Financial

Statements

2012

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

2011

Millions of yen
2010

2009

2008

Net sales................................................................................ ¥34,480
Income before income taxes and minority interests.........
3,067
Net income............................................................................
1,739
Total assets........................................................................... 40,970
Net assets.............................................................................. 25,765
Common stock......................................................................
9,855¥32,0392,407
1,508
39,27324,2209,855¥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

Per share of common stock (in yen):
Net income....................................................................... ¥ 35.04
Owner’s equity.................................................................. 517.32¥ 30.38486.14¥ 15.92
463.55¥  8.98433.56¥ 23.66452.572012

Notes: (1) Figures for 2008 – 2012 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, 2012 and 2011

TAYCA CORPORATION

Millions of yen

ASSETS

2012

2011

2012

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

¥ 5,41279
11,157
8,001
573
(1)
25,221¥ 5,359
79
9,777
7,069
394
(1)
22,677$ 65,893
961
135,836
97,4076,979(19)
307,059

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

1,224
16,53739,233
180
2,934
643
(50,674)
10,0801,238
16,43939,965
181
2,872
178
(49,914)
10,961

14,907201,335
477,637
2,198
35,7297,836(616,926)
122,719

4,624
871
(23)
195
5,668
¥40,970

4,488
1,028
(23)
139
5,633
¥39,273

56,296
10,612(280)
2,383
69,011$498,790

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 2012 and 2011......................
Capital surplus...............................................................................
Retained earnings..........................................................................
Treasury stock, at cost:		 1,794,103 shares in 2012 and 1,787,217 shares in 2011........
			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)

2012

2011

2012

¥   456
1,411
4,808
764
118
2,398
9,958

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

$  5,554
17,18958,5359,310
1,448
29,194
121,233

2,586
102
2,557

3,610
145
2,613

31,4891,252
31,139

—
5,247

5
6,375

—
63,882

9,855
6,766
8,367

9,855
6,767
6,926

119,989
82,383
101,868(539)
24,450(537)
23,011(6,571)
297,670

1,333
(107)
1,226
88
25,765¥40,970

1,180
(58)
1,121
87
24,220¥39,273

16,239(1,310)14,9291,074
313,674$498,790

2

C onsolidated S tatements of I ncome
TAYCA CORPORATION and C onsolidated S ubsidiaries
For the Years Ended March 31, 2012 and 2011

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

2012

2011

2012

¥34,480
26,312
8,167
4,704
3,462

¥32,039
24,796
7,243
4,523
2,720

$419,777
320,342
99,43557,27842,156

112
(102)
(404)
(395)
3,067

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

1,368
(1,252)(4,925)(4,809)37,347

1,181
136
1,318
1,749
10
¥ 1,739

859
19
879
1,527
19
¥ 1,508

14,3881,659
16,04821,299127$ 21,171

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

¥35.04¥30.38$0.42

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, 2012 and 2011

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)

2012

2011

2012

¥1,749¥1,527$21,299

153
(56)
97
1,846

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

1,871
(689)
1,182
22,4811,367
18

22,450
30


1,844
2

Consolidated Statements of Changes in Net Assets
TAYCA CORPORATION and C onsolidated S ubsidiaries
For the Years Ended March 31, 2012 and 2011

TAYCA CORPORATION
Millions of yen
Number ofshares ofcommonstock(Thousands)

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
Net income.................................................
Cash dividends..........................................
Purchase of treasury stock........................
Disposal of treasury stock.........................
Net change in the term.............................
Balance, March 31, 2012............................. 51,428

Commonstock

CapitalsurplusRetainedearnings

Treasurystock

Unrealized
gain onForeignavailablecurrencytranslation
for-salesecurities adjustments¥9,855¥6,767¥5,6661,508(248)¥(534)¥1,310Minority
interests

Total
net assets¥ (49)¥72¥23,088
1,508
(248)
(2)

(130)
¥1,180(9)¥ (58)

15¥87

153¥1,333(48)¥(107)

0
¥88

(125)
¥24,220
1,739
(297)
(2)
0
105
¥25,765(2)¥9,855¥6,767¥6,926
1,739
(297)

(2)
0

(0)
¥9,855¥6,767

Balance, March 31, 2011................................................ $119,989
Net income....................................................................
Cash dividends.............................................................
Purchase of treasury stock...........................................
Disposal of treasury stock............................................
Net change in the term................................................
Balance, March 31, 2012................................................ $119,989$82,383(0)$82,383¥(537)¥8,367¥(539)

Thousands of U.S. dollars (Note 1)$ 84,323$(6,546)$14,367$  (717)
21,171(3,626)
(27)
2
1,871
(592)
$101,868$(6,571)$16,239$(1,310)$1,067

7$1,074$294,867
21,171(3,626)
(27)
2
1,286
$313,674

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, 2012 and 2011
Thousands of
U.S. dollars (Note 1)

Millions of yen

2012

2011

2012

¥3,067¥2,407$37,347

2,490
338
(112)
102

2,750
165
(99)
145

30,3194,123(1,368)1,252(1,411)
(942)
944
(58)
4,419
112
(96)
(1,056)
3,377

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

(17,185)(11,473)
11,495(708)
53,801
1,368(1,180)(12,866)
41,122

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

(1,613)(11)(206)(1,831)(1,664)(14)(107)(1,787)(19,647)(134)(2,513)(22,295)

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.............................................................
		
Proceeds from sales of treasury stock...................................................................
		Dividends paid.........................................................................................................
		
Dividends paid to minority shareholders..............................................................
			Net cash used in financing activities.............................................................

168
393(1,731)
(2)
0
(298)
(3)
(1,473)(93)
700(2,348)
(2)
—
(246)
(6)
(1,998)

2,048
4,784
(21,074)(27)
2(3,636)(37)(17,941)

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

(19)
53
5,359
¥5,412

(5)
969
4,390
¥5,359(239)
645
65,247$65,893

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, 2012 and 2011

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 ¥82.14 to $1, the approximate rate of exchange at March 31,
2012. 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, 2012 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) Liabilities for severance indemnities

The Company and its domestic consolidated subsidiaries (excluding one subsidiary) made provisions for liabilities for severance
indemnities in an amount deemed necessary at the term-end,

5

based on the estimated amounts of projected benefit obligations
and the fair value of the plan assets.
Actuarial gains/losses are recognized in income/expenses using thestraight-line method over 10 years, which is shorter than the averageof the 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 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) Accounting Change
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 “Guidanceon 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, theCompany has adopted “Accounting Standard for Presentation ofComprehensive 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.
Application of “Accounting Standard for Accounting Changes andError Corrections” and others
Effective from the year ended March 31, 2012, the Company and its

domestic consolidated subsidiaries have applied the “AccountingStandard for Accounting Changes and Error Corrections” (ASBJ
Statement No.24, issued on December 4, 2009) and the “Guidanceon Accounting Standard for Accounting Changes and Error
Corrections” (ASBJ Guidance No.24, issued on December 4, 2009).

3. Inventories

4. Short-term borrowings and long-term debt

At the end of each fiscal year, inventories consisted of the following:
Millions of yen
Finished goods and merchandise......

Thousands of
U.S. dollars
2012

Millions of yen
2011
2011

Thousands of
U.S. dollars

2012

2011

2012

Short-term borrowings........................

¥  456¥  298$ 5,554¥5,127¥4,565$62,419

Current portion of long-term debt.....

1,411

1,725

17,189Long-term debt....................................

2,586

3,610

31,489¥4,454¥5,634$54,233

Raw materials and supplies...............

2,349

1,931

28,606Work in process...................................

524

572

6,381

¥8,001¥7,069$97,407

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, 2012

Titanium dioxide
and its derivatives

OthersAdjustments

Consolidated¥34,480

Sales:
Sales to outside customers............................................

¥20,622¥13,857¥    —

Inter-segment sales and transfers..................................

—

666

(666)

—

		Total.............................................................................

20,622

14,524(666)

34,480

Segment profit or loss..........................................................

¥ 2,791¥   665¥     5

¥ 3,462

Segment assets.....................................................................

¥20,955¥ 9,487¥10,527¥40,970

Depreciation and amortization...........................................

¥ 1,640¥   811¥    37¥ 2,490

Amount of increase in tangible and intangible fixed assets......

¥   942¥   921¥    81¥ 1,946

Millions of yen
For the year ended March 31, 2011

Titanium dioxide
and its derivatives

OthersAdjustments

Consolidated¥32,039

Sales:
Sales to outside customers............................................

¥17,752¥14,287¥    —

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

Thousands of U.S. dollars
Titanium dioxide
and its derivatives

OthersAdjustments

Consolidated

Sales to outside customers............................................

$251,066$168,710$     —

$419,777

Inter-segment sales and transfers..................................

—

8,116

(8,116)—

		Total.............................................................................

251,066

176,826(8,116)

419,777

Segment profit or loss..........................................................

$ 33,981$  8,107$     67

$ 42,156

Segment assets.....................................................................

$255,120$115,501$128,168$498,790

Depreciation and amortization...........................................

$ 19,972$  9,885$    461$ 30,319

Amount of increase in tangible and intangible fixed assets......

$ 11,477$ 11,219$    994$ 23,691

For the year ended March 31, 2012
Sales:

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 28, 2012.

Millions of yen

Thousands of
U.S. dollars

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

¥  297$ 3,625

Transfer of general reserve .........................

1,300

15,826

6

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, 2012
and 2011, and the consolidated statements of income, statements of comprehensive income, statements of changes in net assets and statements of cash flows for the years then ended, and a summaryof 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, 2012
and 2011, and their financial performance and cash flows for the years then ended in accordance withaccounting 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, 2012 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, 2012