Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017
<Under Japanese GAAP>
February 3, 2017
These financial statements have been prepared for reference only in accordance with accounting principles and practices generally accepted in Japan.

Stock exchange listing: Tokyo (First Section)
NAGASE & CO., LTD.
Code number:8012
URL (http: //www.nagase.co.jp/english/)Representative:
Kenji Asakura, Representative Director and President
Contact:
Akira Takami, General Manager, Accounting Division
TEL: +81-3-3665-3103
Filing of quarterly report (scheduled): February 8, 2017
Start of distribution of dividends (scheduled): Supplementary documents of quarterly financial results: Yes
Quarterly investors' meeting: No(Note: Amounts have been rounded down to the nearest million yen.)

1. Consolidated Results for the Third Quarter of the Fiscal Year Ending March 31, 2017
(April 1, 2016 to December 31, 2016)(1) Consolidated Operating Results(Percentages represent changes compared with same period of the previous fiscal year.)Net sales
For the third quarter ended
December 31, 2016
December 31, 2015

Operating income

Profit attributable toowners of the parent

Ordinary income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

537,090566,524

(5.2)
(1.0)

11,661
14,825(21.3)
4.2

12,73815,377(17.2)
(5.8)

8,853
9,569

(7.5)
(13.7)(Notes) Comprehensive income

Third quarter ended December 31, 2016: ¥19,426 million (131.6%)
Third quarter ended December 31, 2015: ¥8,386 million (74.8% decrease)
Earnings per share

For the third quarter ended
December 31, 2016
December 31, 2015

Yen
69.90
75.33

Earnings per share (diluted)Yen(2) Consolidated Financial Position
Total assets

Net assets

Shareholders’equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

548,423
512,081

293,010279,14952.5
53.5

2,283.25
2,156.67

December 31, 2016
March 31, 2016
(Reference) Equity capital

As of December 31, 2016: ¥287,969 million
As of March 31, 2016: ¥ 273,963 million

2. Dividends
1Q
For the year ended (or ending)March 2016
March 2017
March 2017 (estimate)

2Q

Annual Dividends per Share
3Q
Fiscal year end

Annual

Yen

Yen

Yen

Yen

Yen




16.00
16.00




16.00

32.00

16.00

32.00

(Note) Revisions to the latest projected dividends: No

3. Projected Consolidated Results for the Fiscal Year Ending March 31, 2017
(April 1, 2016 to March 31, 2017)(Percentages represent changes compared with the corresponding periods of the previous fiscal year.)Net sales
Millions of yen

Full fiscal year

735,000

Operating income% Millions of yen(1.0)

Profit attributable toowners of the parent

Ordinary income% Millions of yen

14,500 (19.6)

16,000Earnings per
share% Millions of yen

%

Yen

9,500

(22.9)

74.78(13.0)(Note) Revisions to the latest projected consolidated results: No* Notes(1) Changes in major subsidiaries during the period (changes in specified subsidiaries accompanying changes in thescope of consolidation): No
New: ― (Company name:)
Excluded: ― (Company name:)(2) Application of special accounting methods to the preparation of quarterly financial statements: No(3) Changes of accounting principles, changes in accounting estimates, and restatement of prior period financial
statements after error correctionsi.
Changes in accordance with revisions to accounting and other standards: No
ii. Changes in items other than (i) above: Yesiii. Changes in accounting estimates: No
iv. Restatement of prior period financial statements after error corrections: No(Note)
Please refer to “2. Summary Information (Notes) (3) Changes in Accounting Policies, Estimates andRestatements.” on page 4 of this document.
(4) Number of shares issued and outstanding (common stock)i.
Number of shares issued and outstanding as of the fiscal period end (including treasury stock)
December 31, 2016
127,408,285 shares March 31,2016
127,408,285 shares
ii.

iii.

Number of treasury stock as of the fiscal period end
December 31, 2016
1,285,832 shares

March 31, 2016

Average number of shares during the period
December 31, 2016
126,667,603 shares

December 31, 2015

377,300 shares

127,031,533 shares* Quarterly Review Implementation DisclosureThis quarterly report is exempt from the quarterly review procedure based upon the Financial Instruments and ExchangeAct. Furthermore, quarterly consolidated financial statements were undergoing the review procedure process at the timeof release.
* Cautionary Statement with Respect to Forecasts of Consolidated Business Results
The earnings forecasts presented in this document are based upon currently available information and assumptions
deemed rational. A variety of factors could cause actual results to differ materially from forecasts.
Please refer to “1. Qualitative Information (3) Qualitative Information related to Earnings Forecasts” on page 4 of thisdocument.

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017

Attachments
1. Qualitative Information

2(1) Business Performance2(2) Financial Position

4(3) Qualitative Information related to Earnings Forecasts

4

2. Summary Information (Notes)

4(1) Changes in Significant Subsidiaries during the Period

4(2) Application of Special Accounting Methods to the Preparation of Quarterly Financial Statements

4(3) Changes in Accounting Policies, Estimates and Restatements

4(4) Additional Information

4

3. Quarterly Consolidated Financial Statements

5(1) Quarterly Consolidated Balance Sheets

5(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income

7

Quarterly Consolidated Statements of Income
Nine-month periods ended December 31, 2016 and 20157

Quarterly Consolidated Statements of Comprehensive Income
Nine-month periods ended December 31, 2016 and 2015
(3) Notes related to Quarterly Consolidated Financial Statements

89(Assumption for Going Concern)

9(Segment Information, etc.)9(Significant Fluctuations in Shareholders’ Equity)10(Significant Subsequent Events)

10

4. Supplementary Information

10(1) Overseas Sales

10

－ 1 －

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017

1. Qualitative Information(1) Business Performancea. General Summary of Results
Improved employment and payrolls, as well as a gradual recovery in corporate earnings, led to a more favorable businesssentiment during the cumulative consolidated third quarter in the Japanese economy. However, we continued to see stagnationin personal spending and constrained external demand. At the same time, growth is slowing in China and other emerging
economies. This, combined with the British exit from the EU, the impact of economic and trade policies of the new U.S.
administration, and other factors, mean that the future direction of the global economy remains uncertain.
In this environment, the Company recorded domestic sales of ¥274.68 billion for the cumulative consolidated third quarter,
which represented a 0.9% increase year on year. Overseas sales, impacted by comparatively strong yen, fell to ¥262.4 billion(10.8% decrease). In total, the Company recorded ¥537.09 billion in net sales, a decrease of 5.2%.
The Company recorded gross profit of ¥68.22 billion (2.3% decrease) in conjunction with lower revenues. Operating income
amounted to ¥11.66 billion, a decrease of 21.3%. This decrease was mainly due to an increase in retirement benefit expense inconnection with the amortization of actuarial losses. Ordinary income amounted to ¥12.73 billion (17.2% decrease), while
profit attributable to owners of the parent amounted to ¥8.85 billion (7.5% decrease).

b. Segment Summary
Functional Materials
The Functional Materials segment recorded lower sales in both domestic and overseas markets.
The Performance Chemicals business recorded lower net sales as a whole. While sales of coating raw materials for automotive
industry grew in ASEAN, lower naphtha prices resulted in lower sales elsewhere, most notably in Japan.
The Speciality Chemicals business recorded slightly higher net sales. This result was mainly due to strong sales of raw
materials for fiber lubricants and fluorochemicals for the electronics industry in Japan, silicone materials sales in the U.S., andraw materials for plastic in Korea.
As a result, net sales for the segment amounted to ¥113.66 billion for the period, representing a ¥5.35 billion (4.5%) decrease.
Operating income for the segment was ¥2.96 billion, representing a ¥10 million (0.5%) decrease.

Advanced Materials & Processing
The Advanced Materials & Processing segment recorded lower sales in both domestic and overseas markets.
The Colors & Advanced Processing business recorded lower net sales overall, despite higher sales of plastic resins for
packaging and container applications and conductive materials in Japan. Sales of digital print processing materials were lower
both in Japan and overseas.
The Polymer Global Account business mainly sells plastics to the office equipment, appliance, and video game device markets.
Here, sales were up slightly as a whole. While sales were level in Japan and slightly lower in Greater China, sales in ASEAN
grew year on year.
As a result, the segment recorded net sales of ¥181.34 billion, representing a ¥16.24 billion (8.2%) decrease. Meanwhile,
operating income increased ¥110 million (2.8%) to ¥4.02 billion, mainly due to improved gross profit ratios among theCompany’s domestic manufacturing subsidiaries.

Electronics
The Electronics segment recorded lower sales as a whole. Domestic sales were higher, driven by the performance of domestic
manufacturing subsidiaries. However, overseas sales were lower in Greater China and the Americas.

－ 2 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017

The Electronic Chemicals business recorded increased sales for the period, driven by higher sales of formulated epoxy resin to
the electronic components and semiconductor industries.
The Electronic Materials business recorded lower net sales, mainly due to lower sales of materials for touch panels and glass
sliming process.
As a result, the segment recorded net sales of ¥96.27 billion for the period, representing a ¥3.02 billion (3.1%) decrease.
Operating income for the segment was ¥4.67 billion, representing a ¥640 million (12.1%) decrease. This decrease was mainly
due to lower operating rates at our overseas manufacturing businesses.

Automotive & Energy
The Automotive Solutions business recorded improved sales for the period. While lower naphtha prices had a negative impact
on revenues in Japan, the resins business experienced growth. Despite favorable volume trends overseas, the strong yen drove
sales downward, resulting in lower performance for the business.
As a result, the segment recorded sales of ¥82.54 billion for the period, down ¥4.7 billion (5.4%). Operating income decreased¥60 million (6.2%) year on year, down to ¥960 million.

Life & Healthcare
The Life & Healthcare segment recorded sales level with the same period in the prior fiscal year. While sales rose domestically,
sales were lower overseas, mainly in Greater China and Europe.
The Life & Healthcare Products business recorded lower sales of TREHA™ in overseas markets, while sales of this productwere level in Japan. Although the business recorded lower sales of AA2G™ to major customers in the Japanese skin care andtoiletries field, sales to major customers overseas were higher. In the pharmaceuticals and medicals fields, sales of raw
pharmaceuticals, intermediates, and medical materials were higher. As a result, the business recorded period sales level withthe prior year.
The Beauty Care Products business, which includes sales of cosmetics and health foods, recorded slightly higher sales, mainly
due to strong performance of new products in contrast to weakness in the performance of older products.
As a result, net sales for the segment amounted to ¥62.79 billion, which was a ¥60 million (0.1%) decrease. Operating income
for the segment was ¥2.84 billion, representing a ¥200 million (7.6%) increase. This increase in operating income was mainly
due to improved gross profit ratios among domestic manufacturing subsidiaries.

Other
No special matters to disclose.

－ 3 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017

(2) Financial Position
As of the end of the consolidated third quarter, current assets amounted to ¥339.14 billion. This represents an increase of ¥26.8
billion compared to the end of the prior consolidated fiscal year. While inventories decreased for the period, accounts
receivable increased. Non-current assets amounted to ¥209.28 billion, up ¥9.53 billion. Although the Company sold shares ofaffiliates during the period, higher fair values for shares retained resulted in an increase in investments in securities. As a resultof these various factors, total assets increased by ¥36.34 billion to ¥548.42 billion as of the end of the consolidated third quarter.
Liabilities amounted to ¥255.41 billion, a ¥22.48 billion increase compared to the end of the prior consolidated fiscal year. This
increase was mainly due to increases in accounts payable.
Net assets amounted to ¥293.01 billion, up ¥13.86 billion. This increase was mainly due to ¥8.85 billion in profit attributable toowners of the parent and an increase in net unrealized holding gain in securities.
As a result, the Company recorded a shareholders’ equity ratio of 52.5%, down 1 point compared to the end of the priorconsolidated fiscal year.

(3) Qualitative Information related to Earnings Forecasts
The Company has made no changes its full-year consolidated earnings forecasts as originally published on May 6, 2016.

2. Summary Information (Notes)(1) Changes in Significant Subsidiaries during the Period
No matters to report.

(2) Application of Special Accounting Methods to the Preparation of Quarterly Financial Statements
No matters to report.

(3) Changes in Accounting Policies, Estimates and Restatements(Change in Inventory Valuation Method)
The Company and certain domestic affiliates had valued inventory according to the weighted-average method. In the
consolidated second quarter of the current fiscal year, these entities have changed to the moving-average method of inventory
valuation. This change in inventory valuation method was made in conjunction with the adoption of a new enterprise system inAugust 2016. By calculating payout costs on a more timely basis, the Company believes it will be able to determine periodic
income or loss more promptly and accurately.
The Company has not applied this change retroactively to restate prior financial statements, as management has not judged theimpact of this change to be material.

(4) Additional Information(Application of Implementation Guidance on Recoverability of Deferred Tax Assets)
The Company has adopted Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26;
March 28, 2016), effective the first quarter of the current consolidated fiscal year.

－ 4 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017

3. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets

Prior Consolidated Fiscal Year
(March 31, 2016)
ASSETS
Current assets
Cash and time deposits
Notes and accounts receivable
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Less allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Intangible fixed assets
Goodwill
Technology-based assets
Other
Total intangible fixed assets
Investments and other assets
Investments in securities
Long-term loans receivable
Deferred tax assets
Other
Less allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets－ 5 －(Millions of yen)
Third Quarter, Current
Consolidated Fiscal Year
(December 31, 2016)

43,283
196,335
57,404
1,726
3,789
2,842
7,843
(890)
312,334

43,392
224,444
55,069
1,444
3,798
2,280
9,190
(478)
339,141

66,47468,426

24,582
15,366
4,567
44,51623,445
14,184
4,321
41,952

81,345
1,023
1,544
5,017
(174)
88,755
199,747
512,081

91,978
618
1,447
5,165
(307)
98,903
209,282
548,423

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017

Prior Consolidated Fiscal Year
(March 31, 2016)
LIABILITIESCurrent liabilities
Notes and accounts payable
Short-term loans
Current portion of long-term loans
Current portion of bonds
Accrued income taxes
Deferred tax liabilities
Accrued bonuses for employees
Accrued bonuses for directors
Other
Total current liabilities
Long-term liabilities
Bonds
Long-term loans
Deferred tax liabilities
Net defined benefit liability
Other
Total long-term liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income (loss)
Net unrealized holding gain on securities
Deferred (loss) gain on hedges
Translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets－ 6 －(Millions of yen)
Third Quarter, Current
Consolidated Fiscal Year
(December 31, 2016)

97,80025,294
8,823
4,305
13
4,224
194
15,461
156,118

116,424
30,700
10,11910,000
1,218
2,560
120
16,175
187,318

30,00023,1088,433
14,0601,211
76,813232,932

20,00020,23012,56914,360934
68,094
255,413

9,699
11,615
213,572(230)
234,657

9,699
11,604
218,342(1,335)
238,31137,074(9)
4,411(2,169)39,3055,185
279,149
512,081

45,947
6
4,260
(556)
49,657
5,041
293,010548,423

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive
Income(Quarterly Consolidated Statements of Income)Nine-month periods ended December 31, 2016 and 2015

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Rent income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary gains
Gain on sale of non-current assets
Gain on sale of investment securities
Other
Total extraordinary gains
Extraordinary losses
Loss on sale of non-current assets
Loss on disposal of non-current assets
Impairment loss
Loss on sale of investments securities
Loss on valuation of investments securities
Loss on sales of shares of subsidiaries and affiliates
Other
Total extraordinary losses
Income before income taxes and non-controlling interests
Income taxes - current
Income taxes - deferred
Total income taxes
Profit for the period
Profit attributable to non-controlling interests
Profit attributable to owners of the parent

Nine-month period ended
December 31, 2015
(April 1, 2015
-December 31, 2015)
566,524
496,720
69,80354,97814,825(Millions of yen)
Nine-month period ended
December 31, 2016
(April 1, 2016
-December 31, 2016)
537,090
468,869
68,22056,55911,661

154
1,264
220
463
2,103

142
1,442
228
458
2,272

804
109
259
376
1,550
15,377

767
27
44
355
1,195
12,738

38
70
109

226
495
76
798

19
117
764
9
6
917
14,569
4,284
533
4,818
9,751
181
9,569

40
169
52
25
92
291
60
731
12,804
3,168
551
3,720
9,084
230
8,853

－ 7 －

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017

(Quarterly Consolidated Statements of Comprehensive Income)Nine-month periods ended December 31, 2016 and 2015

Profit for the period
Other comprehensive income
Net unrealized holding gain on securities
Deferred (loss) gain on hedges
Translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates
accounted for by the equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Shareholders of the parent
Non-controlling interests

Nine-month period ended
December 31, 2015
(April 1, 2015
-December 31, 2015)
9,751(Millions of yen)
Nine-month period ended
December 31, 2016
(April 1, 2016
-December 31, 2016)
9,084

1,560
(3)
(2,129)
(478)

8,865
15
(12)
1,613

(313)

(140)

(1,364)
8,386

10,342
19,426

8,481(95)

19,279146－ 8 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017(3) Notes related to Quarterly Consolidated Financial Statements(Assumption for Going Concern)
No matters to report.

(Segment Information, etc.)
Segment Information
I Nine-month period ended December 31, 2015 (consolidated)
1. Information related to net sales and income (loss) by reportable segment(Millions of yen)
To Quarterly
Consolidated

Reportable Segments
Advanced
Functional
Automotive
Life &
Materials & Electronics
Materials& Energy Healthcare
Processing

Total

Other
(Note) 1

Total

Corporate Adjustments
Statements of(Note) 2(Note) 3
Income(Note) 4

Net sales
Sales to119,024

197,587

99,29987,24262,861

566,016508

566,524－－566,524

1,462

1,707

782

1,953

369

6,275

4,578

10,853－(10,853)－

Total

120,487

199,294

100,081

89,196

63,231

572,292

5,086

577,378－(10,853)

566,524

Segment income(loss)

2,980

3,919

5,315

1,023

2,643

15,882

191

16,073(1,586)338

14,825

customers
Intersegment
sales/transfers(Note) 1. Other is a business segment consisting of businesses not included in reportable segments, and includes logistics services,
information processing services, and professional services.
2. Corporate segment income (loss) represents expenses not allocated to reportable segments or Other.
3. Adjustments are eliminations of intersegment transactions.
4. The sum of Segment income (loss), Corporate, and Adjustments is equivalent to operating profit as presented in the
consolidated statements of income.
II Nine-month period ended December 31, 2016 (consolidated)
1. Information related to net sales and income (loss) by reportable segment(Millions of yen)
To Quarterly
Consolidated

Reportable Segments
Advanced
Functional
Automotive
Life &
Materials & Electronics
Materials& Energy Healthcare
Processing

Total

Other
(Note) 1

Total

Corporate Adjustments
Statements of(Note) 2(Note) 3
Income(Note) 4

Net sales
Sales tocustomers
Intersegment
sales/transfers
Total
Segment income(loss)

113,665

181,345

96,27182,542

62,793536,619471

537,090－－537,090

1,379

1,793

1,314

1,965

364

6,817

4,157

10,974－(10,974)－

115,045

183,138

97,586

84,50863,158543,437

4,628

548,065－(10,974)

537,090

2,965

4,029

4,672

960

2,843

15,470138

15,608(4,341)

395

11,661(Note) 1. Other is a business segment consisting of businesses not included in reportable segments, and includes logistics services,
information processing services, and professional services.
2. Corporate segment income (loss) represents expenses not allocated to reportable segments or Other.
3. Adjustments are eliminations of intersegment transactions.
4. The sum of Segment income (loss), Corporate, and Adjustments is equivalent to operating profit as presented in the
consolidated statements of income.

- 9 -NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Third Quarter of the Fiscal Year Ending March 31, 2017

(Significant Fluctuations in Shareholders’ Equity)
At a meeting held September 20, 2016, the Company’s Board of Directors resolved to repurchase 908,000 shares of Company
stock in accordance with the provisions of Article 156 of the Companies Act as applied mutatis mutandis to the provisions ofArticle 165(3) of the same act.
As a result, treasury stock increased ¥1,104 million, amounting to ¥1,335 million as of the end of the consolidated third quarter.
Stock repurchases under the resolution in question were completed as of September 21, 2016.

(Significant Subsequent Events)
No matters to report.

4. Supplementary Information(1) Overseas Sales
Nine-month period ended December 31, 2015 (consolidated)
GreaterChina
I Overseas sales(Millions of yen)

164,346

ASEAN

Americas84,11624,143

Europe

Other

9,880

Total

11,776

II Consolidated sales(Millions of yen)III

Ratio of overseas sales toconsolidated sales (%)

294,263566,524
29.0

14.9

4.3

1.7

2.0

51.9

Nine-month period ended December 31, 2016 (consolidated)
GreaterChina
I Overseas sales(Millions of yen)II

146,130

ASEAN

Americas74,886

21,584

Europe

Other

8,385

Total

11,416

Consolidated sales

537,090(Millions of yen)III

Ratio of overseas sales toconsolidated sales (%)

262,403

27.2

14.0

4.0

1.6

2.1

48.9

(Note)
1. Overseas sales consist of net sales of the Company and consolidated subsidiaries in other countries or regions.
2. Countries/regions are determined by geographical proximity.
3. Major countries in each region(1) Greater China......China, Hong Kong, Taiwan(2) ASEAN...............Thailand, Singapore(3) Americas.............U.S., Mexico(4) Europe................Germany(5) Other...................Korea
4.

Change in region classifications
The Company had classified its regions as Northeast Asia, Southeast Asia, North America, and Europe & Others. Beginning withthe first quarter of the current consolidated fiscal year, the Company has renamed and reclassified its regions for coordination with
the Company’s ACE-2020, our mid-term management plan.
(1) Northeast Asia renamed as Greater China; Southeast Asia renamed as ASEAN; North America renamed as Americas.
Europe & Others categorized separately into Europe and Other.
(2) Brazil, formerly classified under Europe & Others, now included in Americas(3) Korea, formerly classified under Northeast Asia, now included in Other- 10 -