Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31,2009
October 30, 2008
These financial statements have been prepared for reference only in accordance with accounting principles and practices generally accepted in Japan.

Nagase & Co., Ltd.

Stock exchange listing: Tokyo, Osaka
http://www.nagase.co.jp

Code number: 8012
Representative: Hiroshi Nagase, Representative Director and President
Contact:
Masanori Furukawa, Manager, Corporate Accounting Division
Filing of Quarterly Report (scheduled):
November 12, 2008
Start of distribution of dividends (scheduled): December 8, 2008Tel. 81-3-3665-3103(Note: Amounts have been rounded down to the nearest million yen.)

1. Results for the Second Quarter of the Fiscal Year Ending March 31, 2009
(April 1, 2008 – September 30, 2008)(1) Net Sales and Income (Cumulative)(Percentages represent change compared with the previous second quarter.)

Net sales(¥ million)
Six months ended
Sept. 30, 2008
Six months ended
Sept. 30, 2007

Year-on-yearchange (%)

Operatingincome(¥ million)

Year-on-yearchange (%)

Ordinaryincome(¥ million)

Year-on-yearchange (%)

384,621–8,901–9,849–369,2567.6

10,6260.2

11,657

1.9

Net income(¥ million)

Year-on-yearchange(%)

Six months ended
Sept. 30, 2008
Six months ended
Sept. 30, 2007

Earnings per share(¥)

Earnings per share (diluted)
(¥)

5,706

–

44.38

44.38

(642)

–(5.00)–(2) Financial Position

Sept. 30, 2008
Sept. 30, 2007

Total assets(¥ million)
412,554419,869

Net assets(¥ million)
206,453
208,337

Net worth ratio
(%)
48.1
47.8

Net assets
per share (¥)
1,544.33
1,559.97(Reference) Equity capital: Sept. 30, 2008: ¥198,549 million; March 31, 2008: ¥200,554 million

2. Dividends

Fiscal year ended
March 31, 2008
Fiscal year ending
March 31, 2009
Fiscal year ending
March 31, 2009
(est.)First quarter

Second quarter

Dividends per share (¥)
Third quarter

Year-end

Full year

–

0.00

–

17.00

17.00

–

8.00

––––––––––––––––––––––––––––––

–

8.00

16.00

Note: Revisions to projected dividends during the quarter: Yes

3. Projected Consolidated Results for the Fiscal Year Ending March 31, 2009
(April 1, 2008 – March 31, 2009)(Percentages represent change compared to the previous fiscal year.)Net sales
Full year(¥ million)
770,000(%)
0.7

Operating income

Ordinary income(¥ million) (%)
18,000 (22.0)(¥ million)
19,500Note: Revisions to projected consolidated results during the quarter: Yes

1(%)(21.4)Net income(¥ million)
9,000

(%)
(10.1)

Earnings
per share(¥)
70.00

4.

Other
(1) Changes in major subsidiaries during the period (changes in specified subsidiaries due to changes in the scope ofconsolidation): No(2) Use of simplified accounting methods or special accounting methods for preparation of quarterly financialstatements: Yes
See “4. Other” of “Qualitative Information and Financial Statements” on pages 4-5.
(3) Changes in accounting rules, procedures, presentation method, etc., for the quarterly Consolidated FinancialStatements (changes in material items that form the basis for the preparation of the quarterly consolidated financialstatements)(a) Changes in consolidated accounting methods: Yes(b) Changes other than (a) above: Yes
See “4. Other” of “Qualitative Information and Financial Statements” on pages 4-5.
(4) Number of shares issued and outstanding (common stock)(a) Number of shares at end of period (including treasury stock): September 30, 2008: 138,408,285 shares; March31, 2008: 138,408,285 shares(b) Treasury stock at end of period: September 30, 2008: 9,841,419 shares; March 31, 2008: 9,844,934 shares(c) Average number of shares during the period: Six months ended September 30, 2008: 128,579,544; Six months
ended September 30, 2007: 128,474,198

Note: Cautionary Remark Regarding Forward-Looking Statements
1. The projected consolidated results for the fiscal year ending March 31, 2009 have been revised from projections announced
on April 30, 2008. The projected consolidated results for the fiscal year contained in this document are based on information
currently available to the Company on the date of release. Due to various factors, actual results may differ materially fromthe forecast.
2. Effective from the three months ended June 30, 2008, the Company applies the “Accounting Standard for Quarterly
Financial Reporting” (ASBJ Statement No. 12) and its Implementation Guidance, “Guidance on Accounting Standard for
Quarterly Financial Reporting” (ASBJ Guidance No. 14). Quarterly consolidated financial statements have been prepared inaccordance with the “Regulation for Quarterly Consolidated Financial Reporting.”

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Qualitative Information and Financial Statements
1. Qualitative Information on Consolidated Operating Results(1) Summary of Overall Performance
During the second quarter of the fiscal year ending March 31, 2009, the six months ended September 30,
2008, the Japanese economy weakened with a visible slowdown in corporate exports and capital investment.
The risk of a further economic downturn in the United States increased due to financial instability, and a trend
toward weakening growth in the global economy overall continues to spread.
Under these conditions, domestic sales for the first two quarters increased 5.1 percent compared with thesame period of the previous fiscal year to ¥219.66 billion and overseas sales increased 2.9 percent to ¥164.95
billion for total net sales of ¥384.62 billion, a 4.2 percent increase.
Despite factors including an increase in manufacturing costs at manufacturing subsidiaries due to rising raw
material prices, gross profit increased 0.9 percent compared with the same period of the previous fiscal year to¥39.05 billion due to the increase in sales, but selling, general and administrative expenses increased due tofactors including amortization of actuarial gain in retirement benefit accounting. Consequently, operating
income decreased 16.2 percent to ¥8.90 billion and ordinary income decreased 15.5 percent to ¥9.84 billion.
However, factors including an extraordinary loss of ¥14.3 billion recorded in the same period of the previous
fiscal year related to the voluntary recall of products that resulted in a net loss had no significant effect on thecurrent second-quarter period, and net income was ¥5.70 billion.
(2) Segment Summary[Chemicals] Sales: ¥140.82 billion, a 7.8 percent increase from the same period of the previous fiscal year
Overall sales were strong in the Chemicals segment. Sales expanded significantly in the color and imaging
business, which handles pigments, dyestuffs and other products related to color. In addition, sales remainedsolid in the speciality chemicals business, which handles a wide range of products including surfactants,
industrial oil solutions and organic synthetic raw materials such as silicone and fluorochemicals, and theperformance chemicals business, which handles products such as raw materials for urethane, raw materials andadditives for plastics, and raw materials for paint.
[Plastics]
Sales: ¥134.53 billion, a 6.3 percent increase from the same period of the previous fiscal year
Although yen-denominated sales in the ASEAN region decreased due in part to the effect of a stronger yen,sales increased in the Greater China region including Hong Kong and Taiwan. Despite a decrease in domesticsales for precision instruments and electronics applications and a drop in sales for applications in building andpackaging materials including Nagase products, automotive-related sales were strong, and overall sales in thePlastics segment increased.
[Electronics] Sales: ¥80.19 billion, a 4.7 percent decrease from the same period of the previous fiscal year
Sales continued to expand for precision abrasive materials, substrates for hard disks and other products
handled by the information and functional materials business. Although formulated epoxy resin and chemicalsales increased, sales in the electronic chemicals business were flat due to a decrease in sales of chemical supply
and control equipment used in LCD and semiconductor front-end processing. However, sales in the display
business, which primarily handles processing of components for LCDs and electronic equipment, decreased
compared with the same period of the previous fiscal year. As a result, overall segment sales decreased.
[Life Sciences] Sales: ¥ 28.21 billion, a 5.4 percent increase from the same period of the previous fiscal year
Sales were flat in the beauty care business, which handles cosmetics and health foods. Although sales in thefine chemicals business related to enzymes were flat, overall segment sales increased due to an increase in sales
centered on pharmaceutical intermediates.
[Others]
Sales: ¥0.83 billion, a 25.6 percent decrease from the same period of the previous fiscal year
Segment sales decreased significantly due to the voluntary recall of portable DVD players and other products
and the suspension of sales that began in the previous fiscal year.
2. Qualitative Information on Consolidated Financial Position(1) Assets, Liabilities and Net Assets
Despite the purchase of property, plant and equipment and other factors, total assets decreased ¥7.31 billion
from the end of the previous fiscal year to ¥412.55 billion, mainly due to a decrease in investment securities
following a drop in share prices and a decrease in notes and accounts receivable.

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Despite an increase in long-term debt, total liabilities decreased ¥5.39 billion from the end of the previous
fiscal year to ¥206.10 billion due to factors including decreases in short-term loans and in deferred tax liabilities
resulting from a decrease in net unrealized holding gain on securities following a decline in share prices.
Net assets decreased ¥1.92 billion from the end of the previous fiscal year to ¥206.45 billion despite
recording net income, due to factors including a decrease in net unrealized holding gain on securities recorded
as net assets and a decrease in translation adjustments.
As a result, the net worth ratio increased 0.3 percentage points to 48.1 percent from 47.8 percent at the end of
the previous fiscal year.
(2) Cash FlowsNet cash provided by operating activities was ¥12.18 billion, mainly due to income before income taxes andminority interests, despite factors including income taxes paid and other expenditures.
Net cash used in investing activities was ¥6.20 billion, mainly as a result of purchases of property andequipment.
Net cash used in financing activities was ¥4.05 billion, due to a decrease in short-term loans and the paymentof dividends, despite proceeds from long-term debt.
As a result, the balance of cash and cash equivalents at September 30, 2008 was ¥23.59 billion, an increase of¥0.10 billion from the end of the previous fiscal year.
3. Qualitative Information on Projected Consolidated Results
The Company expects the severe operating environment to continue due to the outlook that lower confidence
globally in financial systems will have a pronounced effect on the real economy.
Under these conditions, the Nagase Group foresees a downturn in demand from the electronic equipment,electronics, automobile and other industries, which are the final customers of its main business partners, and thepossibility of an impairment loss on stock held due to the weak performance of the stock market. As a result,projections for the fiscal year ending March 31, 2009 are for consolidated net sales of ¥770.0 billion (a 0.7
percent increase from the previous fiscal year), operating income of ¥18.0 billion (a 22.0 percent decrease),
ordinary income of ¥19.5 billion (a 21.4 percent decrease), and net income of ¥9.0 billion (a 10.1 percentdecrease).
4. Other(1) Changes in Significant Subsidiaries during the Period (Changes in specified subsidiaries due to changes
in the scope of consolidation)
None applicable.
(2) Use of Simplified Accounting Methods or Special Accounting Methods for Preparation of Quarterly
Financial Statements
The Company uses special quarterly accounting methods to determine income tax payments, including
calculations for some consolidated subsidiaries using the estimated annual effective tax rate based on thenormal effective statutory tax rate.
(3) Changes in Consolidated Accounting Rules, Procedures, Presentation Method, etc. for the Quarterly
Consolidated Financial Statements(a)Effective from the three months ended June 30, 2008, the Company applies the “Accounting Standard
for Quarterly Financial Reporting” (ASBJ Statement No. 12, issued March 14, 2007) and its
Implementation Guidance, “Guidance on Accounting Standard for Quarterly Financial Reporting” (ASBJ
Guidance No. 14, issued March 14, 2007). Quarterly consolidated financial statements have been preparedin accordance with the “Regulation for Quarterly Consolidated Financial Reporting.”(b) Effective from the three months ended June 30, 2008, the Company applies the “Accounting Standardfor Measurement of Inventories” (ASBJ Statement No. 9, issued July 5, 2006), changing from primarily
using the cost or market method to the average method (method for reducing the carrying amount of
inventories below book value due to decline in profitability) for the valuation of inventories held fornormal sale. As a result, gross profit, operating income, ordinary income and income before income taxes
and minority interests each decreased by ¥547 million.
(c) Effective from the three months ended June 30, 2008, the Company applies the “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”(ASBJ PITF No. 18, issued May 17, 2006) and carries out necessary consolidated financial adjustments.
There is no effect on income from these changes.
(d) Previously, finance lease transactions without title transfer were accounted for as operating leases.
However, companies are able to apply “Accounting Standard for Lease Transactions” (ASBJ Statement No.
13, issued June 17, 1993 (First Committee of Business Accounting Council), revised March 30, 2007) and4

its Implementation Guidance, “Guidance on Accounting Standard for Lease Transactions” (ASBJ
Guidance No. 16 (issued January 18, 1994 (Japanese Institute of Certified Public Accountants), revised
March 30, 2007) on quarterly financial statements of fiscal years beginning on or after April 1, 2008.
Accordingly, the Company has applied the revised accounting standard from the three months ended June30, 2008. The revised accounting standard requires that all finance lease transactions be capitalized.
In addition, leased assets related to finance lease transactions without title transfer are depreciated on astraight-line basis, with the lease periods as their useful lives and no residual value.
The Company will continue to account for finance lease transactions without title transfer where thelease transaction started before the first year of application as operating leases.
There is no effect on income from these changes.

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