Financial Performance (Consolidated)
Operating Results
Net Sales
Net sales increased ¥8,439 million, or 4.0%, year on
year, to ¥221,368 million (US$2,693 million) in thereporting period.
The decline in sales of the Steel and Energy
Products Business was more than offset by growth insales of the Industrial Machinery Products Business.

costs and further reductions in fixed costs as efforts tolower the break-even point, both of which were morethan offset by the appreciation of the yen, lower productprice as a result of intensified competition, as well as
increased depreciation and amortization.
Net Income
Net income decreased ¥3,941 million, or 23.8%, to¥12,591 million (US$153 million).

Operating Income
Operating income declined ¥4,584 million, or 16.1%,
to ¥23,911 million (US$290 million). This decrease wasmainly attributable to a more efficient balance between
inventory turnover and notes and accounts receivable asa measure to strengthen our financial position, as wellas to aggressive cost-cutting including improved variable

Geographical Information
The Japanese market accounted for sales of ¥111,156
million (US$1,352 million) and the Chinese market for¥32,038 million (US$389 million), with all other markets accounting for ¥78,173 million (US$951 million).

Cash Flows
Cash and cash equivalents stood at ¥48,107 million(US$585 million) at the reporting term-end, up ¥6,990
million year on year after adjusting noncash items. This
was the result of a decline in working capital as well as
the non-performance of significant fund procurement
on a consolidated accounts basis during the reportingterm.

% of total sales

32,507

Oversea sales

11,50021,77402008 2009 2010 2011 2012

23,00045,66814

34,50026,31928¥ million
46,00042,040110,211

113,858

37,50002008 2009 2010 2011 201222

93,90375,00042

Net Cash Provided by Operating Activities

112,500

49.8

46.6

47.1

%
56

53.5

52.8

119,853

0¥ million
150,000

103,937

10,500Geographical Information

23,911

28,49532,18521,00036,63331,50032,475

Operating Income¥ million
42,000Cash Flow from Operating Activities
Net cash provided by operating activities amounted
to ¥32,507 million (US$395 million), compared with
¥21,774 million in the previous term. This was the resultof a decline in working capital and other factors, despite
the fact that net income before income taxes and otheradjustments came to ¥20,302 million.

0

2008 2009 2010 2011 2012

Cash Flow from Investing Activities
Net cash used in investing activities amounted to ¥18,601
million (US$226 million), compared with ¥28,238 million
for the previous term. This was due mainly to an investment of ¥17,233 million in property, plant and equipment
for the purpose of raising production efficiency.

Cash Flow from Financing Activities
Net cash provided by financing activities amounted to¥6,846 million (US$83 million) compared with a net
cash inflow of ¥2,116 million for the previous term. This
was the result of the non-performance of significant fundprocurement during the reporting term, on a consolidated
accounts basis, as well as an expenditure of ¥4,082 million
for the payment of dividends and other factors.

Financial Position¥ million
72,00063,60728,59218,00065,68536,00058,44054,00053,388Interest-Bearing Debt

Total assets as of the end of March 2012 stood at ¥325,653
million (US$3,962 million), down ¥13,610 million, or
4.0%, from the previous term-end. This was mainly due toa decrease in non-current assets.
Liabilities at the reporting term-end stood at ¥197,039
million (US$2,397 million), down ¥21,403 million, or
9.8%, over the previous term-end. This was largely attributable to an decrease in long-term debt. Interest-bearing debt
stood at ¥63,607 million (US$773 million), down ¥2,079
million from the previous fiscal year. Net assets at thereporting term-end totaled ¥128,613 million (US$1,564
million), for an increase of ¥7,793 million, or 6.5%, overthe previous term-end.

02008 2009 2010 2011 2012

%
40.0

39.2
30.0

32.4

34.0

35.3

2008 2009 2010 2011 2012

21.8
18.3

18.0

17.6
14.4

20.0

12.0

10.2
6.0

0

0

%
24.0

30.3

10.0

35,000ROE

Equity Ratio

128,613

90,12585,23170,000120,820

105,000

111,149

Net Assets¥ million
140,000

0

2008

2009

2010

2011

2012

2008

2009

2010

2011

2012

23

THE JAPAN STEEL WORKS, LTD. AND CONSOLIDATED SUBSIDIARIES

Consolidated Balance Sheets
March 31, 2012 and 2011

Thousands of
U.S. Dollars (Note 3)

Millions of Yen

ASSETS

2012

2011

2012

¥ 48,148¥ 41,187$ 585,813

2,062
44,495370(314)
79,3486,400
4,139
184,652

1,251
43,9981,608(208)
82,241
6,852
8,535
185,467

25,088541,368
4,502(3,820)965,422
77,86850,3592,246,648

Less accumulated depreciation ..........................................................
Property, plant and equipment, net .............................................

11,05896,954
144,515
8,042
2,088
262,659(156,117)
106,541

11,381
96,665
139,4178,339
2,631
258,434(140,893)
117,540

134,542
1,179,633
1,758,304
97,84625,405
3,195,754(1,899,465)
1,296,277

Intangible assets ...................................................................................

934

1,005

11,364

Investments and other assets:
Investments in unconsolidated subsidiaries and affiliates .....................
Investment securities (Notes 16 and 17) ..............................................
Long-term loans receivable .................................................................
Deferred tax assets (Note 20) .............................................................
Other assets (Note 8) ..........................................................................
Less allowance for doubtful accounts .................................................
Total investments and other assets ........................................
Total assets ..............................................................................

868
25,434
241
1,932
5,471
(423)
33,524¥325,653

875
27,613
111
2,075
4,772
(198)
35,249¥339,263

10,561
309,454
2,932
23,50766,565(5,147)
407,884$3,962,197

Current assets:
Cash on hand and in banks (Notes 16 and 17) ...................................
Notes and accounts receivable:
Unconsolidated subsidiaries and affiliates .......................................
Trade (Notes 8 and 16) ..................................................................
Other .............................................................................................
Less allowance for doubtful accounts ............................................
Inventories (Note 4) ............................................................................
Deferred tax assets (Note 20) .............................................................
Other current assets ...........................................................................
Total current assets ...................................................................

Property, plant and equipment, at cost (Notes 5 and 6):
Land ..................................................................................................
Buildings and structures ......................................................................
Machinery and equipment ..................................................................
Leased assets ....................................................................................
Construction in progress ....................................................................

The accompanying notes are an integral part of these statements.

24

Thousands of
U.S. Dollars (Note 3)

Millions of Yen

LIABILITIES AND NET ASSETS

2012

2011

2012

¥ 12,885
15,190¥ 13,120
2,435$ 156,771
184,81637
41,634
1,749
32,615
4,141
21,396
129,64981
44,932
6,384
31,024
7,979
27,600133,558450
506,558
21,280396,824
50,383
260,324
1,577,430

35,53250,130432,315

9,695
195
1,084
20,881
67,389

9,339
199
1,720
23,49484,884

117,958
2,373
13,189254,058
819,917

19,694
5,426
103,288

19,694
5,426
94,779239,616
66,0181,256,698(408)
128,000(224)
119,676(4,964)
1,557,367

Accumulated other comprehensive income:Unrealized holding gain (loss) on securities ......................................
Unrealized gain (loss) from hedging instruments ..............................
Translation adjustments ..................................................................
Total accumulated other comprehensive income ........................

385
(62)
(650)
(327)

687
102
(586)
203

4,684
(754)
(7,909)(3,979)Minority interests .............................................................................
Total net assets ............................................................................
Total liabilities and net assets..................................................

940
128,613¥325,653

940
120,820¥339,263

11,4371,564,825$3,962,197

Current liabilities:
Short-term borrowings (Notes 8 and 16) ............................................
Current portion of long-term debt (Notes 8 and 16) ............................
Notes and accounts payable:
Unconsolidated subsidiaries and affiliates .......................................
Trade (Note 16) ..............................................................................
Other .............................................................................................
Advances received for products .........................................................
Accrued income taxes (Note 20) ........................................................
Other current liabilities .........................................................................
Total current liabilities..................................................................
Long-term liabilities:
Long-term debt (Notes 8 and 16) ........................................................
Accrued retirement benefits (Note 19)
For employees ................................................................................
For directors and corporate auditors ...............................................
Deferred tax liabilities (Note 20) ..........................................................
Other long-term liabilities .....................................................................
Total long-term liabilities .............................................................
Net assets:
Shareholders’ equity (Note 13)
Common stock:
Authorized — 1,000,000,000 shares
Issued — 371,463,036 shares ........................................................
Capital surplus ...................................................................................
Retained earnings ...............................................................................
Treasury stock, at cost (621,564 shares in 2012 and299,234 shares in 2011) ...................................................................
Total shareholders’ equity ..........................................................

25

THE JAPAN STEEL WORKS, LTD. AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Income
For the years ended March 31, 2012 and 2011

Thousands of
U.S. Dollars (Note 3)

Millions of Yen

2012

2011

2012

Net sales ................................................................................................
Cost of sales (Note 10) ...........................................................................
Gross profit ....................................................................................
Selling, general and administrative expenses (Note 10) .....................
Operating income ...........................................................................
Other income (expenses):
Interest and dividend income...............................................................
Interest expense ..................................................................................
Other, net (Note 11) ............................................................................

¥221,368
169,733
51,63427,72323,911¥212,929
155,433
57,49629,00028,495$2,693,369
2,065,130
628,227
337,304
290,923531(664)(3,476)(3,609)

484
(739)
(316)
(571)

6,461
(8,079)(42,292)(43,910)

Income before income taxes and minority interests ...........................
Income taxes (Note 20):
Current ................................................................................................
Deferred ..............................................................................................
Income before minority interests ..........................................................
Minority interests in net income (loss) of consolidated subsidiaries...
Net income (Note 26) .............................................................................

20,302

27,923247,0137,373
312
12,616(25)¥ 12,591

14,075(2,396)
16,244(287)¥ 16,532

89,707
3,796
153,498(304)$ 153,194

The accompanying notes are an integral part of these statements.

26

THE JAPAN STEEL WORKS, LTD. AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Comprehensive Income
For the years ended March 31, 2012 and 2011

Millions of Yen

Income before minority interests ..........................................................
Other comprehensive income:Unrealized holding gain (loss) on securities ..........................................
Unrealized gain (loss) from hedging instruments ..................................
Translation adjustments ......................................................................
Total other comprehensive income (Note 12) .......................................
Comprehensive income ........................................................................
Total comprehensive income attributable to:Shareholders of The Japan Steel Works, Ltd. .....................................
Minority interests .................................................................................

Thousands of
U.S. Dollars (Note 3)

2012

2011

2012

¥12,616¥16,244$153,498

(302)
(164)
(68)
(535)
¥12,081(2,261)315(161)(2,107)¥14,137(3,674)(1,995)(827)(6,509)$146,989¥12,060¥
21¥14,426¥ (288)$146,733$
256

The accompanying notes are an integral part of these statements.

27

THE JAPAN STEEL WORKS, LTD. AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2012 and 2011

Thousands of
U.S. Dollars(Note 3)

Millions of Yen

2012

2011

2012

Balance at beginning of year .....

¥ 19,694 ¥ 19,694$ 239,616

Balance at end of year ..............

¥ 19,694 ¥ 19,694$ 239,616

Capital surplus:
Balance at beginning of year .....

¥ 5,426 ¥ 5,425

Disposal of treasury stock .........

(0)

Balance at end of year ..............

¥ 5,426 ¥ 5,426$¥ 94,779 ¥ 82,701$1,153,169$

066,018(0)66,018Retained earnings:
Balance at beginning of year .....
Cash dividends paid ..................

(4,082)(4,454)(49,665)

Net income ...............................

12,591

16,532

153,194¥103,288 ¥ 94,779$1,256,698

Balance at end of year ..............
Treasury stock, at cost:
Balance at beginning of year .....

¥

Disposal of treasury stock .........
¥

Balance at end of year ..............

Net changes in items other thanthose in shareholders’ equity ...

0Balance at end of year ..............

(4,964)¥119,676 ¥107,607(4,082)$1,456,090(4,454)(49,665)

12,591

16,532

153,194

Purchases of treasury stock ......

(184)

(12)

(2,239)

Disposal of treasury stock .........

0

3

0

Balance at end of year ..............

¥128,000 ¥119,676$1,557,367

Net changes in items other thanthose in shareholders’ equity ...

687 ¥ 2,949
(302)

¥

385 ¥

$

(2,261)
687

$

1,241

(164)

315

(1,995)¥(62) ¥

102

$

(754)

¥

(586) ¥

(425) $

(7,130)

(64)

(160)

(779)

¥

(650) ¥

(586) $

(7,909)¥203 ¥ 2,310(531)(2,106)¥(327) ¥

$

2,470

203

$

(3,979)¥940 ¥ 1,231$

11,437

(0)

(290)

¥

940 ¥

940

$

11,437(6,461)

Minority interests:

Net changes in items other thanthose in shareholders’ equity ...
Balance at end of year ..............

(0)

Total net assets:
Balance at beginning of year .....

¥120,820 ¥111,149$1,470,009

Cash dividends paid ..................

(4,082)(4,454)(49,665)

Net income ...............................

12,591

16,532

153,194

Purchases of treasury stock ......

(184)

(12)

(2,239)8,359

Disposal of treasury stock .........

0

3

0

(3,674)

Net changes in items other thanthose in shareholders’ equity ...

(531)(2,397)(6,461)

4,684

Balance at end of year ..............

¥128,613 ¥120,820$1,564,825

Unrealized holding gain (loss) on
securities:¥(213) $

Total accumulated othercomprehensive income:(2,725)2

102 ¥Net changes in items other thanthose in shareholders’ equity ...

(2,239)Net income ...............................

Balance at end of year ..............

Balance at beginning of year .....

Balance at beginning of year .....

Cash dividends paid ..................

Balance at beginning of year .....

Balance at end of year ..............

(12)(224) $

2012

Translation adjustments:(213) $

0¥

Net changes in items other thanthose in shareholders’ equity ...

(224) ¥

Total shareholders’ equity:
Balance at beginning of year .....

Balance at beginning of year .....

(184)(408) ¥

2011

Unrealized gain (loss) fromhedging instruments:

Balance at beginning of year .....

Purchases of treasury stock ......
Balance at end of year ..............

Millions of Yen

2012

Common stock:Thousands of
U.S. Dollars(Note 3)

The accompanying notes are an integral part of these statements.

28

THE JAPAN STEEL WORKS, LTD. AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Cash Flows
For the years ended March 31, 2012 and 2011

Millions of Yen

Operating activities
Income before income taxes and minority interests .............................
Depreciation and amortization .............................................................
Interest and dividend income...............................................................
Interest expense ..................................................................................
Equity in (earnings) losses of affiliates ..................................................
Loss on write-downs of investment securities......................................
Loss on disposal of tangible and intangible assets...............................
(Gain) loss on sales of property, plant and equipment..........................
Loss on sales of investments in subsidiaries and affiliates ....................
Changes in operating assets and liabilities:
Trade assets (Note 16) ....................................................................
Trade liabilities ................................................................................
Inventories (Note 4) .........................................................................
Other ..............................................................................................
Subtotal ......................................................................................
Interest and dividends received ...........................................................
Interest paid ........................................................................................
Income taxes paid ..............................................................................
Net cash provided by operating activities ..............................
Investing activities
Increase in tangible and intangible assets ............................................
Decrease in tangible and intangible assets ..........................................
Purchases of investment securities ......................................................
Proceeds from sales of investment securities ......................................
Reimbursement of long-term deposits on contracts ............................
(Increase) decrease in short-term loans receivable...............................
Long-term loans receivable made .......................................................
Payments for sales of investments in subsidiaries resulting inchange in scope of consolidation ......................................................
Other...................................................................................................
Net cash used in investing activities ......................................
Financing activities (Notes 8 and 16)
Net decrease in short-term borrowings ...............................................
Increase in long-term debt ..................................................................
Decrease in long-term debt ................................................................
Cash dividend paid..............................................................................
Acquisition of treasury stock................................................................
Proceeds from sales of treasury stock .................................................
Repayments of finance lease obligations .............................................
Other...................................................................................................
Net cash provided by (used in) financing activities ................
Effect of exchange rate changes on cash and cash equivalents .......
(Decrease) increase in cash and cash equivalents ..............................
Cash and cash equivalents at beginning of the year...........................
Cash and cash equivalents at end of the year (Notes 14 and 16) ........

Thousands of
U.S. Dollars (Note 3)

2012

2011

2012

¥20,302
19,244
(531)
664
0
2,303
379
(53)
320

¥27,923
20,021
(484)
739
0
340
481
(15)
—

$247,013
234,140(6,461)8,079
028,020
4,611
(645)
3,893

(1,720)(3,332)
2,776
3,507
43,859526(667)(11,210)32,507(16,489)
11,255(12,614)
3,381
34,539487(725)(12,527)
21,774(20,927)(40,540)
33,77542,669553,629
6,400(8,115)(136,391)
395,510(17,233)
236
(682)
0
(739)
(205)
(30)

(27,626)
157
(41)
0
(487)
2
(56)

(209,673)
2,871(8,298)0(8,991)(2,494)
(365)

(117)
170
(18,601)—(187)(28,238)(1,424)2,068(226,317)

(235)
—
(635)
(4,082)(2)
0(1,869)(21)(6,846)(69)
6,990
41,116¥48,107(602)
10,420(1,087)(4,454)(12)
3(2,097)
(52)
2,116
(138)
(4,486)45,603¥41,116(2,859)—(7,726)(49,665)(24)
0(22,740)(256)(83,295)(840)
85,047500,256$585,315

The accompanying notes are an integral part of these statements.

29

THE JAPAN STEEL WORKS, LTD. AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements
1. Basis of Presentation
The Japan Steel Works, Ltd. (the “Company”) and its domestic subsidiaries maintain their books of account in conformity with the financial
accounting standards of Japan, and its foreign subsidiaries maintaintheir books of account in conformity with those of their respective
countries of domicile.
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles generally acceptedin Japan, which are different in certain respects as to the applicationand disclosure requirements of IFRS, and have been compiled from theconsolidated financial statements prepared by the Company as requiredby the Financial Instruments and Exchange Law of Japan.
As permitted by the Financial Instruments and Exchange Law ofJapan, amounts of less than one million yen have been omitted. As
a result, the totals shown in the accompanying consolidated financial
statements (both in yen and in U.S. dollars) do not necessarily agreewith the sums of the individual amounts.
Certain amounts in the prior year’s consolidated financial statements have been reclassified to conform to the current year’s
presentation.

the consolidated financial statements.
Revenue and expense items arising from transactions denominatedin foreign currencies are generally translated into yen at the rates of
exchange in effect at the respective transaction dates.
All monetary assets and liabilities denominated in foreign currencies
are translated into yen at the rates of exchange in effect at the balance
sheet date and differences arising from the translation are included in
the consolidated statements of income.

2. Summary of Significant Accounting Policies(a) Principles of consolidation and accounting for investments inunconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include theaccounts of the Company and any significant companies controlled
directly or indirectly by the Company.
Companies over which the Company exercises significant influencein terms of their operating and financial policies have been accounted
for by the equity method. All significant intercompany balances andtransactions have been eliminated in consolidation.
As of March 31, 2012, the numbers of consolidated subsidiaries,and subsidiaries and affiliates accounted for by the equity method were
34 and 1 (37 and 1 in 2011), respectively. Effective March 31, 2012,
Joyo Engineering Co., Ltd. was excluded from the scope of consolidation as a result of divestiture of shares. Nikko Machinery Co., Ltd. and
J·Tech Co., Ltd. were excluded from the scope of consolidation, after
Nikko Machinery Co., Ltd. was absorbed by JSW Machine Center
Co., Ltd. and J·Tech Co., Ltd. was absorbed by Nikko Techno Co.,
Ltd. Certain foreign subsidiaries are consolidated on the basis of fiscal
periods ended December 31, which differ from that of the Company.
However, the necessary adjustments have been made if the effect ofthe difference is material.
Investments in subsidiaries and affiliates which are neither
consolidated nor accounted for by the equity method are carried at costor less. Where there has been a permanent decline in the value of suchinvestments, the Company has written them down.
Differences between the cost and the underlying net equity at fairvalue of investments in consolidated subsidiaries and in companies
accounted for by the equity method have been amortized by thestraight-line method over five years after acquisition and are included inselling, general and administrative expenses.

(e) Short-term investments and investment securities
Securities other than equity securities issued by subsidiaries andaffiliates are classified into two categories: held-to-maturity or othersecurities.
Held-to-maturity securities are carried at amortized cost. Marketablesecurities classified as other securities are carried at fair value withchanges in unrealized holding gain or loss, net of the applicable income
taxes, included directly in net assets. Non-marketable securities classified as other securities are carried at cost. Cost of securities sold isdetermined by the moving average method.

(b) Foreign currency translation
The balance sheet accounts of the foreign consolidated subsidiaries
are translated into yen at the rates of exchange in effect at the balance
sheet date, except for the components of net assets excluding minority
interests which are translated at their historical exchange rates.
Revenue and expense accounts are translated at the average rates of
exchange in effect during the year. Differences arising from the translation are presented as translation adjustments and minority interests in

30(c) Cash equivalents
Short-term investments with a maturity of three months or less whenpurchased which can easily be converted to cash and are subject tolittle risk of change in value are considered to be cash equivalents.
(d) Inventories
Real estate held for sale, finished products and work in process arestated the lower of cost or net realizable value determined principallyby the specific identification method. Raw materials are stated at thelower of cost or replacement cost determined principally by the moving
average method.

(f) Allowance for doubtful accounts
The allowance for doubtful accounts is provided for possible bad debts
at an amount estimated based on the historical experience with bad
debts on normal receivables plus an additional allowance for specificuncollectible amounts determined by reference to the collectability of
individual doubtful accounts.
(g) Provision for warranties for completed construction
The Company provides a provision for warranties for completed
construction by estimating losses on future possible claims.
(h) Provision for loss on construction contracts
The Company provides a provision for loss on construction contracts,
which has not been delivered by the fiscal year end, by estimating theamount of total losses anticipated in the following fiscal year and thereafter to be incurred, when the amounts can be reasonably estimated.
(i) Property, plant and equipment and depreciation
Property, plant and equipment is stated on the basis of cost.
Depreciation of property, plant and equipment is determined by the
declining-balance method over the estimated useful lives of the respective assets, except that the straight-line method is applied to buildings.
Significant renewals and additions are capitalized at cost.
Maintenance and repairs are charged to income as incurred.
(j) Leases and depreciation
Finance lease transactions which do not stipulate the transfer of ownership of the leased assets to the lessee are accounted for as sales andpurchase transactions.

With regard to the depreciation method of leased assets, thestraight-line method is applied using the lease period as the estimateduseful life and a residual value of zero.
(k) Retirement benefits
An employee whose employment is terminated is entitled, in mostcases, to a lump-sum severance payment determined by reference tothe current basic rate of pay, length of service and the conditions underwhich the termination occurs.
Accrued retirement benefits for employees have been provided
primarily at an amount calculated based on the retirement benefit
obligation and the fair value of the pension plan assets at the balance
sheet date, as adjusted for prior service cost and unrecognized actuarial
gain or loss. The retirement benefit obligation is attributed to eachperiod by the straight-line method over the estimated years of service ofthe eligible employees.
Prior service cost is being amortized as incurred by the straight-line
method over ten years, which is shorter than the average remaining
years of service of the eligible employees.
Actuarial gain or loss is amortized in the year following the year inwhich the gain or loss is recognized by the straight-line method over ten
years, which is shorter than the average remaining years of service ofthe employees participating in the plans.
(l) Income taxes
Deferred tax assets and liabilities have been recognized in the
consolidated balance sheets with respect to the differences between
financial reporting and the tax bases of the assets and liabilities, and aremeasured using the enacted tax rates and laws which will be in effectwhen the differences are expected to reverse.
(m) Research and development expenses
Research and development expenses are charged to income whenincurred.
(n) Revenue and cost recognition
Revenues are generally recognized on sales of products at the time of
shipment.
Revenues and costs, of which the percentage of completion canbe reliably estimated, are recognized by the percentage-of-completion
method. The percentage of completion is calculated at the cost incurred
as a percentage of the estimated total cost. The completed-contract
method is applied to contracts for which the percentage of completioncannot be reliably estimated.
(o) Derivative financial instruments
Derivative financial instruments are carried at fair value. Gain or loss
on derivatives designated as hedging instruments is deferred as acomponent of net assets until the loss or gain on the underlying hedged
items is recognized. Foreign currency receivables and payables aretranslated at the applicable forward foreign exchange rates when certain
conditions are met. In addition, the related interest differential paid or
received under interest-rate swaps utilized as hedging instruments is
recognized over the terms of the swap agreements as an adjustment
to the interest expense of the underlying hedged items when certain
conditions are met.
(p) Consumption tax
Accounting treatment of consumption tax is the tax exclusion method.

(q) Provision for directors’ bonuses
Provision for directors’ bonuses is provided based on estimatedamounts to be paid in the subsequent period that are applicable to thecurrent period.
(r) Provision for directors’ retirement benefits
Provision for directors’ retirement benefits is provided based on
estimated amounts determined by internal rules.
(s) Additional Information
Effective April 1, 2011, the Company adopted the Accounting Standard
for Accounting Changes and Error Corrections (Accounting Standards
Board of Japan (ASBJ), Statement No. 24 issued on December 4,2009) and the Guidance on Accounting Standard for Accounting
Changes and Error Corrections (ASBJ Guidance No. 24 issued on
December 4, 2009).
3. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollars is included solely forconvenience, as a matter of arithmetic computation only, at ¥82.19 =U.S.$1.00, the approximate rate of exchange prevailing on March 30,
2012. This translation should not be construed as a representation that
all amounts shown could be converted into U.S. dollars at such rate.
4. Inventories
Inventories at March 31, 2012 and 2011 consisted of the following:
Millions of Yen
2012
2011

Real estate held for sale ...........
Finished products ....................
Work in process ......................
Raw materials and supplies .....
Total...................................

¥

18
1,431
72,706
5,192¥79,348

¥

21
1,161
75,0086,050¥82,241

Thousands of
U.S. Dollars
2012

$

219
17,411
884,609
63,171$965,422

Work in process related to construction contracts of which a loss
is anticipated to be incurred was offset with a provision for loss on
construction contracts of ¥2,391 million ($29,091 thousand) at March
31, 2012 and ¥1,257 million at March 31, 2011.
5. Depreciation
Depreciation expense on property, plant and equipment for the years
ended March 31, 2012 and 2011 were as follows:
Millions of Yen
2012
2011

Depreciation expense ..............

¥19,252¥20,003

Thousands of
U.S. Dollars
2012$234,238

6. Advanced Depreciation
Accumulated advanced depreciation related to government grants
received has been deducted directly from the acquisition costs ofcertain tangible fixed assets (plant, machinery and equipment). Suchaccumulated depreciation at March 31, 2012 and 2011 are summarized
as follows:
Millions of Yen
2012
2011

Accumulated advanced
depreciation expense .............

¥1,287¥1,301Thousands of
U.S. Dollars
2012$15,65931

7. Contingent Liabilities
Contingent liabilities at March 31, 2012 and 2011 consisted of thefollowing:Thousands of
U.S. Dollars
2012

Millions of Yen
2012
2011

As endorsers of trade notes receivable:
Discounted to banks .............
Endorsed to other .................
As guarantors of loans:
Muroran Environmental Plant
Service Co., Ltd. ................
Gotsu Wind Power Co., Ltd. ...
Uncollected receivables inleasing companies...............
Employees and other.............

¥

23
85

586
1,633

¥

—
78

$

588
1,757

16
355

280
1,034

7,130
19,869

32
498

195
4,319

8. Short-Term Borrowings and Long-Term Debt
All short-term borrowings, with interest at annual rates ranging from
0.636% to 1.975% at March 31, 2012 and 0.64% to 1.975% at March
31, 2011, were unsecured.
Long-term debt at March 31, 2012 and 2011 were as follows:
Thousands of
U.S. Dollars
2012

Millions of Yen
2012
2011

Loans from banks andinsurance companies withinterest at annual rates ranging
from 0.23% to 2.26% .............
Less those maturing within
one year ..............................
Lease obligations......................
Less those maturing within
one year ..............................
0.48% straight bonds,
due 2015 ................................
Long-term indebtedness
reflected in the consolidatedbalance sheets .......................

¥37,535¥38,170$456,686(13,670)
3,187

(635)
4,396

(166,322)
38,776(1,520)(1,800)(18,494)

10,00010,000121,669¥35,532¥50,130$432,315

The aggregate annual maturities of long-term debt and lease obligations
subsequent to March 31, 2012 are summarized as follows:Year ending March 31,

2013....................................
2014....................................
2015....................................
2016....................................
2017....................................
2018 and thereafter .............

32

Bonds

Long-term debt

Millions of Thousands of
Yen
U.S. Dollars

Millions of Thousands of
Yen
U.S. Dollars¥— $— ¥13,670 $166,322——
10,370 126,171
—
—
2,550
31,026
10,000 121,669
10,830 131,768
—
—
115
1,399
—
—
—
—

Lease obligations
Year ending March 31,

Millions of Thousands of
Yen
U.S. Dollars

2013....................................
2014....................................
2015....................................
2016....................................
2017....................................
2018 and thereafter .............

¥1,520 $18,494
783
9,527
474
5,767
251
3,054
109
1,326
48
584

The assets pledged as collateral for long-term debt at March 31, 2012
and 2011 were as follows:
Millions of Yen
2012
2011

Investments and other assets(Other assets) .........................

¥16

¥

28

Thousands of
U.S. Dollars
2012

$195

9. Liquidation of Accounts Receivable
Accounts receivable transferred to others for liquidation at March 31,
2012 and 2011 are summarized as follows:
Millions of Yen
2012
2011

Accounts receivable .................

¥7,750¥6,017

Thousands of
U.S. Dollars
2012$94,294

10. Research and Development Expenses
Research and development expenses included in manufacturing costs,
and selling, general and administrative expenses for the years ended
March 31, 2012 and 2011 were as follows:
Millions of Yen
2012
2011

Research and development
expenses ................................

¥4,626¥4,487

Thousands of
U.S. Dollars
2012$56,284

11. Other Income (Expenses) — Other, Net
The details of “Other, net” in “Other income (expenses)” for the years
ended March 31, 2012 and 2011 were as follows:
Millions of Yen
2012
2011

Reversal of provision forwarranties for completed
construction ...........................
Gain on adjustment of
insurance................................
Amortization of negative
goodwill ..................................
Provision for warranties forcompleted construction ..........
Equity in losses of affiliates........
Gain on sales of property,
plant and equipment...............
Loss on sales or disposal ofproperty, plant andequipment ..............................
Loss on write-downs ofinvestment securities ..............
Loss on sales of investments in
subsidiaries and affiliates ........
Loss on liquidation ofsubsidiaries and affiliates ........
Loss on valuation ofmembership ...........................
Loss on sales of membership ...
Other, net .................................
Total...................................

¥

Thousands of
U.S. Dollars
2012

485

¥ —

$ 5,901

262

222

3,188

71

71

864

(1,096)0(620)
0(13,335)
0

85

16

1,034

(411)

(482)

(5,001)(2,303)(340)(28,020)(320)—(3,893)(92)—(1,119)

(12)
(3)
(141)
¥(3,476)

(4)
(0)
820
¥(316)(146)(37)(1,716)$(42,292)

12. Other Comprehensive Income
The following table presents reclassification adjustments and tax effects
allocated to each component of other comprehensive income for theyear ended March 31, 2012:
Year ended March 31, 2012

Unrealized holding gain (loss) on securities:
Amount arising during the year ...............
Reclassification adjustments for gains
and losses realized in net income .........
The amount of unrealized holding gain
(loss) on securities before tax effect ...
Tax effect ............................................
Unrealized holding gain (loss) on
securities...........................................
Unrealized gain (loss) from hedging
instruments:
Amount arising during the year ...............
Tax effect ............................................
Unrealized gain (loss) from hedging
instruments .......................................
Translation adjustments:
Amount arising during the year ...............
Translation adjustments ......................
Total other comprehensive income...

Millions ofYen

Thousands of
U.S. Dollars¥(2,571)$(31,281)

2,013

24,492(558)
256(6,789)
3,115

(302)

(3,674)(272)
107(3,309)
1,302

(164)

(1,995)(68)(68)¥ (535)

(827)
(827)
$ (6,509)

13. Supplementary Information for Consolidated Statements of
Changes in Net Assets
Year ended March 31, 2012(a) Information regarding the number and type of shares issued andtreasury stock:
Number of shares

Shares issued:
Common stock ......
Treasury stock:
Common stock(Notes 1 and 2).....

Year ended
March 31,2011

Increaseduringthe year

Decreaseduringthe yearYear ended
March 31,2012

371,463,036——

371,463,036

299,234

322,733

403

621,564

Notes 1: The increase in treasury stock — common stock of 4,960 was
due to the acquisition of fractional shares of less than one unit
and common stock of 317,773 was due to the repurchase ofshares held by lost shareholders.
2: The decrease in treasury stock — common stock of 403 wasdue to sales of fractional shares of less than one unit.
(b) Dividends(i) Dividends paid to shareholders① Resolution:
Annual general meeting ofshareholders held on June 24, 2011
Type of shares:
Common stock
Total amount ofdividends:¥2,226 million ($27,084 thousand)
Dividends per share:¥6 ($0.073)
Cut-off date:
March 31, 2011
Effective date:June 27, 2011
② Resolution:
Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:Meeting of Board of Directors held on
November 7, 2011
Common stock¥1,855 million ($22,570 thousand)¥5 ($0.061)
September 30, 2011
December 5, 2011(ii) Dividends of which the cut-off date was in the year ended March
31, 2012, but the effective date is in the following fiscal year
Resolution:
Annual general meeting ofshareholders held on June 26, 2012
Type of shares:
Common stock
Total amount ofdividends:¥1,854 million ($22,557 thousand)
Dividends per share:¥5 ($0.061)
Cut-off date:
March 31, 2012
Effective date:June 27, 2012
Source of dividends:
Retained earnings

33

Year ended March 31, 2011(a) Information regarding the number and type of shares issued andtreasury stock:
Number of sharesYear ended
March 31,2010

Shares issued:
Common stock ......
Treasury stock:
Common stock(Notes 1 and 2).....

371,463,036

287,708

Increaseduringthe year

Decreaseduringthe year—

15,277—

3,751

Year ended
March 31,2011

299,234(b) Dividends(i) Dividends paid to shareholders① Resolution:
Annual general meeting ofshareholders held on June 25, 2010
Type of shares:
Common stock
Total amount ofdividends:¥2,227 million
Dividends per share:¥6
Cut-off date:
March 31, 2010
Effective date:June 28, 2010

Type of shares:
Total amount ofdividends:
Dividends per share:
Cut-off date:
Effective date:Meeting of Board of Directors held on
November 8, 2010
Common stock¥2,227 million¥6
September 30, 2010
December 6, 2010(ii) Dividends of which the cut-off date was in the year ended March
31, 2011, but the effective date is in the following fiscal year
Resolution:
Annual general meeting ofshareholders held on June 24, 2011
Type of shares:
Common stock
Total amount ofdividends:¥2,226 million
Dividends per share:¥6
Cut-off date:
March 31, 2011
Effective date:June 27, 2011
Source of dividends:
Retained earnings

34

Millions of Yen
2012
2011

371,463,036

Notes 1: The increase in treasury stock — common stock of 15,277
was due to the acquisition of fractional shares of less than oneunit.
2: The decrease in treasury stock — common stock of 3,751
was due to sales of fractional shares of less than one unit.

② Resolution:

14. Cash Flow Information(a) Cash and cash equivalents
The reconciliation between cash and cash equivalents in the accompanying consolidated statements of cash flows and cash on hand and inbanks in the accompanying consolidated balance sheets at March 31,
2012 and 2011 are summarized as follows:

Cash on hand and in banks
in the consolidatedbalance sheet .........................
Investments with maturities ofthree months or less from thedate of acquisition ..................
Time deposits with maturities ofmore than three months .........
Cash and cash equivalents inthe consolidated statement ofcash flows ..............................

Thousands of
U.S. Dollars
2012¥48,148¥41,187$585,813

31

44

377

(72)

(116)

(876)

¥48,107¥41,116$585,315(b) Significant transactions without cash flows
Assets and liabilities corresponding to finance lease transactions thathave been recorded by the Company and its domestic consolidated
subsidiaries at March 31, 2012 and 2011 were as follows:
Millions of Yen
2012
2011

Thousands of
U.S. Dollars
2012

Lease assets ............................

¥646

¥590

$7,860

Lease obligations......................

675

621

8,213

(c) Summary of the reduction in assets and liabilities resulting from thedivestiture of shares in Joyo Engineering Co., Ltd. for the year ended
March 31, 2012, loss on sale of shares and net disbursement

Current assets ...........................................
Noncurrent assets .....................................
Current liabilities ........................................
Noncurrent liabilities...................................
Loss on sale of shares ...............................
Sale value of Joyo Engineering Co., Ltd. ...
Cash and cash equivalents(Joyo Engineering Co., Ltd.).....................
Net payments for divestiture of
Joyo Engineering Co., Ltd. ......................

Millions ofYen

Thousands of
U.S. Dollars

¥368
307
(265)
(124)
(285)
1

$4,477
3,735(3,224)(1,509)(3,468)12(118)(1,436)¥117$1,424

15. Leases
Year ended March 31, 2012
Future minimum lease payments subsequent to March 31, 2012 under
non-cancelable operating leases are summarized as follows:Year ending March 31,

2013.........................................
2014 and thereafter ..................
Total...................................

Millions of Yen

Thousands of
U.S. Dollars¥ 2,819
7,373¥10,193$ 34,299
89,707$124,018

Year ended March 31, 2011
Future minimum lease payments subsequent to March 31, 2011 under
non-cancelable operating leases are summarized as follows:Year ending March 31,

2012.........................................
2013 and thereafter ..................
Total...................................

Millions of Yen¥2,403
7,145¥9,548

16. Financial Instruments
Overview(a) Policy for financial instruments
In consideration of plans for capital investment, the Company andits consolidated subsidiaries (collectively, the “Group”) invest funds
provided by operating cash flows. The Group uses bond issuancesand bank borrowings in order to raise additional funds, if needed. The
Company manages temporary cash surpluses through low-risk financial
assets. The Company uses derivatives for the purpose of reducing risks
and does not enter into derivatives for speculative or trading purposes.
(b) Types of financial instruments and related risk
Trade receivables — trade notes and accounts receivable — areexposed to credit risk in relation to customers. In addition, the Company
is exposed to foreign currency exchange risk arising from receivables
denominated in foreign currencies. The foreign currency exchange risks
deriving from the trade receivables denominated in foreign currencies
are hedged by forward foreign exchange contracts, if needed.
Investment securities are exposed to market risk. Those securities
are composed of mainly the shares of common stock of companies
with which the Company has business relationships.
Trade payables — trade notes and accounts payable — have payment due dates within one year. Since the Company is exposed to foreign currency exchange risk arising from those payables denominatedin foreign currencies, forward foreign exchange contracts are arranged
to reduce the risk, if needed.
Loans payable and bonds are used to raise funds mainly in connection with capital investments. The repayment dates of the long-term
debts extend up to five years from the balance sheet date. Long-term
debt with variable interest rates is exposed to interest rate fluctuation
risk. However, to reduce such risk and fix the interest payments forlong-term debt with variable rates, the Company utilizes interest rate
swap transactions as a hedging instrument.
Regarding derivatives, the Company enters into forward foreignexchange contracts to reduce the foreign currency exchange risk arisingfrom the receivables and payables denominated in foreign currencies.
The Company also enters into interest rate swap transactions to reduce
the fluctuation risk of interest payments for long-term debt with variable
rates.
Information regarding the method of hedge accounting, hedging
instruments and hedged items, hedging policy, and the assessment of
the effectiveness of hedging activities is found in Note 2 (o).

(c) Risk management for financial instruments(i) Monitoring of credit risk (the risk that customers or counterparties
may default)
In accordance with the internal policies of the Company for
managing credit risk arising from receivables, each related divisionmonitors credit worthiness of their main customers periodically,
and monitors due dates and outstanding balances by individual
customer. In addition, the Company is making efforts to identify
and mitigate risks of bad debts from customers who are having
financial difficulties. The consolidated subsidiaries also manage
credit risk using the Company’s internal policies and methods.
The Company also believes that the credit risk of derivatives
is insignificant as it enters into derivative transactions only withfinancial institutions which have a high credit-rating.
(ii) Monitoring of market risk (the risk arising from fluctuations inforeign exchange rates, interest rates and others)
For trade receivables and payables denominated in foreign
currencies, the Company identifies the foreign currency exchange
risk for each currency on a monthly basis and enters into forward
foreign exchange contracts to hedge such risk. In order tomitigate the interest rate risk for loans payable bearing interest at
variable rates, the Company may also enter into interest rate swap
transactions.
For investment securities, the Company periodically reviews
the fair values of such financial instruments and the financial
position of the issuers. In addition, the Company continuously
evaluates whether securities other than those classified as
held-to-maturity should be maintained taking into account their fairvalues and relationships with the issuers.
In conducting derivative transactions, the division in chargeof each derivative transaction follows the internal policies, which
set forth delegation of authority. Monthly reports including actual
transaction data are submitted to top management for theirreview. The consolidated subsidiaries also conduct derivativetransactions using the Company’s internal policies.
(iii) Monitoring of liquidity risk (the risk that the Company may not beable to meet its obligations on scheduled due dates)
Based on the report from each division, the Company preparesand updates its cash flow plans on a timely basis to manage
liquidity risk. The consolidated subsidiaries manage the liquidity
risk using cash flow plans and report to the Company periodically.
(d) Supplementary explanation of the estimated fair value of financial
instruments
The fair value of financial instruments is based on their quoted market
price, if available. When there is no available quoted market price, fairvalue is reasonably estimated. Since various assumptions and factors
are reflected in estimating the fair value, different assumptions and factors could result in different fair value. In addition, the notional amountsof derivatives in Note 18 Derivative Transactions are not necessarily
indicative of the actual market risk involved in derivative transactions.

35

Estimated Fair Value of Financial Instruments
Carrying value of financial instruments on the consolidated balance
sheet as of March 31, 2012 and estimated fair value are shown in thefollowing table. The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Pleaserefer to Note (ii) below).
Year ended March 31, 2012
Millions of Yen

AssetsCash on hand and in banks .....
Trade notes and accounts
receivable ..............................
Securities:
Other securities withmaturities ...........................
Other securities ....................
Total assets ................................
Liabilities
Trade notes and accounts
payable .................................
Short-term borrowings ............
Current portion of long-term
debt ......................................
Bonds .....................................
Long-term debt .......................
Total liabilities .............................
Derivatives (*) ..............................

Carrying
amountEstimated
fair value

Difference¥ 48,148¥ 48,148¥ —46,52046,515(5)

31
24,087¥118,788

31
24,087¥118,783

—
—
¥ (5)

¥ 41,672
12,885¥ 41,672
12,885¥ ——13,67013,67910,00010,02723,86524,068¥102,092 ¥102,332¥(100) ¥
(100)

9
27
203
¥240
—

Thousands of U.S. Dollars
Carrying
amountAssetsCash on hand and in banks .....
Trade notes and accounts
receivable ..............................
Securities:
Other securities withmaturities ...........................
Other securities ....................
Total assets ................................
Liabilities
Trade notes and accounts
payable .................................
Short-term borrowings ............
Current portion of long-term
debt ......................................
Bonds .....................................
Long-term debt .......................
Total liabilities .............................
Derivatives (*) ..............................

Estimated
fair value$ 585,813 $ 585,813
566,006

Difference$—

565,945

(61)

377
377
293,065
293,065$1,445,285 $1,445,224

—
—
(61)

$

$ 507,020 $ 507,020
156,771
156,771$——

166,322
166,431
121,669
121,998
290,364
292,834$1,242,146 $1,245,066$(1,217) $(1,217)

110
329
2,470
$2,920—(*) The value of assets and liabilities arising from derivatives is shown at
net value, with the amount in parentheses representing net liability
position.

36

Year ended March 31, 2011
Millions of Yen

AssetsCash on hand and in banks .....
Trade notes and accounts
receivable ..............................
Securities:
Other securities withmaturities ...........................
Other securities ....................
Total assets ................................
Liabilities
Trade notes and accounts
payable .................................
Short-term borrowings ............
Current portion of long-term
debt ......................................
Bonds .....................................
Long-term debt .......................
Total liabilities .............................
Derivatives (*) ..............................

Carrying
amountEstimated
fair value

Difference¥ 41,187¥ 41,187¥ —45,19745,189(8)

4425,977¥112,407

44
25,977¥112,399

—
—
¥ (8)

¥ 45,013
13,120¥ 45,013
13,120

¥ —
—

635
636
10,0009,865
37,53537,515¥106,303 ¥106,151¥(171) ¥
(171)

1
(134)
(19)
¥(151)—(*) The value of assets and liabilities arising from derivatives is shown at
net value, with the amount in parentheses representing net liability
position.
(i) Method to determine the estimated fair value of financial instruments
and other matters related to securities and derivative transactions
AssetsCash on hand and in banks
The carrying amount is used for bank deposits without maturities,
because the fair value approximates the carrying value. The fair valueof time deposits in banks with maturities is calculated based on thepresent value of the total principal and interest discounted at a rate
supposing a newly made deposit.
Trade notes and accounts receivables
These fair values are calculated by categories of the remaining
periods of the receivables based on the present value using discountrates determined by the period to maturity and credit risk.
Securities
The carrying amount is used for other securities with maturities,
because the fair value approximates the carrying amount.
Quoted market price is used for other securities.
Liabilities
Trade notes and accounts payable and short-term borrowings
The carrying amount is used for these items because the fair value
approximates the carrying amount.
Current portion of long-term debt, bonds and long-term debt
These fair values are calculated by applying a discount rate, basedon the assumed interest rate if a similar new debt is issued, to thetotal of the principal and interest. The current portion of long-term
debt and long-term debt with variable interest rates are subject to thespecial treatment of interest rate swaps and is calculated by applying
a discount rate, based on the assumed interest rate if a similar new
debt is issued, to the total of the principal and interest including thatof the interest rate swap.
Derivative Transactions
Please refer to Note 18, Derivative Transactions, of these notes to theconsolidated financial statements.

(ii) Financial instruments for which it is extremely difficult to determine
the fair value
Thousands of
U.S. Dollars
2012

Millions of Yen
2012
2011

Unlisted stocks .........................

¥1,967¥2,257$23,932

Because the fair values of these financial instruments are extremely
difficult to determine, given that they do not have quoted market prices
and future cash flows cannot be estimated, they are not included in“Securities” in the preceding table.
(iii) Redemption schedule for receivables and securities with maturities at
March 31, 2012 and 2011.
Year ended March 31, 2012
Millions of Yen
Due after
one year
Due in one through five
years
year or less

Cash on hand and in banks ........
Trade notes and accounts
receivable .................................
Securities:
Other securities withmaturities ..............................
Total ...........................................

¥ ——45,709811—

31¥93,889

—
¥811

—
—

Thousands of U.S. Dollars
Due after
one year
Due in one through five
years
year or less$Due after
five years

—

—

9,867

—

—
$9,867——

Year ended March 31, 2011
Millions of Yen
Due after
one year
Due in one through five
years
year or less

Cash on hand and in banks ........
Trade notes and accounts
receivable .................................
Securities:
Other securities withmaturities ..............................
Total ...........................................

Millions of Yen

Due in 1 year or less ...................
Due after 1 year through2 years .....................................
Due after 2 years through3 years .....................................
Due after 3 years through4 years .....................................
Due after 4 years through5 years .....................................
Due after 5 years ........................

Bonds

Long-term
loans

Lease
obligations¥—¥13,670¥1,520—10,370

783

—

2,550

474

10,00010,830

251

—
—

115
—

109
48

Thousands of U.S. Dollars

Due after
five years¥48,148

Cash on hand and in banks ........ $ 585,813
Trade notes and accounts
receivable .................................
556,138
Securities:
Other securities withmaturities ..............................
377
Total ........................................... $1,142,341(iv) The redemption schedule for long-term debt
Year ended March 31, 2012

Due after
five years¥41,187¥ ——44,358839—

44¥85,590

—
¥839

—
—

Long-term
loans

Lease
obligations—$166,322$18,494—

126,171

9,527—

31,026

5,767

121,669

131,768

3,054

—
—

1,399
—

1,326
584

Bonds

Due in 1 year or less ...................
Due after 1 year through2 years .....................................
Due after 2 years through3 years .....................................
Due after 3 years through4 years .....................................
Due after 4 years through5 years .....................................
Due after 5 years ........................

$

Year ended March 31, 2011
Millions of Yen

Due in 1 year or less ...................
Due after 1 year through2 years .....................................
Due after 2 years through3 years .....................................
Due after 3 years through4 years .....................................
Due after 4 years through5 years .....................................
Due after 5 years ........................

Bonds

Long-term
loans

Lease
obligations

¥

—

¥

635

¥1,800—13,6701,384—

10,370

645

—

2,550

345

10,000—10,830
115

145
74

37

17. Securities(a) Held-to-maturity securities:(b) Other securities:
March 31, 2012

March 31, 2012

Millions of Yen
Millions of Yen

Fair value not exceeding thecarrying amount:
Other .......................................
Total ..............................

Fair value

Carrying
amountUnrealized
gain (loss)

¥31
¥31

¥31
¥31

—
—

Thousands of U.S. Dollars
Fair value

Fair value not exceeding thecarrying amount:
Other .......................................
Total ..............................

$377
$377

Carrying
amount$377$377

Unrealized
gain (loss)——

March 31, 2011
Millions of Yen
Fair value

Fair value not exceeding thecarrying amount:
Other .......................................
Total ..............................

Carrying
amountCarrying amount exceeding theacquisition cost:
Stocks.....................................
Carrying amount not exceeding
the acquisition cost:
Stocks.....................................
Total ..............................

Unrealized
gain (loss)

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥ 8,475¥11,746¥3,271

14,393¥22,869

11,720¥23,466(2,673)¥ 597

Thousands of U.S. Dollars

Carrying amount exceeding theacquisition cost:
Stocks.....................................
Carrying amount not exceeding
the acquisition cost:
Stocks.....................................
Total ..............................

Acquisition
cost

Carrying
amountUnrealized
gain (loss)$103,115$142,913$39,798

175,119$278,246

142,596$285,509(32,522)$ 7,264

March 31, 2011
¥44
¥44

¥44
¥44

Millions of Yen——
Carrying amount exceeding theacquisition cost:
Stocks.....................................
Carrying amount not exceeding
the acquisition cost:
Stocks.....................................
Total ..............................

Acquisition
cost

Carrying
amountUnrealized
gain (loss)¥10,043¥14,629¥4,58614,156¥24,199

10,726¥25,356(3,430)¥1,156

When their fair values have declined by 50% or more, impairment losses
are recorded on those securities. When their fair values have declined
by 30% up to 50%, impairment losses are recorded on those securities
on an individual basis to the values considered to be recoverable.

38

18. Derivative Transactions(a) Derivatives not subject to hedge accounting
Year ended March 31, 2012
None applicableYear ended March 31, 2011
None applicable(b) Derivatives subject to hedge accounting
The contract amounts or the amount corresponding to principal as specified by the contract as of the date of the closing of the consolidated
accounts is shown below by type of hedge accounting method.
(i) Currency-related transactions
Year ended March 31, 2012
Hedge accounting method

Allocation method

Type of derivative

Foreign exchange forward contracts Notes and accounts receivable
Sell:
U.S. dollars.......................................................................................
Euros................................................................................................
Foreign exchange forward contracts Notes and accounts payable
Buy:
U.S. dollars.......................................................................................
Euros................................................................................................
Sterling pound ..................................................................................

Hedge accounting method

Allocation method

Principal items hedged

Type of derivative

Principal items hedged

Foreign exchange forward contracts Notes and accounts receivable
Sell:
U.S. dollars.......................................................................................
Euros................................................................................................
Foreign exchange forward contracts Notes and accounts payable
Buy:
U.S. dollars.......................................................................................
Euros................................................................................................
Sterling pound ..................................................................................

Millions of Yen
Contract amount

Fair valueOver one year
¥7,957
275

¥290
66

¥(200)(8)¥2,697
954
116

¥ 84
—
—

¥ 69
31
8

Thousands of U.S. Dollars
Contract amount
Fair valueOver one year
$96,8123,346$3,528803$(2,433)(97)$32,814
11,6071,411$1,022
—
—

$

840
377
97

Note: Calculation of fair value is based on the forward exchange rates.
Year ended March 31, 2011
Hedge accounting method

Allocation method

Type of derivative

Principal items hedged

Foreign exchange forward contracts Notes and accounts receivable
Sell:
U.S. dollars.......................................................................................
Euros................................................................................................
Foreign exchange forward contracts Notes and accounts payable
Buy:
U.S. dollars.......................................................................................
Euros................................................................................................
Sterling pound ..................................................................................

Millions of Yen
Contract amount

Fair valueOver one year
¥ 3,641
341

¥197
29

¥151
(14)

¥10,163
1,045
283

¥ 49
—
—

¥ (2)
29
7

Note: Calculation of fair value is based on the forward exchange rates.

39

(ii) Interest-related transactions
Year ended March 31, 2012
Hedge accounting method

Special treatment forinterest rate swaps

Type of derivative

Receive/floating and pay/fixed

Hedge accounting method

Fair valueOver one year
Current portion of long-termborrowings
Long-term borrowings ...............

Special treatment forinterest rate swaps

Millions of Yen
Contract amountPrincipal items hedged

Type of derivative¥23,000¥10,000(*)

Thousands of U.S. Dollars
Contract amount
Fair value

Principal items hedged

Receive/floating and pay/fixedOver one year
Current portion of long-termborrowings
Long-term borrowings ...............

$279,839$121,669(*)(*) Since interest rate swap contracts accounted for by the special treatment for interest rate swaps are treated together with the long-term borrowings subject to hedging, the estimated fair value of such interest rate swap contracts is included in the estimated fair value of the corresponding long-term borrowings.
Note: Calculation of fair value is based on the stated price by financial institutions.
Year ended March 31, 2011
Hedge accounting method

Special treatment forinterest rate swaps

Type of derivative

Millions of Yen
Contract amountPrincipal items hedged

Receive/floating and pay/fixed

Fair valueOver one year
Current portion of long-termborrowings
Long-term borrowings ...............

¥23,180¥23,000(*)(*) Since interest rate swap contracts accounted for by the special treatment for interest rate swaps are treated together with the long-term borrowings subject to hedging, the estimated fair value of such interest rate swap contracts is included in the estimated fair value of the corresponding long-term borrowings.
Note: Calculation of fair value is based on the stated price by financial institutions.

19. Employees’ Retirement Benefit Plans
The following table sets forth the funded and accrued status of theplans, and the amounts recognized in the accompanying consolidatedbalance sheets at March 31, 2012 and 2011 for the Company’s and theconsolidated subsidiaries’ defined benefit pension plans:

Retirement benefit obligation ....
Plan assets at fair value ............
Unfunded retirement benefit
obligation................................
Unrecognized actuarial loss ......
Unrecognized prior service
cost ........................................
Net retirement benefit
obligation................................
Accrued retirement benefits ......
Prepaid pension cost ................

40

Millions of Yen
2012
2011

Thousands of
U.S. Dollars
2012¥(26,300) ¥(28,507)
14,381
14,902$(319,990)
174,973(11,918)
4,351(13,604)
5,980(145,005)
52,938

414

554

5,037

(7,152)(7,069)(9,695)(9,339)¥ 2,543 ¥ 2,270(87,018)(117,958)$ 30,941

The components of retirement benefit expenses for the years ended
March 31, 2012 and 2011 are outlined as follows:
Millions of Yen
2012
2011

Service cost..............................
Interest cost .............................
Expected return onplan assets .............................
Amortization of actuarial loss ....
Amortization ofprior service cost ....................
Retirement benefit expenses.....

Thousands of
U.S. Dollars
2012¥1,847312¥1,759324$22,472
3,796

(206)
1,152

(213)
1,425

(2,506)
14,016140¥3,246140¥3,436

1,703$39,494

The assumptions used in accounting for the above plans were as
follows:
Discount rate ..........................................
Expected rate of return on plan assets....

2012

2011

1.50%
1.50%

1.50%
1.50%

20. Income Taxes
The significant components of the Company’s deferred tax assets andliabilities at March 31, 2012 and 2011 were as follows:
Millions of Yen
2012
2011

Deferred tax assets:
Accrued enterprise taxes .......
Accrued bonuses ..................
Unrealized gain on
intercompany transactions ...
Accrued retirement benefits
for employees......................
Accrued retirement benefits
for directors and corporate
auditors ...............................
Loss on revaluation of
inventory items ....................
Loss on revaluation offinancial instruments ............
Impairment loss .....................
Depreciation ..........................
Amortization of deferredassets .................................
Provision for warranties forcompleted construction .......
Provision for loss on
construction contracts.........
Less allowance for doubtful
accounts ..............................
Asset retirement obligations...
The percentage-ofcompletion method .............
Tax loss carry forwards .........
Deferred loss on hedges........
Unrealized loss on
investment securities ...........
Other .....................................
Gross deferred tax assets .........
Valuation allowance ...............
Total deferred tax assets ..........
Deferred tax liabilities:
Reserve for advanced
depreciation ........................
Reserve for special
depreciation ........................
Prepaid pension cost.............
Disposal cost with asset
retirement obligations ..........
Unrealized gain on
investment securities ...........
Deferred gain on hedges .......
Other .....................................
Total deferred tax liabilities ........
Net deferred tax assets.............

¥

326
1,215

¥

610
1,410

Thousands of
U.S. Dollars
2012

$

3,966
14,783

784

816

9,539

4,565

4,994

55,542

111

131

1,351

1,521

748

18,506

263
56
971

282
138
1,158

3,200
681
11,814

67

151

815

576

693

7,008

2,021

2,076

24,589

111
462

51
555

1,351
5,621

99
1,800
93

727
2,640
21

1,205
21,900
1,132

944
278
16,272(2,661)
13,611

1,386
246
18,843(3,747)
15,095

11,486
3,382
197,980(32,376)
165,604

1,931

2,299

23,494

1,999
900

2,360
919

24,322
10,950

297

349

3,614

1,156
55
23
6,363
¥ 7,248

1,855
91
13
7,887
¥ 7,207

14,065669
280
77,418$ 88,186

The reconciliation between the effective tax rate reflected in the consolidated statement of income and the statutory tax rate for the year ended
March 31, 2012 was as follows:
2012

Statutory tax rate ....................................................
Effect of:
Change in valuation allowance ................................
Reduction of deferred tax assets due tochanges of tax rates .............................................
Other ......................................................................
Effective tax rate .....................................................

40.5%
(5.2)
2.6
0.0
37.9%

The Company has omitted the reconciliation between the statutory tax
rate and the effective tax rate for financial statement purposes for theyear ended March 31, 2011 because the difference between those
rates was less than 5%.
The “Act for Partial Revision of the Income Tax Act etc. for the
Purpose of Creating Taxation System Responding to Changes in
Economic and Social Structures” (Act No.114 of 2011) and the “Acton Special Measures for Securing Financial Resources Necessary to
Implement Measures for Reconstruction following the Great East Japan
Earthquake” (Act No.117 of 2011) were promulgated on December 2,
2011 and the staged reduction of the national corporate tax rate anda special reconstruction corporate tax will apply to corporate taxes
effective fiscal years beginning on or after April 1, 2012.
As a result, the effective statutory corporate tax rate used tomeasure the Company’s deferred tax assets and liabilities was changed
from 40.5% to 37.8% for the temporary differences expected to berealized or settled in the fiscal years from April 1, 2012 to March 31,
2015 and from 40.5% to 35.4% for temporary differences expected tobe realized or settled from fiscal years beginning April 1, 2015. Due tothis amendment, the net deferred tax assets decreased by ¥505 million($6,144 thousand), deferred income tax increased by ¥533 million($6,485 thousand), unrealized holding gain (loss) on securities increasedby ¥30 million ($365 thousand), and unrealized gain (loss) from hedging
instruments decreased by ¥2 million ($24 thousand).
21. Business combinations
On July 1, 2011, JSW Machine Center Co., Ltd. merged with Nikko
Machinery Co., Ltd., and on October 1, 2011 Nikko Techno Co., Ltd.
merged with J·Tech Co., Ltd.
Transactions under common control(a) Information on companies in business combinationi) Combination between JSW Machine Center Co., Ltd. and Nikko
Machinery Co., Ltd.
① Name and business of companies
Name of surviving company: JSW Machine Center Co., Ltd
Business: Machine processing and finish assembling of steel
and energy products
Manufacturing, remodeling and repair of industrial
machinery products
Name of absorbed company: Nikko Machinery Co., Ltd
Business: Machine processing and assembling of steel andenergy products
Maintenance of processing machinery② Date of business combination
July 1, 2011
③ Legal form of business combination
Absorption-type merger with JSW Machine Center Co., Ltd. as
the surviving company

41

④ Name of company after business combination
JSW Machine Center Co., Ltd.
⑤ Purpose and outline of transactions
The Company intends to reorganize the administrative structure
and improve business efficiency. In addition, the Company
plans to enhance its business base.
ii) Combination between Nikko Techno Co., Ltd. and J·Tech Co.,Ltd.
① Name and business of companies
Name of surviving company: Nikko Techno Co., Ltd.
Business: Machine processing, finishing turning, assembling ofiron, nonferrous metals and special alloys
Manufacturing and sales of processed products
Name of absorbed company: J·Tech Co., Ltd.
Business: Processing of machinery parts, plate working,assembling work and maintenance② Date of business combination
October 1, 2011
③ Legal form of business combination
Absorption-type merger with Nikko Techno Co., Ltd. as thesurviving company④ Name of company after business combination
Nikko Techno Co., Ltd.
⑤ Purpose and outline of transactions
The Company intends to construct an efficient and rational
operating structure. In addition, the Company plans to enhance
productivity and profitability, the effective use of humanresources and support a responsive organization.
(b) Outline of the accounting treatment
The Company accounted for the transactions as transactions undercommon control based on the Accounting Standard for Business
Combinations (Accounting Standards Board of Japan (ASBJ),
Statement No. 21 issued on December 26, 2008) and the Guidanceon Accounting Standard for Business Combinations and AccountingStandard for Business Divestitures (ASBJ Guidance No. 10, issued on
December 26, 2008).

22. Asset Retirement Obligations
The following table presents the changes in asset retirement obligations
for the years ended March 31, 2012 and 2011:
Millions of Yen
2012
2011

Balance at beginning of year.....
Liabilities incurred due to theacquisition of property, plantand equipment .......................
Accretion expense ....................
Liabilities settled .......................
Other ........................................
Balance at end of year ..............

Thousands of
U.S. Dollars
2012¥1,371¥1,338$16,681

—
19
(78)
(12)
¥1,29914
18——¥1,371

—
231
(949)
(146)
$15,805

23. Investment and Rental Properties
The Company has omitted the disclosure of Investment and Rental
Properties due to immateriality for the years ended March 31, 2012 and2011.

24. Segment Information
The reportable segments of the Group are components for which discrete financial information is available and whose operating results are regularly
reviewed by the Executive Committee to make decisions about resource allocation and to assess performance.
The Steel and Energy Products segment includes steel castings and forgings, steel plates, pressure vessels and steel structures. The Industrial
Machinery Products segment includes injection molding machines, film and sheet machinery, blow molding machines, magnesium injection molding
machines, waste treatment equipment and manufacturing equipment for electronic products. The Real Estate and Other Businesses segment
includes regional development.
Millions of Yen
Reportable segments

42

Year ended March 31, 2012

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales and operating income:Sales to third parties ....................................................
Intra-segment sales and transfers ................................
Total sales .........................................................................
Operating income .............................................................

¥105,001
4,285
109,286¥ 11,517¥113,959
3,335
117,294¥ 11,542¥ 2,407
2,983
5,390
¥ 776

¥221,368
10,603
231,972¥ 23,837¥—(10,603)(10,603)¥74¥221,368—
221,368¥ 23,911

Assets, depreciation, and capital expenditures:
Total assets .................................................................
Depreciation and amortization.......................................
Capital expenditures ....................................................

¥147,283
16,0836,238¥ 93,133
2,706
1,896

¥13,540
301
78¥253,956
19,091
8,213¥71,696
161
42¥325,653
19,252
8,256

Adjustments
andeliminations Consolidated

Thousands of U.S. Dollars
Reportable segments

Year ended March 31, 2012

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales and operating income:Sales to third parties ....................................................
Intra-segment sales and transfers ................................
Total sales .........................................................................
Operating income .............................................................

$1,277,540
52,135
1,329,675$ 140,127$1,386,531
40,577
1,427,108$ 140,431$ 29,286
36,29465,580$ 9,442$2,693,369
129,006
2,822,387$ 290,023$—(129,006)(129,006)$
900$2,693,369—
2,693,369$ 290,923

Assets, depreciation, and capital expenditures:
Total assets .................................................................
Depreciation and amortization.......................................
Capital expenditures ....................................................

$1,791,982
195,681
75,897$1,133,143
32,92423,068$164,740
3,662
949$3,089,865
232,279
99,927$872,320
1,959
511$3,962,197
234,238
100,450

Adjustments
andeliminations Consolidated

Notes 1: Adjustments and eliminations for segment profit of ¥74 million ($900 thousand) include elimination of inter-segment profit on inventories andcorporate general administration expense which are not allocable to a reportable segment.
2: Adjustments and eliminations for segment assets of ¥71,696 million ($872,320 thousand) include offset of inter-segment debt and credit,
and corporate assets which are not allocable to a reportable segment.
3: Adjustments and eliminations for depreciation and amortization of ¥161 million ($1,959 thousand) include depreciation and amortization forcorporate assets.
Adjustments and eliminations for capital expenditures of ¥42 million ($511 thousand) include capital expenditures for corporate assets.
Millions of Yen
Reportable segments

Year ended March 31, 2011

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales and operating income:Sales to third parties ....................................................
Intra-segment sales and transfers ................................
Total sales .........................................................................
Operating income .............................................................

¥112,915
2,853
115,769¥ 25,059¥ 97,664
5,331
102,996¥ 3,253¥ 2,349
3,075
5,425
¥ 715

¥212,929
11,260224,190¥ 29,027¥—(11,260)(11,260)¥ (532)¥212,929—
212,929¥ 28,495

Assets, depreciation, and capital expenditures:
Total assets .................................................................
Depreciation and amortization.......................................
Capital expenditures ....................................................

¥167,573
16,492
25,217¥ 89,477
3,042
1,309

¥13,610301
73¥270,661
19,837
26,600¥68,602165
121¥339,263
20,003
26,722Adjustments
andeliminations Consolidated

Notes 1: Adjustments and eliminations for segment profit of ¥532 million include elimination of inter-segment profit on inventories and corporate general administration expense which are not allocable to a reportable segment.
2: Adjustments and eliminations for segment assets of ¥68,602 million include offset of inter-segment debt and credit, and corporate assets
which are not allocable to a reportable segment.
3: Adjustments and eliminations for depreciation and amortization of ¥165 million include depreciation and amortization for corporate assets.
Adjustments and eliminations for capital expenditures of ¥121 million include capital expenditures for corporate assets.
(a) Product and service information

Millions of Yen
Millions of Yen

Year ended March 31, 2012

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales to third parties...

¥105,001¥113,959¥2,407¥221,368

Year ended March 31, 2011

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales to third parties...

¥112,915¥97,664¥2,349¥212,929(b) Geographical information(i) Sales

Thousands of U.S. Dollars

Year ended March 31, 2012

Steel andEnergyProducts

Industrial
Machinery
Products

Real Estate
and OtherBusinesses

Total

Sales to third parties...

$1,277,540 $1,386,531$29,286$2,693,369

Millions of Yen
2012
2011

Japan ...................................
China....................................
Others ..................................
Consolidated ........................

¥111,156
32,03878,173¥221,368¥ 99,070
29,83684,022¥212,929

Thousands of
U.S. Dollars
2012$1,352,427
389,804
951,125$2,693,369

Note: Net sales information above is based on customer location.

43

(ii) Tangible assets
The Company has omitted the disclosure of tangible assets bycountry or region as of March 31, 2012 and 2011 because theamount of tangible assets in Japan accounted for more than 90%of the carrying amount in the Consolidated Balance Sheet.
(c) Significant customer information
The Company has omitted the disclosure of significant customer
information for the years ended March 31, 2012 and 2011 because no
individual customer accounted for more than 10% of net sales in theConsolidated Statement of Income.
(d) Information on loss on impairment of fixed assets
Impairment loss on fixed assets by reportable segment for the years
ended March 31, 2012 and 2011 are summarized as follows:Year ended March 31, 2012
None applicable

Millions of Yen
Steel andEnergyYear ended March 31, 2011 Products

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses eliminations

Total

Impairment loss .........

¥101

¥197

—

¥95

(e) Amortization and balance of goodwill
The following table presents the amortization and balance of goodwill
as of and for the year ended March 31, 2012 and 2011 by reportablesegment:
Millions of Yen
Steel andEnergyYear ended March 31, 2012 Products

Amortization ..............
Balance as ofMarch 31 .................

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses eliminations

—

—

¥64

—

—

—

—

—

Thousands of U.S. Dollars

Amortization ..............
Balance as ofMarch 31 .................

Total

—

$779

—

—

$779

—

—

—

—

—

Millions of Yen
Steel andEnergyYear ended March 31, 2011 Products

Amortization ..............
Balance as ofMarch 31 .................

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses eliminations

Total

—

¥90

—

—

¥90

—

64

—

—

64

¥ 71

—

—

¥ 71

—

214

—

—

214

Thousands of U.S. Dollars
Steel andEnergyYear ended March 31, 2012 Products

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses eliminations

Amortization ..............
Balance as ofMarch 31 .................

—

$ 864

—

—

$ 864

—

2,604

—

—

2,604

Total

Steel andEnergyYear ended March 31, 2011 Products

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses eliminations

Total

Amortization ..............
Balance as ofMarch 31 .................

—

¥ 71

—

—

¥ 71

—

286

—

—

286

(f) Information on gain on negative goodwill
Year ended March 31, 2012
None applicable

25. Shareholders’ Equity
The Corporation Law of Japan provides that an amount equal to 10%of the amount to be disbursed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve and the legal reserve
equals 25% of the capital stock account. Such distributions can bemade at any time by resolution of the meeting of shareholders, or by the
Board of Directors if certain conditions are met.
26. Amounts per Share
Net income per share is calculated based on the net income available
for distribution to shareholders of common stock and the weightedaverage number of shares of common stock outstanding during theyear. Net assets per share are calculated based on the number ofshares of common stock outstanding at year end. Amounts per shareat March 31, 2012 and 2011 and for the years then ended were as
follows:
Yen

The following table presents the amortization and balance of negative
goodwill arising from business combinations on or prior to March 31,
2010 as of and for the years ended March 31, 2012 and 2011 byreportable segment:

44

—

Total

¥64

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses eliminations

Total

Amortization ..............
Balance as ofMarch 31 .................

Year ended March 31, 2011
None applicable—

Steel andEnergyYear ended March 31, 2012 Products

Industrial Real Estate Adjustments
Machinery and Other
and
Products Businesses eliminations

Millions of Yen

Year ended March 31, 2011

¥0Millions of Yen
Steel andEnergyYear ended March 31, 2012 Products

Net income ...............................
Net assets ................................

2012

2011

U.S. Dollars
2012¥ 33.93344.28¥ 44.54322.98$0.41
4.19

Independent Auditor’s Report45