NORITAKE CO., LIMITEDANNUAL REPORT 2008 Year Ended March 31, 2008

The Spectrum of Ceramic Technology Inspiring Infinite Possibilities

NORITAKE CO., LIMITED
Noritake Co., Limited has operations in five business groups:
Industrial Products, Tabletop, Electronics, Ceramics & Materials, andEnvironmental Engineering. Registering a fifth consecutive year of increase,consolidated net sales rose to ¥133,368 million in the fiscal year under review,marking the first year of the seventh three-year medium-term management plan.
Noritake continues to focus on its business growth to “maximize corporate value”
and “the creation of a foundation for next-generation development.”

5 Industrial Products Group 6 Tabletop Group 7 Electronics Group 8 Ceramics & Materials Group 9 Environmental Engineering Group

Contents

1

Six-Year Financial Summary

17 Consolidated Balance Sheets2

Message from the Management

18 Consolidated Statements of Income

5

Review of Operations

19 Consolidated Statements of Changes in Net Assets

10 Research & Development

20 Consolidated Statements of Cash Flows

12 Corporate Governance

21 Notes to Consolidated Financial Statements

13 Directors, Statutory Auditors and

31 Report of Independent Auditors

Executive Officers
14 Consolidated Financial Review

32 Overseas Network
33 Corporate Data / History of Noritake

SIX-YEAR FINANCIAL SUMMARY

Millions of yen

Thousands of
U.S. dollars

2008

2007

2006

2005

2004

2003

2008

¥133,368¥129,240¥123,207¥118,315¥112,927¥110,857$1,333,680

10,488

9,463

8,361

6,927

4,832

2,695

104,880

minority interests

10,171

10,398

9,009

6,729

6,145

1,947

101,710Net income

5,669

5,796

5,031

4,002

3,035

410

56,690

FOR THE YEAR:

Net sales
Operating income
Income before income taxes and

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

¥

38.36

¥

39.20

¥

33.50

¥

26.43

¥

19.65

¥

2.57

$

0.38

Capital expenditures

¥

5,084

¥

4,080

¥

3,413

¥

3,494

¥

3,072

¥

2,289

$

50,840AT YEAR-END:

Total assets¥141,644¥148,827¥143,433¥128,288¥128,719¥119,467$1,416,440

78,083

79,27076,02566,28464,77659,378780,830

55.1

53.3

53.0

51.7

50.3

49.7

Total shareholders’ equity
Total shareholders’ equity ratio (%)

Note: The U.S. dollar amounts above have been translated at the rate of ¥100 to US$1.

Net Sales

Operating Income

Net Income

Net Income per Share(Millions of yen)

(Millions of yen)

(Millions of yen)

(Yen)

123,207129,240

133,368

5,796

10,488
9,463

5,669

5,031

39.20

38.36

07

08

33.50

8,361

06

07

08

06

07

08

06

07

08

06

1

MESSAGE FROM THE MANAGEMENT

Noboru Akahane, Chairman and Representative Director (left) and Hitoshi Tanemura, President and Representative Director (right)

The management wishes to sincerely thank all stakeholders of Noritake Co., Limited for theirsupport over the past fiscal year. We would like to take this opportunity to comment on the Group’s
results for fiscal 2008, ended March 31, 2008. In the first year of the three-year medium-term
management plan, we have strived to boost our results to maximize corporate value and create afoundation for next-generation development during the fiscal year under review.

REINFORCEMENT OF CORE TECHNOLOGIESNoritake has engaged in the establishment of a solid business foundation based on its core ceramic
technologies used in the development of tableware to further cultivate its specialty technologies ineach of the consumer, industrial and technological goods fields.

FORMULATION OF STRUCTURE TO ENHANCE BUSINESS PERFORMANCE
We have proactively a developed production and sales structure tailored to the five businessgroups, while making Groupwide efforts to control product quality and reduce costs by focusing ourmanagement resources in next-generation growth fields.

STRENGTHENING OF BUSINESS FOUNDATION
Based on the further enhancement of corporate governance functions and the Noritake brand, theNoritake Group increased its centripetal force to enhance corporate value. Together with this, wehave made efforts to strengthen our compliance system on the back of increasing corporate social2responsibility to contribute to society through our business activities.
As a result, the Noritake Group’s consolidated net sales for fiscal 2008, ended March 31, 2008,
rose 3.2% year on year to ¥133,368 million. Operating income grew 10.8% to ¥10,488 million, andnet income declined 2.2% to ¥5,669 million.

BASIC POLICY REGARDING EARNINGS DISTRIBUTION
Noritake positions profit return to shareholders as a key management policy. Based on this, weplace emphasis on stable and sustainable dividend payment. In addition, we make effective use ofretained earnings for development investment to create new technologies and products that canbecome the Noritake Group’s future strength, as well as for capital investment for sustainablebusiness development in growth fields. For dividend payment, Noritake plans to distribute ¥4.5 pershare for fiscal 2008 as both an interim and a year-end dividend, for a full-year dividend of ¥9.0 per
share. Dividend payment for fiscal 2009, ending March 31, 2009, is planned to be ¥9.0 per share.

BUSINESS OUTLOOKINDUSTRIAL PRODUCTS GROUP
With the aim of forming a robust business structure to prevail in global competition as a grinding
and polishing tool manufacture, Noritake will make every effort to tackle various challenges,
including the development of new, superior products and technologies, restructuring of the
production system and improvement of marketing efficiency. In specific terms, we will steadily
promote various plans such as the establishment of a new plant with the most advanced equipment
for high-precision processing tools.

TABLETOP GROUP
Noritake’s major markets of Japan and the United States are expected to shrink further. Amid suchcircumstances, we will drastically streamline our sales structure, while placing more emphasis on
newly emerging markets such as Russia. On the production front, we will shift our manufacturingfunction to overseas plants to reduce costs. Furthermore, we will strive to differentiate ourselvesfrom competitors and reinforce our brand power by launching higher-value-added products making
use of our sophisticated technique.

ELECTRONICS GROUP
Both in Japan and overseas, Noritake will enhance the sale of high-value-added products such as
vacuum fluorescent display tubes with built-in controller, high-resolution graphics modules,
information system products and so on. On the development and production fronts, we will strive to
introduce new, high-value-added products and environment-friendly products by using lead-freematerials. Simultaneously, we will endeavor to secure earnings by streamlining our production division.

3

CERAMICS & MATERIALS GROUP
For electronic pastes and electronic components, Noritake will engage in the development of
products for new applications, including solar batteries, as well as atomization technology to meetthe needs of more highly integrated electronic components. In addition, we will strive to expand
overseas sales, mainly of dental-related products.

ENVIRONMENTAL ENGINEERING GROUP
In the heating business, which encompasses dryers and kilns, we will concentrate on development
activities mainly for the display, electronic, semiconductor and solar battery fields. Noritake will also
strive to expand market share for grinding machines for the iron and steel industry by meetingrobust capital investment in Japan and East Asia. Together with this, we will aim to increase sales
by releasing new products in filtration equipment and carbide tipped circular sawing.

R&D
Based on our efforts in the reinforcement of core technologies, new product development andenhancement of development capabilities, Noritake will aim to introduce new technologies andproducts. In order to do so, we will actively promote joint research programs and technologicalexchanges with other companies and research institutes. In the environmental engineering sector,
particularly for solar power-related technologies, Noritake will facilitate the development of state-ofthe-art techniques in material, processing and firing technologies.

We thank our shareholders for their steadfast support and understanding as we work toward
our objectives.

4

Chairman and Representative Director

President and Representative Director

Noboru Akahane

Hitoshi Tanemura

REVIEW OF OPERATIONS

Industrial Products
Group

In the first half of fiscal 2008, sales of grinding wheels and
CBN tools were stagnant due to production cuts in theautomobile industry and certain sectors of the bearing
industry. In the second half, however, sales gained upward
momentum. Particularly, sales to the steel-making industry
increased substantially, reflecting our efforts to expand salesof roll grinding wheels. Despite the impact from theproduction cut in certain sectors, such as the electronics andsemiconductor industries, sales of diamond tools increased
due to growth in the production of automobiles for export aswell as the sales expansion of new products such as the
single-layered, metal bonded diamond wheel “Grit Ace.”
Sales of abrasive cloth and paper remained almost same as
the previous fiscal year despite harsh competition with lowpriced Chinese products both in Japan and overseas.
As a result, consolidated net sales for the Industrial
Products Group rose 2.7% year on year to ¥46,528 million.

44,23645,324

46,52806

07

08

20,95519,34% of Net Sales

34.9%
Sales
(Millions of yen)

06

07

5

Tabletop Group

44,23645,324

46,528

20,955
19,343

11,491
17,723% of Net Sales

13.3%
Sales
(Millions of yen)

06

07

08

06

07

08

During the fiscal year under review, Noritake strived torevitalize sales floor operations to secure sales andprofits amid the shrinking domestic market. However,the drop in sales at local department stores andspecialty stores was notable, resulting in a continuingsales decline. Overseas, sales of tableware to airline
companies in the European and Asian markets aswell as sales of tableware to newly emerging markets
such as Russia were strong. In North America, ourlargest market after Japan, however, sales at large
specialty stores declined while sales at department
stores were stagnant.
As a result, consolidated net sales for the
Tabletop Group decreased 8.4% from the previous
fiscal year to ¥17,723 million.

606

In the domestic market, sales of vacuum fluorescentdisplay tubes (VFD) and products that make use of
20,955

12,43019,343

12,677thick-film printing technology
were weak. Overseas,
23,21733,192
23,248sales of VFD for industrial cooking 20,632
devices, gaming

11,491

2,73

28,926

17,723machines
and automobiles grew in North America,
25,893% of Net Sales

while sales of VFD for audio equipment declined. In

9.5%

addition, VFD sales for industrial cooking devices
and gaming machines were brisk in Europe. In Asia,
VFD sales for audio, measurement and medical
equipment were favorable, while VFD for point-of-saleSales

products decreased.

(Millions of yen)

06

07

As a result, consolidated net sales for the
08

06

07

08

06

07

08

06

07

Electronics Group climbed 2.0% year on year to

08

06¥12,677 million.

Electronics Group7

Sales of pastes for electronic components grew on theback of increased demand for use in new products.
12,43033,192

12,677

11,491% of Net Sales

2,925

2,738 of electronic
2,734
screentelevision market rose, and sales
20,632

28,926

3

Shipments 23,217
of ceramicmaterials destined for the flat23,248
components were strong. In addition, exports of

25,893dental-related products for dental porcelain and24.9%

increased demand for zirconia-framed CAD/CAM
systems contributed to sales growth. Furthermore,sales in the thick-film printed circuit boards andplaster businesses grew.

Sales

As a result, consolidated net sales for the(Millions of yen)

06

07

Ceramics & Materials Group increased 14.7% to
08

06

07

08

06

07

¥33,192 million.

08
06

Ceramics & Materials
Group

8

07

08

Environmental
Engineering Group

23,21733,192
28,92625,89323,2482,925
Sales of far-infrared heaters,
high-efficiency kilns and
2,738

20,632

2,734

controlled-atmosphere furnaces for heat treating use% of Net Sales

remained strong on the back of brisk capital

17.4%

investment in the display and battery as well as
electronic and semiconductor industries. In addition,
sales of grinding machines for the iron and steel
industry grew in Japan, Taiwan and China, while
demand for static mixers and filtration equipment wereSales

robust. On the other hand, sales of carbide tipped(Millions of yen)

06

07

08

06

07

08

circular sawing machines declined.
As a result,net sales for the06
07 consolidated
08
Environmental Engineering Group edged up 0.1% year
on year to ¥23,248 million.

9

RESEARCH & DEVELOPMENT

10

Industrial Products
Group

Tabletop GroupElectronics GroupHIGH-COMPOSITE ROLLS FOR DEBURRINGPRINTED WIRING BOARDS“EVENING MAJESTY” HIGH-GRADE
BONE CHINA

GRAPHIC DISPLAY MODULE

In the key automobile, bearing andprocessing tools fields, Noritake ispursuing the development of productswith better quality and efficiency,
featuring higher-speed, high-precision
processing. In the information-,
telecommunication- and clean energyrelated fields, Noritake focuses on thedevelopment of eco-friendly fixed
grinding, grain-processing tools of highgrade and high precision. Together with
this, we focus on research regarding
basic technologies for uniformly porous
fixed grinding grain processing tools andhigh-flattening processing machinery.
The R&D expenditures in this group
amounted to ¥513 million in the fiscal
year under review.

The Tabletop Group continues towork to develop new decorating
technology and enhance the qualityof porcelain.
The R&D expenditures in thisgroup totaled ¥81 million in fiscal
2008.

In the area of elemental technology
for VFD (vacuum fluorescentdisplay), Noritake Itron Corporation
is developing multiple-function
VFDs, featuring higher brightness
and gray scale VFD modules. In
addition, Noritake is also
developing eco-friendly materials
such as cadmium-free fluorescentpaste and has commenced mass
production of cadmium-free VFDs.
We continue to make every effort toimprove material quality. Beyond
that, the Company engages in thedevelopment of lead-free glassmaterials and new lead-free display
devices based on VFD technology.
The R&D expenditures in thisgroup totaled ¥627 million.

Ceramics &Materials GroupPASTE FOR ELECTRONICS

11,49106

Noritake reinforced its development
activities for electric paste to meet hightech needs in the electronics andenvironment-related industries as well as
in the ceramics-related fields, represented
by electronic materials and components.
Noritake Kizai Co., Ltd. is developing
various electronics materials, including
super-thin-layer electric paste to meet theneeds of next-generation electronic
components, along with platinum paste
and paste
for solar batteries.
12,677
12,430Noritake Ceramics Co., Ltd. is28,926
engaged in the development of high25,893
density, thick-film, multi-layer substrates
for automobiles and high-performance
ceramic carriers for chemical plants.
Noritake’s consolidated subsidiary, KCM
Corporation, is promoting the
microparticulation of barium titanate,compounding electronic components withhigh-level crystallization characteristics,
and the development of low-alkali
07
08
06
07
ceramics for use as electrode bases,
compounding materials, and raw
materials for high-purity silica.
The R&D expenditures in this group
totaled ¥1,431 million.

Environmental
Engineering GroupHIGH-PERFORMANCE ELECTRODE FIRINGFURNACE

Noritake focuses on R&D activities inthe display, battery and semiconductor
industries as well as in the solar battery
field. The R&D expenditures in thisgroup amounted ¥270 million.

Based on our efforts in the reinforcementof core technologies, new productdevelopment and enhancement ofdevelopment capabilities, Noritake will
aim to introduce new technologies andproducts. In order to do so, we will
actively promote joint research programsand technological exchanges with othercompanies and research institutes. In theenvironmental engineering sector,
particularly for solar power-related
technologies, Noritake will facilitate thedevelopment of state-of-the-art
techniques in material, processing andfiring technologies.
Noritake considers the improvement
and establishment of basic technologies,
new product development, and theenhancement of development capabilities
as the pillars of its R&D endeavors. To
this end, the Company will aggressively
pursue technological exchanges andcollaborative research with othercompanies and research institutions, witha focus on promoting R&D in theenvironmental and energy fields and on
realizing new businesses and productsthat contribute to society.

R&D Expenditure(Millions of yen)

23,21733,192

08

06

07

2,925

23,24820,632

2,738

2,734

06

07

08
08

11

CORPORATE GOVERNANCEOUR FUNDAMENTAL APPROACH TO CORPORATE

directors can only be elected by a majority vote and not by

GOVERNANCE

cumulative voting.

With the advancing globalization of business, the effects of corporate

quorum necessary for extraordinary resolutions at the Generalactivities are being held to increasingly strict standards of corporate

Meeting of Shareholders, resolutions proposed for approval at thesocial responsibility. Each executive and employee of the Noritake

Company’s Annual General Meeting of Shareholders, in accordanceGroup is heir to the spirit of Noritake’s founder, and on this basis wewith the provisions of Article 309-2 of the Corporation Law, must be

formulated the Noritake Group Statement of Corporate Ethics. In

ratified by a two-thirds majority vote of shareholders in attendance

observing these standards and putting them into practice, each

and whose total voting rights account for one-third or more of all

member of the Noritake Group personifies the high standards ofexercisable voting rights.

With the aim of effecting smooth operations by reducing thecorporate ethics that bind the Noritake Group. The Group strives to

In accordance with Article 426-1 of the Corporation Law,

increase candor, honesty, and transparency through measures such

Noritake shall exempt directors and auditors’ (including former

as the disclosure of financial data on the Noritake web site.

directors and auditors) from liabilities for damage that may caused bytheir job execution by a resolution at the Board of Directors’ meeting

STATUS OF THE IMPLEMENTATION OF CORPORATE

within the limit of laws and regulations with the aim of having them

GOVERNANCE MEASURES

fully play their expected roles.
While the “company with committees” system is recognized,

1. Status of the Company’s decision-making, executive, andNoritake has decided to use the corporate auditor system.

oversight structures, and other corporate governancesystems:(1) Functions within the Company(2) Status of internal-control and risk-management system
implementation

The Board of Directors sets basic management policies and makes

Noritake is working to bolster internal controls through thedecisions with regard to legal requirements imposed on the Company

establishment of a Compliance Committee and other activities, withand other important matters. The Board of Directors meets at least

the goal of ensuring strict observance of laws and regulations. In

once a month. In addition, when there is a need to ensure uniformity

addition, the Company is deploying risk management systems toof understanding across the entire Group, an extraordinary

address the management risks associated with violations of laws orconference of directors that includes representatives from major

regulations.

Group companies can be convened.
Decisions regarding appropriation of retained earnings andother items stipulated in Article 459-1 of the Corporation Law are

independent auditors

addressed as matters for resolution by the Board of Directors, unless

The Audit Office (comprising two personnel) serves as theotherwise stipulated by law, with the aim of being able to flexibly

Company’s internal audit department and implements operational

return profits to shareholders.

and accounting audits. Audit results are reported to the General

The Executive Council meets weekly to make appropriate andManager in charge of business operations, and, in the event that any

prompt business decisions regarding important issues, following

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

prudent deliberation.

the Executive Committee.

The tenure of directors within Noritake and the Noritake GroupThe Audit Office, auditors and accounting auditors work in close

has been reduced to one year. The purpose of this is to makecollaboration to maintain the effectiveness of audit implementation.

possible the active building of management systems optimally suited

The Board of Auditors is composed of two full-time corporate

to today’s turbulent business environment and to clarify management

auditors and two outside auditors. This board has a mandate toresponsibilities anew with each fiscal year.

supervise auditors’ execution of their duties and the operations andNoritake limits the number of directors to 18.

assets of Noritake and its subsidiaries. In addition, the Board of

Noritake adopts an executive officer system to delegate

Auditors conducts audits on the basis of information received frombusiness operation authority and clarify responsibilities with the aim of

the independent auditors regarding the Company’s consolidated

further reinforcing business execution based on decisions made byfinancial statements and financial statements.

the Board of Directors.
Directors are elected at the Company’s Annual General Meeting

12(3) Status of internal audits and audits by corporate and

The Company concludes limitation of liability contracts witheach outside auditor in accordance with the provisions of Article 423-

of Shareholders, which must be attended by shareholders with

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

exercisable voting rights and whose total voting rights account for

stipulated by the aforementioned contracts is the minimum amountone-third or more of all exercisable voting rights. Furthermore,determined by law.

DIRECTORS, STATUTORY AUDITORSAND EXECUTIVE OFFICERS(As of June 27, 2008)

Noritake’s independent auditor is KPMG AZSA & Co., asestablished by contractual ties. For the fiscal year under review, theCHAIRMAN

Noboru Akahane*

Company’s consolidated and non-consolidated financial statements
are audited by CPAs of KPMG AZSA & Co.

PRESIDENTManaging partners assigned to Noritake by KPMG AZSA & Co.
in fiscal 2008 are as follows.

Hitoshi Tanemura*(Specified employees and managing partners)
CPA

Kazunori Tajima

DIRECTORS

CPA

Kanemaru Yasui

Youichi Yamada

CPA

Hideki Saito

Youichi Suzuki(Assistants)

Kazutaka Nakayama

Eleven CPAs and eight others

Minoru Murata
Kouichi Saburi

2. Possible conflicts of interest or improper relationships
between Noritake and its outside directors and outside
auditors:
Noritake has elected no outside directors.
No improper relationships exist between Noritake and its
outside auditors.
3. Status of the Company’s efforts to improve corporate
governance over the past year:

Tadashi Ogura
Kouzo Yamada
Satoru Shimazaki*Representative Director
STATUTORY AUDITORS

Hiroyasu Hirozawa

In order to delegate business operation authority and clarify

Kazunari Ando

responsibilities with the aim of further reinforcing business execution

Kazuya Okamoto

based on the decisions made by the Board of Directors, Noritake

Yasuji Moriyama

adopted an executive officer system on April 1, 2008.
Based on the Noritake Group Statement of Corporate Ethics
that stipulates the basic approach to fulfilling corporate social
responsibility, the Noritake Group continued to strengthen its

EXECUTIVE OFFICERS

Hitoshi Tanemura

compliance structure through its social education initiatives. Along with

Youichi Yamada

these efforts, the Company increased its focus on further ensuring the

Youichi Suzuki

effectiveness of internal controls and risk management based on legal

Kazutaka Nakayama

compliance through the Compliance Committee’s activities.

Minoru Murata
Kouichi Saburi

Compensation to Directors

Tamio Marubayashi

Compensation paid to directors and auditors:

Takashi Horiguchi

Directors 12 ¥361 million (No outside director appointments exist)

Kouzo Yamada

Auditors

Satoru Shimazaki

5¥48 million (Including ¥10 million to two outside auditors)

Note: These figures include compensation to one director and one auditor who retired
during the fiscal year under review.

Compensation to Independent Auditors
Service-based compensation in accordance with the provisions ofArticle 2-1 of the Certified Public Accountants Law (Law No. 103, 1948):¥34 million

Kyouji Saeki
Hisaya Ogura
Kouhei Kato
Kenji Hayasaka
Masahiro Nakagawa
Yoshitaka Mabuchi

Compensation for services other than the aforementioned, specifically,
internal management advisory services related to financial reporting:¥20 million

13

CONSOLIDATED FINANCIAL REVIEWNet Sales &Overseas Sales Ratio
Net sales (Millions of yen)Overseas sales ratio (%)

123,207129,240

133,368

29.4

30.1

29.0

06

07

08

Operating Income &Operating Income Ratio
Operating income (Millions of yen)

SCOPE OF CONSOLIDATION
Composed of 42 subsidiaries and seven
affiliates, the Noritake Group is engaged in the
manufacture and sale of products in fivebusiness groups—Industrial Products, Tabletop,
Electronics, Ceramics & Materials andEnvironmental Engineering—as well as theprovision of services related to these groups.
A brief description of the operations ofeach of the five business groups follows, andthese group descriptions correspond to the fivebusiness segments used elsewhere in thisreport to describe performance.
Notes:
1. On April 1, 2008, Noritake Kizai Co., Ltd.
merged with Noritake Gypsum Co., Ltd., awholly owned subsidiary of Noritake.
2. On April 1, 2008, Noritake Engineering Co.,
Ltd. merged with Noritake Refractory Co.,
Ltd., a wholly owned subsidiary of Noritake.

Operating income ratio (%)
10,488
9,463
8,361

6.8

7.3

06

07

7.9

08

Net Income &Net Income Ratio
Net income (Millions of yen)
Net income ratio (%)
5,796

5,669

4.5

4.3

5,031

4.1

06

14

07

08

INDUSTRIAL PRODUCTS GROUP
In the Industrial Products Group, grinding wheel
manufacturing is performed by Noritake Bonded
Abrasive Co., Ltd., four other subsidiaries, andone affiliate, while diamond tool manufacturing is
the province of Noritake Super Abrasive Co.,
Ltd. and another subsidiary. They then supply
these products to the Company. Abrasive clothand papers are produced by subsidiary Noritake
Coated Abrasive Co., Ltd. and one affiliate, anda portion of their output comes to the Company.
The Industrial Products Group’s domestic
and overseas sales are substantially handled by
the integrated manufacturing and sales
subsidiaries Noritake Bonded Abrasive Co., Ltd.
and Noritake Super Abrasive Co., Ltd., with
Noritake as the distributor. In addition, Zen
Noritake Co., Ltd. conducts sales in thedomestic market, and Noritake Co., Inc. of theUnited States and four other subsidiaries carryout sales in overseas markets. Noritake CoatedAbrasive Co., Ltd. conducts direct sales of mostof these products both in Japan and overseas.
TABLETOP GROUP
In the Tabletop Group, ceramics and othertableware are manufactured by Noritake China
Mfg. Co., Ltd., two other subsidiaries, and two
affiliates, who supply these products to theCompany.
Noritake Tableware Co., Ltd. and anothersubsidiary conduct sales for the Tabletop Groupin the domestic market. Noritake Co., Inc. of theUnited States and three other subsidiaries
conduct sales in overseas markets, as does
integrated manufacturing and sales subsidiary
Noritake China Mfg. Co., Ltd., with theCompany as the distributor.
ELECTRONICS GROUP
In the Electronics Group, Noritake Itron
Corporation manufactures fluorescent display
tubes and other products, which it supplies to
the Company and its sales subsidiaries.
Sales in Japan and overseas markets arehandled by the integrated manufacturing andsales subsidiary, Noritake Itron Corporation, with
the Company as the distributor. Noritake Co.,
Inc. of the United States and five othersubsidiaries also conduct sales for theElectronics Group in overseas markets.
CERAMICS & MATERIALS GROUP
Manufacturing in the Ceramics & Materials
Group is conducted by Noritake Kizai Co., Ltd.,
which, together with four other subsidiaries andone affiliate, produces electronics pastes andceramic materials and supplies them to theCompany. In addition, subsidiary KCM
Corporation and its subsidiaries produce
ceramic materials, a portion of which is supplied
to the Company.
Domestic sales are handled by subsidiary
Noritake Dental Supply Co., Ltd., together with
the integrated manufacturing and sales
subsidiary Noritake Kizai Co., Ltd. and two othersubsidiaries, with the Company as the
distributor. Noritake Co., Inc. of the UnitedStates and another subsidiary conduct sales for
the Ceramics & Materials Group in overseas
markets. Noritake Kizai Co., Ltd. and two othersubsidiaries also conduct overseas sales, with
the Company as the distributor. KCM
Corporation conducts direct sales of most ofthese products both in Japan and overseas.
ENVIRONMENTAL ENGINEERING GROUP
In the Environmental Engineering Group,
Noritake Engineering Co., Ltd. and three othersubsidiaries manufacture filtration equipment
and supply it to the Company.
The integrated manufacturing and sales
subsidiary, Noritake Engineering Co., Ltd.,
conducts domestic and overseas sales, with theCompany as the distributor. Noritake Co., Inc.
of the United States conducts sales for theEnvironmental Engineering Group in overseas
markets.
Service operations for the above are handled by
Noritake Information Systems Co., Ltd. andanother subsidiary. Two affiliates are also activein this area.
PERFORMANCE ANALYSIS
Consolidated net sales grew 3.2% year on yearto ¥133,368 million, mainly due to theCompany’s robust performance overseas,
particularly in Asia.
The cost of goods sold increased 2.4%
year on year to ¥94,214 million in accordancewith the net sales expansion. Selling, generaland administrative expenses totaled ¥28,666
million, a 3.3% increase compared with theprevious fiscal year.
Accordingly, operating income expanded
10.8% from the ¥9,463 million recorded in theprevious fiscal year to ¥10,488 million.
In other income (expenses), the net
financial income (interest and dividend income
less interest expense) remained almost
unchanged from the previous fiscal year.
However, the Company posted an impairment
loss on fixed assets and a loss on sales ordisposal of property and equipment, which
resulted in other expenses amounting to ¥317
million, compared with ¥935 million in otherincome recorded in the previous fiscal year.
As a result of the aforementioned, income
before income taxes and minority interests
totaled ¥10,171 million. After accounting for
current and deferred income taxes and minority
interests, net income dipped 2.2% year on year
to ¥5,669 million. Based on these figures, net
income per share declined to ¥38.36 from¥39.20 in the previous fiscal year, for a return on
equity of 7.2%, compared with 7.5% in theprevious fiscal year.
FINANCIAL POSITION ANALYSIS
Total assets stood at ¥141,644 million, down
4.8% from the previous fiscal year-end. Current
assets totaled ¥77,142 million, up 0.8% year on
year, while non-current assets amounted to¥64,502 million, down 10.8%. A major factor for
the increase in current assets was an increase ininventories attributable to increased orders forequipment and other related products. The
decrease in non-current assets was caused
primarily by the deteriorated market value ofinvestment securities in line with across-theboard downgrades in the prices of publicly
traded shares.
Total liabilities stood at ¥55,736 million,
down 9.7% year on year. Major factors for the
decline included a decline in notes andaccounts payable as of the end of the fiscal year
under review, which is attributable to year-end
holiday factors in the previous fiscal year, and adecrease in deferred tax liabilities in line with adrop in unrealized gains on available-for-salesecurities.
Net assets totaled ¥85,908 million, down
1.4% year on year. A major factor for thedecrease was a decline in unrealized gains onavailable-for-sale securities.
As a result, shareholders’ equity per sharestood at ¥528.40, compared with ¥536.24 forthe previous fiscal year-end. The shareholders’equity ratio was 55.1%, compared with 53.3%
for the previous fiscal year-end.

Net Income per Share
(Yen)

38.36

07

08

33.50

06

Total Assets(Millions of yen)

143,433

CASH FLOW ANALYSIS
Cash and cash equivalents on a consolidated
basis at the end of the fiscal year under review
saw a net decrease of ¥1,272 million to ¥12,168
million. A decrease in the amount of repayment
of debt and borrowings (the sum of repaymentof long-term debt and net decrease in shortterm borrowings) was more than offset byincrease in property, plant and equipment, adecrease in trade payables, an increase ininventories and other cash outflows.
Free cash flows as of the end of the fiscal
year under review totaled ¥184 million.
Cash flows and factors that affected them
are discussed below.
Net cash provided by operating activities
decreased ¥2,527 million year on year to ¥5,781
million. Positive factors included a contraction of¥3,234 million in increase in trade receivables,
an improvement of ¥1,091 million in decrease inemployee retirement benefit liability and anincrease of ¥488 million in depreciation.
Negative factors included an expansion of ¥875
million in increase in inventories as well as¥2,815 million in decrease in trade payables,
compared with a ¥5,649 million increase intrade payables recorded due to year-end
holiday factors in the previous fiscal year.
Net cash used in investing activities
increased ¥3,061 million year on year to ¥5,597
million. Positive factors included a contraction of¥1,113 million in increase in long-term

39.20

148,82706

141,644

07

08

Total Shareholders’Equity(Millions of yen)

76,02506

79,27078,08307

08

15

Total Shareholders’Equity Ratio
(%)

53.0

06

53.3

07

55.1

08

Return on Equity
(%)

7.1

06

7.5

07

7.2

08

investments and loans receivable. Negative
factors included an expansion of ¥1,023 million
in increase in property, plant and equipment.
Net cash used in financing activities
decreased ¥2,209 million year on year to ¥1,452
million. A major factor for the decrease was a
decline in the amount of repayment of debt andborrowings (the sum of repayment of long-term
debt and net decrease in short-termborrowings).
FINANCIAL POLICIESThe Noritake Group, in principle, funds general
operations and capital expenditures by using its
internal reserves and through borrowings. In
particular, working capital for general operations
is funded through short-term borrowings with amaturity of one year or less. In Japan, Noritake
has adopted a cash management system underwhich the Company centrally procures funds
and then allocates the procured funds toconsolidated subsidiaries in need of operating
funds. Overseas, individual consolidated
subsidiaries adhere to the basic policy of
procuring operating funds by themselves inrespective local currencies.
As of March 31, 2008, the balance ofshort-term borrowings totaled ¥9,116 million,
most of which has been denominated in yen,with the rest in four other currencies. Noritake,in principle, uses its internal reserves for capital
expenditures and other long-term investmentswith a portion covered by long-term debt. As of
March 31, 2008, the balance of long-term debt
amounted to ¥6,700 million.
BUSINESS AND OTHER RISKS
Raw Material and Fuel Price Risk
The Noritake Group conducts operations
centered on ceramic engineering. Like otherindustries, the ceramics industry is subject tomanufacturing cost increases attributable to therise in raw material and fuel prices. Whilecontinually working to improve productivity andreduce costs, Noritake is strategically
implementing upward revisions of its productprices to compensate for such cost increases.
However, in the event that the Company cannot
carry out effective measures to deal with sudden
cost increases, its business performance andfinancial position may be adversely affected.
Exchange Rate Fluctuation Risk
The export ratios of the Tabletop Group and theElectronics Group are high in comparison to

16

Noritake’s other business groups. Accordingly,
unfavorable trends in currency exchange
rates—more specifically, the yen’s rapid
appreciation—may negatively impact theperformance of these business groups, andconsequently the entire Company’s
performance and financial position.
Disaster Risk
The Noritake Group has a number of businessbases in Japan and overseas. In the event thatthese business bases, particularly
manufacturing bases, are damaged byearthquakes, fires and other disasters, theiroperations may have to be suspended for acertain period of time, and this would adversely
affect Noritake’s business performance andfinancial position.
Overseas Affairs Risk
The Noritake Group is actively promoting
overseas operations. Deteriorations in public
safety and security, coupled with changes inpolitical conditions, in each of the countries
where Noritake operates may restrict theCompany’s operations. In particular, in case ofwars, civil disturbances, terrorist attacks and thelike, the Company’s operations may have to besuspended for a certain period of time. Should
this be the case, the Noritake Group’s businessperformance and financial position may be
negatively impacted.
Technology-Related Risk
The Noritake Group is increasingly
concentrating its management resources insuch growth fields as the electronics,
semiconductors and energy industries. These
industries are characterized by the rapid pace of
their technological innovation and dynamic
demand fluctuations, which cause participantsin these industries to experience technology andproduct obsolescence at shorter intervals thanother industries. Accordingly, in the event that
Noritake fails to launch new products in a timely
manner, its business performance and financial
position may be negatively affected.
Risks and factors that could have adverse
effects on the Noritake Group’s businessperformance and financial position are notlimited to those described above. The analysis
of risks is based on information available to theCompany’s management as of March 31, 2008.

CONSOLIDATED BALANCE SHEETSNORITAKE CO., LIMITED and Consolidated Subsidiaries
March 31, 2008 and 2007

Millions of yen

Thousands of
U.S. dollars(Note 1)

2008

2007

2008

¥ 12,168
1,136
39,40920,176
1,539
2,714
77,142¥ 13,440
1,205
39,292
18,183
1,527
2,892
76,539$ 121,680
11,360394,090
201,760
15,39027,140771,420

22,653
623
1,813
4,090
29,17931,822
576
1,611
3,637
37,646

226,530
6,230
18,13040,900291,790

13,18235,72851,661
838
101,409(66,086)
35,323¥141,644

13,22334,99549,547244
98,009(63,367)
34,642¥148,827

131,820357,280
516,6108,380
1,014,090(660,860)
353,230$1,416,440

¥

¥

$

Assets:Current assets:
Cash and cash equivalents
Short-term investments (Note 5)
Notes and accounts receivable, net of allowance for doubtful accounts (Note 3)Inventories (Note 4)
Deferred tax assets (Note 11)
Other current assets
Total current assets
Investments and other assets:
Investment securities (Note 5)
Investments in unconsolidated subsidiaries and affiliates
Deferred tax assets (Note 11)
Other
Total investments and other assets
Property, plant and equipment:
Land
Buildings and structures
Machinery and equipment
Construction in progress
Total property, plant and equipment
Less, accumulated depreciation
Net property, plant and equipment
Total assets
Liabilities:

Current liabilities:
Short-term borrowings (Note 7)
Current portion of long-term debt (Note 7)
Notes and accounts payable (Note 6)
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt (Note 7)
Employee retirement benefit liability (Note 8)
Accrued severance indemnities for directors and corporate auditors
Deferred tax liabilities (Note 11)
Other non-current liabilities
Total long-term liabilities
Total liabilities

9,117
900
21,693
2,818
2,367
1,584
38,4799,111—
24,504
2,898
2,084
1,394
39,991

91,1709,000
216,930
28,18023,67015,840384,790

6,700
4,217
877
5,282
181
17,25755,736

7,600
4,233
787
8,895
213
21,72861,71967,00042,1708,770
52,8201,810
172,570
557,360

15,632
18,83545,521

15,632
18,835
41,182

156,320
188,350455,210(5,170)74,8183,265
7,825
85,908¥141,644(5,142)70,5078,763
7,838
87,108¥148,827(51,700)
748,180
32,65078,250859,080$1,416,440

Net assets (Note 10):

Shareholders’ equity:
Common stock: 397,500,000 shares authorized; 158,428,497 shares issued
Capital surplus
Retained earnings
Less, treasury stock, at cost: 10,656,361 sharesin 2008; 10,603,735 shares in 2007
Total shareholders’ equity
Accumulated gains from valuation and translation adjustments
Minority interests
Total net assets
Total liabilities and net assets
See accompanying Notes to Consolidated Financial Statements.

17

CONSOLIDATED STATEMENTS OF INCOME
NORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2008 and 2007

Millions of yen

Thousands of
U.S. dollars(Note 1)

2008

2007

2008

¥133,368¥129,240$1,333,680

Cost of goods sold94,214

92,034

942,140

Selling, general and administrative expenses

28,666

27,743

286,660

122,880

119,777

1,228,800

10,4889,463

104,880

Operating revenue:

Net sales (Note 12)
Operating costs and expenses (Note 12):

Operating income
Other income (expenses):

Interest and dividend income

522

471

5,220

Interest expense

(183)

(133)

(1,830)

Impairment loss on fixed assets

(336)

—

(3,360)(Loss) gain on sale or disposal of property and equipment

(177)

827

(1,770)Extraordinary severance pay to employees under early retirement plan

(156)

(274)

(1,560)

13

44

130

(317)

935

(3,170)10,171

10,398

101,710

Current

3,811

3,641

38,110

Deferred

70

457

700

3,881

4,098

38,810

Other, net
Income before income taxes and minority interests
Income taxes:

Total income taxes

621

504

¥ 5,669¥ 5,796Less, minority interests in net income of consolidated subsidiaries:

Net income

6,210
$

56,690U.S. dollars(Note 1)Yen

Per share:

Net income
Cash dividends
See accompanying Notes to Consolidated Financial Statements.

18

¥

38.36
9.00

¥

39.20
9.00

$

0.38
0.09

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSNORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2008 and 2007

Shareholders’ equity

Balance at March 31, 2006

Net income for the year
Cash dividends
Bonuses to directors
Fractional shares acquired, net
Net changes other thanshareholders’ equity
Balance at March 31, 2007

Net income for the year
Cash dividends
Fractional shares acquired, net
Net changes other thanshareholders’ equity
Balance at March 31, 2008

Total
shareholders’equityNumber ofshares ofcommon stock
issuedCommonstock

CapitalsurplusRetainedearnings

Treasurystock

158,428,497————¥ 15,632————¥ 18,834———1¥ 36,720
5,796(1,331)(3)—¥ (5,101)
—
—
—
(41)

¥ 66,085
5,796(1,332)(2)(40)—
158,428,497—
15,632—
18,835—
41,182—(5,142)—70,507

—
—
—

—
—
—

—
—
—

5,669
(1,330)
—

—
—
(28)

5,669
(1,330)(28)—
158,428,497—¥ 15,632—¥ 18,835—¥ 45,521—¥ (5,170)—¥ 74,818$156,320$188,350$411,820$(51,420)$705,070

—
—
—

—
—
(0)

56,690(13,300)
—

—
—
(280)

56,690(13,300)(280)—$156,320—$188,350—$455,210—$(51,700)—$748,180

Accumulated gains from valuation and translation adjustments
Total accumulated
Net unrealized
Foreign
gains fromgains oncurrency
valuation andavailable-for-saletranslationtranslation
securities
adjustment
adjustments

Minority
interests

Total
net assets

Millions of yen

Thousands of U.S. dollars (Note 1)

Balance at March 31, 2007

Net income for the year
Cash dividends
Fractional shares acquired, net
Net changes other thanshareholders’ equity
Balance at March 31, 2008

Millions of yen

Balance at March 31, 2006

Net income for the year
Cash dividends
Bonuses to directors
Fractional shares acquired, net
Net changes other thanshareholders’ equity¥ 13,992————¥ (4,052)————¥ 9,940————¥ 7,601————¥ 83,626
5,796(1,332)(2)(40)(1,647)
12,345—470(3,582)—(1,177)
8,763
—

237
7,838
—

(940)
87,108
5,669

—
—

—
—

—
—

—
—

(1,330)(28)(13)¥ 7,825(5,511)¥ 85,908

Balance at March 31, 2007

Net income for the year
Cash dividends
Fractional shares acquired, net
Net changes other thanshareholders’ equity
Balance at March 31, 2008¥

(5,429)6,916(69)¥ (3,651)(5,498)¥ 3,265

Balance at March 31, 2007

$123,450$(35,820)$ 87,630$ 78,380$871,080

—
—
—

—
—
—

—
—
—

—
—
—

56,690(13,300)(280)(54,290)$ 69,160(690)$(36,510)(54,980)$ 32,650(130)$ 78,250(55,110)$859,080

Thousands of U.S. dollars (Note 1)

Net income for the year
Cash dividends
Fractional shares acquired, net
Net changes other thanshareholders’ equity
Balance at March 31, 2008

See accompanying Notes to Consolidated Financial Statements.

19

CONSOLIDATED STATEMENTS OF CASH FLOWSNORITAKE CO., LIMITED and Consolidated Subsidiaries
For the Years Ended March 31, 2008 and 2007

Millions of yen

Thousands of
U.S. dollars(Note 1)

2008

2007

2008

¥10,171¥10,398$101,710

3,971

3,483

39,710

336

—

3,360

(9)

(1,100)(90)

Cash flows from operating activities:

Income before income taxes and minority interests
Adjustments for:
Depreciation
Impairment loss on fixed assets
Decrease in employee retirement benefit liability
Loss (gain) on sales or disposal of property and equipment

177

(827)

1,770

Increase in trade receivables(210)(3,444)(2,100)

Increase in inventories(2,024)(1,149)(20,240)(Decrease) increase in trade payables(2,815)

5,649(28,150)

Other, net
Sub-total(598)(2,258)(5,980)8,999

10,752

89,990Interest and dividends received

524

474

5,240

Interest paid

(181)

(120)

(1,810)(3,561)(2,798)(35,610)

5,781

8,308

57,810

Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:

Increase in property, plant and equipment(4,985)(3,962)(49,850)

Increase in long-term investments and loans receivable(507)(1,620)(5,070)Purchase of additional shares of consolidated subsidiaries

(306)

(79)

(3,060)Decrease in property and long-term investments

80

3,851

800

Decrease (increase) in short-term investments

37

(784)

370

Other, net

84

58

840

(5,597)(2,536)(55,970)—

Net cash used in investing activities
Cash flows from financing activities:

Increase in long-term debt

—

4,400

Repayment of long-term debt—

(1,900)—Net increase (decrease) in short-term borrowings

6(4,685)60

Dividends paid

(1,330)(1,330)(13,300)

Purchase of treasury stock and fractional shares

(33)

(47)

(330)

Other, net

(95)

(99)

(950)

(1,452)(3,661)(14,520)

Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents

119

(40)

2,230

(12,720)

Cash and cash equivalents at beginning of year

13,44011,210134,400

Cash and cash equivalents at end of year

¥12,168¥13,440$121,680

See accompanying Notes to Consolidated Financial Statements.

20(4)(1,272)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NORITAKE CO., LIMITED and Consolidated Subsidiaries

NOTE 1. BASIS OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of NORITAKE CO., LIMITED (the “Company”) and its consolidated subsidiaries (together
with the Company, the “Noritake Group”) have been prepared in accordance with the provisions set forth in the Financial Instrument andExchange Law of Japan and its related accounting regulations and in conformity with accounting principles generally accepted in Japan(“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements from International Financial
Reporting Standards.
The accounts of the Company’s overseas subsidiaries are based on accounting records maintained in conformity with generally accepted
accounting principles prevailing in the respective countries of domicile. The accompanying consolidated financial statements have been
restructured and translated into English from the consolidated financial statements of the Company prepared in accordance with Japanese
GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instrument and Exchange
Law of Japan. Certain supplementary information included in the statutory Japanese language consolidated financial statements, but notrequired for fair presentation, is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts has been included solely for the convenience of readers outside
Japan, using the prevailing approximate exchange rate at March 31, 2008, which was ¥100 to U.S. $1.00. The translation should not be
construed as a representation that the Japanese yen amounts have been, could have been or could in the future be converted into U.S.
dollars at this or any other rate of exchange.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its significant subsidiaries. Investments insignificant unconsolidated subsidiaries and affiliates are accounted for by the equity method. Investments in unconsolidated subsidiaries
and affiliates not accounted for by the equity method are stated at cost. The differences between the acquisition cost of investments in
subsidiaries and the underlying equity in the net assets adjusted based on the fair value at the time of acquisition are principally deferred as
goodwill or negative goodwill and amortized over five years on a straight-line basis. All inter-company accounts and transactions have been
eliminated on consolidation.
The number of consolidated subsidiaries, unconsolidated subsidiaries and affiliates for the years ended March 31, 2008 and 2007 was
as follows:
Consolidated subsidiaries:
Domestic
Overseas
Affiliates, accounted for by the equity method
Unconsolidated subsidiaries, stated at cost
Affiliates, stated at cost

2008

2007

24
14
2
4
5

24
14
2
4
5

The Company’s overseas consolidated subsidiaries close their books on December 31 every year, three months earlier than the Company
and the domestic consolidated subsidiaries. The Company has consolidated these subsidiaries’ financial statements as of their December
31 year-end, because the difference between this fiscal year-end and that of the Company and the domestic consolidated subsidiaries was
not more than three months. Significant transactions during the period between these subsidiaries’ year-end and the Company’s year-end
are adjusted on consolidation.
The overseas consolidated subsidiaries adopt accounting principles generally accepted in their respective countries. No adjustments toconform to accounting principles generally accepted in Japan have been made to their financial statements on consolidation, as there areno significant differences between accounting principles generally accepted in these countries and those accepted in Japan and suchaccounting treatment is allowed under Japanese GAAP effective at the current fiscal year-end.
(b) Accounting standard for presentation of net assets in the balance sheet
Effective from the year ended March 31, 2007, the Noritake Group adopted the accounting standard, “Accounting Standard for Presentationof Net Assets in the Balance Sheet” (Statement No. 5 issued by the Accounting Standards Board of Japan (“ASBJ”)), and the implementation
guidance for the accounting standard for presentation of net assets in the balance sheet (ASBJ Guidance No. 8.)
The consolidated balance sheets prepared in accordance with these standards comprise three sections, which are the assets, liabilities andnet assets sections. The consolidated balance sheets reported pursuant to the previous presentation rules comprised the assets, liabilities,
minority interests and shareholders’ equity sections. Under the previous presentation rules, companies were required to present minority
interests between the non-current liabilities and the shareholders’ equity sections. If the previous accounting method had been applied forthe consolidated balance sheet as of March 31, 2007, shareholders’ equity would have amounted to ¥79,270 million.

21

(c) Cash equivalents
The Noritake Group considers cash equivalents to be highly liquid debt instruments purchased with an original maturity of three months or less.
(d) Investments and marketable securities
The Noritake Group classifies certain investments in debt and equity securities as “held-to-maturity,” “trading” or “available-for-sale,” whoseclassification determines the respective accounting method as stipulated by the accounting standard for financial instruments. According to
the investment policy of the Noritake Group, the Noritake Group’s securities portfolio is classified as available-for-sale securities other than
trading or held-to-maturity. The accounting standard requires that available-for-sale securities for which market quotations are available atfair value be stated and net unrealized gains or losses on such securities be recorded as a component of net assets, net of applicable
income taxes. Gains and losses on the disposition of marketable securities are computed by the moving-average method. Available-for-salesecurities that are nonmarketable and without available market quotations are carried at cost determined by the moving-average method.
Adjustments in carrying values of individual investment securities are charged to income through write-downs, when a decline in value isdeemed other than temporary.
(e) Accounting for derivatives
The Noritake Group is a party to derivative instruments such as foreign exchange forward contracts or interest rate swap contracts in theordinary course of business to reduce its exposure to fluctuations in exchange rates and interest rates for hedge purposes. These transactions
include certain anticipated export sales and import purchases for which foreign exchange forward contracts are used and which bankborrowings for interest rate swap contracts are used. The Noritake Group is also exposed to credit loss in the event of nonperformance by
the other parties. However, the Noritake Group does not expect such nonperformance by the counterparties, because the Noritake Group
enters into derivative transactions only with major banks with relatively high credit ratings.
Foreign exchange forward contracts are accounted for by translating foreign currency denominated assets and liabilities at such contract
rates as an interim measure, if certain hedging criteria are met. According to the special treatment permitted by the accounting standard forfinancial instruments, hedging interest rate swap contracts are accounted for on an accrual basis and recorded net of interest expense
generated from borrowings, hedged items, if certain conditions are met. In addition, during the year ended March 31, 2008, the Company
entered into a derivative contract to hedge risk associated with the occurrence of an earthquake. As the fair value of such a contract is notconsidered determinable, that derivative contract has not been accounted for at fair value.
(f) Inventories
Inventories are stated at cost, determined principally by the first-in, first-out method.
(g) Allowance for doubtful accounts
The allowance for doubtful accounts has been provided for in the aggregate amount of estimated credit loss based on the individual financial
review approach for doubtful or troubled receivables and a general reserve for other receivables based on the historical loss experience fora certain past period.
(h) Property, plant and equipment and depreciation
Property, plant and equipment, including significant renewals and additions, are stated at cost, and are depreciated principally by thestraight-line method for overseas consolidated subsidiaries and by the declining-balance method for the Company and its domestic
consolidated subsidiaries at rates based on the estimated useful life of the assets. Buildings of the Company and its domestic consolidated
subsidiaries acquired on and after April 1, 1998, however, are depreciated by the straight-line method.
In accordance with the amendment of the Corporation Tax Law of Japan, effective from the year ended March 31, 2008, the Company andits domestic consolidated subsidiaries changed the depreciation method for property, plant and equipment acquired on and after April 1,
2007, to the method provided by the amended Corporation Tax Law of Japan. As a result, operating income and income before income
taxes and minority interests decreased by ¥156 million ($1,560 thousand), respectively, for the year ended March 31, 2008, as comparedwith the previous accounting method.
As for property, plant and equipment acquired before April 1, 2007, the Company and its domestic consolidated subsidiaries previously
depreciated up to the depreciable limit of 5% of the acquisition cost in accordance with the Corporation Tax Law of Japan. Effective fromthe year ended March 31, 2008, the residual value is depreciated over five years using the straight-line method from the fiscal year following
the year in which the depreciable limit is reached pursuant to the amended Corporation Tax Law of Japan. As a result, operating income
and income before income taxes and minority interests decreased by ¥178 million ($1,780 thousand), respectively, for the year ended
March 31, 2008, as compared with the previous accounting method.
Repairs and maintenance expenses are charged to current operations as incurred.
(i) Leases
Where financing leases do not transfer ownership of the leased property to the lessee during the term of the lease, the leased property of
the Company and its domestic consolidated subsidiaries is not capitalized and the related rental and lease expenses are charged to income
as incurred a method accepted by the “Opinion Concerning Accounting Standard for Leases” issued by the Business Accounting Councilof Japan (“BACJ”) and the related practical guideline issued by the Japanese Institute of Certified Public Accountants.

22

(j) Accounting standard for impairment of fixed assets
The Company and its domestic consolidated subsidiaries adopted the “Accounting Standard for Impairment of Fixed Assets” issued by
BACJ and the related practical guidance issued by ASBJ. The standard requires that fixed assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss should berecognized in the income statement by reducing the carrying amount of the impaired asset or a group of assets to the recoverable amount,measured as the higher of the asset’s net selling price or value in use. Fixed assets include land, plants, buildings and other forms ofproperty, as well as intangible assets, and are to be grouped at the lowest level for which there are identifiable cash flows from other groupsof assets. For the purpose of recognition and measurement of an impairment loss, fixed assets of the Company and its domestic
consolidated subsidiaries are principally grouped into cash-generating units based on the business division under the managerial
accounting classification. The Noritake Group determines if assets are impaired by comparing their undiscounted expected cash flows to
the carrying amounts in the accounting records. An impairment loss is recognized if undiscounted expected cash flows are less than the
carrying amount of the asset. Recoverable amounts are measured based on net selling prices primarily from appraisal valuations.
While the Noritake Group recorded no impairment loss for the year ended March 31, 2007, the Noritake Group recognized impairment loss
for the year ended March 31, 2008 as follows:
Buildings
Machinery and equipment
Land
Other

Millions of yen

Thousands of
U.S. dollars

¥201
27
56
52
¥336

$2,010270
560
520$3,360(k) Employee retirement benefits
Employees who terminate their service with the Noritake Group are entitled to retirement benefits generally determined by reference tocurrent basic rates of pay, length of service and the conditions under which the termination occurred. The Company has a lump-sum
retirement benefit plan and has also established a defined benefit pension plan, which covers approximately 68 % of retirement benefits for
employees of the Company who retire at the compulsory retirement age after five years or more of service. Some of the Company’s principal
consolidated subsidiaries have similar retirement benefit plans.
The Noritake Group principally recognizes retirement benefits, including pension cost and related liability, based on the actuarial present
value of the projected benefit obligation using actuarial appraisal approach and the fair value of pension plan assets available for benefits at
the respective fiscal year-ends. Unrecognized actuarial differences as changes in the projected benefit obligation or pension plan assets
resulting from the experience different from that assumed and from changes in assumptions are amortized on a straight-line basis over ten
years, a period within the average remaining service years of employees, from the next year in which they arise. Past service cost isrecognized in a single year as incurred.
(l) Accrued severance indemnities for directors and corporate auditors
The Noritake Group may pay severance indemnities to directors and corporate auditors, subject to the approval of the shareholders. The
Noritake Group has provided for this liability at the amount which would be payable assuming all directors and corporate auditors terminatedtheir service at the respective balance sheet dates.
(m) Translation of foreign currency accounts
Receivables, payables and securities, other than stocks of subsidiaries and certain other securities, are translated into Japanese yen at theexchange rate effective at the fiscal year-end. Transactions in foreign currencies are recorded based on the prevailing exchange rate on thetransaction date. Resulting translation gains or losses are included in current earnings.
In respect to financial statement items of overseas consolidated subsidiaries, all asset and liability accounts are translated into yen by
applying the exchange rate in effect at the fiscal year-end. All income and expense accounts are translated at the average rate of exchange
for the fiscal year. Translation differences, after allocating portions attributable to minority interests, are reported as foreign currencytranslation adjustment in a component of net assets in the accompanying consolidated balance sheets.
(n) Research and development expenses
Expenses related to research and development activities are charged to income as incurred. Such research and development expenses
were included in cost of goods sold and selling, general and administrative expenses in the accompanying consolidated statements ofincome and amounted to ¥2,925 million ($29,250 thousand) and ¥2,734 million for the years ended March 31, 2008 and 2007, respectively.
(o) Enterprise taxes
The Noritake Group calculates and records enterprise taxes based on the “added value” and “capital” amounts when levied as size-based
corporate taxes for local government enterprise taxes, and records them in selling, general and administrative expenses.

23

(p) Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized as the future tax
consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases andoperating loss carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates ondeferred tax assets and liabilities is recognized in the period that includes the enactment date.
(q) Accounting standard for directors’ bonus
From the year ended March 31, 2008, the Noritake Group adopted the “Accounting Standard for Directors’ Bonus (ASBJ Statement No. 4)”
issued by ASBJ. The standard requires that the directors’ bonuses, including those for corporate auditors, be accounted for as an expenseof the accounting period in which the bonuses accrued. Until the year ended March 31, 2007, bonuses to directors were recorded as apart of the appropriation of retained earnings in the fiscal year when proposed appropriation of retained earnings for directors’ bonuses
was approved by the Board of Directors and/or shareholders. This accounting change resulted in no material effect on the consolidated
financial statements.
(r) Appropriation of retained earnings
Cash dividends are recorded in the fiscal year when a proposed appropriation of retained earnings is approved by the Board of Directors
and/or shareholders. See Note 2(q) for the accounting for bonuses to directors.
(s) Per share data
Net income per share is computed by dividing income available to common shareholders by the weighted-average number of shares ofcommon stock outstanding during the respective year. Diluted net income per share is not disclosed, as the Noritake Group had no diluted
common shares for the years ended March 31, 2008 or 2007. Cash dividends per share shown for each fiscal year in the accompanying
consolidated statements of income represent dividends declared as applicable to the respective year.
NOTE 3. NOTES AND ACCOUNTS RECEIVABLE
As of March 31, 2008 and 2007, notes and accounts receivable consisted of the following:
Millions of yen

Trade notes receivable
Trade accounts receivable
Other
Less, allowance for doubtful accounts

Thousands of
U.S. dollars

2008

2007

2008

¥ 8,955
30,150490(186)¥39,409¥ 9,061
29,834602(205)¥39,292$ 89,550
301,500
4,900(1,860)$ 394,090

Millions of yen

Thousands of
U.S. dollars

NOTE 4. INVENTORIESAs of March 31, 2008 and 2007, inventories consisted of the following:

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

2008

2007

2008

¥ 9,135
7,307
3,734¥20,176¥ 8,775
6,234
3,174¥18,183$ 91,350
73,07037,340$ 201,760

NOTE 5. INVESTMENTS
As of March 31, 2008 and 2007, short-term investments consisted of time deposits with an original maturity of more than three months.
At March 31, 2008 and 2007, investment securities consisted of the following:

Marketable securities:
Equity securities
Other nonmarketable securities

24

Millions of yen

Thousands of
U.S. dollars

2008

2007

2008

¥22,113540¥22,653¥31,271551¥31,822$ 221,130
5,400$ 226,530

Marketable securities classified as available-for-sale are stated at fair value with unrealized gains and losses, which are excluded from current
earnings and reported as a net amount within the net assets account until realized. As of March 31, 2008 and 2007, gross unrealized gains
and losses for marketable securities were summarized as follows:
Cost

Gross
unrealized gains

Grossunrealized losses

Fair andcarrying value
Millions of yen

Available-for-sale equity securities:
As of March 31, 2008

¥ 10,463¥ 11,718¥ (68)¥ 22,113

9,999

21,286(14)

31,271

As of March 31, 2007

Thousands of U.S. dollars

Available-for-sale equity securities:
As of March 31, 2008

$104,630$117,180$(680)$ 221,130

The Noritake Group sold available-for-sale securities and recorded net gains of ¥28 million ($280 thousand) and ¥38 million for the years
ended March 31, 2008 and 2007, respectively. During the year ended March 31, 2008 and 2007, the Noritake Group recorded a loss on
the write-down of available-for-sale securities due to other-than-temporary impairment in value amounting to ¥37 million ($370 thousand)and ¥12 million, respectively.
NOTE 6. NOTES AND ACCOUNTS PAYABLE
As of March 31, 2008 and 2007, notes and accounts payable consisted of the following:

Trade notes payable
Trade accounts payable
Other

Millions of yen

Thousands of
U.S. dollars

2008

2007

2008

¥11,599
8,849
1,245¥21,693¥13,640
9,826
1,038¥24,504$ 115,990
88,49012,450$ 216,930

NOTE 7. SHORT-TERM BORROWINGS AND LONG-TERM DEBTAs of March 31, 2008 and 2007, short-term borrowings principally consisted of unsecured bank overdrafts and bank loans with interest at
rates ranging from 1.127% to 18.00% per annum.
As of March 31, 2008 and 2007, long-term debt consisted of the following:

Unsecured loans from banks and insurance companies due throughApril 2013 with interest at rates ranging from 0.86% to 1.58% per annumat March 31, 2008
Less, current portion

Millions of yen

Thousands of
U.S. dollars

2008

2007

2008

¥7,600(900)¥6,700¥7,600—¥7,600$76,000(9,000)$67,000

Millions of yen

Thousands of
U.S. dollars

¥ 900
2,300
1,400
—
—
3,000
¥ 7,600$ 9,000
23,00014,000——30,000$ 76,000

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

2009
2010
2011
2012
2013
Thereafter

As is customary in Japan, substantially all bank borrowings are subject to general agreements which provide, among other things, that thebanks may under certain circumstances request additional security for these loans and may treat any security so furnished, as well as cash
deposited with them, as security for all present and future indebtedness. The banks have never requested the Company or its subsidiaries
to submit such additional security. Also, as is customary in Japan, the Company and certain of its subsidiaries may have time deposits withthe banks from which they have short-term and long-term borrowings. However, there are no agreements with any banks which would
require maintaining such deposits.
25

NOTE 8. EMPLOYEE RETIREMENT BENEFITSThe Noritake Group has defined benefit pension plans and lump-sum retirement benefit plans which substantially cover all employees.
The following table reconciles the benefit liability and net periodic retirement benefit expense as of and for the years ended March 31, 2008
and 2007:

Reconciliation of benefit liability:
Projected benefit obligationLess, fair value of pension plan assets at end of year
Projected benefit obligation in excess of pension plan assets
Unrecognized actuarial differences
Prepaid pension cost
Balance of employee retirement benefit liability recognizedon the consolidated balance sheets

Millions of yen

Thousands of
U.S. dollars

2008

2007

2008

¥ 22,001(17,600)
4,401(2,937)
1,464
2,753

¥ 22,656(22,225)
431
1,664
2,095
2,138

$ 220,010(176,000)
44,010(29,370)
14,64027,530¥ 4,217¥ 4,233$ 42,170

Note: 1. The projected benefit obligation of certain subsidiaries with less than 300 employees was calculated using the simplified calculation
method permitted by the accounting standard for employee retirement benefits.
2. Some of the Company’s consolidated subsidiaries participate in a certain corporate pension plan under a multi-employer pension program
established by other employers, together with the subsidiaries. As information regarding whether the pension plan assets have beenreasonably calculated based on the proportion of contributions made by the subsidiaries is not available, the Noritake Group records therequired contributions as net periodic retirement benefit expense for the period in accordance with the amended accounting standard for
employee retirement benefits (ASBJ Statement No. 14). The above table excluded the portion of the pension plan assets under themulti-employer pension program. Information regarding the funded status of the entire corporate pension plan available as of the latest
calculation period-end was as follows:

Pension plan assets at March 31, 2007
Related benefit obligation under the program
Difference, resulting primarily from unamortized past service cost
Ratio of subsidiaries’ contributions to the total contributions to the entire plan

Components of net periodic retirement benefit expense:
Service cost
Interest cost
Expected return on pension plan assets
Amortization of actuarial differences
Amortization of past service cost
Net periodic retirement benefit expense

Millions of yen

Thousands of
U.S. dollars¥ 132,459(139,971)$ 1,324,590(1,399,710)¥$(7,512)(75,120)

2.8%

Millions of yen

Thousands of
U.S. dollars

2008

2007

2008

¥1,108
406
(232)
98
—
¥1,380

¥ 998
420
(212)
(247)
(138)
¥ 821

$ 11,080
4,060(2,320)980—$ 13,800

Major assumptions used in the calculation of the above information for the years ended March 31, 2008 and 2007 were as follows:
Method attributing the projected benefits to periods of services
Discount rate
Expected rate of return on pension plan assets
Amortization of actuarial differences
Amortization of past service cost

26

2008

2007

Straight-line
method2.0%
2.0%
10 years—

Straight-line
method2.0%
2.0%
10 years
1 yearNOTE 9. LEASE COMMITMENTS
As lessee, the Noritake Group has entered into various rental and lease agreements principally for office spaces which are noncancelable
or cancelable with a few months’ advance notice. The Noritake Group also leases machinery, office equipment, and vehicles under leases
which are not usually cancelable as lessee. The aggregate future minimum payments for noncancelable financing leases, including imputed
interest, and operating leases as of March 31, 2008 and 2007, were as follows:

Financing leases:
Due within one year
Due after one year

Operating leases:
Due within one year
Due after one year

Millions of yen

Thousands of
U.S. dollars

2008

2007

2008

¥223
264
¥487

¥308
343
¥651

$2,2302,640$4,870

¥147
135
¥282

¥184
340
¥524

$1,4701,350$2,820

The gross rental and lease expenses, consisting of minimum rental payments for all financing leases and operating leases, for the years
ended March 31, 2008 and 2007 were ¥1,247 million ($12,470 thousand) and ¥1,343 million, respectively. For the years ended March 31,
2008 and 2007, the lease expenses for noncancelable lease agreements which were categorized as financing leases amounted to ¥315
million ($3,150 thousand) and ¥420 million, respectively.
NOTE 10. NET ASSETSThe Japanese Corporate Law (“the Law”) became effective on May 1, 2006, replacing the former Japanese Commercial Code. The Law isgenerally applicable to events and transactions occurring after April 30, 2006 and for fiscal years ending after that date.
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However,a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the issue price of the new sharesas additional paid-in capital, which is included in capital surplus.
Under the Law, in cases in which a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or theexcess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional
paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance
sheets. Under the Law, legal earnings reserve and additional paid-in capital can be used to eliminate or reduce a deficit by a resolution of
the shareholders’ meeting. Additional paid-in capital and legal earnings reserve may not be distributed as dividends. All additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentiallyavailable for dividends.
At March 31, 2008 and 2007, respectively, capital surplus principally consisted of additional paid-in capital. In addition, retained earnings included
legal earnings reserve of the Company in the amount of ¥3,480 million ($34,800 thousand) as of March 31, 2008 and 2007, respectively.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of
the Company in accordance with Japanese laws and regulations.
During the year ended March 31, 2008, the Company paid interim dividends of ¥4.50 per share, amounting to ¥665 million ($6,650 thousand.)In addition, on May 9, 2008, the cash dividends for appropriation of retained earnings amounting to ¥664 million ($6,640 thousand, ¥4.50
per share) were resolved by the Board of Directors of the Company. The appropriation was not accrued in the consolidated financial
statements as of March 31, 2008. Such appropriations are recognized in the period in which they are approved by the shareholders.

27

NOTE 11. INCOME TAXESThe tax effects of temporary differences that gave rise to a significant portion of deferred tax assets and liabilities as of March 31, 2008 and2007, were as follows:
Millions of yen

Thousands of
U.S. dollars

2007

2008

2008

Deferred tax assets:
Inter-company profits on sales
Inter-company unrealized gains on property
Enterprise tax accruals
Accrued bonuses to employees
Employee retirement benefit liability
Accrued severance indemnities for directors and corporate auditors
Inventories
Operating loss carryforwards
OtherLess, valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Gain on transfer of investment securities to trusts for retirement benefit plans
Unrealized gains on available-for-sale securities
Other
Total deferred tax liabilities
Net deferred tax liabilities

¥

257
420
206
501
4,471
363
173
476
1,986
(1,541)
7,312

¥

252
420
204
537
4,857
328
139
531
1,894
(1,767)
7,395$ 2,570
4,200
2,060
5,010
44,710
3,630
1,730
4,760
19,860(15,410)
73,120

3,289
4,372
1,581
9,242
¥ 1,930

3,289
8,271
1,592
13,152¥ 5,757

32,89043,72015,81092,420$ 19,300

Millions of yen

Thousands of
U.S. dollars

2008

2007

2008

¥1,5391,813¥1,527
1,611$15,390
18,130

5,282

8,895

52,820

As of March 31, 2008 and 2007, deferred tax assets and liabilities were recorded as follows:

Deferred tax assets:
Current
Non-current
Deferred tax liabilities:
Non-current

In assessing the realizability of deferred tax assets, management of the Noritake Group considers whether some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. At March 31, 2008 and 2007, a valuation allowance was provided toreduce deferred tax assets to the extent that the management believes that the amount of the deferred tax assets is expected to be realizable.
Reconciliation of the differences between the Japanese statutory effective tax rate and the actual effective income tax rate on pretax income
reflected in the accompanying consolidated statements of income for the year ended March 31, 2008 was as follows:
Percentage ofpretax income

Japanese statutory effective tax rate
Increase (decrease) due to:Permanently non-deductible expenses
Tax exempt income
Local minimum taxes per capita levy
Differences between Japanese and foreign tax rates
Changes in valuation allowances
Tax credit for research and development expenses
Other
Actual effective income tax rate
The reconciliation for the year ended March 31, 2007 was not disclosed; because the difference was not material.

28

40.6%
0.8
(0.8)
0.5
(0.6)
0.6
(2.4)
(0.5)
38.2%

NOTE 12. SEGMENT INFORMATION
A summary of information classified by lines of business of the Noritake Group for the years ended March 31, 2008 and 2007 is as follows:
Industrial
Products

Tabletop

Electronics

Ceramics &Materials

Environmental
Engineering

Total

Elimination

Consolidated
Millions of yen

For the year 2008:
Operating revenue—Net sales:
External customers
Inter-segment sales/transfers
Operating costs and expenses
Operating income¥ 46,528 ¥ 17,723 ¥ 12,677 ¥ 33,192 ¥ 23,248 ¥ 133,368 ¥— ¥ 133,368
32
57
0
1,033
586
1,708
(1,708)—46,56017,78012,67734,22523,834135,076(1,708)133,368
40,033
17,251
11,88529,73921,379120,287
2,593
122,880¥ 6,527 ¥529 ¥792 ¥ 4,486 ¥ 2,455 ¥ 14,789 ¥ (4,301) ¥ 10,488

Identifiable assets
Depreciation
Impairment loss on fixed assets
Capital expenditures¥ 34,572 ¥ 15,489 ¥
1,257
691
—
280
1,503
710

For the year 2007:
Operating revenue—Net sales:
External customers
Inter-segment sales/transfers

9,550 ¥ 30,714 ¥ 16,273 ¥ 106,598 ¥ 35,046 ¥ 141,644
567
971
213
3,699
272
3,971
—
—
—
280
56
336
393
1,793
194
4,593
492
5,085

Operating costs and expenses
Operating income¥ 45,324 ¥ 19,343 ¥ 12,430 ¥ 28,926 ¥ 23,217 ¥ 129,240 ¥— ¥ 129,240
41
57
0
1,142
562
1,802
(1,802)—45,365
19,40012,43030,06823,779131,042(1,802)
129,240
38,876
18,681
11,73026,50921,832
117,628
2,149
119,777¥ 6,489 ¥719 ¥700 ¥ 3,559 ¥ 1,947 ¥ 13,414 ¥ (3,951) ¥9,463

Identifiable assets
Depreciation
Impairment loss on fixed assets
Capital expenditures¥ 33,086 ¥ 16,651 ¥
1,141
552
—
—
1,138
738

9,498 ¥ 31,213 ¥ 15,008 ¥ 105,456 ¥ 43,371 ¥ 148,827
523
809
171
3,196
287
3,483
—
—
—
—
—
—
679
679
465
3,699
381
4,080
Thousands of U.S. dollars

For the year 2008:
Operating revenue—Net sales:
External customers
Inter-segment sales/transfers
Operating costs and expenses
Operating income$465,280 $177,230 $126,770 $331,920 $232,480 $1,333,680 $— $1,333,680
320
570
0
10,3305,860
17,080(17,080)—
465,600
177,800
126,770
342,250
238,340 1,350,760(17,080) 1,333,680
172,510
118,850
297,390
213,790 1,202,870
25,930 1,228,800
400,330$ 65,270 $ 5,290 $ 7,920 $ 44,860 $ 24,550 $ 147,890 $ (43,010) $ 104,880

Identifiable assets
Depreciation
Impairment loss on fixed assets
Capital expenditures$345,720 $154,890 $ 95,500 $307,140 $162,730 $1,065,980 $350,460 $1,416,440
12,570
6,910
5,670
9,710
2,130
36,9902,720
39,710
—
2,800
—
—
—
2,800
560
3,360
15,0307,100
3,930
17,9301,940
45,9304,920
50,850Notes: 1. Operating costs and expenses in the elimination column represent unallocated corporate operating expenses such as general andadministrative expenses of the Company, net of inter-segment transactions.
2. Identifiable assets in the elimination column represent unallocated general corporate items such as cash and short-term and long-term
investments in securities, and general managed property, net of inter-segment balances.
3. Accounting changes:(Accounting change of depreciation method for property, plant and equipment)
As disclosed in Note 2(h), effective from the year ended March 31, 2008, the Company and its domestic consolidated subsidiaries changed
the depreciation method for property, plant and equipment acquired on or after April 1, 2007 to the method provided by the amended
Corporation Tax Law of Japan. As a result, as compared with the previous accounting method, the operating income of the industrial
Products segment, Tabletop segment, Electronics segment, Ceramics & Materials segment and Environmental Engineering segment
decreased by ¥41 million ($410 thousand), ¥33 million ($330 thousand), ¥23 million ($230 thousand), ¥48 million ($480 thousand) and ¥9
million ($90 thousand), respectively, for the year ended March 31, 2008. In addition, from the year ended March 31, 2008, the residual valueof property, plant and equipment acquired before April 1, 2007, is depreciated over five years using the straight-line method from the fiscal
year following the year in which the depreciable limit (5% of the acquisition cost) is reached pursuant to the amended Corporation Tax Law
of Japan. As a result, the operating income of the Industrial Products segment, Tabletop segment, Electronics segment, Ceramics &Materials segment and Environmental Engineering segment decreased by ¥44 million ($440 thousand), ¥33 million ($330 thousand), ¥23
million ($230 thousand), ¥26 million ($260 thousand) and ¥9 million ($90 thousand), respectively, for the year ended March 31, 2008, ascompared with the previous accounting method.
29

Information summarized by geographic area of the Noritake Group for the years ended March 31, 2008 and 2007 is as follows:
North
AmericaJapan

Europe

Asia

Other

Total

Elimination

Consolidated
Millions of yen

For the year 2008:
Operating revenue—Net sales:
External customers
Inter-segment sales/transfers
Operating costs and expenses
Operating income¥ 113,599
12,964
126,563
116,613¥9,950¥ 13,143
47
13,19013,006¥184¥ 3,109
139
3,248
3,033
¥ 215

¥ 2,846
2,700
5,546
5,530
¥
16

¥ 671 ¥ 133,368
5
15,855676
149,223655
138,837¥ 21 ¥ 10,386— ¥ 133,368(15,855)—(15,855)
133,368(15,957)
122,880¥102 ¥ 10,488

Identifiable assets¥ 104,124

¥

6,263

¥ 1,927¥ 4,286¥ 600 ¥ 117,200¥ 24,444 ¥ 141,644¥ 12,996
66
13,062
12,612¥450¥ 2,721
193
2,914
2,773
¥ 141

¥ 2,290
2,652
4,942
4,911
¥
31

¥ 435 ¥ 129,240
12
15,296447
144,536431
135,191¥ 16 ¥
9,345¥

Operating costs and expenses
Operating income¥ 110,798
12,373
123,171
114,464¥8,707— ¥ 129,240(15,296)—(15,296)
129,240(15,414)
119,777
¥
118 ¥
9,463

Identifiable assets¥ 103,378¥¥ 1,698¥ 3,833¥ 541 ¥ 115,992¥ 32,835 ¥ 148,827

For the year 2007:
Operating revenue—Net sales:
External customers
Inter-segment sales/transfers

6,542

¥

Thousands of U.S. dollars

For the year 2008:
Operating revenue—Net sales:
External customers
Inter-segment sales/transfers
Operating costs and expenses
Operating income$1,135,990
129,640
1,265,630
1,166,130$ 99,500$131,430
470
131,900
130,060$ 1,840$31,090
1,390
32,48030,330$ 2,150$28,460
27,00055,46055,300$ 160$6,710 $1,333,680
50
158,550
6,760
1,492,230
6,550
1,388,370$ 210 $ 103,860$— $1,333,680(158,550)—(158,550) 1,333,680(159,570) 1,228,800$ 1,020 $ 104,880

Identifiable assets$1,041,240$ 62,630$19,270$42,860$6,000 $1,172,000$ 244,440 $1,416,440

Note: 1. Identifiable assets in the elimination column represent unallocated general corporate items such as cash and short-term and long-term
investments in securities, net of inter-segment balances.
2. Accounting changes:(Accounting change of depreciation method for property, plant and equipment)
As disclosed in Note 2(h), effective from the year ended March 31, 2008, the Company and its domestic consolidated subsidiaries changed
the depreciation method for property, plant and equipment acquired on or after April 1, 2007 to the method provided by the amended
Corporation Tax Law of Japan. As a result, as compared with the previous accounting method, operating income of the “Japan” segment
decreased by ¥156 million ($1,560 thousand) for the year ended March 31, 2008. In addition, from the year ended March 31, 2008, theresidual value of property, plant and equipment acquired before April 1, 2007, is depreciated over five years using the straight-line methodfrom the fiscal year following the year in which the depreciable limit (5% of the acquisition cost) is reached pursuant to the amended
Corporation Tax Law of Japan. As a result, operating income of “Japan” segment decreased by ¥178 million ($1,780 thousand) for theyear ended March 31, 2008, as compared with the previous accounting method.

For the years ended March 31, 2008 and 2007, overseas sales which included export sales from Japan and net sales of overseas consolidated
subsidiaries other than Japan were summarized as follows:
Millions of yen

North America
EuropeAsia
Other

Percentage of overseas sales to total consolidated net sales

30

Thousands of
U.S. dollars

2008

2007

2008

¥14,226
4,173
19,117
1,108¥38,624¥14,527
3,820
19,601931¥38,879$ 142,260
41,730191,170
11,080$ 386,240

29.0%

30.1%

31

OVERSEAS NETWORK(As of June 27, 2008)

INDUSTRIAL PRODUCTS GROUPNORITAKE CO., INC.
11411 WILLIAMSON ROAD,CINCINNATI, OH 45241, U.S.A.
TEL: 1-513-605-3600
1-800-688-8234 (TOLL FREE)
FAX: 1-513-605-3618
1-800-321-2062 (TOLL FREE)
ATLANTA BRANCH
1005C MANSELL ROAD,ROSWELL, GA 30076, U.S.A.
TEL: 1-770-645-8199 FAX: 1-770-645-8599
NORITAKE EUROPA G.m.b.H.
KURHESSENSTRASSE 3, D-64546
MÖRFELDEN-WALLDORF, GERMANY
TEL: 49-61-05-2092-40/41
FAX: 49-61-05-2092-99
NORITAKE (AUSTRALIA) PTY. LIMITEDMELBOURNE BRANCH
MOONEE PONDS BUSINESS CENTRE,
5 EVERAGE STREET, MOONEE PONDS,
VIC 3039 AUSTRALIATEL: 61-3-8371-0016 FAX: 61-3-9372-9643
NORITAKE (SIAM) CO., LTD.
1096 NEW ROAD, KWAENG BANGRAK,KHET BANGRAK, BANGKOK 10500, THAILAND
TEL: 66-2-235-1688, 236-2364
FAX: 66-2-236-2365
NORITAKE SHANGHAI TRADING CO., LTD.
ROOM 701A AETNA TOWER NO.107,
ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
TEL: 86-21-6237-5667 FAX: 86-21-6237-5790
SIAM COATED ABRASIVE CO., LTD.
AMATA CITY INDUSTRIAL ESTATE 7-126
MOO 4, T. MABYANGPORN, A. PLUAKDAENG,RAYONG, THAILAND
TEL: 66-3-865-0150 FAX: 66-3-865-0158
TABLETOP GROUPNORITAKE CO., INC.
15-22 FAIR LAWN AVENUE,
FAIR LAWN, NJ 07410, U.S.A.
TEL: 1-201-796-2222 FAX: 1-201-796-9155
NEW YORK SHOWROOMNEW YORK MERCHANDISE MART
(19TH FL), 41 MADISON AVENUE,
NEW YORK, NY 10010, U.S.A.
TEL: 1-212-481-3300 FAX: 1-212-685-3784
ATLANTA SHOWROOM
919 AMERICAS MART,
230 SPRING STREET, N.W.,
ATLANTA, GA 30303, U.S.A.
TEL: 1-404-529-9929 FAX: 1-404-529-9822
DALLAS SHOWROOM
2454 TRADE MART, DALLAS, TX 75207, U.S.A.
TEL: 1-214-742-9389 FAX: 1-214-747-5065
SAVANNAH OFFICE
1000 CROSSGATE ROAD PORT WENTWORTHGA 31407 USA
TEL: 1-912-401-0248 FAX: 1-912-964-8464
NORITAKE SERVICE CENTER
2635 CLEARBROOK DRIVE,
ARLINGTON HEIGHTS, IL 60005, U.S.A.
TEL: 1-847-228-5010
FAX: 1-847-228-5104

32

NORITAKE CANADA LIMITED
90 NUGGET AVENUE, AGINCOURT,ONTARIO, M1S 3A7, CANADATEL: 1-416-291-2946 FAX: 1-416-292-0239
NORITAKE (AUSTRALIA) PTY. LIMITEDUNIT 4, 153 BEAUCHAMP ROAD,
MATRAVILLE, N.S.W. 2036, AUSTRALIATEL: 61-2-9316-7123 FAX: 61-2-9316-7085
NORITAKE (U.K.) LIMITED
26 HEATHFIELD, STACEY BUSHES,MILTON KEYNES,MK12 6HR, UNITED KINGDOMTEL: 44-1908-318446 FAX: 44-1908-320932
NORITAKE CO., LIMITEDDUBAI REPRESENTATIVE OFFICE
P.O. BOX 18013, DUBAI, U.A.E.
TEL: 971-4-8811491 FAX: 971-4-8871443
SHANGHAI OFFICEROOM 701 AETNA TOWER
NO.107, ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
TEL: 86-21-6237-5789 FAX: 86-21-6237-5790
NORITAKE LANKA PORCELAIN (PRIVATE)LIMITEDCOLOMBO OFFICE/SHOW ROOM
NO.580, NEGOMBO ROAD, MABOLE, WATTALA,SRILANKATEL: 94-11-2946149 FAX: 94-11-2946144
MATALE FACTORY
P.O. BOX 30, MATALE, SRI LANKA
TEL: 94-66-2244192 FAX: 94-66-2244132

ITRON (U.K.) LIMITEDVANTAGE HOUSE, HARFREY’S ROAD,
HARFREY’S INDUSTRIAL ESTATE,GREAT YARMOUTH, NR31 0LS,
UNITED KINGDOMTEL: 44-1493-601144 FAX: 44-1493-600343
NORITAKE SINGAPORE PTE. LTD.
10 ANSON ROAD, #16-03, INTERNATIONAL PLAZASINGAPORE 079903
TEL: 65-6324-3398 FAX: 65-6324-3397
NORITAKE HONG KONG LIMITEDUNIT 605, REMINGTON CENTRE,
23 HUNG TO ROAD, KWUN TONG, KOWLOON,
HONG KONG, S.A.R., CHINA
TEL: 852-2562-8802 FAX: 852-2561-4650
NORITAKE EUROPA G.m.b.H.
KURHESSENSTRASSE. 3, D-64546
MÖRFELDEN-WALLDORF, GERMANY
TEL: 49-61-05-2092-20 FAX: 49-61-05-2092-99
MUNICH OFFICE
BAHNHOFSTRASSE 4B, 85386 ECHING,GERMANY
TEL: 49-89-321429-20 FAX: 49-89-321429-29
NORITAKE CO., LIMITEDSHANGHAI OFFICEROOM 701A AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
TEL: 86-21-6237-5789 FAX: 86-21-6237-5790
CERAMICS & MATERIALS GROUP

ELECTRONICS GROUPNORITAKE (SIAM) CO., LTD.
1096 NEW ROAD, KWAENG BANGRAK,KHET BANGRAK, BANGKOK 10500,
THAILAND
TEL: 66-2-236-2364, 66-2-235-1688
FAX: 66-2-236-2365

NORITAKE CO., INC.
HQ & CHICAGO BRANCH
2635 CLEARBROOK DRIVE,
ARLINGTON HEIGHTS, IL 60005, U.S.A.
TEL: 1-847-439-9020 FAX: 1-847-593-2285

THE SIAM MOULDING PLASTER CO., LTD.
NO. 32 MOO7 NONGPLAKRADI ROAD,NONGPLING, NONGKHAE, SARABURI, 18140,
THAILAND
TEL: 66-36-373578 FAX: 66-36-373577

DALLAS BRANCH
2454 TRADE MART,DALLAS, TX 75207, U.S.A.
TEL: 1-214-742-9380 FAX: 1-214-747-5065

PT. NORITAKE INDONESIABLOK A-II NO. 9A, KAWASAN BERIKAT,
KOTA BUKIT INDAH, PURWAKARTA, 41181,
JAWA BARAT, INDONESIATEL: 62-264-351311 FAX: 62-264-351314

PANNALA FACTORY
GEN, RANJAN WIJERATHNE MAWATHA,PANNALA, SRI LANKA
TEL: 94-37-2246007 FAX: 94-37-2246008

NEW JERSEY BRANCH
15-22 FAIR LAWN AVENUE, SUITE 2E
FAIR LAWN, NJ 07410, U.S.A.
TEL: 1-201-475-5200 FAX: 1-201-796-2269
BOSTON BRANCH
327 BOSTON POST ROAD, SUITE CSUDBURY, MA 01776, U.S.A.
TEL: 1-978-443-7700 FAX: 1-978-443-3888
ATLANTA BRANCH
1005C MANSELL ROAD,ROSWELL, GA 30076, U.S.A.
TEL: 1-770-993-1022 FAX: 1-770-993-1044
LOS ANGELES BRANCH
21081 SOUTH WESTERN AVENUE,SUITE 180 TORRANCE, CA 90501, U.S.A.
TEL: 1-310-320-1700 FAX: 1-310-320-2900
NORITAKE CANADA LIMITED
90 NUGGET AVENUE, AGINCOURT,ONTARIO, M1S 3A7, CANADATEL: 1-416-291-2946 FAX: 1-416-292-0239

ENVIRONMENTAL ENGINEERING GROUPNORITAKE TAIPEI CO., LTD.
NO. 37, ALLEY 105, LANE 514, JUNGJENG RD.,SHINJUNG CITY, TAIPEI, TAIWAN 242, R.O.C.
TEL: 886-02-2907-1221 FAX: 886-02-2905-1529
NORITAKE CO., LIMITEDSHANGHAI OFFICEROOM 701A AETNA TOWER NO. 107,ZUN YI ROAD, CHANG NING DISTRICT,SHANGHAI, 200051 CHINA
TEL: 86-21-6237-5789 FAX: 86-21-6237-5790

CORPORATE DATAHISTORY OF NORITAKE(As of June 27, 2008)(As of June 27, 2008)

HEAD OFFICE1876 Ichizaemon Morimura established1970 Established Noritake (U.K.) Ltd. in the

1-36, Noritake-Shinmachi

Morimura-kumi in Tokyo, and Toyo

United Kingdom

3-chome, Nishi-ku, Nagoya

Morimura and others established theBegan production of fine ceramic

451-8501, Japan

Hinode Shokai (Morimura Brothers) in

Tel: +81-52-561-7112

New York

Fax: +81-52-561-9721

1904 Established Nippon Toki Gomei Kaisha
1907 Began production of grinding wheels for

DATE OF ESTABLISHMENT

in-house use

January 1904

1914 Succeeded in production of the first

NUMBER OF EMPLOYEES

1917 Sanitary ware division spun off todinner set in Japan
5,280 (Consolidated)become TOTO Ltd.
Established Nippon Toki Co., Ltd.

STOCK EXCHANGE LISTINGS

1919 Electric insulator division spun off toTokyo Stock Exchange

become NGK Insulators Ltd.

Nagoya Stock Exchange

1932 Began production of first bone china
in Japan

TRANSFER AGENT AND
REGISTRAR
Mitsubishi UFJ Trust and Banking

1939 Began full-scale production of industrial
grinding wheels
1943 Tableware production stopped on

industrial products
1971 Began production of filtrationequipment
1972 Established Noritake Lanka Porcelain(Pvt.) Ltd. in Sri Lanka
1973 Began production of diamond tools
1974 Established Noritake Porcelana Mfg.,
Inc. in the Philippines
1979 Began operation of the Craft Center
Began production of materials andequipment for the ceramics industry
1981 Changed the Company name to
Noritake Co., Limited
1987 Established Noritake Europa G.m.b.H.
in Germany
1988 Established Noritake Taipei Co., Ltd.
in Taiwan

Corporationaccount of World War II, changed to full1991 Established Noritake Hong Kong Ltd.

4-5, Marunouchi 1-chome,

production of grinding wheels (only bone

1992 Established Noritake Singapore Pte. Ltd.

Chiyoda-ku, Tokyochina production continued to preserve1993 Opened the Noritake Gallery

100-8212, Japantechnique)1995 Established Pt. Noritake Indonesia

1945 Production of tableware resumed
ANNUAL MEETING OF
SHAREHOLDERS

1947 Established Noritake Co., Inc. in the
United States

The annual meeting of shareholders

1956 Began production of cutleryof the Company is normally held in

1958 Established Noritake (Australia) Pty. Ltd.

June each year in Nagoya, Japan.
In addition, the Company may
hold an extraordinary meeting ofshareholders whenever necessary bygiving at least two weeks’ advancein Australia
1960 Began production of resinoid grinding
wheels at the Kamori Plant
1961 Began production of crystal glassware
Began production of melamine warenotice to shareholders.

1962 Began production of grinding

INDEPENDENT AUDITORS

1963 Began production of belt and fabricmachines
KPMG AZSA & Co.

1996 Established Noritake (Siam) Co., Ltd.
in Thailand
1997 Established Itron (U.K.) Ltd. in the
United Kingdom
1998 Established Noritake Dental Supply
Co., Ltd.
2001 Established Noritake Gypsum Co., Ltd.
Opened the Noritake Garden
2002 Established Noritake Bonded
Abrasive Co., Ltd.
2005 Established Noritake Shanghai Trading
Co., Ltd.

abrasives
1968 Established Noritake Canada Ltd.
in Canada
1969 Began production of electronic products

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

33

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