Financial

Statements

2014

TAYCA CORPORATION
Nittochi Yodoyabashi Bldg., 6-13, Kitahama 3-chome, Chuo-ku, Osaka, Japan   Phone: +81-6-6208-6400   Fax: +81-6-6208-6420

C onsolidated F ive -Y ear S ummary
TAYCA CORPORATION and C onsolidated S ubsidiaries

2013

Millions of yen
2012

2011

2010

Net sales................................................................................ ¥36,186
Income before income taxes and minority interests.........
2,574
Net income............................................................................
1,667
Total assets........................................................................... 42,634
Net assets.............................................................................. 30,131
Common stock......................................................................
9,855¥34,778
2,695
1,723
41,17327,826
9,855¥34,480
3,067
1,739
40,97025,765
9,855¥32,0392,407
1,508
39,27324,2209,855¥29,892
1,223
797
39,97623,0889,855

Per share of common stock (in yen):
Net income....................................................................... ¥ 33.61
Owner’s equity.................................................................. 604.33¥ 34.72558.51¥ 35.04
517.32¥ 30.38486.14¥ 15.92
463.552014

Notes: (1) Figures for 2010 – 2014 represent the results of fiscal year ended March 31, respectively.
(2) 	The computation of net income per share is based upon the weighted average number of shares outstanding during theperiod.

C onsolidated B alance S heets
TAYCA CORPORATION and C onsolidated S ubsidiaries
March 31, 2014 and 2013

TAYCA CORPORATION

Millions of yen

ASSETS

2014

2013

2014

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

¥ 5,54479
10,268
8,665
485
(0)
25,041¥ 3,22979
10,71910,314713(0)25,055$ 53,868
767
99,77084,1984,713(3)
243,314

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

1,267
16,93840,974
184
3,196
274
(53,053)
9,783

1,245
16,77740,272
186
3,085
297
(51,931)
9,932

12,314
164,581398,119
1,793
31,061
2,671(515,487)
95,054

6,933
813
(23)
85
7,809
¥42,634

5,443
631
(26)
135
6,184
¥41,173

67,366
7,903
(223)
833
75,879$414,248

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

See accompanying Notes to Consolidated Financial Statements.

1

Thousands of
U.S. dollars (Note 1)

Millions of yen

Thousands of
U.S. dollars (Note 1)

LIABILITIES AND NET ASSETS

2014

2013

2014

Current liabilities:
Short-term borrowings (Note 4)...................................................
Current portion of long-term debt (Note 4)................................
Trade notes and accounts payable...............................................
Accrued income taxes...................................................................
Accrued expenses..........................................................................
Other current liabilities.................................................................
Total current liabilities.......................................................

¥ 465
1,488
3,610
412
95
2,121
8,193

¥   659
1,454
3,477
339
109
2,217
8,257

$ 4,520
14,46135,0794,011
929
20,60879,610Non-current liabilities:
Long-term debt (Note 4)...............................................................
Long-term accrued amount payable............................................
Liabilities for severance indemnities...........................................
Net defined benefit liabilities.......................................................
Other non-current liabilities.........................................................
Total non-current liabilities...............................................

936
27
—
2,590
755
4,309

2,390
28
2,487
—
182
5,088

9,096
268
—
25,1697,340
41,874

9,855
6,766
11,162

9,855
6,766
9,792

95,76365,750108,462(542)
27,243(540)
25,874(5,269)264,705

2,797
64
(115)
2,746
141
30,131¥42,634

1,868
(24)
—
1,844
107
27,826¥41,173

27,178626(1,117)
26,686
1,370
292,762$414,248

Net assets
Shareholder’s equity
Common stock:
Authorized — 150,000,000 shares
Issued — 51,428,828 shares in 2014 and 2013......................
Capital surplus...............................................................................
Retained earnings..........................................................................
Treasury stock, at cost:
1,803,000 shares in 2014 and 1,798,659 shares in 2013........
Total shareholder’s equity.................................................
Accumulated other comprehensive income
Unrealized gain on available-for-sale securities.........................
Foreign currency translation adjustments..................................
Accumulated remeasurements of defined benefit plans...........
Total accumulated other comprehensive income...........
Minority interests...............................................................................
Total net assets...................................................................

2

C onsolidated S tatements of I ncome
TAYCA CORPORATION and C onsolidated S ubsidiaries
For the Years Ended March 31, 2014 and 2013

TAYCA CORPORATION

Millions of yen

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

2014

2013

2014

¥36,186
28,810
7,376
4,737
2,638

¥34,778
27,185
7,593
4,805
2,787

$351,602
279,931
71,671
46,031
25,639

127
(78)
(113)
(64)
2,574

109
(108)
(93)
(92)
2,695

1,235
(758)
(1,098)(622)
25,017

833
51
884
1,690
22
¥1,667

901
63
964
1,731
8
¥ 1,723

8,095
496
8,592
16,425219$16,205
U.S. dollars(Note 1)Yen

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

Thousands of
U.S. dollars (Note 1)¥33.61¥34.72$0.32

See accompanying Notes to Consolidated Financial Statements.

C onsolidated S tatements of C omprehensive I ncome
TAYCA CORPORATION and C onsolidated S ubsidiaries
For the Years Ended March 31, 2014 and 2013

Millions of yen

Income before minority interests ...................................................
Other comprehensive income
Unrealized gain on available-for-sale securities.........................
Foreign currency translation adjustments...................................
Total other comprehensive income..............................................
Total comprehensive income...........................................................
Total comprehensive income attributable to:
Owners of the parent................................................................
Minority interests.....................................................................
See accompanying Notes to Consolidated Financial Statements.

3

Thousands of
U.S. dollars (Note 1)

2014

2013

2014

¥1,690¥1,731$16,425

929
103
1,032
2,723

534
97
631
2,362

9,026
1,005
10,032
26,457

2,685
37

2,340
21

26,093364

Consolidated Statements of Changes in Net Assets
TAYCA CORPORATION and C onsolidated S ubsidiaries
For the Years Ended March 31, 2014 and 2013

TAYCA CORPORATION

Number ofshares ofcommonstock
Common(Thousands)
stock

Balance, March 31, 2012...............
Net income.................................
Cash dividends..........................
Purchase of treasury stock........
Net change in the term.............
Balance, March 31, 2013...............
Net income.................................
Cash dividends..........................
Purchase of treasury stock........
Net change in the term.............
Balance, March 31, 2014...............

51,428¥9,855

CapitalsurplusRetainedearnings¥6,766¥8,367
1,723(297)

Millions of yen
Unrealized
Accumulated
gain onForeign
remeasureavailablecurrency
ments ofTreasury
for-saletranslation
definedMinoritystock
securities adjustments benefit plans interests¥(539)¥1,333¥(107)—¥ 88¥25,765
1,723
(297)
(1)
637
27,826
1,667
(297)
(1)
935
30,131

534
1,868

83
(24)

—

19
107

929
2,797

88
64

(115)
(115)

33
141

—

1,049

(1,117)(1,117)

321
1,370

(1)
51,428

9,855

6,766

9,792
1,667
(297)

(540)
(1)

51,428

9,855

6,766

11,162

Balance, March 31, 2013.................................
Net income....................................................
Cash dividends.............................................
Purchase of treasury stock...........................
Net change in the term................................
Balance, March 31, 2014.................................

95,76365,75095,14916,205(2,893)(542)

Thousands of U.S. dollars (Note 1)(5,255)
18,151(234)(14)

95,76365,750108,462(5,269)

9,026
27,178

861
626

Total
net assets

270,373
16,205(2,893)(14)
9,091
292,762

See accompanying Notes to Consolidated Financial Statements.

C onsolidated S tatements of C ash F lows
TAYCA CORPORATION and C onsolidated S ubsidiaries
For the Years Ended March 31, 2014 and 2013
Thousands of
U.S. dollars (Note 1)

Millions of yen

2014

2013

2014

¥2,574¥2,695$25,017

1,965
108
(127)
78

2,040
123
(109)
108

19,0981,050(1,235)
758

518
1,689
63
273
7,144
127
(83)
(759)
6,429

483
(2,292)(1,381)
(490)
1,177
109
(111)
(1,326)
(151)

5,041
16,414621
2,653
69,422
1,235(807)(7,375)62,474

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

(1,810)
(62)
—
(231)
(2,104)(1,589)
(21)
2
(101)
(1,710)(17,594)(604)—(2,248)(20,448)

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

(260)—(1,468)
(1)
(296)
(4)
(2,031)156
1,300(1,505)
(1)
(297)
(1)
(348)

(2,531)—(14,266)(14)(2,884)(42)(19,739)

Effect of exchange rate change on cash and cash equivalents....................................
Net increase in cash and cash equivalents.......................................................................
Cash and cash equivalents at beginning of year.............................................................
Cash and cash equivalents at end of year........................................................................

21
2,314
3,229
¥5,54426(2,183)
5,412¥3,229205
22,491
31,376$53,868

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

See accompanying Notes to Consolidated Financial Statements.

4

N otes to C onsolidated F inancial S tatements
TAYCA CORPORATION and C onsolidated S ubsidiaries
For the Years Ended March 31, 2014 and 2013

TAYCA CORPORATION
1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of TAYCACORPORATION (the “Company”) and its subsidiaries have been
prepared in accordance with the provisions set forth in theJapanese Securities and Exchange Law and its related accounting
regulations, and in conformity with accounting principles generally
accepted in Japan, which are different in certain respects as toapplication and disclosure requirements of International Financial
Reporting Standards. In preparing these consolidated financial
statements, certain reclassifications and rearrangements havebeen made to the consolidated financial statements issued
domestically in order to present them in a form which is morefamiliar to readers outside Japan.
The consolidated financial statements are stated in Japaneseyen, the currency of the country in which the Company isincorporated and principally operates. The translations of Japanese
yen amounts into U.S. dollar amounts are included solely for theconvenience of readers outside Japan and have been made at therate of ¥102.92 to $1, the approximate rate of exchange at March
31, 2014. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S.
dollars at that or any other rate.

2. Summary of significant accounting policies
1) Principles of consolidation
The consolidated financial statements as of March 31, 2014 include
the accounts of the Company and its 5 subsidiaries.
All significant intercompany balances and transactions havebeen eliminated in consolidation. All subsidiaries are consolidated
on the basis of their results for fiscal years ended December 31.
2) Cash and cash equivalents
For the purposes of the consolidated statements of cash flows,
cash and cash equivalents include cash-on-hand and in banks andother highly liquid investments with maturities of three months orless when purchased.
3) Inventories
Inventories are stated at the lower of cost or net selling value, cost
being determined by the moving-average method.
4) Securities
Securities other than those of unconsolidated subsidiaries andaffiliates are classified into three categories: trading securities,
held-to-maturity debt securities or other securities. Trading
securities are carried at fair value. Gain or loss, both realized andunrealized is credited or charged to income. Held-to-maturity
debt securities are carried at amortized cost. Marketable securities
classified as other securities are carried at fair value with any
changes in unrealized holding gain or loss, net of the applicable
income taxes, included directly in equity. Cost of securities soldis determined by the moving average method. Non-marketablesecurities classified as other securities are carried at cost.
5) Property, plant, and equipment
Property, plant, and equipment are stated at cost. Depreciationof property, plant, and equipment of the Company and its
domestic consolidated subsidiaries is computed substantially by
the declining-balance method, while the straight-line method isapplied to buildings acquired by the domestic companies after
April 1, 1998, and is principally applied to the property, plant andequipment of foreign subsidiary.
6) Retirement Benefits(1) Method of attributing benefits to periods of service
When calculating retirement benefit obligations, the straight-line
basis was used for attributing expected retirement benefits to theperiods of service until the close of the fiscal year ended March 31,
2014.
(2) Method of expenses for actuarial gains and losses
Actuarial gains and losses are amortized on a straight-line basis
over certain periods within the average remaining service lives of5

employees (mainly 10 years) from the year following that in which
they arise.
7) Income taxes
Current income taxes are provided for based on amounts currently
payable for each year. Deferred income taxes arising from temporary differences in the recognition of assets and liabilities for tax
and financial reporting purposes are reflected in the consolidated
financial statements.
8) Appropriations of retained earnings
Appropriations of retained earnings are reflected in the financial
statements for the following year upon Board of Directors’ orshareholders’ approval.
9) Research and development costs
Research and development costs are charged to income as incurred.
10) Foreign currency transaction
All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yenat the current exchange rates at the balance sheet date.
Revenue and expense items denominated in foreign currencies
are translated using the rate on the date of the transaction.
Related exchange gains or losses are credited or charged toincome as incurred.
11) Foreign currency financial statements
The balance sheet accounts of the foreign subsidiary is translated
into Japanese yen at the current exchange rates as of the balance
sheet date except for equity, which is translated at the historicalrate. Revenue and expense accounts of the foreign subsidiary istranslated into Japanese yen at the current exchange rates.
Differences arising from such translation are shown as “Foreign
currency translation adjustments” in a separate component of equity.
12) Changes in Accounting Policy(Application of the Accounting Standard for Retirement Benefits)
Effective from the close of the fiscal year ended March 31, 2014,
the Company and its consolidated domestic subsidiaries haveapplied the “Accounting Standard for Retirement Benefits”(Accounting Standards Board of Japan (“ASBJ”) Statement No.26,
May 17, 2012 (“Statement No.26”)) and “Guidance on AccountingStandard for Retirement Benefits” (ASBJ Guidance No.25, May 17,
2012 (“Guidance No.25”)), except for article 35 of Statement No.26
and article 67 of Guidance No.25. Consequently, the method waschanged to recording the difference between retirement benefit
obligations and plan assets as net defined benefit liabilities (orassets), and recording actuarial gains (or losses) as net defined
benefit liabilities (or assets).
In accordance with the transitional treatment in article 37 of theStatement No.26, the effect of the change in accounting policies
arising from initial application has been recognized in accumulated remeasurements of defined benefit plans in accumulated
other comprehensive income.
As a result of the application, a liability for retirement benefits
was recognized in the amount of ¥2,590 million yen (US$25,169
thousand) and accumulated other comprehensive income has
decreased by ¥115 million (US$1,117 thousand), at the close of the
fiscal year ended March 31, 2014. Net assets per share decreasedby ¥2.32 yen (US$0.02).
13) Unapplied Accounting Standards• Accounting Standard for Retirement Benefits (ASBJ Statement
No.26, May 17, 2012)• Guidance on Accounting Standard for Retirement Benefits (ASBJ
Guidance No.25, May 17, 2012)(1) Summary
Revisions were made to the accounting of unrecognized actuarial
difference and unrecognized prior costs, the calculation methods
for retirement benefit obligation and service costs, and theenhancement of disclosures.

(2) Effective dates
Revisions relating to the determination of retirement benefit
obligations and current service costs are effective from the
beginning of the fiscal year ending March 31, 2015. However, pastconsolidated financial statements will not be restated, owing
to the transitional treatment set forth in Statement No.26 andGuidance No.25.
(3) Impact of application of the standards
The Company and its consolidated subsidiaries are currently inthe process of estimating the effects of the revisions made to thedetermination of retirement benefit obligations and service costson the consolidated financial statements.

3. Inventories
At the end of each fiscal year, inventories consisted of the following:

Finished goods and merchandise.......
Raw materials and supplies................
Work in process....................................

Thousands of
U.S. dollars
2014$48,556
29,748
5,892$84,198

Millions of yen
2014
2013
¥4,997 ¥ 5,912
3,061
3,849
606
552
¥8,665 ¥10,314

4. Short-term borrowings and long-term debt

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

Millions of yen
2014
2013
¥  465¥  659
1,488
1,454
936
2,390
¥2,889¥4,504

Thousands of
U.S. dollars
2014$ 4,520
14,461
9,096$28,078

Loans from banks due through 2036, with interest rates at 0.6% to
4.9%.

5. Segment information
Industry segment information
The Companies operate principally in two industrial segments.
Each segment has the following main products:
Titanium dioxide and its derivatives: Titanium dioxide, Micro titanium dioxide, Surface treatment business
Others:Surfactants, Sulfuric acid, Aluminum triphosphate		Business warehouses, Electro-ceramics products
Millions of yen
For the year ended March 31, 2014
Sales:
Sales to outside customers............................................
Inter-segment sales and transfers.................................
Total............................................................................
Segment profit or loss............................................................
Segment assets.......................................................................
Depreciation and amortization.............................................
Amount of increase in tangible and intangible fixed assets....

Titanium dioxide
and its derivatives

OthersAdjustments

Consolidated¥20,689—
20,689¥ 1,579¥19,757¥ 1,297¥   978¥15,497672
16,170¥ 1,056¥11,006¥   642¥   464¥     —
(672)
(672)
¥
3
¥11,870¥     25¥     (15)¥36,186—
36,186¥ 2,638¥42,634¥ 1,965¥ 1,427

Millions of yen
For the year ended March 31, 2013
Sales:
Sales to outside customers............................................
Inter-segment sales and transfers.................................
Total............................................................................
Segment profit or loss............................................................
Segment assets.......................................................................
Depreciation and amortization.............................................
Amount of increase in tangible and intangible fixed assets....

Titanium dioxide
and its derivatives

OthersAdjustments

Consolidated¥20,686—
20,686¥ 2,261¥22,512¥ 1,301¥ 1,213¥14,091
811
14,903¥   548¥ 9,819¥   703¥   495

¥   —
(811)
(811)
¥   (22)¥8,840¥   35¥   (30)¥34,778—
34,778¥ 2,787¥41,173¥ 2,040¥ 1,678

Thousands of U.S. dollars
For the year ended March 31, 2014
Sales:
Sales to outside customers............................................
Inter-segment sales and transfers.................................
Total............................................................................
Segment profit or loss............................................................
Segment assets.......................................................................
Depreciation and amortization.............................................
Amount of increase in tangible and intangible fixed assets....

Titanium dioxide
and its derivatives

OthersAdjustments

Consolidated$201,022—
201,022$ 15,343$191,969$ 12,611$  9,507$150,580
6,537
157,118$ 10,265$106,940$  6,241$  4,509$       —(6,537)(6,537)$     30
$115,338$    245$   (146)$351,602—
351,602$ 25,639$414,248$ 19,098$ 13,870

6. Subsequent event
Undisposed deficits at the end of the term under review were
disposed through reversal of general reserve, as approved by theGeneral Meeting of Shareholders held on June 27, 2014.
Year-end cash dividends paid ...................
Transfer of general reserve ........................

Millions of yen
¥ 297
1,200

Thousands of
U.S. dollars$ 2,893
11,6596

I ndependent A uditors ’ R eport
To the Board of Directors of
TAYCA CORPORATION
We have audited the accompanying consolidated financial statements of TAYCA CORPORATION and
its consolidated subsidiaries, which comprise the consolidated balance sheets as at March 31, 2014,
and the consolidated statements of income, statements of comprehensive income, statements ofchanges in net assets and statements of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements inorder to design audit procedures that are appropriate in the circumstances, while the objective of thefinancial statement audit is not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating theoverall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, thefinancial position of TAYCA CORPORATION and its consolidated subsidiaries as at March 31, 2014,
and their financial performance and cash flows for the year then ended in accordance with accounting
principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to theyear ended March 31, 2014 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on
the basis described in Note 1 to the consolidated financial statements.

Osaka, Japan
June 20, 2014