Financial

Statements

2009

TAYCA CORPORATION
Nittochi Yodoyabashi Bldg., 6-13, Kitahama 3-chome, Chuo-ku, Osaka, Japan

Phone: (06) 6208-6400

Fax: (06) 6208-6422

C ONSOLIDATED F IVE -Y EAR S UMMARYTAYCA CORPORATION AND C ONSOLIDATED S UBSIDIARIES
2008

Millions of yen
2007

2006

2005

Net sales............................................................................... ¥32,351
Income before income taxes ..............................................
533
Net income...........................................................................
449
Total assets .......................................................................... 38,290
Equity ................................................................................... 21,784
Common stock .....................................................................
9,855¥32,721
1,912
1,186
39,664
22,7709,855¥30,351
1,633
1,072
41,45723,3109,855¥27,610
1,628
961
39,902
22,9499,855¥26,067
1,209
732
34,702
20,1499,855

Per share of common stock (in yen):
Net income ...................................................................... ¥ 8.98
Equity ............................................................................... 433.56¥ 23.66452.57¥ 21.39463.56¥ 18.77456.99¥ 14.17400.92

2009

Notes: (1) Figures for 2005 – 2009 represent the results of fiscal year ended March 31, respectively.
(2) The computation of net income per share is based upon the weighted average number of shares outstanding during theperiod.

C ONSOLIDATED B ALANCE S HEETSTAYCA CORPORATION AND C ONSOLIDATED S UBSIDIARIESMarch 31, 2009 and 2008

TAYCA CORPORATION

Millions of yen

ASSETS

2009

2008

2009

Current assets:
Cash and cash equivalents ..........................................................
Time deposits ................................................................................
Marketable securities ...................................................................
Trade notes and accounts receivable..........................................
Inventories (Note 3)......................................................................
Other current assets .....................................................................
Total current assets ...........................................................

¥ 2,484
79
14
8,356
8,179
586
19,699¥ 3,555
79
26
9,296
6,966
524
20,448$ 25,283803
143
85,043
83,2395,968
200,483

Property, plant and equipment:
Land ...............................................................................................
Buildings and structures ..............................................................
Machinery and equipment ...........................................................
Vehicles..........................................................................................
Tools, furniture and fixtures ........................................................
Construction in progress..............................................................
Less: accumulated depreciation..................................................
Net property, plant and equipment .................................

1,274
15,59838,777
174
2,689
1,705
(46,492)
13,727

1,346
15,47938,543
180
2,433
341
(45,017)
13,307

12,971
158,750
394,640
1,777
27,36917,353(473,153)
139,708

3,289
1,503
(23)
93
4,862
¥38,290

5,074
785
(23)
71
5,907
¥39,664

33,47415,302(235)
949
49,490$389,682

Investments and other assets:
Investment securities ...................................................................
Other assets ..................................................................................
Allowance for doubtful accounts.................................................
Intangible fixed assets..................................................................
Total investments and other assets .................................

See accompanying Notes to Consolidated Financial Statements.

1

Thousands of
U.S. dollars (Note 1)

Millions of yen

LIABILITIES AND EQUITYCurrent liabilities:
Short-term borrowings (Note 4) ..................................................
Current portion of long-term debt (Note 4) ...............................
Trade notes and accounts payable..............................................
Accrued income taxes...................................................................
Accrued expenses .........................................................................
Other current liabilities ................................................................
Total current liabilities......................................................
Long-term liabilities:
Long-term debt (Note 4) ..............................................................
Long-term accrued amount payable ...........................................
Deferred income taxes..................................................................
Liabilities for severance indemnities ..........................................
Allowance for directors’ andstatutory auditors’ retirement benefits.....................................
Total long-term liabilities .................................................
Equity:Common stock:
Authorized — 150,000,000 shares
Issued — 51,428,828 shares in 2009 and 2008 .....................
Capital surplus ..............................................................................
Retained earnings .........................................................................
Unrealized gain on available-for-sale securities ........................
Foreign currency translation adjustments .................................
Treasury stock, at cost:
1,320,476 shares in 2009 and 1,295,292 shares in 2008 .......
Total ....................................................................................
Minority interests (Note 2-9) .......................................................
Total equity ........................................................................

2009

¥

477
2,199
3,668
46
71
2,894
9,357

Thousands of
U.S. dollars (Note 1)

2008

¥

464
2,011
4,717
603
83
2,579
10,460

2009

$

4,858
22,38537,336474
723
29,455
95,233

4,550
202
—
2,393

4,089
—
15
2,110

46,3072,065—
24,357

1
7,147

217
6,432

11
72,742

9,855
6,767
5,119
480
(73)

9,855
6,767
4,920
1,467
96

100,304
68,86852,105
4,894
(744)

(425)
21,72559
21,784¥38,290(418)
22,68882
22,770¥39,664(4,332)
221,097609
221,706$389,682

2

C ONSOLIDATED S TATEMENTS OF I NCOMETAYCA CORPORATION AND C ONSOLIDATED S UBSIDIARIESFor the Years Ended March 31, 2009 and 2008

TAYCA CORPORATIONNet sales .........................................................................................................
Cost of sales ...................................................................................................
Gross profit .........................................................................................
Selling, general and administrative expenses ........................................
Operating income ..............................................................................
Other income (expenses):
Interest and dividend income .................................................................
Interest expenses .....................................................................................
Other, net ..................................................................................................
Total other expenses .........................................................................
Income before income taxes and minority interests ......................
Income taxes:
Current ......................................................................................................
Deferred.....................................................................................................
Minority interests
Net income .........................................................................................

Thousands of
U.S. dollars (Note 1)
2009$329,240
273,336
55,90347,087
8,816

Millions of yen
2009
2008
¥32,351¥32,72126,85826,052
5,493
6,669
4,626
4,667
866
2,002
138
(163)
(307)
(332)
533

130
(167)
(52)
(89)
1,912

1,411
(1,665)(3,128)(3,382)
5,433

135
(56)
4
449

860
(147)
13
¥ 1,186

$

1,380
(572)
46
4,578

¥23.66

U.S. dollars(Note 1)
$0.08

¥

Yen
Net income per share ..................................................................................

¥8.98

See accompanying Notes to Consolidated Financial Statements.

C ONSOLIDATED S TATEMENTS OF C HANGES IN E QUITYTAYCA CORPORATION AND C ONSOLIDATED S UBSIDIARIESFor the Years Ended March 31, 2009 and 2008
Millions of yen
Number ofshares ofcommonstock
Common(Thousands) stock

Balance, March 31, 2007 ....................... 51,428
Net income ...........................................
Cash dividends .....................................
Purchase of treasury stock ..................
Disposal of treasury stock ...................
Net change in the term........................
Balance, March 31, 2008 ....................... 51,428
Net income ...........................................
Cash dividends .....................................
Purchase of treasury stock ..................
Disposal of treasury stock ...................
Net change in the term........................
Balance, March 31, 2009 ....................... 51,428¥9,855

Capitalsurplus¥6,767

Unrealized
gain onForeignavailable- currency
Retained for-sale translation Treasury
earnings securities adjustments stock¥3,9851,186(250)¥2,997

¥ 55

(7)
0

(0)
¥9,855¥6,767¥(411)¥4,920449(250)(1,530)¥1,46741¥ 96¥(418)(8)1(0)¥9,855¥6,767¥5,119Balance, March 31, 2008 ........................................ $100,304
Net income ............................................................
Cash dividends ......................................................
Purchase of treasury stock ...................................
Disposal of treasury stock ....................................
Net change in the term.........................................
Balance, March 31, 2009 ........................................ $100,304$68,872$50,077

(986)
¥ 480

(169)
¥ (73)¥(425)

Total

Minority
interests

Total
equity¥61¥23,249
1,186
(250)
(7)
0
(1,489)¥22,688
449
(250)
(8)
0
(1,155)¥21,725(22)¥59¥23,310
1,186
(250)
(7)
0
(1,468)¥22,770
449
(250)
(8)
0
(1,177)¥21,784$230,906$835$231,741

20¥82Thousands of U.S. dollars (Note 1)$ 978$68,868$(4,259)

4,578

4,578

(2,551)(2,551)(2,551)

(86)

(86)

(86)

13

9

(3)

See accompanying Notes to Consolidated Financial Statements.

3$14,932

4,578$52,105(10,037)(1,722)$ 4,894$ (744)$(4,332)

9(11,759)(226)(11,986)$221,097$609$221,706

C ONSOLIDATED S TATEMENTS OF C ASH F LOWSTAYCA CORPORATION AND C ONSOLIDATED S UBSIDIARIESFor the Years Ended March 31, 2009 and 2008

TAYCA CORPORATION

Millions of yen

Thousands of
U.S. dollars (Note 1)

2009

2008

2009

¥ 533
2,760
146
(138)
163

¥1,912
2,620
140
(130)
167

$ 5,433
28,091
1,489(1,411)
1,665

890(1,256)932(1,089)

9,064(12,784)

(955)
278
2,422
138
(162)
(910)
1,487

48
266
4,868
130
(183)
(657)
4,157

(9,726)2,830
24,651
1,411(1,656)(9,264)
15,141

Investing activities:
Payments for acquisition of property,
plant and equipment ............................................................
Payments for purchases of investment securities................
Proceeds from sales of investment securities ......................
Other ........................................................................................
Net cash used in investing activities ...............................

(3,013)
(15)
28
(80)
(3,080)(1,906)
(14)
550
(118)
(1,488)(30,666)
(155)
291
(822)
(31,353)

Financing activities:
Net increase in short-term borrowings .................................
Proceeds from long-term debt ...............................................
Repayment of long-term debt ................................................
Payments for purchases of treasury stock ............................
Proceeds from sales of treasury stock ...................................
Dividends paid.........................................................................
Net cash provided by (used in) financing activities .......

112
2,800
(2,114)
(8)
0
(249)
540

171
1,580
(2,293)
(7)
0
(250)
(800)

1,139
28,495(21,519)(86)
9(2,543)
5,496

Effect of exchange rate change 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....................................

(18)(1,071)
3,555¥2,484

48
1,917
1,638
¥3,555(187)(10,902)36,186$25,283

Operating activities:
Adjustments to reconcile net income
to net cash provided by operating activities:
Income before income taxes ..................................................
Depreciation and amortization ..............................................
Loss on disposal of property, plant and equipment ...........
Interest and dividend income ................................................
Interest expense ......................................................................
Changes in assets and liabilities:
Increase in notes and accounts receivable, trade ................
Increase in inventories............................................................
(Decrease) increase in notes andaccounts payable, trade........................................................
Other ........................................................................................
Subtotal ..............................................................................
Interest and dividend income, received ................................
Interest expense, paid.............................................................
Income taxes, paid ..................................................................
Net cash provided by operating activities.......................

See accompanying Notes to Consolidated Financial Statements.

4

N OTES TO C ONSOLIDATED F INANCIAL S TATEMENTS
TAYCA CORPORATION AND C ONSOLIDATED S UBSIDIARIESFor the Years Ended March 31, 2009 and 2008

TAYCA CORPORATION
1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of TAYCACORPORATION (the “Company”) and its subsidiaries have been preparedin accordance with the provisions set forth in the Japanese Securities andExchange Law and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of International
Financial Reporting Standards. In preparing these consolidated financial
statements, certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domestically in order topresent them in a form which is more familiar to readers outside Japan.
The consolidated financial statements are stated in Japanese yen,
the currency of the country in which the Company is incorporated andprincipally operates. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of readers outside
Japan and have been made at the rate of ¥98.26 to $1, the approximate rateof exchange at March 31, 2009. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S.
dollars at that or any other rate.

2. Summary of significant accounting policies
1) Principles of consolidation
The consolidated financial statements as of March 31, 2009 include theaccounts of the Company and its 5 subsidiaries.
All significant intercompany balances and transactions have been
eliminated in consolidation. All subsidiaries are consolidated on the basisof their results for fiscal years ended December 31.
2) Cash and cash equivalents
For the purposes of the consolidated statements of cash flows, cash andcash equivalents include cash-on-hand and in banks and other highly liquid
investments with maturities of three months or less when purchased.
3) Inventories
Inventories are stated at the lower of cost or net selling value, cost being
determined by the moving-average method.
The company has adopted “Accounting Standard for Measurement of
Inventories” (Accounting Standards Board of Japan (“ASBJ”) Statement No.9,
July 5, 2006) from the consolidated fiscal year beginning April 1, 2007.
The effect of this change was to decrease operating income by ¥121 million and income before income taxes and minority interests by ¥90 million.
4) Securities
Securities other than those of unconsolidated subsidiaries and affiliates
are classified into three categories: trading securities, held-to-maturity debt
securities or other securities. Trading securities are carried at fair value.
Gain or loss, both realized and unrealized is credited or charged to income.
Held-to-maturity debt securities are carried at amortized cost. Marketablesecurities classified as other securities are carried at fair value with any
changes in unrealized holding gain or loss, net of the applicable income
taxes, included directly in equity. Cost of securities sold is determined by
the moving average method. Non-marketable securities classified as othersecurities are carried at cost.
5) Property, plant, and equipment
Property, plant, and equipment are stated at cost. Depreciation of property,
plant, and equipment of the Company and its domestic consolidated subsidiaries is computed substantially by the declining-balance method, while
the straight-line method is applied to buildings acquired by the domestic
companies after April 1, 1998, and is principally applied to the property,
plant and equipment of foreign subsidiary.
In fiscal 2009, the Company has changed the useful lives of certain
tangible fixed assets based on the reassessment of the useful lives in lightof the change in the Japanese Corporate Tax Law (the “Tax Law”). The effectof this change was to decrease both operating income and income before
income taxes and minority interests by ¥93 million ($956 thousand).
In fiscal 2008, in accordance with the Tax Law revised in 2007, theCompany and its domestic consolidated subsidiaries adopted the new
method of depreciation based on the Tax Law for the tangible fixed assets
acquired on or after April 1, 2007. The effect of this change was to decrease
both operating income and income before income taxes and minority
interests by ¥51 million.

5

In fiscal 2008, in accordance with the revised Tax Law, for the tangible
fixed assets acquired on or before March 31, 2007, the Company started todepreciate the remaining balance of the assets over a five year period using
straight-line method from the following fiscal year after the book value ofthe assets decreases to 5% of the acquisition costs under the method ofdepreciation based on the Tax Law before revision. The effect of this change
was to decrease both operating income and income before income taxes andminority interests by ¥223 million.
6) Liabilities for severance indemnities
The Company and its domestic consolidated subsidiaries (excluding one
subsidiary) made provisions for liabilities for severance indemnities inan amount deemed necessary at the term-end, based on the estimatedamounts of projected benefit obligations and the fair value of the plan
assets. Transitional obligations in the amount of ¥1,222 million are charged
to expenses using the straight-line method over 10 years.
Actuarial gains/losses are recognized in income/expenses using thestraight-line method over 10 years, which is shorter than the average of theestimated remaining service lives commencing with the following period.
Foreign subsidiary is outside the scope of application.
7) Income taxes
Current income taxes are provided for based on amounts currently payablefor each year. Deferred income taxes arising from temporary differencesin the recognition of assets and liabilities for tax and financial reporting
purposes are reflected in the consolidated financial statements.
8) Appropriations of retained earnings
Appropriations of retained earnings are reflected in the financial statements
for the following year upon Board of Directors’ or shareholders’ approval.
9) Presentation of equity
The Company and its domestic consolidated subsidiaries have adopted the
new accounting standard for presentation of equity in the year ended March
31, 2008. Under this accounting standard, minority interests are presented
as components of equity.
10) Research and development costs
Research and development costs are charged to income as incurred.
11) Foreign currency transaction
All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the current
exchange rates at the balance sheet date.
Revenue and expense items denominated in foreign currencies aretranslated using the rate on the date of the transaction. Related exchange
gains or losses are credited or charged to income as incurred.
12) Foreign currency financial statements
The balance sheet accounts of the foreign subsidiaries are translated into
Japanese yen at the current exchange rates as of the balance sheet date
except for equity, which is translated at the historical rate. Revenue andexpense accounts of the foreign subsidiary is translated into Japanese yen at
the current exchange rates.
Differences arising from such translation are shown as “Foreign currencytranslation adjustments” in a separate component of equity.
13) Accounting Change
Adoption of “Accounting Standard for Leases Transactions”
In fiscal 2009, in accordance with the Accounting Standard (“ASBJ Statement
No.13” issued by the Accounting standards Board of Japan on March 30,2007), (“ASBJ Guidelines No.16” issued by the Accounting standards Boardof Japan on March 30, 2007), finance leases which do not transfer ownershiphave been accounted for as purchase and sale transactions, while they had
been accounted for in the same manner as operating leases with disclosuresof certain “as if capitalized” information until fiscal 2008. There was no effecton profit or loss from this change.
Adoption of “Practical Solutions on the Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements”
In fiscal 2009, the Company has adopted “Practical Solution on Unificationof Accounting Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements (“ASBJ Practical Issues Task Force No.18” issued by the
Accounting Standard Board of Japan on May 17, 2006). There was no effecton profit or loss from this change.

3. Inventories

4. Short-term borrowings and long-term debt

At the end of each fiscal year, inventories consisted of the following:Thousands ofMillions of yen
U.S. dollars
2009
2008
2009
Finished goods and merchandise ..... ¥5,445¥4,701$55,419
Raw materials and supplies...............
2,201
1,800
22,405Work in process ..................................
532
464
5,414
¥8,179¥6,966$83,239

Short-term borrowings .......................
Current portion of long-term debt ....
Long-term debt ...................................

Millions of yen
2009
2008
¥ 477
¥ 464
2,199
2,011
4,550
4,089
¥7,227¥6,565

Thousands of
U.S. dollars
2009$ 4,858
22,38546,307$73,551

Loans from banks due through 2036, with interest rates at 1.2% to 4.9%.

5. Segment information
Industry segment information
The Companies operate principally in three industrial segments.
Each segment has the following main products:
Titanium dioxide and its derivatives:
Titanium dioxide, Micro titanium dioxide, Surface treatment business
Other chemicals:
Surfactants, Sulfuric acid, Aluminum triphosphate
Others:Business warehouses, Electro-ceramics products
Millions of yen
For the year ended March 31, 2009
Sales:
Sales to outside customers ...........................................
Inter-segment sales and transfers.................................
Total ............................................................................
Operating expenses.............................................................
Operating income ................................................................
Identifiable assets at March 31, 2009 ................................
Depreciation.........................................................................
Capital expenditures ...........................................................

Titanium dioxide
and its derivatives

Otherchemicals

OthersElimination ofinter-segment items

Consolidated
total¥18,044855
18,89918,909¥(9)¥21,125¥ 1,866¥ 2,251¥12,540
3,710
16,25015,421¥ 829¥ 9,236¥ 688¥ 1,186¥1,765
2,054
3,820
3,776
¥ 44
¥2,604
¥ 173
¥ 53

¥ —
(6,620)(6,620)(6,621)¥
1¥5,324¥ 31¥ 90¥32,351—
32,351
31,484¥ 866¥38,290¥ 2,760¥ 3,581

Titanium dioxide
and its derivatives

Otherchemicals

OthersElimination ofinter-segment items

Consolidated
total¥19,161967
20,12819,088¥ 1,039¥20,927¥ 1,777¥ 1,035¥11,722
3,633
15,355
14,575¥ 780¥ 8,885
¥ 646
¥ 449

¥1,838
1,998
3,836
3,681
¥ 155
¥2,593
¥ 167
¥ 216

¥ —
(6,599)(6,599)(6,626)¥ 27¥7,258¥ 28¥ 49¥32,721—32,72130,719¥ 2,002¥39,664¥ 2,620¥ 1,750

Titanium dioxide
and its derivatives

Otherchemicals

OthersElimination ofinter-segment items

Consolidated
total$183,638
8,707
192,345
192,440$(94)$214,993$ 18,995$ 22,911$127,629
37,758165,387
156,944$ 8,442$ 94,000$ 7,009$ 12,073$17,972
20,90838,881
38,430$ 450$26,505$ 1,767$ 545$—(67,374)(67,374)(67,391)$17$54,183
$ 319
$ 921

$329,240—
329,240
320,423$ 8,816$389,682$ 28,091$ 36,451

Millions of yen
For the year ended March 31, 2008
Sales:
Sales to outside customers ...........................................
Inter-segment sales and transfers.................................
Total ............................................................................
Operating expenses.............................................................
Operating income ................................................................
Identifiable assets at March 31, 2008 ................................
Depreciation.........................................................................
Capital expenditures ...........................................................

Thousands of U.S. dollars
For the year ended March 31, 2009
Sales:
Sales to outside customers ...........................................
Inter-segment sales and transfers.................................
Total ............................................................................
Operating expenses.............................................................
Operating income ................................................................
Identifiable assets at March 31, 2009 ................................
Depreciation.........................................................................
Capital expenditures ...........................................................

6. Subsequent event
Undisposed deficits at the end of the term under review were disposed
through reversal of general reserve, as approved by the General Meeting of
Shareholders held on June 26, 2009.

Year-end cash dividends paid ..................

Millions of yen

Thousands of
U.S. dollars¥250$2,5496

R EPORT OF I NDEPENDENT P UBLIC A CCOUNTANTS
To the Board of Directors of
TAYCA CORPORATION
We have audited the accompanying consolidated balance sheets of TAYCA CORPORATION andconsolidated subsidiaries at March 31, 2009 and 2008, and the related consolidated statements ofincome, changes in equity and cash flows for the years ended March 31, 2009 and 2008, all expressedin Japanese yen. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express our opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with the auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of TAYCA CORPORATION and consolidated subsidiaries as of March 31, 2009 and 2008, and the consolidated results of their operations and their cash
flows for the years ended March 31, 2009 and 2008, in conformity with accounting principles generally
accepted in Japan.

Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts
and, in our opinion, such translation has been made in conformity with the basis stated in Note 1.
Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

Osaka, Japan
June 23, 2009