Financial

Statements

2011

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

2010

Millions of yen
2009

2008

2007

Net sales................................................................................ ¥32,039
Income before income taxes and minority interests.........
2,407
Net income............................................................................
1,508
Total assets........................................................................... 39,273
Net assets.............................................................................. 24,220
Common stock......................................................................
9,855¥29,892
1,223
797
39,97623,0889,855¥32,351533
449
38,29021,784
9,855¥32,721
1,912
1,186
39,664
22,7709,855¥30,351
1,633
1,072
41,45723,3109,855

Per share of common stock (in yen):
Net income....................................................................... ¥ 30.38
Owner’s equity.................................................................. 486.14¥ 15.92
463.55¥   8.98
433.56¥ 23.66452.57¥ 21.39463.562011

Notes: (1) Figures for 2007 – 2011 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, 2011 and 2010

TAYCA CORPORATION

Millions of yen

ASSETS

2011

2010

2011

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............................................................

¥ 5,359
79
9,777
7,069
394
(1)
22,677¥ 4,390
79
9,344
7,519
429
(5)
21,756$ 64,455
950
117,589
85,022
4,738(20)
272,735

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..................................

1,238
16,43939,965
181
2,872
178
(49,914)
10,961

1,241
16,20839,956
187
2,793
369
(48,430)
12,327

14,895
197,706
480,637
2,180
34,5482,151(600,291)
131,828

4,488
1,028
(23)
139
5,633
¥39,273

4,755
997
(23)
163
5,892
¥39,976

53,97912,369(276)
1,680
67,752$472,316

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

See accompanying Notes to Consolidated Financial Statements.

1

Thousands of
U.S. dollars (Note 1)

Millions of yen

LIABILITIES AND NET ASSETS
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.......................................................
Long-term liabilities:
Long-term debt (Note 4)...............................................................
Long-term accrued amount payable............................................
Liabilities for severance indemnities...........................................
	Allowance for directors’ andstatutory auditors’ retirement benefits......................................
			 Total long-term liabilities..................................................
Net assets
Shareholder’s equity
Common stock:		 Authorized — 150,000,000 shares
		 Issued — 51,428,828 shares in 2011 and 2010......................
Capital surplus...............................................................................
Retained earnings..........................................................................
Treasury stock, at cost:		 1,787,217 shares in 2011 and 1,776,563 shares in 2010........
			 Total shareholder’s equity.................................................
Accumulated other comprehensive income
Unrealized gain on available-for-sale securities.........................
Foreign currency translation adjustments..................................
			 Total accumulated other comprehensive income...........
Minority interests...............................................................................
			 Total net assets...................................................................

Thousands of
U.S. dollars (Note 1)

2011

2010

2011

¥   298
1,725
3,906
637
75
2,033
8,677

¥    396
2,348
3,804
447
73
2,368
9,439

$   3,583
20,753
46,984
7,670
909
24,458104,359

3,610
145
2,613

4,636
165
2,643

43,4271,750
31,427

5
6,375

3
7,448

66
76,671

9,855
6,767
6,926

9,855
6,767
5,666

118,532
81,383
83,298(537)
23,011(534)
21,754(6,466)
276,747

1,180
(58)
1,121
87
24,220¥39,273

1,310
(49)
1,261
72
23,088¥39,976

14,193(708)
13,484
1,054
291,286$472,316

2

C onsolidated S tatements of I ncome
TAYCA CORPORATION and C onsolidated S ubsidiaries
For the Years Ended March 31, 2011 and 2010

TAYCA CORPORATION
Thousands of
U.S. dollars (Note 1)

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.....................................................................................................................

2011

2010

2011

¥32,039
24,796
7,243
4,523
2,720

¥29,892
23,893
5,999
4,570
1,428

$385,327
298,213
87,11454,39832,715

99
(145)
(267)
(313)
2,407

98
(169)
(134)
(204)
1,223

1,199
(1,755)(3,211)(3,768)28,947

859
19
879
1,527
19
¥ 1,508

534
(123)
411
812
15
¥   797

10,340234
10,574
18,373236$ 18,136

U.S. dollars(Note 1)Yen
Net income per share..................................................................................................

¥30.38¥15.92$0.36

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, 2011 and 2010

Thousands of
U.S. dollars (Note 1)

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

2011

2010

2011

¥1,527¥—$18,373

(130)
(11)
(141)
1,385

—
—
—
—

(1,570)(134)(1,704)
16,668

1,367
18

—
—

16,450217

Consolidated Statements of Changes in Net Assets
TAYCA CORPORATION and C onsolidated S ubsidiaries
For the Years Ended March 31, 2011 and 2010

TAYCA CORPORATION
Millions of yen
Number ofshares ofcommonstock(Thousands)

Balance, March 31, 2009............................. 51,428
Net income.................................................
Cash dividends..........................................
Purchase of treasury stock........................
Disposal of treasury stock.........................
Net change in the term.............................
Balance, March 31, 2010............................. 51,428
Net income.................................................
Cash dividends..........................................
Purchase of treasury stock........................
Disposal of treasury stock.........................
Net change in the term.............................
Balance, March 31, 2011............................. 51,428

Commonstock

CapitalsurplusRetainedearnings

Treasurystock

Unrealized
gain onForeignavailablecurrency
for-saletranslation
securities adjustments¥9,855¥6,767¥5,119797(250)¥(425)¥  480¥6,767Total
net assets

¥(73)

¥59

829
¥1,310

23
¥(49)

12
¥72

¥21,784
797
(250)
(109)
0
866
¥23,088
1,508
(248)
(2)

(130)
¥1,180

(9)
¥(58)

15
¥87

(125)
¥24,220$  873$277,675
18,136(2,985)(34)

180$1,054(1,505)$291,286

(109)
0

(0)
¥9,855

Minority
interests¥5,6661,508(248)¥(534)(2)¥9,855¥6,767

Balance, March 31, 2010................................................ $118,532
Net income....................................................................
Cash dividends.............................................................
Purchase of treasury stock...........................................
Disposal of treasury stock............................................
Net change in the term................................................
Balance, March 31, 2011................................................ $118,532$81,383$81,383¥6,926¥(537)

Thousands of U.S. dollars (Note 1)$68,147$(6,431)$15,763$(593)
18,136(2,985)(34)$83,298$(6,466)(1,570)$14,193(115)$(708)

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, 2011 and 2010
Thousands of
U.S. dollars (Note 1)

Millions of yen

2011

2010

2011

¥2,407¥1,223$28,947

2,750
165
(99)
145

3,073
141
(98)
169

33,077
1,988(1,199)
1,755

(436)
447
108
(3)
5,484
99
(147)
(676)
4,760

(977)
669
114
499
4,816
98
(169)
83
4,828

(5,249)
5,376
1,299
(40)
65,957
1,199(1,777)(8,132)
57,246

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..............................................................

(1,664)
(14)
—
(107)
(1,787)(2,430)
(166)
45
(158)
(2,711)(20,023)(179)—(1,296)(21,499)

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

(93)
700
(2,348)
(2)
—
(246)
(6)
(1,998)(96)
2,530(2,295)
(109)
0
(249)
—
(221)

(1,123)
8,418(28,243)(34)—(2,969)(76)(24,029)

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.......................................................................

(5)
969
4,390
¥5,359

9
1,906
2,484
¥4,390(63)
11,65352,801$64,455

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 in trade notes and accounts receivable.................................................
		
Decrease in inventories...........................................................................................
		
Increase 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, 2011 and 2010

TAYCA CORPORATION
1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of TAYCACORPORATION (the “Company”) and its subsidiaries have been preparedin accordance with the provisions set forth in the Japanese Securities andExchange Law and its related accounting regulations, and in conformity
with accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirementsof International Financial Reporting Standards. In preparing these
consolidated financial statements, certain reclassifications and rearrangements have been 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 Japanese yen, thecurrency of the country in which the Company is incorporated and principally operates. The translations of Japanese yen amounts into U.S. dollar
amounts are included solely for the convenience of readers outside Japanand have been made at the rate of ¥83.15 to $1, the approximate rate ofexchange at March 31, 2011. 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, 2011 include theaccounts of the Company and its 5 subsidiaries.
All significant intercompany balances and transactions have been
eliminated in consolidation. All subsidiaries are consolidated on thebasis 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 andcash equivalents include cash-on-hand and in banks and other highly liquid investments with maturities of three months or less when purchased.
3) Inventories
Inventories are stated at the lower of cost or net selling value, cost being
determined by the moving-average method.
4) Securities
Securities other than those of unconsolidated subsidiaries and affiliates
are classified into three categories: trading securities, held-to-maturity
debt securities or other securities. Trading securities are carried at fairvalue. Gain or loss, both realized and unrealized is credited or charged
to income. Held-to-maturity debt securities are carried at amortizedcost. Marketable securities classified as other securities are carried atfair value with any changes in unrealized holding gain or loss, net of theapplicable income taxes, included directly in equity. Cost of securities
sold is 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. Depreciation ofproperty, plant, and equipment of the Company and its domestic consolidated subsidiaries is computed substantially by the declining-balancemethod, while the straight-line method is applied to buildings acquiredby the domestic companies after April 1, 1998, and is principally applied
to the property, plant and equipment of foreign subsidiary.
6) Liabilities for severance indemnities
The Company and its domestic consolidated subsidiaries (excluding one
subsidiary) made provisions for liabilities for severance indemnities inan amount deemed necessary at the term-end, based on the estimatedamounts of projected benefit obligations and the fair value of the plan
assets. Transitional obligations in the amount of ¥1,222 million are
charged to expenses using the straight-line method over 10 years.
Actuarial gains/losses are recognized in income/expenses using thestraight-line method over 10 years, which is shorter than the average ofthe estimated remaining service lives commencing with the following
period. Foreign subsidiary is outside the scope of application.
7) Income taxes
Current income taxes are provided for based on amounts currently
payable for each year. Deferred income taxes arising from temporary

5differences 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’ or shareholders’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 yen at the current
exchange rates at the balance sheet date.
Revenue and expense items denominated in foreign currencies aretranslated using the rate on the date of the transaction. Related exchange
gains or losses are credited or charged to income as incurred.
11) Foreign currency financial statements
The balance sheet accounts of the foreign subsidiaries are translated into
Japanese yen at the current exchange rates as of the balance sheet date
except for equity, which is translated at the historical rate. Revenue andexpense accounts of the foreign subsidiary is translated into Japanese
yen at the current exchange rates.
Differences arising from such translation are shown as “Foreign currency translation adjustments” in a separate component of equity.
12) Accounting Change
Changes in accounting policies for construction revenues and cost ofcompleted works
Effective from the year ended March 31, 2011, with regard to accounting
standards for the recognition of revenues resulting from construction
work undertaken for customers on a subcontractor basis, the Company
and its consolidated domestic subsidiaries have adopted the “AccountingStandard for Construction Contracts” (ASBJ Statement No.15, issued
on December 27, 2007) and the “Guidance on Accounting Standard forConstruction Contracts” (ASBJ Guidance No.18, issued on December 27,2007).
The percentage-of-completion method is applied to contracts forwhich construction started before the end of the fiscal year and thepercentage of construction already completed by the end of the reporting
period can be estimated fairly reliably. Otherwise the completed-contract
method is applied. The percentage of completion at the end of thereporting period is measured by the proportion of the cost incurred tothe estimated total cost.
The effect of this change was immaterial to net sales, operating income,income before income taxes and minority interests, and segment
information.
Application of “Accounting Standard for Asset Retirement
Obligations”
Effective from the fiscal year ended March 31, 2011, the Company and its
consolidated domestic subsidiaries have adopted “Accounting Standard
for Asset Retirement Obligations” (ASBJ Statement No.18, issued on
March 31, 2008) and the “Guidance on Accounting Standard for Asset
Retirement Obligations” (ASBJ Guidance No.21, issued on March 31,2008). There was no effect on profit or loss from this change.
Application of “Accounting Standard for Presentation ofComprehensive Income”
Effective from the fiscal year ended March 31, 2011, the Company has
adopted “Accounting Standard for Presentation of Comprehensive
income” (ASBJ Statement No.25, issued on June 30, 2010) and “Revised
Accounting Standard for Consolidated Financial Statements” (ASBJ
Statement No.22, revised on June 30, 2010).
As a result of the adoption of these standards, the Company haspresented the consolidated statement of comprehensive income in the
consolidated financial statements for the fiscal year ended March 31, 2011.
ln addition, the consolidated balance sheet as of March 31,2010 andthe consolidated statements of changes in net assets for the fiscal years
ended March 31,2010 have been modified to conform with the newpresentation rules of 2011.

3. Inventories

4. Short-term borrowings and long-term debt

At the end of each fiscal year, inventories consisted of the following:Thousands ofMillions of yen
U.S. dollars
2011
2010
2011
Finished goods and merchandise...... ¥4,565¥4,526$54,908
Raw materials and supplies...............
1,931
2,398
23,229Work in process...................................
572
594
6,884
¥7,069¥7,519$85,022

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

Millions of yen
2011
2010
¥  298¥  396
1,725
2,348
3,610
4,636
¥5,634¥7,381Thousands of
U.S. dollars
2011$ 3,583
20,75343,427$67,764

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

5. Segment information
Effective from the fiscal year ended March 31, 2011, the Company has adopted the “Accounting Standard for Disclosure about Segments of an Enterpriseand Related Information” (ASBJ statement No.17, issued on March 27, 2009) and “Guidance on Accounting Standard for Disclosures about Segments of anEnterprise and Related Information” (ASBJ Guidance No.20 issued on March 21, 2008).
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
Titanium dioxide
For the year ended March 31, 2011
and its derivatives
OthersAdjustments
Consolidated
Sales:
Sales to outside customers............................................
¥17,752¥14,287¥     —
¥32,039
Inter-segment sales and transfers..................................
—
618
(618)
—
		 Total.............................................................................
17,752
14,906(618)
32,039Segment profit or loss..........................................................
¥ 1,219¥ 1,486¥     14
¥ 2,720
Segment assets.....................................................................
¥18,687¥10,156¥10,429¥39,273
Depreciation and amortization...........................................
¥ 1,811¥   923¥     15
¥ 2,750
Amount of increase in tangible and intangible fixed assets......
¥   776¥   690¥     22
¥ 1,489
Millions of yen
For the year ended March 31, 2010
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¥16,937—
16,937¥   443¥20,020¥ 2,026¥   887¥12,954661
13,615¥   986¥10,318¥   952¥   908¥    —(661)(661)¥    (1)¥9,637¥   94¥    30¥29,892—
29,892¥ 1,428¥39,976¥ 3,073¥ 1,826

Thousands of U.S. dollars
For the year ended March 31, 2011
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$213,495—
213,495$ 14,662$224,742$ 21,785$   9,333$171,831
7,437
179,269$ 17,874$122,148$ 11,104$   8,303$       —(7,437)(7,437)$    178$125,426$    187$    270$385,327—
385,327$ 32,715$472,316$ 33,077$ 17,908

6. Subsequent event
Undisposed deficits at the end of the term under review were disposed
through reversal of general reserve, as approved by the General Meetingof Shareholders held on June 29, 2011.

Year-end cash dividends paid ...................
Transfer of general reserve ........................

Millions of yen¥  297
1,000

Thousands of
U.S. dollars$ 3,581
12,026

6

I ndependent A uditors ’ R eport
To the Board of Directors of
TAYCA CORPORATION
We have audited the accompanying consolidated balance sheets of TAYCA CORPORATION and consolidated subsidiaries as of March 31, 2011 and 2010, and the related consolidated statements of income,comprehensive income, changes in net assets and cash flows for the years then ended expressed inJapanese yen. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to independently 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. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above presen­t fairly, in all material
respects, the financial position of TAYCA CORPORATION and consolidated subsidiaries as of March
31, 2011 and 2010, and the results of their operations and their cash flows for the years then ended, inconformity with accounting principles generally accepted in Japan.

The U.S. dollar amounts in the accompanying consolidated financial statements with respect to theyear ended March 31, 2011 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 madeon the basis described in Note 1 to the consolidated financial statements.

Osaka, Japan
June 23, 2011