

0.07

(2) Dividends with the cut-off date in the year ended March 31, 2013 and the effective date in theyear ending March 31, 2013

Resolution

Type ofsharesTotal
dividends

Source ofdividends

Dividends
per share(Millions of

Cut-off
date

Effectivedate

31 March,
2013

28 June,2013

Cut-off
date

Effectivedate

31 March,
2013

28 June,
2013

(Yen)

yen)

Annual general meeting of theshareholders on June 27, 2013

Common
stock

¥

678

Retainedearnings¥

Resolution

Type ofsharesTotal
dividends

Source ofdividends

Dividends
per share

5(U.S. dollars)(Thousands of
U.S. dollars)

Annual general meeting of theshareholders on June 27, 2013

Common
stock

$

7,208

Retainedearnings$

0.05

The Companies Act of Japan provides that an amount equal to 10% of the amount to be disbursed as
distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the common stock. Such distributions can be made at any
time by resolution of the shareholders, or by the board of directors if certain conditions are met.

19

12.

Income Taxes

As of March 31, 2013 and 2012, significant components of deferred tax assets and liabilities were as
follows:
March 31,
2012
2013
(Millions of yen)
Deferred tax assets:
Accrued employees’ pension and severance costs¥

804

Asset retirement obligations
Inventories write-off

401
332

Property, plant and equipment

227

Accrued employees’ bonus
Accrued enterprise tax

193
181
–
–

Net loss carried forward
Loss on deferred hedges
Elimination of intercompany profits
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gains on other securities
Mining rightGain on deferred hedges
Special tax-purpose reserve for reduction entry of tangible
assetsAsset retirement obligations

905
334
170

$

230
194
–

8,548
4,263
3,530
2,413
2,052
1,924
–
–

82
984

183
145
101
1,012

871
10,462

3,208
(794)
2,414

3,279
(516)
2,763

34,109(8,442)
25,667

(404)
(302)
(295)

(361)
(833)
–

(4,295)(3,211)(3,136)(159)(63)(4,391)

¥

(17)
(7)
(247)
(1,467)
1,296$(15,300)
10,356

¥

5,061

$

53,811

Net deferred tax assets

¥

(15)
(6)
(413)
(1,439)974

Deferred tax liabilities:
Deferred tax liabilities related to land revaluation

¥

5,061

Other
Total deferred tax liabilities¥

2013(Thousands of
U.S. dollars)

20

For the year ended March 31, 2013, reconciliation between the statutory tax rate and the effective tax rate is
not shown as loss before income taxes and minority interests was recorded.
The reconciliation between the statutory tax rate and the effective tax rate for the year ended March 31,
2012 was as follows:Year ended March 31,
2012
40.7%

Statutory tax rate
Increase (decrease) due to:Entertainment and other non-deductible expenses
Dividend income and other non-taxable income
Effect on elimination of the dividend income from consolidated
subsidiaries
Inhabitants’ per capita taxes
Reversal of deferred tax assets of foreign consolidated subsidiaries
Elimination of the intercompany profits
Reduction of deferred tax assets due to change in income tax rate
Change in valuation allowance
Other

4.4
0.9
21.4
3.4
1.7
(3.2)
1.8

Effective tax rate

66.7%

13.

0.6
(5.0)

LeasesAs lessee:
Pro forma information on an “as if capitalized” basis of finance lease contracts commencing prior to April 1,
2008, which are accounted for in the same manner as operating leases, is not shown as they are immaterial.
There were no impairment losses allocated to leased assets for the years ended March 31, 2013 and 2012.

14.

Commitments and Contingent Liabilities

The Companies were contingently liable as guarantors for loans of certain unconsolidated subsidiary andaffiliate in the aggregate amount of ¥277 million ($2,945 thousand) and ¥365 million as of March 31, 2013
and 2012, respectively.
The Company has entered into loan commitment agreements amounting to ¥5,600 million($59,542 thousand) and ¥5,600 million with two financial institutions as of March 31, 2013 and 2012,
respectively. The loans payable outstanding was zero, and therefore, the unused balance was ¥5,600
million ($59,542 thousand) and ¥5,600 million under the credit facilities as of March 31, 2013 and 2012,
respectively.
The Company has repurchase obligations of ¥538 million ($5,720 thousand) and ¥559 million inconnection with securitization as of March 31, 2013 and 2012, respectively.

21

15.

Financial Instruments

Overview(1) Policy for financial instruments
The Companies raise funds mainly through bank borrowings in consideration of their business plans.
The Companies invest their temporary surplus funds in highly liquid financial assets and raise
short-term operating capital through bank borrowings and issuances of commercial papers. The
Companies use derivatives to avoid after-mentioned risks and do not enter into derivatives for
speculative or trading purposes.
(2) Descriptions of financial instruments and related risks
Trade receivables––notes and accounts receivable, trade––are exposed to customer credit risk. Trade
receivables denominated in foreign currencies which are derived from foreign operations are exposed
to foreign currency risk, and such risk is hedged by forward foreign exchange contracts.
Investment securities are mainly composed of equity securities of companies with business
relationships and exposed to market risk.
Trade payables––notes and accounts payable, trade––are mostly due within two months or less.
Certain trade payables denominated in foreign currencies are exposed to foreign currency risk, andsuch risk is hedged by forward foreign exchange contracts.
Trade receivables and payables in connection with the Smelting business are exposed to commodity
price fluctuation risk of London Metal Exchange (“LME”), and such risk is hedged by metal futurescontracts.
Long-term debt is principally for the purpose of making capital investments, and due up to 10 years
from the consolidated balance sheet date. Certain long-term debt is exposed to interest rate
fluctuation risk, and such risk is hedged by derivatives (interest rate swaps).
As for derivatives, the Companies have entered into the forward foreign exchange contracts to hedge
the foreign currency risk arising from the trade receivables and payables denominated in foreign
currencies, metal futures contracts to hedge the commodity price fluctuation risk of LME arising fromthe trade receivables and payables on the Smelting business and interest rate swaps to hedge thefluctuation risk deriving from interest payment of long-term debt. See Note 1. (f) (3) Hedge
accounting for information about the method of hedge accounting, hedging instruments and hedged
items, hedging policy, and assessment of hedge effectiveness.
(3) Risk management for financial instruments(a) Management of credit risk (risk of default by customers or counterparties)
In accordance with the internal rules of the Company, sales departments of each division of theCompanies periodically monitor creditworthiness of their main customers and manage due dates
and outstanding balances by customer. In addition, the Companies are making efforts to
identify uncollectibility in the earlier stage and mitigate risks of bad debts, due to customers withfinancial difficulties.
The Companies believe that the credit risk of derivatives is insignificant as they enter into
derivative transactions only with financial institutions with high credit ratings.

22

(b) Management of market risks (risks of fluctuations in foreign exchange rates, commodity prices,interest rates and others)
For trade receivables and payables denominated in foreign currencies, the foreign currency riskof the Company identified by currency on a monthly basis is hedged by forward foreignexchange contracts. In order to mitigate the commodity price fluctuation risks of LME for
trade receivables and payables on the Smelting business, the Company has entered into the metal
futures contracts. In addition, the Company has entered into interest rate swap transactions to
mitigate the interest rate fluctuation risk for interest payment of long-term debt.
For investment securities, the Companies periodically monitor the fair values and financial
position of the issuers and continuously review the holding status taking into account market
conditions and relationships with the issuers.
Derivative transactions are conducted and managed by treasury personnel including directors
and each division, and risk management is sufficiently conducted by making reports tomanagement every time transactions are executed as well as on a periodical basis.
(c) Management of liquidity risk on funding (risk of default at due dates)
Based on the report from each department and affiliate, the department in charge of theCompany prepares and updates its cash flow plan on a timely basis and manages liquidity risk by
maintaining liquid funds.
(d) Supplementary explanation of the fair value of financial instruments
Fair values of financial instruments are based on their respective market prices if available.
When there is no market price available, fair value is reasonably calculated. Since various
assumptions and factors are reflected in the calculation of the fair value, different assumptions
and factors could result in different fair value. In addition, the notional amounts of derivatives
in Note 18 Derivative Transactions are not indicative of the market risk involved in derivativetransactions.

23Fair Values of Financial Instruments
Carrying values of financial instruments on the consolidated balance sheets as of March 31, 2013 and 2012
and their fair values are shown in the following table. Financial instruments whose fair value is extremely
difficult to determine are not included in the following table (Please refer to Note 2 below).

Carrying value

March 31, 2013
Fair value(Millions of yen)

(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets¥

11,414
14,667
3,619
29,702¥(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities

¥

¥

¥

6,158
22,47834,45763,093¥777

Derivatives (*2)¥

11,414
14,667
3,619
29,702

¥

¥

–
–
–
–

¥

–

¥

6,158
22,47834,90563,541

¥

–
448
448

¥

777

¥

–

¥

Carrying value

March 31, 2012
Fair value(Millions of yen)

(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets¥

16,55015,997
3,629
36,177¥(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities

¥

¥

¥

7,589
22,47836,62566,692¥(383)

Derivatives (*2)¥

Difference

Difference

16,55015,997
3,629
36,177

¥

¥

¥

7,589
22,47836,714
66,781

¥

–
–
89
89

¥

(383)

¥

–

¥

¥

–
–
–
–

March 31, 2013
Carrying value
Fair value
Difference(Thousands of U.S. dollars)(1) Cash and time deposits(2) Notes and accounts receivable, trade(3) Investment securities
Total assets$(1) Notes and accounts payable, trade(2) Short-term borrowings(3) Long-term debt (*1)
Total liabilities$

Derivatives (*2)

121,360
155,948
38,479315,810$$$65,475
239,000
366,368
670,845

$

8,261

$

121,360
155,948
38,479315,810$$$65,475
239,000
371,132
675,608

$

–
–
4,763
4,763

$

8,261

$

–

$

$

–
–
–
–

(*1) Current portion of long-term debt is included in long-term debt as of March 31, 2013 and 2012.

24

(*2) The value of assets and liabilities arising from derivatives is shown at net value, and the net liability
position is shown in parentheses.
Notes:
1.

Methods to calculate the fair value of financial instruments and other matters related to securities andderivative transactions
Assets(1) Cash and time deposits and (2) Notes and accounts receivable, trade
Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Investment securities
The fair value of equity securities is based on a quoted market price. For information on securities
classified by holding purpose, please refer to Note 16 Investment Securities.
Liabilities(1) Notes and accounts payable, trade and (2) Short-term borrowings
Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Long-term debt
For long-term debt with floating interest rates, its carrying value approximates fair value since thedebt reflects the market interest rates in a short period of time and the credit condition of theCompany does not change significantly after the debt is executed. For long-term debt with fixedinterest rates, the fair value is based upon the present value of the total of principal and interest
discounted by the interest rate to be applied if similar new borrowings were entered into.
Derivative transactions
Please refer to Note 18 Derivative Transactions.

2.

Financial instruments whose fair value is extremely difficult to determine
March 31,2013
2012
(Millions of yen)

Unlisted equity securities

¥

699

¥

1,004

2013
(Thousands of
U.S. dollars)
$

7,432

These are not included in (3) Investment securities in the above table because there were no market
prices available and it was extremely difficult to determine the fair value.

25

3.

Redemption schedule for monetary receivables as of March 31, 2013

Due in one
year or less

Cash and time deposits
Notes and accounts receivable, trade
Total

¥
¥

11,407
14,667
26,075Due in one
year or less

Cash and time deposits
Notes and accounts receivable, trade$ 121,286
155,948$ 277,246

Total

March 31, 2013
Due after
Due after
one yearfive years
through fivethrough ten
years
years
(Millions of yen)
¥

–
–
–

¥

¥

–
–
–

¥

Due after
ten years¥¥

March 31, 2013
Due after
Due after
one yearfive years
through fivethrough ten
years
years
(Thousands of U.S. dollars)
$

–
–
–

$

$

–
–
–

$

–
–
–

Due after
ten years

$
$

–
–
–

4.

The redemption schedule for long-term debt is disclosed in Note 8 Short-Term Borrowings andLong-Term Debt.

16.

Investment Securities

Investment securities held by the Companies are all classified as other securities.
The aggregate cost and fair value (carrying value) of marketable securities classified as other securities asof March 31, 2013 and 2012 were as follows:

Cost
Securities whose fair value exceeds theircost:
Equity securities
Securities whose fair value does notexceed their cost:
Equity securities
Total

¥

1,853

¥

572
2,426

March 31, 2013
Fair value(carrying value)(Millions of yen)

Unrealized gains(losses)

¥

3,226

¥

1,373

¥

393
3,619

¥

(179)
1,193

26

Cost
Securities whose fair value exceeds theircost:
Equity securities
Securities whose fair value does notexceed their cost:
Equity securities
Total

¥

1,567

¥

982
2,549

Cost

March 31, 2012
Fair value(carrying value)(Millions of yen)

Unrealized gains(losses)

¥

2,805

¥

1,237

¥

824
3,629

¥

(158)
1,079

March 31, 2013
Fair value
Unrealized gains(carrying value)(losses)(Thousands of U.S. dollars)

Securities whose fair value exceeds theircost:
Equity securities$

19,702$34,300$14,598

Securities whose fair value does notexceed their cost:
Equity securities
Total

$

6,081
25,794$

4,178
38,479$(1,903)
12,684As of March 31, 2013 and 2012, unlisted equity securities amounting to ¥612 million ($6,507 thousand)and ¥912 million, respectively, are not included in the above table because there were no market prices
available and it was extremely difficult to determine the fair value.
For the years ended March 31, 2013 and 2012, the Companies recognized ¥80 million ($850 thousand) and¥4 million of impairment losses for investment securities, respectively. In the case that the market value
at the end of the year declines by 50% or more from its cost, the Companies recognize the difference
between the market value and the cost as an impairment loss, and in the case that the decline ranges
between 30% and 50%, the Companies recognize an impairment loss for the necessary amount after taking
into consideration factors such as the materiality and recoverability of the amount.
Information about sales of securities classified as other securities for the years ended March 31, 2013 and2012 was as follows:Year ended March 31,
2013
2012
2013
(Millions of yen)(Thousands of
U.S. dollars)
Sales proceeds
Aggregate gain

¥

158
80

¥

38
29

$

1,679
850

27

17. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2013 and 2012 were composed of the followings:
March 31,
2012

2013
(Millions of yen)
Cash and time deposits
Less: Time deposits with maturities in excess of
three months
Cash and cash equivalents

18.

¥

11,414¥–
11,414¥

16,550¥(5)
16,545

2013(Thousands of
U.S. dollars)$

121,360$–
121,360

Derivative Transactions(1) Summarized below are the notional amounts and the fair value of derivative instruments outstanding
as of March 31, 2013 and 2012, for which hedge accounting has not been applied.
Currency-related transactions
March 31, 2013
Notional amountContract
Maturing after
amountone year
Fair value(Millions of yen)

Unrealized
gains (losses)

OTC transactions:
Forward foreign exchange
contracts
Sell:
USD
Total

¥
¥

3
3

¥
¥

–
–

¥
¥

0
0

March 31, 2012
Notional amountContract
Maturing after
amountone year
Fair value(Millions of yen)

¥
¥

0
0

Unrealized
gains (losses)

OTC transactions:
Forward foreign exchange
contracts
Sell:
USD
Total

¥
¥

5
5

¥
¥

–
–

¥
¥

(0)
(0)

¥
¥

(0)
(0)

28

March 31, 2013
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)

Unrealized
gains (losses)

OTC transactions:
Forward foreign exchange
contracts
Sell:
USD
Total

$
$

31
31

$
$

–
–

$
$

0
0

$
$

0
0

Note: The calculation of fair value is based on prices obtained from counterparty financial
institutions and others.
(2) Summarized below are the notional amounts and the fair value of derivative instruments outstanding
as of March 31, 2013 and 2012, for which hedge accounting has been applied.
(a) Interest-related transactions
March 31, 2013
Notional amountContract
Maturing after
amountone year(Millions of yen)Interest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

¥
¥

7,925
7,925

¥
¥

7,065
7,065

March 31, 2012
Notional amountContract
Maturing after
amountone year(Millions of yen)Interest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

¥
¥

8,865
8,865

¥
¥

7,925
7,925

Fair value(Note)

Fair value(Note)March 31, 2013
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)Interest rate swaps hedging long-term
debt, accounted for by exceptional
treatment:
Receive/floating and pay/fixed
Total

$
$

84,26384,263$$75,11975,119(Note)

29

Note: Interest rate swaps to which exceptional treatment is applied are accounted for together withlong-term debt designated as a hedged item. Therefore, their fair values are included in thefair value of long-term debt.
(b) Commodity-related transactions
March 31, 2013
Notional amountContract
Maturing after
amountone year(Millions of yen)
Commodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

¥
¥

13,577
13,577¥¥––

Fair value¥¥

March 31, 2012
Notional amountContract
Maturing after
amountone year(Millions of yen)
Commodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

¥
¥

10,867
10,867

¥
¥

–
–

777
777

Fair value

¥
¥

(382)
(382)

March 31, 2013
Notional amountContract
Maturing after
amountone year
Fair value(Thousands of U.S. dollars)Commodity futures contracts, accounted
for as part of raw materials andfinished goods:
Sell: Metals
Total

$
$

144,359
144,359

$
$

–
–

$
$

8,261
8,261

Note: The calculation of fair value is based on prices obtained from counterparties and others.

30

19.

Other Comprehensive Income

Reclassification adjustments and tax effects allocated to each component of other comprehensive income
for the years ended March 31, 2013 and 2012 were as follows:
Years ended March 31,
2012
2013
2013
(Millions of yen)
Net unrealized gains (losses) on other securities:
Gains (losses) arising during the year
Reclassification adjustments
Amount before tax effectTax effect

¥

148
(4)
143
(43)
100

Gain on deferred hedges:
Gains arising during the year
Reclassification adjustments

340
819

Amount before tax effectTax effectSurplus from land revaluation:
Tax effectForeign currency translation adjustments:
Adjustments arising during the year
Total other comprehensive income¥¥(Thousands of
U.S. dollars)

(435)
(25)
(461)
242
(219)

$

1,573
(42)
1,520
(457)
1,063

1,160
(441)

1,785
1,830
3,615
(1,481)

3,615
8,708
12,333(4,688)

719

2,133

7,644

–
–

718
718

–
–

998
998
1,818

(1,902)(1,902)730

10,611
10,611
19,330¥$31

20. Segment Information(1) Overview of reportable segments
The Company defines reportable segments as components of the Company for which separate
financial information is available and whose operating results are regularly evaluated by the board of
directors to make decisions about how resources are allocated and assess its performance.
Operating departments of the Company are organized according to products and services, and eachdepartment plans comprehensive domestic and overseas strategies for its products and services anddevelops business activities through the Company and its consolidated subsidiaries. Thus, reportablesegments of the Company are determined based on such operating departments; namely, “Smelting,”“Electronic Components and Materials” and “Environment and Recycling,” and “Mineral Resource”
organized based on CBH, the consolidated subsidiary.
· Smelting segment engages in sales and production of zinc and lead products, electric silver andsulfuric acid.
· Mineral Resource segment engages in exploration, development and production of non-ferrous
metal resources and sales of their output.
· Electronic Components and Materials segment engages in sales and production of electronic parts,
electrolytic iron, plating and machine parts.
· Environment and Recycling segment engages in sales and production of zinc oxide and recyclingof waste materials.
(2) Basis of measurement for the amounts of net sales, profit or loss, assets and other items for eachreportable segment
The accounting policies of each reportable segment are generally consistent to those described in Note
1. Summary of Significant Accounting Policies. The segment profit is based on operating income, andintersegment sales and transfers are based on actual market prices.
(Change in depreciation method for property, plant and equipment)
As described in Note 1. (t) Change in accounting policy, effective for the year ended March 31, 2013,
due to the revision of the Corporation Tax Act, the Company and its domestic consolidated
subsidiaries changed their depreciation method to the method in accordance with the revised
Corporation Tax Act for the property, plant and equipment acquired on or after April 1, 2012. Thischange has little effect on segment profit or loss for the year ended March 31, 2013.

32

(3) Information about net sales, profit or loss, assets and other items
Year ended March 31, 2013
Reportable segment
Electronic
Compon- EnvironMineralents andment andSmelting Resource Materials Recycling

Other(Note 1)

Total

Total

Reconciliation(Note 2)

Amounts on
consolidated
financialstatements(Note 3)¥–
(11,081)¥ (11,081)¥(144)¥ 19,064¥¥¥¥

103,654–
103,654534
145,814

¥

¥

7,490

(Millions of yen)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill¥ 71,018
2,621¥ 73,639¥ 1,521¥ 65,332¥ 11,034 ¥ 6,463
3,558
119
¥ 14,592 ¥ 6,582¥ (3,375) ¥773¥ 41,078 ¥ 10,919¥ 2,840 ¥ 3,832 ¥300¥ 4,3416¥ 4,347¥650¥ 4,372¥ 92,857
6,305¥ 99,163¥ (430)¥121,703¥ 10,797
4,775¥ 15,572¥ 1,109¥ 5,046¥339¥ 7,313¥¥ 103,654
11,081¥ 114,735¥
679¥ 126,749

104 ¥

7,418

72

1,710

8,351

210

236

10,50859

10,56729

10,597

–

4,852

–

–

4,852

–

4,852

78

4,930

–

37

–

–

37

–

37

–

37

–

548

–

–

548

–

548

–

548

Reconciliation(Note 2)

Amounts on
consolidated
financialstatements(Note 3)¥–
(11,799)¥ (11,799)¥(86)¥ 25,251¥¥¥¥

105,914–105,9142,802
149,803

¥

¥

6,075

Year ended March 31, 2012
Reportable segment

Smelting

Electronic
Compon- EnvironMineralents andment andResource Materials Recycling

Other(Note 1)

Total

Total

(Millions of yen)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill¥ 76,137
2,972¥ 79,109¥ 1,059¥ 63,279¥ 6,138 ¥ 7,075
3,413
114
¥ 9,551 ¥ 7,189¥ (826) ¥864¥ 36,990 ¥ 10,872¥ 2,809 ¥ 2,334 ¥352¥ 2,9892¥ 2,992¥299¥ 6,153¥¥ 92,340
6,502¥ 98,843¥ 1,396¥ 117,295

341 ¥

5,838

¥ 13,573
5,297¥ 18,871¥ 1,492¥ 7,255¥¥ 105,914
11,799¥ 117,714¥ 2,889¥ 124,551

132 ¥

5,970

104

3,095

10,270279

206

13,851

61

13,912

31

13,944

–

–

–

–

–

–

–

11

11

–

36

–

–

36

–

36

–

36

–

501

–

–

501

–

501

–

501

33

Year ended March 31, 2013
Reportable segment

Smelting

MineralResource

Electronic
Compon- Environents andment andMaterials Recycling

Other(Note 1)

Total

Total

Amounts on
consolidated
financialstatements(Note 3)

Reconciliation(Note 2)(Thousands of U.S. dollars)
Net sales:
External customers
Intersegment
Total
Segment profit (loss)
Segment assets
Other items:
Depreciation andamortization
Increase in property,
plant and equipment
and intangible assets
Impairment losses on
fixed assets
Amortization of
goodwill
Unamortized balanceof goodwill$ 755,108 $ 117,320
27,86837,830$ 782,977 $ 155,151$ 16,172 $ (35,885)$ 694,651 $ 436,767$ 68,718
1,265$ 69,984$ 8,219$ 116,097$ 30,196 $ 40,744 $3,189$ 46,15663$ 46,220$ 6,911$ 46,485$ 987,315 $ 114,800 $ 1,102,115
67,03850,770117,820$ 1,054,364 $ 165,571 $ 1,219,936$ (4,572) $ 11,791 $7,219$ 1,294,024 $ 53,652 $ 1,347,676

$

$

3,604

77,756 $1,105 $$–
(117,820)$ (117,820)$ (1,531)$ 202,700

78,872 $765$ 1,102,115–$ 1,102,115$
5,677$ 1,550,388$

79,63818,181

88,793

2,232

2,509

111,727627

112,355308

112,674–

51,589––51,589–51,589829

52,418

–

393

–

–

393

–

393

–

393

–

5,826

–

–

5,826

–

5,826

–

5,826

Notes 1. “Other” represents business segments not belonging to reportable segments and includes
sound insulation building materials, civil engineering, construction and plant engineering,transportation, environmental analysis and others.
2. “Reconciliation” included the followings:
Year ended March 31,
2012
2013
2013
(Millions of yen)(Thousands of
U.S. dollars)

Segment (loss) profit:
Intersegment elimination¥

Corporate expenses (*)
Total

¥

(69)
(74)
(144)

¥
¥

11
(97)
(86)

$

(733)
(786)

$

(1,531)(*) “Corporate expenses” represents mainly general and administrative expenses that are notallocated to reportable segments.
Year ended March 31,
2012
2013
2013
(Millions of yen)(Thousands of
U.S. dollars)

Segment assets:
Corporate assets (*)¥

19,064¥25,251$

202,700(*) “Corporate assets” represents mainly the Company’s investments of surplus funds including
cash and investment securities and assets relating to administrative divisions.

34

Year ended March 31,
2012
2013
2013
(Millions of yen)(Thousands of
U.S. dollars)

Other items:
Depreciation and amortization
Increase in property, plant and equipment andintangible assets (*)

¥

72

¥

104

$

31

29

765
308

(*) “Increase in property, plant and equipment and intangible assets” represents mainly capital
expenditures that do not belong to reportable segments.
3. Segment profit or loss is reconciled to operating income on the consolidated statements ofoperations.
(4) Related information(a) Information by product and service
Information by product and service has been omitted since similar information is disclosed insegment information described above.
(b) Information by geographical area
Net sales information by geographical area has been omitted since net sales to externalcustomers in Japan exceed 90% of the consolidated sales.
Property, plant and equipment information by geographical area as of March 31, 2013 and 2012
was as follows:Year ended March 31,
2012
2013
2013
(Millions of yen)(Thousands of
U.S. dollars)
Japan
Australia

¥

Total

¥

37,61016,71254,322¥¥

39,13012,72951,860$$399,893
177,692
577,586(c) Information by major customer
Information by major customer has been omitted since there were no sales to single externalcustomer accounting for 10% or more of the consolidated sales.

35