WIND

WATER

EARTH

Water Purification
Wind Energization

Water treatment facilities/Housing & Environment
Equipment

Wind turbine system

Business Units

Earth Reproduction
Pottery & Porcelain /Electro-Ceramics

陶 磁器
POTTERY &PORCELAIN

住設環境機器HOUSING &ENVIRONMENTAL
EQUIPMENT

電子セラミック

ELECTRO－CERAMICS

環境ｴﾈﾙｷﾞｰ
機器
ENVIRONMENTAL
ENERGYEQUIPMENTSales by Segment Information
11.5％
11.5％

13.4％
13.4％

14.0％
14.0％

2011
(5months)
Sales
7,754

2013
(forecast)

2012
Sales
18,239

56.6％
56.6％

Sales
18,300Million yen

28.8％
28.8％

Million yen

59.4％
59.4％

56.8％
56.8％

Million yen

29.5％
29.5％

29.0％
29.0％

Business Segment
million \Housing &Environmental
Equipment

2011

2012

'10.11'11.3'11.4'12.3(5months)

2013(forecast)'12.4'13.3

4,390 10,835 10,400

Tabletop

2,247

5,245

5,400

ElectroCeramics

1,085

2,096

2,450

Others31

62

60（About2011）

Due to the change in fiscal year end
to March 31, the figures for the fullyear are for 5-month period from
November 1,2010 to March 31,2011.

ＮＥＴＷＯＲＫNIKKOMIDDLE EAST
TRADING LLC
(UAE)

PATRA
PORCELAIN
Co., Ltd.
(Thailand)

NIKKO
CERAMICS,
Inc. (USA)・・・Product Activities
・・・Sales Activities

Overseas Customers
USA, Korea, China,
South-East Asia(Taiwan, Singapore,
Vietnam etc.), India, UAE

Contents
Profile of NIKKO

1Financial Highlights

3

Consolidated Balance Sheets

4

Consolidated Statement of Income and Consolidated Statement of Comprehensive Income

6

Consolidated Statement of Shareholders' Equity

7

Consolidated Statement of Cash Flows8

Notes to the Consolidated Financial Statements

9-22

Board of Directors and Satutory Auditors

23

Corporate Data

23

Financial Highlights
NIKKO COMPANY

Consolidated

Data
Total Assets &Shareholders' Equity

Net Income

Net Sales(Million Yen)
200

(Million Yen)

Total Assets
Shareholders' Equity
Shareholders' Equity Ratio (%)
100.0

(%)

0
20,000(Million Yen)
Δ200

20,00080.0

15,00060.0

10,000

40.0

5,000

20.0

15,000Δ400

Δ600

10,000Δ800
5,000
Δ1,000Δ2,400Δ1,200 Δ2,628

0
'08

'09

'10

'08

'11 2012
2012

'08

0.0

0
'09

'11 2012
2012

'10

'09

'08

'10

'11

'09

'10

2012
Thousands of
U. S. dollar(except per
share amounts)

Millions of yen(except per share amounts and %)Consolidated Data
Net Sales
Net Income
Total Assets
Shareholders' Equity
Shareholders' Equity Ratio (%)
Return on Shareholders' Equity (%)
Number of Shares2008
21,267(1,210)（2,628）18,046
7,586
42.0(29.5)

2009
17,063(1,175)（2,303）
13,8285,258
38.0(35.9)

2010
17,961(1,022)
13,9394,143
29.7(21.7)

19,572,000

19,572,000

Per Share of Common StockNet Income
Shareholders' Equity
Cash Dividends(139.46)403.551.00(122.84)
280.59－（5 months)

2011
7,754
(755)
13,2883,381
25.4(20.1)

2012
18,239226
13,173
3,623
27.5
6.5

19,572,000
Yen

19,572,000

19,572,000(54.54)221.13－(40.31)180.49－Notes: ￥82.19 = U.S.$1.00; See Notes to the Consolidated Financial Statements.

The Company has changed its fiscal year-end from October 31 to March 31
resulting in an irregular five-month period for fiscal 2011.

-3-'11 2012
2012

2012
221,9172,754
160,278
44,084U. S. dollar
12.09
193.41
－

0.147
2.353
－

Consolidated Balance Sheets
NIKKO COMPANY

March 31, 2012 and 2011

Thousands of
U. S. dollar
2012

Millions of yen
2012
2011

ASSETS
Current Assets:
Cash and deposits
Notes and accounts receivable:
Trade
Subsidiaries and affiliates
Other
Allowance for doubtful accounts¥1,131¥1,468$13,761

3,153
49
0
(117)

3,002
92
0
(158)

38,365600
6(1,428)

3,603
1
148
7,970

3,388
2
96
7,893

43,84712
1,809
96,975Investments and Other Assets:
Investment securities
Stocks of affiliates
Other
Allowance for doubtful accounts
Total investments and other assets

494
101
539
(394)
740

476
66
525
(388)
679

6,017
1,231
6,561
(4,799)
9,012

Property, plant and equipment, at cost:
Land
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Construction in progress
Lease Assets
Accumulated depreciation
Total property, plant and equipment

1,261
6,783
5,474
1,276
9
234
(10,822)
4,218

1,261
6,750
5,407
1,249
11
230
(10,516)
4,395

15,34382,534
66,611
15,527120
2,854(131,671)
51,320Intangible Assets:
Lease Assets
Other
Total intangible assets and other

152
92
244

211
108
319

1,849
1,119
2,969

Total Assets¥13,173¥13,288$160,278

Inventories
Deferred tax assets
Prepaid expenses and other current assets
Total current assets

See Notes to the Consolidated Financial Statements.

-4-Consolidated Balance Sheets
NIKKO COMPANY

March 31, 2012 and 2011

Thousands of
U. S. dollar
2012

Millions of yen
2012
2011

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:
Notes and accounts payable:
Trade
Subsidiaries and affiliates
Other
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Construction notes payable
Accrued expenses
Income taxes payable
Provision for bonuses
Provision for product warranties
Other
Total current liabilities¥3,090
279
31
1,199
328
94
18
127
53
85
128
976
6,414

¥3,142
222
39
793
162
127
23
179
30
373
103
1,014
6,212

$37,600
3,402
389
14,600
3,992
1,153
223
1,545
656
1,041
1,557
11,88578,048

Noncurrent liabilities:
Long-term loans payable
Lease obligations
Provision for directors' retirement benefits
Provision for retirement benefits
Other
Total noncurrent liabilities
Total Liabilities

1,441
180
104
1,229
178
3,135
9,549

1,720
293
99
1,414
166
3,694
9,907

17,543
2,197
1,274
14,9582,171
38,145
116,193

Shareholders' Equity:
Authorized-60,000,000 shares;
Issued-19,572,000 shares in 2012
and 19,572,000 shares in 2011
Capital surplus

3,200
1,321

3,200
2,066

38,934
16,075

(259)
(334)

(1,231)(334)(3,154)(4,075)

(173)
(130)
3,623

(191)
(128)
3,381

(2,107)(1,587)44,084¥13,173¥13,288$160,278

Retained earnings
Treasury stocks
838,142 shares in 2012 and 835,419 shares in 2011
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total shareholders' equity
Total Liabilities
and Shareholders' Equity

See Notes to the Consolidated Financial Statements.

-5-Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
NIKKO COMPANY

For the year ended March 31, 2012 and the five months ended March 31, 2011

Consolidated Statement of Income
Millions of yen
2012
2011
¥18,239¥7,754
12,977
5,665
5,261
2,088

Net Sales
Cost of Sales
Gross profit

Thousands of
U. S. dollar
2012$221,917
157,901
64,016

Selling, General and Administrative Expenses
Operating income (loss)

5,228
32

2,497
(408)

63,617399

Other (Income) Expenses:
Interest expenses
Interest and dividend income(Gain) on sale or loss on disposal of noncurrent assets, net
Other, net
Income before taxes (loss)

52
(1)
8
(296)
269

22
(0)
2
311
(744)

637
(13)
100
(3,604)
3,278

41
1
43

17
(6)
10

508
15
523

226

(755)

2,754

¥226

¥(755)$2,754

Income taxes-current
Income taxes-deferred
Income taxes
Income (loss) before minority interests
Net income (loss)

Yen
2012
Amounts Per Share of Common Stock:
Net Income (loss)
Cash dividends

Yen
2011

¥12.09－U. S. dollar
2012¥(40.31)－$0.147－

Millions of yen
2012
2011
226
(755)

Thousands of
U. S. dollar
2012
2,754

Consolidated Statement of Comprehensive Income

Income(loss) before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of theparentComprehensive income attributable to minority interests

See Notes to the Consolidated Financial Statements.

-6-

17
(2)
15
242

(10)
3
(6)
(761)

218
(27)
191
2,945

242
－

(761)
－

2,945
－

Consolidated Statement of Changes in Equity
NIKKO COMPANY

For the year ended March 31, 2012 and the five months ended March 31, 2011
Number ofshares ofcommon stock(thousands)
Balance, October 31, 2010
19,572
Deficit disposition－
Net income (loss) for the year－－
Purchase of treasury stock－
Other
Balance, March 31, 2011
19,572
Deficit disposition－
Net income (loss) for the year－－
Purchase of treasury stock－
Other
Balance, March 31, 2012
19,572

Balance, October 31, 2010
Deficit disposition
Net income (loss) for the year
Purchase of treasury stock
Other
Balance, March 31, 2011
Deficit disposition
Net income (loss) for the year
Purchase of treasury stock
Other
Balance, March 31, 2012

Capitalstock¥3,200－－－－¥3,200－－－－¥3,200CapitalsurplusMillions of yen
Retainedearnings¥3,045(978)－－－¥2,066(745)－－－¥1,321Millions of yen
Foreign
Total valuation
Valuation
Currency
and translationdifference on
Translation
adjustments
availablefor-sale
Adjustments
securities¥(180)¥(132)¥(313)
－
－
－
－
－
－
－
－
－
(10)
3
(6)
¥(191)¥(128)¥(319)
－
－
－
－
－
－
－
－
－
17
(2)
15
¥(173)¥(130)¥(303)

Capitalstock

Capitalsurplus$38,934－－－－$38,934

Balance, March 31, 2011
Deficit disposition
Net income (loss) for the year
Purchase of treasury stock
Other
Balance, March 31, 2012

Thousands of dollars
Foreign
Total valuation
Valuation
Currency
and translationdifference on
Translation
adjustments
availablefor-sale
Adjustments
securities$(2,326)$(1,559)$(3,885)
－
－
－
－
－
－
－
－
－
218
(27)
191
$(2,107)$(1,587)$(3,694)-7-¥(334)－－(0)－¥(334)－－(0)－¥(334)$25,144(9,069)－－－$16,075

Total
shareholders'equity¥4,456
－
(755)
(0)
－
¥3,701－226(0)－¥3,927Total
neｔ assets¥4,143
－
(755)
(0)
(6)
¥3,381－226(0)15¥3,623Thousands of dollars
Treasury
Retainedearnings
stock

Balance, March 31, 2011
Deficit disposition
Net income (loss) for the year
Purchase of treasury stock
Other
Balance, March 31, 2012

See Notes to the Consolidated Financial Statements.

¥(1,454)
978
(755)
－
－
(1,231)745
226－－¥(259)

Treasurystock$(14,978)
9,069
2,754
－
－
$(3,154)
Total
neｔ assets$41,144
－
2,754
(5)
191
44,084$(4,069)－－(5)－$(4,075)

Total
shareholders'equity$45,030
－
2,754
(5)
－
$47,779

Consolidated Statement of Cash Flows
NIKKO COMPANY

For the year ended March 31, 2012 and the five months ended March 31, 2011
Thousands of
U. S. dollar
2012

Millions of yen
2012
2011
Net cash provided by (used in) operating activities
Income (Loss) before income taxes and minority interests
Depreciation and amortization
Impairment loss
Loss on adjustment for changes of Accounting Standard for asset
retirement obligations
Loss on liquidation of subsidiaries and affiliates
Business structure improvement expenses
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for retirement benefits
Increase (decrease) in provision for product warranties
Interest and dividends income
Interest expenses
Loss (gain) on sales of property, plant and equipment
Loss on retirement of noncurrent assets
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in claims provable in bankruptcy, claims provable inrehabilitation
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid

¥269
557
41

¥(744)
244―$3,278
6,788
510

―
―
11
(35)
(287)
(185)
25
(10)
52
(0)
9
(142)

43
7
344
(8)
169
46
17
(3)
22
(0)
2
279

―
―
142
(430)
(3,497)(2,256)
304
(122)
637
(10)
111
(1,737)

(15)

(102)

(191)

(217)
7
(159)
(79)
10
(52)
(14)

43
(140)
(114)
107
3
(22)
(42)

(2,644)94(1,943)
(963)
122
(637)
(181)

¥(136)¥45$(1,660)

Net cash provided by (used in) investment activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of stocks of subsidiaries and affiliates
Proceeds from sales of stocks of subsidiaries and affiliates
Payments for investments in capital of subsidiaries and affiliates
Other, net
Net cash provided by (used in) investment activities

(106)
80
(307)
4
(50)
15
―
(10)
¥(373)

(106)
106
(200)
0
―
―
(30)
(7)
¥(237)(1,297)980(3,744)
53
(608)
191
―
(122)
$(4,546)

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Payments into long-term loans payable
Repayments of lease obligations
Purchase of treasury stock
Other, net
Net cash provided by (used in) financing activities

406
50
(162)
(145)
(0)
―
¥148

346
―
(68)
(52)
(0)
(0)
¥225

4,944
608
(1,971)(1,771)(5)―$1,804

Effect of exchange rate change on cash and cash equivalents

(1)

3

(20)

Net increase (decrease) in cash and cash equivalents

(363)

36

(4)

Cash and cash equivalents at beginning of period

1,287

1,251

15,670Cash and cash equivalents at end of period¥924¥1,287$11,247

Net cash provided by (used in) operating activities

See Notes to the Consolidated Financial Statements.

-8-Notes to the Consolidated Financial Statements
NIKKO COMPANY

1. Basis of Presenting Consolidated Financial Statements(1) Accounting Principles and Presentation
The accompanying consolidated financial statements have been prepared from the accounts maintained by
Nikko Company (the "Company") and its consolidated subsidiaries in accordance with the provisions set forthin the Japanese Commercial Code and other countries' regulations and in conformity with accounting
principles and practices generally accepted in Japan, which are different in certain respects as to applicationand disclosure requirements from International Accounting Standards.
Certain items presented in the consolidated financial statements filed with the Ministry of Finance (the"MOF") in Japan have been reclassified for the convenience of readers outside Japan.
The consolidated financial statements are not intended to present the consolidated financial position, resultsof operations and cash flows in accordance with accounting principles and practices generally accepted incountries and jurisdictions other than Japan.
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of¥82.19=U.S.$1 the approximate rate of exchange at March 31, 2012, has been used in translation. The
inclusion of such amounts is not intended to imply that Japanese yen have been or could be readily converted,
realized or settled in U.S. dollars at the rate or any other rate.

(2) Scope of Consolidation
The Company had 3 subsidiaries as at March 31, 2012. The consolidated financial statements include theaccounts of the Company and 3 of its subsidiaries. The consolidated subsidiaries are listed below:
As at March 31, 2012
Equity ownership percentage,
Capital stockincluding indirect ownership(thousands)
Nikko Ceramics, Inc.

100.00 %$1,250

Nikko Hanbai Co., Ltd.

94.85 %

¥470,000

Nikko ME Co., Ltd.

100.00 %¥30,000(3) Consolidation and Elimination
For the purposes of preparing the consolidated financial statements, all significant intercompany
transactions, account balances and unrealized profits among the Companies have been eliminated, and the
portion thereof attributable to minority interests is charged to minority interests.
The cost of investments in the common stock of consolidated subsidiaries is eliminated with the underlying
equity in net assets of such subsidiaries. The material difference between the cost of an investment and theamount of underlying equity in net assets of such subsidiary is deferred and amortized over a reasonable
period within 5 years on a straight-line basis.

(4) Investments in Non-consolidated Subsidiaries and Affiliates
At March 31, 2012, the Company had 3 non-consolidated subsidiaries and 2 affiliates. They have not beenaccounted for by the equity method for the following reasons: insignificant amount of net income and retained
earnings. The investments in affiliates are stated at cost.

-9-2. Summary of Significant Accounting Policies(1) Valuation of Securities
The accounting standard for financial instruments requires that securities be classified into three categories:
trading, held-to-maturity or other securities. Trading securities are carried at fair value and held-to-maturity
securities are carried at amortized cost. Marketable securities classified as other securities are carried at fairmarket value with any changes in unrealized gain or loss, net of the applicable income taxes, included directly
in shareholders’ equity. Non-marketable securities classified as other securities are carried at cost. The cost of
securities sold is determined by the moving average method.

(2) Inventories
At the Company and its domestic consolidated subsidiaries, finished goods, semi-finished products and workin process are stated at cost, cost being determined by the period-average method, merchandise, raw materials
and supplies are valued at cost being determined by the moving average (the carrying value on the balance
sheet is written down to reflect the effect of lower profit margins), costs on uncompleted construction contracts
are stated at cost, cost being determined by the specific identification method (the carrying value on thebalance sheet is written down to reflect the effect of lower profit margins)
Merchandise of overseas consolidated subsidiary is stated at the lower cost method determined by the first-in
first-out method.

(3) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment except forbuildings of the Company is computed on the declining-balance method and depreciation of buildings iscomputed on the straight-line method, at rates based on the estimated useful lives of the assets. Depreciationof property, plant and equipment of the domestic consolidated subsidiary is computed on the declining-balancemethod and buildings (except for structures attached to the buildings) acquired on and after April 1, 1998
have been depreciated by the straight-line method. The estimated useful lives are based on the prescribed by
the Japanese income tax laws. The overseas consolidated subsidiary has computed by the straight-line
method. Normal repairs and maintenance, including minor renewals and improvements, are charged toincome as incurred.

(4)Lease Assets
Depreciation of lease assets is calculated using the straight-line method with the respective lease terms as theuseful lives. The residual value is zero unless there is a residual value guarantee, in which case the amount of
the guarantee is the residual value. For finance lease transactions where there is no transfer of ownershipbeginning prior to the fiscal year when these standards are first applied, the Company uses an accounting
method that is based on the method used for ordinary lease transactions.

(5) Foreign Currency Translation
Foreign currency amounts except for those covered by forward exchange contracts are translated into
Japanese yen on the basis of the rates of exchange in effect at the balance sheet date for monetary current
assets and current liabilities, and at historical rates for other assets and liabilities unless they have accrued
significant exchange losses. Foreign currency amounts covered by forward exchange contracts are translated
into Japanese yen at the relevant contract rates. Historical rates are used for translation of income andexpenses.

(6) Recognition of Income Taxes
The Companies adopted deferred tax accounting, whereby tax effects on temporary differences are adequatelyreflected and recognized as additions to or deductions from "Income Taxes" in the accompanying Consolidated
Statements of Income.

(7) Translation of Foreign Currency Financial Statements(Accounts of Overseas Subsidiaries and Affiliates)
Financial statements of foreign subsidiary is translated into Japanese yen at the current exchange rates as of
the balance sheet date for all balance sheet accounts except for shareholders’ equity accounts, which istranslated at the historical exchange rate. The annual average rate is used for revenue and expense accounts.

- 10 -

(8) Amortization
The amortization of intangible assets of the Company and the domestic consolidated subsidiary are computedby the straight-line method, at rates based on the prescribed by the Japanese income tax laws.
Expenditures related to computer software intended for internal use are amortized over the useful life of therespective assets (5 years).
The overseas consolidated subsidiary has computed by the straight-line method.

(9) Allowance for Doubtful Accounts
Allowance for doubtful accounts is calculated based on the aggregate amount of estimated credit losses for
doubtful receivables plus an amount for receivables other than doubtful receivables calculated using historical
write-off experience from certain prior periods.

(10) Reserve for guarantee for after-care of products
As warranty expenses for certain products sold by the Company are subsequently realized, a provision for
product warranty has been recorded in order to reflect the results of their operations more accurately.

(11) Derivatives
Derivatives are valued at fair value if hedging accounting is not appropriate or where there is no hedging
designation, and the gains or losses on derivatives are recognized in the current earnings.

(12) Cash Equivalents
Cash Equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits and investment trusts that
represent short-term investments, all of which mature or become due within three months of the date ofacquisition.

(13) Shareholders’ Equity
The amount of retained earnings available for dividends under the Commercial Code of Japan is based on theamount stated in the statutory financial statements of the Company. Dividends are approved by theshareholders at a meeting held subsequent to the fiscal year to which the dividend is applicable. In addition, asemi-annual interim dividend payment may be made by resolution of the Board of Directors subject to certain
limitations imposed by the Commercial Code.

(14) Research and Development Costs
Expenses relating to research and development activities are charged to income as incurred. Such researchand development expenses were included in cost of goods sold and selling, general and administrative
expenses in the accompanying consolidated statements of income and amounted to ¥190million ($2,318
thousand) and ¥122million ($1,470 thousand) for the years ended March 31, 2012 and March 31, 2011,
respectively.

( Additional Information )Application of accounting standard for accounting changes and error corrections
After the beginning of the fiscal year under review, the Company made accounting changes and/or correctionsof past errors. For this reason, it has applied Accounting Standard for Accounting Changes and Error
Corrections (ASBJ Statement No. 24, December 4, 2009) and Guidance on Accounting Standard for
Accounting Changes and Error Corrections (ASBJ Guidance No. 24, December 4, 2009).

- 11 -

3. Short-term and Long-term Bank Loans
Short-term loans and Long-term loans are consisted mainly of borrowing from banks.
The composition of Short and Long-term loans maturing and Lease obligations due within one year as ofMarch 31, 2012 and March 31, 2011 are as follows:
Thousands of
U.S. dollars
2012

Millions of yen
2012

2011

Short-term loans payable (0.94%)¥1,199¥793
Current portion of long-term loans payable328
162(2.18%)
Lease obligations
94
127
Percentages show the annual weighted average interest rate at March 31, 2012

$14,600
3,992
1,153

Long-term loans and Lease obligations at March 31, 2012 and March 31, 2011 are as follows:
Thousands of
U.S. dollars
2012

Millions of yen
2012

2011

Long-term loans payable (2.23%)¥1,441¥1,720
Lease obligations
180
293
Percentage shows the annual weighted average interest rate at March 31, 2012$17,543
2,197

The aggregate annual maturities of the non-current portion of long-term loans and lease obligations at March
31, 2012 are as follows:
Thousands of
U.S. dollars

Millions of yen
long-term loans
2014
2015
2016
2017
2018 and thereafterLease
obligations

¥361
335
269
262
214

long-term loans

¥91
51
23
14
-

$4,393
4,077
3,274
3,189
2,607

Lease
obligations$1,118
622
281
174
-

4. Pledged Assets
The carrying amounts of assets pledged as collateral at March 31, 2012 and 2011.
Millions of yen
2012
Land
Buildings and structures
Investment securities
Merchandise and finished goods
Total

¥947
1,225
344
552
¥3,070

2011
¥947
1,284
328
472
¥3,032Thousands of
U.S. dollars
2012$11,530
14,914
4,189
6,724$37,358

The above pledged assets were classified by type of liabilities to which they relate as follows:
Millions of yen
2012Long-term loans payable( include current portion of long-term loans payable)
Short-term loans payable
Notes receivable discounted
Total- 12 -

2011

Thousands of
U.S. dollars
2012¥1,770¥1,882$21,535680
160¥2,610300
330¥2,512

8,273
1,946$31,755

5. Contingent Liabilities
Contingent liabilities at March 31, 2012 and 2011 are as follows:
Thousands of
U.S. dollars
2012

Millions of yen
2012
Guarantee of indebtedness of affiliate
Guarantees of indebtedness of employees
Guarantees of the lease liabilities of the company(Transport duties trust)

2011
¥26
2

¥26
5

$318
33

15

21

186

6. Retirement Plans and Severance Indemnities(1) The Company and its domestic consolidated subsidiaries have a defined contribution pension plan andlump-sum severance indemnity plan. They may grant additional benefits in case where certain
requirements are met when employees retire.
Furthermore, the company changed its retirement benefit plan as of June 1, 2011 from qualified pension
plan to defined contribution pension plan and lump-sum severance indemnity plans.

(2) Detail on the reserve for retirement benefits as of March 31, 2011 and October 31, 2010 are analyzed asfollows:
Thousands of
U.S. dollar
2012

Millions of yen
2012
Retirement benefit obligation at end of year
Plan assets
Unfunded retirement benefit obligation
Unrecognized net retirement benefit obligation
at transition
Unrecognized actuarial loss
Unrecognized prior service cost
Net amount recognized on the balance sheet
Prepaid pension expenses
Accrued retirement benefits

2011¥(1,443)$(17,562)(1,443)¥(3,040)
1,177(1,863)

109

302

1,332

104
―
(1,229)―(1,229)146―(1,414)―(1,414)

1,270―(14,958)―(14,958)――(17,562)

Note: Certain domestic consolidated subsidiaries calculate retirement benefit obligation by thesimplified method permitted under the accounting standards generally accepted in Japan.

- 13 -

(3) Components of retirement benefit expenses for the year ended March 31, 2012 and March 31, 2011 are as
follows:
Thousands of
U.S. dollar
2012

Millions of yen
2012
Service cost
Interest cost
Expected return on plan assets
Amortization of transition of transfers
Amortization of actuarial gains and losses
Premium paid into the defined-contribution plan
Other
Retirement benefit expenses (Total)
Gain/ loss on transfers between pension plans
Total
Note:

¥90
31
(3)
36
19
116
2
292
(283)
8

2011
¥70
24
(9)
27
16
3
0
133
(14)
119

$1,098
381
(47)
443
233
1,420
30
3,561
(3,453)107

In certain domestic consolidated subsidiaries, except premium paid into thedefined-contribution plan and Amortization of transition obligation, retirement expenses under
the simplified method are included in service cost.

(4) Assumptions used for calculation of retirement benefits for the year ended March 31, 2012 and March 31,
2011 are as follows:
2012
Method of attributing the project benefits to periods of service
Discount rate
Expected return on plan assets
Amortization period of unrecognized actuarial gains or losses
Amortization period of net transition obligation- 14 -

2011

Straight-line method
2.0 %
2.0 %
2.0 %
2.0 %
13 years
15 years7. Income Taxes
1. Deferred tax assets and liabilities (both current and non-current) consisted of the following elements:
Thousands
ofU.S. dollar
2012

Millions of yen
2012
Deferred tax assets:
Provision for bonuses not deductible until paid
Provision for product warranties
Allowance for doubtful accounts
Loss on valuation of inventories
Loss on disposal of inventories
Impairment loss on fixed assets
Provision for retirement benefits
Provision for directors' retirement benefits
Business structure improvement expenses
Tax loss carried forward
Other
Subtotal
Allowance for valuation
Total deferred tax assets

2011

¥32
48
114
287
40
30
433
35
39
2,506
101
3,672
(3,671)
¥1

¥146
41
161
319
42
44
571
39
139
2,653
112
4,270
(4,267)
¥2

$397
595
1,388
3,497
492
371
5,279
437
485
30,4931,240
44,679(44,666)
$12

―

―

―

¥1

¥2

$12

Deferred tax liabilities:
Total deferred tax liabilities
Net deferred tax assets

2. A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in theaccompanying consolidated statements of income is as follows:2012
Normal effective statutory tax rate
(Adjustments)
Taxation on per capita basis
Entertainment expenses, etc. permanently non-tax deductible
Unrecognized deferred tax on unrealized gain
Valuation allowance
Other
Actual effective tax rate

40.4%
13.5%
5.2%
4.6%
(46.8%)(0.9%)
16.0%

2011
―
―
―
―
―
―
―
―

Following the promulgation on December 2, 2011 of the “Act for Partial Revision of the Income Tax Act, etc.
for.the Purpose of Creating Taxation System Responding to Changes in Economic and Social Structures” (ActNo.114 of 2011) and the “Act on Special Measures for Securing Financial Resources Necessary to Implement
Measures for Reconstruction following the Great East Japan Earthquake” (Act No. 117 of 2011), Japanese
corporation tax rates will be reduced and the special reconstruction corporation tax, a surtax for reconstruction
funding after the Great East Japan Earthquake, will be imposed for the fiscal years beginning on or after April
12012. In line with these revisions, the Company changed the statutory tax rate to calculate deferred tax assets
and liabilities from 40.4% to 38.3% for temporary differences which are expected to reverse during the period
from the fiscal year beginning on April 1, 2012 to the fiscal year beginning on April 1, 2014. Similarly, theCompany changed the statutory tax rate to calculate deferred tax assets and liabilities from 40.4% to 35.4% for
temporary differences which are expected to reverse from the fiscal year beginning on or after April 1, 2015.
This change does not have a material effect.

- 15 -

8. Accounting for Leases
The Company and certain subsidiaries lease mainly machinery and equipment as lessee.
As disclosed in Note 2 (4), finance leases that do not transfer ownership of the leased assets to the lessee which
commenced prior to November 1, 2008 and have been accounted for with the accounting treatment similar tothat used for operating leases continue to be accounted for with the accounting treatment similar to that used
for operating leases, with disclosure of certain “as if capitalized” information, and are not capitalized.
Thousands of
U.S. dollars
2012

Millions of yen
2012
Acquisition cost
Machinery and equipment
Other assets
Accumulated depreciation
Machinery and equipment
Other assets
Fair loss
Machinery and equipment
Other assets
Net book value
Machinery and equipment
Other assets

2011

¥434
31
¥466

¥509
54
¥563

$5,288387$5,675

¥210
25
¥235

¥224
37
¥262

$2,556307$2,864

38
―
¥38

¥2
―
¥2

466
―
$466

¥186
6

¥281
16

$2,264
79

¥192

¥298

$2,344

Obligations under finance leases as of March 31, 2012 and March 31, 2011 are as follows:
Thousands of
U.S. dollars
2012

Millions of yen
2012

2011

Due within one year
Due after one year

¥59
148
¥207

¥77
237
¥315

$722
1,808
$2,530Allowance for impairment loss on leased property

¥32

¥2

$396

Depreciation expenses and interest expenses under finance leases as of 2012 and 2011, are as follows:
Thousands of
U.S. dollars
2012

Millions of yen
2012
Lease expenses for the year
Depreciation expense
Interest expenses
Impairment loss

2011
¥77
70
10
38

¥36
34
6
2

$944
854
131
466

Depreciation expenses and interest expense, which are not reflected in the accompanying consolidated
statements of income, are computed by the straight-line method and the interest method.
The minimum rental commitments under non-cancellable operating leases at March 31, 2012 and March 31,
2011 are as follows:
Thousands ofMillions of yen
U.S. dollars
2012
2011
2011
Due within one year
Due after one year

¥11
0
¥12

- 16 -

¥11
12
¥23

$136
11
$147

9. Financial Instruments
Fair Value of Financial Instruments
Fair value and variance with carrying value presented on the balance sheets as of March 31, 2012 are as
follows. Fair values that are not readily determinable are not included in the following table. (See *2 foradditional information.).
Millions of yen
2012(1) Cash and time deposits(2) Notes and accounts receivable(3) Investments in securities
Held-to-maturity securities
Available-for-sale securities
Assets Total(4) Notes and accounts payable(5) Short-term bank borrowings(6) Long-term borrowings from banks(7) Lease obligations(8) Income tax payable
Liabilities Total

Carrying value¥1,131
3,203

Fair value¥1,131
3,203

Variance
¥ ―
―

50
395
4,780
3,370
1,199
1,770
275
53
6,669

37
395
4,767
3,370
1,199
1,812
270
53
6,707

(12)
―
(12)
―
―
42
(4)
―
38

Thousands of U.S. dollars
2012(1) Cash and time deposits(2) Notes and accounts receivable(3) Investments in securities
Held-to-maturity securities
Available-for-sale securities
Assets Total(4) Notes and accounts payable(5) Short-term bank borrowings(6) Long-term borrowings from banks(7) Lease obligations(8) Income tax payable
Liabilities Total

Carrying value$13,761
38,972

Fair value$13,761
38,972

Variance
$ ―
―

608
4,817
58,15941,003
14,60021,5353,350
656
81,146458
4,817
58,00941,003
14,60022,0543,295
656
81,610

(150)
―
(150)
―
―
519
(54)
―
464

Millions of yen
2011(1) Cash and time deposits(2) Notes and accounts receivable(3) Investments in securities
Held-to-maturity securities
Available-for-sale securities
Assets Total(4) Notes and accounts payable(5) Short-term bank borrowings(6) Long-term borrowings from banks(7) Lease obligations(8) Income tax payable
Liabilities Total- 17 -

Carrying value¥1,468
3,060

Fair value¥1,4683,060

Variance
¥ ―
―

50
377
4,956
3,364
793
1,882
420
30
6,492

36
377
4,943
3,364
793
1,916
411
30
6,516

(13)
―
(13)
―
―
34
(9)
―
24

(1) Cash and time deposits; (2) Notes and accounts receivable
Carrying value is used for fair value for these short-term items because these amounts are approximately
the same.
(3) Investments in securities
Market prices on exchanges are used to determine the fair valueof equity securities. Prices quoted by financial institutions are used to determine the fair value of bonds.
(4) Notes and accounts payable; (5) Short-term bank borrowings;(8) Income tax payable
Carrying value approximates fair value for these short-term items.
(6) Long-term borrowings from banks
Fair value of long-term borrowing is the discounted value of total principal and interest using an assumed
interest rate on equivalent new borrowings.
(7) Lease obligations
The fair value of lease obligations is the discounted present value of total principal and interest using anassumed interest rate on equivalent new lease transactions.
*2: Fair values that are difficult to determine:
Thousands of
U.S. dollars
2012

Millions of yen
2012
Unlisted shares
Shares of subsidiaries and affiliates
Investments in capital of subsidiaries andaffiliates

2011
¥48
101

¥48
36

$591
1,231

―

30

―

Market prices do not exist for these items. These items are not included in (3) investments in securities, because
their fair values are not readily determinable.

- 18 -

10. Investments
In accordance with the accounting standard for financial instruments, investment securities include equity

securities, bonds and other, of which the aggregate cost, gross unrealized gains/losses and fairvalue pertaining to held-to-maturity securities and available-for-sale securities at March 31,
2012 and March 31, 2011 were as follows.
(1) Held-to-maturity securities
Securities with book values exceeding
Millions of yen
2012Book value―

Fair value―

Other securities

Difference―Book value¥50

Thousands of U.S. dollars
2012

Fair value―¥1

Acquisition
cost¥1Book value$608
Other securities

Difference―(2) Available-for-sale securities
Securities with book values exceeding
Millions of yen
2012Book value

Book value¥50
Other securities

DifferenceBook value

¥0

¥394

Thousands of U.S. dollars
2012
Acquisition
Difference
cost
$22
$13
$8
Available-for-sale securities
Securities with book values exceeding
Millions of yen
2011

¥1

Acquisitioncost¥1

Difference¥(12)

Fair value$458

Difference$(150)

Millions of yen
2011
Fair value¥36

Difference¥(13)

Millions of yen
2012
Acquisition
cost
¥568

Difference¥(173)

Thousands of U.S. dollars
2012Book value

Book value

Fair value¥37

Thousands of U.S. dollars
2012Book value
Fair value
Difference―――
Held-to-maturity securities
Securities with book values exceeding
Millions of yen
2011Book value―

Millions of yen
2012Book value$4,795
Other securities

DifferenceBook value

¥0

¥376

- 19 -

Acquisition
cost$6,911

Difference$(2,116)

Millions of yen
2011
Acquisition
cost
¥567

Difference¥(191)

11. Segment Information(1) Overview of reportable segments
Segments used for financial reporting are the Nikko Group’s constituent units for which separate financial information
is available and for which the Board of Directors performs periodic studies for the purposes of determining theallocation of resources and evaluating performance.
The Group has established business divisions that comprise of the company and its subsidiaries and affiliates, and eachdivision conducts business in line with the comprehensive strategies they have devised for products, merchandise andservices in both domestic and overseas markets.
Therefore, the Group consists of segments by products, merchandise and services on the basis of the business divisions,and the “Housing & Environmental equipment”, “Tabletop” and “Electro-Ceramics” are three reportable segments.
Housing & Environmental
Equipment
Tabletop
Electro-Ceramics

Septic tanks, Bathroom units, Water treatment facilities,
Wind turbine system
Fine bone china, Fine vitrified china, Fine porcelain, Oven ware
Alumina substrates, LTCC substrates, Dielectric ceramics(2) Information related to net sales and profit or loss for each reportable segment
Millions of yen
2012
Housing &Environmental
Equipment

Tabletop

ElectroCeramics

Other

Total

Adjustment

Amounts ontheconsolidated financial
statements

Net sales:―
Sales to outside customers¥10,835¥5,245¥2,096¥62 ¥18,239¥18,239
Intersegment sales or
―
―
―
―
―
―
―
Transfers―
Total¥10,835¥5,245¥2,096¥62 ¥18,239¥18,239
Segment profit (loss)
638
184
(223)
(15)
583
(551)
32
(Operating income(loss))
Segment assets
4,009
4,465
2,391
8
10,874
2,299
13,173
Other items:
Depreciation and
¥123
¥167
¥209
1
¥501
¥56
¥557
Amortization
Increase in Property,
312
3
315
plant and equipment
54
89
167
―
and Intangible assets――
41
Impairment loss
41
―
―
41
Notes: 1.The “Other” category indicated businesses not included in reporting segments, including sales of other products.
2. Below is a description of adjustments.
（1） Segment income adjustment of 551 million yen consists of expenses, such as general administrative expenses, and researchand development costs that do not belong to the reportable segments.
（2） Segment assets adjustment of 2,299 million yen includes assets that do not belong to the reportable segments. The assets
consists of mainly surplus funds (cash and cash equivalents), long-term investment funds (investment securities), and the assets
associated with administrative department and research and development department.
（3） Increase in Property, plant and equipment and Intangible assets adjustment of 3 million yen consists of capital investments- 20 -

Thousands of U.S. dollars
2012

Adjustment

Amounts ontheconsolidated
financialstatements$221,917―$221,917

―

―

―

―

$25,507$757$221,917―$221,917

2,244(2,721)

(191)

7,104

(6,705)(399)

48,77854,33229,096

97

132,305

27,972160,278$1,496$2,041$2,544$19$6,101$686$6,788

667

1,091

2,039

―

3,798

43

3,842

―

―

510

―

510

―

510

Housing &Environmental
Equipment
Net sales:
Sales to outside
customers
Intersegment sales orTransfers
Total
Segment profit (loss)(Operating
income(loss))
Segment assets
Other items:
Depreciation andAmortization
Increase in Property,
plant andequipment andIntangible assets
Impairment loss

Tabletop

ElectroCeramics

Other

Total

$131,828$63,824$25,507

$757

―

―

―

$131,828$63,824

7,772

Millions of yen
2011
Housing &Environmental
Equipment

Tabletop

ElectroCeramics

Other

Total

Adjustment

Amounts ontheconsolidated
financialstatements

Net sales:―
Sales to outside customers¥4,390¥2,247¥1,085¥31¥7,754¥7,754
Intersegment sales or
―
―
―
―
―
―
―
Transfers
―
Total
4,390
2,247
1,085
31
7,754
7,754
Segment profit (loss)
(20)
(79)
(18)
(16)
(135)
(273)
(408)
(Operating income(loss))
Segment assets
3,593
4,493
2,563
8
10,6602,628
13,288Other items:
Depreciation and
¥70
¥72
¥76
¥0
¥219
¥24
¥244
Amortization
Increase in Property,
8
17
40
67
0
67
plant and equipment―
and Intangible assets―
111
Impairment loss
111
111
―
―
―
Notes: 1.The “Other” category indicated businesses not included in reporting segments, including sales of other products.
2. Below is a description of adjustments.
（1） Segment income adjustment of 273 million yen consists of expenses, such as general administrative
expenses, and research and development costs that do not belong to the reportable segments.
（2） Segment assets adjustment of 2,628 million yen includes assets that do not belong to the reportablesegments. The assets consists of mainly surplus funds (cash and cash equivalents), long-term investment funds(investment securities), and the assets associated with administrative department and research and development
department.
（3） Increase in Property, plant and equipment and Intangible assets adjustment of 0 million yen consists ofcapital investmentｓ associated with administrative department and research and development department.

- 21 -

12. Amounts Per Share Common Stock
Net income per share is computed by dividing income available to common shareholders by the weightedaverage number of shares of common stock outstanding during the respective years.

- 22 -

Board of Directors and Statutory Auditors
NIKKO COMPANY(As of June 26th, 2012)
Chairman
Mitsuru Mitani
Chief Executive Officer
Kazuto Futamata
Board Director, Senior Executive Officer
Kazuo Miyanabe
Board Directors
Yasuhiro Kurauchi
Akiko Mitani
Ryuji Iwata(Housing & Environmental Equipment Division, General Manager)(Finance & Administration, General Manager)(Table Top Division, responsible for Marketing Team)

Executive Corporate Auditor
Shigekazu Kaneda
Auditors
Shigeru Sawa
Takao Anzai
Managing Officers
Makoto Aoki
Katsunori Takashita
Isao Hase(Electro-Ceramics Division, General Manager)(Tabletop Division, General Manager)(Housing & Environmental Equipment Division, Deputy General Manager /General Manager of Sales Department )Corporate Data
Head Office
383 Ainoki-Machi, Hakusan-City,
Ishikawa-Prefecture 924-8686 Japan
Tel : 076-276-2121 /Facsimile : 076-276-3309

Japanese Stock Exchange
Nagoya Stock Exchange
Transfer Agent and Registrar
Sumitomo Mitsui Trust Bank, Limited
5-33 Kitahama 4-chome, Chuo-ku, Osaka 541-0041
Japan

Date of Establishment
May 11th, 1908Show RoomHead Office, Tokyo, Osaka, Nagoya, Fukuoka, New York
Concept Shop "SAWA"
Directly Managed Shop "TABLE WITH"
Directly Managed Shop "LATABLE"
Factories
Head Factory, Tsurugi Factory, Saitama Factory

Annual General Meeting
The annual general meeting of shareholders
is held in June each year in Ishikawa-Prefecture

Auditors
AZSA & CO.

Subsidiaries and Affiliates
NIKKO CERAMICS, INC. (U.S.A.)
Nikko Hanbai Co., Ltd. (Japan)
Nikko ME Co., Ltd. (Japan)
N&I ASIA PTE LTD. (Singapore)
NIKKO MIDDLE EAST TRADING LLC (UAE)
Nikko Care Co., Ltd. (Japan)
Sai Co., Ltd. (Japan)

URL
http://www.nikko-company.co.jp/- 23 -