November 9, 2007
Non-Consolidated Financial Results for the Fiscal Year Ended September 30, 2007
Company name:

Fuji Pharma Co., Ltd.

Code number:

4554 (URL http://www.fujipharma.jp)

Stock Exchange listing:

JQ

Representative:

Hirofumi Imai, Representative Director and President

Contact:

Toyoyuki Kamide, Director and General Manager of Administration Department
Tel: 81-(3)-3556-3344

Scheduled date of annual shareholders’ meeting: December 20, 2007
Scheduled start date of dividend: December 21, 2007
Scheduled submission date of annual security report: December 21, 2007
1. Financial Results for the Fiscal Year Ended September 2007 (Oct. 1, 2006 to Sept. 30, 2007)(1) Operating Results
Net sales
Fiscal Year ended Sep. 2007
Fiscal Year ended Sep. 2006

Operating income

Million Yen

YoY change(%)

13,250
11,24017.9
11.0

Net income

Fiscal Year ended Sep. 2007
Fiscal Year ended Sep. 2006

Ordinary income

Million Yen

YoY change(%)

Million Yen

YoY change
(%)

2,103
1,532

37.2
55.1

2,129
1,556

36.8
56.2

Net income per share

Diluted net income
per share

Million Yen

YoYchange (%)

Yen

Yen

1,193
915

30.3
58.7

92.74
73.78

-

Return on equity

Return on assets

Profit margin on sales

(%)

(%)

(%)

11.8
10.0

15.9
13.6

8.8
7.6
Note: Earnings on investments in equity-method affiliates:

Fiscal Year ended Sep. 2007
Fiscal Year ended Sep. 2006

Fiscal year ended September 2007:

None

Fiscal year ended September 2006:

None(2) Financial Positions

Fiscal year ended Sep. 2007
Fiscal year ended Sep. 2006
Note: Shareholders’ equity:

Total assets

Net assets

Shareholders’equity ratio

Shareholders’equity per share

Million Yen

Million Yen

(%)

Yen

19,211
16,98914,00813,01372.9
76.6

1,088.48
1,011.12

Fiscal year ended September 2007: 14,008 million yen
Fiscal year ended September 2006: 13,013 million yen
1(3) Cash Flows
Operatingactivities

Net cash used by
Investingactivities

Financing
activities

Cash and cash
equivalents balance at
end of the fiscal year

Million Yen

Million Yen

Million Yen

Million Yen

1,659
767

-94
-2,364

-179
1,172

3,643
2,258

Dividend per share (Yen)First
SecondAnnual
half
half
7.00
7.00
14.00
7.00
12.00
19.00

Total cash
dividends(Million yen)
180
244

Dividend
payoutratio (%)
19.0
20.5

Dividends
on equity
(%)
1.4
1.8

-

19.5

-

Fiscal year ended Sep. 2007
Fiscal year ended Sep. 2006
2. Dividends

Fiscal year ended September 2006
Fiscal year ended September 2007
Fiscal year ending September 2008
(Estimated)

10.00

10.00

20.00

3. Forecast for the Fiscal Year Ending September 30, 2008 (October 1, 2007 to September 30, 2008)
Net income
Operating
Ordinary
Net income
Net sales
per share
incomeincomeMillion Yen%

Million Yen

7,140
11.4
1,060
First half ended Mar. 2008
15,30015.5
2,190
Fiscal year ended Sep. 2008
Note: The percentage represents the year-on-year change.

%

Million Yen%

Million Yen

%

Yen

0.6
4.1

1,060
2,200

0.1
3.3

630
1,320

5.9
10.6

48.95
102.56

4. Supplementary Information(1) Changes in significant accounting policies(i) Changes in accordance with amendments to accounting principles: Details are described in “Changes inSignificant Accounting Policies” on Page 16.
(ii) Those other than changes which fall under (i): None
(2) Shares outstanding (ordinary shares)(i) Number of shares outstanding as of the end of each fiscal year (including treasury stock shares):Fiscal year period ended September 2007: 12,870,000 sharesFiscal year period ended September 2006: 12,870,000 shares(ii) Number of treasury stock shares as of the end of each fiscal year:
Fiscal year period ended September 2007: 10 sharesFiscal year period ended September 2006: 10 shares
Note: For the number of shares used for the calculation of net income per share, please see “Per Share Data” on
Page 25.
(Note to our earnings forecasts)
Our earnings forecasts are based on the information available and on the assumptions which we regard as
reasonable at the date of this release. Actual results could significantly differ from our estimates because of
uncertain factors inherent to such forecasts and subsequent changes in circumstances.
2

[Qualitative Information and Financial Statements]
I. Review of Operating Performance and Financial Conditions
1. Review of Operating Results
We recorded increases both in sales and profits for the fiscal year concerned: 13,250 million yen of sales(17.9% year-on-year increase), 2,103 million yen of operating income (37.2% year-on-year increase),
2,129 million yen of ordinary income (36.8% year-on-year increase), and 1,193 million yen of net income(30.3% year-on-year increase).
(1) Analysis of Sales
The breakdown of sales being reviewed demonstrated our diagnostic agents, including the key
urography and angiography contract agents, “OYPALOMIN” and “IOPAQUE”, as showing thestrongest growth, an increase of 16.2 percent on a year on year basis to 5,215 million yen. Hormone
drugs, particularly the infertility therapeutic agents, including a pituitary gonadotropic hormone drug,“Human Menopausal Gonadotropin” and “FOLYRMON-P injection”, and an endometriosis
therapeutic agent, “BUSERECUR”, showed favorable sales results. This segment increased by 15.3
percent on a year on year basis to 3,360 million yen. In addition, drugs with other efficacies showed asteady growth. As a result, sales for the period increased by 17.9 percent on a year on year basis.
(2) Analysis of Operating Income
The sales cost ratio for the fiscal year concerned improved by 2.0 percent points to 55.1 % from theprevious year. The selling and administration cost increased by 16.9 percent to 3,850 million yen fromthe previous year due to increased personnel expenses, sales commission and research anddevelopment costs. Its ratio to sales, however, declined by 0.3 percent points to 29.0 percent.
(3) Analysis of Non-operating Income and Extraordinary Losses
We booked 140 million yen of extraordinary losses in the fiscal year concerned, including 104 million
yen of loss on disposal of obsolete inventories and 24 million yen of additional provision for
retirement benefits for directors for prior years in accordance with the revised rules of retirement
benefits for directors.
2. Financial and Cash Flow Conditions(1) Financial Conditions
The closing balance of total assets as at the end of the fiscal year concerned increased by 2,221 million
yen to 19,211 million yen from the opening balance.
The closing balance of current assets increased by 2,080 million yen to 12,761 million yen from theopening balance. While cash and cash equivalents, inventories and trade receivables increased by
1,482 million yen, 588 million and 519 million yen respectively, marketable securities decreased by
597 million yen.

3

The closing balance of fixed assets increased by 140 million yen to 6,449 million yen. The factors forthe increase in tangible fixed assets are capital expenditure for two factories where tablet
pharmaceuticals and injection solution are produced, respectively. We increased the production
capacity of the former prior to the launch of our new products and made an investment in the latter
factory in order to expand the production of syringe-type products and lyophilized formulation.
The closing balance of liabilities at the end of the fiscal year concerned increased by 1,225 million yen
from the opening balance to 5,202 million yen due to a 1,157 million yen increase in current liabilities.
This resulted from a 542 million yen increase in trade payables, a 172 million yen increase in otheraccounts payable and a 164 million yen increase in accrued income taxes.
The closing balance of net assets as at the end of the fiscal year concerned increased by 995 million
yen from the opening balance to 14,008 million yen. This is primarily due to a 1,013 million yen
increase in retained earnings in the shareholders’ equity.
(2) Cash Flow Conditions
The closing balance of cash and cash equivalents increased by 1,385 million yen from the opening
balance to 3,643 million yen. Details of the cash flows of operating, investing and financing activities
and the factors for the increase or decrease in the cash flows are as follows:
1) Net cash provided by operating activities
587 million yen of depreciation, 542 million yen of increase in trade payables and 119 million yen ofincrease in accrued consumption taxes were added to 1,988 million yen of net income before income
taxes for the fiscal year concerned. On the other hand, negative factors for the cash flow in operating
activities were as follows: 702 million yen of income tax payment; 588 million yen of increase ininventories; 519 million yen of increase in trade receivables. Consequently, net cash provided byoperating activities for the fiscal year concerned was 1,659 million yen (116.2% YoY increase).
2) Net cash used in investing activities
We received 600 million yen as proceeds from sales of marketable securities. On the other hand, we
spent 476 million yen, 99 million yen, 52 million yen and 50 million yen for the purchase of tangible
fixed assets, leased assets, marketable securities and leased assets, and the payment of guaranteemoney, respectively. Consequently, net cash used in investment activities was 94 million yen (96.0%
YoY decrease).
3) Net cash used in financing activities
We spent 179 million yen as dividends. Consequently, net cash used in financing activities was in thenegative for the fiscal year concerned (1,172 million yen of positive cash flow in the fiscal year
ended September 30, 2006).

4

Trends of the company’s cash flow indicators are as follows:
FY2003
FY2004Equity ratio (%)
75.7
74.0
Market value basis equity ratio (%)
116.7
110.9
Cash flow to debt (%)
28.3
23.1
Interest coverage ratio (Times)
620.2
632.6

FY2005
77.1
90.8
60.6
183.1

FY2006
76.6
103.5
27.2
332.5

FY2007
72.9
146.7
12.8
706.2

・ Equity ratio: Shareholders’ equity / Total assets
・ Market value basis equity ratio: Market capitalization / Total assets
・ Cash flow to debt: Interest-bearing debt / Operating cash flow
・ Interest coverage ratio: Operating cash flow / Interest paid
※ “Guaranteed deposit received” in the Liability Section of the Balance Sheet is used as interest-bearing debt.
※ “Net cash provided by operating activities” in Cash Flow Statements and “Interest paid” in Income
Statements are used as Operating cash flow and Interest paid.

3. Profit Allocation Policy and Dividend Payment Plan
One of our key tasks is to achieve a consecutive dividend or dividend per share increase. We determine
profit allocation based on the net profit generated during the period concerned, but also comprehensively
taking into account future company performance and earnings to be retained for future business operations.
We plan to re-invest retained earnings in ways to strength research and development, to improve
production capacity and efficiency, and to increase our sales force, in order to enhance operationalfoundations and the expansion of corporate value. There are no plans to change the frequency of dividend
payments.
We determined to pay 12 yen per share as the year-end cash dividend per share. We will pay 19 yen per
share as the annual cash dividend per share since we paid 7 yen per share as the interim cash dividend pershare. We currently plan to pay 10 yen per share both as the interim and year-end cash dividend per sharefor the next fiscal year. As a result, our annual cash dividend per share should be 20 yen.
4. Operational Risk
Risks related to the information contained in the financial statements for the fiscal year concerned which
may have significant influences on investors’ decision are as follows:(1) Statutory Regulations
Our company manufactures and distributes pharmaceutical products under the Pharmaceutical Affairs
Law and related regulations. The revision in laws/regulations related to the pharmaceutical industry,
which may be made in future, may influence our financial condition and business performance.
(2) Research and Development for Pharmaceutical Products
There is a possibility that our research and development projects will be behind schedule, a new
product development period will be extended and the projects will be suspended or even terminated.
These events may have an impact on our business performance.
(3) Competition
Our policy is to sell our products at reasonable prices taking into account the profitability of products.
However, some of our products have been suffering from considerable market price decline because of5the fierce competition from many competitors. Moreover, some original drug manufacturers havetaken an aggressive approach to maintain their market share. Therefore, there is a possibility that wewill not manage to achieve our projected forecasts.
The above statement on possible future risks is based on our company’s prospects as at the end of the
fiscal year ended September 30, 2007.

II. Group Organization
The Company neither has subsidiaries nor affiliates. Therefore, this item is not applicable.

III. Management Policies
1. Fundamental Management Policy
Our corporate mission is “Making a contribution to society through the supply of pharmaceutical products
which facilitate the improvement and cure of medical conditions and disorders”. Under this mission, we
intend to fulfil our responsibility to our customers, shareholders, employees and other stakeholders by
supplying good-quality pharmaceutical products and to achieve continuous growth.

2. Performance Indicator and Targets
Maximum effort will be made to generate earnings sufficient to realize our dividend policy and to cover
the cost of upgrading or expansion of production facilities and continuing growth in research anddevelopment spending. We set measurable targets in our “Mid-term Business Plan” for the four-year
period ended September 30, 2010 as follows: 3,300 million yen of “Ordinary Income” (2,129 million yen
for the fiscal year ended September 30, 2007); 16.5% of “Ordinary Income to Sales” (16.1% as of the
fiscal year ended September 30, 2007); 14.5% of “Return on Assets” (Ordinary Income / Total Assets,
11.8% of the fiscal year ended September 30, 2007). Furthermore, with reference to the rise in shareholder
value, we also regard “Net Income per Share” as an important performance indicator and will target on
154 yen as of the fiscal year ended September 30, 2010 (92.74 yen as of the fiscal year ended September
30, 2007).
3. Medium- and Long-term Management Strategy
We will invest our management resources in a focused way in our strong areas: injectable solutions interms of dosage form, hormone and diagnostic drugs in terms of drug efficacy, and obstetrics, gynaecology
and roentgenology in terms of the medical examination field. We will allocate a strategic budget to theseareas for proactive measures such as business alliances, license agreements, product development andcapital expenditure.
With regard to the obstetric and gynaecologic area, we will enhance our generic product line-up as well as
introducing new drugs from other pharmaceutical companies. We will market these drugs to our existingcustomers in order to efficiently increase our sales. We believe that the improvement of our productportfolio will lead to the further expansion of our business into medical care for women. As for acute6treatment, we plan to proactively launch new products, particularly new injection solutions, responding to
the increasing introduction of Diagnosis Procedure Combination (DPC).
On the marketing and sales side, we will improve the expertise of our medical representatives (MRs) andstrengthen our support to academic research. We also plan to improve our production force. We will
upgrade and expand our production system of a new tablet production factory for commissioning
manufacture as well as increasing our production capacity of sustained-release (drug delivery system)
injectable products and existing injection products whose sales are expected to grow.
4. Key Issues to be Resolved
The generic product market has been expanding amid calls for a cut in national medical expenses.
Meanwhile, medical institutions’ needs for quality assurance, a stable product supply and information
provision have been further increasing. In addition, more and more newcomers, including original drug
manufacturers and foreign drug makers, have increased competition in the generic product market. Under
these circumstances, in order to secure and expand our competitive areas, and actively take growthstrategies such as new development investment plans, we will address the following key challenges:
1) We will strengthen our research and development ability through our alliance with other domestic andforeign pharmaceutical manufacturers.
2) We will reinforce the sales and marketing systems for foundation hospitals by improving the expertiseof MRs and strengthening our support to academic research.
3) We will develop sales and marketing system for new products.
4) Responding to possible increasing needs for quality improvement, demand expansion and stablesupply, we will upgrade and expand our production systems.
5) The importance of corporate social responsibility has been gradually recognized. We will adopt
thoroughgoing measures to secure product quality/safety and environmental protection, and to educate
our employees to comply with pharmaceutical business related laws/regulations and ethical standards.
6) We will establish an internal control system relating to financial reporting.
7) We will foster human resources and secure the necessary personnel for our further growth.
5. Internal Control System Building and Operation
1) Mutual supervision system, organizational structure of operational and administrative divisions,company rules preparation and other internal control systems
Under our company’s mutual supervision system, the Internal Auditor, controlled directly by thepresident, periodically conducts internal auditing to confirm whether each department’s operations
complies with laws and regulations, and company rules. The Auditor reports the results of the internal
auditing to the president as well as giving advice and suggestions to the department audited.
Our administrative division consists of the Corporate Planning Department (which will be divided into
Business Strategy Department and Business Promotion Department), responsible for business planningand budgetary control and the Administrative Department, responsible for general administration,
7

human resource management, accounting, financing and sales affairs. Both departments make ongoing
efforts to maintain and improve their internal control systems.
Our company prepares its own corporate rules, consulting any related laws and regulations. Moreover,
we make revisions to the rules, responding to amendments to the laws and regulations, and changes incorporate conditions.
2) Measures to improve the internal control system in the past year
The Administrative Department took a key role in the Company’s internal control system. It revised thecompany’s existing rules and established new rules and operational guidelines. Furthermore, thedepartment has been providing our employees with opportunities to fully understand the details andconcept of the rules. The Company has also continued to enlighten our employees about insider dealing
and advice against drinking and driving.
6. Other Significant Information on Management
There is no information to be disclosed.

8Ⅳ. Financial Statements(1) Balance Sheet
As of September 30, 2006
AmountRatio (%)
AssetsI Current assets
1. Cash on hand and bank deposits
2. Trade notes receivable ※1
3. Trade accounts receivable
4. Marketable securities
5. Purchased goods
6. Products
7. Raw materials
8. Products in progress
9. Inventory goods
10. Advance payment
11. Prepaid expenses
12. Deferred tax assets
13. Other accounts receivable
14. Accrued income
15. Other current assets
Allowance for doubtful receivables
Total current assets
II Fixed assets
1) Property, plant and equipment
1. Buildings
Accumulated depreciation
2. Structures
Accumulated depreciation
3. Machinery and equipment
Accumulated depreciation
4. Vehicles and other transportation equipment
Accumulated depreciation
5. Tools, furniture and fixtures
Accumulated depreciation
6. Land
7. Construction in progress
Total property, plant and equipment
2) Intangible fixed assets
1. Trademark
2. Distributorship
3. Software
4. Telephone subscription rights
Total intangible assets
3) Investments and other assets
1. Investment securities
2. Investments in anonymous association
3. Long-term prepaid expenses
4. Deferred tax assets
5. Guaranteed deposits
6. Insurance reserve fund
7. Time deposit maturing in more than one year
Total investments and other assets
Total fixed assets
Total assets

1,457,905
658,2624,274,348
1,300,119
147,621924,444984,973436,619
34,819
7,692
176,081269,696
4,615
300
4,600
-1,47910,680,619

4,026,217
1,262,453
80,44961,0662,264,770
1,536,788
24,97815,989537,820
414,592

727,981
8,989

177,288450
361,119
160,798442,699
9,417
400,000
1,551,774
6,309,187
16,989,806

94,134,833
1,507,583
80,68464,4332,544,755
1,735,459
25,736
19,965587,181444,535

19,383

287
558,500
63,5807,976
630,3442,940,649
702,142
4,749,850
702,702229,798
954,176
1,204,930
662,01165,72023,835
178,184
333,613
10,541300
4,448-1,635
12,761,268

62.9

2,763,764

123,227
483,721
4,127,067(Thousands of yen)
As of September 30, 2007
AmountRatio (%)

66.4

2,627,250
16,250809,295
5,771

24.3

142,646
483,721
131,616
4,216,550

21.9

3.7

237
534,500
47,725
7,976
590,439

3.1

9.1
37.1
100.0

157,279450
394,527
179,860
499,580
11,130400,000
1,642,827
6,449,818
19,211,087

8.6
33.6
100.0

As of September 30, 2006
AmountRatio (%)
Liabilities
I Current liabilities
1. Trade notes payable
2. Trade accounts payable
3. Other accounts payable
4. Accrued expenses
5. Accrued income taxes
6. Accrued consumption tax
7. Deposits received
8. Accrued bonuses for employees
9. Accrued bonuses for directors
10. Allowance for sales return
11. Notes payable for purchase of equipment
Total current liabilities
II Fixed liabilities
1. Guaranteed deposits received
2. Accrued retirement benefits for employees
3. Accrued retirement benefits for directors
Total fixed liabilities
Total liabilities
Net assets
I Stockholders' equity
1. Common stock
2. Capital surplus
1) Additional paid-in capital2) Other capital surplus
Gains on disposition of treasury stock
Total of capital surplus
3. Retained earnings
1) Legal reserve
2) Other retained earnings
Contingent reserve
Earned surplus carried forward
Total of retained earnings
4. Treasury stock
Total stockholders' equity
II Valuation and translation adjustments
1. Net unrealized holding gain on securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

237,450
1,644,666
394,065
149,279
419,492
2,004
9,531
464,857
15,3008,736
3,345,384(Thousands of yen)
As of September 30, 2007
AmountRatio (%)

19.7

296,634
2,128,212
566,835
179,977
584,486
121,356
11,166575,086
17,3008,890
12,661
4,502,606

23.5

208,646
371,227
51,491
631,365
3,976,750

3.7
23.4

211,972
410,733
77,110699,816
5,202,423

3.6
27.1

1,616,950

9.5

1,616,950

8.4

2,841,587

14.8

9,544,117-7
14,002,647

49.7
-0.0
72.9

6,016
14,008,663
19,211,087

0.0
72.9
100.0

2,226,020

2,226,020

615,567

615,567
2,841,587

16.8

164,079

164,079

5,000,000
3,366,639

5,000,000
4,380,038
8,530,718-7
12,989,248

50.2
-0.0
76.5

23,80813,013,056
16,989,806

0.1
76.6
100.0

23,80810

6,016

(2) Income Statement
Fiscal year ended Sep. 2006
AmountRatio (%)
I Net sales
1. Sales of goods
10,396,022
2. Sales of merchandise
844,617 11,240,639
II Cost of sales
1. Opening balance of merchandise and goods stocked
889,291
2. Goods purchased for the period
461,240
3. Cost of goods manufactured for the period
6,136,750
Total
7,487,281
4. Closing balance of merchandise and goods stocked
1,072,065
5. Transfer to other accounts ※1
9,749 6,405,467
Gross profit
4,835,172
Provision for allowance for sales returns
8,736
Net gross profit
4,826,435
III Selling, general and administrative expenses
1. Sales promotion expenses
68,056
2. Sales commission
238,749
3. Packaging and transportation expenses
151,030
4. Entertainment expenses
11,842
5. Directors' remuneration
46,0806. Salaries and bonuses for employees
878,739
7. Provision for accrued bonuses for employees
290,245
8. Provision for accrued bonus for directors
15,3009. Provision for retirement benefits for employees
32,467
10. Provision for retirement benefits for directors
7,057
11. Welfare expenses
199,139
12. Traveling expenses
145,095
13. Rent
168,367
14. Depreciation and amortization
52,40915. Research and development expenses ※2
601,711
16. Miscellaneous expenses
387,570 3,293,863
1,532,572
Operating Income
IV Non-operating income
1. Interest received and discount income
2,407
2. Interest on marketable securities
2,013
3. Dividend received364
4. Gain on sales of investment securities
6,628
5. Subcontracting income
11,1506. Miscellaneous income
12,78635,350V Non-operating expenses
1. Interest paid
2,307
2. Sales discount
2,294
3. Miscellaneous expenses
7,310
11,912
1,556,010
Ordinary income
VI Extraordinary losses
1. Loss on disposal of property, plant and equipment ※3
20,915
2. Loss on revaluation of inventories
2,392
3. Loss on disposal of inventories
59,497
4. Loss on revaluation of investment securities
12,083
5. Retirement benefit for directors
6,555
6. Provision for directors' retirement benefits for prior periods
7. Miscellaneous losses
101,445
Income before income taxes
1,454,564
Income taxes - current
592,325-53,637
538,687
Income taxes - deferred
915,877
Net income

11(Thousands of yen)
Fiscal year ended Sep. 31, 2007
AmountRatio (%)
12,300,359
950,160 13,250,520

100.0

1,072,065
594,277
6,862,027
8,528,370
1,183,974
57.0
47,971 7,296,424
43.0
5,954,095
0.1
153
42.9
5,953,941

55.1
44.9
0.0
44.9

29.3
13.6

87,111
319,057
160,905
13,122
48,971
983,831356,80917,30037,551
11,266237,254
170,540
190,758
48,228686,986
480,914 3,850,612
2,103,329

29.0
15.9

0.3

3,720
6,541
387
14,983
10,91236,5460.3

10,7632,129,112

0.1
16.1

100.0

0.1
13.8

0.9
12.9
4.8
8.1

2,349
2,236
6,177

5,974
104,944
24,101
5,421
865,859-70,7670.9
140,441
1,988,670

1.1
15.0

795,091
1,193,579

6.0
9.0

(Thousands of yen)

Manufacturing Statement

I Cost of materials
II Labor cost ※1
III Overheads
Depreciation and amortization
Supplies expenses
Miscellaneous expenses
Cost of goods manufactured for the period
Opening balance of work-in-progress
Total
Closing balance of work-in-progressTransfer to other accounts ※2
Total cost of goods manufactured for the period

Fiscal year ended Sep. 2006
AmountRatio (%)
4,172,334
68.6
661,304
10.9

Fiscal year ended Sep. 31, 2007
AmountRatio (%)
5,101,318
71.3
743,67110.4

439,932
161,898
648,790 1,250,621
6,084,260
599,389
6,683,649
436,619
110,279
6,136,750

433,930
164,597
707,673

20.5
100.0

1,306,201
7,151,192
436,619
7,587,811
662,011
63,772
6,862,027

18.3
100.0

Notes to manufacturing statement
Fiscal year ended Sep. 30, 2006
We applied the simple process costing method on thebasis of historical cost for cost accounting.
Notes:※1. The amount of provisions for allowances included in
the labor cost is as follows (thousands of yen):
Provision for accrued bonuses:
124,563
Provision for accrued retirement benefits: 11,103※ 2. Breakdown of transfer to other accounts is asfollows (thousands of yen):
Loss on revaluation of inventories: 54,161
Other accounts receivable:
56,118

Fiscal year ended Sep. 30, 2007
Same as on the left.
Notes:※1. The amount of provisions for allowances included in
the labor cost is as follows (thousands of yen):
Provision for accrued bonuses:
162,142
Provision for accrued retirement benefits: 12,173※2. Breakdown of transfer to other accounts is as follows(thousands of yen):
Loss on revaluation of inventories: 63,772

12

(3) Statements of Changes in Stockholders' Equity
Fiscal year ended September 30, 2006 (From October 1, 2005 to September 30, 2006)(Thousands of yen)

Stockholders' equity

Commonstock

Balance at beginning of period
Changes in the term
Dividends from surplus
Bonus for directors
Reversal of the amount allotted in theprevious period as bonues for
directors
Net income
Disposal of treasury stock
Net change of items other thanstockholders' equity
Total changes in the term
Balance at end of period

Balance at beginning of period
Changes in the term
Dividends from surplus
Bonus for directors
Reversal of the amount allotted in theprevious period as bonues for
directors
Net income
Disposal of treasury stock
Net change of items other thanstockholders' equity
Total changes in the term
Balance at end of period

1,616,950

1,616,950

Capital surplus
Other capitalsurplusRetained earnings
Other retained earnings

Additional
paid-in capital Profit from disposalof treasury stock
2,226,020-

2,226,020

Total capitalsurplusLegalreserve

2,226,020

615,567

615,567

615,567
615,567

615,567
2,841,587

Contingent Earned surplus
reserve carried forward

164,079 5,000,000

164,079 5,000,000

Total
retainedearnings

2,635,308 7,799,387-173,154-15,500-173,154-15,500

4,108

4,108

915,877

915,877

731,331731,3313,366,639 8,530,718

Stockholders' equity
Valuation and translation adjustments
Net unrealized
Total
Total valuation Total net
Treasury
assetsholding gain on
stockholders'
and translationstock
securities
equityadjustments-729,264
10,913,093
23,314
23,314 10,936,408

729,256-173,154-15,500-173,154-15,500

4,108

4,108

915,877
1,344,824

915,877
1,344,824
493

729,256-7

2,076,155
12,989,248

493
23,808493

493

493 2,076,648
23,808 13,013,056

Fiscal Year Ended September, 2007 (From October 1, 2006 to September 30, 2007)(Thousands of yen)

Stockholders' equity

Commonstock

Balance at beginning of period
Changes in the term
Dividends from surplus
Net income
Net change of items other thanstockholders' equity
Total changes in the term
Balance at end of period

1,616,950

Capital surplus
Other capitalsurplus

Additional
paid-in capital Profit from disposalof treasury stock
2,226,020

615,567

Retained earnings
Other retained earnings
Total capitalsurplus2,841,587

Legalreserve

164,079 5,000,000

3,366,639 8,530,718-180,179 -180,179
1,193,579 1,193,579

1,616,950

2,226,020

615,567

2,841,587

164,079 5,000,000

Stockholders' equity
Valuation and translation adjustments
Net unrealized
Total
Total valuation Total net
assetsholding gain on
stockholders'
and translation
securities
equityadjustments-7
12,989,248
23,80823,808 13,013,056

Treasurystock
Balance at beginning of period
Changes in the term
Dividends from surplus
Net income
Net change of items other thanstockholders' equity
Total changes in the term
Balance at end of period

Contingent Earned surplus
reserve carried forward

Total
retainedearnings-180,179
1,193,579-7-180,179
1,193,579

1,013,399
14,002,647

13-17,791-17,791-17,791-17,791
6,016-17,791995,607
6,016 14,008,663

1,013,399 1,013,399
4,380,038 9,544,117

(4) Cash Flow Statement(Thousands of yen)
Fiscal year ended Sep. 30, 2006 Fiscal year ended Sep. 30, 2007
AmountAmountI Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Increase in retirement benefits for employees
Increase (decrease) in retirement benefits for directors
Increase in allowance for doubtful receivables
Increase in accrued bonuses for employees
Increase in accrued bonuses for directors
Increase in allowance for sales return
Interest and dividends income
Gain on sales of investment securities
Loss on revaluation of investment securities
Loss on disposal of capital assets
Increase in trade receivable
Increase in inventories
Increase in other accounts receivable
Increase in prepaid expenses
Increase in long-term prepaid expenses
Increase in trade payable
Increase in other accounts payable
Increase in accrued expenses
Increase (decrease) in accrued consumption taxes
Increase in guaranteed deposits received
Payments of bonuses to directors
Other
Sub totalInterests and dividends received
Funds transferred to defined contribution pension accountIncome taxes paid
Net cash used by operating activities
II Cash flows from investing activities
Purchase of marketable securities
Proceeds from sales of marketable securities
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of property, plant and equipment
Loss on disposal of property, plant and equipment
Purchase of intangible fixed assets
Purchase of leased assets
Proceeds from sales of leased assets
Payment of guaranteed deposits
Other
Net cash used in investing activities
III Cash flows from financing activities
Borrowing of short-term loan
Repayment of short-term borrowings
Proceeds from sales of treasury stock
Cash dividends paid
Net cash provided by financing activities
IV Effect of exchange rate changes on cash and cash equivalents
V Increase (decrease) in cash and cash equivalents
VI Opening balance of cash and cash equivalents
VII Closing balance of cash and cash equivalents

1,454,564
575,540
43,190-25,506267
35,26715,3008,736-4,785-6,62812,083
20,915-892,478-308,649-4,337-103,813-127,360
362,628
73,947
13,538-11,548
3,694-11,391-33,555
1,089,618
4,475-31,507-295,296
767,290

1,988,670
587,034
39,50525,618155
110,2292,000
153-10,6505,974-519,382-588,160-5,925-2,102-33,407542,730
69,49530,697
119,351
3,326-14,367
2,350,949
10,214-702,111
1,659,052-499,361
11,922-1,333,152-5,953-485,998-847,723
847,723-50,112-1,717-2,364,373-99,883
600,000-10,000-476,749-3,608-52,000-50,112-1,712-94,066

500,000-500,000
1,344,824-172,823
1,172,000-425,082
2,683,431
2,258,349-179,984-179,984
1,385,002
2,258,349
3,643,351(5) Events and Conditions Discovered during the Period which Raise Questions about the Validity ofGoing Concern Assumption
Not applicable.
14(6) Significant Accounting Policies
1. Valuation Criteria and Methods
for Securities Holding

2. Valuation Criteria and Methods
for Inventories
3. Depreciation and Amortization of
Fixed Assets

4. Basis for Significant Allowances

Fiscal year ended Sep. 30, 2006
Securities Holding:Marketable securities:
Market value method on the basis ofmarket price as of the balance sheet
date(Changes in unrealized gain or loss
are included directly in net assets
and the net sales value is calculatedby the moving average method.)

Fiscal year ended Sep. 30, 2007
1) Securities Holding:Marketable securities:
Same as left.

Non-marketable securities:
Moving average cost method

Non-marketable securities:
Same as left.

First-in, first-out cost method

Same as left.

1) Depreciation on property, plantand equipment:
Declining-balance method:
However, depreciation on the buildings
which we bought after April 1, 1998
(excluding the facilities attached to thebuildings) is calculated by thestraight-line method. The useful livesof property, plant and equipment aresummarized as follows:
Buildings: 7 to 50 years
Machinery and equipment: 7 years
2) Amortization of intangible fixed
assets:Straight-line method:
Amortization of computer software
utilized within our company iscalculated by the straight-line methodon the basis of the available duration(5 years).
3) Amortization of long-term
prepaid expenses:
Straight-line method
1)
Allowancefordoubtfulreceivables:
The allowance for doubtful receivables
is provided for possible losses on bad
debts at an amount determined by thefollowing methods. For ordinary
receivables, loan loss ratio method (thehistorical experience of bad debts) isapplied and for receivables of highdefault risk, we examine the possibilityof recovery of the respective
receivables.
2) Accrued bonuses to employees:
Accrued bonuses are provided forbonuses with the amount estimated tobe paid to employees as of the end of
the fiscal year concerned.
3) Accrued retirement benefits for
employees:
Accrued retirement benefits for
employees are provided for retirement
benefits to be paid under the1) Depreciation on property, plantand equipment:
Same as left.

152) Amortization of intangible fixed
assets:Same as left.

3) Amortization
prepaid expenses:
Same as left.

of

long-term

1)
Allowance
receivables:
Same as left.

fordoubtful

2) Accrued bonuses to employees:
Same as left.

3) Accrued retirement benefits for
employees:
Same as left.

5. Accounting for Lease Transactions

6. Cash and Cash Equivalents in
Cash Flow Statements

7. Other Significant Items

Fiscal year ended Sep. 30, 2006
company’s defined benefit programwith the amount calculated based on
potential retirement benefit obligation
as of the end of the fiscal year
concerned.

Fiscal year ended Sep. 30, 2007

4) Accrued retirement benefits for
directors:
Accrued retirement benefits for
directors are provided with the amountestimated to be paid as of the end of
the fiscal year concerned in accordancewith the internal rules for such
retirement benefits for directors.

4) Accrued retirement benefits for
directors:
Same as left.

5) Allowance for sales returns:
Allowance for sales returns is provided
with expected gross profit fromvolume of returns calculated based on
past rejection rates in preparation forsales returns.

5) Allowance for sales returns:
Same as left.

6) Accrued bonuses for directors:
Accrued bonuses are provided forbonuses with the amount estimated tobe paid to directors as of the end of the
fiscal year concerned.

6) Accrued bonuses for directors:
Same as left.

The accounting procedures conform to
the accounting method for the usual
lease contract are applied to financelease agreements excluding those
stipulating the transfer of ownership ofthe leased assets to the lessee.
Cash and cash equivalents consist of
cash on hand and bank deposits which
can be withdrawn at any time andshort-term investments with theduration of three months or less which
can be easily converted to cash and are
exposed to little risk of change invalue.
Accounting for Consumption Tax
Tax-exclusive method is applied to theaccounting for transactions subject toconsumption tax.

Same as left.

Same as left.

Same as left.

(7) Changes in Significant Accounting Policies
Fiscal year ended Sep. 30, 2006
(Accounting for the Impairment of Fixed Assets)
The Company started to account for the impairment of fixed
assets (suggested in "Opinion Paper on the Establishment of
Accounting Standards for Impairment Loss on Fixed Assets
released by the Financial Services Agency's BusinessAccounting Council on August 9, 2002) and "theimplementation guidelines for asset impairment accounting"(Business Accounting Application Guideline No. 6 released by
the Accounting Standards Board of Japan in October 31,2003) in the fiscal year concerned.

16

Fiscal year ended Sep. 30, 2007
(Accounting for depreciation)
Under a revision to corporate tax law, the Company
changed its accounting method for depreciation on property,
plant and equipment in the fiscal year concerned. The
Company applied the new method to the property, plant andequipment which were purchased on and after April 1,
2007.
This change decreased operating income, ordinary income
and net income before taxes by 9,692 thousand yen each.

Fiscal year ended Sep. 30, 2006
This change had no significant impact on the Company's
financial performance.

Fiscal year ended Sep. 30, 2007

(Accounting for bonuses for directors)
The Company started to account for bonuses to directors(Business Accounting Standard No. 4 released on November
29, 2005) in the fiscal year concerned. Before the adoption,
the Company had recognized bonuses to directors as thedecrease in unappropriated profits as of the date of a general
meeting of stockholders. However, the Company started tobook bonuses to directors on an accrual basis in the fiscal year
concerned.
This change decreased operating income, ordinary income andnet income before taxes by 15,300 thousand yen each.
(Accounting Standards for Presentation of Net Assets in
the Balance Sheet)
The Company started to apply the Accounting Standards for
Presentation of Net Assets in the Balance Sheet (BusinessAccounting Standards No. 5 released on December 9, 2005)
and Business Accounting Application Guideline No. 8
released by the Accounting Standards Board of Japan in
December 9, 2005) in the fiscal year concerned.
The total amount of stockholders’ equity for the fiscal year
concerned on the previous accounting standards basis is13,013,056 thousand yen.
The regulations of financial statements were amended in April
2006. The Company prepared the section of net assets in thebalance sheet for the fiscal year concerned in accordance withthe amended regulations.

Changes in the Presentation in Financial Statements
Fiscal year ended Sep. 30, 2006
(Cash Flow Statements)“Increase in prepaid expenses” in the section of cash flows
from operating activities, which is the item included in“Other” in the cash flow statement for the previous fiscal year,
is presented separately in the cash flow statement for the fiscal
year concerned, as its monetary significance increased.
The amount of “Increase in prepaid expenses” included in“Other” in the cash flow statement for the previous fiscal year
is -4,053 thousand yen.

Fiscal year ended Sep. 30, 2007

Supplementary Information
Fiscal year ended Sep. 30, 2006
(Allowance for sales return)
The Company had recognized loss on sales returns as a sales
deduction on an accrual basis until the previous fiscal year.
However, the Company started to provide the allowance forsales return in preparation for possible returns in the fiscal
year concerned. The adoption of this accounting is attributable
to the increasing significance of sales returns in line withexpanding sales. The Company believes that we can reflect
more accurately the impact of sales returns in our financial
statements by adopting this accounting method.
This adoption decreased operating income, ordinary income
and net income by 8,736 thousand yen each.

17

Fiscal year ended Sep. 30, 2007

(8) Notes to Financial Statements(Notes to Balance Sheets)
As of September 30, 2006
※1 Notes receivable and payable due on the fiscal year end
Notes receivable and payable due on the fiscal year end areaccounted for based on the nominal maturity date, although
the fiscal year concerned was a holiday for financial
institutions. The amount of notes receivable and payable
due on the fiscal year end is as follows:
Notes receivable
78,387 thousand yen
Notes payable
5,389 thousand yen

As of September 30, 2007
※1 Notes receivable and payable due on the fiscal year end
Notes receivable and payable due on the fiscal year end areaccounted for based on the nominal maturity date, although
the fiscal year concerned was a holiday for financial
institutions. The amount of notes receivable and payable
due on the fiscal year end is as follows:
Notes receivable
80,942 thousand yen
Notes payable
13,470 thousand yen(Notes to Income Statements)
Fiscal year ended Sep. 30, 2006
※1 Breakdown of transfer to other accounts:(Thousands of yen)
Selling, general and administrative expenses 8,409
Loss on revaluation of inventories
1,339

Fiscal year ended Sep. 30, 2007
※1 Breakdown of transfer to other accounts:(Thousands of yen)
Loss on disposal of inventories
30,584
Selling, general and administrative expenses 14,246
Other accounts receivable
3,139※ 2 Amount of research and development expenses:
Amount of research and development expenses
included in selling and general administrative expenses(Thousands of yen)
601,711※3 Breakdown of loss on retirement of fixed assets:(Thousands of yen)
Building
10,980
Structures
280
Machinery and equipment
8,438
Tool, furniture and fixture
1,216※ 2 Amount of research and development expenses:
Amount of research and development expenses included
in selling and general administrative expenses(Thousands of yen)
686,986※3 Breakdown of loss on retirement of fixed assets:(Thousands of yen)
Building
385
Machinery and equipment
4,277
Tool, furniture and fixture
1,311(Notes to Statements of Changes in Stockholders’ Equity for the Fiscal Year Ended Sep. 30, 2006)
Notes to Classes and Number of Outstanding Shares
Class
Outstanding shares
Common stock

Number of shares asof Sep. 30, 2005

Increase in number ofshares during theperiodDecrease in numberof shares during theperiodNumber of shares asof Sep. 30, 2006

12,870,000--

12,870,000

Increase in number ofshares during theperiodDecrease in numberof shares during theperiodNumber of shares asof Sep. 30, 2006

1,003,600*

10Notes to Classes and Number of Treasury Stocks
Class

Number of shares asof Sep. 30, 2005

Treasury stocks
Common stock
1,003,610* The decrease is attributable to the sales of treasury stocks.

Notes to Surplus(1) Amount of dividend paida. Details of the decision on dividends made by the annual shareholders’ meeting held on December 20, 2005
• Class of stocks: Common stock• Total amount of dividend paid: 83,064 thousand yen• Dividend per share: 7 yen• Record date: September 30, 2005
• Effective date: December 21, 200518

b. Details of the decision on dividends made by the board of directors held on May 17, 2006
• Class of stocks: Common stock• Total amount of dividend paid: 90,089 thousand yen• Dividend per share: 7 yen• Record date: March 31, 2006
• Effective date: June 9, 2006
(2) Amount of dividend payable in the fiscal year ended September 30, 2007
• Class of stocks: Common stock• Dividend resource: Retained earnings• Total amount of dividend paid: 90,089 thousand yen• Dividend per share: 7 yen• Record date: September 30, 2006
• Effective date: December 21, 2006
(Notes to Statements of Changes in Stockholders’ Equity for the Fiscal Year Ended Sep. 30, 2007)
Notes to Classes and Number of Outstanding Shares
Class
Outstanding shares
Common stock

Number of shares asof Sep. 30, 2006

Increase in number ofshares during theperiodDecrease in numberof shares during theperiodNumber of shares asof Sep. 30, 2007

12,870,000--

12,870,000

Number of shares asof Sep. 30, 2006

Increase in number ofshares during theperiodDecrease in numberof shares during theperiodNumber of shares asof Sep. 30, 2007

10

-

-

10

Notes to Classes and Number of Treasury Stocks
Class
Treasury stocks
Common stock

Notes to Surplus(1) Amount of dividend paida. Details of the decision on dividends made by the annual shareholders’ meeting held on December 20, 2006
• Class of stocks: Common stock• Total amount of dividend paid: 90,089 thousand yen• Dividend per share: 7 yen• Record date: September 30, 2006
• Effective date: December 21, 2006
b. Details of the decision on dividends made by the board of directors held on May 10, 2007
• Class of stocks: Common stock• Total amount of dividend paid: 90,089 thousand yen• Dividend per share: 7 yen• Record date: March 31, 2007
• Effective date: June 1, 2007
(2) Amount of dividend payable in the fiscal year ended September 30, 2007
The Board of Directors will propose a dividend payment to the annual shareholders’ meeting held on
December 20, 2007 as follows:• Class of stocks: Common stock• Dividend resource: Retained earnings• Total amount of dividend paid: 154,439 thousand yen• Dividend per share: 12 yen• Record date: September 30, 2007
• Effective date: December 21, 2007
19

(Notes to Cash Flow Statements)
Fiscal year ended Sep. 30, 2006
Cash and cash equivalents balance at end of the period
and the relationship between the balance and the amountbooked in the balance sheets:(As of Sep. 30, 2006)
Thousands of yen
Cash on hand and at banks
1,457,905
Securities
1,300,119
Securities not expired within three months-499,674
Cash and cash equivalents
2,258,349

Fiscal year ended Sep. 30, 2007
Cash and cash equivalents balance at end of the period and therelationship between the balance and the amount booked in thebalance sheets:(As of Sep. 30, 2007)
Thousands of yen
Cash on hand and at banks
2,940,649
Securities
702,702
Cash and cash equivalents
3,643,351(Notes to Lease Transactions)(Thousands of yen)
For the fiscal year ended
Sep. 30, 2007
1. Finance lease transactions except for those agreements
stipulating the transfer of ownership of the leased assets tothe lessee(1) The pro forma amounts of the acquisition costs,
accumulated depreciation and net book value of the leased
assets(Machinery and equipment)
Acquisition costs:
2,156,589
Accumulated depreciation: 808,546
Net book value:
1,348,042

For the fiscal year ended
Sep. 30, 2006
1. Finance lease transactions except for thoseagreements stipulating the transfer of ownership of theleased assets to the lessee(1) The pro forma amounts of the acquisition costs,
accumulated depreciation and net book value of theleased assets(Machinery and equipment)
Acquisition costs:
2,156,589
Accumulated depreciation: 583,858
Net book value:
1,572,731(Vehicles and other transportation equipment)
Acquisition costs:
96,723
Accumulated depreciation:
55,076
Net book value:
41,646(Vehicles and other transportation equipment)
Acquisition costs:
84,042
Accumulated depreciation:
40,218Net book value:
43,824(Tools, furniture and fixtures)
Acquisition costs:
49,110
Accumulated depreciation:
30,728Net book value:
18,382(Tools, furniture and fixtures)
Acquisition costs:
49,110
Accumulated depreciation:
39,050Net book value:
10,060(Total)Acquisition costs:
2,302,422
Accumulated depreciation: 669,662
Net book value:
1,632,759(Total)Acquisition costs:
2,289,741
Accumulated depreciation: 887,815
Net book value:
1,401,926(2) The pro forma amounts of unexpired lease payments
Due in one year or less:
270,617
Due after one year:
1,465,661
Total
1,736,278(2) The pro forma amounts of unexpired lease payments
Due in one year or less:
255,065
Due after one year:
1,190,377
Total
1,445,433(3) Lease payment, depreciation of lease assets and (3) Lease payment, depreciation of lease assets andinterest paidinterest paid
Lease payments:
271,413
Lease payments:
282,208
Depreciation:
224,650
Depreciation:
250,431
Interest paid:
23,678Interest paid:
24,248(4) Methods of calculation of depreciation(4) Methods of calculation of depreciation
Depreciation of leased assets is calculated on the basis Same as left.
of the straight-line method assuming the respective
lease terms as the useful lives. As for the residual
value, in the case of agreements stipulating the residual
value assured, the residual value concerned is adopted
and in any other cases, the residual value is assumed at
zero.

20

For the fiscal year ended
For the fiscal year ended
Sep. 30, 2006
Sep. 30, 2007
(5) Methods of calculation of interests(5) Methods of calculation of interests
The difference between the total amount of the lease Same as left.
payments (excluding maintenance and administration
costs) and the acquisition cost is treated as interest andthe way of allocating the interest to the respective fiscal
years applied is by the interest method.
2. Operating lease transactions(Unexpired lease payments)
Due in one year or less: 24,000
Due after one year:
95,980Total
119,980

2. Operating lease transactions(Unexpired lease payments)
Due in one year or less: 24,000
Due after one year:
71,980Total
95,980(Notes to Securities Holding)
1. Breakdown of marketable securities
As of the fiscal year ended September 30, 2006
Acquisition cost
Securities whose value (1) Stockbooked exceeds their (2) Debt securities
1. Government bonds
acquisition cost
2. Corporate bonds
3. Others(3) Others
Sub Total
Securities whose value (1) Stockbookeddoesnot (2) Debt securities
1. Government bonds
exceed their acquisition
2. Corporate bondscost
3. Others(3) Others
Sub Total
Total

36,95436,954-77,365-40,411-

199,924
199,924
236,879

199,662
199,662
277,028-262-262
40,148

As of the fiscal year ended September 30, 2007
Acquisition cost
Securities whose value (1) Stockbooked exceeds their (2) Debt securities
1. Government bonds
acquisition cost
2. Corporate bonds
3. Others(3) Others
Sub Total
Securities whose value (1) Stockbookeddoesnot (2) Debt securities
1. Government bonds
exceed their acquisition
2. Corporate bondscost
3. Others(3) Others
Sub Total
Total

36,954

21(Thousands of yen)
Value booked in
Unrealized
the balance sheetsgain (loss)
77,36540,411(Thousands of yen)
Value booked in
Unrealized
the balance sheetsgain (loss)
47,126
10,172

36,954-

47,126-99,98099,980136,934

99,953
99,953147,079

10,172-26-26
10,145

2. Marketable securities sold during the fiscal year concerned
Fiscal year ended September 30, 2006
11,922
6,628-

Sales Proceeds
Total gain
Total loss

(Thousands of yen)
Fiscal year ended September 30, 2007-

3. Breakdown of nonmarketable securities
Fiscal year ended
September 30, 2006
Value booked in thebalance sheets(Thousands of yen)
Fiscal year ended
September 30, 2007
Value booked in thebalance sheets

200,275
500,229
499,674200

200,937
501,765
10,200

Other securities
Money Management FundFree Financial Fund
Commercial paper
Unlisted stock (excluding over-the-counter shares)(Note) The Company recorded 12,083 thousand yen impairment losses on part of their securities holdings,
which are unlisted and not measured at a fair value, for the fiscal year concerned.
In the event that the value of securities is estimated to decline 50% or more from the book value due to thedeterioration of the issuer’s financial conditions, the Company applies the impairment accounting method tothe securities.

1. Estimated redemption amount of fixed-term securities
Fiscal year ended September 30, 2006
Less than
1-5
5- 10Over 10years
1 yearyears
years
1. Debt securities(1) Government Bonds(2) Corporate Bonds(3) Others
2. Others
Total

99,940499,674
599,614-99,722
99,722-(Thousands of yen)
Fiscal year ended September 30, 2007
Less than
1-5
5- 10Over 10years
1 year
years
years
-

99,953
99,953--(Notes to Derivative Transactions)
The company did not have any derivative transactions.
(Notes to Retirement Benefit System)
1. Description of the retirement benefit system
We provide a retirement benefit system in accordance with internal rules. Furthermore, we are a member ofthe Mutual Aid Corporation for the Retirement Benefit of Small Size Companies. We may provide a
premium severance pay depending on the reason for an employee’s resignation.
In April 2003, we amended the Retirement Benefit System and introduced the Defined Contribution Pension
Plan and the Retirement Benefit Prepayment Plan.
2. Breakdown of the retirement benefit obligation
1.
2.
3.

Retirement benefit obligation
Estimated retirement benefit provided by Mutual Aid Corporation
Accrued retirement benefit (1-2)

As of Sep. 30, 2006
591,780
220,553
371,227(Thousands of yen)
As of Sep. 30, 2007
618,413207,680
410,733(Note) The pension assets to be transferred to the defined contribution pension account amounts to 132,712
thousand yen and the assets have been transferred over the past four years. The transfer was completed
in the fiscal year ended September 30, 2006.

22

3. Breakdown of expenses related to retirement benefit
1.
2.
3.
4.
5.

(Thousands of yen)
As of Sep. 30, 2007
59,1593,371
18,947
6,016
87,494As of Sep. 30, 2006
53,043647
17,861
5,424
76,977Retirement benefit paid on the basis of service years
Premium severance allowance paid temporarily
Premiums paid to the Defined Contribution Pension Fund
Prepaid retirement benefit
Total expenses

4. Method for calculating the retirement benefit obligation
We applied the simplified method for the calculation of the retirement benefit obligation.
not provide the assumptions of estimating the obligation.

Therefore, we do(Notes to Stock Options)Not applicable.
(Notes to Tax Effect Accounting)
1. Breakdown of deferred tax assets and liabilities(Deferred tax assets)(Thousands of yen)

Nondeductible provision for accrued bonuses
Nondeductible provision for retirement benefits for employees
Nondeductible accrued enterprise tax
Nondeductible provision for retirement benefits for directors
OthersTotal of deferred tax assets(As of Sep. 30, 2006)
189,196
151,089
36,454
20,957
49,137446,835(As of Sep. 30, 2007)
234,060
167,168
47,012
10,13959,221
517,602

16,340430,495

4,129
513,473(Deferred tax liabilities)
Disparity in the estimated value of other marketable securities
Net value of deferred tax assets

2. Disparity between the effective tax rate and the rate of corporate tax based on the tax effect accounting
methodStatutory tax rate
(Disparity)
Deductible research and development cost
Provincial tax to be levied for the fiscal year concerned
Permanent nondeductible items such as entertainment expenses
OthersStatutory tax rate based on the tax effect accounting

Fiscal year ended
September 30, 2006
40.7%
-4.5
0.7
0.3
-0.2
37.0

Fiscal year ended
September 30, 2007
Details on the disparity
between the effective
tax rate and the rate ofcorporate tax based on
the tax effectaccounting are omitted
as the disparity is five
percent or less.

(Notes to Equity in Income of Affiliates)
Not applicable.
(Transactions with Concerned Parties)
Fiscal year ended Sep. 30, 2006 (From Oct. 1, 2005 to Sep. 30, 2006)(1) Parent company and institutional shareholders
Name
Mitsui & Co., Ltd.

Category
Institutional shareholder
Address
Chiyoda-ku, Tokyo
Amount invested
295,797,424 thousand yen
Description of businessTrading conglomerate
Voting interest
15.0%

Details of Transaction
Interlocking directorate
No director is dispatched by Mitsui & Co.
Description of transaction (Thousand of yen)
1. Materials and products purchasing *1&2
Transaction value: 1,884,375
Outstanding trade accounts payable: 680,938
2. Commissions *1&2
Transaction value: 7,044
Outstanding accounts payable: 5,751

23

(2) Directors and major individual shareholders
Name
Fujiaki Mimura

Category
AuditorOccupation
Attorney at law

Details of Transaction
Description of transaction
Attorney’s fee*3
Transaction value (Thousands of yen)
4,035

(Notes)1. The terms and conditions of the above transactions were decided on the basis of the same criteria used for other usualtransactions.
2. The reasonable transaction value was applied to the above transaction.
3. The above attorney’s fee was decided based on the pricing rules prepared by Sakai & Mimura Law Firm and throughnegotiations.
4. The amounts of the above transaction values do not include consumption tax, while the payment due does.

Fiscal year ended Sep. 30, 2007 (From Oct. 1, 2006 to Sep. 30, 2007)(1) Parent company and institutional shareholders
Name
Mitsui & Co., Ltd.

Category
Institutional shareholder
Address
Chiyoda-ku, Tokyo
Amount invested
336,417,157 thousand yen
Description of businessTrading conglomerate
Voting interest
15.0%

Details of Transaction
Interlocking directorate
One director loaned from Mitsui & Co., Ltd.
Description of transaction (Thousand of yen)
1. Materials and products purchasing *1&2
Transaction value: 1,985,268
Outstanding trade accounts payable: 759,191
2. Drug substances purchasing *1&2
Transaction value: 73,869
Outstanding accounts payable: 146
3. Commissions *1&2
Transaction value: 24,097
Outstanding accounts payable: 3,810(2) Directors and major individual shareholders
Name
Fujiaki Mimura

Category
AuditorOccupation
Attorney at law

Details of Transaction
Description of transaction
Attorney’s fee*3
Transaction value (Thousands of yen)
4,213
Outstanding accounts payable: 168(Notes)1. The terms and conditions of the above transactions were decided on the basis of the same criteria used for other usualtransactions.
2. The reasonable transaction value was applied to the above transaction.
3. The above attorney’s fee was decided based on the pricing rules prepared by Bingham McCutchen Murase LLP(foreign law joint enterprise) and through negotiations.
4. The amounts of the above transaction values do not include consumption tax, while the payment due does.

(Notes to Business Combination Accounting)
Not applicable.

24

(Per Share Data)
Fiscal year ended Sep. 30, 2006
Net assets per share
1,011.12 yen
Net income per share
73.78 yen

Fiscal year ended Sep. 30, 2007
Net assets per share
1,088.48 yen
Net income per share
92.74 yen

Fully-diluted net income per share is not presented Fully-diluted net income per share is not presented because
because there are no residual securities, such as there are no residual securities, such as convertible bonds,
convertible bonds, issued by the Company.
issued by the Company.
(Note) The basis of calculating the above figures is as follows:
Fiscal year ended Sep. 30, 2006
Fiscal year ended Sep. 30, 2007
Net income for the fiscal year:
915,877 thousand yen
Net income for the fiscal year: 1,193,579 thousand yen
Amount not applicable to ordinary shareholders:Amount not applicable to ordinary shareholders:
Net income applicable to ordinary shareholders:
Net income applicable to ordinary shareholders:
915,877 thousand yen
1,193,579 thousand yen
Average number of shares outstanding: 12,413,558 shares Average number of shares outstanding: 12,869,990 shares

5. Goods Manufactured, Orders Received and Sales(1) Breakdown of goods manufactured(Thousands of yen)
Fiscal year ended Sep. 30 2006
Fiscal year ended Sep. 30 2007 YOY Change
Business segment(%)
Amount(%)
Amount(%)
Diagnostic drugs
4,462,620
41.8
5,111,910
42.5
114.5
Hormone drugs
3,004,521
28.1
3,272,517
27.2
108.9
Circulatory drugs
1,003,994
9.7
1,071,440
8.9
103.6
Antibiotics & Chemotherapeutics
625,3815.9
612,131
5.1
97.9
Urogenital & genital organ drugs
281,6642.6
327,4962.7
116.3
Dermatological preparation
309,5352.9
314,995
2.6
101.8
Others957,1659.0
1,305,549
10.9
136.4
Total
10,674,882
100.0
12,016,040
100.0
112.6
(Notes) 1. The above amounts are calculated based on selling prices and do not include consumption tax.
2. Fractions less than one thousand yen are omitted.

(2) Breakdown of goods purchased
Business segment
In vitro diagnostic
Dermatological preparation
Hormone drugs
Antibiotics & Chemotherapeutics
Others
Total

Fiscal year ended Sep. 30 2006
Amount(%)
328,856
71.3
38,205
8.3
32,456
7.0
5,952
1.3
55,76912.1
461,240
100.0(Thousand of yen)
Fiscal year ended Sep. 30 2007 YOY Change(%)
Amount(%)
416,68970.3
126.7
54,1639.1
141.8
20,507
3.5
63.2
102,91717.3
184.5
594,277
100.0
128.8

(3) Manufacturing based on the orders received
The Company manufactures products not on a build-to-order basis, but on a sales projection basis.

(4) Breakdown of sales(Thousand of yen)25

Business segment

Fiscal year ended Sep. 30 2006
Amount(%)

Fiscal year ended Sep. 30 2007
Amount(%)

Goods manufactured
Diagnostic drugs
4,489,708
39.9
5,215,300
39.4
Hormone drugs
2,883,480
25.7
3,327,059
25.1
Circulatory drugs
993,2468.8
1,132,669
8.5
Antibiotics & Chemotherapeutics
552,423
4.9
624,702
4.7
Urogenital & genital organ drugs
308,405
2.8
304,788
2.3
Dermatological preparation
293,848
2.6
296,200
2.2
Others874,909
7.8
1,399,638
10.6
Sub total
10,396,022
92.5
12,300,359
92.8
Goods purchased
In vitro diagnostic
597,3565.3
643,284
4.9
Dermatological preparation
101,9690.9
102,357
0.8
Hormone drugs
29,5760.3
33,1360.2
Antibiotics & Chemotherapeutics
14,6640.1
13,420
0.1
Others101,0500.9
157,9631.2
Sub total
844,6177.5
950,160
7.2
Total
11,240,639
100.0
13,250,520
100.0(Notes) 1. The above amounts are calculated based on selling prices and do not include consumption tax.
2. Fractions less than one thousand yen are omitted.

YOY Change
(%)
116.2
115.4
114.0
113.1
98.8
100.8
160.0
118.3
107.7
100.4
112.0
91.5
156.3
112.5
117.9

(Information on major clients)
ClientKonica Minolta Medical & Graphics
Inc.

Fiscal year ended September 30, 2006
Transaction amount (%)
3,152,109 thousand yen (28.0%)

Ⅵ. Other Information to be Disclosed
1. Reshuffle in the Board of Directors and the Board of Auditors(1) Change of representative director
Not applicable.
(2) Reshuffle of other board members
Director due to retire
Yumiko Yamazaki, General Manager of Toyama Factory(3) Formal retirement date of the director
December 20, 2007
2. Other Information
Not applicable.

26

Fiscal year ended September 30, 2007
Transaction amount (%)
3,575,513 thousand yen (27.0%)